As the economic downturn continues to take it's toll on general fund of state and local budgets, one of the more subtle, but equally significant effects of the downturn is being felt in public sector retirement programs. The Utah State Retirement System (URS) has seen fund losses for 2008-09 of approximately $5 Billion or 24% of the total URS portfolio value.
For the general health of the State's budget and in order to maintain an actuarially sound retirement system, we are anticipating sizable increases in the retirement contribution rates that will be required of public employers to maintain the current benefit package for public employees. At this point we can only speculate about future increases in state and local government retirement funding obligations, but most experts believe we will witness increases for at least the next 2-4 years.
Because the budget impact could be quite large, many state and local government lawmakers have expressed concern about the funding liability that the current system may require. In light of this concern, the Utah League of Cities and Towns, Utah Association of Counties and the Utah Association of Special Districts have begun meeting with members of local government employee groups, peace officer groups, firefighter associations, city and county management associations, local government finance officers, and the staff of the URS to begin a dialogue on possible alternations to the system. We have invited the chairs of the Retirement and Independent Entities interim committee to participate in our effort as well.
Local governments see immense value in maintaining a defined benefit system but also recognize that changes are necessary to ensure that the current system does not become an overwhelming liability and the budget priorities of the state and local governments can be fully realized. We have established a set of guiding principles and have begun evaluating various alternatives to the current system. We intend to complete our analysis of the various alternatives by September 2009 and have a set of recommendations that can be brought forward at the September meeting of the Retirement and Independent Entities Committee of the Legislature.
Local governments see immense value in maintaining a defined benefit system but also recognize that changes are necessary to ensure that the current system does not become an overwhelming liability and the budget priorities of the state and local governments can be fully realized. We have established a set of guiding principles and have begun evaluating various alternatives to the current system. We intend to complete our analysis of the various alternatives by September 2009 and have a set of recommendations that can be brought forward at the September meeting of the Retirement and Independent Entities Committee of the Legislature.
If you have interest in the work that is being conducted or would like to learn more about our efforts, we have published all of our meeting details and handouts on our web page.
Here is a link to that information:
