OK’d Pension Fund Merger Supports Rybak’s Budget

The Minneapolis mayor's proposed budget includes no property tax hike, but it depends on savings from a pension fund merger-which has now been approved by members of the city's police and fire pension funds.

Members of Minneapolis police and fire pension funds have both reportedly voted to merge with a statewide pension fund-ending a long fight between the funds and the city. It's also a key factor in Mayor R.T. Rybak's proposed budget, which contains no boost in the city's property tax levy.

The city has said that the merger of the Minneapolis Police Relief Association (MPRA) and the Minneapolis Fire Relief Association (MFRA) with the Public Employees Retirement Association (PERA) would protect taxpayers from rising property taxes. Lawmakers recently passed a measure allowing the merger.

Most municipal funds were merged with the state's PERA system in the 1970s, but the MPRA and the MFRA weren't. The two funds were closed to new members in 1980, and city employees who would've otherwise been eligible to enroll in the two funds were instead enrolled in PERA. The state auditor told the city in 2004 that the closed funds had overcharged the city's taxpayers, and the city took the funds to court.

Hennepin County District Court in 2009 ruled that the funds had overcharged taxpayers by roughly $76 million since 2000. The Minnesota Court of Appeals in June affirmed that ruling and agreed that the fund managers had miscalculated benefits.

According to a report by the Star Tribune, members of both the police and fire pension funds voted this week to merge with the state fund-and the pro-merger vote likely signals the end of the five-year battle with the city.

Rybak on Monday proposed a 2012 budget for the city, which included no property-tax increase and hinged on the members of the funds approving the merger, a move that will reportedly save the city $17.4 million in 2012 alone. The Minneapolis Board of Estimate and Taxation on Tuesday announced that it supports the mayor's plan and set no increase to the 2012 property tax levy.