Legislative Update: Proposals eliminate agencies and make major pension changes

This week at the Capitol numerous bills and proposed constitutional amendments moved closer to floor votes. Below are updates on proposals to eliminate state agencies, make major changes to our pension plan and other anti-union measures.

• SF 1639 is being pushed by Senator Mike Parry. The bill would eliminate numerous state agencies (including DEED, Corrections, Revenue and Health) and reassign their core functions. The House companion to this bill is HF 419 and is authored by Representative Keith Downey. This bill will get another hearing Friday in the Senate State Government Innovations and Veterans Subcommittee on Reform and Redesign.
• Multiple pension bills were heard Tuesday night by the Legislative Commission on Pensions and Retirement. HF 1507 and HF 2168 would reduce the investment assumption in MSRS and the other pension funds from 8.5 percent to 7.5 percent. The current rate of 8.5 percent is set in statute. Representatives from the State Board testified in September that the investment performance has exceeded 8.5 percent for the 30-year period since 1980. These bills are an attempt to make the fund look less solvent than it actually is in order to set the table for a conversion to a defined contribution or hybrid retirement plan.
• HF 2179 was also put before the pension commission on Tuesday night. This bill could open the door to a hybrid retirement plan and discontinue the traditional defined benefit pension plan. Hybrid plans combine elements of both defined benefit and defined contribution retirement plans. There are many variations of hybrid plans being used in different states. Often hybrid plans shift the burden of risk off of the employer and onto employees. Also, hybrid plans can be more expensive than traditional pension plans to administer and funds need to be allocated to cover the transition.
• All three of these pension bills (HF 1507, HF 2168 and HF 2179) have been held over by the commission for possible inclusion into an omnibus pension bill.
• HF 2033 is yet another anti-public employee bill being pushed by Representative Keith Downey. The bill attempts to put state employee compensation inline with private sector compensation. This would negatively impact state employees in dozens of job classes. The bill is based on a Tax Payers Association study paid for by the Minnesota Chamber of Commerce.  The researches have acknowledged the difficulties in comparing private sector and public sector work. For this reason their study only focused on 9,500 jobs in 41 job classes; even though there are over 30,000 state employees working in 1,400 job classes.
• HF 1974 would discontinue step increases and other employee benefits once a collective bargaining agreement has expired. This bill essentially punishes workers, but not management, for stalled contract negotiations. MAPE testified against the bill yesterday in committee. This bill undermines the union’s collective bargaining rights. The measure passed House State Government Finance Committee with only Republican support.
• HF 1975 is authored by Representative Steve Drazkowski. It also passed through the House State Government Operations committee this week. This bill would remove restrictions on contracting out of state services. 

Constitutional Amendments

• MAPE has taken a strong position in opposition to potential constitutional amendments on union membership, budget issues and voter ID. Despite overwhelming testimony against the measure, the voter ID amendment proposal passed out of a Senate committee this week with only GOP support. This measure would force all voters to have a valid and current photo ID in order to vote. This would make it much more difficult for many people to vote and could significantly impact election results.
• No action was taken this week on the so-called “right to work” union membership amendment proposal or the super-majority budget proposal.