The next session of the Montana State Legislature will be facing a really big problem – one that will eventually fall to Montana taxpayers to resolve.
Montana’s retirement funds for teachers and for public employees face a $4.5 billion shortfall. The issue is one that will be a matter of discussion with city and county officials in a series of meetings on Friday being organized by Tom Burnett, (R) Montana House of Representatives, District 6, and Jim Hamilton, (D) Montana House of Representatives, District 61.
The Montana Teachers Retirement System (MTRS) and the Montana Public Employees Retirement System (MPERS) have reached this state of affairs primarily because of overestimating the rate of returns on the state investment fund from which future retirement benefits are paid.
It’s a problem that has been building over time and was ignored in the last state legislative session, but it can’t be ignored any longer, believes Tom McGillvray, who has gathered data regarding the issue. McGillvray is a former Montana House Representative from Billings, and is currently running for the Montana Senate as a Republican.
According to McGillvray, “Doing nothing creates a problem of unfathomable proportion that is not possible to fix within the means of state taxpayers and other needed state services.
Montana taxpayers stand as ultimately liable for the current situation under two aspects of law.
First, Montana has chosen to provide as its system of providing retirement benefits to state employees a “guaranteed retirement pension,” which means that the employer is responsible to fund the benefit no matter what — to “guarantee” it.
Also, Montana’s constitution requires that state pensions be funded on an “actuarially sound basis.” That means that if the system falls short of that requirement, the legislature must increase taxes or transfer money from other programs to make up the short fall.
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