COEUR d'ALENE - Some local legislators believe the retirement system for public employees should be on the table as the state wrestles with ways to trim its budget.

The Public Employee Retirement System of Idaho (PERSI) includes a mandatory base plan in which general members contribute 6.23 percent of their gross salary and the employers kick in 10.39 percent. In this case, employers are the taxpaying public. Fire/police rates are 7.69 percent for the employee and 10.73 percent for the employer.

"I think benefit reductions or employees being asked to contribute more are legitimate areas of discussion," said Sen. John Goedde, R-Coeur d'Alene. "While it will be dimly viewed by teachers, state employees and other PERSI members such as state legislators, I think that in the conversation of reducing costs, this needs to be on the table."

As the plan's sponsor, the Idaho Legislature has the authority to make changes to PERSI.

PERSI members include government employees, including those who work for school districts, most area cities, the county, fire and highway districts and other agencies.

According to PERSI, there are 4,899 active members in Kootenai County, 1,359 inactive members and 2,031 retired members. The largest employers of active members include: Coeur d'Alene School District, 974; Kootenai County, 678; Post Falls School District, 516; Lakeland School District, 473; and the city of Coeur d'Alene, 303.

Despite the recession, employer contribution rates to PERSI have not changed since 2004. In the private sector, employer matches for retirement were among the first areas to be cut and, in many cases, the benefit hasn't been restored.

Rep. Frank Henderson, R-Post Falls, said an evaluation of PERSI is always in order.

"However, no change should be made or considered that would risk the financial soundness of the overall program," Henderson added.

Goedde said there have been informal discussions of tweaking the system or moving to a 401(k) plan, but he hasn't heard of any legislation to that effect.

He said that while it may be that new retirees could be included under a different plan, he believes Idaho has a legal requirement to provide the defined benefit plan for retirees and employees who have paid into the system.

Patrice Perow, PERSI spokesperson, said the organization showed it's sensitive to tight budgets, postponing contribution increases last December and five years ago.

December's decision postponed for a year a rate increase that was planned for this July. The increase would have made the general employer rate 11.32 percent and police/fire 11.66 percent. Increases of 1.5 percent in 2012 and 2.31 percent in 2013 were also planned before the postponement.

The employer contribution rates have been the same since 2004.

PERSI officials said the decision was made to help employees and the system's 730 employer members such as cities, state agencies, counties and school, highway and water districts with their budgets.

"Significant investment gains in recent months bolstered PERSI's funding status to nearly 88 percent, relieving the need for a rate increase at this time," said Jody Olson, PERSI's board chairperson.

"The retirement board has to balance its fiduciary responsibility to ensure the actuarial soundness of the system with the sensitivity to member and employer budget constraints. We are confident postponing the rate increase will not compromise PERSI's stability, and we know how much it will help the state and other public employers and their employees manage tight budgets."

The increase was proposed due to a decline in global markets and the recession, which resulted in lower-than-expected investment income.

How much making changes to PERSI would save on agencies' budgets is debatable.

Perow, the PERSI spokesperson, said changes would likely have little impact on the state's budget shortfall.

"PERSI does not rely on general funds," she said. "We produce and operate from our own revenues, which includes employee and employer contributions and interest earned on investments."

Perow said Idaho lawmakers have always been thoughtful and prudent when it comes to PERSI.

"There's no reason to think that will change," she said.

Goedde said PERSI is both a well-funded and well-managed program.

"Idaho's plan is more than 88 percent funded right now," he said, adding that a healthy plan lies between 80 percent and 100 percent funded. "In light of the past 24 months, we are in great shape."

In fiscal 2010, PERSI paid $522 million in benefits. Eighty-nine percent of that - $465 million - went to retirees living in Idaho.

For the year ending June 30, 2010, member contributions to the base plan was $178 million and employer contributions $298 million.

Post Falls City Administrator Eric Keck said PERSI is one of the nation's strongest public employee retirement systems due to its aggressive management and believes the program is vital to recruiting and keeping employees.

"It is robust and helpful to the employees and so it is a benefit that I would hate to see go away," Keck said. "It helps with employee retention and attraction.

"A public pension program is crucial to the success of public service. I recognize that public funds and tax dollars drive these programs, but it is important to have a retirement vehicle in place for public employees."

Goedde said when times were good and the state was paying less-than-market wages, retirement was an attractive benefit for employment.

Keck said he doesn't believe PERSI is crippling the city's budget. The city pays $762,675 for PERSI benefits and $1.2 million for health and dental insurance.

"We are a service organization and are going to have significant overhead expenses, but PERSI is an excellent program that ensures the future ability of public servants to have some funding in their retirement," said Keck, adding that PERSI is the only retirement program for many public employees.

Post Falls police Chief Scot Haug said other states have more volatile retirement systems, which may result in anything from more benefits to employees to underfunded pension plans and bankruptcy.

"I have colleagues who are retired from California and receiving 100 percent of their top pay when they retired," Haug said. "PERSI does not offer this. The difference is that the PERSI system is sustainable and funded properly when many are not sustainable."

Of Kootenai County's 792 employees, 750 are on PERSI.

Employees are generally satisfied with the system, according to Commissioner Todd Tondee.

Henderson said that if PERSI is looked at as a way to cut costs, he believes an evaluation of all benefits should be made, including sick days, co-payments for prescriptions and insurance contracts.

"In my opinion, there is more opportunity for reducing costs by changes in the employee medical benefit program than in some changes in PERSI contributions," said Henderson, a former member of the Joint Finance-Appropriations Committee that presents the budget.

"Greater transparency of all factors in the medical benefits program would yield significant savings. Such investigations would be a major undertaking, however."

Henderson also believes there should be an investigation of cost-saving opportunity by allowing competition for the state medical benefit contract by allowing out-of-state companies to enter bids.

When the Firefighters Retirement Fund merged with PERSI in 1980, paid firefighters who were members of the original retirement system retained their original benefit entitlement. As such, the employer with those employees pays the general employer rate of 10.73 percent, plus an excess merger cost rate of 17.24 percent for a total of 27.97 percent.

Firefighters hired after Oct. 1, 1980, are PERSI members.

PERSI also offers a voluntary "Choice" 401(k) plan.

Most PERSI members are vested when they acquire 60 months of service, but some elected or appointed officials may be vested after five months.

PERSI members pay into Social Security.

"It's no different from other workers," Perow said.