Thursday, June 16, 2011

Griswold: Protecting retirement benefits requires vigilance, participation

As president emeritus of State Retirees Association, Sam Griswold is one of the most trusted voices in South Carolina on issues related to the South Carolina Retirement System. Sam has drafted a year-end summary of legislative activities from the 2011 session and new developments affecting retirees (and those who hope one day to retire), and it bears reprinting and sharing with others.

Sam writes:

The State Retirees Association has been closely following the Restructuring Bill (H3066) favored by Governor Haley and passed by the House.

As passed by the House, the bill moved the Employee Health Insurance Program (along with a number of other functions currently in the Budget and Control Board) into a new Department of Administration in the Governor's Cabinet. The Retirement Systems would stay with the remains of the Budget and Control Board. We were very concerned about the separation from the Retirement Systems and possible rumored privatization of the Health Insurance Program. We mobilized retirees to contact their Senators and attend the subcommittee of the Senate Judicial Committee which was reviewing the House bill. We wanted Health Insurance and Retirement to remain with the Budget and Control Board or, even better, buffered from the political system by putting both programs under a Board of Trustees. We failed to do that at the subcommittee.

Efforts were enhanced and when the subcommittee made their report to the full Judiciary Committee there was standing room only in the Committee room. Gray heads flowed out of the room and into the hall. Every Senator had been contacted by retirees from their district. The bill was amended in full Committee to retain both the Retirement Systems and the Health Insurance Program under the auspices of the Budget and Control Board. An amendment was proposed but defeated to create a process which would culminate in the creation of a new Employee Benefits Agency to oversee these functions.

Pursuing the bill to the Senate floor, we conferred with several senators regarding the whole business. An interesting coalition developed among generally younger Senators from both ends of the political spectrum -- Democrats and Tea Party affiliates. They put forth an amendment from the floor. The amendment, offered by Senators Sheheen and Massey, abolishes the Budget and Control Board over a two year period and provides for the creation of a separate and independent Employee Benefits Agency. The amendment also calls for the creation of a transition committee of stakeholders to advise the General Assembly on the actual structure of the new agency and further stipulates that during the transition period no changes can be made to retirement and insurance benefits without a unanimous vote of the Budget and Control Board. The amendment passed 43 to 0.

Most of the remainder of Budget and Control Board functions would be put into the new Department of Administration. We liked this version.

By now everybody has probably heard that the Senate adjourned without taking a final vote on the Restructuring Bill (H3066). Governor Haley heard about it and almost immediately signed an Executive Order directing the General Assembly to return to work the next week. The House leadership said they would, the Senate leadership said they would not. Senator McConnell then took the issue to the Supreme Court to determine if the Governor had the authority to call them back. The Court found against the Governor and they did not reconvene.

While final passage is not a certainty, we have come a long way since that cold winter day when so many of you attended the Senate Judiciary Committee and helped us keep health insurance out of the Department of Administration. You helped us stop a runaway train and in doing so helped to set the debate that culminated in the Senate's vote. You proved that we citizens can make a difference if we put forth the effort to participate.

The legislature is in session now for two weeks to deal with a limited agenda of vetoes, the budget, redistricting, and voter I.D. Governor Haley also wants them to deal with restructuring but it would take a 2/3 vote to put it on the agenda. It is unclear if they will have the votes to do that. If they do not take it up, it will be high on the agenda when they convene in January.

One final thing: The Budget and Control Board met on Tuesday, June 14 at 10:00 A.M. An agenda item created by State Treasurer Curtis Loftis proposed to increase the employer contribution into the Retirement Fund and thus maintain the appropriate contribution level to put amortization of the unfunded liability of the Fund into compliance with Government Accounting Standards. This motion failed for lack of a second.

Technically, payment of this contribution is not necessary until the fiscal year starting July 1, 2012. But Treasurer Loftis believes, and we concur, that taking this action now would help preserve the credit rating of the State. So here is another drama that we will have to follow.

The Board also did not address the issue of the assumed rate of return on investment of the Retirement Fund which means state law will automatically trigger a 1.7% cost of living adjustment for retirees effective July 1 and in the benefit check August 1. Hooray for that law that we got passed in 2008. Active participation works!

Our ultimate goal is a fiscally sound retirement and health insurance system that can meet the needs of government employees in our state for the foreseeable future.

But lots of money is involved here: $1.7 billion in annual expenditures for health insurance and a Retirement Fund in excess of $25 Billion. Whenever that much money is on the table, there are an infinite number of people who want a piece of that pie.

But it is OUR pie and worth fighting to keep. These are your dollars, put there for your benefit. They allow you to live the final years of your life in dignity and with the care you will need. We need to ensure that's how these dollars are spent and that they are not spent on the ambitions or greed of any politicians or outside entities. Help us keep it that way.

No comments:

Post a Comment