Minnesota

Major public employee retirement systems in Minnesota include the Minnesota State Retirement System (SRS), the Minnesota Teachers Retirement Association (TRA), and the Minnesota Public Employees Retirement Association (PERA).

Minnesota SRS administers pension and other benefits to state employees and employees of universities, cities, counties, and other political subdivisions that have elected to participate. The system consists of six defined benefit plans and two defined contribution plans. The State Board of Investment which consists of the governor, secretary of state, attorney general, and state auditor manages the assets of the system.

TRA of Minnesota administers retirement and other benefits to most of the state's public school teachers, administrators, and state college faculty. TRA assets are managed by the State Board of Investment.

Minnesota PERA administers pension and other benefits to employees of approximately 2,000 cities, counties, school districts and other political subdivisions in the state. The system administers three defined benefit plans, the largest of which (Public Employees Retirement Fund) makes up more than 90% of active membership. Other plans exist for public safety personnel and corrections officers. PERA also manages a defined contribution plan for employees of local ambulance services, physicians at public hospitals, and local elected officials. PERA assets are managed by the State Board of Investment.

Authorizing Statutes

Section 3.85 of the Minnesota Statutes creates the Legislative Commission on Pensions and Retirement. According to the statute, the powers and duties of the commission include

• studying retirement benefit plans applicable to nonfederal government employees in Minnesota, including federal plans available to the employees;

• making recommendations within the scope of its study, including attention to financing of the various pension funds and financing of accrued liabilities;

• considering all aspects of pension planning and operation and making recommendations designed to establish and maintain sound pension policy for all funds;

• filing a report at least biennially to each session of the legislature;

• analyzing each item of proposed pension and retirement legislation, including amendments to each, with particular reference to analysis of their cost, actuarial soundness, and adherence to sound pension policy, and reporting its findings to the legislature;

• creating and maintaining a library for reference concerning pension and retirement matters, including information about laws and systems in other states; and

• studying, analyzing, and preparing reports in regard to subjects certified to the commission for study.

State Employees

Chapter 352 of the Minnesota Statutes is titled "State Retirement." According to 352.021

Subdivision 1.Establishment. (a) There is established the general state employees retirement plan of the Minnesota State Retirement System for state employees. (b) The general state employees retirement plan is a continuation of the State Employees Retirement Association.

Section 352.03 vests policy-making functions in the Board of Directors.

Membership of board; election; term. The policy-making function of the system is vested in a board of 11 members known as the board of directors. This board shall consist of:

• Three members appointed by the governor, one of whom must be a constitutional officer or appointed state official and two of whom must be public members knowledgeable in pension matters;

• Four state employees elected by state employees covered by the system excluding employees in categories specifically authorized to designate or elect a member by this subdivision;

• One employee of the Metropolitan Council's transit operations or its successor agency designated by the executive committee of the labor organization that is the exclusive bargaining agent representing employees of the transit division;

• One member of the State Patrol retirement fund elected by members of that fund at a time and in a manner fixed by the board;

One employee covered by the correctional employees plan elected by employees covered by that plan;

• One retired employee elected by disabled and retired employees of all plans administered by the system at a time and in a manner to be fixed by the board.

Educational Employees

Chapter 354 of the Minnesota Statutes covers Teachers Retirement. Section 354.06 vests management of the Minnesota Teachers Retirement Association in the Board of Trustees.

Board. The management of the association is vested in a board of eight trustees known as the board of trustees of the Teachers Retirement Association. It is composed of the following persons:

• The commissioner of education;

• The commissioner of management and budget;

• A representative of the Minnesota School Boards Association;

• Four members of the association elected by the members of the association;

• One retiree elected by the retirees of the association.

Local Employees

Chapter 353 of the Minnesota Statutes establishes the Minnesota Public Employees' Retirement Association. Section 353.03 establishes the PERA Board:

Subdivision 1.Management; composition; election. (a) The management of the Public Employees Retirement Association is vested in an 11-member board of trustees consisting of ten members and the state auditor. The state auditor may designate a deputy auditor with expertise in pension matters as the auditor's representative on the board. The governor shall appoint five trustees to four-year terms, one of whom shall be designated to represent school boards, one to represent cities, one to represent counties, one who is a retired annuitant, and one who is a public member knowledgeable in pension matters. The membership of the association, including recipients of retirement annuities and disability and survivor benefits, shall elect five trustees for terms of four years, one of whom must be a member of the police and fire fund and one of whom must be a former member who met the definition of public employee under section 353.01, subdivisions 2 and 2a, for at least five years prior to terminating membership and who is receiving a retirement annuity or a member who receives a disability benefit. Terms expire on January 31 of the fourth year, and positions are vacant until newly elected members are seated. Except as provided in this subdivision, trustees elected by the membership of the association must be public employees and members of the association.

According to 354A.021 TEACHERS RETIREMENT FUND ASSOCIATIONS IN CITIES OF THE FIRST CLASS.

Subdivision 1.Establishment. There is established a teachers retirement fund association in each of the cities of Duluth and St. Paul. The associations shall be known respectively as the "Duluth Teachers Retirement Fund Association" and the "St. Paul Teachers Retirement Fund Association." Each association shall be a continuation of the teachers retirement fund association with the same corporate name established pursuant to the authorization contained in Laws 1909, chapter 343, section 1.

Board Composition

Contributions

Per the U.S. Census, in FY 2015, employer contributions to Minnesota state and local government pension plans were 2.43 percent of all state and local government direct general spending.

Constitutional Protections

No explicit constitutional protection for public pension benefits, but courts apply promissory estoppel and contract theories to protect reasonable pension expectations. Housing and Redevelopment Authority of Chisholm v. Norman, 696 N.W.2d 329 (Minn. 2005)(public employer's promise in CBA to pay retiree healthcare premiums was enforceable on contract grounds); Law Enforcement Labor Services, Inc. v. County of Mower, 483 N.W.2d 696 (Minn. 1992)(upon retirement in reliance on the county's promise of pension benefits a retiree's right is vested for the life of the retiree and cannot be altered absent the retiree's express consent); Christensen v. Minneapolis Mun. Employees Retirement Bd., 331 N.W.2d 740 (Minn. 1983)(promissory estoppel precludes arbitrary changes to a retirement plan but recognizing that public interest in modifying pension plan needs to be considered). Courts also provide limited protection against contract impairment based on MN CONST Art. 1, §11. (MN CONST., Article 1, §11) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits