When it comes to investment returns, surplus revenue and rainy day funds, State Treasurer David McRae told the Rotary Club of Columbus that Mississippi is in the best shape it’s been in since 1992.
“We made $375 million in investment returns for the state of Mississippi (in Fiscal Year 2024), and that is a record,” he said during the club’s meeting Tuesday at Lion Hills Center.
The state has also maintained a AA credit rating for the last four years, McRae said. That allows it to borrow money at lower interest rates, which in turn drives economic development, he said.
“That allows for economic opportunities all around the state,” he said. “It attracts businesses to come here, which at the end of the day, helps us with our revenue.”
McRae said his main concern lately is how the national economy, interest rates and inflation might affect the state’s economy. It’s imperative to maintain the state’s strong financial footing to avoid that being an issue, he said.
“Things are looking good (financially), so we can weather the storm of what happens nationally,” he said. “However, eventually that will take effect in Mississippi, so we need to be on good financial footing.”
PERS reform
While Mississippi’s financial health is in good shape, McRae said the Public Employees’ Retirement System is one area that should be reformed.
PERS is roughly between 58% and 60% funded, which is about the average when looking at retirement systems in other states, McRae said. But he noted that any changes to PERS would affect new hires and not those who are currently enrolled.
“PERS needs to be evaluated and looked at,” he said. “… The main reason I care about PERS so much is that it is … the main problem with our credit rating and one day it’s going to kill our credit rating.”
McRae said the PERS Board is recommending a new retirement tier (Tier 5) for future employees. The new tier, he said, would link the cost-of-living adjustment to the consumer price index. Rather than providing a guaranteed fixed 3% increase, as it currently does, linking the two would tie the benefits to inflation rates.
“Then you would generally fix it for new hires going forward,” he said. “It would not have a problem because your investment and returns would be based upon that CPI, and you’re not taking out more money than you can pay.”
Putting surplus revenue towards PERS could also help shore up the system, McRae said. Louisiana recently implemented a similar solution, directing 25% of surplus revenue toward funding its retirement system, he said.
“If we can put some of the surplus revenue and start putting it toward Tier 4 and below, which are the current employees and retirees, and you will start to see some (gradual growth in) our funding to PERS,” McRae said.
‘The point is that you never know what you have’
McRae told Rotarians his office has given back $110 million in unclaimed funds over the last 4 1/2 years.
“That is an economic boost to the people of Mississippi without using taxpayer dollars,” he said. “The average Mississippian has roughly $2,100 in unclaimed money waiting for them. We just want to get that back to the people of Mississippi.”
He encouraged members to check the state treasury’s website to see if they were eligible for any unclaimed funds.
“The point is that you never know what you have,” he said. “So I highly suggest you go and look at any time.”
McRae is a general assignment and education reporter for The Dispatch.
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