HF 853

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; Minneapolis Employees
Retirement Fund; exempting the executive director from
the political subdivision compensation limit;
permitting the investment of fund assets with the
State Board of Investment; modifying certain liquidity
requirements; amending Minnesota Statutes 2004,
sections 43A.17, subdivision 9; 422A.05, subdivision
2c; 422A.06, subdivisions 3, 5; 422A.101, subdivision
3; repealing Minnesota Statutes 2004, section
422A.101, subdivision 4.

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

Section 1.

Minnesota Statutes 2004, section 43A.17,
subdivision 9, is amended to read:

Subd. 9.

Political subdivision compensation limit.

(a)
The salary and the value of all other forms of compensation of a
person employed by a political subdivision of this state,
excluding a school district, deleted text begin or employed under section 422A.03
deleted text end may not exceed 95 percent of the salary of the governor as set
under section 15A.082, except as provided in this subdivision.
For purposes of this subdivision, "political subdivision of this
state" includes a statutory or home rule charter city, county,
town, metropolitan or regional agency, or other political
subdivision, but does not include a hospital, clinic, or health
maintenance organization owned by such a governmental unit.

(b) Deferred compensation and payroll allocations to
purchase an individual annuity contract for an employee are
included in determining the employee's salary. Other forms of
compensation which shall be included to determine an employee's
total compensation are all other direct and indirect items of
compensation which are not specifically excluded by this
subdivision. Other forms of compensation which shall not be
included in a determination of an employee's total compensation
for the purposes of this subdivision are:

(1) employee benefits that are also provided for the
majority of all other full-time employees of the political
subdivision, vacation and sick leave allowances, health and
dental insurance, disability insurance, term life insurance, and
pension benefits or like benefits the cost of which is borne by
the employee or which is not subject to tax as income under the
Internal Revenue Code of 1986;

(2) dues paid to organizations that are of a civic,
professional, educational, or governmental nature; and

(3) reimbursement for actual expenses incurred by the
employee which the governing body determines to be directly
related to the performance of job responsibilities, including
any relocation expenses paid during the initial year of
employment.

The value of other forms of compensation shall be the
annual cost to the political subdivision for the provision of
the compensation.

(c) The salary of a medical doctor or doctor of osteopathy
occupying a position that the governing body of the political
subdivision has determined requires an M.D. or D.O. degree is
excluded from the limitation in this subdivision.

(d) The commissioner may increase the limitation in this
subdivision for a position that the commissioner has determined
requires special expertise necessitating a higher salary to
attract or retain a qualified person. The commissioner shall
review each proposed increase giving due consideration to salary
rates paid to other persons with similar responsibilities in the
state and nation. The commissioner may not increase the
limitation until the commissioner has presented the proposed
increase to the Legislative Coordinating Commission and received
the commission's recommendation on it. The recommendation is
advisory only. If the commission does not give its
recommendation on a proposed increase within 30 days from its
receipt of the proposal, the commission is deemed to have made
no recommendation.

Sec. 2.

Minnesota Statutes 2004, section 422A.05,
subdivision 2c, is amended to read:

Subd. 2c.

Minneapolis employees retirement fund
investment authority.

(a) For investments made on or after July
1, 1991, the board shall invest funds only in investments
authorized by section 356A.06, subdivision 7.

(b) However, in addition to real estate investments
authorized under paragraph (a), the board may also make loans to
purchasers of Minnesota situs nonfarm residential real estate
that is owned by the Minneapolis Employees Retirement Fund. The
loans must be secured by mortgages or deeds of trust.

(c) For investments made before July 1, 1991, the board
may, but is not required to, comply with paragraph (a).
However, with respect to these investments, the board shall act
in accordance with subdivision 2a and chapter 356A.

new text begin (d) The board may certify special fund assets for
investment by the State Board of Investment under section
11A.17. The board may certify assets for investment by the
State Board of Investment in fixed income pools or in a
separately managed account at the discretion of the State Board
of Investment as provided in section 11A.14.
new text end

Sec. 3.

Minnesota Statutes 2004, section 422A.06,
subdivision 3, is amended to read:

Subd. 3.

Deposit accumulation fund.

new text begin (a) new text end The deposit
accumulation fund consists of the assets held in the fund,
including amounts contributed by or for employees, amounts
contributed by the city, amounts contributed by municipal
activities supported in whole or in part by revenues other than
taxes and amounts contributed by any public corporation, amounts
paid by the state, and by income from investments.

new text begin (b) new text end There must be paid from the fund the amounts required
to be transferred to the retirement benefit fund, or the
disability benefit fund, refunds of contributions, including the
death-while-active refund specified in section 422A.22,
subdivision 4, postretirement increases in retirement allowances
granted under Laws 1965, chapter 688, or Laws 1969, chapter 859,
and expenses of the administration of the retirement fund which
were not charged by the retirement board against the income of
the retirement benefit fund from investments as the cost of
handling the investments of the retirement benefit fund.

new text begin (c) To the extent the deposit accumulation fund has
insufficient assets to transfer the total value of the required
reserves for retirement annuities to either the disability
benefit fund or the retirement benefit fund as required, the
executive director must determine an interest charge for the
period the transfer that remains unpaid at an annual rate equal
to five percent plus the amount of the annual Consumer Price
Index for urban wage earners and clerical workers as calculated
by the Bureau of Labor Statistics of the United States
Department of Labor as of the previous June 30, and the interest
must be reflected in the books of the Minneapolis Employees
Retirement Fund and assessed against the deposit accumulation
fund based on the average quarterly balance outstanding. Any
subsequent transfers from the deposit accumulation fund to the
disability benefit fund or to the retirement fund must first be
applied to interest and then to the principal amount of transfer
outstanding.
new text end

Sec. 4.

Minnesota Statutes 2004, section 422A.06,
subdivision 5, is amended to read:

Subd. 5.

Transfer of reserves to retirement benefit fund;
adjustments of annuities and benefits.

(a) Assets equal to the
required reserves for retirement annuities as determined in
accordance with the appropriate mortality table adopted by the
board of trustees based on the experience of the fund as
recommended by the commission-retained actuary and using the
postretirement interest assumption specified in section 356.215,
subdivision 8, shall be transferred to the disability benefit
fund as provided in subdivision 7, or the retirement benefit
fund, except for any amounts payable from the survivor benefit
fund, as of date of retirement.

new text begin (b) To the extent the deposit accumulation fund has
insufficient assets to transfer the total value of the required
reserves for retirement annuities to either the disability
benefit fund or the retirement benefit fund as required, the
executive director must determine an interest charge for the
period the transfer that remains unpaid at an annual rate equal
to five percent plus the amount of the annual Consumer Price
Index for urban wage earners and clerical workers as calculated
by the Bureau of Labor Statistics of the United States
Department of Labor as of the previous June 30, and the interest
must be reflected in the books of the Minneapolis Employees
Retirement Fund and assessed against the deposit accumulation
fund based on the average quarterly balance outstanding. Any
subsequent transfers from the deposit accumulation fund to the
disability benefit fund or to the retirement fund must first be
applied to interest and then to the principal amount of transfer
outstanding.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end Annuity payments shall be adjusted in accordance
with this chapter, except that no minimum retirement payments
described in this chapter shall include any amounts payable from
the survivors' benefit fund or disability benefit fund and
supplemented benefits specifically financed by statute.

deleted text begin (c) deleted text end new text begin (d) new text end Increases in annuity payments pursuant to this
section shall be made automatically unless written notice on a
form prescribed by the board is filed with the retirement board
requesting that the increase not be made.

deleted text begin (d) deleted text end new text begin (e) new text end Any additional annuity which began to accrue on
July 1, 1973, or which began to accrue on January 1, 1974,
pursuant to Laws 1973, chapter 770, section 1, shall be
considered as part of the base amount to be used in determining
any postretirement adjustments payable pursuant to the
provisions of subdivision 8.

Sec. 5.

Minnesota Statutes 2004, section 422A.101,
subdivision 3, is amended to read:

Subd. 3.

State contributions.

(a) Subject to the
limitation set forth in paragraph (c), the state shall pay to
the Minneapolis Employees Retirement Fund annually an amount
equal to the amount calculated under paragraph (b).

(b) The payment amount is an amount equal to the financial
requirements of the Minneapolis Employees Retirement Fund
reported in the actuarial valuation of the fund prepared by the
commission-retained actuary pursuant to section 356.215 for the
most recent year but based on a target date for full
amortization of the unfunded actuarial accrued liabilities by
June 30, 2020, less the amount of employee contributions
required pursuant to section 422A.10, and the amount of employer
contributions required pursuant to subdivisions 1a, 2, and 2a.
Payments shall be made September 15 annually.

(c) The annual state contribution under this subdivision
may not exceed $9,000,000, plus the cost of the annual
supplemental benefit determined under section 356.43.

(d) If the amount determined under paragraph (b) exceeds
deleted text begin $11,910,000 deleted text end new text begin $9,000,000 new text end , the excess must be allocated to and paid
to the fund by the employers identified in subdivisions 1a and
2, other than units of metropolitan government. Each employer's
share of the excess is proportionate to the employer's share of
the fund's unfunded actuarial accrued liability as disclosed in
the annual actuarial valuation prepared by the actuary
retained deleted text begin by the Legislative Commission on Pensions and
Retirement deleted text end new text begin under section 356.214 new text end compared to the total unfunded
actuarial accrued liability attributed to all employers
identified in subdivisions 1a and 2, other than units of
metropolitan government. Payments must be made in equal
installments as set forth in paragraph (b).

Sec. 6. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, section 422A.101, subdivision 4,
is repealed.
new text end

Sec. 7. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 6 are effective July 1, 2005.
new text end