Minnesota Legislature
HF 2341
as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am
Current Version - as introduced
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A bill for an act
relating to retirement; modifying adjustments by the commissioner of education
to aid payments for Special School District No. 625; increasing direct
state supplemental contributions to the St. Paul Teachers Retirement Fund
Association; removing the sunset and redistributive provisions on direct
state supplemental aids to teacher retirement funds; increasing employer
contribution rates; repealing language on administrative cost-related member
contribution surcharges; eliminating an investment-related postretirement
increase for the St. Paul Teachers Retirement Fund Association; providing for
a limited cost-of-living increase; establishing a new amortization target date
for the St. Paul Teachers Retirement Fund Association; appropriating money;
amending Minnesota Statutes 2006, sections 127A.50, subdivision 1; 354A.12,
subdivisions 2a, 3a, 3c; 354A.29, subdivisions 3, 4; 356.215, subdivision 11;
repealing Minnesota Statutes 2006, sections 127A.50, subdivision 5; 354A.12,
subdivision 3d; 354A.29, subdivision 6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2006, section 127A.50, subdivision 1, is amended to
read:
Subdivision 1.
Aid adjustment.
Beginning in fiscal year 1998 and each year
thereafter, the commissioner of education shall adjust state aid payments to school
operating funds for Independent School District No. 625 deleted text begin anddeleted text end new text begin by the net amount of clauses
(1), (2), and (5),new text end Independent School District No. 709 by the net amount of clauses (1) and
(2), for Special School District No. 1 by the net amount of clauses (1), (2), and (4), and for
all other districts, including charter schools, but excluding any education organizations
that are prohibited from receiving direct state aids under section 123A.26 or 125A.75,
subdivision 7, by the net amount of clauses (1), (2), (3), and (4):
(1) a decrease equal to each district's share of the fiscal year 1997 adjustment
effected under Minnesota Statutes 1996, section 124.2139;
(2) an increase equal to one percent of the salaries paid to members of the general
plan of the Public Employees Retirement Association in fiscal year 1997, multiplied by
0.35 for fiscal year 1998 and 0.70 each year thereafter;
(3) a decrease equal to 2.34 percent of the salaries paid to members of the Teachers
Retirement Association in fiscal year 1997; and
(4) an increase equal to 0.5 percent of the salaries paid to members of the Teachers
Retirement Association in fiscal year 2007.
new text begin
(5) an increase equal to 1.0 percent of the covered salaries for members of the St.
Paul Teachers Retirement Fund Association in the most recent fiscal year as certified by
the executive director of the retirement fund.
new text end
Sec. 2.
Minnesota Statutes 2006, section 354A.12, subdivision 2a, is amended to read:
Subd. 2a.
Employer regular and additional contribution rates.
(a) The
employing units shall make the following employer contributions to teachers retirement
fund associations:
(1) for any coordinated member of a teachers retirement fund association in a city
of the first class, the employing unit shall pay the employer Social Security taxes in
accordance with section 355.46, subdivision 3, clause (b);
(2) for any coordinated member of one of the following teachers retirement fund
associations in a city of the first class, the employing unit shall make a regular employer
contribution to the respective retirement fund association in an amount equal to the
designated percentage of the salary of the coordinated member as provided below:
| Duluth Teachers Retirement |
||
| Fund Association |
4.50 percent |
|
| St. Paul Teachers Retirement |
||
| Fund Association |
deleted text begin 4.50deleted text end new text begin 5.50new text end percent |
(3) for any basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make a regular employer contribution to the respective retirement
fund in an amount equal to deleted text begin 8.00deleted text end new text begin 9.00new text end percent of the salary of the basic member;
(4) for a basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make an additional employer contribution to the respective fund in
an amount equal to 3.64 percent of the salary of the basic member;
(5) for a coordinated member of a teachers retirement fund association in a city
of the first class, the employing unit shall make an additional employer contribution to
the respective fund in an amount equal to the applicable percentage of the coordinated
member's salary, as provided below:
| Duluth Teachers Retirement |
|||
| Fund Association |
1.29 percent |
||
| St. Paul Teachers Retirement |
|||
| Fund Association |
|||
| July 1, 1993 - June 30, 1994 |
0.50 percent |
||
| July 1, 1994 - June 30, 1995 |
1.50 percent |
||
| July 1, 1997, and thereafter |
3.84 percent |
||
(b) The regular and additional employer contributions must be remitted directly to
the respective teachers retirement fund association at least once each month. Delinquent
amounts are payable with interest under the procedure in subdivision 1a.
(c) Payments of regular and additional employer contributions for school district
or technical college employees who are paid from normal operating funds must be made
from the appropriate fund of the district or technical college.
Sec. 3.
Minnesota Statutes 2006, section 354A.12, subdivision 3a, is amended to read:
Subd. 3a.
Special direct state aid to first class city teachers retirement fund
associations.
(a) deleted text begin In fiscal year 1998, the state shall pay $4,827,000 to the St. Paul Teachers
Retirement Fund Association, $17,954,000 to the Minneapolis Teachers Retirement Fund
Association, and $486,000 to the Duluth Teachers Retirement Fund Association. In each
fiscal year after fiscal year 2006, these payments to the first class citydeleted text end new text begin Beginning in fiscal
year 2008, the state shall pay $6,000,000 to the St. Paulnew text end Teachers Retirement Fund
deleted text begin associations must be $2,827,000 for St. Paul, $12,954,000deleted text end new text begin Association and $13,300,000new text end
to the Teachers Retirement Association for the former Minneapolis Teachers Retirement
Fund Associationdeleted text begin , and $486,000 for Duluthdeleted text end .
(b) The direct state aids under this subdivision are payable October 1 annually. The
commissioner of finance shall pay the direct state aid. The amount required under this
subdivision is appropriated annually from the general fund to the commissioner of finance.
Sec. 4.
Minnesota Statutes 2006, section 354A.12, subdivision 3c, is amended to read:
Subd. 3c.
Termination of supplemental contributions and direct matching
and state aid.
(a) The supplemental contributions payable to the Minneapolis Teachers
Retirement Fund Association by Special School District No. 1 and the city of Minneapolis
under section 423A.02, subdivision 3, deleted text begin which must continue to be paid to the Teachers
Retirement Association until 2037,deleted text end or to the St. Paul Teachers Retirement Fund
Association by Independent School District No. 625 under section 423A.02, subdivision
3, or the direct state aids under subdivision 3a to the St. Paul Teachers Retirement Fund
Association deleted text begin terminate at the end of the fiscal year in which the accrued liability funding
ratio for that fund, as determined in the most recent actuarial report for that fund by the
actuary retained under section 356.214, equals or exceeds the accrued liability funding
ratio for the teachers retirement association, as determined in the most recent actuarial
report for the Teachers Retirement Association by the actuary retained under section
356.214deleted text end new text begin must continue to be paid to the Teachers Retirement Association and the St. Paul
Teachers Retirement Fund Association, respectively, until fiscal year 2037new text end .
(b) If the state direct matching, state supplemental, or state aid is terminated for a
deleted text begin first class citydeleted text end teachers retirement fund association under paragraph (a), it may not again
be received by that fund.
deleted text begin
(c) If the St. Paul Teachers Retirement Fund Association is funded at the funding
ratio applicable to the Teachers Retirement Association when the provisions of paragraph
(b) become effective, then any state aid previously distributed to that association must be
immediately transferred to the Teachers Retirement Association.
deleted text end
Sec. 5.
Minnesota Statutes 2006, section 354A.29, subdivision 3, is amended to read:
Subd. 3.
Postretirement adjustmentnew text begin eligibilitynew text end .
(a) The postretirement adjustment
described in the articles and bylaws of the St. Paul Teachers Retirement Fund Association
must be determined by new text begin the executive director and approved by new text end the board annually deleted text begin after
June 30deleted text end using the procedures under this section.
(b) new text begin On January 1, new text end each eligible person who has deleted text begin been receivingdeleted text end new text begin accrued or receivednew text end an
annuity or benefit under the articles of incorporation, the bylaws, or this chapter for at least
deleted text begin 12deleted text end new text begin three full calendarnew text end months as of the end of the deleted text begin fiscaldeleted text end new text begin calendarnew text end year is eligible to receive
a postretirement adjustment deleted text begin of 2.0 percentdeleted text end that is payable deleted text begin eachdeleted text end new text begin the followingnew text end January 1.
Sec. 6.
Minnesota Statutes 2006, section 354A.29, subdivision 4, is amended to read:
Subd. 4.
deleted text begin Additional investment percentagedeleted text end new text begin Cost-of-livingnew text end adjustment.
(a)
deleted text begin An excess investment earningsdeleted text end new text begin Anew text end percentage adjustment must be computed and paid
under this subdivision to deleted text begin those annuitants and eligible benefit recipients who have been
receiving an annuity or benefit for at least 12 months as determined each June 30 by the
board of trusteesdeleted text end new text begin eligible persons as defined under subdivision 3. This adjustment is
determined by reference to the Consumer Price Index for urban wage earners and clerical
workers all items index as reported by the Bureau of Labor Statistics within the United
States Department of Labor each year as part of the determination of annual cost-of-living
adjustments to recipients of federal old-age, survivors, and disability insurance. For
calculations of the cost-of-living adjustment under paragraph (b), the term "average third
quarter Consumer Price Index value" means the sum of the monthly index values as
initially reported by the Bureau of Labor Statistics for the months of July, August, and
September, divided by 3new text end .
deleted text begin
(b) The board shall also determine the five-year annualized rate of return attributable
to the assets of the St. Paul Teachers Retirement Fund Association under the formula
specified in section , clause (11), and the amount of the excess five-year annualized
rate of return over the preretirement interest assumption specified in section .
deleted text end
deleted text begin
(c) The excess investment percentage adjustment must be determined by multiplying
the quantity one minus the rate of contribution deficiency, as specified in the most recent
actuarial report of the actuary retained under sections and , by the rate of
return excess as determined in paragraph (b).
deleted text end
deleted text begin
(d) The excess investment percentage adjustment is payable to all annuitants and
benefit recipients on the following January 1.
deleted text end
new text begin
(b) Before January 1 of each year, the executive director must calculate the amount
of the cost-of-living adjustment by dividing the most recent average third quarter index
value by the same average third quarter index value from the previous year, subtract one
from the resulting quotient, and express the result as a percentage amount, which must be
rounded to the nearest one-tenth of one percent. The final amount may not be negative
and may not exceed 5.0 percent.
new text end
new text begin
(c) The amount calculated under paragraph (b) is the full cost-of-living adjustment
to be applied as a permanent increase to the regular payment of each eligible member
under subdivision 3 on January 1 of the next calendar year. For any eligible member
whose effective date of benefit commencement occurred during the calendar year before
the cost-of-living adjustment is applied, the full increase amount must be prorated on the
basis of whole calendar quarters in benefit payment status in the calendar year prior to
the January 1 on which the cost-of-living adjustment is applied, rounded to the nearest
three-tenths of one percent.
new text end
Sec. 7.
Minnesota Statutes 2006, section 356.215, subdivision 11, is amended to read:
Subd. 11.
Amortization contributions.
(a) In addition to the exhibit indicating the
level normal cost, the actuarial valuation must contain an exhibit indicating the additional
annual contribution sufficient to amortize the unfunded actuarial accrued liability. For
funds governed by chapters 3A, 352, 352B, 352C, 353, 354, 354A, and 490, the additional
contribution must be calculated on a level percentage of covered payroll basis by the
established date for full funding in effect when the valuation is prepared. For funds
governed by chapter 3A, sections 352.90 through 352.951, chapters 352B, 352C, sections
353.63 through 353.68, and chapters 353C, 354A, and 490, the level percent additional
contribution must be calculated assuming annual payroll growth of 6.5 percent. For funds
governed by sections 352.01 through 352.86 and chapter 354, the level percent additional
contribution must be calculated assuming an annual payroll growth of five percent. For the
fund governed by sections 353.01 through 353.46, the level percent additional contribution
must be calculated assuming an annual payroll growth of six percent. For all other funds,
the additional annual contribution must be calculated on a level annual dollar amount basis.
(b) For any fund other than the Minneapolis Employees Retirement Fund deleted text begin anddeleted text end new text begin ,new text end
the Public Employees Retirement Association general plan, new text begin and the St. Paul Teachers
Retirement Fund Association, new text end if there has not been a change in the actuarial assumptions
used for calculating the actuarial accrued liability of the fund, a change in the benefit
plan governing annuities and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability of all or a portion of the
fund, or a combination of the three, which change or changes by itself or by themselves
without inclusion of any other items of increase or decrease produce a net increase in the
unfunded actuarial accrued liability of the fund, the established date for full funding is the
first actuarial valuation date occurring after June 1, 2020.
(c) For any fund or plan other than the Minneapolis Employees Retirement Fund and
the Public Employees Retirement Association general plan, if there has been a change in
any or all of the actuarial assumptions used for calculating the actuarial accrued liability
of the fund, a change in the benefit plan governing annuities and benefits payable from
the fund, a change in the actuarial cost method used in calculating the actuarial accrued
liability of all or a portion of the fund, or a combination of the three, and the change or
changes, by itself or by themselves and without inclusion of any other items of increase or
decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the
established date for full funding must be determined using the following procedure:
(i) the unfunded actuarial accrued liability of the fund must be determined in
accordance with the plan provisions governing annuities and retirement benefits and the
actuarial assumptions in effect before an applicable change;
(ii) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the unfunded actuarial accrued liability amount determined under item
(i) by the established date for full funding in effect before the change must be calculated
using the interest assumption specified in subdivision 8 in effect before the change;
(iii) the unfunded actuarial accrued liability of the fund must be determined in
accordance with any new plan provisions governing annuities and benefits payable from
the fund and any new actuarial assumptions and the remaining plan provisions governing
annuities and benefits payable from the fund and actuarial assumptions in effect before
the change;
(iv) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the difference between the unfunded actuarial accrued liability amount
calculated under item (i) and the unfunded actuarial accrued liability amount calculated
under item (iii) over a period of 30 years from the end of the plan year in which the
applicable change is effective must be calculated using the applicable interest assumption
specified in subdivision 8 in effect after any applicable change;
(v) the level annual dollar or level percentage amortization contribution under item
(iv) must be added to the level annual dollar amortization contribution or level percentage
calculated under item (ii);
(vi) the period in which the unfunded actuarial accrued liability amount determined
in item (iii) is amortized by the total level annual dollar or level percentage amortization
contribution computed under item (v) must be calculated using the interest assumption
specified in subdivision 8 in effect after any applicable change, rounded to the nearest
integral number of years, but not to exceed 30 years from the end of the plan year in
which the determination of the established date for full funding using the procedure set
forth in this clause is made and not to be less than the period of years beginning in the
plan year in which the determination of the established date for full funding using the
procedure set forth in this clause is made and ending by the date for full funding in effect
before the change; and
(vii) the period determined under item (vi) must be added to the date as of which
the actuarial valuation was prepared and the date obtained is the new established date
for full funding.
(d) For the Minneapolis Employees Retirement Fund, the established date for full
funding is June 30, 2020.
(e) For the general employees retirement plan of the Public Employees Retirement
Association, the established date for full funding is June 30, 2031.
(f) For the Teachers Retirement Association, the established date for full funding is
June 30, 2037.
(g) new text begin For the St. Paul Teachers Retirement Fund Association, the established date for
full funding is June 30, 2038. 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.
new text end
new text begin (h) new text end For the retirement plans for which the annual actuarial valuation indicates an
excess of valuation assets over the actuarial accrued liability, the valuation assets in
excess of the actuarial accrued liability must be recognized as a reduction in the current
contribution requirements by an amount equal to the amortization of the excess expressed
as a level percentage of pay over a 30-year period beginning anew with each annual
actuarial valuation of the plan.
Sec. 8. new text begin REPEALER.
new text end
new text begin
Minnesota Statutes 2006, sections 127A.50, subdivision 5; 354A.12, subdivision 3d;
and 354A.29, subdivision 6,
new text end
new text begin
are repealed.
new text end