While that may not sound like much, Jim Sommerville, president of the Georgia State Retirees Association and a retired Environmental Protection Division staffer, said any increase is important, particularly to those on the lower end of the pension scale.
“The cost of living has gone up probably 30% since 2009,” he said. “It’s very difficult for some of the lower-paid state employees making less than $20,000 in retirement to pay for increased health care costs that occur when you get older, the higher price of food.
“It doesn’t go as far as it needs to go to ensure the economic security and quality of life that our folks were told to expect to have when they retired.”
For decades, state pensioners received the same 3% annual increase in their checks as Georgia’s retired teachers, but that ended in the late 2000s, during the Great Recession, when pension systems were hit hard by dips in the stock market and lawmakers made changes to the programs. The teacher pension COLA is prefunded through higher payroll deductions, while the one for state employees was not, pension officials say.
Lawmakers have in recent years made it clear to the ERS board that they wanted it to grant bonuses to retirees to make up for the lack of COLAs.
But bonuses are one-time checks that have to be approved — or not — by the ERS board each year. A cost-of-living raise would be built permanently into how much retirees receive from their pension.
The difference is significant. A $30,000-a-year pension in 2009 would be worth more than $44,000 this year if ex-state workers had received the same COLA as Georgia’s retired educators.
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. Traditionally, lower-paid workers receive much smaller pensions than somebody who retired after running a state agency and was making a big salary.
Pensioners can also receive Social Security.
While some former employees receive six-figure pensions, ex-state patrolmen, prison guards, agricultural inspectors, staff secretaries and child welfare workers are more likely to receive payouts in the range of $15,000 to $30,000 a year.
A number of things came together to make the COLAs possible this year. Retirees began working last year with Gov. Brian Kemp’s administration and lawmakers to come up with a plan to jump-start the COLAS.
Kemp, who is running for reelection this year, and lawmakers also had the financial wherewithal to put money into the ERS system.
Bolstered by massive federal funding to prop up the economy after the start of the COVID-19 pandemic, the state ran a $3.7 billion tax surplus in fiscal 2021 — which ended June 30 — and tax collections continue to climb. That could mean another big surplus this year.
Kemp and lawmakers were able to approve pay raises for state, university and k-12 school employees and boosted spending in most areas of the budget.
Future COLAs will depend on the financial condition of the ERS, including factors such as whether it meets certain investment goals and the ratio of assets to long-term liabilities, Jim Potvin, executive director of the ERS, told the pension board. Some years retirees may not get a COLA, other times they could get up to 3%.
Potvin said the state’s contribution to the system would increase more than $100 million a year.
Sommerville said the goal is for retired state prison guards, patrolmen, Department of Natural Resources staffers and others to get the same 3% raise each year as ex-teachers.
“I think everybody understands that this is not over, it’s not the end, and more needs to be done,” he said.
About 54,000 Georgia pensioners receive checks from the Employees’ Retirement System, which they, and the state, have paid into.
The average pension is about $26,000 a year.