It sounded like good news for PERS.
Reason Foundation policy analyst Steven Gassenberger told the House PERS Select Committee that the new hybrid plan the legislature adopted plus annual contributions of $110 million for four years would “make the system solvent,” as columnist Sid Salter put it.
“A $110 million over four years sounds high, but put it in today, so you can avoid devastation in the future,” Gassenberger said, according to the Magnolia Tribune.
Hmmm. $440 million does sound high until you remember PERS has a $26.5 billion funding gap, then it sounds petite.
The Reason Foundation helped advise the legislature on the hybrid plan it adopted with some controversy in May. The plan creates a new “fifth tier” in which all new employees (and legislators) will be placed beginning next year. That tier has no guaranteed 13th check, replaces the “high four” benefit base with a high-eight base, and offers both a 401k-like benefit and a pension.
Reason says the hybrid plan can put PERS on “a path to solvency.”
But it will take a lot longer than four years and much more than $440 million to get there – like 2055 if all of the Reason assumptions are met each year. Of course, if PERS could achieve model assumptions ….
Gassenberger’s published work on the Reason website has a more cautionary tone than his optimistic comments to legislators. “Mississippi policymakers should be warned that, while this reform does reduce long-term costs, it is not projected to reduce the chances of PERS becoming insolvent.” Essential to that, he said, is fixing PERS’ broken funding policy. The Reason hybrid model calls for replacing the legislature’s four-year phase-in of .5% annual increases in employer contribution rates from 17.9% to 19.9% with an actuarially calculated rate. That rate, a senior Reason official told me, will vary between 25% and 29% to get PERS to full funding by 2055 (assuming all assumptions are met). Based on 2024 numbers, each 1% increase would cost about $75 million annually. That calculates to a need for $457 million to $757 million a year for 30 years. Meanwhile, legislators seemed to ignore a June Moody’s report. The credit agency called the new plan “one of the riskiest combinations of asset/benefit coverage,” as reported by Jackson Jambalaya. Moody’s said, “It will take decades for meaningful savings, and thus meaningful credit benefit, to materialize,” and predicted PERS’s funding gap will jump to $32 billion on the current funding plan. Also, “the system will gradually move toward asset depletion” if a near-term investment loss occurs without offsetting major funding. “There is a way that appears to be right, but in the end it leads to death” – Proverbs 16:25. Crawford is the author of A Republican’s Lament: Mississippi Needs Good Government Conservatives.
16 comments:
The funding gap is the difference between the value of investments as of June 30th compared to the present value of all future liabilities. It does not take into consideration future employee or employer contributions or future investment earnings.
All the old, white Mississippians will mostly benefit until the dinosaur literally runs dry, and goes extinct. Then, Mississippi government won't be the biggest employer anymore, because people won't even think about chasing the Golden Handcuffs PERS promised their parents.
It’s a good thing the legislature didn’t cut the state income tax with all of these debt obligations looming. Oh, wait…
Oh, sure, the Legislature’s fix will work…just like it only took two weeks to flatten Covid’s curve.
But all of the data centers are going to save the day, even if we run out of electricity.
Here come the haircuts. There simply is not enough actual taxpayers in Mississippi to carry the PERS load.
It’s broken and the only fix is a drastic reduction of benefits.
Not to mention the gloom and doom theory is based on everybody retiring at one time, which is an impossibility.
Even a barber with a tenth grade education should know 'is' should be 'are' in your ridiculous sentence.
Perhaps you should lay down the clippers, shake and pop the cover sheet and get on over to the capitol and offer your help.
Continues to amaze me that so many retirees choose the 13th check rather than a monthly distribution of their COLA increases.
The legislature did that this year. It will take many years to see the results but benefits for future employees were drastically cut. Give it time.
@9:30 - Hubby takes his 13th check in December and we invest it, as we are used to living on the 12 months of PERS income and budget accordingly throughout the year.
In thirty years, when solvency is projected to be achieved, 2/3 of the current retirees and half the current legislature will be ashes spread over the reservoir.
Not a damned legislator among the lot gives a rat's ass about PERS or the peons who suffer its existence.
5:30p.m. for the win. All the gloom and doom scenarios are based on the false premise that EVERYONE in PERS were to retire at the same time. WITHOUT the Tier 5, PERS unfunded liability is projected to be the same 30 years from now as it is today. And what is the definition of unfunded liability, it means if everyone in the system[ both employed and already retired] were to ask for their retirement benefit at the same time. This is an IMPOSSIBILTY. The actuaries have calculated that PERS[without Tier 5 implementation ] with have 46 billion dollars in assets in the year 2055. BUT WAIT... I thought the sky was falling ????????
10:16 AM & 4:12 PM, if either or both of you WANT TO BET on PERS making “haircuts” via a “drastic reduction of benefits,” let’s find a way to make that happen so I can take advantage of a rare opportunity to get some easy money.
The PERS SCAM is just another example of “we get the government we deserve.” A drastic cut in PERS benefits is political suicide, and White Liberal Democrats and their RINO partners know this.
From 2017 - 2020 Bill Crawford and Sid Salter were rallying the troops trying to box in Republicans on changing the Mississippi State Flag, a trap that should have been a who cares non-issue, but would cause single issue idiot voters to take the bait and stay home on election day.
And while this “incredibly major MS state flag legislation” was passed into law in 2020, homicides reached a record high in crime infested Democrat controlled Jackson, MS, and 2 young, innocent children died from stray bullets - in just 10 days. But hey, at least Bill & Sid did the really important work in helping get this most important state flag issue resolved.
Now Bill and Sid have moved on to PERS. So remember, when you see Democrats and RINOs talking about getting spending under control, without offering very specific solutions themselves, one only needs to read Matthew 7:15 to understand exactly what’s going on.
If we can have 3.5 more years of the Trumpster, 8 years of JD, and 8 years of Mario, all will be well.
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