On February 10th, I had the great good fortune to hear the President of the Massachusetts Taxpayers Foundation, Michael Widmer, talk about long-term fiscal challenges faced by Massachusetts residents. Mr. Widmer spoke to four primary issues: stagnant employment growth since 2001, a rapidly aging population, a declining workforce, and the high cost of doing business in our state (especially energy costs). He indicated that the impact on state finances of these issues include revenue growth < 5%, the growth of employee obligations (like pensions and healthcare), and cuts in federal spending. The impact trickles down to municipalities of course; there is slow growth along with enormous unfunded retiree liabilities (and he contends that spending on benefits and debt are crowding out the ability to provide basic services).
How can these challenges be addressed? Taxes could be increased (more revenue); do nothing (poor outcome as noted above); or engage in honest and thoughtful discussion around reforming benefits, specifically OPEB (aka other (than pension) post-employment benefits), which are primarily health-care related. Interestingly, in January, 2012 a special commission was convened "...to investigate and study retiree healthcare and other non-pension benefits...[as]... established by Chapter 176 of the Acts of 2011 to address the growing cost and unfunded liability of state and municipal retiree healthcare benefits." The final report, dated January 11, 2013, recommends a variety of actions. (Read it here:http://www.mass.gov/anf/docs/anf/opeb-commission/opeb-commission-final-report.pdf.)
While it is critically important to fulfill obligations to retired employees while offering current employees honorable healthcare benefits, it's time to explore changes that will ensure a solid future for our cities and towns (including our schools). Those objectives are not mutually exclusive and need attention sooner rather than later. Melrose is taking an appropriate and fair step in this direction with the health insurance "opt-out" provision detailed by Human Resources Director Marianne Long at last Tuesday's School Committee meeting. She will evaluate the program in a year and recommend whether to continue it or not. That's the kind of initial approach we need to thoughtfully and respectfully address this challenge.
