STARKVILLE — As we saw earlier this month, it’s rather difficult in December to escape the life lessons from Charles Dickens’ “A Christmas Carol” — nor should we.
The Dickens novella confronts greed, foregone generosity, poverty, plenty, class warfare, regret, guilt and ultimately forgiveness and redemption, and it matters little whether Scrooge is played by George C. Scott, a Disney animated Scrooge McDuck, or a Disney CGI Jim Carrey in glorious 3D animation. The story pounds the same message.
Whether adult or child, we all shiver a bit when the Ghost of Jacob Marley tells Scrooge: “I wear the chain I forged in life,” replied the Ghost. “I made it link by link, and yard by yard; I girded it on of my own free will, and of my own free will I wore it. Is its pattern strange to you?”
For state employees in the Public Employees Retirement System, there’s a similar shiver when journalists examine the structural challenges facing the state’s pension system. For several years now, journalists and retirees alike have been nervously observing the very real threats facing PERS in the future if conditions and circumstances do not change — the Ghost of Christmas Yet to Come, if you will.
Founded in 1952, PERS originally provided full retirement benefits to state workers when they had reached full Social Security retirement age. PERS is a system of retirement plans covering all public employees including public school teachers, the state Highway Safety Patrol, municipal employees and state legislators.
Revenue for the PERS system comes from three primary sources — investment income, employer contributions (paid by the taxpayers) and employee contributions (deducted from the pay of state employees participating in the PERS plans).
Former Gov. Haley Barbour appointed a 12-member study commission to evaluate PERS and recommend improvements that would streamline its organization and funding mechanisms.
That action came in the wake of 2010 changes to the system by the Legislature that saw employee contributions raised from 7.25 percent to 9 percent, retirement eligibility increased from 25 to 30 years for individuals hired on or after July 1, 2011, and the overall benefit formula reduced for individuals hired on or after July 1, 2011.
PERS officials are quick to point out that Mississippi’s pension system is not in “crisis” at this time and that’s true. But our state’s share of the national economic problem of low rates of return on pension system investments and a growing imbalance in the number of retired employees drawing cash out of the system as opposed to the number of workers paying into the system are combining to produce conditions that are likely to produce a crisis.
The bad news? There are few decisions that confront Mississippi lawmakers and executive branch official alike more than changes to the PERS system or even the perception of changes to the system.
Actuarial assumptions project investment growth of 7.75 percent annually in an average year. The last two years, that growth has been 3.4 percent and 2.1 percent. That’s not sustainable in the long term.
Politically, asking the more than 30,000 state employees to pay a higher percentage than the current 15.75 percent is problematic for lawmakers just as it asking state taxpayers to pay for it. Nationally, Mississippi isn’t out of line with the rest of the country.
Public pension plans nationally were only 74 percent funded in 2015 with more than $1 trillion in unfunded liabilities.
The very real political ghosts of Christmas yet to come for Mississippi’s public pension system is likely higher contributions for employees and employers alike unless the economy jumpstarts dramatically and market returns increase just as dramatically.
Mississippi’s pension problems are exacerbated by declining state revenues overall weighed against major transportation infrastructure needs and the familiar struggles to fund public education at all levels and public health care in the poorest state in the union.
Bah humbug! Indeed. But Scrooge wakes up from his fictional nightmare. Public pension nightmares like those faced by a growing number of states won’t end so easily.
Sid Salter is a contributing columnist. Contact him at email@example.com.