COLUMBIA --- State workers watched and waited outside a meeting room Tuesday as the state's top financial leaders argued about changes to the state's retirement system that would ultimately offer them 2 percent annual pension pay increases tied to inflation.
Few doubted they would get it. After all, they long had political support from legislators. Gov. Mark Sanford was the lone holdout on the five-member Budget and Control Board, which approved the increased earnings estimate Tuesday with a 4-1 vote.
Mr. Sanford had vetoed the bill already, saying it incorrectly raised expected annual investment returns for the state pension system to an average of 8 percent from 7.25 percent. He said that amounted to sleight of hand and did nothing to address a $10 billion gap between the money the system has saved and what it would need to pay promised pensions to every worker and retiree immediately.
For retirees who gathered in Columbia to listen to a debate that could have been held in an unruly economics class, the governor's objection was a personal blow -- especially after his veto had been overridden.
"I think it's just his way of not supporting retirees and being insensitive about what our needs are," said Earline Haywood Ulmer, a 63-year-old Orangeburg educator who retired after 39 years.
The 2 percent raise "is not really enough, but it's better than 1 percent," the amount the old law promised, Ms. Ulmer said.
While most of the dozens of retirees watched the board's deliberations from a lobby where a large TV was set up, Ms. Ulmer was one of a handful who packed into the room at the Statehouse. They watched what turned into an argument pitting Mr. Sanford -- armed with charts and quotes from experts -- against state Treasurer Converse Chellis -- and his bigger charts -- along with the board's three other members.
For 45 minutes, Mr. Sanford held up his charts and Mr. Chellis countered with his own.
Bob Borden, who runs the state's retirement investment fund and who had charts of his own, explained that part of his calculations are "expressed in terms of standard deviation of return or 10.69 percent."
Mr. Sanford, a business school graduate, said Mr. Borden must be talking about the "international LT equities being 15 percent."
Mr. Sanford acknowledged the financial talk traveled far from an old business professor's napkin rule: "If you can't do the math on the back of a napkin, it's probably not a good deal. And the math that doesn't still fit with our deal is we still have about $10 billion on unrecognized liability and at present no way to pay for it."
Mr. Chellis dismissed that, noting the new law ended the practice of annual ad hoc cost-of-living raises that contributed to the retirement system's problems and caps what pensioners can expect to receive. He said the liabilities fall substantially in two years and will be paid off later with more money from payroll contributions.
"I think this one is going to come back to both hurt retirees and hurt the taxpayers of South Carolina," Mr. Sanford said as the vote was called.
Cheers erupted down the hall in the lobby after the vote, prompting chuckles in the room.
"I don't blame them. I would be doing the same -- but there may be tears later on," Mr. Sanford said.