Utah Needs $21.3 Million for Retirement Fund

Utah Needs $21.3 Million for Retirement Fund

Save Story
Leer en espaƱol

Estimated read time: 3-4 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

SALT LAKE CITY (AP) -- Utah will have to find an extra $21.3 million to maintain its legal obligation to the state's employee retirement fund, The Associated Press has learned, adding to the state's budget woes.

"It couldn't come at a worse time," Senate President Al Mansell said Wednesday.

The state will have to pay a higher rate into the retirement fund for government and school employees because of the fund's stock-market losses, said Robert Newman, executive director of Utah Retirement Systems.

"Next year we'll have to do another study and my guess is you'll see the rate go up again," he said.

Legislative Auditor General Wayne Welsh said he plans to issue a report next week on the retirement system's "investment activities." Welsh's job is to assess the performance of government operations, and he's usually critical. He refused to comment on his findings until next week.

A retirement board has set the state's new contribution rate at 11.7 percent of each employee's salary, up from 10.4 percent last year.

That means Utah will have to find another $21.3 million to keep the fund sound, legislative fiscal analyst John Massey said.

"We can't ignore it," said House budget leader Ron Bigelow, R-Salt Lake City, who said a series of laws adopted over the years strictly protect retirement benefits for state employees, teachers, school administrators, bus drivers, custodians and other school staff.

The workers pay nothing for pension benefits, which after 30 years provide them with about 60 percent of their salary.

The higher state contribution rate comes after several years of declines. The rates fluctuate every year, based on five-year actuarial averages.

The stock market's poor performance over the past three years has finally caught up with the retirement fund. To make matters worse, the fund will be slow to recover after any economic recovery.

"When it rains, it pours," Mansell said. "When you have a slumping economy, you have a slumping retirement fund."

State revenues also are in a tailspin, a burden on legislators scrapping for every dollar they can find. The Legislature in December ordered most state agencies to take a 4.2 percent funding cut. Most of the cuts were delayed until the next fiscal year starts July 1, when more cuts could take effect.

"The outlook is austere," said Bigelow, a certified public accountant. "There's not much money there. Agencies that used to ask for more money are just asking, `Don't cut me anymore."'

"There's no question about the need in public education, Medicaid and higher education. A lot of schools are going to have funding problems because there's no money for growth," he said.

Legislators can't afford to hold a philosophical debate on social needs. "It's a reality debate. The reality is there's no money," he said.

Utah has a consolidated pension fund for 27,000 school, state, county and municipal retirees. Counties and municipalities pay their own rates into that fund.

Newman was quick to point out that legislators forced to ante up have enjoyed substantial savings in the past. It works both ways.

Two years ago, the rate was cut by 25 percent, saving Utah $80 million that "no one noticed" in flush times, he said.

Legislators are taking more notice now that the bill is going up by $21.3 million, more than they have in their depleted rainy day fund.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

Most recent Utah stories

Related topics



Get informative articles and interesting stories delivered to your inbox weekly. Subscribe to the KSL.com Trending 5.
By subscribing, you acknowledge and agree to KSL.com's Terms of Use and Privacy Policy.

KSL Weather Forecast