Budget Accord Reached

Healthcare Contribution Moratorium Approved

JUNE 30, 2014: House and Senate budget negotiators reached an agreement on the Commonwealth’s $36.4 billion fiscal 2015 budget over the weekend. The measure will be approved by both the House and Senate, and then sent to Governor Patrick later today.

Patrick has ten days in which to review the document (H4242) before signing and/or vetoing sections with which he disagrees. Vetoed items must be overridden by a 2/3rds vote of both the House and Senate before the General Court ends its formal business on Wednesday, July 30th.

Approved within H4242 is section 77, which provides a two-year extension of the moratorium on health insurance premium contribution percentage increases. Qualifying communities must have adopted the provisions of Chapter 69, Acts of 2011. Chapter 69 allows for municipal health insurance plan design changes, as well as creates a process by which local entities can join the state’s GIC.

By implementing Chapter 69, communities must create and utilize a Public Employee Committee (PEC) that serves as the health insurance negotiating body for retirees and active employees. Our Association legally appoints the retiree representative to the PEC.

The two-year extension of the moratorium protects retirees in these communities from further increasing in premium contribution percentages through July 1, 2016. Meanwhile, existing health insurance reform measures will have time to take effect. In addition, the legislature could be considering further reforms to retiree healthcare benefits during the 2015-2016 session.

The FY15 budget also includes a full 3% COLA for state and teacher retirees on a $13,000 base. The COLA takes effect for eligible retirees and survivors on July 1, and will be paid in the July pension check.

Legislative leaders opted not to include a House approved amendment that would have expanded the Pension Reserves Investment Management (PRIM) Board to allow for local pension system representation. PRIM currently invests some $13 billion in local pension assets within its nearly $60 billion trust fund.