A report today from the Center of the American Experiment offers ways to protect the Minnesota public pension system, which, the group said, could require $17 billion from taxpayers if nothing is done.
The report calls for full funding of defined benefit promises to current and retired workers, but shifting new workers to a defined contribution plan.
Kim Crockett, group’s chief operating officer, wrote the report and said:
“Ignoring this looming reality will put school districts, and local and state government in the untenable position of choosing between funding past pension promises and delivering core services.”
Included in the group’s suggestions:
- Use realistic assumptions, including a realistic assumed rate of return and a more defensible discount rate to value liabilities.
- Make public pension data transparent and accessible, with data published by the state and on municipal websites.
- Require the state auditor and legislative auditor to report annually on unfunded liabilities for pensions.
- Review the makeup of pension boards and add taxpayer and young employee representatives to balance the influence of union representatives and retirees.
- Create a defined contribution plan for all new public employees to stop adding new liabilities to the current system and create a way for employees in the current defined benefit plan to move to the defined contribution plan.
- Take immediate steps to preserve and prudently grow pension assets while paying down the unfunded liability.
- The current unfunded liability amortization schedule should be changed to a fixed payment.
- Limit borrowing to pay for benefits while allowing municipalities to issue bonds to pay retirement benefits without a referendum.