GLOBE SLAMS PROPOSAL

 JULY 21, 2010: Following weeks of intense negotiations, the House and Senate have enacted the Municipal Relief Act (H4877). The bill, which now awaits Governor Deval Patrick's approval, contains our Association's proposal to incrementally increase the local COLA base.

Despite our modest approach, that has been fully vetted and researched over the past decade, an editorial in the Thursday, July 15 edition of the Boston Globe slams the proposal and calls for the rejection of the bill.

Contrary to the Globe's editorial spin, our proposal is sound fiscal policy that will take a small step toward offering relief to retirees who continue to witness the erosion of their pension benefits. As two separate studies have now proven, Massachusetts is one of just three states, which do not apply COLA benefits to a retiree's full pension.

While we must accept the reality that our large unfunded pension liability restricts the ability to provide full COLA benefits in Massachusetts, progress must be made to increase the base beyond the current $12,000 - the same level it has been at since 1997!

Our proposal, which received bipartisan support and was unanimously passed by both the House and Senate, grants local option authority to local retirement systems, with the approval of the local legislative body, to increase the COLA base for retirees of that system in $1,000 increments. Given the complexities of local pension funding status, a one-size fits all approach no longer holds merit.

Any increased costs that come about as a result of increasing the base can be rolled into the new 30-year pension funding schedules that will be allowed under the Municipal Relief Act. These new schedules will benefit both retirees, as well as local taxpayers, by stabilizing local pension appropriations and accounting for huge losses incurred as a result of the 2008 market collapse.

"The Globe editorial is not surprising. They continue to rail against public retirees and misrepresent the status of our pension system," said Association President Ralph White. "The truth is our pension system is one of the best run in the country, and unlike many other states, we are financially stable despite the down market.

"Our members have waited 13-years for a higher base, and we finally have a proposal on the governor's desk that we believe is the best solution to a complicated problem. We urge the governor to approve this bill and allow communities the ability to address the COLA base at the local level."

As previously reported, an increased COLA base for state and teacher retirees will be examined as part of the coming revaluation of the state/teachers pension funding schedule. This revaluation will begin in late 2010 and take effect on July 1, 2011.

Members interested in contacting Governor Patrick to ask that he approve the Municipal Relief Act with the COLA base proposal intact can call 617-725-4005 or email using the official online form contained at the bottom of this link. The governor has until Friday, July 30, 2010 to act on H4877.