A bill aimed at curbing the Georgia Teachers’ Retirement System’s insolvency problems has been scaled back after consistent criticism from the state’s educators.
House Bill 109 pegged teachers with a catalogue of new rules requiring them to work longer hours, receive lower cost-of-living adjustments (COLAs) to their benefit payments, and potentially contribute more of their salaries towards the fund during their working years, according to The Atlanta Journal Constitution. The pension is approximately 80% funded.
The mandates received heavy criticism from around the state, causing thousands of emails to be sent to the state legislature intended to dissuade its approach.
House Retirement Chairman Tommy Benton instead cited a preference to change the way COLAs are calculated in the system. Today, beneficiaries receive an annual COLA increase of 1.5% twice per year. Instead, Benton has proposed changing this calculation to 3% once a year, an effort intended to mitigate the compounding effects of the current calculation and save the retirement system approximately $17 million per year, according to local news outlet News Channel 9.
Benton alleges that a majority of the emails sent to legislators in opposition of the bill were sent by individuals who did not fully understand the law’s internal mechanisms.
The emails were a “scare tactic to get retired educators and current educators to write their representative. It is obvious the people who wrote the emails, most of them, had no idea what was in the bill, they just wrote what they were told to write,” AJC reported.
“I don’t know how many I got,” said Benton, himself a retired educator. “I deleted every one of them.”
Additionally, educators would be prohibited from using their sick days to boost their pension in the proposed legislation, a move that could add $1,000 or more a year to their benefit payments once they retire, News Channel 9 reported.
In 2019, the employee contribution rate in Georgia was 6% and the employer contribution rate was 20.9%. Investment returns provide the most amount of funding for the pension, but forecasted market losses and demographic changes have contributed to over 70% of the unfunded accrued liability for the retirement system. The fund has a projected $25 billion in unfunded accrued liability, out of its $71 billion in assets.
Benton argued that the pension’s future is volatile and now is the time to make changes to the system. It’s not in any dire circumstances at the moment, being approximately 80% funded, but there are projected risks to the economy in the long run.
Legislators previously proposed equalizing the COLAs to the inflation rate, but opponents said the current 3% in adjustments is contracted to the pension’s beneficiaries and such changes would violate it.