Group urges Montana governor to veto fix for pension fund

2013-05-01T19:30:00Z 2013-05-06T20:44:38Z Group urges Montana governor to veto fix for pension fund missoulian.com

HELENA – Saying it was betrayed by Gov. State Bullock’s office, a group representing retired Montana public employees is urging him to veto the bill that seeks to fix pensions for public employees.

“We understand that the bill is your bill, and it would be highly unusual for you to veto it at this point, but that is what we are asking,” Russell E. Wrigg, president of the Association of Montana Retired Public Employees, said in the letter Saturday to Bullock. “House Bill 454 tramples on the statutory and constitutional rights of retirees and has the potential to inflict severe harm to current and future retirees.”

About 2,000 retirees in the Public Employees’ Retirement System belong to the association.

“The association feels betrayed by your office and is adamantly opposed to HB454 at this time,” the letter said.

At issue was an amendment to the Guaranteed Annual Benefit Adjustment, to reduce the current 3 percent annual cost of living pension raises.

In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA and questioned its constitutionality.

“We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,” Villa said. “It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.”

Villa added: “Failure to act now would pose an even greater risk to current and future retirees.”

The bill was the Bullock administration’s measure to fix the finances of PERS, while HB377 was its plan to address the Teachers’ Retirement System.

Montana’s eight pensions face a combined potential shortfall of $4.3 billion, largely because their investments lost about one-fourth of their value during the 2008 recession. Fixing the pension systems financially was major issue before the 2013 Legislature.

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Wrigg said HB454, in its original form, was introduced at the request of Bullock’s office. It provided that both employees and employers contribute an additional 1 percent of salary to the PERS pension fund, along with coal tax money and interest. It helped make PERS actuarially sound and didn’t modify the 3 percent GABA.

But Wrigg said the Joint Select Committee on Pensions amended the bill to reduce the GABA from 3 percent to 1 percent for most retirees and for future retirees.

“While those amendments were distasteful, at least they contained a trigger to allow the GABA to be returned to 3 percent when certain actuarial factors came to be,” Wrigg said.

While not actively opposing HB454, Wrigg said the group told legislators that it believed the bill violated employees’ contractual rights.

When the bill reached the Senate Finance and Claims Committee, Wrigg said it was further amended by Sen. Jon Sesso, D-Butte, which “made a bad bill worse.” He said it is his understanding that Bullock’s office was “actively involved” in those amendments, although Villa said the administration supported only a portion of them.

The association opposed the Sesso amendments, Wrigg said, but was unaware of their full impact until after the Senate passed HB454 and it returned to the House. An updated fiscal note was published then to explain its impact.

HB454 as amended permanently reduced the GABA to 1.5 percent from 3 percent, but included a trigger that further cut it to 0.9 percent in 2014, Wrigg said.

“Even worse, it contains no trigger for the GABA to be increased back to the 1.5 percent or to 3 percent,” Wrigg said. “While the bill impliedly provides that the GABA can return to 1.5 percent, there is no specific mechanism that provides for such an increase.”

Wrigg said it could be that the GABA is permanently fixed at 0.9 percent.

“Moreover, we were shocked to find out that the 1 percent contribution by the employees and the employers would only last six months, and would be eliminated Jan. 1, 2014,” Wrigg said.

Missoulian State Bureau reporter Charles S. Johnson can be reached at (406) 447-4066 or by email at chuck.johnson@lee.net.

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(2) Comments

  1. Al Moncrief
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    Al Moncrief - May 02, 2013 2:32 pm
    MONTANA DECIDES TO ATTEMPT A PENSION COLA-THEFT. GOVERNOR BULLOCK "QUESTIONS THE CONSTITUTIONALITY" OF TAKING THE COLA.

    BULLOCK, INCREDIBLY, SUPPORTS A PENSIONER LAWSUIT AGAINST THE STATE, BUT WILL LIKELY SIGN THE BILL ANYWAY.

    Theatre of the absurd in Montana.

    The Montana Legislature has enacted a bill to retroactively take public pension COLA benefits from the state's public pensioners. Like the Colorado education establishment in 2010, education lobbyists in Montana have their fingerprints all over the Montana Legislature's attempt to break public pension COLA contracts. (If employers affiliated with the public pension system can break pensioner contracts, that minimizes future pension contributions for dues-paying union members and local government employers. If the bill gets struck down in court, the judges become "the bad guys.")

    Governor Bullock didn't support the COLA-theft amendment to the bill. Although Bullock thinks the COLA-theft provision in the bill is illegal, it appears he'll sign the bill into law. (Odd that his primary concern is the taxpayers, but he doesn't seem to mind squandering millions of taxpayer dollars on litigation.)

    http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

    Here's Montana Governor Steve Bullock in his State of the State address:

    “We must also meet our responsibility to fix a long-term problem created by our predecessors. I’ve outlined a detailed plan that will shore up our public retirement systems and do so without raising taxes. I look forward to working with this body to ensure that we craft a plan that honors our commitment to Montana’s public servants. A plan that doesn’t go back on the promises we’ve made to our snow plow drivers, prison guards, teachers and other middle class workers who are our friends and our neighbors.”

    Link to Governor Bullock’s State of the State speech:

    http://watch.montanapbs.org/video/2331212142?starttime=1200000

    From helenair.com:

    "Feeling betrayed, retiree group asks governor to veto pension bill."

    "Saying it was betrayed by Gov. State Bullock’s office, a group representing retired Montana public employees is urging him to veto the bill that seeks to fix pensions for public employees."

    “We understand that the bill is your bill, and it would be highly unusual for you to veto it at this point, but that is what we are asking,” Russell E. Wrigg, president of the Association of Montana Retired Public Employees, said in the letter Saturday to Bullock. “House Bill 454 tramples on the statutory and constitutional rights of retirees and has the potential to inflict severe harm to current and future retirees.”

    "About 2,000 retirees in the Public Employees’ Retirement System belong to the association."

    "At issue was an amendment to the Guaranteed Annual Benefit Adjustment (GABA), to reduce the current 3 percent annual cost of living pension raises."

    "In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA and questioned its constitutionality."

    "'We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,' Villa said. 'It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.'"

    "'Moreover, we were shocked to find out that the 1 percent contribution by the employees and the employers would only last six months, and would be eliminated Jan. 1, 2014,' Wrigg said."

    (My comment: Employers affiliated with a public pension system collude with public sector unions to reduce their future pension contributions by taking money from pensioners. Been there.)

    http://helenair.com/news/legislature/feeling-betrayed-retiree-group-asks-governor-to-veto-pension-bill/article_a6b2eaac-b2eb-11e2-b352-0019bb2963f4.html

    Montana pensioners:

    "The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a 'deal’s a deal' only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?"

    "The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA."

    http://helenair.com/news/opinion/readers_alley/montana-should-keep-commitments-to-its-public-employees/article_8cee6aac-98c8-11e2-8aaf-001a4bcf887a.html

    Meanwhile, in Pennsylvania, Governor Tom Corbett's proposal for legal, prospective changes in the state's pension system is moving along:

    From lvb.com:

    "The governor also wants to change the formula for future benefits in current employees' plans. Beginning in 2015, he has proposed reducing the multiplier used to determine future benefits by 0.5 percent."

    (Recall that the Colorado Legislature adopted a bill last year, SB12-149, providing such prospective, legal public pension reform for certain Colorado county governments. This bill honored the accrued public pension benefits of thousands of Colorado government workers and retirees, while two years earlier, the Colorado Legislature passed a bill to seize up to one-third of the accrued pension benefits of Colorado PERA retirees.)

    http://www.lvb.com/article/20130501/LVB01/130509987

    I believe that this solution of prospective pension reform, reducing the rate of accrual of future pension benefits will ultimately prevail in the United States. It is emerging as a logical and legal pension reform alternative increasingly embraced by public pension legal scholars. Many politicians will not act responsibly unless forced to do so by the courts.

    Colorado PERA active and retired members. Contribute at saveperacola.com, and Friend Save Pera Cola on Facebook!
  2. idiot state
    Report Abuse
    idiot state - May 02, 2013 8:02 am
    How come ol' Montana's pensions lost "about a quarter" of their value because of the 2008 recession? Was Montana the only state in the region that went through the recession? How come South Dakota's pensions are fully funded? And Wy and ND likewise do much better than Montana? Is it because of the recession that Montana lost, or, more likely, is it because in pension fund allocation and investing Montana is, yet again, an idiot state? Crooked, corrupt, union controlled and totally inept...the poorest performing state in the region.
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