October 8, 2011 11:45:00 PM
Democrats and some in the news media have repeatedly criticized my decision to create a study commission to analyze the long-term solvency of the Public Employees' Retirement System. These attacks are aimed at politicizing a well-guided study commission and waging a fear-mongering campaign to scare state employees and retirees into voting Democrat during the 2011 legislative elections.
The myth promoted by political organizations is that the review of PERS is being done to punish state employees. They say reform is not needed, and claim "public servants are being targeted." One columnist wrote, "Any politician who thinks that going after public employees is good politics will find out differently at the polls."
Rather than "targeting" public employees, the study commission's purpose is protecting them and their future pension income.
Is a review of PERS needed? Consider this:
PERS' own numbers show the system has 64.2 percent of the funds needed to pay its liabilities over 30 years. This is well below the recommended level of 80 percent, yet some pretend PERS is in "far better shape than most states." A recent Pew Center on the States study ranked PERS 37th in terms of funding status. Our ranking is even worse - 94th of 124 public employee plans - according to a survey conducted by Boston College's Center for Retirement Research.
In 2001, PERS was financially strong with a funded status of 88 percent; a decade later, the funded status has declined to 64.2 percent, despite large contribution increases by both employees and taxpayers in recent years.
The state, or taxpayers', contribution to PERS is 12 percent of payroll now, but this rate will rise to 12.93 percent in January and is projected to increase to 14.35 percent next July. Over the last eight years, the taxpayer share will have been increased by almost half (47 percent). That's unsustainable.
Last year, the Legislature increased employee contributions from 7.25 percent of payroll to 9 percent, an increase of 24 percent and the first increase for employees since 1991.
Despite increases on both taxpayers and employees, the taxpayers' share will go up two more times, totaling nearly 20 percent, within a year.
State employees should be as insulted as taxpayers by anyone who claims that reviewing an under-funded retirement plan is "going after public employees." Clearly, these claims are being driven by politics, not policy.
Whether these political groups recognize it or not, ensuring the long-term solvency of PERS is an obligation that we in leadership positions have, not only to taxpayers but to the tens of thousands of past, current and future employees, like school teachers, local government workers, and those at universities and community colleges.
And, the idea that someone will "take away the 13th check" is silly. The 13th check is simply a choice by a retiree to take a cost-of-living adjustment in a lump sum. It costs no more, and probably less, for PERS to pay the COLA in one 13th check than to make 12 monthly payments.
Finally, the PERS study commission has no authority to change any law or rule about PERS or anything else. Its goal is to give accurate, well-analyzed information to the Legislature and other elected officials, current and future PERS beneficiaries, and the public. It's hard to believe so many people want to distort the facts about a critically important program upon which tens of thousands of families depend.
As governor, I have signed into law several changes to PERS that will be positive yet small steps to help set PERS back on the path of financial prosperity. These changes included increasing the vesting period and retirement age for new employees, passing legislation to curb abuses like "double-dipping," and increasing what state employees pay into the fund from 7.25 percent to 9 percent of payroll. All are steps in the right direction, but these changes alone haven't proven to be enough to protect future pension benefits for all of our current state employees.
If we took the advice of our critics, we'd stick our heads in the sand and hope for the best. But Mississippians didn't elect me to ignore difficult issues like PERS. I have a responsibility to state employees, retirees and taxpayers to make sure the retirement system is solvent and remains viable so benefits can continue to be paid now and in the future.