- Columnist Rebekah Staples says House Bill 1590 is a good step toward a stronger system that honors commitments to retirees without saddling taxpayers with higher taxes.
For decades, Mississippi government workers have contributed to our state’s wellbeing. Whether in our state government, in the classroom, or in your local city hall, each public worker signed on to state service with the expectation and promise of a retirement they could trust.
For these workers, and for our people, the magnitude and importance of the Mississippi Public Employees’ Retirement System (PERS) cannot be overstated. Today, PERS carries billions in assets and billions in liabilities. But more than sterile numbers on a balance sheet, the system provides a living for tens of thousands of citizens, many of whom rely on benefit checks as their only source of income.
Lawmakers are aware of these realities. They feel the burden of managing the system because they have family, friends, and neighbors in the system. None of them are trying to dismantle PERS. All of them are aware of real challenges that must be solved for to protect the system for future retirees.
Public sector retirees and PERS members are understandably concerned whenever their retirements become the subject of front-page headlines and Capitol fodder. Unfortunately, there are people and groups who weaponize this fear for political power.
Regardless of one’s opinion about retirement types or structure, the bottom line is this: Mississippi has a statutory, constitutional, and moral obligation to keep its promises. The big question is how to ensure the system itself is positioned for long-term success, while also being respectful of private sector workers who are not PERS members, but who fund a sizable portion of the public retirement system through taxes. After all, these people are trying to pay for their kids’ college and fund their own retirements, as well.
Last week, the Mississippi House passed legislation (House Bill 1590) to address a couple of PERS issues. Predictably, it has come under attack with false claims. To be clear, the bill does not change benefit payments or amounts. It does not change the so-called “13th check” (cost-of-living adjustment built into the system to help retirees maintain purchasing power). It does not raise the amount of money government workers contribute to the plan.
HB 1590 has two primary purposes: to modernize the PERS governance structure by shifting to a nationally recognized model and to prevent a significant rate hike on taxpayers proposed by the PERS Board that would have disastrous effects on your community.
Currently, the PERS Board has ten members, with only two representing taxpayers who are ultimately on the line for funding the system (a gubernatorial appointment and the State Treasurer). HB 1590 shifts this structure, requiring four appointments from the governor and three appointments from the Lt. Governor while maintaining existing board positions, including two for retirees and active members.
The National Association of State Retirement Administrators is a non-profit association whose members are the directors of the nation’s state, territorial, and largest statewide public retirement systems. NASRA research shows most pension governance models include “trustees who are both elected and appointed. Governors appoint most trustees who are appointed; legislatures or legislative leaders make some appointments.” This is precisely what HB 1590 establishes.
Secondly, but just as critical, HB 1590 prevents the “employer contribution” (read: taxpayer-funded) rate increase adopted by the PERS Board. Because the retirement system covers most government workers, the cost of the plan is shared among state agencies, cities, counties, school districts, rural hospitals, libraries, and the like. The PERS Board recently approved a five-percentage point increase in contributions, an estimated $345 million hit to taxpayers – and local elected officials immediately cried foul on behalf of their constituents.
In January, Greenville Mayor Errick Simmons (D) said “the [PERS] rate that we’re paying now is helping to further put Greenville on the road to financial disaster.” Collins Mayor Hope Magee-Jones (D) says her city will “have to probably look at raising taxes, going to look at not hiring enough employees to do the things we need to do in our cities.” Oxford Mayor Robyn Tannehill (I) said the anticipated $2.4 million rate hike would “require us to either decrease services or increase taxes,” adding that the “PERS Board never discussed what these increases look like where the rubber meets the road.”
Hattiesburg Mayor Toby Barker (I) said “our concern is this being passed to the local level and people getting hit, possibly up to three times by their city, your county, and their school districts having to raise taxes to cover this extra PERS tab.”
It’s no surprise, then, that in a letter dated March 19, the MML executive committee expressed group support (via their 290 members) of legislative efforts to strengthen PERS. The letter says MML has “voiced its concerns with the long-term financial viability of the PERS system as it currently exists” and that HB 1590 would assist “local governments tremendously and help prevent cuts to municipal services, reductions in workforce and potential local tax increases.”
While the PERS system is not in immediate danger, the trends are concerning and require a closer look at system finances. House Bill 1590 is a good step toward a stronger system that honors commitments to retirees without saddling taxpayers (non-beneficiaries) with higher taxes.
House Speaker Jason White spoke earlier this year about taking bold action: “Let’s not focus on safe things in order to score political points. Let’s make this time count.” Speaker White and his members have held true to this vision, passing a rational, targeted bill that protects retirees and taxpayers alike. As both of these (a taxpayer and inactive PERS member), I appreciate their courage to tackle what I consider the greatest fiscal threat to our state’s future.
