A quick update on Pensions

The Pension bill has been calendared for Sunday the 20th, the very last day that the Legislature can pass a bill. We posted a description of it earlier and there are only a few changes dealing with some local issues.  If you want to look at the financial aspect here are the numbers.  And remember, these are just the state's costs.  Local governments, particularly school districts will pay in more as well. 


(Edited to show bottom line. The complete spreadsheet is here.) 

What it comes down to is this. This is not a reform bill, it's a refi bill.  We are yet again refinancing the public pensions.  Yes, we are changing some of the assumptions to match new realities and somehow we are supposed to believe that adapting to these realities is a great concession by the funds and the unions whose members retired and currently working are invested in the pensions. New workers have to pay in more, Retirees, from now on will get COLAs only after they reach retirement age, instead of whenever they happen to retire.  And COLAs will be based on social security increases they will no longer be automatic increases.  

We have to ask at some point, whether the Pensions get us what we are looking to have, a great workforce of committed public servants or people locked into jobs and high cost, highly structured retirement plans. There is the chasm between what public sector retirement and private sector retirement looks like and public sector workers continue to be protected from market forces and budget deficits in Minnesota. And that's the way they like it. But as Kim Crockett of the Center of the American Experiment has pointed out younger teachers will pay more into the pension system than their predecessors did and half of their pension contribution will go to the present unfunded liability. In the private sector, we would call that a Ponzi scheme. 


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