Bill Text: MN HF4 | 2011-2012 | 87th Legislature | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: State workforce reduction required, and early retirement program created.
Spectrum: Partisan Bill (Republican 14-0)
Status: (Passed) 2011-07-20 - Secretary of State Chapter 5 [HF4 Detail]
Download: Minnesota-2011-HF4-Engrossed.html
Bill Title: State workforce reduction required, and early retirement program created.
Spectrum: Partisan Bill (Republican 14-0)
Status: (Passed) 2011-07-20 - Secretary of State Chapter 5 [HF4 Detail]
Download: Minnesota-2011-HF4-Engrossed.html
1.2relating to state government; requiring a reduction in the state workforce;
1.3creating an early retirement program;proposing coding for new law in Minnesota
1.4Statutes, chapter 43A.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [43A.347] REDUCTION IN STATE WORK FORCE; EARLY
1.7RETIREMENT PROGRAM.
1.8 Subdivision 1. Required reduction. (a) The number of full-time equivalent
1.9employees employed in the executive branch, and the costs directly associated with
1.10employing those persons, must be reduced by at least 15 percent by June 30, 2015, and
1.11thereafter, compared to the number of full-time equivalent positions and the costs directly
1.12associated with those positions on July 1, 2011.
1.13(b) An appointing authority may use any or all of the following to achieve this
1.14requirement: early retirement, furloughs, layoffs, a hard hiring freeze, and restructuring
1.15pension programs to defined contribution programs. The early retirement program in this
1.16section is enacted as a tool to assist in complying with the required 15 percent reduction.
1.17(c) For purposes of this section:
1.18(1) "costs directly associated" with employing people means the cost of salaries and
1.19benefits, including the costs of employer contributions to public pension plans; and
1.20(2) "executive branch" does not include the Minnesota State Colleges and
1.21Universities.
1.22 Subd. 2. Early retirement program; actuarial analysis. (a) Following enactment
1.23of this section and prior to implementation of the early retirement program in this
2.1section, the Department of Management and Budget shall perform an actuarial analysis
2.2to determine:
2.3(1) a maximum number of retirees allowable under the early retirement program
2.4specified in this section; and
2.5(2) the percentage of the early retirement program savings to be returned to the
2.6pension fund over a prescribed period of time in order to cover the cost to the pension
2.7fund of the early retirement program specified in this section. The department shall use
2.8the findings in implementing the early retirement program.
2.9(b) The commissioner of management and budget may allocate a maximum number
2.10of employees within each agency that may receive early retirement benefits under this
2.11section.
2.12 Subd. 3. Early retirement program. Notwithstanding any law to the contrary, a
2.13state employee who terminates state service before a date on or before June 30, 2015, to
2.14be determined by the commissioner of management and budget, not to be more than the
2.15number of allowable employees determined by the department, may apply for and receive
2.16a normal retirement annuity without any reduction due to retirement before the normal
2.17retirement age from the public pension plan of which the employee is a member, if the
2.18following conditions are met:
2.19(1) the employee must have at least eight years of service credit in the person's
2.20public pension plan on the date of termination, and the employee's combination of age
2.21and years of service in that pension plan on the date of termination must be equal to
2.22or greater than 70;
2.23(2) the employee must be at least 50 years old on the date of termination; and
2.24(3) for purposes of this section, the employee must not have received a retirement
2.25annuity from a Minnesota public pension plan before the date of terminating state service.
2.26 Subd. 4. Purchase of additional service credit. If an employee's combination of
2.27age and years of service in the person's public pension plan is not equal to or greater than
2.2870, but the person meets the other requirements of subdivision 3, clauses (1) to (3), the
2.29person may purchase up to five years of service credit, in increments of one month, up
2.30to the amount necessary for the person's age and years of service to equal at least 70, by
2.31making an additional contribution to the pension plan. For each month of service credit
2.32purchased, the required contribution is the employee contribution rate for the person's
2.33pension plan multiplied by the employee's monthly salary at the time the purchase is
2.34made. A person may purchase service credit under this subdivision only if the person
2.35terminates state service upon making the purchase.
3.1 Subd. 5. Deferred annuity. A person who meets the conditions of subdivision 3 at
3.2the time of termination but who is not at least 50 years old may terminate state service
3.3and apply for and receive the unreduced annuity specified in subdivision 3 when the
3.4person attains the age of 50.
3.5 Subd. 6. Extension of deadline. To ensure that the efficient operation of state
3.6government is not jeopardized by the simultaneous retirement of large numbers of key
3.7personnel, an appointing authority may extend the June 30, 2015, deadline for terminating
3.8state employment by notifying the executive director of the Minnesota State Retirement
3.9System in writing.
3.10 Subd. 7. Best practices. In implementing this section, the commissioner of
3.11management and budget and affected agencies shall utilize best practices as identified by
3.12other states that have implemented early retirement programs.
3.13 Subd. 8. Hiring freeze. To promote streamlined government and reduced costs, no
3.14state appointing authority may fill a position vacated through state employee participation
3.15in the early retirement program unless the existence of the specific position is mandated
3.16by law.
3.17 Subd. 9. Reemployment prohibition. An employee who receives a higher annuity
3.18as a result of retiring under this section, instead of retiring under law in effect before
3.19enactment of this section may not be reemployed with the state or receive payment from
3.20the state as a consultant for five years after termination.
3.21 Subd. 10. Pension fund return. The commissioner of management and budget
3.22must determine the annual savings realized by each state appointing authority as a result of
3.23not paying compensation to employees who terminate service under the early retirement
3.24program in this section. The commissioner must transfer from the appropriation to
3.25the appointing authority the percentage of the cost savings realized by the appointing
3.26authority through the early retirement program under this section over the number of years
3.27determined by the actuarial analysis in subdivision 2 to the applicable pension fund to
3.28cover the increased cost to the pension fund of the early retirement incentive.
3.29 Subd. 11. Pension reform. Following implementation of the early retirement
3.30program, the commissioner of management and budget shall establish a panel to study and
3.31make recommendations for reforming the state employee retirement pension program.
3.32 Subd. 12. Not applicable to elected officials. A state elected official is not a state
3.33employee for purposes of this section.
1.3creating an early retirement program;proposing coding for new law in Minnesota
1.4Statutes, chapter 43A.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [43A.347] REDUCTION IN STATE WORK FORCE; EARLY
1.7RETIREMENT PROGRAM.
1.8 Subdivision 1. Required reduction. (a) The number of full-time equivalent
1.9employees employed in the executive branch, and the costs directly associated with
1.10employing those persons, must be reduced by at least 15 percent by June 30, 2015, and
1.11thereafter, compared to the number of full-time equivalent positions and the costs directly
1.12associated with those positions on July 1, 2011.
1.13(b) An appointing authority may use any or all of the following to achieve this
1.14requirement: early retirement, furloughs, layoffs, a hard hiring freeze, and restructuring
1.15pension programs to defined contribution programs. The early retirement program in this
1.16section is enacted as a tool to assist in complying with the required 15 percent reduction.
1.17(c) For purposes of this section:
1.18(1) "costs directly associated" with employing people means the cost of salaries and
1.19benefits, including the costs of employer contributions to public pension plans; and
1.20(2) "executive branch" does not include the Minnesota State Colleges and
1.21Universities.
1.22 Subd. 2. Early retirement program; actuarial analysis. (a) Following enactment
1.23of this section and prior to implementation of the early retirement program in this
2.1section, the Department of Management and Budget shall perform an actuarial analysis
2.2to determine:
2.3(1) a maximum number of retirees allowable under the early retirement program
2.4specified in this section; and
2.5(2) the percentage of the early retirement program savings to be returned to the
2.6pension fund over a prescribed period of time in order to cover the cost to the pension
2.7fund of the early retirement program specified in this section. The department shall use
2.8the findings in implementing the early retirement program.
2.9(b) The commissioner of management and budget may allocate a maximum number
2.10of employees within each agency that may receive early retirement benefits under this
2.11section.
2.12 Subd. 3. Early retirement program. Notwithstanding any law to the contrary, a
2.13state employee who terminates state service before a date on or before June 30, 2015, to
2.14be determined by the commissioner of management and budget, not to be more than the
2.15number of allowable employees determined by the department, may apply for and receive
2.16a normal retirement annuity without any reduction due to retirement before the normal
2.17retirement age from the public pension plan of which the employee is a member, if the
2.18following conditions are met:
2.19(1) the employee must have at least eight years of service credit in the person's
2.20public pension plan on the date of termination, and the employee's combination of age
2.21and years of service in that pension plan on the date of termination must be equal to
2.22or greater than 70;
2.23(2) the employee must be at least 50 years old on the date of termination; and
2.24(3) for purposes of this section, the employee must not have received a retirement
2.25annuity from a Minnesota public pension plan before the date of terminating state service.
2.26 Subd. 4. Purchase of additional service credit. If an employee's combination of
2.27age and years of service in the person's public pension plan is not equal to or greater than
2.2870, but the person meets the other requirements of subdivision 3, clauses (1) to (3), the
2.29person may purchase up to five years of service credit, in increments of one month, up
2.30to the amount necessary for the person's age and years of service to equal at least 70, by
2.31making an additional contribution to the pension plan. For each month of service credit
2.32purchased, the required contribution is the employee contribution rate for the person's
2.33pension plan multiplied by the employee's monthly salary at the time the purchase is
2.34made. A person may purchase service credit under this subdivision only if the person
2.35terminates state service upon making the purchase.
3.1 Subd. 5. Deferred annuity. A person who meets the conditions of subdivision 3 at
3.2the time of termination but who is not at least 50 years old may terminate state service
3.3and apply for and receive the unreduced annuity specified in subdivision 3 when the
3.4person attains the age of 50.
3.5 Subd. 6. Extension of deadline. To ensure that the efficient operation of state
3.6government is not jeopardized by the simultaneous retirement of large numbers of key
3.7personnel, an appointing authority may extend the June 30, 2015, deadline for terminating
3.8state employment by notifying the executive director of the Minnesota State Retirement
3.9System in writing.
3.10 Subd. 7. Best practices. In implementing this section, the commissioner of
3.11management and budget and affected agencies shall utilize best practices as identified by
3.12other states that have implemented early retirement programs.
3.13 Subd. 8. Hiring freeze. To promote streamlined government and reduced costs, no
3.14state appointing authority may fill a position vacated through state employee participation
3.15in the early retirement program unless the existence of the specific position is mandated
3.16by law.
3.17 Subd. 9. Reemployment prohibition. An employee who receives a higher annuity
3.18as a result of retiring under this section, instead of retiring under law in effect before
3.19enactment of this section may not be reemployed with the state or receive payment from
3.20the state as a consultant for five years after termination.
3.21 Subd. 10. Pension fund return. The commissioner of management and budget
3.22must determine the annual savings realized by each state appointing authority as a result of
3.23not paying compensation to employees who terminate service under the early retirement
3.24program in this section. The commissioner must transfer from the appropriation to
3.25the appointing authority the percentage of the cost savings realized by the appointing
3.26authority through the early retirement program under this section over the number of years
3.27determined by the actuarial analysis in subdivision 2 to the applicable pension fund to
3.28cover the increased cost to the pension fund of the early retirement incentive.
3.29 Subd. 11. Pension reform. Following implementation of the early retirement
3.30program, the commissioner of management and budget shall establish a panel to study and
3.31make recommendations for reforming the state employee retirement pension program.
3.32 Subd. 12. Not applicable to elected officials. A state elected official is not a state
3.33employee for purposes of this section.
