This story is not really news, but it attracts so little attention. The underfunded state and local pension and retiree health care obligations wobbles the mind.
Who is going to pay for this? How?
Minnesota is in better shape than most states, but expect the Legislature to ask local units of government, such as the City of Red Wing, Goodhue County, and our local school district, to increase their contributions rates to PERA, TRA, etc.
Under current public employee retirement plans, the employer and the employee contribute to the retirement plans. Its no secret that these retirement plans have taken a huge hit in the stock market. Consequently, these plans are substantially underfunded. Which basically means they can’t pay out the benefits they’ve promised. The numbers don’t add up.
So, units of government, and employees, will be told to increase their funding of the retirement plans. The problem is this; local units don’t have the funds to increase contributions, so they will increase local property taxes to pay for this, meaning you pay.
While I am empathetic to the plight of public employees, my retirement account has taken a similar hit, and frankly, I’m not eager to fix other pensions before I can fix my own. Where is the shared sacrifice?
What really burns me is that these funds, PERA, and TRA have been handing out cost of living adjustments to retirees all the while the stock market tanked and pension fund balances were evaporating. These pension funds handed out 2.5% COLAs each of the last two years. How do you hand out COLAs when your fund is down 25%? Incredible.
This is an issue that will likely not show up on the front page of any newspaper. Let your legislator know what you think. Stop the COLAs, temporarily reduce benefits, and the funds should soon be healthy again.