WEEKLY REPORT FOR FRIDAY, FEBRUARY 24, 2023: Between the President’s Day holiday and school vacation week, there is not much to report in terms of legislative or health insurance news. We will have a lot to say about retiree health insurance following the GIC’s insurance premium meeting next Thursday (3/2/2023).
Meanwhile, I would like to bring attention back to the ongoing work to improve COLA benefits for public retirees – particularly the ongoing success we are witnessing at the local level.
Retirement systems across Massachusetts are now in various stages of adopting the additional 2% COLA approved by the legislature and former Governor Charlie Baker last fall. Once adopted locally by both the local retirement board and municipal government, the additional 2% COLA will be added to the 3% COLA approved last July. This increase will place retirees from the 102 local retirement systems on par with retired State Employees and Teachers, who received the 5% COLA last summer.
As you know, the COLA percentage is then applied to the COLA base associated with each retirement system. Across the 102 local retirement systems, the base currently ranges from $12,000 to $18,000 – a level set by the local retirement board, with the approval of the local legislative body. State and Teacher retirees currently have a base of $13,000. A major focus of our Association is to increase this base for the coming fiscal year (FY24).
Local adoption of the additional 2% COLA is a two-step process. First, the 5-member local retirement board must propose and approve the increase. Second, the municipal government must then approve the increase for it to take effect.
To date, we are aware of 45 retirement systems that have approved the additional 2% COLA for the current fiscal year (FY23). Of that number, 27 municipal governments have provided final approval. This means that roughly 1/3 of all local retirees will now have the additional 2% COLA added to their pension check, retroactive to July 1, 2022. The deadline to fully adopt the additional 2% COLA is June 30, 2023.
While each COLA is applied to a specific fiscal year, in this case FY23, once the benefit is paid it becomes a permanent part of a retiree’s pension benefit that can never be taken away. This cumulative impact is not typical across most of the country, where COLAs are often treated as a one-time bonus payment and capped at a certain dollar amount.
The success of the retirement systems listed below is directly related to the hard work and dedication of the local retirement board members. And while the two elected board members representing the members of each system do play an outsized role in advocating for retirees, we owe our gratitude to all retirement board members who do right by retirees.
I should also point out that the list below is not complete or representative of the overall work being done to adopt the additional 2% COLA. The list reflects those systems that have voted to adopt the higher percent, as well as those systems that have received local government approval. The systems listed in BOLD type have received full local approval.
5% FY23 COLA Update (as of 2/23/2023)
- Bristol County
- Franklin County
- Middlesex County
- Worcester County
- Fall River
- Minuteman RSD
- N Adams
If you do not see your local retirement system listed above, you may want to inquire about the COLA status with your local retirement officials. Retired State employees and Teachers (who are members of the Teachers Retirement System) already received the additional 2% COLA last July, after the COLA was approved within the FY23 State Budget. Click here to find your local retirement board. Remember, smaller towns and districts often belong to county or regional retirement systems. These systems have a more stringent local acceptance process due to an amendment added to the legislation at the 11th hour by former Governor Baker.
As we mentioned above, local acceptance of the additional 2% COLA can take place through June 30, 2023. If adopted locally, the new COLA amount is retroactive to July 1, 2022.
We will provide further information on local acceptance as it becomes available.
Next week, we will have a full update on the latest health insurance news – including breaking news on the state GIC’s insurance premium contribution vote scheduled for Thursday, March 2nd. This will mark the final step in the FY24 health plan procurement process.
With great appreciation,
Chief Executive Officer
Mass Retirees Association