The base is the maximum portion of any pension to which the 3% cost-of-living (COLA) increase can be applied. A 3% COLA applied to the $12,000 base equates to a $360 annual increase.

“H335 is being held by the Public Service Committee at our request,” explained Association President Ralph White. “If the bill had been reported out of the Committee at the June 30 deadline, it faced almost certain death. The actuarial cost for state and teacher retirees furnished by Jim Lamenzo, who is the actuary for PERAC, placed the $20,000 base well out of reach - $182 million to be exact.

“In fact, the figures for a possible compromise base of $14,000 or $16,000 were $50 million and $99 million respectively. These numbers were much higher than we anticipated. Right now we’re in a holding pattern trying to find an alternative to our funding schedule.”

Under current law, the state is under a funding schedule that not only addresses future liabilities as they occur, but also requires all past pension liabilities to be fully funded by the year 2018.

The funding schedule can be compared to a mortgage, which the state has obligated itself to pay off by 2018. The $12,000 base is currently included in the cost of that mortgage, not only for current retirees, but also for employees whose benefits must be funded in advance of their retirement. It is this changeover from the old pay-as-you go pension plan, which built up huge debts, that makes increased benefits so difficult at this time.

In 1997 and 1998 when the state and local governments adopted a $12,000 base, up from the previous $9,000 base, there was a major increase in the state and local government funding schedules. Many of the local retirement systems “re-financed” their funding schedules by extending their full-funding date to 2028.

“If the state were to extend its funding schedule by five or ten years, that might take care of a higher base without any increase in the annual appropriation. I don’t see that happening,” said White. “If we had maintained a pension fund investment return like 1999 (24%) for another year or two it’s possible the state could have done a new valuation showing these gains, and included a higher base without any annual increase in the appropriation.”

White was quick to point out that the Association hasn’t given up. “It’s true this has been a temporary setback... a bump in the road. But we haven’t given up by any means. We are now looking at an alternative strategy,” he said. “I’m optimistic we can get this worked out, and we certainly don’t want to hold up any local retirement systems that may be in a position to raise their base at this time.

“I also want to make it clear that Jim Lamenzo is on our side. He was just as disappointed as we were when the numbers were crunched. His 1997 numbers disproved our opponents’ assertion that a 3% COLA, on a $12,000 base was not fiscally responsible. And there is a fiscally responsible answer to our quest for a higher base. We will prove it, yet.”