In letter, Porter urges governor to do right by retired teachers and state employees

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INDIANAPOLIS – State Representative Gregory W. Porter (D-Indianapolis), a member of the State Budget Committee and Ranking Democrat on the Indiana House Ways and Means Committee, wrote to Governor Eric Holcomb yesterday (Mon., July 19, 2021) urging him to do right by retired teachers and state employees.

The 2021 enacted state budget provided a 1% cost-of-living adjustment (COLA) to retired teachers and state employees in lieu of a “13th check,” which is a one-time, post-retirement payment based on an individual's number of years vested in their retirement plan. A decade ago, Indiana leaders provided both a 13th check and a COLA that was usually over 2% to invest in the retirees that invested in the state.

In light of recent news of a rosy SFY 2021 Budget Closeout, Porter is asking state leaders to prioritize these invaluable employees with a one-time disbursement of $300.

Read the full letter below.

 

July 19, 2021

The Honorable Eric Holcomb
Governor, The State of Indiana
200 W. Washington St.
Indianapolis, IN 46204

Dear Governor Holcomb:

The outstanding news from last week about the SFY 2021 Budget Closeout announcement that the state has exceeded its revenue forecasts and will have a substantial surplus for the rest of the fiscal year is great news. I am writing to express my sincere hope that something can be done to increase the level of assistance provided to our retired state teachers and state employees.

The 2021 enacted state budget that you signed into law provided a 1% cost of living adjustment (COLA) to retired teachers and state employees in lieu of what has become the standard provision of a “13th Check.”

A decade ago members of the Indiana General Assembly and the Governor provided both a COLA that was usually over 2% as well as a 13th Check to retired teachers and state employees.

Since then, the default retirement benefit provided has been a 13th Check with no accompanying COLA increase.

The 13th Check provided a minimal floor of relief that retirees could depend on to help make ends meet regardless of how long the individual worked for the state or what their salary was before retirement.

The COLA, although well-intended, provides a much more substantial benefit to retirees who had a longer work tenure and retired with a relatively higher salary level than other state retirees.

For instance, a retiree with a $25,000 annual retirement benefit is going to receive a much higher relative benefit under a 1% COLA than a retiree with only a $10,000 annual retirement benefit. $250 for the $25,000 retirement beneficiary and $100 for the $10,000 retirement beneficiary.

Furthermore, it is difficult to believe but there are some State retirees that served the State of Indiana for 15 years or more but are only receiving a $3,000 total annual retirement benefit. Their 1% COLA will equal only a mere $30. The traditional 13th check would be a vast improvement over the 1% COLA. In the past, the previous minimal benefit was $150 but could have been up to $350 if the retiree was a long-term employee.

With inflation exceeding 5%, a $30, $150 or $200 increase is just not enough for our valued retired teachers and state employees to make ends meet. The 1% COLA in many instances just slightly offsets the immediate and long-term diminishment of the retirement benefit due to inflation.

In light of this dire situation, I am suggesting a couple of possibilities to “do right” by our retired teachers and state employees since we have more than enough money to fund this unintentional oversight.

First, use the remaining unspent state share of the Coronavirus Relief Fund from the Coronavirus Aid, Relief and Economic Security (CARES) Act to pay out a one-time disbursement of $300 dollars to each retired teacher and state employee in addition to the already scheduled 1% COLA.

This funding can be justified because providing support to our aged and most vulnerable populations will help them remain in their homes and not be displaced to higher-density institutional placements that have higher potential COVID-19 risk.

Second, if the use of CARES Act dollars is not viable, the state should use some of the nearly $4 billion in state surplus revenue to fund this estimated $25 million expenditure.

The funding could be authorized in legislation when the Indiana General Assembly reconvenes in September for redistricting or at the very latest when the legislature convenes for the 2022 Session.

Indiana is a state that works. I hope the retirees who helped get us to this point would also benefit from the fruits of their labors.

Thank you in advance for your reconsideration of this matter. Please join me in taking this collective action to correct this unintentional oversight that was placed upon Indiana's retired state employees and teachers while we still have the opportunity to do so.

Sincerely,

Gregory W. Porter
State Representative
RMM, Ways and Means Committee

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