1.1 	A bill for an act
1.2 	relating to retirement; Public Employees Retirement
1.3 	Association; defining covered salary to include
1.4 	certain employer contributions to supplemental
1.5 	retirement plans; amending Minnesota Statutes 2004,
1.6 	sections 353.01, subdivision 10; 356.24, subdivision 1.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2004, section 353.01,
1.9 	subdivision 10, is amended to read:
1.10 		Subd. 10.Salary.  (a) "Salary" means:
1.11 	(1) the periodic compensation of a public employee, before
1.12 	deductions for deferred compensation, supplemental retirement
1.13 	plans, or other voluntary salary reduction programs, and also
1.14 	means "wages" and includes net income from fees;
1.15 	(2) for a public employee who is covered by a supplemental
1.16 	retirement plan under section 356.24, subdivision 1, clause (8),
1.17 	(9), or (10), which require all plan contributions be made by
1.18 	the employer, the contribution to the applicable supplemental
1.19 	retirement plan;and
1.20 	(2) (3) for a public employee who has prior service covered
1.21 	by a local police or firefighters relief association that has
1.22 	consolidated with the Public Employees Retirement Association or
1.23 	to which section 353.665 applies and who has elected coverage
1.24 	either under the public employees police and fire fund benefit
1.25 	plan under section 353A.08 following the consolidation or under
1.26 	section 353.665, subdivision 4, the rate of salary upon which
2.1 	member contributions to the special fund of the relief
2.2 	association were made prior to the effective date of the
2.3 	consolidation as specified by law and by bylaw provisions
2.4 	governing the relief association on the date of the initiation
2.5 	of the consolidation procedure and the actual periodic
2.6 	compensation of the public employee after the effective date of
2.7 	consolidation.
2.8 	(b) Salary does not mean:
2.9 	(1) the fees paid to district court reporters, unused
2.10 	annual vacation or sick leave payments, in lump-sum or periodic
2.11 	payments, severance payments, reimbursement of expenses,
2.12 	lump-sum settlements not attached to a specific earnings period,
2.13 	or workers' compensation payments;
2.14 	(2) employer-paid amounts used by an employee toward the
2.15 	cost of insurance coverage, employer-paid fringe benefits,
2.16 	flexible spending accounts, cafeteria plans, health care expense
2.17 	accounts, day care expenses, or any payments in lieu of any
2.18 	employer-paid group insurance coverage, including the difference
2.19 	between single and family rates that may be paid to a member
2.20 	with single coverage and certain amounts determined by the
2.21 	executive director to be ineligible;
2.22 	(3) the amount equal to that which the employing
2.23 	governmental subdivision would otherwise pay toward single or
2.24 	family insurance coverage for a covered employee when, through a
2.25 	contract or agreement with some but not all employees, the
2.26 	employer:
2.27 	(i) discontinues, or for new hires does not provide,
2.28 	payment toward the cost of the employee's selected insurance
2.29 	coverages under a group plan offered by the employer;
2.30 	(ii) makes the employee solely responsible for all
2.31 	contributions toward the cost of the employee's selected
2.32 	insurance coverages under a group plan offered by the employer,
2.33 	including any amount the employer makes toward other employees'
2.34 	selected insurance coverages under a group plan offered by the
2.35 	employer; and
2.36 	(iii) provides increased salary rates for employees who do
3.1 	not have any employer-paid group insurance coverages;
3.2 	(4) except as provided in section 353.86 or 353.87,
3.3 	compensation of any kind paid to volunteer ambulance service
3.4 	personnel or volunteer firefighters, as defined in subdivision
3.5 	35 or 36; and
3.6 	(5) the amount of compensation that exceeds the limitation
3.7 	provided in section 356.611.
3.8 	(c) Amounts provided to an employee by the employer through
3.9 	a grievance proceeding or a legal settlement are salary only if
3.10 	the settlement is reviewed by the executive director and the
3.11 	amounts are determined by the executive director to be
3.12 	consistent with paragraph (a) and prior determinations.

3.13 	Sec. 2. Minnesota Statutes 2004, section 356.24,
3.14 	subdivision 1, is amended to read:
3.15 		Subdivision 1.Restriction; exceptions.  It is unlawful
3.16 	for a school district or other governmental subdivision or state
3.17 	agency to levy taxes for, or to contribute public funds to a
3.18 	supplemental pension or deferred compensation plan that is
3.19 	established, maintained, and operated in addition to a primary
3.20 	pension program for the benefit of the governmental subdivision
3.21 	employees other than:
3.22 	(1) to a supplemental pension plan that was established,
3.23 	maintained, and operated before May 6, 1971;
3.24 	(2) to a plan that provides solely for group health,
3.25 	hospital, disability, or death benefits;
3.26 	(3) to the individual retirement account plan established
3.27 	by chapter 354B;
3.28 	(4) to a plan that provides solely for severance pay under
3.29 	section 465.72 to a retiring or terminating employee;
3.30 	(5) for employees other than personnel employed by the
3.31 	Board of Trustees of the Minnesota State Colleges and
3.32 	Universities and covered under the Higher Education Supplemental
3.33 	Retirement Plan under chapter 354C, if the supplemental plan
3.34 	coverage is provided for in a personnel policy of the public
3.35 	employer or in the collective bargaining agreement between the
3.36 	public employer and the exclusive representative of public
4.1 	employees in an appropriate unit, in an amount matching employee
4.2 	contributions on a dollar for dollar basis, but not to exceed an
4.3 	employer contribution of $2,000 a year per employee;
4.4 	(i) to the state of Minnesota deferred compensation plan
4.5 	under section 352.96; or
4.6 	(ii) in payment of the applicable portion of the
4.7 	contribution made to any investment eligible under section
4.8 	403(b) of the Internal Revenue Code, if the employing unit has
4.9 	complied with any applicable pension plan provisions of the
4.10 	Internal Revenue Code with respect to the tax-sheltered annuity
4.11 	program during the preceding calendar year;
4.12 	(6) for personnel employed by the Board of Trustees of the
4.13 	Minnesota State Colleges and Universities and not covered by
4.14 	clause (5), to the supplemental retirement plan under chapter
4.15 	354C, if the supplemental plan coverage is provided for in a
4.16 	personnel policy or in the collective bargaining agreement of
4.17 	the public employer with the exclusive representative of the
4.18 	covered employees in an appropriate unit, in an amount matching
4.19 	employee contributions on a dollar for dollar basis, but not to
4.20 	exceed an employer contribution of $2,700 a year for each
4.21 	employee;
4.22 	(7) to a supplemental plan or to a governmental trust to
4.23 	save for postretirement health care expenses qualified for
4.24 	tax-preferred treatment under the Internal Revenue Code, if the
4.25 	supplemental plan coverage is provided for in a personnel policy
4.26 	or in the collective bargaining agreement of a public employer
4.27 	with the exclusive representative of the covered employees in an
4.28 	appropriate unit;
4.29 	(8) to the laborer's national industrial pension fund or to
4.30 	a laborer's local pension fund for the employees of a
4.31 	governmental subdivision who are covered by a collective
4.32 	bargaining agreement that provides for coverage by that fund and
4.33 	that sets forth a fund contribution rate, but not to exceed an
4.34 	employer contribution of $2,000 $5,000 per year per employee;
4.35 	(9) to the plumbers' and pipefitters' national pension fund
4.36 	or to a plumbers' and pipefitters' local pension fund for the
5.1 	employees of a governmental subdivision who are covered by a
5.2 	collective bargaining agreement that provides for coverage by
5.3 	that fund and that sets forth a fund contribution rate, but not
5.4 	to exceed an employer contribution of $2,000 $5,000 per year per
5.5 	employee;
5.6 	(10) to the international union of operating engineers
5.7 	pension fund for the employees of a governmental subdivision who
5.8 	are covered by a collective bargaining agreement that provides
5.9 	for coverage by that fund and that sets forth a fund
5.10 	contribution rate, but not to exceed an employer contribution of
5.11 	$2,000 $5,000 per year per employee; or
5.12 	(11) to a supplemental plan organized and operated under
5.13 	the federal Internal Revenue Code, as amended, that is wholly
5.14 	and solely funded by the employee's accumulated sick leave,
5.15 	accumulated vacation leave, and accumulated severance pay.

5.16 	Sec. 3. APPLICATION TO CERTAIN SALARY AMOUNTS.
 5.17 	(a) Any employer contribution to the international union of
5.18 	operating engineers pension fund made on behalf of a public
5.19 	employee under Minnesota Statutes 2002, section 356.24,
5.20 	subdivision 1, clause (10), must be considered salary under
5.21 	Minnesota Statutes, section 353.01, subdivision 10, if the
5.22 	public employee made employee contributions on the salary amount.
5.23 	(b) A public employee under Minnesota Statutes, section
5.24 	353.01, subdivision 2, may make the equivalent employee
5.25 	contribution on any supplemental retirement fund contribution
5.26 	since July 1, 2002, with annual compound interest at the rate of
5.27 	8.5 percent from the date on which the contribution should have
5.28 	been made if the contribution was made in a timely fashion until
5.29 	the date on which payment is made.
5.30 	(c) If a public employee makes the equivalent employee
5.31 	contribution under paragraph (b), the public employee's employer
5.32 	shall make an equivalent employer contribution equal to the
5.33 	equivalent employee contribution multiplied by the factor
5.34 	1.0843.  The amount is payable within 30 days of the
5.35 	notification by the executive director of the Public Employees
5.36 	Retirement Association that the public employee made the
6.1 	equivalent contribution.  If the employing unit fails to pay the
6.2 	required amount in a timely fashion, the executive director
6.3 	shall recover the amount either under Minnesota Statutes,
6.4 	section 353.28, subdivision 6, or by certifying the amount to
6.5 	the commissioner of finance, who shall deduct the amount from
6.6 	any state aid amount or state payment amount attributable to the
6.7 	employing unit.

6.8 	Sec. 4. EFFECTIVE DATE.
 6.9 	Sections 1 to 3 are effective the day following final
6.10 	enactment.