LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT

Representative Steve Smith, Chair of the Legislative Commission on Pensions and Retirement, called the meeting to order at 7:05 a.m.

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

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

Mr. Bill Tschida, Vice Chancellor of Human Resources, Minnesota State Colleges and Universities System (MnSCU), testified that MnSCU generally supports the use of early retirement incentives over the use of layoffs whenever possible. They are primarily supportive of the legislation they have introduced concerning a specific early retirement incentive program rather than the more general program that would apply to executive and legislative branches.

Mr. Cal Ludeman, Commissioner of Employee Relations, testified that, on the instruction of the administration, they put together a working task force to examine a considerable number of early retirement incentives. Generally, the task force concluded that the bigger and the broader the early retirement incentives are the more trouble they make for state government, and that fine-tuned, specific agency-related incentives that deal with an agency-specific problem are more manageable. Commissioner Ludeman reminded members that the Office of the Legislative Auditor reported that the effect of the 1993 early retirement incentives actually cost the agencies or state government an average of $28,000 to $35,000.

Mr. Dan McElroy, Commissioner of Finance, testified that he agrees with Commissioner Ludeman. Commissioner McElroy said the administration is making an effort to think as longterm as possible, and that he hopes the outcome is a longterm strategy as to the relationship between state employees and our retirement system over the next 20-30 years. Commissioner McElroy said that barrier removal in terms of making the medical savings account plan administered by MSRS as available to people as possible and providing the opportunity of phased retirement should be part of our longterm strategy.

Mr. Lawrence Martin, Executive Director, Legislative Commission on Pensions and Retirement, reviewed the staff memo and policy issues raised by the bill. Mr. Martin noted that the House Higher Education Finance Committee processed the bill. The bill was then rereferred to the House Governmental Operations Committee, and that Committee forwarded amendment A03-0414 to the Commission for consideration.

Sen. Betzold moved H.F. 780/S.F. 664 for consideration and possible inclusion in the omnibus pension bill.

Sen. Tomassoni presented and testified in support of the bill.

Mr. Harley Ogata, General Counsel, Education Minnesota, testified in support of the bill and said that it reflects an agreement between the Minnesota School Boards Association and Education Minnesota.

Sen. Betzold moved amendment A03-0414. MOTION PREVAILED.

Sen. Betzold renewed his motion that H.F. 780/S.F. 664, as amended, be laid over for consideration and possible inclusion in the omnibus pension bill. MOTION PREVAILED.

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

Rep. Krinkie moved H.F. 1386/S.F. 1361 be laid over for interim study.

Ms. Mary Vanek, Executive Director, PERA, testified that current law allows individuals who take an unpaid leave of absence to purchase credit for that period, but for only a one-year period and the individual has to return to work and be reemployed for at least three months to then take another unpaid leave of absence. The employee must pay both the employee and employer contributions plus interest to gain that credit.

Rep. Krinkie renewed his motion to lay over H.F. 1386/S.F. 1361 for interim study. MOTION FAILED.

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

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

Mr. Gary Austin, Executive Director, TRA, testified that TRA used some of the numbers from the study conducted by the Finance Department in 1986 of the previous Rule of 85 to calculate a cost estimate for the bill. Mr. Austin said that any future early retirement incentives need to be targeted and they should be paid for by the employers and not by the pension fund.

Rep. Murphy asked Rep. Wasiluk why the provision applied only to TRA members and did not include Minneapolis, St. Paul, and Duluth teachers. Rep. Wasiluk responded that he brought the bill forward at the request of his constituents, but that he would be open to including those groups.

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

Rep. Erickson moved H.F. 1474/S.F. 1420 for interim study.

Mr. Martin reviewed amendment LCPR03-155, which would include MnSCU in the Section 356B administrative bill submission requirements.

Rep. Erickson amended her motion to move H.F. 1474/S.F. 1420 and amendment LCPR03-155 for consideration and possible inclusion in the omnibus pension bill. MOTION PREVAILED.

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

Sen. Pogemiller moved amendments LCPR03-159, LCPR03-160, LCPR03-161, and LCPR03-162. MOTION PREVAILED.

Sen. Pogemiller moved H.F. 1466/S.F. 1304, as amended, for consideration and possible inclusion in the omnibus pension bill. MOTION PREVAILED.

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

Mr. David Johnson, attorney representing St. Paul Firefighters Local 21, provided background information on the situation and testified in support of the bill. Ms. Ann Walfoort, the individual affected by the bill, was also present.

Ms. Mary Vanek, Executive Director, PERA, testified that the required reserves for prospective benefits would come to approximately $454,000; retroactive benefits would add an additional $86,000.

Sen. Larson moved amendment LCPR03-154. MOTION PREVAILED.

Sen. Larson moved H.F. 1507/S.F. 1426, as amended, for consideration and possible inclusion in the omnibus pension bill. MOTION PREVAILED.

Sen. Larson distributed two handouts related to this issue.

Sen. Larson moved LCPR03-143, Article 5, be studied during the interim. MOTION PREVAILED.

Rep. Smith call a recess at 9:25 a.m.

Rep. Smith called the meeting back to order at 6:25 p.m. Because a quorum was not present at the time, Rep. Smith announced that the meeting would proceed on a Subcommittee basis.

Rep. Erickson moved that when a quorum is present Article 1 be recommended to pass and be included in the omnibus pension bill. MOTION PREVAILED.

Mr. Martin reviewed Article 2.

Mr. Robert Johnson, representing the Professional Firefighters Association, testified in opposition to the provision.

Rep. Krinkie moved that when a quorum is present Article 2 be recommended to pass and be included in the omnibus pension bill. MOTION FAILED.

A quorum was present at 6:47 p.m.

Sen. Pogemiller moved Article 3, Item 1 be recommended to pass and be included in the omnibus pension bill. MOTION FAILED.

Rep. Lipman moved Article 3, Item 1 be laid over for interim study. MOTION PREVAILED.

Sen. Betzold moved H.F. 780/S.F. 664 be recommended to pass and be included in the omnibus pension bill. MOTION PREVAILED.

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

Rep. Erickson moved Article 1 be recommended to pass and be included in the omnibus pension bill. MOTION PREVAILED.

Rep. Krinkie moved Article 2 be recommended to pass and be included in the omnibus pension bill. MOTION FAILED.

Sen. Pogemiller said that he would work with Rep. Ozment and the administration regarding this issue.

Sen. Pogemiller moved H.F. 1386/S.F. 1361.

Rep. Krinkie moved amendments LCPR03-144, LCPR03-145, LCPR03-146, LCPR03-147, LCPR03-148, LCPR03-149, LCPR03-150, and LCPR03-151.

Mr. Keith Carlson, Metropolitan Inter-County Association, testified in opposition to amendments LCPR03-146 and LCPR03-147.

Ms. Laura Cushner, League of Minnesota Cities, testified in opposition to amendments LCPR03-146 and LCPR03-147.

Sen. Betzold moved to amend Rep. Krinkie’s motion so as not to include amendments LCPR03-146 and LCPR03-147. MOTION PREVAILED.

Rep. Krinkie renewed his motion, as amended. MOTION PREVAILED.

Sen. Pogemiller moved amendment LCPR03-146, amended so as not to apply to Section 1. MOTION FAILED.

Ms. Mary Vanek, Executive Director, PERA, testified that the PERA Board asked her to work with the counties to draft language that would not harm the fund, and that PERA supports the legislation.

Sen. Pogemiller moved H.F. 1386/S.F. 1361, as amended, be recommended to pass and be included in the omnibus pension bill. MOTION PREVAILED.

There was no action on H.F. 1433/S.F. 1323.

Sen. Pogemiller moved Article 4, Items 1, 2, and 3, be recommended to pass and be included in the omnibus pension bill.

Sen. Pogemiller amended his motion and moved Article 4, Item 2, be recommended to pass and be included in the omnibus pension bill. MOTION PREVAILED.

Sen. Pogemiller moved Article 4, Item 3, be recommended to pass and be included in the omnibus pension bill. Sen. Pogemiller withdrew his motion.

Sen. Pogemiller moved Article 4, Item 1, be recommended to pass and be included in the omnibus pension bill.

Kathryn S. Hahne, Faegre & Benson, testified that there are four operating port authorities in Minnesota, and that two are staffed with city employees.

Rep. Lipman moved Article 4, Item 1, for interim study. MOTION FAILED.

Chair Smith called a recess at 7:30 p.m.

Chair Smith called the meeting back to order at 8:30 p.m.

The meeting adjourned at 8:30 p.m.