SWAMPSCOTT — Finance Committee members were hesitant to approve a 2% temporary cost-of-living adjustment (COLA) for retirees amid concerns that more than $860,000 in pension increases will financially strain the town.
The adjustment would add an additional 2% boost to the Retirement Board’s current 3% COLA in fiscal year 2023. The adjustment would add up to $280 to the pensions of retired public servants such as police officers, firefighters, and librarians.
In the Retirement Board’s presentation before the Finance Committee Thursday evening, Board member Robert Powell said that more than 60% of the Commonwealth’s eligible retirement systems have implemented a 5% COLA for FY23 since former Gov. Charlie Baker approved the 5% COLA option for local retirement boards last summer.
“The number one thing is service. You come to a town for service — you come here, you want to know your police officer, you want to know your DPW worker. These are the people who have been giving service all these years. You have to invest in your people,” Board member Kevin Breen said.
The Finance Committee did not vote on the proposed adjustment prior to the Select Board’s final vote on Monday. However, committee members generally agreed that the added $860,000 budget item would burden the town more than it would benefit retirees.
Committee member Naomi Dreeben said she understood the importance of supporting retirees, but suggested the increase be spread out over the next few years.
“I certainly don’t want to kick the can down to one year with an $800,000-plus impact that one year. I’d like to see it broken down into smaller chunks over time,” Dreeben said.
Committee member Cindy McNerney echoed Dreeben’s remarks, adding that the estimated 75-cent daily benefit would not make or break any retiree’s financial situation, but would serve as a financial hardship for the town.
“We’ve got a lot of unfunded pension liability and a lot of unfunded OPEB [other post-employment benefits] liability, and what are we thinking when we go to add to it? I mean, have we lost our minds?” McNerney said.
Committee Chair Eric Hartmann, on the other hand, said he planned to attend the Select Board meeting Monday to explain ways in which the $860,000 can be “feathered into” the budget over the course of a few years. He said it was a tough call, but that he was “inclined to support it.”
In the current FY24 budget, Swampscott funds roughly $1.8 million in healthcare for retirees, due to an approximately 22% increase in healthcare costs over the last four years. Town Administrator Sean Fitzgerald said that although he wants the town’s retirees to have the pension increases they deserve, he considered the 5% COLA to be a dangerous precedent.
“Frankly, it puts an extraordinary burden on the town,” Fitzgerald said. “It’s not just an increase for our retirees, it will ripple through other decisions. We’ve built Swampscott’s financial discipline over the last couple of years to help support the broader interest of the community… I do not see this as a step toward a prudent financial future for the town.”
