FROM: Amy McInerny, Chief Financial Officer
SUBJECT: Retiree COLA - Effective April 1, 2020
RECOMMENDATION:
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Approve an annual retiree cost-of-living adjustment of 2.00% effective April 1, 2020 and increase, by 1.00%, the accumulated COLA bank.
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BACKGROUND:
Government Code (GC) section 31870 requires the cost-of-living adjustment (COLA) be calculated by rounding, to the nearest one-half percent, the percentage of annual increase or decrease in the cost-of-living as of January 1st each year, as shown by the Bureau of Labor Statistics Consumer Price Index of All Urban Consumers (CPI) for the Riverside-San Bernardino-Ontario area. A COLA is provided at a maximum of 2.00% per year.
Segal Consulting (Segal), SBCERA’s independent actuary, has determined the COLA in accordance with GC section 31870 to be 3.00% as of January 1, 2020.
The COLA is calculated by comparing the region’s value of the past two November CPI indices. The Riverside-San Bernardino-Ontario area index began December 2018 and is measured at each odd month. The ratio of these indices, 106.573 in 2019 and 103.616 in 2018, is 1.0285:
|
November 2019 |
= |
106.573 |
= |
1.0285 |
|
December 2018 |
|
103.616 |
|
|
GC section 31870 indicates that the resulting percentage change of 2.85% should be rounded to the nearest one-half percent, which is 3.00%.
SBCERA members and eligible beneficiaries who have a benefit effective date on or before April 1, 2020 will receive a 2.00% COLA effective April 1, 2020 and their accumulated COLA bank will increase by 1.00%.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Amy McInerny
ATTACHMENTS:
Exhibit A: Segal’s COLA letter
Exhibit B: Frequently Asked Questions regarding the COLA