Pension Bill Takes Important Step

3-14-2018
AFSCME members and retirees gather to watch as a bipartisan bill to strengthen our pension systems for decades to come takes an important first step.
AFSCME members and retirees gather to watch as a bipartisan bill to strengthen our pension systems for decades to come takes an important first step.

Minnesota senators and representatives on both sides of the aisle voted in favor of a historic pension bill Tuesday night that would keep public pensions strong and well-funded for decades to come.

Members of the audience and some lawmakers applauded after Republicans and Democrats on the Legislative Commission on Pensions and Retirement voted 14-0 in favor of the omnibus pension plan. The bill in the Senate is moving ahead and will be heard Thursday in the Senate Committee on State Government Finance and Policy and Elections.

“I intend to get this off the floor and have a strong, strong vote there because it is a very, very good bill and it will move the ball for us,” said Sen. Chair Julie Rosen, R-District 23. “The point is to make sure that not only our pensions but our viability in the state remain strong.

“This pension bill is good for the state,” she added.

Sen. Sandra Pappas (D-District 65) agreed, saying producing the bipartisan bill was a long, hard process, and she hopes it sails smoothly through the House and Senate.

AFSCME Council 5, our Retirees and more than 25 public sector unions, retiree groups and public employee associations support SF 2620/HF 3053, if it passes as introduced.

This bill would fully fund our state pension plans within 30 years and immediately cut unfunded pension liability by $3.4 billion. AFSCME members are willing to sacrifice together to ensure public workers get the secure retirements they’ve earned. But it’s only fair (and effective) if that sacrifice is shared by workers, retirees and the employer.

The bill would:

  • Increase the employer and employee contribution. For example, for the MSRS General Plan, the employer share would go up by 0.375 percent a year for the next two years and the employee contribution by 0.25 percent a year.
  • Reduce COLAs.
  • Drop the investment return assumption for all the plans to 7.5 percent.

Minnesota Management and Budget Commissioner Myron Frans said Gov. Dayton supports the measure and will include funding in his supplemental budget, to be released Friday.

“It will reverse the downward funding trajectories of our plans and put them on a path toward full funding,” Frans said. “It will ensure that pension liabilities do not continue to weigh down state and local bond ratings. Most importantly, this bill safeguards our promise of retirement security to Minnesota’s public employees for many years to come.”

“This is a great bill,” said Sen. John Jasinski (R-District 24). “I think it’s bipartisan. It’s what all the stakeholders have been asking for.”

Jasinski said he still wants to eventually see the public sector convert from defined-benefit plans (which offer a secure retirement and a stable monthly income) to a defined-contribution plan like a 401 (k), which AFSCME opposes. But he acknowledged that can’t happen anytime soon.

“We definitely have to get this plan funded at a better level to make sure that our employees of the state have a plan that is funded,” Jasinski says. “So I think it is very important.”

These are the Pension Commission members who went on record Tuesday night supporting the pension plan (as originally introduced):

  • Democratic Senators Sandy Pappas and Nick Frentz; and Reps. Mary Murphy and Paul Thissen
  • Republican Senators, Chair Julie Rosen, Gary Dahms, John Jasinski, Warren Limmer and David Senjem; and GOP House Vice Chair Tim O’Driscoll and Reps. Tony Albright, Sarah Anderson, Roz Peterson and Bob Vogel.