LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT

Representative Steve Smith, Chair of the Legislative Commission on Pensions and Retirement, called the meeting to order at 5:23 p.m.

Representatives Sondra Erickson, Philip Krinkie, Eric Lipman, Mary Murphy, and Steve Smith

Senators Don Betzold, Keith Langseth, Cal Larson, and Geoff Michel

Commission Member Absent: Senator Lawrence Pogemiller

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

Sen. Larson offered amendment LCPR03-114, inserting "45" in line 7. MOTION PREVAILED.

Sen. Larson and Rep. Beard reviewed and testified in support of the bill.

Mr. Lawrence A. Jacobson, a retired Mountain Iron-Buhl High School teacher, testified in support of the bill and provided a handout of his testimony.

The following individuals testified in support of the bill and provided a handout of their testimony:
Mr. Thomas H. Selwold, a teacher in the Bloomington School District;
Mr. Rick Winters, a retired Roseville School District teacher; and
Mr. Robert F. Geyen, a member of the Pre-69 Teachers.

Mr. Joseph O’Neill, attorney representing the Pre-69 Teachers, testified in support of the bill and provided historical information and background.

Mr. Gary Austin, Executive Director, TRA, testified that TRA’s actuary, Buck Consultants, looked at a projection of what TRA’s funding level would be as of July 1, 2003, 2004, and 2005. They are currently using a 5-year smoothing method for determining the actuarial value of assets, and so are not recognizing the impact of the significant losses of the past two years. The actuary determined that if, optimistically, TRA was able to bring their investments up to zero for this year, instead of having an $875 million sufficiency, TRA will have a $420 million deficiency and contributions will be slightly deficient. Mr. Austin also referred members to an April 7, 2003, letter providing cost figures for the amended bill. Mr. Austin said that the TRA Board would oppose any increases that are not funded out of separate funds and that are targeted to a specific group, as would be the case in the proposed legislation. Mr. Austin also provided some history on the Variable Annuity option.

The bill, as amended, was laid over.

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

Rep. Johnson presented and testified in favor of his bill. Rep. Johnson said that he had spoken with the Mayor of Plymouth, the Plymouth city attorney, the fire chief, and the head of the Plymouth Volunteer Relief Association and that they are all in support of the bill.

Rep. Smith asked Rep. Johnson to contact that those city officials and have them submit a letter outlining their support.

The bill was laid over.

Mr. Martin reviewed the staff memo and policy issues raised by the bill, and discussed technical amendment LCPR03-115.

Mr. Brian Rice, General Counsel, Minneapolis Firefighters Relief Association (MFRA), testified in opposition to the bill.

Mr. Bob Wetherall, retired from the Minneapolis Fire Department, testified in opposition to the bill and provided historical information regarding the 1969 formula change.

Rep. Strachan reviewed and testified in favor of the bill.

The bill and the amendment were laid over.

Mr. Burek reviewed the staff memo and policy issues raised by the bill, and discussed potential amendments LCPR03-036, LCPR03-037, and LCPR03-038. Mr. Burek said that the issue addressed by the bill came to the forefront as a result of correspondence between White Bear Lake and the State Auditor that indicated White Bear Lake’s benefit levels exceeded the amount that could be paid given the flexible service pension maximum in law, pointing out the error in existing law.

Sen. Larson moved LCPR03-036. MOTION PREVAILED.

Ms. Judith Strobel, Pension Director, Office of the State Auditor, testified that amendment LCPR03-038 would permit White Bear Lake to continue to have the benefit structure that it currently has.

Sen. Larson moved LCPR03-038. MOTION PREVAILED.

The bill, as amended, was laid over.

Sen. Johnson reviewed and provided the history behind the bill.

Mr. Nyle Zikmund, representing the Minnesota State Fire Chiefs Association and the Minnesota Area Relief Association Coalition (MARAC), reviewed the activity occurring over the past year on this subject.

Sen. Larson moved amendment H489A1. MOTION PREVAILED.

The bill, as amended, was laid over.

Mr. Martin reviewed the staff memo and policy issues raised by the bill, and discussed technical amendment LCPR03-113.

Rep. Murphy moved LCPR03-113. MOTION PREVAILED.

Rep. Mullery presented and testified in support of the bill.

Mr. Tim Urista, Plumbers and Pipefitters Local #15, testified in support of the bill.

Rep. Krinkie noted that the bill, as drafted, would apply to any local plumber and pipefitter fund in the state, not just in Minneapolis. Mr. Martin suggested that an amendment to to indicate a particular local pension plan would be appropriate if the Commission desired to limit the intent of the bill.

The bill, as amended, was laid over.

Sen. Belanger presented and testified in favor of the bill.

Mr. Burek informed members that when the memo was written staff was under the impression that the bill was drafted for a single individual, but TRA has indicated that the bill is actually intended to apply to a class of individuals. Mr. Burek reviewed amendments LCPR03-139 and LCPR03-140.

Mr. Gary Austin, Executive Director, TRA, testified that TRA has no opposition to LCPR03-140.

Sen. Larson moved amendments LCPR03-139 and LCPR03-140. Mr. Burek noted that LCPR03-139 would not be needed if LCPR03-140 were used. Sen. Larson amended his motion to move LCPR03-140.

Mr. Austin expressed a concern that the bill does include an open class of individuals and perhaps should be amended to only include the five people currently identified.

Sen. Belanger read and distributed a fax he received from Ms. Sue Grisson, Director of Human Resources, ISD No. 191, Burnsville, indicating that the school district is aware of the cost and the school board members agree that the district should purchase the service credit for teachers minus the employee’s cost plus interest.

Ms. Ginger (Virginia) Olson, one of the teachers affected by the bill, testified in support of the bill.

Sen. Larson renewed his motion on LCPR03-140. MOTION PREVAILED.

The bill, as amended, was laid over.

Mr. Martin reviewed the staff memo and policy issues raised by the bill, and discussed potential amendments LCPR03-111 and LCPR03-112.

Rep. Gerlach indicated his support for amendment LCPR03-111.

Sen. Larson moved LCPR03-111. MOTION PREVAILED.

Mr. David Bergstrom, Executive Director, MSRS, testified concerning affected individual’s situation.

The bill, as amended, was laid over.

Sen. Michel distributed a memo and draft language concerning an issue affecting the former Metropolitan Airports Commission Public Safety Director who was also a St. Louis Park police officer.

Mr. Martin reviewed the staff memo and policy issues raised by the proposed draft language.

Mr. Jim Welna, the person affected by the draft language, testified in support of the provision and responded to members’ questions. Mr. Welna stated that he appeared before the PERA board and that the board passed a motion stating no objection, provided Mr. Welna paid all costs.

The issue was laid over.

Mr. Martin reviewed the staff memo and policy issues raised by the bill, and discussed potential amendments LCPR03-123 and LCPR03-124.

Rep. Seifert presented his bill, and stated that he would be comfortable with amendment LCPR03-123.

Sen. Larson moved LCPR03-123. MOTION PREVAILED.

The bill, as amended, was laid over.

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

Rep. Ozment presented and testified in favor of the bill.

Mr. Morgan Fleming, on behalf of the Middle Management Association, testified in favor of the bill, noting that the provision has the support of the employee groups.

Mr. Garrett Denault, Director, Middle Management Association, testified in support of the bill.

Mr. Lee Mehrkens, Finance Department Budget Officer, testified as to the position of the administration. Mr. Mehrkens said that the reaction of the administration earlier in the year, as represented in a letter from the Commissioners of Finance and Employee Relations, was negative. Mr. Mehrkens also referred to the Legislative Auditor’s Report on previous early retirement incentives.

Sen. Larson requested comments from the Commissioners of Finance and Employee Relations regarding this bill.

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

In response to a question from Rep. Murphy, Mr. Denault said that the $15,000 represents the cost to the state to lay off an employee, the cost for unemployment insurance for a six-month period and the cost the state pays for health insurance.

The bill was laid over.

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

Sen. Larson requested comments from the Commissioners of Finance and Employee Relations regarding this bill.

Mr. Russ Stanton, Director of Government Relations, Inter-Faculty Organization, testified in support of the bill and handed out a letter from MnSCU supporting the bill, and amendment A03-0425 proposing a reporting requirement and a sunset.

Sen. Langseth moved amendment A03-0425. MOTION PREVAILED.

Mr. Rick Nelson, representing the two-year college faculty, testified in support of the bill.

The bill, as amended, was laid over.

Rep. Lipman offered amendment LCPR03-121, which would give MSRS and the State Board of Investment greater flexibility to invest in daily-valued funds.

Mr. David Bergstrom, Executive Director, MSRS, testified in support of the amendment.

The amendment was laid over.

The meeting adjourned at 8:50 p.m.