Font ResizeUtah's public employee retirement fund has been socked by the recession, losing nearly $4 billion last year and prompting state lawmakers to look at making changes.
One possibility: requiring employees to pay into their retirement fund for the first time in two decades.
"It's a crisis and we're just not going to let ourselves fall into that hole, so we're going to try to find solutions cooperatively," House Speaker Dave Clark, R-Santa Clara, said Wednesday.
Nearly 156,000 current public employees and retirees participate in the state retirement system -- including state and local workers, school teachers, police officers, firefighters, judges and even lawmakers -- and about 2,100 started drawing benefits last year.
But the state's retirement fund -- like pension funds across the country -- took a beating last year. Its investment fund, tied up in securities and real estate, went from turning a $1 billion profit in 2007 to suffering nearly $4 billion in losses in 2008.
That leaves the state with 84 percent of the assets needed to fully fund its projected liabilities. And to turn the corner and keep that number from falling further, it will have to come up with an additional $148 million.
Stakeholders are looking at significant changes to plug the gap. Options include requiring employees to start contributing to the retirement fund, raising the retirement age or reducing the benefits paid out to retirees.
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Any changes could only apply to new hirees because the state likely cannot legally alter the commitments it has made to those who are already in the system.
"First and foremost we want people to understand we have a promise and we're attempting to do all we can to make sure that promise is absolutely fulfilled," Clark said.
"What we've found is the program we've got right now, particularly in the dire economic times we're in, [is] going to require us to see what we do going forward, but past promises are not part of those negotiations."
The Utah League of Cities and Towns is spearheading a group of local and county governments to recommend a strategy for solving the problem. The Utah Public Employees Association, the union representing state and local government employees, has a similar task force looking at the issue.
Robert Newman, director of the Utah Retirement Systems, said that, unless something is done to start bringing more money into the system through contributions, the gap between assets and liabilities is expected to keep growing.
Liljenquist said that, given the state's already-strained budget picture, coming up with the millions needed to get the fund moving in the right direction would be "really difficult." So legislators want to "look at the whole range of options we could consider to meet that target without substantially going back to the pot for more money."
The aim is to address the gap without having to lay off workers. "If we didn't do this, we'd have almost no options going into the next couple of years," Liljenquist said.
He said lawmakers are hoping to hear recommendations in September so they can come up with a solution by the time the Legislature convenes in January.
The problem » The fund lost nearly $4 billion in investments last year.
Those affected » 156,000 members from state, local governments, public schools. These include both those currently employed -- 94,000 -- and another 62,000 who already have retired or left public employment.
The total value of pension fund assets is estimated at $15.3 billion, compared to $18.1 billion in liabilities (future payments owed to current and prospective retirees). The gap of nearly $3 billion is nearly three times what it has been for the past five years.
Source: Utah Retirement Systems Annual Report, 2008
