As the temps warm up outside things at the Capitol are growing increasingly more intense. Earlier this week, Gov. Dayton submitted a pointed letter to Legislative leaders urging them to finish their work on time. Legislators have until May 21 to complete a lot of work before they are required to adjourn. Big items left to resolve include supplemental budgets, federal tax conformity, bonding, pension reforms, and a number of other high-profile issues. The IFO is working closely with our Legislative allies to accomplish as many of our priorities as possible and ensure our voices are heard throughout the final weeks of session. Below is an update of the issues we continue to advocate for, or against.
HIGHER EDUCATION FUNDING AND POLICY
Both the Senate Finance Committee and the House Ways and Means Committee have passed their versions of higher education finance and policy bills.
The Senate Higher Education Committee received a $0 target for new spending. However, the Senate bill does reallocate $1 million of surplus funding from the college occupational scholarship pilot program administered by the Office of Higher Education and appropriates that funding to the following:
- $500,000 one-time appropriation to Minnesota State for renewal of workforce development scholarships.
- $300,000 one-time appropriation to the Office of Higher Education for the State Grant program.
- $100,000 one-time appropriation to the Office of Higher Education for the Agricultural Educators Loan Forgiveness program.
- $50,000 one-time appropriation to the Office of Higher Education for the Student Loan Debt Counseling program.
- $50,000 one-time appropriation to the Office of Higher Education for a Teacher Preparation Program Design Grant.
As of the time of passage, the higher education bill did not have a budget target. However, in Senate Finance Committee Tuesday evening, committee members finished hearing all omnibus bills, and an amendment was offered to the higher education section appropriating $1 million to Minnesota State for NextGen (ISRS software overhaul). The amendment passed. This means that NextGen will be in the conversation in the final weeks of session as negotiations begin.
The House Higher Education Committee has a $5 million target for new spending. The original version of the bill also reallocated $1 million in a similar way to the Senate bill. However, the original bill spent $5 million in one-time money for the cybersecurity program at Metro State University.
The House Ways and Means committee then amended the original version of the higher education finance and policy bill to:
- Reduces the one-time $5 million appropriation to Metro State University’s cybersecurity program to $1 million.
- Appropriates $4 million one-time funds to Minnesota State for campus support.
- Deletes the one-time $500,000 appropriation to the workforce development scholarship program.
- Appropriates $500,000 to the University of Minnesota for campus support.
- Appropriates $500,000 of one-time funds to the Office of Higher Education for the State Grant program and other programs.
As a reminder, MinnState is requesting $10 million in on-going campus support and $21 million for NextGen. Gov. Dayton has proposed $10 million in one-time funding and $8.5 million for NextGen as part of his supplemental budget.
Both the House and Senate Higher Education bills include language requiring MinnState to develop a plan to increase the use of affordable textbooks and instructional materials. The plan must be submitted to the Legislature by January 15, 2020. Faculty will be instrumental in developing this plan, should this provision become law.
The next stop for the bills is the House and Senate floor, where the higher education bills are being heard today. After that, each body will fold all of their supplemental budget bills into one large omnibus bill which will then be negotiated in a conference committee made up of 5 Legislators from each body.
TRA Sustainability Measures
Each of Minnesota’s large pension funds is facing a shortfall. The pension reform bill includes sustainability measures for all four public pension systems, including the Teacher’s Retirement Association (TRA). Besides the immediate $3.4 million reduction in pension liabilities, the bill puts the plans on the path toward full funding, provides funding to schools to offset increased pension contributions, and safeguards the retirement security of public employees for the future. The bill lowers the rate of return on investments to 7.5 percent. Here are the key provisions of the pension bill pertaining to TRA:
KEY TRA PENSION BILL PROVISIONS
- COLA: 1.0% for 5 years (2019-2023), then increase by 0.1% per year in each of next five years (2024-2028) to 1.5%
- COLA delay to age 66 (effective 7/1/2024) (exempt: Rule of 90, disability, survivors, age 62/30 years)
- Early retirement: Increase penalties, 5-year phase-in (fiscal years 2020-2024), age 62/30 years exempt
- Employee contribution increase: +0.25% beginning in FY2024 (7.5% to 7.75%)
- Employer contribution increases: +1.25% phased in over 6 years, FY19-24 (7.5% to 8.75%)
The bill has passed the Senate 66-0 and awaits action in the House. A very similar bill passed the House and Senate last year as well, but had other unrelated provisions attached to it and forced Gov. Dayton to veto the entire bill. We are working to urge House leadership to pass a “clean” pension reform bill as soon as possible so it can be signed by the governor.
IRAP Employer Contribution Increase
The IFO worked closely with Sen. Nick Frentz (DFL-Mankato) and introduced a bill to increase the employer contribution of faculty under the IRAP plan to match the employer contribution of faculty in TRA. Currently, faculty under the IRAP plan have a 6% employer contribution. Faculty in the TRA plan are receiving 7.5% and that will increase to 8.75% over six years if the pension reform bill is passed.
We do not expect action on this important issue this session, but we have begun to reach out to MinnState and legislators to continue advocating for this change in future years.
ATTACKS ON PUBLIC EMPLOYEE COLLECTIVE BARGAINING RIGHTS
The Senate State Government Committee supplemental state government finance bill, SF 3764, has clear attacks against public employee’s rights to collectively bargain.
The bill includes a requirement that all state collective bargaining agreements are only enacted upon the governor’s signature. This provision in response to last year’s special session, where the Legislature attached an anti-labor amendment to a contract bill that included paid parental leave for all state employees. The governor ultimately vetoed the bill, but the MN Management and Budget (MMB) allowed the contract and paid parental to go into effect because the negotiated agreements only require legislative approval.
This provision allows the Legislature to use our fairly negotiated contracts and use them as political bargaining chips by trying to force the governor to sign all of it into law.
Another provision in the bill requires all health and dental benefits to be approved by the Joint Subcommittee on Employee Relations (JSER) before it could be agreed to in negotiations. This would lead to lengthy delays in the bargaining process and directly undermine our rights to negotiate the terms and conditions of employment with MinnState.
Another section eliminates fair share fees contingent on the U.S. Supreme Court ruling in the case Janus V. AFSCME that public employees shall not be required to pay their fair share of contract bargaining and enforcement.
The House and Senate have yet to release their respective bonding packages. The House budget resolution, which sets the targets used for various committee budgets, has set aside enough new money for an $825 million bonding package. The Senate is likely to be close to that number as well. The Governor has proposed a $1.5 billion package that includes fully funding the MinnState request and funding an additional $50 million for asset preservation and replacement. The MinnState request includes new building projects at Bemidji State, MSU Mankato, and MSU Moorhead. You can find more information about the MinnState proposal supported by the IFO here.
Taxes have become a hot-button issue this session due to the overhaul of the federal tax system passed late last year. The changes will increase taxes on approximately 300,000 Minnesotans unless changes are made to our state tax code to conform with recent federal changes.
Governor Dayton’s Tax Conformity Plan
Gov. Dayton released his tax plan earlier this session. The Governor’s tax proposal would protect tax deductions for 900,000 Minnesotans and their families which were reduced by the Federal Tax Bill, including employee expenses, homeownership costs, charitable contributions, tuition payments, and more.
Governor Dayton’s proposal would also cut state income taxes for over 2 million Minnesotans; over 1.9 million would see an average tax cut of $117, and 329,000 would see an average tax cut of $160, improving family budgets without risking the stability of our state’s budget.
House Tax Conformity Plan
The House plan released last week would cut the second-lowest income tax tier from 7.05 percent to 6.75 percent by Fiscal Year 2020, resulting in a $336 million tax reduction from the General Fund in Fiscal Years 2020-21. Similarly, corporate tax rates would drop from 9.8 percent to 9.1 percent by Fiscal Year 2020.
In addressing conformity, the bill would alter the base Minnesota tax code calculations from federal taxable income, which ties the state code to a number of federal tax provisions, to adjusted gross income. This provision was also found in Gov. Mark Dayton’s tax proposal.
Overall, the House omnibus tax bill would result in a $104.8 million tax revenue reduction for the General Fund in the 2018-19 biennium, and a $33.7 million reduction in the 2020-21 biennium.
Senate Tax Conformity Plan
The Senate has not released a tax conformity plan.
Constitutional Amendment for Dedicated Transportation Funds
Republicans in the Legislature are pursuing a constitutional amendment that would put a measure on the ballot to constitutionally dedicate motor vehicle-related sales tax revenues toward the state's road and bridge construction fund. If passed by the Legislature and then voters it would reduce general fund revenue available to be used to support higher education, healthcare, and other state budget priorities by more than $1 billion over the next 4 years.
Sexual Harassment Court Standards
There is a bipartisan effort in the Legislature this year to add a single new line to the Minnesota Human Rights Act’s definition of sexual harassment: “An intimidating, hostile, or offensive environment does not require the harassing conduct or communication to be severe or pervasive.
From MinnPost, “That language would nullify in the state a decades-old “severe or pervasive” legal standard used by judges to determine if any sexual harassment case could be actionable — or even heard — in court. In all workplaces, employees have the opportunity to take a sexual harassment claim to court through the state’s human rights act or the federal Equal Employment Opportunity Commission. And many want to, especially if they feel they were harassed and unfairly terminated or didn’t agree with the findings of their human resources department.
But appeals in the courts often end before they even begin, Peppin said. “Lawyers talked about how they would have potential clients and they would outright tell their clients, ‘Well this isn’t enough, this is not going to even be a case,’” said Peppin, R-Rogers. “The severe or pervasive level makes it nearly impossible, if not impossible. We were pretty shocked by some of the cases that we read of harassing behavior that happened and there was no opportunity for someone to have their day in court.”
As you have read, there are a lot of important issues remaining over the next 5 weeks. Please pay attention to your email as we will send action alerts on the issues that require faculty to engage with their legislators.
Please contact me with any questions.