Good News on Pensions
Thanks to the good work of City staff and my colleagues on the Council, the City has won two major victories for Minneapolis taxpayers this week on pensions.
The first came with the signing of the state budget. The Legislature and Governor have granted the City’s request to fold the Minneapolis Employees Retirement Fund (or MERF) into a larger state pension fund. This means that beneficiaries/pensioners of now have assurance their benefits will continue and the fund will not fail. This is a very big deal for Minneapolis, the result of years of work. Deserving of special credit: our Intergovernmental Relations (or IGR) staff, the chairs of the IGR committee (Betsy Hodges from 2006-2009 and Elizabeth Glidden since), Senator Don Betzold and Rep Mary Murphy, and our Finance Department staff Pat Born and Heather Johnston.
The second came just days later. In a major victory for Minneapolis taxpayers, Judge Janet Poston ruled in favor of the City of Minneapolis’ position that two closed pension funds, the Minneapolis Police Relief Association (MPRA) and the Minneapolis Firefighters Relief Association (MFRA), must repay over $52 million in overpayments of benefits that the funds have improperly paid out to members since June of 2000. The total amount that the funds must recoup, however, is higher than $52 million, since Judge Poston ruled that the funds must calculate the amount they have overcharged the City dating back to 2000. The City has calculated that the funds’ overpayment to members from June 2000 through the end of 2009 totals more than $75 million.
In a previous ruling, Judge Poston had identified three ways that the MFRA and MPRA have violated Minnesota law and their own bylaws in improperly calculating benefits to their members, which she ruled has caused Minneapolis taxpayers “great and irreparable harm.” Judge Poston also found that the funds’ improper calculation of benefits would have cost Minneapolis taxpayers $86 million more in the future. The Judge has ordered that by early June, the funds must present to the Court and City their plans to pay the City back, and that they must start recovering the overpayments by July 1.
This decision will ease a significant financial pressure on the City’s budget, and represents the City’s commitment both to pensioners and to taxpayers. I commend our Attorney's Office on this major win.