In less than a month legislators will return to Columbia for the 2017 session. The two biggest problems some say they face are fixing roads and overhauling the state’s failing pension program.
The program has been deteriorating since 1999 after a series of bad investments and poorly managed expectations on returns. Because of the large, growing debt, tax-payers across the state will be stuck paying billions.
Senator Sean Bennett is on the Senate and House joint committee tasked with tackling the problem.
He says the state is somewhere between $20 and $40 billion short on pensions. Early reports had the debt at $21 billion. Richard Eckstrom, South Carolina’s Comptroller General, says it’s likely a debt between $30 and $35 billion. The state’s total budget is $8 billion annually, he added.
“This debt will fall on the shoulders of every tax payer. There will be future tax payers not yet born that are being hung with this debt,” Eckstrom told the I-Team.
Schools, municipalities, and other entities that employ state workers have been tasked with putting more money into the system. Put simply, more of your tax money is required to fix the problem.
And employees like teachers, police, and firefighters are also being required to put more and more money toward their pensions.
State employees already pay 45% more into the state’s pension program than the national average. For perspective, the average teacher takes home $107 fewer than out of state counterparts, according to report released to the joint committee this Fall.
“It’s an extremely complicated, complicated issue,” Senator Bennett told the News 2 I-Team.
But he believes it can be fixed, though it will take years to straighten out. He says the joint committee has spent months gathering facts and understanding the problem. He says this session it’s likely one of the top priorities.
“We have promises that we’ve made,” he explained. “We know we have to fulfill,” he continued.
Some speculate the pension program will need to be overhauled to resemble a 401-K plan in the future.
“I fear that preserving the retirement system in its current form may not be possible. Fixing the plan now is going to be outrageously expensive and the cost of any proposed solutions will financially impact every family in South Carolina. The state’s pension debt is everyone’s problem,” Curtis Loftis, SC Treasurer, wrote the I-Team.
He has grabbed headlines warning about the problems with the system.
“Starting in January, lawmakers will begin debating how to solve the problems that plague our state’s pension system. The pension debt is over $24 billion and I believe that 2017 is our last chance to fix the system at a cost we can afford. A solution to the pension debt must be the legislature’s number one priority.”