When Gloria Gaines retired from her job as a senior secretary with Georgia’s human resources agency in 1999, she expected the state to keep what she felt was a promise that her pension would go up with inflation.
But the Employees Retirement System stopped giving cost-of-living adjustments to thousands of former state workers such as Gaines a decade ago, and today she receives $730 a month less than she would have if she’d received the annual COLAs that she says she was owed.
“We haven’t had a vacation in years and years and years, we don’t go out to eat,” Gaines, 69, of Columbus, said when describing the impact on her family. “I had to put off things that needed to be done to the house until I finally took out a bank loan to get it fixed up.
“I resent that I am supposed to be making $730 more a month than I am now, and I can barely make ends meet.”
About 51,000 former state employees receive checks from the ERS, and many of them feel mistreated by the decision not to provide cost-of-living adjustments, a move that began while the Great Recession was hammering state and system finances. While retired teachers have received regular 3 percent annual increases in their pensions, the best state employees have been able to get is a few bonus checks in recent years.
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Lawmakers say they are well aware of the problem.
“For somebody that was drawing $18,000 a year in 1995, that $18,000 doesn’t go near as far in 2019 as it did in 1995,” said House Appropriations Chairman Terry England, R-Auburn, who has championed the bonus checks the past few years. “I don’t think that’s lost on anyone.”
The Georgia State Retirees Association, which represents state pensioners, is hoping the General Assembly will include money in the budget this session to jump-start the COLAs that retirees had received for decades before the late 2000s. They will be pressing their case Wednesday during the group’s annual “day at the Capitol.”
But it may be a tough sell in a year in which Gov. Brian Kemp is promising a $3,000 teacher pay raise and 2 percent increase for current state workers, two priorities that could cost $600 million in fiscal 2020, which begins July 1.
England said, “It’s something we are going to look at in the fiscal 2020 budget.”
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 for teachers — the Teachers Retirement System — and for state workers — the Employees Retirement System. Combined, they have about $90 billion in assets.
As in any pension system, the payouts 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 recent state audit 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, staff secretaries and child welfare workers are more likely to get pensions like Marylou Mandell, 78, of Stone Mountain, who retired from the state after working for 24 years doing research and statistics for agencies. She nets about $26,000 a year from her state pension.
Mandell, like a lot of former state workers, was influenced by the Great Depression. Either they or their parents lived through that period, and they know how to stretch a dollar.
“We are not big spenders,” Mandell said. “We’ve scaled back our finances, but I have to tell you we are not suffering.”
But she said the lack of cost-of-living increases for state employees makes a statement about how their work is valued.
“What really bothers me is as you get to a certain age, you look back on your life, and it’s sort of like being told that the sacrifices that I made don’t matter and that what I did doesn’t really count,” she said.
Jim Sommerville, the president of the Georgia State Retirees Association, said 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.
Teachers pay a higher percentage of their salaries into the system than state employees, but Sommerville said the COLAs were part of the deal offered when the state wanted to hold down pay raises.
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. Its 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 fiances.
Lawmakers agreed to change it so that new employees received a lower pension and a 401(k)-type retirement plan. The recent audit said the change saved the state $71 million because new employees — who frequently stayed on the job a few years at most — weren’t saving enough to receive the full matching money offered by the state. A vast majority of new staffers don’t stay long enough to vest and receive the full benefits of the plan.
Sommerville, a former Environmental Protection Division staffer who retired in 2010 after 34 years on the job, said pensioners have seen costs rise for things such as prescription drugs in the state’s health plan. “We have heard from a lot of folks having difficulties making ends meet because of medical expenses,” he said.
Judy Woodyard, 71, a former parole officer living in Franklin County who retired in 2o10 after 29 years with the state, said the lack of pension increases meant she and her husband couldn’t afford to help their kids pay for college.
“We make due with what we’ve got,” she said. “We don’t go out much, we don’t buy new clothes. We had hoped by this point we would have been able to enjoy a few of the luxuries of life.”