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PENSION REFORM PHASE II

Legislature Awaits Commission Report

SEPTEMBER 2009: With a September 1 report deadline, the Special Pension Study Commission has been working vigorously throughout the summer preparing its report and recommendations for legislation to the House and Senate.

This much-awaited report will actually be Phase II of pension reform, a top priority of the Governor and Legislature. Phase I was earlier addressed by the Legislature in June, when it repealed three highly publicized pension perks available to elected officials, among other steps.

LOCAL INSURANCE PLANS THREATENED BY FEDERAL HEALTH CARE TAX PROPOSAL

SEPTEMBER 22, 2009:
Senator Max Baucus, chairman of the powerful Senate Finance Committee, has submitted a
health care reform package to his Committee, which will debate the issue in the
coming week.

A key measure in the Baucus's proposal would place a 35% tax
on so-called Cadillac" insurance plans. The proposal, which is backed in
concept by President Obama, seems simple enough on the surface.

SENIOR DRIVING RESTRICTIONS PENDING

Examinations Start at 75

SEPTEMBER 16, 2009: The Legislature's Joint Committee on Transportation has favorably released H3287, which would bring about new drivers license requirements for those age 75 and older.

Chaired by Representative Joseph Wagner (D-Chicopee) and Senator Steven Baddour (D-Methuen), the Transportation Committee redrafted the bill (H3287), which follows a proposal originally filed by Senator Brian Joyce (D-Milton) that would have required driver retesting at age 85, lowers the threshold to age 75.

LEGISLATIVE UPDATE

Recession Stalls Activity - Focus on Defending Benefits

NOVEMBER 2009: Plummeting tax revenues, at both the state and local levels, make for a difficult 2009-2010 Legislation Session.

Despite raising over $900 million in new taxes, the Commonwealth is still facing a multi-billion dollar deficit and has had to make significant cuts in the new budget. The result is not simply a reduction in state-run programs, but also a 20% cut to local aid.

CAR INSURANCE BENEFIT THREATENED

Over 65 Discount Eyed

SEPTEMBER 2009: Back in 1978, our Association was the lead sponsor of legislation that resulted in the passage of Chapter 511 of the Acts of ’78.

This law provided that motor vehicle insurance rates for a vehicle insured by a resident sixty-five years of age or older was to be twenty-five percent lower than the applicable rate of such classification.

ASSOCIATION REGRETS LOSS OF BILL HILL

Was Legislative Chairman

We regret to announce the death of Association Legislative Chairman Bill Hill, who passed away at his home on August 24. His funeral took place on August 27. His death was due to a severe pulmonary condition, which he had battled over the pastyear.

EXPRESS SCRIPTS LETTERS CONCERN SOME

Involves State GIC Plan

AUGUST 11, 2009: A number of members, who are insured under the state insurance plan, are concerned by a letter they received from Express Scripts, the Commonwealth's Group Insurance Commission's prescription drug provider.

The letter, which was sent to 42,000 Express Scripts subscribers, requires that these members must notify Express Scripts if they want to continue to receive their maintenance prescriptions (drugs taken regularly to treat an ongoing condition) through a local pharmacy rather than through "Home Delivery", the Express Scripts mail order pharmacy program.

CONFUSION SURROUNDS FEDERAL HEALTH REFORM

Members Seek Answers On Local Impact

AUGUST 1, 2009: As President Barack Obama attempts to advance his healthcare reform initiative, Association members are left wondering how they may be impacted by a national insurance plan. The rhetoric and confusion being generated in Washington as to details of the various reform proposals has led to fear and anxiety amongst public retirees over the future of their own health insurance plans.

While the Association has not taken a position on the President's proposal, we have been closely monitoring developments and studying the mountains of information coming out of Washington. As it now stands, the state-run Group Insurance Commission plans and local insurance plans (Blue Cross, Harvard Pilgrim, Tufts, etc) are not directly impacted by the federal reform proposals.

STATE CONTRIBUTION RATE TO CHANGE FOR NEW RETIREES

Must Apply By October 1 Deadline To Lock-In 85/15 

JULY 31, 2009: State employees, who have not yet retired, should pay close attention to a proposal, contained in the outside sections of H4181 (supplemental budget), that dramatically increases the health insurance contributions paid by future retirees. H4181 was enacted and sent to the governor on Wednesday.

The proposal, which was devised by Governor Patrick, creates what the legislation calls a “Healthcare Contribution Plan”, whereby active state employees can lock in the current 15% state retiree health insurance contribution. The catch – employees must announce their intention to retire by October 1, 2009 and then retire no later than January 31, 2010. Otherwise, the retiree insurance rate will jump to 20% for those active employees who do not take part in the plan (opting in by October 1) and retire by the end of January.

LOCAL HEALTH INSURANCE REFORMS PENDING

Retirees To Have Seat At Table

JULY 2009: Following on the coattails of a groundbreaking legislative report that aims to control municipal healthcare costs through sweeping changes in the local insurance law (Chapter 32B), the state Senate has passed a provision, within its version of the FY'10 state budget, that significantly alters the governance of local insurance plans.

In short, the proposal would force municipalities to bring their health insurance costs in line with those of the state, which are generally considered to be lower in many cases.

LEGISLATURE EXAMINES DISABILITY RETIREMENT CHANGES

JULY 24, 2009: The Legislature’s Joint Committee on Pubic Service is set to examine proposed changes to the state’s disability retirement law - changes that could have a deep impact on some Association members.

The Association has filed four separate bills dealing with various aspects of disability retirement. Three of the four bills will receive a public hearing before the Public Service Committee on Monday, July.

S1164: Earned Income

Disability retirees are allowed to work in order to supplement their pension and are restricted in the amount they earn. This bill clearly defines earned income and creates an indexing feature that adjusts the permissible amount of a retiree’s earnings for inflation.

H2352: Conversion of Disability Pension

Under this bill, a disability retiree could opt to convert their disability pension over to a reduced superannuation (regular) retirement allowance. Once a retiree converts, they would not be subject to  the restrictions under Section 91A (see S1164 above). However, non disability pensions are subject to federal taxation.

S1222: Increase Maximum COLA Base

Raises COLA base to $16,000 for state and teacher retirees, with a local option provision for members of local retirement systems. Costs associated with a new base would be absorbed by extending the state and local pension funding schedules.

2009-2010 Association Legislative Package

The following bills have been filed by the Association for the 2009-2010 Massachusetts Legislative Session.

LOCAL HEALTH INSURANCE REFORMS PENDING

Retirees To Have Seat At Table

JULY 2009: Following on the coattails of a groundbreaking legislative report that aims to control municipal healthcare costs through sweeping changes in the local insurance law (Chapter 32B), the  state Senate has passed a provision, within its version of the FY'10 state budget, that significantly alters the governance of local insurance plans.

STATE/TEACHER COLA APPROVED

Local Adoption Almost Complete

JULY 2009: In a desperate rush to put together a FY'10 state budget in the face of a $2 billion revenue shortfall, triggering language for the state and teacher retirees 3% July COLA, was omitted from the Senate budget when that branch began budget debate on May 18.

RESPONSE TO AGE 85 ROAD TEST VARIES

JULY 2009: A June 18 email to members asking for opinions on Senate Bill 1929, filed by Senator Brian Joyce (D-Milton), which would require members 85 and over, to take a road test prior to being reissued a new license, has resulted in varied opinions.

As of July 6th, there were 118 replies from members age 85 or over. Twenty-one have already given up their license because of personal reasons, either physical or neurological. Of the remainder, 48 said they were in favor of a road test and felt they could pass such a test, 31 said they opposed such a test unless drivers of all ages were also tested, and 14 gave mixed answers, depending on driving records or cognitive tests.

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%.

LEGISLATURE PASSES PENSION REFORM LAW

Current Retirees Not Effected By Benefit Changes

JUNE 11, 2009: The Massachusetts Legislature has passed sweeping pension reform legislation that will not only impact the pension benefits of future public employees, but could also alter the benefits of current active employees as well.
However, the debate surrounding pension reform and the legislation passed today does not impact the pension benefits now being received by current retirees. Changes could impact those retiring after June 30, 2009.

ATTENTION ASSOCIATION MEMBERS

MAY 2008: Association members recently received a postcard announcing new Internet-based services being provided by the Association. These Members Only services are designed to enhance the Association's ability to keep you informed. If you have not done so already, please email us at the address provided on the postcard to have your name added to our email contact list. You can also contact us directly at the numbers listed on your membership card.

In the coming months, we will announce new online communication features, including a redesigned Association website. These are critical times for public retirees. We will continue to do our best to keep you informed on the lastest developments impacting your public retirement.

2009 COLA SECURED

MAY 25, 2009: With the passage of a 3% COLA increase by the state Senate last week, state and teacher retirees are all but assured of a July 2009 increase in their monthly pension. COLAs for local retirees are the jurisdiction of local retirement systems, 95% of which have now approved the full 3% COLA that will take effect in July. The COLA is based on the first $12,000 of one's pension, for a maximum increase of $360 annually.

Now that the Senate has completed its work on the FY2010 Budget, the Legislature wil begin its conference process, whereby a final compromise budget will be approved by the House and Senate. It is expected that the budget will be sent to Governor Patrick by the end of June, on time for the start of the FY10 Fiscal Year on July 1.

SENATE BUDGET DEBATE UNDERWAY

COLA & Health Insurance Key Items

MAY 19, 2009: The Massachusetts Senate is in the midst of debating the Fiscal Year 2010 budget. Paramount amongst the various issues being debating is how the state will grapple with the severe loss in tax revenue that is the result of the economic recession. Budget officials now project a FY10 deficit that could exceed $5 billion.

While the federal stimulus and state’s reserve account have helped to close the budget gap, the worsening economy continues to cut deep into the Commonwealth’s tax revenues. The Senate is now considering a 1.25% increase in the state sales tax, along with the creation of local option taxes (hotel, meals, etc) designed to help close the budget gap. However, severe spending cuts are expected to remain in effect, even if taxes are raised.

LEADERSHIP CHANGES IN KEY COMMITTEES

Spellane and McGee To Chair Public Service

MAY 2009 VOICE: Leadership changes in the House and Senate have instituted two new chairmen and vice chairmen for the important Joint Committee on Public Service.

New House Speaker Robert DeLeo has appointed Robert Spellane (D-Worcester) to chair the Committee. Michael Rodrigues (D-Westport) will serve as the House vice chairman. The 39 year old Spellane and 50 year old Rodrigues are part of a new generation of leadership in the House.

SOCIAL SECURITY OFFSETS ON TABLE

Overhaul On Horizon In 2010

MAY 2009 VOICE: In the midst of the worse economic conditions since the Great Depression, plans are underway in Washington, D.C. to act on Social Security reform early in 2010.

Despite having received overwhelming support in the past two Congresses for a full repeal of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), it has become evident that any change in Social Security would take place as part of a larger “reform” of the system.