Judge increases Bulger's pension

Former University of Massachusetts president William Bulger won a significant victory in his battle to boost his pension yesterday when a Superior Court judge ruled that the state must include in its calculations items it had discounted as perks.

The ruling increases Bulger's annual pension by about $29,000, to an estimated $208,000, according to state officials, by forcing the state to include in its calculations a housing allowance and a portion of an annuity he received as UMass president.

Bulger's lawyer, Thomas Kiley, hailed the decision saying that his client ''has served in positions of great importance to the citizens of the Commonwealth."

''He was compensated fairly, but on the low end for his service," Kiley said. The decision ''fairly allocates the pension earned during those years of distinguished service."

Attorney General Thomas F. Reilly said in a statement that he planned to appeal the ruling by Judge Ernest B. Murphy. A spokesman for Reilly said the decision would be challenged before the Appeals Court.

Bulger left his post as president of UMass in September 2003 amid controversy over the federal probe of his fugitive brother, James ''Whitey" Bulger.

At the time, William Bulger, the former state Senate president, came under fire on two fronts: for a severance package of $960,000 that Governor Mitt Romney labeled excessive and for seeking to boost his pension by factoring into his base salary a nearly $30,000 housing allowance and a $19,000 annuity. The state argued against including those items, calling them perks.

In his ruling, Murphy wrote that the housing allowance and a portion of the annuity represented ''regular compensation," which should have been counted when the state calculated Bulger's retirement benefit.

''My office just received today's decision regarding William Bulger's pension," Reilly said in the statement. ''Needless to say, I don't believe he is entitled to anything he requested. Enough is enough. Pensions should be based on pay, not perks. This sets a precedent that could be very expensive for this state, and we're prepared to appeal this decision."

State Treasurer Timothy Cahill, who oversees the state board of retirement, declined to comment, saying his office was still reviewing the decision.

Cahill had criticized Bulger's efforts to boost his pension. In February, Cahill wrote an opinion piece, published in the Globe, in which he warned that including the housing allowance and annuity in Bulger's pension would allow state and local employees to incorporate all noncash allowances to increase their pension calculations. Expanding the base for Bulger's pension, Cahill wrote, ''threatens the entire pension system."

In his decision yesterday, Murphy wrote that ''there was no evidence in the administrative record that such a draconian result would flow in the wake of a decision favoring President Bulger on the issues presented."

Bulger resigned from public service in August 2003, having served for seven years as university president and 35 years in the Legislature. Bulger's salary was $309,000 for his final two years, and $280,000 for the bulk of the previous year.

State pension payouts are figured by taking the average of a worker's top three consecutive earning years and then applying a formula based on age and years of service to figure an annual pension amount.

In September 2003, the State Retirement Board rejected Bulger's argument that his base salary should include his housing allowance and annuity. Bulger successfully appealed the decision to the Division of Administrative Law Appeals. The retirement board, overseen by Cahill, appealed that decision.

In February, the Contributory Retirement Appeal Board ruled against Bulger. That decision would have fixed Bulger's annual pension at $179,000. The added payments that Bulger requested would have put his pension at $208,356 a year.

Murphy's decision, while split, overwhelmingly favors Bulger. Murphy held that the housing allowance should be wholly counted as part of Bulger's salary.

Murphy ruled that the portion of annuity that had been paid by the university into a 401(a) fund from January 1996 to January 2001 should not be included in calculating Bulger's pension, because the payment was contingent on Bulger's continuing to be employed by the university. Those payments should be considered a bonus and were not regular compensation, Murphy wrote.

In contrast, the other funds paid to Bulger, from Jan. 5, 2001, until Aug. 31, 2003, were ''held in Bulger's name outright and not subject to forfeiture by virtue of any termination of employment by Bulger" and could be considered compensation, Murphy wrote.