Purpose

This bill lets a specific Minneapolis employee buy back certain old service time in the Public Employees Retirement Association (PERA) General Employees Retirement Plan. It aims to fix periods when the city did not deduct employee contributions or make employer contributions, so the employee could receive retirement credit for that time.

Key terms and entities

• Public Employees Retirement Association (PERA)
• General Employees Retirement Plan (PERA’s retirement plan for general employees)
• Allowable service: the service time that can be credited toward retirement benefits
• City of Minneapolis: the employer in this bill
• Executive director: the PERA official who administers the plan and determines payment amounts
• Employee contributions: money that would have been deducted from the employee’s pay
• Employer contributions: money the city would have contributed to PERA
• Periods of uncredited prior service: specific past time blocks eligible for purchase

Eligible person

The person must meet all of these: - Worked for the City of Minneapolis in the fleet services division of the public works department - Began employment on April 26, 2016 and earned wages through November 4, 2022 - During parts of that time, the city failed to deduct employee contributions and/or make required employer contributions (per Minnesota law) - Ended employment with the city on November 4, 2022

Periods of uncredited prior service

The eligible periods that can be purchased are: - April 11, 2017 through October 10, 2017 - April 27, 2018 through November 24, 2018

How the purchase works (main provisions)

• Authorization to purchase: The city can pay the required amounts for the eligible periods on behalf of the employee. After payment, the employee will receive credit for the listed periods as allowable service in the PERA General Plan.
• Amounts to be paid: For each period, the city must pay:
  • The employee contributions that would have been deducted from the employee’s salary, plus interest, calculated annually at the rate specified in the law (356.59, subdivision 3), from when those deductions should have been paid until the payment date.
  • The employer contributions the city would have paid, plus the same annual interest, calculated from when those payments should have been made until the payment date.
• Determination and notification: The PERA executive director must determine the total payment amount and notify the city and the eligible person of the amount and how it was calculated.
• Payment deadline: The city must make all payments in a single lump sum within 60 days after being notified.
• Credit once paid: After the payments are made, the executive director must credit the eligible person with the allowable service for the specified periods.

Collection if the city does not pay

If the city fails to make the required payments, PERA’s executive director must follow the collection procedures found in Minnesota Statutes for collecting unpaid amounts.

Significance and potential impact

• Clarifies a process to restore retirement service credit that was lost due to earlier payroll handling errors.
• Shifts responsibility for back payments to the city for the periods in question, ensuring the employee can receive retirement credit for those periods.
• Creates a defined timeline and enforcement mechanism to ensure timely payment.

How this changes current law

• Establishes a targeted mechanism for a single employee (under very specific conditions) to purchase previously uncredited service time with city-paid contributions plus interest.
• Requires the city to pay both employee and employer portions for the missed contributions and to promptly fund those payments to PERA.
• Ties PERA crediting of service to the city’s compliance with the payment requirements and uses existing statutory interest formulas for calculation.

Relevant terms - PERA - Public Employees Retirement Association - General Employees Retirement Plan - Allowable service - Service credit - Periods of uncredited prior service - Eligible person - City of Minneapolis - Fleet services division - Public works department - Employee contributions - Employer contributions - Minnesota Statutes section 353.27 - Minnesota Statutes section 356.59 - Minnesota Statutes section 353.28 subdivision 6 - Executive director - Lump sum payment - Credit for service - Collection procedures