As an interim topic, the Commission Chair, Senator Dean E. Johnson, has designated consideration of the issue of the appropriate retirement coverage for emergency dispatchers, post-sentencing officers, and related public employment position.

The interim topic is the outgrowth of Commission actions and deliberations at its March 11, 2002, meeting, where the Commission recommended an amendment to the 2002 Omnibus Pension Bill providing for the inclusion of Hennepin County Medical Center protection officers in the Local Government Correctional Officers Retirement Plan of the Public Employees Retirement Association (PERA-Correctional) and considered without final action an amendment to the 2002 Omnibus Pension Bill requiring an interim study by the Commission of the appropriate retirement coverage for emergency dispatchers and post-sentencing officers. During the 2001-2002 Interim, the Commission also studied the topics of a proposed expansion of the membership of the PERA-Correctional Plan to include 911 dispatchers, county probation officers, and non-police-officer court bailiffs, and the topic of a proposed expansion of the membership of the State Correctional Employees Retirement Plan of the Minnesota State Retirement System (MSRS-Correctional) to include sentencing-to-service crew leaders.

This meeting is the initial consideration of the topic by the Commission during this interim. Commission consideration of the topic is expected by the Commission staff to require at least two or three meetings.

This Commission staff issue memorandum is the initial memorandum on the Commission interim study topic. This memorandum will summarize the development of the membership, the retirement benefits, and the funding of the MSRS-Correctional Retirement Plan and of the PERA-Correctional Retirement Plan, will summarize the information obtained by the Commission during the 2001 Interim study of the topic, and will summarize the options for the Commission in undertaking an additional interim study of the topic. This Commission staff issue memorandum is intended to provide a context for public testimony and other deliberations on the topic. Subsequent Commission staffing efforts will depend on the direction that the Commission chooses for advancing the study.

Background information on the State Correctional Employees Retirement Plan of the Minnesota State Retirement System (MSRS-Correctional) is provided in Appendix A.

Background information on the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional) is provided in Appendix B.

During public testimony on the topic of potential expansions of the correctional employee retirement plans, the State Correctional Employees Retirement Plan of the Minnesota State Retirement System (MSRS-Correctional) and the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional), several groups of public employees have been proposed for inclusion in the special quasi-public-safety employee pension coverage. These public employee groups proposed for inclusion in the MSRS-Correctional Retirement Plan or the PERA-Correctional Retirement Plan are:

1. MSRS-Correctional Retirement Plan Proposed Inclusions.

1. Sentencing-to-Service Crew Leaders. 2001 Session S.F. 1738 (Terwilliger); H.F. 1798 (Wenzel) amends Minnesota Statutes, Section 352.91, Subdivision 3g, which specifies additional Department of Corrections employment positions for membership in the State Correctional Employees Retirement Plan of the Minnesota State Retirement System (MSRS-Correctional), by adding the sentencing-to-service crew leader position who is responsible for county inmate supervision to MSRS-Correctional Plan coverage. It also allows retroactive MSRS-Correctional Plan service credit to June 30, 1975, to be purchased with the payment of the differential between MSRS-Correctional Plan contribution rate and the MSRS-General Employees Retirement Plan (MSRS-General) contribution rate by the member and the transfer of prior related MSRS-General assets. The proposed legislation would apply to all sentencing-to-service crew leaders employed by the Department of Corrections.

2. State Probation Officers. No specific proposed legislation was introduced in the 2001 or 2002 Legislative Sessions. Public testimony requesting the coverage change was presented by Mr. Robert Sutter, an Intensive Community Supervisor Agent in the Minnesota Department of Corrections and a representative of the Minnesota Association of Professional Employees.

2. PERA-Correctional Retirement Plan Proposed Inclusions.

1. 911 Emergency Dispatchers. 2001 Session S.F. 1038 (Pogemiller); H.F. 999 (Mares) amends Minnesota Statutes, Sections 353.01, Subdivision 2b, governing the membership exclusions from the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General), and 353E.02, Subdivision 1, governing the membership inclusions of the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional), by excluding county employees who are 911 dispatchers from PERA-General membership and including them in PERA-Correctional membership.

2. Community Corrections Probation Officers. 2001 Session S.F. 1038 (Pogemiller); H.F. 999 (Mares) amends Minnesota Statutes, Sections 353.01, Subdivision 2b, governing the membership exclusions from the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General), and 353E.02, Subdivision 1, governing the membership inclusions of the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional), by excluding county employees who are community corrections probation officers from PERA-General membership and including them in PERA-Correctional membership.

3. Non-Police-Officer County Court Bailiffs. Potential Amendment LCPR01-220, drafted in 2001 for Representative Harry Mares, amends Minnesota Statutes, Sections 353.01, Subdivision 2b, governing the membership exclusions from the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) and 353E.02, Subdivision 1, governing the membership inclusions of the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional), by excluding county court bailiffs who are not covered by the Public Employees Police and Fire Retirement Plan from PERA-General and including them in PERA-Correctional membership.

1. 2001-2002 Interim Study Topic and Approach. During the 2001 Interim, the Commission staff attempted to gain information on the demographics of the four employee groups proposed for inclusion in the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional), 911 dispatchers, local government probation officers, Hennepin County Medical Center protection officers, and non-police-officer county court bailiffs. With the assembled demographics, the intended course of action was the preparation of reliable actuarial cost estimates of the transfer of these groups from the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) to the PERA-Correctional Plan. The Commission staff was assisted by the Association of Minnesota Counties and the League of Minnesota Cities in assembling the demographic data, who contacted the various employing units with a questionnaire. The questionnaire requested the following information:

1. Employee information (the number of employees by county in these employment classifications, the age, sex, salary, total length of public employment, and length of employment in the occupation for each individual);

2. Job/position descriptions (to give an insight into the nature of the employment); and

3. Employer support (whether the employer supported shifting these occupations from PERA-General to PERA-Correctional).

The Commission staff received considerable county and city information, although approximately 37 counties out of 87 did not respond and there were concerns about the quality of the data received. The data quality issues for received data was the omission of some potentially eligible employees or the inclusion of employers who are already members of the PERA-Correctional Retirement Plan. Additionally, the Hennepin County Medical Center never responded to the Commission staff’s written and telephonic requests.

As a consequence of the extent of unreported data and the concerns over data quality, the Commission staff did not proceed to have actuarial cost estimates prepared for the proposed expansions in late 2001. The protection officers of the Hennepin County Medical Center were transferred from PERA-General to PERA-Correctional by the 2002 Legislature without the benefit of the preparation of any actuarial cost estimate.

2. Results of the 2001-2002 Interim Study.

1. Extent of Responses. Three broad categories of public employees were proposed for transfer to the PERA-Correctional Retirement Plan, the 911 dispatchers, community corrections/probation officers, and court bailiffs. Slightly over 40 counties identified employees who may be eligible for transfer under the various legislative proposals. All city employees in the applicable job categories appear to have been identified.

2. Identified Employment Positions. Counties and cities were requested to identify 911 dispatchers, community corrections/probation officers, and non-peace-officer county court bailiffs. Job titles vary, given the unique nature of each employer and the range of duties the employees perform. Employer discretion entered into identifying the specific job titles that fell under our data request. This diversity is reflected in Table 2.

Aitkin County 911 Dispatcher/Jailer - 20 Assistant Jail Administrator - 1 Jail Administrator - 1 Program Coordinator - 1 Anoka County 911 Dispatcher - 23 911 Lead Dispatcher - 6 Probation Officer - 46 Senior Probation Officer - 15 Benton County Part-time Court Bailiff (Detention Officer I) - 1 Public Safety Dispatcher - 8 Blue Earth County 911 Dispatcher - 13 Probation Officer - 14 Brown County 911 Dispatcher - 6 Probation Officer - 8 Carver County 911 Dispatcher - 7 Lead 911 Dispatcher - 2 Part-time 911 Dispatcher - 2 Public Safety Answering Point Supervisor - 1 Terminal Agency Coordinator - 1 Cass County 911 Dispatcher - 8 Chief 911 Dispatcher - 1 Probation Officer - 2 Chippewa County 911 Dispatcher/Jailer - 9 Chisago County 911 Dispatcher/Jailer - 10 Part-time 911 Dispatcher/Jailer - 2 Probation Officer - 6 Dakota County 911 Dispatcher - 14 Lead 911 Dispatcher - 1 Probation Officer I - 22 Probation Officer II - 29 Probation Officer III - 23 Douglas County 911 Dispatcher - 9 Communication/Dispatch Sergeant - 1 Faribault County 911 Dispatcher - 4 Fillmore County 911 Dispatcher - 4 Freeborn County Court Services Director - 1 Court Services Officer - 5 Grant County 911 Dispatcher/Records - 3 911 Dispatcher/Records Supervisor - 1 Confidential Exec Secy/911 Dispatcher - 1 Part-time 911 Dispatcher/Records - 2 Hennepin County Career Probation/Parole Officer - 222 Probation/Parole Officer - 68 Senior Probation/Parole Officer - 61 Sheriff's Telecommunicator - 37 Isanti County 911 Dispatcher - 7 Jackson County 911 Dispatcher/Jailer - 9 Jailer/911 Dispatch Administrator - 1 Probation Officer - 2 Kandiyohi County 911 Database Manager - 1 Asst. Dir. of Emerg. Communic. & Records - 1 Director of Emerg. Communic. & Records - 1 Non Peace Office Court Bailiff - 2 Probation Officer - 18 Public Safety Dispatcher - 8 Kittson County 911 Dispatcher/Jailer/Clerk - 5 Part-time 911 Dispatcher/Jailer/Clerk - 1 Lake of the Woods County 911 Dispatcher/Jailer - 5 McLeod County 911 Dispatcher - 10 Communications Sergeant - 1

Meeker County 911 Dispatcher - 4 Correctional Officer - 9 Part-time 911 Dispatcher - 2 Part-time Bailiff - 2 Part-time Correctional Officer - 4 Mille Lacs County Part-time Court Bailiff - 4 Morrison County 911 Dispatcher - 4 Part-time 911 Dispatcher - 2 Nobles County Corrections Agent - 5 Olmsted County Jury Attendant - 9 Probation Officer - 29 Senior Probation Officer - 9 Otter Tail County 911 Dispatcher - 8 Part-time 911 Dispatcher - 2 Part-time Bailiff - 12 Part-time Probation Officer - 1 Probation Officer - 4 Polk County 911 Dispatcher - 7 Pope County 911 Dispatcher - 5 Law Library Secretary - 1 Part-time 911 Dispatcher - 4 Probation Officer - 1 Ramsey County 911 Dispatcher - 37 Comm Corr Wkr 1 - 39 Comm Corr Wkr 2 - 47 Comm Corr Wkr 3 - 164 Radio Dispatcher 1 - 1 Red Lake/Polk/Norman Probation Agent - 12 Rice County Probation Officer - 12 Scott County 911 Dispatch Lieutenant - 1 911 Dispatch Sergeant - 3 911 Dispatcher - 8 Part-time 911 Dispatcher - 5 Sherburne County 911 Dispatcher - 11 Bailiff - 2 Probation Officer - 12 St. Louis County Bailiff - 17 Emergency Comm Specialist - 38 Probation Officer I - 13 Probation Officer II - 30 Probation Officer III - 36 Stearns County 911 Dispatcher - 21 Career Agent - 7 Corrections Agent - 5 Senior Agent - 21 Stevens County 911 Dispatcher - 4 Waseca County 911 Dispatcher - 4 Head 911 Dispatcher - 1 Part-time 911 Dispatcher - 2 Probation Officer - 2 Washington County 911 Call Taker - 2 911 Center Coordinator - 3 911 Public Safety Dispatcher - 12 Bailiff - 9 Probation Officer I - 5 Probation Officer II - 15 Probation Officer III - 22 Watonwan County 911 Dispatcher - 3 Part-time 911 Dispatcher - 2 Winona County 911 Dispatcher - 13 Wright County Civilian Communication Officer - 10 Communication Shift Supervisor – 1

Table 3 Indicates the considerable range of possible employment positions considered by reporting employing units to be included in the general categories of 911 dispatcher, community corrections/probation officer, or court bailiff:

3. Analysis Relating to the 911 Dispatcher Group.

   1. Argument for Inclusion—Job Stress. At the Commission’s first consideration of the PERA-Correctional Plan expansion study during the 2001-2002 Interim, the Commission heard testimony from some 911 dispatchers. The main argument for inclusion in the PERA-Correctional Plan rather than the PERA-General Plan is that 911 dispatcher employment is emotionally stressful, because of the emergency nature of the calls received.

      The Commission may wish to consider whether the emotional or psychological stress created by a particular type of employment is sufficient justification for inclusion in a public safety plan. Including positions in PERA-Correctional due to the stressful nature of the employment, rather than the more specific risk of injury or death due to responsibilities for the custody and control of inmates, would be a fundamental shift in the criteria for plan inclusion, and would represent a reversal of the recent direction in defining the membership of this plan.

      The revised 2000-2001 membership criteria for the PERA-Correctional Retirement Plan narrowly define the coverage group to include only employees in county correctional facilities, in certain positions, who are responsible for the custody, security, and control of inmates and who are required to respond to incidents that may occur at the institution. Employment as a 911 dispatcher may be stressful, but that specific work does not expose these employees to the physical demands and physical dangers to which current PERA-Correctional Plan members may be exposed. The job descriptions and comments provided by the counties indicate that in some cases 911 dispatchers may be located at a county correctional facility, or in other cases, in an entirely separate facility, possibly many miles from the correctional institution. Dispatchers, as part of their 911 dispatcher duties, have no contact with inmates regardless of where the employee is located.

      Inmate contact, including responsibility for security, custody, and control of inmates, may occur in situations where a 911 dispatcher has multiple responsibilities. In some cases, this is suggested by the job titles, like the 911 dispatcher/jailer employment title, although in many cases the numerous responsibilities of an employee are not indicated by the job title. In some cases, the multiple duties assigned to dispatchers are sufficient to permit them to qualify for coverage under the existing criteria of the PERA-Correctional Plan, under the jailer/dispatcher category noted in the current eligibility criteria.

   2. Job Stress, Addressing by Diversifying Responsibilities. The duties of 911 dispatchers unquestionably involve stress. It is evident, however, that a sizable majority of the job positions involve multiple responsibilities. The individuals are dividing their time between handling emergency calls and various other tasks. In part, this may be a response by the employer to the stressful nature of handling emergency calls and to help minimize that stress, other duties are assigned to the employees so only part of the work day involves handling these stressful calls. In other cases, there may not be enough emergency call activity to justify having one or more people concentrate entirely on that activity for a full work day.

   3. Difficulty Defining Sufficient Connection. If the Commission concludes that 911 dispatching is extraordinarily stressful, and that a proper response to that stress includes an expansion of PERA-Correctional Plan membership, the effort to specify positions or activities for inclusion will require the Commission to make several decisions. Presumably, the individuals under the most stress are the individuals who directly perform the emergency dispatching work. There are arguments, though, for including individuals who directly supervise these individuals. These supervisors may be next in line to handle 911 calls if the need arises, and the Commission may choose not to discourage advancement by eliminating from PERA-Correctional Plan coverage anyone promoted to a 911 supervisory position. Covering the supervisors would be consistent with the current criteria for the PERA-Correctional Plan, which covers not only correctional guards and dispatcher/jailers, but also their direct supervisors. At some point, however, continued employment advancement suggests a different career path, and activities far removed from the stresses of 911 activity.

      Even with higher level managers and administrators removed from the group, the remaining group includes many individuals with employment appearing to have little direct connection with 911 activity. In part, this identification problem stems from the tendency for 911 dispatcher job descriptions to list numerous responsibilities or tasks, only some of which are related to emergency call activities, and only some of which may be stressful. Another problem is the difficulty in determining who is truly "on the front line," rather than having a role later in the chain of events, and general difficulties determining which positions are truly comparable across cities and counties.

      Given the difficulty in identifying specific positions directly involved in 911 call activity, and where a sufficient percentage of time is spent in that activity, the Commission and Legislature may choose to explore some other approach to addressing the stress of 911 dispatcher employment other than attempting to address this through revised pension plan coverage. If the Commission does choose to revise pension plan coverage, it may choose to limit the coverage group to those most connected with the activity and their immediate supervisors, and setting a threshold for minimum percent of time spent on these activities. The counties would be given the task of deciding which positions or individuals met the criteria.

   4. Part-Time Employment Policy Issues. Some of the 911 dispatchers are part-time employees. The Commission may wish to consider some of the policy issues this raises. Minnesota’s defined benefit public pension plans are geared to full-time employees. Full-time 911 dispatcher work is likely to be stressful, but the duty does not require considerable strength or place the individuals in physical danger. Part-time 911 dispatchers are presumably under less stress than full-time employees providing similar service, further lessening the justification for including part-time 911 dispatchers in the PERA-Correctional Plan. If they are included in plan, the benefit they will receive based on the service and salary will not be sufficient to allow them to truly retire from the labor force. The public policy objectives reflected in the public safety plan design do not carry over to the part-time employment situation. The individual will receive a somewhat higher benefit than if they remain in a general employee plan, but the transfer of the part-time dispatchers and possibly the full-time dispatchers does not seem consistent with typical public safety plan policy objectives.

      Table 4 provides some indication to the Commission regarding the percentage of employees in the broad "911 dispatcher" category who are part-time employees rather than falling into various full-time employee groupings.

3. Analysis Relating to the Community Corrections/Probation Officer Group.

   1. Argument for Inclusion. The Commission heard testimony during the 2001-2002 Interim from probation officers regarding the stressful nature of community corrections/probation officer duties, and the physical danger to which these individuals are exposed. Testimony also indicated that police officer duties and parole/probation officer activities are merging and becoming more similar.

      The reporting counties indicated 21 job titles that fall under the general category of community corrections/probation officer. The jobs in the community corrections/probation officer category all appear to have a strong connection to community corrections/probation officer work. Thus identifying the coverage group for purposes of inclusion in the PERA-Correctional Plan may be more straightforward than in the 911 dispatcher situation.

   2. Nature of Employment. To enable the Commission to determine whether the employment is sufficiently similar to positions already included in the PERA-Correctional Plan or other public safety plans to warrant inclusion, the 2001-2002 Interim Commission staff study requested employers to provide job descriptions. There was, however, a lack of position descriptions from many counties. Not all counties that responded with employee and salary data included position descriptions.

   3. County Reservations. Some comments received from county officials indicate that community corrections/probation/parole officers are exposed to dangerous situations on occasion, but the officials had strong reservations against including them in the PERA-Correctional Plan. The administrators contend that the occurrences typically are not as dangerous or as frequent as the dangers to which jailer/correction guards, the current PERA-Correctional Plan coverage group, are exposed. A few commented that if probation/parole officers are included in the plan, there is little justification for not also including social workers, and if social workers are included, there is no justification for not also including many other county employees. They also note that including the community corrections/ probation officers in the plan would be stepping back from the 2000-2001 revisions to the PERA-Correctional Plan, which had been urged by the Association of Minnesota Counties, and which include requirements that employees eligible for the plan must work in county correctional facilities, be responsible for the custody, security, and control of inmates, and be required as part of their job responsibilities to respond to incidents. Most community corrections/parole officers do not work in correctional facilities and have different responsibilities than the jailer/correctional guards.

   4. Part-Time Employment. Some community corrections/probation/parole officers appear to be engaged in part-time employment, either as identified by the job description or as suggested in the salary data. Table 5 summaries the data on part-time and full-time employment by probation officers.

5. Analysis Relating to the Non-Peace-Officer Court Bailiff Group.

   1. Argument for Inclusion. The Commission heard testimony during the 2001-2002 Interim from a Washington County bailiff that Washington County is unique in using non-licensed bailiffs, that the non-police-officer bailiff employees are responsible for escorting defendants into and out of the court, and that bailiffs are responsible for maintaining control in the courtroom.

   2. Nature of Employment. The reported data does not appear to lend strong support for including non-peace-officer bailiffs in the PERA-Correctional Plan. The nature of the employment is too inconsistent across counties to sufficiently support any revision in the PERA-Correctional Plan coverage group.

      At least nine counties, in addition to Washington County, use non-licensed court bailiffs who are not covered by PERA-P&F. The provided position descriptions and employer comments suggest a wide range of approaches for handling bailiff functions, and great differences in perceived physical risk involved in the occupation. Bailiff position descriptions typically specify that bailiffs are involved in preparing the court room for trial or hearing, and in dealing with the jury. The bailiff may advise the jury on courtroom procedures, monitor the actions of jurors during breaks to ensure no improper actions or communications occur, and provide beverages and meals for jurors. The position description may contain a statement that the bailiff is responsible for maintaining control and generally responding to incidents in the courtroom.

      The perception of the physical risks involved in the responsibility to maintain control and respond to incidents in court room varies greatly across counties. The perception obtained from the position descriptions and the county comments is that non-licensed bailiffs are unlikely to be placed in dangerous situations, although there may be a statement in the position description that the bailiff is responsible for maintaining order in the courtroom.

      In reporting information on court bailiffs, one county included a law library secretary and a few counties included a position called jury attendant.

   3. Part-Time Employment Issue. Part-time bailiff employment appears common. Placing part-time employees in public safety employee retirement plans is not fully compatible with the intended objectives of those plans. Table 6 summarizes the data on part-time and full-time employment by non-peace-officer bailiffs.

4. Age Issues. The Commission has determined that public safety retirement plan coverage is appropriate for occupations which are public safety in nature and where strength and youth are required to perform the duties and there is noticeable risk of physical harm. These conditions are not consistently encountered in the non-licensed bailiff function across counties. The high percentage of part-time employment in bailiff and the age of many individuals providing bailiff functions also argues against public safety plan coverage for non-police-officer bailiffs. For the entire identified court bailiff group, the average age is nearly 61, approximately six years older than the age 55 normal retirement age (full unreduced retirement age) of the PERA-Correctional Plan. Coverage by a public safety plan, where full unreduced retirement is permitted at age 55, presumably because the physical demands and danger of the covered occupations requires a low normal retirement age, does not appear appropriate for this non-peace-officer court bailiff group.

6. Average Age and Age Range of Proposed Coverage Expansion Groups. According to the PERA-Correctional Plan July 1, 2000, actuarial valuation, the average age of active plan members was 37.5 years. The average ages of the dispatcher, community corrections/probation officers and court bailiffs reported during the 2001-2002 Interim are all greater than that age. The average ages of dispatchers, community corrections/probation officers, and court bailiffs are 39.2 years, 41.1 years, and 60.9 years, respectively. This suggests that the PERA-Correctional Retirement Plan normal cost would increase by adding these groups. This would impact not only the cost of adding these additional employees, but it likely would increase employer and employee contribution requirements for all existing PERA-Correctional Plan members, due to increased contribution requirements. Table 7 summaries the average and age range information for all reported 911 dispatchers, probation officers, and non-peace-officer bailiffs.

7. Fiscal Impact of Potential PERA-Correctional Expansion. There is a fiscal impact from a transfer of employees because PERA-Correctional Plan employer contribution rates are higher than those required by PERA-General. In total, 1794 positions are assumed to transfer, and the total fiscal impact in the first year is estimated to be $2.497 million ($2.219 million on the counties, and $278,635 on the cities).

   Several factors will change these estimates. Many counties did not respond to the data request and therefore are not included in the table. Although we believe we have identified all the cities, it is possible there are omissions there as well. Obtaining data from additional counties would identify fiscal impacts on those counties and would increase the total statewide fiscal impact. If the Commission were to drop certain jobs from consideration, the fiscal impact would be less. Table 8 provides a preliminary indication of the fiscal impact on counties and cities if all the identified employees in all the employment categories were to transfer from PERA-General to PERA-P&F.

	Total Positions	Salary (Calendar or Fiscal Year)	Correctional Plan Employer Contributions (8.75% of Total Salary)	PERA-General Plan Employer Contributions (5.53% of Total Salary)	Increased Contribution Requirement
Cities
Albert Lea	8	$239,570	$20,962	$13,248	$7,714
Bloomington	13	$489,060	$42,793	$27,045	$15,748
Brooklyn Center	6	$223,922	$19,593	$12,383	$7,210
Burnsville	11	$306,557	$26,824	$16,953	$9,871
City of St. Paul	70	$3,256,935	$284,982	$180,109	$104,873
Hutchinson	7	$78,106	$6,834	$4,319	$2,515
Maplewood	9	$365,105	$31,947	$20,190	$11,756
Minneapolis	73	$2,853,193	$249,654	$157,782	$91,873
Minnetonka	8	$305,548	$26,735	$16,897	$9,839
Richfield	9	$324,246	$28,372	$17,931	$10,441
West St. Paul	6	$ 211,017	$ 18,464	$ 11,669	$ 6,795
Total	220	$8,653,259	$757,160	$478,525	$278,635
Counties
Aitkin County	23	$703,195	$61,530	$38,887	$22,643
Anoka County	90	$4,089,184	$357,804	$226,132	$131,672
Benton County	9	$244,252	$21,372	$13,507	$7,865
Blue Earth County	27	$843,276	$73,787	$46,633	$27,153
Brown County	14	$513,232	$44,908	$28,382	$16,526
Carver County	13	$410,500	$35,919	$22,701	$13,218
Cass County	11	$397,252	$34,760	$21,968	$12,792
Chippewa County	9	$270,934	$23,707	$14,983	$8,724
Chisago County	18	$491,334	$42,992	$27,171	$15,821
Dakota County	89	$3,800,056	$332,505	$210,143	$122,362
Douglas County	10	$285,361	$24,969	$15,780	$9,189
Faribault County	4	$112,000	$9,800	$6,194	$3,606
Fillmore County	4	$129,800	$11,357	$7,178	$4,180
Freeborn County	6	$260,042	$22,754	$14,380	$8,373
Grant County	7	$160,306	$14,027	$8,865	$5,162
Hennepin County	388	$18,460,931	$1,615,332	$1,020,890	$594,442
Isanti County	7	$208,379	$18,233	$11,523	$6,710
Jackson County	12	$378,074	$33,081	$20,907	$12,174
Kandiyohi County	31	$1,095,304	$95,839	$60,570	$35,269
Kittson County	6	$133,426	$11,675	$7,378	$4,296
Lake of the Woods County	5	$144,893	$12,678	$8,013	$4,666
McLeod County	11	$300,876	$26,327	$16,638	$9,688
Meeker County	21	$367,300	$32,139	$20,312	$11,827
Mille Lacs County	4	$23,654	$2,070	$1,308	$762
Morrison County	6	$177,371	$15,520	$9,809	$5,711
Nobles County	5	$189,720	$16,601	$10,492	$6,109
Olmsted County	47	$1,225,376	$107,220	$67,763	$39,457
Otter Tail County	27	$536,196	$46,917	$29,652	$17,266
Polk County	7	$198,833	$17,398	$10,995	$6,402
Pope County	11	$202,419	$17,712	$11,194	$6,518
Ramsey County	288	$20,182,481	$1,765,967	$1,116,091	$649,876
Red Lake/Polk/Norman County	12	$381,295	$33,363	$21,086	$12,278
Rice County	12	$415,234	$36,333	$22,962	$13,371
Scott County	17	$499,806	$43,733	$27,639	$16,094
Sherburne County	25	$823,976	$72,098	$45,566	$26,532
St. Louis County	134	$4,471,319	$391,240	$247,264	$143,976
Stearns County	54	$2,015,473	$176,354	$111,456	$64,898
Stevens County	4	$100,056	$8,755	$5,533	$3,222
Waseca County	9	$65,978	$5,773	$3,649	$2,124
Washington County	68	$2,798,595	$244,877	$154,762	$90,115
Watonwan County	5	$106,841	$9,349	$5,908	$3,440
Winona County	13	$337,938	$29,570	$18,688	$10,882
Wright County	11	$ 370,904	$ 32,454	$ 20,511	$ 11,943
Total	1,574	$68,923,370	$6,030,795	$3,811,462	$2,219,333
Total All Sources	1,794	$77,576,630	$6,787,955	$4,289,988	$2,497,967

8. Employer Support for Proposed Transfers. No county or city gave unqualified support for the proposed transfer. Only two counties gave conditional support, indicating that they would support the PERA-Correctional Retirement Plan expansion if the State, through additional state aid, paid the full additional required contributions. Several counties and cities reserved judgement or provided no comments. Table 9 summarizes the nature of employing unit comments on the proposed transfers.

1. In General. The topic of a potential expansion of the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional) to cover 911 dispatchers, probation officers, and non-police-officer court bailiffs was first brought to the attention of the Commission during the 2001 Session in the form of S.F. 1038 (Pogemiller); H.F. 999 (Mares), apparently at the instigation of various affected employee groups, including the Minnesota Association of County Probation Officers and the Teamsters Union.

   The Commission took initial testimony on the proposals during the 2001 Session, attempted to gather the necessary demographic data to permit the preparation of the necessary actuarial cost estimate, refinement of the proposal, and an informed policy analysis during the 2001-2002 Interim, took additional testimony from affected employees towards the end of the 2001-2002 Interim, and expanded the PERA-Correctional Retirement Plan membership to include Hennepin County Medical Center protection officers and considered a proposed interim study mandate amendment during the 2002 Session

   In undertaking to resolve deliberations on this topic, the Commission has at least three tasks to complete. The tasks are the collection of demographic and related information on the prospective transferees and their employment responsibilities, the formulation of a specific transfer proposal and its drafting into appropriate legislative language, and the development of a pension and related public policy analysis of the transfer proposal. There are different options open to the Commission in attempting to complete each of these tasks.

2. Collection of Demographic and Related Information.

1. Goal. In order for the Commission to ascertain the actuarial cost of a potential transfer of various employees from general employee retirement plan coverage to public safety employee retirement plan coverage or quasi-public safety employee retirement plan coverage, to analyze whether the proposal includes only the intended transferees and includes all of the intended transferees, and to conduct a full policy analysis of the proposed transfer, data needs to be collected on the demographic characteristics of the potential transferees (age, salary, employment position, part-time status, length of public employment, length of employment in the current position, and extent of employment), the time loss due to job-related incidents or injuries, the applicable job or position descriptions, and an expression of employer support or concern.

2. Options. In gathering demographic and related data, the Commission has the following options identified by the Commission staff:

   1. PERA/MSRS Identification. The process for data collection used by the Commission in creating the PERA-Correctional Retirement Plan was to have the Public Employees Retirement Association (PERA) identify all county correctional employees and having the necessary actuarial work prepared on the basis of that identification. The same process could be used, having PERA and the Minnesota State Retirement System (MSRS) identify the affected potential transferees and transmit the resulting data tapes to the Commission-retained actuary. However, the 1998 PERA identification of potential transferees for the proposed PERA-Correctional Retirement Plan significantly under-identified the number of transferees compared to the first actuarial valuation of the plan, which revises questions about the accuracy of this process. Also, the 1999 process did not permit the type of Commission staff analysis as occurred during the 2001-2002 Interim study of this topic because the information gathering and reporting process was external to the Commission.

   2. Second AMC/LMC Survey and Initial DOC Survey. The 2001-2002 Interim study of this topic utilized surveys of the affected employing units by the Association of Minnesota Counties (AMC) and by the League of Minnesota Cities (LMC) at the instigation of the Commission staff. A second AMC/LMC survey and a similar information request to the Minnesota Department of Corrections could be utilized to obtain the information that was not provided during the 2001-2002 Interim study or that has changed in the year interval. The 2001-2002 Interim surveys failed to gain information from three dozen counties, including some counties with potentially large transfer groups (Becker, Clay, Dodge, Goodhue, Itasca, Mower, Nicollet, and Wabasha). A second survey may not gain any better response.

   3. Direct Commission Staff Survey. The Commission staff could be directed to conduct a survey of the various state and local employing units with potentially affected employees with as much follow-up as is necessary. The survey would potentially consume a considerable amount of Commission staff time and effort. It also may not be very time effective.

   4. Formulation of Working Group of Affected Employer and Employee Group Representatives. The amendment on the topic offered on behalf of the Teamsters Union and considered by the Commission during the 2002 Session proposed the creation of a working group including representatives of the affected pension plans, the affected employers, and the affected employees. The amendment was not recommended by the Commission, but a similar mechanism could be implemented informally by the Commission. The working group would have some potential for providing greater encouragement or pressure to gain greater information provision by affected employing units.

   5. Delay Project Until Legislation Providing a State Aid Penalty for Non-Reporting Is Enacted. If gaining complete information is very important and if the process would benefit from penalizing non-compliance, the project could be delayed until legislation implementing a State aid or related penalty is enacted.

3. Formulation of a Specific Proposal and Drafting.

1. Goal. Any proposal transferring employees from the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General) to the State Correctional Employees Retirement Plan of the Minnesota State Retirement System (MSRS-Correctional) or from the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) to the Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional) should modify the retirement coverage for all of the employees who meet the criteria arrived upon for a transfer and only those employees.

2. Options. To ensure that the proposal for consideration by the Commission implements the change without unintended results, the Commission has the following options identified by the Commission staff:

   1. Utilize the Affected Parties Separately. The Commission could direct each of the affected groups, the counties through the Association of Minnesota Counties (AMC), the cities through the League of Minnesota Cities (LMC), the Minnesota Department of Corrections, the probation officers through the Minnesota Association of Professional Employees and the Minnesota Association of County Probation Officers, and the 911 dispatchers through the Teamsters Union or otherwise, to prepare their optimal version of the criteria for affecting the retirement coverage transfer. The Commission could then assemble the ultimate proposed legislation from a comparison and contrasting of those submissions.

   2. Direct a Working Group to Recommend Criteria. If the Commission creates a working group to assist in collecting the necessary demographic and related data or if the Commission establishes a similar working group for this purpose, the Commission would direct a working group containing retirement plan representatives, affected employee group representatives, and affected employer representatives to formulate the criteria for potential retirement plan transfers.

   3. Direct Commission Staff Assembly of Optional Criteria. The Commission could direct the Commission staff to assemble various options for the criteria for a retirement plan transfer from the insights gained from the 2001-2002 Interim topic data collection and discussed in the Commission staff issue memorandum on the topic presented to the Commission on November 13, 2001, and summarized above.

4. Retirement Plan Transfer Policy Analysis.

1. Goal. Before any proposed retirement plan transfer can be recommended by the Commission, the pension and related public policy implications of the proposal must be identified, developed and discussed. While some of this will be done by the Commission with the assistance of the Commission staff if, and when, the related proposed legislation is considered for inclusion in an eventual omnibus retirement bill, the process may benefit from a process that affords a longer timeframe than a Commission hearing, that is very deliberative, and that is flexible enough to allow for any necessary reformulations of the proposal and additional data collection before the final Commission deliberation.

2. Options. To gain an ongoing policy analysis of a potential retirement plan coverage transfer, the Commission has the following options as identified by the Commission staff:

   1. Direct a Working Group to Assemble Policy Analysis. If the Commission creates a working group for data collection or creates a working group for this purpose, the Commission could direct a working group of affected parties in interest to identify policy issues connected with the topic and assemble supporting and opposing arguments for the transfer for each policy issue.

   2. Appoint a Subcommittee to Conduct the Analysis and Make Recommendations. The Commission chair could establish a subcommittee of the Commission to undertake processing the review of this topic and to make a recommendation on the topic to the Commission during the course of the interim.

   3. Utilize Frequent Consideration of the Topic by the Commission. The topic could be scheduled for a number of periodic considerations by the Commission over the course of the 2002-2003 Interim, thereby allowing for the development of a full policy analysis of any proposed legislation prior to the 2003 Session through public testimony, Commission staff analysis, and otherwise. Because this is an election interim, extensive deliberations could work a hardship on Commission members.

Based on the Commission’s choice or choices on how it wishes to proceed on this topic, the Commission staff will undertake the necessary steps to continue development of this interim topic.

Background Information on the State Correctional Employees Retirement Plan of the Minnesota State Retirement System (MSRS-Correctional)

1. General Background Information on MSRS-Correctional. The State Correctional Employees Retirement Plan of the Minnesota State Retirement System (MSRS-Correctional) was established in 1973 as a result of collective bargaining by the State of Minnesota with the American Federation of State, County, and Municipal Employees, Council 6, under the Public Employees Labor Relations Act (PELRA), when pensions were a mandatory bargainable item, and the resulting implementing legislation. Up to that point, correctional guards and most other correctional system employees were covered by the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General). Some correctional system employees were covered by the Teachers Retirement Association (TRA). In 1973, PELRA was amended to eliminate pension benefits and contributions from the definition of "terms and conditions of employment," Minnesota Statutes, Section 179A.03, Subdivision 19, which are subject to mandatory collective bargaining.

   The MSRS-Correctional Plan has been amended numerous times, from the 1973 change from the career average salary formula benefit to the highest five successive years average salary formula benefit to the 2000 inclusion of the Phoenix Treatment Program in plan covered service credit.

2. Background Information on MSRS-Correctional Plan Membership Eligibility. In 1973, when the MSRS-Correctional was created as a separate plan, membership was largely limited to correctional guards and correctional counselors in adult correctional facilities. In subsequent years, by amendments to the coverage group eligibility provisions of the plan, the coverage group was expanded to include additional correctional positions in both adult and juvenile correctional facilities. The initial coverage group was given credit for prior State employment service in the MSRS-Correctional Employees Retirement Plan, with service credit in the prior plan being forfeited. As a modest number of other groups and job titles were added over the period 1974-1995, MSRS-Correctional Plan service credit was typically prospective only.

   The premise for MSRS-Correctional Plan coverage is that the nature of certain types of correctional employment is sufficiently hazardous on a regular basis and that the need for a particularly vigorous workforce in certain correctional employment positions is sufficiently great that these employees should have retirement coverage that allows for retirement at an age earlier than generally provided for other state employees, provides a retirement annuity upon that retirement in an amount greater than is accruing to other state employees and imposes mandatory retirement at an age earlier than once was applicable to other state employees.

   The first substantial MSRS-Correctional Plan coverage expansion was in 1974. In 1974, the MSRS-Correctional Plan coverage group was expanded to include special schools counselors and shop instructors at the adult correctional institutions and special teachers, trades personnel, and maintenance personnel at the Stillwater Prison, the St. Cloud Reformatory and the Shakopee Women’s Prison if the employee was certified by the Department of Corrections as being regularly engaged in the rehabilitation, treatment, custody, or supervision of inmates. The 1974 expansion occurred only after extended deliberations by the Commission and substantial testimony about the employment duties and hazards of the applicable employee groups.

   Between 1974 and 1996, expansions in the coverage group of the MSRS-Correctional Plan were limited in number and limited in scale, although there were numerous requests for coverage groups expansions and several Commission studies of the issue.

   In 1996, the MSRS-Correctional Plan membership was increased by more than 400 State employees by virtue of the inclusion of 33 additional employment classifications which were certified by the Department of Corrections or the Department of Human Services as having at least 75 percent inmate or Security Hospital patient contact. The affected employees were allowed to retain their prior MSRS-General or TRA retirement coverage if they so desired. For State employees newly included in the MSRS-Correctional Plan, an option was provided to transfer prior State employment service to the plan if there were no breaks in the prior service of more than 180 days, and the prior service was comparable to service eligible for Correctional Plan coverage. To transfer the service, the State employee had to contribute in a lump sum the differential, if positive, between 4.9 percent of salary and the member contribution made to the prior plan, plus six percent interest. For those individuals transferring past coverage, assets representing the funded portion of the present value of the benefits earned to date were transferred from TRA or MSRS-General, as applicable, to MSRS-Correctional.

   In 1999, the MSRS-Correctional Plan membership was increased by an estimated 115 State employees employed in nine employment positions with the Minnesota Extended Treatment Option (METO) on-campus program at the Cambridge Regional Human Services Center, with the affected employees allowed to retain their prior MSRS-General retirement coverage if they so desired. Newly included METO employees had an option to transfer prior State employment service to MSRS-Correctional, with a lump sum contribution differential payment by the transferring employee. For the METO employees transferring past coverage, assets representing the funded portion of the present value of the benefits earned to date were transferred from MSRS-General to MSRS-Correctional.

   As of July 1, 1999, the most recent date on which specific employee information is available, the MSRS-Correctional Plan membership consisted of 2,855 state employees in 102 employment classifications working in 15 state facilities or institutions. The facility and installation breakdown of the MSRS-Correctional Plan membership is as follows:

The ten occupational classifications with the largest number of MSRS-Correctional Plan members are as follows:

3. Background Information on MSRS-Correctional Plan Benefits.

1. In General. The attraction of the MSRS-Correctional Plan for groups seeking this coverage is that the plan pays higher benefits than a general employee plan and has an earlier normal retirement age. Because of the better benefits and earlier retirement age, the plan is more costly than a regular general employee plan. The plan offers a hybrid of general employee plan and public safety plan features. MSRS-Correctional Plan members are coordinated members (i.e., plan coverage supplements Social Security coverage), unlike Public Employees Retirement Association Police and Fire Plan (PERA-P&F) members. Like a public safety plan, members can retire without a reduction for early retirement at age 55 or with a reduction at age 50. The MSRS-Correctional Plan annuity is computed using a 2.4 percent yearly service benefit accrual factor. Duty-related disability benefits are generous, typical of a public safety plan. The duty-related disabilitant receives 50 percent of high five average salary, plus 2.4 percent of high five average salary for each year in excess of 20 years of allowable service. Also akin to a public safety plan, the MSRS-Correctional Plan uses an occupational definition of disability rather than the total impairment disability definition used by the MSRS-General Plan.

   The MSRS-Correctional Plan is a hybrid plan, with features lying somewhere between general employee plans and pure public safety plans. Akin to the state public safety plans (the State Patrol Plan and the Public Employees Retirement Association Police and Fire Plan (PERA-P&F)), the MSRS-Correctional Plan has an age 55 normal retirement age and disability provisions similar to the public safety plans. Like general employee plan members, MSRS-Correctional Plan members do pay into Social Security for the covered employment and will receive monthly checks from that federal program when Social Security benefit eligibility age is reached. Because the MSRS-Correctional Plan members are assumed to have hazardous employment, like the state public safety plan members, but will also receive Social Security, the accrual rate (the percentage of the high-five average salary payable per year of service) is set above that of general employee plans but below that of public safety plans. Coordinated members of general employee plans who retire at normal retirement age have a 1.7 percent accrual rate, MSRS-Correctional Plan members have a 2.4 percent accrual rate, and State Patrol Plan and PERA P&F members have a generous 2.9 percent accrual rate. The justification for the 2.9 percent rate in the State Patrol Plan and PERA P&F is that members of these public safety plans do not pay into the Social Security Old Age Insurance Program and will not be receiving monthly benefits from that system due to covered public safety employment to supplement the income received from the state retirement plan.

2. Detailed Summary of Specific MSRS-Correctional Plan Benefit Features.

   1. Normal Retirement Benefits. Members are eligible for a normal retirement benefit at age 55 and receive a benefit of 2.4 percent of high-five average salary per year of allowable service.

   2. Early Retirement Benefits. Members are eligible for early retirement at age 50. The benefit is computed like a normal retirement benefit, but the benefit is reduced to the actuarial equivalent of the benefit that would be payable if the member deferred receipt until age 55.

   3. Optional Annuity Forms. In lieu of a single life normal or early retirement single life annuity, various optional annuities may also be elected, which are to be actuarially equivalent to the single life annuity except for a subsidized bounce-back provision. Term certain annuities and Social Security leveling options may also be elected.

   4. Duty-Disability Benefits. A member who can not perform his or her duties due to work-related disability is eligible for a duty-disability benefit of 50 percent of high-five salary plus 2.4 percent for each year of service in excess of 20 years, 10 months, but the benefit is capped at 75 percent of the high-five.

   5. Non-Duty-Related Disability. If the disability is not duty-related, the benefit is 2.4 percent of the high-five per year of service, computed on 15 years or actual covered service, whichever is greater.

   6. Death Benefits to Surviving Spouse. If an active or deferred member dies prior to receiving a retirement or disability benefit, benefits are payable to the surviving spouse, or to dependent children if there is no surviving spouse. The surviving spouse benefit is the 100 percent joint-and-survivor benefit that the deceased employee and spouse would qualify for on the date of death, given their ages. If benefits commence before age 55, the benefit is reduced by one-half of an actuarial reduction, rather than a full reduction. In lieu of this joint-and-survivor annuity, the surviving spouse could select an equivalent term-certain annuity, or a refund of member contributions plus six percent interest.

   7. Death Benefits to Surviving Children. If there is no surviving spouse, the surviving children share a 100 percent optional annuity, but benefits cease when the dependent reaches age 20, or after receiving benefits for five years, whichever is later.

   8. Combined Service Provision. The plan is included under the combined service annuity, disability, and survivor provisions.

   9. Post-Retirement Adjustments. Annuities payable under the plan (retirement, survivor, or disability) are adjusted annually to match inflation up to 2.5 percent, plus an additional investment return based adjustment may be received based on a five year averaging of State Board of Investment (SBI) Post Fund investment performance.

   10. Termination Refund. If no other benefit is payable or if a refund is preferred to an annuity, a terminating employee may elect to receive a refund of member contributions plus six percent interest.

   11. Deferred Annuity. A deferred retirement annuity is payable at the normal retirement age to a person with three years of allowable service, with the benefit computed under law in effect at termination and increased by three percent, compounded annually, until January 1 of the year following the attainment of age 55, and five percent thereafter, until the annuity begins.

4. Actuarial Condition and Funding of the MSRS-Correctional Retirement Plan. The following compares the July 1, 2000, and the updated July 1, 2001, MSRS-Correctional Retirement Plan actuarial valuation results:

1. General Background Information on PERA-Correctional. The Local Government Correctional Employees Retirement Plan of the Public Employees Retirement Association (PERA-Correctional) was initially established in 1987 (Laws 1987, Chapter 372, Article 1, Sections 9 to 18). The 1987 plan was available to essential correctional facility employees employed by Dakota County, Hennepin County, Ramsey County, Washington County, or by a joint-powers correctional agency in which Saint Louis County or its municipalities participate, if the employer elected to participate in the plan. The plan was enacted into law due to preliminary interest from those counties in establishing a local correctional plan providing benefits similar to the MSRS Correctional Plan. Due to the cost of the plan compared to general employee plans and other factors, no employing unit ever elected to participate in the plan. Although the plan had no members, it remained in statute for many years, coded as Minnesota Statutes, Chapter 353C, the Local Government Correctional Service Retirement Plan. Because the plan was in statute and might at some date have members, it was necessary to give the plan due consideration and inclusion in Commission actuarial standards, in actuarial contracts with the actuary retained by the Commission, and in procedures for allocating the cost of actuarial valuations among the retirement systems and plans. The Legislature and PERA administrators also felt obligated to revise laws governing the PERA Local Government Correctional Service Retirement Plan to keep it current with administrative changes in law that were deemed appropriate for other public plans. Eventually, as part of the 1997 benefit increase legislation, the Commission recommended a repeal of the plan, given the inconvenience and cost of maintaining and revising a plan which had no membership, and because its benefit and contribution rate provisions had features which were no longer consistent with current pension policy. The Commission felt that if, at some future time, local and county governments were willing to support a plan and there was clear need for a plan offering specific features geared to the needs of various local correctional groups, new provisions could be enacted. In 1997, the plan was repealed (Laws 1997, Chapter 233, Article 1, Section 78, Paragraph (b)).

   In 1998 (Laws 1998, Chapter 390, Article 9), in part as a reaction to the 1997 repeal, special duty disability coverage was extended to local government correctional employees, augmenting the coverage of the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General), with an additional member and employer contribution requirement by or on behalf of the local government correctional employees. Correctional employees, for purpose of the 1998 enhanced PERA disability coverage, were defined as persons who are essential employees under the Public Employees Labor Relations Act (PELRA) working at a county administered or regional jail or correctional facility and who have at least 75 percent direct inmate contact.

   In 1999 (Laws 1999, Chapter 222, coded as Minnesota Statutes, Chapter 353E), after a Commission interim study and following considerable deliberation and controversy, the Commission recommended and the Legislature enacted a second PERA Local Government Correctional Employees Retirement Plan. The plan was developed in response to public employee demands for improved retirement coverage beyond the PERA General Retirement Plan and beyond the 1998 special local government correctional employees duty disability coverage. The plan initially applied to local government employees who are employed in a county-administered jail or correctional facility or in regional facilities, who are certified by the employer to have 95 percent inmate contact, and who would otherwise be a PERA-General member.

   In 2000 (Laws 2000, Chapter 461, Article 10), the PERA Correctional Plan eligibility requirements were further refined at the request of the Association of Minnesota Counties. The revision provided that the county employer was required to certify correctional employees to PERA, replaced with the prior 95 percent inmate contact time requirement with the inclusion of specific employment positions, the requirement that the person be directly responsibility for inmate security, custody, and control, and the requirement that the person be trained and expected to respond to institutional incidents.

   In 2002, (Laws 2002, Chapter 392, Article 4), the membership of the PERA-Correctional Plan was expanded to include the protective officers employed by the Hennepin County Medical Center.

2. PERA-Correctional Plan Membership Requirements. The 1999 plan has been substantively modified once, in 2000. The following compares the membership eligibility requirements of the 1999 PERA-Correctional Plan and of the 2000 PERA-Correctional Plan, with plan coverage for:

Additionally, under the 2000-2001 PERA-Correctional Plan, persons who were members of the 1999 plan continued after 2000 as plan members for the duration of their employment in the particular county correctional institution position.

3. PERA-Correctional Plan Benefits. The current PERA-Correctional Plan is identical to the plan enacted by the 1999 Legislature.

   The following sets forth the major provisions of the PERA-Correctional Plan:

1. Retirement Annuities. Retirement annuities for covered service under the plan will be computed with a 1.9 percent accrual rate per year, with a high-five average salary defined as the highest average for any five years of successive service. The normal retirement age is age 55. Retirement may occur as early as age 50 with an actuarial reduction. Augmentation, as found in current PERA law, applies to deferred annuities. The benefit is a single life annuity, with optional annuity forms of 25 percent, 50 percent, 75 percent or 100 percent joint and survivor options (with subsidized bounce-back feature) or Social Security leveling option to age 62.

2. Disability Benefits. Disability benefits under the plan are computed like a normal retirement annuity, except that the minimum duty-related disability benefit is based upon 25 years of service, and the minimum non-duty-related disability benefit is based upon ten years of service. Optional annuities may be elected.

3. Survivor Benefits. If a vested active or deferred plan member dies after attaining age 50 but before other benefits become payable, the surviving spouse is entitled to a 100 percent joint-and-survivor annuity for which the member would have qualified for on the date of death. In lieu of the joint-and-survivor annuity, the survivor of an active or deferred member who was at least age 50 at death may elect a 10, 15, or 20 year term-certain annuity. If the member was under age 50 at the time of death, the survivor is entitled to a reduced 100 percent joint-and-survivor annuity based on the age of the employee and spouse on the date of the employee’s death. The annuity reduction is a full actuarial reduction to age 50 and one-half of a full actuarial reduction from age 50 until the age payment begins. Deferred annuity augmentation would apply. A survivor benefit may be paid to a dependent child or children if there is no surviving spouse, with the benefit terminating at age 20 or five years after commencement of the benefit, whichever is later.

4. Combined Service Provisions. The plan is included under the combined service annuity, disability, and survivor provisions.

5. Post-Retirement Adjustments. Benefits may be increased each January 1 depending in part on increases in the Consumer Price Index (CPI), to a maximum of 2.5 percent annually, and in part on the investment performance of the Minnesota Post Retirement Investment Fund (MPRIF) in excess of 8.5 percent. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30 will receive a full increase. Members receiving benefits for at least one full month but less than 12 full months will receive a partial increase.

6. Termination Refund. Upon termination of membership, with any length of service credit, a refund is payable of the member’s contributions with six percent interest compounded annually. A deferred annuity may be elected in lieu of a refund if the person has three or more years of allowable service.

7. Deferred Annuity. A deferred retirement annuity is payable at the normal retirement age to a person with three years of allowable service, with the benefit computed under law in effect at termination and increased by three percent, compounded annually, until January 1 of the year following the attainment of age 55, and five percent thereafter, until the annuity begins.

4. Actuarial Condition and Funding of PERA-Correctional. The initial contribution requirements for the PERA-Correctional Plan were set based on the actuarial cost estimate of the 1999 proposed legislation, prepared by the consulting actuary retained by the Commission. That actuarial cost estimate of proposed legislation depended on the identification of potential members by PERA, which ultimately was an undercount, and depended on the benefit plan proposed for the new plan, which omitted a portion of the ultimate disability provisions. The initial contribution rates were 5.83 percent of covered pay by the member and 8.75 percent of covered pay by the employing county (inclusive of applicable 1997 PERA State aid).

   In 2000, because the initial contribution rates were deficient when compared to the first (July 1, 1999) actuarial valuation of the plan, the member and employer contribution rates were increased to 6.01 percent and 9.02 percent, respectively, effective January 1, 2002. That contribution increase was further delayed by the 2001 Legislature to January 1, 2003, because the second (July 1, 2002) actuarial valuation of the plan indicated a contribution sufficiency for the plan. The 2000 contribution increase was repealed in 2002 (Laws 2002, Chapter 392, Article 4, sections 3 and 5).

   The following compares the July 1, 2000, and the updated July 1, 2001, PERA-Correctional Plan actuarial valuation results: