Local officials breath easier as PERS increase postponed
Published 12:00 pm Monday, February 20, 2023
- Generic meridian city hall
Meridian and Lauderdale County officials are breathing a sigh of relief after a mandatory increase in the employer’s contribution to the state retirement system was postponed another year.
The Public Employees’ Retirement System Board of Trustees voted in December to increase the amount employers pay into the retirement fund from 17.4% to 22.4% effective Oct. 1, 2023. The move would have cost state and local governments more than $300 million each year.
After a strong backlash from government leaders, and a now-dead House Bill 605, which would have given the legislature and not the PERS board final say over future increases, the Board of Trustees is expected to postpone the increase until July 1, 2024.
In a Feb. 13 council of governments meeting at Meridian Community College, elected and appointed leaders applauded the postponement as it gives local entities more time to plan.
Meridian City Councilman George Thomas had previously tasked the city’s finance team to come up with some numbers as to what the increase might cost, and Chief Financial Officer Brandye Latimer reported the 5% increase would make payroll costs rise by an additional $1.1 million each year.
Meridian Community College President Dr. Thomas Huebner said the college was looking at an additional $800,000 in costs.
County Administrator Chris Lafferty said Lauderdale County would also see payroll costs sharply increase. A rough estimate, he said, would be around $2 million annually.
The PERS increase comes as more government employees reach retirement age and begin drawing from the system, while fewer people are paying into the plan. Lower than expected return on investment and inflation also contributed to the issue.
An estimate from the PERS five-year strategic plan showed the retirement system is on track to have just 67.6% of its obligations funded by 2047. A healthy system should be around 80%.
While the increase is postponed, it will still go into effect after the July 2024 deadline. Local officials will have to keep the increase in mind as they make plans for the future.
