Public Meeting Notice  Stabilization Fund & Long-Term Liability Financing Task Force - 12/5/25 Meeting Agenda

Meeting ID: 947 3202 4637 
Passcode: 270560

Date: December 5, 2025
Location: Virtual (recorded, open meeting)
Convened by: Administration & Finance (ANF)

Attendees

• Chris Marino (ANF) – Assistant Secretary for Budget
• Laura Taronas (ANF) – Finance Director
• June Matte
• Thomas Smith-Vaughan (Office of the Comptroller)
• Tim Rooney (Department of Revenue)
• Sue Perez (Office of the Treasurer)
• Henry Dormitzer (joined later)
• Pew Charitable Trusts:
  • Greg Mennis
  • Peter Mueller

Opening and Procedural Items

• Meeting called to order with a reminder that the session was recorded in compliance with Open Meeting Law and would be posted publicly.
• Roll call confirmed a quorum.
• Agenda overview provided, including recap of prior meetings, discussion of disaster relief and resiliency liabilities, credit rating considerations, and initial framing of task force recommendations.

Recap of Prior Meeting (November 17)

Stabilization Fund

• Consensus that regular budget stress testing should guide decisions on fund size and use.
• Emphasis on viewing the Stabilization Fund as a bridge during downturns, paired with a broader fiscal toolkit rather than a standalone solution.
• Importance of understanding how long it takes to rebuild reserves after drawdowns.

Pensions

• Current pension funding approach viewed as successful and well-positioned entering the next actuarial schedule.
• Stress testing recommended to better understand long-term pension liabilities.
• Discussion of layered amortization as a potential enhancement to future pension funding policy.

Disaster Relief and Resiliency as a Long-Term Liability

Context and Trends

• Massachusetts has experienced 45 billion-dollar disaster events since 1980.
• Frequency and cost of severe storms, flooding, and tropical cyclone impacts are increasing.
• Disaster-related fiscal exposure affects the state, municipalities, businesses, and residents.

Disaster Relief and Resiliency Fund

• Fund created in FY25 to reduce pressure on the Stabilization Fund and allow more nimble response to disasters.
• Originally proposed to receive a dedicated share of excess capital gains under Section 5G; final budget established the fund but without a permanent funding source.
• Approximately $14 million currently seeded.
• Administration is developing program guidelines and guardrails in coordination with MEMA and environmental agencies.

Policy Discussion

• Participants discussed whether excess capital gains remain an appropriate recurring funding source for disaster relief.
• Benefits noted:
  • Aligns volatile revenue with volatile liabilities.
  • Preserves Stabilization Fund integrity.
  • Allows quicker response than legislative appropriations.
• Concerns raised about:
  • Over-fragmentation of revenue sources.
  • Reduced future budget flexibility.
  • Competing demands on excess capital gains (stabilization, pensions, OPEB, disaster relief).

Key Themes

• Need to balance predictability with flexibility.
• Importance of committing to policies once adopted to maintain credibility.
• Value of periodic review rather than “set-it-and-forget-it” policy design.

Pew Charitable Trusts Presentation – Disaster Budgeting Best Practices

Fiscal Risk Management

• States should clearly define what disaster costs they will cover (state assets, local aid, individual assistance).
• Federal reimbursement delays create cash-flow challenges; reserves or revolving funds can help bridge gaps.
• Rough cost estimates—even imperfect—are better than none for planning purposes.
• Proactive funding mechanisms help avoid reactive budget pressure after disasters.

Mitigation and Resiliency

• Regular, predictable mitigation funding helps reduce long-term costs.
• Integrating resiliency into capital planning (“build back better”) is critical.
• Examples from other states:
  • Dedicated disaster funds with mitigation set-asides.
  • Insurance incentives tied to risk-reduction investments.
  • State support for local mitigation to reduce future disaster costs.

Massachusetts-Specific Data

• Average annual state match for federal disaster assistance estimated at ~$11 million.
• Worst disaster year (2011) reached ~$281 million (inflation-adjusted).
• Estimated 10% diversion of excess capital gains could generate $250–$500 million over time, a meaningful scale relative to historical needs.

Credit Rating Considerations

Historical Context

• Section 5G and reserve-building policies contributed to credit upgrades.
• Failure to adhere to adopted policies previously contributed to downgrades.
• Recent recommitment to statutory fiscal discipline supported restoration of higher ratings.

Rating Agency Perspectives

• Strong reserves viewed positively, but agencies expect:
  • Disciplined use of reserves.
  • Clear long-term financial planning.
  • Structural balance, not reliance on one-time solutions.
• Large pension and debt obligations remain a constraint on future upgrades.

Key Takeaway

• Policy credibility and consistent adherence matter as much as policy design.
• Stress testing and transparent review processes strengthen credit confidence.

Initial Framework for Task Force Recommendations

Areas Identified for Recommendation

• Appropriateness of the Section 5G capital gains threshold and potential rebasing.
• Allocation percentages among stabilization, pensions, OPEB, and other long-term liabilities.
• Long-term target size and use principles for the Stabilization Fund.
• Best practices for funding long-term liabilities, including disaster relief.

Process Discussion

• Members agreed to:
  • Circulate draft considerations for written feedback.
  • Allow time for reflection before finalizing recommendations.
  • Hold a future meeting focused exclusively on recommendation deliberation.
  • Conduct targeted one-on-one outreach prior to final report approval.

Next Steps

• Distribute feedback form to task force members.
• Continue analysis and refinement of recommendation options.
• Schedule upcoming meetings focused on consensus-building.
• Prepare draft report sections for legislative submission.

1. Roll Call
2. 11/17 Meeting Recap
3. Disaster Resiliency, Response and Relief
4. Credit Rating Considerations
5. Initial Recommendations
6. Upcoming Schedule/Process