/Nearly $100 million jump in state pension costs will be issue for legislators

Nearly $100 million jump in state pension costs will be issue for legislators

To ensure long-term stability and retirement benefits for many state and local government employees, the PERS Board voted to raise the employer contribution from 15.75% of payroll to 17.40% of payroll. State agencies, universities, community college, public schools, and local governmental bodies will pay the extra 1.65 percent. Legislators will have to decide whether additional funds can be found to pay the higher retirement costs of their employees during the 2019 session that begins in January. If lawmakers don’t act, these entities will have to pay the additional funds from their existing revenues. The state has never helped local governments fund their part of the retirement system. The increase would require $76 million to fund, less the local government’s portion. $18.1 million for state agencies; $15.9 million for universities; $37.4 Million for kindergarten through 12th grades; $4.9 million for community college. John Read, R-Gautier was asked whether legislators would fund the additional funds for state agencies or education entities during the 2019 session. We don’t know the outcome at this point. Theoretically, it is possible for the Legislature to provide all or a portion the revenue required. According to Pat Robertson (the outgoing executive director for PERS), the state law still requires governmental entities to provide the required amount of money to the PERS Board in order to maintain the program’s financial stability. This extra money is needed to fund the retirement system at a time that the Legislature is struggling with funding for education and state agencies. Many agencies’ budgets have been reduced or underfunded over the past few years. Each employee must contribute 9 percent of their income to their retirement benefits, in addition to what the government agencies contribute. The state law allows the PERS Board to increase the amount that governmental entities have to contribute to the retirement program. It is composed of elected officials such as the state treasurer or members elected by employees. The Legislature must take action to increase the employee contribution. There are also court decisions and opinions from the office of the attorney general that indicate that legislators may not be able to raise the employee contribution while still providing benefits for employees. Nearly 325,000 people are part of the PERS system. This includes current employees and retirees as well as other employees who once worked in the public sector, but now don’t. Total assets for the program are $26.5 billion. According to the most recent numbers, PERS’ funding is at 61% of its full funding. This means it has 61% of the assets required to pay all benefits for the system’s employees, from new hires to retired. The program is $17 million short of its full funding. Robertson stated that the program is financially sound, but that the PERS Board’s goal is to fully fund the program by 2047._x000D