November 21, 2010 in Idaho Voices

Eye on Boise: PERSI director assures Idaho funds not in trouble

By The Spokesman-Review
 

BOISE – Idaho’s public employee retirement system has been deluged by calls, e-mail and visits from worried state and local government retirees who are concerned that it’s going to be eliminated or cut back, but PERSI Director Don Drum said there’s no truth to the rumors driving those concerns.

“I think it’s being driven by national media coverage,” Drum said. “There are many funds out there that are in trouble.” But Idaho’s isn’t, he said.

When he’s heard rumors that some Idaho legislator is working on legislation to change or eliminate PERSI, Drum said he’s tried to track them down and found them all false. “I have not found any legislator who is working on any changes to PERSI,” Drum said. “I’ve talked with the governor, the governor is not working on any changes to PERSI. That’s the message I’m trying to get out.”

He added, “I’m not aware of anyone who is working on any changes to PERSI, and the fund is recovering well. … Time is on our side.”

The fund was 87.7 percent funded as of Nov. 11, Drum said. The system’s unfunded liability has dropped to $1.5 billion, less than half the figure from June 30, 2009 that alarmed some lawmakers during this year’s legislative session.

Bob Maynard, the fund’s investment director, noted that the fund was 105 percent funded back in 2007, before the recession hit. “Prospects for the future are reasonable, but very fragile,” he said. “We are still in a hole, but the hole is relatively much shallower” than those for other state retirement funds. Funds typically don’t want to be 100 percent funded for all future liabilities because that means the current generation is paying too much; 90 to 95 percent is the ideal, Maynard said.

“We have a pretty modest plan structure. We don’t have medical. We have a healthy employee contribution going into the system,” Maynard said. “From day one, all benefit increases that have been put into the system have been fully funded from contribution rates, unlike other retirement systems.”

What that’s meant for Idaho’s state retirement system is that it needs to earn only 3.75 percent above inflation to meet statutory benefit requirements, whereas other systems need 5 percent or more. Thus, a simple, conservative investment approach can work, Maynard said, and that’s what’s happened.

Idaho Democrats to try ‘new things’

Idaho Democratic Party Chairman Keith Roark has decided not to reappoint party Executive Director Jim Hansen when Hansen’s term ends Dec. 31, though Roark insists he doesn’t blame Hansen for the GOP sweep in the Nov. 2 election. “There is a need for some new direction, some new approaches,” Roark said. “Obviously with the Democratic Party in the situation that it’s in, looking forward, we’re going to have to try some new things that have not been tried before.”

Hansen, a former three-term Democratic state lawmaker from Boise and the son of former Idaho Congressman Orval Hansen, headed United Vision for Idaho for 13 years before he took the party post in 2008; there, he was recognized with a prestigious $100,000 leadership award from the Ford Foundation in 2005. When Hansen became the party’s executive director in 2008, Roark, in a press release, called him “one of Idaho’s best known and most experienced community leaders.”

Roark, who has served as party chairman for three years, said he’s not sure himself if he’ll seek another term in February.

“I think our biggest failure has been the failure to develop and articulate a message that clearly reflects what we stand for, and consequently we have found ourselves in a position where we are defined by the Republicans, rather than by members of the Democratic Party, and that’s a significant shortcoming on our part,” Roark said. “We’ve had a very difficult time creating an identity and a message for Idaho Democrats that is separate and distinct from the national Democratic Party. That’s a challenge.”

Roark added, “Jim has worked extremely hard,” and said no individual could have fixed the problem. “We’ve got to look forward, and that means some new names, some new faces and some new personalities with different ideas than those that we pursued for the last three years,” Roark said.

Prison staff furloughs decried

Idaho’s state prison system, with its crimped budget, has continued to put employees on furlough this year, to the tune of 90,000 furlough hours for the fiscal year. That includes 15,000 fewer hours spent monitoring probationers and parolees in the community.

State Corrections Director Brent Reinke said the department is saving $1.89 million this year because of furloughs, but it doesn’t want to continue them next year.

Idaho’s corrections budget has dropped 19 percent since fiscal year 2009. Cost-saving moves have included everything from trimming food costs to 83 cents per meal to setting up a trio of options for short-term sentencing, with three, six- and nine-month options, and carefully shifting inmates among the lowest-cost beds that are appropriate for them.

Meanwhile, Reinke said, other states are looking at releasing thousands of inmates due to budget crises, a move Idaho hasn’t considered. “Idaho’s path is different from other states,” Reinke said, focusing instead on moves to drive down the inmate population and control costs. “We want to be sure … that the short-term crises that we have do not lead to long-term consequences.”

But the cutbacks are taking a toll, he said, particularly on staff. Turnover has ballooned to 28 percent, which then bumps up training costs. “I need to be able to touch the minds and hearts of our staff, because I’ve already picked their pocket,” Reinke said. “It’s got to be about keeping Idaho safe.”

‘Very comfortable’

Senate Finance Chairman Dean Cameron, R-Rupert, put state economist Derek Santos on the spot last week: He asked him what his level of confidence was that Idaho’s state tax revenues would actually grow by 3 to 4 percent in fiscal year 2011, the fiscal year now under way. The official state forecast calls for 4.7 percent growth.

Santos looked back to his boss, Gov. Butch Otter’s budget chief Wayne Hammon, who gave him a nod and said, “It’s your neck.” Amid laughter, Santos said, “Recognizing this may be a career decision, I’m very comfortable with 3 to 4 percent. I would be very comfortable with 3 to 4 percent, and I’m still comfortable with 4.7 percent.”

Lawmakers last year, leery of forecasts of state revenue growth, set their budgets lower than the forecasts, forcing deeper cuts in programs.

Betsy Z. Russell can be reached toll-free at (866) 336-2854 or bzrussell@gmail.com.


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