Massachusetts COVID-19 Pension Bonus Bill a Boondoggle, Groups Warn

A bill working its way through the Massachusetts state legislature to provide bonuses to public employees who worked during the pandemic would cost billions of dollars to the already overstressed pension system, watchdog groups warn.

Massachusetts House Bill 2808, also known as “An Act Relative to Providing a COVID-19 Retirement Credit to Essential Public Workers,” would add three years of retirement credit to state “employees who have volunteered to work or have been required to work at their respective worksites or any other worksite outside of their personal residences during the COVID-19 state of emergency.”

The Pioneer Institute, a think tank, said in a statement that although that sounds reasonable, “upon reading the brief bill, it quickly becomes clear that this legislation is irresponsible in the extreme.” The group said that the bill, which was sponsored by Rep. Jonathan Zlotnik and Sen. John Velis, was written so broadly that it couldn’t determine which public employees wouldn’t be entitled to the benefit.

Pioneer cited a recent hearing before the legislature’s Joint Committee on Public Service in which Rep. Ken Gordon asked Zlotnik whether any analysis had been done on the bill’s fiscal impact. Zlotnik responded that “the short answer is we don’t have a final number as we sit here today.”

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The think tank also noted that the bill defines employee as “a person employed by the Commonwealth of Massachusetts,” including “its political subdivisions,” and therefore would also apply to employees of Massachusetts’ municipalities. It said the bill would be a massive unfunded mandate for the commonwealth’s cities and towns.

“Administrators, accountants, techies, teachers, finance officers, grant writers, trash collectors, and all those paid with public dollars are potentially in line for the benefit,” said Pioneer, which lamented the broad public support the bill has garnered.

To demonstrate its point about the financial impact the bill would have, Pioneer Institute did an analysis of its effect on just one state employee—Marty Meehan, who is president of the University of Massachusetts. Assuming Meehan retires at the end of his current contract in 2025, Pioneer projects that his annual pension would rise to $335,673 from $287,720—an annual increase of nearly $48,000. It also said, based on actuarial tables, that would boost Meehan’s lifetime pension benefit by almost $800,000.

Pioneer also said the bill is “a slap in the face of the tens of thousands of private-sector employees who put themselves in harm’s way” as the public sector did not see employment decrease as sharply as did the private sector during the pandemic.

Siding with Pioneer is the Massachusetts Municipal Association (MMA), a private, nonpartisan, nonprofit organization. MMA Executive Director and CEO Geoffrey Beckwith spoke against the bill at the Public Service committee hearing, saying in written testimony that the group strongly opposes the bill as it “would be very costly for municipalities and local taxpayers, would immediately increase the projected unfunded pension liability in communities across the state, and would translate into reductions in available funding for municipal services in other areas.”

Beckwith said that although there has been no cost analysis to determine the number of people who would qualify for the bonus, “it is clear that the measures would add billions of dollars to state and local unfunded pension liabilities.” He added that “passing presumption bills without first engaging in adequate cost and risk analyses is a leaping-before-looking practice that fails to adequately understand the policy and financial ramifications.”

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Tags: Bill, Geoffrey Beckwith, House Bill 2808, Jonathan Zlotnik, Massachusetts, Massachusetts Municipal Association, MMA, Pension, Pioneer Institute

Maybe this rat poison isn’t so bad after all. A number of institutional investors, who in one survey have likened cryptocurrency to rodents’ least-favorite dish, seem to be warming to Bitcoin and other lesser-light crypto denominations.

Bitcoin and its ilk are beginning to recover from crypto’s May crash, when the most prominent digital currency slumped almost 40%. Data provider Glassnode said institutions, which had been on the sidelines since then, are jumping back into Bitcoin in particular. Big-lot buys totaling $2.5 billion moved off crypto exchanges Wednesday, evidently from institutional investors, part of a strong rebound, Glassnode contended. Since two weeks ago, Bitcoin has rallied 21%.

And Wednesday’s 1.7% price pop apparently had a lot to do with institutions. “Today is the first indication we’ve seen that suggests that big institutional money is back,” Michael Rinko, an analyst at global macro hedge fund Pervalle Global, told CNBC. Up to now, the long-term “-speak for investors—had buoyed the upward action, he said.

Fear of missing out seems to have kicked in for a chunk of institutional players, he maintained. “The psychology behind missing the dip is definitely driving some of the trading right now.”

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Crypto investing among at least some pension funds seems to be a widespread, if sotto voce, activity. More than half of the 1,100 institutional investors polled worldwide by Coalition Greenwich on behalf of Fidelity Digital Assets between this past December and April declared they had made digital asset investments, according to the survey, released a week ago. What’s more, some 70% of respondents said they’d buy crypto in the future.

To be sure, surveys differ. One poll from JPMorgan, announced in June, had found a much lower incidence of institutional crypto use (10%), with half calling the currency “rat poison”—the sobriquet that mega-investor Warren Buffet has hung on crypto.

A celebrity change of heart might have something to do with the turnaround in Bitcoin’s slump and perhaps even with a larger appetite for crypto from institutions. Elon Musk, Tesla’s founder and a notable tech guru, once championed Bitcoin, buying $1.5 billion of it in February and announcing he’d accept the currency as payment for his electric vehicles.

Then, in May, he did an about-face and barred Bitcoin from Tesla purchases, on environmental grounds: that it may be using too much power to solve the complex math puzzles needed to “mine” Bitcoin. A week later, he changed his mind again, but a lot of damage had been done. Meanwhile, China intensified its antipathy toward crypto, deporting its miners.

Amid institutions, few are fessing up to a sudden yen to buy Bitcoin. Yale, Harvard, Brown, and the University of Michigan are among the handful of colleges that have been buying crypto, according to research site Coindesk. It’s known that Yale and a few others for years have invested in companies building blockchain technology, the digital underpinning of crypto, but they since reportedly have taken positions in the stuff. The universities wouldn’t comment.

Grayscale Investments has told Bloomberg that pension funds and endowments are plugging money into its $25 billion trove of digital assets, although it wouldn’t be more specific. Two Virginia pension programs, the Fairfax County Employees’ Retirement System and the Fairfax County Police Officers Retirement System, are exceptions to the institutional preferences for tight lips on the subject. They invest in several crypto funds. Speaking at our 2021 Virtual Chief Investment Officer Symposium in the spring, the heads of the two pension systems pronounced themselves “very happy” with their choice.