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Continued: Pension funds turn to Minnesota government for help

  • Article by: RACHEL E. STASSEN-BERGER  , Star Tribune
  • Last update: April 3, 2013 - 10:48 AM

Due partly to Reinert’s objections, the Senate swapped the fee for a straight appropriation, although it may change back. In the House, the fee idea is still going strong and has bipartisan support.

“Whether you have a big house or little house you are still going to get the same level of fire service or whether you have a 1973 Dodge Dart ... you still get the same level of police protection whether you drive in that car or in a Lexus,” said Rep. Joe Atkins, DFL-Inver Grove Heights, who is sponsoring the measure to charge the $5 fees.

Separately, on Tuesday night the pension commission moved to grant the St. Paul and Duluth teachers funds more help. The Legislative Commission on Pensions and Retirement voted to boost the state’s funding of the St. Paul teachers fund by $7 million a year and lift state aid to the Duluth pension fund to $6.4 million a year. The increases would still need to be approved by the Legislature and signed by the governor to become law.

“It is not the teachers’ fault that these funds are having these problems. ... It is the fault of the stock market,” said Pappas.

Last year, both funds were just a little above 60 percent funded. Pension plans funded at 80 percent or more are generally considered in good health.

Neither St. Paul nor Duluth teachers pension funds have received as much state aid as other teachers funds have.

“We haven’t asked for the help and we haven’t needed the help,” said Dave Johnson, who represents the Duluth teachers pensions. Now they need it, advocates said.

Along with being smacked by stock market downturns, Duluth faces demographic problems. Back in 2006, the number of retirees drawing from the fund surpassed the number of active members contributing. Now, it has about 1.5 retirees for each active member.

Dayton said he’d like a long-term look at the teachers funds.

“If this session doesn’t produce something successful with both of these plans, then I think we really need to use the interim to look and come back next year and say what makes sense on a long-term solution,” Dayton said. “In the short term, given our financial situation, we are looking for another Band-Aid for another couple of years.”

The two funds, unlike most teacher pension funds, remain outside the statewide system which has absorbed most teachers funds, including most recently Minneapolis’. Eventually, St. Paul and Duluth may end up going the same way, lawmakers said.

In the short term, however, that move could be costly.

“It’s probably inevitable, but it doesn’t have to happen overnight,” Pappas said.


Rachel E. Stassen-Berger • Twitter: @RachelSB

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