And, although the state returned the responsibility of new COLA costs to local governments beginning in 1998, the Commonwealth is still paying nearly $100 million per year to the locals for COLAs that have been built into municipal pensions during the ‘81-’98 period.

It should be noted that state COLA payments to local retirees were the direct result of our Association’s action in 1981 when the Legislature refused to pay state and teachers COLAs without a guarantee that local government retirees would also receive COLAs.

"There was only one solution," said Association President Ralph White. "The money from all COLAs, state and local, would have to come from the state budget, an unprecedented expenditure.

"We started with Mike Creedon (D-Brockton), chairman of the House Ways and Means Committee, and convinced him to add $13 million to the state budget, enough to cover a 3% COLA for all retirees. We termed it to be a ‘temporary move.’ After meeting with Tom McGee (House Speaker), he agreed to back our proposal during budget debate. The procedure was repeated in the Senate with Chet Atkins (chairman, Senate Ways and Means) and Senate President Bulger. The budget was signed by Governor King with the COLA money intact."

The rest, of course, is history. The "temporary move" became an 18-year-run during which time the ever-increasing liability to the state ultimately resulted in only three COLAs during a nine-year period prior to 1998 when the law changed requiring local retirement systems to again pay for any new COLAs.

Time For Change: Board Members

"It was a good move at the time," said Medford Retirement Board Chairman Tom Curtis. "Prop. 2 1/2 really squeezed us and there wouldn’t have been any COLAs if the state hadn’t picked up the cost. The local systems are now in a position to fund their own COLAs, and that’s the way it should be."

New Bedford’s longtime Retirement Board member Paul Lestage agrees with Curtis. "It was a temporary solution in 1981, but never intended to be permanent. Actually Tom Finneran (House Speaker) did all retirees a favor by creating the COLA Commission which drafted the new legislation (Ch. 17 Acts ‘97) making it possible to give retirees a new COLA every year."

And Lynn’’s senior Retirement Board member Jim Welsh sees "better days ahead" for all retirees. "The retirement systems have done very well with their investments and will eventually be fully funded," he said. "Better days are ahead for retirees who will be able to count on annual COLAs. We (Lynn) have greatly benefited from the state’s appropriations but now the COLA is back in our hands."

It should be pointed out that although the state’s local payments will gradually decrease through deaths, the Commonwealth’s pension liability fund is currently showing an additional $1 billion as part of its unfunded pension liability because of projected payments to local systems.

"While local governments weren’t happy over the change in the COLA policy, I really don’t think they have any complaint," added Ralph White. "Most retirement board members agree that COLAs are the fiscal responsibility of each retirement system."

The chart (of COLA payments to retirement systems since 1981) shows the amount that each retirement system received in the most recent fiscal year, FY 2000. Also shown is the total amount each retirement system has received from the state since 1981, the first post-Prop 2 1/2 year. All amounts include payments for non-contributory retirees.