Legislative Report #06-07

Report 06-07
June 16, 2006

HOUSE COLA: SLIGHT IMPROVEMENT

The House of Representatives approved the amended state budget for 2006-07 on Thursday. The House version of the budget includes a 3.1% Cost-Of-Living Adjustment for retired teachers, state employees, members of the judicial system, and state legislators; a slight improvement over the 3% that was approved by the Senate.

The House followed the Senate lead with regard to the COLA for retired local government employees. The House budget does not address the local COLA, leaving the decision to the Board of Trustees of the Retirement Systems. The Board met in April and recommended a 2.8% COLA for local retirees. This increase uses all of the gains that are available for benefit enhancements in the Local Governmental Employees’ Retirement System.

THE CONFERENCE AND THE COLA

The budget bill has been returned to the Senate which is expected not to concur is the House amendments. The next step in the process will be the appointment of a joint House-Senate Conference Committee to resolve budgetary differences. We expect the conferees to be appointed by June 20. Historically, the conference committee at a minimum has included the House and Senate leadership of the full Appropriations Committee and the leaders of Finance Committees. We will send a special Legislative Report next week as soon as the appointments are announced.

Can the conferees recommend a COLA for state retirees that is higher than either the Senate or House recommendations? The answer is: “Yes”. The conferees could include a higher COLA in the conference report if they can identify additional money to support the increase. There are serious differences between the House and Senate budget bills, both in terms of the amounts appropriated for various purposes and in approaches to achieving public policy goals. There is a likelihood that some funding will be freed up as these major differences are resolved.

CONTACT HOUSE AND SENATE MEMBERS

Once again, we are asking our members to contact their Senators and Representatives. Please ask your legislators to support a Conference Committee recommendation to give state retirees a COLA of at least 3.7% as was recommended by Governor Easley. If your legislators do not expect to be appointed to the Conference Committee, ask them to urge their conferees to act favorably on our request.

OTHER HOUSE BUDGET PROVISIONS

The House also approved several other budget provisions affecting retirees. These provisions are presented below. In all cases, these House provisions are identical to Senate recommendations.

• $30.0 million for repayment of Funds Withheld from the Teachers’ and State Employees’ Retirement System in 2000-01. This is the fourth installment in a five-year repayment plan.

• Increase monthly benefit for retired volunteer firefighters and rescue squad workers from $163 to $165.

• Increase the maximum monthly benefit for retired North Carolina National Guard members from $150 to $160 and the minimum monthly benefit from $75 to $80.