Two top priority legislative proposals, initiated by Mass Retirees, have been unanimously approved by the House of Representatives, led by Speaker Ron Mariano (D-Quincy) within the outside sections of the FY25 State Budget.
The Special Commission on the COLA, first proposed by Governor Maura Healey (at the request of Mass Retirees) within her budget proposal released in January, was included within the House Ways and Means budget proposal released in early April. Measures included within the respective Ways and Means proposals tend to have the support of legislative leaders.
“We are very grateful to House Ways and Means Chairman Aaron Michlewitz for including the COLA Commission within the House budget. This demonstrates the commitment of the House to improving the COLA for State and Teacher retirees in a meaningful way,” said Mass Retirees CEO Shawn Duhamel. “As we explained when we approached Governor Healey last year, the challenge we face is the high cost of improving the COLA. A new funding approach is needed and the only way to get there with something of this magnitude is through the collective work of a special commission.”
The state is responsible for setting and funding COLA benefits for some 68,000 retired State employees and 70,000 retired Teachers (with the exception retired City of Boston teachers, who are members of the Boston Retirement System). Under the current pension funding schedule, each $1,000 increase in the COLA base adds roughly $50 million to the pension appropriation and creates $500 million in new unfunded liabilities.
1ST LIFE INSURANCE INCREASE SINCE 1985
In addition to the COLA Commission, the House also unanimously approved a budget amendment increasing the State’s Basic Life Insurance Benefit to $10,000. The benefit, which is automatically provided to all active and retired State employees, was last increased in 1985. For the past 39 years, the benefit has remained at $5,000 – an inadequate amount when attempting to cover funeral and burial costs in 2024.
While active employees have access to inexpensive optional life insurance benefits, in addition to the Basic Life coverage, the cost of the optional life plan becomes exceedingly expensive as a retiree ages. After age 75, optional life insurance (essentially a term policy) becomes too costly for most retirees to continue the coverage.
The amendment to the House budget was filed by Representative John Lawn (D-Watertown), who is also the lead sponsor of the Mass Retirees backed bill to increase the benefit. Lawn’s amendment gained immediate bipartisan support, with House Republican Leader Brad Jones (North Reading) and Mathew Muratore (R-Plymouth) among the first to sign on as cosponsors.
It should be noted that life insurance benefits for municipal retirees, including teachers, are set by local governments – not the state. This also applies to those local retirees and employees insured under the state’s Group Insurance Commission. State law allows cities and towns to each set their own basic life insurance benefits, with no limits.
“Our belief is that if we are successful increasing the Basic Life benefit at the state level, it will serve as a catalyst for municipal governments to improve local life insurance benefits,” added President Frank Valeri.
CONFERENCE COMMITTEE UNDERWAY
While the State Senate chose not to include either the COLA Commission or the Basic Life Insurance increase within its version of the FY25 budget passed in late May, Senators did approve an amendment creating a special Task Force on post retirement public sector work by public retirees.
Like the COLA Commission, Mass Retirees is named as a sitting member of the Task Force.
Filed by Senate Republican Leader Bruce Tarr (R-Gloucester), the amendment appears to stem from the recent report by MA Inspector General Jeffrey Shapiro, which calls for increased controls and oversight of rules governing the post retirement public sector work of retirees. For more, see legislative update below.
“Members should not read too much into the fact that the Senate budget does not include the COLA Commission or Basic Life increase. It is a normal part of the legislative process for proposals to be included in one chamber’s version of the budget, but not the other. That is simply part of the give and take,” explains Duhamel. “We are optimistic that the Senate conferees, led by Ways and Means Chairman Michael Rodrigues (D-Westport), understand the importance of a COLA Commission. We also hope, that after 39 years, the Senate will agree that it is time for the Basic Life Insurance benefit to be increased.”
With the formal legislative session ending on July 31, Beacon Hill observers anticipate a budget deal being reached in early July. Once final approval is reached between the House and Senate, the budget will be sent to Governor Healey, who then has 10 days to act.