1.1                          A bill for an act 
  1.2             relating to school employees; establishing a pilot 
  1.3             project for statewide health insurance plan for school 
  1.4             district employees; permitting it to provide 
  1.5             postretirement health insurance coverage; establishing 
  1.6             a labor-management team to design the insurance plan; 
  1.7             amending Minnesota Statutes 2000, section 144.395, 
  1.8             subdivision 1; proposing coding for new law in 
  1.9             Minnesota Statutes, chapter 43A. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  [43A.3175] [SCHOOL EMPLOYEE INSURANCE PLAN 
  1.12  PILOT PROJECT.] 
  1.13     Subdivision 1.  [DEFINITIONS.] For purposes of this section:
  1.14     (1) "eligible employee" means a person who is insurance 
  1.15  eligible and is employed by an eligible employer, so long as the 
  1.16  plan meets the requirements of a governmental plan under United 
  1.17  States Code, title 29, section 1002(32); and 
  1.18     (2) "eligible employer" means a school district as defined 
  1.19  in section 120A.05, a service cooperative as defined in section 
  1.20  123A.21, an intermediate district as defined in section 136D.01, 
  1.21  a cooperative center for vocational education as defined in 
  1.22  section 123A.22, a regional management information center as 
  1.23  defined in section 123A.23, an education unit organized under 
  1.24  section 471.59, or an exclusive representative of employees of 
  1.25  an eligible employer or statewide affiliate. 
  1.26     Subd. 2.  [INSURANCE PLAN PILOT PROJECT.] (a) The school 
  1.27  employee insurance plan is a three-year pilot project, open to 
  2.1   participation by eligible employers, subject to the limits 
  2.2   provided in subdivision 5.  The plan must begin providing 
  2.3   coverage on a date selected by the interim labor-management 
  2.4   committee, which must be no earlier than July 1, 2003, or later 
  2.5   than July 1, 2004. 
  2.6      (b) All eligible employers may apply under subdivision 5 to 
  2.7   participate in the school employee insurance plan pilot 
  2.8   project.  The plan provides health insurance coverage for all 
  2.9   eligible employees of eligible employers that are accepted for 
  2.10  participation under subdivision 5. 
  2.11     (c) The plan may provide coverage to eligible employees who 
  2.12  are retired, to the extent that the eligible employer provides 
  2.13  retiree coverage.  Coverage for persons who are enrolled in, or 
  2.14  eligible to enroll in, Medicare Parts A and B, must be 
  2.15  coordinated as a secondary payer with Medicare, except in 
  2.16  circumstances in which Medicare is by law the secondary payer.  
  2.17  "Eligible to enroll in Medicare Part A" does not include persons 
  2.18  eligible to enroll in Part A only subject to payment of a 
  2.19  premium. 
  2.20     (d) The relative contributions of eligible employers and 
  2.21  their eligible employees to the premiums charged under the plan 
  2.22  are determined solely under the eligible employer's employee 
  2.23  benefits program, subject to collective bargaining. 
  2.24     (e) In addition to health coverage permitted under this 
  2.25  section, the plan may provide services to eligible employers 
  2.26  that wish to establish and maintain health care savings accounts 
  2.27  for eligible employees and retirees, to be used for health 
  2.28  coverage and health care expenses, funded through contributions 
  2.29  made while the account owner is or was an active eligible 
  2.30  employee, in accordance with the Internal Revenue Code and 
  2.31  related federal regulations.  Contributions made by the employer 
  2.32  or employee, if any, must be determined under the employer's 
  2.33  employee benefits program. 
  2.34     Subd. 3.  [PLAN PROVIDER.] (a) The school employee 
  2.35  insurance plan pilot project is provided through a multiple 
  2.36  employer welfare arrangement established under chapter 62H, and 
  3.1   in full compliance with that chapter, including the requirement 
  3.2   of stop-loss coverage, except as otherwise provided in this 
  3.3   section. 
  3.4      (b) Authority to participate in this multiple employer 
  3.5   welfare arrangement is granted to eligible employers 
  3.6   notwithstanding section 62H.01. 
  3.7      (c) Premiums must be calculated so as to accumulate the 
  3.8   full amount of reserves required under chapter 62H and related 
  3.9   rules by the end of the three-year period, and must include 
  3.10  administrative costs of the multiple employer welfare 
  3.11  arrangement and of the labor-management board.  The rate of 
  3.12  accumulation of required reserves must be no less rapid than 
  3.13  proportional over the three-year period. 
  3.14     (d) Additional financial stability for the multiple 
  3.15  employer welfare arrangement is as provided in section 144.395, 
  3.16  subdivision 1. 
  3.17     (e) The commissioner of commerce must not interpret any 
  3.18  provision of chapter 62H or related rules as requiring the 
  3.19  school employee insurance plan pilot project to have stop-loss 
  3.20  insurance actually in effect or to pay any portion of the 
  3.21  premium for stop-loss insurance, prior to the date of beginning 
  3.22  of coverage under the pilot project. 
  3.23     Subd. 4.  [LABOR-MANAGEMENT BOARD.] (a) The plan is 
  3.24  governed by a labor-management board that makes determinations 
  3.25  regarding plan specifications, structure, benefits, premiums, 
  3.26  and admission of eligible employers.  Statewide affiliates of 
  3.27  exclusive representatives of eligible employees with at least 
  3.28  1,500 employees participating in the plan are entitled to 
  3.29  appoint members to the board, provided that the total number of 
  3.30  such members must be five.  These five board positions must be 
  3.31  allocated among statewide affiliates proportionally based upon 
  3.32  their relative numbers of employees enrolled in the plan.  The 
  3.33  Minnesota school boards association is entitled to appoint five 
  3.34  members representing eligible employers to the board.  
  3.35     (b) The labor-management board is a state agency, within 
  3.36  the executive branch.  The board may contract to obtain services 
  4.1   from another state agency or any other entity. 
  4.2      (c) The board may terminate the plan if in the judgment of 
  4.3   the board the plan is no longer financially viable. 
  4.4      Subd. 5.  [EMPLOYER PARTICIPATION.] (a) No more than 50 
  4.5   school districts may participate in the pilot project at any one 
  4.6   time.  In addition, an unlimited number of eligible employers, 
  4.7   as defined in subdivision 1, that are not school districts may 
  4.8   participate.  The total number of covered employees must not be 
  4.9   less than 5,000 nor more than 10,000 at any point in time, based 
  4.10  upon the number of covered employees at the time of an eligible 
  4.11  employer's enrollment in the plan. 
  4.12     (b) The labor-management board is responsible for admission 
  4.13  of eligible employers to the pilot project.  The board must 
  4.14  administer an application process and, if more than 50 school 
  4.15  districts apply, must determine which applicants to admit to the 
  4.16  pilot project. 
  4.17     (c) The labor-management board must require that eligible 
  4.18  employers participating in the pilot project remain in the 
  4.19  school employee insurance plan for at least three consecutive 
  4.20  years, provided that the plan continues in existence for that 
  4.21  three-year period.  Exit prior to that time may be permitted 
  4.22  only upon payment of a penalty equal to at least the amount the 
  4.23  eligible employer contributed to the plan's reserves, as 
  4.24  determined under Minnesota Rules, part 2765.1200. 
  4.25     Subd. 6.  [PLAN CREATION.] (a) The plan specifications, 
  4.26  structure, benefits, premiums, and admissions procedures and 
  4.27  criteria must be determined by an interim labor-management 
  4.28  committee created under subdivision 7.  The plan specifications 
  4.29  must include the following: 
  4.30     (1) requirement that all eligible employees covered by the 
  4.31  plan be in a single pool for purposes of coverage and premiums; 
  4.32     (2) provisions allowing eligible employers and the 
  4.33  exclusive representatives of eligible employees to collectively 
  4.34  bargain provision of health coverage and benefits in addition to 
  4.35  the base benefits provided under the plan; and 
  4.36     (3) a mechanism for retired employees to be eligible for 
  5.1   coverage provided by the school employees insurance plan.  
  5.2      (b) The final determination regarding plan specifications, 
  5.3   structure, benefits, premiums, and admissions procedures and 
  5.4   criteria must be completed by a date allowing implementation no 
  5.5   later than the date selected under subdivision 2, paragraph (a). 
  5.6      Subd. 7.  [CREATION OF INTERIM LABOR-MANAGEMENT 
  5.7   COMMITTEE.] (a) Eligible statewide affiliates of exclusive 
  5.8   representatives of eligible employees, as defined in subdivision 
  5.9   1, with at least 1,500 members statewide are entitled to appoint 
  5.10  members to serve on the interim labor-management committee, 
  5.11  provided that the total number of such members must be five.  
  5.12  These five board positions must be allocated among statewide 
  5.13  affiliates proportionally based upon the relative numbers of 
  5.14  eligible employees whom they represent. 
  5.15     (b) The Minnesota school boards association is entitled to 
  5.16  appoint five members representing eligible employers as defined 
  5.17  in subdivision 1.  
  5.18     (c) All appointments must be made no later than 30 days 
  5.19  after final enactment of this section. 
  5.20     (d) The committee expires upon appointment of a 
  5.21  labor-management board, under subdivision 4. 
  5.22     (e) The committee may contract to receive administrative or 
  5.23  other services from a state agency or any other entity. 
  5.24     Subd. 8.  [ANNUAL REPORTS.] The labor-management board 
  5.25  must, no later than February 1, of each year of the pilot 
  5.26  project, report to the legislature in writing regarding the 
  5.27  status, cost, claims experience, financial stability including 
  5.28  an actuarial analysis, and future prospects of the pilot project.
  5.29     Subd. 9.  [COOPERATION OF SERVICES COOPERATIVES.] Service 
  5.30  cooperatives established under section 123A.21 must permit 
  5.31  eligible employers that terminate enrollment in a plan sponsored 
  5.32  by a service cooperative, upon termination of this pilot 
  5.33  project, to re-enroll in coverage provided by service 
  5.34  cooperatives, notwithstanding any policy or contractual 
  5.35  provision to the contrary. 
  5.36     Subd. 10.  [COMPETITIVE BIDS.] The insurance plan pilot 
  6.1   project must use a competitive bid process for services it 
  6.2   purchases.  This process must allow all interested parties, 
  6.3   including service cooperatives established under section 
  6.4   123A.21, to submit bids to provide all services purchased in 
  6.5   connection with the plan.  Service cooperatives are eligible to 
  6.6   provide services under the pilot project that are within the 
  6.7   scope of section 123A.21, notwithstanding section 62H.03. 
  6.8      Sec. 2.  Minnesota Statutes 2000, section 144.395, 
  6.9   subdivision 1, is amended to read: 
  6.10     Subdivision 1.  [CREATION.] (a) The tobacco use prevention 
  6.11  and local public health endowment fund is created in the state 
  6.12  treasury.  The state board of investment shall invest the fund 
  6.13  under section 11A.24.  All earnings of the fund must be credited 
  6.14  to the fund.  The principal of the fund must be maintained 
  6.15  inviolate, except that the principal may be used to make 
  6.16  expenditures from the fund for the purposes specified in this 
  6.17  section when the market value of the fund falls below 105 
  6.18  percent of the cumulative total of the tobacco settlement 
  6.19  payments received by the state and credited to the tobacco 
  6.20  settlement fund under section 16A.87, subdivision 2.  For 
  6.21  purposes of this section, "principal" means an amount equal to 
  6.22  the cumulative total of the tobacco settlement payments received 
  6.23  by the state and credited to the tobacco settlement fund under 
  6.24  section 16A.87, subdivision 2.  
  6.25     (b) In addition, beginning July 1, 2003, an amount of the 
  6.26  principal specified by the commissioner of commerce shall be 
  6.27  made available to the labor-management board created in section 
  6.28  43A.3175, subdivision 4, if necessary to meet the obligations of 
  6.29  the plan created in section 43A.3175, provided that any amount 
  6.30  made available for that purpose must be repaid by the 
  6.31  labor-management board as soon as financially feasible but no 
  6.32  later than three years after the date of the loan or termination 
  6.33  of the plan, whichever comes first, with interest of five 
  6.34  percent per year on the principal balance.  The amount of the 
  6.35  principal determined by the commissioner of commerce under this 
  6.36  paragraph must not exceed the difference between the reserves 
  7.1   required for the plan under chapter 62H and related rules and 
  7.2   the reserves that the plan has actually accumulated as of the 
  7.3   time of the determination.  The commissioner shall, upon request 
  7.4   of the labor-management board, evidence the state's obligation 
  7.5   under this paragraph by a letter of credit or similar financial 
  7.6   guaranty. 
  7.7      Sec. 3.  [FUNDING MECHANISM.] 
  7.8      For fiscal years 2004, 2005, and 2006, each school district 
  7.9   that participates in the school employee insurance plan pilot 
  7.10  project shall receive school employee insurance plan pilot 
  7.11  project revenue in an amount equal to ten percent of the 
  7.12  increase in the formula allowance between the current fiscal 
  7.13  year and the previous fiscal year times the district's adjusted 
  7.14  marginal cost pupil units for that year.  This revenue is in 
  7.15  addition to any increase in the basic formula allowance under 
  7.16  Minnesota Statutes, section 126C.10, subdivision 2.  This 
  7.17  revenue must be reserved and applied to the costs of providing 
  7.18  employee health insurance.  No school district shall require 
  7.19  employees to pay premium costs that exceed an amount equal to 
  7.20  the total premium cost less the pro rata amount of state aid 
  7.21  under this section applicable to the employee.  This section 
  7.22  does not affect health coverage of retirees or premiums paid by 
  7.23  retirees. 
  7.24     Sec. 4.  [EFFECTIVE DATES.] 
  7.25     Section 1 is effective the day following final enactment.  
  7.26  Sections 2 and 3 are effective July 1, 2003.