Tennessee
Valley Authority Retirees Coalition
NEWS
RELEASE
FOR
IMMEDIATE RELEASE
For
Information Contact:
Mike Moseley
Bowling Green,
KY
931-216-3091
TVA
Retirees Join Forces with National Network
Tennessee
Valley Authority Retirees Coalition Cites
$6 billion
shortfall in TVA Pension Plan for Retirees and Employees
BOWLING GREEN,
KY. (Feb. 9, 2016) – In response to TVA’s under-funding of its employee pension
for over a decade, a group of TVA retirees have formed the Tennessee Valley
Authority Retirees Coalition (TVARC). TVARC has now joined forces with the
National Retiree Legislative Network (NRLN) to seek Congressional assistance in
bringing the employee pension back to a safely funded level. At the end of FY
2015, TVA’s employee pension was only 53 percent funded with liabilities of
$12.8 billion and assets of $6.8 billion, leaving the pension underfunded by $6
billion. TVA’s employee pension covers 35,000 retirees and employees, most of
whom reside in the states of Tennessee, Kentucky, Alabama, And Mississippi.
“It is
intolerable, given TVA’s record profit of $1.1 billion net income in FY 2015
and the multi-million dollar salaries and bonuses of top executives, that the
pension plan has only 53 percent of the assets necessary to cover its pension
obligations,” said Mike Moseley, TVARC executive committee member.
Moseley noted
that TVA contributed only $283 million to the pension in 2015, but payments to
retirees in 2015 were $690 million, leaving a funding gap of over $400,000,000.
“TVA’s recent
proposal to not only cut pension benefits but also to fund the pension with
only $275 million a year will keep it in a critically underfunded status for
many years and increase the likelihood of additional benefit cuts or even
termination by TVA,” Moseley said. “There are 23,700 retirees and 10,900
employees and family members who are expecting TVA to deliver the pension benefits
that were promised, and are legally owed.”
“The TVA was
created by an act of Congress in 1933 to address the economic development and
energy needs of Alabama, Georgia, Kentucky, Mississippi, North Carolina,
Tennessee and Virginia,” Moseley said. “When Congress passed the Employee
Retirement Income Security Act of 1974, TVA was not included under the law and,
as a result, TVA’s pension plan does not have the safety net provided to other
major electric utilities’ pensions by the Pension Benefit Guaranty Corporation.
“Congress decided that the TVA pension did not need the
protections, like minimum funding requirements, provided to private sector
pension plans . Today, TVA operates as a government corporation, and receives
no federal funding. Since Congress excluded TVA from pension laws that mandate
minimum funding for corporate pensions, TVARC’s executive committee believes
that current U.S. Representatives and Senators have a responsibility to see
that the TVA pension plan becomes properly funded in a reasonable length of
time.”
The TVARC
executive committee, in addition to Moseley, initially includes TVA retirees
Les Bays, Kingsport, TN; Dan Pitts, Knoxville, TN; and Bob Taylor, Chattanooga,
TN. They have elected to affiliate with the National Retiree Legislative
Network as the NRLN TVA Retirees Chapter, to gain the NRLN’s advocacy support
in Washington, D.C. and added strength of the more than 2 million retirees and
future retirees the NRLN represents.
“The NRLN will
assist us in our communications with members of Congress to apprise them of the
importance of their insisting that TVA develop a realistic plan to achieve
proper funding of the TVA pension plan”, Moseley said.
Moseley
pointed out there is a NRLN TVA Retirees Chapter webpage at http://www.nrln.org/CHAPTERS/TVA/TVAchapter.html and TVA retirees and employees are invited to
sign up through the webpage to receive emails from TVARC and the NRLN.
About
Tennessee Valley Authority Retirees Coalition
The Tennessee Valley
Authority Retirees Coalition (TVARC), a chapter of the National Retiree
Legislative Network (NRLN), was formed out of retirees’ concerns that their TVA
pension plan has only 53 percent of the assets necessary to meet the pension
benefits legally owed to retirees and employees. TVARC’s objective is to
convince TVA executives, TVA Board members and the TVA Retirement System
(TVARS) board members of the importance of developing a realistic strategy to
adequately fund the TVA pension plan in a reasonable length of time. The NRLN
is a Washington, D.C.-based nonpartisan, nonprofit organization representing
more than 2 million retirees and future retirees from 168 different companies
and public entities.
See official news release here.
I will be joining.... but, it is curious to me that no one mentions the 14th amendment (Section 4) to the U.S. constitution which reads:
ReplyDelete"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
These pensions as not simply protected by ordinary law... they are debts protected under the U.S. Consitution.
TVA debt is not public debt of the United States. The federal government does not guarantee TVA bonds or debt. If TVA defaults on any of its debt, the federal government is not obligated to pay TVA's creditors, bondholders - or retirees.
ReplyDeleteYou need to read the TVA act.
DeleteWhile you are correct regarding TVA's bonds. You are incorrect regarding it's ordinary debts.
Congress never de-obligated TVA's ordinary debts. In fact Congress can't because of the Constitutions limits. Furthermore the TVA Act, by law, REQUIRES TVA to pays ordinary debts (operating expenses) thru the rates increases.
The bottom line is that all debts owed by the TVA remain an obligation of the United States... unless converted into bond debt.
The United States is responsible for the pension debt.
I would like to point out several provision in the TVA Act that provide a factual basis from my assertion the that TVAs pension debt is a public debt obligated to be paid by the United States should TVA default.
Delete1) TVA Bonds issued under Section 15a and 15c of the TVA Act were/are fully guaranteed by the United States as public debt. The relevant sections can be found on page 17 and 19-20 of the Act .
2) Only TVA Bonds issued under Section 15d of the Act to "to assist in financing its
power program and to refund such bonds." are not guaranteed the by United States as public debt. The Section 15d (B) of the Act on page 22 reads: "(b) Bonds issued by the Corporation hereunder shall not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the United States."
3) Not all of the moneys in the TVA pension fund came from generation related activities. Historically TVA projects have come from three source: a) direct congressional appropriations, b) power sales, and c) the raising of bonds. Indeed many retirees, myself included, worked the majority of our careers on TVA projects funded entirely with appropriated federal moneys. The funds used to conduct these congressional mandated projects were used to fund the effected employee's Federal TVA pension plan. Unquestionably, the pension debts incurred as compensation for working these projects are "public debts" owed by BOTH the TVA and the United States under the 14th amendment. Section 12 of the Act makes reference to this multiple pronged funding process reading in part "... from funds secured from the sale of such power, or from funds secured by the sale of bonds hereafter provided for... "
4) TVA funds handled by the TVA are considered "public moneys" of the Corporation or entrusted to Corporation by the United States. See Section 21 of the Act on page 27.
"Sec. 21. (a) All general penal statutes relating to the larceny, embezzlement, conversion, or to the improper handling, retention, use, or disposal of public moneys or property of the United States, shall apply to the moneys and property of the Corporation and to moneys and properties of the United States entrusted to the Corporation."
To summarize:
There are no provisions in the TVA Act which explicitly or implicitly suggest debts owed to TVA's employees, retirees, contractors, vendors, Section 15a and 15c TVA bonds, etc. are not "public debts" covered under the U.S. Constitution's 14th Amendment provision. (Other than debts owed to Section 15d bonds holders). Indeed, the TVA Act makes it crystal clear that bonds issued under Sections 15a and 15c of the TVA Act are "fully and unconditionally guaranteed" by the "United States".
Moreover, TVA employees were frequently used to conduct the business of the United States using federally appropriated funds which were clearly "moneys of the United States entrusted to the Corporation". And these "moneys of the United States" have been comingled with power generation related funds in the TVA pension plan. These federal funds are not the TVA's, they of the property of the United States and pension debts incurred are ultimately debts owed by the United States.
I can't find any provision in law that enables the dissolving of a Federal employees pension benefits or that allows the pension funds of any federal employees to be exempt from the provisions U.S. Constitution's 14th amendment.
So where's the hole?
Regards,
David Kelly
This may be so, but TVA is able to sell long-term bonds and pay much less interest than other utilities. Bond investors must believe the federal government wouldn't let TVA default on them.
ReplyDelete