House Budget Includes 3% COLA

No Change to Retiree Health Insurance

APRIL 15, 2009: The House Committee on Ways and Means has filed a Fiscal Year 2010 budget proposal that contains a full 3% cost-of-living adjustment for retired state employees and teachers. Support for the COLA, which is scheduled to be paid in July, comes despite a looming $4 billion deficit for FY10.

House budget writers, led by Chairman Charles Murphy (D-Burlington), have proposed an increase in the health insurance contributions paid by active stare employees. Under the House proposal, active state workers would contribute 30% toward their insurance premiums. However, state retirees are held harmless, as our any municipal retirees/employees entering the GIC through coalition bargaining.

Insurance contributions for state retirees are maintained at 90/10 (retired prior to July 1, 1994) or 85/15 (retired on or after July 1, 1994). The monthly insurance premiums vary per plan offered by the state’s Group Insurance Commission (GIC). Most active state employees are currently at an 85/15 split, but employees hired after July 1, 2005 contribute 20%.

In order to grapple with the deficit, House leaders propose over $1.8 billion in cuts to state programs and services. Fortunately, the state can access approximately $1.06 billion in federal Medicaid Assistance funds, which are part of the $787 billion American Recovery and Reinvestment Act. Massachusetts expects to receive between $6-$8 billion in federal stimulus funds over the next two years.

The budget proposal also makes significant cuts in local aid. While school aid under Chapter 70 remains largely untouched, overall local aid will be reduced by 25%. In addition, the House budget appears to reduce funding for the so-called “Quinn Bill”, which provides an educational incentive to police officers.

“The House Leadership warned that this would be a barebones budget and they weren’t kidding. Thankfully the COLA and state retiree health insurance benefits are fully funded,” said Association Legislative Liaison Shawn Duhamel. “We are very concerned about the drastic cut in local aid. What impact that may have on local insurance coverage remains to be seen.”