Pension commission OKs its staff bill on party line vote

MAY 10 – The Legislative Commission on Pensions and Retirement approved the omnibus pension bill this morning on a party line vote of 8-4. Members voting against the bill were Sen. Sandy Pappas (D-St. Paul), Sen. Dan Schoen (D-St. Paul Park), Rep. Paul Thissen (D-Minneapolis) and Rep. Mary Murphy (D-Hermantown).

The bill begins moving through other House and Senate committees starting today.

Before tboxhe bill passed, Pappas said she was disappointed there was not agreement in LCPR but indicated there is still potential to reach agreement on a bill that the governor would sign if everyone remains flexible. Pappas said most of the disagreements pertain to the TRA provisions and she is hopeful that with a few adjustments an agreement could be reached. Sen. Julie Rosen, (R-Vernon Center; LCPR chair), indicated she was willing to continue to work on the bill with the governor and feels that the commission has a good foundational bill.

Before considering a series of amendments to the bill, Thissen asked about funding to offset pension costs for state agencies and school districts. Rosen stated that as the bill moves through other committees, funding can be added, including a possible increase in the school aid formula for schools. Rosen said she and Rep. Tim O’Driscoll (R-Sartell) expected to meet with the governor on Monday regarding pensions but the meeting was cancelled.

Pappas said she has concerns about elimination of augmentation and the COLA delay, which she believes will create a rush to retire and have the unintended consequence of exacerbating the teacher shortage. She also advocated for more of a phase-in for lowering the investment assumption to 7.5 percent for TRA. Pappas criticized the 1 percent COLA proposal and the proposed increase in employee contributions, saying these measures are “too much” and do not achieve shared sacrifice.

With regard to a provision that would delay receipt of a retiree’s first COLA until the retiree reaches normal retirement age (66 for most TRA members), Pappas successfully offered an amendment to delay implementation from 2018 to 2023 for all the pension systems. She explained that members near retirement need time to accommodate the change. Rosen said she supported the amendment and it passed.

An amendment to replace the TRA provisions in the bill with proposals supported by the TRA Board of Trustees and stakeholders was offered by Pappas with support from Thissen, but the amendment failed on a party-line vote. Thissen noted that the commission usually proceeds with major pension changes only when the pension system boards and stakeholders are in agreement.

Thissen offered an amendment to remove PERA provisions from the bill since all who testified on these measures indicated opposition, including the PERA board, employees and retirees. This amendment failed on a voice vote.

Courtesy TRA Communications and Committee of Thirteen

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April18th LCPR meeting

The Legislative Commission on Pensions and Retirement (LCPR) met on Tuesday, and Minnesota Management and Budget (MMB) Commissioner Myron Frans testified regarding Gov. Mark Dayton’s recommendations (SF2233/HF2486). These recommendations contain measures endorsed by a Blue Ribbon Panel convened at the governor’s request earlier this year and included in the governor’s biennial budget.

For TRA, the bill calls for a 1 percent retiree cost-of-living adjustment for five years and 1.5 percent thereafter, as well as a 2 percent increase in employer contribution rates.  For MSRS, the bill calls for a reduction in the COLA from 2 percent to 1.5 percent.

Frans said bipartisan support is needed for pension reform. He was questioned about why the employer contribution rate increase for Teachers Retirement Association (TRA) was only funded for two years, and why St. Paul Teachers Retirement Fund Association (SPTRFA) does not receive its requested $5 million direct appropriation in the bill. Frans said MMB believes it cannot commit to these dollar amounts beyond two years.

Sen. Dave Senjem asked about how much the bill is going to cost and what funding ratio trajectory is projected for each of the funds over the next 30 years. With regard to the investment return assumption, Rep. Tim O’Driscoll said that it’s difficult for the State Board of Investment to target one rate for TRA and a different rate for the other systems. TRA has proposed moving to 8 percent while a data-driven study is conducted on best practices for setting the investment assumption. Frans and the blue-ribbon panel recommended 7.5 percent for all systems immediately (July 1, 2017).

Sen. Julie Rosen, commission chair, asked LCPR members whether it would be helpful to get actuarial costing on the governor’s proposal. Members agreed to proceed with a cost study. Separately, Deloitte actuary Michael DeLeon testified on actuarial studies on the retirement systems’ reported actuarial liabilities. Deloitte has only minor recommendations for the system actuaries for the fiscal year 2017 valuation work.

The Pension Commission is expected to meet again next Tuesday, April 25th but no agenda has been set for that meeting

Courtesy of Minnesota TRA Communications

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

Senate passes pension bill

The Senate version of the 2016 Omnibus Pension Bill (SF 588) on Thursday passed out of the chamber on a vote of 61-1. Sen. Eric Pratt voted no.

Senate bill author and pension commission vice chair Sen. Sandy Pappas, D-St. Paul, introduced the bill by saying that the state’s pension plans recently conducted studies and found that public employees are living longer, which means that retirees will be collecting pension checks for a longer period of time as well. Pappas said it is a normal part of pension oversight to have to come in and adjust items such as employer and employee contribution rates and retiree cost-of-living adjustments.

Pappas said that the Teachers Retirement Association and the St. Paul Teachers Retirement Fund Association (SPTRFA) brought sustainability plans to the Legislative Commission on Pensions and Retirement (LCPR) that were expensive because they required more from school districts and state agencies. As it became clear that money would not be available, Pappas said, the current bill was scaled back and has no dollars attached to it.

Under the current bill, St. Paul Teachers will increase contributions by 0.5 percent of salary beginning in 2018. A mechanism that would trigger higher COLAs for all public pension fund participants is being eliminated “so nothing is on automatic pilot,” Pappas said. TRA’s amortization period will be extended to June 2046. To avoid statutory COLA increases on Jan. 1, 2017, the current bill calls for the COLA for MSRS members to drop to 1.75 percent for one year, and TRA members’ COLA drops to 1 percent for one year.

These measures save the plans some money now, but the goal is to return next year to discuss further adjustments. “The governor believes this [a comprehensive sustainability package] needs to happen, if not this year then next year,” Pappas said, adding that the stopgap measure provides time to consider what kind of adjustments in school aid and agency budgets will be required to offset increased employer contributions.

Pappas summarized the technical administrative provisions in the bill, which includes lowering the investment return assumption for TRA to 8 percent. The Public Employees Retirement Association and MSRS lowered their investment assumptions last year. Another provision of the bill allows public plans to accept gifts or bequests. Pappas said the bill moving to the House on Friday is the same as hers.

Sen. Pratt, R-Prior Lake, asked Pappas about the origins of the 8 percent investment assumption. Pappas said that the pension funds, their actuaries and boards – as well as the pension commission – consults with the State Board of Investment. Minnesota’s investments have done very well, are well managed, and are designed with a long-term strategy in mind. Pappas said the pension commission felt that lowering the rate was a good cautionary move, though lowering that rate does have the effect of making the funds look like they’re not as well funded.

Pratt said that the assumption is still too high, and that even investment guru Warren Buffett says that over the long term, the market assumption for returns shouldn’t exceed 7 percent. Pratt added that while there have been good years where the return is 15 percent or more, those gains were wiped out during economic downturns. The state should be looking at fairly conservative investments, he said, noting that the prime rate is only 3.25 percent and that no depository is paying more than 1 percent on deposits.

“These plans aren’t sustainable under their current assumptions, and this is one of those assumptions that are still too high,” Pratt said. He added that he is glad the retiree COLA is being dropped to 1 percent for TRA.

Pappas said that with the Consumer Price Index, a measure of inflation, under 2 percent, LCPR members have been torn about cost-of-living increases for retirees. “In our pension principles, we really believe we need to retain the buying power of the retirees’ paycheck in order to not have it erode” but we realize that the COLA is expensive, she said. She invited Pratt to bring his expertise to the pension commission, and encouraged him to consult with SBI Executive Director Mansco Perry about the investment return issue.

Sen. Mary Kiffmeyer, R-Big Lake, said that large retiree COLAs during boom times in the stock market and the economy “robbed the core” of the pension funds of money that needed to be retained for a rainy day and that legislature was complicit in those decisions. She said there should be a standard that all retirees can count on so that one group of retirees does not get a severe reduction in their COLAs while previous retirees almost double their pensions in a few years. Kiffmeyer said that investment return assumptions have been too high, but the costs to the plans of lowering it shouldn’t be “put on the backs of retirees.” 

Sen. Terri Bonoff, D-Minnetonka, also expressed concern about the 8 percent investment return assumption and said she shares Kiffmeyer’s concerns about keeping promises to retirees. Bonoff said she has been approached by constituents who are investment advisers and they also are concerned that the pensions are underfunded. She asked Pappas for her view about the long-term viability of the state’s pensions.

Pappas said that SBI’s Perry has been quoted as saying that 8 percent is “not unreasonable.” Because of the amount of money the state invests ($65 billion in pension fund assets) and the clout that comes with it, Minnesota is able to get a good rate of return. She added that MSRS is over 85 percent funded, TRA is about 75 percent funded, and St. Paul Teachers is about 74 percent funded. Pappas added that if lawmakers are concerned about the state’s bond rating, additional parts of the original sustainability package can still be acted upon this weekend.

Sen. Dave Thompson, R-Lakeville said that the pension systems are unmanageable and that Pratt is correct that it’s dangerous to assume an 8 percent rate of return. “If you drop the rate, projections look bad,” he said. “And not only do we have economic insecurity, now we’ve got an aging population that’s going to put stress on the system.”

Thompson said the legislature should discontinue the defined-benefit program and go to a defined contribution plan such as the 401(k)-type plans found in the private sector. The people who run these pension plans and the investment portfolio do an extremely good job and in good faith, he said, but “the system is just unworkable.”

Pappas responded to Bonoff’s comments by saying that in Minnesota, the percentage of state and local spending on pensions is much less than the national average (about 2 percent in Minnesota vs. 4 percent nationally). Pappas also pointed out to Thompson that transitioning from a defined-benefit pension to a defined-contribution model would cost billions of dollars because benefits would have to continue to be paid out even though the plans lose new contribution revenue.

Sen. Julie Rosen, R-Vernon Center, said the pension commission is nonpartisan and that members take their duties very seriously. Rosen said the current pension bill is a very good compromise made necessary  after the commission “received a sucker punch” in the form of hard-to-stomach mortality studies. “When you do reform in pensions it’s very slow, like trying to turn the Titanic – and you have to do it deliberately and with seriousness and make sure those funds stay viable.” She urged her colleagues to vote for the bill because it’s the right thing to do.

courtesy TRA Communications

The State of the Pensions as the Session Comes to an End

On Tuesday, the Omnibus Retirement Bill was approved by three committees: the Legislative Commission on Pensions and Retirement (LCPR), Senate State and Local Government Committee and House State Government Finance Committee.  The bill will soon be considered on the House and Senate floors.  The bill contains administrative provisions and “stopgap” sustainability measures that reduce the MSRS COLA to 1.75 percent for one year and the TRA COLA to 1 percent for one year.  The proposal also eliminates future COLA triggers. Highlights from each hearing are below.

 

LCPR Hearing

LCPR approved the omnibus bill containing administrative provisions and scaled down version of sustainability.  LCPR Chair Tim O’Driscoll, R-Sartell, stated that because there is no money set aside for pensions this year, full sustainability could not be pursued but he wanted to get at least a start on the package.  He explained that he had heard concerns raised about how state agencies and school districts would be negatively impacted by proposed contribution increases.  Sen. Sandy Pappas, D-St. Paul, described how she and Rep. O’Driscoll met with the governor and MMB Commissioner Myron Frans and that they believe sustainability is important to the state’s bond rating and keeping the funds on track financially. But it appears to be late this year and the intent is to build the financial needs into state agency budgets and school aid revenue next year.

Mark Haveman, Executive director of the Minnesota Center for Fiscal Excellence, testified that other states have gotten into trouble because of a failure to make prompt corrections with their pension plans. Haveman stressed that root of Minnesota’s problem is an overly optimistic investment assumption.  Rather than being on a path to full funding, he said we are “like a hamster on a wheel that is turning faster and faster.”

Julie Bleyhl, AFSCME Legislative Director, testified in opposition to the proposed stopgap sustainability bill calling it is a “piecemeal” approach with no balance or shared sacrifice.  She said the AFSCME board supports the original proposal, but they find the interim measure unacceptable.

Rodney Rowe, Education Minnesota’s Secretary-Treasurer, testified and re-affirmed their support for the original proposal.  He indicated the stopgap measure solves only 4 percent of the funding problem and puts the entire burden on retirees.

Joan Beaver, Education Minnesota Retired, testified in support of the original proposal and reminded LCPR that pensions are an important teacher retention and recruitment tool.

Rep. Mary Murphy, D-Hermantown, stated she is very concerned that this is has become a repeated cycle in which we come to the end of the session and find out there is no money.  She urged LCPR members to be advocates in the budget setting process to ensure sufficient funds become available for pensions earlier in the process.  She said state agencies need to have line items in their budgets for pensions.  Murphy warned that next year, LCPR members need to be appointed in January in order for work to start promptly on sustainability.

 

Senate State and Local Government Committee Hearing

Sen. Pappas testified, saying that the original sustainability package brought forward by Teachers Retirement Association (TRA) and the Minnesota State Retirement System (MSRS) is the correct solution, but she acknowledged that funding is not available for that full package this year. Pappas said she will continue to seek money for the original package in the closing days of the session. Pappas noted that Gov. Dayton supports the original sustainability package.  Pappas said if she takes over the gavel of the pension commission next year, she is committed to completing the remainder of the sustainability package.

Sen. Jim Abeler, R-Anoka, mentioned the issues surrounding the Teamsters pension plan and said he knows Minnesota wants to “keep promises made.” Abeler asked about the general health of Minnesota’s pension plans, and Pappas provided numbers on the negative effects of experience study changes on all of the systems’ funded ratios. She said that while the pension systems were adequately funded in past years, changes in the investment markets and demographics mean that significant changes are needed to put the funds on path to full funding. She acknowledged that current COLAs are low (1-2 percent range), but that’s all that is currently affordable. Pappas also said she was nervous about not passing a more complete package and is concerned it will negatively affect the state’s bond rating.

Laurie Hacking of TRA and Dave Bergstrom of MSRS testified on the minimal financial impact of the stopgap measure and reiterated that a broader and more balanced package is needed.

In public testimony, Lonnie Duberstein, president-elect of the Retired Educators Association of Minnesota (REAM), said his membership is not happy with the stopgap proposal but understands there’s a need to fix the problem. He said that teacher recruitment has become very difficult, and that many leave the profession early in their careers because of stress. Duberstein said that one thing that kept him in the profession was that he knew he would have a pension when he retired. Pensions are very important to teacher recruitment, he said.

Joan Beaver of Education Minnesota Retired said her organization’s board discussed this “anemic” version of sustainability and supported the original proposal because of the shared sacrifice approach. EdMN Retired doesn’t like the COLA cuts, but there is a willingness to be part of the solution, she said. The group is disappointed that there are no contribution rate increases at a time of budget surplus and that the proposed stopgap solution only corrects 4 percent of the problem. EdMN Retired opposes the 1 percent COLA proposal unless it is part of the whole package that was originally proposed, she said.

Grace Keliher of the Minnesota School Boards Association (MSBA) said her group has been working with TRA from beginning on sustainability efforts, but MSBA can’t support the original package without state funding. She thanked Pappas for being a “warrior” on the issue.

Jodee Buhr of Education Minnesota said the union also has been working with the TRA board and had supported the package because of the shared-sacrifice approach. She emphasized that pensions are a recruitment tool, and the stopgap measure is not enough to ensure that the plan is sustainable for current and future teachers. Buhr said the legislature must continue to work on the remaining parts of sustainability package.

Louise Sundin of the Committee of 13 (Minneapolis), said the original package was delicately balanced and that her group is disappointed at this scaled-down version. She pointed out that employer contribution rates in Minnesota are much lower than they are in other states. The Committee of 13 board is reluctant to support the stopgap measure but appreciates Pappas’ tenacity, Sundin said.

 

House State Government Finance Committee Hearing

LCPR Chair O’Driscoll along with LCPR Executive Director Susan Lenczewski walked the committee through a section-by-section description of the bill. O’Driscoll explained that since this was a short session and an off-budget year, and therefore only limited sustainability measures were able to be included because of lack of funding.  He pledged to be back next year with a more comprehensive solution.

Rep. Lyn Carlson (DFL-Minneapolis) voiced concerns about the long-term fiscal impact if the legislature waits to solve the pension funds’ financial problems.  He warned that, based on his pension experience, deficiencies grow rapidly and that it is better to act sooner rather than later.  O’Driscoll responded by saying that at least the stopgap measure in the proposed bill saves $81 million for this year and that he would work for a more global solution next year.

Rep. Mike Nelson (DFL-Brooklyn Park) stated it is unfortunate that the bill’s remedies are focused exclusively on retirees when in past years, a more balanced shared sacrifice approach was taken. Nelson said he is disappointed that we have lost the opportunity to take care of this problem, especially in a year that there is a $900 million budget surplus.

Brian Rice, representing AFSCME, indicated that AFSCME does not support the bill because it includes only a COLA cut for MSRS and not the whole package that spread the responsibility among retirees, actives and the state.

 

Courtesy TRA Director, Lauri Hacking

And the Bright Side Is….??

The House Government Operations committee on Monday approved a limited sustainability measure for Teachers Retirement Association (TRA) and the Minnesota State Retirement System (MSRS). The measure:

·    Reduces the retiree COLA for MSRS Plans (other than State Patrol and Judges) and TRA for one year only, effective Jan. 1, 2017, to 1.75 percent for MSRS and 1 percent for TRA. The COLA then reverts to 2 percent.

·    Removes the COLA trigger for MSRS-General, MSRS-Correctional, TRA, and St. Paul Teachers Retirement Fund Association (SPTRFA) so there will be no automatic increase in the COLA for each of these plans if specific funding thresholds are reached; and

·    Provides for an increase in the employer contribution of 0.5 percent of salary, for both the basic and coordinated plans of St. Paul Teachers Retirement Fund Association, effective July 1, 2018 (funded by the St. Paul School District).

The limited measure passed on Monday will not close the $1.5 billion funding gap created by increased member longevity and other findings of recent pension system experience studies. For example, reducing the TRA retiree COLA alone addresses only about 4 percent of the funding gap; a gap of over $1.4 billion would remain.

The pension systems have been seeking a more comprehensive solution that reflects a more balanced approach – or shared sacrifice – among retirees, active employees, and employers.

Rep. Tim O’Driscoll, R-Sartell, who chairs the Legislative Commission on Pensions and Retirement (LCPR), said that much more needs to be done to stabilize the plans and that the COLA measure is only a start. O’Driscoll acknowledged that there is much “heartburn” over the partial solution, but said there is no funding forthcoming and that this action is one step in the right direction.

Rep. Mike Nelson, D-Brooklyn Park, said he was disappointed that not more is being done this year to support the pension funds, especially in a surplus year, and expressed support for pursuing a more complete solution next year. He said the state must meet its obligation to Minnesota’s public workforce to ensure that the plans are sustainable and that legislative solutions are fair and balanced.

Nelson and Rep. Joe Mullery, D-Minneapolis, said they were concerned that the burden falls to one group (retirees), and Mullery noted that there have been instances in the past where funding for pensions was allocated in non-budget or even-numbered years.

Courtesy of TRA Communications

Keep the pressure on

Your efforts and the prevailing wisdom of some LCPR members are bringing hope to a critical crossroad.
Make sure Chair, Rep. O’Driscoll, <email>, 451 State Office Building, 651-296-7808, gets the message.

Pappas pushes to include sustainability in pension bill

APRIL 13, 2016 – The Legislative Commission on Pensions and Retirement (LCPR) at its Tues., April 12, meeting did not act on sustainability bills for the Teachers Retirement Association (TRA), the Minnesota State Retirement System (MSRS) and the St. Paul Teachers Retirement Fund Association (SPTRFA). There is still a possibility that sustainability proposals will be taken up at the April 19 LCPR meeting.

LCPR Chair Rep. Tim O’Driscoll, R-Sartell, said that he wished to wait to take any action on the sustainability bills until the House and Senate have developed budget targets and decided the potential amounts of state funding available. There was discussion about taking action on the omnibus retirement bill as assembled – without sustainability – to get it moving through the committee process.

Sen. Sandy Pappas (D-St. Paul) spoke against that strategy and argued that it would be risky for LCPR to move the omnibus bill without the sustainability measures attached to it. Pappas said that the fund directors had made a strong case regarding the high cost of delaying action on sustainability. She also stated that phase-in options for the employer contribution increases are being considered to facilitate adoption of the sustainability proposals.

The commission added a provision to the omnibus pension bill allowing the pension systems to receive gifts, bequests and life insurance death benefits. LCPR adopted a resolution asking the directors of MSRS and LCPR to prepare a report on alternatives to the augmentation reduction proposal for Fairview Hospital privatized employees.

Courtesy of TRA Communications