Negative COLA for State Retirees Delayed One Year by Legislature

News Release

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.

Since 1971, the Maryland Retirement and Pension 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 state’s action is similar to that taken this year by the Social Security Administration. With consumer prices down over the past year, monthly Social Security and Supplemental Security Income benefits did not automatically increase in 2010. This is the first year without an automatic cost of living adjustment for Social Security benefits since they went into effect in 1975.


Michael D. Golden
443-540-6499 (mobile)


The Maryland State Retirement and Pension System is charged with the fiduciary responsibility for properly administering the retirement and pension allowances of 116,000 retirees and beneficiaries as well as the future benefits for over 251,500 active participating members. These groups include state government employees, teachers, law enforcement personnel, legislators, judges and local government employees and fire fighters whose employers have elected to participate in the system.