HELENA – The House on Monday gave final approval to one bill to fix one Montana’s financially troubled pension funds and preliminarily endorsed another bill to address the other major plan.
On a 58-41 vote, the House approved the Senate amendments to House Bill 454 by Rep. Bill McChesney, D-Miles City, to address financial problems with the Public Employees’ Retirement System, or PERS. The bill now goes to Gov. Steve Bullock.
On a 55-45 vote, the House endorsed Senate amendments to HB377 by Rep. Tom Woods, D-Bozeman, to put more money into the Teachers’ Retirement System, or TRS. It faces a final House vote Tuesday.
Both bills increase contributions to pension funds by employers and employees and rely on large infusions of state cash over time, while reducing the annual cost of living adjustments, known as the guaranteed annual adjustment benefit, for retirees.
Montana’s eight public pension funds face a combined potential shortfall of $4.3 billion, in large part because the value of the pension investments plunged by one-fourth during the 2008-09 recession. PERS and TRS are the two largest state pension funds by far.
The state has a constitutional obligation to fund them in an actuarially sound basis.
During the debate on HB377, Woods said a number of competing plans were before the Legislature at the start of the legislative session.
“This evolved to be the best one on the table,” he said of the TRS plans.
Employees agreed to some concessions, such as a contributing more toward their pensions, he said.
“These are reasonable concessions,” Woods said. “This is the middle ground. Let’s meet our contractual and constitutional obligation.”
Rep. Franke Wilmer, D-Bozeman, supported the bill, calling it a “shared solution” that involved employees coming to the table.
Under the plan in HB377, Wilmer said the TRS pension will amortize in 22 years, while now it takes until infinity for the fund to amortize.
But Rep. Nancy Ballance, R-Hamilton, criticized the amended bill, saying it “throws more money at a failing system.”
“The problem is twofold: a low rate of return and excessive benefits,” she said. “This fixes neither of the problems.”
Rep. Brian Hoven, R-Great Falls, said there better alternatives available to fix Montana’s pension system, such as a cash balance plan by former Sen. Joe Balyeat, R-Bozeman, that Gov. Brian Schweitzer vetoed in 2011.
“A special session on pension reform will be faster and cheaper than this bill,” he said.