By Bill Crawford
Ho hum…14.26 percent is now the public employer “contribution” rate to the Mississippi retirement system (PERS). Cities, counties, schools, colleges, and universities along with state agencies are required to contribute this percentage of payroll to support PERS.
Yawn…the rate went up July 1 from 12.93 percent last year. That was up from 12 percent the year before, which was up from 11.85 percent, which increased from 11.30 percent, which rose from 10.75 percent, which rose from the steady rate of 9.75 percent in place from 1990 to 2005.
La de da…these required contribution increases, authorized by the Legislature, allow PERS, in effect, to pass its deficits on to taxpayers.
Oh well…a PERS newsletter to public employers says they should “be aware that the actuary has projected the need for an additional increase next year.”
Twiddly dee…the Governmental Accounting Standards Board (GASB) is drafting new rules that will impact PERS and other public pension plans. One rule will require PERS to calculate its unfunded liabilities a different way. Under the current method, PERS’ percentage of unfunded liabilities has increased since 2001, rising from 12.5 percent to 37.6 percent. The new method is expected to show PERS’ percentage of unfunded liabilities rising even higher. Interestingly, the new rules may allow PERS to use the old method to report to the public and the new method to report to regulators.
Twiddly dum…A percentage of unfunded liabilities higher than 20 percent is what triggers the increase in public employer contributions. The purpose is for the higher contributions to push unfunded liabilities back below 20 percent. But, the last year PERS’ unfunded liabilities were below 20 percent was 2002.
Umm…stock market valuations at the end of June were generally flat compared to a year ago. PERS depends upon 8 percent average returns. Its 10-year average return of 5.4 percent is part of the problem.
Darn…somebody, someday, ought to look into all this. Oh, right, Gov. Haley Barbour appointed an independent commission last year to do just that. The PERS Study Commission recommended adjustments to retiree benefits to stabilize the system.
Eh…Sam Valentine, writing as president of the Mississippi Retired Public Employees Association, says in a PERS newsletter, “We contend that PERS of Mississippi has not reached the point that requires drastic measures in the area of retiree benefits.”
Sigh…GASB is rewriting rules because too many public pension plans have inadequately managed benefit costs in accord with contributions and returns. Moody’s Investor Service, Fitch Ratings and other financial experts have expressed concerns about PERS’ liabilities. The PEW Center on the States ranked Mississippi as one of 19 states with “serious concerns” about its retirement system.
Fiddledy-dee…many legislators, including “conservative” Republicans, promised in the recent election to keep hands off retirement benefits. Ergo, with apologies to Nero, PERS’ financial condition is no burning issue.
Meridian columnist Bill Crawford (email@example.com) was a member of the PERS Study Commission.