“Unraveling the Mystery: Why Alabama Education Retirees Are Still Awaiting Their COLA Increase” • Alabama Reflector

Alia Adia Johnson, 49, retired in June 2023 due to health concerns and job-related stress. After 26 years of teaching in Birmingham, she began taking five different blood pressure medications.

With her years of service, she qualified for a Tier I retirement plan, which typically offers a better payout. However, most of her retirement income goes to health insurance, costing her $600 monthly, not including copays and other medical expenses.

“I would be in trouble if I relied solely on my teacher’s pension,” Johnson said.

On a recent October morning, she joined other retired educators at Sixth Avenue Baptist Church in Birmingham. They gathered to learn how to make the most of their retirement funds.

A hot topic during the meeting was the state’s efforts to tackle rising health care costs. In October, the PEEHIP board decided to withdraw $120 million from a health care trust fund to cover these increases. It remains unclear if lawmakers will fully support this program in 2026.

“We had a real scare,” shared Brenda Lockhart from the Alabama Education Retirees Association.

Many retired teachers expressed that health care costs have increasingly eaten into their fixed retirement payments, which have remained stagnant for over a decade.

“A lot of people choose education for the health insurance benefits,” Lockhart noted. “As retirees, we’ve fulfilled our service, but we still need good insurance.”

In Alabama, retirees haven’t seen any cost-of-living adjustments (COLAs) since 2007. David Foster, who retired in 2013, still receives the same monthly payment he had upon retiring. With deductions for taxes and insurance, he takes home around $3,200 a month.

“We’d all like more, but we can’t risk the current system’s stability,” Foster explained.

Carolyn McMorris, 78, retired from Birmingham City Schools in 2009. Her check hasn’t changed in 15 years, but her living costs, like utilities and medical fees, have increased dramatically. To make ends meet, she started substituting again but had to stop during the pandemic.

“I want to earn more, but my health won’t let me,” she said.

Johnson takes care of her 75-year-old mother, also a former teacher. She runs a side business to help support their household. Living together, they find ways to cut costs; Johnson cooks meals and handles household chores.

“You think retirement means more money because your house is paid off,” Johnson reflected. “But expenses increase with age, especially medical costs. If your income doesn’t rise, how do you pay for everything?”

Jill Jackson, executive director of the Alabama Education Retiree Association, noted that many retirees are worried about escalating costs for essentials like healthcare, fuel, utilities, and food.

As attendees left the church, Johnson pointed out the canes and walkers in the room. “All this equipment adds up,” she remarked.

Alabama is not alone in lacking COLAs, but finding a solution seems bleak. Before the Great Recession, COLAs were more common, ranging from 4% to 7% between 2001 and 2007. However, budget cuts and changes in national policies in the aftermath made these adjustments rare.

Lawmakers have offered one-time bonuses but hesitate to provide regular COLAs due to fears of creating unfunded liabilities. Some experts believe that COLAs added about $2.2 billion in liabilities to Alabama’s retirement systems.

Funding for COLAs involves complex considerations, as seen in the state’s latest budget proposals. Access to reliable state revenue is heavily restricted, making it challenging to allocate sufficient funds for retiree benefits.

David Foster supports the idea that a state lottery could help boost the trust fund for retirees. But the success of such initiatives remains uncertain.

As time goes on, retirees continue to adapt. Stacey Besherse, who recently retired after 26 years, noted the promise of stable retirement benefits when she began her career.

“This was supposed to be a secure path,” she said. Yet, her retirement check only covers fixed monthly expenses, including hefty health insurance costs of $900 a month.

Many retirees she knows struggle to meet increasing medical expenses. “They expected to retire comfortably,” she observed. “Now, I see them sharing meals, just to make ends meet.”