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City employees COLAS (Cost of Living Adjustments) Questioned

By Leslee Kulba- About fifteen people were present during public comment at the last Asheville City Council meeting to support a message “of great importance and, frankly, urgency” from the city’s former risk manager, John Miall. Although only facts were stated, the public was left to believe the state has been misappropriating pension funds.

Miall said local retirees had seen only one cost of living adjustment (COLA), valued at 0.1%, in the 14 years since his retirement.

While Miall considered the city’s consolidation of its pension funds into the Local Governmental Employees’ Retirement System (LGERS) one of its best moves during his 30-year tenure, he was now seeking redress of “harms and financial burdens” incurred from inequitable oversight of the fund.

When city employees retire, they contribute $2.90 a month to the North Carolina Retired Governmental Employees’ Association (NCRGEA), an organization established by the state, “to advocate for the collective interests of [its] retiree members.” This, Miall said, had “failed us miserably.”

Miall suggested the composition of the NCRGEA board of trustees might be contributing to the problem. Of its five officers and fifteen members, only four are representatives of local governments; the rest are or were state employees or teachers. This is not terribly disproportionate, though, as 70,500 of the program’s 288,881 total are retired local employees. [ED NOTE: Comparing the number of pensioners in the defined-benefit program to the state’s 664,418 active workers is a discussion for another day.]

As far as advocacy goes, Miall said local retirees had seen only one cost of living adjustment (COLA), valued at 0.1%, in the 14 years since his retirement. He and former Asheville Police Chief Will Annarino spoke about this last year with an unnamed state senator, presumably Chuck Edwards, who assured he would prioritize the issue in a conversation with the state treasurer the next day, which was a Saturday. To date, there has been no follow-up to repeated inquiries.

Miall therefore “dug deeper,” and discovered a good resource in Ed Sheary, the former director of the Buncombe County library system, who serves on the NCRGEA board. In his investigations, Miall found the state decided 10 years ago to stop considering LGERS COLAs in budget deliberations and instead turned responsibility over to the state treasurer.

Miall then repeated three excuses NCRGEA representatives said they were hearing from the treasurer, who is now Dale Folwell.

The first was that cities and counties would have to increase their contributions to afford a COLA, and they weren’t willing to do that. Miall was skeptical, so he contacted Asheville’s CFO Barbara Whitehorn, who was “out of town and quite ill,” but responded. Miall read from her email, “’What the association says the official line is is quite wrong. You have been seeing annual increases to your budget for contributions to LGERS from 2015 and forward every single year, including one on this year’s budget that’s a full 1.4% greater than in the past.’”

“The truth is, the treasurer’s taking your money, and money from cities and counties across the state, and we’re seeing nothing!” boomed Miall. The last state audit of the fund, incidentally, reported, “The results of our tests disclosed no deficiencies in internal control over financial reporting that we consider to be material weaknesses in relation to our audit scope or any instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.”

The second excuse was the NC League of Municipalities and City and County Management Association, supposedly representing local governments, deemed it “not fiscally responsible to give a raise … in the foreseeable future.” Miall said the average LGERS pensioner was collecting just over $17,000, or about half the $15/hour minimum dominating city budget discussions.

These were the people who, “protected you, picked up the dead people off the street, provided first aid treatment, paved your streets, and picked up your trash to keep us all from dying in our own filth.” Meanwhile, state employees, “and teachers every time they get on a bus to go to Raleigh,” continue to receive periodic COLAs.

The third “insult” was that COLAs should not be given until the pension was funded at 100%, an achievement Miall said was mathematically impossible. He said when he worked for the city, the local government pensioner’s plan funded 97-98% of liabilities and was “the envy of every state in the country.” Having decreased during the recession, the fund is now built back to 94.16%; the net position of the fund for state employees and teachers, at 89% of liabilities last year, somehow was sufficient to justify another COLA for that group.

Miall estimated local government pensioners had lost about 25% of their income by not receiving COLAs. He suggested council could compensate them with a 25% break on property taxes and water bills; or it could fund an adjustment this year for the cost of one bike lane. Thirdly, council could use its clout to demand remediation.

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