By Craig Ford
We are taught from a very early age that a promise is a promise.
Alabama made a promise to teachers, nurses, prison guards, sheriff deputies, child-protection workers, and others serving in the public interest that they could have a decent retirement. Seventy years ago, the Retirement Systems of Alabama (RSA) was created to ensure that promise was kept. Not only has the RSA fulfilled its obligation, but also it has been a tremendous force for progress in the state.
The mission statement of RSA reads: “to serve the interests of our members by preserving the excellent benefits and soundness of the Systems at the least expense to the state of Alabama and all Alabama taxpayers.”
Sounds like a good mission. So, how are they doing?
From most accounts, RSA is doing very well. There are approximately 90,000 Alabama seniors receiving benefits each month. The benefits are not lavish by any stretch – the average monthly retirement check is around $1,700 – but they are always paid on time and guaranteed for life.
Taxpayers do not simply write a check for all retirees each month. RSA pays for these benefits by the investments it has made over the decades with money contributed by the employees and employers. It is important to note the teacher and the school system, the deputy and the sheriff’s department, both pay into the system.
Back in the early 1970s, RSA was in trouble, having only a fraction of what was needed to pay current and future benefits. Through prudent investment strategies and due diligence, by 2006 RSA was able to build up a fund that had 100 percent of needed monies for benefits. After the stock market collapse and the economic downturn, the total went to 71 percent. RSA is strengthening once again as the economy rebounds and investments recover, with more than $26 billion in assets today.
Yet, there has been grumblings in the statehouse about RSA, with ideas that would fundamentally undo the promise we made to teachers and other public employees.
A prime target of critics’ is the RSA policy of investing 10 percent of funds in Alabama. The Alabama investment strategy was critical to landing Mercedes, Hyundai, Honda and Toyota, the backbone our auto industry. The state tourism industry went from $1.5 billion to almost $10 billion since RSA changed the face of Alabama with the Robert Trent Jones Golf Trail, Renaissance resorts, and the Alabama Cruise Terminal.
Critics say RSA made investment returns about one percent less than the national average over the past three years, with the Alabama investment policy as a cause. Democrats believe the number of jobs created and economic impact are every bit as important as the overall returns, as long as RSA is fundamentally sound, which it is.
One proposal being floated by the Republican Supermajority in the statehouse is to get rid of the current elected RSA oversight board and replace it with one appointed by politicians. Using political cronies is never a good answer, and taking away the elected representation of people who put there hard earned pay into the RSA is wrong – a broken promise.
Another proposal the Republicans are pushing is to change the benefits for new and some existing employees from a guaranteed benefit to one that is not. Republicans seem to have a deep-seated animosity to things like Social Security and other retirement guarantees. For some reason, they think retirement security for teachers, law enforcement, firefighters, and other public employees is a bad thing. Republican arguments center on whether these benefits are affordable. The RSA experience clearly shows that they are.
Democrats understand the need to provide retirement security to those who serve our community. Democrats also believe the government should keep it’s promises. That is why Democrats are ready to protect the Retirement Systems of Alabama in this legislative session.