JEFFERSON CITY - The pension board for state workers decided Thursday that the state will need to kick $276 million into the pension fund for state employees next year -- a $20 million increase over the current budget year, according to the state budget office.
The payment is the result of the national economic downturn that cut the investment returns on the retirement fund.
While large, the amount approved by the pension board is a bit lower than the original $303 million estimate -- thanks to a change in accounting practices.
Money for the pension fund is derived from two sources: state contributions and investment earnings.
The fund requires an 8.5 percent return on investment, with any losses or gains distributed over a five year period in a process called economic smoothing. Under the current method of accounting, however, extreme losses must be offset with state contributions the next year.
A report from statistical analysts showed the fund suffered an $825 million investment loss last fiscal year. Under normal practices, this would have required the state to contribute more than $300 million dollars. In a seven to three vote, however, the board decided to extend recovery of that loss over an longer period of time.
"I think the plan has good fundamentals," said Treasurer Clint Zweifel. "If we can get a brief window of two years it seems like it would make sense to give taxpayers relief."
The new method of accounting adopted by the board would be temporary, returning to previous levels in two years.
The fund's executive director, Gary Findlay, cited an uptick in car sales and the freeing of credit signs of a positive stock market. "There will be gains to keep (the fund) level," Findlay said.
State Sen. Jason Crowell, R- Cape Girardeau -- another member of the board -- disagreed with Zweifel and Findlay's assessments.
"This is a politicized outcome based on what you want the contribution to be, not a sound financial option," Crowell said.
Crowell, at one point slamming his hand on the table, was the most vocal of the board's three dissenting members.
"You want to cheat," Crowell said.
"I don't want to cheat," said a visibly upset Don Martin, another board member. "You keep twisting these things around."
While the outcome may produce relief now, it would place a greater stress on future budgets, Crowell said, adding that budgets -- even without these changes -- will be worse in the future.
While not recommending the change, Norman Jones, one of the analysts hired by the fund, said it would be sustainable if practices returned to current levels in two years.