“We have 27 miles of waterfront, and four Red Line stations,” Koch said. S&P described Quincy as “a diversified commercial and industrial city,” citing a growing tax base and strong per capita household incomes. Putting our money with PRIM, I think, will give us the best chance for a successful return.” “What really bolsters the argument for this is the fact that we’re going to invest this money with PRIM, which is a top three pension system in the country. Every year it’s going up in the budget,” Palmucci said. The city will invest the proceeds of the 18-year bond through the Massachusetts Pension Reserve Investment Management system.Ĭouncil member Brian Palmucci voted for the bond issue, even while acknowledging downsides that included lingering structural problems with the pension system and the risks of returns too low. Without the pension bond, payments would have ballooned to upwards of $65 million, according to Mason. 30, 2039, end date and a 2.25% amortization growth rate. 30., and projected annual payments ranging from $36.1 million to $52.7 million, assuming a Sept. Rebecca Sielman, a principal with consulting firm Milliman, estimated Quincy's unfunded actuarial accrued liability at $478.7 million as of Sept. These two are the biggies.”Įlsewhere in Massachusetts, 106,000-population Brockton issued a $302 million negotiated pension bond two months ago while voters in Andover, a 37,000-population town, approved a pension bond of up to $185 million in June, with final approval pending the Select Board. And from there we work the departments and other costs like rubbish increases, energy increases. “What's going up in cost? The two biggest increases usually in the budget are healthcare costs for employees and retirements costs for employees. “In each year at budget time when I start to develop the budget, which then gets presented to the City Council for approval, we look at several areas,” Koch said. Massachusetts law, by contrast, requires all employees pay 11% of their salary to their pensions. “A few years ago, when California, Wisconsin and some of those states got in trouble their pension systems it came out that employees did not contribute that much to the pensions out there.” “Essentially people have a little misnomer about how public pensions works,” Koch said. Koch pitched the concept on a Facebook video in March. Koch, Chief Financial Officer Eric Mason and Strategic Asset Manager Enrico Coscia began planning for the bond sale last year. “However, identifying these risks in advance and ensuring that the purpose of the borrowed funds is clear and supported by effective monitoring and controls can help manage them.” “POBs increase the exposure of budgets and pension balance sheets to financial market volatility, specifically the risk that returns will be less than the borrowing costs,” they wrote. “Issuing debt to close budget gaps and pay down unfunded pension liabilities can alleviate short-term budget pressures but also presents long-term risks,” Greg Mennis, Stephanie Connolly and Mollie Mills of Pew Charitable Trusts said in a commentary. Pension obligation borrowing has been subject to ongoing debate in public finance. It wasn’t about politics or policy, it was about the math.” “There was really a lack of understanding of the financial situation, I say respectfully. “I was a little disturbed,” Koch, in an interview, said of the council’s pushback. With bond approval finally in hand, the council then passed the $347 million budget for fiscal 2022. Some council members worried about the additional debt service. Quincy’s City Council passed the bond measure by a 6-to-3 vote in June - with two-thirds approval necessary - after a contentious back-and-forth with Koch. It also affirmed its AA rating and SP-1-plus ratings on the city’s outstanding GO bonds and $274 million in outstanding bond anticipation notes.
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