Members of the Texas State Employees Union CWA Local 6186 staged a mass call-in to members to the Texas House Appropriations Committee to urge them to support HB 2395, which would fully fund the pension fund for state employees and give state retirees a much needed cost-of-living pension increase, something they haven’t had since 2001.
“Unfortunately, state employee salaries have always lagged behind salaries for commensurate job duties in private industry, so we started out behind”, said TSEU member Rebecca Lutz, who worked for the Department of Health and Human Services. “Now it has been eight years since my husband and I retired, and the price of gasoline has increased, the price of groceries have increased, utility expenses have increased, and medical expenses have increased. However, there has been no increase in our pension. As a result, our standard of living has steadily decreased, and will continue to do so, unless there is an increase to equal the cost-of-living increases.”
The Lutz’s aren’t alone in feeling the bite of higher prices. According to the US Bureau of Labor Statistics, it would take $131 today to buy what $100 bought in 2001.
And as Lutz points out, Texas state employees salaries lag behind salaries for comparable work in the private sector and in many local government jobs; consequently, pensions for most retired state employees are at best modest and in many cases quite low.
The median monthly pension for Texas state retirees is $1,523, and for nearly one-third of these retirees, their monthly pension is $1,000 or less before taxes and insurance deductions.
Like their active employee cohorts, retirees while they were working contributed between 6 percent and 6.5 percent of their monthly salary to their pension fund.
Most retirees recognized that the pension they earned while serving the public would be modest, but they also assumed that it would be enough to provide them some degree of retirement security.
But today’s economy has changed, and those changes have made middle-class life less secure and created challenges that threaten retirement security.
For one thing, the new economy has caused more retirees to enter retirement carrying substantial amounts of debt.
For example, the cost of a higher education has increased so much that some retirees are still paying off higher education loans for their children.
“Before I was eligible for retirement I frequently worked two jobs so I could support my children. I was in a senior level management position but as a single parent, my salary was not adequate to meet our needs and the college expenses,” said Janice Zitelman, a TSEU member who served two terms on the Texas Employee Retirement System Board of Trustees. “Some people say that children should begin supporting themselves when they turn 18, but most know that does not provide for a good start on adult life. While I was working two jobs my children were also working and going to school. When I had the opportunity to retire I took it, knowing that I would need to continue working. The advantage was that I had income from my pension and my new employment. Ten years after I retired, I am still trying to pay off my children’s college education and the last one graduated in 2005.”
Alice Embree, a TSEU member who worked for the Office of the Attorney General’s Child Support Division, also found herself paying off higher education loans well into her retirement.
“My husband and I have been paying a parent plus loan off, and we’re finally done six and one-half years after I retired,” said Embree.
But Embree is also facing another challenge. Her adult daughter will be returning to Texas after working in El Salvador and will be facing some medical expenses, which Embree will likely have to pay for because her daughter doesn’t have health insurance.
She’s not alone. According to the Texas Medical Association, “Texas is the uninsured capital of the United States. More than 6.3 million Texans – including 1.2 million children – lack health insurance. Texas’ uninsurance rates (is) 1.5 to 2 times the national average.” The uninsured rate for adults between 19 and 64 in Texas is 33 percent.
Retirees like Tom Herrera, a TSEU member who worked for the Department of Human Services, are also facing increased medical expenses of their own.
“When my wife and I retired in 1998, we reduced expenses by living in a small house in East Austin,” said Herrera. “The idea was to reduce expenses in order to live on a fixed income and free of debt. But I got sick and have to take medication, whose cost has increased substantially because of higher deductibles and higher co-pays. I recently realized that the medication costs may make it difficult to replace my vehicle which now has 89,000 miles. Despite living in a zip code in which many lower income service providers live, inflation, especially higher health care expenses, has steadily become a problem.”
Opponents of public pensions say that pensions cost too much, but the state employees’ pension is a cost efficient form of employee compensation that is good for employees, retirees, and the public.
Currently, state pension contributions to the state employee pension fund are 0.046 percent of the entire state budget. Raising the state contribution rate to 10 percent of payroll would increase the share only to 0.065 percent.
In a broadcast urging all members to participate in pension increase call-in, TSEU told members, “(The passage of HB 2395) will ensure a healthy, fully funded pension fund for all current and retired state employees and bring us closer to winning a cost of living raise for all current state retirees.”