Teachers retirement fund seeks $8M from state
The Duluth Teachers Retirement Fund Association has asked lawmakers for $8 million in state aid to help shore up its fund, and is signaling that it is willing to accept a smaller cost of living adjustment for retirees in return for the aid.
The once-robust fund was devastated by the 2008 stock market crash and is 63 percent funded, among the least-healthy public pensions in the state.
The fund has received state contributions for the past several years and was slated to receive about $350,000 this year. But an $8 million contribution would get the fund on track to be fully funded by 2037, executive director Jay Stoffel wrote in a letter to members of the Legislative Commission on Pensions and Retirement.
Stoffel spoke to the commission Tuesday night. He said members were appreciative that the Duluth fund is offering to scale back annual cost of living increases to 1 percent from the original proposal of 2 percent. Duluth hasn’t had any cost of living adjustment for three years.
The fund association is also requesting an increase in the employee and Duluth school district pension contribution rates to 7.5 percent from 6.5 percent and 6.79 percent, respectively, which would be the same rates as paid by the statewide Teachers Retirement Association. And it’s requesting a slight increase in the benefit formula.
Aside from market returns, one of Duluth’s issues is its demographics. Last year, 919 members contributed to the fund, down from 1,512 in 1995. On the flip side, the fund was paying 1,386 pensions last year, compared to 841 in 1995. Duluth’s student enrollment dropped from 14,000 in 1995 to less than 9,000 today, which translated to teacher layoffs. The district is left with older, more-senior teachers. Everyone who remains is likely to draw a pension, drawing down the fund.
The bill was laid over Tuesday and the commission will take it up again in two weeks. Stoffel said it’s “wait and see” as the House and Senate jostle with budget proposals. He said he was pleased to hear the House talk about raising the money it allocates to pensions.
Stoffel said the usually robust Duluth fund needs a boost after the losses in 2008.
“We’re in need of a little support,” he said.
News Tribune staff writer Mike Creger contributed to this report.