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What did become law this Session
Omnibus Pensions Bill-Chapter 106
Omnibus
pensions bill language
Omnibus
pensions bill spreadsheet
The omnibus pensions bill was one of the earlier committees to receive a
target, with agreement to spend $15.4 million in FY 26-27 and $25.4 million
before the broader targets were reached. The bill passed the House 129-5 and
the Senate 57-9. The bill went on to the Governor who signed it into law on May
19.
Key Takeaways
- Duty disability reform work group created; recommendations due in 2027.
- New probation/telecommunicator plan established matching task force recommendations with employer contribution rate staying at 7.5%.
- New employer costs for reemployed annuitants begin Jan. 1, 2027.
- Correctional plan contribution reductions lower employer costs beginning in 2027.
- Police & Fire COLA changes funded by state aid, not employer contribution increases.
Duty Disability
Working Group
Article 12, Section 2 establishes a
duty disability work group. The work group is to recommend legislation that
would:
- reform duty disability for members of the public employees police and fire plan; and
- ensure that members of the police and fire plan who become duty disabled have access to affordable health insurance coverage until Medicare eligibility.
The work group will consist of representatives from 15 different organizations and agencies as well as legislators who wish to participate. Legislation recommended by the work group must address 7 topics, including the impending shortfall in the public safety officer’s benefit account, reforming the process for approving duty disability applications, and considering allowing retirees to be covered by the state employee group insurance program (SEGIP) from retirement to age 65. The work group must report its recommendations, with proposed legislation, to the LCPR by March 1, 2027, or, if later, the date all members of the LCPR have been appointed for the 2027–2028 biennium.
MICA has an appointee to the work group, along with other public employer and employee representatives, along with appointees from state agencies. The first meeting of the work group must take place by June 30, 2026. If you would like to learn more about MICA’s involvement in the work group, reach out to MICA Executive Director Nathan Jesson.
Rep. Terry Stier (R-Belle Plaine) added this work group as an amendment to the omnibus pensions bill at the Commission’s final meeting of the year on May 5. He had been in regular contact with public employers and employees in advance of proposing the work group, which MICA signed a letter in support of. Sen. Judy Seeberger (DFL-Afton) also expressed interest in serving on the work group, saying she would be able to attend most meetings. The work group language had unanimous support from the pension commission.
New Probation
Officer and 911 Telecommunicator Plan
Article 5 of the bill establishes the
Local Government Probation and Telecommunicator Retirement Plan to be
administered by PERA. This new plan was the result of the proposal of the
Probation Officer and 911 Telecommunicator Task Force that took place from
June-December last year that MICA participated in.
Key components of the plan include:
- Eligibility: Employees who meet the definition of a probation officer or public safety telecommunicator are required to participate in the PERA Probation and Telecommunicator Plan. However, a person who first became a public employee or a member of a pension fund before July 1, 1989, is not eligible to participate as a member of the PERA Probation and Telecommunicator Plan.
- Vesting: 3 years
- Normal Retirement Age: 60
- Early Retirement Age: 55
- Benefit Formula Multiplier: 1.9%
- COLA: 100% of Social Security COLA, with a 1% minimum and 1.75% maximum
- Employer Contribution Rate: 7.5%
- Employee Contribution Rate: 8.82%
As recommended by the task force, the plan is funded primarily by increased employee contributions. With these employees currently covered by PERA, they are currently contributing 6.5% while employers are contributing 7.5%, though that employer contribution is scheduled to decrease to 6.5% when the plan reaches 98% funding, which is currently projected to occur around 2031. While MICA did not have a position on the creation of a new plan, it said that should the legislature decide to create a new plan that it supported the recommendations from the task force.
At the final commission meeting of the year, the commission added an amendment to temporarily reduce the employee contribution rate to 8%, paid for with state general funds. The contribution rate is scheduled to revert back to 8.82% on September 1, 2028.
Rep. Danny Nadeau (R-Rogers) had raised concerns about the plan starting out at an initial deficiency. He’d initially proposed an amendment that would increase the employee contribution rate to 9.36% to ensure that the plan was sufficient from day one, with scheduled decreases for employees only down to 6.8% over time. He did not propose that amendment when the bill came up for final passage, expressing support for the one-time reduction in employee contributions.
Correctional Plan
Changes
Article 2, Sections 2, 3, and 5 make
changes to the PERA Correctional Plan. The plan has about 4,000 active members.
The changes include:
- Reducing the employer contribution rate from 10.25% to 9%
- Reducing the employee contribution rate from 6.83% to 6%
- Increasing the cost of living adjustment cap from 2.5% to 3%
The changes are effective January 1, 2027. This proposal was brought forward by PERA and supported by MICA. Since the correctional plan is currently at 105% funding, it can support these changes without any cost to the state.
Reemployed
Annuitants
Article 8, Section 7 amends the PERA
and other local government pension plans to require the employer of a
reemployed annuitant to make employer contributions to the applicable pension
plan. Under previous law, when an employee that was already receiving a pension
was hired by a public employer, they did not make employee contributions and
their employer did not make employer contributions. The law change doesn’t
require reemployed annuitants to make employee contributions, but does
require that employers start making contributions for this group starting
January 1, 2027. PERA estimates that across the PERA general plan,
correctional plan, and police and fire plan, that employer contributions will
increase $4.4 million as a result of this law change. MICA did raise the
potential increased costs or reduced hirings of this type of employees, along
with the relatively strong funding of the PERA general plan, but most pension
commission members preferred to make this change for all plans if they were
going to make the change for the Teachers Retirement Association plan.
The biggest speed bump on the floor of either chamber was surprisingly on this provision, which was proposed to be removed in an amendment from Sen. Jordan Rasmusson (R-Fergus Falls). He raised concerns over the increased costs that would be borne by employers and that there wasn’t an increased benefit associated with the cost. The amendment failed 28-39 after a half hour discussion.
Police and Fire
COLA Delay
Article 2, Section 4 reduces the
waiting period for a retiree or benefit recipient to receive a full COLA from
24 months to 12 months under the Police & Fire Plan. In addition, the
waiting period for a partial COLA is reduced from 13 months to 1 month. Article
2, Section 1 provides direct state aid to the Police & Fire Plan to fund
the cost of reducing the postretirement adjustment (COLA) delay. The cost of
the law change is paid by the state rather than local public employers. The
state general fund cost is $8 million by October 1, 2026, and each October 1
thereafter. The aid expires on July 1, 2042.
Section 1 is effective the day following final enactment. Section 4 is effective for postretirement adjustments beginning on or after January 1, 2027.
Public Contracts Payment Transparency
(Chapter 90)
Public contracts payment
transparency bill language
The bill addresses contracts involving public contracting agencies. “Public contracting agency” means both state agencies and political subdivisions.
Key Takeaways
- New requirements for counties, other political subdivisions, and state agencies to provide information to contractors and subcontractors regarding their payments and payment dates upon request
This new law requires a public contracting agency to provide certain information to a contractor or subcontractor regarding payment by the agency, upon written request from the contractor or subcontractor. The required information includes: the amount of a payment; the date the payment was made or approved; and a copy of the payment application submitted by the contractor. This information must be provided for any type of payment made by the agency, including a progress payment, retainage payment, final payment.
For a highway construction contract, this requirement for information is met by providing a copy of the estimate or voucher generated by the public contracting agency. The requested information must be provided by the public contracting agency within seven calendar days of receiving the request for information. A public contracting agency must make available to subcontractors the contact information for the public contracting agency for payment information under this section. A public contracting agency must post contact information on its website for solicitations or bids or on another apparent location on its website, if it has a website. If an agency has an automated internet based system to provide this information, the agency may ask a requester to use that system. No costs or fees may be charged to the contractor or subcontractor providing required information.