GOP reverses course, intervenes in pension hike

BOISE - A Republican-led House panel approved a measure Thursday to block Idaho government retirees from getting a raise from their pensions, reversing course from a day earlier when they dumped the same bill.

The State Affairs Committee voted 12-4 along party lines to stop the $10 billion state pension fund from giving 33,000 retirees, including former teachers, a 1 percent monthly increase starting in March. The resolution now goes to the House floor.

Republicans who resurrected the measure said they did it because pension fund managers hadn't provided them with adequate information about the fund's health, following poor stock market performance in 2009.

Democrats decried Thursday's vote as an "ambush" - the public wasn't given formal notice of the hearing and no pension fund managers were invited - and bashed Republicans for ignoring advice of professional managers who oversee the fund. The increase was approved in December 2009 by the pension fund board.

"This is a complete ambush today," said Rep. Anne Pasley-Stuart, a Boise Democrat who left the hearing before the vote. "Some of us in this room have been acting in good faith and in fair dealing, and today we had the rug pulled out from under us."

Committee Chairman Tom Loertscher, R-Bone, said he didn't think notice or more testimony was necessary before taking up the issue again, given his panel had heard from the public on Wednesday.

Annual cost-of-living increases to Idaho's pension recipients been made every year since 1970 but doing away with them this year could eventually save the fund some $50 million in payouts, said Rep. Dennis Lake, R-Blackfoot and sponsor of the resolution.

Lake also believes holding off is only fair to current government workers, since they are facing a likely 1.5 percent hike in their pension contributions starting July 1, 2011.

Still, the committee Wednesday voted it down 13-5, out of empathy for retirees who are also navigating the down economy.

The about-face came after the vote, when Republicans were passed copies of the actuarial valuation of the Idaho pension fund from July 1, 2009. An actuary concluded the fund had an unfunded liability of more than $3 billion - and that current contribution rates of active employees weren't enough to write down the liability within 25 years, as is required by law. That's why contributions of active employees needed to be raised.

GOP committee members Thursday said they were upset that pension fund managers didn't present this report before Wednesday's vote - upset enough to reverse their vote.

"I'm livid about it," said Rep. Russ Mathews, R-Idaho Falls. "The representations on the fiscal impact yesterday were wanting."

Don Drum, the pension fund's director, told The Associated Press that the fund is financially sound and has regained 15 percent of its value this year as stock markets recovered from 2009 lows. Last year's $3 billion unfunded liability has already been reduced to $2.6 billion.

That's far from its $500 million surplus of 2007 - before stock markets tanked - but it's headed in the right direction. In fact, Drum said Idaho's fund on Wednesday was named among the nation's top-performing pension funds in a Pew Center on the States report.

"If the markets were to continue to move up, our unfunded liability would continue to decrease," Drum said.

Still, he said, Idaho lawmakers have every right to reconsider, since they are the fund's sponsors by law.