Attached is a revision of amendment LCPR03-235 in the form of amendment LCPR03-236, which is an amendment for potential consideration by the Administrative Legislation Subcommittee that resulted from a meeting on August 18, 2003, between the Commission staff and William Tschida, Vice Chancellor for Human Resources at the Minnesota State Colleges and Universities System (MnSCU), Gary Janikowski, System Director of Personnel at MnSCU, Jerry Janezich, Director of State Legislature Relations at MnSCU, and Gary Austin, Executive Director of the Teachers Retirement Association (TRA). The revision adds a sentence relating to MnSCU’s ability to recover unpaid contribution reimbursement amounts, which was omitted from the earlier version unintentionally.

H.F. 1474 (Erickson); S.F. 1420 (Pogemiller), under consideration by the Subcommittee, would have excluded the salary of the MnSCU limited part-time faculty from the TRA definition of salary, to attempt to avoid the unpaid member contributions for uncovered MnSCU service from being considered omitted deductions upon the person eventually electing TRA coverage, and would have established a special TRA service credit purchase for the uncovered MnSCU service, with a subsidized purchase payment. The provisions would have numerous adverse policy implications in the view of the Commission staff. The Subcommittee requested that the Commission staff meet with MnSCU and TRA representatives to attempt to formulate a less problematic solution.

Amendment LCPR03-236 (revision to amendment LCPR03-235) amends Minnesota Statutes, Section 354.51, Subdivision 5, the TRA omitted member contributions collection provision, by creating a special member deduction shortage rule for MnSCU with respect to faculty members and other MnSCU personnel who increase from part-time employment of less than 25 percent of full time and then select TRA coverage. The member deduction shortage, related employer contributions, and interest on those amounts would be initially paid by MnSCU within 60 days of the person electing TRA coverage, with the member contribution and interest portion recoverable by MnSCU in one year from subsequent compensation paid to the employee or otherwise. The omitted member contribution recovery requirement would be limited to unpaid member deductions during the 36-month period that preceded the election of TRA retirement coverage.

Amendment LCPR03-236 will reduce MnSCU’s financial exposure because MnSCU will no longer be required to pay the member contribution amount plus interest. The draft amendment also limits the adverse selection problems for TRA in these omitted deduction recoveries by limiting the service credit exposure to the most recent 36 months. Because of the new financial implications of selecting TRA coverage under this amendment, the amendment should be expected to reduce the number of MnSCU employees exceeding the under 25 percent of full time threshold who will ultimately elect TRA coverage.

cc:    William Tschida, Vice Chancellor for Human Resources, MnSCU
        Gary Janikowski, System Director of Personnel, MnSCU
        Jerry Janezich, Director, State Legislature Relations, MnSCU
        Gary Austin, Executive Director, Teachers Retirement Association