By Bobby Harrison/NEMS Daily Journal
JACKSON – Legislative leaders were told Tuesday that the Public Employees Retirement System remains stable, but they still may need to come up with an additional $44 million for the system during the 2013 session.
Pat Robertson, executive director of PERS, told the Legislative Budget Committee on Tuesday that the system remains stable over the long run. But in the short term, she said it will need additional taxpayer funds to help ensure its stability.
In recent years, the retirement system has been a problem for state leaders as it has taken additional taxpayer funds to shore it up. It has been particularly difficult for legislators to deal with the increased cost of the system during the current economic downturn that has resulted in unprecedented declines in state revenue.
PERS currently is funded at 62 percent of its anticipated costs over a 30-year period. The desired industry average is 80 percent.
Over the long run, Robertson insisted to legislators that steps have been taken to correct the problems that she said were created primarily by the Legislature and governor providing additional retirement benefits to public employees in the late 1990s without paying for them.
“PERS remains financially stable” and benefits for members of the program are protected, she said.
But she said the PERS Board is considering increasing the taxpayer contribution from 14.26 percent of a public employee salary to 15.75 percent. That, she estimated, would mean an additional cost to the state general fund of $44 million. If the Legislature does not appropriate those funds, then by law those costs would just come out of the funds appropriated to each state agency.
For instance, if an agency received an appropriation of $100 million for the upcoming year, the additional cost to shore up the retirement system would just be deducted from the agency budget.
In recent years, the taxpayer cost for the system has risen from the 9.75 percent where it remained from 1990 until 2006 to its current level of 14.26 percent. Employees currently contribute 9 percent of their salary toward their retirement plan.
Robertson said in preliminary discussions the PERS Board has indicated, based on the advice of its financial experts, that the cost to taxpayers can be frozen at 15.75 percent over an extended period.
PERS covers nearly 380,000 current governmental employees and retirees, including state employees, local and county government officials and local school district personnel. Of those in the system, nearly 90,000 are current retirees.