Monday, March 26, 2001     5^th Meeting
Room 316 Capitol

LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT

Senator Dean Johnson, Chair of the Legislative Commission on Pensions and Retirement, called the meeting to order at 6:15 p.m.

Commission members present:

Representatives Philip Krinkie, Harry Mares, Mary Murphy, Steve Smith, and Stephen Wenzel
Senators Don Betzold, Dean Johnson, Lawrence Pogemiller, Dan Stevens, and Roy Terwilliger

Representative Entenza asked that the bill be laid over while he continues to work with the Department of Corrections to obtain additional information.

Senator Stumpf explained the bill.

Mr. Russ Stanton, representing the Inter-Faculty Organization and Minnesota State College Faculty, testified in support of the bill, noting that the bill was introduced at their request.

Representative Mares moved amendment A01-0370. MOTION PREVAILED.

Ms. Julie Blehyl, Legislative Director, AFSCME Council 6, testified in support of the bill and in support of MSRS administering the plan.

Mr. David Haugen, Assistant Commissioner for Employee Insurance, Minnesota Department of Employee Relations, testified that in his discussions with Mr. Stanton last fall, the bill at that time was drafted to create a central trust to serve all local units of government, not just the state. Mr. Haugen thought that was overly broad to their mission, so he suggested to Mr. Stanton that he contact MSRS.

Mr. Edward Burek, Deputy Director, Legislative Commission on Pensions and Retirement, reviewed the staff memo and policy issues raised by the bill.

Senator Betzold moved a verbal amendment on page 4, line 27, strike "$150,000" and insert $75,000". MOTION PREVAILED.

Mr. Terry Haltiner, Labor Relations Manager, City of St. Paul, testified to his concern that if anything is done for public employees that participation should be optional. He mentioned that the city of St. Paul is pursuing a similar plan for employees.

Mr. Hank Stankiewicz, Education Minnesota, testified in support of the bill.

Senator Pogemiller moved the following verbal amendment: page 1, line 13, delete "state" and insert "public"; page 1, line 26, delete "state"; page 2, line 8, delete "state" and insert "public"; and page 2, line 17, delete "state" and insert "public". MOTION PREVAILED.

Ms. Merrill King, Executive Budget Officer, Department of Finance, testified that the Department supports an administrative structure to establish such accounts, but only at no additional cost to the state. She testified that the Department does not have a position on who administers the accounts or on including local government employees in the plan.

Mr. David Bergstrom, Executive Director, MSRS, testified that MSRS is in favor of offering health care reimbursement accounts to employees and they are comfortable with the bill as it currently stands.

Representative Murphy asked Ms. King to comment on the potential FICA savings. Ms. King said that they recognize that there would be a potential FICA savings with the proposal, but the concern is that at some point the State would become liable through bargaining agreements for an additional liability they currently do not have. She indicated the Department’s preference for H.F. 2029, which has language that specifically prohibits the State from contributing to those accounts.

Mr. Stanton responded to Ms. King’s remarks.

Representative Mares moved S.F. 1322; H.F. 1294, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Senator Wiger presented his bill, noting that legislation has previously been passed by the Commission excluding pipefitters and other trades personnel.

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

Senator Pogemiller moved LCPR1-24.

Ms. Mary Vanek, Executive Director, PERA, expressed her concern about the piecemeal approach concerning trades personnel coverage, and that she would support the idea of "all in" or "all out."

Mr. Richard Felber, Business Manager for the Plasterers Union Local 265, and Mr. Doug Gale, Business Manager for the Plumbers Local 34 representing the MAC plumbers, both testified in support of the bill.

Mr. Terry Haltiner, Relations Manager, City of St. Paul Labor, testified in support of amendments LCPR01-25 and LCPR01-106. He testified in opposition to LCPR01-24, noting that at least one union (Local 132) did not want to be a part of the proposed legislation.

Senator Wiger expressed his preference for amendments LCPR01-25 and LCPR01-106.

Senator Pogemiller withdrew his motion on LCPR01-24.

Senator Pogemiller moved amendments LCPR01-25 and LCPR01-106. MOTION PREVAILED.

Senator Pogemiller moved S.F. 77, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Senator Betzold reviewed for Commission members the work of the Subcommittee, noting that some bills were forwarded with recommendation from the Subcommittee and others without recommendation.

Mr. Burek reviewed the provisions contained in the Subcommittee report, referring members to the section-by-section summary.

Representative Murphy asked if there would be a policy issue with regard to Section 7, the provision authorizing the purchase of four years of service credit in PERA for prior employment as an instructor at the University of Minnesota, because of the two different programs involved.

Ms. Mary Vanek, Executive Director, PERA, testified that the purchase is at full actuarial value so it does not present a funding problem, but she raised the concern that since it is for teaching service, it does not align with service that would typically be covered by PERA. Ms. Vanek said that she was not opposed to Ms. Johnson being able to purchase credit, but it would set a precedent for the future.

Mr. Burek commented on some of the policy issues discussed by the Subcommittee.

Senator Betzold moved the Subcommittee report for inclusion in the omnibus pension bill. MOTION PREVAILED.

Representative Rukavina explained his bill and recommended deleting the words "day activity center" on pages 1 and 2.

Mr. Martin reviewed the bill and Representative Rukavina’s verbal amendment.

Representative Murphy moved on page 1, line 16, delete "day activity center," and on page 2, line 3, delete "day activity center,". MOTION PREVAILED.

Mr. Gary Austin, Executive Director, TRA, testified that TRA believes development achievement center service would fall under the nonprofit community-based corporation provision passed last year, and that TRA is not opposed to this additional clarifying language.

Representative Murphy moved S.F. 1676; H.F. 1656, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Representative Cassell presented his bill. Police Chief Charles Nettestad, Alexandria Police Department, testified in support of the bill.

Senator Betzold said the Subcommittee was concerned that this could set a precedent, which is why the Subcommittee forwarded the bill to the Commission without recommendation.

Ms. Mary Vanek, Executive Director, PERA, testified that because the purchase is at full actuarial value it does not present a problem for the fund, but that she expects that there will be other individuals coming forward with similar requests. Ms. Vanek said it would be of benefit to the fund if a policy could be established setting purchases at full actuarial value for service of this nature that can be validated.

Representative Mares moved the Unofficial Subcommittee Engrossment of S.F. 313; H.F. 303 for inclusion in the omnibus pension bill. MOTION PREVAILED.

Representative Cassell presented the bill. Mr. Daniel Sandell explained his situation and testified in support of the bill.

Senator Betzold reviewed the concerns of the Subcommittee and that they felt it important to bring the legislation to the full Commission’s attention. The Subcommittee thought this might involve some further study by the Commission as there may be broader implications than to just this one individual.

Ms. Mary Vanek, Executive Director, PERA, testified that she agreed with the Subcommittee’s concerns. She gave a brief history of the situation and said that the money would come out of the fund.

Mr. Gary Austin, Executive Director, TRA, testified that the full actuarial value is $106,000.

Ms. Vanek testified that the policy in effect for the St. Paul Police Department under the Relief Association bylaws at that time was that no contributions were to be refunded and that the policy changed after the consolidation

Representative Mares moved that the bill be laid over. MOTION PREVAILED.

Senator Pogemiller presented the bill on behalf of Senator Cohen and reviewed the history behind the bill.

Ms. Mary Vanek, Executive Director, PERA, testified that PERA has a signed agreement from Mr. Levine dated April 1, 1975, and she noted that membership was at that time, and is now, optional.

Mr. Terry Haltiner, City of St. Paul Labor Relations Manager, testified to his conversations with Mr. Levine, and stated the City’s position that without any indication of error on its part, the City should not be required to pay.

Mr. Burek reviewed amendments LCPR01-149 and LCPR01-150.

Senator Pogemiller moved LCPR01-150. MOTION PREVAILED.

Senator Pogemiller moved S.F. 737, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Senator Betzold presented the bill.

Senator Pogemiller moved LCPR01-118. MOTION PREVAILED.

Senator Betzold moved S.F. 1694, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Representative Haas explained his bill.

Mr. Burek observed that there is considerable overlap and some conflict between this proposal and S.F. 1322; H.F 1294 that the Commission heard earlier. This proposal would have the Department of Employee Relations administer the plan and the S.F. 1322; H.F. 1294 would have MSRS administer the plan. This proposal is also limited to the various state employee groups but not other public employee groups who would wish to participate. It also contains language to prohibit the State from contributing to cover any of the administrative costs.

Ms. Kristin Dybdal, Department of Finance, reviewed for Representative Haas and the Commission the concerns of the Department as previously stated by Ms. King during testimony on S.F. 1322; H.F. 1294.

Mr. David Haugen, Assistant Commissioner for Employee Insurance, Department of Employee Relations, testified that they are seeking legislative clarification that they have the legislative authority to administer these retiree savings accounts. They have discussed with MSRS the possibility that there could be an arrangement by which MSRS could work with DOER to help them administer the accounts.

Senator Johnson observed that there are several bills intended to establish some form of health care account, and he asked the authors of the following bills to get together to coordinate the various proposals:

S.F. ____ ( ); H.F. 2029 (Haas)
S.F. 641 (Pogemiller); H.F. 695 (Osskopp)
S.F. 1322 (Stumpf); H.F. 1294 (Mares)
S.F. 1484 (Pogemiller); S.F. 1768 (Mullery)

Representative Krinkie mentioned that a budget-neutral proposition would probably have a better chance of surviving in the House.

Senator Johnson said that since S.F. 1322 (Stumpf); H.F. 1294 (Mares) has already been adopted by the Commission, it will remain in the omnibus pension bill as a placeholder.

Senator Pogemiller suggested that all of the bills dealing with PERA-Correctional plan coverage be studied over the Interim, but that those persons present wanting to testify on the bills should have the opportunity to do so.

Mr. Bob Johnson, representing Teamsters Local 320, and acting as spokesperson for Brian Bergson (MAPE) and Julie Blehyl (AFSCME), testified in support of the bills.

Ms. Mary Jo Balzart, 911 telecommunication dispatcher with the Hennepin County Sheriff’s Office, testified in support of S.F. 1038; H.F. 999.

Mr. Patrick Guernsey, President, AFSCME Local 552, testified in support of S.F. 1038; H.F. 999 on behalf of Hennepin County probation and parole officers.

Ms. Cathy Anderson, 911 dispatcher with the Hennepin County Sheriff’s Department, testified in support of S.F. 1038; H.F. 999.

Senator Pogemiller moved amendment LCPR01-145 to S.F. 1038; H.F. 999. MOTION PREVAILED.

Senator Pogemiller moved amendment LCPR01-144 to S.F. 1605; H.F. 2112. MOTION PREVAILED.

Senator Pogemiller moved S.F. 1038; H.F. 999, as amended, and S.F. 1605; H.F. 2112, as amended, be laid over for Interim Study. MOTION PREVAILED.

Senator Pogemiller moved delete-everything amendment LCPR01-147. MOTION PREVAILED.

Senator Pogemiller reviewed some of the current issues concerning the Minneapolis Police Relief Association and testified in support of the bill.

Lt. Mark Ellenberg, Minneapolis police officer with the 5^th Precinct and MPRA elected board member representing active officers, Mr. Robert Collins, retired officer with 33 years of service, Mr. Ben Soule, retired officer with 27 years of service, Mr. Jim Robertson, retired officer, and Sergeant Michael J. Ganley, a 30-year veteran of the Minneapolis Police Department who was on the MPRA Board for approximately 15 years, all testified in opposition to the bill.

Senator Pogemiller moved S.F. 1696; H.F. 1793, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Representative Skoglund presented his bill.

Representative Mares moved S.F. 517; H.F. 122 for inclusion in the omnibus pension bill. MOTION PREVAILED.

Representative Skoglund reviewed his bill and provided additional handout materials.

Representative Erhardt testified in support of the bill.

Mr. Martin reviewed LCPR01-128, LCPR01-138, LCPR01-139, LCPR01-140 and LCPR01-141.

Representative Skoglund expressed his preference for LCPR01-139 and LCPR01-140.

Representative Mares moved LCPR01-139. MOTION PREVAILED.

Representative Mares moved LCPR01-140. MOTION PREVAILED.

Mr. Mark Shepard, House Research, testified that because the Minnesota Constitution requires that an increase in compensation for legislators can’t take effect until after the next election of House members, he has generally advised the Commission that an increase in pension benefits would constitute an increase in compensation that should be delayed until after the next election. He stated that he has not studied this bill thoroughly enough to know whether or not it would be considered to be an increase in pension benefits.

Senator Johnson suggested that the bill be laid over until the next meeting to allow time for members to consider the bill and to consult with colleagues.

Representative Mares moved LCPR01-141.

Representative Skoglund asked that the amendment be laid over to let Counsel look at it more closely.

Representative Mares withdrew his motion on LCPR01-141.

Mr. David Bergstrom, Executive Director, MSRS, responded to a question from Senator Stevens that there were approximately 17-19 legislators who switched at the time of the previous referendum.

The bill was laid over.

Senator Betzold reviewed the possible federal law conflict that this bill is intended to address.

Mr. Gary Austin, Executive Director, TRA, testified that the Minnesota Attorney General has indicated a conflict with federal law.

Senator Betzold moved S.F. 611; H.F. 1240 be laid over for Interim Study. MOTION PREVAILED.

Senator Pogemiller presented his bill and introduced Mr. Todd Pufahl, City Employee Business Manger, Local 363, who explained proposed legislation and testified in support of the bill.

Mr. Martin reviewed amendments LCPR01-143 and LCPR01-146.

Senator Pogemiller moved LCPR01-146, inserting "$2,000" into the blank on line 8. MOTION PREVAILED.

Senator Pogemiller moved S.F. 1665; H.F. 1772, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Senator Pogemiller told members that the bill went through the Service Credit Purchase Subcommittee, and that the Subcommittee adopted several amendments.

Mr. Martin referred members to LCPR01-136, the Unofficial Subcommittee Engrossment.

Mr. Russ Stanton, representing the Inter-Faculty Organization, testified in support of the bill. He explained that, due to an oversight, amendments LCPR01-52 and LCPR01-48 were not heard by the Subcommittee.

Senator Pogemiller moved LCPR01-136. MOTION PREVAILED.

Senator Pogemiller moved LCPR01-52. MOTION PREVAILED.

Senator Pogemiller moved LCPR01-48. MOTION PREVAILED.

Senator Betzold pointed out that the Subcommittee did not review the entire bill since there were provisions not related to buybacks.

Mr. Martin reviewed the policy issues raised by the bill and explained LCPR01-38.

Senator Pogemiller moved LCPR01-38. MOTION PREVAILED.

Mr. Stanton testified that one of the problems for their members in repaying a refund is that they don’t generally have access to that much cash and that this bill provides a more convenient way in which they can repay a refund. He also provided a brief history of the IRAP accounts and testified in support of allowing individuals to transfer funds out of their IRAP accounts.

Senator Pogemiller moved the unofficial engrossment of S.F. 1321, H.F. 1462, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Mr. Russ Stanton, Inter-Faculty Organization, testified in support of the bill.

Mr. Gary Janikowski, Assistant Director for Personnel, MnSCU, testified in support of the bill, saying that they polled the employees in MnSCU and the results of that survey indicate that the employees are not interested in adding additional insurance vendors.

Senator Pogemiller moved S.F. 1736; H.F. 1415 for inclusion in the omnibus pension bill.

Representative Mares suggested the bill be laid over. Senator Pogemiller withdrew his motion and the bill was laid over.

Senator Pogemiller reviewed the bill.

Mr. Russ Stanton, Inter-Faculty Organization, testified in support of the bill and provided handouts.

Mr. Martin reviewed amendment LCPR01-127.

Senator Pogemiller moved LCPR01-127. MOTION PREVAILED.

Senator Pogemiller moved S.F. 1362; H.F. 1646, as amended, for inclusion in the omnibus pension bill. MOTION PREVAILED.

Senator Betzold moved adoption of the proposed draft Commission budget. MOTION PREVAILED.

The meeting adjourned at 10:12 p.m.