Schuylkill retirement board to vote on retiree request at next month’s meeting

A handful of Schuylkill County retirees arrived at a public meeting Wednesday expecting an answer as to whether they would finally, after 10 years, receive a pension increase.

They left with a promise that the county Retirement Board would vote on their request next month when all board members were present.

The board is composed of the three commissioners, Controller Christy D. Joy, and Treasurer Linda L. Marchalk.

Commissioners’ Chairman George F. Halcovage Jr. was absent Wednesday.

“My commitment to all of you is this: Whoever is here, we’re going to vote,” said Commissioner Frank J. Staudenmeier.

“All these folks want is a yes or a no,” said Commissioner Gary J. Hess, who chastised Halcovage.

Retirees have been asking for the increase for almost two years.

“We show up, we show up, we show up, and we keep getting ‘next month, next month, next month,’ ” said retirees association President Joan Dietrich.

“When you’re trying to live on a fixed income for a long time, it’s difficult,” Staudenmeier said.

The cost-of-living adjustment, or COLA, would be the first in 10 years for the retirees. The last increase was in 2007.

Until 2015, the retirement board had balked at increasing the pensions because it would have had to make the raise retroactive, costing millions. But state legislation has since relieved it of that requirement.

Over the past year or so, the retirees have been asking for a three-tenths of a percent increase.

But Joy explained that the state regulates the increases based on a consumer price index. Currently, that would translate into a 1.4 percent increase.

That would give retirees an increase of about $14 a month and cost the county $922,446 over 10 years.

The county is given just two options: To grant that increase or none at all.

Inflow and outflow

On Wednesday, Joy used the analogy of the pension fund as a bath tub to explain how it operates.

Employer and county contributions, with revenue from pension fund investments, flow into the tub. Expenses and benefits flow out through the drain.

Over the past several years, largely due to steadily rising health care costs, the outflow has been greater than the inflow.

In 2008, what came out of the tub was about $4.5 million, and about $3 million went in.

In 2016, almost $8 million was coming out of the tub, and $4.5 million was going in, Joy said.

“The hole in the bottom of the tub is significant, and it’s still growing,” he said.

Employees contribute a minimum of 8 percent of their wages, totaling about $2 million consistently.

The county’s contribution, from the general fund, fluctuates. In 2008, it contributed about $1 million. In 2009, that doubled, then went to $3 million. Last year, it was $2.2 million.

Next year, the estimate is projected at $1.8 million.

“If we offer a COLA, that will go up,” Joy said.

Health benefits pull the plug

In 2008, actuaries estimated the cost of the retirees’ benefits at about $5 million. But in 2009, that estimate grew to $10 million. By 2010, the cost was about $15 million.

The rise has recently slowed a bit, Joy said. But if the county had to write a check to pay off that liability, it would cost about $35 million.

That would hit hard, Joy said, because Schuylkill pays for benefits as it goes instead of setting funds aside to pay for future payments.

The liability dwarfs the others the county has, including leases, bonds, and pension fund contributions.

Employees who retired before 2004 receive lifetime health benefits.

In 2008, the cost was figured at $5 million. After 2016, actuaries figure it would cost $36 million for employees and retirees.

Health care is the county’s biggest liability.

“We’re not funding this. We’re paying as you go,” Joy said. “We made this promise, and we have to keep it.”

Retiree Louise Howells questioned the projections, saying the number of those receiving lifetime benefits will continue to drop because the county stopped offering it after 2004.

“The acceleration (of costs) is not based on that the population of people getting bigger, it’s based on that the price of health care is getting just so crazy,” Joy said.

While the pool of those receiving lifetime benefits is dwindling, the number of retirees is rising.

At the end 2016, the county had about 600 retirees. At the end of 2008, there were 470.

Pension fund levels

In 2007, the pension was 100 percent funded. But from 2009-12, it was under 85 percent. Under state law, the fund must be at least 80 percent funded for COLAs to be granted.

With $137,906,605 in the fund, and payments of about $8 million, why not grant the COLA?

The account is 95 percent, and that’s not enough for Joy to feel comfortable with.

“What we have to be conscious of is that there could be a significant correction (in the market),” Joy said. “We want to make sure that the money were putting in is relatively stable for the next few years.”

Instead of having the retirement board vote on whether to give the increase, Joy wants to see the county adopt a policy that automatically grants increases when the pension reaches a certain, yet-to-be-determined level.

Joy’s website, www.co.schuylkill.pa.us/Offices/Controller/index.asp, has the pension fund reports.