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North Dakota Highway Patrol Pension Fund Missing $46.3 Million | The mighty 790 KFGO

BY: MICHAEL ACHTERLING

BISMARCK, N.D. (North Dakota Monitor) – The North Dakota Highway Patrol pension system is underfunded by $46.3 million and requires additional funding from the Legislature, according to an analysis submitted to lawmakers.

The Legislature's Employee Benefit Programs Committee recently received recommendations on how to address funding issues with the Highway Patrol's pension plan, which is about 68% funded.

Bonnie Wurst, senior consultant at Gabriel, Roeder, Smith & Company Holdings, a Detroit-based actuarial and benefits firm, provided lawmakers with scenarios to bring the pension plan to 100%.

A one-time cash infusion of $35 million to nearly $40 million would fully fund the plan in 20 or 30 years, Wurst said.

Other options include increasing the amount approved by the Legislature for each two-year budget cycle by $5 million per biennium for 30 years or by nearly $7 million per biennium for 20 years, Wurst said.

Without additional funding, Wurst said, the Highway Patrol pension system will be 60% funded in 2046 and further decline to a 54% funded rate in 2053.

“If there are no changes and contributions are not increased … the plan's funded ratio is expected to decline and the funded ratio is not expected to reach 100 percent funded ratio at any time in the future,” she said. “It’s really going downhill, and that’s what we’ve seen over the last five to 10 years.”

The Legislative Committee took no immediate action.

“I think there is definitely interest within the Legislature to look at ways to help fund the unfunded liabilities within the Highway Patrol, but of course that would require legislation,” said Rebecca Fricke, executive director of the North Dakota Public Employee Retirement System, said the North Dakota Monitor.

The Highway Patrol's retirement plan, administered by NDPERS, is separate from the main public employee pension plan that lawmakers passed last year to prevent future hires. State employees covered by this plan will participate in a defined contribution or 401(k)-style retirement plan beginning in January 2025.

“The Highway Patrol plan was not part of this legislation and, to my knowledge, is not being considered,” Fricke said.

Capt. Derek Arndt, commander of the Highway Patrol's Administrative Services Division, said the retirement program is an important part of recruiting and retaining troopers.

“It is critically important to us for our future and our sustainability,” said Arndt.

Col. Brandon Solberg, superintendent of the North Dakota Highway Patrol, told lawmakers that disability and death benefits in their defined benefit plan or pension plan are important in a competitive work environment because law enforcement is a dangerous job.

“A defined contribution plan doesn’t have that disability benefit and doesn’t have that same death benefit that would pass to the spouse,” he said.

Solberg also said members of the Highway Patrol Retirement System do not contribute to Social Security and that lawmakers should take that into account when making changes to employee and employer contribution limits.

The Highway Patrol's retirement program had 144 active participants as of July last year, Wurst said. The plan also included 143 retirees and 59 former members at the time.

Meanwhile, leaders have said additional investment will be needed for the key pension plan for state workers. According to figures presented in the last legislative session, the plan had an unfunded liability of about $1.9 billion. Critics say the liability stems from lawmakers not taking action sooner.

In 2023, lawmakers approved a one-time infusion of $135 million into the state's main pension plan and allocated $65 million in oil tax revenue to the pension plan every two years.

Anna Harden

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