BY DANIEL SCHMIDT
FOR THE OBSERVER
AUBURN — Retired state employees should prepare for some disruptions as dark economic clouds hang over the horizon, according to David Bronner, CEO of Retirement Systems of Alabama.
On May 15, Bronner blasted what he characterized as general political instability in Washington, D.C., and Montgomery while also highlighting the stability of RSA’s investments to retired public employees.
Bronner’s comments came in a wide-ranging acceptance speech before he was awarded the Auburn University Retiree Association’s 20th annual Wilford S. Bailey Award for his contributions to the welfare of retired educators.
It is the second time AURA has awarded the prestigious Bailey award to Bronner, who received the association’s first-ever Bailey Award in 2004.
Since becoming RSA’s CEO in 1974, Bronner has overseen massive changes, many of them successes, to the programs that fund state employees’ pensions.
Over the past 51 years, the public pension fund has grown from $600 million in assets to more than $54 billion spread across 24 separate funds. The Alabama state legislature in recent years has more consistently provided funding, including an additional $120 million in this year’s budget. A chain of world-class golf resorts – Alabama’s Robert Trent Jones Golf Trail – has helped grow the state’s annual tourism revenue from $1.8 billion in 1992 to more than $24 billion today.
However, Bronner told attendees that he feels “more nervous about the future than he has at any other point” in his life.
Those concerns mostly come from uncertainty surrounding additional tariffs that President Donald Trump imposed on much of the global economy, and cuts to research funding and foreign student visas — the lifeblood of institutions such as Auburn University and the University of Alabama at Birmingham — also pose challenges to the state’s economy, according to Bronner. Throw in floated cuts to Medicaid and Social Security, and the list of challenges for retirees grows even longer. Between those factors and others, Bronner said there is a 50-50 chance the country enters a recession by the end of the year.
“If you have any knowledge of tariffs, all it really brought you was the Great Depression in the 1930s,” Bronner said, comparing the indecision surrounding the economic policy to that after the Sept. 11 terror attacks. “[Trump] made a huge mistake with the tariffs, because what happens when you create something that nobody has done except have a bad experience with? It’s very simple: You spook everyone.”
For Alabama’s economy, the threats to the agricultural sector due to retaliation are not the only problem. A reduction in research funding from the federal government and concerns from foreign students, who often pay two to three times what in-state students do for tuition, threaten local economies dependent on those revenues.
“UAB has been hammered,” Bronner said. “It’s out of hundreds of millions of dollars, and we’re a poor state. I don’t know how we’re going to handle it is my point.”
However, despite those challenges, the pension funds RSA oversees remain in a position to continue paying the benefits retired state employees are owed for years to come. With that in mind, Bronner encouraged attendees and other retired educators to fight for what he described as their fair slice of the pie.
That includes a cost-of-living increase that the Alabama state legislature failed to pass last year by one vote amid continued inflation that began sharply increasing in 2021.
“I urge you that over time, if the state employees get something, you’ve got the ability to come right back the following year and say, ‘I need the same treatment,’” Bronner said. “You have to stick together. You have to push for more revenue coming into the state.”
While striking a mostly pessimistic tone, Bronner said there is still reason for optimism. The state employees’ and teachers’ funds are fully funded, and the Public Education Employees’ Health Insurance Plan is routinely renegotiated with various health insurance companies to ensure the best possible cost-to-benefit ratio.
In a closed session with the media following his speech, Bronner urged retired state employees not to become too discouraged over negative economic headlines and to understand that RSA will continue to pay what they are owed regardless.
“They get nervous because they read things in newspapers that the stock market has crashed, but what many of them forget is that it has nothing to do with you,” Bronner said. “This is a defined benefit program. Whatever you sign on the dotted line on the day you quit, that’s what you’re going to get.”
