A bill introduced in the Minnesota House of Representatives this week would merge the $210 million Duluth Teachers' Retirement Fund Association into the $18 billion Minnesota Teachers Retirement Association, St. Paul.
The bill, introduced by state Rep. Mary Murphy, would combine the two plans effective July 1, 2015.
The $69 billion Minnesota State Board of Investment, St. Paul, which currently manages the assets of the state teachers association, would manage the assets of the Duluth teachers plan.
According to the bill, the state would pay the Minnesota TRA $15 million annually until the Duluth plan is fully funded, as recommended by a Jan. 6 report by the state's Legislative Commission on Pensions and Retirement. The Duluth plan had a 55% funded status as of June 30, according to TRA data.
The commission report was requested last year by the state legislators, asking the commission to look at combining the assets and administration of the Duluth plan as well as the $926 million St. Paul Teachers' Retirement Fund Association into the state teachers fund. It also asked the boards of the Duluth and St. Paul teachers plans to vote on whether they approved of a merger; the Duluth fund's board voted in favor while the St. Paul fund opposed such a move.
J. Michael Stoffel, deputy executive director at TRA, said that the status of Duluth teachers plan's current external managers is “in flux,” with details of what will happen to them yet to be worked out. Most of the managers could either be terminated or remain under oversight of the state board, he said, but managers of illiquid assets like private equity and real estate will need their agreements honored by the state board after the merger. Jeffrey Slocum & Associates, Duluth teachers' consultant, will be terminated once the merger concludes.
Mr. Stoffel joined TRA last week; he had been executive director of the Duluth teachers plan. He was replaced there by Karen Kilberg.
“We're optimistic it will pass, especially since the Duluth teachers' board and its membership want to (merge), and the state teachers' board approves of it,” said Laurie Hacking, TRA executive director.
The bill will be considered by the legislative commission at a hearing Jan. 29.
