Committee Reports 39 Public Pensions Underfunded

Nearly 40 local and statewide pension systems for public employees are underfunded, according to a report submitted on Tuesday to the Missouri legislature’s Joint Committee on Public Employee Retirement (JCPER). The report is a detailed “watch list” that focuses on pension programs that have less than 70 percent of outstanding obligations (payments to retired employees) available.

The number of public pensions that fall below the committee’s threshold more than doubled this year, from 19 in 2008 to 39 in 2009, said JCPER Executive Director Ronda Stegmann. Three statewide pension plans appeared for the first time on the committee’s watch list:

• The Missouri State Employee Retirement System (MOSERS), the pension fund for most state employees, including elected officials, is funded at 66 percent, with an investment loss of 19.32 percent
• The Public Education Employee Retirement System (PEERS), the pension fund for non-certificated public school employees, is funded at 61 percent, with an investment loss of 19.1 percent
• The Public School Retirement System of Missouri (PSRS), the pension fund for public school teachers and other certified school employees, is funded at 60 percent, with an investment loss of 19.55 percent

Despite the dire numbers, the committee’s watch list may just be that. While some critics have suggested in the past that public pensions are suffering because plans promise a defined set of benefits instead of taking in a defined set of contributions and doling out the earnings to retirees, the committee blamed the across-the-board losses to the current economic recession.

“Does inclusion on the watch list automatically mean that the benefit structure should be changed in some way?” asked Patricia Yaeger (D-Saint Louis).

“No,” Stegmann replied. “We certainly are not suggesting any impropriety.”

Some committee members even suggested that the funds may have bounced back a bit recently.

Committee Chairman Ward Franz (R-West Plains) said that his own retirement fund increased in value by about 18 percent during the last quarter, and asked whether that could be the case for some of the public pension plans.

“I believe that many of the plans have received double-digit investment growth,” Stegmann said.

The committee’s report, available for the first time online, can be read here.