Gov. Brian Schweitzer Tuesday unveiled his proposal to fix Montana’s troubled pension funds for 78,000 public employees, teachers and retirees, with a mix of cash infusions and increased payments by workers and employers.
Schweitzer said his plan, if adopted by the 2013 Legislature, would erase a combined $3.4 billion in long-range “unfunded liability” in the two major public retirement systems in five to eight years.
“We will fix it without raising taxes — not one penny of new taxes,” he said at a Capitol news conference. “We adopt this plan, we’ll be the first among the states in fixing pension liability.”
Schweitzer, whose final term as governor ends in less than eight months, said he presented a plan now so he could explain it to the public and garner support among those affected by the pension fund and legislators who must adopt it.
Schweitzer’s plan would require workers covered by the Teachers Retirement System and Public Employees Retirement System to increase their contribution by a percentage point, to 8.15 percent for TRS and 7.9 percent for PERS.
School districts would contribute a lump sum of $14.7 million to TRS, while a state lands account would kick in another $25 million.
For PERS, the state and local governments would pay a lump sum of $18.1 million and also increase their payroll contribution for employees by one
The governor said the state can cover the payments without raising taxes, and that local governments should be able to do the same. PERS covers not only state workers, but also county and city workers.
TRS covers about 18,500 workers and pays benefits to nearly 13,000 retirees. PERS covers 28,700 workers and pays pensions to 18,000 retirees.
Eric Feaver, the leader of the state’s largest public-sector union, said Tuesday it supports the proposal, which resembles what the union has been talking about for some time.
“The governor is on the right track,” said Feaver, president of MEA-MFT, which represents teachers and some state and local government workers.
Rep. Pat Ingraham, R-Thompson Falls, who chairs the State Administration and Veterans Affairs Interim Committee, said she looks forward to hearing about the plan, because the panel has done little to develop its own proposal.
The bipartisan panel advanced a major pension-fund reform bill in 2011, but Schweitzer vetoed the bill after it was passed by the Legislature, with Democrats opposing it. The bill would have created a new, hybrid pension plan for new hires covered by TRS, tied to the amount of contributions by the employee and a matching amount from TRS.
“We only have three meetings left; we’ve not come up with anything at this point,” she said. “We’ve sort of been waiting to see what the stakeholders were going to bring forth, for us to consider.”
Sen. Dave Lewis, R-Helena, who last year sponsored a bill requiring new hires under the PERS system to have a 401(k)-style retirement plan rather than a pension, said Tuesday he plans to introduce the same bill in 2013. His bill died during the legislative process.
“We have to stop the bleeding,” he said. “We’ve got to shut off the defined-benefit (pension) plan and go to a defined-contribution plan.”
Schweitzer, however, said he’s very much opposed to a defined-
contribution plan, because it would make the pension funds even less stable and make future retirees entirely dependent on their own investment decisions and Wall Street.