A Georgia House chairman on Tuesday abandoned some unpopular changes to the teacher pension system but held on to two provisions aimed at cutting state retirement costs over time.
House Retirement Committee Chairman Tommy Benton of Jefferson dropped the parts of House Bill 109 requiring teachers to work longer, possibly contribute more to their pensions and see lower cost-of-living increases in retirement.
However, Benton still wants to change how cost-of-living increases are calculated and prohibit teachers hired in the future from cashing in sick leave to increase retirement payments.
The committee is scheduled to vote on the amended bill next week.
Now, Georgia's Teachers Retirement System gives a 1.5% cost-of-living increase twice a year. Benton wants to cut that to 3% once a year. Because the increases would no longer compound like bank interest, state auditors estimate the move would save $17 million of the estimated $2.3 billion in state and local contributions next year.
There are no estimates for how much prohibiting new hires from cashing in sick leave would save, in part because savings would be decades away. But if an employee can save a year's worth of sick leave before retirement, that now boosts their pension. For example, a retiree with a final average salary of $50,000 and 30 years of service gets $30,000 a year in retirement. One with 31 years of service gets $31,000 a year.
The system covers nearly 400,000 public school, college and university employees and retirees. Benton said he wants to preserve pensions and that it will be less painful to make changes now rather than later. He argued the system is unsustainable over the long run, noting that it's fallen from fully funded in 2001 to about 80% funded now. The system had $75 billion in assets on June 30, 2018, but $22 billion in unfunded liabilities, money owed to participants.
``If this thing fails, who would be responsible?`` Benton asked.
System supporters said finances are solid and that changes would hurt new teacher recruitment. Bill Sloan, executive director of the Georgia Retired Educators Association and a board member of the retirement system, noted the required contribution for employers will fall by $191 million next year.
``We're not in any trouble financially. If we were, we would have kept it,`` Sloan said of the $191 million.
Benton had proposed cutting the cost-of-living adjustment to the inflation rate, capping it at the current 3%. Auditors in 2019 estimated that would cut required contributions by $600 million a year in 2025. However, teachers groups and the retirement system argue the state has promised current teachers and retirees to pay the 3% and can't break the contract.
Teacher and retiree groups have mobilized armies of opponents, with one committee member saying Tuesday he's gotten 3,000 emails opposing the bill since the weekend. With all 236 seats in the General Assembly up for election this year, the blowback is getting attention.
Rep. Dominic LaRiccia said opponents in the legislature weren't doing enough to accurately explain the bill, which keeps changing.
"I was a little bit disturbed at the misinformation that has been put out there,'' said Lariccia, a Douglas Republican. ``I think you have a tremendous responsibility to make them understand before they start emailing and texting and calling me.''
http://accesswdun.com/article/2020/2/873976/lawmaker-from-jefferson-abandons-some-changes-to-teacher-pension-system