Wednesday, March 14, 2001     1^st Subcommittee Meeting
Room 125 Capitol

SERVICE CREDIT PURCHASE SUBCOMMITTEE
of the
LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT

Senator Don Betzold, Chair of the Subcommittee, called the meeting to order at 6:05 p.m.

Subcommittee members present:

Representatives Mary Murphy and Steve Smith
Senators Don Betzold and Dan Stevens

Rep. Swapinski testified in support of the bill, and introduced several veterans from the Duluth area. Mr. Fletcher Hinds, Mr. William Klein, Mr. Dave Nyquist, and Mr. Bob Woods all testified in support of the bill, and responded to a question from Rep. Murphy about their respective lengths of military service.

Mr. Roger Hennessey, a Saint Paul teacher, testified in support of the bill and the effect of the loss of service credit on his potential pension benefits as compared to those of his coworkers who did not serve.

Representative Cassell reviewed the bill. Mr. Charles Nettestad, Alexandria Police Chief and formerly with the Brainerd Police Department, testified in support of the bill and provided background information on his particular situation.

Senator Betzold remarked on the number of plans to which this bill would apply. Rep. Cassell said that he would be willing to revise the legislation to make it a single-person bill.

Mr. Lawrence Martin, Executive Director, Legislative Commission on Pensions and Retirement, reviewed the staff memo and policy issues raised by the bill.

Senator Wiger introduced Mr. John Mickelson, Captain of the Cottage Grove Police Department, who testified in support of the bill and provided information regarding his circumstances.

Representative Skoglund testified in support this bill which would allow persons other that just teachers to purchase maternity or other parental leave service credit.

Ms. Julie Blehyl, AFSCME, testified in support of the bill.

Responding to Senator Stevens’ question, Representative Skoglund said that he doesn’t know how many people would potentially purchase such service credit and that cost is the greatest barrier for purchases.

Mr. Martin reviewed the staff memo and policy issues raised by the bill.

Mr. Martin reviewed the staff memo and policy issues raised by the bill.

Mr. Russ Stanton, representing the Inter-Faculty Organization, testified in support of the bill, that it was introduced at their request.

Mr. Edward Burek, Deputy Director, Legislative Commission on Pensions and Retirement, reviewed the staff memo and policy issues raised by the bill. He noted that the bill, as drafted, does not include an employer payment mandate, and referred members to a staff technical amendment that would allow the employer to pay a portion of the purchase cost.

Senator Berg and Representative Peterson testified in support of the bill. Senator Berg said that supported amendment LCPR01-57.

Senator Stevens moved amendment LCPR01-57. MOTION PREVAILED.

Ms. Lori Schwendemann, the person affected by the bill, testified in support of the bill. Representative Murphy asked Ms. Schwendemann if she would like the Commission to include an employer payment mandate, and Ms. Schwendemann responded that she would prefer not to put the county at risk.

Mr. Burek reviewed the staff memo and policy issues raised by the bill. He referred to a staff amendment that would redraft the bill as a service credit purchase at full actuarial value.

Representative Cassell testified in support of his bill and introduced Mr. Daniel Sandell, the person affected by the bill, who testified in support of the bill.

Mr. Burek reviewed the staff memo and policy issues raised by the bill, noting that the bill, as drafted, requires a mandatory employer payment but no interest. He discussed several potential amendments.

Senator Foley provided background information on the situation addressed by this bill. Ms. Sandra Lenarz, the person affected by the bill, testified in support of the bill and responded to questions from members.

Mr. Jim Grathwol, Minneapolis Public Schools, testified that this situation is a clear case of omitted contributions, and that they are willing to make the situation right.

Ms. Karen Kilberg, Executive Director, MTRFA, testified that they would rather not get into FICA issues.

Representative Murphy asked Senator Foley and Mr. Grathwol to get together to work out the issues and report back to the Commission.

Mr. Burek reviewed the staff memo and policy issues raised by the bill. He noted that the bill, as drafted, includes an employer payment mandate, and referred members to a staff technical amendment.

Senator Foley provided background information on the situation addressed by this bill. Mr. John Georgolopolos, the person affected by the bill, testified in support of the bill.

Representative Murphy moved amendment LCPR01-75. MOTION PREVAILED.

Mr. Gary Austin, Executive Director, TRA, provided testimony that the school district has acknowledged that they failed to report the leave to TRA.

Representative Murphy moved S.F. 438; H.F. 537, as amended, be forwarded to the full Legislative Commission on Pensions and Retirement. MOTION PREVAILED.

Mr. Burek reviewed the staff memo and policy issues raised by the bill, pointing out that this is a situation of accrued service credit and not a purchase of time.

Senator Stevens moved amendment LCPR01-56. MOTION PREVAILED.

Senator Belanger and Representative Seagren testified in support of the legislation and on behalf of their constituent, Pamela Trutnau.

Mr. Jim Grathwol, Minneapolis Public Schools, testified that this is more of an issue for MTRFA than for the school district.

Ms. Karen Kilberg, Executive Director, MTRFA, testified that her main concern is that MTRFA has never made an exception to their definition of "year of service" and that to do so would set a precedent she would rather avoid. She also said that MTRFA makes an effort to put the days together in such a way as to be most advantageous to the individual involved.

Mr. Burek reviewed the staff memo and policy issues raised by the bill, noting the mandated Department of Transportation payment.

Senator Debbie Johnson testified, noting that LCPR01-59 would require the following oral amendment: page 1, line 15, delete "children, families, and learning" and insert "economic security".

Mr. Alan Chapman, the person affected by the bill, testified in support of the bill.

Mr. David Bergstrom, Executive Director, MSRS, testified that in their 1968 manual the position is specifically excluded from coverage. He also said that MRS contacted the Department of Transportation and that they had no further information.

Senator Stevens moved delete-everything amendment LCPR01-59, amended on page 1, line 15, by deleting "children, families, and learning" and inserting "economic security". MOTION PREVAILED.

Mr. Burek reviewed the staff memo and policy issues raised by the bill, and noted that LCPR01-64 would be necessary to allow the individual to purchase service credit for the years after the initial year.

Senator Dille explained the situation behind the bill. Representative Ness informed members that this individual will be returning to teaching in the fall. Mr. Bruce Petterson, the person affected by the bill, testified in support of the bill.

Mr. Gary Austin, Executive Director, TRA, referred to his February 23, 2001, letter to Mr. Burek about the cost of the purchase, and he said that TRA does not oppose the bill.

Senator Stevens moved amendment LCPR01-64. MOTION PREVAILED.

Senator Stevens moved S.F. 435; H.F. 527, as amended, be forwarded to the full Legislative Commission on Pensions and Retirement. MOTION PREVAILED.

Mr. Burek reviewed the staff memo and policy issues raised by the bill, and the accompanying staff amendments.

Senator Rest and Representative Thompson testified in support of their bill, and Senator Rest indicated her support of LCPR01-67. Ms. Virginia Rootes testified in support of the bill.

Ms. Mary Vanek, Executive Director, PERA, testified that they looked at the earnings of these two individuals and although it appears that neither met the requirements for coverage PERA would need to review the detailed records for more information. She said that PERA is not opposed to the bill.

Mr. Brian Rice, General Counsel for the Minneapolis Park Board, testified that he agrees with Ms. Vanek and that he will work with PERA to correct the records. He testified in support of the LCPR01-67 amendment. He also said he would not oppose the inclusion of both individuals if they both qualify.

Mr. Burek reviewed the staff memo and policy issues raised by the bill.

Representative Boudreau explained her bill.

Senator Stevens moved amendment LCPR01-68, including the following oral amendment to the bill: page 1, line 18, delete "corrections" and insert "transportation". MOTION PREVAILED.

Mr. Mark Miller, the person affected by the bill, testified in support of the bill.

Mr. David Bergstrom, Executive Director, MSRS, responded to questions from Representative Murphy that he did not have specific numbers of other temporary seasonal workers, and that Revenue Department seasonal workers have in the past been given the opportunity to purchase service credit.

Mr. Burek reviewed the staff memo and policy issues raised by the bill.

Senator Cohen presented his bill, and said that he has talked with the City and that they have not expressed a concern with the legislation.

Mr. Leonard Levine, the person affected by the bill, testified in support of the bill.

Ms. Mary Vanek, Executive Director, PERA, testified that coverage for elected officials was optional at that time, and that there was nothing specific in Mr. Levine’s file indicating a choice.

Representative Murphy asked Senator Cohen to contact the City and obtain written confirmation of what might be an acceptable solution, and the City’s position regarding a mandated payment.

Mr. Burek noted that there is also the option for the affected parties to handle the situation outside of the involvement of the Commission.

Mr. Burek reviewed the staff memo and policy issues raised by the bill.

Representative Sykora testified in support of the bill, noting that the affected individual is currently employed by the Minnesota Department of Veterans Affairs.

Representative Murphy moved LCPR01-70, with a verbal amendment on page 1, line 21, to delete "transportation" and insert "veterans affairs". MOTION PREVAILED.

Mr. Clinton Bucher, the person affected by the bill, testified in support of the bill.

Mr. David Bergstrom, Executive Director, MSRS, testified that there are no teachers in MSRS and Mr. Gary Austin, Executive Director, TRA, testified that Mr. Bucher does not have any service in TRA.

Mr. Burek reviewed the staff memo and policy issues raised by the bill, and informed members that a similar bill, H.F. 1525, has also been introduced.

Representative Skoglund presented his bill. Ms. Judith Johnson, the person affected by the bill, testified in support of the bill and gave a history of her situation.

Mr. David Bergstrom, Executive Director, MSRS, raised the issue that MSRS-Unclassified members have the opportunity to switch to General Plan coverage after ten years of allowable service.

Ms. Mary Vanek, Executive Director, PERA, provided information about the policy issues, and that Ms. Johnson has four years of service that would not otherwise be covered.

Mr. Burek told members that there are a number of other bills related to this issue, including S.F. 1273; H.F. 1215 which is on this agenda, and that members may want to consider a generalized service credit option rather than dealing with several one person bills.

Mr. Burek reviewed the staff memo and policy issues raised by the bill.

Senator Pogemiller requested staff to draft an amendment for generalized university of Minnesota teaching service credit purchases.

Representative Jennings testified in support of his bill. Mr. Joe Pung, the person affected by the bill, testified in support of the bill.

Representative Murphy moved technical amendment LCPR01-79. MOTION PREVAILED.

Mr. Burek reviewed the staff memo and policy issues raised by the bill.

Representative Mares explained his bill and referred to a letter from the school district stating that the school district has agreed to pay the full amount of the purchase.

Ms. Ruth Lindbeck, the person affected by the bill, testified in support of the bill.

Mr. Gary Austin, Executive Director, TRA, said that both TRA and PERA are impacted and that the two plans will work together.

The meeting adjourned at 9:35 p.m.