|
|
3rd Meeting |
|
Room 15
Capitol |
|
LEGISLATIVE
COMMISSION ON PENSIONS AND RETIREMENT
MINUTES
Call to order:
Senator Lawrence Pogemiller, Chair of the Legislative
Commission on Pensions and Retirement, called the meeting to order at
Representatives
Senators Don Betzold, Keith Langseth, Cal Larson, Geoff Michel, and
Agenda
Items
Continued Discussion of Privatization Bills from the
Ms. Mary Vanek, Executive Director, PERA, testified that she spoke with the consulting actuary and the actuary calculated that based upon the funded ratio they could offer 4% and 6% augmentation rates rather than the current 6.5% and 7.5% rates, but Ms. Vanek recommended granting the current provisions to these four privatizations and then close out the current provisions and replace them with 4% and 6% augmentation rates.
Representative Smith moved S.F. 888 (Kubly); H.F. 704 (Koenen) be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
Senator Betzold moved S.F. 1091 (Dille); H.F. 1100 (Newman), as amended, be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
Senator Larson moved S.F. 1149 (Skoe); H.F. 1808 (Eken) be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
Representative Wardlow moved S.F. 1352 (Neuville); H.F. 920 (Cox), as amended, be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
S.F. 995 (Betzold); H.F. 2109 (Smith): Various Plans; State Salary Limit Exceptions
for Public Pension Purposes; and
S.F. 1206 (Betzold); H.F. 1250 (Smith):
Various Plans; Public Pension Salary Limits Local Elected Officials
Exemption
Mr. Lawrence Martin, Executive Director, Legislative Commission on Pensions and Retirement, reviewed the staff memo and policy issues raised by the bill.
Ms. Sandra Neren, representing the Minnesota County Attorneys
Association and the Minnesota Sheriff’s Association, testified in support of
S.F. 1206; H.F. 1250.
Mr. Doug Carnival, representing the Southern Minnesota Municipal Power Association, testified in support of S.F. 995; H.F. 2109.
Mr. Al Bunnett, Hay Group, testified as a consultant to the
Southern Minnesota Municipal Power Association in response to a question from
Senator Larson about the agency’s top salaries.
Mr. Bunnett indicated that the top salary is approximately $160,000 and that
they have done studies on behalf of the agency with regard to organizations
with which they compete in the utility industry, and that salary figure is
considerably below the median.
Mr. Martin reviewed the statutory salary limitation
provisions and referred members to a chart showing the history of increases in
the Governor’s salary.
Senator Larson requested Mr. Martin draft an amendment
regarding Duluth Port Authority employees.
Mr. Gary Carlson, League of Minnesota Cities, testified in
support of S.F. 995; H.F. 2109, clarified that there are two statutes regarding
salary limits and that some individuals are not covered by 43A.17 but are covered by the 356.611 pension cap,
and suggested the possibility of ending this problem by amending the statute
more generally.
Mr. Keith Carlson, Metropolitan Inter-County Association, began his testimony by disclosing that he is personally affected by the bill. He indicated after last year’s legislation, non-school local governments are essentially the only entities that remain subject to the cap. Mr. Carlson indicated that S.F. 995 provides exceptions for four county attorneys, but since the bill was drafted the Olmstead county attorney is also now over the cap and he recommended this individual also be covered. He also noted that more county attorneys and county sheriffs will be over the cap in the future, so he agreed with Gary Carlson’s recommendation of a more general provision.
Representative Smith offered amendment LCPR05-195.
Ms. Vanek testified that she did not ask the PERA Board to
take a position because it is an issue of what are the appropriate levels of
salary to be paid top local government officials, but that PERA has monitored
salaries every year since the law past and has communicated with individuals
affected by the cap. Ms. Vanek said PERA
will continue to monitor salary levels because of the federal cap, which is
currently at $210,000 and is only increased when inflation increases the amount
by $5,000, and that the salary cap is becoming an increasing issue.
Mr. Luther Thompson, Assistant Executive Director, TRA, testified that TRA does audits on admissible salary and submitted a report on those individuals whose salaries for pension purposes were reduced due to inadmissible items, such as car allowance, that had been included in salary.
Ms. Vanek testified that amendment LCPR05-195 would address
PERA’s concerns, but that there two
Mr. Martin clarified that amendment LCPR05-195 would exempt individuals who are quasi-governmental enterprises; the individuals who are still covered by the employee relations cap on their actual salary are local governmental employees and they have a mechanism to seek an individual exemption from the 43A.17 limit and would then automatically be also exempt from the 256.611 limit.
Mr. Keith Carlson testified that there have been approximately
54 requests for exemption and approximately 36 have been granted. He offered several examples, including
Mr. Greg Hubinger, Executive Director, Legislative
Coordinating Commission and the Subcommittee on Employee Relations, testified
that under law a local government may apply for a waiver from the cap and the
Commissioner may grant a waiver but the Commissioner is required to request
advice from Subcommittee on Employee Relations before granting a waiver. The standard in the law requires that the
employer needs to offer a higher salary to attract or retain an employee. In the case of
Mr. Keith Carlson indicated that Commissioner has gone
against Subcommittee recommendations in a number of cases.
Ms. Vanek testified that this is an issue she has discussed
with Board. Ms. Vanek said that the federal
limit exists and they always have to follow it, but there are states that limit
the growth of the salary during the final years. She noted that one of the staff amendments
includes such a provision and that while she doesn’t necessarily agree with the
106% recommended in the staff amendment, PERA does think this is a reasonable
option. Ms. Vanek indicated the problem
not addressed is how to address actual promotions in the final years prior to
retirement.
Senator Larson and Representative Murphy moved the handwritten amendment to include the Duluth Seaway Port Authority. MOTION PREVAILED.
Ms. Neren requested the inclusion of language to make the law retroactive to the original effective date so the individuals would have never been subject to the cap, similar to the 2004 provisions.
Representative Smith moved amendment LCPR05-195, amended to
include a retroactivity clause and to require salary audits and a report on
those audits. MOTION PREVAILED.
Mr. Keith Carlson indicated that the list on page 5 may not
be complete, but the positions are either not currently at the cap, are already
exempted, or would be covered by amendment LCPR05-195.
Mr. Hubinger testified that the packet a city or county submits
with a waiver exemption request includes a resolution from the city or council supporting
the increase.
Senator Larson moved technical amendment LCPR05-156. MOTION
PREVAILED.
Senator Pogemiller requested that the fund directors discuss the limit on end-of-career salary increases.
The bills were laid over.
S.F. 1556 (Betzold-by req.); H.F. 2101 (Murphy): MnSCU; Individual Retirement Account Plan
Investment Option Modification
Mr. Edward Burek, Deputy Director, Legislative Commission
on Pensions and Retirement, reviewed the staff memo and policy issues raised by
the bill.
Mr. Gary Janikowski, Assistant Director of Personnel, MnSCU,
testified that the recommendation came from the Defined Contribution Retirement
Plan Advisory Committee and the intention is to simplify the plan to narrow the
choices.
Mr. Russ Stanton, Inter-Faculty Organization, testified
that the committee included all of the employee groups and it is not a major
issue for the faculty.
Representative Murphy moved S.F. 1556; H.F. 2101 be
recommended for inclusion in the omnibus retirement bill. MOTION
PREVAILED.
S.F. 1431 (Wiger); H.F. 1603 (Slawik):
Mr. Martin reviewed the staff memo and policy issues raised
by the bill, and reviewed the amendments.
Senator Wiger and Representative Slawik testified in
support of the bill.
Senator Betzold moved amendment LCPR05-144. MOTION
PREVAILED.
Representative Murphy moved amendment LCPR05-187. MOTION
PREVAILED.
Representative Smith moved amendment LCPR05-188. MOTION
PREVAILED.
Captain Mike Stroeing, Oakdale Fire Department Relief
Association, and Mr. Ed Dietz, treasurer of the Maplewood Firefighters Relief
Association, were present in support of the bill.
Senator Larson moved S.F. 1431; H.F. 1603, as amended, be
recommended for inclusion in the omnibus retirement bill. MOTION
PREVAILED.
S.F. 1741 (Betzold); H.F. 1934 (Wardlow): Supplemental Pension Plans; Public Funds Contribution Restriction Exemption Clarification
Mr. Martin reviewed the staff memo and policy issues raised
by the bill.
Ms. Cheryl Furrer, Education Minnesota, testified in
support of the bill.
Representative Wardlow moved S.F. 1741; H.F. 1934 be
recommended for inclusion in the omnibus retirement bill. MOTION
PREVAILED.
S.F. 1763 (Pogemiller); H.F. 2031 (Thissen): PERA-P&F;
Mr. Martin reviewed the staff memo and policy issues raised
by the bill.
Ms. Shelly Carthen Watson,
Ms. Vanek testified that the University never intended the police
chiefs to be covered by PERA-P&F, that PERA encouraged the University to
seek this legislation, and that PERA supports the bill.
Representative Thissen moved amendment LCPR05-189. MOTION
PREVAILED.
Representative Thissen moved amendment LCPR05-190. MOTION
PREVAILED.
Representative Thissen moved S.F. 1763; H.F. 2031, as
amended, be recommended for inclusion in the omnibus retirement bill. MOTION
PREVAILED.
S.F. 259 (Betzold); H.F. 1706 (Smith): VFRAs; Implementing the Volunteer Firefighter Relief Association Working Group Recommendations Relating to Firefighter Retirement Financing and Benefits
Mr. Martin reviewed the staff memo and policy issues raised
by the bill.
State Auditor Patricia Anderson testified in support of the
bill and reviewed the working group process.
Mr. Ed Dietz, Maplewood Firefighters Relief Association,
testified in support of the bill.
Mr. Nyle Zikmund, representing
Senator Betzold moved amendment LCPR05-025. MOTION
PREVAILED.
Senator Betzold moved amendment LCPR05-026. MOTION
PREVAILED.
Mr. Dave Ganfield, Secretary, Minnesota State Fire Department
Association and administrator for Apple Valley Fire Relief, testified that some
of the amendments weren’t brought up in the working group, that the group will
continue to meet, and recommended allowing the group to discuss the issues.
Mr. Zikmund commented that while they don’t believe there
are a lot of relief associations invested in junk bonds, they don’t know who is
and getting that information would take some time. Mr. Zikmund said an immediate effective date
may cause a number of associations to not get certified for state aid.
Auditor
Senator Betzold moved S.F. 259; H.F. 1706, as amended, be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
S.F. 623 (Tomassoni); H.F. 240 (Rukavina): VFRAs;
Mr. Rick Bradford, Hoyt Lakes City Administrator, testified
in support of the bill.
Representative Rukavina testified in support of the bill
and provided letters of support from all four units of government.
Mr. Martin reviewed the amendments.
Representative Ozment moved amendment LCPR05-153. MOTION
PREVAILED.
Representative Rukavina testified that he is not opposed to
amendment LCPR05-154.
Representative Murphy moved amendment LCPR05-154. MOTION PREVAILED.
Representative Ozment moved S.F. 623; H.F. 240, as amended,
be recommended for inclusion in the omnibus retirement bill.
The bill was temporarily laid aside until a quorum was present.
S.F. 157 (Tomassoni); H.F. 94 (Rukavina): Eveleth P&F; Eveleth Police & Fire Trust Fund Ad Hoc Post-Retirement Adjustment
Representative Rukavina testified in support of the bill, noting that there are only five remaining affected individuals.
Mr. Burek reviewed the staff memo and policy issues raised by the bill.
Representative Murphy moved amendment LCPR05-035 be
recommended for full Commission consideration.
MOTION PREVAILED.
Representative Murphy moved S.F. 157; H.F. 94, as amended, be recommended for inclusion in the omnibus retirement bill.
The bill was temporarily laid aside until a quorum was present.
Mr. Martin referred members to document LCPR05-201, the current working version of the omnibus retirement bill reflecting the Commission action as of March 30. Mr. Martin noted for audience members that the document is posted on the Commission website.
A quorum was now present.
Representative Smith moved to confirm the adoption of amendments LCPR05-153 and LCPR05-154 to S.F. 623 to H.F. 240. MOTION PREVAILED.
Representative Ozment renewed his motion that S.F. 623; H.F. 240, as amended, be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
Representative Murphy moved to confirm the adoption of amendment LCPR05-035 to S.F. 157; H.F. 94. MOTION PREVAILED.
Representative Murphy renewed her motion that S.F. 157; H.F. 94, as amended, be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
S.F. 1927 (Betzold); H.F. 1799 (Wardlow): VFRAs; Statewide Volunteer Firefighter Retirement Plan Study
Mr. Burek reviewed the staff memo and policy issues raised by the bill.
Mr. Nyle Zikmund testified in support of the bill and
amendment LCPR05-177.
Representative Wardlow moved amendment LCPR05-177. MOTION PREVAILED.
Mr. Zikmund requested a verbal amendment to address
Representative Hackbarth’s concern to clarify that the task force members are
volunteer firefighters.
Representative Wardlow moved to amend S.F. 1927; H.F. 1799 as follows: on page 1, lines 14, 16 and 18, after “members” insert “who are volunteer firefighters”. MOTION PREVAILED.
Representative Wardlow moved S.F. 1927; H.F. 1799, as amended, be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
S.F. 1682 (Pogemiller); H.F. xxx: PERA; Defining Covered Salary to Include Certain Employer Contributions to Supplemental Retirement
Mr. Todd Pufile, Business Manager for City Employees Local
#363, testified in support of the bill and an amendment to be offered by PERA.
Ms. Vanek distributed amendment LCPR05-202, and requested a
verbal amendment as follows: line 4, delete “and the” and delete lines 5-6.
Representative Thissen moved amendment LCPR05-202 as
verbally amended. MOTION PREVAILED.
Senators Betzold and Larson moved to delete Section 3. MOTION
PREVAILED.
Mr. Russ Stanton, Inter-Faculty Organization, gave
background information on the MnSCU $2,700 limit.
Representative Thissen moved S.F. 1682, as amended, be recommended for inclusion in the omnibus retirement bill. MOTION PREVAILED.
S.F. 1865 (Kelley); H.F. xxx: TRA; School Administrators Retirement Coverage Option; Cooperative Agreements with Other States for Combined Service
Mr. Martin reviewed the staff memo and policy issues raised
by the bill.
Senator Kelley testified in support of the bill and
provided background information.
Mr. Charlie Kyte, Executive Director, Minnesota Association
of School Administrators, testified in support of the bill and explained the
need for the proposed legislation. Mr.
Kyte testified that
Dr. Ted Blaesing, White Bear Lake Area School District Superintendent,
testified in support of the bill. Dr.
Blaesing said that he has been assisting the superintendent search firm of Hazard,
Young, & Attea which has conducted over 500 searches across the country over
the past 20 years and that the number of applicants is dropping – ten years ago
there would have been 50-60 applicants, last year there were 20, and 2 top
level applicants chose to withdraw their applications after using the TRA online
calculator.
Mr. Dale Feste, Hopkins School Board Chair, testified in
support of the bill. Mr. Feste told
Commission members that the
Mr. Thompson testified that purchases of service credit can be very expensive, particularly close to retirement. Mr. Thompson indicated TRA’s concern about the multi-state combined service annuity provision and recommended the provision be deleted.
Senator Kelley noted that as school districts have become more diverse, school boards have deemed it advisable to seek candidates who are racially or ethnically diverse and thus have sought candidates from outside the state.
Mr. Kyte testified that they have had success at moving
principals up into superintendent positions, but the challenge is in the larger
metropolitan and suburban school districts and often the best pool of
applicants is those who are serving in similar districts in other parts of the
country.
Senator Kelley distributed amendments SCS1865A-1,
SCS1865A-2 and SCS1865A-3.
Ms. Furrer testified that there needs to be some
portability for superintendents and that there are real challenges in recruiting
and retaining superintendents. Ms.
Furrer suggested including the cities of the first class in the legislation.
The bill was laid over.
Adjournment
The meeting adjourned at