The great New Bedford Retirement Board War

The great New Bedford Retirement Board War

What to make of this war between Mayor Jon Mitchell and the New Bedford Retirement Board?

On the surface, it seems like it’s about whether New Bedford property taxpayers will continue to have to pay annual cost-of-living retirement adjustments (COLAs) that have almost always been above the inflation rate the last 25 years.

But just below that battle, what you see is a powerful and obscure quasi-government board, dominated by city worker unions (principally the police and firefighters). Those members have consistently been able to convince the supposedly neutral “fifth member” on the board, and on occasion even Mitchell’s own appointees, to go along with 3% partial pension increases nearly every year for the past 2½ decades. And this has happened even though the cost-of-living boosts have detrimentally affected the low-income property taxpayers in the city.

The state of Massachusetts seems to have deliberately set up the system this way.

Eric Cohen, executive director of the New Bedford Contributory Retirement System, points to the language of the enabling legislation that created the annual COLAs. He says it could be understood that the state’s language in a section of the law means that the only reason not to give the annual 3% COLA (on the first $14,000 of a retiree’s benefits) is if the increase would “substantially impair the funding schedule of said system.”

And that is exactly what Mitchell says an approved 3% COLA for 2024 will do if a controversial recent Retirement Board vote approving it goes forward.

“We have been chronically unrealistic about the affordability of pension benefit expansions in the past, and that needs to change,” Mitchell said in a May 15 press release outlining his proposed Fiscal Year 2025 city budget.

Cohen, however, in an April 30 email to The New Bedford Light, suggested that the COLAs are almost an automatic thing. “One could argue that unless the Board finds that paying a COLA will substantially impair the funding schedule, it must pay a COLA,” he wrote.

Cohen went on to paint a scenario in which the COLAs are built into the funding schedule for retirement commitments, and that the state’s language “suggests it was written this way to assure retirees receive a COLA.”

According to Chapter 32 of state law, the government COLA increases are supposed to be funded by “the investment accounts of the system.” 

Mayor Mitchell, however, says the costs are also being passed on to the property taxpayers, with New Bedford pension benefits now accounting for a share of the annual budget that surpasses the entire budgets of both the city’s police and fire departments. 

Chapter 32 of Massachusetts law established the state and local retirement systems for government and quasi-government employees. Credit: Pixabay

Mitchell laid some of the blame for both situations on the Retirement Board and City Council, and he wants them to put a stop to it. I’d have liked it better if the mayor had laid more of the blame with the state Legislature where it really belongs. Still, I get it that he’s trying to apply the brakes to property taxes in the city that are steep, especially compared to nearby suburbs.

Here’s what he said in the May 15 press release:

“The Retirement Board and the City Council both possess a measure of local control that could be exercised to reduce the impact of rising pension costs on taxpayers.” He went on to state that the Retirement Board and the council must take responsibility for helping ensure the future solvency of the pension system for today’s active employees. The implication is that you can’t help today’s retirees at the expense of future ones.

How the system doesn’t work

The Retirement Board governs the New Bedford Contributory Retirement System, which besides city workers serves four other local government entities — the regional voc-tech school, the city housing authority, the New Bedford-Dartmouth refuse district and the regional transit authority. But some 88% of the system’s members are city employees, and so it is city property taxpayers who are on the hook to pay, until 2035, the largest part of breathtaking 6% annual increases in the city’s financial obligations to the retirement system. 

What is the reason for property taxpayers being on the hook? The New Bedford retirement benefit has long been underfunded in this working-class city with a limited tax base.

What’s the other reason? Even though the system has long been underfunded, the Retirement Board has nevertheless consistently granted 3% COLAs.

For the last 15 years, the system has chipped away at funding more of its commitments.

Though it is still the fifth-lowest funded in the state, it has made significant progress in slowly increasing the percentage of funding since 2009, when it was at just 38.1%. Today the funding is at 52.2%. 

Mayor Mitchell’s tenure overlaps much of the time period when the city has made progress in funding the retirement commitments — he became mayor in 2012 — and his 2013 appointee, Angela Natho, has voted against the 3% increases more often than her predecessor, the late Arthur Caron, long the indispensable lawyer on many city projects.

Even so, the board has approved 3% COLAs in all but one of the last 25 years, and in that year it approved a 2.5% hike. In recent years, the inflation rate has been significantly higher than 3% but during the vast majority of those 25 years, it was lower. The pension benefits overall are markedly cumulative.

Now, the COLAs only apply to the first $14,000 of an employee’s retirement benefit (and for many years only applied to the first  $12,000). The City Council increased the amount the COLA applies to two years ago and can increase it in increments of $1,000 as it sees fit.

Still, any way you cut it, the New Bedford retirement system is a transfer of money from city property taxpayers (or the workers in the four member government agencies) to the members of the New Bedford retirement system. The cost-of-living allowance goes toward the retirees and away from the property taxpayers, including low-income ones.

The door to the so-called “Corner Office,” the Mayor’s Office, at New Bedford City Hall. Mayor Jon Mitchell says retired employees’ cost of living increases are being passed on to taxpayers, with New Bedford pension benefits now accounting for a share of the annual budget that surpasses the entire budgets of both the city’s police and fire departments. Credit: Jack Spillane / The New Bedford Light

A matter of fairness

It’s not that the government retirees don’t deserve cost-of-living increases. They most certainly do.

But the better way, the more equitable way, to deal with this problem would be for the state to supplement the retirement benefits in working-class cities like New Bedford that no longer have a sufficient tax base to support retirees. The post-industrial cities need a state subsidy in the same way they need a subsidy to run their school systems. Either that or the state needs to reduce the government retirement system benefits for future employees while allowing them to collect from the federal Social Security system, as other states have done. 

Another solution might be for the state to simply limit the cost-of-living increases to whatever the rate of inflation is, instead of allowing as much as 3% when the rate is much lower.

The Social Security system, by the way, is far less generous than the Massachusetts system at the maximum level of benefits.

Don’t hold your breath for Tony Cabral or Mark Montigny or Bill Keating to lead the charge on that one. Many elected officials receive government retirement benefits that are far more generous than Social Security ones. Lower-income government workers may not make out as well as they would have if they could also collect Social Security, but they’re not the people making the laws.

In any event, allowing workers to access the Social Security system in addition to their government pensions would relieve the city’s low-income property taxpayers. 

In fact, some 10 of 11 city councilors have joined the New Bedford retirement system. The 11th, Maria Giesta, was a longtime aide to Congressman Barney Frank and could be on the federal government retirement system. (She did not return my phone call inquiring about her status.)

But the city councilors lining up to receive the government retirement benefit proves more than anything that it is a more attractive system than what is available to private-sector workers.

These property tax increases may not make a lot of difference for property owners at the high end of the New Bedford real estate market, but they certainly make a big difference to many of the working-class, owner-occupied property owners in the city.

The current property taxpayers are carrying the burden for the lack of funding by previous taxpayers, when as one Retirement Board member put it recently, the city failed to fund the system for decades. The other side of that argument, of course, is that the city underfunded the system for decades because it could not realistically afford to do otherwise.

The state of Massachusetts created a curious thing when it devised these local retirement boards. They are composed of five members, with four of the five members ostensibly balanced between representatives of the retirees and the taxpayers.

That seems like a fair enough idea on the surface, but if you examine how the boards have actually been working, it seems much less fair.

Two positions of these retirement boards are elected from the members,  and they serve three-year terms. Two other positions are appointed by, or influenced by, either a mayor or board of selectmen. The so-called “fifth member” is supposed to be the neutral party who understands the views of both sides and who is elected by the other four members to literally break ties.

The fact is that in New Bedford, and many other places, the fifth member tends to be dominated by the retirees’ point of view. Whether inflation is high or inflation is low, the fifth members have almost always voted for the highest annual COLA allowed by the state, or 3%.

Heck, even the mayors’ appointees to the board (as mentioned before, the late Arthur Caron) used to routinely vote for the COLA increases each year.

That situation changed in recent years as Angela Natho, Mayor Mitchell’s appointee to the board, tended in most cases to vote against the 3% COLA. Also voting against the COLA in recent years has been whoever is in the city auditor’s position, which is a job that essentially reports to the mayor and which is automatically a Retirement Board member. 

City employees make up the bulk of New Bedford Retirement System employees. Credit: Jack Spillane / The New Bedford Light

The two sides go to war

Unlike the mayoral and select board members of the Retirement Board, which are at the discretion of the appointing authority, the two retirement system members and the fifth member serve three-year terms.

And when that fifth member’s three-year term is up, the stakes are high because whoever is chosen will potentially hold the deciding vote on these cost-of-living raises.

This year, when the New Bedford Retirement Board posted a vacancy in the fifth member position, all hell broke loose.

Four candidates initially applied, and as far as I could see, all of them were qualified to serve to one degree or another.

But some astonishing things went down during the selection process, in my humble opinion.

First off, all four members, including the mayor’s people, voted against appointing Michael Gagne, who would have seemed well qualified for the job. Gagne had just finished serving two years as acting chief financial officer of New Bedford and had previously served as the town administrator of both Mattapoisett and Dartmouth.

Incomprehensibly, however, both of the Mayor Mitchell-influenced positions on the board voted against Gagne, according to Jan. 9 minutes of the Retirement Board.

The board members are supposed to be independent, but given that former City Auditor Emily Arpke had worked closely with Gagne, that was an impressive vote on her part.

By the way, not all Retirement Board meetings are recorded by the city’s cable access station, including this one. More astounding is that the Retirement Board doesn’t make its own audio recordings of meetings. I’m told by the board’s lawyer that many retirement boards in Massachusetts do not audiotape their meetings.

Anyway, former City Auditor Arpke, who served on the board by virtue of her position, and former city Personnel Director Natho, who was appointed to the board back in 2013 by Mayor Mitchell, both voted against Gagne at the Jan. 9 meeting.

The minutes state that he had given a wrong answer on the COLA cap percentage, and that the two former union leaders on the board (Baillargeon and Kummer) had concerns about his answer on a case involving public safety officers.

I don’t know what all of this is precisely about, but it seems unusual.  Gagne has clear experience and familiarity with the Massachusetts retirement system from his career as a municipal administrator.

I reached out to Mike Gagne, Emily Arpke and Angela Natho but did not hear back from any of them.

Arpke, who has since left the city to work in Fall River, had herself recruited two candidates to be the fifth member, according to the minutes. Richard Taylor had extensive management experience in the federal government and Jon Van Kuiken had management experience in the city of Brockton. Arpke may have referred them but the two retirement system members from the city unions — Leonard F. Baillargeon and James Kummer — would not vote for them. That resulted in a deadlocked board for their candidacies.

The fourth candidate, Susan Mandra Thompson, is a local attorney who had served as the fifth member of the board for the past 10 years. And for some reason, the board deadlocked on reappointing her too, with Arpke stating that she believes in term limits and that she felt the board needed some fresh perspective.

Keep in mind that Thompson had passed off on many of the 3% COLAs that the mayor has said the city cannot afford. The mayor’s appointee, Natho, joined Arpke and the two torpedoed Thompson as they had torpedoed Gagne, though for seemingly different reasons.

An underlying thread in the discussions of the board during the search seemed to be the need to find a board member who knew more about how to bring more money into the system by investing its reserves. It is after all a deeply underfunded system.

The office of the Southeastern Regional Transit Authority in the Bank of America building in downtown New Bedford. In addition to city workers, the Retirement Board’s decisions affect retired SRTA employees. Credit: Jack Spillane / The New Bedford Light

Many Massachusetts retirement systems have joined something called the PRIT (Pension Reserves Investment Trust Fund), which invests pension assets by way of a pooled fund of the various systems. Some board members seemed interested in obtaining someone with some knowledge of it and other ways to better fund the system.

With all four candidates unable to win a majority of the four-person board,  Chairman Baillargeon instructed Cohen to repost the position on the website of the state’s PERAC (Public Employees Retirees Administration Commission). He did this even though Angela Natho had stated there was no need to repost as qualified candidates had already applied. According to the Jan. 9 minutes, Baillargeon acknowledged Natho’s point but reminded her that none of the candidates had received a majority vote.

This, to me, shows how this is a highly political struggle. 

Baillargeon is as much as saying that he and Kummer will not vote for qualified candidates unless they support the union positions. That means they are holding out for someone who they think is always going to back their 3% annual COLAs.

The Retirement Board took one more unsuccessful attempt at approving one of the acknowledged qualified candidates but failed at a Jan. 12 meeting. Baillargeon then instructed the position to be re-posted, and local attorney Chris Saunders came into the picture. 

Saunders says he saw the new post and he checked with Mandra Thompson, whom he described as a friend. He said he wanted to know if she was either interested in being reappointed or being blocked from it. When he found out the situation, he sent his name in.

Saunders came in with a more than competitive resume.

He’s the incumbent Bristol County treasurer, serving as chairman of the Bristol County Retirement Board by virtue of that position. That’s a board that relies on an advisory council for its COLA decisions and it has regularly approved the maximum 3%. It is also much better funded than the New Bedford system.

The county has already invested part of its reserve funds with the PRIT, so Saunders would know something about advising New Bedford on investments. 

Saunders, it seems to me, is indisputably qualified to be on the board. He no doubt knows at least as much about the Massachusetts retirement system as any other candidate. He is also, it should be said, a member of a well-connected political family in the city.

Saunders is usually gracious in taking my calls but he told me he objects to my consistently mentioning his family political connections in my columns. He says he feels there is an implication that he, or his family members, have not earned their positions (Chris Saunders was previously a county commissioner and his wife is an elected city assessor). While he was a member of the county commission, his fellow members appointed him to the part-time paid treasurer position.

I think it’s a fair enough point on Saunders’ behalf, but I also think that as a journalist I have a responsibility to make the public aware of the politics that may relate to a given issue.

The sign on Ashley Boulevard to the main entrance of Greater New Bedford Regional Vocational-Technical High School. Credit: Jack Spillane / The New Bedford Light

In any event, Saunders applied, was interviewed and hired on a 4-0 vote at a Feb. 12 meeting, with both of the board members connected to Mayor Mitchell voting in his favor. I don’t know anything about how the politics may or may not have affected this vote, which way the political connections went or didn’t go. All I know is that Saunders sailed through.

The open meeting law violation

I also, however, know that there was a controversy about the meeting at which Saunders was appointed. The mayor and his city solicitor have successfully argued it was an open meeting law violation.

Either Arpke or Natho could have refused to vote if they felt the meeting was illegal, and there seems to be some confusion about whether or not the board was warned the meeting might not have been properly advertised since it might have been a violation of the open meeting law. In any event, both Arpke and Natho voted.

The board had advertised a Feb.12 meeting to interview candidates and a Feb. 13 meeting to vote on one. But after a snowstorm was anticipated for the 13th, it held a second, unadvertised meeting on the 12th at which Saunders was appointed. 

A Superior Court judge later ruled the second Feb. 12 meeting was not properly advertised and was an open meeting law violation. But Judge Daniel J. O’Shea also ruled that the vote at that meeting in favor of Saunders was legal. 

The judge accepted the Retirement Board’s argument that since the topic of filling the fifth member vacancy was implied by the first Feb. 12 meeting’s agenda, the vote was not illegal. The board’s lawyer called the open meeting violation a “technicality,” and said that treating the second meeting as a separate meeting was “elevating form over substance.” 

I don’t understand this decision since the vote was not taken at that meeting but rather at a second Feb. 12 meeting that was not advertised at all. The minutes of the said Feb. 12 meeting used the word to “adjourn” and “new meeting” when the subsequent, unadvertised meeting was opened on the same day. Keep in mind that Judge O’Shea had also ruled that the meeting at which the vote took place was in violation of the law.

It doesn’t matter. I’m not the judge.

The entrance sign for the Greater New Bedford Regional Refuse Management District on Samuel Barnet Boulevard in Dartmouth. Credit: Jack Spillane / The New Bedford Light

“There’s nothing that compelled the board to hold off on voting that night,” O’Shea wrote in his decision. 

The 2024 cost-of-living vote granting a 3% increase took place a month later on a 3-2 vote with Saunders in favor.

Saunders, during his interview for the appointment, told the board that his philosophy on the COLAs is that “you can’t spend what you don’t have.”

The question, I ask, is whether New Bedford’s city government has the money. The mayor says no, and Saunders says yes. I guess it depends on what you want to spend the city’s money on. 

The mayor rebuked Saunders for the vote in an interview with me. 

“I like Chris, but I have to say he has no interest in considering seriously the impact of the cost-of-living increases on city finances,” he said.

The city would like to grant COLA increases to the retirees especially in the current high inflationary environment, Mitchell said, but then contended that because of Saunders vote, the city may slip below 50% in funding the whole retirement system.

For his part, Saunders has said the board is not allowed to “screw” city employees in order to balance the budget. He has accused the mayor of spending unwisely, mentioning in a New Bedford Light story $15,000 that was spent on Dunkin’ Donut cards during the pandemic and directing government money to a historic preservation/housing/commercial project at the foot of Union Street. He wondered whether the city should have instead spent some of the millions available in pandemic relief funding (ARPA funds) on public works projects.

The mayor and Auditor Arpke have both said it makes better sense to spend money on economic development purposes than recurring spending such as public works projects or retirement benefits.

After the COLA vote, in an April 28 New Bedford Light story, Saunders noted that the city consults with the Retirement Board on shaping funding every two years, but Chief Financial Officer Robert Ekstrom responded that the city did not sign on for 3% COLAs every year.

The office of the New Bedford Housing Authority in the DeMello International Center in downtown New Bedford. Credit: Jack Spillane / The New Bedford Light

An appeal to the AG

Even before Judge O’Shea refused to invalidate the Saunders appointment at the meeting at which the open meeting law violation took place, a group of private citizens who work for the city (led by City Solicitor Eric Jaikes) appealed to Attorney General Andrea Campbell to throw out the vote. That’s how big the stakes are on this funding issue. They didn’t bother to wait to file their appeal for the 30 days that AG Campbell must wait before reviewing their initial complaint.

It is the way Saunders was hired that has given the mayor a possibility of reversing his appointment.

Despite the fact that the Retirement Board members associated with his administration voted for Saunders, Mitchell insists the vote should be thrown out because of the open meeting law violation.

But though Mitchell rebuked Saunders for approving the COLA, he refused to criticize either Arpke or Natho for backing Saunders at the flawed meeting.

“I have the utmost respect for Angela,” Mitchell said. “She was a terrific department head for several mayors.” He added that he supports her continuing on the Retirement Board.

Mitchell may want to keep the personnel director close to his side, even if she did vote for Saunders at what the mayor contends was an illegal meeting.

The mayor did not address my question about Arpke.

The heated politics of this seemingly unsolvable problem of how to justly fund the retirement system continued after Saunders appointment.

Angela Natho, in a sworn affidavit in the Superior Court, contended that Executive Director Cohen had warned board meeting members that they might be a violation of the open meeting law if they voted on Saunders’ application at an unadvertised meeting. She quoted Chairman Baillargeon as saying he’d take responsibility. 

The board rushed the vote at a Feb. 12 meeting because snow was forecast the next day. If the board had not appointed someone by Feb. 22, the vacancy would have been available for a month and reverted to Mayor Mitchell.

Judge O’Shea said in his decision that Natho’s action might have raised ethical issues, since as a member of the Retirement Board, she was a defendant in the suit. He did nothing, however, as he said it was not a matter before the court.

The minutes of the Feb. 12 meeting, at which the vote to appoint Saunders took place, say nothing about Cohen’s alleged warning.

When I asked Cohen about it, he said “If it’s not in the minutes, I don’t believe it was said.”

He wrote me a subsequent email stating that he stands by the minutes. “The Board minutes encapsulate the discussion of the Board and the Board has adopted them as such,” he wrote. 

An audio recording would have resolved this discrepancy.

I don’t know what’s going on here.

But I do know that it’s all politics, and it’s all both sides trying to dominate the other. It’s all poor policy and it’s all unfair to both New Bedford’s working-class homeowners and its government retirees.

And as with most problems that beset New Bedford, you can lay it all at the feet of the Massachusetts state Legislature. And you can be sure the Legislature is in no rush to fix the problem.

Email columnist Jack Spillane at [email protected].

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