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! URGENT ! - Pension Bill Support


Posted Date: 
February 20, 2013
Contact: 
Sheryl Wood, Associate Director, Montana Association of Counties

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The MACo membership has provided staff with guiding principles over the past year, in regards to being part of the solution towards addressing the significant actuarially unfunded status of the Montana Public Employee Retirement Systems:

  1. Employer increases should be small, incremental, predictable and budgetable amounts to minimize fiscal impacts to county budgets or inhibit the ability of counties to fund essential services;
  2. “Triggers” (increases or decreases in contribution rates) should be equitable among employers and employees;
  3.  There should be a standardized benefit plan with no further “tiering” of the systems (i.e., increased costs and/or reduced benefits for new hires only, or changing to a new plan).

The MACo membership also adopted an official policy statement: “MACo supports efforts to implement pension reform policies to provide equitable long term funding and member benefit stability for the Montana Public Employees Retirement Systems affecting county employees, to achieve and maintain solvency and actuarial soundness and equity among beneficiaries and contributors to the systems.”

MACo has been closely monitoring the status of our Retirement Systems throughout the interim and this legislative session, as well as all proposed bills offering possible solutions. 

House Bill 454, sponsored by Rep. Bill McChesney, will be heard Thursday, February 21 at 8:30 a.m. in the House Joint Select Committee on Pensions.  This bill was requested by the Office of Budget and Program Planning on behalf of Governor Bullock, and addresses the Public Employees Retirement System Defined Benefit Plan funding shortfall.  This is possibly the most important bill for Counties this session regarding funding the pension systems! The time has come to ask for your involvement and support.  This will be our ONLY opportunity in this Committee to comment.  If the Committee approves passage of this bill – it goes straight to the House floor.

This bill contains the following components:

  1. Provides for a 1% one-time only employee contribution increase.
    Note:  HB 454 contains a severability clause so should the employee increase be challenged in court and found unconstitutional, the remainder of the bill remains intact.
  2. Provides for a 1% one-time only employer contribution increase;
  3. Provides an equitable trigger:  If the retirement system is funded to achieve actuarial soundness within 25 years, both the employer and the employee contribution rates are reduced;
  4. Applies 1% of employer contributions to the Public Employees Retirement System Defined Contribution plan to the PERS Defined Benefit Plan Unfunded Liability;
  5. Appropriates up to $21 million of unallocated Interest Income from the Coal Tax Severance Tax to the  Public Employee Retirement System defined benefit plan trust fund;
    Note:  This will appropriate unspent interest into the Permanent Fund, and WILL NOT affect the base amounts for TSEP Grants or Renewable Resource Grants and Loans. All funding for TSEP Projects, Grants and Loans remains intact!
  6. Amends the termination date for the transfer of certain money from the coal severance tax bond fund to the Treasure State Endowment Fund and the Treasure State Endowment Regional Water System Fund;
    Note:  These funds could not be transferred without amending the statutory sunset dates.  The dates are being changed from 2020 to 2016 to authorize the fund transfers.

As most of you know, the new GASB regulations will require counties to post their portion of the pension system unfunded liability on their financial statements as of 2015.  As of June 30, 2012, the county portion of that liability was approximately $330 million for the PERS Defined Benefit Plan. 

Preliminary estimates show that the the appropriated interest income combined with the 1% employee contribution increase and the 1% employer contribution increase will add approximately $62 million per year into the system to help achieve actuarial soundness within 30 years, as required per the Montana Constitution.

The members of the House Joint Select Committee on Pensions, and the counties they represent, are:

Dave Lewis, Chair

Senate District 42

Lewis and Clark, Powell, Meagher, Broadwater, Wheatland, and Golden Valley Counties

Rob Cook, Vice Chair

House District 27

Glacier, Toole, and Pondera Counties

Ron Arthun

Senate District 31

Sweet Grass and Park Counties

Joanne Blyton

House District 59

Carbon County

Tom Facey

Senate District 48

Missoula County

Carl Glimm

House District 6

Flathead County

Larry Jent

Senate District 32

Gallatin County

Bill McChesney

House District 40

Custer County

Keith Regier

House District 5

Flathead County

Scott Sales

Senate District 34

Broadwater & Gallatin Counties

Kathy Swanson

House District 86

Granite and Deer Lodge Counties

Chas Vincent

Senate District 1

Lincoln

For the hearing on Thursday,  if your Senator or Representative is on the Committee, please contact them and urge their support for HB 454, as this bill:

Provides a significant source of funding to pay down the liability, without shifting the cost to local governments;

Protects county budgets by providing for a small, incremental, budgetable one-time only employer increase, with a built in trigger for possible reduction in the future;

Does not change benefits for current or new hires and maintains equality in benefit structures;

Sustains a system that has been in place and working to provide essential retirement benefits to our employees for over 60 years;

Does not propose changing to a new plan, or closing the current plan; and

Protects county financial statements by reducing the liability that will need to be posted in 2015.

In appreciation of, and respect for, the Committee’s work and time, we would like to request that Association representatives/lobbyists speak on behalf of their membership, and not flood the room with proponents.  They have two large bills being heard that day, and only about 2 hours to get through them.  However you are always welcome and encouraged to attend.  We do not anticipate any opposition to this bill, but we need all County Elected Official Associations represented at this hearing.  Your Association and/or county legislative representatives are being forwarded this email – so please contact them to offer support on your behalf.

For those counties who do not have members on the Committee, please contact your Representative and Senators and ask for their support of HB 454 both in the Committee and on the floor.

Feel free to contact me if you have any questions, and thank you all for your support of the work we do!

Additional Information: 
Sheryl Wood | (406) 449-4360 | swood@mtcounties.org