TRA stability, one of the most important things for the education community this year, continued to make progress this week with the Omnibus Pensions Bill passing through two key committees and being included in the Governor’s supplemental budget proposal.
Gov. Mark Dayton proposes fully funding the employer contribution for all of the pension funds, including TRA. This is a critical piece in passing the pensions bill (SF 2620/HF 3053)
The pensions bill represents a significant investment of state aid in pension contribution. It includes $18.8 million in this biennium for TRA and a total of $32.5 million for all funds and $90 million in TRA and $133 million in all funds in the next biennium. Read the TRA excerpt of the bill.
Pensions Commission
First, on Tuesday, the Pensions Commission completed their work on the pensions bill. They heard two individual bills that were non-controversial and added to the omnibus bill. Sen. Rosen and Sen. Sandy Pappas gave some brief remarks. Sen. Rosen thanked everyone involved in the process and said this was a longtime in the making but will create stability for the Minnesota Pension system for the next 30 years.
Sen. Pappas echoed Rosen’s remarks, stating this was an amazing bi-partisan effort. She also joked with the stakeholders and said she hoped to not see any of them anytime soon which got a good laugh from the entire room.
Minnesota Management and Budget Commissioner Myron Franz agreed that this was a sustainable package that took tireless work from everyone involved. He indicated that the Governor supports the package in its current form.
Sen. Rosen closed the discussion by thanking the Governor for starting the process. She also thanked the Commission members for their time and thoughtful discussions, the stakeholders for their efforts, the staff for all their hard work, and the boards and pension directors for their support.
A roll call vote showed the overwhelming support for the bill. It passed unanimously and was sent to the House and Senate.
Next Committee
The second move forward occurred Wednesday when the Senate State Government Policy and Finance and Elections Committee heard SF 2620. Again thanking everyone involved for all of their work, Sen. Rosen highlighted the shared sacrifice, reforms, sustainability, and the immediate savings as key reasons this was a great package.
In her final comment, Sen. Pappas stressed that this can’t become a part of the end of session negotiations and action needs to be taken quickly to make sure the bill passes.
At the end of the hearing, SF 2620 passed unanimously with the amendments from the final Pensions Commission hearing. It was sent to the Senate Finance committee and it is expected a hearing will be scheduled soon there.
Credit Ratings
One aspect of the pensions’ problem that is getting more attention is potential negative impact on the state and local governments’ credit ratings for bonds if pensions are not stabilized. Former Rep. Kahn and Seifert agreed on this sitting on TPT’s Almanac’s couch Friday night.
Rep. Kahn called it a “No brainer… when people do the basic arithmetic….If we don’t fix the pensions, what that’s going to do our credit rating will cost more than to fix the pensions.” Former Minority Leader Seifert added, “If we don’t do this now and bend the cost curve, we will pay later in state bonds.”
Next Steps
There is still a long way to go. The House still needs to take action on the bill and the Legislature needs to appropriate the money in some form of supplemental budget before the bill can get to the Governor’s desk for signature.
