Mo. Senate endorses education, pension overhaul

Thursday, April 22, 2010

JEFFERSON CITY, Mo. (AP) -- Facing an impending budget crunch, Missouri senators passed a legislative package Tuesday that would alter how state government funds education, reduce the number of state holidays and require new state employees to start paying money toward their pensions.

The changes come as lawmakers are striving to complete a 2011 budget that takes effect July 1. Missouri revenues are down more than 13 percent this year, and the state's economic forecasters are not expecting much of a rebound in the coming year.

Senators approved three bills Tuesday containing the changes but noted further tweaks are likely as the bills now move to the House.

One of changes would alter Missouri's funding formula used to distribute aid to 523 school districts. That formula was approved in 2005 and is scheduled to be fully phased in by 2013, but it does not offer any guidance if the Legislature cannot provide all the money required for it.

For the 2011 budget that starts July 1, the House and Senate have decided to cancel the increase demanded by the formula and instead keep funding flat. Some lawmakers are concerned Missouri's worsening budget situation could force more budget cuts in 2012.

To deal with that possibility, senators would give themselves until 2018 to fully implement the new funding formula, only reimburse school districts for summer school classes focused on core academic subjects and develop a system for cutting basic school aid under two scenarios:

-- If lawmakers cannot provide all the additional money the new formula demands, school districts would split smaller funding increases.

-- If lawmakers cut education spending below current levels, certain districts that rely more on local money than state funds would get a 10 percent cut to their state aid. After that reduction, the rest of the shortfall would be divided among all 523 districts.

Another measure approved by the Senate seeks to save money by restricting state pensions. Supporters hope to save $34 million next year and up to $315 million combined over five years by increasing the minimum retirement age and requiring new state workers to contribute to the retirement system.

The changes affect workers newly added to the payroll in 2011 who get their pensions through the state's main retirement fund -- the Missouri State Employees' Retirement System -- or through a separate plan for the Department of Transportation and the Highway Patrol.

That bill would force new workers to contribute 4 percent of their pay to the retirement system. Workers don't currently pay anything, and their benefits are funded through the investment income of the pension system and state money.

The legislation also would increase the minimum retirement ages for new workers to get full benefits.

Many state workers would need to wait five years and could retire when they are 67 years old after acquiring 10 years of service. State employees also currently can retire when their age plus the number of years working for state government equal 80, if the worker is at least 48 years old. That option would be increased to 90, and the worker would need to be at least 55 years old.

Separate legislation passed Tuesday is estimated to save a couple million dollars per year in general state revenues by canceling state holidays on Feb. 12 for Abraham Lincoln's birthday and on May 8 for Harry Truman's birthday. Gov. Jay Nixon's administration also has said it plans to end the tradition of issuing an executive order that makes the Friday after Thanksgiving a state holiday.

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