A press Release by Representative Linda Dean Campbell on the twin issues of State assimilation of some local pension systems, as well as local participation in the GIC (State Health Insurance)
Methuen to Pass on Commonwealth Health Care this October – but will take advantage of state management of pension funds.
According to Representative Linda Dean Campbell the City of Methuen has many options regarding future health care under the legislation passed last week by the Massachusetts House of Representatives, and this week by the Senate. “This legislation would allow city and town employees and teachers to receive the same health coverage as state employees under the State Group Insurance Commission Plan.
Under this legislation, commented Campbell, Methuen will have the option of enrolling in the plan starting October 1st 2007. Once a community signs on however, they are obligated to stay with the state plan for a minimum of three years. “Cost increases are significantly lower under the state plan. For example health care coverage at the local level has skyrocketed. In Methuen the percentage increase between FY01 and FY06 is approximately 90%. The state increase during the same period was approximately 48%.” Campbell and Methuen Mayor Bill Manzi agree that Methuen will need to evaluate the plan to determine whether October entry makes fiscal sense for Methuen.. Health Care under the state’s plan is expected to rise 5% during FY09 – this is substantially lower than expected for local plans. “ I will be working very closely with Methuen’s leaders on this particular issue for the indefinite future – this is our budget buster – we must reduce health costs or face layoffs or raise taxes – this is a way the state can help.
Methuen will also be directly affected by legislation passed yesterday by the house pertaining to pension funds currently managed at the local level. Under this legislation, cities and towns performing 2% below the state’s Pension Reserve Investment Trust Fund (PIRT), and whose obligations outweigh assets by over 35% will be required to join the state’s pension fund… According to Campbell, “Methuen falls into both categories by a narrow margin. Actually, Methuen’s retirement board has performed exceptionally well.” Tom Kelly, Methuen’s city auditor concurs, “Like most communities in the Commonwealth, , other areas of municipal spending have impacted retirement funds, for example early retirements ”. In the last analysis, explains Campbell, it does not matter – “Methuen will have the benefit of a historically excellent performing fund with over 47 billion in assets managed by a staff of 23 full time professionals.” This legislation will indirectly help with property tax relief and will help to ensure that there will be sufficient funds to fund all future local public employee retirees.
The insurance plan sounds helpful. It will lower the growth of health cost significantly.
How will joining the state pension fund reduce municipal costs?
Is it true Methuen’s pension fund is only 64% funded?
How these items can contribute to proper tax RELIEF is not clear.
Will savings be deducted from property tax?
How will we protect ourselves from just adding any savings to the budget as growth? Don’t forget elected public leaders come and go, and you cannot speak for those to come.
Could there be a line that says:
Property tax = X
Saving from state participation = Y
Property tax = X – Y
In reality what generally happens is that any savings will be rolled into the budget and life will soon continue as usual. Taxes up and up.
To quote our new governor; Together we can. (What?)
Enjoy the fourth.
Happy Fourth! The pension savings come by way of the higher rate of return garnered by the state system on invested funds. Methuen’s pension system is not fully funded, and I believe your number is accurate. We are on a schedule that will bring us to full funding by 2028. At least for now I will not take the bait on property taxes.