JACKSON — The PEER Committee has released a report on its review of the Public Employees’ Retirement System of Mississippi (PERS).
The scope and purpose of this report is to provide a comprehensive look into the decision-making processes of the PERS board of trustees, its staff and its contractual advisors to determine whether the PERS board is positioned to manage the key risks that threaten the viability of its retirement benefits programs.
In the report’s recommendations, PEER wrote: “While PEER acknowledges the seriousness of the funding concerns facing PERS, the Committee believes PERS’ current financial condition is sufficiently sound to make any modification of current employees’ and retirees’ benefits legally inadvisable. Therefore, the Legislature should carefully consider PERS’ October 2012 proposal for achieving an 80 percent funded ratio by 2042 as a reasonable course of action for long-term stability.
“In preparation for an uncertain future, the Legislature should require the State Personnel Board, Department of Finance and Administration and state economist to study, with necessary assistance from PERS and the attorney general, the benefits package (e.g., compensation, retirement, leave) used as an incentive to hire and retain a quality government workforce in Mississippi. Such a study should help determine what future modifications of the retirement system, if any, might be warranted to preserve a quality government workforce and what elements should be protected, should economic conditions require significant future changes in the retirement system. The study would also provide information for policymakers to develop a more level playing field regarding total compensation of private and public sector employees who have equivalent knowledge and skill sets.
“The PERS board of trustees should develop and maintain an ongoing assessment, catalog and prioritization of possible PERS reform options that would be available to the Legislature should it request such.
“In further acknowledgment of the largely uncharted economic course that the state and the PERS system now face, the Legislature should amend MISS. CODE ANN. Section 25-11-15 (1972) to require the PERS board of trustees to work with the legislative liaisons, the attorney general, actuaries and investment advisors to establish the elements of a risk-assessment strategy that would provide both the PERS board and the Legislature with a working definition of ‘imminent collapse,’ along with the information needed to make early identification of any threat of imminent collapse of the system. Such information would allow the Legislature to modify the benefit structure of the system for all participants based on risk, priority and impact, should economic conditions force such change to become the only option for protecting the viability of the system.
“The Legislature should require the PERS board of trustees to work with relevant control agencies or associations of state and local government to survey participating employers to determine compensation practices (e.g., ‘stacking,’ ‘spiking’) that could create an excessive liability for the system. By Jan. 1, 2014, the board should provide to the Legislature recommendations to address such practices administratively or statutorily.
“While PEER finds no improper actions on the part of the current PERS board, to improve the public’s confidence regarding the objectivity of the board in making decisions that affect the system, the Legislature should amend MISS. CODE ANN. Section 25-11-15 (1972) to revise the board’s composition as follows:
• change one of the two system member positions provided for in subsection (c) (i.e., state employee members) and one of the two positions of a member receiving a retirement allowance as provided for in subsection (f) (i. e., retiree members); and,
• replace these two members with individuals who are not members or retirees of the system, one appointed by the governor and one appointed by the lieutenant governor. In making such appointments, the governor and lieutenant Governor should give preference to individuals with expertise in investments or financial management.
“Also, the Legislature should amend subsection (b) of MISS. CODE ANN. Section 25-11-15 (1972) to state that in making this appointment (i.e., the gubernatorial appointment currently required by law), the governor should give preference to an individual with expertise in investments or financial management.”