OUR OPINION: PERS report recommendations face uncertainty

By NEMS Daily Journal

The 375,000 people who have a financial stake in the Public Employees’ Retirement System of Mississippi waited months for the report of Gov. Haley Barbour’s special study commission on PERS, its benefit levels and its financial health – and it was delivered Wednesday.
The report doesn’t change anything about how PERS operates, but its recommendations would change PERS substantially, if adopted. That remains a big question because virtually all legislators who have been elected to serve during the 2012-2016 term pledged during the fall campaign not to do away with the so-called 13th check or affect the way people already in the system can expect to be paid in retirement.
Barbour and Commission Chair George Schloegel think otherwise on some key points. They support a three-year freeze on cost-of-living adjustments and further changes they say would make the system solvent for the long term. The COLA is what accumulates over a year to fund the coveted 13th check retirees receive.
Barbour and others say the system doesn’t have enough money to move forward without better controlling costs and increasing assets. The major disagreement about how that could be accomplished is at the heart of what would be debated, if legislators go down that path.
Lee County Chancery Clerk Bill Benson is chairman of the board of trustees of PERS – as well as an enrollee in PERS.
He cautioned the special commission in a letter of thanks for its work:
“I, respectfully, would like to remind all involved that PERS serves a wide variety of people in this state – from doctors and lawyers to teachers and road workers – and is vital in the ability of public employers to recruit and retain a quality workforce to maintain our state’s infrastructure. Furthermore, this retirement system is just one facet of the overall public service employee compensation package that includes other benefits such as health care and life insurance; therefore, any recommendations for change should be viewed in that context.”
The tacit message is “be careful.”
The numbers make the case for caution. From the 2010 report:
“As of June 30, 2010, the System’s defined benefit plans served a total of 295,003 members and 82,096 retirees and beneficiaries. There are 893 participating employers from across the State. Primary sources of funding for the System include employer contributions, member contributions, and investment income. Retirement benefits paid during the fiscal year totaled $1.6 billion. Employers contributed $762.0 million during the fiscal year while members of the System contributed a total of $441.8 million. As of June 30, 2010, net assets held in trust for pension benefits totaled $17.2 billion.”
Many Mississippi politicians like to rail about the size and cost of government, but as a matter of fact, government is a huge positive factor in Mississippi’s economy, and the impact of PERS, present and future, falls into the essential category.
We share the concern of many who believe that the commitments made to people already enrolled and those retired be honored as promised.
Reductions, it’s easy to understand, would reduce the quality of life for pensioners, and even a moratorium on COLAs would lessen the benefit calculation.
Benson, a Republican, said he disagrees with some of what the commission recommends. Sen. Hob Bryan, D-Amory, a non-voting member of the commission, has said he believes the PERS assets will become adequate as the economy improves as investment income increases. Bryan is a former chair of the Senate Finance Committee.
As is the case with most public employee pension funds, major private-sector investment firms nationwide help guide policy and recommend decisions.
Any remedy undertaken must be free from partisanship and even the hint of special benefit for any individual or firm involved in handling PERS assets.
More than 375,000 people will be looking over the shoulders of legislators, Gov.-elect Phil Bryant and Lt. Gov.-elect Tate Reeves when or if work on PERS is undertaken.
The website is www.pers.state.ms.us.