COLA Delay Continues

NOVEMBER 2001
- Economic Woes Slow Legislative Process - Beyond the human tragedies that have resulted from the September 11
terrorist attacks is the impact the tragedy has had on our economy. The
economic downturn that began last year has been accelerated in the
weeks following the attack. As a result, legislative leaders are
closely monitoring state revenue receipts and considering trimming
expenditures for the current fiscal year.

The
Legislature plans to hold off on passing the FY’02 State Budget until
after September economic reports are complete. House Speaker Thomas
Finneran, Senate President Thomas Birmingham, and Governor Jane Swift
are fearful that the budget, as it currently stands, maybe several
hundred million dollars out of balance.

While
House and Senate budget conferees continue to wrangle over the Fiscal
2002 state budget, state and teacher retirees patiently wait for their
2001 COLA. When passed, it will take effect retroactive to July 1.

Local
government retirees – city, town, county, authority, district –
received their COLA in July by a vote of their retirement boards. State
and teacher retirees will ultimately receive the same COLA retroactive
to July when the budget is passed and signed by the Governor. The COLA
is not jeopardized because of the delayed budget.

“Since
an annual 3% COLA is assumed within the Commonwealth’s pension funding
schedule and has already been approved by the governor and both
legislative branches, passage of the increase is not in question,”
explains Association President Ralph White.

If
the budget is signed by mid-October, the retroactive payments will be
in the October checks. The same schedule applies if the budget is later
signed before mid-November, when there will be a catch-up COLA in that
month’s check.

Bills On Hold

With
the economy in a flux and the budget undergoing revisions, Legislative
leaders have also placed an unofficial moratorium of sorts on the
passage of most legislation. Bills that would add to the Commonwealth’s
bottom line are at a virtual stand-still.

Since
the majority of the bills contained in the Association’s legislative
package contain a cost that the state would be required to bear, the
status of our 14 bills remains unchanged from what was reported in the
September Voice. In addition, with local governments bracing for cuts
in local aid, a hostile environment exists when it comes to local
approval of new benefits, which would add costs to municipal budgets.

“What
took place in September has changed everything. With all of the
uncertainty that currently exists and a possible recession taking
shape, the Legislature is being extremely cautious as to how they
proceed,” said Association Legislative Chairman Bill Hill. “The current
legislative leadership and the governor experienced the hardships of
the last recession firsthand. They are determined not to repeat the
same mistakes.

“This is not to say
that the Association has given up on any of our bills. We are all going
to have to exercise some patience while this problem is dealt with. It
is a two year session and we have made great progress to this point. We
are hopeful that the economic situation will improve over the next few
months, allowing us to get back on track.”

Dental Plan Advances

On
a brighter note, the Commonwealth’s Group Insurance Commission (GIC) is
moving forward with efforts to create a retiree pay-all dental plan.
Members will recall that a study, which attempted to develop a
dental/vision plan this past year, proved too costly for most retirees
to afford under the current contract.

As
we go to press, the GIC is releasing a request for proposals (RFP) for
a new dental provider for active state employees, which will take
effect July 1, 2002. Included in the RFP is a provision to also develop
a plan for retirees, as a rider of sorts along with the active employee
contract.

“We will know more about
what can be developed in the coming months, once the RFPs begin to come
in. The goal is to design a plan that is affordable for our members,”
said Association Legislative Liaison Shawn Duhamel. “An expensive plan,
one that exceeds $60 a month for individual coverage, is not realistic.
The approach the GIC has now taken should prove beneficial.”

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