Patrick: State Insurance Group Saving Millions for Cities
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Pittsfield is among those listed as saving millions.
"Cities and towns, like all of us, are looking for every opportunity to cut costs and achieve savings to help balance budgets," said Gov. Deval Patrick. "Our Municipal Partnership Act is producing real savings for these communities. In this and other ways, we will continue to work with municipalities to ensure they have the tools they need to educate our children, protect public safety and provide local services."
From 2001 to 2005, health insurance costs for municipalities grew nearly twice as fast as for state government. Since the governor signed pieces of the MPA into law in July 2007, 17 municipalities, six school districts and three planning councils/commissions/development districts have joined the state Group Insurance Commission.
Among the savings realized by communities are:
■ $2.6 million in the city of Pittsfield
■ $10 million in the city of Quincy
■ $2.6 million in the town of Watertown
■ $1.5 million in the town of Norwood
The savings are calculated on current rates and enrollment, including premium increases anticipated from the municipalities' carriers prior to joining the state's health insurance program.
"As a former mayor and chair of the Municipal Affairs Coordinating Cabinet, I have had the opportunity to talk with our local partners about the tools we have to help weather this fiscal downturn," said Lt. Governor Timothy Murray. "Joining the GIC is one of the most important tools and I would encourage communities that have not joined to do so in an effort to save scarce resources."
According to municipal officials, communities will use the savings from joining the GIC to balance their budgets, stave off cuts to core services and invest in capital projects. Additionally, some communities will deposit the savings to shore up their Rainy Day Funds.
Municipalities who joined the state health insurance program prior to the enactment of the MPA have also reaped substantial savings. A recent report commissioned by The Edward J. Collins, Jr. Center for Public Management at University of Massachusetts at Boston's McCormack Graduate School of Public Policy Studies and the Rappaport Institute for Greater Boston at Harvard’s Kennedy School of Government estimates that the city of Springfield, which joined under emergency legislation in January 2007, has saved $19 million to $23 million. The town of Saugus, which joined in January 2008, avoided a $1.3 million deficit in fiscal 2009, dramatically helping their fiscal health.
In addition to allowing communities to join the GIC, the Municipal Partnership Act identifies and requires the state’s lowest-performing pension systems to invest with the state Pension Reserve Investment Trust (PRIT). Additionally, the governor proposed and the Legislature adopted measures to give communities additional revenue from a local option increase in the meals and hotel/motel taxes and by repealing the outdated telecom tax exemption.
