1.1                          A bill for an act 
  1.2             relating to retirement; various public pension plans 
  1.3             and retirement programs; including seasonal revenue 
  1.4             department employees in general state employee 
  1.5             retirement plan coverage; modifying various pension 
  1.6             provisions relating to the Minnesota state colleges 
  1.7             and universities, the higher education individual 
  1.8             retirement account plan, and the higher education 
  1.9             supplemental retirement plan; requiring a study by the 
  1.10            state board of investment on tax-sheltered annuities 
  1.11            and the evaluation of insurance companies providing 
  1.12            tax-sheltered annuities; providing for the 
  1.13            requalification for police and paid firefighter relief 
  1.14            association amortization state aid in certain 
  1.15            instances; clarifying the handling of unclaimed money 
  1.16            and property obtained by the Minneapolis police 
  1.17            department; modifying the retirement date for certain 
  1.18            Hibbing high school teachers; authorizing certain 
  1.19            Minnesota correctional facility-Red Wing employees to 
  1.20            elect correctional state employee retirement plan 
  1.21            coverage; authorizing various correctional employees 
  1.22            to transfer prior eligible service credit to the 
  1.23            correctional state employee retirement plan; 
  1.24            authorizing certain Minnesota state colleges and 
  1.25            universities faculty a limited exemption from the 
  1.26            general state employees retirement plan reemployed 
  1.27            annuitant earnings limitation; authorizing the 
  1.28            teachers retirement association to accept a 
  1.29            beneficiary designation change form filed late; 
  1.30            authorizing certain public employees retirement 
  1.31            association disabilitants to purchase service credit 
  1.32            for a period of uncredited St. Paul parks and 
  1.33            recreation division employment; amending Minnesota 
  1.34            Statutes 1996, sections 69.051, subdivisions 1, 1a, 
  1.35            and 1b; 136F.45, by adding subdivisions; 352.01, 
  1.36            subdivisions 2a and 2b; 354B.21, subdivision 3; 
  1.37            354C.11, 356.20, by adding a subdivision; 356.219; 
  1.38            423A.02, subdivision 2; 423B.06, subdivisions 1 and 
  1.39            1a; 424A.02, subdivision 10; Laws 1996, chapter 408, 
  1.40            article 8, sections 21; 22, subdivision 1; and 24; 
  1.41            repealing Minnesota Statutes 1996, section 356.218; 
  1.42            and Laws 1995, chapter 262, article 1, sections 8, 9, 
  1.43            10, 11, and 12. 
  1.44  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.1                              ARTICLE 1 
  2.2                  GENERAL STATEWIDE EMPLOYEE PENSION  
  2.3                          PLAN MODIFICATIONS 
  2.4      Section 1.  Minnesota Statutes 1996, section 136F.45, is 
  2.5   amended by adding a subdivision to read: 
  2.6      Subd. 3.  [TAX-SHELTERED ANNUITY ADMINISTRATIVE 
  2.7   EXPENSES.] (a) The reasonable and necessary administrative 
  2.8   expenses of the tax-sheltered annuity program must be paid by 
  2.9   the financial institutions authorized by the board of trustees 
  2.10  of the Minnesota state colleges and universities system to 
  2.11  provide tax-sheltered annuity investment options. 
  2.12     (b) Annually, the board of trustees shall establish a 
  2.13  budget for the tax-sheltered annuity program administrative 
  2.14  expenses.  The total budgeted administrative expense must be 
  2.15  allocated among the applicable financial institutions by the 
  2.16  board of trustees. 
  2.17     Sec. 2.  Minnesota Statutes 1996, section 136F.45, is 
  2.18  amended by adding a subdivision to read: 
  2.19     Subd. 4.  [PERIODIC REVIEW.] If the board so chooses, it 
  2.20  may solicit bids or proposals for options under subdivision 1.  
  2.21  The board may retain consulting services to assist it in 
  2.22  soliciting and evaluating bids or proposals and in the periodic 
  2.23  review of companies offering options under subdivision 1.  The 
  2.24  board may annually establish a budget for its costs in the 
  2.25  soliciting, evaluating, and periodic review processes.  The 
  2.26  board may charge a proportional share of all costs related to 
  2.27  the periodic review to each company currently under contract and 
  2.28  may charge a proportional share of all costs related to 
  2.29  soliciting and evaluating bids or proposals to each company 
  2.30  selected by the board.  Contracts must provide that all options 
  2.31  in subdivision 1 must:  (1) be presented in an unbiased manner, 
  2.32  (2) be reported on a periodic basis to all employees 
  2.33  participating in the tax-sheltered annuity program, and (3) not 
  2.34  be the subject of unreasonable solicitation of state employees 
  2.35  to participate in the program.  The contract may not permit any 
  2.36  person to jeopardize the tax-deferred status of money invested 
  3.1   by state employees under this section.  All costs or fees in 
  3.2   relation to the bid solicitation and evaluation process for the 
  3.3   options provided under subdivision 1 must be paid by the 
  3.4   underwriting companies ultimately selected by the board. 
  3.5      Sec. 3.  Minnesota Statutes 1996, section 352.01, 
  3.6   subdivision 2a, is amended to read: 
  3.7      Subd. 2a.  [INCLUDED EMPLOYEES.] (a) "State employee" 
  3.8   includes: 
  3.9      (1) employees of the Minnesota historical society; 
  3.10     (2) employees of the state horticultural society; 
  3.11     (3) employees of the Disabled American Veterans, Department 
  3.12  of Minnesota, Veterans of Foreign Wars, Department of Minnesota, 
  3.13  if employed before July 1, 1963; 
  3.14     (4) employees of the Minnesota crop improvement 
  3.15  association; 
  3.16     (5) employees of the adjutant general who are paid from 
  3.17  federal funds and who are not covered by any federal civilian 
  3.18  employees retirement system; 
  3.19     (6) employees of the state universities employed under the 
  3.20  university activities program; 
  3.21     (7) currently contributing employees covered by the system 
  3.22  who are temporarily employed by the legislature during a 
  3.23  legislative session or any currently contributing employee 
  3.24  employed for any special service as defined in clause (8) of 
  3.25  subdivision 2b; 
  3.26     (8) employees of the armory building commission; 
  3.27     (9) permanent employees of the legislature and persons 
  3.28  employed or designated by the legislature or by a legislative 
  3.29  committee or commission or other competent authority to conduct 
  3.30  a special inquiry, investigation, examination, or installation; 
  3.31     (10) trainees who are employed on a full-time established 
  3.32  training program performing the duties of the classified 
  3.33  position for which they will be eligible to receive immediate 
  3.34  appointment at the completion of the training period; 
  3.35     (11) employees of the Minnesota safety council; 
  3.36     (12) any employees on authorized leave of absence from the 
  4.1   transit operating division of the former metropolitan transit 
  4.2   commission who are employed by the labor organization which is 
  4.3   the exclusive bargaining agent representing employees of the 
  4.4   transit operating division; 
  4.5      (13) employees of the metropolitan council, metropolitan 
  4.6   parks and open space commission, metropolitan sports facilities 
  4.7   commission, metropolitan mosquito control commission, or 
  4.8   metropolitan radio board unless excluded or covered by another 
  4.9   public pension fund or plan under section 473.415, subdivision 
  4.10  3; 
  4.11     (14) judges of the tax court; and 
  4.12     (15) personnel employed on June 30, 1992, by the University 
  4.13  of Minnesota in the management, operation, or maintenance of its 
  4.14  heating plant facilities, whose employment transfers to an 
  4.15  employer assuming operation of the heating plant facilities, so 
  4.16  long as the person is employed at the University of Minnesota 
  4.17  heating plant by that employer or by its successor organization; 
  4.18     (16) seasonal help in the classified service employed by 
  4.19  the department of revenue; and 
  4.20     (17) a person who renders teaching or other service for the 
  4.21  Minnesota state colleges and universities system and who also 
  4.22  renders service on a part-time basis for an employer with 
  4.23  employees covered by the general state employees retirement plan 
  4.24  of the Minnesota state retirement system, for all service with 
  4.25  the Minnesota state colleges and universities system, if the 
  4.26  person's nonteaching service comprises at least 50 percent of 
  4.27  the combined total salary received by the person as determined 
  4.28  by the chancellor of the Minnesota state colleges and 
  4.29  universities system or if the person is certified for general 
  4.30  state employees retirement plan coverage by the chancellor of 
  4.31  the Minnesota state colleges and universities system. 
  4.32     (b) Employees specified in paragraph (a), clause (15), are 
  4.33  included employees under paragraph (a) providing that if 
  4.34  employer and employee contributions are made in a timely manner 
  4.35  in the amounts required by section 352.04.  Employee 
  4.36  contributions must be deducted from salary.  Employer 
  5.1   contributions are the sole obligation of the employer assuming 
  5.2   operation of the University of Minnesota heating plant 
  5.3   facilities or any successor organizations to that employer. 
  5.4      Sec. 4.  Minnesota Statutes 1996, section 352.01, 
  5.5   subdivision 2b, is amended to read: 
  5.6      Subd. 2b.  [EXCLUDED EMPLOYEES.] "State employee" does not 
  5.7   include: 
  5.8      (1) elective state officers; 
  5.9      (2) students employed by the University of Minnesota, the 
  5.10  state universities, and community colleges unless approved for 
  5.11  coverage by the board of regents, the state university board, or 
  5.12  the state board for community colleges, as the case may be; 
  5.13     (3) employees who are eligible for membership in the state 
  5.14  teachers retirement association except employees of the 
  5.15  department of children, families, and learning who have chosen 
  5.16  or may choose to be covered by the Minnesota state retirement 
  5.17  system instead of the teachers retirement association; 
  5.18     (4) employees of the University of Minnesota who are 
  5.19  excluded from coverage by action of the board of regents; 
  5.20     (5) officers and enlisted personnel in the national guard 
  5.21  and the naval militia who are assigned to permanent peacetime 
  5.22  duty and who under federal law are or are required to be members 
  5.23  of a federal retirement system; 
  5.24     (6) election officers; 
  5.25     (7) persons engaged in public work for the state but 
  5.26  employed by contractors when the performance of the contract is 
  5.27  authorized by the legislature or other competent authority; 
  5.28     (8) officers and employees of the senate and house of 
  5.29  representatives or a legislative committee or commission who are 
  5.30  temporarily employed; 
  5.31     (9) receivers, jurors, notaries public, and court employees 
  5.32  who are not in the judicial branch as defined in section 43A.02, 
  5.33  subdivision 25, except referees and adjusters employed by the 
  5.34  department of labor and industry; 
  5.35     (10) patient and inmate help in state charitable, penal, 
  5.36  and correctional institutions including the Minnesota veterans 
  6.1   home; 
  6.2      (11) persons employed for professional services where the 
  6.3   service is incidental to regular professional duties and whose 
  6.4   compensation is paid on a per diem basis; 
  6.5      (12) employees of the Sibley House Association; 
  6.6      (13) the members of any state board or commission who serve 
  6.7   the state intermittently and are paid on a per diem basis; the 
  6.8   secretary, secretary-treasurer, and treasurer of those boards if 
  6.9   their compensation is $5,000 or less per year, or, if they are 
  6.10  legally prohibited from serving more than three years; and the 
  6.11  board of managers of the state agricultural society and its 
  6.12  treasurer unless the treasurer is also its full-time secretary; 
  6.13     (14) state troopers; 
  6.14     (15) temporary employees of the Minnesota state fair 
  6.15  employed on or after July 1 for a period not to extend beyond 
  6.16  October 15 of that year; and persons employed at any time by the 
  6.17  state fair administration for special events held on the 
  6.18  fairgrounds; 
  6.19     (16) emergency employees in the classified service; except 
  6.20  that if an emergency employee, within the same pay period, 
  6.21  becomes a provisional or probationary employee on other than a 
  6.22  temporary basis, the employee shall be considered a "state 
  6.23  employee" retroactively to the beginning of the pay period; 
  6.24     (17) persons described in section 352B.01, subdivision 2, 
  6.25  clauses (2) to (5); 
  6.26     (18) temporary employees in the classified service, and 
  6.27  temporary employees in the unclassified service appointed for a 
  6.28  definite period of not more than six months and employed less 
  6.29  than six months in any one-year period and seasonal help in the 
  6.30  classified service employed by the department of revenue; 
  6.31     (19) trainee employees, except those listed in subdivision 
  6.32  2a, clause (10); 
  6.33     (20) persons whose compensation is paid on a fee basis; 
  6.34     (21) state employees who in any year have credit for 12 
  6.35  months service as teachers in the public schools of the state 
  6.36  and as teachers are members of the teachers retirement 
  7.1   association or a retirement system in St. Paul, Minneapolis, or 
  7.2   Duluth; 
  7.3      (22) employees of the adjutant general employed on an 
  7.4   unlimited intermittent or temporary basis in the classified and 
  7.5   unclassified service for the support of army and air national 
  7.6   guard training facilities; 
  7.7      (23) chaplains and nuns who are excluded from coverage 
  7.8   under the federal Old Age, Survivors, Disability, and Health 
  7.9   Insurance Program for the performance of service as specified in 
  7.10  United States Code, title 42, section 410(a)(8)(A), as amended, 
  7.11  if no irrevocable election of coverage has been made under 
  7.12  section 3121(r) of the Internal Revenue Code of 1986, as amended 
  7.13  through December 31, 1992; 
  7.14     (24) examination monitors employed by departments, 
  7.15  agencies, commissions, and boards to conduct examinations 
  7.16  required by law; 
  7.17     (25) persons appointed to serve as members of fact-finding 
  7.18  commissions or adjustment panels, arbitrators, or labor referees 
  7.19  under chapter 179; 
  7.20     (26) temporary employees employed for limited periods under 
  7.21  any state or federal program for training or rehabilitation 
  7.22  including persons employed for limited periods from areas of 
  7.23  economic distress except skilled and supervisory personnel and 
  7.24  persons having civil service status covered by the system; 
  7.25     (27) full-time students employed by the Minnesota 
  7.26  historical society intermittently during part of the year and 
  7.27  full-time during the summer months; 
  7.28     (28) temporary employees, appointed for not more than six 
  7.29  months, of the metropolitan council and of any of its statutory 
  7.30  boards, if the board members are appointed by the metropolitan 
  7.31  council; 
  7.32     (29) persons employed in positions designated by the 
  7.33  department of employee relations as student workers; 
  7.34     (30) members of trades employed by the successor to the 
  7.35  metropolitan waste control commission with trade union pension 
  7.36  plan coverage under a collective bargaining agreement first 
  8.1   employed after June 1, 1977; 
  8.2      (31) persons employed in subsidized on-the-job training, 
  8.3   work experience, or public service employment as enrollees under 
  8.4   the federal Comprehensive Employment and Training Act after 
  8.5   March 30, 1978, unless the person has as of the later of March 
  8.6   30, 1978, or the date of employment sufficient service credit in 
  8.7   the retirement system to meet the minimum vesting requirements 
  8.8   for a deferred annuity, or the employer agrees in writing on 
  8.9   forms prescribed by the director to make the required employer 
  8.10  contributions, including any employer additional contributions, 
  8.11  on account of that person from revenue sources other than funds 
  8.12  provided under the federal Comprehensive Employment and Training 
  8.13  Act, or the person agrees in writing on forms prescribed by the 
  8.14  director to make the required employer contribution in addition 
  8.15  to the required employee contribution; 
  8.16     (32) off-duty peace officers while employed by the 
  8.17  metropolitan council; 
  8.18     (33) persons who are employed as full-time police officers 
  8.19  by the metropolitan council and as police officers are members 
  8.20  of the public employees police and fire fund; 
  8.21     (34) persons who are employed as full-time firefighters by 
  8.22  the department of military affairs and as firefighters are 
  8.23  members of the public employees police and fire fund; 
  8.24     (35) foreign citizens with a work permit of less than three 
  8.25  years, or an H-1b/JV visa valid for less than three years of 
  8.26  employment, unless notice of extension is supplied which allows 
  8.27  them to work for three or more years as of the date the 
  8.28  extension is granted, in which case they are eligible for 
  8.29  coverage from the date extended; and 
  8.30     (36) persons who are employed by the board of trustees of 
  8.31  the Minnesota state colleges and universities and who elect to 
  8.32  remain members of the public employees retirement association or 
  8.33  the Minneapolis employees retirement fund, whichever applies, 
  8.34  under section 136C.75. 
  8.35     Sec. 5.  Minnesota Statutes 1996, section 354B.21, 
  8.36  subdivision 3, is amended to read: 
  9.1      Subd 3.  [DEFAULT COVERAGE.] (a) If an eligible person 
  9.2   fails to elect coverage by the plan under subdivision 2 or if 
  9.3   the person fails to make a timely election, the following 
  9.4   retirement coverage applies: 
  9.5      (1) for employees of the board who are employed in faculty 
  9.6   positions in the technical colleges, in the state universities 
  9.7   or in the community colleges, the retirement coverage is by the 
  9.8   plan established by this chapter; 
  9.9      (2) for employees of the board who are employed in faculty 
  9.10  positions in the technical colleges, the retirement coverage is 
  9.11  by the plan established by this chapter unless on June 30, 1997, 
  9.12  the employee was a member of the teachers retirement association 
  9.13  established under chapter 354 and then the retirement coverage 
  9.14  is by the teachers retirement association, or, unless the 
  9.15  employee was a member of a first class city teacher retirement 
  9.16  fund established under chapter 354A on June 30, 1995, and then 
  9.17  the retirement coverage is by the Duluth teachers retirement 
  9.18  fund association if the person was a member of that plan on June 
  9.19  30, 1995, or the Minneapolis teachers retirement fund 
  9.20  association if the person was a member of that plan on June 30, 
  9.21  1995, or the St. Paul teachers retirement fund association if 
  9.22  the person was a member of that plan on June 30, 1995; and 
  9.23     (3) for employees of the board who are employed in eligible 
  9.24  unclassified administrative positions, the retirement coverage 
  9.25  is by the plan established by this chapter. 
  9.26     (b) If an employee fails to correctly certify prior 
  9.27  membership in the teachers retirement association to the 
  9.28  Minnesota state colleges and universities system, the system 
  9.29  shall not pay interest on employee contributions, employer 
  9.30  contributions, and additional employer contributions to the 
  9.31  teachers retirement association under section 354.52, 
  9.32  subdivision 4. 
  9.33     Sec. 6.  Minnesota Statutes 1996, section 354C.11, is 
  9.34  amended to read: 
  9.35     354C.11 [COVERAGE.] 
  9.36     Personnel employed by the board of trustees of the 
 10.1   Minnesota state colleges and universities who are in the 
 10.2   unclassified service of the state, and who have completed at 
 10.3   least two years of employment by the board or a predecessor 
 10.4   board with a full-time contract are participants in the 
 10.5   supplemental retirement plan, effective on the next following 
 10.6   July 1, if the person is employed in an eligible unclassified 
 10.7   administrative position as defined in section 354B.20, 
 10.8   subdivision 6, or is employed in an employment classification 
 10.9   included in one of the following collective bargaining units 
 10.10  under section 179A.10, subdivision 2: 
 10.11     (1) the state university instructional unit; 
 10.12     (2) the community college instructional unit; 
 10.13     (3) the technical college instructional unit; and 
 10.14     (4) the state university administrative unit. 
 10.15     Once a person qualifies for participation in the 
 10.16  supplemental plan, all subsequent service by the person as an 
 10.17  unclassified employee of the state university board, the state 
 10.18  board for community colleges, the higher education board, or the 
 10.19  technical colleges is covered by the supplemental plan. 
 10.20     Sec. 7.  [PURCHASE OF SERVICE CREDIT AUTHORIZATION.] 
 10.21     Subdivision 1.  [ELIGIBLE EMPLOYEE.] (a) An eligible 
 10.22  employee described in paragraph (b) is eligible to purchase 
 10.23  service credit in the Minnesota state retirement system general 
 10.24  plan as specified in subdivision 2. 
 10.25     (b) An eligible employee is a person who: 
 10.26     (1) is employed in the classified service by the department 
 10.27  of revenue as seasonal help, newly authorized to receive 
 10.28  prospective service credit under section 3; and 
 10.29     (2) was employed in the classified service by the 
 10.30  department of revenue as seasonal help in each of the last three 
 10.31  fiscal years. 
 10.32     Subd. 2.  [RETIREMENT COVERAGE.] An eligible employee under 
 10.33  subdivision 1, paragraph (b), is entitled to purchase service 
 10.34  credit in the Minnesota state retirement system general plan for 
 10.35  the period of service prior to the effective date of section 3 
 10.36  as seasonal help in the classified service by the department of 
 11.1   revenue.  Any period for which the individual has received 
 11.2   service credit or is eligible to receive service credit in any 
 11.3   other Minnesota public pension plan, other than a volunteer fire 
 11.4   plan, is not eligible for purchase. 
 11.5      Subd. 3.  [AMOUNT.] (a) To receive service credit under 
 11.6   subdivision 2, the Minnesota state retirement system must 
 11.7   receive an amount equal to the actuarial present value, on the 
 11.8   date of payment, as calculated by the actuary retained by the 
 11.9   legislative commission on pensions and retirement, of the amount 
 11.10  of the additional retirement annuity obtained by the acquisition 
 11.11  of the additional service credit in this section.  Calculation 
 11.12  of this amount must be made using the preretirement interest 
 11.13  rate applicable to the Minnesota state retirement system general 
 11.14  plan specified in Minnesota Statutes, section 356.215, 
 11.15  subdivision 4d, and the mortality table adopted for the pension 
 11.16  plan.  The calculation must assume continuous future service in 
 11.17  the association until, and retirement at, the age at which the 
 11.18  minimum requirements of the fund for normal retirement or 
 11.19  retirement with an annuity unreduced for retirement at an early 
 11.20  age, including Minnesota Statutes, section 356.30, are met with 
 11.21  the additional service credit purchased.  The calculation must 
 11.22  assume that the individual accrues future service credit each 
 11.23  year based on a three-year average using the most recent three 
 11.24  year period prior to the effective date of section 3 for service 
 11.25  provided compared to full-time service.  The salary used in the 
 11.26  calculation must be the eligible person's actual current hourly 
 11.27  salary.  The calculation must assume a future salary history 
 11.28  that includes annual salary increases at the applicable salary 
 11.29  increase rate for the plan specified in Minnesota Statutes, 
 11.30  section 356.215, subdivision 4d. 
 11.31     (b) Payment must be made in one lump sum before July 1, 
 11.32  1998, or before retirement, whichever is earlier. 
 11.33     (c) Payment of the amount calculated under this subdivision 
 11.34  must be made by the eligible employee.  However, the Minnesota 
 11.35  department of revenue may, at its discretion, pay all or any 
 11.36  portion of the payment amount that exceeds an amount equal to 
 12.1   the employee contribution rates in effect during the periods of 
 12.2   prior service applied to the actual salary rates in effect 
 12.3   during the periods of prior service, plus interest at the rate 
 12.4   of 8-1/2 percent a year compounded annually from the date on 
 12.5   which the contributions would have been made if retirement 
 12.6   coverage were authorized at the time, to the date on which the 
 12.7   payment is made.  If the department agrees to payments under 
 12.8   this paragraph, the eligible employee must make the employee 
 12.9   payments required under this paragraph before July 1, 1998.  If 
 12.10  that employee payment is made, the department payment under this 
 12.11  paragraph must be remitted to the executive director of the 
 12.12  Minnesota state retirement system within 60 days of receipt by 
 12.13  the executive director of the employee payments specified under 
 12.14  this paragraph. 
 12.15     Subd. 4.  [SERVICE CREDIT GRANT.] Service credit for the 
 12.16  purchase period must be granted by the Minnesota state 
 12.17  retirement system to the account of the eligible employee upon 
 12.18  receipt of the purchase payment amount specified in subdivision 
 12.19  3. 
 12.20     Sec. 8.  [STUDY.] 
 12.21     The state board of investment, in consultation with the 
 12.22  commissioner of commerce, shall study and make recommendations 
 12.23  to the legislature on the most desirable method for evaluating 
 12.24  insurance companies for purposes of Minnesota Statutes, section 
 12.25  356.24, subdivision 1, and on the most desirable method for the 
 12.26  use of section 403(b), Internal Revenue Code, annuities and the 
 12.27  most effective delivery mechanism to employees.  The board shall 
 12.28  report to the legislative commission on pensions and retirement 
 12.29  by February 1, 1998. 
 12.30     Sec. 9.  [REPEALER.] 
 12.31     Laws 1995, chapter 262, article 1, sections 8, 9, 10, 11, 
 12.32  and 12, are repealed. 
 12.33     Sec. 10.  [EFFECTIVE DATE.] 
 12.34     Sections 1 to 9 are effective on July 1, 1997. 
 12.35                             ARTICLE 2 
 12.36                     PENSION MODIFICATIONS WITH 
 13.1                         A LOCAL APPLICATION 
 13.2      Section 1.  Minnesota Statutes 1996, section 423A.02, 
 13.3   subdivision 2, is amended to read: 
 13.4      Subd. 2.  [CONTINUED ELIGIBILITY.] A municipality that has 
 13.5   qualified for amortization state aid under subdivision 1 on 
 13.6   December 31, 1984, and has an additional municipal contribution 
 13.7   payable under section 353A.09, subdivision 5, paragraph (b), as 
 13.8   of the most recent December 31, continues upon application to be 
 13.9   entitled to receive amortization state aid under subdivision 1 
 13.10  and supplementary amortization state aid under subdivision 1a, 
 13.11  after the local police or salaried firefighters' relief 
 13.12  association has been consolidated into the public employees 
 13.13  police and fire fund.  If a municipality loses entitlement for 
 13.14  amortization state aid and supplementary amortization state aid 
 13.15  in any year because of not having an additional municipal 
 13.16  contribution, the municipality is not entitled to the aid 
 13.17  amounts in any subsequent year.  If the actuarial assumptions 
 13.18  specified in section 356.215 are changed in 1997, and the change 
 13.19  results in a municipality having an additional municipal 
 13.20  contribution, and the municipality had previously lost 
 13.21  entitlement for amortization aid and supplementary amortization 
 13.22  due to not having an additional municipal contribution, then the 
 13.23  municipality is again entitled to receive amortization aid and 
 13.24  supplementary amortization aid in the same amount as it 
 13.25  previously received.  
 13.26     Sec. 2.  Minnesota Statutes 1996, section 423B.06, 
 13.27  subdivision 1, is amended to read: 
 13.28     Subdivision 1.  [SOURCES.] The fund is derived from the 
 13.29  following sources: 
 13.30     (1) gifts provided to the fund; 
 13.31     (2) rewards received by active members of the Minneapolis 
 13.32  police department; 
 13.33     (3) money coming into the hands of active members of the 
 13.34  Minneapolis police department in their official capacity and 
 13.35  remaining unclaimed for six months; 
 13.36     (4) proceeds from sales of property coming into the hands 
 14.1   of active members of the Minneapolis police department in their 
 14.2   official capacity and remaining unclaimed for six months, upon 
 14.3   sale by the chief of police of the city; 
 14.4      (5) an amount equal to the minimum percentage specified in 
 14.5   section 69.77, subdivision 2a, of the salary of a first grade 
 14.6   patrol officer deducted from the monthly salary of each active 
 14.7   member; 
 14.8      (6) all money derived from taxation as provided by sections 
 14.9   69.77, subdivisions 2b, 2c, 2d, 2e, and 2f; and 423A.01, 
 14.10  subdivision 2; 
 14.11     (7) all money received from the state amortization aid 
 14.12  programs under section 423A.02, to fund the unfunded actuarial 
 14.13  accrued liability of the association; 
 14.14     (8) all money received from the state under chapter 69, as 
 14.15  state police aid; 
 14.16     (9) all money provided by the state for the association in 
 14.17  addition to clauses (7) and (8); 
 14.18     (10) all money derived from taxation by the municipality 
 14.19  for the support of the association and the payment of pensions; 
 14.20  and 
 14.21     (11) money from the investment of, earnings on, and 
 14.22  interest on the assets of the fund. 
 14.23     Sec. 3.  Minnesota Statutes 1996, section 423B.06, 
 14.24  subdivision 1a, is amended to read: 
 14.25     Subd. 1a.  [SALES OF UNCLAIMED PROPERTY.] The chief of 
 14.26  police of the city shall sell property coming into the hands of 
 14.27  active members of the Minneapolis police department in their 
 14.28  official capacity and remaining unclaimed for six months.  
 14.29     Sec. 4.  [TEACHER RETIREMENT DATE.] 
 14.30     Notwithstanding Minnesota Statutes, section 354.44, 
 14.31  subdivision 4, teachers terminating active teaching service at 
 14.32  the high school in independent school district No. 701, Hibbing, 
 14.33  during June 1997, shall have May 30, 1997, as their date of 
 14.34  retirement for the purpose of receiving retirement benefits from 
 14.35  the teachers retirement association. 
 14.36     Sec. 5.  [EFFECTIVE DATE.] 
 15.1      Sections 1 to 4 are effective on the day following final 
 15.2   enactment. 
 15.3                              ARTICLE 3 
 15.4                  INVESTMENT REPORTING MODIFICATIONS 
 15.5      Section 1.  Minnesota Statutes 1996, section 69.051, 
 15.6   subdivision 1, is amended to read: 
 15.7      Subdivision 1.  [FINANCIAL REPORT AND AUDIT.] The board of 
 15.8   each salaried firefighters' and relief association, police 
 15.9   relief association, and of each volunteer firefighters' relief 
 15.10  association as defined in section 424A.001, subdivision 4, with 
 15.11  assets of at least $200,000 or liabilities of at least $200,000, 
 15.12  according to the most recent actuarial valuation or financial 
 15.13  report if no valuation is required, shall:  
 15.14     (a) (1) Prepare a financial report covering the special and 
 15.15  general funds of the relief association for the preceding fiscal 
 15.16  year on a form prescribed by the state auditor.  The financial 
 15.17  report shall contain financial statements and disclosures which 
 15.18  present the true financial condition of the relief association 
 15.19  and the results of relief association operations in conformity 
 15.20  with generally accepted accounting principles and in compliance 
 15.21  with the regulatory, financing and funding provisions of this 
 15.22  chapter and any other applicable laws.  The financial report 
 15.23  shall be countersigned by the municipal clerk or clerk-treasurer 
 15.24  of the municipality in which the relief association is located 
 15.25  if the relief association is a firefighters' relief association 
 15.26  which is directly associated with a municipal fire department or 
 15.27  is a police relief association, or countersigned by the 
 15.28  secretary of the independent nonprofit firefighting corporation 
 15.29  and by the municipal clerk or clerk-treasurer of the largest 
 15.30  municipality in population which contracts with the independent 
 15.31  nonprofit firefighting corporation if the relief association is 
 15.32  a subsidiary of an independent nonprofit firefighting 
 15.33  corporation; 
 15.34     (b) (2) File the financial report in its office for public 
 15.35  inspection and present it to the city council after the close of 
 15.36  the fiscal year.  One copy of the financial report shall be 
 16.1   furnished to the state auditor after the close of the fiscal 
 16.2   year; and 
 16.3      (c) (3) Submit to the state auditor audited financial 
 16.4   statements which have been attested to by a certified public 
 16.5   accountant, public accountant, or the state auditor within 180 
 16.6   days after the close of the fiscal year, except that the state 
 16.7   auditor may upon request of a city and a showing of inability to 
 16.8   conform, extend the deadline.  The state auditor may accept this 
 16.9   report in lieu of the report required in clause (b) (2). 
 16.10     Sec. 2.  Minnesota Statutes 1996, section 69.051, 
 16.11  subdivision 1a, is amended to read: 
 16.12     Subd. 1a.  [FINANCIAL STATEMENT.] (a) The board of each 
 16.13  volunteer firefighters' relief association and each independent 
 16.14  nonprofit firefighting corporation, as defined in section 
 16.15  424A.001, subdivision 4, with assets of less than $200,000 and 
 16.16  liabilities less than $200,000, according to the most recent 
 16.17  financial report, shall: 
 16.18     (a) prepare a detailed statement of the financial affairs 
 16.19  for the preceding fiscal year of the relief association's 
 16.20  special and general funds in the style and form prescribed by 
 16.21  the state auditor, for the preceding fiscal year showing all 
 16.22  money received, with the sources, and respective amounts 
 16.23  thereof.  The detailed statement must show the sources and 
 16.24  amounts of all money received; all disbursements for which 
 16.25  orders have been drawn upon the treasurer; all, accounts 
 16.26  payable; all and accounts receivable; the amount of money 
 16.27  remaining in the treasury; total assets including a listing of 
 16.28  all investments; the accrued liabilities; and all items 
 16.29  necessary to show accurately the revenues and expenditures and 
 16.30  financial position of the relief association;. 
 16.31     (b) The detailed financial statement required under 
 16.32  paragraph (a) shall must be certified by an independent public 
 16.33  accountant or auditor or by the auditor or accountant who 
 16.34  regularly examines or audits the financial transactions of the 
 16.35  municipality.  In addition to certifying the financial condition 
 16.36  of the special and general funds of the relief association, the 
 17.1   accountant or auditor conducting the examination shall give an 
 17.2   opinion as to the condition of the special and general funds of 
 17.3   the relief association, and shall comment upon any exceptions to 
 17.4   the report.  The independent accountant or auditor shall have at 
 17.5   least five years of public accounting, auditing, or similar 
 17.6   experience, and shall not be an active, inactive, or retired 
 17.7   member of the relief association or the fire or police 
 17.8   department;. 
 17.9      (c) The detailed statement required under paragraph (a) 
 17.10  shall must be countersigned by the municipal clerk or 
 17.11  clerk-treasurer of the municipality, or, where applicable, by 
 17.12  the secretary of the independent nonprofit firefighting 
 17.13  corporation and by the municipal clerk or clerk-treasurer of the 
 17.14  largest municipality in population which contracts with the 
 17.15  independent nonprofit firefighting corporation if the relief 
 17.16  association is a subsidiary of an independent nonprofit 
 17.17  firefighting corporation;. 
 17.18     (d) The volunteer firefighters relief association board 
 17.19  must file the detailed statement required under paragraph (a) in 
 17.20  the relief association office for public inspection and present 
 17.21  it to the city council within 45 days after the close of the 
 17.22  fiscal year;, and must 
 17.23     (e) submit within 90 days after the close of the fiscal 
 17.24  year a copy of the detailed statement to the state auditor 
 17.25  within 90 days of the close of the fiscal year.  
 17.26     Sec. 3.  Minnesota Statutes 1996, section 69.051, 
 17.27  subdivision 1b, is amended to read: 
 17.28     Subd. 1b.  [QUALIFICATION.] The state auditor may, upon a 
 17.29  demonstration by a relief association of hardship or inability 
 17.30  to conform, extend the deadline for reports under subdivision 1 
 17.31  or 1a, but not beyond November 30th following the due date.  If 
 17.32  the reports are not received by November 30, the municipality or 
 17.33  relief association will forfeit its current year state aid, and 
 17.34  until the state auditor receives the required information, the 
 17.35  relief or municipality will be ineligible to receive any future 
 17.36  state aid.  A municipality or police or firefighters' relief 
 18.1   association shall not qualify initially to receive, or be 
 18.2   entitled subsequently to retain, state aid pursuant to this 
 18.3   chapter if the financial reporting requirement or the applicable 
 18.4   requirements of this chapter or any other statute or special law 
 18.5   have not been complied with or are not fulfilled.  
 18.6      Sec. 4.  Minnesota Statutes 1996, section 356.20, is 
 18.7   amended by adding a new subdivision to read: 
 18.8      Subd. 4b.  [ADDITIONAL REPORTING REQUIREMENTS.] Pension 
 18.9   funds referred to in subdivision 2, clauses (5) to (10), must 
 18.10  include, as part of the report required by this section, the 
 18.11  information required under section 356.219.  A pension fund 
 18.12  which fails to include that information is subject to penalties 
 18.13  specified in section 356.219, subdivision 5.  The office of the 
 18.14  state auditor is authorized to develop forms to facilitate the 
 18.15  reporting required under this subdivision.  For pension funds 
 18.16  subject to this subdivision, at the time when reports are filed 
 18.17  under subdivision 3, a copy of the reports must also be 
 18.18  delivered to the office of the state auditor. 
 18.19     Sec. 5.  Minnesota Statutes 1996, section 356.219, is 
 18.20  amended to read: 
 18.21     356.219 [DISCLOSURE OF ADDITIONAL PUBLIC PENSION PLAN 
 18.22  INVESTMENT INFORMATION.] 
 18.23     Subdivision 1.  [REPORT REQUIRED.] (a) Except as indicated 
 18.24  in subdivision 4, the state board of investment on behalf of the 
 18.25  public pension funds and programs for which it is the investment 
 18.26  authority and any Minnesota public pension plan not wholly fully 
 18.27  invested through the state board of investment, including a 
 18.28  local police or firefighters' relief association governed by 
 18.29  sections 69.77 or 69.771 to 69.775, shall report the information 
 18.30  specified in subdivision 2 3 to the state auditor.  The state 
 18.31  auditor may prescribe a form or forms for the purposes of the 
 18.32  reporting requirements contained in this section. 
 18.33     (b) A local police or firefighters relief association 
 18.34  governed by section 69.77 or sections 69.771 to 69.775 is fully 
 18.35  invested for purposes of this section if all assets of the 
 18.36  applicable pension plan beyond sufficient cash equivalent 
 19.1   investments to cover six months expected expenses are invested 
 19.2   under section 11A.17.  The board of any fully invested public 
 19.3   pension plan remains responsible for submitting investment 
 19.4   policy statements and subsequent revisions as required by 
 19.5   subdivision 3, paragraph (a). 
 19.6      (c) For purposes of this section, the state board of 
 19.7   investment is considered to be the investment authority for any 
 19.8   Minnesota public pension fund required to be invested by the 
 19.9   state board of investment under section 11A.23, or for any 
 19.10  Minnesota public pension fund authorized to invest in the 
 19.11  supplemental investment fund under section 11A.17 and which is 
 19.12  fully invested. 
 19.13     Subd. 2.  [ASSET CLASS DEFINITION.] (a) For purposes of 
 19.14  this section, "asset class" means any of the following asset 
 19.15  groupings as authorized in applicable law, bylaws, or articles 
 19.16  of incorporation: 
 19.17     (1) cash and any cash equivalent investments with 
 19.18  maturities of one year or less when issued; 
 19.19     (2) debt securities with maturities greater than one year 
 19.20  when issued, including, but not limited to, mortgage 
 19.21  participation certificates and pools, asset-backed securities, 
 19.22  guaranteed investment contracts, and authorized government and 
 19.23  corporate obligations of corporations organized under laws of 
 19.24  the United States or any state, or the Dominion of Canada or its 
 19.25  provinces; 
 19.26     (3) stocks or convertible issues of any corporation 
 19.27  organized under laws of the United States or any state, or the 
 19.28  Dominion of Canada or its provinces, or any corporation listed 
 19.29  on the New York Stock Exchange or the American Stock Exchange; 
 19.30     (4) international stocks or convertible issues; 
 19.31     (5) international debt securities; and 
 19.32     (6) real estate and venture capital. 
 19.33     (b) If the pension plan is investing under section 69.77, 
 19.34  subdivision 2g, 69.775, or other applicable law, in open-end 
 19.35  investment companies registered under the Federal Investment 
 19.36  Company Act of 1940, or in the Minnesota supplemental investment 
 20.1   fund under section 11A.17, this investment must be included 
 20.2   under paragraph (a), clauses (1) to (6), as appropriate.  If the 
 20.3   investment vehicle includes underlying securities from more than 
 20.4   one asset class as indicated by paragraph (a), clauses (1) to 
 20.5   (6), the investment may be treated as a separate asset class. 
 20.6      Subd. 2 3.  [CONTENT AND TIMING OF REPORTS.] (a) The 
 20.7   following information shall be included in the report required 
 20.8   by subdivision 1: 
 20.9      (1) the market value of all investments at the close of the 
 20.10  reporting period; 
 20.11     (2) regular payroll-based contributions to the fund; 
 20.12     (3) other contributions and revenue paid into the fund, 
 20.13  including, but not limited to, state or local non-payroll-based 
 20.14  contributions, repaid refunds, and buybacks; 
 20.15     (4) total benefits paid to members; 
 20.16     (5) fees paid for investment management services; 
 20.17     (6) salaries and other administrative expenses paid; and 
 20.18     (7) total return on investment. 
 20.19     The report required by subdivision 1 must also include a 
 20.20  written statement of the investment policy in effect on June 30, 
 20.21  1988, and 1997, if that statement has not been previously 
 20.22  submitted.  Following that date, subsequent reports must include 
 20.23  any investment policy changes made subsequently and shall 
 20.24  include the effective date of each policy change rather than a 
 20.25  complete statement of investment policy, unless the state 
 20.26  auditor requests submission of a complete current statement.  
 20.27  The report must also include the information required by 
 20.28  paragraph (b) or (c), as applicable.  The information required 
 20.29  under this subdivision must be reported separately for each 
 20.30  investment account or investment portfolio included in the 
 20.31  pension fund. 
 20.32     (b) For public pension plans other than volunteer 
 20.33  firefighters' relief associations governed by sections 69.77 or 
 20.34  69.771 to 69.775, the information specified in paragraph (a) 
 20.35  must be provided separately for each quarter for the fiscal 
 20.36  years of the pension fund ending during calendar years 1989 
 21.1   through 1991 and on a monthly basis thereafter.  For volunteer 
 21.2   firefighters' relief associations governed by sections 69.77 or 
 21.3   69.771 to 69.775, the information specified in paragraph (a) 
 21.4   must be provided separately each quarter. 
 21.5      (c) Firefighters' relief associations that have assets with 
 21.6   a market value of less than $300,000 must submit a written 
 21.7   statement of their current investment policy on or before 
 21.8   October 1, 1996, must report any subsequent investment policy 
 21.9   changes, including the effective date of the change, within 90 
 21.10  days of the change, must begin collecting the required 
 21.11  information under paragraph (a), clauses (1) to (7), on January 
 21.12  1, 1997, and must submit the required information to the state 
 21.13  auditor on or before October 1, 1998, and subsequently within 
 21.14  six months of the end of each fiscal year.  Other associations 
 21.15  must submit the required information through fiscal year 1993 to 
 21.16  the state auditor on or before October 1, 1994, and subsequently 
 21.17  within six months of the end of each fiscal year. 
 21.18     (b) If a public pension plan has a total market value of 
 21.19  $10,000,000 or more as of the beginning of the calendar year, 
 21.20  the report required by subdivision 1 must include the market 
 21.21  value of the total portfolio and the market value of each 
 21.22  investment account or investment portfolio as of the beginning 
 21.23  of the calendar year and the amount and date of each total 
 21.24  portfolio and investment account or investment portfolio 
 21.25  injection and withdrawal.  If a public pension plan once files a 
 21.26  report under this paragraph, it must continue reporting under 
 21.27  this paragraph even if asset values drop below $10,000,000 in 
 21.28  market value in a subsequent year. 
 21.29     (c) If a public pension plan has a total market value of 
 21.30  less than $10,000,000 as of the beginning of the calendar year, 
 21.31  and was never required to file under paragraph (b), the report 
 21.32  required by subdivision 1 must include the amount and date of 
 21.33  each total portfolio injection and withdrawal.  In addition, the 
 21.34  report must include the market value of the total portfolio and 
 21.35  each investment account or investment portfolio as of the 
 21.36  beginning and the end of the calendar year. 
 22.1      (d) Any public pension plan reporting under paragraph (b) 
 22.2   or (c) may include computed time-weighted rates of return with 
 22.3   the report, in addition to all other required information, as 
 22.4   applicable.  If returns are supplied, the individual who 
 22.5   computed the returns must certify that the returns are net of 
 22.6   all costs and fees, including investment management fees, and 
 22.7   that the procedures used to compute the returns are consistent 
 22.8   with bank administration institute studies of investment 
 22.9   performance measurement and association of investment management 
 22.10  and research presentation standards. 
 22.11     (e) For public pension plans reporting under paragraph (c), 
 22.12  the public pension plan must retain information specifying the 
 22.13  date and amount of each investment account or investment 
 22.14  portfolio injection and withdrawal.  Information that is 
 22.15  required to be collected and retained for any given year or 
 22.16  years under this paragraph must be submitted to the office of 
 22.17  the state auditor if the office of the state auditor requests in 
 22.18  writing that the information be submitted by a public pension 
 22.19  plan or plans, or be submitted by the state board of investment 
 22.20  for any plan or plans for which the state board of investment is 
 22.21  the investment authority under this section.  Information 
 22.22  required to be collected and retained under this subdivision 
 22.23  must also be transmitted to the legislative commission on 
 22.24  pensions upon official action of that commission.  All data 
 22.25  submitted or retained under this section are public data under 
 22.26  Minnesota Statutes, chapter 13. 
 22.27     Subd. 4.  [ALTERNATIVE REPORTING; CERTAIN PLANS.] In lieu 
 22.28  of requirements in subdivision 3, the applicable administration 
 22.29  for the individual retirement account plans under chapters 354B 
 22.30  and 354D and for the University of Minnesota faculty retirement 
 22.31  plan shall submit computed time-weighted rates of return to the 
 22.32  office of the state auditor.  These time-weighted rates of 
 22.33  return must cover the most recent complete calendar year, and 
 22.34  must be computed for each investment option available to plan 
 22.35  members.  To the extent feasible, the returns must be computed 
 22.36  net of all costs, fees, and charges, so that the computed return 
 23.1   reflects the net time-weighted return available to the 
 23.2   investor.  If this is not practical, the existence of any 
 23.3   remaining cost, fee, or charge which could further lower the net 
 23.4   return must be disclosed.  The procedures used to compute the 
 23.5   returns must be consistent with bank administration institute 
 23.6   studies of investment performance measurement and association of 
 23.7   investment management and research presentation standards, or, 
 23.8   if applicable, securities exchange commission requirements.  The 
 23.9   individual who computes the returns must certify that the 
 23.10  supplied returns comply with this subdivision.  The applicable 
 23.11  plan administrator must also submit, with the return 
 23.12  information, the total amounts invested by the plan members, in 
 23.13  aggregate, in each investment option as of the last day of the 
 23.14  calendar year. 
 23.15     Subd. 3 5.  [PENALTY FOR NONCOMPLIANCE.] Failure to comply 
 23.16  with the reporting requirements of this section shall result in 
 23.17  a withholding of all state aid or state appropriation to which 
 23.18  the pension plan may otherwise be directly or indirectly 
 23.19  entitled until the pension plan has complied with the reporting 
 23.20  requirements.  The state auditor shall instruct the 
 23.21  commissioners of revenue and finance to withhold state aid or 
 23.22  state appropriation from any pension plan that fails to comply 
 23.23  with the reporting requirements contained in this section, until 
 23.24  the pension plan has complied with the reporting 
 23.25  requirements.  The state auditor may waive the withholding of 
 23.26  state aid or state appropriations if the state auditor 
 23.27  determines in writing that compliance would create an excessive 
 23.28  hardship. 
 23.29     The state auditor shall agree to waive the withholding of 
 23.30  all state aid required by this subdivision for a volunteer 
 23.31  firefighters' relief association governed by sections 69.77 or 
 23.32  69.771 to 69.775 if: 
 23.33     (1) the relief association certifies to the state auditor 
 23.34  that the financial records necessary to comply with this 
 23.35  reporting requirement for the fiscal years of the pension fund 
 23.36  ending during calendar years 1991 to 1993 no longer exist; or 
 24.1      (2) the state auditor determines that reconstructing 
 24.2   historical financial data for the fiscal years of the pension 
 24.3   fund ending during calendar years 1991 to 1993 would create an 
 24.4   excessive hardship for the relief association. 
 24.5      Subd. 4 6.  [INVESTMENT DISCLOSURE REPORT.] (a) Using the 
 24.6   information provided under subdivision 2 subdivisions 3 and 4, 
 24.7   the state auditor shall compute time-weighted rates of return 
 24.8   for each pension fund, net of all costs and fees, and prepare an 
 24.9   annual report to the legislature on the components of investment 
 24.10  performance resulting from stages in the investment decision 
 24.11  making process of the various public pension plans subject to 
 24.12  this section.  The state auditor may contract with a qualified 
 24.13  consultant or consulting firm to perform the analysis and 
 24.14  prepare the report required under this subdivision.  The report 
 24.15  may also include information collected under subdivision 4 and, 
 24.16  if applicable, subdivision 3. 
 24.17     Subd. 5 7.  [EXPENSE OF REPORT.] All expenses incurred 
 24.18  relating to the investment disclosure report described in 
 24.19  subdivision 4 6 must be borne by the office of the state auditor 
 24.20  and may not be charged back to the entities described in 
 24.21  subdivision 1. 
 24.22     Subd. 8.  [TIMING OF REPORTS.] (a) For salaried firefighter 
 24.23  relief associations, police relief associations, and volunteer 
 24.24  firefighter relief associations, the information required under 
 24.25  this section must be submitted by the due date for reports 
 24.26  required under section 69.051, subdivision 1 or 1a, as 
 24.27  applicable.  If a relief association satisfies the definition of 
 24.28  a fully invested plan under subdivision 1, paragraph (b), for 
 24.29  the calendar year covered by the report required under section 
 24.30  69.051, subdivision 1 or 1a, as applicable, the chief 
 24.31  administrative officer of the covered pension plan shall certify 
 24.32  compliance on a form prescribed by the state auditor.  The state 
 24.33  auditor shall transmit annually to the state board of investment 
 24.34  a list or lists of covered pension plans which submitted 
 24.35  certifications, in order to facilitate reporting by the state 
 24.36  board of investment under paragraph (c). 
 25.1      (b) For the Minneapolis teachers retirement fund 
 25.2   association, the St. Paul teachers retirement fund association, 
 25.3   the Duluth teachers retirement fund association, the Minneapolis 
 25.4   employees retirement fund, and the University of Minnesota 
 25.5   faculty supplemental retirement plan, the information required 
 25.6   under this section must be submitted as part of the report 
 25.7   required under section 356.20. 
 25.8      (c) The state board of investment, on behalf of pension 
 25.9   funds specified in subdivision 1, paragraph (c), must report 
 25.10  information required under this section by September 1 of each 
 25.11  year. 
 25.12     (d) The applicable administrators for the University of 
 25.13  Minnesota faculty retirement plan and the individual retirement 
 25.14  account plans under chapters 354B and 354D must report 
 25.15  information required under this section by June 1 of each year. 
 25.16     Sec. 6.  Minnesota Statutes 1996, section 424A.02, 
 25.17  subdivision 10, is amended to read: 
 25.18     Subd. 10.  [LOCAL APPROVAL OF BYLAW AMENDMENTS; FILING 
 25.19  REQUIREMENTS.] (a) Each relief association to which this section 
 25.20  applies shall file a revised copy of its governing bylaws with 
 25.21  the commissioner of commerce state auditor upon the adoption of 
 25.22  any amendment to its governing bylaws by the relief association 
 25.23  or upon the approval of any amendment to its governing bylaws 
 25.24  granted by the governing body of each municipality served by the 
 25.25  fire department to which the relief association is directly 
 25.26  associated.  Failure of the relief association to file a copy of 
 25.27  the bylaws or any bylaw amendments with the commissioner of 
 25.28  commerce state auditor shall disqualify the municipality from 
 25.29  the distribution of any future fire state aid until this filing 
 25.30  requirement has been completed.  
 25.31     (b) If the special fund of the relief association does not 
 25.32  have a surplus over full funding pursuant to section 69.772, 
 25.33  subdivision 3, clause (2), subclause (e), or 69.773, subdivision 
 25.34  4, and if the municipality is required to provide financial 
 25.35  support to the special fund of the relief association pursuant 
 25.36  to section 69.772 or 69.773, no bylaw amendment which would 
 26.1   affect the amount of, the manner of payment of, or the 
 26.2   conditions for qualification for service pensions or ancillary 
 26.3   benefits or disbursements other than administrative expenses 
 26.4   authorized pursuant to section 69.80 payable from the special 
 26.5   fund of the relief association shall be effective until it has 
 26.6   been ratified by the governing body or bodies of the appropriate 
 26.7   municipalities.  If the municipality is not required to provide 
 26.8   financial support to the special fund pursuant to this section, 
 26.9   the relief association may adopt or amend without municipal 
 26.10  ratification its articles of incorporation or bylaws which 
 26.11  increase or otherwise affect the service pensions or ancillary 
 26.12  benefits payable from the special fund so long as the changes do 
 26.13  not cause the amount of the resulting increase in the accrued 
 26.14  liability of the special fund to exceed 90 percent of the amount 
 26.15  of the prior surplus over full funding and the changes do not 
 26.16  result in the financial requirements of the special fund 
 26.17  exceeding the expected amount of the future fire state aid to be 
 26.18  received by the relief association.  
 26.19     (c) If the relief association pays only a lump sum pension, 
 26.20  the financial requirements are to be determined by the board of 
 26.21  trustees following the preparation of an estimate of the 
 26.22  expected increase in the accrued liability and annual accruing 
 26.23  liability of the relief association attributable to the change.  
 26.24  If the relief association pays a monthly benefit service 
 26.25  pension, the financial requirements are to be determined by the 
 26.26  board of trustees following either an updated actuarial 
 26.27  valuation including the proposed change or an estimate of the 
 26.28  expected actuarial impact of the proposed change prepared by the 
 26.29  actuary of the relief association.  If a relief association 
 26.30  adopts or amends its articles of incorporation or bylaws without 
 26.31  municipal ratification pursuant to this subdivision, and, 
 26.32  subsequent to the amendment or adoption, the financial 
 26.33  requirements of the special fund pursuant to this section are 
 26.34  such so as to require financial support from the municipality, 
 26.35  the provision which was implemented without municipal 
 26.36  ratification shall no longer be effective without municipal 
 27.1   ratification, and any service pensions or ancillary benefits 
 27.2   payable after that date shall be paid only in accordance with 
 27.3   the articles of incorporation or bylaws as amended or adopted 
 27.4   with municipal ratification.  
 27.5      Sec. 7.  [REPEALER.] 
 27.6      Minnesota Statutes, section 356.218, is repealed. 
 27.7      Sec. 8.  [EFFECTIVE DATE.] 
 27.8      Sections 1 to 7 are effective January 1, 1998, except that 
 27.9   no penalty for noncompliance with section 5 may be assessed on 
 27.10  account of any failure to comply with reporting requirements of 
 27.11  that section prior to January 1, 1999. 
 27.12                             ARTICLE 4 
 27.13                    CORRECTIONAL RETIREMENT PLAN 
 27.14                           MODIFICATIONS 
 27.15     Section 1.  Laws 1996, chapter 408, article 8, section 21, 
 27.16  is amended to read:  
 27.17     Sec. 21.  [TEMPORARY PROVISION; ELECTION TO RETAIN 
 27.18  RETIREMENT COVERAGE.] 
 27.19     (a) An employee in a position specified as qualifying under 
 27.20  sections 12, 14, and 15, or an auto mechanic lead, an 
 27.21  electrician, an electrician master of record, a groundskeeper 
 27.22  intermediate, or a plumber master in charge at the Minnesota 
 27.23  correctional facility-Red Wing, may elect to retain coverage 
 27.24  under the general employees retirement plan of the Minnesota 
 27.25  state retirement system or the teachers retirement association, 
 27.26  or may elect to have coverage transferred to and to contribute 
 27.27  to the correctional employees retirement plan.  An employee 
 27.28  electing to participate in the correctional employees retirement 
 27.29  plan shall begin making contributions to the correctional plan 
 27.30  beginning the first full pay period after January 1, 1997, or 
 27.31  the first full pay period following filing of their election to 
 27.32  transfer coverage to the correctional employees retirement plan, 
 27.33  whichever is later.  The election to retain coverage or to 
 27.34  transfer coverage must be made in writing by the person on a 
 27.35  form prescribed by the executive director of the Minnesota state 
 27.36  retirement system and must be filed with the executive director 
 28.1   no later than June 30 December 31, 1997. 
 28.2      (b) An employee failing to make an election by June 15, 
 28.3   1997, must be notified by certified mail by the executive 
 28.4   director of the Minnesota state retirement system or of the 
 28.5   teachers retirement association, whichever applies, of the 
 28.6   deadline to make a choice.  A person who does not submit an 
 28.7   election form must continue coverage in the general employees 
 28.8   retirement plan or the teachers retirement association, 
 28.9   whichever applies, and forfeits all rights to transfer 
 28.10  retirement coverage to the correctional employees retirement 
 28.11  plan. 
 28.12     (c) The election to retain coverage in the general employee 
 28.13  retirement plan or the teachers retirement association or the 
 28.14  election to transfer retirement coverage to the correctional 
 28.15  employees retirement plan is irrevocable once it is filed with 
 28.16  the executive director. 
 28.17     Sec. 2.  Laws 1996, chapter 408, article 8, section 22, 
 28.18  subdivision 1, is amended to read: 
 28.19     Subdivision 1.  [ELECTION OF PRIOR STATE SERVICE COVERAGE.] 
 28.20  (a) An employee who has future retirement coverage transferred 
 28.21  to the correctional employees retirement plan under sections 11, 
 28.22  12, 14, and 15, and 16, or an auto mechanic lead, an 
 28.23  electrician, an electrician master of record, a groundskeeper 
 28.24  intermediate, or a plumber master in charge at the Minnesota 
 28.25  correctional facility-Red Wing, and who does not elect to retain 
 28.26  general state employee retirement plan or teachers retirement 
 28.27  association coverage is entitled to elect to obtain prior 
 28.28  service credit for eligible state service performed on or after 
 28.29  July 1, 1975, and before the first day of the first full pay 
 28.30  period beginning after June 30 December 31, 1997, with the 
 28.31  department of corrections or with the department of human 
 28.32  services at the Minnesota security hospital or the Minnesota 
 28.33  sexual psychopathic personality treatment center.  All prior 
 28.34  service credit must be purchased.  
 28.35     (b) Eligible state service with the department of 
 28.36  corrections or with the department of human services is any 
 29.1   prior period of continuous service on or after July 1, 1975, 
 29.2   performed as an employee of the department of corrections or of 
 29.3   the department of human services that would have been eligible 
 29.4   for the correctional employees retirement plan coverage under 
 29.5   sections 11, 12, 14, and 15, and 16, or an auto mechanic lead, 
 29.6   an electrician, an electrician master of record, a groundskeeper 
 29.7   intermediate, or a plumber master in charge at the Minnesota 
 29.8   correctional facility-Red Wing, if that prior service had been 
 29.9   performed after the first day of the first full pay period 
 29.10  beginning after December 31, 1996, rather than before that 
 29.11  date.  Service is continuous if there has been no period of 
 29.12  discontinuation of eligible state service for a period greater 
 29.13  than 180 calendar days. 
 29.14     (c) The department of corrections or the department of 
 29.15  human services, whichever applies, shall certify eligible state 
 29.16  service to the executive director of the Minnesota state 
 29.17  retirement system. 
 29.18     (d) A covered correctional plan employee employed on 
 29.19  January 1, 1997, who has past service in a job classification 
 29.20  covered under section 11, 12, 14, or 15, or 16, or an auto 
 29.21  mechanic lead, an electrician, an electrician master of record, 
 29.22  a groundskeeper intermediate, or a plumber master in charge at 
 29.23  the Minnesota correctional facility-Red Wing, on January 1, 
 29.24  1997, is entitled to purchase the past service if the applicable 
 29.25  department certifies that the employee met the eligibility 
 29.26  requirements for coverage.  The employee must make the 
 29.27  additional employee contributions under section 17.  Payments 
 29.28  for past service must be completed by June 30, 1999. 
 29.29     Sec. 3.  Laws 1996, chapter 408, article 8, section 24, is 
 29.30  amended to read: 
 29.31     Sec. 24.  [EARLY RETIREMENT INCENTIVE.] 
 29.32     This section applies to an employee who has future 
 29.33  retirement coverage transferred to the correctional employee 
 29.34  retirement plan under sections 11, 12, 14, and 15, and 16, and 
 29.35  who is at least 55 years old on the effective date of sections 
 29.36  11, 12, 14, and 15, and 16.  This section also applies to an 
 30.1   auto mechanic lead, an electrician, an electrician master of 
 30.2   record, a groundskeeper intermediate, or a plumber master in 
 30.3   charge at the Minnesota correctional facility-Red Wing who has 
 30.4   transferred to the correctional employee retirement plan under 
 30.5   this act.  That employee may participate in a health insurance 
 30.6   early retirement incentive available under the terms of a 
 30.7   collective bargaining agreement in effect on the day before the 
 30.8   effective date of sections 11, 12, 14, and 15, and 16, 
 30.9   notwithstanding any provision of the collective bargaining 
 30.10  agreement that limits participation to persons who select the 
 30.11  option during the payroll period in which their 55th birthday 
 30.12  occurs.  A person selecting the health insurance early 
 30.13  retirement incentive under this section must retire by the later 
 30.14  of December 31, 1997 June 30, 1998, or within the pay period 
 30.15  following the time at which the person has at least three years 
 30.16  of covered correctional service, including any purchased service 
 30.17  credit.  An employee meeting this criteria who wishes to extend 
 30.18  the person's employment must do so under Minnesota Statutes, 
 30.19  section 43A.34, subdivision 3. 
 30.20     Sec. 4.  [EFFECTIVE DATE.] 
 30.21     Sections 1 to 3 are effective on the day following final 
 30.22  enactment. 
 30.23                             ARTICLE 5 
 30.24                      MISCELLANEOUS PROVISIONS 
 30.25     Section 1.  [EXEMPTION; METROPOLITAN STATE UNIVERSITY.] 
 30.26     (a) Minnesota Statutes, section 352.115, subdivision 10, 
 30.27  does not apply to a person who: 
 30.28     (1) was born June 22, 1939; 
 30.29     (2) retires from the faculty of Metropolitan State 
 30.30  University with at least ten years of combined service credit in 
 30.31  a system under the jurisdiction of the board of trustees of the 
 30.32  Minnesota state colleges and universities; 
 30.33     (3) was employed on a full-time basis immediately preceding 
 30.34  retirement; 
 30.35     (4) begins drawing an annuity from the Minnesota state 
 30.36  retirement system; and 
 31.1      (5) returns to work on not less than a one-third time basis 
 31.2   and not more than a two-thirds time basis at Metropolitan State 
 31.3   University under an agreement in which the person may not earn a 
 31.4   salary of more than $35,000 in a calendar year from employment 
 31.5   after retirement at Metropolitan State University. 
 31.6      (b) Initial participation, the amount of time worked, and 
 31.7   the duration of participation under this section must be 
 31.8   mutually agreed upon by the employer and the employee.  The 
 31.9   employer may require up to a one-year notice of intent to 
 31.10  participate in the program as a condition of participation under 
 31.11  this section.  The employer shall determine the time of year the 
 31.12  employee shall work. 
 31.13     (c) Minnesota Statutes, section 136F.48, applies to a 
 31.14  person described in paragraph (a), even though the person draws 
 31.15  an annuity from the Minnesota state retirement system instead of 
 31.16  a teachers retirement association. 
 31.17     (d) Notwithstanding any law to the contrary, a person 
 31.18  eligible under paragraphs (a) and (b) may not earn further 
 31.19  service credit in the Minnesota state retirement system or the 
 31.20  teachers retirement association and is not eligible to 
 31.21  participate in the individual retirement account plan or the 
 31.22  supplemental retirement plan established in chapter 354B as a 
 31.23  result of service under this section.  No employer or employee 
 31.24  contribution to any of these plans may be made on behalf of such 
 31.25  a person.  
 31.26     Sec. 2.  [ACCEPTANCE OF BENEFICIARY DESIGNATION CHANGE IN 
 31.27  CERTAIN INSTANCES.] 
 31.28     Notwithstanding any provision of Minnesota Statutes 1996, 
 31.29  chapter 354, to the contrary, the teachers retirement 
 31.30  association may consider as validly filed a beneficiary 
 31.31  designation change form under Minnesota Statutes 1996, section 
 31.32  354.10, subdivision 4, and a joint specification form under 
 31.33  Minnesota Statutes 1996, section 354.46, subdivision 5, which 
 31.34  was postmarked on January 8, 1997, and received by the teachers 
 31.35  retirement association on January 10, 1997, on behalf of a 
 31.36  teacher who was born on February 28, 1947, and who died on 
 32.1   December 22, 1996. 
 32.2      (b) The designated beneficiary of the teacher specified in 
 32.3   paragraph (a) is entitled to receive the applicable monthly 
 32.4   survivor benefit retroactive to January 1, 1997. 
 32.5      Sec. 3.  [PRIOR SERVICE CREDIT PURCHASE FOR CERTAIN PUBLIC 
 32.6   EMPLOYEES.] 
 32.7      (a) A person described in paragraph (b) is entitled to 
 32.8   purchase the period of allowable service credit from the public 
 32.9   employees retirement association described in paragraph (c) if 
 32.10  the purchase payment specified in paragraph (d) is made to the 
 32.11  public employees retirement association. 
 32.12     (b) An eligible person is a person who: 
 32.13     (1) was born on August 10, 1939; 
 32.14     (2) was initially employed on a full-time basis by the 
 32.15  parks and recreation division of the city of St. Paul on 
 32.16  February 12, 1964; 
 32.17     (3) was initially covered by the public employees 
 32.18  retirement association on November 1, 1964; and 
 32.19     (4) left public service on September 16, 1996. 
 32.20     (c) The period of purchasable allowable service credit is 
 32.21  the period beginning on February 12, 1964, and ending on October 
 32.22  31, 1964. 
 32.23     (d) To purchase credit for prior eligible service under 
 32.24  subdivision 1, there must be paid to the public employees 
 32.25  retirement association an amount equal to the present value of 
 32.26  the amount of the additional disability benefit obtained by 
 32.27  purchase of the additional service credit.  The calculation of 
 32.28  this amount must be made by the executive director of the public 
 32.29  employees retirement association using the applicable 
 32.30  preretirement interest rate specified in Minnesota Statutes, 
 32.31  section 356.215, subdivision 4d, and the mortality table adopted 
 32.32  for the retirement association.  The person making the purchase 
 32.33  must establish in the records of the association proof of the 
 32.34  service for which the purchase of prior service is requested.  
 32.35  The manner of the proof of service must be in accordance with 
 32.36  procedures prescribed by the executive director of the 
 33.1   retirement association.  Payment of the amount calculated under 
 33.2   this subdivision is the obligation of the eligible person and 
 33.3   must be made prior to July 1, 1998, in a lump sum.  However, the 
 33.4   former employer of the eligible individual may, at its 
 33.5   discretion, pay all or any portion of the payment amount that 
 33.6   exceeds an amount equal to the employee contribution rate or 
 33.7   rates in effect during the period or periods of prior service, 
 33.8   plus interest at the rate of 8.5 percent per year compounded 
 33.9   annually from the date on which the contributions would 
 33.10  otherwise have been made to the date on which the payment is 
 33.11  made.  If the employer agrees to payments under this paragraph, 
 33.12  the person must make the employee payments required under this 
 33.13  paragraph prior to July 1, 1998.  If that employee payment is 
 33.14  made, the employing unit payment under this paragraph must be 
 33.15  remitted to the executive director of the retirement association 
 33.16  within 60 days of receipt by the executive director of the 
 33.17  employee payments specified under this paragraph. 
 33.18     (e) Service credit for the purchase period or periods must 
 33.19  be granted to the account of the eligible person upon receipt of 
 33.20  the purchase payment amount specified in subdivision 2 and the 
 33.21  disability benefit of the person must be recalculated in light 
 33.22  of the additional service credit. 
 33.23     Sec. 4.  [EFFECTIVE DATE.] 
 33.24     Sections 1, 2, and 3 are effective on the day following 
 33.25  final enactment.