Perdue Administration Moves to Change Retirement Benefits
 
A joint House and Senate Retirement Committees meeting was held on October 23, 2007. Mike Nehf, ERS Director appointed by Governor Perdue and Tommy Hills, Perdue's CFO made presentations that painted a bleak financial picture for the defined benefit plan under ERS. These two guys clearly have the State's interest at the top of their list and the state employees’ interest somewhere further down the list. It doesn’t take much imagination to figure where their marching orders came from.

There was talk of raising the state employee contribution from 1.25% to 6% without any increase in benefits, eliminating or reducing the retirement COLA, and allowing the ERS to invest in something riskier than stocks and bonds. There was considerable talk about the three alternatives or some combination of the above as a means to resolve the alleged financial problem. Of course the state could just increase its contribution to previous levels, but that was not presented as an alternative.

According to the presentation a letter was sent to all state employees from ERS director Mike Nehf dated October 18th that explains the current plight of the ERS fund. The administration’s concern seems to be based on the retirement fund currently being at only 94.5% funding. However, a chart presented at the meeting showed that in the last 17 years the retirement fund was only funded at 100% or higher for five years and at one point in the early 1990s was only funded at 84.4%. It is also interesting to note that prior to Perdue's election, the state contributed between 14% and 18% each year to the retirement fund. Since his election, the state has only contributed 10.4% each year and surprise, surprise, the fund dropped from 101.7% funding to 94.5%.

There was also talk of creating a defined contribution retirement plan for new employees that would eliminate or drastically reduce the current ERS defined benefit plan. The administration’s proposal seems to be to increase pay while decreasing retirement benefits for the new employees supposedly to make state employment competitive with other Georgia businesses, not other public safety agencies outside the state (guess somebody didn't like last year's salary surveys). Three proposals by the Perdue administration have been introduced to bring about these changes: SB 327, SB 328, and SB 329.

The good news is several (but not all) of the few senators and representatives who showed up for the meeting were skeptical of the figures presented and the administration’s suggested courses of action. However, it would probably be a good idea for you to talk to your state senator and representative about protecting your retirement. Nothing makes a stronger, more lasting impact than a constituent voter talking one on one with his elected representative or senator.

To see the data the administration presented, go to
 http://www.ersga.org/news/Pension_Financing_Study_101807.pdf