1.1                          A bill for an act 
  1.2             relating to retirement; reorganizing the law governing 
  1.3             the Minneapolis firefighters relief association; 
  1.4             proposing coding for new law as Minnesota Statutes, 
  1.5             chapter 423C; repealing Laws 1907, chapter 24; Laws 
  1.6             1913, chapters 318, 419; Laws 1917, chapter 196; Laws 
  1.7             1919, chapters 515, 523; Laws 1921, chapter 404; Laws 
  1.8             1923, chapter 61; Laws 1945, chapter 322; Laws 1959, 
  1.9             chapters 213, 491, 568, as amended; Laws 1961, chapter 
  1.10            109; Laws 1963, chapter 318, as amended; Laws 1967, 
  1.11            chapters 819, 824; Laws 1969, chapters 123, 287; Laws 
  1.12            1971, chapter 542; Laws 1975, chapter 57; Laws 1977, 
  1.13            chapter 164, section 2; Laws 1980, chapter 607, 
  1.14            article XV, sections 8, 9, 10; Laws 1988, chapter 572, 
  1.15            sections 4, 5, 6; Laws 1988, chapter 574, sections 3, 
  1.16            4, 5; Laws 1989, chapter 319, article 19, sections 6, 
  1.17            7; Laws 1990, chapter 589, article 1, sections 5, 6; 
  1.18            Laws 1992, chapter 429; Laws 1992, chapter 454, 
  1.19            section 2; Laws 1992, chapter 471, article 2; Laws 
  1.20            1993, chapter 125; Laws 1993, chapter 192, section 32; 
  1.21            Laws 1994, chapter 591; Laws 1994, chapter 632, 
  1.22            article 3, section 14; Laws 1996, chapter 448, article 
  1.23            2, section 3; Laws 1996, chapter 448, article 3, 
  1.24            section 1; Laws 1997, chapter 233, article 4, sections 
  1.25            13, 14, 15, 16, 17, 18, 19, 20, 21, 22. 
  1.26  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.27     Section 1.  [423C.01] [MINNEAPOLIS FIREFIGHTERS RELIEF 
  1.28  ASSOCIATION; DEFINITIONS.] 
  1.29     Subdivision 1.  [TERMS.] For purposes of this chapter, 
  1.30  unless the context clearly indicates otherwise, the terms 
  1.31  defined in this section have the meanings given them. 
  1.32     Subd. 2.  [ACTIVE MEMBER.] "Active member" means a person 
  1.33  who was hired and duly appointed by the city of Minneapolis 
  1.34  before June 15, 1980, as a firefighter who is regularly entered 
  1.35  on the fire department payroll and who serves on active duty. 
  2.1      Subd. 3.  [ACTIVE MEMBER PERCENTAGE.] "Active member 
  2.2   percentage" means the total number of units accrued by active 
  2.3   members divided by the sum of the total number of units to which 
  2.4   eligible members are entitled and active members have accrued. 
  2.5      Subd. 4.  [ACTUARIAL EQUIVALENT OR ACTUARIALLY 
  2.6   EQUIVALENT.] "Actuarial equivalent" or "actuarially equivalent" 
  2.7   means the condition of one annuity or benefit having an equal 
  2.8   actuarial present value as another annuity or benefit determined 
  2.9   as of a given date at a specified age with each actuarial 
  2.10  present value based on the appropriate mortality table adopted 
  2.11  by the board based on the experience of the special fund and 
  2.12  approved by the actuary retained by the legislative commission 
  2.13  on pensions and retirement and using the applicable 
  2.14  preretirement or postretirement interest rate assumptions 
  2.15  specified in section 356.216. 
  2.16     Subd. 5.  [AGE.] "Age" means a person's age at the person's 
  2.17  latest birthday. 
  2.18     Subd. 6.  [ANNUAL POSTRETIREMENT ADJUSTMENT.] "Annual 
  2.19  postretirement adjustment" means the payment of a lump-sum, 
  2.20  postretirement benefit pursuant to section 423C.06 to an 
  2.21  eligible member on June 1 following the determination date in 
  2.22  any year. 
  2.23     Subd. 7.  [ASSOCIATION.] "Association" means the 
  2.24  Minneapolis firefighters relief association.  
  2.25     Subd. 8.  [BOARD.] "Board" means the board established in 
  2.26  section 423C.03 to govern the association. 
  2.27     Subd. 9.  [CITY.] "City" means the city of Minneapolis. 
  2.28     Subd. 10.  [DEFERRED MEMBER.] "Deferred member" means a 
  2.29  person who served on active duty and was regularly entered on 
  2.30  the fire department payroll and separated from active service 
  2.31  prior to attaining 50 years of age and was entitled to receive a 
  2.32  service pension upon reaching age 50 under the law existing at 
  2.33  the time the member separated from active service for at least 
  2.34  five years. 
  2.35     Subd. 11.  [DEPENDENT.] "Dependent" means: 
  2.36     (1) a biological or adopted child of a deceased, active, or 
  3.1   retired member who is unmarried and under the age of 18; 
  3.2      (2) a biological or adopted child of a deceased, active, or 
  3.3   retired member who is between the ages of 18 and 22 and is 
  3.4   enrolled full time at an accredited educational institution 
  3.5   approved by the board; or 
  3.6      (3) a biological child of an active or retired member 
  3.7   conceived during the active or retired member's lifetime and 
  3.8   born after the active or retired member's death. 
  3.9      Subd. 12.  [DETERMINATION DATE.] "Determination date" means 
  3.10  December 31 of each year. 
  3.11     Subd. 13.  [DISABILITY.] "Disability" means a physical or 
  3.12  mental incapacity causing an otherwise active member from 
  3.13  performing firefighting duties for the fire department. 
  3.14     Subd. 14.  [DISCHARGE.] "Discharge" means a complete 
  3.15  separation from and termination of active service as a member of 
  3.16  the fire department. 
  3.17     Subd. 15.  [ELIGIBLE MEMBER.] "Eligible member" means: 
  3.18     (1) a service pensioner; 
  3.19     (2) a permanent disability pensioner; or 
  3.20     (3) a surviving spouse or dependent of a: 
  3.21     (i) deceased active member; 
  3.22     (ii) deceased service pensioner; 
  3.23     (iii) deceased permanent disability pensioner; or 
  3.24     (iv) deceased deferred member 
  3.25  who received a pension benefit from the association at any time 
  3.26  during the 12 months before the determination date. 
  3.27     Subd. 16.  [EXCESS INVESTMENT INCOME.] "Excess investment 
  3.28  income" means the amount, if any, by which the time-weighted 
  3.29  total rate of return earned by the special fund in the prior 
  3.30  five fiscal years has exceeded the actual percentage increase in 
  3.31  the current monthly salary of a first grade firefighter in the 
  3.32  most recent fiscal year plus two percent.  The excess investment 
  3.33  income must be expressed as a dollar amount and may not exceed 
  3.34  one percent of the total assets of the special fund except when 
  3.35  the actuarial value of assets of the special fund, according to 
  3.36  the most recent annual actuarial valuation prepared in 
  4.1   accordance with sections 356.215 and 356.216, is greater than 
  4.2   102 percent of its actuarial accrued liabilities, in which case 
  4.3   the amount must not exceed 1.5 percent of the assets of the 
  4.4   special fund.  
  4.5      Subd. 17.  [FIRE DEPARTMENT.] "Fire department" means the 
  4.6   Minneapolis fire department. 
  4.7      Subd. 18.  [NET EXCESS ASSET AMOUNT PAYMENT.] "Net excess 
  4.8   asset amount payment" means the payment of an additional 
  4.9   postretirement payment under section 423C.06, subdivision 4, to 
  4.10  an eligible member on June 1 following the determination date in 
  4.11  the given year. 
  4.12     Subd. 19.  [NET TOTAL EXCESS ASSET AMOUNT.] "Net total 
  4.13  excess asset amount" means the total excess asset amount stated 
  4.14  in dollars and multiplied by one minus the active member 
  4.15  percentage. 
  4.16     Subd. 20.  [PERIOD OF SERVICE.] "Period of service" means: 
  4.17     (1) any service rendered by a firefighter for any calendar 
  4.18  month when the member receives salary from which deductions are 
  4.19  made, deposited, and credited to the special fund.  Leaves of 
  4.20  absence of more than 90 days, except those granted because of 
  4.21  disability due to sickness or accident or to enable a member to 
  4.22  accept an appointive position in the fire department, shall be 
  4.23  excluded in computing a member's period of service; 
  4.24     (2) any period in which the member, after entering the fire 
  4.25  department, leaves to either enter the military forces of the 
  4.26  United States in a time of war or national emergency and 
  4.27  subsequently receives an honorable discharge from the military 
  4.28  or renders fire prevention services to the United States 
  4.29  government in a time of war or national emergency, provided the 
  4.30  member who serves either applies for reinstatement in or resumes 
  4.31  active duty in the fire department within six months.  During 
  4.32  any period of military or fire prevention service, the 
  4.33  individual shall not be considered an active member.  Any period 
  4.34  of service a member qualifies for under this clause is limited 
  4.35  as follows: 
  4.36     (i) credit shall be granted for service rendered subsequent 
  5.1   to July 1, 1961, but the credit shall not exceed six calendar 
  5.2   years; 
  5.3      (ii) no credit shall be granted for service rendered 
  5.4   subsequent to July 1, 1961, if the period of service rendered 
  5.5   prior to July 1, 1961, equals or exceeds six calendar years; and 
  5.6      (iii) if the period of service prior to July 1, 1961, is 
  5.7   less than six calendar years, credit for service subsequent to 
  5.8   July 1, 1961, shall be added to the prior service, but in no 
  5.9   case shall total service credit exceed six calendar years. 
  5.10     Subd. 21.  [RETIRED MEMBER.] "Retired member" means a 
  5.11  former active member who has terminated active service with the 
  5.12  fire department and is entitled to receive a pension or benefit 
  5.13  under this chapter or any predecessor law. 
  5.14     Subd. 22.  [SURVIVING SPOUSE MEMBER.] "Surviving spouse 
  5.15  member" means a person who was: 
  5.16     (1) legally married to, and residing with, an active, 
  5.17  deferred, or retired member both during the time the member was 
  5.18  regularly entered on the payroll and serving on active duty in 
  5.19  the fire department and at the time of the member's death; 
  5.20     (2) not in a common law marriage; and 
  5.21     (3) in the event the person was married to a retired or 
  5.22  deferred member, the person was married to that retired or 
  5.23  deferred member for at least one year prior to the member's 
  5.24  discharge from the fire department. 
  5.25     Subd. 23.  [TIME-WEIGHTED TOTAL RATE OF 
  5.26  RETURN.] "Time-weighted total rate of return" means the 
  5.27  percentage amount determined by using the formula or formulas 
  5.28  established by the state board of investment under section 
  5.29  11A.04, clause (11), and in effect on January 1, 1987. 
  5.30     Subd. 24.  [TOTAL EXCESS ASSET AMOUNT.] (a) "Total excess 
  5.31  asset amount" means the difference, if positive, expressed in 
  5.32  dollars, between the special fund's market value of assets after 
  5.33  any deductions required by section 423C.06, subdivision 3, and 
  5.34  110 percent of the actuarial accrued liabilities based on the 
  5.35  actuarial valuation indicated in paragraph (b). 
  5.36     (b) The total excess asset amount in paragraph (a) exists 
  6.1   if the actuarial liability funding ratio, according to the most 
  6.2   recent annual actuarial valuation of the special fund prepared 
  6.3   in accordance with sections 69.77, 356.215, and 356.216, with 
  6.4   adjustments required by section 423C.06, subdivision 3, equals 
  6.5   or exceeds 110 percent. 
  6.6      Subd. 25.  [UNIT.] "Unit" means 1/80 of the maximum monthly 
  6.7   salary of a first grade firefighter on the first day of the 
  6.8   month in which the pension benefits provided by this chapter are 
  6.9   paid. 
  6.10     Sec. 2.  [423C.02] [MINNEAPOLIS FIREFIGHTERS RELIEF 
  6.11  ASSOCIATION.] 
  6.12     Subdivision 1.  [CREATION.] The active and retired members 
  6.13  of the fire department and their surviving spouses shall 
  6.14  maintain the association.  The association shall be duly 
  6.15  incorporated under chapter 317A.  This corporation shall have 
  6.16  perpetual corporate existence.  The association shall create, 
  6.17  maintain, and administer those funds and accounts as set forth 
  6.18  in section 423C.04 for the benefit of its members, surviving 
  6.19  spouses, and dependents.  The sources of revenue for each fund 
  6.20  and account are governed by section 423C.04.  The authorized 
  6.21  disbursements from each fund and account are governed by 
  6.22  sections 423C.04, 423C.05, and 423C.06. 
  6.23     Subd. 2.  [MEMBERSHIP.] Active members, deferred members, 
  6.24  retired members, and surviving spouse members as defined in 
  6.25  section 423C.01 are members of the association. 
  6.26     Subd. 3.  [MANAGEMENT OF ASSOCIATION.] The board created in 
  6.27  section 423C.03 shall manage, control, and operate the 
  6.28  association, including the funds and accounts set forth in 
  6.29  section 423C.04, according to this chapter, other applicable 
  6.30  law, and the association's articles of incorporation and its 
  6.31  bylaws.  Notwithstanding section 423A.01, subdivision 2, or any 
  6.32  other law to the contrary, the board shall continue to govern 
  6.33  the association until there are fewer than 100 members receiving 
  6.34  benefits under this chapter.  Thereafter, the special fund shall 
  6.35  become a trust fund according to section 423A.01, subdivision 2. 
  6.36     Subd. 4.  [DISPOSITION OF ASSETS UPON CONCLUSION OF BENEFIT 
  7.1   PAYMENTS.] Upon the last member's death and the certification by 
  7.2   the chief administrative officer of the city to the state 
  7.3   auditor of the absence of any remaining person entitled to a 
  7.4   benefit under this chapter, all assets of the association or 
  7.5   trust fund, whichever applies, shall revert to the city.  The 
  7.6   city shall only use these assets for firefighting expenditure 
  7.7   purposes. 
  7.8      Sec. 3.  [423C.03] [BOARD MEMBERSHIP; ELECTIONS; DUTIES; 
  7.9   COMPENSATION; BOND; MEETINGS; POWERS.] 
  7.10     Subdivision 1.  [BOARD COMPOSITION AND ELECTIONS.] The 
  7.11  board shall consist of one person appointed by the city and ten 
  7.12  other members selected by the members.  At least eight board 
  7.13  members shall be retired or surviving spouse members of the 
  7.14  association.  When there are fewer than 50 active members 
  7.15  remaining in the association, there shall be at least nine 
  7.16  retired or surviving spouse members on the board.  As long as 
  7.17  there is one active member of the association, there shall be at 
  7.18  least one active member on the board.  Elections for active and 
  7.19  retired positions on the board shall be conducted pursuant to 
  7.20  the association's bylaws.  Board members shall serve a term of 
  7.21  three years. 
  7.22     Subd. 2.  [BOARD OFFICERS.] The officers of the association 
  7.23  shall consist of a president, one or more vice-presidents, an 
  7.24  executive secretary, a treasurer, an assistant executive 
  7.25  secretary, and an assistant treasurer.  Only elected members of 
  7.26  the board are eligible to be officers.  Officers shall have 
  7.27  those duties and responsibilities as set forth in this chapter, 
  7.28  other applicable law, and the association's bylaws.  Officers 
  7.29  shall be compensated as provided in subdivision 3.  All officers 
  7.30  shall be elected at the annual meeting of the association's 
  7.31  board and shall hold their office for a term of two years or 
  7.32  until their successors are elected and duly qualified. 
  7.33     Subd. 3.  [COMPENSATION OF OFFICERS AND BOARD 
  7.34  MEMBERS.] Notwithstanding any other law to the contrary, the 
  7.35  association may provide for payment of the following salaries to 
  7.36  its officers and board members: 
  8.1      (1) the executive secretary may receive a salary not 
  8.2   exceeding 30 percent of the maximum salary of a top grade 
  8.3   firefighter; 
  8.4      (2) the president may receive a salary not exceeding ten 
  8.5   percent of the maximum salary of a top grade firefighter; and 
  8.6      (3) all other elected members of the board may receive a 
  8.7   salary not exceeding 2.5 percent of the maximum salary of a top 
  8.8   grade firefighter. 
  8.9      Subd. 4.  [BOND FOR EXECUTIVE SECRETARY AND TREASURER.] The 
  8.10  executive secretary shall furnish a corporate bond to the 
  8.11  association for the faithful performance of duties in an amount 
  8.12  that the board shall from time to time determine.  The treasurer 
  8.13  shall furnish a corporate bond to the association for the 
  8.14  faithful performance of duties in an amount acceptable to the 
  8.15  city.  The association is authorized to and shall pay the 
  8.16  premiums on these bonds from its special fund. 
  8.17     Subd. 5.  [MEETINGS.] Each December, the board shall hold 
  8.18  an annual meeting to elect its officers.  All other meetings of 
  8.19  the board shall be held as provided in the association's 
  8.20  articles or bylaws.  Board members may participate in a board 
  8.21  meeting by any means of communication through which the trustee, 
  8.22  other board members participating, and all other board members 
  8.23  physically present at the meeting may simultaneously hear each 
  8.24  other during the meeting.  Participating in a meeting by this 
  8.25  means is the same as being physically present at the meeting. 
  8.26     Subd. 6.  [ADDITIONAL BOARD POWERS.] In addition to the 
  8.27  powers granted the board by this chapter, other applicable state 
  8.28  and federal law, and its articles and bylaws, the board shall 
  8.29  have the following powers: 
  8.30     (a) The board may authorize and create a board of examiners 
  8.31  to investigate and report on all applications for temporary and 
  8.32  permanent disability pensions.  This board of examiners shall 
  8.33  review, investigate, and report on all applications for 
  8.34  disability pensions and make recommendations as to the benefit 
  8.35  amount to be paid.  The board of examiners shall consist of at 
  8.36  least three board members. 
  9.1      (b) The board shall at all times have the right to reduce 
  9.2   and otherwise adjust the amount of pensions and benefits paid 
  9.3   out of its funds and accounts.  Within the limits prescribed in 
  9.4   this chapter, state law, and the federal and state 
  9.5   constitutions, the association shall have and retain the right 
  9.6   to increase and otherwise adjust these pensions and benefits 
  9.7   after they have been reduced. 
  9.8      Sec. 4.  [423C.04] [ASSOCIATION FUNDS AND ACCOUNTS.] 
  9.9      Subdivision 1.  [DUTIES.] The association shall create, 
  9.10  maintain, and administer the funds and accounts in this 
  9.11  section.  The sources of revenue and authorized disbursements of 
  9.12  each fund and account are governed by this section. 
  9.13     Subd. 2.  [SPECIAL FUND; PURPOSE AND SOURCES OF 
  9.14  REVENUE.] The special fund may only be used to pay for defined 
  9.15  and contingent benefits as set forth in sections 423C.05 and 
  9.16  423C.06; compensation for officers and board members as set 
  9.17  forth in section 423C.03, subdivision 3; expenses of officers 
  9.18  and employees of the association in connection with the 
  9.19  protection of the special fund; and expenses of operating, 
  9.20  administering, and maintaining the association, including those 
  9.21  authorized by this chapter, section 69.80, or other applicable 
  9.22  law.  The special fund is derived from the following sources: 
  9.23     (1) receipts from the state, including, but not limited to, 
  9.24  all money received pursuant to applicable state amortization and 
  9.25  supplemental amortization aid laws and state fire aid laws; 
  9.26     (2) all money derived from taxation by the city for the 
  9.27  support of the association and the payment of benefits set forth 
  9.28  in sections 423C.05 and 423C.06; 
  9.29     (3) an amount equal to the minimum percentage specified in 
  9.30  section 69.77, subdivision 2a, of the salary of a first grade 
  9.31  firefighter deducted from the monthly salary of each active 
  9.32  member; and 
  9.33     (4) money from the investment of, earnings on, and interest 
  9.34  of special fund assets. 
  9.35     Subd. 3.  [GENERAL FUND.] The general fund is separate and 
  9.36  distinct from the special fund.  The general fund may, 
 10.1   consistent with applicable law, be expended for those purposes 
 10.2   deemed appropriate by the board.  The city finance officer shall 
 10.3   deduct from each active member's biweekly payroll check a sum 
 10.4   equal to one-half of one percent of the maximum biweekly salary 
 10.5   of a first grade firefighter.  This sum shall be forwarded to 
 10.6   the association's treasurer and deposited in the general fund.  
 10.7   The general fund shall also consist of receipts from private 
 10.8   sources, such as gifts, charges, rents, fundraising projects, 
 10.9   and dues paid by members; investment of, earnings on, and 
 10.10  interest of the general fund; and all other sources.  Money 
 10.11  received from other sources may also be deposited in the general 
 10.12  fund. 
 10.13     Subd. 4.  [HEALTH INSURANCE ACCOUNTS.] Notwithstanding any 
 10.14  law to the contrary, contributions of active members of the 
 10.15  association with at least 25 years of service made after the 
 10.16  25th year of service must be deposited in a separate account and 
 10.17  used to pay health care costs of the individual member upon 
 10.18  retirement.  The board shall adopt rules regarding the frequency 
 10.19  and amounts of distributions from these accounts.  A member with 
 10.20  an account established pursuant to this section is entitled, 
 10.21  upon retirement or disability, to receive periodic distributions 
 10.22  from the account, in the amount and with the frequency specified 
 10.23  by the retiring member consistent with the board's rules. 
 10.24     Sec. 5.  [423C.05] [DEFINED BENEFITS.] 
 10.25     Subdivision 1.  [DUTIES.] The association is authorized to 
 10.26  and shall pay the benefits in this section to its members in 
 10.27  accordance with this section.  All benefits authorized in this 
 10.28  section shall be paid from the association's special fund. 
 10.29     Subd. 2.  [SERVICE PENSION.] (a) An active member who has 
 10.30  performed duty for the fire department for five years or more 
 10.31  and was vested on April 1, 1988, upon written application after 
 10.32  retiring from duty and reaching at least age 50, is entitled to 
 10.33  be paid monthly for life a service pension according to the 
 10.34  following schedule: 
 10.35     Period of Service       Units of Service Pension Payable
 10.36              5                             8.0
 11.1               6                             9.6
 11.2               7                            11.2
 11.3               8                            12.8
 11.4               9                            14.4
 11.5              10                            16.0
 11.6              11                            17.6
 11.7              12                            19.2
 11.8              13                            20.8
 11.9              14                            22.4
 11.10             15                            24.0
 11.11             16                            25.6
 11.12             17                            27.2
 11.13             18                            28.8
 11.14             19                            30.4
 11.15             20                            34.0
 11.16             21                            35.6
 11.17             22                            37.2
 11.18             23                            38.8
 11.19             24                            40.4
 11.20             25                            42.0
 11.21     (b) A member entitled to a benefit under this subdivision 
 11.22  may elect to have it paid as an optional retirement annuity 
 11.23  pursuant to the conditions set forth in subdivision 8.  A member 
 11.24  receiving a benefit pursuant to subdivision 5 or 6 shall not 
 11.25  simultaneously be entitled to a benefit under this subdivision. 
 11.26     Subd. 3.  [CALCULATION OF SERVICE PENSION FOR DEFERRED 
 11.27  MEMBERS.] An association member who has performed services for 
 11.28  the fire department for five years or more but has not reached 
 11.29  the age of 50 years shall be eligible to retire from the 
 11.30  department after April 1, 1988, without forfeiting service 
 11.31  pension rights.  The member shall, upon application, be placed 
 11.32  on the association's deferred pension roll.  The association 
 11.33  shall, upon board approval, pay the pension of any member on the 
 11.34  deferred pension roll who has attained 50 years of age from the 
 11.35  date the application is approved.  The pension shall be paid in 
 11.36  accordance with the schedule in subdivision 2.  Any person 
 12.1   making this application waives all other rights, claims, or 
 12.2   demands against the association for any cause that may have 
 12.3   arisen from or that may be attributable to the person's service 
 12.4   in the fire department. 
 12.5      Subd. 4.  [TEMPORARY DISABILITY PENSION.] An active member 
 12.6   who, by sickness or accident, becomes temporarily disabled from 
 12.7   performing firefighter duties for the fire department shall be 
 12.8   entitled to a temporary disability pension.  No allowance for 
 12.9   disability shall be made unless notice of the disability and an 
 12.10  application for benefits is made by or on behalf of the disabled 
 12.11  member within 90 days after the beginning of the disability.  
 12.12  This application shall include a certificate from a qualified 
 12.13  medical professional setting forth the cause, nature, and extent 
 12.14  of the disability.  This certificate must also conclude that the 
 12.15  disability was incurred or sustained while the member was in the 
 12.16  service of the fire department.  The board may appoint a board 
 12.17  of examiners pursuant to section 423C.03, subdivision 6, 
 12.18  paragraph (a), to investigate and report on an application for 
 12.19  benefits pursuant to this section and make recommendations as to 
 12.20  eligibility and the benefit amount to be paid.  A member 
 12.21  entitled to a disability pension shall receive benefits in the 
 12.22  amount and manner determined by the board. 
 12.23     Subd. 5.  [SERVICE-RELATED PERMANENT DISABILITY 
 12.24  PENSION.] An active member who becomes permanently disabled as a 
 12.25  result of a service-related disease or injury shall, upon 
 12.26  application and approval of the board, be entitled to a pension 
 12.27  of 42 units.  The application for service-related permanent 
 12.28  disability shall include a certificate from a qualified medical 
 12.29  professional setting forth the permanent nature of the 
 12.30  disability or disease and that it was service-related.  The 
 12.31  board may appoint a board of examiners pursuant to section 
 12.32  423C.03, subdivision 6, paragraph (a), to investigate and make 
 12.33  recommendations on an application for a pension pursuant to this 
 12.34  subdivision. 
 12.35     Subd. 6.  [NONSERVICE-RELATED PERMANENT DISABILITY 
 12.36  PENSION.] An active member who, by sickness or accident, becomes 
 13.1   permanently disabled from performing firefighter duties for the 
 13.2   fire department shall be entitled to a permanent disability 
 13.3   pension.  No allowance for disability shall be made unless 
 13.4   notice of the disability and an application for benefits is made 
 13.5   by or on behalf of the disabled member within 90 days after the 
 13.6   beginning of the disability.  This application shall include a 
 13.7   certificate from a qualified medical professional setting forth 
 13.8   the cause, nature, and extent of the disability.  The board may 
 13.9   appoint a board of examiners pursuant to section 423C.03, 
 13.10  subdivision 6, paragraph (a), to investigate and report on an 
 13.11  application for benefits pursuant to this section and make 
 13.12  recommendations as to eligibility and the benefit amount to be 
 13.13  paid.  A member entitled to a disability pension shall receive 
 13.14  benefits in the amount and manner determined by the board, not 
 13.15  to exceed 42 units. 
 13.16     Subd. 7.  [SURVIVING SPOUSE AND DEPENDENT 
 13.17  PENSIONS.] Notwithstanding any other law to the contrary, when a 
 13.18  service pensioner, disability pensioner, deferred pensioner, or 
 13.19  active member of the association dies, recipient beneficiaries 
 13.20  are entitled to a pension or pensions, as follows: 
 13.21     (1) to a surviving spouse, a pension of 22 units per month; 
 13.22     (2) a surviving spouse of a deceased service pensioner, 
 13.23  disability pensioner, or deferred pensioner who is otherwise not 
 13.24  qualified for a pension may receive a benefit if the surviving 
 13.25  spouse was legally married to the decedent for a period of two 
 13.26  years and was residing with the decedent at the time of death.  
 13.27  The surviving spouse benefit provided in this clause is the same 
 13.28  as that provided to those who meet the definition of surviving 
 13.29  spouse under section 423C.01, subdivision 22, except that if the 
 13.30  surviving spouse is younger than the decedent, the surviving 
 13.31  spouse benefit must be actuarially equivalent to a surviving 
 13.32  spouse benefit that would have been paid to the member's spouse 
 13.33  had the member been married to a person of the same or greater 
 13.34  age than the member's age prior to retirement.  A benefit paid 
 13.35  in this circumstance may be less than 17 units notwithstanding 
 13.36  the minimum set out in this clause; 
 14.1      (3) to each dependent, if the dependent's other parent is 
 14.2   living, a pension not to exceed eight units per month.  
 14.3   Dependents between the ages of 18 and 22 may continue to receive 
 14.4   a pension upon board determination that the dependent complies 
 14.5   with the requirements of section 423C.01, subdivision 11, and 
 14.6   applicable association bylaws, except that if the dependent 
 14.7   marries before the age of 22 years the pension shall cease as of 
 14.8   the date of the marriage.  The board shall make the final 
 14.9   determination with respect to eligibility for benefits and 
 14.10  compliance with section 423C.01, subdivision 11; 
 14.11     (4) each dependent of a deceased member after the death of 
 14.12  the dependent's other parent, or in the event the other parent 
 14.13  predeceases the member, is entitled to receive a pension in the 
 14.14  amount the board deems necessary to properly support each 
 14.15  dependent until the dependent reaches the age of not less than 
 14.16  16 and not more than 18 years.  Dependents between the ages of 
 14.17  18 and 22 may be entitled to continue receiving a pension upon 
 14.18  board determination that the dependent complies with the 
 14.19  requirements of section 423C.01, subdivision 11, and applicable 
 14.20  association bylaws, except that if the dependent marries before 
 14.21  the age of 22 years the pension shall cease as of the date of 
 14.22  the marriage.  The board shall make the final determination with 
 14.23  respect to eligibility for benefits and compliance; and 
 14.24     (5) the total pension payable to a surviving spouse and all 
 14.25  dependents of a deceased member shall in no event exceed 42 
 14.26  units per month. 
 14.27     Subd. 8.  [OPTIONAL RETIREMENT ANNUITY ELECTION.] A member 
 14.28  of the association who retires or becomes disabled may elect an 
 14.29  optional retirement annuity prior to the receipt of any 
 14.30  benefits.  The optional retirement annuity may be a 50 percent, 
 14.31  75 percent, or 100 percent joint survivor annuity without 
 14.32  reinstatement in the event the designated beneficiary 
 14.33  predeceases the member or a joint and survivor annuity with 
 14.34  reinstatement in the event the member predeceases the designated 
 14.35  beneficiary.  An optional retirement annuity must be actuarially 
 14.36  equivalent to the service pension and automatic survivor 
 15.1   coverage otherwise payable to the retired member and the 
 15.2   member's beneficiaries.  Once selected, the optional annuity is 
 15.3   irrevocable. 
 15.4      Sec. 6.  [423C.06] [INVESTMENT-RELATED POSTRETIREMENT 
 15.5   ADJUSTMENTS.] 
 15.6      Subdivision 1.  [ANNUAL ADJUSTMENTS.] Notwithstanding the 
 15.7   provisions of chapter 69, or any other law to the contrary, the 
 15.8   association may provide annual postretirement payments to 
 15.9   eligible members under this section.  No provision of or payment 
 15.10  made under this section may be interpreted or relied upon by any 
 15.11  member of the association to guarantee or entitle a member to 
 15.12  annual postretirement adjustments for any period when the 
 15.13  requirements in this section have not been met. 
 15.14     Subd. 2.  [ACTUARIAL ASSETS OF SPECIAL FUND LESS THAN 102 
 15.15  PERCENT.] When the actuarial assets of the special fund in any 
 15.16  year are less than 102 percent of its accrued liabilities 
 15.17  according to the most recent annual actuarial valuation of the 
 15.18  special fund prepared in accordance with sections 356.215 and 
 15.19  356.216, investment-related postretirement adjustments shall be 
 15.20  determined and paid pursuant to this subdivision.  Payment of 
 15.21  the annual postretirement adjustment may be made only if there 
 15.22  is excess investment income. 
 15.23     (a) The board shall determine by May 1 of each year whether 
 15.24  or not the special fund has excess investment income.  The 
 15.25  amount of excess investment income, if any, must be stated as a 
 15.26  dollar amount and reported by the executive secretary to the 
 15.27  mayor and governing body of the city, the state auditor, the 
 15.28  commissioner of finance, and the executive director of the 
 15.29  legislative commission on pensions and retirement.  The dollar 
 15.30  amount of excess investment income up to one percent of the 
 15.31  assets of the special fund must be applied for the purpose 
 15.32  specified in paragraph (b).  Excess investment income must not 
 15.33  be considered as income to or assets of the special fund for 
 15.34  actuarial valuations of the special fund for that year under 
 15.35  sections 69.77, 356.215, 356.216, and this section except to 
 15.36  offset the annual postretirement adjustment.  Additional 
 16.1   investment income is any realized or unrealized investment 
 16.2   income other than the excess investment income and must be 
 16.3   included in the actuarial valuations performed under sections 
 16.4   69.77, 356.215, 356.216, and this section. 
 16.5      (b) The amount determined under paragraph (a) must be 
 16.6   applied as follows:  the association shall apply the 1-1/2 
 16.7   percent of assets that constitute excess investment income to 
 16.8   the payment of an annual postretirement adjustment to eligible 
 16.9   members.  The amount of each eligible member's postretirement 
 16.10  adjustment shall be calculated by dividing the total number of 
 16.11  units to which eligible members are entitled into the excess 
 16.12  investment income available for distribution to eligible 
 16.13  members, and then multiplying that result by the number of units 
 16.14  to which each eligible member is entitled.  If this amount 
 16.15  exceeds the total monthly benefit that the eligible member was 
 16.16  entitled to in the prior year under the terms of this chapter, 
 16.17  the association shall pay the eligible member the lesser 
 16.18  amount.  Payment of the annual postretirement adjustment must be 
 16.19  in a lump-sum amount on June 1 following the determination date 
 16.20  in any year.  In the event an eligible member dies prior to the 
 16.21  payment of the annual postretirement adjustment, the executive 
 16.22  secretary shall pay the eligible member's estate the amount to 
 16.23  which the member was entitled. 
 16.24     Subd. 3.  [ACTUARIAL ASSETS OF SPECIAL FUND 102 PERCENT OR 
 16.25  MORE.] When the actuarial assets of the special fund in any year 
 16.26  is 102 percent or more of its accrued liabilities according to 
 16.27  the most recent annual actuarial valuation of the special fund 
 16.28  prepared in accordance with sections 356.215 and 356.216, an 
 16.29  investment-related postretirement adjustment shall be determined 
 16.30  and paid pursuant to this subdivision.  Payment of the annual 
 16.31  postretirement adjustment may only be made if there is excess 
 16.32  investment income. 
 16.33     (a) The board shall determine by May 1 of each year whether 
 16.34  or not the special fund has excess investment income.  The 
 16.35  amount of excess investment income, if any, must be stated as a 
 16.36  dollar amount and reported by the executive secretary to the 
 17.1   mayor and governing body of the city, the state auditor, the 
 17.2   commissioner of finance, and the executive director of the 
 17.3   legislative commission on pensions and retirement.  The dollar 
 17.4   amount of excess investment income up to 1-1/2 percent of the 
 17.5   assets of the fund must be applied for the purpose specified in 
 17.6   paragraph (b).  Excess investment income must not be considered 
 17.7   as income to or assets of the special fund for actuarial 
 17.8   valuations of the special fund for that year under sections 
 17.9   69.77, 356.215, 356.216, and this section except to offset the 
 17.10  annual postretirement adjustment.  Additional investment income 
 17.11  is any realized or unrealized investment income other than the 
 17.12  excess investment income and must be included in the actuarial 
 17.13  valuations performed under sections 69.77, 356.215, 356.216, and 
 17.14  this section. 
 17.15     (b) The amount determined under paragraph (a) must be 
 17.16  applied as follows:  the association shall apply the 1-1/2 
 17.17  percent of assets that constitute excess investment income to 
 17.18  the payment of an annual postretirement adjustment to eligible 
 17.19  members.  The amount of each eligible member's postretirement 
 17.20  adjustment shall be calculated by dividing the total number of 
 17.21  units to which eligible members are entitled into the excess 
 17.22  investment income available for distribution to eligible 
 17.23  members, and then multiplying that result by the number of units 
 17.24  to which each eligible member is entitled.  Payment of the 
 17.25  annual postretirement adjustment must be in a lump-sum amount on 
 17.26  June 1 following the determination date in any year.  In the 
 17.27  event an eligible member dies prior to the payment of the annual 
 17.28  postretirement adjustment, the executive secretary shall pay the 
 17.29  eligible member's estate the amount to which the member was 
 17.30  entitled. 
 17.31     Subd. 4.  [ACTUARIAL ASSETS OF SPECIAL FUND 110 PERCENT OR 
 17.32  MORE.] When the actuarial assets of the special fund in any year 
 17.33  is 110 percent or more of its accrued liabilities according to 
 17.34  the most recent annual actuarial valuation of the special fund 
 17.35  prepared in accordance with sections 356.215 and 356.216, an 
 17.36  investment-related postretirement adjustment shall be determined 
 18.1   and paid pursuant to this subdivision.  Payment of the annual 
 18.2   postretirement adjustment may be made only if a total excess 
 18.3   asset amount exists. 
 18.4      (a) The board shall determine by May 1 of each year whether 
 18.5   the special fund has a total excess asset amount for that year.  
 18.6   If a total excess asset amount exists for the given year, the 
 18.7   net total asset amount shall be determined.  The executive 
 18.8   secretary shall report the total excess asset amount and net 
 18.9   total excess asset amount to the mayor and governing body of the 
 18.10  city, the state auditor, the commissioner of finance, and the 
 18.11  executive director of the legislative commission on pensions and 
 18.12  retirement.  The portion of the net excess asset amount which is 
 18.13  distributed under this subdivision shall not be considered 
 18.14  income to or assets of the special fund for actuarial valuations 
 18.15  of the special fund for that year under sections 69.77, 356.215, 
 18.16  and 356.216 and Laws 2000, chapter 461, except to offset the 
 18.17  amount distributed. 
 18.18     (b) Twenty percent of the net total excess asset amount 
 18.19  determined under paragraph (a) is available for excess asset 
 18.20  amount payments under paragraph (c). 
 18.21     (c) Except as limited under paragraph (d), the net excess 
 18.22  asset amount payment to an eligible member is equal to the 
 18.23  amount determined under paragraph (b) multiplied by the units 
 18.24  applicable to the eligible member and divided by the total units 
 18.25  of all eligible members. 
 18.26     (d) A member who is an eligible member for the entire 12 
 18.27  months before the determination date is eligible for a full 
 18.28  excess asset amount payment pursuant to paragraph (c).  A member 
 18.29  who is an eligible member for less than 12 months before the 
 18.30  determination date is eligible for a prorated excess asset 
 18.31  amount payment.  If an eligible member dies before the 
 18.32  determination date and before the excess asset amount payment 
 18.33  commences, the association shall pay the eligible member's 
 18.34  excess asset amount payment to the eligible member's surviving 
 18.35  spouse or, if no surviving spouse, to the eligible member's 
 18.36  estate. 
 19.1      (e) The excess asset amount payments determined under this 
 19.2   subdivision commence on June 1 following the determination 
 19.3   date.  The board may disperse payments to eligible members in a 
 19.4   lump sum, 12 monthly installments, or any other manner that the 
 19.5   board determines. 
 19.6      Subd. 5.  [REPORT ON ANNUAL POSTRETIREMENT 
 19.7   ADJUSTMENTS.] The executive secretary shall submit a report on 
 19.8   the amount of all postretirement adjustments made under this 
 19.9   section and the manner in which those payments were determined 
 19.10  to the state auditor, the executive director of the legislative 
 19.11  commission on pensions and retirement, and the city clerk. 
 19.12     Subd. 6.  [CITY TAX LEVY.] If in any year after the 
 19.13  actuarial value of special fund assets, according to the most 
 19.14  recent annual actuarial valuation prepared in accordance with 
 19.15  sections 356.215 and 356.216, is greater than 102 percent of the 
 19.16  actuarial accrued liabilities of the special fund and 
 19.17  subsequently the actuarial value of assets are less than 100 
 19.18  percent of the actuarial accrued liabilities according to the 
 19.19  most recent annual actuarial valuation prepared according to 
 19.20  sections 356.215 and 356.216, the city of Minneapolis is not 
 19.21  required to levy a property tax to fund any deficit unless the 
 19.22  fund has two successive years when the actuarial value of assets 
 19.23  are less than 100 percent of the actuarial accrued liabilities 
 19.24  according to the most recent annual actuarial valuation prepared 
 19.25  according to sections 356.215 and 356.216. 
 19.26     Sec. 7.  [423C.07] [ACTUARIAL VALUATION DATE.] 
 19.27     Notwithstanding section 69.77, subdivision 2h; 356.215; or 
 19.28  356.216, the annual actuarial valuation of the association must 
 19.29  be completed by May 1 of each year. 
 19.30     Sec. 8.  [423C.08] [MEMBER CONTRIBUTION REFUND TO 
 19.31  BENEFICIARY UPON DEATH.] 
 19.32     If an active, deferred, or retired member of the 
 19.33  association dies and no survivor benefit is payable, the 
 19.34  designated beneficiary of the decedent or, if none, the legal 
 19.35  representative of the estate of the decedent is entitled, upon 
 19.36  application, to a refund.  The refund shall be an amount equal 
 20.1   to the member contributions to the credit of the decedent, plus 
 20.2   interest on those contributions at an annual compounded rate of 
 20.3   five percent from the first day of the month following the date 
 20.4   of death of the decedent, reduced by the sum of any service 
 20.5   pension or disability benefit previously paid by the fund to the 
 20.6   decedent. 
 20.7      Sec. 9.  [423C.09] [PAYMENTS EXEMPT FROM PROCESS.] 
 20.8      All payments made, or to be made, by the association under 
 20.9   this chapter shall be totally exempt from garnishment, 
 20.10  execution, or other legal process, except as provided in section 
 20.11  518.58 or 518.581.  No person entitled to a payment shall have 
 20.12  the right to assign the name, nor shall the association have 
 20.13  authority to recognize any assignment or to pay any sum on 
 20.14  account thereof.  Any attempt to transfer any right or claim, or 
 20.15  any part thereof, shall be void. 
 20.16     Sec. 10.  [423C.10] [VOLUNTARY EMPLOYEE BENEFIT 
 20.17  ASSOCIATION.] 
 20.18     Subdivision 1.  [PURPOSE.] The legislature finds that the 
 20.19  cost of health care absorbs a significant and growing percentage 
 20.20  of government resources and personal income.  The legislature 
 20.21  also finds that it has set aside funds to meet current and 
 20.22  future retirement obligations for its public employees and 
 20.23  adequately funded these obligations thereby obviating future 
 20.24  expenditures of government resources.  The legislature also 
 20.25  finds that local government, state government, and the federal 
 20.26  government have not been able to effectively address either the 
 20.27  short-term increases in health care costs or the long-term 
 20.28  funding needs to adequately provide health care to both active 
 20.29  and retired public employees.  The legislature also finds that 
 20.30  health care costs have become increasingly onerous to retired 
 20.31  public employees and presents a major economic concern to public 
 20.32  employees upon their retirement.  The legislature believes that 
 20.33  finding a means to prefund health costs without state and local 
 20.34  government undertaking these obligations is both prudent and 
 20.35  sound.  The legislature also believes that the federal 
 20.36  government has at its disposal the best means to address health 
 21.1   care cost issues.  The legislature also finds that a voluntary 
 21.2   employee benefit association may be a new way for Minnesota 
 21.3   public pension plans to partially address this issue. 
 21.4      Subd. 2.  [CREATION.] The association shall create, 
 21.5   maintain, and administer section 501(c)(9), of the Internal 
 21.6   Revenue Code, voluntary employee benefit organization for the 
 21.7   benefit of its members.  If required, the association may 
 21.8   incorporate a separate nonprofit entity under chapter 317A to 
 21.9   obtain any necessary federal approvals for the organization.  
 21.10  This voluntary employee benefit organization shall provide for 
 21.11  the payment of health care-related benefits to members and their 
 21.12  surviving spouses and dependents.  Substantially all operations 
 21.13  of the voluntary employees benefit organization shall be in 
 21.14  furtherance of providing these health care-related benefits. 
 21.15     Subd. 3.  [GOVERNANCE AND MEMBERSHIP.] Elected members of 
 21.16  the board shall manage, operate, and administer the voluntary 
 21.17  employee benefit organization.  To the extent permissible by 
 21.18  section 501(c)(9), of the Internal Revenue Code, all members of 
 21.19  the association are eligible to participate in the voluntary 
 21.20  employees benefit organization.  Participation in the voluntary 
 21.21  employees benefit association is voluntary. 
 21.22     Subd. 4.  [FUNDING.] The individual accounts of members 
 21.23  choosing to participate in the voluntary employees benefit 
 21.24  organization may, consistent with federal law, be funded by any 
 21.25  of the following methods: 
 21.26     (1) a transfer of assets to the voluntary employees benefit 
 21.27  association for the member's health insurance account authorized 
 21.28  in section 423C.04, subdivision 4; 
 21.29     (2) contributions of active members of the association with 
 21.30  25 or more years of service not directed to a health insurance 
 21.31  account established in section 423C.04, subdivision 4; 
 21.32     (3) a portion of any disability benefit or postretirement 
 21.33  adjustment the member is entitled to under this chapter.  The 
 21.34  member shall designate that portion of the benefit the member 
 21.35  wishes to transfer to the voluntary employees benefit 
 21.36  organization on forms developed by the association.  A member's 
 22.1   benefit shall be offset dollar-for-dollar by the amount the 
 22.2   member wishes to transfer to the voluntary employees benefit 
 22.3   organization; or 
 22.4      (4) a transfer of funds from the city of Minneapolis to a 
 22.5   member's account in the voluntary employees benefit organization 
 22.6   pursuant to a collective bargaining agreement. 
 22.7      Sec. 11.  [423C.11] [WORKERS' COMPENSATION ACT NOT 
 22.8   AFFECTED.] 
 22.9      This chapter shall not be construed as abridging, 
 22.10  repealing, or amending the laws of this state relating to the 
 22.11  provisions of the law commonly known as the Workers' 
 22.12  Compensation Act. 
 22.13     Sec. 12.  [REPEALER.] 
 22.14     Laws 1907, chapter 24; Laws 1913, chapters 318 and 419; 
 22.15  Laws 1917, chapter 196; Laws 1919, chapters 515 and 523; Laws 
 22.16  1921, chapter 404; Laws 1923, chapter 61; Laws 1945, chapter 
 22.17  322; Laws 1959, chapters 213, 491, and 568, as amended by Laws 
 22.18  1961, extra session chapter 3; Laws 1961, chapter 109; Laws 
 22.19  1963, chapter 318, as amended by Laws 1965, chapters 519 and 
 22.20  578; Laws 1967, chapters 819 and 824; Laws 1969, chapters 123 
 22.21  and 287; Laws 1971, chapter 542; Laws 1975, chapter 57; Laws 
 22.22  1977, chapter 164, section 2; Laws 1980, chapter 607, article 
 22.23  XV, sections 8, 9, and 10; Laws 1988, chapter 572, sections 4, 
 22.24  5, and 6; Laws 1988, chapter 574, sections 3, 4, and 5; Laws 
 22.25  1989, chapter 319, article 19, sections 6 and 7; Laws 1990, 
 22.26  chapter 589, article 1, sections 5 and 6; Laws 1992, chapter 
 22.27  429; Laws 1992, chapter 454, section 2; Laws 1992, chapter 471, 
 22.28  article 2; Laws 1993, chapter 125; Laws 1993, chapter 192, 
 22.29  section 32; Laws 1994, chapter 591; Laws 1994, chapter 632, 
 22.30  article 3, section 14; Laws 1996, chapter 448, article 2, 
 22.31  section 3; Laws 1996, chapter 488, article 3, section 1; and 
 22.32  Laws 1997, chapter 233, article 4, sections 13, 14, 15, 16, 17, 
 22.33  18, 19, 20, 21, and 22, are repealed.