The Senate Finance and Taxation General Fund Committee gave a favorable report Wednesday to Senate Bill 206, which would give a one-time bonus to retired state workers.
SB206 is sponsored by state Sen. Cam Ward, R-Alabaster.
Ward said that under his bill each retired state employee would receive $24 per year of service in a one time bonus in December. The average retiree would get just under $400.
“We can not do a cola (Cost of Living Adjustment) fiscally,” Ward said.
A cola would be an unfunded liability for the Retirement Systems of Alabama (RSA). No money was ever deposited from either the employees or from the state to fund cost of living adjustments to the pension.
“These employees are covered by a defined benefit plan,” state Sen. Jim McClendon, R-Springville, said. “They are going to get the benefits that they are designed to get through the defined benefit plan. Some of this will come out of the general fund.”
Ward said that only part of it would come out of the general fund.
“I get contacted all the time that retirees need a cola,” McClendon said. “They are on a defined benefit plan.”
Ward said that local governments who participate in the retirement plan would have the option on whether or not they want to participate in the bonuses for their retirees.
State Sen. Linda Coleman-Madison, D-Birmingham, said, “State employees are very important to this state. We definitely need to encourage those seasoned employees to remain.”
The Finance and Taxation General Fund Committee is chaired by Sen. Greg Albritton, R-Atmore.
Chairman Albritton asked, “What is the raw amount of money that is going to go out to retired employees?”
“The average is about $400 per retired employee,” Ward said. That is just shy of $16 million.”
“We did this last year and we have not paid for that yet,” Albritton said. “We know that there is an economic edge coming up; but we don’t know where that is going to drop.”
“We want to do right by people as much as possible that is why we proposed a 2 percent pay increase (for state workers),” Albritton said. I am concerned that we are establishing a pattern here. I am not going to block your bill.
SB206 received a favorable report from the committee. It can now be considered by the full Senate.
On Tuesday, the Alabama House of Representatives passed the 2020 state general fund budget. It did not have a retiree bonus. If the full Senate votes for the retiree bonus, then the Senate Finance and Taxation Committee will add the retiree bonus to the general fund budget and send that back to the House for their consideration.
Representatives of retired educators told the Alabama Political Reporter that they support the bonus for retired state employees and are also asking for a bonus for retired education employees. Education is in a separate budget, the education trust fund (ETF).