State, Teacher COLA... At Last

JANUARY 2002
- Finally, eligible state and teacher retirees and survivors will
receive their 3% pension COLA which will be effective retroactively to
July 2001.

The increase will be
included in the December checks and, because of the delay, will
actually be a six-month COLA. Retirees, who were on the pension rolls
prior to July 1, 2000, are eligible for this increase.

State
and Teacher Retirement Boards have been unable to pay the July increase
until the passage of the Fiscal 2002 State Budget. It was not until
November 21 that the budget was enacted by the Legislature and sent to
Governor Swift for signing. She then had 10 days to make her vetoes and
sign the budget. Although there was disagreement in the amount to be
appropriated for the Commonwealth's long-range pension funding
schedule, the House, Senate and Governor had earlier agreed on the 3%
COLA.

Local government retirees -
city, town, county, authority, district - received their COLA in July
by a vote of their retirement boards which control their own budgets.
This was made possible by our Association's 1997 legislation (Ch. 17)
which gave autonomy to local retirement boards.

"Delayed
state budgets are nothing new and this year's budget was even more
difficult to finalize because of the projected $1.4 billion shortfall,
due to the recession, which was further exacerbated by the September 11
attack," said Association President Ralph White.

"There
were strong philosophical and political differences between the House
and Senate. When you add the Governor, with her own fiscal and
political agenda to the mix, the delay is easy to understand, despite
the media criticism.

"We have kept
our members fully informed on the budget's progress through our
publication, website and especially our toll-free 24-hour hotline. We
have had very few complaints about the delay. I have found that members
are very understanding when they are kept informed and I applaud them
for being so understanding."

Retirees Eligible For Next 3% COLA In July 2002

Although
the January 2002 Social Security COLA will be 2.6%, Massachusetts'
state and local government retirees and survivors will be eligible for
3% COLAs in July 2002, the start of the next fiscal year.

The
Labor Department's Bureau of Labor Statistics (BLS) announced in
October that the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) had increased 2.6% over last year's third
quarter index, the standard for Social Security and veterans' benefit
increases.

Members will recall that
in 1999 we successfully lobbied for an amendment in the outside section
of the state budget, which allowed COLAs of 3% rather than the CPI
formula then in effect. This was especially beneficial in 1999 when the
CPI COLA would have been only 1.3%.

The amendment was accepted by local retirement systems which also paid 3% COLAs in 1999 and in subsequent years.

While
it's true that local retirement boards still have the option of paying
a lesser 2.6% CPI COLA, we are confident that most will vote for the 3%
figure.

"We are well aware that the
limited $12,000 base remains a barrier to a full COLA on pensions
greater than that amount. But on the positive side, the 3% COLA of the
past three years is a cumulative 9%, which beats the cumulative CPI
COLA of 7.1% over the same period," said White.

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