House Approves Measures for Retiree Benefits
Within the outer sections of the Fiscal Year 2025 (FY25) State Budget, the Massachusetts House of Representatives, under the guidance of Speaker Ron Mariano (D-Quincy), has given unanimous approval to two top-priority legislative proposals initiated by Mass Retirees. These proposals address critical financial needs for retired state employees and teachers.
COLA Commission Gains Momentum
The first proposal, a Special Commission on the COLA, originally suggested by Governor Maura Healey in her January budget proposal, was incorporated into the House Ways and Means budget proposal in early April. Measures included within the respective Ways and Means proposals typically garner support from legislative leaders.
“We are very grateful to House Ways and Means Chairman Aaron Michlewitz for including the COLA Commission within the House budget. This demonstrates the House’s commitment to meaningfully improving the COLA for State and Teacher retirees,” said Mass Retirees CEO Shawn Duhamel.
“As we explained when we approached Governor Healey last year, the challenge we face is the high cost of improving the COLA. A new funding approach is needed, and the only way to get there with something of this magnitude is through the collective work of a special commission.”
The state currently provides and funds COLA benefits for approximately 68,000 retired state employees and 70,000 retired teachers (excluding retired City of Boston teachers, who are part of the Boston Retirement System). Under current pension funding, every $1,000 increase in the COLA base adds roughly $50 million to the pension appropriation and creates $500 million in new unfunded liabilities.
Basic Life Insurance Benefit Increase
In addition to the COLA Commission, the House also unanimously approved a budget amendment to increase the state’s Basic Life Insurance Benefit to $10,000. This benefit is automatically provided to all active and retired state employees and was last increased in 1985. For the past 39 years, the benefit has remained at $5,000, which is considered inadequate to cover funeral and burial costs in 2024.
While active employees can access inexpensive optional life insurance benefits, the cost of optional plans becomes exceedingly expensive as a retiree ages. After the age of 75, these policies often become too costly for most retirees.
Representative John Lawn (D-Watertown), the lead sponsor of the Mass Retirees-backed bill to increase the benefit, filed the amendment. The amendment quickly gained bipartisan support, with House Republican Leader Brad Jones (North Reading) and Mathew Muratore (R-Plymouth) among the first to sign on as co-sponsors.
It’s important to note that life insurance benefits for municipal retirees, including teachers, are set by local governments, not by the state. State law allows cities and towns to establish their own basic life insurance benefits, without limits.
“Our belief is that if we are successful increasing the Basic Life benefit at the state level, it will serve as a catalyst for municipal governments to improve local life insurance benefits,” added President Frank Valeri.
Conference Committee in Session
While the State Senate did not include either the COLA Commission or the Basic Life Insurance increase in its version of the FY25 budget passed in May, Senators did approve an amendment creating a special Task Force on post-retirement public sector work by public retirees.
Mass Retirees is named as a sitting member of the Task Force, similar to the COLA Commission. The amendment, filed by Senate Republican Leader Bruce Tarr (R-Gloucester), appears to be a response to a recent report by MA Inspector General Jeffrey Shapiro, which calls for increased controls and oversight of rules governing the post-retirement public sector work of retirees.
“Members should not read too much into the fact that the Senate budget does not include the COLA Commission or Basic Life increase. It is a normal part of the legislative process,” explained Duhamel. “We are optimistic that the Senate conferees, led by Ways and Means Chairman Michael Rodrigues (D-Westport), understand the importance of a COLA Commission. We also hope, that after 39 years, the Senate will agree that it is time for the Basic Life Insurance benefit to be increased.”
With the formal legislative session ending on July 31, Beacon Hill observers anticipate a budget deal being reached in early July. Once a final agreement is made between the House and Senate, the budget will go to Governor Healey for her action within ten days.
