Seventeen months ago I reported the salary was $518,000 for our state’s highest paid official, Retirement Systems of Alabama CEO Dr. David Bronner.
This month the state website lists Dr. Bronner’s salary for a single state pay period as $23,499.75. The state has 26 annual pay periods so Dr. Bronner’s annual salary has increased nearly $100,000 to $611,000 since my last report.
The state’s per capita income is under $20,000, meaning the average Alabama worker earns less in a year than David Bronner makes in a month. If you scroll down the top 20 or so officials at RSA, you will find a similar pattern.
Public pension plans took a significant fall from the financial collapse in 2008 with the median investment loss at 25 percent. Even before the recession, however, states were underfunding their employee pension plans. A study by the Pew Center on the states released earlier this year and based on data from before the 2008 Wall Street crisis found that there was a gap of $1 trillion between assets and liabilities of state pension funds.
And what about RSA’s performance? The RSA funds also took a beating in the economic downturn, including a 23-percent loss in 2008, but have made an average recovery since the market took an upturn. However, the system still suffers from Dr. Bronner’s failed investment in U. S. Airlines and his illtimed investment in the construction of a railcar manufacturing facility in Muscle Shoals.
As I reported two weeks ago, the rail plant started as a spin-off of a Canadian rail-car manufacturer and was lured to the Muscle Shoals area in 2007 with $140 million in state and local incentives and a $350-million loan from the state pension funds, which now own the building.
It was supposed to bring nearly 2000 jobs to the state, but the facility has never been occupied, and the over two-million squarefoot structure now sits idle.
The Retirement Systems of Alabama is in charge these days, having converted its $625 million loan and investment into outright ownership in August. Bronner, whose positive investments include golf courses and a building in New York City, is now in the rail business I presume. He told The Birmingham
he wants things moving by the end of the year.
“It’s my number-one project,” Bronner said. “The public gets paid back by having the jobs. It’s on my own shoulders and I want to get that bird off my shoulders.” We all wish him well, but he best hurry.
RSA as we know it may be in jeopardy
I am told that six newly elected governors, including Dr. Robert Bentley, may propose some type of 401(k)-style retirement plan for public sector employees in their states, adding to a national movement that favors a shift away from traditional guaranteed pensions such as Alabama’s teacher and stateworker plans.
I haven’t been able to question our governor elect about this matter but will do so in the near future.
In addition to Dr. Bentley, Republican governors who were elected in Nevada, Pennsylvania, Tennessee, and Wisconsin and an independent elected in Rhode Island have all indicated they favor 401(k)-style plans. Public-employee organizations have fought to preserve the current system, although they have supported some benefit reductions for newly hired employees. Several other candidates for statewide offices elected Tuesday also have said they believe state employee pension plans eventually will run out of money unless new hires receive retirement benefits more in line with those of the private sector.
Pension reform already was going to be a major battle in many state legislatures in 2011. The Nov. 2nd vote could also create legislative conflict between the newly elected Republicans and Democrats who received campaign help from public-employee unions.
In the California governor’s race, Meg Whitman, a Republican, attempted to paint Democrat Jerry Brown as a tool of labor unions who would refuse to slash public pension costs. Brown, who won, said he would work with union leaders to keep the current defined-benefit plan but offer it to new employees with diminished benefits and increase contributions of current workers. That may be the remedy many states choose.
Bob Martin is editor and publisher of The
Montgomery Independent. E-mail him