MMA urges Labor and Workforce Development Committee to support unemployment insurance reform bill

The Honorable Josh S. Cutler, House Chair
The Honorable Patricia D. Jehlen, Senate Chair
Joint Committee on Labor and Workforce Development
State House, Boston

Delivered electronically

Dear Chair Cutler, Chair Jehlen, and Distinguished Members of the Committee,

On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association appreciates the opportunity to testify in strong support of S. 1151, An Act Relative to Municipal Unemployment Insurance Reform, filed by Senator Creem.

This legislation stems from the important work of the Municipal Unemployment Insurance (UI) Task Force, and its several recommendations to provide relief to municipalities and taxpayers while maintaining the integrity of the UI Trust Fund. The Task Force offered a report with a series of recommendations, which was followed by legislation during the subsequent legislative session. However, two of the most significant reforms recommended by the Task Force were left out of the final reform legislation in 2014. Years later, these reforms are still just as necessary and require an appropriate remedy. S. 1151 includes these two outstanding provisions from the Task Force’s report.

First, the bill addresses the issue of a municipal retiree collecting both unemployment benefits and a defined benefit pension from the same public or private employer. Under state retirement laws, there is a 1,200-hour limit on the hours worked after retiring and then returning to work for the same employer. The problem is that after the 1,200-hour cap is reached, the retiree can technically file an unemployment claim, even though the law explicitly prohibits working more hours. This results in a loophole where taxpayers must now pay unemployment benefits to an individual who is also receiving a retirement pension and not even eligible to work additional hours beyond the cap.

S. 1151 would correct this major flaw by reducing unemployment benefits received by individuals who are also receiving a defined benefit pension from their post-retirement employer by an amount equal to 65% of their weekly pension. A retiree’s access to unemployment insurance would not be prohibited under this change, but the net cost to taxpayers and employers would be significantly reduced. This provision is crucial to protecting the integrity of the pension system while still allowing an employee to collect unemployment insurance benefits when warranted.

Second, the bill would also address an existing loophole that allows certain school-based employees — those who are paid by the municipality directly and not by the school department — to collect unemployment benefits during school vacations and on summer break. The problem is that bus drivers, crossing guards and others who are funded by the municipal budget can technically collect unemployment benefits when school is not in session, even though there is absolutely no expectation of work during those weeks. This flaw in existing state statute would be corrected by clarifying that school-based employees who are not paid directly by the school department would be ineligible to collect unemployment benefits during vacations and in the summer, by including them in the “reasonable assurance” exceptions applied to all other school-based employees. This would ensure that these school employees could not collect unemployment benefits if they have a reasonable assurance of returning to their jobs after the vacation or summer.

S. 1151 offers straightforward yet overdue reforms to the unemployment system and an important opportunity to provide necessary relief to municipalities and taxpayers across the Commonwealth. We offer our strong support for the bill, and respectfully request the Committee to report the bill out of committee favorably. If you have any questions, please do not hesitate to contact me or MMA Senior Executive and Legislative Director Dave Koffman at dkoffman@mma.org or (617) 426-7272, ext. 122, at any time.

Thank you for your support of the Commonwealth’s 351 cities and towns.

Sincerely,

Geoffrey C. Beckwith
MMA Executive Director & CEO