2.3% COLA For 2008

Hull, Hingham Early Birds

JANUARY 2008: Retirement Boards, across the Commonwealth, will once again have the opportunity to vote 3% COLAs for their eligible retirees effective July 2008, rather than a 2.3% increase, an alternative option allowed by law.

Under Section 103 of Massachusetts’ retirement law, all 104 of our local retirement boards have until July to vote, but most will be voting well before that date.

The 2.3% alternative option is calculated by comparing the consumer price index (CPI) increase from the third quarter of 2006 to the third quarter of 2007. This is the figure that is being used to increase Social Security checks this January.

Actually, the Section 103 law allows boards a third option. That is to vote for a zero COLA if the payment of a COLA would “substantially impair the funding schedule” of their retirement system. It’s been 1999 since any board voted a zero COLA and Year 2000 since any boards voted less than 3%.

Once the CPI for the third quarter is released by the Bureau of Labor Statistics in mid-October, any Board is free to go ahead and vote for the following July’s COLA. Traditionally, Newton, Plymouth County, Bristol County and Medford are among the first Boards to vote.

Hull, Hingham First Boards To Vote

Last year, however, wealthy Wellesley was surprisingly the first Board to vote. This year Hull and Hingham were the first to vote, both at their October meetings – Hull on the 23rd and Hingham on the 31st. On their heels, the Newton Board voted for a 3% COLA on November 21, followed then by the Blue Hills Regional Board on November 27 and the Medford Board on November 28.

At the state level, the 3% language triggering the COLA for state and teacher retirees will be included in the Governor’s FY ’09 (effective July ’08) state budget, which he will submit in January, subject to approval by the Legislature. Members will recall that former Governor Mitt Romney neglected to include a COLA in two of his four proposed  state budgets, an item that was eventually rectified by the House and Senate.