Salary Cap Waiver

Pursuant to Minn. Stat. 43A.17, Subd. 9, (a) the salary and the value of all other forms of compensation of a person employed by a political subdivision of this state, excluding a school district, or employed under section 422A.03 may not exceed 110 percent of the salary of the governor as set under section 15A.082. For purposes of this subdivision, "political subdivision of this state" includes a statutory or home rule charter city, county, town, metropolitan or regional agency, or other political subdivision, but does not include a hospital, clinic, or health maintenance organization owned by such a governmental unit. (b) Beginning in 2006, the limit in paragraph (a) shall be adjusted annually in January. The limit shall equal the limit for the prior year increased by the percentage increase, if any, in the Consumer Price Index for all-urban consumers from October of the second prior year to October of the immediately prior year.

The new limitation for those without waivers

Effective August 1, 2005 local governments may compensate an employee up to $132,333 annually without asking for a waiver from Minnesota Management & Budget. The $132,333 will be increased on January 1, 2006 in accordance with the Consumer Price Index (CPI) from October of the second prior year to October of the immediately prior year. The limitation will be annually adjusted in each subsequent year thereafter.

Effective January 1, 2006 the new limit was $138,023.
Effective January 1, 2007 the new limit was $139,817.
Effective January 1, 2008 the new limit was $144,711.
Effective January 1, 2009 the new limit is $150,065

The new limitation for those with waivers approved by the Commissioner of Minnesota Management & Budget:
Effective August 1, 2005 local government employees who have an existing waiver that exceeds 110% of the governor's salary ($132,333) may receive a 3.2% increase on their approved waiver amount. If the existing approved waiver amount is below 110% of the governor’s salary, the local government unit employee's compensation may be increased up to 110% of the governor’s salary plus 3.2%.

Effective January 1, 2006 those with an existing waiver may receive up to a 4.3% increase on the approved waiver amount. This is in addition to the previous 3.2% CPI-U increase.

Effective January 1, 2007 those with an existing waiver may receive up to a 1.3% increase on the approved waiver amount. This is in addition to the previous CPI-U increases applied on August 1, 2005, and January 1, 2006.

Effective January 1, 2008 those with an existing waiver may receive up to a 3.5% increase on the approved waiver amount. This is in addition to the previous CPI-U increases applied on August 1, 2005, January 1, 2006, and January 1, 2007.

Effective January 1, 2009 those with an existing waiver may receive up to a 3.7% increase on the approved waiver amount. This is in addition to the previous annual CPI-U adjustments.

Ongoing Increases:
Effective January 1, 2006, and each January thereafter, the new limit and approved waiver amounts will be adjusted by the CPI-U. Local governments may choose to increase their salaries or approved waiver limits factoring in the CPI-U increase without an additional waiver.

The actual rates and CPI numbers will be posted on the MMB website as they become available. The CPI used for calculations is the unadjusted CPI for all urban consumers from October of the second prior year to October of the immediate prior year.

Waivers:
Waivers are not required up to the new limits as outlined above. Waivers are still required to award a salary in excess of 110% of the governor’s salary (with the exception of allowable increases based on the Consumer Price Index).

Local governments wishing to apply for a waiver may do so by filling out the salary cap waiver request form [Word format] [pdf format].. The questionnaire may be sent to the Commissioner of Minnesota Management & Budget.