Alabama's retired teachers are facing increasing financial strain as rising healthcare costs clash with stagnant pensions, with troubling stories pouring out of meetings focused on how to maximize limited retirement incomes.
Alike Adia Johnson, 49, retired early from her teaching position due to health issues. After 26 years of service, she qualified for the higher-paying Tier I retirement plan, yet most of her monthly pension check disappears on health insurance premiums, which she says run about $600. Out-of-pocket expenses compound the problem, leaving her feeling precariously positioned financially.
“I would be in trouble if I had to count on only a teacher’s income,” Johnson stated, echoing the sentiments of many other attendees at the recent gathering at the Sixth Avenue Baptist Church in Birmingham.
During this meeting, which featured discussion on the state’s responses to soaring healthcare costs, Brenda Lockhart from the Alabama Education Retirees Association expressed her concerns, painting a dire picture of financial insecurity for Alabama's over 107,000 retirees. Recent board decisions, such as withdrawing nearly $120 million from the Public Education Employees' Health Insurance Plan (PEEHIP) trust fund, are worrying retirees who are already feeling the pinch from skyrocketing healthcare costs.
For many retirees, like David Foster, who has not seen any adjustments to his monthly pension since retiring after 35 years, the situation is becoming dire. Despite accumulating some modest one-time bonuses, Foster's payments have not increased alongside living and healthcare costs, which have risen precipitously. “It’s kind of one of those situations where, you know, it’d be great to be able to do it, but at the same time, you jeopardize the functioning of the current system,” he said.
McMorris, 78, shared her struggles of facing ever-increasing utility bills and medical costs without any significant changes to her income. Having retired from the Birmingham City Schools, she also attempted to re-enter the workforce to offset expenses but found herself hindered by health concerns.
Jill Jackson, executive director of the Alabama Education Retiree Association, elaborated on the struggles faced by retirees, stating many have never experienced the now-distant benefit of cost-of-living adjustments (COLA). “Instead, they are concerned with the increasing health insurance and medicine costs, gas, utilities, and food,” she noted.
The lack of COLA is particularly concerning because retirees haven’t seen any since 2007; since then, inflation has eroded their spending power significantly. A dollar today buys roughly 66% of what it would have purchased back then. This long-standing issue prompts many veterans of the educational field to reconsider their financial strategies post-retirement.
Past policies had allowed for annual cost-of-living increases, but financial reality shifted dramatically during the Great Recession. The Education Trust Fund’s budget faced significant downturns, complicated by changes to the COLA funding mechanisms put forth by the Government Accounting Standards Board, which necessitated upfront financial commitments tied to the anticipated costs of benefits across decades.
“This situation raises the question: where will the money come from to support retirees?” That is the pressing issue highlighted by many Alabama retirees.
Despite proposals to augment retirement funding through concepts like state lotteries, many feel skepticism surrounds implementation and actual-to-benefit ratios. “And we know what happened to all the lottery and gaming bills the last session,” Foster commented, indicating the lack of comprehensive solutions.
Legislative leaders have expressed doubt about reinstatement of regular COLA, primarily due to concerns about unfunded liabilities. “That was quite expensive, and after the 2008-09 recession, the Legislature really put a stop to it,” explained Rep. Danny Garrett, chair of the House Ways and Means Education Committee.
Even with proposals aimed at creating alternative funding streams, such as revenue from future gambling legislation, GARRETT warned against expecting substantial or immediate relief.
One ray of hope presented at the recent meetings is advocacy for one-time bonus checks, modeled after previous sessions' fiscal policies. While they were met with skepticism, some retirees have held onto the hope for occasional small boosts to their stagnant incomes.
Over the years, these retired educators have setup informal support networks. Stacey Besherse, who only retired last year, finds herself canvassing for community effort to bring the retirees together, many of whom share meals to minimize costs. “They retired with what they thought they were going to be able to live on,” she shared. “And I’ve watched them scrape their leftovers for dinner.”
The call for change continues as Alabama’s retired teachers look for solutions to their financial woes, seeking to rectify the issues plaguing their retirement security and insurance coverage. Collaboration between retired educators, advocacy organizations, and state officials remains pivotal.