Opinion ID: 2628033
Heading Depth: 4
Heading Rank: 1

Heading: The purpose of the COLA and its importance

Text: The main purpose of the COLA according to the State Division of Retirement and Benefits is to assist retirees, who elect to remain in the state, to defray the higher cost of living in Alaska. [20] The state contends in its opening brief that this is a legitimate purpose in itself and that enabling retirees to stay in the state after they retire also benefits public employers: Consistent with promoting public service, the COLA helps attract qualified employees who wish to make Alaska their home even after retirement. Employees who plan to remain in Alaska after retirement are also less likely to leave their jobs, and the public interest is served when experienced employees are retained. The public also benefits because these employees will tend to be more committed to the state's long term interests. Gallant disagrees that the COLA is intended to encourage retirees to continue to reside in Alaska. He cites the stated purpose of PERS: The purpose of this chapter is to encourage qualified personnel to enter and remain in the service of the state or a political subdivision or public organization of the state by establishing a system for the payment of retirement, disability, and death benefits to or on behalf of the employees.[ [21] ] But he does not acknowledge that paying a COLA to retirees is related to this purpose or that encouraging them to continue to reside in Alaska is a legitimate purpose. Gallant mentions only one purpose that the COLA has: to preserve the buying power of retirement dollars by compensating for high living costs in Alaska. We agree with the state that the main purpose of the COLA is to encourage retired public employees to continue to live in the state by helping to defray the higher cost of living. This conflicts with the superior court's conclusion that the COLA was broadly meant to equalize the value of state retirement benefits regardless of whether retirees choose to live in Alaska or some other high cost location. We think that the fact that the COLA statutes have always provided that the COLA is only available to retirees who continue to live in the state renders untenable the superior court's conclusion. Gallant's statement of the COLA purpose  compensating for high living costs in Alaska  also conflicts with the superior court's geographically unlimited conception of the purpose of COLA payments. Further, when one asks why the legislature might have wished to pay a COLA to retirees in order, as Gallant would have it, to compensate for high living costs in Alaska, the only plausible answer is that given by the state: to encourage retirees to continue to live in Alaska. Retirees not living in Alaska have no need to be compensated for Alaska's high living costs. How important is this purpose? We believe, for the reasons that follow, that it is at least legitimate. The policy of encouraging Alaskans to continue to reside in Alaska is one that the legislature has pursued in other contexts. As we stated in State, Department of Revenue, Permanent Fund Dividend Division v. Cosio, one of the three main purposes of the Permanent Fund Dividend Program is to encourage persons to maintain their residence in Alaska and to reduce population turnover in the state. [22] We recognized in Cosio that this purpose was legitimate. [23] Likewise, the Longevity Bonus Program was also enacted for this purpose: Alaska's longevity bonus program was enacted by the Alaska Legislature in 1972 for the purpose of providing to Alaskans age sixty-five years and older an incentive to continue to live in Alaska. [24] The legislature could readily view as desirable the goal of encouraging retired public employees to remain in the state. As a class, they tend to be responsible and economically stable citizens. They make minimal demands on such big ticket government items as public education and law enforcement, they have generally comprehensive health insurance, and they often positively contribute to society by volunteering in charitable and civic endeavors. Further, retirees contribute to the economy when they remain in the state, spending the money that they have earned during their working lives.