COLA Reform Now Law

JULY 1997 - After
more than a year of studies and a hard fought lobbying effort by our
Association, the Legislature passed the COLA reform bill on June 2. The
bill, S-1753, was signed into law by Governor William Weld on June 9,
1997, as Chapter 17 of the Acts of 1997.

While
the law does not provide for a COLA to be paid this year, it is a
significant change in how all future COLAs will be funded. COLAs will
now be funded by each individual retirement system. Annually, the COLA
will be based on the Consumer Price Index (CPI) or 3%, whichever is
less, and will be paid on a base of $12,000.

As
we have reported in previous issues of the Voice, the new COLA law is
the product of a Special Commission established in 1996 to develop a
new way of funding retirees’ COLAs. The Commission filed its proposal
with the Joint Committee on Public Service early in the year, which was
unanimously endorsed by the Committee on March 18.

On
April 17, the Senate, after a lengthy speech by Senator Marian Walsh
(D-West Roxbury), engrossed the bill by a vote of 38-0, in a show of
bi-partisan support for the proposal. Soon after the Senate vote, the
Mass. Municipal Association (MMA), which had been a member of the COLA
Commission, changed its position on the bill. Local officials, many of
whom opposed the bill, began pressuring the MMA to stop the bill from
passing the House. For the next month, the MMA fought to derail the
bill and stay with the present system of the state paying for the COLA.

“After
the COLA passed the Senate, the MMA started getting calls from local
officials who were concerned over the cost of paying for the COLA at
the local level,” said Association Legislative Liaison Shawn Duhamel.
“Once the heat was turned up by their members, the MMA had no choice
but to lobby against the bill.”

Feverish Debate in House

On
Wednesday May 21, the House Ways & Means Committee, chaired by Paul
Haley (D-Weymouth), released the COLA bill by a unanimous vote at an
executive session. The following day, during a full formal session, the
House leadership made a procedural move to bring the COLA to the floor
for a vote.

Republican leadership,
along with a handful of Democrats, acting on information supplied to
the MMA by the actuarial firm of Coopers and Lybrand, painted a bleak
picture of the COLAs’ fiscal impact on local government budgets. They
argued that the bill should be put off until further studies could be
conducted. Opponents of the bill were initially successful in holding
off the vote by preventing the bill from being brought to the floor.

Under
House rules, any bill which is not printed on the daily calendar must
receive a two-thirds majority to be brought to the floor for a vote. In
this case, the vote to suspend the rules failed by one vote.

“When
we lost the vote to suspend rules, we knew it could be the start of
endless delays which would give opponents more time to spread their
fiscal propaganda,” said Association President Ralph White. “But having
made a commitment that the time had come to get the job done, the
Speaker invoked a rarely used rule that saved the day. This bill had
been his concept from the beginning and in the clutch he stood by his
word.”

After losing the initial
vote to suspend the rules, House Speaker Thomas Finneran dispatched his
lieutenants onto the House floor to lobby the members on behalf of the
bill. Then, using a rarely used procedural move, acting Speaker Angelo
Scaccia (D-Roslindale) moved that the House adjourn and meet again
forthwith. By doing so, a new legislative day was born so that the COLA
could be addressed.

House members,
who opposed the bill, were caught off-guard, spending the next five
hours in intense debate. Minority Leader Dave Peters (R-Charlton) urged
the House to put off voting on the matter for a week, so that more
information on the possible costs could be obtained. According to the
figures distributed by the MMA, the COLA would push many communities
into fiscal chaos.

Arguing against
a further delay were Representatives Haley, Timothy Toomey
(D-Cambridge), Sal DiMasi (D-Boston), John Slattery (D-Peabody), and
Mike Ruane (D-Salem). Each dismissed the information being put forth by
the MMA as “bogus” and urged the House not to be swayed be “scare
tactics”.

“On face value, the MMA’s
numbers had painted a very bleak picture of the fiscal impact on local
budgets. However, the data was based on the skewed assumption that
local COLAs would be based on current funding schedules,” continued
White. “The bill allows the locals to establish alternative schedules
that can treat the COLA as a separate entity. Fortunately, the majority
of the Reps. understood this and did not buy into the MMA’s argument.”

Finally,
at 8:20 Thursday night, the House voted 93-40 in favor of engrossing
the bill. This came after attempts by the opponents to offer a variety
of amendments designed to dilute the bill. All attempts to do so failed
overwhelmingly.

‘Held The Line as Long as Possible’

As an organization, our Association lobbied for and won the first ever state appropriation for local COLAs in 1981.

“It
was the first year of Prop.2 1/2,” said President Ralph White. “The
COLAs had always been uniform to all retirement systems by state
mandate, but Prop. 2 1/2 killed the mandate and we were desperately
attempting to maintain this uniformity. It was a fairness issue.”

White
pointed out that year-after-year the COLA became an annual lobbying
priority. “It was always our top priority and even though the amounts
were relatively modest, we were successful every year until 1989 when
the bottom fell out,” he said.

“There
were no COLAs for the next three years, and even though Kevin
Blanchette (former House Chairman of Public Service Committee) pulled a
rabbit out of a hat with a 5% COLA in ‘92, the momentum for the state
paying local COLAs was lost. Last year we were told by legislative
leaders that the local retirement systems would not receive any
additional funds for new COLAs. The message was loud, clear and
unequivocal: Work with the COLA Commission and come back with new COLA
legislation for the 1997 session.”

The
state and teachers COLAs will be in good shape beginning next year. We
held the line as long as possible on the local COLAs, and are now
depending on local retirement boards to work towards parity for their
systems’ members.

The challenge to
local retirement boards is not so much Chapter 306 (disability reform)
as it is to Chapter 17–the COLA. As an Association we are committed to
making Chapter 17 work on the local government level and we expect no
less from elected and appointed retirement board members upon whom
retirees and survivors are dependent. From our observation, most of
these board members are stand-up people who will fight for their
members.

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