- Associated Press - Tuesday, February 14, 2017

COLUMBIA, S.C. (AP) - Legislators advanced a proposal Tuesday aimed at shoring up South Carolina’s pension system for current employees but warned additional fixes are coming that may drastically alter benefits offered to future employees.

The bill sent to the full House Ways and Means Committee would increase employers’ contribution rates by 7 percentage points over the next six years, requiring the taxpayer-supported entities to cumulatively put an additional $3.2 billion into the system.

More than $42 million extra also would collectively come out of the paychecks of about 223,000 employees next fiscal year. But the legislation specifies that would be the end of rate hikes for workers, who already pay some of the nation’s highest rates.

Rep. Bill Herbkersman, the subcommittee’s chairman, said budget writers are considering covering roughly $165 million of the $236 million required from employers next fiscal year in the state budget. That would fully cover the 2017-18 increase for most state agencies and K-12 school districts, while covering half the increase for other entities in the system.

Those employers - which include colleges, city and county governments, and utilities - would have to come up with the rest separately. That could come from local property taxes or tuition.

Panel members warned that the changes won’t fix the system indefinitely. Legislators have said they can’t repeat their 2012 mistake, when they congratulated themselves as passing a pension reform law they claimed shored up the system for generations to come. Yet the debt continued to grow.

“What’s going to secure this?” said Rep. Mike Anthony, D-Union. “Let’s keep biting at this apple.”

A joint House-Senate pension study committee will get to work soon on “next phase” fixes, said Herbkersman, R-Bluffton, its co-chairman.

“There’s nothing off the table,” he said, adding that could include moving new employees to defined contribution benefits, such as 401K plans.

New employees should “understand the system probably will not look like it does now,” said Rep. Gilda Cobb-Hunter, D-Orangeburg. “We’ve been careful of steering away from the ‘DC’ word, but we’re putting people on notice some changes are likely just because we can’t afford what we have now for new employees.”

Other potential changes they plan to explore include closing the system to employers that aren’t state agencies and school districts.

The system’s roughly 850 employers include many quasi-public entities, even associations that advocate for public employees. Although benefits are capped at salaries of roughly $250,000, that’s far more than most state employees make, and high-paid workers at hospitals, colleges and other employers could be draining the system, Herbkersman said.

His panel will evaluate the various employers’ impact on the system.

“If they’re helping, I love ‘em, but if not, we’re going to have to change that,” he said.

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