ST PAUL, Minn. — The Minnesota Senate Thursday night passed the duty disability reform bill, in an effort to shore up the statewide retirement plan for police and firefighters.
The fund has been hit hard in the past few years, due to a wave of early retirements from post-traumatic stress. The legislation is an attempt to slow the impact of so many officers and firefighters leaving the field due to mental health injuries incurred on the job.
"The situation now is that the pension fund, PERA Police and Fire, is being depleted," Sen. Nick Frenz of North Mankato, the lead author of a bill, told KARE.
"With an increase in claims some cities are seeing a bigger hit to their budget, partly because health care costs are going up and partly because the number of people on duty disability is increasing."
Twelve Republicans joined 28 Democrats in voting for the bill. It already passed the House once, but the House will need to concur with an amendment the Senate added. If that happens, it will go to Gov. Walz's desk to be signed into law.
Civil unrest in the wake of George Floyd's murder sparked a wave of post-traumatic stress claims, first against he Workers Compensation system, and next to the state's Public Employees Retirement Association Police and Fire retirement plan.
The bill devotes part of the state's budget surplus to stabilize that system, but also make a key change for those seeking a duty-related mental injury. Officers and firefighters experiencing PTSD will need to seek treatment first.
They'll receive 24 months of mental health treatment before they can be placed on duty-related early retirement. They'll continue in their status as a paid, full-time employee during that treatment period.
"If they're better after 24 weeks and can return to duty that's great, if they can find another job with the police or sheriff or firefighters, that's great," Sen. Frentz explained.
"What we're trying to do with the bill first and foremost is to take care of those people that keep us safe, by providing treatment, by protecting the plan status so they can have a fair retirement and we can recruit the next generation of police, fire and paramedics."
The plan has the support of the statewide police and firefighting groups, because the alternative would be to raise retirement payroll deductions for active duty public safety workers.
Cities and counties also support the bill because of the financial burdens they've faced with PTSD-related duty disability claims. Those municipalities are required to pay ongoing health coverage for those public safety employees who go on duty disability.
Jenny Max, the Nisswa City Administrator, told lawmakers earlier in the session that her city will have to raise local property taxes to cover that cost for one officer.
"A longtime officer of the City of Nisswa filed for duty disability benefits and the city was informed those benefits were approved by PERA. The initial financial impact of this one duty disability claim was over $350,000 that would expand over 24 years resulting in an accumulative 14% levy increase."
In a Pension Commission hearing March 20, PERA director Doug Anderson said current retirees have nothing to worry about, but the system will need to be shored up if the early retirements continue at this pace.
"The amount of disability retirees in recent years has had a really significant impact. Our estimates are that if this doesn’t change it will increase the cost of the plan by $40 million per year. That’s about 4 percent of payroll," Anderson told lawmakers.
The bill drew opposition from some quarters because it will change the rules around what's known as the reemployment offset for some retirees. It would lower the amount of benefits some firefighters and police get if they've taken new jobs that pay more money than their original public safety jobs did.
"We believe it more fairly requires disability recipients that can work to help support the health of the fund from which they benefit," Anderson explained.
The notion, according to Anderson, is that those who have more income than they did before they suffered a disabling injury should continue to contribute to the retirement fund for as many years as they would've if they hadn't been injured.
During that joint hearing, Samantha Steward of the Meuser, Yackley and Rowland law firm warned the changes could be devastating to those currently on duty disability early retirement. She said retirees will be losing tax-free income because of their taxable income.
Meuser, Yackley and Rowland specializes in representing law enforcement officers and other first responders seeking to file duty disability complaints. It has represented hundreds of Minneapolis Police Department officers who filed Workers Comp claims and later took early retirement through the PERA Police and Fire Plan.