Twenty-nine Get Over $79,000
BY PHIL DRAKE
Montana’s top retiree gets $116,587 in annual benefits with 29 others receiving more than $70,000, according to a report prepared for a legislative committee reviewing pension costs for state-sponsored retirement systems. The numbers are more than twice the average salary of typical Montanans.
The Aug. 3 report came in response to lawmakers’ questions about salary spiking, defined as a large increase in an employee’s salary shortly before retirement, which increases an employee’s pension benefit.
One member of the State Administrative and Veteran Affairs Interim Committee tasked with looking at the retirement systems told Montana Watchdog he found the numbers to be alarming.
“It just isn’t right,” said Sen. Dave Lewis, R-Helena. “This is Montana, we’re not California. Five, six, seven, $8,000 a month is a lot of money. We’re not a high income state.”
A fellow SAVA committee member echoed those comments. “It’s kind of alarming that we’ve got people pulling those numbers—huge unneces-sary benefits—out of a public retirement system that is as much as $3 billion underwater,” said Sen. Joe Balyeat, R-Bozeman.
The report, which SAVA members are expected to discuss at their Sept. 13 meeting, looked at the top 100 annual pensions among 2,981 Teachers Retirement System and 5,689 Public Employees Retirement System retirees for 2005-2009. In the TRS, the top 10 employees received between $96,759 and $72,253 in annual benefits. In the PERS, the top 10 take in $116,587 to $81,360 in annual benefits.
On the lower end of the scale, the 100th top recipient in the TRS received $48,872 in annual benefits and the 100th on the PERS $55,496.
The average pension benefits in the top 100 of the PERS was $65,031 and $58,369 in the TRS. For all retirees the mean was $16,484 in the PERS and $22,631 in the TRS. Names or job titles were not included in the lists.
Eric Feaver, MEA-MFT teachers union president, noted that the median pension benefit for a state public employee was under $23,000. “That’s hardly a king’s ransom,” he said.
Public employees are not compen-sated three times more than what private sector employees make, he said, adding Montana is “a state that forever has underpaid its public servants.”
According to information from the state’s Department of Commerce website, in 2008 Montana had a per capita personal income of $34,622. This PCPI ranked 39th in the United States and was 86 percent of the national average, $40,166.
The SAVA committee in mid-August drafted two proposals for the Legislature to consider changing TRS benefits. One plan created individ-ual retirement accounts based on how much an employee put into the system. The employer matches that amount. The competing proposal bases retirement benefits on the final five years on the job instead of three.
Also, employees would have to work 15 years instead of five to be vested in the system. Both proposals were offered by Balyeat.
“We have to reform this system,” Balyeat said, adding that the PERS board is drafting legislation for changes to be considered by lawmakers in 2011. “The taxpayers of Montana cannot afford to pay hundreds of millions more.”
Feaver said he did sense a mood not only in Montana but the rest of the country to alter pension systems. “You bet I’m concerned,” he said. “I think people believe that public employees…have an advantage over the private sector. Some people want to bring public employees down in some fashion,” he said, adding these employees worked for years with the promise of a good retirement.
Feaver said he feared there would be a call for massive changes to the public retirement systems. “These are difficult times,” he said. “Folks, rather than raise aspirations, would rather tear down the existing structure.”
Lewis said the pension system has outgrown its original intention. “Retirement was just basically a little bit extra to be added to Social Security,” he said. “For some people to turn it into eight, nine, 10 grand a month was not intended. I just think it’s not right.”
He said he expected this issue to come before the state Legislature in 2011. But he didn’t think it would gain much traction and would have to be addressed at the next legislative session in 2013.
Lewis said this is an issue that will go down party lines. “Democrats want the status quo,” he said, adding that their mantra is: “Let’s not change anything. The stock market will come back. The GOP says ‘This is a big problem. You can’t whistle as you walk by the graveyard.'”
Lewis, who said he receives $1,200 a month in pension benefits for his 30 years in state government, said he can understand a public employee’s perspective that the pension is money they worked hard to earn.
In a prior interview, Balyeat said courts have ruled that changes cannot be made to retirement benefits for current employees. Any new plan, he said, would likely impact new employees only.