The FY2012 state budget Governor Patrick signed into law on July 11 includes new provisions to support municipalities seeking to address their liability for Other Post-Employment Benefits (OPEB). The new provisions make it easier for any political subdivision, municipality, county, agency or authority of the commonwealth to establish an OPEB Liability Trust Fund with assets set aside to meet the liabilities to retirees for health care and other non-pension benefits. The provisions also provide authority for these entities to invest their OPEB Trust Fund assets in the State Retiree Benefits Trust Fund (SRBTF).
These new provisions, contained in Chapter 68 of the Acts of 2011 (the budget for FY 2012), are set forth below.
Further guidance on the implementation of these new provisions of law will be forthcoming from A&F shortly; in the meantime, anyone having any questions regarding these new provisions of law should contact Abby Dosoretz at Abby.Dosoretz@MassMail.State.MA.US.
SECTION 49. Section 24 of said chapter 32A is hereby amended by inserting after the word "system", in line 16, as so appearing, the following words:- and for depositing, investing and disbursing amounts transferred to it under subsection (d).
SECTION 50. Said section 24 of said chapter 32A is hereby further amended by striking out subsection (d), as so appearing, and inserting in place thereof the following subsection:-
(d) Upon authorization by the board, any political subdivision, municipality, county or agency or authority of the commonwealth may participate in the fund using procedures and criteria to be adopted by the board.
SECTION 57. Said chapter 32B is hereby further amended by striking out section 20, as so appearing, and inserting in place thereof the following section:-
Section 20. (a) A city, town, district, county or municipal lighting plant that accepts this section may establish an Other Post-Employment Benefits Liability Trust Fund, and may appropriate amounts to be credited to the fund. Any interest or other income generated by the fund shall be added to and become part of the fund. Amounts that a governmental unit receives as a sponsor of a qualified retiree prescription drug plan under 42 U.S.C. section 1395w-132 may be added to and become part of the fund. All monies held in the fund shall be segregated from other funds and shall not be subject to the claims of any general creditor of the city, town, district, county or municipal lighting plant.
(b) The custodian of the fund shall be (i) a designee appointed by the board of a municipal lighting plant; (ii) the treasurer of any other governmental unit; or (iii) if designated by the city, town, district, county or municipal lighting plant in the same manner as acceptance prescribed in this section, the Health Care Security Trust board of trustees established in section 4 of chapter 29D, provided that the board of trustees accepts the designation. The custodian may employ an outside custodial service to hold the monies in the fund. Monies in the fund shall be invested and reinvested by the custodian consistent with the prudent investor rule established in chapter 203C and may, with the approval of the Health Care Security Trust board of trustees, be invested in the State Retiree Benefits Trust Fund established in section 24 of chapter 32A.
(c) This section may be accepted in a city having a Plan D or Plan E charter, by vote of the city council; in any other city, by vote of the city council and approval of the mayor; in a town, by vote of the town at a town meeting; in a district, by vote of the governing board; in a municipal lighting plant, by vote of the board; and in a county, by vote of the county commissioners.
(d) Every city, town, district, county and municipal lighting plant shall annually submit to the public employee retirement administration commission, on or before December 31, a summary of its other post-employment benefits cost and obligations and all related information required under Government Accounting Standards Board standard 45, in this subsection called "GASB 45", covering the last fiscal or calendar year for which this information is available. On or before June 30 of the following year, the public employee retirement administration commission shall notify any entity submitting this summary of any concerns that the commission may have or any areas in which the summary does not conform to the requirements of GASB 45 or other standards that the commission may establish. The public employee retirement administration commission shall file a summary report of the information received under this subsection with the chairs of the house and senate committees on ways and means, the secretary of administration and finance and the board of trustees of the Health Care Security Trust.
SECTION 206. Nothing in section 20 of chapter 32B of the General Laws shall affect the validity of any action taken before July 1, 2011 by a city or town that authorizes the contributory retirement system of which the employees of that city or town are members to be the custodian of an Other Post-Employment Benefits Liability Trust Fund.