Pension News

Pension News – General Pension News

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Hello REAM Members!!

Since I last wrote you, there has so much going on!! The Pandemic, the riots, the Emergency declarations, and the Curfews . . . What more could have happened?!?

As of this writing, we can add to that list that the State Legislature has been called into Special Session by Governor Walz. There was a lot of unfinished business that still needs doing. Much work just didn’t get finished before they adjourned in May. Even though it was called the “Bonding Session”, there was no Bonding Bill that was actually passed. A Special Session usually has a very tight Agenda. This time there is no real message about that. One side seeks to stay on the job until it’s done, the other side says only that the Session will be short. Saying not much will be done. We know that our Government has a lot on it’s plate, but both sides agree it’s a mess!! AND they agree that in order to rectify things, “ALL things are on the Table!!” Our question is, “Does that mean Pensions too??”

Legislative Committee members have formulated a letter to send to State Legislative and Administrative Leaders. We made it clear that the Pensions are on a good path and that those state-wide systems and funds should NOT be altered. The verbiage of the letter will be available to you via our REAM Website.

On another note, we have also witnessed the conundrum of Voting in the midst of a Pandemic. What happened in Wisconsin, and more recently, in Georgia, give Voters Great cause for Concern. Do we have to put our health at risk to cast our Ballot??

The answer to that question is NO!! I you haven’t yet received a letter from our State’s Secretary of State, Steve Simon, you will get one soon. It spells out that “Voting by Mail” in Minnesota is the right of every registered Voter. The form you get from him, facilities that for You! Just fill it out (3 minutes tops), and send back to your County in the postage paid envelope provided, and you will be sent a Mail IN Ballot!! It’s that simple. I urge you, fellow members, to Vote in this way. Your Vote is important. Your Vote is your way to exercise your power in our shared Democracy. Voting by Mail (aka Absentee ballot) does not require you give any reason for doing so. It is safe, and it lets You be in control of Voting without cause for worry. Please do that this time, even if you are like me, and enjoy going to the Polls!!

As always, I wish you Well!

Timothy Moynihan

REAM Legislative Co-Chair

P.S. There is a non-partisan, non-profit group that has attended our Fall State Conferences with an informational booth. They are called: Center for Voter Information. Their website is : and their phone # is : (866) 377-7396. They will answer any questions you may have about Voting rules and processes.

The Governmental Accounting Standards Board (GASB) will be releasing its Preliminary Views (PV) on its “Financial Reporting Model Improvements” project on September 28. The objective of this project is to make improvements to the current financial reporting model (GASB Statement 34) to enhance its effectiveness in providing information that is essential for decision-making and enhance the ability to assess a government’s accounting.

Statement 34 provides the blueprint for state and local government financial reporting. The current effort to offer improvements is considering the following issues:

  • options for enhancing the financial statement analysis component, including the elimination of requirements that are boilerplate and no longer necessary for understanding the financial reporting model;
  • alternatives for the format of the statement of activities, including whether a government-wide statement of cash flows should be required and, if so, how those cash flows should be presented;
  • options for providing additional information about debt service funds;
  • a conceptually consistent measurement focus and basis of accounting and a presentation format for governmental fund financial statements consistent with the measurement focus and basis of accounting;
  • the evaluation of operating indicator alternatives in conjunction with the guidance for the separate presentation of operating and nonoperating revenues and expenses;
  • where the fiduciary fund financial statements should be presented in the basic financial statements; and
  • the appropriate method of communication (either as basic financial statements or required supplementary information) for budgetary comparison information and consider whether and, if so, which budget variances should be required to be presented.

The project began in 2013 and an “Invitation to Comment” (ITC) was issued at the end of 2016. This is normally done when the Board has not reached a clear consensus on an issue. It laid out the ideas and options for recognition in and presentation of governmental funds in a neutral fashion and stated no preference for one approach over another.

According to a recent interview with David Vaudt, the Chair of GASB, more than 100 comment letters on the ITC were received, and there was “strong participation in the series of public hearings and user forums last spring.” The PV will now provide a specific approach and overall direction for governmental funds, as well as an alternative view.

Chairman Vaudt said that beyond governmental funds, the PV will propose enhancing proprietary fund financial statements by introducing a description of nonoperating and a definition of operating and including a presentation of a subtotal for operating income or loss and noncapital subsidies. “We also propose providing budgetary comparison information only as required supplementary information and requiring two variance columns,” he explained. Other topics include proposed guidance on the communication of major component unit information and the introduction of a schedule of government-wide expenses by natural classification.

Vaudt encouraged input in response to the PV. “We’re in a more formative stage right now,” he explained, and sharing thoughts at this point is “really helping firm up the direction and approach we’re going to ultimately take.” Vaudt went on to note that while it will be critical for GASB to have input at the “Exposure Draft” stage as well, “in terms of having a big impact,” he said that participation at the PV stage is “essential.”

“This particular GASB project may not appear to be as directly related to public plans as have been GASB’s pension accounting and financial reporting efforts, or their more recent OPEB undertakings, but it is still important in ensuring that plan participants have a clear understanding of their employers’ financial health,” explained Maureen Westgard, NCTR’s Executive Director.

Also, she pointed to the comments made by the California State Teachers’ Retirement System (CalSTRS) in submitting a response to the GASB ITC. CalSTRS noted that although it does not administer any governmental funds, pension and other post-employment benefit (OPEB) information from CalSTRS audited financial statements is incorporated into approximately 1,800 contributing employer governmental fund financial statements. “Given the reliance individuals place upon the employer financial statements information, CalSTRS would like to provide its perspective and responses to the questions within the lTC,” their letter stated.

Westgard also noted that she had discussed this project and other GASB activities with Chairman Vaudt personally in a meeting with him in Washington, DC, on September 11. “I think it is important that NCTR have the opportunity to share our perspectives with GASB on this and a number of other undertakings that they may have,” she continued. “I am often concerned that GASB may not appreciate how their actions can be miscast and used by our opponents, and I asked them to please keep in mind this potential misuse in their deliberations,” she concluded.

Teacher walkouts over low pay and cuts to school funding appear to be continuing into the new school year. They could be bolstered by a new study showing that teachers now earn 11.1 percent less than comparable professionals, representing a record pay gap between educators and other college-educated workers.

Teachers are earning almost 2 percent less than they did in 1999 and 5 percent less than their 2009 pay, according to the U.S. Department of Education. Frustration with this sad state of affairs finally hit the boiling point earlier this spring, when teachers by the thousands in six states — West Virginia, Oklahoma, Arizona, North Carolina, Kentucky, and Colorado — walked out of their classrooms, most of them demanding better pay and more funding for education. The results of their protests, while mixed, appear to have emboldened more teachers to continue the effort into the new school year.

For example, beginning in August, teachers in more than a dozen districts in Washington state went on strike over contract negotiations, affecting about 11 percent of the state’s 1.1 million school children. Teachers in Los Angeles, which is the second-largest school district in the nation, have overwhelmingly voted to authorize a strike, which could take place next month. “And teachers in North Carolina, who protested in droves at the state capital in May, forcing schools across the state to close, are weighing future collective actions this year,” according to Education Week. Finally, in Louisiana, where the average teacher salary in 2016-17 was $50,000 (which is comparable to North Carolina’s), the Louisiana Federation of Teachers surveyed about 4,000 educators in May to see who would support a mass strike, and just over 60 percent of respondents said they would support a statewide walkout.

Now, a recent study provides new support for teachers’ complaints over salaries. According to the Economic Policy Institute (EPI), the “teacher pay penalty” for all public school teachers – that is, the percent by which public school teachers are paid less than comparable workers — has grown substantially since the mid-1990s.

The teacher wage penalty was 1.8 percent in 1994, grew to 4.3 percent in 1996, and reached a record 18.7 percent in 2017. This reflects the relative wage gap, regression-adjusted for education, experience, and other factors known to affect earnings. In plain dollars-and-cents English, average weekly wages of public school teachers (adjusted for inflation) decreased $27 from 1996 to 2017, from $1,164 to $1,137 (in 2017 dollars). In contrast, weekly wages of other college graduates increased $137 over this same period, from $1,339 to $1,476. (Appendix C of the report shows public school teacher and nonteacher college graduate weekly wages, by state.)

This wage penalty is also larger for male teachers than for women. In 2017, female public school teachers were making 15.6 percent less in wages than comparable female workers, but the weekly wage penalty for male teachers is worse: in 2017, male public school teachers were making 26.8 percent less in wages than comparable male workers.

The report also contains a chart showing the teacher wage penalty, by state. Overall, there is no state where teacher pay is equal to or better than that of other college graduates. Wyoming, Rhode Island, and Arkansas have the most modest wage penalties, of approximately 5 percent or less, and these three are the only states with penalties lower than 10 percent. Other states with large wage penalties, in addition to those that were the subject of strikes this spring, are Virginia, Missouri, New Mexico, Utah, and Alabama — all exceeding 29 percent. In 16 states, public school teacher weekly wages lag by more than 25 percent.

But what about benefits, such as pensions and health insurance? They should also be considered as part of the total compensation package, and teachers do enjoy more valuable benefits packages than other professionals. Without taking these into account, relative teacher wages could overstate the teacher disadvantage in total compensation.

However, EPI does take these benefits into account. The 2017 wage penalty for 2017, 18.7 percent, was offset by the EPI’s estimate of a 7.6 percent benefit advantage. However, this still produced the record-setting 11.1 percent total teacher compensation penalty for 2017.

The EPI report draws several conclusions related to this pay gap:

  • The opportunity cost of becoming a teacher and remaining in the profession becomes more and more important as relative teacher pay falls further behind that of other professions.
  • The large wage penalty for male teachers likely is a key reason why the gender mix of teachers has not changed much over time.
  • That women, once a somewhat captive labor pool for the teaching profession, have many more opportunities outside the profession today than in the past means that growing wage and compensation penalties will make it all the more difficult to recruit and retain high-quality teachers.
  • The ever-increasing costs of higher education and burdensome student loans are also a barrier to the teaching profession in light of a widening pay gap.

EPI also stresses that notwithstanding the advantage in benefits, the wage penalty, on its own, is “critically important as it is only earnings that families can put toward making ends meet—its only earnings that can pay for expenses such as rent, food, and student loan payments.”

The bottom line? As EPI notes, providing teachers with a decent middle-class living commensurate with other professionals with similar education “is not simply a matter of fairness.” “Effective teachers are the most important school-based determinant of student educational performance,” EPI points out, and to ensure a high-quality teaching workforce, “schools must retain experienced teachers and recruit high-quality students into the profession.” “Pay is an important component of retention and recruitment,” EPI concludes.

“When the national average starting salary for a teacher is $38,617, according to the National Education Association, while the average salary for recent college grads overall is about $50,400 annually, is it any wonder that fewer students are opting for a degree in education,” asked Maureen Westgard, NCTR’s Executive Director. “Adequate, reliable retirement benefits are very important in recruiting and retaining a well-qualified teacher workforce, but as this study shows, the advantages do not totally offset the overall pay penalty,” she continued. “There may be a number of reasons for the teacher shortages that every state is facing, but I think this pay issue is certainly a major factor,” she concluded.

Will the teacher unrest over salaries continue? The teachers appear to have the public’s support. Two recent national polls found that Americans are largely in favor of higher teacher pay and they also support teachers’ right to go on strike. And a poll found that nearly half of people who were told the average teacher salary in their state said the pay should increase, which represents a 13 percent increase over last year, which researchers attribute to the teacher walkouts.

Also, the U.S. Supreme Court’s decision in June in Janus v. the American Federation of State, County, and Municipal Employees, which now prohibits public-employee unions from collecting “agency” or “fair share” fees from workers who decline to become members, may also serve to lead to more political activism, some observers believe.

For example, Jon Shelton, an associate professor of democracy and justice studies at the University of Wisconsin-Green Bay, told Education Week that teachers’ unions seem inspired by the wave of teacher activism last spring, even adopting similar strategies. “You’re seeing teachers’ unions … specifically linking the needs of teachers with the needs of students,” he said. Shelton thinks that the red-state actions in the spring, along with “a real state of galvanization” in the aftermath of the Januscase, could result in teachers moving in a more militant direction in blue states as well.

And then there are the upcoming November elections. Some 550 educators will be on election ballots, according to the NEA, running for everything from local school board to governor. And at least 20 educators filed to run for Congress this cycle. While their issues vary, and they come from both political parties, US News and World Report says that there seems to be a common theme of concern with the neglect in state K-12 education budgets.

NCTR members who attended the Annual Conference in Providence, Rhode island, in 2016 will already be familiar with one such teacher. She is Jahana Hayes, a former history teacher in Connecticut who was the National Teacher of the Year in 2016, and spoke at the Conference. Hayes won the Democratic primary in Connecticut’s 5th Congressional District, and if she wins in the general election in November, she would be the first African-American Democrat in the state to serve in Congress.

Teachers are increasingly involved in many political debates. Their total compensation will continue to be a major part of the discussion of the future of education in America, and their benefits will be an important part of this debate.

Stay tuned.

itch Ratings, Standard and Poor’s agree Minnesota is in prime fiscal health

With sound fiscal management and a structurally-balanced budget outlook, national rating agencies assign top bond ratings for the State of Minnesota

Fitch’s AAA rating notes “Minnesota has shown significant financial resilience”

S&P’s AAA rating “reflects our view of the state’s improved financial position and recently passed pension reform”

ST. PAUL, MN – In separate announcements today, two national bond rating agencies – Fitch Ratings and Standard and Poor’s (S&P) – gave the State of Minnesota their highest “AAA” bond ratings, affirming that Minnesota is in prime fiscal health. Today’s bond rating announcements follow nearly eight years of sound fiscal management from the Dayton Administration – including difficult budget cuts, the elimination of budget shifts and gimmicks that undermined our fiscal health, the long-term stabilization of the State’s revenues, structural budget balances into the future, public employee pension reforms, and historic savings in Minnesota’s Budget Reserves.

“Our state government has made a complete financial turnaround in the past seven-and-a-half years,” said Governor Mark Dayton. “The credit for Minnesota’s success belongs to the people of our state. I thank Minnesotans for their many contributions to the strength of our economy and the stabilization of our State’s budget. And I thank MMB Commissioner Myron Frans and his tremendous staff for their steadfast commitment to improving Minnesota’s financial management.”

“Minnesota’s financial health is better than ever, and these AAA ratings are proof of the progress we have made,” said Commissioner Myron Frans. “One of the key reasons for our AAA ratings by S&P and Fitch is because of the Pension Reform Bill that unanimously passed by the Minnesota Legislature this year. This bill not only benefits 511,000 Minnesotans, it immediately eliminated $3.4 billion of the state’s unfunded pension liabilities, and put the plans on a path to fully fund pensions within 30 years the moment Governor Dayton signed it. Management of our state pensions had long been a concern for the rating agencies, so it was a highlight of my time as Commissioner to tell them we had taken a significant step to achieve pension reform with bipartisan support.”

Standard and Poor’s upgraded its rating to AAA, with a stable outlook. In its determination, S&P notes: “The stable outlook on Minnesota reflects our view of the state’s improved financial position and recently passed pension reform. The state has shown a commitment to actively managing its long-term liabilities to better align its statutory funding of the pension with actuarially determined contributions and through benefit reductions.”

S&P also called out the state’s sound financial management and leadership, saying: “The state has historically had very strong budget management. Minnesota has strong policies and procedures. It was able to manage through the political impasse between the governor and the legislature over tax reform adopted in the fiscal 2018-2019 biennium… We have assigned a score of ‘1.5’ to the state’s overall financial management, on a scale where ‘1.0’ is the strongest score and ‘4.0’ the weakest.”

To read the full report from Standard and Poor’s, CLICK HERE.

Fitch Ratings upgraded Minnesota’s bond rating to AAA in 2016, after having downgraded Minnesota’s rating to AA+ in 2011. This year, Fitch reaffirmed its rating of AAA, with a stable outlook. In its determination, Fitch notes: “Minnesota has shown significant financial resilience through downturns and a strong commitment to bolstering its financial position as conditions improve. Minnesota’s economy is well-balanced, with positive wealth indicators and innate demographic strengths. [The state is] exceptionally well positioned to manage throughout the economic cycle while maintaining a high level of financial flexibility.”

To read the full report from Fitch, CLICK HERE.

A third national bond rating agency, Moody’s Investors Service, reaffirmed today its Aa1 rating for Minnesota. In its determination, Moody’s notes: “Minnesota’s Aa1 general obligation rating reflects the state’s diverse and growing economy, supporting healthy revenue growth in recent years. The rating also reflects improved financial management practices that have resulted in replenishment of budget reserves and a structurally balanced budget… The state’s manageable debt and pension burden, along with recently enacted pension reform, affords the state additional financial flexibility.”

To read the full report from Moody’s, CLICK HERE.

About Minnesota’s Economic and Fiscal Turnarounds

In January 2011, Minnesota was still facing the economic consequences of the Great Recession, and the state budget was a mess. Over 202,000 Minnesotans were out of work, the State of Minnesota was facing a $6.2 billion deficit and owed school districts $1.9 billion, and there was nothing in the State’s Budget Reserves. Since then, Minnesota’s economy and fiscal health has greatly improved. The chart below lays out some key comparisons of Minnesota’s budget and economy between January 2011 and now.


January 2011


July 2018

Better Economy

Unemployment was at 6.9 percent

202,000 people were out of work

At 3.1 percent, unemployment in Minnesota is at its lowest rate in 18 years (as of the latest jobs report)

Unemployment has been at or below 4 percent for 47 straight months

Minnesota employers have added over 302,600 new jobs since January 2011

With 2.96 million jobs, Minnesota now has more jobs than ever before

Better Budget

Minnesota faced a $6.2 billion budget deficit

Minnesota owed our school districts $1.9 billion

Minnesota had nothing in the budget reserve account to protect the state’s finances from economic downturns

Nine out of the last ten budget forecasts have projected budget surpluses in Minnesota

Minnesota currently has a projected $419 million budget surplus for the FY2020-21 biennium

Minnesota has nearly $2 billion in cash and budget reserves to help protect the state’s finances from future economic downturns and prevent harmful budget cuts to essential state services


By Madeline Will on May 10, 2018 11:33 AM

In the 11th hour of the legislative session, Colorado lawmakers passed a compromise deal to reform the state’s underfunded pension system for teachers and other public employees.

The final version of the bill, which is now headed to the governor’s desk, increases employees’ contributions to the retirement fund, raises the minimum retirement age for new teachers from 58 to 64, calculates retired employees’ earnings from five years of their highest average pay, and reduces the cost-of-living adjustment from 2 percent to 1.5 percent. Retirees will also lose cost-of-living raises for two years.

Teachers had protested at the state capitol weeks earlier against proposed changes to their retirement benefits. Some of the changes that teachers most disliked didn’t make it to the final version of the bill. For example, legislators originally proposed calculating retirement earnings from seven years of employees’ highest average pay—currently, it’s calculated from the top three years. And Republican lawmakers originally didn’t want to increase the contributions made by the state or school districts to the retirement fund, but the final version of the bill shares the increased contributions between employers and employees. Colorado will contribute $225 million annually to help pay off the unfunded debt.
“This is nobody’s idea of a perfect solution,” said Democratic Gov. John Hickenlooper, according to the Denver Business Journal, in an appearance at the legislative caucus meeting. “But you’ve got to look at the long term. This is much better than what we had.”

Colorado’s pension system has some of the largest debts of any pension in the country, according to the Associated Press—it owes retirees $32 billion to $50 billion in unfunded benefits. Colorado teachers are among the 40 percent of teachers nationally who are not eligible for Social Security.

According to the AP, the state teachers’ union criticized legislators for rushing a compromise without giving the public enough time to review the deal.

“This is bad policy done in haste,” said Kerrie Dallman, president of the Colorado Education Association.
Across the country, states’ pension obligations for public employees are accelerating—teachers’ pension debt tops out nationally at more than $516 billion. Teachers in Kentucky have also walked out of their classrooms and protested their state’s pension reforms this spring. Legislators there passed a bill that says teachers who are hired after the start of 2019 will be put into a “cash-balance” plan, which is a hybrid of a traditional defined-benefit pension and the kind of 401(K) retirement savings plan common in the private sector.

Colorado legislators had considered enacting a similar plan for new teachers hired after 2020, but the final version did not include that provision, which had been adamently opposed by the teachers’ union.

April 12, 2018

The House Ways & Means committee took up a resolution on how to allocate the state’s projected $329 million budget surplus. The House proposal did not specifically identify an amount for pensions, and $27 million is needed in fiscal year 2019 to fund the pension bill. Rep. Lyndon Carlson asked chairman Jim Knoblach if there was anything in the resolution for pensions, and the chairman responded that funding for pensions is included in a $50.6 million category designated as “other bills.” We await further hearings in the House.

April 11, 2018

Gov. Dayton sent a letter to Speaker of the House Kurt Daudt urging the House to expedite passage of a clean pension bill.

March 7, 2018

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.

Tuesday, March 13, 2018
5:30-7:30 PM

Room: 1200 Minnesota Senate Building

Chair: Sen. Julie A. Rosen


  1. Approval of March 6, 2018, meeting minutes.
  2. Minnesota Management and Budget testimony on the 2018 Omnibus Retirement Bill.
    • Myron Frans, Commissioner
    • Paul Moore, Executive Budget Officer
    • Britta Reitan, Executive Budget Coordinator
  3. Motion LCPR18-M3: SPTRFA; Changes to demographic and economic assumptions for actuarial valuations. (Motion will be available Monday, 3/12)
  4. LCPR18-011: PERA-General; Excluding certain St. Paul city and school district temporary construction employees who are covered by the Minnesota Laborers Pension Fund. (Bill language will be available Friday, 3/9)
  5. SF 2971 (Lang); HF 3353 (Miller): PERA Privatizations; Clarifying a 1992 session law impacting employees of the Swift County/Benson Hospital
  6. SF 2620 (Rosen); HF 3053 (O’Driscoll): 2018 Omnibus Retirement Bill, third consideration. (Amendments will be available Monday, 3/12)
    • Amendment S2620-1A (technical)
    • Amendment SCS2620A-3 (appropriations)
    • Final action on the 2018 Omnibus Bill

We should have known when lawmakers failed to pass – again – a much-needed teacher pay raise, they weren’t done insulting us. Oh no. They’re doubling down. Their plan now is to force us to stay where we’re teaching, to make it next to impossible to get a better teaching job.

Passed unanimously out of the House Education Committee on Monday, February 26, House Bill 2556 would make any Oklahoma public school teacher who accepts a position with another Oklahoma public school after June 15 subject to civil litigation, a State Board of Education hearing and a suspension of his/her teaching certificate. Most of us aren’t done teaching students and submitting final grades until Memorial Day. Yet the state of Oklahoma seems to think it’s fair to give us only two weeks to consider our professional options, submit applications to other school districts that pay more, interview and be offered a position elsewhere. It can’t be done … and they know it.  Why shouldn’t we be able to take a better job year round like every other profession?

Plus, House Bill 2556 only restricts Oklahoma public school teachers. Administrators can move to another job after June 15 if it’s beneficial to them. And, teachers are safe from being sued or losing their certificate if they choose to leave their position for a private school position or for a better-paying position across the state line. This bill only penalizes us if we leave one Oklahoma public school for another. What kind of logic is that? How fair is that?

What exactly are our state lawmakers trying to prove here? Is it that the crisis they have created justifies modern-day indentured servitude? Is it that hypocrisy should be protected by law? After all, it’s legal for them to leave their elected position before their term is up when a higher-paying opportunity comes along. But a teacher making the nation’s worst teacher salary who accepts another teaching position that pays more somehow deserves to be sued and have their livelihood threatened.

In every other profession, the law of supply and demand determines salaries. As the teacher shortage crisis in our state deepens, more and more school districts are finding the dollars to pay more than the state minimum – some significantly more. And it is our freedom as professionals to accept higher-paying teaching jobs at nearby schools that will help to continue to drive up teaching salaries at all school districts. It also keeps the pressure on our Legislature. Lawmakers are peddling this bill as anti-charter thinking that will lead to our blind support. They obviously think it’s pretty easy to hoodwink us and if they can’t or won’t give us a salary increase for more than 10 years they will quite literally keep us in our place. Please join me in proving them wrong. I’ve been an OEA member since before House Bill 1017 and I’m not going to take this sitting down.

Call state Rep. Dennis Casey, the author of House Bill 2556, and especially your locally elected lawmakers to say you are insulted and adamantly opposed to this bill. You can find your local lawmakers through this search engine: We must unite in defeating this bill and allowing lawmakers to continue to put and keep us down.

Sue Burkett
OEA Member since 1990

By James Salzer – The Atlanta Journal-Constitution

After agreeing over the past two sessions to pump nearly $600 million in extra payments into state teacher pensions, Georgia lawmakers have once again raised questions about the long-term prospects of the retirement system.

“At some point we are going to have to draw a hard line in the sand,” said state House Retirement Vice Chairman Tom Kirby, R-Loganville.
But it almost certainly won’t be during the 2018 legislative session, which will be followed by primary season.

Gloom-and-doom scenarios for the pension system have long been floated — scaring teachers and retirees. But as the House Retirement Committee recently began hearing a bill to limit cost-of-living raises to pensioners, the chairman made it clear the measure wouldn’t go anywhere.

House Retirement Chairman Paul Battles, R-Cartersville, who is leaving the Legislature after this year, noted that his wife is in the Teachers Retirement System. She warned him not to mess with it.

“And I have to go home,” Battles said to an audience that included teacher and school lobbyists.

The fact is, many lawmakers who say they want to make changes to the more than $70 billion TRS — possibly converting it to a 401(k)-type fund for new teachers who are hired — have friends or relatives paying into the system or receiving a pension from either the TRS or its companion, the Employees Retirement System for state workers.

And teacher and retiree groups flooded lawmakers with calls and emails opposing House Bill 903, a proposal by state Rep. Howard Maxwell, R-Dallas, a former Retirement Committee chairman who, like Battles, is retiring.

While acknowledging that slowing the 3 percent cost-of-living raises to retirees wouldn’t dramatically improve the system’s bottom line, Maxwell said lawmakers need to start somewhere. At 3 percent a year, he said, the average pension of about $3,000 a month would be worth $6,000 in 25 years.
“That’s great if we can afford it,” Maxwell said. “If we can’t afford it, if taxpayers are going to continue to have to put billions of dollars into the system, my question is, how are our children and grandchildren going to pay for it?”

John Palmer, a Cobb County educator and spokesman for the teacher group TRAGIC, called Maxwell’s bill “another broken promise” to teachers.
He said teachers were promised cost-of-living raises long ago, and that educators watched as lawmakers cut education spending, furloughed teachers and used reserves in their health insurance plan to prop up the state budget during the Great Recession. That was followed by higher health care premiums and cuts in benefits.

Teachers aren’t getting state raises from the General Assembly this year, Palmer noted, but lawmakers have been floating tax breaks for select businesses and the state is promising a massive incentive package to attract Amazon to build its second headquarters in Atlanta.

“Instead of raises, legislators are complaining about taxpayer funded retirement for our teachers (we pay into TRS), and again refusing to give our retired state employees a cost-of living adjustment,” Palmer wrote in an “alert” posted online to teacher and retiree groups.

“This,” he said, “is shameful.”

Last session, Georgia lawmakers raised the alarm when they had to provide an extra $223 million to ensure the financial security of the system. This year the figure is an extra $361 million, eating up about one-third of all new state revenue.

The Georgia system is funded through a combination of contributions from employees and employers (school districts, public colleges, state agencies, etc.), as well as investment income.

The “employer,” or government, contribution rate paid into the fund — a percentage of employee payroll — will, by the upcoming fiscal year, have more than doubled since 2012. The rate of employee contribution — what teachers, principals, college officials and others pay in — has remained the same for six years.

Buster Evans, the head of the TRS, said the employer contribution rate is expected to go up again next year, but then it is projected to decline for a few years.

Teachers say the money is worth it to the state because the pension system is a great recruiting tool that attracts educators and keeps the best on the job for decades.

Any attempt to alter the current system — which covers about 400,000 teachers, University System of Georgia employees and retired educators — causes a political stir at the Capitol.

Proposals have typically been beaten down before they can get traction. One of the Republican candidates for governor, former state Sen. Hunter Hill, has called for changes, but most of the leading politicians are steering clear of the issue this election season.

The most common suggestion has been to give new teachers 401-(k) type funds — with matching money contributed by the government — instead of the current pensions where they would receive a monthly check for life when they retire.

States across the country have had to subsidize pension plans to prop them up in recent years, draining resources from other areas of their budgets, fiscal experts say.

The pensions that Georgia teachers and employees receive are based on the highest income they earned over a period of time and the years they worked.
Statewide, the average TRS payout last year to the 122,629 retirees in the system was about $36,000.

The system had 84 percent of its pension liability covered in 2014. At the end of 2016, that had fallen to 76 percent. At the end of 2017, after a good year in the stock market, it was back up to 79 percent of the assets needed to pay what it owes to pensioners in the future.

While pension experts typically prefer to see the ratio above 80 percent, it’s an improvement from recent years, and Georgia’s pensions are stronger than similar retirement systems in many other states.

The Great Recession greatly set back the system, which counts on a certain rate of return on investments. The system hasn’t fully recovered from those losses, officials said, even with strong stock performances the past few years.

Also, the number of teachers and employees contributing to the fund had dropped by about 15,000 at one point because jobs were cut or positions went unfilled.

While some of those teaching and state jobs have since returned, there are fewer active workers paying into the fund than there were in 2009. Meanwhile, there are more retirees drawing from the fund as baby boomers retire.

State Rep. Debbie Buckner, D-Junction City, a member of the House Retirement Committee, said the growth in retirees wasn’t a surprise.
“We knew it was coming,” Buckner said, “we just didn’t know how to deal with it.”

Buckner said she doesn’t agree with some of her Republican colleagues that the defined-benefit program in which employees are guaranteed monthly checks is the problem.

Kirby isn’t so sure.

“The root of all this is we are still running the defined-benefit program that businesses learned 20 years they couldn’t sustain,” the Loganville Republican said.

While current retirees and teachers should retain the current pension system — what they’ve been promised — Kirby said, “Going forward we are going to have to do something different.”

Battles suggested a two-year study of the system. He also said the state should consider picking a point down the road — say six years from now — when it would start offering different benefits such as a 401(k)-type fund to new teachers, rather than a pension.

“If we are not proactive on this,” Battles said, “we will obviously have to make some hard decisions.”

Legislative Commission on Pensions and Retirement
Tuesday, March 6, 2018
5:30-7:30 PM
Room: 1200 Minnesota Senate Building
Chair: Sen. Julie A. Rosen


  1. Approval of February 27, 2018, meeting minutes.
  2. SF 2622 (Utke); HF 2957 (Grossell): Clearbrook Fire Department Relief Association; Extension for submitting reports for fire state aid eligibility.
  3. SF 2743 (Latz): TRA/MnState; TRA coverage election authority for certain employee.
  4. HF 3145 (Newberger): PERA DC; Permitting distributions while employed; clarifying provisions.
  5. HF 2808 (Hoppe): PERA-P&F; Expanding coverage for certain paramedics and emergency medical technicians employed by Hennepin Healthcare System, Inc.
    • Amendment S2620-2A
  6. SF xxxx; HF xxxx (LCPR18-012): Hennepin County supplemental retirement plan; expanding investment authority.
  7. SF 2620 (Rosen); HF 3035 (O’ Driscoll): 2018 Omnibus Retirement Bill, second consideration.
    • Public testimony will be taken (contact Lisa Diesslin at 651-296-6806 or BEFORE the meeting to be put on the testifier list)

The Legislative Commission on Pensions and Retirement (LCPR) on Tues., Feb. 27, introduced a 2018 pension bill (Senate File 2620) covering contribution and benefit changes for the four Minnesota public pension funds – the Public Employees Retirement Association (PERA), Teachers Retirement Association (TRA), Minnesota State Retirement System (MSRS) and the St. Paul Teachers Retirement Fund Association (SPTRFA).

LCPR Executive Director Susan Lenczewski prefaced her summary of the bill by noting that sustainability legislation has been proposed by the retirement plans for the past two years in part to adjust for longer public worker life spans but failed to gain passage.

The four pension directors reviewed the bill and expressed support on behalf of their boards. Senate Fiscal Analyst Eric Nauman reviewed the state aids and appropriation amounts in the bill.

Amendments will be considered and public testimony taken at the next hearing on March 6. On March 13, the pension commission plans to vote on the bill and send it on to other committees for review.

REAM Legislative Team

Pictured at the Minnesota Senate Office Building are:
Paul Ehrhard, Tim Moynihan, Senator Mary Kiffmeyer (Big Lake),
John Fisher and Lonnie Duberstein.

Legislative Commission on Pensions and Retirement
Tuesday, February 27, 2018
5:30-7:30 PM
Room: 1200 Minnesota Senate Building
Chair: Sen. Julie A. Rosen


  1. Approval of February 19, 2018, meeting minutes.
  2. SF 2620 (Rosen); HF xxxx (O’ Driscoll): 2018 Omnibus Retirement Bill, first consideration (will be introduced 2/22/18).
    • LCPR staff overview
    • Jill Schurtz, Executive Director, St. Paul Teachers Retirement Fund Association (SPTRFA)
    • Jay Stoffel, Executive Director, Teachers Retirement Association (TRA)
    • Doug Anderson, Executive Director, Public Employees Retirement Association (PERA)
    • Erin Leonard, Executive Director, Minnesota State Retirement System (MSRS)
    • Eric Nauman, Senate Fiscal Analyst

Note: No public testimony will be taken at this meeting – there will be an opportunity to testify at the March 6, 2018, meeting.

The Legislative Commission on Pensions and Retirement on Mon., Feb. 19, heard testimony on a state public pension stress-testing analysis from researchers at the Pew Charitable Trusts. Also testifying was the executive director of the South Dakota Retirement System, a “hybrid defined benefit plan.”

The Pew research is part of its Public Sector Retirement Systems Project, which began in 2007 and has received funding from the anti-pension Laura and John Arnold Foundation. The research includes 50-state trends on public pensions and retiree benefits related to funding, investments, governance, and employee preferences.

In their discussion, presenters Susan Banta and Tim Dawson said that pension systems are “as exposed to the impact of an economic downturn as ever, based on measures of fiscal health and investment risk.” They added that pension fiscal health varies across states and cities. There is a $1.1 trillion pension funding gap in the nation, according to 2015 data collected from annual reports in all 50 states, Pew reports.

The stress testing referenced by Pew is an analysis in which adverse economic scenarios and market volatility are simulated to assess fiscal health. Stress testing also assesses the impact of lower investment returns or an economic recession on pension costs and liabilities. Pew touts its stress testing as a tool to aid administrators and policymakers to plan for the next market downturn. Banta and Dawson presented stress-tested projections for several states on metrics such as assets and contributions, and said that nine states presently require stress testing.

Robert Wylie, executive director of the South Dakota Retirement System, testified regarding recent plan changes at SDRS – notably legislation in 2017 tying the retiree cost-of-living adjustment to the Consumer Price Index inflation measure. The SDRS COLA equals the CPI-W with a minimum of .5 percent and a maximum of 3.5 percent that may be restricted based on actuarial projections for keeping the plan fully funded.

All three speakers emphasized that each state is unique and there is no one-size-fits-all approach to pension reform.

Also on Monday, the LCPR approved a motion to change all economic assumptions (except the investment rate of return) for the Public Employees Retirement Association (PERA), Minnesota State Retirement System (MSRS), and Teachers Retirement Association (TRA).

LCPR chair Sen. Julie Rosen laid out a timeline for upcoming meetings:

Feb. 27: Pension bill to be released.

March 6: Consider changes to the bill.

March 13: LCPR to vote on pension bill.

March 20: LCPR hearing on Secure Choice.

Legislative Commission on Pensions and Retirement
Monday, February 19, 2018
1:00 PM
Room 1100, Minnesota Senate Building
Chair: Sen. Julie A. Rosen


Approval of February 6, 2018, meeting minutes.

Motion LCPR18-M2: MSRS, PERA, and TRA; Changes to economic assumptions (except investment rate of return) for actuarial valuations.

Ensuring Sustainability of Minnesota’s Pension Plans – Stress Testing.

– Susan Banta, Director of Research, Public Sector Retirement Systems,
The Pew Charitable Trusts

– Timothy Dawson, Officer, State Policy, Public Sector Retirement Systems,
The Pew Charitable Trusts

The South Dakota Perspective.
– Robert A. Wylie, Executive Director, South Dakota Retirement System

Monitor and Adjust . . .  Funding

The Purpose of the Legislative Commission on Pensions and Retirement is monitor the State’s Pensions and make adjustments as needed.  The Commission is the starting point for Pension Legislation.  No legislation has been passed into Law for the last two Sessions.

The TRA and PERA Pension Funds have not been Fully Funded by the State since 1998.  The Actuarial Determined Contribution amount is a Non-Partisan calculation of what is needed to maintain good funding levels.  That level of Contribution would have made Both Funds 108% Funded IF those Contributions had been made.

As a per cent of Minnesota’s State Budget . . . Two(2) percent is dedicated to Pension Funding & Costs.  That gives Minnesota a Ranking of 48th among ALL of the States in this great Nation.


In the 2018 “Bonding” Session, It is clear that Bonding Ratings are connected to the “health and well being” of State Public Pensions.  Rating agencies have made it known that they are watching what will be done with Pension funding and reform “very carefully”.  Our State’s ability to borrow and bond at low cost is in the balance.

The evidence of the Economic Impact of the Pensions on our State is strong.  We have data that shows how Pension payments to retirees have significant, positive impact on every County in Minnesota.  That impact total is more than Seven(7) Billion dollars a year!!

The Pension payments made to retirees are subject to Minnesota State Income Tax.  Minnesota is one of 13 States that taxes Pension income.  These Taxation dollars contribute greatly to our State’s communities. It is known that most retirees continue to live all or most of their retirement IN our State.  Pension dollars spent are significant in the rural Communities of Greater Minnesota. It’s a fact, that 87% of TRA Retirees Live and Pay taxes in Minnesota!!

Pensions are Benefits

Our TRA and PERA Defined Benefit program is a significant factor in Recruitment and Retention of Public Employees.  Some think of it as “Deferred Compensation” offered as a Benefit to employees.  Lower salaries are somewhat offset by a well defined retirement Benefit.  Studies have found that 63% say the offer of a Pension is important in accepting a job.

Studies also show that 81% of Americans Support Pensions for Teachers to offset lower salaries.  People want good and qualified individuals to be hired to Teach our Children!!

Association says study on public pension funding was ‘contrived’, and ‘cherrypicked’ data.

The National Association of State Retirement Administrators, (NASRA) has rejected the findings of a recent report on public pension funding from the American Legislative Exchange Council (ALEC), saying the findings contain “serious flaws.”

The ALEC report claimed that US public pension plans are far more underfunded than they report, and that the aggregate unfunded liability of all plans exceeds $6 trillion, with a funding level of approximately 33%. However, NASRA said that using “current, prevailing actuarial methods” for valuing liabilities, public pensions report an aggregate unfunded liability of approximately $1.5 trillion, and a funding ratio of around 70%.

NASRA said its main problems with ALEC’s report on 280 state-administered public pension plans is that its conclusions are based on the use of a below-market, risk-free interest rate to calculate the funding condition; it “erroneously states” that using a risk-free rate for funding is endorsed by the Society of Actuaries; and it “ignores the variable nature of benefit structures and financing arrangements in many public pension plans,” rather than assign all public pension liabilities and costs to employers and taxpayers.

NASRA also argued the report implies that only a few states have enacted modifications to their retirement systems, “even though every state has recently made changes to one or more of its pension plans,” and claims that public pension reporting and transparency is inadequate, “when, in fact, public pensions are highly transparent and a public database of state level plans already exists.”

ALEC’s report used a discount rate “derived from a short, cherrypicked time period,” said NASRA, which was calculated using a “so-called” risk-free investment return of 2.14%. NASRA said a risk-free rate “is not helpful for calculating pension funding information,” and that the outcome of this calculation should not be used to characterize plans’ funding condition.

“By ALEC’s admission, this is a synthetic rate manufactured by averaging the yield on 10- and 20-year bonds from April 2016 to March 2017,” said NASRA, “an unconventional window to measure financial data, and one that featured atypically low rates even in the current low-rate environment.”
It added that the rate used by ALEC is lower even than the current yield on 10-year US Treasury bonds, which is just under 2.5%, and that rates used for corporate pension plans are currently around 4.0%.

“It is only through the use of a rate as low as the one used in the report that ALEC finds ‘every single state would be considered at risk of defaulting on their pension obligations,’” said NASRA. “Using current interest rates, particularly from such an oddly brief and irrelevant period of time, to calculate long-term funding requirements, and to characterize the funding condition of a pension plan that will continue to operate for decades, is incongruous with the way plans actually are funded.”

Wednesday, January 24, 2018
2:00 PM
Room: 1150 Minnesota Senate Building
Chair: Sen. Julie A. Rosen


1. Approval of January 12, 2018, meeting minutes.

2. Public pension policy initiative.
– Kurt Winkelmann, Senior Fellow, Heller-Hurwicz Economics Institute, University of Minnesota

3. Oklahoma’s path from a pension plan to a defined contribution plan for public employees.
– Joseph Fox, Executive Director, Oklahoma Public Employees Retirement System – via SKYPE

4. Impact of the Tax Cuts and Jobs Act of 2017 on public pension plans and pension recipients.
– Joel Michael, House Research
– Nora Pollock, Senate Counsel

The Legislative Commission on Pensions and Retirement met on Fri., Jan. 12, to hear financial updates from Minnesota Management and Budget (MMB) as well as the four Minnesota public pension plans.

Commission chair Sen. Julie Rosen said there will be three more meetings before the 2018 legislative session begins in mid-February. Among the topics are the conversion to defined-contribution or 401(k)-type retirement plans, Minnesota public employment trends, and a discussion with University of Minnesota senior pension policy fellow Kurt Winkelmann. Winkelmann, a former managing director at Goldman Sachs, is leading an inter-disciplinary research project on pension policy design.
These meetings are tentatively scheduled for the weeks of Jan. 22, Jan. 29, and Feb. 5.

MMB Commissioner Myron Frans on Friday began his testimony by saying that Gov. Mark Dayton is “concerned and interested” in accomplishing pension reform. Frans said that after the February economic forecast is released, the governor plans to put forward a budget request. Frans said that a big unknown is what impact the new federal tax bill and tax conformity will have on Minnesota taxpayers.

Frans said that he and his staff spent a significant amount of time with the big three bond ratings agencies (Moody’s, S&P, Fitch) discussing the state’s financial status with regard to public pensions. The bipartisan work of the LCPR, the shared sacrifice ethos and the good investment return of 15 percent for fiscal year 2017 impressed the agencies. Still, Frans said, they will be watching Minnesota closely.

“It’s critical that credit agencies see us as responsible,” Frans said, adding that it’s important that lawmakers deal with pension reform seriously this year once the February forecast clarifies what resources might be available.

Last year, Dayton vetoed pension legislation when it was rolled into a controversial measure that would have restricted local governments from setting minimum wage rates and other private-sector worker benefits. On Friday, LCPR director Susan Lenczewski summarized the bill that came out of the LCPR last year as well as the other bills that emerged as the session progressed.

The fund directors then provided overviews of their plans’ financial status and discussed the imperative of passing pension legislation to address deficiencies. Doug Anderson of the Public Employees Retirement Association (PERA), Erin Leonard of the Minnesota State Retirement System (MSRS), Jay Stoffel of the Teachers Retirement Association (TRA) and Jill Schurtz of the St. Paul Teachers Retirement Fund Association (SPTRFA) testified regarding their efforts to work with stakeholder groups to find agreement on shared-sacrifice sustainability measures.

This year’s pension commission members are:
Sen. Julie Rosen (Chair), R-Vernon Center
Sen. Sandy Pappas, D-St. Paul
Sen. Gary Dahms, R-Redwood Falls
Sen. Nick Frentz, D-North Mankato
Sen. John Jasinski, R-Faribault
Sen. Warren Limmer, R-Maple Grove
Sen. David Senjem, R-Rochester

Rep. Tim O’Driscoll, R-Sartell
Rep. Tony Albright, R-Prior Lake
Rep. Sarah Anderson, R-Plymouth
Rep. Roz Peterson, R-Lakeville
Rep. Bob Vogel, R-Elko New Market
Rep. Mary Murphy, D-Hermantown
Rep. Paul Thissen, D-Minneapolis

Pension Issues in the News January 3, 2018.

Pension Issues in the News Dec. 15, 2017.

This issue of Pension Issues in the News contains an article regarding MN Public Pensions.

This issue of Pension Issues in the News contains an article regarding MN Public Pensions.

Watch this video where Chuck Helle explains why he is a REAM member.

The following are good representations of information presented at the NRTA Legislative Advocacy Conference in September.

PowerPoint Presentations

Federal Legislative Climate and Outlook
Joyce Rogers, Senior Vice President, AARP Government Affairs:!ApeSrTS6ktSThGv5NIQ5dV-LcSiz

Public Pension Research and Resources
Diane Oakley, Executive Director, National Institute on Retirement Security:!ApeSrTS6ktSThG2HRkKUiGNowx0I

Barrie Tabin Berger, Senior Legislative Representative, AARP State Advocacy & Strategy:!ApeSrTS6ktSThG8bouYEaKM18hCM

Hank Kim, Executive Director and Counsel, National Conference on Public Employee Retirement Systems:!ApeSrTS6ktSThHHpHeWEXgWaYT3Z

Keynote Address
Joshua M. Franzel, PhD, President/CEO, Center for State and Local Government Excellence:!ApeSrTS6ktSThHPmVDi2sQc86pz8

The Federal and State Landscapes on Public Pensions
Jeannine Markoe Raymond, Director of Federal Relations, National Association of State Retirement Administrators:!ApeSrTS6ktSThHQ4lWFh3_4dGr_i

Bailey Childers, Executive Director, National Public Pension Coalition:!ApeSrTS6ktSThHblY0Eu2xhDN_7G

AARP Priority Issue – RAISE Family Caregivers Act
Rhonda Richards, Senior Legislative Representative, Health & Family, AARP Government Affairs:!ApeSrTS6ktSThHg06niL1fQ2K8fS

RAISE Family Caregivers Fact Sheet:!ApeSrTS6ktSThGaU6CCHP28C83T6

PPI’s Valuing the Invaluable:!ApeSrTS6ktSThHqq3mRjGTQH-2Bm

RAISE Family Caregivers Confidential Talking Points:!ApeSrTS6ktSThHvr0TtnbGL_GX87

Effective Messaging on Teacher Retirement Issues
Kelly Kenneally, Owner, Kenneally Company:!ApeSrTS6ktSThHw407OTBRfwC4wV

Closing Reception
Lily Liu, AARP Historian:!ApeSrTS6ktSThQBEN83tRwSNIHvd

Public Pension Talking Points

NRTA/NIRS General Pension-Related Talking Points:!ApeSrTS6ktSThGgoJvIjqAZpJyFF

NRTA/NIRS 10 Key Pension Messages:!ApeSrTS6ktSThH5csMbT8DCz1-S9

Additional Resources

AARP’s Understanding Public Pensions: A Guide for Elected Officials!ApeSrTS6ktSThQH_qrfJLPUa_Tc7

Pensionomics 2016: Measuring the Economic Impact of DB Pension Expenditures
NIRS created state fact sheets that highlight the economic impact of pensions in your state. Click on the map and print off your state fact sheets.

Public Pensions are a Good Deal for Taxpayers
The National Conference on Public Employee Retirement Systems published this report in August 2017 and shows that public pensions are resilient, pose little, if any, burden on taxpayers and taxpayer contributions are fully or partially offset by tax revenues generated.

Why Pensions Matter
The National Public Pension Coalition produced this report in March 2017 to provide a brief history of defined benefit pension plans in the United States.

Still a Better Bang for the Buck: Update on the Economic Efficiencies of Pensions
NIRS research finds that pension plans are a far more cost-efficient means of providing retirement income as compared to individual defined contribution accounts.

Revisiting The Three Rs of Teacher Retirement Systems: Recruitment, Retention, and Retirement
NIRS Issue Brief from September 2017 that analyzes the effectiveness of pensions on teacher retention and productivity. It finds that pensions play a critical role in recruiting and retaining highly productive teachers.

Helpful Websites

National Institute on Retirement Security,
National Conference on Public Employee Retirement Systems,
Center for State and Local Government Excellence,
National Association of State Retirement Administrators,
National Public Pension Coalition,
National Council on Teacher Retirement,
National Conference of State Legislatures,

This issue of Pension Issues in the News contains an article regarding MN Public Pensions.

Laurie Hacking’s PowerPoint presentation and the TRA County Map presented at the REAM 2017 Conference.

October 4, 2017 National Association of State Retirement Administrator’s News Clips. Click here to open or download a PDFor read the NASRA Oct. 4 News Clips online. (Online version contains links for more information.)

This issue of Pension Issues in the News contains an article regarding MN Public Pensions.

September 27, 2017 National Association of State Retirement Administrator’s News Clips. Read the NASRA Sept. 27 News Clips online. (Online version contains links for more information.)

The Legislative Commission on Pensions and Retirement (LCPR) on Wed., Sept. 20, heard reports from the pension fund executive directors on the financial impact of the recent 15.1 percent investment return and the failure to enact a pension bill during the 2017 session. The commission also heard from the State Economist Laura Kalambokidis and State Board of Investment (SBI) Director Mansco Perry regarding national economic forecasts and the investment return assumption.

MSRS Executive Director Erin Leonard reported that the MSRS General Plan’s estimated funded ratio for FY17 is 81.5 percent (assuming a 7.5 percent investment return) and its estimated deficiency is 4.3 percent of pay. That plan’s funded ratio is projected to decline to 62.6 percent in 30 years if no action is taken to address its deficiency. Had the 2017 pension bill been enacted, the MSRS plan would have a slight sufficiency of 0.35 percent of pay and would have been projected to exceed 100 percent funded by 2047.

PERA Executive Director Doug Anderson reported that the PERA General Plan’s estimated funded ratio for FY17 is 76 percent (assuming a 7.5 percent investment return) and the plan has a slight sufficiency of 0.2 percent of pay if measured using a 30-year amortization period. That plan’s funded ratio is projected to steadily increase to 95 percent in 30 years. Had the 2017 pension bill been enacted, the PERA plan would have a sufficiency of 1.3 percent of pay and would have been projected to attain 117 percent funded by 2047. Anderson fielded questions regarding the recent Bloomberg article which focused the Governmental Accounting Standards Board (GASB) accounting numbers. Anderson cautioned the LCPR that the GASB numbers are likely to be very volatile year to year and that they reflect only a snapshot in time rather than the long-term financial status of the plan.

TRA Executive Director Jay Stoffel reported that TRA’s estimated funded ratio for FY17 is 69.1 percent (assuming a 7.5 percent investment return) and its estimated deficiency is 8.53 percent of pay. TRA’s funded ratio is projected to decline to 50 percent in 30 years if no action is taken to address its deficiency. Had the 2017 pension bill been enacted, the plan would have a deficiency of 0.74 percent of pay and would have been projected to attain 95 percent funded by 2047. During discussion of TRA, Rep. Tim O’Driscoll commented that TRA did not come to the table, as other plans did, with sufficient benefit reductions and that TRA was asking for more funding than the other plans. Sen. Julie Rosen, commission chair, added that she appreciated Sen. Dan Schoen’s amendment to put TRA’s provisions back into the bill after they had been removed in committee. Rosen characterized the Schoen amendment as a good faith effort, but commented that it was unfortunately designed to pay for school district costs at a later time. Rosen also said that TRA had been resistant to accepting the 7.5 percent return assumption and stressed that she wanted to achieve that change. Stoffel explained that TRA is asking its actuary to perform a mini-experience study focused on economic assumption to update the actuary’s recommendations. The study is due in November.

SPTRFA Executive Director Jill Schurtz reported that the St. Paul teacher plan’s estimated funded ratio for FY17 as 60 percent (assuming a 7.5 percent investment return and taking into account mortality improvements) and its estimated deficiency is 4.2 percent of pay. That plan’s funded ratio is projected to decline to 52 percent in 30 years if no action is taken. Had the 2017 pension bill been enacted, SPTRFA would have a sufficiency of 0.9 percent of pay and would have been projected to attain 99 percent funded by 2047.

State Economist Laura Kalambokidis warned that due to an aging population, slow labor force growth and ongoing federal fiscal risks, the U.S. economy is expected to have slower than expected economic growth and lower than expected investment returns. She indicated that past performance of the financial markets does not guarantee the same future results. Kalambokidis advised LCPR to recognize that future investment returns may be lower and more uncertain than past returns. She said that getting the discount rate wrong has consequences: setting it too low can result in overstating liabilities and incurring unnecessary costs today while setting it too high will understand liabilities and push costs to future generations.

SBI Executive Director Mansco Perry provided an overview of how SBI’s assets are managed and what SBI returns have been over short- and long-term periods. He showed that SBI return performance ranks in the upper 20 percent of funds. With respect to the investment return assumption, he stated that once the LCPR changes the assumption, he recommends that it stay with that assumption for a minimum of five years because investment forecasts are highly uncertain and do not lend themselves to such precision.

The commission plans to meet again on Oct. 10 or 11.

Make a campaign contribution – receive a dollar-for-dollar refund!

Take advantage of the Minnesota Political Contribution Refund Program.

Retirees Must Become Engaged in the Political Process!

Hey, Retirees, “can you spare $50 for a few weeks?” REAM Vice President, Paul Ehrhard asked.

            His pitch was one of a horde of similar pleas that Minnesotans are receiving these days heralding the return of the state’s Political Contribution Refund program.

The two-decade-old program allows Minnesota registered voters to contribute up to $50 per individual or $100 per married couple, to a Minnesota registered legislative candidate or political party and get a tax refund back from the state. It’s designed to get candidates to agree to spending limits and amplify the voices of regular Minnesotans.

The refund system has been on ­hiatus for four years, the result of skinny state budgets

“When it went away, it reduced the ability for average people in Minnesota without a lot of means to have political influence,”

Every single registered voter in Minnesota is now eligible to donate up to $50 per individual or $100 per couple. It’s a quick, free way to fund legislative candidates and state office holders you support – and it’s never been more important to support a candidate. You will have your donation fully refunded (this does not apply for Federal offices- US Senate or US Congress).

          We urge retirees to support leaders who embody your ideals and principles especially as it relates to our TRA and PERA Defined Pension plans.

Why retirees must become Involved in the political process?

Having an open-minded Governor and House of Representative after the 2018 election will be critical to addressing long term sustainability of our TRA and PERA defined pension plans. We need friends at the Capitol!

REAM urges every member to make campaign contributions to the Governor and/or House of Representative candidate that you will support in the 2018 election.   Candidates appreciate contributions to their campaign – it also gives you a chance to promote your concerns. When you send a contribution, mention that you are a retired educator who is concerned that your TRA defined pension plan be strengthened.    

Please Write a check to Minnesota Legislative Candidates or State Office seekers in 2017 and in 2018 and get up to $50 direct dollar-for-dollar refund from the State. See how PCR works below – taken from the Minnesota Department of Revenue website.

How to Use the Minnesota Political Contribution Refund Program?

          You can request a Political Contribution Refund if you contribute money to qualified candidates who have filed their candidacy with the Secretary of State for the Minnesota State Senate or House of representatives; for Minnesota governor, lieutenant governor, attorney general, secretary of state, state auditor and Minnesota political parties.

You can only request one refund for each calendar year that you made contributions. If making several small donations to eligible candidates or party units, wait to submit a Political Contribution Refund form until all are received or the receipts received total at least $50 per individual or $100 per couple.

What contributions qualify for a refund?

Political contributions you made to eligible state candidates or political parties (not US Senate or Congressional candidates) on or after July 1, 2017. Contributions made before that date do not qualify for a refund.

How much is the refund?

The refund is the amount of your contributions up to $50 for an individual or $100 for a married couple (if you file a joint Political Contribution Refund application).  Usually you will receive your refund within 6 weeks of submitting the refund application.

How do I request a refund?

You must attach copies of the receipts you received for contributions being claimed on your application. Most political parties/candidates will mail you a receipt and the necessary 2017 Form PCR, Political Contribution Refund Application. Mail the form and receipt to: Minnesota Department of Revenue, Political Contribution Refund St. Paul, MN 55146-1800.

Call the State Capitol at 800-652-9094 between 8:00 a.m.- 4:30 p.m. Mon.- Fri. if you have questions.

The State can only accept Form EP-3 receipts that you received from a qualified candidate or political party as proof of your contribution(s).

When can I file?

You may apply for your refund at any time, but no later than April 16, 2018. You will receive your dollar-for-dollar refund of up to $50 per individual or $100 per couple in about 4-8 weeks!

 Please “Make A Difference” In Minnesota Elections!

Thank You!!!

This issue of Pension Issues in the News contains numerous articles regarding MN Public Pensions.

September 20, 2017 National Association of State Retirement Admnistrator’s News Clips. Read the NASRA Sept. 20 News Clips online. (Online version contains links for more information.)

September 13, 2017 National Association of State Retirement Admnistrator’s News Clips. Read the NSRA Sept. 13 News Clips online. (Online version contains links for more information.)

It’s important that you stay informed about what is really happening with your public pension. The following articles were recently published in the Minneapolis and St. Paul papers. They are available online by clicking the links below. The first two articles were written by those who are seeking to privatize public pensions. The final article was written by the Executive Directors of Minnesota’s Three Public Defined Pension Plans: PERA, MSRS and TRA.

How Healthy are Minnesota’s Pensions Depends on Where you Look

Minnesota’s Public Pension System is in Crisis New Data Shows

State’s systems seek legislative action on proposed reforms

Please read the current issue of Pension Issues in the News.

An article published by Bloomberg News (“New Math Deals Minnesota’s Pensions the Biggest Hit in the U.S.”/;”, Aug. 31, 2017), uses numbers reported under the Governmental Accounting Standards Board (GASB) rules to paint an incomplete and misleading picture of the financial health of Minnesota’s public pension plans.

The key point to understand about numbers reported under GASB rules is that the true health of a pension plan is determined not by GASB annual accounting rules but by funding policy.

GASB reporting is not intended to provide a picture of the funded status of a pension plan. Instead, funded status is determined by an actuarial funding methodology, the objective of which is to achieve an ultimate funded status of 100 percent. If the TRA reforms currently pending in the legislature are enacted, TRA will be on that positive funding trajectory.

In response to an increase in TRA liabilities caused by longer member lifespans and reflected in the GASB numbers, the TRA Board of Trustees proposed $1.6 billion in benefit reductions and $92 million in annual contribution increases. Unfortunately, the TRA proposed financial reforms failed to be enacted during the past two legislative sessions (2016-2017). TRA will renew its request for reforms in the 2018 session.

Enactment of proposed pension reforms by the legislature would significantly improve the numbers reported under GASB rules – as will the strong 15.1 percent fiscal 2017 investment return.

The Bloomberg article claims that Minnesota has experienced “lackluster” investment returns. In fact, the State Board of Investment has averaged an 8.7 percent annual return over the past 30 years, consistently outperforming its peers (public fund median over 30 years is 8.3 percent). Returns over 35 years have averaged 10.2 percent per year.

Recent numbers reported for GASB purposes lag one year and reflect investment returns from fiscal year 2016, which were indeed lackluster at -0.10 percent. However, for the fiscal year that ended on June 30, 2017, the SBI returned 15.1 percent (public fund median for FY 2017 was 12.4 percent). GASB results for FY2017 thus will swing dramatically in the other direction. The year-to-year GASB numbers will fluctuate wildly and do not provide appropriate guidance for oversight of pension funding, which is best viewed through a very long-term lens.

Minnesota’s pension funds are not in crisis but do need constant monitoring and adjusting and, with help from the state legislature and the governor, will be on sound footing for many years to come.

Susan M. Barbieri
Communications Director
Teachers Retirement Association

The August 2017 National Association of State Retirement Admnistrators News Clips contains three articles of importance for MN retired educators. They are:

  • Consultants recommend switching current Kentucky workers to a DC plan and voiding effects of COLAs since 1996
  • ERS of Texas lowers investment return assumption from 8.0 to 7.5 percent
  • Alicia Munnell: Should we plan to live to 100?

Click here to open or download a PDF or read the News Clips online. (Online version contains links for more information.)

Please read the current issue of Pension Issues in the News.

Saturday, May 20, 2017 was “Rally Day at the Capitol for Public Education.”

Rally Day

Pictured from left to right: Lonnie Duberstein (REAM President), Curt Hutchens (past REAM President) and Paul Ehrhard (REAM Vice President).

Hello REAM members! How are you doing?

Are you aware of how much your pension has eroded since 2009?

Since 2009, we have lost the MN Post retirement Investment Fund (Post Fund), which averaged a COLA of 6.8% from 1980-2003 and kept TRA retirees ahead of inflation. With the loss of the Post Fund, we were promised a 2.5% COLA going forward. It lasted one year, followed by two years of ZERO COLA, followed by 2.0% COLA until the present. Now the Legislative Commission on Pension and Retirement (LCPR) is seriously looking at changing our COLA to 1% permanently. This action has the potential, for the first time in decades, to have us, TRA retirees, fall behind inflation with a loss of buying power.

In 1998, the MN Legislature lowered the employer(ER) contribution rate from 8.14%, which was the national average at that time for states with pension benefits and social security, to 5% which was well below the national average for such states. We, as employees in Minnesota, were paying 6.5% which was well above the employee national average. The 6.5% was lowered to the national average of 5%. At that time, our pension fund was 108% funded. To this day MN, as employer through our school districts, is not at the 8% funding level. Other states which have pensions and social security, the national state employer average has grown to 12.2%!! The 12.2% is paid by the district with money from the state and is based on the active employee’s salary.

According to the U.S. Census reports, MN puts 2.25% of local and state general taxes into Minnesota Public Employee Pension Funds, while the national average for states with social security and pensions is 4.5%. Since 1998, MN has masked the growing deficit in our fund with investment returns, and several reforms such as eliminating the Rule of 90 and increasing the normal retirement age to 66 years, which is the nation’s highest retirement age, to avoid high pension reductions. Most states still have 30 years or the Rule of 90 for their normal age of retirement. Now our MN Legislature as the employer is considering a normal retirement age of 67—still the highest in the nation.

Here is the secret the Legislature does not want you to know or talk about. According to the National Association of State Administrators, MN ranks 45th in the nation for not paying its full Annual Required Contribution (ARC) each year since 2001 for our TRA pension fund. Now, if you go to, you will find as of 2014, TRA is 77.1% funded and the percentage of the Annual Required Contribution (ARC) paid is only 74%. This is creating the huge deficit the state as the employer, through money given to local districts, has created.

This year our Minnesota Management and Budget (MMB) department has a 2% employer increase in the pension bill stating this is all the state can afford. In reality, MN has a huge surplus, but it is not in our legislators’ special interests to fully pay the Annual Required Contribution (ARC) for the TRA fund when they have been able to take loans from it for years! It’s in their interests to give tax payers and corporations tax refunds as it helps get them to get re-elected, but it lets the TRA Fund and other funds grow a deficit for someone else, like folks on pensions to deal with in their retirement, and the teachers who come after us.

Please help get your friends on board with a REAM membership and help educate your friends as to why they need to talk with and educate their legislators on the need to pay the full Annual Required Contribution (ARC) to our TRA pension fund each year. The growing deficit, if not dealt with appropriately, will make it harder for the TRA Administrators to do their job; puts our state bonding rate at risk; impacts the growing teacher shortage in our state; and creates a problem for your buying power going forward. Be informed! Get involved! Stay involved!!

Curt Hutchins was on the TRA Board for 20 years and has, during some of those years, served as chair of the TRA Board. He has served as president of REAM and continues to serve on the REAM Board.

Our quest to achieve 10,000+ members is steadily climbing. We now have 9,587 members strong at the last report on Monday, February 13th. “It’s not over until it’s over” and we reach our goal of 10,000+ However, let it be known that in order for REAM to be a viable organization and do our job in the best way that we can, we need to constantly bring in new members and leaders.

We need some young (?) retirees who can take leadership roles in local units to preserve the integrity and unity at the base of our groups. It isn’t hard, and just think how good it will make you feel to know that you helped your fellow retired educators preserve their pensions which are the life line to a happy retirement.

The leaders that we have not only need a pat on the back, BUT they need help. Some locals are asking the RAC committee for help in restoring and building their local REAM organizations. The RAC Committee is responding, but you can also help if it is only giving just a little time to help organize or better yet to help one or two of your fellow retirees join REAM. The $15.00 fee is a very little bit in helping our organization function for our betterment.

With the revelation that we have almost 10,000 members, sadly I must report that we have 1134 former members of REAM who have not renewed. If you see one of your retiree friends, ask them if they have renewed their REAM membership for 2016-2017. We need to present a united front when contacting our legislators. If you want to know if a person from your area is one of the non-renewals, email me at: I can help identify their status. Also, some members have died, but we haven’t been given the information that they have passed away. Please help us keep our records current.

We are at the stage in the legislative session where we will be contacting our legislators about pending legislationPlease send the following to our secretary, Karna Brewer at:

  • Your name,
  • Your Senate or House of Representative District number,
  • The name of your State Senator and Representative member

We must remain active in the protection of our pensions.

The 2017 REAM Legislative Conference will be Wednesday, February 8 at the Maple Grove Community Center, 12951 Weaver Lake Road in Maple Grove. Registration begins at 8:30 a.m. Rolls, juice and coffee will be available at Registration. The Conference will begin at 9 a.m. and end at 2:30 p.m. A lunch will be provided at Noon.

One speaker will be Tom Nicholls, Senior Legislative Representative for NRTA (National Retired Teachers Association). NRTA is based in Washington, D.C. Tom has worked with pension issues previously with AARP. He has worked with several states on pension issues. Hopefully, a few state legislators will be available to speakat the conference as well.

REAM is attempting to install a systems wide communications system. This system would contain member’s legislative districts so that contact with legislators could be facilitated when appropriate contact is necessary. In this legislative session, REAM will need your support in protecting pensions and serving our members. Please send your NAME, SENATE and HOUSE of REPRESENTATIVE DISTRICT NUMBER to: Karna Brewer at:

Please include the names of your State Senator and House of Representative member. Your voice may be needed in this legislative session concerning pension issues.

Your TRA/PERA defined benefit pension plan is at risk and will be under serious attack in the 2017 MN legislature. Legislators want to know how many constituents your organization represents. REAM’s goal is to have 10,000 members by the time the 2017 Legislative session begins.

How can you help with defending your pension? We are asking each REAM member to recruit one or more new REAM members. If each REAM member will pass out membership applications to 10 prospects and then monitor their applications to fruition we can reach our goal.

Where can you get the applications and the Pension talking points to share with prospects? REAM WEBSITE: You can download the forms and duplicate them. REAM NEWS: The back page of the REAM NEWS has the form. Make 10 copies to hand out to prospects.Pension talking points can be found on the web site also. Talking points and applications will be available in:

  • Mankato at the REAM meeting on October 13.
  • Anoka at the AHRSA luncheon on October 18.
  • Rochester at the SEREAM meeting on October 19.

Let’s all pull together to give our legislative committee some help in the 2017 session. VOTE, VOTE, VOTE. YOUR VOTE CAN SAVE YOUR STATE PENSION AND ALSO YOUR SOCIAL SECURITY.

Members . . . The Situation of our Pension Preservation Mission has changed. The Experience Study that was described by my colleague, Henry Carbone, has changed the view of our Pension Sustainability. Legislation that was proposed and before the Legislative Pension and Retirement Commission (LPRC) was not passed as a bill . . . Instead . . . It was passed in Part . . . as an initiative that required only sacrifice by US . . . the Retirees. Fortunately, the Governor decided to line item veto that provision as being “Unfair”.

As of this writing, the prospect of a Special Session for our State Legislature is being negotiated. It is believed by this writer that a Pension Bill that enacts a “Shared” sacrifice Sustainability plan is unlikely. So . . . What should we Do Now??

We should be ProActive by Inviting Legislative Input. There are a fair number of Legislative Representatives who are NOT running for office in the Fall. Every Congressional seat, Senate or House, are up for election. We MUST make every effort to INVITE interaction from those who are running for a seat in the Legislature. Please consider this list of possible actions :

  • Reach out to Candidates who are running for the first time. Invite them to your REAM gatherings (regular or not) to have dialogue about Pensions. Share with your members what is learned, so as to be instructive when they vote.
  • Attend Town Hall gatherings where candidates are meeting with voters. Ask questions about their positions on Pension policy. Again, share what they say with your local membership.
  • Invite Prospective Candidates, particularly those running for the first time, to meet and greet with you about issues important to retirees.
  • Visit websites of Candidates to gain knowledge of their Public appearances so that Members can attend and be interrogative directly about Pension Policy. We are skilled at asking questions !!
  • Write to Candidate websites about our concern for ongoing State Participation in the State’s longstanding record of Pension Excellence !
  • Write to your local news publications as an OPED piece, as to how our State’s credit rating is somewhat dependant on the Pension systems Health and Well-being.

This is a short list. Hopefully it serves to give rise to Interactions that have Significance. This is not the time to sit idling by and hope that nothing will change and that your Pension will be ongoing as you know it. The entities that seek the end of Defined Benefit Pensions are working tirelessly towards that end. We can and will prevail IF . . . we Do what we Do . . . Our Diligence

Most Certainly . . . Vote . . . And do so as an Informed Voter . . . Thank you !!

Don leathers’ response to mark haveman’s april 24 commentary in the star-tribune

Letter to editor:

A retired teacher of 34 years, i became a legislative co-chair for the retired educators association of minnesota (ream) in the summer of 2011. Since then, i have actively attended teacher retirement association (tra) board and investment advisory council (iac) meetings, as well as hearings conducted by the legislative commission on pensions and retirement (lcpr). That comes to 20+ meetings a year covering pension issues, and i live 100 miles south of st. Paul.
I attend these meetings because i want to learn as much as i can about public pensions and the positive impact they have on minnesota. And, i want to support those pensions to ensure that they will be around for your and my children and grandchildren to enjoy.

That’s why i was dismayed to read mark haveman’s commentary (april 24, “can minnesotans…”) on public pension plans in the opinion exchange section of the star tribune. Mr. Haveman criticizes minnesota’s pension managers for “prudently and responsibly managing these funds,” qualities which i have found to be a highly laudatory, both from a retired teacher’s perspective and from that of a taxpayer.

The writer further suggests that the reasonable manner in which these funds are managed is a ruse to mask the truth from the taxpaying public. He refers to their strategy as “pretend and extend,” where pension reporting “does a spectacular job of muddling, confusing and distorting economic reality.” If i have learned anything in my brief time around minnesota’s pension groups, it is that they get “ahead of the ball,” seek out feedback from shareholder groups, listen to their actuaries, discuss possible scenarios, and act in a transparent nature.

The iac and tra board have some of the brightest minds from the state’s private and public sectors working to find solutions to real, economic problems. And, the lcpr has been doing what’s right for active and retired public employees and minnesota taxpayers for decades. For mr. Haveman to suggest that these dedicated minnesotans are willingly in violation of “finance 101,” is a pretty serious allegation.

In may of 2015, tra released the findings of an experience study conducted by its actuaries outlining the overall health of its pension plan. As mr. Haveman observed, “retired public employees are living (and working) longer” and that “lowering investment expectations” might be a good first move. And, it indeed was.

In november, the lcpr, under advisement from its own actuarial firm, deloitte, voted to lower tra’s assumption rate from 8.5% to 8%. For mr. Haveman to suggest that, according to pension fund actuaries, garnering a 7% investment over the next 20 years is “no better than a coin flip,” reduces actuarial science to a sort of alchemy.

In fact, at the november hearing, deloitte’s actuaries, after advising the lcpr to set the discount rate at 8%, further instructed them to leave it there for a period of time. Interestingly, the state board of investment’s earnings in its portfolio over the past 30 years are between 9% and 10%. Another example of prudently and responsibly managing funds.

As is the case with many policy issues these days, whether it is trade agreements, health care, climate change or transportation funding, there are often vocal forces of opposition. Some are critics of the defined-benefit (db) public pension, for a host of reasons. Toward the end of his piece, mr. Haveman states, “we can fix this,” (minnesota’s public pension problem). However, he never provides the reader with a plan or alternative. He talks about the “twin goals of providing public employees with high-quality, secure retirement while eliminating long-term risks to taxpayers and government services.” But, we never learn how. Replacing a defined-benefit pension with a 401k?

Mr. Haveman saves his best piece of writing for the last sentence of his piece: “all we need is [sic] a few good men and women to make this happen.” Believe me, those good people are in place in st. Paul, and they are working hard, day-in-and-day- out, to find solutions to real, economic problems that will empower state and local government, provide security to active and retired public employees and help all minnesotans, including your grandchildren and mine.


Fiscal responsibility means regular course-corrections are a normal and necessary part of doing business.

We agree with the call for fixes to the state’s public pension plans made by Mark Haveman of the Minnesota Center for Fiscal Excellence (“Public pension plans: Can we Minnesotans handle the truth?” April 22). In fact, Minnesota’s pension boards have proposed to fix the plans in ways that meet the interests of everyone who has a stake in the system – including public employees, retirees, governments and taxpayers.

Two of the three statewide pension plans are indeed seeking legislative changes “for the third time in 10 years.” Monitoring the plans and making necessary adjustments is an ongoing, routine part of the exercise of our fiduciary duty to Minnesota’s taxpayers, active and retired public workers, local government units and school districts. We are committed to the defined-benefit (DB) pension model and believe wholeheartedly that DB pensions are the best way to provide modest retirement security for our public workers in the most cost-effective way for taxpayers.

Last year the forecast for future longevity improvements was changed for the state’s three largest plans. We have long known that Minnesotans are living longer, and our actuaries have been forecasting longer lifespans for some time now. However, recent studies indicate that the previous assumption for future lifespan improvement should be more conservative. Adoption of this recommendation increases the plans’ liability estimates while reducing the risk of future cost increases.

Despite the cost impact of the mortality assumption change, the Public Employee Retirement Association’s (PERA) General Plan – the state’s largest – is still on a path to achieve full funding without legislative action this year. The Teachers Retirement Association (TRA) and Minnesota State Retirement System (MSRS) are seeking to offset the increased costs of providing retirement benefits for a longer period of time. In December, TRA and MSRS administrators, boards, active and retired employees and employers agreed to a sustainability package that will result in over $1.4 billion in benefit cuts. The state legislature now must approve the changes.

When combined with savings from reform measures taken in 2010, previous and proposed reforms will save $8.2 billion. These are structural reforms that will produce ongoing savings and put the plans on track for 100 percent funding.

The proposed changes reflect a “shared sacrifice” philosophy. TRA and MSRS retirees will see their cost-of-living adjustments reduced significantly. In addition, MSRS is asking members still in the public workforce to contribute more of their pay toward their pension. Both MSRS and TRA are asking employers to kick in 1 percent more to help attract and retain a high-quality workforce.

Ratings agencies Moody’s, Standard & Poor’s and Fitch have issued harsh reports on states that have not been proactive and aggressive in managing their public pension plans. Minnesota has a history of good financial stewardship of its public pensions, which is reflected in the state’s AA+/Positive bond rating. Our 2016 proposed reforms will help preserve that positive assessment. We appreciate Mr. Haveman’s general call to action, though it should be noted that we began working on detailed solutions the minute after our actuaries wrapped up their studies last summer.

We now ask the legislature to pass our sustainability measures and continue Minnesota’s tradition of fiscal excellence in public pension management.

Laurie Hacking, executive director, TRA
Dave Bergstrom, executive director, MSRS
Doug Anderson, executive director, PERA

Mark Haveman’s article from the Star Tribune regarding pensions.

LCPR (Legislative Commission on Pensions & Retirement) will meet on Tuesday, April 12 at 5:30 p.m. to discuss the TRA Sustainability Bill. The meeting will be in the State Office Building. If the legislature does not act on this bill in 2016, it will cost TRA $106.5 million.

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