Thursday, 15 July 2021 14:27

OPINION: State retirees need cost of living adjustment

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During my organization’s half-century of advocating for the interests of North Carolina’s retired governmental employees, we have had days when we were proud of our legislature.


We have also had times when they have disappointed us, and compelled us to fight harder to secure a fair and just outcome for those who helped build this state into what it is today. There have been very few times when we felt both disappointed and ashamed.

This is, unfortunately, one of those times.

The Senate budget has been published and, once again, our legislators have inexcusably broken faith with their responsibilities to retired governmental employees.

Since 2008, our public-sector retirees have had no meaningful increase in their retirement checks. Their pensions have lost at least 20 percent of their purchasing power due to inflation. These workers served as Highway Patrol officers, public safety officers, health services providers, teachers, clerical workers, and grounds and maintenance workers. Many worked in conditions where the salaries would not be acceptable today.

During their working years, they provided the underpinning for our state, which is now considered one of the fastest growing and best places to live in the USA. Compared to working in the private sector, their pay was modest, but they believed they had the security of a fair retirement plan in their future.

When news broke last month that the state unexpectedly had a $6 billion surplus, we were confident that the legislature’s sense of fairness and justice would prevail, and our retirees would get the cost-of-living adjustment that was well overdue.

Sometimes people ask what is meant by a COLA, and why it exists. Government pensions are determined by a formula, based primarily on salary and years of service. A pensioner knows in advance how many dollars will be in their monthly check.

It is meant to be fair and predictable, but there is a problem. The amount paid does not increase, but prices do. In the first few years of inflation, the reduction in purchasing power might be manageable as the retiree lives more and more frugally.  

Consider a woman who began her retirement in 2008 at age 65 with a pension of $1,000 monthly. This year, she is 78 and her purchasing power, relative to 13 years ago, is only $800. She may need increased health care and prescription drugs. Those prices and co-pays steadily increase, as do the prices of food, utilities, services, etc. But her purchasing power continues to shrink.

This is where COLAs come in.

A retiree’s loss of purchasing power can be mitigated by the General Assembly granting a COLA, so that their monthly check is brought closer to the purchasing power it originally promised. In some states, a COLA is tied to increases in the Consumer Price Index, the measure of the average price of a defined array of goods the public tends to purchase. The retirees in those states know that their purchasing power at retirement will remain constant, regardless of inflation.

Until 2008, North Carolina provided regular COLAs for retired government workers. COLAs were expected to resume as needed once our financial crisis and the Great Recession passed. But that resumption did not occur. 

Inflation is rapidly increasing the cost of food, fuel, and medicine.

Older people were the most vulnerable demographic during the COVID-19 pandemic. Their contacts with family, church friends, neighbors, and others were cut off. Many remain in especially challenging and lonely circumstances.

The Senate is proposing $13.9 billion in tax cuts. Tax cuts help ordinary working people and often boost the economy. But they do little to help those no longer part of the workforce. How can the legislature enact such huge tax cuts while saying there is no money to help our retirees? Failing to provide a desperately-needed COLA to our retirees is breaking faith with those who served the state and whose needs have become impossible to ignore.

We are better than this. Our history shows us to have held certain values close — keeping promises, upholding obligations, demonstrating both fiscal responsibility as well as compassion. The General Assembly’s budget should demonstrate those values. Inflation and stagnant retirement checks are drowning our state pensioners. 

Alice Bordsen is a retired member of the N.C. House of Representatives from Alamance County, and is a member of the Board of Directors for the N.C. Retired Governmental Employees Association.