ST. LOUIS — Pension costs for state workers could grow by up to $85 million next year, and that has officials looking to control costs for Missouri's two largest retirement systems.
The state contributed $375 million this year to the Missouri State Employees' Retirement System and the Missouri Department of Transportation and Highway Patrol Employees Retirement System. Those systems are the state's two largest retirement plans and are "defined benefit" pension plans, which means that retirees receive guaranteed payouts.
Workers do not contribute any of their salaries to pay for the benefits. The pensions are funded entirely through state money and the retirement systems' investment income.
The Missouri State Employees' Retirement System covers 55,000 state workers and 30,000 retirees. The Missouri Department of Transportation and Highway Patrol Employees Retirement System covers 8,800 workers and 7,500 retirees.
The St. Louis Post-Dispatch reported Wednesday that state officials are concerned about the cost of the pensions systems.
Sen. Jason Crowell, who serves on the state employees retirement system board of trustees, said the state likely will need to contribute between $65 million and $85 million next year to fund the larger pension fund. He said that money is taken from other state programs and could crimp future state services if retirement costs are not controlled.
"Are certain benefits too generous? I am very interested in looking at all of our benefit packages, including the fact that right now MOSERS does not have an employee contribution," said Crowell, R-Cape Girardeau.
Fellow board member Kelvin Simmons, who is Gov. Jay Nixon's commissioner of administration, said that any potential budget savings needs to be considered. Simmons said that eight states are examining their retirement systems.
"When you have an economy like we're experiencing, everything should be on the table to discuss," he said.
According to the National Conference on State Legislatures, six states have reduced benefits for new employees. At least four states have required workers to pay a larger portion of their salaries into retirement funds. For example, Texas has increased the age of required years of service before retirement and lowered the benefit to those who leave early. It also requires workers to pay more into pension funds.
In Missouri, retirement benefits are based on a percentage of workers' salaries for their last several years on the job and the number of years they worked for the state. It also gives an incentive for employees to retire early through an incentive program that allows for retirement when their age and years of service equal 80.
The largest retirement benefit currently goes to former Truman State University President Jack Magruder, who spent 39 years at the school in Kirksville and started as a chemistry professor in 1964. Magruder, 74, receives $151,188 per year.
Five others draw more than $100,000 per year. They are former Missouri Southern State University President Julio Leon, two judges, a psychiatrist and a mental health administrator.
Five former governors receive pensions ranging from $19,596 for Democrat Joe Teasdale to $66,900 for Democrat Bob Holden and Republican John Ashcroft, who each held other state offices before becoming governor. Former Republican Sen. John Russell of Lebanon has the highest pension among former lawmakers. Russell served 42 years in the assembly and receives $56,844.
House Speaker Bob Griffin, a Democrat, spent 38 years in government and gets $56,436 per year.