Debate Heats Over State Education Retirement System

Residents and local officials are debating if the Missouri Public School Retirement System (PSRS) is sustainable for the future, placing a growing burden on teachers, school districts and taxpayers.

In Wednesday's edition of The Call, Mehlville Fire Protection District board chairman Aaron Hilmer wrote a letter addressing his concerns with PSRS.

His research showed that former Mehlville Superintendent Terry Noble received $485 per day in retirement, totaling more than $6 million.

At its annual retreat in August, the Mehlville school board said they would draft a letter to the on teacher retirement contribution rates. Now, teachers contribute 14.5 percent to the state’s education pension fund, and the district is required to match that contribution.

"It's just not good for the system when a 55-year-old, who has a lot to give, is being encouraged to retire," said Mehlville School Board President Venki Palamand in an interview with Patch.

"From an actuarial standpoint, its not sustainable over the long term,” he said. “It is a tremendous burden on the entry-level teachers to lose 14.5 percent of their salary to fund the retirement system."

But Steve Yoakum, executive director of PSRS, told Patch the retirement fund is in “relatively good condition.”

He said the system, which serves more than 220,000 active and retired educators, is about 78 percent funded. That is expected to rise into the low 80s this year.

“It’s not that unusual in a pension system,” he said. “We’re cognizant of the burden on the school districts and believe the 14.5 percent (contribution rate) will be adequate.”

Yoakum said the problem with the system stems from people retiring earlier (at an average age of 59) and living longer, requiring more money throughout a longer period of time.

“We will pay that average retired teacher more money in retirement than her school district paid her during her working career,” Yoakum said in a PSRS status update video on YouTube.

But Hilmer said he believes public employees shouldn’t receive better benefits than the taxpayers who fund their retirement system.

“There are some people who have a bit of pension envy,” Yoakum said. “There is some misinformation out there. This system is not only sustainable, it will go forward in the future.”

Yoakum mentioned raising the minimum retirement age to 60 as a solution to future challenges in funding, although there are no bills pending in the state legislature.

“We know it’s putting a burden on our local school districts,” said Sen. Jim Lembke, R-unincoporated St. Louis County. “I think it’s something that will be on the radar screen as we go back in January.”

Lembke said he has not heard from many constituents voicing concern over the system.

“It’s kind of one of those issues that’s a little inside baseball,” he said. “Those that serve on the school board are very familiar. Beyond that, it’s not something a lot of people realize.”

In his letter, Hilmer said residents were being “kept in the dark about unfair and expensive pension benefits for school district employees.”

He urged residents to contact their legislators and push for a 401(k)-style pension plan, what most private companies use.

Yoakum said schools would end up paying more money in the first 10 years if the retirement system was converted to a 401(k)-style plan.

“It also doesn’t relieve obligation for what you already promised. There’s not an immediate cost-savings in order to do that at all,” he said. “We’re faced with future changes in the plan to make sure the future educators have a good plan like the current ones.”

But Hilmer thinks the current plan is too good. He said Noble will receive approximately $177,000 a year in retirement from taxpayers.