July 04, 2012 - Reps. Marsha Haefner and Cloria Brown said the Public School Retirement System, or PSRS, has a numbers problem and needs to be changed.
Haefner, R-Oakville, told the roughly 40 people who attended a town-hall meeting at the Cliff Cave Branch County Library last week the current PSRS system is "unsustainable."
"We have about 68,000 teachers in the state of Missouri who are currently teaching and adding to that fund. We have, I believe, 56,000, plus or minus, people receiving retirement benefits from that fund," Haefner said. "So just right there, do the math, and you can figure out that the money that's in the pot for retirement is going to run out very quickly."
PSRS and the Public Education Employee Retirement System, or PEERS, are retirement plans for certified and classified public education employees.
Under the current system, PSRS and PEERS members and school districts contribute to the funds. PSRS contribution rates for educators and school districts are 14.5 percent for the 2012-2013 school year, the same as last school year.
Similarly, PEERS contribution rates did not increase. School districts and employees both contribute 6.86 percent.
The PSRS funding ratio — actuarial value of assets divided by actuarial accrued liability — was 85.5 percent in 2011. The 2011 PEERS funding ratio was 85.3 percent.
Brown, R-Lemay, vice chair of the House Retirement Committee, said PSRS is "managed by people who say there is no problem."
"The teachers sit there and they believe there is no problem," she said. "There is a problem. It is not a problem that is going to happen today or tomorrow."
Legislators, according to Haefner, have been trying to work with PSRS representatives to come to an agreement that will work for retired teachers and taxpayers.
"What I would like to see is an agreement from this system saying that if this is what they want to continue doing, they will let the state taxpayers off the hook if their calculations are not what they say that they are," Haefner said.
Brown said she spoke with Steve Yoakum, PSRS/PEERS executive director, last year, and he told her "they were looking into a second-tier system."
"... New teachers coming in, instead of coming in and putting in 14.5 percent of their salary with the taxpayer having to match 14.5 percent, that maybe they would go to like a 7-percent tier ...," Brown said.
The PSRS/PEERS Board of Trustees last August approved a funding stabilization policy that "provides an annual 2-percent cost-of-living adjustment to retirees when inflation is between 0 percent and 5 percent ... (and) utilizes a 30-year amortization period with the goal of paying off the unfunded accrued liability and becoming 100-percent pre-funded within that time period," according to the PSRS/PEERS website.
Legislators tried to enact that policy into law, according to Brown, but the bill, Senate Bill 842, did not leave the Senate. Sen. John Lamping, R-Ladue, introduced SB 842, which would have implemented "a 30-year amortization period beginning with the 2011-2012 school year to pay off the unfunded actuarial accrued liability or until the system becomes 100-percent funded."
The bill also stated, "The level rate of contribution for a fiscal year cannot exceed the level rate of contribution for the prior fiscal year by more than one-half percent for PSRS or one-quarter percent for PEERS."
A report from the Committee on Legislative Research Oversight Division states PSRS/PEERS officials assume the "proposal requires the contribution rate to be fixed at the current contribution level for 2011-2012 until the PSRS/PEERS funded ratio is 100 percent."
PSRS/PEERS posted on its website, www.psrsmo.org, that it is happy to report "no legislation passed impacting the retirement benefits" of its members or retirees.
"This effort was accomplished by the involvement of education associations, retired and active members contacting their legislators, and our legislative team, who spent many hours walking the floors of the Capitol and monitoring numerous hearings and floor debates," the website stated.
Neither Haefner nor Brown introduced legislation regarding PSRS/PEERS. However, Haefner said that does mean she does not have "any political will or courage."
"I said two years ago when I ran for this office for the first time the (public education retirement) system is broken," she said. "We need to come together, the teachers and the legislators, to find a solution. We work every day on trying to find that middle ground. But because I don't have a bill, one of 1,800 bills this session, doesn't mean I lack will or courage."
Additionally, Brown questioned how she would introduce a bill when she does not know the answer to the problem.
"I can't write a bill that says, 'Do this, this and this,' if I don't know what the answer is," Brown said.
Mehlville Board of Education member Rich Franz told the Call if Brown, Haefner and Sen. Lembke, R-Lemay, who attended the June 28 town-hall meeting, are committed to addressing the PSRS/PEERS situation, their commitment should have been noticeable through media attention given to legislation they introduced.
"(Rep. Haefner) said she did not introduce any legislation," Franz said. "I simply want our state legislators to put this issue before politics because, as Rep. Haefner pointed out herself, it's a problem that's not going to go away and it cannot be ignored."
Yoakum was unavailable for comment before the Call went to press.