Pensions and Retiree Health Care

Check out the Op Ed by Arnold Schwarzenegger in the Wall Street Journal on August 27, 2010. (The link is to your right under “Interesting Articles.”)


Gov. Schwarzenegger writes, “State employees are hard-working and valuable contributors to our society. But here's the plain truth: California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.”

Ditto for the City of Newton.

Like the state of California, employee salaries and benefits comprise nearly 80% of all municipal costs. (77% to be precise.)

Costs for the City of Newton are growing at a faster rate than our revenues. Opportunities to increase our revenues are modest at best. We certainly need to implement cost efficiencies. But, the bottom line is that the City of Newton provides a broad array of necessary public services accomplished primarily through the employment of staff. We will need to control the rise in salaries (forecasted to grow at approximately 4% to 4.5% annually) and benefits (projected to grow at 7% annually).

We will need to reexamine each part of the compensation we offer from salaries to health care benefits to pensions.

The benefits portion of this review will be especially important because Newton may not be able to bear the same level of benefits in the future that it has committed to in the past.