Minnesota public retirees deserve pension reform


Guest Columnist


More than 1,300 retirees receive a public pension in Morrison County. When you include the surrounding counties of Crow Wing, Mille Lacs, Benton, Stearns and Todd, the number of retirees is over 13,600. In all, 184,946 Minnesotans rely on a public pension. These men and women spent their careers as public servants, bettering their communities in roles such as teachers, firefighters and police officers. Ensuring their pensions remain funded and secure is not just the right thing to do, it is a necessity for the future economic vitality of our state.

Just last year, Minnesota’s Triple A Bond Rating was restored and in February we forecasted the eighth budget surplus in a row. But other states face serious budget problems and over the past decade, budget crises have been worsened by a lack of reform of pension plans. In Pennsylvania, since 2006 unfunded pension liability has skyrocketed from $7.6 billion to more than $74 billion. Pennsylvania’s pension costs have been partly to blame for driving numerous school districts to consider property tax hikes and layoffs during budget discussions for the upcoming school year.

Governor Dayton has proposed a pension reform package to address the issue head-on — both for the peace of mind of our workers in their retirement and to provide fiscal integrity that is predictable and affordable to taxpayers. Down the road, Minnesota must avoid the fate of other states that have significant unfunded liability resulting in cuts in spending on other priorities. We must ensure our pension plans remain able to provide the benefits earned by and promised to plan members.

The rising costs of pension plans are primarily due to what is generally good news: Minnesota has one of the longest life expectancies in the country – 81 years. Because this is longer than what was projected when many workers started their careers, estimates today put pension payments higher than expected in the next few decades.

To address the rising costs, Governor Dayton convened a group of independent business, legal, academic and financial professionals last fall to review the status of Minnesota’s pension plans and recommend strategies for improvement. Coined the Blue Ribbon Panel, the group recommended changes to improve funding the plans and shifting the assumed rate of return.

As a result of these recommendations, Governor Dayton has put forward a proposal to reform Minnesota’s pension plans. The approach is one of shared responsibility among the state and school districts as the employers, the employees, and the retirees in order to provide a sustainable solution for the long term.

Each set of recommendations reflect the needs of the particular plan and include changes such as increased employee contributions, increased employer contributions and reductions of retiree COLAs. The governor’s recommendation also includes a reduction of the investment return assumption to 7.5 percent for all plans.

At the root of this effort is a commitment toward protecting the retirement security of our public servants in Morrison County and throughout Minnesota. The governor is committed to working with the Legislature on responsible, sound pension reforms that will not only provide peace of mind to our workers, but also afford fiscal responsibility for our taxpayers.


Myron Frans is the Minnesota Management and Budget commissioner.

  • J. SKI

    In any given year, Minnesota COLA increases should not exceed the Federal COLA for any State retirement plan.