Omnibus Pension Bill Clears another Hurdle

5-11-2018
AFSCME members, staff and retirees Jeff Vars, Dan Gorman, Dylan Green, Jeff Birttnen, Pat Benner, Ron Krueger, Della Hulter, Mary Benner and Delphine Steiner watch Friday as the Omnibus Pension Bill takes another step forward.
AFSCME members, staff and retirees Jeff Vars, Dan Gorman, Dylan Green, Jeff Birttnen, Pat Benner, Ron Krueger, Della Hulter, Mary Benner and Delphine Steiner watch Friday as the Omnibus Pension Bill takes another step forward.

The House State Government Finance Committee just unanimously passed a pension bill that would make state public retirements secure for decades.

With the unanimous vote Friday, Omnibus Pension Bill SF 2620 now moves onto the House Ways and Means Committee, before it can head to the floor. The Senate already passed the bill 66-0.

“This would be the largest reform package ever completed in the state of Minnesota,” said Doug Anderson, who heads the Public Employees Retirement Association. It would save $3.4 billion right away, and $8.2 billion total, while shoring up the state’s bond ratings.

“We have been working on a pension bill for three years,” said Jay Stoffel, executive director of the Teachers Retirement Association. “This bill has unprecedented and full support from all stakeholder groups. It’s time to pass it.”

SF 2620 includes shared responsibility from all parties to fully fund pension plans within 30 years.

The pension sustainability plan would:

  • Increase the employer and employee contribution
  • Include new state funding
  • Reduce COLAs
  • Reduce the rate of interest on money refunded to employees who leave
  • Repeal automatic COLA triggers that had occurred when certain funding levels were reached
  • Postpone the start of COLAs to full retirement age
  • Reduce the assumed rate of return from 8 percent to 7.5 percent

“The whole concept of the bill meets the concept of shared sacrifice where you have employers and employees all contributing,” said Minnesota Management and Budget commissioner Myron Frans. The bill preserves workers’ retirements without affecting the delivery of public services. “By stabilizing the pension systems, we satisfy the promise we made to our employees.”

Frans emphasized that passing the pension sustainability bill will reduce the state’s unfunded liability, which will make bond rating agencies look favorably on Minnesota.

Rep. Tim O’Driscoll said two of the top rating services, S&P and Moody’s, have noted the state needs to resolve its underfunded pension issue.  Otherwise, he said, “it means when Minnesota needs to do funding and financing, it will cost us more, and over time, it will cost us an awful lot more.”

O’Driscoll said the Omnibus Pension Bill is the most important piece of legislation the House will undertake this year, up there with taxes.

In 2016, Gov. Dayton vetoed a previous omnibus bill because it put the entire burden for reforming the pension system on retirees. In 2017, he vetoed a larger bill containing pensions because the Legislature included a provision that would have stripped local governments of their ability to improve wages and benefits.

“We have a good bill, and it’s moving forward,” said Rep. Liz Olson. “I’m hopeful we’ll have a clean bill and not play politics with it.”

The Omnibus Pension Bill is backed by the Public Employees Pension Coalition (PEPC), which represents more than 500,000 public workers and retirees; 17

educators’ unions and associations; and the League of Minnesota Cities, Association of Minnesota Counties and the Minnesota Inter-County Association.