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Opinion: Retired Pa. teachers deserve cost-of-living adjustment

State legislators, the governor, judges and many others received a generous and automatic 7.8% cost of living salary increase this year. Retired teachers and other state retirees who are not in this favored group got nothing - again.

These retirees have not had an increase in more than two decades. Since the state’s treasury is brimming with cash this year, efforts are underway - again - to do something about it.

State Sens. Katie Muth, D-Chester and Montgomery, and John Kane, D-Delaware and Chester, had planned to introduce legislation that would have provided a cost-of-living adjustment (COLA) for beneficiaries of both the Pennsylvania Public School Employees Retirement System and the Pennsylvania State Employees Retirement System.

The two senators had begun circulating data last September and asking their colleagues to join them as co-sponsors of the legislation, but time ran out when the session ended Nov. 30, and the proposed legislation was never introduced.

According to Muth’s spokesman, the plan is to do it this session, which just began with the new year. The senators noted that during the period between 2002, when the last adjustment occurred, and today, the rate of inflation has increased by about 50%. This means that these retirees have lost about one-third of their pension’s buying power since 2002.

“Everyone deserves to live and to retire with dignity and financial security. Retired teachers and school employees across our Commonwealth worked their entire lives and contributed so much to our communities and to our children only to struggle with the steady increases in cost-of-living since 2002,” said Muth, a member of the PSERS board of trustees.

“It is time that our legislature stands up for public school employees and our retirees - and it is time that PSERS prioritizes the retirement security of their annuitants over high-priced investment managers and risky private equity investments that include millions and millions of dollars of investment fees,” Muth added.

Muth’s reference was in part in response to the revelation that the PSERS pension fund has been saddled with problems and the subject of several investigations. In late 2020, the pension’s board voted to approve performance benchmark numbers that proved to be in error. The board reversed its vote five months later. The error resulted in members contributing about $180 more each year. An internal investigation last year found no wrongdoing.

Between 1967 and 2001, PSERS annuitants received cost-of-living adjustments on the average of once every 2½ years, but now 20 years have elapsed without one.

The PSERS retirement benefit is defined by law under the State Employees’ Retirement Code, and any change to the benefit structure, including a COLA, requires legislative approval.

According to information provided by PSERS, during the past 40 years, the General Assembly approved eight COLAs, with the amount determined by the individual retiree’s years of service, years in retirement, and the increase in inflation since the previous COLA.

Muth’s spokesman said that the senator and “other stakeholders” are studying the proposed legislation, which he said is likely to be introduced “in the near future.”

PSERS Executive Director Mark McKillop earlier this year said that with the Democrats taking control of the state House of Representatives and a Gov. Josh Shapiro, who has expressed support for such legislation in the past, there is a better chance that legislation will be looked upon more favorably in this session than previously.

McKillop explained that the most common reason legislators give for opposing a COLA is that it would add to the pension fund’s unfunded liability. “This is understandable,” he said, “but one proposal would add just 0.2% to the unfunded liability.” In return, however, he said, enactment would have a “significant impact on the well-being of annuitants who retired 20 years ago or more and who have not received a COLA in two decades.”

He said that the additional unfunded liability would be a small price to pay to help retirees live in dignity, especially with $5 billion in the state’s “rainy day fund.

By Bruce Frassinelli | tneditor@tnonline.com

The foregoing opinions do not necessarily reflect the views of the Editorial Board or Times News LLC.