Do State Employees Have 6 Weeks of Paid Parental Leave? Or Not?

There may be another post-Special Session lawsuit in the offing.

You may recall that last year, Lt. Governor Tina Smith announced with great fanfare, like the Fairy Queen Mother, that she had waived her magic wand and granted most state employees 6 weeks of paid parental leave. The Dayton administration signed a “memorandum of understanding” with the unions giving the benefit.

At the time, I wondered: was this new benefit funded? The legislature was not in session. Doesn’t the House originate and approve spending? How can the administration add a new benefit without securing the funds? Do you just put it on the taxpayer credit card to be covered in the future?

When the press announced the deal, it noted that the benefit had to be approved by the legislature.

Here is what happened. The Legislature included the new benefit in a package deal put before the Governor at the end of May: you give us “pre-emption” language that asserts the right of the state to set minimum wage and other labor standards for state employers, and we will give you things you said you want: 6 weeks of paid parental leave and a reform pension bill for state employees, and language clarifying and strengthening the statute on “wage theft.”

The language in Senate File 3 was explicit: Section 2, entitled “Ratifications Contingent on Enactment,” said that any ratification of the paid parental leave benefit was contingent on the bill being enacted into law. In other words, if Gov. Dayton vetoed the bill, the legislature did not ratify or otherwise approve the new benefit. (You can read it on page 222 of SF 3)

Commissioner of Revenue Myron Frans sent a letter to his boss, Gov. Dayton, on May 30th declaring that the legislature had in fact ratified the labor deal, and implemented the new benefit for state employees. Governor Dayton said, “The veto of this bill has no legal effect on the on the (sic) bargaining agreements and compensation plans.”

According to MPR News, 700 employees have already used the benefit.

Seven hundred state employees have taken advantage of paid parental leave as the end of the first full year approaches, according to the budget agency.

Frans said he expects similar numbers in future years. He also expects to lock the benefit in place in the next round of employee contracts as negotiations on those begin this summer.

The state’s labor unions are proceeding with the Dayton administration’s interpretation.

According to that same MPR story, one of the bill’s authors predicted that this will have to be settled in a court of law:

Rep. Pat Garofalo, R-Farmington, said while the engineer contract was indeed ratified, the parental leave add-on for all unions was not. Garofalo points to specific language that said the leave policy wouldn’t happen without the full bill being enacted.

“It is an issue of checks and balances,” Garofalo said. “It’s important to understand that on these memorandums of understanding, if a Democratic governor can do this today and be allowed to do it, there’s nothing to stop a Republican governor from doing this in the future.”

He expects a court challenge to try to stop Dayton, but isn’t sure whether that would come from the Legislature or an outside group.

“Whether the merits of the idea are a good idea or a bad idea are separate,” Garofalo said. “We just can’t have the executive branch running around doing what they want.”

My concern is that the pension plans for state employees (all public employees) are already underfunded. For example, MSRS General admits to an unfunded liability of $2.6 billion but more realistic assumptions puts that number between $4 and $5 billion. MSRS General has not paid the full amount due (required contribution) since 2001.

So the Dayton administration has added another benefit apparently without identifying the cost or source of funds to pay for it. Ironically, one of the reforms that Dayton vetoed in SF 3 was an increase in both employer and employee contributions to the pension funds.

Surely there is a better way to run state government.