1.1                          A bill for an act 
  1.2             relating to retirement; public employees retirement 
  1.3             association; modifying membership eligibility; 
  1.4             modifying the definition of allowable service for 
  1.5             benefit calculation purposes; prorating service credit 
  1.6             for benefit calculation purposes; modifying employer 
  1.7             reporting requirements; modifying contribution rates; 
  1.8             changing amortization requirements; modifying the 
  1.9             definition of vesting; modifying contribution refunds; 
  1.10            providing for state assistance; amending Minnesota 
  1.11            Statutes 2000, sections 273.1385, subdivision 1; 
  1.12            353.01, subdivisions 2, 2a, 2b, 7, 11b, 12, 12a, 16, 
  1.13            and by adding subdivisions; 353.27, subdivisions 2, 
  1.14            3a, 4, and 11; 353.29, subdivision 1; 353.32, 
  1.15            subdivision 1a; 353.33, subdivision 1; 353.34, 
  1.16            subdivisions 1, 2, 3, and by adding subdivisions; 
  1.17            353.35, subdivision 2; 353.71, subdivisions 1 and 2; 
  1.18            353.86, subdivision 1; and 356.215, subdivision 4g. 
  1.19  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.20                             ARTICLE 1
  1.21     Section 1.  Minnesota Statutes 2000, section 353.01, 
  1.22  subdivision 2, is amended to read: 
  1.23     Subd. 2.  [PUBLIC EMPLOYEE.] "Public employee" means an a 
  1.24  governmental employee performing personal services for a 
  1.25  governmental subdivision under defined in subdivision 6, whose 
  1.26  salary is paid, in whole or in part, from revenue derived from 
  1.27  taxation, fees, assessments, or from other sources.  The 
  1.28  term also includes special the classes of persons listed in 
  1.29  subdivision subdivisions 2a, but and 2d.  The term excludes 
  1.30  special the classes of persons listed in subdivision 2b for 
  1.31  purposes of membership in the association.  Public employee The 
  1.32  term does not include independent contractors and their 
  2.1   employees.  A reemployed annuitant under section 353.37 must not 
  2.2   be considered to be a public employee for purposes of that 
  2.3   reemployment. 
  2.4      Sec. 2.  Minnesota Statutes 2000, section 353.01, 
  2.5   subdivision 2a, is amended to read: 
  2.6      Subd. 2a.  [INCLUDED EMPLOYEES.] (a) Public employees whose 
  2.7   salary from one governmental subdivision exceeds $425 in any 
  2.8   month shall participate as members of the association.  If the 
  2.9   salary of an employee is less than $425 in a subsequent month, 
  2.10  the employee retains membership eligibility.  The following 
  2.11  persons are considered public employees: 
  2.12     (1) employees whose annual salary from one governmental 
  2.13  subdivision exceeds a stipulation prepared in advance, in 
  2.14  writing, to be not more than $5,100 per calendar year or per 
  2.15  school year for school employees for employment expected to be 
  2.16  of a full year's duration or more than the prorated portion of 
  2.17  $5,100 per employment period expected to be of less than a full 
  2.18  year's duration.  If compensation from one governmental 
  2.19  subdivision to an employee under this clause exceeds $5,100 per 
  2.20  calendar year or school year after being stipulated in advance 
  2.21  not to exceed that amount, the stipulation is no longer valid 
  2.22  and contributions must be made on behalf of the employee under 
  2.23  section 353.27, subdivision 12, from the month in which the 
  2.24  employee's salary first exceeded $425; 
  2.25     (2) employees whose total salary from concurrent 
  2.26  nontemporary positions in one governmental subdivision exceeds 
  2.27  $425 in any month; 
  2.28     (3) elected officers for service to which they were elected 
  2.29  by the public-at-large, or persons appointed to fill a vacancy 
  2.30  in an elective office, who elect to participate by filing an 
  2.31  application for membership, but not for service on a joint or 
  2.32  regional board that is a governmental subdivision under 
  2.33  subdivision 6, paragraph (a), unless the salary earned for that 
  2.34  service exceeds $425 in any month.  The option to become a 
  2.35  member, once exercised, may not be withdrawn during the 
  2.36  incumbency of the person in office; 
  3.1      (4) members who are appointed by the governor to be a state 
  3.2   department head and elect not to be covered by the Minnesota 
  3.3   state retirement system under section 352.021; 
  3.4      (5) employees of elected officers; 
  3.5      (6) persons who elect to remain members under section 
  3.6   480.181, subdivision 2; 
  3.7      (7) employees of a school district who receive separate 
  3.8   salaries for driving their own buses; 
  3.9      (8) employees of the Minnesota association of townships 
  3.10  when the board of the association, at its option, certifies to 
  3.11  the executive director that its employees are to be included for 
  3.12  purposes of retirement coverage, in which case coverage of all 
  3.13  employees of the association is permanent; 
  3.14     (9) employees of a county historical society who are county 
  3.15  employees; 
  3.16     (10) employees of a county historical society located in 
  3.17  the county whom the county, at its option, certifies to the 
  3.18  executive director to be county employees for purposes of 
  3.19  retirement coverage under this chapter, which status must be 
  3.20  accorded to all similarly situated county historical society 
  3.21  employees and, once established, must continue as long as a 
  3.22  person is an employee of the county historical society and is 
  3.23  not excluded under subdivision 2b; and 
  3.24     (11) employees who became members before July 1, 1988, 
  3.25  based on the total salary of positions held in more than one 
  3.26  governmental subdivision. shall participate as members of the 
  3.27  association with retirement coverage by the public employees 
  3.28  retirement plan or the public employees police and fire 
  3.29  retirement plan under this chapter, or the local government 
  3.30  correctional employees retirement plan under chapter 353E, 
  3.31  whichever applies, as a condition of their employment on the 
  3.32  first day of employment unless they: 
  3.33     (1) are specifically excluded under subdivision 2b; 
  3.34     (2) do not exercise their right to elect retirement 
  3.35  coverage in the association as provided in subdivision 2d, 
  3.36  paragraph (a); or 
  4.1      (3) are employees of the governmental subdivisions listed 
  4.2   in subdivision 2d, paragraph (b), where the governmental 
  4.3   subdivision has not elected to participate in the association. 
  4.4      (b) A public employee who was a member of the association 
  4.5   on June 30, 2002, based on employment that qualified for 
  4.6   membership coverage by the public employees retirement plan or 
  4.7   the public employees police and fire plan under this chapter, or 
  4.8   the local government correctional employees retirement plan 
  4.9   under chapter 353E retains that membership until the employee 
  4.10  terminates all public employment or membership as defined in 
  4.11  subdivisions 11a and 11b. 
  4.12     Sec. 3.  Minnesota Statutes 2000, section 353.01, 
  4.13  subdivision 2b, is amended to read: 
  4.14     Subd. 2b.  [EXCLUDED EMPLOYEES.] The following public 
  4.15  employees shall not participate as members of the association 
  4.16  with retirement coverage by the public employees retirement 
  4.17  plan, the local government correctional employees retirement 
  4.18  plan under chapter 353E, or the public employees police and fire 
  4.19  retirement plan: 
  4.20     (1) except for elected county sheriffs, public officers 
  4.21  elected to a governing body, or persons appointed to fill a 
  4.22  vacancy in an elective office of a governing body, who do not 
  4.23  elect to participate in the association by filing an application 
  4.24  for membership whose term of office first commences on or after 
  4.25  July 1, 2002, for the service to be rendered in that elective 
  4.26  position.  Elected governing body officials who were active 
  4.27  members of the association's coordinated or basic retirement 
  4.28  plans as of June 30, 2002, continue participation throughout 
  4.29  incumbency in office until termination of public service occurs 
  4.30  as defined in subdivision 11a; 
  4.31     (2) election officers or election judges; 
  4.32     (3) patient and inmate personnel who perform services in 
  4.33  charitable, penal, or correctional institutions of for a 
  4.34  governmental subdivision; 
  4.35     (4) employees who are hired for a temporary position under 
  4.36  subdivision 12a, and employees who resign from a nontemporary 
  5.1   position and accept a temporary position within 30 days in the 
  5.2   same governmental subdivision, but not those.  An employer must 
  5.3   not apply the definition of temporary position so as to exclude 
  5.4   employees who are hired for an unlimited period to fill 
  5.5   positions that are permanent or for an unspecified period but 
  5.6   who are serving a probationary period at the start of the 
  5.7   employment.  If the period of employment extends beyond six 
  5.8   consecutive months and the employee earns more than $425 from 
  5.9   one governmental subdivision in any one calendar month, the 
  5.10  department head shall report the employee for membership and 
  5.11  require employee deductions be made on behalf of the employee 
  5.12  under section 353.27, subdivision 4. 
  5.13     The membership eligibility of an employee who resigns or is 
  5.14  dismissed from a temporary position and within 30 days accepts 
  5.15  another temporary position in the same governmental subdivision 
  5.16  is determined on the total length of employment rather than on 
  5.17  each separate position.  Membership eligibility of an employee 
  5.18  who holds concurrent temporary and nontemporary positions in one 
  5.19  governmental subdivision is determined by the length of 
  5.20  employment and salary of each separate position; 
  5.21     (5) employees whose actual salary from one governmental 
  5.22  subdivision does not exceed $425 per month, or whose annual 
  5.23  salary from one governmental subdivision does not exceed a 
  5.24  stipulation prepared in advance, in writing, that the salary 
  5.25  must not exceed $5,100 per calendar year or per school year for 
  5.26  school employees for employment expected to be of a full year's 
  5.27  duration or more than the prorated portion of $5,100 per 
  5.28  employment period for employment expected to be of less than a 
  5.29  full year's duration; 
  5.30     (6) employees who are employed by reason of work emergency 
  5.31  caused by fire, flood, storm, or similar disaster; 
  5.32     (7) (6) employees who by virtue of their employment in one 
  5.33  governmental subdivision are required by law to be a member of 
  5.34  and to contribute to any of the plans or funds administered by 
  5.35  the Minnesota state retirement system, the teachers retirement 
  5.36  association, the Duluth teachers retirement fund association, 
  6.1   the Minneapolis teachers retirement association, the St. Paul 
  6.2   teachers retirement fund association, the Minneapolis employees 
  6.3   retirement fund, or any police or firefighters relief 
  6.4   association governed by section 69.77 that has not consolidated 
  6.5   with the public employees retirement association, or any local 
  6.6   police or firefighters consolidation account but who have not 
  6.7   elected the type of benefit coverage provided by the public 
  6.8   employees police and fire fund under sections 353A.01 to 
  6.9   353A.10, or any persons covered by section 353.665, subdivision 
  6.10  4, 5, or 6, who have not elected public employees police and 
  6.11  fire plan benefit coverage.  This clause must not be construed 
  6.12  to prevent a person from being a member of and contributing to 
  6.13  the public employees retirement association and also belonging 
  6.14  to and contributing to another public pension fund for other 
  6.15  service occurring during the same period of time.  A person who 
  6.16  meets the definition of "public employee" in subdivision 2 by 
  6.17  virtue of other service occurring during the same period of time 
  6.18  becomes a member of the association unless contributions are 
  6.19  made to another public retirement fund on the salary based on 
  6.20  the other service or to the teachers retirement association by a 
  6.21  teacher as defined in section 354.05, subdivision 2; 
  6.22     (8) (7) persons who are members of a religious order and 
  6.23  are excluded from coverage under the federal Old Age, Survivors, 
  6.24  Disability, and Health Insurance Program for the performance of 
  6.25  service as specified in United States Code, title 42, section 
  6.26  410(a)(8)(A), as amended through January 1, 1987, if no 
  6.27  irrevocable election of coverage has been made under section 
  6.28  3121(r) of the Internal Revenue Code of 1954, as amended; 
  6.29     (9) full-time students who (8) employees who at the time 
  6.30  they are hired by a governmental subdivision are enrolled and on 
  6.31  a full-time basis to attend or are regularly attending classes 
  6.32  at an accredited school, college, or university and who are 
  6.33  part-time employees as defined by a governmental subdivision in 
  6.34  an undergraduate, graduate, or professional-technical program, 
  6.35  or a public or charter high school, provided the employment is 
  6.36  predicated on the student status of the individual; 
  7.1      (10) (9) resident physicians, medical interns, and 
  7.2   pharmacist residents and pharmacist interns who are serving in a 
  7.3   degree or residency program in public hospitals; 
  7.4      (11) (10) students who are serving in an internship or 
  7.5   residency program sponsored by an accredited educational 
  7.6   institution; 
  7.7      (12) (11) persons who hold a part-time adult supplementary 
  7.8   technical college license who render part-time teaching service 
  7.9   in a technical college; 
  7.10     (13) (12) foreign citizens working for a governmental 
  7.11  subdivision with a work permit of less than three years, or an 
  7.12  H-1b visa valid for less than three years of employment.  Upon 
  7.13  notice to the association that the work permit or visa extends 
  7.14  beyond the three-year period, the foreign citizens are eligible 
  7.15  for membership from the date of the extension; 
  7.16     (14) (13) public hospital employees who elected not to 
  7.17  participate as members of the association before 1972 and who 
  7.18  did not elect to participate from July 1, 1988, to October 1, 
  7.19  1988; 
  7.20     (15) (14) except as provided in section 353.86, volunteer 
  7.21  ambulance service personnel, as defined in subdivision 35, but 
  7.22  persons who serve as volunteer ambulance service personnel may 
  7.23  still qualify as public employees under subdivision 2 and may be 
  7.24  members of the public employees retirement association and 
  7.25  participants in the public employees retirement fund or the 
  7.26  public employees police and fire fund, whichever applies, on the 
  7.27  basis of compensation received from public employment service 
  7.28  other than service as volunteer ambulance service personnel; 
  7.29     (16) (15) except as provided in section 353.87, volunteer 
  7.30  firefighters, as defined in subdivision 36, engaging in 
  7.31  activities undertaken as part of volunteer firefighter duties; 
  7.32  provided that a person who is a volunteer firefighter may still 
  7.33  qualify as a public employee under subdivision 2 and may be a 
  7.34  member of the public employees retirement association and a 
  7.35  participant in the public employees retirement fund or the 
  7.36  public employees police and fire fund, whichever applies, on the 
  8.1   basis of compensation received from public employment activities 
  8.2   other than those as a volunteer firefighter; 
  8.3      (17) (16) pipefitters and associated trades personnel 
  8.4   employed by independent school district No. 625, St. Paul, with 
  8.5   who have retirement coverage by the pipefitters local 455 
  8.6   pension plan under a collective bargaining agreement who were 
  8.7   either first employed after May 1, 1997, or, if first employed 
  8.8   before May 2, 1997, elected to be excluded under Laws 1997, 
  8.9   chapter 241, article 2, section 12; and 
  8.10     (18) (17) electrical workers, plumbers, carpenters, and 
  8.11  associated trades personnel employed by independent school 
  8.12  district No. 625, St. Paul, or the city of St. Paul, with 
  8.13  coverage by the electrical workers local 110 pension plan, the 
  8.14  united association plumbers local 34 pension plan, or the 
  8.15  carpenters local 87 pension plan under a collective bargaining 
  8.16  agreement who were either first employed after May 1, 2000, or, 
  8.17  if first employed before May 2, 2000, elected to be excluded 
  8.18  under Laws 2000, chapter 461, article 7, section 5.; 
  8.19     (18) employees hired after June 30, 2002, to fill seasonal 
  8.20  positions limited in duration by the employer to 185 consecutive 
  8.21  calendar days or less in each business year of the governmental 
  8.22  subdivision.  A position is a seasonal position when the nature 
  8.23  of the work or its duration are related to a specific season or 
  8.24  seasons of the year, regardless of whether the employing agency 
  8.25  anticipates that the same employee will return to the position 
  8.26  each season in which it becomes available.  The entire period of 
  8.27  employment in a business year will be used to determine whether 
  8.28  a position may be excluded as seasonal when there is less than a 
  8.29  30-day break between one seasonal position and a subsequent 
  8.30  seasonal position for employment with the same governmental 
  8.31  employer.  Seasonal positions include, but may not be limited 
  8.32  to, coaching athletic activities; employment to plow snow or 
  8.33  maintain roads or parks, or to operate skating rinks, ski 
  8.34  lodges, golf courses, or swimming pools; and 
  8.35     (19) persons provided sheltered employment or work-study 
  8.36  positions by a governmental subdivision that participate in an 
  9.1   employment or industries program maintained for the benefit of 
  9.2   these persons where the governmental subdivision limits the 
  9.3   position's duration to three years or less.  This includes 
  9.4   persons participating in a federal or state subsidized 
  9.5   on-the-job training, work experience, senior citizen, youth, or 
  9.6   unemployment relief program where the training or work 
  9.7   experience is not provided as a part of, or for future permanent 
  9.8   public employment. 
  9.9      Sec. 4.  Minnesota Statutes 2000, section 353.01, is 
  9.10  amended by adding a subdivision to read: 
  9.11     Subd. 2d.  [OPTIONAL MEMBERSHIP.] (a) Membership in the 
  9.12  association is optional by action of the individual employee for 
  9.13  the following public employees who meet the conditions set forth 
  9.14  in subdivision 2a: 
  9.15     (1) members of the coordinated plan who are also employees 
  9.16  of labor organizations as defined in section 353.017, 
  9.17  subdivision 1, for their employment by the labor organization 
  9.18  only if they elect to have membership under section 353.017, 
  9.19  subdivision 2; 
  9.20     (2) persons who are elected or persons who are appointed to 
  9.21  elected positions other than local governing body elected 
  9.22  positions who elect to participate by filing a written election 
  9.23  for membership; 
  9.24     (3) members of the association who are appointed by the 
  9.25  governor to be a state department head and elect not to be 
  9.26  covered by the general state employees retirement plan of the 
  9.27  Minnesota state retirement system under section 352.021; and 
  9.28     (4) city managers as defined in section 353.028, 
  9.29  subdivision 1, unless they elect to be excluded from membership 
  9.30  in the association under section 353.028, subdivision 2. 
  9.31     (b) Membership in the association is optional by action of 
  9.32  the governmental subdivision for the employees of the following 
  9.33  governmental subdivisions under the conditions specified: 
  9.34     (1) the Minnesota association of townships if the board of 
  9.35  the association, at its option, certifies to the executive 
  9.36  director that its employees are to be included for purposes of 
 10.1   retirement coverage, in which case the status of the association 
 10.2   as a participating employer is permanent; and 
 10.3      (2) a county historical society if the county in which the 
 10.4   historical society is located, at its option, certifies to the 
 10.5   executive director that the employees of the historical society 
 10.6   are to be county employees for purposes of retirement coverage 
 10.7   under this chapter.  The status as a county employee must be 
 10.8   accorded to all similarly situated county historical society 
 10.9   employees and, once established, must continue as long as a 
 10.10  person is an employee of the county historical society. 
 10.11     (c) For employees covered by paragraph (a), clause (1), 
 10.12  (2), (3), or by paragraph (b), if the necessary membership 
 10.13  election is not made, the employee is excluded from retirement 
 10.14  coverage under this chapter.  For employees covered by paragraph 
 10.15  (a), clause (4), if the necessary election is not made, the 
 10.16  employee must become a member and have retirement coverage under 
 10.17  this chapter.  The option to become a member, once exercised 
 10.18  under this subdivision, may not be withdrawn until termination 
 10.19  of public service as defined under subdivision 11a. 
 10.20     Sec. 5.  Minnesota Statutes 2000, section 353.01, 
 10.21  subdivision 7, is amended to read: 
 10.22     Subd. 7.  [MEMBER.] "Member" means a person who accepts 
 10.23  employment as a "public employee" under subdivision 2, is an 
 10.24  employee who works in one or more positions that require or 
 10.25  allow membership in the association under subdivision 2a or 
 10.26  2d, for whom contributions have been withheld from salary and 
 10.27  who is not covered by the plan established in chapter 353D or 
 10.28  excluded under subdivision 2b.  A person who is a member remains 
 10.29  a member while performing services as a public employee and 
 10.30  while on an authorized leave of absence or an authorized 
 10.31  temporary layoff. 
 10.32     Sec. 6.  Minnesota Statutes 2000, section 353.01, 
 10.33  subdivision 11b, is amended to read: 
 10.34     Subd. 11b.  [TERMINATION OF MEMBERSHIP.] (a) "Termination 
 10.35  of membership" means the conclusion of membership in the 
 10.36  association and occurs: 
 11.1      (1) upon termination of public service under subdivision 
 11.2   11a; 
 11.3      (2) when a member who is a part-time employee is excluded 
 11.4   from membership as a full-time student under subdivision 2b, 
 11.5   clause (9); 
 11.6      (3) when a member does not return to work within 30 days of 
 11.7   the expiration of an authorized temporary layoff under 
 11.8   subdivision 12 or an authorized leave of absence under 
 11.9   subdivision 31.  If the employee subsequently returns to a 
 11.10  position in the same governmental subdivision, the employee 
 11.11  shall not again be required to earn a salary in excess of $425 
 11.12  per month, unless the employee has taken a refund of accumulated 
 11.13  employee deductions plus interest under section 353.34, 
 11.14  subdivision 1 as evidenced by the appropriate record filed by 
 11.15  the governmental subdivision; or 
 11.16     (4) (3) when a person files a written election to 
 11.17  discontinue employee deductions under section 353.27, 
 11.18  subdivision 7, paragraph (a), clause (1). 
 11.19     (b) The termination of membership must be reported to the 
 11.20  association by the governmental subdivision. 
 11.21     Sec. 7.  Minnesota Statutes 2000, section 353.01, 
 11.22  subdivision 12, is amended to read: 
 11.23     Subd. 12.  [AUTHORIZED TEMPORARY LAYOFF.] "Authorized 
 11.24  temporary layoff," including seasonal leave of absence, means a 
 11.25  suspension of public service authorized by the employing 
 11.26  governmental subdivision for a specified period not exceeding 
 11.27  three months in any calendar year or school year for school 
 11.28  employees, as evidenced by appropriate record of the employer 
 11.29  and promptly transmitted to the association.  The association 
 11.30  shall credit the member for an authorized temporary layoff only 
 11.31  as provided in subdivision 16, paragraph (a), clause (4). 
 11.32     Sec. 8.  Minnesota Statutes 2000, section 353.01, 
 11.33  subdivision 12a, is amended to read: 
 11.34     Subd. 12a.  [TEMPORARY POSITION.] (1) "Temporary position" 
 11.35  means an employment position predetermined by the employer at 
 11.36  the time of hiring to be a period of six months or less or.  
 12.1   Temporary position also means an employment position occupied by 
 12.2   a person hired by the employer as a temporary replacement who 
 12.3   will be employed for a predetermined period of six months or 
 12.4   less. 
 12.5      (2) "Temporary position" does not mean an employment 
 12.6   position for an unlimited period a specified term in which a 
 12.7   person serves a probationary period or works an irregular 
 12.8   schedule as a requirement for employment on a permanent or 
 12.9   unlimited basis. 
 12.10     Sec. 9.  Minnesota Statutes 2000, section 353.01, is 
 12.11  amended by adding a subdivision to read: 
 12.12     Subd. 38.  [BUSINESS YEAR.] "Business year" means the first 
 12.13  full pay period through the last full pay period of a 
 12.14  governmental subdivision's 12-month fiscal year. 
 12.15     Sec. 10.  Minnesota Statutes 2000, section 353.86, 
 12.16  subdivision 1, is amended to read: 
 12.17     Subdivision 1.  [PARTICIPATION.] Volunteer ambulance 
 12.18  service personnel, as defined in section 353.01, subdivision 35, 
 12.19  who are or become members of and participants in the public 
 12.20  employees retirement fund or the public employees police and 
 12.21  fire fund before July 1, 2002, and make contributions to either 
 12.22  of those funds based on compensation for service other than 
 12.23  volunteer ambulance service may elect to participate in that 
 12.24  same fund with respect to compensation received for volunteer 
 12.25  ambulance service, provided that the volunteer ambulance service 
 12.26  is not credited to another public or private pension plan 
 12.27  including the public employees retirement plan established by 
 12.28  chapter 353D and provided further that the volunteer ambulance 
 12.29  service is rendered for the same governmental unit for which the 
 12.30  nonvolunteer ambulance service is rendered. 
 12.31     Sec. 11.  [EFFECTIVE DATE.] 
 12.32     Sections 1 to 10 are effective July 1, 2002. 
 12.33                             ARTICLE 2
 12.34     Section 1.  Minnesota Statutes 2000, section 353.01, 
 12.35  subdivision 16, is amended to read: 
 12.36     Subd. 16.  [ALLOWABLE SERVICE; LIMITS AND COMPUTATION.] (a) 
 13.1   "Allowable service" means: 
 13.2      (1) service during years of actual membership in the course 
 13.3   of which employee contributions were made, periods covered by 
 13.4   payments in lieu of salary deductions under section 353.35, and 
 13.5   service in years during which the public employee was not a 
 13.6   member but for which the member later elected, while a member, 
 13.7   to obtain credit by making payments to the fund as permitted by 
 13.8   any law then in effect.; 
 13.9      (b) "Allowable service" also means (2) a period of 
 13.10  authorized leave of absence with pay from which deductions for 
 13.11  employee contributions are made, deposited, and credited to the 
 13.12  fund.; 
 13.13     (c) "Allowable service" also means (3) a period of 
 13.14  authorized personal, parental, or medical leave of absence 
 13.15  without pay, including a leave of absence covered under the 
 13.16  Family Medical Leave Act, that does not exceed one year, and 
 13.17  during or for which a member obtained full or fractional service 
 13.18  credit for each month in the leave period by payments to the 
 13.19  fund made in place of salary deductions, provided that the 
 13.20  payments are made in an amount or amounts based on the member's 
 13.21  average salary on which deductions were paid for the last six 
 13.22  months of public service, or for that portion of the last six 
 13.23  months while the member was in public service, to apply to the 
 13.24  period in either case immediately preceding commencement of the 
 13.25  leave of absence.  If the employee elects to pay employee 
 13.26  contributions for the period of any leave of absence without 
 13.27  pay, or for any portion of the leave, the employee shall also, 
 13.28  as a condition to the exercise of the election, pay to the fund 
 13.29  an amount equivalent to both the required employer and 
 13.30  additional employer contributions for the employee.  The payment 
 13.31  must be made within one year from the expiration of the leave of 
 13.32  absence or within 20 days after termination of public service 
 13.33  under subdivision 11a.  The employer by appropriate action of 
 13.34  its governing body, made a part of its official records, before 
 13.35  the date of the first payment of the employee contribution, may 
 13.36  certify to the association in writing its commitment to pay the 
 14.1   employer and additional employer contributions from the proceeds 
 14.2   of a tax levy made under section 353.28.  Payments under this 
 14.3   paragraph must include interest at an annual rate of 8.5 percent 
 14.4   compounded annually from the date of the termination of the 
 14.5   leave of absence to the date payment is made.  An employee shall 
 14.6   return to public service and receive a minimum of three months 
 14.7   of allowable service to be eligible to pay employee and employer 
 14.8   contributions for a subsequent authorized leave of absence 
 14.9   without pay.  Upon payment the employee must be given allowable 
 14.10  service credit for full calendar months or fractions of a month 
 14.11  during the leave period as described in paragraph (d), clauses 
 14.12  (1) and (2), based on the salary or compensated hours used in 
 14.13  computing the payment amount; 
 14.14     (d) "Allowable service" also means (4) a periodic, 
 14.15  repetitive leave that is offered to all employees of a 
 14.16  governmental subdivision.  The leave program may not exceed 208 
 14.17  hours per annual normal work cycle as certified to the 
 14.18  association by the employer.  A participating member obtains 
 14.19  service credit by making employee contributions in an amount or 
 14.20  amounts based on the member's average salary that would have 
 14.21  been paid if the leave had not been taken.  The employer shall 
 14.22  pay the employer and additional employer contributions on behalf 
 14.23  of the participating member.  The employee and the employer are 
 14.24  responsible to pay interest on their respective shares at the 
 14.25  rate of 8.5 percent a year, compounded annually, from the end of 
 14.26  the normal cycle until full payment is made.  An employer shall 
 14.27  also make the employer and additional employer contributions, 
 14.28  plus 8.5 percent interest, compounded annually, on behalf of an 
 14.29  employee who makes employee contributions but terminates public 
 14.30  service.  The employee contributions must be made within one 
 14.31  year after the end of the annual normal working cycle or within 
 14.32  20 days after termination of public service, whichever is 
 14.33  sooner.  The association shall prescribe the manner and forms to 
 14.34  be used by a governmental subdivision in administering a 
 14.35  periodic, repetitive leave.  Upon payment the member must be 
 14.36  given allowable service credit for full calendar months or 
 15.1   fractions of a month during the leave period as described in 
 15.2   paragraph (d), clauses (1) and (2), based on the salary or 
 15.3   compensated hours used in computing the payment amount; 
 15.4      (e) "Allowable service" also means a period during which a 
 15.5   member is on an authorized sick leave of absence, without pay, 
 15.6   limited to one year.  An employee who has received one year of 
 15.7   allowable service shall return to public service and receive a 
 15.8   minimum of three months of allowable service to receive 
 15.9   allowable service for a subsequent authorized sick leave of 
 15.10  absence. 
 15.11     (f) "Allowable service" also means (5) an authorized 
 15.12  temporary layoff under subdivision 12,.  For temporary layoffs 
 15.13  beginning before July 1, 2002, allowable service shall be 
 15.14  limited to three months allowable service per authorized 
 15.15  temporary layoff in one calendar year.  An employee who has 
 15.16  received the maximum service allowed for an authorized temporary 
 15.17  layoff shall return to public service and receive a minimum of 
 15.18  three months of allowable service to receive allowable service 
 15.19  for a subsequent authorized temporary layoff.  For temporary 
 15.20  layoffs occurring on or after July 1, 2002, members shall 
 15.21  receive allowable service credit for the calendar month in which 
 15.22  the member does not receive salary due to the layoff using the 
 15.23  following formula: 
 15.24     (i) members who earn one month of credit for each of the 
 15.25  nine calendar months of the year of employment with the 
 15.26  governmental subdivision that authorized the layoff, shall 
 15.27  receive one month of credit, limited to three credits per year, 
 15.28  for each month of the temporary layoff; or 
 15.29     (ii) members who earn less than nine months of allowable 
 15.30  service credit in the year for periods of compensated employment 
 15.31  with the governmental subdivision that authorized the layoff, 
 15.32  shall receive credit on a fractional basis for each month of the 
 15.33  authorized layoff, limited to three, determined by dividing the 
 15.34  total amount of service credit earned for the compensated 
 15.35  employment by nine and multiplying the resulting number by the 
 15.36  total number of months in the layoff period that are not 
 16.1   compensated; or 
 16.2      (g) Notwithstanding any law to the contrary, "allowable 
 16.3   service" also means a parental leave.  The association shall 
 16.4   grant a maximum of two months service credit for a parental 
 16.5   leave, within six months after the birth or adoption, upon 
 16.6   documentation from the member's governmental subdivision or 
 16.7   presentation of a birth certificate or other evidence of birth 
 16.8   or adoption to the association. 
 16.9      (h) "Allowable service" also means (6) a period during 
 16.10  which a member is on an authorized leave of absence to enter 
 16.11  military service in the armed forces of the United States, 
 16.12  provided that the member returns to public service upon 
 16.13  discharge from military service under section 192.262 and pays 
 16.14  into the fund employee contributions based upon the employee's 
 16.15  salary at the date of return from military service.  Payment 
 16.16  must be made within three times the length of the military leave 
 16.17  period, or five years of the date of discharge from the military 
 16.18  service, whichever is less.  The amount of these contributions 
 16.19  must be in accord with the contribution rates and salary 
 16.20  limitations, if any, in effect during the leave, plus interest 
 16.21  at an annual rate of 8.5 percent compounded annually from the 
 16.22  date of return to public service to the date payment is made.  
 16.23  The matching employer contribution and additional employer 
 16.24  contribution under section 353.27, subdivisions 3 and 3a, must 
 16.25  be paid by the governmental subdivision employing the member 
 16.26  upon return to public service if the member makes the employee 
 16.27  contributions.  The governmental subdivision involved may 
 16.28  appropriate money for those payments.  A member may not receive 
 16.29  credit for a voluntary extension of military service at the 
 16.30  instance of the member beyond the initial period of enlistment, 
 16.31  induction, or call to active duty.  Upon payment the employee 
 16.32  must be given allowable service credit for full calendar months 
 16.33  or fractions of a month during the leave period as described in 
 16.34  paragraph (d), clauses (1) and (2), based on the salary or 
 16.35  compensated hours used in computing the payment amount. 
 16.36     (i) (b) For calculating benefits under sections 353.30, 
 17.1   353.31, 353.32, and 353.33 for state officers and employees 
 17.2   displaced by the Community Corrections Act, chapter 401, and 
 17.3   transferred into county service under section 401.04, "allowable 
 17.4   service" means combined years of allowable service as defined in 
 17.5   paragraphs paragraph (a) to (i), clauses (1) to (6), and section 
 17.6   352.01, subdivision 11.  
 17.7      (j) (c) For a public employee who has prior service covered 
 17.8   by a local police or firefighters relief association that has 
 17.9   consolidated with the public employees retirement association or 
 17.10  to which section 353.665 applies, and who has elected the type 
 17.11  of benefit coverage provided by the public employees police and 
 17.12  fire fund either under section 353A.08 following the 
 17.13  consolidation or under section 353.665, subdivision 4, 
 17.14  "applicable service" is a period of service credited by the 
 17.15  local police or firefighters relief association as of the 
 17.16  effective date of the consolidation based on law and on bylaw 
 17.17  provisions governing the relief association on the date of the 
 17.18  initiation of the consolidation procedure. 
 17.19     (d) For persons who, after June 30, 2002, first become 
 17.20  members or who terminated membership under subdivision 11b, and 
 17.21  again become members, of the public employees retirement plan, 
 17.22  the public employees police and fire plan under this chapter, or 
 17.23  the local government correctional employee retirement plan under 
 17.24  chapter 353E, whichever applies, allowable service means credit 
 17.25  for compensated hours from which deductions are made, or 
 17.26  payments are made in lieu of salary deductions as provided under 
 17.27  this subdivision and which are deposited and credited in the 
 17.28  fund as provided in section 353.27, determined as follows: 
 17.29     (1) one month of allowable service credit for each month 
 17.30  for which the employee has received salary for 80 or more 
 17.31  compensated hours; or 
 17.32     (2) a fraction of one month of allowable service for each 
 17.33  month for which the employee has received salary for less than 
 17.34  80 compensated hours based upon the number of compensated hours 
 17.35  as they relate to 80 hours. 
 17.36     (e) Elected officials and other public employees who are 
 18.1   compensated solely on an annual basis shall be considered to 
 18.2   have earned a full year of credit for each year in which 
 18.3   compensation is earned. 
 18.4      Allowable service determined and credited on a fractional 
 18.5   basis shall be used in calculating the amount of benefits 
 18.6   payable but must not be used in determining the length of 
 18.7   service required for vesting.  For periods of part-time service 
 18.8   that are duplicated service credit, section 356.30, subdivision 
 18.9   1, paragraphs (g) and (h), govern. 
 18.10     No member shall receive more than 12 months of allowable 
 18.11  service credit in a year. 
 18.12     Sec. 2.  Minnesota Statutes 2000, section 353.01, is 
 18.13  amended by adding a subdivision to read: 
 18.14     Subd. 39.  [COMPENSATED HOURS.] "Compensated hours" means 
 18.15  the hours during which an employee performs services in one or 
 18.16  more positions for a single governmental subdivision for which 
 18.17  the employee receives compensation.  The term also includes paid 
 18.18  holiday hours for which the employee is not required to work, 
 18.19  paid used sick leave hours, paid used personal leave hours and 
 18.20  vacation hours, and the paid hours drawn from accrued 
 18.21  compensatory time. 
 18.22     Sec. 3.  Minnesota Statutes 2000, section 353.27, 
 18.23  subdivision 4, is amended to read: 
 18.24     Subd. 4.  [EMPLOYER REPORTING REQUIREMENTS; CONTRIBUTIONS; 
 18.25  MEMBER STATUS.] (a) A representative authorized by the head of 
 18.26  each department shall deduct employee contributions from the 
 18.27  salary of each employee who qualifies for membership under this 
 18.28  chapter and remit payment in a manner prescribed by the 
 18.29  executive director for the aggregate amount of the employee 
 18.30  contributions, the employer contributions and the additional 
 18.31  employer contributions to be received within 14 calendar days.  
 18.32  The head of each department or the person's designee shall for 
 18.33  each pay period submit to the association a salary deduction 
 18.34  report in the format prescribed by the executive director.  Data 
 18.35  to be submitted as part of salary deduction reporting must 
 18.36  include, but are not limited to:  
 19.1      (1) the legal names and social security numbers of 
 19.2   employees who are members; 
 19.3      (2) the amount of each employee's salary deduction; 
 19.4      (3) the amount of salary from which each deduction was 
 19.5   made; 
 19.6      (4) the beginning and ending dates of the payroll period 
 19.7   covered and the date of actual payment; and 
 19.8      (5) adjustments or corrections covering past pay periods; 
 19.9   and 
 19.10     (6) the hours in the payroll period for which the member 
 19.11  received compensation.  
 19.12     (b) Employers must furnish the data required for enrollment 
 19.13  for each new employee who qualifies for membership in the format 
 19.14  prescribed by the executive director.  The required enrollment 
 19.15  data on new employees must be submitted to the association prior 
 19.16  to or concurrent with the submission of the initial employee 
 19.17  salary deduction.  The employer shall also report to the 
 19.18  association all member employment status changes, such as leaves 
 19.19  of absence, terminations, and death, and the effective dates of 
 19.20  those changes, on an ongoing basis for the payroll cycle in 
 19.21  which they occur.  The employer shall furnish data, forms, and 
 19.22  reports as may be required by the executive director for proper 
 19.23  administration of the retirement system.  Before implementing 
 19.24  new or different computerized reporting requirements, the 
 19.25  executive director shall give appropriate advance notice to 
 19.26  governmental subdivisions to allow time for system modifications.
 19.27     (c) Notwithstanding paragraph (a), the association may 
 19.28  provide for less frequent reporting and payments for small 
 19.29  employers. 
 19.30     Sec. 4.  Minnesota Statutes 2000, section 353.27, 
 19.31  subdivision 11, is amended to read: 
 19.32     Subd. 11.  [EMPLOYERS; REQUIRED TO FURNISH REQUESTED 
 19.33  INFORMATION.] All governmental subdivisions shall furnish 
 19.34  promptly such other information relative to the employment 
 19.35  status of all employees or former employees, including but not 
 19.36  limited to payroll abstracts pertaining to all past and present 
 20.1   employees, as may be requested by the association or its 
 20.2   executive director, including schedules of salaries applicable 
 20.3   to various categories of employment, and the number of actual or 
 20.4   estimated hours for which the employees received compensation.  
 20.5   In the event payroll abstract records have been lost or 
 20.6   destroyed, for whatever reason or in whatever manner, so that 
 20.7   such schedules of salaries cannot be furnished therefrom, the 
 20.8   employing governmental subdivision, in lieu thereof, shall 
 20.9   furnish to the association an estimate of the earnings of any 
 20.10  employee or former employee for any period as may be requested 
 20.11  by the association or its executive director. Should the 
 20.12  association receive such schedules of estimated earnings, the 
 20.13  executive director is hereby authorized to use the same as a 
 20.14  basis for making whatever computations might be necessary for 
 20.15  determining obligations of the employee and employer to the 
 20.16  retirement fund.  If estimates are not furnished by the employer 
 20.17  pursuant to the request of the association or its executive 
 20.18  director, the association may estimate the obligations of the 
 20.19  employee and employer to the retirement fund based upon such 
 20.20  records as are in its possession.  Where payroll abstracts have 
 20.21  been lost or destroyed, the governmental agency need not furnish 
 20.22  any information pertaining to employment prior to July 1, 1963. 
 20.23  The association shall make no estimate of any obligation of any 
 20.24  employee, former employee, or employer covering employment prior 
 20.25  to July 1, 1963. 
 20.26     Sec. 5.  [EFFECTIVE DATE.] 
 20.27     Sections 1 to 4 are effective July 1, 2002. 
 20.28                             ARTICLE 3
 20.29     Section 1.  Minnesota Statutes 2000, section 353.27, 
 20.30  subdivision 2, is amended to read: 
 20.31     Subd. 2.  [EMPLOYEE CONTRIBUTION.] (a) The employee 
 20.32  contribution is an amount (1) for a "basic member" equal to 8.75 
 20.33  percent of total salary; and (2) for a "coordinated member" 
 20.34  equal to 4.75 the following percent of total salary.: 
 20.35     (i) effective on the first paid date occurring after 
 20.36  December 31, 2001, 5.125 percent; and 
 21.1      (ii) effective on the first paid date occurring after 
 21.2   December 31, 2003, if the actuarial valuation of the public 
 21.3   employees retirement association general plan under section 
 21.4   356.215 indicates that the total contributions to the plan are 
 21.5   insufficient to meet the annual financial requirements of the 
 21.6   plan, 5.375 percent. 
 21.7      (b) These contributions must be made by deduction from 
 21.8   salary in the manner provided in subdivision 4.  Where any 
 21.9   portion of a member's salary is paid from other than public 
 21.10  funds, such member's employee contribution must be based on the 
 21.11  total salary received from all sources. 
 21.12     Sec. 2.  Minnesota Statutes 2000, section 356.215, 
 21.13  subdivision 4g, is amended to read: 
 21.14     Subd. 4g.  [AMORTIZATION CONTRIBUTIONS.] (a) In addition to 
 21.15  the exhibit indicating the level normal cost, the actuarial 
 21.16  valuation must contain an exhibit indicating the additional 
 21.17  annual contribution sufficient to amortize the unfunded 
 21.18  actuarial accrued liability.  For funds governed by chapters 3A, 
 21.19  352, 352B, 352C, 353, 354, 354A, and 490, the additional 
 21.20  contribution must be calculated on a level percentage of covered 
 21.21  payroll basis by the established date for full funding in effect 
 21.22  when the valuation is prepared.  For funds governed by chapter 
 21.23  3A, sections 352.90 through 352.951, chapters 352B, 352C, 
 21.24  sections 353.63 through 353.68, and chapters 353C, 354A, and 
 21.25  490, the level percent additional contribution must be 
 21.26  calculated assuming annual payroll growth of 6.5 percent.  For 
 21.27  funds governed by sections 352.01 through 352.86 and chapter 
 21.28  354, the level percent additional contribution must be 
 21.29  calculated assuming an annual payroll growth of five percent.  
 21.30  For the fund governed by sections 353.01 through 353.46, the 
 21.31  level percent additional contribution must be calculated 
 21.32  assuming an annual payroll growth of six percent.  For all other 
 21.33  funds, the additional annual contribution must be calculated on 
 21.34  a level annual dollar amount basis. 
 21.35     (b) For any fund other than the Minneapolis employees 
 21.36  retirement fund and the public employees retirement association 
 22.1   general plan, after the first actuarial valuation date occurring 
 22.2   after June 1, 1989, if there has not been a change in the 
 22.3   actuarial assumptions used for calculating the actuarial accrued 
 22.4   liability of the fund, a change in the benefit plan governing 
 22.5   annuities and benefits payable from the fund, a change in the 
 22.6   actuarial cost method used in calculating the actuarial accrued 
 22.7   liability of all or a portion of the fund, or a combination of 
 22.8   the three, which change or changes by themselves without 
 22.9   inclusion of any other items of increase or decrease produce a 
 22.10  net increase in the unfunded actuarial accrued liability of the 
 22.11  fund, the established date for full funding for the first 
 22.12  actuarial valuation made after June 1, 1989, and each successive 
 22.13  actuarial valuation is the first actuarial valuation date 
 22.14  occurring after June 1, 2020.  
 22.15     (c) For any fund or plan other than the Minneapolis 
 22.16  employees retirement fund and the public employees retirement 
 22.17  association general plan, after the first actuarial valuation 
 22.18  date occurring after June 1, 1989, if there has been a change in 
 22.19  any or all of the actuarial assumptions used for calculating the 
 22.20  actuarial accrued liability of the fund, a change in the benefit 
 22.21  plan governing annuities and benefits payable from the fund, a 
 22.22  change in the actuarial cost method used in calculating the 
 22.23  actuarial accrued liability of all or a portion of the fund, or 
 22.24  a combination of the three, and the change or changes, by 
 22.25  themselves and without inclusion of any other items of increase 
 22.26  or decrease, produce a net increase in the unfunded actuarial 
 22.27  accrued liability in the fund, the established date for full 
 22.28  funding must be determined using the following procedure:  
 22.29     (i) the unfunded actuarial accrued liability of the fund 
 22.30  must be determined in accordance with the plan provisions 
 22.31  governing annuities and retirement benefits and the actuarial 
 22.32  assumptions in effect before an applicable change; 
 22.33     (ii) the level annual dollar contribution or level 
 22.34  percentage, whichever is applicable, needed to amortize the 
 22.35  unfunded actuarial accrued liability amount determined under 
 22.36  item (i) by the established date for full funding in effect 
 23.1   before the change must be calculated using the interest 
 23.2   assumption specified in subdivision 4d in effect before the 
 23.3   change; 
 23.4      (iii) the unfunded actuarial accrued liability of the fund 
 23.5   must be determined in accordance with any new plan provisions 
 23.6   governing annuities and benefits payable from the fund and any 
 23.7   new actuarial assumptions and the remaining plan provisions 
 23.8   governing annuities and benefits payable from the fund and 
 23.9   actuarial assumptions in effect before the change; 
 23.10     (iv) the level annual dollar contribution or level 
 23.11  percentage, whichever is applicable, needed to amortize the 
 23.12  difference between the unfunded actuarial accrued liability 
 23.13  amount calculated under item (i) and the unfunded actuarial 
 23.14  accrued liability amount calculated under item (iii) over a 
 23.15  period of 30 years from the end of the plan year in which the 
 23.16  applicable change is effective must be calculated using the 
 23.17  applicable interest assumption specified in subdivision 4d in 
 23.18  effect after any applicable change; 
 23.19     (v) the level annual dollar or level percentage 
 23.20  amortization contribution under item (iv) must be added to the 
 23.21  level annual dollar amortization contribution or level 
 23.22  percentage calculated under item (ii); 
 23.23     (vi) the period in which the unfunded actuarial accrued 
 23.24  liability amount determined in item (iii) is amortized by the 
 23.25  total level annual dollar or level percentage amortization 
 23.26  contribution computed under item (v) must be calculated using 
 23.27  the interest assumption specified in subdivision 4d in effect 
 23.28  after any applicable change, rounded to the nearest integral 
 23.29  number of years, but not to exceed 30 years from the end of the 
 23.30  plan year in which the determination of the established date for 
 23.31  full funding using the procedure set forth in this clause is 
 23.32  made and not to be less than the period of years beginning in 
 23.33  the plan year in which the determination of the established date 
 23.34  for full funding using the procedure set forth in this clause is 
 23.35  made and ending by the date for full funding in effect before 
 23.36  the change; and 
 24.1      (vii) the period determined under item (vi) must be added 
 24.2   to the date as of which the actuarial valuation was prepared and 
 24.3   the date obtained is the new established date for full funding.  
 24.4      (d) For the Minneapolis employees retirement fund, the 
 24.5   established date for full funding is June 30, 2020. 
 24.6      (e) For the public employees retirement association general 
 24.7   plan, the established date for full funding is June 30, 2031. 
 24.8      (f) For the retirement plans for which the annual actuarial 
 24.9   valuation indicates an excess of valuation assets over the 
 24.10  actuarial accrued liability, the valuation assets in excess of 
 24.11  the actuarial accrued liability must be recognized as a 
 24.12  reduction in the current contribution requirements by an amount 
 24.13  equal to the amortization of the excess expressed as a level 
 24.14  percentage of pay over a 30-year period beginning anew with each 
 24.15  annual actuarial valuation of the plan. 
 24.16     Sec. 3.  [EFFECTIVE DATE.] 
 24.17     Section 1 is effective the first paid date following 
 24.18  December 31, 2001.  Section 2 is effective June 30, 2001, for 
 24.19  actuarial valuations prepared on or after that date. 
 24.20                             ARTICLE 4
 24.21     Section 1.  Minnesota Statutes 2000, section 353.01, is 
 24.22  amended by adding a subdivision to read: 
 24.23     Subd. 40.  [VESTING.] "Vesting" for benefit eligibility is 
 24.24  defined as follows: 
 24.25     (1) for persons who were members of the public employees 
 24.26  retirement association on June 30, 2002, or the public employees 
 24.27  police and fire plan under this chapter, or the local government 
 24.28  correctional employees retirement plan under chapter 353E, 
 24.29  vesting means three years of allowable service as defined in 
 24.30  subdivision 18; and 
 24.31     (2) for persons who first become members or who terminated 
 24.32  public service under subdivision 11a and again become members of 
 24.33  the public employees retirement association after June 30, 2002, 
 24.34  vesting means five years of allowable service as defined in 
 24.35  subdivision 18. 
 24.36     Sec. 2.  Minnesota Statutes 2000, section 353.29, 
 25.1   subdivision 1, is amended to read: 
 25.2      Subdivision 1.  [AGE AND ALLOWABLE SERVICE REQUIREMENTS.] 
 25.3   Upon termination of membership, a person who has attained normal 
 25.4   retirement age and who received credit for not less than three 
 25.5   years of allowable service is vested as defined in section 
 25.6   353.01, subdivision 40, is entitled upon application to a 
 25.7   retirement annuity.  The retirement annuity is known as the 
 25.8   "normal" retirement annuity. 
 25.9      Sec. 3.  Minnesota Statutes 2000, section 353.32, 
 25.10  subdivision 1a, is amended to read: 
 25.11     Subd. 1a.  [SURVIVING SPOUSE OPTIONAL ANNUITY.] (a) If a 
 25.12  member or former member who has credit for not less than three 
 25.13  years of allowable service and is vested as defined under 
 25.14  section 353.01, subdivision 40, dies before the annuity or 
 25.15  disability benefit begins to accrue under section 353.29, 
 25.16  subdivision 7, or 353.33, subdivision 2, notwithstanding any 
 25.17  designation of beneficiary to the contrary, the surviving spouse 
 25.18  may elect to receive, instead of a refund with interest under 
 25.19  subdivision 1, or surviving spouse benefits otherwise payable 
 25.20  under section 353.31, an annuity equal to the 100 percent joint 
 25.21  and survivor annuity that the member could have qualified for 
 25.22  had the member terminated service on the date of death.  
 25.23     (b) If the member was under age 55 and has credit for at 
 25.24  least 30 years of allowable service on the date of death, the 
 25.25  surviving spouse may elect to receive a 100 percent joint and 
 25.26  survivor annuity based on the age of the member and surviving 
 25.27  spouse on the date of death.  The annuity is payable using the 
 25.28  full early retirement reduction under section 353.30, 
 25.29  subdivisions 1b and 1c, to age 55 and one-half of the early 
 25.30  retirement reduction from age 55 to the age payment begins.  
 25.31     (c) If the member was under age 55 and has credit for at 
 25.32  least three years of allowable service is vested as defined 
 25.33  under section 353.01, subdivision 40, on the date of death but 
 25.34  did not qualify for retirement, the surviving spouse may elect 
 25.35  to receive the 100 percent joint and survivor annuity based on 
 25.36  the age of the member and surviving spouse at the time of 
 26.1   death.  The annuity is payable using the full early retirement 
 26.2   reduction under section 353.30, subdivision 1, 1b, 1c, or 5, to 
 26.3   age 55 and one-half of the early retirement reduction from age 
 26.4   55 to the age payment begins. 
 26.5      Notwithstanding the definition of surviving spouse in 
 26.6   section 353.01, subdivision 20, a former spouse of the member, 
 26.7   if any, is entitled to a portion of the monthly surviving spouse 
 26.8   optional annuity if stipulated under the terms of a marriage 
 26.9   dissolution decree filed with the association.  If there is no 
 26.10  surviving spouse or child or children, a former spouse may be 
 26.11  entitled to a lump-sum refund payment under subdivision 1, if 
 26.12  provided for in a marriage dissolution decree but not a monthly 
 26.13  surviving spouse optional annuity despite the terms of a 
 26.14  marriage dissolution decree filed with the association. 
 26.15     The surviving spouse eligible for surviving spouse benefits 
 26.16  under paragraph (a) may apply for the annuity at any time after 
 26.17  the date on which the deceased employee would have attained the 
 26.18  required age for retirement based on the employee's allowable 
 26.19  service.  The surviving spouse eligible for surviving spouse 
 26.20  benefits under paragraph (b) or (c) may apply for an annuity any 
 26.21  time after the member's death.  The annuity must be computed 
 26.22  under sections 353.29, subdivisions 2 and 3; 353.30, 
 26.23  subdivisions 1, 1a, 1b, 1c, and 5; and 353.31, subdivision 3.  
 26.24     Sections 353.34, subdivision 3, and 353.71, subdivision 2, 
 26.25  apply to a deferred annuity or surviving spouse benefit payable 
 26.26  under this subdivision.  No payment may accrue beyond the end of 
 26.27  the month in which entitlement to the annuity has terminated or 
 26.28  upon expiration of the term certain benefit payment under 
 26.29  subdivision 1b.  An amount equal to any excess of the 
 26.30  accumulated contributions that were credited to the account of 
 26.31  the deceased employee over and above the total of the annuities 
 26.32  paid and payable to the surviving spouse must be paid to the 
 26.33  deceased member's last designated beneficiary or, if none, as 
 26.34  specified under subdivision 1.  
 26.35     A member may specify in writing that this subdivision does 
 26.36  not apply and that payment may be made only to the designated 
 27.1   beneficiary as otherwise provided by this chapter. 
 27.2      Sec. 4.  Minnesota Statutes 2000, section 353.33, 
 27.3   subdivision 1, is amended to read: 
 27.4      Subdivision 1.  [AGE, SERVICE, AND SALARY REQUIREMENTS.] A 
 27.5   coordinated member who has at least three years of allowable 
 27.6   service is vested as defined under section 353.01, subdivision 
 27.7   40, and becomes totally and permanently disabled before normal 
 27.8   retirement age, and a basic member who has at least three years 
 27.9   of allowable service is vested as defined under section 353.01, 
 27.10  subdivision 40, and who becomes totally and permanently disabled 
 27.11  is entitled to a disability benefit in an amount under 
 27.12  subdivision 3.  If the disabled person's public service has 
 27.13  terminated at any time,:  (1) at least two of the required three 
 27.14  years of allowable service must have been rendered after last 
 27.15  becoming a member if vesting under section 353.01, subdivision 
 27.16  40, clause (1) applies; or (2) at least three of the required 
 27.17  five years of allowable service must have been rendered after 
 27.18  last becoming a member if vesting under section 353.01, 
 27.19  subdivision 40, clause (2), applies.  A repayment of a refund 
 27.20  must be made within six months after the effective date of 
 27.21  disability benefits under subdivision 2 or within six months 
 27.22  after the date of the filing of the disability application, 
 27.23  whichever is later.  No purchase of prior service or payment 
 27.24  made in lieu of salary deductions otherwise authorized under 
 27.25  section 353.01, subdivision 16, 353.017, subdivision 4, or 
 27.26  353.36, subdivision 2, may be made after the occurrence of the 
 27.27  disability for which an application under this section is filed. 
 27.28     Sec. 5.  Minnesota Statutes 2000, section 353.34, 
 27.29  subdivision 1, is amended to read: 
 27.30     Subdivision 1.  [REFUND OR DEFERRED ANNUITY.] (a) A former 
 27.31  member is entitled to a refund of accumulated employee 
 27.32  deductions under subdivision 2 and may be entitled to a portion 
 27.33  of accumulated matching employer contributions, as provided 
 27.34  under subdivision 2a, or to a deferred annuity under subdivision 
 27.35  3.  Application for a refund may not be made prior to the date 
 27.36  of termination of public service or the termination of 
 28.1   membership, whichever is sooner.  Except as specified in 
 28.2   paragraph (b), a refund must be paid within 120 days following 
 28.3   receipt of the application unless the applicant has again become 
 28.4   a public employee required to be covered by the association.  
 28.5      (b) If an individual was granted an authorized temporary 
 28.6   layoff, a refund is not payable before termination of membership 
 28.7   under section 353.01, subdivision 11b, clause (3). 
 28.8      (c) An individual who terminates public service covered by 
 28.9   the public employees retirement association general plan, the 
 28.10  public employees retirement association police and fire plan, or 
 28.11  the public employees local government corrections service 
 28.12  retirement plan, and who becomes an active member covered by one 
 28.13  of the other two plans, may receive a refund of employee 
 28.14  contributions plus six percent interest compounded annually from 
 28.15  the plan in which the member terminated service.  If the 
 28.16  individual terminated public service covered by the public 
 28.17  employees retirement association general plan after June 30, 
 28.18  2001, the individual may also receive a portion of the employer 
 28.19  contributions as provided in subdivision 2a. 
 28.20     Sec. 6.  Minnesota Statutes 2000, section 353.34, 
 28.21  subdivision 2, is amended to read: 
 28.22     Subd. 2.  [REFUND WITH INTEREST.] Except as provided in 
 28.23  subdivision 1, any person who ceases to be a public employee 
 28.24  shall receive a refund in an amount equal to accumulated 
 28.25  deductions with interest to the first day of the month in which 
 28.26  the refund is processed at the rate of six percent compounded 
 28.27  annually based on fiscal year balances.  If a person repays a 
 28.28  refund and subsequently applies for another refund, the 
 28.29  repayment amount, including interest, is added to the fiscal 
 28.30  year balance in which the repayment was made. 
 28.31     Sec. 7.  Minnesota Statutes 2000, section 353.34, is 
 28.32  amended by adding a subdivision to read: 
 28.33     Subd. 2a.  [PARTIAL REFUND OF EMPLOYER CONTRIBUTIONS.] A 
 28.34  former member who is vested as defined under section 353.01, 
 28.35  subdivision 40, when termination of public service or 
 28.36  termination of membership occurs after June 30, 2001, who 
 29.1   applies for a refund of the accumulated employee deductions 
 29.2   under subdivision 2 is also entitled to receive an additional 
 29.3   refund in an amount equal to the applicable percentage of the 
 29.4   total accumulated matching employer contributions made on the 
 29.5   former member's behalf, with interest to the first of the month 
 29.6   in which the refund is processed at the rate of six percent 
 29.7   compounded annually: 
 29.8      (1) 25 percent if the refund is paid before the person 
 29.9   attains the age of 55; or 
 29.10     (2) 50 percent if the refund is paid after the person 
 29.11  attains the age of 55. 
 29.12     Sec. 8.  Minnesota Statutes 2000, section 353.34, is 
 29.13  amended by adding a subdivision to read: 
 29.14     Subd. 2b.  [REFUND OF REPAYMENT.] If a person repays a 
 29.15  refund and subsequently applies for another refund, the 
 29.16  repayment amount, including interest, is added to the pay period 
 29.17  balance in which the repayment was made. 
 29.18     Sec. 9.  Minnesota Statutes 2000, section 353.34, 
 29.19  subdivision 3, is amended to read: 
 29.20     Subd. 3.  [DEFERRED ANNUITY; ELIGIBILITY; COMPUTATION.] A 
 29.21  member with at least three years of allowable service who is 
 29.22  vested as defined in section 353.01, subdivision 40, when 
 29.23  termination of public service or termination of membership 
 29.24  occurs has the option of leaving the accumulated deductions in 
 29.25  the fund and being entitled to a deferred retirement annuity 
 29.26  commencing at normal retirement age or to a deferred early 
 29.27  retirement annuity under section 353.30, subdivision 1, 1a, 1b, 
 29.28  1c, or 5.  The deferred annuity must be computed under section 
 29.29  353.29, subdivisions 2 and 3, on the basis of the law in effect 
 29.30  on the date of termination of public service or termination of 
 29.31  membership and must be augmented as provided in section 353.71, 
 29.32  subdivision 2.  A former member qualified to apply for a 
 29.33  deferred retirement annuity may revoke this option at any time 
 29.34  before the commencement of deferred annuity payments by making 
 29.35  application for a refund.  The person is entitled to a refund of 
 29.36  accumulated member and employer contributions within 30 days 
 30.1   following date of receipt of the application by the executive 
 30.2   director. 
 30.3      Sec. 10.  Minnesota Statutes 2000, section 353.35, 
 30.4   subdivision 2, is amended to read: 
 30.5      Subd. 2.  [REFUND REPAYMENT.] A person who receives a 
 30.6   refund of accumulated employee deductions and employer 
 30.7   contributions as provided under section 353.34, subdivision 2a, 
 30.8   plus interest, may repay the total amount of the refund 
 30.9   including the interest, within 30 days of the date the refund 
 30.10  was issued, to retain allowable service. 
 30.11     Sec. 11.  Minnesota Statutes 2000, section 353.71, 
 30.12  subdivision 1, is amended to read: 
 30.13     Subdivision 1.  [ELIGIBILITY.] Any person who has been a 
 30.14  member of the public employees retirement association, or the 
 30.15  Minnesota state retirement system, or the teachers retirement 
 30.16  association, or any other public retirement system in the state 
 30.17  of Minnesota having a like provision, except a fund providing 
 30.18  benefits for police officers or firefighters governed by 
 30.19  sections 69.77 or 69.771 to 69.776, shall be entitled when 
 30.20  qualified to an annuity from each fund if the total allowable 
 30.21  service in all funds or in any two of these funds totals three 
 30.22  or more years, except when including allowable service in the 
 30.23  public employees retirement association general plan, the total 
 30.24  allowable service in all funds must satisfy vesting as defined 
 30.25  in section 353.01, subdivision 40, and provided no portion of 
 30.26  the allowable service upon which the retirement annuity from one 
 30.27  fund is based is again used in the computation for benefits from 
 30.28  another fund and provided further that the person has not taken 
 30.29  a refund from any one of these funds since the person's 
 30.30  membership in that association or system last terminated.  The 
 30.31  annuity from each fund shall be determined by the appropriate 
 30.32  provisions of the law except that the requirement that a person 
 30.33  must have at least three years of allowable service in the 
 30.34  respective association or system, or in the case of the public 
 30.35  employees retirement association general plan, the vesting 
 30.36  requirements defined in section 353.01, subdivision 40, shall 
 31.1   not apply for the purposes of this section provided the combined 
 31.2   service in two or more of these funds equals three or more years.
 31.3      Sec. 12.  Minnesota Statutes 2000, section 353.71, 
 31.4   subdivision 2, is amended to read: 
 31.5      Subd. 2.  [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] (a) 
 31.6   The deferred annuity accruing under subdivision 1, or under 
 31.7   sections 353.34, subdivision 3, and 353.68, subdivision 4, must 
 31.8   be computed on the basis of allowable service prior to the 
 31.9   termination of public service and augmented as provided in this 
 31.10  paragraph.  The required reserves applicable to a deferred 
 31.11  annuity, or to any deferred segment of an annuity must be 
 31.12  determined as of the first day of the month following the month 
 31.13  in which the former member ceased to be a public employee, or 
 31.14  July 1, 1971, whichever is later.  These required reserves must 
 31.15  be augmented at the rate of five percent annually compounded 
 31.16  annually until January 1, 1981, and at the rate of three percent 
 31.17  thereafter until January 1 of the year following the year in 
 31.18  which the former member attains age 55.  From that date to the 
 31.19  effective date of retirement, the rate is five percent 
 31.20  compounded annually.  If a person has more than one period of 
 31.21  uninterrupted service, the required reserves related to each 
 31.22  period must be augmented as specified in this paragraph.  The 
 31.23  sum of the augmented required reserves is the present value of 
 31.24  the annuity.  Uninterrupted service for the purpose of this 
 31.25  subdivision means periods of covered employment during which the 
 31.26  employee has not been separated from public service for more 
 31.27  than two years.  If a person repays a refund, the restored 
 31.28  service must be considered as continuous with the next period of 
 31.29  service for which the employee has credit with this association. 
 31.30  This section must not reduce the annuity otherwise payable under 
 31.31  this chapter.  This paragraph applies to individuals who become 
 31.32  deferred annuitants on or after July 1, 1971.  For a member who 
 31.33  became a deferred annuitant before July 1, 1971, the paragraph 
 31.34  applies from July 1, 1971, if the former active member applies 
 31.35  for an annuity after July 1, 1973. 
 31.36     (b) The retirement annuity or disability benefit of, or the 
 32.1   survivor benefit payable on behalf of, a former member who 
 32.2   terminated service before July 1, 1997, or the survivor benefit 
 32.3   payable on behalf of a basic or police and fire member who was 
 32.4   receiving disability benefits before July 1, 1997, which is 
 32.5   first payable after June 30, 1997, must be increased on an 
 32.6   actuarial equivalent basis to reflect the change in the 
 32.7   postretirement interest rate actuarial assumption under section 
 32.8   356.215, subdivision 4d, from five percent to six percent under 
 32.9   a calculation procedure and tables adopted by the board and 
 32.10  approved by the actuary retained by the legislative commission 
 32.11  on pensions and retirement. 
 32.12     Sec. 13.  [EFFECTIVE DATE.] 
 32.13     Sections 1 to 12 are effective July 1, 2001. 
 32.14                             ARTICLE 5 
 32.15     Section 1.  Minnesota Statutes 2000, section 273.1385, 
 32.16  subdivision 1, is amended to read: 
 32.17     Subdivision 1.  [AID TO OFFSET RATE INCREASE.] (a) 
 32.18  Beginning with the December 26, 1997, payment, and according to 
 32.19  the schedule for payment of local aid under section 477A.015 
 32.20  thereafter, the commissioner of revenue shall pay to each city, 
 32.21  county, town, and other nonschool jurisdiction an amount equal 
 32.22  to 0.35 percent of the fiscal year 1997 payroll for employees 
 32.23  who were members of the general plan of the public employees 
 32.24  retirement association.  Except for the December 1997 
 32.25  distribution under this section, the amount of aid must be 
 32.26  certified before September 1 of the year preceding the 
 32.27  distribution year to the affected local government.  The 
 32.28  executive director of the public employees retirement 
 32.29  association shall certify the general plan fiscal year covered 
 32.30  payroll and other information requested by the commissioner of 
 32.31  revenue, on or before August 1, 1997, and in subsequent years 
 32.32  where necessary, in order to facilitate administration of this 
 32.33  section.  The amount necessary to make these aid payments is 
 32.34  appropriated annually from the general fund to the commissioner 
 32.35  of revenue.  Expenditures under this section paragraph are 
 32.36  estimated to be $7,942,500 in fiscal year 1998, and $15,885,000 
 33.1   in each subsequent fiscal year, less any future reductions under 
 33.2   subdivision 2. 
 33.3      (b) In addition to amounts paid under paragraph (a), 
 33.4   beginning with the December 26, 2001, payment, and according to 
 33.5   the schedule for payment of local aid under section 477A.015 
 33.6   thereafter, the commissioner of revenue shall pay to each 
 33.7   governmental subdivision whose employees are members of the 
 33.8   public employees retirement association general plan, an amount 
 33.9   equal to 0.75 percent of the fiscal year 2000 payroll for 
 33.10  employees who were members of the general plan of the public 
 33.11  employees retirement association.  Except for the December 2001 
 33.12  distribution under this paragraph, the amount of aid must be 
 33.13  certified before September 1 of the year preceding the 
 33.14  distribution year to the affected local government.  The 
 33.15  executive director of the public employees retirement 
 33.16  association shall certify the general plan fiscal year covered 
 33.17  payroll and other information requested by the commissioner of 
 33.18  revenue, on or before August 1, 2001, and in subsequent years 
 33.19  where necessary, in order to facilitate administration of this 
 33.20  section.  The amount necessary to make these aid payments is 
 33.21  appropriated annually from the general fund to the commissioner 
 33.22  of revenue.  Expenditures under this paragraph are estimated to 
 33.23  be $13,500,000 in fiscal year 2002, and $27,000,000 in each 
 33.24  subsequent fiscal year, less any future reductions under 
 33.25  subdivision 2. 
 33.26     Sec. 2.  Minnesota Statutes 2000, section 353.27, 
 33.27  subdivision 3a, is amended to read: 
 33.28     Subd. 3a.  [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An 
 33.29  additional employer contribution must be made equal to (1) 2.68 
 33.30  percent of the total salary of each "basic member"; and 
 33.31  (2) .43 1.18 percent of the total salary of each "coordinated 
 33.32  member."  These contributions must be made from funds available 
 33.33  to the employing subdivision by the means and in the manner 
 33.34  provided in section 353.28.  
 33.35     (b) This subdivision is repealed once the actuarial value 
 33.36  of the assets of the plan equal or exceed the actuarial accrued 
 34.1   liability of the plan as determined by the actuary retained by 
 34.2   the legislative commission on pensions and retirement under 
 34.3   section 356.215.  The repeal is effective on the first day of 
 34.4   the first full pay period occurring after March 31 of the 
 34.5   calendar year following the issuance of the actuarial valuation 
 34.6   upon which the repeal is based.