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March 31, 2010

Term Sheet Terms Explained

My friend, Dave Broadwin of Foley Hoag, has a blog post today which is the first part of his discussion of venture capital term sheet terms that are worth negotiating over.  Dave discusses dividends, partcipating preferred, founder representations, option plan and founder vesting, Board of Directors, and 'drag along'. 

Dave's descriptions are clear, and his advice is sound.  There are very few hard and fast rules about the structure of terms in a venture deal.  Some of this comes down to firm style -- firms tend to like some of these structures, although exceptions can always be made if necessary to win a deal.

The best defense an entrepreneur has is to have options -- alternate offers, or a strategy, perhaps less desireable, that lets you put off fund raising.  You can get VCs to make changes to their standard terms if they have competition.  In the absence of competition, it could be tough.

One of the best arguments against terms like dividends and participating preferred in a series A financing is that it will probably be in the interest of the series A investor to keep these terms out of later financings when more money comes into the deal.  If these terms are in Series A, they'll almost certainly be in later financings.

Dave didn't mention that one pressure that VCs face in eliminating these terms from their deals is the internal partnership dynamics.  Although, in theory, everything is negotiable, if a firm normally gets participating preferred and you want it out of your deal, this may make it harder to get the deal approved by the partners who are on the fence.  Don't assume that every partner in the firm has done a detailed analysis of the pros and cons of your deal and all the terms.  Instead, a reluctant partner may vote No based on something simple like less favorable terms.

I always preferred the cleanest possible deal structure, baking everything into the valuation.  Rather than paying a higher price for a deal and compensating for it with fancy terms, it's better to keep the price a bit lower and keep the deal as clean as possible.  In the end, this works out better for both sides, particularly as more rounds are raised.

In the end, the best an entrepreneur can do is to understand all these terms and do their best to get the best deal they can.  But, it's rarely worth letting a financing fall through because of a stubborn investor on these points.

March 26, 2010

Ignorance becomes hate

I was listening to a podcast of yesterday's Fresh Air while driving to my office today.  It referenced a recent Harris Poll that measured extreme views of President Obama.  The most striking numbers in the poll are these views of President Obama held by people who identify themselves as Republicans:

Majorities of Republicans believe that President Obama:

  • Is a socialist (67%)
  • Wants to take away Americans' right to own guns (61%)
  • Is a Muslim (57%)
  • Wants to turn over the sovereignty of the United States to a one world government (51%); and
  • Has done many things that are unconstitutional (55%).

Also large numbers of Republicans also believe that President Obama:

  • Resents America's heritage (47%)
  • Does what Wall Street and the bankers tell him to do (40%)
  • Was not born in the United States and so is not eligible to be president (45%)
  • Is the "domestic enemy that the U.S. Constitution speaks of" (45%)
  • Is a racist (42%)
  • Want to use an economic collapse or terrorist attack as an excuse to take dictatorial powers (41%)
  • Is doing many of the things that Hitler did (38%).

Even more remarkable perhaps, fully 24% of Republicans believe that "he may be the Anti-Christ" and 22% believe "he wants the terrorists to win."

Now, before you dismiss this as unimportant, go back and read all the numbers again.  These are the opinions of a large number of people in our country.

Even those who oppose Obama's policies would have a hard time finding any evidence that substantiates any of these 'beliefs'.  Formally, most Republicans dismiss these as extreme views.  However, I don't think that Republican leaders do enough to denounce these beliefs.  Don't get me started on the role of outlets like Fox News in beating these drums.  And, these views are leading to threats and violence as we have seen in the response to the passing of the healthcare bill.

Many of my right-leaning friends make jokes where some of the views above are the punchlines.  I'm a believer in humor and am the last person to preach censorship.  But, with so many people in our country thinking these extreme things about President Obama, I worry that we are approaching a tipping point where another Timothy McVeigh type of incident could occur.

And, the Tea Party fervor runs the risk of turning from speaking out to acting out.  Extreme falsehoods that are propogated to those who are ignorant of the facts can turn to hatred pretty easily.

So, rather than chuckling and dismissing claims that Obama is a socialist (check his income -- he's a capitalist) or, even worse, a Nazi, I'd like all of us to denounce and speak out against such rubbish.  If you think that the government is getting too big or has deficits that are too large, go ahead and shout from the rooftops.  If you want to rally to repeal the healthcare bill, go ahead.  Make your argument on the policy merits.  And, have the decency to believe that Obama's point of view is due to a legitimate different view of the role of government in our society or how to manage the government budget, rather than the work of a dictatorial racist Anti-Christ.

March 23, 2010

Healthcare Dust Settling

In the aftermath of President Obama signing the healthcare bill, I've been thinking about the healthcare debate.  Most of the discussion has been about non-issues (death panels) or things that most people agree on (don't mix up abortion policy with this healthcare plan -- stick to the Hyde Amendment).  Congresspeople dismiss the projections of their own Congressional Budget Office but can't point out where the analysis is wrong.  They just don't agree.

I think that Obama made a big mistake in leaving healthcare to Congress for 2009.  Congress is completely ineffective due to the polarized nature of politics.  There is very little compromise and very little bi-partisanship.  This has spiraled out of control since the early 1990s.

Since Obama didn't take charge of this at the beginning, he (and now we) are left with a bill that is far from perfect.  It's got a lot of the right ideas (everyone gets coverage regardless of pre-existing conditions, everyone needs to buy insurance so we can cover those who have pre-existing conditions, etc.).  But, it is overly complicated and has a long implementation period.  Things won't really change until 2014, after the next Presidential election (smart for Obama!). 

I wish that Obama had kept the US plan to be a scaled up version of the Massachusetts plan.  I've bought insurance for my family under this plan.  It was well organized and easy.  I was done in an hour.  Most of the time I spent was checking to make sure that our doctors were part of the plan I wanted.  The same private insurers are available in the market as before.  In fact, you don't hear anyone in MA complain about MA healthcare.  Even Mitt Romney likes it.  He should, it was his doing.  Romney thinks that each state should do what Massachusetts does.  The problem is that most states won't, leaving 10s of millions of people uninsured.

The MA plan hasn't broken the bank.  The latest numbers I've seen say that the state's contribution is 0.4% of the state budget.  And yet, one of our gubernatorial candidates says that it's bankrupting the state.  And, he's the current state Treasurer.  Guess math isn't his strong suit.

Romney figured this out:

Central to the plan was Romney’s recognition that uninsured individuals were costing the state and federal government money because they showed up in emergency rooms for non-emergency care. If they had health insurance, Romney concluded, those government payments to hospitals could be applied to paying to cover the uninsured.

“We said, let’s take the money that the federal government is giving us and that we’re taking from our own state coffers that we use to give to hospitals to give out free care,’ ” Romney says. “Instead, let’s use that money to help low-income people purchase their own private market-based insurance.”

I wish our new federal plan was closer to this simple idea.  Instead, Democrats in Congress overreached.  Some Congresspeople demanded that their states be paid off in order to secure their votes.  The Republicans encouraged irrational opposition irrespective of facts.  And, our debate turned into the Hatfields vs. the McCoys.  Opponents don't even know for sure why they hate the bill (or, their reasons are based on legend and not facts).  But, they know they hate it.

I hope that Obama leads with a heavier hand going forward.  He needs to control the debate and get Congress to follow in line.  He needs to keep reaching out to Republicans and let them decide if they want to collborate with him or stay as the party of No.  And, if he's smart, he'll adopt a couple of Republican-led issues as his own, as Clinton did with welfare reform.

And, let's hold all the news media and talking heads to some strict fact checking.  I appreciated the artilcle about Romney that I linked to before.  He rightly took credit for cracking the code on MA healthcare.  He pointed out where the Democratic legislature went against his wishes on some of the details.  But, he's willing to acknowledge that overall it's a good bill.  Sounds pretty darn bipartisan and reasonable to me.

Government Opression

More on the healthcare bill soon (hopefully later today).  But, I couldn't resist this picture this morning.  The 'this is the tipping point to get us to socialism' rhetoric is ridiculous.  Opponents said the same thing about Social Security and Medicare.  There is a reasonable debate to have about what level of social support the government should provide and how we should pay for it.   But, it's not reasonable to have all the inflammatory rhetoric we've had during this debate.  Is that what it takes to get people to pay attention?

March 18, 2010

Who's Looking Out for You?

Dave Broadwin of Foley Hoag's Emerging Enterprise Center has an interesting blog post about the legal aspects of a company director's fiduciary responsibility.

The key to this issue is that VC investors who take Board seats at small companies have an inherent conflict.  As a partner in a venture fund with compensation tied to the performance of that fund, they are financially motivated to maximize the value of their investment in the company.  As a corporate director, they have a fiduciary responsibility to look out for all the stakeholders in the company.  And, as the Trados case indicates in Dave's blog post, corporate directors should be leaning in favor of looking out for the common shareholders over the preferred.  The preferred shareholders have their rights defined in their stock purchase agreement and, from what I understand of the Trados decision, don't need the additional protection of directors looking out for them.

This creates an obvious conflict, particularly when a company is facing tough times.  What if a company is struggling but has an opportunity to raise money on terms that may be adverse to the existing preferred shareholders?  You can imagine a scenario where, as a Director, a VC votes in favor of this tough financing as it preserves some value for the common stock but, as a preferred shareholder, they vote against it.  That may meet the fiduciary obligations defined in the legal precedent, but sets up weird dynamics.  It's difficult for one person to have two points of view.

What is more likely is that a conflicted director will steer the company away from such a financing because they know that as a shareholder they can't support it.  Is that protecting the interests of the common shareholders?  Unclear.  I was involved in one company that during the 2001 meltdown had to raise an inside round of financing.  It was on tough terms and was structured to motivate existing investors to participate -- put more money in, and you can keep more of what you already have.  Don't put more money in, and you get wiped out (if you are interested in more of the mechanics behind these types of things, say so in the comments.  I'll explain).

One of our large investors made it clear that they had no more money for this deal on any terms.  They were a buyout firm that had been trying their hand at early stage VC.  It wasn't a good fit, and the meltdown confirmed this.  But, even though they weren't going to invest, they were also going to block any sort of financing that diluted their interest.  They were willing to let the company go in order to protect their interest that, without additional financing, would be worth nothing.

We had very complicated discussions at the Board level where each of the VCs was probably thinking more about their firm's stake than about what protected the common shareholders.  Luckily, we were able to convince this firm to let us go ahead with the financing as they were going to get zero one way or the other, unless they changed their mind and participated.  But, the conflict of interest didn't feel good.

Although it's good to have the legal aspect of the conflict clarified -- directors need to protect the common shareholders regardless of what class of stock they hold themselves -- I don't have a good answer for the human side of these conflicts.  The best advice to an entrepreneur is to make sure you go into business with investors and directors who you know, from their past track record, will balance the best interests of the common with their own financial best interests.

Another take on this comes from one of the favorite sayings of one of my former partners (unclear whether the original source of this is John Doerr or Dick Kramlich):

No conflict, no interest!

March 05, 2010

Automated reply?

In my continuing series on what my government leaders say about the escalating cost of municipal healthcare in Massachusetts, here's the response from Governor Patrick's office.  Unfortunately, it seems like someone didn't read my message very clearly.  Both Bedford Town Manager Rick Reed and State Rep. Charles Murphy sent me very complete and thoughtful replies, as posted recently here.  However, Governor Patrick's office didn't read my note or handled it via some sort of automated reply.  The reply had to do with concern about overall insurance premiums (which I do worry about) and not this specific issue which has had a lot of press coverage lately.

Anyway, so no one can accuse me of playing favorites, here's the disappointing reply from Governor Patrick.  I did send a follow-up note to his office explaining what I was interested in.  Perhaps they'll send another reply.  Meanwhile, keep the pressure on your local officials to do something about this.  I'd be interested in some comments from readers about what you are seeing in your towns.  For example, a friend from Wellesley shared with me that Wellesley's problems on this issue seem to be even more acute than the average in the Globe article -- 18% of tax levy spent on municipal employee and retiree healthcare, and still rising fasat!

Reply from Governor Patrick's office:

March 5, 2010

Dear Michael,

On behalf of Governor Deval Patrick, thank you for your recent correspondence regarding your health insurance premiums. 

Responding directly to concerns from citizens and small business leaders, Governor Patrick has directed the Commissioner of Insurance, on an emergency basis, to require health insurance companies to file any increases or changes to rates before they take effect and to disapprove the increases if they are unreasonable or excessive.  Any increases significantly higher than the current level of medical cost inflation, which today is 3.2 percent, will be challenged.

            Some health insurance carriers will begin filing for rate increases on March 2, 2010 for an effective date of April 1, 2010.  While the Division of Insurance is reviewing submitted rates, policyholders must pay their premiums in a timely manner to ensure continued coverage.  If a rate is disapproved, policyholders will be notified by their health carrier of the disapproval and information regarding refunds, if any, of premiums already paid.  If you have any further questions regarding your individual rates please contact the Division of Insurance at 617-521-7794.


            Please feel free to contact our office with any future questions or concerns.  Your comments are always welcome in this administration.


                                                                  The Constituent Services Office

(617) 725-4005


March 04, 2010

My state rep weighs in

On my continuing march against the unreasonably high costs of health care coverage for municipal employees in Massachusetts I reached out to all my elected representatives as well as the Town Manager of Bedford.

Tonight I heard from my state Representative, Charles Murphy.  Murphy is also the Chairman of the Massachusetts House Ways and Means Committee.  His entire response is copied below.  I appreciate that he has been monitoring this issue for some time.

The most important part of his response is the frustration that I sense that the cities and towns are looking to the state to solve a problem by mandate that they can't solve themselves.  Since Bedford has been able to deal with this, I think that all other cities and towns should find a way.  What may be needed is the state setting the standard to let the cities and towns take stronger action, such as adjusting health plans without collective bargaining.  Although a state law would be helpful, it seems like we also need stronger leadership in many of our cities and towns.

Overall, I appreciate the detailed and thoughtful response from Rep. Murphy.  I'm happy to share it with you.  It's also been nice to see that many of my friends are now researching the situation in their own city or town in Massachusetts in order to pressure officials to take action on this matter if they haven't already.

Response from Rep. Murphy:

Dear Mr. Feinstein, Thank you for your email regarding the effects of rising health care costs on municipal budgets.  Hearing the views of my constituents enables me to make more informed decisions, and I appreciate your input regarding this issue. I also read with great interest the two-part Boston Globe report you reference in your email.  While this topic is not new to me, I think the Globe’s in-depth coverage will draw great attention to the issue in the weeks and months ahead.  As State Representative for the 21st Middlesex District, (Burlington, Bedford, and part of Wilmington) and Chair of the House Committee on Ways and Means, I work closely with a great number of local officials who are struggling with budget shortfalls as a result of rising health insurance costs. 

While not insensitive to their plight, I find it telling that cities and towns now look to the legislature for solutions to what most would admit is partially a self-inflicted problem.  I think the second part of the Globe series detailed the escalation of this problem well.  Cities and towns bare much of the responsibility for drastically increasing their premium contribution rates, for agreeing to plans requiring low or, in some cases, no copayments, and allowing some individuals serving very few hours to qualify for health insurance.  While yearly health insurance cost increases are easy to focus upon, I think the report gave some historical perspective as to how we got to this point.

The example used to kick-off the Boston Globe series details a 42-year-old woman, an eight year employee of the City of Everett, receiving health insurance for life because she was terminated by an incoming mayoral administration.  This unusual retirement benefit is allowed by Massachusetts General Laws Chapter 32, Section 10.  Earlier this session the legislature voted to eliminate all elected officials’ ability to collect an enhanced pension under this section, believing that the original intent of the law had been exploited by some individuals over the years.  There have been subsequent discussions of scrapping this law in its entirety.  

Outside of the above provision, retirement benefits for city and town employees should be commensurate with time served.  It takes 10 years to be eligible for a pension, and then the actual pension amount is a function of years served and age at retirement.  As noted in the first Globe story, municipal and state employees cannot qualify for a pension until age 55.  Pension payments for employees who only work 10-15 years are extremely modest, and these payments are even less if the employee is retiring before age 65.  As the Globe series points out, it is not the pension payments alone that weigh on a municipality, but the health care costs that come with it.  One possible way to address this issue would be to raise the number of years an employee must work to qualify for health insurance coverage or a pension.

In your email you also suggest that when an employee leaves municipal service, other than severance benefits, employees should not get continuing health care coverage before retirement age.  While I addressed the health benefits and retirement in the two paragraphs above, I should also note that public employees do not receive any sort of severance package when dismissed from service, regardless of years served or reason for dismissal.

To your final point, about requiring municipalities to enroll all retirees in Medicare, the legislature granted towns this ability in 1991.  I only wish the Globe piece had asked each of the local officials spotlighted in the report why their communities had not yet moved their retirees to Medicare.  I think an honest answer would have been reveling.  Presently cities and towns already have this ability; they seem to lack the desire to achieve these savings, therefore a statewide solution may be necessary to accomplish this initiative.

Again, those of us in the legislature are not insensitive to the plight of local municipalities, regardless of whether or not they contributed to their present situation through past actions.  Over the past year, the House and Senate convened a municipal relief working group to examine ways to aid communities during this financial downturn.  The commission issued a report, the recommendations of which were recently reported favorably by the Joint Committee on Municipalities.  In a similar regard, the House appointed a special committee of members to look at ways to reform the pension system in Massachusetts.  The findings of this report were the basis of a pension reform bill passed earlier this year, and could spawn further legislation this session.  Given the economic times that we now find ourselves, I think government at all levels should be looking for new and innovative ways to deliver necessary services.  Please know that I will continue to work with our local officials to find solutions to the issues raised in your email.  Ensuring that both our state and local governments are good stewards of the taxpayers’ money is necessary in the best of times; this need is only amplified during times like these.

I greatly appreciate your informed opinions and well thought out input on this subject.  Thank you again for taking the time to reach out to me.  If you need any further information or assistance, please contact my office at 617-722-2990.

Kindest regards,

Charles A. Murphy
House Committee on Ways and Means

March 02, 2010

Bedford - A good example

As part of my recent ranting about the escalating costs of health insurance for our Massachusetts municipal employees and the state and local governments' inability to do anything about it, I contacted the Richard Reed, Town Manager for the Town of Bedford where I live.  In about 24 hours I received a personalized, thoughtful and detailed reply about where Bedford stands on this issue.  And, the reply was sent at 11:15 PM!  I copied the entire reply to the end of this post, but here are the highlights.

  • Bedford has worked hard with its unions to keep health care costs more manageable.  Health care costs for all town employees comprise 7.9% of the town budget vs. the 14% in the Boston Globe survey.
  • The details are in the full email, but for its HMO plan, Bedford pays 68% of the insurance premium vs. the 80-90% that most other towns pay.  This is slightly below the average in the private sector.
  • As Bedford is a small town, we have very few elected officals who are compensated.  Most of the elected positions are unpaid or only eligible for a small stipend.  No former elected officals in Bedford receive health benefits.
  • Since the state allowed it 5 years ago, Bedford has required retirees to go on Medicare instead of being covered by the town plan.
  • Although it still has an unfunded health care liability of $62M, Bedford has started putting money aside to fund this which is one reason why it has the highest possible bond rating (AAA).
  • Mr. Reed agrees with me that a state law should be passed that allows cities and towns to change its health insurance plans without being subject to collective bargaining, as long as the benefits don't drop below what the state offers its employees.  This law is going nowhere in the legislature and is one that every Massachusetts citizen should be calling their state senators and representatives about.

I was impressed with the timelinees and professional nature of Mr. Reed's response to me.  Of course, as a citizen, I should expect this level of response, but we've all been conditioned to expect much worse from our elected officials, unfortunately.  More importantly, Bedford's example shows that it's possible for a town to strike a reasonable deal with its unions and to force municipal retirees onto Medicare.  Officials from other towns should follow this example to get their financial houses in order.

As a Massachusetts taxpayer, I am still going to focus on this issue with my state legislators.  Although Bedford is in relatively good shape, if other towns go bust, the state will end up bailing them out.  We need to get ahead of this issue.

The full text of the email I received from Richard Reed, Bedford Town Manager:

Good evening, Mr. Feinstein –

I have read the articles that appeared in the Boston Globe yesterday and today.  As is to be expected, an article about municipal health insurance programs, when taken from a state-wide perspective, paints a negative picture.  Taken from the individual perspective of this Town, the picture is much better as follows:

The article states that many municipal health insurance programs cover 80% to 90% of premium costs and that the average in the private sector is about 70%.  In Bedford, family coverage for our HMO plan (a restricted network) is 61% and individual coverage is 83%; when the premium dollars are combined, the average for the HMO yields a 68% premium contribution from the Town.  We also offer a PPO plan that gives the option to employees to go outside of the network; the PPO plan is covered at 50% of the premium for both individuals and families.  When employees go outside of the network, they must pay 20% of the cost for the service provided.  Bedford does not offer its employees and retirees a traditional indemnity insurance plan; employees who want the freedom of choice must opt for the PPO plan and absorb the 20% co-pay if they go out of the network.  In sum, Bedford’s contributions are less than average, even in the private sector.  As a percentage of the overall operating budget, health insurance will be 7.9%, as compared to the 14% average referenced in the Boston Globe article.

Contrary to the experience in other municipalities, no former elected officials receive health insurance from the Town.  This is due in part to the fact that the Selectmen are the only elected officials in Bedford who receive a very minor annual stipend for their service.  In order to receive heath insurance as a retiree in Massachusetts, you must have been compensated and be eligible for retirement.  Since most of Bedford’s elected officials are not compensated, the majority cannot qualify for retirement health insurance benefits.

The Town of Bedford accepted the Massachusetts law that forces retirees off the Town’s health plan onto the Medicare program.  This decision was made approximately 5 years ago and has resulted in avoiding the substantial expense of carrying these retirees on the regular Town health plan.

All communities are now required under governmental accounting standards to show on their audited financial statements what their unfunded liability is.  Bedford regularly reviews its post retirement health benefits obligations, but had a practice of doing so much earlier than the effective date of the requirement.  As mentioned in the article, very few communities (Wellesley, Needham and Boston) out of the 351 cities and towns in Massachusetts have begun to address this liability.  For some reason they did not mention the one or two other communities that are doing this.  Bedford is one of the communities that have begun to address this.  In fact, we have more than $2 Million set aside for this future liability in a trust fund.  There is still a quite a distance to go in this regard because the Town’s last study showed a liability of about $62 Million, without applying the $2 Million already set aside.  Adjusting for the fact that we already have $2 Million set aside, our liability would be reduced several million over time.  This matter of continuing to address this liability is something that current Town officials discuss quite often.  In fact, at this year’s Annual Town Meeting, another $150,000 will be appropriated towards the liability, assuming voters approve.   This may not seem like much, but Bedford is probably ranks first in the state in terms of the percentage of the liability funded.  This progress made by Bedford is one of the reasons that the Town’s municipal bond rating was upgraded to AAA (the highest possible rating) a few years ago.

Since 1981 when Proposition 2 ½ came into effect, Bedford has never attempted a general override to raise additional tax revenue.  Thus, until at least this point in time, we have been able to avoid a need to increase property taxes over the Prop 2 ½ limit for the purpose of covering health insurance expenses.  We are actively looking at ways to minimize the increases of health insurance costs and hope to continue to be successful in that regard.  Of course, the cost for health insurance continues to rise nationally and all governments and private employers are challenged by this circumstance.

The one thing that would be most helpful to Massachusetts municipalities like Bedford would be for the Massachusetts legislature to change state law so as to allow local governments to make changes in co-pays and deductibles without having to bargain the changes with unions.  The state government is free to change these items without bargaining with their unions.  Private business is not regulated in this regard.  Why shouldn’t local governments be given the same ability?  I see on your blog that you do agree and that you have contacted our state senator and representative encouraging them to grant this authority to local governments.  Such legislation has been proposed for a few years now, but not approved by the legislature.  If more like you would let them know what you think, hopefully they would listen.

Lastly, on your blog you mention the possibility of union’s striking.  Strikes in the public sector are illegal in Massachusetts.

In summary, I do think that health insurance benefits are at a reasonable level in Bedford; that being said, my senior staff and I continue to work to keep these costs in check.  I hope you find this responsive to you message.

Very truly yours,

Richard T Reed

Bedford Town Manager    

March 01, 2010

Keep the pressure on

As a follow-up to my torches and pitchforks post yesterday on the runaway health care costs that are likely to bankrupt Massachusetts cities and towns, here's the conclusion of the story in today's Boston Globe.  This article talks about the political issues involved in changing these laws, as well as the history of how we got into this mess.

The problem started when health care costs were relatively low.  Giving health care benefits seemed like a nice perk for municipal jobs, and the costs were not prohibitive.  Later, the state set some limits on how much of the premium a town could pay, but this limit became the benchmark for unions to reach.  And, at some point, health care benefits became retirement benefits, but they kicked in after 10 years of service and, unlike pensions, were fully paid and could start being used as soon as someone left their job and not at age 55.

These changes largely came during collective bargaining between the towns and unions.  As budgets get tight, these negotiations get tougher, and gains won long ago are tough to give back.  But, it's time for the unions to take ownership for fixing their fair share of our cities and towns fiscal problems.  One first step would be for the unions to agree to let their municipal employees join the state insurance plan, GIC, as Governor Patrick has proposed.  The Globe article details the savings, and the GIC plan is still very generous compared to insurance plans offered by private employers.  There's no hardship there.  Just reality.

The article also mentions that there are some bills in the state legislature that are attempting to clamp down on this, including letting cities and towns make changes to their health insurance without going through collective bargaining.  This seems like a great idea if the unions are not reasonable.  But, these bills seem to be unlikely to pass.  So, find out who your state represenative and senator are and send them an email.  I did this last night, and was happy to find that Governor Patrick has made this change part of his plan to get the cities and towns healthier.  We need the legislature to do something about it.  If not, I'm all in favor of voting them out.  I hope you are listening Senator Fargo and Representative Murphy!  (they represent me in Bedford).

I consider myself a left-leaning independent.  Some may call that a Democrat, but strong sympathy for unions is something that Democrats believe in that I don't.  I think that unions have a place, and certainly in the early 1900s they were essential to get good working conditions for employees.  But, now unions and management have such antagonistic positions that they are counterproductive.  It's particularly tough for municipal employers.  If they take a hard stand against their unions, they could have police, fire fighters, and teachers striking.  That's quite unpopular.  So, these unions need to show some leadership by helping their employers manage their costs to keep their jobs secure for the long-term.  It could be a fair bargain to promise some higher level of job security in order to get these costs under control.

Would you be willing to let these municipal employees go on strike in order to force the issue on health care costs?  That could be pretty chaotic, but unless the legislature can break the unions' positions on this, we may have little choice.

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