Agenda - Council - 02/08/2021 - Laserfiche WebLink

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contribution increases for Police and Fire Plan employers and active employees and a modified cost of living adjustment (COLA) for retirees. Recent adjustments to balance PERA plan costs have largely focused on contribution increases rather than benefit adjustments. On January 1, 2015, the employer and employee contribution rates for the PERA General Plan each increased by 0.25% of salary, resulting in the current employer rate of 7.5 percent of salary and an employee rate of 6.5 percent of salary. For PERA Police and Fire (P&F) employees, the employer contribution was increased to 16.95% and the employee contribution was increased to 11.3 % beginning January 1, 2019 and then the employer contribution was increased to 17.7% and the employee contribution was increased to 11.8% beginning January 1, 2020. For the PERA General Plan, an additional one percent employer contribution is required under Minn. Stat. § 353.27, subd. 3a, which will continue until the actuarial value of the plan assets equal or exceed the liabilities. Employees do not have a similar obligation to help the General Plan reach full funding. When the additional employer contribution was increased to 0.43 percent in 1997, the state instituted a PERA aid program (Minn. Stat. § 273.1385) for employers to partially offset the cost of increased employer contributions. However, the PERA aid payment rate is frozen at 1999 levels, while the additional employer contribution has since increased from .43% to 1.0%. Response: The League of Minnesota Cities supports the sustainability modifications enacted by the legislature in 2018 and continues to oppose any benefit improvements for retirees or active employees until the financial health of the 110 General Plan and the Police and Fire Plan is restored. For the PERA General Plan, any further increases in employer contributions should only be considered by the Legislature after other measures have been considered, including: a) An increase in employee contributions so that employees and employers truly bear the same responsibility to bring the pension plans to full funding; or b) The removal of the cap on PERA Pension Aid payments under Minn. Stat. § 273.1385 and the extension of the aid program after FY2020, so the state equalizes the contributions of employees and employers. The League also supports: a) Modifications to the PERA eligibility guidelines to take into account temporary, seasonal, unique part- time, and student employment situations in cities, particularly in recreational operations. These modifications should include the use of pro -rated service credit, which would make PERA consistent with the other major Minnesota pension plans. b) A comprehensive review of exclusions from pension participation with the goal of simplifying current eligibility guidelines. Such a review should also include a possible revision of current penalties for employers that fail to report covered employees to ensure that these penalties are not overly harsh and punitive. c) The transfer of all school district employees out of the PERA General Plan and into another fund that is more appropriate for school district employees as long as the change would