The Senate voted 38-7 Tuesday to prevent the board that governs the state’s public employee pension plan from increasing the rates government agencies pay to fund the system.

But in passing the legislation, Senate leaders, including Appropriations Chairman Briggs Hopson, R-Vicksburg, told the Senate they supported providing state money to improve the long-term financial viability of the Public Employees Retirement System.

Under current state law, the board that governors PERS can act unilaterally to increase the amount employers, such as state agencies, city and county governments and education entities, contribute to PERS.

But the Senate proposal would give the Legislature the final authority on whether to impose the rate increases.

The financial issues surrounding PERS have come to the forefront this session after its board voted to increase by 5% over a three-year period the amount government entities contribute toward the paycheck of each employee. Various agencies, especially city and county governments, complained they could not afford the increase that would require them to raise taxes and-or cut services.

In response to the increase the PERS board approved, the House proposed to suspend the increase and to dissolve the board. The board, composed primarily of people elected by current public employees and retirees, would be replaced primarily by members appointed by the governor and lieutenant governor under the House plan.

The Senate killed the House plan much to the consternation of the House leaders. But on Tuesday the Senate amended a House bill designed to allow certain retired members to go back to work and continue to draw their retirement. The Senate amendment gives the board the authority to make a recommendation to the Legislature on increasing the employer contribution rate.

The PERS board under the new Senate proposal also would be required to include an analysis by its actuary and two independent actuaries on the reason the increase was needed and the impact the increase would have on governmental entities.

When passing the amendment, which now goes back to House, Senate Accountability, Efficiency, Transparency Chair David Parker, R-Southaven, said the Legislature also should infuse cash into PERS this session to help improve its long-term financial outlook.

But Parker said that infusion of cash would have to be done through an appropriations bill later in the process.

“I agree with the concept we need to put a significant amount of funds into the system this year,” Senate Appropriations Chair Hopson told his fellow senators during debate.

The 2% increase in the employer contribution rate that the PERS Board intends to enact on July 1 unless blocked by the Legislature would cost about $150 million cumulatively for local governments, education entities and state agencies, Parker said. An additional 3% increase would be enacted over the next two years unless blocked by the Legislature.

READ MORE: Public retirement system debate may not be dead yet this session

A small bipartisan group of senators voted against the proposal on Tuesday. They objected to taking away the PERS board’s authority to increase the employer contribution rate unilaterally and also expressed concern that the House would not agree to a Senate proposal to pump additional funds into the program.

After the Senate action, PERS Executive Director Ray Higgins, said, “We are aware of recent legislative developments and are monitoring closely. PERS is a very important system to so many, and additional funding in some manner is necessary for the long-term needs of the plan. We look forward to continued work with the Legislature on this important topic.”

Former Insurance Commissioner George Dale, who is a member of the PERS board elected by the retirees, said, “There has not been enough dialog between the board and the Legislature on what needs to be done to preserve the pension funds for Mississippi public retirees.”

Dale stressed that PERS could meet its financial obligation for current retirees. But he said there could be problems in the future unless action is taken to improve the financial position of the system.

He also said altering the makeup of the board would not change the issues facing the system.

Parker said the Senate has no plans to change the composition of the board, and the amendment passed by the Senate on Tuesday included language stressing that there is no intent to change the benefits for current retirees and public employees.

The plan now goes to the House where members can concur with the Senate proposal and sent it to Gov. Tate Reeves or invite conference or negotiations between the two chambers.

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