Town officials are trying to gauge if voters will approve borrowing $185 million to pay of the town's unfunded pension liability if there is no reform to the pension system going forward.
"I think with no reform this won't pass," said Eugenie Moffitt, chair of the Finance Committee. "So, we have to put as positive a spin on it as possible,"
Voters are being asked to borrow a $185 million pension obligation bond to pay off the town's unfunded pension liability, caused by decades of paying too little into the pension system.
Currently, anyone working more than 20 hours a week who is a permanent employee is eligible for a town pension. A proposed change by Thomas Hartwell the Select Board's appointee to the Retirement Board, would bar any future part-time employees who work 32.5 or fewer hours from receiving a pension. Hartwell also wants to end pension buybacks that currently allow employees to purchase a period of prior service where they worked part-time to increase their pension overall.
The proposed retirement changes would not have much impact on how much the town has to borrow currently, said Jimmy Cuticchia, chair of the Retirement Board. However, the Finance Committee voted unanimously at a March meeting to endorse Hartwell's proposal.
The town is asking voters to borrow money to fully fund the pension obligation through 2040, otherwise steep payments to the fund will be required from the town in coming years, officials warn.
“If you do nothing what are you telling the people out there? We need to make an effort on our part to slow down the growth of pension obligations on our part and we only have two tools to do so," Hartwell said, explaining his proposal to reduce the number of employees eligible for a pension and to impose limitations on buybacks.
“This won’t be a huge impact initially, but it will help eventually," he said.
The largest cost associated with town employee pensions is the "other post-employee benefits," known as OPEB, which mostly covers healthcare. Current and retired part-time employees can have a portion of those benefits paid for because of their pension, Hartwell said.
Hartwell said the town could save an estimated $20 million in the years to come if his proposed changes take effect.
Former Andover Schools Superintendent Sheldon Berman warned the Finance Committee that changes to pension eligibility could impact the district's ability to recruit employees. Teachers have a different retirement system run by the state, and would not be impacted by the proposed changes at the town level. However, the majority of school staff are considered part-time employees because they are only employed for the 180-day school year.
Hartwell said the board could minimize impacts to school staff by having a 32.5 hour a week requirement for 10 months of the year, which is about how long the school year is.
The School Committee has not heard Hartwell's proposal and has not made any comments on it.
The 5-person Retirement Board oversees the town's retirement system. Those board members are the only people to vote on the proposed changes to the pension system, however, others are weighing in before the public hearing set for April 29 at 4 p.m.