House Panel Hears PERA Employer Aid Program Extension Proposal

May 4, 2020

The $13.9 million program, which offsets employer pension contribution increases for the PERA General Plan, is scheduled to sunset on June 30, 2020.

The House Government Operations Committee on May 1 considered HF 4018 (Rep. Andrew Carlson, DFL-Bloomington), a bill that would extend the Public Employees Retirement Association (PERA) Employer Aid program.

The committee approved the bill on a vote of 14-0 and sent it to the House Ways and Means Committee, which will hear the bill while considering how the COVID-19 pandemic may impact the state budget. The Senate has not yet had a hearing on the bill.

About the program

The PERA Employer Aid program was originally created in 1997 to offset a required employer pension contribution increase on behalf of employees in the PERA General Plan. The aid is paid to all non-school PERA employers, including cities.

The initial cost of the program was set at a maximum of $15.9 million per year. Since 1997, the cost of the program has been reduced to $13.9 million, due to reductions in payroll for eligible entities and governmental reorganizations.

When the program was established, the Legislature placed a sunset in the statute that coincided with the projected full funding date for the PERA General Plan of June 30, 2020. The last payments distributed to the 1,400 local government employers across the state occurred last July and December.

What the bill would do

Under the bill, the program would be extended to the earlier of June 30, 2048, or the end of the fiscal year following the fiscal year in which the PERA General Employee Retirement Plan is fully funded.

City groups support the bill

The League of Minnesota Cities testified in support of the bill on behalf of several city groups, including the League, Metro Cities, the Coalition of Greater Minnesota Cities, the Municipal Legislative Commission, the Association of Minnesota Counties, and the Minnesota Inter-County Association.