Legislative Commission on Pensions and Retirement - Mar 25, 2026

Thank you, Mr. Chairman. We have the 1A authors amendment.

Aye.

Thank you.

Thank you, Mr. Chairman. I'm going to start out and then I'll turn it over to Representative feist. Senate File 4419, House File 4069 exempts J1 visa holding teachers and their employing school districts from pension contribution requirements to the Teachers Retirement association for the duration of their exchange term. To fill opening. Let me give you a little background. To fill openings in special education, English as a Second Language, early childhood and other programs. Minnesota public school districts hire teachers from abroad who come to the U.S. on a J1 or an H1B visa. The focus of this bill is on the J1 visa holders. Individuals on the J1 teacher program are authorized to stay for three years, which can be extended for an additional two years. Federal law caps J1 teachers at five years in the U.S. they're structurally prohibited from ever reaching the point where where TRA benefits them. So the problem is when J1 teachers return home, if they take a refund from the pension fund, well, the US tax withholding is typically at least 30% of the taxable amount. And there may be a 10% additional early withdrawal penalty. And their home country may also tax the distribution as well. So on the other hand, when J1 teachers come here, they're facing like $4,000 to $6,000 in immediate costs for housing deposits, vehicle purchases, licensing fees, flights, and the difficulty of establishing credit in a new country. Meanwhile, the districts have to invest heavily in onboarding mentorship and cultural orientation costs that fall outside their regular budget. So if you, if we redirect the employer pension contributions toward these support services, it makes these programs more sustainable. So that's basically why we want to exempt the J1 teachers from contributing to the pension fund. They don't really benefit from it. They don't stay long enough. Collecting their pensions down the road 30, 40 years is difficult. And the employing that school districts really need the money to invest in getting these teachers trained and ready to enter the classroom. So did you want to come?

Okay, so now I'd like to turn it over to Representative Feist and then we have a couple testifiers.

Thank you so much for having me before your commission today. Just to add just a few other points, you know, J1 exchange visitors are temporary by nature. They are often subject to a two year home residence requirement. So they are obligated in a lot of situations to depart the US after their program ends. There are other situations where we have different types of withholdings for people in different types of visa statuses. So One analogy is F1 students. We do not withhold Social Security and FICA taxes. And then in the case of F1s, if they were to switch to another more permanent visa status or green card, then those withholdings would come out. So I think this is kind of an analogous. And I also just wanted to mention that I did have a really good in depth conversation with a J1 teacher about this just to make sure that we heard from teachers. And what she told me is that she would prefer to have this money in her paycheck as she is getting settled in the United States, finding housing, a car, and that I asked her, do you understand how this would work then is you, if you switch to another type of visa after you've been here for a number of years, you would then be starting, you know, at year one in the pension. Do you understand that? And she said she did understand that and would still rather have those funds in her paycheck to begin with when she was in J before she knew if she was going to stay. So, yeah, that's all I wanted to add. Thank you.

So I'm Matthew Conley, founder of Lattice Global Teachers. We're a Minnesota cultural exchange program focused primarily on special education teachers. So we help schools hire international teachers through this J1 visa, the non immigrant visa, capped at five years that we've been discussing. When these teachers go home, they take American classroom ideas and policies with them. It's long been a strength of our country's exchange visitor program. So in my mind, this bill does two things. First, it helps these exchange teachers when they need it most. So when they arrive in Minnesota, there's no cushion. They have 30 days legally to get ready for school, to find housing, buy a car, get a Social Security number, open a bank account, all of those things you can imagine without a US Credit history. So exempting them from TRA lets them keep somewhere between four and five thousand dollars of their own money to cover those costs. Second, it's going to help schools afford to bring them here in the first place. So these teachers aren't beginners. Some of them are young, but some of them are approaching 60 years old. They come with at least two years of full time experience, a relevant bachelor's degree, often in special education and English Mastery. But schools still have to pay for visa support, relocation and orientation. And those are some real costs. So TRA not built for someone who can only stay 5 years. Research from the Equable Institute on Pensions estimates it takes about 25 years for a teacher to get more out of this pension than they put in. And a J1 teacher is not going to get there with the five year cap. And because this exemption ultimately removes both the contributions and the matching liability from Tra's books, we believe the effect is close to neutral. MSRS and Para already take this approach with J1 visa holders. And the federal government, as our Representative Feist mentioned, does it as well with fica, Social Security, and Medicare. So Minnesota schools are all struggling with the same teacher shortage. And we think this bill creates a real and practical way to bring more teachers into our classrooms.

Thank you. My name is Melissa Shaler. I'm the Executive Director of Student Services for Intermediate School District 917. We serve Dakota county schools in the metro area, and we have experienced a significant staffing shortage in our district for licensed special Education teachers, at least since the pandemic, we've used various avenues to address this shortage. The most effective way we've addressed our staffing shortage, however, is hiring highly qualified international special education teachers to teach in our schools and programs. So the this year, for the first time in a long time, I've filled nearly all of my special education teaching positions. And this is due in large part to the 11 highly qualified international special ed teachers we have. This represents just under 10% of our total teaching positions in our district. Unfortunately, the H1B visa option that we've been using to bring these teachers to our district is no longer a viable option for us to since the sharp increase in the fee that was announced in the fall. So the cost for us historically has been about $8,000 per teacher to bring them to our district and now it would be $100,000 per teacher. So this led us to exploring the option of the J1 visa. And Matthew told you a little bit about that. As we have pursued hiring utilizing this option, we find that we are competing with other states that that have provided exemptions to retirement contributions for teachers working under this visa option. And frankly, we'd like to be the most competitive so we get the best candidates to serve our students. Our district is serving mostly students in setting four, so they're in special education all day, every day. We are seeking support exempting our teachers working under the J1 from contributions to TRA in order to be a competitive option. So as I look forward to the next school year, I have 17 open special education teaching positions at this time for 26, 27 school year, and I will fill five of those internally and we'll have 12 remaining open positions. These positions have been posted since February and I don't have any other applicants. So it is really essential that we have an option like J1 and can be a competitive employer for the candidates that we have before us. Thank you.

Thank you.

Thank you.

Chair and members of the Commission, my name is Caitlin Snyder representing Education Minnesota. There are a lot of issues on the table with this bill that we're trying to address here. We're trying to address an immigration system that didn't work very well a year ago and certainly is not working any better at this time. We're trying to address the underpayment of teachers. We're trying to address a system that requires teachers to come here and pay thousands of dollars in order to be in our schools. But fundamentally, we don't believe that we address the teacher shortage by lowering compensation for our members. So under this bill, these folks would never have the option to choose whether or not this is the right path for them. The majority, even the significant majority of J1 teachers might be electing a refund. And to be clear, I do not have data that shows that. But even if that's true, that still is taking away the option from the folks who choose not to elect that option. There's nothing in this bill that says that that that shift of commitment from the employer contribution has to be dedicated to keeping these folks housed, to get them winter jackets and all of the other essentials when you're moving to Minnesota from Jamaica or other countries. So I think that's something that needs to be addressed as well. But fundamentally, I want to see the teacher's voice represented in here. In the bill summary, there's a statement that says, we understand from lattice global that J1 visa holders prefer to receive current pay. That might be their belief, but I think that we need to at least have a survey, a working group, some sort of conversation with the teachers themselves before proceeding, because as the members know, when people are removed from a pension system, it's very rare for them to come back. All of this being said, I want to just acknowledge that Senator Pappas knows more about pensions than I ever will and that Representative Feist knows more about immigration than I care to. And I understand the thought behind this bill, and I think there are good intentions. But I just want us to be incredibly thoughtful and deliberate in making a choice like this.

Yeah, I think I appreciate her comments because, yes, I've been very much in the forefront of trying to get more people to have pensions. And my next bill on secure choice will prove that. I just think this is unusual circumstances, that it's not possible to be pure all the time. And that what these teachers need is they need that money in their paycheck when they first get here. And if there was a world in which they were going to be able to come back, I actually think that they are not allowed to come back after their three to five years. If there was a world where they could come back and continue their teaching career here for another 20 years so that contributing to a pension would be worthwhile to them, then I would feel differently. But I think this is they're coming for a very short period of time and it's a situation where they need the money in their paycheck and the employers for a lot of these small school districts around the state that are kind of struggling to find special ed teachers, this is a real windfall for them. But they're upfront costs for them, and so it also helps the school districts.

I would just mention that I did take notes during Ms. Snyder's comments. I think there are some good ideas there that are worth discussing. And just to emphasize what Senator Pappas said, that it's harder now than it ever has been for J1 teachers to stay here. The $100,000 filing fee that just like appeared out of nowhere this fall is part of that. So a lot of J1 teachers are here for a short period of time and will depart.

thank you, Mr. Chair. And Senator Pappas, thank you for presenting this bill. As I've been looking at it, there's a couple things that, as I was listening to the testimony that I thought did not quite ring right for me. And one had to do with the fact that Most of the J1 visa holders who are coming to teach here would rather have the money to provide housing and all the costs associated with one getting here. I was a beginning teacher one year. I know how little they make and how challenging it is. But I have to say that I don't think that's limited to just J1 visa holders who feel like, you know what, I'd rather have the money today when I need it right now. And so I'm somewhat concerned about that because J1 visa holders, I understand, you know, they have to leave and then stay away for two years and come back. And the point is, no, they can. And there are there are other ways for J1 visa holders to come back through other things. I can read them if you want. But I think the point is I just have to wonder if I understand the impetus of getting more teachers and how critically important that is, especially special ed teachers. But I do not think this might not. I don't know that this is going to achieve what you're seeking. I'm rather concerned about that because when somebody does come back and they can through other types, Even a different J1 visa or other type of visa, things come back, well, suddenly they don't have that retirement. And basically I think your bill is asking our J1 visa holders to give up 9% of their salary and to not have that instead of having that added to their 9.81%. So you're asking those people who come here to teach our kids to not have the benefit of nearly 10% of their salary. That's kind of how I sense this. Well, you're saying that the TRA contributions of 9.81% would no longer be required for J1 visa holders because they're not going to be part of the retirement. So I just think there's some, perhaps even unintended consequences there. And as your other testifier said, there's nothing. I mean, we know there's additional costs anytime a new teacher is brought on and probably more so perhaps for J1 visa holders. And I might, maybe I understood you to say that the school district is investing 9.81% per year in this new teachers pension or TRA. And well, they might not be here for very long. But you know, I have to wonder. I think our teaching pool is very fluid for, you know, many teachers don't stay in a district longer than three years, although I understand that, you know, they'd be moving to another district with another, but their pensions would be going with them. And I think it's problematic to say that J1 visa holders do not have access to, to the same pension support that teachers who are not J1 visa holders hold. And I don't quite see the rationale except that yes, they'd rather have the money up front, but that's true for every beginning teacher and also that we just don't know how that 9.81% would be used instead. So you're kind of denying them the pension and even the possibility if they even come back, then they would have lost those years in pension and pensions are about time and money, money with time over that. So you're denying that. And I'm just not sure how helpful that would be in getting a J1 visa holder to choose to come to Minnesota to teach. It might even make an uncompetitive field. Although I don't think so. For teachers who are not J1 visa holders, those school districts could think, well, gee, it's going to be 9.8% cheaper every year to hire a J1 visa holder than a non visa holder that we have to pay TRA contributions for. So I think there's a lot here that's making me feel a little uncomfortable and I'll certainly look forward to hearing from the rest of the committee. But thank you for the opportunity to speak.

Thank you, Mr.

So since day one in pensions, Representative O' Driscoll has told me, protect the pension, protect the pension, protect the pension. And then I hear from Brian Rice, protect the pension. So there's 497 people in J1 right now that are paying into the pension system. And with this bill, they would not be paying into the pension system. Is that correct? So then, yeah, okay, so the interest, and I don't want to sound greedy, but o' Driscoll and Rice are here, so it's.

But so you have teachers that pay in at 21 years old and they leave the country at 26. That money sits in the account and accrues interest for many, many, many years. And they do eventually get their pension. It may be small, but that money has accrued interest over a period of years. So I'm just wondering is, are we protecting the pension by doing this?

Thank you, Senator Pappas. Representative Steere, you're good. Representative Cha thank you.

It seems like the J1 visa program seems to be popular. Went from 129 and we currently have 497 people on the J1 visas.

In the whole state?

Okay. These J1 visas, they participate in the union process, right?

Yeah.

Representative CHA and do we have any letter of Support from the J1 visa holders on this? Did they bring this forward or.

Somebody or to a group of people?

Thank you. Representative Cha. So I did talk with a J1 teacher, but in talking with Ms. Snyder, I think that we'd welcome more teacher input as well. But I took notes. So I talked with them for quite a while. And this particular J1 teacher was very supportive, said that it's particularly difficult for J1 teachers who are coming here to get set up in a new country, in a new state as they begin their position. Typically they don't arrive. The earliest they can arrive is 30 days before their start date. And so I'm just looking through my notes. So yeah, and again, I liken it to other, like F1 students where we don't have certain withholdings until they switch to a more permanent type of visa classification. So this is analogous. But the teacher that I talked with said that she felt like it was a financial risk for her to come and get set up and that she, you know, would rather have those funds in her paycheck. But I understand what Senator Nelson is saying as well. You know, I think it's always hard for us to save. I think that the reason that we're bringing this proposal forth is very specific to J1 teachers who are here on a temporary visa, often subject to a requirement that they go home or with the new $100,000 fee, they wouldn't even be able to come back on an H1B, which used to be an option. So we're talking about a very small number of teachers who have even less options to stay than they used to.

Thanks, Senator Pappas, Representative Cha. And then we'll go to Representative thank you. Representative Cha. You're good. Representative O' Driscoll thank you, Mr.

And to Senator Pappas and Representative Feist for the bill. Couple of questions. The testifiers we had today were school districts, public school districts. What are the odds that a J1 visa would be a J1 visa holder would be in the college or university system in the state of Minnesota or a private school?

There are a lot of J1 teachers at universities, I assume at private schools as well.

So if they're in a private school, they would be exempt from the state pension already by just nature of

to clarify, they're not all teachers. I was just is your question just how many J1 exchange visitors are there in Minnesota in education more generally? This might be more of a pensions question that I should let Senator Kraffitz answer.

Senator Pappas Mr. Chairman, I don't know the answer to that question. Maybe Mr. Conley does, if we could invite him back to the table.

I was just wondering we were talking primarily about public school districts. Were the TRA covered? Any idea how many people might be in the Minnesota state system which is also tre eligible?

Representative Ojiscol, that's very helpful.

Representative so I don't have like really specific hard stats of like what percentage of J1s move on to get a work visa and ultimately a green card. It is possible a large percentage of, of J1 exchange visitors, not all. It's like really, I could get really boringly detailed, but a lot of them are subject to a two year home residence requirement. And so those teachers are not allowed to change to another type of work visa or to apply for a green card, even if they're married to a US Citizen, until they either get a waiver of that, which right now they can't because they've just started denying them all, or go home for two years before they would be able to return to be with their US citizen spouse. So, you know, plenty of J1s do end up like staying, but I can't give you like a specific number, but it is quite a path, like quite a process if they do want to do that.

Yeah, I wanted to just the reason I asked that question is for members on the commission. We could be facing another question in the future. I didn't contribute to the TRA for five years. I've now gone back to work as a green card holder or a US Citizen. Can I buy back my five years that I wasn't eligible? That's again, just something that we need to think about in the bigger picture of this to avoid administrative problems in the future for future members of this commission. And finally, I would also say that I agree 50% with this plan and that we shouldn't necessarily withhold from the teacher. But I will stand on my comments from last week. If we are going to entertain when we have retired teachers and we're going to require the districts to withhold for the employer contribution. That may be something that we would look at doing here. My quick math on here tells me that if we had 400, 400 teachers at a salary of $50,000 apiece, that would be in the neighborhood. Whoops. 50,000 times 420. That's $21 million in payroll times 9.41. That's about $2 million of leakage. If we were to say we're going to exempt both the employee and the employer from funds that were currently going into TRA that may not be going into TRA as a result of the proposed legislation.

Well, I have some further comments, but I can wait till later. That's okay. Before the bill's closed up, though.

Mr. Chairman, I'm just wondering. I have a sense that Senator Nelson is uncomfortable, but I don't know how other people are feeling. I mean, I'm still prepared to make the motion if people feel like we're ready to go with it. We can always amend it if we decide we want to do more things based on some advice from Ed Minnesota. But I would feel more comfortable if it was in the bill.

it's on. Okay, thank you, Mr. Chair. So while we were having our discussion, I just did a little bit of research that kind of helped me because I'm just not clear that this is a good idea. But others think it is. So I'm just doing a little bit of research. But you know, it looks like apparently between 2001 and 2021 there were about six over 6 million J1 visa holders. And of those 20 to 40%. That's a large range. Do come back, but in some other form it could be, as you mentioned, a waiver. It could be H1B or F1 or marriage, family based. So there's so I'm just trying to understand how this would actually be beneficial in recruitment and I'm not and I'm not and I don't see and I also think it's not helpful to bring in to have teachers who are not part of the tra but they may end up staying here. They may need that retirement. And the point is they can't always get the funding back. It's not like the funding's being stolen. And I haven't heard much about, as I said, the non payment for those J1 visa holders and what's and there's nothing to say that the school district, I mean you could say, well yes, the school districts need this because they've had so many unfunded mandates. Not needing to pay 9.81% for J1 visa holders is going to help them. But I'm just saying there's been a so I just have more questions and I don't know that I'd be able to support this at this point.

Chair.

And Mr.

Thank you, Senator. We're back, Representative and then Representative o' Driscoll and then we'll maybe recess for a minute to talk amongst members about what they might want to do next.

I'm sorry, Representative o' Driscoll and then Representative Hill.

Mr.

Thank you, Representative. For that we're going to go to Representative Hill and then I think we'll recess for 60 seconds. Representative Hill, got a perspective? Yeah. Quick question for Senator Pappas.

be optional for the teacher? Senator Pappas?

Thank you for that, Senator Pappas. Members, I think the best plan for us here, given the agenda, is to lay it over. That's the Chair's intention. Representative Hill, I didn't mean to cut you off, Representative.

Thank you.

No, just one brief comment because we're going to be thinking about this because I expect to see this again. You know, one of the concerns about teaching is there's early attrition in teaching and it happens to be in Minnesota that 30 to 35% of teachers do leave teaching within the first five years in our state. So we have to just kind of keep all of that in mind as we move forward with this. Thank you.

This was a great conversation and I appreciate it and look forward to working with Senator Pappas and with Education Minnesota. And I like the idea of the opt in. I'd wrote written that down as well. So I think there are lots of good ideas today. So thank you.

Yes, Mr. Chairman, it's the the 1A.

I think Also, we could have Mr. Roberts. Chad. Did I get his last name right? There he is.

Yeah.

And members, I should note there's three letters in your packet before we hear from Mr. Roberts. One from AARP, one from the Minnesota Chamber of Commerce, and one from the National Federation of independent businesses. Mr. Roberts, welcome back to LCPR. If you could please introduce yourself and give us a brief description of what we're up to.

It

And Mr. Chairman, Senator Pappas. Mr. Chairman, I think we heard a lot about Secure Choice at our first meeting. So that's why I wanted to make kind of our comments short, because I think we got a really good background and Mr. Roberts has done a fabulous job and Mr. Bergstrom before him, and having a fairly slow rollout, but very intentional and working a lot with the business community to make sure everyone's comfortable, as you can see by the letters of support. And so it's a kind of a mutual admiration society here.

Chair.

Mr. Chair, Representative Nando, members of the committee, the 21 day period is after the initial rollout windows. The board has established a five stage multi phase roll in over the next two and a half years ending June of 2028 based on employer size. The 21 day comes into play after the employers are registered in the program when they hire new employees. But no, that initial rollout phased approach still exists until the final round of employers ending June 30th of 2028.

Representative Nadeau, just to be clear, so let's say we get through all these phases. You've got an employer, he's enrolled there still is that whenever an employee begins work for that company, they don't have to wait for an enrollment period. They can immediately start contributing if they choose. Choose correct.

Or.

Thank you, Representative Nadeau.

Director Robert Swift, Mr. Chair, members of the committee, Representative Renaudo. That 30 day period specifies that there is a 30 day waiting period from the time the employer roll enrolls the employee to which the employee has the option to not participate in the program and opt out of the program before the first payroll contributions are made.

Yes, and that's where I thought you were going. But so what happens when an employee changes their mind?

Mr. Chair, members of the committee, Representative Nadeau. An employee can opt out of the program at any point after the 30 day waiting period. With a Roth IRA, they can withdraw their money at any point after it's contributed. It is subject to tax regulations regarding the earnings on the principal invested in the ira. But at any point they can opt out of the program.

Chair.

Mr. Chair, member, committee. Representative Nadeau. Yes. At any point they could join the program. If they chose not to, they could hop back in.

You're good.

Senator Nelson.

Chair.

Thank you for that. Senator Nelson.

Further member comments or questions? Seeing none. Senator Pappas, it's our intention to move the bill to be incorporated. Do you have any final comments before we make that motion?

Thank you, Senator Pappas. Wouldn't you know it, Ms. Pearson, Ms. Lenczeski, they have the exact, exact same language right here on my secret sheet. So. Members, on the motion of Senator Pappas, any discussion? Seeing none. All in favor, please say aye.

All opposed say nay. Motion prevails and the revisors bill is adopted. Thank you for that expedient trip through the agenda. Members, the main item of business is now before us agenda item four. The recommendations of the probation officer and 911 telecommunications pension plan work group. We had budgeted 45 minutes for this. We're going to take 45 minutes for this. And with that we're going to start with Ms. Wilson. Explaining the materials on this topic, which are in your folders, and that includes the report of the work group. Ms. Wilson.

Thank you, Ms. Wilson. Are we ready? Ms. Pearson, go ahead and run the tape.

Thank you, Chair France. So last year's omnibus pension bill established the Work Group and tasked the Work Group with considering various topics and and determining the features of new pension plans for probation officers and 911 telecommunicators. The legislation required that any new plans be operational by January 1, 2027. Appendix A to the report contains the members of the workgroup, but generally the Work Group was made up of the executive Directors and designated staff of MSRs and para individuals designated by the Commissioner of Corrections and the Commissioner of Public Safety and individuals that represented 13 different unions and organizations at the first Workgroup meeting. The Workgroup elected Anne Finn and Scott Vadnais as co chairs of the Work Group. So, as I mentioned, the Work Group was tasked with considering multiple topics. I won't go over each consideration, but the following slides provide some of the considerations and determinations of the Workgroup. So the first consideration here is that the work group considered whether any other public safety adjacent positions should be included in the new plans. There were four different groups of employees who requested to be included in the new plans and the work group determined that the transit Control center supervisors should be included. These are telecommunicators and employees of Metropolitan Council. The work group also considered the financial impact resulting from the cessation of benefit accruals and contributions for members that transfer from the general plans to the new pension plans. PARA specifically raised a concern that the para General plan will be $33 million worse off if a new plan is created and the group of eligible employees leaves the PARA General plan to participate in the new para plan. MSRS did not have this same concern. Based on this concern, the work group determined that the assets and liabilities in the PARA General plan that are attributable to the probation officers and public safety telecommunicators who become members of the new para plan should then transfer to the new para plan which would result in the new para plan having an unfunded liability from day one. And the proposed Appendix C to the standards which is in your packets explains how the assets that would be transferred from the para General plan to the new para plan should be calculated. And that appendix was prepared with input from Doug Anderson and Paris Actuary. So the next consideration was the balance of employee and employer contributions. This topic obviously got a lot of discussion by the work group, but ultimately each group was able to put forth how much they were willing to contribute and the exact amounts can be seen on the determination side. I won't run through each percentage just to save time. The topic of past service was another issue that had a lot of discussion. The work group considered the option for members to purchase credit for past service. Ultimately, the workgroup determined that there would be a one time opportunity prior to retirement for a member to purchase credit for past service and any amount elected by the member prior to choosing how much past service the member would like to purchase. The member can request that the plans prepare an estimate of the purchase price for up to three different periods of past service. The purchase price would be the actuarial cost of the additional benefit obtained by purchasing the additional service credit minus any offset amount and I will discuss what this offset amount is later on in my presentation. The final consideration I'm going to go over is the approach to use when a person is eligible to receive annuities from multiple pension plans. The real question the workgroup was considering was to whether use the combined service annuity approach or the mixed service approach and this can be a complex topic, so I'm going to give a little bit of background. The combined service annuity approach would require someone who has, say, two retirement annuities to begin taking both retirement annuities within 12 months of each other in order to have both annuities calculated based on the member's highest average salary for five consecutive years under either plan. Which means that if a person started taking an annuity at age 60 in the new plan, the annuity from the general plan would be reduced for early retirement because the normal retirement age in that plan is age 66. The mixed service approach would allow a member to start receiving the retirement annuity from the new plant at age 60 and instead of having to take the general plan annuity within 12 months, they can wait until age 66 and then the annuity would not be reduced. So the work group determined that the mixed service approach should be available, but that does not mean that a person can't use the combined service approach if they choose so the next slide contains the recommended plan features for the new para plan. And if you want to look at the report, this is page 23 of the report which has every single recommendation of the work group. The pieces that I wanted to note is that a person who first becomes a public employee or a member of a pension fund before July 1, 1989 is not eligible to participate as a member of the new para plan. The normal retirement age is lower than the normal retirement age for the para general plan and the multiplier is higher than the multiplier for the para general plan. Otherwise, vesting early retirement age and COLA are the same between this new plan and the para general plan. And the next slide has the recommended plan features of the new MSRS subplan. This starts on page 27 of the report and similar to the new para plan, certain employees wouldn't be included as part of the new MSRS subplan. But specifically employees who are age 60 or older with three years of service in the MSRS general plan when the new sub Plan commences in 2027 will remain in the MSRS general plan. The normal retirement age again is lower than the normal retirement age for the MSRS general plan. But that is the only difference between the two plans. This next slide goes through the costs of the bills. So for the new para plan there is no cost to employers. For the MSRS subplan there is a cost due to a 2% employer contribution increase. MSRS had their actuary do a cost estimate and the estimated cost of that 2% increase is $707,540. And you can see how that amount is broken out in between the three state employers. I was just informed today by the Department of Corrections that they believe their cost is actually $535,954. But I don't know where that number came from. And then going on to the right side of the slide, Both bill drafts LCPR26.013 and minus 017 have a blank appropriation. And this is the offset that amount that I talked about previously which would help offset the cost of purchasing past service. How this would work is that there would be an account for members of the new plans of the new MSRS plan and an account for the new PARA plan. If a member purchased credit for past service funds would be taken from the applicable account to offset the purchase price. The amount that the purchase price would be offset is currently left blank in the bill and would therefore be whatever amount the legislation legislature decides, if any. And my last slide I won't go through as it really just contains a lot of numbers. But I wanted you to all to have a table that just compares the plan features of the current MSRs and para plans and these new proposed plans. Thank you Chair Franz, excellent work.

Very good. Chair France and members of the Commission, good evening. My name is Anne Finn and I'm the Director of Intergovernmental Relations with the League of Minnesota Cities. The League is a statewide association representing 842 of Minnesota's 856 cities. I'm here today because as you heard, I served as co chair of the probation officers and 911 telecommunicators pension plans work group. The other Co chair, Scott, is with me today and we facilitated the meetings that you heard about. The two of us serving as co chairs provided that the group was led by representatives of both employers and employees. I think it's accurate to say the co chairs acted as facilitators and not as advocates during this process. I want to thank the outstanding LCPR staff, including Susan Lencheski, Alina Wilson and Molly Pearson for making this a pretty easy job. They provided all the technical and logistical support for the work group and made sure the group met the requirements of the provisions in the 2025 omnibus pensions and Retirement Bill. I also want to thank the impacted statewide plan staff from MSRS Executive Director Aaron Leonard and Legislative Liaison Jenkins Benglin and from PERA Executive Director Doug Anderson and Policy Coordinator Amy Stranghe. They presented multiple times, they answered technical questions and they informed the work of the group. What I'd like the record to reflect is that the report before you represents the work of many dedicated stakeholders who met nine times between June and November. The meetings I thought were productive, respectful and inclusive. I commend and thank the individuals who brought their best selves to this effort. And I believe the report and the legislation meet the requirements specified by this Commission.

My name is Scott Vadnais, President of

chair and I would just like to

And everybody that was in this, this

today and I think we both support this bill.

Thank you, Mr. Chair and as welcome back for me. So it's my pleasure to be here. So, Mr. Chair and Legislative Commission on Pensions and Retirement. My name is Darlene Pancone. I serve as President of the Minnesota AFPO Nina Chapter and as the Emergency Communications Response Center Manager for Washington County. I am here today in support of LCPR 26, 12, 13 and 17. Thank you for hearing this important legislation and if your continued commitment in addressing the long standing inequities within our public safety system. I would also like to take a moment to recognize several members of this commission. Senator Pappas, for your decades of leadership and your early support of this work. And congratulations on your upcoming retirement to Senator Seberger for your continued support for representing portions of Washington county and Representative Cha as my home representative. I appreciate your service and support. I have dedicated 32 years to the 911 profession and I have been advocating for enhanced pension recognition for public safety telecommunicators for many years. I had the honor of serving as Chair of the 2021, 2022 LCPR Working Group on this issue and most recently participated in the work group that was developed this legislation and the report being presented this evening. These proposed bills are the result for thoughtful collaborative work bringing together retirement systems, state agencies, labor, public safety professional associations and local governments to find a balanced and responsible path forward. Public safety telecommunicators are the first first responders. Every day they manage high stress, high stakes situations, guiding callers through life threatening emergencies and coordinating responses across multiple disciplines. And yet, despite the nature of their work, telecommunicators have remained in general employee pension plans. These bills recognize the reality of their profession. It creates a path forward that better aligns benefits with the demands of the job while remaining responsible in its structure and funding. I also want to acknowledge in something important, these changes do not significantly benefit significant someone like me with over three decades of service and at the age of 57. But it also does no harm. And that is the point. We cannot focus on what this does not change for the past. We must focus on what it secures for the future. If we are serious about recruitment, retention and the long term sustainability of the 911 workforce, we must ensure the benefits of reflect the realities of the work. This profession is evolving. It's becoming more complex, more demanding and more critical to public safety outcomes. And in this environment, it takes years to develop into an effective public safety telecommunicator. Without action, we risk losing the workforce our communities depend on. These bills are about equity, they are about recognition and they are about the future of our profession. So on behalf of Minnesota APCO Neenah Chapter, I respectfully ask for support and I thank the commission for its time.

Chair and members of the committee, my name is Mike LeDoux. I'm the director of Legislative affairs for Law Enforcement labor services. I served 31 years as a Minnesota State Trooper and served as President of the Minnesota State Patrol Troopers Association. I also served on the MSRS Board of Directors as the elected State Patrol Representative where I gained experience with pension policy and oversight. I'm here on behalf of LELs and its member organizations representing more than 8,800 officers and public safety professionals across Minnesota. I also participated in the work group that developed these recommendations where stakeholders with different perspectives work together to reach a balanced and thoughtful outcome. I also want to recognize the contributions of the LCPR staff and the retirement systems in supporting this work. These recommendations are consistent with the LCPR's principles of pension policy which provide that retirement plan should reflect the nature of the work and the age at which employees can reasonably be expected to retire. For 911 telecommunicators. Data provided to the Commission by MSRS in a previous study shows an average retirement age of 59 compared to 64 for general employees. That five year difference demonstrates a clear mismatch between current plan design and actual workforce experience. The proposed normal retirement age of 60 better reflects the realities of this work and aligns with the Commission's own principles. Both 911 Telecommunicators and Probation officers perform demanding and essential public safety roles. 911 telecommunicators are often the first point of contact in emergencies, gathering critical information, coordinating response and providing life saving instructions before responders arrive. Probation officers supervise offenders, work closely with courts and law enforcement and play a vital role in public safety and accountability. Recognizing the nature of this work through a more appropriate retirement structure will help recruit and retain skilled professionals Minnesota depends on. For these reasons, we respectfully urge the Commission to adopt the work group's recommendations. Finally, I would also like to recognize Senator Howe, Senator Pappas and Representative o' Driscoll for their many years of service to their commission and their work on pension policy.

Will do.

Thank you, Ms. Leonard. We'll continue with testimony before member questions. Mr. Bruce, welcome to LCPR. Please introduce yourself and present your testimony.

Thank you Mr. Bruce, well done. Next we'll go to testimony on the new para plan starting with Nicole Cole Kern. Oh, I'm sorry, we just. Mr. Hawkins, if you could come forward and then Ms. Kern would be right nearby. Mr. Hawkins, thank you for your patience. Please introduce yourself and present your testimony.

Thank you, Mr. Hawkins. Director Kern, welcome to LCPR. Please introduce yourself and present your testimony.

Thank you.

Good evening, Mr.

Thank you, Dr. Lieberg. Well done. Our final testifier in person is Nathan Jessom. Mr. Jessen, if you could come forward. Members, while Mr. Jessen's getting ready, it's our intention to go through member questions for this bill. We can adopt the findings even though the bill's not being introduced until tomorrow. And then that would be the end of the agenda for tonight's hearing, so that items following this on the agenda will postpone until after tonight's hearing. With that, Mr. Jessen, welcome to LCPR. If you could please introduce yourself and present your testimony.

Thank you, Mr. Jessom. Well done. Okay, members, let's go to member questions and comments. At this point you're welcome to call testifiers back up. We can discuss adopting the findings of the work group. But let's go to member questions and comments first. Any members questions or comments? Seeing none.

I mean that's ridiculous.

Is that a question for the chair? Representative Doe?

Good question. Representative Doe Members, if we choose to as lcpr, we can adopt the incorporation of this finding this legislation into the omnibus pension bill with blank appropriations in it, as we do sometimes, we are not required to. And with the break next week, we would have two Tuesdays to tee up our choices and maybe even find out what the appropriation and pension target might be. The chair's open either way. Let's go through the questions outside of the question of the appropriations first and see if members have any other comments. I am sensing, given the incredible work that's been done by the advocates and all the testifiers and the work group members, that we have support to adopt the findings but don't want to speak for members. Are there members who want to speak to the bill, the work group report outside of the question of the appropriations? Okay, that's a good sign. Members who want to discuss the appropriations. All right. Representative o', Driscoll, I just want to

Thank you, Representative o'. Driscoll. Excellent point. Other members comments or questions? Representative Cha.

Thank you, Representative Cha. Further, members, questions, comments or concerns with that? Members, unless there's an objection you're willing to put on the record here, the chair is prepared to accept a motion. The motion would be that LCPR 26013, LCPR 017, LCPR 012 be recommended to pass and be incorporated in the omnibus pension bill if Members are open to that. Representative nadeau.

Chair.

If you got an amendment, now's the time, right?

Thank you, Representative Doe. First of all, member comments to the 1A. Representative Nadeau offers the 1A. This is to LCPR 26017 only. And the chair would have some concerns about a yes vote on the amendment at this point, given that we're still talking about what we might find. Also, the matters that are in the bill now were heavily negotiated. So this is a topic that the work group was able to visit with input from all the parties. Having said that, I respect where you're going. It's a bit of front loading. Here, any member comments, questions or concerns. Senator Rasmussen, thank you, Mr.

And I too want to thank everyone who worked on this in the interim. I think this was a good outcome from lots of thoughtful conversation and back and forth. And I know that there was folks that were disappointed that something didn't move forward last year, but I think now we, we have a really thoughtful framework that will serve these public employees well into the future. Mr. Chair, I do support the amendment that Representative Nadeau has brought. I think it's important when we're starting off a new plan to start it off with sufficient funding and if without adopting this amendment, there would be a contribution deficiency on day one in this plan. And I just don't know if that's how we want to be starting off a new plan. And the amendment from Representative Doe would address that and make sure that we're paying for the additional benefits that are included in this plan.

Good evening, Mr. Chair, commission members and Representative Nadeau. Senator Rasmussen, to your question, when the actuaries put a cost to this plan, the cost has kind of a unique feature in that it actually is expensive, expected to decline over time if all assumptions are met. The reason for that is that there's a higher normal cost for a mature group. So as this mature group, as more members join with a lower normal cost, the normal cost overall trends down. So as a funding starting point, if you were to believe that all assumptions would be met, you would have a initial contribution that would actually go down continuously over time, year over year. So feeling with the work group that that may not be practical to have a contribution rate that is actually changing every single year. It was looked at as an alternative, is to choose a fixed rate for a period of time that will be less than what's needed for a period of time, but then more than what's needed for a period of time. So it gets to the same place in a fairly short period of time, but is just kind of viewed as a different funding alternative that is really more probably practical to adopt that makes it clear to the members what their contribution will be for a fixed time as opposed to having it gradually change year over year.

Yeah, and thank you, Mr.

And thank you, Mr. Anderson. The bill basically doesn't, doesn't ratchet the current language of the bill, doesn't ratchet it down. It sets it at 8.82%, period. That's what it does. And so, you know, when I looked at the work plan, there was three options that were put out. Option one kind of, you know, resulted in a funding. It didn't result in a deficiency or a sufficiency. It was, it cost out. And again, recognizing that these are assumptions, the second option had an additional funding deficiency that would trend towards funding to sufficiency within five years, again based on those assumptions and option three. And so the underlying bill is, is at 8.82% in perpetuity. We can obviously change that when we want. But the question that I would like to discuss, and I don't know if I need the amendment to do it, the question that I'm struggling with, Mr. Chair, is should we, as a legislative commission on pensions, make decisions that initially start funds with a deficiency? And that's what I'm struggling with. And what would that do to some of our other plans, who all of a sudden, and to be honest, I'm in para general, I'd love, you know, I'd love to, you know, retire a little earlier. And I think a lot of people would. And so we just push off that funding sufficiency as we all determine, you know, where we want to retire. And I'm just worried about the long term that's I can pull the amendment. I'm not trying to, you know, create a problem. I'm just having a struggle getting my head around is this what we want to do? And maybe we just need more time.

Chair France or Representative Nadeau, I think your assessment is correct in how you're looking at it. I would just point out it's a relatively small deficiency that corrects itself in a very short period of time.

I appreciate that. But the underlying bill doesn't address the that it sets 8.82 in perpetuity. That that's what it does. And so, and so here's what I maybe I want to ask Representative Rasmussen, so. Well, maybe not. It's, you know, I don't mind withdrawing this and keeping the discussion going, that I'm not trying to stall this. And so I know that it's 20 after 7 and we're at that hour. So Mr.

I'm going to withdraw that one a as long as we lay this over for and we'll bring it up again the next time we meet.

Thank you, Mr. Chair. I think, you know, as I'm looking at the calendar, today's the 24th of March. We will be back here most likely on the 7th of April. What, what do we lose by leaving this, laying this over right now, waiting for more information to come. We have an issue of ongoing funding to be able to make this up. We don't have a target yet. We know that we're in a structural deficit. I don't want to have people think, because we're adopting this, that this means that, yep, money's going to be there because we don't know that unless you have, you know, more insight on this than the rest of the commission does. But I've been very close to the people in the Minnesota house from Ways and Means and looking at things that I'm not. I don't have any numbers yet. I get a lot of wait and sees. The second question that I have is is there a potential for duty disability in this new plan for individuals like we're experiencing some of our other plans right now?

Chair, Representative O', Driscoll. The disability provisions that are in this plan are the same that are in the general plan plan and very different than what's in the para police and fire plan.

And the reason I asked that question is if we start out with a deficiency and we get a large run like we've seen in the police and fire on that, that is a way to bankrupt a plan faster than anything. And what we need to also make sure that we're keeping a track. And this is for every person in this room and every person in the state of Minnesota. These are unfunded liabilities, which means that we have to put money into these to keep these going. And every time that MMB goes to New York and wants to find out what are the interest rate that we're going to pay on bonds that we sell, they look behind the curtain, they go, how, how well funded are your plans? And that keeps interest rates low and that allows us the ability to be able to borrow at very competitive rates. So this is a compounding effect that I think we are very appreciative of the work that's been been done. We're digesting it. We're about ready to go on a leave here or a break. A lot more questions I think will be answered for us when we get back as to funding and viability on this.