Lawmakers who bring up the Public Employees Retirement System do so at their own peril, members of the Coast delegation said, but they say it needs to be brought up anyway.
“We have to have that conversation,” Sen. Brice Wiggins, R-Pascagoula, told the crowd at the Pre-Legislative Briefing hosted by the Mississippi Gulf Coast Chamber of Commerce. “When Sen. Tindell filed a bill, he got death threats. That’s crazy. In his case, he was trying to tweak it, to make it better able to do what Sen. (Michael) Watson was saying, extend it.”
Watson and Wiggins told the 200 or so people at the Golden Nugget earlier this week that part of the problem is PERS officials paint too rosy a picture of the state of the retirement fund.
“The executive director comes to the Finance Committee every year,” said Watson, a Pascagoula Republican. “And I literally ask just about the same question every year. And every single year, the answer is the same: We’re going to be fine; everything is OK.
“That’s what we’re fighting. You get the executive director of PERS sending out letters to all retirees, Everything’s fine. And the Legislature over here says, wait a minute, everything is not fine.”
And Watson said he’s talked to experts in the banking and pension industries who agree with the lawmakers.
“We’re in trouble,” he said. “We signed a contract. We can’t unilaterally back out of that contract. What we can do is rework the contract with two willing parties.”
The problem is clear. PERS doesn’t have enough money to pay all the present and future retirees. A 2012 plan adopted by the PERS aimed to have the plan 80 percent funded by 2042, according to a column in a PERS newsletter earlier this year by Executive Director Pat Robertson. It’s a little off course.
“Currently, PERS actuaries project that we will be 62.6 percent funded in 2042 based on current assumptions, which is only slightly higher than our current funded ratio of 60 percent,” she wrote. “Our intention continues to be to reach our goal; how that happens over the next 25 years remains to be determined.”
And it will be determined without Robertson, who said she’s retiring next year. First, Watson said, lawmakers are “going to have to do some educating.”
“If you do nothing, here’s your projection,” Watson said lawmakers will have to explain to retirees. “Or, let’s talk about some possibilities.”
Mississippi is not alone. A report by the Hoover Institution said most public pension plans are underfunded. And, it said, state and local governments are underestimating the amount of money it would take to stop the problem from growing.
“While total government employer contributions to pension systems were $111 billion in 2015, or 4.9 percent of state and local government revenue, the true annual cost of keeping pension liabilities from rising would be approximately $289 billion or 12.7 percent of revenue,” Joshua D. Rauh wrote for the Institution.
Then there’s the 13th check, the lump-sum cost-of-living increase. In 2011, a study commission created by Gov. Haley Barbour recommend that cost-of-living check be frozen for three years. Neither that, nor any other of the commission’s recommendations, were adopted.
This year, House Ways and Means Chairman Jeff Smith, R-Columbus, created a social media ruckus with what appeared to be a suggestion that the 13th check could be up for discussion again.
Democrats saw an opening and took it.
“It has been commonly referred to as the ‘13th Check,’ and is detested by many elected officials who want to get their grubby little hands on the $$$Billions in the state retirement accounts,” wrote Oxford Rep. Jay Hughes on Facebook. “Some privatizers refer to the 13th Check as a ‘welfare check,’ as if it is a handout. IT IS NOT!”
Smith, whose Facebook feed normally is heavy on weather reports, tried to assure retirees the check isn’t in jeopardy.
“There will be no cuts or modification of the Public Employees Retirement System, notwithstanding all the rumors you have heard,” he wrote. “So take a deep breath all retirees, and know your next year will not be changed as far as retirement.”