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Minnesota House of Representatives

State Representative Jeanne Poppe

487 State Office BuildingState Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-4193

For more information contact: Sandy Connolly 651-296-8877

Posted: 2011-02-25 00:00:00
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NEWS COLUMN

CAN MINNESOTA BE THE NEXT WISCONSIN?



As workers across our state watch the budget battle being played out in Wisconsin, the logical question is: could the same thing happen in Minnesota? I thought it would be helpful to consider how benefit plans for Minnesota’s public employees compare with Wisconsin’s.
Wisconsin’s Governor Scott Walker wants to boost pension contributions for public employees from 0 percent to five percent. In Minnesota, public workers are currently paying about 6% of their salaries into their pension accounts. Minnesota teachers contribute 5.5 percent of their pay to their pensions, and this is scheduled to increase to 6 percent in July and 7.5 percent by 2014.
For reference, a 6% contribution is equal to what most private-sector workers contribute to their 401(k)s.
Governor Walker is also asking public workers to increase health care contributions from six percent to 12 percent; Minnesota workers currently contribute more than 12 percent – some as high as 15 percent.
During tough economic times, the Minnesota state legislature has the power to reduce annual pension benefits if the fund is in shortfall, which we did last year. In Wisconsin, pension plans are subject to collective bargaining.
The proposal to have Wisconsin public workers pay more toward their pensions and health care plans has the support of both parties. The workers themselves have indicated they are willing to increase their contributions. The issue that led to massive protests is Governor Walker’s plan to eliminate collective bargaining rights for public employees.
While Minnesota is not on the same path as Wisconsin, some of the legislation introduced this session does have the possibility of limiting collective bargaining in our state, as well as changing the stability of our pension funds.
One bill before us would make Minnesota a “Right to Work" state, which would all but eliminate unions' ability to organize. “Right to Work” is designed to dismantle labor unions by amending the state Constitution to prohibit any collective bargaining agreement between an employer and a union from:
1) Requiring union membership as a condition of employment; or
2) Requiring non-members union to pay union dues or (any fees, etc.) to a union


With Republican majorities in both the House and the Senate, “Right to Work” is likely to be placed on the ballot for voter approval as a constitutional amendment in the 2012 election. A constitutional amendment does not need to be signed by the Governor, and can also not be vetoed.
There has also been legislation introduced to change pension plans from a defined benefit plan to a defined contribution plan. In a defined benefit plan, the retirement benefit is determined by a set formula, rather than on investment returns. The retiree is able to plan accordingly, knowing in advance what the monthly benefit will be.
In a defined contribution plan, contributions are paid into an individual account for each member. The contributions are invested, and the returns on the investment, or losses, are credited to the individual's account. In other words, some retirees may find themselves in the hole upon retirement, with no benefits to draw from. I believe the massive turnover from defined benefits to defined contributions is likely to cost the state more money in both the short-term and the long-term, and requires serious study.
Our nation has a long tradition of permitting workers, both public and private, to organize and negotiate the terms of their employment. Governor Walker’s desire to end these rights has touched a nerve across our country, and reminded people of how hard they have worked to gain a collective voice in their pay, work conditions and benefits. We will all be watching closely as the events unfold in our neighboring state, as well as legislation that will impact workers’ rights here in Minnesota.
Please continue to contact me in the weeks ahead with your questions and feedback. I can be reached at 651-296-4193, by email at rep.jeanne.poppe@house.mn, or by mail at 291 State Office Building, St. Paul, MN 55155.

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