Nice little bit of holiday cheer for Texas’ retired public employees this week.
Retired public employees discovered yesterday that they would not receive additional $500 checks this year. According to Senator Robert Duncan, R-Lubbock, they shouldn’t hold their breath for more benefits next cycle either. “I don’t think we’ll be able to,” he said. “The constitution restricts … any sort of benefit enhancement unless the fund is actuarially sound. It’s not.”
The controversy hinges on the wording of the appropriations bill passed in the 2009 session. The legislature set aside $155 million for the additional checks, but rather than distributing the money through state pension funds, the bill put the Comptroller in charge of distribution. The payments would only be made if the Attorney General had a “conclusive opinion that such one-time payments are constitutionally and statutorily permissible,” according the bill’s language — yet the attorney general’s opinion said that there was no way to have a definitive position. “The appropriation provision on its very face makes it impossible for us to conclusively opine that such payments ‘are constitutionally and statutorily permissible,'” the opinion read.
Since the appropriated millions will return to the pension fund, Duncan says the attorney general’s decision will further the fund’s stability. The new money raised the state’s contribution rate to from 6.58 to 6.64 percent. Duncan said he is committed to keeping the fund healthy in the long term, even if that means no additional money for state retirees in the next few sessions. “The popular thing to do is, ‘Give me something today,’” Duncan said of the payments. “But if that’s what we continue to do, these funds will always be short. They will always be actuarially unsound.”
Advocacy groups that lobbied for the additional checks say that in a recession, teachers and other public employees needed the money badly and view the process with the Attorney General’s Office as an underhanded tactic. “We did not expect there to be such a discussion of semantics,” said Tim Lee, the president of Texas Retired Teachers Association. Lee said while the TRTA knew about the decision to go to the attorney general’s office, he did not know the focus would be on the complexities of the word “conclusively.” Duncan, however, said he told groups like TRTA that the language set a high hurdle, and all parties involved agreed to the language knowing the risks.
As you might imagine, the folks who will not be getting those checks in their Christmas stockings aren’t too happy about this. Here’s a press release from AFSCME that laments its loss, and another from the Texas affiliate of the American Federation of Teachers that I’ve placed beneath the fold. It’s always fun times in budget land, isn’t it?
Here’s the Attorney General’s opinion on the matter. Burka weighs in as well. One place he’s wrong is in singling out the Education Committee chairs – according to Rep. Scott Hochberg, whom I asked about this, the bill in question did not go through their committees. I’m sympathetic to the idea of being conservative with pension funds, but the point of this was that it wasn’t pension funds being allocated for this one-time payment, it was general revenue. Using general revenue to boost the pension fund strikes me as iffy at best – if the investments these funds are tied up in continue to tank, it’s good money after bad, and if they recover with the economy, the general revenue infusion was unnecessary. Frankly, handing out a bunch of checks to people who are sure to spend them would have provided a nice stimulus at a time when the state economy could have really used one. But that’s not the sort of thing we do around here, so I guess it would have upset the natural order of things or something.
FOR IMMEDIATE RELEASE
November 24, 2009
CONTACT: Rob D’Amico
Legislature leaves school retirees empty handed…again
On Monday Texas Attorney General Greg Abbott ruled against the issuance of $500 checks to Teacher Retirement System retirees, which had been authorized conditionally by the legislature in May.
“Retirees, who have not seen a cost-of-living increase since 2001, are once again left empty-handed,” said Linda Bridges, Texas AFT president. “To dangle this money in front of retirees, then have it snatched away because someone used the wrong words in a bill is disgraceful.”
Abbott said the legislature really gave him no choice in the matter, because of strings attached to the modest $500 bonus payments. The legislature said the $500 checks could not be paid out unless the attorney general issued a “conclusive opinion that such one-time payments are constitutionally and statutorily permissible.” Abbott zeroed in on the word “conclusive,” defining its meaning as “irrefutable” beyond question, and said it’s obvious that there’s at least some legal question about the matter, as evidenced by the legislature’s request for his opinion in the first place. In other words, he said, the legislative provision “on its very face makes it impossible for us to conclusively opine that such payments are ‘constitutionally and statutorily permissible.'”
The history of this legislation makes it clear that the true author of today’s decision is not so much Attorney General Abbott as it is Sen. Robert Duncan, the Lubbock Republican who chairs the Senate State Affairs Committee. Last spring Duncan made no secret of the fact that he never wanted to issue a bonus check in the first place. Hence he saw to it first that the amount was cut from the House-proposed $1,000 to $500. Then for good measure he crafted the legislative language that led to today’s decision to kill the bonus checks entirely.
“Thanks to Sen. Duncan, I guess the only thing conclusive about this legislation was that it left retirees waiting and wondering where their checks were while the attorney general pondered his decision for six months,” Bridges said.
The money for the checks (about $120 million) will now be used to increase the state contribution rate to the Teacher Retirement System a smidgen. But that little bump up in the state contribution rate will be a small fraction of the amount needed to enable the pension fund to deliver a true cost-of-living increase to retirees. Meanwhile more than 200,000 retirees and their families receive no cost-of-living adjustment again this year–eight years after the last catch-up cost-of-living increase, years during which they have seen the real value of their pensions eroded about 20 percent by inflation.
Texas AFT represents more than 63,000 teachers, paraprofessionals, support personnel, and higher-education employees across the state. Texas AFT is affiliated with the 1.4-million-member American Federation of Teachers.