To the editor:

Why is it that the majority of opinions continue to request that Aaron Hilmer apologize for identifying the Missouri Public School Retirement System as a “Ponzi” scheme?

What is there to apologize for? He is addressing to the public a system that will not be able to sustain itself without a constant influx of money — your tax dollars.

After a little research on Google, Wikipedia defines a Ponzi scheme as “a fraudulent investment operation because it pays returns to separate investors, not from any actual profit earned by the organization but from their own money or money paid by subsequent investors. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee in the form of short-term returns that are either abnormally high or unusually consistent.

“The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going. The system is destined to collapse because the earnings, if any, are less than the payments to investors.”

I agree that the PSRS is not a fraudulent investment in the criminal sense. However, it does border on lacking fiscal responsibility. Let’s change some words and see if you can understand why Hilmer says that the PSRS needs changing.

The PSRS is an investment operation that pays returns to retired teachers and administrators, not from any actual profit earned by the school district or state government, but from its own return on investment or money paid by future and current teachers and administrators.

The PSRS makes enrollment mandatory for new investors by offering guaranteed payouts at time of retirement that other investments, IRAs or 401(k)s, cannot guarantee in the form of returns that are either abnormally high or unusually consistent.

The perpetuation of the returns that the PSRS advertises and pays requires an ever-increasing flow of money from taxpayers to keep the system going. The system is destined to collapse because the earnings, if any, are less than the payments to the retirees. So, why is everyone in an uproar over the obvious fact that the PSRS is called a Ponzi scheme? If it is not, then why must the contribution rate keep increasing?

At this time, the contribution rate is 29 percent split in half by the employee and school district. This contribution is expected to increase to 38 percent within the next few years. Where are the additional moneys going to come from to pay for the increase? Ask the Hancock or Pattonville school districts now that the casinos have reduced their tax liability through assessment appeals.

The whole point Hilmer makes is that the current system cannot keep doing business as usual. With an $8 billion underfunded liability, there is cause for alarm as the economy will remain in its depressed state for a while and with returns on investments paltry.

He is not, I believe, advocating a change for those currently receiving benefits, but for future enrollees. Like Aaron said, if things don’t change, the taxpayer will be left holding the bag.

Greg Frigerio

Concord

Editor’s note: Mr. Frigerio is a founding member of the Mehlville Community Taxpayers Association, a grassroots, nonpartisan organ-ization that opposed the Mehlville School District’s Proposition C.