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Gov. Patrick Files Final Budget Proposal
Includes 3% COLA & Funding Schedule Changes
JANUARY 22, 2014: Within the final budget proposal of his eight-year tenure as governor, Deval Patrick chose to include two provisions of critical long term importance to public retirees and surviving spouses.
As he has consistently done in the past, the governor has recommended a full 3% cost-of-living adjustment (COLA) for state and teacher retirees who retired before July 1, 2013. Like 2013, the new COLA will be paid on a base of $13,000.
Local retirees will note that municipal, county, regional, authority and district retirement systems are responsible for their own COLA payments, as well as the local establishment of a COLA base. Locally, the COLA base ranges from $12,000 to $18,000.
“I have to give credit to Governor Patrick for now having proposed a COLA increase in each of the past 8 years. Not only is this extremely important to state and teacher retirees, but also sets a positive example for local retirement systems to follow,” said Association Vice President Ralph White. “And with 2013 having delivered great pension investment returns across the state, we’re hopeful that another round of COLA base increases might be on the horizon.”
On Tuesday, State Treasurer and Receiver General Steve Grossman announced that the Commonwealth’s Pension Reserves Investment Trust (PRIT) Fund posted a 15.2% return in 2013 – nearly doubling the assumed rate of return of 8%.
Patrick also followed through on an agreement recently reached with Legislative Leaders and the Public Employee Retirement Administration Commission (PERAC) that increases the Commonwealth’s pension funding appropriation, while shorting the funding schedule by 4 years to 2036.
The plan also puts in place a more conservative approach towards ensuring the stability of the retirement system for years to come.
“By agreeing to this new approach the governor, treasurer and legislative leaders have reaffirmed the commitment to fully funding the Commonwealth’s pension system within the next 22 years. Not only is this good for current retirees and taxpayers alike, but also ensures that the system will be sustainable for future generations as well.”
Patrick’s FY15 budget proposal now goes to the House Committee on Ways and Means, before being debated by the full House in April.