S.F. 737 (Cohen); H.F. ____ (      ) raises a few specific issues for the Subcommittee. A letter from Mr. Levine, included in the materials, suggests he received an estimate of the full actuarial value from PERA of $13,500. If accurate, the Subcommittee may wish to consider where the problem is sufficiently severe to warrant Subcommittee and LCPR meeting time, given other issues presented by the proposal. Mr. Levine apparently has retired. Approval of purchase of service credit bills for individuals who have already retired are very rare, since retiring undermines a claim of sufficient harm. The bill as drafted would require additional retroactive payments, back to the retirement date. The bill is drafted to require the City of Saint Paul to cover the bulk of the purchase cost, but there is no information that the City agrees with any claim that it caused harm.

Given the pension policy issues raised by this bill, it may be advisable to consider remedies which do not involve the pension plan or LCPR. If legislation were to pass, and if there is inconclusive information supporting a claim of harm by the City, Mr. Levine would have to pay the full actuarial value. If our actuarial methodology is providing appropriate estimates, Mr. Levine would receive no net financial gain. He would pay an amount equal to the increased pension he would receive over time. There would only be a net benefit to Mr. Levine if the prior employing unit, the City of Saint Paul, covered part of the cost. That can be achieved without involving special legislation or the pension plan, by reaching a lump sum financial arrangement with the city to compensate for harm.

LCPR01-69 provides some clarifying language and would remove the former employer mandatory payment of a portion of the full actuarial value.