Missouri Audit Reveals Systems In “Most Trouble”

Missouri Gateway Arch

Missouri’s auditor released an all-encompassing audit yesterday of Missouri’s 89 public pension systems. The auditor, Tom Schweich, said the good news was that some systems were performing much better than their peers across the nation.

But the audit also revealed 15 plans that were in the “most trouble.” From MissouriNet:

“We consider them to be a problem if their funding ratio is either below 70 percent, so it’s ten points below what’s considered reasonably safe,” says Schweich, “and anything below 95 percent of required contributions, because we think they should be funded at 100 percent … if it’s anything below 95 percent, that’s a downhill trend.”

Those 15 plans include the Missouri Department of Transportation and Highway Patrol employees’ retirement system and plans covering police and firefighters in Columbia, Joplin and Springfield, and plans covering Kansas City transportation authority and public school employees. Other plans on that list cover some employees of St. Louis County, Bridgeton and nonuniform employees of University City.

Missouri’s plans were 78 percent funded collectively, lower than the 80 percent cut-off that typically marks a “healthy” plan.

But Schewich said the audit showed many of Missouri’s pension systems to be healthier than their peers in other states. That doesn’t mean, however, that those systems are out of the woods by any stretch. From MissouriNet:

Schweich says the survey found that in funding ratio, annual contributions toward solvency, and pension costs as a percentage of payroll, “Missouri is above average but in none of these areas is Missouri safe.”

Missouri recorded a 94 percent contribution rate but the survey found 34 of Missouri’s plans didn’t receive the full contribution recommended by actuaries. The percentage of payroll costs devoted to pension plans rose between 2003 and 2012 in Missouri and nationally, but again Missouri fares better than the national average.

Schweich says the main reason some plans are below an “acceptable” fund ratio is the recession of 2008 and 2009. He says some had high investment return assumptions and some didn’t have employees contributing.

This report marks the first wide-reaching audit of Missouri’s pension systems in 30 years.


Photo by Paul Sableman

Missouri Auditor Offers First Glimpse of Upcoming Pension Report

Missouri Gateway Arch

Missouri Auditor Tom Schweich gave an interview to KSMU radio over the weekend, and in it he offered a sneak preview of his office’s audit of Missouri’s 90 public pension funds.

It’s the first wide-reaching audit of Missouri’s pension systems in 30 years. From the KSMU interview:

He says the good news is a majority of those pensions are “pretty solvent,” but noted that roughly five of the smaller ones in the state are in “serious trouble” and will require further review. Schweich declined to name those pensions ahead of the published audit.

“People wanna know ‘are our pensions solvent? Will we have to bail those pensions out? Will the people who are entitled to that pension money get the money?’ So I initiated a very lengthy and detailed study over a year ago of our 89 pension systems and in a few days we’ll release the results of that.”

Schweich says this will be the first comprehensive study that has been done on pensions in Missouri in over 30 years. He says sometimes pensions come down to a tax, or just good financial management.

“Sometimes they really have the money they’re just not investing it well, or they’re not handling it right or they have too much in the way of administrative costs. So we look at all those things. Our objective is to help pension become solvent if they’re not solvent, and make sure they remain solvent if they are.”

In April, voters in Springfield renewed the city’s ¾-cent police-fire pension sales tax. It was first brought before citizens in 2009, when the pension plan was estimated to be underfunded by $200 million. The plan is now projected to be brought into full funding within five years.

The report won’t be released until sometime in October, but it can eventually be found here.


Photo by Paul Sableman