SF 430

4th Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; various retirement plans; authorizing an optional annuity
election for the surviving spouse of a deceased former legislator; permitting
the optional early division of legislators retirement plan retirement allowances
upon a marriage dissolution; expanding the membership of the general state
employees retirement plan and the State Patrol retirement plan; permitting
withholding of insurance premiums from public safety employee annuities;
providing special coverage to privatized employees of Lakefield Nursing Home,
Lakeview Nursing Home, Oakland Park Nursing Home, and Hutchinson Area
Health Care; permitting various prior service credit purchases; exempting certain
Anoka County employees from reemployed annuitant earnings limitations;
permitting certain combined service annuity back payments; permitting a
delayed disability benefit application; making various administrative changes
in various statewide retirement plans; modifying disability determination
procedures and disability benefits in various plans administered by the Public
Employees Retirement Association; authorizing investment in the State Board of
Investment by the Minneapolis Employees Retirement Fund; relaxing certain
Minneapolis Employees Retirement Fund liquidity transfer requirements;
expanding the coverage group of the state employees correctional retirement
plan to include various Department of Corrections and Department of Human
Services employees; modifying various aspects of the volunteer fire supplemental
benefit coverage; correcting various 2006 drafting errors; establishing a pilot
postretirement adjustment; requiring a study and report; modifying certain
Minneapolis Police Relief Association surviving spouse benefit amounts and
validating prior payments; increasing the amount available for distribution by
the Minneapolis Firefighters Relief Association as a postretirement adjustment;
including the Public Employees Retirement Association staff in the state's
postretirement option; extending the 2006 special retirement incentive to 2009
and making certain modifications; authorizing an additional postretirement
adjustment for surviving spouses receiving benefits from the Thief River
Falls Police Trust Fund; amending Minnesota Statutes 2006, sections 3.85,
subdivision 10; 3A.02, subdivisions 1, 5; 3A.05; 13.632, subdivision 1; 43A.346,
subdivisions 1, 2; 126C.41, subdivision 4; 352.01, subdivisions 2a, 2b, 11;
352.12, subdivision 2a; 352.27; 352.91, subdivisions 3d, 3e, 3f, 4b; 352.951;
352.98, by adding a subdivision; 352B.01, subdivision 2; 352D.02, subdivisions
1, 3; 352D.06, subdivision 3; 353.01, subdivisions 2a, 2b, 6, 16, 28, 37,
by adding subdivisions; 353.03, subdivisions 3, 3a, 4; 353.27, by adding a
subdivision; 353.28, subdivision 6; 353.29, subdivision 3; 353.30, subdivisions
1a, 1b, 1c; 353.32, subdivisions 1a, 1b; 353.33, subdivisions 1, 2, 4, 6, 7a;
353.34, subdivision 3; 353.651, subdivision 4; 353.656, subdivisions 1, 1a, 3, 4,
5a, 6a, 8, 10, by adding subdivisions; 353.657, subdivisions 1, 2, 2a, 3; 353B.08,
subdivision 11; 353E.06, subdivisions 1, 2, 4, 8; 353F.02, subdivision 4; 353F.04,
subdivision 1; 354.05, subdivision 13; 354.093; 354.094; 354.095; 354.096,
subdivision 2; 354.35; 354.44, subdivision 6; 354.45, subdivision 1a; 354.48,
subdivision 3; 354A.12, subdivisions 3b, 3c, 3d; 354B.21, subdivision 3; 355.01,
subdivision 3h; 356.195, subdivision 1; 356.405; 356.46, subdivision 3; 356.87;
356A.06, subdivision 6; 422A.01, subdivision 13a; 422A.05, subdivision 2c;
422A.06, subdivisions 3, 5, 7, 8; 422A.101, subdivision 3; 423A.02, subdivisions
3, 5; 423B.10, subdivision 1; 423C.06, subdivision 2; 424A.10, subdivisions
1, 2, 3; 490.121, subdivisions 15a, 21f; 626.84, subdivision 1; Laws 1981,
chapter 68, section 42, subdivision 1, as amended; Laws 2006, chapter 271,
article 2, sections 12, subdivision 1; 13, subdivision 3; article 3, section 43;
article 14, section 2, subdivision 3; proposing coding for new law in Minnesota
Statutes, chapters 3A; 352; 353; 353E; 354; 356; repealing Minnesota Statutes
2006, sections 352.031; 353.30, subdivision 1; 353.33, subdivisions 6a, 6b,
8; 353.34, subdivision 7; 353.656, subdivisions 5, 9, 11, 12; 353.69; 354.071;
354.49, subdivision 5; 354A.12, subdivision 3d; 354A.29, subdivision 6; 356.90;
422A.101, subdivision 4.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

VARIOUS CLARIFICATIONS AND CORRECTIONS

Section 1.

Minnesota Statutes 2006, section 3A.05, is amended to read:

3A.05 APPLICATION FOR SURVIVOR BENEFIT.

(a) Applications for survivor benefits under section 3A.04 must be filed with the
director by the surviving spouse and dependent child or children entitled to benefits under
section 3A.04, or by the guardian of the estate, if there is one, of the dependent child or
children.

(b) Survivor benefits accrue as of the first day of the month following the death of
the member of the legislature or former legislator and payments commence as of the first
of the month next following the filing of the application, and are retroactive to the date the
benefit accrues or the first of the month occurring 12 months before the month in which
the application is filed with the director, whichever is earlier later.

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

Sec. 2.

Minnesota Statutes 2006, section 13.632, subdivision 1, is amended to read:

Subdivision 1.

Beneficiary and survivor data.

The following data on beneficiaries
and survivors of the Minneapolis Teachers Retirement Fund Association, the St. Paul
Teachers Retirement Fund Association, and the Duluth Teachers Retirement Fund
Association members are private data on individuals: home address, date of birth, direct
deposit number, and tax withholding data.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2006, section 126C.41, subdivision 4, is amended to read:

Subd. 4.

Minneapolis health insurance subsidy.

Each year Special School District
No. 1, Minneapolis, may make an additional levy not to exceed the amount raised by a net
tax rate of .10 percent times the adjusted net tax capacity for taxes payable in 1991 and
thereafter of the property in the district for the preceding year. The proceeds may be used
only to subsidize health insurance costs for eligible teachers as provided in this section.

"Eligible teacher" means a retired teacher who is a retired member of the Teachers
Retirement Association, who was a basic member of the former Minneapolis Teachers
Retirement Fund Association, who retired before May 1, 1974, or who had 20 or more
years of basic member service in the former Minneapolis Teachers Retirement Fund
Association and retired before June 30, 1983, and who is not eligible to receive the
hospital insurance benefits of the federal Medicare program of the Social Security Act
without payment of a monthly premium. The district must notify eligible teachers that a
subsidy is available. To obtain a subsidy, an eligible teacher must submit to the school
district a copy of receipts for health insurance premiums paid. The district must disburse
the health insurance premium subsidy to each eligible teacher according to a schedule
determined by the district, but at least annually. An eligible teacher may receive a subsidy
up to an amount equal to the lesser of 90 percent of the cost of the eligible teacher's
health insurance or up to 90 percent of the cost of the number two qualified plan of health
coverage for individual policies made available by the Minnesota comprehensive health
association under chapter 62E.

If funds remaining from the previous year's health insurance subsidy levy, minus
the previous year's required subsidy amount, are sufficient to pay the estimated current
year subsidy, the levy must be discontinued until the remaining funds are estimated by the
school board to be insufficient to pay the subsidy.

This subdivision does not extend benefits to teachers who retire after June 30,
1983, and does not create a contractual right or claim for altering the benefits in this
subdivision. This subdivision does not restrict the district's right to modify or terminate
coverage under this subdivision.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2006, section 353.01, subdivision 2b, is amended to read:

Subd. 2b.

Excluded employees.

The following public employees are not eligible
to participate as members of the association with retirement coverage by the public
employees retirement plan, the local government correctional employees retirement plan
under chapter 353E, or the public employees police and fire retirement plan:

(1) public officers, other than county sheriffs, who are elected to a governing body,
or persons who are appointed to fill a vacancy in an elective office of a governing body,
whose term of office commences on or after July 1, 2002, for the service to be rendered
in that elective position. Elected governing body officials who were active members of
the association's coordinated or basic retirement plans as of June 30, 2002, continue
participation throughout incumbency in office until termination of public service occurs as
defined in subdivision 11a;

(2) election officers or election judges;

(3) patient and inmate personnel who perform services for a governmental
subdivision;

(4) except as otherwise specified in subdivision 12a, employees who are hired for
a temporary position as defined under subdivision 12a, and employees who resign from
a nontemporary position and accept a temporary position within 30 days in the same
governmental subdivision;

(5) employees who are employed by reason of work emergency caused by fire,
flood, storm, or similar disaster;

(6) employees who by virtue of their employment in one governmental subdivision
are required by law to be a member of and to contribute to any of the plans or funds
administered by the Minnesota State Retirement System, the Teachers Retirement
Association, the Duluth Teachers Retirement Fund Association, the Minneapolis Teachers
Retirement Fund Association, the St. Paul Teachers Retirement Fund Association, the
Minneapolis Employees Retirement Fund, or any police or firefighters relief association
governed by section 69.77 that has not consolidated with the Public Employees Retirement
Association, or any local police or firefighters consolidation account who have not elected
the type of benefit coverage provided by the public employees police and fire fund under
sections 353A.01 to 353A.10, or any persons covered by section 353.665, subdivision 4,
5, or 6, who have not elected public employees police and fire plan benefit coverage. This
clause must not be construed to prevent a person from being a member of and contributing
to the Public Employees Retirement Association and also belonging to and contributing to
another public pension plan or fund for other service occurring during the same period
of time. A person who meets the definition of "public employee" in subdivision 2 by
virtue of other service occurring during the same period of time becomes a member of the
association unless contributions are made to another public retirement fund on the salary
based on the other service or to the Teachers Retirement Association by a teacher as
defined in section 354.05, subdivision 2;

(7) persons who are members of a religious order and are excluded from coverage
under the federal Old Age, Survivors, Disability, and Health Insurance Program for the
performance of service as specified in United States Code, title 42, section 410(a)(8)(A),
as amended through January 1, 1987, if no irrevocable election of coverage has been made
under section 3121(r) of the Internal Revenue Code of 1954, as amended;

(8) employees of a governmental subdivision who have not reached the age of
23 and are enrolled on a full-time basis to attend or are attending classes on a full-time
basis at an accredited school, college, or university in an undergraduate, graduate, or
professional-technical program, or a public or charter high school;

(9) resident physicians, medical interns, and pharmacist residents and pharmacist
interns who are serving in a degree or residency program in public hospitals;

(10) students who are serving in an internship or residency program sponsored
by an accredited educational institution;

(11) persons who hold a part-time adult supplementary technical college license who
render part-time teaching service in a technical college;

(12) except for employees of Hennepin County or Hennepin Healthcare System,
Inc., foreign citizens working for a governmental subdivision with a work permit of less
than three years, or an H-1b visa valid for less than three years of employment. Upon
notice to the association that the work permit or visa extends beyond the three-year period,
the foreign citizens must be reported for membership from the date of the extension;

(13) public hospital employees who elected not to participate as members of the
association before 1972 and who did not elect to participate from July 1, 1988, to October
1, 1988;

(14) except as provided in section 353.86, volunteer ambulance service personnel,
as defined in subdivision 35, but persons who serve as volunteer ambulance service
personnel may still qualify as public employees under subdivision 2 and may be members
of the Public Employees Retirement Association and participants in the public employees
retirement fund or the public employees police and fire fund, whichever applies, on the
basis of compensation received from public employment service other than service as
volunteer ambulance service personnel;

(15) except as provided in section 353.87, volunteer firefighters, as defined in
subdivision 36, engaging in activities undertaken as part of volunteer firefighter duties;
provided that a person who is a volunteer firefighter may still qualify as a public
employee under subdivision 2 and may be a member of the Public Employees Retirement
Association and a participant in the public employees retirement fund or the public
employees police and fire fund, whichever applies, on the basis of compensation received
from public employment activities other than those as a volunteer firefighter;

(16) pipefitters and associated trades personnel employed by Independent School
District No. 625, St. Paul, with coverage under a collective bargaining agreement by the
pipefitters local 455 pension plan who were either first employed after May 1, 1997, or,
if first employed before May 2, 1997, elected to be excluded under Laws 1997, chapter
241, article 2, section 12;

(17) electrical workers, plumbers, carpenters, and associated trades personnel
employed by Independent School District No. 625, St. Paul, or the city of St. Paul,
who have retirement coverage under a collective bargaining agreement by the Electrical
Workers Local 110 pension plan, the United Association Plumbers Local 34 pension plan,
or the Carpenters Local 87 pension plan who were either first employed after May 1,
2000, or, if first employed before May 2, 2000, elected to be excluded under Laws 2000,
chapter 461, article 7, section 5;

(18) bricklayers, allied craftworkers, cement masons, glaziers, glassworkers,
painters, allied tradesworkers, and plasterers employed by the city of St. Paul or
Independent School District No. 625, St. Paul, with coverage under a collective
bargaining agreement by the Bricklayers and Allied Craftworkers Local 1 pension plan,
the Cement Masons Local 633 pension plan, the Glaziers and Glassworkers Local L-1324
pension plan, the Painters and Allied Trades Local 61 pension plan, or the Twin Cities
Plasterers Local 265 pension plan who were either first employed after May 1, 2001, or if
first employed before May 2, 2001, elected to be excluded under Laws 2001, First Special
Session chapter 10, article 10, section 6;

(19) plumbers employed by the Metropolitan Airports Commission, with coverage
under a collective bargaining agreement by the Plumbers Local 34 pension plan, who either
were first employed after May 1, 2001, or if first employed before May 2, 2001, elected to
be excluded under Laws 2001, First Special Session chapter 10, article 10, section 6;

(20) employees who are hired after June 30, 2002, to fill seasonal positions under
subdivision 12b which are limited in duration by the employer to 185 consecutive calendar
days or less in each year of employment with the governmental subdivision;

(21) persons who are provided supported employment or work-study positions
by a governmental subdivision and who participate in an employment or industries
program maintained for the benefit of these persons where the governmental subdivision
limits the position's duration to three years or less, including persons participating in a
federal or state subsidized on-the-job training, work experience, senior citizen, youth, or
unemployment relief program where the training or work experience is not provided as a
part of, or for, future permanent public employment;

(22) independent contractors and the employees of independent contractors; and

(23) reemployed annuitants of the association during the course of that
reemployment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2006, section 354.44, subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement annuity.

(a) The formula
retirement annuity must be computed in accordance with the applicable provisions of the
formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
section 354.05, subdivision 13a, for the period of the member's formula service credit.

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first
became a member of the association or a member of a pension fund listed in section
356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with
paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The
average salary as defined in section 354.05, subdivision 13a, multiplied by the following
percentages per year of formula service credit shall determine the amount of the annuity to
which the member qualifying therefor is entitled for service rendered before July 1, 2006:

			Coordinated Member		Basic Member
	Each year of service during first ten		the percent specified in section 356.315, subdivision 1, per year		the percent specified in section 356.315, subdivision 3, per year
	Each year of service thereafter		the percent specified in section 356.315, subdivision 2, per year		the percent specified in section 356.315, subdivision 4, per year

For service rendered on or after July 1, 2006, the average salary as defined in section
354.05, subdivision 13a, multiplied by the following percentages per year of service credit,
determines the amount the annuity to which the member qualifying therefor is entitled:

			Coordinated Member		Basic Member
	Each year of service during first ten		the percent specified in section 356.315, subdivision 1a, per year		the percent specified in section 356.315, subdivision 3, per year
	Each year of service after ten years of service		the percent specified in section 356.315, subdivision 2b, per year		the percent specified in section 356.315, subdivision 4, per year

(c)(i) This paragraph applies only to a person who first became a member of the
association or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in
conjunction with this paragraph than when calculated under paragraph (d), in conjunction
with paragraph (e).

(ii) Where any member retires prior to normal retirement age under a formula
annuity, the member shall be paid a retirement annuity in an amount equal to the normal
annuity provided in paragraph (b) reduced by one-quarter of one percent for each month
that the member is under normal retirement age at the time of retirement except that for
any member who has 30 or more years of allowable service credit, the reduction shall be
applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable service totals 90 years
is entitled, upon application, to a retirement annuity in an amount equal to the normal
annuity provided in paragraph (b), without any reduction by reason of early retirement.

(d) This paragraph applies to a member who has become at least 55 years old and
first became a member of the association after June 30, 1989, and to any other member
who has become at least 55 years old and whose annuity amount when calculated under
this paragraph and in conjunction with paragraph (e), is higher than it is when calculated
under paragraph (b), in conjunction with paragraph (c). For a basic member, the average
salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified
by section 356.315, subdivision 4, for each year of service for a basic member shall
determine the amount of the retirement annuity to which the basic member is entitled.
The annuity of a basic member who was a member of the former Minneapolis Teachers
Retirement Fund Association as of June 30, 2006, must be determined according to the
annuity formula under the articles of incorporation of the former Minneapolis Teachers
Retirement Fund Association in effect as of that date. For a coordinated member, the
average salary, as defined in section 354.05, subdivision 13a, multiplied by the percent
specified in section 356.315, subdivision 2, for each year of service rendered before July
1, 2006, and by the percent specified in section 356.315, subdivision 2b, for each year of
service rendered on or after July 1, 2006, determines the amount of the retirement annuity
to which the coordinated member is entitled.

(e) This paragraph applies to a person who has become at least 55 years old and first
becomes a member of the association after June 30, 1989, and to any other member who
has become at least 55 years old and whose annuity is higher when calculated under
paragraph (d) in conjunction with this paragraph than when calculated under paragraph
(b), in conjunction with paragraph (c). An employee who retires under the formula annuity
before the normal retirement age shall be paid the normal annuity provided in paragraph
(d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would
be payable to the employee if the employee deferred receipt of the annuity and the annuity
amount were augmented at an annual rate of three percent compounded annually from the
day the annuity begins to accrue until the normal retirement age if the employee became
an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee
becomes an employee after June 30, 2006.

(f) No retirement annuity is payable to a former employee with a salary that exceeds
95 percent of the governor's salary unless and until the salary figures used in computing
the highest five successive years average salary under paragraph (a) have been audited by
the Teachers Retirement Association and determined by the executive director to comply
with the requirements and limitations of section 354.05, subdivisions 35 and 35a.

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

Sec. 6.

Minnesota Statutes 2006, section 354A.12, subdivision 3b, is amended to read:

Subd. 3b.

Special direct state matching aid to the Teachers Retirement
Association.

(a) Special School District No. 1 must make an additional employer
contribution to the Teachers Retirement Fund Association. The city of Minneapolis must
make a contribution to the Teachers Retirement Association. This contribution must be
made by a levy of the board of estimate and taxation of the city of Minneapolis and the
levy, if made, is classified as that of a special taxing district for purposes of sections
275.065 and 276.04, and for all other property tax purposes.

(b) $1,125,000 $1,250,000 must be contributed by Special School District No.
1 and $1,125,000 $1,250,000 must be contributed by the city of Minneapolis to the
Teachers Retirement Association under paragraph (a), and the state shall pay to the
Teachers Retirement Association $2,500,000 each fiscal year. The superintendent of
Special School District No. 1, the mayor of the city of Minneapolis, and the executive
director of the Teachers Retirement Association shall jointly certify to the commissioner
of finance the total amount that has been contributed by Special School District No. 1
and by the city of Minneapolis to the Teachers Retirement Association. Any certification
to the commissioner of education must be made quarterly. If the total certifications for a
fiscal year exceed the maximum annual direct state matching aid amount in any quarter,
the amount of direct state matching aid payable to the Teachers Retirement Association
must be limited to the balance of the maximum annual direct state matching aid amount
available. The amount required under this paragraph, subject to the maximum direct state
matching aid amount, is appropriated annually to the commissioner of finance.

(c) The commissioner of finance may prescribe the form of the certifications
required under paragraph (b).

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

Sec. 7.

Minnesota Statutes 2006, section 354A.12, subdivision 3c, is amended to read:

Subd. 3c.

Termination of supplemental contributions and direct matching
and state aid.

(a) The supplemental contributions payable to the Minneapolis Teachers
Retirement Fund Association by Special School District No. 1 and the city of Minneapolis
under section 423A.02, subdivision 3, which must continue to be paid to the Teachers
Retirement Association until 2037, or. The supplemental contributions payable to the St.
Paul Teachers Retirement Fund Association by Independent School District No. 625 under
section 423A.02, subdivision 3, or the direct state aids under subdivision 3a to the St. Paul
Teachers Retirement Fund Association terminate at the end of the fiscal year in which the
accrued liability funding ratio for that fund, as determined in the most recent actuarial
report for that fund by the actuary retained under section 356.214, equals or exceeds the
accrued liability funding ratio for the teachers retirement association, as determined in
the most recent actuarial report for the Teachers Retirement Association by the actuary
retained under section 356.214.

(b) If the state direct matching, state supplemental, or state aid is terminated for a
first class city teachers retirement fund association under paragraph (a), it may not again
be received by that fund.

(c) If the St. Paul Teachers Retirement Fund Association is funded at the funding
ratio applicable to the Teachers Retirement Association when the provisions of paragraph
(b) become effective, then any state aid previously distributed to that association must be
immediately transferred to the Teachers Retirement Association.

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

Sec. 8.

Minnesota Statutes 2006, section 354A.12, subdivision 3d, is amended to read:

Subd. 3d.

Supplemental administrative expense assessment.

(a) The active and
retired membership of the St. Paul Teachers Retirement Fund Association is responsible
for defraying supplemental administrative expenses other than investment expenses of the
respective teacher retirement fund association.

(b) Investment expenses of the teachers retirement fund association are those
expenses incurred by or on behalf of the retirement fund in connection with the investment
of the assets of the retirement fund other than investment security transaction costs. Other
administrative expenses are all expenses incurred by or on behalf of the retirement fund
for all other retirement fund functions other than the investment of retirement fund assets.
Investment and other administrative expenses must be accounted for using generally
accepted accounting principles and in a manner consistent with the comprehensive annual
financial report of the teachers retirement fund association for the immediately previous
fiscal year under section 356.20.

(c) Supplemental administrative expenses other than investment expenses of the St.
Paul Teachers Retirement Fund Association are those expenses for the fiscal year that:

(1) exceed, for the St. Paul Teachers Retirement Fund Association, $443,745 plus
an additional amount derived by applying the percentage increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers All Items Index published by the
Bureau of Labor Statistics of the United States Department of Labor since July 1, 2001,
to the dollar amount; and

(2) exceed the amount computed by applying the most recent percentage of
pay administrative expense amount, other than investment expenses, for the teachers
retirement association governed by chapter 354 to the covered payroll of the respective
teachers retirement fund association for the fiscal year.

(d) The board of trustees of the St. Paul Teachers Retirement Fund Association
shall allocate the total dollar amount of supplemental administrative expenses other than
investment expenses determined under paragraph (c), clause (2), among the various active
and retired membership groups of the teachers retirement fund association and shall assess
the various membership groups their respective share of the supplemental administrative
expenses other than investment expenses, in amounts determined by the board of trustees.
The supplemental administrative expense assessments must be paid by the membership
group in a manner determined by the board of trustees of the respective teachers retirement
association. Supplemental administrative expenses payable by the active members of the
pension plan must be picked up by the employer in accordance with section 356.62.

(e) With respect to the St. Paul Teachers Retirement Fund Association, the
supplemental administrative expense assessment must be fully disclosed to the various
active and retired membership groups of the teachers retirement fund association. The
chief administrative officer of the St. Paul Teachers Retirement Fund Association shall
prepare a supplemental administrative expense assessment disclosure notice, which must
include the following:

(1) the total amount of administrative expenses of the St. Paul Teachers Retirement
Fund Association, the amount of the investment expenses of the St. Paul Teachers
Retirement Fund Association, and the net remaining amount of administrative expenses of
the St. Paul Teachers Retirement Fund Association;

(2) the amount of administrative expenses for the St. Paul Teachers Retirement Fund
Association that would be equivalent to the teachers retirement association noninvestment
administrative expense level described in paragraph (c);

(3) the total amount of supplemental administrative expenses required for assessment
calculated under paragraph (c);

(4) the portion of the total amount of the supplemental administrative expense
assessment allocated to each membership group and the rationale for that allocation;

(5) the manner of collecting the supplemental administrative expense assessment
from each membership group, the number of assessment payments required during the
year, and the amount of each payment or the procedure used to determine each payment;
and

(6) any other information that the chief administrative officer determines is necessary
to fairly portray the manner in which the supplemental administrative expense assessment
was determined and allocated.

(f) The disclosure notice must be provided annually in the annual report of the
association.

(g) The supplemental administrative expense assessments must be deposited in the
applicable teachers retirement fund upon receipt.

(h) Any omitted active membership group assessments that remain undeducted
and unpaid to the teachers retirement fund association for 90 days must be paid by the
respective school district. The school district may recover any omitted active membership
group assessment amounts that it has previously paid. The teachers retirement fund
association shall deduct any omitted retired membership group assessment amounts from
the benefits next payable after the discovery of the omitted amounts.

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

Sec. 9.

Minnesota Statutes 2006, section 354B.21, subdivision 3, is amended to read:

Subd. 3.

Default coverage.

(a) Prior to making an election under subdivision 2, or
if an eligible person fails to elect coverage by the plan under subdivision 2 or if the person
fails to make a timely election, the following retirement coverage applies:

(1) for employees of the board who are employed in faculty positions in the technical
colleges, in the state universities or in the community colleges, the retirement coverage
is by the plan established by this chapter;

(2) for employees of the board who are employed in faculty positions in the technical
colleges, the retirement coverage is by the plan established by this chapter unless on June
30, 1997, the employee was a member of the Teachers Retirement Association established
under chapter 354 and then the retirement coverage is by the Teachers Retirement
Association, or, unless the employee was a member of a first class city teacher retirement
fund established under chapter 354A on June 30, 1995, and then the retirement coverage
is by the Duluth Teachers Retirement Fund Association if the person was a member of
that plan on June 30, 1995, or the Minneapolis Teachers Retirement Fund Association
Teachers Retirement Association if the person was a member of that plan the former
Minneapolis Teachers Retirement Fund Association on June 30, 1995, or the St. Paul
Teachers Retirement Fund Association if the person was a member of that plan on June
30, 1995; and

(3) for employees of the board who are employed in eligible unclassified
administrative positions, the retirement coverage is by the plan established by this chapter.

(b) If an employee fails to correctly certify prior membership in the Teachers
Retirement Association to the Minnesota State colleges and Universities system, the
system shall not pay interest on employee contributions, employer contributions, and
additional employer contributions to the Teachers Retirement Association under section
354.52, subdivision 4.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 10.

Minnesota Statutes 2006, section 355.01, subdivision 3h, is amended to read:

Subd. 3h.

Minneapolis teacher.

"Minneapolis teacher" means a person employed
by Special School District No. 1, Minneapolis, who holds a position covered by the
Minneapolis Teachers Retirement Fund Association established Teachers Retirement
Association under chapter 354A section 354.70.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2006, section 356A.06, subdivision 6, is amended to read:

Subd. 6.

Limited list of authorized investment securities.

(a) Except to the
extent otherwise authorized by law, a covered pension plan may invest its assets only in
investment securities authorized by this subdivision if the plan does not:

(1) have assets with a book value in excess of $1,000,000;

(2) use the services of an investment advisor registered with the Securities and
Exchange Commission in accordance with the Investment Advisers Act of 1940, or
registered as an investment advisor in accordance with sections 80A.58, and 80A.59
80A.60, for the investment of at least 60 percent of its assets, calculated on book value;

(3) use the services of the State Board of Investment for the investment of at least 60
percent of its assets, calculated on book value; or

(4) use a combination of the services of an investment advisor meeting the
requirements of clause (2) and the services of the State Board of Investment for the
investment of at least 75 percent of its assets, calculated on book value.

(b) Investment securities authorized for a pension plan covered by this subdivision
are:

(1) certificates of deposit issued, to the extent of available insurance or
collateralization, by a financial institution that is a member of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation, is insured
by the National Credit Union Administration, or is authorized to do business in this state
and has deposited with the chief administrative officer of the plan a sufficient amount of
marketable securities as collateral in accordance with section 118A.03;

(2) savings accounts, to the extent of available insurance, with a financial institution
that is a member of the Federal Deposit Insurance Corporation or the Federal Savings
and Loan Insurance Corporation;

(3) governmental obligations, including bonds, notes, bills, or other fixed
obligations, issued by the United States, an agency or instrumentality of the United States,
an organization established and regulated by an act of Congress or by a state, state agency
or instrumentality, municipality, or other governmental or political subdivision that:

(i) for the obligation in question, issues an obligation that equals or exceeds the
stated investment yield of debt securities not exempt from federal income taxation and of
comparable quality;

(ii) for an obligation that is a revenue bond, has been completely self-supporting
for the last five years; and

(iii) for an obligation other than a revenue bond, has issued an obligation backed by
the full faith and credit of the applicable taxing jurisdiction and has not been in default on
the payment of principal or interest on the obligation in question or any other nonrevenue
bond obligation during the preceding ten years;

(4) corporate obligations, including bonds, notes, debentures, or other regularly
issued and readily marketable evidences of indebtedness issued by a corporation organized
under the laws of any state that during the preceding five years has had on average
annual net pretax earnings at least 50 percent greater than the annual interest charges
and principal payments on the total issued debt of the corporation during that period
and that, for the obligation in question, has issued an obligation rated in one of the top
three quality categories by Moody's Investors Service, Incorporated, or Standard and
Poor's Corporation; and

(5) shares in an open-end investment company registered under the federal
Investment Company Act of 1940, if the portfolio investments of the company are limited
to investments that meet the requirements of clauses (1) to (4).

EFFECTIVE DATE.

This section is effective retroactive to August 1, 2006.

Sec. 12.

Minnesota Statutes 2006, section 423A.02, subdivision 3, is amended to read:

Subd. 3.

Reallocation of amortization or supplementary amortization state
aid.

(a) Seventy percent of the difference between $5,720,000 and the current year
amortization aid or supplemental amortization aid distributed under subdivisions 1 and 1a
that is not distributed for any reason to a municipality for use by a local police or salaried
fire relief association must be distributed by the commissioner of revenue according to this
paragraph. The commissioner shall distribute 70 percent of the amounts derived under this
paragraph to the Minneapolis Teachers Retirement Fund Association Teachers Retirement
Association and 30 percent to the St. Paul Teachers Retirement Fund Association to
fund the unfunded actuarial accrued liabilities of the respective funds. These payments
shall be made on or before June 30 each fiscal year. The amount required under this
paragraph is appropriated annually from the general fund to the commissioner of revenue.
If either the Minneapolis Teachers Retirement Fund Association or the St. Paul Teachers
Retirement Fund Association becomes funded at the funding ratio applicable to the
teachers retirement association based on the actuarial reports prepared by the actuary for
the Legislative Commission on Pensions and Retirement, then the commissioner shall
distribute that fund's share under this paragraph to the other fund. The appropriation
under this paragraph terminates when both funds become fully funded, its eligibility for
this aid ceases. Amounts remaining in the undistributed balance account at the end of the
biennium if aid eligibility ceases cancel to the general fund.

(b) In order to receive amortization and supplementary amortization aid under
paragraph (a), Independent School District No. 625, St. Paul, must make contributions
to the St. Paul Teachers Retirement Fund Association in accordance with the following
schedule:

	Fiscal Year		Amount
	1996		$0
	1997		$0
	1998		$200,000
	1999		$400,000
	2000		$600,000
	2001 and thereafter		$800,000

(c) In order to receive amortization and supplementary amortization aid under
paragraph (a), Special School District No. 1, Minneapolis, and the city of Minneapolis
must each make contributions to the Minneapolis Teachers Retirement Fund Association
Teachers Retirement Association in accordance with the following schedule:

	Fiscal Year	City amount		School district amount
	1996	$0		$0
	1997	$0		$0
	1998	$250,000		$250,000
	1999	$400,000		$400,000
	2000	$550,000		$550,000
	2001	$700,000		$700,000
	2002	$850,000		$850,000
	2003 and thereafter	$1,000,000		$1,000,000

(d) Money contributed under paragraph (a) and either paragraph (b) or (c), as
applicable, must be credited to a separate account in the applicable teachers retirement
fund and may not be used in determining any benefit increases. The separate account
terminates for a fund when the aid payments to the fund under paragraph (a) cease.

(e) Thirty percent of the difference between $5,720,000 and the current year
amortization aid or supplemental amortization aid under subdivisions 1 and 1a that is not
distributed for any reason to a municipality for use by a local police or salaried firefighter
relief association must be distributed under section 69.021, subdivision 7, paragraph (d),
as additional funding to support a minimum fire state aid amount for volunteer firefighter
relief associations. The amount required under this paragraph is appropriated annually
to the commissioner of revenue.

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

Sec. 13.

Minnesota Statutes 2006, section 423A.02, subdivision 5, is amended to read:

Subd. 5.

Termination of state aid programs.

The amortization state aid,
supplemental amortization state aid, and additional amortization state aid programs
terminate as of the December 31, next following the date of the actuarial valuation when
the assets of the Minneapolis Teachers Retirement Fund Association equal the actuarial
accrued liability of that plan and when the assets of the St. Paul Teachers Retirement
Fund Association equal the actuarial accrued liability of that plan or December 31, 2009,
whichever is later.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 14.

Laws 2006, chapter 271, article 2, section 12, subdivision 1, is amended to
read:

Subdivision 1.

Election of prior state coverage.

(a) An employee in the
occupational position of laundry coordinator or delivery van driver at the Minnesota
Correctional Facility-Faribault who has future retirement coverage transferred to the
correctional state employees retirement plan under section 5 is entitled to elect to obtain
prior service credit for eligible correctional state service performed after June 30, 1997,
and before July 1, 2006, with the Department of Corrections and an employee who had
future retirement coverage transferred to the correctional state employees retirement
plan under Laws 2004, chapter 267, article 1, section 1, is entitled to elect to obtain
prior service credit for eligible correctional state service performed at the Minnesota
Correctional Facility-Rush City before August 1, 2004. All prior service credit in either
instance must be purchased.

(b) Eligible correctional state service is either a prior period of continuous service
after June 30, 1997, at the Minnesota Correctional Facility-Faribault, or a prior period
of continuous service at the Minnesota Correctional Facility-Rush City before August 1,
2004, whichever applies, performed as an employee of the Department of Corrections that
would have been eligible for the correctional state employees retirement plan coverage
under section 1, if that prior service had been performed after August 1, 2004, or June 30,
2006, rather than before August 1, 2004, or July 1, 2006, whichever applies. Service is
continuous if there has been no period of discontinuation of eligible state service for a
period greater than 30 calendar days.

(c) The commissioner of corrections shall certify eligible correctional state service
to the commissioner of employee relations and to the executive director of the Minnesota
State Retirement System.

(d) A correctional employee covered under section 1 this subdivision is entitled to
purchase the past service if the department certifies that the employee met the eligibility
requirements for coverage. The employee must make additional employee contributions.
Payment for past service must be completed by June 30, 2007.

EFFECTIVE DATE.

This section is effective retroactive to June 14, 2006.

Sec. 15.

Laws 2006, chapter 271, article 2, section 13, subdivision 3, is amended to
read:

Subd. 3.

Employee equivalent contribution.

To receive the transfer of service
credit specified in subdivision 1, the individual must pay to the executive director of the
Minnesota State Retirement System the difference between the employee contribution rate
for the general state employees retirement plan and the employee contribution rate for the
correctional state employees retirement plan in effect during the period eligible for transfer
applied to the eligible individual's salary at the time each additional contribution would
have been deducted from pay if coverage had been provided by the correctional state
employees retirement plan. These amounts shall be paid in a lump sum by September 1,
2005 2007, or prior to termination of service, whichever is earlier, plus 8.5 percent annual
compound interest from the applicable payroll deduction date until paid.

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

Sec. 16.

Laws 2006, chapter 271, article 14, section 2, subdivision 3, is amended to
read:

Subd. 3.

Payment.

If an eligible person meets the requirements to purchase service
credit under this section, the public employees police and fire fund must be paid the
amount determined under Minnesota Statutes, section 356.551. Of this amount:

(1) the eligible person must pay an amount equal to the employee contribution rate
during the period of service to be purchased, applied to the actual salary in effect during
that period, plus interest at the rate of 8.5 percent per year compounded annually from
the date on which the contributions should have been made to the date on which payment
is made under this section; and

(2) the city of Faribault must pay the remainder of the amount determined under
Minnesota Statutes, section 356.551.

EFFECTIVE DATE.

This section is effective retroactive to June 2, 2006.

ARTICLE 2

ADMINISTRATIVE PROVISIONS

Section 1.

Minnesota Statutes 2006, section 3A.02, subdivision 1, is amended to read:

Subdivision 1.

Qualifications.

(a) A former legislator is entitled, upon written
application to the director, to receive a retirement allowance monthly, if the person:

(1) has either served at least six full years, without regard to the application of
section 3A.10, subdivision 2, or has served during all or part of four regular sessions as a
member of the legislature, which service need not be continuous;

(2) has attained the normal retirement age;

(3) has retired as a member of the legislature; and

(4) has made all contributions provided for in section 3A.03, has made payments
for past service under subdivision 2, or has made payments in lieu of contributions under
Minnesota Statutes 1992, section 3A.031, before July 1, 1994.

(b) Unless the former legislator has legislative service before January 1, 1979,
the retirement allowance is an amount equal to 2-1/2 percent per year of service of that
member's average monthly salary and adjusted for that person on an actuarial equivalent
basis to reflect the change in the postretirement interest rate actuarial assumption under
section 356.215, subdivision 8, from five percent to six percent. The adjustment must be
calculated by or, alternatively, the adjustment procedure must be specified by, the actuary
retained under section 356.214. The purpose of this adjustment is to ensure that the total
amount of benefits that the actuary predicts an individual member will receive over the
member's lifetime under this paragraph will be the same as the total amount of benefits the
actuary predicts the individual member would receive over the member's lifetime under
the law in effect before enactment of this paragraph. If the former legislator has legislative
service before January 1, 1979, the person's benefit must include the additional benefit
amount in effect on January 1, 1979, and adjusted as otherwise provided in this paragraph.

(c) The retirement allowance accrues beginning with the first day of the month of
receipt of the application, following the receipt by the director of a retirement application
on a form prescribed by the director, but not before the normal retirement age 60, and,
except as specified in subdivision 1b. The annuity is payable for the remainder of the
former legislator's life, if the former legislator is not serving as a member of the legislature
or as a constitutional officer as defined in section 3A.01, subdivision 1c. The annuity does
not begin to accrue before the person's retirement as a legislator. No annuity payment may
be made retroactive for more than 180 days before the date that the annuity application
is filed with the director.

(d) Any member who has served during all or part of four regular sessions is
considered to have served eight years as a member of the legislature.

(e) The retirement allowance ceases with the last payment that accrued to the retired
legislator during the retired legislator's lifetime, except that the surviving spouse, if any,
is entitled to receive the retirement allowance of the retired legislator for the calendar
month in which the retired legislator died.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2006, section 352.01, subdivision 2a, is amended to read:

Subd. 2a.

Included employees.

(a) "State employee" includes:

(1) employees of the Minnesota Historical Society;

(2) employees of the State Horticultural Society;

(3) employees of the Disabled American Veterans, Department of Minnesota,
Veterans of Foreign Wars, Department of Minnesota, if employed before July 1, 1963;

(4) employees of the Minnesota Crop Improvement Association;

(5) (4) employees of the adjutant general who are paid from federal funds and who
are not covered by any federal civilian employees retirement system;

(6) (5) employees of the Minnesota State Colleges and Universities employed under
the university or college activities program;

(7) (6) currently contributing employees covered by the system who are temporarily
employed by the legislature during a legislative session or any currently contributing
employee employed for any special service as defined in subdivision 2b, clause (8);

(8) employees of the Armory Building Commission;

(9) (7) employees of the legislature appointed without a limit on the duration of their
employment and persons employed or designated by the legislature or by a legislative
committee or commission or other competent authority to conduct a special inquiry,
investigation, examination, or installation;

(10) (8) trainees who are employed on a full-time established training program
performing the duties of the classified position for which they will be eligible to receive
immediate appointment at the completion of the training period;

(11) (9) employees of the Minnesota Safety Council;

(12) (10) any employees on authorized leave of absence from the Transit Operating
Division of the former Metropolitan Transit Commission who are employed by the
labor organization which is the exclusive bargaining agent representing employees of
the Transit Operating Division;

(13) (11) employees of the Metropolitan Council, Metropolitan Parks and Open
Space Commission, Metropolitan Sports Facilities Commission, Metropolitan Mosquito
Control Commission, or Metropolitan Radio Board unless excluded or covered by another
public pension fund or plan under section 473.415, subdivision 3;

(14) (12) judges of the Tax Court;

(15) (13) personnel employed on June 30, 1992, by the University of Minnesota
in the management, operation, or maintenance of its heating plant facilities, whose
employment transfers to an employer assuming operation of the heating plant facilities,
so long as the person is employed at the University of Minnesota heating plant by that
employer or by its successor organization;

(16) (14) seasonal help in the classified service employed by the Department of
Revenue; and

(17) (15) persons employed by the Department of Commerce as a peace officer in
the Insurance Fraud Prevention Division under section 45.0135 who have attained the
mandatory retirement age specified in section 43A.34, subdivision 4; and

(16) employees of the University of Minnesota unless excluded under subdivision
2b, clause (3).

(b) Employees specified in paragraph (a), clause (15) (13), are included employees
under paragraph (a) if employer and employee contributions are made in a timely manner
in the amounts required by section 352.04. Employee contributions must be deducted from
salary. Employer contributions are the sole obligation of the employer assuming operation
of the University of Minnesota heating plant facilities or any successor organizations to
that employer.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2006, section 352.01, subdivision 2b, is amended to read:

Subd. 2b.

Excluded employees.

"State employee" does not include:

(1) students employed by the University of Minnesota, or the state colleges and
universities, unless approved for coverage by the Board of Regents of the University of
Minnesota or the Board of Trustees of the Minnesota State Colleges and Universities, as
the case may be whichever is applicable;

(2) employees who are eligible for membership in the state Teachers Retirement
Association, except employees of the Department of Education who have chosen or may
choose to be covered by the general state employees retirement plan of the Minnesota
State Retirement System instead of the Teachers Retirement Association;

(3) employees of the University of Minnesota who are excluded from coverage by
action of the Board of Regents;

(4) officers and enlisted personnel in the National Guard and the naval militia who
are assigned to permanent peacetime duty and who under federal law are or are required to
be members of a federal retirement system;

(5) election officers;

(6) persons who are engaged in public work for the state but who are employed
by contractors when the performance of the contract is authorized by the legislature or
other competent authority;

(7) officers and employees of the senate, or of the house of representatives, or of a
legislative committee or commission who are temporarily employed;

(8) receivers, jurors, notaries public, and court employees who are not in the judicial
branch as defined in section 43A.02, subdivision 25, except referees and adjusters
employed by the Department of Labor and Industry;

(9) patient and inmate help in state charitable, penal, and correctional institutions
including the Minnesota Veterans Home;

(10) persons who are employed for professional services where the service is
incidental to their regular professional duties and whose compensation is paid on a per
diem basis;

(11) employees of the Sibley House Association;

(12) the members of any state board or commission who serve the state intermittently
and are paid on a per diem basis; the secretary, secretary-treasurer, and treasurer of those
boards if their compensation is $5,000 or less per year, or, if they are legally prohibited
from serving more than three years; and the board of managers of the State Agricultural
Society and its treasurer unless the treasurer is also its full-time secretary;

(13) state troopers and persons who are described in section 352B.01, subdivision 2,
clauses (2) to (6);

(14) temporary employees of the Minnesota State Fair who are employed on or
after July 1 for a period not to extend beyond October 15 of that year; and persons who
are employed at any time by the state fair administration for special events held on the
fairgrounds;

(15) emergency employees who are in the classified service; except that if an
emergency employee, within the same pay period, becomes a provisional or probationary
employee on other than a temporary basis, the employee shall be considered a "state
employee" retroactively to the beginning of the pay period;

(16) persons who are described in section 352B.01, subdivision 2, clauses (2) to (6);

(17) temporary employees in the classified service, and temporary employees in the
unclassified service who are appointed for a definite period of not more than six months
and who are employed less than six months in any one-year period;

(18) (17) interns hired for six months or less and trainee employees, except those
listed in subdivision 2a, clause (10) (8);

(19) (18) persons whose compensation is paid on a fee basis or as an independent
contractor;

(20) (19) state employees who are employed by the Board of Trustees of the
Minnesota State Colleges and Universities in unclassified positions enumerated in section
43A.08, subdivision 1, clause (9);

(21) (20) state employees who in any year have credit for 12 months service as
teachers in the public schools of the state and as teachers are members of the Teachers
Retirement Association or a retirement system in St. Paul, Minneapolis, or Duluth, except
for incidental employment as a state employee that is not covered by one of the teacher
retirement associations or systems;

(22) (21) employees of the adjutant general who are employed on an unlimited
intermittent or temporary basis in the classified or unclassified service for the support of
Army and Air National Guard training facilities;

(23) (22) chaplains and nuns who are excluded from coverage under the federal
Old Age, Survivors, Disability, and Health Insurance Program for the performance of
service as specified in United States Code, title 42, section 410(a)(8)(A), as amended, if
no irrevocable election of coverage has been made under section 3121(r) of the Internal
Revenue Code of 1986, as amended through December 31, 1992;

(24) (23) examination monitors who are employed by departments, agencies,
commissions, and boards to conduct examinations required by law;

(25) (24) persons who are appointed to serve as members of fact-finding
commissions or adjustment panels, arbitrators, or labor referees under chapter 179;

(26) (25) temporary employees who are employed for limited periods under any state
or federal program for training or rehabilitation, including persons who are employed for
limited periods from areas of economic distress, but not including skilled and supervisory
personnel and persons having civil service status covered by the system;

(27) (26) full-time students who are employed by the Minnesota Historical Society
intermittently during part of the year and full-time during the summer months;

(28) (27) temporary employees who are appointed for not more than six months,
of the Metropolitan Council and of any of its statutory boards, if the board members are
appointed by the Metropolitan Council;

(29) (28) persons who are employed in positions designated by the Department of
Employee Relations as student workers;

(30) (29) members of trades who are employed by the successor to the Metropolitan
Waste Control Commission, who have trade union pension plan coverage under a
collective bargaining agreement, and who are first employed after June 1, 1977;

(31) persons who are employed in subsidized on-the-job training, work experience,
or public service employment as enrollees under the federal Comprehensive Employment
and Training Act after March 30, 1978, unless the person has as of the later of March 30,
1978, or the date of employment sufficient service credit in the retirement system to meet
the minimum vesting requirements for a deferred annuity, or the employer agrees in
writing on forms prescribed by the director to make the required employer contributions,
including any employer additional contributions, on account of that person from revenue
sources other than funds provided under the federal Comprehensive Employment and
Training Act, or the person agrees in writing on forms prescribed by the director to make
the required employer contribution in addition to the required employee contribution;

(32) (30) off-duty peace officers while employed by the Metropolitan Council;

(33) (31) persons who are employed as full-time police officers by the Metropolitan
Council and as police officers are members of the public employees police and fire fund;

(34) (32) persons who are employed as full-time firefighters by the Department
of Military Affairs and as firefighters are members of the public employees police and
fire fund;

(35) (33) foreign citizens with a work permit of less than three years, or an H-1b/JV
visa valid for less than three years of employment, unless notice of extension is supplied
which allows them to work for three or more years as of the date the extension is granted,
in which case they are eligible for coverage from the date extended; and

(36) (34) persons who are employed by the Board of Trustees of the Minnesota State
Colleges and Universities and who elect to remain members of the Public Employees
Retirement Association or the Minneapolis Employees Retirement Fund, whichever
applies, under section 136C.75.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2006, section 352.01, subdivision 11, is amended to read:

Subd. 11.

Allowable service.

(a) "Allowable service" means:

(1) Service by an employee for which on or before July 1, 1957, the employee was
entitled to allowable service credit on the records of the system by reason of employee
contributions in the form of salary deductions, payments in lieu of salary deductions, or in
any other manner authorized by Minnesota Statutes 1953, chapter 352, as amended by
Laws 1955, chapter 239.

(2) service by an employee for which on or before July 1, 1961, the employee chose
to obtain credit for service by making payments to the fund under Minnesota Statutes
1961, section 352.24.;

(3) Except as provided in clauses (8) and (9), (2) service by an employee after July 1,
1957, for any calendar month in which the employee is paid salary from which deductions
are made, deposited, and credited in the fund, including deductions made, deposited, and
credited as provided in section 352.041.;

(4) Except as provided in clauses (8) and (9), (3) service by an employee after July
1, 1957, for any calendar month for which payments in lieu of salary deductions are
made, deposited, and credited in the fund, as provided in section 352.27 and Minnesota
Statutes 1957, section 352.021, subdivision 4.;

For purposes of clauses (3) and (4), except as provided in clauses (8) and (9), any
salary paid for a fractional part of any calendar month, including the month of separation
from state service, is deemed the compensation for the entire calendar month.

(5) (4) the period of absence from their duties by employees who are temporarily
disabled because of injuries incurred in the performance of duties and for which disability
the state is liable under the workers' compensation law until the date authorized by the
director for the commencement of payments of a total and permanent disability benefit
from the retirement fund.;

(6) (5) service covered by a refund repaid as provided in section 352.23 or 352D.05,
subdivision 4, except service rendered as an employee of the adjutant general for which
the person has credit with the federal civil service retirement system.;

(7) (6) service before July 1, 1978, by an employee of the Transit Operating Division
of the Metropolitan Transit Commission or by an employee on an authorized leave of
absence from the Transit Operating Division of the Metropolitan Transit Commission who
is employed by the labor organization which is the exclusive bargaining agent representing
employees of the Transit Operating Division, which was credited by the Metropolitan
Transit Commission-Transit Operating Division employees retirement fund or any of its
predecessor plans or funds as past, intermediate, future, continuous, or allowable service
as defined in the Metropolitan Transit Commission-Transit Operating Division employees
retirement fund plan document in effect on December 31, 1977.;

(8) (7) service after July 1, 1983, by an employee who is employed on a part-time
basis for less than 50 percent of full time, for which the employee is paid salary from
which deductions are made, deposited, and credited in the fund, including deductions
made, deposited, and credited as provided in section 352.041 or for which payments in
lieu of salary deductions are made, deposited, and credited in the fund as provided in
section 352.27 shall be credited on a fractional basis either by pay period, monthly, or
annually based on the relationship that the percentage of salary earned bears to a full-time
salary, with any salary paid for the fractional service credited on the basis of the rate of
salary applicable for a full-time pay period, month, or a full-time year. For periods of
part-time service that is duplicated service credit, section 356.30, subdivision 1, clauses
(i) and (j), govern.; and

Allowable service determined and credited on a fractional basis shall be used in
calculating the amount of benefits payable, but service as determined on a fractional basis
must not be used in determining the length of service required for eligibility for benefits.

(9) (8) any period of authorized leave of absence without pay that does not
exceed one year and for which the employee obtained credit by payment to the fund
in lieu of salary deductions. To obtain credit, the employee shall pay an amount equal
to the employee and employer contribution rate in section 352.04, subdivisions 2 and 3,
multiplied by the employee's hourly rate of salary on the date of return from leave of
absence and by the days and months of the leave of absence without pay for which the
employee wants allowable service credit. The employing department, at its option, may
pay the employer amount on behalf of its employees. Payments made under this clause
must include interest at an annual rate of 8.5 percent compounded annually from the date
of termination of the leave of absence to the date payment is made unless payment is
completed within one year of the return from leave of absence under section 352.017.

(10) MS 2002 [Expired]

(11) [Expired, 2002 c 392 art 2 s 4]

(b) For purposes of paragraph (a), clauses (2) and (3), any salary that is paid for
a fractional part of any calendar month, including the month of separation from state
service, is deemed to be the compensation for the entire calendar month.

(c) Allowable service determined and credited on a fractional basis must be used in
calculating the amount of benefits payable, but service as determined on a fractional basis
must not be used in determining the length of service required for eligibility for benefits.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 5.

[352.017] AUTHORIZED LEAVE OF ABSENCE SERVICE CREDIT
PURCHASE PROCEDURE.

Subdivision 1.

Application.

Except for leaves or breaks in service covered by
section 352.27 or 352.275, this section applies to all plans specified in this chapter for
any period of authorized leave of absence without pay that does not exceed one year
and for which the employee obtains credit for allowable service by making payment as
specified in this section to the applicable fund.

Subd. 2.

Purchase procedure.

(a) An employee covered by a plan specified in
this chapter may purchase credit for allowable service in that plan for a period specified
in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c),
whichever applies. The employing unit, at its option, may pay the employer portion of the
amount specified in paragraph (b) on behalf of its employees.

(b) If payment is received by the executive director within one year from the end
of the authorized leave, the payment amount is equal to the employee and employer
contribution rates specified in law for the applicable plan at the end of the leave period
multiplied by the employee's hourly rate of salary on the date of return from the leave of
absence and by the days and months of the leave of absence for which the employee wants
allowable service credit. Payments made under this paragraph must include compound
interest at a monthly rate of 0.71 percent from the last day of the leave period until the last
day of the month in which payment is received.

(c) If payment is received by the executive director after one year, the payment
amount is the amount determined under section 356.551.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 6.

Minnesota Statutes 2006, section 352.12, subdivision 2a, is amended to read:

Subd. 2a.

Surviving spouse coverage term certain.

(a) In lieu of the 100 percent
optional annuity under subdivision 2, or refund under subdivision 1, the surviving spouse
of a deceased employee or former employee may elect to receive survivor coverage in
a term certain of five, ten, 15, or 20 years, but monthly payments must not exceed 75
percent of the average high-five monthly salary of the deceased employee or former
employee. The monthly term certain annuity must be actuarially equivalent to the 100
percent optional annuity under subdivision 2.

(b) If a survivor elects a term certain annuity and dies before the expiration of the
specified term certain period, the commuted value of the remaining annuity payments
must be paid in a lump sum to the survivor's estate.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2006, section 352.27, is amended to read:

352.27 CREDIT FOR BREAK IN SERVICE TO PROVIDE UNIFORMED
SERVICE.

(a) An employee who is absent from employment by reason of service in the
uniformed services, as defined in United States Code, title 38, section 4303(13), and who
returns to state service upon discharge from service in the uniformed service within the
time frames required in United States Code, title 38, section 4312(e), may obtain service
credit for the period of the uniformed service as further specified in this section, provided
that the employee did not separate from uniformed service with a dishonorable or bad
conduct discharge or under other than honorable conditions.

(b) The employee may obtain credit by paying into the fund an equivalent employee
contribution based upon the contribution rate or rates in effect at the time that the
uniformed service was performed multiplied by the full and fractional years being
purchased and applied to the annual salary rate. The annual salary rate is the average
annual salary during the purchase period that the employee would have received if the
employee had continued to be employed in covered employment rather than to provide
uniformed service, or, if the determination of that rate is not reasonably certain, the annual
salary rate is the employee's average salary rate during the 12-month period of covered
employment rendered immediately preceding the period of the uniformed service.

(c) The equivalent employer contribution and, if applicable, the equivalent
additional employer contribution provided in section 352.04 chapter 352 must be paid by
the department employing the employee from funds available to the department at the
time and in the manner provided in section 352.04 chapter 352, using the employer and
additional employer contribution rate or rates in effect at the time that the uniformed
service was performed, applied to the same annual salary rate or rates used to compute the
equivalent employee contribution.

(d) If the employee equivalent contributions provided in this section are not paid in
full, the employee's allowable service credit must be prorated by multiplying the full and
fractional number of years of uniformed service eligible for purchase by the ratio obtained
by dividing the total employee contribution received by the total employee contribution
otherwise required under this section.

(e) To receive service credit under this section, the contributions specified in this
section must be transmitted to the Minnesota State Retirement System during the period
which begins with the date on which the individual returns to state service and which has a
duration of three times the length of the uniformed service period, but not to exceed five
years. If the determined payment period is less than one year, the contributions required
under this section to receive service credit may be made within one year of the discharge
date.

(f) The amount of service credit obtainable under this section may not exceed five
years unless a longer purchase period is required under United States Code, title 38,
section 4312.

(g) The employing unit shall pay interest on all equivalent employee and employer
contribution amounts payable under this section. Interest must be computed at a rate of
8.5 percent compounded annually from the end of each fiscal year of the leave or the break
in service to the end of the month in which the payment is received.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2006, section 352.951, is amended to read:

352.951 APPLICABILITY OF GENERAL LAW.

Except as otherwise provided, this chapter applies to covered correctional
employees, military affairs personnel covered under section 352.85, and Transportation
Department pilots covered under section 352.86, and state fire marshal employees under
section 352.87.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2006, section 352.98, is amended by adding a subdivision
to read:

Subd. 8.

Exemption from process.

Assets in a health care savings plan account
described in this section must be used for the reimbursement of healthcare expenses and
are not assignable or subject to execution, levy, attachment, garnishment, or other legal
process, except as provided in section 518.58, 518.581, or 518A.53.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 10.

Minnesota Statutes 2006, section 352D.02, subdivision 1, is amended to read:

Subdivision 1.

Coverage.

(a) Employees enumerated in paragraph (c), clauses (2),
(3), (4), and (6) to (14), and (16) to (18), if they are in the unclassified service of the state
or Metropolitan Council and are eligible for coverage under the general state employees
retirement plan under chapter 352, are participants in the unclassified plan program under
this chapter unless the employee gives notice to the executive director of the Minnesota
State Retirement System within one year following the commencement of employment
in the unclassified service that the employee desires coverage under the general state
employees retirement plan. For the purposes of this chapter, an employee who does not
file notice with the executive director is deemed to have exercised the option to participate
in the unclassified plan program.

(b) Persons referenced in paragraph (c), clause (5), are participants in the unclassified
program under this chapter unless the person was eligible to elect different coverage under
section 3A.07 and elected retirement coverage by the applicable alternative retirement
plan. Persons referenced in paragraph (c), clause (15), are participants in the unclassified
program under this chapter for judicial employment in excess of the service credit limit in
section 490.121, subdivision 22.

(c) Enumerated employees and referenced persons are:

(1) the governor, the lieutenant governor, the secretary of state, the state auditor,
and the attorney general;

(2) an employee in the Office of the Governor, Lieutenant Governor, Secretary
of State, State Auditor, Attorney General;

(3) an employee of the State Board of Investment;

(4) the head of a department, division, or agency created by statute in the unclassified
service, an acting department head subsequently appointed to the position, or an employee
enumerated in section 15A.0815 or 15A.083, subdivision 4;

(5) a member of the legislature;

(6) a full-time unclassified employee of the legislature or a commission or agency of
the legislature who is appointed without a limit on the duration of the employment or a
temporary legislative employee having shares in the supplemental retirement fund as a
result of former employment covered by this chapter, whether or not eligible for coverage
under the Minnesota State Retirement System;

(7) a person who is employed in a position established under section 43A.08,
subdivision 1, clause (3), or in a position authorized under a statute creating or establishing
a department or agency of the state, which is at the deputy or assistant head of department
or agency or director level;

(8) the regional administrator, or executive director of the Metropolitan Council,
general counsel, division directors, operations managers, and other positions as designated
by the council, all of which may not exceed 27 positions at the council and the chair;

(9) the executive director, associate executive director, and not to exceed nine
positions of the Minnesota Office of Higher Education in the unclassified service, as
designated by the Minnesota Office of Higher Education before January 1, 1992, or
subsequently redesignated with the approval of the board of directors of the Minnesota
State Retirement System, unless the person has elected coverage by the individual
retirement account plan under chapter 354B;

(10) the clerk of the appellate courts appointed under article VI, section 2, of the
Constitution of the state of Minnesota;

(11) the chief executive officers of correctional facilities operated by the Department
of Corrections and of hospitals and nursing homes operated by the Department of Human
Services;

(12) an employee whose principal employment is at the state ceremonial house;

(13) an employee of the Minnesota Educational Computing Corporation Agricultural
Utilization Research Institute;

(14) an employee of the State Lottery who is covered by the managerial plan
established under section 43A.18, subdivision 3; and

(15) a judge who has exceeded the service credit limit in section 490.121,
subdivision 22;

(16) an employee of Minnesota Technology Incorporated;

(17) a person employed by the Minnesota State Colleges and Universities as faculty
or in an eligible unclassified administrative position as defined in section 354B.20,
subdivision 6, who was employed by the former state university or the former community
college system before May 1, 1995, and elected unclassified program coverage prior to
May 1, 1995; and

(18) a person employed by the Minnesota State Colleges and Universities who
was employed in state service before July 1, 1995, who subsequently is employed in an
eligible unclassified administrative position as defined in section 354B.20, subdivision
6, and who elects coverage by the unclassified program.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2006, section 352D.02, subdivision 3, is amended to read:

Subd. 3.

Election irrevocable Transfer to general plan.

An election to not
participate is irrevocable during any period of covered employment. (a) An employee
credited with employee shares in the unclassified program, after acquiring credit for
ten years of allowable service but prior to and not later than one month following the
termination of covered employment, may, notwithstanding other provisions of this
subdivision, elect to terminate participation in the unclassified plan program and be
covered by the regular general plan by filing such a written election with the executive
director. The executive director shall thereupon then redeem the employee's total shares
and shall credit to the employee's account in the regular general plan the amount of
contributions that would have been so credited had the employee been covered by the
regular general plan during the employee's entire covered employment. The balance
of money so redeemed and not credited to the employee's account shall be transferred
to the state contribution reserve of the state employees general plan retirement fund,
except that (1) the employee contribution paid to the unclassified plan program must be
compared to (2) the employee contributions that would have been paid to the general plan
for the comparable period, if the individual had been covered by that plan. If clause (1)
is greater than clause (2), the difference must be refunded to the employee as provided
in section 352.22. If clause (2) is greater than clause (1), the difference must be paid by
the employee within six months of electing general plan coverage or before the effective
date of the annuity, whichever is sooner.

(b) An election under paragraph (a) to transfer coverage to the general plan is
irrevocable during any period of covered employment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Minnesota Statutes 2006, section 352D.06, subdivision 3, is amended to read:

Subd. 3.

Accrual date.

An annuity under this section accrues the first day of the first
full month after an application is received or after the day following termination of state
service, whichever is later. Upon the former employee's request, the annuity may begin
to accrue up to six months before redemption of shares, but not prior to the termination
date from covered service, and must be based on the account value at redemption and
upon the age of the former employee at the date annuity accrual starts. The account must
be valued and redeemed on the later of the end of the month of termination of covered
employment, or the end of the month of receipt of the annuity application for the purpose
of computing the annuity.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 13.

Minnesota Statutes 2006, section 353.01, subdivision 2a, is amended to read:

Subd. 2a.

Included employees.

(a) Public employees whose salary from
employment in one or more positions within one governmental subdivision exceeds $425
in any month shall participate as members of the association. If the salary is less than
$425 in a subsequent month, the employee retains membership eligibility. Eligible public
employees shall participate as members of the association with retirement coverage by
the public employees retirement plan or the public employees police and fire retirement
plan under this chapter, or the local government correctional employees retirement plan
under chapter 353E, whichever applies, as a condition of their employment on the first
day of employment unless they:

(1) are specifically excluded under subdivision 2b;

(2) do not exercise their option to elect retirement coverage in the association as
provided in subdivision 2d, paragraph (a); or

(3) are employees of the governmental subdivisions listed in subdivision 2d,
paragraph (b), where the governmental subdivision has not elected to participate as a
governmental subdivision covered by the association.

(b) A public employee who was a member of the association on June 30, 2002,
based on employment that qualified for membership coverage by the public employees
retirement plan or the public employees police and fire plan under this chapter, or the
local government correctional employees retirement plan under chapter 353E as of June
30, 2002, retains that membership for the duration of the person's employment in that
position or incumbency in elected office. Except as provided in subdivision 28, the person
shall participate as a member until the employee or elected official terminates public
employment under subdivision 11a or terminates membership under subdivision 11b.

(c) Public employees under paragraph (a) include physicians under section 353D.01,
subdivision 2, who do not elect public employees defined contribution plan coverage
under section 353D.02, subdivision 2.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 14.

Minnesota Statutes 2006, section 353.01, subdivision 2b, is amended to read:

Subd. 2b.

Excluded employees.

The following public employees are not eligible
to participate as members of the association with retirement coverage by the public
employees retirement plan, the local government correctional employees retirement plan
under chapter 353E, or the public employees police and fire retirement plan:

(1) public officers, other than county sheriffs, who are elected to a governing body,
or persons who are appointed to fill a vacancy in an elective office of a governing body,
whose term of office commences on or after July 1, 2002, for the service to be rendered
in that elective position. Elected governing body officials who were active members
of the association's coordinated or basic retirement plans as of June 30, 2002, continue
participation throughout incumbency in office until termination of public service occurs as
defined in subdivision 11a;

(2) election officers or election judges;

(3) patient and inmate personnel who perform services for a governmental
subdivision;

(4) except as otherwise specified in subdivision 12a, employees who are hired for
a temporary position as defined under subdivision 12a, and employees who resign from
a nontemporary position and accept a temporary position within 30 days in the same
governmental subdivision;

(5) employees who are employed by reason of work emergency caused by fire,
flood, storm, or similar disaster;

(6) employees who by virtue of their employment in one governmental subdivision
are required by law to be a member of and to contribute to any of the plans or funds
administered by the Minnesota State Retirement System, the Teachers Retirement
Association, the Duluth Teachers Retirement Fund Association, the Minneapolis Teachers
Retirement Fund Association, the St. Paul Teachers Retirement Fund Association, the
Minneapolis Employees Retirement Fund, or any police or firefighters relief association
governed by section 69.77 that has not consolidated with the Public Employees Retirement
Association, or any local police or firefighters consolidation account who have not elected
the type of benefit coverage provided by the public employees police and fire fund under
sections 353A.01 to 353A.10, or any persons covered by section 353.665, subdivision 4,
5, or 6, who have not elected public employees police and fire plan benefit coverage. This
clause must not be construed to prevent a person from being a member of and contributing
to the Public Employees Retirement Association and also belonging to and contributing to
another public pension plan or fund for other service occurring during the same period
of time. A person who meets the definition of "public employee" in subdivision 2 by
virtue of other service occurring during the same period of time becomes a member of the
association unless contributions are made to another public retirement fund on the salary
based on the other service or to the Teachers Retirement Association by a teacher as
defined in section 354.05, subdivision 2;

(7) persons who are members of a religious order and are excluded from coverage
under the federal Old Age, Survivors, Disability, and Health Insurance Program for the
performance of service as specified in United States Code, title 42, section 410(a)(8)(A),
as amended through January 1, 1987, if no irrevocable election of coverage has been made
under section 3121(r) of the Internal Revenue Code of 1954, as amended;

(8) employees of a governmental subdivision who have not reached the age of
23 and are enrolled on a full-time basis to attend or are attending classes on a full-time
basis at an accredited school, college, or university in an undergraduate, graduate, or
professional-technical program, or a public or charter high school;

(9) resident physicians, medical interns, and pharmacist residents and pharmacist
interns who are serving in a degree or residency program in public hospitals;

(10) students who are serving in an internship or residency program sponsored
by an accredited educational institution;

(11) persons who hold a part-time adult supplementary technical college license who
render part-time teaching service in a technical college;

(12) except for employees of Hennepin County or Hennepin Healthcare System,
Inc., foreign citizens working for a governmental subdivision with a work permit of less
than three years, or an H-1b visa valid for less than three years of employment. Upon
notice to the association that the work permit or visa extends beyond the three-year period,
the foreign citizens must be reported for membership from the date of the extension;

(13) public hospital employees who elected not to participate as members of the
association before 1972 and who did not elect to participate from July 1, 1988, to October
1, 1988;

(14) except as provided in section 353.86, volunteer ambulance service personnel,
as defined in subdivision 35, but persons who serve as volunteer ambulance service
personnel may still qualify as public employees under subdivision 2 and may be members
of the Public Employees Retirement Association and participants in the public employees
retirement fund or the public employees police and fire fund, whichever applies, on the
basis of compensation received from public employment service other than service as
volunteer ambulance service personnel;

(15) except as provided in section 353.87, volunteer firefighters, as defined in
subdivision 36, engaging in activities undertaken as part of volunteer firefighter duties;
provided that a person who is a volunteer firefighter may still qualify as a public
employee under subdivision 2 and may be a member of the Public Employees Retirement
Association and a participant in the public employees retirement fund or the public
employees police and fire fund, whichever applies, on the basis of compensation received
from public employment activities other than those as a volunteer firefighter;

(16) pipefitters and associated trades personnel employed by Independent School
District No. 625, St. Paul, with coverage under a collective bargaining agreement by the
pipefitters local 455 pension plan who were either first employed after May 1, 1997, or,
if first employed before May 2, 1997, elected to be excluded under Laws 1997, chapter
241, article 2, section 12;

(17) electrical workers, plumbers, carpenters, and associated trades personnel
employed by Independent School District No. 625, St. Paul, or the city of St. Paul,
who have retirement coverage under a collective bargaining agreement by the Electrical
Workers Local 110 pension plan, the United Association Plumbers Local 34 pension plan,
or the Carpenters Local 87 pension plan who were either first employed after May 1,
2000, or, if first employed before May 2, 2000, elected to be excluded under Laws 2000,
chapter 461, article 7, section 5;

(18) bricklayers, allied craftworkers, cement masons, glaziers, glassworkers,
painters, allied tradesworkers, and plasterers employed by the city of St. Paul or
Independent School District No. 625, St. Paul, with coverage under a collective
bargaining agreement by the Bricklayers and Allied Craftworkers Local 1 pension plan,
the Cement Masons Local 633 pension plan, the Glaziers and Glassworkers Local L-1324
pension plan, the Painters and Allied Trades Local 61 pension plan, or the Twin Cities
Plasterers Local 265 pension plan who were either first employed after May 1, 2001, or if
first employed before May 2, 2001, elected to be excluded under Laws 2001, First Special
Session chapter 10, article 10, section 6;

(19) plumbers employed by the Metropolitan Airports Commission, with coverage
under a collective bargaining agreement by the Plumbers Local 34 pension plan, who either
were first employed after May 1, 2001, or if first employed before May 2, 2001, elected to
be excluded under Laws 2001, First Special Session chapter 10, article 10, section 6;

(20) employees who are hired after June 30, 2002, to fill seasonal positions under
subdivision 12b which are limited in duration by the employer to 185 consecutive calendar
days or less in each year of employment with the governmental subdivision;

(21) persons who are provided supported employment or work-study positions
by a governmental subdivision and who participate in an employment or industries
program maintained for the benefit of these persons where the governmental subdivision
limits the position's duration to three years or less, including persons participating in a
federal or state subsidized on-the-job training, work experience, senior citizen, youth, or
unemployment relief program where the training or work experience is not provided as a
part of, or for, future permanent public employment;

(22) independent contractors and the employees of independent contractors; and

(23) reemployed annuitants of the association during the course of that
reemployment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 15.

Minnesota Statutes 2006, section 353.01, subdivision 6, is amended to read:

Subd. 6.

Governmental subdivision.

(a) "Governmental subdivision" means
a county, city, town, school district within this state, or a department or, unit or
instrumentality of state or local government, or any public body whose revenues are
derived established under state or local authority that has a governmental purpose, is
under public control, is responsible for the employment and payment of the salaries of
employees of the entity, and receives a major portion of its revenues from taxation, fees,
assessments or from other public sources.

(b) Governmental subdivision also means the Public Employees Retirement
Association, the League of Minnesota Cities, the Association of Metropolitan
Municipalities, charter schools formed under section 124D.10, service cooperatives
exercising retirement plan participation under section 123A.21, subdivision 5, joint powers
boards organized under section 471.59, subdivision 11, paragraph (a), family service
collaboratives and children's mental health collaboratives organized under section 471.59,
subdivision 11, paragraph (b) or (c), provided that the entities creating the collaboratives
are governmental units that otherwise qualify for retirement plan membership, public
hospitals owned or operated by, or an integral part of, a governmental subdivision or
governmental subdivisions, the Association of Minnesota Counties, the Metropolitan
Minnesota Intercounty Association, the Minnesota Municipal Utilities Association, the
Metropolitan Airports Commission, the University of Minnesota with respect to police
officers covered by the public employees police and fire retirement plan, the Minneapolis
Employees Retirement Fund for employment initially commenced after June 30, 1979, the
Range Association of Municipalities and Schools, soil and water conservation districts,
economic development authorities created or operating under sections 469.090 to
469.108, the Port Authority of the city of St. Paul, the Spring Lake Park Fire Department,
incorporated, the Lake Johanna Volunteer Fire Department, incorporated, the Red Wing
Environmental Learning Center, the Dakota County Agricultural Society, and Hennepin
Healthcare System, Inc.

(c) Governmental subdivision does not mean any municipal housing and
redevelopment authority organized under the provisions of sections 469.001 to 469.047;
or any port authority organized under sections 469.048 to 469.089 other than the Port
Authority of the city of St. Paul; or any hospital district organized or reorganized prior
to July 1, 1975, under sections 447.31 to 447.37 or the successor of the district, nor
the Minneapolis Community Development Agency; or the board of a family service
collaborative or children's mental health collaborative organized under sections 124D.23,
245.491 to 245.495, or 471.59, if that board is not controlled by representatives of
governmental units.

(d) A nonprofit corporation governed by chapter 317A or organized under Internal
Revenue Code, section 501(c)(3), which is not covered by paragraph (a) or (b), is not a
governmental subdivision unless the entity has obtained a written advisory opinion from
the United States Department of Labor or a ruling from the Internal Revenue Service
declaring the entity to be an instrumentality of the state so as to provide that any future
contributions by the entity on behalf of its employees are contributions to a governmental
plan within the meaning of Internal Revenue Code, section 414(d).

(e) A public body created by state or local authority may request membership on
behalf of its employees by providing sufficient evidence that it meets the requirements in
paragraph (a).

(f) An entity determined to be a governmental subdivision is subject to the reporting
requirements of this chapter upon receipt of a written notice of eligibility from the
association.

EFFECTIVE DATE.

This section is effective the day following final enactment.
Paragraphs (e) and (f) apply to initial plan coverage dates occurring on or after that date.

Sec. 16.

Minnesota Statutes 2006, section 353.01, subdivision 16, is amended to read:

Subd. 16.

Allowable service; limits and computation.

(a) "Allowable service"
means:

(1) service during years of actual membership in the course of which employee
contributions were made, periods covered by payments in lieu of salary deductions under
section 353.35;

(2) service in years during which the public employee was not a member but for
which the member later elected, while a member, to obtain credit by making payments to
the fund as permitted by any law then in effect;

(3) a period of authorized leave of absence with pay from which deductions for
employee contributions are made, deposited, and credited to the fund;

(4) a period of authorized personal, parental, or medical leave of absence without
pay, including a leave of absence covered under the federal Family Medical Leave Act,
that does not exceed one year, and during or for which a member obtained service credit
for each month in the leave period by payments payment under section 353.0161 to the
fund made in place of salary deductions. The payments must be made in an amount
or amounts based on the member's average salary on which deductions were paid for
the last six months of public service, or for that portion of the last six months while the
member was in public service, to apply to the period in either case that immediately
precedes the commencement of the leave of absence. If the employee elects to pay the
employee contributions for the period of any authorized personal, parental, or medical
leave of absence without pay, or for any portion of the leave, the employee shall also, as
a condition to the exercise of the election, pay to the fund an amount equivalent to the
required employer and the additional employer contributions, if any, for the employee.
The payment must be made within one year from the expiration of the leave of absence
or within 20 days after termination of public service under subdivision 11a, whichever
is earlier. The employer, by appropriate action of its governing body which is made a
part of its official records and which is adopted before the date of the first payment of
the employee contribution, may certify to the association in writing its commitment to
pay the employer and additional employer contributions from the proceeds of a tax levy
made under section 353.28. Payments under this paragraph must include interest at an
annual rate of 8.5 percent compounded annually from the date of the termination of the
leave of absence to the date payment is made. An employee must return to public service
and render a minimum of three months of allowable service in order to be eligible to
pay employee and employer contributions make payment under section 353.0161 for a
subsequent authorized leave of absence without pay. Upon payment, the employee must
be granted allowable service credit for the purchased period;

(5) a periodic, repetitive leave that is offered to all employees of a governmental
subdivision. The leave program may not exceed 208 hours per annual normal work
cycle as certified to the association by the employer. A participating member obtains
service credit by making employee contributions in an amount or amounts based on the
member's average salary that would have been paid if the leave had not been taken. The
employer shall pay the employer and additional employer contributions on behalf of the
participating member. The employee and the employer are responsible to pay interest on
their respective shares at the rate of 8.5 percent a year, compounded annually, from the
end of the normal cycle until full payment is made. An employer shall also make the
employer and additional employer contributions, plus 8.5 percent interest, compounded
annually, on behalf of an employee who makes employee contributions but terminates
public service. The employee contributions must be made within one year after the end of
the annual normal working cycle or within 20 days after termination of public service,
whichever is sooner. The executive director shall prescribe the manner and forms to be
used by a governmental subdivision in administering a periodic, repetitive leave. Upon
payment, the member must be granted allowable service credit for the purchased period;

(6) an authorized temporary or seasonal layoff under subdivision 12, limited to three
months allowable service per authorized temporary or seasonal layoff in one calendar year.
An employee who has received the maximum service credit allowed for an authorized
temporary or seasonal layoff must return to public service and must obtain a minimum of
three months of allowable service subsequent to the layoff in order to receive allowable
service for a subsequent authorized temporary or seasonal layoff; or

(7) a period during which a member is absent from employment by a governmental
subdivision by reason of service in the uniformed services, as defined in United States
Code, title 38, section 4303(13), if the member returns to public service upon discharge
from service in the uniformed service within the time frames required under United
States Code, title 38, section 4312(e), provided that the member did not separate from
uniformed service with a dishonorable or bad conduct discharge or under other than
honorable conditions. The service is credited if the member pays into the fund equivalent
employee contributions based upon the contribution rate or rates in effect at the time
that the uniformed service was performed multiplied by the full and fractional years
being purchased and applied to the annual salary rate. The annual salary rate is the
average annual salary during the purchase period that the member would have received
if the member had continued to be employed in covered employment rather than to
provide uniformed service, or, if the determination of that rate is not reasonably certain,
the annual salary rate is the member's average salary rate during the 12-month period of
covered employment rendered immediately preceding the period of the uniformed service.
Payment of the member equivalent contributions must be made during a period that begins
with the date on which the individual returns to public employment and that is three times
the length of the military leave period, or within five years of the date of discharge from
the military service, whichever is less. If the determined payment period is less than
one year, the contributions required under this clause to receive service credit may be
made within one year of the discharge date. Payment may not be accepted following 20
days after termination of public service under subdivision 11a. If the member equivalent
contributions provided for in this clause are not paid in full, the member's allowable
service credit must be prorated by multiplying the full and fractional number of years of
uniformed service eligible for purchase by the ratio obtained by dividing the total member
contributions received by the total member contributions otherwise required under this
clause. The equivalent employer contribution, and, if applicable, the equivalent additional
employer contribution must be paid by the governmental subdivision employing the
member if the member makes the equivalent employee contributions. The employer
payments must be made from funds available to the employing unit, using the employer
and additional employer contribution rate or rates in effect at the time that the uniformed
service was performed, applied to the same annual salary rate or rates used to compute the
equivalent member contribution. The governmental subdivision involved may appropriate
money for those payments. The amount of service credit obtainable under this section may
not exceed five years unless a longer purchase period is required under United States Code,
title 38, section 4312. The employing unit shall pay interest on all equivalent member and
employer contribution amounts payable under this clause. Interest must be computed at
a rate of 8.5 percent compounded annually from the end of each fiscal year of the leave
or the break in service to the end of the month in which the payment is received. Upon
payment, the employee must be granted allowable service credit for the purchased period.

(b) For calculating benefits under sections 353.30, 353.31, 353.32, and 353.33 for
state officers and employees displaced by the Community Corrections Act, chapter 401,
and transferred into county service under section 401.04, "allowable service" means the
combined years of allowable service as defined in paragraph (a), clauses (1) to (6), and
section 352.01, subdivision 11.

(c) For a public employee who has prior service covered by a local police or
firefighters relief association that has consolidated with the Public Employees Retirement
Association or to which section 353.665 applies, and who has elected the type of benefit
coverage provided by the public employees police and fire fund either under section
353A.08 following the consolidation or under section 353.665, subdivision 4, "applicable
service" is a period of service credited by the local police or firefighters relief association
as of the effective date of the consolidation based on law and on bylaw provisions
governing the relief association on the date of the initiation of the consolidation procedure.

(d) No member may receive more than 12 months of allowable service credit in a
year either for vesting purposes or for benefit calculation purposes.

(e) MS 2002 [Expired]

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 17.

Minnesota Statutes 2006, section 353.01, subdivision 28, is amended to read:

Subd. 28.

Retirement.

(a) "Retirement" means the commencement of the payment
of an annuity based on a date designated by the board of trustees. This date determines
the rights under this chapter which occur either before or after retirement. A right to
retirement is subject to termination of public service under subdivision 11a. A right to
retirement requires a complete and continuous separation for 30 days from employment as
a public employee and from the provision of paid services to that employer.

(b) An individual who separates from employment as a public employee and who,
within 30 days of separation, returns to provide service to a governmental subdivision
as an independent contractor or as an employee of an independent contractor, has not
satisfied the separation requirements under paragraph (a).

(c) A former member of the basic or police and fire fund who becomes a coordinated
member upon returning to eligible, nontemporary public service, terminates employment
before obtaining six months' allowable service under subdivision 16, paragraph (a), in
the coordinated fund, and is eligible to receive an annuity the first day of the month after
the most recent termination date shall not accrue a right to a retirement annuity under the
coordinated fund. An annuity otherwise payable to the former member must be based on
the laws in effect on the date of termination of the most recent service under the basic or
police and fire fund and shall be retroactive to the first day of the month following that
termination date or one year preceding the filing of an application for retirement annuity
as provided by section 353.29, subdivision 7, whichever is later. The annuity payment
must be suspended under the provisions of section , if earned compensation for the
reemployment equals or exceeds the amounts indicated under that section. The association
will refund the employee deductions made to the coordinated fund, with interest under
section 353.34, subdivision 2, return the accompanying employer contributions, and
remove the allowable service credits covering the deductions refunded.

(d) Notwithstanding the 30-day separation requirement under paragraph (a), a
member of the a defined benefit plan under this chapter, who also participates in the public
employees defined contribution plan under chapter 353D for other public service, may be
paid, if eligible, a retirement annuity from the defined benefit plan while participating in the
defined contribution plan. A retirement annuity is also payable from a defined benefit plan
under this chapter to an eligible member who terminates public service and who, within
30 days of separation, takes office as an elected official of a governmental subdivision.

(d) Elected officials included in association membership under subdivisions 2a and
2d meet the 30-day separation requirement under this section by resigning from office
before filing for a subsequent term in the same office and by remaining completely and
continuously separated from that office for 30 days prior to the date of the election.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 18.

[353.0161] AUTHORIZED LEAVE OF ABSENCE SERVICE CREDIT
PURCHASE PROCEDURE.

Subdivision 1.

Application.

This section applies to employees covered by any
plan specified in this chapter or chapter 353E for any period of authorized leave of
absence specified in section 353.01, subdivision 16, paragraph (a), clause (4), for which
the employee obtains credit for allowable service by making payment as specified in
this section to the applicable fund.

Subd. 2.

Purchase procedure.

(a) An employee covered by a plan specified in
subdivision 1 may purchase credit for allowable service in that plan for a period specified
in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c),
whichever applies. The employing unit, at its option, may pay the employer portion of the
amount specified in paragraph (b) on behalf of its employees.

(b) If payment is received by the executive director within one year from the end
of the authorized leave, the payment amount is equal to the employee and employer
contribution rates specified in law for the applicable plan at the end of the leave period
multiplied by the employee's hourly rate of salary on the date of return from the leave of
absence and by the days and months of the leave of absence for which the employee wants
allowable service credit. Payments made under this paragraph must include compound
interest at a monthly rate of 0.71 percent from the last day of the leave period until the last
day of the month in which payment is received.

(c) If payment is received by the executive director after one year, the payment
amount is the amount determined under section 356.551.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 19.

Minnesota Statutes 2006, section 353.03, subdivision 3, is amended to read:

Subd. 3.

Duties and powers of the board.

(a) The board shall:

(1) elect a president and vice-president. The board shall;

(2) approve the staffing complement, as recommended by the executive director,
necessary to administer the fund. The cost of administering this chapter must be paid by
the fund.;

(b) The board shall (3) adopt bylaws for its own government and for the management
of the fund consistent with the laws of the state and may modify them at pleasure. It shall;

(4) adopt, alter, and enforce reasonable rules consistent with the laws of the state
and the terms of the applicable benefit plans for the administration and management of the
fund, for the payment and collection of payments from members, and for the payment
of withdrawals and benefits. It shall, and that are necessary in order to comply with the
applicable federal Internal Revenue Service and Department of Labor requirements;

(5) pass upon and allow or disallow all applications for membership in the fund
and shall allow or disallow claims for withdrawals, pensions, or benefits payable from
the fund. It shall;

(6) adopt an appropriate mortality table based on experience of the fund as
recommended by the association actuary and approved under section 356.215, subdivision
18, with interest set at the rate specified in section 356.215, subdivision 8. It shall;

(7) provide for the payment out of the fund of the cost of administering this
chapter, of all necessary expenses for the administration of the fund and of all claims for
withdrawals, pensions, or benefits allowed. The board shall; and

(8) approve or disapprove all recommendations and actions of the executive director
made subject to its approval or disapproval by subdivision 3a.

(c) (b) In passing upon all applications and claims, the board may summon, swear,
hear, and examine witnesses and, in the case of claims for disability benefits, may require
the claimant to submit to a medical examination by a physician of the board's choice, at the
expense of the fund, as a condition precedent to the passing on the claim, and, in the case
of all applications and claims, may conduct investigations necessary to determine their
validity and merit. The board shall establish procedures to assure that a benefit applicant
and recipient may have a review of a benefit eligibility or benefit amount determination
affecting the applicant or recipient. The review procedure may afford the benefit applicant
or benefit recipient an opportunity to present views at any review proceeding conducted,
but is not a contested case under chapter 14.

(d) (c) The board may continue to authorize the sale of life insurance to members
under the insurance program in effect on January 1, 1985, but must not change that
program without the approval of the commissioner of finance. The association shall
not receive any financial benefit from the life insurance program beyond the amount
necessary to reimburse the association for costs incurred in administering the program.
The association shall not engage directly or indirectly in any other activity involving the
sale or promotion of goods or services, or both, whether to members or nonmembers.

(e) (d) The board shall establish procedures governing reimbursement of expenses to
board members. These procedures shall must define the types of activities and expenses
that qualify for reimbursement, shall must provide that all out-of-state travel must be
authorized by the board, and shall must provide for the independent verification of claims
for expense reimbursement. The procedures must comply with the applicable rules
and policies of the Department of Finance, the Department of Administration, and the
Department of Employee Relations.

(f) (e) The board may purchase fiduciary liability insurance and official bonds for the
officers and members of the board of trustees and employees of the association and may
purchase property insurance or may establish a self-insurance risk reserve including, but
not limited to, data processing insurance and "extra-expense" coverage.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 20.

Minnesota Statutes 2006, section 353.03, subdivision 3a, is amended to read:

Subd. 3a.

Executive director.

(a) Appointment. The board shall appoint, with
the advice and consent of the senate, an executive director on the basis of education,
experience in the retirement field, and leadership ability. The executive director shall must
have had at least five years' experience in an executive level management position, which
has included responsibility for pensions, deferred compensation, or employee benefits.
The executive director serves at the pleasure of the board. The salary of the executive
director is as provided by section 15A.0815.

(b) Duties. The management of the association is vested in the executive director
who shall be the executive and administrative head of the association. The executive
director shall act as adviser to the board on all matters pertaining to the association and
shall also act as the secretary of the board. The executive director shall:

(1) attend all meetings of the board;

(2) prepare and recommend to the board appropriate rules to carry out the provisions
of this chapter;

(3) establish and maintain an adequate system of records and accounts following
recognized accounting principles and controls;

(4) designate, with the approval of the board, up to two persons who shall may serve
in the unclassified service and whose salary is salaries are set in accordance with section
43A.18, subdivision 3, appoint a confidential secretary in the unclassified service, and
appoint employees to carry out this chapter, who are subject to chapters 43A and 179A
in the same manner as are executive branch employees;

(5) organize the work of the association as the director deems necessary to fulfill
the functions of the association, and define the duties of its employees and delegate to
them any powers or duties, subject to the control of, and under such conditions as, the
executive director may prescribe;

(6) with the approval of the board, contract for the services of an approved actuary,
professional management services, and any other consulting services as necessary
to fulfill the purposes of this chapter. All contracts are subject to chapter 16C. The
commissioner of administration shall not approve, and the association shall not enter
into, any contract to provide lobbying services or legislative advocacy of any kind.
Any approved actuary retained by the executive director shall function as the actuarial
advisor of the board and the executive director and may perform actuarial valuations and
experience studies to supplement those performed by the actuary retained under section
356.214. Any supplemental actuarial valuations or experience studies shall be filed with
the executive director of the Legislative Commission on Pensions and Retirement. Copies
of professional management survey reports shall be transmitted to the secretary of the
senate, the chief clerk of the house of representatives, and the Legislative Reference
Library as provided by section 3.195, and to the executive director of the commission at
the same time as reports are furnished to the board. Only management firms experienced
in conducting management surveys of federal, state, or local public retirement systems
shall be qualified to contract with the director hereunder;

(7) with the approval of the board provide in-service training for the employees
of the association;

(8) make refunds of accumulated contributions to former members and to the
designated beneficiary, surviving spouse, legal representative or next of kin of deceased
members or deceased former members, as provided in this chapter;

(9) determine the amount of the annuities and disability benefits of members covered
by the association and authorize payment of the annuities and benefits beginning as of
the dates on which the annuities and benefits begin to accrue, in accordance with the
provisions of this chapter;

(10) pay annuities, refunds, survivor benefits, salaries, and necessary operating
expenses of the association;

(11) prepare and submit to the board and the legislature an annual financial report
covering the operation of the association, as required by section 356.20;

(12) prepare and submit biennial and annual budgets to the board for its approval
and submit the approved budgets to the Department of Finance for approval by the
commissioner;

(13) reduce all or part of the accrued interest payable under section 353.27,
subdivisions 12, 12a, and 12b, or 353.28, subdivision 5, upon receipt of proof by the
association of an unreasonable processing delay or other extenuating circumstances of
the employing unit. The executive director shall prescribe and submit for approval by the
board the conditions under which such interest may be reduced; and

(14) with the approval of the board, perform such other duties as may be required for
the administration of the association and the other provisions of this chapter and for the
transaction of its business.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 21.

Minnesota Statutes 2006, section 353.03, subdivision 4, is amended to read:

Subd. 4.

Offices.

The commissioner of administration shall make provision for
suitable office space in the state capitol or other state office buildings, or at such other
location as is determined by the commissioner for the use of the board of trustees and its
executive director. The commissioner shall give the board at least four months notice
for any proposed removal from their present location. Any and all rental charges shall
be paid by the trustees from the public employees retirement fund public pension fund
facilities created under section 356B.10.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 22.

Minnesota Statutes 2006, section 353.27, is amended by adding a subdivision
to read:

Subd. 14.

Treatment of periods before initial coverage date.

(a) If an entity
is determined to be a governmental subdivision due to receipt of a written notice of
eligibility from the association, that employer and its employees are subject to the
requirements of subdivision 12, effective retroactive to the date that the executive director
of the association determines that the entity first met the definition of a governmental
subdivision, if that date predates the notice of eligibility.

(b) If the retroactive time period under paragraph (a) exceeds three years, an
employee is authorized to purchase service credit in the applicable Public Employees
Retirement Association plan for the portion of the period in excess of three years, by
making payment under section 356.551.

(c) This subdivision does not apply if the applicable employment under paragraph
(a) included coverage by any public or private defined benefit or defined contribution
retirement plan, other than a volunteer firefighters relief association. If this paragraph
applies, an individual is prohibited from purchasing service credit for any period or
periods specified in paragraph (a).

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to initial plan coverage dates occurring on or after that date.

Sec. 23.

Minnesota Statutes 2006, section 353.28, subdivision 6, is amended to read:

Subd. 6.

Collection of unpaid amounts.

(a) If a governmental subdivision which
receives the direct proceeds of property taxation fails to pay an amount due under chapter
353, 353A, 353B, 353C, or 353D, the executive director shall certify the amount to the
governmental subdivision for payment. If the governmental subdivision fails to remit the
sum so due in a timely fashion, the executive director shall certify the amount to the
applicable county auditor for collection. The county auditor shall collect the amount
out of the revenue of the governmental subdivision, or shall add the amount to the levy
of the governmental subdivision and make payment directly to the association. This
tax must be levied, collected, and apportioned in the manner that other taxes are levied,
collected, and apportioned.

(b) If a governmental subdivision which is not funded directly from the proceeds
of property taxation fails to pay an amount due under this chapter, the executive
director shall certify the amount to the governmental subdivision for payment. If the
governmental subdivision fails to pay the amount for a period of 60 days after the date
of the certification, the executive director shall certify the amount to the commissioner
of finance, who shall deduct the amount from any subsequent state-aid payment or state
appropriation amount applicable to the governmental subdivision and make payment
directly to the association. If the amount of the state-aid payment or state appropriation is
not sufficient to pay the full sum due, the amounts paid to the association must be applied
first to the unpaid employee deductions withheld from the employees' wages and next to
the unpaid employer contributions. Any remaining amount received by the association
must be applied to the interest due on the employee and employer contribution amounts.
If a government subdivision under this paragraph owes amounts to more than one public
retirement plan, section 356.98 applies.

(c) If a governmental subdivision has been dissolved or closed, the requirements in
paragraph (b) of a certification to the governmental subdivision and the related 60-day
waiting period do not apply. The executive director is authorized to immediately certify
the applicable amount to the commissioner of finance.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 24.

Minnesota Statutes 2006, section 353.29, subdivision 3, is amended to read:

Subd. 3.

Retirement annuity formula.

(a) This paragraph, in conjunction with
section 353.30, subdivisions 1, 1a, 1b, and 1c, applies to any member who first became a
public employee or a member of a pension fund listed in section 356.30, subdivision 3,
before July 1, 1989, unless paragraph (b), in conjunction with section 353.30, subdivision
5, produces a higher annuity amount, in which case paragraph (b) will apply. The average
salary as defined in section 353.01, subdivision 17a, multiplied by the percent specified in
section 356.315, subdivision 3, for each year of allowable service for the first ten years
and thereafter by the percent specified in section 356.315, subdivision 4, per year of
allowable service and completed months less than a full year for the "basic member," a
basic member, and the percent specified in section 356.315, subdivision 1, for each year of
allowable service for the first ten years and thereafter by the percent specified in section
356.315, subdivision 2, per year of allowable service and completed months less than a
full year for the "coordinated member," a coordinated member shall determine the amount
of the "normal" normal retirement annuity.

(b) This paragraph applies to a member who has become at least 55 years old and
first became a public employee after June 30, 1989, and to any other member whose
annuity amount, when calculated under this paragraph and in conjunction with section
353.30, subdivision 5, is higher than it is when calculated under paragraph (a), in
conjunction with section 353.30, subdivisions 1, 1a, 1b, and 1c. The average salary, as
defined in section 353.01, subdivision 17a, multiplied by the percent specified in section
356.315, subdivision 4, for each year of allowable service and completed months less than
a full year for a basic member and the percent specified in section 356.315, subdivision 2,
per year of allowable service and completed months less than a full year for a coordinated
member, shall determine the amount of the normal retirement annuity.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 25.

Minnesota Statutes 2006, section 353.30, subdivision 1a, is amended to read:

Subd. 1a.

Pre-July 1, 1989 members: rule of 90.

Any Upon termination of
public service under section 353.01, subdivision 11a, a person who first became a public
employee or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and whose attained age plus credited allowable service totals 90 years is
entitled upon application to a retirement annuity in an amount equal to the normal annuity
provided in section 353.29, subdivisions 2 and subdivision 3, paragraph (a), without any
reduction in annuity by reason of such due to early retirement.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 26.

Minnesota Statutes 2006, section 353.30, subdivision 1b, is amended to read:

Subd. 1b.

Pre-July 1, 1989 members: 30 years of service.

Any Upon termination
of public service under section 353.01, subdivision 11a, a person who first became a
public employee or a member of a pension fund listed in section 356.30, subdivision
3, before July 1, 1989, with 30 years or more of allowable service credit, who elects
early retirement under subdivision 1 to retire prior to normal retirement age, shall receive
an annuity in an amount equal to the normal annuity provided under section 353.29,
subdivisions 2 and subdivision 3, paragraph (a), reduced by one-quarter of one percent for
each month that the member is under age 62 at the time of retirement.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 27.

Minnesota Statutes 2006, section 353.30, subdivision 1c, is amended to read:

Subd. 1c.

Pre-July 1, 1989 members: early retirement.

Any Upon termination of
public service, a person who first became a public employee or a member of a pension
fund listed in section 356.30, subdivision 3, before July 1, 1989, and who has received
credit for at least 30 years of allowable service or who has become at least 55 years old but
not normal retirement age, and has received credit for at least three years of allowable
service is entitled upon application to a retirement annuity in an amount equal to the
normal annuity provided in section 353.29, subdivisions 2 and subdivision 3, paragraph
(a), reduced by one-quarter of one percent for each month that the member is under normal
retirement age at the time of retirement, except that for any member who has 30 or more
years of allowable service the reduction shall be applied only for each month that the
member is under age 62 at the time of retirement.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 28.

Minnesota Statutes 2006, section 353.32, subdivision 1a, is amended to read:

Subd. 1a.

Surviving spouse optional annuity.

(a) If a member or former member
who has credit for not less than three years of allowable service and dies before the
annuity or disability benefit begins to accrue under section 353.29, subdivision 7, or
353.33, subdivision 2, notwithstanding any designation of beneficiary to the contrary, the
surviving spouse may elect to receive, instead of a refund with interest under subdivision
1, or surviving spouse benefits otherwise payable under section 353.31, an annuity equal
to the a 100 percent joint and survivor annuity that the member could have qualified for
had the member terminated service on the date of death computed consistent with section
353.30, subdivision 1a, 1c, or 5, whichever is applicable.

(b) If the a member was under age 55 first became a public employee or a member of
a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and has credit
for at least 30 years of allowable service on the date of death, the surviving spouse may
elect to receive a 100 percent joint and survivor annuity based on the age of the member
and surviving spouse on the date of death. The annuity is payable using computed using
section 353.30, subdivision 1b, except that the full early retirement reduction under section
353.30, subdivisions 1b and 1c, to that provision will be applied from age 62 back to age 55
and one-half of the early retirement reduction from age 55 back to the age payment begins.

(c) If the a member who was under age 55 and has credit for at least three years of
allowable service on the date of death dies, but did not qualify for retirement on the date
of death, the surviving spouse may elect to receive the a 100 percent joint and survivor
annuity based on the age of the member and surviving spouse at the time of death. The
annuity is payable computed using section 353.30, subdivision 1c or 5, as applicable,
except that the full early retirement reduction under section 353.30, subdivision 1, 1b, 1c,
or 5, specified in the applicable subdivision will be applied to age 55 and one-half of the
early retirement reduction from age 55 back to the age payment begins.

(d) Notwithstanding the definition of surviving spouse in section 353.01, subdivision
20, a former spouse of the member, if any, is entitled to a portion of the monthly surviving
spouse optional annuity if stipulated under the terms of a marriage dissolution decree filed
with the association. If there is no surviving spouse or child or children, a former spouse
may be entitled to a lump-sum refund payment under subdivision 1, if provided for in a
marriage dissolution decree, but not a monthly surviving spouse optional annuity, despite
the terms of a marriage dissolution decree filed with the association.

(e) The surviving spouse eligible for surviving spouse benefits under paragraph (a)
may apply for the annuity at any time after the date on which the deceased employee would
have attained the required age for retirement based on the employee's allowable service.
The surviving spouse eligible for surviving spouse benefits under paragraph (b) or (c) may
apply for an annuity any time after the member's death. The annuity must be computed
under sections 353.29, subdivisions 2 and 3; and 353.30, subdivisions 1, 1a, 1b, 1c, and 5.

(f) Sections 353.34, subdivision 3, and 353.71, subdivision 2, apply to a deferred
annuity or surviving spouse benefit payable under this subdivision. No payment may
accrue beyond the end of the month in which entitlement to the annuity has terminated or
upon expiration of the term certain benefit payment under subdivision 1b.

(g) An amount equal to any excess of the accumulated contributions that were
credited to the account of the deceased employee over and above the total of the annuities
paid and payable to the surviving spouse must be paid to the surviving spouse's estate.

(g) (h) A member may specify in writing that this subdivision does not apply and
that payment may be made only to the designated beneficiary as otherwise provided by
this chapter. The waiver of a surviving spouse annuity under this section does not make a
dependent child eligible for benefits under subdivision 1c.

(i) If the deceased member or former member first became a public employee or a
member of a public pension plan listed in section 356.30, subdivision 3, on or after July
1, 1989, a survivor annuity computed under paragraph (a) or (c) must be computed as
specified in section 353.30, subdivision 5, except for the revised early retirement reduction
specified in paragraph (c), if paragraph (c) is the applicable provision.

(j) For any survivor annuity determined under this subdivision, the payment is to be
based on the total allowable service that the member had accrued as of the date of death
and the age of the member and surviving spouse on that date.

EFFECTIVE DATE.

This section is effective for survivor benefits based on
a date of death occurring on or after July 1, 2007. This section is not intended to
increase, modify, impair, or diminish the benefit entitlements specified in the subdivision
within the Minnesota Statutes being amended. If the executive director of the Public
Employees Retirement Association determines that any provision of this section does
increase, modify, impair, or diminish the benefit entitlements as reflected in applicable
law just before the effective date of this section, the executive director shall certify that
determination and a recommendation as to the required legislative correction to the chairs
of the Legislative Commission on Pensions and Retirement, the house of representatives
Governmental Operations, Reform, Technology and Elections Committee, the senate State
and Local Government Operations and Oversight Committee, and to the executive director
of the Legislative Commission on Pensions and Retirement.

Sec. 29.

Minnesota Statutes 2006, section 353.32, subdivision 1b, is amended to read:

Subd. 1b.

Survivor coverage term certain.

(a) In lieu of the 100 percent optional
annuity under subdivision 1a, or a refund under subdivision 1, the surviving spouse of
a deceased member may elect to receive survivor coverage for a term certain period of
ten, 15, or 20 years, but monthly payments must not exceed 75 percent of the average
high-five monthly salary of the deceased member. The benefit terminates at the end of
the specified term certain period. Except as otherwise specified in this subdivision, the
monthly term certain annuity must be actuarially equivalent to the 100 percent optional
annuity under subdivision 1a.

(b) If a surviving spouse elects a term certain annuity and dies before the expiration
of the specified term certain period, the commuted value of the remaining annuity
payments must be paid in a lump sum to the survivor's estate.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 30.

Minnesota Statutes 2006, section 353.34, subdivision 3, is amended to read:

Subd. 3.

Deferred annuity; eligibility; computation.

A member with at least
three years of allowable service when termination of public service or termination of
membership occurs has the option of leaving the accumulated deductions in the fund and
being entitled to a deferred retirement annuity commencing at normal retirement age
or to a deferred early retirement annuity under section 353.30, subdivision 1, 1a, 1b,
1c, or 5. The deferred annuity must be computed under section 353.29, subdivisions 2
and subdivision 3, on the basis of the law in effect on the date of termination of public
service or termination of membership, whichever is earlier, and must be augmented as
provided in section 353.71, subdivision 2. A former member qualified to apply for a
deferred retirement annuity may revoke this option at any time before the commencement
of deferred annuity payments by making application for a refund. The person is entitled to
a refund of accumulated member contributions within 30 days following date of receipt of
the application by the executive director.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 31.

Minnesota Statutes 2006, section 354.05, subdivision 13, is amended to read:

Subd. 13.

Allowable service.

"Allowable service" means:

(1) Any service rendered by a teacher for which on or before July 1, 1957, the
teacher's account in the retirement fund was credited by reason of employee contributions
in the form of salary deductions, payments in lieu of salary deductions, or in any other
manner authorized by Minnesota Statutes 1953, sections 135.01 to 135.13, as amended by
Laws 1955, chapters 361, 549, 550, 611, or

(2) Any service rendered by a teacher for which on or before July 1, 1961, the
teacher elected to obtain credit for service by making payments to the fund pursuant to
Minnesota Statutes 1980, section 354.09 and section 354.51, or

(3) Any service rendered by a teacher after July 1, 1957, for any calendar month
when the member receives salary from which deductions are made, deposited and credited
in the fund, or

(4) Any service rendered by a person after July 1, 1957, for any calendar month
where payments in lieu of salary deductions are made, deposited and credited into the
fund as provided in Minnesota Statutes 1980, section 354.09, subdivision 4, and section
354.53, or

(5) Any service rendered by a teacher for which the teacher elected to obtain
credit for service by making payments to the fund pursuant to Minnesota Statutes 1980,
section 354.09, subdivisions 1 and 4, sections 354.50, 354.51, Minnesota Statutes 1957,
section 135.41, subdivision 4, Minnesota Statutes 1971, section 354.09, subdivision 2, or
Minnesota Statutes, 1973 Supplement, section 354.09, subdivision 3, or

(6) Both service during years of actual membership in the course of which
contributions were currently made and service in years during which the teacher was not a
member but for which the teacher later elected to obtain credit by making payments to the
fund as permitted by any law then in effect, or

(7) Any service rendered where contributions were made and no allowable service
credit was established because of the limitations contained in Minnesota Statutes 1957,
section 135.09, subdivision 2, as determined by the ratio between the amounts of money
credited to the teacher's account in a fiscal year and the maximum retirement contribution
allowable for that year, or

(8) MS 2002 [Expired]

(9) A period of time during which a teacher who is a state employee was on strike
without pay, not to exceed a period of one year, if the teacher makes a payment in lieu of
salary deductions or makes a prior service credit purchase payment, whichever applies. If
the payment is made within 12 months, the payment by the teacher must be an amount
equal to the employee and employer contribution rates set forth in section 354.42,
subdivisions 2 and 3, applied to the teacher's rate of salary in effect on the conclusion of
the strike for the period of the strike without pay, plus compound interest at a monthly rate
of 0.71 percent from the last day of the strike until the date of payment. If the payment by
the employee is not made within 12 months, the payment must be in an amount equal to
the payment amount determined under section , or

(10) A period of service before July 1, 2006, that was properly credited as allowable
service by the Minneapolis Teachers Retirement Fund Association, and that was rendered
by a teacher as an employee of Special School District No. 1, Minneapolis, or by an
employee of the Minneapolis Teachers Retirement Fund Association who was a member
of the Minneapolis Teachers Retirement Fund Association by virtue of that employment,
who has not begun receiving an annuity or other retirement benefit from the former
Minneapolis Teachers Retirement Fund Association calculated in whole or in part on that
service before July 1, 2006, and who has not taken a refund of member contributions
related to that service unless the refund is repaid under section 354.50, subdivision 4.
Service as an employee of Special School District No. 1, Minneapolis, on or after July 1,
2006, is "allowable service" only as provided by this chapter.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 32.

Minnesota Statutes 2006, section 354.093, is amended to read:

354.093 PARENTAL LEAVE.

Upon granting a parental leave for the birth or adoption of a child, the employing
unit granting the leave must certify the leave to the association on a form specified by the
executive director. A member of the association granted parental leave of absence by
the employing unit is entitled to service credit not to exceed one year for the period of
leave upon payment to the association by the end of the fiscal year following the fiscal
year in which the leave of absence terminated. This payment must equal the total required
employee and employer contributions, and amortization contributions, if any, for the
period of leave prescribed in section 354.42. The payment must be based on the member's
average full-time monthly salary rate on the date the leave of absence commenced, and
must be without interest under section 354.72. Notwithstanding the provisions of any
agreements to the contrary, the contributions specified in this section may not be made to
receive allowable service credit under this section if the member does not retain the right
to full reinstatement at the end of the leave.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 33.

Minnesota Statutes 2006, section 354.094, is amended to read:

354.094 EXTENDED LEAVES OF ABSENCE.

Subdivision 1.

Service credit contributions.

(a) Upon granting any extended leave
of absence under section 122A.46 or 136F.43, the employing unit granting the leave
must certify the leave to the association on a form specified by the executive director.
A member granted an extended leave of absence under section 122A.46 or 136F.43
may pay employee contributions and shall receive allowable and formula service credit
toward annuities and other benefits under this chapter, for each year of the leave, provided
that the member and the employing board make the required employer contribution in
any proportion they may agree upon, during the period of the leave payment is made as
specified in paragraph (b). The employer may enter into an agreement with the exclusive
bargaining representative of the teachers in the district under which, for an individual
teacher, all or a portion of the employee's contribution is paid by the employer. Any such
agreement must include a sunset of eligibility to qualify for the payment and must not
be a part of the collective bargaining agreement. The leave period must not exceed five
years. A member may not receive more than five years of allowable or formula service
credit under this section. The employee and employer contributions must be based upon
the rates of contribution prescribed by section 354.42 for the salary received during the
year immediately preceding the extended leave.

(b) Employee contribution payments without interest for the years for which a
member is receiving service credit while on extended leave must be made on or before
June 30 of each fiscal year for which service credit is to be received, or in instances of
late reporting by the employer, within 30 days after the association gives notification to
the member of the amount due. If payment is to be made by a transfer of pretax assets
authorized under section 356.441, payment is authorized after June 30 of the fiscal year
providing that authorization for the asset transfer has been received by the applicable
third party administrator by June 30, and the payment must include interest at a rate of
.708 percent per month from June 30 through the end of the month in which payment
is received. No payment is permitted after the following September 30. Payment is
authorized after June 30 as specified in section 354.72.

(c) Notwithstanding the provisions of any agreements to the contrary, employee and
employer contributions payments may not be made to receive allowable and formula
service credit if the member does not have full reinstatement rights as provided in section
122A.46 or 136F.43, both during and at the end of the extended leave.

(d) Any school district paying the employee's retirement contributions or payments
under this section shall forward to the applicable Teachers Retirement Association or
retirement fund a copy of the agreement executed by the school district and the employee.

Subd. 2.

Membership; retention.

Notwithstanding section 354.49, subdivision
4, clause (3), a member on extended leave whose employee and employer contributions
are paid into the fund pursuant to under subdivision 1 shall retain membership in the
association for as long as the contributions are paid if payment under subdivision 1,
paragraph (b), or section 354.72, is made, under the same terms and conditions as if
the member had continued to teach in the district or the Minnesota State Colleges and
Universities system.

Subd. 3.

Effect of nonpayment.

A member on extended leave of absence pursuant
to under section 122A.46 or 136F.43 who does not pay employee contributions or whose
employer contribution is not paid into the fund in any fails to make payments under
subdivision 1, paragraph (b), or section 354.72, for any given year of the leave shall be
deemed to cease to render teaching services beginning in that year for purposes of this
chapter and may not pay employee or employer contributions into make payment to the
fund in for any subsequent year of the leave until full payment is made for all prior years
of the leave. Nonpayment of contributions into the fund Failure to make payment shall
does not affect the rights or obligations of the member or the member's employer under
section 122A.46 or 136F.43.

Subd. 4.

Member who does not resume teaching.

A member who pays employee
contributions into makes the payments specified in subdivision 1, paragraph (b), or
section 354.72, to the fund for the agreed maximum duration of an extended leave and
who does not resume teaching in the first school year after that maximum duration has
elapsed shall be is deemed to cease to render teaching services beginning in that year for
purposes of this chapter.

Subd. 5.

Discharge; layoff.

The provisions of this section shall do not apply to a
member who is discharged or placed on unrequested leave of absence or retrenchment
or layoff or whose contract is terminated while the member is on an extended leave of
absence pursuant to under section 122A.46 or 136F.43.

Subd. 6.

Limits on other service credit.

A member who pays employee
contributions makes the payments required under subdivision 1, paragraph (b), or section
354.72, and receives allowable and formula service credit in the association pursuant to
under this section may not pay employee contributions or receive allowable or formula
service credit for the same fiscal year in any other Minnesota public employee pension
plan, except a volunteer firefighters' relief association governed by sections 69.771
to 69.776. This subdivision shall must not be construed to prohibit a member who
pays employee contributions and receives allowable and formula service credit in the
association pursuant to under this section in any for a given year from being employed as
a substitute teacher by any school district during that year. Notwithstanding the provisions
of sections 354.091 and 354.42, a teacher may not pay retirement contributions or receive
allowable or formula service credit in the association for teaching service rendered for any
part of any year for which the teacher pays retirement contributions or receives allowable
or formula service credit pursuant to under this section or section 354A.091 while on an
extended leave of absence pursuant to under section 122A.46.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 34.

Minnesota Statutes 2006, section 354.095, is amended to read:

354.095 MEDICAL LEAVE; PAYMENT PROCEDURES.

Upon granting a medical leave, an employing unit must certify the leave to the
association on a form specified by the executive director. A member of the association
who is on an authorized medical leave of absence is entitled to receive allowable service
credit, not to exceed one year, for the period of leave, upon making the prescribed payment
to the fund under section 354.72. This payment must include the required employee and
employer contributions at the rates specified in section 354.42, subdivisions 2, 3, and 5,
as applied to the member's average full-time monthly salary rate on the date the leave of
absence commenced plus compound annual interest at the rate of 8.5 percent from the end
of the fiscal year during which the leave terminates to the end of the month during which
payment is made. The member must pay the total amount required unless the employing
unit, at its option, pays the employer contributions. The total amount required must be
paid before the effective date of retirement or by the end of the fiscal year following the
fiscal year in which the leave of absence terminated, whichever is earlier. A member
may not receive more than one year of allowable service credit during any fiscal year by
making payment under this section. A member may not receive disability benefits under
section 354.48 and receive allowable service credit under this section for the same period
of time. Notwithstanding the provisions of any agreement to the contrary, employee
and employer contributions may not be made to receive allowable service credit under
this section if the member does not retain the right to full reinstatement both during and
at the end of the medical leave.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 35.

Minnesota Statutes 2006, section 354.096, subdivision 2, is amended to read:

Subd. 2.

Payment.

(a) Notwithstanding any laws to the contrary, a member who
is granted a family leave under United States Code, title 42, section 12631, may receive
allowable service credit for the leave by making payment of the employee, employer, and
additional employer contributions at the rates under section 354.42, during the leave
period as applied to the member's average full-time monthly salary rate on the date the
leave commenced.

(b) The member may make If payment, without interest, to the association by the
end of the fiscal year following the fiscal year in which the leave terminated or before the
effective date of the member's retirement, whichever is earlier is made after the leave
terminates, section 354.72 applies.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 36.

[354.105] PAYMENTS USING PRETAX TRANSFERS.

If a current or past member is making a payment to the Teachers Retirement
Association to receive service credit under a provision of this chapter, chapter 356,
or applicable special law, and this payment is to be made by a transfer of pretax assets
authorized under section 356.441, payment is authorized after the due date, but not to
exceed 90 days, provided that the authorization for the asset transfer has been received by
the applicable third party administrator by the due date, and the payment must include
interest at a rate of .708 percent per month from the due date through the end of the month
in which the Teachers Retirement Association receives the payment.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 37.

Minnesota Statutes 2006, section 354.35, is amended to read:

354.35 OPTIONAL ACCELERATED RETIREMENT ANNUITY BEFORE
NORMAL RETIREMENT AGE.

Subdivision 1.

Normal retirement age definition.

For purposes of this section,
"normal retirement age" means normal retirement age as defined in United States Code,
title 42, section 416(1), as amended.

Subd. 2.

Election of accelerated annuity.

(a) Any coordinated member who retires
before normal retirement age 65 may elect to receive an optional accelerated retirement
annuity from the association which provides for different annuity amounts over different
periods of retirement. The optional accelerated retirement annuity must take the form of
an annuity payable for the period before the member attains age 65, or normal retirement
age, in a greater amount than the amount of the annuity calculated under section 354.44 on
the basis of the age of the member at retirement, but the optional accelerated retirement
annuity must be the actuarial equivalent of the member's annuity computed on the basis of
the member's age at retirement. The greater amount must be paid until the retiree reaches
age 65, or normal retirement age, and at that time the payment from the association must
be reduced. For each year the retiree is under age 65, or normal retirement age, up to five
percent of the total life annuity required reserves may be used to accelerate the optional
retirement annuity under this section. At retirement,

(b) Members who retire before age 62 may elect to have the age specified in annuity
under this section be subdivision accelerated to age 62 instead of 65 rather than normal
retirement age or age 65.

(c) The method of computing the optional accelerated retirement annuity provided in
this section subdivision is established by the board of trustees. In establishing the method
of computing the optional accelerated retirement annuity or any modification of that
procedure, the board of trustees must obtain the written approval of the actuary retained
under section 356.214. The written approval must be a part of the permanent records
of the board of trustees. The election of an optional accelerated retirement annuity is
exercised by making an application on a form provided by the executive director.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 38.

Minnesota Statutes 2006, section 354.45, subdivision 1a, is amended to read:

Subd. 1a.

Bounce-back annuity.

(a) If a former member or disabilitant selects a
joint and survivor annuity option under subdivision 1 after June 30, 1989, the former
member or disabilitant must receive a normal single life annuity if the designated optional
annuity beneficiary dies before the former member or disabilitant. Under this option, no
reduction may be made in the person's annuity to provide for restoration of the normal
single life annuity in the event of the death of the designated optional annuity beneficiary.

(b) The annuity adjustment specified in paragraph (a) also applies to joint and
survivor annuity options under subdivision 1 elected before July 1, 1989. The annuity
adjustment under this paragraph occurs on July 1, 1989, or on the first day of the first
month following the death of the designated optional annuity beneficiary, whichever is
later. This paragraph may not be interpreted as authorizing retroactive payments. The
restoration of the normal single life annuity under this subdivision will take effect on July
1, 1989, or the first of the month following the date of death of the designated optional
annuity beneficiary, or on the first of the month following one year before the date on
which a certified copy of the death record of the designated optional annuity beneficiary is
received in the office of the Teachers Retirement Association, whichever date is later.

(c) Except as stated in paragraph (b), this subdivision may not be interpreted as
authorizing retroactive benefit payments.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 39.

[354.471] ACCOUNT TERMINATION; RESTORATION.

Subdivision 1.

Account termination.

If an active or deferred member dies and
there is no surviving spouse or other beneficiaries, or the spouse or beneficiaries cannot be
located within five years of the date of death of the member, the accumulated employee
and employer contributions and any other payments made to the Teachers Retirement
Association fund by the individual or on behalf of the individual, and all investment
earnings on these amounts, must be credited to and become part of the retirement fund.

Subd. 2.

Restoration.

Following a forfeiture under subdivision 1, if a surviving
spouse or other beneficiary of the deceased contacts the Teachers Retirement Association
and, based on documentation determined by the executive director to be valid and
adequate, establishes a right to a survivor annuity, death refund, or other benefit provided
by this chapter, the account forfeited under subdivision 1 must be fully or partially
restored, as necessary.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 40.

Minnesota Statutes 2006, section 354.48, subdivision 3, is amended to read:

Subd. 3.

Computation of benefits.

(1) (a) The amount of the disability benefit
granted to members covered under section 354.44, subdivision 2, clauses (1) and (2)
paragraphs (b) and (c), is an amount equal to double the annuity which could be purchased
by the member's accumulated deductions plus interest on the amount computed as though
the teacher were at normal retirement age at the time the benefit begins to accrue and in
accordance with the law in effect when the disability application is received on the last day
for which salary is received. Any member who applies for a disability benefit after June
30, 1974, and who failed to make an election pursuant to under Minnesota Statutes 1971,
section 354.145, shall have the disability benefit computed under this clause paragraph, as
further specified in paragraphs (b) and (c), or clause (2) paragraph (d), whichever is larger.

(b) The benefit granted shall be determined by the following:

(a) (1) the amount of the accumulated deductions;

(b) (2) interest actually earned on these accumulated deductions to the date the
benefit begins to accrue;

(c) (3) interest for the years from the date the benefit begins to accrue to the date the
member attains normal retirement age at the rate of three percent;

(d) (4) annuity purchase rates based on an appropriate annuity table of mortality
established by the board as provided in section 354.07, subdivision 1, and using
the applicable postretirement interest rate assumption specified in section 356.215,
subdivision 8.

(c) In addition, a supplementary monthly benefit of $25 to age 65 or the five-year
anniversary of the effective date of the disability benefit, whichever is later, must be
paid to basic members.

(2) (d) The disability benefit granted to members covered under section 354.44,
subdivision 6, shall be computed in the same manner as the annuity provided in section
354.44, subdivision 6. The disability benefit shall be the formula annuity without the
reduction for each month the member is under normal retirement age when the benefit
begins to accrue as defined by the law in effect on the last day for which salary is paid.

(3) (e) For the purposes of computing a retirement annuity when the member
becomes eligible, the amounts paid for disability benefits shall not be deducted from the
individual member's accumulated deductions. If the disability benefits provided in this
subdivision exceed the monthly average salary of the disabled member, the disability
benefits shall be reduced to an amount equal to the disabled member's average salary.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 41.

[354.72] AUTHORIZED LEAVE OF ABSENCE AND STRIKE PERIOD
SERVICE CREDIT PURCHASE PROCEDURE.

Subdivision 1.

Application.

This section applies to any strike period under section
354.05, subdivision 13, clause (9), and to any period of authorized leave of absence
without pay under sections 354.093, 354.094, 354.095, and 354.096 for which the teacher
obtains credit for allowable service by making payment as specified in this section to the
Teachers Retirement Association fund. Each year of an extended leave of absence under
section 354.094 is considered to be a separate leave for purposes of this section.

Subd. 2.

Purchase procedure.

(a) A teacher may purchase credit for allowable and
formula service in the plan for a period specified in subdivision 1 if the teacher makes
a payment as specified in paragraph (b) or (c), whichever applies. The employing unit,
at its option, may pay the employer portion of the amount specified in paragraph (b) on
behalf of its employees.

(b) If payment is received by the executive director within one year from the end
of the strike period or authorized leave under section 354.093, 354.095, or 354.096, or
after June 30 and before the following June 30 for an extended leave of absence under
section 354.094, the payment must equal the total employee and employer contributions,
including amortization contributions if applicable, given the contribution rates in section
354.42, multiplied by the member's average monthly salary rate on the commencement
of the leave or period of strike, multiplied by the months and portions of a month of the
leave of absence or period of strike for which the teacher seeks allowable service credit.
Payments made under this paragraph must include compound interest at a monthly rate of
0.71 percent from the last day of the leave period or strike period, or from June 30 for
an extended leave of absence under section 354.094, until the last day of the month in
which payment is received.

(c) If payment is received by the executive director after the applicable last permitted
date under paragraph (b), the payment amount is the amount determined under section
356.551.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to
authorized leaves of absence that commence on or after that date.

Sec. 42.

Minnesota Statutes 2006, section 356.195, subdivision 1, is amended to read:

Subdivision 1.

Covered plans.

This section applies to all defined benefit plans
specified in section 356.30, subdivision 3, except clause (10).

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 43.

Minnesota Statutes 2006, section 356.405, is amended to read:

356.405 COMBINED PAYMENT OF RETIREMENT ANNUITIES.

(a) The Public Employees Retirement Association and the Minnesota State
Retirement System are permitted to combine payments to retirees if one of the payments
is less than $250 per month and if the individual elects the same joint and survivor
annuity form from both systems, or if the individual elects straight life annuities from both
systems. The total payment must be equal to the amount that is payable if payments were
kept separate. The retiree must agree, in writing, to have the payment combined.

(b) Each plan must calculate the benefit amounts under the laws governing the plan
and the required reserves and future mortality losses or gains must be paid or accrued to
the plan making the combined payment from which the plan where the service was earned.
Each plan must account for its portion of the payment separately, and there may be no
additional actuarial liabilities realized by either plan.

(c) The plan making the payment would be responsible for issuing one payment and
making address changes, tax withholding changes, and other administrative functions
needed to process the payment.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 44.

Minnesota Statutes 2006, section 356.46, subdivision 3, is amended to read:

Subd. 3.

Requirement of notice to member's spouse.

(a) Except as specified in
paragraph (c), if a public pension plan provides optional retirement annuity forms which
include a joint and survivor optional retirement annuity form potentially applicable to the
surviving spouse of a member, the executive director of the public pension plan shall send
a copy of the written statement required by subdivision 2 to the spouse of the member
before the member's election of an optional a retirement annuity.

(b) Following the election of a retirement annuity by the member, a copy of the
completed retirement annuity application and retirement annuity beneficiary form, if
applicable, must be sent by the executive director of the public pension plan to the
spouse of the retiring member. A signed acknowledgment must be required from the
spouse confirming receipt of a copy of the completed retirement annuity application and
retirement annuity beneficiary form, unless the spouse's signature confirming the receipt is
on the annuity application form. If the required signed acknowledgment is not received
from the spouse within 30 days, the executive director of the public pension plan must
send another copy of the completed retirement annuity application and retirement annuity
beneficiary form, if applicable, to the spouse by certified mail with restricted delivery.

(c) For the Teachers Retirement Association, the statement to the spouse that is
required under paragraph (a) must be sent before or upon the member's election of an
annuity.

EFFECTIVE DATE.

This section is effective July 1, 2007.

COMPREHENSIVE EMPLOYMENT TRAINING ACT

SERVICE CREDIT PURCHASE

Sec. 45.

[356.95] PURCHASE OF PRIOR COMPREHENSIVE EMPLOYMENT
TRAINING ACT SERVICE.

Subdivision 1.

Eligibility.

An eligible person is a person who:

(1) is currently an active plan member in a plan included under section 356.30,
subdivision 3, other than clause (3);

(2) was excluded from pension coverage under the provisions of Laws 1978, chapter
720; and

(3) subsequently became employed in unsubsidized public employment covered by
a pension plan included under section 356.30, subdivision 3, other than clause (3), with
the same public employer which provided the subsidized employment or other public
employer.

Subd. 2.

Authorization.

An eligible person under subdivision 1 is authorized to
purchase service credit for that period of uncovered prior subsidized public employment,
other than a period of prior subsidized public employment for which a repayment of a
refund was made, with a public pension plan specified in subdivision 1, clause (3), which,
except for the exclusion provided by Laws 1978, chapter 720, would have provided
pension coverage for the subsidized employment.

Subd. 3.

Procedures.

Section 356.551 applies to purchases under this section,
except that payment must be made before the expiration date of this section or termination
from eligible employment covered by a pension plan under subdivision 1, clause (1),
whichever is earlier.

Subd. 4.

Restriction.

(a) Pre-July 1, 1989, service credit purchased under this
section does not extend eligibility to plan benefits applicable to individuals who became
members prior to July 1, 1989, of a plan listed in section 356.30, subdivision 3.

(b) Service credit may not be purchased for any period for which the individual
has service credit in a covered pension plan, as defined in section 356A.01, subdivision
8, other than a volunteer firefighter plan.

Subd. 5.

Expiration.

This section expires on June 30, 2009.

EFFECTIVE DATE.

This section is effective the day following final enactment.

RECEIVABLES

Sec. 46.

[356.98] ALLOCATION OF RECEIVABLES.

If an employing unit is dissolved or closed and amounts are owed to more than one
Minnesota public pension plan, any amounts available to cover payments to the plans
must be applied first to the employee contributions owed to the applicable plans, and
next to the unpaid employer contributions, including any applicable employer additional
contributions, and finally to the interest due on the employee and employer amounts. If, at
any stage in this allocation process, the available amount is insufficient to fully cover the
amount required, the remaining available payment amount must be prorated among the
applicable plans based on each plan's share of combined covered payroll.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 47.

Minnesota Statutes 2006, section 490.121, subdivision 15a, is amended to
read:

Subd. 15a.

Early retirement date.

"Early retirement date" means the last day of
the month any date after a judge attains the age of 60 but before the judge reaches the
normal retirement date.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 48.

Minnesota Statutes 2006, section 490.121, subdivision 21f, is amended to read:

Subd. 21f.

Normal retirement date.

"Normal retirement date" means the last day
of the month in which date a judge attains the age of 65.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 49. REVISOR INSTRUCTION.

The revisor of statutes shall replace references to section 356.55, which was repealed
in 2002, with references to section 356.551, wherever they appear in Minnesota Statutes
or Minnesota Rules. The revisor shall also make related grammatical changes.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 50. REPEALER.

Minnesota Statutes 2006, sections 353.30, subdivision 1; 353.34, subdivision 7;
353.69; 354.49, subdivision 5; and 356.90, are repealed.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 3

MSRS-CORRECTIONAL PLAN

MEMBERSHIP PROVISIONS

Section 1.

Minnesota Statutes 2006, section 352.91, subdivision 3d, is amended to read:

Subd. 3d.

Other correctional personnel.

(a) "Covered correctional service" means
service by a state employee in one of the employment positions at a correctional facility or
at the Minnesota Security Hospital specified in paragraph (b) if at least 75 percent of the
employee's working time is spent in direct contact with inmates or patients and the fact of
this direct contact is certified to the executive director by the appropriate commissioner.

(b) The employment positions are as follows: baker; central services administrative
specialist, intermediate; central services administrative specialist, principal; chaplain;
chemical dependency counselor supervisor; chief cook; cook; cook coordinator;
corrections program therapist 1; corrections program therapist 2; corrections program
therapist 3; corrections program therapist 4; corrections inmate program coordinator;
corrections transitions program coordinator; corrections security caseworker; corrections
security caseworker career; corrections teaching assistant; delivery van driver; dentist;
electrician supervisor; general maintenance worker; general repair worker; laundry
coordinator; library/information research services specialist; library/information research
services specialist senior; library technician; plant maintenance engineer lead; plumber
supervisor; psychologist 1; psychologist 3; recreation therapist; recreation therapist
coordinator; recreation program assistant; recreation therapist senior; sports medicine
specialist; water treatment plant operator; work therapy assistant; work therapy program
coordinator; and work therapy technician.

EFFECTIVE DATE.

This section is effective the first day of the first payroll period
following June 15, 2007.

Sec. 2.

Minnesota Statutes 2006, section 352.91, subdivision 3e, is amended to read:

Subd. 3e.

Minnesota extended treatment options program.

(a) "Covered
correctional service" means service by a state employee in one of the employment positions
with the Minnesota extended treatment options program specified in paragraph (b) if at
least 75 percent of the employee's working time is spent in direct contact with patients
who are in the Minnesota extended treatment options program and if service in such a
position is certified to the executive director by the commissioner of human services.

(b) The employment positions are:

(1) behavior analyst 1;

(2) behavior analyst 2;

(3) behavior analyst 3;

(4) group supervisor;

(5) group supervisor assistant;

(6) human services support specialist;

(7) developmental disability residential program lead;

(8) psychologist 2;

(9) recreation program assistant;

(10) recreation therapist senior;

(11) registered nurse senior;

(12) skills development specialist;

(13) social worker senior;

(14) social worker specialist; and

(15) speech pathology specialist.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 3.

Minnesota Statutes 2006, section 352.91, subdivision 3f, is amended to read:

Subd. 3f.

Additional Department of Human Services personnel.

(a) "Covered
correctional service" means service by a state employee in one of the employment
positions specified in paragraph (b) at the Minnesota Security Hospital or in the Minnesota
sex offender program if at least 75 percent of the employee's working time is spent in
direct contact with patients and the determination of this direct contact is certified to the
executive director by the commissioner of human services.

(b) The employment positions are:

(1) behavior analyst 2;

(2) behavior analyst 3;

(3) certified occupational therapy assistant 1;

(4) certified occupational therapy assistant 2;

(5) chemical dependency counselor senior;

(4) (6) client advocate;

(5) (7) customer services specialist principal;

(8) dental assistant registered;

(6) (9) group supervisor;

(7) (10) group supervisor assistant;

(8) (11) human services support specialist;

(12) licensed alcohol and drug counselor;

(13) licensed practical nurse 1;

(9) (14) management analyst 3;

(15) occupational therapist;

(10) (16) occupational therapist, senior;

(11) office and administrative specialist senior;

(12) (17) psychologist 1;

(13) (18) psychologist 2;

(14) (19) psychologist 3;

(15) (20) recreation program assistant;

(16) (21) recreation therapist lead;

(22) recreation therapist senior;

(17) (23) rehabilitation counselor senior;

(18) (24) security supervisor;

(25) skills development specialist;

(19) (26) social worker senior;

(20) (27) social worker specialist;

(21) (28) social worker specialist, senior;

(22) (29) special education program assistant;

(30) speech pathology clinician;

(23) (31) work therapy assistant; and

(24) (32) work therapy program coordinator.

EFFECTIVE DATE.

This section is effective the first day of the first payroll period
following June 15, 2007.

Sec. 4.

Minnesota Statutes 2006, section 352.91, subdivision 4b, is amended to read:

Subd. 4b.

Department of Corrections; procedure for coverage change
considerations.

(a) The commissioner of corrections shall appoint a standing review
committee to review and determine positions that should be included in legislative
requests for correctional employees retirement plan coverage under subdivision 4a.

(b) Periodically, the Department of Corrections will convene meetings of the
review committee. The review committee must review all requests and the supporting
documentation for coverage by the correctional employees retirement plan and must
determine which classes or positions meet the statutory requirements for coverage. The
review committee also must determine if incumbents of and recent retirees from classes or
positions determined for inclusion in correctional employees retirement plan coverage
have prior Department of Corrections employment which also qualified as correctional
service and which should be transferred from the general state employees retirement plan
to the plan and the initial date for each potential service credit transfer.

(c) The review committee must evaluate and determine the eligibility date for initial
plan participation and all periods of eligibility in the correctional employees retirement
plan.

(d) The department must provide a notice of each determination and of the
employee's right to appeal from the review committee to each employee who requested
inclusion. Appeals must be filed with the agency human resource manager within 30 days
of the date of the notice of determination.

(d) (e) The commissioner of corrections shall appoint a standing appeals committee
to hear appeals of determinations for coverage. The appeal committee must include
relevant department employees and employee representatives. Appeal committee
determinations are final.

(e) (f) All positions approved for inclusion must be forwarded to the commissioner
of corrections for the preparation of legislation to implement the coverage change and
submission. The commissioner will submit a written recommendation documenting
classes or positions that should or should not be covered by the correctional employees
retirement plan. Documentation of each request and the final determination must be
retained in the Department of Corrections' Office of Human Resource Management.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

[352.955] TRANSFER OF PRIOR MSRS-GENERAL SERVICE
CREDIT FOR CERTAIN EMPLOYEES WITH TRANSFERRED RETIREMENT
COVERAGE.

Subdivision 1.

Election to transfer prior MSRS-general service credit.

(a) An
eligible employee described in paragraph (b) may elect to transfer service credit in the
general state employees retirement plan of the Minnesota State Retirement System to the
correctional state employees retirement plan for eligible prior correctional employment.

(b) An eligible employee is a person who is covered by section 6 or who became
eligible for retirement coverage by the correctional state employees retirement plan of the
Minnesota State Retirement System under Laws 2006, chapter 271, article 2, this article,
or legislation implementing the recommendations under section 352.91, subdivision 4a.

(c) Eligible prior correctional employment is covered correctional service defined
in section 6 or is employment by the Department of Corrections or by the Department
of Human Services that preceded the effective date of the retirement coverage transfer
under Laws 2006, chapter 271, article 2, this article, or legislation implementing the
recommendations under section 352.91, subdivision 4a, is continuous service, and is
certified by the commissioner of corrections and the commissioner of human services,
whichever applies, and by the commissioner of employee relations to the executive
director of the Minnesota State Retirement System as service that would qualify for
correctional state employees retirement plan coverage under section 352.91, if the service
was rendered after the date of coverage transfer.

(d) The election to transfer past service credit under this section must be made in
writing by the applicable person on a form prescribed by the executive director of the
Minnesota State Retirement System and must be filed with the executive director of the
Minnesota State Retirement System on or before (1) January 1, 2008, or the one year
anniversary of the coverage transfer, whichever is later, or (2) the date of the eligible
employee's termination of state employment, whichever is earlier.

Subd. 2.

Payment of additional equivalent contributions; pre-July 1, 2007,
coverage transfers.

(a) An eligible employee who was transferred to plan coverage
before July 1, 2007, and who elects to transfer past service credit under this section must
pay an additional member contribution for that prior service period. The additional
member contribution is the difference between the member contribution rate or rates for
the general state employees retirement plan of the Minnesota State Retirement System
for the period of employment covered by the service credit to be transferred and the
member contribution rate or rates for the correctional state employees retirement plan for
the period of employment covered by the service credit to be transferred, plus annual
compound interest at the rate of 8.5 percent.

(b) The additional equivalent member contribution under this subdivision must be
paid in a lump sum. Payment must accompany the election to transfer the prior service
credit. No transfer election or additional equivalent member contribution payment may be
made by a person or accepted by the executive director after January 1, 2008, or the date
on which the eligible employee terminates state employment, whichever is earlier.

(c) If an eligible employee elects to transfer past service credit under this section
and pays the additional equivalent member contribution amount under paragraphs (a) and
(b), the applicable department shall pay an additional equivalent employer contribution
amount. The additional employer contribution is the difference between the employer
contribution rate or rates for the general state employees retirement plan for the period of
employment covered by the service credit to be transferred and the employer contribution
rate or rates for the correctional state employees retirement plan for the period of
employment covered by the service credit to be transferred, plus annual compound interest
at the rate of 8.5 percent.

(d) The additional equivalent employer contribution under this subdivision must be
paid in a lump sum and must be paid within 30 days of the date on which the executive
director of the Minnesota State Retirement System certifies to the applicable department
that the employee paid the additional equivalent member contribution.

Subd. 3.

Payment of additional equivalent contributions; post-June 30, 2007,
coverage transfers.

(a) An eligible employee who was transferred to plan coverage after
June 30, 2007, and who elects to transfer past service credit under this section must pay
an additional member contribution for that prior service period. The additional member
contribution is (1) the difference between the member contribution rate or rates for the
general state employees retirement plan of the Minnesota State Retirement System for
the period of employment covered by the service credit to be transferred and the member
contribution rate or rates for the correctional state employees retirement plan for the most
recent 12 month period of employment covered by the service credit to be transferred, plus
annual compound interest at the rate of 8.5 percent, and (2) 40 percent of the unfunded
actuarial accrued liability attributable to the past service credit transfer. The unfunded
actuarial accrued liability attributable to the past service credit transfer is the present
value of the benefit obtained by the transfer of the service credit to the correctional state
employees retirement plan reduced by the amount of the asset transfer under subdivision 4,
by the amount of the member contribution equivalent payment under clause (1), and by the
amount of the employer contribution equivalent payment under paragraph (c), clause (1).

(b) The additional equivalent member contribution under this subdivision must be
paid in a lump sum. Payment must accompany the election to transfer the prior service
credit. No transfer election or additional equivalent member contribution payment may be
made by a person or accepted by the executive director after the one year anniversary date
of the effective date of the retirement coverage transfer, or the date on which the eligible
employee terminates state employment, whichever is earlier.

(c) If an eligible employee elects to transfer past service credit under this section
and pays the additional equivalent member contribution amount under subdivision 2,
the applicable department shall pay an additional equivalent employer contribution
amount. The additional employer contribution is (1) the difference between the employer
contribution rate or rates for the general state employees retirement plan for the period of
employment covered by the service credit to be transferred and the employer contribution
rate or rates for the correctional state employees retirement plan for the period of
employment covered by the service credit to be transferred, plus annual compound
interest at the rate of 8.5 percent, and (2) 60 percent of the unfunded actuarial accrued
liability attributable to the past service credit transfer calculated as provided in paragraph
(a), clause (2).

(d) The additional equivalent employer contribution under this subdivision must be
paid in a lump sum and must be paid within 30 days of the date on which the executive
director of the Minnesota State Retirement System certifies to the applicable department
that the employee paid the additional equivalent member contribution.

Subd. 4.

Transfer of assets.

Assets related to the transferred service credit of an
eligible employee must be transferred from the general state employees retirement fund to
the correctional state employees retirement fund in an amount equal to the present value of
benefits earned under the general state employees retirement plan by the eligible employee
transferring past service to the correctional state employees retirement plan, as determined
by the actuary retained under section 356.214, multiplied by the accrued liability funding
ratio of the active members of the general state employees retirement plan as derived from
the most recent actuarial valuation prepared under section 356.215. The transfer of assets
must be made within 45 days after the coverage transfer election is made.

Subd. 5.

Effect of the asset transfer.

Upon the transfer of assets under subdivision
4, the service credit in the general state employees retirement plan of the Minnesota State
Retirement System is forfeited and may not be reinstated. The transferred service credit
and the transferred assets must be credited to the correctional state employees retirement
plan and fund, respectively.

Subd. 6.

Cost of actuarial calculations.

The applicable department shall pay the
cost of the actuarial calculations required by this section as billed by the executive director
of the Minnesota State Retirement System.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6. COVERAGE FOR PRIOR STATE SERVICE FOR CERTAIN PERSONS.

(a) An employee who has retirement coverage for past correctional service
transferred to the correctional state employees retirement plan under paragraph (b) is
entitled to elect to obtain prior service credit for eligible state service performed as a
stores clerk after April 24, 1990, and before September 8, 1994, with the Department of
Corrections. All eligible prior service credit must be purchased.

(b) "Covered correction service" means service between April 25, 1990, through
September 7, 1994, as a stores clerk at the Minnesota Correctional Facility-St. Cloud.

(c) The commissioner of corrections shall certify the eligible state service as a
stores clerk rendered by the employee to the executive director of the Minnesota State
Retirement System.

(d) The covered correctional plan employee who has past service is entitled to
purchase the past service under Minnesota Statutes, section 352.955, if the department
certifies that the employee met the eligibility requirements for coverage.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 4

DISABILITY BENEFIT CHANGES

Section 1.

Minnesota Statutes 2006, section 353.01, subdivision 37, is amended to read:

Subd. 37.

Normal retirement age.

(a) "Normal retirement age" means age 65
for a person who first became a public employee or a member of a pension fund listed
in section 356.30, subdivision 3, clause (7), before July 1, 1989. For a person who first
becomes a public employee after June 30, 1989, "normal retirement age" means the higher
of age 65 or "retirement age," as defined in United States Code, title 42, section 416(l), as
amended, but not to exceed age 66.

(b) "Normal retirement age" means age 55 for a person who is a member of a
pension fund listed in section 356.30, subdivision 3, clauses (8) and (9).

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 2.

Minnesota Statutes 2006, section 353.01, is amended by adding a subdivision
to read:

Subd. 41.

Duty disability.

"Duty disability," physical or psychological, means a
condition that is expected to prevent a member, for a period of not less than 12 months,
from performing the normal duties of the position held by a person who is a member
of the public employees police and fire plan, and that is the direct result of an injury
incurred during, or a disease arising out of, the performance of normal duties or the actual
performance of less frequent duties, either of which are specific to protecting the property
and personal safety of others and that present inherent dangers that are specific to the
positions covered by the public employees police and fire plan.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 3.

Minnesota Statutes 2006, section 353.01, is amended by adding a subdivision
to read:

Subd. 42.

Less frequent duties.

"Less frequent duties" means tasks which are
designated in the applicant's job description as either required from time to time or as
assigned, but which are not carried out as part of the normal routine of the applicant's job.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 4.

Minnesota Statutes 2006, section 353.01, is amended by adding a subdivision
to read:

Subd. 43.

Line of duty death.

"Line of duty death" means a death that occurs while
performing or as a direct result of performing normal or less frequent duties which are
specific to protecting the property and personal safety of others and that present inherent
dangers that are specific to the positions covered by the public employees police and
fire plan.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 5.

Minnesota Statutes 2006, section 353.01, is amended by adding a subdivision
to read:

Subd. 44.

Normal duties.

"Normal duties" means specific tasks which are
designated in the applicant's job description and which the applicant performs on a
day-to-day basis, but do not include less frequent duties which may be requested to be
done by the employer from time to time.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 6.

Minnesota Statutes 2006, section 353.01, is amended by adding a subdivision
to read:

Subd. 45.

Not line of duty death.

For purposes of survivor benefits under the
public employees police and fire plan, a "not line of duty death" is any death not specified
under subdivision 43.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 7.

Minnesota Statutes 2006, section 353.01, is amended by adding a subdivision
to read:

Subd. 46.

Regular disability.

"Regular disability," physical or psychological,
means a condition that is expected to prevent a member, for a period of not less than 12
months, from performing the normal duties of the position held by a person who is a
member of the public employees police and fire plan, and which results from a disease or
an injury that arises from any activities while not at work, or while at work and performing
those normal or less frequent duties that do not present inherent dangers that are specific
to the occupations covered by the public employees police and fire plan.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 8.

[353.031] DISABILITY DETERMINATION PROCEDURES.

Subdivision 1.

Application.

This section applies to all disability determinations for
the public employees general fund, the public employees police and fire fund, and the local
government correctional service retirement plan and any other disability determination
subject to approval by the board, except as otherwise specified in section 353.33, 353.656,
or 353E.05. These requirements and the requirements of section 353.03, subdivision 3,
are in addition to the specific requirements of each plan and govern in the event there is
any conflict between these sections and the procedures specific to any of those plans
under section 353.33, 353.656, or 353E.06.

Subd. 2.

Plan document policy statement.

Disability determinations for the public
employees general fund must be made subject to section 353.01, subdivision 19; and for
the police and fire plan and the local government correctional service retirement plan must
be made consistent with the legislative policy and intent set forth in section 353.63.

Subd. 3.

Procedure to determine eligibility; generally.

(a) Every claim for a
disability benefit must be initiated in writing on an application form and in the manner
prescribed by the executive director and filed with the executive director. An application
for disability benefits must be made within 18 months following termination of public
service as defined under section 353.01, subdivision 11a.

(b) All medical reports must support a finding that the disability arose before the
employee was placed on any paid or unpaid leave of absence or terminated public service,
as defined under section 353.01, subdivision 11a.

(c) An applicant for disability shall provide a detailed report signed by a licensed
medical doctor and at least one additional report signed by a medical doctor, psychologist,
or chiropractor. The applicant shall authorize the release of all medical and health care
evidence, including all medical records and relevant information from any source, to
support the application for initial, or the continuing payment of, disability benefits.

(d) All reports must contain an opinion regarding the claimant's prognosis, the
duration of the disability, and the expectations for improvement. Any report that does not
contain and support a finding that the disability will last for at least one year may not be
relied upon to support eligibility for benefits.

(e) Where the medical evidence supports the expectation that at some point in time
the claimant will no longer be disabled, any decision granting disability may provide
for a termination date upon which disability can be expected to no longer exist. In the
event a termination date is made part of the decision granting benefits, prior to the
actual termination of benefits, the claimant shall have the opportunity to show that the
disabling condition for which benefits were initially granted continues. In the event the
benefits terminate in accordance with the original decision, the claimant may petition for a
review by the board of trustees under section 353.03, subdivision 3, or may reapply for
disability in accordance with these procedures and section 353.33, 353.656, or 353E.06,
as applicable.

(f) Any claim to disability must be supported by a report from the employer
indicating that there is no available work that the employee can perform in the employee's
disabled condition and that all reasonable accommodations have been considered. Upon
request of the executive director, an employer shall provide evidence of the steps the
employer has taken to attempt to provide reasonable accommodations and continued
employment to the claimant. The employer shall also provide a certification of the
member's past public service; the dates of any paid sick leave, vacation, or any other
employer-paid salary continuation plan beyond the last working day; and whether or not
any sick or annual leave has been allowed.

(g) An employee who is placed on leave of absence without compensation because
of a disability is not barred from receiving a disability benefit.

(h) An applicant for disability benefits may file a retirement annuity application
under section 353.29, subdivision 4, simultaneously with an application for disability
benefits. If the application for disability benefits is approved, the retirement annuity
application is cancelled. If disability benefits are denied, the retirement annuity application
must be processed upon the request of the applicant. No member of the public employees
general plan, the public employees police and fire plan, or the local government
correctional service retirement plan may receive a disability benefit and a retirement
annuity simultaneously from the same plan.

Subd. 4.

Additional requirements to determine eligibility for police and fire or
local government correctional service plan disability benefits.

(a) If an application for
disability benefits is filed within two years of the date of the injury or the onset of the illness
that gave rise to the disability application, the application must be supported by evidence
that the applicant is unable to perform the duties of the position held by the applicant on
the date of the injury or the onset of the illness causing the disability. The employer must
provide evidence indicating whether the applicant is able or unable to perform the duties
of the position held on the date of the injury or onset of the illness causing the disability
and the specifications of any duties that the individual can or cannot perform.

(b) If an application for disability benefits is filed more than two years after the date
of injury or the onset of an illness causing the disability, the application must be supported
by evidence that the applicant is unable to perform the most recent duties that are expected
to be performed by the applicant during the 90 days before the filing of the application.
The employer must provide evidence of the duties that are expected to be performed by
the applicant during the 90 days before the filing of the application, whether the applicant
can or cannot perform those duties overall, and the specifications of any duties that the
applicant can or cannot perform.

(c) Any report supporting a claim to disability benefits under section 353.656 or
353E.06 must specifically relate the disability to its cause; and for any claim to duty
disability from an injury or illness arising out of an act of duty, the report must relate
the cause of disability to specific tasks or functions required to be performed by the
employee in fulfilling the employee's duty-related acts which must be specific to the
inherent dangers of the positions eligible for membership in the police and fire fund and
the local government correctional service retirement plan. Any report that does not relate
the cause of disability to specific acts or functions performed by the employee may not be
relied upon as evidence to support eligibility for benefits and may be disregarded in the
executive director's decision-making process.

(d) Any application for duty disability must be supported by a first report of injury as
defined in section 176.231.

(e) If a member who has applied for and been approved for disability benefits before
the termination of service does not terminate service or is not placed on an authorized
leave of absence as certified by the governmental subdivision within 45 days following
the date on which the application is approved, the application shall be canceled. If an
approved application for disability benefits has been canceled, a subsequent application
for disability benefits may not be filed on the basis of the same medical condition for a
minimum of one year from the date on which the previous application was canceled.

Subd. 5.

Medical adviser.

The executive director may contract with licensed
physicians or physicians on the staff of the state commissioner of health, as designated
by the commissioner, to be the medical adviser of the association. The medical adviser
shall review all medical reports submitted to the association, including the findings of
an independent medical examination requested under this section, and shall advise the
executive director.

Subd. 6.

Independent medical examination.

Any individual applying for
or receiving disability benefits must submit to an independent medical examination
if requested by the executive director. The medical examination must be paid for by
the association.

Subd. 7.

Refusal of examination or medical evidence.

If a person applying
for or receiving a disability benefit refuses to submit to a medical examination under
subdivision 6, or fails to provide or to authorize the release of medical evidence under
subdivision 3, the association shall cease the application process or shall discontinue the
payment of a disability benefit, whichever is applicable. Upon the receipt of the requested
medical evidence, the association shall resume the application process or the payment of a
disability benefit upon approval for the continuation, whichever is applicable.

Subd. 8.

Proof of continuing disability.

(a) A disability benefit payment must not
be made except upon adequate proof furnished to the executive director of the association
that the person remains disabled.

(b) During the time when disability benefits are being paid, the executive director
of the association has the right, at reasonable times, to require the disabled member to
submit proof of the continuance of the disability claimed.

(c) Adequate proof of a disability must include a written expert report by a licensed
physician, a licensed chiropractor, or, with respect to a mental impairment, a licensed
psychologist.

Subd. 9.

Application approval or denial; decision of executive director.

Any
decision of the executive director is final, except that a member whose application for
disability benefits or whose continuation of disability benefits is denied may appeal the
executive director's decision to the board of trustees within 60 days of receipt of a certified
letter notifying the member of the decision to deny the application or continuation of
benefits. In developing the record for review by the board when a decision is appealed,
the executive director may direct that the applicant participate in a fact-finding session
conducted by an administrative law judge assigned by the Office of Administrative
Hearings, and, as applicable, a vocational assessment conducted by the qualified
rehabilitation counselor on contract with the Public Employees Retirement Association.

Subd. 10.

Restoring forfeited service.

To restore forfeited service, a repayment of
a refund must be made within six months after the effective date of disability benefits or
within six months after the date of the filing of the disability application, whichever is
later. No purchase of prior service or payment made in lieu of salary deductions otherwise
authorized under section 353.01 may be made after the occurrence of the disability for
which an application is filed under this section.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 9.

Minnesota Statutes 2006, section 353.33, subdivision 1, is amended to read:

Subdivision 1.

Age, service, and salary requirements.

A coordinated member
who has at least three years of allowable service and becomes totally and permanently
disabled before normal retirement age, and a basic member who has at least three years of
allowable service and who becomes totally and permanently disabled, upon application as
defined under section 353.031, is entitled to a disability benefit in an amount determined
under subdivision 3. If the disabled person's public service has terminated at any time,
at least two of the required three years of allowable service must have been rendered
after last becoming an active member. A repayment of a refund must be made within six
months after the effective date of disability benefits under subdivision 2 or within six
months after the date of the filing of the disability application, whichever is later. No
purchase of prior service and no payment made in lieu of salary deductions otherwise
authorized under section 353.01, subdivision 16, may be made after the occurrence of the
disability for which an application under this section is filed.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 10.

Minnesota Statutes 2006, section 353.33, subdivision 2, is amended to read:

Subd. 2.

Applications; Accrual of benefits.

Every claim or demand for a total
and permanent disability benefit must be initiated by written application in the manner
and form prescribed by the executive director showing compliance with the statutory
conditions qualifying the applicant for a total and permanent disability benefit and filed
with the executive director. A member or former member who became totally and
permanently disabled during a period of membership shall file application for total and
permanent disability benefits within three years next following termination of public
service. (a) This benefit begins to accrue the day following the commencement of
disability, when the applicant is no longer receiving any form of compensation, whether
salary or paid leave; 90 days preceding the filing of the application, or, if annual or sick
leave or any other employer-paid salary continuation plan is paid for more than the 90-day
period, from the date salary ceased, whichever is later. No member is entitled to receive a
disability benefit payment when there remains to the member's credit any unused annual
leave or, sick leave, or any other employer-paid salary continuation plan, or under any
other circumstances when, during the period of disability, there has been no impairment of
the person's salary.

(b) Payment must not accrue beyond the end of the month in which entitlement has
terminated. If the disabilitant dies prior to negotiating the check for the month in which
death occurs, payment is made to the surviving spouse, or if none, to the designated
beneficiary, or if none, to the estate. An applicant for total and permanent disability
benefits may file a retirement annuity application under section 353.29, subdivision 4,
simultaneously with an application for total and permanent disability benefits. The
retirement annuity application is void upon the determination of the entitlement for
disability benefits by the executive director. If disability benefits are denied, the retirement
annuity application must be initiated and processed.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 11.

Minnesota Statutes 2006, section 353.33, subdivision 4, is amended to read:

Subd. 4.

Procedure to determine eligibility.

(a) The applicant shall provide
an expert report signed by a licensed physician, psychologist, or chiropractor and the
applicant must authorize the release of medical and health care evidence, including all
medical records and relevant information from any source, to support the application
for total and permanent disability benefits. Eligibility for disability benefits must be
determined following the procedures defined in section 353.031.

(b) The medical adviser shall verify the medical evidence and, if necessary for
disability determination, suggest the referral of the applicant to specialized medical
consultants.

(c) The association shall also obtain from the employer a certification of the
member's past public service, the dates of any paid sick leave and vacation beyond the last
working day and whether or not any sick leave or annual leave has been allowed.

(d) If, after following the procedures for determining eligibility for benefits under
section 353.031, and upon consideration of the medical evidence received and the
recommendations of the medical adviser, it is determined by the executive director that
the applicant is totally and permanently disabled within the meaning of the law, the
association shall grant the person a disability benefit.

(e) An employee who is placed on leave of absence without compensation because
of a disability is not barred from receiving a disability benefit.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 12.

Minnesota Statutes 2006, section 353.33, subdivision 6, is amended to read:

Subd. 6.

Continuing eligibility for benefits.

The association shall determine
eligibility for continuation of disability benefits and require periodic examinations and
evaluations of disabled members as frequently as deemed necessary. The association shall
require the disabled member to provide an expert report signed by a licensed physician,
psychologist, or chiropractor and the disabled member shall authorize the release of
medical and health care evidence, including all medical and health care records and
information from any source, relating to an application for continuation of disability
benefits. Disability benefits are contingent upon a disabled person's participation in a
vocational rehabilitation evaluation if the executive director determines that the disabled
person may be able to return to a gainful occupation. If, after a review by the executive
director under section 353.031, subdivision 8, a member is found to be no longer totally
and permanently disabled, payments must cease the first of the month following the
expiration of a 30-day period after the member receives a certified letter notifying the
member that payments will cease.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 13.

Minnesota Statutes 2006, section 353.33, subdivision 7a, is amended to read:

Subd. 7a.

Trial work period.

(a) This subdivision applies only to the Public
Employees Retirement Association general employees retirement plan.

(b) If, following a work or non-work-related injury or illness, a disabled member
attempts to return to work for their previous public employer or attempts to return to a
similar position with another public employer, on a full-time or less than full-time basis,
the Public Employees Retirement Association shall continue paying the disability benefit
for a period not to exceed six months. The disability benefit must continue in an amount
that, when added to the subsequent employment earnings and workers' compensation
benefit, does not exceed the salary at the date of disability or the salary currently paid
for similar positions, whichever is higher.

(b) (c) No deductions for the general employees retirement fund plan may be taken
from the salary of a disabled person who is attempting to return to work under this
provision unless the member waives further disability benefits.

(c) (d) A member only may return to employment and continue disability benefit
payments once while receiving disability benefits from a the general employees retirement
plan administered by the Public Employees Retirement Association.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 14.

Minnesota Statutes 2006, section 353.651, subdivision 4, is amended to read:

Subd. 4.

Early retirement.

(a) A person who becomes a police and fire plan
member after June 30, 2007, or a former member who is reinstated as a member of the
plan after that date, who is at least 50 years of age with at least three years of allowable
service, upon the termination of public service is entitled upon application to a retirement
annuity equal to the normal annuity calculated under subdivision 3, reduced by two-tenths
of one percent for each month that the member is under age 55 at the time of retirement.

(b) Upon the termination of public service, any police officer or firefighter and fire
plan member who has become not specified in paragraph (a), upon attaining at least 50
years old and who has of age with at least three years of allowable service is entitled
upon application to a retirement annuity equal to the normal annuity calculated under
subdivision 3, reduced by one-tenth of one percent for each month that the member is
under age 55 at the time of retirement.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 15.

Minnesota Statutes 2006, section 353.656, subdivision 1, is amended to read:

Subdivision 1.

In line of Duty disability; computation of benefits.

(a) A member
of the police and fire plan who:

(1) has not met the requirements for a retirement annuity under section 353.651,
subdivision 1, or

(2) has met the requirements for a retirement annuity under section 353.651,
subdivision 1, but who does not have 20 years of credited service; and who becomes
disabled and physically unfit to perform duties as a police officer, firefighter, or paramedic
as defined under section 353.64, subdivision 10, as a direct result of an injury, sickness, or
other disability incurred in or arising out of any act of duty, which has or is expected to
render the member physically or mentally unable to perform the duties as a police officer,
firefighter, or paramedic as defined under section 353.64, subdivision 10, for a period of at
least one year is determined to qualify for duty disability as defined in section 353.01,
subdivision 41, shall receive disability benefits during the period of such disability.

(b) The benefits must be in an amount equal to 60 percent of the "average salary" as
defined in section 353.01, subdivision 17a, plus an additional percent specified in section
356.315, subdivision 6, of that average salary for each year of service in excess of 20 years.

(b) To be eligible for a benefit under paragraph (a), the member must have:

(1) not met the requirements for a retirement annuity under section 353.651,
subdivision 1; or

(2) met the requirements under that subdivision, but does not have at least 20 years
of allowable service credit.

(c) If paragraph (b), clause (2), applies, the disability benefit must be paid for a
period of 60 months from the disability benefit accrual date and at the end of that period
is subject to provisions of subdivision 5a.

(d) If the disability under this subdivision occurs before the member has at least five
years of allowable service credit in the police and fire plan, the disability benefit must be
computed on the "average salary" from which deductions were made for contribution to
the police and fire fund.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 16.

Minnesota Statutes 2006, section 353.656, is amended by adding a subdivision
to read:

Subd. 1a.

Total and permanent duty disability; computation of benefits.

(a)
A member of the police and fire plan whose disabling condition is determined to be a
duty disability that is also a permanent and total disability as defined in section 353.01,
subdivision 19, is entitled to receive, for life, disability benefits in an amount equal to
60 percent of the average salary as defined in section 353.01, subdivision 17a, plus an
additional percent specified in section 356.315, subdivision 6, of that average salary for
each year of service in excess of 20 years.

(b) A disability benefit payable under paragraph (a) is subject to eligibility review
under section 353.33, subdivision 6, but the review may be waived if the executive
director receives a written statement from the association's medical advisor that no
improvement can be expected in the member's disabling condition that was the basis for
payment of the benefit under paragraph (a). A member receiving a disability benefit under
this subdivision who is found to no longer be permanently and totally disabled as defined
under section 353.01, subdivision 19, but continues to meet the definition for receipt of a
duty disability under section 353.01, subdivision 41, is subject to subdivision 1 under this
section upon written notice from the association's medical advisor that the person is no
longer considered permanently and totally disabled.

(c) If a member approved for disability benefits under this subdivision dies before
attaining normal retirement age as defined in section 353.01, subdivision 37, paragraph
(b), or within 60 months of the effective date of the disability, whichever is later,
the surviving spouse is entitled to receive a survivor benefit under section 353.657,
subdivision 2, paragraph (a), clause (1), if the death is the direct result of the disabling
condition for which disability benefits were approved, or section 353.657, subdivision
2, paragraph (a), clause (2) if the death is not directly related to the disabling condition
for which benefits were approved under this subdivision.

(d) If the election of an actuarial equivalent optional annuity is not made at the time
the permanent and total disability benefit accrues, an election must be made within 90
days before the member attains normal retirement age as defined under section 353.01,
subdivision 37, paragraph (b) or having collected total and permanent disability benefits
for 60 months, whichever is later. If a member receiving disability benefits who has
dependent children dies, subdivision 6a, paragraph (c) applies.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 17.

Minnesota Statutes 2006, section 353.656, subdivision 1a, is amended to read:

Subd. 1a 1b.

Optional annuity election.

(a) A disabled member of the police and
fire fund may elect to receive the normal disability benefit or an actuarial equivalent
optional annuity as provided in section 353.30, subdivision 3. If the election of an
actuarial equivalent optional annuity may be is made prior to before the commencement of
payment of the disability benefit or as specified under subdivision 6a., the optional annuity
shall must begin to accrue on the same date as provided for the disability benefit covering
only the disabilitant would have accrued.

(b) If an election of an optional annuity is not made before the commencement of the
disability benefit, the disabilitant may elect an optional annuity:

(1) within 90 days before normal retirement age;

(2) upon the filing of an application to convert to an early retirement annuity, if
electing to convert to an early retirement annuity before the normal retirement age; or

(3) within 90 days before the expiration of the 60-month period for which a disability
benefit is paid, if the disability benefit is payable because the disabled member did not
have at least 20 years of allowable service at normal retirement age.

(c) If the person a disabled member who is not the spouse of the member is
has named as beneficiary of the a joint and survivor optional annuity, beneficiary dies
before the disability benefit ceases and is recalculated under subdivision 5a, the person
is beneficiary eligible to receive the joint and survivor annuity only if the spouse, on
may elect to have the disability application form prescribed by annuity converted at the
executive director, permanently waives times designated in paragraph (b), clause (1),
(2), or (3), whichever allows for the surviving spouse benefits under section 353.657,
subdivisions 2 and 2a earliest payment of a higher joint and survivor annuity option
resulting from recalculation under subdivision 5a, paragraph (e).

(d) A disabled member may name a person other than the spouse as beneficiary
of a joint and survivor annuity only if the spouse of the disabled member refuses to
permanently waive the waives surviving spouse coverage, the selection of a person other
than the spouse of the member as a joint annuitant is invalid on the disability application
form prescribed by the executive director.

(2) (e) If the spouse of the member permanently waives survivor coverage, the
dependent child or children, if any, continue to be eligible for survivor dependent child
benefits, including the minimum benefit under section 353.657, subdivision 3., and the
designated optional annuity beneficiary may draw the monthly benefit; however, the
amount payable to the dependent child or children and joint annuitant must not exceed
the 70 percent maximum family benefit under section 353.657, subdivision 3. If the
maximum is exceeded, the benefit of the joint annuitant must be reduced to the amount
necessary so that the total family benefit does not exceed the 70 percent maximum family
benefit amount.

(3) If the spouse is named as the beneficiary of the joint and survivor optional
annuity, the spouse may draw the monthly benefit; however, the amount payable to
the dependent child or children and the joint annuitant must not exceed the 70 percent
maximum family benefit under section 353.657, subdivision 3. If the maximum is
exceeded, each dependent child will receive ten percent of the member's specified average
monthly salary, and the benefit to the joint annuitant must be reduced to the amount
necessary so that the total family benefit does not exceed the 70 percent maximum family
benefit amount. The joint and survivor optional annuity must be restored to the surviving
spouse, plus applicable postretirement adjustments under section 356.41, as the dependent
child or children become no longer dependent under section 353.01, subdivision 15.

(f) Any optional annuity under this subdivision, plus dependent child benefits, if
applicable, are subject to the maximum and minimum family benefit amounts specified in
section 353.657, subdivision 3a.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 18.

Minnesota Statutes 2006, section 353.656, subdivision 3, is amended to read:

Subd. 3.

Nonduty Regular disability benefit.

(a) Any A member of the police
and fire plan who:

(1) has not met the requirements for a retirement annuity under section 353.651,
subdivision 1, or

(2) has met the requirements for a retirement annuity under section 353.651,
subdivision 1, but who does not have 15 years of credited service; and who becomes
disabled after not less than one year of allowable service because of sickness or injury
occurring while not on duty as a police officer, firefighter, or paramedic as defined under
section 353.64, subdivision 10, and by reason of that sickness or injury the member has
been or is expected to be unable to perform the duties as a police officer, firefighter, or
paramedic as defined under section 353.64, subdivision 10, for a period of at least one
year, is entitled to qualifies for a regular disability benefit as defined in section 353.01,
subdivision 46, is entitled to receive a disability benefit, after filing a valid application,
in an amount equal to 45 percent of the average salary as defined in section 353.01,
subdivision 17a.

(b) The benefit must be paid in the same manner as if the benefit were paid under
section 353.651. If a disability under this subdivision occurs after one but in less than 15
years of allowable service, the disability benefit must be the same as though the member
had at least 15 years service. To be eligible for a benefit under paragraph (a), the member
must have at least one year of allowable service credit and have:

(1) not met the requirements for a retirement annuity under section 353.651,
subdivision 1, or

(2) met the requirements under that subdivision, but does not have at least 15 years
of allowable service credit.

(c) If paragraph (b), clause (2), applies, the disability benefit must be paid for a
period of 60 months from the disability benefit accrual date and, at the end of that period,
is subject to provisions of subdivision 5a.

(d) For a member who is employed as a full-time firefighter by the Department of
Military Affairs of the state of Minnesota, allowable service as a full-time state Military
Affairs Department firefighter credited by the Minnesota State Retirement System may be
used in meeting the minimum allowable service requirement of this subdivision.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 19.

Minnesota Statutes 2006, section 353.656, is amended by adding a subdivision
to read:

Subd. 3a.

Total and permanent regular disability; computation of benefits.

(a) A member of the police and fire plan whose disabling condition is determined to be
a regular disability under section 353.01, subdivision 46 that is also a permanent and
total disability as defined in section 353.01, subdivision 19, is entitled to a receive, for
life, disability benefit in an amount equal to 45 percent of the average salary as defined in
section 353.01, subdivision 17a, plus an additional percent specified in section 356.315,
subdivision 6, of that average salary for each year of service in excess of 15 years.

(b) A disability benefit payable under paragraph (a) is subject to eligibility review
under section 353.33, subdivision 6, but the review may be waived if the executive
director receives a written statement from the association's medical advisor that no
improvement can be expected in the member's disabling condition that was the basis for
payment of the benefit under paragraph (a). A member receiving a disability benefit under
this subdivision who is found to no longer be permanently and totally disabled as defined
under section 353.01, subdivision 19, but continues to meet the definition for receipt of a
regular disability under section 353.01, subdivision 46, is subject to subdivision 3 under
this section upon written notice from the association's medical advisor that the person is
no longer considered permanently and totally disabled.

(c) A member approved for disability benefits under this subdivision may elect
to receive a normal disability benefit or an actuarial equivalent optional annuity. If the
election of an actuarial equivalent optional annuity is not made at the time the total and
permanent disability benefit accrues, an election must be made within 90 days before
the member attains normal retirement age as defined in section 353.01, subdivision 37,
paragraph (b), or having collected disability benefits for 60 months, whichever is later.
No surviving spouse benefits are payable if the member dies during the period in which
a normal total and permanent disability benefit is being paid. If a member receiving
disability benefits who has dependent children dies, subdivision 6a, paragraph (c) applies.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 20.

Minnesota Statutes 2006, section 353.656, subdivision 4, is amended to read:

Subd. 4.

Limitation on disability benefit payments.

(a) No member is entitled to
receive a disability benefit payment when there remains to the member's credit unused
annual leave or, sick leave, or any other employer-provided salary continuation plan, or
under any other circumstances when, during the period of disability, there has been no
impairment of the person's salary as a police officer, a firefighter, or a paramedic as defined
in section 353.64, subdivision 10, whichever applies.

(b) If a disabled member resumes a gainful occupation with earnings that, when
added to the normal disability benefit, and workers' compensation benefit if applicable,
exceed the disabilitant reemployment earnings limit, the amount of the disability benefit
must be reduced as provided in this paragraph. The disabilitant reemployment earnings
limit is the greater of:

(1) the salary earned at the date of disability; or

(2) 125 percent of the base salary currently paid by the employing governmental
subdivision for similar positions.

(c) The disability benefit must be reduced by one dollar for each three dollars by
which the total amount of the current disability benefit, any workers' compensation
benefits if applicable, and actual earnings exceed the greater disabilitant reemployment
earnings limit. In no event may the disability benefit as adjusted under this subdivision
exceed the disability benefit originally allowed.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 21.

Minnesota Statutes 2006, section 353.656, subdivision 5a, is amended to read:

Subd. 5a.

Cessation of disability benefit.

(a) The association shall cease the
payment of an in-line-of-duty or nonduty any disability benefit the first of the month
following the reinstatement of a member to full time or less than full-time service in a
position covered by the police and fire fund.

(b) A disability benefit paid to a disabled member of the police and fire plan, that
was granted under laws in effect after June 30, 2007, terminates at the end of the month in
which the member:

(1) reaches normal retirement age;

(2) if the disability benefit is payable for a 60-month period as determined under
subdivisions 1 and 3, as applicable, the first of the month following the expiration of
the 60-month period; or

(3) if the disabled member so chooses, the end of the month in which the member
has elected to convert to an early retirement annuity under section 353.651, subdivision 4.

(c) If the police and fire member continues to be disabled when the disability benefit
terminates under this subdivision, the member is deemed to be retired. The individual
is entitled to receive a normal retirement annuity or an early retirement annuity under
section 353.651, whichever is applicable, as further specified in paragraph (d) or (e). If the
individual did not previously elect an optional annuity under subdivision 1a, paragraph
(a), the individual may elect an optional annuity under subdivision 1a, paragraph (b).

(d) A member of the police and fire plan who is receiving a disability benefit under
this section may, upon application, elect to receive an early retirement annuity under
section 353.651, subdivision 4, at any time after attaining age 50, but must convert to a
retirement annuity no later than the end of the month in which the disabled member attains
normal retirement age. An early retirement annuity elected under this subdivision must be
calculated on the disabled member's accrued years of service and average salary as defined
in section 353.01, subdivision 17a, and when elected, the member is deemed to be retired.

(e) When an individual's benefit is recalculated as a retirement annuity under this
section, the annuity must be based on clause (1) or clause (2), whichever provides the
greater amount:

(1) the benefit amount at the time of reclassification, including all prior adjustments
provided under section 11A.18; or

(2) a benefit amount computed on the member's actual years of accrued allowable
service credit and the law in effect at the time the disability benefit first accrued, plus any
increases that would have applied since that date under section 11A.18.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 22.

Minnesota Statutes 2006, section 353.656, subdivision 6a, is amended to read:

Subd. 6a.

Disability survivor benefits for pre-July 1, 2007, disabilitants.

(a) If a
member who is receiving a disability benefit under subdivision 1 or 3:

(1) that was granted under the laws in effect before July 1, 2007, dies before
attaining the normal retirement age required for receipt of a retirement annuity under
section 353.651, subdivision 1 as defined under section 353.01, subdivision 37, paragraph
(b), or within five years of the effective date of the disability, whichever is later, the
surviving spouse shall receive a survivor benefit under section 353.657, subdivision 2,
paragraph (a), clause (2); or 2a, unless the surviving spouse elected to receive a refund
under section 353.32, subdivision 1. The joint and survivor optional annuity under
subdivision 2a is based on the minimum disability benefit under subdivision 1 or 3, or the
deceased member's allowable service, whichever is greater;.

(2) (b) If the disability benefit was granted under the laws in effect before July 1,
2007, and the disabilitant is living at the age required for receipt of a retirement annuity
under section 353.651, subdivision 1, or five years after the effective date of the disability,
whichever is later, the disabled member may continue to receive a normal disability
benefit, or the member may elect a joint and survivor optional annuity under section
353.30. The optional annuity is based on the minimum disability benefit under subdivision
1 or 3, or the member's allowable service, whichever is greater. The election of this joint
and survivor annuity must occur within 90 days of the before attaining normal retirement
age required for receipt of a retirement annuity under section 353.651, subdivision 1 as
defined under section 353.01, subdivision 37, paragraph (b), or within 90 days before the
five-year anniversary of the effective date of the disability benefit, whichever is later. The
optional annuity takes effect the first of the month following the month in which the
person attains the age required for receipt of a retirement annuity under section 353.651,
subdivision 1, or reaches the five-year anniversary of the effective date of the disability
benefit, whichever is later; or.

(3) (c) If any disabled member dies while receiving a benefit and has a dependent
child or children under clause (1) or (2), the association shall grant a dependent child
benefit under section 353.657, subdivision 3.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to survivor
benefit applicants where the application is based on the death of a public employee that
occurred after June 30, 2007.

Sec. 23.

Minnesota Statutes 2006, section 353.656, subdivision 8, is amended to read:

Subd. 8.

Application procedure to determine eligibility for police and fire plan
disability benefits.

(a) An application for disability benefits must be made in writing on a
form or forms prescribed by the executive director.

(b) If an application for disability benefits is filed within two years of the date of the
injury or the onset of the illness that gave rise to the disability application, the application
must be supported by evidence that the applicant is unable to perform the duties of the
position held by the applicant on the date of the injury or the onset of the illness causing
the disability. The employer must provide evidence indicating whether the applicant is
able or unable to perform the duties of the position held on the date of the injury or onset
of illness causing the disability and the specifications of any duties that the individual can
or cannot perform.

(c) If an application for disability benefits is filed more than two years after the date
of the injury or the onset of an illness causing the disability, the application must be
supported by evidence that the applicant is unable to perform the most recent duties that
are expected to be performed by the applicant during the 90 days before the filing of the
application. The employer must provide evidence of the duties that are expected to be
performed by the applicant during the 90 days before the filing of the application, whether
the applicant can or cannot perform those duties overall, and the specifications of any
duties that the applicant can or cannot perform.

(d) Unless otherwise permitted by law, no application for disability benefits can be
filed by a former member of the police and fire plan more than three years after the former
member has terminated from Public Employees Retirement Association police and fire
plan covered employment. If an application is filed within three years after the termination
of public employment, the former member must provide evidence that the disability is the
direct result of an injury or the contracting of an illness that occurred while the person was
still actively employed and participating in the police and fire plan.

(e) Any application for duty-related disability must be supported by a first report of
injury as defined in section .

(f) If a member who has applied for and been approved for disability benefits before
the termination of service does not terminate service or is not placed on an authorized
leave of absence as certified by the governmental subdivision within 45 days following
the date on which the application is approved, the application shall be canceled. If an
approved application for disability benefits has been canceled, a subsequent application
for disability benefits may not be filed on the basis of the same medical condition for a
minimum of one year from the date on which the previous application was canceled.

(g) An applicant may file a retirement application under section 353.29, subdivision
4, at the same time as the disability application is filed. If the disability application is
approved, the retirement application is canceled. If the disability application is denied, the
retirement application must be initiated and processed upon the request of the applicant. A
police and fire fund member may not receive a disability benefit and a retirement annuity
from the police and fire fund at the same time.

(h) A repayment of a refund must be made within six months after the effective date
of disability benefits or within six months after the date of the filing of the disability
application, whichever is later. No purchase of prior service or payment made in lieu
of salary deductions otherwise authorized under section may be made after the
occurrence of the disability for which an application is filed under this section.

The application procedures to determine eligibility for police and fire plan disability
benefits are defined under section 353.031.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 24.

Minnesota Statutes 2006, section 353.656, subdivision 10, is amended to read:

Subd. 10.

Accrual of benefits.

(a) Except for a total and permanent disability under
subdivision 1a, a disability benefit begins to accrue the day following the commencement
of disability, when the applicant is no longer receiving any form of compensation, whether
salary or paid leave 90 days preceding the filing of an application,; or, if annual or sick
leave, or any other employer-paid salary continuation plan is paid for more than the
90-day period, from the date on which the payment of salary ceased, whichever is later.
Except for a total and permanent disability under subdivision 1a, no member is entitled
to receive a disability benefit payment when there remains to the member's credit any
unused annual leave, sick leave, or any other employer-paid salary continuation benefit, or
under any other circumstances when, during the period of disability, there has been no
impairment of the person's salary.

(b) Payment of the disability benefit must not continue beyond the end of the month
in which entitlement has terminated. If the disabilitant dies prior to negotiating the check
for the month in which death occurs, payment must be made to the surviving spouse or, if
none, to the designated beneficiary or, if none, to the estate.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 25.

Minnesota Statutes 2006, section 353.656, is amended by adding a subdivision
to read:

Subd. 13.

Chemical dependency limitations to disability benefit eligibility.

(a)
No benefits are payable for any disability resulting in whole or in part from the member's
current use of illegal drugs. This exclusion does not apply to a member who:

(1) has successfully completed a supervised drug rehabilitation program or has
otherwise been rehabilitated successfully and is no longer engaging in such use; or

(2) is participating in a supervised rehabilitation program and is no longer engaging
in such use.

(b) "Illegal use of drugs" means the use of drugs, the possession or distribution of
which is unlawful under United States Code, title 21, section 801. "Illegal use of drugs"
does not include the use of a drug taken under the supervision of a licensed health care
professional, or other uses authorized by United States Code, title 21, or other provisions
of law.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 26.

Minnesota Statutes 2006, section 353.657, subdivision 1, is amended to read:

Subdivision 1.

Generally.

(a) In the event that a member of the police and fire fund
dies from any cause before retirement or after before becoming disabled and receiving
disability benefits, the association shall grant survivor benefits to a surviving spouse, as
defined in section 353.01, subdivision 20, and who was married to the member for a
period of at least one year, except that if death occurs in the line of duty no time limit is
required and to a dependent child or children, as defined in section 353.01, subdivision 15,
except that if the death is not a line of duty death, the member must have accrued at least
three years of credited service.

For purposes of this section, line of duty also includes active military service, as
defined in section 190.05, subdivision 5. The association shall also grant survivor benefits
to a dependent child or children, as defined in section 353.01, subdivision 15.

(b) Notwithstanding the definition of surviving spouse, a former spouse of the
member, if any, is entitled to a portion of the monthly surviving spouse benefit if
stipulated under the terms of a marriage dissolution decree filed with the association. If
there is no surviving spouse or child or children, a former spouse may be entitled to
a lump-sum refund payment under section 353.32, subdivision 1, if provided for in a
marriage dissolution decree but not a monthly surviving spouse benefit despite the terms
of a marriage dissolution decree filed with the association.

(c) The spouse and child or children are entitled to monthly benefits as provided in
the following subdivisions 2 to 4.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to survivor
benefit applicants where the application is based on the death of a public employee that
occurred after June 30, 2007.

Sec. 27.

Minnesota Statutes 2006, section 353.657, subdivision 2, is amended to read:

Subd. 2.

Benefit amount.

(a) The spouse, for life, of a deceased member shall
is entitled to receive receive a monthly benefit for life equal to 50 percent the following
percentage of the member's average full-time monthly salary rate as a member of the
police officer or firefighter and fire plan in effect over the last six months of allowable
service preceding the month in which death occurred.:

(1) if the death was a line of duty death, 60 percent of the stated average salary
is payable; and

(2) if the death was not a line of duty death or if death occurred while receiving
disability benefits that accrued before July 1, 2007, 50 percent of the stated average salary
is payable.

(b) If the member was a part-time employee in the position for which the employee
qualified for participation in the police officer or firefighter and fire plan, the monthly
survivor benefit is based on the salary rate in effect for that member's part-time service
during the last six months of allowable service. If the member's status changed from full
time to part time for health reasons during the last year of employment, the monthly
survivor benefit is based on the full-time salary rate of a the position held as a member of
the police officer or firefighter and fire plan in effect over the last six months of allowable
service preceding the month in which the death occurred.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to survivor
benefit applicants where the application is based on the death of a public employee that
occurred after June 30, 2007.

Sec. 28.

Minnesota Statutes 2006, section 353.657, subdivision 2a, is amended to read:

Subd. 2a.

Death while eligible survivor benefit.

(a) If a member or former
member who has attained the age of at least 50 years and has credit for not less than
three years allowable service or who has credit for at least 30 years of allowable service,
regardless of age attained, dies before the annuity or disability benefit becomes payable,
notwithstanding any designation of beneficiary to the contrary, the surviving spouse may
elect to receive a death while eligible survivor benefit.

(b) Notwithstanding the definition of surviving spouse in section 353.01, subdivision
20, a former spouse of the member, if any, is entitled to a portion of the death while
eligible survivor benefit if stipulated under the terms of a marriage dissolution decree
filed with the association. If there is no surviving spouse or child or children, a former
spouse may be entitled to a lump-sum refund payment under section 353.32, subdivision
1, if provided for in a marriage dissolution decree but not a death while eligible survivor
benefit despite the terms of a marriage dissolution decree filed with the association.

(c) The benefit may be elected instead of a refund with interest under section 353.32,
subdivision 1, or surviving spouse benefits otherwise payable under subdivisions 1 and
2. The benefit must be an annuity equal to the 100 percent joint and survivor annuity
which the member could have qualified for on the date of death, computed as provided in
sections 353.651, subdivisions 2 and 3, and 353.30, subdivision 3. If there is a dependent
child or children, and the 100 percent joint and survivor optional annuity for the surviving
spouse, when added to the benefit of the dependent child or children under subdivision 3,
exceeds an amount equal to 70 percent of the member's specified average monthly salary,
the 100 percent joint and survivor annuity must be reduced by the amount necessary so
that the total family benefit does not exceed the 70 percent maximum family benefit
amount under subdivision 3. The 100 percent joint and survivor optional annuity must be
restored to the surviving spouse, plus applicable postretirement fund adjustments under
section 356.41, as the dependent child or children become no longer dependent under
section 353.01, subdivision 15.

(d) The surviving spouse may apply for the annuity at any time after the date
on which the deceased employee would have attained the required age for retirement
based on the employee's allowable service. Sections 353.34, subdivision 3, and 353.71,
subdivision 2, apply to a deferred annuity payable under this subdivision.

(e) No payment shall accrue accrues beyond the end of the month in which
entitlement to such annuity has terminated. An amount equal to the excess, if any, of the
accumulated contributions which were credited to the account of the deceased employee
over and above the total of the annuities paid and payable to the surviving spouse must
be paid to the deceased member's last designated beneficiary or, if none, to the legal
representative of the estate of such deceased member.

(f) Any member may request in writing that this subdivision not apply and that
payment be made only to the designated beneficiary, as otherwise provided by this chapter.

(g) For a member who is employed as a full-time firefighter by the Department of
Military Affairs of the state of Minnesota, allowable service as a full-time state Military
Affairs Department firefighter credited by the Minnesota State Retirement System may be
used in meeting the minimum allowable service requirement of this subdivision.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 29.

Minnesota Statutes 2006, section 353.657, subdivision 3, is amended to read:

Subd. 3.

Dependent children.

A dependent child, as defined in section 353.01,
subdivision 15, shall is entitled to receive a monthly benefit equal to ten percent of the
member's average full-time monthly salary rate as a member of the police officer or
firefighter and fire plan in effect over the last six months of allowable service preceding
the month in which death occurred. Payments for the benefit of a dependent child must be
made to the surviving parent, or to the legal guardian of the child or to any adult person
with whom the child may at the time be living, provided only that the parent or other
person to whom any amount is to be paid advises the board in writing that the amount will
be held or used in trust for the benefit of the child.

Subd. 3a.

Maximum and minimum family benefits.

(a) The maximum monthly
benefit for one per family must not exceed an amount equal to the following percentages
of the member's average monthly salary as specified in subdivision 3:

(1) 80 percent, if the member's death was a line of duty death; or

(2) 70 percent of the member's specified average monthly salary, and , if the
member's death was not a line of duty death or occurred while the member was receiving a
disability benefit that accrued before July 1, 2007.

(b) The minimum monthly benefit per family, including the joint and survivor
optional annuity under subdivision 2a, and section 353.656, subdivision 1a, must not be
less than the following percentage of the member's average monthly salary as specified in
subdivision 3:

(1) 60 percent, if the death was a line of duty death; or

(2) 50 percent of the member's specified average monthly salary, if the death was
not a line of duty death or occurred while the member was receiving a disability benefit
that accrued before July 1, 2007.

(c) If the maximum under paragraph (a) is exceeded, the monthly benefit of the joint
annuitant must be reduced to the amount necessary so that the total family benefit does not
exceed the applicable maximum. The joint and survivor optional annuity must be restored,
plus applicable postretirement adjustments under section 356.41, as the dependent child or
children become no longer dependent under section 353.01, subdivision 15.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 30.

Minnesota Statutes 2006, section 353B.08, subdivision 11, is amended to read:

Subd. 11.

Subsequent medical reexaminations.

Periodically, upon the
recommendation of the medical adviser appointed as provided in section 353.33,
subdivision 6a 353.031, based on the medical nature of the initial qualifying disability and
its potential for improvement or recovery, the executive director of the Public Employees
Retirement Association shall have a former member of a consolidating relief association
who is receiving a disability benefit reexamined and reevaluated for continued entitlement
to a disability benefit. If, upon the recommendation of the medical adviser, the executive
director determines that the person is no longer entitled to receive a disability benefit, the
disability benefit shall be discontinued effective as of the first day of the second month
following that determination and the person shall be considered for reemployment as
a police officer or a firefighter, whichever applies, by the municipality in which the
consolidating relief association was located.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 31.

[353E.001] DEFINITIONS.

Subdivision 1.

Duty disability.

"Duty disability," physical or psychological, means
a condition that is expected to prevent a member, for a period of not less than 12 months,
from performing the normal duties of a local government correctional service employee as
defined under section 353E.02 and that is the direct result of an injury incurred during, or
a disease arising out of, the performance of normal duties or the actual performance of less
frequent duties, either of which are specific to protecting the property and personal safety
of others and that present inherent dangers that are specific to the positions covered by
the local government correctional service retirement plan.

Subd. 2.

Less frequent duties.

"Less frequent duties" means tasks designated in the
applicant's job description as either required from time to time or as assigned, but which
are not carried out as part of the normal routine of the applicant's job.

Subd. 3.

Normal duties.

"Normal duties" means specific tasks designated in the
applicant's job description and which the applicant performs on a day-to-day basis, but
do not include less frequent duties which may be requested to be done by the employer
from time to time.

Subd. 4.

Regular disability.

"Regular disability," physical or psychological, means
a condition that is expected to prevent a member, for a period of not less than 12 months,
from performing the normal duties of a local government correctional service employee as
defined under section 353E.02 and that results from a disease or an injury that arises from
any activities while not at work or while at work from performing those normal or less
frequent duties that do not present inherent dangers that are specific to the occupations
covered by the local government correctional service retirement plan.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 32.

Minnesota Statutes 2006, section 353E.06, subdivision 1, is amended to read:

Subdivision 1.

Duty disability qualification requirements.

A local government
correctional employee who becomes disabled and physically or mentally unfit to perform
the duties of the position as a direct result of an injury, sickness, or other disability that
is medically determinable, that was incurred in or arose out of any act of duty, and that
renders the employee physically or mentally unable to perform the employee's duties is
determined to qualify for a duty disability as defined in section 353E.001, subdivision 1, is
entitled to a disability benefit. The disability benefit must be based on covered service
under this chapter only and is an amount equal to 47.5 percent of the average salary
defined in section 353E.04, subdivision 2, plus an additional percent equal to that specified
in section 356.315, subdivision 5a, for each year of covered service under this chapter in
excess of 25 years.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 33.

Minnesota Statutes 2006, section 353E.06, subdivision 2, is amended to read:

Subd. 2.

Nonduty Regular disability qualification requirements.

A local
government correctional employee who has at least one year of covered service under this
chapter and becomes disabled and physically or mentally unfit to perform the duties of the
position because of sickness or injury that is medically determinable and that occurs while
not engaged in covered employment, who is determined to qualify for a regular disability
benefit as defined in section 353E.001, subdivision 4, is entitled to a disability benefit
based on covered service under this chapter. The disability benefit must be computed in
the same manner as an annuity under section 353E.04, subdivision 3, and as though the
employee had at least ten years of covered correctional service.

EFFECTIVE DATE.

This section is effective July 1, 2007, and applies to disability
benefit applicants whose last day of public employment was after June 30, 2007.

Sec. 34.

Minnesota Statutes 2006, section 353E.06, subdivision 4, is amended to read:

Subd. 4.

Disability benefit application; accrual of benefits.

A claim or demand
for a disability benefit must be initiated by written application in the manner and form
prescribed by the executive director, filed in the office of the association, showing
compliance with the statutory conditions qualifying the applicant for a disability benefit.
A member or former member who became disabled during a period of membership may
file an application for disability benefits within three years following termination of local
government correctional service, but not after that time has elapsed. (a) Procedures for
the application process and determining eligibility for disability benefits are defined in
section 353.031.

(b) The disability benefit begins to accrue the day following the commencement of
disability, when the applicant is no longer receiving any form of compensation, whether
salary or paid leave; 90 days preceding the filing of the application, or, if annual or sick
leave, or any other employer-paid salary continuation plan is paid for more than the
90-day period, from the date salary ceased, whichever is latest. No member is entitled
to receive a disability benefit payment when there remains to the member's credit any
unused annual leave, sick leave, or any other employer-paid salary continuation benefits or
under any other circumstances when, during the period of disability, there has been no
impairment of the person's salary.

(c) No payment may accrue beyond the end of the month in which entitlement has
terminated. If the disabilitant dies before negotiating the check for the month in which
death occurs, payment must be made to the optional annuitant or beneficiary.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 35.

Minnesota Statutes 2006, section 353E.06, subdivision 8, is amended to read:

Subd. 8.

Continuing benefit eligibility.

Continuing eligibility for a disability
benefit is subject to section 353.33, subdivision 6 353.031, subdivision 8.

EFFECTIVE DATE.

This section is effective July 1, 2007.

Sec. 36. REPEALER.

Minnesota Statutes 2006, sections 353.33, subdivisions 6a, 6b, and 8; and 353.656,
subdivisions 5, 9, 11, and 12, are repealed.

EFFECTIVE DATE.

This section is effective July 1, 2007.

ARTICLE 5

HEALTH CARE FACILITY PRIVATIZATIONS

Section 1.

Minnesota Statutes 2006, section 353F.02, subdivision 4, is amended to read:

Subd. 4.

Medical facility.

"Medical facility" means:

(1) Bridges Medical Services;

(2) the City of Cannon Falls Hospital;

(3) Clearwater County Memorial Hospital doing business as Clearwater Health
Services in Bagley;

(4) the Dassel Lakeside Community Home;

(5) the Fair Oaks Lodge, Wadena;

(6) the Glencoe Area Health Center;

(7) the Hutchinson Area Health Care;

(8) the Kanabec Hospital;

(9) the Lakefield Nursing Home;

(10) the Lakeview Nursing Home in Gaylord;

(11) the Luverne Public Hospital;

(10) (12) the Northfield Hospital;

(13) the Oakland Park Nursing Home;

(11) (14) the RenVilla Nursing Home;

(12) (15) the Renville County Hospital in Olivia;

(13) (16) the St. Peter Community Healthcare Center; and

(14) (17) the Waconia-Ridgeview Medical Center.

EFFECTIVE DATE; LOCAL APPROVAL.

This section is effective upon the
latter of:

(1) for the Lakefield Nursing Home:

(i) the day after the governing body of the city of Lakefield and its chief clerical
officer timely comply with section 645.021, subdivisions 2 and 3; and

(ii) the first day of the month next following certification to the Lakefield City
Council by the executive director of the Public Employees Retirement Association that
the actuarial accrued liability of the special benefit coverage proposed for extension to
the privatized Lakefield Nursing Home employees under this section does not exceed the
actuarial gain otherwise to be accrued by the Public Employees Retirement Association,
as calculated by the consulting actuary retained under section 356.214. The cost of the
actuarial calculations must be borne by the current employer or by the entity which is the
employer following the privatization, and the date of the actuarial calculations must be
within one year of the date the Lakefield Nursing Home is sold or leased;

(2) for the Lakeview Nursing Home in Gaylord:

(i) the day after the governing body of the city of Gaylord and its chief clerical
officer timely comply with section 645.021, subdivisions 2 and 3; and

(ii) the first day of the month next following certification to the Gaylord City
Council by the executive director of the Public Employees Retirement Association that
the actuarial accrued liability of the special benefit coverage proposed for extension to
the privatized Lakeview Nursing Home employees under this section does not exceed the
actuarial gain otherwise to be accrued by the Public Employees Retirement Association,
as calculated by the consulting actuary retained under section 356.214. The cost of the
actuarial calculations must be borne by the current employer or by the entity which is the
employer following the privatization, and the date of the actuarial calculations must be
within one year of the date the Lakeview Nursing Home is sold or leased; and

(3) for the Oakland Park Nursing Home:

(i) the day after the governing body of Pennington County and its chief clerical
officer timely comply with section 645.021, subdivisions 2 and 3; and

(ii) the first day of the month next following certification to Pennington County
by the executive director of the Public Employees Retirement Association that the
actuarial accrued liability of the special benefit coverage proposed for extension to the
privatized Oakland Park Nursing Home employees under this section does not exceed the
actuarial gain otherwise to be accrued by the Public Employees Retirement Association,
as calculated by the consulting actuary retained under section 356.214. The cost of the
actuarial calculations must be borne by the current employer or by the entity which is the
employer following the privatization, and the date of the actuarial calculations must be
within one year of the date the Oakland Park Nursing Home is sold or leased.

Sec. 2.

Minnesota Statutes 2006, section 353F.04, subdivision 1, is amended to read:

Subdivision 1.

Enhanced augmentation rates.

(a) The deferred annuity of
a terminated medical facility or other public employing unit employee is subject to
augmentation under section 353.71, subdivision 2, of the edition of Minnesota Statutes
published in the year in which the privatization occurred, except that the rate of
augmentation is as specified in paragraph (b) or (c), whichever is applicable.

(b) This paragraph applies if the legislation adding the medical facility or other
employing unit to section 353F.02, subdivision 4 or 5, as applicable, was enacted before
July 26, 2005, and became effective before January 1, 2008, for the Hutchinson Area
Health Care or before January 1, 2007, for all other medical facilities and all other
employing units. For a terminated medical facility or other public employing unit
employee, the augmentation rate is 5.5 percent compounded annually until January 1
following the year in which the person attains age 55. From that date to the effective date
of retirement, the augmentation rate is 7.5 percent compounded annually.

(c) If paragraph (b) is not applicable, the augmentation rate is four percent
compounded annually until January 1, following the year in which the person attains age
55. From that date to the effective date of retirement, the augmentation rate is six percent
compounded annually.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 6

STATEWIDE RETIREMENT PLAN APPEALS PROCESS

Section 1.

Minnesota Statutes 2006, section 353.03, subdivision 3, is amended to read:

Subd. 3.

Duties and powers of the board.

(a) The board shall elect a president and
vice-president. The board shall approve the staffing complement necessary to administer
the fund. The cost of administering this chapter must be paid by the fund.

(b) The board shall adopt bylaws for its own government and for the management of
the fund consistent with the laws of the state and may modify them at pleasure. It shall
adopt, alter, and enforce reasonable rules consistent with the laws of the state for the
administration and management of the fund, for the payment and collection of payments
from members, and for the payment of withdrawals and benefits. It shall pass upon and
allow or disallow all applications for membership in the fund and shall allow or disallow
claims for withdrawals, pensions, or benefits payable from the fund. It shall adopt an
appropriate mortality table based on experience of the fund as recommended by the
association actuary, with interest set at the rate specified in section 356.215, subdivision
8. It shall provide for the payment out of the fund of all necessary expenses for the
administration of the fund and of all claims for withdrawals, pensions, or benefits allowed.
The board shall approve or disapprove all recommendations and actions of the executive
director made subject to its approval or disapproval by subdivision 3a.

(c) In passing upon all applications and claims, the board may summon, swear, hear,
and examine witnesses and, in the case of claims for disability benefits, may require the
claimant to submit to a medical examination by a physician of the board's choice, at the
expense of the fund, as a condition precedent to the passing on the claim, and, in the case
of all applications and claims, may conduct investigations necessary to determine their
validity and merit. The board shall establish procedures to assure that a benefit applicant
and recipient may have a review of a benefit eligibility or benefit amount determination
affecting the applicant or recipient. The review procedure may afford the benefit applicant
or benefit recipient an opportunity to present views at any review proceeding conducted,
but is not a contested case under chapter 14.

(d) The board may continue to authorize the sale of life insurance to members under
the insurance program in effect on January 1, 1985, but must not change that program
without the approval of the commissioner of finance. The association shall not receive
any financial benefit from the life insurance program beyond the amount necessary to
reimburse the association for costs incurred in administering the program. The association
shall not engage directly or indirectly in any other activity involving the sale or promotion
of goods or services, or both, whether to members or nonmembers.

(e) The board shall establish procedures governing reimbursement of expenses to
board members. These procedures shall define the types of activities and expenses that
qualify for reimbursement, shall provide that all out-of-state travel must be authorized
by the board, and shall provide for independent verification of claims for expense
reimbursement. The procedures must comply with applicable rules and policies of the
Department of Finance, the Department of Administration, and the Department of
Employee Relations.

(f) The board may purchase fiduciary liability insurance and official bonds for the
officers and members of the board of trustees and employees of the association and may
purchase property insurance or may establish a self-insurance risk reserve including, but
not limited to, data processing insurance and "extra-expense" coverage.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

[356.95] PENSION PLAN APPEAL PROCEDURES.

Subdivision 1.

Definitions.

(a) Unless the language or context clearly indicates that
a different meaning is intended, for the purpose of this section, the terms in paragraphs
(b) to (e) have the meanings given them.

(b) "Chief administrative officer" means the executive director of a covered pension
plan or the executive director's designee or representative.

(c) "Covered pension plan" means a plan enumerated in section 356.20, subdivision
2, clauses (1) to (4), (10), and (12) to (14), but does not mean the deferred compensation
plan administered under sections 352.96 and 352.97 or to the postretirement health care
savings plan administered under section 352.98.

(d) "Governing board" means the Board of Trustees of the Public Employees
Retirement Association, the Board of Trustees of the Teachers Retirement Association, or
the Board of Directors of the Minnesota State Retirement System.

(e) "Person" includes an active, retired, deferred, or nonvested inactive participant in
a covered pension plan or a beneficiary of a participant, or an individual who has applied
to be a participant or who is or may be a survivor of a participant, or a state agency or
other governmental unit that employs active participants in a covered pension plan.

Subd. 2.

Right to review.

A determination made by the administration of a covered
pension plan regarding a person's eligibility, benefits, or other rights under the plan with
which the person does not agree is subject to review under this section.

Subd. 3.

Notice of determination.

If the applicable chief administrative officer
denies an application or a written request, modifies a benefit, or terminates a benefit of
a person claiming a right or potential rights under a covered pension plan, the chief
administrative officer shall notify that person through a written notice containing:

(1) a statement of the reasons for the determination;

(2) a notice that the person may petition the governing board of the covered pension
plan for a review of the determination and that a person's petition for review must be filed
in the administrative office of the covered pension plan within 60 days of the receipt
of the written notice of the determination;

(3) a statement indicating that a failure to petition for review within 60 days
precludes the person from contesting in any other administrative review or court procedure
the issues determined by the chief administrative officer;

(4) a statement indicating that all relevant materials, documents, affidavits, and other
records that the person wishes to be reviewed in support of the petition must be filed with
and received in the administrative office of the covered pension plan at least 30 days
before the date of the hearing under subdivision 10; and

(5) a copy of this section.

Subd. 4.

Termination of benefits.

(a) If a covered pension plan decides to
terminate a benefit that is being paid to a person, before terminating the benefit, the chief
administrative officer must, in addition to the other procedures prescribed in this section,
provide the individual with written notice of the pending benefit termination by certified
mail. The notice must explain the reason for the pending benefit termination. The person
must be given an opportunity to explain, in writing, in person, by telephone, or by e-mail,
the reasons that the benefit should not be terminated.

(b) If the chief administrative officer is unable to contact the person and determines
that a failure to terminate the benefit will result in unauthorized payment by a covered
pension plan, the chief administrative officer may terminate the benefit immediately upon
mailing a written notice containing the information required by subdivision 3 to the
address to which the most recent benefit payment was sent and, if that address is that of a
financial institution, to the last known address of the person.

Subd. 5.

Petition for review.

(a) A person who claims a right under subdivision 2
may petition for a review of that decision by the governing board of the covered pension
plan.

(b) A petition under this section must be sent to the chief administrative officer by
mail and must be postmarked no later than 60 days after the person received the notice
required by subdivision 3. The petition must include the person's statement of the reason
or reasons that the person believes the decision of the chief administrative officer should
be reversed or modified. The petition may include all documentation and written materials
that the petitioner deems to be relevant.

Subd. 6.

Failure to petition.

If a timely petition for review under subdivision 5 is
not filed with the chief administrative officer, the covered pension plan's determination is
final and is not subject to further administrative or judicial review.

Subd. 7.

Notice of hearing.

(a) After receiving a petition, and not less than 30
calendar days from the date of the next regular board meeting, the chief administrative
officer must schedule a timely review of the petition before the governing board of the
covered pension plan. The review must be scheduled to take into consideration any
necessary accommodations to allow the petitioner to participate in the governing board's
review.

(b) Not less than 15 calendar days before the scheduled hearing date, the chief
administrative officer must provide by mail to the petitioner an acknowledgment of the
receipt of the person's petition and a follow-up notice of the time and place of the meeting
at which the governing board is scheduled to consider the petition and must provide a copy
of all relevant documents, evidence, summaries, and recommendations assembled by or
on behalf of the plan administration to be considered by the governing board.

(c) Except as provided in subdivision 8, paragraph (c), all documents and materials
that the petitioner wishes to be part of the record for review must be filed with the chief
administrative officer and must be received in the offices of the covered pension plan at
least 30 days before the date of the meeting at which the petition is scheduled to be heard.

(d) A petitioner, within ten calendar days of the scheduled date of the applicable
board meeting, may request a continuance on a scheduled petition. The chief
administrative officer must reschedule the review within 60 days of the date of the
continuance request. Only one continuance may be granted to any petitioner.

Subd. 8.

Record for review.

(a) All evidence, including all records, documents, and
affidavits in the possession of the covered pension plan of which the covered pension plan
desires to avail itself and be considered by the governing board, and all evidence which the
petitioner wishes to present to the governing board, including any evidence which would
otherwise be classified by law as "private," must be made part of the hearing record.

(b) Not later than seven days before the scheduled hearing date, the chief
administrative officer must provide a copy of the record to each member of the governing
board.

(c) At least five days before the hearing, the petitioner may submit to the chief
administrative officer, for submission to the governing board, any additional document,
affidavit, or other relevant information that was not initially submitted with the petition.

Subd. 9.

Amended determination.

At any time before the hearing before the
governing board, for good cause shown and made part of the records of the plan, the chief
administrative officer may reverse, alter, amend, or modify the prior decision which is
subject to review under this section by issuing an amended decision. Upon doing so, the
chief administrative officer may cancel the governing board's scheduled review of the
person's petition and shall so notify the petitioner.

Subd. 10.

Hearing.

(a) The governing board shall hold a timely hearing on a petition
for review as part of a regularly scheduled board meeting, or as part of a special meeting
if so scheduled. All governing board members who participate in the decision-making
process must be familiar with the record. The governing board shall make its decision
on a petition solely on the record as submitted and on the proceedings of the hearing. At
the hearing, the petitioner, the petitioner's attorney, and the chief administrative officer
may state and discuss with the governing board their positions with respect to the petition.
The governing board may allow further documentation to be placed in the record at the
board meeting only with the agreement of both the chief administrative officer and the
petitioner. The chief administrative officer may not otherwise participate in the board's
decision-making process.

(b) When a petition presents a contested issue of law, an assistant attorney general
may participate and may argue on behalf of the legal position taken by the chief
administrative officer if that assistant attorney general does not also serve as the governing
board's legal advisor during the board's decision-making process.

(c) A motion by a board member, supported by a summary of the relevant facts,
conclusions and reasons, as properly amended and approved by a majority of the
governing board, constitutes the board's final decision. A verbatim statement of the
board's final decision must be served upon the petitioner. If the decision is contrary to the
petitioner's desired outcome, the notice shall inform the petitioner of the appeal rights set
forth in subdivision 13.

(d) If a petitioner who received timely notice of a scheduled hearing fails to appear,
the governing board may nevertheless hear the petition and issue a decision.

Subd. 11.

Disability medical issues.

(a) If a person petitions the governing board
to reverse or modify a determination which found that there exists no medical data
supporting an application for disability benefits, the board may reverse that determination
only if there is in fact medical evidence supporting the application. The board has the
discretion to resubmit a disability benefit application at any time to a medical advisor for
reconsideration, and the resubmission may include an instruction that further medical
examinations be obtained.

(b) The governing board may make a determination contrary to the recommendation
of the medical advisor only if there is expert medical evidence in the record to support
its contrary decision. If there is no medical evidence contrary to the opinion of the
medical advisor in the record and the medical advisor attests that the decision was made in
accordance with the applicable disability standard, the board must follow the decision of
the medical advisor regarding the cause of the disability.

(c) The obligation of the governing board to follow the decision of the medical
advisor under paragraph (b) does not apply to instances when the governing board makes
a determination different from the recommendation of the medical advisor on issues
that do not involve medical issues.

Subd. 12.

Referral for administrative hearing.

(a) Notwithstanding any provision
of sections 14.03, 14.06, and 14.57 to 14.69 to the contrary, a challenge to a determination
of the chief administrative officer of a covered pension plan must be conducted exclusively
under the procedures set forth in this section and is not a contested case under chapter 14.

(b) Notwithstanding the provisions of paragraph (a), a governing board, in its sole
discretion, may refer a petition brought under this section to the Office of Administrative
Hearings for a contested case hearing under sections 14.57 to 14.69.

Subd. 13.

Appeal of the governing board's decision; judicial review.

Within
60 days of the date of the mailing of the notice of the governing board's decision,
the petitioner may appeal the decision by filing a writ of certiorari with the Court of
Appeals under section 606.01 and Rule 115 of the Minnesota Rules of Civil Appellate
Procedure. Failure by a person to appeal to the Court of Appeals within the 60-day
period precludes the person from later raising, in any subsequent administrative hearing
or court proceeding, those substantive and procedural issues that reasonably should have
been raised upon a timely appeal.

Subd. 14.

Petitions without notice.

Notwithstanding the petition notice and
requirements under this section, a person who believes that the person's rights have been
affected by a decision made by the administration of a covered pension plan may request
a review under this section by the appropriate governing board. The petition under this
subdivision must be made within 45 days of the time that the person knew or should have
known of the disputed decision.

Subd. 15.

Governing board review panel.

Any covered pension plan subject
to this section, by motion duly made and adopted, may appoint a panel of governing
board members to hear and determine any or all petitions brought under this section.
The governing board review panel must contain a minimum number of board members
that would otherwise constitute a quorum of board members under the governing body's
rules and procedures.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3. REPEALER.

Minnesota Statutes 2006, sections 352.031; and 354.071, are repealed.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 7

FIRST CLASS CITY TEACHER

RETIREMENT FUND ASSOCIATION CHANGES

Section 1. ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION;
PILOT POSTRETIREMENT ADJUSTMENT; LIMITATIONS.

(a) Notwithstanding any provision of Minnesota Statutes, chapter 354A, to the
contrary, for calendar years 2008 and 2009 and for postretirement adjustments initially
payable on January 1, 2008, or January 1, 2009, as a pilot program this section supersedes
Minnesota Statutes, section 354A.29, subdivisions 3 and 4, and the applicable bylaw
provisions of the St. Paul Teachers Retirement Fund Association.

(b) The postretirement adjustment under the pilot program must be determined by
the executive director and approved by the board annually using the procedures under
this section.

(c) On January 1, each eligible person who has accrued or received an annuity or
benefit under the articles of incorporation, the bylaws, or Minnesota Statutes, chapter
354A, for at least three full calendar months as of the end of the calendar year is eligible to
receive a postretirement adjustment that is payable the following January 1.

(d) A percentage adjustment must be computed and paid under this paragraph to
eligible persons under paragraph (c). This adjustment is determined by reference to the
Consumer Price Index for urban wage earners and clerical workers all items index as
reported by the Bureau of Labor Statistics within the United States Department of Labor
each year as part of the determination of annual cost-of-living adjustments to recipients of
federal old-age, survivors, and disability insurance. For calculations of the cost-of-living
adjustment under paragraph (e), the term "average third quarter Consumer Price Index
value" means the sum of the monthly index values as initially reported by the Bureau of
Labor Statistics for the months of July, August, and September, divided by 3.

(e) Before January 1 of each year, the executive director must calculate the amount
of the cost-of-living adjustment by dividing the most recent average third quarter index
value by the same average third quarter index value from the previous year, subtract one
from the resulting quotient, and express the result as a percentage amount, which must be
rounded to the nearest one-tenth of one percent. The final amount may not be a negative
number and may not exceed 2.5 percent if the rate of investment return of the retirement
fund either for the most recent fiscal year or for the most recent five-year period, each
calculated under the formula specified in Minnesota Statutes, section 11A.04, clause (11),
is less than 8.5 percent and may not exceed 5.0 percent if the rate of investment return of
the retirement fund both for the most recent fiscal year and for the most recent five-year
period, each calculated under the formula specified in Minnesota Statutes, section 11A.04,
clause (11), are equal to or greater than 8.5 percent.

(f) The amount calculated under paragraph (e) is the full cost-of-living adjustment
to be applied as a permanent increase to the regular payment of each eligible member
on January 1 of the next calendar year. For any eligible member whose effective date
of benefit commencement occurred during the calendar year before the cost-of-living
adjustment is applied, the full increase amount must be prorated on the basis of whole
calendar quarters in benefit payment status in the calendar year prior to the January 1 on
which the cost-of-living adjustment is applied, calculated to the third decimal place.

(g) This pilot postretirement adjustment program does not constitute a precedent for
this or any other retirement plan.

Sec. 2. MANDATED STUDY AND REPORT ON ST. PAUL TEACHERS
RETIREMENT FUND ASSOCIATION POSTRETIREMENT ADJUSTMENT
EXPERIENCE.

(a) The Legislative Commission on Pensions and Retirement shall study the
experience of the St. Paul Teachers Retirement Fund Association under the temporary
postretirement adjustment mechanism under section 1 and shall consider any proposals
or analyses presented by other Minnesota public retirement plans regarding potential
or proposed postretirement adjustment mechanism changes. Following the completion
of its study, on or before January 15, 2009, the Legislative Commission on Pensions
and Retirement shall report to the chair of the house of representatives Committee on
Governmental Operations Reform, Technology and Elections, the chair of the house of
representatives Committee on Finance, the chair of the senate Committee on State and
Local Government Operations and Oversight, and the chair of the senate Committee
on Finance, its findings and recommendations regarding a possible continuation,
modification, or elimination of the temporary mechanism specified in section 1.

(b) For fiscal years 2007 and 2008, in addition to the regular actuarial valuation
prepared under Minnesota Statutes, section 356.215, the St. Paul Teachers Retirement
Fund Association shall have prepared and shall file with the Legislative Commission on
Pensions and Retirement a supplemental actuarial valuation report providing comparative
data on the funded status, actuarial requirements, contribution sufficiency or deficiency,
and any other relevant results if the temporary postretirement adjustment mechanism
under section 1 were a permanent mechanism. This report must be submitted for inclusion
in the study required under paragraph (a).

Sec. 3. REPEALER.

Minnesota Statutes 2006, sections 354A.12, subdivision 3d; and 354A.29,
subdivision 6, are repealed.

ARTICLE 8

MINNEAPOLIS EMPLOYEES RETIREMENT FUND

LIQUIDITY CHANGES

Section 1.

Minnesota Statutes 2006, section 422A.01, subdivision 13a, is amended to
read:

Subd. 13a.

Covered salary.

(a) "Salary" is subject to the limitations of section
356.611.

(b) "Salary" also includes the contributions to a supplemental retirement plan under
section 356.24, subdivision 1, clause (8), (9), or (10), for an employee who is covered by a
supplemental retirement plan which requires that all plan contributions be made by the
person's employer from mandatory withholdings from the employee's wages.

Sec. 2.

Minnesota Statutes 2006, section 422A.05, subdivision 2c, is amended to read:

Subd. 2c.

Minneapolis Employees Retirement Fund investment authority.

(a) For investments made on or after July 1, 1991, the board shall invest funds only in
investments authorized by section 356A.06, subdivision 7.

(b) However, in addition to real estate investments authorized under paragraph (a),
the board may also make loans to purchasers of Minnesota situs nonfarm residential real
estate that is owned by the Minneapolis Employees Retirement Fund. The loans must
be secured by mortgages or deeds of trust.

(c) For investments made before July 1, 1991, the board may, but is not required to,
comply with paragraph (a). However, with respect to these investments, the board shall
act in accordance with subdivision 2a and chapter 356A.

(d) The board may certify assets for investment by the State Board of Investment
under section 11A.17. Alternatively or in addition, the board may certify assets for
investment by the State Board of Investment in fixed income pools or in a separately
managed account at the discretion of the State Board of Investment as provided in section
11A.14.

Sec. 3.

Minnesota Statutes 2006, section 422A.06, subdivision 3, is amended to read:

Subd. 3.

Deposit accumulation fund.

(a) The deposit accumulation fund consists
of the assets held in the fund, including amounts contributed by or for employees, amounts
contributed by the city, amounts contributed by municipal activities supported in whole or
in part by revenues other than taxes and amounts contributed by any public corporation,
amounts paid by the state, and by income from investments.

(b) There must be paid from the fund the amounts required to be transferred to the
retirement benefit fund, or the disability benefit fund, refunds of contributions, including
the death-while-active refund specified in section 422A.22, subdivision 4, postretirement
increases in retirement allowances granted under Laws 1965, chapter 688, or Laws 1969,
chapter 859, and expenses of the administration of the retirement fund which were not
charged by the retirement board against the income of the retirement benefit fund from
investments as the cost of handling the investments of the retirement benefit fund.

(c) To the extent that the deposit accumulation fund has insufficient assets to transfer
the total value of the required reserves for retirement annuities to either the disability
benefit fund under subdivisions 5 and 7 or the retirement benefit fund under subdivisions 5
and 8 as required, the deposit accumulation fund has a transfer amount payable on which
an interest charge accrues. The executive director must determine the interest charge for
the period that the transfer amount payable remains unpaid at an annual rate equal to five
percent plus the percentage increase in the amount of the annual Consumer Price Index for
urban wage earners and clerical workers as calculated by the Bureau of Labor Statistics of
the United States Department of Labor from the previous June 30. The interest charge
must be reflected in the books of the Minneapolis Employees Retirement Fund and
assessed against the deposit accumulation fund based on the average quarterly transfer
amount payable balance outstanding. Any revenue received by the deposit accumulation
fund subsequent to unpaid transfers must be transferred from the deposit accumulation
fund to the disability benefit fund or to the retirement fund, whichever applies, and must
first be applied to any remaining interest charge and then must be applied to the principal
amount of transfer amount payable outstanding.

Sec. 4.

Minnesota Statutes 2006, section 422A.06, subdivision 5, is amended to read:

Subd. 5.

Transfer of reserves to retirement benefit fund; adjustments of
annuities and benefits.

(a) Assets equal to the required reserves for retirement annuities
as determined in accordance with the appropriate mortality table adopted by the board
of trustees based on the experience of the fund as recommended by the actuary retained
under section 356.214 and using the postretirement interest assumption specified in
section 356.215, subdivision 8, shall must be transferred to the disability benefit fund as
provided in subdivision 7, or the retirement benefit fund, except for any amounts payable
from the survivor benefit fund, as of date of retirement.

(b) To the extent that the deposit accumulation fund has insufficient assets to cover a
full required transfer amount, the applicable fund must be credited with an interest-bearing
transfer amount payable.

(c) Annuity payments shall must be adjusted in accordance with this chapter, except
that no minimum retirement payments described in this chapter shall must include
any amounts payable from the survivors' benefit fund or disability benefit fund and
supplemented benefits specifically financed by statute.

(c) (d) Increases in annuity payments pursuant to under this section shall be made
automatically unless written notice on a form prescribed by the board is filed with the
retirement board requesting that the increase not be made.

(d) (e) Any additional annuity which began to accrue on July 1, 1973, or which
began to accrue on January 1, 1974, pursuant to under Laws 1973, chapter 770, section
1, shall must be considered as part of the base amount to be used in determining any
postretirement adjustments payable pursuant to under the provisions of subdivision 8.

Sec. 5.

Minnesota Statutes 2006, section 422A.06, subdivision 7, is amended to read:

Subd. 7.

Disability benefit fund.

(a) A disability benefit fund is established,
containing the required reserves for disability allowances under this chapter. A
proportionate share of income from investments must be allocated to this fund and any
interest charge under subdivision 3, paragraph (c), must be credited to the fund. There
must be paid from this fund The disability allowances payable under this chapter must be
paid from this fund.

(b) In the event of the termination of any disability allowance for any reason other
than the death of the recipient, the balance of the required reserves for the disability
allowance as of the date of the termination must be transferred from the disability benefit
fund to the deposit accumulation fund.

(c) At the end of each fiscal year, as part of the annual actuarial valuation, a
determination must be made of the required reserves for all disability allowances being
paid from the disability benefit fund. Any excess of assets over actuarial required reserves
in the disability benefit fund must be transferred to the deposit accumulation fund. Unless
subdivision 3, paragraph (c), applies, any excess of actuarial reserves over assets in the
disability benefit fund must be funded by a transfer of the appropriate amount of assets
from the deposit accumulation fund.

Sec. 6.

Minnesota Statutes 2006, section 422A.06, subdivision 8, is amended to read:

Subd. 8.

Retirement benefit fund.

(a) The retirement benefit fund shall consist
consists of amounts held for payment of retirement allowances for members retired
pursuant to under this chapter, including any transfer amount payable under subdivision 3,
paragraph (c).

(b) Unless subdivision 3, paragraph (c), applies, assets equal to the required reserves
for retirement allowances pursuant to under this chapter determined in accordance with
the appropriate mortality table adopted by the board of trustees based on the experience of
the fund as recommended by the actuary retained under section 356.214 shall must be
transferred from the deposit accumulation fund to the retirement benefit fund as of the last
business day of the month in which the retirement allowance begins. The income from
investments of these assets shall must be allocated to this fund and any interest charge
under subdivision 3, paragraph (c), must be credited to the fund. There shall must be paid
from this fund the retirement annuities authorized by law. A required reserve calculation
for the retirement benefit fund must be made by the actuary retained under section 356.214
and must be certified to the retirement board by the actuary retained under section 356.214.

(c) The retirement benefit fund shall must be governed by the applicable laws
governing the accounting and audit procedures, investment, actuarial requirements,
calculation and payment of postretirement benefit adjustments, discharge of any deficiency
in the assets of the fund when compared to the actuarially determined required reserves,
and other applicable operations and procedures regarding the Minnesota postretirement
investment fund in effect on June 30, 1997, established under Minnesota Statutes 1996,
section 11A.18, and any legal or administrative interpretations of those laws of the State
Board of Investment, the legal advisor to the Board of Investment and the executive
director of the State Board of Investment in effect on June 30, 1997. If a deferred yield
adjustment account is established for the Minnesota postretirement investment fund
before June 30, 1997, under Minnesota Statutes 1996, section 11A.18, subdivision 5, the
retirement board shall also establish and maintain a deferred yield adjustment account
within this fund.

(d) Annually, following the calculation of any postretirement adjustment payable
from the retirement benefit fund, the board of trustees shall submit a report to the
executive director of the Legislative Commission on Pensions and Retirement and to the
commissioner of finance indicating the amount of any postretirement adjustment and
the underlying calculations on which that postretirement adjustment amount is based,
including the amount of dividends, the amount of interest, and the amount of net realized
capital gains or losses utilized in the calculations.

(e) With respect to a former contributing member who began receiving a retirement
annuity or disability benefit under section 422A.151, paragraph (a), clause (2), after June
30, 1997, or with respect to a survivor of a former contributing member who began
receiving a survivor benefit under section 422A.151, paragraph (a), clause (2), after June
30, 1997, the reserves attributable to the one percent lower amount of the cost-of-living
adjustment payable to those annuity or benefit recipients annually must be transferred back
to the deposit accumulation fund to the credit of the Metropolitan Airports Commission.
The calculation of this annual reduced cost-of-living adjustment reserve transfer must be
reviewed by the actuary retained under section 356.214.

Sec. 7.

Minnesota Statutes 2006, section 422A.101, subdivision 3, is amended to read:

Subd. 3.

State contributions.

(a) Subject to the limitation set forth in paragraph (c),
the state shall pay to the Minneapolis Employees Retirement Fund annually an amount
equal to the amount calculated under paragraph (b).

(b) The payment amount is an amount equal to the financial requirements of the
Minneapolis Employees Retirement Fund reported in the actuarial valuation of the fund
prepared by the actuary retained under section 356.214 pursuant to consistent with section
356.215 for the most recent year but based on a target date for full amortization of the
unfunded actuarial accrued liabilities by June 30, 2020, less the amount of employee
contributions required pursuant to under section 422A.10, and the amount of employer
contributions required pursuant to under subdivisions 1a, 2, and 2a. Payments shall be
made September 15 annually.

(c) The annual state contribution under this subdivision may not exceed $9,000,000,
plus the cost of the annual supplemental benefit determined under section 356.43.

(d) If the amount determined under paragraph (b) exceeds $11,910,000 $9,000,000,
the excess must be allocated to and paid to the fund by the employers identified in
subdivisions 1a and 2, other than units of metropolitan government. Each employer's
share of the excess is proportionate to the employer's share of the fund's unfunded
actuarial accrued liability as disclosed in the annual actuarial valuation prepared by the
actuary retained under section 356.214 compared to the total unfunded actuarial accrued
liability attributed to all employers identified in subdivisions 1a and 2, other than units of
metropolitan government. Payments must be made in equal installments as set forth in
paragraph (b).

Sec. 8. REPEALER.

Minnesota Statutes 2006, section 422A.101, subdivision 4, is repealed.

Sec. 9. EFFECTIVE DATE; LOCAL APPROVAL.

If the city council of the city of Minneapolis and its chief clerical officer timely
complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and
3, then section 1 is effective the day after compliance and sections 2 to 8 are effective
retroactively to July 1, 2006.

ARTICLE 9

MINNEAPOLIS POLICE AND FIREFIGHTERS

RELIEF ASSOCIATIONS CHANGES

Section 1.

Minnesota Statutes 2006, section 423B.10, subdivision 1, is amended to read:

Subdivision 1.

Entitlement; benefit amount.

(a) The surviving spouse of a
deceased service pensioner, disability pensioner, deferred pensioner, superannuation
pensioner, or active member, who was the legally married spouse of the decedent, residing
with the decedent, and who was married while or before the time the decedent was on
the payroll of the police department, and who, if the deceased member was a service or
deferred pensioner, was legally married to the member for a period of at least one year
before retirement from the police department, is entitled to a surviving spouse benefit. The
surviving spouse benefit is equal to 22.5 units per month until December 31, 2005, and 23
units per month beginning on January 1, 2006, if the person is the surviving spouse of a
deceased active member or disabilitant. The surviving spouse benefit is equal to six eight
units per month, plus an additional one unit for each year of service to the credit of the
decedent in excess of five years, to a maximum of 22.5 units per month until December 31,
2005, and 23 units per month beginning on January 1, 2006, if the person is the surviving
spouse of a deceased service pensioner, deferred pensioner, or superannuation pensioner.
The surviving spouse benefit is payable for the life of the surviving spouse.

(b) A surviving child of a deceased service pensioner, disability pensioner, deferred
pensioner, superannuation pensioner, or active member, who was living while the decedent
was an active member of the police department or was born within nine months after the
decedent terminated active service in the police department, is entitled to a surviving child
benefit. The surviving child benefit is equal to eight units per month if the person is the
surviving child of a deceased active member or disabilitant. The surviving child benefit
is equal to two units per month, plus an additional four-tenths of one unit per month for
each year of service to the credit of the decedent in excess of five years, to a maximum of
eight units, if the person is the surviving child of a deceased service pensioner, deferred
pensioner, or superannuation pensioner. The surviving child benefit is payable until the
person attains age 18, or, if in full-time attendance during the normal school year, in a
school approved by the board of directors, until the person receives a bachelor's degree or
attains the age of 22 years, whichever occurs first. In the event of the death of both parents
leaving a surviving child or children entitled to a surviving child benefit as determined in
this paragraph, the surviving child is, or the surviving children are, entitled to a surviving
child benefit in such sums as determined by the board of directors to be necessary for
the care and education of such surviving child or children, but not to exceed the family
maximum benefit per month, to the children of any one family.

(c) The surviving spouse and surviving child benefits are subject to a family
maximum benefit. The family maximum benefit is 41 units per month.

(d) A surviving spouse who is otherwise not qualified may receive a benefit if the
surviving spouse was married to the decedent for a period of five years and was residing
with the decedent at the time of death. The surviving spouse benefit is the same as that
provided in paragraph (a), except that if the surviving spouse is younger than the decedent,
the surviving spouse benefit must be actuarially equivalent to a surviving spouse benefit
that would have been paid to the member's spouse had the member been married to a
person of the same age or a greater age than the member's age before retirement.

(e) For any surviving spouse who began receiving survivor benefits before January 1,
2005, the half-unit increase under paragraph (a) is effective retroactive to January 1, 2005.

EFFECTIVE DATE.

This section is effective retroactive from the effective date of
Laws 1997, chapter 233, article 4, section 7, and Laws 2005, First Special Session chapter
8, article 11, section 12. Benefit amounts paid to surviving spouse members previously
paid that are consistent with this section are hereby ratified and confirmed.

Sec. 2.

Minnesota Statutes 2006, section 423C.06, subdivision 2, is amended to read:

Subd. 2.

Actuarial assets of special fund less than 102 percent.

(a) When
the actuarial assets of the special fund in any year are less than 102 percent of its
accrued liabilities according to the most recent annual actuarial valuation of the special
fund prepared in accordance with sections 356.215 and 356.216, investment-related
postretirement adjustments shall be determined and paid pursuant to this subdivision.
Payment of the annual postretirement adjustment may be made only if there is excess
investment income.

(b) The board shall determine by May 1 of each year whether or not the special
fund has excess investment income. The amount of excess investment income, if any,
must be stated as a dollar amount and reported by the executive secretary to the mayor
and governing body of the city, the state auditor, the commissioner of finance, and the
executive director of the Legislative Commission on Pensions and Retirement. The dollar
amount of excess investment income up to one percent of the assets of the special fund
must be applied for the purpose specified in paragraph (c). Excess investment income
must not be considered as income to or assets of the special fund for actuarial valuations
of the special fund for that year under this section and sections 69.77, 356.215, and
356.216, except to offset the annual postretirement adjustment. Additional investment
income is any realized or unrealized investment income other than the excess investment
income and must be included in the actuarial valuations performed under this section
and sections 69.77, 356.215, and 356.216.

(c) The amount determined under paragraph (b) must be applied as follows:
the association shall apply the first one-half of one percent of assets that constitute
excess investment income to the payment of an annual postretirement adjustment to
eligible members and the second one-half of one percent of assets which constitute
excess investment income shall be applied to reduce the state amortization state aid or
supplementary amortization state aid payments otherwise due the association under
section 423A.02 for the current calendar year. The amounts of all payments to eligible
members shall not exceed one-half of one percent of the assets of the fund. The amount
of each eligible member's postretirement adjustment shall be calculated by dividing the
total number of units to which eligible members are entitled into the excess investment
income available for distribution to eligible members, and then multiplying that result by
the number of units to which each eligible member is entitled. If this amount exceeds the
total monthly benefit that the eligible member was entitled to in the prior year under the
terms of this chapter, the association shall pay the eligible member the lesser amount.
Payment of the annual postretirement adjustment must be in a lump-sum amount on June
1 following the determination date in any year. In the event an eligible member dies prior
to the payment of the annual postretirement adjustment, the executive secretary shall pay
the eligible member's estate the amount to which the member was entitled.

EFFECTIVE DATE; LOCAL APPROVAL.

This section is effective the day after
the city council of the city of Minneapolis and its chief clerical officer timely complete
their compliance with section 645.021, subdivisions 2 and 3.

ARTICLE 10

VOLUNTEER FIREFIGHTER BENEFIT CHANGES

Section 1.

Minnesota Statutes 2006, section 424A.10, subdivision 1, is amended to
read:

Subdivision 1.

Definitions.

For purposes of this section:

(1) "qualified recipient" means an individual who receives a lump sum distribution
of pension or retirement benefits from a firefighters' relief association for service that the
individual has performed as a volunteer firefighter;

(2) "survivor of a deceased active or deferred volunteer firefighter" means the legally
married spouse of a deceased volunteer firefighter, or, if none, the surviving minor child or
minor children of a deceased volunteer firefighter;

(3) "active volunteer firefighter" means a person who regularly renders fire
suppression service for a municipal fire department or an independent nonprofit firefighting
corporation, who has met the statutory and other requirements for relief association
membership, and who has been a fully qualified member of the relief association for
at least one month; and

(4) "deferred volunteer firefighter" means a former active volunteer firefighter who
terminated active firefighting service, has sufficient service credit from the applicable
relief association to be entitled to a service pension, but has not applied for or has not
received the service pension.

EFFECTIVE DATE.

This section is effective for supplemental benefits paid after
July 1, 2007.

Sec. 2.

Minnesota Statutes 2006, section 424A.10, subdivision 2, is amended to read:

Subd. 2.

Payment of supplemental benefit.

(a) Upon the payment by a firefighters'
relief association of a lump sum distribution to a qualified recipient, the association must
pay a supplemental benefit to the qualified recipient. Notwithstanding any law to the
contrary, the relief association may must pay the supplemental benefit out of its special
fund. The amount of this benefit equals ten percent of the regular lump sum distribution
that is paid on the basis of the recipient's service as a volunteer firefighter. In no case may
the amount of the supplemental benefit exceed $1,000. A supplemental benefit under
this paragraph may not be paid to a survivor of a deceased active or deferred volunteer
firefighter in that capacity.

(b) Upon the payment by a relief association of a lump sum survivor benefit or
funeral benefit to a survivor of a deceased active volunteer firefighter or of a deceased
deferred volunteer firefighter, the association may pay a supplemental survivor benefit
to the survivor of the deceased active or deferred volunteer firefighter from the special
fund of the relief association if its articles of incorporation or bylaws so provide. The
amount of the supplemental survivor benefit is 20 percent of the survivor benefit or funeral
benefit, but not to exceed $2,000.

(c) An individual may receive a supplemental benefit under paragraph (a) or under
paragraph (b), but not under both paragraphs with respect to one lump sum volunteer
firefighter benefit.

EFFECTIVE DATE.

This section is effective for supplemental benefits paid after
July 1, 2007.

Sec. 3.

Minnesota Statutes 2006, section 424A.10, subdivision 3, is amended to read:

Subd. 3.

State reimbursement.

(a) By February 15 of each year, the treasurer of
the relief association shall apply to the commissioner of revenue for state reimbursement
of the amount of supplemental benefits paid under subdivision 2 during the preceding
calendar year. By March 15, the commissioner shall reimburse the relief association for
the amount of the supplemental benefits paid to qualified recipients and to survivors of
deceased active or deferred volunteer firefighters.

(b) The commissioner of revenue shall prescribe the form of and supporting
information that must be supplied as part of the application for state reimbursement.

(c) The reimbursement payment must be deposited in the special fund of the relief
association.

(d) A sum sufficient to make the payments is appropriated from the general fund
to the commissioner of revenue.

EFFECTIVE DATE.

This section is effective retroactive to July 1, 2006.

ARTICLE 11

VARIOUS BENEFIT AND OTHER CHANGES

Section 1.

Minnesota Statutes 2006, section 3.85, subdivision 10, is amended to read:

Subd. 10.

Standards for pension valuations and cost estimates.

The commission
shall adopt standards prescribing specific detailed methods to calculate, evaluate, and
display current and proposed law liabilities, costs, and actuarial equivalents of all public
employee pension plans in Minnesota. These standards shall be consistent with chapter
356 and be updated annually. The standards must not contain a valuation requirement that
is inconsistent with generally accepted accounting principles applicable to government
pension plans.

Sec. 2.

Minnesota Statutes 2006, section 3A.02, subdivision 5, is amended to read:

Subd. 5.

Optional annuities.

(a) The board of directors shall establish an optional
retirement annuity in the form of a joint and survivor annuity and an optional retirement
annuity in the form of a period certain and life thereafter. Except as provided in paragraph
(b), these optional annuity forms must be actuarially equivalent to the normal allowance
computed under this section, plus the actuarial value of any surviving spouse benefit
otherwise potentially payable at the time of retirement under section 3A.04, subdivision 1.
An individual selecting an optional annuity under this subdivision and the person's spouse
waive any rights to surviving spouse benefits under section 3A.04, subdivision 1.

(b) If a retired legislator selects the joint and survivor annuity option, the retired
legislator must receive a normal single-life allowance if the designated optional annuity
beneficiary dies before the retired legislator and no reduction may be made in the annuity
to provide for restoration of the normal single-life allowance in the event of the death of
the designated optional annuity beneficiary.

(c) The surviving spouse of a legislator who has attained at least age 55 and who dies
while a member of the legislature may elect an optional joint and survivor annuity under
paragraph (a), in lieu of surviving spouse benefits under section 3A.04, subdivision 1.

(d) The surviving spouse of a deceased former legislator may elect an optional joint
and survivor annuity under paragraph (a) in lieu of surviving spouse benefits under section
3A.04, subdivision 1, on or after the date the former legislator would have reached age 55.

EFFECTIVE DATE.

This section is effective the day following final enactment
and also applies to the surviving spouse of a former legislator who died on March 5, 2007.

Sec. 3.

[3A.021] OPTIONAL DIVISION OF RETIREMENT ALLOWANCE.

Subdivision 1.

Election of division.

Notwithstanding section 518.58, subdivision 4,
paragraph (a), clause (5), a former legislator or the former spouse of a former legislator,
if a portion of the former legislator's retirement allowance is awarded to the former
spouse under a marriage dissolution property division decree by a court of competent
jurisdiction, may elect to have payment of the portion of the legislator's retirement
allowance designated in the decree as payable to the former spouse beginning as of the
first day of the month following the date on which the former legislator attains the age of
62, even if the former legislator has not applied for the receipt of retirement allowance as
of that date. In all other respects, the optional retirement allowance division is governed
by section 518.58, subdivision 4.

Subd. 2.

Calculation of subsequent portion of the retirement allowance.

Upon the eventual application for a retirement allowance under this chapter by a former
legislator who elected or was affected by the election of a benefit under subdivision 1,
the subsequent retirement allowance must be adjusted to be the actuarial equivalent of
the balance of the present value of the retirement allowance of the former legislator upon
the effective date of the application remaining after a reduction equal to the present value
of the partial benefit previously paid and subsequently payable to the former spouse,
as calculated by the actuary retained under section 356.214 or as calculated under a
procedure specified by the actuary. The retirement allowance present value calculations
must include the effect of section 356.30.

Subd. 3.

No optional annuity form.

Section 3A.02, subdivision 5, does not apply
to a partial retirement allowance payable under subdivision 1.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to any retirement allowance affected by a marriage dissolution decree rendered
after September 2003.

Sec. 4.

Minnesota Statutes 2006, section 43A.346, subdivision 1, is amended to read:

Subdivision 1.

Definition.

For purposes of this section, "state employee" means
a person currently occupying a civil service position in the executive branch of state
government, the Minnesota State Retirement System, the Public Employees Retirement
Association, or the Office of the Legislative Auditor, or a person employed by the
Metropolitan Council.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2006, section 43A.346, subdivision 2, is amended to read:

Subd. 2.

Eligibility.

(a) This section applies to a state or Metropolitan Council
employee who:

(1) for at least the five years immediately preceding separation under clause (2), has
been regularly scheduled to work 1,044 or more hours per year in a position covered by
a pension plan administered by the Minnesota State Retirement System or the Public
Employees Retirement Association;

(2) terminates state or Metropolitan Council employment;

(3) at the time of termination under clause (2), meets the age and service
requirements necessary to receive an unreduced retirement annuity from the plan and
satisfies requirements for the commencement of the retirement annuity or, for an
employee under the unclassified employees retirement plan, meets the age and service
requirements necessary to receive an unreduced retirement annuity from the plan and
satisfies requirements for the commencement of the retirement annuity or elects a
lump-sum payment; and

(4) agrees to accept a postretirement option position with the same or a different
appointing authority, working a reduced schedule that is both (i) a reduction of at least 25
percent from the employee's number of regularly scheduled work hours; and (ii) 1,044
hours or less in state or Metropolitan Council service.

(b) For purposes of this section, an unreduced retirement annuity includes a
retirement annuity computed under a provision of law which permits retirement, without
application of an earlier retirement reduction factor, whenever age plus years of allowable
service total at least 90.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2006, section 352.01, subdivision 2a, is amended to read:

Subd. 2a.

Included employees.

(a) "State employee" includes:

(1) employees of the Minnesota Historical Society;

(2) employees of the State Horticultural Society;

(3) employees of the Disabled American Veterans, Department of Minnesota,
Veterans of Foreign Wars, Department of Minnesota, if employed before July 1, 1963;

(4) employees of the Minnesota Crop Improvement Association;

(5) employees of the adjutant general who are paid from federal funds and who are
not covered by any federal civilian employees retirement system;

(6) employees of the Minnesota State Colleges and Universities employed under the
university or college activities program;

(7) currently contributing employees covered by the system who are temporarily
employed by the legislature during a legislative session or any currently contributing
employee employed for any special service as defined in subdivision 2b, clause (8);

(8) employees of the Armory Building Commission;

(9) employees of the legislature appointed without a limit on the duration of their
employment and persons employed or designated by the legislature or by a legislative
committee or commission or other competent authority to conduct a special inquiry,
investigation, examination, or installation;

(10) trainees who are employed on a full-time established training program
performing the duties of the classified position for which they will be eligible to receive
immediate appointment at the completion of the training period;

(11) employees of the Minnesota Safety Council;

(12) any employees on authorized leave of absence from the Transit Operating
Division of the former Metropolitan Transit Commission who are employed by the
labor organization which is the exclusive bargaining agent representing employees of
the Transit Operating Division;

(13) employees of the Metropolitan Council, Metropolitan Parks and Open Space
Commission, Metropolitan Sports Facilities Commission, Metropolitan Mosquito Control
Commission, or Metropolitan Radio Board unless excluded or covered by another public
pension fund or plan under section 473.415, subdivision 3;

(14) judges of the Tax Court;

(15) personnel employed on June 30, 1992, by the University of Minnesota in the
management, operation, or maintenance of its heating plant facilities, whose employment
transfers to an employer assuming operation of the heating plant facilities, so long as the
person is employed at the University of Minnesota heating plant by that employer or by its
successor organization;

(16) seasonal help in the classified service employed by the Department of Revenue;
and

(17) persons employed by the Department of Commerce as a peace officer in
the Insurance Fraud Prevention Division under section 45.0135 who have attained the
mandatory retirement age specified in section 43A.34, subdivision 4; and

(18) employees of the Middle Management Association whose employment began
after July 1, 2007, and to whom section 352.029 does not apply.

(b) Employees specified in paragraph (a), clause (15), are included employees under
paragraph (a) if employer and employee contributions are made in a timely manner in the
amounts required by section 352.04. Employee contributions must be deducted from
salary. Employer contributions are the sole obligation of the employer assuming operation
of the University of Minnesota heating plant facilities or any successor organizations to
that employer.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2006, section 352B.01, subdivision 2, is amended to read:

Subd. 2.

Member.

"Member" means:

(1) a State Patrol member currently employed under section 299D.03 by the state,
who is a peace officer under section 626.84, and whose salary or compensation is paid
out of state funds;

(2) a conservation officer employed under section 97A.201, currently employed by
the state, whose salary or compensation is paid out of state funds;

(3) a crime bureau officer who was employed by the crime bureau and was a member
of the Highway Patrolmen's retirement fund on July 1, 1978, whether or not that person
has the power of arrest by warrant after that date, or who is employed as police personnel,
with powers of arrest by warrant under section 299C.04, and who is currently employed
by the state, and whose salary or compensation is paid out of state funds;

(4) a person who is employed by the state in the Department of Public Safety in a
data processing management position with salary or compensation paid from state funds,
who was a crime bureau officer covered by the State Patrol retirement plan on August
15, 1987, and who was initially hired in the data processing management position within
the department during September 1987, or January 1988, with membership continuing
for the duration of the person's employment in that position, whether or not the person
has the power of arrest by warrant after August 15, 1987;

(5) a public safety employee who is a peace officer under section 626.84, subdivision
1, paragraph (c), and who is employed by the Division of Alcohol and Gambling
Enforcement under section 299L.01;

(6) a Fugitive Apprehension Unit officer after October 31, 2000, who is employed by
the Office of Special Investigations of the Department of Corrections and who is a peace
officer under section 626.84; and

(7) an employee of the Department of Commerce defined as a peace officer in section
626.84, subdivision 1, paragraph (c), who is employed by the Division of Insurance Fraud
Prevention under section 45.0135 after January 1, 2005, and who has not attained the
mandatory retirement age specified in section 43A.34, subdivision 4; and

(8) an employee of the Department of Public Safety, who is a licensed peace officer
under section 626.84, subdivision 1, paragraph (c), and is employed as the statewide
coordinator of the Gang and Drug Oversight Council.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies retroactive to April 1, 2007.

Sec. 8.

Minnesota Statutes 2006, section 356.87, is amended to read:

356.87 HEALTH INSURANCE WITHHOLDING.

Subdivision 1.

Public employees insurance program withholding.

(a) Upon
authorization of a person entitled to receive a retirement annuity, disability benefit or
survivor benefit, the executive director of a public pension fund enumerated in section
356.20, subdivision 2, shall withhold health insurance premium amounts from the
retirement annuity, disability benefit or survivor benefit, and shall pay the premium
amounts to the public employees insurance program.

(b) The public employees insurance program shall reimburse a public pension fund
for the administrative expense of withholding the premium amounts and shall assume
liability for the failure of a public pension fund to properly withhold the premium amounts.

Subd. 2.

Public safety retiree insurance withholding.

(a) For purposes of this
subdivision, "governing board" means the governing board or body that has been assigned
the chief policy-making powers and management duties of the applicable pension plan.

(b) For a pension plan covered under section 356.20, subdivision 2, that provides
monthly annuity payments, the governing board may direct the plan's chief administrative
officer to withhold health, accident, and long-term care insurance premiums from the
retirement annuity or disability benefit and to transmit the amount to an approved
insurance provider specified by the eligible person. A governing board which agrees
to participate may revise or revoke that decision at a later date if the board provides
reasonable notice to the applicable parties.

(c) An eligible person is a person who:

(1) is a retiree or disabilitant from a participating plan;

(2) was a public safety officer as defined in United States Code, title 42, section
3796b;

(3) terminated service as a public safety officer due to disability or attainment
of normal retirement age and commences receipt of an annuity without any period of
deferral; and

(4) satisfies any other requirements to have all or a portion of the health, accident,
or long-term care insurance premiums excluded from income for taxation purposes, as
specified in section 845 of Public Law 109-28, the Pension Protection Act of 2006.

(d) An approved insurance provider is:

(1) any regulated, licensed insurance company;

(2) a fraternal or any other organization sponsoring a regulated, licensed insurance
program; or

(3) an employer-sponsored insurance program, whether directly through the
employer or a third-party administrator.

(e) An eligible person may elect to have the applicable plan administrator withhold
and transmit the insurance amounts described in paragraph (b). The eligible person
must make this election on a form prescribed by the chief administrative officer of the
applicable plan.

(f) A pension fund and the plan fiduciaries which authorize or administer
withholding of insurance premiums under this subdivision is not liable for failure to
properly withhold or transmit the premium amounts.

EFFECTIVE DATE.

This section is effective retroactive to January 1, 2007.

Sec. 9.

Minnesota Statutes 2006, section 626.84, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

For purposes of sections 626.84 to 626.863, the
following terms have the meanings given them:

(a) "Board" means the Board of Peace Officer Standards and Training.

(b) "Director" means the executive director of the board.

(c) "Peace officer" means:

(1) an employee or an elected or appointed official of a political subdivision or
law enforcement agency who is licensed by the board, charged with the prevention and
detection of crime and the enforcement of the general criminal laws of the state and who
has the full power of arrest, and shall also include the Minnesota State Patrol, agents of the
Division of Alcohol and Gambling Enforcement, state conservation officers, Metropolitan
Transit police officers, Department of Corrections' Fugitive Apprehension Unit officers,
and Department of Commerce Insurance Fraud Unit officers, and the statewide coordinator
of the Gang and Drug Oversight Council; and

(2) a peace officer who is employed by a law enforcement agency of a federally
recognized tribe, as defined in United States Code, title 25, section 450b(e), and who
is licensed by the board.

(d) "Part-time peace officer" means an individual licensed by the board whose
services are utilized by law enforcement agencies no more than an average of 20 hours per
week, not including time spent on call when no call to active duty is received, calculated
on an annual basis, who has either full powers of arrest or authorization to carry a
firearm while on active duty. The term shall apply even though the individual receives
no compensation for time spent on active duty, and shall apply irrespective of the title
conferred upon the individual by any law enforcement agency.

(e) "Reserve officer" means an individual whose services are utilized by a law
enforcement agency to provide supplementary assistance at special events, traffic or crowd
control, and administrative or clerical assistance. A reserve officer's duties do not include
enforcement of the general criminal laws of the state, and the officer does not have full
powers of arrest or authorization to carry a firearm on duty.

(f) "Law enforcement agency" means:

(1) a unit of state or local government that is authorized by law to grant full powers
of arrest and to charge a person with the duties of preventing and detecting crime and
enforcing the general criminal laws of the state; and

(2) subject to the limitations in section 626.93, a law enforcement agency of a
federally recognized tribe, as defined in United States Code, title 25, section 450b(e).

(g) "Professional peace officer education" means a postsecondary degree program,
or a nondegree program for persons who already have a college degree, that is offered by
a college or university in Minnesota, designed for persons seeking licensure as a peace
officer, and approved by the board.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies retroactive to April 1, 2007.

Sec. 10.

Laws 1981, chapter 68, section 42, subdivision 1, as amended by Laws 1985,
chapter 261, section 14, is amended to read:

Sec. 42. THIEF RIVER FALLS POLICE; SURVIVOR BENEFITS.

Subdivision 1.

Benefits.

Notwithstanding Minnesota Statutes, section 423.58, when
a service pensioner, disability pensioner, deferred pensioner, or an active member of the
Thief River Falls police relief association dies, leaving a surviving spouse, one or more
surviving children, or both, the surviving spouse and child or children shall be entitled to a
pension or pensions as follows:

(1) To the surviving spouse a pension in an amount not to exceed $300 per month
payable for life; provided, however, that if the surviving spouse shall remarry, the pension
shall terminate as of the date of remarriage.

(2) To the child or children, until the child reaches the age of 18 years, a monthly
benefit in an amount not to exceed $125 per month. Payments for the benefit of any
qualified dependent child under the age of 18 years shall be made to the surviving parent
or if none, to the legal guardian of the child. The maximum monthly benefit for any
one family shall not exceed $750. If the member shall die under circumstances which
entitle his surviving spouse and dependent children to receive benefits under the workers'
compensation law, the amounts so received by them shall not be deducted from the
benefits payable under this section.

(3) Pensions payable to a surviving spouse pursuant to paragraph (1) shall be
adjusted annually on January 1, 1986, and January 1 of each year thereafter in proportion
to salary increases paid to active patrolmen by the city during the preceding calendar year,
to a maximum of three and one-half percent in any calendar year. In no event shall the
pension of a surviving spouse exceed $600 per month.

(4) Notwithstanding any provision of paragraph (3) to the contrary, a surviving
spouse benefit under paragraph (1) must be increased on January 1, 2008, by an amount
equal to 3.5 percent of the benefit payable during the preceding month, but not to exceed
$640 per month. The adjustment under this paragraph is in lieu of the adjustment under
paragraph (3).

EFFECTIVE DATE.

This section is effective on the day after the governing
body of the city of Thief River Falls and its chief clerical officer timely complete their
compliance with section 645.021, subdivisions 2 and 3.

Sec. 11.

Laws 2006, chapter 271, article 3, section 43, is amended to read:

Sec. 43. EARLY [356.351] RETIREMENT INCENTIVE.

Subdivision 1.

Eligibility.

(a) An eligible appointing authority in the executive or
legislative branch of state government or the Board of Public Defense or the Minnesota
Historical Society or the Minnesota State Colleges and Universities or any school district
may offer the early retirement incentive in this section to an employee who:

(1) has at least 15 years of allowable service in one or more of the funds listed in
Minnesota Statutes, section 356.30, subdivision 3, or has at least five 15 years of coverage
by the individual retirement account plan governed by Minnesota Statutes, chapter 354B,
and upon retirement is immediately eligible for a retirement annuity or benefit from one or
more of these funds; and

(2) terminates state or teaching service after the effective date of this section and
before September 1, 2006 July 15, 2009; and

(3) is not in receipt of a public retirement plan retirement annuity, retirement
allowance, or service pension during the month preceding the termination of qualified
employment.

(b) An eligible appointing authority is any Minnesota governmental employing unit
which employs one or more employees with retirement coverage by a retirement plan
listed in Minnesota Statutes, section 356.30, by virtue of that employment.

(c) An elected official is not eligible to receive an incentive under this section.

Subd. 2.

Incentive.

(a) For an employee eligible under subdivision 1, if approved
under paragraph (b), the employer may provide an amount up to $17,000, to an employee
who terminates service, to be used:

(1) for an employee who terminates state service after the effective date of this
section and on or before July 15, 2006, unless the appointing authority has designated
the use under clause (2) or the use under clause (3) for the initial retirement incentive
applicable to that employing entity under this enactment after the effective date of this
section, for deposit in the employee's account in the health care savings plan established
by Minnesota Statutes, section 352.98; or

(2) for an employee who terminates state service after July 15, 2006, and before
September 1, 2006:

(i) notwithstanding Minnesota Statutes, section 352.01, subdivision 11, or 354.05,
subdivision 13, whichever applies, if the appointing authority has designated the use under
this clause for the initial retirement incentive applicable to that employing entity under
this enactment after the effective date of this section, for purchase of service credit for
unperformed service sufficient to enable the employee to retire under Minnesota Statutes,
section 352.116, subdivision 1, paragraph (b); 353.30; or 354.44, subdivision 6, paragraph
(b), or 354A.31, subdivision 6, paragraph (b), whichever applies; or

(ii) (3) if the appointing authority has designated the use under this clause for the
initial retirement incentive applicable to the employing entity under this enactment after
the effective date of this section, for purchase of a lifetime annuity or an annuity for a
specific number of years from the state unclassified applicable retirement program plan
to provide additional benefits under Minnesota Statutes, section 352D.06, subdivision
1, as provided in paragraph (d).

(b) Approval to provide the incentive must be obtained from the commissioner
of finance if the eligible employee is a state employee and must be obtained from the
applicable governing board with respect to any other employing entity. An employee
is eligible for the payment under paragraph (a), clause (2), item (i), if the employee
uses money from a deferred compensation account that, combined with the payment
under paragraph (a), clause (2), item (i), would be sufficient to purchase enough service
credit to qualify for retirement under Minnesota Statutes, section 352.116, subdivision
1, paragraph (b); 353.30, subdivision 1a; or 354.44, subdivision 6, paragraph (b), or
354A.31, subdivision 6, paragraph (b), whichever applies.

(c) The cost to purchase service credit under this section paragraph (a), clause (2),
must be made in accordance with Minnesota Statutes, section 356.551.

(d) The annuity purchase under paragraph (a), clause (3), must be made using
annuity factors derived from the applicable factors used by the applicable retirement plan
to transfer amounts to the Minnesota post retirement investment fund and to calculate
optional annuity forms. The purchased annuity must be the actuarial equivalent of the
incentive amount.

Subd. 3.

Designation of positions; employer discretion.

(a) Before offering an
incentive under this section, an appointing authority must be experiencing employee
layoffs due to budget shortfalls or a reorganization that would be offset by offering the
incentive. The appointing authority must document that the incentive payment is equal
to or less than the cost of the employee layoff. The appointing authority must designate
the job classifications or positions within the job classifications that qualify for the
incentive. The appointing authority may modify this designation at any time. Designation
of positions eligible for the incentive under this section, participation of individual
employees, and the amount of the payment under this section are at the sole discretion of
the appointing authority. Unilateral implementation of this section by the employer is not
an unfair labor practice under Minnesota Statutes, chapter 179A.

(b) An employee who is eligible for an incentive under this section, who is offered
an incentive by the appointing authority, and who accepts the incentive offer must do so in
writing. A copy of the acceptance document must be provided by the appointing authority
to the applicable retirement plan within 15 days of its execution.

Subd. 4.

Reemployment prohibition.

No appointing authority referenced in
subdivision 1 is permitted to employ or retain as a consultant an individual who received
an early retirement incentive under this section for a period of three years after the receipt
of the incentive. This provision does not prohibit a school district from employing as a
substitute teacher an individual who received an early retirement incentive under this
section.

Subd. 5.

Utilization report.

On August 1, 2008, and annually thereafter, the
commissioner of employee relations, with respect to the executive branch of state
government, the commissioner of education, with respect to school districts, and the
chancellor of the Minnesota State Colleges and Universities System, with respect to the
system, shall report to the chair of the house of representatives Finance Committee, the
chair of the house of representatives Governmental Operations, Reform, Technology and
Elections Committee, the chair of the senate Finance Committee, the chair of the senate
State and Local Government Operations and Oversight Committee, and the executive
director of the Legislative Commission on Pensions and Retirement on the utilization of
the early retirement incentive. The report must include the total number of employees
who utilized the incentive, the age of each retiring employee, the length of service of each
retiring employee, the incentive amount paid to each retiring employee, the amount of
salary savings through the previous June 30 obtained for each retiring employee, and the
amount of any other financial or budgetary impact related to each retiring employee.

EFFECTIVE DATE.

(a) This section is effective the day following final enactment.

(b) This section expires on July 15, 2009.

ARTICLE 12

SMALL GROUP AND SINGLE PERSON PROVISIONS

Section 1. PERA-GENERAL; CITY OF ST. PAUL EMPLOYEE SERVICE
CREDIT PURCHASE.

(a) An eligible person described in paragraph (b) is entitled to purchase allowable
service credit from the general employees retirement plan of the Public Employees
Retirement Association for the period of employment by the city of St. Paul between
November 11, 1988, and September 30, 1989, that qualified as employment by a public
employee under Minnesota Statutes 1988, section 353.01, subdivision 2b, that was not
previously credited by the retirement plan.

(b) An eligible person is a person who:

(1) was born on December 29, 1958;

(2) was first employed by the city of St. Paul as a part-time or seasonal employee
in 1985;

(3) qualified for Public Employees Retirement Association general plan coverage
in November 1988 but was not reported by the city of St. Paul to the Public Employees
Retirement Association for coverage until October 1989; and

(4) became a member of the general employees retirement plan of the Public
Employees Retirement Association in October 1989.

(c) The eligible person described in paragraph (b) is authorized to apply with the
executive director of the Public Employees Retirement Association to make the service
credit purchase under this section. The application must be in writing and must include
all necessary documentation of the applicability of this section and any other relevant
information that the executive director may require.

(d) Allowable service credit under Minnesota Statutes, section 353.01, subdivision
16, must be granted by the general employees retirement plan of the Public Employees
Retirement Association to the account of the eligible person upon the receipt of the prior
service credit purchase payment amount required under Minnesota Statutes, section
356.551.

(e) Of the prior service credit purchase payment amount under Minnesota Statutes,
section 356.551, the eligible person must pay an amount equal to the employee
contribution rate or rates in effect during the uncredited employment period applied to the
actual salary rates in effect during the period, plus annual compound interest at the rate
of 8.5 percent from the date the member contribution payment should have been made
if made in a timely fashion until the date on which the contribution is actually made. If
the equivalent member contribution payment, plus interest, is made, the city of St. Paul
shall pay the balance of the total prior service credit purchase payment amount under
Minnesota Statutes, section 356.551, within 60 days of notification by the executive
director of the Public Employees Retirement Association that the member contribution
equivalent payment has been received by the association.

(f) Authority for an eligible person to make a prior service credit purchase under this
section expires June 30, 2009, or upon termination of employment covered by the Public
Employees Retirement Association, whichever is earlier.

(g) If the city of St. Paul fails to pay its portion of the prior service credit purchase
payment amount under paragraph (e), the executive director of the Public Employees
Retirement Association must notify the commissioners of finance and revenue of that fact
and the commissioners shall order the deduction of the required payment amount from
the next payment of any state aid to the city of St. Paul and the commissioners shall
transmit the applicable amount to the general employees retirement fund of the Public
Employees Retirement Association.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2. PERA-POLICE AND FIRE PLAN; EXEMPTING CERTAIN ANOKA
COUNTY FIELD INVESTIGATORS FROM REEMPLOYED ANNUITANT
EARNINGS LIMITATIONS.

Notwithstanding any provision of Minnesota Statutes, section 353.37, to the
contrary, a person who is receiving a retirement annuity from the Public Employees
Retirement Association police and fire plan and who was employed by Midwest Forensic
Pathology, P.A., as of December 31, 2006, who became employed by Anoka County
on January 1, 2007, as a field investigator, when the functions of Midwest Forensic
Pathology, P.A., transferred to the county, is exempt from the limitation on reemployed
annuitant earnings under Minnesota Statutes, section 353.37, for the duration of that
employment as a field investigator.

EFFECTIVE DATE.

This section is effective retroactive to January 1, 2007.

Sec. 3. MSRS-GENERAL AND PERA-GENERAL; ANNUITY BACK
PAYMENTS.

(a) Notwithstanding any provision of Minnesota Statutes, sections 352.115,
subdivision 8, and 353.29, subdivision 7, to the contrary, an eligible annuitant described in
paragraph (b) is entitled to a back payment of annuities from the general state employees
retirement plan of the Minnesota State Retirement System and from the general employees
retirement plan of the Public Employees Retirement Association as provided in paragraph
(c). The back payments are intended to correct the consequences of any negligence or
error of the retirement plans in failing to promptly implement a combined service annuity.

(b) An eligible annuitant is a person who:

(1) was born on April 1, 1947;

(2) was employed by Clearwater County and was covered by the general employees
retirement plan of the Public Employees Retirement Association in 1968, 1969, and 1970;

(3) was employed by the Rural Minnesota Concentrated Employment Program
in 1970;

(4) was employed by the state of Minnesota by the Department of Human Services
or its predecessor from 1970 to 2004; and

(5) retired from state employment under the rule of 90 on April 20, 2004.

(c) The back payments are the amount of the annuity of the eligible annuitant from
the general employees retirement plan of the Public Employees Retirement Association
for eight months, representing the period May 1, 2004, to December 31, 2004, and the
amount of the increase in the annuity of the eligible annuitant from the general state
employees retirement plan of the Minnesota State Retirement System on account of
Minnesota Statutes, section 356.30, for 20 months, representing the period May 1, 2004,
to December 31, 2005.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4. TEACHERS RETIREMENT ASSOCIATION; SABBATICAL LEAVE
SALARY CREDIT PURCHASE.

(a) Notwithstanding any provisions to the contrary of Minnesota Statutes, chapter
354 or 354A, an eligible person described in paragraph (b) is entitled to purchase credit
for the salary amount specified in paragraph (c) by making the payment required by
paragraph (d).

(b) An eligible person is a person who:

(1) was born on August 2, 1948;

(2) has 2.95 years of service credit from the Teachers Retirement Association for
teaching service rendered in the early 1970s;

(3) has 26 years of service credit from the former Minneapolis Teachers Retirement
Fund Association transferred to the Teachers Retirement Association under Laws 2006,
chapter 277, article 3, sections 5 and 9, subdivision 3;

(4) took a sabbatical leave from Special School District No. 1, Minneapolis, for the
2004-2005 school year;

(5) obtained full salary credit from the former Minneapolis Teachers Retirement
Fund Association for the 2004-2005 school year under the applicable law and benefit
plan provisions; and

(6) has uncredited full-time equivalent salary from the 2005-2006 school year based
on a reduced salary figure related to the sabbatical leave arrangement.

(c) The salary amount is an amount equal to the difference between the salary credit
the eligible person received from the former Minneapolis Teachers Retirement Fund
Association for the 2005-2006 school year and the full-time equivalent salary of the
eligible person for the 2005-2006 school year.

(d) The required payment amount is an amount equal to 13.64 percent of the salary
amount determined under paragraph (c), plus interest at an 8.5 percent compound rate
from the date on which the contribution amounts would have been made if made in a
timely fashion and the date on which the amount is actually paid. The amount is payable
only in a lump sum.

(e) The eligible person shall provide any relevant documentation related to the
eligibility to make this purchase that is required by the executive director of the Teachers
Retirement Association.

(f) Authority for an eligible person to make the purchase under this section expires
June 30, 2008.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5. COMMUNITY EDUCATION TEACHER; PRIOR SERVICE
PURCHASE.

(a) An eligible person described in paragraph (b) is entitled to purchase prior
uncredited service rendered as a community education teacher for Independent School
District No. 535, Rochester, from the general employees retirement plan of the Public
Employees Retirement Association.

(b) An eligible person is a person who:

(1) was born on March 4, 1939;

(2) began teaching for Independent School District No. 535, Rochester, in 1962 and
retired June 1997;

(3) was a contributing member of the Teachers Retirement Association until
retirement;

(4) subsequent to retirement began teaching for community education; and

(5) because of an error, no deductions were taken from the person's pay and no
contributions were made on the person's behalf by the school district to the Public
Employees Retirement Association for the community education service.

(c) The purchase payment amount for the uncredited community education service
must be determined under Minnesota Statutes, section 356.551. Notwithstanding
Minnesota Statutes, section 356.551, subdivision 2, paragraphs (d) and (e), the purchase
payment amount must be allocated on the basis of one-third of the total by the eligible
person and of the balance of the total by Independent School District No. 535, Rochester.
If the eligible person pays the person's required portion, Independent School District
No. 535, Rochester, shall make its payment within 30 days of notification by the Public
Employees Retirement Association of its payment obligation. If Independent School
District No. 535, Rochester, does not pay the balance within 30 days of notification by the
executive director of the Public Employees Retirement Association of the payment of the
member contribution payment by the eligible person under paragraph (a), the executive
director shall notify the commissioner of finance of that fact and the commissioner shall
deduct from any state aid payable to Independent School District No. 535, Rochester, that
amount, plus interest on that amount of 1.5 percent per month for each month or portion of
a month that has elapsed from the effective date of this section.

(d) This authority expires on May 31, 2009, or on the first day of the month next
following the conclusion of the eligible member's elected public service, whichever
occurs earlier.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6. PERA-GENERAL; LATE DISABILITY BENEFIT APPLICATION
AUTHORIZED.

(a) Notwithstanding any provision of Minnesota Statutes, section 353.33, subdivision
2, to the contrary, a person described in paragraph (b) is authorized to apply for a disability
benefit from the general employees retirement plan of the Public Employees Retirement
Association under Minnesota Statutes, section 353.33.

(b) An eligible person is a person who:

(1) was born on February 1, 1956;

(2) became a Public Employees Retirement Association general plan member on
December 18, 1994, until January 31, 1996, while employed by the city of Benson;

(3) was employed by Independent School District No. 777, Benson, with Public
Employees Retirement Association general plan coverage, from October 1, 1996, until
July 31, 2003;

(4) is disabled within the meaning of Minnesota Statutes, section 353.01, subdivision
19; and

(5) failed to apply for disability benefits under Minnesota Statutes, section 353.33,
within the three-year time period permitted in that statute following termination of covered
employment.

(c) The eligible person under paragraph (b) must provide, in conjunction with the
disability application, any relevant evidence that the executive director of the Public
Employees Retirement Association requires about the existence of a total and permanent
disability as defined in Minnesota Statutes, section 353.01, subdivision 19, and about the
date on which the disability occurred and its relationship to the termination of active
service in July 2003.

(d) If the eligible person files a disability benefit application and if the eligible
person provides sufficient evidence of disability and the occurrence of the disability under
paragraph (c), to qualify for a disability benefit under Minnesota Statutes, section 353.33,
the disability benefit becomes payable on the first day of the first month following the
approval of the application. The disability benefit must be calculated under the laws in
effect at the time the eligible person terminated active service in July 2003. The disability
benefit must include any applicable deferred annuities augmentation under Minnesota
Statutes, section 353.71, subdivision 2.

(e) Nothing in this section may be deemed to exempt the eligible person from the
partial reemployment of a disabilitant provision under Minnesota Statutes, section 353.33,
subdivision 7, or from the trial work period provision under Minnesota Statutes, section
353.33, subdivision 7a.

EFFECTIVE DATE.

(a) This section is effective the day following final enactment.

(b) This section expires, if not utilized, on December 31, 2007.