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Pensions are under pressure, but unions misplace the blame

Minnesota’s unfunded public pension obligations are not a new problem. But reform is difficult when government unions turn a blind eye to shortchanged pension funds and oppose necessary steps to fix the broken system. Several of the state’s public sector unions—including Education Minnesota, SEIU, and AFSCME Council 5—retweeted a cartoon about pensions with a perilous message about the state of defined benefit plans. The unions are scaring their members into thinking pensions will disappear because of the Supreme Court’s recent ruling on Janus v. AFSCME, conveniently excluding the fact that Minnesota has had pension liabilities each year for almost a...

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Moody’s Warns Minnesota: 2018 Pension Bill Not Good Enough

Rating agencies like Moody’s have all threatened to ding the State of Minnesota for not properly funding pensions. This is what finally prompted the Governor and Legislature to act in 2018 (Dayton had 8 years to do it but waited until his second to last year to start to weigh in on a solution, and then his last year to sign a bill). Moody’s released yet another report critical of Minnesota policies, noting that the Omnibus bill was “far from a cure-all.”...

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Pension Funding: the Pension Problem Will Return, Again

The pension bill, which Gov. Mark Dayton supports, is expected to become law though some lawmakers are stunned at the growing expense. Pensions are supposed to be covered by employer and employee contributions that are then invested by the state, but Minnesota stopped paying the full cost of pensions in the early 2000s. Imagine if you did that with your mortgage and then tried to catch up to avoid foreclosure....

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Teachers Pension, on Downward Slide, Wants to Lower Return Assumption: Admits to $9 Billion Deficit Even with Taxpayer Cash Aid

The Teachers Retirement Association (TRA) told legislators last month that it wanted to drop its assumed rate of return from 8.5% to 7.5%. TRA is the last fund in the U.S. to assume an 8.5% rate of return; the average is now 7.36%. The other pension funds in Minnesota assumed 8%. Why do Minnesota funds think they can earn more than other funds in the country? What if they are wrong? TRA is the last public fund in the entire United States to assume 8.5%. ...

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U.S. Unfunded Pension Liabilities Exceed $6 Trillion: Minnesota’s Share is at least $118.7 Billion

With every paycheck, public employees faithfully hand over a percentage of their pay, and taxpayers match or exceed that contribution. Both should be able to trust that the pension funds, and State of Minnesota, have wisely set the right contribution rates, actually paid the full contribution each year and prudently invested the funds so when retirement comes, teachers, cops and the rest of our state and municipal workforce have the pension they were promised. ...

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What Counts as a “Crisis” at the Teachers’ Pension Funds?

TRA admits to a $30.7 billion liability but only has $21.2 billion to cover those promised pensions. TRA says based on the 2017 valuation, it only has $0.69 on the dollar to pay pensions to teachers. If there are no changes, it will only have 50% of funds in 2046. TRA used 2017 numbers because the markets were up—a lot. If it uses the 2016 valuation, the fund is expected to have only 37% of the needed funds in 2046. Why isn’t this a crisis? ...

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Do teachers oppose or support forced union dues?

I have no doubt that most teachers are dedicated professionals who just want to teach—and like the mean girls we all knew in school, that it is a small minority of teachers bullying and enforcing a trade union mentality that is making teachers miserable and creating a hostile environment for the free exchange of ideas. Let’s win that basic freedom back for teachers and our schools. ...

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Employee Freedom Update: Who are Mark Janus and Rebecca Friedrichs?

Who are Mark Janus and Rebecca Friedrichs? And why did I write about them in The Wall Street Journal today? If the Supreme Court rules in Janus’ favor, every government employee across the country will have the right to choose for himself or herself whether to give money to a union. This is equivalent to Minnesota passing a right-to-work constitutional amendment-- only better because it will be the law of land. ...

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