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Pension update and PERA $16 million Discrepancy

Last session Senator Bahr introduced SF1556/HF708 a Bill to add a Corrections Officer to the PERA Board.

The Bill was heard but laid over. PERA's objection was it would make the PERA Board even numbered.

Rep Peggy Scott will be introducing an Amendment which would cure PERA's objection.

MNCORA asks that you write Senator Frentz, Chair of the Pension Committee and tell him to bring the Amendment to a vote when introduced.


make sure to cc 

If this session passes without getting a Correctional Officer seat on the PERA Board we have to start all over again next session!


PERA UPDATE

On March 12 PERA held their Executive Board meeting, MNCORA attended virtually.

Some interesting things came to light.

First a firefighter out on a duty disability who had been overpaid and was paying back the overage at 25% of her check was asking for a 'hardship' reduction to 10% a check. It came to light that there was NO DEFINITION OF HARDSHIP  in PERA's Administrative Manual! And furthermore no one had been granted a hardship reduction in the past! Very narrowly she was granted relief.

MNCORA has asked for a copy of the Administrative Manual as it is not on PERA's website.



Second: The Office of Legislative Auditor audited PERA. It was discovered there's a $16,281,000 discrepancy with money reported to the State!

From the OLA Report:

Misstatements identified by the Office of the Legislative Auditor for which no audit adjustmentswere proposed include:

1. Cash in PERA’s general ledger did not reconcile to cash reported in the state’s accounting system resulting in the following misstatements totaling $16,281,000:

• Overstatements by Fund: General Employees Fund – $15,642,000 and Statewide Volunteer Firefighter Defined Benefit Fund – $639,000  

The OLA also determined that 

FINDING 1
The Public Employees Retirement Association did not have adequate internal controls to ensure it accurately reported cash in its financial statements.

The Public Employees Retirement Association (PERA) potentially overstated cash in the General Employees Retirement Fund and the Statewide Volunteer Firefighter Fund by $15.6 million and
$600,000, respectively. 

PERA manages and records cash transactions in its own accounting system and in the state’s accounting system and prepares its financial statements from its own accounting system. The ending cash balance recorded in each system had an unresolved variance totaling
$16.2 million, and PERA reported the higher balance recorded in its accounting system in its financial statements.

PERA did not periodically reconcile cash between the two systems during the fiscal year and thus did not identify the variance until it completed an annual reconciliation in September 2025. However,
PERA was not able to identify the underlying cause of the variance and make an appropriate correction before it issued its financial statements. Reconciling the cash balance between the two
systems daily or monthly during the fiscal year would have likely allowed sufficient time for PERAto identify and correct the variance before it issued its financial statements.


Third: PERA published their Annual Financial Report


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