Summary

LCPR02-028 would remove service credit proration added to Public Employees Retirement Association (PERA) law by provisions contained in Laws 2001, Chapter 10, Article 11, as part of an article of remedial provisions to address PERA-General funding issues. The prorating provisions would create prorated service credit rather than full service credit for public employees covered by PERA plans first hired on or after January 1, 2002, or who are rehired after than date, and who are employed less than half time (less than 80 hours per month). LCPR02-028 removes these prorating provisions by revising or repealing all or part of Minnesota Statutes 2001 Supplement, Sections 353.01, subdivisions 16 and 39, and 353.27, Subdivisions 4 and 11. These revisions are effective retroactive to January 1, 2002, the date on which these prorating provisions became effective.

Background

LCPR02-028 permits the Legislative Commission on Pensions and Retirement (LCPR) to reconsider the PERA service credit proration question. Senator Pogemiller has expressed interest in revisiting this issue. During the last regular and special session there was considerable discussion regarding whether to include prorated service credit in the PERA legislation, whether it would apply to all employees or just new hires, and when proration would be effective if it were included in the legislation. Proration did appear in the enacted legislation, but there remains confusion regarding whether that was intended or whether its inclusion is due to error. In any event, whether intended or not, the Legislature certainly has authority to reconsider the issues.

At the end of the 2001 Regular Session, both the Senate (S.F. No. 451) (S0451-3, Article 14, Section 12) and the House (House Amendments to S.F. No. 2360 (UES2360-1, Article 11, Section 12) included the proration of service credit for PERA, but differed on the effective date for the proration (the Senate provision was effective July 1, 2001 and the House provision was effective January 1, 2002). PERA had requested a July 1, 2002, effective date for the service credit proration.

All the public pension provisions were rolled into a state department appropriations bill, and LCPR staff had limited involvement with the activities of the conference committee for that bill. The Conference Committee was primarily staffed by House and Senate Committee staff. The Commission staff has primary conference committee staffing responsibilities only when the conference topic is limited to pension legislation and Commission members comprise the conference committee.

Although it is our understanding that the Conference Committee began with an LCPR document (LCPR01-214) which did not include PERA proration as its foundation document for the PERA pension portion of the working draft of the Conference Committee report, PERA service credit proration language eventually ended up in the final enactment. The Commission staff does not have any clear information about when this occurred or why this occurred.