Alabama House committee approves cost-of-living adjustment for certain state retirees

The House Ways and Means General Fund Committee Wednesday approved a cost-of-living adjustment for certain retirees under the Employees’ Retirement System (ERS).

HB 440, sponsored by Rep. Randall Shedd, R-Fairview, would provide a 3% cost-of-living increase for state employees who retired before Oct. 1, 2023.

Local governments would have the option to opt-in to the cost-of-living adjustment, but the funding would come out of the local budget.

HB 440 is a companion bill to HB 201, sponsored by Rep. Steve Clouse, R-Ozark, which establishes procedures for increasing state employee and teacher retirees’ benefits. The bill provides an employer contribution rate increase, estimated 1.05%, to the ERS, which will help fund the cost-of-living adjustment for retirees.

According to the bill’s fiscal note, HB 440 would increase benefit expenses by an estimated $17.1 million for the 2025 fiscal year. However, this amount is projected to decline by approximately 3.6% each subsequent fiscal year.

Neah Scott, legislative counsel for RSA, said the decline in each year is because the adjustment is set only for people who retired before October.

“Not to be morbid, but the expense would go down every year due to death,” she said.

The bill moves to the Alabama House of Representatives for consideration. It needs three legislative days to pass; there are seven days left in the 2024 legislative session.