S.F. 1676 (Tomassoni); H.F. 1656 (Rukavina) amends Minnesota Statutes, Section 354.536, Subdivision 1, the Teachers Retirement Association (TRA) private and parochial school prior teaching service credit purchase provision, and Minnesota Statutes, Section 354A.101, Subdivision 1, the first class city teachers retirement fund association private and parochial school year teaching service credit purchase provision, by adding teaching service for developmental achievement centers and day activity centers to the list of eligible service credit purchases. The provisions are effective on the day following final enactment.

S.F. 1676 (Tomassoni); H.F. 1656 (Rukavina) is intended to permit Debra J. Otonichar and similarly-situated members of Minnesota teacher retirement plans to purchase allowable service credit for prior teaching service rendered in development achievement or day activity centers. The purchase, under current law, would be at the full actuarial value payment price and a current or prior employer could participate in paying for the purchase.

Debra J. Otonichar is a member of the Teachers Retirement Association (TRA) who currently teaches for the Chisholm Public Schools and who taught for nine months (February 1978 to November 1978) for the East Range Day Activity Center, Inc. in Eveleth, Minnesota. Ms. Otonichar desires to purchase a year of TRA service credit for her Day Activity Center teaching service to improve her ultimate retirement annuity from TRA. Her request to make the service credit purchase under the current law was denied by TRA in both 1999 and 2000. She desires an opportunity to make the purchase before the teacher service credit purchase provisions expire in 2002 and before the favorable prior service credit purchase payment determination procedure expires on July 1, 2001.

The proposed legislation will likely raise several pension and related public policy issues for the Legislative Commission on Pensions and Retirement, including the following:

1. Similarities Between Day Activity Centers and Other Eligible Schools. The policy issue is the similarity between developmental achievement centers or day activity centers and the parochial and private schools currently included in statutory service credit purchase authority. Commission members may not have much familiarity with developmental achievement or day activity centers and may require testimony about the entity or entities sponsoring these centers, the nature of the funding of these centers, and their connection with educational institutions. If the case can be made, as Ms. Otonichar begins to do in her attached materials, that development achievement or day activity centers have a structure and a mission essentially identical to those of public, parochial, or private schools, their inclusion in the service credit purchase statute would be appropriate.

2. Appropriateness of Treating Day Activity Center Service as Teaching Service. The policy issue is related to the first issue and is whether or not the employment service rendered at a developmental achievement center or a day activity center is appropriately considered to be "teaching" service. Again, testimony on the daily routine at a day activity center and the roles played by various staff positions would clarify whether or not this service could be legitimately considered to be "teaching" service available for a service credit purchase.

3. The Number of Potential Purchases and the Potential Administrative Burden on TRA. The policy issue is the number of current teachers who have prior developmental achievement center or day activity center service and the administrative burden that these potential purchases will impose on the Teachers Retirement Association (TRA) and the first class city teacher retirement associations. Because there are near-term deadlines on the current service credit purchase payment determination procedures and the various teacher service credit purchases, this service credit purchase expansion could bring large numbers of purchase requests for the four teacher pension plans in the next four to 12 months. This will largely coincide with the normal influx of potential retirees at the end of the school year and could cause these retirement plans potential workflow hardships in the near term.