Jim McGreevy: A clarification on the "5% Solution"

From Jim McGreevy, October 30, 2006

Subject: HCA 5% Proposal

Molly -

After reading some of the postings about the "5% Solution" I began to wonder if I had missed something and that part of the 5% would be diverted to the pension fund.

I checked with Bill Leibensperger who co-chairs the Health Care Advocates. He indicated that there was originally some thought that a portion of the 5% could be used to help improve the pension fund's funding period. However, the proposal is now framed so as to create a trust fund for the 5% that can only be used for health care.

As I understand it, passage of the HCA proposal would allow for the entire 14% Employer Contribution share to be placed in the pension fund. The 1% portion currently going to the Health Care Stabilization Fund is, of course, part of that 14%.

Thus, the HCA proposal when fully implemented would increase funding for health care by a factor of five over current practice, but would also help the pension fund by removing the burden of funding health care from regular employee and employer contributions.

- Jim