Forum: Lawmaker rails on state pension cost

Published 6:30 am Thursday, December 8, 2016

Editor’s note: The following is the second and final installment covering the legislative forum held Tuesday at the Athens-Limestone Public Library. The event, hosted by the Greater Limestone County Chamber of Commerce, was sponsored by Athens State University and The News Courier. The forum featured members of Limestone County’s legislative delegation answering questions on a variety of topics. Part one appeared in Wednesday’s edition of The News Courier.

A state lawmaker criticized the head of the Retirement Systems of Alabama during a legislative forum held Tuesday in Athens.

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State Rep. Lynn Greer, R-Florence, said David Bronner, who leads the pension fund for state employees, incorrectly estimates how much investment return is needed each year to cover retirement payments to state employees.

Greer was one of six members of the Limestone County legislative delegation to appear at the forum, held at Athens-Limestone Public Library and hosted by the Greater Limestone County Chamber of Commerce. The men answered prepared questions from moderator and News Courier Editor Adam Smith.

The event, sponsored by Athens State University and The News Courier, also included questions for House Speaker Mac McCutcheon, state Sens. Tim Melson and Arthur Orr, and state Reps. Phil Williams and Danny Crawford.

Questions for McCutcheon and Crawford appeared in Wednesday’s edition of The News Courier and online at www.enewscourier.com.

Here were the questions posed to the rest and their answers:

Workforce development

Question for Orr: Calhoun, Athens State and the Robotics Technology Park have been proactive in helping build a 21st century workforce through programs and through partnerships with public school systems. Given those efforts, combined with new high-tech industries choosing to locate here in Limestone County, would it be possible for our colleges to receive additional state funding?

Orr: Calhoun is going to embark on a $6 million-plus program for all of its campuses. The president (of Calhoun) looked across the Tennessee Valley and found there was really no place preparing young people in auto mechanics. He’s planning a new facility for that. We were able to put some money in the postsecondary (school) budget for fiscal 2017 to assist with that. The RTP is also moving along.

To answer your question, yes we’re gonna continue to do that. We’ve got a revamping of our workforce regions here in North Alabama and across the state. That’s very important to Gov. Bentley and, I think, the Legislature, to see what a difference it can make to prepare these kids for the workforce.

Not all kids are going to go to a traditional four-year college and get a B.A. or a B.S. Mississippi has transformed that area, and a lot of it is due to the work force they have there.

I would say ours is superior and we could have them trained for the 21st century. We are situated well here but we’ve got to be vigilant and continue to do it …

Medicaid

Question for Melson: Your colleague, Sen. Bill Holtzclaw, last week sent Gov. Bentley a letter to delay a contract with a consultant assisting in the establishment of Medicaid Regional Care Organizations. Holtzclaw said the scope of the fee-for-service model has changed and the RCOs will cost more than previously anticipated. Given your medical background, what’s your opinion of the RCOs and are they the best way to tackle the state’s crippling Medicaid problem?

Melson: The RCOs were proposed before I came down there (to Montgomery). The incentive for people to take care of health through Wal-Mart gifts cards and other things is a novel idea.

If I’m a diabetic at home and my doctor tells me I better be compliant with my medicine, I’d be showing them a picture of a foot amputation or renal dialysis and that would be enough incentive for me, instead of a $25 gift card or something.

But, we need to do something to make people more compliant. Whether it’s aversion through bad outcomes or rewards for good outcomes, I would say responsibility by the individual is more important than education.

As far as the RCOs, when you look at what Huntsville Hospital has done throughout the Valley — they’ve come over the Athens-Limestone Hospital, Decatur-Morgan Hospital and Helen Keller Hospital in Sheffield. My understanding is its really turned around.

If anyone in this region has a chance of making RCOs work its David Spillers (Huntsville Hospital chief executive officer) and his organization … If RCOs were so great an idea three years ago I’m wondering why they are not today — why not give them a chance.

We have thrown a lot of money away. However, it’s about as lean as it can be down in Montgomery … I’m sure coming up with the money for this RCO will be difficult but maybe our new president will find a way to do block grants and we can be a little more creative and innovative on how to take care of Medicaid.

Sometimes its obviously not a (Medicaid) recipients fault they are in the situation they are in and sometimes it is. We can’t be the judge on that. We have to work through things like the RCOs to make them accountable for their problems and their outcomes …

States’ rights

Question for Williams: President-elect Donald Trump has said he would like to see states regain power over certain issues, including public education and public health care. Where do you stand on restoring states’ rights, and is Alabama in a financial position to shoulder the financial burden that could create?

Williams: The only way we are going to succeed if we get a block grant is to be able to engineer and design our own program, our own parameters.

So much of what of what we’re covering today is not anybody in the state of Alabama’s decision to cover or not to cover. It comes down from Washington, D.C. So, if we got a block grant with latitude — go create your own program — I think I could be very optimistic that we could do a lot of things. But, if we are just handed the money and we still have to match something that comes from D.C, I don’t see what would change.

I think Alabama is in a great position with the new president on a number of fronts. I hope to at least have the conversation.

State retirement

Question for Greer: Retirement, like Medicaid, has been sort of an albatross around the neck of the general fund budget. Is this an issue that will get more attention this year? What will the state Legislature do this year about state retirement?

Greer: I know of no proposed legislation. We’ve got a problem. Today in Alabama there are 1.6 people working for everyone drawing retirement. To fully fund retirement today, we’d have to have 48 billion dollars in assets. We’ve got roughly $32 billion.

Keep in mind, you’ve got to make 8 percent of 48 billion to break even. RSA doesn’t want to look at that, they want to say that we only gotta make 8 percent on the $32 billion. What are you gonna do with the $18 billion?

The last fiscal year I’ve seen, 2015, they only paid 1.04 percent on the $32 billion. Now they have good years and bad years.

Were not the only state in this shape. Most states that got in our shape did some sort of legislation to get out of it … They (RSA) were making so much money in the 1980s and ’90s, they couldn’t believe when 2001 and 2002 got here what happened to them…

We have investments we can’t even get back to zero on. You got a golf course you gotta break even operating and then make 8 percent profit on. We can’t even break even on it. What are we going to do with that?…

(Greer said a bill was introduced but not passed last year to try to address the issue.)

It’s hard to do anything in Montgomery when you got a little monthly (RSA) newsletter coming out paid for by the taxpayers that is 100 percent full of lies. Until RSA stops lying to the people of this state and tell the truth, we’ll never solve the problem.

(Legislation was passed in 2011 and 2012 to repeal the DROP program and increase employee contributions for current members and to increase the retirement age and increase employee contributions for new members.)