Decennial Commission Seeks to Aid NH Pension Funding Issues

To aid the $8 billion New Hampshire Retirement System’s funding issues, an agency has formed to determine solutions, Fosters.com reports.

The 17-member authority, known as the Decennial Commission, is calling for the state to reinstate a measure that was eliminated in 2012 after being utilized for more than 30 years—a local government- and school district-specific employer contribution subsidy.

The NHRS pension plan is currently 61.8% funded, with Fosters reporting that the system is estimated to be $5 billion underfunded. The system is funded by contributions from public employees, the employer cities and towns, and returns on investments. When the state ceased its contributions in 2012, the funding responsibilities fell on the communities of the retired employees. Had state contributions continued to pay 35% contributions, the NHRS reports public employee contributions would be $80 million less in 2016.

“This subsidy was eliminated as part of the changes made to the retirement system and the state funding contribution in 2011 subsequent to the economic downturn,” Commission member Sen. David Watters said in a preliminary report obtained by Fosters. “Municipalities have claimed that this ‘downshifting’ of retirement contribution costs was not adequately offset and was a retreat on state obligations to the pension obligations to these employees.”

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According to Marty Karlon, NHRS public information officer, the recommendations are non-binding until they become laws. Fosters notes that the Commission reportedly met 15 times between the end of August and the end of the year and issued a preliminary report. A final report should be ready soon.

Additional recommendations from the preliminary report are a one-time $500 payment to all pensioners this year and additional years when “funds are available” to reflect the cost of living, a 20-hour work week limit for pensioners with post-retirement jobs for system employers, and the deferral of the 10% pension reductions for teachers and school employees from the current age 65 to age 67, Fosters adds.

Tags: Decennial Commission, NHRS, Pension

To help increase funding for Kentucky’s pension predicament, Louisville Mayor Greg Fischer suggested last week that lawmakers tax luxury items, warning that huge pension payments could lead to large city budget cuts in 2018.

“We’re always ready to deal with the unexpected, but this will be difficult for the people of Louisville and force metro government to reduce consistent services,” he told the Courier Journal.

During his annual State of the City Address, Fischer made his proposal and also touched on various issues from investments to creating opportunities for the community.

According to The Journal, Fischer’s officials told Metro Council last month that the city would have to spend $115 million on pensions—$38 million more than this fiscal year—if no drastic changes to the retirement system were made. , The Journal reports that this is the biggest one-year surge metro government has faced.

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City officials say that Louisville is projecting $20 million to $25 million more in budget revenue growth compared to 2016. Fischer urged lawmakers to combine pension reform with tax code changes during the 2018 legislative session, which is now underway.

“Kentucky’s communities have critical needs in terms of education, health, social services, and infrastructure, [and] to meet them, Frankfort must broaden the tax base,” Fischer said. “We need to take a hard look at a tax code that exempts luxury items. It doesn’t make any sense to consider cuts that can hurt a child’s classroom, law enforcement, drug treatment, or our justice system when we don’t tax country club members and limousine rides—that’s just not right.”

The Journal notes that depending on whether a pension reform is adopted before the start of the next fiscal year, Louisville pension payment amounts could change, with city officials optimistic on paying off the obligation in phases if the $38 million sum remains.

When asked if local taxes could be increased should the state legislature not come to a reform, Fischer said that his administration is reviewing its budget, but is also watching to see what happens at the state level.

“We don’t look at taxes until the very last option, (and) the council would have to agree with that as well,” he said.

Tags: Kentucky, Luxury Tax, Mayor Greg Fischer, Pension, Pension Reform