IdahoReporter.com

The oversight board for the Public Employment Retirement System of Idaho (PERSI) met Tuesday in downtown Boise and decided to delay a hike in the rates contributing members pay, a move which will save the state of Idaho $15 million in additional retirement costs in fiscal year 2012.

PERSI board members voted unanimously to delay a three-year phase-in of a rate increase originally designed to shore up the retirement system, though not all trustees were thrilled with the change.

Kirk Sullivan was one of the members not necessarily thrilled with the decision to delay.  “I have to admit, I am very concerned about this,” Sullivan said.  “I understand that the state is out of money, I also understand that … we have a fiduciary responsibility. Protecting the fund is our legal responsibility.”

On the table was a contribution rate increase for those paying into the system, including public employers – state agencies and various other governmental entities – and employees themselves.  As it stands, employers pay 10.44 percent of employee pay rates into the retirement system, while employees pitch in about 4.8 percent.

The PERSI board decided in December of 2009 to phase-in an overall increase of 5.8 percent in the contribution rate over three years to build the health of the fund.  Tuesday’s decision delayed the entire process by one year, meaning the phase-in progression will begin July 1, 2012, and end July 1, 2014. Employers pay two-thirds of the contribution rate, while employees pay the rest.

Since the initial increase decision was made, the fund has grown and completely recovered from major losses sustained in 2008 and 2009.  As of Tuesday morning, the fund’s total value was about $11.4 billion, an amount which puts the account at an 88 percent funding level.  Since July 1, the fund has made $1.3 billion, which investment advisors say helped erase losses taken in the previous two years.

With that information in mind and the PERSI system back on its way to fully-funded status, board members opted to forgo the rate hike increase, a move likely to save the state as much as $15 million in additional retirement costs next fiscal year.  Executive director Don Drum said the delay would also save local and county governments between $25 million and $30 million in fiscal year 2012.

When the hike is enacted on July 1, 2012, it will raise the total contribution from employers to about 11.44 percent of an employee’s salary rate.  Contributing employees of PERSI will see a half a percent increase in their contribution rates, meaning they will put in an additional $13 per check toward their retirements.

Joy Fisher, another trustee, warned that hikes are still necessary and not optional.  “I think it’s really important people understand that this is just a postponement,” said Fisher.  “We still need to take this action.”

PERSI is the largest retirement system in the Gem State and it serves state government employees, along with public school teachers, some local government officials, and others.  PERSI has more than 68,000 contributing members and about 33,000 retired enrollees.  The fund takes in about $39 million in contributions from enrollees on a monthly basis and pays out about $46 million in benefits, with the difference being paid by investment returns.