Dear Source:
For the past several years, we have been reading about the dire financial condition of the Government Employees Retirement System. Warnings have been sounded by officials of the System in their annual reports to the Legislature. Two years ago, a number of citizens and organizations lobbied for the passage of the Retirement System Reform Act of 2005 (Act 6794 which was signed it into law in November of 2005). Although the Act recently celebrated its first birthday, it has not been implemented. Responsibility for failing to implement the Reform Act is shared by the Governor, the Legislature, and the GERS Board of Trustees.
When the Governor signed Act 6794, he indicated his dissatisfaction with some of its provisions. In January 2006 he submitted Bill 26-0200 to the Legislature. Although the bill was discussed in the Senate, it became clear that officials for the Governor's Office and GERS disagreed about how to address the unfunded liability. They were asked to work together towards a solution and to return to the Senate by April 15th. It was not until July 2006 that the Governor submitted an amendment in the nature of a substitute to the Legislature. And, now, four months later, just in time for a lame duck session of the Legislature, the Bill is scheduled for an upcoming Committee of the Whole meeting on November 28th.
The newest version of Bill 26-0200 seeks to negate a number of the reforms made by Act 6794. It repeals or changes some of the reforms made by that act. Among the proposed changes are those that eliminate the ability to elect two GERS board members, undermine the Retirement System's ability to tighten fiscal controls, and modify some of the powers recently granted to the GERS board. These changes are harmful to the long-range financial solvency of the System and, for all intents and purposes, roll back the already enacted reforms.
This bill also includes several provisions that greatly enhance legislative pensions, giving lame duck senators an early Christmas present. Its provisions make it possible for senators to retire at age 50 without penalty and to collect more than 100% of their highest earned salary after 24 years of service. These benefits will also apply to former Senators who were elected after July 1, 1970.
Another controversial and costly provision of the bill increases the cap for service retirement annuities for Executive Branch employees from $65,000 to $85,000. This would result in significant additional long term costs to the System, a System that is already struggling with a tremendous unfunded liability and is liquidating assets in excess of 50 million dollars a year to meet current costs.
The editorial pages of our newspapers have frequently pointed out that the Government Employees Retirement System needs to be saved. Bill 26-0200 does not reform the Retirement System but, rather, raids it.
Leonard Smollett
St. Thomas
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