Originally presented to the Legislature as a teacher pay proposal, this report was a plan to increase the take-home-pay of state and common school employees. It was an alternative to giving state employees a gross salary raise of 7.25 percent. This take-home plan would have eliminated the employee payment to the state retirement fund, thus giving an employee approximately 5 percent more in take-home-pay. The retirement system would have been funded totally by the state under this plan. No further employee withdrawals would have been made after the take-home-pay plan was implemented, thus reducing the total required rate of contribution and resulting in a savings in lieu of a gross raise. Those employees who contributed to the fund prior to implementation of the take-home plan would have received the 5 percent of their salary (plus 1 percent interest) if they ceased working for state government prior to retirement. The tax burden would have been shifted from an employee’s working years to his retirement years, and the proposal also would have provided an incentive for an employee to remain in state government.
Objections to the plan outlined in the report were that some pre-retirement state employees would have received lower retirement benefits, that the increase in take-home pay would have favored the highest salaried employees, and that there would have been no “psychological windfall” when employees left state employment and withdrew their retirement. On the other hand, implementation of the plan would have saved over $25 million per year in lieu of a gross raise. In addition, future salary increases would have been taxed at a lower rate.
For a paper copy of this report, contact PEER by telephone at 601-359-1226 or by e-mail at reports@peer.ms.gov.