Engler, teachers go head-to-head on retirement plan

FARMINGTON — A heated meeting took place Thursday afternoon between state Sen. Kevin Engler (R-Farmington) and a group of retired teachers, but the veteran legislator refused to let the former classroom instructors put him in the corner without a fight.

Engler met with approximately 70 former teachers  at Farmington’s Bauhaus Kaffee after his assistant was surprised earlier in the day by the educators who showed up en masse to a “Listening Post” at the coffeehouse.

When contacted by the assistant about the teachers’ unexpected attendance, Engler agreed to meet with the group that afternoon once he returned from out of town. True to his word, the senator spent almost an hour-and-a-half sparring with the upset retirees regarding the current health of Missouri’s Public School Retirement System/Public Education Employee Retirement System (PSRS/PEERS), as well as recent attempts by state lawmakers to fix what they say are serious flaws in the long-term solvency of the plans.

At the meeting Sen. Engler hit the ground running, saying he didn’t care for accusations of impropriety made against him by Jim Kreider, Missouri Retired Teachers Association executive director, who oversees the teacher retirement system.

“I don’t appreciate him accusing me of stealing or wanting to control the teachers’ retirement fund because of the field of work I’m in – and he did it in writing.”

Engler, along with being a state legislator, is a registered representative of Edward Jones Investments in Farmington.

“I’ve been in politics for 16 years and there is no one more honest in state government,” said Engler. “I have always used my pay as a senator to pay taxes or I give it to charity. I don’t take gifts, golfing, meals, trips or anything else from anyone.”

In December Kreider had written about the senator, “The basic premise is that many elected officials are against Defined Benefit pensions like ours in favor of 401K type retirements which is the business Engler is in. Selling 401ks!”

Kreider went on to say that legislators had an ulterior motive in seeking changes to the plans, writing, “Of course they sure want to get their hands on $30 billion. There is a lot of money to be made controlling our money!”

Engler told the retired teachers that although the retirement fund at one time had “a billion dollar surplus,” this is no longer the case as teachers are living longer and collecting more years of retirement pay. This has put the fund at risk for teachers.

“It is now five billion dollars underfunded,” he said. “This is actuarially very difficult on the fund.”

Teachers at the meeting were quick to ask the senator his position on the passage of SB 842, a legislative plan to make several major changes in the teachers’ retirement system.

“I called the majority leader before I came down here today and he told me it’s not coming to a vote,” said Engler, who added that the makeup of the bill came not from legislators, but from the teachers’ own retirement board.

Offering a history of the state legislature’s involvement with the teacher retirement fund Engler said, “Over 10 years ago the board came to the legislature and asked for several changes since they had over $1 billion in surplus. They asked to allow teachers to ‘buy-in’ years of service that didn’t include teaching; to make a change from using five years average pay to using three years average pay to determine retirement; change some Cost of Living Adjustments (COLA’s); and give bonuses to teachers who teach longer than 30 years. The reasoning was that they had a surplus of money to do all these things and would never need to raise the rate that teachers and school boards put into the fund. Despite that, the participation rate has increased more than 40 percent over the past 10 years.”

Engler said that with some difficult times in the market, additional spending, changes in the fund and allowing administrators to retire and then come back as “consultants,” the fund has fallen to a low of 65 percent in 2005.

“The market has started back up, but a few changes are still needed to keep the fund solvent,” he said. “The retirement system’s board met to come up with options to keep the plan sustainable. The board considered several ideas, but one of the main options discussed was to adjust the COLA – locking it in at 2 percent for retirees when inflation is between 0 and 5 percent. They said that actuarially in 30 years this would take the fund to 100 percent. Because of this action the fund saw an increase from 79 percent to 85 percent funded.”

Engler said that SB 842 actually supported what the board was doing and was holding them accountable to their plans to stabilize the fund. Still, he was against the bill because he said “the board’s hands shouldn’t be tied” if in future years the situation changed and other actions had to be taken.

He sought to calm the fears of the retirees who believe the state wants to take over PSRS/PEERS so legislators can use the teacher retirement fund to bolster other weaker pension programs.

“Why in the world would we want to take over $5 billion in debt? he asked. “Remember that the fund is 85 percent funded, not 100 percent.”

Engler added that he is against the idea of going to a two tiered system or a defined contribution plan, but still feels it’s in the best interest of Missouri teachers “to make sure the current plan continues to remain stable.”

As a personal aside, the senator mentioned that, having children who had chosen to be teachers, he is concerned about the teacher retirement fund’s viability.

Many of the retired teachers present at Thursday’s meeting openly doubted Engler when he said he was against a takeover of the teacher retirement plan by the state. Former North County School teacher Nancy Lynch appeared to speak for many present when she said, “We want to make sure the state doesn’t take over the teacher retirement system. You’re not one of us. We’re educated and we want the state to butt out. The government doesn’t handle money well. Our retirement system is in better financial shape than either the state of Missouri or the U.S. government.”

Several of the retired teachers pointed out a report issued in December 2011 by the Joint Committee on Public Employee Retirement that said both PSRS/PEERS were in better financial condition on an actuarial basis than all other Missouri statewide pension plans with assets over one billion dollars. Engler agreed that the fund is currently solvent, but said it could find itself in trouble if the stock market didn’t show substantial and sustained growth over the next 30 years.

One retired teacher said the group had more trust in Kreider than in Sen. Engler. Because of the hostility he showed for Missouri teachers and the retirement fund, she asked how he could be trusted to do the right thing on their behalf.

Engler replied, “I have a certain amount of hatred for your organization, but not enough to do the wrong thing.”

Noting the shocked reaction of many in the room, Engler clarified his statement, saying his hatred was directed at the organization’s leadership – Kreider specifically – for having falsely accused him of lying and stealing.

Engler closed the meeting with a brief discussion of SB 806, a senate bill to end teacher tenure in the state. He said the bill had been killed and wouldn’t be brought up again this year. While voicing his qualified support for tenure, he said that he was against tenure when used to make the firing of bad teachers difficult or nearly impossible.

A retiree told Engler he was concerned about administrators who, without the protection of teacher tenure, could fire long-term teachers in order to hire family members or bring on younger teachers at a lower salary.

Engler said he favored giving Missouri teachers due process where, if threatened with firing, they would have the right of a hearing before administrators where they could present a defense.

“This would be available to all teachers whether they’ve been in the classroom one year or 30 years,” he said.

Kevin R. Jenkins is a reporter for the Daily Journal and can be reached at 573-431-2010, ext. 114 or at kjenkins@dailyjournalonline.com.