LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT

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

Representatives Ann Lenczewski, Harry Mares, Mary Murphy, and Steve Smith
Senators Don Betzold, Dean Johnson, Lawrence Pogemiller, and Dan Stevens

Representative Philip Krinkie
Senator Roy Terwilliger

Sen. Betzold moved approval of the minutes for the January 22, 2002, Commission meeting.
MOTION PREVAILED.

Mr. Lawrence Martin, Executive Director, Legislative Commission on Pensions and Retirement, reviewed the issue and the work done to date by the Commission. He referred members to pages 19 and 23 of the staff memorandum for alternative solutions.

Mr. J. Michael Stoffel, Executive Secretary, DTRFA, testified on behalf of the directors of the first class city teacher funds, TRA, and PERA. He said that the administrators of those funds met to discuss the issue, and he provided a two-page handout of their recommendations.

Mr. Steve Dess, Executive Director, Minnesota Association of Charter Schools, and Ms. Dee Thomas, Minnesota New Country School and President, Minnesota Association of Charter Schools, testified that they met with Ms. Jessie Montano, Assistant Commissioner, Department of Children, Families and Learning (CFL), and that they reached an agreement on a number of items. Mr. Dess indicated that CFL will be preparing a draft reflecting their discussion. He said that it is important that PERA have the same ability as TRA to aggressively follow-up on any unpaid allocations in a timely manner.

Ms. Rose Hermodson, Department of Children, Families and Learning, responded to comments by Mr. Stoffel that CFL have more oversight and control over the functions of charter schools. She said that charter schools are chartered as nonprofits or cooperatives and there are laws that impact their operations as such. Ms. Hermodson is therefore not sure how much authority or control CFL can have under those circumstances.

Mr. Martin reviewed amendments LCPR01-227 and LCPR01-241.

Ms. Mary Vanek, Executive Director, PERA, testified that the $190,000 figure is a very rough estimate based on information received by PERA from St. Paul Schools. Ms. Vanek said that PERA has nothing to verify those amounts, they have had no members who were employed by the Right Step Academy come forward to ask PERA to pursue, so they do not know how valid those numbers are. She said that Mr. Dess might know if there has been an audit.

Mr. Dess testified that there has not been an audit done for the Right Step Academy, that the record keeping was poor, and that the amount could vary drastically from the estimate.

Mr. Stoffel testified that the discussion among the fund directors was that the member eligibility requirements would remain the same. He noted that the number of charter school members represents about 7% of DTRFA’s total membership.

Mr. Eugene Waschbusch, Secretary/Treasurer, StPTRFA, testified that if charter school teachers are all to be covered by TRA, that the amendment be effective July 1 (the end of the fiscal year) rather than the day following final enactment.

Senator Pogemiller moved amendment LCPR01-227 and amendment LCPR01-241, verbally amended to include appropriate language designating that the funds would come from lease aid. MOTION PREVAILED.

Mr. Martin reviewed the staff memo and policy issues raised by the bill, and discussed potential amendments.

Dr. Charles Kyte, Executive Director, Minnesota Association of School Administrators, testified in support of the bill, noting that this is a top priority in the pension area for the Association. Dr. Kyte said that they are in support of an amendment to better define the accrued benefits, but would be opposed to a $2,000 per year limit.

Mr. Mark Reese, Precision Retirement Group, Inc., testified in support of the bill and suggested wording changes as prepared by Briggs and Morgan. Mr. Reese provided a handout with the recommended language.

Dr. Kyte clarified that they are opposed to LCPR02-024 because benefits are often not accrued on a year-to-year basis, and it may be difficult to determine a specific year for a particular benefit.

Sen. Pogemiller moved LCPR02-026. MOTION PREVAILED.

Ms. Sandra Neren, representing the American Financial Group, testified regarding amendment LCPR02-025.

Sen. Pogemiller moved LCPR02-025, incorporating the following verbal amendment: strike "benefits" and insert "pay". There was no action on the motion.

Sen. Betzold recommended the following: on page 3, line 21, strike "to".

The bill was laid over.

Mr. Edward Burek, Deputy Director, Legislative Commission on Pensions and Retirement, reviewed the staff memo and the history behind this issue.

Ms. Mary Vanek, Executive Director, PERA, gave members background information and testified that if the Commission considers the repeal that it also consider reinstating the pre-2001 membership eligibility rules. She noted that they have already implemented the prorated service credit and are spending a lot money on programming, information materials, and modifying systems that would no longer be necessary if it is repealed.

Mr. Keith Carlson, Metropolitan Inter-County Association, said that his comments also represent the concerns of the League of Minnesota Cities and the Minnesota School Boards Association on this issue. Mr. Carlson testified that they believe what was passed in 2001 was the correct and appropriate policy and he provided and reviewed a handout on the issue.

Sen. Pogemiller moved LCPR02-028. MOTION PREVAILED.

Sen. Pogemiller moved LCPR02-034 to be included in the omnibus pension bill. MOTION PREVAILED.

Sen. Pogemiller summarized his bill and noted an urgency due to a liability potential; for that reason this bill would move forward as a freestanding bill and not as part of the omnibus pension bill.

Sen. Pogemiller moved LCPR02-032. MOTION PREVAILED.

Sen. Pogemiller moved S.F. 2531, H.F. 2695, as amended. MOTION PREVAILED.

Ms. Karen Kilberg, Executive Director, MTRFA, testified that MTRFA has reached a very critical time for the fund – they have now reached the point where they no longer have enough money to transfer the present value of a retiree’s future annuity to the retiree side. Ms. Kilberg said that the board of trustees is very concerned about the situation and the board has hired Milliman USA to do a projection valuation study. They hope to have the results from that study in the next few weeks and will share that information with the Commission.

Ms. Jan Alswager, Education Minnesota, testified in support of the Rule of 90 extension, and provided a handout showing Minnesota’s ranking in a comparison of teacher benefits across states. Ms. Alswager said that the document provides additional information in response to questions from Senator Stevens at a previous Commission meeting.

Ms. Julie Blaha, a seventh and eighth grade math and business computers teacher at Jackson Middle School in Champlin, testified in support of the Rule of 90 extension.

Mr. Travis Cross, an Edina High School band teacher, testified in support of the Rule of 90 extension.

Mr. Tom Mathieu, a St. Paul resident and elementary teacher in Eden Prairie, testified that he is eligible for the Rule of 90, but that he believes it is right and fair to fund this benefit for all teachers.

The meeting adjourned at 8:20 p.m.