Wyoming Education Association

Spring 2021

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Ron Sniffin Executive Director, WEA rsniffin@wyoea.org (307)214-3389 E X E C U T I V E D I R E C T O R I don't know if the pandemic has accelerated my sense of time or if, as I get older, time just goes by faster. I remember my parents cautioning me that time accelerates the older you are. I've been thinking about this lately in the context of our retired members. The Wyoming Education Association is a founding member of the Wyoming Coalition for a Healthy Retirement (WCHR). This coalit ion was created a decade ago in response to potential legislation that would convert the Wyoming Retirement System from a defined benefit pension system to a defined contribution system. The currently defined benefit system guarantees a retiree a specific amount throughout their retirement. A defined contribution system is like a 401(k) plan in which the retiree's income is based on the whim of the stock market. We have been successful in beating back these attacks and are confident we will prevail if this attack were ever to surface again. Recently the coalition has focused our efforts to find some financial relief for retirees. A Cost-of-Living Adjustment (COLA) has not been granted since 2008, and inflation continues to deteriorate their spending power. In 2012, the Wyoming Legislature stripped the Wyo ming Retirement System's power (WRS) to grant a COLA and implemented a provision that the corpus must be 100% funded before a COLA can be given. Actuarial estimates are that the corpus will not be 100% funded until 2050. At this rate, this means current retirees will never see financial relief in their lifetime. According to the US Government Accountability Office, many experts consider a funded ratio of about 80% or better to be sound for government pensions. The current status of the corpus funding is approaching 75%. F r o m t h e A C O L A i n 3 0 Y e a r s M e a n s N e v e r f o r M o s t R e t i r e e s The WRS estimates an annual rate of return on investments of 7%. The WCHR proposed to the legislature that when the rate of return far exceeds the anticipated rate of return in a given year, part of these unanticipated gains should be made available to retirees. For example, in 2018, the return was nearly 18%. That year the return on a corpus of over eight billion dollars was well over a billion dollars. Under WCHR's proposal, if this were to occur again, a portion of this windfall should be siphoned off and put into an endowment fund managed by the Board of the WRS. It then would be up to their discretion how to get this money to retirees. For example, they could offer a 13th check or perhaps focus on a segment of retirees who have been exceptionally hit hard by the lack of a COLA. It was not our intent ion to prescribe how the money is used but to create a pot of money they have access to that currently does not exist. Retirees should have access to unanticipated gains. After all, it is their retirement money in the corpus that was invested in obtaining those gains. Why not let current retirees share in this windfall now? Waiting 30 years—even waiting 10 years—would mean that many retirees would not liv e long enough to benefit. They absolutely should benefit, as it was partly their money that helped to create this windfall. We understand that siphoning off some of the gains in exceptional years will prolong reaching 100% funding. So, we suggest building in guardrails, requiring the corpus to be funded at least 75% for this siphoning to occur. While this concept was embedded in House Bill 221, the bill f ailed to be introduced by the March 8 deadline. While this is unfortunate, we are happy that this legislation has been drafted, and we have started the conversation to move forward. We will now work with the WRS staff and board to better position us for our effort next session. Ron Sniffin Executive Director, WEA 5

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