1.1 	A bill for an act
1.2 	relating to retirement; consolidating the Minneapolis
1.3 	Teachers Retirement Fund Association coordinated
1.4 	program with the Teachers Retirement Association;
1.5 	authorizing the issuance of revenue bonds;
1.6 	appropriating money; amending Minnesota Statutes 2004,
1.7 	sections 354.05, subdivisions 2, 13; 354.42,
1.8 	subdivisions 2, 3; 354A.12, subdivision 3b; 354A.23,
1.9 	by adding a subdivision; 423A.02, subdivision 1b;
1.10 	proposing coding for new law in Minnesota Statutes,
1.11 	chapters 128D; 354; repealing Minnesota Statutes 2004,
1.12 	section 354A.28.
1.13 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.14 	Section 1. [128D.18] FUNDING OF UNFUNDED PENSION
1.15 	LIABILITIES.
1.16 		Subdivision 1.Financing authority. Notwithstanding any
1.17 	other law to the contrary, Special School District No. 1,
1.18 	Minneapolis, may finance all or a portion of the current and
1.19 	future unfunded pension liability of the Minneapolis Teachers
1.20 	Retirement Fund Association through the issuance of pension
1.21 	obligation bonds issued pursuant to this section; provided that
1.22 	the following conditions are met:
1.23 	(a) The bonds shall be payable from state funds and other
1.24 	contributions appropriated to the Minneapolis Teachers
1.25 	Retirement Fund Association to pay unfunded pension liabilities,
1.26 	including, without limitation, special direct aid, matching aid,
1.27 	or other contributions under section 354A.12, subdivision 3a or
1.28 	3b, the employer additional amount paid in fiscal year 2004
1.29 	under section 354A.12, subdivision 2a, paragraph (a), clause
2.1 	(4), which must be continued annually, or any other subsequent
2.2 	state appropriation for such purpose, and the other sources of
2.3 	funds set forth in this section.
2.4 	(b) At the time of issuance of the bonds, section 354A.12,
2.5 	subdivisions 3a and 3b, have not been repealed or amended.
2.6 	(c) The principal amount of bonds issued and outstanding
2.7 	hereunder shall not exceed the unfunded actuarial accrued
2.8 	liability determined by the actuary retained by the Legislative
2.9 	Commission on Pensions and Retirement for the fiscal year ending
2.10 	June 30, 2004, pursuant to sections 356.215 and 356.216.
2.11 		Subd. 2.Use of proceeds. The proceeds of the bonds
2.12 	issued, less costs, shall be paid to the State Board of
2.13 	Investment to be deposited as an asset of the Minneapolis
2.14 	Teachers Retirement Fund Association.  The proceeds shall be
2.15 	held in trust by the State Board of Investment for the benefit
2.16 	of the Minneapolis Teachers Retirement Fund Association and
2.17 	invested as set forth in subdivision 3.  Annually, on the first
2.18 	banking day of the calendar year, the State Board of Investment
2.19 	shall pay to the Minneapolis Teachers Retirement Fund
2.20 	Association from the funds and with investment income thereof,
2.21 	the amount, if any, needed by the pension fund in any year to
2.22 	pay retirement annuities and benefits that are due and payable
2.23 	and the reasonable and necessary administrative expenses of the
2.24 	retirement plan that are due and payable after all assets held
2.25 	by the association, other than those assets held by the State
2.26 	Board of Investment, have been exhausted.
2.27 		Subd. 3.Appropriations. (a) Notwithstanding any law to
2.28 	the contrary, special direct state aid, matching aid, and other
2.29 	contributions levied for the Minneapolis Teachers Retirement
2.30 	Fund Association under section 354A.12, subdivisions 3a and 3b,
2.31 	and amortization or supplementary amortization state aid
2.32 	reallocated to the Minneapolis Teachers Retirement Fund
2.33 	Association under section 423A.02 are pledged and appropriated
2.34 	to the payment of the bonds and must be transferred to Special
2.35 	School District No. 1, Minneapolis, and additional employer
2.36 	contributions levied by Special School District No. 1,
3.1 	Minneapolis, under section 354A.12, subdivision 3b, shall be
3.2 	retained by the district to the extent required to pay debt
3.3 	service on the bonds for the succeeding 12-month period or a
3.4 	longer period established pursuant to the resolution of the
3.5 	district authorizing the bonds.
3.6 	(b) The bond proceeds based on the funding sources for the
3.7 	Minneapolis Teachers Retirement Fund Association referenced in
3.8 	paragraph (a) must be invested by the State Board of Investment
3.9 	in trust for the exclusive benefit of the Minneapolis Teachers
3.10 	Retirement Fund Association.  Notwithstanding any law to the
3.11 	contrary, section 356A.02 shall not apply to the Minneapolis
3.12 	Teachers Retirement Fund Association with respect to any bond
3.13 	proceeds held and invested by the State Board of Investment
3.14 	pursuant to this section.
3.15 	(c) For purposes of annual actuarial valuations and annual
3.16 	financial reports, the assets of the Minneapolis Teachers
3.17 	Retirement Fund Association held by the State Board of
3.18 	Investment pursuant to this section must not be considered as
3.19 	current assets of the Minneapolis Teachers Retirement Fund
3.20 	Association but may be considered as future assets in a similar
3.21 	manner as future contributions to the funds.
3.22 		Subd. 4.No election. No election of the voters of the
3.23 	district shall be required to issue bonds authorized by this
3.24 	section.
3.25 		Subd. 5.Terms and sale of bonds. The bonds issued
3.26 	pursuant to this section shall bear interest at the rate or
3.27 	rates and mature on the date or dates not more than 30 years
3.28 	from the date of issue as the district shall determine by
3.29 	resolution.  Interest may be at a fixed or variable rate.  The
3.30 	bonds may be sold and issued on terms and in a manner that
3.31 	Special School District No. 1, Minneapolis, determines is in its
3.32 	best interests and in the best interests of the state.
3.33 		Subd. 6.This section prevails. Notwithstanding any
3.34 	other law to the contrary, this section shall apply to the
3.35 	issuance and sale of the bonds and to the purposes for which the
3.36 	bonds may be issued.
4.1 		Subd. 7.State pledge against impairment of
4.2 	contracts. The state pledges and agrees with the holders of
4.3 	bonds issued under this section that the state will not limit or
4.4 	alter the rights vested in Special School District No. 1,
4.5 	Minneapolis, to fulfill the terms of any agreements made with
4.6 	the bondholders or in any way impair the rights and remedies of
4.7 	the holders until the bonds, together with interest on them,
4.8 	with interest on any unpaid installments of interest, and all
4.9 	costs and expenses in connection with any action or proceeding
4.10 	by or on behalf of the bondholders, are fully met and
4.11 	discharged.  The district may include this pledge and agreement
4.12 	of the state in any agreement with the holders of bonds issued
4.13 	under this section.
4.14 		Subd. 8.Not net debt. Bonds ended under this section
4.15 	not in default shall not be deemed net debt under any law
4.16 	limiting indebtedness.
4.17 		Subd. 9.Certification and budget request. (a) To ensure
4.18 	the payment of the principal of and interest on bonds issued
4.19 	under this section, the superintendent of schools of Special
4.20 	School District No. 1, Minneapolis, shall annually determine and
4.21 	certify to the governor, on or before December 1, the following
4.22 	amounts:
4.23 	(1) the amount then needed to pay unpaid debt service on
4.24 	the bonds currently due and payable;
4.25 	(2) the amount of any state aids used to pay debt service
4.26 	on the bonds pursuant to this section; and 
4.27 	(3) the amount required to pay debt service on the bonds
4.28 	during the then-current fiscal year, less amounts appropriated
4.29 	and available for debt service pursuant to section 354A.12,
4.30 	subdivisions 3a and 3b.
4.31 	(b) The legislature shall consider including a separate
4.32 	line item in the biennial budget for the following fiscal year,
4.33 	or in a supplemental budget if the biennial budget has
4.34 	previously been approved, all amounts certified by the
4.35 	superintendent of schools of Special School District No. 1,
4.36 	Minneapolis, in accordance with this subdivision.
5.1 		Subd. 10.Aid reduction for repayment. If the amount
5.2 	transferred by Special School District No. 1, Minneapolis, to
5.3 	the paying agent for the bonds is insufficient to pay required
5.4 	debt service, the paying agent shall notify the commissioner of
5.5 	finance.  The commissioner shall reduce any and all unrestricted
5.6 	state aids generally available to the school district by the
5.7 	amount of the deficiency and pay the amounts to the paying agent
5.8 	for the bonds for the payment of debt service.  If the state
5.9 	aids are reduced pursuant to this subdivision, the district may
5.10 	levy a tax in the amount of the reduction in state aid.
5.11 	Notwithstanding any other law to the contrary, no election of
5.12 	the voters of the district is required for the levy and the levy
5.13 	is not subject to other levy limitations.

5.14 	Sec. 2. Minnesota Statutes 2004, section 354.05,
5.15 	subdivision 2, is amended to read:
5.16 		Subd. 2.Teacher.  (a) "Teacher" means:
5.17 	(1) a person who renders service as a teacher, supervisor,
5.18 	principal, superintendent, librarian, nurse, counselor, social
5.19 	worker, therapist, or psychologist in a public school of the
5.20 	state located outside of the corporate limits of a city of the
5.21 	first class the city of Duluth or the city of St. Paul, or in
5.22 	any charter school, irrespective of the location of the school,
5.23 	or in any charitable, penal, or correctional institutions of a
5.24 	governmental subdivision, or who is engaged in educational
5.25 	administration in connection with the state public school
5.26 	system, but excluding the University of Minnesota, whether the
5.27 	position be a public office or an employment, and not including
5.28 	the members or officers of any general governing or managing
5.29 	board or body;
5.30 	(2) an employee of the Teachers Retirement Association;
5.31 	(3) a coordinated member employee of the Minneapolis
5.32 	Teachers Retirement Fund Association;
5.33 	(4) a person who renders teaching service on a part-time
5.34 	basis and who also renders other services for a single employing
5.35 	unit.  A person whose teaching service comprises at least 50
5.36 	percent of the combined employment salary is a member of the
6.1 	association for all services with the single employing unit.  If
6.2 	the person's teaching service comprises less than 50 percent of
6.3 	the combined employment salary, the executive director must
6.4 	determine whether all or none of the combined service is covered
6.5 	by the association; or
6.6 	(4) (5) a person who is not covered by the plans
6.7 	established under chapter 352D, 354A, or 354B and who is
6.8 	employed by the Board of Trustees of the Minnesota State
6.9 	Colleges and Universities system in an unclassified position as:
6.10 	(i) a president, vice-president, or dean;
6.11 	(ii) a manager or a professional in an academic or an
6.12 	academic support program other than specified in item (i);
6.13 	(iii) an administrative or a service support faculty
6.14 	position; or
6.15 	(iv) a teacher or a research assistant.
6.16 	(b) "Teacher" does not mean:
6.17 	(1) a person who works for a school or institution as an
6.18 	independent contractor as defined by the Internal Revenue
6.19 	Service;
6.20 	(2) a person who renders part-time teaching service or who
6.21 	is a customized trainer as defined by the Minnesota State
6.22 	Colleges and Universities system if (i) the service is
6.23 	incidental to the regular nonteaching occupation of the person;
6.24 	and (ii) the employer stipulates annually in advance that the
6.25 	part-time teaching service or customized training service will
6.26 	not exceed 300 hours in a fiscal year and retains the
6.27 	stipulation in its records; and (iii) the part-time teaching
6.28 	service or customized training service actually does not exceed
6.29 	300 hours in a fiscal year; or
6.30 	(3) a person exempt from licensure under section 122A.30.

6.31 	Sec. 3. Minnesota Statutes 2004, section 354.05,
6.32 	subdivision 13, is amended to read:
6.33 		Subd. 13.Allowable service.  "Allowable service" means:
6.34 	(1) Any service rendered by a teacher for which on or
6.35 	before July 1, 1957, the teacher's account in the retirement
6.36 	fund was credited by reason of employee contributions in the
7.1 	form of salary deductions, payments in lieu of salary
7.2 	deductions, or in any other manner authorized by Minnesota
7.3 	Statutes 1953, sections 135.01 to 135.13, as amended by Laws
7.4 	1955, chapters 361, 549, 550, 611, or
7.5 	(2) Any service rendered by a teacher for which on or
7.6 	before July 1, 1961, the teacher elected to obtain credit for
7.7 	service by making payments to the fund pursuant to Minnesota
7.8 	Statutes 1980, section 354.09 and section 354.51, or
7.9 	(3) Any service rendered by a teacher after July 1, 1957,
7.10 	for any calendar month when the member receives salary from
7.11 	which deductions are made, deposited and credited in the fund,
7.12 	or
7.13 	(4) Any service rendered by a person after July 1, 1957,
7.14 	for any calendar month where payments in lieu of salary
7.15 	deductions are made, deposited and credited into the fund as
7.16 	provided in Minnesota Statutes 1980, section 354.09, subdivision
7.17 	4, and section 354.53, or
7.18 	(5) Any service rendered by a teacher for which the teacher
7.19 	elected to obtain credit for service by making payments to the
7.20 	fund pursuant to Minnesota Statutes 1980, section 354.09,
7.21 	subdivisions 1 and 4, sections 354.50, 354.51, Minnesota
7.22 	Statutes 1957, section 135.41, subdivision 4, Minnesota Statutes
7.23 	1971, section 354.09, subdivision 2, or Minnesota Statutes, 1973
7.24 	Supplement, section 354.09, subdivision 3, or
7.25 	(6) Both service during years of actual membership in the
7.26 	course of which contributions were currently made and service in
7.27 	years during which the teacher was not a member but for which
7.28 	the teacher later elected to obtain credit by making payments to
7.29 	the fund as permitted by any law then in effect, or
7.30 	(7) Any service rendered where contributions were made and
7.31 	no allowable service credit was established because of the
7.32 	limitations contained in Minnesota Statutes 1957, section
7.33 	135.09, subdivision 2, as determined by the ratio between the
7.34 	amounts of money credited to the teacher's account in a fiscal
7.35 	year and the maximum retirement contribution allowable for that
7.36 	year, or
8.1 	(8) MS 2002 (Expired)
8.2 	(9) A period of time during which a teacher who is a state
8.3 	employee was on strike without pay, not to exceed a period of
8.4 	one year, if the teacher makes a payment in lieu of salary
8.5 	deductions or makes a prior service credit purchase payment,
8.6 	whichever applies.  If the payment is made within 12 months, the
8.7 	payment by the teacher must be an amount equal to the employee
8.8 	and employer contribution rates set forth in section 354.42,
8.9 	subdivisions 2 and 3, applied to the teacher's rate of salary in
8.10 	effect on the conclusion of the strike for the period of the
8.11 	strike without pay, plus compound interest at a monthly rate of
8.12 	0.71 percent from the last day of the strike until the date of
8.13 	payment.  If the payment by the employee is not made within 12
8.14 	months, the payment must be in an amount equal to the payment
8.15 	amount determined under section 356.55 or 356.551, whichever
8.16 	applies, or 
8.17 	(10) A period of service prior to July 1, 2005, rendered by
8.18 	a coordinated member teacher as an employee of Special School
8.19 	District No. 1, Minneapolis, or a coordinated member employee of
8.20 	the Minneapolis Teachers Retirement Fund Association, who was a
8.21 	member of the Minneapolis Teachers Retirement Fund Association
8.22 	by virtue of that employment, who has not begun receiving an
8.23 	annuity or other retirement benefit from the former Minneapolis
8.24 	Teachers Retirement Fund Association calculated in whole or in
8.25 	part on that service before July 1, 2005, and who has not taken
8.26 	a refund of member contributions related to that service unless
8.27 	the refund is repaid under section 354.50, subdivision 4.

8.28 	Sec. 4. Minnesota Statutes 2004, section 354.42,
8.29 	subdivision 2, is amended to read:
8.30 		Subd. 2.Employee. (a) The employee contribution to the
8.31 	fund is an amount equal to the following percentage of the
8.32 	salary of a member:
8.33 	(1) after July 1, 2005, for a teacher employed by Special
8.34 	School District No. 1, Minneapolis, 5.0 percent if the teacher
8.35 	is a coordinated member;
8.36 	(2) for every other teacher,5.0 percent of if the salary
9.1 	of every teacher is a coordinated member and 9.0 percent of if 
9.2 	the salary of every teacher is a basic member.
9.3 	(b) This contribution must be made by deduction from
9.4 	salary.  Where any portion of a member's salary is paid from
9.5 	other than public funds, the member's employee contribution must
9.6 	be based on the entire salary received.

9.7 	Sec. 5. Minnesota Statutes 2004, section 354.42,
9.8 	subdivision 3, is amended to read:
9.9 		Subd. 3.Employer. (a) The employer contribution to the
9.10 	fund by Special School District No. 1, Minneapolis, is an amount
9.11 	equal to 5.0 percent of the salary of each of its teachers who
9.12 	is a coordinated member.
9.13 	(b) The employer contribution to the fund for every other
9.14 	employer is an amount equal to 5.0 percent of the salary of each
9.15 	coordinated member and 9.0 percent of the salary of each basic
9.16 	member.

9.17 	Sec. 6. [354.70] CONSOLIDATION OF THE MINNEAPOLIS
9.18 	TEACHERS RETIREMENT FUND ASSOCIATION COORDINATED PROGRAM.
9.19 		Subdivision 1.Membership transfer. All active,
9.20 	inactive, and retired members of the Minneapolis Teachers
9.21 	Retirement Fund Association coordinated program established
9.22 	under section 354A.30 are transferred to the Teachers Retirement
9.23 	Association and are no longer members of the Minneapolis
9.24 	Teachers Retirement Fund Association as of the effective date of
9.25 	this section.
9.26 		Subd. 2.Tra membership. A person first hired as a
9.27 	teacher by Special School District No. 1, Minneapolis, after the
9.28 	effective date of this section and who is a teacher as defined
9.29 	in section 354.05, subdivision 2, is a member of the Teachers
9.30 	Retirement Association for the person's teaching service.
9.31 		Subd. 3.Service credit and liability transfer. All
9.32 	allowable service and salary credit of the members and other
9.33 	individuals transferred under subdivision 1 as specified in the
9.34 	records of the Minneapolis Teachers Retirement Fund Association
9.35 	on the transfer date is allowable service credit under section
9.36 	354.05, subdivision 13, formula service credit under section
10.1 	354.05, subdivision 25, and salary credit under section 354.05,
10.2 	subdivision 35, for the Teachers Retirement Association.
10.3 		Subd. 4.Transfer of records. On or before December 31,
10.4 	2006, the chief administrative officer of the Minneapolis
10.5 	Teachers Retirement Fund Association shall effect a transfer of
10.6 	all records and documents relating to the funds and the benefit
10.7 	plans of the association to the executive director of the
10.8 	Teachers Retirement Association.  To the extent possible,
10.9 	original copies of all records and documents must be transferred.
10.10 		Subd. 5.Transfer of assets. (a) On December 31, 2005,
10.11 	the chief administrative officer of the Minneapolis Teachers
10.12 	Retirement Fund Association shall transfer to the Teachers
10.13 	Retirement Association an amount equal to the market value
10.14 	liabilities of the coordinated annuitants as of June 30, 2005,
10.15 	calculated by the actuary hired according to section 356.214.
10.16 	These liabilities must be transferred at the market value funded
10.17 	level of the Teachers Retirement Association on June 30, 2005.
10.18 	(b) As of January 1, 2006, subject to the authority of the
10.19 	State Board of Investment, the board of directors of the
10.20 	Teachers Retirement Association has legal title to and
10.21 	management responsibility for any transferred assets under this
10.22 	subdivision as trustees for any person having a beneficial
10.23 	interest in the coordinated program of the Minneapolis Teachers
10.24 	Retirement Fund Association.  The Board of Trustees of the
10.25 	Minneapolis Teachers Retirement Fund Association shall retain
10.26 	legal title and management responsibilities for the assets of
10.27 	the basic program.  The Teachers Retirement Association is the
10.28 	successor in interest for all claims for and against the former
10.29 	coordinated program of the Minneapolis Teachers Retirement Fund
10.30 	Association with respect to the retirement fund association,
10.31 	except a claim against the Minneapolis Teachers Retirement Fund
10.32 	Association or any person connected with the fund association in
10.33 	a fiduciary capacity, based on any act or acts by that person
10.34 	which were not done in good faith and which constituted a breach
10.35 	of the obligation of the person as a fiduciary.  As the
10.36 	successor in interest, the Teachers Retirement Association may
11.1 	assert any applicable defense in any judicial proceeding which
11.2 	the board of the Minneapolis Teachers Retirement Fund
11.3 	Association would have otherwise been entitled to assert
11.4 	relating to the coordinated program.
11.5 	(c) From the assets of the Minneapolis Teachers Retirement
11.6 	Fund Association coordinated program transferred to the Teachers
11.7 	Retirement Association, an amount equal to the market value
11.8 	liabilities calculated on June 30, 2005, of the coordinated
11.9 	program annuitants, must be transferred to the Minnesota
11.10 	postretirement investment fund.
11.11 		Subd. 6.Benefit calculation. (a) For every deferred,
11.12 	inactive, disabled, and retired coordinated member of the
11.13 	Minneapolis Teachers Retirement Fund Association transferred
11.14 	under subdivision 1, and the survivors of these members,
11.15 	annuities or benefits earned before the date of transfer, other
11.16 	than future postretirement adjustments, must be calculated and
11.17 	paid by the Teachers Retirement Association under the
11.18 	Minneapolis Teachers Retirement Fund Association laws that were
11.19 	in effect relative to the person on the date of the person's
11.20 	termination of active service covered by the Minneapolis
11.21 	Teachers Retirement Fund Association.
11.22 	(b) Retired former Minneapolis Teachers Retirement Fund
11.23 	Association coordinated members must receive postretirement
11.24 	adjustments after December 31, 2005, as provided in section
11.25 	11A.18.  All other benefit recipients of the former Minneapolis
11.26 	Teachers Retirement Fund Association must receive postretirement
11.27 	adjustments after December 31, 2005, as provided in section
11.28 	356.41.

11.29 	Sec. 7. [354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND
11.30 	APPROPRIATION REDEDICATED.
11.31 		Subdivision 1.Appropriation. The amount appropriated in
11.32 	Laws 2003, First Special Session chapter 1, article 1, section
11.33 	27, for the financial requirements of the Minneapolis Employees
11.34 	Retirement Fund under section 422A.101, subdivision 3, is
11.35 	annually appropriated from the general fund to the commissioner
11.36 	of finance for deposit in the Minneapolis Teachers Retirement
12.1 	Fund Association to offset all or a portion of the current and
12.2 	future unfunded pension liability of the Minneapolis Teachers
12.3 	Retirement Fund Association basic program.
12.4 		Subd. 2.Financial requirements. The appropriation in
12.5 	subdivision 1 is available to the extent that financial
12.6 	requirements of the Minneapolis Employees Retirement Fund under
12.7 	section 422A.101, subdivision 3, have been satisfied.

12.8 	Sec. 8. [354.76] COVERAGE BY TEACHERS RETIREMENT
12.9 	ASSOCIATION.
12.10 	Notwithstanding any other law to the contrary, any person
12.11 	whose employment by the Minneapolis Teachers Retirement Fund
12.12 	Association initially commences on or after July 1, 2005, shall
12.13 	be a member of the Teachers Retirement Association.  In no event
12.14 	shall there be any new members of the contributing class of the
12.15 	Minneapolis Teachers Retirement Fund Association on or after
12.16 	July 1, 2005.

12.17 	Sec. 9. Minnesota Statutes 2004, section 354A.12,
12.18 	subdivision 3b, is amended to read:
12.19 		Subd. 3b.Special direct state matching aid to the
12.20 	minneapolis teachers retirement fund association.  (a) Special
12.21 	School District No. 1 may must make an additional employer
12.22 	contribution to the Minneapolis Teachers Retirement Fund
12.23 	Association.  The city of Minneapolis may must make a
12.24 	contribution to the Minneapolis Teachers Retirement Fund
12.25 	Association.  This contribution may must be made by a levy of
12.26 	the board of estimate and taxation of the city of Minneapolis
12.27 	and the levy, if made, is classified as that of a special taxing
12.28 	district for purposes of sections 275.065 and 276.04, and for
12.29 	all other property tax purposes.
12.30 	(b) For every $1,000 contributed in equal proportion by
12.31 	Special School District No. 1 and by the city of Minneapolis to
12.32 	the Minneapolis Teachers Retirement Fund Association under
12.33 	paragraph (a), the state shall pay to the Minneapolis Teachers
12.34 	Retirement Fund Association $1,000, but not to exceed $2,500,000
12.35 	in total in fiscal year 1994.  The superintendent of Special
12.36 	School District No. 1, the mayor of the city of Minneapolis, and
13.1 	the executive director of the Minneapolis Teachers Retirement
13.2 	Fund Association shall jointly certify to the commissioner of
13.3 	finance the total amount that has been contributed by Special
13.4 	School District No. 1 and by the city of Minneapolis to the
13.5 	Minneapolis Teachers Retirement Fund Association.  Any
13.6 	certification to the commissioner of education must be made
13.7 	quarterly.  If the total certifications for a fiscal year exceed
13.8 	the maximum annual direct state matching aid amount in any
13.9 	quarter, the amount of direct state matching aid payable to the
13.10 	Minneapolis Teachers Retirement Fund Association must be limited
13.11 	to the balance of the maximum annual direct state matching aid
13.12 	amount available.  The amount required under this paragraph,
13.13 	subject to the maximum direct state matching aid amount, is
13.14 	appropriated annually to the commissioner of finance.
13.15 	(c) The commissioner of finance may prescribe the form of
13.16 	the certifications required under paragraph (b).

13.17 	Sec. 10. Minnesota Statutes 2004, section 354A.23, is
13.18 	amended by adding a subdivision to read:
13.19 		Subd. 1a.Minneapolis teachers retirement fund
13.20 	association postconsolidation funding. (a) After the
13.21 	consolidation of the Minneapolis Teachers Retirement Fund
13.22 	Association coordinated program and after all funds available to
13.23 	the association to pay basic member benefits and administrative
13.24 	expenses have been exhausted, basic member benefits and
13.25 	administrative expenses will be funded under the terms of this
13.26 	subdivision.
13.27 	(b) Annually, the board of trustees of the Minneapolis
13.28 	Teachers Retirement Fund Association shall certify to the
13.29 	commissioner of finance the amount necessary to pay basic member
13.30 	benefits and administrative expenses for the following year.
13.31 	The commissioner of finance shall then deduct one-third of the
13.32 	certified amount from the local government aid payment made to
13.33 	the city of Minneapolis and one-third of the certified amount
13.34 	from education aid payments made to Special School District No.
13.35 	1, Minneapolis, and remit the funds to the Minneapolis Teachers
13.36 	Retirement Fund Association.  One-third of the certified amount
14.1 	is appropriated annually from the general fund of the state of
14.2 	Minnesota to the commissioner of finance for transfer to the
14.3 	Minneapolis Teachers Retirement Fund Association.
14.4 	(c) Any postretirement increases provided to basic members
14.5 	of the Minneapolis Teachers Retirement Fund Association must not
14.6 	exceed five percent per year.

14.7 	Sec. 11. Minnesota Statutes 2004, section 423A.02,
14.8 	subdivision 1b, is amended to read:
14.9 		Subd. 1b.Additional amortization state aid.  (a)
14.10 	Annually, on October 1, the commissioner of revenue shall
14.11 	allocate the additional amortization state aid transferred under
14.12 	section 69.021, subdivision 11, to:
14.13 	(1) all police or salaried firefighters relief associations
14.14 	governed by and in full compliance with the requirements of
14.15 	section 69.77, that had an unfunded actuarial accrued liability
14.16 	in the actuarial valuation prepared under sections 356.215 and
14.17 	356.216 as of the preceding December 31;
14.18 	(2) all local police or salaried firefighter consolidation
14.19 	accounts governed by chapter 353A that are certified by the
14.20 	executive director of the public employees retirement
14.21 	association as having for the current fiscal year an additional
14.22 	municipal contribution amount under section 353A.09, subdivision
14.23 	5, paragraph (b), and that have implemented section 353A.083,
14.24 	subdivision 1, if the effective date of the consolidation
14.25 	preceded May 24, 1993, and that have implemented section
14.26 	353A.083, subdivision 2, if the effective date of the
14.27 	consolidation preceded June 1, 1995; and
14.28 	(3) the municipalities that are required to make an
14.29 	additional municipal contribution under section 353.665,
14.30 	subdivision 8, for the duration of the required additional
14.31 	contribution.
14.32 	(b) The commissioner shall allocate the state aid on the
14.33 	basis of the proportional share of the relief association or
14.34 	consolidation account of the total unfunded actuarial accrued
14.35 	liability of all recipient relief associations and consolidation
14.36 	accounts as of December 31, 1993, for relief associations, and
15.1 	as of June 30, 1994, for consolidation accounts.
15.2 	(c) Beginning October 1, 2000, and annually thereafter, the
15.3 	commissioner shall allocate the state aid, including any state
15.4 	aid in excess of the limitation in subdivision 4, on the
15.5 	following basis:
15.6 	(1) 64.5 percent to the municipalities to which section
15.7 	353.665, subdivision 8, paragraph (b), or 353A.09, subdivision
15.8 	5, paragraph (b), apply for distribution in accordance with
15.9 	paragraph (b) and subject to the limitation in subdivision 4;
15.10 	(2) 34.2 percent to the city of Minneapolis to fund any
15.11 	unfunded actuarial accrued liability in the actuarial valuation
15.12 	prepared under sections 356.215 and 356.216 as of the preceding
15.13 	December 31 for the Minneapolis Police Relief Association or the
15.14 	Minneapolis Fire Department Relief Association; and
15.15 	(3) 1.3 percent to the city of Virginia to fund any
15.16 	unfunded actuarial accrued liability in the actuarial valuation
15.17 	prepared under sections 356.215 and 356.216 as of the preceding
15.18 	December 31 for the Virginia Fire Department Relief Association.
15.19 	If there is no unfunded actuarial accrued liability in both
15.20 	the Minneapolis Police Relief Association and the Minneapolis
15.21 	Fire Department Relief Association as disclosed in the most
15.22 	recent actuarial valuations for the relief associations prepared
15.23 	under sections 356.215 and 356.216, the commissioner shall
15.24 	allocate that 34.2 percent of the aid as follows:  49 percent to
15.25 	the Minneapolis Teachers Retirement Fund Association, 21 percent
15.26 	to the St. Paul Teachers Retirement Fund Association, and 30
15.27 	percent as additional funding to support minimum fire state aid
15.28 	for volunteer firefighters relief associations.  If there is no
15.29 	unfunded actuarial accrued liability in the Virginia Fire
15.30 	Department Relief Association as disclosed in the most recent
15.31 	actuarial valuation for the relief association prepared under
15.32 	sections 356.215 and 356.216, the commissioner shall allocate
15.33 	that 1.3 percent of the aid as follows:  49 percent to the
15.34 	Minneapolis Teachers Retirement Fund Association, 21 percent to
15.35 	the St. Paul Teachers Retirement Fund Association, and 30
15.36 	percent as additional funding to support minimum fire state aid
16.1 	for volunteer firefighters relief associations.  The allocation
16.2 	must be made by the commissioner at the same time and under the
16.3 	same procedures as specified in subdivision 3. With respect to
16.4 	the Minneapolis Teachers Retirement Fund Association or the St.
16.5 	Paul Teachers Retirement Fund Association, annually, beginning
16.6 	on July 1, 2005, if the applicable teacher's association
16.7 	five-year average time-weighted rate of investment return does
16.8 	not equal or exceed the performance of a composite portfolio
16.9 	assumed passively managed (indexed) invested ten percent in cash
16.10 	equivalents, 60 percent in bonds and similar debt securities,
16.11 	and 30 percent in domestic stock calculated using the formula
16.12 	under section 11A.04, clause (11), the aid allocation to that
16.13 	retirement fund under this section ceases until the five-year
16.14 	annual rate of investment return equals or exceeds the
16.15 	performance of that composite portfolio.
16.16 	(d) The amounts required under this subdivision are
16.17 	annually appropriated to the commissioner of revenue.

16.18 	Sec. 12. SUCCESSOR FOR CERTAIN STATE AID AMOUNTS.
 16.19 	Upon the consolidation of the Minneapolis Teachers
16.20 	Retirement Fund Association, any state aid payable to the
16.21 	Minneapolis Teachers Retirement Fund Association under Minnesota
16.22 	Statutes, sections 354A.12, subdivisions 3a and 3b, and 423A.02,
16.23 	subdivision 3, becomes payable to Special School District No. 1,
16.24 	Minneapolis, and may only be expended to pay the debt service on
16.25 	bonds issued by the school district to defray a portion of the
16.26 	unfunded accrued liability of the former Minneapolis Teachers
16.27 	Retirement Fund Association, or if no bonds have been issued,
16.28 	transferred to the Teachers Retirement Association in addition
16.29 	to the employer contributions otherwise payable by the school
16.30 	district.

16.31 	Sec. 13. FULL FUNDING DATE.
 16.32 	Notwithstanding any other law to the contrary, for the
16.33 	Minneapolis Teachers Retirement Fund, the established date for
16.34 	full funding is 2030.

16.35 	Sec. 14. PROTECTIONS FOR EMPLOYEES.
 16.36 	In addition to any other protection, no employee of the
17.1 	Minneapolis Teachers Retirement Fund Association shall suffer
17.2 	job loss, have a salary reduced, or have employment benefits
17.3 	reduced as a result of the reorganization of the association
17.4 	mandated by this act.  No action taken after July 1, 2009, shall
17.5 	be considered a result of the reorganization of the association
17.6 	mandated by this act for the purposes of this section.

17.7 	Sec. 15. REVISOR'S INSTRUCTION.
 17.8 	(a) If the revisor of statutes can readily determine a
17.9 	substitute reference for the "Minneapolis Teachers Retirement
17.10 	Fund Association coordinated program" in Minnesota Statutes,
17.11 	chapters 354A, 355, 356, 356A, and 423A, in Minnesota Statutes
17.12 	2006 and subsequent editions, the revisor of statutes shall
17.13 	substitute the appropriate reference.
17.14 	(b) For references to the "Minneapolis Teachers Retirement
17.15 	Fund Association coordinated program" in Minnesota Statutes,
17.16 	chapters 354A, 355, 356, 356A, and 423A, for which the revisor
17.17 	of statutes is unable to readily determine a substitute
17.18 	reference, the revisor of statutes shall prepare draft proposed
17.19 	legislation for introduction during the 2006 legislative session
17.20 	providing proposed substitute references.

17.21 	Sec. 16. REPEALER.
 17.22 	Minnesota Statutes 2004, section 354A.28, is repealed.

17.23 	Sec. 17. EFFECTIVE DATE.
 17.24 	Sections 1 and 9 are effective the day following final
17.25 	enactment.  Sections 2 to 8 and 14 are effective July 1, 2005.