“Last year, we had legislation introduced that would require the state and allow communities to establish a trust, whose funds would address these unfunded liabilities, thereby satisfying the requirements of Statement 45,” comments Legislative Chairman Bill Hill. “For this session, Public Service Chairman Kaufman has reintroduced that legislation for us in two parts. One, for the state (H2605), is pending in his committee, and the other, a local option (H1140), is before the Joint Health Care Finance Committee, which has held a hearing on it.

“Recently, both of these committees sponsored a forum at which a number of speakers from the public and private sectors discussed options for satisfying GASB’s requirements.

“Also, Governor Patrick has recognized GASB and its ramifications and included a number of proposals, relating to this issue, in his version of the State Fiscal’08 Budget.” Briefly, the governor proposes the creation of a State Retirees Benefits Trust Fund, whose funds would be managed by the PRIM (Pension Reserves Investment Management) Board and used to meet the unfunded liabilities associated with retiree healthcare costs..

Beginning this July, $380.52 million would be deposited into the Trust Fund. There would also be a phase-in deposit of 90% of the funds received by the state under its settlement with the tobacco industry.

In addition, his budget calls for a special study commission on the state’s liability for paying retiree healthcare and other non-pension benefits. This commission would report its findings and recommendations, including any proposed legislation, no later than December 1, 2007.

“It’s noteworthy that the governor’s budget incorporates several important provisions from our legislation,” comments Hill. “That includes PRIM’s management of the fund, the use of tobacco settlement money and allowing for voluntary local participation with the state GASB fund.”