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Committee passed judicial pension contribution spike without financial impact

Committee passed judicial pension contribution spike without financial impact

Dustin Hurst
January 25, 2017
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January 25, 2017

The Idaho House Commerce and Human Resources Committee approved an increase in contributions to judicial pensions -- without asking how much the plan would cost taxpayers.

On Tuesday, IdahoReporter.com contacted Kelly Cross, communication director for the Public Employee Retirement System of Idaho, for an estimated cost. Cross said, beginning July 1, 2017, the higher contribution rates will cost state taxpayers an additional $511,000 per fiscal year.

The proposal, approved by the House committee Monday, increases the taxpayer burden for a judge’s pension from the current 55.23 percent of a judge’s salary to 62.53 percent.

Judges will have to contribute more, too, from 10.23 percent of their salaries to 11.57 percent.

Reps. Steven Harris of Meridian and Dorothy Moon of Stanley, both Republicans, voted against raising the contribution rates.

Don Drum, PERSI’s executive director, regaled panel members with statistics, percentages and amortization rates. He didn’t, however, disclose the full impact on Idaho taxpayers.

The proposal’s required fiscal impact note didn’t provide much information regarding its impact on taxpayers either.

“Employer contribution rates will increase by 7.25% of salaries, beginning July 1, 2017,” the fiscal note explained. “This will affect the general fund to the extent the contributions required of the employer (Supreme Court) are made from general fund dollars.”

PERSI hopes the rate hike will turn the tide for the chronically underfunded Judges Retirement Fund. In 2013, the pension fund was $13.6 million short of the legal definition of fully-funded. Today, that gap has grown to about $20 million.

An audit released in October 2016 revealed the fund was 75.3 percent funded, below the 80 percent considered the low bar for a healthy pension fund.

Although PERSI’s goal is full funding for the pension account, the trend is going in the wrong direction. The account was 82.99 percent funded in 2013, and 81.28 percent funded last year.

The American Academy of Actuaries takes issue with the 80 percent figure, contending that no single figure at any one time can accurately describe a pension fund’s health.

“All plans should have the objective of accumulating assets equal to 100% of a relevant pension obligation, unless reasons for a different target have been clearly identified and the consequences of that target are well understood,” the 17,000-member group wrote in a 2012 policy memo.

The proposal, approved by a Senate committee last week, takes effect July 1, 2017. Because it’s an agency rule, not a proposed bill, the measure does not need the governor’s signature.

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