Pension News

Pension News – Legislative Updates

Legislative Updates | President's Reports | Executive Director's Reports | General Pension News

 

Greetings Members!

It is hoped that you have weathered the Winter well. For those of us who remain in Minnesnowta all year, it was a challenge that continues here into the month of April!

Our Semi-Annual Legislative Conference did come to fruition. Huge snowfalls and cold were experienced just prior to that Event. Concerns about cancelling due to weather gave rise to numerous calls and emails. We were fortunate. A window, amidst the parade of bad weather storms, allowed it to happen. Let me tell you about it.

We invited Diane Oakley, Executive Director of the National Institute on Retirement Security, a highly respected, non-partisan research organization, to be our Keynote Speaker. Her flight from Washington DC was at risk of being cancelled. Fortunately, she was able to make that trip to give us a very researched based report. She spoke on the “State of our Union” with regard to Pensions and Retirement. It stands as the first time since I’ve been connected with REAM that a Presenter received a Standing Ovation! She was awesome!

To summarize, she pointed clearly to the task REAM has taken up since 1954: to educate, to advocate, and to remain involved. This mission continues to be important for REAM and its members. Links on our website can give more detail about her message/PowerPoint slide she shared. I would encourage all members to sit with that source for a bit, so that we continue to be resources for our fellow members and those in the communities where we reside.

The rest of our agenda was completed as planned even though travel difficulties gave us cause to be flexible. The thirty some registered attendees and nine guests gave us feedback that the networking, discussion interaction, and informative content made it a fruitful endeavor. If you’d like to have more detail on the Conference, please ask me. I would be glad to help with that.

Your REAM leaders have embarked upon a new and exciting effort to serve us by giving us a better tool to connect with one another. It is called “Your Membership”. Please join our efforts to make ourselves a more highly productive, a more highly respected, and a more highly relevant organization. It continues to be my resolve and my hope that our efforts will sustain our Pensions, our Profession, and the well-being of our Members.

With the Snow and the Cold . . . We are abundantly aware of the Winter Season in Minnesota. It is hoped that we know too, that the Legislature is once again in session. This is the Long Session where Funding and Policy Legislation are crafted and vetted in their paths towards becoming our Law. Some attention has been paid towards controversial initiative like Gun Safety and Health Care Insurance Policy. Our focus is . . . and will remain . . . Pension Policy.

We can continue to be happy for Pension Legislation that became Law in the 2018 Session. We must also continue on our Path to advocate for Pension preservation. This year the focus turns to appropriation decisions. Our Pensions have been funded with dollars going directly to School Districts and then being paid to TRA and PERA for the Defined Benefit Pensions we earned. The 2018 Law provided for additional dollars going directly to the Pension Funds! This is different from what has been done in the Past. We support this Change.

We are paying attention to what will be appropriated for the Next Biennium. As of this writing, the Budget, for our new Governor Tim Walz, has not been released. It would be great, as was done by Governor Dayton, to see the dollars for our Pensions, that the 2018 Law requires, in the budget.

Our Annual Legislative Conference is being held on February 21st. In my last message I asked that we endeavor to get person(s) from each REAM unit to attend. The next Legislative Report will chronicle that Event.

Season’s Greetings REAM Members!!

A New Year is upon us. A New Minnesota Legislature will be sworn in and the 2019 Session will begin. A New Governor, a House of Representatives with a New Speaker AND . . . a Change in the Party with the Majority. Forty-five percent of the Legislative persons in the House are New to State Government, and for many it’s their first elected Office. Wow . . . It really is a New Year!!

It is also a time to look back and evaluate our involvements and achievements in the Past year. We can legitimately say that what we were able to do, with our PEPC partners, (Public Employee Pension Coalition), last year was nothing short of amazing. A Pension Bill with unanimous support from All Stakeholder groups, All of the Pension Commission members, and finally the Unanimous Vote of the Legislators in Both Houses . . . is now the Law!! Governor Dayton signed it in to Law, making it the Last Bill he would sign. Another WOW!!

Our focus on Pensions remains an ongoing involvement for REAM. Your Legislative Committee will continue to interact with Policy makers to advocate, to be instructive, and to be informed about forces seeking to undo Defined Benefit Pensions. To that End, we will Host our Semi-Annual Legislative Conference. It is our hope that REAM members from across our great State will choose to participate. It will be held at the TRA Building, at 60 Empire Read in St. Paul on February 21st. As of this writing we have invited many Notable Policy experts to make your participation fruitful. Information about our speakers and Agenda will be available soon.

It is our Goal that every REAM Unit will send at least One representative to the Conference. One car from each Unit will be reimbursed for mileage traveled to and from St. Paul. Registration cost is $25.00. Members can register by email with me or by mailing contact information and a check to my address. Participants will enjoy a continental breakfast and coffee . . . Lunch will also be served.

Please Join Us, your sisters and brothers in REAM, to keep Current and Conversant with Pension Policy and what is happening with our Lawmakers. Thank you for listening!!

Timothy Moynihan

As we come to the End of the Summer, we have much to the thankful for. The year, 2018, will be known as a year of good results for all Public Pension Members. The Unanimous passage, the Governor signing into Law, the first Pension stabilization legislation in more than three years, gave rise to the fervor to celebrate. REAM leaders attended a CelebrationSocial that brought together all the Stakeholders, Legislators, and Governmental staff. It was a celebration of progress. . . And just as important, it was the recognition of the fact, that extraordinary Collaboration had occurred!!

Since that event, another significant thing happened. Organizations on Wall Street’s rating agencies (Moodys, Fitch) made it public that our State’s Bond rating was now moving up to the highest possible rating of. . . AAA!! It’s significant because our local communities, School Districts, Counties and State Government can now bond and borrow at the lowest possible cost to taxpayers. Millions of dollars will be saved. Further, the Agencies cited that the Work Minnesota has done in making things right with our Pension programs is the reason Why!!

There is NO better “Truth Talking Point” about how Pensions benefit our Minnesota Economy!! THAT is what we should be talking about!!

Celebrate the good stuff. . . Yes!! Are we done now? NO! NO! NO!

It is my hope that you will attend our annual REAM Conference September 24-25. When our REAM Board gathers there, you will hear me. Join others calling for a GET OUT the VOTE effort. Those who represent us in St. Paul continue to be the largest single factor on what happens with the Pension Systems that allow us to Retire with Dignity. Please Come!!

In the final five minutes of the 2018 Legislative Session, the Pension Bill, an opus three years in the making, PASSED both Houses with NO dissenting Votes!

When I last wrote, the words, “guardedly optimistic,” described the predominant outlook for our chances. Thanks to the collective work of the Public Employee Pension Coalition (PEPC), there were concerted efforts to bring this Bill across the Finish Line! First, the Legislative Commission on Pensions and Retirement, then the Senate Committees, next Senate floor Vote, and then the Bill SF 2620 moved on to the House with Unanimous Votes.

In the House of Representatives the Bill stalled. This prompted calls from members, targeted visits, and In-person letter appeals from REAM members and PEPC stakeholders. Tension increased as we neared the end of the Session. In the last week, the Bill started to move through Committees. Each time a Unanimous Vote helped our spirits to rise. Several of us attended the last day of the Session to advocate/witness a House floor debate and an up or down Vote. The Bill went through without any changes.

Your President, Vice President, Executive Director, Newsletter Editor, and two Legislative Co-Chairs were present in the Capitol Rotunda . . . to witness Governor Dayton signing the Pension Bill into Law! Your President was asked to speak on behalf of Retired Educators. He was the last to speak, and we can be Proud of his eloquence and the manner with which he delivered our appreciation!

It was a great Day for REAM. It was a great Day for Minnesota Pensions.

“Thank you,” was the next order of business for your REAM Team. A third letter, expressing our Thanks was delivered to the offices of every sitting member of the House and Senate. Many staffers recognized us as we stopped by. It was indeed a very satisfying conclusion to our three year journey.

Thank you to All Members who communicated with Legislators. Clearly, your Voices were Heard!

With the “Spring” of 2018 have come New Beginnings. After two years of no new adjustments, no new funding instruments, and no new sustainability plans . . . A bold Pension Bill has come to the Minnesota State Capitol!!

After what I last reported to you, this may surprise you. The Bill, Senate file 2620, resembles things contained in last year’s Bill. Yes . . . It contains elements that are less than what we hoped to get; yet, it contains an important something that has been lacking since 1998 . . . Funding!! Even more notable is that it passed out of the Legislative Commission on Pensions and Retirement (LCPR) on a unanimous Vote. It has proceeded through the Senate committees and on to the floor for a Vote in record time. It Passed the Senate on a 66-0 Vote. How did this happen?

In short, the leadership of the LCPR, and the Senate as a whole, have come to the realization that Pension adjustments are in the Best interest of the Economy of Minnesota. State and Local Bond Ratings are closely connected to the ability of those governmental entities to borrow money and bond for public projects. The well- being of Retirees has a direct impact on the local economies of Rural and Urban communities. We spend our Pension dollars in Minnesota. We pay taxes on our Pension dollars. Our healthy Pension omics attract and retain Teachers and Public sector employees. Lower salaries are somewhat offset by a Defined Benefit Pension not often found in the private sector. Pension sustainability makes good sense (cents) for Minnesota.

Just like our weather, the promise of a Pension Bill becoming Law, needs to survive those who want to hang on to the “Winter” of failed Pension Bills past. As of this writing, the State House of Representatives has yet to hear or act on the bill. That is why the organization . . . Public Employee Pension Coalition (PEPC) has pushed for solidarity, AND . . . that has been achieved!! All Stakeholder groups, including REAM have endorsed this Bill.

Together, we have put our combined resources to work in meeting with, writing to, and emailing House members. Along with REAM President, Lonnie Duberstein, we visited every single House member’s office to drop off information and speak to those available. Other PEPC groups have orchestrated contacts with Representatives by phone. Some Legislative persons have indicated their phones have been ringing off the hook. This is a good thing.

There are two things for members of REAM to do. First, write or email a note to your State Senator. All of them . . . Voted . . . YES on this Bill. Tell them, Thank You for voting in favor of the Pension Bill. Second, Call your State Representative, and ask him/her to Vote for a “Clean Pension Bill” as it was introduced. Leave a message with the Legislative assistant if you are unable to talk with the Representative. These calls are counted. It will matter that you have made this effort!!
At this point in time, we have reason to be cautiously optimistic, that a Clean bill will go through the House. From there it’s on to Governor Dayton for the signature he has assured us he would make. Thanks you to those of you who have already called, or already emailed. REAM has and will continue to make a good account of itself.

Please Note: More detailed information and talking points on the Bill are available from a link on our REAM Website, as well as the TRA Website.

As I write you today we are moving steadily towards the 2018 Legislative Session. On February 20th Legislators will once again convene to do the business of the People of Minnesota. Since the last REAM Newsletter report, the Legislative Commission on Pensions and Retirement has met three times. Without recapping all the information they took testimony on, I will seek rather to characterize what are clear takeaways for likely Legislative proposals this Session.

Jay Stoffel, new Executive Director of TRA, testified that the TRA Board has voted to recommend a change in the Assumption Rate of Return. A change from 8.5% to 7.5% is now the Position going forward. The other systems (PERA and MSRS) had already made that change and TRA has joined them. This change has huge implications going forward. It is a rate that is used to calculate funding levels, and also retiree benefits. I is notable that he shared no other specific recommendations but instead some guiding principles for Board decisions. In the most recent TRA Newsletter, TRA Board President Marti Zins gives their position’s rationale. She also makes the case for why our Pensions are a “Good” partner to our State’s economy. Pension-omics. It is instructive and I recommend that you read/re-read it.

Testimony from a man named Winkelmann, a professor at the University of Minnesota, a former executive of Goldman Sachs, and a recipient of a grant from the Arnold Foundation, discussed what he called the “Groundhog Day” scenario. He believes that our Pension policy is one that is a yearly examination that requires ongoing remedy. He reported that his task was to study an end to such remedial work, outlining policy that takes taxpayers off the hook, and brings a substitute for current practices. His actual remedy was not clear, but his mission is clear–a recipe for changing pension policy as we know it. Even the Commission chair stated to our Vice-President openly, that the Arnold Foundation casts a critical eye upon Public Pensions. Winkelmann has been engaged and intends to do the Foundation’s work.

Still other testimony from State Pension Executive Director from Oklahoma told the tale of how they converted from a Defined Benefit to a Defined Contribution Pension in their states. The Oklahoma director cited the influence of the Arnold Foundation as a significant driver in their making that change. Their Fund is over 90% funded and why wouldn’t it be? . . . Their retirees have not received a COLA in ten years! A key aspect of their program is that their Fund is “Privately” managed. A question to him about how their Pension members feel about this change. His answer: “Members would prefer the Defined Benefit program”. This testimony gives impetus to the idea of privatizing Pensions.

As the Commission continues to solicit this kind of input, the message points to a continued effort towards a major reform of the way Pensions are conducted in Minnesota. It follows a pattern displayed prominently in the 2017 Legislative Session. The majority party seemed determined to cut Pension costs. Yet the facts show that our state pays less, as a percentage of the budget, than 47 other states! The majority party in our State Legislature has positioned itself as opposing sustainability, and the keeping of the status quo. Our TASK, given those challenges, is to seek out and help ELECT Pension friendly legislators this November!

The Caucus meetings have come and gone. As President Lonnie said in his message, many of you attended and became delegates for upcoming District and State Conventions. It is imperative that we ascertain each candidate’s position(s) on Pension Policy. A tool for interviewing candidates, in person via mail, or email is being developed. It is intended that information gathered should be shared with members to serve as a guide on identifying and ultimately voting for Legislators who will help our cause. This instrument will be sent to local leaders with instructions on how to use it. We cannot expect that Pensions preservation take care of itself. We will take care of our Pensions . . . when we ELECT persons, who go on record, to support us with legislation.
It cannot be known, if during the Session a Call to Action will need to be made. Our Ream Action Committee (RAC) has developed methods for contacting the Membership in the event that urgent actions are needed. For my part, I can tell you that I would not propose nor ask that of you, unless it is truly necessary. Vice-President Paul, Secretary Karna, Don Zwach, Past President John, and President Lonnie have worked hard to make it possible. Numbers really matter. If you should get such a message, please Help!

Your REAM Leaders, along with our Legislative Committee, will continue to be engaged. As always, I wish you well!

I write to you today, as we live out the waning days of 2017. My report at this time is fraught with uncertainty. That is why I say that as of December 12, this is what I can tell you.

After another Legislative Session (2017) where nothing was done with our Pensions, it is our ongoing task to stay involved. Our organization has been active in acquiring reliable information, organizing timely meetings of our leadership, attending and advocating with Legislative and TRA leadership, and communicating our ideas in accordance with input from you, the Members.

REAM leadership got a clear message from members at our last September’s REAM Conference in Hinckley. It was a guiding message as we attended and called for meetings with the TRA Board of Trustees, Executive Director and staff. They asked for and received by November 1st, a statement of what message we believe should be brought to the State Legislature in February 2018. Our “Position” letter will be available shortly via a link on our REAM Website. We requested and were granted a private meeting with new Executive Director Jay Stoffel. It was where we presented our Positions personally.
We also set up meetings with leaders to present our ideas to them directly. Education Minnesota Retired and the Committee of 13 attended. It is evidence of the fact that we are seeking Consensus with other Stakeholders as we go to the Legislature to get good Pension policy passed.

Early next year we intend to be active with the Public Employee Pension Coalition (PEPC) to coordinate with them as we go into the next session. All of us understand that the 2018 Legislative Session is a Bonding session…Not a Funding session. We expect to encounter difficulty convincing Legislators who said there was not money, in a 1.2 billion surplus context, to suddenly find money in 2018. Add to that reports that the State of Minnesota will be in the “red” somewhere in the neighborhood of $190,000,000. Budget numbers can and do change. As the Budget deficit numbers are updated, we will try to keep you apprised of developments on our Website.

In the meantime our focus may need to be more about the make-up of the Legislature and who will be our next Governor. Make no mistake about it. Who get elected will greatly impact what happens with Pensions going forward. All State Representative Lawmakers and the Governor are up of Election. Add to that both U.S. Senate seats will be on the ballot next fall and it should be evident that we could have a much larger campaign push than usual. Please know we will be pursuant of information on how those running stand on issues that are important to us. Your ideas and information about candidates in your area of our State are needed. We intend to be sharing what we find, what we know, with our members. Our Goal: Elect Pension friendly Candidates!
Our Local and Regional REAM units will have a significant role in advancing a Pension policy that serves us all. Let’s resolve to make that happen. Let’s make it a Happy New Year!!

Paul Ehrhard

REAM Vice President, Paul Ehrhard delivering the REAM 2018 Legislative Proposal to TRA Executive Director, J. Stoffel

NRTA Legislative Advocacy Conference – September 2017

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:
https://1drv.ms/p/s!ApeSrTS6ktSThGv5NIQ5dV-LcSiz

Public Pension Research and Resources
Diane Oakley, Executive Director, National Institute on Retirement Security:
https://1drv.ms/p/s!ApeSrTS6ktSThG2HRkKUiGNowx0I

Barrie Tabin Berger, Senior Legislative Representative, AARP State Advocacy & Strategy:
https://1drv.ms/p/s!ApeSrTS6ktSThG8bouYEaKM18hCM

Hank Kim, Executive Director and Counsel, National Conference on Public Employee Retirement Systems:
https://1drv.ms/p/s!ApeSrTS6ktSThHHpHeWEXgWaYT3Z

Keynote Address
Joshua M. Franzel, PhD, President/CEO, Center for State and Local Government Excellence:
https://1drv.ms/b/s!ApeSrTS6ktSThHPmVDi2sQc86pz8

The Federal and State Landscapes on Public Pensions
Jeannine Markoe Raymond, Director of Federal Relations, National Association of State Retirement Administrators:
https://1drv.ms/p/s!ApeSrTS6ktSThHQ4lWFh3_4dGr_i

Bailey Childers, Executive Director, National Public Pension Coalition:
https://1drv.ms/p/s!ApeSrTS6ktSThHblY0Eu2xhDN_7G

AARP Priority Issue – RAISE Family Caregivers Act
Rhonda Richards, Senior Legislative Representative, Health & Family, AARP Government Affairs:
https://1drv.ms/p/s!ApeSrTS6ktSThHg06niL1fQ2K8fS

RAISE Family Caregivers Fact Sheet:
https://1drv.ms/b/s!ApeSrTS6ktSThGaU6CCHP28C83T6

PPI’s Valuing the Invaluable:
https://1drv.ms/b/s!ApeSrTS6ktSThHqq3mRjGTQH-2Bm

RAISE Family Caregivers Confidential Talking Points:
https://1drv.ms/b/s!ApeSrTS6ktSThHvr0TtnbGL_GX87

Effective Messaging on Teacher Retirement Issues
Kelly Kenneally, Owner, Kenneally Company:
https://1drv.ms/p/s!ApeSrTS6ktSThHw407OTBRfwC4wV

Closing Reception
Lily Liu, AARP Historian:
https://1drv.ms/b/s!ApeSrTS6ktSThQBEN83tRwSNIHvd

Public Pension Talking Points

NRTA/NIRS General Pension-Related Talking Points:
https://1drv.ms/w/s!ApeSrTS6ktSThGgoJvIjqAZpJyFF

NRTA/NIRS 10 Key Pension Messages:
https://1drv.ms/w/s!ApeSrTS6ktSThH5csMbT8DCz1-S9

Additional Resources

AARP’s Understanding Public Pensions: A Guide for Elected Officials
https://1drv.ms/b/s!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.
http://www.nirsonline.org/index.php?option=com_content&task=view&id=939&Itemid=126

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.
http://www.ncpers.org/files/NCPERS%20Research%20Series_2017%20Public%20Pensions%20Are%20A%20Good%20Deal%20for%20Taxpayers_Web.pdf

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.
https://protectpensions.org/wp-content/uploads/2017/03/NPPC-Why-Pensions-Matter-FINAL.pdf

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.
http://www.nirsonline.org/storage/nirs/documents/Still%20a%20Better%20Bang/bangforbuck_2014.pdf

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.
http://www.nirsonline.org/storage/nirs/documents/Teacher%20Paper%202014/final_three_rs_report_.pdf

Helpful Websites

AARP, http://www.aarp.org 
National Institute on Retirement Security, http://www.nirsonline.org
National Conference on Public Employee Retirement Systems, http://www.ncpers.org
Center for State and Local Government Excellence, http://www.slge.org
National Association of State Retirement Administrators, http://www.nasra.org
National Public Pension Coalition, https://protectpensions.org/
National Council on Teacher Retirement, http://www.nctr.org
National Conference of State Legislatures, http://www.ncsl.org

Please review the TRA 2017 Legislative Financial Update for Stakeholders (Retirees) which contains important information that may affect your pension.

Legislative Commission on Pensions and Retirement Sept. 20 Meeting Scheduled

Legislative Commission on Pensions and Retirement
Wednesday, September 20, 2017
2 PM
Room: G-15 Capitol
Chair: Sen. Julie A. Rosen

The Legislature closed its Session after working overtime in “Special Session” to complete its work. The resulting legislation has left the watchers of Pension Policy feeling as Seinfeld once said, “It is much to do about Nothing”. No Legislation updates for TRA or PERA were passed.

The Much to Do . . . started in the Fall of 2016 when stakeholders, including REAM, were asked for and gave input to the TRA staff and Board of Trustees. It was contentious. Many REAM Board members were involved and spoke in opposition to COLA provisions in particular. In the END . . . we were heard. Adjustments were made in the proposal that would go before the LCPR for their consideration.

We waited to hear who would be selected by the Republican majority to sit on the LCPR. Hoping on hope that relationships could be formed prior to the January 2017 Legislative Session. In the meantime, we hosted our semi-annual Legislative Conference on Feb. 8. It was attended by forty plus persons from EdMn Retired and REAM. There were three Legislators who were invited and agreed to come. The eventual Chair of the LCPR canceled five days prior. A second Republican member did not show without apology. Only the Lone Democrat came to speak with us. Commission members members were finally announced 4 days before the first meeting of the LCPR.

It was the Spector of things to come. At LCPR meetings, well attended by REAM and other stakeholders, testimony was elicited by the Commission. Four REAM leaders signed up … Only two would be allowed due to last minute time limitation rules. A relationship was becoming evident. It was a time with meetings cancelled, no agenda items involving the TRA proposal, and directives from Republican House members to research “Pension Cost Saving” measures. A report by staff on possible measures had no connection, were not a part of the TRA proposal, and had several provisions that represent benefit reductions for present and future retirees.

Prior to entering the final month of the session, (May), many of us were asking, “What will the Commission be bringing forward to include in the Omnibus Pension Bill. TRA staff informed us that a Bill had been constructed that was in No Way a measure that addressed ANY Part of the TRA proposal… Something new had been crafted without a costing, without TRA input, without any testimony from anyone!! We found ourselves in a position that was UNLIKE anything we had experienced before.

There was a call for testimony and again we signed up. EdMN Retired, REAM, the Committee of 13, MSBA, MMSA all gave testimony in opposition to the Bill… No funding, No Consensus, No Goodness for any of the Stakeholders, were the common points made. In the context of a Billion dollar surplus, it made no sense at all. On May 3rd, the Bill went on to the Senate and the House on a 9-4 … Party line Vote!! It was the first time, in my experience, where something other than a “Unanimous” Vote passed the Omnibus Bill out of the LCPR.

After running its course in the Senate and House committees, TRA was removed entirely from the Bill. That same Bill was vetoed by the Governor as it contained “Preemption Policy” he had promised to reject. Much was done. Nothing was the result. This is the Second consecutive Session where we received NO help for the health and well being of our Pensions.

It is important to note, that there were occasions in the Last hours of this process, where we put out a call for involvement to REAM Leaders and members. Thank you to those who made a trip to Rally at the Capitol, despite the fact that strong thunderstorms were making that trip difficult.
Thank you too for those who made phone calls and wrote letters to the persons who represent YOU.

In retrospect, I would say, that the need for more active involvement has clearly arrived. It is my hope that as we look forward, we can plan for and implement new ways to propose, advocate for, and bring to fruition positive Pension Policy. We will be asking for your input to formulate these plans. We will likewise have some ideas to bring to the conversation. The Pension Landscape has changed. We need to adjust as well!!

Hello again, members!

A lot has been happening since the 2017 Legislative Session began in January. I will try to give you a synopsis that gives you a sense of where things are at the present time.

It was well into January before we knew who the Legislators named to the Legislative Commission on Pensions and Retirement (LCPR) would be. House members were named first and the Senate followed less than a week before the first meeting was scheduled. This is of importance as it was a pattern of delay that has continued.

We hosted the Annual Legislative Conference on February 8. We alternate hosting this event with EdMN-Retired. We scheduled it early thinking that getting active was called for. Remember last year’s agenda included the LCPR Chairperson, Sen. Julie Rosen. Days before the event, Sen. Rosen cancelled. One other Republican member, Rep. Tony Albright had agreed to come for a Legislative Question and Answer Session. He did not show up. No apology or explanation was given. Only Democrat, Rep. Paul Thissen came. We learned a lot that day that was helpful, especially from National Retired Teachers Association representative, Tom Nicholls. We learned the extent to which Pensions are under fire nationwide. He made the case for meeting with and conversing with legislators. NRTA Tips about how to do that are available on our REAM website as a link. www.mnream.org.

As the Legislative session has ensued, Commission meetings have allowed testimony on the TRA stakeholders Bill that was collectively developed. Our President and Vice-President testified without Don Leathers and myself. We were told there wasn’t enough time for all of us to speak. We were told that we would have opportunity to testify at a later meeting. As of this writing, that has not happened. Meetings have been cancelled, and as of Easter break, no action on our Bill has been made.

What has happened is that Rep. Albright and Rep. O’Driscoll, (2016 chair), asked for a report on possible measures that could produce savings for the State in the “Course Correction” with TRA that we have proposed. Among those is a PERMANENT ONE Percent COLA, a lowering of the 1.9% multiplier to 1.7% and a PERMANENT 7.5% assumption rate. The COLA part means retirees and future retirees would see the buying power of their Pension going backwards against inflation…Forever. The report was given to the Commission. Little opportunity to respond by stakeholders or hearing have been granted. Many of us have answered that privately. So what should a REAM member do?

It is my hope that you are seeing/hearing that pension involvement is greatly needed. The pattern of delay and inaction from the Party in power is creating considerable concern for retirees and actives alike. Please call, write or email your State Senator and State Representative immediately. Tell them simply…that our Pension is NOT an Entitlement. It is a Benefit that was promised. It was paid for by YOU and your employer, and WE should be able to continue collecting on that Promise. Tell them you expect them to pass the House File #2486 Bill as crafted by TRA and the Retiree stakeholders! We expect promises to be kept.

Thank you…Thank you in advance for your timely involvement!

P.S. REAM members who are PERA Pensioners. . . Your Pension has no proposal before the LCPR this session.

The Legislature is now in full swing! The Legislative Commission on Pensions and Retirement has met on 31 January and 7 February with both meetings happening in the newly refurbished Capitol Building. The make-up of the 14 member committee was not entirely known until the day before the first meeting. The Commission is chaired by Sen. Julie Rosen who is very knowledgeable about pensions and is generally supportive of same.

Each of the statewide Pension Systems, Minnesota State Retirement System (MSRS), Public Employees Retirement Association (PERA), and the Teachers Retirement Association (TRA) has testified on the proposals that they would like to see the Pensions Legislators include in the eventual Omnibus Pensions bill. We are still a ways off from that happening if things go as they have in the past. It would be a good time for all REAM members to review the TRA proposal on your website so that you can become familiar with the proposals. Your leaders spent many hours working towards its final content. It is a good thing . . . bad thing. All stakeholders are being asked to “sacrifice” so that the Pension will be healthy going forward. This writer is of the belief that this “course correction” will be a good step. It is sure to be followed by another needed correction in the future. That is why our diligence needs to be ongoing.

*ALL MEMBERS please NOTE*. . .

An ADVOCACY/Lobby Day is eminent. It will be done in conjunction with EdMN Retired as it has been in the past. We would like each Unit to send members to St. Paul that day. Please start encouraging and organizing your colleagues and friends to come to St. Paul. Your voice is needed!

In the time between now and then. . . It may be a great time to make a call to your State Representative or Senator just to establish a baseline relationship. Those of you who are already doing so. . . Kudos to YOU! Such relationship will assist with the eventual passage of a favorable Pension Law. Remember, last year there was a bill passed and vetoed by Gov. Dayton. Essentially nothing got done!

As this is being written, leaders of the REAM Legislative Committee, your President, and your Vice-President are preparing to testify before the Commission on Valentine’s Day. We will be asking for support of the TRA proposal. Stay tuned.

Thank you for being a member of REAM. It is powerful when we can show we are approaching 10,000 members STRONG!! Together we can expect to maintain a Pension that we earned, and that we should be able to collect!

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.

I trust that the Holiday Season was a joyous time for you, your friends and family. So much to enjoy, and to be thankful for, in such a short time. Recently, I had to crank out another notch on my belt, but, that’s the price for eating too much lutefisk. One of these days I’ll hop on that treadmill down the basement and get serious.

Since September, the TRA Board has been trying to craft a pension package to present at the 2017 legislative session. If you’ll recall, the 2016 package was vetoed by Governor Dayton because too much financially was expected from retirees. The big hurdle in the legislature was finding the dollars to pay for the 1% increased contribution the bill required from school districts ($44 million). That money was never appropriated; hence, the veto.

In July, the State Board of Investments (SBI) reported its gains for the fiscal year ending on June 30 were -0.10%. The current assumed rate for returns of TRA holdings is 8.5%. SBI Executive Director, Mansco Perry, performed some “test runs,” going out ten years on select TRA holdings, and found rates of return below 7.5%. He advised leaders of the three state pension funds to reduce their assumption rate to below 8%.

It is amid this backdrop that the TRA Board is considering its options for the 2017 legislative package. REAM has been exceptionally well represented at many of the board meetings this fall. As a proactive measure, several REAM board members met in early December to craft a paper concerning its stance on the 2017 Sustainability Package. What follows is REAM’s position:

  • REAM would accept a COLA reduction from 1% to 2% for a period of five years, with a return to 2% thereafter.*
  • REAM would support an increase in active employee contributions from 7.5% to 8.0%, phased in incrementally.
  • REAM would support a 2.5% increase in employer contribution, moving the rate from 7.5% to 10.0% incrementally, with the costs fully offset by new state aid.
  • REAM would support lowering the assumption rate to 8.0% and leaving it there for a reasonable period. The assumption rate could be changed, but only after a data-driven, research-based study.
  • REAM would support extending the amortization period to 30 years

This letter was first presented at the REAM Board meeting in Roseville on December 8. A copy was sent to TRA Board Chair, Marti Zins, and a copy was in the packet of each board member at the December 14 meeting.

If you have questions concerning the TRA 2017 Sustainability Legislation, contact me or any REAM board member. Stay connected to the TRA website and please stay connected with you legislators. Tell them that public pensions are vital to the economic health of Minnesota and Minnesotans.

*At the December 14 TRA Board meeting, the 1% COLA for 10 years was adjusted to a five year reduction.

I trust that everyone is enjoying the wonderful Minnesota summer. With this summer’s high humidity, I hope that each of you is within walking distance of one of our 10,000 pristine lakes. Staying cool has been my mantra all summer long. County fairs are upon us and the State Fair is beckoning. End your summer with a trip to a livestock barn, a ride on the Tilt-a-Whirl or some fantastic Fair Food. My favorite is Walleye-on-Stick. Whatever your inclination, enjoy Minnesota’s late summer marvels.

As the current presidential campaign has shown us, the public sector and pensions are under attack. A recent report from Calian Associates, a respected public pension think tank, reported that public pension investment returns for the fiscal period ending June 30, 2016, were at a dismal 0.5%. It’s been a rocky period for portfolios over the past 18 months and this only adds fodder for the anti-pension legislators that populate state houses across the country. The “new normal” in the stock market is upon us.

Minnesota has been lucky. So far, there has not been a great push to convert our defined-benefit pension to something resembling a 401(k). Conversion dollars has been the BIG hurdle. Other states have not been as fortunate. Rhode Island, Kentucky, and Illinois have seen drastic changes to their pension plans by Republican lawmakers. The John Arnold Foundation, the Koch Brothers and the Pew Charitable (?) Trust have worked tirelessly, and have pumped massive amounts of cash into states, with the aim of eliminating public pensions.

Alabama’s pension fund is a case in point. Conservative groups have targeted the fund, voicing a desire to convert its defined-benefit status to something similar to a 401(k), which will be administered by Wall Street hedge fund managers, the same group who led to the Great Recession of 2008 and the loss of $930 billion in pension funds. Clearly, these Wall Street firms are salivating over the prospect of getting their money grubbing hands on the $2.6 trillion dollars of public pension funds currently held in U.S. Plans. The fees they would receive annually are astronomical.

Let me remind you that the most prolific anti-pension crusader, John Arnold, was a former commodities trader for Enron who, when Enron went into bankruptcy creating massive, often devastating, losses for pension funds and private investors, left Enron with an $8 million dollar golden parachute to become a hedge fund manager. He is now a billionaire, and for the life of me, why he would start a crusade against public pensions, is beyond me. But, it is what it is, and we must be vigilant against him and the countless other moneyed elites who want to destroy public pensions and our dignity in retirement.

On a positive note, Fitch’s, a respected actuarial firm that looks at the health of state economies, recently gave Minnesota a AAA+ rating on its investment practices, the highest rating that it gives out. Our state investors were signaled out for the “rational investment practices and their prudent way of doing business.” Fitch further stated, “Our upgrade reflects a combination of positive credit developments. The AAA+ rating reflects Minnesota’s solid and broad-based economy, a positive revenue structure, a low liability burden and strong control over revenue and spending, that, in conjunction with a sophisticated approach to reserve funding, leaves the state exceptionally well-positioned to manage its funds throughout the economic cycle while maintaining high financial flexibility.” In other words, our TRA, PERA, MSRS and State Board of Investment folks are doing a great job managing our pension funds.

So, what to do in the two months before the 2016 election? First off, ask the legislators in your district where they stand on public pensions. Where do they stand on the issue of providing a retirement with dignity for the public servants who tirelessly educated their children and worked to provide them with a better way of life? What is their position on providing a reasonable pension for those young people who are entering the teaching profession in 2016? Will they support a defined-benefit pension or a conversion to something resembling a 401(k). Talk is sometimes cheap, and I have witnessed legislators in one-on-ones totally agreeing with your concerns and then, when the gavel sounds at a Commission meeting, voting 100% in opposition. Hold your legislators accountable. Make their actions fit their words.

Finally, the past two legislative sessions have been Gridlock 101. A recalcitrant majority in the House has made legislating almost impossible. We need to change that for the betterment of our state. I can only speak for myself, but I’m going to doing everything I can to “flip the House” and bring it into Democratic control. This may not be what some of you want to hear, but it is in the best interests of our state and its citizens.

Now, I’m gonna go have a Walleye-on-a Stick at the Great Minnesota Get Together.

Don Leathers
REAM Legislative co-Chair

IS YOUR PENSION SAFE???

What do you know about your current pension and COLA?

The Bill contained provisions to lower the retiree cost of living adjustment (COLA) from 2 percent to 1 percent for one year for TRA and from 2 percent to 1.75 percent for retirees in the Minnesota State Retirement System (MSRS) plan.

Shared responsibility “remains” an important principle in maintaining the soundness of Minnesota’s pension plans. The pension bill contained only one piece of the overall sustainability plans, placing sole responsibility for reducing the plans liability on current retirees. He went on to say “this is not fair, and I cannot agree to it.”

By vetoing the pension bill, TRA’s plan to reduce the investment assumption from 8.5% to 8% will not take place. This means that TRA will not be able to use the lower assumption as required by the Minnesota statue that requires assumption to reflect the results of the recently completed experience study. Further, an 8.5% investment rate assumption is no longer reasonable according to TRA’s and the pension Commission’s actuaries and continued use of this assumption will understate funding and contribution deficiencies and may cause concerns for TRA’s auditors. This will also increase the unfunded liability.

In closing please check the following website to see who represents you, and then check with them to see how they voted on your pension.

https://www.leg.state.mn.us/leg/districtfinder

Thank you for taking the time to read this and remember REAM is working to protect your pension; however, “it takes all of us to make a village”.

Legislative Input Invitation . . . Tim Moynihan

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!!

IS YOUR PENSION SAFE???

REAM LEGISLATIVE REPORT: Henry Carbonne

What do you know about your current pension and COLA?
Send a thank you note to Governor Dayton for vetoing the 2016 pension bill.

The Bill contained provisions to lower the retiree cost of living adjustment (COLA) from 2 percent to 1 percent for one year for TRA and from 2 percent to 1.75 percent for retirees in the Minnesota State Retirement System (MSRS) plan.

Shared responsibility “remains” an important principle in maintaining the soundness of Minnesota’s pension plans. Unfortunately, the pension bill contained only one piece of the overall sustainability plans, placing sole responsibility for reducing the plans liability on current retirees. He went on to say “this is not fair, and I cannot agree to it.”

By vetoing the pension bill, TRA’s plan to reduce the investment assumption from 8.5% to 8% will not take place. This means that TRA will not be able to use the lower assumption as required by the Minnesota statue that requires assumption to reflect the results of the recently completed experience study. Further, an 8.5% investment rate assumption is no longer reasonable according to TRA’s and the pension Commission’s actuaries and continued use of this assumption will understate funding and contribution deficiencies and may cause concerns for TRA’s auditors. This will also increase the unfunded liability.

In closing please check the following website to see who represents you, and then check with them to see how they voted on your pension.
https://www.leg.state.mn.us/leg/districtfinder

Thank you for taking the time to read this and remember REAM is working to protect your pension; however, “it takes all of us to make a village”.

REAM Legislative Report – Don Leathers

At the end of May, 2015, the Teachers’ Retirement Association (TRA) released a much-anticipated Experience Study outlining some serious issues facing its pension fund. The findings which were of an economic and demographic nature prescribed a fund that needed adjustments if it were to remain sustainable for future retirees.

In its normal fashion, TRA staff was proactive in getting ahead of the possible crisis that lay ahead. They met with shareholder groups from Education Minnesota, the Minnesota School Board Association, Superintendent and Principal groups, as well as the two retired groups, EdMN Retired and the Retired Educators Association of Minnesota (REAM). During those meetings, TRA Executive Director Laurie Hacking and staff carefully outlined the findings of the Experience Study, explaining the gravity of the situation if nothing was done to correct it. The staff took input from the various shareholder groups which, in turn, would direct them in crafting legislation to help sustain the fun to almost 100 per cent by 2047. The resulting legislation was called the TRA Sustainability Legislation.

In November, the interim Legislative Commission on Pensions and Retirement (LCPR) held a hearing to determine whether TRA’s rate assumption, or discount rate, should be lowered from 8.5 per cent to 8 per cent. After debate, the commission voted to accept their actuary’s recommendation to lower the rate. That further eroded the TRA plan’s funding ratio.

In December, the TRA Board met to discuss and vote on the four options that the TRA staff had submitted to help get the fund back on track. The option selected, but not endorsed by EdMN Retired or REAM, in effect:

  • called for no contribution increase for active teachers
  • lowered the COLA from 2% to 1% for 5 years (1.75% after)
  • a 30-year amortization period instead of a 22 year amortization period
  • a 1% contribution increase for schools that would be funded by the state

The measure passed with one dissenting vote by the board member representing the School Board Association. She had concerns over the 1% employer contribution not being funded by the legislature.

Although school districts are asked to contribute 8.5%, (up from 7.5%), re COLA and benefit cuts, and retirees, through COLA cuts, comprise approximately 80% of the cost of the solution.

Let’s do some math. It is mid-April 2016. The Experience Study was released last May. That’s over ten months. The TRA Board approved a plan and the TRA staff began crafting legislation in December. The LCPR had additional interim meetings in February, March, and April. That’s three month. REAM and Ed MN retired conducted a Lobby Day in March to meet with LCPR members and discuss with them the importance of passing the Sustainability Legislation in its entirety this session. Retirees have been sending commission members emails urging them to fund the 1% employer increase. Five LCPR hearings have been conducted in March and early April and, still, no action on the TRA Bill. Kicking the can down the road has become an art form in St. Paul.

It is becoming crystal clear that partisan politics, not what is best for Minnesotans, is an increasingly big part of our legislature. So, if something is really important to you, if it affects your life directly in a negative, or positive way, the best advocate for you is YOU. In order to advocate of yourself, you must educate yourself first. If your concern is your pension and preserving your way of life and making sure that your children and grandchildren can retire with dignity, then here are some places of interest for you.

TRA website (minnesotatra.org)

  • look at the Fund Facts for talking points
  • go to the Pension News Archives about past practices
  • open up the Media Kit and see what is there for you

REAM website (mnream.org)

  • check various links such as NEA-Retired, NRTA, or AARP
  • click on the icon for Pension News and get involved

LCPR website (lcpr.leg.mn) find agendas and contact information

Not all issues that impact you deal with pensions. Find out who your legislators are, contact them and build a personal relationship with them. Find your senator at senate.mn and your representative at house.leg.mn.us. Share your concerns with them and, if you are in St. Paul, stop in and visit them in their office. They really do enjoy hearing from their constituents.

I’ve probably missed something but the point is: get involved. Your pension is too important to you life for you to watch some legislators carve at it with a knife. Every county in Minnesota benefits from our pensions. It all begins with YOU. GET ACTIVE! STAY ACTIVE!

LCPR Hearing
IMPORTANT: Please read Don Leather’s testimony and contact your legislators! LCPR March 15, 2016 Hearing Testimony.

The LCPR (Legislative Committee on Pensions & Retirement) is talking about taking no action this 2016 Session on the TRA Sustainability Proposal. If the proposal is delayed one year the cost to TRA is $106.5 million. This projected deficit would have to be made up in a new TRA Proposal for 2017. This could be even more costly for TRA Retirees if the Sustainability Proposal for 2016 does not move forward in the 2016 Legislative Session. Click here for more information.

Click here for a list of the seven representatives and seven senators that make up the LCPR. Give them a call and encourage them to move forward with this year’s TRA Sustainability Proposal.