Legislative Report #08-05

Report 08-05
June 6, 2008

HOUSE APPROVES BUDGET

The House of Representatives approved the proposed adjustments to the 2008-09 state budget on Thursday. The House included a 2.2% Cost-Of-Living Adjustment for retired teachers, state employees, members of the judicial system, and legislators. This represents a full percentage point increase over the 1.2% COLA that had been proposed by the Governor.

The COLA for retired local government employees is not addressed in the state budget since the local raise does not involve the appropriation of state funds. The Retirement Systems Board of Trustees has recommended a 2.17% COLA for local retirees, using all available gains in the LocalGovernmental Employees Retirement System.

CONTACT YOUR SENATORS!

The budget now goes to the Senate where we expect swift action on the proposal. We appreciate what the House did to raise the COLA. This required an additional appropriation of $30.2 million by the House to supplement the available funds in the Teachers’ and State Employees’ Retirement System (TSERS). Every member of the House deserves our thanks for this effort.

However, a 2.2% COLA does not match the rapidly rising cost of food and fuel. The rate of inflation during the past year was 4.1%. We will ask the Senate to make every effort to increase the COLA above 2.2%. Please contact your Senators. Let them know how inflation has affected your household and urge them to support a higher COLA.

OTHER LEGISLATION OF INTEREST

There was very little committee activity this week due to the focus of the budget process . Below are summaries of two retirement-related bills introduced last week that have not been covered in earlier Legislative Reports.

Senate Bill 2100: State Treasurer’s Investment Program
(Primary Sponsor – Sen. Hoyle)

This bill clarifies the authority of the State Treasurer to retain the services of investment managers in connection with the administration of investments. The bill also authorized the Treasurer to invest retirement systems funds in derivative securities.
The bill has been referred to the Senate Committee on Finance.

Senate Bill 2007: Deferred Retirement Option/ Fire and Rescue
(Primary Sponsor – Sen. Nesbitt)

The bill would allow members of the Firemen’s and Rescue Squad Workers’ Pension Fund who have 20 or more years of service and who are age 55 or older to continue full-time employment and to establish a Deferred Retirement Option Plan (DROP) account. This account would accumulate monthly pension payments plus interest until the member decided to retire. The member then would have the option of drawing the accumulated deferred pension in lump sum or monthly payments.

This bill has been assigned to the Pensions, Retirement, and Aging Committee.