FTPA's Article 38 |
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The 2004 annual Town Meeting approved the following motion for article 38, which was sponsored by the FTPA:
I move that Town Meeting:
Steve Kruger, et al. Framingham Taxpayers Association Click here to see how your Town Meeting Members voted Rationale In 1993 the Town's Board of Selectmen and employee unions approved the adoption of Chapter 32B, Section 19 of the M.G.L. ("32B/19"). Under this law the Town established a Public Employee Bargaining Committee (the "Committee") comprised of one representative from each of the Town's bargaining units and one representative of the Town's retirees. The retiree on the committee has a 10% vote. The remaining 90% of the vote is allocated to each employee member of the Committee based on the size of the bargaining unit he/she represents. This law provides that no substantive changes may be made to the terms of the Town's health insurance coverage without a 70% positive vote of the Committee. If the Town negotiating team asks for a change in the terms of the coverage and the Committee fails to approve the change, the existing terms of coverage remain in effect indefinitely. The Town negotiating team may not combine bargaining for health insurance with bargaining on any other collective bargaining agreements (i.e. salaries and other benefits). Under this law there is very little incentive for the Committee to agree to any changes proposed by the Town negotiating team. In considering the merits of this article please keep in mind the following additional information. 1. In the more than ten years that this law has been available to Massachusetts cities and towns as a local option law only two or three towns have adopted 32B/19 (Framingham and Lexington adopted the law soon after it was enacted, and recently one additiional town is reported to have adopted the law). The fact that only about 1% of the cities and towns in the state have adopted 32B/19 speaks loudly to its unattractiveness. 2. While the Committee has made certain concessions in the terms of the health insurance coverage, the Town's overall costs of health insurance appear to be significantly higher than a peer group of cities and towns. This conclusion is based on research conducted over the past six months by the Framingham Taxpayers Association (FTPA). Table 1 presents the full research results and methodology. Out of a peer group of 14 cities and towns examined, Framingham's health insurance costs as a percent of total payroll for fiscal year 2002 were the second highest (and Lexington, the only other town to adopt 32B/19 in the 1990's, was third highest). Framingham's health insurance cost as a percent of total payroll was 17.6 %, more than 4 percentage points above the median for this group of cities and towns. On Framingham's base of about $90 million total payroll in FY 2002, this translates to more than $3.5 million. 3. Of course, the most meaningful comparison would be to look at our employees' total compensation in comparison to a relevant peer group of cities and towns. In the past, certain Town Meeting Members have asked for such an analysis and been told that since the Town cannot negotiate health insurance with salary and other benefits, no such analysis has been performed. This is yet another indicator that 32B/19 is inhibiting sound management of our costs. What Town management has regularly presented to Town Meeting is data confirming that the salaries of our employees are competitive with other cities and towns in the area. Combining this fact with the data presented in Table 1 strengthens the conclusion that our health insurance costs are relatively high. 4. One change in the terms of our health insurance coverage that would not increase the contribution rate of existing employees, yet would still reduce the Town's health insurance costs would be to increase the contribution rate for new hires on a going forward basis. However, this two-tier approach is specifically prohibited by 32B/19. Thus our existing employees could benefit by the revocation of 32B/19. All across the state, and the country, in all sectors of the economy, the rapidly rising costs of health insurance is being seen as a true "budget buster". All around us there is a growing trend for employers to ask employees to assume a greater share in managing this burden. However, due to our relatively unique circumstances, the Town's management is not able to accomplish this. It is left to Town Meeting to insist that the Town's health insurance costs be brought back into line and a greater degree of flexibility be restored to the Town's bargaining position on health insurance.
Sponsor: Steven A. Kruger, et al.
Sources of data: Schedule A data obtained from the Division of Local Services, City/Town annual reports, conversations with City/Town financial/budget officers. Note 1. The peer group of cities and towns used for comparison in this table were selected based primarily on a chart published in the Framingham Public Schools FY 2002-2003 School Budget Material (page 3) that identified "Similar Districts" and "Contiguous Districts". Two of the cities (Marlborough and Somerville) that appeared in that chart are excluded here because we could not reach appropriate city personnel within a reasonable amount of effort. Also, we replaced Newton with Quincy. Quincy and Newton have similar population, but the median family income in Quincy is within about 10 % of Framingham's whereas the median family income in Newton is more than 50 % higher than in Framingham. Note 2. The numerator of this percentage reflects total actual health insurance expenditures for FY 2002. For those cities/towns that are self-insured this includes the total amount appropriated from the general fund for medical and dental insurance as well as the net change in the health insurance trust fund balance for the year (e.g. if the trust fund balance declined for the year, the amount of the decline was added to the general fund appropriation, reflecting added health insurance expenditures made directly from the trust fund). The numerator includes the health insurance expenditures for both active employees and retirees. This was necessary because some municipalities were unable to easily determine how much of the total was attributable to retirees vs. active employees. For those municipalities that could identify the amount attributable to retirees, the retiree portion was in the neighborhood of 20 % in all cases. The numerator also includes health insurance expenditures paid on behalf of employees whose salaries are paid in part, or in whole, out of funds other than the general fund (e.g. federal and state grant funds and enterprise funds). Virtually all of the cities and towns in this list pay all health insurance expenditures out of the general fund and could not easily determine the portion attributable to employees whose salaries are paid out of other funds. Accordingly, the denominator of the ratio includes all salaries and wages paid out of all funds so that there is a proper matching of the employee group represented in both the numerator and denominator.
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