This morning I got a very brief peek at the news after waking up at 4AM to head to the Ft. Lauderdale airport and my frigid return to Duluth. I was very impressed to see the Strib far ahead of the Duluth News in covering the sorry plight of the Duluth Teacher’s pension.
Here’s the story and here’s the bit about Duluth:
The Duluth Teachers Retirement Fund Association, for example, which has just over 3,300 members, saw a negative return in 2011, but then saw a percentage return in the mid-teens in 2012, said Association Executive Director Jay Stoffel.
Still, the Duluth Teachers Fund has a long way to go before it’s healthy, Stoffel said. It has a $119 million unfunded liability, is only 63 percent funded, and has more retirees to pay than active teachers paying into the fund.
“Our board is concerned,” Stoffel said. “We certainly don’t think we’re in good shape. We have an actuarial consultant who has told us that we do need to do something.”
I knew immediately that I would have to offer kudos to the Strib once I got home and had a chance to link the article on my blog. BUT – HERE’S A SURPRISE TO ME.
I’ve gotten back to Duluth and just found the article again. Before I get to my reactions I just made a new discovery. The article was written by one of the Duluth News Tribunes best reporters. Brandon Stahl. That explains the inclusion of an interview with Jay Stoffel of DFTRA but since there is no mention of the Duluth Trib I wonder if the STRIB stole Brandon away from the DNT or if they are sharing his services. If its the former its a real loss for Duluth News paper subscribers.
Now about the DFTRA. In the post I wrote about the tour of the DFTRA that Mr. Stoffel gave me I said little about my biggest recollection of the meeting.
I asked Mr. Stoffel how the DFTRA could justify raising pension payments to teachers based on Investment earnings that had not yet materialized. This, by the way, is the important question an observent reader should wonder about in Brandon Stahl’s story. What I learned then was that the state of Minnesota seemed to be on the hook if the DFTRA or the TRA or PERA overpaid their retired members. That revelation gobsmacked me. In other words if they gave pensioners more than the pensions collected from active members their public employers of their investment earnings taxpayers would guarantee the pension payment increases.
THAT IS JUST WRONG. No one in the private sector get’s that kind of insurance for their pensions. Better than ten years ago I read about the terrible payouts and impending bankruptcy of Illinois pension plan. Nothing has been done about it and today its in the news again a financial monster that can not be solved so that Illinois public employees can expect full payment of the pension they have been guaranteed.
Minnesota’s crises pales in comparison but its still alarming.
I’ve often expressed contempt for Wisconsin’s Governor Scott Walker. Using his massive GOP victories as a cover to neuter public employees was the easy way to solve a problem with a guarantee of blow back. His disingenuous self righteousness curdled my milk. But. But. But. Walker was right to see public employees as far too powerful for the State of Wisconsin’s own good. Much the same can be said of most non Southern states including Minnesota.
The Brandon Stahl story makes clear that all these public employee pensions are expecting the Minnesota’s taxpayers to make good their over payment of pensions. The old fashioned Republican in me has one simple reaction to that kind of entitlement. Its a rude two word phrase.
DFTRA’s local problems have been grievously aggravated by the Duluth Teacher’s Union which will soon be lobbying the legislature asking that Minnesota taxpayers bail out their over generous pension. One of the many problems plaguing the underfunded DFTRA pension is the diminished number of teacher who’s payments to the pension keep the huge number of retirees getting those generous benefits. If I was a teacher with 35 or 45 teachers in my class seeing my earnings going to retirees I’d wonder if the stress I was enduring was worth it. Oh, probably. Their stress shortened lives will make it easier for the DFTRA to pay future pensions in full.