Friday, March 29, 2024

PERS Problems: When Five Turns into Ten

 Lost in the discussion at the Capitol about PERS is this little nugget in the 2023 actuarial report: 

The PERS Board of Trustees voted in December 2022 to increase the employer contribution rate from 17.4% to 22.4%.  The Board voted to phase in the increase over five years after the proposed rate hike generated a backlash.  

PERS Consultant Cavanaugh McDonald recommended raising the employer contribution by another five points to 27.4%, a ten-point rate hike in less than five years.  What would that mean for local governments, counties, and school districts if PERS followed the recommendation? 

JJ estimated what the cost would be for the five-point increase in a December 2022 post.  Take the numbers posted below and double them if the consultant's recommendation is followed. 

Public School Districts

The PERS rate hike hits public schools the worst.  JJ estimates JPS will pay an additional $7 million while Rankin County schools will pay more than $5 million.  

JPS: $6.8 million

Rankin County School District: $5.2 million

Madison County School District: $4 million

Clinton Public School District: $1.3 million

Hinds County Public School District: $1.2 million

Pearl Public Schools: $1.1 million

Canton: $906,003 


Rankin County: $1 million

Madison County $870,834 (based on 2020 audit)

Hinds County: The Budget & Finance Department estimated the increase will be $1.5 million. Hinds County has not produced an audit since 2019 when the current Board assumed office. 



The PERS pain hits the cities as well although not as badly as the public school districts.  Most of the burbs are in the $400-$500,000 range.  However, Jackson is going to suffer an estimated $3 million hit.  To say Jackson can't afford the increase is putting it mildly.  City Council President Ashby Foote said the city estimates it will be around $2.7 million. 

Jackson: $3 million (based on 2020 audit.)

Ridgeland: $574,000

Pearl: $482,000 (Mayor Windham said it would be approximately $570,000). 

Clinton: $496,000 (Mayor Fisher said it would be close to $600,000.) 

Flowood: $506,000

Madison: $477,913 (City Clerk said it is estimated to be $580,000.)

Brandon: $336,000

Canton: $280,000 (Based on 2019 audit.)

Richland: $289,000

Byram: $50,000 

Most of the burbs would suffer roughly $750,000 to $1 million hit to their budgets.  The increase would cost Jackson nearly $6 million.  Where the hell does Jackson get that money? Abolishing JPD?  Rankin and Madison county school districts would have to pay approximately millions more per year.  JPS? Don't even mention JPS.  The counties? $2 million and up apiece.  

Some will say cut the fat.  Is there enough fat for these cuts? Teachers, police officers, and firefighters would be laid off when their employers can ill afford to lose them.  

This is what happens when the can is kicked down the road for years.  The legislature can stop the rate hikes but what will it do? PERS needs the money as the funding level will drop in the 40's if nothing is done.  

This is what happens when the legislature jacks up the benefits during a bull market without creating a way to pay for them.  



Anonymous said...

At some point this becomes a consequence the electorate has coming because they elected idiots. Putting idiots in leadership positions is expensive and voters are going to have to pay for that incurred expense through higher taxes. Elections have consequences.

Anonymous said...

The amount of non classroom employees in public schools is glaring. I went to the small private school in the 80s, a headmaster and secretary ran the whole school, first through twelfth, 400ish students. Oh yeah, the headmaster coached several sports and taught math, too.

Fried Herbison said...

You really think this has gone unnoticed and we need JJ to analyze it and write a thesis. If you paid even minimal attention to the several PERS Facebook pages (which include comments and data from members as well as legislators), you'd know just how far behind you are in your little 'discovery'.

Paul's squeeze said...

Some of the districts could contact the Madison Co. comptroller's office and get the contact info for that Nigerian prince that they gave $2.7 million. Maybe he could make them a low interest loan.

Anonymous said...

Will the last one in the room……

Anonymous said...

It appears that with the billions in surplus money that is looking for somewhere to be spent, maybe the legislature needs to use some of it to shore up PERS, instead of going ahead with Taters income tax elimination, which is nothing more than something to hang his hat on when he runs for US senate against CHS next election cycle.
The legislature created the problem with PERS many years ago. Pay up now or pay up later!

Anonymous said...

Fried Herbison, the only people who would pay “even minimal attention to the several PERS Facebook pages” are employees/retirees under PERS. This little change has flown under most everyone else’s radar but could affect all of us. I for one appreciate reading JJ’s “little discovery”.

Anonymous said...

When everyone’s property tax bill doubles to fund PERS, do you think it becomes an election issue for the legislators who refused to take an action to prevent it? I do.

Anonymous said...

State retirement in MS is a JOKE. After25 years you get 50% of your pay…with no healthcare coverage?

Travel to other states and you can see where after a career of service you can retire comfortably with benefits for life.

But then again, when you take a guy with a GED who’s stocking shelves at Piggly Wiggly and make him a firefighter, he think he’s hit the lottery…

Anonymous said...

7:51, 25 years is not a career, it’s half of a career for the rest of us paying the taxes to fund PERS.

Anonymous said...

@ "At some point this becomes a consequence the electorate has coming because they elected idiots."

Just who else, pray tell, is running for office?

@ 7:51 - I retired from a state job 5 years ago and am living very comfortably on my PERS retirement, and I have the same health care insurance as I did before I retired. I did work longer than 25 years, and it has been a 30-year service requirement (for no age minimum) for quite some time now.

Anonymous said...

Pay is subpar, pension decent. Don't change it, shore it up.

Anonymous said...

7:15, ridiculous posts like this kill your credibility. Taxes double? If 100% of a governments costs are payroll and benefits, and the benefit contribution goes up 5% then at most taxes would go up 5%. And that’s with no cuts.

But the point is moot. Our elected officials don’t even have the nads to raise the contribution 2%.

Anonymous said...

To answer Kingfish's question regarding the fat: "Is the money there?" YES.

The bloated administrations throughout the state filled with obscenely paid do-nothing "admin" jobs in both the Department of Education (K-12) and Higher Ed (community colleges and universities). Yes, the money is there - but is the political will?

They should crop these two leviathans a lot off the top to shore up PERS before even thinking of raising taxes. Discontinue the 13th check until the budget is solvent, and eliminate the SLRP. Oh there's plenty of "fat" KF, but the scary reality is even if they come up with $2 billion in bloat to use, that's a fraction of what the pension fund needs long term.

Anonymous said...

I will say this as simply as I can: Legislators know how to fix the problem but they won’t because they are safaris of losing their next election. They brag about decreasing state employees and then seem confused why the retirement system requires constant increases in funding. It’s 5th grade math, folks. That tax payer money should be going to the future, not the past.

Anonymous said...

Cut out the SLURP fund the legislature gives themselves on top of state retirement.

Anonymous said...

Again, elected city or county mini politicians should not be able to join PERs.

Public schools have a lot of fluff they could cut out from an administrative level. Have y’all ever seen the Taj Ma Hal that is the RCSD headquarters? A little excessive.

There’s not one unilateral change that needs to be made, but there could be changes to several areas. And they think this poor state needs to eliminate income tax.

Anonymous said...

The MS Legislature is full of douchebag losers. Not a leader among them - because of what @7:45am said.

Anonymous said...

I'm a member. I've put in 28 years at far less than market for a guaranteed pension and I've had someone else control 10% of my income during that time. But, there are things that need to change. The high four should become at the very least the high ten, if not a true average. This didn't used to be a problem but at the very least K-12 and Higher Ed have exploited the high four for at least the last decade.

Only one, or two quarters of PTO leave should be allowed towards retirement instead of years. You shouldn't be able to draw benefits until at least 60. All of these things could be phased in based on the amount of time to retirement.

Finally the legislature of old created this problem and once again instead of actually addressing the issue they had it come up for a vote during Spring Break with no notice and then pushed out incorrect talking points when members got wind of it. Political appointees on the board are not the solution. If municipalities can't afford the increase then the legislature needs to take 150-200 million out of the rainy day fund for this year and spend the next year coming up with a transparent plan. Until this is solved no more big corporate tax breaks that often don't pay off, no more talk of reducing the state income tax. It becomes a more expensive fix every year. But, promises made need to be kept. Period.

Anonymous said...

Mississippi urgently needs to transition to a fair, secure and sustainable defined benefit solution. Increased taxes will be required for a while, employees will see a fairly dramatic change in the plan structure, and retirees likely will lose their automatic COLAs. There are excellent models out there, like Ontario Teachers', New Brunswick Public Service, Wisconsin Retirement System, the Pension Fund of the Christian Church (Disciples of Christ), and the pension plan of the Presbyterian Church (U.S.A.). All of these are fully funded (using low discount rates), have low contribution rates, and award COLAs if funding levels are high enough (typically 110% or more). Even the legal problems to a transition may not be as insurmountable as they once may have seemed, given the 8-1 Supreme Court decision in Sveen v. Melin in 2018. The current PERS Board simply won't make recommendations like these, sad as it is to say.

Anonymous said...

4:53 is right about the glut of education administration. 4:53 stated his private school was lean and mean. When Jesse Howell ran Jackson Prep in the 1970s and 1980s, the administration was Jesse Howell, an assistant over middle school and an assistant over the high school, plus a secretary.

Today Jackson Prep has two diversity officers and a butt load of administration. I'm guessing that the product was a better education under Jesse Howell.

Anonymous said...

11:05- I guess it all depends on what standard of living you want.

When compared to other states, Mississippi’s PERS is terrible. Not only do you work a career for less than what you can in surrounding states, but the retirement benefits are bad.

Just another reason that if you are any good at your job, you leave for other states like TX, FL, TN or even AR.

The dullards that can’t leave usually stay.

Maria Montessori said...

I bet that they can find some waste in the half billion $ spent on administration overhead.

Kingfish said...

Try reading the post. all of it. I was not talking about MDE or state government. I was talking about municipalities and counties.

Where does Jackson get $6 million? What would you cut? Come on girlfriend, don't be shy. What exactly would you cut out? Get rid of the libraries? Get rid of zoning, lay off firefighters and police officers? Look at Ridgeland or Madison's budget? Where do you cut $1 million?

There is indeed fluff in public school districts but for all the criticism RCSD receives, it actually ranks near the top in the state in terms of administrative efficiency. That building looks nice and shiny but compare it to JPS's offices downtown. Friggin labyrinth its so big.

So where do you cut $10 million from RCSD or $12 million from JPS? Where?

Anonymous said...

Kingfish I think Jackson’s general fund annual budget is well over $100,000,000. It can be done.

Anonymous said...

9:08 says: "The high four should become at the very least the high ten, if not a true average."

Social Security's formula is based on your highest 35 yr average! 35!! Tells you how asinine PERS thinks. SSI uses your highest 35 out of your 50 +/- career (as 8:45 said)

Should be easy to see how private sector workers/taxpayers have total disdain for PERS.

Anonymous said...

"...the only people who would pay “even minimal attention to the several PERS Facebook pages” are employees/retirees under PERS."

Thank you for that post, Kingfish, but you're wrong. There are thousands of readers, members and participants on multiple pages. Many of them are legislators and quite a few of those legislators opine on those pages daily.

There are close to 300,000 active and retired members of Mississippi PERS. This number represents about 12.5% of Mississippi's workforce. Roughly 116,000 are retirees. The average retiree benefit is around $27,000. For the MHP division of PERS, the average benefit is $50,000.

As to a 25-30 year retirement, I don't know a soul (other than those whose spouse can float the household budget) who retires and does not start another job, another career or at least something to pay for insurance.

Anonymous said...

Is the legislature's supplemental pension fund fully funded? Just curious.

Kingfish said...

You really think this has gone unnoticed and we need JJ to analyze it and write a thesis. If you paid even minimal attention to the several PERS Facebook pages (which include comments and data from members as well as legislators), you'd know just how far behind you are in your little 'discovery'.

You're assuming I wrote this post for the retirees. Wrong. The intended audience was the general public, not just the retirees. Sometimes, it's not always about them.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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