Reporting Services (ERS)
FREQUENTLY ASKED QUESTIONS (FAQ’S) REGARDING
COST-OF-LIVING ADJUSTMENT
Q1. How was the 2% COLA created?
A. On June 6, 1983, the San Bernardino County Board of Supervisors adopted Government Code section 31874 and implemented an annual cost-of-living adjustment (COLA), for every SBCERA retirement allowance, optional death allowance, or annual death allowance, not to exceed 2% per year in accordance with Government Code section 31870.
Q2. Is the COLA vested?
A. The COLA is a vested benefit, but the amount of the COLA depends on the regional cost-of-living index. Therefore, it may vary from year to year.
Q3. Is the COLA always 2%?
A. No. The COLA depends on the regional cost-of-living index, but in no event can the COLA exceed 2% per year.
Q4. Does the Board of Retirement determine the cost-of-living?
A. No. The cost-of-living is determined by U.S. Bureau of Labor.
Q5. How is the COLA determined?
A. Prior to April 1st of each year, the Board of Retirement must refer to the December 31st, Bureau of Labor Statistics Consumer Price Index for All Urban Consumers for the area in which the county seat is situated in order to determine whether there has been an increase or decrease in the cost-of-living.
Q6. Where can I find the current Bureau of Labor Statistics Consumer Price Index?
A. Go to www.bls.gov/cpi, and follow these steps:
-
Go to the Regional Resources Map and select “Los Angeles,” then click “Go”.
-
To determine the CPI increase from December of one year to December of a later year, you must divide the CPI amount from December of the latter year by the CPI amount from the December of the earlier year. For example, December 2006 CPI amount was 210.6 and December 2005 CPI amount was 203.9, and 210.6 divided by 203.9 is 1.032859, or an increase of 3.29%
Q7. Is there a carryover in cost-of-living for years that exceed 2%?
A. Yes. However, pursuant to Government Code section 31870, the cost-of-living increase or decrease in any year which is not met by the maximum annual change of 2% in allowances shall be accumulated or "banked" to be met by the increases or decreases in allowance in future years; except that no CPI decrease shall reduce the allowance below the amount being received by the member or beneficiary on the effective date of the allowance. Below is an example of how the accumulation or “banked” amount would work for a member who has retired between April 2, 1996, and April 1, 1997:
|
Date Granted |
CPI (%) |
*Adjusted |
COLA (%) |
Change in |
"Bank" |
|
4/1/1997 |
2.40 |
2.50 |
2.00 |
0.50 |
0.50 |
|
4/1/1998 |
1.80 |
2.00 |
2.00 |
0.00 |
0.50 |
|
4/1/1999 |
1.40 |
1.50 |
2.00 |
-0.50 |
0.00 |
|
4/1/2000 |
2.30 |
2.50 |
2.00 |
0.50 |
0.50 |
|
4/1/2001 |
3.71 |
3.50 |
2.00 |
1.50 |
2.00 |
|
4/1/2002 |
2.07 |
2.00 |
2.00 |
0.00 |
2.00 |
|
4/1/2003 |
3.72 |
3.50 |
2.00 |
1.50 |
3.50 |
|
4/1/2004 |
1.80 |
2.00 |
2.00 |
0.00 |
3.50 |
|
4/1/2005 |
4.39 |
4.50 |
2.00 |
2.50 |
6.00 |
|
4/1/2006 |
4.46 |
4.50 |
2.00 |
2.50 |
8.50 |
|
4/1/2007 |
3.29 |
3.50 |
2.00 |
1.50 |
10.00 |
|
4/1/2008 |
4.17 |
4.00 |
2.00 |
2.00 |
12.00 |
|
4/1/2009 |
0.11 |
0.00 |
2.00 |
-2.00 |
10.00 |
|
* Government Code section 31870 requires CPI to be rounded to the nearest one-half percent. |
|||||
Q8. Is there a carryover if the cost-of-living is negative?
A. Yes, if the annual cost-of-living index is negative, any positive accumulations from prior years will be offset by the current year’s negative figure. In this case, a retired member will still receive a cost-of-living adjustment not to exceed 2 percent if there is a positive credit in the resulting accumulated or “banked” amount from previous years.
Q9. What happens if the annual cost-of-living index is negative, and the accumulated or “banked” account is already negative or zero?
A. The negative cost-of-living figure will be accumulated or “banked” and offset against positive increases in the cost-of-living index in future years. In this situation the retired member will not receive a cost-of-living adjustment in the current year and will not receive a cost-of-living adjustment in future years until the accumulations or “banked” amount is positive.
Q10. How much is in my “COLA” Bank?
A. See the Table below.
|
Member Retirement Date |
COLA Bank Balance |
|
|
From |
To |
|
|
Pre-April 1, 1984 |
April 1, 1984 |
32.50% |
|
April 2, 1984 |
April 1, 1985 |
30.00% |
|
April 2, 1985 |
April 1, 1986 |
27.50% |
|
April 2, 1986 |
April 1, 1987 |
24.50% |
|
April 2, 1987 |
April 1, 1988 |
24.50% |
|
April 2, 1988 |
April 1, 1989 |
21.50% |
|
April 2, 1989 |
April 1, 1990 |
18.50% |
|
April 2, 1990 |
April 1, 1991 |
14.50% |
|
April 2, 1991 |
April 1, 1992 |
11.00% |
|
April 2, 1992 |
April 1, 1993 |
10.00% |
|
April 2, 1993 |
April 1, 1994 |
10.00% |
|
April 2, 1994 |
April 1, 1995 |
10.00% |
|
April 2, 1995 |
April 1, 1996 |
10.00% |
|
April 2, 1996 |
April 1, 1997 |
10.00% |
|
April 2, 1997 |
April 1, 1998 |
10.00% |
|
April 2, 1998 |
April 1, 1999 |
10.00% |
|
April 2, 1999 |
April 1, 2000 |
10.00% |
|
April 2, 2000 |
April 1, 2001 |
9.50% |
|
April 2, 2001 |
April 1, 2002 |
8.00% |
|
April 2, 2002 |
April 1, 2003 |
8.00% |
|
April 2, 2003 |
April 1, 2004 |
6.50% |
|
April 2, 2004 |
April 1, 2005 |
6.50% |
|
April 2, 2005 |
April 1, 2006 |
4.00% |
|
April 2, 2006 |
April 1, 2007 |
1.50% |
|
April 2, 2007 |
April 1, 2008 |
0.00% |
|
April 2, 2008 |
April 1, 2009 |
0.00% |
Q11. Does the COLA compound?
A. Yes, the COLA compounds.
Disclaimer
This FAQ Sheet was drafted by the SBCERA staff in order to help members understand complex pension issues surrounding the 2% COLA. Every effort has been made to ensure the accuracy of the information offered. However, you should not rely solely on the information contained herein. In the event of any discrepancy between the information contained in this FAQ and the Government Code provisions or the Bureau of Labor Statistics Consumer Price Index, the Code provisions and the CPI will govern.
NOTICE
SBCERA COST-OF-LIVING ADJUSTMENT (COLA) FOR April 1, 2009
Cost-of-living allowances are given on April 1st of each year based upon the increase or decrease in the cost-of-living index as of January 1st of that year. The current Bureau of Labor Statistics Consumer Price Index for All Urban Consumers for the Los Angeles area for the year ending December 31, 2008, rounded to the nearest one-half of 1 percent is 0%. To find this figure go to www.bls.gov/cpi, go to the Regional Resources Map and select “Los Angeles,” then click “Go”.
Based upon the January 1, 2009, cost-of-living index of 0%, SBCERA retired members are affected in the following manner:
For members who retired on or before April 1, 2008, you will receive a 2% COLA because your accumulated or “banked” cost-of-living amount from previous years exceeded 2%.
For members who retired after April 1, 2008, you will not receive a cost-of-living allowance beginning April 1, 2009, and your cost-of-living accumulated account or “bank” has been credited with a 0%.
