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PRESS RELEASE- Downing to Chair Special Commission Investigating State's Liability for Paying Retiree Health Care and Other Non-Pension Benefits
July 30, 2007

BOSTON – State Senator Benjamin B. Downing (D – Pittsfield) announced today that he will serve as co-chair of a Special Legislative Commission established by Outside Section 82 of the Commonwealth’s Fiscal Year 2008 General Appropriations Act. 

 

Senator Downing stated, “I look forward to working with my colleagues to examine and recommend appropriate measures leading towards the ultimate goal of eliminating the Commonwealth’s liability for paying retiree health care.  This important matter deserves proper scrutiny and I will work hard to ensure that the interests of Massachusetts taxpayers are protected.”

 

The Special Commission will investigate and study the Commonwealth’s liability for paying retiree health care and other post employment benefits (OPEB) and shall report its findings and recommendations, including any proposed legislation, to the Clerks of the Senate and House of Representatives and to the Chairs of the House and Senate Committees on Ways and Means by the end of the calendar year.

 

The federal Government Accounting Standard Board (GASB) has mandated every public retirement system nationally to set aside funding to cover its retirees’ health care costs in order to change from the current pay-as-you-go system to pre-funding the costs.  This mandate requires the Legislature to enact legislation that will enable the state’s 106 retirement systems to set up trust funds. 

 

As outlined by the legislation, Downing and his co-chair of the Joint Committee on Public Service, Representative Jay Kaufman (D – Lexington) will chair the Special Commission.  Downing and Kaufman met last week to prepare for management of the Commission.  The Chairs expect to hold their first Commission meeting in August. 

 

This requirement by GASB follows similar actions mandated for pension systems in the late 1980’s.  At that time, state and local retirement systems began pre-funding employee pensions and instituted funding schedules to pay down the systems’ unfunded pension liability over a period of 20 years. 

 

 

The text of Outside Section 82 is below:

 

SECTION 82. Notwithstanding any general or special law to the contrary, there shall be

a special commission to investigate and study the commonwealth's liability for paying

retiree health care and other non-pension benefits. The commission shall specifically

examine further legislation necessary to comply with statement number 43 and statement

number 45 of the Government Accounting Standards Board, a possible amortization

schedule to fund the commonwealth's liability and, alternatively, state borrowing against

future tobacco litigation proceeds to fund the commonwealth's liability for said retiree

healthcare and other non-pension benefits. The commission shall consist of the chairs of

the joint committee on public service, who shall chair the commission, the chairs of the

house and senate committees on ways and means, the secretary of administration and

finance, or his designee, the state treasurer, or his designee, the state comptroller, or his

designee, the executive director of the pension reserves investment management board, or

his designee, the house minority leader, or his designee, the senate minority leader, or his

designee, and the executive director of the group insurance commission, or his designee.

The commission shall report its findings and recommendations, including any proposed

legislation, to the clerks of the senate and house of representatives and to the chairs of the

house and senate committees on ways and means on or before December 31, 2007.

 

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