PERSI reports 87% funded ratio, seeks continued software upgrade funding and staff support

The Public Employee Retirement System of Idaho (PERSI) reported to the Joint Finance-Appropriations Committee that its funded ratio was about 87% at the end of the last fiscal year, described ongoing technology and staffing needs, and requested both one-time and ongoing appropriations to complete a pension system upgrade and support operations.

Frances Lippitt, a budget and policy analyst with the Legislative Services Office, reviewed PERSI’s operating and continuous funds, noting the agency administers defined benefit pensions and a defined-contribution plan and is governed by a five-member retirement board appointed by the governor. Lippitt told the committee PERSI averages about 73.8 authorized full-time positions and had expended $11.4 million from appropriated funds in FY2024, with personnel costs accounting for 56.6% of those expenditures and operating costs accounting for about 41.9%.

Director Mike Hampton described investment performance and member metrics and answered committee questions about the cost-of-living adjustment (COLA) process and the pension software upgrade. "At the end of last fiscal year we were about 87% funded," Hampton said. He told members the fund’s most recent one-year return was about 9% and that PERSI manages assets for roughly 185,000 members and beneficiaries.

Analysts and the director clarified budget line items. Lippitt said the $12 million pension software upgrade is a five-year project (a $3 million per-year, multi-year appropriation) and that PERSI’s portfolio‑management and investment-management fees are charged to continuously appropriated funds rather than to the administrative appropriation. The governor recommended most requested items except an inflationary ongoing increase and office furniture.

On benefit adjustments, Hampton described the board's standard process: Idaho statute provides the board authority to recommend post-retirement allowance adjustments, and the board weighs market conditions, funded status and long-term sustainability before making recommendations. Vice Chair Woodward asked whether a 1% automatic annual adjustment was accurate; Hampton and staff explained the board recommended a total 1.3% adjustment this year that combined the 1% statutory baseline with a 0.3% retroactive component, subject to legislative approval.

PERSI requested two ongoing enhancements totaling about $277,100 (including modest travel funding for trustees and a requested general inflation adjustment) and one-time requests including $3 million for year four of the software upgrade, $7,000 for office furniture, and $628,500 for IT hardware recommended by OITS. Lippitt said the governor recommended the one-time items and the software funding except for the inflation request and the furniture.

Committee members pressed for details on administrative costs versus investment expenses. Hampton reiterated that investment management fees are paid out of continuously appropriated funds and do not flow through the agency’s annual appropriation, while the appropriation covers personnel, operating costs and software maintenance. He also described PERSI’s short amortization period (about 10.7 years) and noted the board and administrators regularly monitor funded status to avoid long amortization periods that would require contribution‑rate changes.

The board and agency staff remained available for follow-up questions; Hampton thanked committee members for prior support of the pension upgrade and encouraged registrants to use PERSI’s new member portal launched earlier this year.