Bill
SB 724
The bill fixes how October 2025 CPI is estimated to determine 2026–2027 COLAs for SRPS retirees when data is missing.
Title: State Retirement and Pension System – Cost-of-Living Adjustments – Clarification
Jurisdiction: Maryland
Sponsor: Senator Lewis Young (with co-sponsor Senator Karen Young)
Committee: Budget and Taxation
Status: Enacted; approved by the Governor as Chapter 55 (effective upon enactment)
Effective date: This emergency bill takes effect immediately upon enactment.
Purpose and main intent
- The bill clarifies how the Consumer Price Index (CPI) is used to determine cost-of-living adjustments (COLAs) for retirees in Maryland’s State Retirement and Pension System (SRPS) in certain years, with a specific fix for the 2025 data gap caused by a federal government shutdown.
- It establishes a defined method to estimate the October 2025 CPI value to calculate the COLA for fiscal years beginning July 1, 2026, and July 1, 2027.
Key provisions and changes
- Clarification of CPI definition:
- The bill reiterates that the “Consumer Price Index” means the annual average CPI for all urban consumers (U.S. city average, all items, not seasonally adjusted, 1982–1984 = 100), published by the U.S. Bureau of Labor Statistics (BLS).
- Calculation of COLA (Section 29–402):
- Under normal practice, the COLA rate is computed by comparing the CPI in the preceding fiscal year to the CPI in the second preceding fiscal year, with the result capped by applicable COLA caps for each retirement system.
- The bill allows a methodology to determine the October 2025 CPI value in the absence of a published October 2025 CPI:
- October 2025 Index Value is defined as the average of the CPI values for September 2025 and November 2025.
- This approach creates a complete 12 data-point annual CPI for 2025, aligning with the standard practice of using 12 monthly values to compute the annual CPI.
- Implications for COLA calculation:
- The October 2025 estimate increases the 2025 CPI value slightly relative to the interpretation that uses only available 2025 data, which in turn yields a slightly higher pre-cap COLA rate (about 0.067 percentage points higher in the example provided).
- Since many post-2011 service credits are capped at 2.5% (assuming the investment performance meets the assumed rate) or 1% if it does not, the bill’s impact on actual COLAs for most post-2011 service remains negligible due to caps.
- Some small increases may occur for pre-July 2011 service credits and some ERS/TRS retirees where caps do not apply.
- Fiscal impact:
- The estimated effect on State pension liabilities and contribution rates is likely negligible after accounting for caps, amortization of any modest increase, and potential mitigation in future years.
- Local governments and units participating in SRPS would see no discernible changes in pension liabilities or contributions from this adjustment.
- Emergency status:
- The measure is classified as an emergency statute, intended to address an immediate issue arising from the October 2025 data gap.
Who is affected
- Retirees and beneficiaries of Maryland’s State Retirement and Pension System (SRPS), including:
- Employees' Retirement System (ERS)
- Teachers' Retirement System (TRS)
- Law Enforcement Officers’ Pension Systems (LEOPS)
- State Police Retirement System (SPRS)
- Corrections and related parallel systems (EPS/TPS, CORS, etc.)
- State and participating local government employers that fund SRPS, via actuarial contributions and benefit obligations.
Procedural/timeline notes
- The October 2025 CPI data gap prompted the bill’s approach to estimate October 2025 CPI.
- The bill applies to the CPI calendar year ending December 31, 2025 and to COLA adjustments effective July 1, 2026, and July 1, 2027.
- The emergency status permits immediate effect upon enactment.
Notes for readers
- The bill focuses on a technical clarification to ensure a complete, consistent CPI data set for 2025, enabling predictable COLA determinations.
- It does not introduce new benefit formulas or broad changes to COLA caps; rather, it specifies a method to handle a missing federal CPI data point and assesses the potential fiscal impact accordingly.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
