House Allows For Local Option Increases

APRIL 29, 2010: The Association achieved a major legislative victory on Monday, when the House of Representatives unanimously approved an amendment to the Municipal Relief bill allowing local retirement systems to increase the COLA base, in $1,000 increments, from the current $12,000.

This local option provision is a new milestone in the Association's long-fought battle to increase the base amount on which the annual COLA is calculated. It is the first stage of a major effort to increase the COLA base for all public retirees in the coming months.

This local option provision is a new milestone in the Association's long-fought battle to increase the base amount on which the annual COLA is calculated. It is the first stage of a major effort to increase the COLA base for all public retirees in the coming months.

While changes in retirement benefits have historically begun at the state level, then work their way to local acceptance, circumstances dictate a different process this time that has created an opportunity for local retirement systems to lead the way.

"Normally this type of bill would apply to the state and teachers' systems first, then we'd fight to get it adopted at the local level. This time we have our local members leading the way toward a higher COLA base," enthusiastically said Association President Ralph White. "This is something we've been working hard on since 2003. We've gotten close before, but this time we are going to get it done."

In an effort to allow the state's 103 local retirement systems to address the severe losses that resulted from the 2008 financial collapse, new pension valuations are being developed that allow for new 30-year pension funding schedules at the local level. This creates a unique opportunity to allow, by local option, each retirement system to increase the COLA base and roll the costs into the long-term pension funding schedule.

Over the coming winter, the massive State and Teachers' pension fund will revalue and establish a new funding schedule of its own. This will create the same opportunity to raise the COLA base for state and teacher retirees that currently exists at the local level for municipal retirees.

The base was last increased in 1997 - thirteen years ago - when it went from $9,000 to $12,000. At present, the annual 3% COLA increases a retiree's retirement allowance by a maximum $360.

Giving Thanks

While our Association's amendment passed the House unanimously, it was not without a large amount of lobbying and behind the scenes advocacy by our legislative team. Representative Robert Spellane (D-Worcester), House chairman of the Joint Committee on Public Service, was the amendment's lead sponsor and top advocate within the House.

Chairman of the Committee on Municipal and Regional Government, Paul Donato (D-Medford), also played a pivotal role. And Republican Leader Brad Jones (R-Reading) and ranking Ways and Means member Vinny deMacedo (R-Plymouth) lent their support as well.

Ultimately, it was House Ways and Means Chairman Charley Murphy (D-Burlington) and Speaker Robert DeLeo (D-Winthrop) who gave the go ahead for the amendment to pass.

"I cannot say enough about the role Bob Spellane played in this amendment being passed. He is a member of the Speaker's inner circle of advisors and was willing to make the COLA his top priority, advocating for its passage," explained Association Legislative Liaison Shawn Duhamel. "The key to this bill is that it is not only a local option, but contains the needed flexibility for local retirement systems to adopt without causing spikes in local pension appropriations.

"Thankfully, we have leaders in the House who understand this issue and agree that the time has come to finally resolve a difficult problem - which is how do you fund an increase in the base."

The Municipal Relief bill, H4631 , is now before the Senate Committee on Ways and Means. It is expected to be voted on by the Senate by late May.