MTA Vice President Tim Sullivan testified May 17 before the Joint Committee on Public Service in support of S1343 a bill that would increase the base upon which the cost of living adjustment (COLA) is based.
S1343 would raise the base to $16,000 from $12,000. Sullivan was joined by MTA Retired Members Committee co-chairs, Richard Liston and Kathleen Roberts and MTA Executive Committee member Mary Gilmore.
Testimony of MTA Vice President Timothy D. Sullivan in Support of An Act Relative to Cost of Living Adjustments for Retired Public Employees of the Commonwealth (S1343)
May 17, 2011
Chairman Clark, Chairman Scibak and Members of the Public Service Committee,
My name is Tim Sullivan. I am Vice President of the Massachusetts Teachers Association and former President of the Brockton Education Association. It is a pleasure to be testifying before you this afternoon in support of one of MTA’s major priority bills – An Act Relative to Cost of Living Adjustments for Retired Public Employees of the Commonwealth. (S1343).
MTA represents 107,000 active and retired members in nearly 400 local associations throughout Massachusetts.
The MTA supports all bills that will improve the cost-of-living adjustment for retired public employees but my colleagues and I are here to testify specifically in favor of Senate 1343 which we ask that you report favorably. This bill is sponsored by Senator Richard Moore and it would increase the base on which retiree COLAs are calculated from the current $12,000 to $16,000 immediately.
Subsequently, this bill gradually increases that base over a period of fifteen years to an amount that approximates what Social Security uses for its maximum allowance when calculating an annual COLA. For 2011, Social Security’s maximum benefit for a worker retiring at 66 is $2,366 per month or $28,392 annually.
This new base was chosen because it pegs the state COLA base to approximate what Social Security is doing now for its recipients. As you know, Massachusetts public sector employment is not covered by Social Security. In addition, public sector employees who may be eligible for Social Security benefits because of other employment or because of a spousal benefit are penalized due to the Government Pension Offset (GPO) or the Windfall Elimination Provision (WEP).
I just want to cite three figures that justify why the COLA base needs to be set at a new level.
First, under current law, a 3 percent COLA on the current $12,000 base amounts to less than $.99 a day for pension recipients.
Second, in 1971 the COLA base was set at $6,000 and now 40 years later it has only doubled to $12,000 and has not kept pace with inflation in Mass.
Third, retiree pensions are much less expensive than retiree participation in Social Security. If public employees were part of the Social Security system, they would contribute 6.2 percent to Social Security and the Commonwealth would also pay 6.2 percent for each employee.
While we strongly agree that any COLA should be based on one's entire pension, because of the costs involved, we believe S1343 is an important small step toward an adequate COLA.
Thank you for your interest in and consideration of this very important bill.