CARY – District 26 school board members are in the midst of developing a position paper on the state’s pension problems and possible solutions.
According to a draft proposal, district officials are recommending that Teacher Retirement System benefits be based on employees’ contributions, retirement planners should help develop retirement plans for local districts and there should be local control of pensions, among other things.
“We believe that no option should be off the table,” board member Chris Jenner said.
Teacher retirement benefits also should align with retirement benefits of comparable workers in the private sector, the draft document said.
With state lawmakers discussing whether to shift a higher burden of pension costs to school districts, District 26 is preparing for such a shift, eventually, in its budget projections.
The school board plans to vote on the position paper next month.
“If we’re required to allocate additional funds to pension payments, we’re going to be back to cutting programs and letting class sizes grow again,” Jenner said.
There have been solutions proposed by the retirement system itself and independent researchers. Proposed solutions include retirees choosing an annual cost-of-living adjustment or a health insurance benefit, but not both. Other ideas are to tax pension income at a certain amount, increase employee contributions, phase in a shift of the state’s responsibility for pension payments to local districts and increase retiree contributions to health insurance, among other things.
The pension protection clause in the state constitution says benefits to the state’s pension system shall not be diminished or impaired.
“We don’t believe there could not be any kind of meaningful reform with the pension protection clause,” Jenner said.
The draft document says the district believes it is unfair for state taxpayers to pay for the majority of the cost of a retirement system “that for most is better than their own retirement plan.”
“Based on the current situation, any meaningful reform of state pensions will not align with the pension protection clause,” the District 26 position paper reads. “The courts have routinely upheld challenges to the pension protection clause. A constitutional amendment or revision of the constitution at a constitutional convention would be required to soften or repeal the pension protection clause.
The Teachers Retirement System created in 1970 was fair and reasonable, the district says.
“Enhanced benefits legislated since then, combined with the pension protection clause, have created a system that is not fiscally viable and is in need of radical change,” the draft document says. “The longer it takes for that change to happen, and the less radical the change, the greater the financial disaster will be, and the worse the effect will be on the TRS annuitants and taxpayers alike.”