3% COLA OK'D

JULY 2004 - Base Alternative On Horizon - A 3% July COLA for state and teacher retirees is now assured.

In
their respective budgets, which are now being finalized, both the House
and Senate have agreed on a 3% COLA. The budget will require Governor
Romney's signature, but Romney did include the 3% COLA when he
submitted his budget to the Legislature in January.

Locally,
96 of our 104 city, town, county, regional and authority retirement
boards have voted for 3% July COLAs, with the remaining boards
scheduled to vote in June.

Unlike
last year, we do not anticipate any remaining boards voting for a
figure of less than three percent. "There have been a few individual
board members who voted for a figure lower than three percent, but they
have been outvoted in every instance," said Association President Ralph
White. "And none of the dissenting votes have been by elected board
members."

There has been no change
in the COLA law, which is uniform to all retirement systems. The
$12,000 base, which is the maximum to which the 3% can be applied, will
not change this year. Members, who were on the pension rolls prior to
July 1, 2003, are eligible for this year's COLA. Members retired since
July 1, 2003 and prior to July 1, 2004 will be eligible for next year's
COLA.

At press time, a House -
Senate conference committee was meeting on a daily basis attempting to
reach agreement on budget items where the two branches differ. When a
final agreement is reached, the budget will be voted on by both
branches, with no additional amendments allowed, and sent to the
Governor.

Although the budget is a
fiscal blueprint, it is also a bill and, therefore, was subject to
amendments like any other bill. Of the hundreds of amendments that were
offered during floor debate, only a small percentage survived in either
the House or Senate budgets.

Comprehensive COLA Base Study

One
successful amendment, a top priority with our Association, requires the
Public Employee Retirement Administration Commission (PERAC) to explore
alternative methods by which the $12,000 COLA base can be increased in
an affordable manner.

PERAC's study,
which will be submitted to the Legislature, will include the cost and
actuarial liability associated with increasing the base from $12,000 to
$22,000 incrementally by the thousand. In doing so, the Commission will
provide alternative funding schedules which would reduce the unfunded
liability to zero by 2028, 2034 and 2038, respectively. The
Commonwealth's current funding schedule requires the state and
teachers' unfunded liability to be reduced to zero by 2023, in effect
closing the door on a higher base.

In
addition, the Commission will provide assistance in developing similar
schedules for the purpose of increasing the base at the request of any
retirement board in the state.

"This
will be the start of a comprehensive fiscal project to find alternative
ways of increasing the COLA base," said White. "Our goal is to open the
door for retirees of all the state's retirement systems to receive a
COLA on a more realistic and affordable base.

"In
seeking a higher base we are in no way deserting our many members who
have pension smaller than $12,000, much smaller in some cases. We have
always championed the little guy and will continue to do so."

"We
must acknowledge Representative Bob Koczera and Senator Steve Tolman,
the co-chairmen of the Joint Public Service Committee, who sponsored
the COLA base amendments in their respective branches," said
Association Legislative Liaison Shawn Duhamel. "In fact, we must thank
the entire leadership team and members of both branches for their
backing of this breakthrough legislation."

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