The bill includes provisions that impact city employee pensions.
After more than a month of inactivity, the Legislative Commission on Pensions and Retirement met on May 4 and finalized the 2021 omnibus pension bill.
The roughly 80-page bill (SF 1712/HF 1758) includes a number of provisions of interest to cities but notably does not include the extension of the Public Employees Retirement Association (PERA) employer aid that had been approved by the commission at an earlier hearing. The aid provision was dropped due to its roughly $13 million annual cost to the state general fund budget.
The recommendations of the Pension Commission were considered and approved in the Senate State Government Finance and Policy and Elections Committee and the House State Government Finance and Elections Committee and both bills will now head to the House and Senate floors after stops in the Senate Rules and Administration Committee and the House Ways and Means Committee.
Service credit purchase for military leave
The bill extends the time period during which a member can purchase service credit for a period of military service to a minimum of three years after the service member’s discharge from the military.
Under current law, employees returning from military service are allowed up to three times the length of their military leave, but not less than one year or more than five years, to purchase allowable service credit.
The provision is a modification of SF 1993, a bill that would have allowed employees returning from military leave the greater of either five years or three times the length of their military leave to purchase service credits.
The bill would have allowed returning employees more time to adjust to post-leave family and financial circumstances before the deadline for paying service credit. It would have also substantially expanded the enhanced benefit local employers are mandated to pay for interest on the employee contribution share.
The League, the Association of Minnesota Counties (AMC), and the Minnesota Inter-County Association (MICA) shared concerns with the Pension Commission and the provision was scaled back to the three-year time frame in the final bill.
Study of enhanced pension benefits for 911 operators
The bill creates a working group to study whether 911 telecommunications operators should receive enhanced pension benefits and to recommend options to the Pension Commission for providing enhanced benefits. This provision emerged after a bill (SF 2198) was introduced to add the 911 operators to the PERA Corrections Plan.
The League, AMC, and MICA meet with the author to express concerns about the transitional costs and the increased ongoing costs of moving employees into the Corrections Plan.
The working group will be convened by the Pension Commission’s executive director and will include:
- A representative from AMC.
- A representative from the League.
- A representative from MICA.
- A representative from the Department of Public Safety.
- A representative from the Minnesota Association of Public Safety Communications Officials or the National Emergency Number Association of Minnesota.
- The executive director of PERA.
- The executive director of the Minnesota State Retirement System.
- A 911 telecommunicator who works for a county or municipality.
- A 911 telecommunicator who works for the state.
- A member of the public employee’s local government correctional service retirement plan.
- A member of the state correctional employee’s retirement plan.
The working group is required to report to the Pension Commission by March 1, 2022.
Volunteer fire relief provisions
The bill also includes provisions pertaining to fire relief funds. The Pension Commission incorporated an amendment that would establish a working group to study the allocation of firefighter supplemental aid.
The working group would be comprised of stakeholders, including two representatives of the League, and would be convened by the Office of the State Auditor. The working group would be required to submit a report to the Pension Commission by Dec. 31, 2022.
The bill also incorporates unanimous recommendations of the State Auditor’s Fire Relief Association Working Group. In addition, it contains provisions that would conform Statewide Volunteer Firefighter Retirement Plan statutes with fire relief provisions enacted in 2020.