Montana lawmakers looking at possible changes to state pension systems

HELENA — Montana’s unfunded pension legal responsibility has been a subject of debate for years on the state Legislature. Now, a pair of payments geared toward lowering that legal responsibility have handed the Home and are into consideration within the Senate.

On Monday, the Senate Finance and Claims Committee held hearings on Home Payments 226 and 569, each sponsored by Rep. Terry Moore, R-Billings.

“I would like to see the state not have that long-term legal responsibility bearing down on our kids and grandchildren as a generational debt,” Moore informed MTN.

Collectively, the 2 payments search to scale back the “amortization interval” for 4 of Montana’s public pension programs – the size of time required to repay the legal responsibility.

“Throughout the state, it is costing us about 350 million a yr in misplaced earnings on the unfunded legal responsibility,” Moore stated.

Each payments use a mixture of strategies: growing required contributions by public employers, investing state cash and making coverage adjustments for future workers.

“We will take this dialog away from the Legislature and the agony of what to do or what to not do,” stated Moore. “It places us in a path of decision on these explicit plans.”

HB 226 applies to the Public Worker Retirement System, the biggest state pension system. It serves greater than 28,000 energetic members – together with state, native authorities and faculty district workers – and one other 25,000 retirees and beneficiaries.

In response to HB 226, PERS at present has $2.25 billion in unfunded legal responsibility and an amortization interval of 32 years – increased than the utmost 30 years that the system is designed for.

At the moment, employers pay about 9% of their complete payroll for PERS workers into the system. HB 226 would improve that proportion primarily based on an actuarial evaluation of what can be wanted to repay the unfunded legal responsibility. The invoice contains language to make that improve gradual – about 0.5% a yr – and it could put aside $300 million in state funding to cowl the distinction between the actuarially decided fee and the precise fee for the primary few years.

“We’ve requested the state to take part in limiting the publicity of the counties to get us there, and that’s the $300 million,” stated Jason Rittal, deputy director of the Montana Affiliation of Counties. “We’d ask that you just maintain the road laborious on that $300 million assist.”

Leaders with the Montana League of Cities and Cities remained against the invoice even with that help, saying it nonetheless would result in important added prices for municipalities.

HB 226 would additionally make it the default for brand spanking new workers becoming a member of PERS to affix the “outlined contribution plan,” the place the worker assumes the funding danger and alternatives for his or her cash. They’d have the choice to as a substitute choose the “outlined profit plan,” the place workers get a particular pension quantity primarily based on issues like their job and years of service.

At the moment, the outlined profit plan is the default, and workers should choose the outlined contribution plan if they need it. The Montana Federation of Public Staff, the union that represents many PERS members, opposed switching that.

“This impacts individuals who neglect to fill out paperwork – which if you’re 22 has been recognized to occur from time to time,” stated Sarah Piper, MFPE’s director of analysis and bargaining. “At the moment, if somebody forgets to fill it out, they’re positioned within the pension plan, the DB plan. This locations them in a much less safe retirement plan because the default.”

Piper stated about 90% of present workers are within the outlined profit plan, and solely about 10% select outlined contribution.

HB 569 covers three smaller pension programs: the Freeway Patrol Officers’ Retirement System, for Montana Freeway Patrol troopers and supervisors; the Sheriffs’ Retirement System, for county sheriffs, deputies and detention officers and Montana Division of Justice felony investigators; and the Recreation Wardens’ and Peace Officers’ Retirement System, for wardens and a wide range of different state workers, together with corrections officers and Montana College System safety officers.

The invoice would offer $95.6 million in state funds and set up actuarially decided contribution charges for employers to deliver the amortization intervals in these programs to 25 years.

HB 569 would additionally change when newly employed members of the sheriffs’ and freeway patrol programs can start drawing their pensions. At the moment, officers have to work 20 years to be eligible for a retirement profit. The invoice would require they work 20 years and attain the age of fifty.

Throughout Monday’s listening to, numerous regulation enforcement representatives expressed opposition to the change. They stated it is smart for officers to have an earlier retirement as they’re in a bodily and emotionally demanding profession. Additionally they raised issues that, since this added wouldn’t apply to municipal law enforcement officials, it could be tougher for sheriff’s workplaces and MHP to recruit and retain officers.

“I ask that you just permit your regulation enforcement leaders to proceed to have a look at their recruits and inform them, ‘When you give me your 20 greatest – should you serve this group together with your 20 greatest years – we are going to in flip spend money on you and you may draw your retirement,’” stated Gallatin County Undersheriff Jeremy Kopp.

Moore stated the retirement age wouldn’t be modified for the Municipal Police Officers’ Retirement System as a result of they aren’t receiving an infusion of state cash on this invoice. Nevertheless, he stated he expects the state will proceed to have a look at adjustments to the pension programs and will deal with the law enforcement officials’ system as quickly as subsequent legislative session if this invoice goes ahead.

Moore confused that neither invoice would make adjustments to advantages or insurance policies for present public workers or retirees – just for new workers beginning after July. He stated these adjustments are vital steps to make sure the state doesn’t get again right into a place with massive unfunded liabilities once more sooner or later.

“Over the subsequent couple of many years, it should make a distinction,” he stated.

The committee took no quick motion on both invoice.

HB 226 handed the Home final month, 72-25, with a number of Democrats becoming a member of all Republicans in assist. HB 569 handed 62-37, with most Republicans in favor and all Democrats opposed.