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; continuing retirement coverage by the 
  1.18            general employees retirement plan of the Public 
  1.19            Employees Retirement Association for Anoka County 
  1.20            Achieve Program and the Government Training Services; 
  1.21            including in privatized public employee retirement 
  1.22            coverage employees of the Fair Oaks Lodge, Wadena, and 
  1.23            RenVilla Nursing Home; extending the expiration date 
  1.24            on certain prior military service credit purchases; 
  1.25            temporarily exempting Metropolitan Airports Commission 
  1.26            police from reemployed annuitant earnings limitation; 
  1.27            ratifying certain Bellingham volunteer firefighter 
  1.28            relief association annuity purchases; including the 
  1.29            Lake Johanna fire department employees in Public 
  1.30            Employees Retirement Association coverage; expanding 
  1.31            the health care savings plan; modifying the department 
  1.32            of transportation pilots retirement plan; creating a 
  1.33            statewide volunteer firefighter retirement plan study 
  1.34            task force; authorizing shorter vesting periods for 
  1.35            defined contribution volunteer firefighter relief 
  1.36            associations; modifying Minneapolis Police Relief 
  1.37            Association provisions; making changes to the 
  1.38            Minneapolis Teachers Retirement Fund Association; 
  1.39            appropriating money; amending Minnesota Statutes 2002, 
  1.40            sections 3A.03, subdivision 2; 69.77, subdivision 4; 
  1.41            352.01, subdivision 13; 352.113, subdivisions 4, 6, 8, 
  1.42            by adding a subdivision; 352.12, subdivisions 1, 6; 
  1.43            352.22, subdivisions 2, 3; 352.27; 352.275, 
  1.44            subdivision 1; 352.86, subdivision 1; 352.91, 
  1.45            subdivision 3g; 352.95, subdivisions 1, 2, 4; 352.98; 
  1.46            352B.01, subdivisions 3a, 11, by adding a subdivision; 
  2.1             352B.10, subdivisions 1, 2, 3, 4, 5; 352B.105; 
  2.2             352B.11, subdivisions 1, 2, by adding subdivisions; 
  2.3             352D.065, subdivision 2; 352D.075, subdivisions 2, 3, 
  2.4             by adding a subdivision; 353.01, subdivisions 2b, 10, 
  2.5             12a, 12b, 16, 16a; 353.33, subdivisions 4, 6, 6b, 7, 
  2.6             by adding a subdivision; 353.37, subdivision 3, by 
  2.7             adding a subdivision; 353.656, subdivision 5, by 
  2.8             adding subdivisions; 354.05, subdivisions 2, 22, 35; 
  2.9             354.07, subdivision 9; 354.091; 354.096, subdivision 
  2.10            1; 354.42, subdivision 7; 354.44, subdivisions 4, 5, 
  2.11            6; 354.46, subdivisions 2, 2b, 5, by adding a 
  2.12            subdivision; 354.48, subdivisions 2, 4, 6, 6a, 10; 
  2.13            354.51, subdivision 5; 354.52, subdivisions 4a, 6, by 
  2.14            adding a subdivision; 354.53; 354.533, subdivision 1; 
  2.15            354.66, subdivision 2; 354A.011, subdivision 24; 
  2.16            354A.08; 354A.093; 354A.094, subdivision 3; 354A.097, 
  2.17            subdivision 1; 354A.12, subdivisions 3a, 3d, by adding 
  2.18            a subdivision; 354A.28, subdivision 9; 354B.20, 
  2.19            subdivisions 4, 6; 354B.23, subdivision 1; 354B.32; 
  2.20            354C.11, subdivision 2; 356.216; 356.302, subdivision 
  2.21            3; 356.441; 356.611, subdivisions 1, 2, by adding 
  2.22            subdivisions; 422A.18, subdivisions 1, 4; 423B.01, 
  2.23            subdivision 12; 423B.09, subdivisions 1, 4, by adding 
  2.24            a subdivision; 423B.10, subdivision 1; 423B.15, 
  2.25            subdivision 3; 423C.05, subdivisions 4, 5, 6, by 
  2.26            adding a subdivision; 424A.02, subdivisions 2, 7; 
  2.27            490.121, subdivision 10, by adding a subdivision; 
  2.28            490.124, subdivision 12; Minnesota Statutes 2003 
  2.29            Supplement, sections 353.01, subdivision 6; 353F.02, 
  2.30            subdivision 4; 354A.12, subdivision 3b; 423C.03, 
  2.31            subdivision 3; Laws 1999, chapter 222, article 16, 
  2.32            section 16, as amended; Laws 2000, chapter 461, 
  2.33            article 4, section 4, as amended; proposing coding for 
  2.34            new law in Minnesota Statutes, chapters 352F; 353F; 
  2.35            354A; 356; 423B; repealing Minnesota Statutes 2002, 
  2.36            sections 352D.02, subdivision 5; 353.33, subdivision 
  2.37            5b; 354A.107; 490.11. 
  2.38  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.39                             ARTICLE 1
  2.40                         MEMBERSHIP ISSUES
  2.41     Section 1.  Minnesota Statutes 2002, section 352.91, 
  2.42  subdivision 3g, is amended to read: 
  2.43     Subd. 3g.  [ADDITIONAL CORRECTIONS DEPARTMENT PERSONNEL.] 
  2.44  (a) "Covered correctional service" means service by a state 
  2.45  employee in one of the employment positions at the designated 
  2.46  Minnesota correctional facility specified in paragraph (b), 
  2.47  provided that if at least 75 percent of the employee's working 
  2.48  time is spent in direct contact with inmates and the fact of 
  2.49  this direct contact is certified to the executive director by 
  2.50  the commissioner of corrections. 
  2.51     (b) The qualifying employment positions and the designated 
  2.52  correctional facilities are: 
  2.53     (1) corrections discipline unit supervisor, at the 
  2.54  Minnesota Correctional Facility-Faribault, the Minnesota 
  3.1   Correctional Facility-Lino Lakes, the Minnesota Correctional 
  3.2   Facility-Oak Park Heights, the Minnesota Correctional 
  3.3   Facility-Rush City, and the Minnesota Correctional Facility-St. 
  3.4   Cloud; 
  3.5      (2) dental assistant registered, at the Minnesota 
  3.6   Correctional Facility-Faribault, the Minnesota Correctional 
  3.7   Facility-Lino Lakes, the Minnesota Correctional Facility-Moose 
  3.8   Lake, the Minnesota Correctional Facility-Oak Park Heights, and 
  3.9   the Minnesota Correctional Facility-Red Wing; 
  3.10     (3) dental hygienist, at the Minnesota Correctional 
  3.11  Facility-Shakopee and the Minnesota Correctional Facility-Rush 
  3.12  City; 
  3.13     (4) psychologist 2, at the Minnesota Correctional 
  3.14  Facility-Faribault, the Minnesota Correctional Facility-Lino 
  3.15  Lakes, the Minnesota Correctional Facility-Moose Lake, the 
  3.16  Minnesota Correctional Facility-Oak Park Heights, the Minnesota 
  3.17  Correctional Facility-Red Wing, the Minnesota Correctional 
  3.18  Facility-Rush City, the Minnesota Correctional Facility-St. 
  3.19  Cloud, the Minnesota Correctional Facility-Shakopee, and the 
  3.20  Minnesota Correctional Facility-Stillwater; and or 
  3.21     (5) sentencing to service crew leader involved with the 
  3.22  inmate community work crew program, at the Minnesota 
  3.23  Correctional Facility-Faribault and the Minnesota Correctional 
  3.24  Facility-Lino Lakes. 
  3.25     Sec. 2.  Minnesota Statutes 2002, section 353.01, 
  3.26  subdivision 2b, is amended to read: 
  3.27     Subd. 2b.  [EXCLUDED EMPLOYEES.] The following public 
  3.28  employees are not eligible to participate as members of the 
  3.29  association with retirement coverage by the public employees 
  3.30  retirement plan, the local government correctional employees 
  3.31  retirement plan under chapter 353E, or the public employees 
  3.32  police and fire retirement plan: 
  3.33     (1) public officers, other than county sheriffs, who are 
  3.34  elected to a governing body, or persons who are appointed to 
  3.35  fill a vacancy in an elective office of a governing body, whose 
  3.36  term of office first commences on or after July 1, 2002, for the 
  4.1   service to be rendered in that elective position.  Elected 
  4.2   governing body officials who were active members of the 
  4.3   association's coordinated or basic retirement plans as of June 
  4.4   30, 2002, continue participation throughout incumbency in office 
  4.5   until termination of public service occurs as defined in 
  4.6   subdivision 11a; 
  4.7      (2) election officers or election judges; 
  4.8      (3) patient and inmate personnel who perform services for a 
  4.9   governmental subdivision; 
  4.10     (4) except as otherwise specified in subdivision 12a, 
  4.11  employees who are hired for a temporary position as defined 
  4.12  under subdivision 12a, and employees who resign from a 
  4.13  nontemporary position and accept a temporary position within 30 
  4.14  days in the same governmental subdivision.; An employer must not 
  4.15  apply the definition of temporary position so as to exclude 
  4.16  employees who are hired to fill positions that are permanent or 
  4.17  that are for an unspecified period but who are serving a 
  4.18  probationary period at the start of the employment.  If the 
  4.19  period of employment extends beyond six consecutive months and 
  4.20  the employee earns more than $425 from one governmental 
  4.21  subdivision in any calendar month, the department head shall 
  4.22  report the employee for membership and require employee 
  4.23  deductions be made on behalf of the employee under section 
  4.24  353.27, subdivision 4. 
  4.25     The membership eligibility of an employee who resigns or is 
  4.26  dismissed from a temporary position and within 30 days accepts 
  4.27  another temporary position in the same governmental subdivision 
  4.28  is determined on the total length of employment rather than on 
  4.29  each separate position.  Membership eligibility of an employee 
  4.30  who holds concurrent temporary and nontemporary positions in one 
  4.31  governmental subdivision is determined by the length of 
  4.32  employment and salary of each separate position; 
  4.33     (5) employees who are employed by reason of work emergency 
  4.34  caused by fire, flood, storm, or similar disaster; 
  4.35     (6) employees who by virtue of their employment in one 
  4.36  governmental subdivision are required by law to be a member of 
  5.1   and to contribute to any of the plans or funds administered by 
  5.2   the Minnesota State Retirement System, the Teachers Retirement 
  5.3   Association, the Duluth Teachers Retirement Fund Association, 
  5.4   the Minneapolis Teachers Retirement Fund Association, the St. 
  5.5   Paul Teachers Retirement Fund Association, the Minneapolis 
  5.6   Employees Retirement Fund, or any police or firefighters relief 
  5.7   association governed by section 69.77 that has not consolidated 
  5.8   with the Public Employees Retirement Association, or any local 
  5.9   police or firefighters consolidation account but who have not 
  5.10  elected the type of benefit coverage provided by the public 
  5.11  employees police and fire fund under sections 353A.01 to 
  5.12  353A.10, or any persons covered by section 353.665, subdivision 
  5.13  4, 5, or 6, who have not elected public employees police and 
  5.14  fire plan benefit coverage.  This clause must not be construed 
  5.15  to prevent a person from being a member of and contributing to 
  5.16  the Public Employees Retirement Association and also belonging 
  5.17  to and contributing to another public pension plan or fund for 
  5.18  other service occurring during the same period of time.  A 
  5.19  person who meets the definition of "public employee" in 
  5.20  subdivision 2 by virtue of other service occurring during the 
  5.21  same period of time becomes a member of the association unless 
  5.22  contributions are made to another public retirement fund on the 
  5.23  salary based on the other service or to the Teachers Retirement 
  5.24  Association by a teacher as defined in section 354.05, 
  5.25  subdivision 2; 
  5.26     (7) persons who are members of a religious order and are 
  5.27  excluded from coverage under the federal Old Age, Survivors, 
  5.28  Disability, and Health Insurance Program for the performance of 
  5.29  service as specified in United States Code, title 42, section 
  5.30  410(a)(8)(A), as amended through January 1, 1987, if no 
  5.31  irrevocable election of coverage has been made under section 
  5.32  3121(r) of the Internal Revenue Code of 1954, as amended; 
  5.33     (8) employees of a governmental subdivision who have not 
  5.34  reached the age of 23 and are enrolled on a full-time basis to 
  5.35  attend or are attending classes on a full-time basis at an 
  5.36  accredited school, college, or university in an undergraduate, 
  6.1   graduate, or professional-technical program, or a public or 
  6.2   charter high school; 
  6.3      (9) resident physicians, medical interns, and pharmacist 
  6.4   residents and pharmacist interns who are serving in a degree or 
  6.5   residency program in public hospitals; 
  6.6      (10) students who are serving in an internship or residency 
  6.7   program sponsored by an accredited educational institution; 
  6.8      (11) persons who hold a part-time adult supplementary 
  6.9   technical college license who render part-time teaching service 
  6.10  in a technical college; 
  6.11     (12) except for employees of Hennepin County, foreign 
  6.12  citizens working for a governmental subdivision with a work 
  6.13  permit of less than three years, or an H-1b visa valid for less 
  6.14  than three years of employment.  Upon notice to the association 
  6.15  that the work permit or visa extends beyond the three-year 
  6.16  period, the foreign citizens are to must be reported for 
  6.17  membership from the date of the extension; 
  6.18     (13) public hospital employees who elected not to 
  6.19  participate as members of the association before 1972 and who 
  6.20  did not elect to participate from July 1, 1988, to October 1, 
  6.21  1988; 
  6.22     (14) except as provided in section 353.86, volunteer 
  6.23  ambulance service personnel, as defined in subdivision 35, but 
  6.24  persons who serve as volunteer ambulance service personnel may 
  6.25  still qualify as public employees under subdivision 2 and may be 
  6.26  members of the Public Employees Retirement Association and 
  6.27  participants in the public employees retirement fund or the 
  6.28  public employees police and fire fund, whichever applies, on the 
  6.29  basis of compensation received from public employment service 
  6.30  other than service as volunteer ambulance service personnel; 
  6.31     (15) except as provided in section 353.87, volunteer 
  6.32  firefighters, as defined in subdivision 36, engaging in 
  6.33  activities undertaken as part of volunteer firefighter duties; 
  6.34  provided that a person who is a volunteer firefighter may still 
  6.35  qualify as a public employee under subdivision 2 and may be a 
  6.36  member of the Public Employees Retirement Association and a 
  7.1   participant in the public employees retirement fund or the 
  7.2   public employees police and fire fund, whichever applies, on the 
  7.3   basis of compensation received from public employment activities 
  7.4   other than those as a volunteer firefighter; 
  7.5      (16) pipefitters and associated trades personnel employed 
  7.6   by Independent School District No. 625, St. Paul, with coverage 
  7.7   under a collective bargaining agreement by the pipefitters local 
  7.8   455 pension plan who were either first employed after May 1, 
  7.9   1997, or, if first employed before May 2, 1997, elected to be 
  7.10  excluded under Laws 1997, chapter 241, article 2, section 12; 
  7.11     (17) electrical workers, plumbers, carpenters, and 
  7.12  associated trades personnel employed by Independent School 
  7.13  District No. 625, St. Paul, or the city of St. Paul, who have 
  7.14  retirement coverage under a collective bargaining agreement by 
  7.15  the Electrical Workers Local 110 pension plan, the United 
  7.16  Association Plumbers Local 34 pension plan, or the Carpenters 
  7.17  Local 87 pension plan who were either first employed after May 
  7.18  1, 2000, or, if first employed before May 2, 2000, elected to be 
  7.19  excluded under Laws 2000, chapter 461, article 7, section 5; 
  7.20     (18) bricklayers, allied craftworkers, cement masons, 
  7.21  glaziers, glassworkers, painters, allied tradesworkers, and 
  7.22  plasterers employed by the city of St. Paul or Independent 
  7.23  School District No. 625, St. Paul, with coverage under a 
  7.24  collective bargaining agreement by the Bricklayers and Allied 
  7.25  Craftworkers Local 1 pension plan, the Cement Masons Local 633 
  7.26  pension plan, the Glaziers and Glassworkers Local L-1324 pension 
  7.27  plan, the Painters and Allied Trades Local 61 pension plan, or 
  7.28  the Twin Cities Plasterers Local 265 pension plan who were 
  7.29  either first employed after May 1, 2001, or if first employed 
  7.30  before May 2, 2001, elected to be excluded under Laws 2001, 
  7.31  First Special Session chapter 10, article 10, section 6; 
  7.32     (19) plumbers employed by the metropolitan airports 
  7.33  commission, with coverage under a collective bargaining 
  7.34  agreement by the Plumbers Local 34 pension plan, who either were 
  7.35  first employed after May 1, 2001, or if first employed before 
  7.36  May 2, 2001, elected to be excluded under Laws 2001, First 
  8.1   Special Session chapter 10, article 10, section 6; 
  8.2      (20) employees who are hired after June 30, 2002, to fill 
  8.3   seasonal positions under subdivision 12b which are limited in 
  8.4   duration by the employer to 185 consecutive calendar days or 
  8.5   less in each year of employment with the governmental 
  8.6   subdivision; 
  8.7      (21) persons who are provided supported employment or 
  8.8   work-study positions by a governmental subdivision and who 
  8.9   participate in an employment or industries program maintained 
  8.10  for the benefit of these persons where the governmental 
  8.11  subdivision limits the position's duration to three years or 
  8.12  less, including persons participating in a federal or state 
  8.13  subsidized on-the-job training, work experience, senior citizen, 
  8.14  youth, or unemployment relief program where the training or work 
  8.15  experience is not provided as a part of, or for, future 
  8.16  permanent public employment; 
  8.17     (22) independent contractors and the employees of 
  8.18  independent contractors; and 
  8.19     (23) reemployed annuitants of the association during the 
  8.20  course of that reemployment. 
  8.21     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
  8.22  subdivision 12a, is amended to read: 
  8.23     Subd. 12a.  [TEMPORARY POSITION.] (1) (a) "Temporary 
  8.24  position" means an employment position predetermined by the 
  8.25  employer at the time of hiring to be a period of six months or 
  8.26  less.  Temporary position also means an employment position 
  8.27  occupied by a person hired by the employer as a temporary 
  8.28  replacement who is employed for a predetermined period of six 
  8.29  months or less. 
  8.30     (2) (b) "Temporary position" does not mean an employment 
  8.31  position for a specified or unspecified term in which a person 
  8.32  serves a probationary period as a requirement for subsequent 
  8.33  employment on a permanent or unlimited basis. 
  8.34     (c) If employment in a temporary position extends beyond 
  8.35  six consecutive months, the head of the department shall report 
  8.36  the employee for membership if salary in any month exceeds the 
  9.1   salary threshold specified in subdivision 2a.  The membership 
  9.2   eligibility of an employee who resigns or is dismissed from a 
  9.3   temporary position and accepts another temporary position in the 
  9.4   same governmental subdivision within 30 days must be determined 
  9.5   on the total length of employment rather than on each separate 
  9.6   position. 
  9.7      Sec. 4.  Minnesota Statutes 2002, section 353.01, 
  9.8   subdivision 12b, is amended to read: 
  9.9      Subd. 12b.  [SEASONAL POSITION.] "Seasonal position" means 
  9.10  a position where the nature of the work or its duration are 
  9.11  related to a specific season or seasons of the year, regardless 
  9.12  of whether or not the employing agency anticipates that the same 
  9.13  employee will return to the position each season in which it 
  9.14  becomes available.  The entire period of employment in a 
  9.15  business year must be used to determine whether or not a 
  9.16  position may be excluded as seasonal when there is less than a 
  9.17  30-day break between one seasonal position and a subsequent 
  9.18  seasonal position for employment with the same governmental 
  9.19  employer.  Seasonal positions include, but are not limited to, 
  9.20  coaching athletic activities or employment to plow snow or to 
  9.21  maintain roads or parks, or to operate skating rinks, ski 
  9.22  lodges, golf courses, or swimming pools. 
  9.23     Sec. 5.  Minnesota Statutes 2002, section 354.05, 
  9.24  subdivision 2, is amended to read: 
  9.25     Subd. 2.  [TEACHER.] (a) "Teacher" means: 
  9.26     (1) a person who renders service as a teacher, supervisor, 
  9.27  principal, superintendent, librarian, nurse, counselor, social 
  9.28  worker, therapist, or psychologist in a public school of the 
  9.29  state located outside of the corporate limits of a city of the 
  9.30  first class, or in any charter school, irrespective of the 
  9.31  location of the school, or in any charitable, penal, or 
  9.32  correctional institutions of a governmental subdivision, or who 
  9.33  is engaged in educational administration in connection with the 
  9.34  state public school system, but excluding the University of 
  9.35  Minnesota, whether the position be a public office or an 
  9.36  employment, and not including the members or officers of any 
 10.1   general governing or managing board or body; 
 10.2      (2) an employee of the Teachers Retirement Association; 
 10.3      (3) a person who renders teaching service on a part-time 
 10.4   basis and who also renders other services for a single employing 
 10.5   unit.  A person whose teaching service comprises at least 50 
 10.6   percent of the combined employment salary is a member of the 
 10.7   association for all services with the single employing unit.  If 
 10.8   the person's teaching service comprises less than 50 percent of 
 10.9   the combined employment salary, the executive director must 
 10.10  determine whether all or none of the combined service is covered 
 10.11  by the association; or 
 10.12     (4) a person who is not covered by the plans established 
 10.13  under chapter 352D, 354A, or 354B and who is employed by the 
 10.14  Board of Trustees of the Minnesota State Colleges and 
 10.15  Universities system in an unclassified position as: 
 10.16     (i) a president, vice-president, or dean; 
 10.17     (ii) a manager or a professional in an academic or an 
 10.18  academic support program other than specified in item (i); 
 10.19     (iii) an administrative or a service support faculty 
 10.20  position; or 
 10.21     (iv) a teacher or a research assistant. 
 10.22     (b) "Teacher" does not mean: 
 10.23     (1) a person who works for a school or institution as an 
 10.24  independent contractor as defined by the Internal Revenue 
 10.25  Service; 
 10.26     (2) a person employed in subsidized on-the-job training, 
 10.27  work experience or public service employment as an enrollee 
 10.28  under the federal Comprehensive Employment and Training Act from 
 10.29  and after March 30, 1978, unless the person has, as of the later 
 10.30  of March 30, 1978, or the date of employment, sufficient service 
 10.31  credit in the retirement association to meet the minimum vesting 
 10.32  requirements for a deferred retirement annuity, or the employer 
 10.33  agrees in writing on forms prescribed by the executive director 
 10.34  to make the required employer contributions, including any 
 10.35  employer additional contributions, on account of that person 
 10.36  from revenue sources other than funds provided under the federal 
 11.1   Comprehensive Training and Employment Act, or the person agrees 
 11.2   in writing on forms prescribed by the executive director to make 
 11.3   the required employer contribution in addition to the required 
 11.4   employee contribution; 
 11.5      (3) a person holding a part-time adult supplementary 
 11.6   technical college license who renders part-time teaching service 
 11.7   or who is a customized trainer as defined by the Minnesota State 
 11.8   Colleges and Universities system in a technical college if (i) 
 11.9   the service is incidental to the regular nonteaching occupation 
 11.10  of the person; and (ii) the applicable technical college 
 11.11  employer stipulates annually in advance that the part-time 
 11.12  teaching service or customized training service will not exceed 
 11.13  300 hours in a fiscal year and retains the stipulation in its 
 11.14  records; and (iii) the part-time teaching service or customized 
 11.15  training service actually does not exceed 300 hours in a fiscal 
 11.16  year; or 
 11.17     (4) (3) a person exempt from licensure under section 
 11.18  122A.30. 
 11.19     Sec. 6.  Minnesota Statutes 2002, section 354B.20, 
 11.20  subdivision 4, is amended to read: 
 11.21     Subd. 4.  [COVERED EMPLOYMENT.] (a) "Covered employment" 
 11.22  means employment by a person eligible for coverage by this 
 11.23  retirement program under section 354B.21 in a faculty position 
 11.24  or in an eligible unclassified administrative position. 
 11.25     (b) "Covered employment" does not mean employment specified 
 11.26  in paragraph (a) by a faculty member employed in a state 
 11.27  university or a community college the Minnesota State Colleges 
 11.28  and Universities system if the person's initial appointment is 
 11.29  specified as constituting less than 25 percent of a full 
 11.30  academic year, exclusive of summer session, for the applicable 
 11.31  institution. 
 11.32     Sec. 7.  Minnesota Statutes 2002, section 354B.20, 
 11.33  subdivision 6, is amended to read: 
 11.34     Subd. 6.  [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE POSITION.] 
 11.35  "Eligible unclassified administrative position" means the 
 11.36  following: 
 12.1      (1) the chancellor of the board; 
 12.2      (2) a president of a state college or university; or 
 12.3      (3) an excluded administrator employed in a state 
 12.4   university or college, by the board, or by the Higher Education 
 12.5   Services Office; or 
 12.6      (4) other managers and professionals in academic and 
 12.7   academic support programs in the unclassified service employed 
 12.8   in a state university or college, by the board, or by the Higher 
 12.9   Education Services Office. 
 12.10     Sec. 8.  Minnesota Statutes 2002, section 354C.11, 
 12.11  subdivision 2, is amended to read: 
 12.12     Subd. 2.  [ELIGIBILITY.] (a) An individual must participate 
 12.13  in the supplemental retirement plan if the individual is 
 12.14  employed by the Board of Trustees in the unclassified service of 
 12.15  the state and has completed at least two years with a full-time 
 12.16  contract of applicable unclassified employment with the board or 
 12.17  an applicable predecessor board in any of the positions 
 12.18  specified in paragraph (b). 
 12.19     (b) Eligible positions or employment classifications are: 
 12.20     (1) an unclassified administrative position as defined in 
 12.21  section 354B.20, subdivision 6; 
 12.22     (2) an employment classification included in one of the 
 12.23  following collective bargaining units under section 179A.10, 
 12.24  subdivision 2: 
 12.25     (i) the state university instructional unit; 
 12.26     (ii) the state college instructional unit; and 
 12.27     (iii) the state university administrative unit; or 
 12.28     (3) an unclassified employee of the board: 
 12.29     (i) included in the general professional unit or the 
 12.30  supervisory employees unit under section 179A.10, subdivision 2; 
 12.31  or 
 12.32     (ii) an employee who is excluded from one of those units 
 12.33  due to the employee's confidential status under section 179A.10, 
 12.34  subdivision 1, clause (8).  
 12.35     Sec. 9.  [REPEALER.] 
 12.36     Minnesota Statutes 2002, section 352D.02, subdivision 5, is 
 13.1   repealed.  
 13.2      Sec. 10.  [EFFECTIVE DATE.] 
 13.3      (a) Sections 2 to 6 and 9 are effective on July 1, 2004. 
 13.4      (b) Section 7 is effective on July 1, 2004, and applies 
 13.5   retroactively to the date of hire of the applicable person in 
 13.6   the affected position. 
 13.7      (c) Section 8 is effective retroactively to July 1, 2001. 
 13.8                              ARTICLE 2
 13.9                      COVERED SALARY DEFINITION
 13.10     Section 1.  Minnesota Statutes 2002, section 352.01, 
 13.11  subdivision 13, is amended to read: 
 13.12     Subd. 13.  [SALARY.] (a) "Salary" means wages, or other 
 13.13  periodic compensation, paid to an employee before deductions for 
 13.14  deferred compensation, supplemental retirement plans, or other 
 13.15  voluntary salary reduction programs.  
 13.16     (b) "Salary" does not include: 
 13.17     (1) lump sum sick leave payments,; 
 13.18     (2) severance payments,; 
 13.19     (3) lump sum annual leave payments and overtime payments 
 13.20  made at the time of separation from state service,; 
 13.21     (4) payments in lieu of any employer-paid group insurance 
 13.22  coverage, including the difference between single and family 
 13.23  rates that may be paid to an employee with single coverage, and; 
 13.24     (5) payments made as an employer-paid fringe benefit,; 
 13.25     (6) workers' compensation payments,; 
 13.26     (7) employer contributions to a deferred compensation or 
 13.27  tax sheltered annuity program,; and 
 13.28     (8) amounts contributed under a benevolent vacation and 
 13.29  sick leave donation program are not salary. 
 13.30     (c) Amounts provided to an employee by the employer through 
 13.31  a grievance proceeding or a legal settlement are salary only if 
 13.32  the settlement is reviewed by the executive director and the 
 13.33  amounts are determined by the executive director to be 
 13.34  consistent with paragraph (a) and prior determinations. 
 13.35     Sec. 2.  Minnesota Statutes 2002, section 352B.01, 
 13.36  subdivision 11, is amended to read: 
 14.1      Subd. 11.  [AVERAGE MONTHLY SALARY.] (a) "Average monthly 
 14.2   salary" means the average of the highest monthly salaries for 
 14.3   five years of service as a member upon which contributions were 
 14.4   deducted from pay under section 352B.02, or upon which 
 14.5   appropriate contributions or payments were made to the fund to 
 14.6   receive allowable service and salary credit as specified under 
 14.7   the applicable law.  Average monthly salary must be based upon 
 14.8   all allowable service if this service is less than five 
 14.9   years.  It 
 14.10     (b) "Average monthly salary" means the salary of the member 
 14.11  as defined in section 352.01, subdivision 13.  "Average monthly 
 14.12  salary" does not include any lump-sum annual leave payments and 
 14.13  overtime payments made at the time of separation from state 
 14.14  service, any amounts of severance pay, or any reduced salary 
 14.15  paid during the period the person is entitled to workers' 
 14.16  compensation benefit payments for temporary disability.  
 14.17     (c) A member on leave of absence receiving temporary 
 14.18  workers' compensation payments and a reduced salary or no salary 
 14.19  from the employer who is entitled to allowable service credit 
 14.20  for the period of absence may make payment to the fund for the 
 14.21  difference between salary received, if any, and the salary the 
 14.22  member would normally receive if not on leave of absence during 
 14.23  the period.  The member shall pay an amount equal to the member 
 14.24  and employer contribution rate under section 352B.02, 
 14.25  subdivisions 1b and 1c, on the differential salary amount for 
 14.26  the period of the leave of absence.  The employing department, 
 14.27  at its option, may pay the employer amount on behalf of the 
 14.28  member.  Payment made under this subdivision must include 
 14.29  interest at the rate of 8.5 percent per year, and must be 
 14.30  completed within one year of the return from the leave of 
 14.31  absence. 
 14.32     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
 14.33  subdivision 10, is amended to read: 
 14.34     Subd. 10.  [SALARY.] (a) "Salary" means: 
 14.35     (1) the periodic compensation of a public employee, before 
 14.36  deductions for deferred compensation, supplemental retirement 
 15.1   plans, or other voluntary salary reduction programs, and also 
 15.2   means "wages" and includes net income from fees; and 
 15.3      (2) for a public employee who has prior service covered by 
 15.4   a local police or firefighters relief association that has 
 15.5   consolidated with the Public Employees Retirement Association or 
 15.6   to which section 353.665 applies and who has elected coverage 
 15.7   either under the public employees police and fire fund benefit 
 15.8   plan under section 353A.08 following the consolidation or under 
 15.9   section 353.665, subdivision 4, "salary" means the rate of 
 15.10  salary upon which member contributions to the special fund of 
 15.11  the relief association were made prior to the effective date of 
 15.12  the consolidation as specified by law and by bylaw provisions 
 15.13  governing the relief association on the date of the initiation 
 15.14  of the consolidation procedure and the actual periodic 
 15.15  compensation of the public employee after the effective date of 
 15.16  consolidation. 
 15.17     (b) Salary does not mean: 
 15.18     (1) the fees paid to district court reporters, unused 
 15.19  annual vacation or sick leave payments, in lump-sum or periodic 
 15.20  payments, severance payments, reimbursement of expenses, 
 15.21  lump-sum settlements not attached to a specific earnings period, 
 15.22  or workers' compensation payments; 
 15.23     (2) employer-paid amounts used by an employee toward the 
 15.24  cost of insurance coverage, employer-paid fringe benefits, 
 15.25  flexible spending accounts, cafeteria plans, health care expense 
 15.26  accounts, day care expenses, or any payments in lieu of any 
 15.27  employer-paid group insurance coverage, including the difference 
 15.28  between single and family rates that may be paid to a member 
 15.29  with single coverage and certain amounts determined by the 
 15.30  executive director to be ineligible; 
 15.31     (3) the amount equal to that which the employing 
 15.32  governmental subdivision would otherwise pay toward single or 
 15.33  family insurance coverage for a covered employee when, through a 
 15.34  contract or agreement with some but not all employees, the 
 15.35  employer: 
 15.36     (i) discontinues, or for new hires does not provide, 
 16.1   payment toward the cost of the employee's selected insurance 
 16.2   coverages under a group plan offered by the employer; 
 16.3      (ii) makes the employee solely responsible for all 
 16.4   contributions toward the cost of the employee's selected 
 16.5   insurance coverages under a group plan offered by the employer, 
 16.6   including any amount the employer makes toward other employees' 
 16.7   selected insurance coverages under a group plan offered by the 
 16.8   employer; and 
 16.9      (iii) provides increased salary rates for employees who do 
 16.10  not have any employer-paid group insurance coverages; and 
 16.11     (4) except as provided in section 353.86 or 353.87, 
 16.12  compensation of any kind paid to volunteer ambulance service 
 16.13  personnel or volunteer firefighters, as defined in subdivision 
 16.14  35 or 36; and 
 16.15     (5) the amount of compensation that exceeds the limitation 
 16.16  provided in section 356.611.  
 16.17     (c) Amounts provided to an employee by the employer through 
 16.18  a grievance proceeding or a legal settlement are salary only if 
 16.19  the settlement is reviewed by the executive director and the 
 16.20  amounts are determined by the executive director to be 
 16.21  consistent with paragraph (a) and prior determinations. 
 16.22     Sec. 4.  Minnesota Statutes 2002, section 354.05, 
 16.23  subdivision 35, is amended to read: 
 16.24     Subd. 35.  [SALARY.] (a) "Salary" means the periodic 
 16.25  compensation, upon which member contributions are required 
 16.26  before deductions for deferred compensation, supplemental 
 16.27  retirement plans, or other voluntary salary reduction programs. 
 16.28     (b) "Salary" does not mean: 
 16.29     (1) lump sum annual leave payments; 
 16.30     (2) lump sum wellness and sick leave payments; 
 16.31     (3) employer-paid amounts used by an employee toward the 
 16.32  cost of insurance coverage, employer-paid fringe benefits, 
 16.33  flexible spending accounts, cafeteria plans, health care expense 
 16.34  accounts, day care expenses, or any payments in lieu of any 
 16.35  employer-paid group insurance coverage, including the difference 
 16.36  between single and family rates that may be paid to a member 
 17.1   with single coverage and certain amounts determined by the 
 17.2   executive director to be ineligible; 
 17.3      (4) any form of payment made in lieu of any other 
 17.4   employer-paid fringe benefit or expense; 
 17.5      (5) any form of severance payments; 
 17.6      (6) workers' compensation payments; 
 17.7      (7) disability insurance payments, including self-insured 
 17.8   disability payments; 
 17.9      (8) payments to school principals and all other 
 17.10  administrators for services that are in addition to the normal 
 17.11  work year contract if these additional services are performed on 
 17.12  an extended duty day, Saturday, Sunday, holiday, annual leave 
 17.13  day, sick leave day, or any other nonduty day; 
 17.14     (9) payments under section 356.24, subdivision 1, clause 
 17.15  (4); and 
 17.16     (10) payments made under section 122A.40, subdivision 12, 
 17.17  except for payments for sick leave that are accumulated under 
 17.18  the provisions of a uniform school district policy that applies 
 17.19  equally to all similarly situated persons in the district. 
 17.20     (c) Amounts provided to an employee by the employer through 
 17.21  a grievance proceeding or a legal settlement are salary only if 
 17.22  the settlement is reviewed by the executive director and the 
 17.23  amounts are determined by the executive director to be 
 17.24  consistent with paragraph (a) and prior determinations. 
 17.25     Sec. 5.  Minnesota Statutes 2002, section 354A.011, 
 17.26  subdivision 24, is amended to read: 
 17.27     Subd. 24.  [SALARY; COVERED SALARY.] (a) "Salary" or 
 17.28  "covered salary" means the entire compensation, upon which 
 17.29  member contributions are required and made, that is paid to a 
 17.30  teacher before deductions for deferred compensation, 
 17.31  supplemental retirement plans, or other voluntary salary 
 17.32  reduction programs. 
 17.33     (b) "Salary" does not mean: 
 17.34     (1) lump sum annual leave payments; 
 17.35     (2) lump sum wellness and sick leave payments; 
 17.36     (3) employer-paid amounts used by an employee toward the 
 18.1   cost of insurance coverage, employer-paid fringe benefits, 
 18.2   flexible spending accounts, cafeteria plans, health care expense 
 18.3   accounts, day care expenses, or any payments in lieu of any 
 18.4   employer-paid group insurance coverage, including the difference 
 18.5   between single and family rates that may be paid to a member 
 18.6   with single coverage, and certain amounts determined by the 
 18.7   executive secretary or director to be ineligible; 
 18.8      (4) any form of payment that is made in lieu of any other 
 18.9   employer-paid fringe benefit or expense; 
 18.10     (5) any form of severance payments; 
 18.11     (6) workers' compensation payments; 
 18.12     (7) disability insurance payments, including self-insured 
 18.13  disability payments; 
 18.14     (8) payments to school principals and all other 
 18.15  administrators for services that are in addition to the normal 
 18.16  work year contract if these additional services are performed on 
 18.17  an extended duty day, Saturday, Sunday, holiday, annual leave 
 18.18  day, sick leave day, or any other nonduty day; 
 18.19     (9) payments under section 356.24, subdivision 1, clause 
 18.20  (4)(ii); and 
 18.21     (10) payments made under section 122A.40, subdivision 12, 
 18.22  except for payments for sick leave that are accumulated under 
 18.23  the provisions of a uniform school district policy that applies 
 18.24  equally to all similarly situated persons in the district. 
 18.25     (c) Amounts provided to an employee by the employer through 
 18.26  a grievance proceeding or a legal settlement are salary only if 
 18.27  the settlement is reviewed by the executive director and the 
 18.28  amounts are determined by the executive director to be 
 18.29  consistent with paragraph (a) and prior determinations. 
 18.30     Sec. 6.  Minnesota Statutes 2002, section 356.611, 
 18.31  subdivision 1, is amended to read: 
 18.32     Subdivision 1.  [STATE SALARY LIMITATIONS.] (a) 
 18.33  Notwithstanding any provision of law, bylaws, articles of 
 18.34  incorporation, retirement and disability allowance plan 
 18.35  agreements, or retirement plan contracts to the contrary, the 
 18.36  covered salary for pension purposes for a plan participant of a 
 19.1   covered retirement fund enumerated in section 356.30, 
 19.2   subdivision 3, may not exceed 95 percent of the salary 
 19.3   established for the governor under section 15A.082 at the time 
 19.4   the person received the salary. 
 19.5      (b) This section does not apply to a salary paid: 
 19.6      (1) to the governor or to a judge; 
 19.7      (2) to an employee of a political subdivision in a position 
 19.8   that is excluded from the limit as specified under section 
 19.9   43A.17, subdivision 9; or 
 19.10     (3) to a state employee in a position for which the 
 19.11  commissioner of employee relations has approved a salary rate 
 19.12  that exceeds 95 percent of the governor's salary as defined 
 19.13  under section 43A.02, subdivision 21; or 
 19.14     (4) to an employee of Gillette Hospital who is covered by 
 19.15  the general state employees retirement plan of the Minnesota 
 19.16  State Retirement System. 
 19.17     (c) The limited covered salary determined under this 
 19.18  section must be used in determining employee and employer 
 19.19  contributions and in determining retirement annuities and other 
 19.20  benefits under the respective covered retirement fund and under 
 19.21  this chapter. 
 19.22     Sec. 7.  Minnesota Statutes 2002, section 356.611, 
 19.23  subdivision 2, is amended to read: 
 19.24     Subd. 2.  [FEDERAL COMPENSATION LIMITS.] (a) For members 
 19.25  first contributing to of a covered pension plan enumerated in 
 19.26  section 356.30, subdivision 3, on or after July 1, 1995, 
 19.27  compensation in excess of the limitation set forth specified in 
 19.28  section 401(a)(17) of the Internal Revenue Code, as amended, for 
 19.29  changes in the cost of living under section 401(a)(17)(B) of the 
 19.30  Internal Revenue Code, may not be included for contribution and 
 19.31  benefit computation purposes.  
 19.32     (b) Notwithstanding paragraph (a), for members specified in 
 19.33  paragraph (a) who first contributed to a covered plan before 
 19.34  July 1, 1995, the annual compensation limit set forth specified 
 19.35  in Internal Revenue Code 401(a)(17) on June 30, 1993, applies to 
 19.36  members first contributing before July 1, 1995 if that provides 
 20.1   a greater allowable annual compensation. 
 20.2      Sec. 8.  Minnesota Statutes 2002, section 356.611, is 
 20.3   amended by adding a subdivision to read: 
 20.4      Subd. 3.  [MAXIMUM BENEFIT LIMITATIONS.] A member's annual 
 20.5   benefit, if necessary, must be reduced to the extent required by 
 20.6   section 415(b) of the Internal Revenue Code, as adjusted by the 
 20.7   United States Secretary of the Treasury under section 415(d) of 
 20.8   the Internal Revenue Code.  For purposes of section 415 of the 
 20.9   Internal Revenue Code, the limitation year of a pension plan 
 20.10  covered by this section must be the fiscal year or calendar year 
 20.11  of that plan, whichever is applicable.  The accrued benefit 
 20.12  limitation described in section 415(e) of the Internal Revenue 
 20.13  Code must cease to be effective for limitation years beginning 
 20.14  after December 31, 1999. 
 20.15     Sec. 9.  [EFFECTIVE DATE.] 
 20.16     (a) Sections 1, 2, 3, 7, and 8 are effective on July 1, 
 20.17  2004. 
 20.18     (b) Sections 4 and 5 are effective on the day following 
 20.19  final enactment.  
 20.20     (c) For a person who retired on or before the effective 
 20.21  date of section 6, section 6 applies retroactively to April 28, 
 20.22  1994, and retirement annuities that were based on covered salary 
 20.23  amounts that were in excess of the limit in effect after April 
 20.24  28, 1994, but conform with section 6, are ratified. 
 20.25                             ARTICLE 3
 20.26                      ALLOWABLE SERVICE CREDIT
 20.27     Section 1.  Minnesota Statutes 2002, section 352.27, is 
 20.28  amended to read: 
 20.29     352.27 [CREDIT FOR MILITARY BREAK IN SERVICE TO PROVIDE 
 20.30  UNIFORMED SERVICE.] 
 20.31     Any (a) An employee given a leave of absence to enter 
 20.32  military service who is absent from employment by reason of 
 20.33  service in the uniformed services, as defined in United States 
 20.34  Code, title 38, section 4303(13), and who returns to state 
 20.35  service upon discharge from military service as provided in the 
 20.36  uniformed service within the time frames required in United 
 21.1   States Code, title 38, section 192.262 4312(e), may obtain 
 21.2   service credit for the period of military the uniformed service. 
 21.3   The employee is not entitled to credit for any voluntary 
 21.4   extension of military service at the instance of the employee 
 21.5   beyond the initial period of enlistment, induction, or call to 
 21.6   active duty, nor to credit for any period of service following a 
 21.7   voluntary return to military service as further specified in 
 21.8   this section, provided that the employee did not separate from 
 21.9   uniformed service with a dishonorable or bad conduct discharge 
 21.10  or under other than honorable conditions. An 
 21.11     (b) The employee may obtain credit by paying into the fund 
 21.12  an equivalent employee contribution based upon the contribution 
 21.13  rate or rates in effect at the time that the uniformed service 
 21.14  was performed multiplied by the full and fractional years being 
 21.15  purchased and applied to the annual salary received at the date 
 21.16  of return from military service. The amount of this contribution 
 21.17  must be the applicable amounts required in section 352.04, 
 21.18  subdivision 2, plus interest at an annual rate of 8.5 percent 
 21.19  compounded annually rate.  The annual salary rate is the average 
 21.20  annual salary during the purchase period that the employee would 
 21.21  have received if the employee had continued to be employed in 
 21.22  covered employment rather than to provide uniformed service, or, 
 21.23  if the determination of that rate is not reasonably certain, the 
 21.24  annual salary rate is the employee's average salary rate during 
 21.25  the 12-month period of covered employment rendered immediately 
 21.26  preceding the period of the uniformed service.  
 21.27     (c) The matching equivalent employer contribution and, if 
 21.28  applicable, the equivalent additional employer contribution 
 21.29  provided in section 352.04 must be paid by the department 
 21.30  employing the employee upon return to state service from funds 
 21.31  available to the department at the time and in the manner 
 21.32  provided in section 352.04, using the employer and additional 
 21.33  employer contribution rate or rates in effect at the time that 
 21.34  the uniformed service was performed, applied to the same annual 
 21.35  salary rate or rates used to compute the equivalent employee 
 21.36  contribution. 
 22.1      (d) If the employee equivalent contributions provided in 
 22.2   this section are not paid in full, the employee's allowable 
 22.3   service credit must be prorated by multiplying the full and 
 22.4   fractional number of years of uniformed service eligible for 
 22.5   purchase by the ratio obtained by dividing the total employee 
 22.6   contribution received by the total employee contribution 
 22.7   otherwise required under this section.  
 22.8      (e) To receive service credit under this section, the 
 22.9   contributions specified in this section must be transmitted to 
 22.10  the Minnesota State Retirement System during the period which 
 22.11  begins with the date on which the individual returns to state 
 22.12  service and which has a duration of three times the length of 
 22.13  the uniformed service period, but not to exceed five years.  If 
 22.14  the determined payment period is less than one year, the 
 22.15  contributions required under this section to receive service 
 22.16  credit may be made within one year of the discharge date.  
 22.17     (f) The amount of service credit obtainable under this 
 22.18  section may not exceed five years unless a longer purchase 
 22.19  period is required under United States Code, title 38, section 
 22.20  4312.  
 22.21     (g) The employing unit shall pay interest on all equivalent 
 22.22  employee and employer contribution amounts payable under this 
 22.23  section.  Interest must be computed at a rate of 8.5 percent 
 22.24  compounded annually from the end of each fiscal year of the 
 22.25  leave or the break in service to the end of the month in which 
 22.26  the payment is received.  
 22.27     Sec. 2.  Minnesota Statutes 2002, section 352B.01, is 
 22.28  amended by adding a subdivision to read: 
 22.29     Subd. 3b.  [CREDIT FOR BREAK IN SERVICE TO PROVIDE 
 22.30  UNIFORMED SERVICE.] (a) A member who is absent from employment 
 22.31  by reason of service in the uniformed services, as defined in 
 22.32  United States Code, title 38, section 4303(13), and who returns 
 22.33  to state employment in a position covered by the plan upon 
 22.34  discharge from service in the uniformed service within the time 
 22.35  frame required in United States Code, title 38, section 4312(e), 
 22.36  may obtain service credit for the period of the uniformed 
 23.1   service, provided that the member did not separate from 
 23.2   uniformed service with a dishonorable or bad conduct discharge 
 23.3   or under other than honorable conditions.  
 23.4      (b) The member may obtain credit by paying into the fund an 
 23.5   equivalent member contribution based on the contribution rate or 
 23.6   rates in effect at the time that the uniformed service was 
 23.7   performed multiplied by the full and fractional years being 
 23.8   purchased and applied to the annual salary rate.  The annual 
 23.9   salary rate is the average annual salary during the purchase 
 23.10  period that the member would have received if the member had 
 23.11  continued to provide employment services to the state rather 
 23.12  than to provide uniformed service, or if the determination of 
 23.13  that rate is not reasonably certain, the annual salary rate is 
 23.14  the member's average salary rate during the 12-month period of 
 23.15  covered employment rendered immediately preceding the purchase 
 23.16  period.  
 23.17     (c) The equivalent employer contribution and, if 
 23.18  applicable, the equivalent employer additional contribution, 
 23.19  must be paid by the employing unit, using the employer and 
 23.20  employer additional contribution rate or rates in effect at the 
 23.21  time that the uniformed service was performed, applied to the 
 23.22  same annual salary rate or rates used to compute the equivalent 
 23.23  member contribution.  
 23.24     (d) If the member equivalent contributions provided for in 
 23.25  this subdivision are not paid in full, the member's allowable 
 23.26  service credit must be prorated by multiplying the full and 
 23.27  fractional number of years of uniformed service eligible for 
 23.28  purchase by the ratio obtained by dividing the total member 
 23.29  contributions received by the total member contributions 
 23.30  otherwise required under this subdivision.  
 23.31     (e) To receive allowable service credit under this 
 23.32  subdivision, the contributions specified in this section must be 
 23.33  transmitted to the fund during the period which begins with the 
 23.34  date on which the individual returns to state employment covered 
 23.35  by the plan and which has a duration of three times the length 
 23.36  of the uniformed service period, but not to exceed five years.  
 24.1   If the determined payment period is calculated to be less than 
 24.2   one year, the contributions required under this subdivision to 
 24.3   receive service credit may be within one year from the discharge 
 24.4   date.  
 24.5      (f) The amount of allowable service credit obtainable under 
 24.6   this section may not exceed five years, unless a longer purchase 
 24.7   period is required under United States Code, title 38, section 
 24.8   4312.  
 24.9      (g) The employing unit shall pay interest on all equivalent 
 24.10  member and employer contribution amounts payable under this 
 24.11  subdivision.  Interest must be computed at a rate of 8.5 percent 
 24.12  compounded annually from the end of each fiscal year of the 
 24.13  leave or break in service to the end of the month in which 
 24.14  payment is received.  
 24.15     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
 24.16  subdivision 16, is amended to read: 
 24.17     Subd. 16.  [ALLOWABLE SERVICE; LIMITS AND COMPUTATION.] (a) 
 24.18  "Allowable service" means: 
 24.19     (1) service during years of actual membership in the course 
 24.20  of which employee contributions were made, periods covered by 
 24.21  payments in lieu of salary deductions under section 353.35; 
 24.22     (2) service in years during which the public employee was 
 24.23  not a member but for which the member later elected, while a 
 24.24  member, to obtain credit by making payments to the fund as 
 24.25  permitted by any law then in effect; 
 24.26     (3) a period of authorized leave of absence with pay from 
 24.27  which deductions for employee contributions are made, deposited, 
 24.28  and credited to the fund; 
 24.29     (4) a period of authorized personal, parental, or medical 
 24.30  leave of absence without pay, including a leave of absence 
 24.31  covered under the federal Family Medical Leave Act, that does 
 24.32  not exceed one year, and during or for which a member obtained 
 24.33  service credit for each month in the leave period by payments to 
 24.34  the fund made in place of salary deductions.  The payments must 
 24.35  be made in an amount or amounts based on the member's average 
 24.36  salary on which deductions were paid for the last six months of 
 25.1   public service, or for that portion of the last six months while 
 25.2   the member was in public service, to apply to the period in 
 25.3   either case that immediately precedes the commencement of the 
 25.4   leave of absence.  If the employee elects to pay the employee 
 25.5   contributions for the period of any authorized personal, 
 25.6   parental, or medical leave of absence without pay, or for any 
 25.7   portion of the leave, the employee shall also, as a condition to 
 25.8   the exercise of the election, pay to the fund an amount 
 25.9   equivalent to the required employer and the additional employer 
 25.10  contributions, if any, for the employee.  The payment must be 
 25.11  made within one year from the expiration of the leave of absence 
 25.12  or within 20 days after termination of public service under 
 25.13  subdivision 11a, whichever is earlier.  The employer, by 
 25.14  appropriate action of its governing body which is made a part of 
 25.15  its official records and which is adopted before the date of the 
 25.16  first payment of the employee contribution, may certify to the 
 25.17  association in writing its commitment to pay the employer and 
 25.18  additional employer contributions from the proceeds of a tax 
 25.19  levy made under section 353.28.  Payments under this paragraph 
 25.20  must include interest at an annual rate of 8.5 percent 
 25.21  compounded annually from the date of the termination of the 
 25.22  leave of absence to the date payment is made.  An employee shall 
 25.23  return to public service and render a minimum of three months of 
 25.24  allowable service in order to be eligible to pay employee and 
 25.25  employer contributions for a subsequent authorized leave of 
 25.26  absence without pay.  Upon payment, the employee must be granted 
 25.27  allowable service credit for the purchased period; 
 25.28     (5) a periodic, repetitive leave that is offered to all 
 25.29  employees of a governmental subdivision.  The leave program may 
 25.30  not exceed 208 hours per annual normal work cycle as certified 
 25.31  to the association by the employer.  A participating member 
 25.32  obtains service credit by making employee contributions in an 
 25.33  amount or amounts based on the member's average salary that 
 25.34  would have been paid if the leave had not been taken.  The 
 25.35  employer shall pay the employer and additional employer 
 25.36  contributions on behalf of the participating member.  The 
 26.1   employee and the employer are responsible to pay interest on 
 26.2   their respective shares at the rate of 8.5 percent a year, 
 26.3   compounded annually, from the end of the normal cycle until full 
 26.4   payment is made.  An employer shall also make the employer and 
 26.5   additional employer contributions, plus 8.5 percent interest, 
 26.6   compounded annually, on behalf of an employee who makes employee 
 26.7   contributions but terminates public service.  The employee 
 26.8   contributions must be made within one year after the end of the 
 26.9   annual normal working cycle or within 20 days after termination 
 26.10  of public service, whichever is sooner.  The association shall 
 26.11  prescribe the manner and forms to be used by a governmental 
 26.12  subdivision in administering a periodic, repetitive leave.  Upon 
 26.13  payment, the member must be granted allowable service credit for 
 26.14  the purchased period; 
 26.15     (6) an authorized temporary layoff under subdivision 12, 
 26.16  limited to three months allowable service per authorized 
 26.17  temporary layoff in one calendar year.  An employee who has 
 26.18  received the maximum service credit allowed for an authorized 
 26.19  temporary layoff must return to public service and must obtain a 
 26.20  minimum of three months of allowable service subsequent to the 
 26.21  layoff in order to receive allowable service for a subsequent 
 26.22  authorized temporary layoff; or 
 26.23     (7) a period during which a member is on an authorized 
 26.24  leave of absence to enter military absent from employment by a 
 26.25  governmental subdivision by reason of service in the armed 
 26.26  forces of the United States in the uniformed services, as 
 26.27  defined in United States Code, title 38, section 4303(13), if 
 26.28  the member returns to public service upon discharge 
 26.29  from military service in the uniformed service within the time 
 26.30  frames required under United States Code, title 38, section 
 26.31  192.262 and 4312(e), provided that the member did not separate 
 26.32  from uniformed service with a dishonorable or bad conduct 
 26.33  discharge or under other than honorable conditions.  The service 
 26.34  is credited if the member pays into the fund equivalent employee 
 26.35  contributions based upon the employee's contribution rate or 
 26.36  rates in effect at the time that the uniformed service was 
 27.1   performed multiplied by the full and fractional years being 
 27.2   purchased and applied to the annual salary at the date of return 
 27.3   from military service rate.  The annual salary rate is the 
 27.4   average annual salary during the purchase period that the member 
 27.5   would have received if the member had continued to be employed 
 27.6   in covered employment rather than to provide uniformed service, 
 27.7   or, if the determination of that rate is not reasonably certain, 
 27.8   the annual salary rate is the member's average salary rate 
 27.9   during the 12-month period of covered employment rendered 
 27.10  immediately preceding the period of the uniformed service.  
 27.11  Payment of the member equivalent contributions must be made 
 27.12  within during a period which begins with the date on which the 
 27.13  individual returns to public employment and that is three times 
 27.14  the length of the military leave period, or within five years of 
 27.15  the date of discharge from the military service, whichever is 
 27.16  less.  If the determined payment period is less than one year, 
 27.17  the contributions required under this clause to receive service 
 27.18  credit may be made within one year of the discharge date.  
 27.19  Payment may not be accepted following 20 days after termination 
 27.20  of public service under subdivision 11a.  The amount of these 
 27.21  contributions must be in accord with the contribution rates and 
 27.22  salary limitations, if any, in effect during the leave, plus 
 27.23  interest at an annual rate of 8.5 percent compounded annually 
 27.24  from the date of return to public service to the date payment is 
 27.25  made.  If the member equivalent contributions provided for in 
 27.26  this clause are not paid in full, the member's allowable service 
 27.27  credit must be prorated by multiplying the full and fractional 
 27.28  number of years of uniformed service eligible for purchase by 
 27.29  the ratio obtained by dividing the total member contributions 
 27.30  received by the total member contributions otherwise required 
 27.31  under this clause.  The corresponding equivalent employer 
 27.32  contribution, and, if applicable, the equivalent additional 
 27.33  employer contribution, if applicable, must be paid by the 
 27.34  governmental subdivision employing the member upon the person's 
 27.35  return to public service if the member makes the equivalent 
 27.36  employee contributions.  The employer payments must be made from 
 28.1   funds available to the employing unit, using the employer and 
 28.2   additional employer contribution rate or rates in effect at the 
 28.3   time that the uniformed service was performed, applied to the 
 28.4   same annual salary rate or rates used to compute the equivalent 
 28.5   member contribution.  The governmental subdivision involved may 
 28.6   appropriate money for those payments.  A member may not receive 
 28.7   credit for a voluntary extension of military service at the 
 28.8   instance of the member beyond the initial period of enlistment, 
 28.9   induction, or call to active duty.  The amount of service credit 
 28.10  obtainable under this section may not exceed five years unless a 
 28.11  longer purchase period is required under United States Code, 
 28.12  title 38, section 4312.  The employing unit shall pay interest 
 28.13  on all equivalent member and employer contribution amounts 
 28.14  payable under this clause.  Interest must be computed at a rate 
 28.15  of 8.5 percent compounded annually from the end of each fiscal 
 28.16  year of the leave or the break in service to the end of the 
 28.17  month in which the payment is received.  Upon payment, the 
 28.18  employee must be granted allowable service credit for the 
 28.19  purchased period.  
 28.20     (b) For calculating benefits under sections 353.30, 353.31, 
 28.21  353.32, and 353.33 for state officers and employees displaced by 
 28.22  the Community Corrections Act, chapter 401, and transferred into 
 28.23  county service under section 401.04, "allowable service"  means 
 28.24  the combined years of allowable service as defined in paragraph 
 28.25  (a), clauses (1) to (6), and section 352.01, subdivision 11.  
 28.26     (c) For a public employee who has prior service covered by 
 28.27  a local police or firefighters relief association that has 
 28.28  consolidated with the Public Employees Retirement Association or 
 28.29  to which section 353.665 applies, and who has elected the type 
 28.30  of benefit coverage provided by the public employees police and 
 28.31  fire fund either under section 353A.08 following the 
 28.32  consolidation or under section 353.665, subdivision 4, 
 28.33  "applicable service" is a period of service credited by the 
 28.34  local police or firefighters relief association as of the 
 28.35  effective date of the consolidation based on law and on bylaw 
 28.36  provisions governing the relief association on the date of the 
 29.1   initiation of the consolidation procedure. 
 29.2      (d) No member may receive more than 12 months of allowable 
 29.3   service credit in a year either for vesting purposes or for 
 29.4   benefit calculation purposes. 
 29.5      (e) "Allowable service" also means a period purchased under 
 29.6   section 356.555. 
 29.7      Sec. 4.  Minnesota Statutes 2002, section 354.091, is 
 29.8   amended to read: 
 29.9      354.091 [SERVICE CREDIT.] 
 29.10     (a) In computing service credit, no teacher shall receive 
 29.11  credit for more than one year of teaching service for any fiscal 
 29.12  year.  Commencing July 1, 1961: 
 29.13     (1) if a teacher teaches less than five hours in a day, 
 29.14  service credit must be given for the fractional part of the day 
 29.15  as the term of service performed bears to five hours; 
 29.16     (2) if a teacher teaches five or more hours in a day, 
 29.17  service credit must be given for only one day; 
 29.18     (3) if a teacher teaches at least 170 full days in any 
 29.19  fiscal year, service credit must be given for a full year of 
 29.20  teaching service; and 
 29.21     (4) if a teacher teaches for only a fractional part of the 
 29.22  year, service credit must be given for such fractional part of 
 29.23  the year as the period of service performed bears to 170 days. 
 29.24     (b) A teacher shall receive a full year of service credit 
 29.25  based on the number of days in the employer's full school year 
 29.26  if it is less than 170 days.  Teaching service performed before 
 29.27  July 1, 1961, must be computed under the law in effect at the 
 29.28  time it was performed. 
 29.29     (c) A teacher does must not lose or gain retirement service 
 29.30  credit as a result of the employer converting to a flexible or 
 29.31  alternate work schedule.  If the employer converts to a flexible 
 29.32  or alternate work schedule, the forms for reporting and the 
 29.33  procedures for determining service credit must be determined by 
 29.34  the executive director with the approval of the board of 
 29.35  trustees.  
 29.36     (d) For all services rendered on or after July 1, 2003, 
 30.1   service credit for all members employed by the Minnesota State 
 30.2   Colleges and Universities system must be determined: 
 30.3      (1) for full-time employees, by the definition of full time 
 30.4   employment contained in the collective bargaining agreement for 
 30.5   those units listed in section 179A.10, subdivision 2, or 
 30.6   contained in the applicable personnel or salary plan for those 
 30.7   positions designated in section 179A.10, subdivision 1; 
 30.8      (2) for part-time employees, by the appropriate proration 
 30.9   of full-time equivalency based on the provisions contained in 
 30.10  the collective bargaining agreement for those units listed in 
 30.11  section 179A.10, subdivision 2, or contained in the applicable 
 30.12  personnel or salary plan for those positions designated in 
 30.13  section 179A.10, subdivision 1, and the applicable procedures of 
 30.14  the Minnesota State Colleges and Universities system; and 
 30.15     (3) in no case may a member receive more than one year of 
 30.16  service credit for any fiscal year. 
 30.17     Sec. 5.  Minnesota Statutes 2002, section 354.096, 
 30.18  subdivision 1, is amended to read: 
 30.19     Subdivision 1.  [CERTIFICATION.] Upon granting a family 
 30.20  leave to a member, an employing unit must certify the leave to 
 30.21  the association on a form specified by the executive director 
 30.22  before the end of the fiscal year during which the leave was 
 30.23  granted. 
 30.24     Sec. 6.  Minnesota Statutes 2002, section 354.53, is 
 30.25  amended to read: 
 30.26     354.53 [CREDIT FOR MILITARY BREAK IN SERVICE LEAVE OF 
 30.27  ABSENCE TO PROVIDE UNIFORMED SERVICE.] 
 30.28     Subdivision 1.  [ELIGIBILITY; EMPLOYEE AND EMPLOYER 
 30.29  CONTRIBUTIONS.] (a) Any employee given a leave of absence to 
 30.30  enter military service teacher who is absent from employment by 
 30.31  reason of service in the uniformed services, as defined in 
 30.32  United States Code, title 38, section 4303(13), and who returns 
 30.33  to the employer providing teaching service upon discharge from 
 30.34  military service as provided in the uniformed service within the 
 30.35  time frames required in United States Code, title 38, section 
 30.36  192.262 4312(e), may obtain service credit for the period of 
 31.1   military the uniformed service but shall not receive credit for 
 31.2   any voluntary extension of military service at the instance of 
 31.3   the member beyond the initial period of enlistment, induction or 
 31.4   call to active duty as further specified in this section, 
 31.5   provided that the teacher did not separate from uniformed 
 31.6   service with a dishonorable or bad conduct discharge or under 
 31.7   other than honorable conditions. 
 31.8      (b) The member shall may obtain credit by paying into the 
 31.9   fund an equivalent employee contribution based upon the 
 31.10  contribution rate or rates in effect at the time that 
 31.11  the military uniformed service was performed multiplied by the 
 31.12  full and fractional years being purchased and applied to the 
 31.13  annual salary rate of the member for the year beginning with the 
 31.14  date of return from military service and the number of years of 
 31.15  military service together with interest thereon at an annual 
 31.16  rate of 8.5 percent compounded annually from the time the 
 31.17  military service was rendered to the first date of payment.  The 
 31.18  annual salary rate is the average annual salary during the 
 31.19  purchase period that the teacher would have received if the 
 31.20  teacher had continued to provide teaching service to the 
 31.21  employer rather than provide uniformed service or if the 
 31.22  determination of that rate is not reasonably certain, the annual 
 31.23  salary rate is the teacher's average salary rate during the 
 31.24  12-month period immediately preceding the period, or, if the 
 31.25  preceding period is less than 12 months, the annualized rate 
 31.26  derived from the teacher's average salary rate during the period 
 31.27  of teacher employment rendered immediately preceding the period 
 31.28  of the uniformed service.  
 31.29     (c) The equivalent employer contribution and, if 
 31.30  applicable, the equivalent additional contribution provided in 
 31.31  section 354.42 must be paid by the employing unit at as provided 
 31.32  in section 354.52, subdivision 4, using the employer and 
 31.33  employer additional contribution rate or rates in effect at the 
 31.34  time that the military uniformed service was performed, applied 
 31.35  to the same annual salary rate of or rates used to compute the 
 31.36  member for the year beginning with the date of return from 
 32.1   military service, in the manner provided in section 354.52, 
 32.2   subdivision 4 equivalent employee contribution. 
 32.3      Subd. 2.  [CALCULATION OF CREDIT.] (a) For purposes of 
 32.4   computing a money purchase annuity under section 354.44, 
 32.5   subdivision 2, all payments into the fund pursuant to under this 
 32.6   section shall must be considered accumulations after July 1, 
 32.7   1957 for the purpose of computing any annuity in accordance with 
 32.8   section 354.44, subdivision 2.  
 32.9      (b) For purposes of computing a formula annuity under 
 32.10  section 354.44, subdivision 6, if the employee equivalent 
 32.11  contributions and interest thereon provided in this section are 
 32.12  not paid in full, the member's formula service credit shall must 
 32.13  be calculated prorated by multiplying the full and fractional 
 32.14  number of years of military uniformed service eligible for 
 32.15  purchase by the ratio obtained by dividing the total amount paid 
 32.16  and employee contribution received by the maximum amount payable 
 32.17  provided herein total employee contribution otherwise required 
 32.18  under this section. 
 32.19     Subd. 3.  [PAYMENTS ELIGIBLE PAYMENT PERIOD.] Payments 
 32.20  pursuant to this (a) To receive service credit under this 
 32.21  section, the contributions specified in this section shall must 
 32.22  be made within transmitted to the teachers retirement 
 32.23  association during the period which begins with the date on 
 32.24  which the individual returns to teaching service and which has a 
 32.25  duration of three times the length of the uniformed service 
 32.26  period, but not to exceed five years from the date of discharge. 
 32.27     (b) Notwithstanding paragraph (a), if the payment period 
 32.28  determined under paragraph (a) is less than one year, the 
 32.29  contributions required under this section to receive service 
 32.30  credit may be made within one year from the discharge date. 
 32.31     Subd. 4.  [LIMITS ON SERVICE CREDIT.] The amount of service 
 32.32  credit obtainable under this section may not exceed five years, 
 32.33  unless a longer purchase period is required under United States 
 32.34  Code, title 38, section 4312. 
 32.35     Subd. 5.  [INTEREST REQUIREMENTS.] The employer shall pay 
 32.36  interest on all equivalent employee and employer contribution 
 33.1   amounts payable under this section.  Interest must be computed 
 33.2   at a rate of 8.5 percent compounded annually from the end of 
 33.3   each fiscal year of the leave or the break in service to the end 
 33.4   of the month in which the payment is received. 
 33.5      Sec. 7.  Minnesota Statutes 2002, section 354A.093, is 
 33.6   amended to read: 
 33.7      354A.093 [MILITARY BREAK IN SERVICE CREDIT TO PROVIDE 
 33.8   UNIFORMED SERVICE.] 
 33.9      Subdivision 1.  [ELIGIBILITY.] Any teacher in the 
 33.10  coordinated program of either the Minneapolis Teachers 
 33.11  Retirement Fund Association or the St. Paul Teachers Retirement 
 33.12  Fund Association or any teacher in the new law coordinated 
 33.13  program of the Duluth Teachers Retirement Fund Association who 
 33.14  is granted a leave absent from employment by reason of absence 
 33.15  to enter military service in the uniformed services as defined 
 33.16  in United States Code, title 38, section 4303(13) and who 
 33.17  returns to the employer providing active teaching service upon 
 33.18  discharge from military uniformed service as provided in within 
 33.19  the time frames required under United States Code, title 38, 
 33.20  section 192.262 4312(e), shall be entitled to may receive 
 33.21  allowable service credit in the applicable association for all 
 33.22  or a portion of the period of military uniformed service but, 
 33.23  provided that the teacher did not for any voluntary extension of 
 33.24  military separate from uniformed service beyond the initial 
 33.25  period of enlistment, induction with a dishonorable or call to 
 33.26  active duty which occurred at the instance of the teacher bad 
 33.27  conduct discharge or under other than honorable conditions. 
 33.28     Subd. 2.  [CONTRIBUTIONS.] If the teacher granted the 
 33.29  military service leave of absence makes the equivalent employee 
 33.30  contribution for a period of military service leave of absence 
 33.31  pursuant to service provided to the uniformed services under 
 33.32  this section, the employing unit shall make an equivalent 
 33.33  employer contribution on behalf of the teacher to the applicable 
 33.34  association for the period of the military service leave of 
 33.35  absence being purchased in the manner described in section 
 33.36  354A.12, subdivision 2a.  The equivalent employee and employer 
 34.1   contributions shall must be in an amount equal to the employee 
 34.2   and employer contribution rates in effect for other active 
 34.3   members of the association covered by the same program applied 
 34.4   to a salary figure equal to the teacher's average annual salary 
 34.5   rate at the date of return from military service that the 
 34.6   teacher would have received if the leave or break in service had 
 34.7   not occurred, or if the determination of that average salary 
 34.8   rate is not reasonably certain, on the basis of the teacher's 
 34.9   average salary rate during the 12-month period immediately 
 34.10  preceding the period, or, if the preceding period is less than 
 34.11  12 months, the annualized rate derived from the teacher's 
 34.12  average salary rate during the period of teacher employment 
 34.13  rendered immediately preceding the period of uniformed 
 34.14  service, with the result multiplied by the number of full and 
 34.15  fractional years constituting the period of service provided to 
 34.16  the military uniformed service leave of absence which the 
 34.17  teacher seeks is authorized to purchase under this 
 34.18  section.  Payment shall include interest on the amount payable 
 34.19  pursuant to this section at the rate of six percent compounded 
 34.20  annually from the year the military service was rendered to the 
 34.21  date of payment. 
 34.22     Subd. 3.  [PRORATING.] If the payments made by a 
 34.23  teacher pursuant to under this section are less than an the full 
 34.24  amount equal to the applicable contribution rate applied to a 
 34.25  salary figure equal to the teacher's annual salary rate at the 
 34.26  date of return from military service, multiplied by the number 
 34.27  of years constituting the period of the military service leave 
 34.28  of absence determined under subdivision 2, the service credit 
 34.29  shall must be prorated.  The prorated service credit shall must 
 34.30  be determined by the ratio between the amount of the 
 34.31  actual equivalent employee payment which was made and the full 
 34.32  contribution amount payable pursuant to equivalent employee 
 34.33  payment required under this section.  In order to be entitled to 
 34.34  receive service credit under this section, payment shall be made 
 34.35  within five years from the date of discharge from military 
 34.36  service. 
 35.1      Subd. 4.  [ELIGIBLE PAYMENT PERIOD.] (a) To receive service 
 35.2   credit under this section, the contributions specified in this 
 35.3   section must be transmitted to the applicable first class city 
 35.4   teachers retirement fund association during the period which 
 35.5   begins with the date the individual returns to teaching service 
 35.6   and which has a duration of three times the length of the 
 35.7   uniformed service period, but not to exceed five years. 
 35.8      (b) Notwithstanding paragraph (a), if the payment period 
 35.9   determined under paragraph (a) is less than one year, the 
 35.10  contributions required under this section to receive service 
 35.11  credit may be made within one year from the discharge date. 
 35.12     Subd. 5.  [LIMITS ON SERVICE CREDIT.] The amount of service 
 35.13  credit obtainable under this section may not exceed five years, 
 35.14  unless a longer purchase period is required under United States 
 35.15  Code, title 38, section 4312. 
 35.16     Subd. 6.  [INTEREST REQUIREMENTS.] The employer shall pay 
 35.17  interest on all equivalent employee and employer contribution 
 35.18  amounts payable under this section.  Interest must be computed 
 35.19  at a rate of 8.5 percent compounded annually from the end of 
 35.20  each fiscal year of the leave or break in service to the end of 
 35.21  the month in which payment is received. 
 35.22     Sec. 8.  Minnesota Statutes 2002, section 490.121, is 
 35.23  amended by adding a subdivision to read: 
 35.24     Subd. 4b.  [CREDIT FOR BREAK IN SERVICE TO PROVIDE 
 35.25  UNIFORMED SERVICE.] (a) A judge who is absent from employment by 
 35.26  reason of service in the uniformed services, as defined in 
 35.27  United States Code, title 38, section 4303(13), and who returns 
 35.28  to state employment as a judge upon discharge from service in 
 35.29  the uniformed service within the time frame required in United 
 35.30  States Code, title 38, section 4312(e) may obtain service credit 
 35.31  for the period of the uniformed service, provided that the judge 
 35.32  did not separate from uniformed service with a dishonorable or 
 35.33  bad conduct discharge or under other than honorable conditions.  
 35.34     (b) The judge may obtain credit by paying into the fund 
 35.35  equivalent member contribution based on the contribution rate 
 35.36  rates in effect at the time that the uniformed service was 
 36.1   performed multiplied by the full and fractional years being 
 36.2   purchased and applied to the annual salary rate.  The annual 
 36.3   salary rate is the average annual salary during the purchase 
 36.4   period that the judge would have received if the judge had 
 36.5   continued to provide employment services to the state rather 
 36.6   than to provide uniformed service, or if the determination of 
 36.7   that rate is not reasonably certain, the annual salary rate is 
 36.8   the judge's average salary rate during the 12-month period of 
 36.9   judicial employment rendered immediately preceding the purchase 
 36.10  period.  
 36.11     (c) The equivalent employer contribution and, if 
 36.12  applicable, the equivalent employer additional contribution, 
 36.13  must be paid by the employing unit, using the employer and 
 36.14  employer additional contribution rate or rates in effect at the 
 36.15  time that the uniformed service was performed, applied to the 
 36.16  same annual salary rate or rates used to compute the equivalent 
 36.17  member contribution.  
 36.18     (d) If the member equivalent contributions provided for in 
 36.19  this subdivision are not paid in full, the judge's allowable 
 36.20  service credit must be prorated by multiplying the full and 
 36.21  fractional number of years of uniformed service eligible for 
 36.22  purchase by the ratio obtained by dividing the total member 
 36.23  contributions received by the total member contributions 
 36.24  otherwise required under this subdivision.  
 36.25     (e) To receive allowable service credit under this 
 36.26  subdivision, the contributions specified in this section must be 
 36.27  transmitted to the fund during the period which begins with the 
 36.28  date on which the individual returns to judicial employment and 
 36.29  which has a duration of three times the length of the uniformed 
 36.30  service period, but not to exceed five years.  If the determined 
 36.31  payment period is calculated to be less than one year, the 
 36.32  contributions required under this subdivision to receive service 
 36.33  credit may be within one year from the discharge date.  
 36.34     (f) The amount of allowable service credit obtainable under 
 36.35  this section may not exceed five years, unless a longer purchase 
 36.36  period is required under United States Code, title 38, section 
 37.1   4312.  
 37.2      (g) The state court administrator shall pay interest on all 
 37.3   equivalent member and employer contribution amounts payable 
 37.4   under this subdivision.  Interest must be computed at a rate of 
 37.5   8.5 percent compounded annually from the end of each fiscal year 
 37.6   of the leave or break in service to the end of the month in 
 37.7   which payment is received. 
 37.8      Sec. 9.  [EFFECTIVE DATE.] 
 37.9      Sections 1 to 8 are effective on July 1, 2004. 
 37.10                             ARTICLE 4
 37.11               QUALIFIED PART-TIME TEACHER PROVISIONS
 37.12     Section 1.  Minnesota Statutes 2002, section 354.66, 
 37.13  subdivision 2, is amended to read: 
 37.14     Subd. 2.  [QUALIFIED PART-TIME TEACHER PROGRAM 
 37.15  PARTICIPATION REQUIREMENTS.] (a) A teacher in a Minnesota public 
 37.16  elementary school, a Minnesota secondary school, or the 
 37.17  Minnesota State Colleges and Universities system who has three 
 37.18  years or more of allowable service in the association or three 
 37.19  years or more of full-time teaching service in Minnesota public 
 37.20  elementary schools, Minnesota secondary schools, or the 
 37.21  Minnesota State Colleges and Universities system, by agreement 
 37.22  with the board of the employing district or with the authorized 
 37.23  representative of the board, may be assigned to teaching service 
 37.24  in a part-time teaching position under subdivision 3.  The 
 37.25  agreement must be executed before October 1 of the school year 
 37.26  for which the teacher requests to make retirement contributions 
 37.27  under subdivision 4.  A copy of the executed agreement must be 
 37.28  filed with the executive director of the association.  If the 
 37.29  copy of the executed agreement is filed with the association 
 37.30  after October 1 of the school year for which the teacher 
 37.31  requests to make retirement contributions under subdivision 4, 
 37.32  the employing unit shall pay the fine specified in section 
 37.33  354.52, subdivision 6, for each calendar day that elapsed since 
 37.34  the October 1 due date.  The association may not accept an 
 37.35  executed agreement that is received by the association more than 
 37.36  15 months late.  The association may not waive the fine required 
 38.1   by this section. 
 38.2      (b) Notwithstanding paragraph (a), if the teacher is also a 
 38.3   legislator: 
 38.4      (1) the agreement in paragraph (a) must be executed before 
 38.5   March 1 of the school year for which the teacher requests to 
 38.6   make retirement contributions under subdivision 4; and 
 38.7      (2) the fines specified in paragraph (a) apply if the 
 38.8   employing unit does not file the executed agreement with the 
 38.9   executive director of the association by March 1. 
 38.10     Sec. 2.  Minnesota Statutes 2002, section 354A.094, 
 38.11  subdivision 3, is amended to read: 
 38.12     Subd. 3.  [QUALIFIED PART-TIME TEACHER PROGRAM 
 38.13  PARTICIPATION REQUIREMENTS.] (a) A teacher in the public schools 
 38.14  of a city of the first class who has three years or more 
 38.15  allowable service in the applicable retirement fund association 
 38.16  or three years or more of full-time teaching service in 
 38.17  Minnesota public elementary schools, Minnesota secondary 
 38.18  schools, and Minnesota State Colleges and Universities system 
 38.19  may, by agreement with the board of the employing district, be 
 38.20  assigned to teaching service within the district in a part-time 
 38.21  teaching position.  The agreement must be executed before 
 38.22  October 1 of the year for which the teacher requests to make 
 38.23  retirement contributions under subdivision 4.  A copy of the 
 38.24  executed agreement must be filed with the executive director of 
 38.25  the retirement fund association.  If the copy of the executed 
 38.26  agreement is filed with the association after October 1 of the 
 38.27  year for which the teacher requests to make retirement 
 38.28  contributions under subdivision 4, the employing school district 
 38.29  shall pay a fine of $5 for each calendar day that elapsed since 
 38.30  the October 1 due date.  The association may not accept an 
 38.31  executed agreement that is received by the association more than 
 38.32  15 months late.  The association may not waive the fine required 
 38.33  by this section. 
 38.34     (b) Notwithstanding paragraph (a), if the teacher is also a 
 38.35  legislator: 
 38.36     (1) the agreement in paragraph (a) must be executed before 
 39.1   March 1 of the school year for which the teacher requests to 
 39.2   make retirement contributions under subdivision 4; and 
 39.3      (2) the fines specified in paragraph (a) apply if the 
 39.4   employing unit does not file the executed agreement with the 
 39.5   executive director of the applicable Teachers Retirement Fund 
 39.6   Association by March 1. 
 39.7      Sec. 3.  [EFFECTIVE DATE.] 
 39.8      Sections 1 and 2 are effective on July 1, 2004. 
 39.9                              ARTICLE 5
 39.10            RETIREMENT PLAN CONTRIBUTIONS AND TRANSFERS
 39.11     Section 1.  Minnesota Statutes 2002, section 354.42, 
 39.12  subdivision 7, is amended to read: 
 39.13     Subd. 7.  [ERRONEOUS SALARY DEDUCTIONS OR DIRECT PAYMENTS.] 
 39.14  (a) Any deductions taken from the salary of an employee for the 
 39.15  retirement fund in error shall must be refunded to the employee 
 39.16  upon the discovery of the error and after the verification of 
 39.17  the error by the employing unit making the deduction, and. The 
 39.18  corresponding employer contribution and additional employer 
 39.19  contribution amounts attributable to the erroneous salary 
 39.20  deduction must be refunded to the employing unit. 
 39.21     (b) If salary deductions and employer contributions were 
 39.22  erroneously transmitted to the retirement fund and should have 
 39.23  been transmitted to another Minnesota public pension plan, the 
 39.24  retirement association executive director must transfer these 
 39.25  salary deductions and employer contributions to the appropriate 
 39.26  public pension fund without interest.  For purposes of this 
 39.27  paragraph, a Minnesota public pension plan means a plan 
 39.28  specified in section 356.30, subdivision 3, or the plan governed 
 39.29  by chapter 354B. 
 39.30     (c) A potential transfer under paragraph (b) that would 
 39.31  cause the plan to fail to be a qualified plan under section 
 39.32  401(a) of the Internal Revenue Code, as amended, must not be 
 39.33  made by the executive director.  Within 30 days after being 
 39.34  notified by the Teachers Retirement Association of an unmade 
 39.35  potential transfer under this paragraph, the employer of the 
 39.36  affected person must transmit an amount representing the 
 40.1   applicable salary deductions and employer contributions, without 
 40.2   interest, to the retirement fund of the appropriate Minnesota 
 40.3   public pension plan fund.  The retirement association must 
 40.4   provide a credit for the amount of the erroneous salary 
 40.5   deductions and employer contributions against future 
 40.6   contributions from the employer. 
 40.7      (d) If a salary warrant or check from which a deduction for 
 40.8   the retirement fund was taken has been canceled or the amount of 
 40.9   the warrant or if a check has been returned to the funds of the 
 40.10  employing unit making the payment, a refund of the amount 
 40.11  deducted, or any portion of it that is required to adjust the 
 40.12  salary deductions, shall must be made to the employing unit. 
 40.13     (d) (e) Any erroneous direct payments of member-paid 
 40.14  contributions or erroneous salary deductions that were not 
 40.15  refunded in during the regular payroll cycle processing of an 
 40.16  employing unit's annual summary report shall must be refunded to 
 40.17  the member with , plus interest computed using the rate and 
 40.18  method specified in section 354.49, subdivision 2. 
 40.19     (f) Any refund under this subdivision that would cause the 
 40.20  plan to fail to be a qualified plan under section 401(a) of the 
 40.21  Internal Revenue Code, as amended, may not be refunded and 
 40.22  instead must be credited against future contributions payable by 
 40.23  the employer.  The employer is responsible for refunding to the 
 40.24  applicable employee any amount that was erroneously deducted 
 40.25  from the salary of the employee, with interest as specified in 
 40.26  paragraph (e). 
 40.27     Sec. 2.  Minnesota Statutes 2002, section 354.51, 
 40.28  subdivision 5, is amended to read: 
 40.29     Subd. 5.  [PAYMENT OF SHORTAGES.] (a) Except as provided in 
 40.30  paragraph (b), in the event that full required member 
 40.31  contributions are not deducted from the salary of a teacher, 
 40.32  payment shall must be made as follows:  
 40.33     (a) (1) Payment of shortages in member deductions on salary 
 40.34  earned after June 30, 1957, and prior to before July 1, 1981, 
 40.35  may be made any time prior to before retirement.  Payment shall 
 40.36  must include interest at an annual rate of 8.5 percent 
 41.1   compounded annually from the end of the fiscal year in which the 
 41.2   shortage occurred to the end of the month in which payment is 
 41.3   made and the interest shall must be credited to the fund.  If 
 41.4   payment of a shortage in deductions is not made, the formula 
 41.5   service credit of the member shall must be prorated pursuant to 
 41.6   under section 354.05, subdivision 25, clause (3). 
 41.7      (b) (2) Payment of shortages in member deductions on salary 
 41.8   earned after June 30, 1981, shall be are the sole obligation of 
 41.9   the employing unit and shall be are payable by the employing 
 41.10  unit upon notification by the executive director of the shortage 
 41.11  with interest at an annual rate of 8.5 percent compounded 
 41.12  annually from the end of the fiscal year in which the shortage 
 41.13  occurred to the end of the month in which payment is made and 
 41.14  the interest shall must be credited to the fund.  Effective July 
 41.15  1, 1986, the employing unit shall also pay the employer 
 41.16  contributions as specified in section 354.42, subdivisions 3 and 
 41.17  5 for such the shortages.  If the shortage payment is not paid 
 41.18  by the employing unit within 60 days of notification, the 
 41.19  executive director shall certify the amount of the shortage 
 41.20  payment to the applicable county auditor, who shall spread a 
 41.21  levy in the amount of the shortage payment over the taxable 
 41.22  property of the taxing district of the employing unit if the 
 41.23  employing unit is supported by property taxes, or to the 
 41.24  commissioner of finance, who shall deduct the amount from any 
 41.25  state aid or appropriation amount applicable to the employing 
 41.26  unit if the employing unit is not supported by property taxes.  
 41.27     (c) (3) Payment may not be made for shortages in member 
 41.28  deductions on salary earned prior to before July 1, 1957, for 
 41.29  shortages in member deductions on salary paid or payable under 
 41.30  paragraph (b), or for shortages in member deductions for persons 
 41.31  employed by the Minnesota State Colleges and Universities system 
 41.32  in a faculty position or in an eligible unclassified 
 41.33  administrative position and whose employment was less than 25 
 41.34  percent of a full academic year, exclusive of the summer 
 41.35  session, for the applicable institution that exceeds the most 
 41.36  recent 36 months. 
 42.1      (b) For a person who is employed by the Minnesota State 
 42.2   Colleges and Universities system in a faculty position or in an 
 42.3   eligible unclassified administrative position and whose 
 42.4   employment was less than 25 percent of a full academic year, 
 42.5   exclusive of the summer session, for the applicable institution, 
 42.6   upon the person's election under section 354B.21 of retirement 
 42.7   coverage under this chapter, the shortage in member deductions 
 42.8   on the salary for employment by the Minnesota State Colleges and 
 42.9   Universities system institution of less than 25 percent of a 
 42.10  full academic year, exclusive of the summer session, for the 
 42.11  applicable institution for the most recent 36 months and the 
 42.12  associated employer contributions must be paid by the Minnesota 
 42.13  State Colleges and Universities system institution, plus annual 
 42.14  compound interest at the rate of 8.5 percent from the end of the 
 42.15  fiscal year in which the shortage occurred to the end of the 
 42.16  month in which the teachers retirement association coverage 
 42.17  election is made.  If the shortage payment is not made by the 
 42.18  institution within 60 days of notification, the executive 
 42.19  director shall certify the amount of the shortage payment to the 
 42.20  commissioner of finance, who shall deduct the amount from any 
 42.21  state appropriation to the system.  An individual electing 
 42.22  coverage under this paragraph shall repay the amount of the 
 42.23  shortage in member deductions, plus interest, through deduction 
 42.24  from salary or compensation payments within the first year of 
 42.25  employment after the election under section 354B.21, subject to 
 42.26  the limitations in section 16D.16.  The Minnesota State Colleges 
 42.27  and Universities system may use any means available to recover 
 42.28  amounts which were not recovered through deductions from salary 
 42.29  or compensation payments.  No payment of the shortage in member 
 42.30  deductions under this paragraph may be made for a period longer 
 42.31  than the most recent 36 months. 
 42.32     Sec. 3.  Minnesota Statutes 2002, section 354B.23, 
 42.33  subdivision 1, is amended to read: 
 42.34     Subdivision 1.  [MEMBER CONTRIBUTION RATE.] (a) Except as 
 42.35  provided in paragraph (b), The member contribution rate for 
 42.36  participants in the individual retirement account plan is 4.5 
 43.1   percent of salary. 
 43.2      (b) For participants in the individual retirement account 
 43.3   plan who were otherwise eligible to elect retirement coverage in 
 43.4   the state unclassified employees retirement program, the member 
 43.5   contribution rate is the rate specified in section 352D.04, 
 43.6   subdivision 2, paragraph (a). 
 43.7      Sec. 4.  Minnesota Statutes 2002, section 354B.32, is 
 43.8   amended to read: 
 43.9      354B.32 [TRANSFER OF FUNDS TO IRAP.] 
 43.10     A participant in the individual retirement account plan 
 43.11  established in this chapter who has less than ten years of 
 43.12  allowable service under the Teachers Retirement Association or 
 43.13  the a teachers retirement fund association, whichever applies, 
 43.14  may elect to transfer an amount equal to the participant's 
 43.15  accumulated member contributions to the Teachers Retirement 
 43.16  Association or the applicable teachers retirement fund 
 43.17  association, plus compound interest at the rate of six percent 
 43.18  per annum, to the individual retirement account plan.  The 
 43.19  transfers are irrevocable fund to fund fund-to-fund transfers, 
 43.20  and, in no event, may the participant receive direct payment of 
 43.21  the money transferred prior to retirement before the termination 
 43.22  of employment.  If a participant elects the contribution 
 43.23  transfer, all of the participant's allowable and formula service 
 43.24  credit in the Teachers Retirement Association or the teachers 
 43.25  retirement fund association associated with the transferred 
 43.26  amount is forfeited. 
 43.27     The executive director of the Teachers Retirement 
 43.28  Association and the chief administrative officers of the 
 43.29  teachers retirement fund associations, in cooperation with the 
 43.30  chancellor of the Minnesota State Colleges and Universities 
 43.31  system, shall notify participants who are eligible to transfer 
 43.32  of their right to transfer and the amount that they are eligible 
 43.33  to transfer, and shall, upon request, provide forms to implement 
 43.34  the transfer.  The chancellor of the Minnesota State Colleges 
 43.35  and Universities system shall assist the Teachers Retirement 
 43.36  Association and the teachers retirement fund associations in 
 44.1   developing transfer forms and in implementing the transfers.  
 44.2      Authority to elect a transfer under this section expires on 
 44.3   July 1, 2004. 
 44.4      Sec. 5.  [EFFECTIVE DATE; RETROACTIVE APPLICATION.] 
 44.5      (a) Section 2 is effective on July 1, 2004. 
 44.6      (b) Section 2 applies to shortages in member deductions 
 44.7   that occurred before the effective date of the section. 
 44.8      (c) Sections 1, 3, and 4 are effective on July 1, 2004. 
 44.9                              ARTICLE 6
 44.10                REPORTING AND INFORMATION PROVISION
 44.11     Section 1.  Minnesota Statutes 2002, section 354.07, 
 44.12  subdivision 9, is amended to read: 
 44.13     Subd. 9.  [INFORMATION DISTRIBUTION.] All school districts, 
 44.14  the Minnesota State Colleges and Universities, community 
 44.15  colleges and other employers of members of the association are 
 44.16  obligated to distribute to their employees ballots for the 
 44.17  election of members to the board of trustees, pamphlets, 
 44.18  brochures, documents or any other material containing 
 44.19  association information which are prepared by the executive 
 44.20  director or the board and are delivered to the employers for 
 44.21  distribution. 
 44.22     Sec. 2.  Minnesota Statutes 2002, section 354.52, 
 44.23  subdivision 4a, is amended to read: 
 44.24     Subd. 4a.  [MEMBER DATA REPORTING REQUIREMENTS.] (a) An 
 44.25  employing unit must initially provide the member data specified 
 44.26  in paragraph (b) or any of that data not previously provided to 
 44.27  the association for payroll warrants dated after June 30, 1995, 
 44.28  in a format prescribed by the executive director.  An employing 
 44.29  unit must provide the member data specified in paragraph (b) in 
 44.30  a format prescribed by the executive director.  Data changes and 
 44.31  the dates of those changes under this subdivision must be 
 44.32  reported to the association in a format prescribed by the 
 44.33  executive director on an ongoing basis within 14 calendar days 
 44.34  after the date of the end of the payroll cycle in which they 
 44.35  occur.  These data changes must be reported with the payroll 
 44.36  cycle data under subdivision 4b. 
 45.1      (b) Data on the member includes:  
 45.2      (1) legal name, address, date of birth, association member 
 45.3   number, employer-assigned employee number, and Social Security 
 45.4   number; 
 45.5      (2) association status, including, but not limited to, 
 45.6   basic, coordinated, exempt annuitant, exempt technical college 
 45.7   teacher, and exempt independent contractor or consultant; 
 45.8      (3) employment status, including, but not limited to, full 
 45.9   time, part time, intermittent, substitute, or part-time 
 45.10  mobility; 
 45.11     (4) employment position, including, but not limited to, 
 45.12  teacher, superintendent, principal, administrator, or other; 
 45.13     (5) employment activity, including, but not limited to, 
 45.14  hire, termination, resumption of employment, disability, or 
 45.15  death; 
 45.16     (6) leaves of absence; 
 45.17     (7) county district number assigned by the association for 
 45.18  the employing unit; 
 45.19     (8) data center identification number, if applicable; and 
 45.20     (9) gender; 
 45.21     (10) position code; and 
 45.22     (11) other information as may be required by the executive 
 45.23  director. 
 45.24     Sec. 3.  Minnesota Statutes 2002, section 354.52, is 
 45.25  amended by adding a subdivision to read: 
 45.26     Subd. 4c.  [MNSCU SERVICE CREDIT REPORTING.] For all 
 45.27  part-time service rendered on or after July 1, 2004, the service 
 45.28  credit reporting requirement in subdivision 4b for all part-time 
 45.29  employees of the Minnesota State Colleges and Universities 
 45.30  system must be met by the Minnesota State Colleges and 
 45.31  Universities system reporting to the association on or before 
 45.32  July 31 of each year the final calculation of each part-time 
 45.33  member's service credit for the immediately preceding fiscal 
 45.34  year based on the employee's assignments for the fiscal year. 
 45.35     Sec. 4.  Minnesota Statutes 2002, section 354.52, 
 45.36  subdivision 6, is amended to read: 
 46.1      Subd. 6.  [NONCOMPLIANCE CONSEQUENCES.] An employing unit 
 46.2   that does not comply with the reporting requirements under this 
 46.3   section shall subdivision 2a, 4a, or 4b must pay a fine of $5 
 46.4   per calendar day until the association receives the required 
 46.5   data. 
 46.6      Sec. 5.  [LEGISLATIVE COMMISSION ON PENSIONS AND 
 46.7   RETIREMENT; ACTUARIAL SERVICES BILLING TO THIRD PARTIES.] 
 46.8      Notwithstanding any provision of law to the contrary, the 
 46.9   Legislative Commission on Pensions and Retirement may bill third 
 46.10  parties for actuarial services performed for their benefit under 
 46.11  its contract with its consulting actuary under Minnesota 
 46.12  Statutes, section 3.85, and may deposit the actuarial services 
 46.13  reimbursements from those third parties to the credit of the 
 46.14  commission, and those deposited reimbursements are 
 46.15  reappropriated to the commission. 
 46.16     Sec. 6.  [EFFECTIVE DATE.] 
 46.17     (a) Sections 1 to 4 are effective on July 1, 2004. 
 46.18     (b) Section 5 is effective retroactively to July 1, 2003, 
 46.19  and expires when the requirement that the Legislative Commission 
 46.20  on Pensions and Retirement retain a consulting actuary to 
 46.21  perform annual actuarial valuations of retirement plans 
 46.22  terminates. 
 46.23                             ARTICLE 7
 46.24                   RETIREMENT ANNUITY PROVISIONS
 46.25     Section 1.  Minnesota Statutes 2002, section 352.86, 
 46.26  subdivision 1, is amended to read: 
 46.27     Subdivision 1.  [ELIGIBILITY; RETIREMENT ANNUITY.] A person 
 46.28  who is employed by the Department of Transportation in the civil 
 46.29  service employment classification of aircraft pilot or chief 
 46.30  pilot who is covered by the general employee retirement plan of 
 46.31  the system under section 352.01, subdivision 23, who elects this 
 46.32  special retirement coverage under subdivision 3, who is 
 46.33  prohibited from performing the duties of aircraft pilot or chief 
 46.34  pilot after reaching age 62 65 by a rule policy adopted by the 
 46.35  commissioner of transportation, and who terminates employment as 
 46.36  a state employee on reaching that on or after age 62 but prior 
 47.1   to normal retirement age is entitled, upon application, to a 
 47.2   retirement annuity computed in accordance with under section 
 47.3   352.115, subdivisions 2 and 3, without any reduction for early 
 47.4   retirement under section 352.116, subdivision 1. 
 47.5      Sec. 2.  Minnesota Statutes 2002, section 353.37, is 
 47.6   amended by adding a subdivision to read: 
 47.7      Subd. 1b.  [RETIREMENT AGE.] For purposes of this section, 
 47.8   "retirement age" means retirement age as defined in United 
 47.9   States Code, title 42, section 416(l). 
 47.10     Sec. 3.  Minnesota Statutes 2002, section 353.37, 
 47.11  subdivision 3, is amended to read: 
 47.12     Subd. 3.  [REDUCTION OF ANNUITY.] The association shall 
 47.13  reduce the amount of the annuity as follows: 
 47.14     (a) for of a person who has not reached normal the 
 47.15  retirement age, by one-half of the amount in excess of the 
 47.16  applicable reemployment income maximum under subdivision 1;. 
 47.17     (b) for a person who has reached normal retirement age, but 
 47.18  has not reached age 70, one-third of the amount in excess of the 
 47.19  applicable reemployment income maximum under subdivision 1; 
 47.20     (c) for a person who has reached age 70, or for salary 
 47.21  earned through service in an elected office, there is no 
 47.22  reduction upon reemployment, regardless of income. 
 47.23  There is no reduction upon reemployment, regardless of income, 
 47.24  for a person who has reached the retirement age. 
 47.25     Sec. 4.  Minnesota Statutes 2002, section 354.44, 
 47.26  subdivision 4, is amended to read: 
 47.27     Subd. 4.  [RETIREMENT ANNUITY ACCRUAL DATE.] (a) An annuity 
 47.28  payment begins to accrue, providing provided that the age and 
 47.29  service requirements under subdivision 1 are satisfied, after 
 47.30  the termination of teaching service, or after the application 
 47.31  for retirement has been filed with the board, whichever is 
 47.32  later, as follows: 
 47.33     (1) on the 16th day of the month of termination or filing 
 47.34  if the termination or filing occurs on or before the 15th day of 
 47.35  the month; 
 47.36     (2) on the first day of the month following the month of 
 48.1   termination or filing if the termination or filing occurs on or 
 48.2   after the 16th day of the month; 
 48.3      (3) on July 1 for all school principals and other 
 48.4   administrators who receive a full annual contract salary during 
 48.5   the fiscal year for performance of a full year's contract 
 48.6   duties; or 
 48.7      (4) a later date to be either the first or the 16th day of 
 48.8   a month occurring within the six-month period immediately 
 48.9   following the termination of teaching service as specified under 
 48.10  paragraph (b) by the member. 
 48.11     (b) If an application for retirement is filed with the 
 48.12  board during the six-month period that occurs immediately 
 48.13  following the termination of teaching service, the annuity may 
 48.14  begin to accrue as if the application for retirement had been 
 48.15  filed with the board on the date teaching service terminated or 
 48.16  a later date under paragraph (a), clause (4).  An annuity must 
 48.17  not begin to accrue more than one month before the date of final 
 48.18  salary receipt. 
 48.19     Sec. 5.  Minnesota Statutes 2002, section 354.44, 
 48.20  subdivision 5, is amended to read: 
 48.21     Subd. 5.  [RESUMPTION OF TEACHING SERVICE AFTER 
 48.22  RETIREMENT.] (a) Any person who retired under the provisions of 
 48.23  this chapter and has thereafter resumed teaching in any employer 
 48.24  unit to which this chapter applies is eligible to continue to 
 48.25  receive payments in accordance with the annuity except that 
 48.26  annuity payments must be reduced during the calendar year 
 48.27  immediately following any calendar year in which the person's 
 48.28  income from the teaching service is in an amount greater than 
 48.29  the annual maximum earnings allowable for that age for the 
 48.30  continued receipt of full benefit amounts monthly under the 
 48.31  federal old age, survivors and disability insurance program as 
 48.32  set by the secretary of health and human services under United 
 48.33  States Code, title 42, section 403.  The amount of the reduction 
 48.34  must be one-half of the amount in excess of the applicable 
 48.35  reemployment income maximum specified in this subdivision and 
 48.36  must be deducted from the annuity payable for the calendar year 
 49.1   immediately following the calendar year in which the excess 
 49.2   amount was earned.  If the person has not yet reached the 
 49.3   minimum age for the receipt of Social Security benefits, the 
 49.4   maximum earnings for the person must be equal to the annual 
 49.5   maximum earnings allowable for the minimum age for the receipt 
 49.6   of Social Security benefits.  
 49.7      (b) If the person is retired for only a fractional part of 
 49.8   the calendar year during the initial year of retirement, the 
 49.9   maximum reemployment income specified in this subdivision must 
 49.10  be prorated for that calendar year.  
 49.11     (c) After a person has reached the Social Security full 
 49.12  retirement age of 70, no reemployment income maximum is 
 49.13  applicable regardless of the amount of income. 
 49.14     (d) The amount of the retirement annuity reduction must be 
 49.15  handled or disposed of as provided in section 356.47. 
 49.16     (e) For the purpose of this subdivision, income from 
 49.17  teaching service includes, but is not limited to:  
 49.18     (1) all income for services performed as a consultant or an 
 49.19  independent contractor for an employer unit covered by the 
 49.20  provisions of this chapter; and 
 49.21     (2) the greater of either the income received or an amount 
 49.22  based on the rate paid with respect to an administrative 
 49.23  position, consultant, or independent contractor in an employer 
 49.24  unit with approximately the same number of pupils and at the 
 49.25  same level as the position occupied by the person who resumes 
 49.26  teaching service.  
 49.27     Sec. 6.  Minnesota Statutes 2002, section 354.44, 
 49.28  subdivision 6, is amended to read: 
 49.29     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
 49.30  ANNUITY.] (1) (a) The formula retirement annuity must be 
 49.31  computed in accordance with the applicable provisions of the 
 49.32  formulas stated in clause (2) or (4) paragraph (b) or (d) on the 
 49.33  basis of each member's average salary for the period of the 
 49.34  member's formula service credit.  
 49.35     For all years of formula service credit, "average salary," 
 49.36  for the purpose of determining the member's retirement annuity, 
 50.1   means the average salary upon which contributions were made and 
 50.2   upon which payments were made to increase the salary limitation 
 50.3   provided in Minnesota Statutes 1971, section 354.511, for the 
 50.4   highest five successive years of formula service credit 
 50.5   provided, however, that such "average salary" shall not include 
 50.6   any more than the equivalent of 60 monthly salary payments.  
 50.7   Average salary must be based upon all years of formula service 
 50.8   credit if this service credit is less than five years. 
 50.9      (2) (b) This clause paragraph, in conjunction with clause 
 50.10  (3) paragraph (c), applies to a person who first became a member 
 50.11  of the association or a member of a pension fund listed in 
 50.12  section 356.30, subdivision 3, before July 1, 1989, 
 50.13  unless clause (4) paragraph (d), in conjunction with clause 
 50.14  (5) paragraph (e), produces a higher annuity amount, in which 
 50.15  case clause (4) paragraph (d) applies.  The average salary as 
 50.16  defined in clause (1) paragraph (a), multiplied by the following 
 50.17  percentages per year of formula service credit shall determine 
 50.18  the amount of the annuity to which the member qualifying 
 50.19  therefor is entitled: 
 50.20                         Coordinated Member   Basic Member
 50.21  Each year of service     the percent        the percent
 50.22   during first ten        specified in       specified in
 50.23                           section 356.315,   section 356.315,
 50.24                           subdivision 1,     subdivision 3,
 50.25                           per year           per year
 50.26  Each year of service     the percent        the percent
 50.27   thereafter              specified in       specified in
 50.28                           section 356.315,   section 356.315,
 50.29                           subdivision 2,     subdivision 4,
 50.30                           per year           per year
 50.31     (3) (c)(i) This clause paragraph applies only to a person 
 50.32  who first became a member of the association or a member of a 
 50.33  pension fund listed in section 356.30, subdivision 3, before 
 50.34  July 1, 1989, and whose annuity is higher when calculated 
 50.35  under clause (2) paragraph (b), in conjunction with this clause 
 50.36  paragraph than when calculated under clause (4) paragraph (d), 
 51.1   in conjunction with clause (5) paragraph (e). 
 51.2      (ii) Where any member retires prior to normal retirement 
 51.3   age under a formula annuity, the member shall be paid a 
 51.4   retirement annuity in an amount equal to the normal annuity 
 51.5   provided in clause (2) paragraph (b) reduced by one-quarter of 
 51.6   one percent for each month that the member is under normal 
 51.7   retirement age at the time of retirement except that for any 
 51.8   member who has 30 or more years of allowable service credit, the 
 51.9   reduction shall be applied only for each month that the member 
 51.10  is under age 62. 
 51.11     (iii) Any member whose attained age plus credited allowable 
 51.12  service totals 90 years is entitled, upon application, to a 
 51.13  retirement annuity in an amount equal to the normal annuity 
 51.14  provided in clause (2) paragraph (b), without any reduction by 
 51.15  reason of early retirement. 
 51.16     (4) (d) This clause paragraph applies to a member who has 
 51.17  become at least 55 years old and first became a member of the 
 51.18  association after June 30, 1989, and to any other member who has 
 51.19  become at least 55 years old and whose annuity amount when 
 51.20  calculated under this clause paragraph and in conjunction with 
 51.21  clause (5) paragraph (e), is higher than it is when calculated 
 51.22  under clause (2) paragraph (b), in conjunction with clause 
 51.23  (3) paragraph (c).  The average salary, as defined in clause (1) 
 51.24  paragraph (a) multiplied by the percent specified by section 
 51.25  356.315, subdivision 4, for each year of service for a basic 
 51.26  member and by the percent specified in section 356.315, 
 51.27  subdivision 2, for each year of service for a coordinated member 
 51.28  shall determine the amount of the retirement annuity to which 
 51.29  the member is entitled. 
 51.30     (5) (e) This clause paragraph applies to a person who has 
 51.31  become at least 55 years old and first becomes a member of the 
 51.32  association after June 30, 1989, and to any other member who has 
 51.33  become at least 55 years old and whose annuity is higher when 
 51.34  calculated under clause (4) paragraph (d) in conjunction with 
 51.35  this clause paragraph than when calculated under clause 
 51.36  (2) paragraph (b), in conjunction with clause (3) paragraph 
 52.1   (c).  An employee who retires under the formula annuity before 
 52.2   the normal retirement age shall be paid the normal annuity 
 52.3   provided in clause (4) paragraph (d) reduced so that the reduced 
 52.4   annuity is the actuarial equivalent of the annuity that would be 
 52.5   payable to the employee if the employee deferred receipt of the 
 52.6   annuity and the annuity amount were augmented at an annual rate 
 52.7   of three percent compounded annually from the day the annuity 
 52.8   begins to accrue until the normal retirement age. 
 52.9      (f) No retirement annuity is payable to a former employee 
 52.10  with a salary that exceeds 95 percent of the governor's salary 
 52.11  unless and until the salary figures used in computing the 
 52.12  highest five successive years average salary under paragraph (a) 
 52.13  have been audited by the Teachers Retirement Association and 
 52.14  determined by the executive director to comply with the 
 52.15  requirements and limitations of section 354.05, subdivisions 35 
 52.16  and 35a. 
 52.17     Sec. 7.  Minnesota Statutes 2002, section 490.121, 
 52.18  subdivision 10, is amended to read: 
 52.19     Subd. 10.  [EARLY RETIREMENT DATE.] "Early retirement date" 
 52.20  means the last day of any month after a judge attains the age of 
 52.21  62 60 until the normal retirement date. 
 52.22     Sec. 8.  [PERA-POLICE AND FIRE; TEMPORARY EXEMPTION FROM 
 52.23  REEMPLOYED ANNUITANT EARNINGS LIMITATIONS.] 
 52.24     Notwithstanding any provision of Minnesota Statutes, 
 52.25  section 353.37, to the contrary, a person who is receiving a 
 52.26  retirement annuity from the public employees police and fire 
 52.27  plan and who is employed as a sworn peace officer by the 
 52.28  Metropolitan Airports Commission is exempt from the limitation 
 52.29  on reemployed annuitant earnings for the period January 1, 2004, 
 52.30  until June 30, 2007. 
 52.31     Sec. 9.  [TRA; REPORT ON CERTAIN SALARY AUDITS.] 
 52.32     (a) The executive director shall report to the chair of the 
 52.33  Legislative Commission on Pensions and Retirement, the chair of 
 52.34  the Committee on Governmental Operations and Veterans Affairs 
 52.35  Policy of the house of representatives, and the chair of the 
 52.36  State and Local Government Operations Committee of the senate on 
 53.1   the number of superintendents, assistant superintendents, and 
 53.2   principals who retired during the most recent calendar year, the 
 53.3   number of superintendents, assistant superintendents, and 
 53.4   principals where the preretirement salary audit under Minnesota 
 53.5   Statutes, section 354.44, subdivision 6, paragraph (f), 
 53.6   disclosed an impermissible salary inclusion amount, the school 
 53.7   district or districts in which impermissible salary inclusions 
 53.8   occurred, the average amount of the impermissible salary 
 53.9   inclusions where there were impermissible salary inclusions, and 
 53.10  the range of impermissible salary inclusions. 
 53.11     (b) When a report is due, the report must be filed on or 
 53.12  before February 15. 
 53.13     (c) Reports under this section must be made for calendar 
 53.14  years 2004 and 2005.  A report under this section also must be 
 53.15  filed for calendar years 2006 and 2007 if the report for 
 53.16  calendar year 2005 indicates that there were impermissible 
 53.17  salary inclusions that occurred during the calendar year. 
 53.18     Sec. 10.  [EFFECTIVE DATE.] 
 53.19     (a) Section 1 is effective on the day following final 
 53.20  enactment 
 53.21     (b)  Sections 2, 3, 4, 5, 6, and 7 are effective on July 1, 
 53.22  2004. 
 53.23     (c) Section 8 is effective on the day following final 
 53.24  enactment and applies retroactively from January 1, 2004.  
 53.25                             ARTICLE 8
 53.26                   DISABILITY BENEFIT PROVISIONS
 53.27     Section 1.  Minnesota Statutes 2002, section 352.113, 
 53.28  subdivision 4, is amended to read: 
 53.29     Subd. 4.  [MEDICAL OR PSYCHOLOGICAL EXAMINATIONS; 
 53.30  AUTHORIZATION FOR PAYMENT OF BENEFIT.] (a) An applicant shall 
 53.31  provide medical, chiropractic, or psychological evidence to 
 53.32  support an application for total and permanent disability.  
 53.33     (b) The director shall have the employee examined by at 
 53.34  least one additional licensed chiropractor, physician, or 
 53.35  psychologist designated by the medical adviser.  The 
 53.36  chiropractors, physicians, or psychologists shall make written 
 54.1   reports to the director concerning the employee's disability 
 54.2   including medical expert opinions as to whether the employee is 
 54.3   permanently and totally disabled within the meaning of section 
 54.4   352.01, subdivision 17.  
 54.5      (c) The director shall also obtain written certification 
 54.6   from the employer stating whether the employment has ceased or 
 54.7   whether the employee is on sick leave of absence because of a 
 54.8   disability that will prevent further service to the employer and 
 54.9   as a consequence the employee is not entitled to compensation 
 54.10  from the employer.  
 54.11     (d) The medical adviser shall consider the reports of the 
 54.12  physicians, psychologists, and chiropractors and any other 
 54.13  evidence supplied by the employee or other interested parties.  
 54.14  If the medical adviser finds the employee totally and 
 54.15  permanently disabled, the adviser shall make appropriate 
 54.16  recommendation to the director in writing together with the date 
 54.17  from which the employee has been totally disabled.  The director 
 54.18  shall then determine if the disability occurred within 180 days 
 54.19  of filing the application, while still in the employment of the 
 54.20  state, and the propriety of authorizing payment of a disability 
 54.21  benefit as provided in this section.  
 54.22     (e) A terminated employee may apply for a disability 
 54.23  benefit within 180 days of termination as long as the disability 
 54.24  occurred while in the employment of the state.  The fact that an 
 54.25  employee is placed on leave of absence without compensation 
 54.26  because of disability does not bar that employee from receiving 
 54.27  a disability benefit.  
 54.28     (f) Unless the payment of a disability benefit has 
 54.29  terminated because the employee is no longer totally disabled, 
 54.30  or because the employee has reached normal retirement age as 
 54.31  provided in this section, the disability benefit shall must 
 54.32  cease with the last payment received by the disabled employee or 
 54.33  which had accrued during the lifetime of the employee unless 
 54.34  there is a spouse surviving;.  In that event, the surviving 
 54.35  spouse is entitled to the disability benefit for the calendar 
 54.36  month in which the disabled employee died. 
 55.1      Sec. 2.  Minnesota Statutes 2002, section 352.113, 
 55.2   subdivision 6, is amended to read: 
 55.3      Subd. 6.  [REGULAR MEDICAL OR PSYCHOLOGICAL EXAMINATIONS.] 
 55.4   At least once each year during the first five years following 
 55.5   the allowance of a disability benefit to any employee, and at 
 55.6   least once in every three-year period thereafter, the director 
 55.7   may require any disabled employee to undergo a medical, 
 55.8   chiropractic, or psychological examination.  The examination 
 55.9   must be made at the place of residence of the employee, or at 
 55.10  any place mutually agreed upon, by a physician or physicians an 
 55.11  expert or experts designated by the medical adviser and engaged 
 55.12  by the director.  If any examination indicates to the medical 
 55.13  adviser that the employee is no longer permanently and totally 
 55.14  disabled, or is engaged in or can engage in a gainful 
 55.15  occupation, payments of the disability benefit by the fund must 
 55.16  be discontinued.  The payments shall discontinue must be 
 55.17  discontinued as soon as the employee is reinstated to the 
 55.18  payroll following sick leave, but in no case shall may payment 
 55.19  be made for more than 60 days after the medical adviser finds 
 55.20  that the employee is no longer permanently and totally disabled. 
 55.21     Sec. 3.  Minnesota Statutes 2002, section 352.113, is 
 55.22  amended by adding a subdivision to read: 
 55.23     Subd. 7a.  [TEMPORARY REEMPLOYMENT BENEFIT REDUCTION 
 55.24  WAIVER.] A reduction in benefits under subdivision 7, or a 
 55.25  termination of benefits due to the disabled employee resuming a 
 55.26  gainful occupation from which earnings are equal to or more than 
 55.27  the employee's salary at the date of disability or the salary 
 55.28  currently paid for similar positions does not apply until six 
 55.29  months after the individual returns to a gainful occupation. 
 55.30     Sec. 4.  Minnesota Statutes 2002, section 352.113, 
 55.31  subdivision 8, is amended to read: 
 55.32     Subd. 8.  [REFUSAL OF EXAMINATION.] If a disabled employee 
 55.33  refuses to submit to a medical an expert examination as 
 55.34  required, payments by the fund must be discontinued and the 
 55.35  director shall revoke all rights of the employee in any 
 55.36  disability benefit. 
 56.1      Sec. 5.  Minnesota Statutes 2002, section 352.95, 
 56.2   subdivision 1, is amended to read: 
 56.3      Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 56.4   correctional employee who becomes disabled and who is expected 
 56.5   to be physically or mentally unfit to perform the duties of the 
 56.6   position for at least one year as a direct result of an injury, 
 56.7   sickness, or other disability that incurred in or arising arose 
 56.8   out of any act of duty that makes the employee physically or 
 56.9   mentally unable to perform the duties, is entitled to a 
 56.10  disability benefit.  The disability benefit may be based on 
 56.11  covered correctional service only.  The benefit amount must 
 56.12  equal is 50 percent of the average salary defined in section 
 56.13  352.93, plus an additional percent equal to that specified in 
 56.14  section 356.315, subdivision 5, for each year of covered 
 56.15  correctional service in excess of 20 years, ten months, prorated 
 56.16  for completed months. 
 56.17     Sec. 6.  Minnesota Statutes 2002, section 352.95, 
 56.18  subdivision 2, is amended to read: 
 56.19     Subd. 2.  [NON-JOB-RELATED DISABILITY.] Any A covered 
 56.20  correctional employee who, after rendering at least one year of 
 56.21  covered correctional service, becomes disabled and who is 
 56.22  expected to be physically or mentally unfit to perform the 
 56.23  duties of the position for at least one year because of sickness 
 56.24  or injury occurring that occurred while not engaged in covered 
 56.25  employment, is entitled to a disability benefit based on covered 
 56.26  correctional service only.  The disability benefit must be 
 56.27  computed as provided in section 352.93, subdivisions 1 and 2, 
 56.28  and must be computed as though the employee had at least 15 
 56.29  years of covered correctional service. 
 56.30     Sec. 7.  Minnesota Statutes 2002, section 352.95, 
 56.31  subdivision 4, is amended to read: 
 56.32     Subd. 4.  [MEDICAL OR PSYCHOLOGICAL EVIDENCE.] (a) An 
 56.33  applicant shall provide medical, chiropractic, or psychological 
 56.34  evidence to support an application for disability benefits.  The 
 56.35  director shall have the employee examined by at least one 
 56.36  additional licensed physician, chiropractor, or psychologist who 
 57.1   is designated by the medical adviser.  The physicians, 
 57.2   chiropractors, or psychologists with respect to a mental 
 57.3   impairment, shall make written reports to the director 
 57.4   concerning the question of the employee's disability, 
 57.5   including medical their expert opinions as to whether the 
 57.6   employee is disabled within the meaning of this section.  The 
 57.7   director shall also obtain written certification from the 
 57.8   employer stating whether or not the employee is on sick leave of 
 57.9   absence because of a disability that will prevent further 
 57.10  service to the employer, and as a consequence, the employee is 
 57.11  not entitled to compensation from the employer.  
 57.12     (b) If, on considering the physicians' reports by the 
 57.13  physicians, chiropractors, or psychologists and any other 
 57.14  evidence supplied by the employee or others, the medical adviser 
 57.15  finds the employee disabled within the meaning of this section, 
 57.16  the advisor shall make the appropriate recommendation to the 
 57.17  director, in writing, together with the date from which the 
 57.18  employee has been disabled.  The director shall then determine 
 57.19  the propriety of authorizing payment of a disability benefit as 
 57.20  provided in this section.  
 57.21     (c) Unless the payment of a disability benefit has 
 57.22  terminated because the employee is no longer disabled, or 
 57.23  because the employee has reached either age 65 or the five-year 
 57.24  anniversary of the effective date of the disability benefit, 
 57.25  whichever is later, the disability benefit shall must cease with 
 57.26  the last payment which was received by the disabled employee or 
 57.27  which had accrued during the employee's lifetime.  While 
 57.28  disability benefits are paid, the director has the right, at 
 57.29  reasonable times, to require the disabled employee to submit 
 57.30  proof of the continuance of the disability claimed.  If any 
 57.31  examination indicates to the medical adviser that the employee 
 57.32  is no longer disabled, the disability payment must be 
 57.33  discontinued upon the person's reinstatement to state service or 
 57.34  within 60 days of the finding, whichever is sooner.  
 57.35     Sec. 8.  Minnesota Statutes 2002, section 352B.10, 
 57.36  subdivision 1, is amended to read: 
 58.1      Subdivision 1.  [INJURIES,; PAYMENT AMOUNTS.] Any A member 
 58.2   who becomes disabled and who is expected to be physically or 
 58.3   mentally unfit to perform duties for at least one year as a 
 58.4   direct result of an injury, sickness, or other disability that 
 58.5   incurred in or arising arose out of any act of duty, shall is 
 58.6   entitled to receive disability benefits while disabled.  The 
 58.7   benefits must be paid in monthly installments.  The benefit is 
 58.8   an amount equal to the member's average monthly salary 
 58.9   multiplied by 60 percent, plus an additional percent equal to 
 58.10  that specified in section 356.315, subdivision 6, for each year 
 58.11  and pro rata for completed months of service in excess of 20 
 58.12  years, if any. 
 58.13     Sec. 9.  Minnesota Statutes 2002, section 352B.10, 
 58.14  subdivision 2, is amended to read: 
 58.15     Subd. 2.  [DISABLED WHILE NOT ON DUTY.] If a member 
 58.16  terminates employment after with at least one year of service 
 58.17  because of sickness or injury occurring while not on duty and 
 58.18  not engaged in state work entitling the member to membership, 
 58.19  and the member becomes disabled and is expected to be physically 
 58.20  or mentally unfit to perform the duties of the position for at 
 58.21  least one year because of sickness or injury occurring that 
 58.22  occurred while not engaged in covered employment, the member 
 58.23  individual is entitled to disability benefits.  The benefit must 
 58.24  be in the same amount and computed in the same way as if the 
 58.25  member individual were 55 years old at the date of disability 
 58.26  and the annuity were paid was payable under section 352B.08.  If 
 58.27  a disability under this clause subdivision occurs after one year 
 58.28  of service but before 15 years of service, the disability 
 58.29  benefit must be computed as though the member individual had 
 58.30  credit for 15 years of service. 
 58.31     Sec. 10.  Minnesota Statutes 2002, section 352B.10, 
 58.32  subdivision 3, is amended to read: 
 58.33     Subd. 3.  [ANNUAL AND SICK LEAVE; WORK AT LOWER PAY.] No 
 58.34  member shall is entitled to receive any a disability benefit 
 58.35  payment when the member has unused annual leave or sick leave, 
 58.36  or under any other circumstances, when, during the period of 
 59.1   disability, there has been no impairment of salary.  Should If 
 59.2   the member or former member resume disabilitant resumes gainful 
 59.3   work employment, the disability benefit must be continued in an 
 59.4   amount which, when added to current earnings, does not exceed 
 59.5   the salary rate received of by the person at the date of 
 59.6   disability as, which must be adjusted over time by the same 
 59.7   percentage increase in United States average wages used by the 
 59.8   Social Security Administration in calculating average indexed 
 59.9   monthly earnings for the old age, survivors, and disability 
 59.10  insurance programs for the same period. 
 59.11     Sec. 11.  Minnesota Statutes 2002, section 352B.10, 
 59.12  subdivision 4, is amended to read: 
 59.13     Subd. 4.  [PROOF OF DISABILITY.] (a) No disability benefit 
 59.14  payment shall benefits may be made except upon paid unless 
 59.15  adequate proof is furnished to the executive director of the 
 59.16  existence of the disability.  While disability benefits are 
 59.17  being paid 
 59.18     (b) Adequate proof of a disability must include a written 
 59.19  expert report by a licensed physician, by a licensed 
 59.20  chiropractor, or with respect to a mental impairment, by a 
 59.21  licensed psychologist. 
 59.22     (c) Following the commencement of benefit payments, 
 59.23  the executive director has the right, at reasonable times, to 
 59.24  require the disabled former member disabilitant to submit proof 
 59.25  of the continuance of the disability claimed.  
 59.26     Sec. 12.  Minnesota Statutes 2002, section 352B.10, 
 59.27  subdivision 5, is amended to read: 
 59.28     Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 59.29  disabilitant may, in lieu of survivorship coverage under section 
 59.30  352B.11, subdivision 2, choose the normal disability benefit or 
 59.31  an optional annuity as provided in section 352B.08, subdivision 
 59.32  3.  The choice of an optional annuity must be made in writing, 
 59.33  on a form prescribed by the executive director, and must be made 
 59.34  before the commencement of the payment of the disability 
 59.35  benefit, or within 90 days of attaining before reaching age 65 
 59.36  or before reaching the five-year anniversary of the effective 
 60.1   date of the disability benefit, whichever is later.  It The 
 60.2   optional annuity is effective on the date on which the 
 60.3   disability benefit begins to accrue, or the month following the 
 60.4   attainment of age 65 or following the five-year anniversary of 
 60.5   the effective date of the disability benefit, whichever is later.
 60.6      Sec. 13.  Minnesota Statutes 2002, section 352B.105, is 
 60.7   amended to read: 
 60.8      352B.105 [TERMINATION OF DISABILITY BENEFITS.] 
 60.9      Disability benefits payable under section 352B.10 shall 
 60.10  must terminate at on the transfer date, which is the end of the 
 60.11  month in which the beneficiary disabilitant becomes 65 years old 
 60.12  or the five-year anniversary of the effective date of the 
 60.13  disability benefit, whichever is later.  If the beneficiary 
 60.14  disabilitant is still disabled when on the beneficiary becomes 
 60.15  65 years old transfer date, the beneficiary shall disabilitant 
 60.16  must be deemed to be a retired member and, if the beneficiary 
 60.17  disabilitant had chosen an optional annuity under section 
 60.18  352B.10, subdivision 5, shall must receive an annuity in 
 60.19  accordance with under the terms of the optional annuity 
 60.20  previously chosen.  If the beneficiary disabilitant had not 
 60.21  chosen an optional annuity under section 352B.10, subdivision 5, 
 60.22  the beneficiary disabilitant may then choose to receive either a 
 60.23  normal retirement annuity computed under section 352B.08, 
 60.24  subdivision 2, or an optional annuity as provided in section 
 60.25  352B.08, subdivision 3.  An optional annuity must be chosen 
 60.26  within 90 days of attaining age 65 or reaching the five-year 
 60.27  anniversary of the effective date of the disability benefit, 
 60.28  whichever is later transfer date.  If an optional annuity is 
 60.29  chosen, the optional annuity shall begin to accrue accrues on 
 60.30  the first of the month next following attainment of age 65 or 
 60.31  the five-year anniversary of the effective transfer date of the 
 60.32  disability benefit, whichever is later. 
 60.33     Sec. 14.  Minnesota Statutes 2002, section 352D.065, 
 60.34  subdivision 2, is amended to read: 
 60.35     Subd. 2.  [DISABILITY BENEFIT AMOUNT.] A participant who 
 60.36  becomes totally and permanently disabled has the option, even if 
 61.1   on leave of absence without pay, to receive: 
 61.2      (1) the value of the participant's total shares; 
 61.3      (2) the value of one-half of a portion of the total shares 
 61.4   and an annuity based on the value of one-half remainder of the 
 61.5   total shares; or 
 61.6      (3) an annuity based on the value of the participant's 
 61.7   total shares. 
 61.8      Sec. 15.  Minnesota Statutes 2002, section 353.33, 
 61.9   subdivision 4, is amended to read: 
 61.10     Subd. 4.  [PROCEDURE TO DETERMINE ELIGIBILITY.] (a) The 
 61.11  applicant shall provide an expert report signed by a licensed 
 61.12  physician, psychologist, or chiropractor and the applicant must 
 61.13  authorize the release of medical and health care evidence, 
 61.14  including all medical records and relevant information from any 
 61.15  source, to support the application for total and permanent 
 61.16  disability benefits.  
 61.17     (b)  The medical adviser shall verify the medical evidence 
 61.18  and, if necessary for disability determination, suggest the 
 61.19  referral of the applicant to specialized medical consultants.  
 61.20     (c) The association shall also obtain from the employer, a 
 61.21  certification of the member's past public service, the dates of 
 61.22  any paid sick leave and vacation beyond the last working day and 
 61.23  whether or not any sick leave or annual leave has been allowed.  
 61.24     (d) If, upon consideration of the medical evidence received 
 61.25  and the recommendations of the medical adviser, it is determined 
 61.26  by the executive director that the applicant is totally and 
 61.27  permanently disabled within the meaning of the law, the 
 61.28  association shall grant the person a disability benefit.  The 
 61.29  fact that 
 61.30     (e) An employee who is placed on leave of absence without 
 61.31  compensation because of a disability does is not bar the person 
 61.32  barred from receiving a disability benefit. 
 61.33     Sec. 16.  Minnesota Statutes 2002, section 353.33, 
 61.34  subdivision 6, is amended to read: 
 61.35     Subd. 6.  [CONTINUING ELIGIBILITY FOR BENEFITS.] The 
 61.36  association shall determine eligibility for continuation of 
 62.1   disability benefits and require periodic examinations and 
 62.2   evaluations of disabled members as frequently as deemed 
 62.3   necessary.  The association shall require the disabled member to 
 62.4   provide an expert report signed by a licensed physician, 
 62.5   psychologist, or chiropractor and the disabled member shall 
 62.6   authorize the release of medical and health care evidence, 
 62.7   including all medical and health care records and information 
 62.8   from any source, relating to an application for continuation of 
 62.9   disability benefits.  Disability benefits are contingent upon a 
 62.10  disabled person's participation in a vocational 
 62.11  rehabilitation program evaluation if the executive director 
 62.12  determines that the disabled person may be able to return to a 
 62.13  gainful occupation.  If a member is found to be no longer 
 62.14  totally and permanently disabled, payments must cease the first 
 62.15  of the month following the expiration of a 30-day period after 
 62.16  the member receives a certified letter notifying the member that 
 62.17  payments will cease. 
 62.18     Sec. 17.  Minnesota Statutes 2002, section 353.33, 
 62.19  subdivision 6b, is amended to read: 
 62.20     Subd. 6b.  [DUTIES OF THE MEDICAL ADVISER.] At the request 
 62.21  of the executive director, the medical adviser shall designate 
 62.22  licensed physicians, psychologists, or chiropractors to examine 
 62.23  applicants for disability benefits and review the medical expert 
 62.24  reports based upon these examinations to determine whether an 
 62.25  applicant is totally and permanently disabled as defined in 
 62.26  section 353.01, subdivision 19, disabled as defined in section 
 62.27  353.656, or eligible for continuation of disability benefits 
 62.28  under subdivision 6.  The medical examiner shall also review, at 
 62.29  the request of the executive director, all medical and health 
 62.30  care statements on behalf of an applicant for disability 
 62.31  benefits, and shall report in writing to the executive 
 62.32  director the conclusions and recommendations of the examiner on 
 62.33  those matters referred for advice. 
 62.34     Sec. 18.  Minnesota Statutes 2002, section 353.33, 
 62.35  subdivision 7, is amended to read: 
 62.36     Subd. 7.  [PARTIAL REEMPLOYMENT.] If, following a work or 
 63.1   non-work-related injury or illness, a disabled person resumes a 
 63.2   gainful occupation from which who remains totally and 
 63.3   permanently disabled as defined in section 353.01, subdivision 
 63.4   19, has income from employment that is not substantial gainful 
 63.5   activity and the rate of earnings from that employment are less 
 63.6   than the salary rate at the date of disability or the 
 63.7   salary rate currently paid for similar positions similar to the 
 63.8   employment position held by the disabled person immediately 
 63.9   before becoming disabled, whichever is greater, the board 
 63.10  executive director shall continue the disability benefit in an 
 63.11  amount that, when added to the earnings and any workers' 
 63.12  compensation benefit, does not exceed the salary rate at the 
 63.13  date of disability or the salary currently paid for similar 
 63.14  positions similar to the employment position held by the 
 63.15  disabled person immediately before becoming disabled, whichever 
 63.16  is higher, provided. The disability benefit does under this 
 63.17  subdivision may not exceed the disability benefit originally 
 63.18  allowed, plus any postretirement adjustments payable after 
 63.19  December 31, 1988, in accordance with section 11A.18, 
 63.20  subdivision 10.  No deductions for the retirement fund may be 
 63.21  taken from the salary of a disabled person who is receiving a 
 63.22  disability benefit as provided in this subdivision. 
 63.23     Sec. 19.  Minnesota Statutes 2002, section 353.33, is 
 63.24  amended by adding a subdivision to read: 
 63.25     Subd. 7a.  [TRIAL WORK PERIOD.] (a) If, following a work or 
 63.26  non-work related injury or illness, a disabled member attempts 
 63.27  to return to work for their previous public employer or attempts 
 63.28  to return to a similar position with another public employer, on 
 63.29  a full-time or less than full-time basis, the Public Employees 
 63.30  Retirement Association shall continue paying the disability 
 63.31  benefit for a period not to exceed six months.  The disability 
 63.32  benefit must continue in an amount that, when added to the 
 63.33  subsequent employment earnings and workers' compensation 
 63.34  benefit, does not exceed the salary at the date of disability or 
 63.35  the salary currently paid for similar positions, whichever is 
 63.36  higher. 
 64.1      (b) No deductions for the retirement fund may be taken from 
 64.2   the salary of a disabled person who is attempting to return to 
 64.3   work under this provision unless the member waives further 
 64.4   disability benefits. 
 64.5      (c) A member only may return to employment and continue 
 64.6   disability benefit payments once while receiving disability 
 64.7   benefits from a plan administered by the Public Employees 
 64.8   Retirement Association. 
 64.9      Sec. 20.  Minnesota Statutes 2002, section 353.656, 
 64.10  subdivision 5, is amended to read: 
 64.11     Subd. 5.  [PROOF OF DISABILITY.] (a) A disability benefit 
 64.12  payment must not be made except upon adequate proof furnished to 
 64.13  the executive director of the association of the existence of 
 64.14  such a disability, and. 
 64.15     (b) During the time when disability benefits are being 
 64.16  paid, the executive director of the association has the right, 
 64.17  at reasonable times, to require the disabled member to submit 
 64.18  proof of the continuance of the disability claimed.  
 64.19     (c) Adequate proof of a disability must include a written 
 64.20  expert report by a licensed physician, by a licensed 
 64.21  chiropractor, or with respect to a mental impairment, by a 
 64.22  licensed psychologist. 
 64.23     (d) A person applying for or receiving a disability benefit 
 64.24  shall provide or authorize release of medical evidence, 
 64.25  including all medical records and information from any source, 
 64.26  relating to an application for disability benefits or the 
 64.27  continuation of those benefits. 
 64.28     Sec. 21.  Minnesota Statutes 2002, section 353.656, is 
 64.29  amended by adding a subdivision to read: 
 64.30     Subd. 8.  [APPLICATION PROCEDURE TO DETERMINE ELIGIBILITY 
 64.31  FOR POLICE AND FIRE PLAN DISABILITY BENEFITS.] (a) An 
 64.32  application for disability benefits must be made in writing on a 
 64.33  form or forms prescribed by the executive director. 
 64.34     (b) If an application for disability benefits is filed 
 64.35  within two years of the date of the injury or the onset of the 
 64.36  illness that gave rise to the disability application, the 
 65.1   application must be supported by evidence that the applicant is 
 65.2   unable to perform the duties of the position held by the 
 65.3   applicant on the date of the injury or the onset of the illness 
 65.4   causing the disability.  The employer must provide evidence 
 65.5   indicating whether the applicant is able or unable to perform 
 65.6   the duties of the position held on the date of the injury or 
 65.7   onset of illness causing the disability and the specifications 
 65.8   of any duties that the individual can or cannot perform. 
 65.9      (c) If an application for disability benefits is filed more 
 65.10  than two years after the date of the injury or the onset of an 
 65.11  illness causing the disability, the application must be 
 65.12  supported by evidence that the applicant is unable to perform 
 65.13  the most recent duties that are expected to be performed by the 
 65.14  applicant during the 90 days before the filing of the 
 65.15  application.  The employer must provide evidence of the duties 
 65.16  that are expected to be performed by the applicant during the 90 
 65.17  days before to the filing of the application, whether the 
 65.18  applicant can or cannot perform those duties overall, and the 
 65.19  specifications of any duties that the applicant can or cannot 
 65.20  perform. 
 65.21     (d) Unless otherwise permitted by law, no application for 
 65.22  disability benefits can be filed by a former member of the 
 65.23  police and fire plan more than three years after the former 
 65.24  member has terminated from Public Employees Retirement 
 65.25  Association police and fire plan covered employment.  If an 
 65.26  application is filed within three years after the termination of 
 65.27  public employment, the former member must provide evidence that 
 65.28  the disability is the direct result of an injury or the 
 65.29  contracting of an illness that occurred while the person was 
 65.30  still actively employed and participating in the police and fire 
 65.31  plan. 
 65.32     (e) Any application for duty-related disability must be 
 65.33  supported by a first report of injury as defined in section 
 65.34  176.231. 
 65.35     (f) If a member who has applied for and been approved for 
 65.36  disability benefits before the termination of service does not 
 66.1   terminate service or is not placed on an authorized leave of 
 66.2   absence as certified by the governmental subdivision within 45 
 66.3   days following the date on which the application is approved, 
 66.4   the application shall be canceled.  If an approved application 
 66.5   for disability benefits has been canceled, a subsequent 
 66.6   application for disability benefits may not be filed on the 
 66.7   basis of the same medical condition for a minimum of one year 
 66.8   from the date on which the previous application was canceled. 
 66.9      (g) An applicant may file a retirement application under 
 66.10  section 353.29, subdivision 4, at the same time as the 
 66.11  disability application is filed.  If the disability application 
 66.12  is approved, the retirement application is canceled.  If the 
 66.13  disability application is denied, the retirement application 
 66.14  must be initiated and processed upon the request of the 
 66.15  applicant.  A police and fire fund member may not receive a 
 66.16  disability benefit and a retirement annuity from the police and 
 66.17  fire fund at the same time. 
 66.18     (h) A repayment of a refund must be made within six months 
 66.19  after the effective date of disability benefits or within six 
 66.20  months after the date of the filing of the disability 
 66.21  application, whichever is later.  No purchase of prior service 
 66.22  or payment made in lieu of salary deductions otherwise 
 66.23  authorized under section 353.01 or 353.36, subdivision 2, may be 
 66.24  made after the occurrence of the disability for which an 
 66.25  application is filed under this section. 
 66.26     Sec. 22.  Minnesota Statutes 2002, section 353.656, is 
 66.27  amended by adding a subdivision to read: 
 66.28     Subd. 9.  [REFUSAL OF EXAMINATION OR MEDICAL EVIDENCE.] If 
 66.29  a person applying for or receiving a disability benefit refuses 
 66.30  to submit to a medical examination under subdivision 11, or 
 66.31  fails to provide or to authorize the release of medical evidence 
 66.32  under subdivisions 5 and 7, the association shall cease the 
 66.33  application process or shall discontinue the payment of a 
 66.34  disability benefit, whichever is applicable.  Upon the receipt 
 66.35  of the requested medical evidence, the association shall resume 
 66.36  the application process or the payment of a disability benefit 
 67.1   upon approval for the continuation, whichever is applicable. 
 67.2      Sec. 23.  Minnesota Statutes 2002, section 353.656, is 
 67.3   amended by adding a subdivision to read: 
 67.4      Subd. 10.  [ACCRUAL OF BENEFITS.] (a) A disability benefit 
 67.5   begins to accrue the day following the commencement of 
 67.6   disability, 90 days preceding the filing of an application, or, 
 67.7   if annual or sick leave is paid for more than the 90-day period, 
 67.8   from the date on which the payment of salary ceased, whichever 
 67.9   is later. 
 67.10     (b) Payment of the disability benefit must not continue 
 67.11  beyond the end of the month in which entitlement has 
 67.12  terminated.  If the disabilitant dies prior to negotiating the 
 67.13  check for the month in which death occurs, payment must be made 
 67.14  to the surviving spouse or, if none, to the designated 
 67.15  beneficiary or, if none, to the estate. 
 67.16     Sec. 24.  Minnesota Statutes 2002, section 353.656, is 
 67.17  amended by adding a subdivision to read: 
 67.18     Subd. 11.  [INDEPENDENT MEDICAL EXAMINATION; DUTIES OF THE 
 67.19  MEDICAL ADVISOR.] Any individual receiving disability benefits 
 67.20  or any applicant, if requested by the executive director, must 
 67.21  submit to an independent medical examination.  The medical 
 67.22  examination must be paid for by the association.  The medical 
 67.23  advisor shall review all medical reports submitted to the 
 67.24  association, including the findings of an independent medical 
 67.25  examination requested under this section, and shall advise the 
 67.26  executive director. 
 67.27     Sec. 25.  Minnesota Statutes 2002, section 353.656, is 
 67.28  amended by adding a subdivision to read: 
 67.29     Subd. 12.  [APPROVAL OF DISABILITY BENEFITS.] Review of 
 67.30  disability benefit applications and review of existing 
 67.31  disability cases must be made by the executive director based 
 67.32  upon all relevant evidence, including advice from the medical 
 67.33  advisor and the evidence provided by the member and employer.  A 
 67.34  member whose application for disability benefits or whose 
 67.35  continuation of disability benefits is denied may appeal the 
 67.36  executive director's decision to the board of trustees within 45 
 68.1   days of the receipt of a certified letter notifying the member 
 68.2   of the decision to deny the application or the benefit 
 68.3   continuation. 
 68.4      Sec. 26.  Minnesota Statutes 2002, section 354.48, 
 68.5   subdivision 2, is amended to read: 
 68.6      Subd. 2.  [APPLICATIONS; ACCRUAL.] (a) A person described 
 68.7   in subdivision 1, or another person authorized to act on behalf 
 68.8   of the person, may make written application on a form prescribed 
 68.9   by the executive director for a total and permanent disability 
 68.10  benefit only within the 18-month period following the 
 68.11  termination of teaching service.  This 
 68.12     (b) The benefit accrues from the day following the 
 68.13  commencement of the disability or the day following the last day 
 68.14  for which salary is paid, whichever is later, but does not begin 
 68.15  to accrue more than six months before the date on which the 
 68.16  written application is filed with the executive director.  If 
 68.17  salary is being received for either annual or sick leave during 
 68.18  the disability period, payments accrue the disability benefit 
 68.19  accrues from the day following the last day for which this 
 68.20  salary is paid. 
 68.21     Sec. 27.  Minnesota Statutes 2002, section 354.48, 
 68.22  subdivision 4, is amended to read: 
 68.23     Subd. 4.  [DETERMINATION BY THE EXECUTIVE DIRECTOR.] (a) 
 68.24  The executive director shall have the member examined by at 
 68.25  least two licensed physicians, licensed chiropractors, or 
 68.26  licensed psychologists selected by the medical adviser.  
 68.27     (b) These physicians, chiropractors, or psychologists with 
 68.28  respect to a mental impairment, shall make written reports to 
 68.29  the executive director concerning the member's disability, 
 68.30  including medical expert opinions as to whether or not the 
 68.31  member is permanently and totally disabled within the meaning of 
 68.32  section 354.05, subdivision 14.  
 68.33     (c) The executive director shall also obtain written 
 68.34  certification from the last employer stating whether or not the 
 68.35  member was separated from service because of a disability which 
 68.36  would reasonably prevent further service to the employer and as 
 69.1   a consequence the member is not entitled to compensation from 
 69.2   the employer.  
 69.3      (d) If, upon the consideration of the reports of the 
 69.4   physicians, chiropractors, or psychologists and any other 
 69.5   evidence presented by the member or by others interested 
 69.6   therein, the executive director finds that the member is totally 
 69.7   and permanently disabled, the executive director shall grant the 
 69.8   member a disability benefit.  The fact that 
 69.9      (e) An employee who is placed on leave of absence without 
 69.10  compensation because of disability shall is not bar the member 
 69.11  barred from receiving a disability benefit. 
 69.12     Sec. 28.  Minnesota Statutes 2002, section 354.48, 
 69.13  subdivision 6, is amended to read: 
 69.14     Subd. 6.  [REGULAR PHYSICAL EXAMINATIONS.] At least once 
 69.15  each year during the first five years following the allowance of 
 69.16  a disability benefit to any member, and at least once in every 
 69.17  three-year period thereafter, the executive director shall 
 69.18  require the disability beneficiary to undergo a medical an 
 69.19  expert examination by a physician or physicians, by a 
 69.20  chiropractor or chiropractors, or by one or more psychologists 
 69.21  with respect to a mental impairment, engaged by the executive 
 69.22  director.  If any an examination indicates that the member is no 
 69.23  longer permanently and totally disabled or that the member is 
 69.24  engaged or is able to engage in a substantial gainful 
 69.25  occupation, payments of the disability benefit by the 
 69.26  association shall must be discontinued.  The payments shall 
 69.27  discontinue must be discontinued as soon as the member is 
 69.28  reinstated to the payroll following sick leave, but payment may 
 69.29  not be made for more than 60 days after the physicians, the 
 69.30  chiropractors, or the psychologists engaged by the executive 
 69.31  director find that the person is no longer permanently and 
 69.32  totally disabled. 
 69.33     Sec. 29.  Minnesota Statutes 2002, section 354.48, 
 69.34  subdivision 6a, is amended to read: 
 69.35     Subd. 6a.  [MEDICAL ADVISER; DUTIES.] The state 
 69.36  commissioner of health or a licensed physician on the staff of 
 70.1   the department of health who is designated by the commissioner 
 70.2   shall be is the medical adviser of the executive director.  The 
 70.3   medical adviser shall designate licensed physicians, licensed 
 70.4   chiropractors, or licensed psychologists with respect to a 
 70.5   mental impairment, who shall examine applicants for disability 
 70.6   benefits.  The medical adviser shall pass upon all medical 
 70.7   expert reports based on any examinations performed in order to 
 70.8   determine whether a teacher is totally and permanently disabled 
 70.9   as defined in section 354.05, subdivision 14.  The medical 
 70.10  adviser shall also investigate all health and medical statements 
 70.11  and certificates by or on behalf of a teacher in connection with 
 70.12  a disability benefit, and shall report in writing to the 
 70.13  director setting forth any conclusions and recommendations on 
 70.14  all matters referred to the medical adviser.  
 70.15     Sec. 30.  Minnesota Statutes 2002, section 354.48, 
 70.16  subdivision 10, is amended to read: 
 70.17     Subd. 10.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] 
 70.18  (a) No person shall be is entitled to receive both a disability 
 70.19  benefit and a retirement annuity provided by this chapter.  
 70.20     (b) The disability benefit paid to a person hereunder shall 
 70.21  must terminate at the end of the month in which the person 
 70.22  attains the normal retirement age.  If the person is still 
 70.23  totally and permanently disabled at the beginning of the month 
 70.24  next following the month in which the person attains the normal 
 70.25  retirement age, the person shall must be deemed to be on 
 70.26  retirement status and, if the person had elected an optional 
 70.27  annuity pursuant to under subdivision 3a, shall must receive an 
 70.28  annuity in accordance with the terms of the optional annuity 
 70.29  previously elected, or, if the person had not elected an 
 70.30  optional annuity pursuant to under subdivision 3a, may elect to 
 70.31  receive a straight life retirement annuity equal to the 
 70.32  disability benefit paid prior to before the date on which the 
 70.33  person attains the normal retirement age 65 or reaches the 
 70.34  five-year anniversary of the effective date of the disability 
 70.35  benefit, whichever is later, or may elect to receive an optional 
 70.36  annuity as provided in section 354.45, subdivision 1.  
 71.1      (c) Election of an optional annuity must be made within 90 
 71.2   days of the normal retirement age 65 or the five-year 
 71.3   anniversary of the effective date of the disability benefit, 
 71.4   whichever is later.  
 71.5      (d) If an optional annuity is elected, the election shall 
 71.6   be is effective on the date on which the person attains the 
 71.7   normal retirement age 65 or reaches the five-year anniversary of 
 71.8   the effective date of the disability benefit, whichever is 
 71.9   later.  The optional annuity shall begin begins to accrue on the 
 71.10  first day of the month next following the month in which the 
 71.11  person attains the normal retirement age 65 or reaches the 
 71.12  five-year anniversary of the effective date of the disability 
 71.13  benefit, whichever is later.  
 71.14     Sec. 31.  Minnesota Statutes 2002, section 356.302, 
 71.15  subdivision 3, is amended to read: 
 71.16     Subd. 3.  [GENERAL EMPLOYEE PLAN ELIGIBILITY REQUIREMENTS.] 
 71.17  A disabled member of a covered retirement plan who has credit 
 71.18  for allowable service in a combination of general employee 
 71.19  retirement plans is entitled to a combined service disability 
 71.20  benefit if the member: 
 71.21     (1) is less than 65 years of the normal retirement age on 
 71.22  the date of the application for the disability benefit; 
 71.23     (2) has become totally and permanently disabled; 
 71.24     (3) has credit for allowable service in any combination of 
 71.25  general employee retirement plans totaling at least three years; 
 71.26     (4) has credit for at least one-half year of allowable 
 71.27  service with the current general employee retirement plan before 
 71.28  the commencement of the disability; 
 71.29     (5) has at least three continuous years of allowable 
 71.30  service credit by the general employee retirement plan or has at 
 71.31  least a total of three years of allowable service credit by a 
 71.32  combination of general employee retirement plans in a 72-month 
 71.33  period during which no interruption of allowable service credit 
 71.34  from a termination of employment exceeded 29 days; and 
 71.35     (6) was not receiving a retirement annuity or disability 
 71.36  benefit from any covered general employee retirement plan at the 
 72.1   time of the commencement of the disability.  
 72.2      Sec. 32.  Minnesota Statutes 2002, section 422A.18, 
 72.3   subdivision 1, is amended to read: 
 72.4      Subdivision 1.  [MEDICAL EXPERT EXAMINATION.] (a) Upon the 
 72.5   application of the head of the department in which a 
 72.6   contributing employee is employed, or upon the application of 
 72.7   the contributing employee or of one acting in the employee's 
 72.8   behalf, the retirement board shall place the contributor on 
 72.9   disability, provided and pay the person a disability allowance 
 72.10  under this section if the medical board, after a medical an 
 72.11  expert examination of the contributor made at the place of 
 72.12  residence of the contributor or at a place mutually agreed upon, 
 72.13  shall certify to the retirement board that the contributor is 
 72.14  physically or mentally incapacitated for the performance of 
 72.15  further service to the city and recommend that the contributor 
 72.16  be placed on disability. 
 72.17     (b) The medical board shall consist of the city physician, 
 72.18  a physician, chiropractor, or licensed psychologist to be 
 72.19  selected by the retirement board, and a physician, chiropractor, 
 72.20  or licensed psychologist to be selected by the employee.  
 72.21     (c) Disability of an employee resulting from injury or 
 72.22  illness received in the performance of the duties of the city 
 72.23  service shall be defined as duty disability.  
 72.24     (d) Disability incurred as a result of injury or illness 
 72.25  not connected with the performance of such service shall be 
 72.26  defined as nonduty disability.  In order to be entitled to a 
 72.27  retirement allowance for a nonduty disability, an employee shall 
 72.28  have rendered five or more years of service to the city. 
 72.29     Sec. 33.  Minnesota Statutes 2002, section 422A.18, 
 72.30  subdivision 4, is amended to read: 
 72.31     Subd. 4.  [ADDITIONAL MEDICAL EXAMINATIONS.] (a) Once each 
 72.32  year, the retirement board may require any disability 
 72.33  beneficiary while still under the established age for retirement 
 72.34  to undergo medical an expert examination by a physician or one 
 72.35  or more physicians, one or more chiropractors, or one or more 
 72.36  licensed psychologists designated by the retirement board,.  The 
 73.1   examination to must be made at the place of residence of the 
 73.2   beneficiary or other place mutually agreed upon.  Should 
 73.3      (b) If the medical board report and certify certifies to 
 73.4   the retirement board that such the disability beneficiary is no 
 73.5   longer physically or mentally incapacitated for the performance 
 73.6   of duty, the beneficiary's allowance shall must be discontinued 
 73.7   and the head of the department in which the beneficiary was 
 73.8   employed at the time of retirement shall, upon notification by 
 73.9   the retirement board of the report of the medical board, 
 73.10  reemploy the beneficiary at a rate of salary not less than the 
 73.11  amount of the disability allowance, but. 
 73.12     (c)  After the expiration of five years subsequent to the 
 73.13  retirement of such the beneficiary, the restoration to duty, 
 73.14  notwithstanding the recommendation of the medical board, shall 
 73.15  be is optional with the head of the department.  Should If any 
 73.16  disability beneficiary, while under the established age for 
 73.17  retirement refuse, refuses to submit to at least one 
 73.18  medical expert examination in any year by a physician or one or 
 73.19  more physicians, one or more chiropractors, or one or more 
 73.20  licensed psychologists designated by the medical board, the 
 73.21  allowance shall must be discontinued until the withdrawal of 
 73.22  such refusal, and should such refusal continue for one year, all 
 73.23  the beneficiary's rights in and to any retirement or disability 
 73.24  allowance shall be are forfeited. 
 73.25     Sec. 34.  Minnesota Statutes 2002, section 423B.09, 
 73.26  subdivision 4, is amended to read: 
 73.27     Subd. 4.  [CERTIFICATE OF PHYSICIANS REQUIRED.] (a) No 
 73.28  member is entitled to a pension under subdivision 1, paragraph 
 73.29  (b) or (c), except upon the certificate of two or more 
 73.30  physicians or, surgeons, chiropractors, licensed psychologists, 
 73.31  or a combination of experts chosen by the governing board.  This 
 73.32  certificate must set forth the cause, nature, and extent of the 
 73.33  disability, disease, or injury of the member.  
 73.34     (b) No active member may be awarded, granted, or paid a 
 73.35  disability pension under subdivision 1, paragraph (c), unless 
 73.36  the certificate states that the disability, disease, or injury 
 74.1   was incurred or sustained by the member while in the service of 
 74.2   the police department of the city.  The certificate must be 
 74.3   filed with the secretary of the association. 
 74.4      Sec. 35.  Minnesota Statutes 2002, section 423C.05, 
 74.5   subdivision 4, is amended to read: 
 74.6      Subd. 4.  [TEMPORARY DISABILITY PENSION.] (a) An active 
 74.7   member who, by sickness or accident, becomes temporarily 
 74.8   disabled from performing firefighter duties for the fire 
 74.9   department shall be is entitled to a temporary disability 
 74.10  pension.  
 74.11     (b) No allowance for disability shall may be made unless 
 74.12  notice of the disability and an application for benefits is made 
 74.13  by or on behalf of the disabled member within 90 days after the 
 74.14  beginning of the disability.  This application shall must 
 74.15  include a certificate from a qualified medical professional 
 74.16  expert setting forth the cause, nature, and extent of the 
 74.17  disability.  This certificate must also conclude that the 
 74.18  disability was incurred or sustained while the member was in the 
 74.19  service of the fire department.  
 74.20     (c) The board shall utilize the board of examiners 
 74.21  established pursuant to under section 423C.03, subdivision 6, to 
 74.22  investigate and report on an application for benefits pursuant 
 74.23  to under this section and to make recommendations as to 
 74.24  eligibility and the benefit amount to be paid.  
 74.25     (d) A member entitled to a disability pension shall must 
 74.26  receive benefits in the amount and manner determined by the 
 74.27  board. 
 74.28     Sec. 36.  Minnesota Statutes 2002, section 423C.05, 
 74.29  subdivision 5, is amended to read: 
 74.30     Subd. 5.  [SERVICE-RELATED PERMANENT DISABILITY PENSION.] 
 74.31  An active member who becomes permanently disabled as the result 
 74.32  of a service-related disease or injury shall is, upon 
 74.33  application and approval of the board, be entitled to a pension 
 74.34  of 41 units or in the amount determined under subdivision 8.  
 74.35  The application for service-related permanent disability shall 
 74.36  must include a certificate from a qualified medical professional 
 75.1   expert setting forth the permanent nature of the disability or 
 75.2   disease and that it was service related.  
 75.3      Sec. 37.  Minnesota Statutes 2002, section 423C.05, 
 75.4   subdivision 6, is amended to read: 
 75.5      Subd. 6.  [NON-SERVICE-RELATED PERMANENT DISABILITY 
 75.6   PENSION.] An active member who, by reason of sickness or 
 75.7   accident, becomes permanently disabled and unable to perform 
 75.8   firefighter duties for the fire department due to 
 75.9   non-service-related disease or injury shall be is entitled to a 
 75.10  permanent disability pension.  No allowance for disability shall 
 75.11  may be made unless notice of the disability and an application 
 75.12  for benefits is made by or on behalf of the disabled member 
 75.13  within 90 days after the beginning of the disability.  This 
 75.14  application shall must include a certificate from a qualified 
 75.15  medical professional setting forth the cause, nature, and extent 
 75.16  of the disability.  A member who is entitled to a disability 
 75.17  pension under this subdivision shall must receive benefits in 
 75.18  the amount and manner determined by the board, not to exceed 41 
 75.19  units. 
 75.20     Sec. 38.  Minnesota Statutes 2002, section 423C.05, is 
 75.21  amended by adding a subdivision to read: 
 75.22     Subd. 6a.  [QUALIFIED EXPERT.] A qualified expert includes 
 75.23  a licensed physician or chiropractor, or in the case of mental 
 75.24  impairment, includes a licensed psychologist. 
 75.25     Sec. 39.  [REPEALER.] 
 75.26     (a) Minnesota Statutes 2002, sections 353.33, subdivision 
 75.27  5b; and 490.11, are repealed on July 1, 2004. 
 75.28     (b) Sections 3 and 19 are repealed on July 1, 2006. 
 75.29     Sec. 40.  [EFFECTIVE DATE.] 
 75.30     Sections 1 to 39 are effective on July 1, 2004. 
 75.31                             ARTICLE 9
 75.32              DEATH AND SURVIVOR BENEFITS AND REFUNDS
 75.33     Section 1.  Minnesota Statutes 2002, section 3A.03, 
 75.34  subdivision 2, is amended to read: 
 75.35     Subd. 2.  [REFUND.] (a) Any A former member who has made 
 75.36  contributions under subdivision 1 and who is no longer a member 
 76.1   of the legislature is entitled to receive, upon written 
 76.2   application to the executive director on a form prescribed by 
 76.3   the executive director, a refund of all contributions credited 
 76.4   to the member's account with interest at an annual rate of six 
 76.5   percent compounded annually computed as provided in section 
 76.6   352.22, subdivision 2. 
 76.7      (b) The refund of contributions as provided in paragraph (a)
 76.8   terminates all rights of a former member of the legislature or 
 76.9   and the survivors of the former member under this chapter. 
 76.10     (c) If the former member of the legislature again becomes a 
 76.11  member of the legislature after having taken a refund as 
 76.12  provided in paragraph (a), the member must be considered a new 
 76.13  member of this plan.  However, a new the member may reinstate 
 76.14  the rights and credit for service previously forfeited if the 
 76.15  new member repays all refunds taken plus interest at an annual 
 76.16  rate of 8.5 percent compounded annually from the date on which 
 76.17  the refund was taken to the date on which the refund is repaid.  
 76.18     (c) (d) No person may be required to apply for or to accept 
 76.19  a refund. 
 76.20     Sec. 2.  Minnesota Statutes 2002, section 352.12, 
 76.21  subdivision 1, is amended to read: 
 76.22     Subdivision 1.  [DEATH BEFORE TERMINATION OF SERVICE.] If 
 76.23  an employee dies before state service has terminated and neither 
 76.24  a survivor annuity nor a reversionary annuity is payable on 
 76.25  behalf of the employee, or if a former employee who has 
 76.26  sufficient service credit to be entitled to an annuity dies 
 76.27  before the benefit annuity has become payable, the director 
 76.28  shall make a refund with interest is payable upon filing a 
 76.29  written application on a form prescribed by the executive 
 76.30  director.  The refund is payable to the last designated 
 76.31  beneficiary or, if there is none, to the surviving spouse or, if 
 76.32  none, to the employee's surviving children in equal shares or, 
 76.33  if none, to the employee's surviving parents in equal shares or, 
 76.34  if none, to the representative of the estate in an amount equal 
 76.35  to the accumulated employee contributions plus interest at the 
 76.36  rate of six percent per annum compounded annually.  Interest 
 77.1   must be computed as provided in section 352.22, subdivision 2, 
 77.2   to the first day of the month in which the refund is processed.  
 77.3   Upon the death of an employee who has received a refund that was 
 77.4   later repaid in full, interest must be paid on the repaid refund 
 77.5   only from the date of the repayment.  If the repayment was made 
 77.6   in installments, interest must be paid only from the date on 
 77.7   which the installment payments began.  The designated 
 77.8   beneficiary, the surviving spouse, or the representative of the 
 77.9   estate of an employee who had received a disability benefit is 
 77.10  not entitled to the payment of interest upon any balance 
 77.11  remaining to the decedent's credit in the fund at the time of 
 77.12  death, unless the death occurred before any payment could be 
 77.13  negotiated.  
 77.14     Sec. 3.  Minnesota Statutes 2002, section 352.12, 
 77.15  subdivision 6, is amended to read: 
 77.16     Subd. 6.  [DEATH AFTER SERVICE TERMINATION.] Except as 
 77.17  provided in subdivision 1, if a former employee covered by the 
 77.18  system dies and who has not received an annuity, a retirement 
 77.19  allowance, or a disability benefit dies, a refund must be made 
 77.20  is payable to the last designated beneficiary or, if there is 
 77.21  none, to the surviving spouse or, if none, to the employee's 
 77.22  surviving children in equal shares or, if none, to the 
 77.23  employee's surviving parents in equal shares or, if none, to the 
 77.24  representative of the estate in an amount equal to accumulated 
 77.25  employee contributions plus interest.  The refund must include 
 77.26  interest at the rate of six percent per year compounded 
 77.27  annually.  The interest on the refund must be computed as 
 77.28  provided in section 352.22, subdivision 2. 
 77.29     Sec. 4.  Minnesota Statutes 2002, section 352.22, 
 77.30  subdivision 2, is amended to read: 
 77.31     Subd. 2.  [AMOUNT OF REFUND.] Except as provided in 
 77.32  subdivision 3, the refund payable to a person who ceased to be a 
 77.33  state employee by reason of a termination of state service is in 
 77.34  an amount equal to employee accumulated contributions plus 
 77.35  interest at the rate of six percent per year compounded annually 
 77.36  daily from the date that the contribution was made until the 
 78.1   date on which the refund is paid.  Included with the refund is 
 78.2   any interest paid as part of repayment of a past refund, plus 
 78.3   interest thereon from the date of repayment.  Interest must be 
 78.4   computed to the first day of the month in which the refund is 
 78.5   processed and must be based on fiscal year or monthly balances, 
 78.6   whichever applies. 
 78.7      Sec. 5.  Minnesota Statutes 2002, section 352.22, 
 78.8   subdivision 3, is amended to read: 
 78.9      Subd. 3.  [DEFERRED ANNUITY.] (a) An employee who has at 
 78.10  least three years of allowable service when termination occurs 
 78.11  may elect to leave the accumulated contributions in the fund and 
 78.12  thereby be entitled to a deferred retirement annuity.  The 
 78.13  annuity must be computed under the law in effect when state 
 78.14  service terminated, on the basis of the allowable service 
 78.15  credited to the person before the termination of service. 
 78.16     (b) An employee on layoff or on leave of absence without 
 78.17  pay, except a leave of absence for health reasons, and who does 
 78.18  not return to state service shall must have an annuity, deferred 
 78.19  annuity, or other benefit to which the employee may become 
 78.20  entitled computed under the law in effect on the employee's last 
 78.21  working day. 
 78.22     (c) No application for a deferred annuity may be made more 
 78.23  than 60 days before the time the former employee reaches the 
 78.24  required age for entitlement to the payment of the annuity.  The 
 78.25  deferred annuity begins to accrue no earlier than 60 days before 
 78.26  the date the application is filed in the office of the system, 
 78.27  but not (1) before the date on which the employee reaches the 
 78.28  required age for entitlement to the annuity nor (2) before the 
 78.29  day following the termination of state service in a 
 78.30  position which is not covered by the retirement system. 
 78.31     (d) Application for the accumulated contributions left on 
 78.32  deposit with the fund may be made at any time after 30 days 
 78.33  following the date of the termination of service. 
 78.34     Sec. 6.  Minnesota Statutes 2002, section 352B.10, 
 78.35  subdivision 5, is amended to read: 
 78.36     Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 79.1   disabilitant may elect, in lieu of spousal survivorship coverage 
 79.2   under section 352B.11, subdivision 2 subdivisions 2b and 
 79.3   2c, choose the normal disability benefit or an optional annuity 
 79.4   as provided in section 352B.08, subdivision 3.  The choice of an 
 79.5   optional annuity must be made before the commencement of the 
 79.6   payment of the disability benefit, or within 90 days of 
 79.7   attaining before reaching age 65 or reaching the five-year 
 79.8   anniversary of the effective date of the disability benefit, 
 79.9   whichever is later.  It The optional annuity is effective on the 
 79.10  date on which the disability benefit begins to accrue, or the 
 79.11  month following attainment of age 65 or the five-year 
 79.12  anniversary of the effective date of the disability benefit, 
 79.13  whichever is later. 
 79.14     Sec. 7.  Minnesota Statutes 2002, section 352B.11, 
 79.15  subdivision 1, is amended to read: 
 79.16     Subdivision 1.  [REFUND OF PAYMENTS.] (a) A member who has 
 79.17  not received other benefits under this chapter is entitled to a 
 79.18  refund of payments made by salary deduction, plus interest, if 
 79.19  the member is separated, either voluntarily or involuntarily, 
 79.20  from the state service that entitled the member to membership.  
 79.21     (b) In the event of the member's death, if there are no 
 79.22  survivor benefits payable under this chapter, a refund plus 
 79.23  interest is payable to the last designated beneficiary on a form 
 79.24  filed with the director before death, or if no designation is 
 79.25  filed, the refund is payable to the member's estate.  Interest 
 79.26  under this subdivision must be computed at the rate of six 
 79.27  percent a year, compounded annually calculated as provided in 
 79.28  section 352.22, subdivision 2.  To receive a refund, the 
 79.29  application must be made on a form prescribed by the executive 
 79.30  director. 
 79.31     Sec. 8.  Minnesota Statutes 2002, section 352B.11, 
 79.32  subdivision 2, is amended to read: 
 79.33     Subd. 2.  [DEATH; PAYMENT TO SPOUSE AND DEPENDENT CHILDREN; 
 79.34  FAMILY MAXIMUMS.] If a member serving actively as a member, or a 
 79.35  member or former member receiving the disability benefit before 
 79.36  attaining age 65 or reaching the five-year anniversary of the 
 80.1   effective date of the disability benefit, whichever is later, 
 80.2   provided by section 352B.10, subdivisions 1 and 2, dies from any 
 80.3   cause before attaining age 65 or reaching the five-year 
 80.4   anniversary of the effective date of the disability benefit, 
 80.5   whichever is later, the surviving spouse and dependent children 
 80.6   are entitled to benefit payments as follows: 
 80.7      (a) A member with at least three years of allowable service 
 80.8   is deemed to have elected a 100 percent joint and survivor 
 80.9   annuity payable to a surviving spouse only on or after the date 
 80.10  the member or former member became or would have become 55. 
 80.11     (b) The surviving spouse of a member who had credit for 
 80.12  less than three years of service shall receive, for life, a 
 80.13  monthly annuity equal to 50 percent of that part of the average 
 80.14  monthly salary of the member from which deductions were made for 
 80.15  retirement.  
 80.16     (c) The surviving spouse of a member who had credit for at 
 80.17  least three years service and who died after becoming 55 years 
 80.18  old, may elect to receive a 100 percent joint and survivor 
 80.19  annuity, for life, notwithstanding a subsequent remarriage, in 
 80.20  lieu of the annuity prescribed in paragraph (b). 
 80.21     (d) The surviving spouse of any member who had credit for 
 80.22  three years or more and who was not 55 years old at death, shall 
 80.23  receive the benefit equal to 50 percent of the average monthly 
 80.24  salary as described in clause (b) until the deceased member 
 80.25  would have become 55 years old, and beginning the first of the 
 80.26  month following that date, may elect to receive the 100 percent 
 80.27  joint and survivor annuity.  
 80.28     (e) Each dependent child, as defined in section 352B.01, 
 80.29  subdivision 10, shall is entitled to receive a monthly annuity 
 80.30  equal to ten percent of that part of the average monthly salary 
 80.31  of the former deceased member from which deductions were made 
 80.32  for retirement.  A dependent child over 18 and under 23 years of 
 80.33  age also may receive the monthly benefit provided in this 
 80.34  section, if the child is continuously attending an accredited 
 80.35  school as a full-time student during the normal school year as 
 80.36  determined by the director.  If the child does not continuously 
 81.1   attend school, but separates from full-time attendance during 
 81.2   any part of a school year, the annuity shall must cease at the 
 81.3   end of the month of separation.  In addition, a payment of $20 
 81.4   per month shall must be prorated equally to the surviving 
 81.5   dependent children when the former member is survived by more 
 81.6   than one or more dependent children child.  Payments for the 
 81.7   benefit of any qualified dependent child must be made to the 
 81.8   surviving spouse, or if there is none, to the legal guardian of 
 81.9   the child.  The maximum monthly benefit for any one family, 
 81.10  including a surviving spouse benefit, if applicable, must not be 
 81.11  less than 50 percent nor exceed 70 percent of the average 
 81.12  monthly salary for any number of children of the deceased member.
 81.13     (f) If the member dies under circumstances that entitle the 
 81.14  surviving spouse and dependent children to receive benefits 
 81.15  under the workers' compensation law, the workers' compensation 
 81.16  benefits received by them must not be deducted from the benefits 
 81.17  payable under this section. 
 81.18     (g) The surviving spouse of a deceased former member who 
 81.19  had credit for three or more years of allowable service, but not 
 81.20  the spouse of a former member receiving a disability benefit 
 81.21  under section 352B.10, subdivision 2, is entitled to receive the 
 81.22  100 percent joint and survivor annuity at the time the deceased 
 81.23  member would have become 55 years old.  If a former member dies 
 81.24  who does not qualify for other benefits under this chapter, the 
 81.25  surviving spouse or, if none, the children or heirs are entitled 
 81.26  to a refund of the accumulated deductions left in the fund plus 
 81.27  interest at the rate of six percent per year compounded annually.
 81.28     Sec. 9.  Minnesota Statutes 2002, section 352B.11, is 
 81.29  amended by adding a subdivision to read: 
 81.30     Subd. 2b.  [SURVIVING SPOUSE BENEFIT ELIGIBILITY.] (a) If 
 81.31  an active member with three or more years of allowable service 
 81.32  dies before attaining age 55, the surviving spouse is entitled 
 81.33  to the benefit specified in subdivision 2c, paragraph (b). 
 81.34     (b) If an active member with less than three years of 
 81.35  allowable service dies at any age, the surviving spouse is 
 81.36  entitled to receive the benefit specified in subdivision 2c, 
 82.1   paragraph (c). 
 82.2      (c) If an active member with three or more years of 
 82.3   allowable service dies on or after attaining exact age 55, the 
 82.4   surviving spouse is entitled to receive the benefits specified 
 82.5   in subdivision 2c, paragraph (d). 
 82.6      (d) If a disabilitant dies while receiving a disability 
 82.7   benefit under section 352B.10 or before the benefit under that 
 82.8   section commenced, and an optional annuity was not elected under 
 82.9   section 352B.10, subdivision 5, the surviving spouse is entitled 
 82.10  to receive the benefit specified in subdivision 2c, paragraph 
 82.11  (b). 
 82.12     (e) If a former member with three or more years of 
 82.13  allowable service, who terminated from service and has not 
 82.14  received a refund or commenced receipt of any other benefit 
 82.15  provided by this chapter, dies, the surviving spouse is entitled 
 82.16  to receive the benefit specified in subdivision 2c, paragraph 
 82.17  (e).  
 82.18     (f) If a former member with less than three years of 
 82.19  allowable service, who terminated from service and has not 
 82.20  received a refund or commenced receipt of any other benefit, if 
 82.21  applicable, provided by this chapter, dies, the surviving spouse 
 82.22  is entitled to receive the refund specified in subdivision 2c, 
 82.23  paragraph (f). 
 82.24     Sec. 10.  Minnesota Statutes 2002, section 352B.11, is 
 82.25  amended by adding a subdivision to read: 
 82.26     Subd. 2c.  [SURVIVING SPOUSE BENEFIT ENTITLEMENTS.] (a) A 
 82.27  surviving spouse specified in subdivision 2b is eligible to 
 82.28  receive, following the filing of a valid application and 
 82.29  consistent with any other applicable requirements, a benefit as 
 82.30  specified in this subdivision.  A 100 percent joint and survivor 
 82.31  annuity under paragraph (b) must be computed assuming the exact 
 82.32  age 55 for the deceased member and the age of the surviving 
 82.33  spouse on the date of death.  A 100 percent joint and survivor 
 82.34  annuity under paragraph (d) or (e) must be computed using the 
 82.35  age of the deceased member on the date of death and the age of 
 82.36  the surviving spouse on that same date. 
 83.1      (b) For a surviving spouse specified in subdivision 2b, 
 83.2   paragraph (a) or (d), the surviving spouse benefit is a benefit 
 83.3   for life equal to 50 percent of the average monthly salary of 
 83.4   the deceased member.  On the first of the month next following 
 83.5   the date on which the deceased member would have attained exact 
 83.6   age 55, in lieu of continued receipt of the prior benefit, the 
 83.7   surviving spouse is eligible to commence receipt of the second 
 83.8   half of a 100 percent joint and survivor annuity, if this 
 83.9   provides a larger benefit. 
 83.10     (c) For a surviving spouse specified in subdivision 2b, 
 83.11  paragraph (b), the surviving spouse benefit is a benefit for 
 83.12  life equal to 50 percent of the average monthly salary of the 
 83.13  deceased member. 
 83.14     (d) For a surviving spouse specified in subdivision 2b, 
 83.15  paragraph (c), the surviving spouse benefit is a benefit for 
 83.16  life equal to 50 percent of the average monthly salary of the 
 83.17  deceased member, or the second half of a 100 percent joint and 
 83.18  survivor annuity, whichever is larger. 
 83.19     (e) For a surviving spouse specified in subdivision 2b, 
 83.20  paragraph (e), the surviving spouse benefit is the second half 
 83.21  of a 100 percent joint and survivor annuity, commencing on the 
 83.22  first of the month next following the deceased member's date of 
 83.23  death, or the first of the month next following the date on 
 83.24  which the deceased member would have attained age 55, whichever 
 83.25  is later. 
 83.26     (f) For a surviving spouse specified in subdivision 2b, 
 83.27  paragraph (f), the surviving spouse or, if none, the children 
 83.28  or, if none, the deceased member's estate, is entitled to a 
 83.29  refund of the employee contributions plus interest computed as 
 83.30  specified in subdivision 1. 
 83.31     Sec. 11.  Minnesota Statutes 2002, section 352B.11, is 
 83.32  amended by adding a subdivision to read: 
 83.33     Subd. 2d.  [COORDINATION WITH WORKERS' COMPENSATION 
 83.34  BENEFITS.] If the deceased member died under circumstances that 
 83.35  entitle the surviving spouse and the dependent child or children 
 83.36  to receive benefits under workers' compensation law, the 
 84.1   workers' compensation benefits received by the deceased member's 
 84.2   survivor or survivors must not be deducted from the benefits 
 84.3   payable under this section. 
 84.4      Sec. 12.  Minnesota Statutes 2002, section 352D.075, 
 84.5   subdivision 2, is amended to read: 
 84.6      Subd. 2.  [SURVIVING SPOUSE BENEFIT.] (a) Notwithstanding 
 84.7   any designation of a beneficiary to the contrary, if a 
 84.8   participant or a former participant dies leaving a spouse and 
 84.9   there is no named beneficiary who survives to receive payment or 
 84.10  the spouse is named beneficiary before an annuity or a 
 84.11  disability benefit becomes payable, the surviving spouse may is 
 84.12  entitled to receive: 
 84.13     (1) a lump sum payment of the value of the participant's 
 84.14  total shares; 
 84.15     (2) The a lump sum payment of a portion of the value of 
 84.16  one-half of the total shares and beginning at age 55 or 
 84.17  thereafter, at any time after the participant's death, receive 
 84.18  an annuity based on the remaining value of one-half of the total 
 84.19  shares, provided that.  If the spouse dies before receiving any 
 84.20  annuity payments, the remaining value of said the shares shall 
 84.21  be paid is payable to the spouse's children in equal shares, but 
 84.22  and if no such children survive, then to the parents of the 
 84.23  spouse in equal shares, but and if no such children or parents 
 84.24  survive, then to the estate of the spouse; or 
 84.25     (3) Beginning at age 55 or thereafter at any time after the 
 84.26  participant's death, receive an annuity based on the value of 
 84.27  the total shares, provided that.  If the spouse dies before 
 84.28  receiving any annuity payments, the value of said the shares 
 84.29  shall be paid is payable to the spouse's children in equal 
 84.30  shares, but and if no such children survive, then to the parents 
 84.31  of the spouse in equal shares, but and if no such children or 
 84.32  parents survive, then to the estate of the spouse; and further 
 84.33  provided, if said the spouse dies after receiving annuity 
 84.34  payments but before receiving payments equal to the value of the 
 84.35  employee shares, the value of the employee shares 
 84.36  remaining shall be paid is payable to the spouse's children in 
 85.1   equal shares, but and if no such children survive, then to the 
 85.2   parents of the spouse in equal shares, but and if no such 
 85.3   children or parents survive, then to the estate of the spouse.  
 85.4      (b) A participant or a former participant and the person's 
 85.5   spouse may make a joint specification, in writing, on a form 
 85.6   prescribed by the executive director, that the benefits provided 
 85.7   in this section must be paid only to the designated beneficiary. 
 85.8      Sec. 13.  Minnesota Statutes 2002, section 352D.075, is 
 85.9   amended by adding a subdivision to read: 
 85.10     Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 
 85.11  lieu of the annuity under subdivision 2, clause (2) or (3), or 
 85.12  in lieu of a distribution under subdivision 2, clause (1), the 
 85.13  surviving spouse of a deceased participant may elect to receive 
 85.14  survivor coverage in the form of a term certain annuity of five, 
 85.15  six, 15, or 20 years, based on the value of the remaining 
 85.16  shares.  The monthly term certain annuity must be calculated 
 85.17  under section 352D.06, subdivision 1. 
 85.18     Sec. 14.  Minnesota Statutes 2002, section 352D.075, 
 85.19  subdivision 3, is amended to read: 
 85.20     Subd. 3.  [REFUND TO BENEFICIARY.] If a participant dies 
 85.21  and has named a beneficiary no surviving spouse, the value of 
 85.22  the total shares shall be paid is payable to such a designated 
 85.23  beneficiary, but if such the beneficiary dies before receiving 
 85.24  payment, or if no beneficiary has been named and there is no 
 85.25  spouse, the value of said the shares shall be paid is payable 
 85.26  to the children of the participant in equal shares, but or if no 
 85.27  such children survive, then in equal shares to the parents of 
 85.28  the participant, but or if no such children or parents survive, 
 85.29  then to the estate of the participant.  
 85.30     Sec. 15.  [352F.052] [APPLICATION OF SURVIVING SPOUSE, 
 85.31  DEPENDENT CHILD PROVISION.] 
 85.32     Notwithstanding any provisions of law to the contrary, 
 85.33  subdivisions within section 352.12 of the edition of Minnesota 
 85.34  Statutes published in the year before the year in which a 
 85.35  privatization occurred, applicable to the surviving spouse or 
 85.36  dependent children of a former member, apply to the survivors of 
 86.1   a terminated hospital employee of Fairview, University of 
 86.2   Minnesota Physicians, or University Affiliated Family Physicians.
 86.3      Sec. 16.  [353F.052] [APPLICATION OF SURVIVING SPOUSE, 
 86.4   DEPENDENT CHILD PROVISION.] 
 86.5      Notwithstanding any provisions of law to the contrary, 
 86.6   subdivisions within section 353.32 of the edition of Minnesota 
 86.7   Statutes published in the year before the year in which a 
 86.8   privatization occurred, applicable to the surviving spouse or 
 86.9   dependent children of a former member as defined in section 
 86.10  353.01, subdivision 7a, apply to the survivors of a terminated 
 86.11  medical facility or other public employing unit employee. 
 86.12     Sec. 17.  Minnesota Statutes 2002, section 354.05, 
 86.13  subdivision 22, is amended to read: 
 86.14     Subd. 22.  [DESIGNATED BENEFICIARY.] "Designated 
 86.15  beneficiary" means the person, trust, or organization designated 
 86.16  by a retiree or member to receive the benefits to which a 
 86.17  beneficiary is entitled under this chapter.  A beneficiary 
 86.18  designation is valid only if it is made on an appropriate form 
 86.19  provided by the executive director that is signed by the member 
 86.20  and two witnesses to the member's signature.  The properly 
 86.21  completed form must be received by the association on or before 
 86.22  the date of death of the retiree or member.  If a retiree or a 
 86.23  member does not designate a person, trust, or organization, or 
 86.24  if the person who was designated predeceases the retiree or the 
 86.25  member, or if the trust or organization ceases to exist before 
 86.26  the death of the retiree or the member, the designated 
 86.27  beneficiary means is the estate of the deceased retiree or 
 86.28  member. 
 86.29     Sec. 18.  Minnesota Statutes 2002, section 354.46, 
 86.30  subdivision 2, is amended to read: 
 86.31     Subd. 2.  [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY 
 86.32  BENEFIT SURVIVING SPOUSE SURVIVOR COVERAGE.] (a) The surviving 
 86.33  spouse of any member or former member who has If the active or 
 86.34  deferred member was at least age 55 and had credit for at least 
 86.35  three years of allowable service on the date of death, the 
 86.36  surviving spouse is entitled to the second portion of a 100 
 87.1   percent joint and survivor annuity coverage in the event of 
 87.2   death of the member prior to retirement.  If the surviving 
 87.3   spouse does not elect to receive a surviving spouse benefit 
 87.4   under subdivision 1, if applicable, or does not elect to receive 
 87.5   a refund of accumulated member contributions under section 
 87.6   354.47, subdivision 1, the surviving spouse is entitled to 
 87.7   receive, upon written application on a form prescribed by the 
 87.8   executive director, a benefit equal to the second portion of a 
 87.9   100 percent joint and survivor annuity specified under section 
 87.10  354.45, based on the age of the active or deferred member and 
 87.11  surviving spouse at the time of death of the member, and 
 87.12  computed under section 354.44, subdivision 2 or 6, whichever is 
 87.13  applicable the age of the surviving spouse at the time the 
 87.14  benefit accrues. 
 87.15     (b) If the active or deferred member was under age 55 and 
 87.16  has had credit for at least 30 years of allowable service on the 
 87.17  date of death, the surviving spouse may elect to receive the 
 87.18  second portion of a 100 percent joint and survivor annuity based 
 87.19  on the age of the active or deferred member and surviving spouse 
 87.20  on the date of death and the age of the surviving spouse at the 
 87.21  time the benefit accrues.  If section 354.44, subdivision 6, 
 87.22  applies, the annuity is payable using the full early retirement 
 87.23  reduction under section 354.44, subdivision 6, paragraph 
 87.24  clause (3)(ii), to age 55 and one-half of the early retirement 
 87.25  reduction from age 55 to the age payment begins. 
 87.26     (c) If the active or deferred member was under age 55 and 
 87.27  has had credit for at least three years of allowable service on 
 87.28  the date of death, but did not yet qualify for retirement, the 
 87.29  surviving spouse may elect to receive the second portion of a 
 87.30  100 percent joint and survivor annuity based on the age of 
 87.31  the active or deferred member and the surviving spouse at the 
 87.32  time of death and the age of the surviving spouse at the time 
 87.33  the benefit accrues.  If section 354.44, subdivision 6, applies, 
 87.34  the annuity is calculated using the full early retirement 
 87.35  reduction under section 354.44, subdivision 6, to age 55 and 
 87.36  one-half of the early retirement reduction from age 55 to the 
 88.1   age the annuity begins.  The surviving spouse eligible for a 
 88.2   surviving spouse benefit under paragraph (a) may apply for the 
 88.3   annuity at any time after the date on which the deceased 
 88.4   employee would have attained the required age for retirement 
 88.5   based on the employee's allowable service. 
 88.6      (d) The surviving spouse eligible for surviving spouse 
 88.7   benefits under paragraph (b) or (c) this subdivision may apply 
 88.8   for the annuity any time after the member's death.  This The 
 88.9   benefit accrues from the day following the date of the member's 
 88.10  death but may not begin to accrue more than six months before 
 88.11  the date the application is filed with the executive 
 88.12  director and may not accrue before the member's death.  Sections 
 88.13  354.55, subdivision 11, and 354.60 apply to a deferred annuity 
 88.14  payable under this section.  The benefit is payable for life.  
 88.15  Any benefit under this subdivision is in lieu of benefits under 
 88.16  subdivision 1, if applicable, and in lieu of a refund of 
 88.17  accumulated member contributions under section 354.47, 
 88.18  subdivision 1. 
 88.19     (e) For purposes of this subdivision, a designated 
 88.20  beneficiary must be a former spouse or a biological or adopted 
 88.21  child of the member. 
 88.22     Sec. 19.  Minnesota Statutes 2002, section 354.46, 
 88.23  subdivision 2b, is amended to read: 
 88.24     Subd. 2b.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 88.25  no surviving spouse eligible for benefits under subdivision 2, a 
 88.26  each dependent child or children as defined in section 354.05, 
 88.27  subdivision 8a, is eligible for monthly payments surviving child 
 88.28  benefits.  Payments Surviving child benefits to a dependent 
 88.29  child must be paid from the date of the member's death to the 
 88.30  date the dependent child attains age 20 if the child is under 
 88.31  age 15 on the date of the member's death.  If the child is 15 
 88.32  years or older on the date of the member's death, payment must 
 88.33  be made the surviving child benefit is payable for five years.  
 88.34  The payment to a dependent surviving child benefit is an amount 
 88.35  that is actuarially equivalent to the value of a 100 percent 
 88.36  optional annuity under subdivision 2 calculated using the age of 
 89.1   the member and age of the dependent child at as of the date of 
 89.2   death in lieu of the age of the member and the spouse.  If there 
 89.3   is more than one dependent child, each dependent child shall is 
 89.4   entitled to receive a proportionate share of the actuarial value 
 89.5   of the member's account.  
 89.6      Sec. 20.  Minnesota Statutes 2002, section 354.46, 
 89.7   subdivision 5, is amended to read: 
 89.8      Subd. 5.  [PAYMENT TO DESIGNATED BENEFICIARY.] A member and 
 89.9   who is single or, if the member is married, a member and the 
 89.10  spouse of the member jointly, may make a joint specification in 
 89.11  writing on a form prescribed by the executive director that the 
 89.12  benefits provided in subdivision 2, or in section 354.47, 
 89.13  subdivision 1, must be paid only to a designated beneficiary or 
 89.14  to designated beneficiaries.  For purposes of subdivision 2, a 
 89.15  designated beneficiary may only be either a former spouse or a 
 89.16  biological or an adopted child of the member. 
 89.17     Sec. 21.  Minnesota Statutes 2002, section 354.46, is 
 89.18  amended by adding a subdivision to read: 
 89.19     Subd. 6.  [APPLICATION.] (a) A beneficiary designation and 
 89.20  an application for benefits under this section must be in 
 89.21  writing on a form prescribed by the executive director. 
 89.22     (b) Sections 354.55, subdivision 11, and 354.60 apply to a 
 89.23  deferred annuity payable under this section. 
 89.24     (c) Unless otherwise specified, the annuity must be 
 89.25  computed under section 354.44, subdivision 2 or 6, whichever is 
 89.26  applicable. 
 89.27     Sec. 22.  Minnesota Statutes 2002, section 356.441, is 
 89.28  amended to read: 
 89.29     356.441 [REPAYMENT OF REFUNDS PAYMENT ACCEPTANCE ALLOWED.] 
 89.30     Subdivision 1.  [PAYMENT AUTHORIZATION.] The repayment of a 
 89.31  refund and interest on that refund or the payment of equivalent 
 89.32  contributions and interest for an eligible leave of absence, as 
 89.33  permitted under laws governing any public pension plan in 
 89.34  Minnesota, may be made: 
 89.35     (1) with funds distributed or transferred from a plan 
 89.36  qualified under the federal Internal Revenue Code of 1986, 
 90.1   section 401, subsection (a) or (k); 403; 408; or 457, subsection 
 90.2   (b), as amended through December 31, 1988, or an annuity 
 90.3   qualified under the federal Internal Revenue Code of 1986, 
 90.4   section 403(a).  Repayment may also be made from time to time; 
 90.5   or 
 90.6      (2) with funds distributed from an individual retirement 
 90.7   account used solely to receive a or individual retirement 
 90.8   annuity, if done solely in a manner that is eligible for 
 90.9   treatment as a nontaxable rollover from that type of a plan or 
 90.10  annuity or transfer under the applicable federal law.  The 
 90.11  repaid refund 
 90.12     Subd. 2.  [SEPARATE ACCOUNTING REQUIREMENT.] Nontaxable 
 90.13  rollovers or transfer amounts under subdivision 1 received by a 
 90.14  public pension fund must be separately accounted for as member 
 90.15  contributions not previously taxed.  Before accepting 
 90.16  any rollovers or transfers to which this section applies, the 
 90.17  executive director must shall require the member to provide 
 90.18  written documentation to demonstrate that the amounts to 
 90.19  be rolled over or transferred are eligible for a tax-free 
 90.20  rollover or transfer and qualify for that treatment under the 
 90.21  federal Internal Revenue Code of 1986, as amended.  
 90.22     Sec. 23.  Minnesota Statutes 2002, section 490.124, 
 90.23  subdivision 12, is amended to read: 
 90.24     Subd. 12.  [REFUND.] (a) Any A person who ceases to be a 
 90.25  judge but who does not qualify for a retirement annuity or other 
 90.26  benefit under section 490.121 shall be is entitled to a refund 
 90.27  in an amount equal to all the person's member's employee 
 90.28  contributions to the judges' retirement fund plus interest 
 90.29  computed to the first day of the month in which the refund is 
 90.30  processed based on fiscal year balances at an annual rate of 
 90.31  five percent compounded annually under section 352.22, 
 90.32  subdivision 2. 
 90.33     (b) A refund of contributions under paragraph (a) 
 90.34  terminates all service credits and all rights and benefits of 
 90.35  the judge and the judge's survivors.  A person who becomes a 
 90.36  judge again after taking a refund under paragraph (a) may 
 91.1   reinstate the previously terminated service credits, rights, and 
 91.2   benefits by repaying all refunds the total amount of the 
 91.3   previously received refund.  A The refund repayment must include 
 91.4   interest on the total amount previously received at an annual 
 91.5   rate of 8.5 percent compounded annually from the date on which 
 91.6   the refund was received until the date on which the refund is 
 91.7   repaid. 
 91.8      Sec. 24.  [TEACHERS RETIREMENT ASSOCIATION; BENEFICIARY 
 91.9   DESIGNATION.] 
 91.10     (a) An eligible person described in paragraph (b) is 
 91.11  entitled to make a specification that the benefits provided in 
 91.12  Minnesota Statutes, section 354.46, subdivision 2, or in 
 91.13  Minnesota Statutes, section 354.47, subdivision 1, may be paid 
 91.14  only to a designated beneficiary or beneficiaries.  
 91.15     (b) An eligible person is a person who: 
 91.16     (1) was born on July 9, 1956; 
 91.17     (2) is employed as a teacher by Independent School District 
 91.18  No. 535, Rochester; 
 91.19     (3) is a member of the Teachers Retirement Association; 
 91.20     (4) has more than 19 years of allowable service credit in 
 91.21  the Teachers Retirement Association; 
 91.22     (5) has two minor children; 
 91.23     (6) has no potential surviving spouse by virtue of a prior 
 91.24  marriage dissolution; and 
 91.25     (7) has been diagnosed with a serious medical condition 
 91.26  that is life threatening. 
 91.27     (c) The designated beneficiary or beneficiaries may only be 
 91.28  a biological or adopted child, the biological or adopted 
 91.29  children of the eligible person, or a trust established for the 
 91.30  child or children if the trust is required to provide for the 
 91.31  proper health, support, maintenance, and education of the 
 91.32  dependent child or children.  If two or more children are 
 91.33  designated or if a trust established for more than one child is 
 91.34  designated, the benefit payable to or on behalf of each child is 
 91.35  an equal share of the total benefit. 
 91.36     (d) The specification must be made in writing on a form 
 92.1   prescribed by the executive director of the Teachers Retirement 
 92.2   Association.  
 92.3      Sec. 25. [REPEALER.] 
 92.4      Minnesota Statutes 2002, section 354A.107, is repealed. 
 92.5      Sec. 26.  [EFFECTIVE DATE.] 
 92.6      (a) Sections 1 to 25 are effective on July 1, 2004. 
 92.7      (b) Sections 8 to 11 are not intended to increase, modify, 
 92.8   impair, or diminish the benefit entitlements specified in 
 92.9   Minnesota Statutes, chapter 352B.  If the Minnesota State 
 92.10  Retirement System executive director determines that any 
 92.11  provision of those sections does increase, modify, impair, or 
 92.12  diminish the benefit entitlements as reflected in applicable law 
 92.13  just prior to the effective date of this section, the executive 
 92.14  director shall certify that determination and a recommendation 
 92.15  as to the required legislative correction to the chairs of the 
 92.16  Legislative Commission on Pensions and Retirement, the house 
 92.17  Governmental Operations Committee, the senate Governmental 
 92.18  Operations Committee, and the executive director of the 
 92.19  Legislative Commission on Pensions and Retirement. 
 92.20     (c) Consistent with Minnesota Statutes, section 645.21, and 
 92.21  public pension policy in general, the increased interest rate 
 92.22  provided on a refund under section 23 applies only to judges 
 92.23  whose termination of service occurs on or after July 1, 2004. 
 92.24                             ARTICLE 10
 92.25                      FEDERAL INTERNAL REVENUE
 92.26                          CODE COMPLIANCE
 92.27     Section 1.  Minnesota Statutes 2002, section 356.611, is 
 92.28  amended by adding a subdivision to read: 
 92.29     Subd. 4.  [COMPENSATION.] (a) For purposes of this section, 
 92.30  compensation means a member's compensation actually paid or made 
 92.31  available for any limitation year determined as provided by 
 92.32  Treasury Regulation Section 1.415-2(d)(10). 
 92.33     (b) Compensation for any period includes: 
 92.34     (1) any elective deferral as defined in section 402(g)(3) 
 92.35  of the Internal Revenue Code; 
 92.36     (2) any elective amounts that are not includable in a 
 93.1   member's gross income by reason of sections 125 or 457 of the 
 93.2   Internal Revenue Code; and 
 93.3      (3) any elective amounts that are not includable in a 
 93.4   member's gross income by reason of section 132(f)(4) of the 
 93.5   Internal Revenue Code.  
 93.6      Sec. 2.  [356.635] [INTERNAL REVENUE CODE COMPLIANCE.] 
 93.7      Subdivision 1.  [RETIREMENT BENEFIT COMMENCEMENT.] The 
 93.8   retirement benefit of a member who has terminated employment 
 93.9   must begin no later than the later of April 1 of the calendar 
 93.10  year following the calendar year that the member attains the 
 93.11  federal minimum distribution age under section 401(a)(9) of the 
 93.12  Internal Revenue Code or April 1 of the calendar year following 
 93.13  the calendar year in which the member terminated employment. 
 93.14     Subd. 2.  [DISTRIBUTIONS.] Distributions shall be made as 
 93.15  required under section 401(a)(9) of the Internal Revenue Code 
 93.16  and the treasury regulations adopted under that section, 
 93.17  including, but not limited to, the incidental death benefit 
 93.18  provisions of section 401(a)(9)(G) of the Internal Revenue Code. 
 93.19     Subd. 3.  [DIRECT ROLLOVERS.] A distributee may elect, at 
 93.20  the time and in the manner prescribed by the plan administrator, 
 93.21  to have all or any portion of an eligible rollover distribution 
 93.22  paid directly to an eligible retirement plan as specified by the 
 93.23  distributee. 
 93.24     Subd. 4.  [ELIGIBLE ROLLOVER DISTRIBUTION.] An "eligible 
 93.25  rollover distribution" is any distribution of all or any portion 
 93.26  of the balance to the credit of the distributee.  
 93.27     Subd. 5.  [INELIGIBLE AMOUNTS.] An eligible rollover 
 93.28  distribution does not include: 
 93.29     (1) a distribution that is one of a series of substantially 
 93.30  equal periodic payments, receivable annually or more frequently, 
 93.31  that is made for the life or life expectancy of the distributee, 
 93.32  the joint lives or joint life expectancies of the distributee 
 93.33  and the distributee's designated beneficiary, or for a specified 
 93.34  period of ten years or more; 
 93.35     (2) a distribution that is required under section 401(a)(9) 
 93.36  of the Internal Revenue Code; or 
 94.1      (3) any other exception required by law or the Internal 
 94.2   Revenue Code. 
 94.3      Subd. 6.  [ELIGIBLE RETIREMENT PLAN.] (a) An "eligible 
 94.4   retirement plan" is: 
 94.5      (1) an individual retirement account under section 408(a) 
 94.6   of the Internal Revenue Code; 
 94.7      (2) an individual retirement annuity plan under section 
 94.8   408(b) of the Internal Revenue Code; 
 94.9      (3) an annuity plan under section 403(a) of the Internal 
 94.10  Revenue Code; 
 94.11     (4) a qualified trust plan under section 401(a) of the 
 94.12  Internal Revenue Code that accepts the distributee's eligible 
 94.13  rollover distribution; 
 94.14     (5) an annuity contract under section 403(b) of the 
 94.15  Internal Revenue Code; or 
 94.16     (6) an eligible deferred compensation plan under section 
 94.17  457(b) of the Internal Revenue Code, which is maintained by a 
 94.18  state or local government and which agrees to separately account 
 94.19  for the amounts transferred into the plan. 
 94.20     (b) For distributions of after-tax contributions which are 
 94.21  not includable in gross income, the after-tax portion may be 
 94.22  transferred only to an individual retirement account or annuity 
 94.23  described in section 408(a) or (b) of the Internal Revenue Code, 
 94.24  or to a qualified defined contribution plan described in either 
 94.25  section 401(a), or section 403(a), of the Internal Revenue Code, 
 94.26  that agrees to separately account for the amounts transferred, 
 94.27  including separately accounting for the portion of the 
 94.28  distribution which is includable in gross income and the portion 
 94.29  of the distribution which is not includable. 
 94.30     Subd. 7.  [DISTRIBUTEE.] A "distributee" is: 
 94.31     (1) an employee or a former employee; 
 94.32     (2) the surviving spouse of an employee or former employee; 
 94.33  or 
 94.34     (3) the former spouse of the employee or former employee 
 94.35  who is the alternate payee under a qualified domestic relations 
 94.36  order as defined in section 414(p) of the Internal Revenue Code, 
 95.1   or who is a recipient of a court-ordered equitable distribution 
 95.2   of marital property, as provided in section 518.58. 
 95.3      Subd. 8.  [FORFEITURES.] For defined benefit plans, unless 
 95.4   otherwise permitted by section 401(a)(8) of the Internal Revenue 
 95.5   Code, forfeitures may not be applied to increase the benefits 
 95.6   that any employee would otherwise receive under the plan. 
 95.7      Subd. 9.  [MILITARY SERVICE.] Contributions, benefits, and 
 95.8   service credit with respect to qualified military service must 
 95.9   be provided according to section 414(u) of the Internal Revenue 
 95.10  Code. 
 95.11     Sec. 3.  [TRANSITIONAL PROVISION.] 
 95.12     (a) An eligible rollover distribution under Minnesota 
 95.13  Statutes, section 356.635, does not include the portion of a 
 95.14  distribution that is not included in gross income. 
 95.15     (b) For eligible rollover distributions to a surviving 
 95.16  spouse, an eligible retirement plan under Minnesota Statutes, 
 95.17  section 356.635, is limited to an individual retirement account 
 95.18  under section 408(a) of the Internal Revenue Code or an 
 95.19  individual retirement annuity plan under section 408(b) of the 
 95.20  Internal Revenue Code. 
 95.21     Sec. 4.  [EFFECTIVE DATE.] 
 95.22     (a) Section 1, paragraph (a), is effective on July 1, 2004. 
 95.23  Section 1, paragraph (b), is effective retroactively as 
 95.24  follows:  clauses (1) and (2) are effective for limitation years 
 95.25  beginning on and after January 1, 1998; and clause (3) is 
 95.26  effective for limitation years beginning on and after January 1, 
 95.27  2001. 
 95.28     (b) Sections 2 and 3 are effective on the day following 
 95.29  final enactment. 
 95.30     (c) Section 2 is effective retroactively as follows:  
 95.31  subdivision 1 is effective on and after January 1, 1989; 
 95.32  subdivision 2 is effective for distributions on and after 
 95.33  December 31, 1989; subdivision 3 is effective for distributions 
 95.34  on and after January 1, 1993; subdivision 6, paragraph (a), 
 95.35  clauses (5) and (6), are effective for distributions made after 
 95.36  December 31, 2001; subdivision 6, paragraph (b), is effective 
 96.1   for distributions after December 31, 2001; and subdivision 9 is 
 96.2   effective December 12, 1994. 
 96.3      (d) Section 3 is effective only for distributions made 
 96.4   before January 1, 2002. 
 96.5                              ARTICLE 11
 96.6                         HEALTH CARE SAVINGS 
 96.7                          PLAN MODIFICATIONS 
 96.8      Section 1.  Minnesota Statutes 2002, section 352.98, is 
 96.9   amended to read: 
 96.10     352.98 [POSTRETIREMENT HEALTH CARE SAVINGS PLAN.] 
 96.11     Subdivision 1.  [PLAN CREATED.] The Minnesota State 
 96.12  Retirement System shall establish a plan or plans, known as 
 96.13  postretirement health care savings plans, through which public 
 96.14  employers and employees may save to cover postretirement health 
 96.15  care costs.  The Minnesota State Retirement System shall make 
 96.16  available one or more trusts, including a governmental trust or 
 96.17  governmental trusts, authorized under the Internal Revenue Code 
 96.18  to be eligible for tax-preferred or tax-free treatment through 
 96.19  which employers and employees can save to cover postretirement 
 96.20  health care costs.  
 96.21     Subd. 2.  [CONTRACTING AUTHORIZED.] The Minnesota State 
 96.22  Retirement System is authorized to administer the plan and to 
 96.23  contract with public and private entities to provide investment 
 96.24  services, record keeping, benefit payments, and other functions 
 96.25  necessary for the administration of the plan.  If allowed by the 
 96.26  Minnesota State Board of Investment, the Minnesota State Board 
 96.27  of Investment supplemental investment funds may be offered as 
 96.28  investment options under the postretirement health care savings 
 96.29  plan or plans.  
 96.30     Subd. 3.  [CONTRIBUTIONS.] (a) Contributions to the plan 
 96.31  shall must be determined through a personnel policy or in a 
 96.32  collective bargaining agreement of a public employer with the 
 96.33  exclusive representative of the covered employees in an 
 96.34  appropriate unit.  The Minnesota State Retirement System may 
 96.35  offer different types of trusts permitted under the Internal 
 96.36  Revenue Code to best meet the needs of different employee units. 
 97.1      (b) Contributions to the plan by or on behalf of the 
 97.2   employee shall must be held in trust for reimbursement of 
 97.3   employee and dependent health-related expenses following 
 97.4   retirement from public employment or during active employment.  
 97.5   The Minnesota State Retirement System shall maintain a separate 
 97.6   account of the contributions made by or on behalf of each 
 97.7   participant and the earnings thereon.  The Minnesota State 
 97.8   Retirement System shall make available a limited range of 
 97.9   investment options, and each employee may direct the investment 
 97.10  of the accumulations in the employee's account among the 
 97.11  investment options made available by the Minnesota State 
 97.12  Retirement System.  At the request of a participating employer 
 97.13  and employee group, the Minnesota State Retirement System may 
 97.14  determine how the assets of the affected employer and employee 
 97.15  group should be invested.  
 97.16     (c) This section does not obligate a public employer to 
 97.17  meet and negotiate in good faith with the exclusive bargaining 
 97.18  representative of any public employee group regarding an 
 97.19  employer contribution to a postretirement or active employee 
 97.20  health care savings plan authorized by this section and section 
 97.21  356.24, subdivision 1, clause (7).  It is not the intent of the 
 97.22  legislature to authorize the state to incur new funding 
 97.23  obligations for the costs of retiree health care or the costs of 
 97.24  administering retiree health care plans or accounts.  
 97.25     Subd. 4.  [REIMBURSEMENT FOR HEALTH-RELATED EXPENSES.] 
 97.26  Following termination of public service, The Minnesota State 
 97.27  Retirement System shall reimburse employees at least quarterly 
 97.28  for submitted health-related expenses, as required by federal 
 97.29  and state law, until the employee exhausts the accumulation in 
 97.30  the employee's account.  If an employee dies prior to exhausting 
 97.31  the employee's account balance, the employee's spouse or 
 97.32  dependents shall be are eligible to be reimbursed for health 
 97.33  care expenses from the account until the account balance is 
 97.34  exhausted.  If an account balance remains after the death of a 
 97.35  participant and all of the participant's legal dependents, the 
 97.36  remainder of the account shall must be paid to the employee's 
 98.1   beneficiaries or, if none, to the employee's estate.  
 98.2      Subd. 5.  [FEES.] The Minnesota state retirement plan is 
 98.3   authorized to charge uniform fees to participants to cover the 
 98.4   ongoing cost of operating the plan.  Any fees not needed shall 
 98.5   must revert to participant accounts or be used to reduce plan 
 98.6   fees the following year.  The Minnesota State Retirement System 
 98.7   is authorized to charge participating employers a fee, not to 
 98.8   exceed one-sixth of the Federal Insurance Contribution Act 
 98.9   savings realized by the employer as a result of participating in 
 98.10  the plan, until the initial costs of establishing the plan or 
 98.11  plans authorized by this section are recovered, or $75,000, 
 98.12  whichever is less.  
 98.13     Subd. 6.  [ADVISORY COMMITTEE.] (a) The Minnesota State 
 98.14  Retirement System shall establish a participant advisory 
 98.15  committee for the health care savings plan, made up of one 
 98.16  representative appointed by each employee unit participating in 
 98.17  the plan.  Each participating unit shall be responsible for the 
 98.18  expenses of its own representative.  
 98.19     (b) The advisory committee shall meet at least twice per 
 98.20  year and shall be consulted on plan offerings and vendor 
 98.21  selection.  By October 1 of each year, the Minnesota State 
 98.22  Retirement System shall give the advisory committee a statement 
 98.23  of fees collected and the use of the fees.  
 98.24     Subd. 7.  [CONTRACTING WITH PRIVATE ENTITIES.] Nothing in 
 98.25  this section shall prohibit prohibits employers from contracting 
 98.26  with private entities to provide for postretirement health care 
 98.27  reimbursement plans. 
 98.28     Sec. 2.  [EFFECTIVE DATE.] 
 98.29     Section 1 is effective on the day following final enactment.
 98.30                             ARTICLE 12
 98.31                   RETIREMENT COVERAGE FOLLOWING
 98.32                          A PRIVATIZATION
 98.33     Section 1.  Minnesota Statutes 2003 Supplement, section 
 98.34  353F.02, subdivision 4, is amended to read: 
 98.35     Subd. 4.  [MEDICAL FACILITY.] "Medical facility" means: 
 98.36     (1) the Fair Oaks Lodge, Wadena; 
 99.1      (2) the Glencoe Area Health Center; 
 99.2      (2) (3) the Kanabec Hospital; 
 99.3      (4) the Luverne Public Hospital; 
 99.4      (5) the RenVilla Nursing Home; 
 99.5      (3) (6) the St. Peter Community Healthcare Center; and 
 99.6      (7) the Waconia-Ridgeview Medical Center; and 
 99.7      (4) the Kanabec Hospital. 
 99.8      Sec. 2.  [PERA-GENERAL RETENTION OF PUBLIC EMPLOYEE STATUS 
 99.9   FOR ANOKA ACHIEVE PROGRAM EMPLOYEES.] 
 99.10     Subdivision 1.  [APPLICATION.] This section applies to a 
 99.11  person who was: 
 99.12     (1) employed by Anoka County in connection with the Achieve 
 99.13  Program for adults with developmental disabilities on the day 
 99.14  before operation of the program is transferred to Achieve 
 99.15  Services, Inc; and 
 99.16     (2) a member of the Public Employees Retirement Association 
 99.17  on December 31, 2003. 
 99.18     Subd. 2. [CONTINUATION OF COVERAGE.] For purposes of 
 99.19  participation in the coordinated plan of the Public Employees 
 99.20  Retirement Association, a person to whom this section applies is 
 99.21  a "public employee" under chapter 353, while employed by Achieve 
 99.22  Services, Inc., which is a governmental subdivision under 
 99.23  section 353.01, subdivision 6(a) for the purposes of reporting 
 99.24  contributions for those persons to whom this section applies 
 99.25  only. 
 99.26     Sec. 3.  [PERA-GENERAL; RETENTION OF PUBLIC EMPLOYEE 
 99.27  COVERAGE FOR GOVERNMENT TRAINING SERVICES EMPLOYEES.] 
 99.28     Subdivision 1.  [APPLICATION.] Notwithstanding any 
 99.29  provision of Minnesota Statutes, chapter 353, this section 
 99.30  applies to a person who: 
 99.31     (1) was employed by the state and local government joint 
 99.32  powers organization, the Government Training Service, on the day 
 99.33  before the operation was transferred to a nonprofit 
 99.34  organization, Government Training Services; 
 99.35     (2) was a member of the general employees retirement plan 
 99.36  of the Public Employees Retirement Association; and 
100.1      (3) is employed by Government Training Services. 
100.2      Subd. 2.  [COVERAGE CONTINUATION.] (a) A person described 
100.3   in subdivision 1 is a public employee for purposes of Minnesota 
100.4   Statutes, section 353.01, subdivision 2, and is eligible to 
100.5   continue participation in the coordinated program of the general 
100.6   employees retirement plan of the Public Employees Retirement 
100.7   Association. 
100.8      (b) While employing a person described in subdivision 1, 
100.9   Government Training Services is a governmental subdivision for 
100.10  purposes of Minnesota Statutes, section 353.01, subdivision 6, 
100.11  paragraph (a).  
100.12     Sec. 4.  [EFFECTIVE DATE.] 
100.13     (a) Section 1, relating to the Fair Oaks Lodge, Wadena, is 
100.14  effective upon the latter of: 
100.15     (1) the day after the governing body of Todd County and its 
100.16  chief clerical officer timely complete their compliance with 
100.17  Minnesota Statutes, section 645.021, subdivisions 2 and 3;and 
100.18     (2) the day after the governing body of Wadena County and 
100.19  its chief clerical officer timely complete their compliance with 
100.20  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
100.21     (b) Section 1, relating to the RenVilla Nursing Home, is 
100.22  effective upon the latter of: 
100.23     (1) the day after the governing body of the city of 
100.24  Renville and its chief clerical officer timely complete their 
100.25  compliance with Minnesota Statutes, section 645.021, 
100.26  subdivisions 2 and 3; and 
100.27     (2) the first day of the month next following certification 
100.28  to the governing body of the city of Renville by the executive 
100.29  director of the Public Employees Retirement Association that the 
100.30  actuarial accrued liability of the special benefit coverage 
100.31  proposed for extension to the privatized RenVilla Nursing Home 
100.32  employees under section 1 does not exceed the actuarial gain 
100.33  otherwise to be accrued by the Public Employees Retirement 
100.34  Association, as calculated by the consulting actuary retained by 
100.35  the Legislative Commission on Pensions and Retirement. 
100.36     (c) The cost of the actuarial calculations must be borne by 
101.1   the city of Renville or the purchaser of the RenVilla Nursing 
101.2   Home. 
101.3      (d) Section 1, relating to the St. Peter Community 
101.4   Healthcare Center, is effective upon the latter of: 
101.5      (1) the day after the governing body of the city of St. 
101.6   Peter and its chief clerical officer timely complete their 
101.7   compliance with Minnesota Statutes, section 645.021, 
101.8   subdivisions 2 and 3; and 
101.9      (2) the first day of the month next following certification 
101.10  to the governing body of the city of St. Peter by the executive 
101.11  director of the Public Employees Retirement Association that the 
101.12  actuarial accrued liability of the special benefit coverage 
101.13  proposed for extension to the privatized St. Peter Community 
101.14  Healthcare Center employees under section 1 does not exceed the 
101.15  actuarial gain otherwise to be accrued by the Public Employees 
101.16  Retirement Association, as calculated by the consulting actuary 
101.17  retained by the Legislative Commission on Pensions and 
101.18  Retirement. 
101.19     (e) The cost of the actuarial calculations must be borne by 
101.20  the city of St. Peter or the purchaser of the St. Peter 
101.21  Community Healthcare Center. 
101.22     (f) If the required actions under paragraphs (b) and (c) 
101.23  occur, section 1 applies retroactively to the RenVilla Nursing 
101.24  Home as of the date of privatization. 
101.25     (g) If the required actions under paragraph (a) occur, 
101.26  section 1 applies retroactively to Fair Oaks Lodge, Wadena, as 
101.27  of January 1, 2004. 
101.28     (h) Sections 2 and 3 are effective on the day following 
101.29  final enactment. 
101.30                             ARTICLE 13
101.31            MINNEAPOLIS FIREFIGHTERS RELIEF ASSOCIATION
101.32     Section 1.  Minnesota Statutes 2003 Supplement, section 
101.33  423C.03, subdivision 3, is amended to read: 
101.34     Subd. 3.  [COMPENSATION OF OFFICERS AND BOARD MEMBERS.] (a) 
101.35  Notwithstanding any other law to the contrary, the association 
101.36  may provide for payment of the following salaries to its 
102.1   officers and board members: as specified in this subdivision. 
102.2      (1) (b) If the executive secretary is not an active member, 
102.3   the executive secretary may receive a salary to be set by the 
102.4   board, subject to the limitations stated in paragraph (d).  If 
102.5   the executive secretary is an active member, the executive 
102.6   secretary may receive a salary not exceeding 50 percent of the 
102.7   maximum salary of a first grade firefighter;. 
102.8      (2) (c) The president may receive a salary not exceeding 
102.9   ten percent of the maximum salary of a first grade firefighter;, 
102.10  and 
102.11     (3) all other elected members of the board, other than the 
102.12  executive secretary, may receive a salary not exceeding 2.5 
102.13  percent of the maximum salary of a first grade firefighter. 
102.14     (d) If the executive secretary is not an active member, the 
102.15  executive secretary's salary may not exceed the highest salary 
102.16  currently received by the executive director of the Minnesota 
102.17  State Retirement System, the Public Employees Retirement 
102.18  Association, or the Teachers Retirement Association. 
102.19     Sec. 2.  [EFFECTIVE DATE.] 
102.20     Section 1 is effective on the day on which the Minneapolis 
102.21  City Council and the chief clerical officer of the city of 
102.22  Minneapolis complete in a timely manner the requirements of 
102.23  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
102.24                             ARTICLE 14
102.25                    VOLUNTEER FIREFIGHTER RELIEF
102.26                        ASSOCIATION CHANGES
102.27     Section 1.  Minnesota Statutes 2002, section 424A.02, 
102.28  subdivision 2, is amended to read: 
102.29     Subd. 2.  [NONFORFEITABLE PORTION OF SERVICE PENSION.] If 
102.30  the articles of incorporation or bylaws of a relief association 
102.31  so provide, a relief association may pay a reduced service 
102.32  pension to a retiring member who has completed fewer than 20 
102.33  years of service.  The reduced service pension may be paid when 
102.34  the retiring member meets the minimum age and service 
102.35  requirements of subdivision 1.  
102.36     The amount of the reduced service pension may not exceed 
103.1   the amount calculated by multiplying the service pension 
103.2   appropriate for the completed years of service as specified in 
103.3   the bylaws times the applicable nonforfeitable percentage of 
103.4   pension.  
103.5      For a volunteer firefighter relief association that pays a 
103.6   lump sum service pension, a monthly benefit service pension, or 
103.7   a lump sum service pension or a monthly benefit service pension 
103.8   as alternative benefit forms, the nonforfeitable percentage of 
103.9   pension amounts are as follows: 
103.10    Completed Years of Service   Nonforfeitable Percentage
103.11                                     of Pension Amount
103.12               5                          40 percent 
103.13               6                          44 percent 
103.14               7                          48 percent 
103.15               8                          52 percent 
103.16               9                          56 percent 
103.17              10                          60 percent 
103.18              11                          64 percent 
103.19              12                          68 percent 
103.20              13                          72 percent 
103.21              14                          76 percent 
103.22              15                          80 percent 
103.23              16                          84 percent 
103.24              17                          88 percent 
103.25              18                          92 percent 
103.26              19                          96 percent 
103.27              20 and thereafter          100 percent 
103.28     For a volunteer firefighter relief association that pays a 
103.29  defined contribution service pension, the nonforfeitable 
103.30  percentage of pension amounts are as follows:  
103.31    Completed Years of Service   Nonforfeitable Percentage
103.32                                     of Pension Amount
103.33               5                          40 percent 
103.34               6                          52 percent 
103.35               7                          64 percent 
103.36               8                          76 percent 
104.1                9                          88 percent 
104.2               10 and thereafter          100 percent 
104.3      Sec. 2.  Minnesota Statutes 2002, section 424A.02, 
104.4   subdivision 7, is amended to read: 
104.5      Subd. 7.  [DEFERRED SERVICE PENSIONS.] (a) A member of a 
104.6   relief association to which this section applies is entitled to 
104.7   a deferred service pension if the member: 
104.8      (1) has completed the lesser of the minimum period of 
104.9   active service with the fire department specified in the bylaws 
104.10  or 20 years of active service with the fire department; 
104.11     (2) has completed at least five years of active membership 
104.12  in the relief association; and 
104.13     (3) separates from active service and membership before 
104.14  reaching age 50 or the minimum age for retirement and 
104.15  commencement of a service pension specified in the bylaws 
104.16  governing the relief association if that age is greater than age 
104.17  50.  
104.18     (b) The deferred service pension starts when the former 
104.19  member reaches age 50 or the minimum age specified in the bylaws 
104.20  governing the relief association if that age is greater than age 
104.21  50 and when the former member makes a valid written application. 
104.22     (c) A relief association that provides a lump sum service 
104.23  pension may, when its governing bylaws so provide, pay interest 
104.24  on the deferred lump sum service pension during the period of 
104.25  deferral.  If provided for in the bylaws, interest must be paid 
104.26  in one of the following manners: 
104.27     (1) at the investment performance rate actually earned on 
104.28  that portion of the assets if the deferred benefit amount is 
104.29  invested by the relief association in a separate account 
104.30  established and maintained by the relief association or if the 
104.31  deferred benefit amount is invested in a separate investment 
104.32  vehicle held by the relief association or, if not,; 
104.33     (2) at the interest rate of five percent, compounded 
104.34  annually; or 
104.35     (3) at a rate equal to the actual time weighted total rate 
104.36  of return investment performance of the special fund as reported 
105.1   by the office of the state auditor under section 356.219, up to 
105.2   five percent, compounded annually, and applied consistently for 
105.3   all deferred service pensioners. 
105.4      (d) A relief association may not use the method provided 
105.5   for in paragraph (c), clause (3), until it has modified its 
105.6   bylaws to be consistent with that clause. 
105.7      (e) For a deferred service pension that is transferred to a 
105.8   separate account established and maintained by the relief 
105.9   association or separate investment vehicle held by the relief 
105.10  association, the deferred member bears the full investment risk 
105.11  subsequent to transfer and in calculating the accrued liability 
105.12  of the volunteer firefighters relief association that pays a 
105.13  lump sum service pension, the accrued liability for deferred 
105.14  service pensions is equal to the separate relief association 
105.15  account balance or the fair market value of the separate 
105.16  investment vehicle held by the relief association. 
105.17     (e) (f) The deferred service pension is governed by and 
105.18  must be calculated under the general statute, special law, 
105.19  relief association articles of incorporation, and relief 
105.20  association bylaw provisions applicable on the date on which the 
105.21  member separated from active service with the fire department 
105.22  and active membership in the relief association. 
105.23     Sec. 3.  [MARINE ON ST. CROIX VOLUNTEER FIREFIGHTERS RELIEF 
105.24  ASSOCIATION; EARLY VESTING.] 
105.25     (a) Notwithstanding Minnesota Statutes, section 424A.02, 
105.26  subdivision 2, to the contrary, the Marine on St. Croix 
105.27  Volunteer Firefighters Relief Association may utilize an early 
105.28  vesting schedule as provided in paragraphs (b) and (c). 
105.29     (b) If the articles of incorporation or bylaws of the 
105.30  Marine on St. Croix Volunteer Firefighters Relief Association so 
105.31  provide, the relief association may pay a reduced service 
105.32  pension to a retiring member who has completed fewer than ten 
105.33  years of service.  The reduced service pension may be paid when 
105.34  the retiring member meets the minimum age and service 
105.35  requirements of Minnesota Statutes, section 424A.02, subdivision 
105.36  1.  
106.1      (c) The amount of the reduced service pension may not 
106.2   exceed the amount calculated by multiplying the service pension 
106.3   appropriate for the completed years of service as specified in 
106.4   the articles of incorporation or bylaws by the applicable 
106.5   nonforfeitable percentage of the service pension amount.  The 
106.6   nonforfeitable percentage of service pension amounts are as 
106.7   follows: 
106.8            Completed years           Nonforfeitable percentage 
106.9             of service               of service pension amount 
106.10                5                           40 percent 
106.11                6                           52 percent 
106.12                7                           64 percent 
106.13                8                           76 percent 
106.14                9                           88 percent 
106.15               10 and                      100 percent 
106.16               thereafter 
106.17     Sec. 4.  [BELLINGHAM FIREFIGHTER RELIEF ASSOCIATION; 
106.18  RATIFICATION OF PRIOR ANNUITY INVESTMENTS.] 
106.19     Notwithstanding Minnesota Statutes, section 356A.06, 
106.20  subdivision 7, any annuity purchases by the Bellingham 
106.21  Firefighters Relief Association prior to the effective date of 
106.22  this section are ratified as permissible investments. 
106.23     Sec. 5.  [STUDY OF STATEWIDE LUMP SUM VOLUNTEER FIREFIGHTER 
106.24  RETIREMENT PLAN; CREATION OF TASK FORCE.] 
106.25     Subdivision 1.  [TASK FORCE MEMBERSHIP.] (a) A statewide 
106.26  Volunteer Firefighter Retirement Plan Study Task Force is 
106.27  created. 
106.28     (b) The task force members are: 
106.29     (1) four members appointed by the president of the 
106.30  Minnesota Area Relief Association coalition; 
106.31     (2) four members appointed by the president of the 
106.32  Minnesota State Fire Department Association; 
106.33     (3) four members appointed by the president of the 
106.34  Minnesota State Fire Chiefs Association; 
106.35     (4) four members appointed by the board of directors of the 
106.36  League of Minnesota Cities; 
107.1      (5) two members appointed by the board of directors of the 
107.2   Insurance Federation of Minnesota; 
107.3      (6) two members appointed by the board of directors of the 
107.4   Minnesota Association of Farm Mutual Insurance Companies; and 
107.5      (7) the Minnesota state auditor or the auditor's designee. 
107.6      (c) Appointments must be made on or before July 1, 2004.  
107.7   If the appointment is not made in a timely manner, or if there 
107.8   is a vacancy, the state auditor shall appoint the task force 
107.9   member or the replacement member. 
107.10     (d) The chair of the task force must be selected by the 
107.11  task force.  
107.12     (e) Administrative services for the task force must be 
107.13  provided by the Department of Public Safety. 
107.14     Subd. 2.  [TASK FORCE DUTIES.] The task force shall conduct 
107.15  fact finding regarding the creation of a statewide volunteer 
107.16  firefighter retirement plan. 
107.17     The task force shall recommend the investment vehicle or 
107.18  vehicles to be utilized by the plan, the administration and 
107.19  corporate governance structure of the plan, the incentives 
107.20  needed to formulate the plan, the limitations applicable to the 
107.21  plan, and the state resources needed to be dedicated to the plan.
107.22     Subd. 3.  [REPORT.] The task force shall prepare a report 
107.23  detailing its findings about a potential statewide volunteer 
107.24  firefighter retirement plan.  The report is due January 15, 
107.25  2005, and must be filed with the Legislative Reference Library; 
107.26  the chair of the Legislative Commission on Pensions and 
107.27  Retirement; the chair of the State and Local Governmental 
107.28  Operations Committee of the senate; the chair of the State 
107.29  Government, Economic Development, and Judiciary Budget Division 
107.30  of the Senate Finance Committee; the chair of the Governmental 
107.31  Operations and Veterans Affairs Policy Committee of the house of 
107.32  representatives; and the chair of the State Government Finance 
107.33  Committee of the house of representatives. 
107.34     Sec. 6.  [APPROPRIATION.] 
107.35     $40,000 is appropriated from the general fund in fiscal 
107.36  year 2005 to the commissioner of public safety to hire a 
108.1   consultant to assist the statewide Volunteer Firefighter 
108.2   Retirement Plan Study Task Force. 
108.3      Sec. 7.  [EFFECTIVE DATE.] 
108.4      Sections 1, 2, 5, and 6 are effective on July 1, 2004. 
108.5      (b) Section 3 is effective on the day after the date on 
108.6   which the city council of the city of Marine on St. Croix and 
108.7   the chief clerical officer of the city of Marine on St. Croix 
108.8   comply with Minnesota Statutes, section 645.02, subdivisions 2 
108.9   and 3. 
108.10     (c) Section 4 is effective on the day following final 
108.11  enactment. 
108.12     (d) The deferred service pension interest crediting 
108.13  procedure of Minnesota Statutes, section 424A.02, subdivision 7, 
108.14  paragraph (c), clause (3), expires on December 31, 2008. 
108.15                             ARTICLE 15
108.16                     PERA POLICE AND FIRE PLAN
108.17                       MEMBERSHIP INCLUSIONS
108.18     Section 1.  Minnesota Statutes 2003 Supplement, section 
108.19  353.01, subdivision 6, is amended to read: 
108.20     Subd. 6.  [GOVERNMENTAL SUBDIVISION.] (a) "Governmental 
108.21  subdivision" means a county, city, town, school district within 
108.22  this state, or a department or unit of state government, or any 
108.23  public body whose revenues are derived from taxation, fees, 
108.24  assessments or from other sources. 
108.25     (b) Governmental subdivision also means the Public 
108.26  Employees Retirement Association, the League of Minnesota 
108.27  Cities, the Association of Metropolitan Municipalities, public 
108.28  hospitals owned or operated by, or an integral part of, a 
108.29  governmental subdivision or governmental subdivisions, the 
108.30  Association of Minnesota Counties, the Metropolitan Intercounty 
108.31  Association, the Minnesota Municipal Utilities Association, the 
108.32  Metropolitan Airports Commission, the Minneapolis Employees 
108.33  Retirement Fund for employment initially commenced after June 
108.34  30, 1979, the Range Association of Municipalities and Schools, 
108.35  soil and water conservation districts, economic development 
108.36  authorities created or operating under sections 469.090 to 
109.1   469.108, the Port Authority of the city of St. Paul, the Spring 
109.2   Lake Park Fire Department, incorporated, the Lake Johanna 
109.3   Volunteer Fire Department, incorporated, the Red Wing 
109.4   Environmental Learning Center, and the Dakota County 
109.5   Agricultural Society. 
109.6      (c) Governmental subdivision does not mean any municipal 
109.7   housing and redevelopment authority organized under the 
109.8   provisions of sections 469.001 to 469.047; or any port authority 
109.9   organized under sections 469.048 to 469.089 other than the Port 
109.10  Authority of the city of St. Paul; or any hospital district 
109.11  organized or reorganized prior to July 1, 1975, under sections 
109.12  447.31 to 447.37 or the successor of the district, nor the 
109.13  Minneapolis Community Development Agency.  
109.14     Sec. 2.  [EFFECTIVE DATE.] 
109.15     Section 1 is effective on the day following final enactment.
109.16                             ARTICLE 16
109.17                     ONE PERSON AND SMALL GROUP
109.18                          PENSION CHANGES
109.19     Section 1.  [PERA-GENERAL; PURCHASE OF PRIOR SERVICE 
109.20  CREDIT.] 
109.21     (a) An eligible person described in paragraph (b) is 
109.22  entitled to purchase up to 33 months of allowable service credit 
109.23  from the general employees retirement plan of the Public 
109.24  Employees Retirement Association.  The service credit purchase 
109.25  under this section must be made in accordance with Minnesota 
109.26  Statutes, section 356.55 or 356.551, whichever applies. 
109.27     (b) An eligible person is a person who: 
109.28     (1) is currently a member of the Teachers Retirement 
109.29  Association; 
109.30     (2) was employed by Independent School District No. 621, 
109.31  Mounds View, from May 1968 to December 1971, but was not covered 
109.32  by the general employees retirement plan of the Public Employees 
109.33  Retirement Association; 
109.34     (3) was employed by Independent School District No. 31, 
109.35  Bemidji, but was not covered by the general employees retirement 
109.36  plan of the Public Employees Retirement Association; 
110.1      (4) was employed as a special education teacher by 
110.2   Independent School District No. 12, Centennial, for the 
110.3   1974-1975 school year and for the 1977-1978, 1978-1979, and 
110.4   1979-1980 school years; 
110.5      (5) was employed as a special education teacher by 
110.6   Independent School District No. 16, Spring Lake Park, for the 
110.7   1975-1976 school year; 
110.8      (6) was employed as a special education teacher by 
110.9   Independent School District No. 138, North Branch, for the 
110.10  1980-1981, 1981-1982, 1982-1983, 1983-1984, 1984-1985, and 
110.11  1985-1986 school years; and 
110.12     (7) has been employed by Independent School District No. 
110.13  11, Anoka-Hennepin, since the 1986-1987 school year. 
110.14     (c) An eligible person described in paragraph (b) must 
110.15  apply with the executive director of the Public Employees 
110.16  Retirement Association to make the service credit purchase under 
110.17  this section.  The application must be in writing and must 
110.18  include all necessary documentation of the applicability of this 
110.19  section, documentation of the eligible person's eligibility for 
110.20  retirement coverage by the general employees retirement plan of 
110.21  the Public Employees Retirement Association if the employment 
110.22  had been properly reported to the association at the time the 
110.23  employment was rendered, and any other relevant information that 
110.24  the executive director may require. 
110.25     Sec. 2.  [PERA-GENERAL EMPLOYEES RETIREMENT PLAN COVERAGE 
110.26  TERMINATION AUTHORIZATION.] 
110.27     Subdivision 1.  [ELIGIBILITY.] (a) An eligible person 
110.28  specified in paragraph (b) is authorized to apply for a 
110.29  retirement annuity from the public employees police and fire 
110.30  retirement plan, provided that the necessary age and service 
110.31  requirements are met, under Minnesota Statutes, section 353.651, 
110.32  as further specified under subdivision 2. 
110.33     (b) An eligible person is a person who: 
110.34     (1) was born on October 10, 1956; 
110.35     (2) was employed as a police officer by the city of Red 
110.36  Wing; 
111.1      (3) was elected to the Goodhue County Board of 
111.2   Commissioners in November 1998; and 
111.3      (4) elected under the law then applicable to have 
111.4   retirement coverage by the general employees retirement plan of 
111.5   the Public Employees Retirement Association for the county board 
111.6   service.  
111.7      Subd. 2.  [RETIREMENT ANNUITY.] (a) Notwithstanding an 
111.8   irrevocable election to participate in the general employees 
111.9   retirement plan of the Public Employees Retirement Association 
111.10  as an elected official and the person's continuation of elected 
111.11  service, an eligible person under subdivision 1, paragraph (b), 
111.12  is deemed to have terminated retirement plan membership under 
111.13  Minnesota Statutes, section 353.01, subdivision 11b, on the 
111.14  first day of the first pay period next following the date of 
111.15  enactment. 
111.16     (b) Upon the change in retirement coverage status under 
111.17  paragraph (a), the eligible person may apply for a retirement 
111.18  annuity under Minnesota Statutes, section 353.651.  In computing 
111.19  that annuity, the Public Employees Retirement Association must 
111.20  exclude the salary that was attributable to the Goodhue County 
111.21  board service.  The deferred annuity augmentation under 
111.22  Minnesota Statutes, section 353.71, applies to the annuity under 
111.23  this subdivision.  
111.24     Subd. 3.  [TREATMENT OF GOODHUE COUNTY BOARD CONTRIBUTIONS 
111.25  TO PERA.] (a) All member contributions by the eligible person to 
111.26  the coordinated program of the general employee retirement plan 
111.27  of the Public Employees Retirement Association attributable to 
111.28  the Goodhue County board elected service, and all corresponding 
111.29  employer contributions, must be determined. 
111.30     (b) An eligible person described in subdivision 1, 
111.31  paragraph (b), must elect, within 90 days of the change in 
111.32  retirement coverage status under paragraph (a), between 
111.33  receiving a refund under Minnesota Statutes, section 353.34, 
111.34  subdivision 2, of the member contributions determined under 
111.35  paragraph (a) or having coverage by the public employees defined 
111.36  contribution plan under Minnesota Statutes, chapter 353D, as 
112.1   further specified in paragraph (c). 
112.2      (c) If coverage by the public employees defined 
112.3   contribution plan is elected under paragraph (b), contributions 
112.4   to that plan commence as of the first day of the first pay 
112.5   period following the election, and the accumulated member and 
112.6   employer contributions determined under paragraph (a) must be 
112.7   transferred with annual compound interest at the rate of six 
112.8   percent to an account established for the eligible person in its 
112.9   public employees defined contribution plan. 
112.10     (d) If no election is made by an eligible person by the 
112.11  required date in paragraph (b), the individual is assumed to 
112.12  have elected the refund indicated in paragraph (b). 
112.13     (e) Upon an election under paragraph (b), or upon a 
112.14  mandatory refund under paragraph (d), all rights in the Public 
112.15  Employees Retirement Association coordinated plan due to elected 
112.16  Goodhue County board service are forfeited and may not be 
112.17  reestablished.  
112.18     Sec. 3.  [MSRS-UNCLASSIFIED PROGRAM; ELECTION BY SURVIVOR.] 
112.19     (a) Notwithstanding any provision of Minnesota Statutes, 
112.20  chapter 352 or 352D, to the contrary, a person described in 
112.21  paragraph (b) may make the posthumous coverage election 
112.22  specified in paragraph (c) and be eligible for the survivor 
112.23  benefit specified in paragraph (d). 
112.24     (b) An eligible person is the personal representative of 
112.25  the estate of a person who: 
112.26     (1) was born on March 26, 1942; 
112.27     (2) was employed by the house of representatives for 
112.28  several years prior to being laid off; 
112.29     (3) was covered by the unclassified state employees 
112.30  retirement program of the Minnesota State Retirement System as a 
112.31  house employee until electing alternative coverage by the 
112.32  general employee retirement plan at or prior to the termination 
112.33  of house employment; 
112.34     (4) was employed by the senate prior to death, but did not 
112.35  make the election to transfer prior service contributions to the 
112.36  unclassified state employees retirement program under Minnesota 
113.1   Statutes, section 352D.12; and 
113.2      (5) died on February 19, 2004. 
113.3      (c) The posthumous coverage election is the transfer 
113.4   election under Minnesota Statutes, section 352D.12, and the 
113.5   personal representative of the estate of a person described in 
113.6   paragraph (b) may make the election as if the representative was 
113.7   a participant in the unclassified program. 
113.8      (d) If the posthumous coverage election is made under 
113.9   paragraph (c), the estate is entitled to a death benefit under 
113.10  Minnesota Statutes, section 352D.075. 
113.11     (e) The posthumous coverage election under this section 
113.12  expires July 1, 2005. 
113.13     Sec. 4.  [EFFECTIVE DATE.] 
113.14     Sections 1 to 3 are effective on the day following final 
113.15  enactment.  
113.16                             ARTICLE 17
113.17                   PRIOR SERVICE CREDIT PURCHASES
113.18     Section 1.  Minnesota Statutes 2002, section 352.275, 
113.19  subdivision 1, is amended to read: 
113.20     Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
113.21  state employee who has at least three years of allowable service 
113.22  with the Minnesota State Retirement System and who performed 
113.23  service in the United States armed forces before becoming a 
113.24  state employee, or who failed to obtain service credit for a 
113.25  military leave of absence under section 352.27, is entitled to 
113.26  purchase allowable service credit for the initial period of 
113.27  enlistment, induction, or call to active duty without any 
113.28  voluntary extension by making payment under section 356.55 if 
113.29  the employee is not entitled to receive a current or deferred 
113.30  retirement annuity from a United States armed forces pension 
113.31  plan and has not purchased service credit from any other 
113.32  Minnesota defined benefit public employee pension plan for the 
113.33  same period of service. 
113.34     Sec. 2.  Minnesota Statutes 2002, section 352B.01, 
113.35  subdivision 3a, is amended to read: 
113.36     Subd. 3a.  [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 
114.1   (a) A member who has at least three years of allowable service 
114.2   with the State Patrol retirement plan under subdivision 3 and 
114.3   who performed service in the United States armed forces before 
114.4   becoming a member is entitled to purchase allowable service 
114.5   credit for the initial period of enlistment, induction, or call 
114.6   to active duty without any voluntary extension by making payment 
114.7   under section 356.55, if the employee is not entitled to receive 
114.8   a current or deferred retirement annuity from a United States 
114.9   armed forces pension plan and has not purchased service credit 
114.10  from any other Minnesota defined benefit public employee pension 
114.11  plan for the same period of service. 
114.12     (b) A member who desires to purchase service credit under 
114.13  paragraph (a) must apply with the executive director to make the 
114.14  purchase.  The application must include all necessary 
114.15  documentation of the member's qualifications to make the 
114.16  purchase, signed written permission to allow the executive 
114.17  director to request and receive necessary verification of 
114.18  applicable facts and eligibility requirements, and any other 
114.19  relevant information that the executive director may require. 
114.20     (c) Allowable service credit for the purchase period must 
114.21  be granted by the State Patrol retirement plan to the purchasing 
114.22  employee upon receipt of the purchase payment amount.  Payment 
114.23  must be made before the effective date of retirement of the 
114.24  member. 
114.25     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
114.26  subdivision 16a, is amended to read: 
114.27     Subd. 16a.  [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 
114.28  (a) A public employee who has at least three years of allowable 
114.29  service with the Public Employees Retirement Association or the 
114.30  public employees police and fire plan and who performed service 
114.31  in the United States armed forces before becoming a public 
114.32  employee, or who failed to obtain service credit for a military 
114.33  leave of absence under subdivision 16, paragraph (h), is 
114.34  entitled to purchase allowable service credit for the initial 
114.35  period of enlistment, induction, or call to active duty without 
114.36  any voluntary extension by making payment under section 356.55 
115.1   if the public employee is not entitled to receive a current or 
115.2   deferred retirement annuity from a United States armed forces 
115.3   pension plan and has not purchased service credit from any other 
115.4   Minnesota defined benefit public employee pension plan for the 
115.5   same period of service. 
115.6      (b) A public employee who desires to purchase service 
115.7   credit under paragraph (a) must apply with the executive 
115.8   director to make the purchase.  The application must include all 
115.9   necessary documentation of the public employee's qualifications 
115.10  to make the purchase, signed written permission to allow the 
115.11  executive director to request and receive necessary verification 
115.12  of applicable facts and eligibility requirements, and any other 
115.13  relevant information that the executive director may require. 
115.14     (c) Allowable service credit for the purchase period must 
115.15  be granted by the public employees association or the public 
115.16  employees police and fire plan, whichever applies, to the 
115.17  purchasing public employee upon receipt of the purchase payment 
115.18  amount.  Payment must be made before the effective date of 
115.19  retirement of the public employee. 
115.20     Sec. 4.  Minnesota Statutes 2002, section 354.533, 
115.21  subdivision 1, is amended to read: 
115.22     Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
115.23  teacher who has at least three years of allowable service credit 
115.24  with the Teachers Retirement Association and who performed 
115.25  service in the United States armed forces before becoming a 
115.26  teacher as defined in section 354.05, subdivision 2, or who 
115.27  failed to obtain service credit for a military leave of absence 
115.28  under the provisions of section 354.53, is entitled to purchase 
115.29  allowable and formula service credit for the initial period of 
115.30  enlistment, induction, or call to active duty without any 
115.31  voluntary extension by making payment under section 356.55 
115.32  provided the teacher is not entitled to receive a current or 
115.33  deferred retirement annuity from a United States armed forces 
115.34  pension plan and has not purchased service credit from any other 
115.35  Minnesota defined benefit public employee pension plan for the 
115.36  same period of service. 
116.1      Sec. 5.  Minnesota Statutes 2002, section 354A.097, 
116.2   subdivision 1, is amended to read: 
116.3      Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
116.4   teacher who has at least three years of allowable service credit 
116.5   with the teachers retirement fund association and who performed 
116.6   service in the United States armed forces before becoming a 
116.7   teacher as defined in section 354A.011, subdivision 27, or who 
116.8   failed to obtain service credit for a military leave of absence 
116.9   period under section 354A.093, is entitled to purchase allowable 
116.10  service credit for the initial period of enlistment, induction, 
116.11  or call to active duty without any voluntary extension by making 
116.12  payment under section 356.55, provided the teacher is not 
116.13  entitled to receive a current or deferred retirement annuity 
116.14  from a United States armed forces pension plan and has not 
116.15  purchased service credit from another Minnesota defined benefit 
116.16  public employee pension plan for the same period of service. 
116.17     Sec. 6.  Laws 1999, chapter 222, article 16, section 16, as 
116.18  amended by Laws 2002, chapter 392, article 7, section 1, and 
116.19  Laws 2003, First Special Session chapter 12, article 6, section 
116.20  2, is amended to read: 
116.21     Sec. 16.  [REPEALER.] 
116.22     (a) Sections 1 2 to 6 and 8 to 13 are repealed on May 16, 
116.23  2004. 
116.24     (b) Sections 1 and 7 are repealed on May 16, 2006. 
116.25     Sec. 7.  Laws 2000, chapter 461, article 4, section 4, as 
116.26  amended by Laws 2003, First Special Session chapter 12, article 
116.27  6, section 3, is amended to read: 
116.28     Sec. 4.  [EFFECTIVE DATE; SUNSET REPEALER.] 
116.29     (a) Sections 1, 2, and 3 are effective on the day following 
116.30  final enactment. 
116.31     (b) Sections 1, 2, and 3, are repealed on May 16, 2004 2006.
116.32     Sec. 8.  [EFFECTIVE DATE.] 
116.33     Sections 1 to 7 are effective on the day following final 
116.34  enactment. 
116.35                             ARTICLE 18
116.36               MINNEAPOLIS POLICE RELIEF ASSOCIATION 
117.1      Section 1.  Minnesota Statutes 2002, section 69.77, 
117.2   subdivision 4, is amended to read: 
117.3      Subd. 4.  [RELIEF ASSOCIATION FINANCIAL REQUIREMENTS; 
117.4   MINIMUM MUNICIPAL OBLIGATION.] (a) The officers of the relief 
117.5   association shall determine the financial requirements of the 
117.6   relief association and minimum obligation of the municipality 
117.7   for the following calendar year in accordance with the 
117.8   requirements of this subdivision.  The financial requirements of 
117.9   the relief association and the minimum obligation of the 
117.10  municipality must be determined on or before the submission date 
117.11  established by the municipality under subdivision 5. 
117.12     (b) The financial requirements of the relief association 
117.13  for the following calendar year must be based on the most recent 
117.14  actuarial valuation or survey of the special fund of the 
117.15  association if more than one fund is maintained by the 
117.16  association, or of the association, if only one fund is 
117.17  maintained, prepared in accordance with sections 356.215, 
117.18  subdivisions 4 to 15, and 356.216, as required under subdivision 
117.19  10.  If an actuarial estimate is prepared by the actuary of the 
117.20  relief association as part of obtaining a modification of the 
117.21  benefit plan of the relief association and the modification is 
117.22  implemented, the actuarial estimate must be used in calculating 
117.23  the subsequent financial requirements of the relief association. 
117.24     (c) If the relief association has an unfunded actuarial 
117.25  accrued liability as reported in the most recent actuarial 
117.26  valuation or survey, the total of the amounts calculated under 
117.27  clauses (1), (2), and (3), constitute the financial requirements 
117.28  of the relief association for the following year.  If the relief 
117.29  association does not have an unfunded actuarial accrued 
117.30  liability as reported in the most recent actuarial valuation or 
117.31  survey, the amount calculated under clauses (1) and (2) 
117.32  constitute the financial requirements of the relief association 
117.33  for the following year.  The financial requirement elements are: 
117.34     (1) the normal level cost requirement for the following 
117.35  year, expressed as a dollar amount, which must be determined by 
117.36  applying the normal level cost of the relief association as 
118.1   reported in the actuarial valuation or survey and expressed as a 
118.2   percentage of covered payroll to the estimated covered payroll 
118.3   of the active membership of the relief association, including 
118.4   any projected change in the active membership, for the following 
118.5   year; 
118.6      (2) for the Bloomington Fire Department Relief Association, 
118.7   the Fairmont Police Relief Association, and the Virginia Fire 
118.8   Department Relief Association, to the dollar amount of normal 
118.9   cost determined under clause (1) must be added an amount equal 
118.10  to the dollar amount of the administrative expenses of the 
118.11  special fund of the association if more than one fund is 
118.12  maintained by the association, or of the association if only one 
118.13  fund is maintained, for the most recent year, multiplied by the 
118.14  factor of 1.035.  The administrative expenses are those 
118.15  authorized under section 69.80.  No amount of administrative 
118.16  expenses under this clause are to be included in the financial 
118.17  requirements of the Minneapolis Firefighters Relief Association 
118.18  or the Minneapolis Police Relief Association; and 
118.19     (3) to the dollar amount of normal cost and expenses 
118.20  determined under clauses (1) and (2) must be added an amount 
118.21  equal to the level annual dollar amount which is sufficient to 
118.22  amortize the unfunded actuarial accrued liability by December 
118.23  31, 2010, for the Bloomington Fire Department Relief 
118.24  Association, the Fairmont Police Relief Association, the 
118.25  Minneapolis Firefighters Relief Association, and the Virginia 
118.26  Fire Department Relief Association, and by December 31, 2020, 
118.27  for the Minneapolis Police Relief Association, as determined 
118.28  from the actuarial valuation or survey of the fund, using an 
118.29  interest assumption set at the applicable rate specified in 
118.30  section 356.215, subdivision 8.  The amortization date specified 
118.31  in this clause applies to all local police or salaried 
118.32  firefighters' relief associations and that date supersedes any 
118.33  amortization date specified in any applicable special law. 
118.34     (d) The minimum obligation of the municipality is an amount 
118.35  equal to the financial requirements of the relief association 
118.36  reduced by the estimated amount of member contributions from 
119.1   covered salary anticipated for the following calendar year and 
119.2   the estimated amounts anticipated for the following calendar 
119.3   year from the applicable state aid program established under 
119.4   sections 69.011 to 69.051 receivable by the relief association 
119.5   after any allocation made under section 69.031, subdivision 5, 
119.6   paragraph (b), clause (2), or 423A.01, subdivision 2, clause 
119.7   (6), from the local police and salaried firefighters' relief 
119.8   association amortization aid program established under section 
119.9   423A.02, subdivision 1, from the supplementary amortization 
119.10  state-aid program established under section 423A.02, subdivision 
119.11  1a, and from the additional amortization state aid under section 
119.12  423A.02, subdivision 1b. 
119.13     Sec. 2.  Minnesota Statutes 2002, section 356.216, is 
119.14  amended to read: 
119.15     356.216 [CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE 
119.16  AND FIRE FUNDS.] 
119.17     (a) The provisions of section 356.215 that govern the 
119.18  contents of actuarial valuations must apply to any local police 
119.19  or fire pension fund or relief association required to make an 
119.20  actuarial report under this section, except as follows: 
119.21     (1) in calculating normal cost and other requirements, if 
119.22  required to be expressed as a level percentage of covered 
119.23  payroll, the salaries used in computing covered payroll must be 
119.24  the maximum rate of salary on which retirement and survivorship 
119.25  credits and amounts of benefits are determined and from which 
119.26  any member contributions are calculated and deducted; 
119.27     (2) in lieu of the amortization date specified in section 
119.28  356.215, subdivision 11, the appropriate amortization target 
119.29  date specified in section 69.77, subdivision 4, or 69.773, 
119.30  subdivision 4, clause (c), must be used in calculating any 
119.31  required amortization contribution except that the amortization 
119.32  date for the Minneapolis Police Relief Association is December 
119.33  31, 2020; 
119.34     (3) in addition to the tabulation of active members and 
119.35  annuitants provided for in section 356.215, subdivision 13, the 
119.36  member contributions for active members for the calendar year 
120.1   and the prospective annual retirement annuities under the 
120.2   benefit plan for active members must be reported; 
120.3      (4) actuarial valuations required under section 69.773, 
120.4   subdivision 2, must be made at least every four years and 
120.5   actuarial valuations required under section 69.77 shall be made 
120.6   annually; 
120.7      (5) the actuarial balance sheet showing accrued assets 
120.8   valued at market value if the actuarial valuation is required to 
120.9   be prepared at least every four years or valued as current 
120.10  assets under section 356.215, subdivision 1, clause (6), or 
120.11  paragraph (b), whichever applies, if the actuarial valuation is 
120.12  required to be prepared annually, actuarial accrued liabilities, 
120.13  and the unfunded actuarial accrued liability must include the 
120.14  following required reserves: 
120.15           (i) For active members 
120.16        1.  Retirement benefits 
120.17        2.  Disability benefits 
120.18        3.  Refund liability due to death or withdrawal 
120.19        4.  Survivors' benefits 
120.20           (ii) For deferred annuitants' benefits 
120.21           (iii) For former members without vested rights 
120.22           (iv) For annuitants 
120.23        1.  Retirement annuities 
120.24        2.  Disability annuities 
120.25        3.  Surviving spouses' annuities 
120.26        4.  Surviving children's annuities 
120.27     In addition to those required reserves, separate items must 
120.28  be shown for additional benefits, if any, which may not be 
120.29  appropriately included in the reserves listed above; and 
120.30     (6) actuarial valuations are due by the first day of the 
120.31  seventh month after the end of the fiscal year which the 
120.32  actuarial valuation covers. 
120.33     (b) For the Minneapolis Firefighters Relief Association or 
120.34  the Minneapolis Police Relief Association, the following 
120.35  provisions additionally apply: 
120.36     (1) in calculating the actuarial balance sheet, unfunded 
121.1   actuarial accrued liability, and amortization contribution of 
121.2   the relief association, "current assets" means the value of all 
121.3   assets at cost, including realized capital gains and losses, 
121.4   plus or minus, whichever applies, the average value of total 
121.5   unrealized capital gains or losses for the most recent 
121.6   three-year period ending with the end of the plan year 
121.7   immediately preceding the actuarial valuation report 
121.8   transmission date; and 
121.9      (2) in calculating the applicable portions of the actuarial 
121.10  valuation, an annual preretirement interest assumption of six 
121.11  percent, an annual postretirement interest assumption of six 
121.12  percent, and an annual salary increase assumption of four 
121.13  percent must be used. 
121.14     Sec. 3.  Minnesota Statutes 2002, section 423B.01, 
121.15  subdivision 12, is amended to read: 
121.16     Subd. 12.  [EXCESS INVESTMENT INCOME.] "Excess investment 
121.17  income" means the amount, if any, by which the average time 
121.18  weighted total rate of return earned by the fund in the most 
121.19  recent prior five two fiscal years has exceeded the actual 
121.20  average percentage increase in the current monthly salary of a 
121.21  first grade patrol officer in the most recent prior five two 
121.22  fiscal years plus two percent, and must be expressed as a dollar 
121.23  amount.  The amount may not exceed one percent of the total 
121.24  assets of the fund, except when the actuarial value of assets of 
121.25  the fund according to the most recent annual actuarial valuation 
121.26  prepared in accordance with sections 356.215 and 356.216 is 
121.27  greater than 102 percent of its actuarial accrued liabilities, 
121.28  in which case the amount must not exceed 1-1/2 percent of the 
121.29  total assets of the fund, and does not exist unless the yearly 
121.30  average percentage increase of the time weighted total rate of 
121.31  return of the fund for the previous five two years exceeds by 
121.32  two percent the yearly average percentage increase in monthly 
121.33  salary of a first grade patrol officer during the previous five 
121.34  two calendar years. 
121.35     Sec. 4.  Minnesota Statutes 2002, section 423B.09, 
121.36  subdivision 1, is amended to read: 
122.1      Subdivision 1.  [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 
122.2   RECEIVE PENSIONS.] The association shall grant pensions payable 
122.3   from the police pension fund in monthly installments to persons 
122.4   entitled to pensions in the manner and for the following 
122.5   purposes. 
122.6      (a) When the actuarial value of assets of the fund 
122.7   according to the most recent annual actuarial valuation 
122.8   performed in accordance with sections 356.215 and 356.216 is 
122.9   less than 90 percent of the actuarial accrued liabilities, an 
122.10  active member or a deferred pensioner who has performed duty as 
122.11  a member of the police department of the city for five years or 
122.12  more, upon written application after retiring from duty and 
122.13  reaching at least age 50, is entitled to be paid monthly for 
122.14  life a service pension equal to eight units.  For full years of 
122.15  service beyond five years, the service pension increases by 1.6 
122.16  units for each full year, to a maximum of 40 units.  When the 
122.17  actuarial value of assets of the fund according to the most 
122.18  recent annual actuarial valuation prepared in accordance with 
122.19  sections 356.215 and 356.216 is greater than 90 percent of 
122.20  actuarial accrued liabilities, Active members, deferred members, 
122.21  and service pensioners are entitled to a service pension 
122.22  according to the following schedule: 
122.23                 5 years           8.0 units
122.24                 6 years           9.6 units
122.25                 7 years          11.2 units
122.26                 8 years          12.8 units
122.27                 9 years          14.4 units
122.28                10 years          16.0 units
122.29                11 years          17.6 units
122.30                12 years          19.2 units
122.31                13 years          20.8 units
122.32                14 years          22.4 units
122.33                15 years          24.0 units
122.34                16 years          25.6 units
122.35                17 years          27.2 units
122.36                18 years          28.8 units
123.1                 19 years          30.4 units
123.2                 20 years          34.0 35.0 units
123.3                 21 years          35.6 36.6 units
123.4                 22 years          37.2 38.2 units
123.5                 23 years          38.8 39.8 units
123.6                 24 years          40.4 41.4 units
123.7                 25 years          42.0 43.0 units
123.8      Fractional years of service may not be used in computing 
123.9   pensions. 
123.10     (b) An active member who after five years' service but less 
123.11  than 20 years' service with the police department of the city, 
123.12  becomes superannuated so as to be permanently unable to perform 
123.13  the person's assigned duties, is entitled to be paid monthly for 
123.14  life a superannuation pension equal to four units for five years 
123.15  of service and an additional two units for each full year of 
123.16  service over five years and less than 20 years. 
123.17     (c) An active member who is not eligible for a service 
123.18  pension and who, while a member of the police department of the 
123.19  city, becomes diseased or sustains an injury while in the 
123.20  service that permanently unfits the member for the performance 
123.21  of police duties is entitled to be paid monthly for life a 
123.22  pension equal to 34 units while so disabled. 
123.23     Sec. 5.  Minnesota Statutes 2002, section 423B.09, is 
123.24  amended by adding a subdivision to read: 
123.25     Subd. 7.  [ADDITIONAL UNIT.] The additional unit provided 
123.26  to members by subdivision 1 must also be provided to members who 
123.27  selected a joint annuity option under subdivision 6 and must be 
123.28  in an amount that is actuarially equivalent to the service 
123.29  pension and the automatic survivor coverage for that additional 
123.30  unit. 
123.31     Sec. 6.  Minnesota Statutes 2002, section 423B.10, 
123.32  subdivision 1, is amended to read: 
123.33     Subdivision 1.  [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 
123.34  surviving spouse of a deceased service pensioner, disability 
123.35  pensioner, deferred pensioner, superannuation pensioner, or 
123.36  active member, who was the legally married spouse of the 
124.1   decedent, residing with the decedent, and who was married while 
124.2   or before the time the decedent was on the payroll of the police 
124.3   department, and who, if the deceased member was a service or 
124.4   deferred pensioner, was legally married to the member for a 
124.5   period of at least one year before retirement from the police 
124.6   department, is entitled to a surviving spouse benefit.  The 
124.7   surviving spouse benefit is equal to 22 23 units per month if 
124.8   the person is the surviving spouse of a deceased active member 
124.9   or disabilitant.  The surviving spouse benefit is equal to six 
124.10  units per month, plus an additional one unit for each year of 
124.11  service to the credit of the decedent in excess of five years, 
124.12  to a maximum of 22 23 units per month, if the person is the 
124.13  surviving spouse of a deceased service pensioner, deferred 
124.14  pensioner, or superannuation pensioner.  The surviving spouse 
124.15  benefit is payable for the life of the surviving spouse. 
124.16     (b) A surviving child of a deceased service pensioner, 
124.17  disability pensioner, deferred pensioner, superannuation 
124.18  pensioner, or active member, who was living while the decedent 
124.19  was an active member of the police department or was born within 
124.20  nine months after the decedent terminated active service in the 
124.21  police department, is entitled to a surviving child benefit.  
124.22  The surviving child benefit is equal to eight units per month if 
124.23  the person is the surviving child of a deceased active member or 
124.24  disabilitant.  The surviving child benefit is equal to two units 
124.25  per month, plus an additional four-tenths of one unit per month 
124.26  for each year of service to the credit of the decedent in excess 
124.27  of five years, to a maximum of eight units, if the person is the 
124.28  surviving child of a deceased service pensioner, deferred 
124.29  pensioner, or superannuation pensioner.  The surviving child 
124.30  benefit is payable until the person attains age 18, or, if in 
124.31  full-time attendance during the normal school year, in a school 
124.32  approved by the board of directors, until the person receives a 
124.33  bachelor's degree or attains the age of 22 years, whichever 
124.34  occurs first.  In the event of the death of both parents leaving 
124.35  a surviving child or children entitled to a surviving child 
124.36  benefit as determined in this paragraph, the surviving child is, 
125.1   or the surviving children are, entitled to a surviving child 
125.2   benefit in such sums as determined by the board of directors to 
125.3   be necessary for the care and education of such surviving child 
125.4   or children, but not to exceed the family maximum benefit per 
125.5   month, to the children of any one family.  
125.6      (c) The surviving spouse and surviving child benefits are 
125.7   subject to a family maximum benefit.  The family maximum benefit 
125.8   is 41 units per month. 
125.9      (d) A surviving spouse who is otherwise not qualified may 
125.10  receive a benefit if the surviving spouse was married to the 
125.11  decedent for a period of five years and was residing with the 
125.12  decedent at the time of death.  The surviving spouse benefit is 
125.13  the same as that provided in paragraph (a), except that if the 
125.14  surviving spouse is younger than the decedent, the surviving 
125.15  spouse benefit must be actuarially equivalent to a surviving 
125.16  spouse benefit that would have been paid to the member's spouse 
125.17  had the member been married to a person of the same age or a 
125.18  greater age than the member's age before retirement. 
125.19     Sec. 7.  Minnesota Statutes 2002, section 423B.15, 
125.20  subdivision 3, is amended to read: 
125.21     Subd. 3.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
125.22  amount determined under subdivision 2 must be applied in 
125.23  accordance with this subdivision.  When the actuarial value of 
125.24  assets of the fund according to the most recent annual actuarial 
125.25  valuation prepared in accordance with sections 356.215 and 
125.26  356.216 is less than 102 percent of its total actuarial 
125.27  liabilities, the relief association shall apply the first 
125.28  one-half of excess investment income to the payment of an annual 
125.29  postretirement payment as specified in this subdivision and the 
125.30  second one-half of excess investment income up to one-half of 
125.31  one percent of the assets of the fund must be applied to reduce 
125.32  the state amortization state aid or supplementary amortization 
125.33  state aid payments otherwise due to the relief association under 
125.34  section 423A.02 for the current calendar year.  When the 
125.35  actuarial value of assets of the fund according to the most 
125.36  recent annual actuarial valuation prepared in accordance with 
126.1   sections 356.215 and 356.216 is less than 102 percent funded and 
126.2   other conditions are met, the relief association shall pay an 
126.3   annual postretirement payment to all eligible members in an 
126.4   amount not to exceed one-half of one percent of the assets of 
126.5   the fund.  When the actuarial value of assets of the fund 
126.6   according to the most recent annual actuarial valuation prepared 
126.7   in accordance with sections 356.215 and 356.216 is greater than 
126.8   102 percent of its actuarial accrued liabilities, the relief 
126.9   association shall pay an annual postretirement payment to all 
126.10  eligible members in an amount not to exceed 1-1/2 percent of the 
126.11  assets of the fund.  Payment of the annual postretirement 
126.12  payment must be in a lump sum amount on June 1 following the 
126.13  determination date in any year.  Payment of the annual 
126.14  postretirement payment may be made only if the average time 
126.15  weighted total rate of return for the most recent prior five two 
126.16  years exceeds by two percent the actual average percentage 
126.17  increase in the current monthly salary of a top grade patrol 
126.18  officer in the most recent prior five two fiscal years.  The 
126.19  total amount of all payments to members may not exceed the 
126.20  amount determined under this subdivision.  Payment to each 
126.21  eligible member must be calculated by dividing the total number 
126.22  of pension units to which eligible members are entitled into the 
126.23  excess investment income available for distribution to members, 
126.24  and then multiplying that result by the number of units to which 
126.25  each eligible member is entitled to determine each eligible 
126.26  member's annual postretirement payment.  When the actuarial 
126.27  value of assets of the fund according to the most recent annual 
126.28  actuarial valuation prepared in accordance with sections 356.215 
126.29  and 356.216 is less than 102 percent of its actuarial accrued 
126.30  liabilities, payment to each eligible member may not exceed an 
126.31  amount equal to the total monthly benefit that the eligible 
126.32  member was entitled to in the prior year under the terms of the 
126.33  benefit plan of the relief association or each eligible member's 
126.34  proportionate share of the excess investment income, whichever 
126.35  is less.  When the actuarial value of assets of the fund 
126.36  according to the most recent annual actuarial valuation prepared 
127.1   in accordance with sections 356.215 and 356.216 is greater than 
127.2   102 percent of its actuarial accrued liabilities, payment to 
127.3   each eligible member must not exceed the member's proportionate 
127.4   share of 1-1/2 percent of the assets of the fund. 
127.5      A person who received a pension or benefit for the entire 
127.6   12 months before the determination date is eligible for a full 
127.7   annual postretirement payment.  A person who received a pension 
127.8   or benefit for less than 12 months before the determination date 
127.9   is eligible for a prorated annual postretirement payment. 
127.10     Sec. 8.  [423B.22] [GUARANTEED PENSION PROVISION.] 
127.11     Once a pension benefit is properly paid in accordance with 
127.12  this law to any member, the dollar amount of that pension 
127.13  benefit shall not be reduced. 
127.14     Sec. 9.  [LOCAL APPROVAL; NONSEVERABILITY.] 
127.15     Sections 1 to 8 are not severable and are effective on the 
127.16  day after the date of the approval by the city council of the 
127.17  city of Minneapolis and the timely completion by the chief 
127.18  clerical officer of the city of Minneapolis of compliance with 
127.19  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
127.20                             ARTICLE 19
127.21          MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION
127.22     Section 1.  Minnesota Statutes 2002, section 354A.08, is 
127.23  amended to read: 
127.24     354A.08 [AUTHORIZED INVESTMENTS.] 
127.25     (a) A Teachers Retirement Fund Association may receive, 
127.26  hold, and dispose of real estate or personal property acquired 
127.27  by it, whether the acquisition was by purchase, or any other 
127.28  lawful means, as provided in this chapter or in the 
127.29  association's articles of incorporation. In addition to other 
127.30  authorized real estate investments, an association may also 
127.31  invest funds in Minnesota situs nonfarm real estate ownership 
127.32  interests or loans secured by mortgages or deeds of trust. 
127.33     (b) All or a portion of the assets of a first class city 
127.34  teachers retirement fund association may be invested in the 
127.35  Minnesota supplemental investment fund under section 11A.17. 
127.36     Sec. 2.  Minnesota Statutes 2002, section 354A.12, is 
128.1   amended by adding a subdivision to read: 
128.2      Subd. 2c.  [REIMBURSEMENT OF CERTAIN INVESTMENT 
128.3   UNDERPERFORMANCE.] (a) If the report of the state auditor under 
128.4   section 356.219 indicates that the Minneapolis Teachers 
128.5   Retirement Fund Association has underperformed the State Board 
128.6   of Investment basic retirement plans in its investment of the 
128.7   Minneapolis teachers retirement fund assets, on the first of the 
128.8   month next following the release of that report, the board of 
128.9   trustees of the Minneapolis Teachers Retirement Fund Association 
128.10  shall redeem the amount of the underperformance by imposing a 
128.11  charge on active members, retired members, and other benefit 
128.12  recipients. 
128.13     (b) The additional charge on active members must continue 
128.14  for one year and must be a percentage of covered pay.  The 
128.15  charge must be set by the board to represent the active member 
128.16  asset portion of the underperformance as determined by the board.
128.17     (c) The additional charge on retired members must continue 
128.18  for one year and must be a deduction from the annuity or 
128.19  benefit.  The charge must be set by the board to represent the 
128.20  retired member asset portion of the underperformance as 
128.21  determined by the board. 
128.22     (d) The total additional charges under paragraphs (b) and 
128.23  (c) must equal the total amount of the investment 
128.24  underperformance.  If an active member retires during the course 
128.25  of the year during which the additional charge is in force, the 
128.26  member shall pay or have deducted the appropriate charge for the 
128.27  appropriate portion of the year. 
128.28     (e) If the total amount of the underperformance is not 
128.29  recovered under paragraph (d), the balance of the 
128.30  underperformance must be added to any underperformance amount in 
128.31  the next year of underperformance, plus annual compound interest 
128.32  at the rate of 8.5 percent from the date of the applicable 
128.33  report of the state auditor to July 1 of the year in which the 
128.34  balance is to be collected. 
128.35     Sec. 3.  Minnesota Statutes 2002, section 354A.12, 
128.36  subdivision 3a, is amended to read: 
129.1      Subd. 3a.  [SPECIAL DIRECT STATE AID TO FIRST CLASS CITY 
129.2   TEACHERS RETIREMENT FUND ASSOCIATIONS.] (a) In fiscal year 1998, 
129.3   the state shall pay $4,827,000 to the St. Paul Teachers 
129.4   Retirement Fund Association, $17,954,000 to the Minneapolis 
129.5   Teachers Retirement Fund Association, and $486,000 to the Duluth 
129.6   Teachers Retirement Fund Association.  In each subsequent fiscal 
129.7   year, these payments the state shall pay to the first class city 
129.8   teachers retirement fund associations must be $2,827,000 
129.9   $2,967,000 for the St. Paul, $12,954,000 Teachers Retirement 
129.10  Fund Association and $13,300,000 for the Minneapolis, and 
129.11  $486,000 for Duluth Teachers Retirement Fund Association. 
129.12     (b) The direct state aids under this subdivision are 
129.13  payable October 1 annually.  The commissioner of finance shall 
129.14  pay the direct state aid.  The amount required under this 
129.15  subdivision is appropriated annually from the general fund to 
129.16  the commissioner of finance. 
129.17     (c) The direct state aid for the Minneapolis Teachers 
129.18  Retirement Fund Association is governed by section 354A.121. 
129.19     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
129.20  354A.12, subdivision 3b, is amended to read: 
129.21     Subd. 3b.  [SPECIAL DIRECT STATE MATCHING AID TO THE 
129.22  MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special 
129.23  School District No. 1 may make an additional employer 
129.24  contribution to the Minneapolis Teachers Retirement Fund 
129.25  Association.  The city of Minneapolis may make a contribution to 
129.26  the Minneapolis Teachers Retirement Fund Association.  This 
129.27  contribution may be made by a levy of the board of estimate and 
129.28  taxation of the city of Minneapolis and the levy, if made, is 
129.29  classified as that of a special taxing district for purposes of 
129.30  sections 275.065 and 276.04, and for all other property tax 
129.31  purposes. 
129.32     (b) For every $1,000 contributed in equal proportion by 
129.33  Special School District No. 1 and by the city of Minneapolis to 
129.34  the Minneapolis teachers retirement fund association under 
129.35  paragraph (a), the state shall pay to the Minneapolis Teachers 
129.36  Retirement Fund Association $1,000, but not to exceed $2,500,000 
130.1   in total in fiscal year 1994.  The superintendent of Special 
130.2   School District No. 1, the mayor of the city of Minneapolis, and 
130.3   the executive director of the Minneapolis Teachers Retirement 
130.4   Fund Association shall jointly certify to the commissioner of 
130.5   finance the total amount that has been contributed by Special 
130.6   School District No. 1 and by the city of Minneapolis to the 
130.7   Minneapolis Teachers Retirement Fund Association.  Any 
130.8   certification to the commissioner of education must be made 
130.9   quarterly.  If the total certifications for a fiscal year exceed 
130.10  the maximum annual direct state matching aid amount in any 
130.11  quarter, the amount of direct state matching aid payable to the 
130.12  Minneapolis Teachers Retirement Fund Association must be limited 
130.13  to the balance of the maximum annual direct state matching aid 
130.14  amount available.  The amount required under this paragraph, 
130.15  subject to the maximum direct state matching aid amount, is 
130.16  appropriated annually to the commissioner of finance.  The state 
130.17  matching aid is governed by section 354A.121. 
130.18     (c) The commissioner of finance may prescribe the form of 
130.19  the certifications required under paragraph (b). 
130.20     Sec. 5.  Minnesota Statutes 2002, section 354A.12, 
130.21  subdivision 3d, is amended to read: 
130.22     Subd. 3d.  [MTRFA AND SPTRFA SUPPLEMENTAL ADMINISTRATIVE 
130.23  EXPENSE ASSESSMENT.] (a) The active and retired membership of 
130.24  the Minneapolis Teachers Retirement Fund Association and of the 
130.25  St. Paul Teachers Retirement Fund Association is responsible for 
130.26  defraying supplemental administrative expenses other than 
130.27  investment expenses of the respective teacher retirement fund 
130.28  association. 
130.29     (b) Investment expenses of the teachers retirement fund 
130.30  association are those expenses incurred by or on behalf of the 
130.31  retirement fund in connection with the investment of the assets 
130.32  of the retirement fund other than investment security 
130.33  transaction costs.  Other administrative expenses are all 
130.34  expenses incurred by or on behalf of the retirement fund for all 
130.35  other retirement fund functions other than the investment of 
130.36  retirement fund assets.  Investment and other administrative 
131.1   expenses must be accounted for using generally accepted 
131.2   accounting principles and in a manner consistent with the 
131.3   comprehensive annual financial report of the teachers retirement 
131.4   fund association for the immediately previous fiscal year under 
131.5   section 356.20. 
131.6      (c) Supplemental administrative expenses other than 
131.7   investment expenses of a first class city teacher retirement 
131.8   fund association are those expenses for the fiscal year that: 
131.9      (1) exceed, for the St. Paul Teachers Retirement Fund 
131.10  Association $443,745, or for the Minneapolis Teacher Retirement 
131.11  Fund Association $671,513 $428,381, plus, in each case, an 
131.12  additional amount derived by applying the percentage increase in 
131.13  the Consumer Price Index for Urban Wage Earners and Clerical 
131.14  Workers All Items Index published by the Bureau of Labor 
131.15  Statistics of the United States Department of Labor since July 
131.16  1, 2001 2004, to the applicable dollar amount; and 
131.17     (2) for the St. Paul Teachers Retirement Fund Association 
131.18  only, exceed the amount computed by applying the most recent 
131.19  percentage of pay administrative expense amount, other than 
131.20  investment expenses, for the teachers retirement association 
131.21  governed by chapter 354 to the covered payroll of the respective 
131.22  teachers retirement fund association for the fiscal year. 
131.23     (d) The board of trustees of each first class city teachers 
131.24  retirement fund association shall allocate the total dollar 
131.25  amount of supplemental administrative expenses other than 
131.26  investment expenses determined under paragraph (c), clause (2), 
131.27  among the various active and retired membership groups of the 
131.28  teachers retirement fund association and shall assess the 
131.29  various membership groups their respective share of the 
131.30  supplemental administrative expenses other than investment 
131.31  expenses, in amounts determined by the board of trustees.  The 
131.32  supplemental administrative expense assessments must be paid by 
131.33  the membership group in a manner determined by the board of 
131.34  trustees of the respective teachers retirement association.  
131.35  Supplemental administrative expenses payable by the active 
131.36  members of the pension plan must be picked up by the employer in 
132.1   accordance with section 356.62. 
132.2      (e) With respect to the St. Paul Teachers Retirement Fund 
132.3   Association, the supplemental administrative expense assessment 
132.4   must be fully disclosed to the various active and retired 
132.5   membership groups of the teachers retirement fund association.  
132.6   The chief administrative officer of the St. Paul Teachers 
132.7   Retirement Fund Association shall prepare a supplemental 
132.8   administrative expense assessment disclosure notice, which must 
132.9   include the following: 
132.10     (1) the total amount of administrative expenses of the St. 
132.11  Paul Teachers Retirement Fund Association, the amount of the 
132.12  investment expenses of the St. Paul Teachers Retirement Fund 
132.13  Association, and the net remaining amount of administrative 
132.14  expenses of the St. Paul Teachers Retirement Fund Association; 
132.15     (2) the amount of administrative expenses for the St. Paul 
132.16  Teachers Retirement Fund Association that would be equivalent to 
132.17  the teachers retirement association noninvestment administrative 
132.18  expense level described in paragraph (c); 
132.19     (3) the total amount of supplemental administrative 
132.20  expenses required for assessment calculated under paragraph (c); 
132.21     (4) the portion of the total amount of the supplemental 
132.22  administrative expense assessment allocated to each membership 
132.23  group and the rationale for that allocation; 
132.24     (5) the manner of collecting the supplemental 
132.25  administrative expense assessment from each membership group, 
132.26  the number of assessment payments required during the year, and 
132.27  the amount of each payment or the procedure used to determine 
132.28  each payment; and 
132.29     (6) any other information that the chief administrative 
132.30  officer determines is necessary to fairly portray the manner in 
132.31  which the supplemental administrative expense assessment was 
132.32  determined and allocated. 
132.33     (f) The disclosure notice must be provided annually in the 
132.34  annual report of the association. 
132.35     (g) The supplemental administrative expense assessments 
132.36  must be deposited in the applicable teachers retirement fund 
133.1   upon receipt. 
133.2      (h) Any omitted active membership group assessments that 
133.3   remain undeducted and unpaid to the teachers retirement fund 
133.4   association for 90 days must be paid by the respective school 
133.5   district.  The school district may recover any omitted active 
133.6   membership group assessment amounts that it has previously 
133.7   paid.  The teachers retirement fund association shall deduct any 
133.8   omitted retired membership group assessment amounts from the 
133.9   benefits next payable after the discovery of the omitted amounts.
133.10     Sec. 6.  [354A.121] [INVESTMENT PROCEDURES FOR STATE AID TO 
133.11  MINNEAPOLIS TEACHERS RETIREMENT PLAN.] 
133.12     (a) Notwithstanding any provision of law to the contrary, 
133.13  special direct state aid to the Minneapolis Teachers Retirement 
133.14  Fund Association under section 354A.12, subdivision 3a or 3b, 
133.15  and amortization or supplementary amortization state aid 
133.16  reallocated to the Minneapolis Teachers Retirement Fund 
133.17  Association, must be transferred and invested as provided in 
133.18  this section. 
133.19     (b) State aid for the Minneapolis Teachers Retirement Fund 
133.20  Association referenced in paragraph (a) must be transferred to 
133.21  the executive director of the State Board of Investment for 
133.22  investment in the Minnesota supplemental investment fund.  The 
133.23  Minneapolis Teachers Retirement Fund Association state aid 
133.24  amounts and any investment return obtained on those amounts must 
133.25  be invested in the income share account unless the executive 
133.26  director of the State Board of Investment, after appropriate 
133.27  consultation with the board of trustees of the Minneapolis 
133.28  Teachers Retirement Fund Association, determines that the amount 
133.29  should be invested in a different account.  The executive 
133.30  director of the State Board of Investment, after appropriate 
133.31  consultation with the board, may transfer amounts between 
133.32  accounts in the Minnesota supplemental investment fund.  
133.33     (c) If the assets of the Minneapolis teachers retirement 
133.34  fund other than the assets to the credit of the Minneapolis 
133.35  teachers retirement fund in the Minnesota supplemental 
133.36  investment fund are insufficient to pay retirement annuities and 
134.1   benefits that are due and payable or the reasonable and 
134.2   necessary administrative expenses of the retirement plan that 
134.3   are due and payable, the executive director of the State Board 
134.4   of Investment shall transfer the required amount to meet that 
134.5   insufficiency to the chief administrative officer of the 
134.6   Minneapolis Teachers Retirement Fund Association. 
134.7      (d) For purposes of annual actuarial valuations and annual 
134.8   financial reports, the shares in the Minnesota supplemental 
134.9   investment fund owned by the Minneapolis teachers retirement 
134.10  fund must be considered an asset of the Minneapolis teachers 
134.11  retirement fund. 
134.12     Sec. 7.  Minnesota Statutes 2002, section 354A.28, 
134.13  subdivision 9, is amended to read: 
134.14     Subd. 9.  [ADDITIONAL INCREASE.] (a) In addition to the 
134.15  postretirement increases granted under subdivision 8, an 
134.16  additional percentage increase must be computed and paid is 
134.17  payable under this subdivision. 
134.18     (b) The board of trustees shall determine the number of 
134.19  annuities annuitants or benefit recipients who have been 
134.20  receiving an annuity or benefit for at least 12 months as of the 
134.21  current June 30 in total, for the coordinated program, and for 
134.22  the basic program.  These recipients are entitled to receive the 
134.23  surplus investment earnings additional postretirement increase. 
134.24     (c) Annually, on June 30, the board of trustees of the 
134.25  teachers retirement fund association shall determine the amount 
134.26  of reserves in the annuity reserve fund as specified in 
134.27  subdivision 6. 
134.28     (d) Annually, on June 30, the board of trustees of the 
134.29  Minneapolis Teachers Retirement Fund Association shall determine 
134.30  the five-year annualized rate of return attributable to the 
134.31  assets in the annuity reserve fund under the formula or formulas 
134.32  specified in section 11A.04, clause (11) percentage increase 
134.33  granted to eligible retirees of the Teachers Retirement 
134.34  Association on the prior January 1, under section 11A.18, 
134.35  subdivision 9, paragraph (c). 
134.36     (e) The board of trustees shall determine the amount of 
135.1   excess five-year annualized rate of return over the 
135.2   preretirement interest assumption as specified in section 
135.3   356.215. 
135.4      (f) (d) The additional increase must be determined by 
135.5   multiplying the quantity one minus the rate of contribution 
135.6   deficiency, as specified in the most recent actuarial report of 
135.7   the actuary retained by the legislative commission on pensions 
135.8   and retirement, times the rate of return excess as determined in 
135.9   paragraph (e) for annuitants or benefit recipients of the 
135.10  coordinated program is the percentage rate determined under 
135.11  paragraph (c) and, if the Minneapolis Teachers Retirement Fund 
135.12  Association has a funding ratio of at least 100 percent, the 
135.13  additional increase for annuitants or benefit recipients of the 
135.14  basic program is the percentage rate determined under paragraph 
135.15  (c). 
135.16     (g) (e) The additional increase is payable to all eligible 
135.17  annuitants or benefit recipients on January 1 following the June 
135.18  30 determination date under paragraphs paragraph (c) and (d). 
135.19     Sec. 8.  [EFFECTIVE DATE.] 
135.20     Sections 1 to 7 are effective July 1, 2004.