The St. Paul Teachers' Retirement Association retirement fund is badly underfunded. Their proposed 'solution' is a ripoff. Here's how badly underfunded their pension fund is:
Public pensions have long operated under the principle that the current generation socks away money for its own benefits. But in St. Paul, contributions from current workers are helping to pay retiree benefits now, and $560 million in unfunded liabilities loom for the fund down the road.
Simply put, these pensions overpromised. Also, administrators have put in place cushy rules that allow for pension double-dipping, aka retire-and-rehire. This proposed 'solution' proposes to 'crack down' on the double dippers:
The fund estimates it could get another $3.4 million by increasing employee and employer contributions by 1 percent for each and modifying early retirement and return-to-work policies.
Under the proposal, retirees would have to wait six months before they can return to a job with the district, up from 30 days now. And, if they make more than $46,000 after they return, they would lose some pension benefits, which are now set aside and paid out after returnees leave the district.
In other words, it's legal for people collecting a defined benefit plan to retire from their jobs, take a month-long vacation, start collecting their pension, then return to work as a consultant.
Here's the kicker in all this: in many instances, these people are allowed to retire when they're fifty-something. Here's the kicker of all kickers: when they finish their consulting career, these teachers get to collect 2 defined benefit pensions, often before people in the private sector can afford to retire for the first time.
First, it's imperative that these people's pensions be changed from a defined benefit plan to a defined contribution plan. Next, it's imperative that early retirement be eliminated. Finally, it's imperative that retire and rehire programs be eliminated.
It isn't fair to taxpayers to ask them to pay for a 55-year-old teacher's defined benefit pension plan while they're still 10 years from retiring when they're 65. It's doubly unfair to ask that same private sector taxpayer to pay for that teacher's second defined benefit pension before they've retired once.
The lobbyists and DFL legislators who've proposed this fix are attempting to make this sound like a reasonable fix. It isn't a reasonable compromise for the taxpayers. It's a rip-off to the taxpayers who are footing the bill for this bailout.