Amendment LCPR02-062 permits an eligible person, defined based on specific criteria to be limited to Esther Fieldman, to receive a grant of two years of service credit from the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) for her 1961-1963 legislative service, to receive a grant of 5.48 years of service credit from the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General) for the uncredited portion of her 16 years as an employee of Itasca State Park, and to apply for a PERA-General retirement annuity and a recomputed MSRS-General retirement annuity under the Combined Service Annuity portability provision, despite the 21-year period that has elapsed since her initial retirement. Payment of the actuarial liability for the two additional retirement annuity amounts would be the responsibility of the Minnesota House of Representatives and of the Minnesota Department of Natural Resources.

Ms. Esther Fieldman is a resident of Park Rapids, Minnesota, a former legislator (1961-1963), and a retired member (1980) of the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General), based on 10.53 years of service credit earned while she was an employee (a combination of full time and seasonal) of the Department of Natural Resources (DNR) at Itasca State Park (1964-1980).

Ms. Fieldman is currently receiving a retirement annuity from MSRS-General of $291 per month, even after several years of post-retirement adjustments, and she believes that her pension is too small for her 16 years as a State employee at Itasca State Park and two years as a State legislator and does not cover her current prescription costs.

Ms. Fieldman’s retirement annuity is as modest as it is because she had no coverage for service as a State legislator and because she received only partial years of service credit from MSRS-General during her employment at Itasca State Park, with much of that 16-year period spent as a seasonal employee (apparently typically May to October each year). Before the creation of the Legislators Retirement Plan in 1965, retirement coverage for members of the Legislature was by the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) and, as with other elected officials, PERA-General membership was optional. Although Ms. Fieldman indicates that she would not have opted out of pension coverage if it had been available, she either declined the PERA-General coverage, failed to undertake the affirmative steps to gain PERA-General coverage, or was not informed of the opportunity to have PERA-General coverage by officials of the House of Representatives or by PERA. Ms. Fieldman also indicates that other seasonal employees at Itasca State Park received full year MSRS-General service credit for their partial year employment, while she did not.

Amendment LCPR02-062 provides Esther Fieldman of Park Rapids, Minnesota, a former legislator (1961-1963) and a former DNR employee (1964-1980), with an additional retirement annuity from the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) and with an additional retirement annuity from the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General) for periods for which she lacked public retirement coverage or for which she received less than full years of service credit.

The amendment raises several pension and related public policy issues, as follows:

1. Equitable Considerations in Ms. Fieldman’s Situation. The policy issue is whether or not there are equitable considerations that favor Ms. Fieldman and argue persuasively for the enactment of special legislation to benefit her. Ms. Fieldman suggests that her exclusion from PERA-General coverage for her two years of legislative service was not voluntary and represents a failure either by the Legislature or by PERA to properly notify her of her retirement coverage options. After 40 years from the date of her first legislative service, it will be difficult to obtain any documentary evidence relating to her situation and what information she was provided with by the House of Representatives or by PERA. Ms. Fieldman also indicates that other seasonal Department of Natural Resources employees received a full year of service credit for their seasonal service, while she did not. While testimony from MSRS ultimately will be necessary to resolve the issue of past service crediting practices, the applicable law, Minnesota Statutes, 1965, Section 352.01, Subdivision 11, defining "allowable service" for MSRS-General and governing the crediting of service by the plan at the time, did not provide for a full year of service credit for a partial year of service. In MSRS-General, service was credited in 1965 for the full pay period during which member contributions are deducted and currently, in general, service is credited for a full month for any month in which member contributions are deducted.

2. The Cost to the Legislature and the Cost to DNR. The policy issue is the level of cost to provide the improved retirement annuities to Ms. Fieldman that will be borne by the House of Representatives and by the Department of Natural Resources, as her prior employers. No accurate information is currently available about the magnitude of the benefit increase that would be payable to Ms. Fieldman under the amendment for her legislative service from PERA-General, but her additional 5.48 years of MSRS-General Plan service credit, with augmentation, would increase her MSRS-General retirement annuity by $170 per month. The cost to DNR for the service credit grant would be $11,700. Extrapolating from the MSRS-General cost estimate to gain a sense of the potential PERA-General cost, with a grant of two years of PERA-General Plan service credit, the Commission staff estimates that Ms. Fieldman would receive a PERA-General retirement annuity of approximately $98 per month. The cost to the House of Representatives for the service credit grant, as estimated by the Commission staff, would be approximately $7,000.
   
   The Commission has, in recent years, imposed pension costs on employers in service credit purchase situations when there has been clear evidence that the employer made a mistake that harmed the employee, but only on one occasion has the Commission not charged the individual involved an amount equal to the member contributions that they would have made had they been covered, plus compound interest since the purchase period (First Special Session Laws 2001, Chapter 10, Article 17, Section 3, relating to a White Bear Lake School District clerical employee who subsequently became a teacher and lost a year of PERA-General service credit from 1973-1974). A misdeed by the House of Representatives or by the Department of Natural Resources is not clear from the information available to the Commission staff. If the Commission desires to add a requirement for the payment by Ms. Fieldman of the member contributions that she would have made for the periods of the service credit grant, amendment LCPR02-081 would add the requirement for the legislative service and amendment LCPR02-082 would add the requirement for the DNR employment.

3. Precedent. The policy issue is the precedent that the special legislation would set if it is enacted on behalf of Ms. Fieldman. The amendment extends pension coverage to a period of legislative service when retirement coverage was optional and augments service credit during periods of seasonal service, with the cost of the additional benefits borne by the former employers. From anecdotal information available to the Commission staff, large numbers of local elected officials have failed to elect PERA coverage at the start of their elective service and subsequently desire to have pension coverage for that service, especially if the additional service credit was provided at no cost to them. The factual situation underlying Ms. Fieldman’s special legislation, if enacted, would be hard to distinguish from the other elected officials previously excluded from PERA coverage. Those individuals could be expected to seek similar legislation if Ms. Fieldman’s special legislation is enacted. Although the State of Minnesota is reportedly not a large employer of seasonal employees, that is not likely to have been the case with DNR, and Ms. Fieldman’s situation will be difficult to distinguish from all other past seasonal DNR employees who have vested in MSRS-General with less service credit than their chronological years of employment or who have missed the vesting requirement because they have less service credit in MSRS-General than the number of calendar years in which they were employed. Those individuals also could be expected to seek similar legislation if Ms. Fieldman’s special legislation is enacted.