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2019 Legislative Recap

Center of the American Experiment pushed back against far-left policies like the 100% green energy mandate, 70% gas tax hike, and 9% increase in the state budget. Conservative legislators stopped the most radical ideas, but conceded a 6% budget increase. In a surprise victory, a middle-class income tax cut was also passed....

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Pension Omnibus Bill Increases General Fund Contributions to City of Minneapolis; Makes Bailout to Local Government Fund Permanent

The 2018 bill was supposed to immediately and miraculously drop the unfunded liability by billions while lowering the assumed rate of return and solve the funding crisis “for the next 30 years.” The problem is that lawmakers reached a political compromise, which is what elected officials do, but pensions are a mathematical and actuarial puzzle that is immune to political fixes. ...

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A new idea to secure Americans in retirement; put social security taxes to work

Giovanetti recognizes that saving for retirement is very hard for most people and addresses the problem of social security being a terrible deal for most Americans---the negative return for many taxpayers makes payroll taxes just another wealth transfer that leaves billions of dollars in the hands of the government instead of working productively in the market. ...

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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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