Labor Issues a Legislative Priority in 2011

By Barbara T. Reid

One of the first bills to become law in New Hampshire's current legislative session was SB 1, repealing the "evergreen" law that was enacted in 2008. Under the evergreen law, if a public employer—e.g., a city, town or school district—and an employee bargaining unit could not reach consensus on a new collective bargaining agreement before the existing agreement expired, the terms of the existing agreement would remain in force until a new agreement was reached, "including but not limited to the continuation of any pay plan included in the agreement." This meant that if the parties had included a plan of step increases or other pay increases in the collective bargaining agreement, those increases could, in theory, continue forever, even though they were intended to last only a few years.

SB 1 repealed that law as of March 1. As a result, any collective bargaining agreement entered into after March 1—including those approved at this year's town and school district meetings—will not be subject to the evergreen law. Now, when a collective bargaining agreement expires, employees will be protected by the "status quo" doctrine, which ensures continuation of existing pay levels, but does not continue any plan of pay increases that may have been included in the expired agreement.

Another labor-related bill working its way through the legislative process is SB 3, a comprehensive package of retirement reform measures designed to address the rising costs of public employee pension benefits. On March 16, 2011, SB 3 passed the New Hampshire Senate by an overwhelming majority vote of 19-5. The bill is a significant step to enacting meaningful retirement reform measures—reforms comparable to those being proposed and enacted for many public pension systems across the country. The following summarizes key provisions of SB 3 as adopted by the Senate (see below and view full details):

  • Maintains pension and medical subsidy benefits for all current retirees.
  • Phases in increased age and years of service requirements for newly hired and non-vested public safety employees.
  • Increases contribution rates for all employees beginning July 1, 2011.
  • For new hires only, removes end-of-career payments from the pension computation and computes the average final compensation over the highest five years of service rather than the highest three years.
  • For all public safety employees, limits the amount of special detail that is used in the average final compensation calculation to the average of the past seven years.
  • Repeals the gain-sharing provision, the spiking penalty provision, the 4 percent annual increase in the medical subsidy benefit and the ability to purchase credit for out-of-state service.
  • Caps a person's pension at 100 percent of base pay, effective July 16, 2016.
  • Transfers $89 million from the Group II special account to pay for the police and fire medical subsidies, which are now funded through employer contribution rates.
  • Changes the composition of the New Hampshire Retirement System (NHRS) Board of Trustees.
  • Requires a six-month period between retirement and re-employment with any NHRS participating employer. It also clarifies the prohibition for a retiree to simultaneously collect a pension benefit and work full-time in an NHRS "required membership" position.

SB 3 will be reviewed by the Senate Finance committee, and subjected to another Senate vote, before heading to the House in April where it will undergo further debate and deliberations. For more detailed information about SB 3 and other retirement reform measures being considered in this year's legislative session, visit the NHMA website.

Barbara Reid is government finance advisor for the New Hampshire Municipal Association. Contact government affairs staff at 800.852.3358, ext. 384, or by email.