More than 50,000 retirees from state government jobs in Georgia have heard the same thing since the Great Recession: They won’t be receiving a cost-of-living raise in their pensions.
The Employees Retirement System board voted Thursday instead to give the former state workers two 3% bonus checks, capped at a total of $1,800 for ex-staffers with pensions at or above $30,000.
While bonus checks are nice, ex-employees have been pushing hard to get the board to approve COLAs for years because they are permanently built into their pensions.
“We are appreciative of the board doing something,” said Chuck Freedman, a former state budget official who now lobbies for the Georgia State Retirees Association. “We are obviously disappointed. We had hoped to see a COLA.”
Jim Potvin, the executive director of the Employees Retirement System of Georgia, said the bonuses will be the largest that retirees have gotten since he became director in 2012. Retirees will receive the checks at the end of July and January.
Retired employees have said they feel mistreated by the annual decision not to provide cost-of-living adjustments. They note that retired teachers regularly receive annual increases of 3% in their pensions.
The difference is significant. A $30,000-a-year pension in 2009 would be worth more than $41,000 next year if ex-state workers had received the same COLA as Georgia’s retired educators.
The Georgia State Retirees Association, which represents state pensioners, lobbied the General Assembly unsuccessfully to include money in the budget this session to jump-start the COLAs that retirees had received for decades before the late 2000s.
Much of private industry long ago eliminated pensions for workers, but they’ve long been seen as an important recruitment and retention tool for governments such as the state of Georgia. Supporters say the guarantee of a monthly check upon retirement makes up for years of working jobs that often pay less than similar ones in private industry.
The state has several pension systems, but the two biggest are the Teachers Retirement System and the Employees Retirement System. Combined, they have about $90 billion in assets.
As in any pension system, the payouts that former state staffers receive vary, based on their length of service and top salaries while on the job. Lower-paid workers, such as prison guards, for instance, will likely receive a much smaller pension than somebody who retired after running a state agency and was making a big salary.
A state audit out in January said the average pension for an ERS retiree was about $27,000 a year. The Atlanta Journal-Constitution reported in 2017 that a former top staffer at the Georgia World Congress Center had the highest pension, at nearly $300,000. Pensioners can also receive Social Security.
While some former employees receive fat pensions, the ex-state patrolmen, agricultural inspectors, prison guards, staff secretaries and child welfare workers are more likely to receive payouts in the range of $15,000 to $30,000 a year.
Jim Sommerville, the president of the Georgia State Retirees Association, told the AJC earlier this year that in 1980, then-Gov. George Busbee agreed to put more into the retirement system in lieu of big pay raises at a time when inflation was rampant. For decades, the state granted COLAs to state retirees.
The situation for ERS retirees changed in the late 2000s, when concerns were raised that the system was unsustainable, just as some lawmakers now say the state teacher pension system can’t last. The ERS director in 2007 told lawmakers the system faced a potential $16 billion shortfall in coming years as baby boomers continued to retire. Investment returns during the Great Recession additionally strained the system’s finances.
Lawmakers agreed to change it so that new employees received a lower pension and a 401(k)-type retirement plan. A vast majority of new staffers don’t stay long enough to vest and receive the full benefits of the plan.
After lobbying lawmakers this year, all the retirees got was language inserted into the budget that said, “The (ERS) board is urged to consider a benefit adjustment for retired state employees in accordance with sound actuary principles.”
And like last year, they will get a bonus, not a COLA.
“We will try again next year,” Freedman said. “We’ll try again every year.”
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