Mississippi Happenings

Welcome to this week's edition of Mississippi Happenings podcast.

My name is David Olds And also with me is my friend and co-host, Jim Newman.

Jim, say hello.

Hello, how are you?

Today we have with us, Democrat Senator David Blunt.

He's from District 29.

He represents Jackson, Terry and Bonham.

He is the vice chair of the Education Committee.

He is also chair of the Gaming Committee.

Senator Blunt, thank you so much for being with us today.

Thank you for having me.

I'm glad to be here.

Jim, get us started.

Well, no, I'm just happy to be here.

uh Those of you who don't know me, oh as David said, I live in Jackson.

The district I represent is in Hines County, Jackson, Byrum, Mississippi, just south of
Jackson and Terry, uh in a good portion of rural south Hines County.

I'm in my fifth term.

I serve as vice chairman of the Senate Democratic Caucus.

And I'm actually at the Capitol right now.

I've got a committee meeting this afternoon and things are starting to...

ramp up for the session in January.

ah One of the things we wanted to talk about, and I think you had mentioned that you are
familiar with is the PERS ah Employee Retirement Fund.

ah It's my understanding that it's underfunded.

Is that the case?

Well, it's a big issue, so let me try to give you a summary of where we are.

uh I am one of two senators appointed to serve as next officio on the PERS board.

uh Legislators don't vote on boards, but there are two representatives and two senators.

the only Democrat, uh and I've been going to these meetings for six years, so I know
what's going on.

The Mississippi Public Employees Retirement System, or PERS, uh sometimes is referred to
as the state retirement system, but it covers all

public employees in the state, whether you work for the state, the city, a county, a
public university or community college, anybody who is a public employee, with the

exception of the highway patrol, everybody's in the same system.

And everybody in that system contributes every month by law, 9 % of their paycheck off the
top goes to fund their retirement and their employer, whether it be the state, the county,

the school district.

whatever contributes money on top of that.

It's about 18 % of that salary on top of the take-home pay is contributed.

That money goes to PERS, it's invested, and that's what pays benefits.

The system currently is not about to run out of money.

The system has more than about $36, $37 billion in assets right now.

but it has an unfunded liability of about $26 billion.

That means that based on actuarial projections, how many people are currently retired, how
many people are eligible to draw benefits when they retire, how long those people are

gonna live, and what those benefits amount to, the system needs more money.

And everybody acknowledges that.

So we had this crazy situation.

in the legislature this year where we had the two most important issues facing the state
since I've been in the legislature.

This is my 18th session in one bill.

And we did the absolute wrong thing on both of those two issues.

And what was driving the debate in the session was the first argument that Mississippi is
in the best financial shape it's ever been in.

We've never doing better.

We have all this money in the bank.

And we need to eliminate the state income tax, which is more than $2 billion a year in
revenue to the state budget, about a third of the overall general fund budget of the

state.

And it was a top priority for the Speaker of the House and the governor to eliminate the
income tax.

Only one state in the history of the country has had an income tax and chosen to eliminate
it.

And that was Alaska after they found the largest oil reserve in North America back in the
70s.

No one's ever done this before.

In that same bill, we made changes to the retirement system, which provided no additional
money, no meaningful additional money, a little bit around the edges, but no meaningful

additional money to the retirement system.

So the retirement system needs more money.

We don't provide any more significant money to the retirement system, and we eliminate one
third of the state budget.

And that's what the legislature passed, and I voted to get set.

The governor signed that bill into law.

The situation now with PERS is this.

If you are currently in PERS, whether you're retired or you're vested working for uh an
employer in the system, your benefits are not going to be changed.

Your employer has a contract with you when you went to work for the state or the school
district or the county that says, this is your retirement package and this is what you're

going to get.

But for new hires beginning on March 1st, the traditional

pension system, a defined benefit pension system with a cost of living adjustment, which
has been in place since the system was created, is over.

That's not going to be available anymore to anybody who's hired.

You're going to have to work longer for less, and you're not going to have a traditional
pension, and you're not going to have a guaranteed COLA or a cost of living adjustment,

which some people choose to take in one annual check called the 13th check.

That's really a misnomer because what it is is some people choose to get their monthly uh
COLA in one check and not add it to their 12 monthly checks.

But that's the situation.

So that is going to be a significant problem.

In my opinion, it's the wrong way to go.

Both of my parents, my mother grew up in Tupelo, Mr.

Newman on Robin Street.

uh

That's right.

so her parents, my grandmother worked at the library there and my grandfather worked at
the post office right there next to the library on Main Street in Tupelo.

uh So, and my other grandfather was in the, served in the U.S.

Army.

And so both of my parents were the first people in their family to go to college because
their parents had a pension and they had a secure retirement.

uh

that's not gonna be the case for people who are hired after March the 1st.

And you are beginning to hear now from a lot of people uh that this is gonna, while it
will reduce a little slightly more quickly, none of these changes will have major impact

on the unfunded liability of the system for about 30 years.

Because again, the people who are in the system right now working are grandfathered in.

uh Technically that's called tier.

four, the new people who are hired after March 1st are going to be in tier five and get a
reduced set of benefits.

But the main thing is it's going to be much more difficult for employers to hire people
and to keep people.

Wherever you're listening to this, if you talk to your principal or your school
superintendent, if you talk to your fire chief or the police chief where you live, these

people pervoke

And there's lots of other people who work in mental health facilities, who work in the
prison system, who work in difficult jobs that are hard to fill where they don't get paid

enough money.

And I've traveled around the state and talked to these folks on the Public Property
Committee.

When we asked them the same question, what's the biggest challenge you face running your
school or correctional facility or fire department?

They say, we can't pay people enough money and we can't keep them because it's tough job.

The only thing that keeps them is the retirement system.

The retirement system, because even if you're a young person, even if you're in your 20s,
you're seeing 9 % of your paycheck every month go into that system.

so they say, well, young people don't care about their retirement.

Well, first of all, they should.

But I promise you, young people who are putting 9 % of their paycheck in the system every
month see that on the pay stub.

And they're invested.

what keeps them if they've been working for six years, eight years, 10 years, from leaving
to teach at another school, from leaving law enforcement, from leaving a difficult job,

cleaning out bedpans at a mental health facility, is the retirement system, the promise of
a secure retirement.

And it's going to be very, very difficult to keep people if there's no reason to stay, if
there's no guaranteed pension with the cost of living.

If you've just got a private 401k,

It's not technically a 401k, but it's essentially an investment account that is portable
and you choose the investments that your money goes into.

And there's no reason why you just can't pick up and transfer that to some other employer
because it's portable.

If it's portable, people are going to make it portable and they're going to leave.

It's going be hard to keep people and it's going to be the long-term effects of this are
not just that that teacher in 70 years from now is going to have a worse retirement

because of what happened.

in the legislature in 2025, it's also gonna be a big challenge for hiring and keeping
people in these vital professions.

How long does it take for someone to be invested in the system?

To be vested as eight, to draw your retirement under the new system, you've got to have 35
years or be 62 years old.

uh And so that's a particular concern for first responders and jobs are physically
demanding.

But the pension for people who are not in the system, your pension is based on a
multiplier of two things, how long you worked and what your high force salary was during

the time that you worked.

then there's a multiplier based on how many years, whether it's 25, 35, 45, whatever it
is.

And then that's your pension.

That's what you're gonna get with the cost of living adjustment.

So that's out the window and I think it's gonna be the long term.

It's the only thing that I can think of, the legislature could do, that literally is gonna
affect people's lives in 70 and 80 years.

Yeah, it's that 9 % at least here in Tupelo, that 9%, the electric company has gone up 6%.

And then last week or two weeks ago, they announced another 6 % increase in water and
sewage rates.

And then the county is wanting to build a jail and float a.

$96 million bond issue.

PERS may be the only safe place to have money.

kind of.

uh Well, so PERS takes all that money uh and invest it and they average over the past 40
or 50 years here, they're averaging more than 7%.

But what is uh throwing the challenges, there were some changes made for people who were
hired before 1999, those people are now retired and that's putting a challenge on the

system.

uh And then the ratio between the number of people working and the number of people with
drawing benefits is tightened.

That's because a lot of jobs were previously done by public employees have now been
outsourced to private companies, which throws that ratio out of whack.

So I don't know if the legislature is going to look at this again when we come back in
January.

oh If we were to do that, and I'd like to repeal the whole thing and go back and have a
new tier five with a lower cost of living adjustment.

I think that is affordable.

We can do that.

and it will address a lot of these concerns.

But whatever we do, if we were to go back or make any change, we are going to have to pay
for this year of these tier five people.

getting back to your original point is, first other thing is the system needs money.

The system needs more money.

Making changes to the system, making changes to new hires is not going to solve the
problem.

What the system needs is money.

And instead of addressing that last year when we had all this one time money in the bank
left over from the Biden administration, the legislature chose to eliminate the income

tax, which was exactly the wrong thing to do.

We should not cut taxes until we solidify the retirement system, period.

So where do you think that money would come from?

I mean, to me, it ought to come from the income tax, but they just, you know, they say
they want to get rid of the income tax.

I mean, we've had more than once the income tax elimination is fully phased in, and that
may take a number of years, but once it's fully phased in, we've cut more than $3 billion

in annual recurring revenue since 2016.

And we shouldn't have done any of that.

should not, we should phase.

We should stop all phase in of any tax cuts and put that money in the retirement system
and make it strong.

We should not be cutting taxes while we know the retirement system needs money.

The longer we wait to do that, the more it's gonna cost.

uh Senator, is there a possibility that money from the oh lottery or from the mobile
sports betting could go to PERS?

uh That's possible, yes, but I think we need to understand what kind of numbers we're
talking about here.

First of all, all the lottery money is either going to transportation, roads and bridges,
or education right now.

We don't have mobile sports betting.

uh According to the billboards I saw around town earlier this year promoting mobile sports
betting, that will generate about $20 million a year.

So that means it would take about 1,350 years to pay off unfunded liability with mobile
sports betting.

So it's hard to think about these numbers, but just write down on a piece of paper how
many zeros there are in $26 billion.

And then write down on a piece of paper how many zeros there are with $20 million.

This amount of money is almost trivial compared to the size of this debt.

So the income tax, again, these folks last year,

said we're going to eliminate $2 billion in annual revenue to the state.

But it's OK because we think we can get $20 million from sports betting or moving money
from the lottery.

You're not being serious.

They're not anywhere close.

look, different people have different opinions about that issue.

And I understand that.

But let's be real about the numbers that we're talking about here.

And it's not.

uh gambling and selling lottery tickets, if you're for or against it, it's nowhere near
the amount of money that is required.

What is required was an income tax that everybody pays.

And that's what we should have done.

And that's what, you know, that's not what the folks in charge down here wanted to do.

Do you think if there's a Democratic governor elected that there would be a potential of
reinstating the income tax?

Well, to do that, it would require the passage of the legislature.

And the legislature is, of course, supermajority Republican, both in the House and the
Senate.

uh I don't know what's going to happen in the future.

I don't know what's going to happen to the national economy or the stock market or the
state budget.

uh any change, the income tax elimination is law.

And so that would require the legislature to change it.

And the same with the retirement system.

It would require a change in state law so people wouldn't have to have a...

To do that, it require a come to Jesus from a lot of people who voted for this bill.

The only one of the problems I had with the elimination of the state income tax was that
in addition to it, it seems to me that I understood there was a provision where counties

could raise ah taxes, I believe 2 % ah for various projects that were needed that now
would be not funded.

Is that the case?

Mr

I heard?

that I'm aware of.

know, the cities and counties don't get any money from the income tax.

That all goes to the state.

I don't believe that...

I think cities and counties still have the authority to raise taxes and those folks are
locally elected and if they want to do it, they can do it.

If they want to cut taxes, they can do it.

But ad valorem taxes, the primary revenue source for counties, I think is still up to your
county board supervisor.

Okay.

unless I miss something.

It was probably something I heard.

How about education?

Is education going to be the number one bill this year or is it down the road?

Well, education is always the number one item in the state budget, so it's always
important.

I think it is going to be this year, the Speaker of the House and the governor have made
it very clear that their top priority is what they call school choice.

There are hearings in the House right now on that topic.

So I think the House will send us some sort of bill.

There's been a lot of talk about it for the last year and a half, but there haven't been a
lot of specifics.

The only

specific proposal that I'm aware of from the House would allow for a student in a public
school district to go to a different public school district without that home district

holding that child back.

And then the receiving district would have to uh agree to accept that child.

So for example, if you live in Tupelo and you want to go to Lee County Schools, you can go
to Sautela where my grandfather grew up.

South Tulsa is not different now than it was when I used to go up there, but the Lee
County schools would have to accept you.

ah And the Tupelo School would no longer be able to hold you back.

So that's being discussed.

ah But there are other people in this debate who have a uh broader view of what school
choice means.

uh Some people think that you should essentially get a voucher.

school, St.

Mississippi spends roughly $7,000 per student in K-12.

We've got between 50 and 60,000 students who are not in the public school system, who are
either in the private school system or church schools or homeschool.

And some people think that those folks should get a $7,000 check.

uh That they're not in the public school system and the state owes them that money.

That's obviously gonna be expensive depending on how it's done.

It could be upwards of $400 million a year.

And I think it would

clearly have an inflationary effect on the price of private school tuition.

So that's all on the table, but we'll see what the bill ultimately looks like beyond
public to public transfer.

How do they get around, ah when I read the state constitution, it says that public bunnies
have to go to the public schools.

How do they get around sending it?

Well, that's the way I read it, but I'm not a lawyer.

I'm just an English major, so I learned how to read, but I didn't go to law school.

But I think the way that they would do it, and of course, it was to go to Supreme Court,
but they'll do whatever those non-elected officials choose to do, they would argue, and

again, it's not my opinion, but I think what they would say is, we are not giving the
money to the private school, we're giving it to the parents.

and the parent does what he or she wants to do with it.

We're not doing that.

So I don't, to me, that's just money laundering, but that's what they, I think that's what
they would say.

I like that term and we will save that public education because we could spend another
hour or another 30 minutes on that.

But Senator Blunt, thank you so much for being here.

Thank you for your time and thank you for your service to the state of Mississippi.

Any last?

for having me.

Thank you all for reaching out.

oh People across the state listen to this.

Your legislator is gonna decide whether that person's a Democrat or Republican.

They're gonna decide what we're gonna do with this school issue in the upcoming session.

Call your legislator and you can talk to him or her, not a staff person.

We have small districts here.

You can call your legislator and tell him or her what you think.

So I would encourage you to do that.

We will do that.

Jim, do the commercial for us.

Yes, thank you.

Appreciate it very much.

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ah

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Well said Jim, thank you.

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Yes, right now it is free oh and we would love to hear from you and we would love to hear
from uh anything that you would want us to talk about and we do appreciate it.

Yes.

I think we've had some really exciting and newsworthy podcasts in the past, but today was
an example of the type of podcasts that we love to do.

We love to talk to people who are in positions to make a difference and hear their
perspectives on

what might happen and what has happened in the past.

It's very important ah to have an educated society.

Without an educated society, we continue to send the same people over and over and over
again, back to the same posts, and we expect different things to happen.

So this is, in my opinion, this is one of the few broadcasts.

where it's not opinion, it's a broadcast where we ask people who make the laws and affect
our daily lives.

And I think that's important and differentiates us from all of the other podcasts out
there.

Absolutely.

Thank you, Jim.

Any last thing?

You take, all right.

Join us again on the next episode of MS Happenings, Mississippi Happenings podcast.

Thank you so much.