Cement plant retirees could face lump-sum payouts

PIERRE -- The state Legislature last month designated $4 million of general funds to help out the special retirement system that serves employees of the former stateowned cement plant and its operations.

Jason Dilges
Jason Dilges

PIERRE -- The state Legislature last month designated $4 million of general funds to help out the special retirement system that serves employees of the former stateowned cement plant and its operations.

The system is still many millions of dollars short of what is expected to be needed to meet all of its obligations for decades to come. It will go broke in about 20 years unless the Legislature keeps sticking in more money.

Now another idea is popping up to ease the system's financial woes: Early lump-sum payouts to the system's members who haven't yet taken retirement.

That concept was floated Wednesday to the South Dakota Retirement System board of trustees by administrator Rob Wylie.

The payouts would be smaller than the total amounts that members would expect to receive if they received monthly retirement benefits for the remainders of their lives. That would reduce the system's long-term exposure.


The payout approach would need the trustees' approval and would probably require authorization from the Legislature.

Wylie described the $4 million from the Legislature as "a spectacular infusion of funds." The system will receive $2 million in June followed by $2 million in the 2014 fiscal year that starts July 1.

The cement plant and its affiliated operations were sold in 2001 by then-Gov. Bill Janklow, with the Legislature's approval, to a Mexico cement company.

The plant's retirement system was created in 1968 and has been separate since then from SDRS.

SDRS covers all other employees of state government plus the employees of many school districts, counties, cities and special government entities. After the 2001 sale, the cement plant retirement system spent years as a political orphan in state government.

A Rounds administration official acknowledged that it essentially sat forgotten in a drawer.

While unattended, the cement plant's system suffered significant losses some years to its investment portfolio. With no additional revenue flowing in, and with benefits being paid out, the portfolio hasn't been able to recover sufficient value to get back in balance.

The Legislature gave the SDRS trustees the responsibility for the cement plant's system in 2010.


That year the system received $4 million from proceeds of the final sale of cement plant assets. In 2012 the Legislature proved $1 million.

An analysis performed last year showed the system needed $2 million in 2013 and $1.5 million annually for 14 more years in order to get back into balance.

The system members totaled 340 in 2012 with 230 of them receiving benefits. Since the 2001 sale, the total membership had declined from 400 but the recipients have risen from 148.

Jason Dilges was the finance commissioner for the Rounds administration and holds the same role in the Daugaard administration. Dilges also serves on the SDRS board. He said legislators this year wanted assurance that any money eventually left over will be returned to the state treasury for other use.

Matt Clark is state government's chief investment officer. His office manages the SDRS and cementplant portfolios and he sits on the SDRS board.

"It was a wonderful thing," Clark said Wednesday about the latest $4 million.

What To Read Next
Throughout the county party election season, stretching from mid-November to the end of January, delegates have succeeded in changing the makeup of key county parties, like Minnehaha and Pennington.
Members Only
“In our industry there aren’t a lot of young people in it. I like the fact that there are a lot of young people in agriculture here,” he said of the Mitchell area.
Members Only
After the departure of longtime superintendent Marje Kaiser and the hiring of Dan Trefz, who recently resigned, advocates say the specialty school needs help from lawmakers to reach its past heights.
Over the past year, the city has been mulling over bringing a secondary water source to Mitchell – a move Mayor Bob Everson said is aimed at positioning the city to grow.