Tuesday, April 11, 2006

What color is the manager's parachute? 

Particularly when she manages a failing fund?

Managers of a struggling pension fund for Minneapolis teachers are drawing criticism from the Minnesota state auditor over an administrator's new compensation package.

Lawmakers are considering merging that fund with the larger state Teachers Retirement Association, forcing the state fund to absorb nearly $1 billion in unfunded pension obligations to Minneapolis teachers.

That's why State Auditor Pat Anderson expressed outrage that the Minneapolis teachers pension board extended the contract of its executive director, Karen Kilberg, a year beyond the date when the fund would cease to exist under the merger. The deal, approved in March, also granted her a six-month severance, making the entire package worth $215,000.

"This is a brazen act by the board to provide a golden parachute to an outgoing employee at taxpayer expense, knowing the organization may not exist after July 1," Anderson said.

Ann Downing, president of the Minneapolis teachers pension board, defended the move as necessary to keep an administrator around to manage the merger.
This is part of a continuing saga and crisis in the MTRFA that threatens a healthy fund -- in which, for full disclosure, I have a relatively small part of my retirement account from the days before I could get TIAA-CREF on campus -- with merger from an unhealthy one. The bill making this merger reality is HF 2847, wending its way through the Legislature as you read this. Maybe this callout from the auditor's office -- not her first, either -- will finally get some media attention on how the costs of a mismanaged system in Minneapolis is being shifted onto outstate teacher pension plans.

(h/t: Douglas Bass.)

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