The legislative dust-up over a scheduled 1 percent cost of living adjustment that state retirees are scheduled to receive in March affects 33,000 retirees from 728 employers, the largest of which is the state; the employers also include local units of government across the state, from cities and counties to highway and cemetery districts. Whether or not the COLA is granted to the retirees, it won't make any difference in the next scheduled rate increase for PERSI contributions of 1.5 percent, which is scheduled for fiscal year 2012. The reason? The COLA is so small that it's hardly more than a rounding error in the actuarial calculations of the fund's assets and liabilities.

Overall, between now and the end of time, the "net present value" of the 1 percent COLA is $50 million. The net present value of PERSI's future benefits - what it will cost to pay all benefits over time - is estimated at $12 billion. "That's the net present value of future benefits forever," Jody Olson, president of the PERSI board for the past two decades, told the House State Affairs Committee yesterday. In 2008, the PERSI board opted to give retirees just a 1 percent COLA, though it could have granted up to 5.4 percent. "We allowed it to slide by 4.4 percent because we saw these disastrous markets coming," Olson told the committee. "This year, we thought ... (we could) give that 1 percent COLA."

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