RAISE COLA BASE NOW

MARCH 2008: Starting with a special study in 2004, the Association has spent the past four years moving the debate forward on raising the COLA base to a higher level. In 2005, the Public Employee Retirement Administration Commission (PERAC) recommended that the COLA base be raised from the current level of $12,000 to a new level of $16,000. The current $12,000 base was established by the Legislature nearly eleven years ago in 1997.

S2234, which our Association has supported and is currently before the Senate Committee on Ways and Means, has proven to carry too high an initial price to be passed at this time. According to PERAC, the initial cost of raising the base with an automatic indexing feature would add at least $400-$800 million to the state’s pension appropriation in the first year. With the country now entering a recession, the likelihood of such an ambitious proposal passing in the next few years is remote.

For the past three years, our Association has advocated on behalf of a $16,000 base, using PERAC’s report as the basis from which to begin. In order to pay for the upfront cost of raising the base, our Association has proposed extending the pension funding schedule by three years, reaching full-funding in 2026.

Without extending the Commonwealth’s funding schedule, the Legislature will be required to increase the annual pension appropriation for the state and teachers systems by $119 million. Similar to refinancing one’s mortgage, this cost can be rolled into the pension funding schedule by extending the dates by just three years.

Our Association has met with the top staff of the Senate Ways and Means Committee and made a strong case for the base to be increased to $16,000 in 2008. The decision on how to proceed rests with the Committee’s Chairman, Steven Panagiotakos (D-Lowell), along with Senate President Therese Murray (D-Plymouth). Both President Murray and Chairman Panagiotakos have been good friends to public retirees. We very much appreciate their past support of our Association and our members.

"We are now calling on Senate Leadership to move forward with a $16,000 base in 2008. With the current base already below the average pension, a delay will only serve to push retirees further behind. Eleven years have now passed since the last change was made; now is the time to act," said Association President Ralph White.

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