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By Janet Hefler
Published: February 4, 2010

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In the midst of budget season, members of the All-Island Finance Committee (AIFC) and town personnel boards are seeking a consensus on cost-of-living adjustments (COLAs) for municipal and regional agency employees Island-wide and the factors on which they are based.

Although it sounds like a simple concept, given that the cost of living is the same in all Island towns, the percentages have varied widely, creating discord when one town or regional agency grants a bigger COLA than another.

For example, in Fiscal Year 2010 (FY10), Aquinnah and Oak Bluffs offered no COLA, while Chilmark's was 2 percent, Tisbury's 3.5 percent, and West Tisbury's 2 percent.

After Edgartown leaders decided against a COLA for FY10, they proposed a 3-percent COLA for town employees four months into the fiscal year, which voters approved at a special town meeting last October.

Martha's Vineyard Public School non-union employees received a 4-percent COLA. Social Security beneficiaries received no COLA.

The AIFC's effort to come up with a single COLA, based on a specific Consumer Price Index (CPI), was spearheaded by Edgartown FinCom member Fred Condon and Tisbury FinCom member Jonathan Snyder.

The AIFC is open to all members of town finance committees. Although the group has no official status, their meetings offer a forum for discussion about Island financial issues and provide guidance on them to individual FinComs.

The AIFC met twice over the past month to discuss COLA issues with FinCom members from Edgartown, Oak Bluffs, Tisbury and West Tisbury, as well as Tisbury selectmen and personnel board members and staff from Tisbury, Oak Bluffs, Edgartown, and West Tisbury.

Getting on the same page

Some people confuse COLAs with salary adjustments, raises, and steps, Mr. Snyder explained in a phone call last week.

"A COLA is intended to preserve an employee's buying power from one year to the next," he said. "It is not a reward for performance or longevity; it really simply is intended to protect the employee from the erosion of inflation."

CPIs are used as guidance for budget forecasts and for determining percentages for COLAs. According to the U.S. Bureau of Labor Statistics, "The CPI is a measure of the average change over time in prices paid by urban consumers for a market basket of consumer goods and services."

The problem is, there are many CPIs from which to choose, and Island towns do not all use the same one.

Tisbury, for example, uses the CPI for all urban consumers in the Boston-Brockton-Nashua region produced by the U.S. Bureau of Labor Statistics. Chilmark uses the CPI for urban wage earners and clerical workers in the same region, also produced by the Bureau of Labor Statistics.

However, a comparison graph Mr. Snyder made of various CPI indexes from 1982-2009 shows that over the long term, the two were almost identical.

In addition to picking the same CPI, towns would need to agree on the timing of their analysis. Tisbury, for example, recently agreed to use January numbers, which come out in mid-February, in order to get information to update budget forecasts as close to town meeting in April as possible.

The issues are more complicated, however, than just getting all the towns to use the same CPI.

"We have six towns that have six different approaches," Mr. Snyder said. "Many of the towns like to survey what other towns are doing, including some on Nantucket and up on the Cape, so their calculations involve more individual judgment. And some Island towns do not have a regular cost of living adjustment, preferring to adjust their steps and grade levels periodically."

AIFC discussions

At the AIFC's meeting on January 20, Mr. Snyder pointed out that one of the disadvantages of having different COLAs in different towns is that employees who get less feel unappreciated. Also, when it comes to union contracts, negotiators usually choose the highest COLA percentage among the towns.

At a follow-up meeting on Monday, the group discussed the dilemma that multi-year union contracts present. Since COLAs are usually calculated annually, based on CPIs, a percentage picked for year three of a contract may not reflect the economy at that time. And in some years, depending on the economy, a COLA calculation might turn out negative.

Given that possibility, the AIFC recommends setting both a floor and a cap on COLAs to help minimize risk to employees and towns.

A handout by Mr. Snyder explained that setting a floor on COLA percentages, which would likely be zero, would protect employees from the risk of a falling wage or salary level, while a cap would protect towns from the risk of unmanageable year-over-year inflation.

Should inflation significantly exceed the COLA cap for an extended period of time, towns would compensate by adjusting wages and salaries following the normal compensation reviews they already do every three years, Mr. Snyder's handout said.

As Edgartown's Human Resources Coordinator, Marilyn Wortman serves in a unique job not found in other towns. At Monday's meeting, she said that when she presented the single Island-wide COLA idea to the Edgartown selectmen, they were more interested in salary adjustments than a COLA.

Mr. Condon said he senses that the Edgartown selectmen and FinCom are interested in an Island-wide COLA, perhaps after reviewing at the town's salary and compensation plan. "Every town wants to control the way it pays people," he said. "But maybe we can standardize how we do a COLA."

Doug Best, a member of both the Oak Bluffs FinCom and personnel board, said he had received a flurry of emails about the COLA issue. "Any time we can present a united front Island-wide on any issue, it's good," he said.

Although the Oak Bluffs personnel board voted not to give a COLA this year, Mr. Best added, "That doesn't mean we wouldn't support the idea of using the same consumer price index Island-wide."

However, as Mr. Best also pointed out, since this is a year when many Islanders have lost their jobs and people on Social Security did not get a COLA, many voters may not be receptive to towns giving COLAs.

Mr. Snyder suggested that if all the towns agree to a zero percent COLA this year, it would allow time to work out the process for adopting a single Island-wide COLA annually.

As a start, he and Mr. Condon had recommended that the six towns use the same COLA beginning with FY11 budgets, for a three-year trial period.

Maria McFarland, the administrative assistant for the West Tisbury personnel board, said that it might be difficult for West Tisbury to do that this year, because a 2-percent COLA already is included in the proposed fiscal year 2011 budget. However, there will be further discussion about it at a meeting on February 8, she added.

Since no one from Chilmark and Aquinnah attended the AIFC meetings, Mr. Snyder said he and Mr. Condon would contact the towns before the next meeting, which has not been scheduled yet.