LEGISLATURE PASSES 3% COLA INCREASE

Retiree GIC Contribution Rates Unchanged

June 20, 2009: On Friday, the Legislature approved the $27.4 billion Fiscal Year 2010 state budget, which is set to take effect on July 1. Despite the severe recession, that has resulted in deep budget cuts, the budget contains the full 3% COLA for state and teacher retirees. Nearly all local retirement systems have now approved the COLA for local retirees, which will also be paid in July.

While the Legislature opted to increase the insurance contribution rates for active state workers insured under the state's Group Insurance Commission (GIC), rates for retired state workers remain fixed at 90/10 (pre-7/1/94 retirees) or 85/15. Active state workers will now contribute 20% if they were hired prior to 7/1/03. Those hired after that date will contribute 25%.

"Thankfully the landmark 1997 COLA reform law built the annual COLA into the pension funding schedules, which means no direct budget appropriation is needed. Otherwise, a 2010 COLA would have been in serious doubt," explained Association President Ralph White. "If you look back to the recession in the early to mid-90's, you'll see that only three COLAs were paid over a nice year period.

"We are also fortunate that the Legislature continues to maintain the commitment to state retirees, who are insured under the GIC.  Many retirees are living on very limited incomes and to raise contribution rates on them would create a real hardship. Besides, the GIC already increased out-of-pocket costs on retirees this year."

It should also be noted that changes made to the so-called Quinn Bill police education incentive do not impact retired police officers. Retirement benefits, earned through contributions made under the Quinn Bill, cannot be altered.

Transportation Reform

Last week, the Legislature also passed a sweeping reform of the state's massive transportation system, combining the various agencies responsible for its operation. While the details affecting the ongoing operation of transportation system have been widely reported, the specifics that impact public retirees have gone unreported by the press.

As members know, the new law will dissolve the MA Turnpike Authority. The Authority's retirees and active employees will be transferred to the State Retirement System on January 1, 2010. Since retirement benefits are uniform across Massachusetts, Turnpike retirees will not see any change in their pension payments. The only difference will be monthly payments will then be issued by the State Retirement Board, with the checks carrying the signature of state Treasurer Tim Cahill.

However, Turnpike retirees will unfortunately experience some changes with their health insurance benefits, which will now be provided by the state's Group Insurance Commission (GIC) . Like pension benefits, the transition to the GIC will take place on January 1, 2010.
As of that date, Turnpike retirees and employees will be enrolled within the same insurance plans offered to state retirees and employees. Unfortunately, Blue Cross Blue Shield is not a state insurance provider. However, the GIC offers some eight different health plans, most of which are universally accepted across Massachusetts.

Members, who are retired from the Turnpike Authority, can expect further details on the transfer to the state systems in the coming months. If you have immediate questions or concerns, please contact the Association directly.

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