HF 3212

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/12/2023 08:15am

A bill for an act
relating to retirement; State Patrol retirement plan and public employees police
and fire retirement plan; reducing employee contribution rates; increasing
postretirement adjustments; modifying vesting and return to work requirements,
decreasing the employer contribution rate, and adding a supplemental employer
contribution for the public employees police and fire retirement plan; reducing the
investment rate of return actuarial assumption; reducing interest rates; increasing
and adding direct state aids; amending Minnesota Statutes 2022, sections 352B.02,
subdivision 1a; 353.01, subdivision 47; 353.65, subdivisions 2, 3, 3b, by adding
a subdivision; 356.215, subdivision 8; 356.415, subdivisions 1c, 1e; 356.59,
subdivisions 2, 3; proposing coding for new law in Minnesota Statutes, chapters
352B; 353.

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

ARTICLE 1

EMPLOYEE CONTRIBUTION RATE DECREASE

Section 1.

Minnesota Statutes 2022, section 352B.02, subdivision 1a, is amended to read:

Subd. 1a.

Member contributions.

(a) The member contribution is the following
percentage of the member's salary:

	deleted text begin from July 1, 2014, to June 30, 2016 deleted text end	deleted text begin 13.4 deleted text end
	deleted text begin from July 1, 2016, to June 30, 2018 deleted text end	deleted text begin 14.4 deleted text end
	deleted text begin from July 1, 2018, to June 30, 2020 deleted text end	deleted text begin 14.9 deleted text end
	deleted text begin after June 30 deleted text end new text begin July 1 new text end , 2020 new text begin , to June 30, 2023 new text end	15.4
	new text begin after June 30, 2023 new text end	new text begin 10.5 new text end

(b) These contributions must be made by deduction from salary as provided in section
352.04, subdivision 4.

(c) Contribution increases under paragraph (a) must be paid starting the first day of the
first full pay period after the effective date of the increase.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2022, section 353.65, subdivision 2, is amended to read:

Subd. 2.

Employee contribution.

(a) For members other than members who were active
members of the former Minneapolis Firefighters Relief Association on December 29, 2011,
or for members other than members who were active members of the former Minneapolis
Police Relief Association on December 29, 2011, the employee contribution is an amount
equal to the following percentage of the total salary of each member, as follows:

	deleted text begin before January 1, 2019 deleted text end	deleted text begin 10.8 percent deleted text end
	deleted text begin from January 1, 2019, through December 31, 2019 deleted text end	deleted text begin 11.3 percent deleted text end
	from January 1, 2020, deleted text begin and thereafter deleted text end new text begin to June 30, 2023 new text end	11.8 percent
	new text begin after June 30, 2023 new text end	new text begin 9.4 percent new text end

(b) For members who were active members of the former Minneapolis Firefighters Relief
Association on December 29, 2011, the employee contribution is an amount equal to eight
percent of the monthly unit value under section 353.01, subdivision 10a, multiplied by 80
and expressed as a biweekly amount for each member. The employee contribution made
by a member with at least 25 years of service credit as an active member of the former
Minneapolis Firefighters Relief Association must be deposited in the postretirement health
care savings account established under section 352.98.

(c) For members who were active members of the former Minneapolis Police Relief
Association on December 29, 2011, the employee contribution is an amount equal to eight
percent of the monthly unit value under section 353.01, subdivision 10b, multiplied by 80
and expressed as a biweekly amount for each member. The employee contribution made
by a member with at least 25 years of service credit as an active member of the former
Minneapolis Police Relief Association must be deposited in the postretirement health care
savings account established under section 352.98.

(d) Contributions under this section must be made by deduction from salary in the manner
provided in subdivision 4. Where any portion of a member's salary is paid from other than
public funds, the member's employee contribution is based on the total salary received from
all sources.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 2

POSTRETIREMENT ADJUSTMENTS

Section 1.

Minnesota Statutes 2022, section 356.415, subdivision 1c, is amended to read:

Subd. 1c.

Annual postretirement adjustments; deleted text begin PERA- deleted text end new text begin public employees new text end police and
fire new text begin retirement plan new text end .

(a) Retirement annuity, disability benefit, or survivor benefit recipients
of the public employees police and fire retirement plan are entitled to an annual postretirement
adjustment, effective as of each January 1, as follows:

(1) new text begin through December 31, 2023, new text end for each annuitant or benefit recipient who will have
been receiving an annuity or benefit for at least 36 full months as of the immediate preceding
June 30, a postretirement increase of one percent must be applied each year to the amount
of the monthly annuity or benefit of the annuitant or benefit recipient; deleted text begin or
deleted text end

(2) new text begin through December 31, 2023, new text end for each annuitant or benefit recipient who has been
receiving the annuity or benefit for at least 25 full months, but less than 36 months as of
the immediate preceding June 30, a postretirement increase of 1/12 of one percent for each
full month that the person has been receiving an annuity or benefit during the fiscal year in
which the annuity or benefit was effective must be applied each year to the amount of the
monthly annuity or benefit of the annuitant or benefit recipient deleted text begin . deleted text end new text begin ; or
new text end

new text begin (3) effective January 1, 2024, and thereafter, for each annuitant or benefit recipient who
has been receiving an annuity or benefit for at least six full months as of the immediate
preceding June 30, a postretirement increase of 1.5 percent must be applied each year to
the amount of the monthly annuity or benefit of the annuitant or benefit recipient.
new text end

(b) 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 Public Employees Retirement Association requesting that the
increase not be made.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2022, section 356.415, subdivision 1e, is amended to read:

Subd. 1e.

Annual postretirement adjustments; State Patrol retirement plan.

(a)
Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol
retirement plan are entitled to an annual postretirement adjustment, effective as of each
January 1, as follows:

(1) new text begin through December 31, 2023, new text end a postretirement increase of one percent must be applied
each year 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 as of the June 30 of the
calendar year immediately before the adjustment; deleted text begin and
deleted text end

(2) new text begin through December 31, 2023, new text end for each annuitant or benefit recipient who has been
receiving an annuity or a benefit for at least one full month, but less than 12 full months as
of the June 30 of the calendar year immediately before the adjustment, an annual
postretirement increase of 1/12 of one percent for each month that the person has been
receiving an annuity or benefit must be applied to the amount of the monthly annuity or
benefit of each annuitant or benefit recipient deleted text begin . deleted text end new text begin ; and
new text end

new text begin (3) effective January 1, 2024, and thereafter, for each annuitant or benefit recipient who
has been receiving an annuity or benefit for at least six full months as of the immediate
preceding June 30, a postretirement increase of 1.5 percent must be applied each year to
the amount of the monthly annuity or benefit of the annuitant or benefit recipient.
new text end

(b) An increase in annuity or benefit payments under this subdivision must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the applicable covered retirement plan requesting that the increase not
be made.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 3

POLICE AND FIRE PLAN EMPLOYER CONTRIBUTION RATE

Section 1.

Minnesota Statutes 2022, section 353.65, subdivision 3, is amended to read:

Subd. 3.

Employer contribution new text begin and supplemental employer contribution new text end .

(a) With
respect to members other than members who were active members of the former Minneapolis
Firefighters Relief Association on December 29, 2011, or for members other than members
who were active members of the former Minneapolis Police Relief Association on December
29, 2011, the employer contribution is an amount equal to the following percentage of the
total salary of each member, as follows:

	deleted text begin before January 1, 2019 deleted text end	deleted text begin 16.2 percent deleted text end
	deleted text begin from January 1, 2019, through December 31, 2019 deleted text end	deleted text begin 16.95 percent deleted text end
	from January 1, 2020, deleted text begin and thereafter deleted text end new text begin to June 30, 2023 new text end	17.7 percent
	new text begin from July 1, 2023, and thereafter new text end	new text begin 14.1 percent new text end

(b) With respect to members who were active members of the former Minneapolis
Firefighters Relief Association on December 29, 2011, the employer contribution is an
amount equal to the amount of the member contributions under subdivision 2, paragraph
(b).

(c) With respect to members who were active members of the former Minneapolis Police
Relief Association on December 29, 2011, the employer contribution is an amount equal
to the amount of the member contributions under subdivision 2, paragraph (c).

(d) new text begin Effective July 1, 2023, with respect to members other than members described in
paragraphs (b) and (c), the employing governmental subdivision must pay to the public
employees police and fire retirement plan a supplemental employer contribution. The
supplemental employer contribution is 3.6 percent of the total salary of each member. The
supplemental employer contribution remains in effect until the earlier of:
new text end

new text begin (1) December 31 following two consecutive annual actuarial valuations, prepared under
section 356.215 by the actuary retained by the fund under section 356.214, which indicate
that the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial
accrued liabilities; or
new text end

new text begin (2) July 1, 2048.
new text end

new text begin (e) new text end Contributions under this subdivision must be made from funds available to the
employing new text begin governmental new text end subdivision by the means and in the manner provided in section
353.28.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 4

OTHER PERA POLICE AND FIRE PLAN PROVISIONS

Section 1.

Minnesota Statutes 2022, section 353.01, subdivision 47, is amended to read:

Subd. 47.

Vesting.

(a) "Vesting" means obtaining a nonforfeitable entitlement to an
annuity or benefit from a retirement plan administered by the Public Employees Retirement
Association by having credit for sufficient allowable service under paragraph (b), (c), or
(d), whichever applies.

(b) For purposes of qualifying for an annuity or benefit as a basic or coordinated plan
member of the general employees retirement plan of the Public Employees Retirement
Association:

(1) a public employee who first became a member of the association before July 1, 2010,
is 100 percent vested when the person has accrued credit for not less than three years of
allowable service in the general employees retirement plan; and

(2) a public employee who first becomes a member of the association after June 30,
2010, is 100 percent vested when the person has accrued credit for not less than five years
of allowable service in the general employees retirement plan.

(c) For purposes of qualifying for an annuity or benefit as a member of the local
government correctional service retirement plan:

(1) a public employee who first became a member of the association before July 1, 2010,
is 100 percent vested when the person has accrued credit for not less than three years of
allowable service in the local government correctional service retirement plan; and

(2) a public employee who first becomes a member of the association after June 30,
2010, is vested at the following percentages when the person has accrued credit for allowable
service in the local government correctional service retirement plan, as follows:

(i) 50 percent after five years;

(ii) 60 percent after six years;

(iii) 70 percent after seven years;

(iv) 80 percent after eight years;

(v) 90 percent after nine years; and

(vi) 100 percent after ten years.

(d) For purposes of qualifying for an annuity or benefit as a member of the public
employees police and fire retirement plan:

(1) a public employee who first became a member of the association before July 1, 2010,
is 100 percent vested when the person has accrued credit for not less than three years of
allowable service in the public employees police and fire retirement plan;

(2) a public employee new text begin to whom clause (4) does not apply and new text end who first deleted text begin becomes deleted text end new text begin became
new text end a member of the association after June 30, 2010, and before July 1, 2014, is vested at the
following percentages when the person has accrued credited allowable service in the public
employees police and fire retirement plan, as follows:

(i) 50 percent after five years;

(ii) 60 percent after six years;

(iii) 70 percent after seven years;

(iv) 80 percent after eight years;

(v) 90 percent after nine years; and

(vi) 100 percent after ten years; deleted text begin and
deleted text end

(3) a public employee new text begin to whom clause (4) does not apply and new text end who first becomes a member
of the association after June 30, 2014, is vested at the following percentages when the person
has accrued credit for allowable service in the public employees police and fire retirement
plan, as follows:

(i) 50 percent after ten years;

(ii) 55 percent after 11 years;

(iii) 60 percent after 12 years;

(iv) 65 percent after 13 years;

(v) 70 percent after 14 years;

(vi) 75 percent after 15 years;

(vii) 80 percent after 16 years;

(viii) 85 percent after 17 years;

(ix) 90 percent after 18 years;

(x) 95 percent after 19 years; and

(xi) 100 percent after 20 or more years deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) a public employee who first became a member of the association after June 30, 2010,
and who is a member of the association after June 30, 2023, is 100 percent vested when the
person has accrued credit for not less than ten years of allowable service in the public
employees police and fire retirement plan.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 2.

new text begin [353.6513] REEMPLOYMENT OF RETIREE.
new text end

new text begin (a) Notwithstanding any state law to the contrary, including section 353.37, if an eligible
person described in paragraph (b) is receiving an annuity from the public employees police
and fire retirement plan, the eligible person may return to employment with a governmental
subdivision on or after the effective date without any reduction or suspension of the person's
annuity.
new text end

new text begin (b) An eligible person is a person who:
new text end

new text begin (1) has been separated from public service for at least 30 days; and
new text end

new text begin (2) is returning with the approval of the chief of the police or fire department or director
of the agency to a position that is covered by the public employees police and fire retirement
plan or the State Patrol retirement plan.
new text end

new text begin (c) This section expires December 31, 2032.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

ARTICLE 5

INVESTMENT RATE OF RETURN ASSUMPTION

Section 1.

Minnesota Statutes 2022, section 356.215, subdivision 8, is amended to read:

Subd. 8.

Actuarial assumptions.

(a) The actuarial valuation must use the applicable
following investment return assumption:

plan	investment return assumption
general state employees retirement plan	7.5%
correctional state employees retirement plan	7.5
State Patrol retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
legislators retirement plan, and for the constitutional officers calculation of total plan liabilities	0
judges retirement plan	7.5
general public employees retirement plan	7.5
public employees police and fire retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
local government correctional service retirement plan	7.5
teachers retirement plan	7.5
St. Paul teachers retirement plan	7.5
Bloomington Fire Department Relief Association	6
local monthly benefit volunteer firefighter relief associations	5
monthly benefit retirement plans in the statewide volunteer firefighter retirement plan	6

(b) The actuarial valuation for each of the covered retirement plans listed in section
356.415, subdivision 2, and the St. Paul Teachers Retirement Fund Association must take
into account the postretirement adjustment rate or rates applicable to the plan as specified
in section 354A.29, subdivision 7, or 356.415, whichever applies.

(c) The actuarial valuation must use the applicable salary increase and payroll growth
assumptions found in the appendix to the standards for actuarial work adopted by the
Legislative Commission on Pensions and Retirement pursuant to section 3.85, subdivision
10. The appendix must be updated whenever new assumptions have been approved or
deemed approved under subdivision 18.

(d) The assumptions set forth in the appendix to the standards for actuarial work 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2023.
new text end

Sec. 2.

Minnesota Statutes 2022, section 356.59, subdivision 2, is amended to read:

Subd. 2.

Minnesota State Retirement System.

new text begin (a) new text end The interest rates for all retirement
plans administered by the Minnesota State Retirement System new text begin other than the State Patrol
retirement plan new text end are as follows:

			Annual		Monthly
	before July 1, 2015	8.5 percent		0.71 percent
	from July 1, 2015, to June 30, 2018	8.0 percent		0.667 percent
	after June 30, 2018	7.5 percent		0.625 percent

new text begin (b) For the State Patrol retirement plan, the interest rates are as follows:
new text end

			new text begin Annual new text end		new text begin Monthly new text end
	new text begin before July 1, 2015 new text end	new text begin 8.5 percent new text end		new text begin 0.71 percent new text end
	new text begin from July 1, 2015, to June 30, 2018 new text end	new text begin 8.0 percent new text end		new text begin 0.667 percent new text end
	new text begin from July 1, 2018, to June 30, 2023 new text end	new text begin 7.5 percent new text end		new text begin 0.625 percent new text end
	new text begin after June 30, 2023 new text end	new text begin 7.0 percent new text end		new text begin 0.583 percent new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2023.
new text end

Sec. 3.

Minnesota Statutes 2022, section 356.59, subdivision 3, is amended to read:

Subd. 3.

Public Employees Retirement Association.

new text begin (a) new text end The interest rates for all
retirement plans administered by the Public Employees Retirement Association new text begin other than
the public employees police and fire retirement plan new text end are as follows:

	before July 1, 2015	8.5 percent
	from July 1, 2015, to June 30, 2018	8.0 percent
	after June 30, 2018	7.5 percent

new text begin (b) For the public employees police and fire retirement plan, the interest rates are as
follows:
new text end

			new text begin Annual new text end		new text begin Monthly new text end
	new text begin before July 1, 2015 new text end	new text begin 8.5 percent new text end		new text begin 0.71 percent new text end
	new text begin from July 1, 2015, to June 30, 2018 new text end	new text begin 8.0 percent new text end		new text begin 0.667 percent new text end
	new text begin from July 1, 2018, to June 30, 2023 new text end	new text begin 7.5 percent new text end		new text begin 0.625 percent new text end
	new text begin after June 30, 2023 new text end	new text begin 7.0 percent new text end		new text begin 0.583 percent new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2023.
new text end

ARTICLE 6

DIRECT AIDS TO PENSION PLANS

Section 1.

new text begin [352B.025] DIRECT STATE AID; STATE PATROL RETIREMENT
FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Aid authorization. new text end

new text begin Beginning in 2023, the state shall pay $14,500,000
annually to the State Patrol retirement fund.
new text end

new text begin Subd. 2. new text end

new text begin Aid appropriation. new text end

new text begin The commissioner of management and budget shall pay
the aid amount under subdivision 1 on or before October 1, 2023, and October 1 of each
year thereafter. The amount required is appropriated annually from the general fund to the
commissioner of management and budget.
new text end

new text begin Subd. 3. new text end

new text begin Aid expiration. new text end

new text begin The aid under subdivision 1 continues until the earlier of:
new text end

new text begin (1) December 31 following two consecutive annual actuarial valuations, prepared under
section 356.215 by the actuary retained by the fund under section 356.214, which indicate
that the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial
accrued liabilities; or
new text end

new text begin (2) July 1, 2048.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2022, section 353.65, subdivision 3b, is amended to read:

Subd. 3b.

Direct state aid.

(a) The state shall pay deleted text begin $4,500,000 deleted text end new text begin $9,000,000 new text end on deleted text begin October
1, 2018, and deleted text end October 1, deleted text begin 2019 deleted text end new text begin 2023 new text end , to the public employees police and fire retirement plan.

new text begin (b) new text end By October 1 of each year after deleted text begin 2019 deleted text end new text begin 2023 new text end , the state shall pay deleted text begin $9,000,000 deleted text end new text begin $84,000,000
new text end to the public employees police and fire retirement plan.

new text begin (c) new text end The commissioner of management and budget shall pay the aid specified in this
subdivision. The amount required is annually appropriated from the general fund to the
commissioner of management and budget.

deleted text begin (b) The aid under paragraph (a) continues until the earlier of:
deleted text end

deleted text begin (1) the first day of the fiscal year following the fiscal year in which the actuarial value
of assets of the fund equals or exceeds 100 percent of the actuarial accrued liabilities as
reported by the actuary retained under section 356.214 in the annual actuarial valuation
prepared under section 356.215; or
deleted text end

deleted text begin (2) July 1, 2048.
deleted text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2022, section 353.65, is amended by adding a subdivision to
read:

new text begin Subd. 3c. new text end

new text begin Aid expiration. new text end

new text begin The aid under subdivision 3b continues until the earlier of:
new text end

new text begin (1) December 31 following two consecutive annual actuarial valuations prepared under
section 356.215 by the actuary retained by the fund under section 356.214 that indicate that
the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial accrued
liabilities; or
new text end

new text begin (2) July 1, 2048.
new text end

new text begin EFFECTIVE DATE. new text end

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