At this writing, 98 of our 104 city, town, county, authority and district retirement boards have voted for 3% COLAs. One board, Attleboro, voted for a 2.6% COLA. The remaining five boards have indicated they will be voting for three percent COLAs prior to July.

Our Association's 1997 legislation allows local retirement boards to vote on COLAs each year. Boards have the option of voting for a COLA determined by the increase in the consumer price index (CPI) as used by Social Security, if the CPI is less than 3%. The last Social Security CPI was 2.6%. Or, the Boards can vote for a higher 3% COLA.

"Almost without exception, the boards have stepped up to the plate and voted for the three percent," said Association President Ralph White. "And over the last four years when the CPI totalled 9.8%, they voted for 3% each year, adding up to 12%."

Although the law allows a board to vote against a COLA if such payment would "impair" the retirement system's funding schedule, none have taken this action despite two successive bear market years, in which a large number of boards showed negative pension fund investment returns.

"Over an extended period of time, the boards have done very well in their pension fund investments. Most are averaging above 10% on an annualized basis, which is well above their average benchmark of 8.25%. Therefore, even in a bear market cycle the boards are justified in voting for three percent," White said.

With the Acting Governor, the House and the Senate all including three percent COLAs in their respective '03 budgets, it is assured that state and teacher retirees will receive 3% COLAs this July.

Because the House and Senate budgets differ in many regards, a conference committee consisting of fiscal leaders of both branches will be working during the month of June to reach an agreement that can be presented to their members for a vote.

Last year, it wasn't until late November that a House-Senate budget agreement was reached, with state and teacher retiree COLA checks paid in December, retroactive to July.

This year, although it is possible that a final budget vote could extend into July or later, it is likely that an agreement will be reached in time for the COLA increase to take place in the July checks. These are the checks mailed at the end of July.

Members retired prior to July 1, 2001 will be eligible for this year's COLA. Members retired since July 1, 2001 and prior to July 1, 2002, will be eligible for the Year 2003 COLA.

This is a statewide payment formula for all retirement systems in the Commonwealth. The $12,000 base, to which the three-percent is applied, is also applicable to all retirement systems.

We have made progress in raising the base, but this will require increased appropriations to meet the funding liability schedules into which our retirement systems are locked. It does not appear, at this juncture, that FY03 will bode well for increased appropriations. But the COLA base will continue to be a top priority of our Association.