By Ted Carter
The head of the Mississippi Retired Public Employees Association says several legislators have warned him that Gov. Haley Barbour will work after he leaves office to alter the benefits structure of the state’s $20 billion public employers retirement system.
Specifically, Barbour will lobby for curbs on retiree cost-of-living increases and will push for conversion of Public Employees Retirement System of Mississippi pensions to a defined contribution plan similar to 401Ks popular in the private sector, said Sam Valentine, president of the Mississippi Retired Public Employees Association, a Brandon-based group that claims about 3,000 paid members.
Laura Hipp, spokeswoman for the governor, said last month that Barbour is taking a hands-off approach to the work of the study commission he created to recommend ways to keep the Public Employees Retirement System of Mississippi, or PERS, afloat without further burdens on taxpayers.
Valentine made his claims at a public hearing Wednesday held by the PERs study commission, a 12-member panel of legislators, state executives and business and civic leaders.
In creating the panel, Barbour cited an “unsustainable” burden on Mississippi taxpayers inching toward $1 billion annually and asked for a close look at altering the retirement benefits awarded current and future public employees in the state.
PERS covers about 248,000 employees of the state, counties, cities and school districts. Employees contribute 9 percent of their pay to the plan and the state 12 percent. The PERS Trust added an additional .93 percent to the employer contribution but legislators put a moratorium on contributing the extra amount until at least Jan. 1.
In creating the panel, Barbour expressly criticized a round of benefits legislators approved in 1999 that enhanced cost of living increases for retirees.
PERS is paying out about $500 million more a year than it takes in. About $409 million of that unfunded portion can be attributed to the formula for setting cost-of-living increases, according to George Schloegel, a banking executive and Gulf port mayor appointed to chair the study commission.
Schloegel gave each speaker at the hearing three minutes to talk.
Valentine, the head of the Retired Public Employees Association, used his time to warn that Barbour is a “superb” lobbyist who will lean on lawmakers to scale back the plan and seek its conversion to a more private-sector style defined contribution plan.
“We know he’s coming after us,” Valentine said.
More than a dozen other speakers used their allotted minutes to urge the study panel to recommend keeping benefits intact, at least for current retirees and employees. They also urged the panel to reject proposals to convert PERS from a defined pension benefit plan to a defined contribution plan by which benefits would not be guaranteed.
Mississippi’s public employee retirement pensions have served as a strong recruitment tool for teachers, health workers and emergency service workers such as firefighters, the speakers said.
The study commission has hired GRS Actuarial and Consulting Services of Southfield, Mich., to help with the panel’s audit recommendations and other proposals.
Schloegel said GRS and the panel will scrutinize PERS projections that the system can maintain returns of 8 percent on investments. “We want to know whether that needs to be looked at and challenged,” he said.
Tim Medley, a speaker and principal of Jackson financial advisory firm Medley & Brown, said 8 percent is “ambitious.”
The PERS Trust, the system’s policy board, should have more investment specialists serving on it and PERS itself should have at least “10” investment analysts rather than the single one it now has, Medley said.