The dire prediction about the $2.7-billion Public Employees Retirement System (PERS) came in a report from the state Legislative Fiscal Division that concluded that the $350 million in equity losses between July 2000 and July 2002 have left the program in financial trouble, the Associated Press reported.
However, officials said the severity of the problem – and the exact amount of an employer pension contribution increase – won’t be pinpointed for another year until a state financial analysis is completed. The increase also depends on whether an equity rebound continues into next year. Regardless, report author Greg DeWitt said the fund’s earnings are likely to fall short of the 8%-growth predicted in the last PERS analysis.
DeWitt said a preliminary estimate suggests that the state and other Montana government agencies in the system may have to pay 8.9% of payroll – up from the current 6.9%. For the state, that would mean an $11-million annual increase to nearly $49 million. DeWitt said the hike could be imposed gradually, rather than all at once, to soften the immediate effect on government budgets.
The PERS system has 30,000 active members and 16,000 retirees from state agencies, city and county governments, and school districts.
Montana is far from the only state grappling with pension funding issues with many public funds being hit hard by the bull market (See Wilshire: Public Pension Landscape Still Bleak ).