NEXT UP: Pension Reform Phase 3

Association Urges COLA Inclusion

SEPTEMBER 2011 Voice: Determined to act this year on what might prove to be a generational change in our public retirement formula, Legislative Leaders are now drafting legislation that would serve as the third major pension reform measure passed in as many years.

The Joint Committee on Public Service, which is actively reviewing Governor Deval Patrick's reform proposal (HB35), may release its own reform bill prior to the time the Legislature returns from its summer break in early September. Association officials have repeatedly met with Committee Chairs, Representative John Scibak (D-South Hadley) and Senator Katherine Clark (D-Melrose) to discuss reform topics.

As was outlined in our July 2011 edition of the Voice, the Association has urged a tempered approach be taken with pension reform, one that does not destroy the integrity and equitable nature of our defined benefit system. Of utmost importance, Association leaders have also asked that any reform initiative, passed by the Legislature, increase the COLA base for state and teacher retirees.

With the success demonstrated in raising the base by local retirement systems, the stage has been properly set for the Legislature to now address the state and teacher COLA. As members are well aware, the COLA base amount for state and teacher retirees, established in 1997, remains at $12,000.

"We're hopeful that the Legislature will act prudently and not make any deep cuts to future employees' retirement benefits. Despite what critics may say, the facts simply don't support the need to make wholesale changes," explains Association President Ralph White. "That said, there is always room for improvement. Closing loopholes and ensuring a small number of people are not abusing the system makes sense.

"However, when you look at the official PERAC reports that show a new Group 1 career employee is funding over 120% of their pension, it tells a very different story. Even Group 4 employees are funding over 85% of their own benefit. These are factors that should be kept in mind as contribution rates, retirement age and benefit formulas are reviewed.

"And, we believe that the state and teacher retirees' COLA base has to be included within a new reform bill. This is an issue that has not been addressed since 1997. If you're looking at a general reform measure, then it makes sense to include the COLA."