Will one of Minnesota’s largest pension plans run out of money within 16 years? That’s the projection of a new report from Boston College.
Girard Miller, a financial management adviser to governments and columnist for Governing Magazine, says that a report from the Center for Retirement Research at Boston College (PDF) is a “giant red flag” to participants in the Minnesota Teachers Retirement Association pension plan, along with some people in other plans.
The report calculates the “run-out date” for over 120 state, local, and school pension systems across the country. Roughly one-fifth of them could run out of money within 25 years, at least as calculated under some new accounting standards under consideration. The TRA would run out of money in 2028, while some other major plans in the state would hold out longer. See Appendix B of the report for details.
Miller says that if he were a 45-year old public employee, he would want to know two things: Does the report have a valid methodology, and what are state officials going to do about its warning?
Good questions. Miller says that if we start to see normal investment returns sometime soon, “about a dozen” of the 29 plans will eventually “work themselves out of their problems” through “structured incremental changes and shared sacrifices.” But is the TRA one of those plans, or are the problems more serious? Miller doesn’t say. Minnesota teachers, as well as taxpayers and lawmakers, need to find some answers to that question.