The Pension Commission will hear TRA related bills Tuesday evening. MREA has joined other education organizations in submitting a letter of support for the proposals under consideration.
HF 1582 (Wolgamott) SF2000 (Gustafson) is the highest profile of the teacher pension bills. The House bill has 35 authors representing bipartisan support. The bill allows a full pension at age 60 with 30 years of service. It addresses cost of living adjustments and retirement reduction factors. Currently the employer and employee contribution rates will increase on July 1, 2025 to 9.5% and 8%.
The rates for 2023 to 2025 were 8.75% for employers and 7.75% for employees. This bill would raise employer contributions for school districts to 13.3% for coordinated members. The rate is higher for members in the Basic Plan, but this group includes individuals who do not receive social security, a group that gets smaller every year.
The proposed employer contribution represents a 35% increase in the employers’ TRA contribution. Typically, the state reimburses schools for this cost using Pension Adjustment Aid. The estimate for the increase in district contributions for the 60/30 plan is $285 million annually. The bill provides for reimbursement of this amount through Pension Adjustment Aid and the letter MREA signed onto states:
The essential component in the proposals include appropriately funding Pension Adjustment Aid to cover the costs of these improvements. This is a basic foundational component of the proposals. School districts are unable to fund the increases in the bills. This must be a state funded commitment.
HF 2329 (Nadeau) SF2992 (Pratt) provides for full retirement at age 62 with 30 years of service. Again, this bill increases employer contributions to pay for this. Employer contributions would be raised to 10.5%, a 10% increase in the contribution. Again, this is funded through Pension Adjustment Aid, an appropriation from the state to school districts. This would cost approximately $75 million annually.
Budget Targets
The Senate Target for Pensions is $45 million. The House Target is $124 million. It’s important to remember that these amounts cover all pension plans, not just TRA. PERA, MSRS, and other pension plans are all within the Pension target. The money is insufficient to cover the age 60 retirement proposals so the lobbying efforts will be intense. Ultimately the House, Senate and Governor all must agree on the amount of money that will be spent on Pensions.
