Ask the PBA

To the previous posts.

I can read your frustrations, but here are a couple of things to consider.

First, the teacher pay proposal was made by the Governor not the Legislature. It remains to be seen if that will make it into the legislative budget, but from what I have noticed that proposal has not received a warm welcome.

The legislature is going to debate the costs associated with FRS during this session. Whether we like it or not, pension costs are a salient topic.

They are also discussing the state's portion of the FRS unfunded actuarial liability (UAL) which they should do. That cost is roughly $500 million. The larger that UAL grows the more strains are placed on pension payments down the road. It remains to be seen if they will require local employers to pay more towards the UAL.

Pay raises are a completely separate topic. One that both chambers are also going to work on.

Remember what I have said before - this process requires patience. It ebbs and flows. We have 59 days left.

Matt,

Imo the legislature may have the responsibility to deal with that 500 million FRS difference but it should be all the participants that have to shore it up not just from state coffers when the counties have more people in the program than the state has. Thinking like that is probably one reason the state people are so underpaid compared to the county employed people.

Also where is Weatherford getting these savings numbers from with converting new hires all to investment plan ? My guess is it is the savings they would get by that loophole they are using now so employers are paying less into the investment plan employees than they are the pension plan employees. Do you know ?

Thanks

[Matt Puckett]

To the previous posts.

I can read your frustrations, but here are a couple of things to consider.

First, the teacher pay proposal was made by the Governor not the Legislature. It remains to be seen if that will make it into the legislative budget, but from what I have noticed that proposal has not received a warm welcome.

The legislature is going to debate the costs associated with FRS during this session. Whether we like it or not, pension costs are a salient topic.

They are also discussing the state's portion of the FRS unfunded actuarial liability (UAL) which they should do. That cost is roughly $500 million. The larger that UAL grows the more strains are placed on pension payments down the road. It remains to be seen if they will require local employers to pay more towards the UAL.

Pay raises are a completely separate topic. One that both chambers are also going to work on.

Remember what I have said before - this process requires patience. It ebbs and flows. We have 59 days left.

Matt,

Imo the legislature may have the responsibility to deal with that 500 million FRS difference but it should be all the participants that have to shore it up not just from state coffers when the counties have more people in the program than the state has. Thinking like that is probably one reason the state people are so underpaid compared to the county employed people.

Also where is Weatherford getting these savings numbers from with converting new hires all to investment plan ? My guess is it is the savings they would get by that loophole they are using now so employers are paying less into the investment plan employees than they are the pension plan employees. Do you know ?

Thanks

I agree it is all employers' responsibility, but it is more complicated than you think. The $500 million is the state's portion. The local employers will have to pay off the remaining portions which usually requires an increase to the UAL contribution. The state is just paying a chunk this year, because the UAL has not been properly funded for a few years. Remember the Legislature sets the rates by statute so the employers only pay what is required by law.

The savings are linked to one scenario of the actuarial study just completed.

The lower rate employers are paying to investment plan members is not a loophole. The law requires a uniform blended rate to pay for pension and investment plan contributions which is based on the total costs to fund the system. The changes from 2011 lowered those costs.

After the session ends and we all get screwed AGAIN. That's what I'm expected to hear "it's more complicated than what I think".

So how does the state make the local or county agencies pay their portion of the UAL? Do they raise their (employee) contribution levels or make the individual county of municipal govt on the FRS pay their portion outright? I guess by either taxes or higher employee contribution levels.

[Matt Puckett]

After the session ends and we all get screwed AGAIN. That's what I'm expected to hear "it's more complicated than what I think".

Well, it is your choice to believe that outcome. But that is not what I am saying. Nor is that what I am setting you up for in the end.

What I am saying is complicated is method the state must take to pay down the UAL. The UAL for the FRS is over $19 Billion. The state is required to pay roughly 20% of that UAL because of the number of state employee participants. Yet the state legislature also sets the UAL rate so if the local employers are not paying back their fair share - it is because the Legislature did not require them to do it.

[Matt Puckett]

So how does the state make the local or county agencies pay their portion of the UAL? Do they raise their (employee) contribution levels or make the individual county of municipal govt on the FRS pay their portion outright? I guess by either taxes or higher employee contribution levels.

The answer is employers will pay it back through a higher UAL contribution rate which is separate from the normal costs blended rate that is paid by contributions from employers and employees. I suppose someone could argue that requiring an increase to the UAL rate will increase local taxes, but I am not sure that applies to all local governments.

The Legislature is just discussing paying $500 million towards the portion of the UAL that applies to state government.

[Matt Puckett]

Here's this week's Capitol Report
https://www.youtube.com/watch?v=bO0PHf2 ... e=g-user-u

So how does the state make the local or county agencies pay their portion of the UAL? Do they raise their (employee) contribution levels or make the individual county of municipal govt on the FRS pay their portion outright? I guess by either taxes or higher employee contribution levels.

The answer is employers will pay it back through a higher UAL contribution rate which is separate from the normal costs blended rate that is paid by contributions from employers and employees. I suppose someone could argue that requiring an increase to the UAL rate will increase local taxes, but I am not sure that applies to all local governments.

The Legislature is just discussing paying $500 million towards the portion of the UAL that applies to state government.

Not how I read it. Weatherford is saying he wants the state to pay that 500 million this year from the state revenues period this year to shore it up. It will go to the whole FRS fund which is mostly local employees not state employees taking a huge chunk of money that could be used to start addressing our pitiful pay compared to most local officers. Weatherford has not discussed the counties etc. picking up any of that tab this year from what I have heard him say so far and just talks about the state money being used so far.

Here's this week's Capitol Report
https://www.youtube.com/watch?v=bO0PHf2 ... e=g-user-u

Sounds good. Hopefully a decent raise plus a compression raise are secured in the final budget.

[Matt Puckett]

So how does the state make the local or county agencies pay their portion of the UAL? Do they raise their (employee) contribution levels or make the individual county of municipal govt on the FRS pay their portion outright? I guess by either taxes or higher employee contribution levels.

The answer is employers will pay it back through a higher UAL contribution rate which is separate from the normal costs blended rate that is paid by contributions from employers and employees. I suppose someone could argue that requiring an increase to the UAL rate will increase local taxes, but I am not sure that applies to all local governments.

The Legislature is just discussing paying $500 million towards the portion of the UAL that applies to state government.

Not how I read it. Weatherford is saying he wants the state to pay that 500 million this year from the state revenues period this year to shore it up. It will go to the whole FRS fund which is mostly local employees not state employees taking a huge chunk of money that could be used to start addressing our pitiful pay compared to most local officers. Weatherford has not discussed the counties etc. picking up any of that tab this year from what I have heard him say so far and just talks about the state money being used so far.

Key phrase in your comments - from what I have heard him say so far...

Patience. The budget is a huge $ 70 billion appropriation. There are many moving parts and this is just one piece.

Like I have said it is complicated. The Legislature by statute has set the UAL rate low over a number of years which has allowed the UAL to grow. Every employer is required to pay a portion through the UAL rate into the overall system. The state has a portion of around $3.8 billion of the $19 billion so even if it pays $500 million and only requires a modest increase to the UAL rate, it is probably the Legislature's responsibility to do that out of state revenue. The local governments will certainly argue that it is the state's responsibility since it was the legislature's decision to short change it.

We still don't know what will happen until they finalize the budget in May and the governor signs it. That $500 million may come in the form of a chunk which is how I have understood it, or it may be in the form of increased UAL rates to all employers.

Next time I speak with Speaker Weatherford, I will ask him what he intends and then I will post it. Just understand no matter what, it takes agreement from both chambers to get it done. And it could change. Patience.