State House passes COLA legislation for retired public school teachers and state workers

Retired teachers and public servants would receive a cost of living adjustment in their monthly pension payments for the first time in more than 20 years under legislation passed by the Pennsylvania House on Tuesday.

House Bill 1416 would provide increases of 15% to 24.5% to about 69,000 retired public school educators and other state employees, many of whom are in their 80s and 90s. The adjustment would go to those who retired before 2001 when pension enhancements took effect.

The bill, passed in the House with a 160-43 vote, must be approved by the state Senate and signed by Gov. Josh Shapiro before it takes effect.

“These dedicated individuals shaped our state’s and children’s futures, yet for two decades, for 20 years. budgets have ignored their financial needs, leaving them in uncertainty,” said state Rep. Steven Malagari (D-Montgomery), the bill’s prime sponsor.

The General Assembly passed cost-of-living increases for retired state teachers and employees every four or five years from 1968 to 2002. 

While Act 9 of 2001 increased pensions for some who retired after it took effect, those who retired after that have faced surging inflation that diminished their modest pensions, Malagari said.

House Minority Leader Bryan Cutler (R-Lancaster) said that while he supports the concept of a pension increase, the cost of living adjustment legislation would create additional unfunded liability for the State Employees Retirement System and Public School Employees Retirement System.

An analysis by the Independent Fiscal Office estimates that the unfunded liability for both retirement systems would total $1.19 billion. Amortized over the next 10 years, the annual cost to PSERS and SERS $125.1 million and $52.5 million per year. That would require a 0.81% increase in employer contributions for PSERS participants and a 0.74% increase for SERS participants, according to a fiscal note filed with the bill.

The Pennsylvania State Educators Association, which represents about 177,000 active and retired public school educators, school employees, student teachers, higher education staff and health care workers, said the increase would help the older retirees who struggle to make ends meet.

“Every year that goes by without a cost-of-living adjustment for retired public workers, their lives get harder, and their money doesn’t go as far,” PSEA President Aaron Chapin said. “It is long past time for lawmakers to restore the promise of a secure retirement to our retired public servants.”

(This article was updated at 7:53 p.m. on Tuesday, Nov. 14, 2023, to include information about the fiscal impact of the legislation.)