JACKSON, Miss.--We are learning a great deal about the real state of Mississippi's finances in this week of state budget hearings and what we are seeing is that the economic slow down that has been going on nation-wide since 2008 is having a lasting and wide-ranging impact.
If you lost money in a 401K investment, you know that investment returns have taken a huge hit. Mississippi programs such as the Public Employees Retirement System and MPACT (the state's prepaid college tuition program) are structured so that investment return plays a part in the overall monetary outlook of the programs. In other words, if the investments don't pan out, the expected growth doesn't happen.
We talked with both State Treasurer Lynn Fitch and with Rep. Greg Snowden, who is part of the joint House and Senate panel looking at the budget for Fiscal Year 2014 as hearing continue on the first floor of the Woolfolk Building in Jackson.
Snowden said some of the figures he was seeing with the MPACT program stood out to him. MPACT assumes a 7.8 percent investment growth and has seen only a .6 percent return. (More on MPACT in a related article on this site)
"Well that jumped out to me because PERS assumes an 8 percent growth and over the course of the past year they've had .6 percent," he said.
Fitch said the freeze that has been placed on MPACT for now is for an audit to find out just how best to strengthen and secure the program going forward. Tuition hikes and low investment return are factors she cites, saying all current investors are safe.
As far as solving the problem of PERS and keeping commitments to those who are now retired, or who are about to retire from cities, counties, schools and state jobs, Snowden says retention efforts may increase.
"Some of our best state workers, obviously the ones who have experience and have been around, we want to incent them to stay. If they're still productive and still want to be involved, we don't want to push them out the door. We want to have a system that rewards people for staying but by the same token, we have enough stress already on our retirement system and it looks to be increasing."
PERS is expected to ask for a three percent increase in contributions from the state in October.