This article first appeared on the Magnolia Tribune.
- The PERS Board argues that any change in leadership for a plan that serves roughly 10 percent of the state’s population should be done so in a transparent manner.
The Public Employees Retirement System (PERS) Board has gone on record in opposition to House Bill 1590, the legislation authored by State Rep. Hank Zuber (R) that aims to restructure the Board and prevent the most recent rate increase expected to take effect in July.
The legislation passed in the House 85-34 last week.
READ MORE: House seeks new set of eyes on PERS Board
PERS is the state’s retirement system which is overseen by a Board of 10 members.
In a press release, the PERS Board pointed out the main issues they had with the legislation, which included the provision that most of the new Board members would be appointed by state officials rather than elected by the membership of PERS.
“Currently eight of the 10 PERS trustees are elected by the membership. Under HB 1590, this would be reduced to only two of 11 which significantly disenfranchises more than 300,000 members who are directly impacted by the Board’s management,” the statement read.
As of October, reports indicate 144,000 active members and 114,000 retirees are in the PERS system. Over the last decade active member numbers have decreased by 10 percent and retirees have increased by 26 percent.
The PERS Board argues that any change in leadership for a plan that serves roughly 10 percent of the state’s population should be done so in a transparent manner, preventing insinuation that the funds could be mismanaged.
The House bill would give primary appointment power to the Governor and Lt. Governor. The Speaker of the House of Representatives could also recommend appointments to both statewide officials. These appointments would rely on approval from the Senate.
Current PERS Board members also argued that a reconstitution of the members would result in the loss of institutional knowledge and continuity for PERS members.
Ray Higgins, Executive Director of PERS, expressed his continued confidence in the current Board.
“The Board has always acted in accordance with its fiduciary and statutory duties, and PERS will continue to serve its membership to the best of its ability,” said Higgins.
The House legislation not only takes aim at the structure of the Board, but also the most recent rate increase approval. The Board of Trustees recently approved a rate increase, bringing the rate to 22.40 percent through a phased in increased of two percent each year, beginning in July 2024. HB 1590 would prevent that increase from going into effect.
“Regarding the scheduled rate increase, appropriate funding for PERS in some manner is very important for the long-term needs of the plan,” Higgins said in a prior comment on the bill.
Despite the disagreement between the PERS Board and lawmakers regarding an employer rate increase, the PERS Board said as of December 31, 2023, the 15-year return for PERS outperformed 98 percent of other plans in Mississippi’s PEER group with PERS holding more than $30 billion in assets.
In addition to the employer contribution increase over the next three years, the PERS Board also requested a cash infusion or additional funding be considered by the Legislature. An exact amount was not indicated, but Higgins previously said he anticipated it could be close to $350 million annually with lump sums much higher.
In the PERS Board’s statement, the Board said if the rate increase is prevented it could jeopardize membership which in turn could hurt all taxpayers. They expressed concern that if the plan continues without proper funding, it will only get more difficult to address the plan in the future.
“The current Board has acted with integrity and dedication in carrying out its statutory/fiduciary duties; in administering the benefits as prescribed in law while following the recommendations of multiple actuaries and other expert advisors; in making recommendations to help the situation; and in providing numerous scenarios at the Legislature’s request,” the PERS Board of Trustees stated.
Lawmakers previously thwarted an effort to increase employer contribution rates to 22.40 percent with a bill that would remove such authority from the PERS Board. An agreement was reached to hold off on an increase and the bill was killed.
In October’s Joint Legislative Budget Committee hearing, Higgins told lawmakers that the rate either must go up or benefits will have to change. If neither of those things happen, he said the state could be at risk of losing the retirement system.
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The decision was met with push back from lawmakers who said cities, counties, hospitals, and schools were concerned at what a rate increase would do to employer budgets. Many of the lawmakers said those entities have indicated they would be forced to make layoffs, discontinue hiring, cut programs, or raise local taxes.
Higgins has maintained, that the decisions made by the PERS Board to keep the plan operational and sustainable, is their fiduciary responsibility to the members of PERS.
This article first appeared on the Magnolia Tribune and is republished here under a Creative Commons license.
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