H.F. 191 (Gerlach); S.F. 206 (Knutson) amends Minnesota Statutes, Section 352.22, Subdivision 1, the provision of the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General) law which authorizes the payment of member contribution refunds for MSRS-General members who terminate state service or who are laid off, by also including MSRS-General members who are on a medical leave for in excess of one year. The proposed change would be made effective for MSRS-General members who are currently on a medical leave once the one-year requirement is met.

H.F. 191 (Gerlach); S.F. 206 (Knutson) extends entitlement for a refund of member contributions and interest to members of the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General) who are on a medical leave of at least one year in addition to terminated state employees or state employees who are laid off.

The proposed legislation raises various pension and related public policy issues that may merit Commission consideration and discussion, as follows:

1. Unclear Actual Need for Statute Change. The policy issue is the appropriateness of a permanent statutory change when the need for the proposed authority may be needed only for one MSRS-General member. A permanent statutory change when there is no quantity of affected personnel beyond the person who requested the change may be unnecessary or may actually cause potential mischief. MSRS should be asked about the current and historic levels of state employees on long-term medical leaves in order for the Commission to assess the actual need. Amendment LCPR03-111 would recast the provision as a special law provision for the MSRS-General member who requested the change.

2. Appropriateness of the One-Year Duration Requirement. The policy issue is the appropriateness of requiring a state employee to be on a medical leave for at least one year in order to be eligible to receive a refund. One year appears to be a logical duration. Under Minnesota Statutes, Section 352.01, Subdivision 11, Clause (9), an MSRS-General member on an authorized leave of absence without pay of up to one year, including a medical leave, is eligible to receive MSRS-General service credit with the payment of equivalent member and employer contributions. Once the medical leave exceeds one year, the potential for a member receiving MSRS-General service credit is over and the person’s status as analogous to an active member terminates.

3. Appropriateness of Restricting the Provision to One Plan. The policy issue is the appropriateness of limiting this change to MSRS-General and not also including other applicable Minnesota public pension plans. If the problem can arise within MSRS-General, it also may arise in other large retirement plans. Amendment LCPR03-112 would add a comparable provision to the laws governing the General Employees Retirement Plan of the Public Employees Retirement Association (PERA-General), the Teachers Retirement Association (TRA), and the first class city teacher retirement fund associations.

4. Appropriateness of the Change Given an Available Self-Help Remedy. The policy issue is the appropriateness of the proposed legislation since there is a self-help remedy available to a state employee in the circumstance. The self-help remedy is for the employee to terminate state employment, thereby terminating the leave and clarifying the employee’s status, making the person eligible for a refund. The Commission may wish to take testimony from the affected person, from the Department of Employee Relations, or from the Minnesota State Retirement System (MSRS) to clarify the situation of the person and to determine whether or not legislation is the optimal response to this situation.