A New Tactic from the Show-Me Institute

The Show-Me Institute – if the name alone brings to mind a scary thought, it’s for a reason. Missouri’s resident billionaire, Rex Sinquefield, funds this think tank. Sinquefield’s admitted two main areas of interest are rolling back the income tax and education reform. He spends millions of dollars each year to back political candidates that will pass his agenda as well as millions on these think tank groups that help influence legislation.

Your pension is #8 on Rex’s “hit-list” – “20 for 2020“ The Show-Me Institute has put out a plan to introduce policy regarding education and pension reform, changing teacher retirement to a 401(k) system. We must work together to prevent billionaires and bullies from influencing our legislators! To see the full document click here.

A new Tactic – The Show-Me Institute is now holding meetings about “The Looming Pension Crisis” in MO. They are working harder than ever to destroy our pension system. They currently have upcoming dates in St. Louis and in Columbia. Do not believe the misinformation!

 

A Pension Nightmare in Kentucky

During the 2018 Kentucky Legislative Session, lawmakers pulled a “bait and switch” on educators. SB 1 was introduced as a pension bill that would have reduced benefits for educators. Shockingly, elements of SB 1 were combined into another bill, SB 151 which was initially regarding wastewater services. The Kentucky Education Association (K

EA) reported that due to the switch they were not allowed to testify and the bill had not had an actuarial review. KEA also reported that lawmakers were not able to read the entire 291-page bill before they voted for its passage. KEA members felt the legislature had blindsided taxpayers and passed the bill without due process. To read more about the issue in Kentucky click here.

Why are we reporting this information to you? This is meant as a cautionary tale. MRTA is here to prevent these kinds of attacks. We are here to watch for these kinds of maneuvers and to “rally the troops” if something similar arises here in Missouri. If we have said it once we have said it a thousand times, “THERE IS STRENGTH IN NUMBERS!” We need YOU! Please renew your MRTA dues today!

The Silver Lining – “The Year of the Teacher”
In addition to changing pensions for educators, Kentucky lawmakers also passed a law allowing charter schools and for several years in a row did not budget money for schools equating again in no teacher raises. It is clear that educators in Kentucky are fed up. The mid-term 138 seats in the General Assembly and 51 of them are being contested by active teachers, retired teachers, and school board members who have had enough. This unprecedented wave of education-minded candidates has many calling this election year, “The Year of the Teacher.” How inspiring, but at what a cost!

Help MRTA now by renewing for 2019! Missouri Legislative Session begins on January 9th. We need YOU!

MSPMA

Another great conference for MRTA.  Sue Groves, Jim Kreider and myself spent a busy day talking to many attendees.  It was certainly a different group with different levels of understanding about MRTA.  We informed them of who we were and what we do.  Jim even presented a workshop on Retirement and picked up 2 PEERS , 3 total memberships.  It was amazing as most did not have a clue that the teachers and school personnel were part of the same retirement system.  Some had spouses that were teachers and they had more awareness about what we did.  Some had been teachers and then retired and started doing maintenance or head custodian jobs.  I feel  we did a valuable service in spreading the word that will only grow in understanding of MRTA.  One thing I suggested to Jim is maybe on all brochures and mailing information that we always make sure Missouri Retired Teachers Association and Public School Personnel letter be the same size.  Some had the Public School Personnel in smaller letters but on letterhead, it is the same.  Just a thought.  We handed out many bags of information and picked up a total of 4 associate memberships.  I for one must always make sure I connect MRTA and School Personnel when visiting with attendees.  I used the WHY SHOULD PEERS RETIREES JOIN MRTA sheet that was on the packet of Jim’s End of Session Report he handed out.  It is great to take to your buildings when visiting and taking cookies. If you need copies just let the office know.  This conference raised my awareness of an area we need to focus on when presenting.  A special thanks to Jim and Sue for helping out.

Betty Beal
MRTA Retirement Education Committee Chair

 

A note from Jim Kreider:

In my breakout session, I asked who belonged to MSTA or MNEA. ONLY ONE OUT OF 30 belonged!!!! We could sure serve active PEERS especially with liability insurance.  How do we get to the active PEERS employees is the question. Maybe if we would leave the attached and MRTA benefits brochure where PEERS folks hand out at the school. Or see the Department Head of Maintenance/(Plant Manager). There is real opportunity. They had no idea of MRTA and little about their system and the threats to it. THANK YOU!!

 

Halftime Report

As the Legislative Spring Break ends, we must now be attentive to major education/retirement issues being addressed in the General Assembly.  MUCH can happen before Session ends on May 18th. Please check your e-mail often and please act on any CALL TO ACTION from your MRTA.

We have had several successes as of today because of your willingness to be heard and to act. There truly is STRENGTH IN NUMBERS!! To date, we have helped stalled SB 612 the voucher/charter bill in the Senate. We have also helped stall HB 2245 that expands Charter schools statewide. Both these measures take scare tax resources away from public education allowing for fewer dollars to be contributed to our retirement system and invested. We have also pushed for full funding of the Foundation Formula. Your hard work has aided the House of Representatives to add $46 million to the governor’s recommendation budgeting $98 million to the Formula thus fully funding the Foundation Formula. Below is the “HALFTIME” report on MRTA’s 2018 Issues of Importance. Please stay tuned. GOOD JOB!!

2018 MRTA Issues of Importance

PRIORITY #1 – MRTA strongly opposes HB 2660 (Miller R-124)This legislation requires the PSRS/PEERS Board of Trustees include an elected school board member.  In its 70 year history, the law has not allowed for any elected officials to serve as a trustee on the PSRS/PEERS Board.  This has kept politics out of the decision-making process.  This legislation also requires the employer contribution to the system to go back to the employer if an educator leaves before being vested; currently, those funds stay in the system.  This provision will greatly harm the system financially by increasing the systems’ liability by at least $508 million.  If this bill passes it would, in effect, eliminate the possibility of COLA and mean an increase of 2.07% in contribution rate for members and employers.  Please stay tuned and feel free to write your Representative in opposition of HB 2660.

  • Halftime Report – This bill has not been referred to a House Committee as of this date. 

 PRIORITY #2 – MRTA supports full funding of the Foundation Formula and opposes the use of public tax dollars for private schools. The Missouri Constitution mandates adequate funding of K-12 education through HB 2 which requires education funding as the second priority of state expenditures.   Comment: Due to several tax cuts enacted by the legislature over the past few years general revenue is expected to be reduced significantly. MRTA asks funding for Public Education be the priority.

  • Halftime Report – The House Budget Committee added $46 million to Governor’s recommendation budgeting $98 million thus fully funding the Formula.

PRIORITY #3 – MRTA opposes SB 747 (Emery R-31).  This act provides that statewide elected officials and members of the General Assembly serving for the first time on or after January 1, 2019, shall participate in a 401(k) defined contribution plan instead of the current defined benefit plan (DB). Comment: This does not include educators at this time.  It is only one amendment away if this bill is not stopped. DB plans are a proven better use of tax dollars and provide for better retirement security.

  • Halftime Report – This bill is still in committee.

PRIORITY #4 – MRTA opposes HCS HB 2247 (Roeber R-34).   This legislation allows for the expansion of charter schools statewide.   Comment: Charter schools take scarce tax revenue from public education. Currently, charter schools are only allowed in Kansas City and St. Louis City.

  • Halftime Report – Voted out of Committee – on House Calendar for debate.  Now stalled – lack of votes.

PRIORITY #5 – MRTA opposes HB 2200 (Rhoads R-154).  This bill creates “schools of innovation” which is another term for charter schools.  MRTA is very concerned the legislation, as written, changes the Work-After-Retirement (W.A.R.) provisions, which will allow PSRS retirees to work full time for these new schools.  According to PSRS/PEERS actuaries, this will increase the fund liability of the PSRS/PEERS systems by up to $187 million.  This could jeopardize your pension benefit and COLA.

  • Halftime Report – Voted out of Committee Do Pass.  Not on House Calendar.

PRIORITY #6 – MRTA opposes HB 2188 (Matthiesen R-70), SB 612 (Koenig R-13), and SB 565 (Emery R-31).  These acts establish the Missouri Empowerment Scholarship Accounts Program.  Comment: These are voucher schemes which create a new 100% tax credit allowing up to $25 million per year of state revenue to be used for private school tuition and other expenses for students.  This will result in up to $25 million less state revenue for public education per year.  These bills take scarce tax revenue away from public education.

  • Halftime Report – All bills on priority #5 and #6 are on SB 612 and being debated in the Senate.  Now stalled – lack of votes.

PRIORITY #7 – MRTA opposes HJR 55 (Shumake R-5). This is a proposed Constitutional Amendment that eliminates the prohibition of public funds for the use of any religious or sectarian educational purpose.  Comment: This allows for public tax dollars to be used for private schools which will take unlimited tax revenue from public education. 

  • Halftime Report – No Committee Hearing scheduled.

PRIORITY #8 – MRTA supports HB 2335 (Black R-7).  This legislation is regarding Work-After-Retirement (W.A.R.) requirements and would allow retired PSRS educators to work more than 550 hours as a PEERS employee.  Comment: This legislation is a win-win for school districts needing to fill positions such as bus drivers and also allows for retirees to obtain extra employment.  The school district is required to pay the employer contribution to the PEERS system.

  • Halftime Report – Voted out of Committee Do Pass – Awaiting placement on the House Calendar for debate.

PRIORITY #9 – MRTA supports HR 2619 (Brattin R-55).  This bill changes the Working After Retirement (W.A.R.)  provision from 550 hours to 700 hours.

  • Halftime Report – Awaiting assignment to a Committee.

PRIORITY #10 – MRTA supports HB 2184 (Bondon R-56) and SB 856 (Curls D-9) These bills modify provisions relating to the Public school retirement system of Kansas City, MO.   The legislation sets the contribution rates of the employing school districts.  These bills are needed to strengthen the financial health of the system, protecting employee benefits. This legislation will allow for a better opportunity for retirees to be awarded cost-of-living adjustments (COLAs).

  • Halftime Report –  Voted out of Committee Do Pass – Awaiting placement on the House Calendar for debate.

 

2017 Public Pension Exemption

Married couples with Missouri adjusted gross income less than $100,000 and single individuals with Missouri adjusted gross income less than $85,000, may deduct up to 100% of their public retirement benefits, to the extent the amounts are included in their federal adjusted gross income.  Click here for MO-A form.

  • The total public pension exemption was limited to $36,976 for each spouse for the 2017 tax year.
  • Married couples with Missouri adjusted gross income greater than $100,000 and single individuals with Missouri adjusted gross income greater than $85,000, may qualify for a partial exemption.
  • There is no age requirement for eligibility.

Visit www.dor.mo.gov for more information regarding eligibility. Or you may contact the Missouri Department of Revenue at (573) 751-3505, email income@dor.mo.gov or consult a tax professional for more information.

Capitol Blitz Day

Tuesday – February 13th is MRTA Capitol Blitz Day. 
It is time to show our STRENGTH IN NUMBERS!  We are asking you to write your State Representative and State Senator on Tuesday,  February 13, MRTA Capitol Blitz Day.

 

Below is suggested verbiage for correspondence to your representative and senator.  Please feel free to use your own language, the more personal the better.  All politics is local!    Click here to see MRTA’s Issues of Importance

 
Copy and paste this suggested verbiage into an email or write your own personal message:
 
Dear Senator XXXX:
 

I am a taxpayer and voter in your district.  I am a retired educator and member of MRTA.  Today you were delivered our 2018 MRTA Issues of Importance by members of MRTA.  I ask you to review them and consider our positions. There are two pieces of legislation I would like you to oppose.  SB 612 (Koenig R-15) and SB 565 (Emery R-31) are voucher type bills which drain tax revenue away from public education in a time of scarce state revenue.

Thank you for your willingness to serve our state.  Please do not hesitate to contact me if I can answer any questions.  I wish you the very best.

 Sincerely,
 
NAME
ADDRESS
PHONE NUMBER
 

*****************************************************************************

Dear Representative XXXX:

I am a taxpayer and voter in your district.  I am a retired educator and member of MRTA.  Today you were delivered our 2018 MRTA Issues of Importance by members of MRTA.  I ask you to review them and consider our positions.  There is an important issue I would like you to oppose and that is HB 2247 (Roeber R-34).  This bill expands charter schools statewide and will drain scarce state revenues from public education. The vast majority of our public schools in Missouri do an excellent job and charter schools are not needed.  
 
Thank you for your willingness to serve our state.  Please do not hesitate to contact me if I can answer any questions.  I wish you the very best.
 
Sincerely,
 
NAME
ADDRESS
PHONE NUMBER

Sinqufield’s Blueprint for Disaster

A Response from Dr. James Sandfort

Recently, the Show-Me Institute launched a rather ambitious agenda for the coming year. Among the areas of focus, one, in particular, caught my attention – Public Pension Reform.

As far as public pension reform is concerned two important words were omitted from the title; “for Disaster.” For every PSRS/PEERS member, retired or active, Show-Me Institute’s 2018 Blueprint is a serious recipe for disaster. The goal is to replace the current defined benefit pension plan (DB) with a defined contribution plan (DC) – as the authors suggest – “think 401(k).”

The Show-Me Institute’s Logic:
*DC plans cannot incur unfunded liability
*DC plans put investment decisions into the employee’s hands
*DC plans are transferable from one job to another

The authors emphasize that DC plans for public employees exist, in some form, across the country. What they fail to mention is that other states have experimented with DC plans, judged them flawed and have returned to DB plans for their public employees; most notably, Connecticut.

Additionally, the authors fail to share that 401(k) plans, according to original proponents, were never intended to replace DB plans – only supplement them. Those who study the 401(k) approach have concluded that a 401(k) account, even when generously funded, rarely provides a secure retirement for the average worker – the 401(k) math used in the 80’s and 90’s didn’t add up. The reality is that a 401(k) plan is not a pension plan at all – it is just another type of savings account.

Although DC plans can be portable and move with the employee – once a member is vested in a DB plan (generally after 5 years) there is no need for portability. Upon retirement a check based on years of work, contributions and investment earnings will be there for the remainder of the retiree’s life. One of PSRS/PEERS’s rationales for the creation of Missouri’s DB plan was to attract and retain qualified teachers. It has done just that!

While a DC plan does place investment decisions into the employee’s hands, what employee has the technical knowledge to make those critical investment decisions or the time for ongoing meetings with various financial advisors discussing the intricacies of fees and commissions, risk analysis, a balanced portfolio and more? Most educators entered the profession to work with students and are quite content having qualified professionals at PSRS/PEERS invest their pension dollars. And why should they not be? PSRS/PEERS has provided a secure retirement for tens of thousands of public school educators for more than seven decades.

The claim that DC plans do not incur unfunded liability for the taxpayer overlooks a key point. Many DB plans that are experiencing difficulty financially are in trouble precisely because those same entities that would be funding DC plans have withheld contributions they were obligated to make to DB plans already in existence. It is wishful thinking to believe that these same entities would meet their commitments any better over the long term to any DC plans they create. Bad faith is bad faith regardless of the system in place!

So why would others want to dismantle PSRS/PEERS when it is functioning as intended? Perhaps it is a matter of political ideology or a case of “pension jealousy.” Or perhaps, more insidiously, they are eyeing the dollars involved and want a piece of the financial action, collecting unnecessary fees and commissions, at educators’ expense. Whatever the reason, that cannot be allowed to happen!

For seventy years, PSRS/PEERS has delivered on its promise without default or interruption. Although the check that PSRS/PEERS retirees have reliably received each month for decades may be viewed by others as something extra; for those who have spent a career in public schools educating young people, it is “deferred compensation” for work already done. For Missouri educators there are no social security checks, no stock options, no golden parachutes and no year-end bonuses – there is only PSRS/PEERS!

From my perspective,

Jim Sandfort, Retired Superintendent
Center for Pension Research

Click here to see 2018 Blueprint for MO – Pension Reform