This year’s extra payments to ensure the security of the state’s teacher pension program would be enough to give educators a 5 percent raise or eliminate school “austerity cuts” that have been an annual problem for more than a decade.
But now a House committee chairman is warning that the state could wind up nearly doubling its subsidy next year without changes in the system.
House Budget & Fiscal Affairs Oversight Chairman Chuck Martin, R - Alpharetta, recently held a hearing on state retirement systems, which have more than $80 billion in assets. The teacher retirement system is scheduled to receive an extra $223 million from taxpayers in the upcoming fiscal year.
The Teachers Retirement System covers more than 400,000 teachers, University System staffers, other education employees, and retirees. The system makes monthly retirement payments to nearly 120,000 retirees.
Some lawmakers want to begin offering hybrid retirement plans - part pensions and part 401(k)s - to new teachers . Martin also wants the system to consider different types of investments because he said the current mix doesn’t provide the needed rate of return year after year, forcing the state to up its subsidy.
“The only people hurt by low rates of returns are the taxpayers,” Martin said. “The taxpayers are on the hook.”
Teachers and retirees say changing the system so that new teachers get a 401(k) rather than a pension, or letting the system put money into riskier investments, are terrible ideas. They say the pension is a key tool in recruiting and retaining educators.
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