Alabama’s legislative leaders have dampened hopes for cost-of-living adjustments (COLAs) for education retirees. During a recent meeting, Rep. Danny Garrett, R-Trussville, who chairs the House Ways and Means Education Committee, and Neah Scott from the Retirement Systems of Alabama highlighted the difficulties in providing these adjustments.
Garrett noted that fulfilling the public’s desire for COLAs could require nearly a billion dollars from the education budget, making it a significant challenge.
The state’s 107,000 education retirees have not seen a COLA increase since 2007. Previously, these adjustments were common, but the Great Recession and changes in national policy caused costs to soar. Instead of regular increases, retirees have occasionally received one-time bonuses, but no sustainable increases have been established.
Many retirees find that rising health insurance costs are consuming more of their fixed incomes due to the lack of COLA increases. Garrett pointed out that even if a lottery were to pass, the revenue generated would likely be too limited to support long-term COLAs.
Scott added that Alabama lacks a regular funding stream for retiree COLAs. Other states have incorporated these increases into their pension plans, allowing funds to be allocated over the course of a retiree’s career.
Concerns about the pension system’s sustainability are growing. Currently, the system’s funded ratio is about 67%. Rep. David Faulkner, R-Mountain Brook, acknowledged that while COLAs are important for retirees, the state’s defined benefit system wasn’t set up to guarantee them. He emphasized that COLAs were never explicitly promised to retirees, leaving uncertainty about future adjustments.
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Alabama,Alabama House of Representatives,Alabama Legislature,Alabama politics,Education,Education Trust Fund budget,retirees,Retirement Systems of Alabama,Ways of Means Education Budget
