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November 4, 1998

State Developments Great News on Constitutional Pension Protection. The citizens of Arizona and New Mexico overwhelmingly approved constitutional pension protections during the November 3 election. The Arizona provision would guarantee the following three protections:

1) the state's retirement systems must be actuarially funded;

2) the assets are independent trust funds and must be used for the exclusive benefit of plan participants; and

3) retirement system membership is a contractual right. The New Mexico amendment includes the exclusive benefit provision and a contractual right. It also makes two other changes: giving the boards fiduciary duties over retirement system operations and empowering the boards to adopt actuarial assumptions. The Arizona provision won by a margin of 76% in favor and 24% opposed, and the New Mexico amendment by 61% for and 39% against.

Jesse "the Body" Ventura Takes Top Spot in Minnesota. In a three way race, Jesse Ventura of the Reform Party won the Governor's race in the land of 10,000 lakes. Jesse overcame the Democrat, Skip Humphrey, the son of former Vice-President Hubert Humphrey, and Norm Coleman, the former mayor of St. Paul. Jesse's party is Libertarian-oriented, evidenced by Jesse's statement that he wants his legacy to be "when I was Governor, people didn't notice the government." Why is this of interest to NCTR members? Talk about converting the state's defined contribution plans is percolating in Minnesota. Although Jesse's views on pension plans are unknown, his running mate, May Shrunk, is a 65-year old elementary school teacher who teaches in St. Paul. Our Minnesota sources hope she will be a good influence on Jesse in the area of pensions.

Cindie Visits South Dakota Retirement System

Staff of the South Dakota Retirement System welcomed Cindie Moore, NCTR Washington Counsel, to their headquarters on October 8. Cindie stopped by on her way to the NCTR Annual Convention. She toured the headquarters and visited with John Storsteen, Deputy Administrator, and Wade Hubbard, Legal Counsel.

Cindie received a nighttime tour of Pierre, the state capital. A unique feature of the capitol grounds is the "flaming fountain." Both water and natural gas are piped into the same fountain, resulting in a flame on the top and water pouring down the sides. The water flows into a lake that attracts waterfowl year round because of the water's warmth.

NCTR Represented at Congressional Roundtable on Retirement Security and Social Security Reform

Senators Jim Jeffords (R-VT) and Jeff Bingaman (D-NM) and Representatives Nancy Johnson (R-CT) and Earl Pomeroy (D-ND) hosted a year-end briefing on pension and Social Security issues. Cindie Moore represented NCTR on the Roundtable and spoke about the need for expanded portability for participants in 403(b) and 457 plans, which do not currently enjoy the same extent of portability as 401(k) plan participants do. Other Roundtable speakers included Jeannine Markoe Raymond with the National Association of State Retirement Administrators and Dallas Salisbury of the Employee Benefit Research Institute.

1999 Benefits and Contribution Limits Announced

The IRS and the Social Security Administration have released the new limits for 1999. Of interest to state and local government plans is the $5,000 increase in the annual compensation limit for grandfathered participants in governmental plans which followed the section 401(a)(17) compensation cap limit on July 1, 1993. The other change was the increase in the social security wage base from $68,400 to $72,600. Carol Calhoun, an attorney with Conner & Winters PC, and an NCTR member, put together the attached chart showing the changes in the maximum benefits and contribution limits for the years 1996 through 1999.