In an effort to address funding shortfalls, the Minnesota Teachers Retirement Association (TRA) Board of Trustees passed “sustainability package” recommendations for its pension fund during its December 16 meeting in St. Paul.
MSBA Deputy Executive Director Tiffany Rodning — MSBA’s representative on the TRA Board — voted against the recommendations due to the fact there was no funding included to offset the estimated $44 million additional annual costs to school districts.
The “sustainability package” recommendations include:
- A 1 percent increase in the employer contribution rate (increasing from 7.5 percent to 8.5 percent) — this will likely be effective July 1, 2017.
- A cost of living adjustment (COLA) reduction to 1 percent for five years and 1.75 percent thereafter (current COLA rate is 2 percent).
- A lower deferred augmentation rate to align with COLA adjustments.
- Removal of all COLA triggers.
- An extension to a new 30-year amortization period.
- Estimated actuarial impacts: 97 percent funded by 2044, 3.95 percent of pay savings (target was between 4 percent to 5 percent).
These recommendations will now eventually go in the form of a bill to the Legislative Commission on Pensions and Retirement.