May 21 UPDATE: 2014 Omnibus Retirement Bill, H.F. 1951 (Murphy, M.)
Gov. Mark Dayton on Wednesday, May 21, signed into law the Omnibus Retirement Bill (H.F. 1951) providing the St. Paul Teachers’ Retirement Fund Association State funding assistance of $7 Million annually beginning Oct. 1, 2015.
This aid will help address unfunded liabilities brought on by funding shortfalls from the State in years past. The bill also sets a fixed amortization date of 2042 for SPTRFA to achieve full funding, and clarifies membership eligibility requirements for future annual post-retirement benefits. The bill leaves SPTRFA as a separate Plan rather than merging it into the statewide Teachers Retirement Association (TRA), while authorizing the merger of the Duluth Teachers’ Retirement Fund Association(DTRFA) into TRA. Consolidation of DTRFA and TRA will move forward after the expected approval of the TRA and Duluth boards and the DTRFA membership.
Bill author Rep. Mary Murphy, D-Hermantown, said that the measure was “crafted in the spirit of good financial stewardship and accountability to stakeholders – current and future public retirees, local government and school district employers, and taxpayers.”
Senate bill sponsor Sen. Sandy Pappas, D-St. Paul, added: “This is really an attempt to make sure we have a strong, sustainable teacher retirement system for all teachers.”
Other significant reforms in this year’s bill include:
- Raising employee and employer contribution rates for the Public Employees Retirement Association (PERA) and Minnesota State Retirement System (MSRS). MSRS and PERA changes are being made with the intent that they will help put these plans on the path to achieve 100 percent funding.
- Spelling out the process by which cost of living adjustments are triggered when the three statewide plans reach 90 percent funding. The plans must be 90 percent funded two years in a row before COLA increases kick in. For TRA, if 90 percent funded, the COLA increases from 2 percent to 2.5 percent.
- Fixing the statutory joint and survivor optional annuity discount rate for all statewide plans, which will reduce system costs and administration.