HELENA – Here are some of the proposed ideas to address Montana’s pension systems besides one by departing Gov. Brian Schweitzer. (His plan was covered in the main story.)

•Require new hires under the Public Employees’ Retirement System to be in the defined contribution plan.

“What we’re doing now is using the contributions from existing employees to cover the shortfall in the current system, which is basically paying the current retirees,” said Sen. Dave Lewis, R-Helena. “New employees will cut their way loose from this sinking ship.”

•Deal with the pension benefits and money coming in every year.

Sen. Jim Keane, D-Butte, who is a longtime union leader, said the state should address the issue to make the pension funds actuarially sound every year, just as union pension fund must do.

“The state’s problem is we don’t do anything right away,” he said. “We could look at something that forces the executive branch or legislative branch to deal it right up front. We could fund additional money or deal with the benefits going forward.”

•Amend the Montana Constitution to require the state to spend the money to shore up the pension funds to make them actuarially sound.

“We’re already obligated to pay that as a state, and we need to pay that bill before the bill gets worse and worse, like a credit card bill,” said Rep. Kirk Wagoner, R-Montana City, “The constitutional amendment would be if you don’t fix it, you cannot spend more money out of the general fund.”

•Switch to a cash-balance plan.

Sen. Ron Arthun, R-Wilsall, said he is proposing what would be hybrid plan that provides elements of a defined benefit plan and a defined contribution plan. It would guarantee a 4.5 percent return on pension investment, no matter what the investment markets do. An employee would contribute a certain percentage, and the employer would match it.

After 10 years, people could roll over this money to an Individual Retirement Plan if they no longer working for the state. Once they turn 60, they would receive an annuity. They would receive what they put in, what the public employer put in, plus the 4.5 percent return.

“I think it’s a common sense plan, and it meets people in the middle,” Arthun said. “They still have a guaranteed rate of return.”

Rep. Rob Cook, R-Conrad, wants a cash balance with a 3 percent guaranteed rate of return to public employees when they retire.

“I think the perspective is the current defined benefits system places too much risk on the private sector taxpayer,” he said. “We in essence accept all the risk. It doesn’t mean what we follow it with has to be as heinous as the defined contributions system.”

Cook said he likes the cash balance system because “it really matches the flavor of today’s work force,” adding: “Nobody goes to work for anybody for 30 years. They walk away after eight years and get nothing.”

•Increase contributions by employees by 1 percent, have PERS and TRS funds match the increase, use some coal-tax trust fund money and state surplus money to help shore up the funds. Then new hires would go on a defined contribution plan.

“The bill would take care of our obligations on pensions for active and retired people, and new people would be under defined contributions,” said Rep. Keith Regier, R-Kalispell.

•Increase pension contributions by employers by 0.25 percent in each of the next four years for the pension funds for public employees, Highway Patrol, game wardens and sheriffs.

This is the proposal by the Public Employees’ Retirement Administration board, said Roxanne Minnehan, its executive director.

She said the board didn’t recommend increases in employees’ contributions because of increases passed in 2011 as part of a number of changes.

“All those things don’t have a huge impact right now, but over time they will,” she said.

•Raise the contributions by new and current education professionals under Teachers’ Retirement System and make other changes.

Dave Senn, TRS executive director, said the TRS board proposed raising the contribution rate for new and current educational professionals, with triggers to reduce it as the funding becomes more actuarially sound.

There would be changes in calculating pensions for new employees after mid-2013.

“For new members, they’re going to have to pay more, work longer and receive less,” he said. “We think it’s a retirement package that is fair, sustainable and affordable, and it’s competitive with where the states are going nationally with new hires.”

In addition, $14.7 million in excess retirement reserves from school districts would be transferred to TRS as a one-time contribution. The state would provide 80 percent of the districts’ transportation share in the fall to offset any cash flow problems. The state would make an annual $25 million payment to TRS from state land trust revenues.

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(3) comments

Al Moncrief
Al Moncrief


The Colorado Court of Appeals has reversed and remanded an initial District Court ruling that denied the contractual status of public pension COLAs in Colorado. The Court of Appeals confirmed that Colorado PERA pension COLA benefits are a contractual obligation of the pension plan Colorado PERA and its affiliated public employers. A huge victory for public sector retirees in Colorado! The Colorado Legislature may not breach its contracts and push taxpayer obligations onto the backs of a small group of elderly pensioners.

The lawsuit is continuing. Support pension rights in the U.S. by contributing at saveperacola.com. Friend Save Pera Cola on Facebook!

In 1977, the U.S. Supreme Court (in U.S. Trust Co, 431 U.S.) clarified that state attempts to impair their own contracts, ESPECIALLY FINANCIAL OBLIGATIONS, were subject to greater scrutiny and very little deference because the STATE'S SELF-INTEREST IS AT STAKE. As the court bluntly stated:

“A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a state could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all . . . Thus, a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money to promote the public good rather than the private welfare of its creditors."


Walter - a pension are not "other peoples money". It is money earned while an employee is working and is paid as deferred comp when that employee retires. By taking a benefit as deferred comp they are buying an insurance policy for a secure retirement. Would you like it better if they got higher salaries and funded 401K's like the private sector. How's that working out for you? Higher fees, poor or no management of the accounts, no assurance that even your principle will be there when it time to retire. Maybe then they can join the people in the soup likes and food pantries who failed to plan for their own retirement.

If I buy a product or service from your employer do I get to tell you how to spend your money or that you didn't earn it. The ignorance of people who comment on boards like this is astounding.


The people of Montana and that of the nation just do not understand or they have been cleverly fooled by the Left, into believing that you can always live off of (other people's) money.
But sooner or later, the (other people's) money runs out.

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