Local Adoption Almost Complete

JULY 2009: In a desperate rush to put together a FY'10 state budget in the face of a $2 billion revenue shortfall, triggering language for the state and teacher retirees 3% July COLA, was omitted from the Senate budget when that branch began budget debate on May 18.

Alert Association leaders contacted Senator Tom McGee (D-Lynn), Senate Chairman of the Public Service Committee, and gave McGee an amendment drafted by Association Counsel Bill Rehrey, which contained the necessary COLA language. When it became known that Senator McGee was sponsoring an amendment, a large number of Senators signed on to the amendment, which was ultimately approved on the Senate Floor.

"For a brief time, the COLA got caught up in the anxiety caused by sharply falling tax revenues," reports Association Legislative Liaison Shawn Duhamel. "With the ongoing help of Senators McGee and Ken Donnelly (D-Arlington), we were able to make it clear that the COLA funding comes from the retirement system itself and not a separate cost to the budget.

"We are also very pleased that the legislature has not increased state retirees' health insurance contributions (10% if retired before 7/1/94, otherwise 15%), despite the economic collapse. Active state employees may regrettably be forced to contribute 25% this July."

Although it could be several weeks before a House-Senate Conference Committee reaches a compromise on several differing sections of the budget, the state and teachers' COLA is now safely secured within the budgets of both branches and will be included in the final budget that will go to Governor Deval Patrick for signing.

At the municipal level 95 of our 104 local retirement boards have voted for 3% July COLAs for their eligible members. We fully expect that the remaining retirement boards will have completed the necessary vote well in advance of the increase scheduled for the July checks.

Although the $12,000 COLA base will remain in effect for this year at least, increasing the base to a higher level remains a top priority for our Association.

"With the average market loss of 25% or greater for our pension investment funds last year, we knew that there would be no increase in the base this year," says Association President Ralph White. The Commonwealth's giant PRIT Fund, which invests the state and teachers' funds as well as a large percentage of municipal retirement systems' funds, was down by 29% last year. It started the year with $53.7 billion and ended with $37.8 billion - a loss of $16.9 billion.

"However, the road to fiscal recovery has begun," said White. "The 2008 market slump continued through January and February of this year, but the federal stimulus program's impact began with the PRIT Fund's 1.6% return for March, a 6.25% investment return for April and a strong market all spring."