1.1 	A bill for an act
1.2 	relating to state government; providing for lottery
1.3 	gaming machines; imposing a tax on gaming machine and
1.4 	card club revenue; providing powers and duties to
1.5 	director; authorizing blackjack and other card games
1.6 	and imposing tax on gross receipts; creating the Clean
1.7 	Water Legacy Act; providing authority, direction, and
1.8 	funding to achieve and maintain water quality
1.9 	standards for Minnesota's surface waters in accordance
1.10 	with section 303(d) of the federal Clean Water Act;
1.11 	modifying soil and water cost-share contract
1.12 	provisions; extending citizen water monitoring;
1.13 	creating a municipal grant program; modifying tax
1.14 	exemption amounts; modifying net income apportionment
1.15 	provisions; modifying city government aid provisions;
1.16 	restructuring teacher retirement fund; consolidating
1.17 	the Minneapolis Teachers Retirement Fund Association;
1.18 	authorizing issuance of pension obligation bonds;
1.19 	modifying pension provisions; appropriating money for
1.20 	transit, transportation, environment, retirement, and
1.21 	salary supplements; amending Minnesota Statutes 2004,
1.22 	sections 103C.501, subdivision 5; 115.06, subdivision
1.23 	4; 116.182, subdivision 2; 240.13, by adding a
1.24 	subdivision; 240.30, subdivision 8; 240.35,
1.25 	subdivision 1; 290.091, subdivisions 2, 3; 290.191,
1.26 	subdivisions 2, 3; 299L.07, subdivisions 2, 2a;
1.27 	340A.410, subdivision 5; 349A.01, subdivision 10, by
1.28 	adding subdivisions; 349A.10, subdivisions 3, 6;
1.29 	349A.13; 354.05, subdivisions 2, 13; 354.42,
1.30 	subdivisions 2, 3; 354A.011, subdivisions 15a, 27;
1.31 	354A.021, subdivision 1; 354A.092; 354A.093,
1.32 	subdivision 1; 354A.095; 354A.096; 354A.12,
1.33 	subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30;
1.34 	354A.31, subdivision 4; 354A.32, subdivision 1;
1.35 	354A.39; 354A.40, subdivision 1; 354A.41; 356.20,
1.36 	subdivision 2; 356.214, subdivision 1; 356.215,
1.37 	subdivisions 8, 11; 356.30, subdivision 3; 356.302,
1.38 	subdivision 7; 356.303, subdivision 4; 356.315, by
1.39 	adding a subdivision; 356.42, subdivision 3; 356.465,
1.40 	subdivision 3; 423A.02, subdivision 1b; 477A.011,
1.41 	subdivisions 34, 36, as amended; 477A.013,
1.42 	subdivisions 8, 9; 477A.03, subdivision 2a; 541.20;
1.43 	541.21; 609.75, subdivision 3; 609.761, subdivision 2;
1.44 	Laws 2005, chapter 20, article 1, section 39;
1.45 	proposing coding for new law in Minnesota Statutes,
1.46 	chapters 128D; 297A; 349A; 354; 446A; proposing coding
2.1 	for new law as Minnesota Statutes, chapter 114D;
2.2 	repealing Minnesota Statutes 2004, sections 354A.051;
2.3 	354A.105; 354A.23, subdivision 1; 354A.28.
2.4 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.5 	ARTICLE 1
2.6 	RACINO

2.7 	Section 1. Minnesota Statutes 2004, section 240.13, is
2.8 	amended by adding a subdivision to read:
2.9 		Subd. 5a.Purses; gaming machines. From the compensation
2.10 	received by a licensee pursuant to a gaming machine location
2.11 	contract entered into under section 349A.17, the licensee must
2.12 	set aside at least 7.25 percent of the adjusted gross gaming
2.13 	machine revenue as defined under chapter 349A for purses for
2.14 	live horse races conducted by the licensee.  Purse payments made
2.15 	pursuant to this subdivision are in addition to purse payments
2.16 	otherwise established by law or contract.  Twenty percent of the
2.17 	money set aside for purses pursuant to this subdivision shall be
2.18 	transferred to the commission and used for the purposes in
2.19 	section 240.18, subdivisions 2, paragraph (d), and 3, paragraph
2.20 	(b), subject to the proportionality requirement in section
2.21 	240.18, subdivision 1.  The licensee and the horseperson's
2.22 	organization representing the majority of horsepersons who have
2.23 	raced horses at the racetrack during the preceding 12 months may
2.24 	negotiate percentages different from those stated in this
2.25 	section if the agreement is in writing and filed with the
2.26 	commission.

2.27 	Sec. 2. Minnesota Statutes 2004, section 240.30,
2.28 	subdivision 8, is amended to read:
2.29 		Subd. 8.Limitations.  The commission may not approve any
2.30 	plan of operation under subdivision 6 that exceeds any of the
2.31 	following limitations:
2.32 	(1) the maximum number of tables used for card playing at
2.33 	the card club at any one time, other than tables used for
2.34 	instruction, demonstrations, or tournament play, may not exceed
2.35 	50.  The table limit exception for tournament play is allowed
2.36 	for only one tournament per year that lasts for no longer than
2.37 	14 days;
3.1 	(2) except as provided in clause (3) (2), no wager may
3.2 	exceed $60;
3.3 	(3) (2) for games in which each player is allowed to make
3.4 	only one wager or has a limited opportunity to change that
3.5 	wager, no wager may exceed $300.

3.6 	Sec. 3. Minnesota Statutes 2004, section 240.35,
3.7 	subdivision 1, is amended to read:
3.8 		Subdivision 1.Generally.  A licensee of the commission
3.9 	may detain a person if the licensee has probable cause to
3.10 	believe that the person detained has violated section 609.76
3.11 	while at a card club authorized by section 240.30or at a
3.12 	facility where gaming machines are located under section
3.13 	349A.17.  For purposes of this section, "licensee" means the
3.14 	commission's director of racing security or a security officer
3.15 	licensed under Minnesota Rules, chapter 7878.

3.16 	Sec. 4. [297A.651] LOTTERY GAMING MACHINES; IN-LIEU TAX.
3.17 	Adjusted gross gaming machine revenue is exempt from the
3.18 	tax imposed under section 297A.62.  The State Lottery must on or
3.19 	before the 20th day of each month transmit to the commissioner
3.20 	an amount equal to the adjusted gross gaming machine revenue, as
3.21 	defined in section 349A.01, for the previous month multiplied by
3.22 	35 percent.  The commissioner shall deposit the money
3.23 	transmitted under this section in the state treasury in the
3.24 	general fund.

3.25 	Sec. 5. Minnesota Statutes 2004, section 299L.07,
3.26 	subdivision 2, is amended to read:
3.27 		Subd. 2.Exclusions.  Notwithstanding subdivision 1, a
3.28 	gambling device:
3.29 	(1) may be sold by a person who is not licensed under this
3.30 	section, if the person (i) is not engaged in the trade or
3.31 	business of selling gambling devices, and (ii) does not sell
3.32 	more than one gambling device in any calendar year;
3.33 	(2) may be sold by the governing body of a federally
3.34 	recognized Indian tribe described in subdivision 2a, paragraph
3.35 	(b), clause (1), which is not licensed under this section, if
3.36 	(i) the gambling device was operated by the Indian tribe, (ii)
4.1 	the sale is to a distributor licensed under this section, and
4.2 	(iii) the licensed distributor notifies the commissioner of the
4.3 	purchase, in the same manner as is required when the licensed
4.4 	distributor ships a gambling device into Minnesota;
4.5 	(3) may be possessed by a person not licensed under this
4.6 	section if the person holds a permit issued under section
4.7 	299L.08; and 
4.8 	(4) may be possessed by a state agency, with the written
4.9 	authorization of the director, for display or evaluation
4.10 	purposes only and not for the conduct of gambling; and 
4.11 	(5) may be possessed by the State Lottery as authorized
4.12 	under chapter 349A.

4.13 	Sec. 6. Minnesota Statutes 2004, section 299L.07,
4.14 	subdivision 2a, is amended to read:
4.15 		Subd. 2a.Restrictions.  (a) A manufacturer licensed
4.16 	under this section may sell, offer to sell, lease, or rent, in
4.17 	whole or in part, a gambling device only to a distributor
4.18 	licensed under this section or to the State Lottery as
4.19 	authorized under chapter 349A.
4.20 	(b) A distributor licensed under this section may sell,
4.21 	offer to sell, market, rent, lease, or otherwise provide, in
4.22 	whole or in part, a gambling device only to:
4.23 	(1) the governing body of a federally recognized Indian
4.24 	tribe that is authorized to operate the gambling device under a
4.25 	tribal state compact under the Indian Gaming Regulatory Act,
4.26 	Public Law 100-497, and future amendments to it;
4.27 	(2) a person for use in the person's dwelling for display
4.28 	or amusement purposes in a manner that does not afford players
4.29 	an opportunity to obtain anything of value;
4.30 	(3) another distributor licensed under this section; or 
4.31 	(4) a person in another state who is authorized under the
4.32 	laws of that state to possess the gambling device; or 
4.33 	(5) the State Lottery as authorized under chapter 349A.

4.34 	Sec. 7. Minnesota Statutes 2004, section 340A.410,
4.35 	subdivision 5, is amended to read:
4.36 		Subd. 5.Gambling prohibited.  (a) Except as otherwise
5.1 	provided in this subdivision, no retail establishment licensed
5.2 	to sell alcoholic beverages may keep, possess, or operate, or
5.3 	permit the keeping, possession, or operation on the licensed
5.4 	premises of dice or any gambling device as defined in section
5.5 	349.30, or permit gambling therein.
5.6 	(b) Gambling equipment may be kept or operated and raffles
5.7 	conducted on licensed premises and adjoining rooms when the use
5.8 	of the gambling equipment is authorized by (1) chapter 349, (2)
5.9 	a tribal ordinance in conformity with the Indian Gaming
5.10 	Regulatory Act, Public Law 100-497, or (3) a tribal-state
5.11 	compact authorized under section 3.9221.
5.12 	(c) Lottery tickets may be purchased and sold within the
5.13 	licensed premises as authorized by the director of the lottery
5.14 	under chapter 349A.
5.15 	(d) Dice may be kept and used on licensed premises and
5.16 	adjoining rooms as authorized by section 609.761, subdivision 4.
5.17 	(e) Gambling devices may be operated on the premises of a
5.18 	licensed racetrack as authorized by chapter 349A.

5.19 	Sec. 8. Minnesota Statutes 2004, section 349A.01,
5.20 	subdivision 10, is amended to read:
5.21 		Subd. 10.Lottery procurement contract.  "Lottery
5.22 	procurement contract" means a contract to provide lottery
5.23 	products, gaming machines, maintenance of gaming machines,
5.24 	computer hardware and software used to monitor sales of lottery
5.25 	tickets and gaming machine plays, and lottery tickets.  "Lottery
5.26 	procurement contract" does not include a contract to provide an
5.27 	annuity or prize payment agreement or materials, supplies,
5.28 	equipment, or services common to the ordinary operation of a
5.29 	state agency.

5.30 	Sec. 9. Minnesota Statutes 2004, section 349A.01, is
5.31 	amended by adding a subdivision to read:
5.32 		Subd. 14.Gaming machine. "Gaming machine" means any
5.33 	machine, system, or device which, upon payment of consideration
5.34 	in order to play a game, may award or entitle a player to a
5.35 	prize by reason of skill of the player or application of the
5.36 	element of chance, or both.

6.1 	Sec. 10. Minnesota Statutes 2004, section 349A.01, is
6.2 	amended by adding a subdivision to read:
6.3 		Subd. 15.Gaming machine game. "Gaming machine game"
6.4 	means a game operated by a gaming machine as authorized by the
6.5 	director.

6.6 	Sec. 11. Minnesota Statutes 2004, section 349A.01, is
6.7 	amended by adding a subdivision to read:
6.8 		Subd. 16.Gaming machine play. "Gaming machine play"
6.9 	means an electronic record that proves participation in a gaming
6.10 	machine game.

6.11 	Sec. 12. Minnesota Statutes 2004, section 349A.01, is
6.12 	amended by adding a subdivision to read:
6.13 		Subd. 17.Adjusted gross gaming machine revenue.
 6.14 	"Adjusted gross gaming machine revenue" means the sum of all
6.15 	money received by the lottery for gaming machine plays, less the
6.16 	amount paid out in prizes for gaming machine games.

6.17 	Sec. 13. Minnesota Statutes 2004, section 349A.10,
6.18 	subdivision 3, is amended to read:
6.19 		Subd. 3.Lottery operations.  (a) The director shall
6.20 	establish a lottery operations account in the lottery fund.  The
6.21 	director shall pay all costs of operating the lottery, including
6.22 	payroll costs or amounts transferred to the state treasury for
6.23 	payroll costs, but not including lottery prizes, from the
6.24 	lottery operating account.  The director shall credit to the
6.25 	lottery operations account amounts sufficient to pay the
6.26 	operating costs of the lottery.
6.27 	(b) Except as provided in paragraph (e), the director may
6.28 	not credit in any fiscal year thereafter amounts to the lottery
6.29 	operations account which when totaled exceed 15 percent of gross
6.30 	revenue to the lottery fund in that fiscal year.  In computing
6.31 	total amounts credited to the lottery operations account under
6.32 	this paragraph the director shall disregard amounts transferred
6.33 	to or retained by lottery retailers as sales commissions or
6.34 	other compensation and amounts transferred or retained by a
6.35 	racetrack pursuant to a location contract under section 349A.17.
6.36 	(c) The director of the lottery may not expend after July
7.1 	1, 1991, more than 2-3/4 percent of gross revenues in a fiscal
7.2 	year for contracts for the preparation, publication, and
7.3 	placement of advertising.
7.4 	(d) Except as the director determines, the lottery is not
7.5 	subject to chapter 16A relating to budgeting, payroll, and the
7.6 	purchase of goods and services.
7.7 	(e) In addition to the amounts credited to the lottery
7.8 	operations account under paragraph (b), the director is
7.9 	authorized, if necessary, to meet the current obligations of the
7.10 	lottery and to credit up to 25 percent of an amount equal to the
7.11 	average annual amount which was authorized to be credited to the
7.12 	lottery operations account for the previous three fiscal years
7.13 	but was not needed to meet the obligations of the lottery.
7.14 	(f) Notwithstanding the provisions of this subdivision, the
7.15 	director may credit up to ten percent of adjusted gross gaming
7.16 	machine revenue to the lottery operations account in a fiscal
7.17 	year.

7.18 	Sec. 14. Minnesota Statutes 2004, section 349A.10,
7.19 	subdivision 6, is amended to read:
7.20 		Subd. 6.Budget; plans.  The director shall prepare and
7.21 	submit a biennial budget plan to the commissioner of finance.
7.22 	The governor shall recommend the maximum amount available for
7.23 	the lottery in the budget the governor submits to the
7.24 	legislature under section 16A.11.  The maximum amount available
7.25 	to the lottery for operating expenses and capital expenditures
7.26 	shall be determined by law.  Operating expenses shall not
7.27 	include expenses that are a direct function of lottery sales,
7.28 	which include the cost of lottery prizes, amounts paid to
7.29 	lottery retailers as sales commissions or other compensation,
7.30 	amounts paid to produce and deliver scratch lottery games, and 
7.31 	amounts paid to an outside vendor to operate and maintain an
7.32 	on-line gaming system, amounts paid to an outside vendor to
7.33 	operate and maintain a central communications system for gaming
7.34 	machines, and amounts paid to acquire and maintain gaming
7.35 	machines.  In addition, the director shall appear at least once
7.36 	each fiscal year before the senate and house of representatives
8.1 	committees having jurisdiction over gambling policy to present
8.2 	and explain the lottery's plans for future games and the related
8.3 	advertising and promotions and spending plans for the next
8.4 	fiscal year.

8.5 	Sec. 15. Minnesota Statutes 2004, section 349A.13, is
8.6 	amended to read:
8.7 	349A.13 RESTRICTIONS.
8.8 	Nothing in this chapter:
8.9 	(1) authorizes the director to conduct a lottery game or
8.10 	contest the winner or winners of which are determined by the
8.11 	result of a sporting event other than a horse race conducted
8.12 	under chapter 240;
8.13 	(2) authorizes the director to install or operate a lottery
8.14 	device operated by coin or currency which when operated
8.15 	determines the winner of a game except as authorized under
8.16 	section 349A.17; and
8.17 	(3) authorizes the director to sell pull-tabs as defined
8.18 	under section 349.12, subdivision 32.

8.19 	Sec. 16. [349A.17] GAMING MACHINES.
8.20 		Subdivision 1.Location contract. (a) The director may
8.21 	enter into a contract with a person to provide a location for
8.22 	gaming machines.  Contracts entered into under this section are
8.23 	not subject to chapter 16C.  The director may only enter a
8.24 	contract under this subdivision with a person that holds a class
8.25 	A license under chapter 240.  The gaming machines may only be
8.26 	placed at the racetrack for which the class A license under
8.27 	chapter 240 was issued.
8.28 	(b) In order to be eligible for a contract under this
8.29 	section, the class A licensee must have conducted at least 50
8.30 	days of live racing at the racetrack each year within the last
8.31 	five preceding calendar years.  A contract under this section
8.32 	must contain a provision under which the contract terminates on
8.33 	the first day of any calendar year following a calendar year
8.34 	during which the class A licensee has not conducted at least 50
8.35 	days of live racing at the licensee's racetrack.
8.36 	(c) Contracts entered into must provide for compensation to
9.1 	the racetrack in an amount equal to at least 55 percent of
9.2 	adjusted gross gaming machine revenue.  From the amount received
9.3 	by the racetrack under this section, the racetrack shall
9.4 	annually remit an amount equal to one percent of the adjusted
9.5 	gross gaming machine revenue to both the city or town and the
9.6 	county where the racetrack is located.
9.7 	(d) The director may cancel, suspend, or refuse to renew
9.8 	the location contract or impose a civil penalty if the licensee:
9.9 	(1) no longer holds a class A license under chapter 240;
9.10 	(2) fails to account for proceeds from the gaming machines;
9.11 	(3) fails to remit funds to the director in accordance with
9.12 	the location contract;
9.13 	(4) violates a law, rule, or order of the director;
9.14 	(5) fails to comply with any of the terms of the location
9.15 	contract; or 
9.16 	(6) has acted in a manner prejudicial to public confidence
9.17 	in the integrity of the operation of the gaming machines.
9.18 	The cancellation, suspension, or refusal to renew the
9.19 	location contract or imposition of a civil penalty under this
9.20 	paragraph is a contested case under sections 14.57 to 14.69.
9.21 	(e) No gaming machines may be located within a statutory or
9.22 	home rule charter city or town, unless the governing body of the
9.23 	city or town adopts a resolution approving the location of the
9.24 	gaming machines within the city or town.
9.25 	(f) As a condition of entering into a contract under this
9.26 	section, the licensee must make to the commission, for deposit
9.27 	in the general fund, a onetime payment of $100,000,000 by June
9.28 	30, 2007.  A contract must include a provision to refund this
9.29 	payment if this section is repealed by the legislature, revoked
9.30 	by constitutional amendment, or held unconstitutional by a court
9.31 	of competent jurisdiction.
9.32 	(g) The contract entered into under this section must
9.33 	include the following provisions:
9.34 	(1) liquidated damages to recover the initial investment by
9.35 	the licensee in the event the state, through legislation or
9.36 	constitutional amendment, revokes all or substantially all of
10.1 	the forms of gambling authorized under this section.  The
10.2 	liquidated damages must include the onetime payment under
10.3 	paragraph (f) and the unpaid balance of costs incurred by the
10.4 	licensee for construction or acquisition of the gaming facility
10.5 	less the present market value of that property.  Any liquidated
10.6 	damages provision must expire within ten years; and 
10.7 	(2) all costs associated with managing the day-to-day
10.8 	activity of gaming machines, including, but not limited to,
10.9 	routine and minor service and maintenance, security monitoring,
10.10 	verifying winners, paying winners, collecting money from gaming
10.11 	machines, and advertising and marketing of gaming machines must
10.12 	be borne by the licensee.
10.13 		Subd. 2.Operation. (a) All gaming machines that are
10.14 	placed at a racetrack pursuant to subdivision 1 must be operated
10.15 	and controlled by the director.
10.16 	(b) Gaming machines must be owned or leased by the director.
10.17 	(c) Gaming machines must be maintained by the lottery, or
10.18 	by a vendor that is under the control and direction of the
10.19 	director.
10.20 	(d) The director must have a central communications system
10.21 	that monitors activities on each gaming machine.  The central
10.22 	communications system must be located at a lottery office.
10.23 	(e) The director must approve the general security
10.24 	arrangements associated with and relating to the operation of
10.25 	the gaming machines.
10.26 	(f) Advertising and promotional material produced by the
10.27 	racetrack relating to gaming machines located at its facility
10.28 	must be approved by the director.
10.29 	(g) The director may implement such other controls as are
10.30 	deemed necessary for the operation of gaming machines pursuant
10.31 	to this section.
10.32 		Subd. 3.Games. The director shall specify the games
10.33 	that may be played on a gaming machine according to section
10.34 	349A.04.  Gaming machines may conduct pari-mutuel wagering and
10.35 	display horse races pursuant to the director's specifications.
10.36 		Subd. 4.Prizes. A person who plays a gaming machine
11.1 	agrees to be bound by the rules and game procedures applicable
11.2 	to that particular gaming machine game.  The player acknowledges
11.3 	that the determination of whether the player has won a prize is
11.4 	subject to the rules and game procedures adopted by the
11.5 	director, claim procedures established by the director for the
11.6 	game, and any confidential or public validation tests
11.7 	established by the director for that game.  A prize claimed from
11.8 	the play of a gaming machine game is not subject to the
11.9 	provisions of section 349A.08, subdivision 8.
11.10 		Subd. 5.No credit restriction. The licensee shall
11.11 	require that all gaming at a gaming facility, including
11.12 	participation in a gaming machine game, shall be conducted on a
11.13 	cash basis.  Except as provided in this subdivision, no person
11.14 	may be extended credit for gaming at a gaming facility, and the
11.15 	licensee shall not permit any person or organization to offer
11.16 	such credit for a fee at the gaming facility.  This provision
11.17 	does not restrict the right of the licensee or any other person
11.18 	to offer check cashing or to install or accept bank card or
11.19 	credit card transactions in the same manner as would be normally
11.20 	permitted at any retail business within the state.
11.21 		Subd. 6.Prohibitions. (a) A person under the age of 18
11.22 	years may not play a game on or claim a prize from a gaming
11.23 	machine.
11.24 	(b) The director or any employee of the lottery, or a
11.25 	member of their immediate family residing in the same household,
11.26 	may not play a game on a gaming machine or receive a prize from
11.27 	the operation of a gaming machine.
11.28 		Subd. 7.Compulsive gambling; report. (a) The licensee
11.29 	shall prominently post, in the area where the gaming machines
11.30 	are located, the toll-free telephone number established by the
11.31 	commissioner of human services in connection with the compulsive
11.32 	gambling program established under section 245.98.  The
11.33 	licensee, with the approval of the director, shall establish a
11.34 	proactive plan relating to problem gambling.
11.35 	(b) By January 15 of each year, the director shall submit a
11.36 	report to the legislature, of not more than five pages in
12.1 	length, setting forth the performance objectives of the plan and
12.2 	the progress that was made toward those objectives during the
12.3 	prior calendar year.  The licensee may establish a
12.4 	self-exclusion program by which persons, at their request, may
12.5 	be excluded from the facility where the gaming machines are
12.6 	located.
12.7 		Subd. 8.Local licenses. Except as provided in
12.8 	subdivision 1, no political subdivision may require a license to
12.9 	operate a gaming machine, restrict or regulate the placement of
12.10 	gaming machines, or impose a tax or fee on the business of
12.11 	operating gaming machines.
12.12 		Subd. 9.Reimbursement; racing commission. The Minnesota
12.13 	Racing Commission shall require the licensee to reimburse the
12.14 	commission's actual costs, including personnel costs, of
12.15 	regulating the licensee under this section.  Amounts received
12.16 	under this subdivision must be deposited as provided in section
12.17 	240.155, subdivision 1.

12.18 	Sec. 17. Minnesota Statutes 2004, section 541.20, is
12.19 	amended to read:
12.20 	541.20 RECOVERY OF MONEY LOST.
12.21 	Every person who, by playing at cards, dice, or other game,
12.22 	or by betting on the hands or sides of such as are gambling,
12.23 	shall lose to any person so playing or betting any sum of money
12.24 	or any goods, and pays or delivers the same, or any part
12.25 	thereof, to the winner, may sue for and recover such money by a
12.26 	civil action, before any court of competent jurisdiction.  For
12.27 	purposes of this section, gambling shall not include pari-mutuel
12.28 	wagering or other wagering conducted under a license issued
12.29 	pursuant to chapter 240, purchase or sale of tickets in the
12.30 	state lottery, or gambling authorized under chapters 349 and
12.31 	349A.

12.32 	Sec. 18. Minnesota Statutes 2004, section 541.21, is
12.33 	amended to read:
12.34 	541.21 COMMITMENTS FOR GAMBLING DEBT VOID.
12.35 	Every note, bill, bond, mortgage, or other security or
12.36 	conveyance in which the whole or any part of the consideration
13.1 	shall be for any money or goods won by gambling or playing at
13.2 	cards, dice, or any other game whatever, or by betting on the
13.3 	sides or hands of any person gambling, or for reimbursing or
13.4 	repaying any money knowingly lent or advanced at the time and
13.5 	place of such gambling or betting, or lent and advanced for any
13.6 	gambling or betting to any persons so gambling or betting, shall
13.7 	be void and of no effect as between the parties to the same, and
13.8 	as to all persons except such as hold or claim under them in
13.9 	good faith, without notice of the illegality of the
13.10 	consideration of such contract or conveyance.  The provisions of
13.11 	this section shall not apply to:  (1) pari-mutuel or other 
13.12 	wagering conducted under a license issued pursuant to chapter
13.13 	240; (2) purchase of tickets in the state lottery or other
13.14 	wagering authorized under chapter 349A; (3) gaming activities
13.15 	conducted pursuant to the Indian Gaming Regulatory Act, 25
13.16 	U.S.C. 2701 et seq.; or (4) lawful gambling activities permitted
13.17 	under chapter 349.

13.18 	Sec. 19. Minnesota Statutes 2004, section 609.75,
13.19 	subdivision 3, is amended to read:
13.20 		Subd. 3.What are not bets.  The following are not bets:
13.21 	(1) A contract to insure, indemnify, guarantee or otherwise
13.22 	compensate another for a harm or loss sustained, even though the
13.23 	loss depends upon chance.
13.24 	(2) A contract for the purchase or sale at a future date of
13.25 	securities or other commodities.
13.26 	(3) Offers of purses, prizes or premiums to the actual
13.27 	contestants in any bona fide contest for the determination of
13.28 	skill, speed, strength, endurance, or quality or to the bona
13.29 	fide owners of animals or other property entered in such a
13.30 	contest.
13.31 	(4) The game of bingo when conducted in compliance with
13.32 	sections 349.11 to 349.23.
13.33 	(5) A private social bet not part of or incidental to
13.34 	organized, commercialized, or systematic gambling.
13.35 	(6) The operation of equipment or the conduct of a raffle
13.36 	under sections 349.11 to 349.22, by an organization licensed by
14.1 	the Gambling Control Board or an organization exempt from
14.2 	licensing under section 349.166.
14.3 	(7) Pari-mutuel betting on horse racing when the betting is
14.4 	conducted under chapter 240.
14.5 	(8) The purchase and sale of state lottery tickets and
14.6 	plays on a gaming machine under chapter 349A.

14.7 	Sec. 20. Minnesota Statutes 2004, section 609.761,
14.8 	subdivision 2, is amended to read:
14.9 		Subd. 2.State lottery.  Sections 609.755 and 609.76 do
14.10 	not prohibit the operation of the state lottery or the sale,
14.11 	possession, or purchase of tickets for the state lottery under
14.12 	chapter 349A, or the manufacture, possession, sale, or operation
14.13 	of a gaming machine under chapter 349A.

14.14 	Sec. 21. OTHER GAMES.
 14.15 	(a) The Minnesota Racing Commission may authorize a person
14.16 	with a gaming machine location contract under Minnesota
14.17 	Statutes, section 349A.17, to conduct other card games that
14.18 	Indian gaming casinos within this state are authorized by
14.19 	compact or law to conduct.  The Minnesota Racing Commission
14.20 	shall adopt game procedures and take other actions necessary to
14.21 	regulate the conduct and ensure the integrity of the games.  A
14.22 	tax is imposed on games conducted under this section at the rate
14.23 	of 20 percent of the gross gaming receipts.  For purposes of
14.24 	this section, "gross gaming receipts" means all revenue received
14.25 	by the licensee from card games authorized under this section,
14.26 	less winnings paid to players.
14.27 	(b) Of the gross gaming receipts, the licensee must set
14.28 	aside at least 7.25 percent for purses for live horse races
14.29 	conducted by the licensee.  Purse payments under this section
14.30 	are in addition to any other purse payments established by law
14.31 	or contract.  Twenty percent of the amount set aside for purses
14.32 	shall be transferred to the Minnesota Racing Commission and used
14.33 	for the purposes in Minnesota Statutes, section 240.18.  The
14.34 	licensee and the horseperson's organization representing the
14.35 	majority of horsepersons who have raced horses at the racetrack
14.36 	during the preceding 12 months may negotiate percentages
15.1 	different from those stated in this section if the agreement is
15.2 	in writing and filed with the racing commission.

15.3 	Sec. 22. LOTTERY BUDGET; GAMING MACHINES.
 15.4 	The director of the State Lottery shall submit a budget for
15.5 	the operation of gaming machines authorized under Minnesota
15.6 	Statutes, section 349A.17, to the commissioner of finance.
15.7 	Notwithstanding Minnesota Statutes, section 349A.10, subdivision
15.8 	6, the director of the State Lottery may expend amounts
15.9 	necessary to operate the gaming machines.  Amounts expended by
15.10 	the director of the State Lottery for the operation of gaming
15.11 	machines in fiscal years 2006 and 2007 are not subject to the
15.12 	maximum amount set in law for the operation of the lottery.

15.13 	Sec. 23. SEVERABILITY; SAVINGS.
 15.14 	If any part of this article is found to be invalid because
15.15 	it is in conflict with a provision of the Constitution of the
15.16 	state of Minnesota or the Constitution of the United States, or
15.17 	for any other reason, all other provisions of this article shall
15.18 	remain valid and any rights, remedies, and privileges that have
15.19 	been otherwise accrued by this act, shall remain in effect and
15.20 	may be proceeded with and concluded under the provisions of this
15.21 	article.

15.22 	Sec. 24. EFFECTIVE DATE.
 15.23 	This article is effective the day following final enactment.

15.24 	ARTICLE 2
15.25 	CLEAN WATER LEGACY

15.26 	Section 1. Minnesota Statutes 2004, section 103C.501,
15.27 	subdivision 5, is amended to read:
15.28 		Subd. 5.Contracts by districts.  (a) A district board
15.29 	may contract on a cost-share basis to furnish financial aid to a
15.30 	land occupier or to a state agency for permanent systems for
15.31 	erosion or sedimentation control or water quality improvement
15.32 	that are consistent with the district's comprehensive and annual
15.33 	work plans.
15.34 	(b) The duration of the contract may must, at a minimum,be
15.35 	the time required to complete the planned systems.  A contract
15.36 	must specify that the land occupier is liable for monetary
16.1 	damages, not to exceed the and penalties in an amount of up to
16.2 	150 percent of the financial assistance received from the
16.3 	district, for failure to complete the systems or practices in a
16.4 	timely manner or maintain the systems or practices as specified
16.5 	in the contract.
16.6 	(c) A contract may provide for cooperation or funding with
16.7 	federal agencies.  A land occupier or state agency may provide
16.8 	the cost-sharing portion of the contract through services in
16.9 	kind.
16.10 	(d) The state board or the district board may not furnish
16.11 	any financial aid for practices designed only to increase land
16.12 	productivity.
16.13 	(e) When a district board determines that long-term
16.14 	maintenance of a system or practice is desirable, the board may
16.15 	require that such maintenance be made a covenant upon the land
16.16 	for the effective life of the practice.  A covenant under this
16.17 	subdivision shall be construed in the same manner as a
16.18 	conservation restriction under section 84.65.

16.19 	Sec. 2. [114D.05] CITATION.
16.20 	This chapter may be cited as the "Clean Water Legacy Act." 

16.21 	Sec. 3. [114D.10] LEGISLATIVE PURPOSE AND FINDINGS.
16.22 		Subdivision 1.Purpose. The purpose of the Clean Water
16.23 	Legacy Act is to protect, restore, and preserve the quality of
16.24 	Minnesota's surface waters by providing authority, direction,
16.25 	and resources to achieve and maintain water quality standards
16.26 	for surface waters as required by section 303(d) of the federal
16.27 	Clean Water Act, United States Code, title 33, section 1313(d),
16.28 	and applicable federal regulations.
16.29 		Subd. 2.Findings. The legislature finds that:
16.30 	(1) there is a close link between protecting, restoring,
16.31 	and preserving the quality of Minnesota's surface waters and the
16.32 	ability to develop the state's economy, enhance its quality of
16.33 	life, and protect its human and natural resources;
16.34 	(2) achieving the state's water quality goals will require
16.35 	long-term commitment and cooperation by all state and local
16.36 	agencies, and other public and private organizations and
17.1 	individuals, with responsibility and authority for water
17.2 	management, planning, and protection; and 
17.3 	(3) all persons and organizations whose activities affect
17.4 	the quality of waters, including point and nonpoint sources of
17.5 	pollution, have a responsibility to participate in and support
17.6 	efforts to achieve the state's water quality goals.

17.7 	Sec. 4. [114D.15] DEFINITIONS.
17.8 		Subdivision 1.Application. The definitions provided in
17.9 	this section apply to the terms used in this chapter.
17.10 		Subd. 2.Citizen monitoring. "Citizen monitoring" means
17.11 	monitoring of surface water quality by individuals and
17.12 	nongovernmental organizations that is consistent with section
17.13 	115.06, subdivision 4, and Pollution Control Agency guidance on
17.14 	monitoring procedures, quality assurance protocols, and data
17.15 	management.
17.16 		Subd. 3.Clean water council. "Clean Water Council" or
17.17 	"council" means the Clean Water Council created pursuant to
17.18 	section 114D.30, subdivision 1.
17.19 		Subd. 4.Federal tmdl requirements. "Federal TMDL
17.20 	requirements" means the requirements of section 303(d) of the
17.21 	Clean Water Act, United States Code, title 33, section 1313(d),
17.22 	and associated regulations and guidance.
17.23 		Subd. 5.Impaired water. "Impaired water" means surface
17.24 	water that does not meet applicable water quality standards.
17.25 		Subd. 6.Public agencies. "Public agencies" means all
17.26 	state agencies, political subdivisions, joint powers
17.27 	organizations, and special purpose units of government with
17.28 	authority, responsibility, or expertise in protecting,
17.29 	restoring, or preserving the quality of surface waters, managing
17.30 	or planning for surface waters and related lands, or financing
17.31 	waters-related projects.  "Public agencies" also includes the
17.32 	University of Minnesota and other public education institutions.
17.33 		Subd. 7.Restoration. "Restoration" means actions,
17.34 	including effectiveness monitoring, that are taken to achieve
17.35 	and maintain water quality standards for impaired waters in
17.36 	accordance with a TMDL that has been approved by the United
18.1 	States Environmental Protection Agency under federal TMDL
18.2 	requirements.
18.3 		Subd. 8.Surface waters. "Surface waters" means waters
18.4 	of the state as defined in section 115.01, subdivision 22,
18.5 	excluding groundwater as defined in section 115.01, subdivision
18.6 	6.
18.7 		Subd. 9.Third-party tmdl. "Third-party TMDL" means a
18.8 	TMDL by the Pollution Control Agency that is developed in whole
18.9 	or in part cooperatively between representatives from local
18.10 	units of government where the TMDL is being completed and a
18.11 	qualified public or private nonprofit entity other than the
18.12 	Pollution Control Agency consistent with the goals, policies,
18.13 	and priorities in section 114D.20.
18.14 		Subd. 10.Total maximum daily load or tmdl. "Total
18.15 	maximum daily load" or "TMDL" means a scientific study that
18.16 	contains a calculation of the maximum amount of a pollutant that
18.17 	may be introduced into a surface water and still ensure that
18.18 	applicable water quality standards for that water are restored
18.19 	and maintained.  A TMDL also is the sum of the pollutant load
18.20 	allocations for all sources of the pollutant, including a
18.21 	wasteload allocation for point sources, a load allocation for
18.22 	nonpoint sources and natural background, an allocation for
18.23 	future growth of point and nonpoint sources, and a margin of
18.24 	safety to account for uncertainty about the relationship between
18.25 	pollutant loads and the quality of the receiving surface water.
18.26 	"Natural background" means characteristics of the water body
18.27 	resulting from the multiplicity of factors in nature, including
18.28 	climate and ecosystem dynamics, that affect the physical,
18.29 	chemical, or biological conditions in a water body, but does not
18.30 	include measurable and distinguishable pollution that is
18.31 	attributable to human activity or influence.  A TMDL must take
18.32 	into account seasonal variations.
18.33 		Subd. 11.Tmdl implementation plan. "TMDL implementation
18.34 	plan" means a document detailing restoration activities needed
18.35 	to meet the approved TMDL's pollutant load allocations for point
18.36 	and nonpoint sources.
19.1 		Subd. 12.Water quality standards. "Water quality
19.2 	standards" for Minnesota surface waters are found in Minnesota
19.3 	Rules, chapters 7050 and 7052.

19.4 	Sec. 5. [114D.20] IMPLEMENTATION; COORDINATION; GOALS;
19.5 	POLICIES; AND PRIORITIES.
19.6 		Subdivision 1.Coordination and cooperation. In
19.7 	implementing this chapter, public agencies and private entities
19.8 	shall take into consideration the relevant provisions of local
19.9 	and other applicable water management, conservation, land use,
19.10 	land management, and development plans and programs.  Public
19.11 	agencies with authority for local water management,
19.12 	conservation, land use, land management, and development plans
19.13 	shall take into consideration the manner in which their plans
19.14 	affect the implementation of this chapter.  Public agencies
19.15 	shall identify opportunities to participate and assist in the
19.16 	successful implementation of this chapter, including the funding
19.17 	or technical assistance needs, if any, that may be necessary.
19.18 	In implementing this chapter, public agencies shall endeavor to
19.19 	engage the cooperation of organizations and individuals whose
19.20 	activities affect the quality of surface waters, including point
19.21 	and nonpoint sources of pollution, and who have authority and
19.22 	responsibility for water management, planning, and protection.
19.23 	To the extent practicable, public agencies shall endeavor to
19.24 	enter into formal and informal agreements and arrangements with
19.25 	federal agencies and departments to jointly utilize staff and
19.26 	educational, technical, and financial resources to deliver
19.27 	programs or conduct activities to achieve the intent of this
19.28 	chapter, including efforts under the federal Clean Water Act and
19.29 	other federal farm and soil and water conservation programs.
19.30 		Subd. 2.Goals for implementation. The following goals
19.31 	must guide the implementation of this chapter:
19.32 	(1) to identify impaired waters in accordance with federal
19.33 	TMDL requirements within ten years after the effective date of
19.34 	this section and thereafter to ensure continuing evaluation of
19.35 	surface waters for impairments;
19.36 	(2) to submit TMDL's to the United States Environmental
20.1 	Protection Agency for all impaired waters in a timely manner in
20.2 	accordance with federal TMDL requirements;
20.3 	(3) to set a reasonable time for implementing restoration
20.4 	of each identified impaired water;
20.5 	(4) to provide assistance and incentives to prevent waters
20.6 	from becoming impaired and to improve the quality of waters
20.7 	which are listed as impaired but have no approved TMDL
20.8 	addressing the impairment;
20.9 	(5) to promptly seek the delisting of waters from the
20.10 	impaired waters list when those waters are shown to achieve the
20.11 	designated uses applicable to the waters; and 
20.12 	(6) to achieve compliance with federal Clean Water Act
20.13 	requirements in Minnesota.
20.14 		Subd. 3.Implementation policies. The following policies
20.15 	must guide the implementation of this chapter:
20.16 	(1) develop regional and watershed TMDL's and TMDL
20.17 	implementation plans, and TMDL's and TMDL implementation plans
20.18 	for multiple pollutants, where reasonable and feasible;
20.19 	(2) maximize use of available organizational, technical,
20.20 	and financial resources to perform sampling, monitoring, and
20.21 	other activities to identify impaired waters, including use of
20.22 	citizen monitoring;
20.23 	(3) maximize opportunities for restoration of impaired
20.24 	waters, by prioritizing and targeting of available programmatic,
20.25 	financial, and technical resources and by providing additional
20.26 	state resources to complement and leverage available resources;
20.27 	(4) use existing regulatory authorities to achieve
20.28 	restoration for point and nonpoint sources of pollution where
20.29 	applicable, and promote the development and use of effective
20.30 	nonregulatory measures to address pollution sources for which
20.31 	regulations are not applicable;
20.32 	(5) use restoration methods that have a demonstrated
20.33 	effectiveness in reducing impairments and provide the greatest
20.34 	long-term positive impact on water quality protection and
20.35 	improvement and related conservation benefits while
20.36 	incorporating innovative approaches on a case-by-case basis;
21.1 	(6) identify for the legislature any innovative approaches
21.2 	that may strengthen or complement existing programs;
21.3 	(7) identify and encourage implementation of measures to
21.4 	prevent waters from becoming impaired and to improve the quality
21.5 	of waters that are listed as impaired but have no approved TMDL
21.6 	addressing the impairment using the best available data and
21.7 	technology, and establish and report outcome-based performance
21.8 	measures that monitor the progress and effectiveness of
21.9 	protection and restoration measures.
21.10 	(8) monitor and enforce cost-sharing contracts and impose
21.11 	monetary damages in an amount up to 150 percent of the financial
21.12 	assistance received for failure to comply.
21.13 		Subd. 4.Priorities for identifying impaired waters. The
21.14 	Pollution Control Agency, in accordance with federal TMDL
21.15 	requirements, shall set priorities for identifying impaired
21.16 	waters, giving consideration to:
21.17 	(1) waters where impairments would pose the greatest
21.18 	potential risk to human or aquatic health; and 
21.19 	(2) waters where data developed through public agency or
21.20 	citizen monitoring or other means, provides scientific evidence
21.21 	that an impaired condition exists.
21.22 	Subd. 5.[PRIORITIES FOR PREPARATION OF TMDL'S.] The Clean
21.23 	Water Council shall recommend priorities for scheduling and
21.24 	preparing TMDL's and TMDL implementation plans, taking into
21.25 	account the severity of the impairment, the designated uses of
21.26 	those waters, and other applicable federal TMDL requirements.
21.27 	In recommending priorities, the council shall also give
21.28 	consideration to waters and watersheds:
21.29 	(1) with impairments that pose the greatest potential risk
21.30 	to human health;
21.31 	(2) with impairments that pose the greatest potential risk
21.32 	to threatened or endangered species;
21.33 	(3) with impairments that pose the greatest potential risk
21.34 	to aquatic health;
21.35 	(4) where other public agencies and participating
21.36 	organizations and individuals, especially local, basinwide,
22.1 	watershed, or regional agencies or organizations, have
22.2 	demonstrated readiness to assist in carrying out the
22.3 	responsibilities, including availability and organization of
22.4 	human, technical, and financial resources necessary to undertake
22.5 	the work; and 
22.6 	(5) where there is demonstrated coordination and
22.7 	cooperation among cities, counties, watershed districts, and
22.8 	soil and water conservation districts in planning and
22.9 	implementation of activities that will assist in carrying out
22.10 	the responsibilities.
22.11 		Subd. 6.Priorities for restoration of impaired
22.12 	waters. In implementing restoration of impaired waters, in
22.13 	addition to the priority considerations in subdivision 5 the
22.14 	Clean Water Council shall give priority in its recommendations
22.15 	for restoration funding from the clean water legacy account to
22.16 	restoration projects that:
22.17 	(1) coordinate with and utilize existing local authorities
22.18 	and infrastructure for implementation;
22.19 	(2) can be implemented in whole or in part by providing
22.20 	support for existing or ongoing restoration efforts; and 
22.21 	(3) most effectively leverage other sources of restoration
22.22 	funding, including federal, state, local, and private sources of
22.23 	funds;
22.24 	(4) show a high potential for early restoration and
22.25 	delisting based upon scientific data developed through public
22.26 	agency or citizen monitoring or other means; and 
22.27 	(5) show a high potential for long-term water quality and
22.28 	related conservation benefits.
22.29 		Subd. 7.Priorities for funding prevention actions. The
22.30 	Clean Water Council shall apply the priorities applicable under
22.31 	subdivision 6, as far as practicable, when recommending
22.32 	priorities for funding actions to prevent waters from becoming
22.33 	impaired and to improve the quality of waters which are listed
22.34 	as impaired but have no approved TMDL.

22.35 	Sec. 6. [114D.25] ADMINISTRATION; POLLUTION CONTROL
22.36 	AGENCY.
23.1 		Subdivision 1.General duties and authorities. (a) The
23.2 	Pollution Control Agency, in accordance with federal TMDL
23.3 	requirements, shall:  identify impaired waters and propose a
23.4 	list of the waters for review and approval by the United States
23.5 	Environmental Protection Agency; develop and approve TMDL's for
23.6 	listed impaired waters and submit the approved TMDL's to the
23.7 	United State Environmental Protection Agency for final approval;
23.8 	and propose to delist waters from the Environmental Protection
23.9 	Agency impaired waters list.
23.10 	(b) A TMDL must include a statement of the facts and
23.11 	scientific data supporting the TMDL and a list of potential
23.12 	implementation options, including a range of estimates of the
23.13 	cost of implementation and individual wasteload data for any
23.14 	point sources addressed by the TMDL.
23.15 	(c) The implementation information need not be sent to the
23.16 	United States Environmental Protection Agency for review and
23.17 	approval.
23.18 		Subd. 2.Administrative procedures for tmdl
23.19 	approval. The approval of a TMDL by the Pollution Control
23.20 	Agency is a final decision of the agency for purposes of section
23.21 	115.05, and is subject to the contested case procedures of
23.22 	sections 14.57 to 14.62 in accordance with agency procedural
23.23 	rules.  The agency shall not submit an approved TMDL to the
23.24 	United States Environmental Protection Agency until the time for
23.25 	commencing judicial review has run or the judicial review
23.26 	process has been completed.  A TMDL is not subject to the
23.27 	rulemaking requirements of chapter 14, including section 14.386.
23.28 		Subd. 3.Tmdl submittal requirement. Before submitting a
23.29 	TMDL to the United States Environmental Protection Agency, the
23.30 	Pollution Control Agency shall comply with the notice and
23.31 	procedure requirements of this section.  If a contested case
23.32 	proceeding is not required for a proposed TMDL, the agency may
23.33 	submit the TMDL to the United States Environmental Protection
23.34 	Agency no earlier than 30 days after the notice required in
23.35 	subdivision 4.  If a contested case proceeding is required for a
23.36 	TMDL, the TMDL may be submitted to the United States
24.1 	Environmental Protection Agency after the contested case
24.2 	proceeding and appeal process is completed.
24.3 		Subd. 4.Tmdl notice; contents. The Pollution Control
24.4 	Agency shall give notice of its intention to submit a TMDL to
24.5 	the United States Environmental Protection Agency.  The notice
24.6 	must be given by publication in the State Register and by United
24.7 	States mail to persons who have registered their names with the
24.8 	agency.  The notice must include either a copy of the proposed
24.9 	TMDL or an easily readable and understandable description of its
24.10 	nature and effect and an announcement of how free access to the
24.11 	proposed TMDL can be obtained.  In addition, the agency shall
24.12 	make reasonable efforts to notify persons or classes of persons
24.13 	who may be significantly affected by the TMDL by giving notice
24.14 	of its intention in newsletters, newspapers, or other
24.15 	publications, or through other means of communication.  The
24.16 	notice must include a statement informing the public:
24.17 	(1) that the public has 30 days in which to submit comment
24.18 	in support of or in opposition to the proposed TMDL and that
24.19 	comment is encouraged;
24.20 	(2) that each comment should identify the portion of the
24.21 	proposed TMDL addressed, the reason for the comment, and any
24.22 	change proposed;
24.23 	(3) of the manner in which persons must request a contested
24.24 	case proceeding on the proposed TMDL;
24.25 	(4) that the proposed TMDL may be modified if the
24.26 	modifications are supported by the data and views submitted; and 
24.27 	(5) the date on which the 30-day comment period ends.
24.28 		Subd. 5.Third-party tmdl development. The Pollution
24.29 	Control Agency may enter agreements with any qualified public or
24.30 	private nonprofit entity setting forth the terms and conditions
24.31 	under which that entity is authorized to develop a third-party
24.32 	TMDL.  Before entering into an agreement with an entity to
24.33 	develop a third-party TMDL, the Pollution Control Agency must
24.34 	make reasonable efforts to notify cities, counties, townships,
24.35 	soil and water conservation districts, and watershed districts
24.36 	in the area that would be affected by the TMDL.  An agreement
25.1 	with a private nonprofit entity must require active involvement
25.2 	in the process by the Pollution Control Agency and appointment
25.3 	of an advisory committee to provide oversight of the development
25.4 	of the TMDL.  At least 60 percent of the members of the advisory
25.5 	committee must be representatives of local public agencies from
25.6 	the area affected by the TMDL.  In determining whether an entity
25.7 	is qualified to develop a TMDL, the agency shall consider the
25.8 	technical and administrative qualifications of the entity and
25.9 	may not enter into an agreement with a third-party entity that
25.10 	has a conflict of interest with respect to the development of
25.11 	the third-party TMDL.  A TMDL developed by a third party is
25.12 	subject to monitoring, modification, and approval by the
25.13 	Pollution Control Agency, and must be approved by the Pollution
25.14 	Control Agency before it is submitted to the United States
25.15 	Environmental Protection Agency.  Before submitting a TMDL to
25.16 	the Environmental Protection Agency, the Pollution Control
25.17 	Agency must comply with the notice and procedure requirements of
25.18 	subdivision 3.  Approval of a third-party TMDL by the Pollution
25.19 	Control Agency is subject to judicial review and contested case
25.20 	procedures in the same manner as approval of any other TMDL by
25.21 	the Pollution Control Agency.  The Pollution Control Agency
25.22 	shall only consider authorizing the development of TMDL's
25.23 	consistent with the goals, policies, and priorities determined
25.24 	under this section.

25.25 	Sec. 7. [114D.30] CLEAN WATER COUNCIL.
25.26 		Subdivision 1.Creation; duties. A Clean Water Council
25.27 	is created to advise the Pollution Control Agency and other
25.28 	implementing public agencies on the administration and
25.29 	implementation of this chapter, and foster coordination and
25.30 	cooperation as described in section 114D.20, subdivision 1.  The
25.31 	council may also advise on the development of appropriate
25.32 	processes for expert scientific review as described in section
25.33 	114D.35, subdivision 2.  The Pollution Control Agency shall
25.34 	provide administrative support for the council with the support
25.35 	of other member agencies.  The members of the council shall
25.36 	elect a chair from the nonagency members of the council.
26.1 		Subd. 2.Membership; appointment. The governor must
26.2 	appoint the members of the council.  The governor must appoint
26.3 	one person from each of the following agencies:  the Department
26.4 	of Natural Resources, the Department of Agriculture, the
26.5 	Pollution Control Agency, and the Board of Water and Soil
26.6 	Resources.  The governor must appoint 14 additional nonagency
26.7 	members of the council as follows:
26.8 	(1) two members representing statewide farm organizations;
26.9 	(2) two members representing business organizations;
26.10 	(3) two members representing environmental organizations;
26.11 	(4) one member representing soil and water conservation
26.12 	districts;
26.13 	(5) one member representing watershed districts;
26.14 	(6) one member representing nonprofit organizations focused
26.15 	on improvement of Minnesota lakes or streams;
26.16 	(7) one member representing an organization of county
26.17 	governments;
26.18 	(8) two members representing organizations of city
26.19 	governments;
26.20 	(9) one member representing the Metropolitan Council
26.21 	established under section 473.123; and 
26.22 	(10) one member representing an organization of township
26.23 	governments.
26.24 	In making appointments, the governor must attempt to
26.25 	provide for geographic balance.
26.26 		Subd. 3.Terms; compensation; removal. The initial terms
26.27 	of members representing state agencies and the Metropolitan
26.28 	Council expire on the first Monday in January, 2007.
26.29 	Thereafter, the terms of members representing the state agencies
26.30 	and the Metropolitan Council are four years and are coterminous
26.31 	with the governor.  The terms of other members of the council
26.32 	shall be as provided in section 15.059, subdivision 2.  Members
26.33 	may serve until their successors are appointed and qualify.
26.34 	Compensation and removal of council members is as provided in
26.35 	section 15.059, subdivisions 3 and 4.  A vacancy on the council
26.36 	may be filled by the appointing authority provided in
27.1 	subdivision 1 for the remainder of the unexpired term.
27.2 		Subd. 4.Implementation plan. The Clean Water Council
27.3 	shall prepare a plan for implementation of this chapter.  The
27.4 	plan shall address general procedures and timeframes for
27.5 	implementing this chapter, and shall include a more specific
27.6 	implementation work plan for the next fiscal biennium and a
27.7 	framework for setting priorities to address impaired waters
27.8 	consistent with section 114D.45, subdivisions 2 to 7.  The
27.9 	council shall issue the first implementation plan under this
27.10 	subdivision by December 1, 2005, and shall issue a revised work
27.11 	plan by December 1 of each even-numbered year thereafter.
27.12 		Subd. 5.Recommendations on appropriation of funds. The
27.13 	Clean Water Council shall recommend to the governor the manner
27.14 	in which money from the clean water legacy account should be
27.15 	appropriated for the purposes identified in section 114D.45,
27.16 	subdivision 3.  The council's recommendations must be consistent
27.17 	with the purposes, policies, goals, and priorities in sections
27.18 	114D.05 to 114D.35, and shall allocate adequate support and
27.19 	resources to identify impaired waters, develop TMDL's, develop
27.20 	TMDL implementation plans, implement restoration of impaired
27.21 	waters, and provide assistance and incentives to prevent waters
27.22 	from becoming impaired and improve the quality of waters which
27.23 	are listed as impaired but have no approved TMDL.  The council
27.24 	must recommend methods of ensuring that awards of grants, loans,
27.25 	or other funds from the clean water legacy account specify the
27.26 	outcomes to be achieved as a result of the funding, and specify
27.27 	standards to hold the recipient accountable for achieving the
27.28 	desired outcomes.
27.29 		Subd. 6.Biennial report to legislature. By December 1
27.30 	of each even-numbered year, the council shall submit a report to
27.31 	the legislature on the activities for which money from the clean
27.32 	water legacy account has been or will be spent for the current
27.33 	biennium, the activities for which money from the account is
27.34 	recommended to be spent in the next biennium, and the impact on
27.35 	economic development of the implementation of the impaired
27.36 	waters program.  The report due on December 1, 2014, must
28.1 	include an evaluation of the progress made through June 30,
28.2 	2014, in implementing this chapter, the need for funding of
28.3 	future implementation of those sections, and recommendations for
28.4 	the sources of such funding.

28.5 	Sec. 8. [114D.35] PUBLIC AND STAKEHOLDER PARTICIPATION;
28.6 	SCIENTIFIC REVIEW; EDUCATION.
28.7 		Subdivision 1.Public and stakeholder participation.
 28.8 	Public agencies and private entities involved in the
28.9 	implementation of this chapter shall encourage participation by
28.10 	the public and stakeholders, including local citizens, land
28.11 	owners and managers, and public and private organizations, in
28.12 	the identification of impaired waters, in developing TMDL's, and
28.13 	in planning, priority setting, and implementing restoration of
28.14 	impaired waters.  In particular, the Pollution Control Agency
28.15 	shall make reasonable efforts to provide timely information to
28.16 	the public and to stakeholders about impaired waters that have
28.17 	been identified by the agency.  The agency shall seek broad and
28.18 	early public and stakeholder participation in scoping the
28.19 	activities necessary to develop a TMDL, including the scientific
28.20 	models, methods, and approaches to be used in TMDL development,
28.21 	and to implement restoration pursuant to section 114D.15,
28.22 	subdivision 7.
28.23 		Subd. 2.Expert scientific advice. The Clean Water
28.24 	Council and public agencies and private entities shall make use
28.25 	of available public and private expertise from educational,
28.26 	research, and technical organizations, including the University
28.27 	of Minnesota and other higher education institutions, to provide
28.28 	appropriate independent expert advice on models, methods, and
28.29 	approaches used in identifying impaired waters, developing
28.30 	TMDL's, and implementing prevention and restoration.
28.31 		Subd. 3.Education. The Clean Water Council shall
28.32 	develop strategies for informing, educating, and encouraging the
28.33 	participation of citizens, stakeholders, and others regarding
28.34 	the identification of impaired waters, development of TMDL's,
28.35 	development of TMDL implementation plans, and implementation of
28.36 	restoration for impaired waters.  Public agencies shall be
29.1 	responsible for implementing the strategies.

29.2 	Sec. 9. [114D.45] CLEAN WATER LEGACY ACCOUNT.
29.3 		Subdivision 1.Creation. The clean water legacy account
29.4 	is created as an account in the environmental fund.  Money in
29.5 	the account must only be made available for the implementation
29.6 	of this chapter and sections 446A.073 and 446A.074, without
29.7 	supplanting or taking the place of any other funds which are
29.8 	currently available or may become available from any other
29.9 	source, whether federal, state, local, or private, for
29.10 	implementation of those sections.
29.11 		Subd. 2.Uses of account. Subject to appropriation by
29.12 	the legislature, the clean water legacy account may only be used
29.13 	for the following purposes:
29.14 	(1) to provide grants, loans, and technical assistance to
29.15 	public agencies and others who are participating in the process
29.16 	of identifying impaired waters, developing TMDL's and TMDL
29.17 	implementation plans, implementing restoration of impaired
29.18 	waters, and monitoring the effectiveness of restoration;
29.19 	(2) to support measures to prevent waters from becoming
29.20 	impaired and to improve the quality of waters that are listed as
29.21 	impaired but have no approved TMDL addressing the impairment;
29.22 	(3) to provide grants and loans for wastewater and
29.23 	stormwater treatment projects through the Public Facilities
29.24 	Authority;
29.25 	(4) to support the efforts of public agencies associated
29.26 	with individual sewage treatment systems and financial
29.27 	assistance for upgrading and replacing the systems; and 
29.28 	(5) to provide funds to state agencies to carry out their
29.29 	responsibilities under this chapter.

29.30 	Sec. 10. Minnesota Statutes 2004, section 115.06,
29.31 	subdivision 4, is amended to read:
29.32 		Subd. 4.Citizen monitoring of water quality.  (a) The
29.33 	agency may encourage citizen monitoring of ambient water quality
29.34 	for public waters by:
29.35 	(1) providing technical assistance to citizen and local
29.36 	group water quality monitoring efforts;
30.1 	(2) integrating citizen monitoring data into water quality
30.2 	assessments and agency programs, provided that the data adheres
30.3 	to agency quality assurance and quality control protocols; and
30.4 	(3) seeking public and private funds to:
30.5 	(i) collaboratively develop clear guidelines for water
30.6 	quality monitoring procedures and data management practices for
30.7 	specific data and information uses;
30.8 	(ii) distribute the guidelines to citizens, local
30.9 	governments, and other interested parties;
30.10 	(iii) improve and expand water quality monitoring
30.11 	activities carried out by the agency; and
30.12 	(iv) continue to improve electronic and Web access to water
30.13 	quality data and information about public waters that have been
30.14 	either fully or partially assessed.
30.15 	(b) This subdivision does not authorize a citizen to enter
30.16 	onto private property for any purpose.
30.17 	(c) By January 15 of each odd-numbered year, the
30.18 	commissioner shall report to the senate and house of
30.19 	representatives committees with jurisdiction over environmental
30.20 	policy and finance on activities under this section.
30.21 	(d) This subdivision shall sunset June 30, 2005.

30.22 	Sec. 11. Minnesota Statutes 2004, section 116.182,
30.23 	subdivision 2, is amended to read:
30.24 		Subd. 2.Applicability.  This section governs the
30.25 	commissioner's certification of projects seeking financial
30.26 	assistance under section 103F.725, subdivision 1a, 446A.07, or 
30.27 	446A.072, or 446A.075.

30.28 	Sec. 12. [446A.073] CLEAN WATER LEGACY PHOSPHORUS
30.29 	REDUCTION GRANTS.
30.30 		Subdivision 1.Creation of fund. The authority shall
30.31 	establish a clean water legacy capital improvement fund and
30.32 	shall make grants from the fund as provided in this section.
30.33 	Money in the fund, including interest earned, is appropriated to
30.34 	the authority for the purpose of this section.
30.35 		Subd. 2.Grants. The authority shall award grants from
30.36 	the clean water legacy capital improvement fund to governmental
31.1 	units for the capital costs of wastewater treatment facility
31.2 	projects or a portion thereof that will reduce the discharge of
31.3 	total phosphorus from the facility to one milligram per liter or
31.4 	less.  A project is eligible for a grant if it meets the
31.5 	following requirements:
31.6 	(1) the applicable phosphorus discharge limit is
31.7 	incorporated in a permit issued by the agency for the wastewater
31.8 	treatment facility on or after March 28, 2000, the grantee
31.9 	agrees to comply with the applicable limit as a condition of
31.10 	receiving the grant, or the grantee made improvements to a
31.11 	wastewater treatment facility on or after March 28, 2000, that
31.12 	include infrastructure to reduce the discharge of total
31.13 	phosphorus to one milligram per liter or less;
31.14 	(2) the governmental unit has submitted a facilities plan
31.15 	for the project to the agency and a grant application to the
31.16 	authority on a form prescribed by the authority; and 
31.17 	(3) the agency has approved the facilities plan, and
31.18 	certified the eligible costs for the project to the authority.
31.19 		Subd. 3.Eligible capital costs. Eligible capital costs
31.20 	for phosphorus reduction grants under subdivision 4, paragraph
31.21 	(a), include the as-bid construction costs and engineering
31.22 	planning and design costs.  Eligible capital costs for
31.23 	phosphorus reduction grants under subdivision 4, paragraph (b),
31.24 	include the final, incurred construction, engineering, planning,
31.25 	and design costs.
31.26 		Subd. 4.Grant amounts and priorities. (a) Priority must
31.27 	be given to projects that start construction on or after July 1,
31.28 	2005.  If a facility's plan for a project is approved by the
31.29 	agency before July 1, 2009, the amount of the grant is 75
31.30 	percent of the eligible capital cost of the project.  If a
31.31 	facility's plan for a project is approved by the agency on or
31.32 	after July 1, 2009, the amount of the grant is 50 percent of the
31.33 	eligible capital cost of the project.  Priority in awarding
31.34 	grants under this paragraph must be based on the date of
31.35 	approval of the facility's plan for the project.
31.36 	(b) Projects that meet the eligibility requirements in
32.1 	subdivision 2 and have started construction before July 1, 2005,
32.2 	are eligible for grants to reimburse up to 75 percent of the
32.3 	eligible capital cost of the project, less any amounts
32.4 	previously received in grants from other sources.  Application
32.5 	for a grant under this paragraph must be submitted to the
32.6 	authority no later than June 30, 2007.  Priority for award of
32.7 	grants under this paragraph must be based on the date of agency
32.8 	approval of the facility plan.
32.9 	(c) In each fiscal year that money is available for grants,
32.10 	the authority shall first award grants under paragraph (a) to
32.11 	projects that met the eligibility requirements of subdivision 2
32.12 	by May 1 of that year.  The authority shall use any remaining
32.13 	money available that year to award grants under paragraph (b).
32.14 	Grants that have been approved but not awarded in a previous
32.15 	fiscal year carry over and must be awarded in subsequent fiscal
32.16 	years in accordance with the priorities in this paragraph.
32.17 	(d) Disbursements of grants under this section by the
32.18 	authority to recipients must be made for eligible project costs
32.19 	as incurred by the recipients, and must be made by the authority
32.20 	in accordance with the project financing agreement and
32.21 	applicable state law.
32.22 		Subd. 5.Fees. The authority may charge the grant
32.23 	recipient a fee for its administrative costs not to exceed
32.24 	one-half of one percent of the grant amount, to be paid upon
32.25 	execution of the grant agreement.

32.26 	Sec. 13. [446A.074] SMALL COMMUNITY WASTEWATER TREATMENT
32.27 	PROGRAM.
32.28 		Subdivision 1.Creation of fund. The authority shall
32.29 	establish a small community wastewater treatment fund and shall
32.30 	make loans and grants from the fund as provided in this section.
32.31 	Money in the fund is annually appropriated to the authority and
32.32 	does not lapse.  The fund shall be credited with all loan
32.33 	repayments and investment income from the fund, and servicing
32.34 	fees assessed under section 446A.04, subdivision 5.  The
32.35 	authority shall manage and administer the small community
32.36 	wastewater treatment fund, and for these purposes, may exercise
33.1 	all powers provided in this chapter.
33.2 		Subd. 2.Loans and grants. (a) The authority shall award
33.3 	loans as provided in paragraph (b) and grants as provided in
33.4 	paragraph (c) to governmental units from the small community
33.5 	wastewater treatment fund for projects to replace noncomplying
33.6 	individual sewage treatment systems with a community wastewater
33.7 	treatment system or systems meeting the requirements of section
33.8 	115.55.  A governmental unit receiving a loan or loan and grant
33.9 	from the fund shall own the community wastewater treatment
33.10 	systems built under the program and shall be responsible, either
33.11 	directly or through a contract with a private vendor, for all
33.12 	inspections, maintenance, and repairs necessary to assure proper
33.13 	operation of the systems.
33.14 	(b) Loans may be awarded for up to 100 percent of eligible
33.15 	project costs as described in this section.
33.16 	(c) When the area to be served by a project has a median
33.17 	household income below the state average median household
33.18 	income, the governmental unit may receive 50 percent of the
33.19 	funding provided under this section in the form of a grant.  An
33.20 	applicant may submit income survey data collected by an
33.21 	independent party if it believes the most recent United States
33.22 	census does not accurately reflect the median household income
33.23 	of the area to be served.
33.24 		Subd. 3.Project priority list. Governmental units
33.25 	seeking loans or loans and grants from the small community
33.26 	wastewater treatment program shall first submit a project
33.27 	proposal to the agency on a form prescribed by the agency.  A
33.28 	project proposal shall include a compliance determination for
33.29 	all individual sewage treatment systems in the project area.
33.30 	The agency shall rank project proposals on its project priority
33.31 	list used for the water pollution control revolving fund under
33.32 	section 446A.07.
33.33 		Subd. 4.Applications. Governmental units with projects
33.34 	on the project priority list shall submit applications to the
33.35 	authority on forms prescribed by the authority.  The application
33.36 	shall include:
34.1 	(1) a list of the individual sewage treatment systems
34.2 	proposed to be replaced over a period of up to three years;
34.3 	(2) a project schedule and cost estimate for each year of
34.4 	the project;
34.5 	(3) a financing plan for repayment of the loan; and 
34.6 	(4) a management plan providing for the inspection,
34.7 	maintenance, and repairs necessary to assure proper operation of
34.8 	the systems.
34.9 		Subd. 5.Awards. The authority shall award loans or
34.10 	loans and grants as provided in subdivision 2 to governmental
34.11 	units with approved applications based on their ranking on the
34.12 	agency's project priority list.  The total amount awarded shall
34.13 	be based on the estimated project costs for the portion of the
34.14 	project expected to be completed within one year, up to an
34.15 	annual maximum of $500,000.  For projects expected to take more
34.16 	than one year to complete, the authority may make a multiyear
34.17 	commitment for a period not to exceed three years, contingent on
34.18 	the future availability of funds.  Each year of a multiyear
34.19 	commitment must be funded by a separate loan or loan and grant
34.20 	agreement meeting the terms and conditions in subdivision 6.  A
34.21 	governmental unit receiving a loan or loan and grant under a
34.22 	multiyear commitment shall have priority for additional loan and
34.23 	grant funds in subsequent years.
34.24 		Subd. 6.Loan terms and conditions. Loans from the small
34.25 	community wastewater treatment fund shall comply with the
34.26 	following terms and conditions:
34.27 	(1) principal and interest payments must begin no later
34.28 	than two years after the loan is awarded;
34.29 	(2) loans shall carry an interest rate of one percent;
34.30 	(3) loans shall be fully amortized within ten years of the
34.31 	first scheduled payment or, if the loan amount exceeds $10,000
34.32 	per household, shall be fully amortized within 20 years but not
34.33 	to exceed the expected design life of the system;
34.34 	(4) a governmental unit receiving a loan must establish a
34.35 	dedicated source or sources of revenues for repayment of the
34.36 	loan and must issue a general obligation note to the authority
35.1 	for the full amount of the loan; and 
35.2 	(5) each property owner to be served by a community
35.3 	wastewater treatment system under this program must provide an
35.4 	easement to the governmental unit to allow access to the system
35.5 	for management and repairs.
35.6 		Subd. 7.Special assessment deferral. (a) A governmental
35.7 	unit receiving a loan under this section that levies special
35.8 	assessments to repay the loan may defer payment of the
35.9 	assessments under the provisions of sections 435.193 to 435.195.
35.10 	(b) A governmental unit that defers payment of special
35.11 	assessments for one or more properties under paragraph (a) may
35.12 	request deferral of that portion of the debt service on its
35.13 	loan, and the authority shall accept appropriate amendments to
35.14 	the general obligation note of the governmental unit.  If
35.15 	special assessment payments are later received from properties
35.16 	that received a deferral, the funds received shall be paid to
35.17 	the authority with the next scheduled loan payment.
35.18 		Subd. 8.Eligible costs. Eligible costs for small
35.19 	community wastewater treatment loans and grants shall include
35.20 	the costs of planning, design, construction, legal fees,
35.21 	administration, and land acquisition.
35.22 		Subd. 9.Disbursements. Loan and grant disbursements by
35.23 	the authority under this section must be made for eligible
35.24 	project costs as incurred by the recipients, and must be made in
35.25 	accordance with the project loan or grant and loan agreement and
35.26 	applicable state law.
35.27 		Subd. 10.Audits. A governmental unit receiving a loan
35.28 	under this section must annually provide to the authority for
35.29 	the term of the loan a copy of its annual independent audit or,
35.30 	if the governmental unit is not required to prepare an
35.31 	independent audit, a copy of the annual financial reporting form
35.32 	it provides to the state auditor.

35.33 	Sec. 14. Laws 2005, chapter 20, article 1, section 39, is
35.34 	amended to read:

35.35 	Sec. 39. [446A.073] TOTAL MAXIMUM DAILY LOAD GRANTS.
35.36 		Subdivision 1.Program established. When money is
36.1 	appropriated for grants under this program,the authority must
36.2 	make grants to municipalities to cover up to one-half the cost
36.3 	of wastewater treatment or stormwater projects made necessary by
36.4 	wasteload reductions under total maximum daily load plans
36.5 	required by section 303(d) of the federal Clean Water Act,
36.6 	United States Code, title 33, section 1313(d).
36.7 		Subd. 2.Grant application. Application for a grant must
36.8 	be made to the authority on forms prescribed by the authority
36.9 	for the total maximum daily load grant program, with additional
36.10 	information as required by the authority, including a project
36.11 	schedule and cost estimate for the work necessary to comply with
36.12 	the point source wasteload allocation.  In accordance with
36.13 	section 116.182, the Pollution Control Agency shall:
36.14 	(1) calculate the essential project component percentage,
36.15 	which must be multiplied by the total project cost to determine
36.16 	the eligible project cost; and
36.17 	(2) review and certify approved projects to the authority.
36.18 		Subd. 3.Project priorities. When money is appropriated
36.19 	for grants under this program, the authority shall reserve money
36.20 	for projects expected to start construction in the next 12
36.21 	months in the order that:  (1) their total maximum daily load
36.22 	plan was approved by the United States Environmental Protection
36.23 	Agency and in an ; (2) their grant application is received by the
36.24 	authority; and (3) have the greatest load reduction as
36.25 	determined by the Pollution Control Agency.  The authority shall
36.26 	reserve money for projects in an amount based on their most
36.27 	recent cost estimates submitted to the authority or the as-bid
36.28 	costs, whichever is less.
36.29 		Subd. 4.Grant approval. The authority must make a grant
36.30 	to a municipality, as defined in section 116.182, subdivision 1,
36.31 	only after:
36.32 	(1) the commissioner of the Minnesota Pollution Control
36.33 	Agency has certified to the United States Environmental
36.34 	Protection Agency a total maximum daily load plan for identified
36.35 	waters of this state that includes a point source wasteload
36.36 	allocation;
37.1 	(2) the Environmental Protection Agency has approved the
37.2 	plan;
37.3 	(3) a municipality affected by the plan has estimated the
37.4 	cost to it of wastewater treatment projects necessary to comply
37.5 	with the point source wasteload allocation for which the money
37.6 	is reserved has submitted the as-bid costs for its wastewater
37.7 	treatment or stormwater projects to the authority;
37.8 	(4) the Pollution Control Agency has approved the cost
37.9 	estimate; and
37.10 	(5) the authority has determined that the additional
37.11 	financing necessary to complete the project has been committed
37.12 	from other sources.
37.13 		Subd. 5.Grant disbursement. Disbursement of a grant
37.14 	must be made for eligible project costs as incurred by the
37.15 	municipality and in accordance with a project financing
37.16 	agreement and applicable state and federal laws and rules
37.17 	governing the payments.
37.18 		Subd. 6.Fees. The authority may charge the grant
37.19 	recipient a fee for its administrative costs, not to exceed
37.20 	one-half of one percent of the grant amount, to be paid upon
37.21 	execution of the agreement.

37.22 	Sec. 15. APPROPRIATIONS.
 37.23 		Subdivision 1.General provisions. The appropriations in
37.24 	this section are from the general fund and are available for the
37.25 	fiscal years ending June 30, 2006, and June 30, 2007.  Unless
37.26 	otherwise specified in this section, these appropriations do not
37.27 	cancel and remain available until June 30, 2007.  Appropriations
37.28 	in this section that are encumbered under contract, including
37.29 	grant contract, on or before June 30, 2007, are available until
37.30 	June 30, 2009.
37.31 		Subd. 2.Pollution control agency. The following amounts
37.32 	are appropriated to the Pollution Control Agency for the
37.33 	purposes stated:
37.34 	(1) $1,860,000 in fiscal year 2006 and $4,125,000 in fiscal
37.35 	year 2007 are for statewide assessment of surface water quality
37.36 	and trends; of these amounts, up to $1,010,000 in fiscal year
38.1 	2006 and $1,960,000 in fiscal year 2007 are available for grants
38.2 	or contracts to support citizen monitoring of surface waters;
38.3 	and 
38.4 	(2) $1,900,000 in fiscal year 2006 and $3,290,000 in fiscal
38.5 	year 2007 are to develop TMDL's for waters listed on the United
38.6 	States Environmental Protection Agency approved 2004 impaired
38.7 	waters list; of this appropriation, up to $390,000 in fiscal
38.8 	year 2006 and $1,140,000 in fiscal year 2007 are available for
38.9 	grants or contracts to develop TMDL's.
38.10 		Subd. 3.Agriculture department. The following amounts
38.11 	are appropriated to the Department of Agriculture for the
38.12 	purposes stated:
38.13 	(1) $152,000 in fiscal year 2006 and $1,401,000 in fiscal
38.14 	year 2007 are for agricultural best management practices
38.15 	low-interest loans to producers and rural landowners and these
38.16 	funds remain available until expended; of these amounts,
38.17 	$120,000 in fiscal year 2006 and $1,281,000 in fiscal year 2007
38.18 	are available for pass-through to local governments and lenders
38.19 	for low-interest loans;
38.20 	(2) $213,000 in fiscal year 2006 and $487,000 in fiscal
38.21 	year 2007 are to expand technical assistance to producers and
38.22 	conservation professionals on nutrient and pasture management;
38.23 	target practices to sources of water impairments; coordinate
38.24 	federal and state farm conservation programs to fully utilize
38.25 	federal conservation funds; and expand conservation planning
38.26 	assistance for producers; of these amounts, $30,000 in fiscal
38.27 	year 2006 and $126,000 in fiscal year 2007 are available for
38.28 	grants or contracts to develop nutrient and conservation
38.29 	planning assistance information materials; and 
38.30 	(3) $61,000 in fiscal year 2006 and $487,000 in fiscal year
38.31 	2007 are for research, evaluation, and effectiveness monitoring
38.32 	of agricultural practices in restoring impaired waters; of these
38.33 	amounts, $360,000 in fiscal year 2007 is available for grants or
38.34 	contracts for research, evaluations, and effectiveness
38.35 	monitoring of agricultural practices in restoring impaired
38.36 	waters, including on-farm demonstrations.
39.1 		Subd. 4.Board of water and soil resources. The
39.2 	following amounts are appropriated to the Board of Water and
39.3 	Soil Resources for restoration and prevention actions as
39.4 	described in Minnesota Statutes, section 114D.20, subdivisions 6
39.5 	and 7:
39.6 	(1) $274,000 in fiscal year 2006 and $3,504,000 in fiscal
39.7 	year 2007 are for targeted nonpoint restoration cost-share and
39.8 	incentive payments; of these amounts, up to $270,000 in fiscal
39.9 	year 2006 and $3,270,000 in fiscal year 2007 are available for
39.10 	grants to soil and water conservation districts through the
39.11 	state cost-share program authorized under Minnesota Statutes,
39.12 	section 103C.501;
39.13 	(2) $251,000 in fiscal year 2006 and $2,102,000 in fiscal
39.14 	year 2007 are for targeted nonpoint restoration technical,
39.15 	compliance, and engineering assistance activities; of these
39.16 	amounts, up to $247,000 in fiscal year 2006 and $1,950,000 in
39.17 	fiscal year 2007 are available for grants to soil and water
39.18 	conservation districts, watershed management organizations, or
39.19 	counties to support nonpoint restoration implementation
39.20 	activities;
39.21 	(3) $122,000 in fiscal year 2007 is for reporting and
39.22 	evaluation of applied soil and water conservation practices;
39.23 	(4) $1,462,000 in fiscal year 2007 is for grants to
39.24 	counties for implementation of county individual sewage
39.25 	treatment systems programs through the local water resources
39.26 	protection and management program under Minnesota Statutes,
39.27 	section 103B.3369;
39.28 	(5) $300,000 in fiscal year 2006 and $914,000 in fiscal
39.29 	year 2007 are for base and challenge grants to support nonpoint
39.30 	source protection activities related to lake and river
39.31 	protection and management through the local water resources
39.32 	protection and management program under Minnesota Statutes,
39.33 	section 103B.3369; and 
39.34 	(6) $1,462,000 in fiscal year 2007 is for grants to soil
39.35 	and water conservation districts for streambank, stream channel,
39.36 	lakeshore, and roadside protection and restoration projects
40.1 	through the state cost-share program under Minnesota Statutes,
40.2 	section 103C.501.
40.3 		Subd. 5.Department of natural resources. The following
40.4 	amounts are appropriated to the Department of Natural Resources
40.5 	for the purposes stated:
40.6 	(1) $280,000 in fiscal year 2006 and $430,000 in fiscal
40.7 	year 2007 are for statewide assessment of surface water quality
40.8 	and trends; and 
40.9 	(2) $61,000 in fiscal year 2006 and $2,468,000 in fiscal
40.10 	year 2007 are for restoration of impaired waters and actions to
40.11 	prevent waters from becoming impaired; of these amounts, up to
40.12 	$1,700,000 in fiscal year 2007 is available for grants and
40.13 	contracts for forest stewardship planning and implementation,
40.14 	and for research, compliance, and monitoring.
40.15 		Subd. 6.Public facilities authority. $2,681,000 in
40.16 	fiscal year 2006 and $22,671,000 in fiscal year 2007 are
40.17 	appropriated to the Public Facilities Authority; of these
40.18 	amounts, $2,681,000 in fiscal year 2006 and $8,840,000 in fiscal
40.19 	year 2007 are to the clean water legacy capital improvements
40.20 	fund for grants under Minnesota Statutes, section 446A.073;
40.21 	$2,383,000 in fiscal year 2007 is to the small community
40.22 	wastewater treatment fund for loans and grants under Minnesota
40.23 	Statutes, section 446A.074; and $11,448,000 in fiscal year 2007
40.24 	is to the water pollution control revolving fund under Minnesota
40.25 	Statutes, section 446.07, for wastewater treatment and
40.26 	stormwater projects, and for total maximum daily load grants
40.27 	under Minnesota Statutes, section 446A.075.  Funds appropriated
40.28 	under this subdivision do not cancel and are available until
40.29 	expended.

40.30 	Sec. 16. EFFECTIVE DATE.
 40.31 	Sections 1 to 15 are effective the day following final
40.32 	enactment.

40.33 	ARTICLE 3
40.34 	TAX PROVISIONS

40.35 	Section 1. Minnesota Statutes 2004, section 290.091,
40.36 	subdivision 2, is amended to read:
41.1 		Subd. 2.Definitions.  For purposes of the tax imposed by
41.2 	this section, the following terms have the meanings given:
41.3 	(a) "Alternative minimum taxable income" means the sum of
41.4 	the following for the taxable year:
41.5 	(1) the taxpayer's federal alternative minimum taxable
41.6 	income as defined in section 55(b)(2) of the Internal Revenue
41.7 	Code;
41.8 	(2) the taxpayer's itemized deductions allowed in computing
41.9 	federal alternative minimum taxable income, but excluding:
41.10 	(i) the charitable contribution deduction under section 170
41.11 	of the Internal Revenue Code:
41.12 	(A) for taxable years beginning before January 1, 2006,to
41.13 	the extent that the deduction exceeds 1.0 percent of adjusted
41.14 	gross income, as defined ;
41.15 	(B) for taxable years beginning after December 31, 2005, to
41.16 	the full extent of the deduction.
41.17 	For purposes of this clause, "adjusted gross income" has
41.18 	the meaning given in section 62 of the Internal Revenue Code;
41.19 	(ii) the medical expense deduction;
41.20 	(iii) the casualty, theft, and disaster loss deduction; and
41.21 	(iv) the impairment-related work expenses of a disabled
41.22 	person;
41.23 	(3) for depletion allowances computed under section 613A(c)
41.24 	of the Internal Revenue Code, with respect to each property (as
41.25 	defined in section 614 of the Internal Revenue Code), to the
41.26 	extent not included in federal alternative minimum taxable
41.27 	income, the excess of the deduction for depletion allowable
41.28 	under section 611 of the Internal Revenue Code for the taxable
41.29 	year over the adjusted basis of the property at the end of the
41.30 	taxable year (determined without regard to the depletion
41.31 	deduction for the taxable year);
41.32 	(4) to the extent not included in federal alternative
41.33 	minimum taxable income, the amount of the tax preference for
41.34 	intangible drilling cost under section 57(a)(2) of the Internal
41.35 	Revenue Code determined without regard to subparagraph (E);
41.36 	(5) to the extent not included in federal alternative
42.1 	minimum taxable income, the amount of interest income as
42.2 	provided by section 290.01, subdivision 19a, clause (1); and
42.3 	(6) the amount of addition required by section 290.01,
42.4 	subdivision 19a, clause (7);
42.5 	less the sum of the amounts determined under the following:
42.6 	(1) interest income as defined in section 290.01,
42.7 	subdivision 19b, clause (1);
42.8 	(2) an overpayment of state income tax as provided by
42.9 	section 290.01, subdivision 19b, clause (2), to the extent
42.10 	included in federal alternative minimum taxable income;
42.11 	(3) the amount of investment interest paid or accrued
42.12 	within the taxable year on indebtedness to the extent that the
42.13 	amount does not exceed net investment income, as defined in
42.14 	section 163(d)(4) of the Internal Revenue Code.  Interest does
42.15 	not include amounts deducted in computing federal adjusted gross
42.16 	income; and
42.17 	(4) amounts subtracted from federal taxable income as
42.18 	provided by section 290.01, subdivision 19b, clauses (10) and
42.19 	(11).
42.20 	In the case of an estate or trust, alternative minimum
42.21 	taxable income must be computed as provided in section 59(c) of
42.22 	the Internal Revenue Code.
42.23 	(b) "Investment interest" means investment interest as
42.24 	defined in section 163(d)(3) of the Internal Revenue Code.
42.25 	(c) "Tentative minimum tax" equals 6.4 percent of
42.26 	alternative minimum taxable income after subtracting the
42.27 	exemption amount determined under subdivision 3.
42.28 	(d) "Regular tax" means the tax that would be imposed under
42.29 	this chapter (without regard to this section and section
42.30 	290.032), reduced by the sum of the nonrefundable credits
42.31 	allowed under this chapter.
42.32 	(e) "Net minimum tax" means the minimum tax imposed by this
42.33 	section.
42.34 	
EFFECTIVE DATE. This section is effective for taxable
42.35 	years beginning after December 31, 2004.

42.36 	Sec. 2. Minnesota Statutes 2004, section 290.091,
43.1 	subdivision 3, is amended to read:
43.2 		Subd. 3.Exemption amount. (a) For purposes of computing
43.3 	the alternative minimum tax, the exemption amount is:
43.4 	(1) for taxable years beginning before January 1, 2005,the
43.5 	exemption determined under section 55(d) of the Internal Revenue
43.6 	Code, as amended through December 31, 1992;
43.7 	(2) for taxable years beginning after December 31, 2004,
43.8 	and before January 1, 2006, $42,000 for married couples filing
43.9 	joint returns; $21,000 for married individuals filing separate
43.10 	returns, estates, and trusts; and $31,500 for unmarried
43.11 	individuals;
43.12 	(3) for taxable years beginning after December 31, 2005,
43.13 	and before January 1, 2007, $45,000 for married couples filing
43.14 	joint returns; $22,500 for married individuals filing separate
43.15 	returns, estates, and trusts; and $33,750 for unmarried
43.16 	individuals; and 
43.17 	(4) for taxable years beginning after December 31, 2006,
43.18 	and before January 1, 2008, $50,000 for married couples filing
43.19 	joint returns; $25,000 for married individuals filing separate
43.20 	returns, estates, and trusts; and $37,500 for unmarried
43.21 	individuals.
43.22 	(b) The exemption amount determined under this subdivision
43.23 	is subject to the phase out under section 55(d)(3) of the
43.24 	Internal Revenue Code, except that alternative minimum taxable
43.25 	income as determined under this section must be substituted in
43.26 	the computation of the phase out under section 55(d)(3).
43.27 	(c) For taxable years beginning after December 31, 2007,
43.28 	the exemption amount under paragraph (a), clause (4), must be
43.29 	adjusted for inflation.  The commissioner shall make the
43.30 	inflation adjustments in accordance with section 1(f) of the
43.31 	Internal Revenue Code except that for the purposes of this
43.32 	subdivision the percentage increase must be determined from the
43.33 	year starting September 1, 2006, and ending August 31, 2007, as
43.34 	the base year for adjusting for inflation for the tax year
43.35 	beginning after December 31, 2007.  The determination of the
43.36 	commissioner under this subdivision is not a rule under the
44.1 	Administrative Procedure Act.
44.2 	
EFFECTIVE DATE. This section is effective for taxable
44.3 	years beginning after December 31, 2004.

44.4 	Sec. 3. Minnesota Statutes 2004, section 290.191,
44.5 	subdivision 2, is amended to read:
44.6 		Subd. 2.Apportionment formula of general application.
 44.7 	(a) Except for those trades or businesses required to use a
44.8 	different formula under subdivision 3 or section 290.36, and for
44.9 	those trades or businesses that receive permission to use some
44.10 	other method under section 290.20 or under subdivision 4, a
44.11 	trade or business required to apportion its net income must
44.12 	apportion its income to this state on the basis of the
44.13 	percentage obtained by taking the sum of:
44.14 	(1) 75 the percent for the sales factor under paragraph (b) 
44.15 	of the percentage which the sales made within this state in
44.16 	connection with the trade or business during the tax period are
44.17 	of the total sales wherever made in connection with the trade or
44.18 	business during the tax period;
44.19 	(2) 12.5 the percent for the property factor under
44.20 	paragraph (b) of the percentage which the total tangible
44.21 	property used by the taxpayer in this state in connection with
44.22 	the trade or business during the tax period is of the total
44.23 	tangible property, wherever located, used by the taxpayer in
44.24 	connection with the trade or business during the tax period; and
44.25 	(3) 12.5 the percent for the payroll factor under paragraph
44.26 	(b) of the percentage which the taxpayer's total payrolls paid
44.27 	or incurred in this state or paid in respect to labor performed
44.28 	in this state in connection with the trade or business during
44.29 	the tax period are of the taxpayer's total payrolls paid or
44.30 	incurred in connection with the trade or business during the tax
44.31 	period.
44.32 	(b) For purposes of paragraph (a) and subdivision 3, the
44.33 	following percentages apply for the taxable years specified:
44.34 	Taxable years Sales factor Property Payroll
44.35 	beginning percent factor factor
44.36 	during calendar percent percent
45.1 	year
45.2 	     2007 84 8 8
45.3 	     2008 95 2.5 2.5
45.4 	     2009 and later 100 0 0
45.5 	     calendar years 
45.6 	
EFFECTIVE DATE. This section is effective for tax years
45.7 	beginning after December 31, 2006.

45.8 	Sec. 4. Minnesota Statutes 2004, section 290.191,
45.9 	subdivision 3, is amended to read:
45.10 		Subd. 3.Apportionment formula for financial
45.11 	institutions.  Except for an investment company required to
45.12 	apportion its income under section 290.36, a financial
45.13 	institution that is required to apportion its net income must
45.14 	apportion its net income to this state on the basis of the
45.15 	percentage obtained by taking the sum of:
45.16 	(1) 75 the percent for the sales factor under subdivision
45.17 	2, paragraph (b),of the percentage which the receipts from
45.18 	within this state in connection with the trade or business
45.19 	during the tax period are of the total receipts in connection
45.20 	with the trade or business during the tax period, from wherever
45.21 	derived;
45.22 	(2) 12.5 the percent for the property factor under
45.23 	subdivision 2, paragraph (b),of the percentage which the sum of
45.24 	the total tangible property used by the taxpayer in this state
45.25 	and the intangible property owned by the taxpayer and attributed
45.26 	to this state in connection with the trade or business during
45.27 	the tax period is of the sum of the total tangible property,
45.28 	wherever located, used by the taxpayer and the intangible
45.29 	property owned by the taxpayer and attributed to all states in
45.30 	connection with the trade or business during the tax period; and
45.31 	(3) 12.5 the percent for the payroll factor under
45.32 	subdivision 2, paragraph (b),of the percentage which the
45.33 	taxpayer's total payrolls paid or incurred in this state or paid
45.34 	in respect to labor performed in this state in connection with
45.35 	the trade or business during the tax period are of the
45.36 	taxpayer's total payrolls paid or incurred in connection with
46.1 	the trade or business during the tax period.
46.2 	
EFFECTIVE DATE. This section is effective for tax years
46.3 	beginning after December 31, 2006.

46.4 	Sec. 5. Minnesota Statutes 2004, section 477A.011,
46.5 	subdivision 34, is amended to read:
46.6 		Subd. 34.City revenue need.  (a) For a city with a
46.7 	population equal to or greater than 2,500, "city revenue need"
46.8 	is the sum of (1) 5.0734098 times the pre-1940 housing
46.9 	percentage; plus (2) 19.141678 times the population decline
46.10 	percentage; plus (3) 2504.06334 times the road accidents factor;
46.11 	plus (4) 355.0547; minus (5) the metropolitan area factor; minus
46.12 	(6) 49.10638 times the household size.
46.13 	(b) For a city with a population less than 2,500, "city
46.14 	revenue need" is the sum of (1) 2.387 times the pre-1940 housing
46.15 	percentage; plus (2) 2.67591 times the commercial industrial
46.16 	percentage; plus (3) 3.16042 times the population decline
46.17 	percentage; plus (4) 1.206 times the transformed population;
46.18 	minus (5) 62.772.
46.19 	(c) The city revenue need cannot be less than zero.
46.20 	(d) For calendar year 2005 and subsequent years, the city
46.21 	revenue need for a city, as determined in paragraphs (a) to (c),
46.22 	is multiplied by the ratio of the annual most recently available
46.23 	first quarter implicit price deflator for government consumption
46.24 	expenditures and gross investment for state and local
46.25 	governments as prepared by the United States Department of
46.26 	Commerce, for the most recently available year to the 2003 first
46.27 	quarter 2002 implicit price deflator for state and local
46.28 	government purchases.
46.29 	
EFFECTIVE DATE. This section is effective for aids
46.30 	payable in 2006 and thereafter.

46.31 	Sec. 6. Minnesota Statutes 2004, section 477A.011,
46.32 	subdivision 36, as amended by Laws 2005, chapter 38, section 1,
46.33 	and Laws 2005, chapter 151, article 4, section 8, is amended to
46.34 	read:
46.35 		Subd. 36.City aid base. (a) Except as otherwise
46.36 	provided in this subdivision, "city aid base" is zero.
47.1 	(b) The city aid base for any city with a population less
47.2 	than 500 is increased by $40,000 for aids payable in calendar
47.3 	year 1995 and thereafter, and the maximum amount of total aid it
47.4 	may receive under section 477A.013, subdivision 9, paragraph
47.5 	(c), is also increased by $40,000 for aids payable in calendar
47.6 	year 1995 only, provided that:
47.7 	(i) the average total tax capacity rate for taxes payable
47.8 	in 1995 exceeds 200 percent;
47.9 	(ii) the city portion of the tax capacity rate exceeds 100
47.10 	percent; and
47.11 	(iii) its city aid base is less than $60 per capita.
47.12 	(c) The city aid base for a city is increased by $20,000 in
47.13 	1998 and thereafter and the maximum amount of total aid it may
47.14 	receive under section 477A.013, subdivision 9, paragraph (c), is
47.15 	also increased by $20,000 in calendar year 1998 only, provided
47.16 	that:
47.17 	(i) the city has a population in 1994 of 2,500 or more;
47.18 	(ii) the city is located in a county, outside of the
47.19 	metropolitan area, which contains a city of the first class;
47.20 	(iii) the city's net tax capacity used in calculating its
47.21 	1996 aid under section 477A.013 is less than $400 per capita;
47.22 	and
47.23 	(iv) at least four percent of the total net tax capacity,
47.24 	for taxes payable in 1996, of property located in the city is
47.25 	classified as railroad property.
47.26 	(d) The city aid base for a city is increased by $200,000
47.27 	in 1999 and thereafter and the maximum amount of total aid it
47.28 	may receive under section 477A.013, subdivision 9, paragraph
47.29 	(c), is also increased by $200,000 in calendar year 1999 only,
47.30 	provided that:
47.31 	(i) the city was incorporated as a statutory city after
47.32 	December 1, 1993;
47.33 	(ii) its city aid base does not exceed $5,600; and
47.34 	(iii) the city had a population in 1996 of 5,000 or more.
47.35 	(e) The city aid base for a city is increased by $450,000
47.36 	in 1999 to 2008 and the maximum amount of total aid it may
48.1 	receive under section 477A.013, subdivision 9, paragraph (c), is
48.2 	also increased by $450,000 in calendar year 1999 only, provided
48.3 	that:
48.4 	(i) the city had a population in 1996 of at least 50,000;
48.5 	(ii) its population had increased by at least 40 percent in
48.6 	the ten-year period ending in 1996; and
48.7 	(iii) its city's net tax capacity for aids payable in 1998
48.8 	is less than $700 per capita.
48.9 	(f) The city aid base for a city is increased by $150,000
48.10 	for aids payable in 2000 and thereafter, and the maximum amount
48.11 	of total aid it may receive under section 477A.013, subdivision
48.12 	9, paragraph (c), is also increased by $150,000 in calendar year
48.13 	2000 only, provided that:
48.14 	(1) the city has a population that is greater than 1,000
48.15 	and less than 2,500;
48.16 	(2) its commercial and industrial percentage for aids
48.17 	payable in 1999 is greater than 45 percent; and
48.18 	(3) the total market value of all commercial and industrial
48.19 	property in the city for assessment year 1999 is at least 15
48.20 	percent less than the total market value of all commercial and
48.21 	industrial property in the city for assessment year 1998.
48.22 	(g) The city aid base for a city is increased by $200,000
48.23 	in 2000 and thereafter, and the maximum amount of total aid it
48.24 	may receive under section 477A.013, subdivision 9, paragraph
48.25 	(c), is also increased by $200,000 in calendar year 2000 only,
48.26 	provided that:
48.27 	(1) the city had a population in 1997 of 2,500 or more;
48.28 	(2) the net tax capacity of the city used in calculating
48.29 	its 1999 aid under section 477A.013 is less than $650 per
48.30 	capita;
48.31 	(3) the pre-1940 housing percentage of the city used in
48.32 	calculating 1999 aid under section 477A.013 is greater than 12
48.33 	percent;
48.34 	(4) the 1999 local government aid of the city under section
48.35 	477A.013 is less than 20 percent of the amount that the formula
48.36 	aid of the city would have been if the need increase percentage
49.1 	was 100 percent; and
49.2 	(5) the city aid base of the city used in calculating aid
49.3 	under section 477A.013 is less than $7 per capita.
49.4 	(h) The city aid base for a city is increased by $102,000
49.5 	in 2000 and thereafter, and the maximum amount of total aid it
49.6 	may receive under section 477A.013, subdivision 9, paragraph
49.7 	(c), is also increased by $102,000 in calendar year 2000 only,
49.8 	provided that:
49.9 	(1) the city has a population in 1997 of 2,000 or more;
49.10 	(2) the net tax capacity of the city used in calculating
49.11 	its 1999 aid under section 477A.013 is less than $455 per
49.12 	capita;
49.13 	(3) the net levy of the city used in calculating 1999 aid
49.14 	under section 477A.013 is greater than $195 per capita; and
49.15 	(4) the 1999 local government aid of the city under section
49.16 	477A.013 is less than 38 percent of the amount that the formula
49.17 	aid of the city would have been if the need increase percentage
49.18 	was 100 percent.
49.19 	(i) The city aid base for a city is increased by $32,000 in
49.20 	2001 and thereafter, and the maximum amount of total aid it may
49.21 	receive under section 477A.013, subdivision 9, paragraph (c), is
49.22 	also increased by $32,000 in calendar year 2001 only, provided
49.23 	that:
49.24 	(1) the city has a population in 1998 that is greater than
49.25 	200 but less than 500;
49.26 	(2) the city's revenue need used in calculating aids
49.27 	payable in 2000 was greater than $200 per capita;
49.28 	(3) the city net tax capacity for the city used in
49.29 	calculating aids available in 2000 was equal to or less than
49.30 	$200 per capita;
49.31 	(4) the city aid base of the city used in calculating aid
49.32 	under section 477A.013 is less than $65 per capita; and
49.33 	(5) the city's formula aid for aids payable in 2000 was
49.34 	greater than zero.
49.35 	(j) The city aid base for a city is increased by $7,200 in
49.36 	2001 and thereafter, and the maximum amount of total aid it may
50.1 	receive under section 477A.013, subdivision 9, paragraph (c), is
50.2 	also increased by $7,200 in calendar year 2001 only, provided
50.3 	that:
50.4 	(1) the city had a population in 1998 that is greater than
50.5 	200 but less than 500;
50.6 	(2) the city's commercial industrial percentage used in
50.7 	calculating aids payable in 2000 was less than ten percent;
50.8 	(3) more than 25 percent of the city's population was 60
50.9 	years old or older according to the 1990 census;
50.10 	(4) the city aid base of the city used in calculating aid
50.11 	under section 477A.013 is less than $15 per capita; and
50.12 	(5) the city's formula aid for aids payable in 2000 was
50.13 	greater than zero.
50.14 	(k) The city aid base for a city is increased by $45,000 in
50.15 	2001 and thereafter and by an additional $50,000 in calendar
50.16 	years 2002 to 2011, and the maximum amount of total aid it may
50.17 	receive under section 477A.013, subdivision 9, paragraph (c), is
50.18 	also increased by $45,000 in calendar year 2001 only, and by
50.19 	$50,000 in calendar year 2002 only, provided that:
50.20 	(1) the net tax capacity of the city used in calculating
50.21 	its 2000 aid under section 477A.013 is less than $810 per
50.22 	capita;
50.23 	(2) the population of the city declined more than two
50.24 	percent between 1988 and 1998;
50.25 	(3) the net levy of the city used in calculating 2000 aid
50.26 	under section 477A.013 is greater than $240 per capita; and
50.27 	(4) the city received less than $36 per capita in aid under
50.28 	section 477A.013, subdivision 9, for aids payable in 2000.
50.29 	(l) The city aid base for a city with a population of
50.30 	10,000 or more which is located outside of the seven-county
50.31 	metropolitan area is increased in 2002 and thereafter, and the
50.32 	maximum amount of total aid it may receive under section
50.33 	477A.013, subdivision 9, paragraph (b) or (c), is also increased
50.34 	in calendar year 2002 only, by an amount equal to the lesser of:
50.35 	(1)(i) the total population of the city, as determined by
50.36 	the United States Bureau of the Census, in the 2000 census, (ii)
51.1 	minus 5,000, (iii) times 60; or
51.2 	(2) $2,500,000.
51.3 	(m) The city aid base is increased by $50,000 in 2002 and
51.4 	thereafter, and the maximum amount of total aid it may receive
51.5 	under section 477A.013, subdivision 9, paragraph (c), is also
51.6 	increased by $50,000 in calendar year 2002 only, provided that:
51.7 	(1) the city is located in the seven-county metropolitan
51.8 	area;
51.9 	(2) its population in 2000 is between 10,000 and 20,000;
51.10 	and
51.11 	(3) its commercial industrial percentage, as calculated for
51.12 	city aid payable in 2001, was greater than 25 percent.
51.13 	(n) The city aid base for a city is increased by $150,000
51.14 	in calendar years 2002 to 2011 and the maximum amount of total
51.15 	aid it may receive under section 477A.013, subdivision 9,
51.16 	paragraph (c), is also increased by $150,000 in calendar year
51.17 	2002 only, provided that:
51.18 	(1) the city had a population of at least 3,000 but no more
51.19 	than 4,000 in 1999;
51.20 	(2) its home county is located within the seven-county
51.21 	metropolitan area;
51.22 	(3) its pre-1940 housing percentage is less than 15
51.23 	percent; and
51.24 	(4) its city net tax capacity per capita for taxes payable
51.25 	in 2000 is less than $900 per capita.
51.26 	(o) The city aid base for a city is increased by $200,000
51.27 	beginning in calendar year 2003 and the maximum amount of total
51.28 	aid it may receive under section 477A.013, subdivision 9,
51.29 	paragraph (c), is also increased by $200,000 in calendar year
51.30 	2003 only, provided that the city qualified for an increase in
51.31 	homestead and agricultural credit aid under Laws 1995, chapter
51.32 	264, article 8, section 18.
51.33 	(p) The city aid base for a city is increased by $200,000
51.34 	in 2004 only and the maximum amount of total aid it may receive
51.35 	under section 477A.013, subdivision 9, is also increased by
51.36 	$200,000 in calendar year 2004 only, if the city is the site of
52.1 	a nuclear dry cask storage facility.
52.2 	(q) The city aid base for a city is increased by $10,000 in
52.3 	2004 and thereafter and the maximum total aid it may receive
52.4 	under section 477A.013, subdivision 9, is also increased by
52.5 	$10,000 in calendar year 2004 only, if the city was included in
52.6 	a federal major disaster designation issued on April 1, 1998,
52.7 	and its pre-1940 housing stock was decreased by more than 40
52.8 	percent between 1990 and 2000.
52.9 	(r) The city aid base for a city is increased by $25,000 in
52.10 	2006 only and the maximum total aid it may receive under section
52.11 	477A.013, subdivision 9, is also increased by $25,000 in
52.12 	calendar year 2006 only if the city had a population in 2003 of
52.13 	at least 1,000 and has a state park for which the city provides
52.14 	rescue services and which comprised at least 14 percent of the
52.15 	total geographic area included within the city boundaries in
52.16 	2000.
52.17 	(s) The city aid base for a city with a population less
52.18 	than 5,000 is increased in 2006 and thereafter and the maximum
52.19 	amount of total aid it may receive under this section is also
52.20 	increased in calendar year 2006 only by an amount equal to $10
52.21 	multiplied by its population.
52.22 	
EFFECTIVE DATE. This section is effective for aids
52.23 	payable in 2006 and thereafter.

52.24 	Sec. 7. Minnesota Statutes 2004, section 477A.013,
52.25 	subdivision 8, is amended to read:
52.26 		Subd. 8.City formula aid.  In calendar year 2004 2006 
52.27 	and subsequent years, the formula aid for a city is equal to the
52.28 	need increase percentage multiplied by the difference between
52.29 	(1) the city's revenue need multiplied by its population, and
52.30 	(2) the sum of the city's net tax capacity multiplied by the tax
52.31 	effort rate, and the taconite aids under sections 298.28 and
52.32 	298.282, multiplied by the following percentages:
52.33 	(i) zero percent for aids payable in 2004;
52.34 	(ii) 25 percent for aids payable in 2005;
52.35 	(iii) 50 percent for aids payable in 2006;
52.36 	(iv) 75 percent for aids payable in 2007; and 
53.1 	(v) 100 percent for aids payable in 2008 and thereafter.
53.2 	No city may have a formula aid amount less than zero.  The need
53.3 	increase percentage must be the same for all cities.
53.4 	The applicable need increase percentage must be calculated
53.5 	by the Department of Revenue so that the total of the aid under
53.6 	subdivision 9 equals the total amount available for aid under
53.7 	section 477A.03 after the subtraction under section 477A.014,
53.8 	subdivisions 4 and 5.
53.9 	
EFFECTIVE DATE. This section is effective for aids
53.10 	payable in 2006 and thereafter.

53.11 	Sec. 8. Minnesota Statutes 2004, section 477A.013,
53.12 	subdivision 9, is amended to read:
53.13 		Subd. 9.City aid distribution.  (a) In calendar year
53.14 	2002 and thereafter, each city shall receive an aid distribution
53.15 	equal to the sum of (1) the city formula aid under subdivision
53.16 	8, and (2) its city aid base.
53.17 	(b) The aid for a city in calendar year 2004 shall not
53.18 	exceed the amount of its aid in calendar year 2003 after the
53.19 	reductions under Laws 2003, First Special Session chapter 21,
53.20 	article 5.
53.21 	(c) For aids payable in 2005 and in 2007 and thereafter,
53.22 	the total aid for any city shall not exceed the sum of (1) ten
53.23 	percent of the city's net levy for the year prior to the aid
53.24 	distribution plus (2) its total aid in the previous year. For
53.25 	aids payable in 2006 only, the total aid for any city shall not
53.26 	exceed the sum of (1) 11 percent of its levy in the previous
53.27 	year plus (2) its total aid in the previous year.For aids
53.28 	payable in 2005 and thereafter, the total aid for any city with
53.29 	a population of 2,500 or more may not decrease from its total
53.30 	aid under this section in the previous year by an amount greater
53.31 	than ten percent of its net levy in the year prior to the aid
53.32 	distribution.
53.33 	(d) For aids payable in 2004 only, the total aid for a city
53.34 	with a population less than 2,500 may not be less than the
53.35 	amount it was certified to receive in 2003 minus the greater of
53.36 	(1) the reduction to this aid payment in 2003 under Laws 2003,
54.1 	First Special Session chapter 21, article 5, or (2) five percent
54.2 	of its 2003 aid amount.  For aids payable in 2005 and
54.3 	thereafter, the total aid for a city with a population less than
54.4 	2,500 must not be less than the amount it was certified to
54.5 	receive in the previous year minus five percent of its 2003
54.6 	certified aid amount.
54.7 	
EFFECTIVE DATE. This section is effective for aids
54.8 	payable in 2006 and thereafter.

54.9 	Sec. 9. Minnesota Statutes 2004, section 477A.03,
54.10 	subdivision 2a, is amended to read:
54.11 		Subd. 2a.Cities.  For aids payable in 2004, the total
54.12 	aids paid under section 477A.013, subdivision 9, are limited to
54.13 	$429,000,000.  For aids payable in 2005 and thereafter, the
54.14 	total aids paid under section 477A.013, subdivision 9, are
54.15 	increased to $437,052,000. For aids payable in 2006 and
54.16 	thereafter, the total aids paid under section 477A.013,
54.17 	subdivision 9, are increased to $492,052,000.
54.18 	
EFFECTIVE DATE. This section is effective for aids
54.19 	payable in 2006 and thereafter.

54.20 	ARTICLE 4
54.21 	TEACHER RETIREMENT FUND RESTRUCTURING

54.22 	Section 1. [128D.18] FUNDING OF UNFUNDED PENSION
54.23 	LIABILITIES.
54.24 		Subdivision 1.Financing authority. Notwithstanding any
54.25 	other law to the contrary, Special School District No. 1,
54.26 	Minneapolis, may finance all or a portion of the current and
54.27 	future unfunded actuarial accrued liability of the former
54.28 	Minneapolis Teachers Retirement Fund Association through the
54.29 	issuance of pension obligation bonds under this section.
54.30 		Subd. 2.Use of proceeds. The proceeds of the bonds
54.31 	issued, less costs, must be paid to the State Board of
54.32 	Investment to be deposited as a payment toward the funding of
54.33 	the unfunded actuarial accrued liability of the former
54.34 	Minneapolis Teachers Retirement Fund Association owed by Special
54.35 	School District No. 1, Minneapolis, and must be credited as an
54.36 	asset of the Teachers Retirement Association.
55.1 		Subd. 3.Appropriations. Notwithstanding any law to the
55.2 	contrary, special direct state aid, matching aid, and other
55.3 	contributions levied for the Teachers Retirement Association
55.4 	under section 354A.12, subdivisions 3a and 3b, and amortization
55.5 	or supplementary amortization state aid reallocated to the
55.6 	Teachers Retirement Association under section 423A.02 are
55.7 	pledged and appropriated to the payment of the bonds and must be
55.8 	transferred to Special School District No. 1, Minneapolis, and
55.9 	additional employer contributions levied by Special School
55.10 	District No. 1, Minneapolis, under section 354A.12, subdivision
55.11 	3b, shall be retained by the district to the extent required to
55.12 	pay debt service on the bonds for the succeeding 12-month period
55.13 	or a longer period established pursuant to the resolution of the
55.14 	district authorizing the bonds.
55.15 		Subd. 4.No election. No election of the voters of the
55.16 	district shall be required to issue bonds authorized by this
55.17 	section.
55.18 		Subd. 5.Terms and sale of bonds. The bonds issued
55.19 	pursuant to this section shall bear interest at the rate or
55.20 	rates and mature on the date or dates not more than 30 years
55.21 	from the date of issue as the district shall determine by
55.22 	resolution.  Interest may be at a fixed or variable rate.  The
55.23 	bonds may be sold and issued on terms and in a manner that
55.24 	Special School District No. 1, Minneapolis, determines is in its
55.25 	best interests and in the best interests of the state.
55.26 		Subd. 6.This section prevails. Notwithstanding any
55.27 	other law to the contrary, this section shall apply to the
55.28 	issuance and sale of the bonds and to the purposes for which the
55.29 	bonds may be issued.
55.30 		Subd. 7.State pledge against impairment of
55.31 	contracts. The state pledges and agrees with the holders of
55.32 	bonds issued under this section that the state will not limit or
55.33 	alter the rights vested in Special School District No. 1,
55.34 	Minneapolis, to fulfill the terms of any agreements made with
55.35 	the bondholders or in any way impair the rights and remedies of
55.36 	the holders until the bonds, together with interest on them,
56.1 	with interest on any unpaid installments of interest, and all
56.2 	costs and expenses in connection with any action or proceeding
56.3 	by or on behalf of the bondholders, are fully met and
56.4 	discharged.  The district may include this pledge and agreement
56.5 	of the state in any agreement with the holders of bonds issued
56.6 	under this section.
56.7 		Subd. 8.Not net debt. Bonds ended under this section
56.8 	not in default shall not be deemed net debt under any law
56.9 	limiting indebtedness.
56.10 		Subd. 9.Aid reduction for repayment. If the amount
56.11 	transferred by Special School District No. 1, Minneapolis, to
56.12 	the paying agent for the bonds is insufficient to pay required
56.13 	debt service, the paying agent shall notify the commissioner of
56.14 	finance.  The commissioner shall reduce any and all unrestricted
56.15 	state aids generally available to the school district by the
56.16 	amount of the deficiency and pay the amounts to the paying agent
56.17 	for the bonds for the payment of debt service.  If the state
56.18 	aids are reduced pursuant to this subdivision, the district may
56.19 	levy a tax in the amount of the reduction in state aid.
56.20 	Notwithstanding any other law to the contrary, no election of
56.21 	the voters of the district is required for the levy and the levy
56.22 	is not subject to other levy limitations.

56.23 	Sec. 2. [128D.181] AID REDEDICATION.
56.24 	Notwithstanding any law to the contrary and subject to
56.25 	section 2, special direct state aid previously paid to the
56.26 	Minneapolis Teachers Retirement Fund Association under section
56.27 	354A.12, subdivision 3a, must be paid to the Teachers Retirement
56.28 	Association.

56.29 	Sec. 3. Minnesota Statutes 2004, section 354.05,
56.30 	subdivision 2, is amended to read:
56.31 		Subd. 2.Teacher.  (a) "Teacher" means:
56.32 	(1) a person who renders service as a teacher, supervisor,
56.33 	principal, superintendent, librarian, nurse, counselor, social
56.34 	worker, therapist, or psychologist in a public school of the
56.35 	state located outside of the corporate limits of a city of the
56.36 	first class the city of Duluth or the city of St. Paul, or in
57.1 	any charter school, irrespective of the location of the school,
57.2 	or in any charitable, penal, or correctional institutions of a
57.3 	governmental subdivision, or who is engaged in educational
57.4 	administration in connection with the state public school
57.5 	system, but excluding the University of Minnesota, whether the
57.6 	position be a public office or an employment, and not including
57.7 	the members or officers of any general governing or managing
57.8 	board or body;
57.9 	(2) an employee of the Teachers Retirement Association;
57.10 	(3) a person who renders teaching service on a part-time
57.11 	basis and who also renders other services for a single employing
57.12 	unit.  A person whose teaching service comprises at least 50
57.13 	percent of the combined employment salary is a member of the
57.14 	association for all services with the single employing unit.  If
57.15 	the person's teaching service comprises less than 50 percent of
57.16 	the combined employment salary, the executive director must
57.17 	determine whether all or none of the combined service is covered
57.18 	by the association; or
57.19 	(4) a person who is not covered by the plans established
57.20 	under chapter 352D, 354A, or 354B and who is employed by the
57.21 	Board of Trustees of the Minnesota State Colleges and
57.22 	Universities system in an unclassified position as:
57.23 	(i) a president, vice-president, or dean;
57.24 	(ii) a manager or a professional in an academic or an
57.25 	academic support program other than specified in item (i);
57.26 	(iii) an administrative or a service support faculty
57.27 	position; or
57.28 	(iv) a teacher or a research assistant.
57.29 	(b) "Teacher" does not mean:
57.30 	(1) a person who works for a school or institution as an
57.31 	independent contractor as defined by the Internal Revenue
57.32 	Service;
57.33 	(2) a person who renders part-time teaching service or who
57.34 	is a customized trainer as defined by the Minnesota State
57.35 	Colleges and Universities system if (i) the service is
57.36 	incidental to the regular nonteaching occupation of the person;
58.1 	and (ii) the employer stipulates annually in advance that the
58.2 	part-time teaching service or customized training service will
58.3 	not exceed 300 hours in a fiscal year and retains the
58.4 	stipulation in its records; and (iii) the part-time teaching
58.5 	service or customized training service actually does not exceed
58.6 	300 hours in a fiscal year; or
58.7 	(3) a person exempt from licensure under section 122A.30.

58.8 	Sec. 4. Minnesota Statutes 2004, section 354.05,
58.9 	subdivision 13, is amended to read:
58.10 		Subd. 13.Allowable service.  "Allowable service" means:
58.11 	(1) Any service rendered by a teacher for which on or
58.12 	before July 1, 1957, the teacher's account in the retirement
58.13 	fund was credited by reason of employee contributions in the
58.14 	form of salary deductions, payments in lieu of salary
58.15 	deductions, or in any other manner authorized by Minnesota
58.16 	Statutes 1953, sections 135.01 to 135.13, as amended by Laws
58.17 	1955, chapters 361, 549, 550, 611, or
58.18 	(2) Any service rendered by a teacher for which on or
58.19 	before July 1, 1961, the teacher elected to obtain credit for
58.20 	service by making payments to the fund pursuant to Minnesota
58.21 	Statutes 1980, section 354.09 and section 354.51, or
58.22 	(3) Any service rendered by a teacher after July 1, 1957,
58.23 	for any calendar month when the member receives salary from
58.24 	which deductions are made, deposited and credited in the fund,
58.25 	or
58.26 	(4) Any service rendered by a person after July 1, 1957,
58.27 	for any calendar month where payments in lieu of salary
58.28 	deductions are made, deposited and credited into the fund as
58.29 	provided in Minnesota Statutes 1980, section 354.09, subdivision
58.30 	4, and section 354.53, or
58.31 	(5) Any service rendered by a teacher for which the teacher
58.32 	elected to obtain credit for service by making payments to the
58.33 	fund pursuant to Minnesota Statutes 1980, section 354.09,
58.34 	subdivisions 1 and 4, sections 354.50, 354.51, Minnesota
58.35 	Statutes 1957, section 135.41, subdivision 4, Minnesota Statutes
58.36 	1971, section 354.09, subdivision 2, or Minnesota Statutes, 1973
59.1 	Supplement, section 354.09, subdivision 3, or
59.2 	(6) Both service during years of actual membership in the
59.3 	course of which contributions were currently made and service in
59.4 	years during which the teacher was not a member but for which
59.5 	the teacher later elected to obtain credit by making payments to
59.6 	the fund as permitted by any law then in effect, or
59.7 	(7) Any service rendered where contributions were made and
59.8 	no allowable service credit was established because of the
59.9 	limitations contained in Minnesota Statutes 1957, section
59.10 	135.09, subdivision 2, as determined by the ratio between the
59.11 	amounts of money credited to the teacher's account in a fiscal
59.12 	year and the maximum retirement contribution allowable for that
59.13 	year, or
59.14 	(8) MS 2002 (Expired)
59.15 	(9) A period of time during which a teacher who is a state
59.16 	employee was on strike without pay, not to exceed a period of
59.17 	one year, if the teacher makes a payment in lieu of salary
59.18 	deductions or makes a prior service credit purchase payment,
59.19 	whichever applies.  If the payment is made within 12 months, the
59.20 	payment by the teacher must be an amount equal to the employee
59.21 	and employer contribution rates set forth in section 354.42,
59.22 	subdivisions 2 and 3, applied to the teacher's rate of salary in
59.23 	effect on the conclusion of the strike for the period of the
59.24 	strike without pay, plus compound interest at a monthly rate of
59.25 	0.71 percent from the last day of the strike until the date of
59.26 	payment.  If the payment by the employee is not made within 12
59.27 	months, the payment must be in an amount equal to the payment
59.28 	amount determined under section 356.55 or 356.551, whichever
59.29 	applies, or 
59.30 	(10) A period of service before July 1, 2005, that was
59.31 	credited by the Minneapolis Teachers Retirement Fund Association
59.32 	and that was rendered by a teacher as an employee of Special
59.33 	School District No. 1, Minneapolis, or by an employee of the
59.34 	Minneapolis Teachers Retirement Fund Association who was a
59.35 	member of the Minneapolis Teachers Retirement Fund Association
59.36 	by virtue of that employment, who has not begun receiving an
60.1 	annuity or other retirement benefit from the former Minneapolis
60.2 	Teachers Retirement Fund Association calculated in whole or in
60.3 	part on that service before July 1, 2005, and who has not taken
60.4 	a refund of member contributions related to that service unless
60.5 	the refund is repaid under section 354.50, subdivision 4.

60.6 	Sec. 5. Minnesota Statutes 2004, section 354.42,
60.7 	subdivision 2, is amended to read:
60.8 		Subd. 2.Employee. (a) The employee contribution to the
60.9 	fund is an amount equal to 5.0 the following percentage of the
60.10 	salary of a member:
60.11 	(1) after July 1, 2005, for a teacher employed by Special
60.12 	School District No. 1, Minneapolis, 5.5 percent if the teacher
60.13 	is a coordinated member and 9.0 percent if the teacher is a
60.14 	basic member;
60.15 	(2) for every other teacher, after July 1, 2005, 5.0
60.16 	percent of if the salary of every teacher is a coordinated
60.17 	member and 9.0 percent of if the salary of every teacher is a 
60.18 	basic member.
60.19 	(b) This contribution must be made by deduction from
60.20 	salary.  Where any portion of a member's salary is paid from
60.21 	other than public funds, the member's employee contribution must
60.22 	be based on the entire salary received.

60.23 	Sec. 6. Minnesota Statutes 2004, section 354.42,
60.24 	subdivision 3, is amended to read:
60.25 		Subd. 3.Employer. (a) The employer contribution to the
60.26 	fund by Special School District No. 1, Minneapolis, after July
60.27 	1, 2005, is an amount equal to 8.14 percent of the salary of
60.28 	each of its teachers who is a coordinated member and 12.14
60.29 	percent of the salary of each of its teachers who is a basic
60.30 	member.
60.31 	(b) The employer contribution to the fund for every other
60.32 	employer, after July 1, 2005,is an amount equal to 5.0 percent
60.33 	of the salary of each coordinated member and 9.0 percent of the
60.34 	salary of each basic member.
60.35 	(c) As payment toward the cost of the unfunded actuarial
60.36 	accrued liability transferred to the Teachers Retirement
61.1 	Association from the former Minneapolis Teachers Retirement Fund
61.2 	Association, a supplemental contribution of 0.26 percent of the
61.3 	covered payroll of the fund must be made each fiscal year
61.4 	through June 30, 2035.  One-third of the dollar amount of this
61.5 	supplemental contribution must be paid each by Special School
61.6 	District No. 1, Minneapolis, the city of Minneapolis, and the
61.7 	state of Minnesota.  On or before October 1, annually, the
61.8 	executive director of the Teachers Retirement Association shall
61.9 	calculate the expected total dollar amount of the supplemental
61.10 	contribution for the calendar year and shall certify the portion
61.11 	payable by each governmental entity.  The amount is payable in
61.12 	full on or before the following June 1.

61.13 	Sec. 7. [354.70] CONSOLIDATION OF THE MINNEAPOLIS
61.14 	TEACHERS RETIREMENT FUND ASSOCIATION.
61.15 		Subdivision 1.Membership transfer. All active,
61.16 	inactive, and retired members of the Minneapolis Teachers
61.17 	Retirement Fund Association are transferred to the Teachers
61.18 	Retirement Association and are no longer members of the
61.19 	Minneapolis Teachers Retirement Fund Association as of the
61.20 	effective date of this section.
61.21 		Subd. 2.Tra membership. A person first hired as a
61.22 	teacher by Special School District No. 1, Minneapolis, after the
61.23 	effective date of this section and who is a teacher as defined
61.24 	in section 354.05, subdivision 2, is a member of the Teachers
61.25 	Retirement Association for the person's teaching service.
61.26 		Subd. 3.Service credit and liability transfer. All
61.27 	allowable service and salary credit of the members and other
61.28 	individuals transferred under subdivision 1 as specified in the
61.29 	records of the Minneapolis Teachers Retirement Fund Association
61.30 	on the transfer date is allowable service credit under section
61.31 	354.05, subdivision 13, formula service credit under section
61.32 	354.05, subdivision 25, and salary credit under section 354.05,
61.33 	subdivision 35, for the Teachers Retirement Association.
61.34 		Subd. 4.Transfer of records. On the effective date of
61.35 	this section, the chief administrative officer of the
61.36 	Minneapolis Teachers Retirement Fund Association shall effect a
62.1 	transfer of all records and documents relating to the funds and
62.2 	the benefit plans of the association to the executive director
62.3 	of the Teachers Retirement Association.  To the extent possible,
62.4 	original copies of all records and documents must be
62.5 	transferred.  The chief administrative officer of the
62.6 	Minneapolis Teachers Retirement Fund Association shall certify
62.7 	the accuracy of all records and documents for which the transfer
62.8 	of original copies was not possible.
62.9 		Subd. 5.Transfer of assets. (a) On the effective date
62.10 	of this section, the chief administrative officer of the
62.11 	Minneapolis Teachers Retirement Fund Association shall transfer
62.12 	to the Teachers Retirement Association the entire assets of the
62.13 	Minneapolis Teachers Retirement Fund Association.  The transfer
62.14 	of the assets of the Minneapolis Teachers Retirement Fund
62.15 	Association must include any accounts receivable that are
62.16 	determined by the executive director of the State Board of
62.17 	Investment as reasonably capable of being collected.  Legal
62.18 	title to account receivables that are determined by the
62.19 	executive director of the State Board of Investment as not
62.20 	reasonably capable of being collected transfers to Special
62.21 	School District No. 1, Minneapolis, as of the date of the
62.22 	determination of the executive director of the State Board of
62.23 	Investment.  If the account receivables transferred to Special
62.24 	School District No. 1, Minneapolis, are subsequently recovered
62.25 	by the school district, the superintendent of Special School
62.26 	District No. 1, Minneapolis, shall transfer the recovered amount
62.27 	to the executive director of the Teachers Retirement
62.28 	Association, in cash, for deposit in the teachers retirement
62.29 	fund, less the reasonable expenses of the school district
62.30 	related to the recovery.
62.31 	(b) As of the effective date of this section, subject to
62.32 	the authority of the State Board of Investment, the board of
62.33 	directors of the Teachers Retirement Association has legal title
62.34 	to and management responsibility for any transferred assets
62.35 	under this subdivision as trustees for any person having a
62.36 	beneficial interest in the Minneapolis Teachers Retirement Fund
63.1 	Association.  The Teachers Retirement Association is the
63.2 	successor in interest for all claims for and against the former
63.3 	coordinated program of the Minneapolis Teachers Retirement Fund
63.4 	Association with respect to the retirement fund association,
63.5 	except a claim against the Minneapolis Teachers Retirement Fund
63.6 	Association or any person connected with the fund association in
63.7 	a fiduciary capacity, based on any act or acts by that person
63.8 	which were not done in good faith and which constituted a breach
63.9 	of the obligation of the person as a fiduciary.  As the
63.10 	successor in interest, the Teachers Retirement Association may
63.11 	assert any applicable defense in any judicial proceeding which
63.12 	the board of the Minneapolis Teachers Retirement Fund
63.13 	Association would have otherwise been entitled to assert
63.14 	relating to the coordinated program.
63.15 	(c) From the assets of the Minneapolis Teachers Retirement
63.16 	Fund Association transferred to the Teachers Retirement
63.17 	Association, an amount equal to the percentage figure that
63.18 	represents the ratio between the market value of the Minnesota
63.19 	postretirement investment fund as of June 30, 2005, and the
63.20 	required reserves of the Minnesota postretirement investment
63.21 	fund as of June 30, 2005, applied to the present value of future
63.22 	benefits payable to annuitants of the former Minneapolis
63.23 	Teachers Retirement Fund Association as of June 30, 2005,
63.24 	including any postretirement adjustment from the Minnesota
63.25 	postretirement investment fund expected to be payable on January
63.26 	1, 2006, must be transferred to the Minnesota postretirement
63.27 	investment fund.  The executive director of the State Board of
63.28 	Investment shall estimate this ratio at the time of the
63.29 	transfer.  By January 1, 2006, after all necessary financial
63.30 	information becomes available to determine the actual funded
63.31 	ratio of the Minnesota postretirement investment fund, the
63.32 	postretirement fund must refund to the Teachers Retirement
63.33 	Association any excess assets or the Teachers Retirement
63.34 	Association must contribute any deficiency to the Minnesota
63.35 	postretirement investment fund with interest under section
63.36 	11A.18, subdivision 6.  The balance of the assets of the former
64.1 	Minneapolis Teachers Retirement Fund Association after the
64.2 	transfer to the Minnesota postretirement investment fund must be
64.3 	credited to the Teachers Retirement Association.
64.4 	If the assets transferred by the Minneapolis Teachers
64.5 	Retirement Fund Association to the Teachers Retirement
64.6 	Association are insufficient to meet its obligation to the
64.7 	Minnesota postretirement investment fund, additional assets must
64.8 	be transferred by the executive director of the Teachers
64.9 	Retirement Association to meet the amount required.
64.10 		Subd. 6.Benefit calculation. (a) For every deferred,
64.11 	inactive, disabled, and retired member of the Minneapolis
64.12 	Teachers Retirement Fund Association transferred under
64.13 	subdivision 1, and the survivors of these members, annuities or
64.14 	benefits earned before the date of the transfer, other than
64.15 	future postretirement adjustments, must be calculated and paid
64.16 	by the Teachers Retirement Association under the laws, articles
64.17 	of incorporation, and bylaws of the former Minneapolis Teachers
64.18 	Retirement Fund Association that were in effect relative to the
64.19 	person on the date of the person's termination of active service
64.20 	covered by the former Minneapolis Teachers Retirement Fund
64.21 	Association.
64.22 	(b) Former Minneapolis Teachers Retirement Fund Association
64.23 	members who retired before July 1, 2005, must receive
64.24 	postretirement adjustments after December 31, 2005, only as
64.25 	provided in section 11A.18.  All other benefit recipients of the
64.26 	former Minneapolis Teachers Retirement Fund Association must
64.27 	receive postretirement adjustments after December 31, 2005, only
64.28 	as provided in section 356.41.
64.29 		Subd. 7.Termination of the minneapolis teachers
64.30 	retirement fund association. As of the effective date of this
64.31 	section and upon the transfer of administration, records,
64.32 	assets, and liabilities from the Minneapolis Teachers Retirement
64.33 	Fund Association to the Teachers Retirement Association, the
64.34 	Minneapolis Teachers Retirement Fund Association ceases to exist
64.35 	as a Minnesota public pension plan.

64.36 	Sec. 8. [354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND
65.1 	STATE AID REDEDICATED.
65.2 		Subdivision 1.Appropriation. The positive difference,
65.3 	if any, between the actual state aid paid to the Minneapolis
65.4 	Employees Retirement Fund under section 422A.101, subdivision 3,
65.5 	and $8,065,000 annually is appropriated from the general fund to
65.6 	the commissioner of finance for deposit in the Teachers
65.7 	Retirement Association to offset all or a portion of the current
65.8 	and future unfunded actuarial accrued liability of the
65.9 	Minneapolis Teachers Retirement Fund Association.
65.10 		Subd. 2.Financial requirements. The appropriation in
65.11 	subdivision 1 is available to the extent that financial
65.12 	requirements of the Minneapolis Employees Retirement Fund under
65.13 	section 422A.101, subdivision 3, have been satisfied.

65.14 	Sec. 9. Minnesota Statutes 2004, section 354A.011,
65.15 	subdivision 15a, is amended to read:
65.16 		Subd. 15a.Normal retirement age.  "Normal retirement
65.17 	age" means age 65 for a person who first became a member of the
65.18 	coordinated program of the Minneapolis or St. Paul Teachers
65.19 	Retirement Fund Association or the new law coordinated program
65.20 	of the Duluth Teachers Retirement Fund Association or a member
65.21 	of a pension fund listed in section 356.30, subdivision 3,
65.22 	before July 1, 1989.  For a person who first became a member of
65.23 	the coordinated program of the Minneapolis or St. Paul Teachers
65.24 	Retirement Fund Association or the new law coordinated program
65.25 	of the Duluth Teachers Retirement Fund Association after June
65.26 	30, 1989, normal retirement age means the higher of age 65 or
65.27 	retirement age, as defined in United States Code, title 42,
65.28 	section 416(l), as amended, but not to exceed age 66.  For a
65.29 	person who is a member of the basic program of the Minneapolis
65.30 	or St. Paul Teachers Retirement Fund Association or the old law
65.31 	coordinated program of the Duluth Teachers Retirement Fund
65.32 	Association, normal retirement age means the age at which a
65.33 	teacher becomes eligible for a normal retirement annuity
65.34 	computed upon meeting the age and service requirements specified
65.35 	in the applicable provisions of the articles of incorporation or
65.36 	bylaws of the respective teachers retirement fund association.

66.1 	Sec. 10. Minnesota Statutes 2004, section 354A.011,
66.2 	subdivision 27, is amended to read:
66.3 		Subd. 27.Teacher.  (a) "Teacher" means any person who
66.4 	renders service for a public school district, other than a
66.5 	charter school, located in the corporate limits of one of the
66.6 	cities of the first class which was so classified on January 1,
66.7 	1979 Duluth and St. Paul, as any of the following:
66.8 	(1) a full-time employee in a position for which a valid
66.9 	license from the state Department of Education is required;
66.10 	(2) an employee of the teachers retirement fund association
66.11 	located in the city of the first class unless the employee has
66.12 	exercised the option pursuant to Laws 1955, chapter 10, section
66.13 	1, to retain membership in the Minneapolis Employees Retirement
66.14 	Fund established pursuant to chapter 422A;
66.15 	(3) a part-time employee in a position for which a valid
66.16 	license from the state Department of Education is required; or
66.17 	(4) a part-time employee in a position for which a valid
66.18 	license from the state Department of Education is required who
66.19 	also renders other nonteaching services for the school district,
66.20 	unless the board of trustees of the teachers retirement fund
66.21 	association determines that the combined employment is on the
66.22 	whole so substantially dissimilar to teaching service that the
66.23 	service may not be covered by the association.
66.24 	(b) The term does not mean any person who renders service
66.25 	in the school district as any of the following:
66.26 	(1) an independent contractor or the employee of an
66.27 	independent contractor;
66.28 	(2) an employee who is a full-time teacher covered by the
66.29 	Teachers Retirement Association or by another teachers
66.30 	retirement fund association established pursuant to this chapter
66.31 	or chapter 354;
66.32 	(3) an employee exempt from licensure pursuant to section
66.33 	122A.30;
66.34 	(4) an employee who is a teacher in a technical college
66.35 	located in a city of the first class unless the person elects
66.36 	coverage by the applicable first class city teacher retirement
67.1 	fund association under section 354B.21, subdivision 2;
67.2 	(5) a teacher employed by a charter school, irrespective of
67.3 	the location of the school; or
67.4 	(6) an employee who is a part-time teacher in a technical
67.5 	college in a city of the first class and who has elected
67.6 	coverage by the applicable first class city teacher retirement
67.7 	fund association under section 354B.21, subdivision 2, but (i)
67.8 	the teaching service is incidental to the regular nonteaching
67.9 	occupation of the person; (ii) the applicable technical college
67.10 	stipulates annually in advance that the part-time teaching
67.11 	service will not exceed 300 hours in a fiscal year; and (iii)
67.12 	the part-time teaching actually does not exceed 300 hours in the
67.13 	fiscal year to which the certification applies.

67.14 	Sec. 11. Minnesota Statutes 2004, section 354A.021,
67.15 	subdivision 1, is amended to read:
67.16 		Subdivision 1.Establishment.  There is established a
67.17 	teachers retirement fund association in each of the cities of
67.18 	the first class which were so classified on January 1,
67.19 	1979 Duluth and St. Paul.  The associations shall be known
67.20 	respectively as the "Duluth Teachers Retirement Fund
67.21 	Association," the "Minneapolis Teachers Retirement Fund
67.22 	Association" and the "St. Paul Teachers Retirement Fund
67.23 	Association."  Each association shall be a continuation of the
67.24 	teachers retirement fund association with the same corporate
67.25 	name established pursuant to the authorization contained in Laws
67.26 	1909, chapter 343, section 1.

67.27 	Sec. 12. Minnesota Statutes 2004, section 354A.092, is
67.28 	amended to read:
67.29 	354A.092 SABBATICAL LEAVE.
67.30 	Any teacher in the coordinated program of either the
67.31 	Minneapolis Teachers Retirement Fund Association or the St.
67.32 	Paul Teachers Retirement Fund Association or any teacher in the
67.33 	new law coordinated program of the Duluth Teachers Retirement
67.34 	Fund Association who is granted a sabbatical leave shall be
67.35 	entitled to receive allowable service credit in the applicable
67.36 	association for periods of sabbatical leave.  To obtain the
68.1 	service credit, the teacher on sabbatical leave shall make an
68.2 	employee contribution to the applicable association.  No teacher
68.3 	shall be entitled to receive more than three years of allowable
68.4 	service credit pursuant to this section for a period or periods
68.5 	of sabbatical leave during any ten consecutive fiscal or
68.6 	calendar years, whichever is the applicable plan year for the
68.7 	teachers retirement fund association.  If the teacher granted a
68.8 	sabbatical leave makes the employee contribution for a period of
68.9 	sabbatical leave pursuant to this section, the employing unit
68.10 	shall make an employer contribution on behalf of the teacher to
68.11 	the applicable association for that period of sabbatical leave
68.12 	in the manner described in section 354A.12, subdivision 2a.  The
68.13 	employee and employer contributions shall be in an amount equal
68.14 	to the employee and employer contribution rates in effect for
68.15 	other active members of the association covered by the same
68.16 	program applied to a salary figure equal to the teacher's actual
68.17 	covered salary for the plan year immediately preceding the
68.18 	sabbatical leave period.  Payment of the employee contribution
68.19 	authorized pursuant to this section shall be made by the teacher
68.20 	on or before June 30 of year next following the year in which
68.21 	the sabbatical leave terminated and shall be made without
68.22 	interest.  For sabbatical leaves taken after June 30, 1986, the
68.23 	required employer contributions shall be paid by the employing
68.24 	unit within 30 days after notification by the association of the
68.25 	amount due.  If the employee contributions for the sabbatical
68.26 	leave period are less than an amount equal to the applicable
68.27 	contribution rate applied to a salary figure equal to the
68.28 	teacher's actual covered salary for the plan year immediately
68.29 	preceding the sabbatical leave period, service credit shall be
68.30 	prorated.  The prorated service credit shall be determined by
68.31 	the ratio between the amount of the actual payment which was
68.32 	made and the full contribution amount payable pursuant to this
68.33 	section.

68.34 	Sec. 13. Minnesota Statutes 2004, section 354A.093,
68.35 	subdivision 1, is amended to read:
68.36 		Subdivision 1.Eligibility.  Any teacher in the
69.1 	coordinated program of either the Minneapolis Teachers
69.2 	Retirement Fund Association or the St. Paul Teachers Retirement
69.3 	Fund Association or any teacher in the new law coordinated
69.4 	program of the Duluth Teachers Retirement Fund Association who
69.5 	is absent from employment by reason of service in the uniformed
69.6 	services as defined in United States Code, title 38, section
69.7 	4303(13) and who returns to the employer providing active
69.8 	teaching service upon discharge from uniformed service within
69.9 	the time frames required under United States Code, title 38,
69.10 	section 4312(e), may receive allowable service credit in the
69.11 	applicable association for all or a portion of the period of
69.12 	uniformed service, provided that the teacher did not separate
69.13 	from uniformed service with a dishonorable or bad conduct
69.14 	discharge or under other than honorable conditions.

69.15 	Sec. 14. Minnesota Statutes 2004, section 354A.095, is
69.16 	amended to read:
69.17 	354A.095 PARENTAL AND MATERNITY LEAVE.
69.18 	Basic or coordinated members of the St. Paul Teachers
69.19 	Retirement Fund Association, the Minneapolis Teachers Retirement
69.20 	Fund Association,and new coordinated members of the Duluth
69.21 	Teachers Retirement Fund Association, who are granted parental
69.22 	or maternity leave of absence by the employing authority, are
69.23 	entitled to obtain service credit not to exceed one year for the
69.24 	period of leave upon payment to the applicable fund by the end
69.25 	of the fiscal year following the fiscal year in which the leave
69.26 	of absence terminated.  The amount of the payment must include
69.27 	the total required employee and employer contributions for the
69.28 	period of leave prescribed in section 354A.12.  Payment must be
69.29 	based on the member's average monthly salary rate upon return to
69.30 	teaching service, and is payable without interest.  Payment must
69.31 	be accompanied by a certified or otherwise adequate copy of the
69.32 	resolution or action of the employing authority granting or
69.33 	approving the leave.

69.34 	Sec. 15. Minnesota Statutes 2004, section 354A.096, is
69.35 	amended to read:
69.36 	354A.096 MEDICAL LEAVE.
70.1 	Any teacher in the coordinated program of either the
70.2 	Minneapolis Teachers Retirement Fund Association or the St. Paul
70.3 	Teachers Retirement Fund Association or the new law coordinated
70.4 	program of the Duluth Teachers Retirement Fund Association who
70.5 	is on an authorized medical leave of absence and subsequently
70.6 	returns to teaching service is entitled to receive allowable
70.7 	service credit, not to exceed one year, for the period of leave,
70.8 	upon making the prescribed payment to the fund.  This payment
70.9 	must include the required employee and employer contributions at
70.10 	the rates specified in section 354A.12, subdivisions 1 and 2, as
70.11 	applied to the member's average full-time monthly salary rate on
70.12 	the date the leave of absence commenced plus annual interest at
70.13 	the rate of 8.5 percent per year from the end of the fiscal year
70.14 	during which the leave terminates to the end of the month during
70.15 	which payment is made.  The member must pay the total amount
70.16 	required unless the employing unit, at its option, pays the
70.17 	employer contributions.  The total amount required must be paid
70.18 	by the end of the fiscal year following the fiscal year in which
70.19 	the leave of absence terminated or before the member retires,
70.20 	whichever is earlier.  Payment must be accompanied by a copy of
70.21 	the resolution or action of the employing authority granting the
70.22 	leave and the employing authority, upon granting the leave, must
70.23 	certify the leave to the association in a manner specified by
70.24 	the executive director.  A member may not receive more than one
70.25 	year of allowable service credit during any fiscal year by
70.26 	making payment under this section.  A member may not receive
70.27 	disability benefits under section 354A.36 and receive allowable
70.28 	service credit under this section for the same period of time.

70.29 	Sec. 16. Minnesota Statutes 2004, section 354A.12,
70.30 	subdivision 1, is amended to read:
70.31 		Subdivision 1.Employee contributions.  The contribution
70.32 	required to be paid by each member of a teachers retirement fund
70.33 	association shall not be less than the percentage of total
70.34 	salary specified below for the applicable association and
70.35 	program:
70.36 	Association and Program              Percentage of
71.1 	Total Salary
71.2 	Duluth Teachers Retirement
71.3 	Association
71.4 	old law and new law
71.5 	coordinated programs              5.5 percent
71.6 	Minneapolis Teachers Retirement 
71.7 	Association 
71.8 	basic program 8.5 percent 
71.9 	coordinated program 5.5 percent 
71.10 	St. Paul Teachers Retirement
71.11 	Association
71.12 	basic program                     8 percent
71.13 	coordinated program               5.5 percent
71.14 	Contributions shall be made by deduction from salary and
71.15 	must be remitted directly to the respective teachers retirement
71.16 	fund association at least once each month.

71.17 	Sec. 17. Minnesota Statutes 2004, section 354A.12,
71.18 	subdivision 2, is amended to read:
71.19 		Subd. 2.Retirement contribution levy disallowed.  Except
71.20 	as provided in subdivision 3b and in section 423A.02,
71.21 	subdivision 3, with respect to the city of Minneapolis and
71.22 	special school district No. 1 and in section 423A.02,
71.23 	subdivision 3, with respect to independent school district No.
71.24 	625, notwithstanding any law to the contrary, levies for
71.25 	teachers retirement fund associations in the cities of the first
71.26 	class Duluth and St. Paul, including levies for any employer
71.27 	Social Security taxes for teachers covered by the Duluth
71.28 	Teachers Retirement Fund Association or the Minneapolis Teachers
71.29 	Retirement Fund Association or the St. Paul Teachers Retirement
71.30 	Fund Association, are disallowed.

71.31 	Sec. 18. Minnesota Statutes 2004, section 354A.12,
71.32 	subdivision 2a, is amended to read:
71.33 		Subd. 2a.Employer regular and additional contribution
71.34 	rates.  (a) The employing units shall make the following
71.35 	employer contributions to teachers retirement fund associations:
71.36 	(1) for any coordinated member of a teachers retirement
72.1 	fund association in a city of the first class, the employing
72.2 	unit shall pay the employer Social Security taxes in accordance
72.3 	with section 355.46, subdivision 3, clause (b);
72.4 	(2) for any coordinated member of one of the following
72.5 	teachers retirement fund associations in a city of the first
72.6 	class, the employing unit shall make a regular employer
72.7 	contribution to the respective retirement fund association in an
72.8 	amount equal to the designated percentage of the salary of the
72.9 	coordinated member as provided below:
72.10 	Duluth Teachers Retirement
72.11 	     Fund Association                        4.50 percent
72.12 	Minneapolis Teachers Retirement
72.13 	     Fund Association 4.50 percent 
72.14 	     St. Paul Teachers Retirement
72.15 	     Fund Association                        4.50 percent;
72.16 	(3) for any basic member of one of the following St. Paul 
72.17 	Teachers Retirement Fund associations in a city of the first
72.18 	class Association, the employing unit shall make a regular
72.19 	employer contribution to the respective retirement fund in an
72.20 	amount equal to the designated percentage 8.00 percent of the
72.21 	salary of the basic member as provided below:
72.22 	Minneapolis Teachers Retirement 
72.23 	Fund Association 8.50 percent 
72.24 	St. Paul Teachers Retirement 
72.25 	Fund Association 8.00 percent ;
72.26 	(4) for a basic member of a the St. Paul Teachers
72.27 	Retirement Fund Association in a city of the first class, the
72.28 	employing unit shall make an additional employer contribution to
72.29 	the respective fund in an amount equal to the designated
72.30 	percentage 3.64 percent of the salary of the basic member, as
72.31 	provided below:
72.32 	Minneapolis Teachers Retirement 
72.33 	Fund Association 
72.34 	July 1, 1993 - June 30, 1994 4.85 percent 
72.35 	July 1, 1994, and thereafter 3.64 percent 
72.36 	St. Paul Teachers Retirement 
73.1 	Fund Association 
73.2 	July 1, 1993 - June 30, 1995 4.63 percent 
73.3 	July 1, 1995, and thereafter 3.64 percent ;
73.4 	(5) for a coordinated member of a teachers retirement fund
73.5 	association in a city of the first class, the employing unit
73.6 	shall make an additional employer contribution to the respective
73.7 	fund in an amount equal to the applicable percentage of the
73.8 	coordinated member's salary, as provided below:
73.9 	Duluth Teachers Retirement
73.10 	Fund Association                        1.29 percent
73.11 	Minneapolis Teachers Retirement 
73.12 	Fund Association 
73.13 	July 1, 1993 - June 30, 1994 0.50 percent 
73.14 	July 1, 1994, and thereafter 3.64 percent 
73.15 	St. Paul Teachers Retirement
73.16 	Fund Association
73.17 	July 1, 1993 - June 30, 1994          0.50 percent
73.18 	July 1, 1994 - June 30, 1995          1.50 percent
73.19 	July 1, 1997, and thereafter          3.84 percent.
73.20 	(b) The regular and additional employer contributions must
73.21 	be remitted directly to the respective teachers retirement fund
73.22 	association at least once each month.  Delinquent amounts are
73.23 	payable with interest under the procedure in subdivision 1a.
73.24 	(c) Payments of regular and additional employer
73.25 	contributions for school district or technical college employees
73.26 	who are paid from normal operating funds must be made from the
73.27 	appropriate fund of the district or technical college.

73.28 	Sec. 19. Minnesota Statutes 2004, section 354A.12,
73.29 	subdivision 3a, is amended to read:
73.30 		Subd. 3a.Special direct state aid to first class city
73.31 	teachers retirement fund associations.  (a) In fiscal year 1998,
73.32 	the state shall pay $4,827,000 to the St. Paul Teachers
73.33 	Retirement Fund Association, $17,954,000 to the Minneapolis
73.34 	Teachers Retirement Fund Association, and $486,000 to the Duluth
73.35 	Teachers Retirement Fund Association.  In each subsequent fiscal
73.36 	year after fiscal year 2005, these payments to the first class
74.1 	city teachers retirement fund associations must be $2,827,000
74.2 	for St. Paul, $12,954,000 to the Teachers Retirement Association 
74.3 	for the former Minneapolis Teachers Retirement Fund Association,
74.4 	and $486,000 for Duluth.
74.5 	(b) The direct state aids under this subdivision are
74.6 	payable October 1 annually.  The commissioner of finance shall
74.7 	pay the direct state aid.  The amount required under this
74.8 	subdivision is appropriated annually from the general fund to
74.9 	the commissioner of finance.

74.10 	Sec. 20. Minnesota Statutes 2004, section 354A.12,
74.11 	subdivision 3b, is amended to read:
74.12 		Subd. 3b.Special direct state matching aid to the
74.13 	minneapolis teachers retirement fund association.  (a) Special
74.14 	School District No. 1 may must make an additional employer
74.15 	contribution to the Minneapolis Teachers Retirement Fund 
74.16 	Association.  The city of Minneapolis may must make a
74.17 	contribution to the Minneapolis Teachers Retirement Fund 
74.18 	Association.  This contribution may must be made by a levy of
74.19 	the board of estimate and taxation of the city of Minneapolis
74.20 	and the levy, if made, is classified as that of a special taxing
74.21 	district for purposes of sections 275.065 and 276.04, and for
74.22 	all other property tax purposes.
74.23 	(b) For every $1,000 $1,125,000 must be contributed in
74.24 	equal proportion by Special School District No. 1 and $1,125,000
74.25 	must be contributed by the city of Minneapolis to
74.26 	the Minneapolis Teachers Retirement Fund Association under
74.27 	paragraph (a),and the state shall pay to the Minneapolis 
74.28 	Teachers Retirement Fund Association $1,000, but not to
74.29 	exceed $2,500,000 in total in each fiscal year 1994.  The
74.30 	superintendent of Special School District No. 1, the mayor of
74.31 	the city of Minneapolis, and the executive director of
74.32 	the Minneapolis Teachers Retirement Fund Association shall
74.33 	jointly certify to the commissioner of finance the total amount
74.34 	that has been contributed by Special School District No. 1 and
74.35 	by the city of Minneapolis to the Minneapolis Teachers
74.36 	Retirement Fund Association.  Any certification to the
75.1 	commissioner of education must be made quarterly.  If the total
75.2 	certifications for a fiscal year exceed the maximum annual
75.3 	direct state matching aid amount in any quarter, the amount of
75.4 	direct state matching aid payable to the Minneapolis Teachers
75.5 	Retirement Fund Association must be limited to the balance of
75.6 	the maximum annual direct state matching aid amount available.
75.7 	The amount required under this paragraph, subject to the maximum
75.8 	direct state matching aid amount, is appropriated annually to
75.9 	the commissioner of finance.
75.10 	(c) The commissioner of finance may prescribe the form of
75.11 	the certifications required under paragraph (b).

75.12 	Sec. 21. Minnesota Statutes 2004, section 354A.12,
75.13 	subdivision 3c, is amended to read:
75.14 		Subd. 3c.Termination of supplemental contributions and
75.15 	direct matching and state aid.  (a) The supplemental
75.16 	contributions payable to the Minneapolis Teachers Retirement
75.17 	Fund Association by special school district No. 1 and the city
75.18 	of Minneapolis under section 423A.02, subdivision 3, or to the 
75.19 	St. Paul Teachers Retirement Fund Association by Independent
75.20 	School District No. 625 under section 423A.02, subdivision 3, or
75.21 	the direct state aids under subdivision 3a to the first class
75.22 	city St. Paul Teachers Retirement associations, and the direct
75.23 	matching and state aid under subdivision 3b to the Minneapolis
75.24 	Teachers Retirement Fund Association terminate for the
75.25 	respective fund at the end of the fiscal year in which the
75.26 	accrued liability funding ratio for that fund, as determined in
75.27 	the most recent actuarial report for that fund by the actuary
75.28 	retained by the Legislative Commission on Pensions and
75.29 	Retirement, equals or exceeds the accrued liability funding
75.30 	ratio for the teachers retirement association, as determined in
75.31 	the most recent actuarial report for the Teachers Retirement
75.32 	Association by the actuary retained by the Legislative
75.33 	Commission on Pensions and Retirement.
75.34 	(b) If the state direct matching, state supplemental, or
75.35 	state aid is terminated for a first class city teachers
75.36 	retirement fund association under paragraph (a), it may not
76.1 	again be received by that fund.
76.2 	(c) If either the Minneapolis Teachers Retirement Fund
76.3 	Association,the St. Paul Teachers Retirement Fund Association,
76.4 	or the Duluth Teachers Retirement Fund Association remain is 
76.5 	funded at less than the funding ratio applicable to the teachers
76.6 	retirement association when the provisions of paragraph (b)
76.7 	become effective, then any state aid not previously distributed
76.8 	to that association must be immediately transferred to the other
76.9 	associations in proportion to the relative sizes of their
76.10 	unfunded actuarial accrued liabilities Teachers Retirement
76.11 	Association.

76.12 	Sec. 22. Minnesota Statutes 2004, section 354A.12,
76.13 	subdivision 3d, is amended to read:
76.14 		Subd. 3d.Supplemental administrative expense
76.15 	assessment.  (a) The active and retired membership of the
76.16 	Minneapolis Teachers Retirement Fund Association and of the St.
76.17 	Paul Teachers Retirement Fund Association is responsible for
76.18 	defraying supplemental administrative expenses other than
76.19 	investment expenses of the respective teacher retirement fund
76.20 	association.
76.21 	(b) Investment expenses of the teachers retirement fund
76.22 	association are those expenses incurred by or on behalf of the
76.23 	retirement fund in connection with the investment of the assets
76.24 	of the retirement fund other than investment security
76.25 	transaction costs.  Other administrative expenses are all
76.26 	expenses incurred by or on behalf of the retirement fund for all
76.27 	other retirement fund functions other than the investment of
76.28 	retirement fund assets.  Investment and other administrative
76.29 	expenses must be accounted for using generally accepted
76.30 	accounting principles and in a manner consistent with the
76.31 	comprehensive annual financial report of the teachers retirement
76.32 	fund association for the immediately previous fiscal year under
76.33 	section 356.20.
76.34 	(c) Supplemental administrative expenses other than
76.35 	investment expenses of a first class city teacher the St. Paul
76.36 	Teachers Retirement Fund Association are those expenses for the
77.1 	fiscal year that:
77.2 	(1) exceed, for the St. Paul Teachers Retirement Fund
77.3 	Association,$443,745, or for the Minneapolis Teacher Retirement
77.4 	Fund Association $671,513,plus, in each case,an additional
77.5 	amount derived by applying the percentage increase in the
77.6 	Consumer Price Index for Urban Wage Earners and Clerical Workers
77.7 	All Items Index published by the Bureau of Labor Statistics of
77.8 	the United States Department of Labor since July 1, 2001, to the
77.9 	applicable dollar amount; and
77.10 	(2) exceed the amount computed by applying the most recent
77.11 	percentage of pay administrative expense amount, other than
77.12 	investment expenses, for the teachers retirement association
77.13 	governed by chapter 354 to the covered payroll of the respective
77.14 	teachers retirement fund association for the fiscal year.
77.15 	(d) The board of trustees of each first class city the St.
77.16 	Paul Teachers Retirement Fund Association shall allocate the
77.17 	total dollar amount of supplemental administrative expenses
77.18 	other than investment expenses determined under paragraph (c),
77.19 	clause (2), among the various active and retired membership
77.20 	groups of the teachers retirement fund association and shall
77.21 	assess the various membership groups their respective share of
77.22 	the supplemental administrative expenses other than investment
77.23 	expenses, in amounts determined by the board of trustees.  The
77.24 	supplemental administrative expense assessments must be paid by
77.25 	the membership group in a manner determined by the board of
77.26 	trustees of the respective teachers retirement association.
77.27 	Supplemental administrative expenses payable by the active
77.28 	members of the pension plan must be picked up by the employer in
77.29 	accordance with section 356.62.
77.30 	(e) With respect to the St. Paul Teachers Retirement Fund
77.31 	Association, the supplemental administrative expense assessment
77.32 	must be fully disclosed to the various active and retired
77.33 	membership groups of the teachers retirement fund association.
77.34 	The chief administrative officer of the St. Paul Teachers
77.35 	Retirement Fund Association shall prepare a supplemental
77.36 	administrative expense assessment disclosure notice, which must
78.1 	include the following:
78.2 	(1) the total amount of administrative expenses of the St.
78.3 	Paul Teachers Retirement Fund Association, the amount of the
78.4 	investment expenses of the St. Paul Teachers Retirement Fund
78.5 	Association, and the net remaining amount of administrative
78.6 	expenses of the St. Paul Teachers Retirement Fund Association;
78.7 	(2) the amount of administrative expenses for the St. Paul
78.8 	Teachers Retirement Fund Association that would be equivalent to
78.9 	the teachers retirement association noninvestment administrative
78.10 	expense level described in paragraph (c);
78.11 	(3) the total amount of supplemental administrative
78.12 	expenses required for assessment calculated under paragraph (c);
78.13 	(4) the portion of the total amount of the supplemental
78.14 	administrative expense assessment allocated to each membership
78.15 	group and the rationale for that allocation;
78.16 	(5) the manner of collecting the supplemental
78.17 	administrative expense assessment from each membership group,
78.18 	the number of assessment payments required during the year, and
78.19 	the amount of each payment or the procedure used to determine
78.20 	each payment; and
78.21 	(6) any other information that the chief administrative
78.22 	officer determines is necessary to fairly portray the manner in
78.23 	which the supplemental administrative expense assessment was
78.24 	determined and allocated.
78.25 	(f) The disclosure notice must be provided annually in the
78.26 	annual report of the association.
78.27 	(g) The supplemental administrative expense assessments
78.28 	must be deposited in the applicable teachers retirement fund
78.29 	upon receipt.
78.30 	(h) Any omitted active membership group assessments that
78.31 	remain undeducted and unpaid to the teachers retirement fund
78.32 	association for 90 days must be paid by the respective school
78.33 	district.  The school district may recover any omitted active
78.34 	membership group assessment amounts that it has previously
78.35 	paid.  The teachers retirement fund association shall deduct any
78.36 	omitted retired membership group assessment amounts from the
79.1 	benefits next payable after the discovery of the omitted amounts.

79.2 	Sec. 23. Minnesota Statutes 2004, section 354A.30, is
79.3 	amended to read:
79.4 	354A.30  MINNEAPOLIS AND ST. PAUL TEACHERS RETIREMENT
79.5 	FUND ASSOCIATIONS ASSOCIATION; COORDINATED PROGRAM.
79.6 	There is established a coordinated program within the
79.7 	Minneapolis Teachers Retirement Fund Association and a
79.8 	coordinated program within the St. Paul Teachers Retirement Fund
79.9 	Association to provide retirement coverage for teachers who are
79.10 	covered by an agreement or modification made between the state
79.11 	and the secretary of health, education and welfare making the
79.12 	provisions of the federal Old Age, Survivors and Disability
79.13 	Insurance Act applicable to certain teachers covered by the
79.14 	teachers retirement fund association.  The provisions governing
79.15 	the coordinated program shall be sections 354A.31 to 354A.41 and
79.16 	any other applicable provisions of this chapter.

79.17 	Sec. 24. Minnesota Statutes 2004, section 354A.31,
79.18 	subdivision 4, is amended to read:
79.19 		Subd. 4.Computation of the normal coordinated retirement
79.20 	annuity; minneapolis and st. paul funds.  (a) This subdivision
79.21 	applies to the coordinated programs program of the Minneapolis
79.22 	Teachers Retirement Fund Association and the St. Paul Teachers
79.23 	Retirement Fund Association.
79.24 	(b) The normal coordinated retirement annuity shall be an
79.25 	amount equal to a retiring coordinated member's average salary
79.26 	multiplied by the retirement annuity formula percentage.
79.27 	Average salary for purposes of this section shall mean an amount
79.28 	equal to the average salary upon which contributions were made
79.29 	for the highest five successive years of service credit, but
79.30 	which shall not in any event include any more than the
79.31 	equivalent of 60 monthly salary payments.  Average salary must
79.32 	be based upon all years of service credit if this service credit
79.33 	is less than five years.
79.34 	(c) This paragraph, in conjunction with subdivision 6,
79.35 	applies to a person who first became a member or a member in a
79.36 	pension fund listed in section 356.30, subdivision 3, before
80.1 	July 1, 1989, unless paragraph (d), in conjunction with
80.2 	subdivision 7, produces a higher annuity amount, in which case
80.3 	paragraph (d) will apply.  The retirement annuity formula
80.4 	percentage for purposes of this paragraph is the percent
80.5 	specified in section 356.315, subdivision 1, per year for each
80.6 	year of coordinated service for the first ten years and the
80.7 	percent specified in section 356.315, subdivision 2, for each
80.8 	year of coordinated service thereafter.
80.9 	(d) This paragraph applies to a person who has become at
80.10 	least 55 years old and who first becomes a member after June 30,
80.11 	1989, and to any other member who has become at least 55 years
80.12 	old and whose annuity amount, when calculated under this
80.13 	paragraph and in conjunction with subdivision 7 is higher than
80.14 	it is when calculated under paragraph (c), in conjunction with
80.15 	the provisions of subdivision 6.  The retirement annuity formula
80.16 	percentage for purposes of this paragraph is the percent
80.17 	specified in section 356.315, subdivision 2, for each year of
80.18 	coordinated service.

80.19 	Sec. 25. Minnesota Statutes 2004, section 354A.32,
80.20 	subdivision 1, is amended to read:
80.21 		Subdivision 1.Optional forms generally.  The boards 
80.22 	board of the Minneapolis and the St. Paul Teachers Retirement
80.23 	Fund Associations Association shall each establish for the
80.24 	coordinated program and the board of the Duluth Teachers
80.25 	Retirement Fund Association shall establish for the new law
80.26 	coordinated program an optional retirement annuity which shall
80.27 	take the form of a joint and survivor annuity.  Each board may
80.28 	also in its discretion establish an optional annuity which shall
80.29 	take the form of an annuity payable for a period certain and for
80.30 	life thereafter.  Each board shall also establish an optional
80.31 	retirement annuity that guarantees payment of the balance of the
80.32 	annuity recipient's accumulated deductions to a designated
80.33 	beneficiary upon the death of the annuity recipient.  Except as
80.34 	provided in subdivision 1a, optional annuity forms shall be the
80.35 	actuarial equivalent of the normal forms provided in section
80.36 	354A.31.  In establishing these optional annuity forms, the
81.1 	board shall obtain the written recommendation of the
81.2 	commission-retained actuary.  The recommendation shall be a part
81.3 	of the permanent records of the board.

81.4 	Sec. 26. Minnesota Statutes 2004, section 354A.39, is
81.5 	amended to read:
81.6 	354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS;
81.7 	ANNUITY.
81.8 	Any person who has been a member of the Minnesota State
81.9 	Retirement System, the Public Employees Retirement Association
81.10 	including the Public Employees Retirement Association Police and
81.11 	Fire Fund, the Teachers Retirement Association, the Minnesota
81.12 	State Patrol Retirement Association, the legislators retirement
81.13 	plan, the constitutional officers retirement plan, the
81.14 	Minneapolis Employees Retirement Fund, the Duluth Teachers
81.15 	Retirement Fund Association new law coordinated program, the
81.16 	Minneapolis Teachers Retirement Fund Association coordinated
81.17 	program,the St. Paul Teachers Retirement Fund Association
81.18 	coordinated program, or any other public employee retirement
81.19 	system in the state of Minnesota having a like provision but
81.20 	excluding all other funds providing retirement benefits for
81.21 	police officers or firefighters shall be entitled when qualified
81.22 	to an annuity from each fund if the person's total allowable
81.23 	service in all of the funds or in any two or more of the funds
81.24 	totals three or more years, provided that no portion of the
81.25 	allowable service upon which the retirement annuity from one
81.26 	fund is based is used again in the computation for a retirement
81.27 	annuity from another fund and provided further that the person
81.28 	has not taken a refund from any of funds or associations since
81.29 	the person's membership in the fund or association has
81.30 	terminated.  The annuity from each fund or association shall be
81.31 	determined by the appropriate provisions of the law governing
81.32 	each fund or association, except that the requirement that a
81.33 	person must have at least three years of allowable service in
81.34 	the respective fund or association shall not apply for the
81.35 	purposes of this section, provided that the aggregate service in
81.36 	two or more of these funds equals three or more years.

82.1 	Sec. 27. Minnesota Statutes 2004, section 354A.40,
82.2 	subdivision 1, is amended to read:
82.3 		Subdivision 1.Retirement annuity.  Any coordinated
82.4 	member of either the Minneapolis Teachers Retirement Fund
82.5 	Association or of the St. Paul Teachers Retirement Fund
82.6 	Association who has credited service prior to July 1, 1978 shall
82.7 	be entitled to receive a retirement annuity when otherwise
82.8 	qualified, the calculation of which shall utilize the applicable
82.9 	retirement annuity formula specified in articles of
82.10 	incorporation and bylaws of the teachers retirement fund
82.11 	association governing the basic program for that portion of
82.12 	credited service which was served prior to July 1, 1978, and the
82.13 	retirement annuity formula specified in section 354A.31 for the
82.14 	remainder of the member's credited service, both applied to the
82.15 	member's average salary as specified in section 354A.31,
82.16 	subdivision 4.  The formula percentages to be used in
82.17 	calculating the coordinated portion of the retirement annuity or
82.18 	coordinated service under this section shall recognize the
82.19 	coordinated service as a continuation of any service prior to
82.20 	July 1, 1978.

82.21 	Sec. 28. Minnesota Statutes 2004, section 354A.41, is
82.22 	amended to read:
82.23 	354A.41 ADMINISTRATION OF COORDINATED PROGRAM.
82.24 		Subdivision 1.Administrative provisions. The provisions
82.25 	of the articles of incorporation and bylaws of the Minneapolis
82.26 	or the St. Paul Teachers Retirement Fund Association, whichever
82.27 	is applicable,relating to the administration of the fund shall
82.28 	govern the administration of the coordinated program and the
82.29 	provisions of the articles of incorporation and bylaws of the
82.30 	Duluth Teachers Retirement Fund Association relating to the
82.31 	administration of the fund shall govern the administration of
82.32 	the new law coordinated program in instances where the
82.33 	administrative provisions are not inconsistent with the
82.34 	provisions of sections 354A.31 to 354A.41, including but not
82.35 	limited to provisions relating to the composition and function
82.36 	of the board of trustees, the investment of assets of the
83.1 	teachers retirement fund association, and the definition of the
83.2 	plan year.
83.3 		Subd. 2.Actuarial valuations. In any actuarial
83.4 	valuation of the Minneapolis Teachers Retirement Fund
83.5 	Association, the St. Paul Teachers Retirement Fund Association,
83.6 	or the Duluth Teachers Retirement Fund Association under section
83.7 	356.215 prepared by the commission-retained actuary or
83.8 	supplemental actuarial valuation prepared by an approved actuary
83.9 	retained by the teachers retirement fund association, there
83.10 	shall be included a finding of the condition of the fund showing
83.11 	separately the basic and coordinated programs or the old law
83.12 	coordinated and new law coordinated programs, as appropriate.
83.13 	The finding shall include the level normal cost and the
83.14 	applicable employee and employer contribution rates for each
83.15 	program.

83.16 	Sec. 29. Minnesota Statutes 2004, section 356.20,
83.17 	subdivision 2, is amended to read:
83.18 		Subd. 2.Covered public pension plans and funds.  This
83.19 	section applies to the following public pension plans:
83.20 	(1) the general state employees retirement plan of the
83.21 	Minnesota State Retirement System;
83.22 	(2) the general employees retirement plan of the Public
83.23 	Employees Retirement Association;
83.24 	(3) the Teachers Retirement Association;
83.25 	(4) the State Patrol retirement plan;
83.26 	(5) the Minneapolis Teachers Retirement Fund Association;
83.27 	(6) the St. Paul Teachers Retirement Fund Association;
83.28 	(7) (6) the Duluth Teachers Retirement Fund Association;
83.29 	(8) (7) the Minneapolis Employees Retirement Fund;
83.30 	(9) (8) the University of Minnesota faculty retirement
83.31 	plan;
83.32 	(10) (9) the University of Minnesota faculty supplemental
83.33 	retirement plan;
83.34 	(11) (10) the judges retirement fund;
83.35 	(12) (11) a police or firefighter's relief association
83.36 	specified or described in section 69.77, subdivision 1a, or
84.1 	69.771, subdivision 1;
84.2 	(13) (12) the public employees police and fire plan of the
84.3 	Public Employees Retirement Association;
84.4 	(14) (13) the correctional state employees retirement plan
84.5 	of the Minnesota State Retirement System; and
84.6 	(15) (14) the local government correctional service
84.7 	retirement plan of the Public Employees Retirement Association.

84.8 	Sec. 30. Minnesota Statutes 2004, section 356.214,
84.9 	subdivision 1, is amended to read:
84.10 		Subdivision 1.Joint retention.  (a) The chief
84.11 	administrative officers of the Minnesota State Retirement
84.12 	System, the Public Employees Retirement Association, the
84.13 	Teachers Retirement Association, the Duluth Teachers Retirement
84.14 	Fund Association, the Minneapolis Teachers Retirement Fund
84.15 	Association,the Minneapolis Employees Retirement Fund, and the
84.16 	St. Paul Teachers Retirement Fund Association, jointly, on
84.17 	behalf of the state, its employees, its taxpayers, and its
84.18 	various public pension plans, shall contract with an established
84.19 	actuarial consulting firm to conduct annual actuarial valuations
84.20 	and related services for the retirement plans named in paragraph
84.21 	(b).  The principal from the actuarial consulting firm on the
84.22 	contract must be an approved actuary under section 356.215,
84.23 	subdivision 1, paragraph (c).  Prior to becoming effective, the
84.24 	contract under this section is subject to a review and approval
84.25 	by the Legislative Commission on Pensions and Retirement.
84.26 	(b) The contract for actuarial services must include the
84.27 	preparation of actuarial valuations and related actuarial work
84.28 	for the following retirement plans:
84.29 	(1) the teachers retirement plan, Teachers Retirement
84.30 	Association;
84.31 	(2) the general state employees retirement plan, Minnesota
84.32 	State Retirement System;
84.33 	(3) the correctional employees retirement plan, Minnesota
84.34 	State Retirement System;
84.35 	(4) the State Patrol retirement plan, Minnesota State
84.36 	Retirement System;
85.1 	(5) the judges retirement plan, Minnesota State Retirement
85.2 	System;
85.3 	(6) the Minneapolis employees retirement plan, Minneapolis
85.4 	Employees Retirement Fund;
85.5 	(7) the public employees retirement plan, Public Employees
85.6 	Retirement Association;
85.7 	(8) the public employees police and fire plan, Public
85.8 	Employees Retirement Association;
85.9 	(9) the Duluth teachers retirement plan, Duluth Teachers
85.10 	Retirement Fund Association;
85.11 	(10) the Minneapolis teachers retirement plan, Minneapolis
85.12 	Teachers Retirement Fund Association;
85.13 	(11) the St. Paul teachers retirement plan, St. Paul
85.14 	Teachers Retirement Fund Association;
85.15 	(12) (11) the legislators retirement plan, Minnesota State
85.16 	Retirement System;
85.17 	(13) (12) the elective state officers retirement plan,
85.18 	Minnesota State Retirement System; and
85.19 	(14) (13) local government correctional service retirement
85.20 	plan, Public Employees Retirement Association.
85.21 	(c) The contract must require completion of the annual
85.22 	actuarial valuation calculations on a fiscal year basis, with
85.23 	the contents of the actuarial valuation calculations as
85.24 	specified in section 356.215, and in conformity with the
85.25 	standards for actuarial work adopted by the Legislative
85.26 	Commission on Pensions and Retirement.
85.27 	The contract must require completion of annual experience
85.28 	data collection and processing and a quadrennial published
85.29 	experience study for the plans listed in paragraph (b), clauses
85.30 	(1), (2), and (7), as provided for in the standards for
85.31 	actuarial work adopted by the commission.  The experience data
85.32 	collection, processing, and analysis must evaluate the following:
85.33 	(1) individual salary progression;
85.34 	(2) the rate of return on investments based on the current
85.35 	asset value;
85.36 	(3) payroll growth;
86.1 	(4) mortality;
86.2 	(5) retirement age;
86.3 	(6) withdrawal; and
86.4 	(7) disablement.
86.5 	The contract must include provisions for the preparation of
86.6 	cost analyses by the jointly retained actuary for proposed
86.7 	legislation that include changes in benefit provisions or
86.8 	funding policies prior to their consideration by the Legislative
86.9 	Commission on Pensions and Retirement.
86.10 	(d) The actuary retained by the joint retirement systems
86.11 	shall annually prepare a report to the legislature, including a
86.12 	commentary on the actuarial valuation calculations for the plans
86.13 	named in paragraph (b) and summarizing the results of the
86.14 	actuarial valuation calculations.  The actuary shall include
86.15 	with the report the actuary's recommendations to the legislature
86.16 	concerning the appropriateness of the support rates to achieve
86.17 	proper funding of the retirement plans by the required funding
86.18 	dates.  The actuary shall, as part of the quadrennial experience
86.19 	study, include recommendations to the legislature on the
86.20 	appropriateness of the actuarial valuation assumptions required
86.21 	for evaluation in the study.
86.22 	(e) If the actuarial gain and loss analysis in the
86.23 	actuarial valuation calculations indicates a persistent pattern
86.24 	of sizable gains or losses, as directed by the joint retirement
86.25 	systems or as requested by the chair of the Legislative
86.26 	Commission on Pensions and Retirement, the actuary shall prepare
86.27 	a special experience study for a plan listed in paragraph (b),
86.28 	clause (3), (4), (5), (6), (8), (9), (10), (11), (12), (13),or
86.29 	(14) (13), in the manner provided for in the standards for
86.30 	actuarial work adopted by the commission.
86.31 	(f) The term of the contract between the joint retirement
86.32 	systems and the actuary retained may not exceed five years.  The
86.33 	joint retirement system administrative officers shall establish
86.34 	procedures for the consideration and selection of contract
86.35 	bidders and the requirements for the contents of an actuarial
86.36 	services contract under this section.  The procedures and
87.1 	requirements must be submitted to the Legislative Commission on
87.2 	Pensions and Retirement for review and comment prior to final
87.3 	approval by the joint administrators.  The contract is subject
87.4 	to the procurement procedures under chapter 16C.  The
87.5 	consideration of bids and the selection of a consulting
87.6 	actuarial firm by the chief administrative officers must occur
87.7 	at a meeting that is open to the public and reasonable timely
87.8 	public notice of the date and the time of the meeting and its
87.9 	subject matter must be given.
87.10 	(g) The actuarial services contract may not limit the
87.11 	ability of the Minnesota legislature and its standing committees
87.12 	and commissions to rely on the actuarial results of the work
87.13 	prepared under the contract.
87.14 	(h) The joint retirement systems shall designate one of the
87.15 	retirement system executive directors as the actuarial services
87.16 	contract manager.

87.17 	Sec. 31. Minnesota Statutes 2004, section 356.215,
87.18 	subdivision 8, is amended to read:
87.19 		Subd. 8.Interest and salary assumptions.  (a) The
87.20 	actuarial valuation must use the applicable following
87.21 	preretirement interest assumption and the applicable following
87.22 	postretirement interest assumption:
87.23 	preretirement  postretirement
87.24 	                                   interest rate  interest rate
87.25 	            plan                      assumption     assumption
87.26 	     general state employees
87.27 	         retirement plan                  8.5%          6.0%
87.28 	     correctional state employees
87.29 	         retirement plan                  8.5           6.0
87.30 	     State Patrol retirement plan         8.5           6.0
87.31 	     legislators retirement plan          8.5           6.0
87.32 	     elective state officers
87.33 	         retirement plan                  8.5           6.0
87.34 	     judges retirement plan               8.5           6.0
87.35 	     general public employees
87.36 	         retirement plan                  8.5           6.0
87.37 	     public employees police and fire
87.38 	         retirement plan                  8.5           6.0
87.39 	     local government correctional
87.40 	         service retirement plan          8.5           6.0
87.41 	     teachers retirement plan             8.5           6.0
87.42 	     Minneapolis employees
87.43 	         retirement plan                  6.0           5.0
87.44 	     Duluth teachers retirement plan      8.5           8.5
87.45 	Minneapolis teachers retirement
87.46 	         plan 8.5 8.5 
87.47 	     St. Paul teachers retirement
87.48 	         plan                             8.5           8.5
87.49 	     Minneapolis Police Relief
88.1 	         Association                      6.0           6.0
88.2 	     Fairmont Police Relief
88.3 	         Association                      5.0           5.0
88.4 	     Minneapolis Fire Department
88.5 	         Relief Association               6.0           6.0
88.6 	     Virginia Fire Department
88.7 	         Relief Association               5.0           5.0
88.8 	     local monthly benefit volunteer
88.9 	         firefighters relief associations 5.0           5.0
88.10 	(b) The actuarial valuation must use the applicable
88.11 	following single rate future salary increase assumption, the
88.12 	applicable following modified single rate future salary increase
88.13 	assumption, or the applicable following graded rate future
88.14 	salary increase assumption:
88.15 	(1) single rate future salary increase assumption
88.16 	future salary
88.17 	            plan                          increase assumption
88.18 	     legislators retirement plan                  5.0%
88.19 	     elective state officers retirement
88.20 	         plan                                     5.0
88.21 	     judges retirement plan                       5.0
88.22 	     Minneapolis Police Relief Association        4.0
88.23 	     Fairmont Police Relief
88.24 	         Association                              3.5
88.25 	     Minneapolis Fire Department Relief
88.26 	         Association                              4.0
88.27 	     Virginia Fire Department
88.28 	         Relief Association                       3.5
88.29 	(2) modified single rate future salary increase assumption
88.30 	future salary
88.31 	               plan                       increase assumption
88.32 	         Minneapolis employees        the prior calendar year
88.33 	           retirement plan            amount increased first by
88.34 	1.0198 percent to prior
88.35 	                                      fiscal year date and
88.36 	                                      then increased by 4.0
88.37 	                                      percent annually for
88.38 	                                      each future year
88.39 	(3) select and ultimate future salary increase assumption
88.40 	or graded rate future salary increase assumption
88.41 	future salary
88.42 	               plan                       increase assumption
88.43 	     general state employees             select calculation and
88.44 	         retirement plan                      assumption A
88.45 	     correctional state employees
88.46 	         retirement plan                      assumption H G 
88.47 	     State Patrol retirement plan             assumption H G 
88.48 	     general public employees            select calculation and
88.49 	         retirement plan                      assumption B
88.50 	     public employees police and fire
88.51 	         fund retirement plan                 assumption C
88.52 	     local government correctional service
88.53 	         retirement plan                      assumption H G 
88.54 	     teachers retirement plan                 assumption D
88.55 	     Duluth teachers retirement plan          assumption E
88.56 	Minneapolis teachers retirement plan assumption F 
88.57 	     St. Paul teachers retirement plan        assumption G F 
88.58 	
88.59 	     The select calculation is:
89.1 	     during the ten-year select period, a designated percent
89.2 	     is multiplied by the result of ten minus T, where T is
89.3 	     the number of completed years of service, and is added
89.4 	     to the applicable future salary increase assumption.  The
89.5 	     designated percent is 0.2 percent for the correctional state
89.6 	     employees retirement plan, the State Patrol retirement
89.7 	     plan, the public employees police and fire plan, and the
89.8 	     local government correctional service plan; 0.3 percent
89.9 	     for the general state employees retirement plan, the
89.10 	     general public employees retirement plan, the teachers
89.11 	     retirement plan, the Duluth Teachers Retirement Fund
89.12 	     Association, and the St. Paul Teachers Retirement Fund
89.13 	     Association; and 0.4 percent for the Minneapolis Teachers
89.14 	     Retirement Fund Association.
89.15 	
89.16 	          The ultimate future salary increase assumption is:
89.17 	
89.18 	     age  A     B      C     D     E F G F H G 
89.19 	     16  6.95% 6.95% 11.50% 8.20% 8.00% 6.50% 6.90% 7.7500
89.20 	     17  6.906.9011.508.158.006.50 6.90  7.7500
89.21 	     18  6.856.8511.508.108.006.50 6.90  7.7500
89.22 	     19  6.806.8011.508.058.006.50 6.90  7.7500
89.23 	     20  6.756.4011.506.006.906.50 6.90  7.7500
89.24 	     21  6.756.4011.506.006.906.50 6.90  7.1454
89.25 	     22  6.756.4011.006.006.906.50 6.90  7.0725
89.26 	     23  6.756.4010.506.006.856.50 6.85  7.0544
89.27 	     24  6.756.4010.006.006.806.50 6.80  7.0363
89.28 	     25  6.756.409.506.006.756.50 6.75  7.0000
89.29 	     26  6.756.369.206.006.706.50 6.70  7.0000
89.30 	     27  6.756.328.906.006.656.50 6.65  7.0000
89.31 	     28  6.756.288.606.006.606.50 6.60  7.0000
89.32 	     29  6.756.248.306.006.556.50 6.55  7.0000
89.33 	     30  6.756.208.006.006.506.50 6.50  7.0000
89.34 	     31  6.756.167.806.006.456.50 6.45  7.0000
89.35 	     32  6.756.127.606.006.406.50 6.40  7.0000
89.36 	     33  6.756.087.406.006.356.50 6.35  7.0000
89.37 	     34  6.756.047.206.006.306.50 6.30  7.0000
89.38 	     35  6.756.007.006.006.256.50 6.25  7.0000
89.39 	     36  6.755.966.806.006.206.50 6.20  6.9019
89.40 	     37  6.755.926.606.006.156.50 6.15  6.8074
89.41 	     38  6.755.886.405.906.106.50 6.10  6.7125
89.42 	     39  6.755.846.205.806.056.50 6.05  6.6054
89.43 	     40  6.755.806.005.706.006.50 6.00  6.5000
89.44 	     41  6.755.765.905.605.906.50 5.95  6.3540
89.45 	     42  6.755.725.805.505.806.50 5.90  6.2087
89.46 	     43  6.655.685.705.405.706.50 5.85  6.0622
89.47 	     44  6.555.645.605.305.606.50 5.80  5.9048
89.48 	     45  6.455.605.505.205.506.50 5.75  5.7500
89.49 	     46  6.355.565.455.105.406.40 5.70  5.6940
89.50 	     47  6.255.525.405.005.306.30 5.65  5.6375
89.51 	     48  6.155.485.355.005.206.20 5.60  5.5822
89.52 	     49  6.055.445.305.005.106.10 5.55  5.5404
89.53 	     50  5.955.405.255.005.006.00 5.50  5.5000
89.54 	     51  5.855.365.255.005.005.90 5.45  5.4384
89.55 	     52  5.755.325.255.005.005.80 5.40  5.3776
89.56 	     53  5.655.285.255.005.005.70 5.35  5.3167
89.57 	     54  5.555.245.255.005.005.60 5.30  5.2826
89.58 	     55  5.455.205.255.005.005.50 5.25  5.2500
89.59 	     56  5.355.165.255.005.005.40 5.20  5.2500
89.60 	     57  5.255.125.255.005.005.30 5.15  5.2500
89.61 	     58  5.255.085.255.105.005.20 5.10  5.2500
89.62 	     59  5.255.045.255.205.005.10 5.05  5.2500
89.63 	     60  5.255.005.255.305.005.00 5.00  5.2500
89.64 	     61  5.255.005.255.405.005.00 5.00  5.2500
89.65 	     62  5.255.005.255.505.005.00 5.00  5.2500
89.66 	     63  5.255.005.255.605.005.00 5.00  5.2500
89.67 	     64  5.255.005.255.705.005.00 5.00  5.2500
89.68 	     65  5.255.005.255.705.005.00 5.00  5.2500
89.69 	     66  5.255.005.255.705.005.00 5.00  5.2500
89.70 	     67  5.255.005.255.705.005.00 5.00  5.2500
89.71 	     68  5.255.005.255.705.005.00 5.00  5.2500
90.1 	     69  5.255.005.255.705.005.00 5.00  5.2500
90.2 	     70  5.255.005.255.705.005.00 5.00  5.2500
90.3 	     71  5.255.00         5.70
90.4 	(c) The actuarial valuation must use the applicable
90.5 	following payroll growth assumption for calculating the
90.6 	amortization requirement for the unfunded actuarial accrued
90.7 	liability where the amortization retirement is calculated as a
90.8 	level percentage of an increasing payroll:
90.9 	payroll growth
90.10 	                  plan                             assumption
90.11 	     general state employees retirement plan          5.00%
90.12 	     correctional state employees retirement plan     5.00
90.13 	     State Patrol retirement plan                     5.00
90.14 	     legislators retirement plan                      5.00
90.15 	     elective state officers retirement plan          5.00
90.16 	     judges retirement plan                           5.00
90.17 	     general public employees retirement plan         6.00
90.18 	     public employees police and fire
90.19 	         retirement plan                              6.00
90.20 	     local government correctional service
90.21 	         retirement plan                              6.00
90.22 	     teachers retirement plan                         5.00
90.23 	     Duluth teachers retirement plan                  5.00
90.24 	Minneapolis teachers retirement plan 5.00 
90.25 	     St. Paul teachers retirement plan                5.00

90.26 	Sec. 32. Minnesota Statutes 2004, section 356.215,
90.27 	subdivision 11, is amended to read:
90.28 		Subd. 11.Amortization contributions.  (a) In addition to
90.29 	the exhibit indicating the level normal cost, the actuarial
90.30 	valuation must contain an exhibit indicating the additional
90.31 	annual contribution sufficient to amortize the unfunded
90.32 	actuarial accrued liability.  For funds governed by chapters 3A,
90.33 	352, 352B, 352C, 353, 354, 354A, and 490, the additional
90.34 	contribution must be calculated on a level percentage of covered
90.35 	payroll basis by the established date for full funding in effect
90.36 	when the valuation is prepared.  For funds governed by chapter
90.37 	3A, sections 352.90 through 352.951, chapters 352B, 352C,
90.38 	sections 353.63 through 353.68, and chapters 353C, 354A, and
90.39 	490, the level percent additional contribution must be
90.40 	calculated assuming annual payroll growth of 6.5 percent.  For
90.41 	funds governed by sections 352.01 through 352.86 and chapter
90.42 	354, the level percent additional contribution must be
90.43 	calculated assuming an annual payroll growth of five percent.
90.44 	For the fund governed by sections 353.01 through 353.46, the
90.45 	level percent additional contribution must be calculated
91.1 	assuming an annual payroll growth of six percent.  For all other
91.2 	funds, the additional annual contribution must be calculated on
91.3 	a level annual dollar amount basis.
91.4 	(b) For any fund other than the Minneapolis Employees
91.5 	Retirement Fund and the Public Employees Retirement Association
91.6 	general plan, if there has not been a change in the actuarial
91.7 	assumptions used for calculating the actuarial accrued liability
91.8 	of the fund, a change in the benefit plan governing annuities
91.9 	and benefits payable from the fund, a change in the actuarial
91.10 	cost method used in calculating the actuarial accrued liability
91.11 	of all or a portion of the fund, or a combination of the three,
91.12 	which change or changes by itself or by themselves without
91.13 	inclusion of any other items of increase or decrease produce a
91.14 	net increase in the unfunded actuarial accrued liability of the
91.15 	fund, the established date for full funding is the first
91.16 	actuarial valuation date occurring after June 1, 2020.
91.17 	(c) For any fund or plan other than the Minneapolis
91.18 	Employees Retirement Fund and the Public Employees Retirement
91.19 	Association general plan, if there has been a change in any or
91.20 	all of the actuarial assumptions used for calculating the
91.21 	actuarial accrued liability of the fund, a change in the benefit
91.22 	plan governing annuities and benefits payable from the fund, a
91.23 	change in the actuarial cost method used in calculating the
91.24 	actuarial accrued liability of all or a portion of the fund, or
91.25 	a combination of the three, and the change or changes, by itself
91.26 	or by themselves and without inclusion of any other items of
91.27 	increase or decrease, produce a net increase in the unfunded
91.28 	actuarial accrued liability in the fund, the established date
91.29 	for full funding must be determined using the following
91.30 	procedure:
91.31 	(i) the unfunded actuarial accrued liability of the fund
91.32 	must be determined in accordance with the plan provisions
91.33 	governing annuities and retirement benefits and the actuarial
91.34 	assumptions in effect before an applicable change;
91.35 	(ii) the level annual dollar contribution or level
91.36 	percentage, whichever is applicable, needed to amortize the
92.1 	unfunded actuarial accrued liability amount determined under
92.2 	item (i) by the established date for full funding in effect
92.3 	before the change must be calculated using the interest
92.4 	assumption specified in subdivision 8 in effect before the
92.5 	change;
92.6 	(iii) the unfunded actuarial accrued liability of the fund
92.7 	must be determined in accordance with any new plan provisions
92.8 	governing annuities and benefits payable from the fund and any
92.9 	new actuarial assumptions and the remaining plan provisions
92.10 	governing annuities and benefits payable from the fund and
92.11 	actuarial assumptions in effect before the change;
92.12 	(iv) the level annual dollar contribution or level
92.13 	percentage, whichever is applicable, needed to amortize the
92.14 	difference between the unfunded actuarial accrued liability
92.15 	amount calculated under item (i) and the unfunded actuarial
92.16 	accrued liability amount calculated under item (iii) over a
92.17 	period of 30 years from the end of the plan year in which the
92.18 	applicable change is effective must be calculated using the
92.19 	applicable interest assumption specified in subdivision 8 in
92.20 	effect after any applicable change;
92.21 	(v) the level annual dollar or level percentage
92.22 	amortization contribution under item (iv) must be added to the
92.23 	level annual dollar amortization contribution or level
92.24 	percentage calculated under item (ii);
92.25 	(vi) the period in which the unfunded actuarial accrued
92.26 	liability amount determined in item (iii) is amortized by the
92.27 	total level annual dollar or level percentage amortization
92.28 	contribution computed under item (v) must be calculated using
92.29 	the interest assumption specified in subdivision 8 in effect
92.30 	after any applicable change, rounded to the nearest integral
92.31 	number of years, but not to exceed 30 years from the end of the
92.32 	plan year in which the determination of the established date for
92.33 	full funding using the procedure set forth in this clause is
92.34 	made and not to be less than the period of years beginning in
92.35 	the plan year in which the determination of the established date
92.36 	for full funding using the procedure set forth in this clause is
93.1 	made and ending by the date for full funding in effect before
93.2 	the change; and
93.3 	(vii) the period determined under item (vi) must be added
93.4 	to the date as of which the actuarial valuation was prepared and
93.5 	the date obtained is the new established date for full funding.
93.6 	(d) For the Minneapolis Employees Retirement Fund, the
93.7 	established date for full funding is June 30, 2020.
93.8 	(e) For the general employees retirement plan of the Public
93.9 	Employees Retirement Association, the established date for full
93.10 	funding is June 30, 2031.
93.11 	(f) For the Teachers Retirement Association, the
93.12 	established date for full funding is June 30, 2035.
93.13 	(g) For the retirement plans for which the annual actuarial
93.14 	valuation indicates an excess of valuation assets over the
93.15 	actuarial accrued liability, the valuation assets in excess of
93.16 	the actuarial accrued liability must be recognized as a
93.17 	reduction in the current contribution requirements by an amount
93.18 	equal to the amortization of the excess expressed as a level
93.19 	percentage of pay over a 30-year period beginning anew with each
93.20 	annual actuarial valuation of the plan.

93.21 	Sec. 33. Minnesota Statutes 2004, section 356.30,
93.22 	subdivision 3, is amended to read:
93.23 		Subd. 3.Covered plans.  This section applies to the
93.24 	following retirement plans:
93.25 	(1) the general state employees retirement plan of the
93.26 	Minnesota State Retirement System, established under chapter
93.27 	352;
93.28 	(2) the correctional state employees retirement plan of the
93.29 	Minnesota State Retirement System, established under chapter
93.30 	352;
93.31 	(3) the unclassified employees retirement program,
93.32 	established under chapter 352D;
93.33 	(4) the State Patrol retirement plan, established under
93.34 	chapter 352B;
93.35 	(5) the legislators retirement plan, established under
93.36 	chapter 3A;
94.1 	(6) the elective state officers' retirement plan,
94.2 	established under chapter 352C;
94.3 	(7) the general employees retirement plan of the Public
94.4 	Employees Retirement Association, established under chapter 353;
94.5 	(8) the public employees police and fire retirement plan of
94.6 	the Public Employees Retirement Association, established under
94.7 	chapter 353;
94.8 	(9) the local government correctional service retirement
94.9 	plan of the Public Employees Retirement Association, established
94.10 	under chapter 353E;
94.11 	(10) the Teachers Retirement Association, established under
94.12 	chapter 354;
94.13 	(11) the Minneapolis Employees Retirement Fund, established
94.14 	under chapter 422A;
94.15 	(12) the Minneapolis Teachers Retirement Fund Association,
94.16 	established under chapter 354A;
94.17 	(13) the St. Paul Teachers Retirement Fund Association,
94.18 	established under chapter 354A;
94.19 	(14) (13) the Duluth Teachers Retirement Fund Association,
94.20 	established under chapter 354A; and
94.21 	(15) (14) the judges' retirement fund, established by
94.22 	sections 490.121 to 490.132.

94.23 	Sec. 34. Minnesota Statutes 2004, section 356.302,
94.24 	subdivision 7, is amended to read:
94.25 		Subd. 7.Covered retirement plans.  This section applies
94.26 	to the following retirement plans:
94.27 	(1) the general state employees retirement plan of the
94.28 	Minnesota State Retirement System, established by chapter 352;
94.29 	(2) the unclassified state employees retirement program of
94.30 	the Minnesota State Retirement System, established by chapter
94.31 	352D;
94.32 	(3) the general employees retirement plan of the Public
94.33 	Employees Retirement Association, established by chapter 353;
94.34 	(4) the Teachers Retirement Association, established by
94.35 	chapter 354;
94.36 	(5) the Duluth Teachers Retirement Fund Association,
95.1 	established by chapter 354A;
95.2 	(6) the Minneapolis Teachers Retirement Fund Association,
95.3 	established by chapter 354A;
95.4 	(7) the St. Paul Teachers Retirement Fund Association,
95.5 	established by chapter 354A;
95.6 	(8) (7) the Minneapolis Employees Retirement Fund,
95.7 	established by chapter 422A;
95.8 	(9) (8) the state correctional employees retirement plan of
95.9 	the Minnesota State Retirement System, established by chapter
95.10 	352;
95.11 	(10) (9) the State Patrol retirement plan, established by
95.12 	chapter 352B;
95.13 	(11) (10) the public employees police and fire plan of the
95.14 	Public Employees Retirement Association, established by chapter
95.15 	353;
95.16 	(12) (11) the local government correctional service
95.17 	retirement plan of the Public Employees Retirement Association,
95.18 	established by chapter 353E; and
95.19 	(13) (12) the judges' retirement plan, established by
95.20 	sections 490.121 to 490.132.

95.21 	Sec. 35. Minnesota Statutes 2004, section 356.303,
95.22 	subdivision 4, is amended to read:
95.23 		Subd. 4.Covered retirement plans.  This section applies
95.24 	to the following retirement plans:
95.25 	(1) the legislators retirement plan, established by chapter
95.26 	3A;
95.27 	(2) the general state employees retirement plan of the
95.28 	Minnesota State Retirement System, established by chapter 352;
95.29 	(3) the correctional state employees retirement plan of the
95.30 	Minnesota State Retirement System, established by chapter 352;
95.31 	(4) the State Patrol retirement plan, established by
95.32 	chapter 352B;
95.33 	(5) the elective state officers retirement plan,
95.34 	established by chapter 352C;
95.35 	(6) the unclassified state employees retirement program,
95.36 	established by chapter 352D;
96.1 	(7) the general employees retirement plan of the Public
96.2 	Employees Retirement Association, established by chapter 353;
96.3 	(8) the public employees police and fire plan of the Public
96.4 	Employees Retirement Association, established by chapter 353;
96.5 	(9) the local government correctional service retirement
96.6 	plan of the Public Employees Retirement Association, established
96.7 	by chapter 353E;
96.8 	(10) the Teachers Retirement Association, established by
96.9 	chapter 354;
96.10 	(11) the Duluth Teachers Retirement Fund Association,
96.11 	established by chapter 354A;
96.12 	(12) the Minneapolis Teachers Retirement Fund Association,
96.13 	established by chapter 354A;
96.14 	(13) the St. Paul Teachers Retirement Fund Association,
96.15 	established by chapter 354A;
96.16 	(14) (13) the Minneapolis Employees Retirement Fund,
96.17 	established by chapter 422A; and
96.18 	(15) (14) the judges' retirement fund, established by
96.19 	sections 490.121 to 490.132.

96.20 	Sec. 36. Minnesota Statutes 2004, section 356.315, is
96.21 	amended by adding a subdivision to read:
96.22 		Subd. 1a.Coordinated plan members. The applicable
96.23 	benefit accrual rate is 1.5 percent.

96.24 	Sec. 37. Minnesota Statutes 2004, section 356.42,
96.25 	subdivision 3, is amended to read:
96.26 		Subd. 3.Covered retirement plans.  The postretirement
96.27 	adjustment provided in this section applies to the following
96.28 	retirement funds:
96.29 	(1) the general employees retirement plans of the Public
96.30 	Employees Retirement Association;
96.31 	(2) the public employees police and fire plan of the Public
96.32 	Employees Retirement Association;
96.33 	(3) the teachers retirement association;
96.34 	(4) the State Patrol retirement plan;
96.35 	(5) the state employees retirement plan of the Minnesota
96.36 	State Retirement System;
97.1 	(6) the Minneapolis Teachers Retirement Fund Association
97.2 	established under chapter 354A;
97.3 	(7) the St. Paul Teachers Retirement Fund Association
97.4 	established under chapter 354A; and
97.5 	(8) (7) the Duluth Teachers Retirement Fund Association
97.6 	established under chapter 354A.

97.7 	Sec. 38. Minnesota Statutes 2004, section 356.465,
97.8 	subdivision 3, is amended to read:
97.9 		Subd. 3.Covered retirement plans.  The provisions of
97.10 	this section apply to the following retirement plans:
97.11 	(1) the general state employees retirement plan of the
97.12 	Minnesota State Retirement System established under chapter 352;
97.13 	(2) the correctional state employees retirement plan of the
97.14 	Minnesota State Retirement System established under chapter 352;
97.15 	(3) the State Patrol retirement plan established under
97.16 	chapter 352B;
97.17 	(4) the legislators retirement plan established under
97.18 	chapter 3A;
97.19 	(5) the judges retirement plan established under chapter
97.20 	490;
97.21 	(6) the general employees retirement plan of the Public
97.22 	Employees Retirement Association established under chapter 353;
97.23 	(7) the public employees police and fire plan of the Public
97.24 	Employees Retirement Association established under chapter 353;
97.25 	(8) the teachers retirement plan established under chapter
97.26 	354;
97.27 	(9) the Duluth Teachers Retirement Fund Association
97.28 	established under chapter 354A;
97.29 	(10) the St. Paul Teachers Retirement Fund Association
97.30 	established under chapter 354A;
97.31 	(11) the Minneapolis Teachers Retirement Fund Association
97.32 	established under chapter 354A;
97.33 	(12) the Minneapolis employees retirement plan established
97.34 	under chapter 422A;
97.35 	(13) (12) the Minneapolis Firefighters Relief Association
97.36 	established under chapter 423C;
98.1 	(14) (13) the Minneapolis Police Relief Association
98.2 	established under chapter 423B; and
98.3 	(15) (14) the local government correctional service
98.4 	retirement plan of the Public Employees Retirement Association
98.5 	established under chapter 353E.

98.6 	Sec. 39. Minnesota Statutes 2004, section 423A.02,
98.7 	subdivision 1b, is amended to read:
98.8 		Subd. 1b.Additional amortization state aid.  (a)
98.9 	Annually, on October 1, the commissioner of revenue shall
98.10 	allocate the additional amortization state aid transferred under
98.11 	section 69.021, subdivision 11, to:
98.12 	(1) all police or salaried firefighters relief associations
98.13 	governed by and in full compliance with the requirements of
98.14 	section 69.77, that had an unfunded actuarial accrued liability
98.15 	in the actuarial valuation prepared under sections 356.215 and
98.16 	356.216 as of the preceding December 31;
98.17 	(2) all local police or salaried firefighter consolidation
98.18 	accounts governed by chapter 353A that are certified by the
98.19 	executive director of the public employees retirement
98.20 	association as having for the current fiscal year an additional
98.21 	municipal contribution amount under section 353A.09, subdivision
98.22 	5, paragraph (b), and that have implemented section 353A.083,
98.23 	subdivision 1, if the effective date of the consolidation
98.24 	preceded May 24, 1993, and that have implemented section
98.25 	353A.083, subdivision 2, if the effective date of the
98.26 	consolidation preceded June 1, 1995; and
98.27 	(3) the municipalities that are required to make an
98.28 	additional municipal contribution under section 353.665,
98.29 	subdivision 8, for the duration of the required additional
98.30 	contribution.
98.31 	(b) The commissioner shall allocate the state aid on the
98.32 	basis of the proportional share of the relief association or
98.33 	consolidation account of the total unfunded actuarial accrued
98.34 	liability of all recipient relief associations and consolidation
98.35 	accounts as of December 31, 1993, for relief associations, and
98.36 	as of June 30, 1994, for consolidation accounts.
99.1 	(c) Beginning October 1, 2000, and annually thereafter, the
99.2 	commissioner shall allocate the state aid, including any state
99.3 	aid in excess of the limitation in subdivision 4, on the
99.4 	following basis:
99.5 	(1) 64.5 percent to the municipalities to which section
99.6 	353.665, subdivision 8, paragraph (b), or 353A.09, subdivision
99.7 	5, paragraph (b), apply for distribution in accordance with
99.8 	paragraph (b) and subject to the limitation in subdivision 4;
99.9 	(2) 34.2 percent to the city of Minneapolis to fund any
99.10 	unfunded actuarial accrued liability in the actuarial valuation
99.11 	prepared under sections 356.215 and 356.216 as of the preceding
99.12 	December 31 for the Minneapolis Police Relief Association or the
99.13 	Minneapolis Fire Department Relief Association; and
99.14 	(3) 1.3 percent to the city of Virginia to fund any
99.15 	unfunded actuarial accrued liability in the actuarial valuation
99.16 	prepared under sections 356.215 and 356.216 as of the preceding
99.17 	December 31 for the Virginia Fire Department Relief Association.
99.18 	If there is no unfunded actuarial accrued liability in both
99.19 	the Minneapolis Police Relief Association and the Minneapolis
99.20 	Fire Department Relief Association as disclosed in the most
99.21 	recent actuarial valuations for the relief associations prepared
99.22 	under sections 356.215 and 356.216, the commissioner shall
99.23 	allocate that 34.2 percent of the aid as follows:  49 percent to
99.24 	the Minneapolis Teachers Retirement Fund Association, 21 percent
99.25 	to the St. Paul Teachers Retirement Fund Association, and 30
99.26 	percent as additional funding to support minimum fire state aid
99.27 	for volunteer firefighters relief associations.  If there is no
99.28 	unfunded actuarial accrued liability in the Virginia Fire
99.29 	Department Relief Association as disclosed in the most recent
99.30 	actuarial valuation for the relief association prepared under
99.31 	sections 356.215 and 356.216, the commissioner shall allocate
99.32 	that 1.3 percent of the aid as follows:  49 percent to the
99.33 	Minneapolis Teachers Retirement Fund Association, 21 percent to
99.34 	the St. Paul Teachers Retirement Fund Association, and 30
99.35 	percent as additional funding to support minimum fire state aid
99.36 	for volunteer firefighters relief associations.  The allocation
100.1 	must be made by the commissioner at the same time and under the
100.2 	same procedures as specified in subdivision 3.  With respect to
100.3 	the Minneapolis Teachers Retirement Fund Association or the St.
100.4 	Paul Teachers Retirement Fund Association, annually, beginning
100.5 	on July 1, 2005, if the applicable teacher's association
100.6 	five-year average time-weighted rate of investment return does
100.7 	not equal or exceed the performance of a composite portfolio
100.8 	assumed passively managed (indexed) invested ten percent in cash
100.9 	equivalents, 60 percent in bonds and similar debt securities,
100.10 	and 30 percent in domestic stock calculated using the formula
100.11 	under section 11A.04, clause (11), the aid allocation to that
100.12 	retirement fund under this section ceases until the five-year
100.13 	annual rate of investment return equals or exceeds the
100.14 	performance of that composite portfolio.
100.15 	(d) The amounts required under this subdivision are
100.16 	annually appropriated to the commissioner of revenue.

100.17 	Sec. 40. FULL FUNDING DATE.
 100.18 	Notwithstanding any other law to the contrary, for the
100.19 	Teachers Retirement Association, the established date for full
100.20 	funding is 2035.

100.21 	Sec. 41. MTRFA EMPLOYEE JOB PREFERENCE.
 100.22 	An employee of the Minneapolis Teachers Retirement Fund
100.23 	Association on the date of enactment has an employment
100.24 	preference for subsequent employment by the Teachers Retirement
100.25 	Association, the Minnesota State Retirement System, or the
100.26 	Public Employees Retirement Association equivalent to the
100.27 	preference provided to armed forces veterans under state law and
100.28 	Department of Employee Relations practice.

100.29 	Sec. 42. MTRFA ARTICLES AND BYLAWS; REPEAL;
100.30 	APPLICABILITY.
 100.31 	(a) The articles of incorporation and bylaws of the
100.32 	Minneapolis Teachers Retirement Fund Association are repealed
100.33 	and have application only as provided in section 7, subdivision
100.34 	6, and paragraph (b).
100.35 	(b) The articles of incorporation and bylaws of the
100.36 	Minneapolis Teachers Retirement Fund Association only apply to
101.1 	members of the former Minneapolis Teachers Retirement Fund
101.2 	Association with service credit in the plan on or before June
101.3 	30, 2005, and apply solely for purposes of determining the
101.4 	retirement annuity for or benefit on behalf of a member of the
101.5 	basic program of that retirement plan.
101.6 	(c) No annuity adjustment or increase under article 30 of
101.7 	the articles of incorporation of the Minneapolis Teachers
101.8 	Retirement Fund Association is applicable or payable after June
101.9 	30, 2005.

101.10 	Sec. 43. APPROPRIATION.
 101.11 	$3,000,000 in fiscal year 2006 and $3,000,000 in fiscal
101.12 	year 2007 are appropriated from the general fund to make state
101.13 	payments required under Minnesota Statutes, section 354.42,
101.14 	subdivision 3.

101.15 	Sec. 44. REPEALER.
 101.16 	Minnesota Statutes 2004, sections 354A.051; 354A.105;
101.17 	354A.23, subdivision 1; and 354A.28, are repealed.

101.18 	Sec. 45. EFFECTIVE DATE.
 101.19 	Sections 1 to 44 are effective the day following final
101.20 	enactment.

101.21 	ARTICLE 5
101.22 	OTHER APPROPRIATIONS

101.23 	Section 1. APPROPRIATION; PUBLIC TRANSIT.
 101.24 		Subdivision 1.Metropolitan council. $40,000,000 is
101.25 	appropriated from the general fund to the Metropolitan Council
101.26 	in fiscal year 2006 for public transit operations and
101.27 	assistance, including operation of Metro Mobility.  This
101.28 	appropriation is available until June 30, 2007.  This
101.29 	appropriation is in addition to any other appropriation for this
101.30 	purpose.
101.31 		Subd. 2.Commissioner of transportation. $6,000,000 is
101.32 	appropriated from the general fund to the commissioner of
101.33 	transportation in fiscal year 2006 for public transit assistance
101.34 	under Minnesota Statutes, section 174.24.  This appropriation is
101.35 	available until June 30, 2007.  This appropriation is in
101.36 	addition to any other appropriation for this purpose.

102.1 	Sec. 2. SALARY SUPPLEMENT.
 102.2 	(a) $7,000,000 for the fiscal year ending June 30, 2006,
102.3 	and $14,000,000 for the fiscal year ending June 30, 2007, is
102.4 	appropriated from the general fund to the commissioner of
102.5 	finance to pay compensation and economic benefit increases to
102.6 	employees in the executive branch of state government.
102.7 	(b) The amount necessary to pay compensation and economic
102.8 	benefit from other funds in the state treasury are appropriated
102.9 	from those funds.  The amount of the appropriation for this
102.10 	purpose from each fund must not exceed:  (1) in the fiscal year
102.11 	ending June 30, 2006, one percent of the amount spent from each
102.12 	fund for employee compensation in the fiscal year ending June
102.13 	30, 2005; and (2) in the fiscal year ending June 30, 2007, two
102.14 	percent of the amount spent from each fund for employee
102.15 	compensation in the fiscal year ending June 30, 2005.
102.16 	(c) The compensation and economic benefit increases covered
102.17 	by this section are those authorized by current law or resulting
102.18 	from collective bargaining agreements given interim approval by
102.19 	the Legislative Coordinating Commission Subcommittee on Employee
102.20 	Relations.  This section does not apply to increases granted to
102.21 	faculty members at the Minnesota State Colleges and Universities.