HF 1092

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to retirement; individual retirement account 
  1.3             plan; recodifying the individual retirement account 
  1.4             plans of the state university system and state 
  1.5             community college system in light of the higher 
  1.6             education system merger; recoding the professional and 
  1.7             supervisory employee individual retirement account 
  1.8             plan; recodifying the state university-community 
  1.9             college supplemental retirement account; eliminating 
  1.10            state unclassified employee retirement program 
  1.11            coverage option for certain managerial employees; 
  1.12            requiring employing unit payment of certain omitted 
  1.13            member contributions; prohibiting loans from the 
  1.14            individual retirement account plan; proposing a change 
  1.15            in the coding of a portion of chapter 354C as chapter 
  1.16            354D; amending Minnesota Statutes 1994, sections 
  1.17            11A.23, subdivision 4; 352D.02, subdivision 1; 354.05, 
  1.18            subdivision 2a; 355.61; and 356.24, subdivision 1; 
  1.19            proposing coding for new law in Minnesota Statutes, 
  1.20            chapters 354B; and 354C; repealing Minnesota Statutes 
  1.21            1994, sections 352D.02, subdivision 1a; 354B.01; 
  1.22            354B.015; 354B.02; 354B.035; 354B.04; 354B.045; 
  1.23            354B.05; 354B.06; 354B.07; 354B.08; 354B.085; 354B.09; 
  1.24            and 354B.15; Laws 1990, chapter 570, article 3, 
  1.25            sections 10, and 11, as amended; Laws 1993, chapters 
  1.26            192, section 89, and 239, article 5, section 2; Laws 
  1.27            1994, chapters 508, article 1, section 14; and 572, 
  1.28            sections 11, and 12. 
  1.29  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.30                             ARTICLE 1 
  1.31       RECODIFICATION OF INDIVIDUAL RETIREMENT ACCOUNT PLAN;  
  1.32                      NONSUBSTANTIVE REVISIONS
  1.33     Section 1.  [354B.20] [DEFINITIONS.] 
  1.34     Subdivision 1.  [IN GENERAL.] Unless the content or subject 
  1.35  matter indicates otherwise, as used in this chapter, the terms 
  1.36  in this section have the meanings given them. 
  1.37     Subd. 2.  [BOARD.] "Board" means the higher education board.
  2.1      Subd. 3.  [CHANCELLOR.] "Chancellor" means the chancellor 
  2.2   of the board. 
  2.3      Subd. 4.  [COVERED EMPLOYMENT.] (a) "Covered employment" 
  2.4   means employment by a person eligible for coverage by this 
  2.5   retirement program under section 354B.21 in a faculty position 
  2.6   or in an eligible unclassified administrative position. 
  2.7      (b) "Covered employment" does not mean employment specified 
  2.8   in paragraph (a) by a faculty member employed in a state 
  2.9   university or a community college if the person's initial 
  2.10  appointment is specified as constituting less than 25 percent of 
  2.11  a full academic year, exclusive of summer session, for the 
  2.12  applicable institution. 
  2.13     Subd. 5.  [COVERED SALARY.] (a) "Covered salary" means the 
  2.14  periodic compensation paid to the participant before deductions 
  2.15  for deferred compensation, supplemental retirement coverage, or 
  2.16  other voluntary salary reduction program. 
  2.17     (b) "Covered salary" does not mean lump sum sick leave 
  2.18  payments, severance payments, payments in lieu of employer-paid 
  2.19  group insurance coverage, payments based on differences between 
  2.20  single employer-paid group insurance coverage and insurance 
  2.21  coverage including dependents, or workers' compensation payment. 
  2.22     Subd. 6.  [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE 
  2.23  POSITION.] "Eligible unclassified administrative position" means 
  2.24  the following: 
  2.25     (1) the chancellor of the board; 
  2.26     (2) a president of a state university; or 
  2.27     (3) an excluded administrator employed by the state 
  2.28  university system, the board, the higher education coordinating 
  2.29  board, or the technical college system chancellor's office. 
  2.30     Subd. 7.  [EMPLOYING UNIT.] "Employing unit," if the agency 
  2.31  employs any persons covered by the individual retirement account 
  2.32  plan under section 354B.21, means: 
  2.33     (1) the board; 
  2.34     (2) the higher education coordinating board; and 
  2.35     (3) the higher education facilities authority. 
  2.36     Subd. 8.  [FACULTY.] "Faculty" means an employment position 
  3.1   that meets the definition of either section 354.05, subdivision 
  3.2   2, or 354A.011, subdivision 27. 
  3.3      Subd. 9.  [FIRST CLASS CITY TEACHER RETIREMENT FUND 
  3.4   ASSOCIATION.] "First class city teacher retirement fund 
  3.5   association" means a retirement plan, fund, and plan 
  3.6   administration established under chapter 354A. 
  3.7      Subd. 10.  [GENERAL STATE EMPLOYEES RETIREMENT 
  3.8   PLAN.] "General state employees retirement plan" means the 
  3.9   retirement plan administered by the Minnesota state retirement 
  3.10  system and governed by sections 352.01 to 352.73. 
  3.11     Subd. 11.  [HIGHER EDUCATION BOARD.] "Higher education 
  3.12  board" means the governing board for the state universities, the 
  3.13  community colleges, and the technical colleges established by 
  3.14  section 136E.01. 
  3.15     Subd. 12.  [PARTICIPANT.] "Participant" means a person who 
  3.16  is employed in covered employment by the board and who elects 
  3.17  coverage by the plan under section 354B.21. 
  3.18     Subd. 13.  [PLAN.] "Plan" means the individual retirement 
  3.19  account plan established by this chapter. 
  3.20     Subd. 14.  [PLAN ADMINISTRATOR.] "Plan administrator" means 
  3.21  the board employee or an independent contract agent designated 
  3.22  by the board to perform the primary administrative functions 
  3.23  relating to the plan. 
  3.24     Subd. 15.  [SABBATICAL LEAVE.] "Sabbatical leave" means a 
  3.25  sabbatical leave as specified in the applicable collective 
  3.26  bargaining agreement or personnel policy of the board for its 
  3.27  employees. 
  3.28     Subd. 16.  [STATE UNCLASSIFIED EMPLOYEES RETIREMENT 
  3.29  PROGRAM.] "State unclassified employees retirement program" 
  3.30  means the retirement program established by chapter 352D. 
  3.31     Subd. 17.  [SUPPLEMENTAL PLAN.] "Supplemental plan" means 
  3.32  the retirement program established by chapter 354C. 
  3.33     Subd. 18.  [TEACHERS RETIREMENT PLAN.] "Teachers retirement 
  3.34  plan" means the retirement plan established by chapter 354. 
  3.35     Sec. 2.  [354B.21] [COVERAGE.] 
  3.36     Subdivision 1.  [ELIGIBILITY.] The following persons are 
  4.1   eligible to have coverage by the individual retirement account 
  4.2   plan and to be participants in the plan: 
  4.3      (1) employees of the board who are employed as faculty in 
  4.4   an employment classification included in the state university 
  4.5   instructional unit, the community college instructional unit, or 
  4.6   the technical college instructional unit under section 179A.10, 
  4.7   subdivision 2; 
  4.8      (2) the chancellor and employees of the board in eligible 
  4.9   unclassified administrative positions; 
  4.10     (3) the employees in eligible unclassified administrative 
  4.11  positions in the state universities; 
  4.12     (4) the employees in eligible unclassified administrative 
  4.13  positions in the technical colleges; and 
  4.14     (5) the employees in eligible unclassified administrative 
  4.15  positions of the higher education coordinating board or the 
  4.16  higher education facilities authority. 
  4.17     Subd. 2.  [COVERAGE; ELECTION.] (a) An eligible person is 
  4.18  entitled to elect coverage by the plan.  If the eligible person 
  4.19  does not make a timely election of coverage by the plan, the 
  4.20  person has the coverage specified in subdivision 3. 
  4.21     (b) For eligible persons who were employed by the former 
  4.22  state university system or the former community college system 
  4.23  before May 1, 1995, the person has the retirement coverage that 
  4.24  the person had for employment immediately before May 1, 1995. 
  4.25     (c) For all other eligible persons, the election of 
  4.26  coverage must be made within 60 days of the date of enactment of 
  4.27  this act or within 60 days of the start of covered employment, 
  4.28  whichever occurs later. 
  4.29     Subd. 3.  [DEFAULT COVERAGE.] If an eligible person fails 
  4.30  to elect coverage by the plan under subdivision 2 or if the 
  4.31  person fails to make a timely election, the following retirement 
  4.32  coverage applies: 
  4.33     (1) for employees of the board who are employed in faculty 
  4.34  positions in the state universities or in the community 
  4.35  colleges, the retirement coverage is by the plan established by 
  4.36  this chapter; 
  5.1      (2) for employees of the board who are employed in faculty 
  5.2   positions in the technical colleges, the retirement coverage is 
  5.3   by the teachers retirement association established under chapter 
  5.4   354, unless the employee was a member of a first class city 
  5.5   teacher retirement fund established under chapter 354A on June 
  5.6   30, 1995, and then the retirement coverage is by the Duluth 
  5.7   teachers retirement fund association if the person was a member 
  5.8   of that plan on June 30, 1995, or the Minneapolis teachers 
  5.9   retirement fund association if the person was a member of that 
  5.10  plan on June 30, 1995, or the St. Paul teachers retirement fund 
  5.11  association if the person was a member of that plan on June 30, 
  5.12  1995; and 
  5.13     (3) for employees of the board who are employed in eligible 
  5.14  unclassified administrative positions, the retirement coverage 
  5.15  is by the plan established by this chapter unless the person 
  5.16  affirmatively elects the state unclassified employees retirement 
  5.17  program as provided in section 352D.02, subdivisions 1, 1a, and 
  5.18  3, except that the election must be made within the 60-day time 
  5.19  period specified in subdivision 2, paragraph (c). 
  5.20     Subd. 4.  [COVERAGE IN THE EVENT OF ACTING, INTERIM, OR 
  5.21  TEMPORARY APPOINTMENTS.] (a) A person previously employed by the 
  5.22  board and subsequently appointed by the board to an acting, 
  5.23  interim, or temporary faculty or eligible unclassified 
  5.24  administrative position by the board retains the retirement 
  5.25  coverage that the person had in the prior board position.  If 
  5.26  the participant's status becomes permanent, the participant has 
  5.27  the option to make an election of retirement coverage 
  5.28  appropriate to the retirement plan in which the employment 
  5.29  position should have retirement coverage consistent with 
  5.30  subdivision 2. 
  5.31     (b) A person who is appointed to an acting, interim, or 
  5.32  temporary faculty position by the board and who was not employed 
  5.33  in a faculty position by the board immediately before that 
  5.34  appointment must elect coverage as provided in subdivision 2. 
  5.35     Subd. 5.  [PAYMENT FOR CERTAIN PRIOR UNCOVERED SERVICE.] (a)
  5.36  A person employed in a faculty position by the board who was 
  6.1   initially excluded from participation in the individual 
  6.2   retirement account plan coverage, who was not covered by any 
  6.3   other Minnesota public pension plan for that service, and who is 
  6.4   subsequently eligible to participate in the individual 
  6.5   retirement account plan may make member contributions for that 
  6.6   period of prior uncovered teaching employment or eligible 
  6.7   unclassified administrative employment with the board. 
  6.8      (b) The member contributions for prior uncovered board 
  6.9   service are the amount that the person would have paid if the 
  6.10  prior service had been covered employment.  The payment must be 
  6.11  made to the individual retirement account plan administrator and 
  6.12  may be made only in a lump sum or by payroll deduction, as the 
  6.13  person designates.  The payment must be made by the later of: 
  6.14     (1) 45 days of the start of covered employment; or 
  6.15     (2) the end of the fiscal year in which covered employment 
  6.16  began. 
  6.17     (c) The board must contribute an amount to match any 
  6.18  contribution made by a plan participant under this subdivision. 
  6.19     (d) Payments of contributions for prior uncovered board 
  6.20  service under this subdivision must be invested in the same 
  6.21  manner as the regular contributions made by or on behalf of the 
  6.22  plan participant. 
  6.23     Subd. 6.  [CONTINUATION OF COVERAGE.] Once a person is 
  6.24  employed in a position that qualifies for participation in the 
  6.25  individual retirement account plan and elects to participate in 
  6.26  the plan, all subsequent service by the person as a faculty 
  6.27  member employed by the board or other employing unit is covered 
  6.28  by the individual retirement account plan. 
  6.29     Sec. 3.  [354B.22] [IRAP COVERAGE IN ADDITION TO SOCIAL 
  6.30  SECURITY COVERAGE.] 
  6.31     Subdivision 1.  [SOCIAL SECURITY COVERAGE.] (a) Any 
  6.32  employee of the board or other employing unit who elects 
  6.33  coverage by this chapter is a member of the teachers retirement 
  6.34  association solely for purposes of coverage by the federal old 
  6.35  age, survivors, disability and health insurance program, and are 
  6.36  covered by the agreement made under section 355.02. 
  7.1      (b) A person with federal social security coverage through 
  7.2   teachers retirement association membership under paragraph (a) 
  7.3   is not a member of the teachers retirement association for any 
  7.4   other purpose while employed as a teacher by the board, and 
  7.5   membership in the teachers retirement association for this 
  7.6   limited purpose conveys no rights or benefit entitlement under 
  7.7   chapter 354. 
  7.8      Subd. 2.  [PUBLIC PENSION COVERAGE AS CONDITION OF 
  7.9   EMPLOYMENT.] Coverage by a public pension plan under section 
  7.10  354B.21 is a condition of initial employment or continued 
  7.11  employment as a faculty member or eligible unclassified 
  7.12  administrative position by the board or other employing unit. 
  7.13     Sec. 4.  [354B.23] [CONTRIBUTIONS.] 
  7.14     Subdivision 1.  [MEMBER CONTRIBUTION RATE.] (a) Except as 
  7.15  provided in paragraph (b), the member contribution rate for 
  7.16  participants in the individual retirement account plan is 4.5 
  7.17  percent of salary. 
  7.18     (b) For participants in the individual retirement account 
  7.19  plan who were otherwise eligible to elect retirement coverage in 
  7.20  the state unclassified employees retirement program, the member 
  7.21  contribution rate is the rate specified in section 352D.04, 
  7.22  subdivision 2, paragraph (a). 
  7.23     Subd. 2.  [MEMBER CONTRIBUTION METHOD.] Member 
  7.24  contributions must be made by payroll deduction during each pay 
  7.25  period. 
  7.26     Subd. 3.  [EMPLOYER CONTRIBUTION RATE.] The employer 
  7.27  contribution rate on behalf of participants in the individual 
  7.28  retirement account plan is six percent of salary. 
  7.29     Subd. 4.  [EMPLOYER CONTRIBUTION METHOD.] The employer 
  7.30  contribution must be made by the employing unit of a plan 
  7.31  participant during each pay period.  The employer contribution 
  7.32  must be made from the available revenue sources of the employing 
  7.33  unit. 
  7.34     Subd. 5.  [OMITTED MEMBER DEDUCTIONS.] (a) If the employing 
  7.35  unit that employs a plan participant fails to deduct the member 
  7.36  contribution from the participant's salary and a period of less 
  8.1   than 60 days from the date on which the deduction should have 
  8.2   been made has elapsed, the employing unit must obtain the 
  8.3   omitted member deduction by an additional payroll deduction 
  8.4   during the pay period next following the discovery of the 
  8.5   omission. 
  8.6      (b) If the employing unit of a plan participant fails to 
  8.7   deduct the member contribution from the participant's salary and 
  8.8   that omission continues for at least 60 days from the date on 
  8.9   which the deduction should have been made, the employing unit 
  8.10  and the participant may agree on an alternate deduction amount 
  8.11  representing the omitted member contribution, but the employing 
  8.12  unit must pay the full required employer contribution and must 
  8.13  pay an amount equal to 8.5 percent of the total member and 
  8.14  employer contribution amounts due in lieu of any interest.  An 
  8.15  omitted member contribution must be made within one year of the 
  8.16  date on which the member contribution deduction was scheduled to 
  8.17  have been made. 
  8.18     Subd. 6.  [TRANSFER OF CERTAIN TRA MEMBER CONTRIBUTION 
  8.19  AMOUNTS TO IRAP.] (a) Notwithstanding any provisions of chapter 
  8.20  354 to the contrary, a former member of the teachers retirement 
  8.21  association who has less than three years of allowable service 
  8.22  credit under section 354.05, subdivision 13, and who is a member 
  8.23  of the individual retirement account plan may elect to transfer 
  8.24  to the plan an amount equal to the refund that the person could 
  8.25  have received under section 354.49, subdivision 2, if the person 
  8.26  had been eligible to receive a refund. 
  8.27     (b) The transfer must be made from the teachers retirement 
  8.28  association directly to the individual retirement account plan 
  8.29  and credited to the appropriate account. 
  8.30     (c) No amount under this subdivision may be paid directly 
  8.31  to the former teachers retirement association member. 
  8.32     (d) The election of this transfer must be made on a form 
  8.33  prescribed by the executive director of the teachers retirement 
  8.34  association, after consultation with the plan administrator. 
  8.35     Sec. 5.  [354B.24] [SABBATICAL LEAVE.] 
  8.36     Subdivision 1.  [CONTINUATION OF COVERAGE.] A person who is 
  9.1   a participant in the individual retirement plan, and who goes on 
  9.2   an approved sabbatical leave, must remain a participant in the 
  9.3   plan for any period during which the person receives a salary 
  9.4   from the board or during which the person makes an optional 
  9.5   contribution provided for in subdivision 3. 
  9.6      Subd. 2.  [MANDATORY CONTRIBUTIONS.] (a) From the salary 
  9.7   paid to the person during the course of an approved sabbatical 
  9.8   leave, the employing unit must deduct a member contribution as 
  9.9   required under section 354B.23, subdivision 1. 
  9.10     (b) The employing unit must make the employer contribution 
  9.11  on behalf of the plan participant as provided in section 
  9.12  354B.23, subdivision 3. 
  9.13     Subd. 3.  [OPTIONAL ADDITIONAL CONTRIBUTIONS.] (a) A plan 
  9.14  participant on an approved sabbatical leave may make an optional 
  9.15  additional member contribution.  The optional additional member 
  9.16  may not exceed the applicable member contribution rate specified 
  9.17  in section 354B.23, subdivision 1, applied to the difference 
  9.18  between the amount of salary actually received during the 
  9.19  sabbatical leave and the amount of salary actually received for 
  9.20  a comparable period of an identical length to the sabbatical 
  9.21  leave that occurred during the fiscal year immediately preceding 
  9.22  the sabbatical leave. 
  9.23     (b) Any optional additional member contribution must be 
  9.24  made before the last day of the fiscal year next following the 
  9.25  fiscal year in which the sabbatical leave terminates.  The 
  9.26  optional additional member contribution may not include interest.
  9.27     (c) When an optional additional member contribution is 
  9.28  made, the employing unit must make the employer contribution at 
  9.29  the rate set forth in section 354B.23, subdivision 3, on the 
  9.30  salary that was the basis for the optional additional member 
  9.31  contribution under paragraph (a). 
  9.32     (d) An employer contribution required under this section 
  9.33  must be made no later than 60 days after the date on which the 
  9.34  optional additional member contribution was made. 
  9.35     Subd. 4.  [REINSTATEMENT RIGHTS.] Notwithstanding the 
  9.36  provisions of any sabbatical leave agreements, regular and 
 10.1   optional additional member contributions and employer 
 10.2   contributions under this section are permissible only if the 
 10.3   plan participant retains the right to full reinstatement to an 
 10.4   employment position with the applicable employing unit both 
 10.5   during and at the conclusion of the sabbatical leave. 
 10.6      Sec. 6.  [354B.25] [INDIVIDUAL RETIREMENT ACCOUNT PLAN 
 10.7   ADMINISTRATION.] 
 10.8      Subdivision 1.  [GENERAL GOVERNANCE.] The individual 
 10.9   retirement account plan is the administrative responsibility of 
 10.10  the higher education board.  The higher education board may 
 10.11  administer the plan directly or may contract out for 
 10.12  administrative services with a qualified third-party plan 
 10.13  administrative entity. 
 10.14     Subd. 2.  [ANNUITY CONTRACTS AND CUSTODIAL ACCOUNTS.] (a) 
 10.15  The plan administrator shall arrange for the purchase of fixed 
 10.16  annuity contracts, variable annuity contracts, a combination of 
 10.17  fixed and variable annuity contracts, or custodial accounts from 
 10.18  financial institutions which have been selected by the state 
 10.19  board of investment under subdivision 3, as the investment 
 10.20  vehicle for the retirement coverage of plan participants and to 
 10.21  provide retirement benefits to plan participants. 
 10.22     (b) The annuity contracts or accounts must be purchased 
 10.23  with contributions under section 354B.23 or with money or assets 
 10.24  otherwise provided by law by authority of the board and 
 10.25  considered acceptable by the applicable financial institution. 
 10.26     (c) In addition to contracts and accounts from financial 
 10.27  institutions, the Minnesota supplemental investment fund 
 10.28  established under section 11A.17 and administered by the state 
 10.29  board of investment is one of the investment options for the 
 10.30  individual retirement account plan. 
 10.31     Subd. 3.  [SELECTION OF FINANCIAL INSTITUTIONS.] (a) The 
 10.32  financial institutions provided for under subdivision 2 must be 
 10.33  selected by the state board of investment. 
 10.34     (b) The state board of investment may select up to five 
 10.35  financial institutions to provide annuity contracts and 
 10.36  custodial accounts as investment options for the individual 
 11.1   retirement account plan in addition to the Minnesota 
 11.2   supplemental investment fund.  In making its selection, the 
 11.3   state board of investment shall consider at least the following 
 11.4   factors: 
 11.5      (1) the experience and ability of the financial institution 
 11.6   to provide retirement and death benefits that are suited to meet 
 11.7   the needs of plan participants; 
 11.8      (2) the relationship of those retirement and death benefits 
 11.9   provided by the financial institution to their cost; and 
 11.10     (3) the financial strength and stability of the financial 
 11.11  institution. 
 11.12     (c) After selecting a financial institution, the state 
 11.13  board of investment must periodically review each financial 
 11.14  institution selected under paragraph (b).  The periodic review 
 11.15  must occur at least every three years.  In making its review, 
 11.16  the state board of investment may retain appropriate consulting 
 11.17  services to assist it in its periodic review, may establish a 
 11.18  budget for the cost of the periodic review process, and may 
 11.19  charge a proportional share of these costs to the reviewed 
 11.20  financial institution. 
 11.21     (d) Contracts with financial institutions under this 
 11.22  section must be executed by the board and must be approved by 
 11.23  the state board of investment before execution. 
 11.24     (e) The state board of investment shall also establish 
 11.25  policies and procedures under section 11A.04, clause (2), to 
 11.26  carry out the provisions of this subdivision. 
 11.27     Subd. 4.  [BENEFIT OWNERSHIP.] The retirement benefits 
 11.28  provided by the annuity contracts and custodial accounts of the 
 11.29  individual retirement account plan are held for the benefit of 
 11.30  plan participants and must be paid according to this chapter and 
 11.31  of the plan document. 
 11.32     Subd. 5.  [INDIVIDUAL RETIREMENT ACCOUNT PLAN 
 11.33  ADMINISTRATIVE EXPENSES.] (a) The reasonable and necessary 
 11.34  administrative expenses of the individual retirement account 
 11.35  plan must be paid by plan participants in the following manner: 
 11.36     (1) from plan participants with amounts invested in the 
 12.1   Minnesota supplemental investment fund, the plan administrator 
 12.2   may charge an administrative expense assessment as provided in 
 12.3   section 11A.17, subdivisions 10a and 14; and 
 12.4      (2) from plan participants with amounts through annuity 
 12.5   contracts and custodial accounts purchased under subdivision 2, 
 12.6   paragraph (a), the plan administrator may charge an 
 12.7   administrative expense assessment of a designated amount, not to 
 12.8   exceed two percent of member and employer contributions, as 
 12.9   those contributions are made. 
 12.10     (b) Any administrative expense charge that is not actually 
 12.11  needed for the administrative expenses of the individual 
 12.12  retirement account plan must be refunded to member accounts. 
 12.13     Sec. 7.  [NO EFFECT ON CURRENT COVERAGE AND PRIOR SERVICE 
 12.14  CREDIT AND CONTRIBUTIONS.] 
 12.15     (a) Nothing in sections 1 to 9 is intended to remove any 
 12.16  current participant in the individual retirement account plan 
 12.17  from future coverage by that plan for continued employment in 
 12.18  the same employment position or to add any person to individual 
 12.19  retirement account plan coverage or eligibility who was not 
 12.20  eligible for that coverage under the laws in effect before July 
 12.21  1, 1995. 
 12.22     (b) Nothing in section 1 to 9 may be construed to 
 12.23  disqualify any period of employment covered by the individual 
 12.24  retirement account plan or to disqualify any contributions to 
 12.25  the credit of participants in the individual retirement account 
 12.26  plan as reflected in plan records as of June 30, 1995. 
 12.27     Sec. 8.  [INSTRUCTION TO REVISOR.] 
 12.28     In Minnesota Statutes 1995 Supplement and subsequent 
 12.29  editions, the revisor of statutes shall correct any references 
 12.30  to any provision of Minnesota Statutes, chapter 136E in sections 
 12.31  1 to 9, replacing the incorrect reference with the appropriate 
 12.32  reference. 
 12.33     Sec. 9.  [REPEALER.] 
 12.34     (a) Minnesota Statutes 1994, sections 354B.01; 354B.015; 
 12.35  354B.02; 354B.035; 354B.04; 354B.045; 354B.05; and 354B.15, are 
 12.36  repealed. 
 13.1      (b) Laws 1990, chapter 570, article 3, sections 10 and 11, 
 13.2   as amended by Laws 1992, chapter 420, section 1, and Laws 1993, 
 13.3   chapter 239, article 2, section 7; Laws 1993, chapters 192, 
 13.4   section 89, and 239, article 5, section 2; and Laws 1994, 
 13.5   chapters 508, article 1, section 14; and 572, sections 11 and 
 13.6   12, are repealed. 
 13.7      Sec. 10. [EFFECTIVE DATE.] 
 13.8      Sections 1 to 9 are effective July 1, 1995. 
 13.9                              ARTICLE 2 
 13.10         RECODING THE PROFESSIONAL AND SUPERVISORY EMPLOYEE
 13.11                 INDIVIDUAL RETIREMENT ACCOUNT PLAN
 13.12     Section 1.  [INSTRUCTIONS TO REVISOR.] 
 13.13     In Minnesota Statutes 1995 Supplement and subsequent 
 13.14  editions, the revisor of statutes shall renumber as chapter 354D 
 13.15  the professional and supervisory employee individual retirement 
 13.16  account law that is currently coded as chapter 354C and shall 
 13.17  appropriately revise any statutory cross-references in light of 
 13.18  that recoding. 
 13.19     Sec. 2.  [EFFECTIVE DATE.] 
 13.20     Section 1 is effective on July 1, 1995. 
 13.21                             ARTICLE 3 
 13.22        RECODIFICATION OF STATE UNIVERSITY-COMMUNITY COLLEGE
 13.23                  SUPPLEMENTAL RETIREMENT ACCOUNT. 
 13.24     Section 1.  [354C.10] [ESTABLISHMENT.] 
 13.25     A supplemental retirement plan is established for certain 
 13.26  employees of the higher education board.  The supplemental 
 13.27  retirement plan is the continuation of the plan established by 
 13.28  Laws 1967, chapter 808, sections 1 to 6, as amended. 
 13.29     Sec. 2.  [354C.11] [COVERAGE.] 
 13.30     Personnel employed by the higher education board who are in 
 13.31  the unclassified service of the state, and who have completed 
 13.32  the second year of a full-time contract, are participants in the 
 13.33  supplemental retirement plan, effective on the next following 
 13.34  July 1, if the person is employed in an eligible unclassified 
 13.35  administrative position as defined in section 354B.20, 
 13.36  subdivision 6, or is employed in an employment classification 
 14.1   included in one of the following collective bargaining units 
 14.2   under section 179A.10, subdivision 2: 
 14.3      (1) the state university instructional unit; 
 14.4      (2) the community college instructional unit; 
 14.5      (3) the technical college instructional unit; and 
 14.6      (4) the state university administrative unit. 
 14.7      Sec. 3.  [354C.12] [SALARY DEDUCTIONS AND MATCHING EMPLOYER 
 14.8   CONTRIBUTIONS.] 
 14.9      Subdivision 1.  [BASIC CONTRIBUTIONS AND DEDUCTIONS.] (a) 
 14.10  The employer of personnel covered by the supplemental retirement 
 14.11  plan as provided in section 354C.11 shall deduct a sum equal to 
 14.12  five percent of the annual salary of the person between $6,000 
 14.13  and $15,000. 
 14.14     (b) The basic contribution deduction must be made in the 
 14.15  same manner as other retirement deductions are made from the 
 14.16  salary of the person under section 352.04, subdivision 4; 
 14.17  352D.04, subdivision 2; 354.42, subdivision 2; or 354A.12, 
 14.18  whichever applies. 
 14.19     (c) The employer shall also make a contribution to the 
 14.20  supplemental retirement plan on behalf of covered personnel 
 14.21  equal to the salary deduction made under paragraph (a). 
 14.22     Subd. 2.  [OMITTED DEDUCTIONS.] If the employer of 
 14.23  personnel covered by the supplemental retirement plan as 
 14.24  provided in section 354C.11 fails to deduct the member basic 
 14.25  contribution from the covered employee's salary and a period of 
 14.26  less than 60 days from the date on which the deduction should 
 14.27  have been made has elapsed, the employer must obtain the omitted 
 14.28  member deduction by an additional payroll deduction during the 
 14.29  pay period next following the discovery of the omission.  If the 
 14.30  employer fails to deduct the member basic contribution from the 
 14.31  covered employee's salary and that omission continues for at 
 14.32  least 60 days from the date on which the member basic 
 14.33  contribution deduction should have been made, the employer and 
 14.34  the covered employee may agree on an alternate additional 
 14.35  deduction amount representing the omitted member basic 
 14.36  contribution, but the employer must pay the full required 
 15.1   omitted employer basic contribution and must pay an amount equal 
 15.2   to 8.5 percent of the total member and employer contribution 
 15.3   amounts due in lieu of any interest.  An omitted member basic 
 15.4   contribution deduction must be made within one year of the date 
 15.5   on which the deduction was scheduled to have been made. 
 15.6      Subd. 3.  [ADDITIONAL DEDUCTIONS AND CONTRIBUTIONS.] If an 
 15.7   agreement is made under section 356.24 for an additional 
 15.8   employee deduction and an additional matching employer 
 15.9   contribution, an amount equal to the additional employee 
 15.10  contribution must be deducted from the employee's salary above 
 15.11  $15,000.  The employer must match the additional employee 
 15.12  contribution deduction. 
 15.13     Subd. 4.  [ADMINISTRATIVE EXPENSES.] The higher education 
 15.14  board is authorized to pay the necessary and reasonable 
 15.15  administrative expenses of the supplemental retirement plan.  
 15.16  The administrative fees or charges must be paid by participants 
 15.17  in the following manner: 
 15.18     (1) from participants whose contributions are invested with 
 15.19  the state board of investment, the plan administrator may 
 15.20  recover administrative expenses in the manner provided by 
 15.21  section 11A.17, subdivisions 10a and 14; or 
 15.22     (2) from participants where contributions are invested 
 15.23  through contracts purchased from any other authorized source, 
 15.24  the plan administrator may assess an amount of up to two percent 
 15.25  of the employee and employer contributions. 
 15.26     Any recovered or assessed amounts that are not needed for 
 15.27  the necessary and reasonable administrative expenses of the plan 
 15.28  must be refunded to member accounts. 
 15.29     Sec. 4.  [354C.13] [ADMINISTRATION.] 
 15.30     The higher education board shall administer the 
 15.31  supplemental retirement plan. 
 15.32     Sec. 5.  [354C.14] [INVESTMENT OF DEDUCTIONS AND 
 15.33  CONTRIBUTIONS.] 
 15.34     (a) The higher education board shall invest the deductions 
 15.35  and contributions under section 354C.12, after deduction of 
 15.36  administrative expenses under section 354C.12, subdivision 4, in 
 16.1   annuity contracts or custodial accounts from financial 
 16.2   institutions selected by the state board of investment under 
 16.3   section 354B.25, subdivision 3. 
 16.4      (b) The retirement contributions and death benefits 
 16.5   provided by annuity contracts or custodial accounts purchased by 
 16.6   the higher education board are owned by the supplemental 
 16.7   retirement plan and must be paid in accordance with those 
 16.8   annuity contracts or custodial account agreements. 
 16.9      Sec. 6.  [354C.15] [REDEMPTION OF SUPPLEMENTAL INVESTMENT 
 16.10  FUND SHARES.] 
 16.11     (a) The higher education board shall redeem all shares in 
 16.12  the accounts of the Minnesota supplemental investment fund held 
 16.13  on behalf of personnel covered by the supplemental retirement 
 16.14  plan upon the election by the person of an investment option 
 16.15  other than the supplemental investment fund, except as provided 
 16.16  in paragraph (b). 
 16.17     (b) The redemption of shares in the fixed interest account 
 16.18  attributable to a guaranteed investment contract as of July 1, 
 16.19  1994, may not occur until the expiration date of the applicable 
 16.20  guaranteed investment contract. 
 16.21     (c) The higher education board shall transfer the cash 
 16.22  realized from a redemption of Minnesota supplemental investment 
 16.23  fund shares to the financial institution or institutions 
 16.24  selected by the state board of investment under section 354B.25, 
 16.25  subdivision 3. 
 16.26     Sec. 7.  [354C.16] [PAYMENT OF BENEFITS.] 
 16.27     (a) The withdrawal of member contributions, employer 
 16.28  contributions and accrued investment income, or a retirement 
 16.29  benefit based on those amounts is payable immediately upon the 
 16.30  death or termination of employment of the employee. 
 16.31     (b) An application by the employee or made on behalf of the 
 16.32  employee by an appropriate third party must be filed before any 
 16.33  payment of benefits may occur. 
 16.34     Sec. 8.  [354C.17] [TAX SHELTER PROVISIONS.] 
 16.35     Subdivision 1.  [AGREEMENTS; SALARY ADJUSTMENTS.] For the 
 16.36  purpose of permitting participation in a tax shelter for 
 17.1   employment income under the applicable pension provisions of the 
 17.2   Internal Revenue Code, the higher education board may enter into 
 17.3   agreements with its employees to reduce or to adjust downward 
 17.4   the salaries for persons covered by the supplemental retirement 
 17.5   plan under section 354C.11, and to pay as the employer an amount 
 17.6   equivalent to the salary reduction or the salary downward 
 17.7   adjustment in the same manner as deductions would have been paid 
 17.8   by the employee under section 354C.12, subdivision 1. 
 17.9      Subd. 2.  [RULES.] The higher education board may adopt 
 17.10  rules and procedures consistent with this chapter to permit, if 
 17.11  possible, participation in a tax shelter under the applicable 
 17.12  provisions of the Internal Revenue Code. 
 17.13     Sec. 9.  [354C.18] [RULES.] 
 17.14     (a) The higher education board may adopt rules to 
 17.15  administer this chapter. 
 17.16     (b) The higher education board may deposit member 
 17.17  contributions in a nontreasury account established under chapter 
 17.18  136, an account or accounts established under section 11A.17, or 
 17.19  other appropriate accounts operated by the state board of 
 17.20  investment for investment under procedures established by the 
 17.21  state board of investment. 
 17.22     Sec. 10.  [NO EFFECT ON CURRENT COVERAGE AND PRIOR SERVICE 
 17.23  CREDIT AND CONTRIBUTIONS.] 
 17.24     (a) Nothing in this recodification article is intended to 
 17.25  effect the eligibility for coverage or the coverage by the 
 17.26  supplemental retirement plan of any person covered by that plan 
 17.27  on June 30, 1995. 
 17.28     (b) Nothing in this recodification article may be construed 
 17.29  to disqualify any contributions to the credit of any person 
 17.30  covered by the supplemental retirement plan as reflected in plan 
 17.31  records as of June 30, 1995. 
 17.32     Sec. 11.  [REPEALER.] 
 17.33     Minnesota Statutes 1994, sections 354B.06; 354B.07; 
 17.34  354B.08; 354B.085; and 354B.09, are repealed. 
 17.35     Sec. 12.  [EFFECTIVE DATE.] 
 17.36     Sections 1 to 11 are effective July 1, 1995. 
 18.1                              ARTICLE 4 
 18.2                          CONFORMING CHANGES 
 18.3      Section 1.  Minnesota Statutes 1994, section 11A.23, 
 18.4   subdivision 4, is amended to read: 
 18.5      Subd. 4.  [COVERED RETIREMENT FUNDS AND PLANS.] The 
 18.6   provisions of this section shall apply to the following 
 18.7   retirement funds and plans:  
 18.8      (1) State university and state community college higher 
 18.9   education board supplemental retirement plan established 
 18.10  pursuant to sections 354B.07 to 354B.09 under chapter 354C; 
 18.11     (2) state employees retirement fund established pursuant to 
 18.12  chapter 352; 
 18.13     (3) correctional employees retirement plan established 
 18.14  pursuant to chapter 352; 
 18.15     (4) state patrol retirement fund established pursuant to 
 18.16  chapter 352B; 
 18.17     (5) unclassified employees retirement plan established 
 18.18  pursuant to chapter 352D; 
 18.19     (6) public employees retirement fund established pursuant 
 18.20  to chapter 353; 
 18.21     (7) public employees police and fire fund established 
 18.22  pursuant to chapter 353; 
 18.23     (8) teachers' retirement fund established pursuant to 
 18.24  chapter 354; 
 18.25     (9) judges' retirement fund established pursuant to chapter 
 18.26  490; and 
 18.27     (10) any other funds required by law to be invested by the 
 18.28  board.  
 18.29     Sec. 2.  Minnesota Statutes 1994, section 354.05, 
 18.30  subdivision 2a, is amended to read: 
 18.31     Subd. 2a.  [EXCEPTIONS.] (a) Notwithstanding subdivision 2, 
 18.32  a person specified in paragraph (b) is not a member of the fund 
 18.33  except for purposes of social security coverage unless (1) the 
 18.34  person is covered by section 354B.02, subdivision 2, and remains 
 18.35  a member of the fund for all purposes or, (2) the person is 
 18.36  covered by section 354B.02, subdivision 1 or 5, or 
 19.1   354B.035 354B.21, and elects coverage by the teachers retirement 
 19.2   association. 
 19.3      (b) A teacher is excluded from fund membership other than 
 19.4   social security coverage under paragraph (a) if first employed 
 19.5   as: 
 19.6      (1) a teacher in the state university system after June 30, 
 19.7   1989; 
 19.8      (2) a teacher in the state community college system after 
 19.9   June 30, 1989; or 
 19.10     (3) a teacher in a technical college authorized under 
 19.11  chapter 136C or 136D after June 30, 1995 the person is covered 
 19.12  by the individual retirement account plan established under 
 19.13  chapter 354B. 
 19.14     Sec. 3.  Minnesota Statutes 1994, section 355.61, is 
 19.15  amended to read: 
 19.16     355.61 [SOCIAL SECURITY COVERAGE FOR CERTAIN STATE 
 19.17  UNIVERSITY OR COMMUNITY COLLEGE FACULTY MEMBERS EMPLOYED BY THE 
 19.18  HIGHER EDUCATION BOARD.] 
 19.19     Plan participants under section 354B.02, subdivision 1, and 
 19.20  persons electing participation under section 354B.02, 
 19.21  subdivision 2 or 3, 354B.21 remain members of the teachers 
 19.22  retirement association for purposes of social security coverage 
 19.23  only, and remain covered by the applicable agreement entered 
 19.24  into under section 355.02, but are not members of the teachers 
 19.25  retirement association for any other purpose while employed in 
 19.26  covered employment. 
 19.27     Sec. 4.  Minnesota Statutes 1994, section 356.24, 
 19.28  subdivision 1, is amended to read: 
 19.29     Subdivision 1.  [RESTRICTION; EXCEPTIONS.] (a) It is 
 19.30  unlawful for a school district or other governmental subdivision 
 19.31  or state agency to levy taxes for, or contribute public funds to 
 19.32  a supplemental pension or deferred compensation plan that is 
 19.33  established, maintained, and operated in addition to a primary 
 19.34  pension program for the benefit of the governmental subdivision 
 19.35  employees other than: 
 19.36     (1) to a supplemental pension plan that was established, 
 20.1   maintained, and operated before May 6, 1971; 
 20.2      (2) to a plan that provides solely for group health, 
 20.3   hospital, disability, or death benefits, to the individual 
 20.4   retirement account plan established by sections 354B.01 to 
 20.5   354B.05 chapter 354B; 
 20.6      (3) to a plan that provides solely for severance pay under 
 20.7   section 465.72 to a retiring or terminating employee; 
 20.8      (4) for employees other than personnel employed by the 
 20.9   state university board or the community college board and 
 20.10  covered by section 354B.07, subdivision 1 the higher education 
 20.11  board supplemental retirement plan under chapter 354C, to: 
 20.12     (i) the state of Minnesota deferred compensation plan under 
 20.13  section 352.96; or 
 20.14     (ii) payment of the applicable portion of the premium on a 
 20.15  tax sheltered annuity contract qualified under section 403(b) of 
 20.16  the federal Internal Revenue Code, purchased from a qualified 
 20.17  insurance company; if provided for in a personnel policy or in 
 20.18  the collective bargaining agreement of the public employer with 
 20.19  the exclusive representative of public employees in an 
 20.20  appropriate unit, in an amount matching employee contributions 
 20.21  on a dollar for dollar basis, but not to exceed an employer 
 20.22  contribution of $2,000 a year per employee; or 
 20.23     (5) for personnel employed by the state university board or 
 20.24  the community college board and not covered by sections 352D.02, 
 20.25  subdivision 1a, and 354B.07, subdivision 1 clause (4), to the 
 20.26  supplemental retirement plan under sections 354B.07 to 354B.09 
 20.27  chapter 354C, if provided for in a personnel policy or in the 
 20.28  collective bargaining agreement of the public employer with the 
 20.29  exclusive representative of the covered employees in an 
 20.30  appropriate unit, in an amount matching employee contributions 
 20.31  on a dollar for dollar basis, but not to exceed an employer 
 20.32  contribution of $2,000 a year for each employee.  
 20.33     (b) A qualified insurance company is a company that: 
 20.34     (1) meets the definition in section 60A.02, subdivision 4; 
 20.35     (2) is licensed to engage in life insurance or annuity 
 20.36  business in the state; 
 21.1      (3) is determined by the commissioner of commerce to have a 
 21.2   rating within the top two rating categories by a recognized 
 21.3   national rating agency or organization that regularly rates 
 21.4   insurance companies; and 
 21.5      (4) is determined by the state board of investment to be 
 21.6   among the ten applicant insurance companies with competitive 
 21.7   options and investment returns on annuity products.  The state 
 21.8   board of investment determination must be made on or before 
 21.9   January 1, 1993, and must be reviewed periodically.  The state 
 21.10  board of investment may retain actuarial services to assist it 
 21.11  in this determination and in its periodic review.  The state 
 21.12  board of investment may annually establish a budget for its 
 21.13  costs in any determination and periodic review processes.  The 
 21.14  state board of investment may charge a proportional share of all 
 21.15  costs related to the periodic review to those companies 
 21.16  currently under contract and may charge a proportional share of 
 21.17  all costs related to soliciting and evaluating bids in a 
 21.18  determination process to each company selected by the state 
 21.19  board of investment.  All contracts must be approved before 
 21.20  execution by the state board of investment.  The state board of 
 21.21  investment shall establish policies and procedures under section 
 21.22  11A.04, clause (2), to carry out this paragraph. 
 21.23     (c) A personnel policy for unrepresented employees or a 
 21.24  collective bargaining agreement may establish limits on the 
 21.25  number of vendors under paragraph (b), clause (4), that it will 
 21.26  utilize and conditions under which the vendors may contact 
 21.27  employees both during working hours and after working hours. 
 21.28     Sec. 5.  [EFFECTIVE DATE.] 
 21.29     Sections 1 to 4 are effective July 1, 1995. 
 21.30                             ARTICLE 5 
 21.31      IRAP AND RELATED RETIREMENT COVERAGE SUBSTANTIVE CHANGES 
 21.32     Section 1.  Minnesota Statutes 1994, section 352D.02, 
 21.33  subdivision 1, is amended to read: 
 21.34     Subdivision 1.  [COVERAGE.] (a) Employees enumerated in 
 21.35  paragraph (b), if they are in the unclassified service of the 
 21.36  state or metropolitan council and are eligible for coverage 
 22.1   under the general state employees retirement plan under chapter 
 22.2   352, are participants in the unclassified program under this 
 22.3   chapter unless the employee gives notice to the executive 
 22.4   director of the Minnesota state retirement system within one 
 22.5   year following the commencement of employment in the 
 22.6   unclassified service that the employee desires coverage under 
 22.7   the general state employees retirement plan.  For the purposes 
 22.8   of this chapter, an employee who does not file notice with the 
 22.9   executive director is deemed to have exercised the option to 
 22.10  participate in the unclassified plan. 
 22.11     (b) Enumerated employees are: 
 22.12     (1) an employee in the office of the governor, lieutenant 
 22.13  governor, secretary of state, state auditor, state treasurer, 
 22.14  attorney general, or an employee of the state board of 
 22.15  investment; 
 22.16     (2) the head of a department, division, or agency created 
 22.17  by statute in the unclassified service, an acting department 
 22.18  head subsequently appointed to the position, or an employee 
 22.19  enumerated in section 15A.081, subdivision 1 or 15A.083, 
 22.20  subdivision 4; 
 22.21     (3) a permanent, full-time unclassified employee of the 
 22.22  legislature or a commission or agency of the legislature or a 
 22.23  temporary legislative employee having shares in the supplemental 
 22.24  retirement fund as a result of former employment covered by this 
 22.25  chapter, whether or not eligible for coverage under the 
 22.26  Minnesota state retirement system; 
 22.27     (4) a person other than an employee of the state board of 
 22.28  technical colleges who is employed in a position established 
 22.29  under section 43A.08, subdivision 1, clause (3), or subdivision 
 22.30  1a, or in a position authorized under a statute creating or 
 22.31  establishing a department or agency of the state, which is at 
 22.32  the deputy or assistant head of department or agency or director 
 22.33  level; 
 22.34     (5) the regional administrator, or executive director of 
 22.35  the metropolitan council, general counsel, division directors, 
 22.36  operations managers, and other positions as designated by the 
 23.1   council, all of which may not exceed 27 positions at the 
 23.2   council; and the chair, provided that upon initial designation 
 23.3   of all positions provided for in this clause, no further 
 23.4   designations or redesignations may be made without approval of 
 23.5   the board of directors of the Minnesota state retirement system; 
 23.6      (6) the executive director, associate executive director, 
 23.7   and not to exceed nine positions of the higher education 
 23.8   coordinating board in the unclassified service, as designated by 
 23.9   the higher education coordinating board before January 1, 1992, 
 23.10  or subsequently redesignated with the approval of the board of 
 23.11  directors of the Minnesota state retirement system, unless the 
 23.12  person has elected coverage by the individual retirement account 
 23.13  plan under chapter 354B; 
 23.14     (7) the clerk of the appellate courts appointed under 
 23.15  article VI, section 2, of the Constitution of the state of 
 23.16  Minnesota; 
 23.17     (8) the chief executive officers of correctional facilities 
 23.18  operated by the department of corrections and of hospitals and 
 23.19  nursing homes operated by the department of human services; 
 23.20     (9) an employee whose principal employment is at the state 
 23.21  ceremonial house; 
 23.22     (10) an employee of the Minnesota educational computing 
 23.23  corporation; 
 23.24     (11) an employee of the world trade center board; and 
 23.25     (12) an employee of the state lottery board who is covered 
 23.26  by the managerial plan established under section 43A.18, 
 23.27  subdivision 3; 
 23.28     (13) an employee of the state board of technical colleges 
 23.29  employed in a position established under section 43A.08, 
 23.30  subdivision 1, clause (3), or 1a, unless the person has elected 
 23.31  coverage by the individual retirement account plan under chapter 
 23.32  354B; and 
 23.33     (14) an employee of the higher education board in a 
 23.34  position established under section 136E.04, subdivision 2, 
 23.35  unless the person has elected coverage by the individual 
 23.36  retirement account plan under chapter 354B. 
 24.1      Sec. 2.  Article 1, section 1, subdivision 4, is amended to 
 24.2   read: 
 24.3      Subd. 4. [COVERED EMPLOYMENT.] (a) "Covered employment" 
 24.4   means employment by a person eligible for coverage by this 
 24.5   retirement program under section 354B.21 in a faculty position 
 24.6   or in an eligible unclassified administrative position. 
 24.7      (b) "Covered employment" does not mean employment specified 
 24.8   in paragraph (a) by a faculty member employed in a state 
 24.9   university or a community college if the person's initial 
 24.10  appointment is specified as constituting less than 25 percent of 
 24.11  a full academic year, exclusive of summer session, for the 
 24.12  applicable institution. 
 24.13     Sec. 3.  Article 1, section 1, subdivision 6, is amended to 
 24.14  read: 
 24.15     Subd. 6.  [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE POSITION.] 
 24.16  "Eligible unclassified administrative position" means the 
 24.17  following: 
 24.18     (1) the chancellor of the board; 
 24.19     (2) a president of a state college or university; or 
 24.20     (3) an excluded administrator employed by the in a state 
 24.21  university system or college, by the board, or by the higher 
 24.22  education coordinating board, or the technical college system 
 24.23  chancellor's office. 
 24.24     Sec. 4.  Article 1, section 2, subdivision 1, is amended to 
 24.25  read: 
 24.26     Subdivision 1.  [ELIGIBILITY.] The following persons are 
 24.27  eligible to have coverage by the individual retirement account 
 24.28  plan and to be participants in the plan: 
 24.29     (1) employees of the board who are employed as faculty in 
 24.30  an employment classification included in the state university 
 24.31  instructional unit, the community college instructional unit, or 
 24.32  the technical college instructional unit under section 179A.10, 
 24.33  subdivision 2; 
 24.34     (2) the chancellor and employees of the board in eligible 
 24.35  unclassified administrative positions; and 
 24.36     (3) the employees in eligible unclassified administrative 
 25.1   positions in the state universities; 
 25.2      (4) the employees in eligible unclassified administrative 
 25.3   positions in the technical colleges; and 
 25.4      (5) the employees in eligible unclassified administrative 
 25.5   positions of the higher education coordinating board or the 
 25.6   higher education facilities authority of the community colleges. 
 25.7      Sec. 5.  Article 1, section 2, subdivision 2, is amended to 
 25.8   read: 
 25.9      Subd. 2. [COVERAGE; ELECTION.] (a) An eligible person is 
 25.10  entitled to elect coverage by the plan.  If the eligible person 
 25.11  does not make a timely election of coverage by the plan, the 
 25.12  person has the coverage specified in subdivision 3. 
 25.13     (b) For eligible persons who were employed by the former 
 25.14  state university system or the former community college system 
 25.15  before May 1, 1995, the person has the retirement coverage that 
 25.16  the person had for employment immediately before May 1, 1995. 
 25.17     (c) For all other eligible persons, the election of 
 25.18  coverage must be made within 60 90 days of the date of enactment 
 25.19  of this act or 60 90 days of the start of covered employment, 
 25.20  whichever occurs later. 
 25.21     Sec. 6.  Article 1, section 2, subdivision 3, is amended to 
 25.22  read: 
 25.23     Subd 3.  [DEFAULT COVERAGE.] If an eligible person fails to 
 25.24  elect coverage by the plan under subdivision 2 or if the person 
 25.25  fails to make a timely election, the following retirement 
 25.26  coverage applies: 
 25.27     (1) for employees of the board who are employed in faculty 
 25.28  positions in the state universities or in the community 
 25.29  colleges, the retirement coverage is by the plan established by 
 25.30  this chapter; 
 25.31     (2) for employees of the board who are employed in faculty 
 25.32  positions in the technical colleges, the retirement coverage is 
 25.33  by the teachers retirement association established under chapter 
 25.34  354, unless the employee was a member of a first class city 
 25.35  teacher retirement fund established under chapter 354A on June 
 25.36  30, 1995, and then the retirement coverage is by the Duluth 
 26.1   teachers retirement fund association if the person was a member 
 26.2   of that plan on June 30, 1995, or the Minneapolis teachers 
 26.3   retirement fund association if the person was a member of that 
 26.4   plan on June 30, 1995, or the St. Paul teachers retirement fund 
 26.5   association if the person was a member of that plan on June 30, 
 26.6   1995; and 
 26.7      (3) for employees of the board who are employed in eligible 
 26.8   unclassified administrative positions, the retirement coverage 
 26.9   is by the plan established by this chapter unless the person 
 26.10  affirmatively elects the state unclassified employees retirement 
 26.11  program as provided in section 352D.02, subdivisions 1, 1a, and 
 26.12  3, except that the election must be made within the 60 day time 
 26.13  period specified in subdivision 2, paragraph (b). 
 26.14     Sec. 7.  Article 1, section 2, is amended by adding a 
 26.15  subdivision to read: 
 26.16     Subd. 3a.  [CONTINUATION OF PLAN COVERAGE IN CERTAIN 
 26.17  INSTANCES.] For a person with retirement coverage by a first 
 26.18  class city teacher retirement fund association instead of the 
 26.19  individual retirement account plan under subdivision 3, clause 
 26.20  (2), coverage by the applicable retirement fund association 
 26.21  continues for the duration of the person's employment by the 
 26.22  higher education board unless, within 90 days of a change in 
 26.23  employment within the Minnesota state colleges and universities 
 26.24  system, the person elects the individual retirement account plan 
 26.25  for all future employment by the higher education board. 
 26.26     Sec. 8.  Article 1, section 2, is amended by adding a 
 26.27  subdivision to read: 
 26.28     Subd. 3b.  [COVERAGE OF CERTAIN FORMER TECHNICAL COLLEGE 
 26.29  FACULTY MEMBERS.] A person who was employed as a teacher by a 
 26.30  technical college before July 1, 1995, and who subsequently is 
 26.31  reclassified into a different employment position while 
 26.32  continuing to perform the same or essentially the same 
 26.33  employment duties and consequently shifts from the technical 
 26.34  college instructional collective bargaining unit to another 
 26.35  state collective bargaining unit retains coverage by the 
 26.36  teachers retirement association or the applicable first class 
 27.1   city teachers retirement fund association, whichever applies. 
 27.2      Sec. 9.  Article 1, section 2, subdivision 5, is amended to 
 27.3   read: 
 27.4      Subd. 5. [PAYMENT FOR CERTAIN PRIOR UNCOVERED SERVICE.] (a) 
 27.5   A person employed in a faculty position by the board who was 
 27.6   initially excluded from participation in the individual 
 27.7   retirement account plan coverage, who was not covered by any 
 27.8   other Minnesota public pension plan for that service, and who is 
 27.9   subsequently eligible to participate in the individual 
 27.10  retirement account plan may make member contributions for that 
 27.11  period of prior uncovered teaching employment or eligible 
 27.12  unclassified administrative employment with the board. 
 27.13     (b) The member contributions for prior uncovered board 
 27.14  service are the amount that the person would have paid if the 
 27.15  prior service had been covered employment.  The payment must be 
 27.16  made to the individual retirement account plan administrator and 
 27.17  may be made only in a lump sum or by payroll deduction, as the 
 27.18  person designates.  The payment must be made by the later of: 
 27.19     (1) 45 days of the start of covered employment; or 
 27.20     (2) the end of the fiscal year in which covered employment 
 27.21  began. 
 27.22     (c) The board must contribute an amount to match any 
 27.23  contribution made by a plan participant under this subdivision. 
 27.24     (d) Payments of contributions for prior uncovered board 
 27.25  service under this subdivision must be invested in the same 
 27.26  manner as the regular contributions made by or on behalf of the 
 27.27  plan participant. 
 27.28     Sec. 10.  Article 1, section 4, subdivision 5, is amended 
 27.29  to read: 
 27.30     Subd. 5. [OMITTED MEMBER DEDUCTIONS.] (a) If the employing 
 27.31  unit that employs a plan participant fails to deduct the member 
 27.32  contribution from the participant's salary and a period of less 
 27.33  than 60 days from the date on which the deduction should have 
 27.34  been made has elapsed, the employing unit must obtain the 
 27.35  omitted member deduction by an additional payroll deduction 
 27.36  during the pay period next following the discovery of the 
 28.1   omission. 
 28.2      (b) If the employing unit of a plan participant fails to 
 28.3   deduct the member contribution from the participant's salary and 
 28.4   that omission continues for at least 60 days from the date on 
 28.5   which the deduction should have been made, the employing unit 
 28.6   and the participant may agree on an alternate deduction must pay 
 28.7   the amount representing the omitted member contribution, but the 
 28.8   employing unit must pay and the full required employer 
 28.9   contribution and must pay an amount equal to, plus compound 
 28.10  interest at an annual rate of 8.5 percent of the total member 
 28.11  and employer contribution amounts due in lieu of any 
 28.12  interest.  An omitted member contribution The contributions and 
 28.13  any interest must be made within one year of the date on which 
 28.14  the member contribution deduction was scheduled to have been 
 28.15  made omission was discovered. 
 28.16     Sec. 11.  Article 1, section 6, subdivision 2, is amended 
 28.17  to read: 
 28.18     Subd. 2.  [ANNUITY CONTRACTS AND CUSTODIAL ACCOUNTS.] (a) 
 28.19  The plan administrator shall arrange for the purchase of fixed 
 28.20  annuity contracts, variable annuity contracts, a combination of 
 28.21  fixed and variable annuity contracts, or custodial accounts from 
 28.22  financial institutions which have been selected by the state 
 28.23  board of investment under subdivision 3, as the investment 
 28.24  vehicle for the retirement coverage of plan participants and to 
 28.25  provide retirement benefits to plan participants.  Custodial 
 28.26  accounts from financial institutions shall include open-end 
 28.27  investment companies registered under the federal Investment 
 28.28  Company Act of 1940, as amended. 
 28.29     (b) The annuity contracts or accounts must be purchased 
 28.30  with contributions under section 354B.23 or with money or assets 
 28.31  otherwise provided by law by authority of the board and deemed 
 28.32  acceptable by the applicable financial institution. 
 28.33     (c) In addition to contracts and accounts from financial 
 28.34  institutions, the Minnesota supplemental investment fund 
 28.35  established under section 11A.17 and administered by the state 
 28.36  board of investment is one of the investment options for the 
 29.1   individual retirement account plan. 
 29.2      Sec. 12.  Article 1, section 6, subdivision 3, is amended 
 29.3   to read: 
 29.4      Subd. 3.  [SELECTION OF FINANCIAL INSTITUTIONS.] (a) The 
 29.5   financial institutions provided for under subdivision 2 must be 
 29.6   selected by the state board of investment.  Financial 
 29.7   institutions include open-end investment companies registered 
 29.8   under the federal Investment Company Act of 1940, as amended. 
 29.9      (b) The state board of investment may select up to five 
 29.10  financial institutions to provide annuity contracts and, 
 29.11  custodial accounts, or a combination, as investment options for 
 29.12  the individual retirement account plan in addition to the 
 29.13  Minnesota supplemental investment fund.  In making its 
 29.14  selection, at a minimum, the state board of investment shall 
 29.15  consider at least the following: 
 29.16     (1) the experience and ability of the financial institution 
 29.17  to provide retirement and death benefits that are suited to meet 
 29.18  the needs of plan participants; 
 29.19     (2) the relationship of those retirement and death benefits 
 29.20  provided by the financial institution to their cost; and 
 29.21     (3) the financial strength and stability of the financial 
 29.22  institution. 
 29.23     (c) After selecting a financial institution, the state 
 29.24  board of investment must periodically review each financial 
 29.25  institution selected under paragraph (b).  The periodic review 
 29.26  must occur at least every three years.  In making its review, 
 29.27  the state board of investment may retain appropriate consulting 
 29.28  services to assist it in its periodic review, may establish a 
 29.29  budget for th cost of the periodic review process, and may 
 29.30  charge a proportional share of these costs to the reviewed 
 29.31  financial institution. 
 29.32     (d) Contracts with financial institutions under this 
 29.33  section must be executed by the board and must be approved by 
 29.34  the state board of investment before execution. 
 29.35     (e) the state board of investment shall also establish 
 29.36  policies and procedures under section 11A.04, clause (2) to 
 30.1   carry out the provisions of this subdivision. 
 30.2      Sec. 13.  [354B.30] [DEFERRED ANNUITY ENTITLEMENT FOR 
 30.3   CERTAIN FORMER TRA MEMBERS.] 
 30.4      Notwithstanding any provision of chapter 354 to the 
 30.5   contrary, a person covered by this chapter who had less than 
 30.6   three years of prior allowable service credit in the teachers 
 30.7   retirement association is entitled to a deferred annuity and 
 30.8   augmentation under section 354.55, subdivision 11. 
 30.9      Sec. 14.  [354B.26] [PROHIBITION ON LOANS OR PRETERMINATION 
 30.10  DISTRIBUTIONS.] 
 30.11     (a) No participant may obtain a loan from the plan or 
 30.12  obtain any distribution from the plan at a time before the 
 30.13  participant terminates the employment that gave rise to plan 
 30.14  coverage. 
 30.15     (b) No amounts to the credit of the plan are assignable 
 30.16  either in law or in equity, are subject to state estate tax, or 
 30.17  are subject to execution, levy, attachment, garnishment, or 
 30.18  other legal process, except as provided in section 518.58, 
 30.19  518.581, or 518.611. 
 30.20     Sec. 15.  Article 3, section 2, is amended to read: 
 30.21     Sec. 2.  [354C.11] [COVERAGE.] 
 30.22     Personnel employed by the higher education board who are in 
 30.23  the unclassified service of the state, and who have completed 
 30.24  the second year of at least two years of employment by the board 
 30.25  or a predecessor board with a full-time contract are 
 30.26  participants in the supplemental retirement plan, effective on 
 30.27  the next following July 1, if the person is employed in an 
 30.28  eligible unclassified administrative position as defined in 
 30.29  section 354B.20, subdivision 6, or is employed in an employment 
 30.30  classification included in one of the following collective 
 30.31  bargaining units under section 179A.10, subdivision 2: 
 30.32     (1) the state university instructional unit; 
 30.33     (2) the community college instructional unit; 
 30.34     (3) the technical college instructional unit; and 
 30.35     (4) the state university administrative unit. 
 30.36     Sec. 16.  Article 3, section 3, subdivision 2, is amended 
 31.1   to read: 
 31.2      Subd. 2.  [OMITTED DEDUCTIONS.] If the employer of 
 31.3   personnel covered by the supplemental retirement plan as 
 31.4   provided in section 354C.11 fails to deduct the member basic 
 31.5   contribution from the covered employee's salary and a period of 
 31.6   less than 60 days from the date on which the deduction should 
 31.7   have been made has elapsed, the employer must obtain the omitted 
 31.8   member deduction by an additional payroll deduction during the 
 31.9   pay period next following the discovery of the omission.  If the 
 31.10  employer fails to deduct the member basic contribution from the 
 31.11  covered employee's salary and that omission continues for at 
 31.12  least 60 days from the date on which the member basic 
 31.13  contribution deduction should have been made, the employer and 
 31.14  the covered employee may agree on an alternate additional 
 31.15  deduction must pay the amount representing the omitted member 
 31.16  basic contribution, but the employer must pay and the full 
 31.17  required omitted employer basic contribution and must pay an 
 31.18  amount equal to, plus compound interest at an annual rate of 8.5 
 31.19  percent of the total member and employer contribution amounts 
 31.20  due in lieu of any interest.  An omitted member basic 
 31.21  contribution deduction The contributions must be made within one 
 31.22  year of the date on which the deduction was scheduled to have 
 31.23  been made omission was discovered. 
 31.24     Sec. 17.  [354C.151] [REDEMPTION OF OTHER INVESTMENT 
 31.25  AMOUNTS.] 
 31.26     The higher education board shall redeem amounts invested in 
 31.27  investment options other than the Minnesota supplemental 
 31.28  investment fund, when required, in a manner consistent with any 
 31.29  contractual relationship with that investment option.  The 
 31.30  higher education board shall invest or pay out any amounts 
 31.31  realized from a redemption under this section in a manner 
 31.32  consistent with this chapter. 
 31.33     Sec. 18.  [354C.165] [PROHIBITION ON LOANS OR 
 31.34  PRETERMINATION DISTRIBUTIONS.] 
 31.35     (a) No participant may obtain a loan from the plan or 
 31.36  obtain any distribution from the plan at a time before the 
 32.1   participant terminates the employment that gave rise to plan 
 32.2   coverage. 
 32.3      (b) No amounts to the credit of the plan are assignable 
 32.4   either in law or in equity, are subject to state estate tax, or 
 32.5   are subject to execution, levy, attachment, garnishment, or 
 32.6   other legal process, except as provided in section 518.58, 
 32.7   518.581, or 518.611. 
 32.8      Sec. 19.  [EFFECT OF UNCLASSIFIED PROGRAM COVERAGE CHANGE.] 
 32.9      The change in eligibility for retirement coverage by the 
 32.10  unclassified employees retirement program of the Minnesota state 
 32.11  retirement system provided for in sections 1, 6, and 19 may not 
 32.12  be interpreted to disqualify from future retirement coverage by 
 32.13  the unclassified employees retirement program any person who is 
 32.14  a member of the unclassified employees retirement program on the 
 32.15  date of enactment and may not be interpreted to disqualify from 
 32.16  eligibility to elect future retirement coverage by the 
 32.17  unclassified employees retirement program any person who was 
 32.18  employed in state service any time before the date of enactment 
 32.19  and who subsequently is employed in an eligible unclassified 
 32.20  administrative position under article 1, section 1, subdivision 
 32.21  6. 
 32.22     Sec. 20.  [REPEALER.] 
 32.23     Minnesota Statutes 1994, section 352D.02, subdivision 1a, 
 32.24  is repealed. 
 32.25     Sec. 21.  [EFFECTIVE DATE.] 
 32.26     Sections 1 to 20 are effective July 1, 1995.  The 
 32.27  provisions of sections 1 to 20 being amendatory of various 
 32.28  sections of article 1, if any section of article 1 fails to 
 32.29  become law, the corresponding amendatory section of sections 1 
 32.30  to 20 is void.