The Minnesota Office of the Legislative Auditor has released a report that cites challenges ahead for government employee pension funds – particularly the Minnesota Teachers Retirement Association, Public Employees Retirement Plan, and the Minnesota State Retirement System.
The report points to a $4 billion deficit in the Postretirement Fund that is not reflected in the state’s accounting ratios – therefore, making the state’s pension plans appear to be better funded than they really are.
In addition to recommending that funding ratios reflect the deficit, the State Auditor is also urging the legislature to find a way to fully finance this Fund and “change the benefit formula to avoid future deficits.”
The report also warns that many local governments are not setting aside enough funding for retiree postemployment benefits, particularly health insurance. Roughly 20 percent of local governments and school districts in Minnesota pay for retiree health benefits. With a low funding ratio of 69.1 percent, and a $420 million deficit, the St. Paul Teacher’s Retirement Fund is identified in the report as facing a serious risk of funding difficulties. The Teachers Retirement Fund also carries a large deficit, though is in better shape than the St. Paul fund.