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| OLD BILL: At the beginning of the 2003 session our bill asked for a 25% increase in a teacher's original pension, based on the Life Plan A1 choice. This was based on the prior legislative action in providing options for certain TRA members under Minn. Stat. 354.55 whose TRA pensions needed to be recalculated because of legislative action which treated these certain TRA members unfairly compared to their compatriots. Specifically, when the State Legislature changed the pension formula from one based on "Career Average Salary" to one based on "High five year Average Salary" in 1973, it also passed Minn. Stat. 354.55 subd. 15 which gave "Pre - 1973 law retirements" a 25 percent increase in their benefits and annuities. Under the original SF 213 and HF 282, for example, if a teacher retired with a pension of $2,000, this old bill would have recalculated the original pension this way: $2,000 x .25 + $2,000 = $2,500 All future increases and cost of living increases would be based on $2,500. AMENDING THE BILL: In the middle of the 2003 session, we amended the bill for these reasons: A. TRA pointed out that in our old bill an IMP teacher who got a better pension using the Formula--and therefore chose the Formula plan-- would have been eligible for having her pension recalculated. (We were not fully aware of this, and appreciated their suggestion.) B. Tom Selwold, Rick Winters, and Diane Kammerer met with TRA officials who suggested the wording that would make more sense. (That does not mean that TRA supported the amendment.) The wording of the amended bill was sent by TRA to Senator Larson who accepted it and had the bill amended for the hearing before the Legislative Commission on Pensions and Retirements, of which he is a member. The amendment eliminates any IMP teacher who got a better pension with the Formula from now getting an increase because of our bill. The key is that the amended bill looks at the POSITIVE DIFFERENCE between an IMP pension and a Formula pension. For example, if the IMP teacher would have gotten $1,500 under IMP and $2,000 in the Formula plan, she would have chosen the Formula plan for calculating her pension. She is not included in our bill because the difference between IMP and the Formula is negative: $1,500 - $2,000 = negative $500; therefore not included in the amended bill. AMENDED BILL: The old bill would have given us a 25% increase to our original pension benefit. The new, amended bill gives us a 45% increase of the POSITIVE DIFFERENCE between what we got and what we would have gotten if we had been IMP. This is similar to the prior legislative intent of Minn. Stat. 354.55 in assisting the benefits and annuities of certain TRA members who were treated unfairly by specific legislation action. (In our case by giving some Pre - '69 teacher members of TRA two choices at retirement, while we only received one retirement choice at Retirement.) For example, if a Pre 69 Teacher retired with a non-IMP pension of $2,000, but would have gotten $3,000 with IMP, he would get a 45% increase of the $1,000 difference, or $450. $3,000 - $2,000 = +$1,000; $1,000 x .45 = $450; $2,000 + $450 = $2,450 All future increases and cost of living increases would be based on $2,450. Some legislators see the 25% increase in the old bill and the 45% in the new, amended bill and think that we are asking for way too much. We all need to be able to explain the reasons why the percent changed. In fact, the amended bill with a 45% increase as outlined, costs TRA substantially less money than the original bill with the 25% increase, as computed by TRA. |
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| UPDATED PROPOSED BILL AND EXPLANATION |
| EXPLANATION OF OUR BILL, Senate File 676 (originally Senate File 213 and House File 282): |
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