3% July COLA On Schedule

JULY 2005
- Retired members of our 106 retirement systems can look forward to a
new 3% cost-of-living adjustment (COLA) in their July pension checks.

At
the state level, the Governor, House and Senate have taken the
necessary steps within the FY'06 budget, effective this July, to assure
a new COLA for state and teacher retirees.

Locally,
100 of our 104 city, town, county, regional, district, and authority
retirement boards have voted for 3% July COLAs for their retirees. The
remaining four boards are scheduled to approve 3% before the end of
June.

Under law, any retiree or
survivor on the pension rolls prior to July 1, 2004 will be eligible
for this July's COLA. Members retired since that date, and prior to
this July 1, will be eligible for the July 2006 COLA. The eligibility
date is uniform to all retirement systems.

The
$12,000 base, which is the maximum portion of any pension to which the
3% can be applied, remains in effect this year. Therefore, the maximum
COLA will be $360 annually or $30.00 monthly.

Tackling the Base

As
members know, the $12,000 base, which was originally $5,000, has been
the most difficult and frustrating section of our COLA law to change.
Pension benefits are no longer a pay-as-you-go budget item, and
ratcheting up the base under current law is a daunting undertaking.
"In a sense, we are held hostage to our funding schedule which requires
that any improvement in a pension law, in this case the COLA base, must
not only show the immediate cost, but also the future cost," said
Association President Ralph White. "And much of the future cost must be
paid in advance in today's dollars (annual budgets).

State
law requires that the current unfunded liability of all retirement
systems must be paid off no later than the year 2028. "We've researched
the cost of increasing the base to $16,000, for example, but
unfortunately the actuarial numbers are much too high to present to the
Legislature with any chance of passage," explained White.

"Despite
the funding schedule obstacle, there is hope. We've been working with
PERAC's (Public Employee Retirement Administration Commission)
actuaries," said White. "A bill we pushed through last year brings
PERAC into the fold. PERAC is required to submit a COLA base report to
the Legislature by the end of this year. The PERAC Commissioners would
very much like to help us find funding alternatives. All organizations
and agencies in the public retirement arena have been invited to become
involved in this COLA base project."

White Optimistic

Meanwhile,
White, ever the optimist, points out that despite the $12,000 base,
eligible retirees will have received seven successive 3% COLAs at the
end of this July, plus a 2.1% COLA in 1998. This would equate to an
increase of $2,772 over that period for a person with a $12,000 pension.

"Compared
to the previous nine years when there were only three COLAs, 1998 was a
breakthrough year. When we were successful in getting the law changed
at that time, including increasing the base from $9,000 to $12,000, it
was regarded as a huge victory."

"We're
now at the, 'What have you done for us lately?' stage with some
members. It's human nature. I think that most members understand that
if anything can be done to improve the base, we will get it done.
Truthfully, our members have been great with their support," said White.

Tags: