Update: You can view the Fox 9 News Video from last night here.
Minnesota Senate Republicans Gretchen Hoffman and Mike Parry introduced SF 813 on Monday, March 14, which would reduce the required taxpayer share of government pension funding by three percent. The bill shifts the cost to the public employees who receive the retirement benefits by increasing their contributions by three percent.
“Given what’s happening in the private economy these days this shift is a welcome reform,” said Kim Crockett, President of the Minnesota Free Market Institute. “The Senate bill is estimated to save state and local taxpayers about $50 million in the first biennium.”
“That’s important, but more importantly, SF 813 is a signal that legislators get it. The bill shows that our leaders in St. Paul understand that the public sector needs to align with the private sector. That includes giving public employees greater responsibility for their own retirement. This is a good first step; we’d like to see public employees also get total control of their retirement funds by shifting to a defined contribution plan.”
(Crockett is scheduled to appear on Fox 9 News tonight during the 9 PM broadcast to discuss the Senate legislation and public pensions. )
In creating new contribution rates the bill repeals contribution increases passed in 2010 that put the taxpayers on the hook for additional millions. Those increases were to be phased in between 2011 and 2015. Depending on the valuation method used, Minnesota may be facing long-term unfunded pension debt of up to $19.4 billion. Keep in mind this bill does not change the amount of money going into pensions; it shifts a share of the contribution from taxpayers to the employees. The Legislature has yet to act on any reform initiatives that shift away from guaranteed pensions.
“The Senate bill reflects our belief that Minnesota taxpayers have contributed more than enough,” Crockett said. “Their 401(k) plans have lost 30 to 60 percent of their value, they have lost equity in their homes, and they may have lost their job. Certainly they have had to re-think their retirement plans and schedules. They need relief so that they can increase contributions to their own savings.”