Pensions

Readers Write: Mistrust of science, public pensions

The Sept. 10 commentary by James Lenz (“Shifty motives, suspicious minds”) analyzed issues related to scientific research and the influence of big business on distrust of science. The single most powerful factor, however, in public skepticism of scientific expertise is the influence of big business on politics.

One of the foci of Lenz’s article is climate change. The power of the fossil-fuel industry and related business interests is enormous. They control politicians through direct donations, campaign advertisements and “dark money” contributions to political-action organizations. Ask the GOP governors and congressional delegations of Texas and Florida about human impact on climate change. Responses will range from outright climate-change denial to the inane excuse that they are not scientists. Texas and Florida are states most vulnerable to climate change, yet they dance like puppets for their corporate donors.

The denial of reality by politicians is transferred directly to many constituents. After all, if members of Congress do not trust science, why should others? The impact also is pervasive in the Trump administration. The gutting of the Environmental Protection Agency through budget reductions and policy revisions illustrates both disdain for science and allegiance to business interests.

The influence of unfettered business actors rightly is criticized. The real culprits, however, are the politicians who snuggle comfortably in the back pockets of their corporate handlers.

Phil George, Lakeville

PUBLIC PENSIONS

It matters how the ‘crisis’ is accounted for

In her Sept. 10 commentary “State’s public pensions are in crisis,” Kim Crockett suggests that the sky is falling on our system, based on a recent report from Bloomberg Markets. The source for this is an article by Martin Z. Braun titled “New Math Deals Minnesota’s Pensions the Biggest Hit in the U.S.” To support the supposition of a crisis, Crockett quotes the most speculative and sensational portions of this article, yet ignores the most obvious explanation for Minnesota’s decline in pension solvency relative to other states.

In his article, Braun admits that Minnesota is one of only four states to use “a discount rate, ‘significantly lower’ than their traditional discount rate to value liabilities … .” Braun then quotes Todd Tauzer, an S&P Global Ratings analyst, speaking about Minnesota, “Because of that huge drop in the discount rate under GASB reporting, their liabilities skyrocket. That’s why you see that huge change compared to other states.”

In other words, Minnesota’s State Board of Investment (MSBI) used the most honest and conservative interpretation of the Governmental Accounting Standards Board’s “new math” accounting method to estimate our pension fund’s future liabilities. Relative to the 46 states that were not so honest, it appears that Minnesota fell from best-funded to worst-funded pension plan overnight. Of course, nothing has changed with the pension plan except the accounting method, which has served to magnify the obvious need for funding adjustments. The MSBI has recommended adjusting the plan’s funding formula during the past two legislative sessions without successful adoption. Continued inaction on this vital legislation may prompt the very crisis that Crockett envisions.

Joseph Ehrlich, Arden Hills

• • •

Crockett states that “when [pension] funds hit a rough patch, unions look for a solution they can sell to members.” Let’s please not conflate unions and pension funds. My union (Education Minnesota) has no role in the collection, distribution or investment of pension funds. And while the union can offer input, any “solution” to a pension-fund problem will be crafted by the Teachers Retirement Association — an entity completely separate from the union — whose plan must then be passed by the Legislature and signed into law. The union is certainly an advocate for a stable pension fund, but to imply that it has a closer operative role is misleading.

Mark Brandt, Minneapolis

• • •

I am an actuary and the husband of a teacher. I appreciate the effort by Director Jay Stoffel of the Teachers Retirement Association (TRA) to reform the retirement plan (“State’s systems seek legislative action on proposed reforms,” Sept. 10). However, despite his comforting reassurances, I believe our plan and the other state plans are already in crisis.

By the state’s assumptions, the TRA plan has $6.5 billion less than needed. By standardized national assumptions (GASB), the plan has $30.7 billion less than needed. Stoffel encourages us to rely on the state’s view, not the independent GASB’s. The GASB estimates are more reliable. They are set at arm’s length. The results are also very close to my estimates as an insurance company actuary. When states set their own assumptions, they may naturally pick ones that make things look better than they are. Minnesota’s assumptions are the most lax in the country.

The director recommends cutting benefits by $1.2 billion over time and increasing annual contributions by $92 million. This falls far short of making the plan whole under with measure. It does little more than preserve the status quo.

I agree with the directors about the need for reform, but more drastic measures than these are needed if we are going to honor our promises to teachers and other state employees. It’s just not realistic to expect these pensions to be paid without major action. The Legislature needs to choose — fund them or change them. Choose one, but act.

Ross Bowen, Minnetonka

CORRECTION

A Sept. 10 commentary about the mistrust of science incorrectly stated that Stephen Hawking was a Nobel-winning physicist. Hawking has not been awarded that prize.

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