Minnesotans should be wary of public-pension distrust

  • Article by: DON LEATHERS
  • Updated: April 8, 2013 - 7:18 AM

Recent news has implied a greater taxpayer burden than exists.

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A front-page story April 3 (“Bailout of pensions set to cost taxpayers”) suggested that Minnesota public employees are lining up on the steps of the capitol in St. Paul, demanding a handout.

Nothing could be further from the truth.

While most of the reporting in the article was insightful and balanced, the flames of anti-public-pension sentiment were sparked, perhaps unwittingly, in the opening paragraph, which states: “Minnesota taxpayers and insurance policyholders may be on the hook for $36 million” to bail out ailing pension funds.

The casual reader may be taken aback by the $36 million figure, only $13 million of which is taxpayer money. The balance is fees tacked on to homeowner and auto insurance policies to bolster police and firefighter retirement funds. The $26 million is a significant difference.

What is also significant is that Minnesota public sector pensions are extremely modest. They account for 1.6 percent of the state budget, compared with the national average of 2.9 percent. While some states’ pension funds are facing bankruptcy, Minnesota’s funds are in “decent if not perfect” shape, as the story puts it. When asked about the management of public pensions in the state, Legislative Commission on Pensions and Retirement chair Sandy Pappas, DFL-St. Paul, stated, “We are responsible.”

How responsible? Since the Pension Reform Act was established in 2010, PERA, MSRP and TRA (which cover the whole range of public employees) have reduced pension liabilities (which, inevitably, are taxpayer liabilities) by $5.9 billion. That is truly shared sacrifice by retirees and active members of those plans.

The St. Paul and Duluth teacher funds are unique, and currently both are freestanding. Each has more than 100 years of responsible operation and a detailed plan to become solvent. Dave Anderson, who represents the Duluth Retired Teacher Association, commented at a recent hearing on what he would do to put his district’s pension plan on sound footing: “We will do whatever is good for our members and also what is good for the state of Minnesota.”

Gov. Mark Dayton, Republicans and Democrats should know that a strong, viable public pension program is good for Minnesota.

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Don Leathers, of Austin, is the legislative cochair for the Retired Educators Association of Minnesota.

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