Framingham caught in employee benefits trap

Every tax is a pay cut. Every tax cut is a pay raise.
Citizens for Limited Taxation

Framingham caught in employee benefits trap Wednesday, December 31, 2008

Enzo Rotatori Metrowest Daily News

The MetroWest Daily News article of Dec. 10, "HMO rates up for town employees," states that employees will pay an additional 1 percent toward their medical insurance coverage, with the town paying 89 percent. I find this "negotiated agreement" to be insulting and a slap in the face of Framingham taxpayers.
Allow me to review how this agreement became part of Framingham's legacy. In 1993, every city and town in Massachusetts was offered the opportunity to join a program entitled Public Employee Bargaining Committee, which provided health benefits for that town. Of the 351 eligible Massachusetts communities offered this program, Framingham was one of only two which accepted the program. Reading Chapter 32B: Section 19 of the General Laws of Massachusetts, our contract allows one to understand why it was rejected by over 99 percent of other communities.
The town bargaining committee, represented by 10 or so employee members, must agree by 70 percent vote to permit a change in the existing health care program. This provision alone would suggest that town government would be giving up the right to make changes in the health benefit program leading to a decision by most not to participate. But there is more bad news in the following sentence within the same article, "In the absence of a successor agreement approved under this section, the prior agreement of the public employee committee and the appropriate public authority regarding the provision of health insurance shall remain in effect." That means that the contract is in perpetuity, forever and ever.
Framingham town leaders at the time did agree to participate in this program and now we are in a lose, lose situation. A most devastating decision for Framingham taxpayers. Our current budget expense for employee health insurance is nearly $30 million for this fiscal year. If insurance rates increase by 9 percent per year, this figure will escalate to $60 million in eight years.
Currently, the majority of employees pay 10 percent of cost, increasing to 11 percent and the following year to 13 percent. Even with these concessions, our employee health benefit would be in one of the lowest employee contribution brackets for all towns and cities in the state. Town employees have been receiving this costly benefit for the last 15 years.
Within industry, many employees are paying 25 percent or more for their health insurance coverage. This is my sixth attempt to remedy this injustice. I have been told so many times that there is nothing the town can do about this overly generous program. I am beginning to believe it. However, I will not go down without a fight.
Since the town bargaining committee is not likely to agree to anything greater than a token compromise of 1 percent and an additional 2 percent the following year, the only other action that could ultimately occur would be to withhold funding at Town Meeting, which must approve budget requests. This would be a drastic move and would put Meeting members under enormous pressure. Hopefully my fellow Town Meeting members would be courageous enough to vote to support withholding funds.
I estimate that the amount of money saved with a fair 25 percent employee participation in health insurance contributions would result in a $4 million savings each year. When I made my recommendations to Selectman Chairman Jason Smith, I suggested an increase of 5 percent per year for three years until employees' share of costs were 25 percent.
These additional millions of dollars could be used to support schools, fire and police departments. Did employees give up increases in salary over the years to continue with their extraordinary health benefits?
No, they did not. According to an extensive study performed by the Framingham Taxpayers Association, published in February 2004, salary increases to Framingham employees since 1981 exceeded the increase in the Consumer Price Index (CPI) by more than 14 percentage points on a cumulative basis. The cumulative dollar value of the amount by which COLA's (Cost Of Living Adjustments) have exceeded the increase in CPI since 1981 is on the order of tens of millions of dollars.
The FTA report says it appears the town placed undue emphasis on how much money happened to be available and insufficient emphasis on how much was justified by actual changes in the cost of living and what was sustainable given the up and down nature of the economy.
On May 21, the Boston Globe in part reported that public employees in eastern Massachusetts earn 15 percent more than their private sector counterparts who perform comparable work, and that number is exclusive of more generous government benefit packages.
Two other budget concerns which lend support to a more equitable split in employee health costs are the shortfall of the town stabilization fund (rainy day fund), which should be 5 percent of the town's budget of $202 million. It should have a balance of $10 million but is short $5 million. Framingham has an unfunded liability of over $80 million which must be paid in less than 20 years along with additional annual unfunded amounts.
We certainly want to treat town employees fairly, but we also want to treat the taxpayers fairly. The town has been overly generous to its employees, and when you look at total compensation, including health insurance benefits, you will find that our generosity has been clearly overdone. It is time for the pendulum to swing back the other way.
Enzo Rotatori of Framingham is a Town Meeting member.

Framingham caught in employee benefits trap	Wednesday, December 31, 2008
Enzo Rotatori	Metrowest Daily News
The MetroWest Daily News article of Dec. 10, "HMO rates up for town employees," states that employees will pay an additional 1 percent toward their medical insurance coverage, with the town paying 89 percent. I find this "negotiated agreement" to be insulting and a slap in the face of Framingham taxpayers. Allow me to review how this agreement became part of Framingham's legacy. In 1993, every city and town in Massachusetts was offered the opportunity to join a program entitled Public Employee Bargaining Committee, which provided health benefits for that town. Of the 351 eligible Massachusetts communities offered this program, Framingham was one of only two which accepted the program. Reading Chapter 32B: Section 19 of the General Laws of Massachusetts, our contract allows one to understand why it was rejected by over 99 percent of other communities. The town bargaining committee, represented by 10 or so employee members, must agree by 70 percent vote to permit a change in the existing health care program. This provision alone would suggest that town government would be giving up the right to make changes in the health benefit program leading to a decision by most not to participate. But there is more bad news in the following sentence within the same article, "In the absence of a successor agreement approved under this section, the prior agreement of the public employee committee and the appropriate public authority regarding the provision of health insurance shall remain in effect." That means that the contract is in perpetuity, forever and ever. Framingham town leaders at the time did agree to participate in this program and now we are in a lose, lose situation. A most devastating decision for Framingham taxpayers. Our current budget expense for employee health insurance is nearly $30 million for this fiscal year. If insurance rates increase by 9 percent per year, this figure will escalate to $60 million in eight years. Currently, the majority of employees pay 10 percent of cost, increasing to 11 percent and the following year to 13 percent. Even with these concessions, our employee health benefit would be in one of the lowest employee contribution brackets for all towns and cities in the state. Town employees have been receiving this costly benefit for the last 15 years. Within industry, many employees are paying 25 percent or more for their health insurance coverage. This is my sixth attempt to remedy this injustice. I have been told so many times that there is nothing the town can do about this overly generous program. I am beginning to believe it. However, I will not go down without a fight. Since the town bargaining committee is not likely to agree to anything greater than a token compromise of 1 percent and an additional 2 percent the following year, the only other action that could ultimately occur would be to withhold funding at Town Meeting, which must approve budget requests. This would be a drastic move and would put Meeting members under enormous pressure. Hopefully my fellow Town Meeting members would be courageous enough to vote to support withholding funds. I estimate that the amount of money saved with a fair 25 percent employee participation in health insurance contributions would result in a $4 million savings each year. When I made my recommendations to Selectman Chairman Jason Smith, I suggested an increase of 5 percent per year for three years until employees' share of costs were 25 percent. These additional millions of dollars could be used to support schools, fire and police departments. Did employees give up increases in salary over the years to continue with their extraordinary health benefits? No, they did not. According to an extensive study performed by the Framingham Taxpayers Association, published in February 2004, salary increases to Framingham employees since 1981 exceeded the increase in the Consumer Price Index (CPI) by more than 14 percentage points on a cumulative basis. The cumulative dollar value of the amount by which COLA's (Cost Of Living Adjustments) have exceeded the increase in CPI since 1981 is on the order of tens of millions of dollars. The FTA report says it appears the town placed undue emphasis on how much money happened to be available and insufficient emphasis on how much was justified by actual changes in the cost of living and what was sustainable given the up and down nature of the economy. On May 21, the Boston Globe in part reported that public employees in eastern Massachusetts earn 15 percent more than their private sector counterparts who perform comparable work, and that number is exclusive of more generous government benefit packages. Two other budget concerns which lend support to a more equitable split in employee health costs are the shortfall of the town stabilization fund (rainy day fund), which should be 5 percent of the town's budget of $202 million. It should have a balance of $10 million but is short $5 million. Framingham has an unfunded liability of over $80 million which must be paid in less than 20 years along with additional annual unfunded amounts. We certainly want to treat town employees fairly, but we also want to treat the taxpayers fairly. The town has been overly generous to its employees, and when you look at total compensation, including health insurance benefits, you will find that our generosity has been clearly overdone. It is time for the pendulum to swing back the other way. Enzo Rotatori of Framingham is a Town Meeting member.

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