Boards Prepare For COLA Vote

JANUARY 2005
- Once again, the Consumer Price Index (CPI) was less than 3%. The CPI
for the year ending with the third quarter of 2004 increased by 2.7%
over the third quarter of 2003. This is the figure that will be used
for increases in the January Social Security and Federal retirement
checks.

Under the Massachusetts'
law, 104 local retirement boards have the option of voting for a 3%
July '05 COLA rather than the lower 2.7% figure. Boards also have the
option of voting for a zero COLA if payment of a COLA would
"substantially impair the funding schedule" of their retirement system.

Last
July's COLA of 3% was voted by all local Boards, with none voting for
the CPI figure of the lesser 2.1%, or a zero COLA. In fact, over the
last six years almost all boards voted for 3%, despite CPIs of less
than 3% in five of those years. The few boards that voted for less than
3% in any given year were sharply criticized by our Association.

"I
would expect that every board will again vote for 3% COLAs, rather than
the lower 2.7% figure. We had some individual board members vote
against 3% last year, but they were outvoted by the other members of
their boards," said Association President Ralph White.

COLAs
for the Commonwealth's two mega retirement systems - the State and
Teachers' - are set by the Legislature and governor, with the same 3%
limit as the local systems. The state budget is the vehicle for the
approval of state and teacher retiree pensions. Governor Romney did not
include a COLA in his first budget, the FY '04 budget, which he
submitted in January 2003. The 3% figure was added to the budget by the
House and Senate, which Romney eventually signed. In submitting his FY
'05 budget, which took effect this last July, Romney did include a 3%
COLA. We would expect that the Governor will include a 3% COLA in his
FY '06 budget (July '05 COLA) which he will file this January.

"The
Legislature has been continuously supportive of funding the COLA," said
White. "Members will recall it was the Legislature, led by House
Speaker Tom Finneran, that revived our near-moribund COLA in 1997 (Ch.
17), despite the strong opposition of the Massachusetts Municipal
Association and then-Governor William Weld. Chapter 17 put local COLAs
in the hands of local retirement boards, not city councils, town
meetings, mayors or selectmen. It gave the boards unprecedented power."

Plymouth County First To Vote

Led
by County Treasurer John McLellan, the Plymouth County Retirement Board
was the first local Retirement Board to vote for a 3% COLA effective
this July. The vote came at a meeting on November fifth.

McLellan,
who is the Board chairman, praised fellow Board members Joe McDonough,
John Sciara, Jim Harrington and John Duggan. "Their (Board) attitude
was 'why wait'," said McLellan who usually vies with Medford to be the
first board to vote for a COLA after the CPI figure is released each
October by the Bureau of Labor Statistics. "Medford scooped us last
year," said McLellan. "There was no way they were going to be first
this year. Tom Curtis (Medford Chairman) is going to be disappointed,
but if he hurries, Medford can be second."

"Between
now and June all boards will be voting," said White. "We pretty much
know which boards wait until the last minute. There are a few mayors
who like to do a little board politicking. It's part of the process.
But that's OK just as long as the boards get the job done."

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