Cost of Missouri pension system creating conflict among Republican officials

A showdown is looming over the cost of funding state employee pensions in Missouri, pitting Republican officials against one another in a fight over how best to keep the retirement system fiscally sound while the state faces a massive budget shortfall. And both sides worry about the long-term consequences if the other prevails.

The Missouri State Employees Retirement System, commonly known as MOSERS, covers roughly 113,000 current and past state employees. Its board of trustees requested an additional $45 million from the state to help cover costs in the fiscal year that begins July 1.

House Budget Chairman Scott Fitzpatrick, R-Shell Knob, says that big a funding boost isn’t possible. The budget proposal he’ll lay out Wednesday would still increase MOSERS funding, but by only $15 million.

In the long term, both the House plan and the MOSERS plan project to pay off the pension system’s debt in 28 years. But the House plan calls for the state’s portion of the fund to be roughly the same every year, while MOSERS wants the funding to spike in the early years before tapering off over time.

The pension system is already underfunded, said Missouri Treasurer Eric Schmitt, a Republican who serves on the MOSERS board. With that in mind, he said, the House plan would be “extremely foolish.”

John Watson, MOSERS executive director, said the pension system’s assumptions on rate of return on investment have been far too optimistic for years. Because of that, the unfunded liability of the system has grown in 14 of the last 16 years. Much of the increase requested from the state budget this year, he said, is to “pay off the optimistic views over the last 16 years.”
Read more: Kansas City Star

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