Bill S.F. 1249 Voted through the LCPR Committee

The St. Paul Teachers’ Retirement Fund Association is pleased to report that our legislation, Bill S.F. 1249, was approved by the Legislative Commission on Pensions and Retirement (LCPR) last evening. The SPTRFA bill now moves on to the next step in the process which will be a hearing before the Government Operations Committee. The Chair of House Government Ops is Representative Mike Nelson, our lead House sponsor. After Government Ops the bill will be heard by the Finance Committees in both chambers, Dick Cohen in the Senate and Mary Murphy in the House. Senator Pappas and Representative Murphy have acted to place money in the budget for the proposals from both St. Paul and Duluth. Following Ways and Means hearings, the bill will move on to the floors of both Houses.

Our proposal has been made part of the major (or Omnibus) Pension Bill 2. There are two “Omnibus” bills this year. The LCPR chose to go the “two” route, dividing the more individual related bills from those that pertain more to broad changes in the State’s major pension plans. There is an advantage in being part of this much larger bill in that the association will have many advocates, both legislators as well as the potential beneficiaries that will be working to shepherd it successfully through the Legislative maze.

In the package are the modifications to the Return to Work Program that will allow the Fund to recoup the normal Employer contributions from participants under age 67 PLUS a further 2.5% of the employee share, that will be covered by the SPPS. Additionally, the break in service is increased from 30-90 days and excess earnings balances will be retained by the Fund. Employee contribution rates will increase an additional 1% over a two year period (FY 2016-2017) while the Employer additional 1% is phased in over a three year period, ½% the first of those years, and ¼% the last two. The retirement multiplier will increase 0.2x for Tier I and Tier II employees (from 1.2-1.4x and from 1.7-1.9x) starting with service in school year 2015 and beyond. Finally, the State will contribute an additional $7 million/year for the next twenty five years (or upon achieving full funding whichever comes sooner) in State Aid.

It’s a balanced, fair package with the burden shared. It will close the current deficiency gap and place the Fund on an even more firm footing going forward.

The LCPR committee will be meeting during the Legislative off-season. Senator Pappas and Executive Director Paul Doane will continue discussion on pursuing various items related to pensions expecting that there will be further proposals aimed at addressing the State’s long term liabilities. No doubt that there will be continuing talk about consolidations, hybrid plans, COLAs, etc. However, last night was an important step in the St. Paul Teachers’ Retirement Fund Association’s history and continued success.