S.F. 1249 Senator Pappas and H.F. 1433 Representative Nelson

March 20, Legislative update – S.F. 1249

The St. Paul Teachers’ Retirement Fund Association’s legislative proposal was heard for a second time this week by the Legislative Commission on Pensions and Retirement (LCPR) and for a second time was “held over” at the direction of the Chair, Senator Sandy Pappas (DFL-Saint Paul).  Senator Pappas is an ardent supporter of the Teachers’ Fund and of our legislation.  Procedural issues and concerns about a companion legislative initiative involving the Duluth Teachers’ Retirement System caused the Chair to postpone final action until April 2.

The Commission did adopt a couple of important amendments to the SPTRFA’s  Bill (SF 1249/HF 1433) that were needed to address some operational savings and to accommodate concerns from the School Board modifying the initial proposal’s revisions to the Return to Work Program (RTW).  Under the amended plan, annuitants who return to the Saint Paul Public School District would have to experience a break from active service of 90 days, increased from the present 30 days.  Additionally, the employer contribution of salary earned under the RTW program would now be paid into the Retirement Fund.  Currently, no employer payments were required.  The employee share is not required under the proposal.  Furthermore, one-third of any excess earnings above the allowed $46,000/year salary cap will, under the proposal, now be forfeited to the Fund.

The main provisions of the Bill would increase employer and employee contributions another 1%, starting in 2015, and offset some of that with a raising of the multiplier factor from 1.7 to 1.9x starting in 2015 for earned service credit.  This will bring SPTRFA into parity with the State TRA members regarding both the multiplier applied and level of employee contributions.  There is also a new set of early retirement factors that will more accurately capture changing demographics and which are tilted to apply less of a penalty to the longer tenured, older early retiree.   The other key feature is the request to incorporate an increase in the State’s supplemental contribution by $7 million annually.  Currently, the State provides $2.8 million in financial aid.

Observation:   It remains to be seen if the Bill is able to exit the LCPR early next month as currently slated.  There are some political struggles that need to be resolved, which do not involve SPTRFA directly, but impact the Bill’s eventual success in its maneuvering through the political maze.   Not leaving this preliminary stop (LCPR),  within an extended committee review process, until early April does place it at a bit of disadvantage given the remaining time in this session.  However, we have two excellent allies who are lead sponsors in both branches, House Government Operations Committee Chairman, Mike Nelson , DFL-Brooklyn Park and Senator Pappas, who also fills the role of Senate President.  As LCPR Chair, Senator Pappas is in a very powerful position to make things happen and in my many conversations with her on this Bill, I know she remains very committed to making it happen in this Session.