BREAKTHROUGH ON COLA BASE

SEPTEMBER 2008: A vote by the House and Senate, during the closing hours of the 2008 formal legislative session, has made it possible for eligible members of the State and Teachers’ Retirement Systems to receive three-percent COLAs calculated on a new $16,000 base.

(Editors Note: Shortly after going to press with this story, contained in the September issue of the Voice, Governor Patrick vetoed the legislation that would have increased the base to $16,000 in 2008)

The vote, which came on the evening of July 31, the last day of the session, was a spin-off of enabling language contained in the FY’09 State Budget, effective this July.

Both the House and Senate had included the $16,000 base in the budget when they sent it to Governor Deval Patrick in June. However, the Governor sent the COLA piece back to the Legislature with an amendment that limited the new base to annual pensions for those under $40,000, with those above that amount to remain at the same $12,000 base created in 1997.

Although the large majority of our members have pensions of under $40,000, we have never advocated a policy of splitting ranks when dealing with the COLA base, and made our feelings known to House and Senate leaders.

After several days of intensive negotiating with the Legislative Leadership and working with the MTA (Mass Teachers Assoc) and AFTM (American Federation of Teachers Mass), we reached an agreement that the base would increase to $16,000, but remain at $12,000 for pensions of over $40,000 for the current fiscal year. However, that limit will be removed next July under a sunset clause, which was included in the compromise bill (H4959) that was sent to the Governor on July 31.

A major component of the bill was the extension of the Commonwealth’s funding schedule, which required that amortization of the unfunded liability of the State and Teachers’ Retirement Systems be completed by Year 2023. The bill extends the schedule to Year 2026.

Opponents of the bill claimed that the extension will cost the state $2 billion. Proponents say that this figure is grossly exaggerated and that any additional cost will be satisfied by the long range investment earnings of the employees/retirees pension trust fund.

This is breakthrough legislation, with an emergency preamble, meaning it would take effect immediately back to July 1. "Although it’s not where we would like to be in terms of our total membership, the compromise bill represents a step forward," said Association President Ralph White. "We would hope that the governor agrees."

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