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With only one "no" vote, the Missouri State Employees Retirement System's board on Thursday approved asking state lawmakers for a 20.21 percent-of-payroll contribution in the 2018-19 state budget.

The money — at a dollar amount to be determined during the budget-writing process — is the state government's "employer's contribution" to operations of the retirement system that covers most of the people who work, or have worked, for Missouri's government.

The state's contribution in the current 2017-18 state budget is 19.45 percent and was listed in the budget bills at more than $393.255 million for all funds, including $234.538 million in state general revenue funds.

Over the years, although the contribution percentage has fluctuated some, the total contribution has remained a small portion of the state budget.

The proposed new contribution rate for the 2018-19 budget is the amount recommended by the Cavanaugh MacDonald actuarial firm, which took over the MOSERS account in May after winning the retirement system's new contract.

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The proposed rate is about 2 percent more than lawmakers wrote into the current spending plan.

The board's vote came one day after State Treasurer Eric Schmitt — who is a MOSERS board member — warned lawmakers MOSERS is facing a financial crisis because it's only 60 percent funded and has an unfunded liability of $5.2 billion.

"I am here today to tell you this crisis is no longer on the horizon," Schmitt told the Legislature's Joint Committee on Public Employee Retirement Wednesday. "It's on our doorstep (and) the future of Missouri's finances are at stake."

But Joseph A. Nichols — a Cavanaugh MacDonald consulting actuary from Savannah, Missouri — told the MOSERS board Thursday: "A lot of changes have been made that are pushing us in (the) right direction.

"We talk about a crisis — (but) it's not."

He said as long as the state pays each year's recommended contribution, it will be able to meet its retirement obligations.

Nichols and Patrice A. Beckham — a Cavanaugh MacDonald principal who also is a consulting actuary — told the MOSERS board some of the increased contribution requests have been caused by reducing the system's estimated income from investments.

"They've gone from 8 1/2 (percent) assumed rate-of-return to 7 1/2," she said. "That's huge."

The board already has approved reducing that expectation to 7.05 percent by 2020.

Schmitt told lawmakers Wednesday, and repeated during the MOSERS meeting Thursday, the system's own numbers show a pattern of missing earnings assumptions "in 16 of the past 17 years."

But, Nichols told the board: "Not in the last 30, (and) the last 15 years have included two of the biggest (economic) corrections we've had."

During his Wednesday presentation to the lawmakers, Schmitt said he was concerned MOSERS had used mortality tables from the 1970s in making some decisions.

"The current mortality table (that MOSERS uses) was adopted in the 2016 evaluation," Beckham said.

Before that, MOSERS used a table that was created in 2000, "with improvements through 2016."

Before that, Beckham said, MOSERS used the Guaranteed Annuity Mortality Table from 1971 — an insurance industry table that included projections through 2000.

"Mortality tables are easily misunderstood," she said, because the information often is updated with more recent death statistics — even though a new table isn't created.

She told the board the Society of Actuaries, which creates the tables, "don't do it on any regular basis."

Seth Kelly, MOSERS' chief investment officer, plans to hold some workshops over the next couple months with board members, to talk about how the current investment decisions have been made and to begin discussions about how those decisions should be changed.

"I can make recommendations, but I need your support," he told the board.

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