Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
The Honorable Kenneth I. Gordon, House Chair
The Honorable Michael D. Brady, Senate Chair
Joint Committee on Public Service
State House, Boston
Delivered electronically
Dear Chair Gordon, Chair Brady, and Distinguished Members of the Committee,
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association appreciates the opportunity to submit the following comments on bills before your Committee. We have serious concerns regarding a number of bills that would either credit employees for service or impact the cost-of-living-adjustments or retiree health care. We respectfully ask the Committee to consider local government’s position and concerns regarding legislation that would increase the unfunded liability for public employee pensions.
Creditable Service for Retirement
The MMA opposes several bills that would credit employees for service or include new members under the governing statute for public employment retirement, Massachusetts General Laws Chapter 32: H. 2459, H. 2490, H. 2511, H. 2577, H. 2587, H. 2612, H. 2619, H. 2623, H. 2639, H. 3649, S. 1616, S. 1626, S. 1628, S. 1697, S. 1724, S. 1725, S. 1745, and S. 1751.
Municipalities are already struggling to fund their existing multi-billion-dollar unfunded pension liabilities, and local officials and taxpayers face an equally staggering unfunded obligation for other post-employment benefits (OPEB), most of which is retiree health insurance costs. Communities are doing their best to fund their pension schedules, and are still in the early stages of addressing significant unfunded OPEB liabilities. Despite the many laudable intentions of many of these bills, all of these proposals would clearly add to the heavy burden that local taxpayers are bearing.
Awarding public employees more creditable service would certainly increase pension costs. In addition, proposals to enhance pension eligibility would increase municipal OPEB liabilities, because crediting employees with additional years of service time would increase the number who reach the 10-year mark to vest in the pension system, thus increasing the number who qualify for lifetime retiree health insurance benefits. Therefore, these bills would not only increase the costs of pensions, but also escalate the costs associated with retiree health insurance coverage. This will ultimately be borne by local taxpayers, adding to their tax burden and squeezing out funding that otherwise would go to key municipal services. We respectfully ask you to oppose these bills and not report them out of Committee.
Cost of Living Adjustments
The MMA opposes several bills that would require significant increases in the cost-of-living-adjustment (COLA) base or yearly increases for public retirees: H. 2427, H. 2487, and S. 1629. While we can appreciate the motivation behind these provisions, we oppose these bills due to their considerable negative impact on municipal budgets and an unfunded pension liability that is already overwhelming in size.
The MMA also opposes H. 2505 and S. 1638, which would increase annual COLAs as well as cap the deductibles and copayments paid for covered services of group health insurance at no more than $2,500 for individual coverage and $5,000 for family coverage. Capping maximums at lower rates would drive up the cost of premiums, interfere with municipal plan design authority that is provided in statute, and impose a new unfunded and unaffordable mandate on cities and towns. Setting a fixed dollar amount in statute would also result in outdated limits in the future and necessitate legislative action each year in order to keep pace with the growth of inflation and medical costs.
As cities and towns aggressively fund their pension schedules and grapple with ways to set aside funds for OPEB, this is not the time to introduce options that would add to these already significant liabilities. Each year, the existing obligations to fund pension systems and OPEB liabilities crowd out available funding for key municipal and school services. Cities and towns are struggling mightily with the residual impacts of high inflation and local revenues that are capped by Proposition 2½, and local budgets are already stretched to the limit. The MMA urges the Committee to reject these unaffordable bills.
We greatly appreciate your consideration of these important local government concerns. We look forward to working with you on these issues throughout the legislative session to protect the interests of municipalities and local taxpayers. If you have any questions, please do not hesitate to have your office contact me or MMA Senior Executive and Legislative Director Dave Koffman at dkoffman@mma.org or (617) 426-7272, ext. 122, at any time.
Sincerely,
Geoffrey C. Beckwith
MMA Executive Director & CEO