Kim Crockett’s letter (below) appeared in the “Strib” today:

Kim Crockett, President

Minnesota’s pension administrators have been making the rounds at the State Capitol reassuring lawmakers that the pension system is in good shape.

A recent article (“In pension and benefits, Wisconsin tops Minnesota,” Feb. 24) repeated their claim that investment returns managed by the State Board of Investment will provide 67 cents of every pension dollar paid.

The article also stated: “For every dollar paid out in Minnesota public pension benefits, employees contribute 15 cents, taxpayers kick in about 18 cents and the rest comes from investment earnings.”

Is the state really contributing and earning enough to cover pension promises?

The reassuring answer you get is that Minnesota’s actuarial formula, combined with a long-term aggressive approach to investing, will generate sufficient dollars to fund pensions.

But at what point does the hole get so deep that we cannot earn our way out of it? Unfunded liabilities are now $12.4 billion in actuarial terms and $19.4 billion in market dollars.

When Gov. Mark Dayton was state auditor, he adopted “value-added performance auditing” to check pension performance in real dollars. He knew you could lose money even when you earn a positive investment return.

The economics of pensions are complicated; we find the following study helpful: www.mntax.org/cpfr/pensions.php (see page 46).

Dayton’s reform was dropped because it forced the state to look hard at the fact that it could not keep pension promises without raising contributions from employees or taxpayers.