Statement of Donald Marquis
Commissioner Massachusetts Public Employee Retirement Administration Commission
My comments are given from my position as Manager of a community
of 50,000 population, as a Commissioner of the Massachusetts Public
Employee Retirement Administration Commission (PERAC), and as
Chairman of the Social Security Committee for PERAC.
Obviously, there is no doubt that our Social Security System needs
changes in order to remain solvent and to continue to pay benefits
to the participants of the system. Furthermore, these changes
should be implemented sooner rather than later.
As you know, the Social Security System is a pay-as-you-go system
rather than a funded one. I do not believe that the long-term
solution is simply to keep increasing the Social Security tax on
payroll and/or increasing the retirement age. We need to invest
part of the Social Security funds in equities managed and invested
by a Board of Trustees independent of the administration and
Congress. It has been demonstrated that even a modest return of 8%
over the long-term will basically keep the Social Security System
solvent in the future.
There has been discussion of including the seven states, which are
currently not part of the Social Security System into the system.
We are opposed to this idea.
We in Massachusetts have an excellent public pension system, which
we do not want to lose. Our system was created several years prior
to the Social Security System in 1935. We were subsequently given
a choice of whether to join the Social Security System or retain
our own system, and we chose the latter. The Massachusetts public
retirement system is established under the General Laws and is
governed by a seven-member commission, the Public Employee Retirement
Administration Commission. PERAC oversees 106 individual retirement
boards throughout the state. Fifteen years ago, the State made the
decision to require the pensions systems to move away from a
pay-as-you go funding to a fully funded system. Currently most of
the 106 systems under PERAC are at least fifty percent funded and
several are one hundred percent funded.
There are several reasons why we do not want to be part of the
Social Security System:
1) Our system is solvent and will soon be fully funded. 2) Our
benefits are much better than those under Social Security. 3) We
made all the right and tough decisions here in Massachusetts, and
we do not want to be in a system that is going bankrupt, according
to many, in the next thirty-four years. 4) If forced to join the
Social Security System, it will cost the public employers and
employees in Massachusetts approximately five hundred million
dollars per year. If we have to appropriate that extra money for
Social Security coverage, obviously we will have to cut other
programs under our jurisdiction. 5) We do not want to be looked at
as a "cash cow" in order to help pay the current Social Security
benefits to retirees. 6) Besides, the extra revenues would extend
the Social Security System solvency for only two extra years.
Finally, keep in mind that you may increase your revenues initially
by having us in the Social Security System, but when the "new"
Social Security participants retire, it will cost the Social Security
System a lot more in the end.
Let us look for real long-term solutions to this Social Security
System instead of the piecemeal approach.
Thank you for the opportunity to express my views.
Donald R. Marquis
Town Manager, Arlington, MA
Commissioner, Massachusetts PERAC
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