By Autumn Shelton, WV Press News Sharing
CHARLESTON, W.Va. – Members of the Joint Standing Committee on Pensions and Retirement met at the Capitol on Tuesday where they heard about the importance of providing possible cost of living increases, and a possible one-time supplemental payment, to state retirees.
According to Jeff Fleck, executive director of the Consolidated Public Retirement Board, this past legislative session, Senate Bill 432, which would have provided a one-time $1,500 supplement for certain members in the Public Employees Retirement System (PERS) and the State Teachers Retirement System (TRS) did not make it into law. As a result, his staff was asked to compile data on the feasibility of providing these retirees with a bonus, should the legislature decide to reconsider the bill.
He explained that two different scenarios were examined. First, they looked at providing retirees who receive less than $1,000 a month with a supplement raising their benefits to $1,000 per month, provided they have reached age 70 and have at least 25 years of service.
Second, they looked at providing those same retirees with a one-time $1,500 payment.
“Back in 2005, the legislature enacted what we refer to as pension reform, which puts some limitations on the amounts of increases you can give to retirees,” Fleck explained. “It limits retiree increases to one percent of the actuarial accrued liability as of the last valuation of the plan.” This year, those numbers are $79,422,000 for PERS and $114,951,000 for TRS.
Ken Woodson, actuary for the Consolidated Public Retirement Board, provided committee members with financial information concerning state liability numbers for each of those scenarios.
Sen. Richard Lindsay, D-Kanawha, asked Woodson “For PERS and TRS, with the $1,500 one-time bonus, is that what we tried to do with Senate Bill 432?”
“It is,” Woodson responded. “But, I believe in that original bill, there wasn’t the restriction to have the benefit no more than $1,000, so the liability numbers were considerably higher.” He said he would be able to provide committee members with additional numbers at a later date.
Committee Chair Sen. Eric Nelson, R-Kanawha, advised committee members to review the data presented to them for future discussions.
The committee then heard from three presenters, each noting that the state should look into providing more to retirees than just a supplement for those making less than $1,000.
Danny Gray, with the WV Association of Retired School Employees, spoke first.
“I was born in West Virginia and have lived here all my life,” Gray said. “I worked 31 years in the public schools in Greenbrier County and have been retired for 21 years.”
He said that he contributes to the West Virginia economy every day as he buys groceries, gasoline, prescription medicine and more.
“With each passing year, since I have retired, I’ve seen my buying power from my pension drop. I have felt it more, over the last year, as inflation has continued to remain high,” Gray continued. “It is not surprising that the pension I received in 2001 does not go as far as it once did. In all those years since I retired, I have never been given a cost of living adjustment or any other increase. So my household budget becomes a little more restrained with each passing year.”
He added that this same story could be told by more than 37,000 retired school employees throughout the state.
“This is not just about providing meaningful relief to retired school employees, although I am here to tell you it would be most welcome,” Gray noted. “It is an economic issue for the communities across the Mountain State. I applaud you for your commitment to those who make less than $1,000 a month, but I encourage you to consider all of us.”
Spud Terry, representative of the Alliance for Retired Americans, Coalition of Retired Public Employees, spoke next.
“A lot of our retirees – their pensions aren’t adequate,” Terry said. “As retirees, we achieve our retirement by working a minimum amount of time. We have to pay our employer to be included in the pension plan. All these things are cut and dried. It makes a difference on how many years you work, and how much you pay into retirement. When it boils down, based on that little formula to have a pension, everybody is the same.”
“That pension has pretty much been stagnant for most folks,” he continued, noting that some retirees missed out on a prior supplement by as little as $1, or by just missing the age limit.
“This shotgun approach to providing relief to some of our pensioners – it is just not right.”
He also discussed his concern with carving out a new system for PERS employees.
“Those folks that were carved out got into the new system – they don’t pay any taxes at all on their pensions,” Terry said, adding that judges received a $19,000 cost of living increase.
“In essence what you have done is continue to tax PERS and TRS in order to give other groups a total tax exemption,” Terry noted. “That doesn’t make any sense.”
The last speaker, Jane Marks, AARP state president, said that the state’s public sector retirees play an important role in sustaining the state’s economy.
“West Virginia’s older population actually creates an outsized economic impact that will drive growth for the next 30 years,” Marks noted. “Ensuring the financial resilience of this population during these trying times is a vital importance to the well-being of our entire state.”
“Yet, today we find that inflation is at the highest level in 40 years, rising 8.6% last year alone, and, of course, the purchasing power or our retirees pensions is then greatly reduced,” Marks said. “This problem is made even more precarious because retirees in West Virginia who participate in our Teachers Retirement System and our Public Employees Retirement System do not receive a cost of living increase.”
“A one-time supplement of $1,500 or, perhaps in the future, a [cost of living increase] for these retirees will create a similar ripple effect throughout West Virginia’s economy as our retirees spin these dollars on the goods and services they need to survive, and to thrive.”
“The state will end the fiscal year with a $1.3 billion surplus and the legislature has already appropriated $793 million, leaving our state with a little over $500 million in surplus,” Marks concluded. “We simply must not miss this opportunity to recognize the significant contributions of our state’s retirees – not when we have the funds, an unprecedented blessing, that you can choose to use to create meaningful relief to these retirees.”