The League has long been concerned about the increase in duty disability claims among members of the PERA-Police & Fire Plan.
The Legislative Commission on Pensions and Retirement, also known as the Pension Commission, will receive a briefing on Feb. 23 on the process the Public Employees Retirement Association (PERA) uses to determine duty disability retirement eligibility for police officers and firefighters who are injured in the line of duty.
The Pension Commission held its first meeting of the biennium on Feb. 16, and will meet every Tuesday for the next several weeks. The first meeting was focused on electing leaders for the 14-member joint commission, made up of representatives and senators, and on getting updates on Minnesota’s various public pension plans. Sen. Julie Rosen (R-Vernon Center) will chair the group for the current biennium, and Rep. Mike Nelson (DFL-Brooklyn Park) will serve as vice chair.
Duty disability trends concerning
The League has long been concerned about trends around duty disability claims in the PERA-Police & Fire (P&F) Plan.
The PERA-P&F Plan is the state pension plan for full-time local police officers and firefighters hired after 1980. The plan covers more than 11,000 active public safety officers and pays benefits to 10,000 retirees and survivors. In order to receive a duty disability determination, the injured employee must secure approval from PERA.
According to information released by PERA last year:
- The total number of disability retirements relative to service retirements has increased over the past five years.
- Disability retirement rates for members over age 55 have been increasing at a significant rate.
- About one out of every 10 PERA-P&F employees retiring over age 55 will do so on a disability retirement.
- Disability rates under age 50 have been increasing but remain low. Approximately one out of every 300 members under age 50 goes on disability retirement each year.
- The annual cost to fund future disability retirement benefits is currently 3.45% of payroll (or approximately one out of every six dollars of contribution). This is consistent with results that show nearly one out of every six retirees is on a disability retirement.
What is a duty disability retirement?
A duty disability, which is determined by PERA, means the employee has a physical or psychological condition that is expected to prevent a member from performing the normal duties of the position for a period of not less than 12 months.
Also, the debilitating condition is the direct result of an injury incurred during, or a disease arising out of, the performance of inherently dangerous duties that are specific to the positions covered by the PERA-P&F Plan.
Duty disability retirement versus regular retirement
The PERA-P&F duty disability designation provides benefits that are not provided to regular PERA-P&F retirement. These benefits have the potential to incent older employees to seek a duty disability determination when contemplating retirement.
For example, certain duty disability retirees may be eligible to receive up to 60% of their final average salary tax-free for a period of time. Those taking a regular retirement are taxed on payments made by PERA-P&F.
For cities, one of the most expensive benefits related to duty disability retirements is a “continued health insurance benefit.” Minnesota Statutes, section 299A.465 requires public employers to continue health insurance benefits for firefighters and peace officers injured in the line of duty and for dependents of those killed in the line of duty. This coverage lasts until age 65.
Cities struggle with health insurance mandate
When this law was enacted in 1997, it contained a provision requiring the Department of Public Safety (DPS) to reimburse employers for the full amount of administering this benefit. By 2002, the fund created to provide this benefit became deficient.
Instead of increasing the fund, the 2003 Legislature amended the law to pro-rate reimbursements to cities based on the amount available and the number of eligible applicants. The 2003 law change triggered a significant and unanticipated cost to cities. The cost has increased every year for cities, and the funding for the account has never been increased.
In 2015, the Legislature expanded the health insurance benefit to include survivors of volunteer firefighters who die in the line of duty. This change increased the number of firefighters eligible for this benefit from 2,000 to 20,000 — without increasing funding for the reimbursement account.
In FY 2020, the requests for reimbursements approached $6 million, but the state provided just $1.67 million for that purpose. Under the current law, employers are reimbursed on a pro-rated basis.
The League is convening a meeting of the Public Safety Duty Disability Stakeholder Group, a group comprised of employer and employee representatives, the Department of Public Safety, and PERA. The group is focusing on developing strategies to prevent and treat physical and mental (post-traumatic stress) injuries in the line of duty, and will also look at legislative and non-legislative actions that can be taken to minimize the human and financial toll of these injuries.
A bill that would provide full reimbursement to employers for complying with the health insurance mandate has been introduced in the Senate and will be introduced in the House this session. Initiated by the League and supported by the Stakeholder Group, SF 1204, authored by Sen. Jeff Howe (R-Rockville), would require an annual general fund appropriation to fully compensate local units of government for the cost of continuing health insurance benefits for police officers and firefighters injured in the line of duty and for dependents of those killed in the line of duty.
Watch the meeting
This week’s Pension Commission meeting will begin at 5 p.m. on Feb. 23, and a live stream of the meeting will be available.