The reason for our optimism is that a key Legislative panel for the first time recognized that a change in the current funding schedules of our retirement systems would be the practical way to raise the base from the current $12,000 base to $16,000.

The joint panel, the Committee on Public Service, not only endorsed a $16,000 base, but also included language in the measure that would extend the state and teachers retirement systems’ deadline for achieving a fully funded status from 2023 to 2026. The local retirement systems would also have the same option to extend their funding deadline on behalf of a $16,000 base.

In addition, House Ways and Means Committee Chairman Robert DeLeo (D-Winthrop) and members of the Committee have indicated their support for a higher base. We also feel we have the support of their counterparts in the Senate Ways and Means Committee chaired by Senator Therese Murray (D-Plymouth).

The price tag, to go to a $16,000 base, would be $100 million in the first year alone for the state and teachers’ systems under our current funding schedule, which has always been our greatest obstacle. PERAC, the Public Employee Retirement Administration Commission, has always taken the conservative approach that all accrued liabilities be paid in advance (stay with the current funding schedule).

“Even many conservatives in the Legislature have agreed that it would be fiscally prudent to extend the funding schedule,” said Association President Ralph White. “We don’t know about the governor’s office though. That’s something we would have to tackle when the time comes. I’m looking forward to having that opportunity.”

Work Continues

Even though formal sessions have now ended, activity will continue on Beacon Hill until the first Wednesday in January, when the new 2007-2008 Session begins.

Under the state constitution, both the House and Senate will continue to meet twice weekly. Non-controversial legislation will continue to be acted upon, as long as a roll call vote is not required. Technically, legislative leaders, as well as the governor, can call the General Court back into formal session to address an issue of emergency.

“Our plan is to keep lobbying and pushing for our bills to move forward. Most of our issues are non-controversial and can be enacted during the informal session,” explained Association Legislative Liaison Shawn Duhamel. “Beyond raising the COLA base, there is the minimum pension, survivor benefit increase, healthcare trust fund, amongst other issues.

“The biggest challenge we face is now that formal sessions have ended, the governor’s veto is left unchecked. If he were to veto a bill now, there is no opportunity for an override vote, which must be done by a roll call.”

Association officials are also assembling the legislative package of bills for the coming session. Bills that have not passed will be refiled for the next session.

“Year after year, we face the challenges of the legislative process and must contend with many competing interests,” commented White. “While I would put our record of achievement up against anyone’s, I’m not content with the status quo and will continue to fight for benefits every step of the way.”

At  press time, Association General Counsel Bill Rehrey continues to assess the feasibility of  seeking relief for Option C retirees in the courts. Those members, who are impacted by the change in mortality tables, can learn the latest developments on this issue by monitoring the Association’s website and hotline.

GASB Update

Our healthcare liability funding bill (H4655) has been divided in half by the Joint Healthcare Financing Committee. While the portion, that allows municipalities to establish a retiree healthcare funding schedule, has been reported out favorably (H4887) and is currently before House Ways and Means, the second half, which requires the state to do the same, is still being reviewed by the Healthcare Committee.

As a quick reminder as to the need for this legislation, the Governmental Accounting Standards Board (GASB) establishes accounting standards that states and municipalities adhere to in their financial reports. Recently it issued a new set of standards (Statement 45) which requires that beginning July ’07, states and municipalities must report the future cost of retiree healthcare benefits. While not mandated, Mass  officials will be compelled to show in their financial reports how they plan to pay these costs according to a schedule that spans several years (i.e., 30 years).

In addition to establishing retiree healthcare funding schedules, the healthcare liability fund bills (H4655 and H4887) provides for annual appropriations to a healthcare fund, which, at the state level, would be managed by the PRIM (Pension Reserves Investment Management) Board and may locally be managed by the respective retirement board, PRIM or town officials. Also, any funds, which may be received from the federal government under the Retiree Drug Subsidy (Medicare Part D), would at the state level, and may locally, be deposited into the healthcare fund.