NEW PERA RECOMENDATION

After meeting with PERA Executive Director Doug Anderson he has emailed me a second PERA proposal.

This still has to go to the PERA Board but I believe Mr. Anderson heard what was said and has come up with a very reasonable responsible second proposal.

Here it is:

Proposal 1: Change to 100% of CPI, 1% floor, 1.5% cap. 

Proposal 2: 
*Change current COLA to 100% of CPI, 1% floor, 2.5% cap (currently a fixed 2.5%).

* Maintain the current “trigger off”, which is that the 2.5% cap turns off when funding is < 80% once or < 85% for two consecutive years. 

*If/when the “trigger off” occurs, the benefit goes to 100% CPI, 1% floor, 1.5% cap. 

*Eliminate any future “trigger on”. If the plan triggers off, it could never trigger back on. The benefit would remain 100% CPI, 1% floor, 1.5% cap.

In other words if CPI (inflation) is at least 2.5% or more we are guaranteed the 2.5% COLA. Depending on inflation we are guaranteed at least 1% but can go higher than the earlier proposed 1.5%.

I wish it were left alone, but the writing is on the wall for the legislature to eliminate triggers. The O'Driscoll/Rosen Bill wants to cap us at 1.5%,. The PERA proposal 2 would allow us to go up to our current 2.5% recognizing the health of our plan.

If we drop below the trigger we will join ranks with the other plans. I am a fiscal conservative and believe that is fair. If our plan is doing well we reap the benefit, if it gets weak we tighten the COLA belt. At the end of the day we want a healthy pension.

I again express my gratitude to PERA Executive Director Doug Anderson for taking time to listen to MNPEA Vice President Tom Perkins and myself.

This is not a MNPEA response, the MNPEA Board will meet and respond on their own.

As an interesting aside. We also learned at that meeting that LELS also met with PERA and was on-board with cutting the COLA to 1.5% of their CO's!

Remember, the legislature makes the laws that govern our pensions. PERA executes those laws. There is no guarantee the legislature will follow their recommendation. But if it comes to a fight at the Capital it's another arrow in the quiver.

To be clear, I prefer no change to our current Pension, as it is doing well. IF, they are are going to eliminate the triggers, I prefer the second proposal of the 2.5% COLA to the 1.5% cap.

PERA meeting and recommendation

Today MNPEA Vice President Tom Perkins and I met with PERA Executive Director Doug Anderson and Shayna (?).

They very graciously gave us an hour and a half. We all have the same goal of keeping our pension healthy. They have tremendous pressure to move the plans to 100% funding, a goal I agree with.

There is a proposal to lower the actuarial tables from 8% to 7.5%. If passed, this changes the amount considered fully funded. Under current law it's 8% and our payouts are based on that.

If the actuarial is lowered to 7.5% the proposal is to eliminate the triggers (read previous posts) and go to an across the board COLA formula. An annual COLA of 1% (as a floor) with a max COLA of 1.5% based on inflation (CPI).

In effect this cuts the PERA Correctional COLA a full 1% and the other, not as well funded plans only .5% and  *maintains 1% with no cut to the Police and Fire COLA even though they require $9,000,000 a year just to keep current funding.

This all leads to an assumed funding for the PERA General Plan and Police and Fire to be at 110% in 2047.

Ok, but the PERA Correctional Plan would be funded at 120% in 2047. With "shared sacrifice" we sacrifice more. It reminds me of the book Animal Farm. "All animals are created equal. But some are more equal than others."

PERA does not make law, but are frequently asked for recommendations. These recommendations mirror the O'Driscoll and Rosen Bill.

They gave us this meeting because as stakeholders, MNPEA and retirees of MNPEA, had no input into what they will propose. Now we have, again thank you Doug Anderson.

The hope is when they meet in January they will recommend, like last year, no change to the PERA Correctional Plan.

*Post corrected 12/22/17 I originally posted P&F would get a .5% COLA.

PERA Correctional Plan update

I attended the PERA Board meeting today. There was a motion to reduce our COLA to a 1% floor then tie it to Cost of Living (CPI).

They said they spoke to the "stakeholders" Teamsters Local 320 and AFSCME and they were on board!

They let me address them. Several Board Members thought it unfair to cut us from 2.5% to 1% like the General Plan as our numbers were where they wished all the plans were!

I explained that the MNPEA had majority of CO's, Teamsters lost almost all of theirs to MNPEA and AFSCME only had 100 at the Hennepin County Workhouse.

State Auditor Rebecca Otto made a motion that they contact MNPEA and reconvene in January as not all of the stakeholders had been contacted.

PERA Executive Director Doug Anderson and I spoke and exchanged contact info. He emailed me and I gave him the phone number of Tom Perkins, VP of MNPEA (and author of the PERA Correctional Pension). I also was stopped by reps from the League of Minnesota Cities and the League of Minnesota County's afterwards and we talked at length.

Executive Director Doug Anderson and MNPEA Vice President Tom Perkins will speak tomorrow, Dec. 15th.

The PERA Board will reconvene Jan. 12, 2018 and discuss their findings and make recommendations to the legislature soon after.

My local State Rep. Abigail Whelan spoke to Rep. O'Discoll about our concerns. Both of them recommend talking to your local reps and the PERA Board.

PERA will be making recommendations to the legislature next month. Don't wait!

Meeting with my State Rep about our Pension

Just finished a very productive meeting with my State Representative Abigail Whelan. She met me at our local Dunn Brothers Coffee and we had a very productive conversation about the recent bills (HF 565, SF 545) that sought to lower our COLA. She was in agreement with our position and will be talking to Rep.O'Driscoll (one of the authors) about it.

As you know Governor Dayton vetoed them, but they were part of the Omnibus Bill and very likely will be re-introduced.

I cannot stress enough, please contact your State Representatives and Senators. Rep. Whelan also recommends this.

Stress that our PERA Correctional Pension is well funded.

There is no need for 'shared sacrifice' with less well run pensions.

There is already a trigger in our pension that if it drops below 80% funding our COLA automatically cuts to 1%. (We are funded at 95.7%).

PERA did not recommend any adjustments to our pension, only the Authors of the Bill (HF 565, SF 545) did.

I will be meeting soon with my State Senator Jim Abler.

I cannot thank Rep. Whelan enough for meeting me to hear our issue.