Local Retirees Receive 3% COLA

SEPTEMBER 2001
- State, Teachers Await Budget Passage For Their COLA - For the first time since the enactment of our new 1997 COLA law, all
eligible retirees and survivors of the 104 city, town, county,
regional, authority and district retirement systems received a 3%
pension cost of living (COLA) increase effective this July.

The
2001 three percent COLA was made possible by the vote of the
five-member retirement boards for each of the 104 local retirement
systems. These systems encompass all public retirees in the
Commonwealth with the exception of the two largest systems, the state
and teachers’.

Members will recall,
that our Association’s 1997 legislation (Ch. 17) made it possible for
local governing bodies to authorize retirement boards to independently
vote for annual COLAs based on the consumer price index (CPI) or 3%,
whichever was less. Since the CPI, at that time, was running less than
3%, our Association sponsored legislation in 1999 (Ch. 127) which
allowed boards the option of voting for a full 3%.

In
1999 and 2000, five boards did not vote for the full 3%, but rather
voted for the lesser CPI figures of 1.3% (1999) and 2.4% (2000).

Even
though this year’s CPI was 3.4%, the boards were limited – but not
required – to vote for 3%. However, despite our criticism of boards
which did not previously vote for 3%, we can only praise all boards
this year for voting for the full COLA. This unanimous vote came at a
time when many local pension funds actually lost money on their
investments last year and were facing another down market year in 2001.

State, Teachers Will Receive Retroactive COLA

Because
the FY 2002 state budget (effective July 1, 2001) was not passed in
time for eligible state and teacher retirees to receive the new 3% COLA
in July, there will be a retroactive COLA payment when the budget is
ultimately signed.

There are several
areas in the budget on which the House and Senate disagree and until
both sides reach final agreement, a budget cannot be passed. As we
previously reported, both branches and the Governor have agreed on the
3% COLA; therefore, the new state and teacher COLA is assured.

Passage of the budget will be noted on our 24-hour toll-free recorded hotline and posted on our website.

Members,
retired prior to July 1, 2000, are eligible for this year’s COLA.
Members, retired prior to July 1, 2001, will be eligible for next
year’s COLA.

At the present time,
the $12,000 base remains in effect. The 3% is applied to the first
$12,000 of any pension, meaning that it will be applied to the entire
pension if under $12,000 and to $12,000 of any pension over that
amount. Under this formula, the maximum increase is $360 or $30 monthly.

“This
is the first time we’ve had unanimous support among all retirement
boards,” said Association President Ralph White. “After working so long
and hard to win COLA autonomy for local boards – meaning they don’t
need approval of the mayor, council, selectmen or town meeting to grant
a COLA – it’s disheartening when a board doesn’t use that power.

“One
board (Easthampton) did vote 3-2 against a COLA this year, but under
pressure from retirees, took a later vote which was 4-1 in favor of the
COLA. That gave us a 100% record for this year.

“The
Governor, House and Senate all came through on behalf of state and
teacher retirees. While this COLA cannot be paid (retroactive) until
the FY 2002 budget is passed, our members are accustomed to late
budgets and the politics involved in finalizing these budgets. We have
no complaints with this annual process.”

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