MS PERS – Deep in the Red

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Bigger Pie Forum | MS PERS – Deep in the Red | BPF
 
The Public Employees’ Retirement System of Mississippi, better known as PERS, is the state’s ailing defined benefit pension program.
Right now, the fund has a $16.6 billion unfunded liability, meaning the contributions of state and municipal employees and income from the plan’s investments aren’t enough to cover present and future benefits for retirees.
To cover that would require three years of all of the state’s tax revenues, which add up to more than $5 billion on average. While the Mississippi Legislature isn’t going to close down the state’s government for three years to fill this hole in the state’s finances, it’s instructive to illustrate the fiscal depths in which the pension system resides.
When compared with other states as just a dollar figure, that number isn’t really that bad. Depending on what methodology you accept, either Pew Charitable Trusts or bond ratings firm Moody’s, Illinois is in a bad spot. Pew lists Illinois’ 2016 pension liability at more than $141 billion, while Moody’s says the state has an unfunded liability of $250 billion.
There is a way to compare the impact of pension debt on a state’s finances, not unlike a golf handicap. That’s to find out the percentage of state revenues it’d take to cover the shortfall.
In the case of Mississippi (301 percent), the state is second to New Jersey, which would need 4.85 years to cover its $168 billion in unfunded pension liabilities.
It’s easy to see why Mississippi and other states are in this predicament. Too much was promised to retirees and overly optimistic predictions on future investment returns allowed them to justify the benefits.
One problem for Mississippi taxpayers is they’re about to pay more through increased employer contributions that was passed in June by the PERS board.
This could add up to $87 million in increased outlays

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