HF 1111

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:44am

A bill for an act
relating to retirement; modifying various public pension plan provisions;
providing for uniformity in various administrative provisions; modifying
definitions; amending Minnesota Statutes 2008, sections 3A.02, subdivision 3,
by adding a subdivision; 3A.03, by adding a subdivision; 3A.04, by adding a
subdivision; 3A.115; 11A.08, subdivision 1; 11A.23, subdivisions 1, 2; 352.04,
subdivisions 1, 12; 352.061; 352.113, by adding a subdivision; 352.115, by
adding a subdivision; 352.12, by adding a subdivision; 352.75, subdivisions 3,
4; 352.911, subdivisions 3, 5; 352.93, by adding a subdivision; 352.931, by
adding a subdivision; 352.95, by adding a subdivision; 352B.02, subdivision 1d;
352B.08, by adding a subdivision; 352B.10, by adding a subdivision; 352B.11,
by adding a subdivision; 352C.10; 352D.06, subdivision 1; 352D.065, by adding
a subdivision; 352D.075, by adding a subdivision; 353.06; 353.27, subdivision
1; 353.29, by adding a subdivision; 353.31, subdivision 1b, by adding a
subdivision; 353.33, subdivisions 3b, 7, by adding a subdivision; 353.651, by
adding a subdivision; 353.656, subdivision 5a, by adding a subdivision; 353.657,
subdivision 3a, by adding a subdivision; 353.665, subdivision 3; 353A.02,
subdivisions 14, 23; 353A.05, subdivisions 1, 2; 353A.08, subdivisions 1, 3;
353A.081, subdivision 2; 353A.09, subdivision 1; 353A.10, subdivisions 2,
3; 353E.01, subdivisions 3, 5; 353E.04, by adding a subdivision; 353E.06, by
adding a subdivision; 353E.07, by adding a subdivision; 354.07, subdivision 4;
354.33, subdivision 5; 354.35, by adding a subdivision; 354.42, subdivision 1a;
354.44, by adding a subdivision; 354.46, by adding a subdivision; 354.48, by
adding a subdivision; 354.55, subdivision 13; 354.70, subdivisions 5, 6; 356.215,
subdivisions 1, 11; 356.351, subdivision 2; 490.123, subdivisions 1, 3; 490.124,
by adding a subdivision; proposing coding for new law in Minnesota Statutes,
chapter 356; repealing Minnesota Statutes 2008, sections 11A.041; 11A.18;
11A.181; 352.119, subdivisions 2, 3, 4; 352B.26, subdivisions 1, 3; 353.271;
353A.02, subdivision 20; 353A.09, subdivisions 2, 3; 354.05, subdivision 26;
354.55, subdivision 14; 354.63; 356.41; 356.431, subdivision 2; 422A.01,
subdivision 13; 422A.06, subdivision 4; 490.123, subdivisions 1c, 1e.

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

Section 1.

Minnesota Statutes 2008, section 3A.02, subdivision 3, is amended to read:

Subd. 3.

Appropriation.

The amounts required for payment of retirement
allowances provided by this section are appropriated annually to the director from the
deleted text begin participation of the deleted text end legislators retirement deleted text begin plan in the Minnesota postretirement investment deleted text end
fund new text begin or from the general fund as provided in section 3A.115 new text end . The retirement allowance
must be paid monthly to the recipients entitled to those retirement allowances.

Sec. 2.

Minnesota Statutes 2008, section 3A.02, is amended by adding a subdivision to
read:

new text begin Subd. 6. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A retirement allowance under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 3.

Minnesota Statutes 2008, section 3A.03, is amended by adding a subdivision to
read:

new text begin Subd. 3. new text end

new text begin Legislators retirement fund. new text end

new text begin (a) The legislators retirement fund, a special
retirement fund, is created within the state treasury and must be credited with assets equal
to the participation of the legislators retirement plan in the Minnesota postretirement
investment fund as of June 30, 2009, and any investment proceeds on those assets.
new text end

new text begin (b) The payment of annuities under section 3A.115, paragraph (b), is appropriated
from the legislators retirement fund.
new text end

Sec. 4.

Minnesota Statutes 2008, section 3A.04, is amended by adding a subdivision to
read:

new text begin Subd. 2a. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 5.

Minnesota Statutes 2008, section 3A.115, is amended to read:

3A.115 RETIREMENT ALLOWANCE APPROPRIATION;
new text begin POSTRETIREMENT new text end ADJUSTMENT.

new text begin (a) new text end The amount necessary to fund the retirement allowance granted under this
chapter to a former legislator deleted text begin upon retirement deleted text end new text begin retiring after June 30, 2003, new text end is appropriated
from the general fund to the director to pay pension obligations due to the retiree.

new text begin (b) The amount necessary to fund the retirement allowance granted under this
chapter to a former legislator retiring before July 1, 2003, must be paid from the legislators
retirement fund created under section 3A.03, subdivision 3, until the assets of the fund
are exhausted and at that time, the amount necessary to fund the retirement allowances
under this paragraph is appropriated from the general fund to the director to pay pension
obligations to the retiree.
new text end

new text begin (c) new text end Retirement allowances payable to retired legislators and their survivors under
this chapter must be adjusted deleted text begin in the same manner, at the same times, and in the same
amounts as are benefits payable from the Minnesota postretirement investment fund to
retirees of a participating public pension fund deleted text end new text begin as provided in sections 3A.02, subdivision
6, and 356.415 new text end .

Sec. 6.

Minnesota Statutes 2008, section 11A.08, subdivision 1, is amended to read:

Subdivision 1.

Membership.

There is created an Investment Advisory Council
consisting of 17 members. Ten of these members deleted text begin shall deleted text end new text begin must new text end be experienced in general
investment matters. deleted text begin They shall be appointed by the state board deleted text end new text begin The state board must
appoint the ten members new text end . The other seven members deleted text begin shall be deleted text end new text begin are new text end : the commissioner of
finance; the executive director of the Minnesota State Retirement System; the executive
director of the Public Employees Retirement Association; the executive director of
the Teachers Retirement Association; a retiree currently receiving benefits from deleted text begin the
postretirement investment fund deleted text end new text begin a statewide retirement plan new text end ; and two public employees
who are active members of funds whose assets are invested by the state board. The
new text begin governor must appoint the new text end retiree and the public employees deleted text begin shall be appointed by the
governor deleted text end for four-year terms.

Sec. 7.

Minnesota Statutes 2008, section 11A.23, subdivision 1, is amended to read:

Subdivision 1.

Certification of assets not needed for immediate use.

Each
executive director administering a retirement fund or plan enumerated in subdivision 4
shall, from time to time, certify to the state board for investment those portions of the
assets of the retirement fund or plan which in the judgment of the executive director are
not required for immediate use. deleted text begin Assets of the fund or plan required for participation in
the Minnesota postretirement adjustment fund, the combined investment fund, or the
supplemental investment fund shall be transferred to those funds as provided by sections
11A.01 to 11A.25. deleted text end

Sec. 8.

Minnesota Statutes 2008, section 11A.23, subdivision 2, is amended to read:

Subd. 2.

Investment.

Retirement fund assets certified to the state board pursuant
to subdivision 1 shall be invested by the state board subject to the provisions of section
11A.24. Retirement fund assets transferred to deleted text begin the Minnesota postretirement investment
fund, deleted text end the combined investment fund or the supplemental investment fund shall be invested
by the state board as part of those funds.

Sec. 9.

Minnesota Statutes 2008, section 352.04, subdivision 1, is amended to read:

Subdivision 1.

Fund created.

deleted text begin (a) deleted text end There is created a special fund to be known as the
general state employees retirement fund. In that fund, employee contributions, employer
contributions, and other amounts authorized by law must be deposited.

deleted text begin (b) The general state employees retirement plan of the Minnesota State Retirement
System must participate in the Minnesota postretirement investment fund. The amounts
provided in section 352.119 must be deposited in the Minnesota postretirement investment
fund.
deleted text end

Sec. 10.

Minnesota Statutes 2008, section 352.04, subdivision 12, is amended to read:

Subd. 12.

Fund disbursement restricted.

The general state employees retirement
fund deleted text begin and the participation in the Minnesota postretirement investment fund deleted text end must be
disbursed only for the purposes provided by law. The expenses of the system and any
benefits provided by law deleted text begin , other than benefits payable from the Minnesota postretirement
investment fund, deleted text end must be paid from the general state employees retirement fund. The
retirement allowances, retirement annuities, and disability benefits, as well as refunds of
any sum remaining to the credit of a deceased retired employee or a disabled employee
must be paid deleted text begin only deleted text end from the general state employees retirement fund deleted text begin after the needs
have been certified and the amounts withdrawn from the participation in the Minnesota
postretirement investment fund under section 11A.18 deleted text end . The amounts necessary to make the
payments from the general state employees retirement fund deleted text begin and the participation in the
Minnesota postretirement investment fund deleted text end are annually appropriated from deleted text begin these funds deleted text end
new text begin that fund new text end for those purposes.

Sec. 11.

Minnesota Statutes 2008, section 352.061, is amended to read:

352.061 INVESTMENT BOARD TO INVEST FUNDS.

The director shall, from time to time, certify to the State Board of Investment any
portions of the state employees retirement fund that in the judgment of the director are
not required for immediate use. deleted text begin Assets from the state employees retirement fund must
be transferred to the Minnesota postretirement investment fund as provided in section
11A.18. deleted text end The State Board of Investment shall invest and reinvest sums so deleted text begin transferred, or deleted text end
certified deleted text begin , deleted text end in securities that are duly authorized legal investments under section 11A.24.

Sec. 12.

Minnesota Statutes 2008, section 352.113, is amended by adding a subdivision
to read:

new text begin Subd. 13. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 13.

Minnesota Statutes 2008, section 352.115, is amended by adding a subdivision
to read:

new text begin Subd. 14. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A retirement annuity under
this section and section 352.116 is eligible for postretirement adjustments under section
356.415.
new text end

Sec. 14.

Minnesota Statutes 2008, section 352.12, is amended by adding a subdivision
to read:

new text begin Subd. 2c. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under
subdivision 2, 2a, or 2b is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 15.

Minnesota Statutes 2008, section 352.75, subdivision 3, is amended to read:

Subd. 3.

Existing retired members and benefit recipients.

As of July 1, 1978,
the liability for all retirement annuities, disability benefits, survivorship annuities, and
survivor of deceased active employee benefits paid or payable by the former Metropolitan
Transit Commission-Transit Operating Division employees retirement fund is transferred
to the Minnesota State Retirement System, and is no longer the liability of the former
Metropolitan Transit Commission-Transit Operating Division employees retirement
fund. deleted text begin The required reserves for retirement annuities, disability benefits, and optional
joint and survivor annuities in effect on June 30, 1978, and the required reserves for the
increase in annuities and benefits provided under subdivision 6 must be determined using
a five percent interest assumption and the applicable Minnesota State Retirement System
mortality table and shall be transferred by the Minnesota State Retirement System to
the Minnesota postretirement investment fund on July 1, 1978, but shall be considered
transferred as of June 30, 1978. The annuity or benefit amount in effect on July 1, 1978,
including the increase granted under subdivision 6, must be used for adjustments made
under section 11A.18. deleted text end For persons receiving benefits as survivors of deceased former
retirement annuitants, the benefits must be considered as having commenced on the date
on which the retirement annuitant began receiving the retirement annuity.

Sec. 16.

Minnesota Statutes 2008, section 352.75, subdivision 4, is amended to read:

Subd. 4.

Existing deferred retirees.

Any former member of the former
Metropolitan Transit Commission-Transit Operating Division employees retirement
fund is entitled to a retirement annuity from the Minnesota State Retirement System if
the employee:

(1) is not an active employee of the Transit Operating Division of the former
Metropolitan Transit Commission on July 1, 1978; (2) has at least ten years of active
continuous service with the Transit Operating Division of the former Metropolitan
Transit Commission as defined by the former Metropolitan Transit Commission-Transit
Operating Division employees retirement plan document in effect on December 31, 1977;
(3) has not received a refund of contributions; (4) has not retired or begun receiving an
annuity or benefit from the former Metropolitan Transit Commission-Transit Operating
Division employees retirement fund; (5) is at least 55 years old; and (6) submits a valid
application for a retirement annuity to the executive director of the Minnesota State
Retirement System.

The person is entitled to a retirement annuity in an amount equal to the normal
old age retirement allowance calculated under the former Metropolitan Transit
Commission-Transit Operating Division employees retirement fund plan document in
effect on December 31, 1977, subject to an early retirement reduction or adjustment in
amount on account of retirement before the normal retirement age specified in that former
Metropolitan Transit Commission-Transit Operating Division employees retirement fund
plan document.

The deferred retirement annuity of any person to whom this subdivision applies
must be augmented. The required reserves applicable to the deferred retirement annuity,
determined as of the date the allowance begins to accrue using an appropriate mortality
table and an interest assumption of five percent, must be augmented by interest at the rate
of five percent per year compounded annually from January 1, 1978, to January 1, 1981,
and three percent per year compounded annually from January 1, 1981, to the first day
of the month in which the annuity begins to accrue. deleted text begin Upon deleted text end new text begin After new text end the commencement of
the retirement annuity, the deleted text begin required reserves for the deleted text end annuity deleted text begin must be transferred to the
Minnesota postretirement investment fund in accordance with subdivision 2 and section
352.119 deleted text end new text begin is entitled to postretirement adjustments under section 356.415 new text end . On applying for
a retirement annuity under this subdivision, the person is entitled to elect a joint and
survivor optional annuity under section 352.116, subdivision 3.

Sec. 17.

Minnesota Statutes 2008, section 352.911, subdivision 3, is amended to read:

Subd. 3.

Investment.

deleted text begin The correctional employees retirement fund shall participate
in the Minnesota postretirement investment fund and in that fund there shall be deposited
the amounts provided in section 352.119. deleted text end The deleted text begin balance of any deleted text end assets of the fund deleted text begin shall deleted text end
new text begin must new text end be deposited in the Minnesota combined investment funds as provided in section
11A.14, if applicable, or otherwise under section 11A.23.

Sec. 18.

Minnesota Statutes 2008, section 352.911, subdivision 5, is amended to read:

Subd. 5.

Fund disbursement restricted.

The correctional employees retirement
fund deleted text begin and its share of participation in the Minnesota postretirement investment fund shall deleted text end
new text begin must new text end be disbursed only for the purposes provided for in the applicable provisions in this
chapter. The proportional share of the expenses of the system and any benefits provided
in deleted text begin sections deleted text end new text begin section new text end 352.90 deleted text begin to 352.951, other than benefits payable from the Minnesota
postretirement investment fund, shall deleted text end new text begin must new text end be paid from the correctional employees
retirement fund. The retirement allowances, retirement annuities, the disability benefits,
the survivorship benefits, and any refunds of accumulated deductions shall be paid deleted text begin only deleted text end
from the correctional employees retirement fund deleted text begin after those needs have been certified by
the executive director and the amounts withdrawn from the share of participation in the
Minnesota postretirement fund under section 11A.18 deleted text end . The amounts necessary to make the
payments from the correctional employees retirement fund deleted text begin and the participation in the
Minnesota postretirement investment fund deleted text end are annually appropriated from deleted text begin those funds deleted text end
new text begin that fund new text end for those purposes.

Sec. 19.

Minnesota Statutes 2008, section 352.93, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A retirement annuity under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 20.

Minnesota Statutes 2008, section 352.931, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 21.

Minnesota Statutes 2008, section 352.95, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 22.

Minnesota Statutes 2008, section 352B.02, subdivision 1d, is amended to read:

Subd. 1d.

Fund revenue and expenses.

The amounts provided for in this section
must be credited to the State Patrol retirement fund. All money received must be deposited
by the commissioner of finance in the State Patrol retirement fund. The fund must be used
to pay the administrative expenses of the retirement fund, and the benefits and annuities
provided in this chapter. deleted text begin Appropriate amounts shall be transferred to or withdrawn from
the Minnesota postretirement investment fund as provided in section 352B.26.
deleted text end

Sec. 23.

Minnesota Statutes 2008, section 352B.08, is amended by adding a
subdivision to read:

new text begin Subd. 4. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A retirement annuity under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 24.

Minnesota Statutes 2008, section 352B.10, is amended by adding a
subdivision to read:

new text begin Subd. 6. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 25.

Minnesota Statutes 2008, section 352B.11, is amended by adding a subdivision
to read:

new text begin Subd. 2e. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under
subdivision 2, 2b, or 2c is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 26.

Minnesota Statutes 2008, section 352C.10, is amended to read:

352C.10 BENEFIT ADJUSTMENTS.

Retirement allowances payable to retired constitutional officers and surviving spouse
benefits payable must be adjusted deleted text begin in the same manner, at the same times and in the same
amounts as are benefits payable from the Minnesota postretirement investment fund to
retirees of a participating public pension fund deleted text end new text begin under section 356.451 new text end .

Sec. 27.

Minnesota Statutes 2008, section 352D.06, subdivision 1, is amended to read:

Subdivision 1.

Annuity; reserves.

When a participant attains at least age 55,
terminates from covered service, and applies for a retirement annuity, the cash value of the
participant's shares deleted text begin shall deleted text end new text begin must new text end be transferred to the deleted text begin Minnesota postretirement investment deleted text end
new text begin general state employees retirement new text end fund and new text begin must be new text end used to provide an annuity for the
retired employee based upon the participant's age when the benefit begins to accrue
according to the reserve basis used by the general state employees retirement plan in
determining pensions and reserves. new text begin The annuity under this subdivision is eligible for
postretirement adjustments under section 356.415.
new text end

Sec. 28.

Minnesota Statutes 2008, section 352D.065, is amended by adding a
subdivision to read:

new text begin Subd. 3a. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 29.

Minnesota Statutes 2008, section 352D.075, is amended by adding a
subdivision to read:

new text begin Subd. 2b. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 30.

Minnesota Statutes 2008, section 353.06, is amended to read:

353.06 STATE BOARD OF INVESTMENT TO INVEST FUNDS.

The executive director shall from time to time certify to the State Board of
Investment for investment such portions of the retirement fund as in its judgment may not
be required for immediate use. deleted text begin Assets from the public employees retirement fund shall
be transferred to the Minnesota postretirement investment fund as provided in section
11A.18. deleted text end The State Board of Investment shall thereupon invest and reinvest the sum so
certified, or transferred, in such securities as are duly authorized as legal investments for
state employees retirement fund and shall have authority to sell, convey, and exchange
such securities and invest and reinvest the securities when it deems it desirable to do so
and shall sell securities upon request of the board of trustees when such funds are needed
for its purposes. All of the provisions regarding accounting procedures and restrictions
and conditions for the purchase and sale of securities deleted text begin for the state employees retirement
fund shall deleted text end new text begin under chapter 11A must new text end apply to the accounting, purchase and sale of securities
for the public employees retirement fund.

Sec. 31.

Minnesota Statutes 2008, section 353.27, subdivision 1, is amended to read:

Subdivision 1.

Income; disbursements.

There is a special fund known as the
"public employees retirement fund," the "retirement fund," or the "fund," which shall
include all the assets of the association. This fund shall be credited with all contributions,
all interest and all other income authorized by law. From this fund there is appropriated
the payments authorized by this chapter in the amounts and at such time provided herein,
including the expenses of administering the fund deleted text begin , and including the proper share of the
Minnesota postretirement investment fund deleted text end .

Sec. 32.

Minnesota Statutes 2008, section 353.29, is amended by adding a subdivision
to read:

new text begin Subd. 9. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin An annuity under this section or
section 353.30 is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 33.

Minnesota Statutes 2008, section 353.31, subdivision 1b, is amended to read:

Subd. 1b.

Joint and survivor option.

(a) Prior to payment of a surviving spouse
benefit under subdivision 1, the surviving spouse may elect to receive the 100 percent
joint and survivor optional annuity under section 353.32, subdivision 1a, rather than a
surviving spouse benefit.

(b) If there is a dependent child or children, and the 100 percent joint and survivor
optional annuity for the surviving spouse, when added to the dependent children's benefit
under subdivisions 1 and 1a, exceeds an amount equal to 70 percent of the member's
specified average monthly salary, the 100 percent joint and survivor annuity under section
353.32, subdivision 1a, must be reduced by the amount necessary so that the total family
benefit does not exceed the 70 percent maximum family benefit amount under subdivision
1a.

(c) The 100 percent joint and survivor optional annuity must be restored to the
surviving spouse, plus applicable postretirement deleted text begin fund deleted text end adjustments under new text begin Minnesota
Statutes 2008, new text end section 356.41 new text begin , through January 1, 2009, and thereafter under section
356.415 new text end , as the dependent child or children become no longer dependent under section
353.01, subdivision 15.

Sec. 34.

Minnesota Statutes 2008, section 353.31, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under
subdivision 1 or 1b or section 353.32, subdivision 1a, 1b, or 1c is eligible for
postretirement adjustments under section 356.415.
new text end

Sec. 35.

Minnesota Statutes 2008, section 353.33, subdivision 3b, is amended to read:

Subd. 3b.

Optional annuity election.

A disabled member may elect to receive the
normal disability benefit or an optional annuity under section 353.30, subdivision 3. The
election of an optional annuity must be made prior to the commencement of payment of
the disability benefit. The optional annuity must begin to accrue on the same date as
provided for the disability benefit.

(1) If a person who is not the spouse of a member is named as beneficiary of the
joint and survivor optional annuity, the person is eligible to receive the annuity only
if the spouse, on the disability application form prescribed by the executive director,
permanently waives the surviving spouse benefits under sections 353.31, subdivision 1,
and 353.32, subdivision 1a. If the spouse of the member refuses to permanently waive
the surviving spouse coverage, the selection of a person other than the spouse of the
member as a joint annuitant is invalid.

(2) If the spouse of the member permanently waives survivor coverage, the
dependent children, if any, continue to be eligible for survivor benefits under section
353.31, subdivision 1, including the minimum benefit in section 353.31, subdivision 1a.
The designated optional annuity beneficiary may draw the monthly benefit; however, the
amount payable to the dependent child or children and joint annuitant must not exceed
the 70 percent maximum family benefit under section 353.31, subdivision 1a. If the
maximum is exceeded, the benefit of the joint annuitant must be reduced to the amount
necessary so that the total family benefit does not exceed the 70 percent maximum family
benefit amount.

(3) If the spouse is named as the beneficiary of the joint and survivor optional
annuity, the spouse may draw the monthly benefits; however, the amount payable to
the dependent child or children and the joint annuitant must not exceed the 70 percent
maximum family benefit under section 353.31, subdivision 1a. If the maximum is
exceeded, each dependent child will receive ten percent of the member's specified
average monthly salary, and the benefit to the joint annuitant must be reduced to the
amount necessary so that the total family benefit does not exceed the 70 percent maximum
family benefit amount. The joint and survivor optional annuity must be restored to the
surviving spouse, plus applicable postretirement adjustments under new text begin Minnesota Statutes
2008, new text end section 356.41 new text begin or section 356.415 new text end , as the dependent child or children become no
longer dependent under section 353.01, subdivision 15.

Sec. 36.

Minnesota Statutes 2008, section 353.33, subdivision 7, is amended to read:

Subd. 7.

Partial reemployment.

If, following a work or non-work-related injury
or illness, a disabled person who remains totally and permanently disabled as defined
in section 353.01, subdivision 19, has income from employment that is not substantial
gainful activity and the rate of earnings from that employment are less than the salary
rate at the date of disability or the salary rate currently paid for positions similar to the
employment position held by the disabled person immediately before becoming disabled,
whichever is greater, the executive director shall continue the disability benefit in an
amount that, when added to the earnings and any workers' compensation benefit, does not
exceed the salary rate at the date of disability or the salary currently paid for positions
similar to the employment position held by the disabled person immediately before
becoming disabled, whichever is higher. The disability benefit under this subdivision may
not exceed the disability benefit originally allowed, plus any postretirement adjustments
payable after December 31, 1988, in accordance with new text begin Minnesota Statutes 2008, new text end section
11A.18, subdivision 10 new text begin , or Minnesota Statutes 2008, section 356.41, through January 1,
2009, and thereafter as provided in section 356.415 new text end . No deductions for the retirement fund
may be taken from the salary of a disabled person who is receiving a disability benefit
as provided in this subdivision.

Sec. 37.

Minnesota Statutes 2008, section 353.33, is amended by adding a subdivision
to read:

new text begin Subd. 13. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 38.

Minnesota Statutes 2008, section 353.651, is amended by adding a subdivision
to read:

new text begin Subd. 5. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin An annuity under this section is
eligible for postretirement adjustments under section 356.415.
new text end

Sec. 39.

Minnesota Statutes 2008, section 353.656, subdivision 5a, is amended to read:

Subd. 5a.

Cessation of disability benefit.

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

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

(1) reaches normal retirement age;

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

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

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

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

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

(1) the benefit amount at the time of reclassification, including all prior adjustments
provided under new text begin Minnesota Statutes 2008, new text end section 11A.18 new text begin , through January 1, 2009, and
thereafter as provided in section 356.415 new text end ; or

(2) a benefit amount computed on the member's actual years of accrued allowable
service credit and the law in effect at the time the disability benefit first accrued, plus any
increases that would have applied since that date under section new text begin Minnesota Statutes 2008,
new text end 11A.18 new text begin , through January 1, 2009, and thereafter as provided in section 356.415 new text end .

Sec. 40.

Minnesota Statutes 2008, section 353.656, is amended by adding a subdivision
to read:

new text begin Subd. 14. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 41.

Minnesota Statutes 2008, section 353.657, subdivision 3a, is amended to read:

Subd. 3a.

Maximum and minimum family benefits.

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

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

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

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

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

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

(c) If the maximum under paragraph (a) is exceeded, the monthly benefit of the
joint annuitant must be reduced to the amount necessary so that the total family benefit
does not exceed the applicable maximum. The joint and survivor optional annuity must
be restored, plus applicable postretirement adjustments under new text begin Minnesota Statutes 2008,
new text end section 356.41 new text begin or section 356.415 new text end , as the dependent child or children become no longer
dependent under section 353.01, subdivision 15.

Sec. 42.

Minnesota Statutes 2008, section 353.657, is amended by adding a subdivision
to read:

new text begin Subd. 5. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 43.

Minnesota Statutes 2008, section 353.665, subdivision 3, is amended to read:

Subd. 3.

Transfer of assets.

Unless the municipality has elected to retain the
consolidation account under subdivision 1, paragraph (b), the assets of the former local
police or fire consolidation account must be transferred and upon transfer, the actuarial
value of the assets of a former local police or fire consolidation account less an amount
equal to the residual assets as determined under subdivision 7, paragraph (f), are the
assets of the public employees police and fire fund as of July 1, 1999. deleted text begin The participation
of a consolidation account in the Minnesota postretirement investment fund becomes
part of the participation of the public employees police and fire fund in the Minnesota
postretirement investment fund. deleted text end The deleted text begin remaining deleted text end assets, excluding the amounts for
distribution under subdivision 7, paragraph (f), become an asset of the public employees
police and fire fund. The public employees police and fire fund also must be credited as an
asset with the amount of receivable assets under subdivision 7, paragraph (e).

Sec. 44.

Minnesota Statutes 2008, section 353A.02, subdivision 14, is amended to read:

Subd. 14.

Ineligible investments.

"Ineligible investments" means any investment
security or other asset held by the relief association at or after the initiation of the
consolidation procedure which does not comply with the applicable requirements or
limitations of sections 11A.09, deleted text begin 11A.18, deleted text end 11A.23, and 11A.24.

Sec. 45.

Minnesota Statutes 2008, section 353A.02, subdivision 23, is amended to read:

Subd. 23.

Postretirement adjustment.

"Postretirement adjustment" means any
periodic or regular procedure for modifying the amount of a retirement annuity, service
pension, disability benefit, or survivor benefit after the start of that annuity, pension,
or benefit, including but not limited to modifications of amounts deleted text begin from the Minnesota
postretirement investment fund deleted text end under section deleted text begin 11A.18, subdivision 9 deleted text end new text begin 356.415 new text end , or any
benefit escalation or benefit amount modification based on changes in the salaries payable
to active police officers or salaried firefighters or changes in a cost-of-living index as
provided for in the existing relief association benefit plan.

Sec. 46.

Minnesota Statutes 2008, section 353A.05, subdivision 1, is amended to read:

Subdivision 1.

Commission actions.

(a) Upon initiation of consolidation as
provided in section 353A.04, the executive director of the commission shall direct the
actuary retained under section 356.214 to undertake the preparation of the actuarial
calculations necessary to complete the consolidation.

(b) These actuarial calculations shall include for each active member, each deferred
former member, each retired member, and each current beneficiary the computation of the
present value of future benefits, the future normal costs, if any, and the actuarial accrued
liability on the basis of the existing relief association benefit plan and on the basis of the
public employees police and fire fund benefit plan. These actuarial calculations shall also
include for the total active, deferred, retired, and benefit recipient membership the sum
of the present value of future benefits, the future normal costs, if any, and the actuarial
accrued liability on the basis of the existing relief association benefit plan, on the basis of
the public employees police and fire fund benefit plan, and on the basis of the benefit plan
which produced the largest present value of future benefits for each person. The actuarial
calculations shall be prepared using the entry age actuarial cost method for all components
of the benefit plan and using the actuarial assumptions applicable to the fund for the
most recent actuarial valuation prepared under section 356.215, except that the actuarial
calculations on the basis of the existing relief association benefit plan shall be prepared
using an interest rate actuarial assumption during the postretirement period which is in
the same amount as the interest rate actuarial assumption applicable to the preretirement
period. The actuarial calculations shall include the computation of the present value of the
initial postretirement adjustment anticipated by the executive director of the state board as
payable after the effective date of the consolidation deleted text begin from the Minnesota postretirement
investment fund deleted text end under section deleted text begin 11A.18 deleted text end new text begin 356.415 new text end .

(c) The chief administrative officer of the relief association shall, upon request,
provide in a timely manner to the executive director of the commission and to the actuary
retained under section 356.214 the most current available information or documents,
whichever applies, regarding the demographics of the active, deferred, retired, and
benefit recipient membership of the relief association, the financial condition of the relief
association, and the existing benefit plan of the relief association.

(d) Upon completion of the actuarial calculations required by this subdivision, the
actuary retained under section 356.214 shall issue a report in the form of an appropriate
summary of the actuarial calculations and shall provide a copy of that report to the
executive director of the commission, the executive director of the Public Employees
Retirement Association, the chief administrative officer of the relief association, the chief
administrative officer of the municipality in which the relief association is located, and
the state auditor.

Sec. 47.

Minnesota Statutes 2008, section 353A.05, subdivision 2, is amended to read:

Subd. 2.

State board actions.

(a) Upon approval of consolidation by the
membership as provided in section 353A.04, the executive director of the state board
shall review the existing investment portfolio of the relief association for compliance
with the requirements and limitations set forth in sections 11A.09, 11A.14, deleted text begin 11A.18, deleted text end
11A.23, and 11A.24 and for appropriateness for retention in the light of the established
investment objectives of the state board. The executive director of the state board, using
any reporting service retained by the state board, shall determine the approximate market
value of the existing assets of the relief association upon the effective date of consolidation
and the transfer of assets from the relief association to the individual relief association
consolidation accounts at market value.

(b) The state board may require that the relief association liquidate any investment
security or other item of value which is determined to be ineligible or inappropriate for
retention by the state board. The liquidation shall occur before the effective date of
consolidation and transfer of assets.

(c) If requested to do so by the chief administrative officer of the relief association
or of the municipality, the state board shall provide advice on the means and procedures
available to liquidate investment securities and other assets determined to be ineligible or
inappropriate.

Sec. 48.

Minnesota Statutes 2008, section 353A.08, subdivision 1, is amended to read:

Subdivision 1.

Election of coverage by current retirees.

(a) A person who is
receiving a service pension, disability benefit, or survivor benefit is eligible to elect benefit
coverage provided under the relevant provisions of the public employees police and fire
fund benefit plan or to retain benefit coverage provided under the relief association benefit
plan in effect on the effective date of the consolidation. The relevant provisions of the
public employees police and fire fund benefit plan for the person electing that benefit
coverage are limited to deleted text begin participation in the Minnesota postretirement investment fund for deleted text end
any future postretirement adjustments new text begin under section 356.415 new text end based on the amount of
the benefit or pension payable on December 31, if December 31 is the effective date of
consolidation, or on the December 1 following the effective date of the consolidation, if
other than December 31. The survivor benefit payable on behalf of any service pension
or disability benefit recipient who elects benefit coverage under the public employees
police and fire fund benefit plan must be calculated under the relief association benefit
plan and is subject to deleted text begin participation in the Minnesota postretirement investment fund for
any deleted text end future postretirement adjustments new text begin under section 356.415 new text end based on the amount of the
survivor benefit payable.

(b) A survivor benefit calculated under the relief association benefit plan which is first
payable after June 30, 1997, to the surviving spouse of a retired member of a consolidation
account who, before July 1, 1997, chose deleted text begin to participate in the Minnesota deleted text end postretirement
deleted text begin investment fund deleted text end new text begin adjustments new text end as provided under deleted text begin this subdivision deleted text end new text begin section 356.415 new text end must be
increased on the effective date of the survivor benefit on an actuarial equivalent basis to
reflect the change in the postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a calculation procedure and
tables adopted by the board and approved by the actuary retained under section 356.214.

(c) By electing the public employees police and fire fund benefit plan, a current
service pension or disability benefit recipient who, as of the first January 1 occurring after
the effective date of consolidation, has been receiving the pension or benefit for at least
seven months, or any survivor benefit recipient who, as of the first January 1 occurring
after the effective date of consolidation, has been receiving the benefit on the person's own
behalf or in combination with a prior applicable service pension or disability benefit for at
least seven months is eligible to receive a partial adjustment payable deleted text begin from the Minnesota
postretirement investment fund deleted text end under section deleted text begin 11A.18, subdivision 9 deleted text end new text begin 356.415 new text end .

(d) The election by any pension or benefit recipient must be made on or before
the deadline established by the board of the Public Employees Retirement Association
in a manner that recognizes the number of persons eligible to make the election and the
anticipated time required to conduct any required benefit counseling.

Sec. 49.

Minnesota Statutes 2008, section 353A.08, subdivision 3, is amended to read:

Subd. 3.

Election of coverage by active members.

(a) A person who is an active
member of a police or fire relief association, other than a volunteer firefighter, has the
option to elect benefit coverage under the relevant provisions of the public employees
police and fire fund or to retain benefit coverage provided by the relief association benefit
plan in effect on the effective date of consolidation. The relevant provisions of the public
employee police and fire fund benefit plan for the person electing that benefit coverage
are the relevant provisions of the public employee police and fire fund benefit plan
applicable to retirement annuities, disability benefits, and survivor benefits, including
deleted text begin participation in the Minnesota deleted text end postretirement deleted text begin investment fund deleted text end new text begin adjustments under section
356.415 new text end , but excluding any provisions governing the purchase of credit for prior service
or making payments in lieu of member contribution deductions applicable to any period
which occurred before the effective date of consolidation.

(b) An active member is eligible to make an election at one of the following times:

(1) within six months of the effective date of consolidation;

(2) between the date on which the active member attains the age of 49 years and six
months and the date on which the active member attains the age of 50 years; or

(3) on the date on which the active member terminates active employment for
purposes of receiving a service pension or disability benefits, or within 90 days of the
date the member terminates active employment and defers receipt of a service pension,
whichever applies.

Sec. 50.

Minnesota Statutes 2008, section 353A.081, subdivision 2, is amended to read:

Subd. 2.

Election of coverage.

(a) Individuals eligible under subdivision 1 may
elect, on a form prescribed by the executive director of the Public Employees Retirement
Association, to have survivor benefits calculated under the relevant provisions of the
public employees police and fire fund benefit plan or to have survivor benefits calculated
under the relief association benefit plan. The relevant provisions of the public employee
police and fire fund benefit plan for the person electing that benefit coverage are the
relevant provisions of the public employee police and fire fund benefit plan applicable
to survivor benefits, including deleted text begin participation in the Minnesota deleted text end postretirement deleted text begin investment
fund deleted text end new text begin adjustments under section 356.415 new text end .

(b) If the election results in an increased benefit amount to the surviving spouse
eligible under subdivision 1, or to eligible children if there is no surviving spouse, the
increased benefit accrues as of the date on which the survivor benefits payable to the
survivors from the consolidation account were first paid. The back payment of any
increase in prior benefit amounts, plus any postretirement adjustments payable under
section deleted text begin 356.41 deleted text end new text begin 356.415 new text end , or any increase payable under the local relief association bylaws
is payable as soon as practicable after the effective date of the election.

Sec. 51.

Minnesota Statutes 2008, section 353A.09, subdivision 1, is amended to read:

Subdivision 1.

Establishment of consolidation accounts.

(a) The board of trustees
of the Public Employees Retirement Association shall establish a separate consolidation
account for each local relief association of a municipality that consolidates with the Public
Employees Retirement Association. The association shall credit to the consolidation
account the assets of the individual consolidating local relief association upon transfer,
member contributions received after consolidation under subdivision 4, municipal
contributions received after consolidation under subdivision 5, and a proportionate share
of any investment income earned after consolidation. From the consolidation account,
the association shall pay deleted text begin for the transfer of any required reserves to the Minnesota
postretirement investment fund on account of persons electing the type of benefit coverage
provided by the public employees police and fire fund under subdivisions 2 and 3 and
section 353.271, subdivision 2, deleted text end the pension and benefit amounts on account of persons
electing coverage by the relief association benefit plan under section 353A.08, the benefit
amounts deleted text begin not deleted text end payable deleted text begin from the Minnesota postretirement investment fund deleted text end on account of
persons electing the type of benefit coverage provided by the public employees police and
fire fund under section 353A.08, and any direct administrative expenses related to the
consolidation account, and the proportional share of the general administrative expenses
of the association.

(b) Except as otherwise provided for in this section, the liabilities and the assets
of a consolidation account must be considered for all purposes to be separate from the
balance of the public employees police and fire fund. The consolidation account must be
subject to separate accounting, a separate actuarial valuation, and must be reported as a
separate exhibit in any annual financial report or actuarial valuation report of the public
employees police and fire consolidation fund, whichever applies. The executive director
of the public employees retirement association shall maintain separate accounting records
and balances for each consolidation account.

Sec. 52.

Minnesota Statutes 2008, section 353A.10, subdivision 2, is amended to read:

Subd. 2.

Collection of late contributions.

In the event of a refusal by a
municipality in which was located a local police or firefighters relief association which
has consolidated with the fund to pay to the fund any amount or amounts due under
section 353A.09, subdivisions deleted text begin 2 deleted text end new text begin 4 new text end to 6, the executive director of the public employees
retirement association may notify the Department of Revenue, the Department of Finance,
and the state auditor of the refusal and commence the necessary procedure to collect the
amount or amounts due from the amount of any state aid under sections 69.011 to 69.051,
amortization state aid under section 423A.02, or supplemental amortization state aid under
Laws 1984, chapter 564, section 48, as amended by Laws 1986, chapter 359, section 20,
which is payable to the municipality or to certify the amount or amounts due to the county
auditor for inclusion in the next tax levy of the municipality or for collection from other
revenue available to the municipality, or both.

Sec. 53.

Minnesota Statutes 2008, section 353A.10, subdivision 3, is amended to read:

Subd. 3.

Levy and bonding authority.

A municipality in which was located a local
police or firefighters relief association that has consolidated with the fund may issue
general obligation bonds of the municipality to defray all or a portion of the principal
amounts specified in section 353A.09, subdivisions deleted text begin 2 deleted text end new text begin 4 new text end to 6, or certify to the county
auditor a levy in the amount necessary to defray all or a portion of the principal amount
specified in section 353A.09, subdivisions deleted text begin 2 deleted text end new text begin 4 new text end to 6, or the annual amount specified in
section 353A.09, subdivisions deleted text begin 2 deleted text end new text begin 4 new text end to 6. The municipality may pledge the full faith, credit,
and taxing power of the municipality for the payment of the principal of and interest on the
general obligation bonds. Any municipal bond may be issued without an election under
section 475.58 and may not be included in the net debt of the municipality for purposes of
any charter or statutory debt limitation, nor may any tax levy for the payment of bond
principal or interest be subject to any limitation concerning rate or amount established
by charter or law.

Sec. 54.

Minnesota Statutes 2008, section 353E.01, subdivision 3, is amended to read:

Subd. 3.

Investment.

deleted text begin (a) The public employees local government correctional
service retirement fund participates in the Minnesota postretirement investment fund.
deleted text end

deleted text begin (b) The amounts provided in section 353.271 must be deposited in that fund.
deleted text end

deleted text begin (c) The balance of any deleted text end Assets of the new text begin public employees local government correctional
service retirement new text end fund must be deposited in the Minnesota combined investment fund as
provided in section 11A.14, if applicable, or otherwise invested under section 11A.23.

Sec. 55.

Minnesota Statutes 2008, section 353E.01, subdivision 5, is amended to read:

Subd. 5.

Fund disbursement restricted.

(a) The public employees local
government correctional service retirement fund deleted text begin and its share of participation in the
Minnesota postretirement investment fund deleted text end may be disbursed only for the purposes
provided for in this chapter.

(b) The proportional share of the necessary and reasonable administrative expenses
of the association and any benefits provided in this chapter deleted text begin , other than benefits payable
from the Minnesota postretirement investment fund, deleted text end must be paid from the public
employees local government correctional service retirement fund. Retirement annuities,
disability benefits, survivorship benefits, and any refunds of accumulated deductions may
be paid only from the correctional service retirement fund after those needs have been
certified by the executive director deleted text begin and any applicable amounts withdrawn from the share
of participation in the Minnesota postretirement fund under section 11A.18 deleted text end .

(c) The amounts necessary to make the payments from the public employees local
government correctional service retirement fund deleted text begin and its participation in the Minnesota
postretirement investment fund deleted text end are annually appropriated from those funds for those
purposes.

Sec. 56.

Minnesota Statutes 2008, section 353E.04, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin An annuity under this section is
eligible for postretirement adjustments under section 356.415.
new text end

Sec. 57.

Minnesota Statutes 2008, section 353E.06, is amended by adding a subdivision
to read:

new text begin Subd. 9. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 58.

Minnesota Statutes 2008, section 353E.07, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 59.

Minnesota Statutes 2008, section 354.07, subdivision 4, is amended to read:

Subd. 4.

Certification of funds to State Board of Investment.

It shall be the
duty of the board from time to time to certify to the State Board of Investment for
investment as much of the funds in its hands as shall not be needed for current purposes.
deleted text begin Such funds that are certified as to investment in the postretirement investment fund shall
include the amount as required for the total reserves needed for the purposes described in
section 354.63. deleted text end The State Board of Investment shall thereupon deleted text begin transfer such assets to the
appropriate fund provided herein, in accordance with the procedure set forth in section
354.63, or deleted text end invest and reinvest an amount equal to the sum so certified in such securities
as are now or may hereafter be duly authorized legal investments for state employees
retirement fund and all such securities so transferred or purchased shall be deposited with
the commissioner of finance. All interest from these investments shall be credited to the
deleted text begin appropriate funds deleted text end new text begin teachers retirement fund new text end and used for current purposes or investments,
except as hereinafter provided. The State Board of Investment shall have authority to sell,
convey, and exchange such securities and invest and reinvest the funds when it deems it
desirable to do so, and shall sell securities upon request of the officers of the association
when such officers determine funds are needed for its purposes. All of the provisions
regarding accounting procedures and restrictions and conditions for the purchase and sale
of securities deleted text begin for the state employees retirement fund shall deleted text end new text begin under chapter 11A must new text end apply to
the accounting, purchase and sale of securities for the Teachers' Retirement Association.

Sec. 60.

Minnesota Statutes 2008, section 354.33, subdivision 5, is amended to read:

Subd. 5.

Retirees not eligible for federal benefits.

When any person retires after
July 1, 1973, who (1) has ten or more years of allowable service, and (2) does not have any
retroactive Social Security coverage by reason of the person's position in the retirement
system, and (3) does not qualify for federal old age and survivor primary benefits at the
time of retirement, the annuity must be computed under section 354.44, subdivision 2, of
the law in effect on June 30, 1969, except that accumulations after June 30, 1957, must be
calculated using the deleted text begin same deleted text end new text begin most recent new text end mortality table new text begin approved under section 356.215,
subdivision 18, new text end and deleted text begin interest assumption as are used to transfer the required reserves to the
Minnesota postretirement investment fund deleted text end new text begin using the applicable postretirement interest rate
assumption specified in section 356.215, subdivision 8 new text end .

Sec. 61.

Minnesota Statutes 2008, section 354.35, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin An annuity under this section is
eligible for postretirement adjustments under section 356.415.
new text end

Sec. 62.

Minnesota Statutes 2008, section 354.42, subdivision 1a, is amended to read:

Subd. 1a.

Teachers retirement fund.

(a) Within the Teachers Retirement
Association and the state treasury is created a special retirement fund, which must include
all the assets of the Teachers Retirement Association and all revenue of the association.
The fund is the continuation of the fund established under Laws 1931, chapter 406, section
2, notwithstanding the repeal of Minnesota Statutes 1973, section 354.42, subdivision 1,
by Laws 1974, chapter 289, section 59.

(b) The teachers retirement fund must be credited with all employee and employer
contributions, all investment revenue and gains, and all other income authorized by law.

(c) From the teachers retirement fund is appropriated the payments of annuities
and benefits authorized by this chapter deleted text begin , the transfers to the Minnesota postretirement
investment fund, deleted text end and the reasonable and necessary expenses of administering the fund
and the association.

Sec. 63.

Minnesota Statutes 2008, section 354.44, is amended by adding a subdivision
to read:

new text begin Subd. 7a. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin (a) A retirement annuity under
subdivision 2 or 6 is eligible for postretirement adjustments under section 356.415.
new text end

new text begin (b) Retirement annuities payable from the teachers retirement plan must not be in
an amount less than the amount originally determined on the date of retirement and as
adjusted on each succeeding January 1 under Minnesota Statutes 2008, section 11A.18,
before January 1, 2010, and under section 356.415 after December 31, 2009.
new text end

Sec. 64.

Minnesota Statutes 2008, section 354.46, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A survivor benefit under
subdivision 1, 2, 2a, or 2b, is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 65.

Minnesota Statutes 2008, section 354.48, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.
new text end

Sec. 66.

Minnesota Statutes 2008, section 354.55, subdivision 13, is amended to read:

Subd. 13.

Pre-1969 law retirements.

Any person who ceased teaching service
prior to July 1, 1968, who has ten years or more of allowable service and left accumulated
deductions in the fund for the purpose of receiving when eligible a retirement annuity,
and retires shall have the annuity computed in accordance with the law in effect on June
30, 1969, except that the portion of the annuity based on accumulations after June 30,
1957, under Minnesota Statutes 1967, section 354.44, subdivision 2, and accumulations
under Minnesota Statutes 1967, section 354.33, subdivision 1, deleted text begin shall deleted text end new text begin must new text end be calculated
using the mortality table established by the board under section 354.07, subdivision 1,
new text begin and approved under section 356.215, subdivision 18, new text end and the new text begin postretirement new text end interest rate
assumption specified in section 356.215, deleted text begin to transfer the required reserves to the Minnesota
postretirement investment fund deleted text end new text begin subdivision 8 new text end .

Sec. 67.

Minnesota Statutes 2008, section 354.70, subdivision 5, is amended to read:

Subd. 5.

Transfer of assets.

(a) On or before June 30, 2006, the chief administrative
officer of the Minneapolis Teachers Retirement Fund Association shall transfer to the
Teachers Retirement Association the entire assets of the special retirement fund of the
Minneapolis Teachers Retirement Fund Association. The transfer of the assets of the
Minneapolis Teachers Retirement Fund Association special retirement fund 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.

(b) As of June 30, 2006, assets of the special retirement fund of the Minneapolis
Teachers Retirement Fund Association are assets of the Teachers Retirement Association
to be invested by the State Board of Investment pursuant to the provisions of section
354.07, subdivision 4. The Teachers Retirement Association is the successor in interest to
all claims which the Minneapolis Teachers Retirement Fund Association may have or may
assert against any person and is the successor in interest to all claims which could have
been asserted against the former Minneapolis Teachers Retirement Fund Association,
subject to the following exceptions and qualifications:

(1) the Teachers Retirement Association is not liable for any claim against the
Minneapolis Teachers Retirement Fund Association, its former board or board members,
which is founded upon a claim of breach of fiduciary duty, where the act or acts
constituting the claimed breach were not done in good faith;

(2) the Teachers Retirement Association may assert any applicable defense to any
claim in any judicial or administrative proceeding that the former Minneapolis Teachers
Retirement Fund Association or its board would otherwise have been entitled to assert;

(3) the Teachers Retirement Association may assert any applicable defense that the
Teachers Retirement Association may assert in its capacity as a statewide agency; and

(4) the Teachers Retirement Association shall indemnify any former fiduciary of the
Minneapolis Teachers Retirement Fund Association consistent with the provisions of the
Public Pension Fiduciary Responsibility Act, in section 356A.11.

(c) From the assets of the former 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, 2006, and the required reserves of the Minnesota
postretirement investment fund as of June 30, 2006, applied to the present value of
future benefits payable to annuitants of the former Minneapolis Teachers Retirement
Fund Association as of June 30, 2006, including any postretirement adjustment from the
Minnesota postretirement investment fund expected to be payable on January 1, 2007,
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, 2007, after all necessary financial information becomes available
to determine the actual funded ratio of the Minnesota postretirement investment fund, the
postretirement investment 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 new text begin Minnesota Statutes
2008, new text end 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.

(d) 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.

Sec. 68.

Minnesota Statutes 2008, section 354.70, subdivision 6, is amended to read:

Subd. 6.

Benefit calculation.

(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.

(b) Former Minneapolis Teachers Retirement Fund Association members who
retired before July 1, 2006, must receive postretirement adjustments after December 31,
2006, only as provided in new text begin Minnesota Statutes 2008, new text end section 11A.18 new text begin or section 356.415 new text end . All
other benefit recipients of the former Minneapolis Teachers Retirement Fund Association
must receive postretirement adjustments after December 31, 2006, only as provided in
section deleted text begin 356.41 deleted text end new text begin 356.415 new text end .

(c) This consolidation does not impair or diminish benefits for an active, deferred,
or retired member or a survivor of an active, deferred, or retired member under the
former Minneapolis Teachers Retirement Fund Association in existence at the time of the
consolidation, except that any future guaranteed or investment-related postretirement
adjustments must be paid after July 1, 2006, in accordance with paragraph (b), and all
benefits based on service on or after July 1, 2006, must be determined only by laws
governing the Teachers Retirement Association.

Sec. 69.

Minnesota Statutes 2008, section 356.215, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of sections 3.85 and 356.20 to
356.23, each of the terms in the following paragraphs has the meaning given.

(b) "Actuarial valuation" means a set of calculations prepared by an actuary retained
under section 356.214 if so required under section 3.85, or otherwise, by an approved
actuary, to determine the normal cost and the accrued actuarial liabilities of a benefit
plan, according to the entry age actuarial cost method and based upon stated assumptions
including, but not limited to rates of interest, mortality, salary increase, disability,
withdrawal, and retirement and to determine the payment necessary to amortize over a
stated period any unfunded accrued actuarial liability disclosed as a result of the actuarial
valuation of the benefit plan.

(c) "Approved actuary" means a person who is regularly engaged in the business of
providing actuarial services and who is a fellow in the Society of Actuaries.

(d) "Entry age actuarial cost method" means an actuarial cost method under which
the actuarial present value of the projected benefits of each individual currently covered
by the benefit plan and included in the actuarial valuation is allocated on a level basis over
the service of the individual, if the benefit plan is governed by section 69.773, or over the
earnings of the individual, if the benefit plan is governed by any other law, between the
entry age and the assumed exit age, with the portion of the actuarial present value which is
allocated to the valuation year to be the normal cost and the portion of the actuarial present
value not provided for at the valuation date by the actuarial present value of future normal
costs to be the actuarial accrued liability, with aggregation in the calculation process to be
the sum of the calculated result for each covered individual and with recognition given to
any different benefit formulas which may apply to various periods of service.

(e) "Experience study" means a report providing experience data and an actuarial
analysis of the adequacy of the actuarial assumptions on which actuarial valuations are
based.

(f) "Actuarial value of assets" means new text begin :
new text end

new text begin (1) For the July 1, 2009, actuarial valuation, new text end the market value of all assets as of
deleted text begin the preceding deleted text end June 30, new text begin 2009, new text end reduced by:

deleted text begin (1) deleted text end new text begin (i) new text end 20 percent of the difference between the actual net change in the market
value of new text begin the active fund new text end assets between deleted text begin the deleted text end June 30 deleted text begin that occurred three years earlier deleted text end new text begin ,
2006, new text end and deleted text begin the deleted text end June 30 deleted text begin that occurred four years earlier deleted text end new text begin , 2005, new text end and the computed increase
in the market value of new text begin the active fund new text end assets over that fiscal year period if the assets had
deleted text begin increased at the percentage preretirement interest rate assumption used in the actuarial
valuation for the July 1 that occurred four years earlier deleted text end new text begin earned a rate of return on assets
equal to 8.5 percent annually new text end ;

deleted text begin (2) deleted text end new text begin (ii) new text end 40 percent of the difference between the actual net change in the market
value of new text begin the active fund new text end assets between deleted text begin the deleted text end June 30 deleted text begin that occurred two years earlier deleted text end new text begin , 2007, new text end
and deleted text begin the deleted text end June 30 deleted text begin that occurred three years earlier deleted text end new text begin , 2006, new text end and the computed increase in
the market value of new text begin the active fund new text end assets over that fiscal year period if the assets had
deleted text begin increased at the percentage preretirement interest rate assumption used in the actuarial
valuation for the July 1 that occurred three years earlier deleted text end new text begin earned a rate of return on assets
equal to 8.5 percent annually new text end ;

deleted text begin (3) deleted text end new text begin (iii) new text end 60 percent of the difference between the actual net change in the new text begin active
fund new text end market value of assets between deleted text begin the deleted text end June 30 deleted text begin that occurred one year earlier deleted text end new text begin , 2008, new text end
and deleted text begin the deleted text end June 30 deleted text begin that occurred two years earlier deleted text end new text begin , 2007, new text end and the computed increase in the
new text begin active fund new text end market value of assets over that fiscal year period if the assets had deleted text begin increased
at the percentage preretirement interest rate assumption used in the actuarial valuation
for the July 1 that occurred two years earlier deleted text end new text begin earned a rate of return on assets equal to
8.5 percent annually new text end ; deleted text begin and
deleted text end

deleted text begin (4) deleted text end new text begin (iv) new text end 80 percent of the difference between the actual net change in the market
value of new text begin the active fund new text end assets between deleted text begin the immediately prior deleted text end June 30 new text begin , 2009, new text end and deleted text begin the deleted text end June
30 deleted text begin that occurred one year earlier deleted text end new text begin , 2008, new text end and the computed increase in the market value
of new text begin the active fund new text end assets over that fiscal year period if the assets had deleted text begin increased at the
percentage preretirement interest rate assumption used in the actuarial valuation for the
July 1 that occurred one year earlier. deleted text end new text begin earned a rate of return on assets equal to 8.5 percent
annually; and
new text end

new text begin (v) 80 percent of the difference between the actual net change in the market value of
the Minnesota postretirement investment fund between June 30, 2009, and June 30, 2008,
and the computed increase in the market value of assets over that fiscal year period if the
assets had increased at 8.5 percent annually.
new text end

new text begin (2) For the July 1, 2010, actuarial valuation, the market value of all assets as of
June 30, 2010, reduced by:
new text end

new text begin (i) 20 percent of the difference between the actual net change in the market value
of the active fund assets between June 30, 2007, and June 30, 2006, and the computed
increase in the market value of the active fund assets over that fiscal year period if the
assets had earned a rate of return on assets equal to 8.5 percent annually;
new text end

new text begin (ii) 40 percent of the difference between the actual net change in the market value
of the active fund assets between June 30, 2008, and June 30, 2007, and the computed
increase in the market value of the active fund assets over that fiscal year period if the
assets had earned a rate of return on assets equal to 8.5 percent annually;
new text end

new text begin (iii) 60 percent of the difference between the actual net change in the market value
of the active fund assets between June 30, 2009, and June 30, 2008, and the computed
increase in the market value of the active fund assets over that fiscal year period if the
assets had earned a rate of return on assets equal to 8.5 percent annually;
new text end

new text begin (iv) 80 percent of the difference between the actual net change in the market value of
total assets between June 30, 2010, and June 30, 2009, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to 8.5 percent annually; and
new text end

new text begin (v) 60 percent of the difference between the actual net change in the market value of
the Minnesota postretirement investment fund between June 30, 2009, and June 30, 2008,
and the computed increase in the market value of assets over that fiscal year period if the
assets had increased at 8.5 percent annually.
new text end

new text begin (3) For the July 1, 2011, actuarial valuation, the market value of all assets as of
June 30, 2011, reduced by:
new text end

new text begin (i) 20 percent of the difference between the actual net change in the market value
of the active fund assets between June 30, 2008, and June 30, 2007, and the computed
increase in the market value of the active fund assets over that fiscal year period if the
assets had earned a rate of return on assets equal to 8.5 percent annually;
new text end

new text begin (ii) 40 percent of the difference between the actual net change in the market value of
the active fund assets between June 30, 2009, and the June 30, 2008, and the computed
increase in the market value of the active fund assets over that fiscal year period if the
assets had earned a rate of return on assets equal to 8.5 percent annually;
new text end

new text begin (iii) 60 percent of the difference between the actual net change in the market value
of the total assets between June 30, 2010, and June 30, 2009, and the computed increase in
the market value of the total assets over that fiscal year period if the assets had earned a
rate of return on assets equal to 8.5 percent annually;
new text end

new text begin (iv) 80 percent of the difference between the actual net change in the market value of
total assets between June 30, 2011, and June 30, 2010, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to 8.5 percent annually; and
new text end

new text begin (v) 40 percent of the difference between the actual net change in the market value of
the Minnesota postretirement investment fund between June 30, 2009, and June 30, 2008,
and the computed increase in the market value of assets over that fiscal year period if the
assets had increased at 8.5 percent annually.
new text end

new text begin (4) For the July 1, 2012, actuarial valuation, the market value of all assets as of
June 30, 2012, reduced by:
new text end

new text begin (i) 20 percent of the difference between the actual net change in the market value
of the active fund assets between June 30, 2009, and June 30, 2008, and the computed
increase in the market value of the active fund assets over that fiscal year period if the
assets had earned a rate of return on assets equal to 8.5 percent annually;
new text end

new text begin (ii) 40 percent of the difference between the actual net change in the market value of
total assets between June 30, 2010, and June 30, 2009, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to 8.5 percent annually;
new text end

new text begin (iii) 60 percent of the difference between the actual net change in the market value
of total assets between June 30, 2011, and June 30, 2010, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to 8.5 percent annually;
new text end

new text begin (iv) 80 percent of the difference between the actual net change in the market value of
total assets between June 30, 2012, and June 30, 2011, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to 8.5 percent annually; and
new text end

new text begin (v) 20 percent of the difference between the actual net change in the market value of
the Minnesota postretirement investment fund between June 30, 2009, and June 30, 2008,
and the computed increase in the market value of assets over that fiscal year period if the
assets had increased at 8.5 percent annually.
new text end

new text begin (5) For the July 1, 2013, and following actuarial valuations, the market value of all
assets as of the preceding June 30, reduced by:
new text end

new text begin (i) 20 percent of the difference between the actual net change in the market value
of total assets between the June 30 that occurred three years earlier and the June 30 that
occurred four years earlier and the computed increase in the market value of total assets
over that fiscal year period if the assets had earned a rate of return on assets equal to
8.5 percent annually;
new text end

new text begin (ii) 40 percent of the difference between the actual net change in the market value
of total assets between the June 30 that occurred two years earlier and the June 30 that
occurred three years earlier and the computed increase in the market value of total assets
over that fiscal year period if the assets had earned a rate of return on assets equal to
8.5 percent annually;
new text end

new text begin (iii) 60 percent of the difference between the actual net change in the market value
of total assets between the June 30 that occurred one year earlier and the June 30 that
occurred two years earlier and the computed increase in the market value of total assets
over that fiscal year period if the assets had earned a rate of return on assets equal to
8.5 percent annually; and
new text end

new text begin (iv) 80 percent of the difference between the actual net change in the market value of
total assets between the most recent June 30 and the June 30 that occurred one year earlier
and the computed increase in the market value of total assets over that fiscal year period if
the assets had earned a rate of return on assets equal to 8.5 percent annually.
new text end

new text begin (6) Notwithstanding the calculations in clauses (1) to (5), the actuarial value of
assets is the lesser of the amount calculated in clauses (1) to (5), or 120 percent of the
market value of assets as of the June 30 immediately preceding the valuation date.
new text end

new text begin (7) Notwithstanding the calculations in clauses (1) to (6), the actuarial value of
assets is the greater of the amount calculated in clause (6), or 80 percent of the market
value of assets as of the June 30 immediately preceding the valuation date.
new text end

(g) "Unfunded actuarial accrued liability" means the total current and expected
future benefit obligations, reduced by the sum of the actuarial value of assets and the
present value of future normal costs.

(h) "Pension benefit obligation" means the actuarial present value of credited
projected benefits, determined as the actuarial present value of benefits estimated to be
payable in the future as a result of employee service attributing an equal benefit amount,
including the effect of projected salary increases and any step rate benefit accrual rate
differences, to each year of credited and expected future employee service.

Sec. 70.

Minnesota Statutes 2008, 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 of the retirement plan must contain an
exhibit for financial reporting purposes indicating the additional annual contribution
sufficient to amortize the unfunded actuarial accrued liability and must contain an exhibit
for contribution determination purposes indicating the additional contribution sufficient
to amortize the unfunded actuarial accrued liability. For the retirement plans listed in
subdivision 8, paragraph (c), 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, assuming annual payroll growth at the applicable percentage
rate set forth in subdivision 8, paragraph (c). For all other retirement plans, the additional
annual contribution must be calculated on a level annual dollar amount basis.

(b) For any retirement plan other than the Minneapolis Employees Retirement Fund,
the general employees retirement plan of the Public Employees Retirement Association,
and the St. Paul Teachers Retirement Fund Association, 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 retirement plan other than the Minneapolis Employees Retirement
Fund and the general employees retirement plan of the Public Employees Retirement
Association, 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) For the Teachers Retirement Association, the established date for full funding is
June 30, 2037.

(g) For the correctional state employees retirement plan of the Minnesota State
Retirement System, the established date for full funding is June 30, 2038.

(h) For the judges retirement plan, the established date for full funding is June
30, 2038.

(i) For the public employees police and fire retirement plan, the established date
for full funding is June 30, 2038.

(j) For the St. Paul Teachers Retirement Fund Association, the established date for
full funding is June 30 of the 25th year from the valuation date. In addition to other
requirements of this chapter, the annual actuarial valuation shall contain an exhibit
indicating the funded ratio and the deficiency or sufficiency in annual contributions when
comparing liabilities to the market value of the assets of the fund as of the close of the
most recent fiscal year.

(k) 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.

deleted text begin (l) In addition to calculating the unfunded actuarial accrued liability of the retirement
plan for financial reporting purposes under paragraphs (a) to (j), the actuarial valuation
of the retirement plan must also include a calculation of the unfunded actuarial accrued
liability of the retirement plan for purposes of determining the amortization contribution
sufficient to amortize the unfunded actuarial liability of the Minnesota Post Retirement
Investment Fund. For this exhibit, the calculation must be the unfunded actuarial accrued
liability net of the postretirement adjustment liability funded from the investment
performance of the Minnesota Post Retirement Investment Fund or the retirement benefit
fund.
deleted text end

Sec. 71.

Minnesota Statutes 2008, section 356.351, subdivision 2, is amended to read:

Subd. 2.

Incentive.

(a) For an employee eligible under subdivision 1, if approved
under paragraph (b), the employer may provide an amount up to $17,000, to an employee
who terminates service, to be used:

(1) unless the appointing authority has designated the use under clause (2) or the use
under clause (3) for the initial retirement incentive applicable to that employing entity
under Laws 2007, chapter 134, after May 26, 2007, for deposit in the employee's account
in the health care savings plan established by section 352.98;

(2) notwithstanding section 352.01, subdivision 11, or 354.05, subdivision 13,
whichever applies, if the appointing authority has designated the use under this clause
for the initial retirement incentive applicable to that employing entity under Laws 2007,
chapter 134, after May 26, 2007, for purchase of service credit for unperformed service
sufficient to enable the employee to retire under section 352.116, subdivision 1, paragraph
(b); 353.30; 354.44, subdivision 6, paragraph (b), or 354A.31, subdivision 6, paragraph
(b), whichever applies; or

(3) if the appointing authority has designated the use under this clause for the initial
retirement incentive applicable to the employing entity under Laws 2007, chapter 134,
after May 26, 2007, for purchase of a lifetime annuity or an annuity for a specific number
of years from the applicable retirement plan to provide additional benefits, as provided in
paragraph (d).

(b) Approval to provide the incentive must be obtained from the commissioner
of finance if the eligible employee is a state employee and must be obtained from the
applicable governing board with respect to any other employing entity. An employee is
eligible for the payment under paragraph (a), clause (2), if the employee uses money from
a deferred compensation account that, combined with the payment under paragraph (a),
clause (2), would be sufficient to purchase enough service credit to qualify for retirement
under section 352.116, subdivision 1, paragraph (b); 353.30, subdivision 1a; 354.44,
subdivision 6, paragraph (b), or 354A.31, subdivision 6, paragraph (b), whichever applies.

(c) The cost to purchase service credit under paragraph (a), clause (2), must be
made in accordance with section 356.551.

(d) The annuity purchase under paragraph (a), clause (3), must be made using
annuity factors new text begin , as determined by the actuary retained under section 356.214, new text end derived from
the applicable factors used by the applicable retirement plan deleted text begin to transfer amounts to the
Minnesota postretirement investment fund and deleted text end to calculate optional annuity forms. The
purchased annuity must be the actuarial equivalent of the incentive amount.

Sec. 72.

new text begin [356.415] POSTRETIREMENT ADJUSTMENTS; STATEWIDE
RETIREMENT PLANS.
new text end

new text begin Subdivision 1. new text end

new text begin Annual postretirement adjustments. new text end

new text begin (a) Retirement annuity,
disability benefit, or survivor benefit recipients of a covered retirement plan are entitled to
a postretirement adjustment annually on January 1, as follows:
new text end

new text begin (1) a postretirement increase of 2.5 percent must be applied each year, effective
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has
been receiving an annuity or a benefit for at least 12 full months prior to the January 1
increase; and
new text end

new text begin (2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least one full month, an annual postretirement increase of 1/12 of 2.5 percent
for each month the person has been receiving an annuity or benefit must be applied,
effective January 1 following the year in which the person has been retired for less than
12 months.
new text end

new text begin (b) The increases provided by this section commence on January 1, 2010.
new text end

new text begin (c) An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the covered retirement plan requesting that the increase not be made.
new text end

new text begin (d) The retirement annuity payable to a person who retires before becoming eligible
for Social Security benefits and who has elected the optional payment as provided in
section 353.29, subdivision 6, or 354.35 must be treated as the sum of a period certain
retirement annuity and a life retirement annuity for the purposes of any postretirement
adjustment. The period certain retirement annuity plus the life retirement annuity must be
the annuity amount payable until age 62 for section 353.29, subdivision 6, or age 62, 65,
or normal retirement age, as selected by the member at retirement, for an annuity amount
payable under section 354.35. A postretirement adjustment granted on the period certain
retirement annuity must terminate when the period certain retirement annuity terminates.
new text end

new text begin Subd. 2. new text end

new text begin Covered retirement plans. new text end

new text begin The provisions of this section apply to the
following retirement plans:
new text end

new text begin (1) the legislators retirement plan established under chapter 3A;
new text end

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

new text begin (3) the general state employees retirement plan of the Minnesota State Retirement
System established under chapter 352;
new text end

new text begin (4) the State Patrol retirement plan established under chapter 352B;
new text end

new text begin (5) the elective state officers retirement plan established under chapter 352C;
new text end

new text begin (6) the general employee retirement plan of the Public Employees Retirement
Association established under chapter 353;
new text end

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

new text begin (8) the local government correctional employees retirement plan of the Public
Employees Retirement Association established under chapter 353E;
new text end

new text begin (9) the teachers retirement plan established under chapter 354; and
new text end

new text begin (10) the judges retirement plan established under chapter 490.
new text end

Sec. 73.

Minnesota Statutes 2008, section 490.123, subdivision 1, is amended to read:

Subdivision 1.

Fund creation; revenue and authorized disbursements.

(a) There
is created a special fund to be known as the "judges' retirement fund."

(b) The judges' retirement fund must be credited with all contributions; all interest,
dividends, and other investment proceeds; and all other income authorized by this chapter
or other applicable law.

(c) From this fund there are appropriated the payments authorized by this chapter, in
the amounts and at the times provided, including the necessary and reasonable expenses of
the Minnesota State Retirement System in administering the fund deleted text begin and the transfers to the
Minnesota postretirement investment fund deleted text end .

Sec. 74.

Minnesota Statutes 2008, section 490.123, subdivision 3, is amended to read:

Subd. 3.

Investment.

(a) The executive director of the Minnesota State Retirement
System shall, from time to time, certify to the State Board of Investment such portions
of the judges' retirement fund as in the director's judgment may not be required for
immediate use.

deleted text begin (b) Assets from the judges' retirement fund must be transferred to the Minnesota
postretirement investment fund for retirement and disability benefits as provided in
sections 11A.18 and 352.119.
deleted text end

deleted text begin (c) deleted text end new text begin (b) new text end The State Board of Investment shall thereupon invest and reinvest sums so
deleted text begin transferred, or deleted text end certified deleted text begin , deleted text end in such securities as are duly authorized legal investments for such
purposes under section 11A.24 in compliance with sections 356A.04 and 356A.06.

Sec. 75.

Minnesota Statutes 2008, section 490.124, is amended by adding a subdivision
to read:

new text begin Subd. 14. new text end

new text begin Postretirement adjustment eligibility. new text end

new text begin A retirement annuity under
subdivision 1, 3, or 5, a disability benefit under subdivision 4, and a survivor's annuity
under subdivision 9 or 11 are eligible for postretirement adjustments under section
356.415.
new text end

Sec. 76. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, sections 11A.041; 11A.18; 11A.181; 352.119, subdivisions
2, 3, and 4; 352B.26, subdivisions 1 and 3; 353.271; 353A.02, subdivision 20; 353A.09,
subdivisions 2 and 3; 354.05, subdivision 26; 354.55, subdivision 14; 354.63; 356.41;
356.431, subdivision 2; 422A.01, subdivision 13; 422A.06, subdivision 4; and 490.123,
subdivisions 1c and 1e, new text end new text begin are repealed.
new text end

Sec. 77. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 76 are effective July 1, 2009.
new text end