Committee approves bill to stabilize pension plans for state employees

The Legislature is one step closer to getting an omnibus pension and retirement bill passed this year.

The House Government Operations and Elections Policy Committee approved HF3053/SF2620* Monday and sent it to the House State Government Finance Committee. The Senate passed the bill 66-0 on March 26.

The bill, sponsored by Rep. Tim O'Driscoll (R-Sartell) and Sen. Julie Rosen (R-Vernon Center), would help stabilize state pension plans for more than 500,000 Minnesotans, including teachers, police officers, firefighters and other public employees.

“It’s been about 2.5 years in the making,” O’Driscoll said of the bill. “It is the 2016, 2017 and 2018 omnibus pension bill all rolled into one.”

Members and stakeholders have stressed the bill needs to get passed this year because the amount going into pension accounts won’t be enough to pay benefits in the years to come due to increased liabilities, including the fact that retirees are living longer. O’Driscoll also pointed out that credit rating agencies such as Standard and Poor’s and Moody’s have said Minnesota needs to address its issues with state pension plans.

The bill would bring the funded ratio for the state’s pension plans closer to 100 percent by adding funding and making benefit reforms to save on costs, said Susan Lenczewski, executive director of the Legislative Commission on Pensions and Retirement.

It includes approximately $6.1 billion in additional employee contributions and cost savings over the next 30 years, including an immediate reduction in pension fund liabilities of $3.4 billion, a summary of the bill from the commission says.

Representatives from the state pension plans involved in the bill all testified in support of the measure.

Erin Leonard, executive director of Minnesota State Retirement System, said the bill is a “comprehensive sustainability package,” while Jay Stoffel, executive director of the Teachers Retirement Association, said it “contains needed reforms.”

Minnesota Management and Budget Commissioner Myron Frans said Gov. Mark Dayton “supports this bill and intends to sign a standalone version” of it as it’s currently written when it gets to his desk.