Governor should employ political capital on fixing state's broken pension system
There's an old cliché that says if it isn't broke, don't fix it. What if the system is broke and our elected officials refuse to fix it?
That's the situation with the Public Employees' Retirement System of Mississippi, which is the defined benefit pension system for most state, county and municipal employees.
Why is PERS slowly going broke? Here are the main reasons why:
The number of employees paying into the system is shrinking, while the number of retirees is increasing.
PERS allows retirees to receive a cost of living adjustment every year — the so-called 13th check — and that compounds when they reach ages 55 or 60, depending on when they were hired. That added up to more than $559 million in fiscal 2016 and that number has continued to grow.
While the fund still has a benchmark rate of return of 7.75 percent, recent downturns in the economy have actually eaten into the fund's investment seed corn to the point where even a massive, multi-year stock market rally won't wipe away all of the shortfall.
As a result, the funding ratio — which is defined as assets against liabilities — has shrunk from 73.7 percent in 2007 to 60 percent in the last report. That means if all of the plan's debts were called in today (very unlikely), only 60 percent could be paid. The funding ratio is a good snapshot of the financial health of a pension fund and the lower the ratio, the worse off it is.
The problem with fixing PERS is that it has become the third rail of Mississippi politics. Touch it and you're guaranteed to have your electoral life snuffed out at the ballot box by PERS retirees.
Here's where Gov. Phil Bryant can provide leadership. He's repeatedly said he won't run for another elected office. He's already done his last campaign and doesn't have to worry about facing the voters again.
He's the perfect man to lead the fight to reform PERS, not only to stabilize it so what's promised is delivered to retirees, but to ensure that the payees into the system receive something as well. Bryant has high approval numbers and could use his last political capital to achieve a lasting legacy that would be a great service to Mississippi.
The governor wouldn't even have to convene a commission to come up with a solution. Thanks to former Gov. Haley Barbour's 2011 study commission, there is a blueprint to fix the system ready for employment.
The problem is the Legislature. No one wants to do anything but slightly tweak PERS. To do so would be electoral suicide.
When Vicksburg flooded in 2009, it wasn't like a hurricane or tornado with sudden, violent winds. It was a slow, creeping inevitability as the water started to expand out from the river and inundate farms and communities.
The issues with PERS are like that flood. It won't be a quick bit of destruction, but over time, it becomes too late to leave as the water slowly seals off every exit. Fixing PERS is going to be painful, but there is a choice. We can do something now and it won't be as painful to taxpayers and retirees and employees in the PERS system. Or we can wait 20 years and when the plan is on the verge of implosion, it'll be painful for all.
Gov. Bryant is the right man, at the right time, to do something.
Steve Wilson covers state and local government for the Mississippi Independent News Service. You can follow him on Facebook and on Twitter.