Political factors surround PERS study

By Bobby Harrison/NEMS Daily Journal Jackson Bureau

JACKSON – Gulfport Mayor George Schloegel, the chair of a commission formed by Gov. Haley Barbour to look at the state’s Public Employee Retirement System, said he does not want the panel’s work to become an issue in the Nov. 8 general election.
He said that’s one reason the commission’s report is not scheduled to be released until Nov. 15.
“We do not want to do anything that will cause rhetoric that will affect the politics,” Schloegel said last week at a public hearing where the commission heard from various groups that benefit from the system.
Barbour has said PERS is unsustainable and “relies too heavily on increased contributions from taxpayers.”
The kind of changes, if any, that could be recommended by the commission already is part of the political debate, Schloegel’s preference notwithstanding.
A website, www.honoryourpromise.us, has popped up that urges opposition to any recommendation that would cut or dramatically alter the retirement benefit package for the state’s current and future retirees. And some Democratic candidates are beginning to make campaign promises to preserve PERS benefits since it is an outgoing Republican governor who is calling for changes to the system.
Both gubernatorial candidates, Lt. Gov. Phil Bryant, the Republican nominee, and Hattiesburg Mayor Johnny DuPree, the Democratic nominee, have pledged support for PERS.
Said Bryant, “PERS is in essence a contract between the state and its employees and those who retired under the system, and that contract should be upheld. If the system needs changing, those changes should apply to future state employees.
“Gov. Barbour’s commission is examining PERS to make sure the promises made can be kept. Once the commission publishes it findings, it will be up to the new Legislature to consider the recommendations.”
DuPree said the current retirement system is “a recruitment tool” that is used to offset salaries that are lower for Mississippi public employees than for those in surrounding states.
“If we cut our retirement system, then we are taking away a competitive edge Mississippi has in recruiting teachers, economists, technicians, engineers and computer scientists – all who work for the state in different areas,” DuPree said.
“We owe it to the men and women who work hard for the state not to cut their retirement. That is a pledge we should honor. As governor, I will fight to do so.”
He said any changes should affect only future employees, but said he would fight to protect the so-called 13th check, which Schloegel has cited as needing extra scrutiny.
The 13th check is in effect a yearly 3 percent cost of living increase that retirees receive. The cost of living adjustment can be spread out over the 12 checks retirees get or can be paid in one lump sum at the end of the year.
The “honor your promise” website features several statements from Schloegel, and it has intensified the focus for those involved in the system. On the site are Schloegel’s comments about the 13th check and what he has said on television, seemingly bemoaning the fact that the benefit amounts are guaranteed.
PERS covers all state employees, county and city workers, higher education staff members and school district personnel, including teachers. There are about 165,000 current employees covered and about 80,000 retirees in the system, according to June 2010 figures.
The program is funded at 67 percent, based on 2009 figures. This is below the national average of 76 percent. It has assets of $20 billion, but has an unfunded accrued liability of $11 billion.
During the past 10 years, the system’s investment earnings have been rocked by the downturn after 9/11 and the ongoing recession. On top of the inconsistent investment earnings, PERS is dealing with a growing number of retirees.
Plus, benefits were enhanced in the late 1990s when the system was flush with assets.
Steps have been taken to deal with the woes facing the system, such as requiring 30 years of service for retirement for new hires instead of 25. Plus, employees now contribute 9 percent of their salary to the system, up from 7.25 percent.
Mississippi’s contribution rate for its public sector workers is among the highest in the nation, according to a PERS study.
Pat Robertson, the executive director of the system, acknowledges more needs to be done.
The outcome of the Barbour commission’s deliberations will be followed closely in political circles because of the system’s broad impact statewide.
bobby.harrison@journalinc.com