Late Sunday night, Representative Brad Mayo (R-Oxford) sent out an email to his constituents trying to save face on some of his recent actions in Jackson. One of the issues covered is House Bill 486, which dramatically alters PERS and how it funds itself. What Mayo wrote can be found below (Bold is editorial notation of Cottonmouth):
As many of you have seen, I have introduced House Bill 486 - which would allow employees to opt-out of our PERS system. I know it is the source of much worry for many of you (and PERS members around the state). In no way am I trying to undermine the PERS system. If such a consequence is shown to be the case, I will seek to accordingly alter or kill the bill. However, I would like to explain the genesis of this bill and how it may work. I was asked by younger state employees (with families) and by prospective employees about devising a method of retirement planning that did not tie up 9% of their salary. These employees do not expect to make a career of state service and would like to plan for retirement while stretching their paychecks. Thus, we have developed a plan similar to our university system's Optional Retirement Plan (ORP). It would allow a new employee to allocate a pre-determined percentage of their income (up to 9%) that would be placed in the state's existing Deferred Compensation Program and matched by the employer. The employer would then contribute an additional 2.5% to PERS' accrued liability fund. Thus, the employee would have no claim to any PERS funds, but would be contributing 2.5%. Money would go in, but not come out. This should very slightly (depending upon utilization) increase PERS funding levels (assets/liabilities). There is also a provision for existing employees to roll out of the system, but it is quite punitive. Should an existing employee opt to leave PERS for Deferred Comp, they would only be entitled to rollover their contributions, not their employer's or the earnings. Depending upon their years of service, this would allow them to rollover somewhere between 30 and 40% of their account value. That is not a very good deal for anyone with substantial service and any rollover would improve PERS overall funding levels (by losing a small amount of assets, but forgoing all corresponding liability). I have asked for projections on how this might affect PERS.I have used bold in various parts of this explanation to point out how many times Rep. Mayo treats this bill as a hypothetical scenario. May work? I have asked? The Mississippi State House of Representatives is not a think tank. This is not a thesis. It is a bill with real life consequences from a Representative of a district that is home to the state's flagship university. So many of the people in his district wouldn't make it without this retirement system.
Out of fairness, I have not changed Rep. Mayo's explanation in any way aside from the bold. But even his explanation doesn't offer any reason to believe that this won't drastically alter PERS as we know it.