Contact FreedomWorks

400 North Capitol Street, NW
Suite 765
Washington, DC 20001

  • Toll Free 1.888.564.6273
  • Local 202.783.3870


Governor uncertain if he will sign retirement savings bill

by BOB JOHNSON on 5/14/01.

The head of Alabama's retirement system says state employees and teachers already have one of the best pensions in the country and he's not sure why a new saving plan is needed, given the state's other pressing demands.

"It's a question of how much of this sort of thing do you do for employees and not focus on other needs of the state," said David Bronner, chief executive officer of the Retirement Systems of Alabama.

Gov. Don Siegelman is still reviewing the bill, which passed the Legislature last week, and has not decided if he will sign it into law, Janel Bell, Siegelman's deputy press secretary, said Monday.

The legislation moved so quietly through the House and Senate that some legislators said they were stunned to learn it would give them a taxpayer-funded retirement plan. It would set up a 401(k)-type of savings plan, but does not immediately provide funds for the employer's match.

The bill, sponsored by Sen. Roger Bedford, was supported by the Alabama Education Association and the Alabama State Employee Association.

After it was approved by the House 80-6 last week, several representatives complained they did not know the bill would included legislators and other elected officials in the retirement savings program. Contributions to the plan would be matched by the state.

Several legislators have asked the governor to send the bill back to the Legislature with an executive amendment that would exempt Legislators and elected officials from the savings plan.

The director of the Alabama State Employees Association, Mac McArthur, said the bill sets up the framework for state employees to have a similar savings plan to what is available to many workers in private companies. McArthur said he hopes the governor signs the bill into law.

"It's not a retirement plan. It's a savings plan. It's a way to encourage people to save money," McArthur said.

McArthur said he didn't expect the state to immediately come up with money to fund an employer's match.

"Until there is a match, there's no cost to the state at all," he said.

Bronner said the Retirement Systems of Alabama did not take a formal position on the bill, but his staff did point out several problems to key lawmakers.

"I don't know why they want it so bad," Bronner said. "Let's face it, we're doing real well compared to states in our peer group."

The bill sets up the Public Employee Defined Contribution Savings Fund. The fund would be overseen by a seven-member board appointed by the Alabama State Employees Association.

Although no immediate money for a state match is required, the bill specifies that by July 1 each year, the board determine the amount of employer match "based on funds appropriated by the Legislature."

Susan Salter, a spokeswoman for the Alabama Association of School Boards, said it's bad timing to set up such a plan at a time when school funding is being cut across the state because of a downturn in the economy.

"We've got systems that can't buy an adequate number of textbooks and that can't hire an adequate number of teachers," Salter said. "Obviously the state doesn't have enough money to adequately fund the schools now. Adding an accessory to what is already considered the Cadillac of retirement systems seems a little much."

Twinkle Andress, Alabama director of Citizens for a Sound Economy, said her organization has not taken a position on the bill, but she questioned the wisdom of including elected officials in such a savings plan.

"Elected officials run to serve the people. To turn around and ask the people you are supposed to be serving to match your savings plan doesn't make sense to me," Andress said.