Bill would ‘modify’ teachers’ retirement benefits

Bill would ‘modify’ teachers’ retirement benefits

By MARY SELL, Alabama Daily News

Some lawmakers will try again in 2021 to change the retirement benefits for newer teachers in an effort to attract and retain more educators.

Rep. Alan Baker, R-Brewton, said House Bill 93 focuses on correcting some of the imbalances between Tier I and Tier II benefits, but it doesn’t create a Tier III as legislation he proposed in 2019 and 2020 did.

House Bill 93 would allow Tier II teachers to collect their retirement after 30 years of service, as opposed to waiting until age 62 under current rules, and allow them to rollover unused leave each year, which isn’t currently allowed under Tier II but is under the older Tier I.

“Those were two of the overarching disparities that needed to be addressed given that you have educators in the same line of work and performing the same essential duties, but yet on two different tracks in regards to their retirement,” Baker told Alabama Daily News.

Unlike his previous bills, HB93 does not increase the 1.65 multiplier, which determines how much retirees earn. The legislation does increase teachers’ contributions to their retirement from 6% to 6.75%.

The bill also changes the beneficiary benefit of retirement-eligible teachers in active service to “Option 2,” allowing the beneficiary to receive 100% of the teacher’s salary should he or she die. Currently, beneficiaries receive 50% under Tier II.

“This can help retain retirement-eligible education employees that want to continue working but are worried about not being able to provide for their families if something happens to them prior to retirement,” David Bronner, RSA’s chief executive officer, said in the December issue of RSA’s monthly newsletter. “With the health uncertainties for many older employees, this change would be extremely important.”

Bronner has written in favor of Baker’s bill in several recent issues of The Advisor.

“The major issue facing the RSA is improving Tier II retirement benefits,” Bronner said. “… The proposed improvements can be made without large increases in costs to employers but would have a significant impact by allowing 30-year retirement and conversion of sick leave for retirement credit.”

Baker said the legislation would cost the state less than his previous proposals that were approved in the House but had opposition in the Senate.

According to information from RSA, if Baker’s bill becomes law, the 30-year retirement and sick leave conversion portions in the first year would represent a cost increase of about $5 million, about $3 million of that coming from the Education Trust Fund. The beneficiary change would increase costs by about $12.9 million in the first year, with about $7.9 million coming from the ETF.

Tier II retirement benefits went into effect for new teachers in 2013 in an effort to save the state money on retirement costs. Teachers who were already in the classroom at that time got to stay in the more generous Tier I.

The bill has nine co-sponsors, including House Education Policy Committee chair Rep. Terri Collins, R-Decatur.

“Potentially, we may have reeled in a little too far,” Collins said about Tier II. “There may be some room to improve for people in Tier II.”

If educators can’t rollover their unused leave, they may take the days off simply to not lose them.

“In this current time for sure, we need everyone doing the great job they’re doing,” Collins said.

Under Tier II, teachers must be 62 years old before they collect benefits, rather than being able to retire at any age after 25 years of employment, as the original Tier I allowed.

Baker said hopes the changes would make being an educator in Alabama more attractive to young teachers, incentivizing those educated in the state to stay and attracting some from other states.

“I think most of those that go into the education field, it’s not really for the retirement package but more so for the job they can perform, that is in helping educate children,” Baker said. “But, having said that, I do think that this is a strong step toward evaluating the role the teachers play in the development of students and their educations.”

Sen. Donnie Chasteen, R-Geneva, will sponsor the bill in the Senate and Baker said the proposals in it have been discussed with Senate members for several years. He said he expects this bill to be “more palatable” to members of the Senate than previous versions.

“It appears the Tier II modifications give us the best chance to move this forward in improving the pensions for educators,” Baker said.

Last year, state education leaders released information about the state’s teacher shortage, including:

Since 2010, there’s been a 40% decrease in students entering teacher education programs;Eight percent of teachers leave the profession each year, only about one-third of those departures are due to retirement;

Thirty percent of Alabama classrooms are taught by “out of field” teachers with no background in the subject they’re teaching.

The Coronavirus has changed how legislators will meet starting in February and their first priorities will likely be several bills related to the virus.

Rep. Bill Poole, chairman of the House education budget committee, said he hasn’t yet studied Baker’s new bill.

“I would fully anticipate that the House Ways and Means Committee, which has taken up the prior Tier II, Tier III bills and consider them, to take this up and have public hearings and look at it very, very closely and given significant consideration,” Poole, R-Tuscaloosa, said.

Poole said officials revenue estimates for fiscal year 2022 aren’t yet available but he expects “a positive” year.

“We budgeted very conservatively for FY ’21 in light of the pandemic heretofor,” Poole said. “Our revenues have exceeded what we projected in the midst of the pandemic so consequently, I think, in anticipation of economic growth, hopefully post-pandemic over the latter part of this fiscal year going into next, I’m anticipating a positive budget year.”