Mississippi's Proposed Fiscal 2020 Budget Increase Largely for PERS

Mississippi’s Executive Budget Recommendations for Fiscal 2020 Show Increase Largely for PERS

Share this article


The state’s budgetary process, which starts in the summer, is already under way and Gov. Phil Bryant unveiled his $6.266 billion proposed budget for fiscal 2020, which starts July 1st.  That represents a $170 million increase from last year.

The biggest ticket item in the increase is $75 million to cover an increase in taxpayer costs for the state’s defined benefit pension plan.  That represents 44 percent of the budget increase and it will continue for the foreseeable future until real changes are made to the pension system.

The Public Employees’ Retirement System of Mississippi board increased the taxpayer contribution to the state’s retirement fund from 15.75 percent to 17.4 percent in July.  Several projections have the fund not being able to meet its oft-cited goal of being 80 percent funded by 2042 and the employer contribution rate was last increased in October 2012.

State and local employees aren’t going to face any increases in their contributions because of two factors.  The PERS board lacks any non-member taxpayers as part of its membership and the Legislature would likely face a revolt at the ballot box from PERS members if employee contributions were increased.  This would likely be contested in court as it goes against the contractual standard known as the California rule, which says that employees won’t have their benefits diminish while they’re employed.

When was the last bill in the Legislature that concerned PERS?  The last two bills in 2012 and 2013 that would’ve changed PERS by slight degrees didn’t make it out of committee.  It’s the third rail now of Mississippi politics.  Touch it and risk the organized wrath of the Mississippi Retired Public Employees Association.

So taxpayers are and will be left holding the bag for PERS.  The PERS board gives the Legislature cover with its decision and keeps incumbents safe from the wrath of PERS members, both active and retired.  Speaking of PERS members, the active member to retiree ratio was 1.46 at the end of fiscal 2017, according to an April report by the Legislature’s PEER Committee.  This is above the average ratio for other pension plans nationwide.

That ratio was once as high as 2.22 in 2007, which means fewer workers are supporting more retirees.  This demographic trend will only worsen, as the average age of the plan’s members is 44.7 and members with at least 15 years of service represent 27 percent of all state and municipal employees in the PERS system.

Right now, taxpayers don’t have a vote on the board that controls the state’s pension fund.  And with a Legislature unlikely to make any changes to advance the plan’s fiscal position, taxpayers will be paying even more to keep PERS afloat in coming years.


Leave a Comment