LEGISLATIVE REPORT
February 2015
Treasurer Cowell Calls for Cost of Living Adjustment for Retiree
The following message was released from the Department of State Treasurer of February 1, and this message was the subject of State Treasurer Janet Cowell’s address to retirees at the NCRSP State Convention in Durham on March 17.
State Treasurer Janet Cowell today called on the General Assembly to fund a Cost of Living Adjustment (COLA) for teachers and state employees system during the current legislative session. Cowell, who chairs the ret rement board for the teachers of state employees system, reiterated that the strength of the pension and economic conditions warrant an increase for retirees receiving a state pension. With Cowell’s support, the board decided last month by a split vote to recommend a 1 percent COLA to the legislature.
“Over the long-term, COLAs are an important piece of retirement security,” Cowell said. “Knowing that there will be some cost of living adjustments reassures retirees that their quality of life will be maintained as the years go by.”
North Carolina has one of the most solid pension systems in the nation—one funded by investment earnings, by employee contributions, and by employer contributions set by the legislature. North Carolina’s legislature has with only one exception in 73 years set employer contributions, drawn from the state budget, to the level the system’s independent actuary determines is required to fully fund the system. Because of this history of fully funding the system and because of strong returns on the investments overseen by the Department of State Treasurer, the legislature can grant a 1% COLA and fully fund the actuarial required contribution while still spending $6.9 million less on this retirement system in next year’s budget.
Cowell said, “I am confident that lawmakers share the view that we have long-term pension obligations and I appreciate their support in making annual payments required to keep the system fully funded. A COLA in years when the system can afford it is part of prudent long term financial management.”
The board for the Local Government Employees Retirement System, which Cowell also chairs, unanimously voted last month to approve the maximum COLA allowed for local retirees, a 0.625% increase effective July 1, 2015. That COLA does not require legislative approval.
The North Carolina Retirement Systems, the formal name for the pension fund, is the tenth largest public pension fund in the country. It provides retirement benefits and savings for more than 900,000 North Carolinians, including teachers, state employees, firefighters, police officers and other public workers. For more information, you should visitwww.nctreasurer.com
Status of The Annual Required Contribution (ARC) (Employer Contribution)
The 2014 legislative session adopted a budget that raised the state contribution to the Teachers’ & State Employees’ Retirement System to 9.15% for the fiscal year ending 2015, up from the previous.8.69%. But the state actuary firm, Buck Consultants, reported that an ARC of 8.69% would keep the system fully funded for the fiscal year ending in 2016. A decrease in current appropriations to fund the new ARC would generate $45.5 million.
With the recommendation and support of NCRSP, the Board of Trustees of the Teachers’ & State Employees’ Retirement System recommended a decrease to the current appropriation to fund the ARC at a rate of 9.08%, down from the 9.15 % already budgeted. The resulting savings from the General Fund would be $6.9 million in year one. This would cover the ARC and a 1% COLA. On average, the COLA would provide a $17 per month increase. NCRSP will lobby for the enactment of this recommendation.
Bill Limiting Education Advocacy
As this report is being prepared, the Senate Education Committee is scheduled to consider Senate Bill 480, which would limit school employees’ political activities while on duty. Although the media and other groups have focused on the parts of the legislation dealing with political campaigns and other such political activities, the most troublesome provision in the legislation would curb activities of superintendents, principals, teachers, and other school personnel in their advocacy regarding local, state, or federal policies. If the proposed legislation becomes law, disciplinary action could be taken against offenders.
NCAE is opposed to the current version of the legislation. Educators should not be penalized for advocating for students and for strong public schools. It should also be noted that such prohibitions could infringe on political rights conferred by the First Amendment to the Constitution.
Lobby Days
Please read the following NCAE announcement concerning Lobby Days at the N. C General Assembly:
Join us forNCAELobby Days at the N.C. General Assembly onApril 28 and June 23. We are asking you to come to Raleigh on either of these two days to talk with your representative about developing solutions for great public schools and the commitment it's going to take from all of us to ensure that every child in North Carolina receives a sound education.
As educators, it's important that we remain engaged in the political process. Decisions made in Raleigh everyday affect our profession and our personal lives, from the number of textbook students have, to class size, to school safety, to your pocketbooks. Public education has been a target in the last few years and we must make sure our student-centered, pro-public schools agenda moves forward. So let's roll up our sleeves and get busy!
Please plan to arrive at theNCAECenter, 700 South Salisbury St. in Raleigh, by9:30 a.m.for a short briefing. We encourage you to dress professionally and to wear anyNCAEbuttons that you have. To register for the day most convenient for you. (Note: You may register by going to the NCAE website: www.ncae.org)
NCRSP will be represented at these very important Lobby Days, and we want our local unit to be included in this representation. We hope that we can send a delegation on June 23.
Bob Severs, Chair
Legislative Committee