SEN. DOUG DAVIS: Contrary to opinion, PERS has serious funding problems

By Sen. Doug Davis

The current discussion over reviewing the Public Employees’ Retirement System (PERS) reminds me of a quote from the late US Sen. Daniel Patrick Moynihan: “You’re entitled to your own opinions. You’re not entitled to your own facts.” Here are the facts as they are known to me:
Current employees and retirees should be concerned about the long-term solvency of PERS. While some on the PERS Board insist the system is fine, they have repeatedly stated the need for increases in the contribution rates over the past two years. That does not sound like a healthy retirement plan.
During the first special session in 2010 the Legislature raised the employee’s contribution rate from 7.25 percent to 9 percent. House Bill 1, authored by Speaker Billy McCoy, passed both chambers (80-40 in the House and 28-16 in the Senate) and was signed into law.
In the fall of 2010, the PERS Board again told the Joint Legislative Budget Committee an increase was needed from the state, or taxpayers. PERS staff wanted to raise taxpayers’ contribution from 12 percent to 12.93 percent beginning in July of 2011.
The PERS board requested these increases without suggesting any reforms that would save money and would not affect current retirees or those currently vested in the PERS system. During the 2011 legislative session the Senate adopted an amendment in House Bill 1466 with the following language: “It is the intention of the Legislature that none of the funds appropriated by this act shall be expended if the Public Employees’ Retirement System, on behalf of the Public Employees’ Retirement Board, increases the employer or employee contribution rate for any or all retirement systems managed by the Public Employees’ Retirement Board at a rate higher than the rate in effect on January 1, 2011.”
The amendment was adopted and the measure passed 51-0.
Contrary to Bobby Harrison’s Oct. 12 column, “Facts at odds with some of Barbour’s PERS assertions,” there was never an effort on my part to, “… pass legislation designed to keep retirees from receiving their benefits.” The effort was an attempt to keep the contribution rates from increasing. There is a very clear and distinct difference between the two objectives.
During the 2011 legislative session PERS officials told members they would not increase the employer’s portion to 12.93 percent until January of 2012.
Last month at the Joint Legislative Budget Committee hearings PERS officials told the committee they would again increase the employer’s contribution rate twice during the next fiscal year, ultimately taking it from 12.93 percent to 14.35 percent. Those actions do not take legislative approval. If they carry out the plan they laid out at the budget hearings that would mean four rate increases in three fiscal years.
During this same time the Pew Center reported our PERS system is only 67 percent funded. On Jan. 27 of this year The New York Times reported, “Under its new method, Moody’s found that the states with the biggest total indebtedness included Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey and Rhode Island.”
The Senate tried to approve a study of PERS earlier this year. Repeated rate increases, questions regarding the long-term solvency of the system and the protection of current employees, retirees and Mississippi taxpayers led the Senate to adopt Senate Concurrent Resolution 678 by a vote of 45-5. However, it was only after SCR 678 died in the House without a vote that the governor established his PERS Study Commission.
We need serious discussion about maintaining a stable public retirement system, not scare tactics to frighten voters. There is not a legislative attempt to take away the cost of living adjustment or what is commonly known as the 13th check. The very state leaders who are looking out for the long term solvency of the system are the very ones being vilified by some. Current retirees, state employees and Mississippi taxpayers deserve better. We are all working to ensure we have the best system for all involved because that is our responsibility.
Sen. Doug Davis, R-Hernando, represents state Senate District 1. Contact him at ddavis@senate.ms.gov. He is chairman of the Senate Appropriations Committee.