Actuarial briefing shows new probation/parole/911 plan would cost more initially, taper over decades

Doug opened the session by previewing the actuarial study and introducing the actuaries who prepared it, saying the presentation would explain valuation basics and "prefunding," the practice of funding retirement benefits during the working lifetime.

The actuaries, Bonnie Morris and Sherry Christensen, said they matched three membership files (911 telecommunicators, parole, probation) to PARA’s general plan valuation as of July 1, 2024 and evaluated 2,248 members. "The average age is 43.2 and average service is about 12.6 years," Morris said, noting that mid‑career entry compresses the future funding period and raises short‑term normal costs compared with typical new‑hire ages.

Why it matters: a compressed funding window forces higher level contributions now because there is less time for contributions to earn investment returns. Using illustrative examples, the actuaries showed how moving unreduced retirement earlier or raising multipliers substantially increases required contributions because shorter pay‑in periods and longer payout periods amplify costs.

Key numbers from the study: the baseline PARA valuation (no new plan) showed a recommended actuarial contribution of 11.67% of pay and statutory collections of roughly 14% of pay; the proposed new plan, under two disability scenarios, produced recommended contribution rates that start materially higher—about 19.08% of pay if disability mirrors the general plan and about 24.19% of pay if disability follows police/fire practice. Morris emphasized the 19.08% scenario is "all normal cost" for a brand‑new prospective plan; over time the normal cost is expected to trend downward toward roughly the mid‑teens (actuaries estimated a long‑run level near 14–18%) as the initial, older cohort retires and is replaced by younger hires.

On service and benefit structure: the study assumes a prospective plan design (general‑plan service frozen at the effective date, July 1, 2024) so future benefits would be earned only in the new plan. The proposed formula examples included a 2.2% multiplier and a postretirement increase structure tied to CPI (a 1% floor with a 2.5% maximum in the proposed design similar to local correctional plans). The actuaries also modeled two disability approaches—one consistent with the general plan (total and permanent standard) and one similar to police/fire (broader eligibility and a 20‑year minimum) — and showed the latter materially increases the normal cost.

Questions and data gaps: commission members pressed the presenters on assumption choices—why some slides used unreduced age 55 as an example when the valuation used age 60—and on turnover and retirement behavior for specific job classes. Morris said the 55 example was illustrative and that retirement and withdrawal assumptions were based on Minnesota plan experience tables adjusted for a 60‑year normal age. Members asked about forensic scientists and other classifications not separately captured in the dataset; the actuaries and staff agreed more granular classification data would refine cost estimates.

What’s next: staff and commissioners asked for more classification‑level data on turnover, retirement timing and job tenure for telecommunicators, probation and forensic roles. The commission scheduled additional agenda items to consider purchase‑of‑service options, funding mechanics and which job categories to include in a public‑safety‑adjacent plan.

The commission moved on after the discussion; no formal vote was recorded during this item.