H.F. ____ (     ); S.F. 1616 (Betzold) revises Public Employees Police and Fire Retirement Plan (PERA-P&F) disability procedures by requiring members seeking disability benefits or a continuation of those benefits to release pertinent medical information and to submit to medical evaluations by:

1. Requiring evidence that the applicant is unable to perform duties of the position held at the time of the disability if the application is filed within two years of the onset of the disabling injury or illness;
2. Requiring evidence that the applicant is unable to perform duties assigned within 90 days of the application date if the application is filed more than two years after of the onset of the disabling injury or illness;
3. Requiring first reports of injury in all duty-related applications;
4. Requiring in all cases that the employer must provide evidence that the applicant is unable to perform applicable duties;
5. Voiding the disability application if termination from service does not occur within 45 days after approval of a disability application;
6. Clarifying that individuals may simultaneously apply for disability and retirement benefits, although both may not be received at the same time; and
7. Permitting repayment of refunds no later than six months after the effective date of the disability benefit.

1. Section 1 (page 1, lines 9 to 22) amends Section 353.656, Subdivision 5, a PERA-P&F proof-of-disability provision, by formatting the subdivision into paragraphs and by clarifying that medical information release requirements apply to any review by PERA to determine whether an individual remains disabled.
2. Section 2 (page 1, line 23, to page 3, line 24) amends Section 353.656, the PERA-P&F disability benefit provision, by adding a new subdivision specifying PERA-P&F disability benefit application procedures. The new specified procedures are as follows:
   1. All disability benefit applications must be in writing on forms provided by the executive director.
   2. A copy of a first report of injury (which must initially be filed by the employer with the Commissioner of Labor and Industry within seven days following a duty-related death or serious injury) must accompany all duty-related disability benefit applications.
   3. Any disability benefit application, whether duty-related or non-duty-related, made within two years of the onset of the disabling injury or illness must be accompanied by evidence that the applicant is unable to perform the duties held by the individual at the time of the disabling injury or illness.
   4. Any disability benefit application, whether duty-related or non-duty-related, made more than two years after the onset of the disabling injury or onset of illness must be accompanied by evidence that the applicant is unable to perform the duties assigned to the applicant during the 90 days prior to the date of the application.
   5. The employer must provide evidence regarding the applicant’s ability to perform the applicable duties that were assigned to the individual.
   6. Individuals may file disability benefit applications as late as three years after termination from service. The former member must provide evidence that the disability is a direct result of injury or illness that occurred while the individual was an active PERA-P&F member.
   7. If an individual has not terminated service or been placed on an authorized leave within 45 days following the disability application date, the disability application is cancelled. Another application cannot be filed for at least one year.
   8. A disability applicant may simultaneously file retirement and disability benefit applications. If the application for disability is approved, the retirement application is voided.

   9. Repayments of refunds are permitted until six months after the disability benefit commences or six months after the disability application date, whichever is later.

3. Section 3 (page 3, lines 25 to 36) amends Section 353.656, PERA-P&F’s disability benefit provision, by adding a subdivision specifying medical examination and medical evidence requirements. Any PERA-P&F disabilitant or new disability applicant who refuses to submit to a medical examination or to release medical evidence is prohibited from receiving benefits.

4. Section 4 (page 4, lines 1 to 12), amends Section 353.656, the PERA-P&F disability benefit provision, by adding a subdivision specifying benefit accrual procedures. Disability benefits accrue on the day following commencement of disability, 90 days preceding the filing of an application or, if annual or sick leave is paid for more 90 days, from the date salary ceased, whichever is later.

5. Section 5 (page 4, lines 13 to 22), amends Section 353.656, the PERA-P&F disability benefit provision, by adding a subdivision specifying medical advisor duties. The medical advisor must review all disability-related medical reports submitted to the association and advise the executive director. PERA is authorized to require any disability benefit applicant or current disabilitant to submit to an independent medical examination, to be paid for by the association.

6. Section 6 (page 4, lines 23 to 33) amends Section 353.656, the PERA-P&F disability benefit provision, by adding a subdivision specifying disability approval provisions. In reviewing all disability benefit applications, the executive director will consider all evidence, including advice of the medical advisor and the employer. Any application which is denied by the executive director may be appealed to the board within 45 days.

7. Section 7 (page 3, lines 20 to 22), amends Section 353.68, a PERA-P&F scope and application provision, by adding a subdivision specifying that Section 353.33, the PERA disability benefit application provision, does not apply to members of the PERA-P&F plan for purposes of determining eligibility and accrual of disability benefits.

8. Section 8 (page 3, lines 23 to 24) makes Sections 1 to 7 effective on July 1, 2004.

In 1959, to assist police officers and firefighters in local government, the Legislature established the Public Employees Police and Fire Retirement Plan (PERA-P&F). Initially, the coverage applied to any public employee in law enforcement or fire suppression but, as the licensing of police officers began in the 1970s, the membership qualifications were refined. Coverage is governed by Minnesota Statutes, Section 353.64, Subdivisions 1 and 2. Currently, PERA-P&F membership requires that the employees meet the following requirements to qualify as a police officer:

1. Police Employment. Employment must be as a police officer by a municipal police department of a county sheriff’s office.
2. Primary Law Enforcement Function. Primary employment function must be to enforce the law.
3. POST Board Licensure. Peace officers must be licensed by the Peace Officers Standards and Training Board (POST Board).
4. Property and Safety Protection. Peace officers must be engaged in the hazards of protecting the property and safety of others.
5. Arrest with a Warrant. Peace officers must be empowered to arrest with a warrant.

For firefighters, the PERA-P&F membership provision requires that the municipal employee must either be a full-time firefighter or a person in charge of a designated fire company and be engaged in the hazards of firefighting. For part-time employees engaged in police work or firefighting, PERA-P&F membership is available if the employing municipality declares by governing body resolution that the part-time employee meets the statutory police officer or firefighter requirements, except that the individual does not perform the applicable duties full-time. For full-time police officers or firefighters who are periodically assigned other duties, the other duties must be in the same department and the other duties must be secondary services, with the police or firefighting services being primary.

Since 1959, all newly employed county deputy sheriffs have PERA-P&F pension coverage and, since 1980, all newly employed municipal police officers and all newly employed municipal paid firefighters have pension coverage by PERA-P&F.

As a public safety employer pension plan, PERA-P&F pays larger retirement annuities, disability benefits, and survivor benefits than a general employee retirement plan and has an earlier normal retirement age for the retirement annuity. Because of these benefit plan differences, the plan typically has a greater actuarial cost and greater member and employer contributions than a general employee retirement plan. As law enforcement officers, members of PERA-P&F are not covered by Social Security under both state and federal law for their state law enforcement employment.

The policy reasons for having a more lucrative benefit program for public safety employee retirement plans are that:

• public safety employment (police officer or firefighter service) is particularly hazardous;
• it requires the maintenance of a particularly vigorous and robust workforce to meet the strenuous requirements of the employment position; and
• the normally expected working career of a public safety employee will be significantly curtailed as a consequence of the hazards and strenuous requirements of that type of employment when compared to a general public employee.

Public employee pension plans are intended to assist the governmental personnel system by encouraging the recruitment of qualified and motivated new employees, the retention of able and valued existing employees, and the orderly and predictable out-transitioning of employees at the expected end or normal conclusion of their working career. For public safety employees, public safety employee retirement plans provide more lucrative benefits to assist in the recruitment and retention of new and existing personnel, but most clearly emphasize the out-transitioning function.

At the Commission’s February 10, 2004 meeting, Milliman USA, the Commission-retained actuary, provided an overview of the actuarial results for all Minnesota plans for which that actuary provides actuarial reports. Milliman USA indicated that the PERA-P&F situation deserves careful watching. The reason is the considerable deterioration in the actuarial condition of this plan, as indicated in Table 1 below.

The deterioration in the PERA-P&F funding condition, to the extent it is captured in recent actuarial work, reflects two factors: the weak investment markets in recent years, and a considerable increase in recognized liabilities, as actuarial assumptions were revised in 2003 to better reflect experience. The PERA-P&F actuarial condition as reflected in the July 1, 2002, and the July 1, 2003, actuarial valuations is shown below. Also shown for July 1, 2003, are the results based on market value, rather than actuarial value.

Table 1 indicates that current assets (the actuarial value of assets) remained about the same, approximately $4.7 billion, but the accrued liabilities increased noticeably in 2003, from about $3.9 billion to $4.4 billion, in part reflecting the impact of revised actuarial assumptions regarding mortality and various other factors to better mirror actual experience. The lack of asset growth coupled with a large increase in liabilities caused a considerable drop in the funding ratio, from 121 percent in 2002 to 107 percent in 2003.

Perhaps of more importance is that the plan went from a sizable contribution surplus in 2002 to a contribution deficiency in 2003. This indicates that given a continuation of the present situation, this plan will not be fully funded at the full funding date (July 1, 2033), despite appearing to have more assets than liabilities at the current time. The cause of the contribution deficiency is an unchanged contribution rate despite a large increase in contribution requirements, due to a noticeable increase in normal cost coupled with a much smaller negative amortization factor. Based on the actuarial value of assets, for many years this plan has had considerable assets in excess of full funding. This causes a negative amortization factor. In other words, the excess is being used to reduce the total contribution requirements that would otherwise apply. In 2002, the normal cost plus expenses were 20.34 percent of payroll, but with a 7.26 percent negative amortization factor, the total plan requirements were only 13.08 percent of payroll. In 2003, the increase in normal cost raised the normal cost plus expenses to 22.17 percent of payroll, and the amortization factor was only negative 2.65 percent of payroll, rather than negative 7.26 percent, resulting in total requirements of 19.52 percent of payroll, much higher than in the previous year. The total contributions received, however, remained at 15.50 percent of payroll. Thus, while in 2002 there was a 2.42 percent contribution surplus, by 2003 this had changed to a 4.02 percent of payroll contribution deficiency.

If the market value of assets is used rather than the actuarial value of assets, the current situation is much worse. The smoothing methodology used to create the actuarial value of assets (current assets in the above table) continues to overstate the actual assets on hand. The market value of assets on the most recent actuarial study date (July 1, 2003) was $4.178 billion, considerably less than the $4.713 billion in "current assets" used in the actuarial report. Given the actual market value of the portfolio, the plan has $213.3 million in unfunded liabilities rather than surplus assets. Rather than a 2.65 percent of payroll negative amortization factor to reduce contribution requirements, the amortization factor using market value would be positive 1.75 percent of payroll, adding to the contribution requirements. When the market value of assets, rather than actuarial value, is used in the calculations, the contribution deficiency is 8.42 percent of payroll, not 4.02 percent of payroll.

While the condition of the PERA-P&F fund has unquestionably deteriorated as reflected in this available actuarial work, the situation may be worse than reflected in this work. The problem is a noticeable recent increase in PERA-P&F disability applications. PERA disability benefits and related automatic spousal coverage and health care coverage provide a generous package. The cost of the disability–related benefits, together with higher usage, is likely to further increase plan normal costs. H.F. ____ ( ); S.F. 1616 (Betzold) is intended as a step, although a very modest one, in controlling the use and abuse of PERA-P&F disability benefits provisions.

In the last few years PERA has become increasingly concerned about significant increases in PERA-P&F disability applications, which has lead to a sizable increase in PERA-P&F disabilitants. In the broadest terms, this increased use of disability stems from the ease of qualifying for these benefits in PERA-P&F, and in public safety plans in general, and the strong financial incentive to be a PERA-P&F disabilitant prior to age 65 rather than a service retiree.

It is fairly easy to qualify for disability in the PERA-P&F plan because disability is based on the ability to perform in a specific occupation, and PERA has not had a disability benefit application and review process specifically designed for a public safety plan. This has lead to the need for the current proposal. In PERA-P&F and other public safety plans, an individual who can no longer perform the duties to which the individual had been assigned qualifies for disability. In contrast, the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) and other general employee plans use a far more restrictive standard – an individual must be unable to provide any gainful employment to qualify for benefits.

Recent PERA-P&F experience studies show a large number of PERA-P&F disability applications, considerably higher than expected, by members approaching early retirement age for the plan (age 50) and by those approaching normal retirement age (age 55). Some of these applications are likely due to the strong financial incentive provided by law to seek disability benefits rather than retirement benefits. The package of disability-related benefits offered to PERA-P&F members are as follows:

1. PERA-P&F Disability Benefit. Due to the hazardous nature of public safety employment, public safety plans provide generous disability benefits. In PERA-P&F, a disabilitant receives the retirement benefit to which the individual would be eligible, but without any reduction due to early retirement. The PERA-P&F benefit is 3.0 percent of the high-five average salary for each year of service. Thus, a member going on disability after 30 years of service would receive 90 percent of the high-five average salary as the annual benefit, while a member with 25 years of service would receive 75 percent of the high-five average salary. For those disabilitants with minimal service, the minimum line-of-duty disability is equivalent to a 20-year service pension, while the minimum non-line-of-duty disability is equivalent to a 15-year service pension.

2. Automatic Survivor Coverage. PERA-P&F disability benefits include automatic surviving spouse coverage. If an individual were to retire under the PERA-P&F plan rather than become a PERA-P&F disabilitant, he or she would need to take a reduction in the retirement benefit to provide joint-and-survivor coverage, if that coverage is desired. In contrast, survivor coverage comparable to that provided under a joint-and-survivor annuity is provided automatically to the spouse of disabilitants without charge to the disabilitant.

3. Employer-Paid Health Care for Public Safety Plan Disabilitants and Their Families. Public safety plan duty-related disabilitants receive continued employer-paid health care. The law providing this treatment passed in 1999 (coded as Minnesota Statutes, Section 299A.465) and requires the employer to continue to pay the employer contribution portion of health care insurance costs to age 65 if the disability is duty-related.

In 1993, to address federal law age discrimination compliance concerns, PERA and other pension plans recommended that the last eligible age for disability in public safety plans should be extended from age 55 to age 65. The requested law changes were adopted. Currently, there is some debate about whether some of the age discrimination compliance revisions enacted in 1993 were actually needed in public safety plans. Because the normal retirement age for public safety plans is age 55, not 65 or later as in a general employee plan, there may have been no need to allow access by public safety plan members to disability benefits after age 55.

Permitting access after age 55 is creating additional costs for PERA-P&F, and possibly for other public safety plans. A PERA-P&F member at age 55 or later who retires would pay for any desired surviving spouse coverage by taking a joint-and-survivor annuity, with the necessary reduction in pay for that coverage. The comparable member who is age 55 or older, but who takes a disability benefit rather than a retirement benefit, receives a higher net benefit than the retiree because the disabilitant has no reduction for the spousal coverage. That cost is shifted to the plan. The disabilitant, if the disability is line-of-duty, also receives health care coverage to age 65, with the employer covering the employer contributions for that coverage. The comparable retiree would have to pay for their own health care coverage, which can be very expensive.

Table 2 indicates the normal cost of plan disability benefit provisions as presented in the plan actuarial reports. As an indication of cost during the 1990s, data for 1990 and 1995 is provided. The last column shows the normal cost as indicated in the most recent actuarial valuation, for July 1, 2003. Three general employee plans are shown (MSRS-General, PERA-General, and the Teachers Retirement Association (TRA)) and two public safety plans, the State Patrol Retirement Plan and PERA-P&F. For the general employee plans, the normal cost of disability benefits is generally less than one-half of one percent of payroll. The public safety plan disability normal cost is much higher, currently over two percent of covered payroll.

In recent years, in part because of the attractive package of benefits provided to PERA-P&F disabilitants, particularly if the disability is duty-related, the number of disabilitants has been much higher than expected under the assumptions used in actuarial valuations. Thus, the normal cost of PERA-P&F disability coverage (and possibly the State Patrol Plan) as indicated in the actuarial valuations could be considerably understated. The higher-than-expected use of disability has held for all ages other than the earliest ages. Table 3, from an experience study report dated December 10, 2002, by PERA’s retained actuarial firm, Mercer Human Resource Consulting, shows the PERA-P&F disabilities that occurred between 1997 and 2001 compared to the expected numbers given the assumptions used in the actuarial work. At lower ages there were fewer disabilities than expected, but from age 35 and older, there were considerably more than expected. The highest spikes are at age 45 to 49, prior to the earliest service retirement age for the plan (age 50), and particularly the age group 50 to 54, (prior to age 55, the normal retirement age for this plan) where disabilities were 283 percent of the expected amount. Attachments to this memo show similar information for each separate year or groups of years within the 1997 to 2001 period. For the 50 to 54 age group, disabilities were 178 percent of those expected in 1997-1998, 161 percent in 1998-1999, 375 percent in 1999-2000, and 391 percent of those expected in 2000-2001. The table also shows 28 disabilitants occurring at age 55 or after. Under pre-1993 law this would not occur; these individuals would be treated as retirees.

H.F. ____ ( ); S.F. 1616 (Betzold) revises Public Employees Police and Fire Retirement Plan (PERA-P&F) disability procedures by requiring members seeking disability benefits or a continuation of those benefits to release pertinent medical information and to submit to medical evaluations by:

1. Requiring evidence that the applicant is unable to perform duties of the position held at the time of the disability if the application is filed within two years of the onset of the disabling injury or illness;
2. Requiring evidence that the applicant is unable to perform duties assigned within 90 days of the application date if the application is filed more than two years after of the onset of the disabling injury or illness;
3. Requiring first reports of injury in all duty-related applications;
4. Requiring in all cases that the employer must provide evidence that the applicant is unable to perform applicable duties;
5. Voiding the disability application if termination from service does not occur within 45 days after approval of a disability application;
6. Clarifying that individuals may simultaneously apply for disability and retirement benefits, although both may not be received at the same time; and
7. Permitting repayment of refunds no later than six months after the effective date of the disability benefit.

H.F. ____ ( ); S.F. 1616 (Betzold) is an attempt to clarify and provide more structure to PERA-P&F disability application provisions, including disability benefit reviews to determine if benefits should continue. As indicated above, PERA-P&F has recently incurred a very large contribution deficiency. A recent upward trend in PERA disability benefit applications is likely to further worsen this situation. PERA is seeking the changes found in H.F. ____ ( ); S.F. 1616 (Betzold) as an initial step to help control PERA-P&F disability benefit costs. In reviewing this proposal, the Commission may wish to consider whether this proposal goes far enough, or whether more should be done to curb abuse and limit the use of these provisions.

H.F. ____ ( ); S.F. 1616 (Betzold) raises the following public pension policy issues:

1. Permitting Refund Repayments After Disability Has Occurred. The draft permits refunds to be repaid to reestablish lost service credit as late as six months after the filing of the disability application, or six months after the effective date of disability benefits, whichever is later (page 3, lines 17 to 24). This is equivalent to permitting individuals to purchase insurance after the insurable event has occurred. Pension plan disability provisions are a form of insurance, provided by the pension plan rather than purchased from a private sector provider. A private sector insurance provider would not permit this treatment.

   Notwithstanding Commission staff concerns, the language in question was first added to the General Employee Retirement Plan of the Public Employees Retirement Association (PERA-General) disability provision (Section 353.33, Subdivision 1) in 1992 with minor revision in 1993. The PERA-General refund repayment language is in a subdivision dealing specifically with PERA-General coordinated members. Staff’s understanding, though, is that PERA followed or would follow that same refund repayment policy in PERA-P&F disability situations. Thus, the refund repayment language in this new proposed PERA-P&F provision may reflect a continuation of existing PERA policy rather than new policy.

However, the issue may need to be reconsidered due to the current situation. PERA is concerned about overuse of PERA-P&F disability benefit provisions and the cost impact it is having on the plan. This refund repayment policy is not helping PERA contain its costs. The Commission may wish to consider whether the proposed PERA-P&F refund repayment language should be revised to eliminate or at least reduce the ability of individuals to repay refunds after the disabling event has occurred. Refund repayments reestablish service credit lost by taking a refund. One argument for not considering an amendment is that prohibiting refunds after the insurable event occurred may have little impact on PERA-P&F because the minimum disability benefits are so generous. The minimum line of duty disability benefit is equivalent to a 20-year pension, and there is no minimum vesting requirement to qualify for that benefit. An individual with a duty disability would be interested in repaying a refund only if that gave the individual a total of more than 20 years of service credit. The minimum non-line-of-duty benefit is equivalent to a 15-year pension. Individuals must have at least one year of service credit to qualify for that benefit.

2. Appropriate Duty Standard. The issue is whether a PERA-P&F member should be considered to be disabled if the individual is unable to perform the duties the individual had when the disabling injury or illness occurred, or an inability to perform more recently assigned duties. On page 2, lines 3 to 11, if the application for disability is filed within two years of the disabling event, the proposed test is whether the individual can perform the duties of the position held on the date the injury or onset of illness occurred. If the application is filed more than two years after the disabling event (page 2, lines 12 to 22), the proposed test is whether the individual can perform the duties assigned during the 90 days prior to the application. In this latter case, an individual who was injured but reassigned is not eligible for disability if the individual is able to perform the reassigned duties. In the "under two year" case, however, there is risk that individuals who are reassigned to other duties and who perform capably or who have the ability to perform capably, can qualify for disability based on a determination that the individual is unable to perform the duties they had previously, at the time of the injury or illness.

   PERA has indicated that two years is needed to sort out workers’ compensation issues and to determine whether the position to which the injured individual is assigned will be permanent rather than temporary, and whether the individual can perform those duties over the longer term. The Commission may wish to hear testimony from PERA on this matter. Perhaps the proposed treatment is appropriate and necessary. The risk is that it may be creating a loophole which permits capable individuals to qualify for disability. Perhaps the criteria needs further refining.

3. Inconsistent Employer Input Requirement. PERA seeks to require input from the employer if the disabilitant is an active member. The employer is required to provide evidence indicating whether the individual is able to perform the duties of the position at the time of the disabling event, or more recently assigned duties, depending upon whether the application is filed within two years of the disabling injury or illness, or after two years. The applicable language is found on page 2, lines 8 to 11, and 17 to 22. However, if the applicant has terminated from covered service, there is no requirement or authority to obtain input from the prior employer. The Commission may wish to add comparable language requiring that input.

4. Permitting Terminated Individuals to Apply for Disability Benefits. Allowing individuals who terminate from covered service to apply for disability is problematic, particularly in a plan which uses an occupational definition of disability.

   1. Permitting Disability Applications after Termination. The proposal to permit PERA-P&F members to apply for disability up to three years after terminating is patterned after an existing statement in a PERA-General disability provision, Section 353.33, subdivision 2. Arguments can be made for permitting disability applications from terminated members if the disabling event or onset of illness occurred prior to the termination from service. In these cases, it is prudent to require evidence that the disability is a result of injury or illness that occurred while the individual was an active, covered member. Language on page 2, lines 26 to 30, requires the individual to provide this evidence. Hopefully, this process will be workable in practice. As noted previously, the Commission may wish to add a requirement that the employer provide any useful information.

      Staff’s understanding is that the General State Employees Retirement Plan of the Minnesota State Retirement System (MSRS-General) and the MSRS State Patrol Retirement Plan do not permit individuals to apply for disability benefits after termination of service. The Commission may wish to consider whether the proposed PERA-P&F provision should permit terminated employees to apply for disability benefits and, if it is to be permitted, whether that should be permitted up to three years after termination of service as is provided in the bill, or whether a shorter period is appropriate.

   2. Proper Disability Standard. The second issue in this section is the proper disability standard to use when the individual has terminated service up to three years previously. When an active police officer is injured and unable to perform the services provided at the time of the injury, there is some justification for use of the current occupational standard. However, if an individual voluntarily terminates from covered PERA-P&F employment, that individual has freely chosen not to provide police officer or firefighting services. Given this demonstration that the individual no longer wants to provide police or fire services, it is unclear why that individual should be permitted up to three years after terminating to file for disability benefits based on a contention that he or she is unable to provide the applicable police or fire services. Perhaps in cases such as these, disability should be permitted only if the individual qualifies under the more strict standards used in a general employee plan, which requires an inability to provide any form of meaningful employment.

   3. Termination/Refund Interaction. In cases where an individual has terminated service up to three years previously, the refund repayment language, referred to previously and found on page 3, lines 17 to 24, of the draft, will allow that individual to repay a refund perhaps three-and-a-half to four years after termination from service. This is an extraordinary proposed treatment, given that most plans do not permit refunds if the individual is not an active plan member.

5. Consistency Between Comparable Plans. The issue is the need to retain consistency between comparable plans. If the proposed changes in the PERA-P&F disability benefit eligibility are deemed appropriate, then presumably it would be appropriate for the similar MSRS State Patrol Retirement Plan. While it is unlikely that the Commission will have time at this meeting or during this session to fully consider this expansion, the Commission may wish to consider this as part of an interim topic.

6. Appropriate Commission Action. H.F. ____ ( ); S.F. 1616 (Betzold) reflects considerable discussion within PERA and with applicable interest groups. The Commission may choose to view the proposal as an imperfect but reasonable compromise or, alternatively, as a work in progress which has too many rough edges to consider recommending it for passage. Several of the policies reflected in the draft are borrowed from PERA-General. Some of the practices raise policy questions and may be more problematic when applied to a public safety plan with a position-specific definition of disability rather than a total and permanent definition. If the Commission wishes to consider recommending the provisions to pass, with or without amendments, the Commission may wish to explore whether it is feasible at a later time to revise these provisions.

7. Need for Further Policy Changes, Broader Scope. The issue is whether the changes proposed by PERA in these bills is sufficient to address the PERA-P&F disability situation, which is one element in a worsening financial situation for this plan. The proposal falls short of addressing several of the underlying causes of the increase in disability claims and in controlling the overall cost to PERA and to employing units due to these claims. In some cases, the proposal seems to either create or permit existing loopholes to continue. The Commission may wish to consider any action on PERA-P&F disability procedures during this session as a first step in a lengthier and more involved process. Further review of disabilitant health care provisions, automatic surviving spouse coverage, and age discrimination language may be needed. Retraining, providing preference in employment in non-public safety jobs for individuals who might otherwise by placed on PERA-P&F disability, and other possibilities might be explored. The scope may need to involve several plans in addition to PERA-P&F.

The Commission may wish to consider several of the following amendments. Others can be provided as directed by the Commission.

LCPR04-054 is a technical amendment clarifying language.

LCPR04-055 would remove proposed language on page 3, lines 17 to 20, which permits PERA-P&F members to repay refunds after a disabling event has occurred.

LCPR04-056 would prohibit disability applications after termination of service.

LCPR04-057 is an alternative to LCPR04-056 and could be used to permit disability applications after termination of service, but only for a period to be determined by the Commission. Possibilities include three months rather than three years, or one year rather than three.

LCPR04-058, which could be used if the bills retain any authority to allow disability benefit applications after termination of service, would require the employer to provide evidence regarding the duties assigned while the individual was a covered employee, and the employee’s ability to perform those services.

LCPR04-059, dealing with the "less-than-two-year case," would require the employer to provide information about recently assigned duties if the individual was assigned different duties after the disability injury or onset of illness occurred.

LCPR04-054

  1.1     ............... moves to amend H.F. No. ....; S.F. No. 

  1.2  1616, as follows: 

  1.3     Page 1, lines 13, strike "such" and insert "a" 

  1.4     Page 2, line 11, after "disability" insert "and 

  1.5  specifications of any duties that the individual can or cannot 

  1.6  perform" 

  1.7     Page 2, line 12, delete "Where" and insert "If" and after 

  1.8  "disability" insert "benefits" 

  1.9     Page 2, line 18, delete "most recent" 

  1.10    Page 2, line 23, before "No" insert "Unless otherwise 

  1.11 permitted by law," 

  1.12    Page 2, line 25, delete "public" and insert "from Public 

  1.13 Employees Retirement Association police and fire plan covered" 

  1.14    Page 4, line 16, delete "An" and insert "Any" 

  1.15    Page 4, line 17, delete "and an" and insert "or any" 

  1.16    Page 4, line 22, delete "of the results" 

  1.17    Page 4, line 25, delete "Approval of" 

  1.18    Page 4, line 26, delete "an application for" and insert 

  1.19 "Review of" and delete "benefits" and insert "benefit 

  1.20 applications and review of existing disability cases" 

  1.21    Page 4, line 30, after "benefits" insert "or whose 

  1.22 continuation of disability benefits" 

  1.23    Page 4, line 33, after "application" insert "or benefit 

  1.24 continuation"

LCPR04-055

  1.1     ............... moves to amend H.F. No. ....; S.F. No. 

  1.2  1616, as follows: 

  1.3     Page 3, lines 17, delete everything after "(h)" 

  1.4     Page 3, delete lines 18 and 19 

  1.5     Page 3, lines 20, delete everything before "No"

LCPR04-056

  1.1     ............... moves to amend H.F. No. ....; S.F. No. 

  1.2  1616, as follows: 

  1.3     Page 2, delete lines 23 to 30 

  1.4     Reletter the remaining paragraphs

LCPR04-057

  1.1     ............... moves to amend H.F. No. ....; S.F. No. 

  1.2  1616, as follows: 

  1.3     Page 2, line 24, delete "three" 

  1.4     Page 2, line 25, delete "years" and insert "....." 

  1.5     Page 2, line 26, delete "three years" and insert "....."

LCPR04-058

  1.1     ............... moves to amend H.F. No. ....; S.F. No. 

  1.2  1616, as follows: 

  1.3     Page 2, line 30, after the period insert "The employing 

  1.4  unit for which the former member worked prior to termination of 

  1.5  service must provide evidence of the duties assigned to the 

  1.6  applicant during the final 90 days of covered employment, 

  1.7  evidence regarding the ability of the applicant to perform those 

  1.8  duties, and specifications of any duties that the applicant can 

  1.9  or cannot perform.  The employing unit must also provide similar 

  1.10 information for other time periods if requested by the executive 

  1.11 director."

LCPR04-059

  1.1     ............... moves to amend H.F. No. ....; S.F. No. 

  1.2  1616, as follows: 

  1.3     Page 2, line 11, after the period insert "The employer must 

  1.4  also provide similar information for a more recent time period 

  1.5  or periods if requested by the executive director."