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HF 2028

as introduced - 87th Legislature (2011 - 2012) Posted on 01/30/2012 02:09pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to retirement; Fairmont Police Relief Association; consolidating the
relief association with the Public Employees Police and Fire Retirement Plan
and Fund; amending Minnesota Statutes 2011 Supplement, sections 69.77,
subdivisions 1a, 4; 356.215, subdivision 8; Laws 2002, chapter 392, article 1,
section 8; proposing coding for new law in Minnesota Statutes, chapter 353;
repealing Minnesota Statutes 2010, section 423A.06; Laws 1947, chapter 624,
sections 1; 2; 3; 4; 5; 6; 8; 9; 10; 11; 12; 13; 14; 15; 16; 17; 18; 19; 21; 22, as
amended; Laws 1963, chapter 423; Laws 1999, chapter 222, article 3, sections
3; 4; 5.

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

ARTICLE 1

FAIRMONT POLICE RELIEF ASSOCIATION CONSOLIDATION

Section 1.

new text begin [353.669] CONSOLIDATION OF THE FAIRMONT POLICE RELIEF
ASSOCIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Membership transfer. new text end

new text begin On the effective date of consolidation, the
retired members, including surviving spouses, of the Fairmont Police Relief Association
are transferred to the public employees police and fire retirement plan, are no longer
members of the former Fairmont Police Relief Association, and are members of the public
employees police and fire retirement plan.
new text end

new text begin Subd. 2. new text end

new text begin Benefit liability transfer. new text end

new text begin The liability for the payment of retirement
annuities, service pensions, and survivor benefits of the retired members, service
pensioners, surviving spouses, and any other retirement benefit recipients of the former
Fairmont Police Relief Association, as contained in the transferred records of the former
relief association, is transferred to the public employees police and fire retirement plan on
the effective date of consolidation.
new text end

new text begin Subd. 3. new text end

new text begin Transfer of records. new text end

new text begin On the effective date of consolidation, the
chief administrative officer of the Fairmont Police Relief Association shall transfer all
records and documents relating to the special fund of the former Fairmont Police Relief
Association to the executive director of the Public Employees Retirement Association. To
the extent possible, original copies of all records and documents must be transferred.
new text end

new text begin Subd. 4. new text end

new text begin Transfer of assets; transfer of title to assets. new text end

new text begin (a) On the effective date of
consolidation, the chief administrative officer of the Fairmont Police Relief Association
shall transfer the entire assets of the special fund of the Fairmont Police Relief Association
to the public employees police and fire retirement fund at market value. Unless ineligible
or inappropriate as determined by the State Board of Investment, the transfer must be
in the form of investment securities and must include any accounts receivable that are
determined by the State Board of Investment as being capable of being collected. The city
of Fairmont must transfer, in cash, an amount equal to the market value, as recognized by
the relief association of any investment securities that are determined by the executive
director of the State Board of Investment to be not in compliance with the requirements
and limitations set forth in sections 11A.09, 11A.14, 11A.23, and 11A.24, or to be
inappropriate for retention in light of the established investment objectives of the State
Board of Investment, or of any accounts receivable that are determined by the executive
director as being incapable of being collected. The legal and beneficial title to assets that
are determined to be noncompliant or inappropriate securities or that are determined to be
uncollectable accounts receivable are transferred from the relief association special fund
to the city of Fairmont as of the effective date of consolidation. Any accounts payable
of the special fund of the Fairmont Police Relief Association on the effective date of
consolidation, are an obligation of the public employees police and fire retirement fund
and reduce the value of the transferred relief association special fund assets for purposes
of subdivision 6. Assets transferred from the special fund of the Fairmont Police Relief
Association must be deposited in the public employees police and fire retirement fund
and must be managed by the State Board of Investment through the Minnesota combined
investment funds under section 11A.14.
new text end

new text begin (b) Upon the transfer of the assets to the management of the State Board of
Investment under paragraph (a), legal title to those transferred assets vests with the State
Board of Investment on behalf of the public employees police and fire retirement plan,
and beneficial title to the transferred assets remains with the former membership of the
former Fairmont Police Relief Association.
new text end

new text begin (c) The public employees police and fire retirement plan and fund is the successor in
interest to all claims for and against the Fairmont Police Relief Association. The public
employees police and fire retirement plan and fund is not liable for any claim against the
Fairmont Police Relief Association or its governing board acting in a fiduciary capacity
under chapter 356A or under common law which is founded upon a claim of a breach of
fiduciary duty if the act or acts constituting the claimed breach were not undertaken in
good faith. The public employees police and fire retirement plan may assert any applicable
defense to any claim in any judicial or administrative proceeding that the former Fairmont
Police Relief Association or its former governing board would otherwise have been
entitled to assert and the public employees police and fire retirement plan may assert any
applicable defense that it has in its capacity as a statewide agency.
new text end

new text begin (d) The Public Employees Retirement Association shall indemnify any former
fiduciary of the Fairmont Police Relief Association consistent with the provisions of
section 356A.11. The indemnification may be effected by the purchase by the Public
Employees Retirement Association of reasonable fiduciary liability tail insurance for the
officers and directors of the former Fairmont Police Relief Association.
new text end

new text begin Subd. 5. new text end

new text begin Benefits. new text end

new text begin (a) The annuities, service pensions, and other retirement benefits
of or attributable to retired members and surviving spouses of the Fairmont Police Relief
Association who had that status as of the effective date of consolidation, continue after
consolidation in the same amount and under the same terms as provided under Minnesota
Statutes 2000, sections 423.41 to 423.46, 423.48 to 423.59, 423.61, and 423.62; Laws
1963, chapter 423; Laws 1977, chapter 100; and Laws 1999, chapter 222, article 3, section
4, except as provided in paragraph (b).
new text end

new text begin (b) The annual base salary figure for pension and benefit determinations upon
consolidation and for the balance of calendar year 2012 is $106,666.67 and for calendar
years after 2012 is the prior calendar year's annual base pay plus an increase equal to the
adjustment percentage under section 356.415, subdivision 1c, effective as of January
1 of that calendar year. After December 31, 2012, annual postretirement adjustments
of pensions and benefits in force must be calculated solely under section 356.415,
subdivision 1c.
new text end

new text begin Subd. 6. new text end

new text begin Employer contributions. new text end

new text begin (a) As of the effective date of consolidation, the
approved actuary retained by the Public Employees Retirement Association shall calculate
the present value of future benefits of the former Fairmont Police Relief Association
special fund and, by subtracting the market value of the transferred assets of the Fairmont
Police Relief Association as of the effective date of consolidation, the remainder present
value of future benefits amount, if any. Annually, on or before December 31, if there is a
remainder present value of future benefits account, the city of Fairmont shall pay to the
public employees police and fire retirement fund an amount sufficient, on a level annual
dollar basis, to amortize the calculated remainder present value of future benefits amount
by December 31, 2020.
new text end

new text begin (b) If, after the effective date of consolidation, the postretirement or preretirement
interest rate actuarial assumption applicable to the public employees police and fire
retirement plan under section 356.215, subdivision 8, is modified from the rates specified
in Minnesota Statutes 2010, section 356.215, subdivision 8, the remainder present value of
future benefits amount calculation under paragraph (a), updated for the passage of time,
must be revised and the amortization contribution by the city of Fairmont for the balance
of the amortization period must be redetermined and certified to the city of Fairmont.
new text end

Sec. 2. new text begin TERMINATION OF THE FAIRMONT POLICE RELIEF
ASSOCIATION.
new text end

new text begin On the effective date of consolidation, the Fairmont Police Relief Association
ceases to exist.
new text end

Sec. 3. new text begin REPEALER.
new text end

new text begin Laws 1963, chapter 423; and Laws 1999, chapter 222, article 3, sections 3; 4; and
5,
new text end new text begin are repealed.
new text end

Sec. 4. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 3 are effective as of the last day of the month in which final enactment
occurs.
new text end

ARTICLE 2

RELIEF ASSOCIATION CONSOLIDATION CONFORMING CHANGES

Section 1.

Minnesota Statutes 2011 Supplement, section 69.77, subdivision 1a, is
amended to read:


Subd. 1a.

Covered retirement plans.

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

(1) the Bloomington Firefighters Relief Association;new text begin and
new text end

deleted text begin (2) the Fairmont Police Relief Association; and
deleted text end

deleted text begin (3)deleted text end new text begin (2) new text end the Virginia Fire Department Relief Association.

Sec. 2.

Minnesota Statutes 2011 Supplement, section 69.77, subdivision 4, is amended
to read:


Subd. 4.

Relief association financial requirements; minimum municipal
obligation.

(a) The officers of the relief association shall determine the financial
requirements of the relief association and minimum obligation of the municipality for
the following calendar year in accordance with the requirements of this subdivision.
The financial requirements of the relief association and the minimum obligation of the
municipality must be determined on or before the submission date established by the
municipality under subdivision 5.

(b) The financial requirements of the relief association for the following calendar
year must be based on the most recent actuarial valuation or survey of the special fund of
the association if more than one fund is maintained by the association, or of the association,
if only one fund is maintained, prepared in accordance with sections 356.215, subdivisions
4 to 15
, and 356.216, as required under subdivision 10. If an actuarial estimate is prepared
by the actuary of the relief association as part of obtaining a modification of the benefit
plan of the relief association and the modification is implemented, the actuarial estimate
must be used in calculating the subsequent financial requirements of the relief association.

(c) If the relief association has an unfunded actuarial accrued liability as reported in
the most recent actuarial valuation or survey, the total of the amounts calculated under
clauses (1), (2), and (3), constitute the financial requirements of the relief association for
the following year. If the relief association does not have an unfunded actuarial accrued
liability as reported in the most recent actuarial valuation or survey, the amount calculated
under clauses (1) and (2) constitute the financial requirements of the relief association for
the following year. The financial requirement elements are:

(1) the normal level cost requirement for the following year, expressed as a dollar
amount, which must be determined by applying the normal level cost of the relief
association as reported in the actuarial valuation or survey and expressed as a percentage
of covered payroll to the estimated covered payroll of the active membership of the relief
association, including any projected change in the active membership, for the following
year;

(2) for the Bloomington Fire Department Relief Associationdeleted text begin , the Fairmont Police
Relief Association,
deleted text end and the Virginia Fire Department Relief Association, to the dollar
amount of normal cost determined under clause (1) must be added an amount equal to the
dollar amount of the administrative expenses of the special fund of the association if more
than one fund is maintained by the association, or of the association if only one fund is
maintained, for the most recent year, multiplied by the factor of 1.035. The administrative
expenses are those authorized under section 69.80; and

(3) to the dollar amount of normal cost and expenses determined under clauses
(1) and (2) must be added an amount equal to the level annual dollar amount which
is sufficient to amortize the unfunded actuarial accrued liability as determined from
the actuarial valuation or survey of the fund, using an interest assumption set at the
applicable rate specified in section 356.215, subdivision 8, by that fund's amortization
date as specified in paragraph (d).

(d) The Virginia Fire Department Relief Association special fund amortization date
is December 31, 2010. deleted text begin The Fairmont Police Relief Association special fund amortization
date is December 31, 2020.
deleted text end The Bloomington Fire Department Relief Association
special fund amortization date is determined under section 356.216, clause (2). The
amortization date specified in this paragraph supersedes any amortization date specified in
any applicable special law.

(e) The minimum obligation of the municipality is an amount equal to the financial
requirements of the relief association reduced by the estimated amount of member
contributions from covered salary anticipated for the following calendar year and the
estimated amounts anticipated for the following calendar year from the applicable state aid
program established under sections 69.011 to 69.051 receivable by the relief association
after any allocation made under section 69.031, subdivision 5, paragraph (b), clause (2),
or 423A.01, subdivision 2, paragraph (a), clause (6), from the local police and salaried
firefighters' relief association amortization aid program established under section 423A.02,
subdivision 1
, from the supplementary amortization state-aid program established under
section 423A.02, subdivision 1a, and from the additional amortization state aid under
section 423A.02, subdivision 1b.

Sec. 3.

Minnesota Statutes 2011 Supplement, section 356.215, subdivision 8, is
amended to read:


Subd. 8.

Interest and salary assumptions.

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

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

(b) Before July 1, 2010, the actuarial valuation must use the applicable following
single rate future salary increase assumption, the applicable following modified single
rate future salary increase assumption, or the applicable following graded rate future
salary increase assumption:

(1) single rate future salary increase assumption

plan
future salary increase assumption
legislators retirement plan
5.0%
judges retirement plan
4.0
deleted text begin Fairmont Police Relief Association
deleted text end
deleted text begin 3.5
deleted text end
Virginia Fire Department Relief Association
3.5
Bloomington Fire Department Relief
Association
4.0

(2) age-related select and ultimate future salary increase assumption or graded rate
future salary increase assumption

plan
future salary increase assumption
correctional state employees retirement plan
assumption D
State Patrol retirement plan
assumption C
local government correctional service retirement plan
assumption C
Duluth teachers retirement plan
assumption A
St. Paul teachers retirement plan
assumption B

The select calculation is: during the
designated select period, a designated
percentage rate is multiplied by the result of
the designated integer minus T, where T is
the number of completed years of service,
and is added to the applicable future salary
increase assumption. The designated select
period is five years and the designated
integer is five for the general state employees
retirement plan. The designated select period
is ten years and the designated integer is ten
for all other retirement plans covered by
this clause. The designated percentage rate
is: (1) 0.2 percent for the correctional state
employees retirement plan, the State Patrol
retirement plan, and the local government
correctional service retirement plan; (2)
0.6 percent for the general state employees
retirement plan; and (3) 0.3 percent for the
teachers retirement plan, the Duluth Teachers
Retirement Fund Association, and the St.
Paul Teachers Retirement Fund Association.
The select calculation for the Duluth Teachers
Retirement Fund Association is 8.00 percent
per year for service years one through seven,
7.25 percent per year for service years seven
and eight, and 6.50 percent per year for
service years eight and nine.

The ultimate future salary increase assumption is:

age
A
B
C
D
16
8.00%
6.90%
7.7500%
7.2500%
17
8.00
6.90
7.7500
7.2500
18
8.00
6.90
7.7500
7.2500
19
8.00
6.90
7.7500
7.2500
20
6.90
6.90
7.7500
7.2500
21
6.90
6.90
7.1454
6.6454
22
6.90
6.90
7.0725
6.5725
23
6.85
6.85
7.0544
6.5544
24
6.80
6.80
7.0363
6.5363
25
6.75
6.75
7.0000
6.5000
26
6.70
6.70
7.0000
6.5000
27
6.65
6.65
7.0000
6.5000
28
6.60
6.60
7.0000
6.5000
29
6.55
6.55
7.0000
6.5000
30
6.50
6.50
7.0000
6.5000
31
6.45
6.45
7.0000
6.5000
32
6.40
6.40
7.0000
6.5000
33
6.35
6.35
7.0000
6.5000
34
6.30
6.30
7.0000
6.5000
35
6.25
6.25
7.0000
6.5000
36
6.20
6.20
6.9019
6.4019
37
6.15
6.15
6.8074
6.3074
38
6.10
6.10
6.7125
6.2125
39
6.05
6.05
6.6054
6.1054
40
6.00
6.00
6.5000
6.0000
41
5.90
5.95
6.3540
5.8540
42
5.80
5.90
6.2087
5.7087
43
5.70
5.85
6.0622
5.5622
44
5.60
5.80
5.9048
5.4078
45
5.50
5.75
5.7500
5.2500
46
5.40
5.70
5.6940
5.1940
47
5.30
5.65
5.6375
5.1375
48
5.20
5.60
5.5822
5.0822
49
5.10
5.55
5.5404
5.0404
50
5.00
5.50
5.5000
5.0000
51
4.90
5.45
5.4384
4.9384
52
4.80
5.40
5.3776
4.8776
53
4.70
5.35
5.3167
4.8167
54
4.60
5.30
5.2826
4.7826
55
4.50
5.25
5.2500
4.7500
56
4.40
5.20
5.2500
4.7500
57
4.30
5.15
5.2500
4.7500
58
4.20
5.10
5.2500
4.7500
59
4.10
5.05
5.2500
4.7500
60
4.00
5.00
5.2500
4.7500
61
3.90
5.00
5.2500
4.7500
62
3.80
5.00
5.2500
4.7500
63
3.70
5.00
5.2500
4.7500
64
3.60
5.00
5.2500
4.7500
65
3.50
5.00
5.2500
4.7500
66
3.50
5.00
5.2500
4.7500
67
3.50
5.00
5.2500
4.7500
68
3.50
5.00
5.2500
4.7500
69
3.50
5.00
5.2500
4.7500
70
3.50
5.00
5.2500
4.7500

(3) service-related ultimate future salary increase assumption

general state employees retirement plan of the
Minnesota State Retirement System
assumption A
general employees retirement plan of the Public
Employees Retirement Association
assumption B
Teachers Retirement Association
assumption C
public employees police and fire retirement plan
assumption D
service
length
A
B
C
D
1
10.75%
12.25%
12.00%
13.00%
2
8.35
9.15
9.00
11.00
3
7.15
7.75
8.00
9.00
4
6.45
6.85
7.50
8.00
5
5.95
6.25
7.25
6.50
6
5.55
5.75
7.00
6.10
7
5.25
5.45
6.85
5.80
8
4.95
5.15
6.70
5.60
9
4.75
4.85
6.55
5.40
10
4.65
4.65
6.40
5.30
11
4.45
4.45
6.25
5.20
12
4.35
4.35
6.00
5.10
13
4.25
4.15
5.75
5.00
14
4.05
4.05
5.50
4.90
15
3.95
3.95
5.25
4.80
16
3.85
3.85
5.00
4.80
17
3.75
3.75
4.75
4.80
18
3.75
3.75
4.50
4.80
19
3.75
3.75
4.25
4.80
20
3.75
3.75
4.00
4.80
21
3.75
3.75
3.90
4.70
22
3.75
3.75
3.80
4.60
23
3.75
3.75
3.70
4.50
24
3.75
3.75
3.60
4.50
25
3.75
3.75
3.50
4.50
26
3.75
3.75
3.50
4.50
27
3.75
3.75
3.50
4.50
28
3.75
3.75
3.50
4.50
29
3.75
3.75
3.50
4.50
30 or more
3.75
3.75
3.50
4.50

(c) Before July 2, 2010, the actuarial valuation must use the applicable following
payroll growth assumption for calculating the amortization requirement for the unfunded
actuarial accrued liability where the amortization retirement is calculated as a level
percentage of an increasing payroll:

plan
payroll growth assumption
general state employees retirement plan of the
Minnesota State Retirement System
3.75%
correctional state employees retirement plan
4.50
State Patrol retirement plan
4.50
legislators retirement plan
4.50
judges retirement plan
4.00
general employees retirement plan of the Public
Employees Retirement Association
3.75
public employees police and fire retirement plan
3.75
local government correctional service retirement plan
4.50
teachers retirement plan
3.75
Duluth teachers retirement plan
4.50
St. Paul teachers retirement plan
5.00

(d) After July 1, 2010, the assumptions set forth in paragraphs (b) and (c) continue to
apply, unless a different salary assumption or a different payroll increase assumption:

(1) has been proposed by the governing board of the applicable retirement plan;

(2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
most recent actuarial valuation report if section 356.214 does not apply; and

(3) has been approved or deemed approved under subdivision 18.

Sec. 4.

Laws 2002, chapter 392, article 1, section 8, is amended to read:


Sec. 8. REVISOR INSTRUCTIONS.

deleted text begin (a) In the next and subsequent editions of Minnesota Statutes, the revisor of statutes
shall not print Minnesota Statutes, sections 423.41 to 423.62, but shall denote those
sections as "[LOCAL, CITY OF FAIRMONT, POLICE PENSIONS.]."
deleted text end

deleted text begin (b)deleted text end In the next and subsequent editions of Minnesota Statutes, the revisor of statutes
shall, in each section indicated in column A, replace the cross-reference specified in
column B with the cross-reference set forth in column C:

Column A
Column B
Column C
69.021, subd. 10
69.77, subd. 2a
69.77, subd. 3
69.021, subd. 10
69.77, subd. 2b
69.77, subd. 4
69.021, subd. 10
69.77, subd. 2c
69.77, subd. 5
299A.465, subd. 5
424.03
Minnesota Statutes, 2000,
424.03
353A.07, subd. 6
69.77, subd. 2a
69.77, subd. 3
353A.09, subd. 4
69.77, subd. 2a
69.77, subd. 3
356.216
69.77, subd. 2b
69.77, subd. 4
356.219, subd. 2
69.77, subd. 2g
69.77, subd. 9
423.01, subd. 2
69.77, subd. 2b
69.77, subd. 4
423A.18
69.77, subd. 2i
69.77, subd. 11
423A.19, subd. 4
69.77, subd. 2i
69.77, subd. 11
423B.06, subd. 1
69.77, subd. 2a
69.77, subd. 3
423B.06, subd. 1
69.77, subd. 2b
69.77, subd. 4
423B.06, subd. 1
69.77, subd. 2c
69.77, subd. 5
423B.06, subd. 1
69.77, subd. 2d
69.77, subd. 6
423B.06, subd. 1
69.77, subd. 2e
69.77, subd. 7
423B.06, subd. 1
69.77, subd. 2f
69.77, subd. 8
423B.21, subd. 1
69.77, subd. 2b
69.77, subd. 4

Sec. 5. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2010, section 423A.06, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Laws 1947, chapter 624, sections 1; 2; 3; 4; 5; 6; 8; 9; 10; 11; 12; 13; 14; 15;
16; 17; 18; 19; 21; and 22,
new text end new text begin as amended, are repealed. The revisor shall show Minnesota
Statutes, sections 423.41, 423.42, 423.43, 423.44, 423.45, 423.46, 423.48, 423.49, 423,50,
423.51, 423.52, 423.53, 423.54, 423.55, 423.56, 423.57, 423.58, 423.59, 423.61, and
423.62, as repealed.
new text end

Sec. 6. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 5 are effective on the effective date of article 1, section 3.
new text end