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Eye On Boise

House GOP leaders defend move to block COLA for state retirees

The House Republican leadership has sent out a guest opinion to Idaho media defending its push to try to block a 1 percent COLA for state retirees, a move that failed in the Senate. "Our biggest concern is the health of the Public Employees Retirement System of Idaho (PERSI) fund," write House Speaker Lawerence Denney, R-Midvale; House Majority Leader Mike Moyle, R-Star; House Assistant Majority Leader Scott Bedke, R-Oakley; and House GOP Caucus Chairman Ken Roberts, R-Donnelly. "It is not as good as some people might lead you to believe." Click below to read their full op-ed piece.

By Reps. Lawrence Denney, Mike Moyle, Scott Bedke, Ken Roberts

Much has been said in the last few days about the vote of the House to deny a 1 percent COLA to retired state employees and we have received considerable correspondence – written and verbal – on this very important issue.

If the only issue were providing a COLA increase to retired employees, it would have passed the House with little debate. We would be leading the support because of our high admiration and respect for the 33,000 retired employees in Idaho. However, there were other issues that came to light during committee deliberations and on the House floor that we had to take into consideration.

Ultimately, retired employees will receive the COLA increase because the Senate did not consider the House position. There’s nothing unusual there; the House and Senate do not always agree, and that’s part of the process. However, we believe strongly that the 48-19 vote to deny the COLA increase was the correct call and we’d like to explain why.

Our biggest concern is the health of the Public Employees Retirement System of Idaho (PERSI) fund. It is not as good as some people might lead you to believe.

PERSI has a $2.6 billion – yes, BILLION – unfunded liability to the state of Idaho. In other words, outgoing benefits are exceeding incoming contributions and the gap is widening.

Our hope, of course, is that the economy rebounds and the PERSI fund will be able to absorb COLA increases for retired state employees. Our fear is that the recession will last for some time longer and overburdened taxpayers, ultimately, will have to make up the difference.

Critics of our action have pointed out that COLA increases would be paid from PERSI funds, and not the same source that provides for public schools, health services and other programs. They also say that the Idaho PERSI fund in Idaho has been named by the PEW Center as one of the nation’s top-performing retirement systems.

It’s true that the PEW Center gave high marks to PERSI – but that was before the recession hit Idaho and revenues began declining at a steady rate. A lot of things have changed since then, including the health of the PERSI fund.

The board apparently saw double-digit earnings increases in the fund since July 1, 2009 and apparently decided to allow a 1 percent COLA – while ignoring overall sub-par performance. The $2.6 billion unfunded liability is a more accurate description of the state of the PERSI fund.

Idaho is not alone with having a potentially shaky retirement-system fund. One would be hard pressed to find any state that granted a COLA increase. The federal government has denied COLA increases for Social Security recipients, the military and retired federal employees this year.

The last thing we want is for PERSI to become another disaster, like Social Security – where almost everybody younger than 55 is wondering if benefits will be available. We want PERSI funds to be strong into the future, and holding off on the COLA increase was a step toward meeting that goal.

Economic circumstances also played a major role in our vote. The proposed COLA increase came at a time when the Legislature is making drastic reductions in all areas of state government. As a result, many state employees are facing reductions in salary or taking unpaid furloughs. Those are the more fortunate ones. Many others are facing the gloomier prospect of layoffs, and questions about how they are going to provide for their families. It’s tough to justify increases for retired employees, or any one else, in this economic environment.

Rep. Lawrence Denney is Speaker of the Idaho House of Representatives; Mike Moyle is the House Majority Leader; Scott Bedke is Assistant Majority Leader; and Ken Roberts is the Majority Caucus Chairman.

Eye On Boise

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