Summer Edition 2026 | Living Power Magazine
By Jackson Cozort, RGEA Director of Government Relations
North Carolina entered the 2026 calendar year as the only state in the country without an enacted state budget. After months of negotiations, public disagreements, and behind-the-scenes discussions, lawmakers have now finalized the budget, which includes a 2.5% one-time bonus for state retirees. While many retirees understandably hoped for a recurring cost-of-living adjustment (COLA), the final agreement still represents one of the larger single appropriations in the entire budget, likely exceeding $130 million dedicated specifically to state retiree inflation relief.
This year’s debate also highlighted a broader reality facing North Carolina’s Retirement System: COLAs have become significantly more expensive over time. Today, the Teachers and State Employees Retirement System delivers nearly $6 billion in benefits each year to more than 257,000 retirees and their beneficiaries. With the growing number of retirees, the total monthly pension benefit amount continues to rise. As a result, the cost of a permanent 1% recurring COLA is now estimated to exceed $600 million, compared to roughly $480 million a decade ago.
Importantly, this was not a partisan disagreement. The House, Senate, and Governor each approached retiree relief differently—from providing nothing (Senate budget) to offering a 5% bonus (Governor’s budget)—but none included a recurring COLA that would increase a retiree’s benefit year after year. As the cost of providing COLAs continues to rise, investment performance has become more critical than ever. Every additional dollar earned through stronger long-term returns helps reduce unfunded liabilities, stabilize contribution rates, and create greater flexibility for future retiree inflation relief.
Recognizing this reality, RGEA partnered with State Treasurer Brad Briner and other stakeholders to support House Bill 506, the State Investment Modernization Act. The legislation moves North Carolina away from its decades-old sole fiduciary investment model and establishes a professional Investment Authority Board to oversee pension investments. The goal is straightforward: improve long-term investment performance while maintaining prudent risk management. Early results are promising, as the pension fund has grown by more than $25 billion in the 18 months since Treasurer Briner began implementing changes to governance and asset allocation. The pension’s unfunded liability, simply stated as its future projected debt, has been cut nearly in half in this short period, so the plan’s overall health has improved dramatically since 2024.
For retirees, stronger returns are always more than numbers on a spreadsheet. They represent one of the most effective ways to strengthen the retirement system and improve the prospects for future COLAs and supplemental benefits.
Although the price of a COLA has grown substantially, this does not change the fact that inflation continues to place real pressure on retirees living on fixed incomes. RGEA will continue to advocate for meaningful inflation relief and recurring COLAs, and monitor financial results to support stronger long-term investment performance that creates greater flexibility for future retiree supplements. While this year’s budget may not have delivered everything retirees hoped for, the fight to strengthen retirement security in North Carolina is far from over—and RGEA will be there every step of the way.