Saturday, October 8, 2016

Bill Crawford: Will legislature mishandle PERS?

If what Mississippi politicians – precisely the Legislature and then-Gov. Kirk Fordice – had agreed to in 1999 had come to fruition, the state would now have a health care trust fund of an estimated $4.79 billion with $232.6 million available to spend this year,” wrote political reporter Bobby Harrison in the Northeast Mississippi Daily Journal. Alas, he said, “as of today, the state has no health care trust fund. The Legislature has spent all the funds that would have gone into the trust fund.”

There’s another, much larger trust fund the Legislature has financial responsibility for along with the Public Employees Retirement System board of directors. That’s the PERS retirement fund.

Given what happened to the health care trust fund, should retirees be worried?

While not depleted, the PERS retirement fund is far from adequately funded. On September 23rd, Bloomberg News listed the PERS fund among the ten most under-funded retirement plans in America. PERS’ most recent financial report shows its funding level at just 60.4%.

Fitch Ratings has expressed concern about PERS’ unfunded liabilities. “Unfunded pension liabilities, measured as a percent of personal income, are among the highest of the states.”

In August, Fitch downgraded Mississippi’s credit rating for upcoming bond issues. In July, Moody’s lowered Mississippi’s credit outlook to “negative.” Budget issues were part of the rationale for the ratings issues, but both ratings services cited the state’s high debt level resulting from its huge, unfunded pension liability.

One of the big challenges PERS faces comes from growing numbers of retirees drawing money out while declining numbers of employees pay into the fund.

Because of this, Mississippi says PERS “is in serious jeopardy.” It reported that every year since 2005 the number of retirees has increased while every year since 2009 the number of active employees has decreased.

This mismatch is likely to get worse with budget woes limiting new hires and a high percentage of active employees nearing retirement age. Only 37.8% of active employees are under forty, the story reported.

The level of funded liabilities depends in large part on investment returns each year. Below target returns add to the unfunded shortfall. PERS’ targeted average return to meet its obligations is 7.75% (adjusted down this year from 8%). But PERS’ investment report for June 30, 2016, showed an annual return of just 1.15%. Its five-year average return of 7.16% was 59 basis points below the 7.75% target, indicating unfunded liabilities should increase this year.

Several years ago PERS upped employer contributions to 15.75% and employee contributions to 9% of salaries, saying these high funding rates would bring funded liabilities back to 80% within 30 years. So far, little gain has been achieved.

Meanwhile, legislators have shown great fear when it comes to making hard decisions regarding PERS’ financial stability. Given how they mishandled the health care trust fund, retirees should be wary that legislators will mishandle the PERS retirement fund too.

Crawford is a syndicated columnist from Meridian (


Anonymous said...

Another rerun?

Anonymous said...

Well, well, well, if it were not for government's ability to TAX the ever loving crap out of people and business they would have to learn to function at a level similar to people and business. They collect 7 or 8% sales tax on a huge portion of business transactions and still cry about not having enough money. Enough for what? To pay people to take the money from people. Sure business's remit the money to the State Department of Revenue but the consumers have to give 7% on top of the purchase so that can happen. This is robbery, they never ask the people they represent if they want the money spend on the crap they spend it on. To hell with most public employees, most could not make it in the real world but they do deserve their retirement checks. The jobs so many do should not be done but that just begs the point at this time.

Anonymous said...

Anyone ever added up all the tax money, licenses, permits, etc. the govt. takes from us? It is a surprising % of our money.

Anonymous said...

2:32 could you please backup your statement that most employees couldn't make it in the real world? In fact lets narrow it down a bit more

1. Who do these useless employees work for (State, IHL, City County)?

2. What is the useless position?

3. In what manner did you collect your data?

Ever think of looking at the legislature, instead of blaming the guy at the bottom?

Phil says state spending has jumped, but PERS says that less people are now working in government. (Participation is manditory in PERS). Therefore the state is spending all these extra amounts on something other than employees.

Distraction people. Try not to fall into the trap.

Anonymous said...

Crawford fails to point out the elephant in the room... the legislators are the "gatekeepers" of PERS, and as part-time state employees, they have voted in an un-proportional state funded match to their retirement (as part-time employees, mind you) that is much higher than the state match for other state employees. If I'm not mistaken, a legislator becomes vested much quicker than a regular, full-time state employee.

Your elected legislator is taking care of himself, while screwing all the other state employees. That is the real issue with PERS, notwithstanding its underperformance.

Anonymous said...

"(Participation is manditory in PERS). "

You don't know what you're talking about, so please shut up. I worked for the state for 14 years, participating in OPR instead of PERS, and took 100% of my 403b retirement savings with me when I left. I still control it and have nothing to do with the state.

Anonymous said...

If you change the laws so that pension funds are no longer " locked" and it's not mandatory for employers to contribute what is promised and if pensions don't have to be honored in full when another company buys yours out, then those who want to spend what you've earned get to do that.

If you didn't pay attention decades ago when the foxes first opened the door to the hen house and you haven't bothered to secure the hen house at all and then keep an eye on it, you can't be surprised that other foxes have damn near torn the whole thing down.

Anonymous said...

10:35, I am not 2:32 but I will try to answer your questions.

1. All of the above.

2, At least 40% of all positions are useless and only give friends a job.

3. Anytime something happens and they send all the unnecessary people home you can see all of the useless positions.

You should know by not that you cannot take it for the truth if it comes from a politician.

Anonymous said...

ORP not "OPR"" is an option to positions at Univirsities, who are either Faculty or in a position with budget authority. It is not avalible to every state employee. However, had you not elected into ORP within you're first 30 days of employment, you would've automatically been enrolled in PERS.

If you were allowed into ORP, then more than likely you have a Ph.D. Sad you still haven't learned to do proper research before distributing incorrect information. I hope you aren't teaching.

Anonymous said...

@12:33, participation in PERS is mandatory for all full-time state employees. I don't have a clue what you mean by OPR, but a 403(b) retirement system is only available to educational and non-profit entities. Having said that, all public school employees in Mississippi must participate in PERS. It sounds like you worked for something like a community hospital or something similar that is controlled by government but is still a separate entity. In any event if you were a participant solely in a 403(b) plan you were not a public employee.

Addressing Bill Crawford, you fail to identify the root issue that has put PERS into the shape it is in. Somewhere around 1999 the legislature, flush with money and having a decade of above average investment returns, decided to increase retirement benefits by approximately 15%. This was retroactive to all previous retirees too. PERS was is fine shape up to that point, but the legislature couldn't leave well enough alone. They needed to drum up support for the upcoming elections. It was time to pass out the largesse to the peons to show how much the elected officials cared for them. Inevitably the good times ended with the financial crises of 2000 and 2008, but I don't hear any calls for the legislature to undo what it has done.

15th Check said...

Here we go again with the monthly Kingflush PERS Bash!

Anonymous said...

One other problem with PERs is when they changed from 1.875 percent for each year to 2 percent. The change was put in place for all retirees and future retirees.

Anonymous said...

Hey 10:35, I am 2:32 and I am not doing something else that is non income producing just because you
Told me to. I suspect I was referring to you and your useless, non needed job.

Anonymous said...

Looking at the grammar and structure of the argument, 8:10 either attended JPS or spends a lot of time at Wal-Mart. I'm not a fan of big government spending, but this person could've benefited from a few more dollars being invested in education.

Anonymous said...

8:37, if you failed to understand what 8:10 was saying maybe you could benefit from a few classes.

Anonymous said...

That being????

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