H.F. 489 (Rhodes); S.F. 449 (Johnson, D.E.) creates a 21-member task force to study the need for and the potential design of a voluntary statewide volunteer firefighter retirement plan. The study would consist of a statewide survey of current volunteer firefighter relief associations on the design and components of a potential statewide plan by the Management Analysis Division of the Department of Administration, statewide public hearings on the topic, and the preparation of an actuarial study of the benefit level or levels of a potential statewide plan and its funding requirements. The task force study is due on January 15, 2005. The task force is funded from a $300,000 State general fund appropriation, allocated at $100,000 for the Management Analysis Division of the Department of Administration, at $15,000 for the State Auditor, and at $120,000 for the Department of Administration to retain a consulting actuary.

H.F. 489 (Rhodes); S.F. 449 (Johnson, D.E.) would create a structure for an organized consideration of the potential for creating a statewide volunteer firefighter retirement plan to replace on a voluntary basis some or many volunteer firefighter relief associations. The study would be conducted by a volunteer firefighter-dominated task force, which would conduct a survey of volunteer firefighter relief associations, hold various regional meetings to receive reactions from volunteer firefighters, have actuarial work on alternatives prepared, and prepare a report to the Legislature.

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

1. The Appropriateness of Encouraging A Statewide Volunteer Firefighter Retirement Plan. The policy issue is the appropriateness of the Legislature in encouraging the creation of a statewide volunteer firefighter retirement plan in place of many or most of the current 700+ volunteer firefighter relief associations by mandating a study of the creation of the plan by a specially created task force. Minnesota has had volunteer firefighters for over one hundred years and has provided them with retirement coverage for more than six decades through a decentralized system of volunteer firefighter relief associations. This history of decentralized retirement coverage, which has a discernable cost, is proposed for being reversed by the creation of a statewide retirement plan for volunteer firefighters. The sponsor of the task force proposal, the Minnesota Area Relief Association Coalition (MARAC), has made no statewide or general public policy argument for the proposal, but only provides prospects for increased individual volunteer firefighter benefit amounts and other personal gain advantages by volunteer firefighters for the proposal. If the policy advantages of a shift from a decentralized retirement system to a statewide system cannot be articulated, perhaps there is no statewide advantage. The Legislature certainly can be supportive of greater benefits for volunteer firefighters, but those greater benefits can be obtained by more knowledgeable investment practices by the current volunteer firefighter relief associations and by the provision of greater monetary support by the affected municipality or municipalities. If there is no clear statewide advantage from the ultimate result of the task force’s work, and consequently the creation of a statewide plan is a dubious prospect, then this proposed legislation may be a waste of effort that could be avoided.

2. Unnecessary Legislation Because a Self-Help Remedy Is Available. The policy issue is the appropriateness of the proposed legislation and its utilization of legislative time and effort when the interested parties have a self-help remedy of conducting a study on their own. The Minnesota State Fire Department Association, or the Minnesota Area Relief Association Coalition (MARAC), or the Minnesota State Fire Chiefs Association, as organizations, separately or jointly, could establish a task force or a working group that could elicit and assemble information on the proposal without any legislation.

3. Appropriateness of the Relative Proportion of Task Force Representation. The policy issue is the appropriateness of weighting the task force membership significantly more heavily from the volunteer firefighter community than from other interested parties. The proposed legislation would give the volunteer firefighter community 57 percent of the total membership on the task force. From the standpoint of potential salesmanship of the ultimate product of the task force to the currently suspicious volunteer firefighter community, over-weighting the task force with volunteer firefighters may be assistance, but if the goal of the task force actually is to dispassionately gain information on the topic and report its findings, the over-weighting may not be necessary or desirable. A third party study entity, such as the University of Minnesota or the Citizen’s League, could be retained to undertake the study.

4. Reasonableness of the Cost of the Task Force. The policy issue is the reasonableness of the cost of the task force and the proposed study. The draft proposed legislation would expend up to $300,000 for an 18-month study. By comparison, that amount is approximately two-thirds of the appropriation of the Legislative Commission on Pensions and Retirement for a year and the task force’s work represents a much narrower legislative assignment.

5. Eventual Disposition of the Study. The policy issue is the likelihood that the study will produce a legislative initiative and resulting volunteer firefighter relief association decisions that merit the effort and expense for this study. Any controversy in volunteer firefighter relief association proposed legislation from the volunteer fire community generally dooms that proposal. The Legislative Commission on Pensions and Retirement heard 2002 Session S.F. ____ (       ); H.F. 3235 (Murphy) during February 2002 and initially recommended the proposed task force and study, with minor amendments, for inclusion in the 2002 omnibus retirement bill. Based on a motion from Senator Dan Stevens and based on testimony from Senator Kenric Scheevel and from a representative of the Dodge Center Fire Department, on March 11, 2002, the Commission reconsidered the inclusion of the study in the 2002 omnibus retirement bill and removed the applicable article from the bill. The Commission, in eliminating the proposed study, appeared to be responding to concerns from legislators and some volunteer firefighters about the overall cost of the task force and study, the impact on individual relief associations of the proposed deductions for the 2002 and 2003 fire state aid, and the general disinterest in abandoning the current decentralized system of volunteer fire pension coverage. Opposition testimony similar to that heard by the Commission was also heard in the House State Government Finance Committee from Representative Greg Davids on behalf of southeastern Minnesota volunteer firefighters.