The Legislative Commission on Pensions and Retirement (LCPR) on Tues., March 13, passed the 2018 omnibus pension bill. The next stop for the bill is the Senate State Government Finance Committee, which will hear it on Thurs., March 15, at 1 p.m. in Room 1200 of the Minnesota Senate Building.
The bill includes sustainability measures for all four public pension systems: the Teachers Retirement Association (TRA), the Public Employees Retirement Association (PERA), the Minnesota State Retirement System (MSRS), and the St. Paul Teachers Retirement Fund Association (SPTRFA).
Details on the bill, currently moving as SF 2620 (Senate version)/ HF 3353 (House version), may be viewed on the State Legislature website.
Minnesota Management and Budget Commissioner Myron Frans told commission members that Gov. Mark Dayton endorses the pension bill in its current form and will include the funds in his supplemental budget. Frans said the bill is a “very important sustainability package” that has been several years in the making and includes measures to improve the financial health of the pension funds and the state.
The bill reduces liabilities by about $3.4 million immediately, lowers the rate of return on investments to a “reasonable” 7.5 percent, puts the plans on the path to full funding, provides funding to schools to offset increased pension contributions, ensures that unfunded liabilities won’t weigh down bond ratings, and safeguards the retirement security of public employees for the future, Frans said.
KEY TRA PENSION BILL PROVISIONS
* COLA: 1.0% for 5 years (2019-2023), then increase by 0.1% per year in each of next five years (2024-2028) to 1.5%
* COLA delay to age 66 (effective 7/1/2024) (exempt: Rule of 90, disability, survivors, age 62/30 years)
* Early retirement: Increase penalties, 5-year phase-in (fiscal years 2020-2024), age 62/30 years exempt
* Employee contribution increase: +0.25% beginning in FY2024 (7.5% to 7.75%)
* Employer contribution increases: +1.25% phased in over 6 years, FY19-24 (7.5% to 8.75%)
The Legislative Commission on Pensions and Retirement (LCPR) on Tues., March 6, reviewed miscellaneous pension-related bills and again took up the 2018 Omnibus Retirement Bill. Numerous stakeholders spoke during the public testimony portion of the meeting.
Teachers Retirement Association (TRA) retirees from the group Retired Educators of Minnesota (REAM) said that REAM supports the pension bill as long as funding of the employer contribution portion is approved. REAM’s Lonnie Duberstein said that he is grateful for his defined-benefit pension and wants the same benefit to be preserved for the next generation of teachers.
Education Minnesota’s Rodney Rowe spoke to the recruitment and retention value of the TRA pension and said that his union supports the bill. Joan Beaver of REAM and Education Minnesota Retired and Louise Sundin of the Minneapolis Committee of 13 also spoke in support of the bill.
Representatives of school boards and administrators showed up in force to support the bill provided state pension adjustment aid is included. Scott Croonquist of the Association of Metropolitan School Districts thanked the commission for working out the pension adjustment formula, noting that because schools do not have general levy authority, such an aid provision is needed to offset increases in the TRA employer contribution.
Grace Keliher of the Minnesota School Boards Association, Valerie Dosland of the Minnesota Association of School Administrators, Fred Nolan of the Minnesota Rural Education Association, and Joel Albright of Schools for Equity in Education also testified in favor of the pension bill.
Public safety and firefighter representatives testified that a strong pension system is needed to recruit and retain police officers. Joe Dellwo of the Minnesota State Patrol Trooper’s Association noted that state troopers don’t get Social Security and said that the bill represents shared sacrifice by all parties.
Members of the Minnesota State Retirement System (MSRS) representing the state Pollution Control Agency and the University of Minnesota agreed that a healthy pension system helps attract and retain skilled public workers at a time when “brain drain” and succession planning are major concerns.
Public Employees Retirement Association (PERA) members from AFSCME testified that the 1 percent COLA outlined in the bill is hard to swallow, but the union supports the bill. It was noted that many PERA retirees have no Social Security coverage and are therefore deeply dependent on their state pensions.
Also on Tuesday, the commission reviewed separate bills dealing with state aid eligibility reporting for the Clearbrook Fire Department Relief Association, TRA coverage election authority for a Minnesota State employee, coverage for PERA part-time paramedics and emergency medical technicians employed by Hennepin Healthcare System, and clarifying PERA DC distributions for those still employed.
The pension commission intends to pass the bill at its next meeting, March 13 at 5:30 p.m. in Room 1200, Senate Office Building.
Courtesy TRA Communications
Committee of 13
It is important to let your Representative and Senator know how important the passage of the LCPR Pension Omnibus Bill is – to you and to all Minnesotan.
The Pension Bill has numbers in both houses: SF 2620 and HF 3053. Chair Rosen is working to get universal support in the Senate and Rep. O’Driscol, Vice Chair, is working to get support in the House. Governor Mark Dayton has agreed to put funding for pensions into his Supplemental Budget.
It is an election year for Minnesota. Much is at stake.
Midterm elections don’t usually draw much voter turnout. When the state economy seems to be doing well, voters may think that not voting returns the status quo. These conditions favor the opposition, whose turnouts produce stunning defeats and are followed by dramatic reversals.
Minnesota stands out as a great place to live, for now. The governor’s efforts to hold off the forces of capital side pressure have preserved many gains for Minnesotans. That could come undone in November. There is a fragile and unreliable balance in power.
If the effects of an international trade war sharply depress the equity markets and the economy, pensions and other retirement savings could be similarly depressed and under renewed threat from the investment industry. Losses in farm exports could put further demands on our state’s resources. Meanwhile, prices for consumer goods as well as medical costs and inflation could rise. Social Security and Medicare are already under threat from blossoming Federal debt and the prevailing “everyone for her/himself” attitude in Washington.
We can anticipate debates around gun sentiment and actual education needs upping that piece of the next budget, while the 2017 budget standoff gets revisited attention. The #MeToo movement will rightly demand some actions. Meanwhile, other gender rights agendas lie right beneath the surface. And there will be water quality problems and climate change effects that are unpredictable but seemingly inevitable. Actions taken will have long-lasting outcomes.
Voting in November could not be any more important. Your everyday lives are far more impacted by state controlled factors than any other. Every candidate must be asked about all of the above points, and their answers must be clear and their positions firm. That’s how you must decide your votes.
If you’ve read this far, you were already committed to voting. Now commit to getting family and friends to do likewise. Find out where candidates are on the issues and get yourself and others to the polls in November. Every day you should think about what’s important in your life that the State of Minnesota affects in some way. Listen to what others are saying about these things and talk with them about why you feel as you do. Then every day, tell someone to vote in November.