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State help for Duluth teachers pension fund clears hurdle | Duluth News Tribune | Duluth, Minnesota

imgresPublished April 04, 2013, 12:00 AM

State help for Duluth teachers pension fund clears hurdle

A legislative bill that would shore up the ailing pension fund for Duluth teachers passed over its first hurdle Tuesday in St. Paul.By: Mike Creger, Duluth News Tribune

A legislative bill that would shore up the ailing pension fund for Duluth teachers passed over its first hurdle Tuesday in St. Paul.

The Legislative Commission for Pensions and Retirement voted 10-4 along party lines to move forward the omnibus pensions bill that would inject $6.3 million a year into the Duluth Teachers Retirement Fund and increase what current employees and the district put into it. It also decreases to 1 percent from 2 percent what retirees earn in cost of living adjustments.

“It’s a very good and very big first step,” said Jay Stoffel, executive director of the Duluth fund. “It’s not easy getting through this commission.”

The bill, which includes pension adjustments for the St. Paul school district and other public employee groups, will wend its way through several Senate and House committees in the next two months before coming to any votes on the floor.

Should it pass, the Duluth fund would get $6.3 million, on top of the $346,000 it currently receives, for the next 27 years. District and current employee contributions into the fund would be raised by 1 percent.

Any contribution increase worries retired Rockridge Elementary Principal Tom Threinen, who testified in front of the commission before it voted Tuesday.

He fears that more costs for the district will lead to larger class sizes. The $6 million increase in state aid eased what the district has to match in employee plans a bit, Threinen said.

“We do need the state money,” he said. “Something needs to be done.”

He said that despite the 10-4 vote with all Republicans voting against the overall pension changes, even they realize the need to keep the pension funds afloat.

He said he felt compelled to offer his testimony in St. Paul.

“The problem’s been on my mind,” Threinen said.

It was two recessions in the past 13 years that stung the usually steady and conservative Duluth pension fund the most, Stoffel said.

“This fund has been around for 100 years,” he said. He said its history shows sound management that is conservative but prudent in its investments.

But the recession and changing demographics have played their part. In 1995, Stoffel said, there were about 1,400 Duluth employees in the fund and 900 retirees. Today, the two numbers have completely flipped, he said.

Duluth’s student enrollment dropped from 14,000 in 1995 to fewer 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.

It’s estimated that the Duluth fund is only 63 percent funded right now, a fate similar to that of the St. Paul district, which would receive $7 million in annual state aid under the bill.

Stoffel spoke to the commission last month. He said members were appreciative that the Duluth fund was 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 $6 million request was another concession, Stoffel said, down from $8 million.

via State help for Duluth teachers pension fund clears hurdle | Duluth News Tribune | Duluth, Minnesota.

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