3/13 legislative recap: Pension commission OKs sustainability bill

March 13, 2018

2018 sustainability bill passes out of pension commission

The Legislative Commission on Pensions and Retirement (LCPR) on Tues., March 13, passed the 2018 omnibus pension bill. The next stop for the bill is the Senate State Government Finance Committee, which will hear it on Thurs., March 15, at 1 p.m. in Room 1200 of the Minnesota Senate Building.

The bill includes sustainability measures for all four public pension systems: the Teachers Retirement Association (TRA), the Public Employees Retirement Association (PERA), the Minnesota State Retirement System (MSRS), and the St. Paul Teachers Retirement Fund Association (SPTRFA).

Details on the bill, currently moving as SF 2620 / HF 3353, may be viewed on the State Legislature website: https://www.revisor.mn.gov/bills/text.php?version=latest&session=ls90&number=SF2620&session_year=2018&session_number=0 (Senate version).

Minnesota Management and Budget Commissioner Myron Frans told commission members that Gov. Mark Dayton endorses the pension bill in its current form and will include the funds in his supplemental budget. Frans said the bill is a “very important sustainability package” that has been several years in the making and includes measures to improve the financial health of the pension funds and the state.

The bill reduces liabilities by about $3.4 million immediately, lowers the rate of return on investments to a “reasonable” 7.5 percent, puts the plans on the path to full funding, provides funding to schools to offset increased pension contributions, ensures that unfunded liabilities won’t weigh down bond ratings, and safeguards the retirement security of public employees for the future, Frans said.

Here are the key provisions of the pension bill pertaining to TRA:

KEY TRA PENSION BILL PROVISIONS

COLA: 1.0% for 5 years (2019-2023), then increase by 0.1% per year in each of next five years (2024-2028) to 1.5%

COLA delay to age 66  (effective 7/1/2024) (exempt: Rule of 90, disability, survivors, age 62/30 years)

Early retirement: Increase penalties, 5-year phase-in (fiscal years 2020-2024), age 62/30 years exempt

Employee contribution increase: +0.25% beginning in FY2024 (7.5% to 7.75%)

Employer contribution increases: +1.25% phased in over 6 years, FY19-24 (7.5% to 8.75%)

AFT Report Reveals Asset Managers’ Hypocritical Assault on Workers’ Retirements

For Immediate Release
March 13, 2018

Contact:
Oriana Korin
202-374-6103
Oriana.Korin@aft.org
www.aft.org

AFT Report Reveals Asset Managers’ Hypocritical Assault on Workers’ Retirements

WASHINGTON—A new edition of an influential report published by the American Federation of Teachers exposes Wall Street asset managers who earn millions in fees from defined-benefit pension plans while simultaneously taking actions that can undermine their very existence.

“Ranking Asset Managers: A Retirement Security Report on Money Managers for Pension Fund Trustees” (sixth edition) [LINK], distributed this morning at the Council of Institutional Investors’ Spring Conference, includes a “watch list” of managers who earn fees from investing workers’ defined-benefit pensions while also working behind the scenes to diminish or eliminate those plans.

Workers’ retirement security should not be a Wall Street gamble. Our immediate goal is to make sure the public, our members and public pension trustees are aware of the named managers’ actions. Our long-term goal is retirement security for all.

Disturbingly, some named asset managers have supported initiatives that may harm the retirement security of defined-benefit plan participants, to whom trustees have a formal fiduciary duty.

AFT President Randi Weingarten said: “Asset managers can’t have it both ways. Trustees have a fiduciary duty to ensure workers’ capital is invested in a fiscally prudent manner. Managers, who make a living as defined-benefit plan investors, cannot, in the next breath, attack those same plans. The AFT will continue to liaise closely with the AFT Trustee Council to identify how best to safeguard workers’ retirement security from those who would prefer to undermine it.”

The sixth edition of “Ranking Asset Managers” exposes managers who assist think tanks, political committees and other organizations attacking defined-benefit plans through legislative action and other political tactics. Bellwether Education Partners, the Reason Foundation and the Illinois Policy Institute are among those named for the first time because of their hostility to these plans.

The report again documents the activities of Illinois Gov. Bruce Rauner, who continues to benefit from defined-benefit pension plans while also agitating for their dismantling, as well as the Manhattan Institute, the Show-Me Institute and StudentsFirstNY.

Transparency yields accountability. In the years following the release of the AFT’s first watch list, several investment managers have severed ties with anti-defined-benefit organizations. For example, Rex Sinquefield quit the board of Dimensional Fund Advisors, an investment company he founded, and partners at AQR Capital Management and Court Square Capital Partners left the board of the Manhattan Institute. Over the last few years, several fund managers—after being included on the AFT’s watch list—have pledged not to donate to organizations that undermine retirement security.

The report concludes with the National Conference on Public Employee Retirement Systems’ “Code of Conduct for Public Pension Service Providers,” a set of voluntary ethical guidelines designed to protect the interests of plan participants and beneficiaries, along with a set of recommendations for pension plan trustees wishing to consider secondary factors as part of their decision-making process.

The AFT will continue to periodically update this 2018 edition. A guide for trustees on gun-related investments in their portfolios and the steps pension funds and other investors have taken to address this risk is also in the pipeline.

The full report is available here.

AFT’s Weingarten on DeVos’ ‘60 Minutes’ Interview, Trump’s School Safety Proposals

For Immediate Release
March 12, 2018

Contact:
Oriana Korin
202-374-6103
Oriana.Korin@aft.org
www.aft.org

AFT’s Weingarten on DeVos’ ‘60 Minutes’ Interview, Trump’s School Safety Proposals

WASHINGTON— Statement of AFT President Randi Weingarten responding to Education Secretary Betsy DeVos’ “60 Minutes” interview and President Trump’s school safety proposals:

“The White House proposal to harden schools and to arm teachers is straight out of the NRA playbook. It is antithetical to the needs of children and ignores the purposes of public education. The administration made a choice to listen to the NRA and gun manufacturers, rather than parents, students, teachers, law enforcement and communities. And while the plan takes baby steps to strengthen the background check system, it will mean more guns in schools and, as a result, more potential for violence and tragedy. What a missed opportunity.

“Based on Betsy DeVos’ performance on ‘60 Minutes’ last night, and at Stoneman Douglas High School last week, it’s clear the secretary of education knows little if anything about how to ensure safe and welcoming schools, much less an appropriate environment for teaching and learning. How is she possibly equipped to lead a commission on school safety?

“We gave President Trump the benefit of the doubt—just like we did on the Dreamers—sending him a letter asking to let us share what we know, as educators. But he’d rather listen to the NRA, and do its bidding, than be a champion of children.”

Affirmative Consent Policy

DATE: March 9, 2018
TO: Leadership Council
FROM: Clyde Wilson Pickett, Chief Diversity Officer
SUBJECT: Adopted Changes to Policy 1B.3 Sexual Violence Policy


On Wednesday, February 21, 2018, the Minnesota State Board of Trustees voted to adopt policy amendments to Board Policy 1B.3 Sexual Violence Policy.

The policy changes provide clarity that consent must be affirmative, i.e., informed, freely given and mutually understood willingness to participate in sexual activity that is expressed either by words or clear unambiguous action. The policy also provides clarifying language on what is and what is not affirmative consent. For example:

• There is no consent if coercion, intimidation, threats, or physical force are used.
• The existence of a dating relationship or the existence of a past sexual relationship does not prove or provide the basis for consent.
• Consent must be present throughout the activity and can be revoked at any time.

Board Policy 1B.3 and accompanying procedures and practices are designed to fully comply with federal law (Title IX and relevant guidance from the United States Department of Education) and with Minnesota law, in particular, the Minnesota Sexual Assault Legislation that passed in 2015, amending Minn. Stat. 135A.15 Sexual Harassment and Violence Policy.

Minnesota State remains committed to providing ongoing training and education to help prevent sexual assault. A Sexual Violence Prevention Training workgroup comprised of faculty, staff, and students has been established to help update and expand training and education including the Personal Empowerment Through Self-Awareness/Sexual Violence Training (PETSA) program modules for the colleges and universities who use this resource. Colleges and universities who do not use the PETSA training modules will be required to update their sexual assault training curriculum to include the affirmative consent definition.

For more information on Board Policy 1B.3, please contact the Office of General Counsel or the Office of Equity and Inclusion.

ALERT: New AFT + Member Benefits

I’m pleased to announce two new programs from AFT + Member Benefits

1.   Free College

Yes, that’s what I said—free college. Eastern Gateway Community College in Ohio is a fully accredited, nonprofit public institution that is part of the University System of Ohio. Students can enroll in the online distance-learning program with no costs for tuition, fees or e-texts. Credits earned can be transferred to a four-year college; to date, credits have transferred to 320 educational institutions in 39 states. The program offers seven associate degrees, including business administration, early childhood education, accounting, paralegal, criminal justice and two certificate programs.

Eligibility

This is open to all AFT members, including retirees, as well as their spouses/domestic partners, children, grandchildren, step-children, step-grandchildren, and legal dependents.

How does it work?

Under an academic partnership with Eastern Gateway Community College, the Union Plus Free College Benefit offers grants—known as “last dollar scholarships”—that fill the gap between any federal, state and employer education grants for tuition, fees and e-books for certain online programs at Eastern Gateway.

Is it too good to be true?

The AFT did a thorough review of this program and the institution. Faculty and staff are represented by our colleagues at the NEA. Ohio state law doesn’t allow adjuncts to be unionized, but the college president has made a commitment to meeting the AFT’s standards for employment of adjunct faculty.  So it is true.  And it is good.

Education is core to our mission, so we can’t think of a better program to offer as one of our newest benefits.

Share this link to the Union Plus website: www.unionplusfreecollege.org

Or request a flier to distribute to members, contact AFTplus@aft.org.

2.   Mortgage Program from Amalgamated Bank

We have joined with New York’s first “union bank” to offer a new home financing program. The program offers competitive interest rates and discounts on mortgages and refinancing solutions.  

Program highlights:

· Flexible adjustable-rate mortgages and stable fixed-rate mortgages;

· Refinance lending options;

· Competitive rates and timely approvals;

· An easy prequalification and online application process;

· $700 in discounts on origination fees for AFT members; and

· Strike protection eligibility, where Amalgamated Bank will waive up to three late-payment fees if a member’s local is on strike.

Why Amalgamated Bank?

The mission of Amalgamated Bank is one we can all ascribe to as union members and public servants—“to be the financial institution for progressive people and organizations: those who are working and living to make the world more just, more compassionate and more sustainable.”

Share this link to the Amalgamated Mortgage Program: https://www.amalgamatedbank.com/aft-home-financing-program

Or request a flier to copy and distribute to members, contact AFTplus@aft.org.

Reminder: Accidental Death & Dismemberment

As of Aug. 1, 2017, all working AFT members have $5,000 of accidental death and dismemberment (AD&D) coverage. This is in addition to the optional local-paid coverage some AFT affiliates carry. The AFT purchased this coverage to encourage locals to talk to their members to provide beneficiary information and to increase the perceived value of local membership. Beneficiary cards are to be kept in a secure place at the local union, or we can help you set up a secure cloud-based beneficiary card. Visit www.aft.org/ADD for information on the coverage and related resources.  This coverage is for active members only, not retired members or fair share payers.

For information on this or other AFT Member Benefits programs, please visit the AFT website: https://www.aft.org/member-benefits or call AFT Member Benefits at 800-238-1133, ext. 8643, or email: AFTplus@aft.org.

In unity,

Lorretta Johnson

AFT Secretary-Treasurer

3/7 pension commission update

March 7, 2018

Commission hears public comment on pension bill

The Legislative Commission on Pensions and Retirement (LCPR) on Tues., March 6, reviewed miscellaneous pension-related bills and again took up the 2018 Omnibus Retirement Bill. Numerous stakeholders spoke during the public testimony portion of the meeting.

Teachers Retirement Association (TRA) retirees from the group Retired Educators of Minnesota (REAM) said that REAM supports the pension bill as long as funding of the employer contribution portion is approved. REAM’s Lonnie Duberstein said that he is grateful for his defined-benefit pension and wants the same benefit to be preserved for the next generation of teachers.

Education Minnesota’s Rodney Rowe spoke to the recruitment and retention value of the TRA pension and said that his union supports the bill. Joan Beaver of REAM and Education Minnesota Retired and Louise Sundin of the Minneapolis Committee of 13 also spoke in support of the bill.

Representatives of school boards and administrators showed up in force to support the bill provided state pension adjustment aid is included. Scott Croonquist of the Association of Metropolitan School Districts thanked the commission for working out the pension adjustment formula, noting that because schools do not have general levy authority, such an aid provision is needed to offset increases in the TRA employer contribution.

Grace Keliher of the Minnesota School Boards Association, Valerie Dosland of the Minnesota Association of School Administrators, Fred Nolan of the Minnesota Rural Education Association, and Joel Albright of Schools for Equity in Education also testified in favor of the pension bill.

Public safety and firefighter representatives testified that a strong pension system is needed to recruit and retain police officers. Joe Dellwo of the Minnesota State Patrol Trooper’s Association noted that state troopers don’t get Social Security and said that the bill represents shared sacrifice by all parties.

Members of the Minnesota State Retirement System (MSRS) representing the state Pollution Control Agency and the University of Minnesota agreed that a healthy pension system helps attract and retain skilled public workers at a time when “brain drain” and succession planning are major concerns.

Public Employees Retirement Association (PERA) members from AFSCME testified that the 1 percent COLA outlined in the bill is hard to swallow, but the union supports the bill. It was noted that many PERA retirees have no Social Security coverage and are therefore deeply dependent on their state pensions.

Also on Tuesday, the commission reviewed separate bills dealing with state aid eligibility reporting for the Clearbrook Fire Department Relief Association, TRA coverage election authority for a Minnesota State employee, coverage for PERA part-time paramedics and emergency medical technicians employed by Hennepin Healthcare System, and clarifying PERA DC distributions for those still employed.

The pension commission intends to pass the bill at its next meeting, March 13 at 5:30 p.m. in Room 1200, Senate Office Building.

3/1 edition, Pension Issues in the News

MARCH 1, 2018

MINNESOTA NEWS + OPINION

Reps from Pew Charitable Trusts, South Dakota pension system speak at LCPR

Minneapolis Committee of 13

The Legislative Commission on Pensions and Retirement on Mon., Feb. 19, heard testimony on a state public pension stress-testing analysis from researchers at the Pew Charitable Trusts. Also testifying was the executive director of the South Dakota Retirement System, a “hybrid defined benefit plan.

Minnesota Legislature returns with long agenda, short session

Minnesota Public Radio News

DFL Senate Minority Leader Tom Bakk says money needs to be spent to bolster public employee pensions and to fix the state health department's problems with elder care oversight. But overall, Bakk, DFL-Cook, is warning his colleagues against spending too much. "I worry a little bit that we're going to ...

Candidates for Governor vie for Labor Support at State AFL-CIO Forum

Workday Minnesota

They supported raising the minimum wage, expanding free access to higher education and protecting public pensions. Minnesota's next governor, they agreed, should get the state on track to a single-payer health care system, crack down on wage theft and make needed investments in infrastructure ...

NATIONAL NEWS + OPINION

Retired Teachers Voice Opposition to Pension Overhaul

U.S. News & World Report

Hundreds of retired public school teachers and their allies are pressuring Kentucky lawmakers not to pass a proposed public pension overhaul. Feb. 28, 2018, at 5:02 ... 2018, in Frankfort, Ky. Teachers and other public workers are upset about proposed changes to the state's struggling pension system.

US Public DB Plans Boost Funded Level to 73.1% in Q4

Chief Investment Officer

The funded status of the 100 largest public defined benefit pension plans in the US improved by $60 billion in the fourth quarter of 2017, bringing their funded level up to 73.1% from 71.6% at the end of the previous quarter, according to the consulting firm Milliman. In aggregate, the plans had investment ...

Slossberg says no more investing pension funds in gun manufacturing

Milford Mirror

The Connecticut Education Association (CEA) and American Federation of Teachers Connecticut, Connecticut's two teachers' unions, have both expressed their support for Slossberg's efforts to keep public pension funds from being invested in gun stocks, according to a press release from Slossberg's ...

Long-term investors not phased by volatility – conference panel

Pensions & Investments

Staying in markets during volatile periods and rebalancing are working for long-term investors like public pension funds, said panelists at the National Institute on Retirement Security conference in Washington on Tuesday. "Our window is infinity," said Thomas K. Lee, executive director and chief ...

Teacher Union Pensions Invest In Firearm And Ammunition Manufacturers

The Daily Caller

We're in the business of making money for public education,” he told TheDCNF in an interview. “If you're a fiduciary, you're responsible for investment returns, not to push my own personal agenda,” Bradley stated. Teacher union pension investments from coast-to-coast have continued to buy stock in ...

Pension Funds Under Pressure To Sell Off Investments In Gun-Makers

NPR

"I'm currently urging my colleagues to divest in retail and wholesale suppliers of weapons that are banned for possession or sale in the state of California," says State Treasurer John Chiang, who sits on the boards of his state's two largest pension funds — CalPERS for public employees and CalSTRS ...

State Street discloses it will engage with weapons manufacturers, distributors

Pensions & Investments

"And we will also seek to ensure that any shareholder resources used to influence legislation and regulations, or fund other advocacy efforts is consistent with the company's public views. State Street spokesman Andrew Hopkins could not immediately provide additional information beyond the statement ...

US Public Pension Funds Breaking The Most Important Rule of Investing

ValueWalk

It is a cardinal rule of investing that past performance does not dictate future returns. Nevertheless, it appears that a majority of public pension fund managers have forgotten this axiom in favor of speculative forecasting. According to a research paper from the Standford Business School, it has been ...

Establishing dedicated funding sources could help public pension plans pay down liabilities

texpers

Toll road fees. Lottery system revenue. Alcohol sales taxes. There are just a few ways some public pension funds are creating steady streams of revenue to help pay debt. It isn't a total fix, but establishing a tax or asset specifically for paying down a pension fund's liabilities would be beneficial, according ...

Public Pension Funded Ratio Rose in Q4: Milliman

ThinkAdvisor

“While a lot of media attention has been paid to the recent market volatility in early February, it's not a reason to panic when it comes to public pensions,” Becky Sielman, author of the Milliman index, said in a statement. “Equity gains and losses are typically smoothed out over a number of years when ...

Colorado teachers union, unlike Florida educators, isn't seeking to purge gun stocks from PERA fund

The Denver Post

After Florida public school teachers this week called on their public pension fund to sell off its gun stocks in the wake of last week's mass shooting at a high school, a subsequent Bloomberg analysis found that at least a dozen public pensions around the country invest in U.S. gun manufacturers.

Should state pension plans invest in gunmakers?

CBS News

As of December 31, public pension plans in Arizona, Louisiana, Michigan and Texas also held shares in Sturm Ruger, according to data from S&P Capital IQ. Two of the funds that own the company's stock -- The Teacher Retirement System of Texas and the Public Employees Retirement Association of ...

Montana Rep. Offers $700 Million State Public Pension Solution

Chief Investment Officer

How should Montana fix its the $700 million per year problem that two of its public pensions are estimated to cost the state? One representative has some suggestions. In an opinion piece with the Independent Record, Rep. Tom Burnett recommended the state's Teachers' Retirement System (TRS) and ...

Public Pensions Are Still Betting More Than Half of All Assets on Stocks

Wall Street Journal

Public pension funds that lost hundreds of billions during the last financial crisis still face significant risk from one basic investment: stocks. That vulnerability came into focus earlier this month as markets descended into correction territory for the first time since February 2016. The California Public ...

Gap of $6.6B in state pension funding draws lawmakers' concern

Alaska Dispatch News

Bill Walker proposed paying $263 million into the pension system in the budget that starts in July. That's $80 million more than the current budget. Since 2006, new public workers have a different retirement system and don't receive defined-benefit pensions. Instead, they receive a defined-contribution ...

Kentucky Senate President Shuts Down Bevin's 401(k) Proposal

Chief Investment Officer

According to Kentucky.com, Senate President Robert Stivers declared that the state's public pension system reform will no longer carry several of Gov. Matt Bevin's controversial concepts. The rejected propositions include the moving any existing or future employees from their defined benefits plan (DB) ...

State Pensions Need Reforms, Not Fewer Options

Forbes

While there are disagreements about the size of these unfunded liabilities, one thing is clear: state and local public pensions are spiraling toward insolvency. Despite these problems, politicians across the country are placing restrictions on the assets that public pension funds can hold, which are only ...

Case Study Warns of Effect of Move From Public DB to Public DC

PLANSPONSOR

The NIRS studied the case of Palm Beach, Florida, which it says offers “an important cautionary tale on the detrimental impacts of switching public employees from DB pensions to DC accounts.” In 2012, the Palm Beach Town Council closed its existing DB pension systems for all employees, including ...

Despite activist pressure on gun makers and sellers, Wall Street has a hard time dumping the gun ...

CNBC

In 2015, New York City's public advocate called on TD Bank to stop providing financing to Smith & Wesson, and she asked the Securities and Exchange Commission to examine the gun maker's public disclosures about its products. She also urged the city's largest pension to sell its holdings of Walmart ...