Focus on State/Teacher COLA Base Increase
When it comes to the annual cost-of-living adjustment (COLA), there has been a marked improvement with the overall benefit in recent years. Since 2021, 61 of the 104 public retirement systems increased their COLA base. For a complete listing, see the Association’s Annual Overview of FY24 COLA Bases on page 7.
Moreover, the additional 2% COLA for FY23 was fully adopted by 81 local retirement systems, in addition to the automatic adoption of the extra benefit by the State and Teachers’ Retirement Systems through the passage of the measure, sponsored by Mass Retirees, within last year’s state budget. Eligible retirees belonging to these 83 retirement systems received a 5% COLA for FY23, which ended on June 30, 2023. As always, the COLA percentage is applied to the COLA base of each individual retirement system. For a complete listing, see the COLA Update on page 7.
In terms of the COLA base, 53 retirement systems now have a base ranging from $15,000 to $20,000. Another 48 systems have a base ranging from $13,000 to $14,000, including both the State and Teachers’ Retirement Systems with a base of $13,000.
Since the state operates and funds both the State and Teachers’ Retirement Systems, the COLA base is set by the legislature – with the last increase taking place in 2011. Efforts to include a State / Teacher COLA base increase in the FY24 budget fell short, largely due to cost concerns following a down financial market in 2022 and falling state tax revenues this past spring.
However, in late June, the Joint Committee on Public Service held a hearing on the Association’s COLA proposals. These proposals included a standalone bill increasing the State and Teacher COLA base to $16,000 and a separate proposal creating an additional “senior” or enhanced COLA for career public employees who have been retired 15 or more years and receive pension benefits that are below the system average.
Association President Frank Valeri and Legislative Chairman Tom Bonarrigo testified on the two bills, which also have the support of the Retired Educators Association of MA (REAM) and multiple public employee unions. See related article, page 5.
In July, Valeri and CEO Shawn Duhamel met with Governor Maura Healey’s senior staff to discuss our COLA proposals and enlist the governor’s support in moving the legislation forward. Association leaders have also had recent meetings with State Treasurer Deb Goldberg, as well as the leadership of the MA Teachers’ Retirement System in an all-out effort to advance a COLA proposal forward this year. Our goal is to have a higher State/Teacher COLA base, along with the senior COLA, in place for FY25.
Local Retiree Advocacy
While the state legislature determines COLA benefits for members of the State and Teachers‘ Retirement Systems, across the 102 local retirement systems, the COLA Base is set through a multi-step process involving the local retirement board and local legislative body. In a city this is the city council and mayor, while in a town it is the responsibility of town meeting. For county retirement systems the authority rests with the county commission and with the regional retirement board advisory council within regional retirement systems.
Of the 102 local systems, only 3 continue to maintain the $12,000 COLA base set in 1998 following the local adoption of the landmark COLA Reform Law (Chapter 17, Acts of 1997). The systems are Amesbury, Chelsea, and Fall River. Of the three, Chelsea stands out as the best funded at nearly 80% with a full funding date of 2028.
Over the past year Gardner, Lawrence, New Bedford, Newton, and Winthrop each increased the local base beyond $12,000. In Newton, where the retirement board had unsuccessfully advocated for a base increase for the better part of two decades, the city council finally approved a $3,000 base increase to be phased in over the next three fiscal years.
Of the 22 local systems that did not approve the additional 2% COLA in FY23, 11 approved a COLA base increase within the past two fiscal years. Another 4 of these systems approved a higher base for FY21. This leaves just 7 retirement systems that did not approve the added COLA nor have increased their COLA base within the past 4 fiscal years: Berkshire County, Essex County, Franklin County, Chelsea, Haverhill, Marlborough, and North Attleboro.
In those local retirement systems where the COLA tends to lag, the problem is often opposition from the local government.
“With very few exceptions, the problem is not the local retirement board, but rather the local elected officials who have taken a very fiscally conservative stance when it comes to retirement benefits. These communities do not treat their retirees well. In some cases, the attitude of local officials toward their retirees is truly shameful,” said Valeri. “In the systems where the COLA has been routinely improved, the common factor is often the activism of local retirement board members and local elected officials.
“Several of our county and regional retirement systems are a great example of the success that can be achieved by working together. This starts with the elected members of the board driving the issue forward and doing right by retirees.
“While our work is far from done, I’m encouraged by the progress that we continue to see across all 104 retirement systems. Over the next 12 months our focus will be to improve the COLA base for members of the State and Teachers Retirement Systems, as well as to create a Senior COLA benefit. Both of which is long overdue.”