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PERS director tells Senate committee funding remains top priority as legislators press on assumptions and amortization
Summary
PERS Director Greg Higgins told a Senate committee the system holds about $38 billion, posted roughly an 11.7% return last year and has an approximate 57% funded ratio; lawmakers pressed him on the assumed return, the closed 30-year amortization (to 2047) and the effect of lowering the assumption on reported liabilities.
Greg Higgins, director of the Public Employees' Retirement System (PERS), told a Senate committee that the retirement system controls roughly $38,000,000,000 in assets and posted an investment return of about 11.7% last fiscal year.
"As far as PERS, we have about 38,000,000,000 in the portfolio as of now, as of this morning," Higgins said, and he urged legislators to review the fund's blue packet for details on valuations and assumptions. Higgins told the committee the system's funded ratio is currently about 57%.
Lawmakers focused heavily on how actuarial assumptions and amortization periods affect the system's measured liabilities. Senator Sparks pressed Higgins on the decision to lower PERS' assumed rate of return from 7.75% to 7.0%, saying the change raised the unfunded liability "by approximately $6,000,000,000 on paper." Higgins agreed the assumption change "did increase the liability," calling it a major contributor among several factors that moved the numbers.
The committee also discussed the board's funding recommendation. Higgins said the PERS board and actuaries have identified an actuarially determined employer contribution in the mid-20s (committee members cited about 25.92% in discussion) compared with current contributions near 18.4% of payroll. Higgins asked lawmakers to keep funding consequences in mind for policy proposals, including return-to-work and first-responder benefit changes.
Legislators noted recent policy and legislative actions: the legislature has signaled support for a roughly $1,000,000,000 appropriation to PERS this session and the board has advanced implementation of a tier 5 hybrid reform. Senators urged PERS and the legislature to coordinate on whether large new funding inflows should trigger a review of amortization choices or other elements of the funding policy, especially because the board's 2017 funding policy adopted a closed 30-year amortization horizon that produces higher short-term ADEC (actuarially determined employer contribution) projections.
Higgins emphasized the trade-offs of changing amortization windows too frequently: "You have to be careful of that because otherwise, you negate some of the progress you could make," he said, adding PERS performs annual valuations and rolling experience studies to adjust assumptions.
The committee asked PERS to provide additional actuarial impact statements for pending bills (including House Bill 2) and for forthcoming estimates on specific legislative proposals, such as return-to-work exceptions and potential first-responder benefit changes. Higgins said PERS is preparing those reviews and expects to deliver them as soon as practicable.
The session concluded without formal policy votes on benefit design; the committee adopted a procedural motion to "rise and report."
