Minneapolis Pension Reforms Stifled at Capitol

An attempt to incorporate two closed Minneapolis police and firefighter pension funds into the overall state public employees pension plan failed to advance in the just-ended regular session of the legislature.

However, there may be a chance that the proposal could come up again when a special session is called to resolve the state budget deficit. If the reform plan is approved, it would save the city—and Minneapolis taxpayers—roughly $22 million next year.

If the present dual pension system remains in place, which basically started in 1980 when the legislature rolled most other municipal pensions into the state-run Public Employees Retirement Association (PERA), costs to fund the “dual” approach will continue to climb, and that will be passed on to Minneapolis property tax payers.

The city has lobbied energetically for the reform, and is currently embroiled in a lawsuit against the pension plans, which a judge found to have overcharged the city by $52 million in 2010. The pension funds are appealing the decision.

Reform Bills Ran Out of Time
Sen. Scott Dibble (DFL-Minneapolis), was the chief Senate author of the reform bill. With just a few days to go in the regular session, it appeared there was a good chance it could pass.

However, in the House, bonding bills got interspersed with the pension plan bills and complications arose. “There was a lot of disagreement about a bonding bill to provide flood relief and that interfered with the attempts to deal with the pension issues,” Dibble said.

On the Senate side, what Dibble described as “very right-wing Tea Party elements of the Senate generally against any expansion of any pension funds fought it,” and this held up the bill even longer. “This was, in large part, the result of efforts by arch conservatives who basically hate public employee pension funds,” Dibble added.

In short, as the waning hours of the session unfolded, the bill in both houses simply ran out of time.

Could Make Comeback in Special Session
Anything happening this year is totally at the whim of the governor and the legislature. While a special session seems logical and inevitable given the budget crisis, Gov. Mark Dayton says he will only call a special session if there is already an agreement on the final budget solution with the opposition, the Republicans who control both houses.

Several political experts are predicting that if the special session takes place, that along with the matter of the Vikings Stadium and the Legacy Act funding, the Omnibus Pension Fund would likely be acted on.

If the pension matter isn’t addressed in a special session, then the issue of the Minneapolis funds would have to wait until the 2012 legislative session.