Montanans are proud of their reputation as people of their word. Perhaps that's no longer true in Montana's Legislature. The Legislature is busy dismantling its commitment to public employees by gutting the Guaranteed Annual Benefit Adjustment. The operative word in this provision is “guaranteed,” and while many see it as a commitment and a contract, the Legislature considers GABA its prerogative. House Bill 454 and House Bill 338 would drastically reduce or eliminate GABA.
Both bills are advancing in the House and on their way to the Senate.
Under current law, GABA provides a 3 percent annual increase in a retiree's monthly benefit. GABA has figured into each public employee's calculation as to when and if they can retire. For example, most retirees leave state employment with a state retirement benefit that is no more than half of their last take home pay. So, the GABA provision is not making anyone rich, but it does provide for security as retirees age and their financial options narrow.
Montana enacted a guaranteed statutory annual percentage adjustment for its public employees. This action was commendable and, although modest, it allows each public employee to carefully consider their financial future and retirement options with some certainty. Our aging public employees are being squeezed on many fronts: increasing health care costs, pressure to reduce social security benefits, and rising costs at all levels including household utilities. GABA provides a way for our public retirees to live a dignified retirement.
Why should public employees enjoy this benefit while others in the private sector may live with uncertainty? As we’ve seen over the years, Montana’s Legislature often chooses to ask public employees to do without raises for years at a time. The pension benefit historically has encouraged public employees to remain in public service even though they could often make a higher wage in the private sector. The pension benefit is an integral part of the overall employment contract between Montana and its public sector workers. As such, it should be honored.
Governor Bullock's original proposals to address pension system funding issues would have fixed the funding gap in the retirement systems. The Legislature has turned away from these proposals. The old adage that a crisis should never go to waste applies to this issue. While overall budget surpluses exist and have existed in Montana for many years, the Legislature chooses to concentrate on the reduced value of the retirement trust funds as a rational to reduce the committed benefits owed to its current and future retirees. This is a breach of faith ethically, as well as a breach of a legal contract.
The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a “deal’s a deal” only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?
It is important to contact your legislators and the governor to urge them to oppose any provision such as those found in HB454 and HB338 that eliminates, suspends, or reduces the Guaranteed Annual Benefit Adjustment. In Montana, commitments should be honored – especially to those living on the retirement benefits that were promised by the state.