A controversial incentive for public employees is not as expensive as its critics claim, according to an independent study coming out this morning.

The study shows the Teacher and Employee Retirement Incentive program has added $100 million to the retirement system’s liabilities, instead of $650 million, as previously thought.

The study takes some of the fire from TERI critics, legislators eager to do away with the 3-year-old program because, they say, it is breaking the retirement system.

It also means something else — not TERI — is overtaxing the retirement system.

The state’s top financial leaders must deal with that “something else” or risk the long-term stability of the system, which pays pensions to 231,000 retirees.

The TERI program was created by the General Assembly in 2000 to allow teachers and key employees to keep working after their retirement, at the request of their supervisors.

Essentially, employees would be able to continue working for up to five years after retiring. The retirement payments they could have drawn during those five years would go into a special account that they could access after leaving the TERI program.

But TERI did not turn out as planned.

The Internal Revenue Service said the state could not offer the incentive to some employees and not others. So the program was opened to all state, local and school employees.

Some legislators complain TERI keeps nonproductive workers around too long. Some agency heads say TERI keeps employees in management positions, making it difficult to groom new leaders.

State Sen. Greg Ryberg, R-Aiken, said he will continue fighting to dismantle the program regardless of the study’s findings.

First, Ryberg said, it still costs too much. Plus, it keeps everyone who wants to stay.

“The employer has to have the last say,” Ryberg said. “Otherwise, we can’t control the quality of the work.”

The S.C. Employees Association wants to keep the program as is. State employees say the incentive is a key benefit in an otherwise dwindling state compensation package that has featured no raises for two years and $80-plus-a-month premium increases for family health coverage.

“It’s another attempt to roll back benefits,” Broadus Jamerson, the association’s executive director, said of attempts to kill TERI. “Employees understand that the pay is not the draw, but the benefits.”

Gov. Mark Sanford and the state’s other top financial officers will consider the study at the 10 a.m. meeting of the Budget and Control Board.

They will be asked to make adjustments not to TERI but to the retirement system, in general, to improve its health.

The health of a retirement system is measured by the number of years it would take to pay off its debts, almost like a mortgage.

The board will be asked to adopt financial findings to reflect that it would take 27 years to pay off the system’s debt, high by state standards. Then, the board will be asked to make changes to lower that to 25 years.

The state needs to keep the payoff number below 30 years; otherwise, it would not be able to pay cost-of-living adjustments, perhaps as early as 2005.

The biggest change?

Asking county and local governments to pay a bigger share of their 46,000 employees’ retirement benefits. Local employers have paid only 6.75 percent of an employee’s salary into the system. The state would like them to raise that to the 7.55 percent paid by the state, adding $11.4 million a year to the fund.

Ryberg said the retirement system’s overall health must be maintained. Its leaders must recognize people are living longer and, consequently, relying on retirement payments longer.

Ryberg also said state leaders must consider the effect of a move the Legislature made in 2000 to allow employees to retire after 28 years, instead of 30. This has meant less money coming in to the system and longer payouts.

“The bottom line is the retirement system has got too many years of unfunded liability,” Ryberg said. “Unless we do something, we are going to have a retirement system where we will be unable to pay cost-of-living adjustments in 2005, 2006.”

Reach Bauerlein at (803) 771-8485 or vbauerlein@thestate.com.