This response is intended to clarify some points made by the Calhoun Ledger in its article “Blood, Tears, Anger.......” regarding the state retirement system.
The system is a Defined Benefit Plan, not a Direct Benefit Plan.
As you stated in the article, most problems faced by the retirement system began when the plan was allowed to invest in risky investments such as stocks and alternatives. You also point out that this was accomplished through a constitutional amendment. This means that the decision was made by the voters of the state on a ballot during the general election. As such, the taxpayers who are being asked to fix the problem and make the system whole are the ones who decided to allow the risky investing that helped get the system its current weakened state.
The employers are not being required to pay an “additional” $21.24 per $100 into the Police Office Retirement System or and “additional” $18.56 per $100 into the Employee Retirement System. Currently employers are paying $16.24 into the Police Officer Retirement System and $13.56 into the Employee Retirement System. In both cases, the employer is being required to pay an additional $5.00 per $100 into each system. This $5.00 is to be phased in at $1.00 per year for the next five years.
The issue of whether to change the system from Defined Benefit to Defined Contribution is complicated. I am fairly well educated. I hold a Masters Degree plus thirty hours of graduate credit. I studied and hold credits in the MBA program at the University of North Dakota. I have managed a private agricultural business with $3M in sales in the 1970's. I have managed $20-30M budgets in the public sector. I have overseen the $30-40 million complete rebuilding of the county school system. I admit that it makes me nauseous to have to decide how to invest my 401K funds. The choice between options just requires too much information and I am accustomed to basing my choices on factual data. I would have hated a Defined Contribution Plan.
No doubt, the systems require some cleaning up and oversight to continue to provide a secure retirement for the systems' members.
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