The state owes about $50 billion to its two public pension funds, which pay out retirement benefits to state and public school employees.
But the debt would be larger if one little figure were adjusted: the rate of return.
It’s what the pension funds assume they’ll make on investments. The higher it is, the less the commonwealth must pay up front for retirement benefits.
The current rate is seven-and-a-half percent, and some economists say it would be more realistic if it were lowered.
But Jim McAneny, who directs the panel that analyzes any pension-related legislative proposals, says making the investment returns expectation more conservative might solve one problem, but it would worsen another.
"Well, you’d have an obligation to put in higher contributions, and we’re not putting in what we’re supposed to put in now," he said. "You’d have just a bigger shortfall. The reason why our debt is growing 10 million dollars a day is not because the assumptions are too high. It’s because the contributions are too low."
McAneny says dropping to a 7 percent rate of return would add about $2 billion to the pension debt.
A national group tracking public pensions says investment returns tended to exceed assumed rates except in the wake of the 2008 recession.