Part 1 of an occasional series on the Minnesota government worker pension bailout crisis.
To hear them talk about it, you would think the DFL had passed some major pension reform in 2010. Not so. The few reductions in the increases and increases in the reductions are temporary and subject to change just like every other provision in the politicized body of law that governs Minnesota government worker pensions. And then there's the lawsuit that could unravel the whole thing.
Let's face it, the members of the Minnesota Pension Cartel don't get paid to do nothing. They get paid the big bucks by the government worker unions and the retired government worker member associations to bring home the pension bacon: earlier retirements, bigger benefits, higher taxpayer "contributions," looser accounting standards, cheaper buybacks... The list is long.
While the vast majority of private sector employees have seen their 401k plans dry up and blow away - while these hardworking taxpayers are having to change their plans of a comfortable, carefree retirement - the Governing Class will hardly feel the pea that the down economy placed under the stack of mattresses they sleep on.
Nationally the burden placed on taxpayers by state, federal and local retirement plans is well into the trillions. While Minnesota's predicament is not as dire as states like California and New Jersey, the numbers are no less outrageous.
But rather than dwell on the scary government pension funding deficits that are bankrupting this country and that the private sector taxpayers will have to finance, let's look at some other pension-related numbers:
Lucky Numbers 52 and 55:
If you are a state employee aged 52, you can use your union bumping rights to get a job covered in the MSRS Correctional Plan, work for three more years, and then retire with full pension benefits at age 55. Governor Pawlenty wanted to end this blatant union loophole in 2009 and book $5 million in savings for the public safety budget, but the unions got their way, as usual.
$100 Million:
Believe it or not, the most important vote of the 2009 legislative session took place not on the House floor, but on the floor of the Minnesota Senate. The Senate on May 15, 2009 voted to delete Article 6 of SF 191, the Omnibus Government Worker Pension Bill. Senate Republicans did the taxpayers a huge favor by calling attention to a provision that would have phased in an additional $100 million in annual taxpayer “contributions” to the Teacher Retirement Association (TRA). The source file for this new $100 million tax obligation was Rep. Paul Thissen’s HF 592 and Sen. Don Betzold's SF 506. After the Senate floor fight, word quickly spread in the House that the $100 million bailout was becoming something of a bother, feedbackwise. A decision was made to deal with the provision quietly in the murky depths of the House Rules Committee. With only a few hours remaining in the 2009 Session, and the bill already on the docket for House passage, the Democrats moved to re-refer the pension bill back to Rules to perform the dicey bailout amendectomy.
$100 Million Redux:
The numbers may have changed slightly since last year (we're guessing in an upward fashion) but the Minnesota House and Senate in 2010 handled the teacher bailout issue with apparently no state cashflow to the local school districts who, as the employers, will have to pay a full two percent of salary more for each teacher. Expect further action on this: Clearly the teachers union and their guys in the Statehouse are uncomfortable going to the taxpayers for bailout money when said taxpayers are themselves without said cushy retirement bennies. (BillsandVotes.com will provide a full accounting of recent bailouts in later posts on this issue.)
6/30/1997:
If you became a Minnesota state legislator before June 30, 1997, you were automatically enrolled as a member of the MSRS Defined Benefit Legislators Retirement Plan. The 48 current legislators in the plan and 455 inactive members can look forward to many happy years of retirement. According to the MSRS website, "You can be a member of another public employees plan for other public service, while you are a member of the Legislators Retirement Plan. The plan provides full retirement benefits at age 62, and reduced benefits at age 55." The really great thing about the Pre-1997 Legislative Pension Plan is that members can parley their years of service into credit in more lucrative pension plans. Say you serve in the Minnesota Senate for ten years and the Governor taps you for a commissioner spot. Cha-ching! Your ten years in the Senate count as years of service when your pension benefits are calculated. And since most Minnesota government pension benefits are calculated based on years of service and the highest average five years of salary, and since most state agency heads make $108,393 a year, those ten years of legislative service are suddenly worth a whole lot more. Without the salary bump that a commissionership brings with it, the ten years of service are based on a salary of roughly $41,000.
Stay tuned - more fun with pension numbers to follow...
Cross-posted at LookTrueNorth.com