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State Representative Paul Thissen
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-5375
For more information contact: Chris Shields 651-296-8873
Press/News Releases
THISSEN HELPS NEGOTIATE COMPROMISE ON TEACHER PENSIONS
ST. PAUL - In the last hours of the 2006 session, the Minnesota Legislature voted to merge the nearly bankrupt Minneapolis Teachers pension fund into the statewide Teachers Retirement Fund. State Representative Paul Thissen managed to pull together a coalition of lawmakers, government officials, educators, and pension experts to merge the two funds.
For a dozen years and more, we've made efforts to solve the financing crisis in the Minneapolis teacher pension fund," said Thissen after the bill passed. I am extremely pleased to have played a role in getting this important piece of legislative work done.
Thissen said that both teachers and Minneapolis residents would be paying the price if the fund went into default.
The bottom line for me legally and morally is that the we cannot renege on promises made to those teachers who spent their lifetimes teaching generations of Minnesota children," Thissen added. "Further, the looming default posed a grave threat to Minneapolis property taxpayers who would have been responsible for making good on the fund’s promises.
The merger agreement makes changes in both teacher and school contributions in the statewide fund. The changes not only guarantee the promised benefits to retired Minneapolis teachers, but also ensure that the statewide fund is safe until at least 2037.
The legislation also included important new reforms such as caps on benefit payments and contribution increases.
One of my priorities was to craft legislation that did not simply solve one problem from the past. I wanted to make sure that other pensions do not face similar crises in the future. We cannot pass unsustainable obligations onto our children.”
MERGER FACTS
1. Merges MFTRA (Minneapolis) into TRA (Statewide Teacher Pension).
2. Teacher contributions increased from 5% to 5.5% of salary for coordinated members effective July 1, 2006. In exchange, the formula multiplier is increased by .2% (to 1.9% for coordinated members and 1.5% for basic members). This is a benefit increase for members and the .5% increased employee contribution just about covers the cost. In other words, the teacher contribution increase goes to pay for their benefit increase. [The formula multiplier is one factor in determining the initial pension benefit: the benefit is calculated by taking the average High 5 salary and multiplying it by (years of service times the formula multiplier). A higher multiplier leads to a higher initial pension.]
3. School district contributions increased from 5% to 5.5% of salary effective July 1, 2007. The increase starting in 2007 will be covered by an additional state appropriation to school districts from the state (about $16 million). School districts will be held harmless.
4. Current state aids currently directed to MTFRA, in the range of $17 million, are redirected to TRA. In addition, city and school district annual supplemental appropriations (matching aid) of $2.125 million each MUST now be paid to TRA.
5. No current retiree benefits will decrease as a result of the legislation, but going forward, TRA remains essentially funded. Former MTFRA members will be treated as TRA members with the same post-retirement and, for active members, retirement benefits.
6. Full funding date extended to 2037.
SUPPORT FOR THE BILL
Education Minnesota
TRA
MN School Board Association (assuming language dedicating money to cover employer contribution increase goes on)
Association of Metro School Districts
City of Minneapolis and Minneapolis School District
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News Items
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- State Representative John Persell appointed Majority Whip - (Posted: Dec 21 2012 1:11PM)
- Speaker-designate Thissen to Establish Select Committee on Living Wage Jobs - (Posted: 2012-12-19 00:00:00)
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