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smuscarella@pef.org

Time for state to boost pension COLA

We’ve all heard of “fuzzy math,” “voodoo economics,” and financial “smoke and mirrors,” but it remains totally confusing when our government reports the increased cost of living entitles us to just a 2.3 percent raise in our Social Security benefits.

It’s absurd to consider that an average boost of just $24 per month will make a significant difference to seniors on fixed incomes.

That federal announcement came shortly after the state comptroller’s office published its Comprehensive Annual Financial Report. The good news is our pension system is fully funded and grew by 12.58 percent from April 1, 2006 through March 31, 2007. The net assets of the fund reached $156.6 billion.

Benefit payments to beneficiaries was $6.4 billion, 4.09 percent of total assets.

However, once again, the computation of our annual cost-of-living adjustment (COLA) is amazing. Supposedly, these numbers are based on “core” inflation, but that doesn’t include the rising cost of energy and food. What could be more core than energy and food?

Our COLA rate is half the Consumer Price Index up to 6 percent and only applies to the first $18,000 of our pensions. The result: we will receive a maximum boost of $21 per month in 2008.

When our defined-benefit pension was written into state law, legislators intended it to provide us a livable income in retirement. That implies maintaining a constant level of purchasing power. Instead, for the past 20 years, our dollars have bought about 3 percent less each year than the year before.

The lawmakers didn’t go far enough to offset inflation. An insufficient COLA is breaking faith with all of us who worked our entire careers in public service. We accepted lower pay than the private sector, in exchange for our pensions.

Another unsettling aspect of the report is state Comptroller Thomas DiNapoli’s statement the state and local governments’ contributions to the pension system are being modified.

How does that conform to the court’s ruling the retirement fund “must be managed for the benefit of the members of the fund?”

Now is the time to enhance our COLA. The funds are available; the benefits are well deserved; it would provide broad economic stimulation throughout our state; it would relieve our serious financial hardships; and it’s necessary to keep up with inflation.

Write the governor and your state legislators and express your concerns. Ask them to recognize the essential public services we provided by taking a serious interest in our deteriorating economic predicament.