Appropriations panel probes PERS budget, IT contract and staffing requests

The Appropriations — Government Operations Division on Oct. 23 took up Budget 1023 for the Public Employees’ Retirement System, hearing from agency staff about executive recommendations, a long-term contract for pension software and requests for temporary and permanent staffing increases.

Derek, a PERS staff presenter, told the committee the written testimony and PowerPoint summarize the governor’s executive adjustments and the agency’s change packages: “page 22 has an overall summary of what the executive adjustments are,” he said, noting the material shows the $2,069,275 and the $850,501 in operating adjustments.

Why it matters: The committee pressed on two cost drivers that would shape PERS operations for years — the Sagitec-produced pension administration system PERSLINK and a multi-year development effort PERS says will need one-time funding for additional developers — and on staffing that agency leaders say is critical to closing the main defined-benefit plan and to properly onboarding employers and new hires after changes made by House Bill 1040.

Committee members focused first on staffing and compensation. Rebecca, identified in testimony as the agency executive director, and Derek described vacancy and workload changes. Derek said the agency currently has one vacant FTE (the chief benefit officer, the backfill for Rebecca’s prior role) and requested two additional FTEs the agency views as “critical” for work related to the defined-benefit closure. He described a plan to recruit the chief benefit officer after session and said the agency used temporary funding to employ four interns during the interim and is requesting ongoing funding for an intern going forward. “We used 1 as a communication intern during the calendar year 2024 … and now … we’re actually utilizing 3 different accounting interns,” Derek said.

The agency also requested executive-management compensation adjustments totaling about $110,848 to make workload increases permanent for Rebecca and to compensate Derek’s additional duties. Derek told the committee that neither governor included that compensation package in their recommendations.

On information technology, Derek described PERS’s long-running relationship with Sagitec and the PERSLINK product. “Our PERS link … went live back in 2010 at the cost of about $10,000,000 and we have a highly customized product given the 9 retirement programs that we administer,” he said. He explained the agency pays a licensing fee (about $25,800 in the current request) plus developer/support fees and said the agency is requesting $539,595 in one‑time funding to add a second project manager and two developers from Sagitec to speed work on a backlog of projects.

Levi, a committee staff member, explained how the long-sheet presentation on budget changes shows some of the numbers differently from Derek’s line items (for example, an IT cost-to-continue baseline of about $64,617 that OMB added for general IT rate increases, and separate one-time and contractual items tied to Sagitec development). Committee members asked Levi for a clearer breakdown of the IT totals and for a chart showing total spending, the increases and what the money would buy; the committee asked Derek and Levi to circulate that detail in writing before the next meeting.

Committee members also asked about pension solvency. Derek said PERS has received about $3,230,000,000 in contributions and paid about $3,460,000,000 in benefits since 1977, and that the trust now holds about $4,500,000,000. He described a legislative plan to amortize the unfunded liability of the main defined-benefit plan through 2056 and said the Highway Patrol Plan remains the most troubled fund. Derek described a pending bill that would inject roughly $35,700,000 as a lump-sum deposit intended to move the Highway Patrol Plan toward a 90% funded threshold; he added that, because the plan is small, reaching 90% would still require about 25 years to reach full funding under the current amortization approach.

Members also raised operational concerns tied to HB 1040 (the law that changed participation options for some employees). Derek said the law created a short 30-day window for certain employees to make irrevocable elections about defined-contribution participation and that late employer reporting can prevent members from making those elections. To reduce that risk the agency is seeking an additional enrollment position focused on employer support and an accounting position to help onboard employers and reduce reporting delays.

No formal votes were taken during the hearing. Committee staff and PERS agreed to supply the committee with a written breakdown of the 1-time IT requests, the $110,848 executive compensation request, and details on the two requested FTEs before the next meeting.

The committee ended its review after asking for those follow-ups and noting the agency will return with more documentation.