MD Retirees' COLA Negative for 2011

April 14, 2010 ( – Maryland Governor Martin O’Malley has signed into law legislation that precludes an unprecedented negative cost of living adjustment (COLA) for state retirees and beneficiaries in fiscal year 2011, which begins July 1, 2010.

Under the law, benefits will remain at their current levels and the negative cost of living adjustment that would have gone into effect, will instead be deducted from the positive COLA expected in fiscal year 2012, according to a press release from the Maryland State Retirement and Pension System.   

Since 1971, the System has provided a COLA, beginning with an eligible retiree’s July payment.  Under Maryland law, the COLA is determined by calculating the percentage change in the Consumer Price Index (CPI) for the twelve months (January – December) of the prior calendar year over or below the CPI for the twelve months of the preceding year.  Data from the Bureau of Labor Statistics shows the CPI declined by 0.356% in the year-to-year comparison in 2009 – the first decline on an annual basis since 1954.  

The announcement noted that the state’s action is similar to that taken this year by the Social Security Administration. This is the first year without an automatic COLA for Social Security benefits since they went into effect in 1975.