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Work group flags $33 million funding gap as pensions proposal considered for telecommunicators and probation officers
Summary
A Legislative Commission work group heard actuarial scenarios showing a new pension plan could relieve $212 million in liabilities for the general plan but also remove $245 million in future contributions — leaving the general plan roughly $33 million worse off under one common allocation method, prompting calls for more detailed cost work and draft bill language.
A Legislative Commission on Pensions and Retirement work group spent much of its meeting weighing how to structure new administrative pension plans for telecommunicators and probation officers and reviewing how those choices would affect the existing MSRS general plan.
Alina, presenting an informational chart on state aid, framed one funding example this way: “If the state was able to give a million dollars in state aid and 100 people purchased past service, the first 100 people get $10,000 as an offset.” The group used that slide to illustrate how per-person offsets fall as participation rises.
Actuarial staff and consultants then walked members through the mechanics staff labeled “withdrawal liability” — the unfunded obligation that exists today in the general plan. Doug, summarizing three approaches to creating a new plan, said the dollar amount of the unfunded liability does not disappear just because plan structure changes. “If the new plan is created the general plan stops paying future benefits and the plan loses future contributions — that can leave the general plan about $33 million worse off,” he said, referencing the analysis based on the GRS study and current contribution assumptions.
The work group saw three conceptual options: keep the unfunded liability in the general plan (and create a new plan that starts with zero assets), “spin” the assets and liabilities to the new plan so the obligation moves with members, or create a subplan inside the general plan. Staff said each framing changes timing and accounting but not the underlying obligation that must be funded.
Using the study’s numbers, presenters said creating a new plan would remove roughly $245 million in future contribution flows to the general plan while reducing $212 million in the portion of liability the general plan must pay, producing an illustrative $33 million shortfall. Presenters noted alternate allocation methods (including multi-employer withdrawal-liability rules used in private-sector plans) produced similar-order results in the same ballpark.
Members asked whether a bill the group proposed last year — which had kept increased contributions inside the general plan and required employees to pay higher contribution rates — would have produced the same withdrawal-liability issue. Presenters answered that if employees had remained in the same plan and paid the higher contribution rates, the same type of transfer wouldn’t arise because the funding flows would not leave the general plan.
The meeting discussion moved quickly from that headline figure into policy tradeoffs: whether a subplan reduces volatility through pooled contributions or if a standalone plan improves transparency and clearer accounting of that group’s costs. Presenters recommended running additional actuarial scenarios, including combinations of multiplier changes, retirement-age options and alternative amortization schedules, and members requested cost runs for specific design packages before authorizing staff to draft final bill language.
Next steps: staff will run the requested actuarial variants and circulate a draft bill and written work-group report for member comment ahead of the group’s next meeting; the chair asked members to return cost and definition proposals so legislative filing options can be finalized.
