Pension commission hears public testimony on TRA, St. Paul Teachers funding proposals

Teachers Retirement Association stakeholders testified Tues., Feb. 14, at the Legislative Commission on Pensions and Retirement (LCPR) regarding TRA’s board-approved 2017 financial proposal.

Eighth grade social studies teacher John Bartholow, who teaches at St. Michael-Albertville School East, said that he would question whether to remain in the profession if drastic changes are made to the TRA pension. He cited a Towers Watson study that found that young workers consider a defined-benefit pension an important factor in accepting a job and staying on the job. Teacher effectiveness improves with experience, Bartholow said, and the teacher shortage will worsen if pension benefits are cut.

LeMoyne Corgard of Anoka-Hennepin Education Minnesota said that the TRA pension is a staple of the teaching profession and that active teachers have contributed a substantial portion of their income to their pension. The TRA proposal is balanced and will help sustain the system, Corgard said.

Isle Public Schools social studies teacher Jennifer Ernest spoke about her experience as a young archaeologist who decided to work in a small community school teaching K-12 history, science and social studies. Despite the relatively low pay for teachers, she said she hopes to retire with a sound pension someday. She added that it’s difficult for small school districts with limited resources to absorb contribution increases without state aid.

Rodney Rowe of Education Minnesota testified that half of teachers leave the profession in the first five years, so good benefits are important. EdMN supports TRA proposal because it is balanced, he said.

Lonnie Duberstein, president of the Retired Educators Association of Minnesota, said he can’t ask his retiree members to support a permanent 1 percent COLA and pointed out that the proposed employer contribution increase would still leave Minnesota well below the national average. Duberstein testified about his decisions as a young teacher to remain in the profession despite higher-paying job opportunities.

Representing active and retired Minneapolis teachers, Louise Sundin of the Committee of 13 also testified in support of the delicate balance of the TRA legislative package. Sundin pointed out that 75 percent of active teachers in Minnesota are women, and a high percentage of those are single and heads of households. “Without our public pensions we will become your wards,” Sundin said, noting that the average TRA pension check is a modest $1,800 per month. Research shows that women are 80 percent more likely to become impoverished, she said.

Sundin said that active teachers took a four-year cut as part of the last pension bill because their contributions rose 2 percent. Starting salaries in the mid-$40,000 range make it hard to recruit young talent, especially with heavy burden of student debt, she said. Sundin asked LCPR to keep the normal retirement age at 66, saying that she has a friend who teaches kindergarten and “can’t get up from those little chairs.”

Joan Beaver, board member of Education Minnesota Retired, said that EdMN Retired supports TRA’s proposal and stressed that pensions provide an important economic boost to Minnesota communities. She said that two-thirds of retirees have borne benefit cuts and that benefits are not keeping pace with inflation. TRA’s proposed lower COLA translates into a reduction of about $573 a month, she said. Even so, retirees are willing to share in the sacrifice for the good of the fund, Beaver said.

REAM vice president Paul Ehrhard similarly testified that pensions are a key element in teacher recruitment/retention and that he can’t support a COLA that’s at “1 percent for infinity.”

Representatives of school districts and school boards also testified. Gary Amoroso, executive director of the Minnesota Association of School Administrators, said his group supports TRA’s proposal and added that the TRA board engaged employer groups in the deliberation process. He stressed that state funding to offset increased employer costs is important, especially because previous TRA contribution increases were absorbed by school districts. Amoroso pointed out that the governor’s pension proposal only funds the contribution increases for two years and additional funding will be needed in the third and fourth years.

Scott Croonquist, executive director of the Association of Metropolitan School Districts, said that his group worked with TRA and supports the state aid mechanism in the TRA bill. Croonquist explained that the school aid pension adjustment mechanism is efficient and equitable because it will reimburse districts for their actual increased costs.

Grace Keliher of the Minnesota School Boards Association backed up the testimony of Amoroso and Croonquist and credited Gov. Mark Dayton for recognizing the need to help school districts cover the increased pension costs. Keliher said she supports including a mechanism in TRA’s bill that covers the entire 2 percent employer increase.

Earlier in the evening, the LCPR heard testimony regarding the St. Paul Teachers Retirement Fund Association (SPTRFA) legislative proposal. Mike McCollor, vice president of the SPTRFA Board of Trustees, Mary Gilbert Dougherty of St. Paul Schools, and Brian Rice of the St. Paul Teachers Pension Political Action Committee testified in support of the St. Paul funding bill. Rice stated that it is wise and prudent to lower the investment return assumption to 7.5 percent based on action taken by other states, and that this will keep the system’s financing solid for the long term.

The pension commission approved non-controversial changes to pension system actuarial assumptions – some of which were requested last year. The 2016 administrative bill (SF545/HF565) will be the vehicle for other pension funding reform measures that may be approved by the commission later in the session, LCPR chair Julie Rosen said.

In closing, Rosen said that the process of evaluating the systems’ proposals is only beginning and that while it’s important for LCPR to hear concerns, stakeholders shouldn’t assume that the commission has a course of action already in mind.

Courtesy of Minnesota TRA Communications

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