The Mississippi House’s proposed changes to the state retirement system would cost $1.25 billion over the next three decades and $175 million immediately to keep the program stable, according to state actuaries.
With a handful of pricey policies still being negotiated in the final weeks of the session, Senate leaders — who have pitched a plan to spend $1 billion on the retirement system over 10 years — say the House’s plan costs too much for too little payoff.
“I can’t see where you can spend more money than what we’re spending,” said Sen. Daniel Sparks, a Republican from Belmont who’s behind the Senate’s retirement proposals. “I don’t see where the money’s coming from.”
The retirement system has unfunded liabilities of $26 billion. The Legislature made sweeping changes to the program last year in an effort to shore up the system, including creating a new plan with fewer benefits for people hired after March of this year.
Critics say that the new retirement plan will discourage people from taking state jobs. They say many employees stay in what can be relatively low-paying jobs for robust retirement benefits at the end of their years of service.
As a result, both chambers have pitched plans this year that would “correct” last year’s changes to the Mississippi Public Employees’ Retirement System, which covers about 350,000 public employees or retirees and represents about 10% of the state’s population.
“We can afford anything we want to afford,” said House Education Committee Chairman Rob Roberson, a Republican from Starkville. “You do what you have to do to retain good people. If you don’t have a good pay or retirement structure you’re not going to keep good people.”
The House’s plan, included in a nearly 500-page teacher pay raise bill, would tweak retirement benefits and eligibility for first responders and people hired to state jobs after March 1 of this year — a new category called “Tier 5” — and makes changes to the state’s return-to-work policies.
A memo from the state Legislative Budget Office shows that analysts requested a breakdown of the fiscal impact of the House retirement plan earlier this month.
The House plan would bring retirement eligibility for first responders who entered the system prior to March 1 back down from 35 years to 25 years of service or age 60 with 8 years of service. All first responders in Tier 5, hired after March 1, would be able to retire after the same years of service and age with their four highest consecutive years or earned compensation.
Other state employees would also be able to retire with their four highest consecutive years of compensation at 30 years of service or age 60 with 8 years of service.
Additionally, retirees would be able to return to work after a 90-day break in service at any district. Roberson said they would still have to contribute to the retirement system, but would not get a benefit for that contribution.
In contrast, the Senate’s proposals would infuse the state retirement system with $1 billion over 10 years, starting with $500 million this July, and add an additional $50 million a year over 10 years for cost-of-living increases.
The Senate plan would also bring down the years of service required to retire with full benefits from 35 to 30 for all state employees hired after March 1 and allow most people to return to a state job at up to 80% of their position’s salary and get insurance benefits.
“Our billion actually lowers the liabilities,” Sparks said. “Their money keeps the liabilities at the same level … The money we’re putting in stabilizes the entire system.”
The chambers have invited negotiations on each other’s plans as of Tuesday.
“I get what Senator Sparks is saying,” Roberson said. “I don’t disagree with his assessment … but for the state of Mississippi to grow, we have to understand that we have to pay people the amount that nationally we’re competing with, and part of that pay structure is retirement.”
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