Inflation hurts, and no one feels the pinch more than senior citizens living on fixed incomes.

An 81-year-old Mountville retiree contacted the Watchdog in January to ask why the annual cost-of-living increase for Pennsylvania’s governor and lawmakers is bigger than her Social Security cost-of-living increase.

That inequity bothered her, and judging from the tens of thousands of people who took time to read about her plight in LNP | LancasterOnline, she wasn’t alone in feeling cheated.

Joel Moore, an 81-year-old retired schoolteacher living in Caernarvon Township, read that column, which reinforced a separate concern he has about his own retirement.

After teaching for 42 years (the last 17 in Philadelphia School District), Moore retired in 2011 with a pension administered by Pennsylvania’s Public School Employees’ Retirement System, commonly known as PSERS. He is one of about a half million active and retired teachers, administrators and education support staff whose retirement benefits run through the state system.

Moore laments the fact that his pension benefit hasn’t grown since he entered retirement, even though a dollar’s worth of goods in 2011 now costs nearly $1.50 due to inflation.

According to the National Association of State Retirement Administrators, about three-quarters of U.S. states fund regular cost-of-living increases for their public pensioners, but Pennsylvania has made no such adjustment in nearly a quarter of a century.

“I think in all fairness, there should be a substantial cost-of-living adjustment now, to make up for lost time,” Moore said. “Then they should establish by law … that all (Pennsylvania) employees, whether elected or public employees, get a cost-of-living increase every year. It should be automatic.”

Moore said he keeps a tight budget and knows plenty of teachers who struggle more than he does. In particular, teachers who retired prior to 2001 are hurting.

Pennsylvania: The un-COLA

In July 2001, the General Assembly  enacted Act 9 reforms, increasing teacher pensions by 25%, as well as the pensions of state government employees covered by the State Employees’ Retirement System, commonly known as SERS.

So, for example, a teacher who worked 30 years and retired before the Act 9 reforms were enacted receives a pension equal to 60% of their annual salary at retirement, whereas a teacher with the same 30 years in the classroom who retired post-Act 9 receives 75% of their annual salary.

The following year, in 2002, the Legislature approved a one-time cost-of-living adjustment for pre-Act 9 retirees, but lawmakers haven’t offered up another increase since.

Participants in the state’s public retirement systems used to be able to count on semi-regular, ad hoc cost-of-living adjustments. The Legislature gave the pension plans a little bump several times between 1968 and 2002 to at least keep the compensation moving in a fair direction.

But soon after enacting the pension adjustments in 2001 and 2002, lawmakers discovered the state’s public retirement systems were drastically underfunded due to a combination of insufficient employer contributions and underperforming investments. Ever since, they’ve been reluctant to add more liability to a retirement system already wanting for funds.

Meanwhile, the purchasing power of retired teachers has shriveled.

“Think about what was happening in 2002. Netflix was still sending DVDs to people in the mail,” said Chris Lilienthal, director of communications for the Pennsylvania State Education Association.“That was a long time ago.”

Lilienthal said the teachers union often hears from members who retired before 2001, now in their 80s and 90s, who struggle to make ends meet amid skyrocketing prices for gasoline, groceries, medicine and housing. Their average annual pension benefit is less than $20,000.

According to the union’s calculations, a cost-of-living increase for pre-Act 9 retirees would help about 59,000 state pensioners who retired before 2001, including 37,000 retired educators and support professionals.

Finding political will

A 2023 study published by the nonprofit public policy influencer Pew Charitable Trusts shows Pennsylvania may have righted its public pension ship. By 2017, the state was funding its pension plans on par with their liabilities. By 2020, the Legislature began shoveling in some extra funds each year to start filling the fiscal hole it had dug.

If the state continues to follow its current funding trajectory, according to the study, the pension plans will end up solvent.

Maybe lawmakers are feeling more generous now that the pension plans have turned around – or maybe they’re just embarrassed by how poorly they are funding their oldest, neediest retirees – but whatever the cause, the Legislature appears to have found the political will to finally give out cost-of-living adjustments.

In each of the last two sessions, the House has passed bipartisan bills to give a bump to the pensions of pre-Act 9 retirees, and this year the Senate has a similar bill on the table.

Senate Bill 721, sponsored by Bucks County Republican Frank Farry and co-sponsored by, among others, Lancaster County Democrat James Malone, would increase the monthly benefit of pre-Act 9 retirees by 15% to 24.5% based on when they retired. Interest generated by the state’s Rainy Day Fund would pay for the cost-of-living adjustments.

“I believe teachers are public servants, and they should be able to retire with dignity,” Malone said in a written statement. “It’s absurd that retired educators and school employees are not receiving some sort of regular pay increase to account for inflation.”

As senators weigh whether to support the bill, which currently sits in the Senate Finance Committee, Malone said he would urge his colleagues to put themselves in the shoes of a retired teacher.

“I hope they would go to the grocery store and consider how difficult it must be for retired teachers to get by after years of not seeing a pay increase to match the price increases on the shelves,” he said. “We owe it to these retired public servants to make sure they can live with dignity.”

Readers can urge the General Assembly to make 2026 the year the state’s poorest retired teachers receive fairer compensation by contacting their state legislators. To find yours, visit lanc.news/FindMyLegislator.

For Lilienthal and the state teachers union, taking care of pre-Act 9 retirees represents an important first step toward fairer pensions for all retired teachers. Step 2 would involve building regular cost-of-living increases into law for all state pensioners, so that guys like Joel Moore can feel a little more comfortable living within their budgets.

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