Officials look to cut PERS at Regional
Published 12:00 am Thursday, July 23, 2009
NATCHEZ — Faced with a new state-mandated hospital tax and the rising cost of providing healthcare, hospital, state and county leaders met Wednesday to discuss cutting one major expense at Natchez Regional Medical Center — PERS.
Eliminating the Mississippi Public Employees Retirement System for hospital employees is currently being explored as a cost-saving measure at the hospital.
The PERS system requires hospital employees to contribute 7 percent of their income to the retirement program while the hospital makes a 12 percent contribution to the retirement account.
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And for NRMC that cost, approximately $1.6 million per year, is a great one to bear.
“The bottom line is we can’t afford this,” said Dan Bland chairman of NRMC board of trustees.
Bland said PERS payments combined with a newly-mandated hospital tax make cuts to PERS a necessity.
Natchez Regional’s Chief Administrating Officer Bruce Buchanan said the new hospital tax could cost Regional up to $900,000 this fiscal year.
“It’s going to be a tremendous expense for us,” Buchanan said.
To help lessen the impact of that tax, the majority of the Adams County Board of Supervisors voiced support for either eliminating PERS for Regional’s incoming employees or totally eliminating the plan.
Supervisor Darryl Grennell said while eliminating the retirement program likely would be upsetting for some, it’s necessary.
“The hospital just cannot afford it,” Grennell said. “It’s that simple. It’s not something we want.”
Supervisor S.E. “Spanky” Felter said while he supports the cuts, local leaders should look beyond the hospital.
“(Hospital employees) did not ask to get in this situation. We should be looking at making cuts in our PERS also,” Felter said making cuts for those in county government. “It’s the fair thing to do.”
Buchanan said since 45 percent of the hospital’s employees do not work at Regional for the eight years it requires to for them to become vested in the program, once an employee leaves they’re able to take their contribution but the hospital’s 12 percent match goes directly to PERS.
Buchanan said if the hospital is successfully able to eliminate PERS, no one with money in the system will lose any money.
“That money is safe and it isn’t going anywhere,” he said.
But eliminating PERS won’t be easy.
Natchez Regional Attorney Walter Brown said the hospital tried to eliminate PERS unsuccessfully in 2004 and 2006.
Brown said eliminating PERS would take a legislative act and approval from PERS.
“I think if we got legislative approval, PERS would follow along,” Brown said.
And while the hospital was unable to eliminate PERS in the past, this time could be different, Brown said.
Brown said the hospital’s current bankruptcy and new tax problems could help to persuade the legislature and PERS to let the hospital out of its contract.
“I think this could work to our advantage,” he said.
And while the Brown is making plans to have PERS brought up in the 2010 Legislative session, the timing is critical, Bland said.
“It’s now or never,” Bland said.
Bland said it’s only been in recent months that the hospital has become financially stable and able to “tread water” and the new tax coupled with PERS can hurt the hospital.
“We can’t pay for all of this,” he said. “We just don’t have that much money.”
And support for the elimination of the program goes beyond local leadership.
Reps. Robert Johnson and Sam Mims and Sen. Bob Dearing all voiced support for some form of PERS elimination.