A House plan to dissolve the member-elected board that governs Mississippi’s massive public employee pension plan and replace it with a board dominated by political appointees died Tuesday in the Senate Government Structure Committee.
The bill’s death angered House Speaker Jason White, who called the move “irresponsible.”
Sen. Chris Johnson, R-Hattiesburg, chairman of the committee, said Tuesday afternoon — hours before a deadline for action on the measure — that he would not call the bill up for consideration. Instead, he called for the current board to become more transparent by livestreaming all of its meetings.
He also urged the board to delay the start of its plan to increase by 5% the amount public entities, state and local governments, school districts and universities and colleges must contribute to the program.
The 5% increase is scheduled to begin with a 2% increase in July and be phased in over three years.
That planned increase, which board members said their financial experts reported was needed to ensure the long-term financial stability of the Public Employees Retirement System, caused controversy in the Legislature. It led to the House plan to replace the existing elected board. The House acted after many state agency heads and local officials said the increase would cause financial distress and a possible reduction in services.
As of now, the board’s plan to increase the amount governmental entities contribute to their employees’ paychecks for retirement benefits from 17.4% to 22.4% over a three-year period remains in effect.
Ray Higgins, executive director of PERS, did not say whether the PERS board would heed Johnson’s advice.
“We appreciate the committee’s focus on PERS and their suggestions,” Higgins said. “PERS is such a very important system, not just for our membership but for the entire state. We support the continuation and sustainability of PERS and look forward to working with the Legislature in the future.”
Johnson said senators had received messages from “thousands and thousands of PERS members” who objected to dissolving the board. The current board is comprised primarily of people elected by PERS members. PERS has a massive impact on the state with about 360,000 members, including retirees, current employees and former public sector employees who have not yet retired. Under the House plan that was killed in the Senate committee Tuesday, the new board would be comprised of people appointed by the governor and lieutenant governor.
Killing the legislation “was the right thing to do,” said Ed LeGrand, past president of the Mississippi Retired Public Employee Association and a former member of the PERS board. He said he supported keeping the current board in place and had mixed emotions about recommendations to delay the increase in the employer contribution rate.
“That will be up to the current board to decide,” he said. Earlier, board members had voiced opposition to the House plan to dissolve the current PERS board.
Speaker White, R-West, said in a statement he was disappointed the Senate killed the House bill. He criticized Lt. Gov. Delbert Hosemann specifically for the demise of the legislation.
“The lieutenant governor and Senate’s failure to address the long-term sustainability of our state’s retirement program is irresponsible to not only PERS retirees and participants in the system but Mississippi taxpayers,” White said.
Hosemann in a statement said: “The PERS system’s long-term viability continues to be a serious concern. The Senate and the House need to work together to find a solution. Transparency and trust, from both the Legislature and retirees and employees, will be critical for us to move forward. The Senate is committed to protecting retiree and current employee benefits while balancing the budget.”
The system has assets of about $32 billion, but debt of about $25 billion. But Johnson said that debt was “a snapshot” that would be reduced by strong performances from the stock market.
He stressed that no member of the Senate Government Structure Committee supported any change in the benefits that PERS members received. He said the system had assets to meet its obligations.
The system depends on the contributions from governmental entities, a 9% contribution from employees and its investment earnings for its revenue. Some senators said they believed the board overreacted by imposing the employer contribution increase. Whether the board will heed Johnson’s recommendation to postpone the increase in the employer contribution remains to be seen. Another option would be for the Legislature to infuse funds from its current revenue surplus into the system.
But White said, “Over the next three years, and the foreseeable future if no action is taken, the proposed 5%-10% increase requested to fund PERS will also have the effect of limiting government services, and eliminating state and local government employees.”
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