The state should ensure that excessive resources are not committed to funding teachers' pension systems.
As of June 30, 2015, the most recent date for which an actuarial valuation is available, Mississippi's pension system for teachers is 60.4 percent funded, an increase of 2.7 percentage points since NCTQ's last report. Its current pension debt exceeds $32,400 per pupil throughout the state. It also has a 33.9-year amortization period. This means that if the plan earns its assumed rate of return of 7.75 percent and makes its full actuarially determined contribution payments, it would take the state 33.9 years to pay off its unfunded liabilities. Mississippi's amortization period exceeds the standard 30-year period and its funding level is too low. The state's system is not financially sustainable according to actuarial benchmarks.
In addition, Mississippi commits excessive resources toward its teachers' retirement system. The current employer contribution rate of 15.75 percent and the employee contribution rate of 9 percent are too high, in light of the fact that local districts and teachers are contributing an additional 6.2 percent to Social Security. While these rates allow the state to pay off liabilities under its current amortization schedule, it does so at a high cost, precluding Mississippi from spending those funds on other more immediate means to retain talented teachers.
Mississippi Public Employees’ Retirement System, Actuarial Valuation Report as of June 30, 2015.
Ensure that the pension system is financially sustainable.
The state would be better off if its system was over 95 percent funded to allow more protection during financial downturns. However, Mississippi should consider ways to improve its funding level without raising the contributions of school districts and teachers. In fact, the state should work to decrease employer contributions. Committing excessive resources to pension benefits can negatively affect teacher recruitment and retention. Improving funding levels necessitates, in part, systemic changes in the state's pension system. The goals on pension flexibility and pension neutrality provide suggestions for pension system structures that are both sustainable and fair.
Mississippi did not respond to repeated requests to review this analysis.