HF 647

1st Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to retirement; increasing pension benefit 
  1.3             accrual rates; adjusting financing for pension plans; 
  1.4             adding supplemental financial conditions information 
  1.5             for pension funds; reducing appropriations; modifying 
  1.6             or establishing various pension aids; appropriating 
  1.7             money; amending Minnesota Statutes 1996, sections 
  1.8             3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 
  1.9             and 4; 3A.07; 11A.18, subdivision 9; 352.01, 
  1.10            subdivision 25; 352.04, subdivisions 2 and 3; 352.115, 
  1.11            subdivision 3; 352.72, subdivision 2; 352.92, 
  1.12            subdivisions 1 and 2; 352.93, subdivisions 2, 3, and 
  1.13            by adding a subdivision; 352.95, subdivisions 1 and 5; 
  1.14            352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 
  1.15            2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a 
  1.16            subdivision; 352C.031, subdivision 4; 352C.033; 
  1.17            353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 
  1.18            353.29, subdivision 3; 353.651, subdivision 3; 
  1.19            353.656, subdivision 1; 353.71, subdivision 2; 
  1.20            353A.08, subdivisions 1 and 2; 353A.083, by adding a 
  1.21            subdivision; 354.05, subdivision 38; 354.42, 
  1.22            subdivisions 2, 3, and 5; 354.44, subdivision 6, and 
  1.23            by adding a subdivision; 354.53, subdivision 1; 
  1.24            354.55, subdivision 11; 354A.011, subdivision 15a; 
  1.25            354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, 
  1.26            subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, 
  1.27            subdivisions 2, 4d, and 4g; 356.217; 356.30, 
  1.28            subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, 
  1.29            subdivision 8; 422A.151; 423B.01, subdivision 9, and 
  1.30            by adding a subdivision; 423B.06, by adding a 
  1.31            subdivision; 423B.07; 423B.09, subdivision 1, and by 
  1.32            adding a subdivision; 423B.10, subdivision 1; 423B.15, 
  1.33            subdivisions 2, 3, 6, and by adding a subdivision; and 
  1.34            490.124, subdivisions 1 and 5; Laws 1965, chapter 519, 
  1.35            section 1, as amended; Laws 1979, chapter 109, section 
  1.36            1, as amended; Laws 1989, chapter 319, article 19, 
  1.37            section 7, subdivisions 1, as amended, 3, 4, as 
  1.38            amended, and 7; and Laws 1993, chapter 125, article 1, 
  1.39            section 1; proposing coding for new law in Minnesota 
  1.40            Statutes, chapters 124; 273; 352; 352C; 352E; 354A; 
  1.41            and 356; repealing Minnesota Statutes 1996, sections 
  1.42            124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 
  1.43            353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 
  1.44            353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 
  1.45            356.88, subdivision 2; and Laws 1985, chapter 259, 
  1.46            section 3; and Laws 1993, chapter 336, article 3, 
  2.1             section 1. 
  2.2   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.3                              ARTICLE 1 
  2.4                    PENSION UNIFORMITY PROVISIONS 
  2.5      Section 1.  Minnesota Statutes 1996, section 3.85, 
  2.6   subdivision 11, is amended to read: 
  2.7      Subd. 11.  [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The 
  2.8   commission shall contract with an established actuarial 
  2.9   consulting firm to conduct annual actuarial valuations for the 
  2.10  retirement plans named in paragraph (b).  The contract must 
  2.11  include provisions for performing cost analyses of proposals for 
  2.12  changes in benefit and funding policies.  
  2.13     (b) The contract for actuarial valuation must include the 
  2.14  following retirement plans:  
  2.15     (1) the teachers retirement plan, teachers retirement 
  2.16  association; 
  2.17     (2) the general state employees retirement plan, Minnesota 
  2.18  state retirement system; 
  2.19     (3) the correctional employees retirement plan, Minnesota 
  2.20  state retirement system; 
  2.21     (4) the state patrol retirement plan, Minnesota state 
  2.22  retirement system; 
  2.23     (5) the judges retirement plan, Minnesota state retirement 
  2.24  system; 
  2.25     (6) the Minneapolis employees retirement plan, Minneapolis 
  2.26  employees retirement fund; 
  2.27     (7) the public employees retirement plan, public employees 
  2.28  retirement association; 
  2.29     (8) the public employees police and fire plan, public 
  2.30  employees retirement association; 
  2.31     (9) the Duluth teachers retirement plan, Duluth teachers 
  2.32  retirement fund association; 
  2.33     (10) the Minneapolis teachers retirement plan, Minneapolis 
  2.34  teachers retirement fund association; 
  2.35     (11) the St. Paul teachers retirement plan, St. Paul 
  2.36  teachers retirement fund association; 
  3.1      (12) the legislators retirement plan, Minnesota state 
  3.2   retirement system; and 
  3.3      (13) the elective state officers retirement plan, Minnesota 
  3.4   state retirement system; and 
  3.5      (14) the public employees local government correctional 
  3.6   service retirement plan, public employees retirement 
  3.7   association, if there are any participants in that plan.  
  3.8      (c) The contract must specify completion of annual 
  3.9   actuarial valuation calculations on a fiscal year basis with 
  3.10  their contents as specified in section 356.215, and the 
  3.11  standards for actuarial work adopted by the commission.  
  3.12     The contract must specify completion of annual experience 
  3.13  data collection and processing and a quadrennial published 
  3.14  experience study for the plans listed in paragraph (b), clauses 
  3.15  (1), (2), and (7), as provided for in the standards for 
  3.16  actuarial work adopted by the commission.  The experience data 
  3.17  collection, processing, and analysis must evaluate the following:
  3.18     (1) individual salary progression; 
  3.19     (2) rate of return on investments based on current asset 
  3.20  value; 
  3.21     (3) payroll growth; 
  3.22     (4) mortality; 
  3.23     (5) retirement age; 
  3.24     (6) withdrawal; and 
  3.25     (7) disablement.  
  3.26     (d) The actuary retained by the commission shall annually 
  3.27  prepare a report to the legislature, including the commentary on 
  3.28  the actuarial valuation calculations for the plans named in 
  3.29  paragraph (b) and summarizing the results of the actuarial 
  3.30  valuation calculations.  The commission-retained actuary shall 
  3.31  include with the report the actuary's recommendations concerning 
  3.32  the appropriateness of the support rates to achieve proper 
  3.33  funding of the retirement funds by the required funding dates.  
  3.34  The commission-retained actuary shall, as part of the 
  3.35  quadrennial published experience study, include recommendations 
  3.36  to the legislature on the appropriateness of the actuarial 
  4.1   valuation assumptions required for evaluation in the study.  
  4.2      (e) If the actuarial gain and loss analysis in the 
  4.3   actuarial valuation calculations indicates a persistent pattern 
  4.4   of sizable gains or losses, as directed by the commission, the 
  4.5   actuary retained by the commission shall prepare a special 
  4.6   experience study for a plan listed in paragraph (b), clause (3), 
  4.7   (4), (5), (6), (8), (9), (10), (11), (12), or (13), or (14), in 
  4.8   the manner provided for in the standards for actuarial work 
  4.9   adopted by the commission. 
  4.10     (f) The term of the contract between the commission and the 
  4.11  actuary retained by the commission is two years, plus not to 
  4.12  exceed two one-year extensions before competitive bidding.  The 
  4.13  contract is subject to competitive bidding procedures as 
  4.14  specified by the commission. 
  4.15     Sec. 2.  Minnesota Statutes 1996, section 3.85, subdivision 
  4.16  12, is amended to read: 
  4.17     Subd. 12.  [ALLOCATION OF ACTUARIAL COST.] (a) The 
  4.18  commission shall assess each retirement plan specified in 
  4.19  subdivision 11, paragraph (b), the compensation paid to the 
  4.20  actuary retained by the commission for the actuarial valuation 
  4.21  calculations, quadrennial projection valuations, and quadrennial 
  4.22  experience studies.  The assessment is 100 percent of the amount 
  4.23  of contract compensation for the actuarial consulting firm 
  4.24  retained by the commission for actuarial valuation calculations, 
  4.25  including the public employees police and fire plan 
  4.26  consolidation accounts of the public employees retirement 
  4.27  association, annual experience data collection and processing, 
  4.28  and quadrennial experience studies.  
  4.29     The portion of the total assessment payable by each 
  4.30  retirement system or pension plan must be determined as follows: 
  4.31     (1) Each pension plan specified in subdivision 11, 
  4.32  paragraph (b), clauses (1) to (14) (13), must pay the following 
  4.33  indexed amount based on its total active, deferred, inactive, 
  4.34  and benefit recipient membership: 
  4.35         up to 2,000 members, inclusive         $2.55 per member 
  4.36         2,001 through 10,000 members           $1.13 per member 
  5.1          over 10,000 members                    $0.11 per member  
  5.2      The amount specified is applicable for the assessment of 
  5.3   the July 1, 1991, to June 30, 1992, fiscal year actuarial 
  5.4   compensation amounts.  For the July 1, 1992, to June 30, 1993, 
  5.5   fiscal year and subsequent fiscal year actuarial compensation 
  5.6   amounts, the amount specified must be increased at the same 
  5.7   percentage increase rate as the implicit price deflator for 
  5.8   state and local government purchases of goods and services for 
  5.9   the 12-month period ending with the first quarter of the 
  5.10  calendar year following the completion date for the actuarial 
  5.11  valuation calculations, as published by the federal Department 
  5.12  of Commerce, and rounded upward to the nearest full cent. 
  5.13     (2) The total per-member portion of the allocation must be 
  5.14  determined, and that total per-member amount must be subtracted 
  5.15  from the total amount for allocation.  Of the remainder dollar 
  5.16  amount, the following per-retirement system and per-pension plan 
  5.17  charges must be determined and the charges must be paid by the 
  5.18  system or plan: 
  5.19     (i) 37.87 percent is the total additional per-retirement 
  5.20  system charge, of which one-seventh must be paid by each 
  5.21  retirement system specified in subdivision 11, paragraph (b), 
  5.22  clauses (1), (2), (6), (7), (9), (10), and (11). 
  5.23     (ii) 62.13 percent is the total additional per-pension plan 
  5.24  charge, of which one-thirteenth must be paid by each pension 
  5.25  plan specified in subdivision 11, paragraph (b), clauses (1) to 
  5.26  (13), if there are not any participants in the plan specified in 
  5.27  subdivision 11, paragraph (b), clause (14), or of which 
  5.28  one-fourteenth must be paid by each pension plan specified in 
  5.29  subdivision 11, paragraph (b), clauses (1) to (14), if there are 
  5.30  participants in the plan specified in subdivision 11, paragraph 
  5.31  (b), clause (14). 
  5.32     (b) The assessment must be made following the completion of 
  5.33  the actuarial valuation calculations and the experience 
  5.34  analysis.  The amount of the assessment is appropriated from the 
  5.35  retirement fund applicable to the retirement plan.  Receipts 
  5.36  from assessments must be deposited in the state treasury and 
  6.1   credited to the general fund. 
  6.2      Sec. 3.  Minnesota Statutes 1996, section 3A.02, 
  6.3   subdivision 1, is amended to read: 
  6.4      Subdivision 1.  [QUALIFICATIONS.] (a) A former legislator 
  6.5   is entitled, upon written application to the director, to 
  6.6   receive a retirement allowance monthly, if the person: 
  6.7      (1) has served at least six full years, without regard to 
  6.8   the application of section 3A.10, subdivision 2, or has served 
  6.9   during all or part of four regular sessions as a member of the 
  6.10  legislature, which service need not be continuous; 
  6.11     (2) has attained the normal retirement age; 
  6.12     (3) has retired as a member of the legislature; and 
  6.13     (4) has made all contributions provided for in section 
  6.14  3A.03, has made payments for past service under subdivision 2, 
  6.15  or has made payments in lieu of contributions under Minnesota 
  6.16  Statutes 1992, section 3A.031, prior to July 1, 1994. 
  6.17     (b) This paragraph applies to members of the legislature 
  6.18  who terminate service as a legislator before July 1, 1997.  For 
  6.19  service rendered before the beginning of the 1979 legislative 
  6.20  session, but not to exceed eight years of service, the 
  6.21  retirement allowance is an amount equal to five percent per year 
  6.22  of service of that member's average monthly salary.  For service 
  6.23  in excess of eight years rendered before the beginning of the 
  6.24  1979 legislative session, and for service rendered after the 
  6.25  beginning of the 1979 legislative session, the retirement 
  6.26  allowance is an amount equal to 2-1/2 percent per year of 
  6.27  service of that member's average monthly salary. 
  6.28     (c) This paragraph applies to members of the legislature 
  6.29  who terminate service as a legislator after June 30, 1997.  The 
  6.30  retirement allowance is an amount equal to the applicable rate 
  6.31  or rates under paragraph (b) per year of service of the member's 
  6.32  average monthly salary adjusted for that person on an actuarial 
  6.33  equivalent basis to reflect the change in the postretirement 
  6.34  interest rate actuarial assumption under section 356.215, 
  6.35  subdivision 4d, from five percent to six percent.  The 
  6.36  adjustment must be calculated by or, alternatively, the 
  7.1   adjustment procedure must be specified by, the actuary retained 
  7.2   by the legislative commission on pensions and retirement. 
  7.3      (d) The retirement allowance accrues beginning with the 
  7.4   first day of the month of receipt of the application, but not 
  7.5   before age 60, and for the remainder of the former legislator's 
  7.6   life, if the former legislator is not serving as a member of the 
  7.7   legislature or as a constitutional officer or commissioner as 
  7.8   defined in section 352C.021, subdivisions 2 and 3.  The annuity 
  7.9   shall does not begin to accrue prior to retirement as a 
  7.10  legislator.  No annuity payment shall may be made retroactive 
  7.11  for more than 180 days before the date the annuity application 
  7.12  is filed with the director. 
  7.13     (d) (e) Any member who has served during all or part of 
  7.14  four regular sessions is considered to have served eight years 
  7.15  as a member of the legislature. 
  7.16     (e) (f) The retirement allowance ceases with the last 
  7.17  payment that accrued to the retired legislator during the 
  7.18  retired legislator's lifetime, except that the surviving spouse, 
  7.19  if any, is entitled to the retirement allowance for the calendar 
  7.20  month in which the retired legislator died. 
  7.21     Sec. 4.  Minnesota Statutes 1996, section 3A.02, 
  7.22  subdivision 4, is amended to read: 
  7.23     Subd. 4.  [DEFERRED ANNUITIES AUGMENTATION.] (a) The 
  7.24  deferred annuity of any former legislator shall must be 
  7.25  augmented as provided herein.  The required reserves applicable 
  7.26  to the deferred annuity, determined as of the date the benefit 
  7.27  begins to accrue using an appropriate mortality table and an 
  7.28  interest assumption of five six percent, shall must be augmented 
  7.29  from the first of the month following termination of service, or 
  7.30  July 1, 1973, whichever is later, to the first day of the month 
  7.31  in which the annuity begins to accrue, at the rate of five 
  7.32  percent per annum compounded annually until January 1, 1981, and 
  7.33  thereafter at the rate of three percent per annum compounded 
  7.34  annually until January 1 of the year in which the former 
  7.35  legislator attains age 55.  From that date to the effective date 
  7.36  of retirement, the rate is five percent compounded annually. 
  8.1      (b) The retirement allowance of, or the survivor benefit 
  8.2   payable on behalf of, a former member of the legislature who 
  8.3   terminated service before July 1, 1997, which is not first 
  8.4   payable until after June 30, 1997, must be increased on an 
  8.5   actuarial equivalent basis to reflect the change in the 
  8.6   postretirement interest rate actuarial assumption under section 
  8.7   356.215, subdivision 4d, from five percent to six percent under 
  8.8   a calculation procedure and tables adopted by the board of 
  8.9   directors of the Minnesota state retirement system and approved 
  8.10  by the actuary retained by the legislative commission on 
  8.11  pensions and retirement. 
  8.12     Sec. 5.  Minnesota Statutes 1996, section 11A.18, 
  8.13  subdivision 9, is amended to read: 
  8.14     Subd. 9.  [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 
  8.15  Annually, following June 30, the state board shall use the 
  8.16  procedures in paragraphs (b), (c), and (d) to determine whether 
  8.17  a postretirement adjustment is payable and to determine the 
  8.18  amount of any postretirement adjustment. 
  8.19     (b) If the Consumer Price Index for urban wage earners and 
  8.20  clerical workers all items index published by the Bureau of 
  8.21  Labor Statistics of the United States Department of Labor 
  8.22  increases from June 30 of the preceding year to June 30 of the 
  8.23  current year, the state board shall certify the percentage 
  8.24  increase.  The amount certified may must not exceed the lesser 
  8.25  of the difference between the preretirement interest assumption 
  8.26  and postretirement interest assumption in section 356.215, 
  8.27  subdivision 4d, paragraph (a), or 3.5 2.5 percent.  For the 
  8.28  Minneapolis employees retirement fund, the amount certified must 
  8.29  not exceed 3.5 percent. 
  8.30     (c) In addition to any percentage increase certified under 
  8.31  paragraph (b), the board shall use the following procedures to 
  8.32  determine if a postretirement adjustment is payable under this 
  8.33  paragraph: 
  8.34     (1) The state board shall determine the market value of the 
  8.35  fund on June 30 of that year; 
  8.36     (2) The amount of reserves required for the annuity or 
  9.1   benefit payable to an annuitant and benefit recipient of the 
  9.2   participating public pension plans or funds shall must be 
  9.3   determined by the commission-retained actuary as of the current 
  9.4   June 30.  An annuitant or benefit recipient who has been 
  9.5   receiving an annuity or benefit for at least 12 full months as 
  9.6   of the current June 30 is eligible to receive a full 
  9.7   postretirement adjustment.  An annuitant or benefit recipient 
  9.8   who has been receiving an annuity or benefit for at least one 
  9.9   full month, but less than 12 full months as of the current June 
  9.10  30, is eligible to receive a partial postretirement adjustment.  
  9.11  Each fund shall report separately the amount of the reserves for 
  9.12  those annuitants and benefit recipients who are eligible to 
  9.13  receive a full postretirement benefit adjustment.  This amount 
  9.14  is known as "eligible reserves."  Each fund shall also report 
  9.15  separately the amount of the reserves for those annuitants and 
  9.16  benefit recipients who are not eligible to receive a 
  9.17  postretirement adjustment.  This amount is known as "noneligible 
  9.18  reserves."  For an annuitant or benefit recipient who is 
  9.19  eligible to receive a partial postretirement adjustment, each 
  9.20  fund shall report separately as additional "eligible reserves" 
  9.21  an amount that bears the same ratio to the total reserves 
  9.22  required for the annuitant or benefit recipient as the number of 
  9.23  full months of annuity or benefit receipt as of the current June 
  9.24  30 bears to 12 full months.  The remainder of the annuitant's or 
  9.25  benefit recipient's reserves shall must be separately reported 
  9.26  as additional "noneligible reserves."  The amount of "eligible" 
  9.27  and "noneligible" required reserves shall must be certified to 
  9.28  the board by the commission-retained actuary as soon as is 
  9.29  practical following the current June 30; 
  9.30     (3) The state board shall determine the percentage increase 
  9.31  certified under paragraph (b) multiplied by the eligible 
  9.32  required reserves, as adjusted for mortality gains and losses 
  9.33  under subdivision 11, determined under clause (2); 
  9.34     (4) The state board shall add the amount of reserves 
  9.35  required for the annuities or benefits payable to annuitants and 
  9.36  benefit recipients of the participating public pension plans or 
 10.1   funds as of the current June 30 to the amount determined under 
 10.2   clause (3); 
 10.3      (5) The state board shall subtract the amount determined 
 10.4   under clause (4) from the market value of the fund determined 
 10.5   under clause (1); 
 10.6      (6) The state board shall adjust the amount determined 
 10.7   under clause (5) by the cumulative current balance determined 
 10.8   pursuant to clause (8) and any negative balance carried forward 
 10.9   under clause (9); 
 10.10     (7) A positive amount resulting from the calculations in 
 10.11  clauses (1) to (6) is the excess market value.  A negative 
 10.12  amount is the negative balance; 
 10.13     (8) The state board shall allocate one-fifth of the excess 
 10.14  market value or one-fifth of the negative balance to each of 
 10.15  five consecutive years, beginning with the fiscal year ending 
 10.16  the current June 30; and 
 10.17     (9) To calculate the postretirement adjustment under this 
 10.18  paragraph based on investment performance for a fiscal year, the 
 10.19  state board shall add together all excess market value allocated 
 10.20  to that year and subtract from the sum all negative balances 
 10.21  allocated to that year.  If this calculation results in a 
 10.22  negative number, the entire negative balance must be carried 
 10.23  forward and allocated to the next year.  If the resulting amount 
 10.24  is positive, a postretirement adjustment is payable under this 
 10.25  paragraph.  The board shall express a positive amount as a 
 10.26  percentage of the total eligible required reserves certified to 
 10.27  the board under clause (2).  
 10.28     (d) The state board shall determine the amount of any 
 10.29  postretirement adjustment which is payable using the following 
 10.30  procedure: 
 10.31     (1) The total "eligible" required reserves as of the first 
 10.32  of January next following the end of the fiscal year for the 
 10.33  annuitants and benefit recipients eligible to receive a full or 
 10.34  partial postretirement adjustment as determined by clause (2) 
 10.35  shall must be certified to the state board by the 
 10.36  commission-retained actuary.  The total "eligible" required 
 11.1   reserves shall must be determined by the commission-retained 
 11.2   actuary on the assumption that all annuitants and benefit 
 11.3   recipients eligible to receive a full or partial postretirement 
 11.4   adjustment will be alive on the January 1 in question; and 
 11.5      (2) The state board shall add the percentage certified 
 11.6   under paragraph (b) to any positive percentage calculated under 
 11.7   paragraph (c).  The board shall not subtract from the percentage 
 11.8   certified under paragraph (b) any negative amount calculated 
 11.9   under paragraph (c).  The sum of these percentages shall must be 
 11.10  carried to five decimal places and shall must be certified to 
 11.11  each participating public pension fund or plan as the full 
 11.12  postretirement adjustment percentage.  
 11.13     (e) A retirement annuity payable in the event of retirement 
 11.14  before becoming eligible for social security benefits as 
 11.15  provided in section 352.116, subdivision 3; 353.29, subdivision 
 11.16  6; or 354.35 must be treated as the sum of a period certain 
 11.17  retirement annuity and a life retirement annuity for the 
 11.18  purposes of any postretirement adjustment.  The period certain 
 11.19  retirement annuity plus the life retirement annuity shall must 
 11.20  be the annuity amount payable until age 62 or 65, whichever 
 11.21  applies.  A postretirement adjustment granted on the period 
 11.22  certain retirement annuity must terminate when the period 
 11.23  certain retirement annuity terminates. 
 11.24     Sec. 6.  [124.2141] [AID ADJUSTMENTS DUE TO CHANGES IN 
 11.25  EMPLOYER RETIREMENT CONTRIBUTION RATES.] 
 11.26     Subdivision 1.  [AID ADJUSTMENT.] Beginning in fiscal year 
 11.27  1998 and each year thereafter, the commissioner of children, 
 11.28  families, and learning shall adjust state aid payments to school 
 11.29  operating funds for independent school district No. 625, 
 11.30  independent school district No. 709 and special school district 
 11.31  No. 1, by the net amount of clauses (1) and (2) and for all 
 11.32  other districts, including charter schools, but excluding any 
 11.33  education organizations that are prohibited from receiving 
 11.34  direct state aids under section 124.193 or 124.32, subdivision 
 11.35  12, by the net amount of clauses (1), (2) and (3): 
 11.36     (1) a decrease equal to each district's share of the fiscal 
 12.1   year 1997 adjustment effected under Minnesota Statutes 1996, 
 12.2   section 124.2139; 
 12.3      (2) an increase equal to one percent of the salaries paid 
 12.4   to members of the general plan of the public employees 
 12.5   retirement association in fiscal year 1997, multiplied by 0.35 
 12.6   for fiscal year 1998 and 0.70 each year thereafter; 
 12.7      (3) a decrease equal to 2.34 percent of the salaries paid 
 12.8   to members of the teachers retirement association in fiscal year 
 12.9   1997.  
 12.10     Subd. 2.  [APPROPRIATION AND ESTIMATED NET SAVINGS.] The 
 12.11  amounts necessary to pay any positive net adjustments under this 
 12.12  section to any school district are appropriated annually from 
 12.13  the general fund to the commissioner of children, families, and 
 12.14  learning.  The estimated net general fund savings under this 
 12.15  section is $29,819,000 in fiscal year 1998, and $26,997,000 in 
 12.16  each fiscal year thereafter. 
 12.17     Subd. 3.  [LIMITS ON ADJUSTMENTS AND POTENTIAL REDUCTIONS.] 
 12.18  Increases to any school districts under subdivision 1, clause 
 12.19  (2), and decreases under subdivision 1, clauses (1) and (3), are 
 12.20  limited to the fiscal year 1999 amounts.  The commissioner of 
 12.21  children, families, and learning may permanently reduce the 
 12.22  adjustments to school districts under subdivision 1, clauses (1) 
 12.23  and (2), in the same manner as prescribed for nonschool 
 12.24  jurisdictions under section 273.13985, subdivision 2.  The 
 12.25  commissioner may, from time to time, require that the most 
 12.26  recent fiscal year payroll information be certified by the 
 12.27  executive director of the teachers retirement association.  For 
 12.28  any school district where the newly certified teachers 
 12.29  retirement association payroll is significantly lower than the 
 12.30  fiscal 1997 amount as determined by the commissioner, the 
 12.31  commissioner shall recalculate the lower reduction under 
 12.32  subdivision 1, clause (3), and shall permanently reduce the 
 12.33  adjustment amount in subsequent years. 
 12.34     Subd. 4.  [EFFECT OF REORGANIZATIONS.] The commissioner of 
 12.35  children, families, and learning shall reapportion the aid 
 12.36  adjustments to school districts under this section to account 
 13.1   for significant changes in boundaries or consolidations, as 
 13.2   determined by the commissioner.  If a school district is 
 13.3   dissolved, or a school district function thereof is assumed by 
 13.4   either the state or a nonpublic organization, adjustments for 
 13.5   all or the appropriate fraction of the total payroll under this 
 13.6   section must terminate. 
 13.7      Subd. 5.  [ADJUSTMENT TERMINATION.] All adjustments under 
 13.8   this section terminate on June 30, 2020. 
 13.9      Sec. 7.  [273.13985] [AID FOR PUBLIC EMPLOYEES RETIREMENT 
 13.10  ASSOCIATION EMPLOYER CONTRIBUTION RATE INCREASE.] 
 13.11     Subdivision 1.  [AID TO OFFSET RATE INCREASE.] Beginning 
 13.12  with the December 26, 1997, payment, and according to the 
 13.13  schedule for payment of local aid under section 477A.015 
 13.14  thereafter, the commissioner of revenue shall pay to each city, 
 13.15  county, town, and other nonschool jurisdiction an amount equal 
 13.16  to 0.35 percent of the fiscal year 1997 payroll for employees 
 13.17  who were members of the general plan of the public employees 
 13.18  retirement association.  Except for the December 1997 
 13.19  distribution under this section, the amount of aid must be 
 13.20  certified before September 1 of the year preceding the 
 13.21  distribution year to the affected local government.  The 
 13.22  executive director of the public employees retirement 
 13.23  association shall certify the general plan fiscal year covered 
 13.24  payroll and other information requested by the commissioner of 
 13.25  revenue, on or before August 1, 1997, and in subsequent years 
 13.26  where necessary, in order to facilitate administration of this 
 13.27  section.  The amount necessary to make these aid payments is 
 13.28  appropriated annually from the general fund to the commissioner 
 13.29  of revenue.  Expenditures under this section are estimated to be 
 13.30  $7,942,500 in fiscal year 1998, and $15,885,000 in each 
 13.31  subsequent fiscal year, less any future reductions under 
 13.32  subdivision 2. 
 13.33     Subd. 2.  [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID 
 13.34  REDUCTIONS.] The aid amount received by any jurisdiction in 
 13.35  fiscal year 2000 or any year thereafter may not exceed the 
 13.36  amount it received in fiscal year 1999.  The commissioner may, 
 14.1   from time to time, request the most recent fiscal year payroll 
 14.2   information by jurisdiction to be certified by the executive 
 14.3   director of the public employees retirement association.  For 
 14.4   any jurisdiction where newly certified public employees 
 14.5   retirement association general plan payroll is significantly 
 14.6   lower than the fiscal 1997 amount, as determined by the 
 14.7   commissioner, the commissioner shall recalculate the aid amount 
 14.8   based on the most recent fiscal year payroll information, 
 14.9   certify the recalculated aid amount for the next distribution 
 14.10  year, and permanently reduce the aid amount to that jurisdiction.
 14.11     Subd. 3.  [EFFECT OF REORGANIZATIONS.] The commissioner of 
 14.12  revenue may adjust the aid amounts for separate jurisdictions to 
 14.13  account for significant changes in boundaries or in the form of 
 14.14  government, as determined by the commissioner.  If a local 
 14.15  government function and the associated public employees 
 14.16  retirement association general plan payroll is assumed by either 
 14.17  the state, or a nonpublic organization, the aid amounts 
 14.18  attributable to the function under this section must terminate.  
 14.19     Subd. 4.  [AID TERMINATION.] The aid provided under this 
 14.20  section terminates on June 30, 2020.  
 14.21     Sec. 8.  Minnesota Statutes 1996, section 352.01, 
 14.22  subdivision 25, is amended to read: 
 14.23     Subd. 25.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 14.24  means age 65 for a person who first became a covered employee or 
 14.25  a member of a pension fund listed in section 356.30, subdivision 
 14.26  3, before July 1, 1989.  For a person who first becomes a 
 14.27  covered employee after June 30, 1989, normal retirement age 
 14.28  means the higher of age 65 or "retirement age," as defined in 
 14.29  United States Code, title 42, section 416(l), as amended, but 
 14.30  not to exceed age 66. 
 14.31     Sec. 9.  Minnesota Statutes 1996, section 352.04, 
 14.32  subdivision 2, is amended to read: 
 14.33     Subd. 2.  [EMPLOYEE CONTRIBUTIONS.] The employee 
 14.34  contribution to the fund must be equal to 4.07 4.0 percent of 
 14.35  salary.  These contributions must be made by deduction from 
 14.36  salary as provided in subdivision 4. 
 15.1      Sec. 10.  Minnesota Statutes 1996, section 352.04, 
 15.2   subdivision 3, is amended to read: 
 15.3      Subd. 3.  [EMPLOYER CONTRIBUTIONS.] (a) The employer 
 15.4   contribution to the fund must be equal to 4.2 4.0 percent of 
 15.5   salary. 
 15.6      (b) By January 1 of each year, the board of directors shall 
 15.7   report to the legislative commission on pensions and retirement, 
 15.8   the chair of the committee on appropriations of the house of 
 15.9   representatives, and the chair of the committee on finance of 
 15.10  the senate on the amount raised by the employer and employee 
 15.11  contribution rates in effect and whether the total amount is 
 15.12  less than, the same as, or more than the actuarial requirement 
 15.13  determined under section 356.215. 
 15.14     (c) If the legislative commission on pensions and 
 15.15  retirement, based on the most recent valuation performed by its 
 15.16  actuary, determines that the total amount raised by the employer 
 15.17  and employee contributions under subdivision 2 and paragraph (b) 
 15.18  is less than the actuarial requirements determined under section 
 15.19  356.215, the employer and employee rates must be increased by 
 15.20  equal amounts as necessary to meet the actuarial requirements.  
 15.21  The employee rate may not exceed 4.15 percent of salary and the 
 15.22  employer rate may not exceed 4.29 percent of salary.  The 
 15.23  increases are effective on the next January 1 following the 
 15.24  determination by the commission.  The executive director of the 
 15.25  Minnesota state retirement system shall notify employing units 
 15.26  of any increases under this paragraph. 
 15.27     Sec. 11.  Minnesota Statutes 1996, section 352.115, 
 15.28  subdivision 3, is amended to read: 
 15.29     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 15.30  in conjunction with section 352.116, subdivision 1, applies to a 
 15.31  person who became a covered employee or a member of a pension 
 15.32  fund listed in section 356.30, subdivision 3, before July 1, 
 15.33  1989, unless paragraph (b), in conjunction with section 352.116, 
 15.34  subdivision 1a, produces a higher annuity amount, in which case 
 15.35  paragraph (b) will apply.  The employee's average salary, as 
 15.36  defined in subdivision 2, multiplied by one the percent 
 16.1   specified in section 356.19, subdivision 1, per year of 
 16.2   allowable service for the first ten years and 1.5 the percent 
 16.3   specified in section 356.19, subdivision 2, for each later year 
 16.4   of allowable service and pro rata for completed months less than 
 16.5   a full year shall determine the amount of the retirement annuity 
 16.6   to which the employee is entitled. 
 16.7      (b) This paragraph applies to a person who has become at 
 16.8   least 55 years old and first became a covered employee after 
 16.9   June 30, 1989, and to any other covered employee who has become 
 16.10  at least 55 years old and whose annuity amount, when calculated 
 16.11  under this paragraph and in conjunction with section 352.116, 
 16.12  subdivision 1a, is higher than it is when calculated under 
 16.13  paragraph (a), in conjunction with section 352.116, subdivision 
 16.14  1.  The employee's average salary, as defined in subdivision 2, 
 16.15  multiplied by 1.5 the percent specified in section 356.19, 
 16.16  subdivision 2, for each year of allowable service and pro rata 
 16.17  for months less than a full year shall determine the amount of 
 16.18  the retirement annuity to which the employee is entitled. 
 16.19     Sec. 12.  Minnesota Statutes 1996, section 352.72, 
 16.20  subdivision 2, is amended to read: 
 16.21     Subd. 2.  [COMPUTATION OF DEFERRED ANNUITY.] (a) The 
 16.22  deferred annuity, if any, accruing under subdivision 1, or 
 16.23  section 352.22, subdivision 3, must be computed as provided in 
 16.24  section 352.22, subdivision 3, on the basis of allowable service 
 16.25  before termination of state service and augmented as provided 
 16.26  herein.  The required reserves applicable to a deferred annuity 
 16.27  or to an annuity for which a former employee was eligible but 
 16.28  had not applied or to any deferred segment of an annuity must be 
 16.29  determined as of the date the benefit begins to accrue and 
 16.30  augmented by interest compounded annually from the first day of 
 16.31  the month following the month in which the employee ceased to be 
 16.32  a state employee, or July 1, 1971, whichever is later, to the 
 16.33  first day of the month in which the annuity begins to accrue.  
 16.34  The rates of interest used for this purpose must be five percent 
 16.35  compounded annually until January 1, 1981, and three percent 
 16.36  compounded annually thereafter until January 1 of the year 
 17.1   following the year in which the former employee attains age 55.  
 17.2   From that date to the effective date of retirement, the rate is 
 17.3   five percent compounded annually.  If a person has more than one 
 17.4   period of uninterrupted service, the required reserves related 
 17.5   to each period must be augmented by interest under this 
 17.6   subdivision.  The sum of the augmented required reserves so 
 17.7   determined is the present value of the annuity.  "Uninterrupted 
 17.8   service" for the purpose of this subdivision means periods of 
 17.9   covered employment during which the employee has not been 
 17.10  separated from state service for more than two years.  If a 
 17.11  person repays a refund, the service restored by the repayment 
 17.12  must be considered continuous with the next period of service 
 17.13  for which the employee has credit with this system.  The formula 
 17.14  percentages used for each period of uninterrupted service must 
 17.15  be those applicable to a new employee.  The mortality table and 
 17.16  interest assumption used to compute the annuity must be those in 
 17.17  effect when the employee files application for annuity.  This 
 17.18  section shall does not reduce the annuity otherwise payable 
 17.19  under this chapter. 
 17.20     (b) The retirement annuity or disability benefit of, or the 
 17.21  survivor benefit payable on behalf of, a former state employee 
 17.22  who terminated service before July 1, 1997, which is not first 
 17.23  payable until after June 30, 1997, must be increased on an 
 17.24  actuarial equivalent basis to reflect the change in the 
 17.25  postretirement interest rate actuarial assumption under section 
 17.26  356.215, subdivision 4d, from five percent to six percent under 
 17.27  a calculation procedure and the tables adopted by the board and 
 17.28  approved by the actuary retained by the legislative commission 
 17.29  on pensions and retirement. 
 17.30     Sec. 13.  Minnesota Statutes 1996, section 352.92, 
 17.31  subdivision 1, is amended to read: 
 17.32     Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] Beginning with 
 17.33  the first full pay period after July 1, 1984, in lieu of 
 17.34  employee contributions payable under section 352.04, subdivision 
 17.35  2, Employee contributions by of covered correctional employees 
 17.36  must be in an amount equal to 4.90 5.50 percent of salary.  
 18.1      Sec. 14.  Minnesota Statutes 1996, section 352.92, 
 18.2   subdivision 2, is amended to read: 
 18.3      Subd. 2.  [EMPLOYER CONTRIBUTIONS.] In lieu of employer 
 18.4   contributions payable under section 352.04, subdivision 3, The 
 18.5   employer shall contribute for covered correctional employees an 
 18.6   amount equal to 6.75 7.70 percent of salary.  
 18.7      Sec. 15.  Minnesota Statutes 1996, section 352.93, 
 18.8   subdivision 2, is amended to read: 
 18.9      Subd. 2.  [CALCULATING MONTHLY ANNUITY.] The monthly 
 18.10  annuity under this section must be determined by multiplying the 
 18.11  average monthly salary by the number of years, or completed 
 18.12  months, of covered correctional service by 2.5 the percent 
 18.13  specified in section 356.19, subdivision 5.  However, the 
 18.14  monthly annuity must not exceed 75 percent of the average 
 18.15  monthly salary.  
 18.16     Sec. 16.  Minnesota Statutes 1996, section 352.93, 
 18.17  subdivision 3, is amended to read: 
 18.18     Subd. 3.  [PAYMENTS; DURATION AND AMOUNT ANNUITY ACCRUAL.] 
 18.19  The annuity under this section shall must begin to accrue as 
 18.20  provided in section 352.115, subdivision 8., and must be paid 
 18.21  for an additional 84 full calendar months or to the first of the 
 18.22  month following the month in which the employee attains normal 
 18.23  retirement age, whichever occurs first, except that payment must 
 18.24  not cease before the first of the month following the month in 
 18.25  which the employee becomes 62.  It must then be reduced to the 
 18.26  amount as calculated at normal retirement age under section 
 18.27  352.115, except that if this amount, when added to that portion 
 18.28  of the social security benefit based on state service the 
 18.29  employee would be eligible to receive at the time, is less than 
 18.30  the benefit payable under subdivision 2, the retired employee 
 18.31  shall receive an amount that when added to the social security 
 18.32  benefit will equal the amount payable under subdivision 2.  If 
 18.33  the employee retired prior to age 55, the reduced benefit as 
 18.34  calculated under section 352.115 must be actuarially reduced as 
 18.35  provided in subdivision 2a.  
 18.36     When an annuity is reduced under this subdivision, the 
 19.1   percentage adjustments, if any, that have been applied to the 
 19.2   original annuity under section 11A.18, before the reduction, 
 19.3   must be compounded and applied to the reduced annuity.  A former 
 19.4   correctional employee employed by the state in a position 
 19.5   covered by the regular plan or the unclassified employees 
 19.6   retirement program between the age of 58 and normal retirement 
 19.7   age shall receive a partial return of correctional contributions 
 19.8   at retirement with six percent interest based on the following 
 19.9   formula: 
 19.10  
 19.11   Employee contributions             Years and complete    
 19.12   contributed as a                   months of regular     
 19.13   correctional employee              service between     
 19.14   in excess of the                   age 58 and the    
 19.15   contributions the                  normal retirement age 
 19.16   employee would have       X        ..................... 
 19.17   contributed as a                   number of years between
 19.18   regular employee                   age 58 and normal 
 19.19                                      retirement age 
 19.20     Sec. 17.  Minnesota Statutes 1996, section 352.93, is 
 19.21  amended by adding a subdivision to read: 
 19.22     Subd. 3a.  [OPTIONAL ANNUITIES.] The board may establish 
 19.23  optional annuity forms to pay a higher amount from the date of 
 19.24  retirement until an employee is first eligible to draw social 
 19.25  security benefits or up to the age the employee is eligible to 
 19.26  receive unreduced social security benefits, at which time the 
 19.27  monthly benefits must be reduced.  The optional annuity forms 
 19.28  must be actuarially equivalent to the normal single life annuity 
 19.29  form provided in subdivision 2.  The optional annuity forms must 
 19.30  be approved by the actuary retained by the legislative 
 19.31  commission on pensions and retirement. 
 19.32     Sec. 18.  [352.931] [SURVIVOR BENEFITS.] 
 19.33     Subdivision 1.  [SURVIVING SPOUSE BENEFIT.] (a) If the 
 19.34  correctional employee was at least age 50, has credit for at 
 19.35  least three years allowable service, and dies before an annuity 
 19.36  or disability benefit has become payable, notwithstanding any 
 20.1   designation of beneficiary to the contrary, the surviving spouse 
 20.2   of the employee may elect to receive, in lieu of the refund 
 20.3   under section 352.12, subdivision 1, an annuity for life equal 
 20.4   to the joint and 100 percent survivor annuity which the employee 
 20.5   could have qualified for had the employee terminated service on 
 20.6   the date of death.  The election may be made at any time after 
 20.7   the date of death of the employee.  The surviving spouse benefit 
 20.8   begins to accrue as of the first of the month next following the 
 20.9   date on which the application for the benefit was filed. 
 20.10     (b) If the employee was under age 50, dies, and had credit 
 20.11  for at least three years of allowable service credit on the date 
 20.12  of death but did not yet qualify for retirement, the surviving 
 20.13  spouse may elect to receive a 100 percent joint and survivor 
 20.14  annuity based on the age of the employee and surviving spouse at 
 20.15  the time of death.  The annuity is payable using the early 
 20.16  retirement reduction under section 352.93, subdivision 2a, to 
 20.17  age 50, and one-half of the early retirement reduction from age 
 20.18  50 to the age payment begins.  The surviving spouse eligible for 
 20.19  surviving spouse benefits under this paragraph may apply for the 
 20.20  annuity at any time after the employee's death.  Sections 
 20.21  352.22, subdivision 3, and 352.72, subdivision 2, apply to a 
 20.22  deferred annuity or surviving spouse benefit payable under this 
 20.23  subdivision.  
 20.24     (c) The annuity must cease with the last payment received 
 20.25  by the surviving spouse in the lifetime of the surviving 
 20.26  spouse.  Any employee may request in writing that this 
 20.27  subdivision not apply and that payment be made only to a 
 20.28  designated beneficiary as otherwise provided by this chapter. 
 20.29     Subd. 2.  [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 
 20.30  lieu of the 100 percent optional annuity under subdivision 1, 
 20.31  the surviving spouse of a deceased employee may elect to receive 
 20.32  survivor coverage in a term certain of ten, 15, or 20 years.  
 20.33  The monthly term certain annuity must be actuarially equivalent 
 20.34  to the 100 percent optional annuity under subdivision 1 and must 
 20.35  be approved by the actuary retained by the legislative 
 20.36  commission on pensions and retirement.  The optional annuity 
 21.1   ceases upon the expiration of the term certain period.  If a 
 21.2   survivor elects a term certain annuity and dies before the 
 21.3   expiration of the specified term certain period, the commuted 
 21.4   value of the remaining annuity payments must be paid in a lump 
 21.5   sum to the survivor's estate. 
 21.6      Subd. 3.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 21.7   no surviving spouse eligible for benefits under subdivision 1, a 
 21.8   dependent child as defined in section 352.01, subdivision 26, is 
 21.9   eligible for a dependent child survivor benefit.  Benefits to a 
 21.10  dependent child must be paid from the date of the employee's 
 21.11  death to the date the dependent child attains age 20 if the 
 21.12  child is under age 15 on the date of death.  If the child is 15 
 21.13  years or older on the date of death, the benefit is payable for 
 21.14  five years.  The payment to a dependent child is an amount 
 21.15  actuarially equivalent to the value of a 100 percent joint and 
 21.16  survivor optional annuity using the age of the employee and age 
 21.17  of the dependent child at the date of death in lieu of the age 
 21.18  of the surviving spouse.  If there is more than one dependent 
 21.19  child, each dependent child shall receive a proportionate share 
 21.20  of the actuarial value of the employee's account, with the 
 21.21  amount of the benefit payable to each child to be determined 
 21.22  based on the portion of the total eligibility period that each 
 21.23  child is eligible.  The process for calculating the dependent 
 21.24  child survivor benefit must be approved by the actuary retained 
 21.25  by the legislative commission on pensions and retirement. 
 21.26     Subd. 4.  [DEATH REFUND.] An amount equal to the excess, if 
 21.27  any, of the accumulated contributions credited to the account of 
 21.28  the deceased employee in excess of the total of the benefits 
 21.29  paid to the surviving spouse and surviving child or children 
 21.30  must be paid to the deceased employee's last designated 
 21.31  beneficiary or, if none, as specified under section 352.12, 
 21.32  subdivision 1. 
 21.33     Subd. 5.  [APPLICATION.] The benefit elections under this 
 21.34  section must be made on an application form prescribed by the 
 21.35  executive director and must be filed with the executive director.
 21.36     Sec. 19.  Minnesota Statutes 1996, section 352.95, 
 22.1   subdivision 1, is amended to read: 
 22.2      Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 22.3   correctional employee who becomes disabled and physically unfit 
 22.4   to perform the duties of the position as a direct result of an 
 22.5   injury, sickness, or other disability incurred in or arising out 
 22.6   of any act of duty that makes the employee physically or 
 22.7   mentally unable to perform the duties, is entitled to a 
 22.8   disability benefit based on covered correctional service only.  
 22.9   The benefit amount must equal 50 percent of the average salary 
 22.10  defined in section 352.93, plus an additional 2-1/2 percent 
 22.11  equal to that specified in section 356.19, subdivision 5, for 
 22.12  each year of covered correctional service in excess of 20 years, 
 22.13  ten months, prorated for completed months. 
 22.14     Sec. 20.  Minnesota Statutes 1996, section 352.95, 
 22.15  subdivision 5, is amended to read: 
 22.16     Subd. 5.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 
 22.17  disability benefit paid to a disabled correctional employee 
 22.18  under this section shall terminate at the end of the month in 
 22.19  which the employee reaches age 62.  If the disabled correctional 
 22.20  employee is still disabled when the employee reaches age 62, the 
 22.21  employee shall be deemed to be a retired employee.  If the 
 22.22  employee had elected an optional annuity under subdivision 1a, 
 22.23  the employee shall receive an annuity in accordance with the 
 22.24  terms of the optional annuity previously elected.  If the 
 22.25  employee had not elected an optional annuity under subdivision 
 22.26  1a, the employee may within 90 days of attaining age 65 or 
 22.27  reaching the five-year anniversary of the effective date of the 
 22.28  disability benefit, whichever is later, either elect to receive 
 22.29  a normal retirement annuity computed in the manner provided in 
 22.30  section 352.115 352.93 or elect to receive an optional annuity 
 22.31  as provided in section 352.116, subdivision 3, based on the same 
 22.32  length of service as used in the calculation of the disability 
 22.33  benefit.  Election of an optional annuity must be made within 90 
 22.34  days before attaining age 65 or reaching the five-year 
 22.35  anniversary of the effective date of the disability benefit, 
 22.36  whichever is later.  The reduction for retirement before normal 
 23.1   retirement age as provided in section 352.116, subdivision 1 or 
 23.2   1a, does not apply.  The savings clause provision of section 
 23.3   352.93, subdivision 3, applies.  If an optional annuity is 
 23.4   elected, the optional annuity shall begin to accrue on the first 
 23.5   of the month following the month in which the employee reaches 
 23.6   age 65 or the five-year anniversary of the effective date of the 
 23.7   disability benefit, whichever is later. 
 23.8      Sec. 21.  Minnesota Statutes 1996, section 352B.02, 
 23.9   subdivision 1a, is amended to read: 
 23.10     Subd. 1a.  [MEMBER CONTRIBUTIONS.] Each member shall pay a 
 23.11  sum equal to 8.92 8.40 percent of the member's salary, which 
 23.12  shall constitute the member contribution to the fund.  
 23.13     Sec. 22.  Minnesota Statutes 1996, section 352B.02, 
 23.14  subdivision 1c, is amended to read: 
 23.15     Subd. 1c.  [EMPLOYER CONTRIBUTIONS.] (a) In addition to 
 23.16  member contributions, department heads shall pay a sum equal to 
 23.17  14.88 12.60 percent of the salary upon which deductions were 
 23.18  made, which shall constitute the employer contribution to the 
 23.19  fund.  Department contributions must be paid out of money 
 23.20  appropriated to departments for this purpose. 
 23.21     (b) By January 1 of each year, the board of directors shall 
 23.22  report to the legislative commission on pensions and retirement, 
 23.23  the chair of the committee on appropriations of the house of 
 23.24  representatives, and the chair of the committee on finance of 
 23.25  the senate on the amount raised by the employer and employee 
 23.26  contribution rates in effect and whether the total amount is 
 23.27  less than, the same as, or more than the actuarial requirement 
 23.28  determined under section 356.215. 
 23.29     Sec. 23.  Minnesota Statutes 1996, section 352B.08, 
 23.30  subdivision 2, is amended to read: 
 23.31     Subd. 2.  [NORMAL RETIREMENT ANNUITY.] The annuity must be 
 23.32  paid in monthly installments.  The annuity shall be equal to the 
 23.33  amount determined by multiplying the average monthly salary of 
 23.34  the member by 2.65 the percent specified in section 356.19, 
 23.35  subdivision 6, for each year and pro rata for completed months 
 23.36  of service.  
 24.1      Sec. 24.  Minnesota Statutes 1996, section 352B.08, 
 24.2   subdivision 2a, is amended to read: 
 24.3      Subd. 2a.  [EARLY RETIREMENT.] Any member who has become at 
 24.4   least 50 years old, or former member if service ended after June 
 24.5   30, 1989, and who has at least three years of allowable service 
 24.6   is entitled upon application to a reduced retirement annuity 
 24.7   equal to the annuity calculated under subdivision 2, reduced so 
 24.8   that the reduced annuity is the actuarial equivalent of the 
 24.9   annuity that would be payable if the member deferred receipt of 
 24.10  the annuity from the day the annuity begins to accrue to age 
 24.11  55 by two-tenths of one percent for each month that the member 
 24.12  is under age 55 at the time of retirement. 
 24.13     Sec. 25.  Minnesota Statutes 1996, section 352B.10, 
 24.14  subdivision 1, is amended to read: 
 24.15     Subdivision 1.  [INJURIES, PAYMENT AMOUNTS.] Any member who 
 24.16  becomes disabled and physically or mentally unfit to perform 
 24.17  duties as a direct result of an injury, sickness, or other 
 24.18  disability incurred in or arising out of any act of duty, shall 
 24.19  receive disability benefits while disabled.  The benefits must 
 24.20  be paid in monthly installments equal to the member's average 
 24.21  monthly salary multiplied by 53 60 percent, plus an additional 
 24.22  2.65 percent equal to that specified in section 356.19, 
 24.23  subdivision 6, for each year and pro rata for completed months 
 24.24  of service in excess of 20 years, if any. 
 24.25     Sec. 26.  Minnesota Statutes 1996, section 352B.30, is 
 24.26  amended by adding a subdivision to read: 
 24.27     Subd. 4.  [1997 POSTRETIREMENT FUND INTEREST CHANGES.] The 
 24.28  retirement annuity or disability benefit of, or the survivor 
 24.29  benefit payable on behalf of, a former member who terminated 
 24.30  service before July 1, 1997, which is not first payable until 
 24.31  after June 30, 1997, must be increased on an actuarial 
 24.32  equivalent basis to reflect the change in the postretirement 
 24.33  interest rate actuarial assumption under section 356.215, 
 24.34  subdivision 4d, from five percent to six percent under a 
 24.35  calculation procedure and tables adopted by the board and 
 24.36  approved by the actuary retained by the legislative commission 
 25.1   on pensions and retirement. 
 25.2      Sec. 27.  Minnesota Statutes 1996, section 352C.031, 
 25.3   subdivision 4, is amended to read: 
 25.4      Subd. 4.  [RETIREMENT ALLOWANCE FORMULA.] (a) This 
 25.5   paragraph applies to constitutional officers who terminate that 
 25.6   service before July 1, 1997.  The average salary multiplied by 
 25.7   2-1/2 percent for each year of allowable service and pro rata 
 25.8   for completed months less than a full year shall determine the 
 25.9   amount of the normal retirement allowance. 
 25.10     (b) This paragraph applies to constitutional officers who 
 25.11  terminate that service after June 30, 1997.  The retirement 
 25.12  allowance is an amount equal to the rate under paragraph (a) per 
 25.13  year of service of the constitutional officer's average monthly 
 25.14  salary adjusted for that person on an actuarial equivalent basis 
 25.15  to reflect the change in the postretirement interest rate 
 25.16  actuarial assumption under section 356.215, subdivision 4d, from 
 25.17  five percent to six percent.  The adjustment must be calculated 
 25.18  by or, alternatively, the adjustment procedure must be specified 
 25.19  by the actuary retained by the legislative commission on 
 25.20  pensions and retirement. 
 25.21     Sec. 28.  Minnesota Statutes 1996, section 352C.033, is 
 25.22  amended to read: 
 25.23     352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 
 25.24     (a) The deferred retirement allowance for any former 
 25.25  constitutional officer shall must be augmented as provided in 
 25.26  this section.  The required reserves applicable to the deferred 
 25.27  retirement allowance, determined as of the date the retirement 
 25.28  allowance begins to accrue using the appropriate mortality table 
 25.29  and an interest assumption of five six percent, shall be 
 25.30  augmented from the first of the month following termination of 
 25.31  service as a constitutional officer, or January 1, 1979, 
 25.32  whichever is later, to the first day of the month in which the 
 25.33  annuity begins to accrue, at the rate of five percent per annum 
 25.34  compounded annually until January 1, 1981, and thereafter at the 
 25.35  rate of three percent per annum compounded annually until 
 25.36  January 1 of the year in which the former constitutional officer 
 26.1   attains age 55.  From that date to the effective date of 
 26.2   retirement, the rate is five percent compounded annually. 
 26.3      (b) The retirement allowance of, or the survivor benefit 
 26.4   payable on behalf of, a former constitutional officer who 
 26.5   terminated service before July 1, 1997, which is not first 
 26.6   payable until after June 30, 1997, must be increased on an 
 26.7   actuarial equivalent basis to reflect the change in the 
 26.8   postretirement interest rate actuarial assumption under section 
 26.9   356.215, subdivision 4d, from five percent to six percent under 
 26.10  a calculation procedure and tables adopted by the board as 
 26.11  recommended by an approved actuary and approved by the actuary 
 26.12  retained by the legislative commission on pensions and 
 26.13  retirement. 
 26.14     Sec. 29.  Minnesota Statutes 1996, section 353.01, 
 26.15  subdivision 37, is amended to read: 
 26.16     Subd. 37.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 26.17  means age 65 for a person who first became a public employee or 
 26.18  a member of a pension fund listed in section 356.30, subdivision 
 26.19  3, before July 1, 1989.  For a person who first becomes a public 
 26.20  employee after June 30, 1989, "normal retirement age" means the 
 26.21  higher of age 65 or "retirement age," as defined in United 
 26.22  States Code, title 42, section 416(l), as amended, but not to 
 26.23  exceed age 66. 
 26.24     Sec. 30.  Minnesota Statutes 1996, section 353.27, 
 26.25  subdivision 2, is amended to read: 
 26.26     Subd. 2.  [EMPLOYEE CONTRIBUTION.] The employee 
 26.27  contribution shall be an amount (a) for a "basic member" equal 
 26.28  to 8.23 8.75 percent of total salary; and (b) for a "coordinated 
 26.29  member" equal to 4.23 4.75 percent of total salary.  These 
 26.30  contributions shall must be made by deduction from salary in the 
 26.31  manner provided in subdivision 4.  Where any portion of a 
 26.32  member's salary is paid from other than public funds, such 
 26.33  member's employee contribution shall must be based on the total 
 26.34  salary received from all sources. 
 26.35     Sec. 31.  Minnesota Statutes 1996, section 353.27, 
 26.36  subdivision 3a, is amended to read: 
 27.1      Subd. 3a.  [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An 
 27.2   additional employer contribution shall must be made equal to (a) 
 27.3   2-1/2 2.68 percent of the total salary of each "basic member"; 
 27.4   and (b) one-quarter of one .43 percent of the total salary of 
 27.5   each "coordinated member."  These contributions shall must be 
 27.6   made from funds available to the employing subdivision by the 
 27.7   means and in the manner provided in section 353.28.  
 27.8      (b) This subdivision is repealed once the actuarial value 
 27.9   of the assets of the plan equal or exceed the actuarial accrued 
 27.10  liability of the plan as determined by the actuary retained by 
 27.11  the legislative commission on pensions and retirement under 
 27.12  section 356.215.  The repeal is effective on the first day of 
 27.13  the first full pay period occurring after March 31 of the 
 27.14  calendar year following the issuance of the actuarial valuation 
 27.15  upon which the repeal is based. 
 27.16     Sec. 32.  Minnesota Statutes 1996, section 353.29, 
 27.17  subdivision 3, is amended to read: 
 27.18     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 27.19  in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
 27.20  1c, applies to any member who first became a public employee or 
 27.21  a member of a pension fund listed in section 356.30, subdivision 
 27.22  3, before July 1, 1989, unless paragraph (b), in conjunction 
 27.23  with section 353.30, subdivision 5, produces a higher annuity 
 27.24  amount, in which case paragraph (b) will apply.  The average 
 27.25  salary as defined in subdivision 2, multiplied by two the 
 27.26  percent specified in section 356.19, subdivision 3, for each 
 27.27  year of allowable service for the first ten years and thereafter 
 27.28  by 2.5 the percent specified in section 356.19, subdivision 4, 
 27.29  per year of allowable service and completed months less than a 
 27.30  full year for the "basic member," and one the percent specified 
 27.31  in section 356.19, subdivision 1, for each year of allowable 
 27.32  service for the first ten years and thereafter by 1.5 the 
 27.33  percent specified in section 356.19, subdivision 2, per year of 
 27.34  allowable service and completed months less than a full year for 
 27.35  the "coordinated member," shall determine the amount of the 
 27.36  "normal" retirement annuity. 
 28.1      (b) This paragraph applies to a member who has become at 
 28.2   least 55 years old and first became a public employee after June 
 28.3   30, 1989, and to any other member whose annuity amount, when 
 28.4   calculated under this paragraph and in conjunction with section 
 28.5   353.30, subdivision 5, is higher than it is when calculated 
 28.6   under paragraph (a), in conjunction with section 353.30, 
 28.7   subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined 
 28.8   in subdivision 2, multiplied by 2.5 the percent specified in 
 28.9   section 356.19, subdivision 4, for each year of allowable 
 28.10  service and completed months less than a full year for a basic 
 28.11  member and 1.5 the percent specified in section 356.19, 
 28.12  subdivision 2, per year of allowable service and completed 
 28.13  months less than a full year for a coordinated member, shall 
 28.14  determine the amount of the normal retirement annuity. 
 28.15     Sec. 33.  Minnesota Statutes 1996, section 353.651, 
 28.16  subdivision 3, is amended to read: 
 28.17     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] The average salary 
 28.18  as defined in subdivision 2, multiplied by 2.65 the percent 
 28.19  specified in section 356.19, subdivision 6, per year of 
 28.20  allowable service determines the amount of the normal retirement 
 28.21  annuity.  If the member has earned allowable service for 
 28.22  performing services other than those of a police officer or 
 28.23  firefighter, the annuity representing such service is computed 
 28.24  under sections 353.29 and 353.30. 
 28.25     Sec. 34.  Minnesota Statutes 1996, section 353.656, 
 28.26  subdivision 1, is amended to read: 
 28.27     Subdivision 1.  [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 
 28.28  A member of the police and fire fund who becomes disabled and 
 28.29  physically unfit to perform duties as a police officer or 
 28.30  firefighter subsequent to June 30, 1973, as a direct result of 
 28.31  an injury, sickness, or other disability incurred in or arising 
 28.32  out of any act of duty, which has or is expected to render the 
 28.33  member physically or mentally unable to perform duties as a 
 28.34  police officer or firefighter for a period of at least one year, 
 28.35  shall receive disability benefits during the period of such 
 28.36  disability.  The benefits must be in an amount equal to 53 60 
 29.1   percent of the "average salary" under subdivision 3, plus an 
 29.2   additional 2.65 percent specified in section 356.19, subdivision 
 29.3   6, of said average salary for each year of service in excess of 
 29.4   20 years.  Should disability under this subdivision occur before 
 29.5   the member has at least five years of allowable service credit 
 29.6   in the police and fire fund, the disability benefit must be 
 29.7   computed on the "average salary" from which deductions were made 
 29.8   for contribution to the police and fire fund. 
 29.9      Sec. 35.  Minnesota Statutes 1996, section 353.71, 
 29.10  subdivision 2, is amended to read: 
 29.11     Subd. 2.  [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] (a) 
 29.12  The deferred annuity, if any, accruing under subdivision 1, or 
 29.13  sections 353.34, subdivision 3, and 353.68, subdivision 4, shall 
 29.14  must be computed in the manner provided in said sections, on the 
 29.15  basis of allowable service prior to termination of public 
 29.16  service and augmented as provided herein.  The required reserves 
 29.17  applicable to a deferred annuity, or to an annuity for which a 
 29.18  former member was eligible but had not applied, or to any 
 29.19  deferred segment of an annuity shall be determined as of the 
 29.20  date the annuity begins to accrue and shall be augmented from 
 29.21  the first day of the month following the month in which the 
 29.22  former member ceased to be a public employee, or July 1, 1971, 
 29.23  whichever is later, to the first day of the month in which the 
 29.24  annuity begins to accrue, at the rate of five percent per annum 
 29.25  compounded annually until January 1, 1981, and at the rate of 
 29.26  three percent thereafter until January 1 of the year following 
 29.27  the year in which the former member attains age 55.  From that 
 29.28  date to the effective date of retirement, the rate is five 
 29.29  percent per annum compounded annually.  If a person has more 
 29.30  than one period of uninterrupted service, the required reserves 
 29.31  related to each period shall be augmented by interest pursuant 
 29.32  to this subdivision.  The sum of the augmented required reserves 
 29.33  so determined shall be the present value of the annuity.  
 29.34  Uninterrupted service for the purpose of this subdivision shall 
 29.35  mean periods of covered employment during which the employee has 
 29.36  not been separated from public service for more than two years.  
 30.1   If a person repays a refund, the service restored thereby shall 
 30.2   be considered as continuous with the next period of service for 
 30.3   which the employee has credit with this association. The formula 
 30.4   percentages used for each period of uninterrupted service shall 
 30.5   be those as would be applicable to a new employee.  This section 
 30.6   shall not reduce the annuity otherwise payable under this 
 30.7   chapter.  This subdivision shall apply to deferred annuitants of 
 30.8   record on July 1, 1971, and to employees who thereafter become 
 30.9   deferred annuitants; it shall also apply from July 1, 1971, to 
 30.10  former members who make application for an annuity after July 1, 
 30.11  1973. 
 30.12     (b) The retirement annuity or disability benefit of, or the 
 30.13  survivor benefit payable on behalf of, a former member who 
 30.14  terminated service before July 1, 1997, which is not first 
 30.15  payable until after June 30, 1997, must be increased on an 
 30.16  actuarial equivalent basis to reflect the change in the 
 30.17  postretirement interest rate actuarial assumption under section 
 30.18  356.215, subdivision 4d, from five percent to six percent under 
 30.19  a calculation procedure and tables adopted by the board and 
 30.20  approved by the actuary retained by the legislative commission 
 30.21  on pensions and retirement. 
 30.22     Sec. 36.  Minnesota Statutes 1996, section 353A.08, 
 30.23  subdivision 1, is amended to read: 
 30.24     Subdivision 1.  [ELECTION OF COVERAGE BY CURRENT RETIREES.] 
 30.25  A person who is receiving a service pension, disability benefit, 
 30.26  or survivorship survivor benefit is eligible to elect benefit 
 30.27  coverage provided under the relevant provisions of the public 
 30.28  employees police and fire fund benefit plan or to retain benefit 
 30.29  coverage provided under the relief association benefit plan in 
 30.30  effect on the effective date of the consolidation.  The relevant 
 30.31  provisions of the public employees police and fire fund benefit 
 30.32  plan for the person electing that benefit coverage are limited 
 30.33  to participation in the Minnesota postretirement investment fund 
 30.34  for any future postretirement adjustments based on the amount of 
 30.35  the benefit or pension payable on December 31, if December 31 is 
 30.36  the effective date of consolidation, or on the December 1 
 31.1   following the effective date of the consolidation, if other than 
 31.2   December 31.  The survivorship survivor benefit payable on 
 31.3   behalf of any service pension or disability benefit recipient 
 31.4   who elects benefit coverage under the public employees police 
 31.5   and fire fund benefit plan must be calculated under the relief 
 31.6   association benefit plan and is subject to participation in the 
 31.7   Minnesota postretirement investment fund for any future 
 31.8   postretirement adjustments based on the amount of the 
 31.9   survivorship survivor benefit payable.  
 31.10     A survivor benefit calculated under the relief association 
 31.11  benefit plan which is first payable after June 30, 1997, to the 
 31.12  surviving spouse of a retired member of a consolidation account 
 31.13  who, before July 1, 1997, chose to participate in the Minnesota 
 31.14  postretirement investment fund as provided under this 
 31.15  subdivision must be increased on the effective date of the 
 31.16  survivor benefit on an actuarial equivalent basis to reflect the 
 31.17  change in the postretirement interest rate actuarial assumption 
 31.18  under section 356.215, subdivision 4d, from five percent to six 
 31.19  percent under a calculation procedure and tables adopted by the 
 31.20  board and approved by the actuary retained by the legislative 
 31.21  commission on pensions and retirement. 
 31.22     By electing the public employees police and fire fund 
 31.23  benefit plan, a current service pension or disability benefit 
 31.24  recipient who, as of the first January 1 occurring after the 
 31.25  effective date of consolidation, has been receiving the pension 
 31.26  or benefit for at least seven months, or any survivor benefit 
 31.27  recipient who, as of the first January 1 occurring after the 
 31.28  effective date of consolidation, has been receiving the benefit 
 31.29  on the person's own behalf or in combination with a prior 
 31.30  applicable service pension or disability benefit for at least 
 31.31  seven months is eligible to receive a partial adjustment payable 
 31.32  from the Minnesota postretirement investment fund under section 
 31.33  11A.18, subdivision 9. 
 31.34     The election by any pension or benefit recipient must be 
 31.35  made on or before the deadline established by the board of the 
 31.36  public employees retirement association in a manner that 
 32.1   recognizes the number of persons eligible to make the election 
 32.2   and the anticipated time required to conduct any required 
 32.3   benefit counseling.  
 32.4      Sec. 37.  Minnesota Statutes 1996, section 353A.08, 
 32.5   subdivision 2, is amended to read: 
 32.6      Subd. 2.  [ELECTION OF COVERAGE BY CURRENT DEFERRED 
 32.7   RETIREES.] (a) Any person who has terminated active employment 
 32.8   as a police officer or firefighter, whichever applies, with the 
 32.9   municipality, has sufficient credit for service to entitle the 
 32.10  person to an eventual service pension and has not taken a refund 
 32.11  of accumulated member contributions, if applicable, shall have 
 32.12  the option to elect to have benefit coverage provided under the 
 32.13  relevant provisions of the public employees police and fire fund 
 32.14  benefit plan or to retain benefit coverage provided by the 
 32.15  relief association benefit plan in effect on the effective date 
 32.16  of consolidation.  The relevant provisions of the public 
 32.17  employees police and fire fund benefit plan for the person 
 32.18  electing that benefit coverage shall be the provisions specified 
 32.19  in subdivision 1.  
 32.20     The election shall be made when the person files an 
 32.21  application for receipt of the deferred service pension and 
 32.22  shall accompany that application.  
 32.23     (b) The retirement annuity for a deferred member of a 
 32.24  consolidated local relief association which consolidated before 
 32.25  July 1, 1997, who elected the relevant provisions of the public 
 32.26  employees police and fire fund benefit plan under subdivision 1 
 32.27  must be increased on an actuarial equivalent basis to reflect 
 32.28  the change in the postretirement interest rate actuarial 
 32.29  assumption under section 356.215, subdivision 4d, from five 
 32.30  percent to six percent under a calculation procedure and tables 
 32.31  adopted by the board of trustees of the public employees 
 32.32  retirement association and approved by the actuary retained by 
 32.33  the legislative commission on pensions and retirement. 
 32.34     Sec. 38.  Minnesota Statutes 1996, section 353A.083, is 
 32.35  amended by adding a subdivision to read: 
 32.36     Subd. 3.  [PRE-1997 CONSOLIDATION.] (a) For any 
 33.1   consolidation plan account in effect on July 1, 1997, the 
 33.2   applicable benefit plan coverage defined in paragraph (b) or (c) 
 33.3   applies unless the consolidation account's city approves the 
 33.4   extension of the post-June 30, 1997, public employees police and 
 33.5   fire fund benefit plan to the consolidation account members. 
 33.6      (b) If the applicable municipality has approved the July 1, 
 33.7   1993, public employees police and fire fund benefit provisions, 
 33.8   but has not approved the extension of the post-June 30, 1997, 
 33.9   public employees police and fire fund benefit provisions: 
 33.10     (1) the benefit accrual rate for calculating retirement 
 33.11  annuities that apply to consolidation account members who have 
 33.12  elected or elect coverage under the provisions of the public 
 33.13  employees police and fire fund benefit plan is 2.9 percent of 
 33.14  average salary under section 353.651, subdivision 2, per year of 
 33.15  allowable service; 
 33.16     (2) the optional survivor annuities payable to the 
 33.17  survivors of these consolidated members who elected coverage 
 33.18  under the provisions of the public employees police and fire 
 33.19  fund benefit plan must be determined using a benefit accrual 
 33.20  rate of 2.9 percent of average salary under section 353.651, 
 33.21  subdivision 2, per year of the member's allowable service; 
 33.22     (3) the disability benefit payable for these consolidated 
 33.23  members who elected or elect coverage under the provisions of 
 33.24  the public employees police and fire fund benefit plan and: 
 33.25     (i) who become disabled in the line of duty, as defined 
 33.26  under section 353.656, subdivision 1, is an amount equal to 58 
 33.27  percent of average salary under section 353.651, subdivision 2, 
 33.28  plus an additional 2.9 percent of that average salary for each 
 33.29  year of service in excess of 20 years; or 
 33.30     (ii) who become disabled because of sickness or injury 
 33.31  occurring while not on duty, as defined under section 353.656, 
 33.32  subdivision 3, is an amount equal to 43.50 percent of average 
 33.33  salary under section 353.651, subdivision 2, plus an additional 
 33.34  2.9 percent of that average salary for each year of service in 
 33.35  excess of 15 years. 
 33.36     (c) If the applicable municipality has not approved the 
 34.1   July 1, 1993, public employees police and fire fund benefit 
 34.2   provisions, and has not approved the extension of the post-June 
 34.3   30, 1997, public employees police and fire fund benefit 
 34.4   provisions: 
 34.5      (1) the benefit accrual rate for calculating retirement 
 34.6   annuities that apply to consolidation account members who have 
 34.7   elected or elect coverage under the provisions of the public 
 34.8   employees police and fire fund benefit plan is 2.74 percent of 
 34.9   average salary under section 353.651, subdivision 2, per year of 
 34.10  allowable service; 
 34.11     (2) the optional survivor annuities payable to the 
 34.12  survivors of these consolidated members who elected coverage 
 34.13  under the provisions of the public employees police and fire 
 34.14  fund benefit plan must be determined using a benefit accrual 
 34.15  rate of 2.74 percent of average salary under section 353.651, 
 34.16  subdivision 2, per year of the member's allowable service; 
 34.17     (3) the disability benefit payable for consolidated members 
 34.18  who elected or elect the coverage under the provisions of the 
 34.19  public employees police and fire fund benefit plan and: 
 34.20     (i) who become disabled in the line of duty, as defined 
 34.21  under section 353.656, subdivision 1, is an amount equal to 
 34.22  54.80 percent of the average salary under section 353.651, 
 34.23  subdivision 2, plus an additional 2.74 percent of that average 
 34.24  salary for each year of service in excess of 20 years; or 
 34.25     (ii) who become disabled because of sickness or injury 
 34.26  occurring while not on duty, as defined under section 353.656, 
 34.27  subdivision 3, is an amount equal to 41.10 percent of the 
 34.28  average salary under section 353.651, subdivision 2, plus an 
 34.29  additional 2.74 percent of that average salary for each year of 
 34.30  service in excess of 15 years. 
 34.31     Sec. 39.  Minnesota Statutes 1996, section 354.05, 
 34.32  subdivision 38, is amended to read: 
 34.33     Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 34.34  means age 65 for a person who first became a member of the 
 34.35  association or a member of a pension fund listed in section 
 34.36  356.30, subdivision 3, before July 1, 1989.  For a person who 
 35.1   first becomes a member of the association after June 30, 1989, 
 35.2   normal retirement age means the higher of age 65 or "retirement 
 35.3   age," as defined in United States Code, title 42, section 
 35.4   416(l), as amended, but not to exceed age 66. 
 35.5      Sec. 40.  Minnesota Statutes 1996, section 354.42, 
 35.6   subdivision 2, is amended to read: 
 35.7      Subd. 2.  [EMPLOYEE.] The employee contribution to the fund 
 35.8   shall be is an amount equal to 6.5 5.0 percent of the salary of 
 35.9   every coordinated member and 10.5 9.0 percent of the salary of 
 35.10  every basic member.  This contribution shall must be made by 
 35.11  deduction from salary.  Where any portion of a member's salary 
 35.12  is paid from other than public funds, such the member's employee 
 35.13  contribution shall must be based on the entire salary received.  
 35.14     Sec. 41.  Minnesota Statutes 1996, section 354.42, 
 35.15  subdivision 3, is amended to read: 
 35.16     Subd. 3.  [EMPLOYER.] The employer contribution to the fund 
 35.17  shall be is an amount equal to 4-1/2 5.0 percent of the salary 
 35.18  of each coordinated member and 8-1/2 9.0 percent of the salary 
 35.19  of each basic member.  
 35.20     Sec. 42.  Minnesota Statutes 1996, section 354.42, 
 35.21  subdivision 5, is amended to read: 
 35.22     Subd. 5.  [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) To 
 35.23  amortize the unfunded actuarial accrued liability computed under 
 35.24  the entry age actuarial cost method and disclosed under the 
 35.25  annual actuarial valuations prepared by the commission-retained 
 35.26  actuary under section 356.215, an additional employer 
 35.27  contribution shall must be made in the amount of 3.64 1.64 
 35.28  percent of the salary of each member.  
 35.29     (b) This contribution must be made in the manner provided 
 35.30  in section 354.52, subdivision 4.  
 35.31     (c) This subdivision is repealed once the actuarial value 
 35.32  of the assets of the plan equal or exceed the actuarial accrued 
 35.33  liability of the plan as determined by the actuary retained by 
 35.34  the legislative commission on pensions and retirement under 
 35.35  section 356.215.  The repeal is effective on the first day of 
 35.36  the first full pay period occurring after March 31 of the 
 36.1   calendar year following the issuance of the actuarial valuation 
 36.2   upon which the repeal is based. 
 36.3      By January 1 of each year, the board of directors shall 
 36.4   report to the legislative commission on pensions and retirement, 
 36.5   the chair of the committee on appropriations of the house of 
 36.6   representatives, and the chair of the committee on finance of 
 36.7   the senate on the amount raised by the additional employer 
 36.8   contribution rate in effect and whether that amount is less 
 36.9   than, the same as, or more than the required amortization 
 36.10  contribution determined under section 356.215. 
 36.11     Sec. 43.  Minnesota Statutes 1996, section 354.44, 
 36.12  subdivision 6, is amended to read: 
 36.13     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
 36.14  ANNUITY.] (1) The formula retirement annuity hereunder shall 
 36.15  must be computed in accordance with the applicable provisions of 
 36.16  the formulas stated in clause (2) or (4) on the basis of each 
 36.17  member's average salary for the period of the member's formula 
 36.18  service credit.  
 36.19     For all years of formula service credit, "average salary," 
 36.20  for the purpose of determining the member's retirement annuity, 
 36.21  means the average salary upon which contributions were made and 
 36.22  upon which payments were made to increase the salary limitation 
 36.23  provided in Minnesota Statutes 1971, section 354.511, for the 
 36.24  highest five successive years of formula service credit 
 36.25  provided, however, that such "average salary" shall not include 
 36.26  any more than the equivalent of 60 monthly salary payments.  
 36.27  Average salary must be based upon all years of formula service 
 36.28  credit if this service credit is less than five years. 
 36.29     (2) This clause, in conjunction with clause (3), applies to 
 36.30  a person who first became a member of the association or a 
 36.31  member of a pension fund listed in section 356.30, subdivision 
 36.32  3, before July 1, 1989, unless clause (4), in conjunction with 
 36.33  clause (5), produces a higher annuity amount, in which case 
 36.34  clause (4) applies.  The average salary as defined in clause 
 36.35  (1), multiplied by the following percentages per year of formula 
 36.36  service credit shall determine the amount of the annuity to 
 37.1   which the member qualifying therefor is entitled: 
 37.2                          Coordinated Member   Basic Member
 37.3   Each year of service     1.13 the           2.13 the
 37.4    during first ten        percent            percent
 37.5                            specified in       specified in
 37.6                            section 356.19,    section 356.19,
 37.7                            subdivision 1,     subdivision 3,
 37.8                            per year           per year
 37.9   Each year of service     1.63 the           2.63 the
 37.10   thereafter              percent            percent
 37.11                           specified in       specified in
 37.12                           section 356.19,    section 356.19,
 37.13                           subdivision 2,     subdivision 4,
 37.14                           per year           per year
 37.15     (3)(i) This clause applies only to a person who first 
 37.16  became a member of the association or a member of a pension fund 
 37.17  listed in section 356.30, subdivision 3, before July 1, 1989, 
 37.18  and whose annuity is higher when calculated under clause (2), in 
 37.19  conjunction with this clause than when calculated under clause 
 37.20  (4), in conjunction with clause (5). 
 37.21     (ii) Where any member retires prior to normal retirement 
 37.22  age under a formula annuity, the member shall be paid a 
 37.23  retirement annuity in an amount equal to the normal annuity 
 37.24  provided in clause (2) reduced by one-quarter of one percent for 
 37.25  each month that the member is under normal retirement age at the 
 37.26  time of retirement except that for any member who has 30 or more 
 37.27  years of allowable service credit, the reduction shall be 
 37.28  applied only for each month that the member is under age 62. 
 37.29     (iii) Any member whose attained age plus credited allowable 
 37.30  service totals 90 years is entitled, upon application, to a 
 37.31  retirement annuity in an amount equal to the normal annuity 
 37.32  provided in clause (2), without any reduction by reason of early 
 37.33  retirement. 
 37.34     (4) This clause applies to a member who has become at least 
 37.35  55 years old and first became a member of the association after 
 37.36  June 30, 1989, and to any other member who has become at least 
 38.1   55 years old and whose annuity amount when calculated under this 
 38.2   clause and in conjunction with clause (5), is higher than it is 
 38.3   when calculated under clause (2), in conjunction with clause (3).
 38.4   The average salary, as defined in clause (1) multiplied by 2.63 
 38.5   the percent specified by section 356.19, subdivision 4, for each 
 38.6   year of service for a basic member and by 1.63 the 
 38.7   percent specified in section 356.19, subdivision 2, for each 
 38.8   year of service for a coordinated member shall determine the 
 38.9   amount of the retirement annuity to which the member is entitled.
 38.10     (5) This clause applies to a person who has become at least 
 38.11  55 years old and first becomes a member of the association after 
 38.12  June 30, 1989, and to any other member who has become at least 
 38.13  55 years old and whose annuity is higher when calculated under 
 38.14  clause (4) in conjunction with this clause than when calculated 
 38.15  under clause (2), in conjunction with clause (3).  An employee 
 38.16  who retires under the formula annuity before the normal 
 38.17  retirement age shall be paid the normal annuity provided in 
 38.18  clause (4) reduced so that the reduced annuity is the actuarial 
 38.19  equivalent of the annuity that would be payable to the employee 
 38.20  if the employee deferred receipt of the annuity and the annuity 
 38.21  amount were augmented at an annual rate of three percent 
 38.22  compounded annually from the day the annuity begins to accrue 
 38.23  until the normal retirement age. 
 38.24     Sec. 44.  Minnesota Statutes 1996, section 354.44, is 
 38.25  amended by adding a subdivision to read: 
 38.26     Subd. 6a.  [EXTENSION OF 1997 PERMANENT INCREASE.] (a) A 
 38.27  percentage of the permanent increase for benefit recipients 
 38.28  effective July 1, 1997, under section 62, as specified in 
 38.29  paragraph (b), is payable to: 
 38.30     (1) a member who terminates service after June 30, 1997, 
 38.31  and whose benefit begins to accrue during the period of July 2, 
 38.32  1997, to July 1, 2002, based on the member's age at retirement. 
 38.33     (2) a member who is determined to be totally and 
 38.34  permanently disabled under section 354.05, subdivision 14, after 
 38.35  June 30, 1997, and whose benefit begins to accrue during the 
 38.36  period of July 2, 1997, to July 1, 2002, based on the member's 
 39.1   age at disability. 
 39.2      (3) the survivor of a member who dies after June 30, 1997, 
 39.3   and whose benefit begins to accrue during the period of July 2, 
 39.4   1997, to July 1, 2002. 
 39.5      (b) The percentage of the permanent increase is the amount 
 39.6   designated for the applicable beginning benefit accrual date, as 
 39.7   follows: 
 39.8    Beginning Benefit                    Percentage of  
 39.9      Accrual Date                     Permanent Increase  
 39.10   July 2, 1997 to July 1, 1998          50 percent  
 39.11   July 2, 1998 to July 1, 1999          40 percent  
 39.12   July 2, 1999 to July 1, 2000          30 percent  
 39.13   July 2, 2000 to July 1, 2001          20 percent  
 39.14   July 2, 2001 to July 1, 2002          10 percent 
 39.15     Sec. 45.  Minnesota Statutes 1996, section 354.53, 
 39.16  subdivision 1, is amended to read: 
 39.17     Subdivision 1.  [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 
 39.18  employee given a leave of absence to enter military service and 
 39.19  who returns to teaching service upon discharge from military 
 39.20  service as provided in section 192.262, shall may obtain credit 
 39.21  for the period of military service but shall not receive credit 
 39.22  for any voluntary extension of military service at the instance 
 39.23  of the member beyond the initial period of enlistment, induction 
 39.24  or call to active duty.  The member shall obtain credit by 
 39.25  paying into the fund an employee contribution based upon 
 39.26  the salary of the member at the date of return from military 
 39.27  service.  The amount of this contribution shall be as follows: 
 39.28  
 39.29         Period          Basic Member     Coordinated Member
 39.30       July 1, 1973       8 percent          4 percent
 39.31  thru
 39.32  June 30, 1979
 39.33  July 1, 1979
 39.34  and 8.5 percent 4.5 percent
 39.35  thereafter
 39.36     The contributions specified in this subdivision shall be 
 40.1   contribution rates in effect at the time that the military 
 40.2   service was performed multiplied by the annual salary rate of 
 40.3   the member for the year beginning with the date of return from 
 40.4   military service and the number of years of military service 
 40.5   together with interest thereon at an annual rate of 8.5 percent 
 40.6   compounded annually from the time the military service was 
 40.7   rendered to the first date of payment.  The employer 
 40.8   contribution and additional contribution provided in section 
 40.9   354.42 shall must be paid by the employing unit at the rates in 
 40.10  effect at the time that the military service was performed, 
 40.11  applied to the annual salary rate of the member for the year 
 40.12  beginning with the date of return from military service, in the 
 40.13  manner provided in section 354.52, subdivision 4. 
 40.14     Sec. 46.  Minnesota Statutes 1996, section 354.55, 
 40.15  subdivision 11, is amended to read: 
 40.16     Subd. 11.  [DEFERRED ANNUITY; AUGMENTATION.] (a) Any person 
 40.17  covered under section 354.44, subdivision 6, who ceases to 
 40.18  render teaching service, may leave the person's accumulated 
 40.19  deductions in the fund for the purpose of receiving a deferred 
 40.20  annuity at retirement.  Eligibility for an annuity under this 
 40.21  subdivision shall be is governed pursuant to section 354.44, 
 40.22  subdivision 1, or 354.60. 
 40.23     (b) The amount of the deferred retirement annuity shall be 
 40.24  is determined by section 354.44, subdivision 6, and augmented as 
 40.25  provided in this subdivision.  The required reserves related to 
 40.26  that portion of the annuity which had accrued when the member 
 40.27  ceased to render teaching service shall must be augmented by 
 40.28  interest compounded annually from the first day of the month 
 40.29  following the month during which the member ceased to render 
 40.30  teaching service to the effective date of retirement.  There 
 40.31  shall be no augmentation if this period is less than three 
 40.32  months or if this period commences prior to July 1, 1971.  The 
 40.33  rates of interest used for this purpose shall must be five 
 40.34  percent compounded annually commencing July 1, 1971, until 
 40.35  January 1, 1981, and three percent compounded annually 
 40.36  thereafter until January 1 of the year following the year in 
 41.1   which the former member attains age 55.  From that date to the 
 41.2   effective date of retirement, the rate is five percent 
 41.3   compounded annually.  If a person has more than one period of 
 41.4   uninterrupted service, a separate average salary determined 
 41.5   under section 354.44, subdivision 6, must be used for each 
 41.6   period and the required reserves related to each period shall 
 41.7   must be augmented by interest pursuant to this subdivision.  The 
 41.8   sum of the augmented required reserves so determined shall be 
 41.9   the basis for purchasing the deferred annuity.  If a person 
 41.10  repays a refund, the service restored by the repayment must be 
 41.11  considered as continuous with the next period of service for 
 41.12  which the person has credit with this fund.  If a person does 
 41.13  not render teaching service in any one fiscal year or more 
 41.14  consecutive fiscal years and then resumes teaching service, the 
 41.15  formula percentages used from the date of the resumption of 
 41.16  teaching service shall must be those applicable to new members.  
 41.17  The mortality table and interest assumption used to compute the 
 41.18  annuity shall must be the applicable mortality table established 
 41.19  by the board under section 354.07, subdivision 1, and the 
 41.20  interest rate assumption under section 356.215 in effect when 
 41.21  the member retires.  A period of uninterrupted service for the 
 41.22  purposes of this subdivision means a period of covered teaching 
 41.23  service during which the member has not been separated from 
 41.24  active service for more than one fiscal year. 
 41.25     (c) In no case shall the annuity payable under this 
 41.26  subdivision be less than the amount of annuity payable pursuant 
 41.27  to section 354.44, subdivision 6. 
 41.28     (d) The requirements and provisions for retirement before 
 41.29  normal retirement age contained in section 354.44, subdivision 
 41.30  6, clause (3) or (5), shall also apply to an employee fulfilling 
 41.31  the requirements with a combination of service as provided in 
 41.32  section 354.60. 
 41.33     (e) The augmentation provided by this subdivision applies 
 41.34  to the benefit provided in section 354.46, subdivision 2. 
 41.35     (f) The augmentation provided by this subdivision shall not 
 41.36  apply to any period in which a person is on an approved leave of 
 42.1   absence from an employer unit covered by the provisions of this 
 42.2   chapter.  
 42.3      (g) The retirement annuity or disability benefit of, or the 
 42.4   survivor benefit payable on behalf of, a former teacher who 
 42.5   terminated service before July 1, 1997, which is not first 
 42.6   payable until after June 30, 1997, must be increased on an 
 42.7   actuarial equivalent basis to reflect the change in the 
 42.8   postretirement interest rate actuarial assumption under section 
 42.9   356.215, subdivision 4d, from five percent to six percent under 
 42.10  a calculation procedure and tables adopted by the board as 
 42.11  recommended by an approved actuary and approved by the actuary 
 42.12  retained by the legislative commission on pensions and 
 42.13  retirement. 
 42.14     Sec. 47.  [356.19] [RETIREMENT BENEFIT FORMULA 
 42.15  PERCENTAGES.] 
 42.16     Subdivision 1.  [COORDINATED PLAN MEMBERS.] The applicable 
 42.17  benefit accrual rate is 1.2 percent. 
 42.18     Subd. 2.  [COORDINATED PLAN MEMBERS.] The applicable 
 42.19  benefit accrual rate is 1.7 percent. 
 42.20     Subd. 3.  [BASIC PLAN MEMBERS.] The applicable benefit 
 42.21  accrual rate is 2.2 percent. 
 42.22     Subd. 4.  [BASIC PLAN MEMBERS.] The applicable benefit 
 42.23  accrual rate is 2.7 percent. 
 42.24     Subd. 5.  [CORRECTIONAL PLAN MEMBERS.] The applicable 
 42.25  benefit accrual rate is 2.4 percent. 
 42.26     Subd. 6.  [STATE TROOPERS PLAN AND POLICE/FIRE PLAN 
 42.27  MEMBERS.] The applicable benefit accrual rate is 3.0 percent. 
 42.28     Subd. 7.  [JUDGES PLAN.] The applicable benefit accrual 
 42.29  rate is 2.7 percent. 
 42.30     Subd. 8.  [JUDGES PLAN.] The applicable benefit accrual 
 42.31  rate is 3.2 percent. 
 42.32     Subd. 9.  [FUTURE BENEFIT ACCRUAL RATE INCREASES.] After 
 42.33  January 2, 1998, benefit accrual rate increases under this 
 42.34  section must apply only to allowable service or formula service 
 42.35  rendered after the effective date of the benefit accrual rate 
 42.36  increase. 
 43.1      Sec. 48.  Minnesota Statutes 1996, section 356.20, 
 43.2   subdivision 2, is amended to read: 
 43.3      Subd. 2.  [COVERED PUBLIC PENSION FUNDS.] This section 
 43.4   applies to the following public pension plans: 
 43.5      (1) State employees retirement fund. 
 43.6      (2) Public employees retirement fund. 
 43.7      (3) Teachers retirement association. 
 43.8      (4) State patrol retirement fund. 
 43.9      (5) Minneapolis teachers retirement fund association. 
 43.10     (6) St. Paul teachers retirement fund association. 
 43.11     (7) Duluth teachers retirement fund association. 
 43.12     (8) Minneapolis employees retirement fund. 
 43.13     (9) University of Minnesota faculty retirement plan. 
 43.14     (10) University of Minnesota faculty supplemental 
 43.15  retirement plan. 
 43.16     (11) Judges retirement fund. 
 43.17     (12) Any police or firefighter's relief association 
 43.18  enumerated in section 69.77, subdivision 1a or 69.771, 
 43.19  subdivision 1. 
 43.20     (13) Public employees police and fire fund.  
 43.21     (14) Minnesota state retirement system correctional 
 43.22  officers retirement fund.  
 43.23     (15) Public employees local government correctional service 
 43.24  retirement plan. 
 43.25     Sec. 49.  Minnesota Statutes 1996, section 356.215, 
 43.26  subdivision 2, is amended to read: 
 43.27     Subd. 2.  [REQUIREMENTS.] (a) It is the policy of the 
 43.28  legislature that it is necessary and appropriate to determine 
 43.29  annually the financial status of tax supported retirement and 
 43.30  pension plans for public employees.  To achieve this goal, the 
 43.31  legislative commission on pensions and retirement shall have 
 43.32  prepared by the actuary retained by the commission annual 
 43.33  actuarial valuations of the retirement plans enumerated in 
 43.34  section 3.85, subdivision 11, paragraph (b), and quadrennial 
 43.35  experience studies of the retirement plans enumerated in section 
 43.36  3.85, subdivision 11, paragraph (b), clauses (1), (2), and (7), 
 44.1   and, two years after each set of quadrennial experience studies, 
 44.2   quadrennial projection valuations of the retirement plans 
 44.3   enumerated in section 3.85, subdivision 11, paragraph (b), 
 44.4   clauses (1), (2), and (7), and of any other retirement plan 
 44.5   enumerated in section 3.85, subdivision 11, paragraph (b), for 
 44.6   which it determines that the analysis is beneficial.  The 
 44.7   governing or managing board or administrative officials of each 
 44.8   public pension and retirement fund or plan enumerated in section 
 44.9   356.20, subdivision 2, clauses (9), (10), and (12), shall have 
 44.10  prepared by an approved actuary annual actuarial valuations of 
 44.11  their respective funds as provided in this section.  This 
 44.12  requirement also applies to any fund that is the successor to 
 44.13  any organization enumerated in section 356.20, subdivision 2, or 
 44.14  to the governing or managing board or administrative officials 
 44.15  of any newly formed retirement fund or association operating 
 44.16  under the control or supervision of any public employee group, 
 44.17  governmental unit, or institution receiving a portion of its 
 44.18  support through legislative appropriations, and any local police 
 44.19  or fire fund coming within the provisions of section 356.216. 
 44.20     (b) The quadrennial projection valuations required under 
 44.21  paragraph (a) are intended to serve as an additional analytical 
 44.22  tool with which policy makers may assess the future funding 
 44.23  status of public plans through forecasting and testing various 
 44.24  potential outcomes over time if certain plan assumptions or 
 44.25  valuation methods were to be modified.  In consultation with the 
 44.26  executive director of the legislative commission on pensions and 
 44.27  retirement, the retirement fund directors, the state economist, 
 44.28  the state demographer, the commissioner of finance, and the 
 44.29  commissioner of employee relations, the actuary retained by the 
 44.30  legislative commission on pensions and retirement shall perform 
 44.31  the quadrennial projection valuations, testing future 
 44.32  implications for plan funding by modifying assumptions and 
 44.33  methods currently in place.  The commission-retained actuary 
 44.34  shall provide advice to the commission as to the periods over 
 44.35  which such projections should be made, the nature and scope of 
 44.36  the scenarios to be analyzed, the measures of funding status to 
 45.1   be employed, and shall report the results of these analyses in 
 45.2   the same manner as for quadrennial experience studies. 
 45.3      Sec. 50.  Minnesota Statutes 1996, section 356.215, 
 45.4   subdivision 4d, is amended to read: 
 45.5      Subd. 4d.  [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 
 45.6   governed by chapters chapter 352B, 353C, and by sections 352.90 
 45.7   through 352.951 and 353.63 through 353.68, the actuarial 
 45.8   valuation must use a preretirement interest assumption of 8.5 
 45.9   percent, a postretirement interest assumption of five six 
 45.10  percent, and a future salary increase assumption of 6.5 percent. 
 45.11     (b) For funds governed by chapter 354A, the actuarial 
 45.12  valuation must use preretirement and postretirement assumptions 
 45.13  of 8.5 percent and a future salary increase assumption of 6.5 
 45.14  percent, but the actuarial valuation must reflect the payment of 
 45.15  postretirement adjustments to retirees, based on the methods 
 45.16  specified in the bylaws of the fund as approved by the 
 45.17  legislature.  For a fund governed by chapter 422A, the actuarial 
 45.18  valuation shall use a preretirement interest assumption of six 
 45.19  percent, a postretirement interest assumption of five percent, 
 45.20  and an assumption that in each future year the salary on which a 
 45.21  retirement or other benefit is based is 1.04 multiplied by the 
 45.22  salary for the preceding year.  
 45.23     (c) For all other funds not specified in paragraph (a), 
 45.24  (b), (d), or (e), the actuarial valuation must use a 
 45.25  preretirement interest assumption of five percent, a 
 45.26  postretirement interest assumption of five percent, and a future 
 45.27  salary increase assumption of 3.5 percent. 
 45.28     (d) For funds governed by chapters 3A, 352C, and 490, the 
 45.29  actuarial valuation must use a preretirement interest assumption 
 45.30  of 8.5 percent, a postretirement interest assumption of five six 
 45.31  percent, and a future salary increase assumption of 6.5 percent 
 45.32  in each future year in which the salary amount payable is not 
 45.33  determinable from section 3.099, 15A.081, subdivision 6, or 
 45.34  15A.083, subdivision 1, whichever applies, or from applicable 
 45.35  compensation council recommendations under section 15A.082. 
 45.36     (e) For funds governed by sections 352.01 through 352.86, 
 46.1   353.01 through 353.46, and chapter 354, the actuarial valuation 
 46.2   must use a preretirement interest assumption of 8.5, a 
 46.3   postretirement interest assumption of five six percent, and a 
 46.4   graded rate future salary increase assumption as follows: 
 46.5           General state   General public   
 46.6             employees       employees         Teachers  
 46.7            retirement      retirement        retirement 
 46.8    Age        plan            plan              plan 
 46.9    16        7.2500%         8.71%              7.25%
 46.10   17        7.2500          8.71               7.25 
 46.11   18        7.2500          8.70               7.25 
 46.12   19        7.2500          8.70               7.25 
 46.13   20        7.2500          7.70               7.25 
 46.14   21        7.1454          7.70               7.25 
 46.15   22        7.1094          7.70               7.25 
 46.16   23        7.0725          7.70               7.20 
 46.17   24        7.0363          7.70               7.15 
 46.18   25        7.0000          7.60               7.10 
 46.19   26        7.0000          7.51               7.05 
 46.20   27        7.0000          7.39               7.00 
 46.21   28        7.0000          7.30               7.00 
 46.22   29        7.0000          7.20               7.00 
 46.23   30        7.0000          7.20               7.00 
 46.24   31        7.0000          7.10               7.00 
 46.25   32        7.0000          7.10               7.00 
 46.26   33        7.0000          7.00               7.00 
 46.27   34        7.0000          7.00               7.00 
 46.28   35        7.0000          6.90               7.00 
 46.29   36        6.9019          6.80               7.00 
 46.30   37        6.8074          6.70               7.00 
 46.31   38        6.7125          6.60               6.90 
 46.32   39        6.6054          6.50               6.80 
 46.33   40        6.5000          6.40               6.70 
 46.34   41        6.3540          6.30               6.60 
 46.35   42        6.2087          6.30               6.50 
 46.36   43        6.0622          6.30               6.35 
 47.1    44        5.9048          6.20               6.20 
 47.2    45        5.7500          6.20               6.05 
 47.3    46        5.6940          6.09               5.90 
 47.4    47        5.6375          6.00               5.75 
 47.5    48        5.5822          5.90               5.70 
 47.6    49        5.5405          5.80               5.65 
 47.7    50        5.5000          5.70               5.60 
 47.8    51        5.4384          5.70               5.55 
 47.9    52        5.3776          5.70               5.50 
 47.10   53        5.3167          5.70               5.45 
 47.11   54        5.2826          5.70               5.40 
 47.12   55        5.2500          5.70               5.35 
 47.13   56        5.2500          5.70               5.30 
 47.14   57        5.2500          5.70               5.25 
 47.15   58        5.2500          5.70               5.25 
 47.16   59        5.2500          5.70               5.25 
 47.17   60        5.2500          5.00               5.25 
 47.18   61        5.2500          5.00               5.25 
 47.19   62        5.2500          5.00               5.25 
 47.20   63        5.2500          5.00               5.25 
 47.21   64        5.2500          5.00               5.25 
 47.22   65        5.2500          5.00               5.25 
 47.23   66        5.2500          5.00               5.25 
 47.24   67        5.2500          5.00               5.25 
 47.25   68        5.2500          5.00               5.25 
 47.26   69        5.2500          5.00               5.25 
 47.27   70        5.2500          5.00               5.25 
 47.28     Sec. 51.  Minnesota Statutes 1996, section 356.215, 
 47.29  subdivision 4g, is amended to read: 
 47.30     Subd. 4g.  [AMORTIZATION CONTRIBUTIONS.] (a) In addition to 
 47.31  the exhibit indicating the level normal cost, the actuarial 
 47.32  valuation must contain an exhibit indicating the additional 
 47.33  annual contribution sufficient to amortize the unfunded 
 47.34  actuarial accrued liability.  For funds governed by chapters 3A, 
 47.35  352, 352B, 352C, 353, 353C, 354, 354A, and 490, the additional 
 47.36  contribution must be calculated on a level percentage of covered 
 48.1   payroll basis by the established date for full funding in effect 
 48.2   when the valuation is prepared.  For funds governed by chapter 
 48.3   3A, sections 352.90 through 352.951, chapters 352B, 352C, 
 48.4   sections 353.63 through 353.68, and chapters 353C, 354A, and 
 48.5   490, the level percent additional contribution must be 
 48.6   calculated assuming annual payroll growth of 6.5 percent.  For 
 48.7   funds governed by sections 352.01 through 352.86 and chapter 
 48.8   354, the level percent additional contribution must be 
 48.9   calculated assuming an annual payroll growth of five percent.  
 48.10  For the fund governed by sections 353.01 through 353.46, the 
 48.11  level percent additional contribution must be calculated 
 48.12  assuming an annual payroll growth of six percent.  For all other 
 48.13  funds, the additional annual contribution must be calculated on 
 48.14  a level annual dollar amount basis. 
 48.15     (b) For any fund other than the Minneapolis employees 
 48.16  retirement fund, after the first actuarial valuation date 
 48.17  occurring after June 1, 1989, if there has not been a change in 
 48.18  the actuarial assumptions used for calculating the actuarial 
 48.19  accrued liability of the fund, a change in the benefit plan 
 48.20  governing annuities and benefits payable from the fund, a change 
 48.21  in the actuarial cost method used in calculating the actuarial 
 48.22  accrued liability of all or a portion of the fund, or a 
 48.23  combination of the three, which change or changes by themselves 
 48.24  without inclusion of any other items of increase or decrease 
 48.25  produce a net increase in the unfunded actuarial accrued 
 48.26  liability of the fund, the established date for full funding for 
 48.27  the first actuarial valuation made after June 1, 1989, and each 
 48.28  successive actuarial valuation is the first actuarial valuation 
 48.29  date occurring after June 1, 2020.  
 48.30     (c) For any fund or plan other than the Minneapolis 
 48.31  employees retirement fund, after the first actuarial valuation 
 48.32  date occurring after June 1, 1989, if there has been a change in 
 48.33  any or all of the actuarial assumptions used for calculating the 
 48.34  actuarial accrued liability of the fund, a change in the benefit 
 48.35  plan governing annuities and benefits payable from the fund, a 
 48.36  change in the actuarial cost method used in calculating the 
 49.1   actuarial accrued liability of all or a portion of the fund, or 
 49.2   a combination of the three, and the change or changes, by 
 49.3   themselves and without inclusion of any other items of increase 
 49.4   or decrease, produce a net increase in the unfunded actuarial 
 49.5   accrued liability in the fund, the established date for full 
 49.6   funding must be determined using the following procedure:  
 49.7      (i) the unfunded actuarial accrued liability of the fund 
 49.8   must be determined in accordance with the plan provisions 
 49.9   governing annuities and retirement benefits and the actuarial 
 49.10  assumptions in effect before an applicable change; 
 49.11     (ii) the level annual dollar contribution or level 
 49.12  percentage, whichever is applicable, needed to amortize the 
 49.13  unfunded actuarial accrued liability amount determined under 
 49.14  item (i) by the established date for full funding in effect 
 49.15  before the change must be calculated using the interest 
 49.16  assumption specified in subdivision 4d in effect before the 
 49.17  change; 
 49.18     (iii) the unfunded actuarial accrued liability of the fund 
 49.19  must be determined in accordance with any new plan provisions 
 49.20  governing annuities and benefits payable from the fund and any 
 49.21  new actuarial assumptions and the remaining plan provisions 
 49.22  governing annuities and benefits payable from the fund and 
 49.23  actuarial assumptions in effect before the change; 
 49.24     (iv) the level annual dollar contribution or level 
 49.25  percentage, whichever is applicable, needed to amortize the 
 49.26  difference between the unfunded actuarial accrued liability 
 49.27  amount calculated under item (i) and the unfunded actuarial 
 49.28  accrued liability amount calculated under item (iii) over a 
 49.29  period of 30 years from the end of the plan year in which the 
 49.30  applicable change is effective must be calculated using the 
 49.31  applicable interest assumption specified in subdivision 4d in 
 49.32  effect after any applicable change; 
 49.33     (v) the level annual dollar or level percentage 
 49.34  amortization contribution under item (iv) must be added to the 
 49.35  level annual dollar amortization contribution or level 
 49.36  percentage calculated under item (ii); 
 50.1      (vi) the period in which the unfunded actuarial accrued 
 50.2   liability amount determined in item (iii) is amortized by the 
 50.3   total level annual dollar or level percentage amortization 
 50.4   contribution computed under item (v) must be calculated using 
 50.5   the interest assumption specified in subdivision 4d in effect 
 50.6   after any applicable change, rounded to the nearest integral 
 50.7   number of years, but not to exceed 30 years from the end of the 
 50.8   plan year in which the determination of the established date for 
 50.9   full funding using the procedure set forth in this clause is 
 50.10  made and not to be less than the period of years beginning in 
 50.11  the plan year in which the determination of the established date 
 50.12  for full funding using the procedure set forth in this clause is 
 50.13  made and ending by the date for full funding in effect before 
 50.14  the change; and 
 50.15     (vii) the period determined under item (vi) must be added 
 50.16  to the date as of which the actuarial valuation was prepared and 
 50.17  the date obtained is the new established date for full funding.  
 50.18     (d) For the Minneapolis employees retirement fund, the 
 50.19  established date for full funding is June 30, 2020. 
 50.20     (e) For the public employees retirement association police 
 50.21  and fire fund plan, the correctional employees retirement plan 
 50.22  of the Minnesota state retirement system, and the state patrol 
 50.23  retirement plan, an excess of valuation assets over actuarial 
 50.24  accrued liability will must be amortized in the same manner over 
 50.25  the same period as an unfunded actuarial accrued liability 
 50.26  but will must serve to reduce the required contribution instead 
 50.27  of increasing it. 
 50.28     Sec. 52.  Minnesota Statutes 1996, section 356.217, is 
 50.29  amended to read: 
 50.30     356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.] 
 50.31     (a) The actuary retained by the legislative commission on 
 50.32  pensions and retirement is not required to prepare actuarial 
 50.33  valuations of the public employees local government correctional 
 50.34  employees retirement plan unless the plan is implemented by a 
 50.35  county under section 353C.04. 
 50.36     (b) The cost of any requested benefit projections by the 
 51.1   commission-retained actuary relating to the Minnesota 
 51.2   postretirement investment fund for the state board of investment 
 51.3   is payable by the state board of investment. 
 51.4      (c) (b) Actuarial valuations under section 356.215, for 
 51.5   July 1, 1991, and thereafter, are not required to have an 
 51.6   individual commentary section.  The commentary section, if 
 51.7   omitted from the individual plan actuarial valuation, must be 
 51.8   included in an appropriate generalized format as part of the 
 51.9   report to the legislature under section 3.85, subdivision 11. 
 51.10     (d) (c) Actuarial valuations under section 356.215, for 
 51.11  July 1, 1991, and thereafter, are not required to contain 
 51.12  separate actuarial valuation results for basic and coordinated 
 51.13  programs unless each program has a membership of at least ten 
 51.14  percent of the total membership of the fund.  Actuarial 
 51.15  valuations under section 356.215, for July 1, 1991, and 
 51.16  thereafter, are not required to contain cash flow forecasts. 
 51.17     (e) (d) Actuarial valuations of the public employees police 
 51.18  and fire fund local consolidation accounts for July 1, 1991, and 
 51.19  thereafter, are not required to contain separate tabulations or 
 51.20  summaries of active member, service retirement, disability 
 51.21  retirement, and survivor data for each local consolidation 
 51.22  account. 
 51.23     (f) (e) The commission-retained actuary is: 
 51.24     (1) required to publish experience findings for plans for 
 51.25  which experience findings are required only on a quadrennial 
 51.26  basis for the four-year period ending June 30, 1992, and every 
 51.27  four years thereafter; 
 51.28     (2) not required to prepare a separate experience analysis 
 51.29  or publish separate experience findings for basic and 
 51.30  coordinated programs if separate actuarial valuation results for 
 51.31  the programs are not required; and 
 51.32     (3) not required to calculate investment rate of return 
 51.33  experience results on any basis other than current asset value 
 51.34  as defined in section 356.215, subdivision 1, clause (6). 
 51.35     Sec. 53.  Minnesota Statutes 1996, section 356.30, 
 51.36  subdivision 1, is amended to read: 
 52.1      Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 
 52.2   Notwithstanding any provisions to the contrary of the laws 
 52.3   governing the funds enumerated in subdivision 3, a person who 
 52.4   has met the qualifications of clause (2) may elect to receive a 
 52.5   retirement annuity from each fund in which the person has at 
 52.6   least six months allowable service, based on the allowable 
 52.7   service in each fund, subject to the provisions of clause (3).  
 52.8      (2) A person may receive upon retirement a retirement 
 52.9   annuity from each fund in which the person has at least six 
 52.10  months allowable service, and augmentation of a deferred annuity 
 52.11  calculated under the laws governing each public pension plan or 
 52.12  fund named in subdivision 3, from the date the person terminated 
 52.13  all public service if: 
 52.14     (a) the person has allowable service totaling an amount 
 52.15  that allows the person to receive an annuity in any two or more 
 52.16  of the enumerated funds; and 
 52.17     (b) the person has not begun to receive an annuity from any 
 52.18  enumerated fund or the person has made application for benefits 
 52.19  from all funds and the effective dates of the retirement annuity 
 52.20  with each fund under which the person chooses to receive an 
 52.21  annuity are within a one-year period.  
 52.22     (3) The retirement annuity from each fund must be based 
 52.23  upon the allowable service in each fund, except that:  
 52.24     (a) The laws governing annuities must be the law in effect 
 52.25  on the date of termination from the last period of public 
 52.26  service under a covered fund with which the person earned a 
 52.27  minimum of one-half year of allowable service credit during that 
 52.28  employment.  
 52.29     (b) The "average salary" on which the annuity from each 
 52.30  covered fund in which the employee has credit in a formula plan 
 52.31  shall be based on the employee's highest five successive years 
 52.32  of covered salary during the entire service in covered funds.  
 52.33     (c) The formula percentages to be used by each fund must be 
 52.34  those percentages prescribed by each fund's formula as continued 
 52.35  for the respective years of allowable service from one fund to 
 52.36  the next, recognizing all previous allowable service with the 
 53.1   other covered funds.  
 53.2      (d) Allowable service in all the funds must be combined in 
 53.3   determining eligibility for and the application of each fund's 
 53.4   provisions in respect to actuarial reduction in the annuity 
 53.5   amount for retirement prior to normal retirement.  
 53.6      (e) The annuity amount payable for any allowable service 
 53.7   under a nonformula plan of a covered fund must not be affected 
 53.8   but such service and covered salary must be used in the above 
 53.9   calculation.  
 53.10     (f) This section shall not apply to any person whose final 
 53.11  termination from the last public service under a covered fund is 
 53.12  prior to May 1, 1975.  
 53.13     (g) For the purpose of computing annuities under this 
 53.14  section the formula percentages used by any covered fund, except 
 53.15  the basic program of the teachers retirement association, the 
 53.16  public employees police and fire fund, and the state patrol 
 53.17  retirement fund, must not exceed 2-1/2 the percent specified in 
 53.18  section 356.19, subdivision 4, per year of service for any year 
 53.19  of service or fraction thereof.  The formula percentage used by 
 53.20  the public employees police and fire fund and the state patrol 
 53.21  retirement fund must not exceed 2.65 the percent specified in 
 53.22  section 356.19, subdivision 6, per year of service for any year 
 53.23  of service or fraction thereof.  The formula percentage used by 
 53.24  the teachers retirement association must not exceed 2.63 percent 
 53.25  per year of basic program service for any year of basic program 
 53.26  service or fraction thereof.  The formula percentage used by the 
 53.27  legislators retirement plan and the elective state officers 
 53.28  retirement must not exceed 2.5 percent, but this limit does not 
 53.29  apply to the adjustment provided under section 3A.02, 
 53.30  subdivision 1, paragraph (c), or 352C.031, paragraph (b). 
 53.31     (h) Any period of time for which a person has credit in 
 53.32  more than one of the covered funds must be used only once for 
 53.33  the purpose of determining total allowable service.  
 53.34     (i) If the period of duplicated service credit is more than 
 53.35  six months, or the person has credit for more than six months 
 53.36  with each of the funds, each fund shall apply its formula to a 
 54.1   prorated service credit for the period of duplicated service 
 54.2   based on a fraction of the salary on which deductions were paid 
 54.3   to that fund for the period divided by the total salary on which 
 54.4   deductions were paid to all funds for the period.  
 54.5      (j) If the period of duplicated service credit is less than 
 54.6   six months, or when added to other service credit with that fund 
 54.7   is less than six months, the service credit must be ignored and 
 54.8   a refund of contributions made to the person in accord with that 
 54.9   fund's refund provisions.  
 54.10     Sec. 54.  Minnesota Statutes 1996, section 356.30, 
 54.11  subdivision 3, is amended to read: 
 54.12     Subd. 3.  [COVERED FUNDS.] This section applies to the 
 54.13  following retirement funds: 
 54.14     (1) state employees retirement fund, established pursuant 
 54.15  to chapter 352; 
 54.16     (2) correctional employees retirement program, established 
 54.17  pursuant to chapter 352; 
 54.18     (3) unclassified employees retirement plan, established 
 54.19  pursuant to chapter 352D; 
 54.20     (4) state patrol retirement fund, established pursuant to 
 54.21  chapter 352B; 
 54.22     (5) legislators' retirement plan, established pursuant to 
 54.23  chapter 3A; 
 54.24     (6) elective state officers' retirement plan, established 
 54.25  pursuant to chapter 352C; 
 54.26     (7) public employees retirement association, established 
 54.27  pursuant to chapter 353; 
 54.28     (8) public employees police and fire fund, established 
 54.29  pursuant to chapter 353; 
 54.30     (9) teachers retirement association, established pursuant 
 54.31  to chapter 354; 
 54.32     (10) Minneapolis employees retirement fund, established 
 54.33  pursuant to chapter 422A; 
 54.34     (11) Minneapolis teachers retirement fund association, 
 54.35  established pursuant to chapter 354A; 
 54.36     (12) St. Paul teachers retirement fund association, 
 55.1   established pursuant to chapter 354A; 
 55.2      (13) Duluth teachers retirement fund association, 
 55.3   established pursuant to chapter 354A; 
 55.4      (14) public employees local government correctional service 
 55.5   retirement plan established by sections 353C.01 to 353C.10; and 
 55.6      (15) (14) judges' retirement fund, established by sections 
 55.7   490.121 to 490.132. 
 55.8      Sec. 55.  Minnesota Statutes 1996, section 356.32, 
 55.9   subdivision 2, is amended to read: 
 55.10     Subd. 2.  [COVERED FUNDS.] The provisions of this section 
 55.11  shall apply to the following retirement funds: 
 55.12     (1) state employees retirement fund, established pursuant 
 55.13  to chapter 352; 
 55.14     (2) correctional employees retirement program, established 
 55.15  pursuant to chapter 352; 
 55.16     (3) state patrol retirement fund, established pursuant to 
 55.17  chapter 352B; 
 55.18     (4) public employees retirement fund, established pursuant 
 55.19  to chapter 353; 
 55.20     (5) public employees police and fire fund, established 
 55.21  pursuant to chapter 353; 
 55.22     (6) teachers retirement association, established pursuant 
 55.23  to chapter 354; 
 55.24     (7) Minneapolis employees retirement fund, established 
 55.25  pursuant to chapter 422A; 
 55.26     (8) Duluth teachers retirement fund association, 
 55.27  established pursuant to chapter 354A; 
 55.28     (9) Minneapolis teachers retirement fund association, 
 55.29  established pursuant to chapter 354A; and 
 55.30     (10) St. Paul teachers retirement fund association, 
 55.31  established pursuant to chapter 354A; 
 55.32     (11) public employees local government correctional service 
 55.33  retirement plan established by sections 353B.01 to 353B.10. 
 55.34     Sec. 56.  Minnesota Statutes 1996, section 422A.06, 
 55.35  subdivision 8, is amended to read: 
 55.36     Subd. 8.  [RETIREMENT BENEFIT FUND.] (a) The retirement 
 56.1   benefit fund shall consist of amounts held for payment of 
 56.2   retirement allowances for members retired pursuant to this 
 56.3   chapter.  
 56.4      (b) Assets equal to the required reserves for retirement 
 56.5   allowances pursuant to this chapter determined in accordance 
 56.6   with the appropriate mortality table adopted by the board of 
 56.7   trustees based on the experience of the fund as recommended by 
 56.8   the commission-retained actuary shall be transferred from the 
 56.9   deposit accumulation fund to the retirement benefit fund as of 
 56.10  the last business day of the month in which the retirement 
 56.11  allowance begins.  The income from investments of these assets 
 56.12  shall be allocated to this fund.  There shall be paid from this 
 56.13  fund the retirement annuities authorized by law.  A required 
 56.14  reserve calculation for the retirement benefit fund must be made 
 56.15  by the actuary retained by the legislative commission on 
 56.16  pensions and retirement and must be certified to the retirement 
 56.17  board by the commission-retained actuary. 
 56.18     (c) The retirement benefit fund shall be governed by the 
 56.19  applicable laws governing the accounting and audit procedures, 
 56.20  investment, actuarial requirements, calculation and payment of 
 56.21  postretirement benefit adjustments, discharge of any deficiency 
 56.22  in the assets of the fund when compared to the actuarially 
 56.23  determined required reserves, and other applicable operations 
 56.24  and procedures regarding the Minnesota postretirement investment 
 56.25  fund in effect on June 30, 1997, established pursuant to under 
 56.26  Minnesota Statutes 1996, section 11A.18, and any legal or 
 56.27  administrative interpretations of those laws of the state board 
 56.28  of investment, the legal advisor to the board of investment and 
 56.29  the executive director of the state board of investment in 
 56.30  effect on June 30, 1997.  If a deferred yield adjustment account 
 56.31  is established for the Minnesota postretirement investment 
 56.32  fund before June 30, 1997, under Minnesota Statutes 1996, 
 56.33  section 11A.18, subdivision 5, the retirement board shall also 
 56.34  establish and maintain a deferred yield adjustment account 
 56.35  within this fund.  
 56.36     (d) Annually, following the calculation of any 
 57.1   postretirement adjustment payable from the retirement benefit 
 57.2   fund, the board of trustees shall submit a report to the 
 57.3   executive director of the legislative commission on pensions and 
 57.4   retirement and to the commissioner of finance indicating the 
 57.5   amount of any postretirement adjustment and the underlying 
 57.6   calculations on which that postretirement adjustment amount is 
 57.7   based, including the amount of dividends, the amount of 
 57.8   interest, and the amount of net realized capital gains or losses 
 57.9   utilized in the calculations. 
 57.10     (e) With respect to a former contributing member who began 
 57.11  receiving a retirement annuity or disability benefit under 
 57.12  section 422A.151, paragraph (a), clause (2), after June 30, 
 57.13  1997, or with respect to a survivor of a former contributing 
 57.14  member who began receiving a survivor benefit under section 
 57.15  422A.151, paragraph (a), clause (2), after June 30, 1997, the 
 57.16  reserves attributable to the one percent lower amount of the 
 57.17  cost-of-living adjustment payable to those annuity or benefit 
 57.18  recipients annually must be transferred back to the deposit 
 57.19  accumulation fund to the credit of the metropolitan airports 
 57.20  commission.  The calculation of this annual reduced 
 57.21  cost-of-living adjustment reserve transfer must be reviewed by 
 57.22  the actuary retained by the legislative commission on pensions 
 57.23  and retirement. 
 57.24     Sec. 57.  Minnesota Statutes 1996, section 422A.151, is 
 57.25  amended to read: 
 57.26     422A.151 [ALTERNATIVE CALCULATION OF ANNUITY.] 
 57.27     (a) In the case of a contributing member of the Minneapolis 
 57.28  employees retirement fund who is employed as a licensed peace 
 57.29  officer or firefighter with the metropolitan airports commission 
 57.30  and who retires, becomes disabled within the meaning of section 
 57.31  422A.18, or dies, the retirement, disability, or survivor 
 57.32  allowance is equal to the higher of the following: 
 57.33     (1) the retirement, disability, or survivor allowance 
 57.34  calculated for the person under the applicable provisions of the 
 57.35  Minneapolis employees retirement fund; or 
 57.36     (2) the retirement, disability, or survivor benefit that 
 58.1   the person would be entitled to upon meeting the applicable age 
 58.2   and allowable service requirements of section 353.651, 353.656, 
 58.3   or 353.657 if all employment as a licensed peace officer or 
 58.4   firefighter with the metropolitan airports commission had been 
 58.5   allowable service under the public employees retirement 
 58.6   association police and fire fund, instead of being covered by 
 58.7   the Minneapolis employees retirement fund.  In computing the 
 58.8   alternative benefit under section 353.651, 353.656, or 353.657, 
 58.9   the applicable definitions and related provisions of chapter 353 
 58.10  must be used. 
 58.11     A firefighter or licensed peace officer terminating 
 58.12  employment by the metropolitan airports commission after June 
 58.13  30, 1997, or the survivor of a deceased firefighter or licensed 
 58.14  peace officer terminating employment by the metropolitan 
 58.15  airports commission after June 30, 1997, under section 353.651, 
 58.16  353.656, or 353.657, shall receive a one percent lower 
 58.17  cost-of-living adjustment than otherwise payable under section 
 58.18  422A.06, subdivision 5.  If the cost-of-living adjustment 
 58.19  payable under section 422A.06, subdivision 5, is less than one 
 58.20  percent, the firefighter or licensed peace officer who retired 
 58.21  after June 30, 1997, must not have a reduction in the previously 
 58.22  received annuity or benefit amount, but future cost-of-living 
 58.23  adjustments must be modified equal to the percentage the benefit 
 58.24  would have been reduced below the person's current annuity or 
 58.25  benefit amount to reflect the one percent lower cost-of-living 
 58.26  adjustment under section 422A.06, subdivision 5. 
 58.27     (b) If a contributing member under paragraph (a) has 
 58.28  periods of coverage by the Minneapolis employees retirement fund 
 58.29  that include service other than employment as a licensed peace 
 58.30  officer or firefighter as well as employment as a licensed peace 
 58.31  officer or firefighter, the calculation of the benefit under 
 58.32  paragraph (a), clause (2), may only utilize service as a 
 58.33  licensed peace officer or firefighter employed by the 
 58.34  metropolitan airports commission. 
 58.35     Sec. 58.  Minnesota Statutes 1996, section 490.124, 
 58.36  subdivision 1, is amended to read: 
 59.1      Subdivision 1.  [BASIC RETIREMENT ANNUITY.] Except as 
 59.2   qualified hereinafter from and after mandatory retirement date, 
 59.3   normal retirement date, early retirement date, or one year from 
 59.4   the disability retirement date, as the case may be, a retirement 
 59.5   annuity shall be payable to a retiring judge from the judges' 
 59.6   retirement fund in an amount equal to:  (1) 2-1/2 the percent of 
 59.7   specified in section 356.19, subdivision 7, multiplied by the 
 59.8   judge's final average compensation multiplied by the number of 
 59.9   years and fractions of years of allowable service rendered prior 
 59.10  to July 1, 1980; plus (2) three the percent of specified in 
 59.11  section 356.19, subdivision 8, multiplied by the judge's final 
 59.12  average compensation multiplied by the number of years and 
 59.13  fractions of years of allowable service rendered after June 30, 
 59.14  1980; provided that the annuity shall must not exceed 65 70 
 59.15  percent of the judge's annual salary for the 12 months 
 59.16  immediately preceding retirement.  
 59.17     Sec. 59.  Minnesota Statutes 1996, section 490.124, 
 59.18  subdivision 5, is amended to read: 
 59.19     Subd. 5.  [DEFERRED BENEFITS.] (a) Any benefit to which a 
 59.20  judge is entitled under this section may be deferred until early 
 59.21  or normal retirement date, notwithstanding termination of such 
 59.22  judge's service prior thereto. 
 59.23     (b) The retirement annuity of, or the survivor benefit 
 59.24  payable on behalf of, a former judge, who terminated service 
 59.25  before July 1, 1997, which is not first payable until after June 
 59.26  30, 1997, must be increased on an actuarial equivalent basis to 
 59.27  reflect the change in the postretirement interest rate actuarial 
 59.28  assumption under section 356.215, subdivision 4d, from five 
 59.29  percent to six percent under a calculation procedure and tables 
 59.30  adopted by the board of directors of the Minnesota state 
 59.31  retirement system and approved by the actuary retained by the 
 59.32  legislative commission on pensions and retirement. 
 59.33     Sec. 60.  [APPROPRIATIONS; DEPARTMENT OF CORRECTIONS AND 
 59.34  LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.] 
 59.35     (a) $900,000 in fiscal year 1998 and $900,000 in fiscal 
 59.36  year 1999 is appropriated from the general fund to the 
 60.1   commissioner of corrections.  The commissioner of finance shall 
 60.2   include this amount in the base budget for the agency when 
 60.3   developing the governor's budget recommendations for the 
 60.4   biennium ending June 30, 2001. 
 60.5      (b) For fiscal year 1999, $50,000 is appropriated to the 
 60.6   legislative coordinating commission for allocation to the 
 60.7   legislative commission on pensions and retirement. 
 60.8      Sec. 61.  [APPROPRIATION REDUCTION.] 
 60.9      Subdivision 1.  [REDUCTIONS BY RETIREMENT PLAN AND 
 60.10  EMPLOYER.] In fiscal years 1998 and 1999, the commissioner of 
 60.11  finance shall reduce allotments and cancel to the general fund 
 60.12  the amounts determined by multiplying the general fund supported 
 60.13  salaries of employees who are members of the teachers retirement 
 60.14  association according to clauses (1) and (2), and for employees 
 60.15  who are members of the general state employees retirement plan 
 60.16  of the Minnesota state retirement system according to clauses 
 60.17  (3), (4), and (5): 
 60.18     (1) 0.90 percent for the Minnesota state colleges and 
 60.19  universities; 
 60.20     (2) 1.50 percent for all agencies other than the Minnesota 
 60.21  state colleges and universities 
 60.22     (3) 0.20 percent for all agencies other than the Minnesota 
 60.23  state colleges and universities and the university of Minnesota; 
 60.24     (4) 0.12 percent for the Minnesota state colleges and 
 60.25  universities; 
 60.26     (5) 0.0728 percent for the university of Minnesota. 
 60.27     Subd. 2.  [APPROPRIATION REDUCTIONS APPLIED TO BASE 
 60.28  BUDGETS.] The commissioner of finance shall include the 
 60.29  reductions under subdivision 1 when developing the base budgets 
 60.30  for all affected organizations as submitted with the governor's 
 60.31  recommended budget for the biennium ending June 30, 2001. 
 60.32     Subd. 3.  [PROJECTED SAVINGS.] For the biennium ending June 
 60.33  30, 1999, the projected general fund savings attributable to the 
 60.34  reductions under subdivision 1 are as follows: 
 60.35                                            fiscal year 
 60.36                                          1998        1999 
 61.1    subdivision 1, clauses (1) and (2)  $1,937,000  $2,053,000 
 61.2    subdivision 1, clauses (3)          $1,162,000  $1,233,000 
 61.3    subdivision 1, clauses (4) and (5)  $  480,000  $  509,000 
 61.4      Sec. 62.  [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.] 
 61.5      A monthly survivor, disability, or retirement benefit paid 
 61.6   under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 352D, 
 61.7   353, 353A, 354, and 490 on June 30, 1997, is permanently 
 61.8   increased effective July 1, 1997, to reflect the change in the 
 61.9   postretirement fund interest assumption from five percent to six 
 61.10  percent.  The benefit payable under the six percent 
 61.11  postretirement interest assumption must be actuarially 
 61.12  equivalent to the benefit payable under the five percent 
 61.13  interest assumption and must be based on tables adopted by the 
 61.14  applicable board and approved by the actuary retained by the 
 61.15  legislative commission on pensions and retirement. 
 61.16     Sec. 63.  [ALTERNATIVE BENEFIT ADJUSTMENTS.] 
 61.17     If the permanent increase under section 62, along with the 
 61.18  annual cost-of-living adjustments paid during the ten years 
 61.19  after the effective date of this section averages less than 
 61.20  inflation as measured by the Consumer Price Index or 3.5 
 61.21  percent, whichever is lower, the executive directors of the 
 61.22  teachers retirement association, public employees retirement 
 61.23  association, and the Minnesota state retirement system shall 
 61.24  suggest alternative benefit adjustments for retirees receiving 
 61.25  benefits on June 30, 1997, who exceed their life expectancy by 
 61.26  three or more years. 
 61.27     Sec. 64.  [MANDATED PENSION COMMISSION STUDY; DISPOSITION 
 61.28  OF PERA-P&F CONSOLIDATION ACCOUNTS.] 
 61.29     (a) The legislative commission on pensions and retirement, 
 61.30  in consultation with the affected constituencies, shall study 
 61.31  the advantages and disadvantages of the blending of some or all 
 61.32  local police and salaried firefighter consolidation accounts 
 61.33  into the public employees police and fire retirement plan 
 61.34  established under Minnesota Statutes, sections 353.63 to 353.68. 
 61.35     (b) The report must be transmitted on or before January 31, 
 61.36  1998, to the chair of the committee on governmental operations 
 62.1   and veterans of the senate, the chair of the governmental 
 62.2   operations budget division of the senate, the chair of the 
 62.3   committee on governmental operations of the house of 
 62.4   representatives, and the chair of the state government finance 
 62.5   division of the house of representatives. 
 62.6      Sec. 65.  [MANDATED PENSION COMMISSION STUDY; FIRST CLASS 
 62.7   CITY TEACHER RETIREMENT FUND CONSOLIDATION OPTIONS.] 
 62.8      (a) The legislative commission on pensions and retirement, 
 62.9   in consultation with the affected constituencies, shall study 
 62.10  the advantages and disadvantages of the restructuring or the 
 62.11  consolidation of the first class city teacher retirement fund 
 62.12  associations and the statewide teachers retirement association.  
 62.13  In its deliberations, the commission shall review the future 
 62.14  state funding needs of the Minneapolis employees retirement fund 
 62.15  and other applicable state pension funding resources. 
 62.16     (b) The report must be transmitted on or before January 31, 
 62.17  1998, to the chair of the committee on governmental operations 
 62.18  and veterans of the senate, the chair of the governmental 
 62.19  operations budget division of the senate, the chair of the 
 62.20  committee on governmental operations of the house of 
 62.21  representatives, and the chair of the state governmental finance 
 62.22  division of the house of representatives. 
 62.23     Sec. 66.  [REPEALER.] 
 62.24     (a) Minnesota Statutes 1996, sections 124.195, subdivision 
 62.25  12; 124.2139; 356.70; and 356.88, subdivision 2, are repealed. 
 62.26     (b) Minnesota Statutes 1996, sections 353C.01; 353C.02; 
 62.27  353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 
 62.28  and 353C.10, are repealed. 
 62.29     Sec. 67.  [EFFECTIVE DATES.] 
 62.30     Sections 30 and 31 are effective the first full pay period 
 62.31  after December 31, 1997.  Sections 9, 10, 13, 14, 21, and 22 are 
 62.32  effective the first full pay period after June 30, 1997.  
 62.33  Sections 40, 41, and 42 are effective for all salary paid July 
 62.34  1, 1997, or later.  Sections 1 to 8, 11, 12, 15 to 20, 23 to 29, 
 62.35  32 to 39, and 43 to 66 are effective July 1, 1997. 
 62.36                             ARTICLE 2
 63.1               LEGISLATORS AND CONSTITUTIONAL OFFICERS
 63.2      Section 1.  Minnesota Statutes 1996, section 3A.07, is 
 63.3   amended to read: 
 63.4      3A.07 [APPLICATION.] 
 63.5      This chapter applies to members of the legislature in 
 63.6   service upon after July 1, 1965, or thereafter, who otherwise 
 63.7   meet the requirements of this chapter, except that members 
 63.8   elected for the first time after June 30, 1997, are covered by 
 63.9   the elected officers plan in chapter 352E.  
 63.10     Sec. 2.  [352C.011] [APPLICABILITY.] 
 63.11     This chapter applies only to constitutional officers first 
 63.12  elected before July 1, 1997, to a constitutional office.  
 63.13  Constitutional officers elected for the first time to a 
 63.14  constitutional office after June 30, 1997, are covered by the 
 63.15  elected officers plan under chapter 352E. 
 63.16     Sec. 3.  [352E.051] [ESTABLISHMENT.] 
 63.17     A retirement program for legislators and constitutional 
 63.18  officers to be known as the elected officers plan is established 
 63.19  in the Minnesota state retirement system. 
 63.20     Sec. 4.  [352E.052] [DEFINITIONS.] 
 63.21     Subdivision 1.  [TERMS.] As used in this chapter, unless 
 63.22  the language, context, or subject matter indicates otherwise, 
 63.23  the terms in this section have the meanings given them. 
 63.24     Subd. 2.  [COVERED EMPLOYMENT.] "Covered employment" means 
 63.25  any period for which a constitutional officer or legislator 
 63.26  serves in office. 
 63.27     Subd. 3.  [ELECTED OFFICERS PLAN.] "Elected officers plan" 
 63.28  means the retirement program established by this chapter for 
 63.29  legislators and constitutional officers who were elected for the 
 63.30  first time to their positions after June 30, 1997. 
 63.31     Subd. 4.  [EMPLOYEE SHARES.] "Employee shares" means shares 
 63.32  in the supplemental fund purchased with the elected officer's 
 63.33  contributions. 
 63.34     Subd. 5.  [EMPLOYER SHARES.] "Employer shares" means shares 
 63.35  in the supplemental fund purchased with the employer's 
 63.36  contributions. 
 64.1      Subd. 6.  [SUPPLEMENTAL FUND.] "Supplemental fund" means 
 64.2   the fund established and governed by section 11A.17. 
 64.3      Subd. 7.  [TOTAL SHARES.] "Total shares" means all the 
 64.4   employee shares and employer shares credited to a participant.  
 64.5   Where applicable, the term contributions means shares. 
 64.6      Subd. 8.  [VALUE.] "Value" means cash value at the end of 
 64.7   the month following receipt of an application.  If no 
 64.8   application is required, value means the cash value at the end 
 64.9   of the month in which the event necessitating the transfer 
 64.10  occurs. 
 64.11     Subd. 9.  [EXECUTIVE DIRECTOR.] "Executive director" means 
 64.12  the executive director of the Minnesota state retirement system 
 64.13  appointed under section 352.03, subdivision 5. 
 64.14     Subd. 10.  [PARTICIPANT.] "Participant" means any elected 
 64.15  official who has shares invested in the elected officers plan. 
 64.16     Sec. 5.  [352E.053] [COVERAGE.] 
 64.17     First-time constitutional officers elected to any 
 64.18  constitutional office and first-time legislators elected after 
 64.19  June 30, 1997, are eligible for coverage under the elected 
 64.20  officers plan. 
 64.21     Sec. 6.  [352E.0535] [MEMBER AND EMPLOYER CONTRIBUTIONS.] 
 64.22     (a) The money used to purchase shares under this section 
 64.23  are the employee and employer contributions provided in this 
 64.24  subdivision. 
 64.25     (b) The employee contribution is five percent of salary. 
 64.26     (c) The employer contribution is an amount equal to five 
 64.27  percent of salary. 
 64.28     (d) These contributions must be made by deduction from 
 64.29  salary in the manner provided in section 352.04, subdivisions 4, 
 64.30  5, and 6. 
 64.31     Sec. 7.  [352E.054] [INVESTMENT OPTIONS.] 
 64.32     (a) An employee may elect to purchase shares in one or a 
 64.33  combination of the income share account, growth share account, 
 64.34  international share account, money market account, bond market 
 64.35  account, fixed interest account, or common stock index account 
 64.36  established in section 11A.17.  The employee may elect to 
 65.1   participate in one or more of the investment accounts in the 
 65.2   fund by specifying, on a form provided by the executive 
 65.3   director, the percentage of the employee's contributions 
 65.4   provided in subdivision 2 to be used to purchase shares in each 
 65.5   of the accounts. 
 65.6      (b) A participant may indicate in writing on forms provided 
 65.7   by the Minnesota state retirement system a choice of options for 
 65.8   subsequent purchases of shares.  Until a different written 
 65.9   indication is made by the participant, the executive director 
 65.10  shall purchase shares in the supplemental fund as selected by 
 65.11  the participant.  If no initial option is chosen, 100 percent 
 65.12  income shares must be purchased for a participant. 
 65.13     (c) A participant or former participant may also change the 
 65.14  investment options selected for all or a portion of the 
 65.15  participant's shares previously purchased in accounts. 
 65.16     Sec. 8.  [352E.055] [WITHDRAWAL OPTIONS.] 
 65.17     Subdivision 1.  [PAYMENT AFTER TERMINATION.] No withdrawal 
 65.18  of shares shall be permitted prior to termination of covered 
 65.19  employment. 
 65.20     Subd. 2.  [WITHDRAWAL OPTIONS.] After termination of 
 65.21  covered employment or any time thereafter, a participant is 
 65.22  entitled, upon application, to withdraw the cash value of the 
 65.23  participant's total shares or leave such shares on deposit with 
 65.24  the supplemental retirement fund.  Shares not withdrawn remain 
 65.25  on deposit with the supplemental retirement fund until the 
 65.26  former participant becomes at least 55 years old, and applies 
 65.27  for an annuity under section 352E.06, subdivision 1. 
 65.28     Sec. 9.  [352E.06] [ANNUITIES.] 
 65.29     Subdivision 1.  [ANNUITY PURCHASE.] When a participant 
 65.30  attains at least age 55, is retired from covered service, and 
 65.31  applies for a retirement annuity, the cash value of the 
 65.32  participant's shares must be transferred to the Minnesota 
 65.33  postretirement investment fund and used to provide an annuity 
 65.34  for the retired employee based upon the participant's age when 
 65.35  the benefit begins to accrue according to the reserve basis used 
 65.36  by the state employees retirement fund in determining pensions 
 66.1   and reserves. 
 66.2      Subd. 2.  [LUMP SUM PLUS ANNUITY OPTION.] A participant has 
 66.3   the option in an application for an annuity to apply for and 
 66.4   receive the value of one-half of the total shares and thereafter 
 66.5   receive an annuity, as provided in subdivision 1, based on the 
 66.6   value of one-half of the total shares. 
 66.7      Subd. 3.  [ANNUITY ACCRUED.] An annuity herein begins to 
 66.8   accrue the first day of the first full month after an 
 66.9   application is received or after termination of state service, 
 66.10  whichever is later. 
 66.11     Sec. 10.  [352E.07] [DISABILITY BENEFITS.] 
 66.12     Subdivision 1.  [PAYMENT OPTION.] A participant who becomes 
 66.13  totally and permanently disabled has the option to receive: 
 66.14     (1) the value of the participant's total shares; 
 66.15     (2) the value of one-half of the total shares and an 
 66.16  annuity based on the value of one-half of the total shares; or 
 66.17     (3) an annuity based on the value of the participant's 
 66.18  total shares. 
 66.19     Subd. 2.  [ACCRUAL.] The annuity payable under this section 
 66.20  begins to accrue the first day of the month following the day of 
 66.21  disability and is based on the participant's age when the 
 66.22  annuity begins to accrue.  The shares must be valued as of the 
 66.23  end of the month following authorization of payments. 
 66.24     Subd. 3.  [PAYMENT IN ADDITION TO WORKERS' 
 66.25  COMPENSATION.] The benefits payable under this section must not 
 66.26  be reduced by amounts received or receivable under applicable 
 66.27  workers' compensation laws. 
 66.28     Subd. 4.  [REPAYMENT PROHIBITION.] A participant who 
 66.29  returns to covered service after receiving benefits under this 
 66.30  section shall not be required or allowed to repay such benefits. 
 66.31     Sec. 11.  [352E.08] [DEATH BENEFITS.] 
 66.32     Subdivision 1.  [SURVIVOR BENEFITS.] If a participant dies 
 66.33  leaving a spouse and there is no named beneficiary who survives 
 66.34  to receive payment or the spouse is named beneficiary, the 
 66.35  spouse may receive: 
 66.36     (1) the value of the participant's total shares; 
 67.1      (2) the value of one-half of the total shares, and receive 
 67.2   an annuity based on the value of one-half of the total shares, 
 67.3   provided that if the spouse dies before receiving any annuity 
 67.4   payments the value of said shares shall be paid to the spouse's 
 67.5   children in equal shares, but if no such children survive, then 
 67.6   to the parents of the spouse in equal shares, but if no such 
 67.7   children or parents survive, then to the estate of the spouse; 
 67.8   or 
 67.9      (3) an annuity based on the value of the total shares, 
 67.10  provided that if the spouse dies before receiving any annuity 
 67.11  payments the value of said shares shall be paid to the spouse's 
 67.12  children in equal shares, but if no such children survive, then 
 67.13  to the parents of the spouse in equal shares, but if no such 
 67.14  children or parent survive, then to the estate of the spouse; 
 67.15  and further provided, if said spouse dies after receiving 
 67.16  annuity payments but before receiving payments equal to the 
 67.17  value of the employee shares, the value of the employee shares 
 67.18  remaining shall be paid to the spouse's children in equal 
 67.19  shares, but if no such children survive, then to the parents of 
 67.20  the spouse in equal shares, but if no such children or parents 
 67.21  survive, then to the estate of the spouse. 
 67.22     Subd. 2.  [PAYMENT WITHOUT BENEFICIARY DESIGNATION.] If a 
 67.23  participant dies and has named a beneficiary, the value of the 
 67.24  total shares must be paid to such beneficiary, but if such 
 67.25  beneficiary dies before receiving payment, or if no beneficiary 
 67.26  has been named and there is no spouse, the value of said shares 
 67.27  must be paid to the children of the participant in equal shares, 
 67.28  but if no such children survive then in equal shares to the 
 67.29  parents of the participant, but if no such children or parents 
 67.30  survive, then to the estate of the participant. 
 67.31     Sec. 12.  [352E.09] [ADMINISTRATION.] 
 67.32     Subdivision 1.  [FIDUCIARY RESPONSIBILITY.] The elected 
 67.33  officers plan and the provisions of this chapter must be 
 67.34  administered by the Minnesota state retirement system.  
 67.35  Fiduciary activities of the elected officers plan must be 
 67.36  undertaken in a manner consistent with chapter 356A. 
 68.1      Subd. 2.  [REDEMPTION OR PURCHASE OF SHARES.] Whenever 
 68.2   redemption or purchases from the supplemental retirement fund 
 68.3   are required to be made, the executive director shall make them. 
 68.4      Subd. 3.  [PROSPECTUS.] The executive director shall 
 68.5   annually distribute the prospectus prepared by the supplemental 
 68.6   fund to each participant in covered employment. 
 68.7      Subd. 4.  [APPLICATION.] Whenever benefits or withdrawals 
 68.8   are authorized or required to be paid, payment must be made only 
 68.9   after receipt of an application signed by the person or 
 68.10  representative authorized to receive the benefit or withdrawal.  
 68.11  Such application must be made only on forms authorized by the 
 68.12  executive director.  
 68.13     Subd. 5.  [DISBURSEMENT OF ACCOUNT.] If the beneficiary, 
 68.14  surviving spouse, or estate has not made application for 
 68.15  benefits within ten years after the date of death of a 
 68.16  participant, the value of the shares must be appropriated to the 
 68.17  regular fund according to section 352.12, subdivision 12.  If a 
 68.18  former participant fails to make a claim for benefits by April 1 
 68.19  following the year in which the former participant attains the 
 68.20  age of 70 years and six months, the value of the shares are 
 68.21  appropriated to the general employees retirement fund according 
 68.22  to section 352.22, subdivision 8. 
 68.23     Subd. 6.  [ADMINISTRATIVE FEES.] Up to one-tenth of one 
 68.24  percent of salary must be deducted from the employee 
 68.25  contributions and up to one-tenth of one percent salary must be 
 68.26  deducted from the employer contributions, as authorized by 
 68.27  section 352E.054, subdivision 2, to pay the administrative 
 68.28  expenses of the elected officers plan. 
 68.29     Sec. 13.  [EFFECTIVE DATE.] 
 68.30     Sections 1 to 12 are effective July 1, 1997. 
 68.31                             ARTICLE 3
 68.32             FIRST CLASS CITY TEACHER RETIREMENT FUNDS
 68.33     Section 1.  Minnesota Statutes 1996, section 354A.011, 
 68.34  subdivision 15a, is amended to read: 
 68.35     Subd. 15a.  [NORMAL RETIREMENT AGE.] "Normal retirement 
 68.36  age" means age 65 for a person who first became a member of the 
 69.1   coordinated program of the Minneapolis or St. Paul teachers 
 69.2   retirement fund association or the new law coordinated program 
 69.3   of the Duluth teachers retirement fund association or a member 
 69.4   of a pension fund listed in section 356.30, subdivision 3, 
 69.5   before July 1, 1989.  For a person who first became a member of 
 69.6   the coordinated program of the Minneapolis or St. Paul teachers 
 69.7   retirement fund association or the new law coordinated program 
 69.8   of the Duluth teachers retirement fund association after June 
 69.9   30, 1989, normal retirement age means the higher of age 65 or 
 69.10  retirement age, as defined in United States Code, title 42, 
 69.11  section 416(l), as amended, but not to exceed age 66.  For a 
 69.12  person who is a member of the basic program of the Minneapolis 
 69.13  or St. Paul teachers retirement fund association or the old law 
 69.14  coordinated program of the Duluth teachers retirement fund 
 69.15  association, normal retirement age means the age at which a 
 69.16  teacher becomes eligible for a normal retirement annuity 
 69.17  computed upon meeting the age and service requirements specified 
 69.18  in the applicable provisions of the articles of incorporation or 
 69.19  bylaws of the respective teachers retirement fund association. 
 69.20     Sec. 2.  Minnesota Statutes 1996, section 354A.12, 
 69.21  subdivision 1, is amended to read: 
 69.22     Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] The contribution 
 69.23  required to be paid by each member of a teachers retirement fund 
 69.24  association shall not be less than the percentage of total 
 69.25  salary specified below for the applicable association and 
 69.26  program: 
 69.27       Association and Program              Percentage of
 69.28                                            Total Salary
 69.29  Duluth teachers retirement
 69.30    association
 69.31            old law and new law
 69.32            coordinated programs              5.5 percent
 69.33  Minneapolis teachers retirement
 69.34    association
 69.35            basic program                     8.5 percent
 69.36            coordinated program               4.5 5.5 percent
 70.1   St. Paul teachers retirement
 70.2     association
 70.3             basic program                     8 percent
 70.4             coordinated program               4.5 5.5 percent
 70.5      Contributions shall be made by deduction from salary and 
 70.6   must be remitted directly to the respective teachers retirement 
 70.7   fund association at least once each month. 
 70.8      Sec. 3.  Minnesota Statutes 1996, section 354A.12, 
 70.9   subdivision 2a, is amended to read: 
 70.10     Subd. 2a.  [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 
 70.11  RATES.] (a) The employing units shall make the following 
 70.12  employer contributions to teachers retirement fund associations: 
 70.13     (1) for any coordinated member of a teachers retirement 
 70.14  fund association in a city of the first class, the employing 
 70.15  unit shall pay the employer social security taxes in accordance 
 70.16  with section 355.46, subdivision 3, clause (b); 
 70.17     (2) for any coordinated member of one of the following 
 70.18  teachers retirement fund associations in a city of the first 
 70.19  class, the employing unit shall make a regular employer 
 70.20  contribution to the respective retirement fund association in an 
 70.21  amount equal to the designated percentage of the salary of the 
 70.22  coordinated member as provided below: 
 70.23       Duluth teachers retirement
 70.24       fund association                        4.50 percent
 70.25       Minneapolis teachers retirement
 70.26       fund association                        4.50 percent
 70.27       St. Paul teachers retirement
 70.28       fund association                        4.50 percent;
 70.29     (3) for any basic member of one of the following teachers 
 70.30  retirement fund associations in a city of the first class, the 
 70.31  employing unit shall make a regular employer contribution to the 
 70.32  respective retirement fund in an amount equal to the designated 
 70.33  percentage of the salary of the basic member as provided below: 
 70.34       Minneapolis teachers retirement
 70.35       fund association                        8.50 percent
 70.36       St. Paul teachers retirement
 71.1        fund association                        8.00 percent
 71.2      (4) for a basic member of a teachers retirement fund 
 71.3   association in a city of the first class, the employing unit 
 71.4   shall make an additional employer contribution to the respective 
 71.5   fund in an amount equal to the designated percentage of the 
 71.6   salary of the basic member, as provided below: 
 71.7        Minneapolis teachers retirement 
 71.8        fund association 
 71.9          July 1, 1993 - June 30, 1994          4.85 percent 
 71.10         July 1, 1994, and thereafter          3.64 percent
 71.11       St. Paul teachers retirement 
 71.12       fund association 
 71.13         July 1, 1993 - June 30, 1995          4.63 percent 
 71.14         July 1, 1995, and thereafter          3.64 percent
 71.15     (5) for a coordinated member of a teachers retirement fund 
 71.16  association in a city of the first class, the employing unit 
 71.17  shall make an additional employer contribution to the respective 
 71.18  fund in an amount equal to the applicable percentage of the 
 71.19  coordinated member's salary, as provided below: 
 71.20       Duluth teachers retirement
 71.21       fund association                        1.29 percent 
 71.22       Minneapolis teachers retirement
 71.23       fund association
 71.24         July 1, 1993 - June 30, 1994          0.50 percent 
 71.25         July 1, 1994, and thereafter          3.64 percent
 71.26       St. Paul teachers retirement 
 71.27       fund association 
 71.28         July 1, 1993 - June 30, 1994          0.50 percent 
 71.29         July 1, 1994 - June 30, 1995          1.50 percent 
 71.30         July 1, 1995 1997, and thereafter     3.64
 71.31                                               3.84 percent
 71.32     (b) The regular and additional employer contributions must 
 71.33  be remitted directly to the respective teachers retirement fund 
 71.34  association at least once each month.  Delinquent amounts are 
 71.35  payable with interest under the procedure in subdivision 1a. 
 71.36     (c) Payments of regular and additional employer 
 72.1   contributions for school district or technical college employees 
 72.2   who are paid from normal operating funds must be made from the 
 72.3   appropriate fund of the district or technical college. 
 72.4      Sec. 4.  Minnesota Statutes 1996, section 354A.12, 
 72.5   subdivision 3a, is amended to read: 
 72.6      Subd. 3a.  [SPECIAL DIRECT STATE AID TO ST. PAUL FIRST 
 72.7   CLASS CITY TEACHERS RETIREMENT FUND ASSOCIATION ASSOCIATIONS.] 
 72.8   (a) In fiscal year 1998, the state shall pay $5,545,000 to the 
 72.9   St. Paul teachers retirement fund association $500,000 in fiscal 
 72.10  year 1994, $21,324,000 to the Minneapolis teachers retirement 
 72.11  fund association, and $486,000 to the Duluth teachers retirement 
 72.12  fund association.  In each subsequent fiscal year, the payment 
 72.13  these payments to the St. Paul first class city teachers 
 72.14  retirement fund association associations must be increased at 
 72.15  the same rate as the increase in the general education revenue 
 72.16  formula allowance under section 124A.22, subdivision 2, in 
 72.17  subsequent fiscal years $2,827,000 for St. Paul, $12,954,000 for 
 72.18  Minneapolis, and $486,000 for Duluth. 
 72.19     (b) The direct state aid is aids under this subdivision are 
 72.20  payable October 1 annually.  The commissioner of finance shall 
 72.21  pay the direct state aid.  The amount required under this 
 72.22  subdivision is appropriated annually from the general fund to 
 72.23  the commissioner of finance. 
 72.24     Sec. 5.  Minnesota Statutes 1996, section 354A.12, 
 72.25  subdivision 3c, is amended to read: 
 72.26     Subd. 3c.  [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND 
 72.27  DIRECT MATCHING AND STATE AID.] (a) The supplemental 
 72.28  contributions payable to the Minneapolis teachers retirement 
 72.29  fund association by special school district No. 1 and the city 
 72.30  of Minneapolis under section 423A.02, subdivision 3, or to the 
 72.31  St. Paul teachers retirement fund association by independent 
 72.32  school district No. 625 under section 423A.02, subdivision 3, or 
 72.33  the direct state aid aids under subdivision 3a to the St. Paul 
 72.34  first class city teachers retirement association associations, 
 72.35  and the direct matching and state aid under subdivision 3b to 
 72.36  the Minneapolis teachers retirement fund association terminates 
 73.1   terminate for the respective fund at the end of the fiscal year 
 73.2   in which the accrued liability funding ratio for that fund, as 
 73.3   determined in the most recent actuarial report for that fund by 
 73.4   the actuary retained by the legislative commission on pensions 
 73.5   and retirement, equals or exceeds the accrued liability funding 
 73.6   ratio for the teachers retirement association, as determined in 
 73.7   the most recent actuarial report for the teachers retirement 
 73.8   association by the actuary retained by the legislative 
 73.9   commission on pensions and retirement. 
 73.10     (b) If the state direct matching, state supplemental, or 
 73.11  state aid is terminated for the St. Paul a first class city 
 73.12  teachers retirement fund association or the Minneapolis teachers 
 73.13  retirement fund association under paragraph (a), it may not 
 73.14  again be received by that fund. 
 73.15     (c) If either the Minneapolis teachers retirement fund 
 73.16  association, or the St. Paul teachers retirement fund 
 73.17  association, or the Duluth teachers retirement fund association 
 73.18  remain funded at less than the funding ratio applicable to the 
 73.19  teachers retirement association when the provisions of paragraph 
 73.20  (b) become effective, then any state aid not distributed to that 
 73.21  association must be immediately transferred to the other 
 73.22  association associations in proportion to the relative sizes of 
 73.23  their unfunded actuarial accrued liabilities. 
 73.24     Sec. 6.  [354A.29] [ST. PAUL TEACHERS RETIREMENT FUND 
 73.25  ASSOCIATION POSTRETIREMENT ADJUSTMENT.] 
 73.26     Subdivision 1.  [ARTICLES OF INCORPORATION AND 
 73.27  BYLAWS.] Permission is granted for the St. Paul teachers 
 73.28  retirement fund association under Minnesota Statutes, section 
 73.29  354A.12, subdivision 4, to amend its articles of incorporation 
 73.30  and bylaws to provide postretirement adjustments under this 
 73.31  section. 
 73.32     Subd. 2.  [ELIMINATION OF PRIOR LUMP SUM POSTRETIREMENT 
 73.33  ADJUSTMENT MECHANISM.] As a condition precedent to the 
 73.34  implementation of subdivisions 3 through 6, the lump sum 
 73.35  postretirement adjustment mechanism in effect on the date of 
 73.36  enactment of this section must be eliminated and the articles of 
 74.1   incorporation and bylaws of the association must be amended 
 74.2   accordingly. 
 74.3      Subd. 3.  [POSTRETIREMENT ADJUSTMENT.] (a) The 
 74.4   postretirement adjustment described in the articles and bylaws 
 74.5   of the St. Paul teachers retirement fund association must be 
 74.6   determined by the board annually after June 30 using the 
 74.7   procedures under this section. 
 74.8      (b) Each eligible person who has been receiving an annuity 
 74.9   or benefit under the articles of incorporation, the bylaws, or 
 74.10  this chapter for at least 12 months as of the end of the fiscal 
 74.11  year is eligible to receive a postretirement adjustment of 2.0 
 74.12  percent that is payable each January 1. 
 74.13     Subd. 4.  [ADDITIONAL INVESTMENT PERCENTAGE 
 74.14  ADJUSTMENT.] (a) An excess investment earnings percentage 
 74.15  adjustment must be computed and paid under this subdivision to 
 74.16  those annuitants and eligible benefit recipients who have been 
 74.17  receiving an annuity or benefit for at least 12 months as 
 74.18  determined each June 30 by the board of trustees. 
 74.19     (b) The board shall also determine the five-year annualized 
 74.20  rate of return attributable to the assets of the St. Paul 
 74.21  teachers retirement fund association under the formula specified 
 74.22  in section 11A.04, clause (11), and the amount of the excess 
 74.23  five-year annualized rate of return over the preretirement 
 74.24  interest assumption specified in Minnesota Statutes, section 
 74.25  356.215. 
 74.26     (c) The excess investment percentage adjustment must be 
 74.27  determined by multiplying the quantity one minus the rate of 
 74.28  contribution deficiency, as specified in the most recent 
 74.29  actuarial report of the actuary retained by the legislative 
 74.30  commission on pensions and retirement under section 356.215, by 
 74.31  the rate of return excess as determined in paragraph (b). 
 74.32     (d) The excess investment percentage adjustment is payable 
 74.33  to all annuitants and benefit recipients on the following 
 74.34  January 1. 
 74.35     Subd. 5.  [EFFECT ON ANNUITY.] The adjustments calculated 
 74.36  under subdivisions 3 and 4 must be included in all annuities or 
 75.1   benefits paid to the recipient after the adjustments take effect.
 75.2      Subd. 6.  [LUMP SUM POSTRETIREMENT ADJUSTMENT 
 75.3   TRANSITION.] This subdivision applies to all annuitants and 
 75.4   beneficiaries of the association who received a lump sum 
 75.5   postretirement adjustment before the calculation of the first 
 75.6   postretirement adjustment under subdivisions 3 and 4.  Before 
 75.7   the calculation of the first postretirement adjustment under 
 75.8   subdivisions 3 and 4, the annual retirement annuity must be 
 75.9   increased by the amount of the lump sum postretirement 
 75.10  adjustment described in the association bylaws and paid to the 
 75.11  annuitant or beneficiary in 1997 before the effective date of 
 75.12  this section or if the annuitant or beneficiary was not eligible 
 75.13  for a lump sum postretirement adjustment, then the annual 
 75.14  benefit paid to that annuitant or benefit recipient must be 
 75.15  increased by the cumulative percentage increase in the Consumer 
 75.16  Price Index for urban wage earners and clerical workers All 
 75.17  Items Index published by the United States Department of Labor, 
 75.18  Bureau of Labor Statistics, from the date of the initial receipt 
 75.19  of a retirement annuity or benefit of the person whose service 
 75.20  is the basis of the benefit to June 30, 1997. 
 75.21     Sec. 7.  Minnesota Statutes 1996, section 354A.31, 
 75.22  subdivision 4, is amended to read: 
 75.23     Subd. 4.  [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 
 75.24  ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 
 75.25  applies to the coordinated programs of the Minneapolis teachers 
 75.26  retirement fund association and the St. Paul teachers retirement 
 75.27  fund association.  
 75.28     (b) The normal coordinated retirement annuity shall be an 
 75.29  amount equal to a retiring coordinated member's average salary 
 75.30  multiplied by the retirement annuity formula percentage.  
 75.31  Average salary for purposes of this section shall mean an amount 
 75.32  equal to the average salary upon which contributions were made 
 75.33  for the highest five successive years of service credit, but 
 75.34  which shall not in any event include any more than the 
 75.35  equivalent of 60 monthly salary payments.  Average salary must 
 75.36  be based upon all years of service credit if this service credit 
 76.1   is less than five years. 
 76.2      (c) This paragraph, in conjunction with subdivision 6, 
 76.3   applies to a person who first became a member or a member in a 
 76.4   pension fund listed in section 356.30, subdivision 3, before 
 76.5   July 1, 1989, unless paragraph (d), in conjunction with 
 76.6   subdivision 7, produces a higher annuity amount, in which case 
 76.7   paragraph (d) will apply.  The retirement annuity formula 
 76.8   percentage for purposes of this paragraph is one the percent 
 76.9   specified in section 356.19, subdivision 1, per year for each 
 76.10  year of coordinated service for the first ten years and 1.5 the 
 76.11  percent specified in section 356.19, subdivision 2, for each 
 76.12  year of coordinated service thereafter.  
 76.13     (d) This paragraph applies to a person who has become at 
 76.14  least 55 years old and who first becomes a member after June 30, 
 76.15  1989, and to any other member who has become at least 55 years 
 76.16  old and whose annuity amount, when calculated under this 
 76.17  paragraph and in conjunction with subdivision 7 is higher than 
 76.18  it is when calculated under paragraph (c), in conjunction with 
 76.19  the provisions of subdivision 6.  The retirement annuity formula 
 76.20  percentage for purposes of this paragraph is 1.5 the percent 
 76.21  specified in section 356.19, subdivision 2, for each year of 
 76.22  coordinated service.  
 76.23     Sec. 8.  Minnesota Statutes 1996, section 354A.31, 
 76.24  subdivision 4a, is amended to read: 
 76.25     Subd. 4a.  [COMPUTATION OF THE NORMAL COORDINATED 
 76.26  RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 
 76.27  to the new law coordinated program of the Duluth teachers 
 76.28  retirement fund association. 
 76.29     (b) The normal coordinated retirement annuity is an amount 
 76.30  equal to a retiring coordinated member's average salary 
 76.31  multiplied by the retirement annuity formula percentage.  
 76.32  Average salary for purposes of this section means an amount 
 76.33  equal to the average salary upon which contributions were made 
 76.34  for the highest five successive years of service credit, but may 
 76.35  not in any event include any more than the equivalent of 60 
 76.36  monthly salary payments.  Average salary must be based upon all 
 77.1   years of service credit if this service credit is less than five 
 77.2   years. 
 77.3      (c) This paragraph, in conjunction with subdivision 6, 
 77.4   applies to a person who first became a member or a member in a 
 77.5   pension fund listed in section 356.30, subdivision 3, before 
 77.6   July 1, 1989, unless paragraph (d), in conjunction with 
 77.7   subdivision 7, produces a higher annuity amount, in which case 
 77.8   paragraph (d) applies.  The retirement annuity formula 
 77.9   percentage for purposes of this paragraph is 1.13 the percent 
 77.10  specified in section 356.19, subdivision 1, per year for each 
 77.11  year of coordinated service for the first ten years and 1.63 the 
 77.12  percent specified in section 356.19, subdivision 2, for each 
 77.13  subsequent year of coordinated service. 
 77.14     (d) This paragraph applies to a person who is at least 55 
 77.15  years old and who first becomes a member after June 30, 1989, 
 77.16  and to any other member who is at least 55 years old and whose 
 77.17  annuity amount, when calculated under this paragraph and in 
 77.18  conjunction with subdivision 7, is higher than it is when 
 77.19  calculated under paragraph (c) in conjunction with subdivision 
 77.20  6.  The retirement annuity formula percentage for purposes of 
 77.21  this paragraph is 1.63 the percent specified in section 356.19, 
 77.22  subdivision 2, for each year of coordinated service. 
 77.23     Sec. 9.  Laws 1979, chapter 109, section 1, as amended by 
 77.24  Laws 1981, chapter 157, section 1, is amended to read: 
 77.25     Section 1.  Authorization is hereby granted in accordance 
 77.26  with Minnesota Statutes, Section 354A.12, for the St. Paul 
 77.27  teachers retirement fund association to amend its bylaws as 
 77.28  follows: 
 77.29     (1) Paragraph 9 of Section 3 of Article IV of the bylaws 
 77.30  may be amended to provide a lump sum payment to annuitants and 
 77.31  survivor benefit recipients who have been receiving annuities or 
 77.32  benefits for at least three years, payable three months 
 77.33  following the end of a fiscal year.  The payments shall only be 
 77.34  made if the investment income of the fund during the preceding 
 77.35  fiscal year was in excess of 5-1/2 percent of the asset value of 
 77.36  the fund at the end of that fiscal year.  The amount that each 
 78.1   eligible annuitant or benefit recipient shall be entitled to 
 78.2   receive shall be determined as follows: 
 78.3      (a) The years of service of each annuitant as credited by 
 78.4   the fund and the years of service of each person on behalf of 
 78.5   whom a survivor benefit is paid as credited by the fund shall be 
 78.6   totaled; 
 78.7      (b) The dollar amount equal to one-half of one percent of 
 78.8   the asset value of the fund at the end of the previous fiscal 
 78.9   year shall be determined; 
 78.10     (c) The dollar amount determined pursuant to clause (b) 
 78.11  shall be divided by the aggregate years of credited service 
 78.12  totaled pursuant to clause (a), the result to be considered the 
 78.13  bonus figure per year of service credit; 
 78.14     (d) For each eligible annuitant and benefit recipient, the 
 78.15  payment shall be equal to the bonus figure per year of service 
 78.16  credit determined pursuant to clause (c) multiplied by each year 
 78.17  of service credited for that person by the fund. 
 78.18     (2) A new paragraph may be added to Section 2 of Article IV 
 78.19  of the bylaws to provide that any active member of the fund with 
 78.20  service credit prior to July 1, 1978 who elects in the social 
 78.21  security referendum to become a coordinated member shall be 
 78.22  entitled to a retirement annuity when otherwise qualified, the 
 78.23  calculation of which shall utilize the formula specified in Laws 
 78.24  1977, Chapter 429, Section 61 for that portion of credited 
 78.25  service which was served prior to July 1, 1978 and the new 
 78.26  coordinated formula specified in the bylaws for the remainder of 
 78.27  credited service, both applied to the average salary as 
 78.28  specified in Paragraph 2 of Section 1 of Article IX.  The 
 78.29  formula percentages to be used in calculating the coordinated 
 78.30  portion of a retirement annuity on coordinated service shall 
 78.31  recognize the coordinated service as a continuation of any 
 78.32  service prior to July 1, 1978. 
 78.33     (3) (2) Paragraph 5 of Section 3 of Article IV of the 
 78.34  bylaws in effect on June 1, 1978 may be amended to provide that 
 78.35  the recomputation of a disability benefit in an amount equal to 
 78.36  a service pension shall occur when the member attains the age of 
 79.1   60 years and shall be recomputed without any reduction for early 
 79.2   retirement, and that if the disability terminates prior to age 
 79.3   60 the member shall be eligible for benefits as provided in 
 79.4   Paragraph 1 of Section 3 of Article IV and the years of service 
 79.5   and final average salary accrued to disability termination date 
 79.6   would be used as provided in Paragraph 5 of Section 3 of Article 
 79.7   IV of the bylaws in effect June 1, 1978 and that Paragraph 3 of 
 79.8   Section 4 of Article IV be amended to conform to this provision. 
 79.9      (4) (3) Article VIII of the bylaws in effect July 1, 1978 
 79.10  may be amended by adding a new section 5 providing augmentation 
 79.11  of benefits in the same manner as Minnesota Statutes 1978, 
 79.12  Section 354.55, Subdivision 11. 
 79.13     Sec. 10.  [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 
 79.14  INCREASE FORMULAS.] 
 79.15     In accordance with Minnesota Statutes, section 354A.12, 
 79.16  subdivision 4, approval is granted for the Duluth teachers 
 79.17  retirement fund association to amend its articles of 
 79.18  incorporation or bylaws by increasing the formula percentage 
 79.19  used in computing annuities for old law coordinated program 
 79.20  members in the Duluth teachers retirement fund association to 
 79.21  1.45 percent for each year of credited service. 
 79.22     Sec. 11.  [REPEALER.] 
 79.23     (a) Minnesota Statutes 1996, section 354A.12, subdivision 
 79.24  2b, is repealed. 
 79.25     (b) Laws 1985, chapter 259, section 3; and Laws 1993, 
 79.26  chapter 336, article 3, section 1, are repealed. 
 79.27     Sec. 12.  [EFFECTIVE DATES.] 
 79.28     Sections 2 and 3 are effective for all salary paid on or 
 79.29  after July 1, 1997.  Sections 1 and 4 to 11 are effective July 
 79.30  1, 1997. 
 79.31                             ARTICLE 4
 79.32                MINNEAPOLIS POLICE AND FIREFIGHTERS
 79.33     Section 1.  Minnesota Statutes 1996, section 423B.01, 
 79.34  subdivision 9, is amended to read: 
 79.35     Subd. 9.  [EXCESS INVESTMENT INCOME.] "Excess investment 
 79.36  income" means the amount, if any, by which the average time 
 80.1   weighted total rate of return earned by the fund in the most 
 80.2   recent prior five fiscal years has exceeded the actual average 
 80.3   percentage increase in the current monthly salary of a first 
 80.4   grade patrol officer in the most recent prior five fiscal years 
 80.5   plus two percent, and must be expressed as a dollar amount and.  
 80.6   The amount may not exceed one percent of the total assets of the 
 80.7   fund, except when the actuarial value of assets of the fund 
 80.8   according to the most recent annual actuarial valuation prepared 
 80.9   in accordance with sections 356.215 and 356.216 is greater than 
 80.10  102 percent of its actuarial accrued liabilities, in which case 
 80.11  the amount must not exceed 1-1/2 percent of the total assets of 
 80.12  the fund, and does not exist unless the yearly average 
 80.13  percentage increase of the time weighted total rate of return of 
 80.14  the fund for the previous five years exceeds by two percent the 
 80.15  yearly average percentage increase in monthly salary of a first 
 80.16  grade patrol officer during the previous five calendar years. 
 80.17     Sec. 2.  Minnesota Statutes 1996, section 423B.01 is 
 80.18  amended by adding a new subdivision to read: 
 80.19     Subd. 15.  [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 
 80.20  or "actuarially equivalent" means the condition of one annuity 
 80.21  or benefit having an equal actuarial present value as another 
 80.22  annuity or benefit, determined as of a given date at a specified 
 80.23  age with each actuarial present value based on the appropriate 
 80.24  mortality table adopted by the board of directors based on the 
 80.25  experience of the fund and approved by the actuary retained by 
 80.26  the legislative commission on pensions and retirement and using 
 80.27  the applicable preretirement or postretirement interest rate 
 80.28  assumptions specified in section 356.216. 
 80.29     Sec. 3.  Minnesota Statutes 1996, section 423B.06, is 
 80.30  amended by adding a subdivision to read: 
 80.31     Subd. 5.  [TAX LEVY.] Notwithstanding any provision of 
 80.32  section 69.77 to the contrary, if in any year after the 
 80.33  actuarial value of assets of the fund according to the most 
 80.34  recent annual actuarial valuation prepared in accordance with 
 80.35  sections 356.215 and 356.216 is greater than 102 percent of the 
 80.36  actuarial accrued liabilities of the fund and subsequently the 
 81.1   actuarial value of assets are less than 100 percent of the 
 81.2   actuarial accrued liabilities, the city of Minneapolis is not 
 81.3   required to levy a property tax to amortize any unfunded 
 81.4   actuarial accrued liability unless the fund experiences two 
 81.5   successive years when the actuarial value of assets are less 
 81.6   than 100 percent of the actuarial accrued liabilities according 
 81.7   to the most recent annual actuarial valuation prepared in 
 81.8   accordance with sections 356.215 and 356.216. 
 81.9      Sec. 4.  Minnesota Statutes 1996, section 423B.07, is 
 81.10  amended to read: 
 81.11     423B.07 [AUTHORIZED FUND DISBURSEMENTS.] 
 81.12     The police pension fund may be used only for the payment of:
 81.13     (1) service, disability, or dependency pensions; 
 81.14     (2) notwithstanding a contrary provision of section 69.80, 
 81.15  the salary of the secretary of the association in an amount not 
 81.16  to exceed 30 percent of the base salary of a first grade patrol 
 81.17  officer, the salary of the president of the association in an 
 81.18  amount not to exceed ten percent of the base salary of a first 
 81.19  grade patrol officer, and the salaries of the other elected 
 81.20  members of the board of trustees in an amount not to exceed 
 81.21  three units; 
 81.22     (3) expenses of officers and employees of the association 
 81.23  in connection with the protection of the fund; 
 81.24     (4) expenses of operating and maintaining the association, 
 81.25  including the administrative expenses related to the 
 81.26  administration of the insurance plan authorized in section 
 81.27  423B.08; 
 81.28     (5) support for hospital and medical insurance for 
 81.29  pensioners who have completed 20 years or more of service or 
 81.30  permanent disabilitants and surviving spouses of deceased active 
 81.31  members, disabilitants, or service pensioners who have completed 
 81.32  20 years or more of service in an amount equal to one unit per 
 81.33  month, to be added to the pension otherwise provided; 
 81.34     (6) health and welfare benefits of one unit per month in 
 81.35  addition to other benefits for members who retired after July 1, 
 81.36  1980, and have completed 20 years or more of service or for 
 82.1   members who are permanent disabilitants; and 
 82.2      (7) (5) other expenses authorized by section 69.80, or 
 82.3   other applicable law. 
 82.4      Sec. 5.  Minnesota Statutes 1996, section 423B.09, 
 82.5   subdivision 1, is amended to read: 
 82.6      Subdivision 1.  [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 
 82.7   RECEIVE PENSIONS.] The association shall grant pensions payable 
 82.8   from the police pension fund in monthly installments to persons 
 82.9   entitled to pensions in the manner and for the following 
 82.10  purposes. 
 82.11     (a) When the actuarial value of assets of the fund 
 82.12  according to the most recent annual actuarial valuation 
 82.13  performed in accordance with sections 356.215 and 356.216 is 
 82.14  less than 90 percent of the actuarial accrued liabilities, an 
 82.15  active member or a deferred pensioner who has performed duty as 
 82.16  a member of the police department of the city for five years or 
 82.17  more, upon written application after retiring from duty and 
 82.18  reaching at least age 50, is entitled to be paid monthly for 
 82.19  life a service pension equal to eight units.  For full years of 
 82.20  service beyond five years, the service pension increases by 1.6 
 82.21  units for each full year, to a maximum of 40 units.  When the 
 82.22  actuarial value of assets of the fund according to the most 
 82.23  recent annual actuarial valuation prepared in accordance with 
 82.24  sections 356.215 and 356.216 is of greater than 90 percent of 
 82.25  actuarial accrued liabilities, active members, deferred members, 
 82.26  and service pensioners are entitled to a service pension 
 82.27  according to the following schedule: 
 82.28                 5 years           8.0 units
 82.29                 6 years           9.6 units
 82.30                 7 years          11.2 units
 82.31                 8 years          12.8 units
 82.32                 9 years          14.4 units
 82.33                10 years          16.0 units
 82.34                11 years          17.6 units
 82.35                12 years          19.2 units
 82.36                13 years          20.8 units
 83.1                 14 years          22.4 units
 83.2                 15 years          24.0 units
 83.3                 16 years          25.6 units
 83.4                 17 years          27.2 units
 83.5                 18 years          28.8 units
 83.6                 19 years          30.4 units
 83.7                 20 years          34.0 units
 83.8                 21 years          35.6 units
 83.9                 22 years          37.2 units
 83.10                23 years          38.8 units
 83.11                24 years          40.4 units
 83.12                25 years          42.0 units
 83.13     Fractional years of service may not be used in computing 
 83.14  pensions. 
 83.15     (b) An active member who after five years' service but less 
 83.16  than 20 years' service with the police department of the city, 
 83.17  becomes superannuated so as to be permanently unable to perform 
 83.18  the person's assigned duties, is entitled to be paid monthly for 
 83.19  life a superannuation pension equal to two units for five years 
 83.20  of service and an additional two units for each full year of 
 83.21  service over five years and less than 20 years. 
 83.22     (c) An active member who is not eligible for a service 
 83.23  pension and who, while a member of the police department of the 
 83.24  city, becomes diseased or sustains an injury while in the 
 83.25  service that permanently unfits the member for the performance 
 83.26  of police duties is entitled to be paid monthly for life a 
 83.27  pension equal to 32 units while so disabled. 
 83.28     Sec. 6.  Minnesota Statutes 1996, section 423B.09, is 
 83.29  amended by adding a subdivision to read: 
 83.30     Subd. 6.  [OPTIONAL ANNUITIES.] A member who is retired or 
 83.31  disabled on the effective date of this subdivision may elect an 
 83.32  optional retirement annuity within 60 days of the effective date 
 83.33  instead of the normal retirement annuity.  A member who retires 
 83.34  or becomes disabled after the effective date of this subdivision 
 83.35  may elect an optional retirement annuity prior to the receipt of 
 83.36  any benefits.  The optional retirement annuity may be a 50 
 84.1   percent, a 75 percent, or a 100 percent joint and survivor 
 84.2   annuity without reinstatement in the event of the designated 
 84.3   beneficiary predeceasing the member or a 50 percent, a 75 
 84.4   percent, or a 100 percent joint and survivor annuity with 
 84.5   reinstatement in the event of the designated beneficiary 
 84.6   predeceasing the member.  Optional retirement annuity forms must 
 84.7   be actuarially equivalent to the service pension and automatic 
 84.8   survivor coverage otherwise payable to the retiring member and 
 84.9   the member's beneficiaries.  Once selected, the optional annuity 
 84.10  is irrevocable. 
 84.11     Sec. 7.  Minnesota Statutes 1996, section 423B.10, 
 84.12  subdivision 1, is amended to read: 
 84.13     Subdivision 1.  [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 
 84.14  surviving spouse of a deceased service pensioner, disability 
 84.15  pensioner, deferred pensioner, superannuation pensioner, or 
 84.16  active member, who was the legally married spouse of the 
 84.17  decedent, residing with the decedent, and who was married while 
 84.18  or before the time the decedent was on the payroll of the police 
 84.19  department, and who, if the deceased member was a service or 
 84.20  deferred pensioner, was legally married to the member for a 
 84.21  period of at least one year before retirement from the police 
 84.22  department, is entitled to a surviving spouse benefit.  The 
 84.23  surviving spouse benefit is equal to 21 22 units per month if 
 84.24  the person is the surviving spouse of a deceased active member 
 84.25  or disabilitant.  The surviving spouse benefit is equal to six 
 84.26  units per month, plus an additional one unit for each year of 
 84.27  service to the credit of the decedent in excess of five years, 
 84.28  to a maximum of 21 22 units per month, if the person is the 
 84.29  surviving spouse of a deceased service pensioner, deferred 
 84.30  pensioner, or superannuation pensioner.  The surviving spouse 
 84.31  benefit is payable for the life of the surviving spouse. 
 84.32     (b) A surviving child of a deceased service pensioner, 
 84.33  disability pensioner, deferred pensioner, superannuation 
 84.34  pensioner, or active member, who was living while the decedent 
 84.35  was an active member of the police department or was born within 
 84.36  nine months after the decedent terminated active service in the 
 85.1   police department, is entitled to a surviving child benefit.  
 85.2   The surviving child benefit is equal to eight units per month if 
 85.3   the person is the surviving child of a deceased active member or 
 85.4   disabilitant.  The surviving child benefit is equal to two units 
 85.5   per month, plus an additional four-tenths of one unit per month 
 85.6   for each year of service to the credit of the decedent in excess 
 85.7   of five years, to a maximum of eight units, if the person is the 
 85.8   surviving child of a deceased service pensioner, deferred 
 85.9   pensioner, or superannuation pensioner.  The surviving child 
 85.10  benefit is payable until the person attains age 18, or, if in 
 85.11  full-time attendance during the normal school year, in a school 
 85.12  approved by the board of directors, until the person receives a 
 85.13  bachelor's degree or attains the age of 22 years, whichever 
 85.14  occurs first.  In the event of the death of both parents leaving 
 85.15  a surviving child or children entitled to a surviving child 
 85.16  benefit as determined in this paragraph, the surviving child is, 
 85.17  or the surviving children are, entitled to a surviving child 
 85.18  benefit in such sums as determined by the board of directors to 
 85.19  be necessary for the care and education of such surviving child 
 85.20  or children, but not to exceed the family maximum benefit per 
 85.21  month, to the children of any one family.  
 85.22     (c) The surviving spouse and surviving child benefits are 
 85.23  subject to a family maximum benefit.  The family maximum benefit 
 85.24  is 40 41 units per month. 
 85.25     (d) A surviving spouse who is otherwise not qualified may 
 85.26  receive a benefit if the surviving spouse was married to the 
 85.27  decedent for a period of five years and was residing with the 
 85.28  decedent at the time of death.  The surviving spouse benefit is 
 85.29  the same as that provided in paragraph (a), except that if the 
 85.30  surviving spouse is younger than the decedent, the surviving 
 85.31  spouse benefit must be actuarially equivalent to a surviving 
 85.32  spouse benefit that would have been paid to the member's spouse 
 85.33  had the member been married to a person of the same age or a 
 85.34  greater age than the member's age before retirement. 
 85.35     Sec. 8.  Minnesota Statutes 1996, section 423B.15, 
 85.36  subdivision 2, is amended to read: 
 86.1      Subd. 2.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
 86.2   board of trustees of the relief association shall determine by 
 86.3   May 1 of each year whether or not the fund has excess investment 
 86.4   income.  The amount of excess investment income, if any, must be 
 86.5   stated as a dollar amount and reported by the chief 
 86.6   administrative officer of the relief association to the mayor 
 86.7   and governing body of the city, the state auditor, the 
 86.8   commissioner of finance, and the executive director of the 
 86.9   legislative commission on pensions and retirement.  The dollar 
 86.10  amount of excess investment income up to one percent of the 
 86.11  assets of the fund, except when the actuarial value of assets of 
 86.12  the fund according to the most recent annual actuarial valuation 
 86.13  prepared in accordance with sections 356.215 and 356.216 is 
 86.14  greater than 102 percent of its actuarial accrued liabilities in 
 86.15  which case the amount may not exceed 1-1/2 percent of the assets 
 86.16  of the fund, must be applied for the purpose specified in 
 86.17  subdivision 3.  Excess investment income must not be considered 
 86.18  as income to or assets of the fund for actuarial valuations of 
 86.19  the fund for that year under sections 69.77, 356.215, and 
 86.20  356.216 and the provisions of this section except to offset the 
 86.21  annual postretirement payment.  Additional investment income is 
 86.22  any realized or unrealized investment income other than the 
 86.23  excess investment income and must be included in the actuarial 
 86.24  valuations performed under sections 69.77, 356.215, and 356.216 
 86.25  and the provisions of this section. 
 86.26     Sec. 9.  Minnesota Statutes 1996, section 423B.15, 
 86.27  subdivision 3, is amended to read: 
 86.28     Subd. 3.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
 86.29  amount determined under subdivision 2 must be applied in 
 86.30  accordance with this subdivision.  When the actuarial value of 
 86.31  assets of the fund according to the most recent annual actuarial 
 86.32  valuation prepared in accordance with sections 356.215 and 
 86.33  356.216 is less than 102 percent of its total actuarial 
 86.34  liabilities, the relief association shall apply the first 
 86.35  one-half of excess investment income to the payment of an annual 
 86.36  postretirement payment as specified in this subdivision. and the 
 87.1   second one-half of excess investment income up to one-half of 
 87.2   one percent of the assets of the fund must be applied to reduce 
 87.3   the state amortization state aid or supplementary amortization 
 87.4   state aid payments otherwise due to the relief association under 
 87.5   section 423A.02 for the current calendar year.  When the 
 87.6   actuarial value of assets of the fund according to the most 
 87.7   recent annual actuarial valuation prepared in accordance with 
 87.8   sections 356.215 and 356.216 is less than 102 percent funded and 
 87.9   other conditions are met, the relief association shall pay an 
 87.10  annual postretirement payment to all eligible members in an 
 87.11  amount not to exceed one-half of one percent of the assets of 
 87.12  the fund.  When the actuarial value of assets of the fund 
 87.13  according to the most recent annual actuarial valuation prepared 
 87.14  in accordance with sections 356.215 and 356.216 is greater than 
 87.15  102 percent of its actuarial accrued liabilities, the relief 
 87.16  association shall pay an annual postretirement payment to all 
 87.17  eligible members in an amount not to exceed 1-1/2 percent of the 
 87.18  assets of the fund.  Payment of the annual postretirement 
 87.19  payment must be in a lump sum amount on June 1 following the 
 87.20  determination date in any year.  Payment of the annual 
 87.21  postretirement payment may be made only if the average time 
 87.22  weighted total rate of return for the most recent prior five 
 87.23  years exceeds by two percent the actual average percentage 
 87.24  increase in the current monthly salary of a top grade patrol 
 87.25  officer in the most recent prior five fiscal years.  The total 
 87.26  amount of all payments to members may not exceed the amount 
 87.27  determined under this subdivision.  Payment to each eligible 
 87.28  member must be calculated by dividing the total number of 
 87.29  pension units to which eligible members are entitled into the 
 87.30  excess investment income available for distribution to members, 
 87.31  and then multiplying that result by the number of units to which 
 87.32  each eligible member is entitled to determine each eligible 
 87.33  member's annual postretirement payment.  When the actuarial 
 87.34  value of assets of the fund according to the most recent annual 
 87.35  actuarial valuation prepared in accordance with sections 356.215 
 87.36  and 356.216 is less than 102 percent of its actuarial accrued 
 88.1   liabilities, payment to each eligible member may not exceed an 
 88.2   amount equal to the total monthly benefit that the eligible 
 88.3   member was entitled to in the prior year under the terms of the 
 88.4   benefit plan of the relief association or each eligible member's 
 88.5   proportionate share of the excess investment income, whichever 
 88.6   is less.  When the actuarial value of assets of the fund 
 88.7   according to the most recent annual actuarial valuation prepared 
 88.8   in accordance with sections 356.215 and 356.216 is greater than 
 88.9   102 percent of its actuarial accrued liabilities, payment to 
 88.10  each eligible member must not exceed the member's proportionate 
 88.11  share of 1-1/2 percent of the assets of the fund. 
 88.12     A person who received a pension or benefit for the entire 
 88.13  12 months before the determination date is eligible for a full 
 88.14  annual postretirement payment.  A person who received a pension 
 88.15  or benefit for less than 12 months before the determination date 
 88.16  is eligible for a prorated annual postretirement payment. 
 88.17     Sec. 10.  Minnesota Statutes 1996, section 423B.15, 
 88.18  subdivision 6, is amended to read: 
 88.19     Subd. 6.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
 88.20  No provision of or payment made under this section may be 
 88.21  interpreted or relied upon by any member of the relief 
 88.22  association to guarantee or entitle a member to annual 
 88.23  postretirement payments for a period when no excess investment 
 88.24  income is earned by the fund.  If the actuarial value of assets 
 88.25  of the fund according to the most recent annual actuarial 
 88.26  valuation prepared in accordance with sections 356.215 and 
 88.27  356.216 is less than 102 percent of its actuarial accrued 
 88.28  liabilities, the distribution of assets under this section must 
 88.29  not exceed one-half of one percent. 
 88.30     Sec. 11.  Minnesota Statutes 1996, section 423B.15, is 
 88.31  amended by adding a subdivision to read: 
 88.32     Subd. 7.  [ANNUAL ACTUARIAL VALUATION DATE.] 
 88.33  Notwithstanding any provision of section 69.77, subdivision 2h, 
 88.34  356.215 or 356.216 to the contrary, the annual actuarial 
 88.35  valuation of the fund must be completed by May 1 of each year. 
 88.36     Sec. 12.  Laws 1965, chapter 519, section 1, as amended by 
 89.1   Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, 
 89.2   section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 
 89.3   164, section 2; Laws 1990, chapter 589, article 1, section 5; 
 89.4   Laws 1992, chapter 454, section 2; and Laws 1994, chapter 591, 
 89.5   article 1, section 1, is amended to read: 
 89.6      Section 1.  [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF 
 89.7   ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding 
 89.8   the provisions of Minnesota Statutes 1965, Section 69.48, to the 
 89.9   contrary, when a service pensioner, disability pensioner, or 
 89.10  deferred pensioner, or an active member of a relief association 
 89.11  dies, leaving: 
 89.12     (1) A surviving spouse who was a legally married spouse, 
 89.13  residing with the decedent, and who was married while or prior 
 89.14  to the time the decedent was on the payroll of the fire 
 89.15  department in the case of a deceased active member; and who, in 
 89.16  case the deceased member was a service or deferred pensioner was 
 89.17  legally married to the member at least five years before death; 
 89.18  or 
 89.19     (2) A child or children who were living while the deceased 
 89.20  was on the payroll of the fire department, or born within nine 
 89.21  months after the decedent was withdrawn from the payroll of the 
 89.22  fire department, the surviving spouse and the child or children 
 89.23  shall be entitled to a pension or pensions, as follows: 
 89.24     (a) To the surviving spouse, a pension of not less than 17 
 89.25  units, and not to exceed the total of 22 units per month, as the 
 89.26  bylaws of the association provide, for life; provided, that if 
 89.27  the spouse shall remarry then the pension shall cease and 
 89.28  terminate as of the date of remarriage; provided, further, if 
 89.29  the remarriage terminates for any reason, the surviving spouse 
 89.30  shall again be entitled to a pension as the bylaws of the 
 89.31  association provide; 
 89.32     (b) To the child or children, if their other parent is 
 89.33  living, a pension of not to exceed eight units per month for 
 89.34  each child up to the time each child reaches the age of not less 
 89.35  than 16 years and not to exceed an age of 18 years; provided, 
 89.36  however, upon approval by the board of trustees, such a child 
 90.1   who is a full-time student, upon proof of compliance with the 
 90.2   provisions of this act, may be entitled to such pension so long 
 90.3   as the child is a full-time student and has not reached 22 years 
 90.4   of age, all in conformity with the bylaws of the association; 
 90.5   provided, further, the total pensions hereunder for the 
 90.6   surviving spouse and children of the deceased member shall not 
 90.7   exceed the sum of 41 units per month; 
 90.8      (c) A child or children of a deceased member after the 
 90.9   death of their other parent, or in the event their other parent 
 90.10  predeceases the member, be entitled to receive a pension or 
 90.11  pensions in such amount as the board of trustees of the 
 90.12  association shall deem necessary to properly support the child 
 90.13  or children until they reach the age of not less than 16 and not 
 90.14  more than 18 years; provided, however, upon approval by the 
 90.15  board of trustees, such a child who is a full-time student, upon 
 90.16  proof of compliance with the provisions of this act, may be 
 90.17  entitled to such pension so long as the child is a full-time 
 90.18  student and has not reached 22 years of age, as the bylaws of 
 90.19  the association may provide; but the total amount of the pension 
 90.20  or pensions hereunder for any child or children shall not exceed 
 90.21  the sum of 41 units per month; 
 90.22     (d) For the purposes of this act, a full-time student is 
 90.23  defined as an individual who is in full-time attendance as a 
 90.24  student at an educational institution.  Whether or not the 
 90.25  student was in full-time attendance would be determined by the 
 90.26  board of trustees of the association in the light of the 
 90.27  standards and practices of the school involved.  Specifically 
 90.28  excluded is a person who is paid by the person's employer while 
 90.29  attending school at the request of the person's employer.  
 90.30  Benefits may continue during any period of four calendar months 
 90.31  or less in any 12 month period in which a person does not attend 
 90.32  school if the person shows to the satisfaction of the board of 
 90.33  trustees that the person intends to continue in full-time school 
 90.34  attendance immediately after the end of the period.  An 
 90.35  educational institution is defined so as to permit the payment 
 90.36  of benefits to students taking vocational or academic courses in 
 91.1   all approved, accredited or licensed schools, colleges, and 
 91.2   universities.  The board of trustees shall make the final 
 91.3   determination of eligibility for benefits if any question arises 
 91.4   concerning the approved status of the educational institution 
 91.5   which the student attends or proposes to attend; 
 91.6      (e) In the event that a child who is receiving a pension as 
 91.7   provided above shall marry before the age of 22 years, the 
 91.8   pension shall cease as of the date of the marriage.; and 
 91.9      (f) A surviving spouse of a deceased service pensioner, 
 91.10  disability pensioner, deferred pensioner, or service pensioner 
 91.11  who is otherwise not qualified may receive a benefit if the 
 91.12  surviving spouse was legally married to the decedent for a 
 91.13  period of five years and was residing with the decedent at the 
 91.14  time of death.  The surviving spouse benefit is the same as that 
 91.15  provided under paragraph (a), except that if the surviving 
 91.16  spouse is younger than the decedent, the surviving spouse 
 91.17  benefit must be actuarially equivalent to a surviving spouse 
 91.18  benefit that would have been paid to the member's spouse had the 
 91.19  member been married to a person of the same age or a greater age 
 91.20  than the member's age prior to retirement.  A benefit paid under 
 91.21  this paragraph may be less than 17 units, notwithstanding the 17 
 91.22  unit minimum established under paragraph (a). 
 91.23     Sec. 13.  Laws 1989, chapter 319, article 19, section 7, 
 91.24  subdivision 1, as amended by Laws 1992, chapter 471, article 2, 
 91.25  section 5, and Laws 1996, chapter 438, article 4, section 12, is 
 91.26  amended to read: 
 91.27     Subdivision 1.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF 
 91.28  ASSOCIATION; DEFINITIONS.] For the purposes of this section, 
 91.29  each of the terms in this subdivision have the meanings given 
 91.30  them in paragraphs (a) to (h). 
 91.31     (a) "Annual postretirement payment" means the payment of a 
 91.32  lump sum postretirement benefit to an eligible member on June 1 
 91.33  following the determination date in any year. 
 91.34     (b) "City" means the city of Minneapolis. 
 91.35     (c) "Determination date" means December 31 of each year. 
 91.36     (d) "Eligible member" means a person, including a service 
 92.1   pensioner, a disability pensioner, a survivor, or dependent of a 
 92.2   deceased active member, service pensioner, or disability 
 92.3   pensioner, who received a pension or benefit from the relief 
 92.4   association during the 12 months before the determination date.  
 92.5   A person who received a pension or benefit for the entire 12 
 92.6   months before the determination date is eligible for a full 
 92.7   annual postretirement payment.  A person who received a pension 
 92.8   or benefit for less than 12 months before the determination date 
 92.9   is eligible for a prorated annual postretirement payment. 
 92.10     (e) "Excess investment income" means the amount by which 
 92.11  the average time weighted total rate of return earned by the 
 92.12  fund in the most recent prior five fiscal years has exceeded the 
 92.13  actual average percentage increase in the current monthly salary 
 92.14  of a top grade firefighter in the most recent prior five fiscal 
 92.15  years plus two percent.  The excess investment income must be 
 92.16  expressed as a dollar amount and may not exceed one percent of 
 92.17  the total assets of the fund, except when the actuarial value of 
 92.18  assets of the fund according to the most recent annual actuarial 
 92.19  valuation prepared in accordance with Minnesota Statutes, 
 92.20  sections 356.215 and 356.216 is greater than 102 percent of its 
 92.21  actuarial accrued liabilities in which case the amount must not 
 92.22  exceed 1-1/2 percent of the assets of the funds. 
 92.23     (f) "Fund" means the Minneapolis fire department relief 
 92.24  association. 
 92.25     (g) "Relief association" means the Minneapolis fire 
 92.26  department relief association.  
 92.27     (h) "Time weighted total rate of return" means the 
 92.28  percentage amount determined by using the formula or formulas 
 92.29  established by the state board of investment under Minnesota 
 92.30  Statutes, section 11A.04, clause (11), and in effect on January 
 92.31  1, 1987. 
 92.32     Sec. 14.  Laws 1989, chapter 319, article 19, section 7, 
 92.33  subdivision 3, is amended to read: 
 92.34     Subd. 3.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
 92.35  board of trustees of the relief association shall determine by 
 92.36  May 1 of each year whether or not the relief association has 
 93.1   excess investment income.  The amount of excess investment 
 93.2   income, if any, must be stated as a dollar amount and reported 
 93.3   by the chief administrative officer of the relief association to 
 93.4   the mayor and governing body of the city, the state auditor, the 
 93.5   commissioner of finance, and the executive director of the 
 93.6   legislative commission on pensions and retirement.  The dollar 
 93.7   amount of excess investment income up to one percent of the 
 93.8   assets of the fund, except if the actuarial value of assets of 
 93.9   the fund according to the most recent annual actuarial valuation 
 93.10  prepared in accordance with Minnesota Statutes, sections 356.215 
 93.11  and 356.216 is greater than 102 percent of its actuarial accrued 
 93.12  liabilities, must be applied for the purpose specified in 
 93.13  subdivision 4.  Excess investment income must not be considered 
 93.14  as income to or assets of the fund for actuarial valuations of 
 93.15  the fund for that year under sections 69.77, 356.215, and 
 93.16  356.216 and the provisions of this section except to offset the 
 93.17  annual postretirement payment.  Additional investment income is 
 93.18  any realized or unrealized investment income other than the 
 93.19  excess investment income and must be included in the actuarial 
 93.20  valuations performed under sections 69.77, 356.215, and 356.216 
 93.21  and the provisions of this section. 
 93.22     Sec. 15.  Laws 1989, chapter 319, article 19, section 7, 
 93.23  subdivision 4, as amended by Laws 1990, chapter 570, article 12, 
 93.24  section 63, Laws 1992, chapter 471, article 2, section 6, and 
 93.25  Laws 1996, chapter 438, article 4, section 13, is amended to 
 93.26  read: 
 93.27     Subd. 4.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
 93.28  amount determined under subdivision 3 must be applied in 
 93.29  accordance with this subdivision.  When the actuarial value of 
 93.30  assets of the fund according to the most recent annual actuarial 
 93.31  valuation prepared in accordance with Minnesota Statutes, 
 93.32  sections 356.215 and 356.216 is less than 102 percent of its 
 93.33  actuarial accrued liabilities, the relief association shall 
 93.34  apply the first one-half of one percent of assets which 
 93.35  constitute excess investment income to the payment of an annual 
 93.36  postretirement payment as specified in this subdivision. and the 
 94.1   second one-half of one percent of assets which constitute excess 
 94.2   investment income shall be applied to reduce the state 
 94.3   amortization state aid or supplementary amortization state aid 
 94.4   payments otherwise due to the relief association under section 
 94.5   423A.02 for the current calendar year.  When the actuarial value 
 94.6   of assets of the fund according to the most recent annual 
 94.7   actuarial valuation prepared in accordance with Minnesota 
 94.8   Statutes, sections 356.215 and 356.216 is less than 102 percent 
 94.9   of its actuarial accrued liabilities, the relief association 
 94.10  shall pay an annual postretirement payment to all eligible 
 94.11  members in an amount not to exceed one-half of one percent of 
 94.12  the assets of the fund.  Payment of the annual postretirement 
 94.13  payment must be in a lump sum amount on June 1 following the 
 94.14  determination date in any year.  When the actuarial value of 
 94.15  assets of the fund according to the most recent annual actuarial 
 94.16  valuation prepared in accordance with Minnesota Statutes, 
 94.17  sections 356.215 and 356.216 is greater than 102 percent of its 
 94.18  actuarial accrued liabilities, the relief association shall pay 
 94.19  an annual postretirement payment to all eligible members in an 
 94.20  amount not to exceed 1-1/2 percent of the assets of the fund.  
 94.21  Payment of the annual postretirement payment may be made only if 
 94.22  the average time weighted total rate of return in the most 
 94.23  recent prior five fiscal years exceeds by two percent the actual 
 94.24  average percentage increase in the current monthly salary of a 
 94.25  top grade firefighter in the most recent prior five fiscal 
 94.26  years.  The total amount of all payments to members may not 
 94.27  exceed the amount determined under subdivision 3.  Payment to 
 94.28  each eligible member must be calculated by dividing the total 
 94.29  number of pension units to which eligible members are entitled 
 94.30  into the excess investment income available for distribution to 
 94.31  members, and then multiplying that result by the number of units 
 94.32  to which each eligible member is entitled to determine each 
 94.33  eligible member's annual postretirement payment.  When the fund 
 94.34  actuarial value of assets according to the most recent annual 
 94.35  actuarial valuation prepared in accordance with Minnesota 
 94.36  Statutes, sections 356.215 and 356.216 is less than 102 percent 
 95.1   of its actuarial accrued liabilities, payment to each eligible 
 95.2   member may not exceed an amount equal to the total monthly 
 95.3   benefit that the eligible member was entitled to in the prior 
 95.4   year under the terms of the benefit plan of the relief 
 95.5   association or each eligible member's proportionate share of the 
 95.6   excess investment income, whichever is less.  When the actuarial 
 95.7   value of assets of the fund according to the most recent annual 
 95.8   actuarial valuation prepared in accordance with Minnesota 
 95.9   Statutes, sections 356.215 and 356.216 is greater than 102 
 95.10  percent of its actuarial accrued liabilities, payment to each 
 95.11  eligible member may not exceed the member's proportionate share 
 95.12  of 1-1/2 percent of assets of the fund. 
 95.13     Sec. 16.  Laws 1989, chapter 319, article 19, section 7, 
 95.14  subdivision 7, is amended to read: 
 95.15     Subd. 7.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
 95.16  No provision of or payment made under this section may be 
 95.17  interpreted or relied upon by any member of the relief 
 95.18  association to guarantee or entitle a member to annual 
 95.19  postretirement payments for a period when no excess investment 
 95.20  income is earned by the fund.  If the actuarial value of assets 
 95.21  of the fund according to the most recent annual actuarial 
 95.22  valuation prepared in accordance with Minnesota Statutes, 
 95.23  sections 356.215 and 356.216 is less than 102 percent of its 
 95.24  actuarial accrued liabilities, a distribution of the fund assets 
 95.25  must not exceed one-half of one percent. 
 95.26     Sec. 17.  Laws 1993, chapter 125, article 1, section 1, is 
 95.27  amended to read: 
 95.28     Section 1.  [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.] 
 95.29     Notwithstanding the provisions of Minnesota Statutes, 
 95.30  section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, 
 95.31  chapter 607, article XV, section 9, to the contrary, when the 
 95.32  actuarial value of assets of the fund according to the most 
 95.33  recent annual actuarial valuation prepared in accordance with 
 95.34  Minnesota Statutes, sections 356.215 and 356.216 is less than 90 
 95.35  percent of its actuarial accrued liabilities, the service 
 95.36  pensions payable by the Minneapolis fire department relief 
 96.1   association for members terminating active service as a 
 96.2   Minneapolis firefighter after June 1, 1993, must be computed as 
 96.3   follows: 
 96.4               length of                   service 
 96.5           credited service            pension payable
 96.6               10 years                  16.0 units
 96.7               11 years                  17.6 units
 96.8               12 years                  19.2 units
 96.9               13 years                  20.8 units
 96.10              14 years                  22.4 units
 96.11              15 years                  24.0 units
 96.12              16 years                  25.6 units
 96.13              17 years                  27.2 units
 96.14              18 years                  28.8 units
 96.15              19 years                  30.4 units
 96.16              20 years                  33.0 units
 96.17              21 years                  34.6 units
 96.18              22 years                  36.2 units
 96.19              23 years                  37.8 units
 96.20              24 years                  39.4 units
 96.21              25 years                  41.0 units
 96.22     When the actuarial value of assets of the fund according to 
 96.23  the most recent annual actuarial valuation prepared in 
 96.24  accordance with Minnesota Statutes, sections 356.215 and 356.216 
 96.25  is of greater than 90 percent of actuarial accrued liabilities, 
 96.26  the following schedule applies to all active members and retired 
 96.27  service pensioners who otherwise met the then existing 
 96.28  requirements to receive a benefit: 
 96.29              length of                   service 
 96.30          credited service            pension payable
 96.31               5 years                   8.0 units
 96.32               6 years                   9.6 units
 96.33               7 years                  11.2 units
 96.34               8 years                  12.8 units
 96.35               9 years                  14.4 units
 96.36              10 years                  16.0 units
 97.1               11 years                  17.6 units
 97.2               12 years                  19.2 units
 97.3               13 years                  20.8 units
 97.4               14 years                  22.4 units
 97.5               15 years                  24.0 units
 97.6               16 years                  25.6 units
 97.7               17 years                  27.2 units
 97.8               18 years                  28.8 units
 97.9               19 years                  30.4 units
 97.10              20 years                  33.0 33.5 units
 97.11              21 years                  34.6 35.1 units
 97.12              22 years                  36.2 37.7 units
 97.13              23 years                  37.8 38.3 units
 97.14              24 years                  39.4 39.9 units
 97.15              25 years                  41.0 41.5 units
 97.16     When the actuarial value of assets of the fund according to 
 97.17  the most recent annual actuarial valuation prepared in 
 97.18  accordance with Minnesota Statutes, sections 356.215 and 356.216 
 97.19  is of greater than 92.5 percent of actuarial accrued 
 97.20  liabilities, the following schedule applies to all active 
 97.21  members and retired service pensioners who otherwise met the 
 97.22  then existing requirements to receive a benefit: 
 97.23              length of                   service 
 97.24          credited service            pension payable
 97.25               5 years                   8.0 units
 97.26               6 years                   9.6 units
 97.27               7 years                  11.2 units
 97.28               8 years                  12.8 units
 97.29               9 years                  14.4 units
 97.30              10 years                  16.0 units
 97.31              11 years                  17.6 units
 97.32              12 years                  19.2 units
 97.33              13 years                  20.8 units
 97.34              14 years                  22.4 units
 97.35              15 years                  24.0 units
 97.36              16 years                  25.6 units
 98.1               17 years                  27.2 units
 98.2               18 years                  28.8 units
 98.3               19 years                  30.4 units
 98.4               20 years                  34.0 units
 98.5               21 years                  35.6 units
 98.6               22 years                  37.2 units
 98.7               23 years                  38.8 units
 98.8               24 years                  40.4 units
 98.9               25 years                  42.0 units
 98.10     Sec. 18.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; 
 98.11  OPTIONAL ANNUITIES.] 
 98.12     A member of the Minneapolis fire department relief 
 98.13  association who is retired or disabled on the effective date of 
 98.14  this section may elect an optional retirement annuity within 60 
 98.15  days of the effective date instead of the normal retirement 
 98.16  pension.  A member who retires or becomes disabled after the 
 98.17  effective date of this section may elect an optional retirement 
 98.18  annuity prior to the receipt of any benefits.  The optional 
 98.19  retirement annuity may be a 50 percent, a 75 percent, or a 100 
 98.20  percent joint and survivor annuity without reinstatement in the 
 98.21  event of the designated beneficiary predeceasing the member or a 
 98.22  joint and survivor annuity with reinstatement in the event of 
 98.23  the designated beneficiary predeceasing the member.  An optional 
 98.24  retirement annuity must be actuarially equivalent to the service 
 98.25  pension and automatic survivor coverage otherwise payable to the 
 98.26  retiring member and the member's beneficiaries.  Once selected, 
 98.27  the optional annuity is irrevocable. 
 98.28     Sec. 19.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION 
 98.29  TAX LEVY.] 
 98.30     If in any year after the Minneapolis fire department relief 
 98.31  actuarial value of assets of the association according to the 
 98.32  most recent annual actuarial valuation prepared in accordance 
 98.33  with Minnesota Statutes, sections 356.215 and 356.216 is greater 
 98.34  than 102 percent of the actuarial accrued liabilities of the 
 98.35  fund and subsequently the actuarial value of assets are less 
 98.36  than 100 percent of the actuarial accrued liabilities according 
 99.1   to the most recent annual actuarial valuation prepared in 
 99.2   accordance with Minnesota Statutes, sections 356.215 and 
 99.3   356.216, the city of Minneapolis is not required to levy a 
 99.4   property tax to fund any deficit unless the fund has two 
 99.5   successive years when the actuarial value of assets are less 
 99.6   than 100 percent of the actuarial accrued liabilities according 
 99.7   to the most recent annual actuarial valuation prepared in 
 99.8   accordance with Minnesota Statutes, sections 356.215 and 356.216.
 99.9      Sec. 20.  [ACTUARIAL VALUATION DATE.] 
 99.10     Notwithstanding Minnesota Statutes, section 69.77, 
 99.11  subdivision 2h, 356.215 or 356.216, the annual actuarial 
 99.12  valuation of the Minneapolis fire department relief association 
 99.13  must be completed by May 1 of each year. 
 99.14     Sec. 21.  [ACTUARIAL EQUIVALENT.] 
 99.15     For the purposes of the Minneapolis fire department relief 
 99.16  association, "actuarial equivalent" or "actuarially equivalent" 
 99.17  means the condition of one annuity or benefit having an equal 
 99.18  actuarial present value as another annuity or benefit, 
 99.19  determined as of a given date at a specified age with each 
 99.20  actuarial present value based on the appropriate mortality table 
 99.21  adopted by the board of directors based on the experience of the 
 99.22  fund and approved by the actuary retained by the legislative 
 99.23  commission on pensions and retirement and using the applicable 
 99.24  preretirement or postretirement interest rate assumptions 
 99.25  specified in Minnesota Statutes, section 356.216. 
 99.26     Sec. 22.  [BENEFIT EXCHANGE.] 
 99.27     The one unit health and welfare benefit granted to members 
 99.28  of the Minneapolis fire department relief association in Laws 
 99.29  1980, chapter 667, article XV, section 9, who retired after July 
 99.30  1, 1980, must be reduced by one-half unit upon the 
 99.31  implementation of the benefit improvement in section 17 when the 
 99.32  actuarial value of assets of the fund according to the most 
 99.33  recent annual actuarial valuation report under Minnesota 
 99.34  Statutes, sections 356.215 and 356.216 exceeds 90 percent of its 
 99.35  actuarial accrued liabilities and the benefit must be eliminated 
 99.36  when the actuarial value of assets of the fund exceeds 92.5 
100.1   percent of its actuarial accrued liabilities and the benefit in 
100.2   section 15 is fully implemented. 
100.3      Sec. 23.  [EFFECTIVE DATE.] 
100.4      The sections of this article are effective on the day after 
100.5   compliance by the governing body of the city of Minneapolis with 
100.6   Minnesota Statutes, section 645.021, subdivision 2.  Section 4 
100.7   is effective when the provisions of section 5 take effect.  
100.8   Sections 7 and 12 are effective retroactive to July 1, 1996 and 
100.9   apply to all current spouses of members, except that the unit 
100.10  increases for surviving spouses in section 7 shall not otherwise 
100.11  increase the surviving spouse benefit beyond 22 units.