A business-backed effort to get Oregon voters to reduce the costs of the state’s public pension system has quietly closed shop — at least for the 2020 election.
Backers had filed five potential ballot measures sponsored by two prominent Oregon political figures — former Democratic Gov. Ted Kulongoski and former Republican state Sen. Chris Telfer — that would revamp the benefits provided by the Oregon Public Employees Retirement System.
The Oregon Public Employees Retirement System (PERS) building in Tigard, Oregon, on Sunday, Jan. 6, 2019.
Bryan M. Vance/OPB
After earlier withdrawing three of the measures, supporters quietly dropped the last two the day before Thanksgiving.
Tim Nesbitt, the former Oregon AFL-CIO president who has worked with state business leaders on the issue, said actions taken during the last legislative session helped reduce the immediate air of crisis around a retirement system facing a $27 billion debt. In addition, he said, the booming stock market should also help hold down increases in pension costs in the near term.
As a result, he said, backers concluded it makes more sense to see how the finances of the system play out over the next several years — instead of trying to tackle the costs of the pension system during a 2020 general election dominated by a high-intensity presidential election.
How to solve the puzzle of PERS has been a hot topic in state politics repeatedly over the past two decades. Democratic Gov. Kate Brown last year defeated a Republican challenger, Knute Buehler, who wanted to make major cuts in PERS benefits. But she vowed to take action to reduce the rise in employer rates, which now average about 25% of payroll.
Brown signed a measure, Senate Bill 1049, earlier this year that makes some modest benefit reductions while also stretching out the time to pay off the unfunded pension liability.
Without the bill, pension costs were projected to rise to about 29% of payroll, costing public agencies another billion dollars over the two-year budget cycle, Nesbitt said.
Instead, employee rates are projected to stay about the same, particularly if this year’s stock market advances stick through the rest of the year. The pension system is heavily dependent on investment earnings, so the stronger the market, the more money generated to pay benefits.
“The legislation seems well-designed to avert another round of increases which would devastate budgets” for schools and other services in the next several years, Nesbitt said. “We should give the legislation time to see how it works.”
The withdrawal of the PERS initiatives pleased the public employee unions, which have bitterly opposed any reductions in worker benefits.
“I think it’s time for them to stop these corporate-backed attacks on hard-working public employees,” said Patty Wentz, a spokeswoman for the PERS Coalition, which represents several unions.
She argued that attempts to cut pensions only make it harder to attract and retain talented teachers, firefighters and other public employees. And she said that voters made it clear when they rejected Buehler’s gubernatorial candidacy that they weren’t interested in cutting pensions.
Nesbitt said his supporters could return in later years for another attempt at initiative reform. He noted that the Oregon Supreme Court is considering the constitutionality of the PERS measure signed by Brown this year. The court’s decision could roll back some or all of the benefit cut. And it will also provide more clarity on what benefit changes it is willing to accept.
The business-backed measures prevented a variety of approaches to reducing costs. They include shifting new workers to 401(k)-style retirement plans and diverting some contributions to existing public employee retiree investment accounts toward paying the costs of the main pension plans, which guarantee workers a set pension amount depending on their pay and years of service.
One other pension-related measure has been filed for the 2020 ballot. It’s sponsored by two former Republican state representatives — Julie Parrish of West Linn and Mark Johnson of Hood River — and Portland activist Kim Sordyl. Their measure would amend the state constitution to require future benefits for all public pensions to be paid without going into debt. The intent is to force public agencies to either lower their pension costs or to ensure they are paid without borrowing.
Parrish said she and other sponsors are still deciding whether to go ahead with the measure. She expressed confidence that they could collect enough signatures to qualify for the ballot but acknowledged the difficulty of raising enough money to conduct a fall election campaign against determined union opposition.
“We are committed to this concept,” she said. “The real question is are we going to roll the dice and get it done this [upcoming] year, or do we take the full two years going into the ’22 cycle.”
Some leaders of Oklahoma’s pension systems think the systems can withstand paying a cost-of-living adjustment to state retirees next year.
State retirees have gone 11 years without a cost-of-living adjustment in their pension checks, but that could change after executive directors of five state pension systems gave state legislators a positive financial outlook in a Friday hearing.
The directors detailed the health of each pension system and the effects of offering retirees a 2% or 4% adjustment next year as part of a deeper dive on the issue.
Oklahoma’s pension systems, which used to be some of the worst in the nation, have come a long way in the past decade, the directors said.
Several of the state’s pension systems are funded at or above 99%.
Others, like those for retired teachers and firefighters, are lower but hitting high points. The teachers’ system is at 72% and the firefighters’ system is at 71%
“In my history, I don’t know that we’ve ever been over 70% funded so we’re very proud of that,” said Chase Rankin, executive director of the firefighters’ system.
Rep. Avery Frix, R-Muskogee, pushed unsuccessfully this year to give most state retirees a 4% cost-of-living adjustment. He plans to renew his push during the 2020 legislative session.
Frix said the information presented Friday at his interim study on cost-of-living adjustments solidifies his argument that legislators can offer an adjustment without bankrupting the systems.
“My hope is to show that our state retirement systems have improved dramatically over the past decade, and we are now in a position to give our retirees the COLA they deserve and have been promised,” he said.
Frix pointedly asked most of the state’s pension heads whether the systems could withstand offering an adjustment. Most said yes.
Offering a 4% adjustment would likely reduce the funded rates of each pension system between one and three percentage points.
Ginger Sigler, the executive director of the Oklahoma Police and Pension Retirement system, said the improvements in the retirement systems were done on the backs of state retirees.
The police pension system is funded at nearly 103%, and would drop to 101% with a pension adjustment.
“Our retirees have suffered from this and I think it’s time to give a COLA. We need to be prudent about it, but I think it’s time,” she said
Tom Spencer, executive director of the Teachers’ Retirement System of Oklahoma, said the decision was not his to make.
“That’s not for me to say,” he said. “I don’t like to see the funded ratio ever go down.”
Retirees packed the Capitol hearing room for the interim study, leaving standing room only for latecomers.
Retired Oklahoma City teacher Debbie Hogue-Downing walked away from the meeting convinced a pension adjustment is feasible.
A widow, Hogue-Downing has grown more concerned about her finances in the five years since her husband’s death. Home repair costs have started adding up as everything else in Hogue-Downing’s life has started to cost more.
“We need to let legislators know that it’s important for us and we’re serious about this,” she said.
House legislators, both Democrats and Republicans, overwhelmingly supported offering a pension adjustment to retirees this year, but Senate leadership was concerned about the health of the pension systems and didn’t want to cause lasting damage.
Part of what hurt the state’s pension systems a decade ago was legislators repeatedly giving retirees more generous benefits than the state could afford.
Earlier this year, Senate leaders asked for an actuarial analysis of offering retirees a 2% adjustment, which is less than the plan the House approved.
Cost-of-living adjustments will undoubtedly be an issue next year, and may force the House and Senate to come to a compromise during the 2020 legislative session.
WASHINGTON–(BUSINESS WIRE)–At a time when state and local governments are struggling to attract and retain employees to deliver vital taxpayer services, a new national poll finds that retirement and healthcare benefits are critically important job features, more so than salary. These benefits are viewed as a powerful recruitment and retention tool, with nearly all state and local workers (93 percent) saying that pensions incentivize public workers to have long public service careers, and 94 percent agreeing that a pension is a good tool for both attracting and retaining employees.
The research also finds that cutting benefits could have severe workforce consequences. Some 73 percent say they would be more likely to leave their job if their pension were cut, and 79 percent say they would be more likely to leave their job if their healthcare benefits were cut. Also, nearly all (92 percent) of state and local employees say eliminating pensions for the public workforce will weaken governments’ ability to attract and retain qualified workers, while the vast majority say eliminating pensions would weaken public safety and the U.S. education system.
And in contrast to conventional wisdom that Millennials are “dissatisfied job hoppers,” 84 percent of Millennials working in state and local government are satisfied with their current job. Nearly three-fourths (74 percent) say a pension benefit is a major reason they chose a public sector job, while 85 percent say they plan to stay with their current employer until they are eligible for retirement or can no longer work.
These findings are contained in new research, State and Local Employee Views on Their Jobs, Pay and Benefits, available here. The findings are published by the National Institute on Retirement (NIRS) and based on research conducted by Greenwald & Associates. NIRS also has published three professions fact sheets that provide a deeper dive on the views of teachers, firefighters and law enforcement professionals. The findings will be reviewed during a webinar on Monday, November 18, 2019, at 2:00 PM ET. Register at no charge here.
“It’s clear from the research that public service is important to state and local workers like teachers, nurses, police officers, and firefighters. They serve despite high job stress and lower salaries. And it’s equally clear that healthcare and retirement benefits have a magnetic effect on public employees,” said Dan Doonan, NIRS executive director. “Understanding at a deep level these employee preferences and concerns will best position state and local policymakers to recruit and retain qualified, experienced employees that taxpayers depend upon.”
Wyoming firefighter Kevin Reddy said, “Serving as a firefighter for the past 18 years in Wyoming is an honor, and it gives me great satisfaction to help my fellow citizens during terrifying situations. Firefighters are committed to protecting lives and property, and we are equally committed to our communities – from coaching children’s sports teams to volunteering with local charities.”
“When we are on the job,” Reddy said, “firefighters are protecting our fellow citizens and providing for our families. A key part of our compensation is a pension, which we contribute to throughout our career. A pension provides financial security in retirement, and it also provides important death and disability benefits for firefighters and their families. Pensions also play a critical role in recruiting and retaining firefighters here in Wyoming, so it’s important to offer these retirement benefits. I plan to stay on the job as long as I’m able, and I appreciate having a pension at the end of my career.”
“When I served as a school superintendent in Kentucky, one of the most difficult challenges we faced was attracting and keeping teachers, particularly in rural areas,” said Tim Abrams, executive director of the Kentucky Retired Teachers Association. “Healthcare and pension benefits were the single most important workforce tool I had to keep our schools staffed with experienced teachers and education workers like bus drivers and librarians. And as we’ve seen recently in Kentucky, educators fully understand their pension and healthcare benefits are critically important to their financial security.”
The key research findings are as follows:
- State and local employees place a high value on serving the public and their community, and are generally satisfied with their job despite high stress. The vast majority (89 percent) of state and local employees are satisfied with the ability to serve the public aspect of their job. Some 85 percent are satisfied with their jobs, while 71 percent say their jobs are stressful.
- Benefits are among the most important job features for state and local employees. Health insurance is very important to 78 percent of state and local employees, and retirement benefits are very important to 73 percent. Salary is less important, at 71 percent.
- State and local employees have mixed views on the competitiveness of their salary and compensation, but the vast majority agree they could earn a higher salary in the private sector and a pension factors into the competitiveness of their compensation. Only 22 percent of state and local employees say their salaries are very competitive, and 80 percent say they could earn a higher salary in the private sector.
- Benefits are viewed as a powerful recruitment and retention tool across state and local government professions. Nearly all state and local workers (93 percent) say pensions incentivize public workers to have long public service careers, while 94 percent say offering a pension is a good tool for attracting and retaining employees. The vast majority of state and local employees (89 percent) say they plan to stay with their current employer until they are eligible for retirement or can no longer work.
- State and local government employees overwhelmingly have favorable views of pensions, with lasting retirement income and monthly checks the most important features. Some 94 percent of state and local employees have favorable views of defined benefit pensions.
- Most public workers feel they will be financially secure in retirement, but the vast majority of state and local employees are highly concerned about cuts to retirement benefits & government officials underfunding of pension plans. Nearly three-fourths (72 percent) of state and local employees are confident they will be financially secure in retirement. But, 86 percent are concerned about cuts to their retirement benefits while 85 percent are concerned about government officials underfunding their pension.
- Cutting state and local employee benefits could drive them out of the public workforce. More than half of state and local employees (58 percent) say that switching them out of a pension into an individual retirement plan, like a 401(k)-style plan, would make them more likely to leave their job. Some 73 percent say they would be more likely to leave their job if their pension were cut, and 79 percent say they would be more likely to leave their job if their healthcare benefits were cut.
- State and local employees say eliminating pensions has risks. Nearly all (92 percent) state and local employees say eliminating pensions for the public workforce will weaken governments’ ability to attract and retain qualified workers to deliver public services. The vast majority (83 percent) say eliminating pensions would weaken public safety. Similarly, 87 percent say eliminating pensions would weaken the U.S. education system.
- Millennials working in state and local government generally share the views of Baby Boomers and GenXers on their job, serving the public, pay, and benefits. Some 84 percent of Millennials working in state and local government are satisfied with their current job, while 90 percent say they are committed to serving the public. Most (80 percent) Millennial state and local employees say they could earn a higher salary in the private sector. Nearly three-fourths (74 percent) of Millennial state and local employees say a pension benefit is a major reason they chose a public sector job, while 85 percent say they plan to stay with their current employer until they are eligible for retirement or can no longer work.
Conducted by Greenwald & Associates, information for this study was collected from online interviews between August 22 through September 12, 2019. Sample was selected using two online panel providers, with 1,118 public sector employees aged 18 and older completing the survey to include 362 teachers, 284 police officers, 204 firefighters and 268 other public sector employees. The final data were weighted by age, gender, and personal income to reflect the demographics within each of these professions, and also weighted to reflect the distribution of these professions within the public sector workforce.
The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers and the economy as a whole. Located in Washington, D.C., NIRS’ diverse membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at www.nirsonline.org. Follow NIRS on Twitter @nirsonline.
Matt Bevin, the notoriously unpopular Republican governor of Kentucky, appears to have narrowly lost his bid for reelection in the deep-red state. And experts say the teachers who led statewide walkouts last year are the reason why.
Kentucky was one of several red states that saw mass protests last year by educators who were fed up with years of education budget cuts and low pay. In Kentucky, teachers called in sick to protest the passage of a bill overhauling the state’s public pension system, arguing it left educators with less generous retirement benefits and would further discourage new teachers from entering the profession.
While there were several big issues at stake in this gubernatorial election on Tuesday — including abortion access and Medicaid expansion— political experts say Bevin’s attacks on public education and his criticism of teachers likely sealed his fate and buoyed Democrat Andy Beshear, who led the vote by a margin of about 5,000 votes and declared victory Tuesday night, although Bevin has not yet conceded.
“[Bevin] committed a series of unforced errors in his battle with the teachers’ unions, using much more provocative language than necessary, much more combative language than necessary,” Stephen Voss, an associate professor of political science at the University of Kentucky, tells TIME.
Meanwhile, Beshear—who proposed a $2,000 pay raise for public school teachers, promised to raise their starting salary to $40,000 and pushed for student-loan forgiveness for educators—specifically thanked union members while declaring victory on Tuesday night. Bevin had criticized those plans as promises on which Beshear would be unable to deliver.
“Tonight, voters in Kentucky sent a message loud and clear for everyone to hear. It’s a message that says our elections don’t have to be about right versus left. They are still about right versus wrong,” Beshear said Tuesday. “That our values, and how we treat each other, is still more important than our party. That what unites us as Kentuckians is still stronger than any national divisions.”
For months, Bevin, who was elected in 2015, has been one of the most unpopular governors in the country, according to polling by Morning Consult. His disapproval rating increased sharply to 57% in early 2018, when the teacher walkouts took place in Kentucky. In the latest survey—conducted from July 1 through Sept. 30—53% of respondents disapproved of Bevin, and just 34% approved.
Paula Setser-Kissick was a registered Republican until August 2017, when she asked a question about teachers’ retirement eligibility during a Facebook Live Q&A with Bevin, who lashed out, saying, “If you happen to be a teacher who would walk out on your classroom in order to serve what’s in your own personal best interest at the expense of your children, you probably should retire.”
In response, Setser-Kissick — a digital learning coach for Fayette County Public Schools — registered as a Democrat, ran (unsuccessfully) for a state senate seat on an education-focused platform, and spent the last four months door-knocking for Beshear in Fayette County, where he ultimately won 65% of the vote.
“As the numbers show, our work made a difference, and we’re pretty proud of that,” says Setser-Kissick, 54, who hopes Beshear will solve the problems with the state’s pension plan, fully fund public education and limit the expansion of charter schools in the state.
During the past two years, Bevin has continued to insult teachers. In April 2018, he accused teachers of leaving children vulnerable to sexual assault and drug use during the statewide walkout. “I guarantee you somewhere in Kentucky today, a child was sexually assaulted that was left at home because there was nobody there to watch them,” he said. “Children were harmed — some physically, some sexually, some were introduced to drugs for the first time — because they were vulnerable and left alone.”
A year later, he suggested that teachers were to blame for the shooting of a 7-year-old girl, who was at home during another round of teacher “sick-outs” in March. She was reportedly being cared for by her legal guardian when she was accidentally shot by her 11-year-old brother.
And during a gubernatorial debate last month, Bevin doubled down once again, saying he regretted none of his previous comments about educators.
“I think it’s safe to say the sick-outs definitely played a part in his defeat. Let’s face it, they grabbed the public’s attention. When that happened, it focused the public’s attention on the bad behavior of both the governor and the legislature,” Setser-Kissick said. “I think Andy Beshear’s election reflected how Kentuckians were disgusted with such ugly attacks from an elected official.”
On the campaign trail, Beshear often pointed to Bevin’s teacher-related remarks as evidence that he was “unfit to govern.”
“A lot of people really just see Gov. Bevin as being very abrasive in his style,” says Thomas Matijasic, a history professor at Big Sandy Community and Technical College in Prestonsburg, Ky., and an expert in Kentucky politics. “He really, really insulted a lot of teachers. That might not seem to be a big deal in another state, but I think in Kentucky, where a far lower percentage of people have college degrees, teachers kind of form the core of the middle class, especially in rural areas, and I think there was a really negative impact. Even a lot of teachers who were registered Republicans disliked him.”
In his reelection bid, Bevin aligned himself closely with President Donald Trump, who hosted a rally for Bevin in Lexington, Ky., on the night before the election. His narrow loss in a state Trump won by 30 points in 2016 could now signal potential trouble for Trump’s path to reelection in 2020, especially because Bevin was the Republican candidate in Kentucky who tied himself closest to Trump in both political support and rhetorical style, says Voss. And while Bevin lost, Republicans won the other key state offices that were up for election in Kentucky.
“It’s not a general repudiation of the Republican Party,” Voss says of Bevin’s loss.
Bevin has not yet conceded, and he requested a recanvass of the election on Wednesday — a process in which county election officials check voting machines and absentee ballots to confirm all votes were counted and reported correctly.
But educators and their advocates have already celebrated the election outcome as a win for public education. “This victory demonstrates the power of educators and how the #RedforEd movement is reshaping the political landscape in Kentucky and across the nation,” National Education Association President Lily Eskelsen García said in a statement. “Educators are empowered and engaged like never before, and they made their presence felt in this election. They invested their shoe leather marching and going door to door. They spent their nights and weekends on the phone, calling voters.”
In Kentucky, even Republican educators say they’re looking forward to change, even if it comes in the form of a Democratic governor.
“Teachers don’t have summers off anymore, they don’t make a lot of money, and they’re certainly not respected by the governor who’s in there currently,” says Charles Clark, the assistant principal at Rowan County Middle School in Morehead, Ky. “I’m hoping that the governor-elect will be much more respectful. And based upon what he’s said and what his actions have been to this point, I think that will be the case.”
Clark, 41, ran in a Republican primary last year against incumbent state Rep. Jill York because he thought she wasn’t a strong enough advocate for public education. (York, who was endorsed in the primary by the Kentucky Education Association, defeated Clark, but later lost the general election to Democrat Kathy Hinkle.)
But Clark hopes that Bevin’s loss sends a message to politicians throughout Kentucky. A registered Republican, he says he did not vote for Bevin, even though he voted for other Republicans on the ballot.
“I hope they realize that how you treat people matters, that trying to degrade or downplay a profession… doesn’t work,” Clark says. “You can’t belittle the largest workforce in the state and expect to keep your office. When you’re supposed to be a representative democracy and you’re not representing your people, then you’re going to lose.”
As a Connecticut state employee and taxpayer, I feel that public service workers are among Connecticut’s greatest assets — and among the most unfairly vilified.
From teachers to sanitation workers to first responders, we care for our children, plow our roads, help the jobless and the poor, build our bridges, and keep our neighborhoods clean and safe. More often than not, public sector workers are bringing home less money than we could by doing similar work in the private sector, but not without good reason.
Yet too often state employees are condemned for having the security that comes with a defined benefit retirement plan. It’s time to change the narrative that wealthy and corporate special interests are spinning about pensions.
From the start of our employment, we pay a percentage of our wages into our pension with every paycheck. Our employer also contributes to the plan, and this money is then professionally invested. As long as we have been working and paying into this system for the minimum number of years required by our employer, we will receive a modest but guaranteed benefit for life once we retire.
This is money that we as public service workers have earned and have agreed to not receive until retirement, with the hope of providing security and stability for ourselves and our families at the end of our lives.
State and local pensions are a great investment for Connecticut taxpayers. According to the National Institute on Retirement Security, in 2016 alone pensions generated $7.1 billion in economic activity. Each dollar invested by taxpayers into public pensions supports $3.54 in economic activity, while each dollar paid out in pension benefits creates $1.42 in total economic output here in our state.
It is important to remember that most opposition to public pensions is funded by billionaires such as the Kochs, the Yankee Institute, and the Reason Foundation — all looking to destabilize state and municipal systems to further their own self-interested agendas.
Then there’s John Arnold, a former Enron energy trader who has become the chief funder of anti-pension activity across the nation, saw his own net worth soar to $3.3 billion dollars by the end of this fiscal year and has spent nearly $50 million over the length of his career on his anti-pension crusade.
Much of the research from the pension- and union-haters is biased, often inflating issues to scare lawmakers into changing if not gutting pension systems. They claim that public employees are greedy and using their pensions to get rich, but the actual numbers show otherwise.
The average public pension benefit in Connecticut is about $36,000 a year. According to publicly available data from the state Comptroller, the average retirement benefit for current tiered, non-hazardous duty employees is around $18,600 a year. Clearly, we’re not getting rich off the system.
The pension haters have a goal in mind: to force public employees into risky defined contribution savings plans like 401(k)s, thereby transferring wealth from working families to Wall Street banks and traders.
In the 1980s, private sector businesses began closing their pension plans and opting for 401(k)s for their employees, but unlike 401(k) plans, public pensions have time to recover from economic downturns like we saw in 2008, which is why they continue to be the most affordable, durable and efficient retirement systems available.
Pensions cost 46 percent less than 401(k)s to administer while achieving the same target benefit. Even the architects of the 401(k), such as Sheldon Whitehouse, acknowledge the inadequacy of this vehicle to provide a dignified and stable retirement in the long term since 401(k) plans were never designed to be the sole retirement plan for Americans.
Every Connecticut citizen should have access to a secure and dignified retirement. However, destroying my pension and forcing me into a 401(k) won’t move Connecticut forward.
Let’s stop beating up on public service workers and begin developing real solutions to the challenges we face.
Xavier Gordon of Stamford is a state employee and president of AFSCME Local 269.
Elsa Solis, a 75-year-old retired state caseworker, tries to stay out of her home as much as possible, spending most of the day volunteering at a local senior center. On a fixed income that hasn’t budged for 17 years, the San Antonio resident can’t afford to fix her central air conditioner and a plumbing leak at her 50-year-old home, which she said is in dire need of repairs.
“I tell people if you can work as long as you can work, continue because once you stop, that’s it. You’re on a level that stays like that and everything has gone up,” said Solis, who worked for the state health agency for 32 years, retiring in 1997.
Solis is among a growing number of retired state employees who have been calling on lawmakers to increase their monthly retirement checks, which the Legislature hasn’t increased since 2001, and to shore up the pension system. Faced with an ever-rising cost of living, retirees say living off their pension checks has become so difficult that they are refinancing their homes, going to food banks, skipping medication and going back to work.
The average monthly pension of the state’s 111,000 retired state employees and beneficiaries is $1,690, according to the Employee Retirement System of Texas. About 18,000 of those retirees live in the Austin area.
Texas House members from the Austin area in June signed a letter asking the Legislative Budget Board to consider injecting more money into the pension system as well as fund an across-the-board raise for state employees next legislative session.
“We rely on these employees to carry out the services and mandates that we place up on them. It is only right for us to honor their service to Texas by ensuring that they will receive the pensions we promised once they retire,” the lawmakers wrote.
More than 50 legislators in total have written letters to the Legislative Budget Board, of which Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen, R-Lake Jackson, are members, asking for relief for retired state workers, according to the Texas State Employees Union.
The union held a series of news conferences across the state on Friday about the issue.
The Legislature this year approved spending $1.1 billion over the next two years to shore up the retired teachers’ pension system and distribute a one-time payment of up to $2,000 to all retired teachers and school employees.
Retirees want the same consideration.
“There’s a mentality among a lot of politicians that state workers are expendable, and it bleeds over into the general public,” said Amy Mashberg, who retired from the state hospital four years ago. “We’re not.”
Much of Solis’ monthly pension check of $1,300 goes toward her $400 car payment, $200 car insurance bill and gas, which is guzzled up by her daily trips to visit her sister with dementia at a nursing home. She’s been putting off repairs to her car after a collision two years ago.
Sometimes accepting donations from the food bank and limiting her water use at home, Solis tries to cut costs as much as she can. She said she doesn’t like to accumulate debt after accruing as much as $30,000 in loans while she was raising her two sons on her own on a modest caseworker’s salary.
Solis said she would use any increase to her pension check to help fix her house, pay for her car expenses and pad her savings. She also receives $1,300 every month in Social Security.
“It’s hard,” Solis said. “I’m able to live on what I make, but it would be nice to get a little more.”
Paula Everett, a retiree and member of the Texas State Employees Union, said retirees who are struggling the most are those who have been retired for decades and were in low-paying jobs — like clerical workers and assisted living workers — that yielded smaller pensions.
Jose L. Rocha, who retired from connecting needy individuals with social services for the Texas Health and Human Services Commission, is refinancing his Pflugerville home to free up some money.
“I felt that I was going to have a comfortable retirement. Not rich, but I thought I was going to have enough and that I didn’t have to worry,” said Rocha, who worked for the state for 30 years.
Dripping Springs resident Rosaura Gómez said to ease some of her budget constraints, she’s taken jobs here and there since retiring from the Texas Health and Human Services Commission. Earning a monthly pension check of about $2,300 and not yet drawing on Social Security, she said she would use any boost to her pension for emergency situations.
“When you retire, you really don’t get the amount of money that you get when you’re actually working,” Gómez said, adding that she receives about $13,000 to $14,000 less annually than her salary. “As the years go by, cost of living goes up and my pension pay has stayed the same.”
Rising cost-of-living expenses include health insurance premiums, medication costs, property taxes, car insurance, homeowner insurance, dentist visits and gasoline prices, retirees told the American-Statesman.
Path to depletion
The Texas House this year proposed injecting $150 million over the next two years into the retired state employee pension system but the provision was removed during bill negotiations with the Senate. The Legislature instead prioritized new funding toward public education, property tax relief, Hurricane Harvey relief and the Teacher Retirement System.
State law requires the pension system to be fully funded within a 31-year period — which also means the pension fund is actuarially sound — for lawmakers to give retirees any sort of pension increase.
As of August 2018, the latest data available, the pension fund was nowhere close to being actuarially sound but instead was on a path to depletion by 2096 if contributions to the system did not increase.
The state contributes 9.5% of gross payroll, agencies contribute 0.5%, and system members contribute 9.5% of their salaries.
It would take a lump sum contribution of $4.8 billion to make the pension fund actuarially sound while maintaining current contribution rates for both members and the state.
Employee unions fear the tenuous health of the pension system might turn people off from pursuing a state job. The turnover rate of state employees was 19.3% in 2018, the highest in at least 12 years. The most common reason non-retiring employees cite for leaving is because they want better pay and benefits, according to the State Auditor’s Office.
“You have Bucees paying $15 an hour and Costco paying $15 an hour. You have state employees, depending on where you work, making anywhere between $12 and $14 an hour and a lot of time they require degrees. That’s what we’re fighting against,” said Joe Montemayor, an organizer for the Texas State Employees Union.
The union also is calling on the Legislative Budget Board to take emergency action on an across-the-board pay raise. Lawmakers in 2016 used emergency funding to increase salaries for Child Protective Service workers amid a slew of child abuse deaths.
“It’s getting really tough to be a public employee. One point in time, folks (worked) for the state with the understanding that whenever they retire, they would be taken care of, but it’s not the case anymore,” Montemayor said.