HF 163

3rd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to local government; authorizing the city of Duluth to establish accounts
to pay for postemployment benefits owed to retired employees and to generate
revenue dedicated to meet certain city obligations; requiring an analysis and
report; appropriating money; proposing coding for new law in Minnesota
Statutes, chapters 11A; 353.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [11A.235] ACCOUNT FOR INVESTMENT OF CERTAIN DULUTH
FUNDS OR ASSETS.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The State Board of Investment, when requested by
the city of Duluth, may invest the funds or assets of the city's community investment trust
fund in a special account for that purpose in the combined investment funds established
in section 11A.14, subject to the policies and procedures established by the State Board
of Investment. Use of the funds in the account is restricted to debt service payments for
the city's street improvement program or to any other use approved in accordance with
Section 54(E) of the home rule charter of the city of Duluth.
new text end

new text begin Subd. 2. new text end

new text begin Account maintenance and investment. new text end

new text begin The city may deposit money in
the account and may withdraw money from the account for purposes approved by the
Duluth City Council in accordance with Section 54(E) of the home rule charter of the city
of Duluth. Such transactions must be at a time and in a manner required by the executive
director of the State Board of Investment. Investment earnings must be credited to the
account of the city. The account may be terminated by the city at any time.
new text end

new text begin EFFECTIVE DATE; LOCAL APPROVAL. new text end

new text begin This section is effective the day
following the day on which the chief clerical officer of the city of Duluth timely completes
its compliance with Minnesota Statutes, section 645.021, subdivision 3, following
approval by the Duluth City Council in compliance with Minnesota Statutes, section
645.021, subdivision 2.
new text end

Sec. 2.

new text begin [353.95] ACCOUNT FOR DULUTH POSTEMPLOYMENT BENEFITS.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The Public Employees Retirement Association may
administer an account representing the irrevocable trust fund established by the city of
Duluth to be used only to fund and pay for the postemployment benefits owed to retired
employees in accordance with language contained in labor agreements between the city
and its employee bargaining units, or between participating subgroups in the city's health
plan and their retirees. The city of Duluth investment committee shall serve as trustee
of the irrevocable trust.
new text end

new text begin Subd. 2. new text end

new text begin Definition. new text end

new text begin For purposes of this section, "postemployment benefit" means
a benefit giving rise to a liability under Statement 45 of the Governmental Accounting
Standards Board, and therefore does not include benefits to be paid by a Minnesota public
pension plan listed in section 356.20, subdivision 2, or 356.30, subdivision 3, and benefits
provided on a defined contribution individual account basis.
new text end

new text begin Subd. 3. new text end

new text begin Account maintenance and investment. new text end

new text begin (a) The Public Employees
Retirement Association may charge the city fees for reasonable administrative costs,
and the amount of those fees is appropriated to the association from the account. The
Public Employees Retirement Association may establish other terms and conditions for
participation in the account.
new text end

new text begin (b) The Public Employees Retirement Association must certify all money in the
account to the State Board of Investment for investment in the combined investment funds
established in section 11A.14, subject to the policies and procedures established by the
State Board of Investment. Investment earnings must be credited to the account of the city.
new text end

new text begin Subd. 4. new text end

new text begin Management and termination of account. new text end

new text begin The city may deposit money
in the account and may withdraw money from the account as needed for postemployment
benefits owed on behalf of retired employees of the city or its subgroups. Such transactions
must be at a time and in a manner required by the executive director of the Public
Employees Retirement Association. The city of Duluth must ensure that the investment
and management of the assets complies with the prudent investor rule in section 501B.151
and that withdrawals comply with the requirements of this section. The account may
be terminated only to the extent the city's postemployment benefit actuarial liability is
satisfied or otherwise defeased.
new text end

new text begin Subd. 5. new text end

new text begin Status of irrevocable fund. new text end

new text begin (a) All money in the account representing the
irrevocable fund created in this section is held in trust for the exclusive benefit of retired
employees of the city and of subgroups participating in the city's health plan, and is not
subject to claims by creditors of the state, the city, the city's subgroups, or the current and
former employees of the city or its subgroups.
new text end

new text begin (b) The irrevocable trust fund underlying the account created in this section must be
deemed an arrangement equivalent to a trust for all legal purposes.
new text end

new text begin EFFECTIVE DATE; LOCAL APPROVAL. new text end

new text begin This section is effective the day
following the day on which the chief clerical officer of the city of Duluth timely completes
its compliance with Minnesota Statutes, section 645.021, subdivision 3, following
approval by the Duluth City Council in compliance with Minnesota Statutes, section
645.021, subdivision 2.
new text end

Sec. 3. new text begin INTENT AND PURPOSE; NO PRECEDENT.
new text end

new text begin (a) Sections 1 and 2 are intended to resolve specific expenditure and funding issues
that have arisen in the city of Duluth.
new text end

new text begin (b) Nothing in sections 1 and 2 may be interpreted as establishing a precedent for
potential solutions to postemployment benefit expenditure and funding problems in other
jurisdictions that may be fashioned by the 2007 legislature.
new text end

Sec. 4. new text begin ADDITIONAL RATE OF RETURN ANALYSIS; ANNUAL REPORT
BY STATE BOARD OF INVESTMENT.
new text end

new text begin (a) The State Board of Investment shall annually perform an additional analysis of
the rate of investment return using a value-added analysis for the investment fund into
which the irrevocable trust fund assets have been deposited under section 2.
new text end

new text begin (b) In making its value-added investment performance analysis, the board shall
compare its rate of return with the rates of return that it could have achieved in treasury bill
investments and with the rates of return that it could have achieved in investments in the
applicable indices combined, in a manner that adjusts for the board's actual portfolio mix.
new text end

new text begin (c) The board shall annually file a report on the additional rate of return analysis
with the Legislative Reference Library on or before November 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2007.
new text end