1.1 	A bill for an act
1.2 	relating to retirement; statewide and major local
1.3 	retirement plans; providing for various member and
1.4 	employer contribution rate increases; restructuring
1.5 	the statewide Teachers Retirement Association fund and
1.6 	benefit plan; providing a special postretirement
1.7 	adjustment to certain pre-1969 teachers; changing
1.8 	deferred annuities augmentation for new retirement
1.9 	plan members; creating a public pension plan default
1.10 	insurance pool; increasing the maximum retirement plan
1.11 	covered salary figure; providing certain early
1.12 	retirement incentives; creating a task force to study
1.13 	creation of a statewide volunteer firefighter
1.14 	retirement plan; appropriating money; amending
1.15 	Minnesota Statutes 2004, sections 352.01, subdivision
1.16 	13; 352.04, subdivisions 2, 3, 12; 352.116,
1.17 	subdivision 1a; 352.72, subdivision 2; 352.911,
1.18 	subdivision 5; 352.92, subdivisions 1, 2; 352B.01,
1.19 	subdivision 11; 352B.02, subdivisions 1a, 1c, 1d;
1.20 	352B.30, subdivision 2; 352D.04, subdivision 2;
1.21 	352D.09, subdivision 7; 353.01, subdivision 10;
1.22 	353.27, subdivisions 1, 2, 3, 3a, by adding a
1.23 	subdivision; 353.30, subdivision 5; 353.65,
1.24 	subdivisions 2, 3, 6; 353.71, subdivision 2; 353B.02,
1.25 	subdivision 10; 353E.01, subdivision 5; 353E.05;
1.26 	354.05, subdivisions 2, 13, 35; 354.42, subdivisions
1.27 	2, 3, by adding a subdivision; 354.44, subdivision 6;
1.28 	354.55, subdivision 11; 354A.011, subdivisions 15a,
1.29 	24, 27; 354A.021, subdivisions 1, 4; 354A.092;
1.30 	354A.093, subdivision 1; 354A.095; 354A.096; 354A.12,
1.31 	subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30;
1.32 	354A.31, subdivisions 4, 7; 354A.32, subdivision 1;
1.33 	354A.37, subdivision 2; 354A.39; 354A.40, subdivision
1.34 	1; 354A.41; 356.20, subdivision 2; 356.214,
1.35 	subdivision 1; 356.215, subdivision 8; 356.30,
1.36 	subdivisions 1, 3; 356.302, subdivision 7; 356.303,
1.37 	subdivision 4; 356.315, by adding a subdivision;
1.38 	356.42, subdivision 3; 356.465, subdivision 3;
1.39 	356.611, subdivision 1; 422A.01, by adding a
1.40 	subdivision; 423A.02, subdivision 1b; 423B.01, by
1.41 	adding a subdivision; 423C.01, by adding a
1.42 	subdivision; 490.121, by adding a subdivision;
1.43 	proposing coding for new law in Minnesota Statutes,
1.44 	chapters 126C; 128D; 354; 356; repealing Minnesota
1.45 	Statutes 2004, sections 354A.051; 354A.105; 354A.23,
1.46 	subdivision 1; 354A.28.
2.1 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.2 	ARTICLE 1
2.3 	VARIOUS RETIREMENT PLAN CONTRIBUTION
2.4 	RATE INCREASES

2.5 	Section 1. Minnesota Statutes 2004, section 352.04,
2.6 	subdivision 2, is amended to read:
2.7 		Subd. 2.Employee contributions.  The employee
2.8 	contribution to the fund must be equal to 4.0 percent of
2.9 	salary. Beginning on July 1, 2007, the employee contribution
2.10 	must be equal to 4.25 percent of salary.  Beginning on July 1,
2.11 	2008, the employee contribution must be equal to 4.50 percent of
2.12 	salary.  Beginning on July 1, 2009, the employee contribution
2.13 	must be equal to 4.75 percent of salary.  Beginning on July 1,
2.14 	2010, the employee contribution must be equal to 5.0 percent of
2.15 	salary.These contributions must be made by deduction from
2.16 	salary as provided in subdivision 4.

2.17 	Sec. 2. Minnesota Statutes 2004, section 352.04,
2.18 	subdivision 3, is amended to read:
2.19 		Subd. 3.Employer contributions.  The employer
2.20 	contribution to the fund must be equal to 4.0 percent of
2.21 	salary. Beginning on July 1, 2007, the employer contribution
2.22 	must be equal to 4.25 percent of salary.  Beginning on July 1,
2.23 	2008, the employer contribution must be equal to 4.50 percent of
2.24 	salary.  Beginning on July 1, 2009, the employer contribution
2.25 	must be equal to 4.75 percent of salary.  Beginning on July 1,
2.26 	2010, the employer contribution must be equal to 5.0 percent of
2.27 	salary.

2.28 	Sec. 3. Minnesota Statutes 2004, section 352.92,
2.29 	subdivision 1, is amended to read:
2.30 		Subdivision 1.Employee contributions.  Employee
2.31 	contributions of covered correctional employees must be in an
2.32 	amount equal to 5.69 a percent of salary. Beginning July 1,
2.33 	2007, through June 30, 2008, the employee contribution must be
2.34 	equal to 6.4 percent of salary.  Beginning July 1, 2008, through
2.35 	June 30, 2009, the employee contribution must be equal to 7.0
2.36 	percent of salary.  Beginning July 1, 2009, through June 30,
3.1 	2010, the employee contribution must be equal to 7.7 percent of
3.2 	salary.  Beginning July 1, 2010, the ongoing employee
3.3 	contribution must be equal to 8.6 percent of salary.

3.4 	Sec. 4. Minnesota Statutes 2004, section 352.92,
3.5 	subdivision 2, is amended to read:
3.6 		Subd. 2.Employer contributions.  The employer shall
3.7 	contribute for covered correctional employees an amount equal to
3.8 	7.98 a percent of salary. Beginning July 1, 2007, through June
3.9 	30, 2008, the employer contribution must be equal to 9.1 percent
3.10 	of salary.  Beginning July 1, 2008, through June 30, 2009, the
3.11 	employer contribution must be equal to 10.1 percent of salary.
3.12 	Beginning July 1, 2009, through June 30, 2010, the employer
3.13 	contribution must be equal to 11.1 percent of salary.  Beginning
3.14 	July 1, 2010, the ongoing employer contribution must be equal to
3.15 	12.1 percent of salary.

3.16 	Sec. 5. Minnesota Statutes 2004, section 352B.02,
3.17 	subdivision 1a, is amended to read:
3.18 		Subd. 1a.Member contributions.  Each member shall pay a
3.19 	sum equal to 8.40 a percent of the member's salary, which shall
3.20 	constitute the member contribution to the fund. Beginning July
3.21 	1, 2007, through June 30, 2008, each member contribution shall
3.22 	be equal to 9.1 percent of salary.  Beginning July 1, 2008, the
3.23 	ongoing member contribution amount shall be equal to 9.8 percent
3.24 	of salary.

3.25 	Sec. 6. Minnesota Statutes 2004, section 352B.02,
3.26 	subdivision 1c, is amended to read:
3.27 		Subd. 1c.Employer contributions.  In addition to member
3.28 	contributions, department heads shall pay a sum equal to 12.60 a 
3.29 	percent of the salary upon which deductions were made, which
3.30 	shall constitute the employer contribution to the fund.
3.31 	Beginning July 1, 2007, through June 30, 2008, the employer
3.32 	contribution shall be equal to 13.6 percent of salary.
3.33 	Beginning July 1, 2008, the ongoing employer contribution amount
3.34 	shall be equal to 14.6 percent of salary.Department
3.35 	contributions must be paid out of money appropriated to
3.36 	departments for this purpose.

4.1 	Sec. 7. Minnesota Statutes 2004, section 352D.04,
4.2 	subdivision 2, is amended to read:
4.3 		Subd. 2.Contribution rates.  (a) The money used to
4.4 	purchase shares under this section is the employee and employer
4.5 	contributions provided in this subdivision.
4.6 	(b) The employee contribution is an amount equal to the
4.7 	employee contribution specified in section 352.04, subdivision 2
4.8 	four percent of salary.
4.9 	(c) The employer contribution is an amount equal to six
4.10 	percent of salary.
4.11 	(d) These contributions must be made in the manner provided
4.12 	in section 352.04, subdivisions 4, 5, and 6.
4.13 	(e) For members of the legislature, the contributions under
4.14 	this subdivision also must be made on per diem payments received
4.15 	during a regular or special legislative session, but may not be
4.16 	made on per diem payments received outside of a regular or
4.17 	special legislative session, on the additional compensation
4.18 	attributable to a leadership position under section 3.099,
4.19 	subdivision 3, living expense payments under section 3.101, or
4.20 	special session living expense payments under section 3.103.
4.21 	(f) For a judge who is a member of the unclassified plan
4.22 	under section 352D.02, subdivision 1, paragraph (c), clause
4.23 	(16), the employee contribution rate is eight percent of salary,
4.24 	and there is no employer contribution.

4.25 	Sec. 8. Minnesota Statutes 2004, section 353.27,
4.26 	subdivision 2, is amended to read:
4.27 		Subd. 2.Employee contribution.  (a) The employee
4.28 	contribution is the following applicable percentage of the total
4.29 	salary amount for a "basic member" and for a "coordinated
4.30 	member":
4.31 	Basic    Coordinated
4.32 	                                   Program     Program
4.33 	Before January 1, 2002 8.75 4.75
4.34 	Effective January 1, 2002 
4.35 	Effective before January 1, 2006 9.10         5.10
4.36 	Effective January 1, 2006 9.10 5.50
5.1 	Effective January 1, 2007 9.10 5.75
5.2 	Effective January 1, 2008 9.10 6.00 plus any
5.3 	                                                 contribution
5.4 	                                                 rate adjustment
5.5 	                                                 under
5.6 	                                                 subdivision 3b 
5.7 	(b) These contributions must be made by deduction from
5.8 	salary as defined in section 353.01, subdivision 10,in the
5.9 	manner provided in subdivision 4. Where If any portion of a
5.10 	member's salary is paid from other than public funds, such the 
5.11 	member's employee contribution must be based on the total salary
5.12 	received by the member from all sources.

5.13 	Sec. 9. Minnesota Statutes 2004, section 353.27,
5.14 	subdivision 3, is amended to read:
5.15 		Subd. 3.Employer contribution.  (a) The employer
5.16 	contribution is the following applicable percentage of the total
5.17 	salary amount for "basic members" and for "coordinated members":
5.18 	Basic     Coordinated
5.19 	                                 Program      Program
5.20 	Before January 1, 2002 8.75 4.75
5.21 	Effective January 1, 2002 
5.22 	Effective before January 1, 2006 9.10          5.10
5.23 	Effective January 1, 2006 9.10 5.50
5.24 	Effective January 1, 2007 9.10 5.75
5.25 	Effective January 1, 2008 9.10 6.00 plus any
5.26 	                                                contribution
5.27 	                                                rate adjustment
5.28 	                                                under
5.29 	                                                subdivision 3b 
5.30 	(b) This contribution must be made from funds available to
5.31 	the employing subdivision by the means and in the manner
5.32 	provided in section 353.28.

5.33 	Sec. 10. Minnesota Statutes 2004, section 353.27,
5.34 	subdivision 3a, is amended to read:
5.35 		Subd. 3a.Additional employer contribution.  (a) An
5.36 	additional employer contribution must be made equal to (1) 2.68
6.1 	percent of the following applicable percentage of the total
6.2 	salary of each amount for "basic member members ";and (2)
6.3 	.43 percent of the total salary of each for "coordinated member.
6.4 	members ":
6.5 	Basic Coordinated
6.6 	                                    Program Program
6.7 	Effective before January 1, 2006 2.68 .43
6.8 	Effective January 1, 2006 2.68 .50
6.9 	Effective January 1, 2009 2.68 .75
6.10 	Effective January 1, 2010 2.68 1.00 
6.11 	These contributions must be made from funds available to
6.12 	the employing subdivision by the means and in the manner
6.13 	provided in section 353.28.
6.14 	(b) The coordinated program contribution rates set forth in
6.15 	paragraph (a) effective for January 1, 2009, or January 1, 2010,
6.16 	must not be implemented if, following receipt of the July 1,
6.17 	2008, or July 1, 2009, annual actuarial valuation reports under
6.18 	section 356.215, respectively, the actuarially required
6.19 	contributions are equal to or less than the total rates under
6.20 	this section in effect as of January 1, 2008.
6.21 	(c) This subdivision is repealed once the actuarial value
6.22 	of the assets of the plan equal or exceed the actuarial accrued
6.23 	liability of the plan as determined by the actuary retained by
6.24 	the Legislative Commission on Pensions and Retirement under
6.25 	section 356.215.  The repeal is effective on the first day of
6.26 	the first full pay period occurring after March 31 of the
6.27 	calendar year following the issuance of the actuarial valuation
6.28 	upon which the repeal is based.

6.29 	Sec. 11. Minnesota Statutes 2004, section 353.27, is
6.30 	amended by adding a subdivision to read:
6.31 		Subd. 3b.Change in employee and employer contributions
6.32 	in certain instances. (a) For purposes of this section, a
6.33 	contribution sufficiency exists if the total of the employee
6.34 	contribution under subdivision 2, the employer contribution
6.35 	under subdivision 3, the additional employer contribution under
6.36 	subdivision 3a, and any additional contribution previously
7.1 	imposed under this subdivision exceeds the total of the normal
7.2 	cost, the administrative expenses, and the amortization
7.3 	contribution of the retirement plan as reported in the most
7.4 	recent actuarial valuation of the retirement plan prepared by
7.5 	the actuary retained under section 356.214 and prepared under
7.6 	section 356.215 and the standards for actuarial work of the
7.7 	Legislative Commission on Pensions and Retirement.  For purposes
7.8 	of this section, a contribution deficiency exists if the total
7.9 	of the employee contributions under subdivision 2, the employer
7.10 	contributions under subdivision 3, the additional employer
7.11 	contribution under subdivision 3a, and any additional
7.12 	contribution previously imposed under this subdivision is less
7.13 	than the total of the normal cost, the administrative expenses,
7.14 	and the amortization contribution of the retirement plan as
7.15 	reported in the most recent actuarial valuation of the
7.16 	retirement plan prepared by the actuary retained under section
7.17 	356.214 and prepared under section 356.215 and the standards for
7.18 	actuarial work of the Legislative Commission on Pensions and
7.19 	Retirement.
7.20 	(b) Employee and employer contributions under subdivisions
7.21 	2 and 3 must be adjusted:
7.22 	(1) if, after July 1, 2010, the regular actuarial
7.23 	valuations of the general employees retirement plan of the
7.24 	Public Employees Retirement Association under section 356.215
7.25 	indicate that there is a contribution sufficiency under
7.26 	paragraph (a) equal to or greater than 0.5 percent of covered
7.27 	payroll for two consecutive years, the coordinated program
7.28 	employee and employer contribution rates must be decreased as
7.29 	determined under paragraph (c) to a level such that the
7.30 	sufficiency equals no more than 0.25 percent of covered payroll
7.31 	based on the most recent actuarial valuation; or 
7.32 	(2) if, after July 1, 2010, the regular actuarial
7.33 	valuations of the general employees retirement plan of the
7.34 	Public Employees Retirement Association under section 356.215
7.35 	indicate that there is a deficiency equal to or greater than 0.5
7.36 	percent of covered payroll for two consecutive years, the
8.1 	coordinated program employee and employer contribution rates
8.2 	must be increased as determined under paragraph (c) to a level
8.3 	such that no deficiency exists based on the most recent
8.4 	actuarial valuation.
8.5 	(c) The contribution rate increase or decrease must be
8.6 	determined by the executive director of the Public Employees
8.7 	Retirement Association, must be reported to the chair and the
8.8 	executive director of the Legislative Commission on Pensions and
8.9 	Retirement on or before the next February 1, and, if the
8.10 	Legislative Commission on Pensions and Retirement does not
8.11 	recommend against the rate change or does not recommend a
8.12 	modification in the rate change, is effective on the next July 1
8.13 	following the determination by the executive director that a
8.14 	contribution deficiency or sufficiency has existed for two
8.15 	consecutive fiscal years based on the most recent actuarial
8.16 	valuations under section 356.215.  If the actuarially required
8.17 	contribution exceeds or is less than the total support provided
8.18 	by the combined employee and employer contribution rates by more
8.19 	than 0.5 percent of covered payroll, the coordinated program
8.20 	employee and employer contribution rates must be adjusted
8.21 	incrementally over one or more years to a level such that there
8.22 	remains a contribution sufficiency of no more than 0.25 percent
8.23 	of covered payroll.
8.24 	(d) No incremental adjustment may exceed 0.25 percent for
8.25 	either the coordinated program employee and employer
8.26 	contribution rates per year in which any adjustment is
8.27 	implemented.  A contribution rate adjustment under this
8.28 	subdivision must not be made until at least two years have
8.29 	passed since fully implementing a previous adjustment under this
8.30 	subdivision.

8.31 	Sec. 12. Minnesota Statutes 2004, section 353.65,
8.32 	subdivision 2, is amended to read:
8.33 		Subd. 2.Employee contribution rate. (a) The employee
8.34 	contribution is an amount equal to 6.2 the percent of the total
8.35 	salary of the member specified in paragraph (b).  This
8.36 	contribution must be made by deduction from salary in the manner
9.1 	provided in subdivision 4.  Where any portion of a member's
9.2 	salary is paid from other than public funds, the member's
9.3 	employee contribution is based on the total salary received from
9.4 	all sources.
9.5 	(b) For calendar year 2006, the employee contribution rate
9.6 	is 7.0 percent.  For calendar year 2007, the employee
9.7 	contribution rate is 7.8 percent.  For calendar year 2008, the
9.8 	employee contribution rate is 8.6 percent.  For calendar year
9.9 	2009 and thereafter, the employee contribution rate is 9.4
9.10 	percent.

9.11 	Sec. 13. Minnesota Statutes 2004, section 353.65,
9.12 	subdivision 3, is amended to read:
9.13 		Subd. 3.Employer contribution rate. (a) The employer
9.14 	contribution shall be an amount equal to 9.3 the percent of the
9.15 	total salary of every member as specified in paragraph (b).
9.16 	This contribution shall be made from funds available to the
9.17 	employing subdivision by the means and in the manner provided in
9.18 	section 353.28.
9.19 	(b) For calendar year 2006, the employer contribution rate
9.20 	is 10.5 percent.  For calendar year 2007, the employer
9.21 	contribution rate is 11.7 percent.  For calendar year 2008, the
9.22 	employer contribution rate is 12.9 percent.  For calendar year
9.23 	2009 and thereafter, the employer contribution rate is 14.1
9.24 	percent.

9.25 	Sec. 14. EFFECTIVE DATE.
 9.26 	(a) Sections 1, 2, and 7 are effective on July 1, 2007.
9.27 	(b) Sections 3 to 6 are effective on July 1, 2005.
9.28 	(c) Sections 8 to 13 are effective on January 1, 2006.

9.29 	ARTICLE 2
9.30 	TEACHER RETIREMENT FUND AND
9.31 	BENEFIT RESTRUCTURING

9.32 	Section 1. [126C.458] LEVY FOR EARLY RETIREMENT COSTS.
9.33 	Each year, a school district may levy for the additional
9.34 	employer contributions required under section 354.42,
9.35 	subdivision 3.

9.36 	Sec. 2. [128D.18] FUNDING OF UNFUNDED PENSION
10.1 	LIABILITIES.
10.2 		Subdivision 1.Financing authority. Notwithstanding any
10.3 	other law to the contrary, Special School District No. 1,
10.4 	Minneapolis, may finance all or a portion of the current and
10.5 	future unfunded actuarial accrued liability of the former
10.6 	Minneapolis Teachers Retirement Fund Association through the
10.7 	issuance of pension obligation bonds under this section.
10.8 		Subd. 2.Use of proceeds. The proceeds of the bonds
10.9 	issued, less costs, must be paid to the State Board of
10.10 	Investment to be deposited as a payment toward the funding of
10.11 	the unfunded actuarial accrued liability of the former
10.12 	Minneapolis Teachers Retirement Fund Association owed by Special
10.13 	School District No. 1, Minneapolis, and must be credited as an
10.14 	asset of the Teachers Retirement Association.
10.15 		Subd. 3.Appropriations. Notwithstanding any law to the
10.16 	contrary, special direct state aid, matching aid, and other
10.17 	contributions levied for the Teachers Retirement Association
10.18 	under section 354A.12, subdivisions 3a and 3b, and amortization
10.19 	or supplementary amortization state aid reallocated to the
10.20 	Teachers Retirement Association under section 423A.02 are
10.21 	pledged and appropriated to the payment of the bonds and must be
10.22 	transferred to Special School District No. 1, Minneapolis, and
10.23 	additional employer contributions levied by Special School
10.24 	District No. 1, Minneapolis, under section 354A.12, subdivision
10.25 	3b, shall be retained by the district to the extent required to
10.26 	pay debt service on the bonds for the succeeding 12-month period
10.27 	or a longer period established pursuant to the resolution of the
10.28 	district authorizing the bonds.
10.29 		Subd. 4.No election. No election of the voters of the
10.30 	district shall be required to issue bonds authorized by this
10.31 	section.
10.32 		Subd. 5.Terms and sale of bonds. The bonds issued
10.33 	pursuant to this section shall bear interest at the rate or
10.34 	rates and mature on the date or dates not more than 30 years
10.35 	from the date of issue as the district shall determine by
10.36 	resolution.  Interest may be at a fixed or variable rate.  The
11.1 	bonds may be sold and issued on terms and in a manner that
11.2 	Special School District No. 1, Minneapolis, determines is in its
11.3 	best interests and in the best interests of the state.
11.4 		Subd. 6.This section prevails. Notwithstanding any
11.5 	other law to the contrary, this section shall apply to the
11.6 	issuance and sale of the bonds and to the purposes for which the
11.7 	bonds may be issued.
11.8 		Subd. 7.State pledge against impairment of
11.9 	contracts. The state pledges and agrees with the holders of
11.10 	bonds issued under this section that the state will not limit or
11.11 	alter the rights vested in Special School District No. 1,
11.12 	Minneapolis, to fulfill the terms of any agreements made with
11.13 	the bondholders or in any way impair the rights and remedies of
11.14 	the holders until the bonds, together with interest on them,
11.15 	with interest on any unpaid installments of interest, and all
11.16 	costs and expenses in connection with any action or proceeding
11.17 	by or on behalf of the bondholders, are fully met and
11.18 	discharged.  The district may include this pledge and agreement
11.19 	of the state in any agreement with the holders of bonds issued
11.20 	under this section.
11.21 		Subd. 8.Not net debt. Bonds ended under this section
11.22 	not in default shall not be deemed net debt under any law
11.23 	limiting indebtedness.
11.24 		Subd. 9.Aid reduction for repayment. If the amount
11.25 	transferred by Special School District No. 1, Minneapolis, to
11.26 	the paying agent for the bonds is insufficient to pay required
11.27 	debt service, the paying agent shall notify the commissioner of
11.28 	finance.  The commissioner shall reduce any and all unrestricted
11.29 	state aids generally available to the school district by the
11.30 	amount of the deficiency and pay the amounts to the paying agent
11.31 	for the bonds for the payment of debt service.  If the state
11.32 	aids are reduced pursuant to this subdivision, the district may
11.33 	levy a tax in the amount of the reduction in state aid.
11.34 	Notwithstanding any other law to the contrary, no election of
11.35 	the voters of the district is required for the levy and the levy
11.36 	is not subject to other levy limitations.

12.1 	Sec. 3. [128D.181] AID REDEDICATION.
12.2 	Notwithstanding any law to the contrary and subject to
12.3 	section 2, special direct state aid previously paid to the
12.4 	Minneapolis Teachers Retirement Fund Association under section
12.5 	354A.12, subdivision 3a, must be paid to the Teachers Retirement
12.6 	Association.

12.7 	Sec. 4. Minnesota Statutes 2004, section 354.05,
12.8 	subdivision 2, is amended to read:
12.9 		Subd. 2.Teacher.  (a) "Teacher" means:
12.10 	(1) a person who renders service as a teacher, supervisor,
12.11 	principal, superintendent, librarian, nurse, counselor, social
12.12 	worker, therapist, or psychologist in a public school of the
12.13 	state located outside of the corporate limits of a city of the
12.14 	first class the city of Duluth or the city of St. Paul, or in
12.15 	any charter school, irrespective of the location of the school,
12.16 	or in any charitable, penal, or correctional institutions of a
12.17 	governmental subdivision, or who is engaged in educational
12.18 	administration in connection with the state public school
12.19 	system, but excluding the University of Minnesota, whether the
12.20 	position be a public office or an employment, and not including
12.21 	the members or officers of any general governing or managing
12.22 	board or body;
12.23 	(2) an employee of the Teachers Retirement Association;
12.24 	(3) a person who renders teaching service on a part-time
12.25 	basis and who also renders other services for a single employing
12.26 	unit.  A person whose teaching service comprises at least 50
12.27 	percent of the combined employment salary is a member of the
12.28 	association for all services with the single employing unit.  If
12.29 	the person's teaching service comprises less than 50 percent of
12.30 	the combined employment salary, the executive director must
12.31 	determine whether all or none of the combined service is covered
12.32 	by the association; or
12.33 	(4) a person who is not covered by the plans established
12.34 	under chapter 352D, 354A, or 354B and who is employed by the
12.35 	Board of Trustees of the Minnesota State Colleges and
12.36 	Universities system in an unclassified position as:
13.1 	(i) a president, vice-president, or dean;
13.2 	(ii) a manager or a professional in an academic or an
13.3 	academic support program other than specified in item (i);
13.4 	(iii) an administrative or a service support faculty
13.5 	position; or
13.6 	(iv) a teacher or a research assistant.
13.7 	(b) "Teacher" does not mean:
13.8 	(1) a person who works for a school or institution as an
13.9 	independent contractor as defined by the Internal Revenue
13.10 	Service;
13.11 	(2) a person who renders part-time teaching service or who
13.12 	is a customized trainer as defined by the Minnesota State
13.13 	Colleges and Universities system if (i) the service is
13.14 	incidental to the regular nonteaching occupation of the person;
13.15 	and (ii) the employer stipulates annually in advance that the
13.16 	part-time teaching service or customized training service will
13.17 	not exceed 300 hours in a fiscal year and retains the
13.18 	stipulation in its records; and (iii) the part-time teaching
13.19 	service or customized training service actually does not exceed
13.20 	300 hours in a fiscal year; or
13.21 	(3) a person exempt from licensure under section 122A.30.

13.22 	Sec. 5. Minnesota Statutes 2004, section 354.05,
13.23 	subdivision 13, is amended to read:
13.24 		Subd. 13.Allowable service.  "Allowable service" means:
13.25 	(1) Any service rendered by a teacher for which on or
13.26 	before July 1, 1957, the teacher's account in the retirement
13.27 	fund was credited by reason of employee contributions in the
13.28 	form of salary deductions, payments in lieu of salary
13.29 	deductions, or in any other manner authorized by Minnesota
13.30 	Statutes 1953, sections 135.01 to 135.13, as amended by Laws
13.31 	1955, chapters 361, 549, 550, 611, or
13.32 	(2) Any service rendered by a teacher for which on or
13.33 	before July 1, 1961, the teacher elected to obtain credit for
13.34 	service by making payments to the fund pursuant to Minnesota
13.35 	Statutes 1980, section 354.09 and section 354.51, or
13.36 	(3) Any service rendered by a teacher after July 1, 1957,
14.1 	for any calendar month when the member receives salary from
14.2 	which deductions are made, deposited and credited in the fund,
14.3 	or
14.4 	(4) Any service rendered by a person after July 1, 1957,
14.5 	for any calendar month where payments in lieu of salary
14.6 	deductions are made, deposited and credited into the fund as
14.7 	provided in Minnesota Statutes 1980, section 354.09, subdivision
14.8 	4, and section 354.53, or
14.9 	(5) Any service rendered by a teacher for which the teacher
14.10 	elected to obtain credit for service by making payments to the
14.11 	fund pursuant to Minnesota Statutes 1980, section 354.09,
14.12 	subdivisions 1 and 4, sections 354.50, 354.51, Minnesota
14.13 	Statutes 1957, section 135.41, subdivision 4, Minnesota Statutes
14.14 	1971, section 354.09, subdivision 2, or Minnesota Statutes, 1973
14.15 	Supplement, section 354.09, subdivision 3, or
14.16 	(6) Both service during years of actual membership in the
14.17 	course of which contributions were currently made and service in
14.18 	years during which the teacher was not a member but for which
14.19 	the teacher later elected to obtain credit by making payments to
14.20 	the fund as permitted by any law then in effect, or
14.21 	(7) Any service rendered where contributions were made and
14.22 	no allowable service credit was established because of the
14.23 	limitations contained in Minnesota Statutes 1957, section
14.24 	135.09, subdivision 2, as determined by the ratio between the
14.25 	amounts of money credited to the teacher's account in a fiscal
14.26 	year and the maximum retirement contribution allowable for that
14.27 	year, or
14.28 	(8) MS 2002 (Expired)
14.29 	(9) A period of time during which a teacher who is a state
14.30 	employee was on strike without pay, not to exceed a period of
14.31 	one year, if the teacher makes a payment in lieu of salary
14.32 	deductions or makes a prior service credit purchase payment,
14.33 	whichever applies.  If the payment is made within 12 months, the
14.34 	payment by the teacher must be an amount equal to the employee
14.35 	and employer contribution rates set forth in section 354.42,
14.36 	subdivisions 2 and 3, applied to the teacher's rate of salary in
15.1 	effect on the conclusion of the strike for the period of the
15.2 	strike without pay, plus compound interest at a monthly rate of
15.3 	0.71 percent from the last day of the strike until the date of
15.4 	payment.  If the payment by the employee is not made within 12
15.5 	months, the payment must be in an amount equal to the payment
15.6 	amount determined under section 356.55 or 356.551, whichever
15.7 	applies, or 
15.8 	(10) A period of service before July 1, 2005, that was
15.9 	credited by the Minneapolis Teachers Retirement Fund Association
15.10 	and that was rendered by a teacher as an employee of Special
15.11 	School District No. 1, Minneapolis, or by an employee of the
15.12 	Minneapolis Teachers Retirement Fund Association who was a
15.13 	member of the Minneapolis Teachers Retirement Fund Association
15.14 	by virtue of that employment, who has not begun receiving an
15.15 	annuity or other retirement benefit from the former Minneapolis
15.16 	Teachers Retirement Fund Association calculated in whole or in
15.17 	part on that service before July 1, 2005, and who has not taken
15.18 	a refund of member contributions related to that service unless
15.19 	the refund is repaid under section 354.50, subdivision 4.

15.20 	Sec. 6. Minnesota Statutes 2004, section 354.42,
15.21 	subdivision 2, is amended to read:
15.22 		Subd. 2.Employee. (a) The employee contribution to the
15.23 	fund is an amount equal to the following percentage of the
15.24 	salary of a member:
15.25 	(1) after July 1, 2005, for a teacher employed by Special
15.26 	School District No. 1, Minneapolis, 5.5 percent if the teacher
15.27 	is a coordinated member and 9.0 percent if the teacher is a
15.28 	basic member;
15.29 	(2) for every other teacher,5.0 5.5 percent of if the
15.30 	salary of every teacher is a coordinated member and 9.0 percent
15.31 	of if the salary of every teacher is a basic member.
15.32 	(b) This contribution must be made by deduction from
15.33 	salary.  Where any portion of a member's salary is paid from
15.34 	other than public funds, the member's employee contribution must
15.35 	be based on the entire salary received.

15.36 	Sec. 7. Minnesota Statutes 2004, section 354.42,
16.1 	subdivision 3, is amended to read:
16.2 		Subd. 3.Employer. (a) The employer contribution to the
16.3 	fund by Special School District No. 1, Minneapolis, is an amount
16.4 	equal to 8.64 percent of the salary of each of its teachers who
16.5 	is a coordinated member and 12.64 percent of the salary of each
16.6 	of its teachers who is a basic member.
16.7 	(b) The employer contribution to the fund for every other
16.8 	employer is an amount equal to 5.0 5.5 percent of the salary of
16.9 	each coordinated member and 9.0 percent of the salary of each
16.10 	basic member.
16.11 	(c) As payment toward the cost of the unfunded actuarial
16.12 	accrued liability transferred to the Teachers Retirement
16.13 	Association from the former Minneapolis Teachers Retirement Fund
16.14 	Association, a supplemental contribution of 0.26 percent of the
16.15 	covered payroll of the fund must be made each fiscal year
16.16 	through June 30, 2035.  One-third of the dollar amount of this
16.17 	supplemental contribution must be paid each by Special School
16.18 	District No. 1, Minneapolis, the city of Minneapolis, and the
16.19 	state of Minnesota.  On or before October 1, annually, the
16.20 	executive director of the Teachers Retirement Association shall
16.21 	calculate the expected total dollar amount of the supplemental
16.22 	contribution for the calendar year and shall certify the portion
16.23 	payable by each governmental entity.  The amount is payable in
16.24 	full on or before the following June 1.

16.25 	Sec. 8. Minnesota Statutes 2004, section 354.44,
16.26 	subdivision 6, is amended to read:
16.27 		Subd. 6.Computation of formula program retirement
16.28 	annuity.  (a) The formula retirement annuity must be computed in
16.29 	accordance with the applicable provisions of the formulas stated
16.30 	in paragraph (b) or (d) on the basis of each member's average
16.31 	salary for the period of the member's formula service credit.
16.32 	For all years of formula service credit, "average salary,"
16.33 	for the purpose of determining the member's retirement annuity,
16.34 	means the average salary upon which contributions were made and
16.35 	upon which payments were made to increase the salary limitation
16.36 	provided in Minnesota Statutes 1971, section 354.511, for the
17.1 	highest five successive years of formula service credit
17.2 	provided, however, that such "average salary" shall not include
17.3 	any more than the equivalent of 60 monthly salary payments.
17.4 	Average salary must be based upon all years of formula service
17.5 	credit if this service credit is less than five years.
17.6 	(b) This paragraph, in conjunction with paragraph (c),
17.7 	applies to a person who first became a member of the association
17.8 	or a member of a pension fund listed in section 356.30,
17.9 	subdivision 3, before July 1, 1989, unless paragraph (d), in
17.10 	conjunction with paragraph (e), produces a higher annuity
17.11 	amount, in which case paragraph (d) applies.  The average salary
17.12 	as defined in paragraph (a), multiplied by the following
17.13 	percentages per year of formula service credit shall determine
17.14 	the amount of the annuity to which the member qualifying
17.15 	therefor is entitled for service rendered prior to July 1, 2005:
17.16 	Coordinated Member   Basic Member
17.17 	Each year of service     the percent        the percent
17.18 	during first ten         specified in       specified in
17.19 	section 356.315,   section 356.315,
17.20 	subdivision 1,     subdivision 3,
17.21 	per year           per year
17.22 	Each year of service     the percent        the percent
17.23 	thereafter               specified in       specified in
17.24 	section 356.315,   section 356.315,
17.25 	subdivision 2,     subdivision 4,
17.26 	per year           per year
17.27 	For service rendered on or after July 1, 2005, the average
17.28 	salary as defined in paragraph (a), multiplied by the following
17.29 	percentages per year of service credit shall determine the
17.30 	amount of the annuity to which the member qualifying therefor is
17.31 	entitled:
17.32 	Coordinated Member Basic Member 
17.33 	Each year of service the percent the percent 
17.34 	during first ten specified in specified in 
17.35 	section 356.315,section 356.315,
17.36 	subdivision 1a,subdivision 3,
18.1 	per year per year 
18.2 	Coordinated Member Basic Member 
18.3 	Each year of service the percent the percent 
18.4 	after ten years of specified in specified in 
18.5 	service section 356.315,section 356.315,
18.6 	subdivision 2a,subdivision 4,
18.7 	per year per year 
18.8 	(c)(i) This paragraph applies only to a person who first
18.9 	became a member of the association or a member of a pension fund
18.10 	listed in section 356.30, subdivision 3, before July 1, 1989,
18.11 	and whose annuity is higher when calculated under paragraph (b),
18.12 	in conjunction with this paragraph than when calculated under
18.13 	paragraph (d), in conjunction with paragraph (e).
18.14 	(ii) Where any member retires prior to normal retirement
18.15 	age under a formula annuity, the member shall be paid a
18.16 	retirement annuity in an amount equal to the normal annuity
18.17 	provided in paragraph (b) reduced by one-quarter of one percent
18.18 	for each month that the member is under normal retirement age at
18.19 	the time of retirement except that for any member who has 30 or
18.20 	more years of allowable service credit, the reduction shall be
18.21 	applied only for each month that the member is under age 62.
18.22 	(iii) Any member whose attained age plus credited allowable
18.23 	service totals 90 years is entitled, upon application, to a
18.24 	retirement annuity in an amount equal to the normal annuity
18.25 	provided in paragraph (b), without any reduction by reason of
18.26 	early retirement.
18.27 	(d) This paragraph applies to a member who has become at
18.28 	least 55 years old and first became a member of the association
18.29 	after June 30, 1989, and to any other member who has become at
18.30 	least 55 years old and whose annuity amount when calculated
18.31 	under this paragraph and in conjunction with paragraph (e), is
18.32 	higher than it is when calculated under paragraph (b), in
18.33 	conjunction with paragraph (c). For a basic member,the average
18.34 	salary, as defined in paragraph (a) multiplied by the percent
18.35 	specified by section 356.315, subdivision 4, for each year of
18.36 	service for a basic member and by the percent specified in
19.1 	section 356.315, subdivision 2, for each year of service for a
19.2 	coordinated member shall determine the amount of the retirement
19.3 	annuity to which the basic member is entitled. For a
19.4 	coordinated member, the average salary, as defined in paragraph
19.5 	(a) multiplied by the percent specified in section 356.315,
19.6 	subdivision 2, for each year of service rendered prior to July
19.7 	1, 2005, and by the percent specified in section 356.315,
19.8 	subdivision 2a, for each year of service rendered on or after
19.9 	July 1, 2005, shall determine the amount of the retirement
19.10 	annuity to which the coordinated member is entitled.
19.11 	(e) This paragraph applies to a person who has become at
19.12 	least 55 years old and first becomes a member of the association
19.13 	after June 30, 1989, and to any other member who has become at
19.14 	least 55 years old and whose annuity is higher when calculated
19.15 	under paragraph (d) in conjunction with this paragraph than when
19.16 	calculated under paragraph (b), in conjunction with paragraph
19.17 	(c).  An employee who retires under the formula annuity before
19.18 	the normal retirement age shall be paid the normal annuity
19.19 	provided in paragraph (d) reduced so that the reduced annuity is
19.20 	the actuarial equivalent of the annuity that would be payable to
19.21 	the employee if the employee deferred receipt of the annuity and
19.22 	the annuity amount were augmented at an annual rate of three
19.23 	percent compounded annually from the day the annuity begins to
19.24 	accrue until the normal retirement age.
19.25 	(f) No retirement annuity is payable to a former employee
19.26 	with a salary that exceeds 95 percent of the governor's salary
19.27 	unless and until the salary figures used in computing the
19.28 	highest five successive years average salary under paragraph (a)
19.29 	have been audited by the Teachers Retirement Association and
19.30 	determined by the executive director to comply with the
19.31 	requirements and limitations of section 354.05, subdivisions 35
19.32 	and 35a.

19.33 	Sec. 9. [354.70] CONSOLIDATION OF THE MINNEAPOLIS
19.34 	TEACHERS RETIREMENT FUND ASSOCIATION.
19.35 		Subdivision 1.Membership transfer. All active,
19.36 	inactive, and retired members of the Minneapolis Teachers
20.1 	Retirement Fund Association are transferred to the Teachers
20.2 	Retirement Association and are no longer members of the
20.3 	Minneapolis Teachers Retirement Fund Association as of the
20.4 	effective date of this section.
20.5 		Subd. 2.Tra membership. A person first hired as a
20.6 	teacher by Special School District No. 1, Minneapolis, after the
20.7 	effective date of this section and who is a teacher as defined
20.8 	in section 354.05, subdivision 2, is a member of the Teachers
20.9 	Retirement Association for the person's teaching service.
20.10 		Subd. 3.Service credit and liability transfer. All
20.11 	allowable service and salary credit of the members and other
20.12 	individuals transferred under subdivision 1 as specified in the
20.13 	records of the Minneapolis Teachers Retirement Fund Association
20.14 	on the transfer date is allowable service credit under section
20.15 	354.05, subdivision 13, formula service credit under section
20.16 	354.05, subdivision 25, and salary credit under section 354.05,
20.17 	subdivision 35, for the Teachers Retirement Association.
20.18 		Subd. 4.Transfer of records. On the effective date of
20.19 	this section, the chief administrative officer of the
20.20 	Minneapolis Teachers Retirement Fund Association shall effect a
20.21 	transfer of all records and documents relating to the funds and
20.22 	the benefit plans of the association to the executive director
20.23 	of the Teachers Retirement Association.  To the extent possible,
20.24 	original copies of all records and documents must be
20.25 	transferred.  The chief administrative officer of the
20.26 	Minneapolis Teachers Retirement Fund Association shall certify
20.27 	the accuracy of all records and documents for which the transfer
20.28 	of original copies was not possible.
20.29 		Subd. 5.Transfer of assets. (a) On the effective date
20.30 	of this section, the chief administrative officer of the
20.31 	Minneapolis Teachers Retirement Fund Association shall transfer
20.32 	to the Teachers Retirement Association the entire assets of the
20.33 	Minneapolis Teachers Retirement Fund Association.  The transfer
20.34 	of the assets of the Minneapolis Teachers Retirement Fund
20.35 	Association must include any accounts receivable that are
20.36 	determined by the executive director of the State Board of
21.1 	Investment as reasonably capable of being collected.  Legal
21.2 	title to account receivables that are determined by the
21.3 	executive director of the State Board of Investment as not
21.4 	reasonably capable of being collected transfers to Special
21.5 	School District No. 1, Minneapolis, as of the date of the
21.6 	determination of the executive director of the State Board of
21.7 	Investment.  If the account receivables transferred to Special
21.8 	School District No. 1, Minneapolis, are subsequently recovered
21.9 	by the school district, the superintendent of Special School
21.10 	District No. 1, Minneapolis, shall transfer the recovered amount
21.11 	to the executive director of the Teachers Retirement
21.12 	Association, in cash, for deposit in the teachers retirement
21.13 	fund, less the reasonable expenses of the school district
21.14 	related to the recovery.
21.15 	(b) As of the effective date of this section, subject to
21.16 	the authority of the State Board of Investment, the board of
21.17 	directors of the Teachers Retirement Association has legal title
21.18 	to and management responsibility for any transferred assets
21.19 	under this subdivision as trustees for any person having a
21.20 	beneficial interest in the Minneapolis Teachers Retirement Fund
21.21 	Association.  The Teachers Retirement Association is the
21.22 	successor in interest for all claims for and against the former
21.23 	coordinated program of the Minneapolis Teachers Retirement Fund
21.24 	Association with respect to the retirement fund association,
21.25 	except a claim against the Minneapolis Teachers Retirement Fund
21.26 	Association or any person connected with the fund association in
21.27 	a fiduciary capacity, based on any act or acts by that person
21.28 	which were not done in good faith and which constituted a breach
21.29 	of the obligation of the person as a fiduciary.  As the
21.30 	successor in interest, the Teachers Retirement Association may
21.31 	assert any applicable defense in any judicial proceeding which
21.32 	the board of the Minneapolis Teachers Retirement Fund
21.33 	Association would have otherwise been entitled to assert
21.34 	relating to the coordinated program.
21.35 	(c) From the assets of the Minneapolis Teachers Retirement
21.36 	Fund Association transferred to the Teachers Retirement
22.1 	Association, an amount equal to the percentage figure that
22.2 	represents the ratio between the market value of the Minnesota
22.3 	postretirement investment fund as of June 30, 2005, and the
22.4 	required reserves of the Minnesota postretirement investment
22.5 	fund as of June 30, 2005, applied to the present value of future
22.6 	benefits payable to annuitants of the former Minneapolis
22.7 	Teachers Retirement Fund Association as of June 30, 2005,
22.8 	including any postretirement adjustment from the Minnesota
22.9 	postretirement investment fund expected to be payable on January
22.10 	1, 2006, must be transferred to the Minnesota postretirement
22.11 	investment fund.  The executive director of the State Board of
22.12 	Investment shall estimate this ratio at the time of the
22.13 	transfer.  By January 1, 2006, after all necessary financial
22.14 	information becomes available to determine the actual funded
22.15 	ratio of the Minnesota postretirement investment fund, the
22.16 	postretirement fund must refund to the Teachers Retirement
22.17 	Association any excess assets or the Teachers Retirement
22.18 	Association must contribute any deficiency to the Minnesota
22.19 	postretirement investment fund with interest under section
22.20 	11A.18, subdivision 6.  The balance of the assets of the former
22.21 	Minneapolis Teachers Retirement Fund Association after the
22.22 	transfer to the Minnesota postretirement investment fund must be
22.23 	credited to the Teachers Retirement Association.
22.24 	If the assets transferred by the Minneapolis Teachers
22.25 	Retirement Fund Association to the Teachers Retirement
22.26 	Association are insufficient to meet its obligation to the
22.27 	Minnesota postretirement investment fund, additional assets must
22.28 	be transferred by the executive director of the Teachers
22.29 	Retirement Association to meet the amount required.
22.30 		Subd. 6.Benefit calculation. (a) For every deferred,
22.31 	inactive, disabled, and retired member of the Minneapolis
22.32 	Teachers Retirement Fund Association transferred under
22.33 	subdivision 1, and the survivors of these members, annuities or
22.34 	benefits earned before the date of the transfer, other than
22.35 	future postretirement adjustments, must be calculated and paid
22.36 	by the Teachers Retirement Association under the laws, articles
23.1 	of incorporation, and bylaws of the former Minneapolis Teachers
23.2 	Retirement Fund Association that were in effect relative to the
23.3 	person on the date of the person's termination of active service
23.4 	covered by the former Minneapolis Teachers Retirement Fund
23.5 	Association.
23.6 	(b) Former Minneapolis Teachers Retirement Fund Association
23.7 	members who retired before July 1, 2005, must receive
23.8 	postretirement adjustments after January 1, 2006, only as
23.9 	provided in section 11A.18.  All other benefit recipients of the
23.10 	former Minneapolis Teachers Retirement Fund Association must
23.11 	receive postretirement adjustments after January 1, 2006, only
23.12 	as provided in section 356.41.
23.13 		Subd. 7.Termination of the minneapolis teachers
23.14 	retirement fund association. As of the effective date of this
23.15 	section and upon the transfer of administration, records,
23.16 	assets, and liabilities from the Minneapolis Teachers Retirement
23.17 	Fund Association to the Teachers Retirement Association, the
23.18 	Minneapolis Teachers Retirement Fund Association ceases to exist
23.19 	as a Minnesota public pension plan.

23.20 	Sec. 10. [354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND
23.21 	STATE AID REDEDICATED.
23.22 		Subdivision 1.Appropriation. The positive difference,
23.23 	if any, between the actual state aid paid to the Minneapolis
23.24 	Employees Retirement Fund under section 422A.101, subdivision 3,
23.25 	and $8,065,000 annually is appropriated from the general fund to
23.26 	the commissioner of finance for deposit in the Teachers
23.27 	Retirement Association to offset all or a portion of the current
23.28 	and future unfunded actuarial accrued liability of the
23.29 	Minneapolis Teachers Retirement Fund Association.
23.30 		Subd. 2.Financial requirements. The appropriation in
23.31 	subdivision 1 is available to the extent that financial
23.32 	requirements of the Minneapolis Employees Retirement Fund under
23.33 	section 422A.101, subdivision 3, have been satisfied.

23.34 	Sec. 11. Minnesota Statutes 2004, section 354A.011,
23.35 	subdivision 15a, is amended to read:
23.36 		Subd. 15a.Normal retirement age.  "Normal retirement
24.1 	age" means age 65 for a person who first became a member of the
24.2 	coordinated program of the Minneapolis or St. Paul Teachers
24.3 	Retirement Fund Association or the new law coordinated program
24.4 	of the Duluth Teachers Retirement Fund Association or a member
24.5 	of a pension fund listed in section 356.30, subdivision 3,
24.6 	before July 1, 1989.  For a person who first became a member of
24.7 	the coordinated program of the Minneapolis or St. Paul Teachers
24.8 	Retirement Fund Association or the new law coordinated program
24.9 	of the Duluth Teachers Retirement Fund Association after June
24.10 	30, 1989, normal retirement age means the higher of age 65 or
24.11 	retirement age, as defined in United States Code, title 42,
24.12 	section 416(l), as amended, but not to exceed age 66.  For a
24.13 	person who is a member of the basic program of the Minneapolis
24.14 	or St. Paul Teachers Retirement Fund Association or the old law
24.15 	coordinated program of the Duluth Teachers Retirement Fund
24.16 	Association, normal retirement age means the age at which a
24.17 	teacher becomes eligible for a normal retirement annuity
24.18 	computed upon meeting the age and service requirements specified
24.19 	in the applicable provisions of the articles of incorporation or
24.20 	bylaws of the respective teachers retirement fund association.

24.21 	Sec. 12. Minnesota Statutes 2004, section 354A.011,
24.22 	subdivision 27, is amended to read:
24.23 		Subd. 27.Teacher.  (a) "Teacher" means any person who
24.24 	renders service for a public school district, other than a
24.25 	charter school, located in the corporate limits of one of the
24.26 	cities of the first class which was so classified on January 1,
24.27 	1979 Duluth and St. Paul, as any of the following:
24.28 	(1) a full-time employee in a position for which a valid
24.29 	license from the state Department of Education is required;
24.30 	(2) an employee of the teachers retirement fund association
24.31 	located in the city of the first class unless the employee has
24.32 	exercised the option pursuant to Laws 1955, chapter 10, section
24.33 	1, to retain membership in the Minneapolis Employees Retirement
24.34 	Fund established pursuant to chapter 422A;
24.35 	(3) a part-time employee in a position for which a valid
24.36 	license from the state Department of Education is required; or
25.1 	(4) a part-time employee in a position for which a valid
25.2 	license from the state Department of Education is required who
25.3 	also renders other nonteaching services for the school district,
25.4 	unless the board of trustees of the teachers retirement fund
25.5 	association determines that the combined employment is on the
25.6 	whole so substantially dissimilar to teaching service that the
25.7 	service may not be covered by the association.
25.8 	(b) The term does not mean any person who renders service
25.9 	in the school district as any of the following:
25.10 	(1) an independent contractor or the employee of an
25.11 	independent contractor;
25.12 	(2) an employee who is a full-time teacher covered by the
25.13 	Teachers Retirement Association or by another teachers
25.14 	retirement fund association established pursuant to this chapter
25.15 	or chapter 354;
25.16 	(3) an employee exempt from licensure pursuant to section
25.17 	122A.30;
25.18 	(4) an employee who is a teacher in a technical college
25.19 	located in a city of the first class unless the person elects
25.20 	coverage by the applicable first class city teacher retirement
25.21 	fund association under section 354B.21, subdivision 2;
25.22 	(5) a teacher employed by a charter school, irrespective of
25.23 	the location of the school; or
25.24 	(6) an employee who is a part-time teacher in a technical
25.25 	college in a city of the first class and who has elected
25.26 	coverage by the applicable first class city teacher retirement
25.27 	fund association under section 354B.21, subdivision 2, but (i)
25.28 	the teaching service is incidental to the regular nonteaching
25.29 	occupation of the person; (ii) the applicable technical college
25.30 	stipulates annually in advance that the part-time teaching
25.31 	service will not exceed 300 hours in a fiscal year; and (iii)
25.32 	the part-time teaching actually does not exceed 300 hours in the
25.33 	fiscal year to which the certification applies.

25.34 	Sec. 13. Minnesota Statutes 2004, section 354A.021,
25.35 	subdivision 1, is amended to read:
25.36 		Subdivision 1.Establishment.  There is established a
26.1 	teachers retirement fund association in each of the cities of
26.2 	the first class which were so classified on January 1,
26.3 	1979 Duluth and St. Paul.  The associations shall be known
26.4 	respectively as the "Duluth Teachers Retirement Fund
26.5 	Association," the "Minneapolis Teachers Retirement Fund
26.6 	Association" and the "St. Paul Teachers Retirement Fund
26.7 	Association."  Each association shall be a continuation of the
26.8 	teachers retirement fund association with the same corporate
26.9 	name established pursuant to the authorization contained in Laws
26.10 	1909, chapter 343, section 1.

26.11 	Sec. 14. Minnesota Statutes 2004, section 354A.092, is
26.12 	amended to read:
26.13 	354A.092 SABBATICAL LEAVE.
26.14 	Any teacher in the coordinated program of either the
26.15 	Minneapolis Teachers Retirement Fund Association or the St.
26.16 	Paul Teachers Retirement Fund Association or any teacher in the
26.17 	new law coordinated program of the Duluth Teachers Retirement
26.18 	Fund Association who is granted a sabbatical leave shall be
26.19 	entitled to receive allowable service credit in the applicable
26.20 	association for periods of sabbatical leave.  To obtain the
26.21 	service credit, the teacher on sabbatical leave shall make an
26.22 	employee contribution to the applicable association.  No teacher
26.23 	shall be entitled to receive more than three years of allowable
26.24 	service credit pursuant to this section for a period or periods
26.25 	of sabbatical leave during any ten consecutive fiscal or
26.26 	calendar years, whichever is the applicable plan year for the
26.27 	teachers retirement fund association.  If the teacher granted a
26.28 	sabbatical leave makes the employee contribution for a period of
26.29 	sabbatical leave pursuant to this section, the employing unit
26.30 	shall make an employer contribution on behalf of the teacher to
26.31 	the applicable association for that period of sabbatical leave
26.32 	in the manner described in section 354A.12, subdivision 2a.  The
26.33 	employee and employer contributions shall be in an amount equal
26.34 	to the employee and employer contribution rates in effect for
26.35 	other active members of the association covered by the same
26.36 	program applied to a salary figure equal to the teacher's actual
27.1 	covered salary for the plan year immediately preceding the
27.2 	sabbatical leave period.  Payment of the employee contribution
27.3 	authorized pursuant to this section shall be made by the teacher
27.4 	on or before June 30 of year next following the year in which
27.5 	the sabbatical leave terminated and shall be made without
27.6 	interest.  For sabbatical leaves taken after June 30, 1986, the
27.7 	required employer contributions shall be paid by the employing
27.8 	unit within 30 days after notification by the association of the
27.9 	amount due.  If the employee contributions for the sabbatical
27.10 	leave period are less than an amount equal to the applicable
27.11 	contribution rate applied to a salary figure equal to the
27.12 	teacher's actual covered salary for the plan year immediately
27.13 	preceding the sabbatical leave period, service credit shall be
27.14 	prorated.  The prorated service credit shall be determined by
27.15 	the ratio between the amount of the actual payment which was
27.16 	made and the full contribution amount payable pursuant to this
27.17 	section.

27.18 	Sec. 15. Minnesota Statutes 2004, section 354A.093,
27.19 	subdivision 1, is amended to read:
27.20 		Subdivision 1.Eligibility.  Any teacher in the
27.21 	coordinated program of either the Minneapolis Teachers
27.22 	Retirement Fund Association or the St. Paul Teachers Retirement
27.23 	Fund Association or any teacher in the new law coordinated
27.24 	program of the Duluth Teachers Retirement Fund Association who
27.25 	is absent from employment by reason of service in the uniformed
27.26 	services as defined in United States Code, title 38, section
27.27 	4303(13) and who returns to the employer providing active
27.28 	teaching service upon discharge from uniformed service within
27.29 	the time frames required under United States Code, title 38,
27.30 	section 4312(e), may receive allowable service credit in the
27.31 	applicable association for all or a portion of the period of
27.32 	uniformed service, provided that the teacher did not separate
27.33 	from uniformed service with a dishonorable or bad conduct
27.34 	discharge or under other than honorable conditions.

27.35 	Sec. 16. Minnesota Statutes 2004, section 354A.095, is
27.36 	amended to read:
28.1 	354A.095 PARENTAL AND MATERNITY LEAVE.
28.2 	Basic or coordinated members of the St. Paul Teachers
28.3 	Retirement Fund Association, the Minneapolis Teachers Retirement
28.4 	Fund Association,and new coordinated members of the Duluth
28.5 	Teachers Retirement Fund Association, who are granted parental
28.6 	or maternity leave of absence by the employing authority, are
28.7 	entitled to obtain service credit not to exceed one year for the
28.8 	period of leave upon payment to the applicable fund by the end
28.9 	of the fiscal year following the fiscal year in which the leave
28.10 	of absence terminated.  The amount of the payment must include
28.11 	the total required employee and employer contributions for the
28.12 	period of leave prescribed in section 354A.12.  Payment must be
28.13 	based on the member's average monthly salary rate upon return to
28.14 	teaching service, and is payable without interest.  Payment must
28.15 	be accompanied by a certified or otherwise adequate copy of the
28.16 	resolution or action of the employing authority granting or
28.17 	approving the leave.

28.18 	Sec. 17. Minnesota Statutes 2004, section 354A.096, is
28.19 	amended to read:
28.20 	354A.096 MEDICAL LEAVE.
28.21 	Any teacher in the coordinated program of either the
28.22 	Minneapolis Teachers Retirement Fund Association or the St. Paul
28.23 	Teachers Retirement Fund Association or the new law coordinated
28.24 	program of the Duluth Teachers Retirement Fund Association who
28.25 	is on an authorized medical leave of absence and subsequently
28.26 	returns to teaching service is entitled to receive allowable
28.27 	service credit, not to exceed one year, for the period of leave,
28.28 	upon making the prescribed payment to the fund.  This payment
28.29 	must include the required employee and employer contributions at
28.30 	the rates specified in section 354A.12, subdivisions 1 and 2, as
28.31 	applied to the member's average full-time monthly salary rate on
28.32 	the date the leave of absence commenced plus annual interest at
28.33 	the rate of 8.5 percent per year from the end of the fiscal year
28.34 	during which the leave terminates to the end of the month during
28.35 	which payment is made.  The member must pay the total amount
28.36 	required unless the employing unit, at its option, pays the
29.1 	employer contributions.  The total amount required must be paid
29.2 	by the end of the fiscal year following the fiscal year in which
29.3 	the leave of absence terminated or before the member retires,
29.4 	whichever is earlier.  Payment must be accompanied by a copy of
29.5 	the resolution or action of the employing authority granting the
29.6 	leave and the employing authority, upon granting the leave, must
29.7 	certify the leave to the association in a manner specified by
29.8 	the executive director.  A member may not receive more than one
29.9 	year of allowable service credit during any fiscal year by
29.10 	making payment under this section.  A member may not receive
29.11 	disability benefits under section 354A.36 and receive allowable
29.12 	service credit under this section for the same period of time.

29.13 	Sec. 18. Minnesota Statutes 2004, section 354A.12,
29.14 	subdivision 1, is amended to read:
29.15 		Subdivision 1.Employee contributions.  The contribution
29.16 	required to be paid by each member of a teachers retirement fund
29.17 	association shall not be less than the percentage of total
29.18 	salary specified below for the applicable association and
29.19 	program:
29.20 	Association and Program              Percentage of
29.21 	Total Salary
29.22 	Duluth Teachers Retirement
29.23 	Association
29.24 	old law and new law
29.25 	coordinated programs              5.5 percent
29.26 	Minneapolis Teachers Retirement 
29.27 	Association 
29.28 	basic program 8.5 percent 
29.29 	coordinated program 5.5 percent 
29.30 	St. Paul Teachers Retirement
29.31 	Association
29.32 	basic program                     8 percent
29.33 	coordinated program               5.5 percent
29.34 	Contributions shall be made by deduction from salary and
29.35 	must be remitted directly to the respective teachers retirement
29.36 	fund association at least once each month.

30.1 	Sec. 19. Minnesota Statutes 2004, section 354A.12,
30.2 	subdivision 2, is amended to read:
30.3 		Subd. 2.Retirement contribution levy disallowed.  Except
30.4 	as provided in subdivision 3b and in section 423A.02,
30.5 	subdivision 3, with respect to the city of Minneapolis and
30.6 	special school district No. 1 and in section 423A.02,
30.7 	subdivision 3, with respect to independent school district No.
30.8 	625, notwithstanding any law to the contrary, levies for
30.9 	teachers retirement fund associations in the cities of the first
30.10 	class Duluth and St. Paul, including levies for any employer
30.11 	Social Security taxes for teachers covered by the Duluth
30.12 	Teachers Retirement Fund Association or the Minneapolis Teachers
30.13 	Retirement Fund Association or the St. Paul Teachers Retirement
30.14 	Fund Association, are disallowed.

30.15 	Sec. 20. Minnesota Statutes 2004, section 354A.12,
30.16 	subdivision 2a, is amended to read:
30.17 		Subd. 2a.Employer regular and additional contribution
30.18 	rates.  (a) The employing units shall make the following
30.19 	employer contributions to teachers retirement fund associations:
30.20 	(1) for any coordinated member of a teachers retirement
30.21 	fund association in a city of the first class, the employing
30.22 	unit shall pay the employer Social Security taxes in accordance
30.23 	with section 355.46, subdivision 3, clause (b);
30.24 	(2) for any coordinated member of one of the following
30.25 	teachers retirement fund associations in a city of the first
30.26 	class, the employing unit shall make a regular employer
30.27 	contribution to the respective retirement fund association in an
30.28 	amount equal to the designated percentage of the salary of the
30.29 	coordinated member as provided below:
30.30 	Duluth Teachers Retirement
30.31 	     Fund Association                        4.50 percent
30.32 	Minneapolis Teachers Retirement
30.33 	     Fund Association 4.50 percent 
30.34 	     St. Paul Teachers Retirement
30.35 	     Fund Association                        4.50 percent;
30.36 	(3) for any basic member of one of the following St. Paul 
31.1 	Teachers Retirement Fund associations in a city of the first
31.2 	class Association, the employing unit shall make a regular
31.3 	employer contribution to the respective retirement fund in an
31.4 	amount equal to the designated percentage 8.00 percent of the
31.5 	salary of the basic member as provided below:
31.6 	Minneapolis Teachers Retirement 
31.7 	Fund Association 8.50 percent 
31.8 	St. Paul Teachers Retirement 
31.9 	Fund Association 8.00 percent ;
31.10 	(4) for a basic member of a the St. Paul Teachers
31.11 	Retirement Fund Association in a city of the first class, the
31.12 	employing unit shall make an additional employer contribution to
31.13 	the respective fund in an amount equal to the designated
31.14 	percentage 3.64 percent of the salary of the basic member, as
31.15 	provided below:
31.16 	Minneapolis Teachers Retirement 
31.17 	Fund Association 
31.18 	July 1, 1993 - June 30, 1994 4.85 percent 
31.19 	July 1, 1994, and thereafter 3.64 percent 
31.20 	St. Paul Teachers Retirement 
31.21 	Fund Association 
31.22 	July 1, 1993 - June 30, 1995 4.63 percent 
31.23 	July 1, 1995, and thereafter 3.64 percent ;
31.24 	(5) for a coordinated member of a teachers retirement fund
31.25 	association in a city of the first class, the employing unit
31.26 	shall make an additional employer contribution to the respective
31.27 	fund in an amount equal to the applicable percentage of the
31.28 	coordinated member's salary, as provided below:
31.29 	Duluth Teachers Retirement
31.30 	Fund Association                        1.29 percent
31.31 	Minneapolis Teachers Retirement 
31.32 	Fund Association 
31.33 	July 1, 1993 - June 30, 1994 0.50 percent 
31.34 	July 1, 1994, and thereafter 3.64 percent 
31.35 	St. Paul Teachers Retirement
31.36 	Fund Association
32.1 	July 1, 1993 - June 30, 1994          0.50 percent
32.2 	July 1, 1994 - June 30, 1995          1.50 percent
32.3 	July 1, 1997, and thereafter          3.84 percent.
32.4 	(b) The regular and additional employer contributions must
32.5 	be remitted directly to the respective teachers retirement fund
32.6 	association at least once each month.  Delinquent amounts are
32.7 	payable with interest under the procedure in subdivision 1a.
32.8 	(c) Payments of regular and additional employer
32.9 	contributions for school district or technical college employees
32.10 	who are paid from normal operating funds must be made from the
32.11 	appropriate fund of the district or technical college.

32.12 	Sec. 21. Minnesota Statutes 2004, section 354A.12,
32.13 	subdivision 3a, is amended to read:
32.14 		Subd. 3a.Special direct state aid to first class city
32.15 	teachers retirement fund associations.  (a) In fiscal year 1998,
32.16 	the state shall pay $4,827,000 to the St. Paul Teachers
32.17 	Retirement Fund Association, $17,954,000 to the Minneapolis
32.18 	Teachers Retirement Fund Association, and $486,000 to the Duluth
32.19 	Teachers Retirement Fund Association.  In each subsequent fiscal
32.20 	year after fiscal year 2005, these payments to the first class
32.21 	city teachers retirement fund associations must be $2,827,000
32.22 	for St. Paul, $12,954,000 to the Teachers Retirement Association 
32.23 	for the former Minneapolis Teachers Retirement Fund Association,
32.24 	and $486,000 for Duluth.
32.25 	(b) The direct state aids under this subdivision are
32.26 	payable October 1 annually.  The commissioner of finance shall
32.27 	pay the direct state aid.  The amount required under this
32.28 	subdivision is appropriated annually from the general fund to
32.29 	the commissioner of finance.

32.30 	Sec. 22. Minnesota Statutes 2004, section 354A.12,
32.31 	subdivision 3b, is amended to read:
32.32 		Subd. 3b.Special direct state matching aid to the
32.33 	minneapolis teachers retirement fund association.  (a) Special
32.34 	School District No. 1 may must make an additional employer
32.35 	contribution to the Minneapolis Teachers Retirement Fund 
32.36 	Association.  The city of Minneapolis may must make a
33.1 	contribution to the Minneapolis Teachers Retirement Fund 
33.2 	Association.  This contribution may must be made by a levy of
33.3 	the board of estimate and taxation of the city of Minneapolis
33.4 	and the levy, if made, is classified as that of a special taxing
33.5 	district for purposes of sections 275.065 and 276.04, and for
33.6 	all other property tax purposes.
33.7 	(b) For every $1,000 $1,125,000 must be contributed in
33.8 	equal proportion by Special School District No. 1 and $1,125,000
33.9 	must be contributed by the city of Minneapolis to
33.10 	the Minneapolis Teachers Retirement Fund Association under
33.11 	paragraph (a),and the state shall pay to the Minneapolis 
33.12 	Teachers Retirement Fund Association $1,000, but not to
33.13 	exceed $2,500,000 in total in each fiscal year 1994.  The
33.14 	superintendent of Special School District No. 1, the mayor of
33.15 	the city of Minneapolis, and the executive director of
33.16 	the Minneapolis Teachers Retirement Fund Association shall
33.17 	jointly certify to the commissioner of finance the total amount
33.18 	that has been contributed by Special School District No. 1 and
33.19 	by the city of Minneapolis to the Minneapolis Teachers
33.20 	Retirement Fund Association.  Any certification to the
33.21 	commissioner of education must be made quarterly.  If the total
33.22 	certifications for a fiscal year exceed the maximum annual
33.23 	direct state matching aid amount in any quarter, the amount of
33.24 	direct state matching aid payable to the Minneapolis Teachers
33.25 	Retirement Fund Association must be limited to the balance of
33.26 	the maximum annual direct state matching aid amount available.
33.27 	The amount required under this paragraph, subject to the maximum
33.28 	direct state matching aid amount, is appropriated annually to
33.29 	the commissioner of finance.
33.30 	(c) The commissioner of finance may prescribe the form of
33.31 	the certifications required under paragraph (b).

33.32 	Sec. 23. Minnesota Statutes 2004, section 354A.12,
33.33 	subdivision 3c, is amended to read:
33.34 		Subd. 3c.Termination of supplemental contributions and
33.35 	direct matching and state aid.  (a) The supplemental
33.36 	contributions payable to the Minneapolis Teachers Retirement
34.1 	Fund Association by special school district No. 1 and the city
34.2 	of Minneapolis under section 423A.02, subdivision 3, or to the 
34.3 	St. Paul Teachers Retirement Fund Association by Independent
34.4 	School District No. 625 under section 423A.02, subdivision 3, or
34.5 	the direct state aids under subdivision 3a to the first class
34.6 	city St. Paul Teachers Retirement associations, and the direct
34.7 	matching and state aid under subdivision 3b to the Minneapolis
34.8 	Teachers Retirement Fund Association terminate for the
34.9 	respective fund at the end of the fiscal year in which the
34.10 	accrued liability funding ratio for that fund, as determined in
34.11 	the most recent actuarial report for that fund by the actuary
34.12 	retained by the Legislative Commission on Pensions and
34.13 	Retirement, equals or exceeds the accrued liability funding
34.14 	ratio for the teachers retirement association, as determined in
34.15 	the most recent actuarial report for the Teachers Retirement
34.16 	Association by the actuary retained by the Legislative
34.17 	Commission on Pensions and Retirement.
34.18 	(b) If the state direct matching, state supplemental, or
34.19 	state aid is terminated for a first class city teachers
34.20 	retirement fund association under paragraph (a), it may not
34.21 	again be received by that fund.
34.22 	(c) If either the Minneapolis Teachers Retirement Fund
34.23 	Association,the St. Paul Teachers Retirement Fund Association,
34.24 	or the Duluth Teachers Retirement Fund Association remain is 
34.25 	funded at less than the funding ratio applicable to the teachers
34.26 	retirement association when the provisions of paragraph (b)
34.27 	become effective, then any state aid not previously distributed
34.28 	to that association must be immediately transferred to the other
34.29 	associations in proportion to the relative sizes of their
34.30 	unfunded actuarial accrued liabilities Teachers Retirement
34.31 	Association.

34.32 	Sec. 24. Minnesota Statutes 2004, section 354A.12,
34.33 	subdivision 3d, is amended to read:
34.34 		Subd. 3d.Supplemental administrative expense
34.35 	assessment.  (a) The active and retired membership of the
34.36 	Minneapolis Teachers Retirement Fund Association and of the St.
35.1 	Paul Teachers Retirement Fund Association is responsible for
35.2 	defraying supplemental administrative expenses other than
35.3 	investment expenses of the respective teacher retirement fund
35.4 	association.
35.5 	(b) Investment expenses of the teachers retirement fund
35.6 	association are those expenses incurred by or on behalf of the
35.7 	retirement fund in connection with the investment of the assets
35.8 	of the retirement fund other than investment security
35.9 	transaction costs.  Other administrative expenses are all
35.10 	expenses incurred by or on behalf of the retirement fund for all
35.11 	other retirement fund functions other than the investment of
35.12 	retirement fund assets.  Investment and other administrative
35.13 	expenses must be accounted for using generally accepted
35.14 	accounting principles and in a manner consistent with the
35.15 	comprehensive annual financial report of the teachers retirement
35.16 	fund association for the immediately previous fiscal year under
35.17 	section 356.20.
35.18 	(c) Supplemental administrative expenses other than
35.19 	investment expenses of a first class city teacher the St. Paul
35.20 	Teachers Retirement Fund Association are those expenses for the
35.21 	fiscal year that:
35.22 	(1) exceed, for the St. Paul Teachers Retirement Fund
35.23 	Association,$443,745, or for the Minneapolis Teacher Retirement
35.24 	Fund Association $671,513,plus, in each case,an additional
35.25 	amount derived by applying the percentage increase in the
35.26 	Consumer Price Index for Urban Wage Earners and Clerical Workers
35.27 	All Items Index published by the Bureau of Labor Statistics of
35.28 	the United States Department of Labor since July 1, 2001, to the
35.29 	applicable dollar amount; and
35.30 	(2) exceed the amount computed by applying the most recent
35.31 	percentage of pay administrative expense amount, other than
35.32 	investment expenses, for the teachers retirement association
35.33 	governed by chapter 354 to the covered payroll of the respective
35.34 	teachers retirement fund association for the fiscal year.
35.35 	(d) The board of trustees of each first class city the St.
35.36 	Paul Teachers Retirement Fund Association shall allocate the
36.1 	total dollar amount of supplemental administrative expenses
36.2 	other than investment expenses determined under paragraph (c),
36.3 	clause (2), among the various active and retired membership
36.4 	groups of the teachers retirement fund association and shall
36.5 	assess the various membership groups their respective share of
36.6 	the supplemental administrative expenses other than investment
36.7 	expenses, in amounts determined by the board of trustees.  The
36.8 	supplemental administrative expense assessments must be paid by
36.9 	the membership group in a manner determined by the board of
36.10 	trustees of the respective teachers retirement association.
36.11 	Supplemental administrative expenses payable by the active
36.12 	members of the pension plan must be picked up by the employer in
36.13 	accordance with section 356.62.
36.14 	(e) With respect to the St. Paul Teachers Retirement Fund
36.15 	Association, the supplemental administrative expense assessment
36.16 	must be fully disclosed to the various active and retired
36.17 	membership groups of the teachers retirement fund association.
36.18 	The chief administrative officer of the St. Paul Teachers
36.19 	Retirement Fund Association shall prepare a supplemental
36.20 	administrative expense assessment disclosure notice, which must
36.21 	include the following:
36.22 	(1) the total amount of administrative expenses of the St.
36.23 	Paul Teachers Retirement Fund Association, the amount of the
36.24 	investment expenses of the St. Paul Teachers Retirement Fund
36.25 	Association, and the net remaining amount of administrative
36.26 	expenses of the St. Paul Teachers Retirement Fund Association;
36.27 	(2) the amount of administrative expenses for the St. Paul
36.28 	Teachers Retirement Fund Association that would be equivalent to
36.29 	the teachers retirement association noninvestment administrative
36.30 	expense level described in paragraph (c);
36.31 	(3) the total amount of supplemental administrative
36.32 	expenses required for assessment calculated under paragraph (c);
36.33 	(4) the portion of the total amount of the supplemental
36.34 	administrative expense assessment allocated to each membership
36.35 	group and the rationale for that allocation;
36.36 	(5) the manner of collecting the supplemental
37.1 	administrative expense assessment from each membership group,
37.2 	the number of assessment payments required during the year, and
37.3 	the amount of each payment or the procedure used to determine
37.4 	each payment; and
37.5 	(6) any other information that the chief administrative
37.6 	officer determines is necessary to fairly portray the manner in
37.7 	which the supplemental administrative expense assessment was
37.8 	determined and allocated.
37.9 	(f) The disclosure notice must be provided annually in the
37.10 	annual report of the association.
37.11 	(g) The supplemental administrative expense assessments
37.12 	must be deposited in the applicable teachers retirement fund
37.13 	upon receipt.
37.14 	(h) Any omitted active membership group assessments that
37.15 	remain undeducted and unpaid to the teachers retirement fund
37.16 	association for 90 days must be paid by the respective school
37.17 	district.  The school district may recover any omitted active
37.18 	membership group assessment amounts that it has previously
37.19 	paid.  The teachers retirement fund association shall deduct any
37.20 	omitted retired membership group assessment amounts from the
37.21 	benefits next payable after the discovery of the omitted amounts.

37.22 	Sec. 25. Minnesota Statutes 2004, section 354A.30, is
37.23 	amended to read:
37.24 	354A.30  MINNEAPOLIS AND ST. PAUL TEACHERS RETIREMENT
37.25 	FUND ASSOCIATIONS ASSOCIATION; COORDINATED PROGRAM.
37.26 	There is established a coordinated program within the
37.27 	Minneapolis Teachers Retirement Fund Association and a
37.28 	coordinated program within the St. Paul Teachers Retirement Fund
37.29 	Association to provide retirement coverage for teachers who are
37.30 	covered by an agreement or modification made between the state
37.31 	and the secretary of health, education and welfare making the
37.32 	provisions of the federal Old Age, Survivors and Disability
37.33 	Insurance Act applicable to certain teachers covered by the
37.34 	teachers retirement fund association.  The provisions governing
37.35 	the coordinated program shall be sections 354A.31 to 354A.41 and
37.36 	any other applicable provisions of this chapter.

38.1 	Sec. 26. Minnesota Statutes 2004, section 354A.31,
38.2 	subdivision 4, is amended to read:
38.3 		Subd. 4.Computation of the normal coordinated retirement
38.4 	annuity; minneapolis and st. paul funds.  (a) This subdivision
38.5 	applies to the coordinated programs program of the Minneapolis
38.6 	Teachers Retirement Fund Association and the St. Paul Teachers
38.7 	Retirement Fund Association.
38.8 	(b) The normal coordinated retirement annuity shall be an
38.9 	amount equal to a retiring coordinated member's average salary
38.10 	multiplied by the retirement annuity formula percentage.
38.11 	Average salary for purposes of this section shall mean an amount
38.12 	equal to the average salary upon which contributions were made
38.13 	for the highest five successive years of service credit, but
38.14 	which shall not in any event include any more than the
38.15 	equivalent of 60 monthly salary payments.  Average salary must
38.16 	be based upon all years of service credit if this service credit
38.17 	is less than five years.
38.18 	(c) This paragraph, in conjunction with subdivision 6,
38.19 	applies to a person who first became a member or a member in a
38.20 	pension fund listed in section 356.30, subdivision 3, before
38.21 	July 1, 1989, unless paragraph (d), in conjunction with
38.22 	subdivision 7, produces a higher annuity amount, in which case
38.23 	paragraph (d) will apply.  The retirement annuity formula
38.24 	percentage for purposes of this paragraph is the percent
38.25 	specified in section 356.315, subdivision 1, per year for each
38.26 	year of coordinated service for the first ten years and the
38.27 	percent specified in section 356.315, subdivision 2, for each
38.28 	year of coordinated service thereafter.
38.29 	(d) This paragraph applies to a person who has become at
38.30 	least 55 years old and who first becomes a member after June 30,
38.31 	1989, and to any other member who has become at least 55 years
38.32 	old and whose annuity amount, when calculated under this
38.33 	paragraph and in conjunction with subdivision 7 is higher than
38.34 	it is when calculated under paragraph (c), in conjunction with
38.35 	the provisions of subdivision 6.  The retirement annuity formula
38.36 	percentage for purposes of this paragraph is the percent
39.1 	specified in section 356.315, subdivision 2, for each year of
39.2 	coordinated service.

39.3 	Sec. 27. Minnesota Statutes 2004, section 354A.32,
39.4 	subdivision 1, is amended to read:
39.5 		Subdivision 1.Optional forms generally.  The boards 
39.6 	board of the Minneapolis and the St. Paul Teachers Retirement
39.7 	Fund Associations Association shall each establish for the
39.8 	coordinated program and the board of the Duluth Teachers
39.9 	Retirement Fund Association shall establish for the new law
39.10 	coordinated program an optional retirement annuity which shall
39.11 	take the form of a joint and survivor annuity.  Each board may
39.12 	also in its discretion establish an optional annuity which shall
39.13 	take the form of an annuity payable for a period certain and for
39.14 	life thereafter.  Each board shall also establish an optional
39.15 	retirement annuity that guarantees payment of the balance of the
39.16 	annuity recipient's accumulated deductions to a designated
39.17 	beneficiary upon the death of the annuity recipient.  Except as
39.18 	provided in subdivision 1a, optional annuity forms shall be the
39.19 	actuarial equivalent of the normal forms provided in section
39.20 	354A.31.  In establishing these optional annuity forms, the
39.21 	board shall obtain the written recommendation of the
39.22 	commission-retained actuary.  The recommendation shall be a part
39.23 	of the permanent records of the board.

39.24 	Sec. 28. Minnesota Statutes 2004, section 354A.39, is
39.25 	amended to read:
39.26 	354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS;
39.27 	ANNUITY.
39.28 	Any person who has been a member of the Minnesota State
39.29 	Retirement System, the Public Employees Retirement Association
39.30 	including the Public Employees Retirement Association Police and
39.31 	Fire Fund, the Teachers Retirement Association, the Minnesota
39.32 	State Patrol Retirement Association, the legislators retirement
39.33 	plan, the constitutional officers retirement plan, the
39.34 	Minneapolis Employees Retirement Fund, the Duluth Teachers
39.35 	Retirement Fund Association new law coordinated program, the
39.36 	Minneapolis Teachers Retirement Fund Association coordinated
40.1 	program,the St. Paul Teachers Retirement Fund Association
40.2 	coordinated program, or any other public employee retirement
40.3 	system in the state of Minnesota having a like provision but
40.4 	excluding all other funds providing retirement benefits for
40.5 	police officers or firefighters shall be entitled when qualified
40.6 	to an annuity from each fund if the person's total allowable
40.7 	service in all of the funds or in any two or more of the funds
40.8 	totals three or more years, provided that no portion of the
40.9 	allowable service upon which the retirement annuity from one
40.10 	fund is based is used again in the computation for a retirement
40.11 	annuity from another fund and provided further that the person
40.12 	has not taken a refund from any of funds or associations since
40.13 	the person's membership in the fund or association has
40.14 	terminated.  The annuity from each fund or association shall be
40.15 	determined by the appropriate provisions of the law governing
40.16 	each fund or association, except that the requirement that a
40.17 	person must have at least three years of allowable service in
40.18 	the respective fund or association shall not apply for the
40.19 	purposes of this section, provided that the aggregate service in
40.20 	two or more of these funds equals three or more years.

40.21 	Sec. 29. Minnesota Statutes 2004, section 354A.40,
40.22 	subdivision 1, is amended to read:
40.23 		Subdivision 1.Retirement annuity.  Any coordinated
40.24 	member of either the Minneapolis Teachers Retirement Fund
40.25 	Association or of the St. Paul Teachers Retirement Fund
40.26 	Association who has credited service prior to July 1, 1978 shall
40.27 	be entitled to receive a retirement annuity when otherwise
40.28 	qualified, the calculation of which shall utilize the applicable
40.29 	retirement annuity formula specified in articles of
40.30 	incorporation and bylaws of the teachers retirement fund
40.31 	association governing the basic program for that portion of
40.32 	credited service which was served prior to July 1, 1978, and the
40.33 	retirement annuity formula specified in section 354A.31 for the
40.34 	remainder of the member's credited service, both applied to the
40.35 	member's average salary as specified in section 354A.31,
40.36 	subdivision 4.  The formula percentages to be used in
41.1 	calculating the coordinated portion of the retirement annuity or
41.2 	coordinated service under this section shall recognize the
41.3 	coordinated service as a continuation of any service prior to
41.4 	July 1, 1978.

41.5 	Sec. 30. Minnesota Statutes 2004, section 354A.41, is
41.6 	amended to read:
41.7 	354A.41 ADMINISTRATION OF COORDINATED PROGRAM.
41.8 		Subdivision 1.Administrative provisions. The provisions
41.9 	of the articles of incorporation and bylaws of the Minneapolis
41.10 	or the St. Paul Teachers Retirement Fund Association, whichever
41.11 	is applicable,relating to the administration of the fund shall
41.12 	govern the administration of the coordinated program and the
41.13 	provisions of the articles of incorporation and bylaws of the
41.14 	Duluth Teachers Retirement Fund Association relating to the
41.15 	administration of the fund shall govern the administration of
41.16 	the new law coordinated program in instances where the
41.17 	administrative provisions are not inconsistent with the
41.18 	provisions of sections 354A.31 to 354A.41, including but not
41.19 	limited to provisions relating to the composition and function
41.20 	of the board of trustees, the investment of assets of the
41.21 	teachers retirement fund association, and the definition of the
41.22 	plan year.
41.23 		Subd. 2.Actuarial valuations. In any actuarial
41.24 	valuation of the Minneapolis Teachers Retirement Fund
41.25 	Association, the St. Paul Teachers Retirement Fund Association,
41.26 	or the Duluth Teachers Retirement Fund Association under section
41.27 	356.215 prepared by the commission-retained actuary or
41.28 	supplemental actuarial valuation prepared by an approved actuary
41.29 	retained by the teachers retirement fund association, there
41.30 	shall be included a finding of the condition of the fund showing
41.31 	separately the basic and coordinated programs or the old law
41.32 	coordinated and new law coordinated programs, as appropriate.
41.33 	The finding shall include the level normal cost and the
41.34 	applicable employee and employer contribution rates for each
41.35 	program.

41.36 	Sec. 31. Minnesota Statutes 2004, section 356.20,
42.1 	subdivision 2, is amended to read:
42.2 		Subd. 2.Covered public pension plans and funds.  This
42.3 	section applies to the following public pension plans:
42.4 	(1) the general state employees retirement plan of the
42.5 	Minnesota State Retirement System;
42.6 	(2) the general employees retirement plan of the Public
42.7 	Employees Retirement Association;
42.8 	(3) the Teachers Retirement Association;
42.9 	(4) the State Patrol retirement plan;
42.10 	(5) the Minneapolis Teachers Retirement Fund Association;
42.11 	(6) the St. Paul Teachers Retirement Fund Association;
42.12 	(7) (6) the Duluth Teachers Retirement Fund Association;
42.13 	(8) (7) the Minneapolis Employees Retirement Fund;
42.14 	(9) (8) the University of Minnesota faculty retirement
42.15 	plan;
42.16 	(10) (9) the University of Minnesota faculty supplemental
42.17 	retirement plan;
42.18 	(11) (10) the judges retirement fund;
42.19 	(12) (11) a police or firefighter's relief association
42.20 	specified or described in section 69.77, subdivision 1a, or
42.21 	69.771, subdivision 1;
42.22 	(13) (12) the public employees police and fire plan of the
42.23 	Public Employees Retirement Association;
42.24 	(14) (13) the correctional state employees retirement plan
42.25 	of the Minnesota State Retirement System; and
42.26 	(15) (14) the local government correctional service
42.27 	retirement plan of the Public Employees Retirement Association.

42.28 	Sec. 32. Minnesota Statutes 2004, section 356.214,
42.29 	subdivision 1, is amended to read:
42.30 		Subdivision 1.Joint retention.  (a) The chief
42.31 	administrative officers of the Minnesota State Retirement
42.32 	System, the Public Employees Retirement Association, the
42.33 	Teachers Retirement Association, the Duluth Teachers Retirement
42.34 	Fund Association, the Minneapolis Teachers Retirement Fund
42.35 	Association,the Minneapolis Employees Retirement Fund, and the
42.36 	St. Paul Teachers Retirement Fund Association, jointly, on
43.1 	behalf of the state, its employees, its taxpayers, and its
43.2 	various public pension plans, shall contract with an established
43.3 	actuarial consulting firm to conduct annual actuarial valuations
43.4 	and related services for the retirement plans named in paragraph
43.5 	(b).  The principal from the actuarial consulting firm on the
43.6 	contract must be an approved actuary under section 356.215,
43.7 	subdivision 1, paragraph (c).  Prior to becoming effective, the
43.8 	contract under this section is subject to a review and approval
43.9 	by the Legislative Commission on Pensions and Retirement.
43.10 	(b) The contract for actuarial services must include the
43.11 	preparation of actuarial valuations and related actuarial work
43.12 	for the following retirement plans:
43.13 	(1) the teachers retirement plan, Teachers Retirement
43.14 	Association;
43.15 	(2) the general state employees retirement plan, Minnesota
43.16 	State Retirement System;
43.17 	(3) the correctional employees retirement plan, Minnesota
43.18 	State Retirement System;
43.19 	(4) the State Patrol retirement plan, Minnesota State
43.20 	Retirement System;
43.21 	(5) the judges retirement plan, Minnesota State Retirement
43.22 	System;
43.23 	(6) the Minneapolis employees retirement plan, Minneapolis
43.24 	Employees Retirement Fund;
43.25 	(7) the public employees retirement plan, Public Employees
43.26 	Retirement Association;
43.27 	(8) the public employees police and fire plan, Public
43.28 	Employees Retirement Association;
43.29 	(9) the Duluth teachers retirement plan, Duluth Teachers
43.30 	Retirement Fund Association;
43.31 	(10) the Minneapolis teachers retirement plan, Minneapolis
43.32 	Teachers Retirement Fund Association;
43.33 	(11) the St. Paul teachers retirement plan, St. Paul
43.34 	Teachers Retirement Fund Association;
43.35 	(12) (11) the legislators retirement plan, Minnesota State
43.36 	Retirement System;
44.1 	(13) (12) the elective state officers retirement plan,
44.2 	Minnesota State Retirement System; and
44.3 	(14) (13) local government correctional service retirement
44.4 	plan, Public Employees Retirement Association.
44.5 	(c) The contract must require completion of the annual
44.6 	actuarial valuation calculations on a fiscal year basis, with
44.7 	the contents of the actuarial valuation calculations as
44.8 	specified in section 356.215, and in conformity with the
44.9 	standards for actuarial work adopted by the Legislative
44.10 	Commission on Pensions and Retirement.
44.11 	The contract must require completion of annual experience
44.12 	data collection and processing and a quadrennial published
44.13 	experience study for the plans listed in paragraph (b), clauses
44.14 	(1), (2), and (7), as provided for in the standards for
44.15 	actuarial work adopted by the commission.  The experience data
44.16 	collection, processing, and analysis must evaluate the following:
44.17 	(1) individual salary progression;
44.18 	(2) the rate of return on investments based on the current
44.19 	asset value;
44.20 	(3) payroll growth;
44.21 	(4) mortality;
44.22 	(5) retirement age;
44.23 	(6) withdrawal; and
44.24 	(7) disablement.
44.25 	The contract must include provisions for the preparation of
44.26 	cost analyses by the jointly retained actuary for proposed
44.27 	legislation that include changes in benefit provisions or
44.28 	funding policies prior to their consideration by the Legislative
44.29 	Commission on Pensions and Retirement.
44.30 	(d) The actuary retained by the joint retirement systems
44.31 	shall annually prepare a report to the legislature, including a
44.32 	commentary on the actuarial valuation calculations for the plans
44.33 	named in paragraph (b) and summarizing the results of the
44.34 	actuarial valuation calculations.  The actuary shall include
44.35 	with the report the actuary's recommendations to the legislature
44.36 	concerning the appropriateness of the support rates to achieve
45.1 	proper funding of the retirement plans by the required funding
45.2 	dates.  The actuary shall, as part of the quadrennial experience
45.3 	study, include recommendations to the legislature on the
45.4 	appropriateness of the actuarial valuation assumptions required
45.5 	for evaluation in the study.
45.6 	(e) If the actuarial gain and loss analysis in the
45.7 	actuarial valuation calculations indicates a persistent pattern
45.8 	of sizable gains or losses, as directed by the joint retirement
45.9 	systems or as requested by the chair of the Legislative
45.10 	Commission on Pensions and Retirement, the actuary shall prepare
45.11 	a special experience study for a plan listed in paragraph (b),
45.12 	clause (3), (4), (5), (6), (8), (9), (10), (11), (12), (13),or
45.13 	(14) (13), in the manner provided for in the standards for
45.14 	actuarial work adopted by the commission.
45.15 	(f) The term of the contract between the joint retirement
45.16 	systems and the actuary retained may not exceed five years.  The
45.17 	joint retirement system administrative officers shall establish
45.18 	procedures for the consideration and selection of contract
45.19 	bidders and the requirements for the contents of an actuarial
45.20 	services contract under this section.  The procedures and
45.21 	requirements must be submitted to the Legislative Commission on
45.22 	Pensions and Retirement for review and comment prior to final
45.23 	approval by the joint administrators.  The contract is subject
45.24 	to the procurement procedures under chapter 16C.  The
45.25 	consideration of bids and the selection of a consulting
45.26 	actuarial firm by the chief administrative officers must occur
45.27 	at a meeting that is open to the public and reasonable timely
45.28 	public notice of the date and the time of the meeting and its
45.29 	subject matter must be given.
45.30 	(g) The actuarial services contract may not limit the
45.31 	ability of the Minnesota legislature and its standing committees
45.32 	and commissions to rely on the actuarial results of the work
45.33 	prepared under the contract.
45.34 	(h) The joint retirement systems shall designate one of the
45.35 	retirement system executive directors as the actuarial services
45.36 	contract manager.

46.1 	Sec. 33. Minnesota Statutes 2004, section 356.215,
46.2 	subdivision 8, is amended to read:
46.3 		Subd. 8.Interest and salary assumptions.  (a) The
46.4 	actuarial valuation must use the applicable following
46.5 	preretirement interest assumption and the applicable following
46.6 	postretirement interest assumption:
46.7 	preretirement  postretirement
46.8 	                                   interest rate  interest rate
46.9 	            plan                      assumption     assumption
46.10 	     general state employees
46.11 	         retirement plan                  8.5%          6.0%
46.12 	     correctional state employees
46.13 	         retirement plan                  8.5           6.0
46.14 	     State Patrol retirement plan         8.5           6.0
46.15 	     legislators retirement plan          8.5           6.0
46.16 	     elective state officers
46.17 	         retirement plan                  8.5           6.0
46.18 	     judges retirement plan               8.5           6.0
46.19 	     general public employees
46.20 	         retirement plan                  8.5           6.0
46.21 	     public employees police and fire
46.22 	         retirement plan                  8.5           6.0
46.23 	     local government correctional
46.24 	         service retirement plan          8.5           6.0
46.25 	     teachers retirement plan             8.5           6.0
46.26 	     Minneapolis employees
46.27 	         retirement plan                  6.0           5.0
46.28 	     Duluth teachers retirement plan      8.5           8.5
46.29 	Minneapolis teachers retirement
46.30 	         plan 8.5 8.5 
46.31 	     St. Paul teachers retirement
46.32 	         plan                             8.5           8.5
46.33 	     Minneapolis Police Relief
46.34 	         Association                      6.0           6.0
46.35 	     Fairmont Police Relief
46.36 	         Association                      5.0           5.0
46.37 	     Minneapolis Fire Department
46.38 	         Relief Association               6.0           6.0
46.39 	     Virginia Fire Department
46.40 	         Relief Association               5.0           5.0
46.41 	     local monthly benefit volunteer
46.42 	         firefighters relief associations 5.0           5.0
46.43 	(b) The actuarial valuation must use the applicable
46.44 	following single rate future salary increase assumption, the
46.45 	applicable following modified single rate future salary increase
46.46 	assumption, or the applicable following graded rate future
46.47 	salary increase assumption:
46.48 	(1) single rate future salary increase assumption
46.49 	future salary
46.50 	            plan                          increase assumption
46.51 	     legislators retirement plan                  5.0%
46.52 	     elective state officers retirement
46.53 	         plan                                     5.0
46.54 	     judges retirement plan                       5.0
46.55 	     Minneapolis Police Relief Association        4.0
46.56 	     Fairmont Police Relief
46.57 	         Association                              3.5
46.58 	     Minneapolis Fire Department Relief
47.1 	         Association                              4.0
47.2 	     Virginia Fire Department
47.3 	         Relief Association                       3.5
47.4 	(2) modified single rate future salary increase assumption
47.5 	future salary
47.6 	               plan                       increase assumption
47.7 	         Minneapolis employees        the prior calendar year
47.8 	           retirement plan            amount increased first by
47.9 	1.0198 percent to prior
47.10 	                                      fiscal year date and
47.11 	                                      then increased by 4.0
47.12 	                                      percent annually for
47.13 	                                      each future year
47.14 	(3) select and ultimate future salary increase assumption
47.15 	or graded rate future salary increase assumption
47.16 	future salary
47.17 	               plan                       increase assumption
47.18 	     general state employees             select calculation and
47.19 	         retirement plan                      assumption A
47.20 	     correctional state employees
47.21 	         retirement plan                      assumption H G 
47.22 	     State Patrol retirement plan             assumption H G 
47.23 	     general public employees            select calculation and
47.24 	         retirement plan                      assumption B
47.25 	     public employees police and fire
47.26 	         fund retirement plan                 assumption C
47.27 	     local government correctional service
47.28 	         retirement plan                      assumption H G 
47.29 	     teachers retirement plan                 assumption D
47.30 	     Duluth teachers retirement plan          assumption E
47.31 	Minneapolis teachers retirement plan assumption F 
47.32 	     St. Paul teachers retirement plan        assumption G F 
47.33 	
47.34 	     The select calculation is:
47.35 	     during the ten-year select period, a designated percent
47.36 	     is multiplied by the result of ten minus T, where T is
47.37 	     the number of completed years of service, and is added
47.38 	     to the applicable future salary increase assumption.  The
47.39 	     designated percent is 0.2 percent for the correctional state
47.40 	     employees retirement plan, the State Patrol retirement
47.41 	     plan, the public employees police and fire plan, and the
47.42 	     local government correctional service plan; 0.3 percent
47.43 	     for the general state employees retirement plan, the
47.44 	     general public employees retirement plan, the teachers
47.45 	     retirement plan, the Duluth Teachers Retirement Fund
47.46 	     Association, and the St. Paul Teachers Retirement Fund
47.47 	     Association; and 0.4 percent for the Minneapolis Teachers
47.48 	     Retirement Fund Association.
47.49 	
47.50 	          The ultimate future salary increase assumption is:
47.51 	
47.52 	     age  A     B      C     D     E F G F H G 
47.53 	     16  6.95% 6.95% 11.50% 8.20% 8.00% 6.50% 6.90% 7.7500
47.54 	     17  6.906.9011.508.158.006.50 6.90  7.7500
47.55 	     18  6.856.8511.508.108.006.50 6.90  7.7500
47.56 	     19  6.806.8011.508.058.006.50 6.90  7.7500
47.57 	     20  6.756.4011.506.006.906.50 6.90  7.7500
47.58 	     21  6.756.4011.506.006.906.50 6.90  7.1454
47.59 	     22  6.756.4011.006.006.906.50 6.90  7.0725
47.60 	     23  6.756.4010.506.006.856.50 6.85  7.0544
47.61 	     24  6.756.4010.006.006.806.50 6.80  7.0363
47.62 	     25  6.756.409.506.006.756.50 6.75  7.0000
47.63 	     26  6.756.369.206.006.706.50 6.70  7.0000
47.64 	     27  6.756.328.906.006.656.50 6.65  7.0000
47.65 	     28  6.756.288.606.006.606.50 6.60  7.0000
47.66 	     29  6.756.248.306.006.556.50 6.55  7.0000
48.1 	     30  6.756.208.006.006.506.50 6.50  7.0000
48.2 	     31  6.756.167.806.006.456.50 6.45  7.0000
48.3 	     32  6.756.127.606.006.406.50 6.40  7.0000
48.4 	     33  6.756.087.406.006.356.50 6.35  7.0000
48.5 	     34  6.756.047.206.006.306.50 6.30  7.0000
48.6 	     35  6.756.007.006.006.256.50 6.25  7.0000
48.7 	     36  6.755.966.806.006.206.50 6.20  6.9019
48.8 	     37  6.755.926.606.006.156.50 6.15  6.8074
48.9 	     38  6.755.886.405.906.106.50 6.10  6.7125
48.10 	     39  6.755.846.205.806.056.50 6.05  6.6054
48.11 	     40  6.755.806.005.706.006.50 6.00  6.5000
48.12 	     41  6.755.765.905.605.906.50 5.95  6.3540
48.13 	     42  6.755.725.805.505.806.50 5.90  6.2087
48.14 	     43  6.655.685.705.405.706.50 5.85  6.0622
48.15 	     44  6.555.645.605.305.606.50 5.80  5.9048
48.16 	     45  6.455.605.505.205.506.50 5.75  5.7500
48.17 	     46  6.355.565.455.105.406.40 5.70  5.6940
48.18 	     47  6.255.525.405.005.306.30 5.65  5.6375
48.19 	     48  6.155.485.355.005.206.20 5.60  5.5822
48.20 	     49  6.055.445.305.005.106.10 5.55  5.5404
48.21 	     50  5.955.405.255.005.006.00 5.50  5.5000
48.22 	     51  5.855.365.255.005.005.90 5.45  5.4384
48.23 	     52  5.755.325.255.005.005.80 5.40  5.3776
48.24 	     53  5.655.285.255.005.005.70 5.35  5.3167
48.25 	     54  5.555.245.255.005.005.60 5.30  5.2826
48.26 	     55  5.455.205.255.005.005.50 5.25  5.2500
48.27 	     56  5.355.165.255.005.005.40 5.20  5.2500
48.28 	     57  5.255.125.255.005.005.30 5.15  5.2500
48.29 	     58  5.255.085.255.105.005.20 5.10  5.2500
48.30 	     59  5.255.045.255.205.005.10 5.05  5.2500
48.31 	     60  5.255.005.255.305.005.00 5.00  5.2500
48.32 	     61  5.255.005.255.405.005.00 5.00  5.2500
48.33 	     62  5.255.005.255.505.005.00 5.00  5.2500
48.34 	     63  5.255.005.255.605.005.00 5.00  5.2500
48.35 	     64  5.255.005.255.705.005.00 5.00  5.2500
48.36 	     65  5.255.005.255.705.005.00 5.00  5.2500
48.37 	     66  5.255.005.255.705.005.00 5.00  5.2500
48.38 	     67  5.255.005.255.705.005.00 5.00  5.2500
48.39 	     68  5.255.005.255.705.005.00 5.00  5.2500
48.40 	     69  5.255.005.255.705.005.00 5.00  5.2500
48.41 	     70  5.255.005.255.705.005.00 5.00  5.2500
48.42 	     71  5.255.00         5.70
48.43 	(c) The actuarial valuation must use the applicable
48.44 	following payroll growth assumption for calculating the
48.45 	amortization requirement for the unfunded actuarial accrued
48.46 	liability where the amortization retirement is calculated as a
48.47 	level percentage of an increasing payroll:
48.48 	payroll growth
48.49 	                  plan                             assumption
48.50 	     general state employees retirement plan          5.00%
48.51 	     correctional state employees retirement plan     5.00
48.52 	     State Patrol retirement plan                     5.00
48.53 	     legislators retirement plan                      5.00
48.54 	     elective state officers retirement plan          5.00
48.55 	     judges retirement plan                           5.00
48.56 	     general public employees retirement plan         6.00
48.57 	     public employees police and fire
48.58 	         retirement plan                              6.00
48.59 	     local government correctional service
48.60 	         retirement plan                              6.00
48.61 	     teachers retirement plan                         5.00
48.62 	     Duluth teachers retirement plan                  5.00
48.63 	Minneapolis teachers retirement plan 5.00 
48.64 	     St. Paul teachers retirement plan                5.00

49.1 	Sec. 34. Minnesota Statutes 2004, section 356.30,
49.2 	subdivision 3, is amended to read:
49.3 		Subd. 3.Covered plans.  This section applies to the
49.4 	following retirement plans:
49.5 	(1) the general state employees retirement plan of the
49.6 	Minnesota State Retirement System, established under chapter
49.7 	352;
49.8 	(2) the correctional state employees retirement plan of the
49.9 	Minnesota State Retirement System, established under chapter
49.10 	352;
49.11 	(3) the unclassified employees retirement program,
49.12 	established under chapter 352D;
49.13 	(4) the State Patrol retirement plan, established under
49.14 	chapter 352B;
49.15 	(5) the legislators retirement plan, established under
49.16 	chapter 3A;
49.17 	(6) the elective state officers' retirement plan,
49.18 	established under chapter 352C;
49.19 	(7) the general employees retirement plan of the Public
49.20 	Employees Retirement Association, established under chapter 353;
49.21 	(8) the public employees police and fire retirement plan of
49.22 	the Public Employees Retirement Association, established under
49.23 	chapter 353;
49.24 	(9) the local government correctional service retirement
49.25 	plan of the Public Employees Retirement Association, established
49.26 	under chapter 353E;
49.27 	(10) the Teachers Retirement Association, established under
49.28 	chapter 354;
49.29 	(11) the Minneapolis Employees Retirement Fund, established
49.30 	under chapter 422A;
49.31 	(12) the Minneapolis Teachers Retirement Fund Association,
49.32 	established under chapter 354A;
49.33 	(13) the St. Paul Teachers Retirement Fund Association,
49.34 	established under chapter 354A;
49.35 	(14) (13) the Duluth Teachers Retirement Fund Association,
49.36 	established under chapter 354A; and
50.1 	(15) (14) the judges' retirement fund, established by
50.2 	sections 490.121 to 490.132.

50.3 	Sec. 35. Minnesota Statutes 2004, section 356.302,
50.4 	subdivision 7, is amended to read:
50.5 		Subd. 7.Covered retirement plans.  This section applies
50.6 	to the following retirement plans:
50.7 	(1) the general state employees retirement plan of the
50.8 	Minnesota State Retirement System, established by chapter 352;
50.9 	(2) the unclassified state employees retirement program of
50.10 	the Minnesota State Retirement System, established by chapter
50.11 	352D;
50.12 	(3) the general employees retirement plan of the Public
50.13 	Employees Retirement Association, established by chapter 353;
50.14 	(4) the Teachers Retirement Association, established by
50.15 	chapter 354;
50.16 	(5) the Duluth Teachers Retirement Fund Association,
50.17 	established by chapter 354A;
50.18 	(6) the Minneapolis Teachers Retirement Fund Association,
50.19 	established by chapter 354A;
50.20 	(7) the St. Paul Teachers Retirement Fund Association,
50.21 	established by chapter 354A;
50.22 	(8) (7) the Minneapolis Employees Retirement Fund,
50.23 	established by chapter 422A;
50.24 	(9) (8) the state correctional employees retirement plan of
50.25 	the Minnesota State Retirement System, established by chapter
50.26 	352;
50.27 	(10) (9) the State Patrol retirement plan, established by
50.28 	chapter 352B;
50.29 	(11) (10) the public employees police and fire plan of the
50.30 	Public Employees Retirement Association, established by chapter
50.31 	353;
50.32 	(12) (11) the local government correctional service
50.33 	retirement plan of the Public Employees Retirement Association,
50.34 	established by chapter 353E; and
50.35 	(13) (12) the judges' retirement plan, established by
50.36 	sections 490.121 to 490.132.

51.1 	Sec. 36. Minnesota Statutes 2004, section 356.303,
51.2 	subdivision 4, is amended to read:
51.3 		Subd. 4.Covered retirement plans.  This section applies
51.4 	to the following retirement plans:
51.5 	(1) the legislators retirement plan, established by chapter
51.6 	3A;
51.7 	(2) the general state employees retirement plan of the
51.8 	Minnesota State Retirement System, established by chapter 352;
51.9 	(3) the correctional state employees retirement plan of the
51.10 	Minnesota State Retirement System, established by chapter 352;
51.11 	(4) the State Patrol retirement plan, established by
51.12 	chapter 352B;
51.13 	(5) the elective state officers retirement plan,
51.14 	established by chapter 352C;
51.15 	(6) the unclassified state employees retirement program,
51.16 	established by chapter 352D;
51.17 	(7) the general employees retirement plan of the Public
51.18 	Employees Retirement Association, established by chapter 353;
51.19 	(8) the public employees police and fire plan of the Public
51.20 	Employees Retirement Association, established by chapter 353;
51.21 	(9) the local government correctional service retirement
51.22 	plan of the Public Employees Retirement Association, established
51.23 	by chapter 353E;
51.24 	(10) the Teachers Retirement Association, established by
51.25 	chapter 354;
51.26 	(11) the Duluth Teachers Retirement Fund Association,
51.27 	established by chapter 354A;
51.28 	(12) the Minneapolis Teachers Retirement Fund Association,
51.29 	established by chapter 354A;
51.30 	(13) the St. Paul Teachers Retirement Fund Association,
51.31 	established by chapter 354A;
51.32 	(14) (13) the Minneapolis Employees Retirement Fund,
51.33 	established by chapter 422A; and
51.34 	(15) (14) the judges' retirement fund, established by
51.35 	sections 490.121 to 490.132.

51.36 	Sec. 37. Minnesota Statutes 2004, section 356.315, is
52.1 	amended by adding a subdivision to read:
52.2 		Subd. 1a.Coordinated plan members. The applicable
52.3 	benefit accrual rate is 1.5 percent.

52.4 	Sec. 38. Minnesota Statutes 2004, section 356.42,
52.5 	subdivision 3, is amended to read:
52.6 		Subd. 3.Covered retirement plans.  The postretirement
52.7 	adjustment provided in this section applies to the following
52.8 	retirement funds:
52.9 	(1) the general employees retirement plans of the Public
52.10 	Employees Retirement Association;
52.11 	(2) the public employees police and fire plan of the Public
52.12 	Employees Retirement Association;
52.13 	(3) the teachers retirement association;
52.14 	(4) the State Patrol retirement plan;
52.15 	(5) the state employees retirement plan of the Minnesota
52.16 	State Retirement System;
52.17 	(6) the Minneapolis Teachers Retirement Fund Association
52.18 	established under chapter 354A;
52.19 	(7) the St. Paul Teachers Retirement Fund Association
52.20 	established under chapter 354A; and
52.21 	(8) (7) the Duluth Teachers Retirement Fund Association
52.22 	established under chapter 354A.

52.23 	Sec. 39. Minnesota Statutes 2004, section 356.465,
52.24 	subdivision 3, is amended to read:
52.25 		Subd. 3.Covered retirement plans.  The provisions of
52.26 	this section apply to the following retirement plans:
52.27 	(1) the general state employees retirement plan of the
52.28 	Minnesota State Retirement System established under chapter 352;
52.29 	(2) the correctional state employees retirement plan of the
52.30 	Minnesota State Retirement System established under chapter 352;
52.31 	(3) the State Patrol retirement plan established under
52.32 	chapter 352B;
52.33 	(4) the legislators retirement plan established under
52.34 	chapter 3A;
52.35 	(5) the judges retirement plan established under chapter
52.36 	490;
53.1 	(6) the general employees retirement plan of the Public
53.2 	Employees Retirement Association established under chapter 353;
53.3 	(7) the public employees police and fire plan of the Public
53.4 	Employees Retirement Association established under chapter 353;
53.5 	(8) the teachers retirement plan established under chapter
53.6 	354;
53.7 	(9) the Duluth Teachers Retirement Fund Association
53.8 	established under chapter 354A;
53.9 	(10) the St. Paul Teachers Retirement Fund Association
53.10 	established under chapter 354A;
53.11 	(11) the Minneapolis Teachers Retirement Fund Association
53.12 	established under chapter 354A;
53.13 	(12) the Minneapolis employees retirement plan established
53.14 	under chapter 422A;
53.15 	(13) (12) the Minneapolis Firefighters Relief Association
53.16 	established under chapter 423C;
53.17 	(14) (13) the Minneapolis Police Relief Association
53.18 	established under chapter 423B; and
53.19 	(15) (14) the local government correctional service
53.20 	retirement plan of the Public Employees Retirement Association
53.21 	established under chapter 353E.

53.22 	Sec. 40. Minnesota Statutes 2004, section 423A.02,
53.23 	subdivision 1b, is amended to read:
53.24 		Subd. 1b.Additional amortization state aid.  (a)
53.25 	Annually, on October 1, the commissioner of revenue shall
53.26 	allocate the additional amortization state aid transferred under
53.27 	section 69.021, subdivision 11, to:
53.28 	(1) all police or salaried firefighters relief associations
53.29 	governed by and in full compliance with the requirements of
53.30 	section 69.77, that had an unfunded actuarial accrued liability
53.31 	in the actuarial valuation prepared under sections 356.215 and
53.32 	356.216 as of the preceding December 31;
53.33 	(2) all local police or salaried firefighter consolidation
53.34 	accounts governed by chapter 353A that are certified by the
53.35 	executive director of the public employees retirement
53.36 	association as having for the current fiscal year an additional
54.1 	municipal contribution amount under section 353A.09, subdivision
54.2 	5, paragraph (b), and that have implemented section 353A.083,
54.3 	subdivision 1, if the effective date of the consolidation
54.4 	preceded May 24, 1993, and that have implemented section
54.5 	353A.083, subdivision 2, if the effective date of the
54.6 	consolidation preceded June 1, 1995; and
54.7 	(3) the municipalities that are required to make an
54.8 	additional municipal contribution under section 353.665,
54.9 	subdivision 8, for the duration of the required additional
54.10 	contribution.
54.11 	(b) The commissioner shall allocate the state aid on the
54.12 	basis of the proportional share of the relief association or
54.13 	consolidation account of the total unfunded actuarial accrued
54.14 	liability of all recipient relief associations and consolidation
54.15 	accounts as of December 31, 1993, for relief associations, and
54.16 	as of June 30, 1994, for consolidation accounts.
54.17 	(c) Beginning October 1, 2000, and annually thereafter, the
54.18 	commissioner shall allocate the state aid, including any state
54.19 	aid in excess of the limitation in subdivision 4, on the
54.20 	following basis:
54.21 	(1) 64.5 percent to the municipalities to which section
54.22 	353.665, subdivision 8, paragraph (b), or 353A.09, subdivision
54.23 	5, paragraph (b), apply for distribution in accordance with
54.24 	paragraph (b) and subject to the limitation in subdivision 4;
54.25 	(2) 34.2 percent to the city of Minneapolis to fund any
54.26 	unfunded actuarial accrued liability in the actuarial valuation
54.27 	prepared under sections 356.215 and 356.216 as of the preceding
54.28 	December 31 for the Minneapolis Police Relief Association or the
54.29 	Minneapolis Fire Department Relief Association; and
54.30 	(3) 1.3 percent to the city of Virginia to fund any
54.31 	unfunded actuarial accrued liability in the actuarial valuation
54.32 	prepared under sections 356.215 and 356.216 as of the preceding
54.33 	December 31 for the Virginia Fire Department Relief Association.
54.34 	If there is no unfunded actuarial accrued liability in both
54.35 	the Minneapolis Police Relief Association and the Minneapolis
54.36 	Fire Department Relief Association as disclosed in the most
55.1 	recent actuarial valuations for the relief associations prepared
55.2 	under sections 356.215 and 356.216, the commissioner shall
55.3 	allocate that 34.2 percent of the aid as follows:  49 percent to
55.4 	the Minneapolis Teachers Retirement Fund Association, 21 percent
55.5 	to the St. Paul Teachers Retirement Fund Association, and 30
55.6 	percent as additional funding to support minimum fire state aid
55.7 	for volunteer firefighters relief associations.  If there is no
55.8 	unfunded actuarial accrued liability in the Virginia Fire
55.9 	Department Relief Association as disclosed in the most recent
55.10 	actuarial valuation for the relief association prepared under
55.11 	sections 356.215 and 356.216, the commissioner shall allocate
55.12 	that 1.3 percent of the aid as follows:  49 percent to the
55.13 	Minneapolis Teachers Retirement Fund Association, 21 percent to
55.14 	the St. Paul Teachers Retirement Fund Association, and 30
55.15 	percent as additional funding to support minimum fire state aid
55.16 	for volunteer firefighters relief associations.  The allocation
55.17 	must be made by the commissioner at the same time and under the
55.18 	same procedures as specified in subdivision 3.  With respect to
55.19 	the Minneapolis Teachers Retirement Fund Association or the St.
55.20 	Paul Teachers Retirement Fund Association, annually, beginning
55.21 	on July 1, 2005, if the applicable teacher's association
55.22 	five-year average time-weighted rate of investment return does
55.23 	not equal or exceed the performance of a composite portfolio
55.24 	assumed passively managed (indexed) invested ten percent in cash
55.25 	equivalents, 60 percent in bonds and similar debt securities,
55.26 	and 30 percent in domestic stock calculated using the formula
55.27 	under section 11A.04, clause (11), the aid allocation to that
55.28 	retirement fund under this section ceases until the five-year
55.29 	annual rate of investment return equals or exceeds the
55.30 	performance of that composite portfolio.
55.31 	(d) The amounts required under this subdivision are
55.32 	annually appropriated to the commissioner of revenue.

55.33 	Sec. 41. FULL FUNDING DATE.
 55.34 	Notwithstanding any other law to the contrary, for the
55.35 	Teachers Retirement Association, the established date for full
55.36 	funding is 2035.

56.1 	Sec. 42. MTRFA EMPLOYEE JOB PREFERENCE.
 56.2 	An employee of the Minneapolis Teachers Retirement Fund
56.3 	Association on the date of enactment has an employment
56.4 	preference for subsequent employment by the Teachers Retirement
56.5 	Association, the Minnesota State Retirement System, or the
56.6 	Public Employees Retirement Association equivalent to the
56.7 	preference provided to armed forces veterans under state law and
56.8 	Department of Employee Relations practice.

56.9 	Sec. 43. MTRFA ARTICLES AND BYLAWS; REPEAL;
56.10 	APPLICABILITY.
 56.11 	(a) The articles of incorporation and bylaws of the
56.12 	Minneapolis Teachers Retirement Fund Association are repealed
56.13 	and have application only as provided in section 6, subdivision
56.14 	6, and paragraph (b).
56.15 	(b) The articles of incorporation and bylaws of the
56.16 	Minneapolis Teachers Retirement Fund Association only apply to
56.17 	members of the former Minneapolis Teachers Retirement Fund
56.18 	Association with service credit in the plan on or before June
56.19 	30, 2005, and apply solely for purposes of determining the
56.20 	retirement annuity for or benefit on behalf of a member of the
56.21 	basic program of that retirement plan.
56.22 	(c) No annuity adjustment or increase under article 30 of
56.23 	the articles of incorporation of the Minneapolis Teachers
56.24 	Retirement Fund Association is applicable or payable after June
56.25 	30, 2005.

56.26 	Sec. 44. APPROPRIATION.
 56.27 	$2,500,000 is appropriated from the education reserve
56.28 	account in the special revenue fund to the commissioner of
56.29 	finance for transfer to the teachers retirement fund as required
56.30 	by section 7.  $1,250,000 is for the fiscal year ending June 30,
56.31 	2006, and $1,250,000 is for the fiscal year ending June 30, 2007.

56.32 	Sec. 45. REPEALER.
 56.33 	Minnesota Statutes 2004, sections 354A.051; 354A.105;
56.34 	354A.23, subdivision 1; and 354A.28, are repealed.

56.35 	Sec. 46. EFFECTIVE DATE.
 56.36 	(a) Sections 1, 2, 3, 21, and 22 are effective on the day
57.1 	following final enactment.
57.2 	(b) Sections 4 to 20 and 23 to 45 are effective on the day
57.3 	following final enactment.

57.4 	ARTICLE 3
57.5 	PRE-1969 TEACHER SPECIAL POSTRETIREMENT
57.6 	ADJUSTMENT

57.7 	Section 1. [354.551] ADDITIONAL BENEFIT FOR CERTAIN
57.8 	TEACHERS.
57.9 		Subdivision 1.Additional benefit entitlement. If there
57.10 	is an appropriation for this purpose and to the extent of that
57.11 	appropriation, eligible retired teachers as defined in
57.12 	subdivision 2 are entitled to receive the additional benefit
57.13 	amount determined under subdivision 3 unless the applicable
57.14 	person files a written notification with the executive director
57.15 	of the Teachers Retirement Association that the additional
57.16 	benefit not be paid.
57.17 		Subd. 2.Eligibility. An eligible person for purposes of
57.18 	this section is a person who:
57.19 	(1) was a teacher as defined in section 354.05, subdivision
57.20 	2;
57.21 	(2) rendered teaching service as defined in section 354.05,
57.22 	subdivision 3, either during the 1968-1969 school year, but was
57.23 	not covered by the improved money purchase program savings
57.24 	clause in section 354.55, subdivision 17, or before the
57.25 	1968-1969 school year, did not take a refund of member
57.26 	contributions upon the termination of teacher service, and was
57.27 	eligible to make an election under Minnesota Statutes 1971,
57.28 	section 354.55, subdivision 8.
57.29 		Subd. 3.Determination of additional benefit amount. (a)
57.30 	By July 1, annually, the executive director of the Teachers
57.31 	Retirement Association shall determine which retired teachers
57.32 	are eligible to receive an additional benefit amount under this
57.33 	section and the amount of each person's additional benefit
57.34 	amount.
57.35 	If the applicable appropriation permits, as determined by
57.36 	the executive director of the Teachers Retirement Association,
58.1 	the increase amount is 45 percent of the difference, if a
58.2 	positive number, obtained by subtracting the single life annuity
58.3 	amount initially payable upon retirement under section 354.44,
58.4 	subdivision 6, from a comparable single life annuity amount
58.5 	computed as of the same date under section 354.44, subdivision
58.6 	2.  If the applicable appropriation does not permit the full
58.7 	postretirement adjustment payment amount as determined by the
58.8 	executive director of the Teachers Retirement Association, the
58.9 	increase amount is that portion of the full increase amount that
58.10 	bears the same relationship to the full increase amount that the
58.11 	appropriation bears to the full required funding for the full
58.12 	increase amount.
58.13 	(b) The additional retirement benefit is payable beginning
58.14 	July 1, 2005, for persons who were receiving a retirement
58.15 	annuity on June 1, 2005, or with the initial retirement annuity
58.16 	payment for persons who were active, deferred, or inactive
58.17 	members on June 1, 2005.
58.18 		Subd. 4.Duration of additional benefit. If the
58.19 	appropriations permit, the additional benefit amount is payable
58.20 	for life or for the duration of the selected optional annuity
58.21 	form, whichever applies.
58.22 		Subd. 5.No payment to estate; no retroactivity. (a)
58.23 	Nothing in this section authorizes the payment of an additional
58.24 	benefit amount under this section to an estate or to a survivor
58.25 	or beneficiary other than under an optional annuity form.
58.26 	(b) Nothing in this section authorizes the payment of an
58.27 	additional benefit amount for any period before July 1, 2005.
58.28 	(c) Nothing in this section authorizes the payment of an
58.29 	additional benefit amount to a person who was or is entitled to
58.30 	have their retirement annuity calculated under section 354.44,
58.31 	subdivision 2.

58.32 	Sec. 2. APPROPRIATION.
 58.33 	There is appropriated from the education reserve account in
58.34 	the special revenue fund to the executive director of the
58.35 	Teachers Retirement Association for the purposes of the special
58.36 	postretirement adjustment under section 1 $11,000,000 for the
59.1 	year ending June 30, 2006, and $11,000,000 for the year ending
59.2 	June 30, 2007.

59.3 	Sec. 3. EFFECTIVE DATE.
 59.4 	Sections 1 and 2 are effective on July 1, 2005.

59.5 	ARTICLE 4
59.6 	PENSION DEFAULT INSURANCE POOL

59.7 	Section 1. Minnesota Statutes 2004, section 352.04,
59.8 	subdivision 12, is amended to read:
59.9 		Subd. 12.Fund disbursement restricted. (a) The state
59.10 	employees retirement fund and the participation in the Minnesota
59.11 	postretirement investment fund must be disbursed only for the
59.12 	purposes provided by law.
59.13 	(b) The expenses of the system, the pension default
59.14 	insurance pool charge under section 356.95,and any benefits
59.15 	provided by law, other than benefits payable from the Minnesota
59.16 	postretirement investment fund, must be paid from the state
59.17 	employees retirement fund.
59.18 	(c) The retirement allowances, retirement annuities, and
59.19 	disability benefits, as well as refunds of any sum remaining to
59.20 	the credit of a deceased retired employee or a disabled employee
59.21 	must be paid only from the state employees retirement fund after
59.22 	the needs have been certified and the amounts withdrawn from the
59.23 	participation in the Minnesota postretirement investment fund
59.24 	under section 11A.18.
59.25 	(d) The amounts necessary to make the payments from the
59.26 	state employees retirement fund and the participation in the
59.27 	Minnesota postretirement investment fund are annually
59.28 	appropriated from these funds for those purposes.

59.29 	Sec. 2. Minnesota Statutes 2004, section 352.911,
59.30 	subdivision 5, is amended to read:
59.31 		Subd. 5.Fund disbursement restricted. (a) The
59.32 	correctional employees retirement fund and its share of
59.33 	participation in the Minnesota postretirement investment fund
59.34 	shall be disbursed only for the purposes provided for in the
59.35 	applicable provisions in this chapter.
59.36 	(b) The proportional share of the expenses of the system,
60.1 	the pension default insurance pool charge under section 356.95,
60.2 	and any benefits provided in sections 352.90 to 352.951, other
60.3 	than benefits payable from the Minnesota postretirement
60.4 	investment fund, shall be paid from the correctional employees
60.5 	retirement fund.
60.6 	(c) The retirement allowances, retirement annuities, the
60.7 	disability benefits, the survivorship benefits, and any refunds
60.8 	of accumulated deductions shall be paid only from the
60.9 	correctional employees retirement fund after those needs have
60.10 	been certified by the executive director and the amounts
60.11 	withdrawn from the share of participation in the Minnesota
60.12 	postretirement fund under section 11A.18.
60.13 	(d) The amounts necessary to make the payments from the
60.14 	correctional employees retirement fund and the participation in
60.15 	the Minnesota postretirement investment fund are annually
60.16 	appropriated from those funds for those purposes.

60.17 	Sec. 3. Minnesota Statutes 2004, section 352B.02,
60.18 	subdivision 1d, is amended to read:
60.19 		Subd. 1d.Fund revenue and expenses.  The amounts
60.20 	provided for in this section must be credited to the State
60.21 	Patrol retirement fund.  All money received must be deposited by
60.22 	the commissioner of finance in the State Patrol retirement
60.23 	fund.  The fund must be used to pay the administrative expenses
60.24 	of the retirement fund, the pension default insurance pool
60.25 	charge under section 356.95,and the benefits and annuities
60.26 	provided in this chapter.  Appropriate amounts shall be
60.27 	transferred to or withdrawn from the Minnesota postretirement
60.28 	investment fund as provided in section 352B.26.

60.29 	Sec. 4. Minnesota Statutes 2004, section 352D.09,
60.30 	subdivision 7, is amended to read:
60.31 		Subd. 7.Administrative fees.  The board of directors
60.32 	shall establish a budget and charge participants a fee to pay
60.33 	the administrative expenses of the unclassified program and the
60.34 	pension default insurance pool charge under section 356.95.
60.35 	Fees cannot be charged on contributions and investment returns
60.36 	attributable to contributions made before July 1, 1992.  Annual
61.1 	total fees charged for plan administration cannot exceed 10/100
61.2 	of one percent of the contributions and investment returns
61.3 	attributable to contributions made on or after July 1, 1992.

61.4 	Sec. 5. Minnesota Statutes 2004, section 353.27,
61.5 	subdivision 1, is amended to read:
61.6 		Subdivision 1.Income; disbursements.  There is a special
61.7 	fund known as the "public employees retirement fund," the
61.8 	"retirement fund," or the "fund," which shall include all the
61.9 	assets of the association.  This fund shall be credited with all
61.10 	contributions, all interest and all other income authorized by
61.11 	law.  From this fund there is appropriated the payments
61.12 	authorized by this chapter in the amounts and at such time
61.13 	provided herein, including the expenses of administering the
61.14 	fund, including the pension default insurance pool charge under
61.15 	section 356.95,and including the proper share of the Minnesota
61.16 	postretirement investment fund.

61.17 	Sec. 6. Minnesota Statutes 2004, section 353.65,
61.18 	subdivision 6, is amended to read:
61.19 		Subd. 6.Fund.  All contributions other than the excess
61.20 	contribution established by section 69.031, subdivision 5,
61.21 	paragraphs (2), clauses (b) and (c), and (3) shall be credited
61.22 	to the fund and all interest and other income of the fund shall
61.23 	be credited to said fund.  The retirement fund shall be
61.24 	disbursed only for the purposes herein provided.  The expenses
61.25 	of said fund, the pension default insurance pool charge,and the
61.26 	annuities herein provided upon retirement shall be paid from
61.27 	said fund.

61.28 	Sec. 7. Minnesota Statutes 2004, section 353E.01,
61.29 	subdivision 5, is amended to read:
61.30 		Subd. 5.Fund disbursement restricted.  (a) The public
61.31 	employees local government correctional service retirement fund
61.32 	and its share of participation in the Minnesota postretirement
61.33 	investment fund may be disbursed only for the purposes provided
61.34 	for in this chapter.
61.35 	(b) The proportional share of the necessary and reasonable
61.36 	administrative expenses of the association, the pension default
62.1 	insurance pool charge under section 356.95,and any benefits
62.2 	provided in this chapter, other than benefits payable from the
62.3 	Minnesota postretirement investment fund, must be paid from the
62.4 	public employees local government correctional service
62.5 	retirement fund.  Retirement annuities, disability benefits,
62.6 	survivorship benefits, and any refunds of accumulated deductions
62.7 	may be paid only from the correctional service retirement fund
62.8 	after those needs have been certified by the executive director
62.9 	and any applicable amounts withdrawn from the share of
62.10 	participation in the Minnesota postretirement fund under section
62.11 	11A.18.
62.12 	(c) The amounts necessary to make the payments from the
62.13 	public employees local government correctional service
62.14 	retirement fund and its participation in the Minnesota
62.15 	postretirement investment fund are annually appropriated from
62.16 	those funds for those purposes.

62.17 	Sec. 8. Minnesota Statutes 2004, section 354.42, is
62.18 	amended by adding a subdivision to read:
62.19 		Subd. 8.Pension default charge. The pension default
62.20 	insurance pool charge under section 356.95 must be paid from the
62.21 	Teachers Retirement Association.

62.22 	Sec. 9. Minnesota Statutes 2004, section 354A.021,
62.23 	subdivision 4, is amended to read:
62.24 		Subd. 4.Fund disbursement restricted.  The assets of the
62.25 	special retirement fund shall be disbursed only for the purposes
62.26 	provided for in this chapter, the articles of incorporation or
62.27 	bylaws in effect as of March 31, 1975, and the articles of
62.28 	incorporation or bylaws adopted subsequent to March 31, 1975 in
62.29 	accordance with the provisions of section 354A.12. The pension
62.30 	default insurance pool charge under section 356.95 and all
62.31 	appropriate expenses of and any authorized benefits provided by
62.32 	the teachers retirement fund association shall be paid from the
62.33 	special retirement fund.  Amounts necessary to make payments
62.34 	from the special retirement fund of a teachers retirement fund
62.35 	association are hereby appropriated.
62.36 	Sec 10.  [356.95] [PENSION DEFAULT INSURANCE POOL.]
63.1 		Subdivision 1.Default insurance; legislative
63.2 	findings. The legislature finds that some Minnesota public
63.3 	pension plans have periodic funding difficulties and could
63.4 	default on the payment of retirement benefits in the future.
63.5 	The legislature further finds that a potential default may occur
63.6 	at a time when timely corrective legislative responses may not
63.7 	be possible, causing significant potential economic harm to
63.8 	affected benefit recipients.  To provide emergency funding
63.9 	resources for a Minnesota public pension plan facing a default
63.10 	in the payment of retirement benefits, the legislature is
63.11 	establishing an insurance pool to have resources for a temporary
63.12 	remedy for a defaulting pension plan.
63.13 		Subd. 2.Default insurance charge. (a) In fiscal year
63.14 	2006, the pension default insurance charge is $0.10 per month
63.15 	per active member and benefit recipient of a covered retirement
63.16 	plan.
63.17 	(b) The pension default insurance charge must be reassessed
63.18 	by the commissioner of finance, who shall revise the charge
63.19 	upward or downward based on an assessment of the potential risk
63.20 	of a future retirement plan default.  The consulting actuary
63.21 	retained under section 356.214 shall provide an assessment of
63.22 	the relative probability of future retirement plan defaults as
63.23 	part of the actuarial valuation reports performed annually.
63.24 		Subd. 3.Receipt of charges; investment. The pension
63.25 	default insurance charge is payable to the commissioner of
63.26 	finance for deposit in a special pension default insurance pool
63.27 	fund in the state treasury.  The special default insurance pool
63.28 	fund must be invested by the State Board of Investment in
63.29 	investments authorized under section 11A.24.
63.30 		Subd. 4.Disbursements. (a) The chief administrative
63.31 	officer of a covered retirement plan facing imminent default in
63.32 	the payment of retirement annuities and benefits is authorized
63.33 	to apply to the commissioner of finance for the transfer of
63.34 	assets to forestall the default.
63.35 	(b) If the commissioner of finance finds that a covered
63.36 	retirement plan is facing an imminent default, the commissioner
64.1 	may transfer the necessary amount of assets to avert the
64.2 	expected default from the pension default insurance pool.
64.3 		Subd. 5.Covered retirement plans. The retirement plans
64.4 	covered by the pension default insurance pool are:
64.5 	(1) the general state employees retirement plan of the
64.6 	Minnesota State Retirement System, established under chapter
64.7 	352;
64.8 	(2) the correctional state employees retirement plan of the
64.9 	Minnesota State Retirement System, established under chapter
64.10 	352;
64.11 	(3) the unclassified employees retirement program,
64.12 	established under chapter 352D;
64.13 	(4) the State Patrol retirement plan, established under
64.14 	chapter 352B;
64.15 	(5) the legislators retirement plan, established under
64.16 	chapter 3A;
64.17 	(6) the elective state officers' retirement plan,
64.18 	established under chapter 352C;
64.19 	(7) the general employees retirement plan of the Public
64.20 	Employees Retirement Association, established under chapter 353;
64.21 	(8) the public employees police and fire retirement plan of
64.22 	the Public Employees Retirement Association, established under
64.23 	chapter 353;
64.24 	(9) the local government correctional service retirement
64.25 	plan of the Public Employees Retirement Association, established
64.26 	under chapter 353E;
64.27 	(10) the Teachers Retirement Association, established under
64.28 	chapter 354;
64.29 	(11) the Minneapolis Employees Retirement Fund, established
64.30 	under chapter 422A;
64.31 	(12) the Minneapolis Teachers Retirement Fund Association,
64.32 	established under chapter 354A;
64.33 	(13) the St. Paul Teachers Retirement Fund Association,
64.34 	established under chapter 354A;
64.35 	(14) the Duluth Teachers Retirement Fund Association,
64.36 	established under chapter 354A; and 
65.1 	(15) the judges' retirement fund, established by sections
65.2 	490.121 to 490.132.

65.3 	Sec. 11. EFFECTIVE DATE.
 65.4 	Sections 1 to 10 are effective on the day following final
65.5 	enactment.

65.6 	ARTICLE 5
65.7 	DEFERRED ANNUITIES AUGMENTATION

65.8 	Section 1. Minnesota Statutes 2004, section 352.116,
65.9 	subdivision 1a, is amended to read:
65.10 		Subd. 1a.Actuarial reduction for early retirement.  This
65.11 	subdivision applies to a person who has become at least 55 years
65.12 	old and first became a covered employee after June 30, 1989, and
65.13 	to any other covered employee who has become at least 55 years
65.14 	old and whose annuity is higher when calculated under section
65.15 	352.115, subdivision 3, paragraph (b), in conjunction with this
65.16 	subdivision than when calculated under section 352.115,
65.17 	subdivision 3, paragraph (a), in conjunction with subdivision 1.
65.18 	A covered employee who retires before the normal retirement age
65.19 	shall be paid the normal retirement annuity provided in section
65.20 	352.115, subdivisions 2 and 3, paragraph (b), reduced so that
65.21 	the reduced annuity is the actuarial equivalent of the annuity
65.22 	that would be payable to the employee if the employee deferred
65.23 	receipt of the annuity and the annuity amount were augmented at
65.24 	an annual rate of three percent compounded annually from the day
65.25 	the annuity begins to accrue until the normal retirement age, if
65.26 	the employee became an employee before July 1, 2005, and is the
65.27 	actuarial equivalent of this annuity that would be payable to
65.28 	the employee if the employee deferred receipt of the annuity if
65.29 	the employee initially became an employee after June 30, 2005.

65.30 	Sec. 2. Minnesota Statutes 2004, section 352.72,
65.31 	subdivision 2, is amended to read:
65.32 		Subd. 2.Computation of deferred annuity.  (a) The
65.33 	deferred annuity, if any, accruing under subdivision 1, or
65.34 	section 352.22, subdivision 3, must be computed as provided in
65.35 	section 352.22, subdivision 3, on the basis of allowable service
65.36 	before termination of state service and augmented as provided
66.1 	herein.
66.2 	(b) If the employee became an employee before July 1, 2005,
66.3 	the required reserves applicable to a deferred annuity or to an
66.4 	annuity for which a former employee was eligible but had not
66.5 	applied or to any deferred segment of an annuity must be
66.6 	determined as of the date the benefit begins to accrue and
66.7 	augmented by interest compounded annually from the first day of
66.8 	the month following the month in which the employee ceased to be
66.9 	a state employee, or July 1, 1971, whichever is later, to the
66.10 	first day of the month in which the annuity begins to accrue.
66.11 	The rates of interest used for this purpose must be five percent
66.12 	compounded annually until January 1, 1981, and three percent
66.13 	compounded annually thereafter until January 1 of the year
66.14 	following the year in which the former employee attains age 55.
66.15 	From that date to the effective date of retirement, the rate is
66.16 	five percent compounded annually.  If a person has more than one
66.17 	period of uninterrupted service, the required reserves related
66.18 	to each period must be augmented by interest under this
66.19 	subdivision.  The sum of the augmented required reserves so
66.20 	determined is the present value of the annuity.  "Uninterrupted
66.21 	service" for the purpose of this subdivision means periods of
66.22 	covered employment during which the employee has not been
66.23 	separated from state service for more than two years.  If a
66.24 	person repays a refund, the service restored by the repayment
66.25 	must be considered continuous with the next period of service
66.26 	for which the employee has credit with this system.  The formula
66.27 	percentages used for each period of uninterrupted service must
66.28 	be those applicable to a new employee.  The mortality table and
66.29 	interest assumption used to compute the annuity must be those in
66.30 	effect when the employee files application for annuity.  This
66.31 	section does not reduce the annuity otherwise payable under this
66.32 	chapter.
66.33 	(c) If the employee initially became an employee after June
66.34 	30, 2005, no augmentation is payable on a deferred annuity.
66.35 	(b) (d) The retirement annuity or disability benefit of, or
66.36 	the survivor benefit payable on behalf of, a former state
67.1 	employee who terminated service before July 1, 1997, which is
67.2 	not first payable until after June 30, 1997, must be increased
67.3 	on an actuarial equivalent basis to reflect the change in the
67.4 	postretirement interest rate actuarial assumption under section
67.5 	356.215, subdivision 8, from five percent to six percent under a
67.6 	calculation procedure and the tables adopted by the board and
67.7 	approved by the actuary retained by the Legislative Commission
67.8 	on Pensions and Retirement.

67.9 	Sec. 3. Minnesota Statutes 2004, section 352B.30,
67.10 	subdivision 2, is amended to read:
67.11 		Subd. 2.Computation of deferred annuity. (a) Deferred
67.12 	annuities must be computed according to this chapter on the
67.13 	basis of allowable service before termination of service and
67.14 	augmented as provided in this chapter.
67.15 	(b) If the member became a member before July 1, 2005,the
67.16 	required reserves applicable to a deferred annuity must be
67.17 	augmented by interest compounded annually from the first day of
67.18 	the month following the month in which the member terminated
67.19 	service, or July 1, 1971, whichever is later, to the first day
67.20 	of the month in which the annuity begins to accrue.  The rates
67.21 	of interest used for this purpose shall be five percent per year
67.22 	compounded annually until January 1, 1981, and after that date
67.23 	three percent per year compounded annually.  The mortality table
67.24 	and interest assumption used to compute the annuity shall be
67.25 	those in effect when the member files application for annuity.
67.26 	(c) If the member initially became a member after June 30,
67.27 	2005, no augmentation is payable on a deferred annuity.

67.28 	Sec. 4. Minnesota Statutes 2004, section 353.30,
67.29 	subdivision 5, is amended to read:
67.30 		Subd. 5.Actuarial reduction for early retirement.  This
67.31 	subdivision applies to a member who has become at least 55 years
67.32 	old and first became a public employee after June 30, 1989, and
67.33 	to any other member who has become at least 55 years old and
67.34 	whose annuity is higher when calculated under section 353.29,
67.35 	subdivision 3, paragraph (b), in conjunction with this
67.36 	subdivision than when calculated under section 353.29,
68.1 	subdivision 3, paragraph (a), in conjunction with subdivision 1,
68.2 	1a, 1b, or 1c.  An employee who retires before normal retirement
68.3 	age shall be paid the retirement annuity provided in section
68.4 	353.29, subdivision 3, paragraph (b), reduced so that the
68.5 	reduced annuity is the actuarial equivalent of the annuity that
68.6 	would be payable to the employee if the employee deferred
68.7 	receipt of the annuity and the annuity amount were augmented at
68.8 	an annual rate of three percent compounded annually from the day
68.9 	the annuity begins to accrue until the normal retirement age if
68.10 	the member became a member before July 1, 2005, and is the
68.11 	actuarial equivalent of the annuity that would be payable to the
68.12 	member if the member deferred receipt of the annuity if the
68.13 	member initially became a member after June 30, 2005.

68.14 	Sec. 5. Minnesota Statutes 2004, section 353.71,
68.15 	subdivision 2, is amended to read:
68.16 		Subd. 2.Deferred annuity computation; augmentation.  (a)
68.17 	The deferred annuity accruing under subdivision 1, or under
68.18 	sections 353.34, subdivision 3, and 353.68, subdivision 4, must
68.19 	be computed on the basis of allowable service prior to the
68.20 	termination of public service and augmented as provided in this
68.21 	paragraph.
68.22 	(b) The required reserves applicable to a deferred annuity,
68.23 	or to any deferred segment of an annuity must be determined as
68.24 	of the first day of the month following the month in which the
68.25 	former member ceased to be a public employee, or July 1, 1971,
68.26 	whichever is later. If the member became a member before July
68.27 	1, 2005,these required reserves must be augmented at the rate
68.28 	of five percent annually compounded annually until January 1,
68.29 	1981, and at the rate of three percent thereafter until January
68.30 	1 of the year following the year in which the former member
68.31 	attains age 55.  From that date to the effective date of
68.32 	retirement, the rate is five percent compounded annually.  If a
68.33 	person has more than one period of uninterrupted service, the
68.34 	required reserves related to each period must be augmented as
68.35 	specified in this paragraph.  The sum of the augmented required
68.36 	reserves is the present value of the annuity.  Uninterrupted
69.1 	service for the purpose of this subdivision means periods of
69.2 	covered employment during which the employee has not been
69.3 	separated from public service for more than two years.  If a
69.4 	person repays a refund, the restored service must be considered
69.5 	as continuous with the next period of service for which the
69.6 	employee has credit with this association. This section must not
69.7 	reduce the annuity otherwise payable under this chapter.  This
69.8 	paragraph applies to individuals who become deferred annuitants
69.9 	on or after July 1, 1971.  For a member who became a deferred
69.10 	annuitant before July 1, 1971, the paragraph applies from July
69.11 	1, 1971, if the former active member applies for an annuity
69.12 	after July 1, 1973.
69.13 	(c) If the member initially became a member after June 30,
69.14 	2005, no augmentation is payable on a deferred annuity.
69.15 	(b) (d) The retirement annuity or disability benefit of, or
69.16 	the survivor benefit payable on behalf of, a former member who
69.17 	terminated service before July 1, 1997, or the survivor benefit
69.18 	payable on behalf of a basic or police and fire member who was
69.19 	receiving disability benefits before July 1, 1997, which is
69.20 	first payable after June 30, 1997, must be increased on an
69.21 	actuarial equivalent basis to reflect the change in the
69.22 	postretirement interest rate actuarial assumption under section
69.23 	356.215, subdivision 8, from five percent to six percent under a
69.24 	calculation procedure and tables adopted by the board and
69.25 	approved by the actuary retained by the Legislative Commission
69.26 	on Pensions and Retirement.

69.27 	Sec. 6. Minnesota Statutes 2004, section 353E.05, is
69.28 	amended to read:
69.29 	353E.05 AUGMENTATION IN CERTAIN CASES.
69.30 	Unless prior service has been transferred or unless a
69.31 	combined service annuity under section 356.30 has been elected,
69.32 	an employee who becomes a local government correctional employee
69.33 	after being a member of the Public Employees Retirement
69.34 	Association or the public employees police and fire fund is
69.35 	covered under section 353.71, subdivision 2, with respect to
69.36 	that prior service.  An employee who became an employee before
70.1 	July 1, 2005, and who becomes a member of the Public Employees
70.2 	Retirement Association or the public employees police and fire
70.3 	plan after being a local government correctional employee is
70.4 	also covered under section 353.71, subdivision 2, with respect
70.5 	to that prior service, unless calculated under section 356.30.

70.6 	Sec. 7. Minnesota Statutes 2004, section 354.44,
70.7 	subdivision 6, is amended to read:
70.8 		Subd. 6.Computation of formula program retirement
70.9 	annuity.  (a) The formula retirement annuity must be computed in
70.10 	accordance with the applicable provisions of the formulas stated
70.11 	in paragraph (b) or (d) on the basis of each member's average
70.12 	salary for the period of the member's formula service credit.
70.13 	For all years of formula service credit, "average salary,"
70.14 	for the purpose of determining the member's retirement annuity,
70.15 	means the average salary upon which contributions were made and
70.16 	upon which payments were made to increase the salary limitation
70.17 	provided in Minnesota Statutes 1971, section 354.511, for the
70.18 	highest five successive years of formula service credit
70.19 	provided, however, that such "average salary" shall not include
70.20 	any more than the equivalent of 60 monthly salary payments.
70.21 	Average salary must be based upon all years of formula service
70.22 	credit if this service credit is less than five years.
70.23 	(b) This paragraph, in conjunction with paragraph (c),
70.24 	applies to a person who first became a member of the association
70.25 	or a member of a pension fund listed in section 356.30,
70.26 	subdivision 3, before July 1, 1989, unless paragraph (d), in
70.27 	conjunction with paragraph (e), produces a higher annuity
70.28 	amount, in which case paragraph (d) applies.  The average salary
70.29 	as defined in paragraph (a), multiplied by the following
70.30 	percentages per year of formula service credit shall determine
70.31 	the amount of the annuity to which the member qualifying
70.32 	therefor is entitled:
70.33 	Coordinated Member   Basic Member
70.34 	Each year of service     the percent        the percent
70.35 	during first ten         specified in       specified in
70.36 	section 356.315,   section 356.315,
71.1 	subdivision 1,     subdivision 3,
71.2 	per year           per year
71.3 	Each year of service     the percent        the percent
71.4 	thereafter               specified in       specified in
71.5 	section 356.315,   section 356.315,
71.6 	subdivision 2,     subdivision 4,
71.7 	per year           per year
71.8 	(c)(i) This paragraph applies only to a person who first
71.9 	became a member of the association or a member of a pension fund
71.10 	listed in section 356.30, subdivision 3, before July 1, 1989,
71.11 	and whose annuity is higher when calculated under paragraph (b),
71.12 	in conjunction with this paragraph than when calculated under
71.13 	paragraph (d), in conjunction with paragraph (e).
71.14 	(ii) Where any member retires prior to normal retirement
71.15 	age under a formula annuity, the member shall be paid a
71.16 	retirement annuity in an amount equal to the normal annuity
71.17 	provided in paragraph (b) reduced by one-quarter of one percent
71.18 	for each month that the member is under normal retirement age at
71.19 	the time of retirement except that for any member who has 30 or
71.20 	more years of allowable service credit, the reduction shall be
71.21 	applied only for each month that the member is under age 62.
71.22 	(iii) Any member whose attained age plus credited allowable
71.23 	service totals 90 years is entitled, upon application, to a
71.24 	retirement annuity in an amount equal to the normal annuity
71.25 	provided in paragraph (b), without any reduction by reason of
71.26 	early retirement.
71.27 	(d) This paragraph applies to a member who has become at
71.28 	least 55 years old and first became a member of the association
71.29 	after June 30, 1989, and to any other member who has become at
71.30 	least 55 years old and whose annuity amount when calculated
71.31 	under this paragraph and in conjunction with paragraph (e), is
71.32 	higher than it is when calculated under paragraph (b), in
71.33 	conjunction with paragraph (c).  The average salary, as defined
71.34 	in paragraph (a) multiplied by the percent specified by section
71.35 	356.315, subdivision 4, for each year of service for a basic
71.36 	member and by the percent specified in section 356.315,
72.1 	subdivision 2, for each year of service for a coordinated member
72.2 	shall determine the amount of the retirement annuity to which
72.3 	the member is entitled.
72.4 	(e) This paragraph applies to a person who has become at
72.5 	least 55 years old and first becomes a member of the association
72.6 	after June 30, 1989, and to any other member who has become at
72.7 	least 55 years old and whose annuity is higher when calculated
72.8 	under paragraph (d) in conjunction with this paragraph than when
72.9 	calculated under paragraph (b), in conjunction with paragraph
72.10 	(c).  An employee who retires under the formula annuity before
72.11 	the normal retirement age shall be paid the normal annuity
72.12 	provided in paragraph (d) reduced so that the reduced annuity is
72.13 	the actuarial equivalent of the annuity that would be payable to
72.14 	the employee if the employee deferred receipt of the annuity and
72.15 	the annuity amount were augmented at an annual rate of three
72.16 	percent compounded annually from the day the annuity begins to
72.17 	accrue until the normal retirement age if the employee became an
72.18 	employee before July 1, 2005, and is the actuarial equivalent of
72.19 	the annuity that would be payable to the employee if the
72.20 	employee initially became a member after June 30, 2005.
72.21 	(f) No retirement annuity is payable to a former employee
72.22 	with a salary that exceeds 95 percent of the governor's salary
72.23 	unless and until the salary figures used in computing the
72.24 	highest five successive years average salary under paragraph (a)
72.25 	have been audited by the Teachers Retirement Association and
72.26 	determined by the executive director to comply with the
72.27 	requirements and limitations of section 354.05, subdivisions 35
72.28 	and 35a.

72.29 	Sec. 8. Minnesota Statutes 2004, section 354.55,
72.30 	subdivision 11, is amended to read:
72.31 		Subd. 11.Deferred annuity; augmentation.  (a) Any person
72.32 	covered under section 354.44, subdivision 6, who ceases to
72.33 	render teaching service, may leave the person's accumulated
72.34 	deductions in the fund for the purpose of receiving a deferred
72.35 	annuity at retirement.  Eligibility for an annuity under this
72.36 	subdivision is governed pursuant to section 354.44, subdivision
73.1 	1, or 354.60.
73.2 	(b) The amount of the deferred retirement annuity is
73.3 	determined by section 354.44, subdivision 6, and augmented as
73.4 	provided in this subdivision.  The required reserves related to
73.5 	that portion of the annuity which had accrued when the member
73.6 	ceased to render teaching service must be augmented by interest
73.7 	compounded annually from the first day of the month following
73.8 	the month during which the member ceased to render teaching
73.9 	service to the effective date of retirement.  There shall be no
73.10 	augmentation if this period is less than three months or if this
73.11 	period commences prior to July 1, 1971. If the member became a
73.12 	member before July 1, 2005,the rates of interest used for this
73.13 	purpose must be five percent compounded annually commencing July
73.14 	1, 1971, until January 1, 1981, and three percent compounded
73.15 	annually thereafter until January 1 of the year following the
73.16 	year in which the former member attains age 55.  From that date
73.17 	to the effective date of retirement, the rate is five percent
73.18 	compounded annually.  If a person has more than one period of
73.19 	uninterrupted service, a separate average salary determined
73.20 	under section 354.44, subdivision 6, must be used for each
73.21 	period and the required reserves related to each period must be
73.22 	augmented by interest pursuant to this subdivision.  The sum of
73.23 	the augmented required reserves so determined shall be the basis
73.24 	for purchasing the deferred annuity.  If a person repays a
73.25 	refund, the service restored by the repayment must be considered
73.26 	as continuous with the next period of service for which the
73.27 	person has credit with this fund.  If a person does not render
73.28 	teaching service in any one fiscal year or more consecutive
73.29 	fiscal years and then resumes teaching service, the formula
73.30 	percentages used from the date of the resumption of teaching
73.31 	service must be those applicable to new members.  The mortality
73.32 	table and interest assumption used to compute the annuity must
73.33 	be the applicable mortality table established by the board under
73.34 	section 354.07, subdivision 1, and the interest rate assumption
73.35 	under section 356.215 in effect when the member retires.  A
73.36 	period of uninterrupted service for the purposes of this
74.1 	subdivision means a period of covered teaching service during
74.2 	which the member has not been separated from active service for
74.3 	more than one fiscal year.
74.4 	(c) In no case shall the annuity payable under this
74.5 	subdivision be less than the amount of annuity payable pursuant
74.6 	to section 354.44, subdivision 6. If the member initially
74.7 	became a member after June 30, 2005, no augmentation is payable
74.8 	on a deferred annuity.
74.9 	(d) The requirements and provisions for retirement before
74.10 	normal retirement age contained in section 354.44, subdivision
74.11 	6, clause (3) or (5), shall also apply to an employee fulfilling
74.12 	the requirements with a combination of service as provided in
74.13 	section 354.60.
74.14 	(e) The augmentation provided by this subdivision applies
74.15 	to the benefit provided in section 354.46, subdivision 2.
74.16 	(f) The augmentation provided by this subdivision shall not
74.17 	apply to any period in which a person is on an approved leave of
74.18 	absence from an employer unit covered by the provisions of this
74.19 	chapter.
74.20 	(g) The retirement annuity or disability benefit of, or the
74.21 	survivor benefit payable on behalf of, a former teacher who
74.22 	terminated service before July 1, 1997, which is not first
74.23 	payable until after June 30, 1997, must be increased on an
74.24 	actuarial equivalent basis to reflect the change in the
74.25 	postretirement interest rate actuarial assumption under section
74.26 	356.215, subdivision 8, from five percent to six percent under a
74.27 	calculation procedure and tables adopted by the board as
74.28 	recommended by an approved actuary and approved by the actuary
74.29 	retained by the Legislative Commission on Pensions and
74.30 	Retirement.

74.31 	Sec. 9. Minnesota Statutes 2004, section 354A.31,
74.32 	subdivision 7, is amended to read:
74.33 		Subd. 7.Actuarial reduction for early retirement.  This
74.34 	subdivision applies to a person who has become at least 55 years
74.35 	old and first becomes a coordinated member after June 30, 1989,
74.36 	and to any other coordinated member who has become at least 55
75.1 	years old and whose annuity is higher when calculated using the
75.2 	retirement annuity formula percentage in subdivision 4,
75.3 	paragraph (d), and subdivision 4a, paragraph (d), in conjunction
75.4 	with this subdivision than when calculated under subdivision 4,
75.5 	paragraph (c), or subdivision 4a, paragraph (c), in conjunction
75.6 	with subdivision 6.  A coordinated member who retires before the
75.7 	full benefit age shall be paid the retirement annuity calculated
75.8 	using the retirement annuity formula percentage in subdivision
75.9 	4, paragraph (d), or subdivision 4a, paragraph (d), reduced so
75.10 	that the reduced annuity is the actuarial equivalent of the
75.11 	annuity that would be payable to the member if the member
75.12 	deferred receipt of the annuity and the annuity amount were
75.13 	augmented at an annual rate of three percent compounded annually
75.14 	from the day the annuity begins to accrue until the normal
75.15 	retirement age if the member became a member before July 1,
75.16 	2005, and is the actuarial equivalent of the annuity that would
75.17 	be payable to the member if the member initially became a member
75.18 	after June 30, 2005.

75.19 	Sec. 10. Minnesota Statutes 2004, section 354A.37,
75.20 	subdivision 2, is amended to read:
75.21 		Subd. 2.Eligibility for deferred retirement annuity.
 75.22 	(a) Any coordinated member who ceases to render teaching
75.23 	services for the school district in which the teachers
75.24 	retirement fund association is located, with sufficient
75.25 	allowable service credit to meet the minimum service
75.26 	requirements specified in section 354A.31, subdivision 1, shall
75.27 	be entitled to a deferred retirement annuity in lieu of a refund
75.28 	pursuant to subdivision 1.  The deferred retirement annuity
75.29 	shall be computed pursuant to section 354A.31 and shall be
75.30 	augmented as provided in this subdivision.  The deferred annuity
75.31 	shall commence upon application after the person on deferred
75.32 	status attains at least the minimum age specified in section
75.33 	354A.31, subdivision 1.
75.34 	(b) If the coordinated member became a member before July
75.35 	1, 2005,the monthly annuity amount that had accrued when the
75.36 	member ceased to render teaching service must be augmented from
76.1 	the first day of the month following the month during which the
76.2 	member ceased to render teaching service to the effective date
76.3 	of retirement.  There is no augmentation if this period is less
76.4 	than three months.  The rate of augmentation is three percent
76.5 	compounded annually until January 1 of the year following the
76.6 	year in which the former member attains age 55, and five percent
76.7 	compounded annually after that date to the effective date of
76.8 	retirement.  If a person has more than one period of
76.9 	uninterrupted service, a separate average salary determined
76.10 	under section 354A.31 must be used for each period, and the
76.11 	monthly annuity amount related to each period must be augmented
76.12 	as provided in this subdivision.  The sum of the augmented
76.13 	monthly annuity amounts determines the total deferred annuity
76.14 	payable.  If a person repays a refund, the service restored by
76.15 	the repayment must be considered as continuous with the next
76.16 	period of service for which the person has credit with the
76.17 	fund.  If a person does not render teaching services in any one
76.18 	fiscal year or more consecutive fiscal years and then resumes
76.19 	teaching service, the formula percentages used from the date of
76.20 	resumption of teaching service are those applicable to new
76.21 	members.  The mortality table and interest assumption used to
76.22 	compute the annuity are the table established by the fund to
76.23 	compute other annuities, and the interest assumption under
76.24 	section 356.215 in effect when the member retires.  A period of
76.25 	uninterrupted service for the purpose of this subdivision means
76.26 	a period of covered teaching service during which the member has
76.27 	not been separated from active service for more than one fiscal
76.28 	year.  The augmentation provided by this subdivision applies to
76.29 	the benefit provided in section 354A.35, subdivision 2.  The
76.30 	augmentation provided by this subdivision does not apply to any
76.31 	period in which a person is on an approved leave of absence from
76.32 	an employer unit.
76.33 	(c) If the coordinated member initially became a member
76.34 	after June 30, 2005, no augmentation is payable on a deferred
76.35 	annuity.

76.36 	Sec. 11. Minnesota Statutes 2004, section 356.30,
77.1 	subdivision 1, is amended to read:
77.2 		Subdivision 1.Eligibility; computation of annuity.  (a)
77.3 	Notwithstanding any provisions of the laws governing the
77.4 	retirement plans enumerated in subdivision 3, a person who has
77.5 	met the qualifications of paragraph (b) may elect to receive a
77.6 	retirement annuity from each enumerated retirement plan in which
77.7 	the person has at least one-half year of allowable service,
77.8 	based on the allowable service in each plan, subject to the
77.9 	provisions of paragraph (c).
77.10 	(b) A person may receive, upon retirement, a retirement
77.11 	annuity from each enumerated retirement plan in which the person
77.12 	has at least one-half year of allowable service, and, if the
77.13 	person was a member of a covered retirement plan on or before
77.14 	July 1, 2005,augmentation of a deferred annuity calculated
77.15 	under the laws governing each public pension plan or fund named
77.16 	in subdivision 3, from the date the person terminated all public
77.17 	service if:
77.18 	(1) the person has allowable service totaling an amount
77.19 	that allows the person to receive an annuity in any two or more
77.20 	of the enumerated plans; and
77.21 	(2) the person has not begun to receive an annuity from any
77.22 	enumerated plan or the person has made application for benefits
77.23 	from each applicable plan and the effective dates of the
77.24 	retirement annuity with each plan under which the person chooses
77.25 	to receive an annuity are within a one-year period.
77.26 	(c) The retirement annuity from each plan must be based
77.27 	upon the allowable service, accrual rates, and average salary in
77.28 	the applicable plan except as further specified or modified in
77.29 	the following clauses:
77.30 	(1) the laws governing annuities must be the law in effect
77.31 	on the date of termination from the last period of public
77.32 	service under a covered retirement plan with which the person
77.33 	earned a minimum of one-half year of allowable service credit
77.34 	during that employment;
77.35 	(2) the "average salary" on which the annuity from each
77.36 	covered plan in which the employee has credit in a formula plan
78.1 	must be based on the employee's highest five successive years of
78.2 	covered salary during the entire service in covered plans;
78.3 	(3) the accrual rates to be used by each plan must be those
78.4 	percentages prescribed by each plan's formula as continued for
78.5 	the respective years of allowable service from one plan to the
78.6 	next, recognizing all previous allowable service with the other
78.7 	covered plans;
78.8 	(4) the allowable service in all the plans must be combined
78.9 	in determining eligibility for and the application of each
78.10 	plan's provisions in respect to reduction in the annuity amount
78.11 	for retirement prior to normal retirement age; and
78.12 	(5) the annuity amount payable for any allowable service
78.13 	under a nonformula plan of a covered plan must not be affected,
78.14 	but such service and covered salary must be used in the above
78.15 	calculation.
78.16 	(d) This section does not apply to any person whose final
78.17 	termination from the last public service under a covered plan
78.18 	was before May 1, 1975.
78.19 	(e) For the purpose of computing annuities under this
78.20 	section, the accrual rates used by any covered plan, except the
78.21 	public employees police and fire plan, the judges' retirement
78.22 	fund, and the State Patrol retirement plan, must not exceed the
78.23 	percent specified in section 356.315, subdivision 4, per year of
78.24 	service for any year of service or fraction thereof.  The
78.25 	formula percentage used by the judges' retirement fund must not
78.26 	exceed the percentage rate specified in section 356.315,
78.27 	subdivision 8, per year of service for any year of service or
78.28 	fraction thereof.  The accrual rate used by the public employees
78.29 	police and fire plan and the State Patrol retirement plan must
78.30 	not exceed the percentage rate specified in section 356.315,
78.31 	subdivision 6, per year of service for any year of service or
78.32 	fraction thereof.  The accrual rate or rates used by the
78.33 	legislators retirement plan and the elective state officers
78.34 	retirement plan must not exceed 2.5 percent, but this limit does
78.35 	not apply to the adjustment provided under section 3A.02,
78.36 	subdivision 1, paragraph (c), or 352C.031, paragraph (b).
79.1 	(f) Any period of time for which a person has credit in
79.2 	more than one of the covered plans must be used only once for
79.3 	the purpose of determining total allowable service.
79.4 	(g) If the period of duplicated service credit is more than
79.5 	one-half year, or the person has credit for more than one-half
79.6 	year, with each of the plans, each plan must apply its formula
79.7 	to a prorated service credit for the period of duplicated
79.8 	service based on a fraction of the salary on which deductions
79.9 	were paid to that fund for the period divided by the total
79.10 	salary on which deductions were paid to all plans for the period.
79.11 	(h) If the period of duplicated service credit is less than
79.12 	one-half year, or when added to other service credit with that
79.13 	plan is less than one-half year, the service credit must be
79.14 	ignored and a refund of contributions made to the person in
79.15 	accord with that plan's refund provisions.

79.16 	Sec. 12. EFFECTIVE DATE.
 79.17 	Sections 1 to 11 are effective on July 1, 2005.

79.18 	ARTICLE 6
79.19 	MAXIMUM RETIREMENT PLAN
79.20 	COVERED SALARY

79.21 	Section 1. Minnesota Statutes 2004, section 352.01,
79.22 	subdivision 13, is amended to read:
79.23 		Subd. 13.Salary.  (a) Subject to the limitations of
79.24 	section 356.611,"salary" means wages, or other periodic
79.25 	compensation, paid to an employee before deductions for deferred
79.26 	compensation, supplemental retirement plans, or other voluntary
79.27 	salary reduction programs.
79.28 	(b) "Salary" does not include:
79.29 	(1) lump sum sick leave payments;
79.30 	(2) severance payments;
79.31 	(3) lump sum annual leave payments and overtime payments
79.32 	made at the time of separation from state service;
79.33 	(4) payments in lieu of any employer-paid group insurance
79.34 	coverage, including the difference between single and family
79.35 	rates that may be paid to an employee with single coverage;
79.36 	(5) payments made as an employer-paid fringe benefit;
80.1 	(6) workers' compensation payments;
80.2 	(7) employer contributions to a deferred compensation or
80.3 	tax sheltered annuity program; and
80.4 	(8) amounts contributed under a benevolent vacation and
80.5 	sick leave donation program.
80.6 	(c) Amounts provided to an employee by the employer through
80.7 	a grievance proceeding or a legal settlement are salary only if
80.8 	the settlement is reviewed by the executive director and the
80.9 	amounts are determined by the executive director to be
80.10 	consistent with paragraph (a) and prior determinations.

80.11 	Sec. 2. Minnesota Statutes 2004, section 352B.01,
80.12 	subdivision 11, is amended to read:
80.13 		Subd. 11.Average monthly salary.  (a) Subject to the
80.14 	limitations of section 356.611,"average monthly salary" means
80.15 	the average of the highest monthly salaries for five years of
80.16 	service as a member upon which contributions were deducted from
80.17 	pay under section 352B.02, or upon which appropriate
80.18 	contributions or payments were made to the fund to receive
80.19 	allowable service and salary credit as specified under the
80.20 	applicable law.  Average monthly salary must be based upon all
80.21 	allowable service if this service is less than five years.
80.22 	(b) "Average monthly salary" means the salary of the member
80.23 	as defined in section 352.01, subdivision 13.  "Average monthly
80.24 	salary" does not include any lump-sum annual leave payments and
80.25 	overtime payments made at the time of separation from state
80.26 	service, any amounts of severance pay, or any reduced salary
80.27 	paid during the period the person is entitled to workers'
80.28 	compensation benefit payments for temporary disability.
80.29 	(c) A member on leave of absence receiving temporary
80.30 	workers' compensation payments and a reduced salary or no salary
80.31 	from the employer who is entitled to allowable service credit
80.32 	for the period of absence may make payment to the fund for the
80.33 	difference between salary received, if any, and the salary the
80.34 	member would normally receive if not on leave of absence during
80.35 	the period.  The member shall pay an amount equal to the member
80.36 	and employer contribution rate under section 352B.02,
81.1 	subdivisions 1b and 1c, on the differential salary amount for
81.2 	the period of the leave of absence.  The employing department,
81.3 	at its option, may pay the employer amount on behalf of the
81.4 	member.  Payment made under this subdivision must include
81.5 	interest at the rate of 8.5 percent per year, and must be
81.6 	completed within one year of the return from the leave of
81.7 	absence.

81.8 	Sec. 3. Minnesota Statutes 2004, section 353.01,
81.9 	subdivision 10, is amended to read:
81.10 		Subd. 10.Salary.  (a) Subject to the limitations of
81.11 	section 356.611,"salary" means:
81.12 	(1) the periodic compensation of a public employee, before
81.13 	deductions for deferred compensation, supplemental retirement
81.14 	plans, or other voluntary salary reduction programs, and also
81.15 	means "wages" and includes net income from fees; and
81.16 	(2) for a public employee who has prior service covered by
81.17 	a local police or firefighters relief association that has
81.18 	consolidated with the Public Employees Retirement Association or
81.19 	to which section 353.665 applies and who has elected coverage
81.20 	either under the public employees police and fire fund benefit
81.21 	plan under section 353A.08 following the consolidation or under
81.22 	section 353.665, subdivision 4, the rate of salary upon which
81.23 	member contributions to the special fund of the relief
81.24 	association were made prior to the effective date of the
81.25 	consolidation as specified by law and by bylaw provisions
81.26 	governing the relief association on the date of the initiation
81.27 	of the consolidation procedure and the actual periodic
81.28 	compensation of the public employee after the effective date of
81.29 	consolidation.
81.30 	(b) Salary does not mean:
81.31 	(1) the fees paid to district court reporters, unused
81.32 	annual vacation or sick leave payments, in lump-sum or periodic
81.33 	payments, severance payments, reimbursement of expenses,
81.34 	lump-sum settlements not attached to a specific earnings period,
81.35 	or workers' compensation payments;
81.36 	(2) employer-paid amounts used by an employee toward the
82.1 	cost of insurance coverage, employer-paid fringe benefits,
82.2 	flexible spending accounts, cafeteria plans, health care expense
82.3 	accounts, day care expenses, or any payments in lieu of any
82.4 	employer-paid group insurance coverage, including the difference
82.5 	between single and family rates that may be paid to a member
82.6 	with single coverage and certain amounts determined by the
82.7 	executive director to be ineligible;
82.8 	(3) the amount equal to that which the employing
82.9 	governmental subdivision would otherwise pay toward single or
82.10 	family insurance coverage for a covered employee when, through a
82.11 	contract or agreement with some but not all employees, the
82.12 	employer:
82.13 	(i) discontinues, or for new hires does not provide,
82.14 	payment toward the cost of the employee's selected insurance
82.15 	coverages under a group plan offered by the employer;
82.16 	(ii) makes the employee solely responsible for all
82.17 	contributions toward the cost of the employee's selected
82.18 	insurance coverages under a group plan offered by the employer,
82.19 	including any amount the employer makes toward other employees'
82.20 	selected insurance coverages under a group plan offered by the
82.21 	employer; and
82.22 	(iii) provides increased salary rates for employees who do
82.23 	not have any employer-paid group insurance coverages;
82.24 	(4) except as provided in section 353.86 or 353.87,
82.25 	compensation of any kind paid to volunteer ambulance service
82.26 	personnel or volunteer firefighters, as defined in subdivision
82.27 	35 or 36; and
82.28 	(5) the amount of compensation that exceeds the limitation
82.29 	provided in section 356.611.
82.30 	(c) Amounts provided to an employee by the employer through
82.31 	a grievance proceeding or a legal settlement are salary only if
82.32 	the settlement is reviewed by the executive director and the
82.33 	amounts are determined by the executive director to be
82.34 	consistent with paragraph (a) and prior determinations.

82.35 	Sec. 4. Minnesota Statutes 2004, section 353B.02,
82.36 	subdivision 10, is amended to read:
83.1 		Subd. 10.Salary.  (a) "Salary" under this chapter is
83.2 	subject to the limitations of section 356.611.
83.3 	(b) "Salary" for benefit computation and contribution
83.4 	purposes means the salary of a first class or first grade
83.5 	firefighter or patrol officer, whichever applies, for the former
83.6 	members of the following consolidating relief associations:
83.7 	(1) Anoka Police Relief Association;
83.8 	(2) Austin Firefighters Relief Association;
83.9 	(3) Austin Police Relief Association;
83.10 	(4) Columbia Heights Fire Department Relief Association,
83.11 	Paid Division;
83.12 	(5) Fairmont Police Benefit Association;
83.13 	(6) Faribault Fire Department Relief Association;
83.14 	(7) Mankato Fire Department Relief Association;
83.15 	(8) Minneapolis Fire Department Relief Association;
83.16 	(9) Minneapolis Police Relief Association;
83.17 	(10) Richfield Fire Department Relief Association;
83.18 	(11) Rochester Fire Department Relief Association;
83.19 	(12) Rochester Police Relief Association;
83.20 	(13) St. Cloud Fire Department Relief Association;
83.21 	(14) St. Cloud Police Relief Association;
83.22 	(15) St. Paul Fire Department Relief Association;
83.23 	(16) South St. Paul Firefighters Relief Association;
83.24 	(17) West St. Paul Firefighters Relief Association;
83.25 	(18) West St. Paul Police Relief Association; and
83.26 	(19) Winona Fire Department Relief Association.
83.27 	(b) (c) "Salary" for benefit computation purposes means the
83.28 	salary of a first grade patrol officer for the second month of
83.29 	the previous fiscal year and for contribution purposes means the
83.30 	current salary of a first grade patrol officer, for the former
83.31 	members of the following consolidating relief associations:
83.32 	(1) Bloomington Police Relief Association;
83.33 	(2) Crystal Police Relief Association;
83.34 	(3) Fridley Police Pension Association;
83.35 	(4) Richfield Police Relief Association;
83.36 	(5) St. Louis Park Police Relief Association; and
84.1 	(6) Winona Police Relief Association.
84.2 	(c) (d) "Salary" for benefit computation purposes means the
84.3 	final salary and for contribution purposes means the current
84.4 	salary for the former members of the following consolidating
84.5 	relief associations:
84.6 	(1) Albert Lea Firefighters Relief Association;
84.7 	(2) Albert Lea Police Relief Association;
84.8 	(3) Buhl Police Relief Association;
84.9 	(4) Chisholm Firefighters Relief Association;
84.10 	(5) Crookston Fire Department Relief Association;
84.11 	(6) Crookston Police Relief Association;
84.12 	(7) Faribault Police Benefit Association;
84.13 	(8) Red Wing Police Relief Association; and
84.14 	(9) Virginia Fire Department Relief Association.
84.15 	(d) (e) "Salary" for benefit computation purposes means the
84.16 	average earnings or salary for the final six months of
84.17 	employment before retirement and for contribution purposes means
84.18 	the current salary for the former members of the following
84.19 	consolidating relief associations:
84.20 	(1) Chisholm Police Relief Association;
84.21 	(2) Hibbing Firefighters Relief Association; and
84.22 	(3) Hibbing Police Relief Association.
84.23 	(e) (f) "Salary" for benefit computation purposes means the
84.24 	greater of the final salary at retirement or the highest salary
84.25 	of a patrol officer and for contribution purposes means the
84.26 	greater of the current salary or the current highest salary of a
84.27 	patrol officer for the former members of the following
84.28 	consolidating relief associations:
84.29 	(1) Brainerd Police Benefit Association; and
84.30 	(2) New Ulm Police Relief Association.
84.31 	(f) (g) "Salary" for benefit computation and contribution
84.32 	purposes means the following for the former members of the
84.33 	consolidating relief associations as indicated:
84.34 	(1) salary of a top grade patrol officer, including
84.35 	longevity pay and education incentive pay in an amount not to
84.36 	exceed $235 per month, Columbia Heights Police Relief
85.1 	Association;
85.2 	(2) maximum pay of a firefighter, including overtime
85.3 	payments for a regular workweek of a firefighter mandated by the
85.4 	federal Fair Labor Standards Act of 1938, as amended, Duluth
85.5 	Firefighters Relief Association;
85.6 	(3) salary of a first class patrol officer with 16 years of
85.7 	service, Duluth Police Pension Association;
85.8 	(4) base salary for the rank currently held, plus longevity
85.9 	pay, pay for eligibility for next higher rank and pay for first
85.10 	aid care, Mankato Police Benefit Association;
85.11 	(5) average annual salary for highest three paid years for
85.12 	benefit computation purposes and current salary for contribution
85.13 	purposes, Red Wing Fire Department Relief Association;
85.14 	(6) pay of the highest grade full-time firefighter, St.
85.15 	Louis Park Fire Department Relief Association;
85.16 	(7) maximum monthly pay of a patrol officer, St. Paul
85.17 	Police Relief Association;
85.18 	(8) prevailing base pay of rank held at retirement for
85.19 	benefit computation purposes and current salary for contribution
85.20 	purposes, South St. Paul Police Relief Association; and
85.21 	(9) prevailing pay for rank held for at least six months
85.22 	before retirement for benefit computation purposes and current
85.23 	salary for contribution purposes, Virginia Police Relief
85.24 	Association.

85.25 	Sec. 5. Minnesota Statutes 2004, section 354.05,
85.26 	subdivision 35, is amended to read:
85.27 		Subd. 35.Salary.  (a) Subject to the limitations of
85.28 	section 356.611,"salary" means the periodic compensation, upon
85.29 	which member contributions are required before deductions for
85.30 	deferred compensation, supplemental retirement plans, or other
85.31 	voluntary salary reduction programs.
85.32 	(b) "Salary" does not mean:
85.33 	(1) lump sum annual leave payments;
85.34 	(2) lump sum wellness and sick leave payments;
85.35 	(3) employer-paid amounts used by an employee toward the
85.36 	cost of insurance coverage, employer-paid fringe benefits,
86.1 	flexible spending accounts, cafeteria plans, health care expense
86.2 	accounts, day care expenses, or any payments in lieu of any
86.3 	employer-paid group insurance coverage, including the difference
86.4 	between single and family rates that may be paid to a member
86.5 	with single coverage and certain amounts determined by the
86.6 	executive director to be ineligible;
86.7 	(4) any form of payment made in lieu of any other
86.8 	employer-paid fringe benefit or expense;
86.9 	(5) any form of severance payments;
86.10 	(6) workers' compensation payments;
86.11 	(7) disability insurance payments, including self-insured
86.12 	disability payments;
86.13 	(8) payments to school principals and all other
86.14 	administrators for services that are in addition to the normal
86.15 	work year contract if these additional services are performed on
86.16 	an extended duty day, Saturday, Sunday, holiday, annual leave
86.17 	day, sick leave day, or any other nonduty day;
86.18 	(9) payments under section 356.24, subdivision 1, clause
86.19 	(4); and
86.20 	(10) payments made under section 122A.40, subdivision 12,
86.21 	except for payments for sick leave that are accumulated under
86.22 	the provisions of a uniform school district policy that applies
86.23 	equally to all similarly situated persons in the district.
86.24 	(c) Amounts provided to an employee by the employer through
86.25 	a grievance proceeding or a legal settlement are salary only if
86.26 	the settlement is reviewed by the executive director and the
86.27 	amounts are determined by the executive director to be
86.28 	consistent with paragraph (a) and prior determinations.

86.29 	Sec. 6. Minnesota Statutes 2004, section 354A.011,
86.30 	subdivision 24, is amended to read:
86.31 		Subd. 24.Salary; covered salary.  (a) Subject to the
86.32 	limitations of section 356.611,"salary" or "covered salary"
86.33 	means the entire compensation, upon which member contributions
86.34 	are required and made, that is paid to a teacher before
86.35 	deductions for deferred compensation, supplemental retirement
86.36 	plans, or other voluntary salary reduction programs.
87.1 	(b) "Salary" does not mean:
87.2 	(1) lump sum annual leave payments;
87.3 	(2) lump sum wellness and sick leave payments;
87.4 	(3) employer-paid amounts used by an employee toward the
87.5 	cost of insurance coverage, employer-paid fringe benefits,
87.6 	flexible spending accounts, cafeteria plans, health care expense
87.7 	accounts, day care expenses, or any payments in lieu of any
87.8 	employer-paid group insurance coverage, including the difference
87.9 	between single and family rates that may be paid to a member
87.10 	with single coverage, and certain amounts determined by the
87.11 	executive secretary or director to be ineligible;
87.12 	(4) any form of payment that is made in lieu of any other
87.13 	employer-paid fringe benefit or expense;
87.14 	(5) any form of severance payments;
87.15 	(6) workers' compensation payments;
87.16 	(7) disability insurance payments, including self-insured
87.17 	disability payments;
87.18 	(8) payments to school principals and all other
87.19 	administrators for services that are in addition to the normal
87.20 	work year contract if these additional services are performed on
87.21 	an extended duty day, Saturday, Sunday, holiday, annual leave
87.22 	day, sick leave day, or any other nonduty day;
87.23 	(9) payments under section 356.24, subdivision 1, clause
87.24 	(4)(ii); and
87.25 	(10) payments made under section 122A.40, subdivision 12,
87.26 	except for payments for sick leave that are accumulated under
87.27 	the provisions of a uniform school district policy that applies
87.28 	equally to all similarly situated persons in the district.
87.29 	(c) Amounts provided to an employee by the employer through
87.30 	a grievance proceeding or a legal settlement are salary only if
87.31 	the settlement is reviewed by the executive director and the
87.32 	amounts are determined by the executive director to be
87.33 	consistent with paragraph (a) and prior determinations.

87.34 	Sec. 7. Minnesota Statutes 2004, section 356.611,
87.35 	subdivision 1, is amended to read:
87.36 		Subdivision 1.State salary limitations.  (a)
88.1 	Notwithstanding any provision of law, bylaws, articles of
88.2 	incorporation, retirement and disability allowance plan
88.3 	agreements, or retirement plan contracts to the contrary, the
88.4 	covered salary for pension purposes for a plan participant of a
88.5 	covered retirement fund enumerated in section 356.30,
88.6 	subdivision 3, may not exceed 95 110 percent of the salary
88.7 	established for the governor under section 15A.082 at the time
88.8 	the person received the salary.
88.9 	(b) This section does not apply to a salary paid:
88.10 	(1) to the governor or to a judge;
88.11 	(2) to an employee or an elected official who is not
88.12 	subject to the limit as specified under section 43A.17,
88.13 	subdivision 9;
88.14 	(3) to an employee of a political subdivision in a position
88.15 	that is excluded from the limit as specified under section
88.16 	43A.17, subdivision 9;
88.17 	(3) (4) to a state employee as defined under section
88.18 	43A.02, subdivision 21;
88.19 	(4) (5) to an employee of Gillette Hospital who is covered
88.20 	by the general state employees retirement plan of the Minnesota
88.21 	State Retirement System;
88.22 	(5) (6) to an employee of the Minnesota Crop Improvement
88.23 	Council; or 
88.24 	(6) (7) to an employee of the Minnesota Historical Society;
88.25 	(8) to an employee of the Southern Minnesota Municipal
88.26 	Power Association; or 
88.27 	(9) to the director of the Duluth Port Authority.
88.28 	(c) The limited covered salary determined under this
88.29 	section must be used in determining employee and employer
88.30 	contributions and in determining retirement annuities and other
88.31 	benefits under the respective covered retirement fund and under
88.32 	this chapter.

88.33 	Sec. 8. Minnesota Statutes 2004, section 422A.01, is
88.34 	amended by adding a subdivision to read:
88.35 		Subd. 13a.Covered salary. "Salary" is subject to the
88.36 	limitations of section 356.611.

89.1 	Sec. 9. Minnesota Statutes 2004, section 423B.01, is
89.2 	amended by adding a subdivision to read:
89.3 		Subd. 22.Covered salary. "Salary" is subject to the
89.4 	limitations of section 356.611.

89.5 	Sec. 10. Minnesota Statutes 2004, section 423C.01, is
89.6 	amended by adding a subdivision to read:
89.7 		Subd. 29.Covered salary. "Salary" is subject to the
89.8 	limitations of section 356.611.

89.9 	Sec. 11. Minnesota Statutes 2004, section 490.121, is
89.10 	amended by adding a subdivision to read:
89.11 		Subd. 21a.Covered salary limitation. "Final average
89.12 	compensation" is subject to the limitations of section 356.611.

89.13 	Sec. 12. EFFECTIVE DATE.
 89.14 	This article is effective the day following final
89.15 	enactment, except that section 7 applies retroactively to April
89.16 	28, 1994.

89.17 	ARTICLE 7
89.18 	EARLY RETIREMENT INCENTIVES

89.19 	Section 1. EARLY RETIREMENT INCENTIVE.
 89.20 		Subdivision 1.Eligibility. An appointing authority in
89.21 	the executive or legislative branch of state government or the
89.22 	Board of Public Defense or the Minnesota Historical Society or
89.23 	any school district may offer the early retirement incentive in
89.24 	this section to an employee who:
89.25 	(1) has at least five years of allowable service in one or
89.26 	more of the funds listed in Minnesota Statutes, section 356.30,
89.27 	subdivision 3, or has at least five years of coverage by the
89.28 	individual retirement account plan governed by Minnesota
89.29 	Statutes, chapter 354b, and upon retirement is immediately
89.30 	eligible for a retirement annuity or benefit from one or more of
89.31 	these funds; and 
89.32 	(2) terminates state or teaching service after the
89.33 	effective date of this section and before September 1, 2005.
89.34 		Subd. 2.Incentive. (a) For an employee eligible under
89.35 	subdivision 1, the employer may provide an amount up to $17,000,
89.36 	to be used:
90.1 	(1) for an employee who terminates state service after the
90.2 	effective date of this section and on or before July 15, 2005,
90.3 	for deposit in the employee's account in the health care savings
90.4 	plan established by Minnesota Statutes, section 352.98; or 
90.5 	(2) for an employee who terminates state service after July
90.6 	15, 2005, and before September 1, 2005:
90.7 	(i) notwithstanding Minnesota Statutes, section 352.01,
90.8 	subdivision 11, or 354.05, subdivision 13, whichever applies,
90.9 	for purchase of service credit for unperformed service
90.10 	sufficient to enable the employee to retire under Minnesota
90.11 	Statutes, section 352.116, subdivision 1, paragraph (b); 353.30;
90.12 	or 354.44, subdivision 6, paragraph (b), whichever applies; or 
90.13 	(ii) for purchase of a lifetime annuity or annuity for a
90.14 	specific number of years from the state unclassified retirement
90.15 	program to provide additional benefits under Minnesota Statutes,
90.16 	section 352D.06, subdivision 1.
90.17 	(b) An employee is eligible for the payment under paragraph
90.18 	(a), clause (2), item (i), if the employee uses money from a
90.19 	deferred compensation account that, combined with the payment
90.20 	under paragraph (a), clause (2), item (i), would be sufficient
90.21 	to purchase enough service credit to qualify for retirement
90.22 	under Minnesota Statutes, section 352.116, subdivision 1,
90.23 	paragraph (b); 353.30, subdivision 1a; or 354.44, subdivision 6,
90.24 	paragraph (b), whichever applies.
90.25 		Subd. 3.Designation of positions; employer
90.26 	discretion. Before offering an incentive under this section, an
90.27 	appointing authority must designate the job classifications or
90.28 	positions within job classifications that qualify for the
90.29 	incentive.  The appointing authority may modify this designation
90.30 	at any time.  Designation of positions eligible for the
90.31 	incentive under this section, participation of individual
90.32 	employees, and the amount of the payment under this section are
90.33 	at the sole discretion of the appointing authority.  Unilateral
90.34 	implementation of this section by the employer is not an unfair
90.35 	labor practice under Minnesota Statutes, chapter 179A.

90.36 	Sec. 2. POSTRETIREMENT EMPLOYMENT.
 91.1 	(a) This section applies to a state employee who:
91.2 	(1) on the effective date of this section is regularly
91.3 	scheduled to work 1,044 or more hours a year in a position
91.4 	covered by the Minnesota state retirement system general
91.5 	employees retirement plan, correctional plan, or unclassified
91.6 	plan;
91.7 	(2) enters into an agreement with the appointing authority
91.8 	to work a reduced schedule that is both (i) a reduction of at
91.9 	least 25 percent from the number of regularly scheduled work
91.10 	hours; and (ii) 1,044 hours or less in the covered position; and 
91.11 	(3) at the time of entering into the agreement under clause
91.12 	(2), meets the age and service requirements necessary to receive
91.13 	an unreduced retirement benefit from the plan.
91.14 	(b) Notwithstanding any law to the contrary, for service
91.15 	under an agreement entered into under paragraph (a), an employee:
91.16 	(1) may receive a retirement annuity from the plan without
91.17 	separating from state service; and 
91.18 	(2) is not subject to the cessation of annuity provisions
91.19 	in Minnesota Statutes, section 352.115, subdivision 10.
91.20 	(c) The amount of hours worked, the work schedule, and the
91.21 	duration of the phased retirement employment must be mutually
91.22 	agreed to by the employee and the appointing authority.  The
91.23 	appointing authority may not require a person to waive any
91.24 	rights under a collective bargaining agreement as a condition of
91.25 	participation under this section.  The appointing authority has
91.26 	sole discretion to determine if and the extent to which phased
91.27 	retirement under this section is available to an employee.  Upon
91.28 	expiration of an agreement entered into under this section, the
91.29 	appointing authority must restore the position to its status
91.30 	prior to the agreement.
91.31 	(d) Notwithstanding any law to the contrary, a person may
91.32 	not earn service credit in the Minnesota state retirement system
91.33 	for employment covered under this section, and employer
91.34 	contributions and payroll deductions for the retirement fund
91.35 	must not be made based on earnings of a person working under
91.36 	this section.  No change shall be made to a monthly annuity or
92.1 	retirement allowance based on employment under this section.
92.2 	(e) A person who works under this section is a member of
92.3 	the appropriate bargaining unit; is covered by the appropriate
92.4 	collective bargaining contract or compensation plan; and is
92.5 	eligible for health care coverage as provided in the collective
92.6 	bargaining contract or compensation plan.
92.7 	(f) An agreement under this section may apply only to work
92.8 	through June 30, 2007.

92.9 	Sec. 3. VOLUNTARY HOUR REDUCTION PLAN.
 92.10 	(a) This section applies to a state employee who:
92.11 	(1) on the effective date of this section is regularly
92.12 	scheduled to work 1,044 or more hours a year in a position
92.13 	covered by a pension plan administered by the Minnesota state
92.14 	retirement system; and 
92.15 	(2) enters into an agreement with the appointing authority
92.16 	to work a reduced schedule of 1,044 hours or less in the covered
92.17 	position.
92.18 	(b) Notwithstanding any law to the contrary, for service
92.19 	under an agreement entered into under paragraph (a),
92.20 	contributions may be made to the applicable plan of the
92.21 	Minnesota state retirement system as if the employee had not
92.22 	reduced hours.  The employee must pay the additional employee
92.23 	contributions and the employer must pay the additional employer
92.24 	contributions necessary to bring the service credit and salary
92.25 	up to the level prior to the voluntary reduction in hours.
92.26 	Contributions must be made in a time and manner prescribed by
92.27 	the executive director of the Minnesota state retirement system.
92.28 	(c) The amount of hours worked, the work schedule, and the
92.29 	duration of the voluntary hour reduction must be mutually agreed
92.30 	to by the employee and the appointing authority.  The appointing
92.31 	authority may not require a person to waive any rights under a
92.32 	collective bargaining agreement as a condition of participation
92.33 	under this section.  The appointing authority has sole
92.34 	discretion to determine if and the extent to which voluntary
92.35 	hour reduction under this section is available to an employee.
92.36 	(d) A person who works under this section is a member of
93.1 	the appropriate bargaining unit; is covered by the appropriate
93.2 	collective bargaining contract or compensation plan; and is
93.3 	eligible for health care coverage as provided in the collective
93.4 	bargaining contract or compensation plan.
93.5 	(e) An agreement under this section may apply only to work
93.6 	through June 30, 2007.

93.7 	Sec. 4. VOLUNTARY UNPAID LEAVE OF ABSENCE.
 93.8 	Appointing authorities in state government may allow each
93.9 	employee to take unpaid leaves of absence for up to 1,044 hours
93.10 	between June 1, 2005, and June 30, 2007.  Each appointing
93.11 	authority approving such a leave shall allow the employee to
93.12 	continue accruing vacation and sick leave, be eligible for paid
93.13 	holidays and insurance benefits, accrue seniority, and accrue
93.14 	service credit and credited salary in the state retirement plans
93.15 	as if the employee had actually been employed during the time of
93.16 	leave.  An employee covered by the unclassified plan may
93.17 	voluntarily make both the employee and employer contributions to
93.18 	the unclassified plan during the leave of absence.  For
93.19 	employees covered by another retirement plan administered by the
93.20 	Minnesota State Retirement System, the employee must pay the
93.21 	additional employee contributions and the employer must pay the
93.22 	additional employer contributions necessary to bring the service
93.23 	credit and salary credit up to the level prior to the voluntary
93.24 	reduction in hours.  Contributions must be made at a time and in
93.25 	a manner prescribed by the executive director of the Minnesota
93.26 	State Retirement System.  If the leave of absence is for one
93.27 	full pay period or longer, any holiday pay shall be included in
93.28 	the first payroll warrant after return from the leave of
93.29 	absence.  The appointing authority shall attempt to grant
93.30 	requests for the unpaid leaves of absence consistent with the
93.31 	need to continue efficient operation of the agency.  However,
93.32 	each appointing authority shall retain discretion to grant or
93.33 	refuse to grant requests for leaves of absence and to schedule
93.34 	and cancel leaves, subject to the applicable provisions of
93.35 	collective bargaining agreements and compensation plans.

93.36 	Sec. 5. RELATIONSHIP OF SECTIONS.
 94.1 	(a) An employee covered by a phased retirement agreement
94.2 	under section 2 may not be covered by the voluntary hour
94.3 	reduction provisions of section 3 or by a voluntary unpaid leave
94.4 	of absence agreement under section 4 during the same time period
94.5 	or any later time period.
94.6 	(b) An employee covered by the voluntary hour reduction
94.7 	provisions of section 3:
94.8 	(1) may not be covered by a phased retirement agreement
94.9 	under section 2 during the same time period, but may be covered
94.10 	by a phased retirement agreement under section 2 during a later
94.11 	time period; and 
94.12 	(2) may be covered by the voluntary leave of absence
94.13 	provision of section 4 during an earlier or later time period.
94.14 	(c) An employee may receive the early retirement incentive
94.15 	in section 1 after being covered under section 2, 3, or 4.  An
94.16 	employee who receives an incentive under section 1 may not later
94.17 	be covered by section 2, 3, or 4.

94.18 	Sec. 6. EFFECTIVE DATE.
 94.19 	Sections 1 to 5 are effective the day following final
94.20 	enactment.

94.21 	ARTICLE 8
94.22 	STATEWIDE VOLUNTEER FIREFIGHTER TASK FORCE STUDY

94.23 	Section 1. STUDY OF STATEWIDE LUMP-SUM VOLUNTEER
94.24 	FIREFIGHTER RETIREMENT PLAN; CREATION OF TASK FORCE.
 94.25 		Subdivision 1.Task force membership. (a) A statewide
94.26 	Volunteer Firefighter Retirement Plan Study Task Force is
94.27 	created.
94.28 	(b) The task force members are:
94.29 	(1) four members appointed by the president of the
94.30 	Minnesota Area Relief Association coalition;
94.31 	(2) four members appointed by the president of the
94.32 	Minnesota State Fire Department Association;
94.33 	(3) four members appointed by the president of the
94.34 	Minnesota State Fire Chiefs Association;
94.35 	(4) four members appointed by the board of directors of the
94.36 	League of Minnesota Cities;
95.1 	(5) two members appointed by the board of directors of the
95.2 	Insurance Federation of Minnesota;
95.3 	(6) two members appointed by the board of directors of the
95.4 	Minnesota Association of Farm Mutual Insurance Companies; and 
95.5 	(7) the Minnesota state auditor or the auditor's designee.
95.6 	(c) Appointments must be made on or before July 1, 2005.
95.7 	If the appointment is not made in a timely manner, or if there
95.8 	is a vacancy, the state auditor shall appoint the task force
95.9 	member or the replacement member.
95.10 	(d) The chair of the task force shall be selected by the
95.11 	task force.
95.12 	(e) Administrative services for the task force must be
95.13 	provided by the Department of Public Safety.
95.14 		Subd. 2.Task force duties. (a) The task force shall
95.15 	conduct fact finding regarding the creation of a statewide
95.16 	volunteer firefighter retirement plan.
95.17 	(b) The task force shall recommend the investment vehicle
95.18 	or vehicles to be utilized by the plan, the administration and
95.19 	corporate governance structure of the plan, the incentives
95.20 	needed to formulate the plan, the limitations applicable to the
95.21 	plan, and the state resources needed to be dedicated to the plan.
95.22 		Subd. 3.Report. The task force shall prepare a report
95.23 	detailing its findings about a potential statewide volunteer
95.24 	firefighter retirement plan.  The report is due January 15,
95.25 	2006, and must be filed with the Legislative Reference Library;
95.26 	the chair of the Legislative Commission on Pensions and
95.27 	Retirement; the chair of the State and Local Government
95.28 	Operations Committee of the senate; the chair of the State
95.29 	Government Budget Division, Environment, Agriculture, and
95.30 	Economic Development Budget Division, and Public Safety Budget
95.31 	Division of the senate Finance Committee; the chair of the
95.32 	Governmental Operations and Veterans Affairs Policy Committee of
95.33 	the house of representatives; and the chair of the State
95.34 	Government Finance Committee of the house of representatives.

95.35 	Sec. 2. APPROPRIATION.
 95.36 	$40,000 is appropriated from the general fund in fiscal
96.1 	year 2006 to the commissioner of public safety to hire a
96.2 	consultant to assist the statewide Volunteer Firefighter
96.3 	Retirement Plan Study Task Force.

96.4 	Sec. 3. EFFECTIVE DATE.
 96.5 	Sections 1 and 2 are effective the day following final
96.6 	enactment.