Vote Yes On Budget To Reduce Gap In Police Pension Funding

Charlestown’s police are our first responders. Yet the funded status of the police pension is only 67.6% of what we owe while the funded status of the general employees pensions is 96%. This budget would transfer $1million from the unassigned fund (surplus) to increase the funded status of our police pension plan to 74%. These funds would be deposited into the state pension trust fund account dedicated to Charlestown police. By law, these funds cannot be used for any other purpose.

If the funds are left in Charlestown’s surplus account they earn very low interest that is well below the inflation rate. Money put into the police pension system will earn significantly more long term than holding it in the surplus account. The pension fund outperformed 95% of U.S. pension plans during the COVID-19 market crisis; it uses a conservative asset allocation policy to significantly improve the performance of the portfolio while reducing risk.

The opponents of the budget call this “sending an additional $1 million to the state.” The money goes to our police when they retire. The State Investment Commission manages the money, but the money belongs to the police.

These funds represent a debt, no matter where they are stored. They are not an asset. At some point they have to be paid to the pension fund to ensure money is available for our first responders when they retire.

Keeping the money in surplus will not lower your taxes, but a pension payment now will lower taxes. It will save taxpayers money next year and every year after.

If the budget fails, the money we have available now to pay the police pension fund will stay, mingled together with other funds, in the surplus account where it eventually could be put to a different purpose. That would cause the amount taxpayers owe to the police pension fund to continue to increase and lead to increased taxes in the future.

During past economic downturns, communities across the country have delayed paying pension funds to balance operating budgets, resulting in long-term fiscal problems. Charlestown doesn’t need this money to balance the budget – these are surplus funds – there is no good reason not to pay some of the debt on the police pension and plenty of bad reasons to allow the pension to remain underfunded.

Please vote “Yes” on the Charlestown budget. If you believe the postal service will not deliver your mail ballot by June 1, then you should drop it in the white box next to the main entrance to the Town Hall.