1.1                          A bill for an act 
  1.2             relating to retirement; statewide and major local 
  1.3             public pension plans; making various changes of an 
  1.4             administrative nature; setting various limitations and 
  1.5             requirements for public employees police and fire 
  1.6             retirement plan disability benefit applications; 
  1.7             resolving one person and small group pension problems; 
  1.8             reducing the early retirement age for the judges 
  1.9             retirement plan; authorizing a shorter vesting 
  1.10            schedule for the Marine on St. Croix Volunteer 
  1.11            Firefighters Relief Association; revising the salary 
  1.12            maximum for the executive secretary of the Minneapolis 
  1.13            Firefighters Relief Association; permitting single 
  1.14            Teachers Retirement Association members to make 
  1.15            survivor benefit designations; authorizing retirement 
  1.16            coverage discontinuation by an elected county 
  1.17            official; revising the manner in which actuarial 
  1.18            services to the Legislative Commission on Pensions and 
  1.19            Retirement are provided; continuing retirement 
  1.20            coverage by the general employees retirement plan of 
  1.21            the Public Employees Retirement Association for Anoka 
  1.22            County Achieve Program and the Government Training 
  1.23            Services; including in privatized public employee 
  1.24            retirement coverage employees of the Fair Oaks Lodge, 
  1.25            Wadena, and RenVilla Nursing Home; extending the 
  1.26            expiration date on certain prior military service 
  1.27            credit purchases; temporarily exempting Metropolitan 
  1.28            Airports Commission police from reemployed annuitant 
  1.29            earnings limitation; ratifying certain Bellingham 
  1.30            volunteer firefighter relief association annuity 
  1.31            purchases; including the Lake Johanna fire department 
  1.32            employees in Public Employees Retirement Association 
  1.33            coverage; expanding the health care savings plan; 
  1.34            modifying the department of transportation pilots 
  1.35            retirement plan; creating a statewide volunteer 
  1.36            firefighter retirement plan study task force; 
  1.37            authorizing shorter vesting periods for defined 
  1.38            contribution volunteer firefighter relief 
  1.39            associations; modifying Minneapolis Police Relief 
  1.40            Association provisions; appropriating money; amending 
  1.41            Minnesota Statutes 2002, sections 3A.03, subdivision 
  1.42            2; 69.77, subdivision 4; 352.01, subdivision 13; 
  1.43            352.03, subdivision 6; 352.113, subdivisions 4, 6, 8, 
  1.44            by adding a subdivision; 352.12, subdivisions 1, 6; 
  1.45            352.22, subdivisions 2, 3; 352.27; 352.275, 
  1.46            subdivision 1; 352.86, subdivision 1; 352.95, 
  2.1             subdivisions 1, 2, 4; 352.98; 352B.01, subdivisions 
  2.2             3a, 11, by adding a subdivision; 352B.02, subdivision 
  2.3             1e; 352B.10, subdivisions 1, 2, 3, 4, 5; 352B.105; 
  2.4             352B.11, subdivisions 1, 2, by adding subdivisions; 
  2.5             352D.065, subdivision 2; 352D.075, subdivisions 2, 3, 
  2.6             by adding a subdivision; 353.01, subdivisions 2b, 10, 
  2.7             12a, 12b, 16, 16a; 353.03, subdivision 3a; 353.33, 
  2.8             subdivisions 4, 6, 6b, 7, by adding a subdivision; 
  2.9             353.37, subdivision 3, by adding a subdivision; 
  2.10            353.656, subdivision 5, by adding subdivisions; 
  2.11            354.05, subdivisions 2, 22, 35; 354.06, subdivision 
  2.12            2a; 354.07, subdivision 9; 354.091; 354.096, 
  2.13            subdivision 1; 354.42, subdivision 7; 354.44, 
  2.14            subdivisions 4, 5; 354.46, subdivisions 2, 2b, 5, by 
  2.15            adding a subdivision; 354.48, subdivisions 2, 4, 6, 
  2.16            6a, 10; 354.51, subdivision 5; 354.52, subdivisions 
  2.17            4a, 6, by adding a subdivision; 354.53; 354.533, 
  2.18            subdivision 1; 354.66, subdivision 2; 354A.011, 
  2.19            subdivision 24; 354A.021, subdivision 7; 354A.093; 
  2.20            354A.094, subdivision 3; 354A.097, subdivision 1; 
  2.21            354B.20, subdivisions 4, 6; 354B.23, subdivision 1; 
  2.22            354B.32; 354C.11, subdivision 2; 356.215, subdivisions 
  2.23            2, 18; 356.216; 356.302, subdivision 3; 356.441; 
  2.24            356.611, subdivision 2, by adding subdivisions; 
  2.25            422A.06, subdivision 2; 422A.18, subdivisions 1, 4; 
  2.26            423B.01, subdivision 12; 423B.09, subdivisions 1, 4, 
  2.27            by adding a subdivision; 423B.10, subdivision 1; 
  2.28            423B.15, subdivision 3; 423C.05, subdivisions 4, 5, 6, 
  2.29            by adding a subdivision; 424A.02, subdivisions 2, 7; 
  2.30            490.121, subdivision 10, by adding a subdivision; 
  2.31            490.124, subdivision 12; Minnesota Statutes 2003 
  2.32            Supplement, sections 353.01, subdivision 6; 353F.02, 
  2.33            subdivision 4; 423C.03, subdivision 3; Laws 1999, 
  2.34            chapter 222, article 16, section 16, as amended; Laws 
  2.35            2000, chapter 461, article 4, section 4; proposing 
  2.36            coding for new law in Minnesota Statutes, chapters 
  2.37            352F; 356; 423B; repealing Minnesota Statutes 2002, 
  2.38            sections 3.85, subdivisions 11, 12; 352D.02, 
  2.39            subdivision 5; 353.33, subdivision 5b; 354A.107; 
  2.40            356.217; 490.11. 
  2.41  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.42                             ARTICLE 1
  2.43                         MEMBERSHIP ISSUES
  2.44     Section 1.  Minnesota Statutes 2002, section 353.01, 
  2.45  subdivision 2b, is amended to read: 
  2.46     Subd. 2b.  [EXCLUDED EMPLOYEES.] The following public 
  2.47  employees are not eligible to participate as members of the 
  2.48  association with retirement coverage by the public employees 
  2.49  retirement plan, the local government correctional employees 
  2.50  retirement plan under chapter 353E, or the public employees 
  2.51  police and fire retirement plan: 
  2.52     (1) public officers, other than county sheriffs, who are 
  2.53  elected to a governing body, or persons who are appointed to 
  2.54  fill a vacancy in an elective office of a governing body, whose 
  2.55  term of office first commences on or after July 1, 2002, for the 
  3.1   service to be rendered in that elective position.  Elected 
  3.2   governing body officials who were active members of the 
  3.3   association's coordinated or basic retirement plans as of June 
  3.4   30, 2002, continue participation throughout incumbency in office 
  3.5   until termination of public service occurs as defined in 
  3.6   subdivision 11a; 
  3.7      (2) election officers or election judges; 
  3.8      (3) patient and inmate personnel who perform services for a 
  3.9   governmental subdivision; 
  3.10     (4) except as otherwise specified in subdivision 12a, 
  3.11  employees who are hired for a temporary position as defined 
  3.12  under subdivision 12a, and employees who resign from a 
  3.13  nontemporary position and accept a temporary position within 30 
  3.14  days in the same governmental subdivision.; An employer must not 
  3.15  apply the definition of temporary position so as to exclude 
  3.16  employees who are hired to fill positions that are permanent or 
  3.17  that are for an unspecified period but who are serving a 
  3.18  probationary period at the start of the employment.  If the 
  3.19  period of employment extends beyond six consecutive months and 
  3.20  the employee earns more than $425 from one governmental 
  3.21  subdivision in any calendar month, the department head shall 
  3.22  report the employee for membership and require employee 
  3.23  deductions be made on behalf of the employee under section 
  3.24  353.27, subdivision 4. 
  3.25     The membership eligibility of an employee who resigns or is 
  3.26  dismissed from a temporary position and within 30 days accepts 
  3.27  another temporary position in the same governmental subdivision 
  3.28  is determined on the total length of employment rather than on 
  3.29  each separate position.  Membership eligibility of an employee 
  3.30  who holds concurrent temporary and nontemporary positions in one 
  3.31  governmental subdivision is determined by the length of 
  3.32  employment and salary of each separate position; 
  3.33     (5) employees who are employed by reason of work emergency 
  3.34  caused by fire, flood, storm, or similar disaster; 
  3.35     (6) employees who by virtue of their employment in one 
  3.36  governmental subdivision are required by law to be a member of 
  4.1   and to contribute to any of the plans or funds administered by 
  4.2   the Minnesota State Retirement System, the Teachers Retirement 
  4.3   Association, the Duluth Teachers Retirement Fund Association, 
  4.4   the Minneapolis Teachers Retirement Fund Association, the St. 
  4.5   Paul Teachers Retirement Fund Association, the Minneapolis 
  4.6   Employees Retirement Fund, or any police or firefighters relief 
  4.7   association governed by section 69.77 that has not consolidated 
  4.8   with the Public Employees Retirement Association, or any local 
  4.9   police or firefighters consolidation account but who have not 
  4.10  elected the type of benefit coverage provided by the public 
  4.11  employees police and fire fund under sections 353A.01 to 
  4.12  353A.10, or any persons covered by section 353.665, subdivision 
  4.13  4, 5, or 6, who have not elected public employees police and 
  4.14  fire plan benefit coverage.  This clause must not be construed 
  4.15  to prevent a person from being a member of and contributing to 
  4.16  the Public Employees Retirement Association and also belonging 
  4.17  to and contributing to another public pension plan or fund for 
  4.18  other service occurring during the same period of time.  A 
  4.19  person who meets the definition of "public employee" in 
  4.20  subdivision 2 by virtue of other service occurring during the 
  4.21  same period of time becomes a member of the association unless 
  4.22  contributions are made to another public retirement fund on the 
  4.23  salary based on the other service or to the Teachers Retirement 
  4.24  Association by a teacher as defined in section 354.05, 
  4.25  subdivision 2; 
  4.26     (7) persons who are members of a religious order and are 
  4.27  excluded from coverage under the federal Old Age, Survivors, 
  4.28  Disability, and Health Insurance Program for the performance of 
  4.29  service as specified in United States Code, title 42, section 
  4.30  410(a)(8)(A), as amended through January 1, 1987, if no 
  4.31  irrevocable election of coverage has been made under section 
  4.32  3121(r) of the Internal Revenue Code of 1954, as amended; 
  4.33     (8) employees of a governmental subdivision who have not 
  4.34  reached the age of 23 and are enrolled on a full-time basis to 
  4.35  attend or are attending classes on a full-time basis at an 
  4.36  accredited school, college, or university in an undergraduate, 
  5.1   graduate, or professional-technical program, or a public or 
  5.2   charter high school; 
  5.3      (9) resident physicians, medical interns, and pharmacist 
  5.4   residents and pharmacist interns who are serving in a degree or 
  5.5   residency program in public hospitals; 
  5.6      (10) students who are serving in an internship or residency 
  5.7   program sponsored by an accredited educational institution; 
  5.8      (11) persons who hold a part-time adult supplementary 
  5.9   technical college license who render part-time teaching service 
  5.10  in a technical college; 
  5.11     (12) except for employees of Hennepin County, foreign 
  5.12  citizens working for a governmental subdivision with a work 
  5.13  permit of less than three years, or an H-1b visa valid for less 
  5.14  than three years of employment.  Upon notice to the association 
  5.15  that the work permit or visa extends beyond the three-year 
  5.16  period, the foreign citizens are to must be reported for 
  5.17  membership from the date of the extension; 
  5.18     (13) public hospital employees who elected not to 
  5.19  participate as members of the association before 1972 and who 
  5.20  did not elect to participate from July 1, 1988, to October 1, 
  5.21  1988; 
  5.22     (14) except as provided in section 353.86, volunteer 
  5.23  ambulance service personnel, as defined in subdivision 35, but 
  5.24  persons who serve as volunteer ambulance service personnel may 
  5.25  still qualify as public employees under subdivision 2 and may be 
  5.26  members of the Public Employees Retirement Association and 
  5.27  participants in the public employees retirement fund or the 
  5.28  public employees police and fire fund, whichever applies, on the 
  5.29  basis of compensation received from public employment service 
  5.30  other than service as volunteer ambulance service personnel; 
  5.31     (15) except as provided in section 353.87, volunteer 
  5.32  firefighters, as defined in subdivision 36, engaging in 
  5.33  activities undertaken as part of volunteer firefighter duties; 
  5.34  provided that a person who is a volunteer firefighter may still 
  5.35  qualify as a public employee under subdivision 2 and may be a 
  5.36  member of the Public Employees Retirement Association and a 
  6.1   participant in the public employees retirement fund or the 
  6.2   public employees police and fire fund, whichever applies, on the 
  6.3   basis of compensation received from public employment activities 
  6.4   other than those as a volunteer firefighter; 
  6.5      (16) pipefitters and associated trades personnel employed 
  6.6   by Independent School District No. 625, St. Paul, with coverage 
  6.7   under a collective bargaining agreement by the pipefitters local 
  6.8   455 pension plan who were either first employed after May 1, 
  6.9   1997, or, if first employed before May 2, 1997, elected to be 
  6.10  excluded under Laws 1997, chapter 241, article 2, section 12; 
  6.11     (17) electrical workers, plumbers, carpenters, and 
  6.12  associated trades personnel employed by Independent School 
  6.13  District No. 625, St. Paul, or the city of St. Paul, who have 
  6.14  retirement coverage under a collective bargaining agreement by 
  6.15  the Electrical Workers Local 110 pension plan, the United 
  6.16  Association Plumbers Local 34 pension plan, or the Carpenters 
  6.17  Local 87 pension plan who were either first employed after May 
  6.18  1, 2000, or, if first employed before May 2, 2000, elected to be 
  6.19  excluded under Laws 2000, chapter 461, article 7, section 5; 
  6.20     (18) bricklayers, allied craftworkers, cement masons, 
  6.21  glaziers, glassworkers, painters, allied tradesworkers, and 
  6.22  plasterers employed by the city of St. Paul or Independent 
  6.23  School District No. 625, St. Paul, with coverage under a 
  6.24  collective bargaining agreement by the Bricklayers and Allied 
  6.25  Craftworkers Local 1 pension plan, the Cement Masons Local 633 
  6.26  pension plan, the Glaziers and Glassworkers Local L-1324 pension 
  6.27  plan, the Painters and Allied Trades Local 61 pension plan, or 
  6.28  the Twin Cities Plasterers Local 265 pension plan who were 
  6.29  either first employed after May 1, 2001, or if first employed 
  6.30  before May 2, 2001, elected to be excluded under Laws 2001, 
  6.31  First Special Session chapter 10, article 10, section 6; 
  6.32     (19) plumbers employed by the metropolitan airports 
  6.33  commission, with coverage under a collective bargaining 
  6.34  agreement by the Plumbers Local 34 pension plan, who either were 
  6.35  first employed after May 1, 2001, or if first employed before 
  6.36  May 2, 2001, elected to be excluded under Laws 2001, First 
  7.1   Special Session chapter 10, article 10, section 6; 
  7.2      (20) employees who are hired after June 30, 2002, to fill 
  7.3   seasonal positions under subdivision 12b which are limited in 
  7.4   duration by the employer to 185 consecutive calendar days or 
  7.5   less in each year of employment with the governmental 
  7.6   subdivision; 
  7.7      (21) persons who are provided supported employment or 
  7.8   work-study positions by a governmental subdivision and who 
  7.9   participate in an employment or industries program maintained 
  7.10  for the benefit of these persons where the governmental 
  7.11  subdivision limits the position's duration to three years or 
  7.12  less, including persons participating in a federal or state 
  7.13  subsidized on-the-job training, work experience, senior citizen, 
  7.14  youth, or unemployment relief program where the training or work 
  7.15  experience is not provided as a part of, or for, future 
  7.16  permanent public employment; 
  7.17     (22) independent contractors and the employees of 
  7.18  independent contractors; and 
  7.19     (23) reemployed annuitants of the association during the 
  7.20  course of that reemployment. 
  7.21     Sec. 2.  Minnesota Statutes 2002, section 353.01, 
  7.22  subdivision 12a, is amended to read: 
  7.23     Subd. 12a.  [TEMPORARY POSITION.] (1) (a) "Temporary 
  7.24  position" means an employment position predetermined by the 
  7.25  employer at the time of hiring to be a period of six months or 
  7.26  less.  Temporary position also means an employment position 
  7.27  occupied by a person hired by the employer as a temporary 
  7.28  replacement who is employed for a predetermined period of six 
  7.29  months or less. 
  7.30     (2) (b) "Temporary position" does not mean an employment 
  7.31  position for a specified or unspecified term in which a person 
  7.32  serves a probationary period as a requirement for subsequent 
  7.33  employment on a permanent or unlimited basis. 
  7.34     (c) If employment in a temporary position extends beyond 
  7.35  six consecutive months, the head of the department shall report 
  7.36  the employee for membership if salary in any month exceeds the 
  8.1   salary threshold specified in subdivision 2a.  The membership 
  8.2   eligibility of an employee who resigns or is dismissed from a 
  8.3   temporary position and accepts another temporary position in the 
  8.4   same governmental subdivision within 30 days must be determined 
  8.5   on the total length of employment rather than on each separate 
  8.6   position. 
  8.7      Sec. 3.  Minnesota Statutes 2002, section 353.01, 
  8.8   subdivision 12b, is amended to read: 
  8.9      Subd. 12b.  [SEASONAL POSITION.] "Seasonal position" means 
  8.10  a position where the nature of the work or its duration are 
  8.11  related to a specific season or seasons of the year, regardless 
  8.12  of whether or not the employing agency anticipates that the same 
  8.13  employee will return to the position each season in which it 
  8.14  becomes available.  The entire period of employment in a 
  8.15  business year must be used to determine whether or not a 
  8.16  position may be excluded as seasonal when there is less than a 
  8.17  30-day break between one seasonal position and a subsequent 
  8.18  seasonal position for employment with the same governmental 
  8.19  employer.  Seasonal positions include, but are not limited to, 
  8.20  coaching athletic activities or employment to plow snow or to 
  8.21  maintain roads or parks, or to operate skating rinks, ski 
  8.22  lodges, golf courses, or swimming pools. 
  8.23     Sec. 4.  Minnesota Statutes 2002, section 354.05, 
  8.24  subdivision 2, is amended to read: 
  8.25     Subd. 2.  [TEACHER.] (a) "Teacher" means: 
  8.26     (1) a person who renders service as a teacher, supervisor, 
  8.27  principal, superintendent, librarian, nurse, counselor, social 
  8.28  worker, therapist, or psychologist in a public school of the 
  8.29  state located outside of the corporate limits of a city of the 
  8.30  first class, or in any charter school, irrespective of the 
  8.31  location of the school, or in any charitable, penal, or 
  8.32  correctional institutions of a governmental subdivision, or who 
  8.33  is engaged in educational administration in connection with the 
  8.34  state public school system, but excluding the University of 
  8.35  Minnesota, whether the position be a public office or an 
  8.36  employment, and not including the members or officers of any 
  9.1   general governing or managing board or body; 
  9.2      (2) an employee of the Teachers Retirement Association; 
  9.3      (3) a person who renders teaching service on a part-time 
  9.4   basis and who also renders other services for a single employing 
  9.5   unit.  A person whose teaching service comprises at least 50 
  9.6   percent of the combined employment salary is a member of the 
  9.7   association for all services with the single employing unit.  If 
  9.8   the person's teaching service comprises less than 50 percent of 
  9.9   the combined employment salary, the executive director must 
  9.10  determine whether all or none of the combined service is covered 
  9.11  by the association; or 
  9.12     (4) a person who is not covered by the plans established 
  9.13  under chapter 352D, 354A, or 354B and who is employed by the 
  9.14  Board of Trustees of the Minnesota State Colleges and 
  9.15  Universities system in an unclassified position as: 
  9.16     (i) a president, vice-president, or dean; 
  9.17     (ii) a manager or a professional in an academic or an 
  9.18  academic support program other than specified in item (i); 
  9.19     (iii) an administrative or a service support faculty 
  9.20  position; or 
  9.21     (iv) a teacher or a research assistant. 
  9.22     (b) "Teacher" does not mean: 
  9.23     (1) a person who works for a school or institution as an 
  9.24  independent contractor as defined by the Internal Revenue 
  9.25  Service; 
  9.26     (2) a person employed in subsidized on-the-job training, 
  9.27  work experience or public service employment as an enrollee 
  9.28  under the federal Comprehensive Employment and Training Act from 
  9.29  and after March 30, 1978, unless the person has, as of the later 
  9.30  of March 30, 1978, or the date of employment, sufficient service 
  9.31  credit in the retirement association to meet the minimum vesting 
  9.32  requirements for a deferred retirement annuity, or the employer 
  9.33  agrees in writing on forms prescribed by the executive director 
  9.34  to make the required employer contributions, including any 
  9.35  employer additional contributions, on account of that person 
  9.36  from revenue sources other than funds provided under the federal 
 10.1   Comprehensive Training and Employment Act, or the person agrees 
 10.2   in writing on forms prescribed by the executive director to make 
 10.3   the required employer contribution in addition to the required 
 10.4   employee contribution; 
 10.5      (3) a person holding a part-time adult supplementary 
 10.6   technical college license who renders part-time teaching service 
 10.7   or who is a customized trainer as defined by the Minnesota State 
 10.8   Colleges and Universities system in a technical college if (i) 
 10.9   the service is incidental to the regular nonteaching occupation 
 10.10  of the person; and (ii) the applicable technical college 
 10.11  employer stipulates annually in advance that the part-time 
 10.12  teaching service or customized training service will not exceed 
 10.13  300 hours in a fiscal year and retains the stipulation in its 
 10.14  records; and (iii) the part-time teaching service or customized 
 10.15  training service actually does not exceed 300 hours in a fiscal 
 10.16  year; or 
 10.17     (4) (3) a person exempt from licensure under section 
 10.18  122A.30. 
 10.19     Sec. 5.  Minnesota Statutes 2002, section 354B.20, 
 10.20  subdivision 4, is amended to read: 
 10.21     Subd. 4.  [COVERED EMPLOYMENT.] (a) "Covered employment" 
 10.22  means employment by a person eligible for coverage by this 
 10.23  retirement program under section 354B.21 in a faculty position 
 10.24  or in an eligible unclassified administrative position. 
 10.25     (b) "Covered employment" does not mean employment specified 
 10.26  in paragraph (a) by a faculty member employed in a state 
 10.27  university or a community college the Minnesota State Colleges 
 10.28  and Universities system if the person's initial appointment is 
 10.29  specified as constituting less than 25 percent of a full 
 10.30  academic year, exclusive of summer session, for the applicable 
 10.31  institution. 
 10.32     Sec. 6.  Minnesota Statutes 2002, section 354B.20, 
 10.33  subdivision 6, is amended to read: 
 10.34     Subd. 6.  [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE POSITION.] 
 10.35  "Eligible unclassified administrative position" means the 
 10.36  following: 
 11.1      (1) the chancellor of the board; 
 11.2      (2) a president of a state college or university; or 
 11.3      (3) an excluded administrator employed in a state 
 11.4   university or college, by the board, or by the Higher Education 
 11.5   Services Office; or 
 11.6      (4) other managers and professionals in academic and 
 11.7   academic support programs in the unclassified service employed 
 11.8   in a state university or college, by the board, or by the Higher 
 11.9   Education Services Office. 
 11.10     Sec. 7.  Minnesota Statutes 2002, section 354C.11, 
 11.11  subdivision 2, is amended to read: 
 11.12     Subd. 2.  [ELIGIBILITY.] (a) An individual must participate 
 11.13  in the supplemental retirement plan if the individual is 
 11.14  employed by the Board of Trustees in the unclassified service of 
 11.15  the state and has completed at least two years with a full-time 
 11.16  contract of applicable unclassified employment with the board or 
 11.17  an applicable predecessor board in any of the positions 
 11.18  specified in paragraph (b). 
 11.19     (b) Eligible positions or employment classifications are: 
 11.20     (1) an unclassified administrative position as defined in 
 11.21  section 354B.20, subdivision 6; 
 11.22     (2) an employment classification included in one of the 
 11.23  following collective bargaining units under section 179A.10, 
 11.24  subdivision 2: 
 11.25     (i) the state university instructional unit; 
 11.26     (ii) the state college instructional unit; and 
 11.27     (iii) the state university administrative unit; or 
 11.28     (3) an unclassified employee of the board: 
 11.29     (i) included in the general professional unit or the 
 11.30  supervisory employees unit under section 179A.10, subdivision 2; 
 11.31  or 
 11.32     (ii) an employee who is excluded from one of those units 
 11.33  due to the employee's confidential status under section 179A.10, 
 11.34  subdivision 1, clause (8).  
 11.35     Sec. 8.  [REPEALER.] 
 11.36     Minnesota Statutes 2002, section 352D.02, subdivision 5, is 
 12.1   repealed.  
 12.2      Sec. 9.  [EFFECTIVE DATE.] 
 12.3      (a) Sections 1 to 5 and 8 are effective on July 1, 2004. 
 12.4      (b) Section 6 is effective on July 1, 2004, and applies 
 12.5   retroactively to the date of hire of the applicable person in 
 12.6   the affected position. 
 12.7      (c) Section 7 is effective retroactively to July 1, 2001. 
 12.8                              ARTICLE 2
 12.9                      COVERED SALARY DEFINITION
 12.10     Section 1.  Minnesota Statutes 2002, section 352.01, 
 12.11  subdivision 13, is amended to read: 
 12.12     Subd. 13.  [SALARY.] (a) "Salary" means wages, or other 
 12.13  periodic compensation, paid to an employee before deductions for 
 12.14  deferred compensation, supplemental retirement plans, or other 
 12.15  voluntary salary reduction programs.  
 12.16     (b) "Salary" does not include: 
 12.17     (1) lump sum sick leave payments,; 
 12.18     (2) severance payments,; 
 12.19     (3) lump sum annual leave payments and overtime payments 
 12.20  made at the time of separation from state service,; 
 12.21     (4) payments in lieu of any employer-paid group insurance 
 12.22  coverage, including the difference between single and family 
 12.23  rates that may be paid to an employee with single coverage, and; 
 12.24     (5) payments made as an employer-paid fringe benefit,; 
 12.25     (6) workers' compensation payments,; 
 12.26     (7) employer contributions to a deferred compensation or 
 12.27  tax sheltered annuity program,; and 
 12.28     (8) amounts contributed under a benevolent vacation and 
 12.29  sick leave donation program are not salary. 
 12.30     (c) Amounts provided to an employee by the employer through 
 12.31  a grievance proceeding or a legal settlement are salary only if 
 12.32  the settlement is reviewed by the executive director and the 
 12.33  amounts are determined by the executive director to be 
 12.34  consistent with paragraph (a) and prior determinations. 
 12.35     Sec. 2.  Minnesota Statutes 2002, section 352B.01, 
 12.36  subdivision 11, is amended to read: 
 13.1      Subd. 11.  [AVERAGE MONTHLY SALARY.] (a) "Average monthly 
 13.2   salary" means the average of the highest monthly salaries for 
 13.3   five years of service as a member upon which contributions were 
 13.4   deducted from pay under section 352B.02, or upon which 
 13.5   appropriate contributions or payments were made to the fund to 
 13.6   receive allowable service and salary credit as specified under 
 13.7   the applicable law.  Average monthly salary must be based upon 
 13.8   all allowable service if this service is less than five 
 13.9   years.  It 
 13.10     (b) "Average monthly salary" means the salary of the member 
 13.11  as defined in section 352.01, subdivision 13.  "Average monthly 
 13.12  salary" does not include any lump-sum annual leave payments and 
 13.13  overtime payments made at the time of separation from state 
 13.14  service, any amounts of severance pay, or any reduced salary 
 13.15  paid during the period the person is entitled to workers' 
 13.16  compensation benefit payments for temporary disability.  
 13.17     (c) A member on leave of absence receiving temporary 
 13.18  workers' compensation payments and a reduced salary or no salary 
 13.19  from the employer who is entitled to allowable service credit 
 13.20  for the period of absence may make payment to the fund for the 
 13.21  difference between salary received, if any, and the salary the 
 13.22  member would normally receive if not on leave of absence during 
 13.23  the period.  The member shall pay an amount equal to the member 
 13.24  and employer contribution rate under section 352B.02, 
 13.25  subdivisions 1b and 1c, on the differential salary amount for 
 13.26  the period of the leave of absence.  The employing department, 
 13.27  at its option, may pay the employer amount on behalf of the 
 13.28  member.  Payment made under this subdivision must include 
 13.29  interest at the rate of 8.5 percent per year, and must be 
 13.30  completed within one year of the return from the leave of 
 13.31  absence. 
 13.32     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
 13.33  subdivision 10, is amended to read: 
 13.34     Subd. 10.  [SALARY.] (a) "Salary" means: 
 13.35     (1) the periodic compensation of a public employee, before 
 13.36  deductions for deferred compensation, supplemental retirement 
 14.1   plans, or other voluntary salary reduction programs, and also 
 14.2   means "wages" and includes net income from fees; and 
 14.3      (2) for a public employee who has prior service covered by 
 14.4   a local police or firefighters relief association that has 
 14.5   consolidated with the Public Employees Retirement Association or 
 14.6   to which section 353.665 applies and who has elected coverage 
 14.7   either under the public employees police and fire fund benefit 
 14.8   plan under section 353A.08 following the consolidation or under 
 14.9   section 353.665, subdivision 4, "salary" means the rate of 
 14.10  salary upon which member contributions to the special fund of 
 14.11  the relief association were made prior to the effective date of 
 14.12  the consolidation as specified by law and by bylaw provisions 
 14.13  governing the relief association on the date of the initiation 
 14.14  of the consolidation procedure and the actual periodic 
 14.15  compensation of the public employee after the effective date of 
 14.16  consolidation. 
 14.17     (b) Salary does not mean: 
 14.18     (1) the fees paid to district court reporters, unused 
 14.19  annual vacation or sick leave payments, in lump-sum or periodic 
 14.20  payments, severance payments, reimbursement of expenses, 
 14.21  lump-sum settlements not attached to a specific earnings period, 
 14.22  or workers' compensation payments; 
 14.23     (2) employer-paid amounts used by an employee toward the 
 14.24  cost of insurance coverage, employer-paid fringe benefits, 
 14.25  flexible spending accounts, cafeteria plans, health care expense 
 14.26  accounts, day care expenses, or any payments in lieu of any 
 14.27  employer-paid group insurance coverage, including the difference 
 14.28  between single and family rates that may be paid to a member 
 14.29  with single coverage and certain amounts determined by the 
 14.30  executive director to be ineligible; 
 14.31     (3) the amount equal to that which the employing 
 14.32  governmental subdivision would otherwise pay toward single or 
 14.33  family insurance coverage for a covered employee when, through a 
 14.34  contract or agreement with some but not all employees, the 
 14.35  employer: 
 14.36     (i) discontinues, or for new hires does not provide, 
 15.1   payment toward the cost of the employee's selected insurance 
 15.2   coverages under a group plan offered by the employer; 
 15.3      (ii) makes the employee solely responsible for all 
 15.4   contributions toward the cost of the employee's selected 
 15.5   insurance coverages under a group plan offered by the employer, 
 15.6   including any amount the employer makes toward other employees' 
 15.7   selected insurance coverages under a group plan offered by the 
 15.8   employer; and 
 15.9      (iii) provides increased salary rates for employees who do 
 15.10  not have any employer-paid group insurance coverages; and 
 15.11     (4) except as provided in section 353.86 or 353.87, 
 15.12  compensation of any kind paid to volunteer ambulance service 
 15.13  personnel or volunteer firefighters, as defined in subdivision 
 15.14  35 or 36; and 
 15.15     (5) the amount of compensation that exceeds the limitation 
 15.16  provided in section 356.611.  
 15.17     (c) Amounts provided to an employee by the employer through 
 15.18  a grievance proceeding or a legal settlement are salary only if 
 15.19  the settlement is reviewed by the executive director and the 
 15.20  amounts are determined by the executive director to be 
 15.21  consistent with paragraph (a) and prior determinations. 
 15.22     Sec. 4.  Minnesota Statutes 2002, section 354.05, 
 15.23  subdivision 35, is amended to read: 
 15.24     Subd. 35.  [SALARY.] (a) "Salary" means the periodic 
 15.25  compensation, upon which member contributions are required 
 15.26  before deductions for deferred compensation, supplemental 
 15.27  retirement plans, or other voluntary salary reduction programs. 
 15.28     (b) "Salary" does not mean: 
 15.29     (1) lump sum annual leave payments; 
 15.30     (2) lump sum wellness and sick leave payments; 
 15.31     (3) employer-paid amounts used by an employee toward the 
 15.32  cost of insurance coverage, employer-paid fringe benefits, 
 15.33  flexible spending accounts, cafeteria plans, health care expense 
 15.34  accounts, day care expenses, or any payments in lieu of any 
 15.35  employer-paid group insurance coverage, including the difference 
 15.36  between single and family rates that may be paid to a member 
 16.1   with single coverage and certain amounts determined by the 
 16.2   executive director to be ineligible; 
 16.3      (4) any form of payment made in lieu of any other 
 16.4   employer-paid fringe benefit or expense; 
 16.5      (5) any form of severance payments; 
 16.6      (6) workers' compensation payments; 
 16.7      (7) disability insurance payments, including self-insured 
 16.8   disability payments; 
 16.9      (8) payments to school principals and all other 
 16.10  administrators for services that are in addition to the normal 
 16.11  work year contract if these additional services are performed on 
 16.12  an extended duty day, Saturday, Sunday, holiday, annual leave 
 16.13  day, sick leave day, or any other nonduty day; 
 16.14     (9) payments under section 356.24, subdivision 1, clause 
 16.15  (4); and 
 16.16     (10) payments made under section 122A.40, subdivision 12, 
 16.17  except for payments for sick leave that are accumulated under 
 16.18  the provisions of a uniform school district policy that applies 
 16.19  equally to all similarly situated persons in the district. 
 16.20     (c) Amounts provided to an employee by the employer through 
 16.21  a grievance proceeding or a legal settlement are salary only if 
 16.22  the settlement is reviewed by the executive director and the 
 16.23  amounts are determined by the executive director to be 
 16.24  consistent with paragraph (a) and prior determinations. 
 16.25     Sec. 5.  Minnesota Statutes 2002, section 354A.011, 
 16.26  subdivision 24, is amended to read: 
 16.27     Subd. 24.  [SALARY; COVERED SALARY.] (a) "Salary" or 
 16.28  "covered salary" means the entire compensation, upon which 
 16.29  member contributions are required and made, that is paid to a 
 16.30  teacher before deductions for deferred compensation, 
 16.31  supplemental retirement plans, or other voluntary salary 
 16.32  reduction programs. 
 16.33     (b) "Salary" does not mean: 
 16.34     (1) lump sum annual leave payments; 
 16.35     (2) lump sum wellness and sick leave payments; 
 16.36     (3) employer-paid amounts used by an employee toward the 
 17.1   cost of insurance coverage, employer-paid fringe benefits, 
 17.2   flexible spending accounts, cafeteria plans, health care expense 
 17.3   accounts, day care expenses, or any payments in lieu of any 
 17.4   employer-paid group insurance coverage, including the difference 
 17.5   between single and family rates that may be paid to a member 
 17.6   with single coverage, and certain amounts determined by the 
 17.7   executive secretary or director to be ineligible; 
 17.8      (4) any form of payment that is made in lieu of any other 
 17.9   employer-paid fringe benefit or expense; 
 17.10     (5) any form of severance payments; 
 17.11     (6) workers' compensation payments; 
 17.12     (7) disability insurance payments, including self-insured 
 17.13  disability payments; 
 17.14     (8) payments to school principals and all other 
 17.15  administrators for services that are in addition to the normal 
 17.16  work year contract if these additional services are performed on 
 17.17  an extended duty day, Saturday, Sunday, holiday, annual leave 
 17.18  day, sick leave day, or any other nonduty day; 
 17.19     (9) payments under section 356.24, subdivision 1, clause 
 17.20  (4)(ii); and 
 17.21     (10) payments made under section 122A.40, subdivision 12, 
 17.22  except for payments for sick leave that are accumulated under 
 17.23  the provisions of a uniform school district policy that applies 
 17.24  equally to all similarly situated persons in the district. 
 17.25     (c) Amounts provided to an employee by the employer through 
 17.26  a grievance proceeding or a legal settlement are salary only if 
 17.27  the settlement is reviewed by the executive director and the 
 17.28  amounts are determined by the executive director to be 
 17.29  consistent with paragraph (a) and prior determinations. 
 17.30     Sec. 6.  Minnesota Statutes 2002, section 356.611, 
 17.31  subdivision 2, is amended to read: 
 17.32     Subd. 2.  [FEDERAL COMPENSATION LIMITS.] (a) For members 
 17.33  first contributing to of a covered pension plan enumerated in 
 17.34  section 356.30, subdivision 3, on or after July 1, 1995, 
 17.35  compensation in excess of the limitation set forth specified in 
 17.36  section 401(a)(17) of the Internal Revenue Code, as amended, for 
 18.1   changes in the cost of living under section 401(a)(17)(B) of the 
 18.2   Internal Revenue Code, may not be included for contribution and 
 18.3   benefit computation purposes.  
 18.4      (b) Notwithstanding paragraph (a), for members specified in 
 18.5   paragraph (a) who first contributed to a covered plan before 
 18.6   July 1, 1995, the annual compensation limit set forth specified 
 18.7   in Internal Revenue Code 401(a)(17) on June 30, 1993, applies to 
 18.8   members first contributing before July 1, 1995 if that provides 
 18.9   a greater allowable annual compensation. 
 18.10     Sec. 7.  Minnesota Statutes 2002, section 356.611, is 
 18.11  amended by adding a subdivision to read: 
 18.12     Subd. 3.  [MAXIMUM BENEFIT LIMITATIONS.] A member's annual 
 18.13  benefit, if necessary, must be reduced to the extent required by 
 18.14  section 415(b) of the Internal Revenue Code, as adjusted by the 
 18.15  United States Secretary of the Treasury under section 415(d) of 
 18.16  the Internal Revenue Code.  For purposes of section 415 of the 
 18.17  Internal Revenue Code, the limitation year of a pension plan 
 18.18  covered by this section must be the fiscal year or calendar year 
 18.19  of that plan, whichever is applicable.  The accrued benefit 
 18.20  limitation described in section 415(e) of the Internal Revenue 
 18.21  Code must cease to be effective for limitation years beginning 
 18.22  after December 31, 1999. 
 18.23     Sec. 8.  [EFFECTIVE DATE.] 
 18.24     (a) Sections 1, 2, 3, 6, and 7 are effective on July 1, 
 18.25  2004. 
 18.26     (b) Sections 4 and 5 are effective on the day following 
 18.27  final enactment.  
 18.28                             ARTICLE 3
 18.29                      ALLOWABLE SERVICE CREDIT
 18.30     Section 1.  Minnesota Statutes 2002, section 352.27, is 
 18.31  amended to read: 
 18.32     352.27 [CREDIT FOR MILITARY BREAK IN SERVICE TO PROVIDE 
 18.33  UNIFORMED SERVICE.] 
 18.34     Any (a) An employee given a leave of absence to enter 
 18.35  military service who is absent from employment by reason of 
 18.36  service in the uniformed services, as defined in United States 
 19.1   Code, title 38, section 4303(13), and who returns to state 
 19.2   service upon discharge from military service as provided in the 
 19.3   uniformed service within the time frames required in United 
 19.4   States Code, title 38, section 192.262 4312(e), may obtain 
 19.5   service credit for the period of military the uniformed service. 
 19.6   The employee is not entitled to credit for any voluntary 
 19.7   extension of military service at the instance of the employee 
 19.8   beyond the initial period of enlistment, induction, or call to 
 19.9   active duty, nor to credit for any period of service following a 
 19.10  voluntary return to military service as further specified in 
 19.11  this section, provided that the employee did not separate from 
 19.12  uniformed service with a dishonorable or bad conduct discharge 
 19.13  or under other than honorable conditions. An 
 19.14     (b) The employee may obtain credit by paying into the fund 
 19.15  an equivalent employee contribution based upon the contribution 
 19.16  rate or rates in effect at the time that the uniformed service 
 19.17  was performed multiplied by the full and fractional years being 
 19.18  purchased and applied to the annual salary received at the date 
 19.19  of return from military service. The amount of this contribution 
 19.20  must be the applicable amounts required in section 352.04, 
 19.21  subdivision 2, plus interest at an annual rate of 8.5 percent 
 19.22  compounded annually rate.  The annual salary rate is the average 
 19.23  annual salary during the purchase period that the employee would 
 19.24  have received if the employee had continued to be employed in 
 19.25  covered employment rather than to provide uniformed service, or, 
 19.26  if the determination of that rate is not reasonably certain, the 
 19.27  annual salary rate is the employee's average salary rate during 
 19.28  the 12-month period of covered employment rendered immediately 
 19.29  preceding the period of the uniformed service.  
 19.30     (c) The matching equivalent employer contribution and, if 
 19.31  applicable, the equivalent additional employer contribution 
 19.32  provided in section 352.04 must be paid by the department 
 19.33  employing the employee upon return to state service from funds 
 19.34  available to the department at the time and in the manner 
 19.35  provided in section 352.04, using the employer and additional 
 19.36  employer contribution rate or rates in effect at the time that 
 20.1   the uniformed service was performed, applied to the same annual 
 20.2   salary rate or rates used to compute the equivalent employee 
 20.3   contribution. 
 20.4      (d) If the employee equivalent contributions provided in 
 20.5   this section are not paid in full, the employee's allowable 
 20.6   service credit must be prorated by multiplying the full and 
 20.7   fractional number of years of uniformed service eligible for 
 20.8   purchase by the ratio obtained by dividing the total employee 
 20.9   contribution received by the total employee contribution 
 20.10  otherwise required under this section.  
 20.11     (e) To receive service credit under this section, the 
 20.12  contributions specified in this section must be transmitted to 
 20.13  the Minnesota State Retirement System during the period which 
 20.14  begins with the date on which the individual returns to state 
 20.15  service and which has a duration of three times the length of 
 20.16  the uniformed service period, but not to exceed five years.  If 
 20.17  the determined payment period is less than one year, the 
 20.18  contributions required under this section to receive service 
 20.19  credit may be made within one year of the discharge date.  
 20.20     (f) The amount of service credit obtainable under this 
 20.21  section may not exceed five years unless a longer purchase 
 20.22  period is required under United States Code, title 38, section 
 20.23  4312.  
 20.24     (g) The employing unit shall pay interest on all equivalent 
 20.25  employee and employer contribution amounts payable under this 
 20.26  section.  Interest must be computed at a rate of 8.5 percent 
 20.27  compounded annually from the end of each fiscal year of the 
 20.28  leave or the break in service to the end of the month in which 
 20.29  the payment is received.  
 20.30     Sec. 2.  Minnesota Statutes 2002, section 352B.01, is 
 20.31  amended by adding a subdivision to read: 
 20.32     Subd. 3b.  [CREDIT FOR BREAK IN SERVICE TO PROVIDE 
 20.33  UNIFORMED SERVICE.] (a) A member who is absent from employment 
 20.34  by reason of service in the uniformed services, as defined in 
 20.35  United States Code, title 38, section 4303(13), and who returns 
 20.36  to state employment in a position covered by the plan upon 
 21.1   discharge from service in the uniformed service within the time 
 21.2   frame required in United States Code, title 38, section 4312(e), 
 21.3   may obtain service credit for the period of the uniformed 
 21.4   service, provided that the member did not separate from 
 21.5   uniformed service with a dishonorable or bad conduct discharge 
 21.6   or under other than honorable conditions.  
 21.7      (b) The member may obtain credit by paying into the fund an 
 21.8   equivalent member contribution based on the contribution rate or 
 21.9   rates in effect at the time that the uniformed service was 
 21.10  performed multiplied by the full and fractional years being 
 21.11  purchased and applied to the annual salary rate.  The annual 
 21.12  salary rate is the average annual salary during the purchase 
 21.13  period that the member would have received if the member had 
 21.14  continued to provide employment services to the state rather 
 21.15  than to provide uniformed service, or if the determination of 
 21.16  that rate is not reasonably certain, the annual salary rate is 
 21.17  the member's average salary rate during the 12-month period of 
 21.18  covered employment rendered immediately preceding the purchase 
 21.19  period.  
 21.20     (c) The equivalent employer contribution and, if 
 21.21  applicable, the equivalent employer additional contribution, 
 21.22  must be paid by the employing unit, using the employer and 
 21.23  employer additional contribution rate or rates in effect at the 
 21.24  time that the uniformed service was performed, applied to the 
 21.25  same annual salary rate or rates used to compute the equivalent 
 21.26  member contribution.  
 21.27     (d) If the member equivalent contributions provided for in 
 21.28  this subdivision are not paid in full, the member's allowable 
 21.29  service credit must be prorated by multiplying the full and 
 21.30  fractional number of years of uniformed service eligible for 
 21.31  purchase by the ratio obtained by dividing the total member 
 21.32  contributions received by the total member contributions 
 21.33  otherwise required under this subdivision.  
 21.34     (e) To receive allowable service credit under this 
 21.35  subdivision, the contributions specified in this section must be 
 21.36  transmitted to the fund during the period which begins with the 
 22.1   date on which the individual returns to state employment covered 
 22.2   by the plan and which has a duration of three times the length 
 22.3   of the uniformed service period, but not to exceed five years.  
 22.4   If the determined payment period is calculated to be less than 
 22.5   one year, the contributions required under this subdivision to 
 22.6   receive service credit may be within one year from the discharge 
 22.7   date.  
 22.8      (f) The amount of allowable service credit obtainable under 
 22.9   this section may not exceed five years, unless a longer purchase 
 22.10  period is required under United States Code, title 38, section 
 22.11  4312.  
 22.12     (g) The employing unit shall pay interest on all equivalent 
 22.13  member and employer contribution amounts payable under this 
 22.14  subdivision.  Interest must be computed at a rate of 8.5 percent 
 22.15  compounded annually from the end of each fiscal year of the 
 22.16  leave or break in service to the end of the month in which 
 22.17  payment is received.  
 22.18     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
 22.19  subdivision 16, is amended to read: 
 22.20     Subd. 16.  [ALLOWABLE SERVICE; LIMITS AND COMPUTATION.] (a) 
 22.21  "Allowable service" means: 
 22.22     (1) service during years of actual membership in the course 
 22.23  of which employee contributions were made, periods covered by 
 22.24  payments in lieu of salary deductions under section 353.35; 
 22.25     (2) service in years during which the public employee was 
 22.26  not a member but for which the member later elected, while a 
 22.27  member, to obtain credit by making payments to the fund as 
 22.28  permitted by any law then in effect; 
 22.29     (3) a period of authorized leave of absence with pay from 
 22.30  which deductions for employee contributions are made, deposited, 
 22.31  and credited to the fund; 
 22.32     (4) a period of authorized personal, parental, or medical 
 22.33  leave of absence without pay, including a leave of absence 
 22.34  covered under the federal Family Medical Leave Act, that does 
 22.35  not exceed one year, and during or for which a member obtained 
 22.36  service credit for each month in the leave period by payments to 
 23.1   the fund made in place of salary deductions.  The payments must 
 23.2   be made in an amount or amounts based on the member's average 
 23.3   salary on which deductions were paid for the last six months of 
 23.4   public service, or for that portion of the last six months while 
 23.5   the member was in public service, to apply to the period in 
 23.6   either case that immediately precedes the commencement of the 
 23.7   leave of absence.  If the employee elects to pay the employee 
 23.8   contributions for the period of any authorized personal, 
 23.9   parental, or medical leave of absence without pay, or for any 
 23.10  portion of the leave, the employee shall also, as a condition to 
 23.11  the exercise of the election, pay to the fund an amount 
 23.12  equivalent to the required employer and the additional employer 
 23.13  contributions, if any, for the employee.  The payment must be 
 23.14  made within one year from the expiration of the leave of absence 
 23.15  or within 20 days after termination of public service under 
 23.16  subdivision 11a, whichever is earlier.  The employer, by 
 23.17  appropriate action of its governing body which is made a part of 
 23.18  its official records and which is adopted before the date of the 
 23.19  first payment of the employee contribution, may certify to the 
 23.20  association in writing its commitment to pay the employer and 
 23.21  additional employer contributions from the proceeds of a tax 
 23.22  levy made under section 353.28.  Payments under this paragraph 
 23.23  must include interest at an annual rate of 8.5 percent 
 23.24  compounded annually from the date of the termination of the 
 23.25  leave of absence to the date payment is made.  An employee shall 
 23.26  return to public service and render a minimum of three months of 
 23.27  allowable service in order to be eligible to pay employee and 
 23.28  employer contributions for a subsequent authorized leave of 
 23.29  absence without pay.  Upon payment, the employee must be granted 
 23.30  allowable service credit for the purchased period; 
 23.31     (5) a periodic, repetitive leave that is offered to all 
 23.32  employees of a governmental subdivision.  The leave program may 
 23.33  not exceed 208 hours per annual normal work cycle as certified 
 23.34  to the association by the employer.  A participating member 
 23.35  obtains service credit by making employee contributions in an 
 23.36  amount or amounts based on the member's average salary that 
 24.1   would have been paid if the leave had not been taken.  The 
 24.2   employer shall pay the employer and additional employer 
 24.3   contributions on behalf of the participating member.  The 
 24.4   employee and the employer are responsible to pay interest on 
 24.5   their respective shares at the rate of 8.5 percent a year, 
 24.6   compounded annually, from the end of the normal cycle until full 
 24.7   payment is made.  An employer shall also make the employer and 
 24.8   additional employer contributions, plus 8.5 percent interest, 
 24.9   compounded annually, on behalf of an employee who makes employee 
 24.10  contributions but terminates public service.  The employee 
 24.11  contributions must be made within one year after the end of the 
 24.12  annual normal working cycle or within 20 days after termination 
 24.13  of public service, whichever is sooner.  The association shall 
 24.14  prescribe the manner and forms to be used by a governmental 
 24.15  subdivision in administering a periodic, repetitive leave.  Upon 
 24.16  payment, the member must be granted allowable service credit for 
 24.17  the purchased period; 
 24.18     (6) an authorized temporary layoff under subdivision 12, 
 24.19  limited to three months allowable service per authorized 
 24.20  temporary layoff in one calendar year.  An employee who has 
 24.21  received the maximum service credit allowed for an authorized 
 24.22  temporary layoff must return to public service and must obtain a 
 24.23  minimum of three months of allowable service subsequent to the 
 24.24  layoff in order to receive allowable service for a subsequent 
 24.25  authorized temporary layoff; or 
 24.26     (7) a period during which a member is on an authorized 
 24.27  leave of absence to enter military absent from employment by a 
 24.28  governmental subdivision by reason of service in the armed 
 24.29  forces of the United States in the uniformed services, as 
 24.30  defined in United States Code, title 38, section 4303(13), if 
 24.31  the member returns to public service upon discharge 
 24.32  from military service in the uniformed service within the time 
 24.33  frames required under United States Code, title 38, section 
 24.34  192.262 and 4312(e), provided that the member did not separate 
 24.35  from uniformed service with a dishonorable or bad conduct 
 24.36  discharge or under other than honorable conditions.  The service 
 25.1   is credited if the member pays into the fund equivalent employee 
 25.2   contributions based upon the employee's contribution rate or 
 25.3   rates in effect at the time that the uniformed service was 
 25.4   performed multiplied by the full and fractional years being 
 25.5   purchased and applied to the annual salary at the date of return 
 25.6   from military service rate.  The annual salary rate is the 
 25.7   average annual salary during the purchase period that the member 
 25.8   would have received if the member had continued to be employed 
 25.9   in covered employment rather than to provide uniformed service, 
 25.10  or, if the determination of that rate is not reasonably certain, 
 25.11  the annual salary rate is the member's average salary rate 
 25.12  during the 12-month period of covered employment rendered 
 25.13  immediately preceding the period of the uniformed service.  
 25.14  Payment of the member equivalent contributions must be made 
 25.15  within during a period which begins with the date on which the 
 25.16  individual returns to public employment and that is three times 
 25.17  the length of the military leave period, or within five years of 
 25.18  the date of discharge from the military service, whichever is 
 25.19  less.  If the determined payment period is less than one year, 
 25.20  the contributions required under this clause to receive service 
 25.21  credit may be made within one year of the discharge date.  
 25.22  Payment may not be accepted following 20 days after termination 
 25.23  of public service under subdivision 11a.  The amount of these 
 25.24  contributions must be in accord with the contribution rates and 
 25.25  salary limitations, if any, in effect during the leave, plus 
 25.26  interest at an annual rate of 8.5 percent compounded annually 
 25.27  from the date of return to public service to the date payment is 
 25.28  made.  If the member equivalent contributions provided for in 
 25.29  this clause are not paid in full, the member's allowable service 
 25.30  credit must be prorated by multiplying the full and fractional 
 25.31  number of years of uniformed service eligible for purchase by 
 25.32  the ratio obtained by dividing the total member contributions 
 25.33  received by the total member contributions otherwise required 
 25.34  under this clause.  The corresponding equivalent employer 
 25.35  contribution, and, if applicable, the equivalent additional 
 25.36  employer contribution, if applicable, must be paid by the 
 26.1   governmental subdivision employing the member upon the person's 
 26.2   return to public service if the member makes the equivalent 
 26.3   employee contributions.  The employer payments must be made from 
 26.4   funds available to the employing unit, using the employer and 
 26.5   additional employer contribution rate or rates in effect at the 
 26.6   time that the uniformed service was performed, applied to the 
 26.7   same annual salary rate or rates used to compute the equivalent 
 26.8   member contribution.  The governmental subdivision involved may 
 26.9   appropriate money for those payments.  A member may not receive 
 26.10  credit for a voluntary extension of military service at the 
 26.11  instance of the member beyond the initial period of enlistment, 
 26.12  induction, or call to active duty.  The amount of service credit 
 26.13  obtainable under this section may not exceed five years unless a 
 26.14  longer purchase period is required under United States Code, 
 26.15  title 38, section 4312.  The employing unit shall pay interest 
 26.16  on all equivalent member and employer contribution amounts 
 26.17  payable under this clause.  Interest must be computed at a rate 
 26.18  of 8.5 percent compounded annually from the end of each fiscal 
 26.19  year of the leave or the break in service to the end of the 
 26.20  month in which the payment is received.  Upon payment, the 
 26.21  employee must be granted allowable service credit for the 
 26.22  purchased period.  
 26.23     (b) For calculating benefits under sections 353.30, 353.31, 
 26.24  353.32, and 353.33 for state officers and employees displaced by 
 26.25  the Community Corrections Act, chapter 401, and transferred into 
 26.26  county service under section 401.04, "allowable service"  means 
 26.27  the combined years of allowable service as defined in paragraph 
 26.28  (a), clauses (1) to (6), and section 352.01, subdivision 11.  
 26.29     (c) For a public employee who has prior service covered by 
 26.30  a local police or firefighters relief association that has 
 26.31  consolidated with the Public Employees Retirement Association or 
 26.32  to which section 353.665 applies, and who has elected the type 
 26.33  of benefit coverage provided by the public employees police and 
 26.34  fire fund either under section 353A.08 following the 
 26.35  consolidation or under section 353.665, subdivision 4, 
 26.36  "applicable service" is a period of service credited by the 
 27.1   local police or firefighters relief association as of the 
 27.2   effective date of the consolidation based on law and on bylaw 
 27.3   provisions governing the relief association on the date of the 
 27.4   initiation of the consolidation procedure. 
 27.5      (d) No member may receive more than 12 months of allowable 
 27.6   service credit in a year either for vesting purposes or for 
 27.7   benefit calculation purposes. 
 27.8      (e) "Allowable service" also means a period purchased under 
 27.9   section 356.555. 
 27.10     Sec. 4.  Minnesota Statutes 2002, section 354.091, is 
 27.11  amended to read: 
 27.12     354.091 [SERVICE CREDIT.] 
 27.13     (a) In computing service credit, no teacher shall receive 
 27.14  credit for more than one year of teaching service for any fiscal 
 27.15  year.  Commencing July 1, 1961: 
 27.16     (1) if a teacher teaches less than five hours in a day, 
 27.17  service credit must be given for the fractional part of the day 
 27.18  as the term of service performed bears to five hours; 
 27.19     (2) if a teacher teaches five or more hours in a day, 
 27.20  service credit must be given for only one day; 
 27.21     (3) if a teacher teaches at least 170 full days in any 
 27.22  fiscal year, service credit must be given for a full year of 
 27.23  teaching service; and 
 27.24     (4) if a teacher teaches for only a fractional part of the 
 27.25  year, service credit must be given for such fractional part of 
 27.26  the year as the period of service performed bears to 170 days. 
 27.27     (b) A teacher shall receive a full year of service credit 
 27.28  based on the number of days in the employer's full school year 
 27.29  if it is less than 170 days.  Teaching service performed before 
 27.30  July 1, 1961, must be computed under the law in effect at the 
 27.31  time it was performed. 
 27.32     (c) A teacher does must not lose or gain retirement service 
 27.33  credit as a result of the employer converting to a flexible or 
 27.34  alternate work schedule.  If the employer converts to a flexible 
 27.35  or alternate work schedule, the forms for reporting and the 
 27.36  procedures for determining service credit must be determined by 
 28.1   the executive director with the approval of the board of 
 28.2   trustees.  
 28.3      (d) For all services rendered on or after July 1, 2003, 
 28.4   service credit for all members employed by the Minnesota State 
 28.5   Colleges and Universities system must be determined: 
 28.6      (1) for full-time employees, by the definition of full time 
 28.7   employment contained in the collective bargaining agreement for 
 28.8   those units listed in section 179A.10, subdivision 2, or 
 28.9   contained in the applicable personnel or salary plan for those 
 28.10  positions designated in section 179A.10, subdivision 1; 
 28.11     (2) for part-time employees, by the appropriate proration 
 28.12  of full-time equivalency based on the provisions contained in 
 28.13  the collective bargaining agreement for those units listed in 
 28.14  section 179A.10, subdivision 2, or contained in the applicable 
 28.15  personnel or salary plan for those positions designated in 
 28.16  section 179A.10, subdivision 1, and the applicable procedures of 
 28.17  the Minnesota State Colleges and Universities system; and 
 28.18     (3) in no case may a member receive more than one year of 
 28.19  service credit for any fiscal year. 
 28.20     Sec. 5.  Minnesota Statutes 2002, section 354.096, 
 28.21  subdivision 1, is amended to read: 
 28.22     Subdivision 1.  [CERTIFICATION.] Upon granting a family 
 28.23  leave to a member, an employing unit must certify the leave to 
 28.24  the association on a form specified by the executive director 
 28.25  before the end of the fiscal year during which the leave was 
 28.26  granted. 
 28.27     Sec. 6.  Minnesota Statutes 2002, section 354.53, is 
 28.28  amended to read: 
 28.29     354.53 [CREDIT FOR MILITARY BREAK IN SERVICE LEAVE OF 
 28.30  ABSENCE TO PROVIDE UNIFORMED SERVICE.] 
 28.31     Subdivision 1.  [ELIGIBILITY; EMPLOYEE AND EMPLOYER 
 28.32  CONTRIBUTIONS.] (a) Any employee given a leave of absence to 
 28.33  enter military service teacher who is absent from employment by 
 28.34  reason of service in the uniformed services, as defined in 
 28.35  United States Code, title 38, section 4303(13), and who returns 
 28.36  to the employer providing teaching service upon discharge from 
 29.1   military service as provided in the uniformed service within the 
 29.2   time frames required in United States Code, title 38, section 
 29.3   192.262 4312(e), may obtain service credit for the period of 
 29.4   military the uniformed service but shall not receive credit for 
 29.5   any voluntary extension of military service at the instance of 
 29.6   the member beyond the initial period of enlistment, induction or 
 29.7   call to active duty as further specified in this section, 
 29.8   provided that the teacher did not separate from uniformed 
 29.9   service with a dishonorable or bad conduct discharge or under 
 29.10  other than honorable conditions. 
 29.11     (b) The member shall may obtain credit by paying into the 
 29.12  fund an equivalent employee contribution based upon the 
 29.13  contribution rate or rates in effect at the time that 
 29.14  the military uniformed service was performed multiplied by the 
 29.15  full and fractional years being purchased and applied to the 
 29.16  annual salary rate of the member for the year beginning with the 
 29.17  date of return from military service and the number of years of 
 29.18  military service together with interest thereon at an annual 
 29.19  rate of 8.5 percent compounded annually from the time the 
 29.20  military service was rendered to the first date of payment.  The 
 29.21  annual salary rate is the average annual salary during the 
 29.22  purchase period that the teacher would have received if the 
 29.23  teacher had continued to provide teaching service to the 
 29.24  employer rather than provide uniformed service or if the 
 29.25  determination of that rate is not reasonably certain, the annual 
 29.26  salary rate is the teacher's average salary rate during the 
 29.27  12-month period immediately preceding the period, or, if the 
 29.28  preceding period is less than 12 months, the annualized rate 
 29.29  derived from the teacher's average salary rate during the period 
 29.30  of teacher employment rendered immediately preceding the period 
 29.31  of the uniformed service.  
 29.32     (c) The equivalent employer contribution and, if 
 29.33  applicable, the equivalent additional contribution provided in 
 29.34  section 354.42 must be paid by the employing unit at as provided 
 29.35  in section 354.52, subdivision 4, using the employer and 
 29.36  employer additional contribution rate or rates in effect at the 
 30.1   time that the military uniformed service was performed, applied 
 30.2   to the same annual salary rate of or rates used to compute the 
 30.3   member for the year beginning with the date of return from 
 30.4   military service, in the manner provided in section 354.52, 
 30.5   subdivision 4 equivalent employee contribution. 
 30.6      Subd. 2.  [CALCULATION OF CREDIT.] (a) For purposes of 
 30.7   computing a money purchase annuity under section 354.44, 
 30.8   subdivision 2, all payments into the fund pursuant to under this 
 30.9   section shall must be considered accumulations after July 1, 
 30.10  1957 for the purpose of computing any annuity in accordance with 
 30.11  section 354.44, subdivision 2.  
 30.12     (b) For purposes of computing a formula annuity under 
 30.13  section 354.44, subdivision 6, if the employee equivalent 
 30.14  contributions and interest thereon provided in this section are 
 30.15  not paid in full, the member's formula service credit shall must 
 30.16  be calculated prorated by multiplying the full and fractional 
 30.17  number of years of military uniformed service eligible for 
 30.18  purchase by the ratio obtained by dividing the total amount paid 
 30.19  and employee contribution received by the maximum amount payable 
 30.20  provided herein total employee contribution otherwise required 
 30.21  under this section. 
 30.22     Subd. 3.  [PAYMENTS ELIGIBLE PAYMENT PERIOD.] Payments 
 30.23  pursuant to this (a) To receive service credit under this 
 30.24  section, the contributions specified in this section shall must 
 30.25  be made within transmitted to the teachers retirement 
 30.26  association during the period which begins with the date on 
 30.27  which the individual returns to teaching service and which has a 
 30.28  duration of three times the length of the uniformed service 
 30.29  period, but not to exceed five years from the date of discharge. 
 30.30     (b) Notwithstanding paragraph (a), if the payment period 
 30.31  determined under paragraph (a) is less than one year, the 
 30.32  contributions required under this section to receive service 
 30.33  credit may be made within one year from the discharge date. 
 30.34     Subd. 4.  [LIMITS ON SERVICE CREDIT.] The amount of service 
 30.35  credit obtainable under this section may not exceed five years, 
 30.36  unless a longer purchase period is required under United States 
 31.1   Code, title 38, section 4312. 
 31.2      Subd. 5.  [INTEREST REQUIREMENTS.] The employer shall pay 
 31.3   interest on all equivalent employee and employer contribution 
 31.4   amounts payable under this section.  Interest must be computed 
 31.5   at a rate of 8.5 percent compounded annually from the end of 
 31.6   each fiscal year of the leave or the break in service to the end 
 31.7   of the month in which the payment is received. 
 31.8      Sec. 7.  Minnesota Statutes 2002, section 354A.093, is 
 31.9   amended to read: 
 31.10     354A.093 [MILITARY BREAK IN SERVICE CREDIT TO PROVIDE 
 31.11  UNIFORMED SERVICE.] 
 31.12     Subdivision 1.  [ELIGIBILITY.] Any teacher in the 
 31.13  coordinated program of either the Minneapolis Teachers 
 31.14  Retirement Fund Association or the St. Paul Teachers Retirement 
 31.15  Fund Association or any teacher in the new law coordinated 
 31.16  program of the Duluth Teachers Retirement Fund Association who 
 31.17  is granted a leave absent from employment by reason of absence 
 31.18  to enter military service in the uniformed services as defined 
 31.19  in United States Code, title 38, section 4303(13) and who 
 31.20  returns to the employer providing active teaching service upon 
 31.21  discharge from military uniformed service as provided in within 
 31.22  the time frames required under United States Code, title 38, 
 31.23  section 192.262 4312(e), shall be entitled to may receive 
 31.24  allowable service credit in the applicable association for all 
 31.25  or a portion of the period of military uniformed service but, 
 31.26  provided that the teacher did not for any voluntary extension of 
 31.27  military separate from uniformed service beyond the initial 
 31.28  period of enlistment, induction with a dishonorable or call to 
 31.29  active duty which occurred at the instance of the teacher bad 
 31.30  conduct discharge or under other than honorable conditions. 
 31.31     Subd. 2.  [CONTRIBUTIONS.] If the teacher granted the 
 31.32  military service leave of absence makes the equivalent employee 
 31.33  contribution for a period of military service leave of absence 
 31.34  pursuant to service provided to the uniformed services under 
 31.35  this section, the employing unit shall make an equivalent 
 31.36  employer contribution on behalf of the teacher to the applicable 
 32.1   association for the period of the military service leave of 
 32.2   absence being purchased in the manner described in section 
 32.3   354A.12, subdivision 2a.  The equivalent employee and employer 
 32.4   contributions shall must be in an amount equal to the employee 
 32.5   and employer contribution rates in effect for other active 
 32.6   members of the association covered by the same program applied 
 32.7   to a salary figure equal to the teacher's average annual salary 
 32.8   rate at the date of return from military service that the 
 32.9   teacher would have received if the leave or break in service had 
 32.10  not occurred, or if the determination of that average salary 
 32.11  rate is not reasonably certain, on the basis of the teacher's 
 32.12  average salary rate during the 12-month period immediately 
 32.13  preceding the period, or, if the preceding period is less than 
 32.14  12 months, the annualized rate derived from the teacher's 
 32.15  average salary rate during the period of teacher employment 
 32.16  rendered immediately preceding the period of uniformed 
 32.17  service, with the result multiplied by the number of full and 
 32.18  fractional years constituting the period of service provided to 
 32.19  the military uniformed service leave of absence which the 
 32.20  teacher seeks is authorized to purchase under this 
 32.21  section.  Payment shall include interest on the amount payable 
 32.22  pursuant to this section at the rate of six percent compounded 
 32.23  annually from the year the military service was rendered to the 
 32.24  date of payment. 
 32.25     Subd. 3.  [PRORATING.] If the payments made by a 
 32.26  teacher pursuant to under this section are less than an the full 
 32.27  amount equal to the applicable contribution rate applied to a 
 32.28  salary figure equal to the teacher's annual salary rate at the 
 32.29  date of return from military service, multiplied by the number 
 32.30  of years constituting the period of the military service leave 
 32.31  of absence determined under subdivision 2, the service credit 
 32.32  shall must be prorated.  The prorated service credit shall must 
 32.33  be determined by the ratio between the amount of the 
 32.34  actual equivalent employee payment which was made and the full 
 32.35  contribution amount payable pursuant to equivalent employee 
 32.36  payment required under this section.  In order to be entitled to 
 33.1   receive service credit under this section, payment shall be made 
 33.2   within five years from the date of discharge from military 
 33.3   service. 
 33.4      Subd. 4.  [ELIGIBLE PAYMENT PERIOD.] (a) To receive service 
 33.5   credit under this section, the contributions specified in this 
 33.6   section must be transmitted to the applicable first class city 
 33.7   teachers retirement fund association during the period which 
 33.8   begins with the date the individual returns to teaching service 
 33.9   and which has a duration of three times the length of the 
 33.10  uniformed service period, but not to exceed five years. 
 33.11     (b) Notwithstanding paragraph (a), if the payment period 
 33.12  determined under paragraph (a) is less than one year, the 
 33.13  contributions required under this section to receive service 
 33.14  credit may be made within one year from the discharge date. 
 33.15     Subd. 5.  [LIMITS ON SERVICE CREDIT.] The amount of service 
 33.16  credit obtainable under this section may not exceed five years, 
 33.17  unless a longer purchase period is required under United States 
 33.18  Code, title 38, section 4312. 
 33.19     Subd. 6.  [INTEREST REQUIREMENTS.] The employer shall pay 
 33.20  interest on all equivalent employee and employer contribution 
 33.21  amounts payable under this section.  Interest must be computed 
 33.22  at a rate of 8.5 percent compounded annually from the end of 
 33.23  each fiscal year of the leave or break in service to the end of 
 33.24  the month in which payment is received. 
 33.25     Sec. 8.  Minnesota Statutes 2002, section 490.121, is 
 33.26  amended by adding a subdivision to read: 
 33.27     Subd. 4b.  [CREDIT FOR BREAK IN SERVICE TO PROVIDE 
 33.28  UNIFORMED SERVICE.] (a) A judge who is absent from employment by 
 33.29  reason of service in the uniformed services, as defined in 
 33.30  United States Code, title 38, section 4303(13), and who returns 
 33.31  to state employment as a judge upon discharge from service in 
 33.32  the uniformed service within the time frame required in United 
 33.33  States Code, title 38, section 4312(e) may obtain service credit 
 33.34  for the period of the uniformed service, provided that the judge 
 33.35  did not separate from uniformed service with a dishonorable or 
 33.36  bad conduct discharge or under other than honorable conditions.  
 34.1      (b) The judge may obtain credit by paying into the fund 
 34.2   equivalent member contribution based on the contribution rate 
 34.3   rates in effect at the time that the uniformed service was 
 34.4   performed multiplied by the full and fractional years being 
 34.5   purchased and applied to the annual salary rate.  The annual 
 34.6   salary rate is the average annual salary during the purchase 
 34.7   period that the judge would have received if the judge had 
 34.8   continued to provide employment services to the state rather 
 34.9   than to provide uniformed service, or if the determination of 
 34.10  that rate is not reasonably certain, the annual salary rate is 
 34.11  the judge's average salary rate during the 12-month period of 
 34.12  judicial employment rendered immediately preceding the purchase 
 34.13  period.  
 34.14     (c) The equivalent employer contribution and, if 
 34.15  applicable, the equivalent employer additional contribution, 
 34.16  must be paid by the employing unit, using the employer and 
 34.17  employer additional contribution rate or rates in effect at the 
 34.18  time that the uniformed service was performed, applied to the 
 34.19  same annual salary rate or rates used to compute the equivalent 
 34.20  member contribution.  
 34.21     (d) If the member equivalent contributions provided for in 
 34.22  this subdivision are not paid in full, the judge's allowable 
 34.23  service credit must be prorated by multiplying the full and 
 34.24  fractional number of years of uniformed service eligible for 
 34.25  purchase by the ratio obtained by dividing the total member 
 34.26  contributions received by the total member contributions 
 34.27  otherwise required under this subdivision.  
 34.28     (e) To receive allowable service credit under this 
 34.29  subdivision, the contributions specified in this section must be 
 34.30  transmitted to the fund during the period which begins with the 
 34.31  date on which the individual returns to judicial employment and 
 34.32  which has a duration of three times the length of the uniformed 
 34.33  service period, but not to exceed five years.  If the determined 
 34.34  payment period is calculated to be less than one year, the 
 34.35  contributions required under this subdivision to receive service 
 34.36  credit may be within one year from the discharge date.  
 35.1      (f) The amount of allowable service credit obtainable under 
 35.2   this section may not exceed five years, unless a longer purchase 
 35.3   period is required under United States Code, title 38, section 
 35.4   4312.  
 35.5      (g) The state court administrator shall pay interest on all 
 35.6   equivalent member and employer contribution amounts payable 
 35.7   under this subdivision.  Interest must be computed at a rate of 
 35.8   8.5 percent compounded annually from the end of each fiscal year 
 35.9   of the leave or break in service to the end of the month in 
 35.10  which payment is received. 
 35.11     Sec. 9.  [EFFECTIVE DATE.] 
 35.12     Sections 1 to 8 are effective on July 1, 2004. 
 35.13                             ARTICLE 4
 35.14               QUALIFIED PART-TIME TEACHER PROVISIONS
 35.15     Section 1.  Minnesota Statutes 2002, section 354.66, 
 35.16  subdivision 2, is amended to read: 
 35.17     Subd. 2.  [QUALIFIED PART-TIME TEACHER PROGRAM 
 35.18  PARTICIPATION REQUIREMENTS.] (a) A teacher in a Minnesota public 
 35.19  elementary school, a Minnesota secondary school, or the 
 35.20  Minnesota State Colleges and Universities system who has three 
 35.21  years or more of allowable service in the association or three 
 35.22  years or more of full-time teaching service in Minnesota public 
 35.23  elementary schools, Minnesota secondary schools, or the 
 35.24  Minnesota State Colleges and Universities system, by agreement 
 35.25  with the board of the employing district or with the authorized 
 35.26  representative of the board, may be assigned to teaching service 
 35.27  in a part-time teaching position under subdivision 3.  The 
 35.28  agreement must be executed before October 1 of the school year 
 35.29  for which the teacher requests to make retirement contributions 
 35.30  under subdivision 4.  A copy of the executed agreement must be 
 35.31  filed with the executive director of the association.  If the 
 35.32  copy of the executed agreement is filed with the association 
 35.33  after October 1 of the school year for which the teacher 
 35.34  requests to make retirement contributions under subdivision 4, 
 35.35  the employing unit shall pay the fine specified in section 
 35.36  354.52, subdivision 6, for each calendar day that elapsed since 
 36.1   the October 1 due date.  The association may not accept an 
 36.2   executed agreement that is received by the association more than 
 36.3   15 months late.  The association may not waive the fine required 
 36.4   by this section. 
 36.5      (b) Notwithstanding paragraph (a), if the teacher is also a 
 36.6   legislator: 
 36.7      (1) the agreement in paragraph (a) must be executed before 
 36.8   March 1 of the school year for which the teacher requests to 
 36.9   make retirement contributions under subdivision 4; and 
 36.10     (2) the fines specified in paragraph (a) apply if the 
 36.11  employing unit does not file the executed agreement with the 
 36.12  executive director of the association by March 1. 
 36.13     Sec. 2.  Minnesota Statutes 2002, section 354A.094, 
 36.14  subdivision 3, is amended to read: 
 36.15     Subd. 3.  [QUALIFIED PART-TIME TEACHER PROGRAM 
 36.16  PARTICIPATION REQUIREMENTS.] (a) A teacher in the public schools 
 36.17  of a city of the first class who has three years or more 
 36.18  allowable service in the applicable retirement fund association 
 36.19  or three years or more of full-time teaching service in 
 36.20  Minnesota public elementary schools, Minnesota secondary 
 36.21  schools, and Minnesota State Colleges and Universities system 
 36.22  may, by agreement with the board of the employing district, be 
 36.23  assigned to teaching service within the district in a part-time 
 36.24  teaching position.  The agreement must be executed before 
 36.25  October 1 of the year for which the teacher requests to make 
 36.26  retirement contributions under subdivision 4.  A copy of the 
 36.27  executed agreement must be filed with the executive director of 
 36.28  the retirement fund association.  If the copy of the executed 
 36.29  agreement is filed with the association after October 1 of the 
 36.30  year for which the teacher requests to make retirement 
 36.31  contributions under subdivision 4, the employing school district 
 36.32  shall pay a fine of $5 for each calendar day that elapsed since 
 36.33  the October 1 due date.  The association may not accept an 
 36.34  executed agreement that is received by the association more than 
 36.35  15 months late.  The association may not waive the fine required 
 36.36  by this section. 
 37.1      (b) Notwithstanding paragraph (a), if the teacher is also a 
 37.2   legislator: 
 37.3      (1) the agreement in paragraph (a) must be executed before 
 37.4   March 1 of the school year for which the teacher requests to 
 37.5   make retirement contributions under subdivision 4; and 
 37.6      (2) the fines specified in paragraph (a) apply if the 
 37.7   employing unit does not file the executed agreement with the 
 37.8   executive director of the applicable Teachers Retirement Fund 
 37.9   Association by March 1. 
 37.10     Sec. 3.  [EFFECTIVE DATE.] 
 37.11     Sections 1 and 2 are effective on July 1, 2004. 
 37.12                             ARTICLE 5
 37.13            RETIREMENT PLAN CONTRIBUTIONS AND TRANSFERS
 37.14     Section 1.  Minnesota Statutes 2002, section 354.42, 
 37.15  subdivision 7, is amended to read: 
 37.16     Subd. 7.  [ERRONEOUS SALARY DEDUCTIONS OR DIRECT PAYMENTS.] 
 37.17  (a) Any deductions taken from the salary of an employee for the 
 37.18  retirement fund in error shall must be refunded to the employee 
 37.19  upon the discovery of the error and after the verification of 
 37.20  the error by the employing unit making the deduction, and. The 
 37.21  corresponding employer contribution and additional employer 
 37.22  contribution amounts attributable to the erroneous salary 
 37.23  deduction must be refunded to the employing unit. 
 37.24     (b) If salary deductions and employer contributions were 
 37.25  erroneously transmitted to the retirement fund and should have 
 37.26  been transmitted to another Minnesota public pension plan, the 
 37.27  retirement association executive director must transfer these 
 37.28  salary deductions and employer contributions to the appropriate 
 37.29  public pension fund without interest.  For purposes of this 
 37.30  paragraph, a Minnesota public pension plan means a plan 
 37.31  specified in section 356.30, subdivision 3, or the plan governed 
 37.32  by chapter 354B. 
 37.33     (c) A potential transfer under paragraph (b) that would 
 37.34  cause the plan to fail to be a qualified plan under section 
 37.35  401(a) of the Internal Revenue Code, as amended, must not be 
 37.36  made by the executive director.  Within 30 days after being 
 38.1   notified by the Teachers Retirement Association of an unmade 
 38.2   potential transfer under this paragraph, the employer of the 
 38.3   affected person must transmit an amount representing the 
 38.4   applicable salary deductions and employer contributions, without 
 38.5   interest, to the retirement fund of the appropriate Minnesota 
 38.6   public pension plan fund.  The retirement association must 
 38.7   provide a credit for the amount of the erroneous salary 
 38.8   deductions and employer contributions against future 
 38.9   contributions from the employer. 
 38.10     (d) If a salary warrant or check from which a deduction for 
 38.11  the retirement fund was taken has been canceled or the amount of 
 38.12  the warrant or if a check has been returned to the funds of the 
 38.13  employing unit making the payment, a refund of the amount 
 38.14  deducted, or any portion of it that is required to adjust the 
 38.15  salary deductions, shall must be made to the employing unit. 
 38.16     (d) (e) Any erroneous direct payments of member-paid 
 38.17  contributions or erroneous salary deductions that were not 
 38.18  refunded in during the regular payroll cycle processing of an 
 38.19  employing unit's annual summary report shall must be refunded to 
 38.20  the member with , plus interest computed using the rate and 
 38.21  method specified in section 354.49, subdivision 2. 
 38.22     (f) Any refund under this subdivision that would cause the 
 38.23  plan to fail to be a qualified plan under section 401(a) of the 
 38.24  Internal Revenue Code, as amended, may not be refunded and 
 38.25  instead must be credited against future contributions payable by 
 38.26  the employer.  The employer is responsible for refunding to the 
 38.27  applicable employee any amount that was erroneously deducted 
 38.28  from the salary of the employee, with interest as specified in 
 38.29  paragraph (e). 
 38.30     Sec. 2.  Minnesota Statutes 2002, section 354.51, 
 38.31  subdivision 5, is amended to read: 
 38.32     Subd. 5.  [PAYMENT OF SHORTAGES.] (a) Except as provided in 
 38.33  paragraph (b), in the event that full required member 
 38.34  contributions are not deducted from the salary of a teacher, 
 38.35  payment shall must be made as follows:  
 38.36     (a) (1) Payment of shortages in member deductions on salary 
 39.1   earned after June 30, 1957, and prior to before July 1, 1981, 
 39.2   may be made any time prior to before retirement.  Payment shall 
 39.3   must include interest at an annual rate of 8.5 percent 
 39.4   compounded annually from the end of the fiscal year in which the 
 39.5   shortage occurred to the end of the month in which payment is 
 39.6   made and the interest shall must be credited to the fund.  If 
 39.7   payment of a shortage in deductions is not made, the formula 
 39.8   service credit of the member shall must be prorated pursuant to 
 39.9   under section 354.05, subdivision 25, clause (3). 
 39.10     (b) (2) Payment of shortages in member deductions on salary 
 39.11  earned after June 30, 1981, shall be are the sole obligation of 
 39.12  the employing unit and shall be are payable by the employing 
 39.13  unit upon notification by the executive director of the shortage 
 39.14  with interest at an annual rate of 8.5 percent compounded 
 39.15  annually from the end of the fiscal year in which the shortage 
 39.16  occurred to the end of the month in which payment is made and 
 39.17  the interest shall must be credited to the fund.  Effective July 
 39.18  1, 1986, the employing unit shall also pay the employer 
 39.19  contributions as specified in section 354.42, subdivisions 3 and 
 39.20  5 for such the shortages.  If the shortage payment is not paid 
 39.21  by the employing unit within 60 days of notification, the 
 39.22  executive director shall certify the amount of the shortage 
 39.23  payment to the applicable county auditor, who shall spread a 
 39.24  levy in the amount of the shortage payment over the taxable 
 39.25  property of the taxing district of the employing unit if the 
 39.26  employing unit is supported by property taxes, or to the 
 39.27  commissioner of finance, who shall deduct the amount from any 
 39.28  state aid or appropriation amount applicable to the employing 
 39.29  unit if the employing unit is not supported by property taxes.  
 39.30     (c) (3) Payment may not be made for shortages in member 
 39.31  deductions on salary earned prior to before July 1, 1957, for 
 39.32  shortages in member deductions on salary paid or payable under 
 39.33  paragraph (b), or for shortages in member deductions for persons 
 39.34  employed by the Minnesota State Colleges and Universities system 
 39.35  in a faculty position or in an eligible unclassified 
 39.36  administrative position and whose employment was less than 25 
 40.1   percent of a full academic year, exclusive of the summer 
 40.2   session, for the applicable institution that exceeds the most 
 40.3   recent 36 months. 
 40.4      (b) For a person who is employed by the Minnesota State 
 40.5   Colleges and Universities system in a faculty position or in an 
 40.6   eligible unclassified administrative position and whose 
 40.7   employment was less than 25 percent of a full academic year, 
 40.8   exclusive of the summer session, for the applicable institution, 
 40.9   upon the person's election under section 354B.21 of retirement 
 40.10  coverage under this chapter, the shortage in member deductions 
 40.11  on the salary for employment by the Minnesota State Colleges and 
 40.12  Universities system institution of less than 25 percent of a 
 40.13  full academic year, exclusive of the summer session, for the 
 40.14  applicable institution for the most recent 36 months and the 
 40.15  associated employer contributions must be paid by the Minnesota 
 40.16  State Colleges and Universities system institution, plus annual 
 40.17  compound interest at the rate of 8.5 percent from the end of the 
 40.18  fiscal year in which the shortage occurred to the end of the 
 40.19  month in which the teachers retirement association coverage 
 40.20  election is made.  If the shortage payment is not made by the 
 40.21  institution within 60 days of notification, the executive 
 40.22  director shall certify the amount of the shortage payment to the 
 40.23  commissioner of finance, who shall deduct the amount from any 
 40.24  state appropriation to the system.  An individual electing 
 40.25  coverage under this paragraph shall repay the amount of the 
 40.26  shortage in member deductions, plus interest, through deduction 
 40.27  from salary or compensation payments within the first year of 
 40.28  employment after the election under section 354B.21, subject to 
 40.29  the limitations in section 16D.16.  The Minnesota State Colleges 
 40.30  and Universities system may use any means available to recover 
 40.31  amounts which were not recovered through deductions from salary 
 40.32  or compensation payments.  No payment of the shortage in member 
 40.33  deductions under this paragraph may be made for a period longer 
 40.34  than the most recent 36 months. 
 40.35     Sec. 3.  Minnesota Statutes 2002, section 354B.23, 
 40.36  subdivision 1, is amended to read: 
 41.1      Subdivision 1.  [MEMBER CONTRIBUTION RATE.] (a) Except as 
 41.2   provided in paragraph (b), The member contribution rate for 
 41.3   participants in the individual retirement account plan is 4.5 
 41.4   percent of salary. 
 41.5      (b) For participants in the individual retirement account 
 41.6   plan who were otherwise eligible to elect retirement coverage in 
 41.7   the state unclassified employees retirement program, the member 
 41.8   contribution rate is the rate specified in section 352D.04, 
 41.9   subdivision 2, paragraph (a). 
 41.10     Sec. 4.  Minnesota Statutes 2002, section 354B.32, is 
 41.11  amended to read: 
 41.12     354B.32 [TRANSFER OF FUNDS TO IRAP.] 
 41.13     A participant in the individual retirement account plan 
 41.14  established in this chapter who has less than ten years of 
 41.15  allowable service under the Teachers Retirement Association or 
 41.16  the a teachers retirement fund association, whichever applies, 
 41.17  may elect to transfer an amount equal to the participant's 
 41.18  accumulated member contributions to the Teachers Retirement 
 41.19  Association or the applicable teachers retirement fund 
 41.20  association, plus compound interest at the rate of six percent 
 41.21  per annum, to the individual retirement account plan.  The 
 41.22  transfers are irrevocable fund to fund fund-to-fund transfers, 
 41.23  and, in no event, may the participant receive direct payment of 
 41.24  the money transferred prior to retirement before the termination 
 41.25  of employment.  If a participant elects the contribution 
 41.26  transfer, all of the participant's allowable and formula service 
 41.27  credit in the Teachers Retirement Association or the teachers 
 41.28  retirement fund association associated with the transferred 
 41.29  amount is forfeited. 
 41.30     The executive director of the Teachers Retirement 
 41.31  Association and the chief administrative officers of the 
 41.32  teachers retirement fund associations, in cooperation with the 
 41.33  chancellor of the Minnesota State Colleges and Universities 
 41.34  system, shall notify participants who are eligible to transfer 
 41.35  of their right to transfer and the amount that they are eligible 
 41.36  to transfer, and shall, upon request, provide forms to implement 
 42.1   the transfer.  The chancellor of the Minnesota State Colleges 
 42.2   and Universities system shall assist the Teachers Retirement 
 42.3   Association and the teachers retirement fund associations in 
 42.4   developing transfer forms and in implementing the transfers.  
 42.5      Authority to elect a transfer under this section expires on 
 42.6   July 1, 2004. 
 42.7      Sec. 5.  [EFFECTIVE DATE; RETROACTIVE APPLICATION.] 
 42.8      (a) Section 2 is effective on July 1, 2004. 
 42.9      (b) Section 2 applies to shortages in member deductions 
 42.10  that occurred before the effective date of the section. 
 42.11     (c) Sections 1, 3, and 4 are effective on July 1, 2004. 
 42.12                             ARTICLE 6
 42.13                REPORTING AND INFORMATION PROVISION
 42.14     Section 1.  Minnesota Statutes 2002, section 354.07, 
 42.15  subdivision 9, is amended to read: 
 42.16     Subd. 9.  [INFORMATION DISTRIBUTION.] All school districts, 
 42.17  the Minnesota State Colleges and Universities, community 
 42.18  colleges and other employers of members of the association are 
 42.19  obligated to distribute to their employees ballots for the 
 42.20  election of members to the board of trustees, pamphlets, 
 42.21  brochures, documents or any other material containing 
 42.22  association information which are prepared by the executive 
 42.23  director or the board and are delivered to the employers for 
 42.24  distribution. 
 42.25     Sec. 2.  Minnesota Statutes 2002, section 354.52, 
 42.26  subdivision 4a, is amended to read: 
 42.27     Subd. 4a.  [MEMBER DATA REPORTING REQUIREMENTS.] (a) An 
 42.28  employing unit must initially provide the member data specified 
 42.29  in paragraph (b) or any of that data not previously provided to 
 42.30  the association for payroll warrants dated after June 30, 1995, 
 42.31  in a format prescribed by the executive director.  An employing 
 42.32  unit must provide the member data specified in paragraph (b) in 
 42.33  a format prescribed by the executive director.  Data changes and 
 42.34  the dates of those changes under this subdivision must be 
 42.35  reported to the association in a format prescribed by the 
 42.36  executive director on an ongoing basis within 14 calendar days 
 43.1   after the date of the end of the payroll cycle in which they 
 43.2   occur.  These data changes must be reported with the payroll 
 43.3   cycle data under subdivision 4b. 
 43.4      (b) Data on the member includes:  
 43.5      (1) legal name, address, date of birth, association member 
 43.6   number, employer-assigned employee number, and Social Security 
 43.7   number; 
 43.8      (2) association status, including, but not limited to, 
 43.9   basic, coordinated, exempt annuitant, exempt technical college 
 43.10  teacher, and exempt independent contractor or consultant; 
 43.11     (3) employment status, including, but not limited to, full 
 43.12  time, part time, intermittent, substitute, or part-time 
 43.13  mobility; 
 43.14     (4) employment position, including, but not limited to, 
 43.15  teacher, superintendent, principal, administrator, or other; 
 43.16     (5) employment activity, including, but not limited to, 
 43.17  hire, termination, resumption of employment, disability, or 
 43.18  death; 
 43.19     (6) leaves of absence; 
 43.20     (7) county district number assigned by the association for 
 43.21  the employing unit; 
 43.22     (8) data center identification number, if applicable; and 
 43.23     (9) gender; 
 43.24     (10) position code; and 
 43.25     (11) other information as may be required by the executive 
 43.26  director. 
 43.27     Sec. 3.  Minnesota Statutes 2002, section 354.52, is 
 43.28  amended by adding a subdivision to read: 
 43.29     Subd. 4c.  [MNSCU SERVICE CREDIT REPORTING.] For all 
 43.30  part-time service rendered on or after July 1, 2004, the service 
 43.31  credit reporting requirement in subdivision 4b for all part-time 
 43.32  employees of the Minnesota State Colleges and Universities 
 43.33  system must be met by the Minnesota State Colleges and 
 43.34  Universities system reporting to the association on or before 
 43.35  July 31 of each year the final calculation of each part-time 
 43.36  member's service credit for the immediately preceding fiscal 
 44.1   year based on the employee's assignments for the fiscal year. 
 44.2      Sec. 4.  Minnesota Statutes 2002, section 354.52, 
 44.3   subdivision 6, is amended to read: 
 44.4      Subd. 6.  [NONCOMPLIANCE CONSEQUENCES.] An employing unit 
 44.5   that does not comply with the reporting requirements under this 
 44.6   section shall subdivision 2a, 4a, or 4b must pay a fine of $5 
 44.7   per calendar day until the association receives the required 
 44.8   data. 
 44.9      Sec. 5.  [EFFECTIVE DATE.] 
 44.10     Sections 1 to 4 are effective on July 1, 2004. 
 44.11                             ARTICLE 7
 44.12                   RETIREMENT ANNUITY PROVISIONS
 44.13     Section 1.  Minnesota Statutes 2002, section 352.86, 
 44.14  subdivision 1, is amended to read: 
 44.15     Subdivision 1.  [ELIGIBILITY; RETIREMENT ANNUITY.] A person 
 44.16  who is employed by the Department of Transportation in the civil 
 44.17  service employment classification of aircraft pilot or chief 
 44.18  pilot who is covered by the general employee retirement plan of 
 44.19  the system under section 352.01, subdivision 23, who elects this 
 44.20  special retirement coverage under subdivision 3, who is 
 44.21  prohibited from performing the duties of aircraft pilot or chief 
 44.22  pilot after reaching age 62 65 by a rule policy adopted by the 
 44.23  commissioner of transportation, and who terminates employment as 
 44.24  a state employee on reaching that on or after age 62 but prior 
 44.25  to normal retirement age is entitled, upon application, to a 
 44.26  retirement annuity computed in accordance with under section 
 44.27  352.115, subdivisions 2 and 3, without any reduction for early 
 44.28  retirement under section 352.116, subdivision 1. 
 44.29     Sec. 2.  Minnesota Statutes 2002, section 353.37, is 
 44.30  amended by adding a subdivision to read: 
 44.31     Subd. 1b.  [RETIREMENT AGE.] For purposes of this section, 
 44.32  "retirement age" means retirement age as defined in United 
 44.33  States Code, title 42, section 416(l). 
 44.34     Sec. 3.  Minnesota Statutes 2002, section 353.37, 
 44.35  subdivision 3, is amended to read: 
 44.36     Subd. 3.  [REDUCTION OF ANNUITY.] The association shall 
 45.1   reduce the amount of the annuity as follows: 
 45.2      (a) for of a person who has not reached normal the 
 45.3   retirement age, by one-half of the amount in excess of the 
 45.4   applicable reemployment income maximum under subdivision 1;. 
 45.5      (b) for a person who has reached normal retirement age, but 
 45.6   has not reached age 70, one-third of the amount in excess of the 
 45.7   applicable reemployment income maximum under subdivision 1; 
 45.8      (c) for a person who has reached age 70, or for salary 
 45.9   earned through service in an elected office, there is no 
 45.10  reduction upon reemployment, regardless of income. 
 45.11  There is no reduction upon reemployment, regardless of income, 
 45.12  for a person who has reached the retirement age. 
 45.13     Sec. 4.  Minnesota Statutes 2002, section 354.44, 
 45.14  subdivision 4, is amended to read: 
 45.15     Subd. 4.  [RETIREMENT ANNUITY ACCRUAL DATE.] (a) An annuity 
 45.16  payment begins to accrue, providing provided that the age and 
 45.17  service requirements under subdivision 1 are satisfied, after 
 45.18  the termination of teaching service, or after the application 
 45.19  for retirement has been filed with the board, whichever is 
 45.20  later, as follows: 
 45.21     (1) on the 16th day of the month of termination or filing 
 45.22  if the termination or filing occurs on or before the 15th day of 
 45.23  the month; 
 45.24     (2) on the first day of the month following the month of 
 45.25  termination or filing if the termination or filing occurs on or 
 45.26  after the 16th day of the month; 
 45.27     (3) on July 1 for all school principals and other 
 45.28  administrators who receive a full annual contract salary during 
 45.29  the fiscal year for performance of a full year's contract 
 45.30  duties; or 
 45.31     (4) a later date to be either the first or the 16th day of 
 45.32  a month occurring within the six-month period immediately 
 45.33  following the termination of teaching service as specified under 
 45.34  paragraph (b) by the member. 
 45.35     (b) If an application for retirement is filed with the 
 45.36  board during the six-month period that occurs immediately 
 46.1   following the termination of teaching service, the annuity may 
 46.2   begin to accrue as if the application for retirement had been 
 46.3   filed with the board on the date teaching service terminated or 
 46.4   a later date under paragraph (a), clause (4).  An annuity must 
 46.5   not begin to accrue more than one month before the date of final 
 46.6   salary receipt. 
 46.7      Sec. 5.  Minnesota Statutes 2002, section 354.44, 
 46.8   subdivision 5, is amended to read: 
 46.9      Subd. 5.  [RESUMPTION OF TEACHING SERVICE AFTER 
 46.10  RETIREMENT.] (a) Any person who retired under the provisions of 
 46.11  this chapter and has thereafter resumed teaching in any employer 
 46.12  unit to which this chapter applies is eligible to continue to 
 46.13  receive payments in accordance with the annuity except that 
 46.14  annuity payments must be reduced during the calendar year 
 46.15  immediately following any calendar year in which the person's 
 46.16  income from the teaching service is in an amount greater than 
 46.17  the annual maximum earnings allowable for that age for the 
 46.18  continued receipt of full benefit amounts monthly under the 
 46.19  federal old age, survivors and disability insurance program as 
 46.20  set by the secretary of health and human services under United 
 46.21  States Code, title 42, section 403.  The amount of the reduction 
 46.22  must be one-half of the amount in excess of the applicable 
 46.23  reemployment income maximum specified in this subdivision and 
 46.24  must be deducted from the annuity payable for the calendar year 
 46.25  immediately following the calendar year in which the excess 
 46.26  amount was earned.  If the person has not yet reached the 
 46.27  minimum age for the receipt of Social Security benefits, the 
 46.28  maximum earnings for the person must be equal to the annual 
 46.29  maximum earnings allowable for the minimum age for the receipt 
 46.30  of Social Security benefits.  
 46.31     (b) If the person is retired for only a fractional part of 
 46.32  the calendar year during the initial year of retirement, the 
 46.33  maximum reemployment income specified in this subdivision must 
 46.34  be prorated for that calendar year.  
 46.35     (c) After a person has reached the Social Security full 
 46.36  retirement age of 70, no reemployment income maximum is 
 47.1   applicable regardless of the amount of income. 
 47.2      (d) The amount of the retirement annuity reduction must be 
 47.3   handled or disposed of as provided in section 356.47. 
 47.4      (e) For the purpose of this subdivision, income from 
 47.5   teaching service includes, but is not limited to:  
 47.6      (1) all income for services performed as a consultant or an 
 47.7   independent contractor for an employer unit covered by the 
 47.8   provisions of this chapter; and 
 47.9      (2) the greater of either the income received or an amount 
 47.10  based on the rate paid with respect to an administrative 
 47.11  position, consultant, or independent contractor in an employer 
 47.12  unit with approximately the same number of pupils and at the 
 47.13  same level as the position occupied by the person who resumes 
 47.14  teaching service.  
 47.15     Sec. 6.  Minnesota Statutes 2002, section 490.121, 
 47.16  subdivision 10, is amended to read: 
 47.17     Subd. 10.  [EARLY RETIREMENT DATE.] "Early retirement date" 
 47.18  means the last day of any month after a judge attains the age of 
 47.19  62 60 until the normal retirement date. 
 47.20     Sec. 7.  [PERA-POLICE AND FIRE; TEMPORARY EXEMPTION FROM 
 47.21  REEMPLOYED ANNUITANT EARNINGS LIMITATIONS.] 
 47.22     Notwithstanding any provision of Minnesota Statutes, 
 47.23  section 353.37, to the contrary, a person who is receiving a 
 47.24  retirement annuity from the public employees police and fire 
 47.25  plan and who is employed as a sworn peace officer by the 
 47.26  Metropolitan Airports Commission is exempt from the limitation 
 47.27  on reemployed annuitant earnings for the period January 1, 2004, 
 47.28  until June 30, 2007. 
 47.29     Sec. 8.  [EFFECTIVE DATE.] 
 47.30     (a) Section 1 is effective on the day following final 
 47.31  enactment 
 47.32     (b)  Sections 2, 3, 4, 5, and 6 are effective on July 1, 
 47.33  2004. 
 47.34     (c) Section 7 is effective on the day following final 
 47.35  enactment and applies retroactively from January 1, 2004.  
 47.36                             ARTICLE 8
 48.1                    DISABILITY BENEFIT PROVISIONS
 48.2      Section 1.  Minnesota Statutes 2002, section 352.113, 
 48.3   subdivision 4, is amended to read: 
 48.4      Subd. 4.  [MEDICAL OR PSYCHOLOGICAL EXAMINATIONS; 
 48.5   AUTHORIZATION FOR PAYMENT OF BENEFIT.] (a) An applicant shall 
 48.6   provide medical, chiropractic, or psychological evidence to 
 48.7   support an application for total and permanent disability.  
 48.8      (b) The director shall have the employee examined by at 
 48.9   least one additional licensed chiropractor, physician, or 
 48.10  psychologist designated by the medical adviser.  The 
 48.11  chiropractors, physicians, or psychologists shall make written 
 48.12  reports to the director concerning the employee's disability 
 48.13  including medical expert opinions as to whether the employee is 
 48.14  permanently and totally disabled within the meaning of section 
 48.15  352.01, subdivision 17.  
 48.16     (c) The director shall also obtain written certification 
 48.17  from the employer stating whether the employment has ceased or 
 48.18  whether the employee is on sick leave of absence because of a 
 48.19  disability that will prevent further service to the employer and 
 48.20  as a consequence the employee is not entitled to compensation 
 48.21  from the employer.  
 48.22     (d) The medical adviser shall consider the reports of the 
 48.23  physicians, psychologists, and chiropractors and any other 
 48.24  evidence supplied by the employee or other interested parties.  
 48.25  If the medical adviser finds the employee totally and 
 48.26  permanently disabled, the adviser shall make appropriate 
 48.27  recommendation to the director in writing together with the date 
 48.28  from which the employee has been totally disabled.  The director 
 48.29  shall then determine if the disability occurred within 180 days 
 48.30  of filing the application, while still in the employment of the 
 48.31  state, and the propriety of authorizing payment of a disability 
 48.32  benefit as provided in this section.  
 48.33     (e) A terminated employee may apply for a disability 
 48.34  benefit within 180 days of termination as long as the disability 
 48.35  occurred while in the employment of the state.  The fact that an 
 48.36  employee is placed on leave of absence without compensation 
 49.1   because of disability does not bar that employee from receiving 
 49.2   a disability benefit.  
 49.3      (f) Unless the payment of a disability benefit has 
 49.4   terminated because the employee is no longer totally disabled, 
 49.5   or because the employee has reached normal retirement age as 
 49.6   provided in this section, the disability benefit shall must 
 49.7   cease with the last payment received by the disabled employee or 
 49.8   which had accrued during the lifetime of the employee unless 
 49.9   there is a spouse surviving;.  In that event, the surviving 
 49.10  spouse is entitled to the disability benefit for the calendar 
 49.11  month in which the disabled employee died. 
 49.12     Sec. 2.  Minnesota Statutes 2002, section 352.113, 
 49.13  subdivision 6, is amended to read: 
 49.14     Subd. 6.  [REGULAR MEDICAL OR PSYCHOLOGICAL EXAMINATIONS.] 
 49.15  At least once each year during the first five years following 
 49.16  the allowance of a disability benefit to any employee, and at 
 49.17  least once in every three-year period thereafter, the director 
 49.18  may require any disabled employee to undergo a medical, 
 49.19  chiropractic, or psychological examination.  The examination 
 49.20  must be made at the place of residence of the employee, or at 
 49.21  any place mutually agreed upon, by a physician or physicians an 
 49.22  expert or experts designated by the medical adviser and engaged 
 49.23  by the director.  If any examination indicates to the medical 
 49.24  adviser that the employee is no longer permanently and totally 
 49.25  disabled, or is engaged in or can engage in a gainful 
 49.26  occupation, payments of the disability benefit by the fund must 
 49.27  be discontinued.  The payments shall discontinue must be 
 49.28  discontinued as soon as the employee is reinstated to the 
 49.29  payroll following sick leave, but in no case shall may payment 
 49.30  be made for more than 60 days after the medical adviser finds 
 49.31  that the employee is no longer permanently and totally disabled. 
 49.32     Sec. 3.  Minnesota Statutes 2002, section 352.113, is 
 49.33  amended by adding a subdivision to read: 
 49.34     Subd. 7a.  [TEMPORARY REEMPLOYMENT BENEFIT REDUCTION 
 49.35  WAIVER.] A reduction in benefits under subdivision 7, or a 
 49.36  termination of benefits due to the disabled employee resuming a 
 50.1   gainful occupation from which earnings are equal to or more than 
 50.2   the employee's salary at the date of disability or the salary 
 50.3   currently paid for similar positions does not apply until six 
 50.4   months after the individual returns to a gainful occupation. 
 50.5      Sec. 4.  Minnesota Statutes 2002, section 352.113, 
 50.6   subdivision 8, is amended to read: 
 50.7      Subd. 8.  [REFUSAL OF EXAMINATION.] If a disabled employee 
 50.8   refuses to submit to a medical an expert examination as 
 50.9   required, payments by the fund must be discontinued and the 
 50.10  director shall revoke all rights of the employee in any 
 50.11  disability benefit. 
 50.12     Sec. 5.  Minnesota Statutes 2002, section 352.95, 
 50.13  subdivision 1, is amended to read: 
 50.14     Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 50.15  correctional employee who becomes disabled and who is expected 
 50.16  to be physically or mentally unfit to perform the duties of the 
 50.17  position for at least one year as a direct result of an injury, 
 50.18  sickness, or other disability that incurred in or arising arose 
 50.19  out of any act of duty that makes the employee physically or 
 50.20  mentally unable to perform the duties, is entitled to a 
 50.21  disability benefit.  The disability benefit may be based on 
 50.22  covered correctional service only.  The benefit amount must 
 50.23  equal is 50 percent of the average salary defined in section 
 50.24  352.93, plus an additional percent equal to that specified in 
 50.25  section 356.315, subdivision 5, for each year of covered 
 50.26  correctional service in excess of 20 years, ten months, prorated 
 50.27  for completed months. 
 50.28     Sec. 6.  Minnesota Statutes 2002, section 352.95, 
 50.29  subdivision 2, is amended to read: 
 50.30     Subd. 2.  [NON-JOB-RELATED DISABILITY.] Any A covered 
 50.31  correctional employee who, after rendering at least one year of 
 50.32  covered correctional service, becomes disabled and who is 
 50.33  expected to be physically or mentally unfit to perform the 
 50.34  duties of the position for at least one year because of sickness 
 50.35  or injury occurring that occurred while not engaged in covered 
 50.36  employment, is entitled to a disability benefit based on covered 
 51.1   correctional service only.  The disability benefit must be 
 51.2   computed as provided in section 352.93, subdivisions 1 and 2, 
 51.3   and must be computed as though the employee had at least 15 
 51.4   years of covered correctional service. 
 51.5      Sec. 7.  Minnesota Statutes 2002, section 352.95, 
 51.6   subdivision 4, is amended to read: 
 51.7      Subd. 4.  [MEDICAL OR PSYCHOLOGICAL EVIDENCE.] (a) An 
 51.8   applicant shall provide medical, chiropractic, or psychological 
 51.9   evidence to support an application for disability benefits.  The 
 51.10  director shall have the employee examined by at least one 
 51.11  additional licensed physician, chiropractor, or psychologist who 
 51.12  is designated by the medical adviser.  The physicians, 
 51.13  chiropractors, or psychologists with respect to a mental 
 51.14  impairment, shall make written reports to the director 
 51.15  concerning the question of the employee's disability, 
 51.16  including medical their expert opinions as to whether the 
 51.17  employee is disabled within the meaning of this section.  The 
 51.18  director shall also obtain written certification from the 
 51.19  employer stating whether or not the employee is on sick leave of 
 51.20  absence because of a disability that will prevent further 
 51.21  service to the employer, and as a consequence, the employee is 
 51.22  not entitled to compensation from the employer.  
 51.23     (b) If, on considering the physicians' reports by the 
 51.24  physicians, chiropractors, or psychologists and any other 
 51.25  evidence supplied by the employee or others, the medical adviser 
 51.26  finds the employee disabled within the meaning of this section, 
 51.27  the advisor shall make the appropriate recommendation to the 
 51.28  director, in writing, together with the date from which the 
 51.29  employee has been disabled.  The director shall then determine 
 51.30  the propriety of authorizing payment of a disability benefit as 
 51.31  provided in this section.  
 51.32     (c) Unless the payment of a disability benefit has 
 51.33  terminated because the employee is no longer disabled, or 
 51.34  because the employee has reached either age 65 or the five-year 
 51.35  anniversary of the effective date of the disability benefit, 
 51.36  whichever is later, the disability benefit shall must cease with 
 52.1   the last payment which was received by the disabled employee or 
 52.2   which had accrued during the employee's lifetime.  While 
 52.3   disability benefits are paid, the director has the right, at 
 52.4   reasonable times, to require the disabled employee to submit 
 52.5   proof of the continuance of the disability claimed.  If any 
 52.6   examination indicates to the medical adviser that the employee 
 52.7   is no longer disabled, the disability payment must be 
 52.8   discontinued upon the person's reinstatement to state service or 
 52.9   within 60 days of the finding, whichever is sooner.  
 52.10     Sec. 8.  Minnesota Statutes 2002, section 352B.10, 
 52.11  subdivision 1, is amended to read: 
 52.12     Subdivision 1.  [INJURIES,; PAYMENT AMOUNTS.] Any A member 
 52.13  who becomes disabled and who is expected to be physically or 
 52.14  mentally unfit to perform duties for at least one year as a 
 52.15  direct result of an injury, sickness, or other disability that 
 52.16  incurred in or arising arose out of any act of duty, shall is 
 52.17  entitled to receive disability benefits while disabled.  The 
 52.18  benefits must be paid in monthly installments.  The benefit is 
 52.19  an amount equal to the member's average monthly salary 
 52.20  multiplied by 60 percent, plus an additional percent equal to 
 52.21  that specified in section 356.315, subdivision 6, for each year 
 52.22  and pro rata for completed months of service in excess of 20 
 52.23  years, if any. 
 52.24     Sec. 9.  Minnesota Statutes 2002, section 352B.10, 
 52.25  subdivision 2, is amended to read: 
 52.26     Subd. 2.  [DISABLED WHILE NOT ON DUTY.] If a member 
 52.27  terminates employment after with at least one year of service 
 52.28  because of sickness or injury occurring while not on duty and 
 52.29  not engaged in state work entitling the member to membership, 
 52.30  and the member becomes disabled and is expected to be physically 
 52.31  or mentally unfit to perform the duties of the position for at 
 52.32  least one year because of sickness or injury occurring that 
 52.33  occurred while not engaged in covered employment, the member 
 52.34  individual is entitled to disability benefits.  The benefit must 
 52.35  be in the same amount and computed in the same way as if the 
 52.36  member individual were 55 years old at the date of disability 
 53.1   and the annuity were paid was payable under section 352B.08.  If 
 53.2   a disability under this clause subdivision occurs after one year 
 53.3   of service but before 15 years of service, the disability 
 53.4   benefit must be computed as though the member individual had 
 53.5   credit for 15 years of service. 
 53.6      Sec. 10.  Minnesota Statutes 2002, section 352B.10, 
 53.7   subdivision 3, is amended to read: 
 53.8      Subd. 3.  [ANNUAL AND SICK LEAVE; WORK AT LOWER PAY.] No 
 53.9   member shall is entitled to receive any a disability benefit 
 53.10  payment when the member has unused annual leave or sick leave, 
 53.11  or under any other circumstances, when, during the period of 
 53.12  disability, there has been no impairment of salary.  Should If 
 53.13  the member or former member resume disabilitant resumes gainful 
 53.14  work employment, the disability benefit must be continued in an 
 53.15  amount which, when added to current earnings, does not exceed 
 53.16  the salary rate received of by the person at the date of 
 53.17  disability as, which must be adjusted over time by the same 
 53.18  percentage increase in United States average wages used by the 
 53.19  Social Security Administration in calculating average indexed 
 53.20  monthly earnings for the old age, survivors, and disability 
 53.21  insurance programs for the same period. 
 53.22     Sec. 11.  Minnesota Statutes 2002, section 352B.10, 
 53.23  subdivision 4, is amended to read: 
 53.24     Subd. 4.  [PROOF OF DISABILITY.] (a) No disability benefit 
 53.25  payment shall benefits may be made except upon paid unless 
 53.26  adequate proof is furnished to the executive director of the 
 53.27  existence of the disability.  While disability benefits are 
 53.28  being paid 
 53.29     (b) Adequate proof of a disability must include a written 
 53.30  expert report by a licensed physician, by a licensed 
 53.31  chiropractor, or with respect to a mental impairment, by a 
 53.32  licensed psychologist. 
 53.33     (c) Following the commencement of benefit payments, 
 53.34  the executive director has the right, at reasonable times, to 
 53.35  require the disabled former member disabilitant to submit proof 
 53.36  of the continuance of the disability claimed.  
 54.1      Sec. 12.  Minnesota Statutes 2002, section 352B.10, 
 54.2   subdivision 5, is amended to read: 
 54.3      Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 54.4   disabilitant may, in lieu of survivorship coverage under section 
 54.5   352B.11, subdivision 2, choose the normal disability benefit or 
 54.6   an optional annuity as provided in section 352B.08, subdivision 
 54.7   3.  The choice of an optional annuity must be made in writing, 
 54.8   on a form prescribed by the executive director, and must be made 
 54.9   before the commencement of the payment of the disability 
 54.10  benefit, or within 90 days of attaining before reaching age 65 
 54.11  or before reaching the five-year anniversary of the effective 
 54.12  date of the disability benefit, whichever is later.  It The 
 54.13  optional annuity is effective on the date on which the 
 54.14  disability benefit begins to accrue, or the month following the 
 54.15  attainment of age 65 or following the five-year anniversary of 
 54.16  the effective date of the disability benefit, whichever is later.
 54.17     Sec. 13.  Minnesota Statutes 2002, section 352B.105, is 
 54.18  amended to read: 
 54.19     352B.105 [TERMINATION OF DISABILITY BENEFITS.] 
 54.20     Disability benefits payable under section 352B.10 shall 
 54.21  must terminate at on the transfer date, which is the end of the 
 54.22  month in which the beneficiary disabilitant becomes 65 years old 
 54.23  or the five-year anniversary of the effective date of the 
 54.24  disability benefit, whichever is later.  If the beneficiary 
 54.25  disabilitant is still disabled when on the beneficiary becomes 
 54.26  65 years old transfer date, the beneficiary shall disabilitant 
 54.27  must be deemed to be a retired member and, if the beneficiary 
 54.28  disabilitant had chosen an optional annuity under section 
 54.29  352B.10, subdivision 5, shall must receive an annuity in 
 54.30  accordance with under the terms of the optional annuity 
 54.31  previously chosen.  If the beneficiary disabilitant had not 
 54.32  chosen an optional annuity under section 352B.10, subdivision 5, 
 54.33  the beneficiary disabilitant may then choose to receive either a 
 54.34  normal retirement annuity computed under section 352B.08, 
 54.35  subdivision 2, or an optional annuity as provided in section 
 54.36  352B.08, subdivision 3.  An optional annuity must be chosen 
 55.1   within 90 days of attaining age 65 or reaching the five-year 
 55.2   anniversary of the effective date of the disability benefit, 
 55.3   whichever is later transfer date.  If an optional annuity is 
 55.4   chosen, the optional annuity shall begin to accrue accrues on 
 55.5   the first of the month next following attainment of age 65 or 
 55.6   the five-year anniversary of the effective transfer date of the 
 55.7   disability benefit, whichever is later. 
 55.8      Sec. 14.  Minnesota Statutes 2002, section 352D.065, 
 55.9   subdivision 2, is amended to read: 
 55.10     Subd. 2.  [DISABILITY BENEFIT AMOUNT.] A participant who 
 55.11  becomes totally and permanently disabled has the option, even if 
 55.12  on leave of absence without pay, to receive: 
 55.13     (1) the value of the participant's total shares; 
 55.14     (2) the value of one-half of a portion of the total shares 
 55.15  and an annuity based on the value of one-half remainder of the 
 55.16  total shares; or 
 55.17     (3) an annuity based on the value of the participant's 
 55.18  total shares. 
 55.19     Sec. 15.  Minnesota Statutes 2002, section 353.33, 
 55.20  subdivision 4, is amended to read: 
 55.21     Subd. 4.  [PROCEDURE TO DETERMINE ELIGIBILITY.] (a) The 
 55.22  applicant shall provide an expert report signed by a licensed 
 55.23  physician, psychologist, or chiropractor and the applicant must 
 55.24  authorize the release of medical and health care evidence, 
 55.25  including all medical records and relevant information from any 
 55.26  source, to support the application for total and permanent 
 55.27  disability benefits.  
 55.28     (b)  The medical adviser shall verify the medical evidence 
 55.29  and, if necessary for disability determination, suggest the 
 55.30  referral of the applicant to specialized medical consultants.  
 55.31     (c) The association shall also obtain from the employer, a 
 55.32  certification of the member's past public service, the dates of 
 55.33  any paid sick leave and vacation beyond the last working day and 
 55.34  whether or not any sick leave or annual leave has been allowed.  
 55.35     (d) If, upon consideration of the medical evidence received 
 55.36  and the recommendations of the medical adviser, it is determined 
 56.1   by the executive director that the applicant is totally and 
 56.2   permanently disabled within the meaning of the law, the 
 56.3   association shall grant the person a disability benefit.  The 
 56.4   fact that 
 56.5      (e) An employee who is placed on leave of absence without 
 56.6   compensation because of a disability does is not bar the person 
 56.7   barred from receiving a disability benefit. 
 56.8      Sec. 16.  Minnesota Statutes 2002, section 353.33, 
 56.9   subdivision 6, is amended to read: 
 56.10     Subd. 6.  [CONTINUING ELIGIBILITY FOR BENEFITS.] The 
 56.11  association shall determine eligibility for continuation of 
 56.12  disability benefits and require periodic examinations and 
 56.13  evaluations of disabled members as frequently as deemed 
 56.14  necessary.  The association shall require the disabled member to 
 56.15  provide an expert report signed by a licensed physician, 
 56.16  psychologist, or chiropractor and the disabled member shall 
 56.17  authorize the release of medical and health care evidence, 
 56.18  including all medical and health care records and information 
 56.19  from any source, relating to an application for continuation of 
 56.20  disability benefits.  Disability benefits are contingent upon a 
 56.21  disabled person's participation in a vocational 
 56.22  rehabilitation program evaluation if the executive director 
 56.23  determines that the disabled person may be able to return to a 
 56.24  gainful occupation.  If a member is found to be no longer 
 56.25  totally and permanently disabled, payments must cease the first 
 56.26  of the month following the expiration of a 30-day period after 
 56.27  the member receives a certified letter notifying the member that 
 56.28  payments will cease. 
 56.29     Sec. 17.  Minnesota Statutes 2002, section 353.33, 
 56.30  subdivision 6b, is amended to read: 
 56.31     Subd. 6b.  [DUTIES OF THE MEDICAL ADVISER.] At the request 
 56.32  of the executive director, the medical adviser shall designate 
 56.33  licensed physicians, psychologists, or chiropractors to examine 
 56.34  applicants for disability benefits and review the medical expert 
 56.35  reports based upon these examinations to determine whether an 
 56.36  applicant is totally and permanently disabled as defined in 
 57.1   section 353.01, subdivision 19, disabled as defined in section 
 57.2   353.656, or eligible for continuation of disability benefits 
 57.3   under subdivision 6.  The medical examiner shall also review, at 
 57.4   the request of the executive director, all medical and health 
 57.5   care statements on behalf of an applicant for disability 
 57.6   benefits, and shall report in writing to the executive 
 57.7   director the conclusions and recommendations of the examiner on 
 57.8   those matters referred for advice. 
 57.9      Sec. 18.  Minnesota Statutes 2002, section 353.33, 
 57.10  subdivision 7, is amended to read: 
 57.11     Subd. 7.  [PARTIAL REEMPLOYMENT.] If, following a work or 
 57.12  non-work-related injury or illness, a disabled person resumes a 
 57.13  gainful occupation from which who remains totally and 
 57.14  permanently disabled as defined in section 353.01, subdivision 
 57.15  19, has income from employment that is not substantial gainful 
 57.16  activity and the rate of earnings from that employment are less 
 57.17  than the salary rate at the date of disability or the 
 57.18  salary rate currently paid for similar positions similar to the 
 57.19  employment position held by the disabled person immediately 
 57.20  before becoming disabled, whichever is greater, the board 
 57.21  executive director shall continue the disability benefit in an 
 57.22  amount that, when added to the earnings and any workers' 
 57.23  compensation benefit, does not exceed the salary rate at the 
 57.24  date of disability or the salary currently paid for similar 
 57.25  positions similar to the employment position held by the 
 57.26  disabled person immediately before becoming disabled, whichever 
 57.27  is higher, provided. The disability benefit does under this 
 57.28  subdivision may not exceed the disability benefit originally 
 57.29  allowed, plus any postretirement adjustments payable after 
 57.30  December 31, 1988, in accordance with section 11A.18, 
 57.31  subdivision 10.  No deductions for the retirement fund may be 
 57.32  taken from the salary of a disabled person who is receiving a 
 57.33  disability benefit as provided in this subdivision. 
 57.34     Sec. 19.  Minnesota Statutes 2002, section 353.33, is 
 57.35  amended by adding a subdivision to read: 
 57.36     Subd. 7a.  [TRIAL WORK PERIOD.] (a) If, following a work or 
 58.1   non-work related injury or illness, a disabled member attempts 
 58.2   to return to work for their previous public employer or attempts 
 58.3   to return to a similar position with another public employer, on 
 58.4   a full-time or less than full-time basis, the Public Employees 
 58.5   Retirement Association shall continue paying the disability 
 58.6   benefit for a period not to exceed six months.  The disability 
 58.7   benefit must continue in an amount that, when added to the 
 58.8   subsequent employment earnings and workers' compensation 
 58.9   benefit, does not exceed the salary at the date of disability or 
 58.10  the salary currently paid for similar positions, whichever is 
 58.11  higher. 
 58.12     (b) No deductions for the retirement fund may be taken from 
 58.13  the salary of a disabled person who is attempting to return to 
 58.14  work under this provision unless the member waives further 
 58.15  disability benefits. 
 58.16     (c) A member only may return to employment and continue 
 58.17  disability benefit payments once while receiving disability 
 58.18  benefits from a plan administered by the Public Employees 
 58.19  Retirement Association. 
 58.20     Sec. 20.  Minnesota Statutes 2002, section 353.656, 
 58.21  subdivision 5, is amended to read: 
 58.22     Subd. 5.  [PROOF OF DISABILITY.] (a) A disability benefit 
 58.23  payment must not be made except upon adequate proof furnished to 
 58.24  the executive director of the association of the existence of 
 58.25  such a disability, and. 
 58.26     (b) During the time when disability benefits are being 
 58.27  paid, the executive director of the association has the right, 
 58.28  at reasonable times, to require the disabled member to submit 
 58.29  proof of the continuance of the disability claimed.  
 58.30     (c) Adequate proof of a disability must include a written 
 58.31  expert report by a licensed physician, by a licensed 
 58.32  chiropractor, or with respect to a mental impairment, by a 
 58.33  licensed psychologist. 
 58.34     (d) A person applying for or receiving a disability benefit 
 58.35  shall provide or authorize release of medical evidence, 
 58.36  including all medical records and information from any source, 
 59.1   relating to an application for disability benefits or the 
 59.2   continuation of those benefits. 
 59.3      Sec. 21.  Minnesota Statutes 2002, section 353.656, is 
 59.4   amended by adding a subdivision to read: 
 59.5      Subd. 8.  [APPLICATION PROCEDURE TO DETERMINE ELIGIBILITY 
 59.6   FOR POLICE AND FIRE PLAN DISABILITY BENEFITS.] (a) An 
 59.7   application for disability benefits must be made in writing on a 
 59.8   form or forms prescribed by the executive director. 
 59.9      (b) If an application for disability benefits is filed 
 59.10  within two years of the date of the injury or the onset of the 
 59.11  illness that gave rise to the disability application, the 
 59.12  application must be supported by evidence that the applicant is 
 59.13  unable to perform the duties of the position held by the 
 59.14  applicant on the date of the injury or the onset of the illness 
 59.15  causing the disability.  The employer must provide evidence 
 59.16  indicating whether the applicant is able or unable to perform 
 59.17  the duties of the position held on the date of the injury or 
 59.18  onset of illness causing the disability and the specifications 
 59.19  of any duties that the individual can or cannot perform. 
 59.20     (c) If an application for disability benefits is filed more 
 59.21  than two years after the date of the injury or the onset of an 
 59.22  illness causing the disability, the application must be 
 59.23  supported by evidence that the applicant is unable to perform 
 59.24  the most recent duties that are expected to be performed by the 
 59.25  applicant during the 90 days before the filing of the 
 59.26  application.  The employer must provide evidence of the duties 
 59.27  that are expected to be performed by the applicant during the 90 
 59.28  days before to the filing of the application, whether the 
 59.29  applicant can or cannot perform those duties overall, and the 
 59.30  specifications of any duties that the applicant can or cannot 
 59.31  perform. 
 59.32     (d) Unless otherwise permitted by law, no application for 
 59.33  disability benefits can be filed by a former member of the 
 59.34  police and fire plan more than three years after the former 
 59.35  member has terminated from Public Employees Retirement 
 59.36  Association police and fire plan covered employment.  If an 
 60.1   application is filed within three years after the termination of 
 60.2   public employment, the former member must provide evidence that 
 60.3   the disability is the direct result of an injury or the 
 60.4   contracting of an illness that occurred while the person was 
 60.5   still actively employed and participating in the police and fire 
 60.6   plan. 
 60.7      (e) Any application for duty-related disability must be 
 60.8   supported by a first report of injury as defined in section 
 60.9   176.231. 
 60.10     (f) If a member who has applied for and been approved for 
 60.11  disability benefits before the termination of service does not 
 60.12  terminate service or is not placed on an authorized leave of 
 60.13  absence as certified by the governmental subdivision within 45 
 60.14  days following the date on which the application is approved, 
 60.15  the application shall be canceled.  If an approved application 
 60.16  for disability benefits has been canceled, a subsequent 
 60.17  application for disability benefits may not be filed on the 
 60.18  basis of the same medical condition for a minimum of one year 
 60.19  from the date on which the previous application was canceled. 
 60.20     (g) An applicant may file a retirement application under 
 60.21  section 353.29, subdivision 4, at the same time as the 
 60.22  disability application is filed.  If the disability application 
 60.23  is approved, the retirement application is canceled.  If the 
 60.24  disability application is denied, the retirement application 
 60.25  must be initiated and processed upon the request of the 
 60.26  applicant.  A police and fire fund member may not receive a 
 60.27  disability benefit and a retirement annuity from the police and 
 60.28  fire fund at the same time. 
 60.29     (h) A repayment of a refund must be made within six months 
 60.30  after the effective date of disability benefits or within six 
 60.31  months after the date of the filing of the disability 
 60.32  application, whichever is later.  No purchase of prior service 
 60.33  or payment made in lieu of salary deductions otherwise 
 60.34  authorized under section 353.01 or 353.36, subdivision 2, may be 
 60.35  made after the occurrence of the disability for which an 
 60.36  application is filed under this section. 
 61.1      Sec. 22.  Minnesota Statutes 2002, section 353.656, is 
 61.2   amended by adding a subdivision to read: 
 61.3      Subd. 9.  [REFUSAL OF EXAMINATION OR MEDICAL EVIDENCE.] If 
 61.4   a person applying for or receiving a disability benefit refuses 
 61.5   to submit to a medical examination under subdivision 11, or 
 61.6   fails to provide or to authorize the release of medical evidence 
 61.7   under subdivisions 5 and 7, the association shall cease the 
 61.8   application process or shall discontinue the payment of a 
 61.9   disability benefit, whichever is applicable.  Upon the receipt 
 61.10  of the requested medical evidence, the association shall resume 
 61.11  the application process or the payment of a disability benefit 
 61.12  upon approval for the continuation, whichever is applicable. 
 61.13     Sec. 23.  Minnesota Statutes 2002, section 353.656, is 
 61.14  amended by adding a subdivision to read: 
 61.15     Subd. 10.  [ACCRUAL OF BENEFITS.] (a) A disability benefit 
 61.16  begins to accrue the day following the commencement of 
 61.17  disability, 90 days preceding the filing of an application, or, 
 61.18  if annual or sick leave is paid for more than the 90-day period, 
 61.19  from the date on which the payment of salary ceased, whichever 
 61.20  is later. 
 61.21     (b) Payment of the disability benefit must not continue 
 61.22  beyond the end of the month in which entitlement has 
 61.23  terminated.  If the disabilitant dies prior to negotiating the 
 61.24  check for the month in which death occurs, payment must be made 
 61.25  to the surviving spouse or, if none, to the designated 
 61.26  beneficiary or, if none, to the estate. 
 61.27     Sec. 24.  Minnesota Statutes 2002, section 353.656, is 
 61.28  amended by adding a subdivision to read: 
 61.29     Subd. 11.  [INDEPENDENT MEDICAL EXAMINATION; DUTIES OF THE 
 61.30  MEDICAL ADVISOR.] Any individual receiving disability benefits 
 61.31  or any applicant, if requested by the executive director, must 
 61.32  submit to an independent medical examination.  The medical 
 61.33  examination must be paid for by the association.  The medical 
 61.34  advisor shall review all medical reports submitted to the 
 61.35  association, including the findings of an independent medical 
 61.36  examination requested under this section, and shall advise the 
 62.1   executive director. 
 62.2      Sec. 25.  Minnesota Statutes 2002, section 353.656, is 
 62.3   amended by adding a subdivision to read: 
 62.4      Subd. 12.  [APPROVAL OF DISABILITY BENEFITS.] Review of 
 62.5   disability benefit applications and review of existing 
 62.6   disability cases must be made by the executive director based 
 62.7   upon all relevant evidence, including advice from the medical 
 62.8   advisor and the evidence provided by the member and employer.  A 
 62.9   member whose application for disability benefits or whose 
 62.10  continuation of disability benefits is denied may appeal the 
 62.11  executive director's decision to the board of trustees within 45 
 62.12  days of the receipt of a certified letter notifying the member 
 62.13  of the decision to deny the application or the benefit 
 62.14  continuation. 
 62.15     Sec. 26.  Minnesota Statutes 2002, section 354.48, 
 62.16  subdivision 2, is amended to read: 
 62.17     Subd. 2.  [APPLICATIONS; ACCRUAL.] (a) A person described 
 62.18  in subdivision 1, or another person authorized to act on behalf 
 62.19  of the person, may make written application on a form prescribed 
 62.20  by the executive director for a total and permanent disability 
 62.21  benefit only within the 18-month period following the 
 62.22  termination of teaching service.  This 
 62.23     (b) The benefit accrues from the day following the 
 62.24  commencement of the disability or the day following the last day 
 62.25  for which salary is paid, whichever is later, but does not begin 
 62.26  to accrue more than six months before the date on which the 
 62.27  written application is filed with the executive director.  If 
 62.28  salary is being received for either annual or sick leave during 
 62.29  the disability period, payments accrue the disability benefit 
 62.30  accrues from the day following the last day for which this 
 62.31  salary is paid. 
 62.32     Sec. 27.  Minnesota Statutes 2002, section 354.48, 
 62.33  subdivision 4, is amended to read: 
 62.34     Subd. 4.  [DETERMINATION BY THE EXECUTIVE DIRECTOR.] (a) 
 62.35  The executive director shall have the member examined by at 
 62.36  least two licensed physicians, licensed chiropractors, or 
 63.1   licensed psychologists selected by the medical adviser.  
 63.2      (b) These physicians, chiropractors, or psychologists with 
 63.3   respect to a mental impairment, shall make written reports to 
 63.4   the executive director concerning the member's disability, 
 63.5   including medical expert opinions as to whether or not the 
 63.6   member is permanently and totally disabled within the meaning of 
 63.7   section 354.05, subdivision 14.  
 63.8      (c) The executive director shall also obtain written 
 63.9   certification from the last employer stating whether or not the 
 63.10  member was separated from service because of a disability which 
 63.11  would reasonably prevent further service to the employer and as 
 63.12  a consequence the member is not entitled to compensation from 
 63.13  the employer.  
 63.14     (d) If, upon the consideration of the reports of the 
 63.15  physicians, chiropractors, or psychologists and any other 
 63.16  evidence presented by the member or by others interested 
 63.17  therein, the executive director finds that the member is totally 
 63.18  and permanently disabled, the executive director shall grant the 
 63.19  member a disability benefit.  The fact that 
 63.20     (e) An employee who is placed on leave of absence without 
 63.21  compensation because of disability shall is not bar the member 
 63.22  barred from receiving a disability benefit. 
 63.23     Sec. 28.  Minnesota Statutes 2002, section 354.48, 
 63.24  subdivision 6, is amended to read: 
 63.25     Subd. 6.  [REGULAR PHYSICAL EXAMINATIONS.] At least once 
 63.26  each year during the first five years following the allowance of 
 63.27  a disability benefit to any member, and at least once in every 
 63.28  three-year period thereafter, the executive director shall 
 63.29  require the disability beneficiary to undergo a medical an 
 63.30  expert examination by a physician or physicians, by a 
 63.31  chiropractor or chiropractors, or by one or more psychologists 
 63.32  with respect to a mental impairment, engaged by the executive 
 63.33  director.  If any an examination indicates that the member is no 
 63.34  longer permanently and totally disabled or that the member is 
 63.35  engaged or is able to engage in a substantial gainful 
 63.36  occupation, payments of the disability benefit by the 
 64.1   association shall must be discontinued.  The payments shall 
 64.2   discontinue must be discontinued as soon as the member is 
 64.3   reinstated to the payroll following sick leave, but payment may 
 64.4   not be made for more than 60 days after the physicians, the 
 64.5   chiropractors, or the psychologists engaged by the executive 
 64.6   director find that the person is no longer permanently and 
 64.7   totally disabled. 
 64.8      Sec. 29.  Minnesota Statutes 2002, section 354.48, 
 64.9   subdivision 6a, is amended to read: 
 64.10     Subd. 6a.  [MEDICAL ADVISER; DUTIES.] The state 
 64.11  commissioner of health or a licensed physician on the staff of 
 64.12  the department of health who is designated by the commissioner 
 64.13  shall be is the medical adviser of the executive director.  The 
 64.14  medical adviser shall designate licensed physicians, licensed 
 64.15  chiropractors, or licensed psychologists with respect to a 
 64.16  mental impairment, who shall examine applicants for disability 
 64.17  benefits.  The medical adviser shall pass upon all medical 
 64.18  expert reports based on any examinations performed in order to 
 64.19  determine whether a teacher is totally and permanently disabled 
 64.20  as defined in section 354.05, subdivision 14.  The medical 
 64.21  adviser shall also investigate all health and medical statements 
 64.22  and certificates by or on behalf of a teacher in connection with 
 64.23  a disability benefit, and shall report in writing to the 
 64.24  director setting forth any conclusions and recommendations on 
 64.25  all matters referred to the medical adviser.  
 64.26     Sec. 30.  Minnesota Statutes 2002, section 354.48, 
 64.27  subdivision 10, is amended to read: 
 64.28     Subd. 10.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] 
 64.29  (a) No person shall be is entitled to receive both a disability 
 64.30  benefit and a retirement annuity provided by this chapter.  
 64.31     (b) The disability benefit paid to a person hereunder shall 
 64.32  must terminate at the end of the month in which the person 
 64.33  attains the normal retirement age.  If the person is still 
 64.34  totally and permanently disabled at the beginning of the month 
 64.35  next following the month in which the person attains the normal 
 64.36  retirement age, the person shall must be deemed to be on 
 65.1   retirement status and, if the person had elected an optional 
 65.2   annuity pursuant to under subdivision 3a, shall must receive an 
 65.3   annuity in accordance with the terms of the optional annuity 
 65.4   previously elected, or, if the person had not elected an 
 65.5   optional annuity pursuant to under subdivision 3a, may elect to 
 65.6   receive a straight life retirement annuity equal to the 
 65.7   disability benefit paid prior to before the date on which the 
 65.8   person attains the normal retirement age 65 or reaches the 
 65.9   five-year anniversary of the effective date of the disability 
 65.10  benefit, whichever is later, or may elect to receive an optional 
 65.11  annuity as provided in section 354.45, subdivision 1.  
 65.12     (c) Election of an optional annuity must be made within 90 
 65.13  days of the normal retirement age 65 or the five-year 
 65.14  anniversary of the effective date of the disability benefit, 
 65.15  whichever is later.  
 65.16     (d) If an optional annuity is elected, the election shall 
 65.17  be is effective on the date on which the person attains the 
 65.18  normal retirement age 65 or reaches the five-year anniversary of 
 65.19  the effective date of the disability benefit, whichever is 
 65.20  later.  The optional annuity shall begin begins to accrue on the 
 65.21  first day of the month next following the month in which the 
 65.22  person attains the normal retirement age 65 or reaches the 
 65.23  five-year anniversary of the effective date of the disability 
 65.24  benefit, whichever is later.  
 65.25     Sec. 31.  Minnesota Statutes 2002, section 356.302, 
 65.26  subdivision 3, is amended to read: 
 65.27     Subd. 3.  [GENERAL EMPLOYEE PLAN ELIGIBILITY REQUIREMENTS.] 
 65.28  A disabled member of a covered retirement plan who has credit 
 65.29  for allowable service in a combination of general employee 
 65.30  retirement plans is entitled to a combined service disability 
 65.31  benefit if the member: 
 65.32     (1) is less than 65 years of the normal retirement age on 
 65.33  the date of the application for the disability benefit; 
 65.34     (2) has become totally and permanently disabled; 
 65.35     (3) has credit for allowable service in any combination of 
 65.36  general employee retirement plans totaling at least three years; 
 66.1      (4) has credit for at least one-half year of allowable 
 66.2   service with the current general employee retirement plan before 
 66.3   the commencement of the disability; 
 66.4      (5) has at least three continuous years of allowable 
 66.5   service credit by the general employee retirement plan or has at 
 66.6   least a total of three years of allowable service credit by a 
 66.7   combination of general employee retirement plans in a 72-month 
 66.8   period during which no interruption of allowable service credit 
 66.9   from a termination of employment exceeded 29 days; and 
 66.10     (6) was not receiving a retirement annuity or disability 
 66.11  benefit from any covered general employee retirement plan at the 
 66.12  time of the commencement of the disability.  
 66.13     Sec. 32.  Minnesota Statutes 2002, section 422A.18, 
 66.14  subdivision 1, is amended to read: 
 66.15     Subdivision 1.  [MEDICAL EXPERT EXAMINATION.] (a) Upon the 
 66.16  application of the head of the department in which a 
 66.17  contributing employee is employed, or upon the application of 
 66.18  the contributing employee or of one acting in the employee's 
 66.19  behalf, the retirement board shall place the contributor on 
 66.20  disability, provided and pay the person a disability allowance 
 66.21  under this section if the medical board, after a medical an 
 66.22  expert examination of the contributor made at the place of 
 66.23  residence of the contributor or at a place mutually agreed upon, 
 66.24  shall certify to the retirement board that the contributor is 
 66.25  physically or mentally incapacitated for the performance of 
 66.26  further service to the city and recommend that the contributor 
 66.27  be placed on disability. 
 66.28     (b) The medical board shall consist of the city physician, 
 66.29  a physician, chiropractor, or licensed psychologist to be 
 66.30  selected by the retirement board, and a physician, chiropractor, 
 66.31  or licensed psychologist to be selected by the employee.  
 66.32     (c) Disability of an employee resulting from injury or 
 66.33  illness received in the performance of the duties of the city 
 66.34  service shall be defined as duty disability.  
 66.35     (d) Disability incurred as a result of injury or illness 
 66.36  not connected with the performance of such service shall be 
 67.1   defined as nonduty disability.  In order to be entitled to a 
 67.2   retirement allowance for a nonduty disability, an employee shall 
 67.3   have rendered five or more years of service to the city. 
 67.4      Sec. 33.  Minnesota Statutes 2002, section 422A.18, 
 67.5   subdivision 4, is amended to read: 
 67.6      Subd. 4.  [ADDITIONAL MEDICAL EXAMINATIONS.] (a) Once each 
 67.7   year, the retirement board may require any disability 
 67.8   beneficiary while still under the established age for retirement 
 67.9   to undergo medical an expert examination by a physician or one 
 67.10  or more physicians, one or more chiropractors, or one or more 
 67.11  licensed psychologists designated by the retirement board,.  The 
 67.12  examination to must be made at the place of residence of the 
 67.13  beneficiary or other place mutually agreed upon.  Should 
 67.14     (b) If the medical board report and certify certifies to 
 67.15  the retirement board that such the disability beneficiary is no 
 67.16  longer physically or mentally incapacitated for the performance 
 67.17  of duty, the beneficiary's allowance shall must be discontinued 
 67.18  and the head of the department in which the beneficiary was 
 67.19  employed at the time of retirement shall, upon notification by 
 67.20  the retirement board of the report of the medical board, 
 67.21  reemploy the beneficiary at a rate of salary not less than the 
 67.22  amount of the disability allowance, but. 
 67.23     (c)  After the expiration of five years subsequent to the 
 67.24  retirement of such the beneficiary, the restoration to duty, 
 67.25  notwithstanding the recommendation of the medical board, shall 
 67.26  be is optional with the head of the department.  Should If any 
 67.27  disability beneficiary, while under the established age for 
 67.28  retirement refuse, refuses to submit to at least one 
 67.29  medical expert examination in any year by a physician or one or 
 67.30  more physicians, one or more chiropractors, or one or more 
 67.31  licensed psychologists designated by the medical board, the 
 67.32  allowance shall must be discontinued until the withdrawal of 
 67.33  such refusal, and should such refusal continue for one year, all 
 67.34  the beneficiary's rights in and to any retirement or disability 
 67.35  allowance shall be are forfeited. 
 67.36     Sec. 34.  Minnesota Statutes 2002, section 423B.09, 
 68.1   subdivision 4, is amended to read: 
 68.2      Subd. 4.  [CERTIFICATE OF PHYSICIANS REQUIRED.] (a) No 
 68.3   member is entitled to a pension under subdivision 1, paragraph 
 68.4   (b) or (c), except upon the certificate of two or more 
 68.5   physicians or, surgeons, chiropractors, licensed psychologists, 
 68.6   or a combination of experts chosen by the governing board.  This 
 68.7   certificate must set forth the cause, nature, and extent of the 
 68.8   disability, disease, or injury of the member.  
 68.9      (b) No active member may be awarded, granted, or paid a 
 68.10  disability pension under subdivision 1, paragraph (c), unless 
 68.11  the certificate states that the disability, disease, or injury 
 68.12  was incurred or sustained by the member while in the service of 
 68.13  the police department of the city.  The certificate must be 
 68.14  filed with the secretary of the association. 
 68.15     Sec. 35.  Minnesota Statutes 2002, section 423C.05, 
 68.16  subdivision 4, is amended to read: 
 68.17     Subd. 4.  [TEMPORARY DISABILITY PENSION.] (a) An active 
 68.18  member who, by sickness or accident, becomes temporarily 
 68.19  disabled from performing firefighter duties for the fire 
 68.20  department shall be is entitled to a temporary disability 
 68.21  pension.  
 68.22     (b) No allowance for disability shall may be made unless 
 68.23  notice of the disability and an application for benefits is made 
 68.24  by or on behalf of the disabled member within 90 days after the 
 68.25  beginning of the disability.  This application shall must 
 68.26  include a certificate from a qualified medical professional 
 68.27  expert setting forth the cause, nature, and extent of the 
 68.28  disability.  This certificate must also conclude that the 
 68.29  disability was incurred or sustained while the member was in the 
 68.30  service of the fire department.  
 68.31     (c) The board shall utilize the board of examiners 
 68.32  established pursuant to under section 423C.03, subdivision 6, to 
 68.33  investigate and report on an application for benefits pursuant 
 68.34  to under this section and to make recommendations as to 
 68.35  eligibility and the benefit amount to be paid.  
 68.36     (d) A member entitled to a disability pension shall must 
 69.1   receive benefits in the amount and manner determined by the 
 69.2   board. 
 69.3      Sec. 36.  Minnesota Statutes 2002, section 423C.05, 
 69.4   subdivision 5, is amended to read: 
 69.5      Subd. 5.  [SERVICE-RELATED PERMANENT DISABILITY PENSION.] 
 69.6   An active member who becomes permanently disabled as the result 
 69.7   of a service-related disease or injury shall is, upon 
 69.8   application and approval of the board, be entitled to a pension 
 69.9   of 41 units or in the amount determined under subdivision 8.  
 69.10  The application for service-related permanent disability shall 
 69.11  must include a certificate from a qualified medical professional 
 69.12  expert setting forth the permanent nature of the disability or 
 69.13  disease and that it was service related.  
 69.14     Sec. 37.  Minnesota Statutes 2002, section 423C.05, 
 69.15  subdivision 6, is amended to read: 
 69.16     Subd. 6.  [NON-SERVICE-RELATED PERMANENT DISABILITY 
 69.17  PENSION.] An active member who, by reason of sickness or 
 69.18  accident, becomes permanently disabled and unable to perform 
 69.19  firefighter duties for the fire department due to 
 69.20  non-service-related disease or injury shall be is entitled to a 
 69.21  permanent disability pension.  No allowance for disability shall 
 69.22  may be made unless notice of the disability and an application 
 69.23  for benefits is made by or on behalf of the disabled member 
 69.24  within 90 days after the beginning of the disability.  This 
 69.25  application shall must include a certificate from a qualified 
 69.26  medical professional setting forth the cause, nature, and extent 
 69.27  of the disability.  A member who is entitled to a disability 
 69.28  pension under this subdivision shall must receive benefits in 
 69.29  the amount and manner determined by the board, not to exceed 41 
 69.30  units. 
 69.31     Sec. 38.  Minnesota Statutes 2002, section 423C.05, is 
 69.32  amended by adding a subdivision to read: 
 69.33     Subd. 6a.  [QUALIFIED EXPERT.] A qualified expert includes 
 69.34  a licensed physician or chiropractor, or in the case of mental 
 69.35  impairment, includes a licensed psychologist. 
 69.36     Sec. 39.  [REPEALER.] 
 70.1      (a) Minnesota Statutes 2002, sections 353.33, subdivision 
 70.2   5b; and 490.11, are repealed on July 1, 2004. 
 70.3      (b) Sections 3 and 19 are repealed on July 1, 2006. 
 70.4      Sec. 40.  [EFFECTIVE DATE.] 
 70.5      Sections 1 to 39 are effective on July 1, 2004. 
 70.6                              ARTICLE 9
 70.7               DEATH AND SURVIVOR BENEFITS AND REFUNDS
 70.8      Section 1.  Minnesota Statutes 2002, section 3A.03, 
 70.9   subdivision 2, is amended to read: 
 70.10     Subd. 2.  [REFUND.] (a) Any A former member who has made 
 70.11  contributions under subdivision 1 and who is no longer a member 
 70.12  of the legislature is entitled to receive, upon written 
 70.13  application to the executive director on a form prescribed by 
 70.14  the executive director, a refund of all contributions credited 
 70.15  to the member's account with interest at an annual rate of six 
 70.16  percent compounded annually computed as provided in section 
 70.17  352.22, subdivision 2. 
 70.18     (b) The refund of contributions as provided in paragraph (a)
 70.19  terminates all rights of a former member of the legislature or 
 70.20  and the survivors of the former member under this chapter. 
 70.21     (c) If the former member of the legislature again becomes a 
 70.22  member of the legislature after having taken a refund as 
 70.23  provided in paragraph (a), the member must be considered a new 
 70.24  member of this plan.  However, a new the member may reinstate 
 70.25  the rights and credit for service previously forfeited if the 
 70.26  new member repays all refunds taken plus interest at an annual 
 70.27  rate of 8.5 percent compounded annually from the date on which 
 70.28  the refund was taken to the date on which the refund is repaid.  
 70.29     (c) (d) No person may be required to apply for or to accept 
 70.30  a refund. 
 70.31     Sec. 2.  Minnesota Statutes 2002, section 352.12, 
 70.32  subdivision 1, is amended to read: 
 70.33     Subdivision 1.  [DEATH BEFORE TERMINATION OF SERVICE.] If 
 70.34  an employee dies before state service has terminated and neither 
 70.35  a survivor annuity nor a reversionary annuity is payable on 
 70.36  behalf of the employee, or if a former employee who has 
 71.1   sufficient service credit to be entitled to an annuity dies 
 71.2   before the benefit annuity has become payable, the director 
 71.3   shall make a refund with interest is payable upon filing a 
 71.4   written application on a form prescribed by the executive 
 71.5   director.  The refund is payable to the last designated 
 71.6   beneficiary or, if there is none, to the surviving spouse or, if 
 71.7   none, to the employee's surviving children in equal shares or, 
 71.8   if none, to the employee's surviving parents in equal shares or, 
 71.9   if none, to the representative of the estate in an amount equal 
 71.10  to the accumulated employee contributions plus interest at the 
 71.11  rate of six percent per annum compounded annually.  Interest 
 71.12  must be computed as provided in section 352.22, subdivision 2, 
 71.13  to the first day of the month in which the refund is processed.  
 71.14  Upon the death of an employee who has received a refund that was 
 71.15  later repaid in full, interest must be paid on the repaid refund 
 71.16  only from the date of the repayment.  If the repayment was made 
 71.17  in installments, interest must be paid only from the date on 
 71.18  which the installment payments began.  The designated 
 71.19  beneficiary, the surviving spouse, or the representative of the 
 71.20  estate of an employee who had received a disability benefit is 
 71.21  not entitled to the payment of interest upon any balance 
 71.22  remaining to the decedent's credit in the fund at the time of 
 71.23  death, unless the death occurred before any payment could be 
 71.24  negotiated.  
 71.25     Sec. 3.  Minnesota Statutes 2002, section 352.12, 
 71.26  subdivision 6, is amended to read: 
 71.27     Subd. 6.  [DEATH AFTER SERVICE TERMINATION.] Except as 
 71.28  provided in subdivision 1, if a former employee covered by the 
 71.29  system dies and who has not received an annuity, a retirement 
 71.30  allowance, or a disability benefit dies, a refund must be made 
 71.31  is payable to the last designated beneficiary or, if there is 
 71.32  none, to the surviving spouse or, if none, to the employee's 
 71.33  surviving children in equal shares or, if none, to the 
 71.34  employee's surviving parents in equal shares or, if none, to the 
 71.35  representative of the estate in an amount equal to accumulated 
 71.36  employee contributions plus interest.  The refund must include 
 72.1   interest at the rate of six percent per year compounded 
 72.2   annually.  The interest on the refund must be computed as 
 72.3   provided in section 352.22, subdivision 2. 
 72.4      Sec. 4.  Minnesota Statutes 2002, section 352.22, 
 72.5   subdivision 2, is amended to read: 
 72.6      Subd. 2.  [AMOUNT OF REFUND.] Except as provided in 
 72.7   subdivision 3, the refund payable to a person who ceased to be a 
 72.8   state employee by reason of a termination of state service is in 
 72.9   an amount equal to employee accumulated contributions plus 
 72.10  interest at the rate of six percent per year compounded annually 
 72.11  daily from the date that the contribution was made until the 
 72.12  date on which the refund is paid.  Included with the refund is 
 72.13  any interest paid as part of repayment of a past refund, plus 
 72.14  interest thereon from the date of repayment.  Interest must be 
 72.15  computed to the first day of the month in which the refund is 
 72.16  processed and must be based on fiscal year or monthly balances, 
 72.17  whichever applies. 
 72.18     Sec. 5.  Minnesota Statutes 2002, section 352.22, 
 72.19  subdivision 3, is amended to read: 
 72.20     Subd. 3.  [DEFERRED ANNUITY.] (a) An employee who has at 
 72.21  least three years of allowable service when termination occurs 
 72.22  may elect to leave the accumulated contributions in the fund and 
 72.23  thereby be entitled to a deferred retirement annuity.  The 
 72.24  annuity must be computed under the law in effect when state 
 72.25  service terminated, on the basis of the allowable service 
 72.26  credited to the person before the termination of service. 
 72.27     (b) An employee on layoff or on leave of absence without 
 72.28  pay, except a leave of absence for health reasons, and who does 
 72.29  not return to state service shall must have an annuity, deferred 
 72.30  annuity, or other benefit to which the employee may become 
 72.31  entitled computed under the law in effect on the employee's last 
 72.32  working day. 
 72.33     (c) No application for a deferred annuity may be made more 
 72.34  than 60 days before the time the former employee reaches the 
 72.35  required age for entitlement to the payment of the annuity.  The 
 72.36  deferred annuity begins to accrue no earlier than 60 days before 
 73.1   the date the application is filed in the office of the system, 
 73.2   but not (1) before the date on which the employee reaches the 
 73.3   required age for entitlement to the annuity nor (2) before the 
 73.4   day following the termination of state service in a 
 73.5   position which is not covered by the retirement system. 
 73.6      (d) Application for the accumulated contributions left on 
 73.7   deposit with the fund may be made at any time after 30 days 
 73.8   following the date of the termination of service. 
 73.9      Sec. 6.  Minnesota Statutes 2002, section 352B.10, 
 73.10  subdivision 5, is amended to read: 
 73.11     Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 73.12  disabilitant may elect, in lieu of spousal survivorship coverage 
 73.13  under section 352B.11, subdivision 2 subdivisions 2b and 
 73.14  2c, choose the normal disability benefit or an optional annuity 
 73.15  as provided in section 352B.08, subdivision 3.  The choice of an 
 73.16  optional annuity must be made before the commencement of the 
 73.17  payment of the disability benefit, or within 90 days of 
 73.18  attaining before reaching age 65 or reaching the five-year 
 73.19  anniversary of the effective date of the disability benefit, 
 73.20  whichever is later.  It The optional annuity is effective on the 
 73.21  date on which the disability benefit begins to accrue, or the 
 73.22  month following attainment of age 65 or the five-year 
 73.23  anniversary of the effective date of the disability benefit, 
 73.24  whichever is later. 
 73.25     Sec. 7.  Minnesota Statutes 2002, section 352B.11, 
 73.26  subdivision 1, is amended to read: 
 73.27     Subdivision 1.  [REFUND OF PAYMENTS.] (a) A member who has 
 73.28  not received other benefits under this chapter is entitled to a 
 73.29  refund of payments made by salary deduction, plus interest, if 
 73.30  the member is separated, either voluntarily or involuntarily, 
 73.31  from the state service that entitled the member to membership.  
 73.32     (b) In the event of the member's death, if there are no 
 73.33  survivor benefits payable under this chapter, a refund plus 
 73.34  interest is payable to the last designated beneficiary on a form 
 73.35  filed with the director before death, or if no designation is 
 73.36  filed, the refund is payable to the member's estate.  Interest 
 74.1   under this subdivision must be computed at the rate of six 
 74.2   percent a year, compounded annually calculated as provided in 
 74.3   section 352.22, subdivision 2.  To receive a refund, the 
 74.4   application must be made on a form prescribed by the executive 
 74.5   director. 
 74.6      Sec. 8.  Minnesota Statutes 2002, section 352B.11, 
 74.7   subdivision 2, is amended to read: 
 74.8      Subd. 2.  [DEATH; PAYMENT TO SPOUSE AND DEPENDENT CHILDREN; 
 74.9   FAMILY MAXIMUMS.] If a member serving actively as a member, or a 
 74.10  member or former member receiving the disability benefit before 
 74.11  attaining age 65 or reaching the five-year anniversary of the 
 74.12  effective date of the disability benefit, whichever is later, 
 74.13  provided by section 352B.10, subdivisions 1 and 2, dies from any 
 74.14  cause before attaining age 65 or reaching the five-year 
 74.15  anniversary of the effective date of the disability benefit, 
 74.16  whichever is later, the surviving spouse and dependent children 
 74.17  are entitled to benefit payments as follows: 
 74.18     (a) A member with at least three years of allowable service 
 74.19  is deemed to have elected a 100 percent joint and survivor 
 74.20  annuity payable to a surviving spouse only on or after the date 
 74.21  the member or former member became or would have become 55. 
 74.22     (b) The surviving spouse of a member who had credit for 
 74.23  less than three years of service shall receive, for life, a 
 74.24  monthly annuity equal to 50 percent of that part of the average 
 74.25  monthly salary of the member from which deductions were made for 
 74.26  retirement.  
 74.27     (c) The surviving spouse of a member who had credit for at 
 74.28  least three years service and who died after becoming 55 years 
 74.29  old, may elect to receive a 100 percent joint and survivor 
 74.30  annuity, for life, notwithstanding a subsequent remarriage, in 
 74.31  lieu of the annuity prescribed in paragraph (b). 
 74.32     (d) The surviving spouse of any member who had credit for 
 74.33  three years or more and who was not 55 years old at death, shall 
 74.34  receive the benefit equal to 50 percent of the average monthly 
 74.35  salary as described in clause (b) until the deceased member 
 74.36  would have become 55 years old, and beginning the first of the 
 75.1   month following that date, may elect to receive the 100 percent 
 75.2   joint and survivor annuity.  
 75.3      (e) Each dependent child, as defined in section 352B.01, 
 75.4   subdivision 10, shall is entitled to receive a monthly annuity 
 75.5   equal to ten percent of that part of the average monthly salary 
 75.6   of the former deceased member from which deductions were made 
 75.7   for retirement.  A dependent child over 18 and under 23 years of 
 75.8   age also may receive the monthly benefit provided in this 
 75.9   section, if the child is continuously attending an accredited 
 75.10  school as a full-time student during the normal school year as 
 75.11  determined by the director.  If the child does not continuously 
 75.12  attend school, but separates from full-time attendance during 
 75.13  any part of a school year, the annuity shall must cease at the 
 75.14  end of the month of separation.  In addition, a payment of $20 
 75.15  per month shall must be prorated equally to the surviving 
 75.16  dependent children when the former member is survived by more 
 75.17  than one or more dependent children child.  Payments for the 
 75.18  benefit of any qualified dependent child must be made to the 
 75.19  surviving spouse, or if there is none, to the legal guardian of 
 75.20  the child.  The maximum monthly benefit for any one family, 
 75.21  including a surviving spouse benefit, if applicable, must not be 
 75.22  less than 50 percent nor exceed 70 percent of the average 
 75.23  monthly salary for any number of children of the deceased member.
 75.24     (f) If the member dies under circumstances that entitle the 
 75.25  surviving spouse and dependent children to receive benefits 
 75.26  under the workers' compensation law, the workers' compensation 
 75.27  benefits received by them must not be deducted from the benefits 
 75.28  payable under this section. 
 75.29     (g) The surviving spouse of a deceased former member who 
 75.30  had credit for three or more years of allowable service, but not 
 75.31  the spouse of a former member receiving a disability benefit 
 75.32  under section 352B.10, subdivision 2, is entitled to receive the 
 75.33  100 percent joint and survivor annuity at the time the deceased 
 75.34  member would have become 55 years old.  If a former member dies 
 75.35  who does not qualify for other benefits under this chapter, the 
 75.36  surviving spouse or, if none, the children or heirs are entitled 
 76.1   to a refund of the accumulated deductions left in the fund plus 
 76.2   interest at the rate of six percent per year compounded annually.
 76.3      Sec. 9.  Minnesota Statutes 2002, section 352B.11, is 
 76.4   amended by adding a subdivision to read: 
 76.5      Subd. 2b.  [SURVIVING SPOUSE BENEFIT ELIGIBILITY.] (a) If 
 76.6   an active member with three or more years of allowable service 
 76.7   dies before attaining age 55, the surviving spouse is entitled 
 76.8   to the benefit specified in subdivision 2c, paragraph (b). 
 76.9      (b) If an active member with less than three years of 
 76.10  allowable service dies at any age, the surviving spouse is 
 76.11  entitled to receive the benefit specified in subdivision 2c, 
 76.12  paragraph (c). 
 76.13     (c) If an active member with three or more years of 
 76.14  allowable service dies on or after attaining exact age 55, the 
 76.15  surviving spouse is entitled to receive the benefits specified 
 76.16  in subdivision 2c, paragraph (d). 
 76.17     (d) If a disabilitant dies while receiving a disability 
 76.18  benefit under section 352B.10 or before the benefit under that 
 76.19  section commenced, and an optional annuity was not elected under 
 76.20  section 352B.10, subdivision 5, the surviving spouse is entitled 
 76.21  to receive the benefit specified in subdivision 2c, paragraph 
 76.22  (b). 
 76.23     (e) If a former member with three or more years of 
 76.24  allowable service, who terminated from service and has not 
 76.25  received a refund or commenced receipt of any other benefit 
 76.26  provided by this chapter, dies, the surviving spouse is entitled 
 76.27  to receive the benefit specified in subdivision 2c, paragraph 
 76.28  (e).  
 76.29     (f) If a former member with less than three years of 
 76.30  allowable service, who terminated from service and has not 
 76.31  received a refund or commenced receipt of any other benefit, if 
 76.32  applicable, provided by this chapter, dies, the surviving spouse 
 76.33  is entitled to receive the refund specified in subdivision 2c, 
 76.34  paragraph (f). 
 76.35     Sec. 10.  Minnesota Statutes 2002, section 352B.11, is 
 76.36  amended by adding a subdivision to read: 
 77.1      Subd. 2c.  [SURVIVING SPOUSE BENEFIT ENTITLEMENTS.] (a) A 
 77.2   surviving spouse specified in subdivision 2b is eligible to 
 77.3   receive, following the filing of a valid application and 
 77.4   consistent with any other applicable requirements, a benefit as 
 77.5   specified in this subdivision.  A 100 percent joint and survivor 
 77.6   annuity under paragraph (b) must be computed assuming the exact 
 77.7   age 55 for the deceased member and the age of the surviving 
 77.8   spouse on the date of death.  A 100 percent joint and survivor 
 77.9   annuity under paragraph (d) or (e) must be computed using the 
 77.10  age of the deceased member on the date of death and the age of 
 77.11  the surviving spouse on that same date. 
 77.12     (b) For a surviving spouse specified in subdivision 2b, 
 77.13  paragraph (a) or (d), the surviving spouse benefit is a benefit 
 77.14  for life equal to 50 percent of the average monthly salary of 
 77.15  the deceased member.  On the first of the month next following 
 77.16  the date on which the deceased member would have attained exact 
 77.17  age 55, in lieu of continued receipt of the prior benefit, the 
 77.18  surviving spouse is eligible to commence receipt of the second 
 77.19  half of a 100 percent joint and survivor annuity, if this 
 77.20  provides a larger benefit. 
 77.21     (c) For a surviving spouse specified in subdivision 2b, 
 77.22  paragraph (b), the surviving spouse benefit is a benefit for 
 77.23  life equal to 50 percent of the average monthly salary of the 
 77.24  deceased member. 
 77.25     (d) For a surviving spouse specified in subdivision 2b, 
 77.26  paragraph (c), the surviving spouse benefit is a benefit for 
 77.27  life equal to 50 percent of the average monthly salary of the 
 77.28  deceased member, or the second half of a 100 percent joint and 
 77.29  survivor annuity, whichever is larger. 
 77.30     (e) For a surviving spouse specified in subdivision 2b, 
 77.31  paragraph (e), the surviving spouse benefit is the second half 
 77.32  of a 100 percent joint and survivor annuity, commencing on the 
 77.33  first of the month next following the deceased member's date of 
 77.34  death, or the first of the month next following the date on 
 77.35  which the deceased member would have attained age 55, whichever 
 77.36  is later. 
 78.1      (f) For a surviving spouse specified in subdivision 2b, 
 78.2   paragraph (f), the surviving spouse or, if none, the children 
 78.3   or, if none, the deceased member's estate, is entitled to a 
 78.4   refund of the employee contributions plus interest computed as 
 78.5   specified in subdivision 1. 
 78.6      Sec. 11.  Minnesota Statutes 2002, section 352B.11, is 
 78.7   amended by adding a subdivision to read: 
 78.8      Subd. 2d.  [COORDINATION WITH WORKERS' COMPENSATION 
 78.9   BENEFITS.] If the deceased member died under circumstances that 
 78.10  entitle the surviving spouse and the dependent child or children 
 78.11  to receive benefits under workers' compensation law, the 
 78.12  workers' compensation benefits received by the deceased member's 
 78.13  survivor or survivors must not be deducted from the benefits 
 78.14  payable under this section. 
 78.15     Sec. 12.  Minnesota Statutes 2002, section 352D.075, 
 78.16  subdivision 2, is amended to read: 
 78.17     Subd. 2.  [SURVIVING SPOUSE BENEFIT.] (a) Notwithstanding 
 78.18  any designation of a beneficiary to the contrary, if a 
 78.19  participant or a former participant dies leaving a spouse and 
 78.20  there is no named beneficiary who survives to receive payment or 
 78.21  the spouse is named beneficiary before an annuity or a 
 78.22  disability benefit becomes payable, the surviving spouse may is 
 78.23  entitled to receive: 
 78.24     (1) a lump sum payment of the value of the participant's 
 78.25  total shares; 
 78.26     (2) The a lump sum payment of a portion of the value of 
 78.27  one-half of the total shares and beginning at age 55 or 
 78.28  thereafter, at any time after the participant's death, receive 
 78.29  an annuity based on the remaining value of one-half of the total 
 78.30  shares, provided that.  If the spouse dies before receiving any 
 78.31  annuity payments, the remaining value of said the shares shall 
 78.32  be paid is payable to the spouse's children in equal shares, but 
 78.33  and if no such children survive, then to the parents of the 
 78.34  spouse in equal shares, but and if no such children or parents 
 78.35  survive, then to the estate of the spouse; or 
 78.36     (3) Beginning at age 55 or thereafter at any time after the 
 79.1   participant's death, receive an annuity based on the value of 
 79.2   the total shares, provided that.  If the spouse dies before 
 79.3   receiving any annuity payments, the value of said the shares 
 79.4   shall be paid is payable to the spouse's children in equal 
 79.5   shares, but and if no such children survive, then to the parents 
 79.6   of the spouse in equal shares, but and if no such children or 
 79.7   parents survive, then to the estate of the spouse; and further 
 79.8   provided, if said the spouse dies after receiving annuity 
 79.9   payments but before receiving payments equal to the value of the 
 79.10  employee shares, the value of the employee shares 
 79.11  remaining shall be paid is payable to the spouse's children in 
 79.12  equal shares, but and if no such children survive, then to the 
 79.13  parents of the spouse in equal shares, but and if no such 
 79.14  children or parents survive, then to the estate of the spouse.  
 79.15     (b) A participant or a former participant and the person's 
 79.16  spouse may make a joint specification, in writing, on a form 
 79.17  prescribed by the executive director, that the benefits provided 
 79.18  in this section must be paid only to the designated beneficiary. 
 79.19     Sec. 13.  Minnesota Statutes 2002, section 352D.075, is 
 79.20  amended by adding a subdivision to read: 
 79.21     Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 
 79.22  lieu of the annuity under subdivision 2, clause (2) or (3), or 
 79.23  in lieu of a distribution under subdivision 2, clause (1), the 
 79.24  surviving spouse of a deceased participant may elect to receive 
 79.25  survivor coverage in the form of a term certain annuity of five, 
 79.26  six, 15, or 20 years, based on the value of the remaining 
 79.27  shares.  The monthly term certain annuity must be calculated 
 79.28  under section 352D.06, subdivision 1. 
 79.29     Sec. 14.  Minnesota Statutes 2002, section 352D.075, 
 79.30  subdivision 3, is amended to read: 
 79.31     Subd. 3.  [REFUND TO BENEFICIARY.] If a participant dies 
 79.32  and has named a beneficiary no surviving spouse, the value of 
 79.33  the total shares shall be paid is payable to such a designated 
 79.34  beneficiary, but if such the beneficiary dies before receiving 
 79.35  payment, or if no beneficiary has been named and there is no 
 79.36  spouse, the value of said the shares shall be paid is payable 
 80.1   to the children of the participant in equal shares, but or if no 
 80.2   such children survive, then in equal shares to the parents of 
 80.3   the participant, but or if no such children or parents survive, 
 80.4   then to the estate of the participant.  
 80.5      Sec. 15.  [352F.052] [APPLICATION OF SURVIVING SPOUSE, 
 80.6   DEPENDENT CHILD PROVISION.] 
 80.7      Notwithstanding any provisions of law to the contrary, 
 80.8   subdivisions within section 352.12 of the edition of Minnesota 
 80.9   Statutes published in the year before the year in which a 
 80.10  privatization occurred, applicable to the surviving spouse or 
 80.11  dependent children of a former member, apply to the survivors of 
 80.12  a terminated hospital employee of Fairview, University of 
 80.13  Minnesota Physicians, or University Affiliated Family Physicians.
 80.14     Sec. 16.  [353F.052] [APPLICATION OF SURVIVING SPOUSE, 
 80.15  DEPENDENT CHILD PROVISION.] 
 80.16     Notwithstanding any provisions of law to the contrary, 
 80.17  subdivisions within section 353.32 of the edition of Minnesota 
 80.18  Statutes published in the year before the year in which a 
 80.19  privatization occurred, applicable to the surviving spouse or 
 80.20  dependent children of a former member as defined in section 
 80.21  353.01, subdivision 7a, apply to the survivors of a terminated 
 80.22  medical facility or other public employing unit employee. 
 80.23     Sec. 17.  Minnesota Statutes 2002, section 354.05, 
 80.24  subdivision 22, is amended to read: 
 80.25     Subd. 22.  [DESIGNATED BENEFICIARY.] "Designated 
 80.26  beneficiary" means the person, trust, or organization designated 
 80.27  by a retiree or member to receive the benefits to which a 
 80.28  beneficiary is entitled under this chapter.  A beneficiary 
 80.29  designation is valid only if it is made on an appropriate form 
 80.30  provided by the executive director that is signed by the member 
 80.31  and two witnesses to the member's signature.  The properly 
 80.32  completed form must be received by the association on or before 
 80.33  the date of death of the retiree or member.  If a retiree or a 
 80.34  member does not designate a person, trust, or organization, or 
 80.35  if the person who was designated predeceases the retiree or the 
 80.36  member, or if the trust or organization ceases to exist before 
 81.1   the death of the retiree or the member, the designated 
 81.2   beneficiary means is the estate of the deceased retiree or 
 81.3   member. 
 81.4      Sec. 18.  Minnesota Statutes 2002, section 354.46, 
 81.5   subdivision 2, is amended to read: 
 81.6      Subd. 2.  [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY 
 81.7   BENEFIT SURVIVING SPOUSE SURVIVOR COVERAGE.] (a) The surviving 
 81.8   spouse of any member or former member who has If the active or 
 81.9   deferred member was at least age 55 and had credit for at least 
 81.10  three years of allowable service on the date of death, the 
 81.11  surviving spouse is entitled to the second portion of a 100 
 81.12  percent joint and survivor annuity coverage in the event of 
 81.13  death of the member prior to retirement.  If the surviving 
 81.14  spouse does not elect to receive a surviving spouse benefit 
 81.15  under subdivision 1, if applicable, or does not elect to receive 
 81.16  a refund of accumulated member contributions under section 
 81.17  354.47, subdivision 1, the surviving spouse is entitled to 
 81.18  receive, upon written application on a form prescribed by the 
 81.19  executive director, a benefit equal to the second portion of a 
 81.20  100 percent joint and survivor annuity specified under section 
 81.21  354.45, based on the age of the active or deferred member and 
 81.22  surviving spouse at the time of death of the member, and 
 81.23  computed under section 354.44, subdivision 2 or 6, whichever is 
 81.24  applicable the age of the surviving spouse at the time the 
 81.25  benefit accrues. 
 81.26     (b) If the active or deferred member was under age 55 and 
 81.27  has had credit for at least 30 years of allowable service on the 
 81.28  date of death, the surviving spouse may elect to receive the 
 81.29  second portion of a 100 percent joint and survivor annuity based 
 81.30  on the age of the active or deferred member and surviving spouse 
 81.31  on the date of death and the age of the surviving spouse at the 
 81.32  time the benefit accrues.  If section 354.44, subdivision 6, 
 81.33  applies, the annuity is payable using the full early retirement 
 81.34  reduction under section 354.44, subdivision 6, paragraph 
 81.35  clause (3)(ii), to age 55 and one-half of the early retirement 
 81.36  reduction from age 55 to the age payment begins. 
 82.1      (c) If the active or deferred member was under age 55 and 
 82.2   has had credit for at least three years of allowable service on 
 82.3   the date of death, but did not yet qualify for retirement, the 
 82.4   surviving spouse may elect to receive the second portion of a 
 82.5   100 percent joint and survivor annuity based on the age of 
 82.6   the active or deferred member and the surviving spouse at the 
 82.7   time of death and the age of the surviving spouse at the time 
 82.8   the benefit accrues.  If section 354.44, subdivision 6, applies, 
 82.9   the annuity is calculated using the full early retirement 
 82.10  reduction under section 354.44, subdivision 6, to age 55 and 
 82.11  one-half of the early retirement reduction from age 55 to the 
 82.12  age the annuity begins.  The surviving spouse eligible for a 
 82.13  surviving spouse benefit under paragraph (a) may apply for the 
 82.14  annuity at any time after the date on which the deceased 
 82.15  employee would have attained the required age for retirement 
 82.16  based on the employee's allowable service. 
 82.17     (d) The surviving spouse eligible for surviving spouse 
 82.18  benefits under paragraph (b) or (c) this subdivision may apply 
 82.19  for the annuity any time after the member's death.  This The 
 82.20  benefit accrues from the day following the date of the member's 
 82.21  death but may not begin to accrue more than six months before 
 82.22  the date the application is filed with the executive 
 82.23  director and may not accrue before the member's death.  Sections 
 82.24  354.55, subdivision 11, and 354.60 apply to a deferred annuity 
 82.25  payable under this section.  The benefit is payable for life.  
 82.26  Any benefit under this subdivision is in lieu of benefits under 
 82.27  subdivision 1, if applicable, and in lieu of a refund of 
 82.28  accumulated member contributions under section 354.47, 
 82.29  subdivision 1. 
 82.30     (e) For purposes of this subdivision, a designated 
 82.31  beneficiary must be a former spouse or a biological or adopted 
 82.32  child of the member. 
 82.33     Sec. 19.  Minnesota Statutes 2002, section 354.46, 
 82.34  subdivision 2b, is amended to read: 
 82.35     Subd. 2b.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 82.36  no surviving spouse eligible for benefits under subdivision 2, a 
 83.1   each dependent child or children as defined in section 354.05, 
 83.2   subdivision 8a, is eligible for monthly payments surviving child 
 83.3   benefits.  Payments Surviving child benefits to a dependent 
 83.4   child must be paid from the date of the member's death to the 
 83.5   date the dependent child attains age 20 if the child is under 
 83.6   age 15 on the date of the member's death.  If the child is 15 
 83.7   years or older on the date of the member's death, payment must 
 83.8   be made the surviving child benefit is payable for five years.  
 83.9   The payment to a dependent surviving child benefit is an amount 
 83.10  that is actuarially equivalent to the value of a 100 percent 
 83.11  optional annuity under subdivision 2 calculated using the age of 
 83.12  the member and age of the dependent child at as of the date of 
 83.13  death in lieu of the age of the member and the spouse.  If there 
 83.14  is more than one dependent child, each dependent child shall is 
 83.15  entitled to receive a proportionate share of the actuarial value 
 83.16  of the member's account.  
 83.17     Sec. 20.  Minnesota Statutes 2002, section 354.46, 
 83.18  subdivision 5, is amended to read: 
 83.19     Subd. 5.  [PAYMENT TO DESIGNATED BENEFICIARY.] A member and 
 83.20  who is single or, if the member is married, a member and the 
 83.21  spouse of the member jointly, may make a joint specification in 
 83.22  writing on a form prescribed by the executive director that the 
 83.23  benefits provided in subdivision 2, or in section 354.47, 
 83.24  subdivision 1, must be paid only to a designated beneficiary or 
 83.25  to designated beneficiaries.  For purposes of subdivision 2, a 
 83.26  designated beneficiary may only be either a former spouse or a 
 83.27  biological or an adopted child of the member. 
 83.28     Sec. 21.  Minnesota Statutes 2002, section 354.46, is 
 83.29  amended by adding a subdivision to read: 
 83.30     Subd. 6.  [APPLICATION.] (a) A beneficiary designation and 
 83.31  an application for benefits under this section must be in 
 83.32  writing on a form prescribed by the executive director. 
 83.33     (b) Sections 354.55, subdivision 11, and 354.60 apply to a 
 83.34  deferred annuity payable under this section. 
 83.35     (c) Unless otherwise specified, the annuity must be 
 83.36  computed under section 354.44, subdivision 2 or 6, whichever is 
 84.1   applicable. 
 84.2      Sec. 22.  Minnesota Statutes 2002, section 356.441, is 
 84.3   amended to read: 
 84.4      356.441 [REPAYMENT OF REFUNDS PAYMENT ACCEPTANCE ALLOWED.] 
 84.5      Subdivision 1.  [PAYMENT AUTHORIZATION.] The repayment of a 
 84.6   refund and interest on that refund or the payment of equivalent 
 84.7   contributions and interest for an eligible leave of absence, as 
 84.8   permitted under laws governing any public pension plan in 
 84.9   Minnesota, may be made: 
 84.10     (1) with funds distributed or transferred from a plan 
 84.11  qualified under the federal Internal Revenue Code of 1986, 
 84.12  section 401, subsection (a) or (k); 403; 408; or 457, subsection 
 84.13  (b), as amended through December 31, 1988, or an annuity 
 84.14  qualified under the federal Internal Revenue Code of 1986, 
 84.15  section 403(a).  Repayment may also be made from time to time; 
 84.16  or 
 84.17     (2) with funds distributed from an individual retirement 
 84.18  account used solely to receive a or individual retirement 
 84.19  annuity, if done solely in a manner that is eligible for 
 84.20  treatment as a nontaxable rollover from that type of a plan or 
 84.21  annuity or transfer under the applicable federal law.  The 
 84.22  repaid refund 
 84.23     Subd. 2.  [SEPARATE ACCOUNTING REQUIREMENT.] Nontaxable 
 84.24  rollovers or transfer amounts under subdivision 1 received by a 
 84.25  public pension fund must be separately accounted for as member 
 84.26  contributions not previously taxed.  Before accepting 
 84.27  any rollovers or transfers to which this section applies, the 
 84.28  executive director must shall require the member to provide 
 84.29  written documentation to demonstrate that the amounts to 
 84.30  be rolled over or transferred are eligible for a tax-free 
 84.31  rollover or transfer and qualify for that treatment under the 
 84.32  federal Internal Revenue Code of 1986, as amended.  
 84.33     Sec. 23.  Minnesota Statutes 2002, section 490.124, 
 84.34  subdivision 12, is amended to read: 
 84.35     Subd. 12.  [REFUND.] (a) Any A person who ceases to be a 
 84.36  judge but who does not qualify for a retirement annuity or other 
 85.1   benefit under section 490.121 shall be is entitled to a refund 
 85.2   in an amount equal to all the person's member's employee 
 85.3   contributions to the judges' retirement fund plus interest 
 85.4   computed to the first day of the month in which the refund is 
 85.5   processed based on fiscal year balances at an annual rate of 
 85.6   five percent compounded annually under section 352.22, 
 85.7   subdivision 2. 
 85.8      (b) A refund of contributions under paragraph (a) 
 85.9   terminates all service credits and all rights and benefits of 
 85.10  the judge and the judge's survivors.  A person who becomes a 
 85.11  judge again after taking a refund under paragraph (a) may 
 85.12  reinstate the previously terminated service credits, rights, and 
 85.13  benefits by repaying all refunds the total amount of the 
 85.14  previously received refund.  A The refund repayment must include 
 85.15  interest on the total amount previously received at an annual 
 85.16  rate of 8.5 percent compounded annually from the date on which 
 85.17  the refund was received until the date on which the refund is 
 85.18  repaid. 
 85.19     Sec. 24.  [TEACHERS RETIREMENT ASSOCIATION; BENEFICIARY 
 85.20  DESIGNATION.] 
 85.21     (a) An eligible person described in paragraph (b) is 
 85.22  entitled to make a specification that the benefits provided in 
 85.23  Minnesota Statutes, section 354.46, subdivision 2, or in 
 85.24  Minnesota Statutes, section 354.47, subdivision 1, may be paid 
 85.25  only to a designated beneficiary or beneficiaries.  
 85.26     (b) An eligible person is a person who: 
 85.27     (1) was born on July 9, 1956; 
 85.28     (2) is employed as a teacher by Independent School District 
 85.29  No. 535, Rochester; 
 85.30     (3) is a member of the Teachers Retirement Association; 
 85.31     (4) has more than 19 years of allowable service credit in 
 85.32  the Teachers Retirement Association; 
 85.33     (5) has two minor children; 
 85.34     (6) has no potential surviving spouse by virtue of a prior 
 85.35  marriage dissolution; and 
 85.36     (7) has been diagnosed with a serious medical condition 
 86.1   that is life threatening. 
 86.2      (c) The designated beneficiary or beneficiaries may only be 
 86.3   a biological or adopted child, the biological or adopted 
 86.4   children of the eligible person, or a trust established for the 
 86.5   child or children if the trust is required to provide for the 
 86.6   proper health, support, maintenance, and education of the 
 86.7   dependent child or children.  If two or more children are 
 86.8   designated or if a trust established for more than one child is 
 86.9   designated, the benefit payable to or on behalf of each child is 
 86.10  an equal share of the total benefit. 
 86.11     (d) The specification must be made in writing on a form 
 86.12  prescribed by the executive director of the Teachers Retirement 
 86.13  Association.  
 86.14     Sec. 25. [REPEALER.] 
 86.15     Minnesota Statutes 2002, section 354A.107, is repealed. 
 86.16     Sec. 26.  [EFFECTIVE DATE.] 
 86.17     (a) Sections 1 to 25 are effective on July 1, 2004. 
 86.18     (b) Sections 8 to 11 are not intended to increase, modify, 
 86.19  impair, or diminish the benefit entitlements specified in 
 86.20  Minnesota Statutes, chapter 352B.  If the Minnesota State 
 86.21  Retirement System executive director determines that any 
 86.22  provision of those sections does increase, modify, impair, or 
 86.23  diminish the benefit entitlements as reflected in applicable law 
 86.24  just prior to the effective date of this section, the executive 
 86.25  director shall certify that determination and a recommendation 
 86.26  as to the required legislative correction to the chairs of the 
 86.27  Legislative Commission on Pensions and Retirement, the house 
 86.28  Governmental Operations Committee, the senate Governmental 
 86.29  Operations Committee, and the executive director of the 
 86.30  Legislative Commission on Pensions and Retirement. 
 86.31     (c) Consistent with Minnesota Statutes, section 645.21, and 
 86.32  public pension policy in general, the increased interest rate 
 86.33  provided on a refund under section 23 applies only to judges 
 86.34  whose termination of service occurs on or after July 1, 2004. 
 86.35                             ARTICLE 10
 86.36                      FEDERAL INTERNAL REVENUE
 87.1                           CODE COMPLIANCE
 87.2      Section 1.  Minnesota Statutes 2002, section 356.611, is 
 87.3   amended by adding a subdivision to read: 
 87.4      Subd. 4.  [COMPENSATION.] (a) For purposes of this section, 
 87.5   compensation means a member's compensation actually paid or made 
 87.6   available for any limitation year determined as provided by 
 87.7   Treasury Regulation Section 1.415-2(d)(10). 
 87.8      (b) Compensation for any period includes: 
 87.9      (1) any elective deferral as defined in section 402(g)(3) 
 87.10  of the Internal Revenue Code; 
 87.11     (2) any elective amounts that are not includable in a 
 87.12  member's gross income by reason of sections 125 or 457 of the 
 87.13  Internal Revenue Code; and 
 87.14     (3) any elective amounts that are not includable in a 
 87.15  member's gross income by reason of section 132(f)(4) of the 
 87.16  Internal Revenue Code.  
 87.17     Sec. 2.  [356.635] [INTERNAL REVENUE CODE COMPLIANCE.] 
 87.18     Subdivision 1.  [RETIREMENT BENEFIT COMMENCEMENT.] The 
 87.19  retirement benefit of a member who has terminated employment 
 87.20  must begin no later than the later of April 1 of the calendar 
 87.21  year following the calendar year that the member attains the 
 87.22  federal minimum distribution age under section 401(a)(9) of the 
 87.23  Internal Revenue Code or April 1 of the calendar year following 
 87.24  the calendar year in which the member terminated employment. 
 87.25     Subd. 2.  [DISTRIBUTIONS.] Distributions shall be made as 
 87.26  required under section 401(a)(9) of the Internal Revenue Code 
 87.27  and the treasury regulations adopted under that section, 
 87.28  including, but not limited to, the incidental death benefit 
 87.29  provisions of section 401(a)(9)(G) of the Internal Revenue Code. 
 87.30     Subd. 3.  [DIRECT ROLLOVERS.] A distributee may elect, at 
 87.31  the time and in the manner prescribed by the plan administrator, 
 87.32  to have all or any portion of an eligible rollover distribution 
 87.33  paid directly to an eligible retirement plan as specified by the 
 87.34  distributee. 
 87.35     Subd. 4.  [ELIGIBLE ROLLOVER DISTRIBUTION.] An "eligible 
 87.36  rollover distribution" is any distribution of all or any portion 
 88.1   of the balance to the credit of the distributee.  
 88.2      Subd. 5.  [INELIGIBLE AMOUNTS.] An eligible rollover 
 88.3   distribution does not include: 
 88.4      (1) a distribution that is one of a series of substantially 
 88.5   equal periodic payments, receivable annually or more frequently, 
 88.6   that is made for the life or life expectancy of the distributee, 
 88.7   the joint lives or joint life expectancies of the distributee 
 88.8   and the distributee's designated beneficiary, or for a specified 
 88.9   period of ten years or more; 
 88.10     (2) a distribution that is required under section 401(a)(9) 
 88.11  of the Internal Revenue Code; or 
 88.12     (3) any other exception required by law or the Internal 
 88.13  Revenue Code. 
 88.14     Subd. 6.  [ELIGIBLE RETIREMENT PLAN.] (a) An "eligible 
 88.15  retirement plan" is: 
 88.16     (1) an individual retirement account under section 408(a) 
 88.17  of the Internal Revenue Code; 
 88.18     (2) an individual retirement annuity plan under section 
 88.19  408(b) of the Internal Revenue Code; 
 88.20     (3) an annuity plan under section 403(a) of the Internal 
 88.21  Revenue Code; 
 88.22     (4) a qualified trust plan under section 401(a) of the 
 88.23  Internal Revenue Code that accepts the distributee's eligible 
 88.24  rollover distribution; 
 88.25     (5) an annuity contract under section 403(b) of the 
 88.26  Internal Revenue Code; or 
 88.27     (6) an eligible deferred compensation plan under section 
 88.28  457(b) of the Internal Revenue Code, which is maintained by a 
 88.29  state or local government and which agrees to separately account 
 88.30  for the amounts transferred into the plan. 
 88.31     (b) For distributions of after-tax contributions which are 
 88.32  not includable in gross income, the after-tax portion may be 
 88.33  transferred only to an individual retirement account or annuity 
 88.34  described in section 408(a) or (b) of the Internal Revenue Code, 
 88.35  or to a qualified defined contribution plan described in either 
 88.36  section 401(a), or section 403(a), of the Internal Revenue Code, 
 89.1   that agrees to separately account for the amounts transferred, 
 89.2   including separately accounting for the portion of the 
 89.3   distribution which is includable in gross income and the portion 
 89.4   of the distribution which is not includable. 
 89.5      Subd. 7.  [DISTRIBUTEE.] A "distributee" is: 
 89.6      (1) an employee or a former employee; 
 89.7      (2) the surviving spouse of an employee or former employee; 
 89.8   or 
 89.9      (3) the former spouse of the employee or former employee 
 89.10  who is the alternate payee under a qualified domestic relations 
 89.11  order as defined in section 414(p) of the Internal Revenue Code, 
 89.12  or who is a recipient of a court-ordered equitable distribution 
 89.13  of marital property, as provided in section 518.58. 
 89.14     Subd. 8.  [FORFEITURES.] For defined benefit plans, unless 
 89.15  otherwise permitted by section 401(a)(8) of the Internal Revenue 
 89.16  Code, forfeitures may not be applied to increase the benefits 
 89.17  that any employee would otherwise receive under the plan. 
 89.18     Subd. 9.  [MILITARY SERVICE.] Contributions, benefits, and 
 89.19  service credit with respect to qualified military service must 
 89.20  be provided according to section 414(u) of the Internal Revenue 
 89.21  Code. 
 89.22     Sec. 3.  [TRANSITIONAL PROVISION.] 
 89.23     (a) An eligible rollover distribution under Minnesota 
 89.24  Statutes, section 356.635, does not include the portion of a 
 89.25  distribution that is not included in gross income. 
 89.26     (b) For eligible rollover distributions to a surviving 
 89.27  spouse, an eligible retirement plan under Minnesota Statutes, 
 89.28  section 356.635, is limited to an individual retirement account 
 89.29  under section 408(a) of the Internal Revenue Code or an 
 89.30  individual retirement annuity plan under section 408(b) of the 
 89.31  Internal Revenue Code. 
 89.32     Sec. 4.  [EFFECTIVE DATE.] 
 89.33     (a) Section 1, paragraph (a), is effective on July 1, 2004. 
 89.34  Section 1, paragraph (b), is effective retroactively as 
 89.35  follows:  clauses (1) and (2) are effective for limitation years 
 89.36  beginning on and after January 1, 1998; and clause (3) is 
 90.1   effective for limitation years beginning on and after January 1, 
 90.2   2001. 
 90.3      (b) Sections 2 and 3 are effective on the day following 
 90.4   final enactment. 
 90.5      (c) Section 2 is effective retroactively as follows:  
 90.6   subdivision 1 is effective on and after January 1, 1989; 
 90.7   subdivision 2 is effective for distributions on and after 
 90.8   December 31, 1989; subdivision 3 is effective for distributions 
 90.9   on and after January 1, 1993; subdivision 6, paragraph (a), 
 90.10  clauses (5) and (6), are effective for distributions made after 
 90.11  December 31, 2001; subdivision 6, paragraph (b), is effective 
 90.12  for distributions after December 31, 2001; and subdivision 9 is 
 90.13  effective December 12, 1994. 
 90.14     (d) Section 3 is effective only for distributions made 
 90.15  before January 1, 2002. 
 90.16                             ARTICLE 11
 90.17                        HEALTH CARE SAVINGS 
 90.18                         PLAN MODIFICATIONS 
 90.19     Section 1.  Minnesota Statutes 2002, section 352.98, is 
 90.20  amended to read: 
 90.21     352.98 [POSTRETIREMENT HEALTH CARE SAVINGS PLAN.] 
 90.22     Subdivision 1.  [PLAN CREATED.] The Minnesota State 
 90.23  Retirement System shall establish a plan or plans, known as 
 90.24  postretirement health care savings plans, through which public 
 90.25  employers and employees may save to cover postretirement health 
 90.26  care costs.  The Minnesota State Retirement System shall make 
 90.27  available one or more trusts, including a governmental trust or 
 90.28  governmental trusts, authorized under the Internal Revenue Code 
 90.29  to be eligible for tax-preferred or tax-free treatment through 
 90.30  which employers and employees can save to cover postretirement 
 90.31  health care costs.  
 90.32     Subd. 2.  [CONTRACTING AUTHORIZED.] The Minnesota State 
 90.33  Retirement System is authorized to administer the plan and to 
 90.34  contract with public and private entities to provide investment 
 90.35  services, record keeping, benefit payments, and other functions 
 90.36  necessary for the administration of the plan.  If allowed by the 
 91.1   Minnesota State Board of Investment, the Minnesota State Board 
 91.2   of Investment supplemental investment funds may be offered as 
 91.3   investment options under the postretirement health care savings 
 91.4   plan or plans.  
 91.5      Subd. 3.  [CONTRIBUTIONS.] (a) Contributions to the plan 
 91.6   shall must be determined through a personnel policy or in a 
 91.7   collective bargaining agreement of a public employer with the 
 91.8   exclusive representative of the covered employees in an 
 91.9   appropriate unit.  The Minnesota State Retirement System may 
 91.10  offer different types of trusts permitted under the Internal 
 91.11  Revenue Code to best meet the needs of different employee units. 
 91.12     (b) Contributions to the plan by or on behalf of the 
 91.13  employee shall must be held in trust for reimbursement of 
 91.14  employee and dependent health-related expenses following 
 91.15  retirement from public employment or during active employment.  
 91.16  The Minnesota State Retirement System shall maintain a separate 
 91.17  account of the contributions made by or on behalf of each 
 91.18  participant and the earnings thereon.  The Minnesota State 
 91.19  Retirement System shall make available a limited range of 
 91.20  investment options, and each employee may direct the investment 
 91.21  of the accumulations in the employee's account among the 
 91.22  investment options made available by the Minnesota State 
 91.23  Retirement System.  At the request of a participating employer 
 91.24  and employee group, the Minnesota State Retirement System may 
 91.25  determine how the assets of the affected employer and employee 
 91.26  group should be invested.  
 91.27     (c) This section does not obligate a public employer to 
 91.28  meet and negotiate in good faith with the exclusive bargaining 
 91.29  representative of any public employee group regarding an 
 91.30  employer contribution to a postretirement or active employee 
 91.31  health care savings plan authorized by this section and section 
 91.32  356.24, subdivision 1, clause (7).  It is not the intent of the 
 91.33  legislature to authorize the state to incur new funding 
 91.34  obligations for the costs of retiree health care or the costs of 
 91.35  administering retiree health care plans or accounts.  
 91.36     Subd. 4.  [REIMBURSEMENT FOR HEALTH-RELATED EXPENSES.] 
 92.1   Following termination of public service, The Minnesota State 
 92.2   Retirement System shall reimburse employees at least quarterly 
 92.3   for submitted health-related expenses, as required by federal 
 92.4   and state law, until the employee exhausts the accumulation in 
 92.5   the employee's account.  If an employee dies prior to exhausting 
 92.6   the employee's account balance, the employee's spouse or 
 92.7   dependents shall be are eligible to be reimbursed for health 
 92.8   care expenses from the account until the account balance is 
 92.9   exhausted.  If an account balance remains after the death of a 
 92.10  participant and all of the participant's legal dependents, the 
 92.11  remainder of the account shall must be paid to the employee's 
 92.12  beneficiaries or, if none, to the employee's estate.  
 92.13     Subd. 5.  [FEES.] The Minnesota state retirement plan is 
 92.14  authorized to charge uniform fees to participants to cover the 
 92.15  ongoing cost of operating the plan.  Any fees not needed shall 
 92.16  must revert to participant accounts or be used to reduce plan 
 92.17  fees the following year.  The Minnesota State Retirement System 
 92.18  is authorized to charge participating employers a fee, not to 
 92.19  exceed one-sixth of the Federal Insurance Contribution Act 
 92.20  savings realized by the employer as a result of participating in 
 92.21  the plan, until the initial costs of establishing the plan or 
 92.22  plans authorized by this section are recovered, or $75,000, 
 92.23  whichever is less.  
 92.24     Subd. 6.  [ADVISORY COMMITTEE.] (a) The Minnesota State 
 92.25  Retirement System shall establish a participant advisory 
 92.26  committee for the health care savings plan, made up of one 
 92.27  representative appointed by each employee unit participating in 
 92.28  the plan.  Each participating unit shall be responsible for the 
 92.29  expenses of its own representative.  
 92.30     (b) The advisory committee shall meet at least twice per 
 92.31  year and shall be consulted on plan offerings and vendor 
 92.32  selection.  By October 1 of each year, the Minnesota State 
 92.33  Retirement System shall give the advisory committee a statement 
 92.34  of fees collected and the use of the fees.  
 92.35     Subd. 7.  [CONTRACTING WITH PRIVATE ENTITIES.] Nothing in 
 92.36  this section shall prohibit prohibits employers from contracting 
 93.1   with private entities to provide for postretirement health care 
 93.2   reimbursement plans. 
 93.3      Sec. 2.  [EFFECTIVE DATE.] 
 93.4      Section 1 is effective on the day following final enactment.
 93.5                              ARTICLE 12
 93.6                    RETIREMENT COVERAGE FOLLOWING
 93.7                           A PRIVATIZATION
 93.8      Section 1.  Minnesota Statutes 2003 Supplement, section 
 93.9   353F.02, subdivision 4, is amended to read: 
 93.10     Subd. 4.  [MEDICAL FACILITY.] "Medical facility" means: 
 93.11     (1) the Fair Oaks Lodge, Wadena; 
 93.12     (2) the Glencoe Area Health Center; 
 93.13     (2) (3) the Kanabec Hospital; 
 93.14     (4) the Luverne Public Hospital; 
 93.15     (5) the RenVilla Nursing Home; and 
 93.16     (3) (6) the Waconia-Ridgeview Medical Center; and 
 93.17     (4) the Kanabec Hospital. 
 93.18     Sec. 2.  [PERA-GENERAL RETENTION OF PUBLIC EMPLOYEE STATUS 
 93.19  FOR ANOKA ACHIEVE PROGRAM EMPLOYEES.] 
 93.20     Subdivision 1.  [APPLICATION.] This section applies to a 
 93.21  person who was: 
 93.22     (1) employed by Anoka County in connection with the Achieve 
 93.23  Program for adults with developmental disabilities on the day 
 93.24  before operation of the program is transferred to Achieve 
 93.25  Services, Inc; and 
 93.26     (2) a member of the Public Employees Retirement Association 
 93.27  on December 31, 2003. 
 93.28     Subd. 2. [CONTINUATION OF COVERAGE.] For purposes of 
 93.29  participation in the coordinated plan of the Public Employees 
 93.30  Retirement Association, a person to whom this section applies is 
 93.31  a "public employee" under chapter 353, while employed by Achieve 
 93.32  Services, Inc., which is a governmental subdivision under 
 93.33  section 353.01, subdivision 6(a) for the purposes of reporting 
 93.34  contributions for those persons to whom this section applies 
 93.35  only. 
 93.36     Sec. 3.  [PERA-GENERAL; RETENTION OF PUBLIC EMPLOYEE 
 94.1   COVERAGE FOR GOVERNMENT TRAINING SERVICES EMPLOYEES.] 
 94.2      Subdivision 1.  [APPLICATION.] Notwithstanding any 
 94.3   provision of Minnesota Statutes, chapter 353, this section 
 94.4   applies to a person who: 
 94.5      (1) was employed by the state and local government joint 
 94.6   powers organization, the Government Training Service, on the day 
 94.7   before the operation was transferred to a nonprofit 
 94.8   organization, Government Training Services; 
 94.9      (2) was a member of the general employees retirement plan 
 94.10  of the Public Employees Retirement Association; and 
 94.11     (3) is employed by Government Training Services. 
 94.12     Subd. 2.  [COVERAGE CONTINUATION.] (a) A person described 
 94.13  in subdivision 1 is a public employee for purposes of Minnesota 
 94.14  Statutes, section 353.01, subdivision 2, and is eligible to 
 94.15  continue participation in the coordinated program of the general 
 94.16  employees retirement plan of the Public Employees Retirement 
 94.17  Association. 
 94.18     (b) While employing a person described in subdivision 1, 
 94.19  Government Training Services is a governmental subdivision for 
 94.20  purposes of Minnesota Statutes, section 353.01, subdivision 6, 
 94.21  paragraph (a).  
 94.22     Sec. 4.  [EFFECTIVE DATE.] 
 94.23     (a) Section 1, relating to the Fair Oaks Lodge, Wadena, is 
 94.24  effective upon the latter of: 
 94.25     (1) the day after the governing body of Todd County and its 
 94.26  chief clerical officer timely complete their compliance with 
 94.27  Minnesota Statutes, section 645.021, subdivisions 2 and 3;and 
 94.28     (2) the day after the governing body of Wadena County and 
 94.29  its chief clerical officer timely complete their compliance with 
 94.30  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
 94.31     (b) Section 1, relating to the RenVilla Nursing Home, is 
 94.32  effective upon the latter of: 
 94.33     (1) the day after the governing body of the city of 
 94.34  Renville and its chief clerical officer timely complete their 
 94.35  compliance with Minnesota Statutes, section 645.021, 
 94.36  subdivisions 2 and 3; and 
 95.1      (2) the first day of the month next following certification 
 95.2   to the governing body of the city of Renville by the executive 
 95.3   director of the Public Employees Retirement Association that the 
 95.4   actuarial accrued liability of the special benefit coverage 
 95.5   proposed for extension to the privatized RenVilla Nursing Home 
 95.6   employees under section 1 does not exceed the actuarial gain 
 95.7   otherwise to be accrued by the Public Employees Retirement 
 95.8   Association, as calculated by the consulting actuary retained by 
 95.9   the Legislative Commission on Pensions and Retirement. 
 95.10     (c) The cost of the actuarial calculations must be borne by 
 95.11  the city of Renville or the purchaser of the RenVilla Nursing 
 95.12  Home. 
 95.13     (d) If the required actions under paragraphs (b) and (c) 
 95.14  occur, section 1 applies retroactively to the RenVilla Nursing 
 95.15  Home as of the date of privatization. 
 95.16     (e) If the required actions under paragraph (a) occur, 
 95.17  section 1 applies retroactively to Fair Oaks Lodge, Wadena, as 
 95.18  of January 1, 2004. 
 95.19     (f) Sections 2 and 3 are effective on the day following 
 95.20  final enactment. 
 95.21                             ARTICLE 13
 95.22            MINNEAPOLIS FIREFIGHTERS RELIEF ASSOCIATION
 95.23     Section 1.  Minnesota Statutes 2003 Supplement, section 
 95.24  423C.03, subdivision 3, is amended to read: 
 95.25     Subd. 3.  [COMPENSATION OF OFFICERS AND BOARD MEMBERS.] (a) 
 95.26  Notwithstanding any other law to the contrary, the association 
 95.27  may provide for payment of the following salaries to its 
 95.28  officers and board members: as specified in this subdivision. 
 95.29     (1) (b) If the executive secretary is not an active member, 
 95.30  the executive secretary may receive a salary to be set by the 
 95.31  board, subject to the limitations stated in paragraph (d).  If 
 95.32  the executive secretary is an active member, the executive 
 95.33  secretary may receive a salary not exceeding 50 percent of the 
 95.34  maximum salary of a first grade firefighter;. 
 95.35     (2) (c) The president may receive a salary not exceeding 
 95.36  ten percent of the maximum salary of a first grade firefighter;, 
 96.1   and 
 96.2      (3) all other elected members of the board, other than the 
 96.3   executive secretary, may receive a salary not exceeding 2.5 
 96.4   percent of the maximum salary of a first grade firefighter. 
 96.5      (d) If the executive secretary is not an active member, the 
 96.6   executive secretary's salary may not exceed the highest salary 
 96.7   currently received by the executive director of the Minnesota 
 96.8   State Retirement System, the Public Employees Retirement 
 96.9   Association, or the Teachers Retirement Association. 
 96.10     Sec. 2.  [EFFECTIVE DATE.] 
 96.11     Section 1 is effective on the day on which the Minneapolis 
 96.12  City Council and the chief clerical officer of the city of 
 96.13  Minneapolis complete in a timely manner the requirements of 
 96.14  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
 96.15                             ARTICLE 14
 96.16                    VOLUNTEER FIREFIGHTER RELIEF
 96.17                        ASSOCIATION CHANGES
 96.18     Section 1.  Minnesota Statutes 2002, section 424A.02, 
 96.19  subdivision 2, is amended to read: 
 96.20     Subd. 2.  [NONFORFEITABLE PORTION OF SERVICE PENSION.] If 
 96.21  the articles of incorporation or bylaws of a relief association 
 96.22  so provide, a relief association may pay a reduced service 
 96.23  pension to a retiring member who has completed fewer than 20 
 96.24  years of service.  The reduced service pension may be paid when 
 96.25  the retiring member meets the minimum age and service 
 96.26  requirements of subdivision 1.  
 96.27     The amount of the reduced service pension may not exceed 
 96.28  the amount calculated by multiplying the service pension 
 96.29  appropriate for the completed years of service as specified in 
 96.30  the bylaws times the applicable nonforfeitable percentage of 
 96.31  pension.  
 96.32     For a volunteer firefighter relief association that pays a 
 96.33  lump sum service pension, a monthly benefit service pension, or 
 96.34  a lump sum service pension or a monthly benefit service pension 
 96.35  as alternative benefit forms, the nonforfeitable percentage of 
 96.36  pension amounts are as follows: 
 97.1     Completed Years of Service   Nonforfeitable Percentage
 97.2                                      of Pension Amount
 97.3                5                          40 percent 
 97.4                6                          44 percent 
 97.5                7                          48 percent 
 97.6                8                          52 percent 
 97.7                9                          56 percent 
 97.8               10                          60 percent 
 97.9               11                          64 percent 
 97.10              12                          68 percent 
 97.11              13                          72 percent 
 97.12              14                          76 percent 
 97.13              15                          80 percent 
 97.14              16                          84 percent 
 97.15              17                          88 percent 
 97.16              18                          92 percent 
 97.17              19                          96 percent 
 97.18              20 and thereafter          100 percent 
 97.19     For a volunteer firefighter relief association that pays a 
 97.20  defined contribution service pension, the nonforfeitable 
 97.21  percentage of pension amounts are as follows:  
 97.22    Completed Years of Service   Nonforfeitable Percentage
 97.23                                     of Pension Amount
 97.24               5                          40 percent 
 97.25               6                          52 percent 
 97.26               7                          64 percent 
 97.27               8                          76 percent 
 97.28               9                          88 percent 
 97.29              10 and thereafter          100 percent 
 97.30     Sec. 2.  Minnesota Statutes 2002, section 424A.02, 
 97.31  subdivision 7, is amended to read: 
 97.32     Subd. 7.  [DEFERRED SERVICE PENSIONS.] (a) A member of a 
 97.33  relief association to which this section applies is entitled to 
 97.34  a deferred service pension if the member: 
 97.35     (1) has completed the lesser of the minimum period of 
 97.36  active service with the fire department specified in the bylaws 
 98.1   or 20 years of active service with the fire department; 
 98.2      (2) has completed at least five years of active membership 
 98.3   in the relief association; and 
 98.4      (3) separates from active service and membership before 
 98.5   reaching age 50 or the minimum age for retirement and 
 98.6   commencement of a service pension specified in the bylaws 
 98.7   governing the relief association if that age is greater than age 
 98.8   50.  
 98.9      (b) The deferred service pension starts when the former 
 98.10  member reaches age 50 or the minimum age specified in the bylaws 
 98.11  governing the relief association if that age is greater than age 
 98.12  50 and when the former member makes a valid written application. 
 98.13     (c) A relief association that provides a lump sum service 
 98.14  pension may, when its governing bylaws so provide, pay interest 
 98.15  on the deferred lump sum service pension during the period of 
 98.16  deferral.  If provided for in the bylaws, interest must be paid 
 98.17  in one of the following manners: 
 98.18     (1) at the investment performance rate actually earned on 
 98.19  that portion of the assets if the deferred benefit amount is 
 98.20  invested by the relief association in a separate account 
 98.21  established and maintained by the relief association or if the 
 98.22  deferred benefit amount is invested in a separate investment 
 98.23  vehicle held by the relief association or, if not,; 
 98.24     (2) at the interest rate of five percent, compounded 
 98.25  annually; or 
 98.26     (3) at a rate equal to the actual time weighted total rate 
 98.27  of return investment performance of the special fund as reported 
 98.28  by the office of the state auditor under section 356.219, up to 
 98.29  five percent, compounded annually, and applied consistently for 
 98.30  all deferred service pensioners. 
 98.31     (d) A relief association may not use the method provided 
 98.32  for in paragraph (c), clause (3), until it has modified its 
 98.33  bylaws to be consistent with that clause. 
 98.34     (e) For a deferred service pension that is transferred to a 
 98.35  separate account established and maintained by the relief 
 98.36  association or separate investment vehicle held by the relief 
 99.1   association, the deferred member bears the full investment risk 
 99.2   subsequent to transfer and in calculating the accrued liability 
 99.3   of the volunteer firefighters relief association that pays a 
 99.4   lump sum service pension, the accrued liability for deferred 
 99.5   service pensions is equal to the separate relief association 
 99.6   account balance or the fair market value of the separate 
 99.7   investment vehicle held by the relief association. 
 99.8      (e) (f) The deferred service pension is governed by and 
 99.9   must be calculated under the general statute, special law, 
 99.10  relief association articles of incorporation, and relief 
 99.11  association bylaw provisions applicable on the date on which the 
 99.12  member separated from active service with the fire department 
 99.13  and active membership in the relief association. 
 99.14     Sec. 3.  [MARINE ON ST. CROIX VOLUNTEER FIREFIGHTERS RELIEF 
 99.15  ASSOCIATION; EARLY VESTING.] 
 99.16     (a) Notwithstanding Minnesota Statutes, section 424A.02, 
 99.17  subdivision 2, to the contrary, the Marine on St. Croix 
 99.18  Volunteer Firefighters Relief Association may utilize an early 
 99.19  vesting schedule as provided in paragraphs (b) and (c). 
 99.20     (b) If the articles of incorporation or bylaws of the 
 99.21  Marine on St. Croix Volunteer Firefighters Relief Association so 
 99.22  provide, the relief association may pay a reduced service 
 99.23  pension to a retiring member who has completed fewer than ten 
 99.24  years of service.  The reduced service pension may be paid when 
 99.25  the retiring member meets the minimum age and service 
 99.26  requirements of Minnesota Statutes, section 424A.02, subdivision 
 99.27  1.  
 99.28     (c) The amount of the reduced service pension may not 
 99.29  exceed the amount calculated by multiplying the service pension 
 99.30  appropriate for the completed years of service as specified in 
 99.31  the articles of incorporation or bylaws by the applicable 
 99.32  nonforfeitable percentage of the service pension amount.  The 
 99.33  nonforfeitable percentage of service pension amounts are as 
 99.34  follows: 
 99.35           Completed years           Nonforfeitable percentage 
 99.36            of service               of service pension amount 
100.1                 5                           40 percent 
100.2                 6                           52 percent 
100.3                 7                           64 percent 
100.4                 8                           76 percent 
100.5                 9                           88 percent 
100.6                10 and                      100 percent 
100.7                thereafter 
100.8      Sec. 4.  [BELLINGHAM FIREFIGHTER RELIEF ASSOCIATION; 
100.9   RATIFICATION OF PRIOR ANNUITY INVESTMENTS.] 
100.10     Notwithstanding Minnesota Statutes, section 356A.06, 
100.11  subdivision 7, any annuity purchases by the Bellingham 
100.12  Firefighters Relief Association prior to the effective date of 
100.13  this section are ratified as permissible investments. 
100.14     Sec. 5.  [STUDY OF STATEWIDE LUMP SUM VOLUNTEER FIREFIGHTER 
100.15  RETIREMENT PLAN; CREATION OF TASK FORCE.] 
100.16     Subdivision 1.  [TASK FORCE MEMBERSHIP.] (a) A statewide 
100.17  Volunteer Firefighter Retirement Plan Study Task Force is 
100.18  created. 
100.19     (b) The task force members are: 
100.20     (1) four members appointed by the president of the 
100.21  Minnesota Area Relief Association coalition; 
100.22     (2) four members appointed by the president of the 
100.23  Minnesota State Fire Department Association; 
100.24     (3) four members appointed by the president of the 
100.25  Minnesota State Fire Chiefs Association; 
100.26     (4) four members appointed by the board of directors of the 
100.27  League of Minnesota Cities; 
100.28     (5) two members appointed by the board of directors of the 
100.29  Insurance Federation of Minnesota; 
100.30     (6) two members appointed by the board of directors of the 
100.31  Minnesota Association of Farm Mutual Insurance Companies; and 
100.32     (7) the Minnesota state auditor or the auditor's designee. 
100.33     (c) Appointments must be made on or before July 1, 2004.  
100.34  If the appointment is not made in a timely manner, or if there 
100.35  is a vacancy, the state auditor shall appoint the task force 
100.36  member or the replacement member. 
101.1      (d) The chair of the task force must be selected by the 
101.2   task force.  
101.3      (e) Administrative services for the task force must be 
101.4   provided by the Department of Public Safety. 
101.5      Subd. 2.  [TASK FORCE DUTIES.] The task force shall conduct 
101.6   fact finding regarding the creation of a statewide volunteer 
101.7   firefighter retirement plan. 
101.8      The task force shall recommend the investment vehicle or 
101.9   vehicles to be utilized by the plan, the administration and 
101.10  corporate governance structure of the plan, the incentives 
101.11  needed to formulate the plan, the limitations applicable to the 
101.12  plan, and the state resources needed to be dedicated to the plan.
101.13     Subd. 3.  [REPORT.] The task force shall prepare a report 
101.14  detailing its findings about a potential statewide volunteer 
101.15  firefighter retirement plan.  The report is due January 15, 
101.16  2005, and must be filed with the Legislative Reference Library; 
101.17  the chair of the Legislative Commission on Pensions and 
101.18  Retirement; the chair of the State and Local Governmental 
101.19  Operations Committee of the senate; the chair of the State 
101.20  Government, Economic Development, and Judiciary Budget Division 
101.21  of the Senate Finance Committee; the chair of the Governmental 
101.22  Operations and Veterans Affairs Policy Committee of the house of 
101.23  representatives; and the chair of the State Government Finance 
101.24  Committee of the house of representatives. 
101.25     Sec. 6.  [APPROPRIATION.] 
101.26     $40,000 is appropriated from the general fund in fiscal 
101.27  year 2005 to the commissioner of public safety to hire a 
101.28  consultant to assist the statewide Volunteer Firefighter 
101.29  Retirement Plan Study Task Force. 
101.30     Sec. 7.  [EFFECTIVE DATE.] 
101.31     Sections 1, 2, 5, and 6 are effective on July 1, 2004. 
101.32     (b) Section 3 is effective on the day after the date on 
101.33  which the city council of the city of Marine on St. Croix and 
101.34  the chief clerical officer of the city of Marine on St. Croix 
101.35  comply with Minnesota Statutes, section 645.02, subdivisions 2 
101.36  and 3. 
102.1      (c) Section 4 is effective on the day following final 
102.2   enactment. 
102.3      (d) The deferred service pension interest crediting 
102.4   procedure of Minnesota Statutes, section 424A.02, subdivision 7, 
102.5   paragraph (c), clause (3), expires on December 31, 2008. 
102.6                              ARTICLE 15
102.7                      PERA POLICE AND FIRE PLAN
102.8                        MEMBERSHIP INCLUSIONS
102.9      Section 1.  Minnesota Statutes 2003 Supplement, section 
102.10  353.01, subdivision 6, is amended to read: 
102.11     Subd. 6.  [GOVERNMENTAL SUBDIVISION.] (a) "Governmental 
102.12  subdivision" means a county, city, town, school district within 
102.13  this state, or a department or unit of state government, or any 
102.14  public body whose revenues are derived from taxation, fees, 
102.15  assessments or from other sources. 
102.16     (b) Governmental subdivision also means the Public 
102.17  Employees Retirement Association, the League of Minnesota 
102.18  Cities, the Association of Metropolitan Municipalities, public 
102.19  hospitals owned or operated by, or an integral part of, a 
102.20  governmental subdivision or governmental subdivisions, the 
102.21  Association of Minnesota Counties, the Metropolitan Intercounty 
102.22  Association, the Minnesota Municipal Utilities Association, the 
102.23  Metropolitan Airports Commission, the Minneapolis Employees 
102.24  Retirement Fund for employment initially commenced after June 
102.25  30, 1979, the Range Association of Municipalities and Schools, 
102.26  soil and water conservation districts, economic development 
102.27  authorities created or operating under sections 469.090 to 
102.28  469.108, the Port Authority of the city of St. Paul, the Spring 
102.29  Lake Park Fire Department, incorporated, the Lake Johanna 
102.30  Volunteer Fire Department, incorporated, the Red Wing 
102.31  Environmental Learning Center, and the Dakota County 
102.32  Agricultural Society. 
102.33     (c) Governmental subdivision does not mean any municipal 
102.34  housing and redevelopment authority organized under the 
102.35  provisions of sections 469.001 to 469.047; or any port authority 
102.36  organized under sections 469.048 to 469.089 other than the Port 
103.1   Authority of the city of St. Paul; or any hospital district 
103.2   organized or reorganized prior to July 1, 1975, under sections 
103.3   447.31 to 447.37 or the successor of the district, nor the 
103.4   Minneapolis Community Development Agency.  
103.5      Sec. 2.  [EFFECTIVE DATE.] 
103.6      Section 1 is effective on the day following final enactment.
103.7                              ARTICLE 16
103.8                      ONE PERSON AND SMALL GROUP
103.9                           PENSION CHANGES
103.10     Section 1.  [PERA-GENERAL; PURCHASE OF PRIOR SERVICE 
103.11  CREDIT.] 
103.12     (a) An eligible person described in paragraph (b) is 
103.13  entitled to purchase up to 33 months of allowable service credit 
103.14  from the general employees retirement plan of the Public 
103.15  Employees Retirement Association.  The service credit purchase 
103.16  under this section must be made in accordance with Minnesota 
103.17  Statutes, section 356.55 or 356.551, whichever applies. 
103.18     (b) An eligible person is a person who: 
103.19     (1) is currently a member of the Teachers Retirement 
103.20  Association; 
103.21     (2) was employed by Independent School District No. 621, 
103.22  Mounds View, from May 1968 to December 1971, but was not covered 
103.23  by the general employees retirement plan of the Public Employees 
103.24  Retirement Association; 
103.25     (3) was employed by Independent School District No. 31, 
103.26  Bemidji, but was not covered by the general employees retirement 
103.27  plan of the Public Employees Retirement Association; 
103.28     (4) was employed as a special education teacher by 
103.29  Independent School District No. 12, Centennial, for the 
103.30  1974-1975 school year and for the 1977-1978, 1978-1979, and 
103.31  1979-1980 school years; 
103.32     (5) was employed as a special education teacher by 
103.33  Independent School District No. 16, Spring Lake Park, for the 
103.34  1975-1976 school year; 
103.35     (6) was employed as a special education teacher by 
103.36  Independent School District No. 138, North Branch, for the 
104.1   1980-1981, 1981-1982, 1982-1983, 1983-1984, 1984-1985, and 
104.2   1985-1986 school years; and 
104.3      (7) has been employed by Independent School District No. 
104.4   11, Anoka-Hennepin, since the 1986-1987 school year. 
104.5      (c) An eligible person described in paragraph (b) must 
104.6   apply with the executive director of the Public Employees 
104.7   Retirement Association to make the service credit purchase under 
104.8   this section.  The application must be in writing and must 
104.9   include all necessary documentation of the applicability of this 
104.10  section, documentation of the eligible person's eligibility for 
104.11  retirement coverage by the general employees retirement plan of 
104.12  the Public Employees Retirement Association if the employment 
104.13  had been properly reported to the association at the time the 
104.14  employment was rendered, and any other relevant information that 
104.15  the executive director may require. 
104.16     Sec. 2.  [PERA-GENERAL EMPLOYEES RETIREMENT PLAN COVERAGE 
104.17  TERMINATION AUTHORIZATION.] 
104.18     Subdivision 1.  [ELIGIBILITY.] (a) An eligible person 
104.19  specified in paragraph (b) is authorized to apply for a 
104.20  retirement annuity from the public employees police and fire 
104.21  retirement plan, provided that the necessary age and service 
104.22  requirements are met, under Minnesota Statutes, section 353.651, 
104.23  as further specified under subdivision 2. 
104.24     (b) An eligible person is a person who: 
104.25     (1) was born on October 10, 1956; 
104.26     (2) was employed as a police officer by the city of Red 
104.27  Wing; 
104.28     (3) was elected to the Goodhue County Board of 
104.29  Commissioners in November 1998; and 
104.30     (4) elected under the law then applicable to have 
104.31  retirement coverage by the general employees retirement plan of 
104.32  the Public Employees Retirement Association for the county board 
104.33  service.  
104.34     Subd. 2.  [RETIREMENT ANNUITY.] (a) Notwithstanding an 
104.35  irrevocable election to participate in the general employees 
104.36  retirement plan of the Public Employees Retirement Association 
105.1   as an elected official and the person's continuation of elected 
105.2   service, an eligible person under subdivision 1, paragraph (b), 
105.3   is deemed to have terminated retirement plan membership under 
105.4   Minnesota Statutes, section 353.01, subdivision 11b, on the 
105.5   first day of the first pay period next following the date of 
105.6   enactment. 
105.7      (b) Upon the change in retirement coverage status under 
105.8   paragraph (a), the eligible person may apply for a retirement 
105.9   annuity under Minnesota Statutes, section 353.651.  In computing 
105.10  that annuity, the Public Employees Retirement Association must 
105.11  exclude the salary that was attributable to the Goodhue County 
105.12  board service.  The deferred annuity augmentation under 
105.13  Minnesota Statutes, section 353.71, applies to the annuity under 
105.14  this subdivision.  
105.15     Subd. 3.  [TREATMENT OF GOODHUE COUNTY BOARD CONTRIBUTIONS 
105.16  TO PERA.] (a) All member contributions by the eligible person to 
105.17  the coordinated program of the general employee retirement plan 
105.18  of the Public Employees Retirement Association attributable to 
105.19  the Goodhue County board elected service, and all corresponding 
105.20  employer contributions, must be determined. 
105.21     (b) An eligible person described in subdivision 1, 
105.22  paragraph (b), must elect, within 90 days of the change in 
105.23  retirement coverage status under paragraph (a), between 
105.24  receiving a refund under Minnesota Statutes, section 353.34, 
105.25  subdivision 2, of the member contributions determined under 
105.26  paragraph (a) or having coverage by the public employees defined 
105.27  contribution plan under Minnesota Statutes, chapter 353D, as 
105.28  further specified in paragraph (c). 
105.29     (c) If coverage by the public employees defined 
105.30  contribution plan is elected under paragraph (b), contributions 
105.31  to that plan commence as of the first day of the first pay 
105.32  period following the election, and the accumulated member and 
105.33  employer contributions determined under paragraph (a) must be 
105.34  transferred with annual compound interest at the rate of six 
105.35  percent to an account established for the eligible person in its 
105.36  public employees defined contribution plan. 
106.1      (d) If no election is made by an eligible person by the 
106.2   required date in paragraph (b), the individual is assumed to 
106.3   have elected the refund indicated in paragraph (b). 
106.4      (e) Upon an election under paragraph (b), or upon a 
106.5   mandatory refund under paragraph (d), all rights in the Public 
106.6   Employees Retirement Association coordinated plan due to elected 
106.7   Goodhue County board service are forfeited and may not be 
106.8   reestablished.  
106.9      Sec. 3.  [EFFECTIVE DATE.] 
106.10     Sections 1 and 2 are effective on the day following final 
106.11  enactment.  
106.12                             ARTICLE 17
106.13                   PRIOR SERVICE CREDIT PURCHASES
106.14     Section 1.  Minnesota Statutes 2002, section 352.275, 
106.15  subdivision 1, is amended to read: 
106.16     Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
106.17  state employee who has at least three years of allowable service 
106.18  with the Minnesota State Retirement System and who performed 
106.19  service in the United States armed forces before becoming a 
106.20  state employee, or who failed to obtain service credit for a 
106.21  military leave of absence under section 352.27, is entitled to 
106.22  purchase allowable service credit for the initial period of 
106.23  enlistment, induction, or call to active duty without any 
106.24  voluntary extension by making payment under section 356.55 if 
106.25  the employee is not entitled to receive a current or deferred 
106.26  retirement annuity from a United States armed forces pension 
106.27  plan and has not purchased service credit from any other defined 
106.28  benefit public employee pension plan for the same period of 
106.29  service. 
106.30     Sec. 2.  Minnesota Statutes 2002, section 352B.01, 
106.31  subdivision 3a, is amended to read: 
106.32     Subd. 3a.  [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 
106.33  (a) A member who has at least three years of allowable service 
106.34  with the State Patrol retirement plan under subdivision 3 and 
106.35  who performed service in the United States armed forces before 
106.36  becoming a member is entitled to purchase allowable service 
107.1   credit for the initial period of enlistment, induction, or call 
107.2   to active duty without any voluntary extension by making payment 
107.3   under section 356.55, if the employee is not entitled to receive 
107.4   a current or deferred retirement annuity from a United States 
107.5   armed forces pension plan and has not purchased service credit 
107.6   from any other defined benefit public employee pension plan for 
107.7   the same period of service. 
107.8      (b) A member who desires to purchase service credit under 
107.9   paragraph (a) must apply with the executive director to make the 
107.10  purchase.  The application must include all necessary 
107.11  documentation of the member's qualifications to make the 
107.12  purchase, signed written permission to allow the executive 
107.13  director to request and receive necessary verification of 
107.14  applicable facts and eligibility requirements, and any other 
107.15  relevant information that the executive director may require. 
107.16     (c) Allowable service credit for the purchase period must 
107.17  be granted by the State Patrol retirement plan to the purchasing 
107.18  employee upon receipt of the purchase payment amount.  Payment 
107.19  must be made before the effective date of retirement of the 
107.20  member. 
107.21     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
107.22  subdivision 16a, is amended to read: 
107.23     Subd. 16a.  [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 
107.24  (a) A public employee who has at least three years of allowable 
107.25  service with the Public Employees Retirement Association or the 
107.26  public employees police and fire plan and who performed service 
107.27  in the United States armed forces before becoming a public 
107.28  employee, or who failed to obtain service credit for a military 
107.29  leave of absence under subdivision 16, paragraph (h), is 
107.30  entitled to purchase allowable service credit for the initial 
107.31  period of enlistment, induction, or call to active duty without 
107.32  any voluntary extension by making payment under section 
107.33  356.55 if the public employee is not entitled to receive a 
107.34  current or deferred retirement annuity from a United States 
107.35  armed forces pension plan and has not purchased service credit 
107.36  from any other defined benefit public employee pension plan for 
108.1   the same period of service. 
108.2      (b) A public employee who desires to purchase service 
108.3   credit under paragraph (a) must apply with the executive 
108.4   director to make the purchase.  The application must include all 
108.5   necessary documentation of the public employee's qualifications 
108.6   to make the purchase, signed written permission to allow the 
108.7   executive director to request and receive necessary verification 
108.8   of applicable facts and eligibility requirements, and any other 
108.9   relevant information that the executive director may require. 
108.10     (c) Allowable service credit for the purchase period must 
108.11  be granted by the public employees association or the public 
108.12  employees police and fire plan, whichever applies, to the 
108.13  purchasing public employee upon receipt of the purchase payment 
108.14  amount.  Payment must be made before the effective date of 
108.15  retirement of the public employee. 
108.16     Sec. 4.  Minnesota Statutes 2002, section 354.533, 
108.17  subdivision 1, is amended to read: 
108.18     Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
108.19  teacher who has at least three years of allowable service credit 
108.20  with the Teachers Retirement Association and who performed 
108.21  service in the United States armed forces before becoming a 
108.22  teacher as defined in section 354.05, subdivision 2, or who 
108.23  failed to obtain service credit for a military leave of absence 
108.24  under the provisions of section 354.53, is entitled to purchase 
108.25  allowable and formula service credit for the initial period of 
108.26  enlistment, induction, or call to active duty without any 
108.27  voluntary extension by making payment under section 356.55 
108.28  provided the teacher is not entitled to receive a current or 
108.29  deferred retirement annuity from a United States armed forces 
108.30  pension plan and has not purchased service credit from any other 
108.31  defined benefit public employee pension plan for the same period 
108.32  of service. 
108.33     Sec. 5.  Minnesota Statutes 2002, section 354A.097, 
108.34  subdivision 1, is amended to read: 
108.35     Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
108.36  teacher who has at least three years of allowable service credit 
109.1   with the teachers retirement fund association and who performed 
109.2   service in the United States armed forces before becoming a 
109.3   teacher as defined in section 354A.011, subdivision 27, or who 
109.4   failed to obtain service credit for a military leave of absence 
109.5   period under section 354A.093, is entitled to purchase allowable 
109.6   service credit for the initial period of enlistment, induction, 
109.7   or call to active duty without any voluntary extension by making 
109.8   payment under section 356.55, provided the teacher is not 
109.9   entitled to receive a current or deferred retirement annuity 
109.10  from a United States armed forces pension plan and has not 
109.11  purchased service credit from another defined benefit public 
109.12  employee pension plan for the same period of service. 
109.13     Sec. 6.  Laws 1999, chapter 222, article 16, section 16, as 
109.14  amended by Laws 2002, chapter 392, article 7, section 1, and 
109.15  Laws 2003, First Special Session chapter 12, article 6, section 
109.16  2, is amended to read: 
109.17     Sec. 16.  [REPEALER.] 
109.18     (a) Sections 1 2 to 6 and 8 to 13 are repealed on May 16, 
109.19  2004. 
109.20     (b) Sections 1 and 7 are repealed on May 16, 2006. 
109.21     Sec. 7.  Laws 2000, chapter 461, article 4, section 4, as 
109.22  amended by Laws 2003, First Special Session chapter 12, article 
109.23  6, section 4, is amended to read: 
109.24     Sec. 4.  [EFFECTIVE DATE; SUNSET REPEALER.] 
109.25     (a) Sections 1, 2, and 3 are effective on the day following 
109.26  final enactment. 
109.27     (b) Sections 1, 2, and 3, are repealed on May 16, 2004 2006.
109.28     Sec. 8.  [EFFECTIVE DATE.] 
109.29     Sections 1 to 7 are effective on the day following final 
109.30  enactment. 
109.31                             ARTICLE 18
109.32                  PROVISION OF ACTUARIAL SERVICES
109.33     Section 1.  Minnesota Statutes 2002, section 352.03, 
109.34  subdivision 6, is amended to read: 
109.35     Subd. 6.  [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 
109.36  management of the system is vested in the director, who is the 
110.1   executive and administrative head of the system.  The director 
110.2   shall be advisor to the board on matters pertaining to the 
110.3   system and shall also act as the secretary of the board.  The 
110.4   director shall: 
110.5      (1) attend meetings of the board; 
110.6      (2) prepare and recommend to the board appropriate rules to 
110.7   carry out this chapter; 
110.8      (3) establish and maintain an adequate system of records 
110.9   and accounts following recognized accounting principles and 
110.10  controls; 
110.11     (4) designate an assistant director with the approval of 
110.12  the board; 
110.13     (5) appoint any employees, both permanent and temporary, 
110.14  that are necessary to carry out the provisions of this chapter; 
110.15     (6) organize the work of the system as the director deems 
110.16  necessary to fulfill the functions of the system, and define the 
110.17  duties of its employees and delegate to them any powers or 
110.18  duties, subject to the control of the director and under 
110.19  conditions the director may prescribe.  Appointments to exercise 
110.20  delegated power must be by written order and shall be filed with 
110.21  the secretary of state; 
110.22     (7) with the advice and consent of the board, contract for 
110.23  the services of an approved actuary, professional management 
110.24  services, and any other consulting services as necessary and fix 
110.25  the compensation for those services.  The contracts are not 
110.26  subject to competitive bidding under chapter 16C.  Any approved 
110.27  actuary retained by the executive director shall function as the 
110.28  actuarial advisor of the board and the executive director, and 
110.29  may perform actuarial valuations and experience studies to 
110.30  supplement those performed by the actuary retained by the 
110.31  legislative commission on pensions and retirement under section 
110.32  6.  Any supplemental actuarial valuations or experience studies 
110.33  shall be filed with the executive director of the Legislative 
110.34  Commission on Pensions and Retirement.  Professional management 
110.35  services may not be contracted for more often than once in six 
110.36  years.  Copies of professional management survey reports must be 
111.1   transmitted to the secretary of the senate, the chief clerk of 
111.2   the house of representatives, and the legislative reference 
111.3   library as provided by section 3.195, and to the executive 
111.4   director of the commission at the time as reports are furnished 
111.5   to the board.  Only management firms experienced in conducting 
111.6   management surveys of federal, state, or local public retirement 
111.7   systems are qualified to contract with the director; 
111.8      (8) with the advice and consent of the board provide 
111.9   in-service training for the employees of the system; 
111.10     (9) make refunds of accumulated contributions to former 
111.11  state employees and to the designated beneficiary, surviving 
111.12  spouse, legal representative, or next of kin of deceased state 
111.13  employees or deceased former state employees, as provided in 
111.14  this chapter; 
111.15     (10) determine the amount of the annuities and disability 
111.16  benefits of employees covered by the system and authorize 
111.17  payment of the annuities and benefits beginning as of the dates 
111.18  on which the annuities and benefits begin to accrue, in 
111.19  accordance with the provisions of this chapter; 
111.20     (11) pay annuities, refunds, survivor benefits, salaries, 
111.21  and necessary operating expenses of the system; 
111.22     (12) certify funds available for investment to the State 
111.23  Board of Investment; 
111.24     (13) with the advice and approval of the board request the 
111.25  State Board of Investment to sell securities when the director 
111.26  determines that funds are needed for the system; 
111.27     (14) prepare and submit to the board and the legislature an 
111.28  annual financial report covering the operation of the system, as 
111.29  required by section 356.20; 
111.30     (15) prepare and submit biennial and annual budgets to the 
111.31  board and with the approval of the board submit the budgets to 
111.32  the Department of Finance; and 
111.33     (16) with the approval of the board, perform other duties 
111.34  required to administer the retirement and other provisions of 
111.35  this chapter and to do its business. 
111.36     Sec. 2.  Minnesota Statutes 2002, section 352B.02, 
112.1   subdivision 1e, is amended to read: 
112.2      Subd. 1e.  [AUDIT; ACTUARIAL VALUATION.] The legislative 
112.3   auditor shall audit the fund.  Any actuarial valuation of the 
112.4   fund required under section 356.215 shall must be prepared by 
112.5   the actuary retained by the Legislative Commission on Pensions 
112.6   and Retirement under section 6.  Any approved actuary retained 
112.7   by the executive director under section 352.03, subdivision 6, 
112.8   may perform actuarial valuations and experience studies to 
112.9   supplement those performed by the commission-retained actuary.  
112.10  Any supplemental actuarial valuation or experience studies shall 
112.11  be filed with the executive director of the Legislative 
112.12  Commission on Pensions and Retirement.  
112.13     Sec. 3.  Minnesota Statutes 2002, section 353.03, 
112.14  subdivision 3a, is amended to read: 
112.15     Subd. 3a.  [EXECUTIVE DIRECTOR.] (a)  [APPOINTMENT.] The 
112.16  board shall appoint, with the advice and consent of the senate, 
112.17  an executive director on the basis of education, experience in 
112.18  the retirement field, and leadership ability.  The executive 
112.19  director shall have had at least five years' experience in an 
112.20  executive level management position, which has included 
112.21  responsibility for pensions, deferred compensation, or employee 
112.22  benefits.  The executive director serves at the pleasure of the 
112.23  board.  The salary of the executive director is as provided by 
112.24  section 15A.0815. 
112.25     (b)  [DUTIES.] The management of the association is vested 
112.26  in the executive director who shall be the executive and 
112.27  administrative head of the association.  The executive director 
112.28  shall act as adviser to the board on all matters pertaining to 
112.29  the association and shall also act as the secretary of the 
112.30  board.  The executive director shall: 
112.31     (1) attend all meetings of the board; 
112.32     (2) prepare and recommend to the board appropriate rules to 
112.33  carry out the provisions of this chapter; 
112.34     (3) establish and maintain an adequate system of records 
112.35  and accounts following recognized accounting principles and 
112.36  controls; 
113.1      (4) designate, with the approval of the board, up to two 
113.2   persons who shall serve in the unclassified service and whose 
113.3   salary is set in accordance with section 43A.18, subdivision 3, 
113.4   appoint a confidential secretary in the unclassified service, 
113.5   and appoint employees to carry out this chapter, who are subject 
113.6   to chapters 43A and 179A in the same manner as are executive 
113.7   branch employees; 
113.8      (5) organize the work of the association as the director 
113.9   deems necessary to fulfill the functions of the association, and 
113.10  define the duties of its employees and delegate to them any 
113.11  powers or duties, subject to the control of, and under such 
113.12  conditions as, the executive director may prescribe; 
113.13     (6) with the approval of the board, contract for the 
113.14  services of an approved actuary, professional management 
113.15  services, and any other consulting services as necessary to 
113.16  fulfill the purposes of this chapter.  All contracts are subject 
113.17  to chapter 16C.  The commissioner of administration shall not 
113.18  approve, and the association shall not enter into, any contract 
113.19  to provide lobbying services or legislative advocacy of any 
113.20  kind.  Any approved actuary retained by the executive director 
113.21  shall function as the actuarial advisor of the board and the 
113.22  executive director and may perform actuarial valuations and 
113.23  experience studies to supplement those performed by the actuary 
113.24  retained by the Legislative Commission on Pensions and 
113.25  Retirement under section 6.  Any supplemental actuarial 
113.26  valuations or experience studies shall be filed with the 
113.27  executive director of the Legislative Commission on Pensions and 
113.28  Retirement.  Copies of professional management survey reports 
113.29  shall be transmitted to the secretary of the senate, the chief 
113.30  clerk of the house of representatives, and the Legislative 
113.31  Reference Library as provided by section 3.195, and to the 
113.32  executive director of the commission at the same time as reports 
113.33  are furnished to the board.  Only management firms experienced 
113.34  in conducting management surveys of federal, state, or local 
113.35  public retirement systems shall be qualified to contract with 
113.36  the director hereunder; 
114.1      (7) with the approval of the board provide in-service 
114.2   training for the employees of the association; 
114.3      (8) make refunds of accumulated contributions to former 
114.4   members and to the designated beneficiary, surviving spouse, 
114.5   legal representative or next of kin of deceased members or 
114.6   deceased former members, as provided in this chapter; 
114.7      (9) determine the amount of the annuities and disability 
114.8   benefits of members covered by the association and authorize 
114.9   payment of the annuities and benefits beginning as of the dates 
114.10  on which the annuities and benefits begin to accrue, in 
114.11  accordance with the provisions of this chapter; 
114.12     (10) pay annuities, refunds, survivor benefits, salaries, 
114.13  and necessary operating expenses of the association; 
114.14     (11) prepare and submit to the board and the legislature an 
114.15  annual financial report covering the operation of the 
114.16  association, as required by section 356.20; 
114.17     (12) prepare and submit biennial and annual budgets to the 
114.18  board for its approval and submit the approved budgets to the 
114.19  department of finance for approval by the commissioner; 
114.20     (13) reduce all or part of the accrued interest payable 
114.21  under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 
114.22  subdivision 5, upon receipt of proof by the association of an 
114.23  unreasonable processing delay or other extenuating circumstances 
114.24  of the employing unit.  The executive director shall prescribe 
114.25  and submit for approval by the board the conditions under which 
114.26  such interest may be reduced; and 
114.27     (14) with the approval of the board, perform such other 
114.28  duties as may be required for the administration of the 
114.29  association and the other provisions of this chapter and for the 
114.30  transaction of its business.  
114.31     Sec. 4.  Minnesota Statutes 2002, section 354.06, 
114.32  subdivision 2a, is amended to read: 
114.33     Subd. 2a.  [DUTIES OF EXECUTIVE DIRECTOR.] The management 
114.34  of the association is vested in the executive director who shall 
114.35  be the executive and administrative head of the association.  
114.36  The executive director shall act as advisor to the board on all 
115.1   matters pertaining to the association and shall also act as the 
115.2   secretary of the board.  The executive director shall: 
115.3      (1) attend all meetings of the board; 
115.4      (2) prepare and recommend to the board appropriate rules to 
115.5   carry out the provisions of this chapter; 
115.6      (3) establish and maintain an adequate system of records 
115.7   and accounts following recognized accounting principles and 
115.8   controls; 
115.9      (4) designate an assistant executive director in the 
115.10  unclassified service and two assistant executive directors in 
115.11  the classified service with the approval of the board, and 
115.12  appoint such employees, both permanent and temporary, as are 
115.13  necessary to carry out the provisions of this chapter; 
115.14     (5) organize the work of the association as the director 
115.15  deems necessary to fulfill the functions of the association, and 
115.16  define the duties of its employees and delegate to them any 
115.17  powers or duties, subject to the director's control and under 
115.18  such conditions as the director may prescribe; 
115.19     (6) with the approval of the board, contract and set the 
115.20  compensation for the services of an approved actuary, 
115.21  professional management services, and any other consulting 
115.22  services.  These contracts are not subject to the competitive 
115.23  bidding procedure prescribed by chapter 16C.  An approved 
115.24  actuary retained by the executive director shall function as the 
115.25  actuarial advisor of the board and the executive director and 
115.26  may perform actuarial valuations and experience studies to 
115.27  supplement those performed by the actuary retained by the 
115.28  legislative commission on pensions and retirement under section 
115.29  6.  Any supplemental actuarial valuations or experience studies 
115.30  shall be filed with the executive director of the Legislative 
115.31  Commission on Pensions and Retirement.  Copies of professional 
115.32  management survey reports must be transmitted to the secretary 
115.33  of the senate, the chief clerk of the house of representatives, 
115.34  and the legislative reference library as provided by section 
115.35  3.195, and to the executive director of the commission at the 
115.36  same time as reports are furnished to the board.  Only 
116.1   management firms experienced in conducting management surveys of 
116.2   federal, state, or local public retirement systems are qualified 
116.3   to contract with the executive director; 
116.4      (7) with the approval of the board, provide in-service 
116.5   training for the employees of the association; 
116.6      (8) make refunds of accumulated contributions to former 
116.7   members and to the designated beneficiary, surviving spouse, 
116.8   legal representative, or next of kin of deceased members or 
116.9   deceased former members, under this chapter; 
116.10     (9) determine the amount of the annuities and disability 
116.11  benefits of members covered by the association and authorize 
116.12  payment of the annuities and benefits beginning as of the dates 
116.13  on which the annuities and benefits begin to accrue, under this 
116.14  chapter; 
116.15     (10) pay annuities, refunds, survivor benefits, salaries, 
116.16  and necessary operating expenses of the association; 
116.17     (11) prepare and submit to the board and the legislature an 
116.18  annual financial report covering the operation of the 
116.19  association, as required by section 356.20; 
116.20     (12) certify funds available for investment to the state 
116.21  board of investment; 
116.22     (13) with the advice and approval of the board, request the 
116.23  State Board of Investment to sell securities on determining that 
116.24  funds are needed for the purposes of the association; 
116.25     (14) prepare and submit biennial and annual budgets to the 
116.26  board and with the approval of the board submit those budgets to 
116.27  the department of finance; and 
116.28     (15) with the approval of the board, perform such other 
116.29  duties as may be required for the administration of the 
116.30  association and the other provisions of this chapter and for the 
116.31  transaction of its business.  The executive director may: 
116.32     (i) reduce all or part of the accrued interest and fines 
116.33  payable by an employing unit for reporting requirements under 
116.34  section 354.52, based on an evaluation of any extenuating 
116.35  circumstances of the employing unit; 
116.36     (ii) assign association employees to conduct field audits 
117.1   of an employing unit to ensure compliance with the provisions of 
117.2   this chapter; and 
117.3      (iii) recover overpayments, if not repaid to the 
117.4   association, by suspending or reducing the payment of a 
117.5   retirement annuity, refund, disability benefit, survivor 
117.6   benefit, or optional annuity under this chapter until the 
117.7   overpayment, plus interest, has been recovered. 
117.8      Sec. 5.  Minnesota Statutes 2002, section 354A.021, 
117.9   subdivision 7, is amended to read: 
117.10     Subd. 7.  [ACTUARIAL CONSULTANT.] The board of trustees or 
117.11  directors of each teachers retirement fund association may 
117.12  contract for the services of an approved actuary and fix the 
117.13  reasonable compensation for those services.  Any approved 
117.14  actuary retained by the board shall function as the actuarial 
117.15  advisor to the board and may perform actuarial valuations and 
117.16  experience studies to supplement those performed by the actuary 
117.17  retained by the Legislative Commission on Pensions and 
117.18  Retirement under section 6.  Any supplemental actuarial 
117.19  valuations or experience studies shall must be filed with the 
117.20  executive director of the Legislative Commission on Pensions and 
117.21  Retirement. 
117.22     Sec. 6.  [356.214] [ACTUARIAL VALUATION PREPARATION; JOINT 
117.23  RETENTION OF CONSULTING ACTUARY.] 
117.24     Subdivision 1.  [JOINT RETENTION.] (a) The chief 
117.25  administrative officers of the Minnesota State Retirement 
117.26  System, the Public Employees Retirement Association, the 
117.27  Teachers Retirement Association, the Duluth Teachers Retirement 
117.28  Fund Association, the Minneapolis Teachers Retirement Fund 
117.29  Association, the Minneapolis Employees Retirement Fund, and the 
117.30  St. Paul Teachers Retirement Fund Association, jointly, on 
117.31  behalf of the state, its employees, its taxpayers, and its 
117.32  various public pension plans, shall contract with an established 
117.33  actuarial consulting firm to conduct annual actuarial valuations 
117.34  and related services for the retirement plans named in paragraph 
117.35  (b).  The principal from the actuarial consulting firm on the 
117.36  contract must be an approved actuary under section 356.215, 
118.1   subdivision 1, paragraph (c).  Prior to becoming effective, the 
118.2   contract under this section is subject to a review and approval 
118.3   by the Legislative Commission on Pensions and Retirement. 
118.4      (b) The contract for actuarial services must include the 
118.5   preparation of actuarial valuations and related actuarial work 
118.6   for the following retirement plans:  
118.7      (1) the teachers retirement plan, Teachers Retirement 
118.8   Association; 
118.9      (2) the general state employees retirement plan, Minnesota 
118.10  State Retirement System; 
118.11     (3) the correctional employees retirement plan, Minnesota 
118.12  State Retirement System; 
118.13     (4) the State Patrol retirement plan, Minnesota State 
118.14  Retirement System; 
118.15     (5) the judges retirement plan, Minnesota State Retirement 
118.16  System; 
118.17     (6) the Minneapolis employees retirement plan, Minneapolis 
118.18  Employees Retirement Fund; 
118.19     (7) the public employees retirement plan, Public Employees 
118.20  Retirement Association; 
118.21     (8) the public employees police and fire plan, Public 
118.22  Employees Retirement Association; 
118.23     (9) the Duluth teachers retirement plan, Duluth Teachers 
118.24  Retirement Fund Association; 
118.25     (10) the Minneapolis teachers retirement plan, Minneapolis 
118.26  Teachers Retirement Fund Association; 
118.27     (11) the St. Paul teachers retirement plan, St. Paul 
118.28  Teachers Retirement Fund Association; 
118.29     (12) the legislators retirement plan, Minnesota State 
118.30  Retirement System; 
118.31     (13) the elective state officers retirement plan, Minnesota 
118.32  State Retirement System; and 
118.33     (14) local government correctional service retirement plan, 
118.34  Public Employees Retirement Association.  
118.35     (c) The contract must require completion of the annual 
118.36  actuarial valuation calculations on a fiscal year basis, with 
119.1   the contents of the actuarial valuation calculations as 
119.2   specified in section 356.215, and in conformity with the 
119.3   standards for actuarial work adopted by the Legislative 
119.4   Commission on Pensions and Retirement.  
119.5      The contract must require completion of annual experience 
119.6   data collection and processing and a quadrennial published 
119.7   experience study for the plans listed in paragraph (b), clauses 
119.8   (1), (2), and (7), as provided for in the standards for 
119.9   actuarial work adopted by the commission.  The experience data 
119.10  collection, processing, and analysis must evaluate the following:
119.11     (1) individual salary progression; 
119.12     (2) the rate of return on investments based on the current 
119.13  asset value; 
119.14     (3) payroll growth; 
119.15     (4) mortality; 
119.16     (5) retirement age; 
119.17     (6) withdrawal; and 
119.18     (7) disablement.  
119.19     The contract must include provisions for the preparation of 
119.20  cost analyses by the jointly retained actuary for proposed 
119.21  legislation that include changes in benefit provisions or 
119.22  funding policies prior to their consideration by the Legislative 
119.23  Commission on Pensions and Retirement. 
119.24     (d) The actuary retained by the joint retirement systems 
119.25  shall annually prepare a report to the legislature, including a 
119.26  commentary on the actuarial valuation calculations for the plans 
119.27  named in paragraph (b) and summarizing the results of the 
119.28  actuarial valuation calculations.  The actuary shall include 
119.29  with the report the actuary's recommendations to the legislature 
119.30  concerning the appropriateness of the support rates to achieve 
119.31  proper funding of the retirement plans by the required funding 
119.32  dates.  The actuary shall, as part of the quadrennial experience 
119.33  study, include recommendations to the legislature on the 
119.34  appropriateness of the actuarial valuation assumptions required 
119.35  for evaluation in the study.  
119.36     (e) If the actuarial gain and loss analysis in the 
120.1   actuarial valuation calculations indicates a persistent pattern 
120.2   of sizable gains or losses, as directed by the joint retirement 
120.3   systems or as requested by the chair of the Legislative 
120.4   Commission on Pensions and Retirement, the actuary shall prepare 
120.5   a special experience study for a plan listed in paragraph (b), 
120.6   clause (3), (4), (5), (6), (8), (9), (10), (11), (12), (13), or 
120.7   (14), in the manner provided for in the standards for actuarial 
120.8   work adopted by the commission. 
120.9      (f) The term of the contract between the joint retirement 
120.10  systems and the actuary retained may not exceed five years.  The 
120.11  joint retirement system administrative officers shall establish 
120.12  procedures for the consideration and selection of contract 
120.13  bidders and the requirements for the contents of an actuarial 
120.14  services contract under this section.  The procedures and 
120.15  requirements must be submitted to the Legislative Commission on 
120.16  Pensions and Retirement for review and comment prior to final 
120.17  approval by the joint administrators.  The contract is subject 
120.18  to the procurement procedures under chapter 16C.  The 
120.19  consideration of bids and the selection of a consulting 
120.20  actuarial firm by the chief administrative officers must occur 
120.21  at a meeting that is open to the public and reasonable timely 
120.22  public notice of the date and the time of the meeting and its 
120.23  subject matter must be given. 
120.24     (g) The actuarial services contract may not limit the 
120.25  ability of the Minnesota legislature and its standing committees 
120.26  and commissions to rely on the actuarial results of the work 
120.27  prepared under the contract. 
120.28     (h) The joint retirement systems shall designate one of the 
120.29  retirement system executive directors as the actuarial services 
120.30  contract manager. 
120.31     Subd. 2.  [ALLOCATION OF ACTUARIAL COSTS.] (a) The 
120.32  actuarial services contract manager shall assess each retirement 
120.33  plan specified in subdivision 1, paragraph (b), its appropriate 
120.34  portion of the total compensation paid to the actuary retained 
120.35  by the joint retirement systems for the actuarial valuation 
120.36  calculations and quadrennial experience studies.  The total 
121.1   assessment is 100 percent of the amount of contract compensation 
121.2   for the actuarial consulting firm for actuarial valuation 
121.3   calculations, including any public employees police and fire 
121.4   plan consolidation accounts of the Public Employees Retirement 
121.5   Association established after March 1, 1999, annual experience 
121.6   data collection and processing, and quadrennial experience 
121.7   studies.  
121.8      The portion of the total assessment payable by each 
121.9   retirement system or pension plan must be determined based on 
121.10  each plan's proportion of the actuarial services required, as 
121.11  determined by the retained actuary, to complete the actuarial 
121.12  valuation calculations, annual experience data collection and 
121.13  processing, and quadrennial experience studies for all plans.  
121.14     The assessment must be made within 30 days following the 
121.15  end of the fiscal year and must be reported to the chief 
121.16  administrative officers of the applicable retirement plans.  The 
121.17  amount of the assessment is appropriated from the retirement 
121.18  fund applicable to the retirement plan. 
121.19     (b) The actuarial services contract manager shall assess 
121.20  each retirement plan or each interest group which requested the 
121.21  preparation of a cost analysis for proposed legislation the cost 
121.22  of the actuary retained by the joint retirement systems incurred 
121.23  in the cost analysis preparation.  With respect to interest 
121.24  groups, the actuarial services contract manager shall obtain a 
121.25  written commitment for the payment of the assessment in advance 
121.26  of the cost analysis preparation and may require an advance 
121.27  deposit or advance payment before authorizing the cost analysis 
121.28  preparation.  The retirement plan or the interest group shall 
121.29  pay the assessment within 30 days of the date on which the 
121.30  assessment is billed.  The amount of the assessment is 
121.31  appropriated from the retirement fund applicable to the 
121.32  retirement plan for cost analyses requested by a retirement plan 
121.33  or system. 
121.34     (c) The actuarial services contract manager shall assess to 
121.35  the Legislative Commission on Pensions and Retirement the cost 
121.36  of the actuarial cost analysis preparation for the proposed 
122.1   legislation requested by the chair of the Legislative Commission 
122.2   on Pensions and Retirement or by the commission executive 
122.3   director.  The commission shall pay the assessment within 30 
122.4   days of the date on which the assessment is billed. 
122.5      Subd. 3.  [REPORTING TO THE COMMISSION.] A copy of the 
122.6   actuarial valuations, experience studies, and actuarial cost 
122.7   analyses prepared by the actuary retained by the joint 
122.8   retirement systems under the contract provided for in this 
122.9   section must be filed with the executive director of the 
122.10  Legislative Commission on Pensions and Retirement at the same 
122.11  time that the document is transmitted to the actuarial services 
122.12  contract manager or to any other document recipient. 
122.13     Sec. 7.  Minnesota Statutes 2002, section 356.215, 
122.14  subdivision 2, is amended to read: 
122.15     Subd. 2.  [REQUIREMENTS.] (a) It is the policy of the 
122.16  legislature that it is necessary and appropriate to determine 
122.17  annually the financial status of tax supported retirement and 
122.18  pension plans for public employees.  To achieve this goal:  
122.19     (1) the Legislative Commission on Pensions and Retirement 
122.20  shall have prepared by the actuary retained by the commission 
122.21  under section 6 shall prepare annual actuarial valuations of the 
122.22  retirement plans enumerated in section 3.85 6, subdivision 11 1, 
122.23  paragraph (b), and quadrennial experience studies of the 
122.24  retirement plans enumerated in section 3.85 6, subdivision 11 1, 
122.25  paragraph (b), clauses (1), (2), and (7); and 
122.26     (2) the commissioner of finance may have prepared by the 
122.27  actuary retained by the commission, two years after each set of 
122.28  quadrennial experience studies, quadrennial projection 
122.29  valuations of at least one of the retirement plans enumerated in 
122.30  section 3.85 6, subdivision 11 1, paragraph (b), for which the 
122.31  commissioner determines that the analysis may be beneficial.  
122.32     (b) The governing or managing board or administrative 
122.33  officials of each public pension and retirement fund or plan 
122.34  enumerated in section 356.20, subdivision 2, clauses (9), (10), 
122.35  and (12), shall have prepared by an approved actuary annual 
122.36  actuarial valuations of their respective funds as provided in 
123.1   this section.  This requirement also applies to any fund or plan 
123.2   that is the successor to any organization enumerated in section 
123.3   356.20, subdivision 2, or to the governing or managing board or 
123.4   administrative officials of any newly formed retirement fund, 
123.5   plan, or association operating under the control or supervision 
123.6   of any public employee group, governmental unit, or institution 
123.7   receiving a portion of its support through legislative 
123.8   appropriations, and any local police or fire fund to which 
123.9   section 356.216 applies. 
123.10     Sec. 8.  Minnesota Statutes 2002, section 356.215, 
123.11  subdivision 18, is amended to read: 
123.12     Subd. 18.  [ESTABLISHMENT OF ACTUARIAL ASSUMPTIONS.] (a) 
123.13  The actuarial assumptions used for the preparation of actuarial 
123.14  valuations under this section that are other than those set 
123.15  forth in this section may be changed only with the approval of 
123.16  the Legislative Commission on Pensions and Retirement.  
123.17     (b) A change in the applicable actuarial assumptions may be 
123.18  proposed by the governing board of the applicable pension fund 
123.19  or relief association, by the actuary retained by the 
123.20  Legislative Commission on Pensions and Retirement joint 
123.21  retirement systems under section 6, by the actuarial advisor to 
123.22  a pension fund governed by chapter 352, 353, 354, or 354A, or by 
123.23  the actuary retained by a local police or firefighters relief 
123.24  association governed by sections 69.77 or 69.771 to 69.776, if 
123.25  one is retained. 
123.26     Sec. 9.  Minnesota Statutes 2002, section 422A.06, 
123.27  subdivision 2, is amended to read: 
123.28     Subd. 2.  [ACTUARIAL VALUATION REQUIRED.] As of July 1 of 
123.29  each year, an actuarial valuation of the retirement fund shall 
123.30  be prepared by the commission-retained actuary retained by the 
123.31  joint retirement systems under section 6 and filed in 
123.32  conformance with the provisions and requirements of sections 
123.33  356.215 to 356.23.  Experience studies shall be prepared at 
123.34  those times required by statute, required by the standards for 
123.35  actuarial work adopted by the Legislative Commission on Pensions 
123.36  and Retirement or ordered by the board. 
124.1      The board may contract for the services of an approved 
124.2   actuary and fix the reasonable compensation for those services.  
124.3   Any approved actuary retained by the board shall function as the 
124.4   actuarial advisor to the board and may perform actuarial 
124.5   valuations and experience studies to supplement those performed 
124.6   by the actuary retained by the Legislative Commission on 
124.7   Pensions and Retirement joint retirement systems under section 6.
124.8   Any supplemental actuarial valuations or experience studies 
124.9   shall must be filed with the executive director of the 
124.10  Legislative Commission on Pensions and Retirement.  
124.11     Sec. 10.  [REPEALER.] 
124.12     Minnesota Statutes 2002, sections 3.85, subdivisions 11 and 
124.13  12; and 356.217 are repealed. 
124.14     Sec. 11. [EFFECTIVE DATE.] 
124.15     Sections 1 to 10 are effective on the day following final 
124.16  enactment. 
124.17                             ARTICLE 19 
124.18               MINNEAPOLIS POLICE RELIEF ASSOCIATION 
124.19     Section 1.  Minnesota Statutes 2002, section 69.77, 
124.20  subdivision 4, is amended to read: 
124.21     Subd. 4.  [RELIEF ASSOCIATION FINANCIAL REQUIREMENTS; 
124.22  MINIMUM MUNICIPAL OBLIGATION.] (a) The officers of the relief 
124.23  association shall determine the financial requirements of the 
124.24  relief association and minimum obligation of the municipality 
124.25  for the following calendar year in accordance with the 
124.26  requirements of this subdivision.  The financial requirements of 
124.27  the relief association and the minimum obligation of the 
124.28  municipality must be determined on or before the submission date 
124.29  established by the municipality under subdivision 5. 
124.30     (b) The financial requirements of the relief association 
124.31  for the following calendar year must be based on the most recent 
124.32  actuarial valuation or survey of the special fund of the 
124.33  association if more than one fund is maintained by the 
124.34  association, or of the association, if only one fund is 
124.35  maintained, prepared in accordance with sections 356.215, 
124.36  subdivisions 4 to 15, and 356.216, as required under subdivision 
125.1   10.  If an actuarial estimate is prepared by the actuary of the 
125.2   relief association as part of obtaining a modification of the 
125.3   benefit plan of the relief association and the modification is 
125.4   implemented, the actuarial estimate must be used in calculating 
125.5   the subsequent financial requirements of the relief association. 
125.6      (c) If the relief association has an unfunded actuarial 
125.7   accrued liability as reported in the most recent actuarial 
125.8   valuation or survey, the total of the amounts calculated under 
125.9   clauses (1), (2), and (3), constitute the financial requirements 
125.10  of the relief association for the following year.  If the relief 
125.11  association does not have an unfunded actuarial accrued 
125.12  liability as reported in the most recent actuarial valuation or 
125.13  survey, the amount calculated under clauses (1) and (2) 
125.14  constitute the financial requirements of the relief association 
125.15  for the following year.  The financial requirement elements are: 
125.16     (1) the normal level cost requirement for the following 
125.17  year, expressed as a dollar amount, which must be determined by 
125.18  applying the normal level cost of the relief association as 
125.19  reported in the actuarial valuation or survey and expressed as a 
125.20  percentage of covered payroll to the estimated covered payroll 
125.21  of the active membership of the relief association, including 
125.22  any projected change in the active membership, for the following 
125.23  year; 
125.24     (2) for the Bloomington Fire Department Relief Association, 
125.25  the Fairmont Police Relief Association, and the Virginia Fire 
125.26  Department Relief Association, to the dollar amount of normal 
125.27  cost determined under clause (1) must be added an amount equal 
125.28  to the dollar amount of the administrative expenses of the 
125.29  special fund of the association if more than one fund is 
125.30  maintained by the association, or of the association if only one 
125.31  fund is maintained, for the most recent year, multiplied by the 
125.32  factor of 1.035.  The administrative expenses are those 
125.33  authorized under section 69.80.  No amount of administrative 
125.34  expenses under this clause are to be included in the financial 
125.35  requirements of the Minneapolis Firefighters Relief Association 
125.36  or the Minneapolis Police Relief Association; and 
126.1      (3) to the dollar amount of normal cost and expenses 
126.2   determined under clauses (1) and (2) must be added an amount 
126.3   equal to the level annual dollar amount which is sufficient to 
126.4   amortize the unfunded actuarial accrued liability by December 
126.5   31, 2010, for the Bloomington Fire Department Relief 
126.6   Association, the Fairmont Police Relief Association, the 
126.7   Minneapolis Firefighters Relief Association, and the Virginia 
126.8   Fire Department Relief Association, and by December 31, 2020, 
126.9   for the Minneapolis Police Relief Association, as determined 
126.10  from the actuarial valuation or survey of the fund, using an 
126.11  interest assumption set at the applicable rate specified in 
126.12  section 356.215, subdivision 8.  The amortization date specified 
126.13  in this clause applies to all local police or salaried 
126.14  firefighters' relief associations and that date supersedes any 
126.15  amortization date specified in any applicable special law. 
126.16     (d) The minimum obligation of the municipality is an amount 
126.17  equal to the financial requirements of the relief association 
126.18  reduced by the estimated amount of member contributions from 
126.19  covered salary anticipated for the following calendar year and 
126.20  the estimated amounts anticipated for the following calendar 
126.21  year from the applicable state aid program established under 
126.22  sections 69.011 to 69.051 receivable by the relief association 
126.23  after any allocation made under section 69.031, subdivision 5, 
126.24  paragraph (b), clause (2), or 423A.01, subdivision 2, clause 
126.25  (6), from the local police and salaried firefighters' relief 
126.26  association amortization aid program established under section 
126.27  423A.02, subdivision 1, from the supplementary amortization 
126.28  state-aid program established under section 423A.02, subdivision 
126.29  1a, and from the additional amortization state aid under section 
126.30  423A.02, subdivision 1b. 
126.31     Sec. 2.  Minnesota Statutes 2002, section 356.216, is 
126.32  amended to read: 
126.33     356.216 [CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE 
126.34  AND FIRE FUNDS.] 
126.35     (a) The provisions of section 356.215 that govern the 
126.36  contents of actuarial valuations must apply to any local police 
127.1   or fire pension fund or relief association required to make an 
127.2   actuarial report under this section, except as follows: 
127.3      (1) in calculating normal cost and other requirements, if 
127.4   required to be expressed as a level percentage of covered 
127.5   payroll, the salaries used in computing covered payroll must be 
127.6   the maximum rate of salary on which retirement and survivorship 
127.7   credits and amounts of benefits are determined and from which 
127.8   any member contributions are calculated and deducted; 
127.9      (2) in lieu of the amortization date specified in section 
127.10  356.215, subdivision 11, the appropriate amortization target 
127.11  date specified in section 69.77, subdivision 4, or 69.773, 
127.12  subdivision 4, clause (c), must be used in calculating any 
127.13  required amortization contribution except that the amortization 
127.14  date for the Minneapolis Police Relief Association is December 
127.15  31, 2020; 
127.16     (3) in addition to the tabulation of active members and 
127.17  annuitants provided for in section 356.215, subdivision 13, the 
127.18  member contributions for active members for the calendar year 
127.19  and the prospective annual retirement annuities under the 
127.20  benefit plan for active members must be reported; 
127.21     (4) actuarial valuations required under section 69.773, 
127.22  subdivision 2, must be made at least every four years and 
127.23  actuarial valuations required under section 69.77 shall be made 
127.24  annually; 
127.25     (5) the actuarial balance sheet showing accrued assets 
127.26  valued at market value if the actuarial valuation is required to 
127.27  be prepared at least every four years or valued as current 
127.28  assets under section 356.215, subdivision 1, clause (6), or 
127.29  paragraph (b), whichever applies, if the actuarial valuation is 
127.30  required to be prepared annually, actuarial accrued liabilities, 
127.31  and the unfunded actuarial accrued liability must include the 
127.32  following required reserves: 
127.33           (i) For active members 
127.34        1.  Retirement benefits 
127.35        2.  Disability benefits 
127.36        3.  Refund liability due to death or withdrawal 
128.1         4.  Survivors' benefits 
128.2            (ii) For deferred annuitants' benefits 
128.3            (iii) For former members without vested rights 
128.4            (iv) For annuitants 
128.5         1.  Retirement annuities 
128.6         2.  Disability annuities 
128.7         3.  Surviving spouses' annuities 
128.8         4.  Surviving children's annuities 
128.9      In addition to those required reserves, separate items must 
128.10  be shown for additional benefits, if any, which may not be 
128.11  appropriately included in the reserves listed above; and 
128.12     (6) actuarial valuations are due by the first day of the 
128.13  seventh month after the end of the fiscal year which the 
128.14  actuarial valuation covers. 
128.15     (b) For the Minneapolis Firefighters Relief Association or 
128.16  the Minneapolis Police Relief Association, the following 
128.17  provisions additionally apply: 
128.18     (1) in calculating the actuarial balance sheet, unfunded 
128.19  actuarial accrued liability, and amortization contribution of 
128.20  the relief association, "current assets" means the value of all 
128.21  assets at cost, including realized capital gains and losses, 
128.22  plus or minus, whichever applies, the average value of total 
128.23  unrealized capital gains or losses for the most recent 
128.24  three-year period ending with the end of the plan year 
128.25  immediately preceding the actuarial valuation report 
128.26  transmission date; and 
128.27     (2) in calculating the applicable portions of the actuarial 
128.28  valuation, an annual preretirement interest assumption of six 
128.29  percent, an annual postretirement interest assumption of six 
128.30  percent, and an annual salary increase assumption of four 
128.31  percent must be used. 
128.32     Sec. 3.  Minnesota Statutes 2002, section 423B.01, 
128.33  subdivision 12, is amended to read: 
128.34     Subd. 12.  [EXCESS INVESTMENT INCOME.] "Excess investment 
128.35  income" means the amount, if any, by which the average time 
128.36  weighted total rate of return earned by the fund in the most 
129.1   recent prior five two fiscal years has exceeded the actual 
129.2   average percentage increase in the current monthly salary of a 
129.3   first grade patrol officer in the most recent prior five two 
129.4   fiscal years plus two percent, and must be expressed as a dollar 
129.5   amount.  The amount may not exceed one percent of the total 
129.6   assets of the fund, except when the actuarial value of assets of 
129.7   the fund according to the most recent annual actuarial valuation 
129.8   prepared in accordance with sections 356.215 and 356.216 is 
129.9   greater than 102 percent of its actuarial accrued liabilities, 
129.10  in which case the amount must not exceed 1-1/2 percent of the 
129.11  total assets of the fund, and does not exist unless the yearly 
129.12  average percentage increase of the time weighted total rate of 
129.13  return of the fund for the previous five two years exceeds by 
129.14  two percent the yearly average percentage increase in monthly 
129.15  salary of a first grade patrol officer during the previous five 
129.16  two calendar years. 
129.17     Sec. 4.  Minnesota Statutes 2002, section 423B.09, 
129.18  subdivision 1, is amended to read: 
129.19     Subdivision 1.  [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 
129.20  RECEIVE PENSIONS.] The association shall grant pensions payable 
129.21  from the police pension fund in monthly installments to persons 
129.22  entitled to pensions in the manner and for the following 
129.23  purposes. 
129.24     (a) When the actuarial value of assets of the fund 
129.25  according to the most recent annual actuarial valuation 
129.26  performed in accordance with sections 356.215 and 356.216 is 
129.27  less than 90 percent of the actuarial accrued liabilities, an 
129.28  active member or a deferred pensioner who has performed duty as 
129.29  a member of the police department of the city for five years or 
129.30  more, upon written application after retiring from duty and 
129.31  reaching at least age 50, is entitled to be paid monthly for 
129.32  life a service pension equal to eight units.  For full years of 
129.33  service beyond five years, the service pension increases by 1.6 
129.34  units for each full year, to a maximum of 40 units.  When the 
129.35  actuarial value of assets of the fund according to the most 
129.36  recent annual actuarial valuation prepared in accordance with 
130.1   sections 356.215 and 356.216 is greater than 90 percent of 
130.2   actuarial accrued liabilities, Active members, deferred members, 
130.3   and service pensioners are entitled to a service pension 
130.4   according to the following schedule: 
130.5                  5 years           8.0 units
130.6                  6 years           9.6 units
130.7                  7 years          11.2 units
130.8                  8 years          12.8 units
130.9                  9 years          14.4 units
130.10                10 years          16.0 units
130.11                11 years          17.6 units
130.12                12 years          19.2 units
130.13                13 years          20.8 units
130.14                14 years          22.4 units
130.15                15 years          24.0 units
130.16                16 years          25.6 units
130.17                17 years          27.2 units
130.18                18 years          28.8 units
130.19                19 years          30.4 units
130.20                20 years          34.0 35.0 units
130.21                21 years          35.6 36.6 units
130.22                22 years          37.2 38.2 units
130.23                23 years          38.8 39.8 units
130.24                24 years          40.4 41.4 units
130.25                25 years          42.0 43.0 units
130.26     Fractional years of service may not be used in computing 
130.27  pensions. 
130.28     (b) An active member who after five years' service but less 
130.29  than 20 years' service with the police department of the city, 
130.30  becomes superannuated so as to be permanently unable to perform 
130.31  the person's assigned duties, is entitled to be paid monthly for 
130.32  life a superannuation pension equal to four units for five years 
130.33  of service and an additional two units for each full year of 
130.34  service over five years and less than 20 years. 
130.35     (c) An active member who is not eligible for a service 
130.36  pension and who, while a member of the police department of the 
131.1   city, becomes diseased or sustains an injury while in the 
131.2   service that permanently unfits the member for the performance 
131.3   of police duties is entitled to be paid monthly for life a 
131.4   pension equal to 34 units while so disabled. 
131.5      Sec. 5.  Minnesota Statutes 2002, section 423B.09, is 
131.6   amended by adding a subdivision to read: 
131.7      Subd. 7.  [ADDITIONAL UNIT.] The additional unit provided 
131.8   to members by subdivision 1 must also be provided to members who 
131.9   selected a joint annuity option under subdivision 6 and must be 
131.10  in an amount that is actuarially equivalent to the service 
131.11  pension and the automatic survivor coverage for that additional 
131.12  unit. 
131.13     Sec. 6.  Minnesota Statutes 2002, section 423B.10, 
131.14  subdivision 1, is amended to read: 
131.15     Subdivision 1.  [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 
131.16  surviving spouse of a deceased service pensioner, disability 
131.17  pensioner, deferred pensioner, superannuation pensioner, or 
131.18  active member, who was the legally married spouse of the 
131.19  decedent, residing with the decedent, and who was married while 
131.20  or before the time the decedent was on the payroll of the police 
131.21  department, and who, if the deceased member was a service or 
131.22  deferred pensioner, was legally married to the member for a 
131.23  period of at least one year before retirement from the police 
131.24  department, is entitled to a surviving spouse benefit.  The 
131.25  surviving spouse benefit is equal to 22 23 units per month if 
131.26  the person is the surviving spouse of a deceased active member 
131.27  or disabilitant.  The surviving spouse benefit is equal to six 
131.28  units per month, plus an additional one unit for each year of 
131.29  service to the credit of the decedent in excess of five years, 
131.30  to a maximum of 22 23 units per month, if the person is the 
131.31  surviving spouse of a deceased service pensioner, deferred 
131.32  pensioner, or superannuation pensioner.  The surviving spouse 
131.33  benefit is payable for the life of the surviving spouse. 
131.34     (b) A surviving child of a deceased service pensioner, 
131.35  disability pensioner, deferred pensioner, superannuation 
131.36  pensioner, or active member, who was living while the decedent 
132.1   was an active member of the police department or was born within 
132.2   nine months after the decedent terminated active service in the 
132.3   police department, is entitled to a surviving child benefit.  
132.4   The surviving child benefit is equal to eight units per month if 
132.5   the person is the surviving child of a deceased active member or 
132.6   disabilitant.  The surviving child benefit is equal to two units 
132.7   per month, plus an additional four-tenths of one unit per month 
132.8   for each year of service to the credit of the decedent in excess 
132.9   of five years, to a maximum of eight units, if the person is the 
132.10  surviving child of a deceased service pensioner, deferred 
132.11  pensioner, or superannuation pensioner.  The surviving child 
132.12  benefit is payable until the person attains age 18, or, if in 
132.13  full-time attendance during the normal school year, in a school 
132.14  approved by the board of directors, until the person receives a 
132.15  bachelor's degree or attains the age of 22 years, whichever 
132.16  occurs first.  In the event of the death of both parents leaving 
132.17  a surviving child or children entitled to a surviving child 
132.18  benefit as determined in this paragraph, the surviving child is, 
132.19  or the surviving children are, entitled to a surviving child 
132.20  benefit in such sums as determined by the board of directors to 
132.21  be necessary for the care and education of such surviving child 
132.22  or children, but not to exceed the family maximum benefit per 
132.23  month, to the children of any one family.  
132.24     (c) The surviving spouse and surviving child benefits are 
132.25  subject to a family maximum benefit.  The family maximum benefit 
132.26  is 41 units per month. 
132.27     (d) A surviving spouse who is otherwise not qualified may 
132.28  receive a benefit if the surviving spouse was married to the 
132.29  decedent for a period of five years and was residing with the 
132.30  decedent at the time of death.  The surviving spouse benefit is 
132.31  the same as that provided in paragraph (a), except that if the 
132.32  surviving spouse is younger than the decedent, the surviving 
132.33  spouse benefit must be actuarially equivalent to a surviving 
132.34  spouse benefit that would have been paid to the member's spouse 
132.35  had the member been married to a person of the same age or a 
132.36  greater age than the member's age before retirement. 
133.1      Sec. 7.  Minnesota Statutes 2002, section 423B.15, 
133.2   subdivision 3, is amended to read: 
133.3      Subd. 3.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
133.4   amount determined under subdivision 2 must be applied in 
133.5   accordance with this subdivision.  When the actuarial value of 
133.6   assets of the fund according to the most recent annual actuarial 
133.7   valuation prepared in accordance with sections 356.215 and 
133.8   356.216 is less than 102 percent of its total actuarial 
133.9   liabilities, the relief association shall apply the first 
133.10  one-half of excess investment income to the payment of an annual 
133.11  postretirement payment as specified in this subdivision and the 
133.12  second one-half of excess investment income up to one-half of 
133.13  one percent of the assets of the fund must be applied to reduce 
133.14  the state amortization state aid or supplementary amortization 
133.15  state aid payments otherwise due to the relief association under 
133.16  section 423A.02 for the current calendar year.  When the 
133.17  actuarial value of assets of the fund according to the most 
133.18  recent annual actuarial valuation prepared in accordance with 
133.19  sections 356.215 and 356.216 is less than 102 percent funded and 
133.20  other conditions are met, the relief association shall pay an 
133.21  annual postretirement payment to all eligible members in an 
133.22  amount not to exceed one-half of one percent of the assets of 
133.23  the fund.  When the actuarial value of assets of the fund 
133.24  according to the most recent annual actuarial valuation prepared 
133.25  in accordance with sections 356.215 and 356.216 is greater than 
133.26  102 percent of its actuarial accrued liabilities, the relief 
133.27  association shall pay an annual postretirement payment to all 
133.28  eligible members in an amount not to exceed 1-1/2 percent of the 
133.29  assets of the fund.  Payment of the annual postretirement 
133.30  payment must be in a lump sum amount on June 1 following the 
133.31  determination date in any year.  Payment of the annual 
133.32  postretirement payment may be made only if the average time 
133.33  weighted total rate of return for the most recent prior five two 
133.34  years exceeds by two percent the actual average percentage 
133.35  increase in the current monthly salary of a top grade patrol 
133.36  officer in the most recent prior five two fiscal years.  The 
134.1   total amount of all payments to members may not exceed the 
134.2   amount determined under this subdivision.  Payment to each 
134.3   eligible member must be calculated by dividing the total number 
134.4   of pension units to which eligible members are entitled into the 
134.5   excess investment income available for distribution to members, 
134.6   and then multiplying that result by the number of units to which 
134.7   each eligible member is entitled to determine each eligible 
134.8   member's annual postretirement payment.  When the actuarial 
134.9   value of assets of the fund according to the most recent annual 
134.10  actuarial valuation prepared in accordance with sections 356.215 
134.11  and 356.216 is less than 102 percent of its actuarial accrued 
134.12  liabilities, payment to each eligible member may not exceed an 
134.13  amount equal to the total monthly benefit that the eligible 
134.14  member was entitled to in the prior year under the terms of the 
134.15  benefit plan of the relief association or each eligible member's 
134.16  proportionate share of the excess investment income, whichever 
134.17  is less.  When the actuarial value of assets of the fund 
134.18  according to the most recent annual actuarial valuation prepared 
134.19  in accordance with sections 356.215 and 356.216 is greater than 
134.20  102 percent of its actuarial accrued liabilities, payment to 
134.21  each eligible member must not exceed the member's proportionate 
134.22  share of 1-1/2 percent of the assets of the fund. 
134.23     A person who received a pension or benefit for the entire 
134.24  12 months before the determination date is eligible for a full 
134.25  annual postretirement payment.  A person who received a pension 
134.26  or benefit for less than 12 months before the determination date 
134.27  is eligible for a prorated annual postretirement payment. 
134.28     Sec. 8.  [423B.22] [GUARANTEED PENSION PROVISION.] 
134.29     Once a pension benefit is properly paid in accordance with 
134.30  this law to any member, the dollar amount of that pension 
134.31  benefit shall not be reduced. 
134.32     Sec. 9.  [LOCAL APPROVAL; NONSEVERABILITY.] 
134.33     Sections 1 to 8 are not severable and are effective on the 
134.34  day after the date of the approval by the city council of the 
134.35  city of Minneapolis and the timely completion by the chief 
134.36  clerical officer of the city of Minneapolis of compliance with 
135.1   Minnesota Statutes, section 645.021, subdivisions 2 and 3.