HF 4

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 01/20/2011 03:07pm

A bill for an act
relating to state government; requiring a reduction in the state workforce;
creating an early retirement program; proposing coding for new law in Minnesota
Statutes, chapter 43A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [43A.347] REDUCTION IN STATE WORK FORCE; EARLY
RETIREMENT PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Required reduction. new text end

new text begin (a) The number of full-time equivalent
employees employed in the executive branch, and the costs directly associated with
employing those persons, must be reduced by at least 15 percent by June 30, 2015, and
thereafter, compared to the number of full-time equivalent positions and the costs directly
associated with those positions on July 1, 2011.
new text end

new text begin (b) An appointing authority may use any or all of the following to achieve this
requirement: early retirement, furloughs, layoffs, a hard hiring freeze, and restructuring
pension programs to defined contribution programs. The early retirement program in this
section is enacted as a tool to assist in complying with the required 15 percent reduction.
new text end

new text begin (c) For purposes of this section:
new text end

new text begin (1) "costs directly associated" with employing people means the cost of salaries and
benefits, including the costs of employer contributions to public pension plans; and
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new text begin (2) "executive branch" does not include the Minnesota State Colleges and
Universities.
new text end

new text begin Subd. 2. new text end

new text begin Early retirement program; actuarial analysis. new text end

new text begin (a) Following enactment
of this section and prior to implementation of the early retirement program in this
section, the Department of Management and Budget shall perform an actuarial analysis
to determine:
new text end

new text begin (1) a maximum number of retirees allowable under the early retirement program
specified in this section; and
new text end

new text begin (2) the percentage of the early retirement program savings to be returned to the
pension fund over a prescribed period of time in order to cover the cost to the pension
fund of the early retirement program specified in this section. The department shall use
the findings in implementing the early retirement program.
new text end

new text begin (b) The commissioner of management and budget may allocate a maximum number
of employees within each agency that may receive early retirement benefits under this
section.
new text end

new text begin Subd. 3. new text end

new text begin Early retirement program. new text end

new text begin Notwithstanding any law to the contrary, a
state employee who terminates state service before a date on or before June 30, 2015, to
be determined by the commissioner of management and budget, not to be more than the
number of allowable employees determined by the department, may apply for and receive
a normal retirement annuity without any reduction due to retirement before the normal
retirement age from the public pension plan of which the employee is a member, if the
following conditions are met:
new text end

new text begin (1) the employee must have at least eight years of service credit in the person's
public pension plan on the date of termination, and the employee's combination of age
and years of service in that pension plan on the date of termination must be equal to
or greater than 70;
new text end

new text begin (2) the employee must be at least 50 years old on the date of termination; and
new text end

new text begin (3) for purposes of this section, the employee must not have received a retirement
annuity from a Minnesota public pension plan before the date of terminating state service.
new text end

new text begin Subd. 4. new text end

new text begin Purchase of additional service credit. new text end

new text begin If an employee's combination of
age and years of service in the person's public pension plan is not equal to or greater than
70, but the person meets the other requirements of subdivision 3, clauses (1) to (3), the
person may purchase up to five years of service credit, in increments of one month, up
to the amount necessary for the person's age and years of service to equal at least 70, by
making an additional contribution to the pension plan. For each month of service credit
purchased, the required contribution is the employee contribution rate for the person's
pension plan multiplied by the employee's monthly salary at the time the purchase is
made. A person may purchase service credit under this subdivision only if the person
terminates state service upon making the purchase.
new text end

new text begin Subd. 5. new text end

new text begin Deferred annuity. new text end

new text begin A person who meets the conditions of subdivision 3 at
the time of termination but who is not at least 50 years old may terminate state service
and apply for and receive the unreduced annuity specified in subdivision 3 when the
person attains the age of 50.
new text end

new text begin Subd. 6. new text end

new text begin Extension of deadline. new text end

new text begin To ensure that the efficient operation of state
government is not jeopardized by the simultaneous retirement of large numbers of key
personnel, an appointing authority may extend the June 30, 2015, deadline for terminating
state employment by notifying the executive director of the Minnesota State Retirement
System in writing.
new text end

new text begin Subd. 7. new text end

new text begin Best practices. new text end

new text begin In implementing this section, the commissioner of
management and budget and affected agencies shall utilize best practices as identified by
other states that have implemented early retirement programs.
new text end

new text begin Subd. 8. new text end

new text begin Hiring freeze. new text end

new text begin To promote streamlined government and reduced costs, no
state appointing authority may fill a position vacated through state employee participation
in the early retirement program unless the existence of the specific position is mandated
by law.
new text end

new text begin Subd. 9. new text end

new text begin Reemployment prohibition. new text end

new text begin An employee who receives a higher annuity
as a result of retiring under this section, instead of retiring under law in effect before
enactment of this section may not be reemployed with the state or receive payment from
the state as a consultant for five years after termination.
new text end

new text begin Subd. 10. new text end

new text begin Pension fund return. new text end

new text begin The commissioner of management and budget
must determine the annual savings realized by each state appointing authority as a result of
not paying compensation to employees who terminate service under the early retirement
program in this section. The commissioner must transfer from the appropriation to
the appointing authority the percentage of the cost savings realized by the appointing
authority through the early retirement program under this section over the number of years
determined by the actuarial analysis in subdivision 2 to the applicable pension fund to
cover the increased cost to the pension fund of the early retirement incentive.
new text end

new text begin Subd. 11. new text end

new text begin Pension reform. new text end

new text begin Following implementation of the early retirement
program, the commissioner of management and budget shall establish a panel to study and
make recommendations for reforming the state employee retirement pension program.
new text end

new text begin Subd. 12. new text end

new text begin Not applicable to elected officials. new text end

new text begin A state elected official is not a state
employee for purposes of this section.
new text end