Pension COLA Base To Be Studied

JANUARY 2004
- Public Service Committee Acts - In a move that breathed new life into our efforts to raise the base
upon which the annual pension cost-of-living adjustment (COLA) is
applied, the Joint Committee on Public Service has commissioned an
in-depth study of the subject.

With
the state recovering from a $3 billion deficit for the current fiscal
year and another $2 billion shortfall predicted for the coming fiscal
year, the Association had held dim hopes that any action would be taken
on a new COLA base this year. Hope sprung eternal in November, when the
Public Service Committee released SB 1453 with a favorable report.

The
Committee, which is chaired by Representative Robert Koczera and
Senator David Magnani, drafted language for the Committee itself to
officially study the issue. This unusual move would create an official
legislative report that will likely serve as a blueprint to raise the
COLA base.

Currently, the base to
which the COLA is applied is locked in at $12,000. In other words, a 3%
COLA is applied to only the first $12,000 of a retiree or survivor's
pension. As members are well aware, this has been the case since 1998,
when the base was increased from $9,000.

Combining
a number of bills under one number, SB 1453, filed by Senator Guy
Glodis (D-Worcester), the Committee chose one vehicle to advance the
issue and develop the cost analysis that is key to future action on any
base increase.

"We have to address
the COLA base, which at $12,000 is too low," said Glodis. "By drafting
language that would raise the base in increments of $1,000 we can get a
price tag on the increase in the unfunded liability at each level. This
is essential to understanding what the increase in the annual pension
appropriation would ultimately be."

"We
moved from a $9,000 base to $12,000 in 1998, but have been stalled at
that level since that time," explained Association President Ralph
White. "The negative stock market returns have caused the unfunded
liability to become a major obstacle. Our members understand this and
have been very patient and understanding of the Commonwealth's fiscal
plight. However, now is the time for the Legislature to cut us some
slack by beginning to prepare for the next step."

As
of press time, the bill had advanced to the Joint Committee on Rules,
which is chaired by Senator Stephen Brewer (D-Barre) and Rep. Angelo
Scaccia (D-Hyde Park). Both have been strong allies of public retirees
and our Association.

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