I'd like to share my thoughts on recent news concerning the potential for the cost of the pension plan to increase. This is a very real concern for us. For many councils the impact of the pension expense is taking away dollars from operating expenses such as outreach programs for at-risk girls, scholarship support for low-income girls, and general programming.
Most Girl Scout councils, including GSNEO, are part of the National Girl Scout Council Retirement Plan - a pension plan for council staff that our national organization (Girl Scouts of the USA) oversees. The pension plan was established in the 1970s and frozen as of July 31, 2010. This means that staff have not been earning pension benefits since the plan was frozen. It is a fairly modest pension plan, compared to many we are reading about in the news these days. For one thing, it is frozen. Staff who retire with full benefits (in most cases after 30 years of service), are paid 50% of their average annual salary during the later part of their employment. There are no medical benefits, and there is no cost of living increase. The pension plan was over-funded until 2009, when the recession (and resulting decline in investment values and interest rates), coupled with some legis lative changes in the way future liabilities are calculated, pushed it into an underfunded status.
We need to bring our plan to funded status in 10 years - by 2023, and because the Girl Scout pension plan is frozen, we have an accelerated funding requirement during the next three years (2014-2016). Girl Scouts is seeking legislative relief that will help spread out our funding obligations over the next 10 years. If we are successful in obtaining that relief, assuming no dramatic changes in the discount rate or investment values during that time, then GSNEO's pension obligations will hold about steady with what they have been during the current fiscal year.
How can this be fixed?
Currently, Girl Scouts has tougher funding rules than for-profit plans. Girl Scouts is asking Congress to support the Charitable Pension Flexibility Act (H.R. 2134) and the Cooperative and Small Charity Pension Flexibility Act (S. 1302). These will allow certain charity pension plans, including ours, to opt in as early as 2014 to the pension funding rules that apply to for-profit companies. The legislation would allow councils to continue to meet their pension responsibilities with no changes to beneficiaries, but it would smooth out the contributions by councils similar to rates used by corporate plans.
Without Congressional Action
Girl Scout councils will see a 40% increase next year in their pension expense; $36 million more over the next three years than company pension plans. Girl Scout councils across the country will need to lay-off staff, cut programs, and serve fewer girls, including at-risk girls - among other drastic measures.
What does this mean for GSNEO?
During the 2013 year, GSNEO's pension liability is $562,596. Without legislative relief, this liability will increase in 2014 to $787,645. However, with the legislative relief, our pension liability would be $646,994 in 2014. That would be a savings for our council of over $140,000 WITH legislative relief. Without legislative relief, GSNEO, like other Girl Scout councils, will likely need to make budget cuts in the future to fund our pension responsibility. The GSNEO Board has already passed a balanced budget for 2014 that accounts for the pension liability with no budget relief.
Would this legislative fix cost the governement/tax payers money?
No, since it just applies to charitable plans, there should be no cost to taxpayers. In fact, it would help locally as councils could then continue to keep staff and invest in girls in their communities.
Are camps being sold to pay for the pension expense?
No, the GSNEO Board of Directors voted to use proceeds from the sale of camps for camp improvements.
What is GSNEO doing to address this issue?
GSNEO is meeting with Senators and Representatives that serve communities within our 18-county footprint. We are discussing the issue with them, sharing information, answering their questions, and asking them to support Girl Scouting in their community by supporting the legislation.
What can I do to help address this issue?
Visit the Girl Scout Advocacy Network and learn how you can ACT NOW to enact legislation to directly support Girl Scout councils. Key to the legislation passing is strong bipartisan support. Send a message to your U.S. Representatives and U.S. Senators today.