Governor Brian Schweitzer’s office is pitching a new strategy to help fix a growing shortfall in the state’s public employee retirement plans. The plans for teachers and other public employees will need more than $3 billion over the next 30 years to break even. The Governor’s Budget Director spoke Thursday with the committee that would draft legislation to implement this plan.
Bozeman Senator, Democrat Larry Jent says lawmakers are obligated to fix the debt problems of the public employee retirement plans. And it needs to happen soon.
“As a fiscal priority, I would rank pensions as being the number one priority facing the 2013 legislature,” he said.
The Constitution insists these pension plans be financially sound—which they haven’t been for about a decade. And Jent says it’s a moral obligation too, for the nearly 80-thousand Montanans who are either receiving the benefits now or will in the future.
Jent sits on the State Administration and Veteran Affairs Interim Committee. That’s the committee in charge of drafting a bill to address this problem. He approves of the new plan from the Governor’s office.
There are two retirement plans that are being addressed here—the Teacher’s Retirement System and the Public Employee Retirement System. Each plan has its own financial problems and the Governor’s plan addresses each one individually. But they’re similar.
It’s a three pronged approach:
- Increase contributions from Employees.
- Increase contributions from the employers, like schools, local governments, or the state.
- Increase revenue coming from state trust lands.
Villa says this strategy will make the retirement plans solvent again in the coming decades. And he says it all could be accomplished with reserve funds that do exist or should exist at the state and local level.
“We’re not increasing taxes a single cent with our proposal,” Villa said, “and we’re simply asking the local governments do what we’ve done in managing our money and not raising taxes yet still fixing our unfunded liabilities.”
Wilsall Senator, Republican Ron Arthun has problems with that analysis. He’s interested in the proposal, but he says it would not be a pain-free solution. He says some local governments and school districts may have a hard time finding extra cash.
“I’ve talked to many school boards and they are strapped already so I don’t know where the money will come from,” Arthun said, unless that money comes from a local tax increase.
Villa says this plan has been released well in advance of the 2013 Legislature to give local governments and school districts time to weigh in.