HF 125

as introduced - 84th Legislature, 2005 1st Special Session (2005 - 2005) Posted on 12/15/2009 12:00am

A bill for an act
relating to state government; providing for lottery
gaming machines; imposing a tax on gaming machine and
card club revenue; providing powers and duties to
director; authorizing blackjack and other card games
and imposing tax on gross receipts; creating the Clean
Water Legacy Act; providing authority, direction, and
funding to achieve and maintain water quality
standards for Minnesota's surface waters in accordance
with section 303(d) of the federal Clean Water Act;
modifying soil and water cost-share contract
provisions; extending citizen water monitoring;
creating a municipal grant program; modifying tax
exemption amounts; modifying net income apportionment
provisions; modifying city government aid provisions;
restructuring teacher retirement fund; consolidating
the Minneapolis Teachers Retirement Fund Association;
authorizing issuance of pension obligation bonds;
modifying pension provisions; appropriating money for
transit, transportation, environment, retirement, and
salary supplements; amending Minnesota Statutes 2004,
sections 103C.501, subdivision 5; 115.06, subdivision
4; 116.182, subdivision 2; 240.13, by adding a
subdivision; 240.30, subdivision 8; 240.35,
subdivision 1; 290.091, subdivisions 2, 3; 290.191,
subdivisions 2, 3; 299L.07, subdivisions 2, 2a;
340A.410, subdivision 5; 349A.01, subdivision 10, by
adding subdivisions; 349A.10, subdivisions 3, 6;
349A.13; 354.05, subdivisions 2, 13; 354.42,
subdivisions 2, 3; 354A.011, subdivisions 15a, 27;
354A.021, subdivision 1; 354A.092; 354A.093,
subdivision 1; 354A.095; 354A.096; 354A.12,
subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30;
354A.31, subdivision 4; 354A.32, subdivision 1;
354A.39; 354A.40, subdivision 1; 354A.41; 356.20,
subdivision 2; 356.214, subdivision 1; 356.215,
subdivisions 8, 11; 356.30, subdivision 3; 356.302,
subdivision 7; 356.303, subdivision 4; 356.315, by
adding a subdivision; 356.42, subdivision 3; 356.465,
subdivision 3; 423A.02, subdivision 1b; 477A.011,
subdivisions 34, 36, as amended; 477A.013,
subdivisions 8, 9; 477A.03, subdivision 2a; 541.20;
541.21; 609.75, subdivision 3; 609.761, subdivision 2;
Laws 2005, chapter 20, article 1, section 39;
proposing coding for new law in Minnesota Statutes,
chapters 128D; 297A; 349A; 354; 446A; proposing coding
for new law as Minnesota Statutes, chapter 114D;
repealing Minnesota Statutes 2004, sections 354A.051;
354A.105; 354A.23, subdivision 1; 354A.28.

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

ARTICLE 1

RACINO

Section 1.

Minnesota Statutes 2004, section 240.13, is
amended by adding a subdivision to read:

new text begin Subd. 5a. new text end

new text begin Purses; gaming machines. new text end

new text begin From the compensation
received by a licensee pursuant to a gaming machine location
contract entered into under section 349A.17, the licensee must
set aside at least 7.25 percent of the adjusted gross gaming
machine revenue as defined under chapter 349A for purses for
live horse races conducted by the licensee. Purse payments made
pursuant to this subdivision are in addition to purse payments
otherwise established by law or contract. Twenty percent of the
money set aside for purses pursuant to this subdivision shall be
transferred to the commission and used for the purposes in
section 240.18, subdivisions 2, paragraph (d), and 3, paragraph
(b), subject to the proportionality requirement in section
240.18, subdivision 1. The licensee and the horseperson's
organization representing the majority of horsepersons who have
raced horses at the racetrack during the preceding 12 months may
negotiate percentages different from those stated in this
section if the agreement is in writing and filed with the
commission.
new text end

Sec. 2.

Minnesota Statutes 2004, section 240.30,
subdivision 8, is amended to read:

Subd. 8.

Limitations.

The commission may not approve any
plan of operation under subdivision 6 that exceeds any of the
following limitations:

(1) deleted text begin the maximum number of tables used for card playing at
the card club at any one time, other than tables used for
instruction, demonstrations, or tournament play, may not exceed
50. The table limit exception for tournament play is allowed
for only one tournament per year that lasts for no longer than
14 days;
deleted text end

deleted text begin (2) deleted text end except as provided in clause deleted text begin (3) deleted text end new text begin (2) new text end , no wager may
exceed $60;

deleted text begin (3) deleted text end new text begin (2) new text end for games in which each player is allowed to make
only one wager or has a limited opportunity to change that
wager, no wager may exceed $300.

Sec. 3.

Minnesota Statutes 2004, section 240.35,
subdivision 1, is amended to read:

Subdivision 1.

Generally.

A licensee of the commission
may detain a person if the licensee has probable cause to
believe that the person detained has violated section 609.76
while at a card club authorized by section 240.30 new text begin or at a
facility where gaming machines are located under section
349A.17 new text end . For purposes of this section, "licensee" means the
commission's director of racing security or a security officer
licensed under Minnesota Rules, chapter 7878.

Sec. 4.

new text begin [297A.651] LOTTERY GAMING MACHINES; IN-LIEU TAX.
new text end

new text begin Adjusted gross gaming machine revenue is exempt from the
tax imposed under section 297A.62. The State Lottery must on or
before the 20th day of each month transmit to the commissioner
an amount equal to the adjusted gross gaming machine revenue, as
defined in section 349A.01, for the previous month multiplied by
35 percent. The commissioner shall deposit the money
transmitted under this section in the state treasury in the
general fund.
new text end

Sec. 5.

Minnesota Statutes 2004, section 299L.07,
subdivision 2, is amended to read:

Subd. 2.

Exclusions.

Notwithstanding subdivision 1, a
gambling device:

(1) may be sold by a person who is not licensed under this
section, if the person (i) is not engaged in the trade or
business of selling gambling devices, and (ii) does not sell
more than one gambling device in any calendar year;

(2) may be sold by the governing body of a federally
recognized Indian tribe described in subdivision 2a, paragraph
(b), clause (1), which is not licensed under this section, if
(i) the gambling device was operated by the Indian tribe, (ii)
the sale is to a distributor licensed under this section, and
(iii) the licensed distributor notifies the commissioner of the
purchase, in the same manner as is required when the licensed
distributor ships a gambling device into Minnesota;

(3) may be possessed by a person not licensed under this
section if the person holds a permit issued under section
299L.08; deleted text begin and
deleted text end

(4) may be possessed by a state agency, with the written
authorization of the director, for display or evaluation
purposes only and not for the conduct of gambling new text begin ; and
new text end

new text begin (5) may be possessed by the State Lottery as authorized
under chapter 349A new text end .

Sec. 6.

Minnesota Statutes 2004, section 299L.07,
subdivision 2a, is amended to read:

Subd. 2a.

Restrictions.

(a) A manufacturer licensed
under this section may sell, offer to sell, lease, or rent, in
whole or in part, a gambling device only to a distributor
licensed under this section new text begin or to the State Lottery as
authorized under chapter 349A new text end .

(b) A distributor licensed under this section may sell,
offer to sell, market, rent, lease, or otherwise provide, in
whole or in part, a gambling device only to:

(1) the governing body of a federally recognized Indian
tribe that is authorized to operate the gambling device under a
tribal state compact under the Indian Gaming Regulatory Act,
Public Law 100-497, and future amendments to it;

(2) a person for use in the person's dwelling for display
or amusement purposes in a manner that does not afford players
an opportunity to obtain anything of value;

(3) another distributor licensed under this section; deleted text begin or
deleted text end

(4) a person in another state who is authorized under the
laws of that state to possess the gambling device new text begin ; or
new text end

new text begin (5) the State Lottery as authorized under chapter 349A new text end .

Sec. 7.

Minnesota Statutes 2004, section 340A.410,
subdivision 5, is amended to read:

Subd. 5.

Gambling prohibited.

(a) Except as otherwise
provided in this subdivision, no retail establishment licensed
to sell alcoholic beverages may keep, possess, or operate, or
permit the keeping, possession, or operation on the licensed
premises of dice or any gambling device as defined in section
349.30, or permit gambling therein.

(b) Gambling equipment may be kept or operated and raffles
conducted on licensed premises and adjoining rooms when the use
of the gambling equipment is authorized by (1) chapter 349, (2)
a tribal ordinance in conformity with the Indian Gaming
Regulatory Act, Public Law 100-497, or (3) a tribal-state
compact authorized under section 3.9221.

(c) Lottery tickets may be purchased and sold within the
licensed premises as authorized by the director of the lottery
under chapter 349A.

(d) Dice may be kept and used on licensed premises and
adjoining rooms as authorized by section 609.761, subdivision 4.

new text begin (e) Gambling devices may be operated on the premises of a
licensed racetrack as authorized by chapter 349A.
new text end

Sec. 8.

Minnesota Statutes 2004, section 349A.01,
subdivision 10, is amended to read:

Subd. 10.

Lottery procurement contract.

"Lottery
procurement contract" means a contract to provide lottery
products, new text begin gaming machines, maintenance of gaming machines,
new text end computer hardware and software used to monitor sales of lottery
tickets new text begin and gaming machine plays new text end , and lottery tickets. "Lottery
procurement contract" does not include a contract to provide an
annuity or prize payment agreement or materials, supplies,
equipment, or services common to the ordinary operation of a
state agency.

Sec. 9.

Minnesota Statutes 2004, section 349A.01, is
amended by adding a subdivision to read:

new text begin Subd. 14. new text end

new text begin Gaming machine. new text end

new text begin "Gaming machine" means any
machine, system, or device which, upon payment of consideration
in order to play a game, may award or entitle a player to a
prize by reason of skill of the player or application of the
element of chance, or both.
new text end

Sec. 10.

Minnesota Statutes 2004, section 349A.01, is
amended by adding a subdivision to read:

new text begin Subd. 15. new text end

new text begin Gaming machine game. new text end

new text begin "Gaming machine game"
means a game operated by a gaming machine as authorized by the
director.
new text end

Sec. 11.

Minnesota Statutes 2004, section 349A.01, is
amended by adding a subdivision to read:

new text begin Subd. 16. new text end

new text begin Gaming machine play. new text end

new text begin "Gaming machine play"
means an electronic record that proves participation in a gaming
machine game.
new text end

Sec. 12.

Minnesota Statutes 2004, section 349A.01, is
amended by adding a subdivision to read:

new text begin Subd. 17. new text end

new text begin Adjusted gross gaming machine revenue.
new text end

new text begin "Adjusted gross gaming machine revenue" means the sum of all
money received by the lottery for gaming machine plays, less the
amount paid out in prizes for gaming machine games.
new text end

Sec. 13.

Minnesota Statutes 2004, section 349A.10,
subdivision 3, is amended to read:

Subd. 3.

Lottery operations.

(a) The director shall
establish a lottery operations account in the lottery fund. The
director shall pay all costs of operating the lottery, including
payroll costs or amounts transferred to the state treasury for
payroll costs, but not including lottery prizes, from the
lottery operating account. The director shall credit to the
lottery operations account amounts sufficient to pay the
operating costs of the lottery.

(b) Except as provided in paragraph (e), the director may
not credit in any fiscal year thereafter amounts to the lottery
operations account which when totaled exceed 15 percent of gross
revenue to the lottery fund in that fiscal year. In computing
total amounts credited to the lottery operations account under
this paragraph the director shall disregard amounts transferred
to or retained by lottery retailers as sales commissions or
other compensation new text begin and amounts transferred or retained by a
racetrack pursuant to a location contract under section 349A.17 new text end .

(c) The director of the lottery may not expend after July
1, 1991, more than 2-3/4 percent of gross revenues in a fiscal
year for contracts for the preparation, publication, and
placement of advertising.

(d) Except as the director determines, the lottery is not
subject to chapter 16A relating to budgeting, payroll, and the
purchase of goods and services.

(e) In addition to the amounts credited to the lottery
operations account under paragraph (b), the director is
authorized, if necessary, to meet the current obligations of the
lottery and to credit up to 25 percent of an amount equal to the
average annual amount which was authorized to be credited to the
lottery operations account for the previous three fiscal years
but was not needed to meet the obligations of the lottery.

new text begin (f) Notwithstanding the provisions of this subdivision, the
director may credit up to ten percent of adjusted gross gaming
machine revenue to the lottery operations account in a fiscal
year.
new text end

Sec. 14.

Minnesota Statutes 2004, section 349A.10,
subdivision 6, is amended to read:

Subd. 6.

Budget; plans.

The director shall prepare and
submit a biennial budget plan to the commissioner of finance.
The governor shall recommend the maximum amount available for
the lottery in the budget the governor submits to the
legislature under section 16A.11. The maximum amount available
to the lottery for operating expenses and capital expenditures
shall be determined by law. Operating expenses shall not
include expenses that are a direct function of lottery sales,
which include the cost of lottery prizes, amounts paid to
lottery retailers as sales commissions or other compensation,
amounts paid to produce and deliver scratch lottery games, deleted text begin and
deleted text end amounts paid to an outside vendor to operate and maintain an
on-line gaming system new text begin , amounts paid to an outside vendor to
operate and maintain a central communications system for gaming
machines, and amounts paid to acquire and maintain gaming
machines new text end . In addition, the director shall appear at least once
each fiscal year before the senate and house of representatives
committees having jurisdiction over gambling policy to present
and explain the lottery's plans for future games and the related
advertising and promotions and spending plans for the next
fiscal year.

Sec. 15.

Minnesota Statutes 2004, section 349A.13, is
amended to read:

349A.13 RESTRICTIONS.

Nothing in this chapter:

(1) authorizes the director to conduct a lottery game or
contest the winner or winners of which are determined by the
result of a sporting event other than a horse race conducted
under chapter 240;

(2) authorizes the director to install or operate a lottery
device operated by coin or currency which when operated
determines the winner of a game new text begin except as authorized under
section 349A.17 new text end ; and

(3) authorizes the director to sell pull-tabs as defined
under section 349.12, subdivision 32.

Sec. 16.

new text begin [349A.17] GAMING MACHINES.
new text end

new text begin Subdivision 1. new text end

new text begin Location contract. new text end

new text begin (a) The director may
enter into a contract with a person to provide a location for
gaming machines. Contracts entered into under this section are
not subject to chapter 16C. The director may only enter a
contract under this subdivision with a person that holds a class
A license under chapter 240. The gaming machines may only be
placed at the racetrack for which the class A license under
chapter 240 was issued.
new text end

new text begin (b) In order to be eligible for a contract under this
section, the class A licensee must have conducted at least 50
days of live racing at the racetrack each year within the last
five preceding calendar years. A contract under this section
must contain a provision under which the contract terminates on
the first day of any calendar year following a calendar year
during which the class A licensee has not conducted at least 50
days of live racing at the licensee's racetrack.
new text end

new text begin (c) Contracts entered into must provide for compensation to
the racetrack in an amount equal to at least 55 percent of
adjusted gross gaming machine revenue. From the amount received
by the racetrack under this section, the racetrack shall
annually remit an amount equal to one percent of the adjusted
gross gaming machine revenue to both the city or town and the
county where the racetrack is located.
new text end

new text begin (d) The director may cancel, suspend, or refuse to renew
the location contract or impose a civil penalty if the licensee:
new text end

new text begin (1) no longer holds a class A license under chapter 240;
new text end

new text begin (2) fails to account for proceeds from the gaming machines;
new text end

new text begin (3) fails to remit funds to the director in accordance with
the location contract;
new text end

new text begin (4) violates a law, rule, or order of the director;
new text end

new text begin (5) fails to comply with any of the terms of the location
contract; or
new text end

new text begin (6) has acted in a manner prejudicial to public confidence
in the integrity of the operation of the gaming machines.
new text end

new text begin The cancellation, suspension, or refusal to renew the
location contract or imposition of a civil penalty under this
paragraph is a contested case under sections 14.57 to 14.69.
new text end

new text begin (e) No gaming machines may be located within a statutory or
home rule charter city or town, unless the governing body of the
city or town adopts a resolution approving the location of the
gaming machines within the city or town.
new text end

new text begin (f) As a condition of entering into a contract under this
section, the licensee must make to the commission, for deposit
in the general fund, a onetime payment of $100,000,000 by June
30, 2007. A contract must include a provision to refund this
payment if this section is repealed by the legislature, revoked
by constitutional amendment, or held unconstitutional by a court
of competent jurisdiction.
new text end

new text begin (g) The contract entered into under this section must
include the following provisions:
new text end

new text begin (1) liquidated damages to recover the initial investment by
the licensee in the event the state, through legislation or
constitutional amendment, revokes all or substantially all of
the forms of gambling authorized under this section. The
liquidated damages must include the onetime payment under
paragraph (f) and the unpaid balance of costs incurred by the
licensee for construction or acquisition of the gaming facility
less the present market value of that property. Any liquidated
damages provision must expire within ten years; and
new text end

new text begin (2) all costs associated with managing the day-to-day
activity of gaming machines, including, but not limited to,
routine and minor service and maintenance, security monitoring,
verifying winners, paying winners, collecting money from gaming
machines, and advertising and marketing of gaming machines must
be borne by the licensee.
new text end

new text begin Subd. 2. new text end

new text begin Operation. new text end

new text begin (a) All gaming machines that are
placed at a racetrack pursuant to subdivision 1 must be operated
and controlled by the director.
new text end

new text begin (b) Gaming machines must be owned or leased by the director.
new text end

new text begin (c) Gaming machines must be maintained by the lottery, or
by a vendor that is under the control and direction of the
director.
new text end

new text begin (d) The director must have a central communications system
that monitors activities on each gaming machine. The central
communications system must be located at a lottery office.
new text end

new text begin (e) The director must approve the general security
arrangements associated with and relating to the operation of
the gaming machines.
new text end

new text begin (f) Advertising and promotional material produced by the
racetrack relating to gaming machines located at its facility
must be approved by the director.
new text end

new text begin (g) The director may implement such other controls as are
deemed necessary for the operation of gaming machines pursuant
to this section.
new text end

new text begin Subd. 3. new text end

new text begin Games. new text end

new text begin The director shall specify the games
that may be played on a gaming machine according to section
349A.04. Gaming machines may conduct pari-mutuel wagering and
display horse races pursuant to the director's specifications.
new text end

new text begin Subd. 4. new text end

new text begin Prizes. new text end

new text begin A person who plays a gaming machine
agrees to be bound by the rules and game procedures applicable
to that particular gaming machine game. The player acknowledges
that the determination of whether the player has won a prize is
subject to the rules and game procedures adopted by the
director, claim procedures established by the director for the
game, and any confidential or public validation tests
established by the director for that game. A prize claimed from
the play of a gaming machine game is not subject to the
provisions of section 349A.08, subdivision 8.
new text end

new text begin Subd. 5. new text end

new text begin No credit restriction. new text end

new text begin The licensee shall
require that all gaming at a gaming facility, including
participation in a gaming machine game, shall be conducted on a
cash basis. Except as provided in this subdivision, no person
may be extended credit for gaming at a gaming facility, and the
licensee shall not permit any person or organization to offer
such credit for a fee at the gaming facility. This provision
does not restrict the right of the licensee or any other person
to offer check cashing or to install or accept bank card or
credit card transactions in the same manner as would be normally
permitted at any retail business within the state.
new text end

new text begin Subd. 6. new text end

new text begin Prohibitions. new text end

new text begin (a) A person under the age of 18
years may not play a game on or claim a prize from a gaming
machine.
new text end

new text begin (b) The director or any employee of the lottery, or a
member of their immediate family residing in the same household,
may not play a game on a gaming machine or receive a prize from
the operation of a gaming machine.
new text end

new text begin Subd. 7. new text end

new text begin Compulsive gambling; report. new text end

new text begin (a) The licensee
shall prominently post, in the area where the gaming machines
are located, the toll-free telephone number established by the
commissioner of human services in connection with the compulsive
gambling program established under section 245.98. The
licensee, with the approval of the director, shall establish a
proactive plan relating to problem gambling.
new text end

new text begin (b) By January 15 of each year, the director shall submit a
report to the legislature, of not more than five pages in
length, setting forth the performance objectives of the plan and
the progress that was made toward those objectives during the
prior calendar year. The licensee may establish a
self-exclusion program by which persons, at their request, may
be excluded from the facility where the gaming machines are
located.
new text end

new text begin Subd. 8. new text end

new text begin Local licenses. new text end

new text begin Except as provided in
subdivision 1, no political subdivision may require a license to
operate a gaming machine, restrict or regulate the placement of
gaming machines, or impose a tax or fee on the business of
operating gaming machines.
new text end

new text begin Subd. 9. new text end

new text begin Reimbursement; racing commission. new text end

new text begin The Minnesota
Racing Commission shall require the licensee to reimburse the
commission's actual costs, including personnel costs, of
regulating the licensee under this section. Amounts received
under this subdivision must be deposited as provided in section
240.155, subdivision 1.
new text end

Sec. 17.

Minnesota Statutes 2004, section 541.20, is
amended to read:

541.20 RECOVERY OF MONEY LOST.

Every person who, by playing at cards, dice, or other game,
or by betting on the hands or sides of such as are gambling,
shall lose to any person so playing or betting any sum of money
or any goods, and pays or delivers the same, or any part
thereof, to the winner, may sue for and recover such money by a
civil action, before any court of competent jurisdiction. For
purposes of this section, gambling shall not include pari-mutuel
wagering new text begin or other wagering new text end conducted under a license issued
pursuant to chapter 240, purchase or sale of tickets in the
state lottery, or gambling authorized under chapters 349 and
349A.

Sec. 18.

Minnesota Statutes 2004, section 541.21, is
amended to read:

541.21 COMMITMENTS FOR GAMBLING DEBT VOID.

Every note, bill, bond, mortgage, or other security or
conveyance in which the whole or any part of the consideration
shall be for any money or goods won by gambling or playing at
cards, dice, or any other game whatever, or by betting on the
sides or hands of any person gambling, or for reimbursing or
repaying any money knowingly lent or advanced at the time and
place of such gambling or betting, or lent and advanced for any
gambling or betting to any persons so gambling or betting, shall
be void and of no effect as between the parties to the same, and
as to all persons except such as hold or claim under them in
good faith, without notice of the illegality of the
consideration of such contract or conveyance. The provisions of
this section shall not apply to: (1) pari-mutuel new text begin or other
new text end wagering conducted under a license issued pursuant to chapter
240; (2) purchase of tickets in the state lottery new text begin or other
wagering authorized new text end under chapter 349A; (3) gaming activities
conducted pursuant to the Indian Gaming Regulatory Act, 25
U.S.C. 2701 et seq.; or (4) lawful gambling activities permitted
under chapter 349.

Sec. 19.

Minnesota Statutes 2004, section 609.75,
subdivision 3, is amended to read:

Subd. 3.

What are not bets.

The following are not bets:

(1) A contract to insure, indemnify, guarantee or otherwise
compensate another for a harm or loss sustained, even though the
loss depends upon chance.

(2) A contract for the purchase or sale at a future date of
securities or other commodities.

(3) Offers of purses, prizes or premiums to the actual
contestants in any bona fide contest for the determination of
skill, speed, strength, endurance, or quality or to the bona
fide owners of animals or other property entered in such a
contest.

(4) The game of bingo when conducted in compliance with
sections 349.11 to 349.23.

(5) A private social bet not part of or incidental to
organized, commercialized, or systematic gambling.

(6) The operation of equipment or the conduct of a raffle
under sections 349.11 to 349.22, by an organization licensed by
the Gambling Control Board or an organization exempt from
licensing under section 349.166.

(7) Pari-mutuel betting on horse racing when the betting is
conducted under chapter 240.

(8) The purchase and sale of state lottery tickets new text begin and
plays on a gaming machine new text end under chapter 349A.

Sec. 20.

Minnesota Statutes 2004, section 609.761,
subdivision 2, is amended to read:

Subd. 2.

State lottery.

Sections 609.755 and 609.76 do
not prohibit the operation of the state lottery or the sale,
possession, or purchase of tickets for the state lottery under
chapter 349A new text begin , or the manufacture, possession, sale, or operation
of a gaming machine under chapter 349A new text end .

Sec. 21. new text begin OTHER GAMES.
new text end

new text begin (a) The Minnesota Racing Commission may authorize a person
with a gaming machine location contract under Minnesota
Statutes, section 349A.17, to conduct other card games that
Indian gaming casinos within this state are authorized by
compact or law to conduct. The Minnesota Racing Commission
shall adopt game procedures and take other actions necessary to
regulate the conduct and ensure the integrity of the games. A
tax is imposed on games conducted under this section at the rate
of 20 percent of the gross gaming receipts. For purposes of
this section, "gross gaming receipts" means all revenue received
by the licensee from card games authorized under this section,
less winnings paid to players.
new text end

new text begin (b) Of the gross gaming receipts, the licensee must set
aside at least 7.25 percent for purses for live horse races
conducted by the licensee. Purse payments under this section
are in addition to any other purse payments established by law
or contract. Twenty percent of the amount set aside for purses
shall be transferred to the Minnesota Racing Commission and used
for the purposes in Minnesota Statutes, section 240.18. The
licensee and the horseperson's organization representing the
majority of horsepersons who have raced horses at the racetrack
during the preceding 12 months may negotiate percentages
different from those stated in this section if the agreement is
in writing and filed with the racing commission.
new text end

Sec. 22. new text begin LOTTERY BUDGET; GAMING MACHINES.
new text end

new text begin The director of the State Lottery shall submit a budget for
the operation of gaming machines authorized under Minnesota
Statutes, section 349A.17, to the commissioner of finance.
Notwithstanding Minnesota Statutes, section 349A.10, subdivision
6, the director of the State Lottery may expend amounts
necessary to operate the gaming machines. Amounts expended by
the director of the State Lottery for the operation of gaming
machines in fiscal years 2006 and 2007 are not subject to the
maximum amount set in law for the operation of the lottery.
new text end

Sec. 23. new text begin SEVERABILITY; SAVINGS.
new text end

new text begin If any part of this article is found to be invalid because
it is in conflict with a provision of the Constitution of the
state of Minnesota or the Constitution of the United States, or
for any other reason, all other provisions of this article shall
remain valid and any rights, remedies, and privileges that have
been otherwise accrued by this act, shall remain in effect and
may be proceeded with and concluded under the provisions of this
article.
new text end

Sec. 24. new text begin EFFECTIVE DATE.
new text end

new text begin This article is effective the day following final enactment.
new text end

ARTICLE 2

CLEAN WATER LEGACY

Section 1.

Minnesota Statutes 2004, section 103C.501,
subdivision 5, is amended to read:

Subd. 5.

Contracts by districts.

(a) A district board
may contract on a cost-share basis to furnish financial aid to a
land occupier or to a state agency for permanent systems for
erosion or sedimentation control or water quality improvement
that are consistent with the district's comprehensive and annual
work plans.

(b) The duration of the contract deleted text begin may deleted text end new text begin must, at a minimum, new text end be
the time required to complete the planned systems. A contract
must specify that the land occupier is liable for monetary
damages deleted text begin , not to exceed the deleted text end new text begin and penalties in an new text end amount deleted text begin of deleted text end new text begin up to
150 percent of the new text end financial assistance received from the
district, for failure to complete the systems or practices in a
timely manner or maintain the systems or practices as specified
in the contract.

(c) A contract may provide for cooperation or funding with
federal agencies. A land occupier or state agency may provide
the cost-sharing portion of the contract through services in
kind.

(d) The state board or the district board may not furnish
any financial aid for practices designed only to increase land
productivity.

new text begin (e) When a district board determines that long-term
maintenance of a system or practice is desirable, the board may
require that such maintenance be made a covenant upon the land
for the effective life of the practice. A covenant under this
subdivision shall be construed in the same manner as a
conservation restriction under section 84.65.
new text end

Sec. 2.

new text begin [114D.05] CITATION.
new text end

new text begin This chapter may be cited as the "Clean Water Legacy Act."
new text end

Sec. 3.

new text begin [114D.10] LEGISLATIVE PURPOSE AND FINDINGS.
new text end

new text begin Subdivision 1. new text end

new text begin Purpose. new text end

new text begin The purpose of the Clean Water
Legacy Act is to protect, restore, and preserve the quality of
Minnesota's surface waters by providing authority, direction,
and resources to achieve and maintain water quality standards
for surface waters as required by section 303(d) of the federal
Clean Water Act, United States Code, title 33, section 1313(d),
and applicable federal regulations.
new text end

new text begin Subd. 2. new text end

new text begin Findings. new text end

new text begin The legislature finds that:
new text end

new text begin (1) there is a close link between protecting, restoring,
and preserving the quality of Minnesota's surface waters and the
ability to develop the state's economy, enhance its quality of
life, and protect its human and natural resources;
new text end

new text begin (2) achieving the state's water quality goals will require
long-term commitment and cooperation by all state and local
agencies, and other public and private organizations and
individuals, with responsibility and authority for water
management, planning, and protection; and
new text end

new text begin (3) all persons and organizations whose activities affect
the quality of waters, including point and nonpoint sources of
pollution, have a responsibility to participate in and support
efforts to achieve the state's water quality goals.
new text end

Sec. 4.

new text begin [114D.15] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin The definitions provided in
this section apply to the terms used in this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Citizen monitoring. new text end

new text begin "Citizen monitoring" means
monitoring of surface water quality by individuals and
nongovernmental organizations that is consistent with section
115.06, subdivision 4, and Pollution Control Agency guidance on
monitoring procedures, quality assurance protocols, and data
management.
new text end

new text begin Subd. 3. new text end

new text begin Clean water council. new text end

new text begin "Clean Water Council" or
"council" means the Clean Water Council created pursuant to
section 114D.30, subdivision 1.
new text end

new text begin Subd. 4. new text end

new text begin Federal tmdl requirements. new text end

new text begin "Federal TMDL
requirements" means the requirements of section 303(d) of the
Clean Water Act, United States Code, title 33, section 1313(d),
and associated regulations and guidance.
new text end

new text begin Subd. 5. new text end

new text begin Impaired water. new text end

new text begin "Impaired water" means surface
water that does not meet applicable water quality standards.
new text end

new text begin Subd. 6. new text end

new text begin Public agencies. new text end

new text begin "Public agencies" means all
state agencies, political subdivisions, joint powers
organizations, and special purpose units of government with
authority, responsibility, or expertise in protecting,
restoring, or preserving the quality of surface waters, managing
or planning for surface waters and related lands, or financing
waters-related projects. "Public agencies" also includes the
University of Minnesota and other public education institutions.
new text end

new text begin Subd. 7. new text end

new text begin Restoration. new text end

new text begin "Restoration" means actions,
including effectiveness monitoring, that are taken to achieve
and maintain water quality standards for impaired waters in
accordance with a TMDL that has been approved by the United
States Environmental Protection Agency under federal TMDL
requirements.
new text end

new text begin Subd. 8. new text end

new text begin Surface waters. new text end

new text begin "Surface waters" means waters
of the state as defined in section 115.01, subdivision 22,
excluding groundwater as defined in section 115.01, subdivision
6.
new text end

new text begin Subd. 9. new text end

new text begin Third-party tmdl. new text end

new text begin "Third-party TMDL" means a
TMDL by the Pollution Control Agency that is developed in whole
or in part cooperatively between representatives from local
units of government where the TMDL is being completed and a
qualified public or private nonprofit entity other than the
Pollution Control Agency consistent with the goals, policies,
and priorities in section 114D.20.
new text end

new text begin Subd. 10. new text end

new text begin Total maximum daily load or tmdl. new text end

new text begin "Total
maximum daily load" or "TMDL" means a scientific study that
contains a calculation of the maximum amount of a pollutant that
may be introduced into a surface water and still ensure that
applicable water quality standards for that water are restored
and maintained. A TMDL also is the sum of the pollutant load
allocations for all sources of the pollutant, including a
wasteload allocation for point sources, a load allocation for
nonpoint sources and natural background, an allocation for
future growth of point and nonpoint sources, and a margin of
safety to account for uncertainty about the relationship between
pollutant loads and the quality of the receiving surface water.
"Natural background" means characteristics of the water body
resulting from the multiplicity of factors in nature, including
climate and ecosystem dynamics, that affect the physical,
chemical, or biological conditions in a water body, but does not
include measurable and distinguishable pollution that is
attributable to human activity or influence. A TMDL must take
into account seasonal variations.
new text end

new text begin Subd. 11. new text end

new text begin Tmdl implementation plan. new text end

new text begin "TMDL implementation
plan" means a document detailing restoration activities needed
to meet the approved TMDL's pollutant load allocations for point
and nonpoint sources.
new text end

new text begin Subd. 12. new text end

new text begin Water quality standards. new text end

new text begin "Water quality
standards" for Minnesota surface waters are found in Minnesota
Rules, chapters 7050 and 7052.
new text end

Sec. 5.

new text begin [114D.20] IMPLEMENTATION; COORDINATION; GOALS;
POLICIES; AND PRIORITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Coordination and cooperation. new text end

new text begin In
implementing this chapter, public agencies and private entities
shall take into consideration the relevant provisions of local
and other applicable water management, conservation, land use,
land management, and development plans and programs. Public
agencies with authority for local water management,
conservation, land use, land management, and development plans
shall take into consideration the manner in which their plans
affect the implementation of this chapter. Public agencies
shall identify opportunities to participate and assist in the
successful implementation of this chapter, including the funding
or technical assistance needs, if any, that may be necessary.
In implementing this chapter, public agencies shall endeavor to
engage the cooperation of organizations and individuals whose
activities affect the quality of surface waters, including point
and nonpoint sources of pollution, and who have authority and
responsibility for water management, planning, and protection.
To the extent practicable, public agencies shall endeavor to
enter into formal and informal agreements and arrangements with
federal agencies and departments to jointly utilize staff and
educational, technical, and financial resources to deliver
programs or conduct activities to achieve the intent of this
chapter, including efforts under the federal Clean Water Act and
other federal farm and soil and water conservation programs.
new text end

new text begin Subd. 2. new text end

new text begin Goals for implementation. new text end

new text begin The following goals
must guide the implementation of this chapter:
new text end

new text begin (1) to identify impaired waters in accordance with federal
TMDL requirements within ten years after the effective date of
this section and thereafter to ensure continuing evaluation of
surface waters for impairments;
new text end

new text begin (2) to submit TMDL's to the United States Environmental
Protection Agency for all impaired waters in a timely manner in
accordance with federal TMDL requirements;
new text end

new text begin (3) to set a reasonable time for implementing restoration
of each identified impaired water;
new text end

new text begin (4) to provide assistance and incentives to prevent waters
from becoming impaired and to improve the quality of waters
which are listed as impaired but have no approved TMDL
addressing the impairment;
new text end

new text begin (5) to promptly seek the delisting of waters from the
impaired waters list when those waters are shown to achieve the
designated uses applicable to the waters; and
new text end

new text begin (6) to achieve compliance with federal Clean Water Act
requirements in Minnesota.
new text end

new text begin Subd. 3. new text end

new text begin Implementation policies. new text end

new text begin The following policies
must guide the implementation of this chapter:
new text end

new text begin (1) develop regional and watershed TMDL's and TMDL
implementation plans, and TMDL's and TMDL implementation plans
for multiple pollutants, where reasonable and feasible;
new text end

new text begin (2) maximize use of available organizational, technical,
and financial resources to perform sampling, monitoring, and
other activities to identify impaired waters, including use of
citizen monitoring;
new text end

new text begin (3) maximize opportunities for restoration of impaired
waters, by prioritizing and targeting of available programmatic,
financial, and technical resources and by providing additional
state resources to complement and leverage available resources;
new text end

new text begin (4) use existing regulatory authorities to achieve
restoration for point and nonpoint sources of pollution where
applicable, and promote the development and use of effective
nonregulatory measures to address pollution sources for which
regulations are not applicable;
new text end

new text begin (5) use restoration methods that have a demonstrated
effectiveness in reducing impairments and provide the greatest
long-term positive impact on water quality protection and
improvement and related conservation benefits while
incorporating innovative approaches on a case-by-case basis;
new text end

new text begin (6) identify for the legislature any innovative approaches
that may strengthen or complement existing programs;
new text end

new text begin (7) identify and encourage implementation of measures to
prevent waters from becoming impaired and to improve the quality
of waters that are listed as impaired but have no approved TMDL
addressing the impairment using the best available data and
technology, and establish and report outcome-based performance
measures that monitor the progress and effectiveness of
protection and restoration measures.
new text end

new text begin (8) monitor and enforce cost-sharing contracts and impose
monetary damages in an amount up to 150 percent of the financial
assistance received for failure to comply.
new text end

new text begin Subd. 4. new text end

new text begin Priorities for identifying impaired waters. new text end

new text begin The
Pollution Control Agency, in accordance with federal TMDL
requirements, shall set priorities for identifying impaired
waters, giving consideration to:
new text end

new text begin (1) waters where impairments would pose the greatest
potential risk to human or aquatic health; and
new text end

new text begin (2) waters where data developed through public agency or
citizen monitoring or other means, provides scientific evidence
that an impaired condition exists.
new text end

new text begin Subd. 5. new text end [PRIORITIES FOR PREPARATION OF TMDL'S.] new text begin The Clean
Water Council shall recommend priorities for scheduling and
preparing TMDL's and TMDL implementation plans, taking into
account the severity of the impairment, the designated uses of
those waters, and other applicable federal TMDL requirements.
In recommending priorities, the council shall also give
consideration to waters and watersheds:
new text end

new text begin (1) with impairments that pose the greatest potential risk
to human health;
new text end

new text begin (2) with impairments that pose the greatest potential risk
to threatened or endangered species;
new text end

new text begin (3) with impairments that pose the greatest potential risk
to aquatic health;
new text end

new text begin (4) where other public agencies and participating
organizations and individuals, especially local, basinwide,
watershed, or regional agencies or organizations, have
demonstrated readiness to assist in carrying out the
responsibilities, including availability and organization of
human, technical, and financial resources necessary to undertake
the work; and
new text end

new text begin (5) where there is demonstrated coordination and
cooperation among cities, counties, watershed districts, and
soil and water conservation districts in planning and
implementation of activities that will assist in carrying out
the responsibilities.
new text end

new text begin Subd. 6. new text end

new text begin Priorities for restoration of impaired
waters. new text end

new text begin In implementing restoration of impaired waters, in
addition to the priority considerations in subdivision 5 the
Clean Water Council shall give priority in its recommendations
for restoration funding from the clean water legacy account to
restoration projects that:
new text end

new text begin (1) coordinate with and utilize existing local authorities
and infrastructure for implementation;
new text end

new text begin (2) can be implemented in whole or in part by providing
support for existing or ongoing restoration efforts; and
new text end

new text begin (3) most effectively leverage other sources of restoration
funding, including federal, state, local, and private sources of
funds;
new text end

new text begin (4) show a high potential for early restoration and
delisting based upon scientific data developed through public
agency or citizen monitoring or other means; and
new text end

new text begin (5) show a high potential for long-term water quality and
related conservation benefits.
new text end

new text begin Subd. 7. new text end

new text begin Priorities for funding prevention actions. new text end

new text begin The
Clean Water Council shall apply the priorities applicable under
subdivision 6, as far as practicable, when recommending
priorities for funding actions to prevent waters from becoming
impaired and to improve the quality of waters which are listed
as impaired but have no approved TMDL.
new text end

Sec. 6.

new text begin [114D.25] ADMINISTRATION; POLLUTION CONTROL
AGENCY.
new text end

new text begin Subdivision 1. new text end

new text begin General duties and authorities. new text end

new text begin (a) The
Pollution Control Agency, in accordance with federal TMDL
requirements, shall: identify impaired waters and propose a
list of the waters for review and approval by the United States
Environmental Protection Agency; develop and approve TMDL's for
listed impaired waters and submit the approved TMDL's to the
United State Environmental Protection Agency for final approval;
and propose to delist waters from the Environmental Protection
Agency impaired waters list.
new text end

new text begin (b) A TMDL must include a statement of the facts and
scientific data supporting the TMDL and a list of potential
implementation options, including a range of estimates of the
cost of implementation and individual wasteload data for any
point sources addressed by the TMDL.
new text end

new text begin (c) The implementation information need not be sent to the
United States Environmental Protection Agency for review and
approval.
new text end

new text begin Subd. 2. new text end

new text begin Administrative procedures for tmdl
approval. new text end

new text begin The approval of a TMDL by the Pollution Control
Agency is a final decision of the agency for purposes of section
115.05, and is subject to the contested case procedures of
sections 14.57 to 14.62 in accordance with agency procedural
rules. The agency shall not submit an approved TMDL to the
United States Environmental Protection Agency until the time for
commencing judicial review has run or the judicial review
process has been completed. A TMDL is not subject to the
rulemaking requirements of chapter 14, including section 14.386.
new text end

new text begin Subd. 3. new text end

new text begin Tmdl submittal requirement. new text end

new text begin Before submitting a
TMDL to the United States Environmental Protection Agency, the
Pollution Control Agency shall comply with the notice and
procedure requirements of this section. If a contested case
proceeding is not required for a proposed TMDL, the agency may
submit the TMDL to the United States Environmental Protection
Agency no earlier than 30 days after the notice required in
subdivision 4. If a contested case proceeding is required for a
TMDL, the TMDL may be submitted to the United States
Environmental Protection Agency after the contested case
proceeding and appeal process is completed.
new text end

new text begin Subd. 4. new text end

new text begin Tmdl notice; contents. new text end

new text begin The Pollution Control
Agency shall give notice of its intention to submit a TMDL to
the United States Environmental Protection Agency. The notice
must be given by publication in the State Register and by United
States mail to persons who have registered their names with the
agency. The notice must include either a copy of the proposed
TMDL or an easily readable and understandable description of its
nature and effect and an announcement of how free access to the
proposed TMDL can be obtained. In addition, the agency shall
make reasonable efforts to notify persons or classes of persons
who may be significantly affected by the TMDL by giving notice
of its intention in newsletters, newspapers, or other
publications, or through other means of communication. The
notice must include a statement informing the public:
new text end

new text begin (1) that the public has 30 days in which to submit comment
in support of or in opposition to the proposed TMDL and that
comment is encouraged;
new text end

new text begin (2) that each comment should identify the portion of the
proposed TMDL addressed, the reason for the comment, and any
change proposed;
new text end

new text begin (3) of the manner in which persons must request a contested
case proceeding on the proposed TMDL;
new text end

new text begin (4) that the proposed TMDL may be modified if the
modifications are supported by the data and views submitted; and
new text end

new text begin (5) the date on which the 30-day comment period ends.
new text end

new text begin Subd. 5. new text end

new text begin Third-party tmdl development. new text end

new text begin The Pollution
Control Agency may enter agreements with any qualified public or
private nonprofit entity setting forth the terms and conditions
under which that entity is authorized to develop a third-party
TMDL. Before entering into an agreement with an entity to
develop a third-party TMDL, the Pollution Control Agency must
make reasonable efforts to notify cities, counties, townships,
soil and water conservation districts, and watershed districts
in the area that would be affected by the TMDL. An agreement
with a private nonprofit entity must require active involvement
in the process by the Pollution Control Agency and appointment
of an advisory committee to provide oversight of the development
of the TMDL. At least 60 percent of the members of the advisory
committee must be representatives of local public agencies from
the area affected by the TMDL. In determining whether an entity
is qualified to develop a TMDL, the agency shall consider the
technical and administrative qualifications of the entity and
may not enter into an agreement with a third-party entity that
has a conflict of interest with respect to the development of
the third-party TMDL. A TMDL developed by a third party is
subject to monitoring, modification, and approval by the
Pollution Control Agency, and must be approved by the Pollution
Control Agency before it is submitted to the United States
Environmental Protection Agency. Before submitting a TMDL to
the Environmental Protection Agency, the Pollution Control
Agency must comply with the notice and procedure requirements of
subdivision 3. Approval of a third-party TMDL by the Pollution
Control Agency is subject to judicial review and contested case
procedures in the same manner as approval of any other TMDL by
the Pollution Control Agency. The Pollution Control Agency
shall only consider authorizing the development of TMDL's
consistent with the goals, policies, and priorities determined
under this section.
new text end

Sec. 7.

new text begin [114D.30] CLEAN WATER COUNCIL.
new text end

new text begin Subdivision 1. new text end

new text begin Creation; duties. new text end

new text begin A Clean Water Council
is created to advise the Pollution Control Agency and other
implementing public agencies on the administration and
implementation of this chapter, and foster coordination and
cooperation as described in section 114D.20, subdivision 1. The
council may also advise on the development of appropriate
processes for expert scientific review as described in section
114D.35, subdivision 2. The Pollution Control Agency shall
provide administrative support for the council with the support
of other member agencies. The members of the council shall
elect a chair from the nonagency members of the council.
new text end

new text begin Subd. 2. new text end

new text begin Membership; appointment. new text end

new text begin The governor must
appoint the members of the council. The governor must appoint
one person from each of the following agencies: the Department
of Natural Resources, the Department of Agriculture, the
Pollution Control Agency, and the Board of Water and Soil
Resources. The governor must appoint 14 additional nonagency
members of the council as follows:
new text end

new text begin (1) two members representing statewide farm organizations;
new text end

new text begin (2) two members representing business organizations;
new text end

new text begin (3) two members representing environmental organizations;
new text end

new text begin (4) one member representing soil and water conservation
districts;
new text end

new text begin (5) one member representing watershed districts;
new text end

new text begin (6) one member representing nonprofit organizations focused
on improvement of Minnesota lakes or streams;
new text end

new text begin (7) one member representing an organization of county
governments;
new text end

new text begin (8) two members representing organizations of city
governments;
new text end

new text begin (9) one member representing the Metropolitan Council
established under section 473.123; and
new text end

new text begin (10) one member representing an organization of township
governments.
new text end

new text begin In making appointments, the governor must attempt to
provide for geographic balance.
new text end

new text begin Subd. 3. new text end

new text begin Terms; compensation; removal. new text end

new text begin The initial terms
of members representing state agencies and the Metropolitan
Council expire on the first Monday in January, 2007.
Thereafter, the terms of members representing the state agencies
and the Metropolitan Council are four years and are coterminous
with the governor. The terms of other members of the council
shall be as provided in section 15.059, subdivision 2. Members
may serve until their successors are appointed and qualify.
Compensation and removal of council members is as provided in
section 15.059, subdivisions 3 and 4. A vacancy on the council
may be filled by the appointing authority provided in
subdivision 1 for the remainder of the unexpired term.
new text end

new text begin Subd. 4. new text end

new text begin Implementation plan. new text end

new text begin The Clean Water Council
shall prepare a plan for implementation of this chapter. The
plan shall address general procedures and timeframes for
implementing this chapter, and shall include a more specific
implementation work plan for the next fiscal biennium and a
framework for setting priorities to address impaired waters
consistent with section 114D.45, subdivisions 2 to 7. The
council shall issue the first implementation plan under this
subdivision by December 1, 2005, and shall issue a revised work
plan by December 1 of each even-numbered year thereafter.
new text end

new text begin Subd. 5. new text end

new text begin Recommendations on appropriation of funds. new text end

new text begin The
Clean Water Council shall recommend to the governor the manner
in which money from the clean water legacy account should be
appropriated for the purposes identified in section 114D.45,
subdivision 3. The council's recommendations must be consistent
with the purposes, policies, goals, and priorities in sections
114D.05 to 114D.35, and shall allocate adequate support and
resources to identify impaired waters, develop TMDL's, develop
TMDL implementation plans, implement restoration of impaired
waters, and provide assistance and incentives to prevent waters
from becoming impaired and improve the quality of waters which
are listed as impaired but have no approved TMDL. The council
must recommend methods of ensuring that awards of grants, loans,
or other funds from the clean water legacy account specify the
outcomes to be achieved as a result of the funding, and specify
standards to hold the recipient accountable for achieving the
desired outcomes.
new text end

new text begin Subd. 6. new text end

new text begin Biennial report to legislature. new text end

new text begin By December 1
of each even-numbered year, the council shall submit a report to
the legislature on the activities for which money from the clean
water legacy account has been or will be spent for the current
biennium, the activities for which money from the account is
recommended to be spent in the next biennium, and the impact on
economic development of the implementation of the impaired
waters program. The report due on December 1, 2014, must
include an evaluation of the progress made through June 30,
2014, in implementing this chapter, the need for funding of
future implementation of those sections, and recommendations for
the sources of such funding.
new text end

Sec. 8.

new text begin [114D.35] PUBLIC AND STAKEHOLDER PARTICIPATION;
SCIENTIFIC REVIEW; EDUCATION.
new text end

new text begin Subdivision 1. new text end

new text begin Public and stakeholder participation.
new text end

new text begin Public agencies and private entities involved in the
implementation of this chapter shall encourage participation by
the public and stakeholders, including local citizens, land
owners and managers, and public and private organizations, in
the identification of impaired waters, in developing TMDL's, and
in planning, priority setting, and implementing restoration of
impaired waters. In particular, the Pollution Control Agency
shall make reasonable efforts to provide timely information to
the public and to stakeholders about impaired waters that have
been identified by the agency. The agency shall seek broad and
early public and stakeholder participation in scoping the
activities necessary to develop a TMDL, including the scientific
models, methods, and approaches to be used in TMDL development,
and to implement restoration pursuant to section 114D.15,
subdivision 7.
new text end

new text begin Subd. 2. new text end

new text begin Expert scientific advice. new text end

new text begin The Clean Water
Council and public agencies and private entities shall make use
of available public and private expertise from educational,
research, and technical organizations, including the University
of Minnesota and other higher education institutions, to provide
appropriate independent expert advice on models, methods, and
approaches used in identifying impaired waters, developing
TMDL's, and implementing prevention and restoration.
new text end

new text begin Subd. 3. new text end

new text begin Education. new text end

new text begin The Clean Water Council shall
develop strategies for informing, educating, and encouraging the
participation of citizens, stakeholders, and others regarding
the identification of impaired waters, development of TMDL's,
development of TMDL implementation plans, and implementation of
restoration for impaired waters. Public agencies shall be
responsible for implementing the strategies.
new text end

Sec. 9.

new text begin [114D.45] CLEAN WATER LEGACY ACCOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin The clean water legacy account
is created as an account in the environmental fund. Money in
the account must only be made available for the implementation
of this chapter and sections 446A.073 and 446A.074, without
supplanting or taking the place of any other funds which are
currently available or may become available from any other
source, whether federal, state, local, or private, for
implementation of those sections.
new text end

new text begin Subd. 2. new text end

new text begin Uses of account. new text end

new text begin Subject to appropriation by
the legislature, the clean water legacy account may only be used
for the following purposes:
new text end

new text begin (1) to provide grants, loans, and technical assistance to
public agencies and others who are participating in the process
of identifying impaired waters, developing TMDL's and TMDL
implementation plans, implementing restoration of impaired
waters, and monitoring the effectiveness of restoration;
new text end

new text begin (2) to support measures to prevent waters from becoming
impaired and to improve the quality of waters that are listed as
impaired but have no approved TMDL addressing the impairment;
new text end

new text begin (3) to provide grants and loans for wastewater and
stormwater treatment projects through the Public Facilities
Authority;
new text end

new text begin (4) to support the efforts of public agencies associated
with individual sewage treatment systems and financial
assistance for upgrading and replacing the systems; and
new text end

new text begin (5) to provide funds to state agencies to carry out their
responsibilities under this chapter.
new text end

Sec. 10.

Minnesota Statutes 2004, section 115.06,
subdivision 4, is amended to read:

Subd. 4.

Citizen monitoring of water quality.

(a) The
agency may encourage citizen monitoring of ambient water quality
for public waters by:

(1) providing technical assistance to citizen and local
group water quality monitoring efforts;

(2) integrating citizen monitoring data into water quality
assessments and agency programs, provided that the data adheres
to agency quality assurance and quality control protocols; and

(3) seeking public and private funds to:

(i) collaboratively develop clear guidelines for water
quality monitoring procedures and data management practices for
specific data and information uses;

(ii) distribute the guidelines to citizens, local
governments, and other interested parties;

(iii) improve and expand water quality monitoring
activities carried out by the agency; and

(iv) continue to improve electronic and Web access to water
quality data and information about public waters that have been
either fully or partially assessed.

(b) This subdivision does not authorize a citizen to enter
onto private property for any purpose.

(c) By January 15 of each odd-numbered year, the
commissioner shall report to the senate and house of
representatives committees with jurisdiction over environmental
policy and finance on activities under this section.

deleted text begin (d) This subdivision shall sunset June 30, 2005.
deleted text end

Sec. 11.

Minnesota Statutes 2004, section 116.182,
subdivision 2, is amended to read:

Subd. 2.

Applicability.

This section governs the
commissioner's certification of projects seeking financial
assistance under section 103F.725, subdivision 1a, 446A.07, deleted text begin or
deleted text end 446A.072 new text begin , or 446A.075 new text end .

Sec. 12.

new text begin [446A.073] CLEAN WATER LEGACY PHOSPHORUS
REDUCTION GRANTS.
new text end

new text begin Subdivision 1. new text end

new text begin Creation of fund. new text end

new text begin The authority shall
establish a clean water legacy capital improvement fund and
shall make grants from the fund as provided in this section.
Money in the fund, including interest earned, is appropriated to
the authority for the purpose of this section.
new text end

new text begin Subd. 2. new text end

new text begin Grants. new text end

new text begin The authority shall award grants from
the clean water legacy capital improvement fund to governmental
units for the capital costs of wastewater treatment facility
projects or a portion thereof that will reduce the discharge of
total phosphorus from the facility to one milligram per liter or
less. A project is eligible for a grant if it meets the
following requirements:
new text end

new text begin (1) the applicable phosphorus discharge limit is
incorporated in a permit issued by the agency for the wastewater
treatment facility on or after March 28, 2000, the grantee
agrees to comply with the applicable limit as a condition of
receiving the grant, or the grantee made improvements to a
wastewater treatment facility on or after March 28, 2000, that
include infrastructure to reduce the discharge of total
phosphorus to one milligram per liter or less;
new text end

new text begin (2) the governmental unit has submitted a facilities plan
for the project to the agency and a grant application to the
authority on a form prescribed by the authority; and
new text end

new text begin (3) the agency has approved the facilities plan, and
certified the eligible costs for the project to the authority.
new text end

new text begin Subd. 3. new text end

new text begin Eligible capital costs. new text end

new text begin Eligible capital costs
for phosphorus reduction grants under subdivision 4, paragraph
(a), include the as-bid construction costs and engineering
planning and design costs. Eligible capital costs for
phosphorus reduction grants under subdivision 4, paragraph (b),
include the final, incurred construction, engineering, planning,
and design costs.
new text end

new text begin Subd. 4. new text end

new text begin Grant amounts and priorities. new text end

new text begin (a) Priority must
be given to projects that start construction on or after July 1,
2005. If a facility's plan for a project is approved by the
agency before July 1, 2009, the amount of the grant is 75
percent of the eligible capital cost of the project. If a
facility's plan for a project is approved by the agency on or
after July 1, 2009, the amount of the grant is 50 percent of the
eligible capital cost of the project. Priority in awarding
grants under this paragraph must be based on the date of
approval of the facility's plan for the project.
new text end

new text begin (b) Projects that meet the eligibility requirements in
subdivision 2 and have started construction before July 1, 2005,
are eligible for grants to reimburse up to 75 percent of the
eligible capital cost of the project, less any amounts
previously received in grants from other sources. Application
for a grant under this paragraph must be submitted to the
authority no later than June 30, 2007. Priority for award of
grants under this paragraph must be based on the date of agency
approval of the facility plan.
new text end

new text begin (c) In each fiscal year that money is available for grants,
the authority shall first award grants under paragraph (a) to
projects that met the eligibility requirements of subdivision 2
by May 1 of that year. The authority shall use any remaining
money available that year to award grants under paragraph (b).
Grants that have been approved but not awarded in a previous
fiscal year carry over and must be awarded in subsequent fiscal
years in accordance with the priorities in this paragraph.
new text end

new text begin (d) Disbursements of grants under this section by the
authority to recipients must be made for eligible project costs
as incurred by the recipients, and must be made by the authority
in accordance with the project financing agreement and
applicable state law.
new text end

new text begin Subd. 5. new text end

new text begin Fees. new text end

new text begin The authority may charge the grant
recipient a fee for its administrative costs not to exceed
one-half of one percent of the grant amount, to be paid upon
execution of the grant agreement.
new text end

Sec. 13.

new text begin [446A.074] SMALL COMMUNITY WASTEWATER TREATMENT
PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Creation of fund. new text end

new text begin The authority shall
establish a small community wastewater treatment fund and shall
make loans and grants from the fund as provided in this section.
Money in the fund is annually appropriated to the authority and
does not lapse. The fund shall be credited with all loan
repayments and investment income from the fund, and servicing
fees assessed under section 446A.04, subdivision 5. The
authority shall manage and administer the small community
wastewater treatment fund, and for these purposes, may exercise
all powers provided in this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Loans and grants. new text end

new text begin (a) The authority shall award
loans as provided in paragraph (b) and grants as provided in
paragraph (c) to governmental units from the small community
wastewater treatment fund for projects to replace noncomplying
individual sewage treatment systems with a community wastewater
treatment system or systems meeting the requirements of section
115.55. A governmental unit receiving a loan or loan and grant
from the fund shall own the community wastewater treatment
systems built under the program and shall be responsible, either
directly or through a contract with a private vendor, for all
inspections, maintenance, and repairs necessary to assure proper
operation of the systems.
new text end

new text begin (b) Loans may be awarded for up to 100 percent of eligible
project costs as described in this section.
new text end

new text begin (c) When the area to be served by a project has a median
household income below the state average median household
income, the governmental unit may receive 50 percent of the
funding provided under this section in the form of a grant. An
applicant may submit income survey data collected by an
independent party if it believes the most recent United States
census does not accurately reflect the median household income
of the area to be served.
new text end

new text begin Subd. 3. new text end

new text begin Project priority list. new text end

new text begin Governmental units
seeking loans or loans and grants from the small community
wastewater treatment program shall first submit a project
proposal to the agency on a form prescribed by the agency. A
project proposal shall include a compliance determination for
all individual sewage treatment systems in the project area.
The agency shall rank project proposals on its project priority
list used for the water pollution control revolving fund under
section 446A.07.
new text end

new text begin Subd. 4. new text end

new text begin Applications. new text end

new text begin Governmental units with projects
on the project priority list shall submit applications to the
authority on forms prescribed by the authority. The application
shall include:
new text end

new text begin (1) a list of the individual sewage treatment systems
proposed to be replaced over a period of up to three years;
new text end

new text begin (2) a project schedule and cost estimate for each year of
the project;
new text end

new text begin (3) a financing plan for repayment of the loan; and
new text end

new text begin (4) a management plan providing for the inspection,
maintenance, and repairs necessary to assure proper operation of
the systems.
new text end

new text begin Subd. 5. new text end

new text begin Awards. new text end

new text begin The authority shall award loans or
loans and grants as provided in subdivision 2 to governmental
units with approved applications based on their ranking on the
agency's project priority list. The total amount awarded shall
be based on the estimated project costs for the portion of the
project expected to be completed within one year, up to an
annual maximum of $500,000. For projects expected to take more
than one year to complete, the authority may make a multiyear
commitment for a period not to exceed three years, contingent on
the future availability of funds. Each year of a multiyear
commitment must be funded by a separate loan or loan and grant
agreement meeting the terms and conditions in subdivision 6. A
governmental unit receiving a loan or loan and grant under a
multiyear commitment shall have priority for additional loan and
grant funds in subsequent years.
new text end

new text begin Subd. 6. new text end

new text begin Loan terms and conditions. new text end

new text begin Loans from the small
community wastewater treatment fund shall comply with the
following terms and conditions:
new text end

new text begin (1) principal and interest payments must begin no later
than two years after the loan is awarded;
new text end

new text begin (2) loans shall carry an interest rate of one percent;
new text end

new text begin (3) loans shall be fully amortized within ten years of the
first scheduled payment or, if the loan amount exceeds $10,000
per household, shall be fully amortized within 20 years but not
to exceed the expected design life of the system;
new text end

new text begin (4) a governmental unit receiving a loan must establish a
dedicated source or sources of revenues for repayment of the
loan and must issue a general obligation note to the authority
for the full amount of the loan; and
new text end

new text begin (5) each property owner to be served by a community
wastewater treatment system under this program must provide an
easement to the governmental unit to allow access to the system
for management and repairs.
new text end

new text begin Subd. 7. new text end

new text begin Special assessment deferral. new text end

new text begin (a) A governmental
unit receiving a loan under this section that levies special
assessments to repay the loan may defer payment of the
assessments under the provisions of sections 435.193 to 435.195.
new text end

new text begin (b) A governmental unit that defers payment of special
assessments for one or more properties under paragraph (a) may
request deferral of that portion of the debt service on its
loan, and the authority shall accept appropriate amendments to
the general obligation note of the governmental unit. If
special assessment payments are later received from properties
that received a deferral, the funds received shall be paid to
the authority with the next scheduled loan payment.
new text end

new text begin Subd. 8. new text end

new text begin Eligible costs. new text end

new text begin Eligible costs for small
community wastewater treatment loans and grants shall include
the costs of planning, design, construction, legal fees,
administration, and land acquisition.
new text end

new text begin Subd. 9. new text end

new text begin Disbursements. new text end

new text begin Loan and grant disbursements by
the authority under this section must be made for eligible
project costs as incurred by the recipients, and must be made in
accordance with the project loan or grant and loan agreement and
applicable state law.
new text end

new text begin Subd. 10. new text end

new text begin Audits. new text end

new text begin A governmental unit receiving a loan
under this section must annually provide to the authority for
the term of the loan a copy of its annual independent audit or,
if the governmental unit is not required to prepare an
independent audit, a copy of the annual financial reporting form
it provides to the state auditor.
new text end

Sec. 14.

Laws 2005, chapter 20, article 1, section 39, is
amended to read:

Sec. 39.

new text begin [446A.073] TOTAL MAXIMUM DAILY LOAD GRANTS.
new text end

Subdivision 1.

Program established.

new text begin When money is
appropriated for grants under this program, new text end the authority must
make grants to municipalities to cover up to one-half the cost
of wastewater treatment new text begin or stormwater new text end projects made necessary by
wasteload reductions under total maximum daily load plans
required by section 303(d) of the federal Clean Water Act,
United States Code, title 33, section 1313(d).

Subd. 2.

Grant application.

Application for a grant must
be made to the authority on forms prescribed by the authority
for the total maximum daily load grant program, with additional
information as required by the authority new text begin , including a project
schedule and cost estimate for the work necessary to comply with
the point source wasteload allocation new text end . In accordance with
section 116.182, the Pollution Control Agency shall:

(1) calculate the essential project component percentage,
which must be multiplied by the total project cost to determine
the eligible project cost; and

(2) review and certify approved projects to the authority.

Subd. 3.

Project priorities.

When money is appropriated
for grants under this program, the authority shall reserve money
for projects new text begin expected to start construction in the next 12
months new text end in the order that new text begin : (1) new text end their total maximum daily load
plan was approved by the United States Environmental Protection
Agency deleted text begin and in an deleted text end new text begin ; (2) their grant application is received by the
authority; and (3) have the greatest load reduction as
determined by the Pollution Control Agency. The authority shall
reserve money for projects in an new text end amount based on their most
recent cost estimates submitted to the authority or the as-bid
costs, whichever is less.

Subd. 4.

Grant approval.

The authority must make a grant
to a municipality, as defined in section 116.182, subdivision 1,
only after:

(1) the commissioner of the Minnesota Pollution Control
Agency has certified to the United States Environmental
Protection Agency a total maximum daily load plan for identified
waters of this state that includes a point source wasteload
allocation;

(2) the Environmental Protection Agency has approved the
plan;

(3) a municipality deleted text begin affected by the plan has estimated the
cost to it of wastewater treatment projects necessary to comply
with the point source wasteload allocation deleted text end new text begin for which the money
is reserved has submitted the as-bid costs for its wastewater
treatment or stormwater projects to the authority new text end ;

(4) the Pollution Control Agency has approved the cost
estimate; and

(5) the authority has determined that the additional
financing necessary to complete the project has been committed
from other sources.

Subd. 5.

Grant disbursement.

Disbursement of a grant
must be made for eligible project costs as incurred by the
municipality and in accordance with a project financing
agreement and applicable state and federal laws and rules
governing the payments.

new text begin Subd. 6. new text end

new text begin Fees. new text end

new text begin The authority may charge the grant
recipient a fee for its administrative costs, not to exceed
one-half of one percent of the grant amount, to be paid upon
execution of the agreement.
new text end

Sec. 15. new text begin APPROPRIATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin General provisions. new text end

new text begin The appropriations in
this section are from the general fund and are available for the
fiscal years ending June 30, 2006, and June 30, 2007. Unless
otherwise specified in this section, these appropriations do not
cancel and remain available until June 30, 2007. Appropriations
in this section that are encumbered under contract, including
grant contract, on or before June 30, 2007, are available until
June 30, 2009.
new text end

new text begin Subd. 2. new text end

new text begin Pollution control agency. new text end

new text begin The following amounts
are appropriated to the Pollution Control Agency for the
purposes stated:
new text end

new text begin (1) $1,860,000 in fiscal year 2006 and $4,125,000 in fiscal
year 2007 are for statewide assessment of surface water quality
and trends; of these amounts, up to $1,010,000 in fiscal year
2006 and $1,960,000 in fiscal year 2007 are available for grants
or contracts to support citizen monitoring of surface waters;
and
new text end

new text begin (2) $1,900,000 in fiscal year 2006 and $3,290,000 in fiscal
year 2007 are to develop TMDL's for waters listed on the United
States Environmental Protection Agency approved 2004 impaired
waters list; of this appropriation, up to $390,000 in fiscal
year 2006 and $1,140,000 in fiscal year 2007 are available for
grants or contracts to develop TMDL's.
new text end

new text begin Subd. 3. new text end

new text begin Agriculture department. new text end

new text begin The following amounts
are appropriated to the Department of Agriculture for the
purposes stated:
new text end

new text begin (1) $152,000 in fiscal year 2006 and $1,401,000 in fiscal
year 2007 are for agricultural best management practices
low-interest loans to producers and rural landowners and these
funds remain available until expended; of these amounts,
$120,000 in fiscal year 2006 and $1,281,000 in fiscal year 2007
are available for pass-through to local governments and lenders
for low-interest loans;
new text end

new text begin (2) $213,000 in fiscal year 2006 and $487,000 in fiscal
year 2007 are to expand technical assistance to producers and
conservation professionals on nutrient and pasture management;
target practices to sources of water impairments; coordinate
federal and state farm conservation programs to fully utilize
federal conservation funds; and expand conservation planning
assistance for producers; of these amounts, $30,000 in fiscal
year 2006 and $126,000 in fiscal year 2007 are available for
grants or contracts to develop nutrient and conservation
planning assistance information materials; and
new text end

new text begin (3) $61,000 in fiscal year 2006 and $487,000 in fiscal year
2007 are for research, evaluation, and effectiveness monitoring
of agricultural practices in restoring impaired waters; of these
amounts, $360,000 in fiscal year 2007 is available for grants or
contracts for research, evaluations, and effectiveness
monitoring of agricultural practices in restoring impaired
waters, including on-farm demonstrations.
new text end

new text begin Subd. 4. new text end

new text begin Board of water and soil resources. new text end

new text begin The
following amounts are appropriated to the Board of Water and
Soil Resources for restoration and prevention actions as
described in Minnesota Statutes, section 114D.20, subdivisions 6
and 7:
new text end

new text begin (1) $274,000 in fiscal year 2006 and $3,504,000 in fiscal
year 2007 are for targeted nonpoint restoration cost-share and
incentive payments; of these amounts, up to $270,000 in fiscal
year 2006 and $3,270,000 in fiscal year 2007 are available for
grants to soil and water conservation districts through the
state cost-share program authorized under Minnesota Statutes,
section 103C.501;
new text end

new text begin (2) $251,000 in fiscal year 2006 and $2,102,000 in fiscal
year 2007 are for targeted nonpoint restoration technical,
compliance, and engineering assistance activities; of these
amounts, up to $247,000 in fiscal year 2006 and $1,950,000 in
fiscal year 2007 are available for grants to soil and water
conservation districts, watershed management organizations, or
counties to support nonpoint restoration implementation
activities;
new text end

new text begin (3) $122,000 in fiscal year 2007 is for reporting and
evaluation of applied soil and water conservation practices;
new text end

new text begin (4) $1,462,000 in fiscal year 2007 is for grants to
counties for implementation of county individual sewage
treatment systems programs through the local water resources
protection and management program under Minnesota Statutes,
section 103B.3369;
new text end

new text begin (5) $300,000 in fiscal year 2006 and $914,000 in fiscal
year 2007 are for base and challenge grants to support nonpoint
source protection activities related to lake and river
protection and management through the local water resources
protection and management program under Minnesota Statutes,
section 103B.3369; and
new text end

new text begin (6) $1,462,000 in fiscal year 2007 is for grants to soil
and water conservation districts for streambank, stream channel,
lakeshore, and roadside protection and restoration projects
through the state cost-share program under Minnesota Statutes,
section 103C.501.
new text end

new text begin Subd. 5. new text end

new text begin Department of natural resources. new text end

new text begin The following
amounts are appropriated to the Department of Natural Resources
for the purposes stated:
new text end

new text begin (1) $280,000 in fiscal year 2006 and $430,000 in fiscal
year 2007 are for statewide assessment of surface water quality
and trends; and
new text end

new text begin (2) $61,000 in fiscal year 2006 and $2,468,000 in fiscal
year 2007 are for restoration of impaired waters and actions to
prevent waters from becoming impaired; of these amounts, up to
$1,700,000 in fiscal year 2007 is available for grants and
contracts for forest stewardship planning and implementation,
and for research, compliance, and monitoring.
new text end

new text begin Subd. 6. new text end

new text begin Public facilities authority. new text end

new text begin $2,681,000 in
fiscal year 2006 and $22,671,000 in fiscal year 2007 are
appropriated to the Public Facilities Authority; of these
amounts, $2,681,000 in fiscal year 2006 and $8,840,000 in fiscal
year 2007 are to the clean water legacy capital improvements
fund for grants under Minnesota Statutes, section 446A.073;
$2,383,000 in fiscal year 2007 is to the small community
wastewater treatment fund for loans and grants under Minnesota
Statutes, section 446A.074; and $11,448,000 in fiscal year 2007
is to the water pollution control revolving fund under Minnesota
Statutes, section 446.07, for wastewater treatment and
stormwater projects, and for total maximum daily load grants
under Minnesota Statutes, section 446A.075. Funds appropriated
under this subdivision do not cancel and are available until
expended.
new text end

Sec. 16. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 15 are effective the day following final
enactment.
new text end

ARTICLE 3

TAX PROVISIONS

Section 1.

Minnesota Statutes 2004, section 290.091,
subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by
this section, the following terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of
the following for the taxable year:

(1) the taxpayer's federal alternative minimum taxable
income as defined in section 55(b)(2) of the Internal Revenue
Code;

(2) the taxpayer's itemized deductions allowed in computing
federal alternative minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170
of the Internal Revenue Code new text begin :
new text end

new text begin (A) for taxable years beginning before January 1, 2006, new text end to
the extent that the deduction exceeds 1.0 percent of adjusted
gross income deleted text begin , as defined deleted text end new text begin ;
new text end

new text begin (B) for taxable years beginning after December 31, 2005, to
the full extent of the deduction.
new text end

new text begin For purposes of this clause, "adjusted gross income" has
the meaning given new text end in section 62 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled
person;

(3) for depletion allowances computed under section 613A(c)
of the Internal Revenue Code, with respect to each property (as
defined in section 614 of the Internal Revenue Code), to the
extent not included in federal alternative minimum taxable
income, the excess of the deduction for depletion allowable
under section 611 of the Internal Revenue Code for the taxable
year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion
deduction for the taxable year);

(4) to the extent not included in federal alternative
minimum taxable income, the amount of the tax preference for
intangible drilling cost under section 57(a)(2) of the Internal
Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative
minimum taxable income, the amount of interest income as
provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01,
subdivision 19a, clause (7);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01,
subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by
section 290.01, subdivision 19b, clause (2), to the extent
included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued
within the taxable year on indebtedness to the extent that the
amount does not exceed net investment income, as defined in
section 163(d)(4) of the Internal Revenue Code. Interest does
not include amounts deducted in computing federal adjusted gross
income; and

(4) amounts subtracted from federal taxable income as
provided by section 290.01, subdivision 19b, clauses (10) and
(11).

In the case of an estate or trust, alternative minimum
taxable income must be computed as provided in section 59(c) of
the Internal Revenue Code.

(b) "Investment interest" means investment interest as
defined in section 163(d)(3) of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of
alternative minimum taxable income after subtracting the
exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under
this chapter (without regard to this section and section
290.032), reduced by the sum of the nonrefundable credits
allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this
section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable
years beginning after December 31, 2004.
new text end

Sec. 2.

Minnesota Statutes 2004, section 290.091,
subdivision 3, is amended to read:

Subd. 3.

Exemption amount.

new text begin (a) new text end For purposes of computing
the alternative minimum tax, the exemption amount is new text begin :
new text end

new text begin (1) for taxable years beginning before January 1, 2005, new text end the
exemption determined under section 55(d) of the Internal Revenue
Code, as amended through December 31, 1992 new text begin ;
new text end

new text begin (2) for taxable years beginning after December 31, 2004,
and before January 1, 2006, $42,000 for married couples filing
joint returns; $21,000 for married individuals filing separate
returns, estates, and trusts; and $31,500 for unmarried
individuals;
new text end

new text begin (3) for taxable years beginning after December 31, 2005,
and before January 1, 2007, $45,000 for married couples filing
joint returns; $22,500 for married individuals filing separate
returns, estates, and trusts; and $33,750 for unmarried
individuals; and
new text end

new text begin (4) for taxable years beginning after December 31, 2006,
and before January 1, 2008, $50,000 for married couples filing
joint returns; $25,000 for married individuals filing separate
returns, estates, and trusts; and $37,500 for unmarried
individuals.
new text end

new text begin (b) The exemption amount determined under this subdivision
is subject to the phase out under section 55(d)(3) of the
Internal Revenue Code new text end , except that alternative minimum taxable
income as determined under this section must be substituted in
the computation of the phase out deleted text begin under section 55(d)(3) deleted text end .

new text begin (c) For taxable years beginning after December 31, 2007,
the exemption amount under paragraph (a), clause (4), must be
adjusted for inflation. The commissioner shall make the
inflation adjustments in accordance with section 1(f) of the
Internal Revenue Code except that for the purposes of this
subdivision the percentage increase must be determined from the
year starting September 1, 2006, and ending August 31, 2007, as
the base year for adjusting for inflation for the tax year
beginning after December 31, 2007. The determination of the
commissioner under this subdivision is not a rule under the
Administrative Procedure Act.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable
years beginning after December 31, 2004.
new text end

Sec. 3.

Minnesota Statutes 2004, section 290.191,
subdivision 2, is amended to read:

Subd. 2.

Apportionment formula of general application.

new text begin (a) new text end Except for those trades or businesses required to use a
different formula under subdivision 3 or section 290.36, and for
those trades or businesses that receive permission to use some
other method under section 290.20 or under subdivision 4, a
trade or business required to apportion its net income must
apportion its income to this state on the basis of the
percentage obtained by taking the sum of:

(1) deleted text begin 75 deleted text end new text begin the new text end percent new text begin for the sales factor under paragraph (b)
new text end of the percentage which the sales made within this state in
connection with the trade or business during the tax period are
of the total sales wherever made in connection with the trade or
business during the tax period;

(2) deleted text begin 12.5 deleted text end new text begin the new text end percent new text begin for the property factor under
paragraph (b) new text end of the percentage which the total tangible
property used by the taxpayer in this state in connection with
the trade or business during the tax period is of the total
tangible property, wherever located, used by the taxpayer in
connection with the trade or business during the tax period; and

(3) deleted text begin 12.5 deleted text end new text begin the new text end percent new text begin for the payroll factor under paragraph
(b) new text end of the percentage which the taxpayer's total payrolls paid
or incurred in this state or paid in respect to labor performed
in this state in connection with the trade or business during
the tax period are of the taxpayer's total payrolls paid or
incurred in connection with the trade or business during the tax
period.

new text begin (b) For purposes of paragraph (a) and subdivision 3, the
following percentages apply for the taxable years specified:
new text end

new text begin Taxable years new text end new text begin Sales factor new text end new text begin Property new text end new text begin Payroll
beginning new text end new text begin percent new text end new text begin factor new text end new text begin factor
during calendar new text end new text begin percent new text end new text begin percent
year
2007 new text end new text begin 84 new text end new text begin 8 new text end new text begin 8
2008 new text end new text begin 95 new text end new text begin 2.5 new text end new text begin 2.5
2009 and later new text end new text begin 100 new text end new text begin 0 new text end new text begin 0
calendar years
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 4.

Minnesota Statutes 2004, section 290.191,
subdivision 3, is amended to read:

Subd. 3.

Apportionment formula for financial
institutions.

Except for an investment company required to
apportion its income under section 290.36, a financial
institution that is required to apportion its net income must
apportion its net income to this state on the basis of the
percentage obtained by taking the sum of:

(1) deleted text begin 75 deleted text end new text begin the new text end percent new text begin for the sales factor under subdivision
2, paragraph (b), new text end of the percentage which the receipts from
within this state in connection with the trade or business
during the tax period are of the total receipts in connection
with the trade or business during the tax period, from wherever
derived;

(2) deleted text begin 12.5 deleted text end new text begin the new text end percent new text begin for the property factor under
subdivision 2, paragraph (b), new text end of the percentage which the sum of
the total tangible property used by the taxpayer in this state
and the intangible property owned by the taxpayer and attributed
to this state in connection with the trade or business during
the tax period is of the sum of the total tangible property,
wherever located, used by the taxpayer and the intangible
property owned by the taxpayer and attributed to all states in
connection with the trade or business during the tax period; and

(3) deleted text begin 12.5 deleted text end new text begin the new text end percent new text begin for the payroll factor under
subdivision 2, paragraph (b), new text end of the percentage which the
taxpayer's total payrolls paid or incurred in this state or paid
in respect to labor performed in this state in connection with
the trade or business during the tax period are of the
taxpayer's total payrolls paid or incurred in connection with
the trade or business during the tax period.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years
beginning after December 31, 2006.
new text end

Sec. 5.

Minnesota Statutes 2004, section 477A.011,
subdivision 34, is amended to read:

Subd. 34.

City revenue need.

(a) For a city with a
population equal to or greater than 2,500, "city revenue need"
is the sum of (1) 5.0734098 times the pre-1940 housing
percentage; plus (2) 19.141678 times the population decline
percentage; plus (3) 2504.06334 times the road accidents factor;
plus (4) 355.0547; minus (5) the metropolitan area factor; minus
(6) 49.10638 times the household size.

(b) For a city with a population less than 2,500, "city
revenue need" is the sum of (1) 2.387 times the pre-1940 housing
percentage; plus (2) 2.67591 times the commercial industrial
percentage; plus (3) 3.16042 times the population decline
percentage; plus (4) 1.206 times the transformed population;
minus (5) 62.772.

(c) The city revenue need cannot be less than zero.

(d) For calendar year 2005 and subsequent years, the city
revenue need for a city, as determined in paragraphs (a) to (c),
is multiplied by the ratio of the deleted text begin annual deleted text end new text begin most recently available
first quarter new text end implicit price deflator for government consumption
expenditures and gross investment for state and local
governments as prepared by the United States Department of
Commerce, deleted text begin for the most recently available year deleted text end to the deleted text begin 2003 deleted text end new text begin first
quarter 2002 new text end implicit price deflator for state and local
government purchases.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2006 and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2004, section 477A.011,
subdivision 36, as amended by Laws 2005, chapter 38, section 1,
and Laws 2005, chapter 151, article 4, section 8, is amended to
read:

Subd. 36.

City aid base.

(a) Except as otherwise
provided in this subdivision, "city aid base" is zero.

(b) The city aid base for any city with a population less
than 500 is increased by $40,000 for aids payable in calendar
year 1995 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $40,000 for aids payable in calendar
year 1995 only, provided that:

(i) the average total tax capacity rate for taxes payable
in 1995 exceeds 200 percent;

(ii) the city portion of the tax capacity rate exceeds 100
percent; and

(iii) its city aid base is less than $60 per capita.

(c) The city aid base for a city is increased by $20,000 in
1998 and thereafter and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $20,000 in calendar year 1998 only, provided
that:

(i) the city has a population in 1994 of 2,500 or more;

(ii) the city is located in a county, outside of the
metropolitan area, which contains a city of the first class;

(iii) the city's net tax capacity used in calculating its
1996 aid under section 477A.013 is less than $400 per capita;
and

(iv) at least four percent of the total net tax capacity,
for taxes payable in 1996, of property located in the city is
classified as railroad property.

(d) The city aid base for a city is increased by $200,000
in 1999 and thereafter and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $200,000 in calendar year 1999 only,
provided that:

(i) the city was incorporated as a statutory city after
December 1, 1993;

(ii) its city aid base does not exceed $5,600; and

(iii) the city had a population in 1996 of 5,000 or more.

(e) The city aid base for a city is increased by $450,000
in 1999 to 2008 and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $450,000 in calendar year 1999 only, provided
that:

(i) the city had a population in 1996 of at least 50,000;

(ii) its population had increased by at least 40 percent in
the ten-year period ending in 1996; and

(iii) its city's net tax capacity for aids payable in 1998
is less than $700 per capita.

(f) The city aid base for a city is increased by $150,000
for aids payable in 2000 and thereafter, and the maximum amount
of total aid it may receive under section 477A.013, subdivision
9, paragraph (c), is also increased by $150,000 in calendar year
2000 only, provided that:

(1) the city has a population that is greater than 1,000
and less than 2,500;

(2) its commercial and industrial percentage for aids
payable in 1999 is greater than 45 percent; and

(3) the total market value of all commercial and industrial
property in the city for assessment year 1999 is at least 15
percent less than the total market value of all commercial and
industrial property in the city for assessment year 1998.

(g) The city aid base for a city is increased by $200,000
in 2000 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $200,000 in calendar year 2000 only,
provided that:

(1) the city had a population in 1997 of 2,500 or more;

(2) the net tax capacity of the city used in calculating
its 1999 aid under section 477A.013 is less than $650 per
capita;

(3) the pre-1940 housing percentage of the city used in
calculating 1999 aid under section 477A.013 is greater than 12
percent;

(4) the 1999 local government aid of the city under section
477A.013 is less than 20 percent of the amount that the formula
aid of the city would have been if the need increase percentage
was 100 percent; and

(5) the city aid base of the city used in calculating aid
under section 477A.013 is less than $7 per capita.

(h) The city aid base for a city is increased by $102,000
in 2000 and thereafter, and the maximum amount of total aid it
may receive under section 477A.013, subdivision 9, paragraph
(c), is also increased by $102,000 in calendar year 2000 only,
provided that:

(1) the city has a population in 1997 of 2,000 or more;

(2) the net tax capacity of the city used in calculating
its 1999 aid under section 477A.013 is less than $455 per
capita;

(3) the net levy of the city used in calculating 1999 aid
under section 477A.013 is greater than $195 per capita; and

(4) the 1999 local government aid of the city under section
477A.013 is less than 38 percent of the amount that the formula
aid of the city would have been if the need increase percentage
was 100 percent.

(i) The city aid base for a city is increased by $32,000 in
2001 and thereafter, and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $32,000 in calendar year 2001 only, provided
that:

(1) the city has a population in 1998 that is greater than
200 but less than 500;

(2) the city's revenue need used in calculating aids
payable in 2000 was greater than $200 per capita;

(3) the city net tax capacity for the city used in
calculating aids available in 2000 was equal to or less than
$200 per capita;

(4) the city aid base of the city used in calculating aid
under section 477A.013 is less than $65 per capita; and

(5) the city's formula aid for aids payable in 2000 was
greater than zero.

(j) The city aid base for a city is increased by $7,200 in
2001 and thereafter, and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $7,200 in calendar year 2001 only, provided
that:

(1) the city had a population in 1998 that is greater than
200 but less than 500;

(2) the city's commercial industrial percentage used in
calculating aids payable in 2000 was less than ten percent;

(3) more than 25 percent of the city's population was 60
years old or older according to the 1990 census;

(4) the city aid base of the city used in calculating aid
under section 477A.013 is less than $15 per capita; and

(5) the city's formula aid for aids payable in 2000 was
greater than zero.

(k) The city aid base for a city is increased by $45,000 in
2001 and thereafter and by an additional $50,000 in calendar
years 2002 to 2011, and the maximum amount of total aid it may
receive under section 477A.013, subdivision 9, paragraph (c), is
also increased by $45,000 in calendar year 2001 only, and by
$50,000 in calendar year 2002 only, provided that:

(1) the net tax capacity of the city used in calculating
its 2000 aid under section 477A.013 is less than $810 per
capita;

(2) the population of the city declined more than two
percent between 1988 and 1998;

(3) the net levy of the city used in calculating 2000 aid
under section 477A.013 is greater than $240 per capita; and

(4) the city received less than $36 per capita in aid under
section 477A.013, subdivision 9, for aids payable in 2000.

(l) The city aid base for a city with a population of
10,000 or more which is located outside of the seven-county
metropolitan area is increased in 2002 and thereafter, and the
maximum amount of total aid it may receive under section
477A.013, subdivision 9, paragraph (b) or (c), is also increased
in calendar year 2002 only, by an amount equal to the lesser of:

(1)(i) the total population of the city, as determined by
the United States Bureau of the Census, in the 2000 census, (ii)
minus 5,000, (iii) times 60; or

(2) $2,500,000.

(m) The city aid base is increased by $50,000 in 2002 and
thereafter, and the maximum amount of total aid it may receive
under section 477A.013, subdivision 9, paragraph (c), is also
increased by $50,000 in calendar year 2002 only, provided that:

(1) the city is located in the seven-county metropolitan
area;

(2) its population in 2000 is between 10,000 and 20,000;
and

(3) its commercial industrial percentage, as calculated for
city aid payable in 2001, was greater than 25 percent.

(n) The city aid base for a city is increased by $150,000
in calendar years 2002 to 2011 and the maximum amount of total
aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $150,000 in calendar year
2002 only, provided that:

(1) the city had a population of at least 3,000 but no more
than 4,000 in 1999;

(2) its home county is located within the seven-county
metropolitan area;

(3) its pre-1940 housing percentage is less than 15
percent; and

(4) its city net tax capacity per capita for taxes payable
in 2000 is less than $900 per capita.

(o) The city aid base for a city is increased by $200,000
beginning in calendar year 2003 and the maximum amount of total
aid it may receive under section 477A.013, subdivision 9,
paragraph (c), is also increased by $200,000 in calendar year
2003 only, provided that the city qualified for an increase in
homestead and agricultural credit aid under Laws 1995, chapter
264, article 8, section 18.

(p) The city aid base for a city is increased by $200,000
in 2004 only and the maximum amount of total aid it may receive
under section 477A.013, subdivision 9, is also increased by
$200,000 in calendar year 2004 only, if the city is the site of
a nuclear dry cask storage facility.

(q) The city aid base for a city is increased by $10,000 in
2004 and thereafter and the maximum total aid it may receive
under section 477A.013, subdivision 9, is also increased by
$10,000 in calendar year 2004 only, if the city was included in
a federal major disaster designation issued on April 1, 1998,
and its pre-1940 housing stock was decreased by more than 40
percent between 1990 and 2000.

(r) The city aid base for a city is increased by $25,000 in
2006 only and the maximum total aid it may receive under section
477A.013, subdivision 9, is also increased by $25,000 in
calendar year 2006 only if the city had a population in 2003 of
at least 1,000 and has a state park for which the city provides
rescue services and which comprised at least 14 percent of the
total geographic area included within the city boundaries in
2000.

new text begin (s) The city aid base for a city with a population less
than 5,000 is increased in 2006 and thereafter and the maximum
amount of total aid it may receive under this section is also
increased in calendar year 2006 only by an amount equal to $10
multiplied by its population.
new text end

new text begin EFFECTIVE DATE. new text end

This section is effective for aids
payable in 2006 and thereafter.

Sec. 7.

Minnesota Statutes 2004, section 477A.013,
subdivision 8, is amended to read:

Subd. 8.

City formula aid.

In calendar year deleted text begin 2004 deleted text end new text begin 2006
new text end and subsequent years, the formula aid for a city is equal to the
need increase percentage multiplied by the difference between
(1) the city's revenue need multiplied by its population, and
(2) the deleted text begin sum of the deleted text end city's net tax capacity multiplied by the tax
effort rate deleted text begin , and the taconite aids under sections 298.28 and
298.282, multiplied by the following percentages:
deleted text end

deleted text begin (i) zero percent for aids payable in 2004;
deleted text end

deleted text begin (ii) 25 percent for aids payable in 2005;
deleted text end

deleted text begin (iii) 50 percent for aids payable in 2006;
deleted text end

deleted text begin (iv) 75 percent for aids payable in 2007; and
deleted text end

deleted text begin (v) 100 percent for aids payable in 2008 and thereafter deleted text end .

No city may have a formula aid amount less than zero. The need
increase percentage must be the same for all cities.

The applicable need increase percentage must be calculated
by the Department of Revenue so that the total of the aid under
subdivision 9 equals the total amount available for aid under
section 477A.03 after the subtraction under section 477A.014,
subdivisions 4 and 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2006 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2004, section 477A.013,
subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year
2002 and thereafter, each city shall receive an aid distribution
equal to the sum of (1) the city formula aid under subdivision
8, and (2) its city aid base.

(b) The aid for a city in calendar year 2004 shall not
exceed the amount of its aid in calendar year 2003 after the
reductions under Laws 2003, First Special Session chapter 21,
article 5.

(c) For aids payable in 2005 and new text begin in 2007 and new text end thereafter,
the total aid for any city shall not exceed the sum of (1) ten
percent of the city's net levy for the year prior to the aid
distribution plus (2) its total aid in the previous year. new text begin For
aids payable in 2006 only, the total aid for any city shall not
exceed the sum of (1) 11 percent of its levy in the previous
year plus (2) its total aid in the previous year. new text end For aids
payable in 2005 and thereafter, the total aid for any city with
a population of 2,500 or more may not decrease from its total
aid under this section in the previous year by an amount greater
than ten percent of its net levy in the year prior to the aid
distribution.

(d) For aids payable in 2004 only, the total aid for a city
with a population less than 2,500 may not be less than the
amount it was certified to receive in 2003 minus the greater of
(1) the reduction to this aid payment in 2003 under Laws 2003,
First Special Session chapter 21, article 5, or (2) five percent
of its 2003 aid amount. For aids payable in 2005 and
thereafter, the total aid for a city with a population less than
2,500 must not be less than the amount it was certified to
receive in the previous year minus five percent of its 2003
certified aid amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2006 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2004, section 477A.03,
subdivision 2a, is amended to read:

Subd. 2a.

Cities.

For aids payable in 2004, the total
aids paid under section 477A.013, subdivision 9, are limited to
$429,000,000. For aids payable in 2005 deleted text begin and thereafter deleted text end , the
total aids paid under section 477A.013, subdivision 9, are
increased to $437,052,000. new text begin For aids payable in 2006 and
thereafter, the total aids paid under section 477A.013,
subdivision 9, are increased to $492,052,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids
payable in 2006 and thereafter.
new text end

ARTICLE 4

TEACHER RETIREMENT FUND RESTRUCTURING

Section 1.

new text begin [128D.18] FUNDING OF UNFUNDED PENSION
LIABILITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Financing authority. new text end

new text begin Notwithstanding any
other law to the contrary, Special School District No. 1,
Minneapolis, may finance all or a portion of the current and
future unfunded actuarial accrued liability of the former
Minneapolis Teachers Retirement Fund Association through the
issuance of pension obligation bonds under this section.
new text end

new text begin Subd. 2. new text end

new text begin Use of proceeds. new text end

new text begin The proceeds of the bonds
issued, less costs, must be paid to the State Board of
Investment to be deposited as a payment toward the funding of
the unfunded actuarial accrued liability of the former
Minneapolis Teachers Retirement Fund Association owed by Special
School District No. 1, Minneapolis, and must be credited as an
asset of the Teachers Retirement Association.
new text end

new text begin Subd. 3. new text end

new text begin Appropriations. new text end

new text begin Notwithstanding any law to the
contrary, special direct state aid, matching aid, and other
contributions levied for the Teachers Retirement Association
under section 354A.12, subdivisions 3a and 3b, and amortization
or supplementary amortization state aid reallocated to the
Teachers Retirement Association under section 423A.02 are
pledged and appropriated to the payment of the bonds and must be
transferred to Special School District No. 1, Minneapolis, and
additional employer contributions levied by Special School
District No. 1, Minneapolis, under section 354A.12, subdivision
3b, shall be retained by the district to the extent required to
pay debt service on the bonds for the succeeding 12-month period
or a longer period established pursuant to the resolution of the
district authorizing the bonds.
new text end

new text begin Subd. 4. new text end

new text begin No election. new text end

new text begin No election of the voters of the
district shall be required to issue bonds authorized by this
section.
new text end

new text begin Subd. 5. new text end

new text begin Terms and sale of bonds. new text end

new text begin The bonds issued
pursuant to this section shall bear interest at the rate or
rates and mature on the date or dates not more than 30 years
from the date of issue as the district shall determine by
resolution. Interest may be at a fixed or variable rate. The
bonds may be sold and issued on terms and in a manner that
Special School District No. 1, Minneapolis, determines is in its
best interests and in the best interests of the state.
new text end

new text begin Subd. 6. new text end

new text begin This section prevails. new text end

new text begin Notwithstanding any
other law to the contrary, this section shall apply to the
issuance and sale of the bonds and to the purposes for which the
bonds may be issued.
new text end

new text begin Subd. 7. new text end

new text begin State pledge against impairment of
contracts. new text end

new text begin The state pledges and agrees with the holders of
bonds issued under this section that the state will not limit or
alter the rights vested in Special School District No. 1,
Minneapolis, to fulfill the terms of any agreements made with
the bondholders or in any way impair the rights and remedies of
the holders until the bonds, together with interest on them,
with interest on any unpaid installments of interest, and all
costs and expenses in connection with any action or proceeding
by or on behalf of the bondholders, are fully met and
discharged. The district may include this pledge and agreement
of the state in any agreement with the holders of bonds issued
under this section.
new text end

new text begin Subd. 8. new text end

new text begin Not net debt. new text end

new text begin Bonds ended under this section
not in default shall not be deemed net debt under any law
limiting indebtedness.
new text end

new text begin Subd. 9. new text end

new text begin Aid reduction for repayment. new text end

new text begin If the amount
transferred by Special School District No. 1, Minneapolis, to
the paying agent for the bonds is insufficient to pay required
debt service, the paying agent shall notify the commissioner of
finance. The commissioner shall reduce any and all unrestricted
state aids generally available to the school district by the
amount of the deficiency and pay the amounts to the paying agent
for the bonds for the payment of debt service. If the state
aids are reduced pursuant to this subdivision, the district may
levy a tax in the amount of the reduction in state aid.
Notwithstanding any other law to the contrary, no election of
the voters of the district is required for the levy and the levy
is not subject to other levy limitations.
new text end

Sec. 2.

new text begin [128D.181] AID REDEDICATION.
new text end

new text begin Notwithstanding any law to the contrary and subject to
section 2, special direct state aid previously paid to the
Minneapolis Teachers Retirement Fund Association under section
354A.12, subdivision 3a, must be paid to the Teachers Retirement
Association.
new text end

Sec. 3.

Minnesota Statutes 2004, section 354.05,
subdivision 2, is amended to read:

Subd. 2.

Teacher.

(a) "Teacher" means:

(1) a person who renders service as a teacher, supervisor,
principal, superintendent, librarian, nurse, counselor, social
worker, therapist, or psychologist in a public school of the
state located outside of the corporate limits of deleted text begin a city of the
first class deleted text end new text begin the city of Duluth or the city of St. Paul new text end , or in
any charter school, irrespective of the location of the school,
or in any charitable, penal, or correctional institutions of a
governmental subdivision, or who is engaged in educational
administration in connection with the state public school
system, but excluding the University of Minnesota, whether the
position be a public office or an employment, and not including
the members or officers of any general governing or managing
board or body;

(2) an employee of the Teachers Retirement Association;

(3) a person who renders teaching service on a part-time
basis and who also renders other services for a single employing
unit. A person whose teaching service comprises at least 50
percent of the combined employment salary is a member of the
association for all services with the single employing unit. If
the person's teaching service comprises less than 50 percent of
the combined employment salary, the executive director must
determine whether all or none of the combined service is covered
by the association; or

(4) a person who is not covered by the plans established
under chapter 352D, 354A, or 354B and who is employed by the
Board of Trustees of the Minnesota State Colleges and
Universities system in an unclassified position as:

(i) a president, vice-president, or dean;

(ii) a manager or a professional in an academic or an
academic support program other than specified in item (i);

(iii) an administrative or a service support faculty
position; or

(iv) a teacher or a research assistant.

(b) "Teacher" does not mean:

(1) a person who works for a school or institution as an
independent contractor as defined by the Internal Revenue
Service;

(2) a person who renders part-time teaching service or who
is a customized trainer as defined by the Minnesota State
Colleges and Universities system if (i) the service is
incidental to the regular nonteaching occupation of the person;
and (ii) the employer stipulates annually in advance that the
part-time teaching service or customized training service will
not exceed 300 hours in a fiscal year and retains the
stipulation in its records; and (iii) the part-time teaching
service or customized training service actually does not exceed
300 hours in a fiscal year; or

(3) a person exempt from licensure under section 122A.30.

Sec. 4.

Minnesota Statutes 2004, 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 356.55 or 356.551, whichever
applies new text begin , or
new text end

new text begin (10) A period of service before July 1, 2005, that was
credited 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, 2005, 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 new text end .

Sec. 5.

Minnesota Statutes 2004, section 354.42,
subdivision 2, is amended to read:

Subd. 2.

Employee.

new text begin (a) new text end The employee contribution to the
fund is an amount equal to deleted text begin 5.0 deleted text end new text begin the following percentage of the
salary of a member:
new text end

new text begin (1) after July 1, 2005, for a teacher employed by Special
School District No. 1, Minneapolis, 5.5 percent if the teacher
is a coordinated member and 9.0 percent if the teacher is a
basic member;
new text end

new text begin (2) for every other teacher, after July 1, 2005, 5.0
new text end percent deleted text begin of deleted text end new text begin if new text end the deleted text begin salary of every deleted text end new text begin teacher is a new text end coordinated
member and 9.0 percent deleted text begin of deleted text end new text begin if new text end the deleted text begin salary of every deleted text end new text begin teacher is a
new text end basic member.

new text begin (b) new text end This contribution must be made by deduction from
salary. Where any portion of a member's salary is paid from
other than public funds, the member's employee contribution must
be based on the entire salary received.

Sec. 6.

Minnesota Statutes 2004, section 354.42,
subdivision 3, is amended to read:

Subd. 3.

Employer.

new text begin (a) The employer contribution to the
fund by Special School District No. 1, Minneapolis, after July
1, 2005, is an amount equal to 8.14 percent of the salary of
each of its teachers who is a coordinated member and 12.14
percent of the salary of each of its teachers who is a basic
member.
new text end

new text begin (b) new text end The employer contribution to the fund new text begin for every other
employer, after July 1, 2005, new text end is an amount equal to 5.0 percent
of the salary of each coordinated member and 9.0 percent of the
salary of each basic member.

new text begin (c) As payment toward the cost of the unfunded actuarial
accrued liability transferred to the Teachers Retirement
Association from the former Minneapolis Teachers Retirement Fund
Association, a supplemental contribution of 0.26 percent of the
covered payroll of the fund must be made each fiscal year
through June 30, 2035. One-third of the dollar amount of this
supplemental contribution must be paid each by Special School
District No. 1, Minneapolis, the city of Minneapolis, and the
state of Minnesota. On or before October 1, annually, the
executive director of the Teachers Retirement Association shall
calculate the expected total dollar amount of the supplemental
contribution for the calendar year and shall certify the portion
payable by each governmental entity. The amount is payable in
full on or before the following June 1.
new text end

Sec. 7.

new text begin [354.70] CONSOLIDATION OF THE MINNEAPOLIS
TEACHERS RETIREMENT FUND ASSOCIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Membership transfer. new text end

new text begin All active,
inactive, and retired members of the Minneapolis Teachers
Retirement Fund Association are transferred to the Teachers
Retirement Association and are no longer members of the
Minneapolis Teachers Retirement Fund Association as of the
effective date of this section.
new text end

new text begin Subd. 2. new text end

new text begin Tra membership. new text end

new text begin A person first hired as a
teacher by Special School District No. 1, Minneapolis, after the
effective date of this section and who is a teacher as defined
in section 354.05, subdivision 2, is a member of the Teachers
Retirement Association for the person's teaching service.
new text end

new text begin Subd. 3. new text end

new text begin Service credit and liability transfer. new text end

new text begin All
allowable service and salary credit of the members and other
individuals transferred under subdivision 1 as specified in the
records of the Minneapolis Teachers Retirement Fund Association
on the transfer date is allowable service credit under section
354.05, subdivision 13, formula service credit under section
354.05, subdivision 25, and salary credit under section 354.05,
subdivision 35, for the Teachers Retirement Association.
new text end

new text begin Subd. 4. new text end

new text begin Transfer of records. new text end

new text begin On the effective date of
this section, the chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall effect a
transfer of all records and documents relating to the funds and
the benefit plans of the association to the executive director
of the Teachers Retirement Association. To the extent possible,
original copies of all records and documents must be
transferred. The chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall certify
the accuracy of all records and documents for which the transfer
of original copies was not possible.
new text end

new text begin Subd. 5. new text end

new text begin Transfer of assets. new text end

new text begin (a) On the effective date
of this section, the chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall transfer
to the Teachers Retirement Association the entire assets of the
Minneapolis Teachers Retirement Fund Association. The transfer
of the assets of the Minneapolis Teachers Retirement Fund
Association must include any accounts receivable that are
determined by the executive director of the State Board of
Investment as reasonably capable of being collected. Legal
title to account receivables that are determined by the
executive director of the State Board of Investment as not
reasonably capable of being collected transfers to Special
School District No. 1, Minneapolis, as of the date of the
determination of the executive director of the State Board of
Investment. If the account receivables transferred to Special
School District No. 1, Minneapolis, are subsequently recovered
by the school district, the superintendent of Special School
District No. 1, Minneapolis, shall transfer the recovered amount
to the executive director of the Teachers Retirement
Association, in cash, for deposit in the teachers retirement
fund, less the reasonable expenses of the school district
related to the recovery.
new text end

new text begin (b) As of the effective date of this section, subject to
the authority of the State Board of Investment, the board of
directors of the Teachers Retirement Association has legal title
to and management responsibility for any transferred assets
under this subdivision as trustees for any person having a
beneficial interest in the Minneapolis Teachers Retirement Fund
Association. The Teachers Retirement Association is the
successor in interest for all claims for and against the former
coordinated program of the Minneapolis Teachers Retirement Fund
Association with respect to the retirement fund association,
except a claim against the Minneapolis Teachers Retirement Fund
Association or any person connected with the fund association in
a fiduciary capacity, based on any act or acts by that person
which were not done in good faith and which constituted a breach
of the obligation of the person as a fiduciary. As the
successor in interest, the Teachers Retirement Association may
assert any applicable defense in any judicial proceeding which
the board of the Minneapolis Teachers Retirement Fund
Association would have otherwise been entitled to assert
relating to the coordinated program.
new text end

new text begin (c) From the assets of the Minneapolis Teachers Retirement
Fund Association transferred to the Teachers Retirement
Association, an amount equal to the percentage figure that
represents the ratio between the market value of the Minnesota
postretirement investment fund as of June 30, 2005, and the
required reserves of the Minnesota postretirement investment
fund as of June 30, 2005, applied to the present value of future
benefits payable to annuitants of the former Minneapolis
Teachers Retirement Fund Association as of June 30, 2005,
including any postretirement adjustment from the Minnesota
postretirement investment fund expected to be payable on January
1, 2006, must be transferred to the Minnesota postretirement
investment fund. The executive director of the State Board of
Investment shall estimate this ratio at the time of the
transfer. By January 1, 2006, after all necessary financial
information becomes available to determine the actual funded
ratio of the Minnesota postretirement investment fund, the
postretirement fund must refund to the Teachers Retirement
Association any excess assets or the Teachers Retirement
Association must contribute any deficiency to the Minnesota
postretirement investment fund with interest under section
11A.18, subdivision 6. The balance of the assets of the former
Minneapolis Teachers Retirement Fund Association after the
transfer to the Minnesota postretirement investment fund must be
credited to the Teachers Retirement Association.
new text end

new text begin If the assets transferred by the Minneapolis Teachers
Retirement Fund Association to the Teachers Retirement
Association are insufficient to meet its obligation to the
Minnesota postretirement investment fund, additional assets must
be transferred by the executive director of the Teachers
Retirement Association to meet the amount required.
new text end

new text begin Subd. 6. new text end

new text begin Benefit calculation. new text end

new text begin (a) For every deferred,
inactive, disabled, and retired member of the Minneapolis
Teachers Retirement Fund Association transferred under
subdivision 1, and the survivors of these members, annuities or
benefits earned before the date of the transfer, other than
future postretirement adjustments, must be calculated and paid
by the Teachers Retirement Association under the laws, articles
of incorporation, and bylaws of the former Minneapolis Teachers
Retirement Fund Association that were in effect relative to the
person on the date of the person's termination of active service
covered by the former Minneapolis Teachers Retirement Fund
Association.
new text end

new text begin (b) Former Minneapolis Teachers Retirement Fund Association
members who retired before July 1, 2005, must receive
postretirement adjustments after December 31, 2005, only as
provided in section 11A.18. All other benefit recipients of the
former Minneapolis Teachers Retirement Fund Association must
receive postretirement adjustments after December 31, 2005, only
as provided in section 356.41.
new text end

new text begin Subd. 7. new text end

new text begin Termination of the minneapolis teachers
retirement fund association. new text end

new text begin As of the effective date of this
section and upon the transfer of administration, records,
assets, and liabilities from the Minneapolis Teachers Retirement
Fund Association to the Teachers Retirement Association, the
Minneapolis Teachers Retirement Fund Association ceases to exist
as a Minnesota public pension plan.
new text end

Sec. 8.

new text begin [354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND
STATE AID REDEDICATED.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin The positive difference,
if any, between the actual state aid paid to the Minneapolis
Employees Retirement Fund under section 422A.101, subdivision 3,
and $8,065,000 annually is appropriated from the general fund to
the commissioner of finance for deposit in the Teachers
Retirement Association to offset all or a portion of the current
and future unfunded actuarial accrued liability of the
Minneapolis Teachers Retirement Fund Association.
new text end

new text begin Subd. 2. new text end

new text begin Financial requirements. new text end

new text begin The appropriation in
subdivision 1 is available to the extent that financial
requirements of the Minneapolis Employees Retirement Fund under
section 422A.101, subdivision 3, have been satisfied.
new text end

Sec. 9.

Minnesota Statutes 2004, section 354A.011,
subdivision 15a, is amended to read:

Subd. 15a.

Normal retirement age.

"Normal retirement
age" means age 65 for a person who first became a member of the
coordinated program of the deleted text begin Minneapolis or deleted text end St. Paul Teachers
Retirement Fund Association or the new law coordinated program
of the Duluth Teachers Retirement Fund Association or a member
of a pension fund listed in section 356.30, subdivision 3,
before July 1, 1989. For a person who first became a member of
the coordinated program of the deleted text begin Minneapolis or deleted text end St. Paul Teachers
Retirement Fund Association or the new law coordinated program
of the Duluth Teachers Retirement Fund Association 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. For a
person who is a member of the basic program of the deleted text begin Minneapolis
or deleted text end St. Paul Teachers Retirement Fund Association or the old law
coordinated program of the Duluth Teachers Retirement Fund
Association, normal retirement age means the age at which a
teacher becomes eligible for a normal retirement annuity
computed upon meeting the age and service requirements specified
in the applicable provisions of the articles of incorporation or
bylaws of the respective teachers retirement fund association.

Sec. 10.

Minnesota Statutes 2004, section 354A.011,
subdivision 27, is amended to read:

Subd. 27.

Teacher.

(a) "Teacher" means any person who
renders service for a public school district, other than a
charter school, located in the corporate limits of deleted text begin one of deleted text end the
cities of deleted text begin the first class which was so classified on January 1,
1979 deleted text end new text begin Duluth and St. Paul new text end , as any of the following:

(1) a full-time employee in a position for which a valid
license from the state Department of Education is required;

(2) an employee of the teachers retirement fund association
located in the city of the first class unless the employee has
exercised the option pursuant to Laws 1955, chapter 10, section
1, to retain membership in the Minneapolis Employees Retirement
Fund established pursuant to chapter 422A;

(3) a part-time employee in a position for which a valid
license from the state Department of Education is required; or

(4) a part-time employee in a position for which a valid
license from the state Department of Education is required who
also renders other nonteaching services for the school district,
unless the board of trustees of the teachers retirement fund
association determines that the combined employment is on the
whole so substantially dissimilar to teaching service that the
service may not be covered by the association.

(b) The term does not mean any person who renders service
in the school district as any of the following:

(1) an independent contractor or the employee of an
independent contractor;

(2) an employee who is a full-time teacher covered by the
Teachers Retirement Association or by another teachers
retirement fund association established pursuant to this chapter
or chapter 354;

(3) an employee exempt from licensure pursuant to section
122A.30;

(4) an employee who is a teacher in a technical college
located in a city of the first class unless the person elects
coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2;

(5) a teacher employed by a charter school, irrespective of
the location of the school; or

(6) an employee who is a part-time teacher in a technical
college in a city of the first class and who has elected
coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2, but (i)
the teaching service is incidental to the regular nonteaching
occupation of the person; (ii) the applicable technical college
stipulates annually in advance that the part-time teaching
service will not exceed 300 hours in a fiscal year; and (iii)
the part-time teaching actually does not exceed 300 hours in the
fiscal year to which the certification applies.

Sec. 11.

Minnesota Statutes 2004, section 354A.021,
subdivision 1, is amended to read:

Subdivision 1.

Establishment.

There is established a
teachers retirement fund association in each of the cities of
deleted text begin the first class which were so classified on January 1,
1979 deleted text end new text begin Duluth and St. Paul new text end . The associations shall be known
respectively as the "Duluth Teachers Retirement Fund
Association deleted text begin , deleted text end " deleted text begin the "Minneapolis Teachers Retirement Fund
Association" deleted text end and the "St. Paul Teachers Retirement Fund
Association." Each association shall be a continuation of the
teachers retirement fund association with the same corporate
name established pursuant to the authorization contained in Laws
1909, chapter 343, section 1.

Sec. 12.

Minnesota Statutes 2004, section 354A.092, is
amended to read:

354A.092 SABBATICAL LEAVE.

Any teacher in the coordinated program of deleted text begin either the
Minneapolis Teachers Retirement Fund Association or deleted text end the St.
Paul Teachers Retirement Fund Association or any teacher in the
new law coordinated program of the Duluth Teachers Retirement
Fund Association who is granted a sabbatical leave shall be
entitled to receive allowable service credit in the applicable
association for periods of sabbatical leave. To obtain the
service credit, the teacher on sabbatical leave shall make an
employee contribution to the applicable association. No teacher
shall be entitled to receive more than three years of allowable
service credit pursuant to this section for a period or periods
of sabbatical leave during any ten consecutive fiscal or
calendar years, whichever is the applicable plan year for the
teachers retirement fund association. If the teacher granted a
sabbatical leave makes the employee contribution for a period of
sabbatical leave pursuant to this section, the employing unit
shall make an employer contribution on behalf of the teacher to
the applicable association for that period of sabbatical leave
in the manner described in section 354A.12, subdivision 2a. The
employee and employer contributions shall be in an amount equal
to the employee and employer contribution rates in effect for
other active members of the association covered by the same
program applied to a salary figure equal to the teacher's actual
covered salary for the plan year immediately preceding the
sabbatical leave period. Payment of the employee contribution
authorized pursuant to this section shall be made by the teacher
on or before June 30 of year next following the year in which
the sabbatical leave terminated and shall be made without
interest. For sabbatical leaves taken after June 30, 1986, the
required employer contributions shall be paid by the employing
unit within 30 days after notification by the association of the
amount due. If the employee contributions for the sabbatical
leave period are less than an amount equal to the applicable
contribution rate applied to a salary figure equal to the
teacher's actual covered salary for the plan year immediately
preceding the sabbatical leave period, service credit shall be
prorated. The prorated service credit shall be determined by
the ratio between the amount of the actual payment which was
made and the full contribution amount payable pursuant to this
section.

Sec. 13.

Minnesota Statutes 2004, section 354A.093,
subdivision 1, is amended to read:

Subdivision 1.

Eligibility.

Any teacher in the
coordinated program of deleted text begin either the Minneapolis Teachers
Retirement Fund Association or deleted text end the St. Paul Teachers Retirement
Fund Association or any teacher in the new law coordinated
program of the Duluth Teachers Retirement Fund Association 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 the employer providing active
teaching service upon discharge from uniformed service within
the time frames required under United States Code, title 38,
section 4312(e), may receive allowable service credit in the
applicable association for all or a portion of the period of
uniformed service, provided that the teacher did not separate
from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions.

Sec. 14.

Minnesota Statutes 2004, section 354A.095, is
amended to read:

354A.095 PARENTAL AND MATERNITY LEAVE.

Basic or coordinated members of the St. Paul Teachers
Retirement Fund Association deleted text begin , the Minneapolis Teachers Retirement
Fund Association, deleted text end and new coordinated members of the Duluth
Teachers Retirement Fund Association, who are granted parental
or maternity leave of absence by the employing authority, are
entitled to obtain service credit not to exceed one year for the
period of leave upon payment to the applicable fund by the end
of the fiscal year following the fiscal year in which the leave
of absence terminated. The amount of the payment must include
the total required employee and employer contributions for the
period of leave prescribed in section 354A.12. Payment must be
based on the member's average monthly salary rate upon return to
teaching service, and is payable without interest. Payment must
be accompanied by a certified or otherwise adequate copy of the
resolution or action of the employing authority granting or
approving the leave.

Sec. 15.

Minnesota Statutes 2004, section 354A.096, is
amended to read:

354A.096 MEDICAL LEAVE.

Any teacher in the coordinated program of deleted text begin either the
Minneapolis Teachers Retirement Fund Association or deleted text end the St. Paul
Teachers Retirement Fund Association or the new law coordinated
program of the Duluth Teachers Retirement Fund Association who
is on an authorized medical leave of absence and subsequently
returns to teaching service 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. This payment
must include the required employee and employer contributions at
the rates specified in section 354A.12, subdivisions 1 and 2, as
applied to the member's average full-time monthly salary rate on
the date the leave of absence commenced plus annual interest at
the rate of 8.5 percent per year 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
by the end of the fiscal year following the fiscal year in which
the leave of absence terminated or before the member retires,
whichever is earlier. Payment must be accompanied by a copy of
the resolution or action of the employing authority granting the
leave and the employing authority, upon granting the leave, must
certify the leave to the association in a manner specified by
the executive director. 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 354A.36 and receive allowable
service credit under this section for the same period of time.

Sec. 16.

Minnesota Statutes 2004, section 354A.12,
subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

The contribution
required to be paid by each member of a teachers retirement fund
association shall not be less than the percentage of total
salary specified below for the applicable association and
program:

Association and Program Percentage of

Total Salary

Duluth Teachers Retirement

Association

old law and new law

coordinated programs 5.5 percent

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Association
deleted text end

deleted text begin basic program deleted text end deleted text begin 8.5 percent
deleted text end

deleted text begin coordinated program deleted text end deleted text begin 5.5 percent
deleted text end

St. Paul Teachers Retirement

Association

basic program 8 percent

coordinated program 5.5 percent

Contributions shall be made by deduction from salary and
must be remitted directly to the respective teachers retirement
fund association at least once each month.

Sec. 17.

Minnesota Statutes 2004, section 354A.12,
subdivision 2, is amended to read:

Subd. 2.

Retirement contribution levy disallowed.

Except
as provided in deleted text begin subdivision 3b and in section 423A.02,
subdivision 3, with respect to the city of Minneapolis and
special school district No. 1 and in deleted text end section 423A.02,
subdivision 3, with respect to independent school district No.
625, notwithstanding any law to the contrary, levies for
teachers retirement fund associations in new text begin the new text end cities of deleted text begin the first
class deleted text end new text begin Duluth and St. Paul new text end , including levies for any employer
Social Security taxes for teachers covered by the Duluth
Teachers Retirement Fund Association or the deleted text begin Minneapolis Teachers
Retirement Fund Association or the deleted text end St. Paul Teachers Retirement
Fund Association, are disallowed.

Sec. 18.

Minnesota Statutes 2004, section 354A.12,
subdivision 2a, is amended to read:

Subd. 2a.

Employer regular and additional contribution
rates.

(a) The employing units shall make the following
employer contributions to teachers retirement fund associations:

(1) for any coordinated member of a teachers retirement
fund association in a city of the first class, the employing
unit shall pay the employer Social Security taxes in accordance
with section 355.46, subdivision 3, clause (b);

(2) for any coordinated member of one of the following
teachers retirement fund associations in a city of the first
class, the employing unit shall make a regular employer
contribution to the respective retirement fund association in an
amount equal to the designated percentage of the salary of the
coordinated member as provided below:

Duluth Teachers Retirement
Fund Association 4.50 percent
deleted text begin Minneapolis Teachers Retirement
Fund Association deleted text end deleted text begin 4.50 percent
deleted text end St. Paul Teachers Retirement
Fund Association 4.50 percent;

(3) for any basic member of deleted text begin one of deleted text end the deleted text begin following deleted text end new text begin St. Paul
new text end Teachers Retirement Fund deleted text begin associations in a city of the first
class deleted text end new text begin Association new text end , the employing unit shall make a regular
employer contribution to the respective retirement fund in an
amount equal to deleted text begin the designated percentage deleted text end new text begin 8.00 percent new text end of the
salary of the basic member deleted text begin as provided below:
deleted text end

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Fund Association deleted text end deleted text begin 8.50 percent
deleted text end

deleted text begin St. Paul Teachers Retirement
deleted text end

deleted text begin Fund Association deleted text end deleted text begin 8.00 percent deleted text end new text begin ;
new text end

(4) for a basic member of deleted text begin a deleted text end new text begin the St. Paul new text end Teachers
Retirement Fund Association deleted text begin in a city of the first class deleted text end , the
employing unit shall make an additional employer contribution to
the respective fund in an amount equal to deleted text begin the designated
percentage deleted text end new text begin 3.64 percent new text end of the salary of the basic member deleted text begin , as
provided below:
deleted text end

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Fund Association
deleted text end

deleted text begin July 1, 1993 - June 30, 1994 deleted text end deleted text begin 4.85 percent
deleted text end

deleted text begin July 1, 1994, and thereafter deleted text end deleted text begin 3.64 percent
deleted text end

deleted text begin St. Paul Teachers Retirement
deleted text end

deleted text begin Fund Association
deleted text end

deleted text begin July 1, 1993 - June 30, 1995 deleted text end deleted text begin 4.63 percent
deleted text end

deleted text begin July 1, 1995, and thereafter deleted text end deleted text begin 3.64 percent deleted text end new text begin ;
new text end

(5) for a coordinated member of a teachers retirement fund
association in a city of the first class, the employing unit
shall make an additional employer contribution to the respective
fund in an amount equal to the applicable percentage of the
coordinated member's salary, as provided below:

Duluth Teachers Retirement

Fund Association 1.29 percent

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Fund Association
deleted text end

deleted text begin July 1, 1993 - June 30, 1994 deleted text end deleted text begin 0.50 percent
deleted text end

deleted text begin July 1, 1994, and thereafter deleted text end deleted text begin 3.64 percent
deleted text end

St. Paul Teachers Retirement

Fund Association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994 - June 30, 1995 1.50 percent

July 1, 1997, and thereafter 3.84 percent new text begin .
new text end

(b) The regular and additional employer contributions must
be remitted directly to the respective teachers retirement fund
association at least once each month. Delinquent amounts are
payable with interest under the procedure in subdivision 1a.

(c) Payments of regular and additional employer
contributions for school district or technical college employees
who are paid from normal operating funds must be made from the
appropriate fund of the district or technical college.

Sec. 19.

Minnesota Statutes 2004, section 354A.12,
subdivision 3a, is amended to read:

Subd. 3a.

Special direct state aid to first class city
teachers retirement fund associations.

(a) In fiscal year 1998,
the state shall pay $4,827,000 to the St. Paul Teachers
Retirement Fund Association, $17,954,000 to the Minneapolis
Teachers Retirement Fund Association, and $486,000 to the Duluth
Teachers Retirement Fund Association. In each deleted text begin subsequent deleted text end fiscal
year new text begin after fiscal year 2005 new text end , these payments to the first class
city teachers retirement fund associations must be $2,827,000
for St. Paul, $12,954,000 new text begin to the Teachers Retirement Association
new text end for new text begin the former new text end Minneapolis new text begin Teachers Retirement Fund Association new text end ,
and $486,000 for Duluth.

(b) The direct state aids under this subdivision are
payable October 1 annually. The commissioner of finance shall
pay the direct state aid. The amount required under this
subdivision is appropriated annually from the general fund to
the commissioner of finance.

Sec. 20.

Minnesota Statutes 2004, section 354A.12,
subdivision 3b, is amended to read:

Subd. 3b.

Special direct state matching aid to the
deleted text begin minneapolis deleted text end teachers retirement deleted text begin fund deleted text end association.

(a) Special
School District No. 1 deleted text begin may deleted text end new text begin must new text end make an additional employer
contribution to the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund
deleted text end Association. The city of Minneapolis deleted text begin may deleted text end new text begin must new text end make a
contribution to the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund
deleted text end Association. This contribution deleted text begin may deleted text end new text begin must new text end 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) deleted text begin For every $1,000 deleted text end new text begin $1,125,000 must be new text end contributed deleted text begin in
equal proportion deleted text end by Special School District No. 1 and new text begin $1,125,000
must be contributed new text end by the city of Minneapolis to
the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end Association under
paragraph (a) deleted text begin , deleted text end new text begin and new text end the state shall pay to the deleted text begin Minneapolis
deleted text end Teachers Retirement deleted text begin Fund deleted text end Association deleted text begin $1,000, but not to
exceed deleted text end $2,500,000 deleted text begin in total in deleted text end new text begin each new text end fiscal year deleted text begin 1994 deleted text end . The
superintendent of Special School District No. 1, the mayor of
the city of Minneapolis, and the executive director of
the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end 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 deleted text begin Minneapolis deleted text end Teachers
Retirement deleted text begin Fund deleted text end 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 deleted text begin Minneapolis deleted text end Teachers
Retirement deleted text begin Fund deleted text end 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).

Sec. 21.

Minnesota Statutes 2004, 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 deleted text begin Minneapolis Teachers Retirement
Fund Association by special school district No. 1 and the city
of Minneapolis under section 423A.02, subdivision 3, or to the
deleted text end 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 deleted text begin first class
city deleted text end new text begin St. Paul new text end Teachers Retirement deleted text begin associations, and the direct
matching and state aid under subdivision 3b to the Minneapolis
Teachers Retirement deleted text end Fund Association terminate deleted text begin for the
respective fund deleted text end 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 by the Legislative Commission on Pensions and
Retirement, 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 by the Legislative
Commission on Pensions and Retirement.

(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 deleted text begin either the Minneapolis Teachers Retirement Fund
Association, deleted text end the St. Paul Teachers Retirement Fund Association deleted text begin ,
or the Duluth Teachers Retirement Fund Association remain deleted text end new text begin is
new text end funded at deleted text begin less than deleted text end the funding ratio applicable to the teachers
retirement association when the provisions of paragraph (b)
become effective, then any state aid deleted text begin not deleted text end new text begin previously new text end distributed
to that association must be immediately transferred to the deleted text begin other
associations in proportion to the relative sizes of their
unfunded actuarial accrued liabilities deleted text end new text begin Teachers Retirement
Association new text end .

Sec. 22.

Minnesota Statutes 2004, section 354A.12,
subdivision 3d, is amended to read:

Subd. 3d.

Supplemental administrative expense
assessment.

(a) The active and retired membership of the
deleted text begin Minneapolis Teachers Retirement Fund Association and of the deleted text end 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 deleted text begin a first class city teacher deleted text end new text begin the St. Paul
Teachers new text end Retirement Fund Association are those expenses for the
fiscal year that:

(1) exceed, for the St. Paul Teachers Retirement Fund
Association new text begin , new text end $443,745 deleted text begin , or for the Minneapolis Teacher Retirement
Fund Association $671,513, deleted text end plus deleted text begin , in each case, deleted text end 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
deleted text begin applicable deleted text end 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 deleted text begin each first class city deleted text end new text begin the St.
Paul new text end 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.

Sec. 23.

Minnesota Statutes 2004, section 354A.30, is
amended to read:

354A.30 deleted text begin MINNEAPOLIS AND deleted text end ST. PAUL TEACHERS RETIREMENT
FUND deleted text begin ASSOCIATIONS deleted text end new text begin ASSOCIATION new text end ; COORDINATED PROGRAM.

There is established a coordinated program within the
deleted text begin Minneapolis Teachers Retirement Fund Association and a
coordinated program within the deleted text end St. Paul Teachers Retirement Fund
Association to provide retirement coverage for teachers who are
covered by an agreement or modification made between the state
and the secretary of health, education and welfare making the
provisions of the federal Old Age, Survivors and Disability
Insurance Act applicable to certain teachers covered by the
teachers retirement fund association. The provisions governing
the coordinated program shall be sections 354A.31 to 354A.41 and
any other applicable provisions of this chapter.

Sec. 24.

Minnesota Statutes 2004, section 354A.31,
subdivision 4, is amended to read:

Subd. 4.

Computation of the normal coordinated retirement
annuity; deleted text begin minneapolis and deleted text end st. paul deleted text begin funds deleted text end .

(a) This subdivision
applies to the coordinated deleted text begin programs deleted text end new text begin program new text end of the deleted text begin Minneapolis
Teachers Retirement Fund Association and the deleted text end St. Paul Teachers
Retirement Fund Association.

(b) The normal coordinated retirement annuity shall be an
amount equal to a retiring coordinated member's average salary
multiplied by the retirement annuity formula percentage.
Average salary for purposes of this section shall mean an amount
equal to the average salary upon which contributions were made
for the highest five successive years of service credit, but
which shall not in any event include any more than the
equivalent of 60 monthly salary payments. Average salary must
be based upon all years of service credit if this service credit
is less than five years.

(c) This paragraph, in conjunction with subdivision 6,
applies to a person who first became a member or a member in a
pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, unless paragraph (d), in conjunction with
subdivision 7, produces a higher annuity amount, in which case
paragraph (d) will apply. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 1, per year for each
year of coordinated service for the first ten years and the
percent specified in section 356.315, subdivision 2, for each
year of coordinated service thereafter.

(d) This paragraph applies to a person who has become at
least 55 years old and who first becomes a member 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 subdivision 7 is higher than
it is when calculated under paragraph (c), in conjunction with
the provisions of subdivision 6. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 2, for each year of
coordinated service.

Sec. 25.

Minnesota Statutes 2004, section 354A.32,
subdivision 1, is amended to read:

Subdivision 1.

Optional forms generally.

The deleted text begin boards
deleted text end new text begin board new text end of the deleted text begin Minneapolis and the deleted text end St. Paul Teachers Retirement
Fund deleted text begin Associations deleted text end new text begin Association new text end shall deleted text begin each deleted text end establish for the
coordinated program and the board of the Duluth Teachers
Retirement Fund Association shall establish for the new law
coordinated program an optional retirement annuity which shall
take the form of a joint and survivor annuity. Each board may
also in its discretion establish an optional annuity which shall
take the form of an annuity payable for a period certain and for
life thereafter. Each board shall also establish an optional
retirement annuity that guarantees payment of the balance of the
annuity recipient's accumulated deductions to a designated
beneficiary upon the death of the annuity recipient. Except as
provided in subdivision 1a, optional annuity forms shall be the
actuarial equivalent of the normal forms provided in section
354A.31. In establishing these optional annuity forms, the
board shall obtain the written recommendation of the
commission-retained actuary. The recommendation shall be a part
of the permanent records of the board.

Sec. 26.

Minnesota Statutes 2004, section 354A.39, is
amended to read:

354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS;
ANNUITY.

Any person who has been a member of the Minnesota State
Retirement System, the Public Employees Retirement Association
including the Public Employees Retirement Association Police and
Fire Fund, the Teachers Retirement Association, the Minnesota
State Patrol Retirement Association, the legislators retirement
plan, the constitutional officers retirement plan, the
Minneapolis Employees Retirement Fund, the Duluth Teachers
Retirement Fund Association new law coordinated program, deleted text begin the
Minneapolis Teachers Retirement Fund Association coordinated
program, deleted text end the St. Paul Teachers Retirement Fund Association
coordinated program, or any other public employee retirement
system in the state of Minnesota having a like provision but
excluding all other funds providing retirement benefits for
police officers or firefighters shall be entitled when qualified
to an annuity from each fund if the person's total allowable
service in all of the funds or in any two or more of the funds
totals three or more years, provided that no portion of the
allowable service upon which the retirement annuity from one
fund is based is used again in the computation for a retirement
annuity from another fund and provided further that the person
has not taken a refund from any of funds or associations since
the person's membership in the fund or association has
terminated. The annuity from each fund or association shall be
determined by the appropriate provisions of the law governing
each fund or association, except that the requirement that a
person must have at least three years of allowable service in
the respective fund or association shall not apply for the
purposes of this section, provided that the aggregate service in
two or more of these funds equals three or more years.

Sec. 27.

Minnesota Statutes 2004, section 354A.40,
subdivision 1, is amended to read:

Subdivision 1.

Retirement annuity.

Any coordinated
member of deleted text begin either the Minneapolis Teachers Retirement Fund
Association or of deleted text end the St. Paul Teachers Retirement Fund
Association who has credited service prior to July 1, 1978 shall
be entitled to receive a retirement annuity when otherwise
qualified, the calculation of which shall utilize the applicable
retirement annuity formula specified in articles of
incorporation and bylaws of the teachers retirement fund
association governing the basic program for that portion of
credited service which was served prior to July 1, 1978, and the
retirement annuity formula specified in section 354A.31 for the
remainder of the member's credited service, both applied to the
member's average salary as specified in section 354A.31,
subdivision 4. The formula percentages to be used in
calculating the coordinated portion of the retirement annuity or
coordinated service under this section shall recognize the
coordinated service as a continuation of any service prior to
July 1, 1978.

Sec. 28.

Minnesota Statutes 2004, section 354A.41, is
amended to read:

354A.41 ADMINISTRATION OF COORDINATED PROGRAM.

Subdivision 1.

Administrative provisions.

The provisions
of the articles of incorporation and bylaws of the deleted text begin Minneapolis
or the deleted text end St. Paul Teachers Retirement Fund Association deleted text begin , whichever
is applicable, deleted text end relating to the administration of the fund shall
govern the administration of the coordinated program and the
provisions of the articles of incorporation and bylaws of the
Duluth Teachers Retirement Fund Association relating to the
administration of the fund shall govern the administration of
the new law coordinated program in instances where the
administrative provisions are not inconsistent with the
provisions of sections 354A.31 to 354A.41, including but not
limited to provisions relating to the composition and function
of the board of trustees, the investment of assets of the
teachers retirement fund association, and the definition of the
plan year.

Subd. 2.

Actuarial valuations.

In any actuarial
valuation of the deleted text begin Minneapolis Teachers Retirement Fund
Association, the deleted text end St. Paul Teachers Retirement Fund Association deleted text begin ,
deleted text end or the Duluth Teachers Retirement Fund Association under section
356.215 prepared by the commission-retained actuary or
supplemental actuarial valuation prepared by an approved actuary
retained by the teachers retirement fund association, there
shall be included a finding of the condition of the fund showing
separately the basic and coordinated programs or the old law
coordinated and new law coordinated programs, as appropriate.
The finding shall include the level normal cost and the
applicable employee and employer contribution rates for each
program.

Sec. 29.

Minnesota Statutes 2004, section 356.20,
subdivision 2, is amended to read:

Subd. 2.

Covered public pension plans and funds.

This
section applies to the following public pension plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System;

(2) the general employees retirement plan of the Public
Employees Retirement Association;

(3) the Teachers Retirement Association;

(4) the State Patrol retirement plan;

(5) the deleted text begin Minneapolis Teachers Retirement Fund Association;
deleted text end

deleted text begin (6) the deleted text end St. Paul Teachers Retirement Fund Association;

deleted text begin (7) deleted text end new text begin (6) new text end the Duluth Teachers Retirement Fund Association;

deleted text begin (8) deleted text end new text begin (7) new text end the Minneapolis Employees Retirement Fund;

deleted text begin (9) deleted text end new text begin (8) new text end the University of Minnesota faculty retirement
plan;

deleted text begin (10) deleted text end new text begin (9) new text end the University of Minnesota faculty supplemental
retirement plan;

deleted text begin (11) deleted text end new text begin (10) new text end the judges retirement fund;

deleted text begin (12) deleted text end new text begin (11) new text end a police or firefighter's relief association
specified or described in section 69.77, subdivision 1a, or
69.771, subdivision 1;

deleted text begin (13) deleted text end new text begin (12) new text end the public employees police and fire plan of the
Public Employees Retirement Association;

deleted text begin (14) deleted text end new text begin (13) new text end the correctional state employees retirement plan
of the Minnesota State Retirement System; and

deleted text begin (15) deleted text end new text begin (14) new text end the local government correctional service
retirement plan of the Public Employees Retirement Association.

Sec. 30.

Minnesota Statutes 2004, section 356.214,
subdivision 1, is amended to read:

Subdivision 1.

Joint retention.

(a) The chief
administrative officers of the Minnesota State Retirement
System, the Public Employees Retirement Association, the
Teachers Retirement Association, the Duluth Teachers Retirement
Fund Association, deleted text begin the Minneapolis Teachers Retirement Fund
Association, deleted text end the Minneapolis Employees Retirement Fund, and the
St. Paul Teachers Retirement Fund Association, jointly, on
behalf of the state, its employees, its taxpayers, and its
various public pension plans, shall contract with an established
actuarial consulting firm to conduct annual actuarial valuations
and related services for the retirement plans named in paragraph
(b). The principal from the actuarial consulting firm on the
contract must be an approved actuary under section 356.215,
subdivision 1, paragraph (c). Prior to becoming effective, the
contract under this section is subject to a review and approval
by the Legislative Commission on Pensions and Retirement.

(b) The contract for actuarial services must include the
preparation of actuarial valuations and related actuarial work
for the following retirement plans:

(1) the teachers retirement plan, Teachers Retirement
Association;

(2) the general state employees retirement plan, Minnesota
State Retirement System;

(3) the correctional employees retirement plan, Minnesota
State Retirement System;

(4) the State Patrol retirement plan, Minnesota State
Retirement System;

(5) the judges retirement plan, Minnesota State Retirement
System;

(6) the Minneapolis employees retirement plan, Minneapolis
Employees Retirement Fund;

(7) the public employees retirement plan, Public Employees
Retirement Association;

(8) the public employees police and fire plan, Public
Employees Retirement Association;

(9) the Duluth teachers retirement plan, Duluth Teachers
Retirement Fund Association;

(10) the deleted text begin Minneapolis teachers retirement plan, Minneapolis
Teachers Retirement Fund Association;
deleted text end

deleted text begin (11) the deleted text end St. Paul teachers retirement plan, St. Paul
Teachers Retirement Fund Association;

deleted text begin (12) deleted text end new text begin (11) new text end the legislators retirement plan, Minnesota State
Retirement System;

deleted text begin (13) deleted text end new text begin (12) new text end the elective state officers retirement plan,
Minnesota State Retirement System; and

deleted text begin (14) deleted text end new text begin (13) new text end local government correctional service retirement
plan, Public Employees Retirement Association.

(c) The contract must require completion of the annual
actuarial valuation calculations on a fiscal year basis, with
the contents of the actuarial valuation calculations as
specified in section 356.215, and in conformity with the
standards for actuarial work adopted by the Legislative
Commission on Pensions and Retirement.

The contract must require completion of annual experience
data collection and processing and a quadrennial published
experience study for the plans listed in paragraph (b), clauses
(1), (2), and (7), as provided for in the standards for
actuarial work adopted by the commission. The experience data
collection, processing, and analysis must evaluate the following:

(1) individual salary progression;

(2) the rate of return on investments based on the current
asset value;

(3) payroll growth;

(4) mortality;

(5) retirement age;

(6) withdrawal; and

(7) disablement.

The contract must include provisions for the preparation of
cost analyses by the jointly retained actuary for proposed
legislation that include changes in benefit provisions or
funding policies prior to their consideration by the Legislative
Commission on Pensions and Retirement.

(d) The actuary retained by the joint retirement systems
shall annually prepare a report to the legislature, including a
commentary on the actuarial valuation calculations for the plans
named in paragraph (b) and summarizing the results of the
actuarial valuation calculations. The actuary shall include
with the report the actuary's recommendations to the legislature
concerning the appropriateness of the support rates to achieve
proper funding of the retirement plans by the required funding
dates. The actuary shall, as part of the quadrennial experience
study, include recommendations to the legislature on the
appropriateness of the actuarial valuation assumptions required
for evaluation in the study.

(e) If the actuarial gain and loss analysis in the
actuarial valuation calculations indicates a persistent pattern
of sizable gains or losses, as directed by the joint retirement
systems or as requested by the chair of the Legislative
Commission on Pensions and Retirement, the actuary shall prepare
a special experience study for a plan listed in paragraph (b),
clause (3), (4), (5), (6), (8), (9), (10), (11), (12), deleted text begin (13), deleted text end or
deleted text begin (14) deleted text end new text begin (13) new text end , in the manner provided for in the standards for
actuarial work adopted by the commission.

(f) The term of the contract between the joint retirement
systems and the actuary retained may not exceed five years. The
joint retirement system administrative officers shall establish
procedures for the consideration and selection of contract
bidders and the requirements for the contents of an actuarial
services contract under this section. The procedures and
requirements must be submitted to the Legislative Commission on
Pensions and Retirement for review and comment prior to final
approval by the joint administrators. The contract is subject
to the procurement procedures under chapter 16C. The
consideration of bids and the selection of a consulting
actuarial firm by the chief administrative officers must occur
at a meeting that is open to the public and reasonable timely
public notice of the date and the time of the meeting and its
subject matter must be given.

(g) The actuarial services contract may not limit the
ability of the Minnesota legislature and its standing committees
and commissions to rely on the actuarial results of the work
prepared under the contract.

(h) The joint retirement systems shall designate one of the
retirement system executive directors as the actuarial services
contract manager.

Sec. 31.

Minnesota Statutes 2004, section 356.215,
subdivision 8, is amended to read:

Subd. 8.

Interest and salary assumptions.

(a) The
actuarial valuation must use the applicable following
preretirement interest assumption and the applicable following
postretirement interest assumption:

preretirement postretirement
interest rate interest rate
plan assumption assumption
general state employees
retirement plan 8.5% 6.0%
correctional state employees
retirement plan 8.5 6.0
State Patrol retirement plan 8.5 6.0
legislators retirement plan 8.5 6.0
elective state officers
retirement plan 8.5 6.0
judges retirement plan 8.5 6.0
general public employees
retirement plan 8.5 6.0
public employees police and fire
retirement plan 8.5 6.0
local government correctional
service retirement plan 8.5 6.0
teachers retirement plan 8.5 6.0
Minneapolis employees
retirement plan 6.0 5.0
Duluth teachers retirement plan 8.5 8.5
deleted text begin Minneapolis teachers retirement
plan deleted text end deleted text begin 8.5 deleted text end deleted text begin 8.5
deleted text end St. Paul teachers retirement
plan 8.5 8.5
Minneapolis Police Relief
Association 6.0 6.0
Fairmont Police Relief
Association 5.0 5.0
Minneapolis Fire Department
Relief Association 6.0 6.0
Virginia Fire Department
Relief Association 5.0 5.0
local monthly benefit volunteer
firefighters relief associations 5.0 5.0

(b) The actuarial valuation must use the applicable
following single rate future salary increase assumption, the
applicable following modified single rate future salary increase
assumption, or the applicable following graded rate future
salary increase assumption:

(1) single rate future salary increase assumption

future salary
plan increase assumption
legislators retirement plan 5.0%
elective state officers retirement
plan 5.0
judges retirement plan 5.0
Minneapolis Police Relief Association 4.0
Fairmont Police Relief
Association 3.5
Minneapolis Fire Department Relief
Association 4.0
Virginia Fire Department
Relief Association 3.5

(2) modified single rate future salary increase assumption

future salary
plan increase assumption
Minneapolis employees the prior calendar year
retirement plan amount increased first by
1.0198 percent to prior
fiscal year date and
then increased by 4.0
percent annually for
each future year

(3) select and ultimate future salary increase assumption
or graded rate future salary increase assumption

future salary
plan increase assumption
general state employees select calculation and
retirement plan assumption A
correctional state employees
retirement plan assumption deleted text begin H deleted text end new text begin G
new text end State Patrol retirement plan assumption deleted text begin H deleted text end new text begin G
new text end general public employees select calculation and
retirement plan assumption B
public employees police and fire
fund retirement plan assumption C
local government correctional service
retirement plan assumption deleted text begin H deleted text end new text begin G
new text end teachers retirement plan assumption D
Duluth teachers retirement plan assumption E
deleted text begin Minneapolis teachers retirement plan deleted text end deleted text begin assumption F
deleted text end St. Paul teachers retirement plan assumption deleted text begin G deleted text end new text begin F
new text end
The select calculation is:
during the ten-year select period, a designated percent
is multiplied by the result of ten minus T, where T is
the number of completed years of service, and is added
to the applicable future salary increase assumption. The
designated percent is 0.2 percent for the correctional state
employees retirement plan, the State Patrol retirement
plan, the public employees police and fire plan, and the
local government correctional service plan; 0.3 percent
for the general state employees retirement plan, the
general public employees retirement plan, the teachers
retirement plan, the Duluth Teachers Retirement Fund
Association, and the St. Paul Teachers Retirement Fund
Association; and 0.4 percent for the Minneapolis Teachers
Retirement Fund Association.

The ultimate future salary increase assumption is:

age A B C D E deleted text begin F deleted text end deleted text begin G deleted text end new text begin F new text end deleted text begin H deleted text end new text begin G
new text end 16 6.95% 6.95% 11.50% 8.20% 8.00% deleted text begin 6.50% deleted text end 6.90% 7.7500
17 6.90 6.90 11.50 8.15 8.00 deleted text begin 6.50 deleted text end 6.90 7.7500
18 6.85 6.85 11.50 8.10 8.00 deleted text begin 6.50 deleted text end 6.90 7.7500
19 6.80 6.80 11.50 8.05 8.00 deleted text begin 6.50 deleted text end 6.90 7.7500
20 6.75 6.40 11.50 6.00 6.90 deleted text begin 6.50 deleted text end 6.90 7.7500
21 6.75 6.40 11.50 6.00 6.90 deleted text begin 6.50 deleted text end 6.90 7.1454
22 6.75 6.40 11.00 6.00 6.90 deleted text begin 6.50 deleted text end 6.90 7.0725
23 6.75 6.40 10.50 6.00 6.85 deleted text begin 6.50 deleted text end 6.85 7.0544
24 6.75 6.40 10.00 6.00 6.80 deleted text begin 6.50 deleted text end 6.80 7.0363
25 6.75 6.40 9.50 6.00 6.75 deleted text begin 6.50 deleted text end 6.75 7.0000
26 6.75 6.36 9.20 6.00 6.70 deleted text begin 6.50 deleted text end 6.70 7.0000
27 6.75 6.32 8.90 6.00 6.65 deleted text begin 6.50 deleted text end 6.65 7.0000
28 6.75 6.28 8.60 6.00 6.60 deleted text begin 6.50 deleted text end 6.60 7.0000
29 6.75 6.24 8.30 6.00 6.55 deleted text begin 6.50 deleted text end 6.55 7.0000
30 6.75 6.20 8.00 6.00 6.50 deleted text begin 6.50 deleted text end 6.50 7.0000
31 6.75 6.16 7.80 6.00 6.45 deleted text begin 6.50 deleted text end 6.45 7.0000
32 6.75 6.12 7.60 6.00 6.40 deleted text begin 6.50 deleted text end 6.40 7.0000
33 6.75 6.08 7.40 6.00 6.35 deleted text begin 6.50 deleted text end 6.35 7.0000
34 6.75 6.04 7.20 6.00 6.30 deleted text begin 6.50 deleted text end 6.30 7.0000
35 6.75 6.00 7.00 6.00 6.25 deleted text begin 6.50 deleted text end 6.25 7.0000
36 6.75 5.96 6.80 6.00 6.20 deleted text begin 6.50 deleted text end 6.20 6.9019
37 6.75 5.92 6.60 6.00 6.15 deleted text begin 6.50 deleted text end 6.15 6.8074
38 6.75 5.88 6.40 5.90 6.10 deleted text begin 6.50 deleted text end 6.10 6.7125
39 6.75 5.84 6.20 5.80 6.05 deleted text begin 6.50 deleted text end 6.05 6.6054
40 6.75 5.80 6.00 5.70 6.00 deleted text begin 6.50 deleted text end 6.00 6.5000
41 6.75 5.76 5.90 5.60 5.90 deleted text begin 6.50 deleted text end 5.95 6.3540
42 6.75 5.72 5.80 5.50 5.80 deleted text begin 6.50 deleted text end 5.90 6.2087
43 6.65 5.68 5.70 5.40 5.70 deleted text begin 6.50 deleted text end 5.85 6.0622
44 6.55 5.64 5.60 5.30 5.60 deleted text begin 6.50 deleted text end 5.80 5.9048
45 6.45 5.60 5.50 5.20 5.50 deleted text begin 6.50 deleted text end 5.75 5.7500
46 6.35 5.56 5.45 5.10 5.40 deleted text begin 6.40 deleted text end 5.70 5.6940
47 6.25 5.52 5.40 5.00 5.30 deleted text begin 6.30 deleted text end 5.65 5.6375
48 6.15 5.48 5.35 5.00 5.20 deleted text begin 6.20 deleted text end 5.60 5.5822
49 6.05 5.44 5.30 5.00 5.10 deleted text begin 6.10 deleted text end 5.55 5.5404
50 5.95 5.40 5.25 5.00 5.00 deleted text begin 6.00 deleted text end 5.50 5.5000
51 5.85 5.36 5.25 5.00 5.00 deleted text begin 5.90 deleted text end 5.45 5.4384
52 5.75 5.32 5.25 5.00 5.00 deleted text begin 5.80 deleted text end 5.40 5.3776
53 5.65 5.28 5.25 5.00 5.00 deleted text begin 5.70 deleted text end 5.35 5.3167
54 5.55 5.24 5.25 5.00 5.00 deleted text begin 5.60 deleted text end 5.30 5.2826
55 5.45 5.20 5.25 5.00 5.00 deleted text begin 5.50 deleted text end 5.25 5.2500
56 5.35 5.16 5.25 5.00 5.00 deleted text begin 5.40 deleted text end 5.20 5.2500
57 5.25 5.12 5.25 5.00 5.00 deleted text begin 5.30 deleted text end 5.15 5.2500
58 5.25 5.08 5.25 5.10 5.00 deleted text begin 5.20 deleted text end 5.10 5.2500
59 5.25 5.04 5.25 5.20 5.00 deleted text begin 5.10 deleted text end 5.05 5.2500
60 5.25 5.00 5.25 5.30 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
61 5.25 5.00 5.25 5.40 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
62 5.25 5.00 5.25 5.50 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
63 5.25 5.00 5.25 5.60 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
64 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
65 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
66 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
67 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
68 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
69 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
70 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
71 5.25 5.00 5.70

(c) The actuarial valuation must use the applicable
following payroll growth assumption for calculating the
amortization requirement for the unfunded actuarial accrued
liability where the amortization retirement is calculated as a
level percentage of an increasing payroll:

payroll growth
plan assumption
general state employees retirement plan 5.00%
correctional state employees retirement plan 5.00
State Patrol retirement plan 5.00
legislators retirement plan 5.00
elective state officers retirement plan 5.00
judges retirement plan 5.00
general public employees retirement plan 6.00
public employees police and fire
retirement plan 6.00
local government correctional service
retirement plan 6.00
teachers retirement plan 5.00
Duluth teachers retirement plan 5.00
deleted text begin Minneapolis teachers retirement plan deleted text end deleted text begin 5.00
deleted text end St. Paul teachers retirement plan 5.00

Sec. 32.

Minnesota Statutes 2004, section 356.215,
subdivision 11, is amended to read:

Subd. 11.

Amortization contributions.

(a) In addition to
the exhibit indicating the level normal cost, the actuarial
valuation must contain an exhibit indicating the additional
annual contribution sufficient to amortize the unfunded
actuarial accrued liability. For funds governed by chapters 3A,
352, 352B, 352C, 353, 354, 354A, and 490, the additional
contribution must be calculated on a level percentage of covered
payroll basis by the established date for full funding in effect
when the valuation is prepared. For funds governed by chapter
3A, sections 352.90 through 352.951, chapters 352B, 352C,
sections 353.63 through 353.68, and chapters 353C, 354A, and
490, the level percent additional contribution must be
calculated assuming annual payroll growth of 6.5 percent. For
funds governed by sections 352.01 through 352.86 and chapter
354, the level percent additional contribution must be
calculated assuming an annual payroll growth of five percent.
For the fund governed by sections 353.01 through 353.46, the
level percent additional contribution must be calculated
assuming an annual payroll growth of six percent. For all other
funds, the additional annual contribution must be calculated on
a level annual dollar amount basis.

(b) For any fund other than the Minneapolis Employees
Retirement Fund and the Public Employees Retirement Association
general plan, if there has not been a change in the actuarial
assumptions used for calculating the actuarial accrued liability
of the fund, a change in the benefit plan governing annuities
and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability
of all or a portion of the fund, or a combination of the three,
which change or changes by itself or by themselves without
inclusion of any other items of increase or decrease produce a
net increase in the unfunded actuarial accrued liability of the
fund, the established date for full funding is the first
actuarial valuation date occurring after June 1, 2020.

(c) For any fund or plan other than the Minneapolis
Employees Retirement Fund and the Public Employees Retirement
Association general plan, if there has been a change in any or
all of the actuarial assumptions used for calculating the
actuarial accrued liability of the fund, a change in the benefit
plan governing annuities and benefits payable from the fund, a
change in the actuarial cost method used in calculating the
actuarial accrued liability of all or a portion of the fund, or
a combination of the three, and the change or changes, by itself
or by themselves and without inclusion of any other items of
increase or decrease, produce a net increase in the unfunded
actuarial accrued liability in the fund, the established date
for full funding must be determined using the following
procedure:

(i) the unfunded actuarial accrued liability of the fund
must be determined in accordance with the plan provisions
governing annuities and retirement benefits and the actuarial
assumptions in effect before an applicable change;

(ii) the level annual dollar contribution or level
percentage, whichever is applicable, needed to amortize the
unfunded actuarial accrued liability amount determined under
item (i) by the established date for full funding in effect
before the change must be calculated using the interest
assumption specified in subdivision 8 in effect before the
change;

(iii) the unfunded actuarial accrued liability of the fund
must be determined in accordance with any new plan provisions
governing annuities and benefits payable from the fund and any
new actuarial assumptions and the remaining plan provisions
governing annuities and benefits payable from the fund and
actuarial assumptions in effect before the change;

(iv) the level annual dollar contribution or level
percentage, whichever is applicable, needed to amortize the
difference between the unfunded actuarial accrued liability
amount calculated under item (i) and the unfunded actuarial
accrued liability amount calculated under item (iii) over a
period of 30 years from the end of the plan year in which the
applicable change is effective must be calculated using the
applicable interest assumption specified in subdivision 8 in
effect after any applicable change;

(v) the level annual dollar or level percentage
amortization contribution under item (iv) must be added to the
level annual dollar amortization contribution or level
percentage calculated under item (ii);

(vi) the period in which the unfunded actuarial accrued
liability amount determined in item (iii) is amortized by the
total level annual dollar or level percentage amortization
contribution computed under item (v) must be calculated using
the interest assumption specified in subdivision 8 in effect
after any applicable change, rounded to the nearest integral
number of years, but not to exceed 30 years from the end of the
plan year in which the determination of the established date for
full funding using the procedure set forth in this clause is
made and not to be less than the period of years beginning in
the plan year in which the determination of the established date
for full funding using the procedure set forth in this clause is
made and ending by the date for full funding in effect before
the change; and

(vii) the period determined under item (vi) must be added
to the date as of which the actuarial valuation was prepared and
the date obtained is the new established date for full funding.

(d) For the Minneapolis Employees Retirement Fund, the
established date for full funding is June 30, 2020.

(e) For the general employees retirement plan of the Public
Employees Retirement Association, the established date for full
funding is June 30, 2031.

(f) new text begin For the Teachers Retirement Association, the
established date for full funding is June 30, 2035.
new text end

new text begin (g) new text end For the retirement plans for which the annual actuarial
valuation indicates an excess of valuation assets over the
actuarial accrued liability, the valuation assets in excess of
the actuarial accrued liability must be recognized as a
reduction in the current contribution requirements by an amount
equal to the amortization of the excess expressed as a level
percentage of pay over a 30-year period beginning anew with each
annual actuarial valuation of the plan.

Sec. 33.

Minnesota Statutes 2004, section 356.30,
subdivision 3, is amended to read:

Subd. 3.

Covered plans.

This section applies to the
following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(2) the correctional state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(3) the unclassified employees retirement program,
established under chapter 352D;

(4) the State Patrol retirement plan, established under
chapter 352B;

(5) the legislators retirement plan, established under
chapter 3A;

(6) the elective state officers' retirement plan,
established under chapter 352C;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established under chapter 353;

(8) the public employees police and fire retirement plan of
the Public Employees Retirement Association, established under
chapter 353;

(9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
under chapter 353E;

(10) the Teachers Retirement Association, established under
chapter 354;

(11) the Minneapolis Employees Retirement Fund, established
under chapter 422A;

(12) the deleted text begin Minneapolis Teachers Retirement Fund Association,
established under chapter 354A;
deleted text end

deleted text begin (13) the deleted text end St. Paul Teachers Retirement Fund Association,
established under chapter 354A;

deleted text begin (14) deleted text end new text begin (13) new text end the Duluth Teachers Retirement Fund Association,
established under chapter 354A; and

deleted text begin (15) deleted text end new text begin (14) new text end the judges' retirement fund, established by
sections 490.121 to 490.132.

Sec. 34.

Minnesota Statutes 2004, section 356.302,
subdivision 7, is amended to read:

Subd. 7.

Covered retirement plans.

This section applies
to the following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(2) the unclassified state employees retirement program of
the Minnesota State Retirement System, established by chapter
352D;

(3) the general employees retirement plan of the Public
Employees Retirement Association, established by chapter 353;

(4) the Teachers Retirement Association, established by
chapter 354;

(5) the Duluth Teachers Retirement Fund Association,
established by chapter 354A;

(6) the deleted text begin Minneapolis Teachers Retirement Fund Association,
established by chapter 354A;
deleted text end

deleted text begin (7) the deleted text end St. Paul Teachers Retirement Fund Association,
established by chapter 354A;

deleted text begin (8) deleted text end new text begin (7) new text end the Minneapolis Employees Retirement Fund,
established by chapter 422A;

deleted text begin (9) deleted text end new text begin (8) new text end the state correctional employees retirement plan of
the Minnesota State Retirement System, established by chapter
352;

deleted text begin (10) deleted text end new text begin (9) new text end the State Patrol retirement plan, established by
chapter 352B;

deleted text begin (11) deleted text end new text begin (10) new text end the public employees police and fire plan of the
Public Employees Retirement Association, established by chapter
353;

deleted text begin (12) deleted text end new text begin (11) new text end the local government correctional service
retirement plan of the Public Employees Retirement Association,
established by chapter 353E; and

deleted text begin (13) deleted text end new text begin (12) new text end the judges' retirement plan, established by
sections 490.121 to 490.132.

Sec. 35.

Minnesota Statutes 2004, section 356.303,
subdivision 4, is amended to read:

Subd. 4.

Covered retirement plans.

This section applies
to the following retirement plans:

(1) the legislators retirement plan, established by chapter
3A;

(2) the general state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(3) the correctional state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(4) the State Patrol retirement plan, established by
chapter 352B;

(5) the elective state officers retirement plan,
established by chapter 352C;

(6) the unclassified state employees retirement program,
established by chapter 352D;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established by chapter 353;

(8) the public employees police and fire plan of the Public
Employees Retirement Association, established by chapter 353;

(9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
by chapter 353E;

(10) the Teachers Retirement Association, established by
chapter 354;

(11) the Duluth Teachers Retirement Fund Association,
established by chapter 354A;

(12) the deleted text begin Minneapolis Teachers Retirement Fund Association,
established by chapter 354A;
deleted text end

deleted text begin (13) the deleted text end St. Paul Teachers Retirement Fund Association,
established by chapter 354A;

deleted text begin (14) deleted text end new text begin (13) new text end the Minneapolis Employees Retirement Fund,
established by chapter 422A; and

deleted text begin (15) deleted text end new text begin (14) new text end the judges' retirement fund, established by
sections 490.121 to 490.132.

Sec. 36.

Minnesota Statutes 2004, section 356.315, is
amended by adding a subdivision to read:

new text begin Subd. 1a. new text end

new text begin Coordinated plan members. new text end

new text begin The applicable
benefit accrual rate is 1.5 percent.
new text end

Sec. 37.

Minnesota Statutes 2004, section 356.42,
subdivision 3, is amended to read:

Subd. 3.

Covered retirement plans.

The postretirement
adjustment provided in this section applies to the following
retirement funds:

(1) the general employees retirement plans of the Public
Employees Retirement Association;

(2) the public employees police and fire plan of the Public
Employees Retirement Association;

(3) the teachers retirement association;

(4) the State Patrol retirement plan;

(5) the state employees retirement plan of the Minnesota
State Retirement System;

(6) the deleted text begin Minneapolis Teachers Retirement Fund Association
established under chapter 354A;
deleted text end

deleted text begin (7) the deleted text end St. Paul Teachers Retirement Fund Association
established under chapter 354A; and

deleted text begin (8) deleted text end new text begin (7) new text end the Duluth Teachers Retirement Fund Association
established under chapter 354A.

Sec. 38.

Minnesota Statutes 2004, section 356.465,
subdivision 3, is amended to read:

Subd. 3.

Covered retirement plans.

The provisions of
this section apply to the following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System established under chapter 352;

(2) the correctional state employees retirement plan of the
Minnesota State Retirement System established under chapter 352;

(3) the State Patrol retirement plan established under
chapter 352B;

(4) the legislators retirement plan established under
chapter 3A;

(5) the judges retirement plan established under chapter
490;

(6) the general employees retirement plan of the Public
Employees Retirement Association established under chapter 353;

(7) the public employees police and fire plan of the Public
Employees Retirement Association established under chapter 353;

(8) the teachers retirement plan established under chapter
354;

(9) the Duluth Teachers Retirement Fund Association
established under chapter 354A;

(10) the St. Paul Teachers Retirement Fund Association
established under chapter 354A;

(11) the deleted text begin Minneapolis Teachers Retirement Fund Association
established under chapter 354A;
deleted text end

deleted text begin (12) the deleted text end Minneapolis employees retirement plan established
under chapter 422A;

deleted text begin (13) deleted text end new text begin (12) new text end the Minneapolis Firefighters Relief Association
established under chapter 423C;

deleted text begin (14) deleted text end new text begin (13) new text end the Minneapolis Police Relief Association
established under chapter 423B; and

deleted text begin (15) deleted text end new text begin (14) new text end the local government correctional service
retirement plan of the Public Employees Retirement Association
established under chapter 353E.

Sec. 39.

Minnesota Statutes 2004, section 423A.02,
subdivision 1b, is amended to read:

Subd. 1b.

Additional amortization state aid.

(a)
Annually, on October 1, the commissioner of revenue shall
allocate the additional amortization state aid transferred under
section 69.021, subdivision 11, to:

(1) all police or salaried firefighters relief associations
governed by and in full compliance with the requirements of
section 69.77, that had an unfunded actuarial accrued liability
in the actuarial valuation prepared under sections 356.215 and
356.216 as of the preceding December 31;

(2) all local police or salaried firefighter consolidation
accounts governed by chapter 353A that are certified by the
executive director of the public employees retirement
association as having for the current fiscal year an additional
municipal contribution amount under section 353A.09, subdivision
5, paragraph (b), and that have implemented section 353A.083,
subdivision 1, if the effective date of the consolidation
preceded May 24, 1993, and that have implemented section
353A.083, subdivision 2, if the effective date of the
consolidation preceded June 1, 1995; and

(3) the municipalities that are required to make an
additional municipal contribution under section 353.665,
subdivision 8, for the duration of the required additional
contribution.

(b) The commissioner shall allocate the state aid on the
basis of the proportional share of the relief association or
consolidation account of the total unfunded actuarial accrued
liability of all recipient relief associations and consolidation
accounts as of December 31, 1993, for relief associations, and
as of June 30, 1994, for consolidation accounts.

(c) Beginning October 1, 2000, and annually thereafter, the
commissioner shall allocate the state aid, including any state
aid in excess of the limitation in subdivision 4, on the
following basis:

(1) 64.5 percent to the municipalities to which section
353.665, subdivision 8, paragraph (b), or 353A.09, subdivision
5, paragraph (b), apply for distribution in accordance with
paragraph (b) and subject to the limitation in subdivision 4;

(2) 34.2 percent to the city of Minneapolis to fund any
unfunded actuarial accrued liability in the actuarial valuation
prepared under sections 356.215 and 356.216 as of the preceding
December 31 for the Minneapolis Police Relief Association or the
Minneapolis Fire Department Relief Association; and

(3) 1.3 percent to the city of Virginia to fund any
unfunded actuarial accrued liability in the actuarial valuation
prepared under sections 356.215 and 356.216 as of the preceding
December 31 for the Virginia Fire Department Relief Association.

If there is no unfunded actuarial accrued liability in both
the Minneapolis Police Relief Association and the Minneapolis
Fire Department Relief Association as disclosed in the most
recent actuarial valuations for the relief associations prepared
under sections 356.215 and 356.216, the commissioner shall
allocate that 34.2 percent of the aid as follows: 49 percent to
the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end Association, 21 percent
to the St. Paul Teachers Retirement Fund Association, and 30
percent as additional funding to support minimum fire state aid
for volunteer firefighters relief associations. If there is no
unfunded actuarial accrued liability in the Virginia Fire
Department Relief Association as disclosed in the most recent
actuarial valuation for the relief association prepared under
sections 356.215 and 356.216, the commissioner shall allocate
that 1.3 percent of the aid as follows: 49 percent to the
deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end Association, 21 percent to
the St. Paul Teachers Retirement Fund Association, and 30
percent as additional funding to support minimum fire state aid
for volunteer firefighters relief associations. The allocation
must be made by the commissioner at the same time and under the
same procedures as specified in subdivision 3. With respect to
the deleted text begin Minneapolis Teachers Retirement Fund Association or the deleted text end St.
Paul Teachers Retirement Fund Association, annually, beginning
on July 1, 2005, if the applicable teacher's association
five-year average time-weighted rate of investment return does
not equal or exceed the performance of a composite portfolio
assumed passively managed (indexed) invested ten percent in cash
equivalents, 60 percent in bonds and similar debt securities,
and 30 percent in domestic stock calculated using the formula
under section 11A.04, clause (11), the aid allocation to that
retirement fund under this section ceases until the five-year
annual rate of investment return equals or exceeds the
performance of that composite portfolio.

(d) The amounts required under this subdivision are
annually appropriated to the commissioner of revenue.

Sec. 40. new text begin FULL FUNDING DATE.
new text end

new text begin Notwithstanding any other law to the contrary, for the
Teachers Retirement Association, the established date for full
funding is 2035.
new text end

Sec. 41. new text begin MTRFA EMPLOYEE JOB PREFERENCE.
new text end

new text begin An employee of the Minneapolis Teachers Retirement Fund
Association on the date of enactment has an employment
preference for subsequent employment by the Teachers Retirement
Association, the Minnesota State Retirement System, or the
Public Employees Retirement Association equivalent to the
preference provided to armed forces veterans under state law and
Department of Employee Relations practice.
new text end

Sec. 42. new text begin MTRFA ARTICLES AND BYLAWS; REPEAL;
APPLICABILITY.
new text end

new text begin (a) The articles of incorporation and bylaws of the
Minneapolis Teachers Retirement Fund Association are repealed
and have application only as provided in section 7, subdivision
6, and paragraph (b).
new text end

new text begin (b) The articles of incorporation and bylaws of the
Minneapolis Teachers Retirement Fund Association only apply to
members of the former Minneapolis Teachers Retirement Fund
Association with service credit in the plan on or before June
30, 2005, and apply solely for purposes of determining the
retirement annuity for or benefit on behalf of a member of the
basic program of that retirement plan.
new text end

new text begin (c) No annuity adjustment or increase under article 30 of
the articles of incorporation of the Minneapolis Teachers
Retirement Fund Association is applicable or payable after June
30, 2005.
new text end

Sec. 43. new text begin APPROPRIATION.
new text end

new text begin $3,000,000 in fiscal year 2006 and $3,000,000 in fiscal
year 2007 are appropriated from the general fund to make state
payments required under Minnesota Statutes, section 354.42,
subdivision 3.
new text end

Sec. 44. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 354A.051; 354A.105;
354A.23, subdivision 1; and 354A.28, are repealed.
new text end

Sec. 45. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 44 are effective the day following final
enactment.
new text end

ARTICLE 5

OTHER APPROPRIATIONS

Section 1. new text begin APPROPRIATION; PUBLIC TRANSIT.
new text end

new text begin Subdivision 1. new text end

new text begin Metropolitan council. new text end

new text begin $40,000,000 is
appropriated from the general fund to the Metropolitan Council
in fiscal year 2006 for public transit operations and
assistance, including operation of Metro Mobility. This
appropriation is available until June 30, 2007. This
appropriation is in addition to any other appropriation for this
purpose.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner of transportation. new text end

new text begin $6,000,000 is
appropriated from the general fund to the commissioner of
transportation in fiscal year 2006 for public transit assistance
under Minnesota Statutes, section 174.24. This appropriation is
available until June 30, 2007. This appropriation is in
addition to any other appropriation for this purpose.
new text end

Sec. 2. new text begin SALARY SUPPLEMENT.
new text end

new text begin (a) $7,000,000 for the fiscal year ending June 30, 2006,
and $14,000,000 for the fiscal year ending June 30, 2007, is
appropriated from the general fund to the commissioner of
finance to pay compensation and economic benefit increases to
employees in the executive branch of state government.
new text end

new text begin (b) The amount necessary to pay compensation and economic
benefit from other funds in the state treasury are appropriated
from those funds. The amount of the appropriation for this
purpose from each fund must not exceed: (1) in the fiscal year
ending June 30, 2006, one percent of the amount spent from each
fund for employee compensation in the fiscal year ending June
30, 2005; and (2) in the fiscal year ending June 30, 2007, two
percent of the amount spent from each fund for employee
compensation in the fiscal year ending June 30, 2005.
new text end

new text begin (c) The compensation and economic benefit increases covered
by this section are those authorized by current law or resulting
from collective bargaining agreements given interim approval by
the Legislative Coordinating Commission Subcommittee on Employee
Relations. This section does not apply to increases granted to
faculty members at the Minnesota State Colleges and Universities.
new text end