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Bills Affecting Workers Under Pension Plan Draw Extra Scrutiny
By Vicky Eckenrode, The Times-Union
June 20, 2007
Georgia's largest employer is bracing for the strain a wave of retiring baby boomers will put on its benefits funding.
The state government is considering ways to ensure its workers, from teachers to law enforcement officials, are adequately covered in their pensions and health-care plans.
Georgia's state-funded pension plan now is fully funded, unlike those of some other states. Still, the coming retirement flood was in the back of lawmakers' minds Tuesday as they heard requests to lower retirement ages for some employees while increasing benefits for others.
"I'm concerned if we let people retire early and people are living longer, we're moving in the wrong directions," Sen. Jack Murphy, R-Cumming, said in response to one proposal to let appellate court judges retire at age 60 instead of 65 if they've served the state for 12 years.
Murphy and other members of the Senate Retirement committee considered nearly a dozen bills affecting the state's pension program.
Although the General Assembly is not in session, any changes to the pension are required to undergo an actuarial analysis to determine the first-year's costs, which will be done before legislators return in January to vote on the bills. Under state law, the changes cannot be made unless lawmakers also put money in the budget to pay for them.
For several of the bills, the proposed changes would only affect a small number of employees in individual agencies, but officials who oversee the state retirement plan were wary about opening the door for similar requests.
For example, the Georgia Bureau of Investigation pushed a bill Thursday that would increase benefits for only 10 of its employees who started their careers as narcotics agents but want to fall under the same retirement requirements as those hired as special agents.
"This is the most dangerous stuff that we're doing," said Senate Retirement Chairman Bill Heath, R-Bremen. "Every group, once we give some benefit, then the other groups want it."
Heath ordered the state's actuaries to analyze several bills, but with stipulations that any costs be covered by extra contributions from the employees who participate.
'Underfunded period' ahead
Georgia's Employment Retirement System has more than 700,000 former and current state workers enrolled in the pension plan.
Employees and the state contribute, and once workers reach their required number of years on the state's payrolls and appropriate retirement age, they become eligible to receive a pension equal to a portion of their salary for the rest of their lives.
Several states have received unflattering attention for underfunding their pension programs. And Georgia officials suggest money might be tight even for a fully-funded program like theirs.
"Once we get through this baby boomer bubble, we're probably going to go through an underfunded period," Heath said. "It's going to put a burden on the system. Then it will be fine again."
Some legislators are pushing for a bill allowing up to 5 percent of the pension fund to be invested in more volatile vehicles that could also have a higher return than traditional bonds and stocks.
Most other states allow some of their pension funding to be invested in areas like venture capital funds for start up companies, currency markets or equity for privately-held companies.
The idea is backed by the state's chamber of commerce who would like to see money go toward biotech and biomedical companies to help with economic development, but there has been resistance from employee groups concerned about the risk.
Tax commissioners disagree
One bill Heath sponsored, to drop new county tax commissioners and their staffs from the state retirement system, raised the most dissent Tuesday.
He reasons that the officials do more work for the local governments and should participate in the county plans. But that did not sit well with the several tax commissioners who attended the meeting at the Capitol.
Columbia County Tax Commissioner Kay Allen said her staff of 24 spends most of their workdays handling state services, such as issuing vehicle tags and titles.
She said vehicle-related work in Columbia County last year resulted in sending nearly $2.8 million to the state and only $153,000 to the county.
The county benefited from about 5 percent of the money collected through the local office for state property taxes.
"They want to kick us out," Allen said. "We bring in a lot of revenue, and we work for the state of Georgia."
Benefits shortfall is looming
Even more pressing than the pension plan's future is the projected shortfall in paying for retiree's non-pension benefits, which includes health care and life insurance coverage.
The state estimates it will need to put aside $17 billion for the expenses during the next 30 years. Gov. Sonny Perdue warned last month about the need to start devoting more of the state budget to that effort, which could take away money from other programs.
"Both houses acknowledged this year that we have that obligation, and we made just a scratch on the surface of $100 million down payment on $17 billion," Perdue said, referring to the amount approved in the upcoming budget.
The rising costs of health care coupled with longer life expectancies growing longer has caused some of the pressure, but so has expanding the coverage, Heath said.
"We're adding all these things, like dental care for example, that probably wasn't envisioned 20 years ago," he said.
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