Plan would fix pension fund

02/28/2006

BY PATRICK SWEENEY
Pioneer Press

A legislative pension commission on Monday unanimously recommended a $36 million-a-year fix for the dramatically underfunded Minneapolis Teachers’ Retirement Fund Association.

The bailout recommended by the House-Senate Legislative Commission on Pensions and Retirement would merge about 8,500 current and retired teachers in Minneapolis into a much larger statewide pension plan, the Minnesota Teachers Retirement Association.

To persuade the statewide plan to accept the merger, the proposed legislation would increase future pension benefits for members of the consolidated plan.

The increased benefits would be paid for by an $18 million a year increase in pension contributions from school districts and an equal contribution from active teachers.

The commission’s recommendation now goes to the House and Senate for consideration.

“It helps us resolve a problem that, if we don’t get it resolved, just keeps getting more and more costly,” said Rep. Dennis Ozment, R-Rosemount, who proposed the merger plan.

Ozment said his plan does not specify how school districts would pay the $18 million a year, but he said he assumed the state would provide the money.

The proposal was written so the school districts’ payments would start on July 1, 2007, and lawmakers and Gov. Tim Pawlenty would not have to provide new funding during the current two-year budget cycle.

In January, state Auditor Patricia Anderson said that in mid-2005 the Minneapolis Teachers’ Retirement Fund Association had only about 45 percent of the assets it needs to guarantee future pensions and was paying out money faster than it was earning it. For years, legislators have been considering proposals to restore solvency to the failing Minneapolis fund.

Anderson, a supporter of merging the two teacher retirement systems, said Monday that Ozment’s plan was a “big positive step,” but she stopped short of endorsing it. She said she was wary of the $18 million a year cost to taxpayers for improving teacher pensions statewide.