1st Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to retirement; statewide and major local 1.3 public pension plans; making various changes of an 1.4 administrative nature; setting various limitations and 1.5 requirements for public employees police and fire 1.6 retirement plan disability benefit applications; 1.7 resolving one person and small group pension problems; 1.8 reducing the early retirement age for the judges 1.9 retirement plan; authorizing a shorter vesting 1.10 schedule for the Marine on St. Croix Volunteer 1.11 Firefighters Relief Association; revising the salary 1.12 maximum for the executive secretary of the Minneapolis 1.13 Firefighters Relief Association; permitting single 1.14 Teachers Retirement Association members to make 1.15 survivor benefit designations; authorizing retirement 1.16 coverage discontinuation by an elected county 1.17 official; revising the manner in which actuarial 1.18 services to the Legislative Commission on Pensions and 1.19 Retirement are provided; continuing retirement 1.20 coverage by the general employees retirement plan of 1.21 the Public Employees Retirement Association for Anoka 1.22 County Achieve Program and the Government Training 1.23 Services; including in privatized public employee 1.24 retirement coverage employees of the Fair Oaks Lodge, 1.25 Wadena, and RenVilla Nursing Home; extending the 1.26 expiration date on certain prior military service 1.27 credit purchases; temporarily exempting Metropolitan 1.28 Airports Commission police from reemployed annuitant 1.29 earnings limitation; ratifying certain Bellingham 1.30 volunteer firefighter relief association annuity 1.31 purchases; including the Lake Johanna fire department 1.32 employees in Public Employees Retirement Association 1.33 coverage; expanding the health care savings plan; 1.34 modifying the department of transportation pilots 1.35 retirement plan; creating a statewide volunteer 1.36 firefighter retirement plan study task force; 1.37 authorizing shorter vesting periods for defined 1.38 contribution volunteer firefighter relief 1.39 associations; appropriating money; amending Minnesota 1.40 Statutes 2002, sections 3A.03, subdivision 2; 352.01, 1.41 subdivision 13; 352.03, subdivision 6; 352.113, 1.42 subdivisions 4, 6, 8, by adding a subdivision; 352.12, 1.43 subdivisions 1, 6; 352.22, subdivisions 2, 3; 352.27; 1.44 352.275, subdivision 1; 352.86, subdivision 1; 352.95, 1.45 subdivisions 1, 2, 4; 352.98; 352B.01, subdivisions 1.46 3a, 11, by adding a subdivision; 352B.02, subdivision 2.1 1e; 352B.10, subdivisions 1, 2, 3, 4, 5; 352B.105; 2.2 352B.11, subdivisions 1, 2, by adding subdivisions; 2.3 352D.065, subdivision 2; 352D.075, subdivisions 2, 3, 2.4 by adding a subdivision; 353.01, subdivisions 2b, 10, 2.5 12a, 12b, 16, 16a; 353.03, subdivision 3a; 353.33, 2.6 subdivisions 4, 6, 6b, 7, by adding a subdivision; 2.7 353.37, subdivision 3, by adding a subdivision; 2.8 353.656, subdivision 5, by adding subdivisions; 2.9 354.05, subdivisions 2, 22, 35; 354.06, subdivision 2.10 2a; 354.07, subdivision 9; 354.091; 354.096, 2.11 subdivision 1; 354.42, subdivision 7; 354.44, 2.12 subdivisions 4, 5; 354.46, subdivisions 2, 2b, 5, by 2.13 adding a subdivision; 354.48, subdivisions 2, 4, 6, 2.14 6a, 10; 354.51, subdivision 5; 354.52, subdivisions 2.15 4a, 6, by adding a subdivision; 354.53; 354.533, 2.16 subdivision 1; 354.66, subdivision 2; 354A.011, 2.17 subdivision 24; 354A.021, subdivision 7; 354A.093; 2.18 354A.094, subdivision 3; 354A.097, subdivision 1; 2.19 354B.20, subdivisions 4, 6; 354B.23, subdivision 1; 2.20 354B.32; 354C.11, subdivision 2; 356.215, subdivisions 2.21 2, 18; 356.302, subdivision 3; 356.441; 356.611, 2.22 subdivision 2, by adding subdivisions; 422A.06, 2.23 subdivision 2; 422A.18, subdivisions 1, 4; 423B.09, 2.24 subdivision 4; 423C.05, subdivisions 4, 5, 6, by 2.25 adding a subdivision; 424A.02, subdivisions 2, 7; 2.26 490.121, subdivision 10, by adding a subdivision; 2.27 490.124, subdivision 12; Minnesota Statutes 2003 2.28 Supplement, sections 353.01, subdivision 6; 353F.02, 2.29 subdivision 4; 423C.03, subdivision 3; Laws 1999, 2.30 chapter 222, article 16, section 16, as amended; Laws 2.31 2000, chapter 461, article 4, section 4; proposing 2.32 coding for new law in Minnesota Statutes, chapters 2.33 352F; 356; repealing Minnesota Statutes 2002, sections 2.34 3.85, subdivisions 11, 12; 352D.02, subdivision 5; 2.35 353.33, subdivision 5b; 354A.107; 356.217; 490.11. 2.36 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.37 ARTICLE 1 2.38 MEMBERSHIP ISSUES 2.39 Section 1. Minnesota Statutes 2002, section 353.01, 2.40 subdivision 2b, is amended to read: 2.41 Subd. 2b. [EXCLUDED EMPLOYEES.] The following public 2.42 employees are not eligible to participate as members of the 2.43 association with retirement coverage by the public employees 2.44 retirement plan, the local government correctional employees 2.45 retirement plan under chapter 353E, or the public employees 2.46 police and fire retirement plan: 2.47 (1) public officers, other than county sheriffs, who are 2.48 elected to a governing body, or persons who are appointed to 2.49 fill a vacancy in an elective office of a governing body, whose 2.50 term of officefirstcommences on or after July 1, 2002, for the 2.51 service to be rendered in that elective position. Elected 2.52 governing body officials who were active members of the 2.53 association's coordinated or basic retirement plans as of June 3.1 30, 2002, continue participation throughout incumbency in office 3.2 until termination of public service occurs as defined in 3.3 subdivision 11a; 3.4 (2) election officers or election judges; 3.5 (3) patient and inmate personnel who perform services for a 3.6 governmental subdivision; 3.7 (4) except as otherwise specified in subdivision 12a, 3.8 employees who are hired for a temporary position as defined 3.9 under subdivision 12a, and employees who resign from a 3.10 nontemporary position and accept a temporary position within 30 3.11 days in the same governmental subdivision.;An employer must not3.12apply the definition of temporary position so as to exclude3.13employees who are hired to fill positions that are permanent or3.14that are for an unspecified period but who are serving a3.15probationary period at the start of the employment. If the3.16period of employment extends beyond six consecutive months and3.17the employee earns more than $425 from one governmental3.18subdivision in any calendar month, the department head shall3.19report the employee for membership and require employee3.20deductions be made on behalf of the employee under section3.21353.27, subdivision 4.3.22The membership eligibility of an employee who resigns or is3.23dismissed from a temporary position and within 30 days accepts3.24another temporary position in the same governmental subdivision3.25is determined on the total length of employment rather than on3.26each separate position. Membership eligibility of an employee3.27who holds concurrent temporary and nontemporary positions in one3.28governmental subdivision is determined by the length of3.29employment and salary of each separate position;3.30 (5) employees who are employed by reason of work emergency 3.31 caused by fire, flood, storm, or similar disaster; 3.32 (6) employees who by virtue of their employment in one 3.33 governmental subdivision are required by law to be a member of 3.34 and to contribute to any of the plans or funds administered by 3.35 the Minnesota State Retirement System, the Teachers Retirement 3.36 Association, the Duluth Teachers Retirement Fund Association, 4.1 the Minneapolis Teachers Retirement Fund Association, the St. 4.2 Paul Teachers Retirement Fund Association, the Minneapolis 4.3 Employees Retirement Fund, or any police or firefighters relief 4.4 association governed by section 69.77 that has not consolidated 4.5 with the Public Employees Retirement Association, or any local 4.6 police or firefighters consolidation accountbutwho have not 4.7 elected the type of benefit coverage provided by the public 4.8 employees police and fire fund under sections 353A.01 to 4.9 353A.10, or any persons covered by section 353.665, subdivision 4.10 4, 5, or 6, who have not elected public employees police and 4.11 fire plan benefit coverage. This clause must not be construed 4.12 to prevent a person from being a member of and contributing to 4.13 the Public Employees Retirement Association and also belonging 4.14 to and contributing to another public pension plan or fund for 4.15 other service occurring during the same period of time. A 4.16 person who meets the definition of "public employee" in 4.17 subdivision 2 by virtue of other service occurring during the 4.18 same period of time becomes a member of the association unless 4.19 contributions are made to another public retirement fund on the 4.20 salary based on the other service or to the Teachers Retirement 4.21 Association by a teacher as defined in section 354.05, 4.22 subdivision 2; 4.23 (7) persons who are members of a religious order and are 4.24 excluded from coverage under the federal Old Age, Survivors, 4.25 Disability, and Health Insurance Program for the performance of 4.26 service as specified in United States Code, title 42, section 4.27 410(a)(8)(A), as amended through January 1, 1987, if no 4.28 irrevocable election of coverage has been made under section 4.29 3121(r) of the Internal Revenue Code of 1954, as amended; 4.30 (8) employees of a governmental subdivision who have not 4.31 reached the age of 23 and are enrolled on a full-time basis to 4.32 attend or are attending classes on a full-time basis at an 4.33 accredited school, college, or university in an undergraduate, 4.34 graduate, or professional-technical program, or a public or 4.35 charter high school; 4.36 (9) resident physicians, medical interns, and pharmacist 5.1 residents and pharmacist interns who are serving in a degree or 5.2 residency program in public hospitals; 5.3 (10) students who are serving in an internship or residency 5.4 program sponsored by an accredited educational institution; 5.5 (11) persons who hold a part-time adult supplementary 5.6 technical college license who render part-time teaching service 5.7 in a technical college; 5.8 (12) except for employees of Hennepin County, foreign 5.9 citizens working for a governmental subdivision with a work 5.10 permit of less than three years, or an H-1b visa valid for less 5.11 than three years of employment. Upon notice to the association 5.12 that the work permit or visa extends beyond the three-year 5.13 period, the foreign citizensare tomust be reported for 5.14 membership from the date of the extension; 5.15 (13) public hospital employees who elected not to 5.16 participate as members of the association before 1972 and who 5.17 did not elect to participate from July 1, 1988, to October 1, 5.18 1988; 5.19 (14) except as provided in section 353.86, volunteer 5.20 ambulance service personnel, as defined in subdivision 35, but 5.21 persons who serve as volunteer ambulance service personnel may 5.22 still qualify as public employees under subdivision 2 and may be 5.23 members of the Public Employees Retirement Association and 5.24 participants in the public employees retirement fund or the 5.25 public employees police and fire fund, whichever applies, on the 5.26 basis of compensation received from public employment service 5.27 other than service as volunteer ambulance service personnel; 5.28 (15) except as provided in section 353.87, volunteer 5.29 firefighters, as defined in subdivision 36, engaging in 5.30 activities undertaken as part of volunteer firefighter duties; 5.31 provided that a person who is a volunteer firefighter may still 5.32 qualify as a public employee under subdivision 2 and may be a 5.33 member of the Public Employees Retirement Association and a 5.34 participant in the public employees retirement fund or the 5.35 public employees police and fire fund, whichever applies, on the 5.36 basis of compensation received from public employment activities 6.1 other than those as a volunteer firefighter; 6.2 (16) pipefitters and associated trades personnel employed 6.3 by Independent School District No. 625, St. Paul, with coverage 6.4 under a collective bargaining agreement by the pipefitters local 6.5 455 pension plan who were either first employed after May 1, 6.6 1997, or, if first employed before May 2, 1997, elected to be 6.7 excluded under Laws 1997, chapter 241, article 2, section 12; 6.8 (17) electrical workers, plumbers, carpenters, and 6.9 associated trades personnel employed by Independent School 6.10 District No. 625, St. Paul, or the city of St. Paul, who have 6.11 retirement coverage under a collective bargaining agreement by 6.12 the Electrical Workers Local 110 pension plan, the United 6.13 Association Plumbers Local 34 pension plan, or the Carpenters 6.14 Local 87 pension plan who were either first employed after May 6.15 1, 2000, or, if first employed before May 2, 2000, elected to be 6.16 excluded under Laws 2000, chapter 461, article 7, section 5; 6.17 (18) bricklayers, allied craftworkers, cement masons, 6.18 glaziers, glassworkers, painters, allied tradesworkers, and 6.19 plasterers employed by the city of St. Paul or Independent 6.20 School District No. 625, St. Paul, with coverage under a 6.21 collective bargaining agreement by the Bricklayers and Allied 6.22 Craftworkers Local 1 pension plan, the Cement Masons Local 633 6.23 pension plan, the Glaziers and Glassworkers Local L-1324 pension 6.24 plan, the Painters and Allied Trades Local 61 pension plan, or 6.25 the Twin Cities Plasterers Local 265 pension plan who were 6.26 either first employed after May 1, 2001, or if first employed 6.27 before May 2, 2001, elected to be excluded under Laws 2001, 6.28 First Special Session chapter 10, article 10, section 6; 6.29 (19) plumbers employed by the metropolitan airports 6.30 commission, with coverage under a collective bargaining 6.31 agreement by the Plumbers Local 34 pension plan, who either were 6.32 first employed after May 1, 2001, or if first employed before 6.33 May 2, 2001, elected to be excluded under Laws 2001, First 6.34 Special Session chapter 10, article 10, section 6; 6.35 (20) employees who are hired after June 30, 2002, to fill 6.36 seasonal positions under subdivision 12b which are limited in 7.1 duration by the employer to 185 consecutive calendar days or 7.2 less in each year of employment with the governmental 7.3 subdivision; 7.4 (21) persons who are provided supported employment or 7.5 work-study positions by a governmental subdivision and who 7.6 participate in an employment or industries program maintained 7.7 for the benefit of these persons where the governmental 7.8 subdivision limits the position's duration to three years or 7.9 less, including persons participating in a federal or state 7.10 subsidized on-the-job training, work experience, senior citizen, 7.11 youth, or unemployment relief program where the training or work 7.12 experience is not provided as a part of, or for, future 7.13 permanent public employment; 7.14 (22) independent contractors and the employees of 7.15 independent contractors; and 7.16 (23) reemployed annuitants of the association during the 7.17 course of that reemployment. 7.18 Sec. 2. Minnesota Statutes 2002, section 353.01, 7.19 subdivision 12a, is amended to read: 7.20 Subd. 12a. [TEMPORARY POSITION.](1)(a) "Temporary 7.21 position" means an employment position predetermined by the 7.22 employer at the time of hiring to be a period of six months or 7.23 less. Temporary position also means an employment position 7.24 occupied by a person hired by the employer as a temporary 7.25 replacement who is employed for a predetermined period of six 7.26 months or less. 7.27(2)(b) "Temporary position" does not mean an employment 7.28 position for a specified or unspecified term in which a person 7.29 serves a probationary period as a requirement for subsequent 7.30 employment on a permanent or unlimited basis. 7.31 (c) If employment in a temporary position extends beyond 7.32 six consecutive months, the head of the department shall report 7.33 the employee for membership if salary in any month exceeds the 7.34 salary threshold specified in subdivision 2a. The membership 7.35 eligibility of an employee who resigns or is dismissed from a 7.36 temporary position and accepts another temporary position in the 8.1 same governmental subdivision within 30 days is determined on 8.2 the total length of employment rather than on each separate 8.3 position. 8.4 Sec. 3. Minnesota Statutes 2002, section 353.01, 8.5 subdivision 12b, is amended to read: 8.6 Subd. 12b. [SEASONAL POSITION.] "Seasonal position" means 8.7 a position where the nature of the work or its duration are 8.8 related to a specific season or seasons of the year, regardless 8.9 of whether or not the employing agency anticipates that the same 8.10 employee will return to the position each season in which it 8.11 becomes available. The entire period of employment in a 8.12businessyear must be used to determine whether or not a 8.13 position may be excluded as seasonal when there is less than a 8.14 30-day break between one seasonal position and a subsequent 8.15 seasonal position for employment with the same governmental 8.16 employer. Seasonal positions include, but are not limited to, 8.17 coaching athletic activities or employment to plow snow or to 8.18 maintain roads or parks, or to operate skating rinks, ski 8.19 lodges, golf courses, or swimming pools. 8.20 Sec. 4. Minnesota Statutes 2002, section 354.05, 8.21 subdivision 2, is amended to read: 8.22 Subd. 2. [TEACHER.] (a) "Teacher" means: 8.23 (1) a person who renders service as a teacher, supervisor, 8.24 principal, superintendent, librarian, nurse, counselor, social 8.25 worker, therapist, or psychologist in a public school of the 8.26 state located outside of the corporate limits of a city of the 8.27 first class, or in any charter school, irrespective of the 8.28 location of the school, or in any charitable, penal, or 8.29 correctional institutions of a governmental subdivision, or who 8.30 is engaged in educational administration in connection with the 8.31 state public school system, but excluding the University of 8.32 Minnesota, whether the position be a public office or an 8.33 employment, not including the members or officers of any general 8.34 governing or managing board or body; 8.35 (2) an employee of the teachers retirement association; 8.36 (3) a person who renders teaching service on a part-time 9.1 basis and who also renders other services for a single employing 9.2 unit. A person whose teaching service comprises at least 50 9.3 percent of the combined employment salary is a member of the 9.4 association for all services with the single employing unit. If 9.5 the person's teaching service comprises less than 50 percent of 9.6 the combined employment salary, the executive director must 9.7 determine whether all or none of the combined service is covered 9.8 by the association; or 9.9 (4) a person who is not covered by the plans established 9.10 under chapter 352D, 354A, or 354B and who is employed by the 9.11 Board of Trustees of the Minnesota State Colleges and 9.12 Universities system in an unclassified position as: 9.13 (i) a president, vice-president, or dean; 9.14 (ii) a manager or a professional in an academic or an 9.15 academic support program other than specified in item (i); 9.16 (iii) an administrative or a service support faculty 9.17 position; or 9.18 (iv) a teacher or a research assistant. 9.19 (b) "Teacher" does not mean: 9.20 (1) a person who works for a school or institution as an 9.21 independent contractor as defined by the Internal Revenue 9.22 Service; 9.23 (2)a person employed in subsidized on-the-job training,9.24work experience or public service employment as an enrollee9.25under the federal Comprehensive Employment and Training Act from9.26and after March 30, 1978, unless the person has, as of the later9.27of March 30, 1978, or the date of employment, sufficient service9.28credit in the retirement association to meet the minimum vesting9.29requirements for a deferred retirement annuity, or the employer9.30agrees in writing on forms prescribed by the executive director9.31to make the required employer contributions, including any9.32employer additional contributions, on account of that person9.33from revenue sources other than funds provided under the federal9.34Comprehensive Training and Employment Act, or the person agrees9.35in writing on forms prescribed by the executive director to make9.36the required employer contribution in addition to the required10.1employee contribution;10.2(3)a personholding a part-time adult supplementary10.3technical college licensewho renders part-time teaching service 10.4 or a customized trainer as defined by the Minnesota State 10.5 Colleges and Universities systemin a technical collegeif (i) 10.6 the service is incidental to the regular nonteaching occupation 10.7 of the person; and (ii) theapplicable technical college10.8 employer stipulates annually in advance that the part-time 10.9 teaching service or customized training service will not exceed 10.10 300 hours in a fiscal year and retains the stipulation in its 10.11 records; and (iii) the part-time teaching service or customized 10.12 training service actually does not exceed 300 hours in a fiscal 10.13 year; or 10.14(4)(3) a person exempt from licensure under section 10.15 122A.30. 10.16 Sec. 5. Minnesota Statutes 2002, section 354B.20, 10.17 subdivision 4, is amended to read: 10.18 Subd. 4. [COVERED EMPLOYMENT.] (a) "Covered employment" 10.19 means employment by a person eligible for coverage by this 10.20 retirement program under section 354B.21 in a faculty position 10.21 or in an eligible unclassified administrative position. 10.22 (b) "Covered employment" does not mean employment specified 10.23 in paragraph (a) by a faculty member employed ina state10.24university or a community collegethe Minnesota State Colleges 10.25 and Universities system if the person's initial appointment is 10.26 specified as constituting less than 25 percent of a full 10.27 academic year, exclusive of summer session, for the applicable 10.28 institution. 10.29 Sec. 6. Minnesota Statutes 2002, section 354B.20, 10.30 subdivision 6, is amended to read: 10.31 Subd. 6. [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE POSITION.] 10.32 "Eligible unclassified administrative position" means the 10.33 following: 10.34 (1) the chancellor of the board; 10.35 (2) a president of a state college or university;or10.36 (3) anexcludedadministrator employed in a state 11.1 university or college, by the board, or by the higher education 11.2 services office; or 11.3 (4) other managers and professionals in academic and 11.4 academic support programs in the unclassified service employed 11.5 in a state university or college, by the board, or by the higher 11.6 education services office. 11.7 Sec. 7. Minnesota Statutes 2002, section 354C.11, 11.8 subdivision 2, is amended to read: 11.9 Subd. 2. [ELIGIBILITY.] (a) An individual must participate 11.10 in the supplemental retirement plan if the individual is 11.11 employed by the board of trustees in the unclassified service of 11.12 the state and has completed at least two years with a full-time 11.13 contract of applicable unclassified employment with the board or 11.14 an applicable predecessor board in any of the positions 11.15 specified in paragraph (b). 11.16 (b) Eligible positions or employment classifications are: 11.17 (1) an unclassified administrative position as defined in 11.18 section 354B.20, subdivision 6; 11.19 (2) an employment classification included in one of the 11.20 following collective bargaining units under section 179A.10, 11.21 subdivision 2: 11.22 (i) the state university instructional unit; 11.23 (ii) the state college instructional unit; and 11.24 (iii) the state university administrative unit; or 11.25 (3) an unclassified employee of the board: 11.26 (i) included in the general professional unit or 11.27 supervisory employees unit under section 179A.10, subdivision 2; 11.28 or 11.29 (ii) excluded from those units due to the employee's 11.30 confidential status under section 179A.10, subdivision 1, clause 11.31 (8). 11.32 Sec. 8. [REPEALER.] 11.33 Minnesota Statutes 2002, section 352D.02, subdivision 5, is 11.34 repealed. 11.35 Sec. 9. [EFFECTIVE DATE.] 11.36 (a) Sections 1 to 5 and 8 are effective on July 1, 2004. 12.1 (b) Section 6 is effective on July 1, 2004, and applies 12.2 retroactively to the date of hire of the applicable person in 12.3 the affected position. 12.4 (c) Section 7 is effective retroactively to July 1, 2001. 12.5 ARTICLE 2 12.6 COVERED SALARY DEFINITION 12.7 Section 1. Minnesota Statutes 2002, section 352.01, 12.8 subdivision 13, is amended to read: 12.9 Subd. 13. [SALARY.] (a) "Salary" means wages, or other 12.10 periodic compensation, paid to an employee before deductions for 12.11 deferred compensation, supplemental retirement plans, or other 12.12 voluntary salary reduction programs. 12.13 (b) "Salary" does not include: 12.14 (1) lump sum sick leave payments,; 12.15 (2) severance payments,; 12.16 (3) lump sum annual leave payments and overtime payments 12.17 made at the time of separation from state service,; 12.18 (4) payments in lieu of any employer-paid group insurance 12.19 coverage, including the difference between single and family 12.20 rates that may be paid to an employee with single coverage, and; 12.21 (5) payments made as an employer-paid fringe benefit,; 12.22 (6) workers' compensation payments,; 12.23 (7) employer contributions to a deferred compensation or 12.24 tax sheltered annuity program,; and 12.25 (8) amounts contributed under a benevolent vacation and 12.26 sick leave donation programare not salary. 12.27 (c) Amounts provided to an employee by the employer through 12.28 a grievance proceeding or a legal settlement are salary only if 12.29 the settlement is reviewed by the executive director and the 12.30 amounts are determined by the executive director to be 12.31 consistent with paragraph (a) and prior determinations. 12.32 Sec. 2. Minnesota Statutes 2002, section 352B.01, 12.33 subdivision 11, is amended to read: 12.34 Subd. 11. [AVERAGE MONTHLY SALARY.] (a) "Average monthly 12.35 salary" means the average of the highest monthly salaries for 12.36 five years of service as a member upon which contributions were 13.1 deducted from pay under section 352B.02, or upon which 13.2 appropriate contributions or payments were made to the fund to 13.3 receive allowable service and salary credit as specified under 13.4 the applicable law. Average monthly salary must be based upon 13.5 all allowable service if this service is less than five 13.6 years.It13.7 (b) "Average monthly salary" means the salary of the member 13.8 as defined in section 352.01, subdivision 13. "Average monthly 13.9 salary" does not include any lump-sum annual leave payments and 13.10 overtime payments made at the time of separation from state 13.11 service, any amounts of severance pay, or any reduced salary 13.12 paid during the period the person is entitled to workers' 13.13 compensation benefit payments for temporary disability. 13.14 (c) A member on leave of absence receiving temporary 13.15 workers' compensation payments and a reduced salary or no salary 13.16 from the employer who is entitled to allowable service credit 13.17 for the period of absence may make payment to the fund for the 13.18 difference between salary received, if any, and the salary the 13.19 member would normally receive if not on leave of absence during 13.20 the period. The member shall pay an amount equal to the member 13.21 and employer contribution rate under section 352B.02, 13.22 subdivisions 1b and 1c, on the differential salary amount for 13.23 the period of the leave of absence. The employing department, 13.24 at its option, may pay the employer amount on behalf of the 13.25 member. Payment made under this subdivision must include 13.26 interest at the rate of 8.5 percent per year, and must be 13.27 completed within one year of the return from the leave of 13.28 absence. 13.29 Sec. 3. Minnesota Statutes 2002, section 353.01, 13.30 subdivision 10, is amended to read: 13.31 Subd. 10. [SALARY.] (a) "Salary" means: 13.32 (1) periodic compensation of a public employee, before 13.33 deductions for deferred compensation, supplemental retirement 13.34 plans, or other voluntary salary reduction programs, and also 13.35 means "wages" and includes net income from fees; and 13.36 (2) for a public employee who has prior service covered by 14.1 a local police or firefighters relief association that has 14.2 consolidated with the Public Employees Retirement Association or 14.3 to which section 353.665 applies and who has elected coverage 14.4 either under the public employees police and fire fund benefit 14.5 plan under section 353A.08 following the consolidation or under 14.6 section 353.665, subdivision 4, "salary" means the rate of 14.7 salary upon which member contributions to the special fund of 14.8 the relief association were made prior to the effective date of 14.9 the consolidation as specified by law and by bylaw provisions 14.10 governing the relief association on the date of the initiation 14.11 of the consolidation procedure and the actual periodic 14.12 compensation of the public employee after the effective date of 14.13 consolidation. 14.14 (b) Salary does not mean: 14.15 (1) fees paid to district court reporters, unused annual 14.16 vacation or sick leave payments, in lump-sum or periodic 14.17 payments, severance payments, reimbursement of expenses, 14.18 lump-sum settlements not attached to a specific earnings period, 14.19 or workers' compensation payments; 14.20 (2) employer-paid amounts used by an employee toward the 14.21 cost of insurance coverage, employer-paid fringe benefits, 14.22 flexible spending accounts, cafeteria plans, health care expense 14.23 accounts, day care expenses, or any payments in lieu of any 14.24 employer-paid group insurance coverage, including the difference 14.25 between single and family rates that may be paid to a member 14.26 with single coverage and certain amounts determined by the 14.27 executive director to be ineligible; 14.28 (3) the amount equal to that which the employing 14.29 governmental subdivision would otherwise pay toward single or 14.30 family insurance coverage for a covered employee when, through a 14.31 contract or agreement with some but not all employees, the 14.32 employer: 14.33 (i) discontinues, or for new hires does not provide, 14.34 payment toward the cost of the employee's selected insurance 14.35 coverages under a group plan offered by the employer; 14.36 (ii) makes the employee solely responsible for all 15.1 contributions toward the cost of the employee's selected 15.2 insurance coverages under a group plan offered by the employer, 15.3 including any amount the employer makes toward other employees' 15.4 selected insurance coverages under a group plan offered by the 15.5 employer; and 15.6 (iii) provides increased salary rates for employees who do 15.7 not have any employer-paid group insurance coverages;and15.8 (4) except as provided in section 353.86 or 353.87, 15.9 compensation of any kind paid to volunteer ambulance service 15.10 personnel or volunteer firefighters, as defined in subdivision 15.11 35 or 36; and 15.12 (5) compensation that exceeds the limitation provided in 15.13 section 356.611. 15.14 (c) Amounts provided to an employee by the employer through 15.15 a grievance proceeding or a legal settlement are salary only if 15.16 the settlement is reviewed by the executive director and the 15.17 amounts are determined by the executive director to be 15.18 consistent with paragraph (a) and prior determinations. 15.19 Sec. 4. Minnesota Statutes 2002, section 354.05, 15.20 subdivision 35, is amended to read: 15.21 Subd. 35. [SALARY.] (a) "Salary" means the periodic 15.22 compensation, upon which member contributions are required 15.23 before deductions for deferred compensation, supplemental 15.24 retirement plans, or other voluntary salary reduction programs. 15.25 (b) "Salary" does not mean: 15.26 (1) lump sum annual leave payments; 15.27 (2) lump sum wellness and sick leave payments; 15.28 (3) employer-paid amounts used by an employee toward the 15.29 cost of insurance coverage, employer-paid fringe benefits, 15.30 flexible spending accounts, cafeteria plans, health care expense 15.31 accounts, day care expenses, or any payments in lieu of any 15.32 employer-paid group insurance coverage, including the difference 15.33 between single and family rates that may be paid to a member 15.34 with single coverage and certain amounts determined by the 15.35 executive director to be ineligible; 15.36 (4) any form of payment made in lieu of any other 16.1 employer-paid fringe benefit or expense; 16.2 (5) any form of severance payments; 16.3 (6) workers' compensation payments; 16.4 (7) disability insurance payments including self-insured 16.5 disability payments; 16.6 (8) payments to school principals and all other 16.7 administrators for services in addition to the normal work year 16.8 contract if these additional services are performed on an 16.9 extended duty day, Saturday, Sunday, holiday, annual leave day, 16.10 sick leave day, or any other nonduty day; 16.11 (9) payments under section 356.24, subdivision 1, clause 16.12 (4); and 16.13 (10) payments made under section 122A.40, subdivision 12, 16.14 except for payments for sick leave accumulated under the 16.15 provisions of a uniform school district policy that applies 16.16 equally to all similarly situated persons in the district. 16.17 (c) Amounts provided to an employee by the employer through 16.18 a grievance proceeding or a legal settlement are salary only if 16.19 the settlement is reviewed by the executive director and the 16.20 amounts are determined by the executive director to be 16.21 consistent with paragraph (a) and prior determinations. 16.22 Sec. 5. Minnesota Statutes 2002, section 354A.011, 16.23 subdivision 24, is amended to read: 16.24 Subd. 24. [SALARY; COVERED SALARY.] (a) "Salary" or 16.25 "covered salary" means the entire compensation, upon which 16.26 member contributions are required and made, that is paid to a 16.27 teacher before deductions for deferred compensation, 16.28 supplemental retirement plans, or other voluntary salary 16.29 reduction programs. 16.30 (b) "Salary" does not mean: 16.31 (1) lump sum annual leave payments; 16.32 (2) lump sum wellness and sick leave payments; 16.33 (3) employer-paid amounts used by an employee toward the 16.34 cost of insurance coverage, employer-paid fringe benefits, 16.35 flexible spending accounts, cafeteria plans, health care expense 16.36 accounts, day care expenses, or any payments in lieu of any 17.1 employer-paid group insurance coverage, including the difference 17.2 between single and family rates that may be paid to a member 17.3 with single coverage, and certain amounts determined by the 17.4 executive secretary or director to be ineligible; 17.5 (4) any form of payment made in lieu of any other 17.6 employer-paid fringe benefit or expense; 17.7 (5) any form of severance payments; 17.8 (6) workers' compensation payments; 17.9 (7) disability insurance payments, including self-insured 17.10 disability payments; 17.11 (8) payments to school principals and all other 17.12 administrators for services in addition to the normal work year 17.13 contract if these additional services are performed on an 17.14 extended duty day, Saturday, Sunday, holiday, annual leave day, 17.15 sick leave day, or any other nonduty day; 17.16 (9) payments under section 356.24, subdivision 1, clause 17.17 (4)(ii); and 17.18 (10) payments made under section 122A.40, subdivision 12, 17.19 except for payments for sick leave accumulated under the 17.20 provisions of a uniform school district policy that applies 17.21 equally to all similarly situated persons in the district. 17.22 (c) Amounts provided to an employee by the employer through 17.23 a grievance proceeding or a legal settlement are salary only if 17.24 the settlement is reviewed by the executive director and the 17.25 amounts are determined by the executive director to be 17.26 consistent with paragraph (a) and prior determinations. 17.27 Sec. 6. Minnesota Statutes 2002, section 356.611, 17.28 subdivision 2, is amended to read: 17.29 Subd. 2. [FEDERAL COMPENSATION LIMITS.] (a) For members 17.30first contributing toof a covered pension plan enumerated in 17.31 section 356.30, subdivision 3,on or after July 1, 1995,17.32 compensation in excess of the limitationset forthspecified in 17.33 section 401(a)(17) of the Internal Revenue Code, as amended, for 17.34 changes in the cost of living under section 401(a)(17)(B) of the 17.35 Internal Revenue Code, may not be included for contribution and 17.36 benefit computation purposes. 18.1 (b) Notwithstanding paragraph (a), for members specified in 18.2 paragraph (a) who first contributed to a covered plan before 18.3 July 1, 1995, the annual compensation limitset forthspecified 18.4 in Internal Revenue Code 401(a)(17) on June 30, 1993, appliesto18.5members first contributing before July 1, 1995if that provides 18.6 a greater allowable annual compensation. 18.7 Sec. 7. Minnesota Statutes 2002, section 356.611, is 18.8 amended by adding a subdivision to read: 18.9 Subd. 3. [MAXIMUM BENEFIT LIMITATIONS.] A member's annual 18.10 benefit must, if necessary, be reduced to the extent required by 18.11 section 415(b) of the Internal Revenue Code, as adjusted by the 18.12 United States Secretary of the Treasury under section 415(d) of 18.13 the Internal Revenue Code. For purposes of section 415 of the 18.14 Internal Revenue Code, the limitation year of a pension plan 18.15 covered by this section must be the fiscal year or calendar year 18.16 of that plan, whichever is applicable. The accrued benefit 18.17 limitation described in section 415(e) of the Internal Revenue 18.18 Code must cease to be effective for limitation years beginning 18.19 after December 31, 1999. 18.20 Sec. 8. [EFFECTIVE DATE.] 18.21 (a) Sections 1, 2, 3, 6, and 7 are effective on July 1, 18.22 2004. 18.23 (b) Sections 4 and 5 are effective on the day following 18.24 final enactment. 18.25 ARTICLE 3 18.26 ALLOWABLE SERVICE CREDIT 18.27 Section 1. Minnesota Statutes 2002, section 352.27, is 18.28 amended to read: 18.29 352.27 [CREDIT FORMILITARYBREAK IN SERVICE TO PROVIDE 18.30 UNIFORMED SERVICE.] 18.31Any(a) An employeegiven a leave of absence to enter18.32military servicewho is absent from employment by reason of 18.33 service in the uniformed services, as defined in United States 18.34 Code, title 38, section 4303(13), and who returns to state 18.35 service upon discharge frommilitaryserviceas providedin the 18.36 uniformed service within the time frames required in United 19.1 States Code, title 38, section192.2624312(e), may obtain 19.2 service credit for the period ofmilitarythe uniformed service.19.3The employee is not entitled to credit for any voluntary19.4extension of military service at the instance of the employee19.5beyond the initial period of enlistment, induction, or call to19.6active duty, nor to credit for any period of service following a19.7voluntary return to military serviceas further specified in 19.8 this section, provided that the employee did not separate from 19.9 uniformed service with a dishonorable or bad conduct discharge 19.10 or under other than honorable conditions.An19.11 (b) The employee may obtain credit by paying into the fund 19.12 an equivalent employee contribution based upon the contribution 19.13 rate or rates in effect at the time that the uniformed service 19.14 was performed multiplied by the full and fractional years being 19.15 purchased and applied to the annual salaryreceived at the date19.16of return from military service. The amount of this contribution19.17must be the applicable amounts required in section 352.04,19.18subdivision 2, plus interest at an annual rate of 8.5 percent19.19compounded annuallyrate. The annual salary rate is the average 19.20 annual salary during the purchase period that the employee would 19.21 have received if the employee had continued to be employed in 19.22 covered employment rather than to provide uniformed service, or, 19.23 if the determination of that rate is not reasonably certain, the 19.24 annual salary rate is the employee's average salary rate during 19.25 the 12-month period of covered employment immediately preceding 19.26 the period of the uniformed service. 19.27 (c) Thematchingequivalent employer contribution and, if 19.28 applicable, the equivalent additional employer contribution 19.29 provided in section 352.04 must be paid by the department 19.30 employing the employeeupon return to state servicefrom funds 19.31 available to the department at the time and in the manner 19.32 provided in section 352.04, using the employer and additional 19.33 employer contribution rate or rates in effect at the time that 19.34 the uniformed service was performed, applied to the same annual 19.35 salary rate or rates used to compute the equivalent employee 19.36 contribution. 20.1 (d) If the employee equivalent contributions provided in 20.2 this section are not paid in full, the employee's allowable 20.3 service credit must be prorated by multiplying the full and 20.4 fractional number of years of uniformed service eligible for 20.5 purchase by the ratio obtained by dividing the total employee 20.6 contribution received by the total employee contribution 20.7 otherwise required under this section. 20.8 (e) To receive service credit under this section, the 20.9 contributions specified in this section must be transmitted to 20.10 the Minnesota State Retirement System during the period which 20.11 begins with the date on which the individual returns to state 20.12 service and which has a duration of three times the length of 20.13 the uniformed service period, but not to exceed five years. If 20.14 the determined payment period is less than one year, the 20.15 contributions required under this section to receive service 20.16 credit may be made within one year of the discharge date. 20.17 (f) The amount of service credit obtainable under this 20.18 section may not exceed five years unless a longer purchase 20.19 period is required under United States Code, title 38, section 20.20 4312. 20.21 (g) The employing unit shall pay interest on all equivalent 20.22 employee and employer contribution amounts payable under this 20.23 section. Interest must be computed at a rate of 8.5 percent 20.24 compounded annually from the end of each fiscal year of the 20.25 leave or the break in service to the end of the month in which 20.26 the payment is received. 20.27 Sec. 2. Minnesota Statutes 2002, section 352B.01, is 20.28 amended by adding a subdivision to read: 20.29 Subd. 3b. [CREDIT FOR BREAK IN SERVICE TO PROVIDE 20.30 UNIFORMED SERVICE.] (a) A member who is absent from employment 20.31 by reason of service in the uniformed services, as defined in 20.32 United States Code, title 38, section 4303(13), and who returns 20.33 to state employment in a position covered by the plan upon 20.34 discharge from service in the uniformed service within the time 20.35 frame required in United States Code, title 38, section 4312(e), 20.36 may obtain service credit for the period of the uniformed 21.1 service, provided that the member did not separate from 21.2 uniformed service with a dishonorable or bad conduct discharge 21.3 or under other than honorable conditions. 21.4 (b) The member may obtain credit by paying into the fund an 21.5 equivalent member contribution based on the contribution rate or 21.6 rates in effect at the time that the uniformed service was 21.7 performed multiplied by the full and fractional years being 21.8 purchased and applied to the annual salary rate. The annual 21.9 salary rate is the average annual salary during the purchase 21.10 period that the member would have received if the member had 21.11 continued to provide employment services to the state rather 21.12 than to provide uniformed service, or if the determination of 21.13 that rate is not reasonably certain, the annual salary rate is 21.14 the member's average salary rate during the 12-month period 21.15 immediately preceding the purchase period. 21.16 (c) The equivalent employer contribution and, if 21.17 applicable, the equivalent employer additional contribution, 21.18 must be paid by the employing unit, using the employer and 21.19 employer additional contribution rate or rates in effect at the 21.20 time that the uniformed service was performed, applied to the 21.21 same annual salary rate or rates used to compute the equivalent 21.22 member contribution. 21.23 (d) If the member equivalent contributions provided for in 21.24 this subdivision are not paid in full, the member's allowable 21.25 service credit must be prorated by multiplying the full and 21.26 fractional number of years of uniformed service eligible for 21.27 purchase by the ratio obtained by dividing the total member 21.28 contributions received by the total member contributions 21.29 otherwise required under this subdivision. 21.30 (e) To receive allowable service credit under this 21.31 subdivision, the contributions specified in this section must be 21.32 transmitted to the fund during the period which begins with the 21.33 date on which the individual returns to state employment covered 21.34 by the plan and which has a duration of three times the length 21.35 of the uniformed service period, but not to exceed five years. 21.36 If the determined payment period is calculated to be less than 22.1 one year, the contributions required under this subdivision to 22.2 receive service credit may be within one year from the discharge 22.3 date. 22.4 (f) The amount of allowable service credit obtainable under 22.5 this section may not exceed five years, unless a longer purchase 22.6 period is required under United States Code, title 38, section 22.7 4312. 22.8 (g) The employing unit shall pay interest on all equivalent 22.9 member and employer contribution amounts payable under this 22.10 subdivision. Interest must be computed at a rate of 8.5 percent 22.11 compounded annually from the end of each fiscal year of the 22.12 leave or break in service to the end of the month in which 22.13 payment is received. 22.14 Sec. 3. Minnesota Statutes 2002, section 353.01, 22.15 subdivision 16, is amended to read: 22.16 Subd. 16. [ALLOWABLE SERVICE; LIMITS AND COMPUTATION.] (a) 22.17 "Allowable service" means: 22.18 (1) service during years of actual membership in the course 22.19 of which employee contributions were made, periods covered by 22.20 payments in lieu of salary deductions under section 353.35; 22.21 (2) service in years during which the public employee was 22.22 not a member but for which the member later elected, while a 22.23 member, to obtain credit by making payments to the fund as 22.24 permitted by any law then in effect; 22.25 (3) a period of authorized leave of absence with pay from 22.26 which deductions for employee contributions are made, deposited, 22.27 and credited to the fund; 22.28 (4) a period of authorized personal, parental, or medical 22.29 leave of absence without pay, including a leave of absence 22.30 covered under the federal Family Medical Leave Act, that does 22.31 not exceed one year, and during or for which a member obtained 22.32 service credit for each month in the leave period by payments to 22.33 the fund made in place of salary deductions. The payments must 22.34 be made in an amount or amounts based on the member's average 22.35 salary on which deductions were paid for the last six months of 22.36 public service, or for that portion of the last six months while 23.1 the member was in public service, to apply to the period in 23.2 either case that immediately precedes the commencement of the 23.3 leave of absence. If the employee elects to pay the employee 23.4 contributions for the period of any authorized personal, 23.5 parental, or medical leave of absence without pay, or for any 23.6 portion of the leave, the employee shall also, as a condition to 23.7 the exercise of the election, pay to the fund an amount 23.8 equivalent to the required employer and the additional employer 23.9 contributions, if any, for the employee. The payment must be 23.10 made within one year from the expiration of the leave of absence 23.11 or within 20 days after termination of public service under 23.12 subdivision 11a, whichever is earlier. The employer, by 23.13 appropriate action of its governing body which is made a part of 23.14 its official records and which is adopted before the date of the 23.15 first payment of the employee contribution, may certify to the 23.16 association in writing its commitment to pay the employer and 23.17 additional employer contributions from the proceeds of a tax 23.18 levy made under section 353.28. Payments under this paragraph 23.19 must include interest at an annual rate of 8.5 percent 23.20 compounded annually from the date of the termination of the 23.21 leave of absence to the date payment is made. An employee shall 23.22 return to public service and render a minimum of three months of 23.23 allowable service in order to be eligible to pay employee and 23.24 employer contributions for a subsequent authorized leave of 23.25 absence without pay. Upon payment, the employee must be granted 23.26 allowable service credit for the purchased period; 23.27 (5) a periodic, repetitive leave that is offered to all 23.28 employees of a governmental subdivision. The leave program may 23.29 not exceed 208 hours per annual normal work cycle as certified 23.30 to the association by the employer. A participating member 23.31 obtains service credit by making employee contributions in an 23.32 amount or amounts based on the member's average salary that 23.33 would have been paid if the leave had not been taken. The 23.34 employer shall pay the employer and additional employer 23.35 contributions on behalf of the participating member. The 23.36 employee and the employer are responsible to pay interest on 24.1 their respective shares at the rate of 8.5 percent a year, 24.2 compounded annually, from the end of the normal cycle until full 24.3 payment is made. An employer shall also make the employer and 24.4 additional employer contributions, plus 8.5 percent interest, 24.5 compounded annually, on behalf of an employee who makes employee 24.6 contributions but terminates public service. The employee 24.7 contributions must be made within one year after the end of the 24.8 annual normal working cycle or within 20 days after termination 24.9 of public service, whichever is sooner. The association shall 24.10 prescribe the manner and forms to be used by a governmental 24.11 subdivision in administering a periodic, repetitive leave. Upon 24.12 payment, the member must be granted allowable service credit for 24.13 the purchased period; 24.14 (6) an authorized temporary layoff under subdivision 12, 24.15 limited to three months allowable service per authorized 24.16 temporary layoff in one calendar year. An employee who has 24.17 received the maximum service credit allowed for an authorized 24.18 temporary layoff must return to public service and must obtain a 24.19 minimum of three months of allowable service subsequent to the 24.20 layoff in order to receive allowable service for a subsequent 24.21 authorized temporary layoff; or 24.22 (7) a period during which a member ison an authorized24.23leave of absence to enter militaryabsent from employment by a 24.24 governmental subdivision by reason of servicein the armed24.25forces of the United Statesin the uniformed services, as 24.26 defined in United States Code, title 38, section 4303(13), if 24.27 the member returns to public service upon discharge 24.28 frommilitaryservice in the uniformed service within the time 24.29 frames required under United States Code, title 38, section 24.30192.262 and4312(e), provided that the member did not separate 24.31 from uniformed service with a dishonorable or bad conduct 24.32 discharge or under other than honorable conditions. The service 24.33 is credited if the member pays into the fund equivalent employee 24.34 contributions based upon theemployee'scontribution rate or 24.35 rates in effect at the time that the uniformed service was 24.36 performed multiplied by the full and fractional years being 25.1 purchased and applied to the annual salaryat the date of return25.2from military servicerate. The annual salary rate is the 25.3 average annual salary during the purchase period that the member 25.4 would have received if the member had continued to be employed 25.5 in covered employment rather than to provide uniformed service, 25.6 or, if the determination of that rate is not reasonably certain, 25.7 the annual salary rate is the member's average salary rate 25.8 during the 12-month period of covered employment immediately 25.9 preceding the period of the uniformed service. Payment of the 25.10 member equivalent contributions must be madewithinduring a 25.11 period which begins with the date on which the individual 25.12 returns to public employment and that is three times the length 25.13 of the military leave period, or within five years of the date 25.14 of discharge from the military service, whichever is less. If 25.15 the determined payment period is less than one year, the 25.16 contributions required under this clause to receive service 25.17 credit may be made within one year of the discharge date. 25.18 Payment may not be accepted following 20 days after termination 25.19 of public service under subdivision 11a.The amount of these25.20contributions must be in accord with the contribution rates and25.21salary limitations, if any, in effect during the leave, plus25.22interest at an annual rate of 8.5 percent compounded annually25.23from the date of return to public service to the date payment is25.24made.If the member equivalent contributions provided for in 25.25 this clause are not paid in full, the member's allowable service 25.26 credit must be prorated by multiplying the full and fractional 25.27 number of years of uniformed service eligible for purchase by 25.28 the ratio obtained by dividing the total member contributions 25.29 received by the total member contributions otherwise required 25.30 under this clause. Thecorrespondingequivalent employer 25.31 contribution, and, if applicable, the equivalent additional 25.32 employer contribution, if applicable,must be paid by the 25.33 governmental subdivision employing the memberupon the person's25.34return to public serviceif the member makes the equivalent 25.35 employee contributions. The employer payments must be made from 25.36 funds available to the employing unit, using the employer and 26.1 additional employer contribution rate or rates in effect at the 26.2 time that the uniformed service was performed, applied to the 26.3 same annual salary rate or rates used to compute the equivalent 26.4 member contribution. The governmental subdivision involved may 26.5 appropriate money for those payments.A member may not receive26.6credit for a voluntary extension of military service at the26.7instance of the member beyond the initial period of enlistment,26.8induction, or call to active duty.The amount of service credit 26.9 obtainable under this section may not exceed five years unless a 26.10 longer purchase period is required under United States Code, 26.11 title 38, section 4312. The employing unit shall pay interest 26.12 on all equivalent member and employer contribution amounts 26.13 payable under this clause. Interest must be computed at a rate 26.14 of 8.5 percent compounded annually from the end of each fiscal 26.15 year of the leave or the break in service to the end of the 26.16 month in which the payment is received. Upon payment, the 26.17 employee must be granted allowable service credit for the 26.18 purchased period. 26.19 (b) For calculating benefits under sections 353.30, 353.31, 26.20 353.32, and 353.33 for state officers and employees displaced by 26.21 the Community Corrections Act, chapter 401, and transferred into 26.22 county service under section 401.04, "allowable service" means 26.23 the combined years of allowable service as defined in paragraph 26.24 (a), clauses (1) to (6), and section 352.01, subdivision 11. 26.25 (c) For a public employee who has prior service covered by 26.26 a local police or firefighters relief association that has 26.27 consolidated with the Public Employees Retirement Association or 26.28 to which section 353.665 applies, and who has elected the type 26.29 of benefit coverage provided by the public employees police and 26.30 fire fund either under section 353A.08 following the 26.31 consolidation or under section 353.665, subdivision 4, 26.32 "applicable service" is a period of service credited by the 26.33 local police or firefighters relief association as of the 26.34 effective date of the consolidation based on law and on bylaw 26.35 provisions governing the relief association on the date of the 26.36 initiation of the consolidation procedure. 27.1 (d) No member may receive more than 12 months of allowable 27.2 service credit in a year either for vesting purposes or for 27.3 benefit calculation purposes. 27.4 (e) "Allowable service" also means a period purchased under 27.5 section 356.555. 27.6 Sec. 4. Minnesota Statutes 2002, section 354.091, is 27.7 amended to read: 27.8 354.091 [SERVICE CREDIT.] 27.9 (a) In computing service credit, no teacher shall receive 27.10 credit for more than one year of teaching service for any fiscal 27.11 year. Commencing July 1, 1961: 27.12 (1) if a teacher teaches less than five hours in a day, 27.13 service credit must be given for the fractional part of the day 27.14 as the term of service performed bears to five hours; 27.15 (2) if a teacher teaches five or more hours in a day, 27.16 service credit must be given for only one day; 27.17 (3) if a teacher teaches at least 170 full days in any 27.18 fiscal year, service credit must be given for a full year of 27.19 teaching service; and 27.20 (4) if a teacher teaches for only a fractional part of the 27.21 year, service credit must be given for such fractional part of 27.22 the year as the period of service performed bears to 170 days. 27.23 (b) A teacher shall receive a full year of service credit 27.24 based on the number of days in the employer's full school year 27.25 if it is less than 170 days. Teaching service performed before 27.26 July 1, 1961, must be computed under the law in effect at the 27.27 time it was performed. 27.28 (c) A teacher does not lose or gain retirement service 27.29 credit as a result of the employer converting to a flexible or 27.30 alternate work schedule. If the employer converts to a flexible 27.31 or alternate work schedule, the forms for reporting and the 27.32 procedures for determining service credit must be determined by 27.33 the executive director with the approval of the board of 27.34 trustees. 27.35 (d) For all services rendered on or after July 1, 2003, 27.36 service credit for all members employed by the Minnesota State 28.1 Colleges and Universities system must be determined: 28.2 (1) for full-time employees, by the definition of full time 28.3 employment contained in the collective bargaining agreement for 28.4 those units listed in section 179A.10, subdivision 2, or 28.5 contained in the applicable personnel or salary plan for those 28.6 positions designated in section 179A.10, subdivision 1; 28.7 (2) for part-time employees, by the appropriate proration 28.8 of full-time equivalency based on the provisions contained in 28.9 the collective bargaining agreement for those units listed in 28.10 section 179A.10, subdivision 2, or contained in the applicable 28.11 personnel or salary plan for those positions designated in 28.12 section 179A.10, subdivision 1, and the applicable procedures of 28.13 the Minnesota State Colleges and Universities system; and 28.14 (3) in no case may a member receive more than one year of 28.15 service credit for any fiscal year. 28.16 Sec. 5. Minnesota Statutes 2002, section 354.096, 28.17 subdivision 1, is amended to read: 28.18 Subdivision 1. [CERTIFICATION.] Upon granting a family 28.19 leave to a member, an employing unit must certify the leave to 28.20 the association on a form specified by the executive director 28.21before the end of the fiscal year during which the leave was28.22granted. 28.23 Sec. 6. Minnesota Statutes 2002, section 354.53, is 28.24 amended to read: 28.25 354.53 [CREDIT FORMILITARYBREAK IN SERVICELEAVE OF28.26ABSENCETO PROVIDE UNIFORMED SERVICE.] 28.27 Subdivision 1. [ELIGIBILITY; EMPLOYEE AND EMPLOYER 28.28 CONTRIBUTIONS.] (a) Anyemployee given a leave of absence to28.29enter military serviceteacher who is absent from employment by 28.30 reason of service in the uniformed services, as defined in 28.31 United States Code, title 38, section 4303(13), and who returns 28.32 to the employer providing teaching service upon discharge from 28.33militaryserviceas providedin the uniformed service within the 28.34 time frames required in United States Code, title 38, section 28.35192.2624312(e), may obtain service credit for the period of 28.36militarythe uniformed servicebut shall not receive credit for29.1any voluntary extension of military service at the instance of29.2the member beyond the initial period of enlistment, induction or29.3call to active dutyas further specified in this section, 29.4 provided that the teacher did not separate from uniformed 29.5 service with a dishonorable or bad conduct discharge or under 29.6 other than honorable conditions. 29.7 (b) The membershallmay obtain credit by paying into the 29.8 fund an equivalent employee contribution based upon the 29.9 contribution rate or rates in effect at the time that 29.10 themilitaryuniformed service was performed multiplied by the 29.11 full and fractional years being purchased and applied to the 29.12 annual salary rateof the member for the year beginning with the29.13date of return from military service and the number of years of29.14military service together with interest thereon at an annual29.15rate of 8.5 percent compounded annually from the time the29.16military service was rendered to the first date of payment. The 29.17 annual salary rate is the average annual salary during the 29.18 purchase period that the teacher would have received if the 29.19 teacher had continued to provide teaching service to the 29.20 employer rather than provide uniformed service or if the 29.21 determination of that rate is not reasonably certain, the annual 29.22 salary rate is the teacher's average salary rate during the 29.23 12-month period immediately preceding the period, or, if the 29.24 preceding period is less than 12 months, the annualized rate 29.25 derived from the teacher's average salary rate during the period 29.26 of teacher employment immediately preceding the period of the 29.27 uniformed service. 29.28 (c) The equivalent employer contribution and, if 29.29 applicable, the equivalent additional contribution provided in 29.30 section 354.42 must be paid by the employing unitatas provided 29.31 in section 354.52, subdivision 4, using the employer and 29.32 employer additional contribution rate or rates in effect at the 29.33 time that themilitaryuniformed service was performed, applied 29.34 to the same annual salary rateofor rates used to compute the 29.35member for the year beginning with the date of return from29.36military service, in the manner provided in section 354.52,30.1subdivision 4equivalent employee contribution. 30.2 Subd. 2. [CALCULATION OF CREDIT.] (a) For purposes of 30.3 computing a money purchase annuity under section 354.44, 30.4 subdivision 2 money purchase annuity, all payments into the fund 30.5pursuant tounder this sectionshallmust be considered 30.6 accumulations after July 1, 1957for the purpose of computing30.7any annuity in accordance with section 354.44, subdivision 2. 30.8 (b) For purposes of computing a formula annuity under 30.9 section 354.44, subdivision 6, if the employee equivalent 30.10 contributionsand interest thereonprovided in this section are 30.11 not paid in full, the member's formula service creditshallmust 30.12 becalculatedprorated by multiplying the full and fractional 30.13 number of years ofmilitaryuniformed service eligible for 30.14 purchase by the ratio obtained by dividing the totalamount paid30.15andemployee contribution received by themaximum amount payable30.16provided hereintotal employee contribution otherwise required 30.17 under this section. 30.18 Subd. 3. [PAYMENTSELIGIBLE PAYMENT PERIOD.]Payments30.19pursuant to this(a) To receive service credit under this 30.20 section, the contributions specified in this sectionshallmust 30.21 bemade withintransmitted to the teachers retirement 30.22 association during the period which begins with the date on 30.23 which the individual returns to teaching service and which has a 30.24 duration of three times the length of the uniformed service 30.25 period, but not to exceed five yearsfrom the date of discharge. 30.26 (b) Notwithstanding paragraph (a), if the payment period 30.27 determined under paragraph (a) is less than one year, the 30.28 contributions required under this section to receive service 30.29 credit may be made within one year from the discharge date. 30.30 Subd. 4. [LIMITS ON SERVICE CREDIT.] The amount of service 30.31 credit obtainable under this section may not exceed five years, 30.32 unless a longer purchase period is required under United States 30.33 Code, title 38, section 4312. 30.34 Subd. 5. [INTEREST REQUIREMENTS.] The employer shall pay 30.35 interest on all equivalent employee and employer contribution 30.36 amounts payable under this section. Interest must be computed 31.1 at a rate of 8.5 percent compounded annually from the end of 31.2 each fiscal year of the leave or the break in service to the end 31.3 of the month in which the payment is received. 31.4 Sec. 7. Minnesota Statutes 2002, section 354A.093, is 31.5 amended to read: 31.6 354A.093 [MILITARYBREAK IN SERVICECREDITTO PROVIDE 31.7 UNIFORMED SERVICE.] 31.8 Subdivision 1. [ELIGIBILITY.] Any teacher in the 31.9 coordinated program of either the Minneapolis Teachers 31.10 Retirement Fund Association or the St. Paul Teachers Retirement 31.11 Fund Association or any teacher in the new law coordinated 31.12 program of the Duluth Teachers Retirement Fund Association who 31.13 isgranted a leaveabsent from employment by reason ofabsence31.14to enter militaryservice in the uniformed services as defined 31.15 in United States Code, title 38, section 4303(13) and who 31.16 returns to the employer providing active teaching service upon 31.17 discharge frommilitaryuniformed serviceas provided inwithin 31.18 the time frames required under United States Code, title 38, 31.19 section192.2624312(e),shall be entitled tomay receive 31.20 allowable service credit in the applicable association for all 31.21 or a portion of the period ofmilitaryuniformed servicebut, 31.22 provided that the teacher did notfor any voluntary extension of31.23militaryseparate from uniformed servicebeyond the initial31.24period of enlistment, inductionwith a dishonorable orcall to31.25active duty which occurred at the instance of the teacherbad 31.26 conduct discharge or under other than honorable conditions. 31.27 Subd. 2. [CONTRIBUTIONS.] If the teachergranted the31.28military service leave of absencemakes the equivalent employee 31.29 contribution for a period ofmilitary service leave of absence31.30pursuant toservice provided to the uniformed services under 31.31 this section, the employing unit shall make an equivalent 31.32 employer contribution on behalf of the teacher to the applicable 31.33 association for the periodof the military service leave of31.34absencebeing purchased in the manner described in section 31.35 354A.12, subdivision 2a. The equivalent employee and employer 31.36 contributionsshallmust be in an amount equal to the employee 32.1 and employer contribution rates in effect for other active 32.2 members of the association covered by the same program applied 32.3 to a salary figure equal to the teacher's average annual salary 32.4 rateat the date of return from military servicethat the 32.5 teacher would have received if the leave or break in service had 32.6 not occurred, or if the determination of that average salary 32.7 rate is not reasonably certain, on the basis of the teacher's 32.8 average salary rate during the 12-month period immediately 32.9 preceding the period, or, if the preceding period is less than 32.10 12 months, the annualized rate derived from the teacher's 32.11 average salary rate during the period of teacher employment 32.12 immediately preceding the period of uniformed service, with the 32.13 result multiplied by the number of full and fractional years 32.14 constituting the period of service provided to themilitary32.15 uniformed serviceleave of absencewhich the teacherseeksis 32.16 authorized to purchase under this section.Payment shall32.17include interest on the amount payable pursuant to this section32.18at the rate of six percent compounded annually from the year the32.19military service was rendered to the date of payment.32.20 Subd. 3. [PRORATING.] If the payments made by a 32.21 teacherpursuant tounder this section are less thananthe full 32.22 amountequal to the applicable contribution rate applied to a32.23salary figure equal to the teacher's annual salary rate at the32.24date of return from military service, multiplied by the number32.25of years constituting the period of the military service leave32.26of absencedetermined under subdivision 2, the service credit 32.27shallmust be prorated. The prorated service creditshallmust 32.28 be determined by the ratio between the amount of the 32.29 actual equivalent employee payment which was made and the full 32.30contribution amount payable pursuant toequivalent employee 32.31 payment required under this section.In order to be entitled to32.32receive service credit under this section, payment shall be made32.33within five years from the date of discharge from military32.34service.32.35 Subd. 4. [ELIGIBLE PAYMENT PERIOD.] (a) To receive service 32.36 credit under this section, the contributions specified in this 33.1 section must be transmitted to the applicable first class city 33.2 teachers retirement fund association during the period which 33.3 begins with the date the individual returns to teaching service 33.4 and which has a duration of three times the length of the 33.5 uniformed service period, but not to exceed five years. 33.6 (b) Notwithstanding paragraph (a), if the payment period 33.7 determined under paragraph (a) is less than one year, the 33.8 contributions required under this section to receive service 33.9 credit may be made within one year from the discharge date. 33.10 Subd. 5. [LIMITS ON SERVICE CREDIT.] The amount of service 33.11 credit obtainable under this section may not exceed five years, 33.12 unless a longer purchase period is required under United States 33.13 Code, title 38, section 4312. 33.14 Subd. 6. [INTEREST REQUIREMENTS.] The employer shall pay 33.15 interest on all equivalent employee and employer contribution 33.16 amounts payable under this section. Interest must be computed 33.17 at a rate of 8.5 percent compounded annually from the end of 33.18 each fiscal year of the leave or break in service to the end of 33.19 the month in which payment is received. 33.20 Sec. 8. Minnesota Statutes 2002, section 490.121, is 33.21 amended by adding a subdivision to read: 33.22 Subd. 4b. [CREDIT FOR BREAK IN SERVICE TO PROVIDE 33.23 UNIFORMED SERVICE.] (a) A judge who is absent from employment by 33.24 reason of service in the uniformed services, as defined in 33.25 United States Code, title 38, section 4303(13), and who returns 33.26 to state employment as a judge upon discharge from service in 33.27 the uniformed service within the time frame required in United 33.28 States Code, title 38, section 4312(e) may obtain service credit 33.29 for the period of the uniformed service, provided that the judge 33.30 did not separate from uniformed service with a dishonorable or 33.31 bad conduct discharge or under other than honorable conditions. 33.32 (b) The judge may obtain credit by paying into the fund 33.33 equivalent member contribution based on the contribution rate 33.34 rates in effect at the time that the uniformed service was 33.35 performed multiplied by the full and fractional years being 33.36 purchased and applied to the annual salary rate. The annual 34.1 salary rate is the average annual salary during the purchase 34.2 period that the judge would have received if the judge had 34.3 continued to provide employment services to the state rather 34.4 than to provide uniformed service, or if the determination of 34.5 that rate is not reasonably certain, the annual salary rate is 34.6 the judge's average salary rate during the 12-month period 34.7 immediately preceding the purchase period. 34.8 (c) The equivalent employer contribution and, if 34.9 applicable, the equivalent employer additional contribution, 34.10 must be paid by the employing unit, using the employer and 34.11 employer additional contribution rate or rates in effect at the 34.12 time that the uniformed service was performed, applied to the 34.13 same annual salary rate or rates used to compute the equivalent 34.14 member contribution. 34.15 (d) If the member equivalent contributions provided for in 34.16 this subdivision are not paid in full, the judge's allowable 34.17 service credit must be prorated by multiplying the full and 34.18 fractional number of years of uniformed service eligible for 34.19 purchase by the ratio obtained by dividing the total member 34.20 contributions received by the total member contributions 34.21 otherwise required under this subdivision. 34.22 (e) To receive allowable service credit under this 34.23 subdivision, the contributions specified in this section must be 34.24 transmitted to the fund during the period which begins with the 34.25 date on which the individual returns to judicial employment and 34.26 which has a duration of three times the length of the uniformed 34.27 service period, but not to exceed five years. If the determined 34.28 payment period is calculated to be less than one year, the 34.29 contributions required under this subdivision to receive service 34.30 credit may be within one year from the discharge date. 34.31 (f) The amount of allowable service credit obtainable under 34.32 this section may not exceed five years, unless a longer purchase 34.33 period is required under United States Code, title 38, section 34.34 4312. 34.35 (g) The state court administrator shall pay interest on all 34.36 equivalent member and employer contribution amounts payable 35.1 under this subdivision. Interest must be computed at a rate of 35.2 8.5 percent compounded annually from the end of each fiscal year 35.3 of the leave or break in service to the end of the month in 35.4 which payment is received. 35.5 Sec. 9. [EFFECTIVE DATE.] 35.6 Sections 1 to 8 are effective on July 1, 2004. 35.7 ARTICLE 4 35.8 QUALIFIED PART-TIME TEACHER PROVISIONS 35.9 Section 1. Minnesota Statutes 2002, section 354.66, 35.10 subdivision 2, is amended to read: 35.11 Subd. 2. [QUALIFIED PART-TIME TEACHER PROGRAM 35.12 PARTICIPATION REQUIREMENTS.] (a) A teacher in a Minnesota public 35.13 elementary school, a Minnesota secondary school, or the 35.14 Minnesota State Colleges and Universities system who has three 35.15 years or more of allowable service in the association or three 35.16 years or more of full-time teaching service in Minnesota public 35.17 elementary schools, Minnesota secondary schools, or the 35.18 Minnesota State Colleges and Universities system, by agreement 35.19 with the board of the employing district or with the authorized 35.20 representative of the board, may be assigned to teaching service 35.21 in a part-time teaching position under subdivision 3. The 35.22 agreement must be executed before October 1 of the school year 35.23 for which the teacher requests to make retirement contributions 35.24 under subdivision 4. A copy of the executed agreement must be 35.25 filed with the executive director of the association. If the 35.26 copy of the executed agreement is filed with the association 35.27 after October 1 of the school year for which the teacher 35.28 requests to make retirement contributions under subdivision 4, 35.29 the employing unit shall pay the fine specified in section 35.30 354.52, subdivision 6, for each calendar day that elapsed since 35.31 the October 1 due date. The association may not accept an 35.32 executed agreement that is received by the association more than 35.33 15 months late. The association may not waive the fine required 35.34 by this section. 35.35 (b) Notwithstanding paragraph (a), if the teacher is also a 35.36 legislator: 36.1 (1) the agreement in paragraph (a) must be executed before 36.2 March 1 of the school year for which the teacher requests to 36.3 make retirement contributions under subdivision 4; and 36.4 (2) fines specified in paragraph (a) apply if the employing 36.5 unit does not file the executed agreement with the executive 36.6 director of the association by March 1. 36.7 Sec. 2. Minnesota Statutes 2002, section 354A.094, 36.8 subdivision 3, is amended to read: 36.9 Subd. 3. [QUALIFIED PART-TIME TEACHER PROGRAM 36.10 PARTICIPATION REQUIREMENTS.] (a) A teacher in the public schools 36.11 of a city of the first class who has three years or more 36.12 allowable service in the applicable retirement fund association 36.13 or three years or more of full-time teaching service in 36.14 Minnesota public elementary schools, Minnesota secondary 36.15 schools, and Minnesota State Colleges and Universities system 36.16 may, by agreement with the board of the employing district, be 36.17 assigned to teaching service within the district in a part-time 36.18 teaching position. The agreement must be executed before 36.19 October 1 of the year for which the teacher requests to make 36.20 retirement contributions under subdivision 4. A copy of the 36.21 executed agreement must be filed with the executive director of 36.22 the retirement fund association. If the copy of the executed 36.23 agreement is filed with the association after October 1 of the 36.24 year for which the teacher requests to make retirement 36.25 contributions under subdivision 4, the employing school district 36.26 shall pay a fine of $5 for each calendar day that elapsed since 36.27 the October 1 due date. The association may not accept an 36.28 executed agreement that is received by the association more than 36.29 15 months late. The association may not waive the fine required 36.30 by this section. 36.31 (b) Notwithstanding paragraph (a), if the teacher is also a 36.32 legislator: 36.33 (1) the agreement in paragraph (a) must be executed before 36.34 March 1 of the school year for which the teacher requests to 36.35 make retirement contributions under subdivision 4; and 36.36 (2) fines specified in paragraph (a) apply if the employing 37.1 unit does not file the executed agreement with the executive 37.2 director of the Teachers Retirement Fund Association by March 1. 37.3 Sec. 3. [EFFECTIVE DATE.] 37.4 Sections 1 and 2 are effective on July 1, 2004. 37.5 ARTICLE 5 37.6 RETIREMENT PLAN CONTRIBUTIONS AND TRANSFERS 37.7 Section 1. Minnesota Statutes 2002, section 354.42, 37.8 subdivision 7, is amended to read: 37.9 Subd. 7. [ERRONEOUS SALARY DEDUCTIONS OR DIRECT PAYMENTS.] 37.10 (a)Anydeductions taken from the salary of an employee for the 37.11 retirement fund in errorshallmust be refunded to the employee 37.12 upon the discovery of the error and after the verification of 37.13 the error by the employing unit making the deduction, and. The 37.14 corresponding employer contribution and additional employer 37.15 contribution amounts attributable to the erroneous salary 37.16 deduction must be refunded to the employing unit. 37.17 (b) If salary deductions and employer contributions were 37.18 erroneously transmitted to the retirement fund and should have 37.19 been transmitted to another Minnesota public pension plan, the 37.20retirement associationexecutive director must transfer these 37.21 salary deductions and employer contributions to the appropriate 37.22 public pension fund without interest. For purposes of this 37.23 paragraph, a Minnesota public pension plan means a plan 37.24 specified in section 356.30, subdivision 3, or the plan governed 37.25 by chapter 354B. 37.26 (c) A potential transfer under paragraph (b) that would 37.27 cause the plan to fail to be a qualified plan under section 37.28 401(a) of the Internal Revenue Code, as amended, must not be 37.29 made by the executive director. Within 30 days after being 37.30 notified by the Teachers Retirement Association of an unmade 37.31 potential transfer under this paragraph, the employer of the 37.32 affected person must transmit an amount representing the 37.33 applicable salary deductions and employer contributions, without 37.34 interest, to the retirement fund of the appropriate Minnesota 37.35 public pension plan fund. The retirement association must 37.36 provide a credit for the amount of the erroneous salary 38.1 deductions and employer contributions against future 38.2 contributions from the employer. 38.3 (d) If a salary warrant or check from which a deduction for 38.4 the retirement fund was taken has been canceled or the amount of 38.5 the warrant or if a check has been returned to the funds of the 38.6 employing unit making the payment, a refund of the amount 38.7 deducted, or any portion of it that is required to adjust the 38.8 salary deductions,shallmust be made to the employing unit. 38.9(d)(e)Anyerroneous direct payments of member-paid 38.10 contributions or erroneous salary deductions that were not 38.11 refundedinduring the regular payroll cycle processingof an38.12employing unit's annual summary report shallmust be refunded to 38.13 the memberwith, plus interest computed using the rate and 38.14 method specified in section 354.49, subdivision 2. 38.15 (f) Any refund under this subdivision that would cause the 38.16 plan to fail to be a qualified plan under section 401(a) of the 38.17 Internal Revenue Code, as amended, may not be refunded and 38.18 instead must be credited against future contributions payable by 38.19 the employer. The employer is responsible for refunding to the 38.20 applicable employee any amount that was erroneously deducted 38.21 from the salary of the employee, with interest as specified in 38.22 paragraph (e). 38.23 Sec. 2. Minnesota Statutes 2002, section 354.51, 38.24 subdivision 5, is amended to read: 38.25 Subd. 5. [PAYMENT OF SHORTAGES.] (a) Except as provided in 38.26 paragraph (b), in the event that full required member 38.27 contributions are not deducted from the salary of a teacher, 38.28 paymentshallmust be made as follows: 38.29(a)(1) Payment of shortages in member deductions on salary 38.30 earned after June 30, 1957, andprior tobefore July 1, 1981, 38.31 may be made any timeprior tobefore retirement. Paymentshall38.32 must include interest at an annual rate of 8.5 percent 38.33 compounded annually from the end of the fiscal year in which the 38.34 shortage occurred to the end of the month in which payment is 38.35 made and the interestshallmust be credited to the fund. If 38.36 payment of a shortage in deductions is not made, the formula 39.1 service credit of the membershallmust be proratedpursuant to39.2 under section 354.05, subdivision 25, clause (3). 39.3(b)(2) Payment of shortages in member deductions on salary 39.4 earned after June 30, 1981,shall beare the sole obligation of 39.5 the employing unit andshall beare payable by the employing 39.6 unit upon notification by the executive director of the shortage 39.7 with interest at an annual rate of 8.5 percent compounded 39.8 annually from the end of the fiscal year in which the shortage 39.9 occurred to the end of the month in which payment is made and 39.10 the interestshallmust be credited to the fund. Effective July 39.11 1, 1986, the employing unit shall also pay the employer 39.12 contributions as specified in section 354.42, subdivisions 3 and 39.13 5 forsuchthe shortages. If the shortage payment is not paid 39.14 by the employing unit within 60 days of notification, the 39.15 executive director shall certify the amount of the shortage 39.16 payment to the applicable county auditor, who shall spread a 39.17 levy in the amount of the shortage payment over the taxable 39.18 property of the taxing district of the employing unit if the 39.19 employing unit is supported by property taxes, or to the 39.20 commissioner of finance, who shall deduct the amount from any 39.21 state aid or appropriation amount applicable to the employing 39.22 unit if the employing unit is not supported by property taxes. 39.23(c)(3) Payment may not be made for shortages in member 39.24 deductions on salary earnedprior tobefore July 1, 1957, for 39.25 shortages in member deductions on salary paid or payable under 39.26 paragraph (b), or for shortages in member deductions for persons 39.27 employed by the Minnesota State Colleges and Universities system 39.28 in a faculty position or in an eligible unclassified 39.29 administrative position and whose employment was less than 25 39.30 percent of a full academic year, exclusive of the summer 39.31 session, for the applicable institution that exceeds the most 39.32 recent 36 months. 39.33 (b) For a person who is employed by the Minnesota State 39.34 Colleges and Universities system in a faculty position or in an 39.35 eligible unclassified administrative position and whose 39.36 employment was less than 25 percent of a full academic year, 40.1 exclusive of the summer session, for the applicable institution, 40.2 upon the person's election under section 354B.21 of retirement 40.3 coverage under this chapter, the shortage in member deductions 40.4 on the salary for employment by the Minnesota State Colleges and 40.5 Universities system institution of less than 25 percent of a 40.6 full academic year, exclusive of the summer session, for the 40.7 applicable institution for the most recent 36 months and the 40.8 associated employer contributions must be paid by the Minnesota 40.9 State Colleges and Universities system institution, plus annual 40.10 compound interest at the rate of 8.5 percent from the end of the 40.11 fiscal year in which the shortage occurred to the end of the 40.12 month in which the teachers retirement association coverage 40.13 election is made. If the shortage payment is not made by the 40.14 institution within 60 days of notification, the executive 40.15 director shall certify the amount of the shortage payment to the 40.16 commissioner of finance, who shall deduct the amount from any 40.17 state appropriation to the system. An individual electing 40.18 coverage under this paragraph shall repay the amount of the 40.19 shortage in member deductions, plus interest, through deduction 40.20 from salary or compensation payments within the first year of 40.21 employment after the election under section 354B.21, subject to 40.22 the limitations in section 16D.16. The Minnesota State Colleges 40.23 and Universities system may use any means available to recover 40.24 amounts which were not recovered through deductions from salary 40.25 or compensation payments. No payment of the shortage in member 40.26 deductions under this paragraph may be made for a period longer 40.27 than the most recent 36 months. 40.28 Sec. 3. Minnesota Statutes 2002, section 354B.23, 40.29 subdivision 1, is amended to read: 40.30 Subdivision 1. [MEMBER CONTRIBUTION RATE.](a) Except as40.31provided in paragraph (b),The member contribution rate for 40.32 participants in the individual retirement account plan is 4.5 40.33 percent of salary. 40.34(b) For participants in the individual retirement account40.35plan who were otherwise eligible to elect retirement coverage in40.36the state unclassified employees retirement program, the member41.1contribution rate is the rate specified in section 352D.04,41.2subdivision 2, paragraph (a).41.3 Sec. 4. Minnesota Statutes 2002, section 354B.32, is 41.4 amended to read: 41.5 354B.32 [TRANSFER OF FUNDS TO IRAP.] 41.6 A participant in the individual retirement account plan 41.7 established in this chapter who has less than ten years of 41.8 allowable service under the Teachers Retirement Association or 41.9thea teachers retirement fund association, whichever applies, 41.10 may elect to transfer an amount equal to the participant's 41.11 accumulated member contributions to the teachers retirement 41.12 association or the applicable teachers retirement fund 41.13 association, plus compound interest at the rate of six percent 41.14 per annum, to the individual retirement account plan. The 41.15 transfers are irrevocablefund to fundfund-to-fund transfers, 41.16 and, in no event, may the participant receive direct payment of 41.17 the money transferredprior to retirementbefore the termination 41.18 of employment. If a participant elects the contribution 41.19 transfer, all of the participant's allowable and formula service 41.20 credit in the Teachers Retirement Association or the teachers 41.21 retirement fund association associated with the transferred 41.22 amount is forfeited. 41.23 The executive director of the Teachers Retirement 41.24 Association and the chief administrative officers of the 41.25 teachers retirement fund associations, in cooperation with the 41.26 chancellor of the Minnesota State Colleges and Universities 41.27 system, shall notify participants who are eligible to transfer 41.28 of their right to transfer and the amount that they are eligible 41.29 to transfer, and shall, upon request, provide forms to implement 41.30 the transfer. The chancellor of the Minnesota State Colleges 41.31 and Universities system shall assist the Teachers Retirement 41.32 Association and the teachers retirement fund associations in 41.33 developing transfer forms and in implementing the transfers. 41.34 Authority to elect a transfer under this section expires on 41.35 July 1, 2004. 41.36 Sec. 5. [EFFECTIVE DATE; RETROACTIVE APPLICATION.] 42.1 (a) Section 2 is effective on July 1, 2004. 42.2 (b) Section 2 applies to shortages in member deductions 42.3 that occurred before the effective date of the section. 42.4 (c) Sections 1, 3, and 4 are effective on July 1, 2004. 42.5 ARTICLE 6 42.6 REPORTING AND INFORMATION PROVISION 42.7 Section 1. Minnesota Statutes 2002, section 354.07, 42.8 subdivision 9, is amended to read: 42.9 Subd. 9. [INFORMATION DISTRIBUTION.] All school districts, 42.10 the Minnesota State Colleges and Universities,community42.11collegesand other employers of members of the association are 42.12 obligated to distribute to their employees ballots for the 42.13 election of members to the board of trustees, pamphlets, 42.14 brochures, documents or any other material containing 42.15 association information which are prepared by the executive 42.16 director or the board and are delivered to the employers for 42.17 distribution. 42.18 Sec. 2. Minnesota Statutes 2002, section 354.52, 42.19 subdivision 4a, is amended to read: 42.20 Subd. 4a. [MEMBER DATA REPORTING REQUIREMENTS.] (a)An42.21employing unit must initially provide the member data specified42.22in paragraph (b) or any of that data not previously provided to42.23the association for payroll warrants dated after June 30, 1995,42.24in a format prescribed by the executive director.An employing 42.25 unit must provide the member data specified in paragraph (b) in 42.26 a format prescribed by the executive director. Data changes and 42.27 the dates of those changes under this subdivision must be 42.28 reported to the association in a format prescribed by the 42.29 executive director on an ongoing basis within 14 calendar days 42.30 after the date of the end of the payroll cycle in which they 42.31 occur. These data changes must be reported with the payroll 42.32 cycle data under subdivision 4b. 42.33 (b) Data on the member includes: 42.34 (1) legal name, address, date of birth, association member 42.35 number, employer-assigned employee number, and Social Security 42.36 number; 43.1 (2) association status, including, but not limited to, 43.2 basic, coordinated, exempt annuitant, exempt technical college 43.3 teacher, and exempt independent contractor or consultant; 43.4 (3) employment status, including, but not limited to, full 43.5 time, part time, intermittent, substitute, or part-time 43.6 mobility; 43.7 (4) employment position, including, but not limited to, 43.8 teacher, superintendent, principal, administrator, or other; 43.9 (5) employment activity, including, but not limited to, 43.10 hire, termination, resumption of employment, disability, or 43.11 death; 43.12 (6) leaves of absence; 43.13 (7) county district number assigned by the association for 43.14 the employing unit; 43.15 (8) data center identification number, if applicable;and43.16 (9) gender; 43.17 (10) position code; and 43.18 (11) other information as may be required by the executive 43.19 director. 43.20 Sec. 3. Minnesota Statutes 2002, section 354.52, is 43.21 amended by adding a subdivision to read: 43.22 Subd. 4c. [MNSCU SERVICE CREDIT REPORTING.] For all 43.23 part-time service rendered on or after July 1, 2004, the service 43.24 credit reporting requirement in subdivision 4b for all part-time 43.25 employees of the Minnesota State Colleges and Universities 43.26 system must be met by the Minnesota State Colleges and 43.27 Universities system reporting to the association on or before 43.28 July 31 of each year the final calculation of each part-time 43.29 member's service credit for the immediately preceding fiscal 43.30 year based on the employee's assignments for the fiscal year. 43.31 Sec. 4. Minnesota Statutes 2002, section 354.52, 43.32 subdivision 6, is amended to read: 43.33 Subd. 6. [NONCOMPLIANCE CONSEQUENCES.] An employing unit 43.34 that does not comply with the reporting requirements underthis43.35section shallsubdivision 2a, 4a, or 4b must pay a fine of $5 43.36 per calendar day until the association receives the required 44.1 data. 44.2 Sec. 5. [EFFECTIVE DATE.] 44.3 Sections 1 to 4 are effective on July 1, 2004. 44.4 ARTICLE 7 44.5 RETIREMENT ANNUITY PROVISIONS 44.6 Section 1. Minnesota Statutes 2002, section 352.86, 44.7 subdivision 1, is amended to read: 44.8 Subdivision 1. [ELIGIBILITY; RETIREMENT ANNUITY.] A person 44.9 who is employed by the Department of Transportation in the civil 44.10 service employment classification of aircraft pilot or chief 44.11 pilot who is covered by the general employee retirement plan of 44.12 the system under section 352.01, subdivision 23, who elects this 44.13 special retirement coverage under subdivision 3, who is 44.14 prohibited from performing the duties of aircraft pilot or chief 44.15 pilot after reaching age6265 by arulepolicy adopted by the 44.16 commissioner of transportation, and who terminates employment as 44.17 a state employee onreaching thaton or after age 62 but prior 44.18 to normal retirement age is entitled, upon application, to a 44.19 retirement annuity computedin accordance withunder section 44.20 352.115, subdivisions 2 and 3, without any reduction for early 44.21 retirement under section 352.116, subdivision 1. 44.22 Sec. 2. Minnesota Statutes 2002, section 353.37, is 44.23 amended by adding a subdivision to read: 44.24 Subd. 1b. [RETIREMENT AGE.] For purposes of this section, 44.25 "retirement age" means retirement age as defined in United 44.26 States Code, title 42, section 416(l). 44.27 Sec. 3. Minnesota Statutes 2002, section 353.37, 44.28 subdivision 3, is amended to read: 44.29 Subd. 3. [REDUCTION OF ANNUITY.] The association shall 44.30 reduce the amount of the annuityas follows:44.31(a) forof a person who has not reachednormalthe 44.32 retirement age,by one-half of the amount in excess of the 44.33 applicable reemployment income maximum under subdivision 1;. 44.34(b) for a person who has reached normal retirement age, but44.35has not reached age 70, one-third of the amount in excess of the44.36applicable reemployment income maximum under subdivision 1;45.1(c) for a person who has reached age 70, or for salary45.2earned through service in an elected office, there is no45.3reduction upon reemployment, regardless of income.45.4 There is no reduction upon reemployment, regardless of income, 45.5 for a person who has reached the retirement age. 45.6 Sec. 4. Minnesota Statutes 2002, section 354.44, 45.7 subdivision 4, is amended to read: 45.8 Subd. 4. [RETIREMENT ANNUITY ACCRUAL DATE.] (a) An annuity 45.9 payment begins to accrue, providing that the age and service 45.10 requirements under subdivision 1 are satisfied, after the 45.11 termination of teaching service, or after the application for 45.12 retirement has been filed with the board, whichever is later, as 45.13 follows: 45.14 (1) on the 16th day of the month of termination or filing 45.15 if the termination or filing occurs on or before the 15th day of 45.16 the month; 45.17 (2) on the first day of the month following the month of 45.18 termination or filing if the termination or filing occurs on or 45.19 after the 16th day of the month; 45.20 (3) on July 1 for all school principals and other 45.21 administrators who receive a full annual contract salary during 45.22 the fiscal year for performance of a full year's contract 45.23 duties; or 45.24 (4) a later date to be either the first or the 16th day of 45.25 a month occurring within the six-month period immediately 45.26 following the termination of teaching service as specified under 45.27 paragraph (b) by the member. 45.28 (b) If an application for retirement is filed with the 45.29 board during the six-month period that occurs immediately 45.30 following the termination of teaching service, the annuity may 45.31 begin to accrue as if the application for retirement had been 45.32 filed with the board on the date teaching service terminated or 45.33 a later date under paragraph (a), clause (4).An annuity must45.34not begin to accrue more than one month before the date of final45.35salary receipt.45.36 Sec. 5. Minnesota Statutes 2002, section 354.44, 46.1 subdivision 5, is amended to read: 46.2 Subd. 5. [RESUMPTION OF TEACHING SERVICE AFTER 46.3 RETIREMENT.] (a) Any person who retired under the provisions of 46.4 this chapter and has thereafter resumed teaching in any employer 46.5 unit to which this chapter applies is eligible to continue to 46.6 receive payments in accordance with the annuity except that 46.7 annuity payments must be reduced during the calendar year 46.8 immediately following any calendar year in which the person's 46.9 income from the teaching service is in an amount greater than 46.10 the annual maximum earnings allowable for that age for the 46.11 continued receipt of full benefit amounts monthly under the 46.12 federal old age, survivors and disability insurance program as 46.13 set by the secretary of health and human services under United 46.14 States Code, title 42, section 403. The amount of the reduction 46.15 must be one-half of the amount in excess of the applicable 46.16 reemployment income maximum specified in this subdivision and 46.17 must be deducted from the annuity payable for the calendar year 46.18 immediately following the calendar year in which the excess 46.19 amount was earned. If the person has not yet reached the 46.20 minimum age for the receipt of Social Security benefits, the 46.21 maximum earnings for the person must be equal to the annual 46.22 maximum earnings allowable for the minimum age for the receipt 46.23 of Social Security benefits. 46.24 (b) If the person is retired for only a fractional part of 46.25 the calendar year during the initial year of retirement, the 46.26 maximum reemployment income specified in this subdivision must 46.27 be prorated for that calendar year. 46.28 (c) After a person has reached the Social Security full 46.29 retirement ageof 70, no reemployment income maximum is 46.30 applicable regardless of the amount of income. 46.31 (d) The amount of the retirement annuity reduction must be 46.32 handled or disposed of as provided in section 356.47. 46.33 (e) For the purpose of this subdivision, income from 46.34 teaching service includes, but is not limited to: 46.35 (1) all income for services performed as a consultant or an 46.36 independent contractor for an employer unit covered by the 47.1 provisions of this chapter; and 47.2 (2) the greater of either the income received or an amount 47.3 based on the rate paid with respect to an administrative 47.4 position, consultant, or independent contractor in an employer 47.5 unit with approximately the same number of pupils and at the 47.6 same level as the position occupied by the person who resumes 47.7 teaching service. 47.8 Sec. 6. Minnesota Statutes 2002, section 490.121, 47.9 subdivision 10, is amended to read: 47.10 Subd. 10. [EARLY RETIREMENT DATE.] "Early retirement date" 47.11 means the last day of any month after a judge attains the age of 47.126260 until the normal retirement date. 47.13 Sec. 7. [PERA-POLICE AND FIRE; TEMPORARY EXEMPTION FROM 47.14 REEMPLOYED ANNUITANT EARNINGS LIMITATIONS.] 47.15 Notwithstanding any provision of Minnesota Statutes, 47.16 section 353.37, to the contrary, a person who is receiving a 47.17 retirement annuity from the public employees police and fire 47.18 plan and who is employed as a sworn peace officer by the 47.19 Metropolitan Airports Commission, is exempt from the limitation 47.20 on reemployed annuitant earnings for the period January 1, 2004, 47.21 until June 30, 2007. 47.22 Sec. 8. [EFFECTIVE DATE.] 47.23 (a) Section 1 is effective on the day following final 47.24 enactment 47.25 (b) Sections 2, 3, 4, 5, and 6 are effective on July 1, 47.26 2004. 47.27 (c) Section 7 is effective on the day following final 47.28 enactment and applies retroactively from January 1, 2004. 47.29 ARTICLE 8 47.30 DISABILITY BENEFIT PROVISIONS 47.31 Section 1. Minnesota Statutes 2002, section 352.113, 47.32 subdivision 4, is amended to read: 47.33 Subd. 4. [MEDICAL OR PSYCHOLOGICAL EXAMINATIONS; 47.34 AUTHORIZATION FOR PAYMENT OF BENEFIT.] (a) An applicant shall 47.35 provide medical, chiropractic, or psychological evidence to 47.36 support an application for total and permanent disability. 48.1 (b) The director shall have the employee examined by at 48.2 least one additional licensed chiropractor, physician, or 48.3 psychologist designated by the medical adviser. The 48.4 chiropractors, physicians, or psychologists shall make written 48.5 reports to the director concerning the employee's disability 48.6 includingmedicalexpert opinions as to whether the employee is 48.7 permanently and totally disabled within the meaning of section 48.8 352.01, subdivision 17. 48.9 (c) The director shall also obtain written certification 48.10 from the employer stating whether the employment has ceased or 48.11 whether the employee is on sick leave of absence because of a 48.12 disability that will prevent further service to the employer and 48.13 as a consequence the employee is not entitled to compensation 48.14 from the employer. 48.15 (d) The medical adviser shall consider the reports of the 48.16 physicians, psychologists, and chiropractors and any other 48.17 evidence supplied by the employee or other interested parties. 48.18 If the medical adviser finds the employee totally and 48.19 permanently disabled, the adviser shall make appropriate 48.20 recommendation to the director in writing together with the date 48.21 from which the employee has been totally disabled. The director 48.22 shall then determine if the disability occurred within 180 days 48.23 of filing the application, while still in the employment of the 48.24 state, and the propriety of authorizing payment of a disability 48.25 benefit as provided in this section. 48.26 (e) A terminated employee may apply for a disability 48.27 benefit within 180 days of termination as long as the disability 48.28 occurred while in the employment of the state. The fact that an 48.29 employee is placed on leave of absence without compensation 48.30 because of disability does not bar that employee from receiving 48.31 a disability benefit. 48.32 (f) Unless payment of a disability benefit has terminated 48.33 because the employee is no longer totally disabled, or because 48.34 the employee has reached normal retirement age as provided in 48.35 this section, the disability benefit shall cease with the last 48.36 payment received by the disabled employee or which had accrued 49.1 during the lifetime of the employee unless there is a spouse 49.2 surviving; in that event the surviving spouse is entitled to the 49.3 disability benefit for the calendar month in which the disabled 49.4 employee died. 49.5 Sec. 2. Minnesota Statutes 2002, section 352.113, 49.6 subdivision 6, is amended to read: 49.7 Subd. 6. [REGULAR MEDICAL OR PSYCHOLOGICAL EXAMINATIONS.] 49.8 At least once each year during the first five years following 49.9 the allowance of a disability benefit to any employee, and at 49.10 least once in every three-year period thereafter, the director 49.11 may require any disabled employee to undergo a medical, 49.12 chiropractic, or psychological examination. The examination 49.13 must be made at the place of residence of the employee, or at 49.14 any place mutually agreed upon, bya physician or physiciansan 49.15 expert or experts designated by the medical adviser and engaged 49.16 by the director. If any examination indicates to the medical 49.17 adviser that the employee is no longer permanently and totally 49.18 disabled, or is engaged in or can engage in a gainful 49.19 occupation, payments of the disability benefit by the fund must 49.20 be discontinued. The payments shall discontinue as soon as the 49.21 employee is reinstated to the payroll following sick leave, but 49.22 in no case shall payment be made for more than 60 days after the 49.23 medical adviser finds that the employee is no longer permanently 49.24 and totally disabled. 49.25 Sec. 3. Minnesota Statutes 2002, section 352.113, is 49.26 amended by adding a subdivision to read: 49.27 Subd. 7a. [TEMPORARY REEMPLOYMENT BENEFIT REDUCTION 49.28 WAIVER.] A reduction in benefits under subdivision 7, or a 49.29 termination of benefits due to the disabled employee resuming a 49.30 gainful occupation from which earnings are equal to or more than 49.31 the employee's salary at the date of disability or the salary 49.32 currently paid for similar positions does not apply until six 49.33 months after the individual returns to a gainful occupation. 49.34 Sec. 4. Minnesota Statutes 2002, section 352.113, 49.35 subdivision 8, is amended to read: 49.36 Subd. 8. [REFUSAL OF EXAMINATION.] If a disabled employee 50.1 refuses to submit toa medicalan expert examination as 50.2 required, payments by the fund must be discontinued and the 50.3 director shall revoke all rights of the employee in any 50.4 disability benefit. 50.5 Sec. 5. Minnesota Statutes 2002, section 352.95, 50.6 subdivision 1, is amended to read: 50.7 Subdivision 1. [JOB-RELATED DISABILITY.] A covered 50.8 correctional employee who becomes disabled and who is expected 50.9 to be physically or mentally unfit to perform the duties of the 50.10 position for at least one year as a direct result of an injury, 50.11 sickness, or other disability that incurred in orarisingarose 50.12 out of any act of duty that makes the employee physically or 50.13 mentally unable to perform the duties,is entitled to a 50.14 disability benefit. The disability benefit may be based on 50.15 covered correctional service only. The benefit amountmust50.16equalis 50 percent of the average salary defined in section 50.17 352.93, plus an additional percent equal to that specified in 50.18 section 356.315, subdivision 5, for each year of covered 50.19 correctional service in excess of 20 years, ten months, prorated 50.20 for completed months. 50.21 Sec. 6. Minnesota Statutes 2002, section 352.95, 50.22 subdivision 2, is amended to read: 50.23 Subd. 2. [NON-JOB-RELATED DISABILITY.]AnyA covered 50.24 correctional employee who, after rendering at least one year of 50.25 covered correctional service, becomes disabled and who is 50.26 expected to be physically or mentally unfit to perform the 50.27 duties of the position for at least one year because of sickness 50.28 or injuryoccurringthat occurred while not engaged in covered 50.29 employment,is entitled to a disability benefit based on covered 50.30 correctional service only. The disability benefit must be 50.31 computed as provided in section 352.93, subdivisions 1 and 2, 50.32 and must be computed as though the employee had at least 15 50.33 years of covered correctional service. 50.34 Sec. 7. Minnesota Statutes 2002, section 352.95, 50.35 subdivision 4, is amended to read: 50.36 Subd. 4. [MEDICAL OR PSYCHOLOGICAL EVIDENCE.] (a) An 51.1 applicant shall provide medical, chiropractic, or psychological 51.2 evidence to support an application for disability benefits. The 51.3 director shall have the employee examined by at least one 51.4 additional licensed physician, chiropractor, or psychologist who 51.5 is designated by the medical adviser. The physicians, 51.6 chiropractors, or psychologists with respect to a mental 51.7 impairment, shall make written reports to the director 51.8 concerning the question of the employee's disability, 51.9 includingmedicaltheir expert opinions as to whether the 51.10 employee is disabled within the meaning of this section. The 51.11 director shall also obtain written certification from the 51.12 employer stating whether or not the employee is on sick leave of 51.13 absence because of a disability that will prevent further 51.14 service to the employer, and as a consequence, the employee is 51.15 not entitled to compensation from the employer. 51.16 (b) If, on considering thephysicians'reports by the 51.17 physicians, chiropractors, or psychologists and any other 51.18 evidence supplied by the employee or others, the medical adviser 51.19 finds the employee disabled within the meaning of this section, 51.20 the advisor shall make appropriate recommendation to the 51.21 director, in writing, together with the date from which the 51.22 employee has been disabled. The director shall then determine 51.23 the propriety of authorizing payment of a disability benefit as 51.24 provided in this section. 51.25 (c) Unless the payment of a disability benefit has 51.26 terminated because the employee is no longer disabled, or 51.27 because the employee has reached either age 65 or the five-year 51.28 anniversary of the effective date of the disability benefit, 51.29 whichever is later, the disability benefitshallmust cease with 51.30 the last payment received by the disabled employee or which had 51.31 accrued during the employee's lifetime. While disability 51.32 benefits are paid, the director has the right, at reasonable 51.33 times, to require the disabled employee to submit proof of the 51.34 continuance of the disability claimed. If any examination 51.35 indicates to the medical adviser that the employee is no longer 51.36 disabled, the disability payment must be discontinued upon the 52.1 reinstatement to state service or within 60 days of the finding, 52.2 whichever is sooner. 52.3 Sec. 8. Minnesota Statutes 2002, section 352B.10, 52.4 subdivision 1, is amended to read: 52.5 Subdivision 1. [INJURIES,; PAYMENT AMOUNTS.]AnyA member 52.6 who becomes disabled and who is expected to be physically or 52.7 mentally unfit to perform duties for at least one year as a 52.8 direct result of an injury, sickness, or other disability that 52.9 incurred in orarisingarose out of any act of duty,shallis 52.10 entitled to receive disability benefits while disabled. The 52.11 benefits must be paid in monthly installments. The benefit is 52.12 an amount equal to the member's average monthly salary 52.13 multiplied by 60 percent, plus an additional percent equal to 52.14 that specified in section 356.315, subdivision 6, for each year 52.15 and pro rata for completed months of service in excess of 20 52.16 years, if any. 52.17 Sec. 9. Minnesota Statutes 2002, section 352B.10, 52.18 subdivision 2, is amended to read: 52.19 Subd. 2. [DISABLED WHILE NOT ON DUTY.] If a member 52.20terminates employment afterwith at least one year of service 52.21because of sickness or injury occurring while not on duty and52.22not engaged in state work entitling the member to membership,52.23and the memberbecomes disabled and is expected to be physically 52.24 or mentally unfit to perform the duties of the position for at 52.25 least one year because of sickness or injuryoccurringthat 52.26 occurred while not engaged in covered employment, themember52.27 individual is entitled to disability benefits. The benefit must 52.28 bein the same amount andcomputedin the same wayas if the 52.29memberindividual were 55 years old at the date of disability 52.30 and the annuitywere paidwas payable under section 352B.08. If 52.31 a disability under thisclausesubdivision occurs after one year 52.32 of service but before 15 years of service, the disability 52.33 benefit must be computed as though thememberindividual had 15 52.34 years of service. 52.35 Sec. 10. Minnesota Statutes 2002, section 352B.10, 52.36 subdivision 3, is amended to read: 53.1 Subd. 3. [ANNUAL AND SICK LEAVE; WORK AT LOWER PAY.] No 53.2 membershallis entitled to receiveanya disability benefit 53.3 payment when the member has unused annual leave or sick leave, 53.4 or under any other circumstances,when, during the period of 53.5 disability, there has been no impairment of salary.ShouldIf 53.6 themember or former member resumedisabilitant resumes gainful 53.7workemployment, the disability benefit must be continued in an 53.8 amount which, when added to current earnings, does not exceed 53.9 the salary rate receivedofby the person at the date of 53.10 disabilityas, which must be adjusted over time by thesame53.11 percentage increase in United States average wages used by the 53.12 Social Security Administration in calculating average indexed 53.13 monthly earnings for the old age, survivors, and disability 53.14 insurance programs for the same period. 53.15 Sec. 11. Minnesota Statutes 2002, section 352B.10, 53.16 subdivision 4, is amended to read: 53.17 Subd. 4. [PROOF OF DISABILITY.] (a) No disabilitybenefit53.18payment shallbenefits may bemade except uponpaid unless 53.19 adequate proof is furnished to the executive director of the 53.20 existence of the disability.While disability benefits are53.21being paid53.22 (b) Adequate proof of a disability must include a written 53.23 expert report by a licensed physician, by a licensed 53.24 chiropractor, or with respect to a mental impairment, by a 53.25 licensed psychologist. 53.26 (c) Following the commencement of benefit payments, 53.27 the executive director has the right, at reasonable times, to 53.28 require thedisabled former memberdisabilitant to submit proof 53.29 of the continuance of the disability claimed. 53.30 Sec. 12. Minnesota Statutes 2002, section 352B.10, 53.31 subdivision 5, is amended to read: 53.32 Subd. 5. [OPTIONAL ANNUITY.] Adisabled member53.33 disabilitant may, in lieu of survivorship coverage under section 53.34 352B.11, subdivision 2, choose the normal disability benefit or 53.35 an optional annuity as provided in section 352B.08, subdivision 53.36 3. The choice of an optional annuity must be made in writing, 54.1 on a form prescribed by the executive director, and must be made 54.2 before the commencement of the payment of the disability 54.3 benefit, or within 90 daysof attainingbefore reaching age 65 54.4 or before reaching the five-year anniversary of the effective 54.5 date of the disability benefit, whichever is later.ItThe 54.6 optional annuity is effective on the date on which the 54.7 disability benefit begins to accrue, or the month following the 54.8 attainment of age 65 or following the five-year anniversary of 54.9 the effective date of the disability benefit, whichever is later. 54.10 Sec. 13. Minnesota Statutes 2002, section 352B.105, is 54.11 amended to read: 54.12 352B.105 [TERMINATION OF DISABILITY BENEFITS.] 54.13 Disability benefits payable under section 352B.10shall54.14 must terminateaton the transfer date, which is the end of the 54.15 month in which thebeneficiarydisabilitant becomes 65 years old 54.16 or the five-year anniversary of the effective date of the 54.17 disability benefit, whichever is later. If thebeneficiary54.18 disabilitant is still disabledwhenon thebeneficiary becomes54.1965 years oldtransfer date, thebeneficiary shalldisabilitant 54.20 must be deemed to be a retired member and, if thebeneficiary54.21 disabilitant had chosen an optional annuity under section 54.22 352B.10, subdivision 5,shallmust receive an annuityin54.23accordance withunder the terms of the optional annuity 54.24 previously chosen. If thebeneficiarydisabilitant had not 54.25 chosen an optional annuity under section 352B.10, subdivision 5, 54.26 thebeneficiarydisabilitant may then choose to receive either a 54.27 normal retirement annuity computed under section 352B.08, 54.28 subdivision 2, or an optional annuity as provided in section 54.29 352B.08, subdivision 3. An optional annuity must be chosen 54.30 within 90 days of attainingage 65 or reachingthefive-year54.31anniversary of the effective date of the disability benefit,54.32whichever is latertransfer date. If an optional annuity is 54.33 chosen, the optional annuityshall begin to accrueaccrues on 54.34 the first of the month next followingattainment of age 65 or54.35the five-year anniversary oftheeffectivetransfer dateof the54.36disability benefit, whichever is later. 55.1 Sec. 14. Minnesota Statutes 2002, section 352D.065, 55.2 subdivision 2, is amended to read: 55.3 Subd. 2. [DISABILITY BENEFIT AMOUNT.] A participant who 55.4 becomes totally and permanently disabled has the option, even if 55.5 on leave of absence without pay, to receive: 55.6 (1) the value of the participant's total shares; 55.7 (2) the value ofone-halfof a portion of the total shares 55.8 and an annuity based on thevalue of one-halfremainder of the 55.9 total shares; or 55.10 (3) an annuity based on the value of the participant's 55.11 total shares. 55.12 Sec. 15. Minnesota Statutes 2002, section 353.33, 55.13 subdivision 4, is amended to read: 55.14 Subd. 4. [PROCEDURE TO DETERMINE ELIGIBILITY.] (a) The 55.15 applicant shall provide an expert report signed by a licensed 55.16 physician, psychologist, or chiropractor and the applicant must 55.17 authorize the release of medical and health care evidence, 55.18 including all medical records and relevant information from any 55.19 source, to support the application for total and permanent 55.20 disability benefits. 55.21 (b) The medical adviser shall verify the medical evidence 55.22 and, if necessary for disability determination, suggest the 55.23 referral of the applicant to specialized medical consultants. 55.24 (c) The association shall also obtain from the employer, 55.25 certification of the member's past public service, dates of paid 55.26 sick leave and vacation beyond the last working day and whether 55.27 or not sick leave or annual leave has been allowed. 55.28 (d) If, upon consideration of the medical evidence received 55.29 and the recommendations of the medical adviser, it is determined 55.30 by the executive director that the applicant is totally and 55.31 permanently disabled within the meaning of the law, the 55.32 association shall grant the person a disability benefit.The55.33fact that55.34 (e) An employee who is placed on leave of absence without 55.35 compensation because of disabilitydoesis notbar the person55.36 barred from receiving a disability benefit. 56.1 Sec. 16. Minnesota Statutes 2002, section 353.33, 56.2 subdivision 6, is amended to read: 56.3 Subd. 6. [CONTINUING ELIGIBILITY FOR BENEFITS.] The 56.4 association shall determine eligibility for continuation of 56.5 disability benefits and require periodic examinations and 56.6 evaluations of disabled members as frequently as deemed 56.7 necessary. The association shall require the disabled member to 56.8 provide an expert report signed by a licensed physician, 56.9 psychologist, or chiropractor and the disabled member shall 56.10 authorize the release of medical and health care evidence, 56.11 including all medical and health care records and information 56.12 from any source, relating to an application for continuation of 56.13 disability benefits. Disability benefits are contingent upon a 56.14 disabled person's participation in a vocational 56.15 rehabilitationprogramevaluation if the executive director 56.16 determines that the disabled person may be able to return to a 56.17 gainful occupation. If a member is found to be no longer 56.18 totally and permanently disabled, payments must cease the first 56.19 of the month following the expiration of a 30-day period after 56.20 the member receives a certified letter notifying the member that 56.21 payments will cease. 56.22 Sec. 17. Minnesota Statutes 2002, section 353.33, 56.23 subdivision 6b, is amended to read: 56.24 Subd. 6b. [DUTIES OF THE MEDICAL ADVISER.] At the request 56.25 of the executive director, the medical adviser shall designate 56.26 licensed physicians, psychologists, or chiropractors to examine 56.27 applicants for disability benefits and review themedicalexpert 56.28 reports based upon these examinations to determine whether an 56.29 applicant is totally and permanently disabled as defined in 56.30 section 353.01, subdivision 19, disabled as defined in section 56.31 353.656, or eligible for continuation of disability benefits 56.32 under subdivision 6. The medical examiner shall also review, at 56.33 the request of the executive director, all medical and health 56.34 care statements on behalf of an applicant for disability 56.35 benefits, and shall report in writing to the executive 56.36 director the conclusions and recommendations of the examiner on 57.1 those matters referred for advice. 57.2 Sec. 18. Minnesota Statutes 2002, section 353.33, 57.3 subdivision 7, is amended to read: 57.4 Subd. 7. [PARTIAL REEMPLOYMENT.] If, following a work or 57.5 non-work-related injury or illness, a disabled personresumes a57.6gainful occupation from whichwho remains totally and 57.7 permanently disabled as defined in section 353.01, subdivision 57.8 19, has income from employment that is not substantial gainful 57.9 activity and the rate of earnings from that employment are less 57.10 than the salary rate at the date of disability or the 57.11 salary rate currently paid forsimilarpositions similar to the 57.12 employment position held by the disabled person immediately 57.13 before becoming disabled, whichever is greater, theboard57.14 executive director shall continue the disability benefit in an 57.15 amount that, when added to the earnings and any workers' 57.16 compensation benefit, does not exceed the salary rate at the 57.17 date of disability or the salary currently paid forsimilar57.18 positions similar to the employment position held by the 57.19 disabled person immediately before becoming disabled, whichever 57.20 is higher, provided. The disability benefitdoesunder this 57.21 subdivision may not exceed the disability benefit originally 57.22 allowed, plus any postretirement adjustments payable after 57.23 December 31, 1988, in accordance with section 11A.18, 57.24 subdivision 10. No deductions for the retirement fund may be 57.25 taken from the salary of a disabled person who is receiving a 57.26 disability benefit as provided in this subdivision. 57.27 Sec. 19. Minnesota Statutes 2002, section 353.33, is 57.28 amended by adding a subdivision to read: 57.29 Subd. 7a. [TRIAL WORK PERIOD.] (a) If, following a work or 57.30 non-work related injury or illness, a disabled member attempts 57.31 to return to work for their previous public employer or attempts 57.32 to return to a similar position with another public employer, on 57.33 a full-time or less than full-time basis, the Public Employees 57.34 Retirement Association shall continue paying the disability 57.35 benefit for a period not to exceed six months. The disability 57.36 benefit must continue in an amount that, when added to the 58.1 subsequent employment earnings and workers' compensation 58.2 benefit, does not exceed the salary at the date of disability or 58.3 the salary currently paid for similar positions, whichever is 58.4 higher. 58.5 (b) No deductions for the retirement fund may be taken from 58.6 the salary of a disabled person who is attempting to return to 58.7 work under this provision unless the member waives further 58.8 disability benefits. 58.9 (c) A member only may return to employment and continue 58.10 disability benefit payments once while receiving disability 58.11 benefits from a plan administered by the Public Employees 58.12 Retirement Association. 58.13 Sec. 20. Minnesota Statutes 2002, section 353.656, 58.14 subdivision 5, is amended to read: 58.15 Subd. 5. [PROOF OF DISABILITY.] (a) A disability benefit 58.16 payment must not be made except upon adequate proof furnished to 58.17 the executive director of the association of the existence of 58.18sucha disability, and. 58.19 (b) During the time when disability benefits are being 58.20 paid, the executive director of the association has the right, 58.21 at reasonable times, to require the disabled member to submit 58.22 proof of the continuance of the disability claimed. 58.23 (c) Adequate proof of a disability must include a written 58.24 expert report by a licensed physician, by a licensed 58.25 chiropractor, or with respect to a mental impairment, by a 58.26 licensed psychologist. 58.27 (d) A person applying for or receiving a disability benefit 58.28 shall provide or authorize release of medical evidence, 58.29 including all medical records and information from any source, 58.30 relating to an application for disability benefits or the 58.31 continuation of those benefits. 58.32 Sec. 21. Minnesota Statutes 2002, section 353.656, is 58.33 amended by adding a subdivision to read: 58.34 Subd. 8. [APPLICATION PROCEDURE TO DETERMINE ELIGIBILITY 58.35 FOR POLICE AND FIRE PLAN DISABILITY BENEFITS.] (a) An 58.36 application for disability benefits must be made in writing on a 59.1 form or forms prescribed by the executive director. 59.2 (b) If an application for disability benefits is filed 59.3 within two years of the date of the injury or the onset of the 59.4 illness that gave rise to the disability application, the 59.5 application must be supported by evidence that the applicant is 59.6 unable to perform the duties of the position held by the 59.7 applicant on the date of the injury or the onset of the illness 59.8 causing the disability. The employer must provide evidence 59.9 indicating whether the applicant is able or unable to perform 59.10 the duties of the position held on the date of the injury or 59.11 onset of illness causing the disability and the specifications 59.12 of any duties that the individual can or cannot perform. 59.13 (c) If an application for disability benefits is filed more 59.14 than two years after the date of the injury or the onset of an 59.15 illness causing the disability, the application must be 59.16 supported by evidence that the applicant is unable to perform 59.17 the most recent duties that are expected to be performed by the 59.18 applicant during the 90 days before the filing of the 59.19 application. The employer must provide evidence of the duties 59.20 that are expected to be performed by the applicant during the 90 59.21 days before to the filing of the application, whether the 59.22 applicant can or cannot perform those duties overall, and the 59.23 specifications of any duties that the applicant can or cannot 59.24 perform. 59.25 (d) Unless otherwise permitted by law, no application for 59.26 disability benefits can be filed by a former member of the 59.27 police and fire plan more than three years after the former 59.28 member has terminated from Public Employees Retirement 59.29 Association police and fire plan covered employment. If an 59.30 application is filed within three years after the termination of 59.31 public employment, the former member must provide evidence that 59.32 the disability is the direct result of an injury or the 59.33 contracting of an illness that occurred while still actively 59.34 employed and participating in the police and fire plan. 59.35 (e) Any application for duty-related disability must be 59.36 supported by a first report of injury as defined in section 60.1 176.231. 60.2 (f) If a member who has applied for and been approved for 60.3 disability benefits before the termination of service does not 60.4 terminate service or is not placed on an authorized leave of 60.5 absence as certified by the governmental subdivision within 45 60.6 days following the date on which the application is approved, 60.7 the application shall be canceled. If an approved application 60.8 for disability benefits has been canceled, a subsequent 60.9 application for disability benefits may not be filed on the 60.10 basis of the same medical condition for a minimum of one year 60.11 from the date on which the previous application was canceled. 60.12 (g) An applicant may file a retirement application under 60.13 section 353.29, subdivision 4, at the same time as the 60.14 disability application is filed. If the disability application 60.15 is approved, the retirement application is canceled. If the 60.16 disability application is denied, the retirement application 60.17 must be initiated and processed upon the request of the 60.18 applicant. A police and fire fund member may not receive a 60.19 disability benefit and a retirement annuity from the police and 60.20 fire fund at the same time. 60.21 (h) A repayment of a refund must be made within six months 60.22 after the effective date of disability benefits or within six 60.23 months after the date of the filing of the disability 60.24 application, whichever is later. No purchase of prior service 60.25 or payment made in lieu of salary deductions otherwise 60.26 authorized under section 353.01 or 353.36, subdivision 2, may be 60.27 made after the occurrence of the disability for which an 60.28 application is filed under this section. 60.29 Sec. 22. Minnesota Statutes 2002, section 353.656, is 60.30 amended by adding a subdivision to read: 60.31 Subd. 9. [REFUSAL OF EXAMINATION OR MEDICAL EVIDENCE.] If 60.32 a person applying for or receiving a disability benefit refuses 60.33 to submit to a medical examination under subdivision 11, or 60.34 fails to provide or to authorize the release of medical evidence 60.35 under subdivisions 5 and 7, the association shall cease the 60.36 application process or shall discontinue the payment of a 61.1 disability benefit, whichever is applicable. Upon the receipt 61.2 of the requested medical evidence, the association shall resume 61.3 the application process or the payment of a disability benefit 61.4 upon approval for the continuation, whichever is applicable. 61.5 Sec. 23. Minnesota Statutes 2002, section 353.656, is 61.6 amended by adding a subdivision to read: 61.7 Subd. 10. [ACCRUAL OF BENEFITS.] (a) A disability benefit 61.8 begins to accrue the day following the commencement of 61.9 disability, 90 days preceding the filing of an application, or, 61.10 if annual or sick leave is paid for more than the 90-day period, 61.11 from the date on which the payment of salary ceased, whichever 61.12 is later. 61.13 (b) Payment of the disability benefit must not continue 61.14 beyond the end of the month in which entitlement has 61.15 terminated. If the disabilitant dies prior to negotiating the 61.16 check for the month in which death occurs, payment must be made 61.17 to the surviving spouse or, if none, to the designated 61.18 beneficiary or, if none, to the estate. 61.19 Sec. 24. Minnesota Statutes 2002, section 353.656, is 61.20 amended by adding a subdivision to read: 61.21 Subd. 11. [INDEPENDENT MEDICAL EXAMINATION; DUTIES OF THE 61.22 MEDICAL ADVISOR.] Any individual receiving disability benefits 61.23 or any applicant, if requested by the executive director, must 61.24 submit to an independent medical examination. The medical 61.25 examination must be paid for by the association. The medical 61.26 advisor shall review all medical reports submitted to the 61.27 association, including the findings of an independent medical 61.28 examination requested under this section, and shall advise the 61.29 executive director. 61.30 Sec. 25. Minnesota Statutes 2002, section 353.656, is 61.31 amended by adding a subdivision to read: 61.32 Subd. 12. [APPROVAL OF DISABILITY BENEFITS.] Review of 61.33 disability benefit applications and review of existing 61.34 disability cases must be made by the executive director based 61.35 upon all relevant evidence including advice from the medical 61.36 advisor and the evidence provided by the member and employer. A 62.1 member whose application for disability benefits or whose 62.2 continuation of disability benefits is denied may appeal the 62.3 executive director's decision to the board of trustees within 45 62.4 days of the receipt of a certified letter notifying the member 62.5 of the decision to deny the application or the benefit 62.6 continuation. 62.7 Sec. 26. Minnesota Statutes 2002, section 354.48, 62.8 subdivision 2, is amended to read: 62.9 Subd. 2. [APPLICATIONS; ACCRUAL.] (a) A person described 62.10 in subdivision 1, or another person authorized to act on behalf 62.11 of the person, may make written application on a form prescribed 62.12 by the executive director for a total and permanent disability 62.13 benefit only within the 18-month period following the 62.14 termination of teaching service.This62.15 (b) The benefit accrues from the day following the 62.16 commencement of the disability or the day following the last day 62.17 for which salary is paid, whichever is later, but does not begin 62.18 to accrue more than six months before the date on which the 62.19 written application is filed with the executive director. If 62.20 salary is being received for either annual or sick leave during 62.21 the disability period,payments accruethe disability benefit 62.22 accrues from the day following the last day for which this 62.23 salary is paid. 62.24 Sec. 27. Minnesota Statutes 2002, section 354.48, 62.25 subdivision 4, is amended to read: 62.26 Subd. 4. [DETERMINATION BY THE EXECUTIVE DIRECTOR.] (a) 62.27 The executive director shall have the member examined by at 62.28 least two licensed physicians, licensed chiropractors, or 62.29 licensed psychologists selected by the medical adviser. 62.30 (b) These physicians, chiropractors, or psychologists with 62.31 respect to a mental impairment, shall make written reports to 62.32 the executive director concerning the member's disability, 62.33 includingmedicalexpert opinions as to whether or not the 62.34 member is permanently and totally disabled within the meaning of 62.35 section 354.05, subdivision 14. 62.36 (c) The executive director shall also obtain written 63.1 certification from the last employer stating whether or not the 63.2 member was separated from service because of a disability which 63.3 would reasonably prevent further service to the employer and as 63.4 a consequence the member is not entitled to compensation from 63.5 the employer. 63.6 (d) If, upon the consideration of the reports of the 63.7 physicians or psychologists and any other evidence presented by 63.8 the member or by others interested therein, the executive 63.9 director finds that the member is totally and permanently 63.10 disabled, the executive director shall grant the member a 63.11 disability benefit.The fact that63.12 (e) An employee who is placed on leave of absence without 63.13 compensation because of disabilityshallis notbar the member63.14 barred from receiving a disability benefit. 63.15 Sec. 28. Minnesota Statutes 2002, section 354.48, 63.16 subdivision 6, is amended to read: 63.17 Subd. 6. [REGULAR PHYSICAL EXAMINATIONS.] At least once 63.18 each year during the first five years following the allowance of 63.19 a disability benefit to any member, and at least once in every 63.20 three-year period thereafter, the executive director shall 63.21 require the disability beneficiary to undergoa medicalan 63.22 expert examination by a physician or physicians, by a 63.23 chiropractor or chiropractors, or by one or more psychologists 63.24 with respect to a mental impairment, engaged by the executive 63.25 director. Ifanyan examination indicates that the member is no 63.26 longer permanently and totally disabled or that the member is 63.27 engaged or is able to engage in a substantial gainful 63.28 occupation, payments of the disability benefit by the 63.29 associationshallmust be discontinued. The paymentsshall63.30discontinuemust be discontinued as soon as the member is 63.31 reinstated to the payroll following sick leave, but payment may 63.32 not be made for more than 60 days after the physicians, the 63.33 chiropractors, or the psychologists engaged by the executive 63.34 director find that the person is no longer permanently and 63.35 totally disabled. 63.36 Sec. 29. Minnesota Statutes 2002, section 354.48, 64.1 subdivision 6a, is amended to read: 64.2 Subd. 6a. [MEDICAL ADVISER; DUTIES.] The state 64.3 commissioner of health or a licensed physician on the staff of 64.4 the department of health who is designated by the commissioner 64.5 shall be the medical adviser of the executive director. The 64.6 medical adviser shall designate licensed physicians, licensed 64.7 chiropractors, or licensed psychologists with respect to a 64.8 mental impairment, who shall examine applicants for disability 64.9 benefits. The medical adviser shall pass upon allmedical64.10 expert reports based on any examinations performed in order to 64.11 determine whether a teacher is totally and permanently disabled 64.12 as defined in section 354.05, subdivision 14. The medical 64.13 adviser shall also investigate all health and medical statements 64.14 and certificates by or on behalf of a teacher in connection with 64.15 a disability benefit, and shall report in writing to the 64.16 director setting forth any conclusions and recommendations on 64.17 all matters referred to the medical adviser. 64.18 Sec. 30. Minnesota Statutes 2002, section 354.48, 64.19 subdivision 10, is amended to read: 64.20 Subd. 10. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] 64.21 (a) No personshall beis entitled to receive both a disability 64.22 benefit and a retirement annuity provided by this chapter. 64.23 (b) The disability benefit paid to a person hereundershall64.24 must terminate at the end of the month in which the person 64.25 attains the normal retirement age. If the person is still 64.26 totally and permanently disabled at the beginning of the month 64.27 next following the month in which the person attains the normal 64.28 retirement age, the personshallmust be deemed to be on 64.29 retirement status and, if the person had elected an optional 64.30 annuitypursuant tounder subdivision 3a,shallmust receive an 64.31 annuity in accordance with the terms of the optional annuity 64.32 previously elected, or, if the person had not elected an 64.33 optional annuitypursuant tounder subdivision 3a, may elect to 64.34 receive a straight life retirement annuity equal to the 64.35 disability benefit paidprior tobefore the date on which the 64.36 person attains age 65 or reaches the five-year anniversary of 65.1 the effective date of the disability benefit, whichever is 65.2 later, or may elect to receive an optional annuity as provided 65.3 in section 354.45, subdivision 1. 65.4 (c) Election of an optional annuity must be made within 90 65.5 days of the normal retirement age65or the five-year 65.6 anniversary of the effective date of the disability benefit, 65.7 whichever is later. 65.8 (d) If an optional annuity is elected, the electionshall65.9beis effective on the date on which the person attains the 65.10 normal retirement age65or reaches the five-year anniversary of 65.11 the effective date of the disability benefit, whichever is 65.12 later. The optional annuityshall beginbegins to accrue on the 65.13 first day of the month next following the month in which the 65.14 person attains the normal retirement age65or reaches the 65.15 five-year anniversary of the effective date of the disability 65.16 benefit, whichever is later. 65.17 Sec. 31. Minnesota Statutes 2002, section 356.302, 65.18 subdivision 3, is amended to read: 65.19 Subd. 3. [GENERAL EMPLOYEE PLAN ELIGIBILITY REQUIREMENTS.] 65.20 A disabled member of a covered retirement plan who has credit 65.21 for allowable service in a combination of general employee 65.22 retirement plans is entitled to a combined service disability 65.23 benefit if the member: 65.24 (1) is less than65 years ofthe normal retirement age on 65.25 the date of the application for the disability benefit; 65.26 (2) has become totally and permanently disabled; 65.27 (3) has credit for allowable service in any combination of 65.28 general employee retirement plans totaling at least three years; 65.29 (4) has credit for at least one-half year of allowable 65.30 service with the current general employee retirement plan before 65.31 the commencement of the disability; 65.32 (5) has at least three continuous years of allowable 65.33 service credit by the general employee retirement plan or has at 65.34 least a total of three years of allowable service credit by a 65.35 combination of general employee retirement plans in a 72-month 65.36 period during which no interruption of allowable service credit 66.1 from a termination of employment exceeded 29 days; and 66.2 (6) was not receiving a retirement annuity or disability 66.3 benefit from any covered general employee retirement plan at the 66.4 time of the commencement of the disability. 66.5 Sec. 32. Minnesota Statutes 2002, section 422A.18, 66.6 subdivision 1, is amended to read: 66.7 Subdivision 1. [MEDICALEXPERT EXAMINATION.] (a) Upon the 66.8 application of the head of the department in which a 66.9 contributing employee is employed, or upon the application of 66.10 the contributing employee or of one acting in the employee's 66.11 behalf, the retirement board shall place the contributor on 66.12 disability, providedand pay the person a disability allowance 66.13 under this section if the medical board, aftera medicalan 66.14 expert examination of the contributor made at the place of 66.15 residence of the contributor or at a place mutually agreed upon, 66.16 shall certify to the retirement board that the contributor is 66.17 physically or mentally incapacitated for the performance of 66.18 further service to the city and recommend that the contributor 66.19 be placed on disability. 66.20 (b) The medical board shall consist of the city physician, 66.21 a physician, chiropractor, or licensed psychologist to be 66.22 selected by the retirement board, and a physician, chiropractor, 66.23 or licensed psychologist to be selected by the employee. 66.24 (c) Disability of an employee resulting from injury or 66.25 illness received in the performance of the duties of the city 66.26 service shall be defined as duty disability. 66.27 (d) Disability incurred as a result of injury or illness 66.28 not connected with the performance of such service shall be 66.29 defined as nonduty disability. In order to be entitled to a 66.30 retirement allowance for a nonduty disability an employee shall 66.31 have rendered five or more years of service to the city. 66.32 Sec. 33. Minnesota Statutes 2002, section 422A.18, 66.33 subdivision 4, is amended to read: 66.34 Subd. 4. [ADDITIONAL MEDICAL EXAMINATIONS.] (a) Once each 66.35 year, the retirement board may require any disability 66.36 beneficiary while still under the established age for retirement 67.1 to undergomedicalan expert examination bya physician orone 67.2 or more physicians, one or more chiropractors, or one or more 67.3 licensed psychologists designated by the retirement board,. The 67.4 examinationtomust be made at the place of residence of the 67.5 beneficiary or other place mutually agreed upon.Should67.6 (b) If the medical boardreport and certifycertifies to 67.7 the retirement board thatsuchthe disability beneficiary is no 67.8 longer physically or mentally incapacitated for the performance 67.9 of duty, the beneficiary's allowanceshallmust be discontinued 67.10 and the head of the department in which the beneficiary was 67.11 employed at the time of retirement shall, upon notification by 67.12 the retirement board of the report of the medical board, 67.13 reemploy the beneficiary at a rate of salary not less than the 67.14 amount of the disability allowance, but. 67.15 (c) After the expiration of five years subsequent to the 67.16 retirement ofsuchthe beneficiary, the restoration to duty, 67.17 notwithstanding the recommendation of the medical board,shall67.18beis optional with the head of the department.ShouldIf any 67.19 disability beneficiary while under the established age for 67.20 retirementrefuserefuses to submit to at least one 67.21medicalexpert examination in any year bya physician orone or 67.22 more physicians, one or more chiropractors, or one or more 67.23 licensed psychologists designated by the medical board, the 67.24 allowanceshallmust be discontinued until the withdrawal of 67.25 such refusal, and should such refusal continue for one year, all 67.26 the beneficiary's rights in and to any retirement or disability 67.27 allowanceshall beare forfeited. 67.28 Sec. 34. Minnesota Statutes 2002, section 423B.09, 67.29 subdivision 4, is amended to read: 67.30 Subd. 4. [CERTIFICATE OF PHYSICIANS REQUIRED.] (a) No 67.31 member is entitled to a pension under subdivision 1, paragraph 67.32 (b) or (c), except upon the certificate of two or more 67.33 physiciansor, surgeons, chiropractors, licensed psychologists, 67.34 or a combination of experts chosen by the governing board. This 67.35 certificate must set forth the cause, nature, and extent of the 67.36 disability, disease, or injury of the member. 68.1 (b) No active member may be awarded, granted, or paid a 68.2 disability pension under subdivision 1, paragraph (c), unless 68.3 the certificate states that the disability, disease, or injury 68.4 was incurred or sustained by the member while in the service of 68.5 the police department of the city. The certificate must be 68.6 filed with the secretary of the association. 68.7 Sec. 35. Minnesota Statutes 2002, section 423C.05, 68.8 subdivision 4, is amended to read: 68.9 Subd. 4. [TEMPORARY DISABILITY PENSION.] (a) An active 68.10 member who, by sickness or accident, becomes temporarily 68.11 disabled from performing firefighter duties for the fire 68.12 departmentshall beis entitled to a temporary disability 68.13 pension. 68.14 (b) No allowance for disabilityshallmay be made unless 68.15 notice of the disability and an application for benefits is made 68.16 by or on behalf of the disabled member within 90 days after the 68.17 beginning of the disability. This applicationshallmust 68.18 include a certificate from a qualifiedmedical professional68.19 expert setting forth the cause, nature, and extent of the 68.20 disability. This certificate must also conclude that the 68.21 disability was incurred or sustained while the member was in the 68.22 service of the fire department. 68.23 (c) The board shall utilize the board of examiners 68.24 establishedpursuant tounder section 423C.03, subdivision 6, to 68.25 investigate and report on an application for benefitspursuant68.26tounder this section and to make recommendations as to 68.27 eligibility and the benefit amount to be paid. 68.28 (d) A member entitled to a disability pensionshallmust 68.29 receive benefits in the amount and manner determined by the 68.30 board. 68.31 Sec. 36. Minnesota Statutes 2002, section 423C.05, 68.32 subdivision 5, is amended to read: 68.33 Subd. 5. [SERVICE-RELATED PERMANENT DISABILITY PENSION.] 68.34 An active member who becomes permanently disabled as the result 68.35 of a service-related disease or injuryshallis, upon 68.36 application and approval of the board,beentitled to a pension 69.1 of 41 units or in the amount determined under subdivision 8. 69.2 The application for service-related permanent disabilityshall69.3 must include a certificate from a qualifiedmedical professional69.4 expert setting forth the permanent nature of the disability or 69.5 disease and that it was service related. 69.6 Sec. 37. Minnesota Statutes 2002, section 423C.05, 69.7 subdivision 6, is amended to read: 69.8 Subd. 6. [NON-SERVICE-RELATED PERMANENT DISABILITY 69.9 PENSION.] An active member who, by sickness or accident, becomes 69.10 permanently disabled and unable to perform firefighter duties 69.11 for the fire department due to non-service-related disease or 69.12 injuryshall beis entitled to a permanent disability pension. 69.13 No allowance for disabilityshallmay be made unless notice of 69.14 the disability and an application for benefits is made by or on 69.15 behalf of the disabled member within 90 days after the beginning 69.16 of the disability. This applicationshallmust include a 69.17 certificate from a qualified medical professional setting forth 69.18 the cause, nature, and extent of the disability. A member 69.19 entitled to a disability pension under this subdivisionshall69.20 must receive benefits in the amount and manner determined by the 69.21 board, not to exceed 41 units. 69.22 Sec. 38. Minnesota Statutes 2002, section 423C.05, is 69.23 amended by adding a subdivision to read: 69.24 Subd. 6a. [QUALIFIED EXPERT.] A qualified expert includes 69.25 a licensed physician or chiropractor, or in the case of mental 69.26 impairment, includes a licensed psychologist. 69.27 Sec. 39. [REPEALER.] 69.28 (a) Minnesota Statutes 2002, sections 353.33, subdivision 69.29 5b; and 490.11, are repealed on July 1, 2004. 69.30 (b) Sections 3 and 19 are repealed on July 1, 2006. 69.31 Sec. 40. [EFFECTIVE DATE.] 69.32 Sections 1 to 39 are effective on July 1, 2004. 69.33 ARTICLE 9 69.34 DEATH AND SURVIVOR BENEFITS AND REFUNDS 69.35 Section 1. Minnesota Statutes 2002, section 3A.03, 69.36 subdivision 2, is amended to read: 70.1 Subd. 2. [REFUND.] (a)AnyA former member who has made 70.2 contributions under subdivision 1 and who is no longer a member 70.3 of the legislature is entitled to receive, upon written 70.4 application to the executive director on a form prescribed by 70.5 the executive director, a refund of all contributions credited 70.6 to the member's account with interestat an annual rate of six70.7percent compounded annuallycomputed as provided in section 70.8 352.22, subdivision 2. 70.9 (b) The refund of contributions as provided in paragraph (a) 70.10 terminates all rights of a former member of the legislatureor70.11 and the survivors of the former member under this chapter. 70.12 (c) If the former member of the legislature again becomes a 70.13 member of the legislature after having taken a refund as 70.14 provided in paragraph (a), the member must be considered a new 70.15 member of this plan. However,a newthe member may reinstate 70.16 the rights and credit for service previously forfeited if the 70.17newmember repays all refunds taken plus interest at an annual 70.18 rate of 8.5 percent compounded annually from the date on which 70.19 the refund was taken to the date on which the refund is repaid. 70.20(c)(d) No person may be required to apply for or to accept 70.21 a refund. 70.22 Sec. 2. Minnesota Statutes 2002, section 352.12, 70.23 subdivision 1, is amended to read: 70.24 Subdivision 1. [DEATH BEFORE TERMINATION OF SERVICE.] If 70.25 an employee dies before state service has terminated and neither 70.26 a survivor annuity nor a reversionary annuity is payable on 70.27 behalf of the employee, or if a former employee who has 70.28 sufficient service credit to be entitled to an annuity dies 70.29 before thebenefitannuity has become payable,the director70.30shall makea refund with interest is payable upon filing a 70.31 written application on a form prescribed by the executive 70.32 director. The refund is payable to the last designated 70.33 beneficiary or, if there is none, to the surviving spouse or, if 70.34 none, to the employee's surviving children in equal shares or, 70.35 if none, to the employee's surviving parents in equal shares or, 70.36 if none, to the representative of the estatein an amount equal71.1to the accumulated employee contributions plus interest at the71.2rate of six percent per annum compounded annually. Interest 71.3 must be computed as provided in section 352.22, subdivision 2,71.4to the first day of the month in which the refund is processed. 71.5 Upon the death of an employee who has received a refund that was 71.6 later repaid in full, interest must be paid on the repaid refund 71.7 only from the date of the repayment. If the repayment was made 71.8 in installments, interest must be paid only from the date on 71.9 which the installment payments began. The designated 71.10 beneficiary, the surviving spouse, or the representative of the 71.11 estate of an employee who had received a disability benefit is 71.12 not entitled to the payment of interest upon any balance 71.13 remaining to the decedent's credit in the fund at the time of 71.14 death, unless the death occurred before any payment could be 71.15 negotiated. 71.16 Sec. 3. Minnesota Statutes 2002, section 352.12, 71.17 subdivision 6, is amended to read: 71.18 Subd. 6. [DEATH AFTER SERVICE TERMINATION.] Except as 71.19 provided in subdivision 1, if a former employee covered by the 71.20 systemdies andwho has not received an annuity, a retirement 71.21 allowance, or a disability benefit dies, a refundmust be made71.22 is payable to the last designated beneficiary or, if there is 71.23 none, to the surviving spouse or, if none, to the employee's 71.24 surviving children in equal shares or, if none, to the 71.25 employee's surviving parents in equal shares or, if none, to the 71.26 representative of the estate in an amount equal to accumulated 71.27 employee contributions plus interest.The refund must include71.28interest at the rate of six percent per year compounded71.29annually.The interest on the refund must be computed as 71.30 provided in section 352.22, subdivision 2. 71.31 Sec. 4. Minnesota Statutes 2002, section 352.22, 71.32 subdivision 2, is amended to read: 71.33 Subd. 2. [AMOUNT OF REFUND.] Except as provided in 71.34 subdivision 3, the refund payable to a person who ceased to be a 71.35 state employee by reason of a termination of state service isin71.36 an amount equal to employee accumulated contributions plus 72.1 interest at the rate of six percent per year compoundedannually72.2 daily from the date that the contribution was made until the 72.3 date on which the refund is paid. Included with the refund is 72.4 any interest paid as part of repayment of a past refund, plus 72.5 interest thereon from the date of repayment.Interest must be72.6computed to the first day of the month in which the refund is72.7processed and must be based on fiscal year or monthly balances,72.8whichever applies.72.9 Sec. 5. Minnesota Statutes 2002, section 352.22, 72.10 subdivision 3, is amended to read: 72.11 Subd. 3. [DEFERRED ANNUITY.] (a) An employee who has at 72.12 least three years of allowable service when termination occurs 72.13 may elect to leave the accumulated contributions in the fund and 72.14 thereby be entitled to a deferred retirement annuity. The 72.15 annuity must be computed under the law in effect when state 72.16 service terminated, on the basis of the allowable service 72.17 credited to the person before the termination of service. 72.18 (b) An employee on layoff or on leave of absence without 72.19 pay, except a leave of absence for health reasons, and who does 72.20 not return to state serviceshallmust have an annuity, deferred 72.21 annuity, or other benefit to which the employee may become 72.22 entitled computed under the law in effect on the employee's last 72.23 working day. 72.24 (c) No application for a deferred annuity may be made more 72.25 than 60 days before the time the former employee reaches the 72.26 required age for entitlement to the payment of the annuity. The 72.27 deferred annuity begins to accrue no earlier than 60 days before 72.28 the date the application is filed in the office of the system, 72.29 but not (1) before the date on which the employee reaches the 72.30 required age for entitlement to the annuity nor (2) before the 72.31 day following the termination of state service in a 72.32 position which is not covered by the retirement system. 72.33 (d) Application for the accumulated contributions left on 72.34 deposit with the fund may be made at any timeafter 30 days72.35 following the date of the termination of service. 72.36 Sec. 6. Minnesota Statutes 2002, section 352B.10, 73.1 subdivision 5, is amended to read: 73.2 Subd. 5. [OPTIONAL ANNUITY.] Adisabled member73.3 disabilitant may elect, in lieu of spousal survivorship coverage 73.4 under section 352B.11,subdivision 2subdivisions 2b and 73.5 2c,choosethe normal disability benefit or an optional annuity 73.6 as provided in section 352B.08, subdivision 3. The choice of an 73.7 optional annuity must be made before the commencement of the 73.8 payment of the disability benefit, or within 90 daysof73.9attainingbefore reaching age 65 or reaching the five-year 73.10 anniversary of the effective date of the disability benefit, 73.11 whichever is later.ItThe optional annuity is effective on the 73.12 date on which the disability benefit begins to accrue, or the 73.13 month following attainment of age 65 or the five-year 73.14 anniversary of the effective date of the disability benefit, 73.15 whichever is later. 73.16 Sec. 7. Minnesota Statutes 2002, section 352B.11, 73.17 subdivision 1, is amended to read: 73.18 Subdivision 1. [REFUND OF PAYMENTS.] (a) A member who has 73.19 not received other benefits under this chapter is entitled to a 73.20 refund of payments made by salary deduction, plus interest, if 73.21 the member is separated, either voluntarily or involuntarily, 73.22 from the state service that entitled the member to membership. 73.23 (b) In the event of the member's death, if there are no 73.24 survivor benefits payable under this chapter, a refund plus 73.25 interest is payable to the last designated beneficiary on a form 73.26 filed with the director before death, or if no designation is 73.27 filed,the refundis payable to the member's estate. Interest 73.28 under this subdivision must becomputed at the rate of six73.29percent a year, compounded annuallycalculated as provided in 73.30 section 352.22, subdivision 2. To receive a refund, the 73.31 application must be made on a form prescribed by the executive 73.32 director. 73.33 Sec. 8. Minnesota Statutes 2002, section 352B.11, 73.34 subdivision 2, is amended to read: 73.35 Subd. 2. [DEATH; PAYMENT TOSPOUSE ANDDEPENDENT CHILDREN; 73.36 FAMILY MAXIMUMS.]If a member serving actively as a member, or a74.1member or former member receiving the disability benefit before74.2attaining age 65 or reaching the five-year anniversary of the74.3effective date of the disability benefit, whichever is later,74.4provided by section 352B.10, subdivisions 1 and 2, dies from any74.5cause before attaining age 65 or reaching the five-year74.6anniversary of the effective date of the disability benefit,74.7whichever is later, the surviving spouse and dependent children74.8are entitled to benefit payments as follows:74.9(a) A member with at least three years of allowable service74.10is deemed to have elected a 100 percent joint and survivor74.11annuity payable to a surviving spouse only on or after the date74.12the member or former member became or would have become 55.74.13(b) The surviving spouse of a member who had credit for74.14less than three years of service shall receive, for life, a74.15monthly annuity equal to 50 percent of that part of the average74.16monthly salary of the member from which deductions were made for74.17retirement.74.18(c) The surviving spouse of a member who had credit for at74.19least three years service and who died after becoming 55 years74.20old, may elect to receive a 100 percent joint and survivor74.21annuity, for life, notwithstanding a subsequent remarriage, in74.22lieu of the annuity prescribed in paragraph (b).74.23(d) The surviving spouse of any member who had credit for74.24three years or more and who was not 55 years old at death, shall74.25receive the benefit equal to 50 percent of the average monthly74.26salary as described in clause (b) until the deceased member74.27would have become 55 years old, and beginning the first of the74.28month following that date, may elect to receive the 100 percent74.29joint and survivor annuity.74.30(e)Each dependent child, as defined in section 352B.01, 74.31 subdivision 10,shallis entitled to receive a monthly annuity 74.32 equal to ten percent ofthat part ofthe average monthly salary 74.33 of theformerdeceased memberfrom which deductions were made74.34for retirement. A dependent child over 18 and under 23 years of 74.35 age also may receive the monthly benefit provided in this 74.36 section,if the child is continuously attending an accredited 75.1 school as a full-time student during the normal school year as 75.2 determined by the director. If the child does not continuously 75.3 attend school, but separates from full-time attendance during 75.4 any part of a school year, the annuityshallmust cease at the 75.5 end of the month of separation. In addition, a payment of $20 75.6 per monthshallmust be prorated equally to surviving dependent 75.7 children when the former member is survived by one or more 75.8 dependent children. Payments for the benefit of anyqualified75.9 dependent child must be made to the surviving spouse, or if 75.10 there is none, to the legal guardian of the child. Themaximum75.11 monthly benefit for any one family, including a surviving spouse 75.12 benefit, if applicable, must not be less than 50 percent nor 75.13 exceed 70 percent of the average monthly salaryfor any number75.14of childrenof the deceased member. 75.15(f) If the member dies under circumstances that entitle the75.16surviving spouse and dependent children to receive benefits75.17under the workers' compensation law, the workers' compensation75.18benefits received by them must not be deducted from the benefits75.19payable under this section.75.20(g) The surviving spouse of a deceased former member who75.21had credit for three or more years of allowable service, but not75.22the spouse of a former member receiving a disability benefit75.23under section 352B.10, subdivision 2, is entitled to receive the75.24100 percent joint and survivor annuity at the time the deceased75.25member would have become 55 years old. If a former member dies75.26who does not qualify for other benefits under this chapter, the75.27surviving spouse or, if none, the children or heirs are entitled75.28to a refund of the accumulated deductions left in the fund plus75.29interest at the rate of six percent per year compounded annually.75.30 Sec. 9. Minnesota Statutes 2002, section 352B.11, is 75.31 amended by adding a subdivision to read: 75.32 Subd. 2b. [SURVIVING SPOUSE BENEFIT ELIGIBILITY.] (a) If 75.33 an active member with three or more years of allowable service 75.34 dies before attaining age 55, the surviving spouse is entitled 75.35 to the benefit specified in subdivision 2c, paragraph (b). 75.36 (b) If an active member with less than three years of 76.1 allowable service dies at any age, the surviving spouse is 76.2 entitled to receive the benefit specified in subdivision 2c, 76.3 paragraph (c). 76.4 (c) If an active member with three or more years of 76.5 allowable service dies on or after attaining exact age 55, the 76.6 surviving spouse is entitled to receive the benefits specified 76.7 in subdivision 2c, paragraph (d). 76.8 (d) If a disabilitant dies while receiving a disability 76.9 benefit under section 352B.10 or before the benefit under that 76.10 section commenced, and an optional annuity was not elected under 76.11 section 352B.10, subdivision 5, the surviving spouse is entitled 76.12 to receive the benefit specified in subdivision 2c, paragraph 76.13 (b). 76.14 (e) If a former member with three or more years of 76.15 allowable service, who terminated from service and has not 76.16 received a refund or commenced receipt of any other benefit 76.17 provided by this chapter, dies, the surviving spouse is entitled 76.18 to receive the benefit specified in subdivision 2c, paragraph 76.19 (e). 76.20 (f) If a former member with less than three years of 76.21 allowable service, who terminated from service and has not 76.22 received a refund or commenced receipt of any other benefit, if 76.23 applicable, provided by this chapter, dies, the surviving spouse 76.24 is entitled to receive the refund specified in subdivision 2c, 76.25 paragraph (f). 76.26 Sec. 10. Minnesota Statutes 2002, section 352B.11, is 76.27 amended by adding a subdivision to read: 76.28 Subd. 2c. [SURVIVING SPOUSE BENEFIT ENTITLEMENTS.] (a) A 76.29 surviving spouse specified in subdivision 2b is eligible to 76.30 receive, following the filing of a valid application and 76.31 consistent with any other applicable requirements, a benefit as 76.32 specified in this subdivision. A 100 percent joint and survivor 76.33 annuity under paragraph (b) must be computed assuming the exact 76.34 age 55 for the deceased and the age of the surviving spouse on 76.35 the date of death. A 100 percent joint and survivor annuity 76.36 under paragraph (d) or (e) must be computed using the age of the 77.1 deceased on the date of death and the age of the surviving 77.2 spouse on that same date. 77.3 (b) For a surviving spouse specified in subdivision 2b, 77.4 paragraph (a) or (d), the surviving spouse benefit is a benefit 77.5 for life equal to 50 percent of the average monthly salary of 77.6 the deceased member. On the first of the month next following 77.7 the date on which the deceased member would have attained exact 77.8 age 55, in lieu of continued receipt of the prior benefit, the 77.9 surviving spouse is eligible to commence receipt of the second 77.10 half of a 100 percent joint and survivor annuity, if this 77.11 provides a larger benefit. 77.12 (c) For a surviving spouse specified in subdivision 2b, 77.13 paragraph (b), the surviving spouse benefit is a benefit for 77.14 life equal to 50 percent of the average monthly salary of the 77.15 deceased member. 77.16 (d) For a surviving spouse specified in subdivision 2b, 77.17 paragraph (c), the surviving spouse benefit is a benefit for 77.18 life equal to 50 percent of the average monthly salary of the 77.19 deceased member, or the second half of a 100 percent joint and 77.20 survivor annuity, whichever is larger. 77.21 (e) For a surviving spouse specified in subdivision 2b, 77.22 paragraph (e), the surviving spouse benefit is the second half 77.23 of a 100 percent joint and survivor annuity, commencing on the 77.24 first of the month next following the deceased member's date of 77.25 death, or the first of the month next following the date on 77.26 which the deceased member would have attained age 55, whichever 77.27 is later. 77.28 (f) For a surviving spouse specified in subdivision 2b, 77.29 paragraph (f), the surviving spouse or, if none, the children 77.30 or, if none, the deceased member's estate, is entitled to a 77.31 refund of the employee contributions plus interest computed as 77.32 specified in subdivision 1. 77.33 Sec. 11. Minnesota Statutes 2002, section 352B.11, is 77.34 amended by adding a subdivision to read: 77.35 Subd. 2d. [COORDINATION WITH WORKERS' COMPENSATION 77.36 BENEFITS.] If the deceased member died under circumstances that 78.1 entitle the surviving spouse and the dependent child or children 78.2 to receive benefits under workers' compensation law, the 78.3 workers' compensation benefits received by the deceased member's 78.4 survivor or survivors must not be deducted from the benefits 78.5 payable under this section. 78.6 Sec. 12. Minnesota Statutes 2002, section 352D.075, 78.7 subdivision 2, is amended to read: 78.8 Subd. 2. [SURVIVING SPOUSE BENEFIT.] (a) Notwithstanding 78.9 any designation of a beneficiary to the contrary, if a 78.10 participant or a former participant diesleaving a spouse and78.11there is no named beneficiary who survives to receive payment or78.12the spouse is named beneficiarybefore an annuity or a 78.13 disability benefit becomes payable, the surviving spousemayis 78.14 entitled to receive: 78.15 (1) a lump sum payment of the value of the participant's 78.16 total shares; 78.17 (2)Thea lump sum payment of a portion of the value of 78.18one-half ofthe total shares andbeginning at age 55 or78.19thereafter, at any time after the participant's death,receive78.20 an annuity based on the remaining value ofone-half ofthe total 78.21 shares, provided that. If the spouse dies before receiving any 78.22 annuity payments, the remaining value ofsaidthe sharesshall78.23be paidis payable to the spouse's children in equal shares,but78.24 and if nosuchchildren survive, then to the parents of the 78.25 spouse in equal shares,butand if nosuchchildren or parents 78.26 survive, then to the estate of the spouse; or 78.27 (3)Beginning at age 55 or thereafterat any time after the 78.28 participant's death,receivean annuity based on the value of 78.29 the total shares, provided that. If the spouse dies before 78.30 receiving any annuity payments, the value ofsaidthe shares 78.31shall be paidis payable to the spouse's children in equal 78.32 shares,butand if nosuchchildren survive, then to the parents 78.33 of the spouse in equal shares,butand if no such children or 78.34 parents survive, then to the estate of the spouse; andfurther78.35provided,ifsaidthe spouse dies after receiving annuity 78.36 payments but before receiving payments equal to the value of the 79.1 employee shares, the value of the employee shares 79.2 remainingshall be paidis payable to the spouse's children in 79.3 equal shares,butand if nosuchchildren survive, then to the 79.4 parents of the spouse in equal shares,butand if nosuch79.5 children or parents survive, then to the estate of the spouse. 79.6 (b) A participant or a former participant and the person's 79.7 spouse may make a joint specification, in writing, on a form 79.8 prescribed by the executive director, that the benefits provided 79.9 in this section must be paid only to the designated beneficiary. 79.10 Sec. 13. Minnesota Statutes 2002, section 352D.075, is 79.11 amended by adding a subdivision to read: 79.12 Subd. 2a. [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 79.13 lieu of the annuity under subdivision 2, clause (2) or (3), or 79.14 in lieu of a distribution under subdivision 2, clause (1), the 79.15 surviving spouse of a deceased participant may elect to receive 79.16 survivor coverage in the form of a term certain annuity of five, 79.17 six, 15, or 20 years, based on the value of the remaining 79.18 shares. The monthly term certain annuity must be calculated 79.19 under section 352D.06, subdivision 1. 79.20 Sec. 14. Minnesota Statutes 2002, section 352D.075, 79.21 subdivision 3, is amended to read: 79.22 Subd. 3. [REFUND TO BENEFICIARY.] If a participant dies 79.23 and hasnamed a beneficiaryno surviving spouse, the value of 79.24 the total sharesshall be paidis payable tosucha designated 79.25 beneficiary, but ifsuchthe beneficiary dies before receiving 79.26 payment, or if no beneficiary has been namedand there is no79.27spouse, the value ofsaidthe sharesshall be paidis payable 79.28 to the children of the participant in equal shares,butor if no 79.29suchchildren survive, then in equal shares to the parents of 79.30 the participant,butor if nosuch children orparents survive, 79.31 then to the estate of the participant. 79.32 Sec. 15. [352F.052] [APPLICATION OF SURVIVING SPOUSE, 79.33 DEPENDENT CHILD PROVISION.] 79.34 Notwithstanding any provisions of law to the contrary, 79.35 subdivisions within section 352.12 of the edition of Minnesota 79.36 Statutes published in the year before the year in which a 80.1 privatization occurred, applicable to the surviving spouse or 80.2 dependent children of a former member, apply to the survivors of 80.3 a terminated hospital employee of Fairview, University of 80.4 Minnesota Physicians, or University Affiliated Family Physicians. 80.5 Sec. 16. [353F.052] [APPLICATION OF SURVIVING SPOUSE, 80.6 DEPENDENT CHILD PROVISION.] 80.7 Notwithstanding any provisions of law to the contrary, 80.8 subdivisions within section 353.32 of the edition of Minnesota 80.9 Statutes published in the year before the year in which a 80.10 privatization occurred, applicable to the surviving spouse or 80.11 dependent children of a former member as defined in section 80.12 353.01, subdivision 7a, apply to the survivors of a terminated 80.13 medical facility or other public employing unit employee. 80.14 Sec. 17. Minnesota Statutes 2002, section 354.05, 80.15 subdivision 22, is amended to read: 80.16 Subd. 22. [DESIGNATED BENEFICIARY.] "Designated 80.17 beneficiary" means the person, trust, or organization designated 80.18 by a retiree or member to receive the benefits to which a 80.19 beneficiary is entitled under this chapter. A beneficiary 80.20 designation is valid only if it is made on an appropriate form 80.21 provided by the executive director that is signed by the member 80.22and two witnesses to the member's signature. The properly 80.23 completed form must be received by the association on or before 80.24 the date of death of the retiree or member. If a retiree or a 80.25 member does not designate a person, trust, or organization, or 80.26 if the person who was designated predeceases the retiree or the 80.27 member, or if the trust or organization ceases to exist before 80.28 the death of the retiree or the member, the designated 80.29 beneficiarymeansis the estate of the deceased retiree or 80.30 member. 80.31 Sec. 18. Minnesota Statutes 2002, section 354.46, 80.32 subdivision 2, is amended to read: 80.33 Subd. 2. [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY80.34BENEFITSURVIVING SPOUSE SURVIVOR COVERAGE.] (a)The surviving80.35spouse of any member or former member who hasIf the active or 80.36 deferred member was at least age 55 and had credit for at least 81.1 three years of allowable service on the date of death, the 81.2 surviving spouse is entitled to the second portion of a 100 81.3 percent joint and survivor annuitycoverage in the event of81.4death of the member prior to retirement. If the surviving81.5spouse does not elect to receive a surviving spouse benefit81.6under subdivision 1, if applicable, or does not elect to receive81.7a refund of accumulated member contributions under section81.8354.47, subdivision 1, the surviving spouse is entitled to81.9receive, upon written application on a form prescribed by the81.10executive director, a benefit equal to the second portion of a81.11100 percent joint and survivor annuityspecified under section 81.12 354.45, based on the age of the active or deferred memberand81.13surviving spouseat the time of deathof the member,and 81.14computed under section 354.44, subdivision 2 or 6, whichever is81.15applicablethe age of the surviving spouse at the time the 81.16 benefit accrues. 81.17 (b) If the active or deferred member was under age 55 and 81.18hashad credit for at least 30 years of allowable service on the 81.19 date of death, the surviving spouse may elect to receive the 81.20 second portion of a 100 percent joint and survivor annuity based 81.21 on the age of the active or deferred memberand surviving spouse81.22 on the date of death and the age of the surviving spouse at the 81.23 time the benefit accrues. If section 354.44, subdivision 6, 81.24 applies, the annuity is payable using the full early retirement 81.25 reduction under section 354.44, subdivision 6,paragraph81.26 clause (3)(ii), to age 55 and one-half of the early retirement 81.27 reduction from age 55 to the age payment begins. 81.28 (c) If the active or deferred member was under age 55 and 81.29hashad credit for at least three years of allowable service on 81.30 the date of death, but did not yet qualify for retirement, the 81.31 surviving spouse may elect to receive the second portion of a 81.32 100 percent joint and survivor annuity based on the age of 81.33 the active or deferred memberand the surviving spouseat the 81.34 time of death and the age of the surviving spouse at the time 81.35 the benefit accrues. If section 354.44, subdivision 6, applies, 81.36 the annuity is calculated using the full early retirement 82.1 reduction under section 354.44, subdivision 6, to age 55 and 82.2 one-half of the early retirement reduction from age 55 to the 82.3 age the annuity begins.The surviving spouse eligible for a82.4surviving spouse benefit under paragraph (a) may apply for the82.5annuity at any time after the date on which the deceased82.6employee would have attained the required age for retirement82.7based on the employee's allowable service.82.8 (d) The surviving spouse eligible for surviving spouse 82.9 benefits underparagraph (b) or (c)this subdivision may apply 82.10 for the annuity any time after the member's death.ThisThe 82.11 benefitaccrues from the day following the date of the member's82.12death butmay not begin to accrue more than six months before 82.13 the date the application is filed with the executive 82.14 director and may not accrue before the member's death.Sections82.15354.55, subdivision 11, and 354.60 apply to a deferred annuity82.16payable under this section.The benefit is payable for life. 82.17 Any benefit under this subdivision is in lieu of benefits under 82.18 subdivision 1, if applicable, and in lieu of a refund of 82.19 accumulated member contributions under section 354.47, 82.20 subdivision 1. 82.21 (e) For purposes of this subdivision, a designated 82.22 beneficiary must be a former spouse or a biological or adopted 82.23 child of the member. 82.24 Sec. 19. Minnesota Statutes 2002, section 354.46, 82.25 subdivision 2b, is amended to read: 82.26 Subd. 2b. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 82.27 no surviving spouse eligible for benefits under subdivision 2,a82.28 each dependent childor childrenas defined in section 354.05, 82.29 subdivision 8a, is eligible for monthlypaymentssurviving child 82.30 benefits.PaymentsSurviving child benefits to a dependent 82.31 child must be paid from the date of the member's death to the 82.32 date the dependent child attains age 20 if the child is under 82.33 age 15 on the date of the member's death. If the child is 15 82.34 years or older on the date of the member's death,payment must82.35be madethe surviving child benefit is payable for five years. 82.36 Thepayment to adependent surviving child benefit is an amount 83.1 actuarially equivalent to the value of a 100 percent optional 83.2 annuity under subdivision 2 calculated using the age of the 83.3 member and age of the dependent childatas of the date of death 83.4 in lieu of the age of the member and the spouse. If there is 83.5 more than one dependent child, each dependent childshallis 83.6 entitled to receive a proportionate share of the actuarial value 83.7 of the member's account. 83.8 Sec. 20. Minnesota Statutes 2002, section 354.46, 83.9 subdivision 5, is amended to read: 83.10 Subd. 5. [PAYMENT TO DESIGNATED BENEFICIARY.] A memberand83.11 who is single or, if the member is married, a member and the 83.12 spouse of the member jointly, may make ajointspecification in 83.13 writing on a form prescribed by the executive director that the 83.14 benefits provided in subdivision 2, or in section 354.47, 83.15 subdivision 1, must be paid only to a designated beneficiary or 83.16 to designated beneficiaries. For purposes of subdivision 2, a 83.17 designated beneficiary may only be either a former spouse or a 83.18 biological or an adopted child of the member. 83.19 Sec. 21. Minnesota Statutes 2002, section 354.46, is 83.20 amended by adding a subdivision to read: 83.21 Subd. 6. [APPLICATION.] (a) A beneficiary designation and 83.22 an application for benefits under this section must be in 83.23 writing on a form prescribed by the executive director. 83.24 (b) Sections 354.55, subdivision 11, and 354.60 apply to a 83.25 deferred annuity payable under this section. 83.26 (c) Unless otherwise specified, the annuity must be 83.27 computed under section 354.44, subdivision 2 or 6, whichever is 83.28 applicable. 83.29 Sec. 22. Minnesota Statutes 2002, section 356.441, is 83.30 amended to read: 83.31 356.441 [REPAYMENT OF REFUNDSPAYMENT ACCEPTANCE ALLOWED.] 83.32 Subdivision 1. [PAYMENT AUTHORIZATION.] The repayment of a 83.33 refund and interest on that refund or the payment of equivalent 83.34 contributions and interest for an eligible leave of absence, as 83.35 permitted under laws governing any public pension plan in 83.36 Minnesota, may be made: 84.1 (1) with funds distributed or transferred from a plan 84.2 qualified under the federal Internal Revenue Code of 1986, 84.3 section 401, subsection (a) or (k); 403; 408; or 457, subsection 84.4 (b), as amendedthrough December 31, 1988, or an annuity84.5qualified under the federal Internal Revenue Code of 1986,84.6section 403(a). Repayment may also be madefrom time to time; 84.7 or 84.8 (2) with funds distributed from an individual retirement 84.9 accountused solely to receive aor individual retirement 84.10 annuity, if done solely in a manner that is eligible for 84.11 treatment as a nontaxable rolloverfrom that type of a plan or84.12annuityor transfer under the applicable federal law.The84.13repaid refund84.14 Subd. 2. [SEPARATE ACCOUNTING REQUIREMENT.] Nontaxable 84.15 rollovers or transfer amounts under subdivision 1 received by a 84.16 public pension fund must be separately accounted for as member 84.17 contributions not previously taxed. Before accepting 84.18 any rollovers or transfers to which this section applies, the 84.19 executive directormustshall require the member to provide 84.20 written documentation to demonstrate that the amounts to 84.21 be rolled over or transferred are eligible for a tax-free 84.22 rollover or transfer and qualify for that treatment under the 84.23 federal Internal Revenue Code of 1986, as amended. 84.24 Sec. 23. Minnesota Statutes 2002, section 490.124, 84.25 subdivision 12, is amended to read: 84.26 Subd. 12. [REFUND.] (a)AnyA person who ceases to be a 84.27 judge but who does not qualify for a retirement annuity or other 84.28 benefit under section 490.121shall beis entitled to a refund 84.29 in an amount equal to all theperson'smember's employee 84.30 contributions to the judges' retirement fund plus interest 84.31 computedto the first day of the month in which the refund is84.32processed based on fiscal year balances at an annual rate of84.33five percent compounded annuallyunder section 352.22, 84.34 subdivision 2. 84.35 (b) A refund of contributions under paragraph (a) 84.36 terminates all service credits and all rights and benefits of 85.1 the judge and the judge's survivors. A person who becomes a 85.2 judge again after taking a refund under paragraph (a) may 85.3 reinstate the previously terminated service credits, rights, and 85.4 benefits by repayingall refundsthe total amount of the 85.5 previously received refund.AThe refund repayment must include 85.6 interest on the total amount previously received at an annual 85.7 rate of 8.5 percent compounded annually from the date on which 85.8 the refund was received until the date on which the refund is 85.9 repaid. 85.10 Sec. 24. [TEACHERS RETIREMENT ASSOCIATION; BENEFICIARY 85.11 DESIGNATION.] 85.12 (a) An eligible person described in paragraph (b) is 85.13 entitled to make a specification that the benefits provided in 85.14 Minnesota Statutes, section 354.46, subdivision 2, or in 85.15 Minnesota Statutes, section 354.47, subdivision 1, may be paid 85.16 only to a designated beneficiary or beneficiaries. 85.17 (b) An eligible person is a person who: 85.18 (1) was born on July 9, 1956; 85.19 (2) is employed as a teacher by Independent School District 85.20 No. 535, Rochester; 85.21 (3) is a member of the Teachers Retirement Association; 85.22 (4) has more than 19 years of allowable service credit in 85.23 the Teachers Retirement Association; 85.24 (5) has two minor children; 85.25 (6) has no potential surviving spouse by virtue of a prior 85.26 marriage dissolution; and 85.27 (7) has been diagnosed with a serious medical condition 85.28 that is life threatening. 85.29 (c) The designated beneficiary or beneficiaries may only be 85.30 a biological or adopted child, the biological or adopted 85.31 children of the eligible person, or a trust established for the 85.32 child or children if the trust is required to provide for the 85.33 proper health, support, maintenance, and education of the 85.34 dependent child or children. If two or more children are 85.35 designated or if a trust established for more than one child is 85.36 designated, the benefit payable to or on behalf of each child is 86.1 an equal share of the total benefit. 86.2 (d) The specification must be made in writing on a form 86.3 prescribed by the executive director of the Teachers Retirement 86.4 Association. 86.5 Sec. 25. [REPEALER.] 86.6 Minnesota Statutes 2002, section 354A.107, is repealed. 86.7 Sec. 26. [EFFECTIVE DATE.] 86.8 (a) Sections 1 to 25 are effective on July 1, 2004. 86.9 (b) Sections 8 to 11 are not intended to increase, modify, 86.10 impair, or diminish the benefit entitlements specified in 86.11 Minnesota Statutes, chapter 352B. If the Minnesota State 86.12 Retirement System executive director determines that any 86.13 provision of those sections does increase, modify, impair, or 86.14 diminish the benefit entitlements as reflected in applicable law 86.15 just prior to the effective date of this section, the executive 86.16 director shall certify that determination and a recommendation 86.17 as to the required legislative correction to the chairs of the 86.18 Legislative Commission on Pensions and Retirement, the house 86.19 Governmental Operations Committee, the senate Governmental 86.20 Operations Committee, and the executive director of the 86.21 Legislative Commission on Pensions and Retirement. 86.22 (c) Consistent with Minnesota Statutes, section 645.21, and 86.23 public pension policy in general, the increased interest rate 86.24 provided on a refund under section 23 applies only to judges 86.25 whose termination of service occurs on or after July 1, 2004. 86.26 ARTICLE 10 86.27 FEDERAL INTERNAL REVENUE 86.28 CODE COMPLIANCE 86.29 Section 1. Minnesota Statutes 2002, section 356.611, is 86.30 amended by adding a subdivision to read: 86.31 Subd. 4. [COMPENSATION.] (a) For purposes of this section, 86.32 compensation means a member's compensation actually paid or made 86.33 available for any limitation year determined as provided by 86.34 Treasury Regulation Section 1.415-2(d)(10). 86.35 (b) Compensation for any period includes: 86.36 (1) any elective deferral as defined in section 402(g)(3) 87.1 of the Internal Revenue Code; 87.2 (2) any elective amounts that are not includable in a 87.3 member's gross income by reason of sections 125 or 457 of the 87.4 Internal Revenue Code; and 87.5 (3) any elective amounts that are not includable in a 87.6 member's gross income by reason of section 132(f)(4) of the 87.7 Internal Revenue Code. 87.8 Sec. 2. [356.635] [INTERNAL REVENUE CODE COMPLIANCE.] 87.9 Subdivision 1. [RETIREMENT BENEFIT COMMENCEMENT.] The 87.10 retirement benefit of a member who has terminated employment 87.11 must begin no later than the later of April 1 of the calendar 87.12 year following the calendar year that the member attains the 87.13 federal minimum distribution age under section 401(a)(9) of the 87.14 Internal Revenue Code or April 1 of the calendar year following 87.15 the calendar year in which the member terminated employment. 87.16 Subd. 2. [DISTRIBUTIONS.] Distributions shall be made as 87.17 required under section 401(a)(9) of the Internal Revenue Code 87.18 and the treasury regulations adopted under that section, 87.19 including, but not limited to, the incidental death benefit 87.20 provisions of section 401(a)(9)(G) of the Internal Revenue Code. 87.21 Subd. 3. [DIRECT ROLLOVERS.] A distributee may elect, at 87.22 the time and in the manner prescribed by the plan administrator, 87.23 to have all or any portion of an eligible rollover distribution 87.24 paid directly to an eligible retirement plan as specified by the 87.25 distributee. 87.26 Subd. 4. [ELIGIBLE ROLLOVER DISTRIBUTION.] An "eligible 87.27 rollover distribution" is any distribution of all or any portion 87.28 of the balance to the credit of the distributee. 87.29 Subd. 5. [INELIGIBLE AMOUNTS.] An eligible rollover 87.30 distribution does not include: 87.31 (1) a distribution that is one of a series of substantially 87.32 equal periodic payments, receivable annually or more frequently, 87.33 that is made for the life or life expectancy of the distributee, 87.34 the joint lives or joint life expectancies of the distributee 87.35 and the distributee's designated beneficiary, or for a specified 87.36 period of ten years or more; 88.1 (2) a distribution that is required under section 401(a)(9) 88.2 of the Internal Revenue Code; or 88.3 (3) any other exception required by law or the Internal 88.4 Revenue Code. 88.5 Subd. 6. [ELIGIBLE RETIREMENT PLAN.] (a) An "eligible 88.6 retirement plan" is: 88.7 (1) an individual retirement account under section 408(a) 88.8 of the Internal Revenue Code; 88.9 (2) an individual retirement annuity plan under section 88.10 408(b) of the Internal Revenue Code; 88.11 (3) an annuity plan under section 403(a) of the Internal 88.12 Revenue Code; 88.13 (4) a qualified trust plan under section 401(a) of the 88.14 Internal Revenue Code that accepts the distributee's eligible 88.15 rollover distribution; 88.16 (5) an annuity contract under section 403(b) of the 88.17 Internal Revenue Code; or 88.18 (6) an eligible deferred compensation plan under section 88.19 457(b) of the Internal Revenue Code, which is maintained by a 88.20 state or local government and which agrees to separately account 88.21 for the amounts transferred into the plan. 88.22 (b) For distributions of after-tax contributions which are 88.23 not includable in gross income, the after-tax portion may be 88.24 transferred only to an individual retirement account or annuity 88.25 described in section 408(a) or (b) of the Internal Revenue Code, 88.26 or to a qualified defined contribution plan described in either 88.27 section 401(a), or section 403(a), of the Internal Revenue Code, 88.28 that agrees to separately account for the amounts transferred, 88.29 including separately accounting for the portion of the 88.30 distribution which is includable in gross income and the portion 88.31 of the distribution which is not includable. 88.32 Subd. 7. [DISTRIBUTEE.] A "distributee" is: 88.33 (1) an employee or a former employee; 88.34 (2) the surviving spouse of an employee or former employee; 88.35 or 88.36 (3) the former spouse of the employee or former employee 89.1 who is the alternate payee under a qualified domestic relations 89.2 order as defined in section 414(p) of the Internal Revenue Code, 89.3 or who is a recipient of a court-ordered equitable distribution 89.4 of marital property, as provided in section 518.58. 89.5 Subd. 8. [FORFEITURES.] For defined benefit plans, unless 89.6 otherwise permitted by section 401(a)(8) of the Internal Revenue 89.7 Code, forfeitures may not be applied to increase the benefits 89.8 that any employee would otherwise receive under the plan. 89.9 Subd. 9. [MILITARY SERVICE.] Contributions, benefits, and 89.10 service credit with respect to qualified military service must 89.11 be provided according to section 414(u) of the Internal Revenue 89.12 Code. 89.13 Sec. 3. [TRANSITIONAL PROVISION.] 89.14 (a) An eligible rollover distribution under Minnesota 89.15 Statutes, section 356.635, does not include the portion of a 89.16 distribution that is not included in gross income. 89.17 (b) For eligible rollover distributions to a surviving 89.18 spouse, an eligible retirement plan under Minnesota Statutes, 89.19 section 356.635, is limited to an individual retirement account 89.20 under section 408(a) of the Internal Revenue Code or an 89.21 individual retirement annuity plan under section 408(b) of the 89.22 Internal Revenue Code. 89.23 Sec. 4. [EFFECTIVE DATE.] 89.24 (a) Section 1, paragraph (a), is effective on July 1, 2004. 89.25 Section 1, paragraph (b), is effective retroactively as 89.26 follows: clauses (1) and (2) are effective for limitation years 89.27 beginning on and after January 1, 1998; and clause (3) is 89.28 effective for limitation years beginning on and after January 1, 89.29 2001. 89.30 (b) Sections 2 and 3 are effective on the day following 89.31 final enactment. 89.32 (c) Section 2 is effective retroactively as follows: 89.33 subdivision 1 is effective on and after January 1, 1989; 89.34 subdivision 2 is effective for distributions on and after 89.35 December 31, 1989; subdivision 3 is effective for distributions 89.36 on and after January 1, 1993; subdivision 6, paragraph (a), 90.1 clauses (5) and (6), are effective for distributions made after 90.2 December 31, 2001; subdivision 6, paragraph (b), is effective 90.3 for distributions after December 31, 2001; and subdivision 9 is 90.4 effective December 12, 1994. 90.5 (d) Section 3 is effective only for distributions made 90.6 before January 1, 2002. 90.7 ARTICLE 11 90.8 HEALTH CARE SAVINGS 90.9 PLAN MODIFICATIONS 90.10 Section 1. Minnesota Statutes 2002, section 352.98, is 90.11 amended to read: 90.12 352.98 [POSTRETIREMENTHEALTH CARE SAVINGS PLAN.] 90.13 Subdivision 1. [PLAN CREATED.] The Minnesota State 90.14 Retirement System shall establish a plan or plans, known as 90.15postretirementhealth care savings plans, through which public 90.16 employers and employees may save to coverpostretirementhealth 90.17 care costs. The Minnesota State Retirement System shall make 90.18 available one or more trusts, including a governmental trust or 90.19 governmental trusts, authorized under the Internal Revenue Code 90.20 to be eligible for tax-preferred or tax-free treatment through 90.21 which employers and employees can save to coverpostretirement90.22 health care costs. 90.23 Subd. 2. [CONTRACTING AUTHORIZED.] The Minnesota State 90.24 Retirement System is authorized to administer the plan and to 90.25 contract with public and private entities to provide investment 90.26 services, record keeping, benefit payments, and other functions 90.27 necessary for the administration of the plan. If allowed by the 90.28 Minnesota State Board of Investment, the Minnesota State Board 90.29 of Investment supplemental investment funds may be offered as 90.30 investment options under thepostretirementhealth care savings 90.31 plan or plans. 90.32 Subd. 3. [CONTRIBUTIONS.] (a) Contributions to the plan 90.33 shall be determined through a personnel policy or in a 90.34 collective bargaining agreement of a public employer with the 90.35 exclusive representative of the covered employees in an 90.36 appropriate unit. The Minnesota State Retirement System may 91.1 offer different types of trusts permitted under the Internal 91.2 Revenue Code to best meet the needs of different employee units. 91.3 (b) Contributions to the plan by or on behalf of the 91.4 employee shall be held in trust for reimbursement of employee 91.5 and dependent health-related expenses following retirement from 91.6 public employment or during active employment. The Minnesota 91.7 State Retirement System shall maintain a separate account of the 91.8 contributions made by or on behalf of each participant and the 91.9 earnings thereon. The Minnesota State Retirement System shall 91.10 make available a limited range of investment options, and each 91.11 employee may direct the investment of the accumulations in the 91.12 employee's account among the investment options made available 91.13 by the Minnesota State Retirement System. At the request of a 91.14 participating employer and employee group, the Minnesota State 91.15 Retirement System may determine how the assets of the affected 91.16 employer and employee group should be invested. 91.17 (c) This section does not obligate a public employer to 91.18 meet and negotiate in good faith with the exclusive bargaining 91.19 representative of any public employee group regarding an 91.20 employer contribution to a postretirement or active employee 91.21 health care savings plan authorized by this section and section 91.22 356.24, subdivision 1, clause (7). It is not the intent of the 91.23 legislature to authorize the state to incur new funding 91.24 obligations for the costs of retiree health care or the costs of 91.25 administering retiree health care plans or accounts. 91.26 Subd. 4. [REIMBURSEMENT FOR HEALTH-RELATED EXPENSES.] 91.27Following termination of public service,The Minnesota State 91.28 Retirement System shall reimburse employees at least quarterly 91.29 for submitted health-related expenses, as required by federal 91.30 and state law, until the employee exhausts the accumulation in 91.31 the employee's account. If an employee dies prior to exhausting 91.32 the employee's account balance, the employee's spouse or 91.33 dependents shall be eligible to be reimbursed for health care 91.34 expenses from the account until the account balance is 91.35 exhausted. If an account balance remains after the death of a 91.36 participant and all of the participant's legal dependents, the 92.1 remainder of the account shall be paid to the employee's 92.2 beneficiaries or, if none, to the employee's estate. 92.3 Subd. 5. [FEES.] The Minnesota state retirement plan is 92.4 authorized to charge uniform fees to participants to cover the 92.5 ongoing cost of operating the plan. Any fees not needed shall 92.6 revert to participant accounts or be used to reduce plan fees 92.7 the following year.The Minnesota State Retirement System is92.8authorized to charge participating employers a fee, not to92.9exceed one-sixth of the Federal Insurance Contribution Act92.10savings realized by the employer as a result of participating in92.11the plan, until the initial costs of establishing the plan or92.12plans authorized by this section are recovered, or $75,000,92.13whichever is less.92.14 Subd. 6. [ADVISORY COMMITTEE.] (a) The Minnesota State 92.15 Retirement System shall establish a participant advisory 92.16 committee for the health care savings plan, made up of one 92.17 representative appointed by each employee unit participating in 92.18 the plan. Each participating unit shall be responsible for the 92.19 expenses of its own representative. 92.20 (b) The advisory committee shall meet at least twice per 92.21 year and shall be consulted on plan offerings and vendor 92.22 selection. By October 1 of each year, the Minnesota State 92.23 Retirement System shall give the advisory committee a statement 92.24 of fees collected and the use of the fees. 92.25 Subd. 7. [CONTRACTING WITH PRIVATE ENTITIES.] Nothing in 92.26 this section shall prohibit employers from contracting with 92.27 private entities to provide forpostretirementhealth care 92.28 reimbursement plans. 92.29 Sec. 2. [EFFECTIVE DATE.] 92.30 Section 1 is effective on the day following final enactment. 92.31 ARTICLE 12 92.32 RETIREMENT COVERAGE FOLLOWING 92.33 A PRIVATIZATION 92.34 Section 1. Minnesota Statutes 2003 Supplement, section 92.35 353F.02, subdivision 4, is amended to read: 92.36 Subd. 4. [MEDICAL FACILITY.] "Medical facility" means: 93.1 (1) the Fair Oaks Lodge, Wadena; 93.2 (2) the Glencoe Area Health Center; 93.3(2)(3) the Kanabec Hospital; 93.4 (4) the Luverne Public Hospital; 93.5 (5) the RenVilla Nursing Home; and 93.6(3)(6) the Waconia-Ridgeview Medical Center; and93.7(4) the Kanabec Hospital. 93.8 Sec. 2. [PERA-GENERAL RETENTION OF PUBLIC EMPLOYEE STATUS 93.9 FOR ANOKA ACHIEVE PROGRAM EMPLOYEES.] 93.10 Subdivision 1. [APPLICATION.] This section applies to a 93.11 person who was: 93.12 (1) employed by Anoka County in connection with the Achieve 93.13 Program for adults with developmental disabilities on the day 93.14 before operation of the program is transferred to Achieve 93.15 Services, Inc; and 93.16 (2) a member of the Public Employees Retirement Association 93.17 on December 31, 2003. 93.18 Subd. 2. [CONTINUATION OF COVERAGE.] For purposes of 93.19 participation in the coordinated plan of the Public Employees 93.20 Retirement Association, a person to whom this section applies is 93.21 a "public employee" under chapter 353, while employed by Achieve 93.22 Services, Inc., which is a governmental subdivision under 93.23 section 353.01, subdivision 6(a) for the purposes of reporting 93.24 contributions for those persons to whom this section applies 93.25 only. 93.26 Sec. 3. [PERA-GENERAL; RETENTION OF PUBLIC EMPLOYEE 93.27 COVERAGE FOR GOVERNMENT TRAINING SERVICES EMPLOYEES.] 93.28 Subdivision 1. [APPLICATION.] Notwithstanding any 93.29 provision of Minnesota Statutes, chapter 353, this section 93.30 applies to a person who: 93.31 (1) was employed by the state and local government joint 93.32 powers organization, the Government Training Service, on the day 93.33 before the operation was transferred to a nonprofit 93.34 organization, Government Training Services; 93.35 (2) was a member of the general employees retirement plan 93.36 of the Public Employees Retirement Association; and 94.1 (3) is employed by Government Training Services. 94.2 Subd. 2. [COVERAGE CONTINUATION.] (a) A person described 94.3 in subdivision 1 is a public employee for purposes of Minnesota 94.4 Statutes, section 353.01, subdivision 2, and is eligible to 94.5 continue participation in the coordinated program of the general 94.6 employees retirement plan of the Public Employees Retirement 94.7 Association. 94.8 (b) While employing a person described in subdivision 1, 94.9 Government Training Services is a governmental subdivision for 94.10 purposes of Minnesota Statutes, section 353.01, subdivision 6, 94.11 paragraph (a). 94.12 Sec. 4. [EFFECTIVE DATE.] 94.13 (a) Section 1, relating to the Fair Oaks Lodge, Wadena, is 94.14 effective upon the latter of: 94.15 (1) the day after the governing body of Todd County and its 94.16 chief clerical officer timely complete their compliance with 94.17 Minnesota Statutes, section 645.021, subdivisions 2 and 3;and 94.18 (2) the day after the governing body of Wadena County and 94.19 its chief clerical officer timely complete their compliance with 94.20 Minnesota Statutes, section 645.021, subdivisions 2 and 3. 94.21 (b) Section 1, relating to the RenVilla Nursing Home, is 94.22 effective upon the latter of: 94.23 (1) the day after the governing body of the city of 94.24 Renville and its chief clerical officer timely complete their 94.25 compliance with Minnesota Statutes, section 645.021, 94.26 subdivisions 2 and 3; and 94.27 (2) the first day of the month next following certification 94.28 to the governing body of the city of Renville by the executive 94.29 director of the Public Employees Retirement Association that the 94.30 actuarial accrued liability of the special benefit coverage 94.31 proposed for extension to the privatized RenVilla Nursing Home 94.32 employees under section 1 does not exceed the actuarial gain 94.33 otherwise to be accrued by the Public Employees Retirement 94.34 Association, as calculated by the consulting actuary retained by 94.35 the Legislative Commission on Pensions and Retirement. 94.36 (c) The cost of the actuarial calculations must be borne by 95.1 the city of Renville or the purchaser of the RenVilla Nursing 95.2 Home. 95.3 (d) If the required actions under paragraphs (b) and (c) 95.4 occur, section 1 applies retroactively to the RenVilla Nursing 95.5 Home as of the date of privatization. 95.6 (e) If the required actions under paragraph (a) occur, 95.7 section 1 applies retroactively to Fair Oaks Lodge, Wadena, as 95.8 of January 1, 2004. 95.9 (f) Sections 2 and 3 are effective on the day following 95.10 final enactment. 95.11 ARTICLE 13 95.12 MINNEAPOLIS FIREFIGHTERS RELIEF ASSOCIATION 95.13 Section 1. Minnesota Statutes 2003 Supplement, section 95.14 423C.03, subdivision 3, is amended to read: 95.15 Subd. 3. [COMPENSATION OF OFFICERS AND BOARD MEMBERS.] (a) 95.16 Notwithstanding any other law to the contrary, the association 95.17 may provide forpayment of the followingsalaries to its 95.18 officers and board members:as specified in this subdivision. 95.19(1)(b) If the executive secretary is not an active member, 95.20 the executive secretary may receive a salary to be set by the 95.21 board, subject to the limitations stated in paragraph (d). If 95.22 the executive secretary is an active member, the executive 95.23 secretary may receive a salary not exceeding 50 percent of the 95.24 maximum salary of a first grade firefighter;. 95.25(2)(c) The president may receive a salary not exceeding 95.26 ten percent of the maximum salary of a first grade firefighter;, 95.27 and 95.28(3)all other elected members of the board, other than the 95.29 executive secretary, may receive a salary not exceeding 2.5 95.30 percent of the maximum salary of a first grade firefighter. 95.31 (d) If the executive secretary is not an active member, the 95.32 executive secretary's salary may not exceed the highest salary 95.33 currently received by the executive director of the Minnesota 95.34 State Retirement System, the Public Employees Retirement 95.35 Association, or the Teachers Retirement Association. 95.36 Sec. 2. [EFFECTIVE DATE.] 96.1 Section 1 is effective on the day on which the Minneapolis 96.2 City Council and the chief clerical officer of the city of 96.3 Minneapolis complete in a timely manner the requirements of 96.4 Minnesota Statutes, section 645.021, subdivisions 2 and 3. 96.5 ARTICLE 14 96.6 VOLUNTEER FIREFIGHTER RELIEF 96.7 ASSOCIATION CHANGES 96.8 Section 1. Minnesota Statutes 2002, section 424A.02, 96.9 subdivision 2, is amended to read: 96.10 Subd. 2. [NONFORFEITABLE PORTION OF SERVICE PENSION.] If 96.11 the articles of incorporation or bylaws of a relief association 96.12 so provide, a relief association may pay a reduced service 96.13 pension to a retiring member who has completed fewer than 20 96.14 years of service. The reduced service pension may be paid when 96.15 the retiring member meets the minimum age and service 96.16 requirements of subdivision 1. 96.17 The amount of the reduced service pension may not exceed 96.18 the amount calculated by multiplying the service pension 96.19 appropriate for the completed years of service as specified in 96.20 the bylaws times the applicable nonforfeitable percentage of 96.21 pension. 96.22 For a volunteer firefighter relief association that pays a 96.23 lump sum service pension, a monthly benefit service pension, or 96.24 a lump sum service pension or a monthly benefit service pension 96.25 as alternative benefit forms, the nonforfeitable percentage of 96.26 pension amounts are as follows: 96.27 Completed Years of Service Nonforfeitable Percentage 96.28 of Pension Amount 96.29 5 40 percent 96.30 6 44 percent 96.31 7 48 percent 96.32 8 52 percent 96.33 9 56 percent 96.34 10 60 percent 96.35 11 64 percent 96.36 12 68 percent 97.1 13 72 percent 97.2 14 76 percent 97.3 15 80 percent 97.4 16 84 percent 97.5 17 88 percent 97.6 18 92 percent 97.7 19 96 percent 97.8 20 and thereafter 100 percent 97.9 For a volunteer firefighter relief association that pays a 97.10 defined contribution service pension, the nonforfeitable 97.11 percentage of pension amounts are as follows: 97.12 Completed Years of Service Nonforfeitable Percentage 97.13 of Pension Amount 97.14 5 40 percent 97.15 6 52 percent 97.16 7 64 percent 97.17 8 76 percent 97.18 9 88 percent 97.19 10 and thereafter 100 percent 97.20 Sec. 2. Minnesota Statutes 2002, section 424A.02, 97.21 subdivision 7, is amended to read: 97.22 Subd. 7. [DEFERRED SERVICE PENSIONS.] (a) A member of a 97.23 relief association to which this section applies is entitled to 97.24 a deferred service pension if the member: 97.25 (1) has completed the lesser of the minimum period of 97.26 active service with the fire department specified in the bylaws 97.27 or 20 years of active service with the fire department; 97.28 (2) has completed at least five years of active membership 97.29 in the relief association; and 97.30 (3) separates from active service and membership before 97.31 reaching age 50 or the minimum age for retirement and 97.32 commencement of a service pension specified in the bylaws 97.33 governing the relief association if that age is greater than age 97.34 50. 97.35 (b) The deferred service pension starts when the former 97.36 member reaches age 50 or the minimum age specified in the bylaws 98.1 governing the relief association if that age is greater than age 98.2 50 and when the former member makes a valid written application. 98.3 (c) A relief association that provides a lump sum service 98.4 pension may, when its governing bylaws so provide, pay interest 98.5 on the deferred lump sum service pension during the period of 98.6 deferral. If provided for in the bylaws, interest must be paid 98.7 in one of the following manners: 98.8 (1) at the investment performance rate actually earned on 98.9 that portion of the assets if the deferred benefit amount is 98.10 invested by the relief association in a separate account 98.11 established and maintained by the relief association or if the 98.12 deferred benefit amount is invested in a separate investment 98.13 vehicle held by the relief associationor, if not,; 98.14 (2) at the interest rate of five percent, compounded 98.15 annually; or 98.16 (3) at a rate equal to the actual time weighted total rate 98.17 of return investment performance of the special fund as reported 98.18 by the office of the state auditor under section 356.219, up to 98.19 five percent, compounded annually, and applied consistently for 98.20 all deferred service pensioners. 98.21 (d) A relief association may not use the method provided 98.22 for in paragraph (c), clause (3), until it has modified its 98.23 bylaws to be consistent with that clause. 98.24 (e) For a deferred service pension that is transferred to a 98.25 separate account established and maintained by the relief 98.26 association or separate investment vehicle held by the relief 98.27 association, the deferred member bears the full investment risk 98.28 subsequent to transfer and in calculating the accrued liability 98.29 of the volunteer firefighters relief association that pays a 98.30 lump sum service pension, the accrued liability for deferred 98.31 service pensions is equal to the separate relief association 98.32 account balance or the fair market value of the separate 98.33 investment vehicle held by the relief association. 98.34(e)(f) The deferred service pension is governed by and 98.35 must be calculated under the general statute, special law, 98.36 relief association articles of incorporation, and relief 99.1 association bylaw provisions applicable on the date on which the 99.2 member separated from active service with the fire department 99.3 and active membership in the relief association. 99.4 Sec. 3. [MARINE ON ST. CROIX VOLUNTEER FIREFIGHTERS RELIEF 99.5 ASSOCIATION; EARLY VESTING.] 99.6 (a) Notwithstanding Minnesota Statutes, section 424A.02, 99.7 subdivision 2, to the contrary, the Marine on St. Croix 99.8 Volunteer Firefighters Relief Association may utilize an early 99.9 vesting schedule as provided in paragraphs (b) and (c). 99.10 (b) If the articles of incorporation or bylaws of the 99.11 Marine on St. Croix Volunteer Firefighters Relief Association so 99.12 provide, the relief association may pay a reduced service 99.13 pension to a retiring member who has completed fewer than ten 99.14 years of service. The reduced service pension may be paid when 99.15 the retiring member meets the minimum age and service 99.16 requirements of Minnesota Statutes, section 424A.02, subdivision 99.17 1. 99.18 (c) The amount of the reduced service pension may not 99.19 exceed the amount calculated by multiplying the service pension 99.20 appropriate for the completed years of service as specified in 99.21 the articles of incorporation or bylaws by the applicable 99.22 nonforfeitable percentage of the service pension amount. The 99.23 nonforfeitable percentage of service pension amounts are as 99.24 follows: 99.25 Completed years Nonforfeitable percentage 99.26 of service of service pension amount 99.27 5 40 percent 99.28 6 52 percent 99.29 7 64 percent 99.30 8 76 percent 99.31 9 88 percent 99.32 10 and 100 percent 99.33 thereafter 99.34 Sec. 4. [BELLINGHAM FIREFIGHTER RELIEF ASSOCIATION; 99.35 RATIFICATION OF PRIOR ANNUITY INVESTMENTS.] 99.36 Notwithstanding Minnesota Statutes, section 356A.06, 100.1 subdivision 7, any annuity purchases by the Bellingham 100.2 Firefighters Relief Association prior to the effective date of 100.3 this section are ratified as permissible investments. 100.4 Sec. 5. [STUDY OF STATEWIDE LUMP SUM VOLUNTEER FIREFIGHTER 100.5 RETIREMENT PLAN; CREATION OF TASK FORCE.] 100.6 Subdivision 1. [TASK FORCE MEMBERSHIP.] (a) A statewide 100.7 Volunteer Firefighter Retirement Plan Study Task Force is 100.8 created. 100.9 (b) The task force members are: 100.10 (1) four members appointed by the president of the 100.11 Minnesota Area Relief Association coalition; 100.12 (2) four members appointed by the president of the 100.13 Minnesota State Fire Department Association; 100.14 (3) four members appointed by the president of the 100.15 Minnesota State Fire Chiefs Association; 100.16 (4) four members appointed by the board of directors of the 100.17 League of Minnesota Cities; 100.18 (5) two members appointed by the board of directors of the 100.19 Insurance Federation of Minnesota; 100.20 (6) two members appointed by the board of directors of the 100.21 Minnesota Association of Farm Mutual Insurance Companies; and 100.22 (7) the Minnesota state auditor or the auditor's designee. 100.23 (c) Appointments must be made on or before July 1, 2004. 100.24 If the appointment is not made in a timely manner, or if there 100.25 is a vacancy, the state auditor shall appoint the task force 100.26 member or the replacement member. 100.27 (d) The chair of the task force shall be selected by the 100.28 task force. 100.29 (e) Administrative services for the task force must be 100.30 provided by the Department of Public Safety. 100.31 Subd. 2. [TASK FORCE DUTIES.] The task force shall conduct 100.32 fact finding regarding the creation of a statewide volunteer 100.33 firefighter retirement plan. 100.34 The task force shall recommend the investment vehicle or 100.35 vehicles to be utilized by the plan, the administration and 100.36 corporate governance structure of the plan, the incentives 101.1 needed to formulate the plan, the limitations applicable to the 101.2 plan, and the state resources needed to be dedicated to the plan. 101.3 Subd. 3. [REPORT.] The task force shall prepare a report 101.4 detailing its findings about a potential statewide volunteer 101.5 firefighter retirement plan. The report is due January 15, 101.6 2005, and must be filed with the Legislative Reference Library; 101.7 the chair of the Legislative Commission on Pensions and 101.8 Retirement; the chair of the State and Local Governmental 101.9 Operations Committee of the senate; the chair of the State 101.10 Government, Economic Development, and Judiciary Budget Division 101.11 of the Senate Finance Committee; the chair of the Governmental 101.12 Operations and Veterans Affairs Policy Committee of the house of 101.13 representatives; and the chair of the State Government Finance 101.14 Committee of the house of representatives. 101.15 Sec. 6. [APPROPRIATION.] 101.16 $40,000 is appropriated from the general fund in fiscal 101.17 year 2005 to the commissioner of public safety to hire a 101.18 consultant to assist the statewide Volunteer Firefighter 101.19 Retirement Plan Study Task Force. 101.20 Sec. 7. [EFFECTIVE DATE.] 101.21 Sections 1, 2, 5, and 6 are effective on July 1, 2004. 101.22 (b) Section 3 is effective on the day after the date on 101.23 which the city council of the city of Marine on St. Croix and 101.24 the chief clerical officer of the city of Marine on St. Croix 101.25 comply with Minnesota Statutes, section 645.02, subdivisions 2 101.26 and 3. 101.27 (c) Section 4 is effective on the day following final 101.28 enactment. 101.29 (d) The deferred service pension interest crediting 101.30 procedure of Minnesota Statutes, section 424A.02, subdivision 7, 101.31 paragraph (c), clause (3), expires on December 31, 2008. 101.32 ARTICLE 15 101.33 PERA POLICE AND FIRE PLAN 101.34 MEMBERSHIP INCLUSIONS 101.35 Section 1. Minnesota Statutes 2003 Supplement, section 101.36 353.01, subdivision 6, is amended to read: 102.1 Subd. 6. [GOVERNMENTAL SUBDIVISION.] (a) "Governmental 102.2 subdivision" means a county, city, town, school district within 102.3 this state, or a department or unit of state government, or any 102.4 public body whose revenues are derived from taxation, fees, 102.5 assessments or from other sources. 102.6 (b) Governmental subdivision also means the Public 102.7 Employees Retirement Association, the League of Minnesota 102.8 Cities, the Association of Metropolitan Municipalities, public 102.9 hospitals owned or operated by, or an integral part of, a 102.10 governmental subdivision or governmental subdivisions, the 102.11 Association of Minnesota Counties, the Metropolitan Intercounty 102.12 Association, the Minnesota Municipal Utilities Association, the 102.13 Metropolitan Airports Commission, the Minneapolis Employees 102.14 Retirement Fund for employment initially commenced after June 102.15 30, 1979, the Range Association of Municipalities and Schools, 102.16 soil and water conservation districts, economic development 102.17 authorities created or operating under sections 469.090 to 102.18 469.108, the Port Authority of the city of St. Paul, the Spring 102.19 Lake Park Fire Department, incorporated, the Lake Johanna 102.20 Volunteer Fire Department, incorporated, the Red Wing 102.21 Environmental Learning Center, and the Dakota County 102.22 Agricultural Society. 102.23 (c) Governmental subdivision does not mean any municipal 102.24 housing and redevelopment authority organized under the 102.25 provisions of sections 469.001 to 469.047; or any port authority 102.26 organized under sections 469.048 to 469.089 other than the Port 102.27 Authority of the city of St. Paul; or any hospital district 102.28 organized or reorganized prior to July 1, 1975, under sections 102.29 447.31 to 447.37 or the successor of the district, nor the 102.30 Minneapolis Community Development Agency. 102.31 Sec. 2. [EFFECTIVE DATE.] 102.32 Section 1 is effective on the day following final enactment. 102.33 ARTICLE 16 102.34 ONE PERSON AND SMALL GROUP 102.35 PENSION CHANGES 102.36 Section 1. [PERA-GENERAL; PURCHASE OF PRIOR SERVICE 103.1 CREDIT.] 103.2 (a) An eligible person described in paragraph (b) is 103.3 entitled to purchase up to 33 months of allowable service credit 103.4 from the general employees retirement plan of the Public 103.5 Employees Retirement Association. The service credit purchase 103.6 under this section must be made in accordance with Minnesota 103.7 Statutes, section 356.55 or 356.551, whichever applies. 103.8 (b) An eligible person is a person who: 103.9 (1) is currently a member of the Teachers Retirement 103.10 Association; 103.11 (2) was employed by Independent School District No. 621, 103.12 Mounds View, from May 1968 to December 1971, but was not covered 103.13 by the general employees retirement plan of the Public Employees 103.14 Retirement Association; 103.15 (3) was employed by Independent School District No. 31, 103.16 Bemidji, but was not covered by the general employees retirement 103.17 plan of the Public Employees Retirement Association; 103.18 (4) was employed as a special education teacher by 103.19 Independent School District No. 12, Centennial, for the 103.20 1974-1975 school year and for the 1977-1978, 1978-1979, and 103.21 1979-1980 school years; 103.22 (5) was employed as a special education teacher by 103.23 Independent School District No. 16, Spring Lake Park, for the 103.24 1975-1976 school year; 103.25 (6) was employed as a special education teacher by 103.26 Independent School District No. 138, North Branch, for the 103.27 1980-1981, 1981-1982, 1982-1983, 1983-1984, 1984-1985, and 103.28 1985-1986 school years; and 103.29 (7) has been employed by Independent School District No. 103.30 11, Anoka-Hennepin, since the 1986-1987 school year. 103.31 (c) An eligible person described in paragraph (b) must 103.32 apply with the executive director of the Public Employees 103.33 Retirement Association to make the service credit purchase under 103.34 this section. The application must be in writing and must 103.35 include all necessary documentation of the applicability of this 103.36 section, documentation of the eligible person's eligibility for 104.1 retirement coverage by the general employees retirement plan of 104.2 the Public Employees Retirement Association if the employment 104.3 had been properly reported to the association at the time the 104.4 employment was rendered, and any other relevant information that 104.5 the executive director may require. 104.6 Sec. 2. [PERA-GENERAL EMPLOYEES RETIREMENT PLAN COVERAGE 104.7 TERMINATION AUTHORIZATION.] 104.8 Subdivision 1. [ELIGIBILITY.] (a) An eligible person 104.9 specified in paragraph (b) is authorized to apply for a 104.10 retirement annuity from the public employees police and fire 104.11 retirement plan, provided that the necessary age and service 104.12 requirements are met, under Minnesota Statutes, section 353.651, 104.13 as further specified under subdivision 2. 104.14 (b) An eligible person is a person who: 104.15 (1) was born on October 10, 1956; 104.16 (2) was employed as a police officer by the city of Red 104.17 Wing; 104.18 (3) was elected to the Goodhue County Board of 104.19 Commissioners in November 1998; and 104.20 (4) elected under the law then applicable to have 104.21 retirement coverage by the general employees retirement plan of 104.22 the Public Employees Retirement Association for the county board 104.23 service. 104.24 Subd. 2. [RETIREMENT ANNUITY.] (a) Notwithstanding an 104.25 irrevocable election to participate in the general employees 104.26 retirement plan of the Public Employees Retirement Association 104.27 as an elected official and the person's continuation of elected 104.28 service, an eligible person under subdivision 1, paragraph (b), 104.29 is deemed to have terminated retirement plan membership under 104.30 Minnesota Statutes, section 353.01, subdivision 11b, on the 104.31 first day of the first pay period next following the date of 104.32 enactment. 104.33 (b) Upon the change in retirement coverage status under 104.34 paragraph (a), the eligible person may apply for a retirement 104.35 annuity under Minnesota Statutes, section 353.651. In computing 104.36 that annuity, the Public Employees Retirement Association must 105.1 exclude the salary that was attributable to the Goodhue County 105.2 board service. The deferred annuity augmentation under 105.3 Minnesota Statutes, section 353.71, applies to the annuity under 105.4 this subdivision. 105.5 Subd. 3. [TREATMENT OF GOODHUE COUNTY BOARD CONTRIBUTIONS 105.6 TO PERA.] (a) All member contributions by the eligible person to 105.7 the coordinated program of the general employee retirement plan 105.8 of the Public Employees Retirement Association attributable to 105.9 the Goodhue County board elected service, and all corresponding 105.10 employer contributions, must be determined. 105.11 (b) An eligible person described in subdivision 1, 105.12 paragraph (b), must elect, within 90 days of the change in 105.13 retirement coverage status under paragraph (a), between 105.14 receiving a refund under Minnesota Statutes, section 353.34, 105.15 subdivision 2, of the member contributions determined under 105.16 paragraph (a) or having coverage by the public employees defined 105.17 contribution plan under Minnesota Statutes, chapter 353D, as 105.18 further specified in paragraph (c). 105.19 (c) If coverage by the public employees defined 105.20 contribution plan is elected under paragraph (b), contributions 105.21 to that plan commence as of the first day of the first pay 105.22 period following the election, and the accumulated member and 105.23 employer contributions determined under paragraph (a) must be 105.24 transferred with annual compound interest at the rate of six 105.25 percent to an account established for the eligible person in its 105.26 public employees defined contribution plan. 105.27 (d) If no election is made by an eligible person by the 105.28 required date in paragraph (b), the individual is assumed to 105.29 have elected the refund indicated in paragraph (b). 105.30 (e) Upon an election under paragraph (b), or upon a 105.31 mandatory refund under paragraph (d), all rights in the Public 105.32 Employees Retirement Association coordinated plan due to elected 105.33 Goodhue County board service are forfeited and may not be 105.34 reestablished. 105.35 Sec. 3. [EFFECTIVE DATE.] 105.36 Sections 1 and 2 are effective on the day following final 106.1 enactment. 106.2 ARTICLE 17 106.3 PRIOR SERVICE CREDIT PURCHASES 106.4 Section 1. Minnesota Statutes 2002, section 352.275, 106.5 subdivision 1, is amended to read: 106.6 Subdivision 1. [SERVICE CREDIT PURCHASE AUTHORIZED.] A 106.7 state employee who has at least three years of allowable service 106.8 with the Minnesota State Retirement System and who performed 106.9 service in the United States armed forces before becoming a 106.10 state employee, or who failed to obtain service credit for a 106.11 military leave of absence under section 352.27, is entitled to 106.12 purchase allowable service credit for the initial period of 106.13 enlistment, induction, or call to active duty without any 106.14 voluntary extension by making payment under section 356.55if106.15the employee is not entitled to receive a current or deferred106.16retirement annuity from a United States armed forces pension106.17plan and has not purchased service credit from any other defined106.18benefit public employee pension plan for the same period of106.19service. 106.20 Sec. 2. Minnesota Statutes 2002, section 352B.01, 106.21 subdivision 3a, is amended to read: 106.22 Subd. 3a. [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 106.23 (a) A member who has at least three years of allowable service 106.24 with the State Patrol retirement plan under subdivision 3 and 106.25 who performed service in the United States armed forces before 106.26 becoming a member is entitled to purchase allowable service 106.27 credit for the initial period of enlistment, induction, or call 106.28 to active duty without any voluntary extension by making payment 106.29 under section 356.55, if the employee is not entitled to receive106.30a current or deferred retirement annuity from a United States106.31armed forces pension plan and has not purchased service credit106.32from any other defined benefit public employee pension plan for106.33the same period of service. 106.34 (b) A member who desires to purchase service credit under 106.35 paragraph (a) must apply with the executive director to make the 106.36 purchase. The application must include all necessary 107.1 documentation of the member's qualifications to make the 107.2 purchase, signed written permission to allow the executive 107.3 director to request and receive necessary verification of 107.4 applicable facts and eligibility requirements, and any other 107.5 relevant information that the executive director may require. 107.6 (c) Allowable service credit for the purchase period must 107.7 be granted by the State Patrol retirement plan to the purchasing 107.8 employee upon receipt of the purchase payment amount. Payment 107.9 must be made before the effective date of retirement of the 107.10 member. 107.11 Sec. 3. Minnesota Statutes 2002, section 353.01, 107.12 subdivision 16a, is amended to read: 107.13 Subd. 16a. [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 107.14 (a) A public employee who has at least three years of allowable 107.15 service with the Public Employees Retirement Association or the 107.16 public employees police and fire plan and who performed service 107.17 in the United States armed forces before becoming a public 107.18 employee, or who failed to obtain service credit for a military 107.19 leave of absence under subdivision 16, paragraph (h), is 107.20 entitled to purchase allowable service credit for the initial 107.21 period of enlistment, induction, or call to active duty without 107.22 any voluntary extension by making payment under section 107.23 356.55if the public employee is not entitled to receive a107.24current or deferred retirement annuity from a United States107.25armed forces pension plan and has not purchased service credit107.26from any other defined benefit public employee pension plan for107.27the same period of service. 107.28 (b) A public employee who desires to purchase service 107.29 credit under paragraph (a) must apply with the executive 107.30 director to make the purchase. The application must include all 107.31 necessary documentation of the public employee's qualifications 107.32 to make the purchase, signed written permission to allow the 107.33 executive director to request and receive necessary verification 107.34 of applicable facts and eligibility requirements, and any other 107.35 relevant information that the executive director may require. 107.36 (c) Allowable service credit for the purchase period must 108.1 be granted by the public employees association or the public 108.2 employees police and fire plan, whichever applies, to the 108.3 purchasing public employee upon receipt of the purchase payment 108.4 amount. Payment must be made before the effective date of 108.5 retirement of the public employee. 108.6 Sec. 4. Minnesota Statutes 2002, section 354.533, 108.7 subdivision 1, is amended to read: 108.8 Subdivision 1. [SERVICE CREDIT PURCHASE AUTHORIZED.] A 108.9 teacher who has at least three years of allowable service credit 108.10 with the Teachers Retirement Association and who performed 108.11 service in the United States armed forces before becoming a 108.12 teacher as defined in section 354.05, subdivision 2, or who 108.13 failed to obtain service credit for a military leave of absence 108.14 under the provisions of section 354.53, is entitled to purchase 108.15 allowable and formula service credit for the initial period of 108.16 enlistment, induction, or call to active duty without any 108.17 voluntary extension by making payment under section 356.55 108.18provided the teacher is not entitled to receive a current or108.19deferred retirement annuity from a United States armed forces108.20pension plan and has not purchased service credit from any other108.21defined benefit public employee pension plan for the same period108.22of service. 108.23 Sec. 5. Minnesota Statutes 2002, section 354A.097, 108.24 subdivision 1, is amended to read: 108.25 Subdivision 1. [SERVICE CREDIT PURCHASE AUTHORIZED.] A 108.26 teacher who has at least three years of allowable service credit 108.27 with the teachers retirement fund association and who performed 108.28 service in the United States armed forces before becoming a 108.29 teacher as defined in section 354A.011, subdivision 27, or who 108.30 failed to obtain service credit for a military leave of absence 108.31 period under section 354A.093, is entitled to purchase allowable 108.32 service credit for the initial period of enlistment, induction, 108.33 or call to active duty without any voluntary extension by making 108.34 payment under section 356.55, provided the teacher is not108.35entitled to receive a current or deferred retirement annuity108.36from a United States armed forces pension plan and has not109.1purchased service credit from another defined benefit public109.2employee pension plan for the same period of service. 109.3 Sec. 6. Laws 1999, chapter 222, article 16, section 16, as 109.4 amended by Laws 2002, chapter 392, article 7, section 1, and 109.5 Laws 2003, First Special Session chapter 12, article 6, section 109.6 2, is amended to read: 109.7 Sec. 16. [REPEALER.] 109.8 (a) Sections12 to 6 and 8 to 13 are repealed on May 16, 109.9 2004. 109.10 (b) Sections 1 and 7 are repealed on May 16, 2006. 109.11 Sec. 7. Laws 2000, chapter 461, article 4, section 4, as 109.12 amended by Laws 2003, First Special Session chapter 12, article 109.13 6, section 4, is amended to read: 109.14 Sec. 4. [EFFECTIVE DATE; SUNSET REPEALER.] 109.15(a)Sections 1, 2, and 3 are effective on the day following 109.16 final enactment. 109.17(b) Sections 1, 2, and 3 are repealed on May 16, 2004.109.18 Sec. 8. [EFFECTIVE DATE.] 109.19 Sections 1 to 7 are effective on the day following final 109.20 enactment. 109.21 ARTICLE 18 109.22 PROVISION OF ACTUARIAL SERVICES 109.23 Section 1. Minnesota Statutes 2002, section 352.03, 109.24 subdivision 6, is amended to read: 109.25 Subd. 6. [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 109.26 management of the system is vested in the director, who is the 109.27 executive and administrative head of the system. The director 109.28 shall be advisor to the board on matters pertaining to the 109.29 system and shall also act as the secretary of the board. The 109.30 director shall: 109.31 (1) attend meetings of the board; 109.32 (2) prepare and recommend to the board appropriate rules to 109.33 carry out this chapter; 109.34 (3) establish and maintain an adequate system of records 109.35 and accounts following recognized accounting principles and 109.36 controls; 110.1 (4) designate an assistant director with the approval of 110.2 the board; 110.3 (5) appoint any employees, both permanent and temporary, 110.4 that are necessary to carry out the provisions of this chapter; 110.5 (6) organize the work of the system as the director deems 110.6 necessary to fulfill the functions of the system, and define the 110.7 duties of its employees and delegate to them any powers or 110.8 duties, subject to the control of the director and under 110.9 conditions the director may prescribe. Appointments to exercise 110.10 delegated power must be by written order and shall be filed with 110.11 the secretary of state; 110.12 (7) with the advice and consent of the board, contract for 110.13 the services of an approved actuary, professional management 110.14 services, and any other consulting services as necessary and fix 110.15 the compensation for those services. The contracts are not 110.16 subject to competitive bidding under chapter 16C. Any approved 110.17 actuary retained by the executive director shall function as the 110.18 actuarial advisor of the board and the executive director, and 110.19 may perform actuarial valuations and experience studies to 110.20 supplement those performed by the actuary retainedby the110.21legislative commission on pensions and retirementunder section 110.22 6. Any supplemental actuarial valuations or experience studies 110.23 shall be filed with the executive director of the Legislative 110.24 Commission on Pensions and Retirement. Professional management 110.25 services may not be contracted for more often than once in six 110.26 years. Copies of professional management survey reports must be 110.27 transmitted to the secretary of the senate, the chief clerk of 110.28 the house of representatives, and the legislative reference 110.29 library as provided by section 3.195, and to the executive 110.30 director of the commission at the time as reports are furnished 110.31 to the board. Only management firms experienced in conducting 110.32 management surveys of federal, state, or local public retirement 110.33 systems are qualified to contract with the director; 110.34 (8) with the advice and consent of the board provide 110.35 in-service training for the employees of the system; 110.36 (9) make refunds of accumulated contributions to former 111.1 state employees and to the designated beneficiary, surviving 111.2 spouse, legal representative, or next of kin of deceased state 111.3 employees or deceased former state employees, as provided in 111.4 this chapter; 111.5 (10) determine the amount of the annuities and disability 111.6 benefits of employees covered by the system and authorize 111.7 payment of the annuities and benefits beginning as of the dates 111.8 on which the annuities and benefits begin to accrue, in 111.9 accordance with the provisions of this chapter; 111.10 (11) pay annuities, refunds, survivor benefits, salaries, 111.11 and necessary operating expenses of the system; 111.12 (12) certify funds available for investment to the State 111.13 Board of Investment; 111.14 (13) with the advice and approval of the board request the 111.15 State Board of Investment to sell securities when the director 111.16 determines that funds are needed for the system; 111.17 (14) prepare and submit to the board and the legislature an 111.18 annual financial report covering the operation of the system, as 111.19 required by section 356.20; 111.20 (15) prepare and submit biennial and annual budgets to the 111.21 board and with the approval of the board submit the budgets to 111.22 the Department of Finance; and 111.23 (16) with the approval of the board, perform other duties 111.24 required to administer the retirement and other provisions of 111.25 this chapter and to do its business. 111.26 Sec. 2. Minnesota Statutes 2002, section 352B.02, 111.27 subdivision 1e, is amended to read: 111.28 Subd. 1e. [AUDIT; ACTUARIAL VALUATION.] The legislative 111.29 auditor shall audit the fund. Any actuarial valuation of the 111.30 fund required under section 356.215shallmust be prepared by 111.31 the actuary retainedby the Legislative Commission on Pensions111.32and Retirementunder section 6. Any approved actuary retained 111.33 by the executive director under section 352.03, subdivision 6, 111.34 may perform actuarial valuations and experience studies to 111.35 supplement those performed by the commission-retained actuary. 111.36 Any supplemental actuarial valuation or experience studies shall 112.1 be filed with the executive director of the Legislative 112.2 Commission on Pensions and Retirement. 112.3 Sec. 3. Minnesota Statutes 2002, section 353.03, 112.4 subdivision 3a, is amended to read: 112.5 Subd. 3a. [EXECUTIVE DIRECTOR.] (a) [APPOINTMENT.] The 112.6 board shall appoint, with the advice and consent of the senate, 112.7 an executive director on the basis of education, experience in 112.8 the retirement field, and leadership ability. The executive 112.9 director shall have had at least five years' experience in an 112.10 executive level management position, which has included 112.11 responsibility for pensions, deferred compensation, or employee 112.12 benefits. The executive director serves at the pleasure of the 112.13 board. The salary of the executive director is as provided by 112.14 section 15A.0815. 112.15 (b) [DUTIES.] The management of the association is vested 112.16 in the executive director who shall be the executive and 112.17 administrative head of the association. The executive director 112.18 shall act as adviser to the board on all matters pertaining to 112.19 the association and shall also act as the secretary of the 112.20 board. The executive director shall: 112.21 (1) attend all meetings of the board; 112.22 (2) prepare and recommend to the board appropriate rules to 112.23 carry out the provisions of this chapter; 112.24 (3) establish and maintain an adequate system of records 112.25 and accounts following recognized accounting principles and 112.26 controls; 112.27 (4) designate, with the approval of the board, up to two 112.28 persons who shall serve in the unclassified service and whose 112.29 salary is set in accordance with section 43A.18, subdivision 3, 112.30 appoint a confidential secretary in the unclassified service, 112.31 and appoint employees to carry out this chapter, who are subject 112.32 to chapters 43A and 179A in the same manner as are executive 112.33 branch employees; 112.34 (5) organize the work of the association as the director 112.35 deems necessary to fulfill the functions of the association, and 112.36 define the duties of its employees and delegate to them any 113.1 powers or duties, subject to the control of, and under such 113.2 conditions as, the executive director may prescribe; 113.3 (6) with the approval of the board, contract for the 113.4 services of an approved actuary, professional management 113.5 services, and any other consulting services as necessary to 113.6 fulfill the purposes of this chapter. All contracts are subject 113.7 to chapter 16C. The commissioner of administration shall not 113.8 approve, and the association shall not enter into, any contract 113.9 to provide lobbying services or legislative advocacy of any 113.10 kind. Any approved actuary retained by the executive director 113.11 shall function as the actuarial advisor of the board and the 113.12 executive director and may perform actuarial valuations and 113.13 experience studies to supplement those performed by the actuary 113.14 retainedby the Legislative Commission on Pensions and113.15Retirementunder section 6. Any supplemental actuarial 113.16 valuations or experience studies shall be filed with the 113.17 executive director of the Legislative Commission on Pensions and 113.18 Retirement. Copies of professional management survey reports 113.19 shall be transmitted to the secretary of the senate, the chief 113.20 clerk of the house of representatives, and the Legislative 113.21 Reference Library as provided by section 3.195, and to the 113.22 executive director of the commission at the same time as reports 113.23 are furnished to the board. Only management firms experienced 113.24 in conducting management surveys of federal, state, or local 113.25 public retirement systems shall be qualified to contract with 113.26 the director hereunder; 113.27 (7) with the approval of the board provide in-service 113.28 training for the employees of the association; 113.29 (8) make refunds of accumulated contributions to former 113.30 members and to the designated beneficiary, surviving spouse, 113.31 legal representative or next of kin of deceased members or 113.32 deceased former members, as provided in this chapter; 113.33 (9) determine the amount of the annuities and disability 113.34 benefits of members covered by the association and authorize 113.35 payment of the annuities and benefits beginning as of the dates 113.36 on which the annuities and benefits begin to accrue, in 114.1 accordance with the provisions of this chapter; 114.2 (10) pay annuities, refunds, survivor benefits, salaries, 114.3 and necessary operating expenses of the association; 114.4 (11) prepare and submit to the board and the legislature an 114.5 annual financial report covering the operation of the 114.6 association, as required by section 356.20; 114.7 (12) prepare and submit biennial and annual budgets to the 114.8 board for its approval and submit the approved budgets to the 114.9 department of finance for approval by the commissioner; 114.10 (13) reduce all or part of the accrued interest payable 114.11 under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 114.12 subdivision 5, upon receipt of proof by the association of an 114.13 unreasonable processing delay or other extenuating circumstances 114.14 of the employing unit. The executive director shall prescribe 114.15 and submit for approval by the board the conditions under which 114.16 such interest may be reduced; and 114.17 (14) with the approval of the board, perform such other 114.18 duties as may be required for the administration of the 114.19 association and the other provisions of this chapter and for the 114.20 transaction of its business. 114.21 Sec. 4. Minnesota Statutes 2002, section 354.06, 114.22 subdivision 2a, is amended to read: 114.23 Subd. 2a. [DUTIES OF EXECUTIVE DIRECTOR.] The management 114.24 of the association is vested in the executive director who shall 114.25 be the executive and administrative head of the association. 114.26 The executive director shall act as advisor to the board on all 114.27 matters pertaining to the association and shall also act as the 114.28 secretary of the board. The executive director shall: 114.29 (1) attend all meetings of the board; 114.30 (2) prepare and recommend to the board appropriate rules to 114.31 carry out the provisions of this chapter; 114.32 (3) establish and maintain an adequate system of records 114.33 and accounts following recognized accounting principles and 114.34 controls; 114.35 (4) designate an assistant executive director in the 114.36 unclassified service and two assistant executive directors in 115.1 the classified service with the approval of the board, and 115.2 appoint such employees, both permanent and temporary, as are 115.3 necessary to carry out the provisions of this chapter; 115.4 (5) organize the work of the association as the director 115.5 deems necessary to fulfill the functions of the association, and 115.6 define the duties of its employees and delegate to them any 115.7 powers or duties, subject to the director's control and under 115.8 such conditions as the director may prescribe; 115.9 (6) with the approval of the board, contract and set the 115.10 compensation for the services of an approved actuary, 115.11 professional management services, and any other consulting 115.12 services. These contracts are not subject to the competitive 115.13 bidding procedure prescribed by chapter 16C. An approved 115.14 actuary retained by the executive director shall function as the 115.15 actuarial advisor of the board and the executive director and 115.16 may perform actuarial valuations and experience studies to 115.17 supplement those performed by the actuary retainedby the115.18legislative commission on pensions and retirementunder section 115.19 6. Any supplemental actuarial valuations or experience studies 115.20 shall be filed with the executive director of the Legislative 115.21 Commission on Pensions and Retirement. Copies of professional 115.22 management survey reports must be transmitted to the secretary 115.23 of the senate, the chief clerk of the house of representatives, 115.24 and the legislative reference library as provided by section 115.25 3.195, and to the executive director of the commission at the 115.26 same time as reports are furnished to the board. Only 115.27 management firms experienced in conducting management surveys of 115.28 federal, state, or local public retirement systems are qualified 115.29 to contract with the executive director; 115.30 (7) with the approval of the board, provide in-service 115.31 training for the employees of the association; 115.32 (8) make refunds of accumulated contributions to former 115.33 members and to the designated beneficiary, surviving spouse, 115.34 legal representative, or next of kin of deceased members or 115.35 deceased former members, under this chapter; 115.36 (9) determine the amount of the annuities and disability 116.1 benefits of members covered by the association and authorize 116.2 payment of the annuities and benefits beginning as of the dates 116.3 on which the annuities and benefits begin to accrue, under this 116.4 chapter; 116.5 (10) pay annuities, refunds, survivor benefits, salaries, 116.6 and necessary operating expenses of the association; 116.7 (11) prepare and submit to the board and the legislature an 116.8 annual financial report covering the operation of the 116.9 association, as required by section 356.20; 116.10 (12) certify funds available for investment to the state 116.11 board of investment; 116.12 (13) with the advice and approval of the board, request the 116.13 State Board of Investment to sell securities on determining that 116.14 funds are needed for the purposes of the association; 116.15 (14) prepare and submit biennial and annual budgets to the 116.16 board and with the approval of the board submit those budgets to 116.17 the department of finance; and 116.18 (15) with the approval of the board, perform such other 116.19 duties as may be required for the administration of the 116.20 association and the other provisions of this chapter and for the 116.21 transaction of its business. The executive director may: 116.22 (i) reduce all or part of the accrued interest and fines 116.23 payable by an employing unit for reporting requirements under 116.24 section 354.52, based on an evaluation of any extenuating 116.25 circumstances of the employing unit; 116.26 (ii) assign association employees to conduct field audits 116.27 of an employing unit to ensure compliance with the provisions of 116.28 this chapter; and 116.29 (iii) recover overpayments, if not repaid to the 116.30 association, by suspending or reducing the payment of a 116.31 retirement annuity, refund, disability benefit, survivor 116.32 benefit, or optional annuity under this chapter until the 116.33 overpayment, plus interest, has been recovered. 116.34 Sec. 5. Minnesota Statutes 2002, section 354A.021, 116.35 subdivision 7, is amended to read: 116.36 Subd. 7. [ACTUARIAL CONSULTANT.] The board of trustees or 117.1 directors of each teachers retirement fund association may 117.2 contract for the services of an approved actuary and fix the 117.3 reasonable compensation for those services. Any approved 117.4 actuary retained by the board shall function as the actuarial 117.5 advisor to the board and may perform actuarial valuations and 117.6 experience studies to supplement those performed by the actuary 117.7 retainedby the Legislative Commission on Pensions and117.8Retirementunder section 6. Any supplemental actuarial 117.9 valuations or experience studiesshallmust be filed with the 117.10 executive director of the Legislative Commission on Pensions and 117.11 Retirement. 117.12 Sec. 6. [356.214] [ACTUARIAL VALUATION PREPARATION; JOINT 117.13 RETENTION OF CONSULTING ACTUARY.] 117.14 Subdivision 1. [JOINT RETENTION.] (a) The chief 117.15 administrative officers of the Minnesota State Retirement 117.16 System, the Public Employees Retirement Association, the 117.17 Teachers Retirement Association, the Duluth Teachers Retirement 117.18 Fund Association, the Minneapolis Teachers Retirement Fund 117.19 Association, the Minneapolis Employees Retirement Fund, and the 117.20 St. Paul Teachers Retirement Fund Association, jointly, on 117.21 behalf of the state, its employees, its taxpayers, and its 117.22 various public pension plans, shall contract with an established 117.23 actuarial consulting firm to conduct annual actuarial valuations 117.24 and related services for the retirement plans named in paragraph 117.25 (b). The principal from the actuarial consulting firm on the 117.26 contract must be an approved actuary under section 356.215, 117.27 subdivision 1, paragraph (c). Prior to becoming effective, the 117.28 contract under this section is subject to a review and approval 117.29 by the Legislative Commission on Pensions and Retirement. 117.30 (b) The contract for actuarial services must include the 117.31 preparation of actuarial valuations and related actuarial work 117.32 for the following retirement plans: 117.33 (1) the teachers retirement plan, Teachers Retirement 117.34 Association; 117.35 (2) the general state employees retirement plan, Minnesota 117.36 State Retirement System; 118.1 (3) the correctional employees retirement plan, Minnesota 118.2 State Retirement System; 118.3 (4) the State Patrol retirement plan, Minnesota State 118.4 Retirement System; 118.5 (5) the judges retirement plan, Minnesota State Retirement 118.6 System; 118.7 (6) the Minneapolis employees retirement plan, Minneapolis 118.8 Employees Retirement Fund; 118.9 (7) the public employees retirement plan, Public Employees 118.10 Retirement Association; 118.11 (8) the public employees police and fire plan, Public 118.12 Employees Retirement Association; 118.13 (9) the Duluth teachers retirement plan, Duluth Teachers 118.14 Retirement Fund Association; 118.15 (10) the Minneapolis teachers retirement plan, Minneapolis 118.16 Teachers Retirement Fund Association; 118.17 (11) the St. Paul teachers retirement plan, St. Paul 118.18 Teachers Retirement Fund Association; 118.19 (12) the legislators retirement plan, Minnesota State 118.20 Retirement System; 118.21 (13) the elective state officers retirement plan, Minnesota 118.22 State Retirement System; and 118.23 (14) local government correctional service retirement plan, 118.24 Public Employees Retirement Association. 118.25 (c) The contract must require completion of the annual 118.26 actuarial valuation calculations on a fiscal year basis, with 118.27 the contents of the actuarial valuation calculations as 118.28 specified in section 356.215, and in conformity with the 118.29 standards for actuarial work adopted by the Legislative 118.30 Commission on Pensions and Retirement. 118.31 The contract must require completion of annual experience 118.32 data collection and processing and a quadrennial published 118.33 experience study for the plans listed in paragraph (b), clauses 118.34 (1), (2), and (7), as provided for in the standards for 118.35 actuarial work adopted by the commission. The experience data 118.36 collection, processing, and analysis must evaluate the following: 119.1 (1) individual salary progression; 119.2 (2) the rate of return on investments based on the current 119.3 asset value; 119.4 (3) payroll growth; 119.5 (4) mortality; 119.6 (5) retirement age; 119.7 (6) withdrawal; and 119.8 (7) disablement. 119.9 The contract must include provisions for the preparation of 119.10 cost analyses by the jointly retained actuary for proposed 119.11 legislation that include changes in benefit provisions or 119.12 funding policies prior to their consideration by the Legislative 119.13 Commission on Pensions and Retirement. 119.14 (d) The actuary retained by the joint retirement systems 119.15 shall annually prepare a report to the legislature, including a 119.16 commentary on the actuarial valuation calculations for the plans 119.17 named in paragraph (b) and summarizing the results of the 119.18 actuarial valuation calculations. The actuary shall include 119.19 with the report the actuary's recommendations to the legislature 119.20 concerning the appropriateness of the support rates to achieve 119.21 proper funding of the retirement plans by the required funding 119.22 dates. The actuary shall, as part of the quadrennial experience 119.23 study, include recommendations to the legislature on the 119.24 appropriateness of the actuarial valuation assumptions required 119.25 for evaluation in the study. 119.26 (e) If the actuarial gain and loss analysis in the 119.27 actuarial valuation calculations indicates a persistent pattern 119.28 of sizable gains or losses, as directed by the joint retirement 119.29 systems or as requested by the chair of the Legislative 119.30 Commission on Pensions and Retirement, the actuary shall prepare 119.31 a special experience study for a plan listed in paragraph (b), 119.32 clause (3), (4), (5), (6), (8), (9), (10), (11), (12), (13), or 119.33 (14), in the manner provided for in the standards for actuarial 119.34 work adopted by the commission. 119.35 (f) The term of the contract between the joint retirement 119.36 systems and the actuary retained may not exceed five years. The 120.1 joint retirement system administrative officers shall establish 120.2 procedures for the consideration and selection of contract 120.3 bidders and the requirements for the contents of an actuarial 120.4 services contract under this section. The procedures and 120.5 requirements must be submitted to the Legislative Commission on 120.6 Pensions and Retirement for review and comment prior to final 120.7 approval by the joint administrators. The contract is subject 120.8 to the procurement procedures under chapter 16C. The 120.9 consideration of bids and the selection of a consulting 120.10 actuarial firm by the chief administrative officers must occur 120.11 at a meeting that is open to the public and reasonable timely 120.12 public notice of the date and the time of the meeting and its 120.13 subject matter must be given. 120.14 (g) The actuarial services contract may not limit the 120.15 ability of the Minnesota legislature and its standing committees 120.16 and commissions to rely on the actuarial results of the work 120.17 prepared under the contract. 120.18 (h) The joint retirement systems shall designate one of the 120.19 retirement system executive directors as the actuarial services 120.20 contract manager. 120.21 Subd. 2. [ALLOCATION OF ACTUARIAL COSTS.] (a) The 120.22 actuarial services contract manager shall assess each retirement 120.23 plan specified in subdivision 1, paragraph (b), its appropriate 120.24 portion of the total compensation paid to the actuary retained 120.25 by the joint retirement systems for the actuarial valuation 120.26 calculations and quadrennial experience studies. The total 120.27 assessment is 100 percent of the amount of contract compensation 120.28 for the actuarial consulting firm for actuarial valuation 120.29 calculations, including any public employees police and fire 120.30 plan consolidation accounts of the Public Employees Retirement 120.31 Association established after March 1, 1999, annual experience 120.32 data collection and processing, and quadrennial experience 120.33 studies. 120.34 The portion of the total assessment payable by each 120.35 retirement system or pension plan must be determined based on 120.36 each plan's proportion of the actuarial services required, as 121.1 determined by the retained actuary, to complete the actuarial 121.2 valuation calculations, annual experience data collection and 121.3 processing, and quadrennial experience studies for all plans. 121.4 The assessment must be made within 30 days following the 121.5 end of the fiscal year and must be reported to the chief 121.6 administrative officers of the applicable retirement plans. The 121.7 amount of the assessment is appropriated from the retirement 121.8 fund applicable to the retirement plan. 121.9 (b) The actuarial services contract manager shall assess 121.10 each retirement plan or each interest group which requested the 121.11 preparation of a cost analysis for proposed legislation the cost 121.12 of the actuary retained by the joint retirement systems incurred 121.13 in the cost analysis preparation. With respect to interest 121.14 groups, the actuarial services contract manager shall obtain a 121.15 written commitment for the payment of the assessment in advance 121.16 of the cost analysis preparation and may require an advance 121.17 deposit or advance payment before authorizing the cost analysis 121.18 preparation. The retirement plan or the interest group shall 121.19 pay the assessment within 30 days of the date on which the 121.20 assessment is billed. The amount of the assessment is 121.21 appropriated from the retirement fund applicable to the 121.22 retirement plan for cost analyses requested by a retirement plan 121.23 or system. 121.24 (c) The actuarial services contract manager shall assess to 121.25 the Legislative Commission on Pensions and Retirement the cost 121.26 of the actuarial cost analysis preparation for the proposed 121.27 legislation requested by the chair of the Legislative Commission 121.28 on Pensions and Retirement or by the commission executive 121.29 director. The commission shall pay the assessment within 30 121.30 days of the date on which the assessment is billed. 121.31 Subd. 3. [REPORTING TO THE COMMISSION.] A copy of the 121.32 actuarial valuations, experience studies, and actuarial cost 121.33 analyses prepared by the actuary retained by the joint 121.34 retirement systems under the contract provided for in this 121.35 section must be filed with the executive director of the 121.36 Legislative Commission on Pensions and Retirement at the same 122.1 time that the document is transmitted to the actuarial services 122.2 contract manager or to any other document recipient. 122.3 Sec. 7. Minnesota Statutes 2002, section 356.215, 122.4 subdivision 2, is amended to read: 122.5 Subd. 2. [REQUIREMENTS.] (a) It is the policy of the 122.6 legislature that it is necessary and appropriate to determine 122.7 annually the financial status of tax supported retirement and 122.8 pension plans for public employees. To achieve this goal: 122.9 (1) theLegislative Commission on Pensions and Retirement122.10shall have prepared by theactuary retainedby the commission122.11 under section 6 shall prepare annual actuarial valuations of the 122.12 retirement plans enumerated in section3.856, subdivision111, 122.13 paragraph (b), and quadrennial experience studies of the 122.14 retirement plans enumerated in section3.856, subdivision111, 122.15 paragraph (b), clauses (1), (2), and (7); and 122.16 (2) the commissioner of finance may have prepared by the 122.17 actuary retained by the commission, two years after each set of 122.18 quadrennial experience studies, quadrennial projection 122.19 valuations of at least one of the retirement plans enumerated in 122.20 section3.856, subdivision111, paragraph (b), for which the 122.21 commissioner determines that the analysis may be beneficial. 122.22 (b) The governing or managing board or administrative 122.23 officials of each public pension and retirement fund or plan 122.24 enumerated in section 356.20, subdivision 2, clauses (9), (10), 122.25 and (12), shall have prepared by an approved actuary annual 122.26 actuarial valuations of their respective funds as provided in 122.27 this section. This requirement also applies to any fund or plan 122.28 that is the successor to any organization enumerated in section 122.29 356.20, subdivision 2, or to the governing or managing board or 122.30 administrative officials of any newly formed retirement fund, 122.31 plan, or association operating under the control or supervision 122.32 of any public employee group, governmental unit, or institution 122.33 receiving a portion of its support through legislative 122.34 appropriations, and any local police or fire fund to which 122.35 section 356.216 applies. 122.36 Sec. 8. Minnesota Statutes 2002, section 356.215, 123.1 subdivision 18, is amended to read: 123.2 Subd. 18. [ESTABLISHMENT OF ACTUARIAL ASSUMPTIONS.] (a) 123.3 The actuarial assumptions used for the preparation of actuarial 123.4 valuations under this section that are other than those set 123.5 forth in this section may be changed only with the approval of 123.6 the Legislative Commission on Pensions and Retirement. 123.7 (b) A change in the applicable actuarial assumptions may be 123.8 proposed by the governing board of the applicable pension fund 123.9 or relief association, by the actuary retained by the 123.10Legislative Commission on Pensions and Retirementjoint 123.11 retirement systems under section 6, by the actuarial advisor to 123.12 a pension fund governed by chapter 352, 353, 354, or 354A, or by 123.13 the actuary retained by a local police or firefighters relief 123.14 association governed by sections 69.77 or 69.771 to 69.776, if 123.15 one is retained. 123.16 Sec. 9. Minnesota Statutes 2002, section 422A.06, 123.17 subdivision 2, is amended to read: 123.18 Subd. 2. [ACTUARIAL VALUATION REQUIRED.] As of July 1 of 123.19 each year, an actuarial valuation of the retirement fund shall 123.20 be prepared by thecommission-retainedactuary retained by the 123.21 joint retirement systems under section 6 and filed in 123.22 conformance with the provisions and requirements of sections 123.23 356.215 to 356.23. Experience studies shall be prepared at 123.24 those times required by statute, required by the standards for 123.25 actuarial work adopted by the Legislative Commission on Pensions 123.26 and Retirement or ordered by the board. 123.27 The board may contract for the services of an approved 123.28 actuary and fix the reasonable compensation for those services. 123.29 Any approved actuary retained by the board shall function as the 123.30 actuarial advisor to the board and may perform actuarial 123.31 valuations and experience studies to supplement those performed 123.32 by the actuary retained by theLegislative Commission on123.33Pensions and Retirementjoint retirement systems under section 6. 123.34 Any supplemental actuarial valuations or experience studies 123.35shallmust be filed with the executive director of the 123.36 Legislative Commission on Pensions and Retirement. 124.1 Sec. 10. [REPEALER.] 124.2 Minnesota Statutes 2002, sections 3.85, subdivisions 11 and 124.3 12; and 356.217 are repealed. 124.4 Sec. 11. [EFFECTIVE DATE.] 124.5 Sections 1 to 10 are effective on the day following final 124.6 enactment.