NEWS RELEASE | For Immediate Release
Study Finds Georgia’s Proposed Pension Reforms Fall Short
Even before COVID-19, a problem existed
Atlanta – The Georgia Public Policy Foundation and Reason Foundation released an Issue Analysis today that examines recent legislation intended to address the out-of-control costs in the Teachers Retirement System of Georgia.
“Proposed Reforms to Georgia’s Teacher Pension System Missed the Mark,” the Issue Analysis by Reason Foundation’s Jen Sidorova and Len Gilroy – who is also a Senior Fellow with the Georgia Public Policy Foundation – found that four bills debated by the Georgia House of Representatives’ Retirement Committee “did not sufficiently address the scale of the problem that existed before the COVID-related crash [and] there is an opportunity for better reform in the future.”
Actuarial consultant Milliman recently predicted that pension funding rations would decline by over 20% as a result of COVID-19, the authors note, and “If warnings like this come to fruition the pandemic’s impact on the global capital markets is almost certain to expose pension plan vulnerabilities across the country, including TRS. Because of this, it is important to understand the impact that the proposed bills could have had in order to guide future policy decisions.”
The Legislature, whose session has been suspended indefinitely because of COVID-19, must reconvene before July 1 to pass a state budget for fiscal year 2021; the assumption is that legislators will not tackle pension reform then.
Reason Foundation’s Pension Integrity Project found that HB 662 and HB 667, while not comprehensive solutions to the challenges facing the TRS, would have significantly improved the system’s long-term solvency. HB 109 would have marginally helped by adding contributions, but HB 830 would have likely increased risk and lessened valuation transparency, which seems counterproductive.
Unless legislators adopt a comprehensive approach to achieving fiscal sustainability, “further growth in unfunded liabilities and long-term costs jeopardizes retirement security for teachers and crowds out funding for other public services taxpayers rely on,” Sidorova and Gilroy conclude.
About Reason Foundation (Reason.org): Founded in 1978, the Foundation advances a free society by developing, applying, and promoting libertarian principles, including individual liberty, free markets, and the rule of law.
About the Georgia Public Policy Foundation (Georgiapolicy.org): Established in 1991, the Foundation is a trusted, independent resource for voters and elected officials. The Foundation provides actionable solutions to real-life problems by bringing people together.