Six state legislators – three Republicans and three Democrats – have formed a coalition to address the looming problem of funding the state’s retirement funds for public employees. Five of those legislators were in Billings last week to gather input from city, school and county officials regarding the problems that surround the issue and to hopefully gather support to motivate other political factions to take the matter seriously.
The Montana Teachers Retirement System (MTRS) and the Montana Public Employees Retirement System (MPERS) face $4.5 billion in unfunded liabilities in the future – an obligation for which Montana taxpayers stand ultimately responsible.
Concerned about how the state will meet the obligation and how to mitigate it becoming an ever larger liability, Tom Burnett, (R) Montana House of Representatives, District 6, and Jim Hamilton, (D) Montana House of Representatives, District 61 gathered the support of four other concerned legislators to work jointly to help find solutions.
Last Friday, the legislators met with a wide variety of local financial administrators and human resource directors to explain the problem and to get feedback from their on-the–ground observations. Besides Burnett and Hamilton, both of Bozeman, the other legislators in attendance were Emma Kerr-Carpenter, (D) Billings, House of Representatives, District 49; Bill Mercer, (R) Billings, House of Representatives, District 46. and Matt Regier, (R) Kalispell, House of Representatives, District 4. Absent was Dave Fern, (D) Whitefish, House of Representatives , District 5.
Burnett explained the situation, likening it to a patient with a propensity for heart disease. It’s not a heart attack or a dire need to operate, but it is time to improve the patient’s diet, relieve stress, and do exercise. But it is time to act, said Burnett, “Why would we want to wait for the heart attack?”
While numerous factors impact the soundness of the retirement investment fund, the primary reason the unfunded liability is growing is because the state’s boards that oversee investments have set the expected rate of return on the fund investment higher than what has proven to be realistic. The difference between the interest that is earned and that which was projected, becomes the unfunded liability that must be funded in some manner by the state– ie. the employer – which is required by state law.
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