Goat Hill Weekly: Education, Pension Reform & Legislative Pay

The Education Options Act – House Bill 541 by Rep. Phil Williams

Background Information:

• Right now only about 60% of Alabama students graduate from high school.
• The problem is concentrated, as only 13% of schools produce 60% of the dropouts.
• Dropouts aren’t just an education problem, they’re an economic threat. Here are some things to keep in mind:

High school dropouts are twice as likely to be unemployed, three times more likely to live in poverty and eight times more likely to be in prison. Four out of every ten dropouts end up on at least one form of public assistance.

Why the Education Options Act makes sense:

• Communities need a variety of tools they can use to not only curb their local dropout rate but also create productive graduates who are better equipped for the future, be it college or the workforce.

• The Education Options Act seeks to offer a diverse menu of improvement options from which different communities may choose based on what their particular needs are.

Here’s what the bill does:

1. Provides a pathway for school systems to obtain flexibility from state statutes or state board regulations in order to make improvements in their system.

2. Allows local school systems in Alabama to authorize innovative public charter schools.

3. Authorizes communities to convert existing schools into innovative public charter schools.

Here’s what the bill does NOT do:

The Education Options Act does not require the creation of even one charter school, nor does it mandate that a board request a waiver from any state statute.  The legislation merely provides the framework for an innovative school board to change the status quo.

Here’s what you can expect from groups opposed to this legislation:

Defenders of the status quo attack charter schools citing data from a Stanford University study. They say the study shows that charter schools don’t work. The truth is the Stanford study actually includes strongly positive results for charter schools:

• They are right that at the national level, charter students perform lower than non-charter students in reading and math in the FIRST YEAR. What they won’t tell you is charter students perform higher in reading and the same in math the SECOND YEAR. By the THIRD YEAR, national results show charter students performing higher than non-charter students in both subjects.

• Additionally, a Mathematica study out of Princeton, New Jersey showed that charter schools are particularly effective in raising achievement for lower-income students as compared to their traditional school counterparts.

Pension Reform  – House Bill 508, by Reps. Ison & McCutcheon

What must change about Alabama’s Retirement System and Why:

• Currently, anyone may retire with 25 years of service, no matter how young they are.  Or, they can retire at age 60 as long as they’ve served for 10 years.
• Taxpayers’ contributions to fund RSA have tripled since 2001 from $330 million to almost $1 billion this year. By the RSA’s own projections, that funding will need to increase by another 77% over the next eight years in order for RSA to continue operating at its current pace.
• If changes aren’t made to the retirement system, it’s estimated that it will run out of money by 2023
• Public employees deserve to have peace of mind and know they can count on the promises they’ve been made.

About the Plan:

• These changes do not affect current employees or retirees – whether they’re vested or not.  This will only be for new employees hired beginning in 2013.
• These changes will save the state more than five billion dollars over the next 30 years.
• Over time, that works out to an average savings of 162 million dollars a year.  The savings increase year by year as more new hires begin employment.
• By simply setting a minimum retirement age of 62 for most employees, the state can save more than three billion dollars over 30 years.
• For law enforcement, the minimum retirement age would be 56.
• While there is an overall reduction in benefits for new hires, this bill also lowers the contribution rate they will have to pay for those benefits. That means their take-home pay will actually be higher because they will have less of their paycheck withheld for pension contributions.
• These changes bring the state more in line with the private sector.  They honor commitments to current employees. And they still provide a solid, attractive retirement for future employees as well.

Legislative Payraise Repeal – House Bill 276 by Rep. Mike Ball

Background Information:

• Last year, members of the House Republican Caucus voluntarily cut their own pay by 15% to correspond with proration currently being experienced by state agencies.
• Lawmakers are now working on a plan to repeal the 2007 pay raise and allow voters to determine legislative pay at the ballot box.

Here’s what this plan would do:

1. Tie legislative pay at median household income so it would increase or decrease based on how Alabamians are doing economically

2. Modernize the reimbursement system so that lawmakers are treated like any other state employee for travel, hotel stays, etc.

3. Repeal automatic cost-of-living adjustments built into the Democrats’ pay raise and takes away every legislative “expense allowance” ever enacted by the body.

Bottom line:

If the legislature had approved this plan rather than the pay raise the Democrats pushed through, salaries for lawmakers would have actually decreased by 8%, the same amount Alabama’s median income has dropped since the economic recession began.