Proclaiming that a full scale attack on the Public Employees’ Retirement System of Mississippi is soon to be underway at the Capitol, Democratic legislators gathered Tuesday to pledge a fight to the finish on the issue.
“We’re going to be a blockade,” declared House Minority Leader Bobby Moak at the close of a late morning press conference called in response to what the Democratic lawmakers say is soon-to-be-introduced Republican legislation calling for a sweeping overall of the PERS system and its governance.
The Democratic lawmakers say they expect some Republican help repelling the proposed overhaul. A strong dose of legislative self-interest could come into play, they say, noting the bill would eliminate the Supplemental Legislative Retirement Plan — the retirement plan for the Legislature – for lawmakers elected on or after Jan. 1, 2011.
Democratic Rep. Stephen Holland acknowledged that stake when he joined fellow 30-year legislator Moak at the press conference. “So guess what? We have a very vested interest in the PERs system – just as all of these people who have committed their lives to public service have in the public employees’ retirement system.”
Whether the bill lives or dies is likely up to Republican Lt. Gov. Tate Reeves, who serves as a gatekeeper of sorts on Senate legislation. He indicated a willingness Tuesday to look at any bills that show promise for fixing the fiscal ills of the defined benefits retirement plan.
“Protecting the state retirement system for current and future retirees is critical, and the Senate will review bills related to PERS as they move through the committee process,” he said in an email.
Among a number of other changes, Democrats say the GOP legislation would freeze cost-of-living increases for retirees until the $20 billion retirement fund shows significant improvement toward funding its pension obligations. Specifically, the funded percentage would have to reach 70 percent for COLAs to resume. The funded ratios stood at 58 percent on June 30, 2012, down from 62.2 percent at the end of June the previous year.
The bill also would tie the COLA to the Consumer Price Index, not to exceed 3 percent annually. The indexing to the CPI would have implications for the so-called “13th check” retirees now receive each year.
Moak identified the legislation as the work of newly elected Republican Sen. Nancy Collins of Tupelo. Collins’ office confirmed she is writing a PERs bill, but is tied up with charter school legislation this week and would not be free to talk about PERs until next week.
Moak and company distributed a page-long list of what they said contained the major elements of Collins’ soon-to-be-introduced bill. Moak would not say how he got the rundown on Collins’ legislation, other than to attribute the information to “the Details Ferry.”
Collins’ plan, Democrats say, goes far beyond the recommendations of a study commission appointed in 2011 by then-Gov. Haley Barbour. He gave the commission the job of proposing ways to free taxpayers from a $100 annual obligation to a retirement fund running $12 billion short of meeting its pension obligations.
Barbour’s 12-member commission proposed changes that would keep 30-year workers on the job to age 62 to gain full retirement benefits. Under the proposals, they could retire at 55, provided they had worked 30 years . On the downside, they would have to go without cost-of-living increases, or COLAs, until they reach 62.
Retirement before 55 would still be possible for workers with 30 years of service, though eligibility would be limited to “an actuarially reduced benefit.”
The proposals from Barbour’s commission languished in last year’s session, with Capitol observers assessing them as too radioactive for lawmakers to want to touch.
That appears not to be the case this year. What Collins wants, said Moak, is “a total overhaul of the system, a total overhaul of the governing board.”
Moak said the bill inflicts pain all around. “What the summary tells you is that this legislation not only affects those who come into the system. This affects folks who are in the system now. Most importantly, it affects those retirees who are depending on these checks as their source of income today.”
The measure, said Moak, would also open the door to future political meddling by adding seven new appointed members to the PERS Board of Trustees, with three members appointed by the governor and four by the lieutenant governor.
“Once you get your governing board in place you can do just about what you want to,” he said.
State Sen. Hob Bryan, another 30-year member of the Legislature, said he is especially concerned by a part of the bill that calls for curtailing the “13th check,” an additional payment retirees receive annually to reflect cost of living increases. For retirees, Collins’ plan to tie the COLA to the Consumer Price Index “would cut their 13th check over a period of years by 10 percent,” Bryan said. “That’s not the promise that was made and that’s not the right thing to do.”
The Democratic legislators say they are open to reforms of the retirement system but want any proposed changes to be vetted and endorsed by the PERS Board of Trustees.
The board has 10 members, eight of whom are elected to six-year staggered terms by the various worker and retiree groups. The governor has one appointment to the board. The state treasurer is a standing member of the board as well.