Representative Jay Kaufman (D-Lexington) and Senator Patricia Jehlen (D-Somerville), who co-chair the Joint Committee on Public Service, have advanced a bill that creates a statewide mechanism for pre-funding retiree health insurance.

The legislation, H361, establishes a first of its kind state trust fund to set aside and invest monies to pre-fund the future costs of retiree health insurance. Additionally, the bill allows local governments to do the same and create their own trust funds.

At the local level, the trusts could be managed by the respective retirement systems and invested alongside the pension funds. The state's own healthcare trust would be managed by the Pension Reserves Investment Management (PRIM) Board, chaired by Treasurer Timothy Cahill.

H361 also requires that any federal subsidies, received by the state or municipalities under the Medicare Part D program, be deposited into the trust fund. As our members know, we have been long-advocating the position that these subsidies must be earmarked for retiree healthcare and no other purpose.

Included in the proposal for the creation of the state healthcare trust is a provision for the allocation of funds to it from the tobacco settlement trust (Chapter 29D).

"We must applaud the Public Service Committee for their leadership on this issue. GASB has created an important national issue that must be immediately addressed," said Association President Ralph White. "This bill not only recognizes GASB, but more importantly sets up a system to deal with the new requirements.

"By setting money aside, we are protecting the retiree health benefits well into the future."