I'm afraid that Mr Hutchins is completely wrong here. Return assumptions are not a philosophical debate that depends on whether you are an optimist or pessimist. In fact your opinion about future returns shouldn't influence your return assumptions at all - because it is just that - an opinion!
The risk free rate is more appropriate rate to use because the liabilities of the fund are risk free. They are promises to the current and future retirees on Minnesota.
The use of a riskless rate to value a riskless liability is based on simple finance.