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Legislative Update from Bernard Shaw Maryland Troopers Association Lobbyist 4/8/11
House Bill 70 – Budget Bill Fiscal Year 2012 House Bill 72 – Budget Reconciliation and Financing Act of 2011
On 4/8/11 the Senate and the House concurred with the Conference Committee on both of these bills. The Conference Committee concurred on the following amendments.
Healthcare and Prescription Plan
For Active and Retired Members the co-pays for prescriptions will be as follows:
Generic Drugs: Co-pays go from $5 to $10 Preferred Brand: Co-pays go from $15 to $25 Non-preferred Brand Co-pays go from $25 to $40
For retirees, the out-of-pocket cap will go from $700 to $1500 per year. For a retiree and spouse the out of pocket cap will go from $700 to $2000. Additionally, the retiree's annual premium will go to 75% state-25% retiree resulting in an increase of $16.42 per month for a retiree and spouse.
For Active and Retirees, the Healthcare premium of 80%-20% did not change and no other changes were made to the Healthcare program.
For retirees no changes were made to the pension system and those who retire prior to July 1, 2011 will continue to receive the unlimited cost of living adjustments. For new hires in the State Police after July 1, 2011, retirement amounts will be calculated using the highest 5 years of compensation.
For new hires in the State Police after July 1, 2011, they must be at least 50 years old or 25 years of service to be eligible for normal retirement and they will be required to work 10 years before becoming vested in any system.
For current employees and new hires, cost of living adjustments for all service credit earned after July 1, 2011 in all systems will be capped at 2.5% in any year the State Retirement and Pension System achieves its assumed rate of return and capped at 1% in years that the investment rate of return is not met.
The Deferred Retirement Option Program (DROP) continues for employees, but the rate of return was amended from 6% compounded monthly to 4% compounded annually for any account opened after July 1, 2011.
The Conference Committee eliminated the provision by the House that capped the State's required contribution to 20% of payroll in any given year, but allowed the reduction in the state's contribution to be reduced by $120 million in fiscal years 2012 and 2013. Additionally, they set a cap on the reinvestment of savings from pension reform measures at $300 million for any given fiscal year. The committees agreed that these issues will have to be revisited on a yearly basis and further reductions may be necessary based on any increased cost of healthcare and the prescription program and the current economic conditions.
As the lobbyist for the Maryland Troopers Association, I would like to thank Jack Howard, President of the State Police Alumni Association, Janis Kramer, Lobbyist of the State Police Alumni Association and Jim Dulay, President of SLEOLA, for all of their testimony, assistance and efforts in resolving these issues. Also, I would like to thank Mr. Mo Krome, State Police representative to the pension board, for his assistance with information pertaining to the State Police Retirement System and all of the retirees and members who called or e-mailed their Senators and Delegates on these critical issues and conducted themselves in a professional manner. I did not hear any derogatory comments from Senators or Delegates on any call or email made by a member of the Maryland Troopers Association.
A special thanks to Delegate Norm Conway, Chair, House Appropriations Committee, Senator Ed Kasemeyer, Chair, Senate Budget and Taxation Committee and all of the other members of the Conference Committee who were, after hours of discussion, able to concur on a plan that reduced the originally proposed financial impact on retirees and active employees.