The Atlanta Journal-Constitution
Fat-cat pensions distort reality
In 2011, The Atlanta Journal-Constitution carried a story that 1,100 state retirees receive more than $100,000 a year, including a former Teachers Retirement System bigwig who received $318,000 a year.
That’s for life, perhaps 20or 30 years. Just for waking up every day.
Last week, the AJC’s state government maestro, James Salzer, returned to that statistical well and found that six years later, the number of state retirees pulling in $100,000-plus per annum had more than doubled to almost 2,400.
Salzer found that 64 state retirees — including former state agency directors and college presidents — are getting pensions of $200,000-$350,000 a year.
The baby-boomer bubble of high-priced state employees is quickly turning into a very big demographic lump of comfortable retirees.
Who they are remains a mystery because while you can go online and see to the dollar what every state employee earns, retiree names are kept secret. That’s most likely because a couple of decades ago, a 49-year-old state employee got an $80,000 pension in a sweet retirement deal. He happened to be the brother of Terry Coleman, a powerful legislator. Next thing you know, the curtain goes down on the public knowing who gets what in retirement.
Now, let me pause and say this is not another pension-bashing yarn.
Retired state employees for the most part aren’t fat cats. The average pension in the Teacher Retirement System, which covers about 120,000 retirees, approaches $40,000. The idea is tohang onto good teachers, who aren’t paid a bunch, so they stay in the classroom for their career.
And in the state’s other pension pool, the Employee Retirement System (ERS), about 60percent of pensioners bring in less
than $30,000 a year, said Chuck Freedman, a retired state analyst who now lobbies for the State Retirees Association.
Public employee pensions have been under fire across the nation and in Georgia. Nine years ago, the ERS was retooled to be a hybrid plan — half of it remained an old-timey defined benefits pension and half became a 401(k).
The reason for the attacks are twofold:
1) Hardly anyone in private industry gets a pension anymore, so there’s a bit of envy among the tax-paying public.
2) Those pensions get expensive with an aging work population and the state needing to kick in money to keep them solvent. Georgia had to contribute an extra $223million to the teachers’ fund this year and might have to kick in $400 million next year.
But efforts to retool the teachers’ fund are dangerous. In2002, Gov. Roy Barnes got beat partly because he messed with teachers’ tenure. Georgia pols haven’t forgotten that.
State Rep. Chuck Martin, R-Alpharetta, is looking at ways tot weak the system, but is quick to add, “I wouldn’t propose anything to break that contract” with teachers.
There are ways to make pensions more “portable,” he said, because people no longer stay in one job for their entire career.
But that’s the conundrum. Do you make it easy for employees tomove on — and save money — or spend more to make it more attractive and harder for them to leave?
Senate veteran Jack Hill, R-Reidsville, who is chairman of that chamber’s purse strings, thinks some changes will ultimately have to be madeto keep the system solvent. But he’s “concerned” about efforts to change teacher pensions because “it helps us in the long run. It helps us keep good people. We’re having enough trouble getting teachers today.”
He should know. His wife is a retired principal and his daughter is a teacher.
So, back tomy rant on the hefty pensions.
We can use the case of Georgia Department of Transportation chief Russell McMurry to show how the system can possibly go off the rails. McMurry got a $100,000 salary bump this year, bringing him to $350,000. And he got a $65,000 increase last year.
McMurry, who is 48, is approaching 28 years at GDOT, meaning he can retire at age 50 and get $210,000 a year. That’s because pensions are based on years of employment times 2 percent, multiplied by the highest average salary of 24 continuous months. That means he’d get $60,000 more A YEAR in pension than he would have gotten if his bosses simply left him with his first healthy raise.
I’m not saying he’s going to retire at 50, but he could. In fact, he’d be dumb not to.
To make the system more fair, the pension should be based off the average of the highest five years or something like that. Because if you’re a good enough employee to get a big raise, you should be valuable enough to stick around for at least five years to do the work and really earn that pension. Right?
I mean, it would be better for Georgia that McMurry stick around at 100 percent of his salary instead of getting 60 percent to fish.
Aretiree on the lowend of the fat-cat table ($100,000 a year) could get at least $3 million if he or she were to live another 30 years. Former GDOT chief Tom Moreland got $89,000 when he retired 30 years ago and has seen raises since, as well as a lucrative career in private industry. Why, a highway interchange has even been named for him, although everyone calls it Spaghetti Junction.
Steve Anthony was the chief aide for former House Speaker Tom Murphy and later taught at Georgia State University. That’s two stints in government for 18 and 16 years, although he took the lump sums of cash both times rather than get a pension. He has no beef with what state retirees receive.
“Whatever salary they legally got, that’s how they base the pension,” Anthony said. “The question isn’t, ‘Does he deserve what he got in retirement?’ It’s, ‘Did he deserve to get that big amount of money (in salary)?’”
Still, the question remains: Should taxpayers be on the hook paying a public servant millions after they retire? Should there be some kind of cap?
John Palmer, a Cobb County band director and spokesman for the teachers’ group TRAGIC, said the fat pensions are an easy target. “It’s very easy to play gotcha politics.”
For now, teachers’ pensions remain intact. But the actuarial forces of gravity and economics are fixing to one day play hardball.