1.1                          A bill for an act
  1.2             relating to retirement; increasing pension benefit 
  1.3             accrual rates; adjusting financing for pension plans; 
  1.4             adding supplemental financial conditions information 
  1.5             for pension funds; reducing appropriations; modifying 
  1.6             or establishing various pension aids; appropriating 
  1.7             money; amending Minnesota Statutes 1996, sections 
  1.8             3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 
  1.9             and 4; 3A.03, subdivision 1; 3A.07; 11A.18, 
  1.10            subdivision 9; 69.011, subdivisions 1, 2, and by 
  1.11            adding a subdivision; 69.021, subdivisions 7a and 10; 
  1.12            69.031, subdivision 5; 352.01, subdivision 25; 352.04, 
  1.13            subdivisions 2 and 3; 352.115, subdivision 3; 352.72, 
  1.14            subdivision 2; 352.92, subdivisions 1 and 2; 352.93, 
  1.15            subdivisions 2, 3, and by adding a subdivision; 
  1.16            352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a 
  1.17            and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, 
  1.18            subdivision 1; 352B.30, by adding a subdivision; 
  1.19            352C.031, subdivision 4; 352C.033; 352D.02, 
  1.20            subdivisions 1 and 2; 352D.04, subdivisions 1 and 2; 
  1.21            353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 
  1.22            353.29, subdivision 3; 353.651, subdivision 3; 
  1.23            353.656, subdivision 1; 353.71, subdivision 2; 
  1.24            353A.08, subdivisions 1 and 2; 353A.083, by adding a 
  1.25            subdivision; 354.05, subdivision 38; 354.42, 
  1.26            subdivisions 2, 3, and 5; 354.44, subdivision 6, and 
  1.27            by adding a subdivision; 354.53, subdivision 1; 
  1.28            354.55, subdivision 11; 354A.011, subdivision 15a; 
  1.29            354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, 
  1.30            subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, 
  1.31            subdivisions 2, 4d, and 4g; 356.217; 356.30, 
  1.32            subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, 
  1.33            subdivision 8; 422A.151; 423B.01, subdivision 9, and 
  1.34            by adding a subdivision; 423B.06, by adding a 
  1.35            subdivision; 423B.07; 423B.09, subdivision 1, and by 
  1.36            adding a subdivision; 423B.10, subdivision 1; 423B.15, 
  1.37            subdivisions 2, 3, 6, and by adding a subdivision; and 
  1.38            490.124, subdivisions 1 and 5; Laws 1965, chapter 519, 
  1.39            section 1, as amended; Laws 1979, chapter 109, section 
  1.40            1, as amended; Laws 1989, chapter 319, article 19, 
  1.41            section 7, subdivisions 1, as amended, 3, 4, as 
  1.42            amended, and 7; and Laws 1993, chapter 125, article 1, 
  1.43            section 1; proposing coding for new law in Minnesota 
  1.44            Statutes, chapters 124; 273; 352; 352C; 354A; 355; and 
  1.45            356; repealing Minnesota Statutes 1996, sections 
  1.46            124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 
  2.1             353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 
  2.2             353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 
  2.3             356.88, subdivision 2; and Laws 1985, chapter 259, 
  2.4             section 3; and Laws 1993, chapter 336, article 3, 
  2.5             section 1. 
  2.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.7                              ARTICLE 1
  2.8                    PENSION UNIFORMITY PROVISIONS 
  2.9      Section 1.  Minnesota Statutes 1996, section 3.85, 
  2.10  subdivision 11, is amended to read: 
  2.11     Subd. 11.  [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The 
  2.12  commission shall contract with an established actuarial 
  2.13  consulting firm to conduct annual actuarial valuations for the 
  2.14  retirement plans named in paragraph (b).  The contract must 
  2.15  include provisions for performing cost analyses of proposals for 
  2.16  changes in benefit and funding policies.  
  2.17     (b) The contract for actuarial valuation must include the 
  2.18  following retirement plans:  
  2.19     (1) the teachers retirement plan, teachers retirement 
  2.20  association; 
  2.21     (2) the general state employees retirement plan, Minnesota 
  2.22  state retirement system; 
  2.23     (3) the correctional employees retirement plan, Minnesota 
  2.24  state retirement system; 
  2.25     (4) the state patrol retirement plan, Minnesota state 
  2.26  retirement system; 
  2.27     (5) the judges retirement plan, Minnesota state retirement 
  2.28  system; 
  2.29     (6) the Minneapolis employees retirement plan, Minneapolis 
  2.30  employees retirement fund; 
  2.31     (7) the public employees retirement plan, public employees 
  2.32  retirement association; 
  2.33     (8) the public employees police and fire plan, public 
  2.34  employees retirement association; 
  2.35     (9) the Duluth teachers retirement plan, Duluth teachers 
  2.36  retirement fund association; 
  2.37     (10) the Minneapolis teachers retirement plan, Minneapolis 
  2.38  teachers retirement fund association; 
  3.1      (11) the St. Paul teachers retirement plan, St. Paul 
  3.2   teachers retirement fund association; 
  3.3      (12) the legislators retirement plan, Minnesota state 
  3.4   retirement system; and 
  3.5      (13) the elective state officers retirement plan, Minnesota 
  3.6   state retirement system; and 
  3.7      (14) the public employees local government correctional 
  3.8   service retirement plan, public employees retirement 
  3.9   association, if there are any participants in that plan.  
  3.10     (c) The contract must specify completion of annual 
  3.11  actuarial valuation calculations on a fiscal year basis with 
  3.12  their contents as specified in section 356.215, and the 
  3.13  standards for actuarial work adopted by the commission.  
  3.14     The contract must specify completion of annual experience 
  3.15  data collection and processing and a quadrennial published 
  3.16  experience study for the plans listed in paragraph (b), clauses 
  3.17  (1), (2), and (7), as provided for in the standards for 
  3.18  actuarial work adopted by the commission.  The experience data 
  3.19  collection, processing, and analysis must evaluate the following:
  3.20     (1) individual salary progression; 
  3.21     (2) rate of return on investments based on current asset 
  3.22  value; 
  3.23     (3) payroll growth; 
  3.24     (4) mortality; 
  3.25     (5) retirement age; 
  3.26     (6) withdrawal; and 
  3.27     (7) disablement.  
  3.28     (d) The actuary retained by the commission shall annually 
  3.29  prepare a report to the legislature, including the commentary on 
  3.30  the actuarial valuation calculations for the plans named in 
  3.31  paragraph (b) and summarizing the results of the actuarial 
  3.32  valuation calculations.  The commission-retained actuary shall 
  3.33  include with the report the actuary's recommendations concerning 
  3.34  the appropriateness of the support rates to achieve proper 
  3.35  funding of the retirement funds by the required funding dates.  
  3.36  The commission-retained actuary shall, as part of the 
  4.1   quadrennial published experience study, include recommendations 
  4.2   to the legislature on the appropriateness of the actuarial 
  4.3   valuation assumptions required for evaluation in the study.  
  4.4      (e) If the actuarial gain and loss analysis in the 
  4.5   actuarial valuation calculations indicates a persistent pattern 
  4.6   of sizable gains or losses, as directed by the commission, the 
  4.7   actuary retained by the commission shall prepare a special 
  4.8   experience study for a plan listed in paragraph (b), clause (3), 
  4.9   (4), (5), (6), (8), (9), (10), (11), (12), or (13), or (14), in 
  4.10  the manner provided for in the standards for actuarial work 
  4.11  adopted by the commission. 
  4.12     (f) The term of the contract between the commission and the 
  4.13  actuary retained by the commission is two years, plus not to 
  4.14  exceed two one-year extensions before competitive bidding.  The 
  4.15  contract is subject to competitive bidding procedures as 
  4.16  specified by the commission. 
  4.17     Sec. 2.  Minnesota Statutes 1996, section 3.85, subdivision 
  4.18  12, is amended to read: 
  4.19     Subd. 12.  [ALLOCATION OF ACTUARIAL COST.] (a) The 
  4.20  commission shall assess each retirement plan specified in 
  4.21  subdivision 11, paragraph (b), the compensation paid to the 
  4.22  actuary retained by the commission for the actuarial valuation 
  4.23  calculations, quadrennial projection valuations, and quadrennial 
  4.24  experience studies.  The assessment is 100 percent of the amount 
  4.25  of contract compensation for the actuarial consulting firm 
  4.26  retained by the commission for actuarial valuation calculations, 
  4.27  including the public employees police and fire plan 
  4.28  consolidation accounts of the public employees retirement 
  4.29  association, annual experience data collection and processing, 
  4.30  and quadrennial experience studies.  
  4.31     The portion of the total assessment payable by each 
  4.32  retirement system or pension plan must be determined as follows: 
  4.33     (1) Each pension plan specified in subdivision 11, 
  4.34  paragraph (b), clauses (1) to (14) (13), must pay the following 
  4.35  indexed amount based on its total active, deferred, inactive, 
  4.36  and benefit recipient membership: 
  5.1          up to 2,000 members, inclusive         $2.55 per member 
  5.2          2,001 through 10,000 members           $1.13 per member 
  5.3          over 10,000 members                    $0.11 per member  
  5.4      The amount specified is applicable for the assessment of 
  5.5   the July 1, 1991, to June 30, 1992, fiscal year actuarial 
  5.6   compensation amounts.  For the July 1, 1992, to June 30, 1993, 
  5.7   fiscal year and subsequent fiscal year actuarial compensation 
  5.8   amounts, the amount specified must be increased at the same 
  5.9   percentage increase rate as the implicit price deflator for 
  5.10  state and local government purchases of goods and services for 
  5.11  the 12-month period ending with the first quarter of the 
  5.12  calendar year following the completion date for the actuarial 
  5.13  valuation calculations, as published by the federal Department 
  5.14  of Commerce, and rounded upward to the nearest full cent. 
  5.15     (2) The total per-member portion of the allocation must be 
  5.16  determined, and that total per-member amount must be subtracted 
  5.17  from the total amount for allocation.  Of the remainder dollar 
  5.18  amount, the following per-retirement system and per-pension plan 
  5.19  charges must be determined and the charges must be paid by the 
  5.20  system or plan: 
  5.21     (i) 37.87 percent is the total additional per-retirement 
  5.22  system charge, of which one-seventh must be paid by each 
  5.23  retirement system specified in subdivision 11, paragraph (b), 
  5.24  clauses (1), (2), (6), (7), (9), (10), and (11). 
  5.25     (ii) 62.13 percent is the total additional per-pension plan 
  5.26  charge, of which one-thirteenth must be paid by each pension 
  5.27  plan specified in subdivision 11, paragraph (b), clauses (1) to 
  5.28  (13), if there are not any participants in the plan specified in 
  5.29  subdivision 11, paragraph (b), clause (14), or of which 
  5.30  one-fourteenth must be paid by each pension plan specified in 
  5.31  subdivision 11, paragraph (b), clauses (1) to (14), if there are 
  5.32  participants in the plan specified in subdivision 11, paragraph 
  5.33  (b), clause (14). 
  5.34     (b) The assessment must be made following the completion of 
  5.35  the actuarial valuation calculations and the experience 
  5.36  analysis.  The amount of the assessment is appropriated from the 
  6.1   retirement fund applicable to the retirement plan.  Receipts 
  6.2   from assessments must be deposited in the state treasury and 
  6.3   credited to the general fund. 
  6.4      Sec. 3.  Minnesota Statutes 1996, section 3A.02, 
  6.5   subdivision 1, is amended to read: 
  6.6      Subdivision 1.  [QUALIFICATIONS.] (a) A former legislator 
  6.7   is entitled, upon written application to the director, to 
  6.8   receive a retirement allowance monthly, if the person: 
  6.9      (1) has served at least six full years, without regard to 
  6.10  the application of section 3A.10, subdivision 2, or has served 
  6.11  during all or part of four regular sessions as a member of the 
  6.12  legislature, which service need not be continuous; 
  6.13     (2) has attained the normal retirement age; 
  6.14     (3) has retired as a member of the legislature; and 
  6.15     (4) has made all contributions provided for in section 
  6.16  3A.03, has made payments for past service under subdivision 2, 
  6.17  or has made payments in lieu of contributions under Minnesota 
  6.18  Statutes 1992, section 3A.031, prior to July 1, 1994. 
  6.19     (b) This paragraph applies to members of the legislature 
  6.20  who terminate service as a legislator before July 1, 1997.  For 
  6.21  service rendered before the beginning of the 1979 legislative 
  6.22  session, but not to exceed eight years of service, the 
  6.23  retirement allowance is an amount equal to five percent per year 
  6.24  of service of that member's average monthly salary.  For service 
  6.25  in excess of eight years rendered before the beginning of the 
  6.26  1979 legislative session, and for service rendered after the 
  6.27  beginning of the 1979 legislative session, the retirement 
  6.28  allowance is an amount equal to 2-1/2 percent per year of 
  6.29  service of that member's average monthly salary. 
  6.30     (c) This paragraph applies to members of the legislature 
  6.31  who terminate service as a legislator after June 30, 1997.  The 
  6.32  retirement allowance is an amount equal to the applicable rate 
  6.33  or rates under paragraph (b) per year of service of the member's 
  6.34  average monthly salary adjusted for that person on an actuarial 
  6.35  equivalent basis to reflect the change in the post retirement 
  6.36  interest rate actuarial assumption under section 56 from five 
  7.1   percent to six percent.  The adjustment must be calculated by 
  7.2   or, alternatively, the adjustment procedure must be specified 
  7.3   by, the actuary retained by the legislative commission on 
  7.4   pensions and retirement. 
  7.5      (d) The retirement allowance accrues beginning with the 
  7.6   first day of the month of receipt of the application, but not 
  7.7   before age 60, and for the remainder of the former legislator's 
  7.8   life, if the former legislator is not serving as a member of the 
  7.9   legislature or as a constitutional officer or commissioner as 
  7.10  defined in section 352C.021, subdivisions 2 and 3.  The annuity 
  7.11  shall does not begin to accrue prior to retirement as a 
  7.12  legislator.  No annuity payment shall may be made retroactive 
  7.13  for more than 180 days before the date the annuity application 
  7.14  is filed with the director. 
  7.15     (d) (e) Any member who has served during all or part of 
  7.16  four regular sessions is considered to have served eight years 
  7.17  as a member of the legislature. 
  7.18     (e) (f) The retirement allowance ceases with the last 
  7.19  payment that accrued to the retired legislator during the 
  7.20  retired legislator's lifetime, except that the surviving spouse, 
  7.21  if any, is entitled to the retirement allowance for the calendar 
  7.22  month in which the retired legislator died. 
  7.23     Sec. 4.  Minnesota Statutes 1996, section 3A.02, 
  7.24  subdivision 4, is amended to read: 
  7.25     Subd. 4.  [DEFERRED ANNUITIES AUGMENTATION.] (a) The 
  7.26  deferred annuity of any former legislator shall must be 
  7.27  augmented as provided herein.  The required reserves applicable 
  7.28  to the deferred annuity, determined as of the date the benefit 
  7.29  begins to accrue using an appropriate mortality table and an 
  7.30  interest assumption of five six percent, shall must be augmented 
  7.31  from the first of the month following termination of service, or 
  7.32  July 1, 1973, whichever is later, to the first day of the month 
  7.33  in which the annuity begins to accrue, at the rate of five 
  7.34  percent per annum compounded annually until January 1, 1981, and 
  7.35  thereafter at the rate of three percent per annum compounded 
  7.36  annually until January 1 of the year in which the former 
  8.1   legislator attains age 55.  From that date to the effective date 
  8.2   of retirement, the rate is five percent compounded annually. 
  8.3      (b) The retirement allowance of, or the survivor benefit 
  8.4   payable on behalf of, a former member of the legislature who 
  8.5   terminated service before July 1, 1997, which is not first 
  8.6   payable until after June 30, 1997, must be increased on an 
  8.7   actuarial equivalent basis to reflect the change in the post 
  8.8   retirement interest rate actuarial assumption under section 56 
  8.9   from five percent to six percent under a calculation procedure 
  8.10  and tables adopted by the board of directors of the Minnesota 
  8.11  state retirement system and approved by the actuary retained by 
  8.12  the legislative commission on pensions and retirement. 
  8.13     Sec. 5.  Minnesota Statutes 1996, section 3A.03, 
  8.14  subdivision 1, is amended to read: 
  8.15     Subdivision 1.  [PERCENTAGE.] Every member of the 
  8.16  legislature shall contribute nine ten percent of total salary, 
  8.17  by payroll deduction, to be paid into the state treasury and 
  8.18  deposited in the general fund.  It shall be the duty of the 
  8.19  director to record the periodic contributions of each member of 
  8.20  the legislature and credit such contribution to the member's 
  8.21  account. 
  8.22     Sec. 6.  Minnesota Statutes 1996, section 11A.18, 
  8.23  subdivision 9, is amended to read: 
  8.24     Subd. 9.  [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 
  8.25  Annually, following June 30, the state board shall use the 
  8.26  procedures in paragraphs (b), (c), and (d) to determine whether 
  8.27  a postretirement adjustment is payable and to determine the 
  8.28  amount of any postretirement adjustment. 
  8.29     (b) If the Consumer Price Index for urban wage earners and 
  8.30  clerical workers all items index published by the Bureau of 
  8.31  Labor Statistics of the United States Department of Labor 
  8.32  increases from June 30 of the preceding year to June 30 of the 
  8.33  current year, the state board shall certify the percentage 
  8.34  increase.  The amount certified may must not exceed the lesser 
  8.35  of the difference between the preretirement interest assumption 
  8.36  and postretirement interest assumption in section 356.215, 
  9.1   subdivision 4d, paragraph (a), or 3.5 2.5 percent.  For the 
  9.2   Minneapolis employees retirement fund, the amount certified must 
  9.3   not exceed 3.5 percent. 
  9.4      (c) In addition to any percentage increase certified under 
  9.5   paragraph (b), the board shall use the following procedures to 
  9.6   determine if a postretirement adjustment is payable under this 
  9.7   paragraph: 
  9.8      (1) The state board shall determine the market value of the 
  9.9   fund on June 30 of that year; 
  9.10     (2) The amount of reserves required for the annuity or 
  9.11  benefit payable to an annuitant and benefit recipient of the 
  9.12  participating public pension plans or funds shall must be 
  9.13  determined by the commission-retained actuary as of the current 
  9.14  June 30.  An annuitant or benefit recipient who has been 
  9.15  receiving an annuity or benefit for at least 12 full months as 
  9.16  of the current June 30 is eligible to receive a full 
  9.17  postretirement adjustment.  An annuitant or benefit recipient 
  9.18  who has been receiving an annuity or benefit for at least one 
  9.19  full month, but less than 12 full months as of the current June 
  9.20  30, is eligible to receive a partial postretirement adjustment.  
  9.21  Each fund shall report separately the amount of the reserves for 
  9.22  those annuitants and benefit recipients who are eligible to 
  9.23  receive a full postretirement benefit adjustment.  This amount 
  9.24  is known as "eligible reserves."  Each fund shall also report 
  9.25  separately the amount of the reserves for those annuitants and 
  9.26  benefit recipients who are not eligible to receive a 
  9.27  postretirement adjustment.  This amount is known as "noneligible 
  9.28  reserves."  For an annuitant or benefit recipient who is 
  9.29  eligible to receive a partial postretirement adjustment, each 
  9.30  fund shall report separately as additional "eligible reserves" 
  9.31  an amount that bears the same ratio to the total reserves 
  9.32  required for the annuitant or benefit recipient as the number of 
  9.33  full months of annuity or benefit receipt as of the current June 
  9.34  30 bears to 12 full months.  The remainder of the annuitant's or 
  9.35  benefit recipient's reserves shall must be separately reported 
  9.36  as additional "noneligible reserves."  The amount of "eligible" 
 10.1   and "noneligible" required reserves shall must be certified to 
 10.2   the board by the commission-retained actuary as soon as is 
 10.3   practical following the current June 30; 
 10.4      (3) The state board shall determine the percentage increase 
 10.5   certified under paragraph (b) multiplied by the eligible 
 10.6   required reserves, as adjusted for mortality gains and losses 
 10.7   under subdivision 11, determined under clause (2); 
 10.8      (4) The state board shall add the amount of reserves 
 10.9   required for the annuities or benefits payable to annuitants and 
 10.10  benefit recipients of the participating public pension plans or 
 10.11  funds as of the current June 30 to the amount determined under 
 10.12  clause (3); 
 10.13     (5) The state board shall subtract the amount determined 
 10.14  under clause (4) from the market value of the fund determined 
 10.15  under clause (1); 
 10.16     (6) The state board shall adjust the amount determined 
 10.17  under clause (5) by the cumulative current balance determined 
 10.18  pursuant to clause (8) and any negative balance carried forward 
 10.19  under clause (9); 
 10.20     (7) A positive amount resulting from the calculations in 
 10.21  clauses (1) to (6) is the excess market value.  A negative 
 10.22  amount is the negative balance; 
 10.23     (8) The state board shall allocate one-fifth of the excess 
 10.24  market value or one-fifth of the negative balance to each of 
 10.25  five consecutive years, beginning with the fiscal year ending 
 10.26  the current June 30; and 
 10.27     (9) To calculate the postretirement adjustment under this 
 10.28  paragraph based on investment performance for a fiscal year, the 
 10.29  state board shall add together all excess market value allocated 
 10.30  to that year and subtract from the sum all negative balances 
 10.31  allocated to that year.  If this calculation results in a 
 10.32  negative number, the entire negative balance must be carried 
 10.33  forward and allocated to the next year.  If the resulting amount 
 10.34  is positive, a postretirement adjustment is payable under this 
 10.35  paragraph.  The board shall express a positive amount as a 
 10.36  percentage of the total eligible required reserves certified to 
 11.1   the board under clause (2).  
 11.2      (d) The state board shall determine the amount of any 
 11.3   postretirement adjustment which is payable using the following 
 11.4   procedure: 
 11.5      (1) The total "eligible" required reserves as of the first 
 11.6   of January next following the end of the fiscal year for the 
 11.7   annuitants and benefit recipients eligible to receive a full or 
 11.8   partial postretirement adjustment as determined by clause (2) 
 11.9   shall must be certified to the state board by the 
 11.10  commission-retained actuary.  The total "eligible" required 
 11.11  reserves shall must be determined by the commission-retained 
 11.12  actuary on the assumption that all annuitants and benefit 
 11.13  recipients eligible to receive a full or partial postretirement 
 11.14  adjustment will be alive on the January 1 in question; and 
 11.15     (2) The state board shall add the percentage certified 
 11.16  under paragraph (b) to any positive percentage calculated under 
 11.17  paragraph (c).  The board shall not subtract from the percentage 
 11.18  certified under paragraph (b) any negative amount calculated 
 11.19  under paragraph (c).  The sum of these percentages shall must be 
 11.20  carried to five decimal places and shall must be certified to 
 11.21  each participating public pension fund or plan as the full 
 11.22  postretirement adjustment percentage.  
 11.23     (e) A retirement annuity payable in the event of retirement 
 11.24  before becoming eligible for social security benefits as 
 11.25  provided in section 352.116, subdivision 3; 353.29, subdivision 
 11.26  6; or 354.35 must be treated as the sum of a period certain 
 11.27  retirement annuity and a life retirement annuity for the 
 11.28  purposes of any postretirement adjustment.  The period certain 
 11.29  retirement annuity plus the life retirement annuity shall must 
 11.30  be the annuity amount payable until age 62 or 65, whichever 
 11.31  applies.  A postretirement adjustment granted on the period 
 11.32  certain retirement annuity must terminate when the period 
 11.33  certain retirement annuity terminates. 
 11.34     Sec. 7.  Minnesota Statutes 1996, section 69.011, 
 11.35  subdivision 1, is amended to read: 
 11.36     Subdivision 1.  [DEFINITIONS.] Unless the language or 
 12.1   context clearly indicates that a different meaning is intended, 
 12.2   the following words and terms shall for the purposes of this 
 12.3   chapter and chapters 423, 423A, 424 and 424A have the meanings 
 12.4   ascribed to them: 
 12.5      (a) "Commissioner" means the commissioner of revenue. 
 12.6      (b) "Municipality" means any home rule charter or statutory 
 12.7   city, organized town or park district subject to chapter 398, 
 12.8   the University of Minnesota, and, for purposes of the fire state 
 12.9   aid program only, an American Indian tribal government entity 
 12.10  located within a federally recognized American Indian 
 12.11  reservation, and, for purposes of the police state aid program 
 12.12  only, the metropolitan airports commission, with respect to 
 12.13  employees peace officers covered under chapter 422A, or the 
 12.14  department of natural resources and the department of public 
 12.15  safety with respect to peace officers covered under chapter 352B.
 12.16     (c) "Minnesota Firetown Premium Report" means a form 
 12.17  prescribed by the commissioner containing space for reporting by 
 12.18  insurers of fire, lightning, sprinkler leakage and extended 
 12.19  coverage premiums received upon risks located or to be performed 
 12.20  in this state less return premiums and dividends. 
 12.21     (d) "Firetown" means the area serviced by any municipality 
 12.22  having a qualified fire department or a qualified incorporated 
 12.23  fire department having a subsidiary volunteer firefighters' 
 12.24  relief association. 
 12.25     (e) "Market value" means latest available market value of 
 12.26  all property in a taxing jurisdiction, whether the property is 
 12.27  subject to taxation, or exempt from ad valorem taxation obtained 
 12.28  from information which appears on abstracts filed with the 
 12.29  commissioner of revenue or equalized by the state board of 
 12.30  equalization. 
 12.31     (f) "Minnesota Aid to Police Premium Report" means a form 
 12.32  prescribed by the commissioner for reporting by each fire and 
 12.33  casualty insurer of all premiums received upon direct business 
 12.34  received by it in this state, or by its agents for it, in cash 
 12.35  or otherwise, during the preceding calendar year, with reference 
 12.36  to insurance written for insuring against the perils contained 
 13.1   in auto insurance coverages as reported in the Minnesota 
 13.2   business schedule of the annual financial statement which each 
 13.3   insurer is required to file with the commissioner in accordance 
 13.4   with the governing laws or rules less return premiums and 
 13.5   dividends. 
 13.6      (g) "Peace officer" means any person: 
 13.7      (1) whose primary source of income derived from wages is 
 13.8   from direct employment by a municipality or county as a law 
 13.9   enforcement officer on a full-time basis of not less than 30 
 13.10  hours per week; 
 13.11     (2) who has been employed for a minimum of six months prior 
 13.12  to December 31 preceding the date of the current year's 
 13.13  certification under subdivision 2, clause (b); 
 13.14     (3) who is sworn to enforce the general criminal laws of 
 13.15  the state and local ordinances; 
 13.16     (4) who is licensed by the peace officers standards and 
 13.17  training board and is authorized to arrest with a warrant; and 
 13.18     (5) who is a member of a local police relief association to 
 13.19  which section 69.77 applies, the state patrol retirement plan, 
 13.20  the public employees police and fire fund, or the Minneapolis 
 13.21  employees retirement fund. 
 13.22     (h) "Full-time equivalent number of peace officers 
 13.23  providing contract service" means the integral or fractional 
 13.24  number of peace officers which would be necessary to provide the 
 13.25  contract service if all peace officers providing service were 
 13.26  employed on a full-time basis as defined by the employing unit 
 13.27  and the municipality receiving the contract service. 
 13.28     (i) "Retirement benefits other than a service pension"  
 13.29  means any disbursement authorized under section 424A.05, 
 13.30  subdivision 3, clauses (2), (3) and (4).  
 13.31     (j) "Municipal clerk, municipal clerk-treasurer or county 
 13.32  auditor" means the person who was elected or appointed to the 
 13.33  specified position or, in the absence of the person, another 
 13.34  person who is designated by the applicable governing body.  In a 
 13.35  park district the clerk is the secretary of the board of park 
 13.36  district commissioners.  In the case of the University of 
 14.1   Minnesota, the clerk is that official designated by the board of 
 14.2   regents.  For the metropolitan airports commission, the clerk is 
 14.3   the person designated by the commission.  For the department of 
 14.4   natural resources or the department of public safety, the clerk 
 14.5   is the respective commissioner. 
 14.6      Sec. 8.  Minnesota Statutes 1996, section 69.011, 
 14.7   subdivision 2, is amended to read: 
 14.8      Subd. 2.  [QUALIFICATION FOR FIRE OR POLICE STATE AID.] (a) 
 14.9   In order to qualify to receive fire state aid, on or before 
 14.10  March 15 annually, in conjunction with the financial report 
 14.11  required pursuant to section 69.051, the clerk of each 
 14.12  municipality having a duly organized fire department as provided 
 14.13  in subdivision 4, or the secretary of each independent nonprofit 
 14.14  firefighting corporation having a subsidiary incorporated 
 14.15  firefighters' relief association whichever is applicable, and 
 14.16  the fire chief, shall jointly certify the existence of the 
 14.17  municipal fire department or of the independent nonprofit 
 14.18  firefighting corporation, whichever is applicable, which meets 
 14.19  the minimum qualification requirements set forth in this 
 14.20  subdivision, and the fire personnel and equipment of the 
 14.21  municipal fire department or the independent nonprofit 
 14.22  firefighting corporation as of the preceding December 31.  
 14.23  Certification shall be made to the commissioner on a form 
 14.24  prescribed by the commissioner and shall include any other facts 
 14.25  the commissioner may require.  The certification shall be made 
 14.26  to the commissioner in duplicate.  Each copy of the certificate 
 14.27  shall be duly executed and deemed an original.  The commissioner 
 14.28  shall forward one copy to the auditor of the county wherein the 
 14.29  fire department is located and retain one copy. 
 14.30     (b) On or before March 15 annually the clerk of each 
 14.31  municipality having a duly organized police department and 
 14.32  having a duly incorporated relief association shall certify that 
 14.33  fact to the county auditor of the county where the police 
 14.34  department is located and to the commissioner on a form 
 14.35  prescribed by the commissioner together with the other facts the 
 14.36  commissioner or auditor may require. 
 15.1      Except as provided in subdivision 2b, on or before March 15 
 15.2   annually, the clerk of each municipality and the auditor of each 
 15.3   county employing one or more peace officers as defined in 
 15.4   subdivision 1, clause (h) (g), shall certify the number of such 
 15.5   peace officers to the commissioner on forms prescribed by the 
 15.6   commissioner.  Credit for officers employed less than a full 
 15.7   year shall be apportioned.  Each full month of employment of a 
 15.8   qualifying officer during the calendar year shall entitle the 
 15.9   employing municipality or county to credit for 1/12 of the 
 15.10  payment for employment of a peace officer for the entire year.  
 15.11  For purposes of sections 69.011 to 69.051, employment of a peace 
 15.12  officer shall commence when the peace officer is entered on the 
 15.13  payroll of the respective municipal police department or county 
 15.14  sheriff's department.  No peace officer shall be included in the 
 15.15  certification of the number of peace officers by more than one 
 15.16  municipality or county for the same month. 
 15.17     Sec. 9.  Minnesota Statutes 1996, section 69.011, is 
 15.18  amended by adding a subdivision to read: 
 15.19     Subd. 2b.  [DEPARTMENTS OF NATURAL RESOURCES AND PUBLIC 
 15.20  SAFETY.] (a) On or before July 1, 1997, the commissioner of 
 15.21  natural resources shall certify one-half of the number of peace 
 15.22  officers as defined in subdivision 1, clause (g), employed by 
 15.23  the enforcement division during calendar year 1996 and the 
 15.24  commissioner of public safety shall certify one-half of the 
 15.25  number of peace officers as defined in subdivision 1, clause 
 15.26  (g), employed by the bureau of criminal apprehension, the 
 15.27  gambling enforcement division, and the state patrol division 
 15.28  during calendar year 1996. 
 15.29     (b) On or before March 15, 1998, and annually on or before 
 15.30  March 15, thereafter, the commissioner of natural resources 
 15.31  shall certify the number of peace officers as defined in 
 15.32  subdivision 1, clause (g), employed by the enforcement division 
 15.33  and the commissioner of public safety shall certify the number 
 15.34  of peace officers as defined in subdivision 1, clause (g), 
 15.35  employed by the bureau of criminal apprehension, the gambling 
 15.36  enforcement division, and the state patrol division. 
 16.1      (c) The certification must be on a form prescribed by the 
 16.2   commissioner.  Peace officers certified under this paragraph 
 16.3   must be included in the total certifications under subdivision 2.
 16.4      Sec. 10.  Minnesota Statutes 1996, section 69.021, 
 16.5   subdivision 7a, is amended to read: 
 16.6      Subd. 7a.  [APPORTIONMENT OF POLICE STATE AID.] (a) The 
 16.7   commissioner shall apportion the state peace officer aid to each 
 16.8   municipality and to the county in the following manner: 
 16.9      (1) for all municipalities maintaining police departments 
 16.10  and the county, counties, the department of natural resources, 
 16.11  and the department of public safety, the police state aid must 
 16.12  be distributed in proportion to the total number of peace 
 16.13  officers, as determined under section 69.011, subdivision 1, 
 16.14  clause (g), and subdivision 2, clause (b), employed by 
 16.15  each municipality and by the county employing unit for 12 
 16.16  calendar months and the proportional or fractional number who 
 16.17  were employed less than 12 months; 
 16.18     (2) for each municipality which contracts with the county 
 16.19  for police service, a proportionate amount of the state aid 
 16.20  distributed to the county based on the full-time equivalent 
 16.21  number of peace officers providing contract service must be 
 16.22  credited against the municipality's contract obligation; and 
 16.23     (3) for each municipality which contracts with another 
 16.24  municipality for police service, a proportionate amount of the 
 16.25  state aid distributed to the municipality providing contract 
 16.26  service based on the full-time equivalent number of peace 
 16.27  officers providing contract service on a full-time equivalent 
 16.28  basis must be credited against the contract obligation of the 
 16.29  municipality receiving contract service. 
 16.30     (b) No municipality entitled to receive state peace officer 
 16.31  aid may be apportioned less state peace officer aid for any year 
 16.32  under Laws 1976, chapter 315, than the amount which was 
 16.33  apportioned to it for calendar year 1975 based on premiums 
 16.34  reported to the commissioner for calendar year 1974; provided, 
 16.35  the amount of state peace officer aid to other municipalities 
 16.36  within the county and to the county must be adjusted in 
 17.1   proportion to the total number of peace officers in the 
 17.2   municipalities and the county, so that the amount of state peace 
 17.3   officer aid apportioned does not exceed the amount of state 
 17.4   peace officer aid available for apportionment. 
 17.5      Sec. 11.  Minnesota Statutes 1996, section 69.021, 
 17.6   subdivision 10, is amended to read: 
 17.7      Subd. 10.  [REDUCTION.] (a) The commissioner of revenue 
 17.8   shall reduce the apportionment of police state aid under 
 17.9   subdivisions 5, paragraph (b), 6, and 7 7a, for eligible 
 17.10  employer units by any excess police state aid. 
 17.11     (b) "Excess police state aid" is: 
 17.12     (1) for counties and municipalities, the amount in excess 
 17.13  of the employer's total prior calendar year obligation under 
 17.14  section 353.65, as certified by the executive director of the 
 17.15  public employees retirement association; and 
 17.16     (2) for the department of natural resources and for the 
 17.17  department of public safety, the amount in excess of the 
 17.18  employer's total prior calendar year obligation under section 
 17.19  352B.02, subdivision 1c, for plan members who are peace officers 
 17.20  under section 69.011, subdivision 1, clause (g), as certified by 
 17.21  the executive director of the Minnesota state retirement system. 
 17.22     (c) The total shall be deposited in a separate excess 
 17.23  police state-aid account in the general fund, administered and 
 17.24  distributed as provided in subdivision 11. 
 17.25     Sec. 12.  Minnesota Statutes 1996, section 69.031, 
 17.26  subdivision 5, is amended to read: 
 17.27     Subd. 5.  [DEPOSIT OF STATE AID.] (1) (a) The municipal 
 17.28  treasurer, on receiving the fire state aid, shall within 30 days 
 17.29  after receipt transmit it to the treasurer of the duly 
 17.30  incorporated firefighters' relief association if there is one 
 17.31  organized and the association has filed a financial report with 
 17.32  the municipality; but if there is no relief association 
 17.33  organized, or if any association dissolve, be removed, or has 
 17.34  heretofore dissolved, or has been removed as trustees of state 
 17.35  aid, then the treasurer of the municipality shall keep the money 
 17.36  in the municipal treasury as provided for in section 424A.08 and 
 18.1   shall be disbursed only for the purposes and in the manner set 
 18.2   forth in that section.  
 18.3      (2) (b) The municipal treasurer, upon receipt of the police 
 18.4   state aid, shall disburse the police state aid in the following 
 18.5   manner: 
 18.6      (a) (1) For a municipality in which a local police relief 
 18.7   association exists and all peace officers are members of the 
 18.8   association, the total state aid shall be transmitted to the 
 18.9   treasurer of the relief association within 30 days of the date 
 18.10  of receipt, and the treasurer of the relief association shall 
 18.11  immediately deposit the total state aid in the special fund of 
 18.12  the relief association; 
 18.13     (b) (2) For a municipality in which police retirement 
 18.14  coverage is provided by the public employees police and fire 
 18.15  fund and all peace officers are members of the fund, the total 
 18.16  state aid shall be applied toward the municipality's employer 
 18.17  contribution to the public employees police and fire fund 
 18.18  pursuant to section 353.65, subdivision 3; or 
 18.19     (c) (3) For a municipality other than a city of the first 
 18.20  class with a population of more than 300,000 in which both a 
 18.21  police relief association exists and police retirement coverage 
 18.22  is provided in part by the public employees police and fire 
 18.23  fund, the municipality may elect at its option to transmit the 
 18.24  total state aid to the treasurer of the relief association as 
 18.25  provided in clause (a), to use the total state aid to apply 
 18.26  toward the municipality's employer contribution to the public 
 18.27  employees police and fire fund subject to all the provisions set 
 18.28  forth in clause (b), or to allot the total state aid 
 18.29  proportionately to be transmitted to the police relief 
 18.30  association as provided in this subdivision and to apply toward 
 18.31  the municipality's employer contribution to the public employees 
 18.32  police and fire fund subject to the provisions of clause (b) on 
 18.33  the basis of the respective number of active full-time peace 
 18.34  officers, as defined in section 69.011, subdivision 1, clause 
 18.35  (g). 
 18.36     For a city of the first class with a population of more 
 19.1   than 300,000, in addition, the city may elect to allot the 
 19.2   appropriate portion of the total police state aid to apply 
 19.3   toward the employer contribution of the city to the public 
 19.4   employees police and fire fund based on the covered salary of 
 19.5   police officers covered by the fund each payroll period and to 
 19.6   transmit the balance to the police relief association. 
 19.7      (3) (c) The county treasurer, upon receipt of the police 
 19.8   state aid for the county, shall apply the total state aid toward 
 19.9   the county's employer contribution to the public employees 
 19.10  police and fire fund pursuant to section 353.65, subdivision 3. 
 19.11     (4) (d) The designated metropolitan airports commission 
 19.12  official, upon receipt of the police state aid for the 
 19.13  metropolitan airports commission, shall apply the total police 
 19.14  state aid toward the commission's employer contribution to the 
 19.15  Minneapolis employees retirement fund under section 422A.101, 
 19.16  subdivision 2a. 
 19.17     (e) For the department of natural resources and for the 
 19.18  department of public safety, the department must apply the total 
 19.19  police state aid toward the employer contribution of the 
 19.20  department to the state patrol retirement plan under section 
 19.21  352B.02, subdivision 1c. 
 19.22     Sec. 13.  [124.2141] [AID ADJUSTMENTS DUE TO CHANGES IN 
 19.23  EMPLOYER RETIREMENT CONTRIBUTION RATES.] 
 19.24     Subdivision 1.  [AID ADJUSTMENT.] Beginning in fiscal year 
 19.25  1998 and each year thereafter, the commissioner of children, 
 19.26  families, and learning shall adjust state aid payments to school 
 19.27  operating funds for independent school district No. 625, 
 19.28  independent school district No. 709 and special school district 
 19.29  No. 1, by the net amount of clauses (1) and (2) and for all 
 19.30  other districts, including charter schools, but excluding any 
 19.31  education organizations that are prohibited from receiving 
 19.32  direct state aids under section 124.193 or 124.32, subdivision 
 19.33  12, by the net amount of clauses (1), (2) and (3): 
 19.34     (1) a decrease equal to each district's share of the fiscal 
 19.35  year 1997 adjustment effected under Minnesota statutes 1996, 
 19.36  section 124.2139; 
 20.1      (2) an increase equal to one percent of the salaries paid 
 20.2   to members of the general plan of the public employees 
 20.3   retirement association in fiscal year 1997, multiplied by 0.35 
 20.4   for fiscal year 1998 and 0.70 each year thereafter; 
 20.5      (3) a decrease equal to 2.34 percent of the salaries paid 
 20.6   to members of the teachers retirement association in fiscal year 
 20.7   1997.  
 20.8      Subd. 2.  [APPROPRIATION AND ESTIMATED NET SAVINGS.] The 
 20.9   amounts necessary to pay any positive net adjustments under this 
 20.10  section to any school district are appropriated annually from 
 20.11  the general fund to the commissioner of children, families and 
 20.12  learning.  The estimated net general fund savings under this 
 20.13  section is $29,819,000 in fiscal year 1998, and $26,997,000 in 
 20.14  each fiscal year thereafter. 
 20.15     Subd. 3.  [LIMITS ON ADJUSTMENTS AND POTENTIAL REDUCTIONS.] 
 20.16  Increases to any school districts under subdivision 1, clause 
 20.17  (2), and decreases under subdivision 1, clauses (1) and (3), are 
 20.18  limited to the fiscal year 1999 amounts.  The commissioner of 
 20.19  children, families and learning may permanently reduce the 
 20.20  adjustments to school districts under subdivision 1, clauses (1) 
 20.21  and (2), in the same manner as prescribed for non-school 
 20.22  jurisdictions under section 273.13985, subdivision 2.  The 
 20.23  commissioner may, from time to time, require that the most 
 20.24  recent fiscal year payroll information be certified by the 
 20.25  executive director of the teachers retirement association.  For 
 20.26  any school district where the newly certified teachers 
 20.27  retirement association payroll is significantly lower than the 
 20.28  fiscal 1997 amount as determined by the commissioner, the 
 20.29  commissioner shall recalculate the lower reduction under 
 20.30  subdivision 1, clause (3), and shall permanently reduce the 
 20.31  adjustment amount in subsequent years. 
 20.32     Subd. 4.  [EFFECT OF REORGANIZATIONS.] The commissioner of 
 20.33  children, families, and learning shall reapportion the aid 
 20.34  adjustments to school districts under this section to account 
 20.35  for significant changes in boundaries or consolidations, as 
 20.36  determined by the commissioner.  If a school district is 
 21.1   dissolved, or a school district function thereof is assumed by 
 21.2   either the state or a non-public organization, adjustments for 
 21.3   all or the appropriate fraction of the total payroll under this 
 21.4   section must terminate. 
 21.5      Subd. 5.  [ADJUSTMENT TERMINATION.] All adjustments under 
 21.6   this section terminate on June 30, 2020. 
 21.7      Sec. 14.  [273.13985] [AID FOR PUBLIC EMPLOYEES RETIREMENT 
 21.8   ASSOCIATION EMPLOYER CONTRIBUTION RATE INCREASE.] 
 21.9      Subdivision 1.  [AID TO OFFSET RATE INCREASE.] Beginning 
 21.10  with the December 26, 1997, payment, and according to the 
 21.11  schedule for payment of local aid under section 477A.015 
 21.12  thereafter, the commissioner of revenue shall pay to each city, 
 21.13  county, town and other non-school jurisdiction an amount equal 
 21.14  to 0.35 percent of the fiscal year 1997 payroll for employees 
 21.15  who were members of the general plan of the public employees 
 21.16  retirement association.  Except for the December 1997 
 21.17  distribution under this section, the amount of aid must be 
 21.18  certified before September 1 of the year preceding the 
 21.19  distribution year to the affected local government.  The 
 21.20  executive director of the public employees retirement 
 21.21  association shall certify the general plan fiscal year covered 
 21.22  payroll and other information requested by the commissioner of 
 21.23  revenue, on or before August 1, 1997, and in subsequent years 
 21.24  where necessary, in order to facilitate administration of this 
 21.25  section.  The amount necessary to make these aid payments is 
 21.26  appropriated annually from the general fund to the commissioner 
 21.27  of revenue.  Expenditures under this section are estimated to be 
 21.28  $7,942,500 in fiscal year 1998, and $15,885,000 in each 
 21.29  subsequent fiscal year, less any future reductions under 
 21.30  subdivision 2. 
 21.31     Subd. 2.  [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID 
 21.32  REDUCTIONS.] The aid amount received by any jurisdiction in 
 21.33  fiscal year 2000 or any year thereafter may not exceed the 
 21.34  amount it received in fiscal year 1999.  The commissioner may, 
 21.35  from time to time, request the most recent fiscal year payroll 
 21.36  information by jurisdiction to be certified by the executive 
 22.1   director of the public employees retirement association.  For 
 22.2   any jurisdiction where newly certified public employees 
 22.3   retirement association general plan payroll is significantly 
 22.4   lower than the fiscal 1997 amount, as determined by the 
 22.5   commissioner, the commissioner shall recalculate the aid amount 
 22.6   based on the most recent fiscal year payroll information, 
 22.7   certify the recalculated aid amount for the next distribution 
 22.8   year, and permanently reduce the aid amount to that jurisdiction.
 22.9      Subd. 3.  [EFFECT OF REORGANIZATIONS.] The commissioner of 
 22.10  revenue may adjust the aid amounts for separate jurisdictions to 
 22.11  account for significant changes in boundaries or in the form of 
 22.12  government, as determined by the commissioner.  If a local 
 22.13  government function and the associated public employees 
 22.14  retirement association general plan payroll is assumed by either 
 22.15  the state, or a non-public organization, the aid amounts 
 22.16  attributable to the function under this section must terminate.  
 22.17     Subd. 4.  [AID TERMINATION.] The aid provided under this 
 22.18  section terminates on June 30, 2020.  
 22.19     Sec. 15.  Minnesota Statutes 1996, section 352.01, 
 22.20  subdivision 25, is amended to read: 
 22.21     Subd. 25.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 22.22  means age 65 for a person who first became a covered employee or 
 22.23  a member of a pension fund listed in section 356.30, subdivision 
 22.24  3, before July 1, 1989.  For a person who first becomes a 
 22.25  covered employee after June 30, 1989, normal retirement age 
 22.26  means the higher of age 65 or "retirement age," as defined in 
 22.27  United States Code, title 42, section 416(l), as amended, but 
 22.28  not to exceed age 66. 
 22.29     Sec. 16.  Minnesota Statutes 1996, section 352.04, 
 22.30  subdivision 2, is amended to read: 
 22.31     Subd. 2.  [EMPLOYEE CONTRIBUTIONS.] The employee 
 22.32  contribution to the fund must be equal to 4.07 4.0 percent of 
 22.33  salary.  These contributions must be made by deduction from 
 22.34  salary as provided in subdivision 4. 
 22.35     Sec. 17.  Minnesota Statutes 1996, section 352.04, 
 22.36  subdivision 3, is amended to read: 
 23.1      Subd. 3.  [EMPLOYER CONTRIBUTIONS.] (a) The employer 
 23.2   contribution to the fund must be equal to 4.2 4.0 percent of 
 23.3   salary. 
 23.4      (b) By January 1 of each year, the board of directors shall 
 23.5   report to the legislative commission on pensions and retirement, 
 23.6   the chair of the committee on appropriations of the house of 
 23.7   representatives, and the chair of the committee on finance of 
 23.8   the senate on the amount raised by the employer and employee 
 23.9   contribution rates in effect and whether the total amount is 
 23.10  less than, the same as, or more than the actuarial requirement 
 23.11  determined under section 356.215. 
 23.12     (c) If the legislative commission on pensions and 
 23.13  retirement, based on the most recent valuation performed by its 
 23.14  actuary, determines that the total amount raised by the employer 
 23.15  and employee contributions under subdivision 2 and paragraph (b) 
 23.16  is less than the actuarial requirements determined under section 
 23.17  356.215, the employer and employee rates must be increased by 
 23.18  equal amounts as necessary to meet the actuarial requirements.  
 23.19  The employee rate may not exceed 4.15 percent of salary and the 
 23.20  employer rate may not exceed 4.29 percent of salary.  The 
 23.21  increases are effective on the next January 1 following the 
 23.22  determination by the commission.  The executive director of the 
 23.23  Minnesota state retirement system shall notify employing units 
 23.24  of any increases under this paragraph. 
 23.25     Sec. 18.  Minnesota Statutes 1996, section 352.115, 
 23.26  subdivision 3, is amended to read: 
 23.27     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 23.28  in conjunction with section 352.116, subdivision 1, applies to a 
 23.29  person who became a covered employee or a member of a pension 
 23.30  fund listed in section 356.30, subdivision 3, before July 1, 
 23.31  1989, unless paragraph (b), in conjunction with section 352.116, 
 23.32  subdivision 1a, produces a higher annuity amount, in which case 
 23.33  paragraph (b) will apply.  The employee's average salary, as 
 23.34  defined in subdivision 2, multiplied by one the percent 
 23.35  specified in section 356.19, subdivision 1, per year of 
 23.36  allowable service for the first ten years and 1.5 the percent 
 24.1   specified in section 356.19, subdivision 2, for each later year 
 24.2   of allowable service and pro rata for completed months less than 
 24.3   a full year shall determine the amount of the retirement annuity 
 24.4   to which the employee is entitled. 
 24.5      (b) This paragraph applies to a person who has become at 
 24.6   least 55 years old and first became a covered employee after 
 24.7   June 30, 1989, and to any other covered employee who has become 
 24.8   at least 55 years old and whose annuity amount, when calculated 
 24.9   under this paragraph and in conjunction with section 352.116, 
 24.10  subdivision 1a, is higher than it is when calculated under 
 24.11  paragraph (a), in conjunction with section 352.116, subdivision 
 24.12  1.  The employee's average salary, as defined in subdivision 2, 
 24.13  multiplied by 1.5 the percent specified in section 356.19, 
 24.14  subdivision 2, for each year of allowable service and pro rata 
 24.15  for months less than a full year shall determine the amount of 
 24.16  the retirement annuity to which the employee is entitled. 
 24.17     Sec. 19.  Minnesota Statutes 1996, section 352.72, 
 24.18  subdivision 2, is amended to read: 
 24.19     Subd. 2.  [COMPUTATION OF DEFERRED ANNUITY.] (a) The 
 24.20  deferred annuity, if any, accruing under subdivision 1, or 
 24.21  section 352.22, subdivision 3, must be computed as provided in 
 24.22  section 352.22, subdivision 3, on the basis of allowable service 
 24.23  before termination of state service and augmented as provided 
 24.24  herein.  The required reserves applicable to a deferred annuity 
 24.25  or to an annuity for which a former employee was eligible but 
 24.26  had not applied or to any deferred segment of an annuity must be 
 24.27  determined as of the date the benefit begins to accrue and 
 24.28  augmented by interest compounded annually from the first day of 
 24.29  the month following the month in which the employee ceased to be 
 24.30  a state employee, or July 1, 1971, whichever is later, to the 
 24.31  first day of the month in which the annuity begins to accrue.  
 24.32  The rates of interest used for this purpose must be five percent 
 24.33  compounded annually until January 1, 1981, and three percent 
 24.34  compounded annually thereafter until January 1 of the year 
 24.35  following the year in which the former employee attains age 55.  
 24.36  From that date to the effective date of retirement, the rate is 
 25.1   five percent compounded annually.  If a person has more than one 
 25.2   period of uninterrupted service, the required reserves related 
 25.3   to each period must be augmented by interest under this 
 25.4   subdivision.  The sum of the augmented required reserves so 
 25.5   determined is the present value of the annuity.  "Uninterrupted 
 25.6   service" for the purpose of this subdivision means periods of 
 25.7   covered employment during which the employee has not been 
 25.8   separated from state service for more than two years.  If a 
 25.9   person repays a refund, the service restored by the repayment 
 25.10  must be considered continuous with the next period of service 
 25.11  for which the employee has credit with this system.  The formula 
 25.12  percentages used for each period of uninterrupted service must 
 25.13  be those applicable to a new employee.  The mortality table and 
 25.14  interest assumption used to compute the annuity must be those in 
 25.15  effect when the employee files application for annuity.  This 
 25.16  section shall does not reduce the annuity otherwise payable 
 25.17  under this chapter. 
 25.18     (b) The retirement annuity or disability benefit of, or the 
 25.19  survivor benefit payable on behalf of, a former state employee 
 25.20  who terminated service before July 1, 1997, which is not first 
 25.21  payable until after June 30, 1997, must be increased on an 
 25.22  actuarial equivalent basis to reflect the change in the post 
 25.23  retirement interest rate actuarial assumption under section 56 
 25.24  from five percent to six percent under a calculation procedure 
 25.25  and the tables adopted by the board and approved by the actuary 
 25.26  retained by the legislative commission on pensions and 
 25.27  retirement. 
 25.28     Sec. 20.  Minnesota Statutes 1996, section 352.92, 
 25.29  subdivision 1, is amended to read: 
 25.30     Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] Beginning with 
 25.31  the first full pay period after July 1, 1984, in lieu of 
 25.32  employee contributions payable under section 352.04, subdivision 
 25.33  2, Employee contributions by of covered correctional employees 
 25.34  must be in an amount equal to 4.90 5.50 percent of salary.  
 25.35     Sec. 21.  Minnesota Statutes 1996, section 352.92, 
 25.36  subdivision 2, is amended to read: 
 26.1      Subd. 2.  [EMPLOYER CONTRIBUTIONS.] In lieu of employer 
 26.2   contributions payable under section 352.04, subdivision 3, The 
 26.3   employer shall contribute for covered correctional employees an 
 26.4   amount equal to 6.75 7.70 percent of salary.  
 26.5      Sec. 22.  Minnesota Statutes 1996, section 352.93, 
 26.6   subdivision 2, is amended to read: 
 26.7      Subd. 2.  [CALCULATING MONTHLY ANNUITY.] The monthly 
 26.8   annuity under this section must be determined by multiplying the 
 26.9   average monthly salary by the number of years, or completed 
 26.10  months, of covered correctional service by 2.5 the percent 
 26.11  specified in section 356.19, subdivision 5.  However, the 
 26.12  monthly annuity must not exceed 75 percent of the average 
 26.13  monthly salary.  
 26.14     Sec. 23.  Minnesota Statutes 1996, section 352.93, 
 26.15  subdivision 3, is amended to read: 
 26.16     Subd. 3.  [PAYMENTS; DURATION AND AMOUNT ANNUITY ACCRUAL.] 
 26.17  The annuity under this section shall must begin to accrue as 
 26.18  provided in section 352.115, subdivision 8., and must be paid 
 26.19  for an additional 84 full calendar months or to the first of the 
 26.20  month following the month in which the employee attains normal 
 26.21  retirement age, whichever occurs first, except that payment must 
 26.22  not cease before the first of the month following the month in 
 26.23  which the employee becomes 62.  It must then be reduced to the 
 26.24  amount as calculated at normal retirement age under section 
 26.25  352.115, except that if this amount, when added to that portion 
 26.26  of the social security benefit based on state service the 
 26.27  employee would be eligible to receive at the time, is less than 
 26.28  the benefit payable under subdivision 2, the retired employee 
 26.29  shall receive an amount that when added to the social security 
 26.30  benefit will equal the amount payable under subdivision 2.  If 
 26.31  the employee retired prior to age 55, the reduced benefit as 
 26.32  calculated under section 352.115 must be actuarially reduced as 
 26.33  provided in subdivision 2a.  
 26.34     When an annuity is reduced under this subdivision, the 
 26.35  percentage adjustments, if any, that have been applied to the 
 26.36  original annuity under section 11A.18, before the reduction, 
 27.1   must be compounded and applied to the reduced annuity.  A former 
 27.2   correctional employee employed by the state in a position 
 27.3   covered by the regular plan or the unclassified employees 
 27.4   retirement program between the age of 58 and normal retirement 
 27.5   age shall receive a partial return of correctional contributions 
 27.6   at retirement with six percent interest based on the following 
 27.7   formula: 
 27.8   
 27.9    Employee contributions             Years and complete    
 27.10   contributed as a                   months of regular     
 27.11   correctional employee              service between     
 27.12   in excess of the                   age 58 and the    
 27.13   contributions the                  normal retirement age 
 27.14   employee would have       X        ..................... 
 27.15   contributed as a                   number of years between
 27.16   regular employee                   age 58 and normal 
 27.17                                      retirement age 
 27.18     Sec. 24.  Minnesota Statutes 1996, section 352.93, is 
 27.19  amended by adding a subdivision to read: 
 27.20     Subd. 3a.  [OPTIONAL ANNUITIES.] The board may establish 
 27.21  optional annuity forms to pay a higher amount from the date of 
 27.22  retirement until an employee is first eligible to draw social 
 27.23  security benefits or up to the age the employee is eligible to 
 27.24  receive unreduced social security benefits, at which time the 
 27.25  monthly benefits must be reduced.  The optional annuity forms 
 27.26  must be actuarially equivalent to the normal single life annuity 
 27.27  form provided in subdivision 2.  The optional annuity forms must 
 27.28  be approved by the actuary retained by the legislative 
 27.29  commission on pensions and retirement. 
 27.30     Sec. 25.  [352.931] [SURVIVOR BENEFITS.] 
 27.31     Subdivision 1.  [SURVIVING SPOUSE BENEFIT.] (a) If the 
 27.32  correctional employee was at least age 50, has credit for at 
 27.33  least three years allowable service, and dies before an annuity 
 27.34  or disability benefit has become payable, notwithstanding any 
 27.35  designation of beneficiary to the contrary, the surviving spouse 
 27.36  of the employee may elect to receive, in lieu of the refund 
 28.1   under section 352.12, subdivision 1, an annuity for life equal 
 28.2   to the joint and 100 percent survivor annuity which the employee 
 28.3   could have qualified for had the employee terminated service on 
 28.4   the date of death.  The election may be made at any time after 
 28.5   the date of death of the employee.  The surviving spouse benefit 
 28.6   begins to accrue as of the first of the month next following the 
 28.7   date on which the application for the benefit was filed. 
 28.8      (b) If the employee was under age 50, dies, and had credit 
 28.9   for at least three years of allowable service credit on the date 
 28.10  of death but did not yet qualify for retirement, the surviving 
 28.11  spouse may elect to receive a 100 percent joint and survivor 
 28.12  annuity based on the age of the employee and surviving spouse at 
 28.13  the time of death.  The annuity is payable using the early 
 28.14  retirement reduction under section 352.93, subdivision 2a, to 
 28.15  age 50, and one-half of the early retirement reduction from age 
 28.16  50 to the age payment begins.  The surviving spouse eligible for 
 28.17  surviving spouse benefits under this paragraph may apply for the 
 28.18  annuity at any time after the employee's death.  Sections 
 28.19  352.22, subdivision 3, and 352.72, subdivision 2, apply to a 
 28.20  deferred annuity or surviving spouse benefit payable under this 
 28.21  subdivision.  
 28.22     (c) The annuity must cease with the last payment received 
 28.23  by the surviving spouse in the lifetime of the surviving 
 28.24  spouse.  Any employee may request in writing that this 
 28.25  subdivision not apply and that payment be made only to a 
 28.26  designated beneficiary as otherwise provided by this chapter. 
 28.27     Subd. 2.  [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 
 28.28  lieu of the 100 percent optional annuity under subdivision 1, 
 28.29  the surviving spouse of a deceased employee may elect to receive 
 28.30  survivor coverage in a term certain of ten, 15, or 20 years.  
 28.31  The monthly term certain annuity must be actuarially equivalent 
 28.32  to the 100 percent optional annuity under subdivision 1 and must 
 28.33  be approved by the actuary retained by the legislative 
 28.34  commission on pensions and retirement.  The optional annuity 
 28.35  ceases upon the expiration of the term certain period.  If a 
 28.36  survivor elects a term certain annuity and dies before the 
 29.1   expiration of the specified term certain period, the commuted 
 29.2   value of the remaining annuity payments must be paid in a lump 
 29.3   sum to the survivor's estate. 
 29.4      Subd. 3.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 29.5   no surviving spouse eligible for benefits under subdivision 1, a 
 29.6   dependent child as defined in section 352.01, subdivision 26, is 
 29.7   eligible for a dependent child survivor benefit.  Benefits to a 
 29.8   dependent child must be paid from the date of the employee's 
 29.9   death to the date the dependent child attains age 20 if the 
 29.10  child is under age 15 on the date of death.  If the child is 15 
 29.11  years or older on the date of death, the benefit is payable for 
 29.12  five years.  The payment to a dependent child is an amount 
 29.13  actuarially equivalent to the value of a 100 percent joint and 
 29.14  survivor optional annuity using the age of the employee and age 
 29.15  of the dependent child at the date of death in lieu of the age 
 29.16  of the surviving spouse.  If there is more than one dependent 
 29.17  child, each dependent child shall receive a proportionate share 
 29.18  of the actuarial value of the employee's account, with the 
 29.19  amount of the benefit payable to each child to be determined 
 29.20  based on the portion of the total eligibility period that each 
 29.21  child is eligible.  The process for calculating the dependent 
 29.22  child survivor benefit must be approved by the actuary retained 
 29.23  by the legislative commission on pensions and retirement. 
 29.24     Subd. 4.  [DEATH REFUND.] An amount equal to the excess, if 
 29.25  any, of the accumulated contributions credited to the account of 
 29.26  the deceased employee in excess of the total of the benefits 
 29.27  paid to the surviving spouse and surviving child or children 
 29.28  must be paid to the deceased employee's last designated 
 29.29  beneficiary or, if none, as specified under section 352.12, 
 29.30  subdivision 1. 
 29.31     Subd. 5.  [APPLICATION.] The benefit elections under this 
 29.32  section must be made on an application form prescribed by the 
 29.33  executive director and must be filed with the executive director.
 29.34     Sec. 26.  Minnesota Statutes 1996, section 352.95, 
 29.35  subdivision 1, is amended to read: 
 29.36     Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 30.1   correctional employee who becomes disabled and physically unfit 
 30.2   to perform the duties of the position as a direct result of an 
 30.3   injury, sickness, or other disability incurred in or arising out 
 30.4   of any act of duty that makes the employee physically or 
 30.5   mentally unable to perform the duties, is entitled to a 
 30.6   disability benefit based on covered correctional service only.  
 30.7   The benefit amount must equal 50 percent of the average salary 
 30.8   defined in section 352.93, plus an additional 2-1/2 percent 
 30.9   equal to that specified in section 356.19, subdivision 5, for 
 30.10  each year of covered correctional service in excess of 20 years, 
 30.11  ten months, prorated for completed months. 
 30.12     Sec. 27.  Minnesota Statutes 1996, section 352.95, 
 30.13  subdivision 5, is amended to read: 
 30.14     Subd. 5.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 
 30.15  disability benefit paid to a disabled correctional employee 
 30.16  under this section shall terminate at the end of the month in 
 30.17  which the employee reaches age 62.  If the disabled correctional 
 30.18  employee is still disabled when the employee reaches age 62, the 
 30.19  employee shall be deemed to be a retired employee.  If the 
 30.20  employee had elected an optional annuity under subdivision 1a, 
 30.21  the employee shall receive an annuity in accordance with the 
 30.22  terms of the optional annuity previously elected.  If the 
 30.23  employee had not elected an optional annuity under subdivision 
 30.24  1a, the employee may within 90 days of attaining age 65 or 
 30.25  reaching the five-year anniversary of the effective date of the 
 30.26  disability benefit, whichever is later, either elect to receive 
 30.27  a normal retirement annuity computed in the manner provided in 
 30.28  section 352.115 352.93 or elect to receive an optional annuity 
 30.29  as provided in section 352.116, subdivision 3, based on the same 
 30.30  length of service as used in the calculation of the disability 
 30.31  benefit.  Election of an optional annuity must be made within 90 
 30.32  days before attaining age 65 or reaching the five-year 
 30.33  anniversary of the effective date of the disability benefit, 
 30.34  whichever is later.  The reduction for retirement before normal 
 30.35  retirement age as provided in section 352.116, subdivision 1 or 
 30.36  1a, does not apply.  The savings clause provision of section 
 31.1   352.93, subdivision 3, applies.  If an optional annuity is 
 31.2   elected, the optional annuity shall begin to accrue on the first 
 31.3   of the month following the month in which the employee reaches 
 31.4   age 65 or the five-year anniversary of the effective date of the 
 31.5   disability benefit, whichever is later. 
 31.6      Sec. 28.  Minnesota Statutes 1996, section 352B.02, 
 31.7   subdivision 1a, is amended to read: 
 31.8      Subd. 1a.  [MEMBER CONTRIBUTIONS.] Each member shall pay a 
 31.9   sum equal to 8.92 8.40 percent of the member's salary, which 
 31.10  shall constitute the member contribution to the fund.  
 31.11     Sec. 29.  Minnesota Statutes 1996, section 352B.02, 
 31.12  subdivision 1c, is amended to read: 
 31.13     Subd. 1c.  [EMPLOYER CONTRIBUTIONS.] (a) In addition to 
 31.14  member contributions, department heads shall pay a sum equal to 
 31.15  14.88 12.60 percent of the salary upon which deductions were 
 31.16  made, which shall constitute the employer contribution to the 
 31.17  fund.  Department contributions must be paid out of money 
 31.18  appropriated to departments for this purpose, including police 
 31.19  state aid under sections 69.011 through 69.031. 
 31.20     (b) By January 1 of each year, the board of directors shall 
 31.21  report to the legislative commission on pensions and retirement, 
 31.22  the chair of the committee on appropriations of the house of 
 31.23  representatives, and the chair of the committee on finance of 
 31.24  the senate on the amount raised by the employer and employee 
 31.25  contribution rates in effect and whether the total amount is 
 31.26  less than, the same as, or more than the actuarial requirement 
 31.27  determined under section 356.215. 
 31.28     Sec. 30.  Minnesota Statutes 1996, section 352B.08, 
 31.29  subdivision 2, is amended to read: 
 31.30     Subd. 2.  [NORMAL RETIREMENT ANNUITY.] The annuity must be 
 31.31  paid in monthly installments.  The annuity shall be equal to the 
 31.32  amount determined by multiplying the average monthly salary of 
 31.33  the member by 2.65 the percent specified in section 356.19, 
 31.34  subdivision 6, for each year and pro rata for completed months 
 31.35  of service.  
 31.36     Sec. 31.  Minnesota Statutes 1996, section 352B.08, 
 32.1   subdivision 2a, is amended to read: 
 32.2      Subd. 2a.  [EARLY RETIREMENT.] Any member who has become at 
 32.3   least 50 years old, or former member if service ended after June 
 32.4   30, 1989, and who has at least three years of allowable service 
 32.5   is entitled upon application to a reduced retirement annuity 
 32.6   equal to the annuity calculated under subdivision 2, reduced so 
 32.7   that the reduced annuity is the actuarial equivalent of the 
 32.8   annuity that would be payable if the member deferred receipt of 
 32.9   the annuity from the day the annuity begins to accrue to age 
 32.10  55 by two-tenths of one percent for each month that the member 
 32.11  is under age 55 at the time of retirement. 
 32.12     Sec. 32.  Minnesota Statutes 1996, section 352B.10, 
 32.13  subdivision 1, is amended to read: 
 32.14     Subdivision 1.  [INJURIES, PAYMENT AMOUNTS.] Any member who 
 32.15  becomes disabled and physically or mentally unfit to perform 
 32.16  duties as a direct result of an injury, sickness, or other 
 32.17  disability incurred in or arising out of any act of duty, shall 
 32.18  receive disability benefits while disabled.  The benefits must 
 32.19  be paid in monthly installments equal to the member's average 
 32.20  monthly salary multiplied by 53 60 percent, plus an additional 
 32.21  2.65 percent equal to that specified in section 356.19, 
 32.22  subdivision 6, for each year and pro rata for completed months 
 32.23  of service in excess of 20 years, if any. 
 32.24     Sec. 33.  Minnesota Statutes 1996, section 352B.30, is 
 32.25  amended by adding a subdivision to read: 
 32.26     Subd. 4.  [1997 POSTRETIREMENT FUND INTEREST CHANGES.] The 
 32.27  retirement annuity or disability benefit of, or the survivor 
 32.28  benefit payable on behalf of, a former member who terminated 
 32.29  service before July 1, 1997, which is not first payable until 
 32.30  after June 30, 1997, must be increased on an actuarial 
 32.31  equivalent basis to reflect the change in the post retirement 
 32.32  interest rate actuarial assumption under section 56 from five 
 32.33  percent to six percent under a calculation procedure and tables 
 32.34  adopted by the board and approved by the actuary retained by the 
 32.35  legislative commission on pensions and retirement. 
 32.36     Sec. 34.  Minnesota Statutes 1996, section 352C.031, 
 33.1   subdivision 4, is amended to read: 
 33.2      Subd. 4.  [RETIREMENT ALLOWANCE FORMULA.] (a) This 
 33.3   paragraph applies to constitutional officers who terminate that 
 33.4   service before July 1, 1997.  The average salary multiplied by 
 33.5   2-1/2 percent for each year of allowable service and pro rata 
 33.6   for completed months less than a full year shall determine the 
 33.7   amount of the normal retirement allowance. 
 33.8      (b) This paragraph applies to constitutional officers who 
 33.9   terminate that service after June 30, 1997.  The retirement 
 33.10  allowance is an amount equal to the rate under paragraph (a) per 
 33.11  year of service of the constitutional officer's average monthly 
 33.12  salary adjusted for that person on an actuarial equivalent basis 
 33.13  to reflect the change in the post retirement interest rate 
 33.14  actuarial assumption under section 56 from five percent to six 
 33.15  percent.  The adjustment must be calculated by or, 
 33.16  alternatively, the adjustment procedure must be specified by the 
 33.17  actuary retained by the legislative commission on pensions and 
 33.18  retirement. 
 33.19     Sec. 35.  Minnesota Statutes 1996, section 352C.033, is 
 33.20  amended to read: 
 33.21     352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 
 33.22     (a) The deferred retirement allowance for any former 
 33.23  constitutional officer shall must be augmented as provided in 
 33.24  this section.  The required reserves applicable to the deferred 
 33.25  retirement allowance, determined as of the date the retirement 
 33.26  allowance begins to accrue using the appropriate mortality table 
 33.27  and an interest assumption of five six percent, shall be 
 33.28  augmented from the first of the month following termination of 
 33.29  service as a constitutional officer, or January 1, 1979, 
 33.30  whichever is later, to the first day of the month in which the 
 33.31  annuity begins to accrue, at the rate of five percent per annum 
 33.32  compounded annually until January 1, 1981, and thereafter at the 
 33.33  rate of three percent per annum compounded annually until 
 33.34  January 1 of the year in which the former constitutional officer 
 33.35  attains age 55.  From that date to the effective date of 
 33.36  retirement, the rate is five percent compounded annually. 
 34.1      (b) The retirement allowance of, or the survivor benefit 
 34.2   payable on behalf of, a former constitutional officer who 
 34.3   terminated service before July 1, 1997, which is not first 
 34.4   payable until after June 30, 1997, must be increased on an 
 34.5   actuarial equivalent basis to reflect the change in the post 
 34.6   retirement interest rate actuarial assumption under section 56 
 34.7   from five percent to six percent under a calculation procedure 
 34.8   and tables adopted by the board as recommended by an approved 
 34.9   actuary and approved by the actuary retained by the legislative 
 34.10  commission on pensions and retirement. 
 34.11     Sec. 36.  Minnesota Statutes 1996, section 353.01, 
 34.12  subdivision 37, is amended to read: 
 34.13     Subd. 37.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 34.14  means age 65 for a person who first became a public employee or 
 34.15  a member of a pension fund listed in section 356.30, subdivision 
 34.16  3, before July 1, 1989.  For a person who first becomes a public 
 34.17  employee after June 30, 1989, "normal retirement age" means the 
 34.18  higher of age 65 or "retirement age," as defined in United 
 34.19  States Code, title 42, section 416(l), as amended, but not to 
 34.20  exceed age 66. 
 34.21     Sec. 37.  Minnesota Statutes 1996, section 353.27, 
 34.22  subdivision 2, is amended to read: 
 34.23     Subd. 2.  [EMPLOYEE CONTRIBUTION.] The employee 
 34.24  contribution shall be an amount (a) for a "basic member" equal 
 34.25  to 8.23 8.75 percent of total salary; and (b) for a "coordinated 
 34.26  member" equal to 4.23 4.75 percent of total salary.  These 
 34.27  contributions shall must be made by deduction from salary in the 
 34.28  manner provided in subdivision 4.  Where any portion of a 
 34.29  member's salary is paid from other than public funds, such 
 34.30  member's employee contribution shall must be based on the total 
 34.31  salary received from all sources. 
 34.32     Sec. 38.  Minnesota Statutes 1996, section 353.27, 
 34.33  subdivision 3a, is amended to read: 
 34.34     Subd. 3a.  [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An 
 34.35  additional employer contribution shall must be made equal to (a) 
 34.36  2-1/2 2.68 percent of the total salary of each "basic member"; 
 35.1   and (b) one-quarter of one .43 percent of the total salary of 
 35.2   each "coordinated member."  These contributions shall must be 
 35.3   made from funds available to the employing subdivision by the 
 35.4   means and in the manner provided in section 353.28.  
 35.5      (b) This subdivision is repealed once the actuarial value 
 35.6   of the assets of the plan equal or exceed the actuarial accrued 
 35.7   liability of the plan as determined by the actuary retained by 
 35.8   the legislative commission on pensions and retirement under 
 35.9   section 356.215.  The repeal is effective on the first day of 
 35.10  the first full pay period occurring after March 31 of the 
 35.11  calendar year following the issuance of the actuarial valuation 
 35.12  upon which the repeal is based. 
 35.13     Sec. 39.  Minnesota Statutes 1996, section 353.29, 
 35.14  subdivision 3, is amended to read: 
 35.15     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 35.16  in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
 35.17  1c, applies to any member who first became a public employee or 
 35.18  a member of a pension fund listed in section 356.30, subdivision 
 35.19  3, before July 1, 1989, unless paragraph (b), in conjunction 
 35.20  with section 353.30, subdivision 5, produces a higher annuity 
 35.21  amount, in which case paragraph (b) will apply.  The average 
 35.22  salary as defined in subdivision 2, multiplied by two the 
 35.23  percent specified in section 356.19, subdivision 3, for each 
 35.24  year of allowable service for the first ten years and thereafter 
 35.25  by 2.5 the percent specified in section 356.19, subdivision 4, 
 35.26  per year of allowable service and completed months less than a 
 35.27  full year for the "basic member," and one the percent specified 
 35.28  in section 356.19, subdivision 1, for each year of allowable 
 35.29  service for the first ten years and thereafter by 1.5 the 
 35.30  percent specified in section 356.19, subdivision 2, per year of 
 35.31  allowable service and completed months less than a full year for 
 35.32  the "coordinated member," shall determine the amount of the 
 35.33  "normal" retirement annuity. 
 35.34     (b) This paragraph applies to a member who has become at 
 35.35  least 55 years old and first became a public employee after June 
 35.36  30, 1989, and to any other member whose annuity amount, when 
 36.1   calculated under this paragraph and in conjunction with section 
 36.2   353.30, subdivision 5, is higher than it is when calculated 
 36.3   under paragraph (a), in conjunction with section 353.30, 
 36.4   subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined 
 36.5   in subdivision 2, multiplied by 2.5 the percent specified in 
 36.6   section 356.19, subdivision 4, for each year of allowable 
 36.7   service and completed months less than a full year for a basic 
 36.8   member and 1.5 the percent specified in section 356.19, 
 36.9   subdivision 2, per year of allowable service and completed 
 36.10  months less than a full year for a coordinated member, shall 
 36.11  determine the amount of the normal retirement annuity. 
 36.12     Sec. 40.  Minnesota Statutes 1996, section 353.651, 
 36.13  subdivision 3, is amended to read: 
 36.14     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] The average salary 
 36.15  as defined in subdivision 2, multiplied by 2.65 the percent 
 36.16  specified in section 356.19, subdivision 6, per year of 
 36.17  allowable service determines the amount of the normal retirement 
 36.18  annuity.  If the member has earned allowable service for 
 36.19  performing services other than those of a police officer or 
 36.20  firefighter, the annuity representing such service is computed 
 36.21  under sections 353.29 and 353.30. 
 36.22     Sec. 41.  Minnesota Statutes 1996, section 353.656, 
 36.23  subdivision 1, is amended to read: 
 36.24     Subdivision 1.  [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 
 36.25  A member of the police and fire fund who becomes disabled and 
 36.26  physically unfit to perform duties as a police officer or 
 36.27  firefighter subsequent to June 30, 1973, as a direct result of 
 36.28  an injury, sickness, or other disability incurred in or arising 
 36.29  out of any act of duty, which has or is expected to render the 
 36.30  member physically or mentally unable to perform duties as a 
 36.31  police officer or firefighter for a period of at least one year, 
 36.32  shall receive disability benefits during the period of such 
 36.33  disability.  The benefits must be in an amount equal to 53 60 
 36.34  percent of the "average salary" under subdivision 3, plus an 
 36.35  additional 2.65 percent specified in section 356.19, subdivision 
 36.36  6, of said average salary for each year of service in excess of 
 37.1   20 years.  Should disability under this subdivision occur before 
 37.2   the member has at least five years of allowable service credit 
 37.3   in the police and fire fund, the disability benefit must be 
 37.4   computed on the "average salary" from which deductions were made 
 37.5   for contribution to the police and fire fund. 
 37.6      Sec. 42.  Minnesota Statutes 1996, section 353.71, 
 37.7   subdivision 2, is amended to read: 
 37.8      Subd. 2.  [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] (a) 
 37.9   The deferred annuity, if any, accruing under subdivision 1, or 
 37.10  sections 353.34, subdivision 3, and 353.68, subdivision 4, shall 
 37.11  must be computed in the manner provided in said sections, on the 
 37.12  basis of allowable service prior to termination of public 
 37.13  service and augmented as provided herein.  The required reserves 
 37.14  applicable to a deferred annuity, or to an annuity for which a 
 37.15  former member was eligible but had not applied, or to any 
 37.16  deferred segment of an annuity shall be determined as of the 
 37.17  date the annuity begins to accrue and shall be augmented from 
 37.18  the first day of the month following the month in which the 
 37.19  former member ceased to be a public employee, or July 1, 1971, 
 37.20  whichever is later, to the first day of the month in which the 
 37.21  annuity begins to accrue, at the rate of five percent per annum 
 37.22  compounded annually until January 1, 1981, and at the rate of 
 37.23  three percent thereafter until January 1 of the year following 
 37.24  the year in which the former member attains age 55.  From that 
 37.25  date to the effective date of retirement, the rate is five 
 37.26  percent per annum compounded annually.  If a person has more 
 37.27  than one period of uninterrupted service, the required reserves 
 37.28  related to each period shall be augmented by interest pursuant 
 37.29  to this subdivision.  The sum of the augmented required reserves 
 37.30  so determined shall be the present value of the annuity.  
 37.31  Uninterrupted service for the purpose of this subdivision shall 
 37.32  mean periods of covered employment during which the employee has 
 37.33  not been separated from public service for more than two years.  
 37.34  If a person repays a refund, the service restored thereby shall 
 37.35  be considered as continuous with the next period of service for 
 37.36  which the employee has credit with this association. The formula 
 38.1   percentages used for each period of uninterrupted service shall 
 38.2   be those as would be applicable to a new employee.  This section 
 38.3   shall not reduce the annuity otherwise payable under this 
 38.4   chapter.  This subdivision shall apply to deferred annuitants of 
 38.5   record on July 1, 1971, and to employees who thereafter become 
 38.6   deferred annuitants; it shall also apply from July 1, 1971, to 
 38.7   former members who make application for an annuity after July 1, 
 38.8   1973. 
 38.9      (b) The retirement annuity or disability benefit of, or the 
 38.10  survivor benefit payable on behalf of, a former member who 
 38.11  terminated service before July 1, 1997, which is not first 
 38.12  payable until after June 30, 1997, must be increased on an 
 38.13  actuarial equivalent basis to reflect the change in the post 
 38.14  retirement interest rate actuarial assumption under section 56 
 38.15  from five percent to six percent under a calculation procedure 
 38.16  and tables adopted by the board and approved by the actuary 
 38.17  retained by the legislative commission on pensions and 
 38.18  retirement. 
 38.19     Sec. 43.  Minnesota Statutes 1996, section 353A.08, 
 38.20  subdivision 1, is amended to read: 
 38.21     Subdivision 1.  [ELECTION OF COVERAGE BY CURRENT RETIREES.] 
 38.22  A person who is receiving a service pension, disability benefit, 
 38.23  or survivorship survivor benefit is eligible to elect benefit 
 38.24  coverage provided under the relevant provisions of the public 
 38.25  employees police and fire fund benefit plan or to retain benefit 
 38.26  coverage provided under the relief association benefit plan in 
 38.27  effect on the effective date of the consolidation.  The relevant 
 38.28  provisions of the public employees police and fire fund benefit 
 38.29  plan for the person electing that benefit coverage are limited 
 38.30  to participation in the Minnesota postretirement investment fund 
 38.31  for any future postretirement adjustments based on the amount of 
 38.32  the benefit or pension payable on December 31, if December 31 is 
 38.33  the effective date of consolidation, or on the December 1 
 38.34  following the effective date of the consolidation, if other than 
 38.35  December 31.  The survivorship survivor benefit payable on 
 38.36  behalf of any service pension or disability benefit recipient 
 39.1   who elects benefit coverage under the public employees police 
 39.2   and fire fund benefit plan must be calculated under the relief 
 39.3   association benefit plan and is subject to participation in the 
 39.4   Minnesota postretirement investment fund for any future 
 39.5   postretirement adjustments based on the amount of the 
 39.6   survivorship survivor benefit payable.  
 39.7      A survivor benefit calculated under the relief association 
 39.8   benefit plan which is first payable after June 30, 1997, to the 
 39.9   surviving spouse of a retired member of a consolidation account 
 39.10  who, before July 1, 1997, chose to participate in the Minnesota 
 39.11  postretirement investment fund as provided under this 
 39.12  subdivision must be increased on the effective date of the 
 39.13  survivor benefit on an actuarial equivalent basis to reflect the 
 39.14  change in the postretirement interest rate actuarial assumption 
 39.15  under section 56 from five percent to six percent under a 
 39.16  calculation procedure and tables adopted by the board and 
 39.17  approved by the actuary retained by the legislative commission 
 39.18  on pensions and retirement. 
 39.19     By electing the public employees police and fire fund 
 39.20  benefit plan, a current service pension or disability benefit 
 39.21  recipient who, as of the first January 1 occurring after the 
 39.22  effective date of consolidation, has been receiving the pension 
 39.23  or benefit for at least seven months, or any survivor benefit 
 39.24  recipient who, as of the first January 1 occurring after the 
 39.25  effective date of consolidation, has been receiving the benefit 
 39.26  on the person's own behalf or in combination with a prior 
 39.27  applicable service pension or disability benefit for at least 
 39.28  seven months is eligible to receive a partial adjustment payable 
 39.29  from the Minnesota postretirement investment fund under section 
 39.30  11A.18, subdivision 9. 
 39.31     The election by any pension or benefit recipient must be 
 39.32  made on or before the deadline established by the board of the 
 39.33  public employees retirement association in a manner that 
 39.34  recognizes the number of persons eligible to make the election 
 39.35  and the anticipated time required to conduct any required 
 39.36  benefit counseling.  
 40.1      Sec. 44.  Minnesota Statutes 1996, section 353A.08, 
 40.2   subdivision 2, is amended to read: 
 40.3      Subd. 2.  [ELECTION OF COVERAGE BY CURRENT DEFERRED 
 40.4   RETIREES.] (a) Any person who has terminated active employment 
 40.5   as a police officer or firefighter, whichever applies, with the 
 40.6   municipality, has sufficient credit for service to entitle the 
 40.7   person to an eventual service pension and has not taken a refund 
 40.8   of accumulated member contributions, if applicable, shall have 
 40.9   the option to elect to have benefit coverage provided under the 
 40.10  relevant provisions of the public employees police and fire fund 
 40.11  benefit plan or to retain benefit coverage provided by the 
 40.12  relief association benefit plan in effect on the effective date 
 40.13  of consolidation.  The relevant provisions of the public 
 40.14  employees police and fire fund benefit plan for the person 
 40.15  electing that benefit coverage shall be the provisions specified 
 40.16  in subdivision 1.  
 40.17     The election shall be made when the person files an 
 40.18  application for receipt of the deferred service pension and 
 40.19  shall accompany that application.  
 40.20     (b) The retirement annuity for a deferred member of a 
 40.21  consolidated local relief association which consolidated before 
 40.22  July 1, 1997, who elected the relevant provisions of the public 
 40.23  employees police and fire fund benefit plan under subdivision 1 
 40.24  must be increased on an actuarial equivalent basis to reflect 
 40.25  the change in the post retirement interest rate actuarial 
 40.26  assumption under section 56 from five percent to six percent 
 40.27  under a calculation procedure and tables adopted by the board of 
 40.28  trustees of the public employees retirement association and 
 40.29  approved by the actuary retained by the legislative commission 
 40.30  on pensions and retirement. 
 40.31     Sec. 45.  Minnesota Statutes 1996, section 353A.083, is 
 40.32  amended by adding a subdivision to read: 
 40.33     Subd. 3.  [PRE-1997 CONSOLIDATION.] (a) For any 
 40.34  consolidation plan account in effect on July 1, 1997, the 
 40.35  applicable benefit plan coverage defined in paragraph (b) or (c) 
 40.36  applies unless the consolidation account's city approves the 
 41.1   extension of the post-June 30, 1997, public employees police and 
 41.2   fire fund benefit plan to the consolidation account members. 
 41.3      (b) If the applicable municipality has approved the July 1, 
 41.4   1993, public employees police and fire fund benefit provisions, 
 41.5   but has not approved the extension of the post-June 30, 1997, 
 41.6   public employees police and fire fund benefit provisions: 
 41.7      (1) the benefit accrual rate for calculating retirement 
 41.8   annuities that apply to consolidation account members who have 
 41.9   elected or elect coverage under the provisions of the public 
 41.10  employees police and fire fund benefit plan is 2.9 percent of 
 41.11  average salary under section 353.651, subdivision 2, per year of 
 41.12  allowable service; 
 41.13     (2) the optional survivor annuities payable to the 
 41.14  survivors of these consolidated members who elected coverage 
 41.15  under the provisions of the public employees police and fire 
 41.16  fund benefit plan must be determined using a benefit accrual 
 41.17  rate of 2.9 percent of average salary under section 353.651, 
 41.18  subdivision 2, per year of the member's allowable service; 
 41.19     (3) the disability benefit payable for these consolidated 
 41.20  members who elected or elect coverage under the provisions of 
 41.21  the public employees police and fire fund benefit plan and: 
 41.22     (i) who become disabled in the line of duty, as defined 
 41.23  under section 353.656, subdivision 1, is an amount equal to 58 
 41.24  percent of average salary under section 353.651, subdivision 2, 
 41.25  plus an additional 2.9 percent of that average salary for each 
 41.26  year of service in excess of 20 years; or 
 41.27     (ii) who become disabled because of sickness or injury 
 41.28  occurring while not on duty, as defined under section 353.656, 
 41.29  subdivision 3, is an amount equal to 43.50 percent of average 
 41.30  salary under section 353.651, subdivision 2, plus an additional 
 41.31  2.9 percent of that average salary for each year of service in 
 41.32  excess of 15 years. 
 41.33     (c) If the applicable municipality has not approved the 
 41.34  July 1, 1993, public employees police and fire fund benefit 
 41.35  provisions, and has not approved the extension of the post-June 
 41.36  30, 1997, public employees police and fire fund benefit 
 42.1   provisions: 
 42.2      (1) the benefit accrual rate for calculating retirement 
 42.3   annuities that apply to consolidation account members who have 
 42.4   elected or elect coverage under the provisions of the public 
 42.5   employees police and fire fund benefit plan is 2.74 percent of 
 42.6   average salary under section 353.651, subdivision 2, per year of 
 42.7   allowable service; 
 42.8      (2) the optional survivor annuities payable to the 
 42.9   survivors of these consolidated members who elected coverage 
 42.10  under the provisions of the public employees police and fire 
 42.11  fund benefit plan must be determined using a benefit accrual 
 42.12  rate of 2.74 percent of average salary under section 353.651, 
 42.13  subdivision 2, per year of the member's allowable service; 
 42.14     (3) the disability benefit payable for consolidated members 
 42.15  who elected or elect the coverage under the provisions of the 
 42.16  public employees police and fire fund benefit plan and: 
 42.17     (i) who become disabled in the line of duty, as defined 
 42.18  under section 353.656, subdivision 1, is an amount equal to 
 42.19  54.80 percent of the average salary under section 353.651, 
 42.20  subdivision 2, plus an additional 2.74 percent of that average 
 42.21  salary for each year of service in excess of 20 years; or 
 42.22     (ii) who become disabled because of sickness or injury 
 42.23  occurring while not on duty, as defined under section 353.656, 
 42.24  subdivision 3, is an amount equal to 41.10 percent of the 
 42.25  average salary under section 353.651, subdivision 2, plus an 
 42.26  additional 2.74 percent of that average salary for each year of 
 42.27  service in excess of 15 years. 
 42.28     Sec. 46.  Minnesota Statutes 1996, section 354.05, 
 42.29  subdivision 38, is amended to read: 
 42.30     Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 42.31  means age 65 for a person who first became a member of the 
 42.32  association or a member of a pension fund listed in section 
 42.33  356.30, subdivision 3, before July 1, 1989.  For a person who 
 42.34  first becomes a member of the association after June 30, 1989, 
 42.35  normal retirement age means the higher of age 65 or "retirement 
 42.36  age," as defined in United States Code, title 42, section 
 43.1   416(l), as amended, but not to exceed age 66. 
 43.2      Sec. 47.  Minnesota Statutes 1996, section 354.42, 
 43.3   subdivision 2, is amended to read: 
 43.4      Subd. 2.  [EMPLOYEE.] The employee contribution to the fund 
 43.5   shall be is an amount equal to 6.5 5.0 percent of the salary of 
 43.6   every coordinated member and 10.5 9.0 percent of the salary of 
 43.7   every basic member.  This contribution shall must be made by 
 43.8   deduction from salary.  Where any portion of a member's salary 
 43.9   is paid from other than public funds, such the member's employee 
 43.10  contribution shall must be based on the entire salary received.  
 43.11     Sec. 48.  Minnesota Statutes 1996, section 354.42, 
 43.12  subdivision 3, is amended to read: 
 43.13     Subd. 3.  [EMPLOYER.] The employer contribution to the fund 
 43.14  shall be is an amount equal to 4-1/2 5.0 percent of the salary 
 43.15  of each coordinated member and 8-1/2 9.0 percent of the salary 
 43.16  of each basic member.  
 43.17     Sec. 49.  Minnesota Statutes 1996, section 354.42, 
 43.18  subdivision 5, is amended to read: 
 43.19     Subd. 5.  [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) To 
 43.20  amortize the unfunded actuarial accrued liability computed under 
 43.21  the entry age actuarial cost method and disclosed under the 
 43.22  annual actuarial valuations prepared by the commission-retained 
 43.23  actuary under section 356.215, an additional employer 
 43.24  contribution shall must be made in the amount of 3.64 1.64 
 43.25  percent of the salary of each member.  
 43.26     (b) This contribution must be made in the manner provided 
 43.27  in section 354.52, subdivision 4.  
 43.28     (c) This subdivision is repealed once the actuarial value 
 43.29  of the assets of the plan equal or exceed the actuarial accrued 
 43.30  liability of the plan as determined by the actuary retained by 
 43.31  the legislative commission on pensions and retirement under 
 43.32  section 356.215.  The repeal is effective on the first day of 
 43.33  the first full pay period occurring after March 31 of the 
 43.34  calendar year following the issuance of the actuarial valuation 
 43.35  upon which the repeal is based. 
 43.36     By January 1 of each year, the board of directors shall 
 44.1   report to the legislative commission on pensions and retirement, 
 44.2   the chair of the committee on appropriations of the house of 
 44.3   representatives, and the chair of the committee on finance of 
 44.4   the senate on the amount raised by the additional employer 
 44.5   contribution rate in effect and whether that amount is less 
 44.6   than, the same as, or more than the required amortization 
 44.7   contribution determined under section 356.215. 
 44.8      Sec. 50.  Minnesota Statutes 1996, section 354.44, 
 44.9   subdivision 6, is amended to read: 
 44.10     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
 44.11  ANNUITY.] (1) The formula retirement annuity hereunder shall 
 44.12  must be computed in accordance with the applicable provisions of 
 44.13  the formulas stated in clause (2) or (4) on the basis of each 
 44.14  member's average salary for the period of the member's formula 
 44.15  service credit.  
 44.16     For all years of formula service credit, "average salary," 
 44.17  for the purpose of determining the member's retirement annuity, 
 44.18  means the average salary upon which contributions were made and 
 44.19  upon which payments were made to increase the salary limitation 
 44.20  provided in Minnesota Statutes 1971, section 354.511, for the 
 44.21  highest five successive years of formula service credit 
 44.22  provided, however, that such "average salary" shall not include 
 44.23  any more than the equivalent of 60 monthly salary payments.  
 44.24  Average salary must be based upon all years of formula service 
 44.25  credit if this service credit is less than five years. 
 44.26     (2) This clause, in conjunction with clause (3), applies to 
 44.27  a person who first became a member of the association or a 
 44.28  member of a pension fund listed in section 356.30, subdivision 
 44.29  3, before July 1, 1989, unless clause (4), in conjunction with 
 44.30  clause (5), produces a higher annuity amount, in which case 
 44.31  clause (4) applies.  The average salary as defined in clause 
 44.32  (1), multiplied by the following percentages per year of formula 
 44.33  service credit shall determine the amount of the annuity to 
 44.34  which the member qualifying therefor is entitled: 
 44.35                         Coordinated Member   Basic Member
 44.36  Each year of service     1.13 the           2.13 the
 45.1    during first ten        percent            percent
 45.2                            specified in       specified in
 45.3                            section 356.19,    section 356.19,
 45.4                            subdivision 1,     subdivision 3,
 45.5                            per year           per year
 45.6   Each year of service     1.63 the           2.63 the
 45.7    thereafter              percent            percent
 45.8                            specified in       specified in
 45.9                            section 356.19,    section 356.19,
 45.10                           subdivision 2,     subdivision 4,
 45.11                           per year           per year
 45.12     (3)(i) This clause applies only to a person who first 
 45.13  became a member of the association or a member of a pension fund 
 45.14  listed in section 356.30, subdivision 3, before July 1, 1989, 
 45.15  and whose annuity is higher when calculated under clause (2), in 
 45.16  conjunction with this clause than when calculated under clause 
 45.17  (4), in conjunction with clause (5). 
 45.18     (ii) Where any member retires prior to normal retirement 
 45.19  age under a formula annuity, the member shall be paid a 
 45.20  retirement annuity in an amount equal to the normal annuity 
 45.21  provided in clause (2) reduced by one-quarter of one percent for 
 45.22  each month that the member is under normal retirement age at the 
 45.23  time of retirement except that for any member who has 30 or more 
 45.24  years of allowable service credit, the reduction shall be 
 45.25  applied only for each month that the member is under age 62. 
 45.26     (iii) Any member whose attained age plus credited allowable 
 45.27  service totals 90 years is entitled, upon application, to a 
 45.28  retirement annuity in an amount equal to the normal annuity 
 45.29  provided in clause (2), without any reduction by reason of early 
 45.30  retirement. 
 45.31     (4) This clause applies to a member who has become at least 
 45.32  55 years old and first became a member of the association after 
 45.33  June 30, 1989, and to any other member who has become at least 
 45.34  55 years old and whose annuity amount when calculated under this 
 45.35  clause and in conjunction with clause (5), is higher than it is 
 45.36  when calculated under clause (2), in conjunction with clause (3).
 46.1   The average salary, as defined in clause (1) multiplied by 2.63 
 46.2   the percent specified by section 356.19, subdivision 4, for each 
 46.3   year of service for a basic member and by 1.63 the 
 46.4   percent specified in section 356.19, subdivision 2, for each 
 46.5   year of service for a coordinated member shall determine the 
 46.6   amount of the retirement annuity to which the member is entitled.
 46.7      (5) This clause applies to a person who has become at least 
 46.8   55 years old and first becomes a member of the association after 
 46.9   June 30, 1989, and to any other member who has become at least 
 46.10  55 years old and whose annuity is higher when calculated under 
 46.11  clause (4) in conjunction with this clause than when calculated 
 46.12  under clause (2), in conjunction with clause (3).  An employee 
 46.13  who retires under the formula annuity before the normal 
 46.14  retirement age shall be paid the normal annuity provided in 
 46.15  clause (4) reduced so that the reduced annuity is the actuarial 
 46.16  equivalent of the annuity that would be payable to the employee 
 46.17  if the employee deferred receipt of the annuity and the annuity 
 46.18  amount were augmented at an annual rate of three percent 
 46.19  compounded annually from the day the annuity begins to accrue 
 46.20  until the normal retirement age. 
 46.21     Sec. 51.  Minnesota Statutes 1996, section 354.44, is 
 46.22  amended by adding a subdivision to read: 
 46.23     Subd. 6a.  [EXTENSION OF 1997 PERMANENT INCREASE.] (a) A 
 46.24  percentage of the permanent increase for benefit recipients 
 46.25  effective July 1, 1997, under section 68, as specified in 
 46.26  paragraph (b), is payable to: 
 46.27     (1) a member who terminates service after June 30, 1997, 
 46.28  and whose benefit begins to accrue during the period of July 2, 
 46.29  1997, to July 1, 2002, based on the member's age at retirement. 
 46.30     (2) a member who is determined to be totally and 
 46.31  permanently disabled under section 354.05, subdivision 14, after 
 46.32  June 30, 1997, and whose benefit begins to accrue during the 
 46.33  period of July 2, 1997, to July 1, 2002, based on the member's 
 46.34  age at disability. 
 46.35     (3) the survivor of a member who dies after June 30, 1997, 
 46.36  and whose benefit begins to accrue during the period of July 2, 
 47.1   1997, to July 1, 2002. 
 47.2      (b) The percentage of the permanent increase is the amount 
 47.3   designated for the applicable beginning benefit accrual date, as 
 47.4   follows: 
 47.5    Beginning Benefit                    Percentage of  
 47.6      Accrual Date                     Permanent Increase  
 47.7    July 2, 1997,  to July 1, 1998          50 percent  
 47.8    July 2, 1998,  to July 1, 1999          40 percent  
 47.9    July 2, 1999,  to July 1, 2000          30 percent  
 47.10   July 2, 2000,  to July 1, 2001          20 percent  
 47.11   July 2, 2001,  to July 1, 2002          10 percent 
 47.12     Sec. 52.  Minnesota Statutes 1996, section 354.53, 
 47.13  subdivision 1, is amended to read: 
 47.14     Subdivision 1.  [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 
 47.15  employee given a leave of absence to enter military service and 
 47.16  who returns to teaching service upon discharge from military 
 47.17  service as provided in section 192.262, shall may obtain credit 
 47.18  for the period of military service but shall not receive credit 
 47.19  for any voluntary extension of military service at the instance 
 47.20  of the member beyond the initial period of enlistment, induction 
 47.21  or call to active duty.  The member shall obtain credit by 
 47.22  paying into the fund an employee contribution based upon 
 47.23  the salary of the member at the date of return from military 
 47.24  service.  The amount of this contribution shall be as follows: 
 47.25  
 47.26         Period          Basic Member     Coordinated Member
 47.27       July 1, 1973       8 percent          4 percent
 47.28  thru
 47.29  June 30, 1979
 47.30  July 1, 1979
 47.31  and 8.5 percent 4.5 percent
 47.32  thereafter
 47.33     The contributions specified in this subdivision shall be 
 47.34  contribution rates in effect at the time that the military 
 47.35  service was performed multiplied by the annual salary rate of 
 47.36  the member for the year beginning with the date of return from 
 48.1   military service and the number of years of military service 
 48.2   together with interest thereon at an annual rate of 8.5 percent 
 48.3   compounded annually from the time the military service was 
 48.4   rendered to the first date of payment.  The employer 
 48.5   contribution and additional contribution provided in section 
 48.6   354.42 shall must be paid by the employing unit at the rates in 
 48.7   effect at the time that the military service was performed, 
 48.8   applied to the annual salary rate of the member for the year 
 48.9   beginning with the date of return from military service, in the 
 48.10  manner provided in section 354.52, subdivision 4. 
 48.11     Sec. 53.  Minnesota Statutes 1996, section 354.55, 
 48.12  subdivision 11, is amended to read: 
 48.13     Subd. 11.  [DEFERRED ANNUITY; AUGMENTATION.] (a) Any person 
 48.14  covered under section 354.44, subdivision 6, who ceases to 
 48.15  render teaching service, may leave the person's accumulated 
 48.16  deductions in the fund for the purpose of receiving a deferred 
 48.17  annuity at retirement.  Eligibility for an annuity under this 
 48.18  subdivision shall be is governed pursuant to section 354.44, 
 48.19  subdivision 1, or 354.60. 
 48.20     (b) The amount of the deferred retirement annuity shall be 
 48.21  is determined by section 354.44, subdivision 6, and augmented as 
 48.22  provided in this subdivision.  The required reserves related to 
 48.23  that portion of the annuity which had accrued when the member 
 48.24  ceased to render teaching service shall must be augmented by 
 48.25  interest compounded annually from the first day of the month 
 48.26  following the month during which the member ceased to render 
 48.27  teaching service to the effective date of retirement.  There 
 48.28  shall be no augmentation if this period is less than three 
 48.29  months or if this period commences prior to July 1, 1971.  The 
 48.30  rates of interest used for this purpose shall must be five 
 48.31  percent compounded annually commencing July 1, 1971, until 
 48.32  January 1, 1981, and three percent compounded annually 
 48.33  thereafter until January 1 of the year following the year in 
 48.34  which the former member attains age 55.  From that date to the 
 48.35  effective date of retirement, the rate is five percent 
 48.36  compounded annually.  If a person has more than one period of 
 49.1   uninterrupted service, a separate average salary determined 
 49.2   under section 354.44, subdivision 6, must be used for each 
 49.3   period and the required reserves related to each period shall 
 49.4   must be augmented by interest pursuant to this subdivision.  The 
 49.5   sum of the augmented required reserves so determined shall be 
 49.6   the basis for purchasing the deferred annuity.  If a person 
 49.7   repays a refund, the service restored by the repayment must be 
 49.8   considered as continuous with the next period of service for 
 49.9   which the person has credit with this fund.  If a person does 
 49.10  not render teaching service in any one fiscal year or more 
 49.11  consecutive fiscal years and then resumes teaching service, the 
 49.12  formula percentages used from the date of the resumption of 
 49.13  teaching service shall must be those applicable to new members.  
 49.14  The mortality table and interest assumption used to compute the 
 49.15  annuity shall must be the applicable mortality table established 
 49.16  by the board under section 354.07, subdivision 1, and the 
 49.17  interest rate assumption under section 356.215 in effect when 
 49.18  the member retires.  A period of uninterrupted service for the 
 49.19  purposes of this subdivision means a period of covered teaching 
 49.20  service during which the member has not been separated from 
 49.21  active service for more than one fiscal year. 
 49.22     (c) In no case shall the annuity payable under this 
 49.23  subdivision be less than the amount of annuity payable pursuant 
 49.24  to section 354.44, subdivision 6. 
 49.25     (d) The requirements and provisions for retirement before 
 49.26  normal retirement age contained in section 354.44, subdivision 
 49.27  6, clause (3) or (5), shall also apply to an employee fulfilling 
 49.28  the requirements with a combination of service as provided in 
 49.29  section 354.60. 
 49.30     (e) The augmentation provided by this subdivision applies 
 49.31  to the benefit provided in section 354.46, subdivision 2. 
 49.32     (f) The augmentation provided by this subdivision shall not 
 49.33  apply to any period in which a person is on an approved leave of 
 49.34  absence from an employer unit covered by the provisions of this 
 49.35  chapter.  
 49.36     (g) The retirement annuity or disability benefit of, or the 
 50.1   survivor benefit payable on behalf of, a former teacher who 
 50.2   terminated service before July 1, 1997, which is not first 
 50.3   payable until after June 30, 1997, must be increased on an 
 50.4   actuarial equivalent basis to reflect the change in the post 
 50.5   retirement interest rate actuarial assumption under section 56 
 50.6   from five percent to six percent under a calculation procedure 
 50.7   and tables adopted by the board as recommended by an approved 
 50.8   actuary and approved by the actuary retained by the legislative 
 50.9   commission on pensions and retirement. 
 50.10     Sec. 54.  [356.19] [RETIREMENT BENEFIT FORMULA 
 50.11  PERCENTAGES.] 
 50.12     Subdivision 1.  [COORDINATED PLAN MEMBERS.] The applicable 
 50.13  benefit accrual rate is 1.2 percent. 
 50.14     Subd. 2.  [COORDINATED PLAN MEMBERS.] The applicable 
 50.15  benefit accrual rate is 1.7 percent. 
 50.16     Subd. 3.  [BASIC PLAN MEMBERS.] The applicable benefit 
 50.17  accrual rate is 2.2 percent. 
 50.18     Subd. 4.  [BASIC PLAN MEMBERS.] The applicable benefit 
 50.19  accrual rate is 2.7 percent. 
 50.20     Subd. 5.  [CORRECTIONAL PLAN MEMBERS.] The applicable 
 50.21  benefit accrual rate is 2.4 percent. 
 50.22     Subd. 6.  [STATE TROOPERS PLAN AND POLICE/FIRE PLAN 
 50.23  MEMBERS.] The applicable benefit accrual rate is 3.0 percent. 
 50.24     Subd. 7.  [JUDGES PLAN.] The applicable benefit accrual 
 50.25  rate is 2.7 percent. 
 50.26     Subd. 8.  [JUDGES PLAN.] The applicable benefit accrual 
 50.27  rate is 3.2 percent. 
 50.28     Subd. 9.  [FUTURE BENEFIT ACCRUAL RATE INCREASES.] After 
 50.29  January 2, 1998, benefit accrual rate increases under this 
 50.30  section must apply only to allowable service or formula service 
 50.31  rendered after the effective date of the benefit accrual rate 
 50.32  increase. 
 50.33     Sec. 55.  Minnesota Statutes 1996, section 356.20, 
 50.34  subdivision 2, is amended to read: 
 50.35     Subd. 2.  [COVERED PUBLIC PENSION FUNDS.] This section 
 50.36  applies to the following public pension plans: 
 51.1      (1) State employees retirement fund. 
 51.2      (2) Public employees retirement fund. 
 51.3      (3) Teachers retirement association. 
 51.4      (4) State patrol retirement fund. 
 51.5      (5) Minneapolis teachers retirement fund association. 
 51.6      (6) St. Paul teachers retirement fund association. 
 51.7      (7) Duluth teachers retirement fund association. 
 51.8      (8) Minneapolis employees retirement fund. 
 51.9      (9) University of Minnesota faculty retirement plan. 
 51.10     (10) University of Minnesota faculty supplemental 
 51.11  retirement plan. 
 51.12     (11) Judges retirement fund. 
 51.13     (12) Any police or firefighter's relief association 
 51.14  enumerated in section 69.77, subdivision 1a or 69.771, 
 51.15  subdivision 1. 
 51.16     (13) Public employees police and fire fund.  
 51.17     (14) Minnesota state retirement system correctional 
 51.18  officers retirement fund.  
 51.19     (15) Public employees local government correctional service 
 51.20  retirement plan. 
 51.21     Sec. 56.  Minnesota Statutes 1996, section 356.215, 
 51.22  subdivision 2, is amended to read: 
 51.23     Subd. 2.  [REQUIREMENTS.] (a) It is the policy of the 
 51.24  legislature that it is necessary and appropriate to determine 
 51.25  annually the financial status of tax supported retirement and 
 51.26  pension plans for public employees.  To achieve this goal, the 
 51.27  legislative commission on pensions and retirement shall have 
 51.28  prepared by the actuary retained by the commission annual 
 51.29  actuarial valuations of the retirement plans enumerated in 
 51.30  section 3.85, subdivision 11, paragraph (b), and quadrennial 
 51.31  experience studies of the retirement plans enumerated in section 
 51.32  3.85, subdivision 11, paragraph (b), clauses (1), (2), and (7), 
 51.33  and, two years after each set of quadrennial experience studies, 
 51.34  quadrennial projection valuations of the retirement plans 
 51.35  enumerated in section 3.85, subdivision 11, paragraph (b), 
 51.36  clauses (1), (2), and (7), and of any other retirement plan 
 52.1   enumerated in section 3.85, subdivision 11, paragraph (b), for 
 52.2   which it determines that the analysis is beneficial.  The 
 52.3   governing or managing board or administrative officials of each 
 52.4   public pension and retirement fund or plan enumerated in section 
 52.5   356.20, subdivision 2, clauses (9), (10), and (12), shall have 
 52.6   prepared by an approved actuary annual actuarial valuations of 
 52.7   their respective funds as provided in this section.  This 
 52.8   requirement also applies to any fund that is the successor to 
 52.9   any organization enumerated in section 356.20, subdivision 2, or 
 52.10  to the governing or managing board or administrative officials 
 52.11  of any newly formed retirement fund or association operating 
 52.12  under the control or supervision of any public employee group, 
 52.13  governmental unit, or institution receiving a portion of its 
 52.14  support through legislative appropriations, and any local police 
 52.15  or fire fund coming within the provisions of section 356.216. 
 52.16     (b) The quadrennial projection valuations required under 
 52.17  paragraph (a) are intended to serve as an additional analytical 
 52.18  tool with which policy makers may assess the future funding 
 52.19  status of public plans through forecasting and testing various 
 52.20  potential outcomes over time if certain plan assumptions or 
 52.21  valuation methods were to be modified.  In consultation with the 
 52.22  executive director of the legislative commission on pensions and 
 52.23  retirement, the retirement fund directors, the state economist, 
 52.24  the state demographer, the commissioner of finance, and the 
 52.25  commissioner of employee relations, the actuary retained by the 
 52.26  legislative commission on pensions and retirement shall perform 
 52.27  the quadrennial projection valuations, testing future 
 52.28  implications for plan funding by modifying assumptions and 
 52.29  methods currently in place.  The commission-retained actuary 
 52.30  shall provide advice to the commission as to the periods over 
 52.31  which such projections should be made, the nature and scope of 
 52.32  the scenarios to be analyzed, the measures of funding status to 
 52.33  be employed, and shall report the results of these analyses in 
 52.34  the same manner as for quadrennial experience studies. 
 52.35     Sec. 57.  Minnesota Statutes 1996, section 356.215, 
 52.36  subdivision 4d, is amended to read: 
 53.1      Subd. 4d.  [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 
 53.2   governed by chapters chapter 352B, 353C, and by sections 
 53.3   352.90 through to 352.951 and 353.63 through to 353.68, the 
 53.4   actuarial valuation must use a preretirement interest assumption 
 53.5   of 8.5 percent, a postretirement interest assumption of five six 
 53.6   percent, and a future salary increase assumption of 6.5 percent. 
 53.7      (b) For funds governed by chapter 354A, the actuarial 
 53.8   valuation must use preretirement and postretirement assumptions 
 53.9   of 8.5 percent and a future salary increase assumption of 6.5 
 53.10  percent, but the actuarial valuation must reflect the payment of 
 53.11  postretirement adjustments to retirees, based on the methods 
 53.12  specified in the bylaws of the fund as approved by the 
 53.13  legislature.  For a fund governed by chapter 422A, the actuarial 
 53.14  valuation shall use a preretirement interest assumption of six 
 53.15  percent, a postretirement interest assumption of five percent, 
 53.16  and an assumption that in each future year the salary on which a 
 53.17  retirement or other benefit is based is 1.04 multiplied by the 
 53.18  salary for the preceding year.  
 53.19     (c) For all other funds not specified in paragraph (a), 
 53.20  (b), (d), or (e), the actuarial valuation must use a 
 53.21  preretirement interest assumption of five percent, a 
 53.22  postretirement interest assumption of five percent, and a future 
 53.23  salary increase assumption of 3.5 percent. 
 53.24     (d) For funds governed by chapters 3A, 352C, and 490, the 
 53.25  actuarial valuation must use a preretirement interest assumption 
 53.26  of 8.5 percent, a postretirement interest assumption of five six 
 53.27  percent, and a future salary increase assumption of 6.5 percent 
 53.28  in each future year in which the salary amount payable is not 
 53.29  determinable from section 3.099, 15A.081, subdivision 6, or 
 53.30  15A.083, subdivision 1, whichever applies, or from applicable 
 53.31  compensation council recommendations under section 15A.082. 
 53.32     (e) For funds governed by sections 352.01 through 352.86, 
 53.33  353.01 through 353.46, and chapter 354, the actuarial valuation 
 53.34  must use a preretirement interest assumption of 8.5, a 
 53.35  postretirement interest assumption of five six percent, and a 
 53.36  graded rate future salary increase assumption as follows: 
 54.1           General state   General public   
 54.2             employees       employees         Teachers  
 54.3            retirement      retirement        retirement 
 54.4    Age        plan            plan              plan 
 54.5    16        7.2500%         8.71%              7.25%
 54.6    17        7.2500          8.71               7.25 
 54.7    18        7.2500          8.70               7.25 
 54.8    19        7.2500          8.70               7.25 
 54.9    20        7.2500          7.70               7.25 
 54.10   21        7.1454          7.70               7.25 
 54.11   22        7.1094          7.70               7.25 
 54.12   23        7.0725          7.70               7.20 
 54.13   24        7.0363          7.70               7.15 
 54.14   25        7.0000          7.60               7.10 
 54.15   26        7.0000          7.51               7.05 
 54.16   27        7.0000          7.39               7.00 
 54.17   28        7.0000          7.30               7.00 
 54.18   29        7.0000          7.20               7.00 
 54.19   30        7.0000          7.20               7.00 
 54.20   31        7.0000          7.10               7.00 
 54.21   32        7.0000          7.10               7.00 
 54.22   33        7.0000          7.00               7.00 
 54.23   34        7.0000          7.00               7.00 
 54.24   35        7.0000          6.90               7.00 
 54.25   36        6.9019          6.80               7.00 
 54.26   37        6.8074          6.70               7.00 
 54.27   38        6.7125          6.60               6.90 
 54.28   39        6.6054          6.50               6.80 
 54.29   40        6.5000          6.40               6.70 
 54.30   41        6.3540          6.30               6.60 
 54.31   42        6.2087          6.30               6.50 
 54.32   43        6.0622          6.30               6.35 
 54.33   44        5.9048          6.20               6.20 
 54.34   45        5.7500          6.20               6.05 
 54.35   46        5.6940          6.09               5.90 
 54.36   47        5.6375          6.00               5.75 
 55.1    48        5.5822          5.90               5.70 
 55.2    49        5.5405          5.80               5.65 
 55.3    50        5.5000          5.70               5.60 
 55.4    51        5.4384          5.70               5.55 
 55.5    52        5.3776          5.70               5.50 
 55.6    53        5.3167          5.70               5.45 
 55.7    54        5.2826          5.70               5.40 
 55.8    55        5.2500          5.70               5.35 
 55.9    56        5.2500          5.70               5.30 
 55.10   57        5.2500          5.70               5.25 
 55.11   58        5.2500          5.70               5.25 
 55.12   59        5.2500          5.70               5.25 
 55.13   60        5.2500          5.00               5.25 
 55.14   61        5.2500          5.00               5.25 
 55.15   62        5.2500          5.00               5.25 
 55.16   63        5.2500          5.00               5.25 
 55.17   64        5.2500          5.00               5.25 
 55.18   65        5.2500          5.00               5.25 
 55.19   66        5.2500          5.00               5.25 
 55.20   67        5.2500          5.00               5.25 
 55.21   68        5.2500          5.00               5.25 
 55.22   69        5.2500          5.00               5.25 
 55.23   70        5.2500          5.00               5.25 
 55.24     Sec. 58.  Minnesota Statutes 1996, section 356.215, 
 55.25  subdivision 4g, is amended to read: 
 55.26     Subd. 4g.  [AMORTIZATION CONTRIBUTIONS.] (a) In addition to 
 55.27  the exhibit indicating the level normal cost, the actuarial 
 55.28  valuation must contain an exhibit indicating the additional 
 55.29  annual contribution sufficient to amortize the unfunded 
 55.30  actuarial accrued liability.  For funds governed by chapters 3A, 
 55.31  352, 352B, 352C, 353, 353C, 354, 354A, and 490, the additional 
 55.32  contribution must be calculated on a level percentage of covered 
 55.33  payroll basis by the established date for full funding in effect 
 55.34  when the valuation is prepared.  For funds governed by chapter 
 55.35  3A, sections 352.90 through 352.951, chapters 352B, 352C, 
 55.36  sections 353.63 through 353.68, and chapters 353C, 354A, and 
 56.1   490, the level percent additional contribution must be 
 56.2   calculated assuming annual payroll growth of 6.5 percent.  For 
 56.3   funds governed by sections 352.01 through 352.86 and chapter 
 56.4   354, the level percent additional contribution must be 
 56.5   calculated assuming an annual payroll growth of five percent.  
 56.6   For the fund governed by sections 353.01 through 353.46, the 
 56.7   level percent additional contribution must be calculated 
 56.8   assuming an annual payroll growth of six percent.  For all other 
 56.9   funds, the additional annual contribution must be calculated on 
 56.10  a level annual dollar amount basis. 
 56.11     (b) For any fund other than the Minneapolis employees 
 56.12  retirement fund, after the first actuarial valuation date 
 56.13  occurring after June 1, 1989, if there has not been a change in 
 56.14  the actuarial assumptions used for calculating the actuarial 
 56.15  accrued liability of the fund, a change in the benefit plan 
 56.16  governing annuities and benefits payable from the fund, a change 
 56.17  in the actuarial cost method used in calculating the actuarial 
 56.18  accrued liability of all or a portion of the fund, or a 
 56.19  combination of the three, which change or changes by themselves 
 56.20  without inclusion of any other items of increase or decrease 
 56.21  produce a net increase in the unfunded actuarial accrued 
 56.22  liability of the fund, the established date for full funding for 
 56.23  the first actuarial valuation made after June 1, 1989, and each 
 56.24  successive actuarial valuation is the first actuarial valuation 
 56.25  date occurring after June 1, 2020.  
 56.26     (c) For any fund or plan other than the Minneapolis 
 56.27  employees retirement fund, after the first actuarial valuation 
 56.28  date occurring after June 1, 1989, if there has been a change in 
 56.29  any or all of the actuarial assumptions used for calculating the 
 56.30  actuarial accrued liability of the fund, a change in the benefit 
 56.31  plan governing annuities and benefits payable from the fund, a 
 56.32  change in the actuarial cost method used in calculating the 
 56.33  actuarial accrued liability of all or a portion of the fund, or 
 56.34  a combination of the three, and the change or changes, by 
 56.35  themselves and without inclusion of any other items of increase 
 56.36  or decrease, produce a net increase in the unfunded actuarial 
 57.1   accrued liability in the fund, the established date for full 
 57.2   funding must be determined using the following procedure:  
 57.3      (i) the unfunded actuarial accrued liability of the fund 
 57.4   must be determined in accordance with the plan provisions 
 57.5   governing annuities and retirement benefits and the actuarial 
 57.6   assumptions in effect before an applicable change; 
 57.7      (ii) the level annual dollar contribution or level 
 57.8   percentage, whichever is applicable, needed to amortize the 
 57.9   unfunded actuarial accrued liability amount determined under 
 57.10  item (i) by the established date for full funding in effect 
 57.11  before the change must be calculated using the interest 
 57.12  assumption specified in subdivision 4d in effect before the 
 57.13  change; 
 57.14     (iii) the unfunded actuarial accrued liability of the fund 
 57.15  must be determined in accordance with any new plan provisions 
 57.16  governing annuities and benefits payable from the fund and any 
 57.17  new actuarial assumptions and the remaining plan provisions 
 57.18  governing annuities and benefits payable from the fund and 
 57.19  actuarial assumptions in effect before the change; 
 57.20     (iv) the level annual dollar contribution or level 
 57.21  percentage, whichever is applicable, needed to amortize the 
 57.22  difference between the unfunded actuarial accrued liability 
 57.23  amount calculated under item (i) and the unfunded actuarial 
 57.24  accrued liability amount calculated under item (iii) over a 
 57.25  period of 30 years from the end of the plan year in which the 
 57.26  applicable change is effective must be calculated using the 
 57.27  applicable interest assumption specified in subdivision 4d in 
 57.28  effect after any applicable change; 
 57.29     (v) the level annual dollar or level percentage 
 57.30  amortization contribution under item (iv) must be added to the 
 57.31  level annual dollar amortization contribution or level 
 57.32  percentage calculated under item (ii); 
 57.33     (vi) the period in which the unfunded actuarial accrued 
 57.34  liability amount determined in item (iii) is amortized by the 
 57.35  total level annual dollar or level percentage amortization 
 57.36  contribution computed under item (v) must be calculated using 
 58.1   the interest assumption specified in subdivision 4d in effect 
 58.2   after any applicable change, rounded to the nearest integral 
 58.3   number of years, but not to exceed 30 years from the end of the 
 58.4   plan year in which the determination of the established date for 
 58.5   full funding using the procedure set forth in this clause is 
 58.6   made and not to be less than the period of years beginning in 
 58.7   the plan year in which the determination of the established date 
 58.8   for full funding using the procedure set forth in this clause is 
 58.9   made and ending by the date for full funding in effect before 
 58.10  the change; and 
 58.11     (vii) the period determined under item (vi) must be added 
 58.12  to the date as of which the actuarial valuation was prepared and 
 58.13  the date obtained is the new established date for full funding.  
 58.14     (d) For the Minneapolis employees retirement fund, the 
 58.15  established date for full funding is June 30, 2020. 
 58.16     (e) For the public employees retirement association police 
 58.17  and fire fund plan, the correctional employees retirement plan 
 58.18  of the Minnesota state retirement system, and the state patrol 
 58.19  retirement plan, an excess of valuation assets over actuarial 
 58.20  accrued liability will must be amortized in the same manner over 
 58.21  the same period as an unfunded actuarial accrued liability 
 58.22  but will must serve to reduce the required contribution instead 
 58.23  of increasing it. 
 58.24     Sec. 59.  Minnesota Statutes 1996, section 356.217, is 
 58.25  amended to read: 
 58.26     356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.] 
 58.27     (a) The actuary retained by the legislative commission on 
 58.28  pensions and retirement is not required to prepare actuarial 
 58.29  valuations of the public employees local government correctional 
 58.30  employees retirement plan unless the plan is implemented by a 
 58.31  county under section 353C.04. 
 58.32     (b) The cost of any requested benefit projections by the 
 58.33  commission-retained actuary relating to the Minnesota 
 58.34  postretirement investment fund for the state board of investment 
 58.35  is payable by the state board of investment. 
 58.36     (c) (b) Actuarial valuations under section 356.215, for 
 59.1   July 1, 1991, and thereafter, are not required to have an 
 59.2   individual commentary section.  The commentary section, if 
 59.3   omitted from the individual plan actuarial valuation, must be 
 59.4   included in an appropriate generalized format as part of the 
 59.5   report to the legislature under section 3.85, subdivision 11. 
 59.6      (d) (c) Actuarial valuations under section 356.215, for 
 59.7   July 1, 1991, and thereafter, are not required to contain 
 59.8   separate actuarial valuation results for basic and coordinated 
 59.9   programs unless each program has a membership of at least ten 
 59.10  percent of the total membership of the fund.  Actuarial 
 59.11  valuations under section 356.215, for July 1, 1991, and 
 59.12  thereafter, are not required to contain cash flow forecasts. 
 59.13     (e) (d) Actuarial valuations of the public employees police 
 59.14  and fire fund local consolidation accounts for July 1, 1991, and 
 59.15  thereafter, are not required to contain separate tabulations or 
 59.16  summaries of active member, service retirement, disability 
 59.17  retirement, and survivor data for each local consolidation 
 59.18  account. 
 59.19     (f) (e) The commission-retained actuary is: 
 59.20     (1) required to publish experience findings for plans for 
 59.21  which experience findings are required only on a quadrennial 
 59.22  basis for the four-year period ending June 30, 1992, and every 
 59.23  four years thereafter; 
 59.24     (2) not required to prepare a separate experience analysis 
 59.25  or publish separate experience findings for basic and 
 59.26  coordinated programs if separate actuarial valuation results for 
 59.27  the programs are not required; and 
 59.28     (3) not required to calculate investment rate of return 
 59.29  experience results on any basis other than current asset value 
 59.30  as defined in section 356.215, subdivision 1, clause (6). 
 59.31     Sec. 60.  Minnesota Statutes 1996, section 356.30, 
 59.32  subdivision 1, is amended to read: 
 59.33     Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 
 59.34  Notwithstanding any provisions to the contrary of the laws 
 59.35  governing the funds enumerated in subdivision 3, a person who 
 59.36  has met the qualifications of clause (2) may elect to receive a 
 60.1   retirement annuity from each fund in which the person has at 
 60.2   least six months allowable service, based on the allowable 
 60.3   service in each fund, subject to the provisions of clause (3).  
 60.4      (2) A person may receive upon retirement a retirement 
 60.5   annuity from each fund in which the person has at least six 
 60.6   months allowable service, and augmentation of a deferred annuity 
 60.7   calculated under the laws governing each public pension plan or 
 60.8   fund named in subdivision 3, from the date the person terminated 
 60.9   all public service if: 
 60.10     (a) the person has allowable service totaling an amount 
 60.11  that allows the person to receive an annuity in any two or more 
 60.12  of the enumerated funds; and 
 60.13     (b) the person has not begun to receive an annuity from any 
 60.14  enumerated fund or the person has made application for benefits 
 60.15  from all funds and the effective dates of the retirement annuity 
 60.16  with each fund under which the person chooses to receive an 
 60.17  annuity are within a one-year period.  
 60.18     (3) The retirement annuity from each fund must be based 
 60.19  upon the allowable service in each fund, except that:  
 60.20     (a) The laws governing annuities must be the law in effect 
 60.21  on the date of termination from the last period of public 
 60.22  service under a covered fund with which the person earned a 
 60.23  minimum of one-half year of allowable service credit during that 
 60.24  employment.  
 60.25     (b) The "average salary" on which the annuity from each 
 60.26  covered fund in which the employee has credit in a formula plan 
 60.27  shall be based on the employee's highest five successive years 
 60.28  of covered salary during the entire service in covered funds.  
 60.29     (c) The formula percentages to be used by each fund must be 
 60.30  those percentages prescribed by each fund's formula as continued 
 60.31  for the respective years of allowable service from one fund to 
 60.32  the next, recognizing all previous allowable service with the 
 60.33  other covered funds.  
 60.34     (d) Allowable service in all the funds must be combined in 
 60.35  determining eligibility for and the application of each fund's 
 60.36  provisions in respect to actuarial reduction in the annuity 
 61.1   amount for retirement prior to normal retirement.  
 61.2      (e) The annuity amount payable for any allowable service 
 61.3   under a nonformula plan of a covered fund must not be affected 
 61.4   but such service and covered salary must be used in the above 
 61.5   calculation.  
 61.6      (f) This section shall not apply to any person whose final 
 61.7   termination from the last public service under a covered fund is 
 61.8   prior to May 1, 1975.  
 61.9      (g) For the purpose of computing annuities under this 
 61.10  section the formula percentages used by any covered fund, except 
 61.11  the basic program of the teachers retirement association, the 
 61.12  public employees police and fire fund, and the state patrol 
 61.13  retirement fund, must not exceed 2-1/2 the percent specified in 
 61.14  section 356.19, subdivision 4, per year of service for any year 
 61.15  of service or fraction thereof.  The formula percentage used by 
 61.16  the public employees police and fire fund and the state patrol 
 61.17  retirement fund must not exceed 2.65 the percent specified in 
 61.18  section 356.19, subdivision 6, per year of service for any year 
 61.19  of service or fraction thereof.  The formula percentage used by 
 61.20  the teachers retirement association must not exceed 2.63 percent 
 61.21  per year of basic program service for any year of basic program 
 61.22  service or fraction thereof.  The formula percentage used by the 
 61.23  legislators retirement plan and the elective state officers 
 61.24  retirement must not exceed 2.5 percent, but this limit does not 
 61.25  apply to the adjustment provided under section 3A.02, 
 61.26  subdivision 1, paragraph (c), or 352C.031, paragraph (b). 
 61.27     (h) Any period of time for which a person has credit in 
 61.28  more than one of the covered funds must be used only once for 
 61.29  the purpose of determining total allowable service.  
 61.30     (i) If the period of duplicated service credit is more than 
 61.31  six months, or the person has credit for more than six months 
 61.32  with each of the funds, each fund shall apply its formula to a 
 61.33  prorated service credit for the period of duplicated service 
 61.34  based on a fraction of the salary on which deductions were paid 
 61.35  to that fund for the period divided by the total salary on which 
 61.36  deductions were paid to all funds for the period.  
 62.1      (j) If the period of duplicated service credit is less than 
 62.2   six months, or when added to other service credit with that fund 
 62.3   is less than six months, the service credit must be ignored and 
 62.4   a refund of contributions made to the person in accord with that 
 62.5   fund's refund provisions.  
 62.6      Sec. 61.  Minnesota Statutes 1996, section 356.30, 
 62.7   subdivision 3, is amended to read: 
 62.8      Subd. 3.  [COVERED FUNDS.] This section applies to the 
 62.9   following retirement funds: 
 62.10     (1) state employees retirement fund, established pursuant 
 62.11  to chapter 352; 
 62.12     (2) correctional employees retirement program, established 
 62.13  pursuant to chapter 352; 
 62.14     (3) unclassified employees retirement plan, established 
 62.15  pursuant to chapter 352D; 
 62.16     (4) state patrol retirement fund, established pursuant to 
 62.17  chapter 352B; 
 62.18     (5) legislators' retirement plan, established pursuant to 
 62.19  chapter 3A; 
 62.20     (6) elective state officers' retirement plan, established 
 62.21  pursuant to chapter 352C; 
 62.22     (7) public employees retirement association, established 
 62.23  pursuant to chapter 353; 
 62.24     (8) public employees police and fire fund, established 
 62.25  pursuant to chapter 353; 
 62.26     (9) teachers retirement association, established pursuant 
 62.27  to chapter 354; 
 62.28     (10) Minneapolis employees retirement fund, established 
 62.29  pursuant to chapter 422A; 
 62.30     (11) Minneapolis teachers retirement fund association, 
 62.31  established pursuant to chapter 354A; 
 62.32     (12) St. Paul teachers retirement fund association, 
 62.33  established pursuant to chapter 354A; 
 62.34     (13) Duluth teachers retirement fund association, 
 62.35  established pursuant to chapter 354A; 
 62.36     (14) public employees local government correctional service 
 63.1   retirement plan established by sections 353C.01 to 353C.10; and 
 63.2      (15) (14) judges' retirement fund, established by sections 
 63.3   490.121 to 490.132. 
 63.4      Sec. 62.  Minnesota Statutes 1996, section 356.32, 
 63.5   subdivision 2, is amended to read: 
 63.6      Subd. 2.  [COVERED FUNDS.] The provisions of this section 
 63.7   shall apply to the following retirement funds: 
 63.8      (1) state employees retirement fund, established pursuant 
 63.9   to chapter 352; 
 63.10     (2) correctional employees retirement program, established 
 63.11  pursuant to chapter 352; 
 63.12     (3) state patrol retirement fund, established pursuant to 
 63.13  chapter 352B; 
 63.14     (4) public employees retirement fund, established pursuant 
 63.15  to chapter 353; 
 63.16     (5) public employees police and fire fund, established 
 63.17  pursuant to chapter 353; 
 63.18     (6) teachers retirement association, established pursuant 
 63.19  to chapter 354; 
 63.20     (7) Minneapolis employees retirement fund, established 
 63.21  pursuant to chapter 422A; 
 63.22     (8) Duluth teachers retirement fund association, 
 63.23  established pursuant to chapter 354A; 
 63.24     (9) Minneapolis teachers retirement fund association, 
 63.25  established pursuant to chapter 354A; and 
 63.26     (10) St. Paul teachers retirement fund association, 
 63.27  established pursuant to chapter 354A; 
 63.28     (11) public employees local government correctional service 
 63.29  retirement plan established by sections 353B.01 to 353B.10. 
 63.30     Sec. 63.  Minnesota Statutes 1996, section 422A.06, 
 63.31  subdivision 8, is amended to read: 
 63.32     Subd. 8.  [RETIREMENT BENEFIT FUND.] (a) The retirement 
 63.33  benefit fund shall consist of amounts held for payment of 
 63.34  retirement allowances for members retired pursuant to this 
 63.35  chapter.  
 63.36     (b) Assets equal to the required reserves for retirement 
 64.1   allowances pursuant to this chapter determined in accordance 
 64.2   with the appropriate mortality table adopted by the board of 
 64.3   trustees based on the experience of the fund as recommended by 
 64.4   the commission-retained actuary shall be transferred from the 
 64.5   deposit accumulation fund to the retirement benefit fund as of 
 64.6   the last business day of the month in which the retirement 
 64.7   allowance begins.  The income from investments of these assets 
 64.8   shall be allocated to this fund.  There shall be paid from this 
 64.9   fund the retirement annuities authorized by law.  A required 
 64.10  reserve calculation for the retirement benefit fund must be made 
 64.11  by the actuary retained by the legislative commission on 
 64.12  pensions and retirement and must be certified to the retirement 
 64.13  board by the commission-retained actuary. 
 64.14     (c) The retirement benefit fund shall be governed by the 
 64.15  applicable laws governing the accounting and audit procedures, 
 64.16  investment, actuarial requirements, calculation and payment of 
 64.17  postretirement benefit adjustments, discharge of any deficiency 
 64.18  in the assets of the fund when compared to the actuarially 
 64.19  determined required reserves, and other applicable operations 
 64.20  and procedures regarding the Minnesota postretirement investment 
 64.21  fund in effect on June 30, 1997, established pursuant to under 
 64.22  Minnesota Statutes 1996, section 11A.18, and any legal or 
 64.23  administrative interpretations of those laws of the state board 
 64.24  of investment, the legal advisor to the board of investment and 
 64.25  the executive director of the state board of investment in 
 64.26  effect on June 30, 1997.  If a deferred yield adjustment account 
 64.27  is established for the Minnesota postretirement investment 
 64.28  fund before June 30, 1997, under Minnesota Statutes 1996, 
 64.29  section 11A.18, subdivision 5, the retirement board shall also 
 64.30  establish and maintain a deferred yield adjustment account 
 64.31  within this fund.  
 64.32     (d) Annually, following the calculation of any 
 64.33  postretirement adjustment payable from the retirement benefit 
 64.34  fund, the board of trustees shall submit a report to the 
 64.35  executive director of the legislative commission on pensions and 
 64.36  retirement and to the commissioner of finance indicating the 
 65.1   amount of any postretirement adjustment and the underlying 
 65.2   calculations on which that postretirement adjustment amount is 
 65.3   based, including the amount of dividends, the amount of 
 65.4   interest, and the amount of net realized capital gains or losses 
 65.5   utilized in the calculations. 
 65.6      (e) With respect to a former contributing member who began 
 65.7   receiving a retirement annuity or disability benefit under 
 65.8   section 422A.151, paragraph (a), clause (2), after June 30, 
 65.9   1997, or with respect to a survivor of a former contributing 
 65.10  member who began receiving a survivor benefit under section 
 65.11  422A.151, paragraph (a), clause (2), after June 30, 1997, the 
 65.12  reserves attributable to the one percent lower amount of the 
 65.13  cost-of-living adjustment payable to those annuity or benefit 
 65.14  recipients annually must be transferred back to the deposit 
 65.15  accumulation fund to the credit of the metropolitan airports 
 65.16  commission.  The calculation of this annual reduced 
 65.17  cost-of-living adjustment reserve transfer must be reviewed by 
 65.18  the actuary retained by the legislative commission on pensions 
 65.19  and retirement. 
 65.20     Sec. 64.  Minnesota Statutes 1996, section 422A.151, is 
 65.21  amended to read: 
 65.22     422A.151 [ALTERNATIVE CALCULATION OF ANNUITY.] 
 65.23     (a) In the case of a contributing member of the Minneapolis 
 65.24  employees retirement fund who is employed as a licensed peace 
 65.25  officer or firefighter with the metropolitan airports commission 
 65.26  and who retires, becomes disabled within the meaning of section 
 65.27  422A.18, or dies, the retirement, disability, or survivor 
 65.28  allowance is equal to the higher of the following: 
 65.29     (1) the retirement, disability, or survivor allowance 
 65.30  calculated for the person under the applicable provisions of the 
 65.31  Minneapolis employees retirement fund; or 
 65.32     (2) the retirement, disability, or survivor benefit that 
 65.33  the person would be entitled to upon meeting the applicable age 
 65.34  and allowable service requirements of section 353.651, 353.656, 
 65.35  or 353.657 if all employment as a licensed peace officer or 
 65.36  firefighter with the metropolitan airports commission had been 
 66.1   allowable service under the public employees retirement 
 66.2   association police and fire fund, instead of being covered by 
 66.3   the Minneapolis employees retirement fund.  In computing the 
 66.4   alternative benefit under section 353.651, 353.656, or 353.657, 
 66.5   the applicable definitions and related provisions of chapter 353 
 66.6   must be used. 
 66.7      A firefighter or licensed peace officer terminating 
 66.8   employment by the metropolitan airports commission after June 
 66.9   30, 1997, or the survivor of a deceased firefighter or licensed 
 66.10  peace officer terminating employment by the metropolitan 
 66.11  airports commission after June 30, 1997, under section 353.651, 
 66.12  353.656, or 353.657, shall receive a one percent lower 
 66.13  cost-of-living adjustment than otherwise payable under section 
 66.14  422A.06, subdivision 5.  If the cost-of-living adjustment 
 66.15  payable under section 422A.06, subdivision 5, is less than one 
 66.16  percent, the firefighter or licensed peace officer who retired 
 66.17  after June 30, 1997, must not have a reduction in the previously 
 66.18  received annuity or benefit amount, but future cost-of-living 
 66.19  adjustments must be modified equal to the percentage the benefit 
 66.20  would have been reduced below the person's current annuity or 
 66.21  benefit amount to reflect the one percent lower cost-of-living 
 66.22  adjustment under section 422A.06, subdivision 5. 
 66.23     (b) If a contributing member under paragraph (a) has 
 66.24  periods of coverage by the Minneapolis employees retirement fund 
 66.25  that include service other than employment as a licensed peace 
 66.26  officer or firefighter as well as employment as a licensed peace 
 66.27  officer or firefighter, the calculation of the benefit under 
 66.28  paragraph (a), clause (2), may only utilize service as a 
 66.29  licensed peace officer or firefighter employed by the 
 66.30  metropolitan airports commission. 
 66.31     Sec. 65.  Minnesota Statutes 1996, section 490.124, 
 66.32  subdivision 1, is amended to read: 
 66.33     Subdivision 1.  [BASIC RETIREMENT ANNUITY.] Except as 
 66.34  qualified hereinafter from and after mandatory retirement date, 
 66.35  normal retirement date, early retirement date, or one year from 
 66.36  the disability retirement date, as the case may be, a retirement 
 67.1   annuity shall be payable to a retiring judge from the judges' 
 67.2   retirement fund in an amount equal to:  (1) 2-1/2 the percent of 
 67.3   specified in section 356.19, subdivision 7, multiplied by the 
 67.4   judge's final average compensation multiplied by the number of 
 67.5   years and fractions of years of allowable service rendered prior 
 67.6   to July 1, 1980; plus (2) three the percent of specified in 
 67.7   section 356.19, subdivision 8, multiplied by the judge's final 
 67.8   average compensation multiplied by the number of years and 
 67.9   fractions of years of allowable service rendered after June 30, 
 67.10  1980; provided that the annuity shall must not exceed 65 70 
 67.11  percent of the judge's annual salary for the 12 months 
 67.12  immediately preceding retirement.  
 67.13     Sec. 66.  Minnesota Statutes 1996, section 490.124, 
 67.14  subdivision 5, is amended to read: 
 67.15     Subd. 5.  [DEFERRED BENEFITS.] (a) Any benefit to which a 
 67.16  judge is entitled under this section may be deferred until early 
 67.17  or normal retirement date, notwithstanding termination of such 
 67.18  judge's service prior thereto. 
 67.19     (b) The retirement annuity of, or the survivor benefit 
 67.20  payable on behalf of, a former judge, who terminated service 
 67.21  before July 1, 1997, which is not first payable until after June 
 67.22  30, 1997, must be increased on an actuarial equivalent basis to 
 67.23  reflect the change in the post retirement interest rate 
 67.24  actuarial assumption under section 56 from five percent to six 
 67.25  percent under a calculation procedure and tables adopted by the 
 67.26  board of directors of the Minnesota state retirement system and 
 67.27  approved by the actuary retained by the legislative commission 
 67.28  on pensions and retirement. 
 67.29     Sec. 67.  [APPROPRIATIONS; DEPARTMENT OF CORRECTIONS AND 
 67.30  LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.] 
 67.31     (a) For fiscal years 1998 and 1999, $900,000 is 
 67.32  appropriated to the commissioner of corrections.  The 
 67.33  commissioner of finance shall include this amount in the base 
 67.34  budget for the agency when developing the governor's budget 
 67.35  recommendations for the biennium ending June 30, 2001. 
 67.36     (b) For fiscal year 1999, $50,000 is appropriated to the 
 68.1   legislative coordinating commission for allocation to the 
 68.2   legislative commission on pensions and retirement. 
 68.3      Sec. 68.  [APPROPRIATION REDUCTION.] 
 68.4      Subdivision 1.  [REDUCTIONS BY RETIREMENT PLAN AND 
 68.5   EMPLOYER.] In fiscal years 1998 and 1999, the commissioner of 
 68.6   finance shall reduce allotments and cancel to the general fund 
 68.7   the amounts determined by multiplying the general fund supported 
 68.8   salaries of employees who are members of the teachers retirement 
 68.9   association according to clauses (1) and (2), and for employees 
 68.10  who are members of the general state employees retirement plan 
 68.11  of the Minnesota state retirement system according to clauses 
 68.12  (3), (4), and (5): 
 68.13     (1) 0.90 percent for the Minnesota state colleges and 
 68.14  universities; 
 68.15     (2) 1.50 percent for all agencies other than the Minnesota 
 68.16  state colleges and universities 
 68.17     (3) 0.20 percent for all agencies other than the Minnesota 
 68.18  state colleges and universities and the university of Minnesota; 
 68.19     (4) 0.12 percent for the Minnesota state colleges and 
 68.20  universities; 
 68.21     (5) 0.0728 percent for the university of Minnesota. 
 68.22     Subd. 2.  [APPROPRIATION REDUCTIONS APPLIED TO BASE 
 68.23  BUDGETS.] The commissioner of finance shall include the 
 68.24  reductions under subdivision 1 when developing the base budgets 
 68.25  for all affected organizations as submitted with the governor's 
 68.26  recommended budget for the biennium ending June 30, 2001. 
 68.27     Subd. 3.  [PROJECTED SAVINGS.] For the biennium ending June 
 68.28  30, 1999, the projected general fund savings attributable to the 
 68.29  reductions under subdivision 1 are as follows: 
 68.30                                            fiscal year 
 68.31                                          1998        1999 
 68.32   subdivision 1, clauses (1) and (2)  $1,937,000  $2,053,000 
 68.33   subdivision 1, clauses (3)          $1,162,000  $1,233,000 
 68.34   subdivision 1, clauses (4) and (5)  $  480,000  $  509,000 
 68.35     Sec. 69.  [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.] 
 68.36     A monthly survivor, disability, or retirement benefit paid 
 69.1   under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 352D, 
 69.2   353, 353A, 354, and 490, on June 30, 1997, is permanently 
 69.3   increased effective July 1, 1997, to reflect the change in the 
 69.4   postretirement fund interest assumption from five percent to six 
 69.5   percent.  The benefit payable under the six percent 
 69.6   postretirement interest assumption must be actuarially 
 69.7   equivalent to the benefit payable under the five percent 
 69.8   interest assumption and must be based on tables adopted by the 
 69.9   applicable board and approved by the actuary retained by the 
 69.10  legislative commission on pensions and retirement. 
 69.11     Sec. 70.  [MANDATED PENSION COMMISSION STUDY; DISPOSITION 
 69.12  OF PERA-P&F CONSOLIDATION ACCOUNTS.] 
 69.13     (a) The legislative commission on pensions and retirement, 
 69.14  in consultation with the affected constituencies, shall study 
 69.15  the advantages and disadvantages of the blending of some or all 
 69.16  local police and salaried firefighter consolidation accounts 
 69.17  into the public employees police and fire retirement plan 
 69.18  established under Minnesota Statutes, sections 353.63 to 353.68. 
 69.19     (b) The report must be transmitted on or before January 31, 
 69.20  1998, to the chair of the committee on governmental operations 
 69.21  and veterans of the senate, the chair of the governmental 
 69.22  operations budget division of the senate, the chair of the 
 69.23  committee on governmental operations of the house of 
 69.24  representatives, and the chair of the state government finance 
 69.25  division of the house of representatives. 
 69.26     Sec. 71.  [MANDATED PENSION COMMISSION STUDY; FIRST CLASS 
 69.27  CITY TEACHER RETIREMENT FUND CONSOLIDATION OPTIONS.] 
 69.28     (a) The legislative commission on pensions and retirement, 
 69.29  in consultation with the affected constituencies, shall study 
 69.30  the advantages and disadvantages of the restructuring or the 
 69.31  consolidation of the first class city teacher retirement fund 
 69.32  associations and the statewide teachers retirement association.  
 69.33  In its deliberations, the commission shall review the future 
 69.34  state funding needs of the Minneapolis employees retirement fund 
 69.35  and other applicable state pension funding resources. 
 69.36     (b) The report must be transmitted on or before January 31, 
 70.1   1998, to the chair of the committee on governmental operations 
 70.2   and veterans of the senate, the chair of the governmental 
 70.3   operations budget division of the senate, the chair of the 
 70.4   committee on governmental operations of the house of 
 70.5   representatives, and the chair of the state governmental finance 
 70.6   division of the house of representatives. 
 70.7      Sec. 72.  [POLICE STATE AID ADJUSTMENT.] 
 70.8      The legislature determines that the total employer 
 70.9   contributions paid to the public employees police and fire fund 
 70.10  for calendar year 1995, as certified to the commissioner of 
 70.11  revenue by the public employees retirement association in August 
 70.12  1996 for determining the amount of police state aid to be 
 70.13  distributed in September 1996, were overstated for some of the 
 70.14  counties and cities and understated for other counties and 
 70.15  cities.  The executive director of the public employees 
 70.16  retirement association shall certify to the commissioner of 
 70.17  revenue the amount of the overstated or understated 1995 
 70.18  calendar year employer contributions paid to the public 
 70.19  employees police and fire fund by each county and city; and the 
 70.20  commissioner of revenue shall adjust the October 1997 police 
 70.21  state aid distributions by the applicable amount of overpaid or 
 70.22  underpaid police state aid distributed in September 1996. 
 70.23     The estimated net adjustment for police state aid in the 
 70.24  fiscal year ending June 30, 1998, is $1,835,000.  The expected 
 70.25  net reduction to future police state aid expenditures resulting 
 70.26  from this adjustment is 6.5 percent less each year. 
 70.27     Sec. 73.  [REPEALER.] 
 70.28     (a) Minnesota Statutes 1996, sections 124.195, subdivision 
 70.29  12; 124.2139; 356.70; and 356.88, subdivision 2, are repealed. 
 70.30     (b) Minnesota Statutes 1996, sections 353C.01; 353C.02; 
 70.31  353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 
 70.32  and 353C.10, are repealed. 
 70.33     Sec. 74.  [EFFECTIVE DATES.] 
 70.34     Sections 37 and 38 are effective the first full pay period 
 70.35  after December 31, 1997.  Sections 16, 17, 20, 21, 28, and 29 
 70.36  are effective the first full pay period after June 30, 1997.  
 71.1   Sections 47, 48, and 49 are effective for all salary paid July 
 71.2   1, 1997, or later.  Sections 1 to 4 and 6 to 15, 18, 19, 22 to 
 71.3   27, 30 to 36, 39 to 46, and 50 to 73 are effective July 1, 1997.
 71.4   Section 5 is effective the first full pay period after December 
 71.5   31, 1998. 
 71.6                              ARTICLE 2
 71.7               LEGISLATORS AND CONSTITUTIONAL OFFICERS
 71.8      Section 1.  Minnesota Statutes 1996, section 3A.07, is 
 71.9   amended to read: 
 71.10     3A.07 [APPLICATION.] 
 71.11     (a) Except as provided in paragraph (b), this chapter 
 71.12  applies to members of the legislature in service upon after July 
 71.13  1, 1965, or thereafter, who otherwise meet the requirements of 
 71.14  this chapter. 
 71.15     (b) Members of the legislature who were elected for the 
 71.16  first time after June 30, 1997, or members of the legislature 
 71.17  who were elected before July 1, 1997, and who elect not to be 
 71.18  members of the plan established by this chapter are covered by 
 71.19  the unclassified employees retirement program governed by 
 71.20  chapter 352D. 
 71.21     (c) The coverage election under paragraph (b) is 
 71.22  irrevocable and must be made on a form prescribed by the 
 71.23  director. 
 71.24     Sec. 2.  [352C.011] [APPLICABILITY.] 
 71.25     (a) Except as provided in paragraph (b), this chapter 
 71.26  applies only to constitutional officers first elected before 
 71.27  July 1, 1997, to a constitutional office.  
 71.28     (b) Constitutional officers elected for the first time to a 
 71.29  constitutional office after June 30, 1997, or constitutional 
 71.30  officers who were elected before July 1, 1997, and who elect not 
 71.31  to be members of the plan established by this chapter are 
 71.32  covered by the unclassified employees retirement program 
 71.33  governed by chapter 352D. 
 71.34     (c) The coverage election under paragraph (b) is 
 71.35  irrevocable and must be made on a form prescribed by the 
 71.36  executive director of the Minnesota state retirement system. 
 72.1      Sec. 3.  Minnesota Statutes 1996, section 352D.02, 
 72.2   subdivision 1, is amended to read: 
 72.3      Subdivision 1.  [COVERAGE.] (a) Employees enumerated in 
 72.4   paragraph (b) (c), clauses 2, 3, 4, and 6 to 15, if they are in 
 72.5   the unclassified service of the state or metropolitan council 
 72.6   and are eligible for coverage under the general state employees 
 72.7   retirement plan under chapter 352, are participants in the 
 72.8   unclassified program under this chapter unless the employee 
 72.9   gives notice to the executive director of the Minnesota state 
 72.10  retirement system within one year following the commencement of 
 72.11  employment in the unclassified service that the employee desires 
 72.12  coverage under the general state employees retirement plan.  For 
 72.13  the purposes of this chapter, an employee who does not file 
 72.14  notice with the executive director is deemed to have exercised 
 72.15  the option to participate in the unclassified plan. 
 72.16     (b) Persons referenced in paragraph (c), clauses (1) and 
 72.17  (5), are participants in the unclassified program under this 
 72.18  chapter unless the person is eligible to elect different 
 72.19  coverage under section 3A.07 or 352C.011 and elects retirement 
 72.20  coverage by the applicable alternative retirement plan. 
 72.21     (c) Enumerated employees and referenced persons are: 
 72.22     (1) the governor, the lieutenant governor, the secretary of 
 72.23  state, the state auditor, the state treasurer, and the attorney 
 72.24  general; 
 72.25     (2) an employee in the office of the governor, lieutenant 
 72.26  governor, secretary of state, state auditor, state treasurer, 
 72.27  attorney general, or; 
 72.28     (3) an employee of the state board of investment; 
 72.29     (2) (4) the head of a department, division, or agency 
 72.30  created by statute in the unclassified service, an acting 
 72.31  department head subsequently appointed to the position, or an 
 72.32  employee enumerated in section 15A.081, subdivision 1 or 
 72.33  15A.083, subdivision 4; 
 72.34     (3) (5) a member of the legislature; 
 72.35     (6) a permanent, full-time unclassified employee of the 
 72.36  legislature or a commission or agency of the legislature or a 
 73.1   temporary legislative employee having shares in the supplemental 
 73.2   retirement fund as a result of former employment covered by this 
 73.3   chapter, whether or not eligible for coverage under the 
 73.4   Minnesota state retirement system; 
 73.5      (4) (7) a person who is employed in a position established 
 73.6   under section 43A.08, subdivision 1, clause (3), or in a 
 73.7   position authorized under a statute creating or establishing a 
 73.8   department or agency of the state, which is at the deputy or 
 73.9   assistant head of department or agency or director level; 
 73.10     (5) (8) the regional administrator, or executive director 
 73.11  of the metropolitan council, general counsel, division 
 73.12  directors, operations managers, and other positions as 
 73.13  designated by the council, all of which may not exceed 27 
 73.14  positions at the council and the chair, provided that upon 
 73.15  initial designation of all positions provided for in this 
 73.16  clause, no further designations or redesignations may be made 
 73.17  without approval of the board of directors of the Minnesota 
 73.18  state retirement system; 
 73.19     (6) (9) the executive director, associate executive 
 73.20  director, and not to exceed nine positions of the higher 
 73.21  education services office in the unclassified service, as 
 73.22  designated by the higher education services office before 
 73.23  January 1, 1992, or subsequently redesignated with the approval 
 73.24  of the board of directors of the Minnesota state retirement 
 73.25  system, unless the person has elected coverage by the individual 
 73.26  retirement account plan under chapter 354B; 
 73.27     (7) (10) the clerk of the appellate courts appointed under 
 73.28  article VI, section 2, of the Constitution of the state of 
 73.29  Minnesota; 
 73.30     (8) (11) the chief executive officers of correctional 
 73.31  facilities operated by the department of corrections and of 
 73.32  hospitals and nursing homes operated by the department of human 
 73.33  services; 
 73.34     (9) (12) an employee whose principal employment is at the 
 73.35  state ceremonial house; 
 73.36     (10) (13) an employee of the Minnesota educational 
 74.1   computing corporation; 
 74.2      (11) (14) an employee of the world trade center board; and 
 74.3      (12) (15) an employee of the state lottery board who is 
 74.4   covered by the managerial plan established under section 43A.18, 
 74.5   subdivision 3. 
 74.6      Sec. 4.  Minnesota Statutes 1996, section 352D.02, 
 74.7   subdivision 2, is amended to read: 
 74.8      Subd. 2.  [COVERAGE UPON EMPLOYMENT CHANGE.] A person 
 74.9   becoming a participant in the unclassified program by virtue of 
 74.10  employment in a position specified in subdivision 1, 
 74.11  clause (2) (4) and remaining in the unclassified service shall 
 74.12  remain a participant in the program even though the position the 
 74.13  person occupies is deleted from any of the sections referenced 
 74.14  in subdivision 1, clause (2) (4) by subsequent amendment, except 
 74.15  that a person shall not be eligible to elect the unclassified 
 74.16  program after separation from unclassified service if on the 
 74.17  return of the person to service, that position is not specified 
 74.18  in subdivision 1, clause (2) (4).  Any person employed in a 
 74.19  position specified in subdivision 1 shall cease to participate 
 74.20  in the unclassified program in the event the position is placed 
 74.21  in the classified service. 
 74.22     Sec. 5.  Minnesota Statutes 1996, section 352D.04, 
 74.23  subdivision 1, is amended to read: 
 74.24     Subdivision 1.  [INVESTMENT OPTIONS.] (a) An employee A 
 74.25  person exercising an option to participate in the retirement 
 74.26  program provided by this chapter may elect to purchase shares in 
 74.27  one or a combination of the income share account, the growth 
 74.28  share account, the international share account, the money market 
 74.29  account, the bond market account, the fixed interest account, or 
 74.30  the common stock index account established in section 11A.17.  
 74.31  The employee person may elect to participate in one or more of 
 74.32  the investment accounts in the fund by specifying, on a form 
 74.33  provided by the executive director, the percentage of 
 74.34  the employee's person's contributions provided in subdivision 2 
 74.35  to be used to purchase shares in each of the accounts. 
 74.36     (b) A participant may indicate in writing on forms provided 
 75.1   by the Minnesota state retirement system a choice of options for 
 75.2   subsequent purchases of shares.  Until a different written 
 75.3   indication is made by the participant, the executive director 
 75.4   shall purchase shares in the supplemental fund as selected by 
 75.5   the participant.  If no initial option is chosen, 100 percent 
 75.6   income shares must be purchased for a participant.  A change in 
 75.7   choice of investment option is effective no later than the first 
 75.8   pay date first occurring after 30 days following the receipt of 
 75.9   the request for a change. 
 75.10     (c) Shares in the fixed interest account attributable to 
 75.11  any guaranteed investment contract as of July 1, 1994, may not 
 75.12  be withdrawn from the fund or transferred to another account 
 75.13  until the guaranteed investment contract has expired, unless the 
 75.14  participant qualifies for withdrawal under section 352D.05 or 
 75.15  for benefit payments under sections 352D.06 to 352D.075. 
 75.16     (d) A participant or former participant may also change the 
 75.17  investment options selected for all or a portion of the 
 75.18  participant's shares previously purchased in accounts, subject 
 75.19  to the provisions of paragraph (c) concerning the fixed interest 
 75.20  account.  Changes in investment options for the participant's 
 75.21  shares must be effected as soon as cash flow to an account 
 75.22  practically permits, but not later than six months after the 
 75.23  requested change. 
 75.24     Sec. 6.  Minnesota Statutes 1996, section 352D.04, 
 75.25  subdivision 2, is amended to read: 
 75.26     Subd. 2.  [CONTRIBUTION RATES.] (a) The moneys money used 
 75.27  to purchase shares under this section shall be is the employee 
 75.28  and employer contributions provided in this subdivision. 
 75.29     (a) (b) The employee contribution shall be is an amount 
 75.30  equal to the employee contribution specified in section 352.04, 
 75.31  subdivision 2.  
 75.32     (b) (c) The employer contribution shall be is an amount 
 75.33  equal to six percent of salary.  
 75.34     (d) These contributions shall must be made by deduction 
 75.35  from salary in the manner provided in section 352.04, 
 75.36  subdivisions 4, 5, and 6.  
 76.1      (e) For members of the legislature, the contributions under 
 76.2   this subdivision also must be made on per diem payments received 
 76.3   during a regular or special legislative session, but may not be 
 76.4   made on per diem payments received outside of a regular or 
 76.5   special legislative session, on the additional compensation 
 76.6   attributable to a leadership position under section 3.099, 
 76.7   subdivision 3, living expense payments under section 3.101, or 
 76.8   special session living expense payments under section 3.103. 
 76.9      Sec. 7.  [355.621] [LEGISLATORS AND CONSTITUTIONAL 
 76.10  OFFICERS; SOCIAL SECURITY COVERAGE REFERENDUM.] 
 76.11     Subdivision 1.  [DEFINITIONS GENERALLY.] For the purposes 
 76.12  of sections 7 to 14, each of the terms defined in this section 
 76.13  has the indicated meaning. 
 76.14     Subd. 2.  [ENABLING ACT.] "Enabling act" means sections 
 76.15  355.01 to 355.07. 
 76.16     Subd. 3.  [LEGISLATOR.] "Legislator" means a member of the 
 76.17  legislature duly elected and sworn into office. 
 76.18     Subd. 4.  [CONSTITUTIONAL OFFICER.] "Constitutional officer"
 76.19  means the governor, the lieutenant governor, the attorney 
 76.20  general, the secretary of state, the state auditor, and the 
 76.21  state treasurer duly elected and sworn into office. 
 76.22     Subd. 5.  [ADDITIONAL TERMS.] The terms "social security 
 76.23  act," "state agency," "employment," "wages," "contribution 
 76.24  fund," "federal insurance contributions act," and "political 
 76.25  subdivision" each have the meaning ascribed in the enabling act. 
 76.26     Sec. 8.  [355.622] [REFERENDUM.] 
 76.27     Under the enabling act, the governor shall designate an 
 76.28  agency or individual to supervise a referendum to be held after 
 76.29  July 1, 1997, in accordance with provisions of section 
 76.30  218(d)(6)(c) of the Social Security Act, for legislators and for 
 76.31  constitutional officers. 
 76.32     Sec. 9.  [355.623] [NOTICE OF REFERENDUM.] 
 76.33     The notice of referendum required by section 218(d) of the 
 76.34  Social Security Act that is to be provided to legislators and to 
 76.35  constitutional officers must contain a statement of the rights 
 76.36  which accrue under the Social Security Act.  The statement must 
 77.1   be in the form that the agency or individual designated to 
 77.2   supervise the referendum deems necessary and sufficient to 
 77.3   inform legislators and constitutional officers of their Social 
 77.4   Security Act rights.  The statement must also inform the 
 77.5   legislators and constitutional officers of the effect that 
 77.6   social security coverage will have on their future public 
 77.7   retirement coverage. 
 77.8      Sec. 10.  [355.624] [DIVISION OF THE LEGISLATORS RETIREMENT 
 77.9   PLAN AND THE ELECTIVE STATE OFFICERS RETIREMENT PLAN.] 
 77.10     (a) In accord with section 218(d)(6)(c) of the Social 
 77.11  Security Act, the state agency shall divide the legislators 
 77.12  retirement plan into two parts or divisions and shall divide the 
 77.13  elective state officers retirement plan into two parts or 
 77.14  divisions. 
 77.15     (b) One division or part of the legislators retirement plan 
 77.16  must be composed of legislators who desire coverage under an 
 77.17  agreement under section 218(d) of the Social Security Act, and 
 77.18  those legislators must have their future public pension plan 
 77.19  coverage under chapter 352D.  Also included in this division or 
 77.20  part are legislators who are elected after July 1, 1997.  The 
 77.21  other division or part of the legislators retirement plan must 
 77.22  be composed of legislators who do not desire coverage under an 
 77.23  agreement under section 218(d) of the Social Security Act, and 
 77.24  those legislators must have their future public pension plan 
 77.25  coverage under chapter 3A. 
 77.26     (c) One division or part of the elective state officers 
 77.27  retirement plan must be composed of constitutional officers who 
 77.28  desire coverage under an agreement under section 218(d) of the 
 77.29  Social Security Act, and those constitutional officers must have 
 77.30  their future public pension plan coverage under chapter 352D.  
 77.31  Also included in this division or part are constitutional 
 77.32  officers who are elected after July 1, 1997.  The other division 
 77.33  or part of the elective state officers retirement plan must be 
 77.34  composed of constitutional officers who do not desire coverage 
 77.35  under an agreement under section 218(d) of the Social Security 
 77.36  Act, and those constitutional officers must have their future 
 78.1   public pension plan coverage under chapter 352C. 
 78.2      Sec. 11.  [355.625] [TRANSFER OF MEMBERS.] 
 78.3      In accord with section 218(d)(6)(f) of the Social Security 
 78.4   Act and when the legislators retirement plan or the elective 
 78.5   state officers retirement plan, whichever applies, is divided 
 78.6   into two parts or divisions, a legislator or constitutional 
 78.7   officer who does not desire coverage under an agreement under 
 78.8   section 218(d) of the Social Security Act may be transferred to 
 78.9   the other part or division if the agreement with the federal 
 78.10  Department of Health and Human Services so provides and if the 
 78.11  legislator or constitutional officer files with the state agency 
 78.12  a written request for the transfer. 
 78.13     Sec. 12.  [355.626] [CERTIFICATION BY GOVERNOR.] 
 78.14     If the governor receives satisfactory evidence that the 
 78.15  conditions specified in section 218(d)(7) of the Social Security 
 78.16  Act have been met with respect to the legislators retirement 
 78.17  plan or the elective state officers retirement plan, whichever 
 78.18  applies, the governor shall so certify to the secretary of the 
 78.19  federal Department of Health and Human Services. 
 78.20     Sec. 13.  [355.627] [AGREEMENTS WITH FEDERAL AGENCY.] 
 78.21     Upon the governor's certification under section 12, the 
 78.22  state agency, with the approval of the governor, is authorized 
 78.23  after June 30, 1997, to enter into or modify an agreement with 
 78.24  the secretary of the federal Department of Health and Human 
 78.25  Services with respect to legislators or constitutional officers, 
 78.26  whichever applies. 
 78.27     Sec. 14.  [355.628] [SOCIAL SECURITY CONTRIBUTIONS.] 
 78.28     Subdivision 1.  [EMPLOYER CONTRIBUTIONS.] Employer 
 78.29  contributions required under the agreement or modification under 
 78.30  section 13 and payments required by section 355.49 must be paid 
 78.31  by the senate, the house of representatives, or the relevant 
 78.32  constitutional office, whichever applies. 
 78.33     Subd. 2.  [EMPLOYEE CONTRIBUTIONS; DEDUCTION FROM 
 78.34  WAGES.] (a) After the date on which the agreement or 
 78.35  modification under section 13 is executed, there must be paid as 
 78.36  a deduction from wages an employee contribution by legislators 
 79.1   or constitutional officers in an amount equal to the tax that 
 79.2   would be imposed by the Federal Insurance Contribution Act if 
 79.3   the service constituted employment within the meaning of the act.
 79.4      (b) Contributions made under this subdivision must be paid 
 79.5   into the contribution fund in partial discharge of the employer 
 79.6   liability for social security coverage. 
 79.7      (c) A failure to deduct employee contributions does not 
 79.8   relieve the legislator or constitutional officer or the senate, 
 79.9   the house of representatives, or the relevant constitutional 
 79.10  office of the liability to make the contribution. 
 79.11     Sec. 15.  [COVERAGE ELECTION.] 
 79.12     (a) Members of the legislature who were members of the 
 79.13  legislators retirement plan on the effective date of this 
 79.14  section and constitutional officers who were members of the 
 79.15  elective state officers retirement plan on the effective date of 
 79.16  this section may elect coverage by the unclassified employees 
 79.17  retirement program governed by Minnesota Statutes, chapter 352D, 
 79.18  instead of the prior retirement coverage, as part of the social 
 79.19  security referendum under section 10. 
 79.20     (b) The election of a retirement coverage change applies 
 79.21  only to prospective service as a member of the legislature or a 
 79.22  constitutional officer.  The election must be made in 
 79.23  conjunction with the referendum selection under section 10.  A 
 79.24  member of the legislature or a constitutional officer who elects 
 79.25  a retirement coverage change under this section is entitled to 
 79.26  an augmented deferred retirement annuity under Minnesota 
 79.27  Statutes, section 3A.02, subdivisions 1 and 4, or Minnesota 
 79.28  Statutes, sections 352C.031 and 352C.033, whichever applies, 
 79.29  notwithstanding any provision of law to the contrary. 
 79.30     (c) A member of the legislature or a constitutional officer 
 79.31  who elects a retirement coverage change under this section is 
 79.32  not entitled to a refund under Minnesota Statutes, section 
 79.33  3A.03, subdivision 2, or 352C.09, subdivision 2, whichever 
 79.34  applies, until the person terminates service as a member of the 
 79.35  legislature or a constitutional officer. 
 79.36     Sec. 16.  [EFFECTIVE DATE.] 
 80.1      Sections 1 to 15 are effective July 1, 1997. 
 80.2                              ARTICLE 3
 80.3              FIRST CLASS CITY TEACHER RETIREMENT FUNDS
 80.4      Section 1.  Minnesota Statutes 1996, section 354A.011, 
 80.5   subdivision 15a, is amended to read: 
 80.6      Subd. 15a.  [NORMAL RETIREMENT AGE.] "Normal retirement 
 80.7   age" means age 65 for a person who first became a member of the 
 80.8   coordinated program of the Minneapolis or St. Paul teachers 
 80.9   retirement fund association or the new law coordinated program 
 80.10  of the Duluth teachers retirement fund association or a member 
 80.11  of a pension fund listed in section 356.30, subdivision 3, 
 80.12  before July 1, 1989.  For a person who first became a member of 
 80.13  the coordinated program of the Minneapolis or St. Paul teachers 
 80.14  retirement fund association or the new law coordinated program 
 80.15  of the Duluth teachers retirement fund association after June 
 80.16  30, 1989, normal retirement age means the higher of age 65 or 
 80.17  retirement age, as defined in United States Code, title 42, 
 80.18  section 416(l), as amended, but not to exceed age 66.  For a 
 80.19  person who is a member of the basic program of the Minneapolis 
 80.20  or St. Paul teachers retirement fund association or the old law 
 80.21  coordinated program of the Duluth teachers retirement fund 
 80.22  association, normal retirement age means the age at which a 
 80.23  teacher becomes eligible for a normal retirement annuity 
 80.24  computed upon meeting the age and service requirements specified 
 80.25  in the applicable provisions of the articles of incorporation or 
 80.26  bylaws of the respective teachers retirement fund association. 
 80.27     Sec. 2.  Minnesota Statutes 1996, section 354A.12, 
 80.28  subdivision 1, is amended to read: 
 80.29     Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] The contribution 
 80.30  required to be paid by each member of a teachers retirement fund 
 80.31  association shall not be less than the percentage of total 
 80.32  salary specified below for the applicable association and 
 80.33  program: 
 80.34       Association and Program              Percentage of
 80.35                                            Total Salary
 80.36  Duluth teachers retirement
 81.1     association
 81.2             old law and new law
 81.3             coordinated programs              5.5 percent
 81.4   Minneapolis teachers retirement
 81.5     association
 81.6             basic program                     8.5 percent
 81.7             coordinated program               4.5 5.5 percent
 81.8   St. Paul teachers retirement
 81.9     association
 81.10            basic program                     8 percent
 81.11            coordinated program               4.5 5.5 percent
 81.12     Contributions shall be made by deduction from salary and 
 81.13  must be remitted directly to the respective teachers retirement 
 81.14  fund association at least once each month. 
 81.15     Sec. 3.  Minnesota Statutes 1996, section 354A.12, 
 81.16  subdivision 2a, is amended to read: 
 81.17     Subd. 2a.  [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 
 81.18  RATES.] (a) The employing units shall make the following 
 81.19  employer contributions to teachers retirement fund associations: 
 81.20     (1) for any coordinated member of a teachers retirement 
 81.21  fund association in a city of the first class, the employing 
 81.22  unit shall pay the employer social security taxes in accordance 
 81.23  with section 355.46, subdivision 3, clause (b); 
 81.24     (2) for any coordinated member of one of the following 
 81.25  teachers retirement fund associations in a city of the first 
 81.26  class, the employing unit shall make a regular employer 
 81.27  contribution to the respective retirement fund association in an 
 81.28  amount equal to the designated percentage of the salary of the 
 81.29  coordinated member as provided below: 
 81.30       Duluth teachers retirement
 81.31       fund association                        4.50 percent
 81.32       Minneapolis teachers retirement
 81.33       fund association                        4.50 percent
 81.34       St. Paul teachers retirement
 81.35       fund association                        4.50 percent;
 81.36     (3) for any basic member of one of the following teachers 
 82.1   retirement fund associations in a city of the first class, the 
 82.2   employing unit shall make a regular employer contribution to the 
 82.3   respective retirement fund in an amount equal to the designated 
 82.4   percentage of the salary of the basic member as provided below: 
 82.5        Minneapolis teachers retirement
 82.6        fund association                        8.50 percent
 82.7        St. Paul teachers retirement
 82.8        fund association                        8.00 percent
 82.9      (4) for a basic member of a teachers retirement fund 
 82.10  association in a city of the first class, the employing unit 
 82.11  shall make an additional employer contribution to the respective 
 82.12  fund in an amount equal to the designated percentage of the 
 82.13  salary of the basic member, as provided below: 
 82.14       Minneapolis teachers retirement 
 82.15       fund association 
 82.16         July 1, 1993 - June 30, 1994          4.85 percent 
 82.17         July 1, 1994, and thereafter          3.64 percent
 82.18       St. Paul teachers retirement 
 82.19       fund association 
 82.20         July 1, 1993 - June 30, 1995          4.63 percent 
 82.21         July 1, 1995, and thereafter          3.64 percent
 82.22     (5) for a coordinated member of a teachers retirement fund 
 82.23  association in a city of the first class, the employing unit 
 82.24  shall make an additional employer contribution to the respective 
 82.25  fund in an amount equal to the applicable percentage of the 
 82.26  coordinated member's salary, as provided below: 
 82.27       Duluth teachers retirement
 82.28       fund association                        1.29 percent 
 82.29       Minneapolis teachers retirement
 82.30       fund association
 82.31         July 1, 1993 - June 30, 1994          0.50 percent 
 82.32         July 1, 1994, and thereafter          3.64 percent
 82.33       St. Paul teachers retirement 
 82.34       fund association 
 82.35         July 1, 1993 - June 30, 1994          0.50 percent 
 82.36         July 1, 1994 - June 30, 1995          1.50 percent 
 83.1          July 1, 1995 1997, and thereafter     3.64
 83.2                                                3.84 percent
 83.3      (b) The regular and additional employer contributions must 
 83.4   be remitted directly to the respective teachers retirement fund 
 83.5   association at least once each month.  Delinquent amounts are 
 83.6   payable with interest under the procedure in subdivision 1a. 
 83.7      (c) Payments of regular and additional employer 
 83.8   contributions for school district or technical college employees 
 83.9   who are paid from normal operating funds must be made from the 
 83.10  appropriate fund of the district or technical college. 
 83.11     Sec. 4.  Minnesota Statutes 1996, section 354A.12, 
 83.12  subdivision 3a, is amended to read: 
 83.13     Subd. 3a.  [SPECIAL DIRECT STATE AID TO ST. PAUL FIRST 
 83.14  CLASS CITY TEACHERS RETIREMENT FUND ASSOCIATION ASSOCIATIONS.] 
 83.15  (a) In fiscal year 1998, the state shall pay $5,545,000 to the 
 83.16  St. Paul teachers retirement fund association $500,000 in fiscal 
 83.17  year 1994, $21,027,000 to the Minneapolis teachers retirement 
 83.18  fund association, and $486,000 to the Duluth teachers retirement 
 83.19  fund association.  In each subsequent fiscal year, the payment 
 83.20  these payments to the St. Paul first class city teachers 
 83.21  retirement fund association associations must be increased at 
 83.22  the same rate as the increase in the general education revenue 
 83.23  formula allowance under section 124A.22, subdivision 2, in 
 83.24  subsequent fiscal years $2,827,000 for St. Paul, $12,954,000 for 
 83.25  Minneapolis, and $486,000 for Duluth. 
 83.26     (b) The direct state aid is aids under this subdivision are 
 83.27  payable October 1 annually.  The commissioner of finance shall 
 83.28  pay the direct state aid.  The amount required under this 
 83.29  subdivision is appropriated annually from the general fund to 
 83.30  the commissioner of finance. 
 83.31     Sec. 5.  Minnesota Statutes 1996, section 354A.12, 
 83.32  subdivision 3c, is amended to read: 
 83.33     Subd. 3c.  [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND 
 83.34  DIRECT MATCHING AND STATE AID.] (a) The supplemental 
 83.35  contributions payable to the Minneapolis teachers retirement 
 83.36  fund association by special school district No. 1 and the city 
 84.1   of Minneapolis under section 423A.02, subdivision 3, or to the 
 84.2   St. Paul teachers retirement fund association by independent 
 84.3   school district No. 625 under section 423A.02, subdivision 3, or 
 84.4   the direct state aid aids under subdivision 3a to the St. Paul 
 84.5   first class city teachers retirement association associations, 
 84.6   and the direct matching and state aid under subdivision 3b to 
 84.7   the Minneapolis teachers retirement fund association terminates 
 84.8   terminate for the respective fund at the end of the fiscal year 
 84.9   in which the accrued liability funding ratio for that fund, as 
 84.10  determined in the most recent actuarial report for that fund by 
 84.11  the actuary retained by the legislative commission on pensions 
 84.12  and retirement, equals or exceeds the accrued liability funding 
 84.13  ratio for the teachers retirement association, as determined in 
 84.14  the most recent actuarial report for the teachers retirement 
 84.15  association by the actuary retained by the legislative 
 84.16  commission on pensions and retirement. 
 84.17     (b) If the state direct matching, state supplemental, or 
 84.18  state aid is terminated for the St. Paul a first class city 
 84.19  teachers retirement fund association or the Minneapolis teachers 
 84.20  retirement fund association under paragraph (a), it may not 
 84.21  again be received by that fund. 
 84.22     (c) If either the Minneapolis teachers retirement fund 
 84.23  association, or the St. Paul teachers retirement fund 
 84.24  association, or the Duluth teachers retirement fund association 
 84.25  remain funded at less than the funding ratio applicable to the 
 84.26  teachers retirement association when the provisions of paragraph 
 84.27  (b) become effective, then any state aid not distributed to that 
 84.28  association must be immediately transferred to the other 
 84.29  association associations in proportion to the relative sizes of 
 84.30  their unfunded actuarial accrued liabilities. 
 84.31     Sec. 6.  [354A.29] [ST. PAUL TEACHERS RETIREMENT FUND 
 84.32  ASSOCIATION POSTRETIREMENT ADJUSTMENT.] 
 84.33     Subdivision 1.  [ARTICLES OF INCORPORATION AND 
 84.34  BYLAWS.] Permission is granted for the St. Paul teachers 
 84.35  retirement fund association under Minnesota Statutes, section 
 84.36  354A.12, subdivision 4, to amend its articles of incorporation 
 85.1   and bylaws to provide postretirement adjustments under this 
 85.2   section. 
 85.3      Subd. 2.  [ELIMINATION OF PRIOR LUMP SUM POSTRETIREMENT 
 85.4   ADJUSTMENT MECHANISM.] As a condition precedent to the 
 85.5   implementation of subdivisions 3 to 6, the lump sum 
 85.6   postretirement adjustment mechanism in effect on the date of 
 85.7   enactment of this section must be eliminated and the articles of 
 85.8   incorporation and bylaws of the association must be amended 
 85.9   accordingly. 
 85.10     Subd. 3.  [POSTRETIREMENT ADJUSTMENT.] (a) The 
 85.11  postretirement adjustment described in the articles and bylaws 
 85.12  of the St. Paul teachers retirement fund association must be 
 85.13  determined by the board annually after June 30 using the 
 85.14  procedures under this section. 
 85.15     (b) Each eligible person who has been receiving an annuity 
 85.16  or benefit under the articles of incorporation, the bylaws, or 
 85.17  this chapter for at least 12 months as of the end of the fiscal 
 85.18  year is eligible to receive a postretirement adjustment of 2.0 
 85.19  percent that is payable each January 1. 
 85.20     Subd. 4.  [ADDITIONAL INVESTMENT PERCENTAGE 
 85.21  ADJUSTMENT.] (a) An excess investment earnings percentage 
 85.22  adjustment must be computed and paid under this subdivision to 
 85.23  those annuitants and eligible benefit recipients who have been 
 85.24  receiving an annuity or benefit for at least 12 months as 
 85.25  determined each June 30 by the board of trustees. 
 85.26     (b) The board shall also determine the five-year annualized 
 85.27  rate of return attributable to the assets of the St. Paul 
 85.28  teachers retirement fund association under the formula specified 
 85.29  in section 11A.04, clause (11), and the amount of the excess 
 85.30  five-year annualized rate of return over the preretirement 
 85.31  interest assumption specified in Minnesota Statutes, section 
 85.32  356.215. 
 85.33     (c) The excess investment percentage adjustment must be 
 85.34  determined by multiplying the quantity one minus the rate of 
 85.35  contribution deficiency, as specified in the most recent 
 85.36  actuarial report of the actuary retained by the legislative 
 86.1   commission on pensions and retirement under section 356.215, by 
 86.2   the rate of return excess as determined in paragraph (b). 
 86.3      (d) The excess investment percentage adjustment is payable 
 86.4   to all annuitants and benefit recipients on the following 
 86.5   January 1. 
 86.6      Subd. 5.  [EFFECT ON ANNUITY.] The adjustments calculated 
 86.7   under subdivisions 3 and 4 must be included in all annuities or 
 86.8   benefits paid to the recipient after the adjustments take effect.
 86.9      Subd. 6.  [LUMP SUM POSTRETIREMENT ADJUSTMENT 
 86.10  TRANSITION.] This subdivision applies to all annuitants and 
 86.11  beneficiaries of the association who received a lump sum 
 86.12  postretirement adjustment before the calculation of the first 
 86.13  postretirement adjustment under subdivisions 3 and 4.  Before 
 86.14  the calculation of the first postretirement adjustment under 
 86.15  subdivisions 3 and 4, the annual retirement annuity must be 
 86.16  increased by the amount of the lump sum postretirement 
 86.17  adjustment described in the association bylaws and paid to the 
 86.18  annuitant or beneficiary in 1997 before the effective date of 
 86.19  this section or if the annuitant or beneficiary was not eligible 
 86.20  for a lump sum postretirement adjustment, then the annual 
 86.21  benefit paid to that annuitant or benefit recipient must be 
 86.22  increased by the cumulative percentage increase in the Consumer 
 86.23  Price Index for urban wage earners and clerical workers All 
 86.24  Items Index published by the United States Department of Labor, 
 86.25  Bureau of Labor Statistics, from the date of the initial receipt 
 86.26  of a retirement annuity or benefit of the person whose service 
 86.27  is the basis of the benefit to June 30, 1997. 
 86.28     Sec. 7.  Minnesota Statutes 1996, section 354A.31, 
 86.29  subdivision 4, is amended to read: 
 86.30     Subd. 4.  [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 
 86.31  ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 
 86.32  applies to the coordinated programs of the Minneapolis teachers 
 86.33  retirement fund association and the St. Paul teachers retirement 
 86.34  fund association.  
 86.35     (b) The normal coordinated retirement annuity shall be an 
 86.36  amount equal to a retiring coordinated member's average salary 
 87.1   multiplied by the retirement annuity formula percentage.  
 87.2   Average salary for purposes of this section shall mean an amount 
 87.3   equal to the average salary upon which contributions were made 
 87.4   for the highest five successive years of service credit, but 
 87.5   which shall not in any event include any more than the 
 87.6   equivalent of 60 monthly salary payments.  Average salary must 
 87.7   be based upon all years of service credit if this service credit 
 87.8   is less than five years. 
 87.9      (c) This paragraph, in conjunction with subdivision 6, 
 87.10  applies to a person who first became a member or a member in a 
 87.11  pension fund listed in section 356.30, subdivision 3, before 
 87.12  July 1, 1989, unless paragraph (d), in conjunction with 
 87.13  subdivision 7, produces a higher annuity amount, in which case 
 87.14  paragraph (d) will apply.  The retirement annuity formula 
 87.15  percentage for purposes of this paragraph is one the percent 
 87.16  specified in section 356.19, subdivision 1, per year for each 
 87.17  year of coordinated service for the first ten years and 1.5 the 
 87.18  percent specified in section 356.19, subdivision 2, for each 
 87.19  year of coordinated service thereafter.  
 87.20     (d) This paragraph applies to a person who has become at 
 87.21  least 55 years old and who first becomes a member after June 30, 
 87.22  1989, and to any other member who has become at least 55 years 
 87.23  old and whose annuity amount, when calculated under this 
 87.24  paragraph and in conjunction with subdivision 7 is higher than 
 87.25  it is when calculated under paragraph (c), in conjunction with 
 87.26  the provisions of subdivision 6.  The retirement annuity formula 
 87.27  percentage for purposes of this paragraph is 1.5 the percent 
 87.28  specified in section 356.19, subdivision 2, for each year of 
 87.29  coordinated service.  
 87.30     Sec. 8.  Minnesota Statutes 1996, section 354A.31, 
 87.31  subdivision 4a, is amended to read: 
 87.32     Subd. 4a.  [COMPUTATION OF THE NORMAL COORDINATED 
 87.33  RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 
 87.34  to the new law coordinated program of the Duluth teachers 
 87.35  retirement fund association. 
 87.36     (b) The normal coordinated retirement annuity is an amount 
 88.1   equal to a retiring coordinated member's average salary 
 88.2   multiplied by the retirement annuity formula percentage.  
 88.3   Average salary for purposes of this section means an amount 
 88.4   equal to the average salary upon which contributions were made 
 88.5   for the highest five successive years of service credit, but may 
 88.6   not in any event include any more than the equivalent of 60 
 88.7   monthly salary payments.  Average salary must be based upon all 
 88.8   years of service credit if this service credit is less than five 
 88.9   years. 
 88.10     (c) This paragraph, in conjunction with subdivision 6, 
 88.11  applies to a person who first became a member or a member in a 
 88.12  pension fund listed in section 356.30, subdivision 3, before 
 88.13  July 1, 1989, unless paragraph (d), in conjunction with 
 88.14  subdivision 7, produces a higher annuity amount, in which case 
 88.15  paragraph (d) applies.  The retirement annuity formula 
 88.16  percentage for purposes of this paragraph is 1.13 the percent 
 88.17  specified in section 356.19, subdivision 1, per year for each 
 88.18  year of coordinated service for the first ten years and 1.63 the 
 88.19  percent specified in section 356.19, subdivision 2, for each 
 88.20  subsequent year of coordinated service. 
 88.21     (d) This paragraph applies to a person who is at least 55 
 88.22  years old and who first becomes a member after June 30, 1989, 
 88.23  and to any other member who is at least 55 years old and whose 
 88.24  annuity amount, when calculated under this paragraph and in 
 88.25  conjunction with subdivision 7, is higher than it is when 
 88.26  calculated under paragraph (c) in conjunction with subdivision 
 88.27  6.  The retirement annuity formula percentage for purposes of 
 88.28  this paragraph is 1.63 the percent specified in section 356.19, 
 88.29  subdivision 2, for each year of coordinated service. 
 88.30     Sec. 9.  Laws 1979, chapter 109, section 1, as amended by 
 88.31  Laws 1981, chapter 157, section 1, is amended to read: 
 88.32     Section 1.  Authorization is hereby granted in accordance 
 88.33  with Minnesota Statutes, Section 354A.12, for the St. Paul 
 88.34  teachers retirement fund association to amend its bylaws as 
 88.35  follows: 
 88.36     (1) Paragraph 9 of Section 3 of Article IV of the bylaws 
 89.1   may be amended to provide a lump sum payment to annuitants and 
 89.2   survivor benefit recipients who have been receiving annuities or 
 89.3   benefits for at least three years, payable three months 
 89.4   following the end of a fiscal year.  The payments shall only be 
 89.5   made if the investment income of the fund during the preceding 
 89.6   fiscal year was in excess of 5-1/2 percent of the asset value of 
 89.7   the fund at the end of that fiscal year.  The amount that each 
 89.8   eligible annuitant or benefit recipient shall be entitled to 
 89.9   receive shall be determined as follows: 
 89.10     (a) The years of service of each annuitant as credited by 
 89.11  the fund and the years of service of each person on behalf of 
 89.12  whom a survivor benefit is paid as credited by the fund shall be 
 89.13  totaled; 
 89.14     (b) The dollar amount equal to one-half of one percent of 
 89.15  the asset value of the fund at the end of the previous fiscal 
 89.16  year shall be determined; 
 89.17     (c) The dollar amount determined pursuant to clause (b) 
 89.18  shall be divided by the aggregate years of credited service 
 89.19  totaled pursuant to clause (a), the result to be considered the 
 89.20  bonus figure per year of service credit; 
 89.21     (d) For each eligible annuitant and benefit recipient, the 
 89.22  payment shall be equal to the bonus figure per year of service 
 89.23  credit determined pursuant to clause (c) multiplied by each year 
 89.24  of service credited for that person by the fund. 
 89.25     (2) A new paragraph may be added to Section 2 of Article IV 
 89.26  of the bylaws to provide that any active member of the fund with 
 89.27  service credit prior to July 1, 1978, who elects in the social 
 89.28  security referendum to become a coordinated member shall be 
 89.29  entitled to a retirement annuity when otherwise qualified, the 
 89.30  calculation of which shall utilize the formula specified in Laws 
 89.31  1977, Chapter 429, Section 61 for that portion of credited 
 89.32  service which was served prior to July 1, 1978, and the new 
 89.33  coordinated formula specified in the bylaws for the remainder of 
 89.34  credited service, both applied to the average salary as 
 89.35  specified in Paragraph 2 of Section 1 of Article IX.  The 
 89.36  formula percentages to be used in calculating the coordinated 
 90.1   portion of a retirement annuity on coordinated service shall 
 90.2   recognize the coordinated service as a continuation of any 
 90.3   service prior to July 1, 1978. 
 90.4      (3) (2) Paragraph 5 of Section 3 of Article IV of the 
 90.5   bylaws in effect on June 1, 1978, may be amended to provide that 
 90.6   the recomputation of a disability benefit in an amount equal to 
 90.7   a service pension shall occur when the member attains the age of 
 90.8   60 years and shall be recomputed without any reduction for early 
 90.9   retirement, and that if the disability terminates prior to age 
 90.10  60 the member shall be eligible for benefits as provided in 
 90.11  Paragraph 1 of Section 3 of Article IV and the years of service 
 90.12  and final average salary accrued to disability termination date 
 90.13  would be used as provided in Paragraph 5 of Section 3 of Article 
 90.14  IV of the bylaws in effect June 1, 1978, and that Paragraph 3 of 
 90.15  Section 4 of Article IV be amended to conform to this provision. 
 90.16     (4) (3) Article VIII of the bylaws in effect July 1, 1978, 
 90.17  may be amended by adding a new section 5 providing augmentation 
 90.18  of benefits in the same manner as Minnesota Statutes 1978, 
 90.19  Section 354.55, Subdivision 11. 
 90.20     Sec. 10.  [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 
 90.21  INCREASE FORMULAS.] 
 90.22     In accordance with Minnesota Statutes, section 354A.12, 
 90.23  subdivision 4, approval is granted for the Duluth teachers 
 90.24  retirement fund association to amend its articles of 
 90.25  incorporation or bylaws by increasing the formula percentage 
 90.26  used in computing annuities for old law coordinated program 
 90.27  members in the Duluth teachers retirement fund association to 
 90.28  1.45 percent for each year of credited service. 
 90.29     Sec. 11.  [REPEALER.] 
 90.30     (a) Minnesota Statutes 1996, section 354A.12, subdivision 
 90.31  2b, is repealed. 
 90.32     (b) Laws 1985, chapter 259, section 3; and Laws 1993, 
 90.33  chapter 336, article 3, section 1, are repealed. 
 90.34     Sec. 12.  [EFFECTIVE DATES.] 
 90.35     Sections 2 and 3 are effective for all salary paid on or 
 90.36  after July 1, 1997.  Sections 1 and 4 to 11 are effective July 
 91.1   1, 1997. 
 91.2                              ARTICLE 4
 91.3                 MINNEAPOLIS POLICE AND FIREFIGHTERS
 91.4      Section 1.  Minnesota Statutes 1996, section 423B.01, 
 91.5   subdivision 9, is amended to read: 
 91.6      Subd. 9.  [EXCESS INVESTMENT INCOME.] "Excess investment 
 91.7   income" means the amount, if any, by which the average time 
 91.8   weighted total rate of return earned by the fund in the most 
 91.9   recent prior five fiscal years has exceeded the actual average 
 91.10  percentage increase in the current monthly salary of a first 
 91.11  grade patrol officer in the most recent prior five fiscal years 
 91.12  plus two percent, and must be expressed as a dollar amount and.  
 91.13  The amount may not exceed one percent of the total assets of the 
 91.14  fund, except when the actuarial value of assets of the fund 
 91.15  according to the most recent annual actuarial valuation prepared 
 91.16  in accordance with sections 356.215 and 356.216 is greater than 
 91.17  102 percent of its actuarial accrued liabilities, in which case 
 91.18  the amount must not exceed 1-1/2 percent of the total assets of 
 91.19  the fund, and does not exist unless the yearly average 
 91.20  percentage increase of the time weighted total rate of return of 
 91.21  the fund for the previous five years exceeds by two percent the 
 91.22  yearly average percentage increase in monthly salary of a first 
 91.23  grade patrol officer during the previous five calendar years. 
 91.24     Sec. 2.  Minnesota Statutes 1996, section 423B.01 is 
 91.25  amended by adding a new subdivision to read: 
 91.26     Subd. 15.  [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 
 91.27  or "actuarially equivalent" means the condition of one annuity 
 91.28  or benefit having an equal actuarial present value as another 
 91.29  annuity or benefit, determined as of a given date at a specified 
 91.30  age with each actuarial present value based on the appropriate 
 91.31  mortality table adopted by the board of directors based on the 
 91.32  experience of the fund and approved by the actuary retained by 
 91.33  the legislative commission on pensions and retirement and using 
 91.34  the applicable preretirement or postretirement interest rate 
 91.35  assumptions specified in section 356.216. 
 91.36     Sec. 3.  Minnesota Statutes 1996, section 423B.06, is 
 92.1   amended by adding a subdivision to read: 
 92.2      Subd. 5.  [TAX LEVY.] Notwithstanding any provision of 
 92.3   section 69.77 to the contrary, if in any year after the 
 92.4   actuarial value of assets of the fund according to the most 
 92.5   recent annual actuarial valuation prepared in accordance with 
 92.6   sections 356.215 and 356.216 is greater than 102 percent of the 
 92.7   actuarial accrued liabilities of the fund and subsequently the 
 92.8   actuarial value of assets are less than 100 percent of the 
 92.9   actuarial accrued liabilities, the city of Minneapolis is not 
 92.10  required to levy a property tax to amortize any unfunded 
 92.11  actuarial accrued liability unless the fund experiences two 
 92.12  successive years when the actuarial value of assets are less 
 92.13  than 100 percent of the actuarial accrued liabilities according 
 92.14  to the most recent annual actuarial valuation prepared in 
 92.15  accordance with sections 356.215 and 356.216. 
 92.16     Sec. 4.  Minnesota Statutes 1996, section 423B.07, is 
 92.17  amended to read: 
 92.18     423B.07 [AUTHORIZED FUND DISBURSEMENTS.] 
 92.19     The police pension fund may be used only for the payment of:
 92.20     (1) service, disability, or dependency pensions; 
 92.21     (2) notwithstanding a contrary provision of section 69.80, 
 92.22  the salary of the secretary of the association in an amount not 
 92.23  to exceed 30 percent of the base salary of a first grade patrol 
 92.24  officer, the salary of the president of the association in an 
 92.25  amount not to exceed ten percent of the base salary of a first 
 92.26  grade patrol officer, and the salaries of the other elected 
 92.27  members of the board of trustees in an amount not to exceed 
 92.28  three units; 
 92.29     (3) expenses of officers and employees of the association 
 92.30  in connection with the protection of the fund; 
 92.31     (4) expenses of operating and maintaining the association, 
 92.32  including the administrative expenses related to the 
 92.33  administration of the insurance plan authorized in section 
 92.34  423B.08; 
 92.35     (5) support for hospital and medical insurance for 
 92.36  pensioners who have completed 20 years or more of service or 
 93.1   permanent disabilitants and surviving spouses of deceased active 
 93.2   members, disabilitants, or service pensioners who have completed 
 93.3   20 years or more of service in an amount equal to one unit per 
 93.4   month, to be added to the pension otherwise provided; 
 93.5      (6) health and welfare benefits of one unit per month in 
 93.6   addition to other benefits for members who retired after July 1, 
 93.7   1980, and have completed 20 years or more of service or for 
 93.8   members who are permanent disabilitants; and 
 93.9      (7) (5) other expenses authorized by section 69.80, or 
 93.10  other applicable law. 
 93.11     Sec. 5.  Minnesota Statutes 1996, section 423B.09, 
 93.12  subdivision 1, is amended to read: 
 93.13     Subdivision 1.  [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 
 93.14  RECEIVE PENSIONS.] The association shall grant pensions payable 
 93.15  from the police pension fund in monthly installments to persons 
 93.16  entitled to pensions in the manner and for the following 
 93.17  purposes. 
 93.18     (a) When the actuarial value of assets of the fund 
 93.19  according to the most recent annual actuarial valuation 
 93.20  performed in accordance with sections 356.215 and 356.216 is 
 93.21  less than 90 percent of the actuarial accrued liabilities, an 
 93.22  active member or a deferred pensioner who has performed duty as 
 93.23  a member of the police department of the city for five years or 
 93.24  more, upon written application after retiring from duty and 
 93.25  reaching at least age 50, is entitled to be paid monthly for 
 93.26  life a service pension equal to eight units.  For full years of 
 93.27  service beyond five years, the service pension increases by 1.6 
 93.28  units for each full year, to a maximum of 40 units.  When the 
 93.29  actuarial value of assets of the fund according to the most 
 93.30  recent annual actuarial valuation prepared in accordance with 
 93.31  sections 356.215 and 356.216 is of greater than 90 percent of 
 93.32  actuarial accrued liabilities, active members, deferred members, 
 93.33  and service pensioners are entitled to a service pension 
 93.34  according to the following schedule: 
 93.35                 5 years           8.0 units
 93.36                 6 years           9.6 units
 94.1                  7 years          11.2 units
 94.2                  8 years          12.8 units
 94.3                  9 years          14.4 units
 94.4                 10 years          16.0 units
 94.5                 11 years          17.6 units
 94.6                 12 years          19.2 units
 94.7                 13 years          20.8 units
 94.8                 14 years          22.4 units
 94.9                 15 years          24.0 units
 94.10                16 years          25.6 units
 94.11                17 years          27.2 units
 94.12                18 years          28.8 units
 94.13                19 years          30.4 units
 94.14                20 years          34.0 units
 94.15                21 years          35.6 units
 94.16                22 years          37.2 units
 94.17                23 years          38.8 units
 94.18                24 years          40.4 units
 94.19                25 years          42.0 units
 94.20     Fractional years of service may not be used in computing 
 94.21  pensions. 
 94.22     (b) An active member who after five years' service but less 
 94.23  than 20 years' service with the police department of the city, 
 94.24  becomes superannuated so as to be permanently unable to perform 
 94.25  the person's assigned duties, is entitled to be paid monthly for 
 94.26  life a superannuation pension equal to two units for five years 
 94.27  of service and an additional two units for each full year of 
 94.28  service over five years and less than 20 years. 
 94.29     (c) An active member who is not eligible for a service 
 94.30  pension and who, while a member of the police department of the 
 94.31  city, becomes diseased or sustains an injury while in the 
 94.32  service that permanently unfits the member for the performance 
 94.33  of police duties is entitled to be paid monthly for life a 
 94.34  pension equal to 32 units while so disabled. 
 94.35     Sec. 6.  Minnesota Statutes 1996, section 423B.09, is 
 94.36  amended by adding a subdivision to read: 
 95.1      Subd. 6.  [OPTIONAL ANNUITIES.] A member who is retired or 
 95.2   disabled on the effective date of this subdivision may elect an 
 95.3   optional retirement annuity within 60 days of the effective date 
 95.4   instead of the normal retirement annuity.  A member who retires 
 95.5   or becomes disabled after the effective date of this subdivision 
 95.6   may elect an optional retirement annuity prior to the receipt of 
 95.7   any benefits.  The optional retirement annuity may be a 50 
 95.8   percent, a 75 percent, or a 100 percent joint and survivor 
 95.9   annuity without reinstatement in the event of the designated 
 95.10  beneficiary predeceasing the member or a 50 percent, a 75 
 95.11  percent, or a 100 percent joint and survivor annuity with 
 95.12  reinstatement in the event of the designated beneficiary 
 95.13  predeceasing the member.  Optional retirement annuity forms must 
 95.14  be actuarially equivalent to the service pension and automatic 
 95.15  survivor coverage otherwise payable to the retiring member and 
 95.16  the member's beneficiaries.  Once selected, the optional annuity 
 95.17  is irrevocable. 
 95.18     Sec. 7.  Minnesota Statutes 1996, section 423B.10, 
 95.19  subdivision 1, is amended to read: 
 95.20     Subdivision 1.  [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 
 95.21  surviving spouse of a deceased service pensioner, disability 
 95.22  pensioner, deferred pensioner, superannuation pensioner, or 
 95.23  active member, who was the legally married spouse of the 
 95.24  decedent, residing with the decedent, and who was married while 
 95.25  or before the time the decedent was on the payroll of the police 
 95.26  department, and who, if the deceased member was a service or 
 95.27  deferred pensioner, was legally married to the member for a 
 95.28  period of at least one year before retirement from the police 
 95.29  department, is entitled to a surviving spouse benefit.  The 
 95.30  surviving spouse benefit is equal to 21 22 units per month if 
 95.31  the person is the surviving spouse of a deceased active member 
 95.32  or disabilitant.  The surviving spouse benefit is equal to six 
 95.33  units per month, plus an additional one unit for each year of 
 95.34  service to the credit of the decedent in excess of five years, 
 95.35  to a maximum of 21 22 units per month, if the person is the 
 95.36  surviving spouse of a deceased service pensioner, deferred 
 96.1   pensioner, or superannuation pensioner.  The surviving spouse 
 96.2   benefit is payable for the life of the surviving spouse. 
 96.3      (b) A surviving child of a deceased service pensioner, 
 96.4   disability pensioner, deferred pensioner, superannuation 
 96.5   pensioner, or active member, who was living while the decedent 
 96.6   was an active member of the police department or was born within 
 96.7   nine months after the decedent terminated active service in the 
 96.8   police department, is entitled to a surviving child benefit.  
 96.9   The surviving child benefit is equal to eight units per month if 
 96.10  the person is the surviving child of a deceased active member or 
 96.11  disabilitant.  The surviving child benefit is equal to two units 
 96.12  per month, plus an additional four-tenths of one unit per month 
 96.13  for each year of service to the credit of the decedent in excess 
 96.14  of five years, to a maximum of eight units, if the person is the 
 96.15  surviving child of a deceased service pensioner, deferred 
 96.16  pensioner, or superannuation pensioner.  The surviving child 
 96.17  benefit is payable until the person attains age 18, or, if in 
 96.18  full-time attendance during the normal school year, in a school 
 96.19  approved by the board of directors, until the person receives a 
 96.20  bachelor's degree or attains the age of 22 years, whichever 
 96.21  occurs first.  In the event of the death of both parents leaving 
 96.22  a surviving child or children entitled to a surviving child 
 96.23  benefit as determined in this paragraph, the surviving child is, 
 96.24  or the surviving children are, entitled to a surviving child 
 96.25  benefit in such sums as determined by the board of directors to 
 96.26  be necessary for the care and education of such surviving child 
 96.27  or children, but not to exceed the family maximum benefit per 
 96.28  month, to the children of any one family.  
 96.29     (c) The surviving spouse and surviving child benefits are 
 96.30  subject to a family maximum benefit.  The family maximum benefit 
 96.31  is 40 41 units per month. 
 96.32     (d) A surviving spouse who is otherwise not qualified may 
 96.33  receive a benefit if the surviving spouse was married to the 
 96.34  decedent for a period of five years and was residing with the 
 96.35  decedent at the time of death.  The surviving spouse benefit is 
 96.36  the same as that provided in paragraph (a), except that if the 
 97.1   surviving spouse is younger than the decedent, the surviving 
 97.2   spouse benefit must be actuarially equivalent to a surviving 
 97.3   spouse benefit that would have been paid to the member's spouse 
 97.4   had the member been married to a person of the same age or a 
 97.5   greater age than the member's age before retirement. 
 97.6      Sec. 8.  Minnesota Statutes 1996, section 423B.15, 
 97.7   subdivision 2, is amended to read: 
 97.8      Subd. 2.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
 97.9   board of trustees of the relief association shall determine by 
 97.10  May 1 of each year whether or not the fund has excess investment 
 97.11  income.  The amount of excess investment income, if any, must be 
 97.12  stated as a dollar amount and reported by the chief 
 97.13  administrative officer of the relief association to the mayor 
 97.14  and governing body of the city, the state auditor, the 
 97.15  commissioner of finance, and the executive director of the 
 97.16  legislative commission on pensions and retirement.  The dollar 
 97.17  amount of excess investment income up to one percent of the 
 97.18  assets of the fund, except when the actuarial value of assets of 
 97.19  the fund according to the most recent annual actuarial valuation 
 97.20  prepared in accordance with sections 356.215 and 356.216 is 
 97.21  greater than 102 percent of its actuarial accrued liabilities in 
 97.22  which case the amount may not exceed 1-1/2 percent of the assets 
 97.23  of the fund, must be applied for the purpose specified in 
 97.24  subdivision 3.  Excess investment income must not be considered 
 97.25  as income to or assets of the fund for actuarial valuations of 
 97.26  the fund for that year under sections 69.77, 356.215, and 
 97.27  356.216 and the provisions of this section except to offset the 
 97.28  annual postretirement payment.  Additional investment income is 
 97.29  any realized or unrealized investment income other than the 
 97.30  excess investment income and must be included in the actuarial 
 97.31  valuations performed under sections 69.77, 356.215, and 356.216 
 97.32  and the provisions of this section. 
 97.33     Sec. 9.  Minnesota Statutes 1996, section 423B.15, 
 97.34  subdivision 3, is amended to read: 
 97.35     Subd. 3.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
 97.36  amount determined under subdivision 2 must be applied in 
 98.1   accordance with this subdivision.  When the actuarial value of 
 98.2   assets of the fund according to the most recent annual actuarial 
 98.3   valuation prepared in accordance with sections 356.215 and 
 98.4   356.216 is less than 102 percent of its total actuarial 
 98.5   liabilities, the relief association shall apply the first 
 98.6   one-half of excess investment income to the payment of an annual 
 98.7   postretirement payment as specified in this subdivision. and the 
 98.8   second one-half of excess investment income up to one-half of 
 98.9   one percent of the assets of the fund must be applied to reduce 
 98.10  the state amortization state aid or supplementary amortization 
 98.11  state aid payments otherwise due to the relief association under 
 98.12  section 423A.02 for the current calendar year.  When the 
 98.13  actuarial value of assets of the fund according to the most 
 98.14  recent annual actuarial valuation prepared in accordance with 
 98.15  sections 356.215 and 356.216 is less than 102 percent funded and 
 98.16  other conditions are met, the relief association shall pay an 
 98.17  annual postretirement payment to all eligible members in an 
 98.18  amount not to exceed one-half of one percent of the assets of 
 98.19  the fund.  When the actuarial value of assets of the fund 
 98.20  according to the most recent annual actuarial valuation prepared 
 98.21  in accordance with sections 356.215 and 356.216 is greater than 
 98.22  102 percent of its actuarial accrued liabilities, the relief 
 98.23  association shall pay an annual postretirement payment to all 
 98.24  eligible members in an amount not to exceed 1-1/2 percent of the 
 98.25  assets of the fund.  Payment of the annual postretirement 
 98.26  payment must be in a lump sum amount on June 1 following the 
 98.27  determination date in any year.  Payment of the annual 
 98.28  postretirement payment may be made only if the average time 
 98.29  weighted total rate of return for the most recent prior five 
 98.30  years exceeds by two percent the actual average percentage 
 98.31  increase in the current monthly salary of a top grade patrol 
 98.32  officer in the most recent prior five fiscal years.  The total 
 98.33  amount of all payments to members may not exceed the amount 
 98.34  determined under this subdivision.  Payment to each eligible 
 98.35  member must be calculated by dividing the total number of 
 98.36  pension units to which eligible members are entitled into the 
 99.1   excess investment income available for distribution to members, 
 99.2   and then multiplying that result by the number of units to which 
 99.3   each eligible member is entitled to determine each eligible 
 99.4   member's annual postretirement payment.  When the actuarial 
 99.5   value of assets of the fund according to the most recent annual 
 99.6   actuarial valuation prepared in accordance with sections 356.215 
 99.7   and 356.216 is less than 102 percent of its actuarial accrued 
 99.8   liabilities, payment to each eligible member may not exceed an 
 99.9   amount equal to the total monthly benefit that the eligible 
 99.10  member was entitled to in the prior year under the terms of the 
 99.11  benefit plan of the relief association or each eligible member's 
 99.12  proportionate share of the excess investment income, whichever 
 99.13  is less.  When the actuarial value of assets of the fund 
 99.14  according to the most recent annual actuarial valuation prepared 
 99.15  in accordance with sections 356.215 and 356.216 is greater than 
 99.16  102 percent of its actuarial accrued liabilities, payment to 
 99.17  each eligible member must not exceed the member's proportionate 
 99.18  share of 1-1/2 percent of the assets of the fund. 
 99.19     A person who received a pension or benefit for the entire 
 99.20  12 months before the determination date is eligible for a full 
 99.21  annual postretirement payment.  A person who received a pension 
 99.22  or benefit for less than 12 months before the determination date 
 99.23  is eligible for a prorated annual postretirement payment. 
 99.24     Sec. 10.  Minnesota Statutes 1996, section 423B.15, 
 99.25  subdivision 6, is amended to read: 
 99.26     Subd. 6.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
 99.27  No provision of or payment made under this section may be 
 99.28  interpreted or relied upon by any member of the relief 
 99.29  association to guarantee or entitle a member to annual 
 99.30  postretirement payments for a period when no excess investment 
 99.31  income is earned by the fund.  If the actuarial value of assets 
 99.32  of the fund according to the most recent annual actuarial 
 99.33  valuation prepared in accordance with sections 356.215 and 
 99.34  356.216 is less than 102 percent of its actuarial accrued 
 99.35  liabilities, the distribution of assets under this section must 
 99.36  not exceed one-half of one percent. 
100.1      Sec. 11.  Minnesota Statutes 1996, section 423B.15, is 
100.2   amended by adding a subdivision to read: 
100.3      Subd. 7.  [ANNUAL ACTUARIAL VALUATION DATE.] 
100.4   Notwithstanding any provision of section 69.77, subdivision 2h, 
100.5   356.215, or 356.216 to the contrary, the annual actuarial 
100.6   valuation of the fund must be completed by May 1 of each year. 
100.7      Sec. 12.  Laws 1965, chapter 519, section 1, as amended by 
100.8   Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, 
100.9   section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 
100.10  164, section 2; Laws 1990, chapter 589, article 1, section 5; 
100.11  Laws 1992, chapter 454, section 2; and Laws 1994, chapter 591, 
100.12  article 1, section 1, is amended to read: 
100.13     Section 1.  [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF 
100.14  ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding 
100.15  the provisions of Minnesota Statutes 1965, Section 69.48, to the 
100.16  contrary, when a service pensioner, disability pensioner, or 
100.17  deferred pensioner, or an active member of a relief association 
100.18  dies, leaving: 
100.19     (1) A surviving spouse who was a legally married spouse, 
100.20  residing with the decedent, and who was married while or prior 
100.21  to the time the decedent was on the payroll of the fire 
100.22  department in the case of a deceased active member; and who, in 
100.23  case the deceased member was a service or deferred pensioner was 
100.24  legally married to the member at least five years before death; 
100.25  or 
100.26     (2) A child or children who were living while the deceased 
100.27  was on the payroll of the fire department, or born within nine 
100.28  months after the decedent was withdrawn from the payroll of the 
100.29  fire department, the surviving spouse and the child or children 
100.30  shall be entitled to a pension or pensions, as follows: 
100.31     (a) To the surviving spouse, a pension of not less than 17 
100.32  units, and not to exceed the total of 22 units per month, as the 
100.33  bylaws of the association provide, for life; provided, that if 
100.34  the spouse shall remarry then the pension shall cease and 
100.35  terminate as of the date of remarriage; provided, further, if 
100.36  the remarriage terminates for any reason, the surviving spouse 
101.1   shall again be entitled to a pension as the bylaws of the 
101.2   association provide; 
101.3      (b) To the child or children, if their other parent is 
101.4   living, a pension of not to exceed eight units per month for 
101.5   each child up to the time each child reaches the age of not less 
101.6   than 16 years and not to exceed an age of 18 years; provided, 
101.7   however, upon approval by the board of trustees, such a child 
101.8   who is a full-time student, upon proof of compliance with the 
101.9   provisions of this act, may be entitled to such pension so long 
101.10  as the child is a full-time student and has not reached 22 years 
101.11  of age, all in conformity with the bylaws of the association; 
101.12  provided, further, the total pensions hereunder for the 
101.13  surviving spouse and children of the deceased member shall not 
101.14  exceed the sum of 41 units per month; 
101.15     (c) A child or children of a deceased member after the 
101.16  death of their other parent, or in the event their other parent 
101.17  predeceases the member, be entitled to receive a pension or 
101.18  pensions in such amount as the board of trustees of the 
101.19  association shall deem necessary to properly support the child 
101.20  or children until they reach the age of not less than 16 and not 
101.21  more than 18 years; provided, however, upon approval by the 
101.22  board of trustees, such a child who is a full-time student, upon 
101.23  proof of compliance with the provisions of this act, may be 
101.24  entitled to such pension so long as the child is a full-time 
101.25  student and has not reached 22 years of age, as the bylaws of 
101.26  the association may provide; but the total amount of the pension 
101.27  or pensions hereunder for any child or children shall not exceed 
101.28  the sum of 41 units per month; 
101.29     (d) For the purposes of this act, a full-time student is 
101.30  defined as an individual who is in full-time attendance as a 
101.31  student at an educational institution.  Whether or not the 
101.32  student was in full-time attendance would be determined by the 
101.33  board of trustees of the association in the light of the 
101.34  standards and practices of the school involved.  Specifically 
101.35  excluded is a person who is paid by the person's employer while 
101.36  attending school at the request of the person's employer.  
102.1   Benefits may continue during any period of four calendar months 
102.2   or less in any 12 month period in which a person does not attend 
102.3   school if the person shows to the satisfaction of the board of 
102.4   trustees that the person intends to continue in full-time school 
102.5   attendance immediately after the end of the period.  An 
102.6   educational institution is defined so as to permit the payment 
102.7   of benefits to students taking vocational or academic courses in 
102.8   all approved, accredited or licensed schools, colleges, and 
102.9   universities.  The board of trustees shall make the final 
102.10  determination of eligibility for benefits if any question arises 
102.11  concerning the approved status of the educational institution 
102.12  which the student attends or proposes to attend; 
102.13     (e) In the event that a child who is receiving a pension as 
102.14  provided above shall marry before the age of 22 years, the 
102.15  pension shall cease as of the date of the marriage.; and 
102.16     (f) A surviving spouse of a deceased service pensioner, 
102.17  disability pensioner, deferred pensioner, or service pensioner 
102.18  who is otherwise not qualified may receive a benefit if the 
102.19  surviving spouse was legally married to the decedent for a 
102.20  period of five years and was residing with the decedent at the 
102.21  time of death.  The surviving spouse benefit is the same as that 
102.22  provided under paragraph (a), except that if the surviving 
102.23  spouse is younger than the decedent, the surviving spouse 
102.24  benefit must be actuarially equivalent to a surviving spouse 
102.25  benefit that would have been paid to the member's spouse had the 
102.26  member been married to a person of the same age or a greater age 
102.27  than the member's age prior to retirement.  A benefit paid under 
102.28  this paragraph may be less than 17 units, notwithstanding the 17 
102.29  unit minimum established under paragraph (a). 
102.30     Sec. 13.  Laws 1989, chapter 319, article 19, section 7, 
102.31  subdivision 1, as amended by Laws 1992, chapter 471, article 2, 
102.32  section 5, and Laws 1996, chapter 438, article 4, section 12, is 
102.33  amended to read: 
102.34     Subdivision 1.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF 
102.35  ASSOCIATION; DEFINITIONS.] For the purposes of this section, 
102.36  each of the terms in this subdivision have the meanings given 
103.1   them in paragraphs (a) to (h). 
103.2      (a) "Annual postretirement payment" means the payment of a 
103.3   lump sum postretirement benefit to an eligible member on June 1 
103.4   following the determination date in any year. 
103.5      (b) "City" means the city of Minneapolis. 
103.6      (c) "Determination date" means December 31 of each year. 
103.7      (d) "Eligible member" means a person, including a service 
103.8   pensioner, a disability pensioner, a survivor, or dependent of a 
103.9   deceased active member, service pensioner, or disability 
103.10  pensioner, who received a pension or benefit from the relief 
103.11  association during the 12 months before the determination date.  
103.12  A person who received a pension or benefit for the entire 12 
103.13  months before the determination date is eligible for a full 
103.14  annual postretirement payment.  A person who received a pension 
103.15  or benefit for less than 12 months before the determination date 
103.16  is eligible for a prorated annual postretirement payment. 
103.17     (e) "Excess investment income" means the amount by which 
103.18  the average time weighted total rate of return earned by the 
103.19  fund in the most recent prior five fiscal years has exceeded the 
103.20  actual average percentage increase in the current monthly salary 
103.21  of a top grade firefighter in the most recent prior five fiscal 
103.22  years plus two percent.  The excess investment income must be 
103.23  expressed as a dollar amount and may not exceed one percent of 
103.24  the total assets of the fund, except when the actuarial value of 
103.25  assets of the fund according to the most recent annual actuarial 
103.26  valuation prepared in accordance with Minnesota Statutes, 
103.27  sections 356.215 and 356.216, is greater than 102 percent of its 
103.28  actuarial accrued liabilities in which case the amount must not 
103.29  exceed 1-1/2 percent of the assets of the funds. 
103.30     (f) "Fund" means the Minneapolis fire department relief 
103.31  association. 
103.32     (g) "Relief association" means the Minneapolis fire 
103.33  department relief association.  
103.34     (h) "Time weighted total rate of return" means the 
103.35  percentage amount determined by using the formula or formulas 
103.36  established by the state board of investment under Minnesota 
104.1   Statutes, section 11A.04, clause (11), and in effect on January 
104.2   1, 1987. 
104.3      Sec. 14.  Laws 1989, chapter 319, article 19, section 7, 
104.4   subdivision 3, is amended to read: 
104.5      Subd. 3.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
104.6   board of trustees of the relief association shall determine by 
104.7   May 1 of each year whether or not the relief association has 
104.8   excess investment income.  The amount of excess investment 
104.9   income, if any, must be stated as a dollar amount and reported 
104.10  by the chief administrative officer of the relief association to 
104.11  the mayor and governing body of the city, the state auditor, the 
104.12  commissioner of finance, and the executive director of the 
104.13  legislative commission on pensions and retirement.  The dollar 
104.14  amount of excess investment income up to one percent of the 
104.15  assets of the fund, except if the actuarial value of assets of 
104.16  the fund according to the most recent annual actuarial valuation 
104.17  prepared in accordance with Minnesota Statutes, sections 356.215 
104.18  and 356.216, is greater than 102 percent of its actuarial 
104.19  accrued liabilities, must be applied for the purpose specified 
104.20  in subdivision 4.  Excess investment income must not be 
104.21  considered as income to or assets of the fund for actuarial 
104.22  valuations of the fund for that year under sections 69.77, 
104.23  356.215, and 356.216 and the provisions of this section except 
104.24  to offset the annual postretirement payment.  Additional 
104.25  investment income is any realized or unrealized investment 
104.26  income other than the excess investment income and must be 
104.27  included in the actuarial valuations performed under sections 
104.28  69.77, 356.215, and 356.216 and the provisions of this section. 
104.29     Sec. 15.  Laws 1989, chapter 319, article 19, section 7, 
104.30  subdivision 4, as amended by Laws 1990, chapter 570, article 12, 
104.31  section 63, Laws 1992, chapter 471, article 2, section 6, and 
104.32  Laws 1996, chapter 438, article 4, section 13, is amended to 
104.33  read: 
104.34     Subd. 4.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
104.35  amount determined under subdivision 3 must be applied in 
104.36  accordance with this subdivision.  When the actuarial value of 
105.1   assets of the fund according to the most recent annual actuarial 
105.2   valuation prepared in accordance with Minnesota Statutes, 
105.3   sections 356.215 and 356.216, is less than 102 percent of its 
105.4   actuarial accrued liabilities, the relief association shall 
105.5   apply the first one-half of one percent of assets which 
105.6   constitute excess investment income to the payment of an annual 
105.7   postretirement payment as specified in this subdivision. and the 
105.8   second one-half of one percent of assets which constitute excess 
105.9   investment income shall be applied to reduce the state 
105.10  amortization state aid or supplementary amortization state aid 
105.11  payments otherwise due to the relief association under section 
105.12  423A.02 for the current calendar year.  When the actuarial value 
105.13  of assets of the fund according to the most recent annual 
105.14  actuarial valuation prepared in accordance with Minnesota 
105.15  Statutes, sections 356.215 and 356.216, is less than 102 percent 
105.16  of its actuarial accrued liabilities, the relief association 
105.17  shall pay an annual postretirement payment to all eligible 
105.18  members in an amount not to exceed one-half of one percent of 
105.19  the assets of the fund.  Payment of the annual postretirement 
105.20  payment must be in a lump sum amount on June 1 following the 
105.21  determination date in any year.  When the actuarial value of 
105.22  assets of the fund according to the most recent annual actuarial 
105.23  valuation prepared in accordance with Minnesota Statutes, 
105.24  section 356.215 and 356.216, is greater than 102 percent of its 
105.25  actuarial accrued liabilities, the relief association shall pay 
105.26  an annual postretirement payment to all eligible members in an 
105.27  amount not to exceed 1-1/2 percent of the assets of the fund.  
105.28  Payment of the annual postretirement payment may be made only if 
105.29  the average time weighted total rate of return in the most 
105.30  recent prior five fiscal years exceeds by two percent the actual 
105.31  average percentage increase in the current monthly salary of a 
105.32  top grade firefighter in the most recent prior five fiscal 
105.33  years.  The total amount of all payments to members may not 
105.34  exceed the amount determined under subdivision 3.  Payment to 
105.35  each eligible member must be calculated by dividing the total 
105.36  number of pension units to which eligible members are entitled 
106.1   into the excess investment income available for distribution to 
106.2   members, and then multiplying that result by the number of units 
106.3   to which each eligible member is entitled to determine each 
106.4   eligible member's annual postretirement payment.  When the fund 
106.5   actuarial value of assets according to the most recent annual 
106.6   actuarial valuation prepared in accordance with Minnesota 
106.7   Statutes, sections 356.215 and 356.216, is less than 102 percent 
106.8   of its actuarial accrued liabilities, payment to each eligible 
106.9   member may not exceed an amount equal to the total monthly 
106.10  benefit that the eligible member was entitled to in the prior 
106.11  year under the terms of the benefit plan of the relief 
106.12  association or each eligible member's proportionate share of the 
106.13  excess investment income, whichever is less.  When the actuarial 
106.14  value of assets of the fund according to the most recent annual 
106.15  actuarial valuation prepared in accordance with Minnesota 
106.16  Statutes, sections 356.215 and 356.216, is greater than 102 
106.17  percent of its actuarial accrued liabilities, payment to each 
106.18  eligible member may not exceed the member's proportionate share 
106.19  of 1-1/2 percent of assets of the fund. 
106.20     Sec. 16.  Laws 1989, chapter 319, article 19, section 7, 
106.21  subdivision 7, is amended to read: 
106.22     Subd. 7.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
106.23  No provision of or payment made under this section may be 
106.24  interpreted or relied upon by any member of the relief 
106.25  association to guarantee or entitle a member to annual 
106.26  postretirement payments for a period when no excess investment 
106.27  income is earned by the fund.  If the actuarial value of assets 
106.28  of the fund according to the most recent annual actuarial 
106.29  valuation prepared in accordance with Minnesota Statutes, 
106.30  sections 356.215 and 356.216, is less than 102 percent of its 
106.31  actuarial accrued liabilities, a distribution of the fund assets 
106.32  must not exceed one-half of one percent. 
106.33     Sec. 17.  Laws 1993, chapter 125, article 1, section 1, is 
106.34  amended to read: 
106.35     Section 1.  [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.] 
106.36     Notwithstanding the provisions of Minnesota Statutes, 
107.1   section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, 
107.2   chapter 607, article XV, section 9, to the contrary, when the 
107.3   actuarial value of assets of the fund according to the most 
107.4   recent annual actuarial valuation prepared in accordance with 
107.5   Minnesota Statutes, sections 356.215 and 356.216, is less than 
107.6   90 percent of its actuarial accrued liabilities, the service 
107.7   pensions payable by the Minneapolis fire department relief 
107.8   association for members terminating active service as a 
107.9   Minneapolis firefighter after June 1, 1993, must be computed as 
107.10  follows: 
107.11              length of                   service 
107.12          credited service            pension payable
107.13              10 years                  16.0 units
107.14              11 years                  17.6 units
107.15              12 years                  19.2 units
107.16              13 years                  20.8 units
107.17              14 years                  22.4 units
107.18              15 years                  24.0 units
107.19              16 years                  25.6 units
107.20              17 years                  27.2 units
107.21              18 years                  28.8 units
107.22              19 years                  30.4 units
107.23              20 years                  33.0 units
107.24              21 years                  34.6 units
107.25              22 years                  36.2 units
107.26              23 years                  37.8 units
107.27              24 years                  39.4 units
107.28              25 years                  41.0 units
107.29     When the actuarial value of assets of the fund according to 
107.30  the most recent annual actuarial valuation prepared in 
107.31  accordance with Minnesota Statutes, sections 356.215 and 
107.32  356.216, is of greater than 90 percent of actuarial accrued 
107.33  liabilities, the following schedule applies to all active 
107.34  members and retired service pensioners who otherwise met the 
107.35  then existing requirements to receive a benefit: 
107.36              length of                   service 
108.1           credited service            pension payable
108.2                5 years                   8.0 units
108.3                6 years                   9.6 units
108.4                7 years                  11.2 units
108.5                8 years                  12.8 units
108.6                9 years                  14.4 units
108.7               10 years                  16.0 units
108.8               11 years                  17.6 units
108.9               12 years                  19.2 units
108.10              13 years                  20.8 units
108.11              14 years                  22.4 units
108.12              15 years                  24.0 units
108.13              16 years                  25.6 units
108.14              17 years                  27.2 units
108.15              18 years                  28.8 units
108.16              19 years                  30.4 units
108.17              20 years                  33.0 33.5 units
108.18              21 years                  34.6 35.1 units
108.19              22 years                  36.2 37.7 units
108.20              23 years                  37.8 38.3 units
108.21              24 years                  39.4 39.9 units
108.22              25 years                  41.0 41.5 units
108.23     When the actuarial value of assets of the fund according to 
108.24  the most recent annual actuarial valuation prepared in 
108.25  accordance with Minnesota Statutes, sections 356.215 and 
108.26  356.216, is of greater than 92.5 percent of actuarial accrued 
108.27  liabilities, the following schedule applies to all active 
108.28  members and retired service pensioners who otherwise met the 
108.29  then existing requirements to receive a benefit: 
108.30              length of                   service 
108.31          credited service            pension payable
108.32               5 years                   8.0 units
108.33               6 years                   9.6 units
108.34               7 years                  11.2 units
108.35               8 years                  12.8 units
108.36               9 years                  14.4 units
109.1               10 years                  16.0 units
109.2               11 years                  17.6 units
109.3               12 years                  19.2 units
109.4               13 years                  20.8 units
109.5               14 years                  22.4 units
109.6               15 years                  24.0 units
109.7               16 years                  25.6 units
109.8               17 years                  27.2 units
109.9               18 years                  28.8 units
109.10              19 years                  30.4 units
109.11              20 years                  34.0 units
109.12              21 years                  35.6 units
109.13              22 years                  37.2 units
109.14              23 years                  38.8 units
109.15              24 years                  40.4 units
109.16              25 years                  42.0 units
109.17     Sec. 18.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; 
109.18  OPTIONAL ANNUITIES.] 
109.19     A member of the Minneapolis fire department relief 
109.20  association who is retired or disabled on the effective date of 
109.21  this section may elect an optional retirement annuity within 60 
109.22  days of the effective date instead of the normal retirement 
109.23  pension.  A member who retires or becomes disabled after the 
109.24  effective date of this section may elect an optional retirement 
109.25  annuity prior to the receipt of any benefits.  The optional 
109.26  retirement annuity may be a 50 percent, a 75 percent, or a 100 
109.27  percent joint and survivor annuity without reinstatement in the 
109.28  event of the designated beneficiary predeceasing the member or a 
109.29  joint and survivor annuity with reinstatement in the event of 
109.30  the designated beneficiary predeceasing the member.  An optional 
109.31  retirement annuity must be actuarially equivalent to the service 
109.32  pension and automatic survivor coverage otherwise payable to the 
109.33  retiring member and the member's beneficiaries.  Once selected, 
109.34  the optional annuity is irrevocable. 
109.35     Sec. 19.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION 
109.36  TAX LEVY.] 
110.1      If in any year after the Minneapolis fire department relief 
110.2   actuarial value of assets of the association according to the 
110.3   most recent annual actuarial valuation prepared in accordance 
110.4   with Minnesota Statutes, sections 356.215 and 356.216, is 
110.5   greater than 102 percent of the actuarial accrued liabilities of 
110.6   the fund and subsequently the actuarial value of assets are less 
110.7   than 100 percent of the actuarial accrued liabilities according 
110.8   to the most recent annual actuarial valuation prepared in 
110.9   accordance with Minnesota Statutes, sections 356.215 and 
110.10  356.216, the city of Minneapolis is not required to levy a 
110.11  property tax to fund any deficit unless the fund has two 
110.12  successive years when the actuarial value of assets are less 
110.13  than 100 percent of the actuarial accrued liabilities according 
110.14  to the most recent annual actuarial valuation prepared in 
110.15  accordance with Minnesota Statutes, sections 356.215 and 356.216.
110.16     Sec. 20.  [ACTUARIAL VALUATION DATE.] 
110.17     Notwithstanding Minnesota Statutes, section 69.77, 
110.18  subdivision 2h, 356.215, or 356.216, the annual actuarial 
110.19  valuation of the Minneapolis fire department relief association 
110.20  must be completed by May 1 of each year. 
110.21     Sec. 21.  [ACTUARIAL EQUIVALENT.] 
110.22     For the purposes of the Minneapolis fire department relief 
110.23  association, "actuarial equivalent" or "actuarially equivalent" 
110.24  means the condition of one annuity or benefit having an equal 
110.25  actuarial present value as another annuity or benefit, 
110.26  determined as of a given date at a specified age with each 
110.27  actuarial present value based on the appropriate mortality table 
110.28  adopted by the board of directors based on the experience of the 
110.29  fund and approved by the actuary retained by the legislative 
110.30  commission on pensions and retirement and using the applicable 
110.31  preretirement or postretirement interest rate assumptions 
110.32  specified in Minnesota Statutes, section 356.216. 
110.33     Sec. 22.  [BENEFIT EXCHANGE.] 
110.34     The one unit health and welfare benefit granted to members 
110.35  of the Minneapolis fire department relief association in Laws 
110.36  1980, chapter 667, article XV, section 9, who retired after July 
111.1   1, 1980, must be reduced by one-half unit upon the 
111.2   implementation of the benefit improvement in section 17 when the 
111.3   actuarial value of assets of the fund according to the most 
111.4   recent annual actuarial valuation report under Minnesota 
111.5   Statutes, sections 356.215 and 356.216, exceeds 90 percent of 
111.6   its actuarial accrued liabilities and the benefit must be 
111.7   eliminated when the actuarial value of assets of the fund 
111.8   exceeds 92.5 percent of its actuarial accrued liabilities and 
111.9   the benefit in section 15 is fully implemented. 
111.10     Sec. 23.  [EFFECTIVE DATE.] 
111.11     The sections of this article are effective on the day after 
111.12  compliance by the governing body of the city of Minneapolis with 
111.13  Minnesota Statutes, section 645.021, subdivision 2.  Section 4 
111.14  is effective when the provisions of section 5 take effect.  
111.15  Sections 7 and 12 are effective retroactive to July 1, 1996, and 
111.16  apply to all current spouses of members, except that the unit 
111.17  increases for surviving spouses in section 7 shall not otherwise 
111.18  increase the surviving spouse benefit beyond 22 units.