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Andrew Biggs on Pensions in the Wall Street Journal: Pension Commission Meets January 31st at 5pm

Andrew Biggs had another good article in the Wall Street Journal yesterday called “Why Public Pensions are so Rich”. The pay-wall is down so you can enjoy it.

It reminded me to tell you that the LCPR (pension commission) begins meeting again on Tuesday nights at 5:00 pm, January 31st and throughout the session. Here is the link in case you want to join us.

We’ll keep you posted on pension reform to address our massive unfunded liabilities (or the lack thereof) as the session progresses. We are looking for a move to a hybrid plan (combining a defined benefit and defined contribution) as well as changes in the assumed rate of return for pension investments (currently the highest in the nation at 8.5%). Stay tuned!

 

Press Release: Non-Members Could be Assessed “Fair Share” Fees if Childcare Union Formed

PRESS RELEASE

CONTACT

Dan McGrath

612-605-3303 ext. 703

[email protected]

 

 

Non-Members Could be Assessed “Fair Share” Fees if ChildcareUnionFormed

Statements by Governor and Unions Misleading

St. Paul – The possibility of childcare providers who opt not to join one of the two proposed childcare unions being required to pay fair share fees has become a hotly contested point of debate, but despite assurances from the governor, his Frequently Asked Questions (FAQ) page on his blocked executive order and statements from union organizers, it’s clear that state law will allow the unions to require fair share fees of non-members if established.

 

Fair Share fees are costs assessed on individuals who are not members of a union which is the exclusive representative of a bargaining unit they are considered part of. The theory is that the union is doing work on the individual’s behalf to better their conditions, wages or benefits, so even though the individual does not desire the service provided by the union, payment of their “fair share” is expected.

 

Governor Dayton’s executive order establishing the unionization election says, “Nothing in this order shall be construed to require participation, or the involuntary payment of dues by any family childcare provider,” but this is a tricky bit of word play, said Jeff Davis, a spokesperson for the Childcare Freedom Coalition.

 

“This has the right sound, but when you scrutinize the legal meanings and definitions of words, and how the governor’s order interacts with laws already on the books, you learn that this wording is deliberately misleading, designed to obfuscate the reality of unionization. It’s a smoke screen,” saidDavis.

 

Davisnoted that there is a legal distinction between union dues and fair share fees, both are legal terms defined inMinnesotastatutes. “Fees” are paid by non-members while “dues” are paid by members of a union.

 

Representatives of the American Federation of State, County and Municipal Employees Unions (AFSCME) and Service Workers International Union (SEIU) were evasive when asked about fair share fees in committee hearings conducted by the legislature, relying on this word-play, insisting that only union members will pay “dues.”

 

Part 3 of the governor’s executive order reads, “If a majority of licensed registered subsidized family child care providers voting in the mail ballot election provided for herein, vote affirmatively for exclusive meet and confer representation, the Commissioner of the Bureau of Mediation Services shall certify the organization so designated.”

 

Exclusive “meet and confer” representation is only defined in Minnesota Statutes in chapter 179A, which governs public employee unions (Specifically, the legal term, “meet and confer” is defined in Minnesota Statute 179A.03, subdivision 10). Minnesota Statute 179A.06, subdivision 3 allows “the exclusive representative” (the union) governed by Chapter 179A to “require employees who are not members of the exclusive representative to contribute a fair share fee for services rendered by the exclusive representative.”

 

Those mandatory fair share fees can be up to 85% of the members’ union dues.

 

“It doesn’t matter what the governor’s stated intentions are, or how he means his order to be construed,” saidDavis, “The governor can’t make or alter laws by intent or by executive orders, which is exactly why Judge Lindman issued a restraining order stopping the order. Once an exclusive meet and confer representation union is established, the laws on the books take effect. 179A is the only chapter inMinnesotalaw governing this type of union and it’s clear as day that fair share fees can be required of non-members.”

 

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For more information, see www.ChildcareFREEDOM.com

Minnesota Teachers Should Ask: Will Our Retirement Fund Run Out of Money?

Will one of Minnesota’s largest pension plans run out of money within 16 years? That’s the projection of a new report from Boston College.

Girard Miller, a financial management adviser to governments and columnist for Governing Magazine, says that a report from the Center for Retirement Research at Boston College (PDF) is a “giant red flag” to participants in the Minnesota Teachers Retirement Association pension plan, along with some people in other plans.

The report calculates the “run-out date” for over 120 state, local, and school pension systems across the country. Roughly one-fifth of them could run out of money within 25 years, at least as calculated under some new accounting standards under consideration. The TRA would run out of money in 2028, while some other major plans in the state would hold out longer. See Appendix B of the report for details.

Miller says that if he were a 45-year old public employee, he would want to know two things: Does the report have a valid methodology, and what are state officials going to do about its warning?

Good questions. Miller says that if we start to see normal investment returns sometime soon, “about a dozen” of the 29 plans will eventually “work themselves out of their problems” through “structured incremental changes and shared sacrifices.” But is the TRA one of those plans, or are the problems more serious? Miller doesn’t say. Minnesota teachers, as well as taxpayers and lawmakers, need to find some answers to that question.

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