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Miss. Sen. Nancy Collins of Tupelo is courageously preparing legislation to address growing financial problems with the state retirement system (PERS).
She said her goal was to start a conversation about PERSâ€™ long-term sustainability.
â€śThis is the elephant in the room,â€ť she told her hometown paper. â€śWe should not be afraid to talk about it.â€ť
Collins proposal would implement many of the recommendations made by the PERS Study Commission appointed by former Gov. Haley Barbour, including freezing retireesâ€™ annual cost of living adjustments (COLA) for three years.
While many state legislators will privately admit to growing concerns about PERS, few have had the courage to do so publicly, much less prepare legislation.
Why do this?
The answer starts with unconstitutional actions by the Legislature and the PERS Board in 1999. Here is what PERS Executive Director Pat Robertson wrote in a special report â€śAre Mississippiâ€™s public retirement plans secure:â€ť
â€śBenefit improvements were enacted in 1999 without a funding mechanism in place other than the expectation of continued investment gains. Since June 30, 1998, PERS-accrued liabilities have more than doubled due to growth in the number of retirees, improved mortality and the compounding effect of benefit improvements.â€ť
â€śWithout a funding mechanismâ€ť means in violation of Section 272(A)(2) of the Miss. Constitution enacted at the request of state retirees in 1986:
â€śLegislation shall not be enacted increasing benefits under the Public Employeesâ€™ Retirement System of Mississippi (PERS) and the Mississippi Highway Safety Patrol Retirement System in any manner unless funds are available therefor, or unless concurrent provisions are made for funding any such increase in accordance with a prior certification of the cost by the board of trustees of the systems based on accepted actuarial standards.â€ť
Not only were benefit improvements enacted without funding, they were backdated at no cost to participants.
The answer continues with the disturbing financial consequences of these unconstitutional actions. Despite increasing what employers pay (i.e., taxpayers) â€” from 9.75 percent to 15.75 percent â€” and employees pay â€” from 7.25 percent to 9 percent â€” PERS-funded levels have plummeted from 85 percent to 58 percent since 1998.
Collins proposal says retirees â€” the ones getting the unconstitutional extra benefits â€” should help pay, too. She proposes no cuts to benefits or 13th checks, just no increases for three years, a huge savings for PERS.
Political opponents and opportunists started screaming and scaring retirees.
Some claim Collinsâ€™ bill would result in numerous lawsuits. Frankly, few retirees should want to risk putting the constitutionality of their benefits before a judge just to prevent a temporary freeze in COLA increases. The PERS Study Commission Legal Committee, which included a former Supreme Court Justice and retirement plan legal expert, advised that future COLAs, unlike earned benefits, may be changed for existing retirees.
Nancy Collins, you got grit girl.
Bill Crawford is a syndicated columnist. Contact him at email@example.com.