FUNDING SCHEDULE EXTENSION AND PENSION REFORM PHASE II PENDING

February 8 Hearing Scheduled

January 28, 2010: Governor Deval Patrick has filed two bills over the past week that could have major impacts on the Massachusetts public pension systems, as well as employees and retirees.

The first is a bill, H4439, that would allow local pension funding schedules to be extended until 2040. This extension, which has been long called for by MACRS and supported by PERAC, is necessary to account for the severe market losses in 2008. While 2009 appears to have been a banner year for most systems, the sting of the great recession will be felt for years to come.

“This is an important bill that has been in the works for many months. Jim Lamenzo and PERAC have been working closely with our local boards to find a solution to the problems created in 2008,” explained MACRS Legislative Chairman Ralph White. “Our hope is that we can work with the Legislature to get a bill passed before the spring budget season begins.

“We are also working on a simultaneous plan to provide for a local option COLA base increase as part of this proposal. This would allow local systems to incrementally increase the COLA base and roll the funding into the new schedules.”

More Pension Reform

Under what he has dubbed “Pension Reform Part II”, the governor has filed H4440, which would make sweeping changes to the pension benefit of all newly hired public employees, along with some changes to benefits of current active employees. Retirees are not impacted by the proposal. The governor also released a lengthy summary of the bill.

Like the funding schedule extension, this proposal is also before the Joint Committee on Public Service. A hearing has been scheduled for Monday February 8, at which MACRS will be represented.

It is unclear as to what action, if any, the Legislature may take on the latest reform proposal, which is sure to stir controversy amongst the public employee unions.