Gov. Schweitzer unveils plan to fix PERS & TRS
Governor Schweitzer has unveiled a new plan to do what must be done to eliminate unfunded liability in the Teachers' and Public Employees' Retirement Systems.
“We affirm our choice to climb on board the governor's plan or some close approximation and save our public employee pension plans,” said MEA-MFT President Eric Feaver. “We refuse to surrender to the likes of politicians Dave Lewis and Rick Hill.”
(See additional quotes by Feaver in the two articles below.)
Governor unveils pension fix plan
By MIKE DENNISON IR State Bureau | Wednesday, April 11, 2012
Gov. Brian Schweitzer Tuesday unveiled his proposal to fix Montana’s troubled pension funds for 78,000 public employees, teachers and retirees, with a mix of cash infusions and increased payments by workers and employers.
Schweitzer said his plan, if adopted by the 2013 Legislature, would erase a combined $3.4 billion in long-range “unfunded liability” in the two major public retirement systems in five to eight years.
“We will fix it without raising taxes — not one penny of new taxes,” he said at a Capitol news conference. “We adopt this plan, we’ll be the first among the states in fixing pension liability.”
Schweitzer, whose final term as governor ends in less than eight months, said he presented a plan now so he could explain it to the public and garner support among those affected by the pension fund and legislators who must adopt it.
Schweitzer’s plan would require workers covered by the Teachers Retirement System and Public Employees Retirement System to increase their contribution by a percentage point, to 8.15 percent for TRS and 7.9 percent for PERS.
School districts would contribute a lump sum of $14.7 million to TRS, while a state lands account would kick in another $25 million.
For PERS, the state and local governments would pay a lump sum of $18.1 million and also increase their payroll contribution for employees by one percentage point.
The governor said the state can cover the payments without raising taxes, and that local governments should be able to do the same. PERS covers not only state workers, but also county and city workers.
TRS covers about 18,500 workers and pays benefits to nearly 13,000 retirees. PERS covers 28,700 workers and pays pensions to 18,000 retirees.
Eric Feaver, the leader of the state’s largest public-sector union, said Tuesday it supports the proposal, which resembles what the union has been talking about for some time.
“The governor is on the right track,” said Feaver, president of MEA-MFT, which represents teachers and some state and local government workers.
Rep. Pat Ingraham, R-Thompson Falls, who chairs the State Administration and Veterans Affairs Interim Committee, said she looks forward to hearing about the plan, because the panel has done little to develop its own proposal.
The bipartisan panel advanced a major pension-fund reform bill in 2011, but Schweitzer vetoed the bill after it was passed by the Legislature, with Democrats opposing it. The bill would have created a new, hybrid pension plan for new hires covered by TRS, tied to the amount of contributions by the employee and a matching amount from TRS.
“We only have three meetings left; we’ve not come up with anything at this point,” she said. “We’ve sort of been waiting to see what the stakeholders were going to bring forth, for us to consider.”
Sen. Dave Lewis, R-Helena, who last year sponsored a bill requiring new hires under the PERS system to have a 401(k)-style retirement plan rather than a pension, said Tuesday he plans to introduce the same bill in 2013. His bill died during the legislative process.
“We have to stop the bleeding,” he said. “We’ve got to shut off the defined-benefit (pension) plan and go to a defined-contribution plan.”
Schweitzer, however, said he’s very much opposed to a defined-contribution plan, because it would make the pension funds even less stable and make future retirees entirely dependent on their own investment decisions and Wall Street.
Hill Pans Plan - Bullock Sees Merit
Matt Gouras - Associated Press - April 10, 2012
HELENA, Mont. — Gov. Brian Schweitzer proposed an aggressive public pension fix Tuesday, a plan that comes as he nears the end of his term and one that faces a very uncertain future when it goes to his successor and the Legislature next year for potential implementation.
Key aspects of the proposal met with immediate criticism from a leading Republican candidate to replace Schweitzer. The leading Democrat was more receptive.
The projected shortfall for the state's government worker pension system exceeds $3 billion over the next 30 years. Lawmakers are currently discussing potential fixes in an interim committee but have not identified any solutions.
Schweitzer's plan calls for employees and their public employers to each increase their contributions an additional 1 percent of the salary paid. His plan would also funnel some revenue from natural resource development into the pensions, and require local governments to kick in more for their employees as well.
Schweitzer said he expects local governments and school districts to pay their share out of current revenues and without raising taxes.
"This is a very deep hole," Schweitzer said. "And you cannot continue to look the other way."
An influential union leader, Eric Feaver of MEA-MFT, said employees would agree to pay more to fix the problem.
"We can do this quickly, and it is fair," Feaver said.
Schweitzer leaves office in December. Republicans hold large majorities in the Legislature, and very possibly could control it again after November's elections. In the past, the GOP has been hostile to the governor's proposals and critical of several moves he has made since the Legislature adjourned last year.
The Democratic governor thinks the problem is so large that lawmakers will support it.
"I don't think they have another choice," Schweitzer said. "You can't continue to kick the can down the road."
Schweitzer argued the Montana Constitution requires the state to ensure the pensions are sound.
Many Republicans hope to take away the pension for new government employees and replace it with what is known as a defined contribution plan, similar to a 401K in the private sector.
Schweitzer beat back the idea, saying it is not fair to turn public employee retirements over to "the sharks on Wall Street."
"I don't trust Wall Street," the governor said. "They are good at putting money in their own pockets."
Rick Hill, a former congressman who has been topping a crowded Republican field for governor in fundraising, said he disagrees with the portion of the plan that earmarks increased revenue from natural resource development to fix the problem. He said it should be used as part of a plan that aims to reduce local property taxes.
"Government employees should not have benefits more generous than those offered in the private sector, but the governor's plan would provide excessively generous pension benefits for eternity," Hill said in a statement. "New government employees should have a defined contribution plan similar to those in the private market place and reform should include a shared responsibility between the employer and employees."
Attorney General Steve Bullock, the presumptive Democratic nominee aiming to replace Schweitzer, will review the governor's offering. Schweitzer said he would be talking to Bullock about it more. Like the governor, Bullock laid blame on pension decisions that preceded Schweitzer.
"Gov. Schweitzer is proposing responsible fixes to the big problems we face, and he's proposing to do so without raising taxes," Bullock spokesman Kevin O'Brien said. "Steve is reviewing the plan and looks forward to discussing it in detail with the Governor."