HF 1430

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to retirement; Minnesota state retirement 
  1.3             system general plan, correctional plan, legislators 
  1.4             plan, state patrol plan, judges plan, and various 
  1.5             other plans covered by combined service annuity 
  1.6             provisions; enhancing legislators plan 
  1.7             service-in-more-than-one-fund provision; expanding use 
  1.8             of combined service annuity provision by retirees of 
  1.9             public safety plans; expanding entitlement to 
  1.10            dependent child benefits in legislators plan and state 
  1.11            patrol plan; creating financial incentives for 
  1.12            Minnesota state retirement system general plan 
  1.13            disabilitants to return to work; clarifying disability 
  1.14            definitions in various plans; requiring disabilitant 
  1.15            study; permitting earlier retirement in elected state 
  1.16            officers plan and judges plan; reducing early 
  1.17            retirement penalties in judges plan; clarifying 
  1.18            Minnesota state retirement system excluded employee 
  1.19            provision; requiring daily compounding of refund 
  1.20            interest in various plans; enhancing judges plan 
  1.21            refund interest rate; creating six year term certain 
  1.22            annuity in Minnesota state retirement system general 
  1.23            plan and unclassified plan; revising unclassified plan 
  1.24            payout options; revising state patrol plan dependent 
  1.25            child benefits; creating account in Minnesota state 
  1.26            retirement system funded by increased unclassified 
  1.27            plan employer contributions to reimburse Minnesota 
  1.28            state retirement system general plan for losses from 
  1.29            transfers from unclassified plan to general plan; 
  1.30            amending Minnesota Statutes 2002, sections 3A.01, 
  1.31            subdivision 2; 3A.03, subdivision 2; 3A.12, 
  1.32            subdivision 1; 352.01, subdivisions 2b, 13; 352.113, 
  1.33            by adding a subdivision; 352.12, subdivisions 1, 2a, 
  1.34            6, 7, 8, 11; 352.22, subdivisions 2, 3; 352.95, 
  1.35            subdivisions 1, 2; 352B.01, subdivisions 10, 11; 
  1.36            352B.10; 352B.105; 352B.11, subdivisions 1, 2, by 
  1.37            adding subdivisions; 352C.031, subdivision 2; 352D.02, 
  1.38            subdivision 3; 352D.04, subdivision 2; 352D.065, 
  1.39            subdivision 2; 352D.075, subdivisions 2, 3, by adding 
  1.40            a subdivision; 356.30, subdivision 1; 356.441; 
  1.41            490.121, subdivision 10; 490.124, subdivisions 3, 12; 
  1.42            repealing Minnesota Statutes 2002, sections 352.01, 
  1.43            subdivision 13a; 352D.02, subdivision 5; 490.11. 
  1.44  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.1                              ARTICLE 1 
  2.2                           COMBINED SERVICE 
  2.3      Section 1.  Minnesota Statutes 2002, section 3A.12, 
  2.4   subdivision 1, is amended to read: 
  2.5      Subdivision 1.  [ENTITLEMENT TO ANNUITY.] (a) Any 
  2.6   legislator who has been an employee covered by a retirement 
  2.7   system listed in paragraph (b) is entitled when qualified to an 
  2.8   annuity from each fund if total allowable service in two or more 
  2.9   of the fund plans totals six or more years. 
  2.10     (b) This section applies to the Minnesota state retirement 
  2.11  system, or a member of the public employees retirement 
  2.12  association including the public employees retirement 
  2.13  association police and fire fund, or the teachers retirement 
  2.14  association, or the Minneapolis employees retirement fund, or 
  2.15  the state patrol retirement fund, or any other public employee 
  2.16  retirement system in the state of Minnesota having with a like 
  2.17  similar provision but excluding all other funds providing 
  2.18  benefits for police or firefighters, shall be entitled when 
  2.19  qualified to an annuity from each fund if the total allowable 
  2.20  service for which the legislator has credit in all funds or in 
  2.21  any two of these funds totals ten or more years, provided. 
  2.22     (c) No portion of the allowable service upon which the 
  2.23  retirement annuity from one fund is based is again may be used 
  2.24  in the computation for benefits from another fund.  The annuity 
  2.25  from each fund shall be determined by the appropriate provisions 
  2.26  of the law except that the requirement that a person must have 
  2.27  at least ten six years allowable service in the respective 
  2.28  system or association shall not apply for the purposes of this 
  2.29  section provided the combined service in two or more of these 
  2.30  funds equals ten six or more years.  
  2.31     (d) The augmentation of deferred annuities provided in 
  2.32  section 3A.02, subdivision 4, shall apply to the annuities 
  2.33  accruing hereunder under this section. 
  2.34     Sec. 2.  Minnesota Statutes 2002, section 356.30, 
  2.35  subdivision 1, is amended to read: 
  2.36     Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (a) 
  3.1   Notwithstanding any provisions of the laws governing the 
  3.2   retirement plans enumerated in subdivision 3, a person who has 
  3.3   met the qualifications of paragraph (b) may elect to receive a 
  3.4   retirement annuity from each enumerated retirement plan in which 
  3.5   the person has at least one-half year of allowable service, 
  3.6   based on the allowable service in each plan, subject to the 
  3.7   provisions of paragraph (c) (e). 
  3.8      (b) A person may receive, upon retirement, a retirement 
  3.9   annuity from each enumerated retirement plan in which the person 
  3.10  has at least one-half year of allowable service, and 
  3.11  augmentation of a deferred annuity calculated under the laws 
  3.12  governing each public pension plan or fund named in subdivision 
  3.13  3, from the date the person terminated all public service if: 
  3.14     (1) the person has allowable service totaling an amount 
  3.15  that allows the person to receive an annuity in any two or more 
  3.16  of the enumerated plans; and 
  3.17     (2) the person has not begun to receive an annuity from any 
  3.18  enumerated plan or the person has made application for benefits 
  3.19  from each applicable plan and the effective dates of the 
  3.20  retirement annuity with each plan under which the person chooses 
  3.21  to receive an annuity are within a one-year period specified in 
  3.22  paragraph (c) or (d), as applicable. 
  3.23     (c) If the annuities receivable under paragraph (b) to the 
  3.24  person include an annuity computed under the state patrol 
  3.25  retirement plan under chapter 352B, the public employees 
  3.26  retirement association police and fire plan under chapter 353, 
  3.27  or a Minneapolis employees retirement association retirement 
  3.28  annuity computed under section 422A.151, the period is five 
  3.29  years. 
  3.30     (d) If the annuities receivable under paragraph (b) to the 
  3.31  person do not include one or more annuities specified under 
  3.32  paragraph (c), the period is one year. 
  3.33     (e) The retirement annuity from each plan must be based 
  3.34  upon the allowable service, accrual rates, and average salary in 
  3.35  the applicable plan except as further specified or modified in 
  3.36  the following clauses:  
  4.1      (1) the laws governing annuities must be the law in effect 
  4.2   on the date of termination from the last period of public 
  4.3   service under a covered retirement plan with which the person 
  4.4   earned a minimum of one-half year of allowable service credit 
  4.5   during that employment; 
  4.6      (2) the "average salary" on which the annuity from each 
  4.7   covered plan in which the employee has credit in a formula plan 
  4.8   must be based on the employee's highest five successive years of 
  4.9   covered salary during the entire service in covered plans; 
  4.10     (3) the accrual rates to be used by each plan must be those 
  4.11  percentages prescribed by each plan's formula as continued for 
  4.12  the respective years of allowable service from one plan to the 
  4.13  next, recognizing all previous allowable service with the other 
  4.14  covered plans; 
  4.15     (4) the allowable service in all the plans must be combined 
  4.16  in determining eligibility for and the application of each 
  4.17  plan's provisions in respect to reduction in the annuity amount 
  4.18  for retirement prior to normal retirement age; and 
  4.19     (5) the annuity amount payable for any allowable service 
  4.20  under a nonformula plan of a covered plan must not be affected, 
  4.21  but such service and covered salary must be used in the above 
  4.22  calculation.  
  4.23     (d) (f) This section does not apply to any person whose 
  4.24  final termination from the last public service under a covered 
  4.25  plan was before May 1, 1975.  
  4.26     (e) (g) For the purpose of computing annuities under this 
  4.27  section, the accrual rates used by any covered plan, except the 
  4.28  public employees police and fire plan, the judges' retirement 
  4.29  fund, and the state patrol retirement plan, must not exceed the 
  4.30  percent specified in section 356.315, subdivision 4, per year of 
  4.31  service for any year of service or fraction thereof.  The 
  4.32  formula percentage used by the judges' retirement fund must not 
  4.33  exceed the percentage rate specified in section 356.315, 
  4.34  subdivision 8, per year of service for any year of service or 
  4.35  fraction thereof.  The accrual rate used by the public employees 
  4.36  police and fire plan and the state patrol retirement plan must 
  5.1   not exceed the percentage rate specified in section 356.315, 
  5.2   subdivision 6, per year of service for any year of service or 
  5.3   fraction thereof.  The accrual rate or rates used by the 
  5.4   legislators retirement plan and the elective state officers 
  5.5   retirement plan must not exceed 2.5 percent, but this limit does 
  5.6   not apply to the adjustment provided under section 3A.02, 
  5.7   subdivision 1, paragraph (c), or 352C.031, paragraph (b). 
  5.8      (f) (h) Any period of time for which a person has credit in 
  5.9   more than one of the covered plans must be used only once for 
  5.10  the purpose of determining total allowable service.  
  5.11     (g) (i) If the period of duplicated service credit is more 
  5.12  than one-half year, or the person has credit for more than 
  5.13  one-half year, with each of the plans, each plan must apply its 
  5.14  formula to a prorated service credit for the period of 
  5.15  duplicated service based on a fraction of the salary on which 
  5.16  deductions were paid to that fund for the period divided by the 
  5.17  total salary on which deductions were paid to all plans for the 
  5.18  period. 
  5.19     (h) (j) If the period of duplicated service credit is less 
  5.20  than one-half year, or when added to other service credit with 
  5.21  that plan is less than one-half year, the service credit must be 
  5.22  ignored and a refund of contributions made to the person in 
  5.23  accord with that plan's refund provisions. 
  5.24     Sec. 3.  [EFFECTIVE DATE.] 
  5.25     Sections 1 and 2 are effective July 1, 2003. 
  5.26                             ARTICLE 2 
  5.27                            DEFINITIONS
  5.28     Section 1.  Minnesota Statutes 2002, section 3A.01, 
  5.29  subdivision 2, is amended to read: 
  5.30     Subd. 2.  [DEPENDENT CHILD.] "Dependent child" means any 
  5.31  natural or adopted child of a deceased member of the legislature 
  5.32  or former legislator who is under the age of 18, or who is under 
  5.33  the age of 22 and is a full-time student, and who in either case 
  5.34  is unmarried and was actually dependent for more than one-half 
  5.35  of support upon such legislator for a period of at least 90 days 
  5.36  immediately prior to the legislator's death. It also includes 
  6.1   any child of the member of the legislature or former legislator 
  6.2   conceived during the lifetime of, and born after the death of, 
  6.3   the member or former legislator.  This subdivision shall be 
  6.4   retroactive as to any dependent child under the age of 22 years 
  6.5   as of April 1, 1975. 
  6.6      Sec. 2.  Minnesota Statutes 2002, section 352.01, 
  6.7   subdivision 13, is amended to read: 
  6.8      Subd. 13.  [SALARY.] (a) "Salary" means wages, or other 
  6.9   periodic compensation, paid to an employee before deductions for 
  6.10  deferred compensation, supplemental retirement plans, or other 
  6.11  voluntary salary reduction programs.  
  6.12     (b) Salary does not include: 
  6.13     (1) lump sum sick leave payments,; 
  6.14     (2) severance payments,; 
  6.15     (3) lump sum annual leave payments and overtime payments 
  6.16  made at the time of separation from state service,; 
  6.17     (4) payments in lieu of any employer-paid group insurance 
  6.18  coverage, including the difference between single and family 
  6.19  rates that may be paid to an employee with single coverage, and; 
  6.20     (5) payments made as an employer-paid fringe benefit,; 
  6.21     (6) workers' compensation payments,; 
  6.22     (7) employer contributions to a deferred compensation or 
  6.23  tax sheltered annuity program,; and 
  6.24     (8) amounts contributed under a benevolent vacation and 
  6.25  sick leave donation program are not salary. 
  6.26     (c) Amounts provided to an employee by the employer through 
  6.27  a grievance proceeding or a legal settlement are salary only if 
  6.28  the settlement is reviewed by the executive director and the 
  6.29  amounts are determined by the executive director to be 
  6.30  consistent with paragraph (a). 
  6.31     Sec. 3.  Minnesota Statutes 2002, section 352B.01, 
  6.32  subdivision 10, is amended to read: 
  6.33     Subd. 10.  [DEPENDENT CHILD.] "Dependent child" means a 
  6.34  natural or adopted unmarried child of a deceased member under 
  6.35  the age of 18 23 years, including any child of the member 
  6.36  conceived during the member's lifetime of the member and born 
  7.1   after the member's death of the member. 
  7.2      Sec. 4.  Minnesota Statutes 2002, section 352B.01, 
  7.3   subdivision 11, is amended to read: 
  7.4      Subd. 11.  [AVERAGE MONTHLY SALARY.] "Average monthly 
  7.5   salary" means the average of the highest monthly salaries for 
  7.6   five years of service as a member upon which contributions were 
  7.7   deducted from pay under section 352B.02, or upon which 
  7.8   appropriate contributions or payments were made to the fund to 
  7.9   receive allowable service and salary credit as specified under 
  7.10  applicable law.  Average monthly salary must be based upon all 
  7.11  allowable service if this service is less than five years.  It 
  7.12  does not include any lump-sum annual leave payments and overtime 
  7.13  payments made at the time of separation from state service, any 
  7.14  amounts of severance pay, or any reduced salary paid during the 
  7.15  period the person is entitled to workers' compensation benefit 
  7.16  payments for temporary disability.  A member on leave of absence 
  7.17  receiving temporary workers' compensation payments and a reduced 
  7.18  salary or no salary from the employer who is entitled to 
  7.19  allowable service credit for the period of absence may make 
  7.20  payment to the fund for the difference between salary received, 
  7.21  if any, and the salary the member would normally receive if not 
  7.22  on leave of absence during the period.  The member shall pay an 
  7.23  amount equal to the member and employer contribution rate under 
  7.24  section 352B.02, subdivisions 1b and 1c, on the differential 
  7.25  salary amount for the period of the leave of absence.  The 
  7.26  employing department, at its option, may pay the employer amount 
  7.27  on behalf of the member.  Payment made under this subdivision 
  7.28  must include interest at the rate of 8.5 percent per year, and 
  7.29  must be completed within one year of the return from the leave 
  7.30  of absence. 
  7.31     Sec. 5.  [REPEALER.] 
  7.32     Minnesota Statutes 2002, section 352.01, subdivision 13a, 
  7.33  is repealed. 
  7.34     Sec. 6.  [EFFECTIVE DATE.] 
  7.35     Sections 1 to 5 are effective on July 1, 2003. 
  7.36                             ARTICLE 3 
  8.1                              DISABILITY 
  8.2      Section 1.  Minnesota Statutes 2002, section 352.113, is 
  8.3   amended by adding a subdivision to read: 
  8.4      Subd. 7a.  [TEMPORARY REEMPLOYMENT BENEFIT REDUCTION 
  8.5   WAIVER.] Any reduction in benefits under subdivision 7, or any 
  8.6   termination of benefits due to resuming a gainful occupation 
  8.7   from which earnings are equal to or more than the employee's 
  8.8   salary at the date of disability or the salary currently paid 
  8.9   for similar positions, shall not apply until six months after 
  8.10  the individual returns to a gainful occupation. 
  8.11     Sec. 2.  Minnesota Statutes 2002, section 352.95, 
  8.12  subdivision 1, is amended to read: 
  8.13     Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
  8.14  correctional employee who becomes disabled and is expected to be 
  8.15  physically or mentally unfit to perform the duties of the 
  8.16  position for at least one year as a direct result of an injury, 
  8.17  sickness, or other disability incurred in or arising out of any 
  8.18  act of duty that makes the employee physically or mentally 
  8.19  unable to perform the duties, is entitled to a disability 
  8.20  benefit based on covered correctional service only.  The benefit 
  8.21  amount must equal 50 percent of the average salary defined in 
  8.22  section 352.93, plus an additional percent equal to that 
  8.23  specified in section 356.315, subdivision 5, for each year of 
  8.24  covered correctional service in excess of 20 years, ten months, 
  8.25  prorated for completed months. 
  8.26     Sec. 3.  Minnesota Statutes 2002, section 352.95, 
  8.27  subdivision 2, is amended to read: 
  8.28     Subd. 2.  [NON-JOB-RELATED DISABILITY.] Any covered 
  8.29  correctional employee who, after at least one year of covered 
  8.30  correctional service, becomes disabled and is expected to be 
  8.31  physically or mentally unfit to perform the duties of the 
  8.32  position for at least one year because of sickness or injury 
  8.33  occurring while not engaged in covered employment, is entitled 
  8.34  to a disability benefit based on covered correctional service 
  8.35  only.  The disability benefit must be computed as provided in 
  8.36  section 352.93, subdivisions 1 and 2, and computed as though the 
  9.1   employee had at least 15 years of covered correctional service. 
  9.2      Sec. 4.  Minnesota Statutes 2002, section 352B.10, is 
  9.3   amended to read: 
  9.4      352B.10 [DISABILITY BENEFITS.] 
  9.5      Subdivision 1.  [INJURIES,; PAYMENT AMOUNTS.] Any member 
  9.6   who becomes disabled and is expected to be physically or 
  9.7   mentally unfit to perform duties for at least one year as a 
  9.8   direct result of an injury, sickness, or other disability 
  9.9   incurred in or arising out of any act of duty, shall receive 
  9.10  disability benefits while disabled.  The benefits must be paid 
  9.11  in monthly installments equal to the member's average monthly 
  9.12  salary multiplied by 60 percent, plus an additional percent 
  9.13  equal to that specified in section 356.315, subdivision 6, for 
  9.14  each year and pro rata for completed months of service in excess 
  9.15  of 20 years, if any. 
  9.16     Subd. 2.  [DISABLED WHILE NOT ON DUTY.] If a member 
  9.17  terminates employment after with at least one year of service 
  9.18  because of sickness or injury occurring while not on duty and 
  9.19  not engaged in state work entitling the member to membership, 
  9.20  and the member becomes disabled and is expected to be physically 
  9.21  or mentally unfit to perform the duties of the position for at 
  9.22  least one year because of sickness or injury occurring while not 
  9.23  engaged in covered employment, the member individual is entitled 
  9.24  to disability benefits.  The benefit must be in the same amount 
  9.25  and computed in the same way as if the member individual were 55 
  9.26  years old at the date of disability and the annuity were paid 
  9.27  under section 352B.08.  If disability under this clause 
  9.28  subdivision occurs after one but before 15 years service, the 
  9.29  disability benefit must be computed as though the member 
  9.30  individual had 15 years service. 
  9.31     Subd. 3.  [ANNUAL AND SICK LEAVE; WORK AT LOWER PAY.] No 
  9.32  member shall receive any disability benefit payment when the 
  9.33  member has unused annual leave or sick leave, or under any other 
  9.34  circumstances, when during the period of disability there has 
  9.35  been no impairment of salary.  Should If the member or former 
  9.36  member resume disabilitant resumes gainful work employment, the 
 10.1   disability benefit must be continued in an amount which when 
 10.2   added to current earnings does not exceed the salary rate 
 10.3   received of by the person at the date of disability as adjusted 
 10.4   over time by the same percentage increase in United States 
 10.5   average wages used by the social security administration in 
 10.6   calculating average indexed monthly earnings for the same period.
 10.7      Subd. 4.  [PROOF OF DISABILITY.] No disability benefit 
 10.8   payment benefits shall be made except upon paid unless adequate 
 10.9   proof is furnished to the executive director of the existence of 
 10.10  the disability.  While disability benefits are being paid 
 10.11  Following the commencement of benefit payments, the executive 
 10.12  director has the right, at reasonable times, to require 
 10.13  the disabled former member disabilitant to submit proof of the 
 10.14  continuance of the disability claimed.  
 10.15     Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 10.16  disabilitant may, in lieu of survivorship coverage under section 
 10.17  352B.11, subdivision 2, choose the normal disability benefit or 
 10.18  an optional annuity as provided in section 352B.08, subdivision 
 10.19  3.  The choice of an optional annuity must be made before 
 10.20  commencement of payment of the disability benefit, or within 90 
 10.21  days of attaining before reaching age 65 or reaching the 
 10.22  five-year anniversary of the effective date of the disability 
 10.23  benefit, whichever is later.  It The optional annuity is 
 10.24  effective on the date on which the disability benefit begins to 
 10.25  accrue, or the month following attainment of age 65 or the 
 10.26  five-year anniversary of the effective date of the disability 
 10.27  benefit, whichever is later. 
 10.28     Sec. 5.  Minnesota Statutes 2002, section 352B.105, is 
 10.29  amended to read: 
 10.30     352B.105 [TERMINATION OF DISABILITY BENEFITS.] 
 10.31     Disability benefits payable under section 352B.10 shall 
 10.32  must terminate at on the transfer date, which is the end of the 
 10.33  month the beneficiary disabilitant becomes 65 years old or the 
 10.34  five-year anniversary of the effective date of the disability 
 10.35  benefit, whichever is later.  If the beneficiary disabilitant is 
 10.36  still disabled when on the beneficiary becomes 65 years 
 11.1   old transfer date, the beneficiary disabilitant shall be deemed 
 11.2   to be a retired member and, if the beneficiary disabilitant had 
 11.3   chosen an optional annuity under section 352B.10, subdivision 5, 
 11.4   shall receive an annuity in accordance with under the terms of 
 11.5   the optional annuity previously chosen.  If the beneficiary 
 11.6   disabilitant had not chosen an optional annuity under section 
 11.7   352B.10, subdivision 5, the beneficiary disabilitant may choose 
 11.8   to receive either a normal retirement annuity computed under 
 11.9   section 352B.08, subdivision 2, or an optional annuity as 
 11.10  provided in section 352B.08, subdivision 3.  An optional annuity 
 11.11  must be chosen within 90 days of attaining age 65 or reaching 
 11.12  the five-year anniversary of the effective date of the 
 11.13  disability benefit, whichever is later transfer date.  If an 
 11.14  optional annuity is chosen, the optional annuity shall begin to 
 11.15  accrue the first of the month following attainment of age 65 or 
 11.16  the five-year anniversary of the effective transfer date of the 
 11.17  disability benefit, whichever is later. 
 11.18     Sec. 6.  Minnesota Statutes 2002, section 352D.065, 
 11.19  subdivision 2, is amended to read: 
 11.20     Subd. 2.  A participant who becomes totally and permanently 
 11.21  disabled has the option even if on leave of absence without pay 
 11.22  to receive: 
 11.23     (1) the value of the participant's total shares; 
 11.24     (2) the partial value of one-half of the total shares and 
 11.25  an annuity based on the value of one-half remainder of the total 
 11.26  shares; or 
 11.27     (3) an annuity based on the value of the participant's 
 11.28  total shares. 
 11.29     Sec. 7.  [REPEALER.] 
 11.30     Section 1 is repealed July 1, 2006.  
 11.31     Sec. 8.  [EFFECTIVE DATE.] 
 11.32     Sections 1 to 7 are effective July 1, 2003. 
 11.33                             ARTICLE 4
 11.34                          EARLY RETIREMENT
 11.35     Section 1.  Minnesota Statutes 2002, section 352C.031, 
 11.36  subdivision 2, is amended to read: 
 12.1      Subd. 2.  [REDUCED RETIREMENT ALLOWANCE.] Upon separation 
 12.2   from service, a former constitutional officer who has attained 
 12.3   the age of at least 60 55 years and who has at least eight years 
 12.4   of allowable service is entitled upon making written application 
 12.5   on forms supplied by the director to a retirement allowance in 
 12.6   an amount equal to a normal retirement allowance reduced by 
 12.7   one-half of one percent for each month that the former 
 12.8   constitutional officer is under age 62. 
 12.9      Sec. 2.  Minnesota Statutes 2002, section 490.121, 
 12.10  subdivision 10, is amended to read: 
 12.11     Subd. 10.  [EARLY RETIREMENT DATE.] "Early retirement date" 
 12.12  means a date which is the last day of any the month, following 
 12.13  termination of service and submission of a written application 
 12.14  for retirement, on which the early retirement annuity begins to 
 12.15  accrue.  The applicable date must be after a the judge attains 
 12.16  the age of 62 until 55 and before the normal retirement date. 
 12.17     Sec. 3.  Minnesota Statutes 2002, section 490.124, 
 12.18  subdivision 3, is amended to read: 
 12.19     Subd. 3.  [EARLY RETIREMENT.] The retirement annuity 
 12.20  provided by subdivision 1 of any judge electing to retire at an 
 12.21  early retirement date shall be reduced by the lesser of the 
 12.22  following:  
 12.23     (1) one-half of one percent per month from the retirement 
 12.24  date to normal retirement date; or 
 12.25     (2) an amount so that the reduced annuity is actuarially 
 12.26  equivalent to the annuity that would be payable to the employee 
 12.27  if the employee deferred receipt of the annuity from the early 
 12.28  retirement date to the normal retirement date. 
 12.29     Sec. 4.  [EFFECTIVE DATE.] 
 12.30     Sections 1 to 3 are effective July 1, 2003.  
 12.31                             ARTICLE 5 
 12.32                            ELIGIBILITY 
 12.33     Section 1.  Minnesota Statutes 2002, section 352.01, 
 12.34  subdivision 2b, is amended to read: 
 12.35     Subd. 2b.  [EXCLUDED EMPLOYEES.] "State employee" does not 
 12.36  include: 
 13.1      (1) students employed by the University of Minnesota, or 
 13.2   the state colleges and universities, unless approved for 
 13.3   coverage by the board of regents of the University of Minnesota 
 13.4   or the board of trustees of the Minnesota state colleges and 
 13.5   universities, as the case may be whichever is applicable; 
 13.6      (2) employees who are eligible for membership in the state 
 13.7   teachers retirement association, except employees of the 
 13.8   department of children, families, and learning who have chosen 
 13.9   or may choose to be covered by the general state employees 
 13.10  retirement plan of the Minnesota state retirement system instead 
 13.11  of the teachers retirement association; 
 13.12     (3) employees of the University of Minnesota who are 
 13.13  excluded from coverage by action of the board of regents; 
 13.14     (4) officers and enlisted personnel in the national guard 
 13.15  and the naval militia who are assigned to permanent peacetime 
 13.16  duty and who under federal law are or are required to be members 
 13.17  of a federal retirement system; 
 13.18     (5) election officers; 
 13.19     (6) persons who are engaged in public work for the state 
 13.20  but who are employed by contractors when the performance of the 
 13.21  contract is authorized by the legislature or other competent 
 13.22  authority; 
 13.23     (7) officers and employees of the senate, or of the house 
 13.24  of representatives, or of a legislative committee or commission 
 13.25  who are temporarily employed; 
 13.26     (8) receivers, jurors, notaries public, and court employees 
 13.27  who are not in the judicial branch as defined in section 43A.02, 
 13.28  subdivision 25, except referees and adjusters employed by the 
 13.29  department of labor and industry; 
 13.30     (9) patient and inmate help in state charitable, penal, and 
 13.31  correctional institutions including the Minnesota veterans home; 
 13.32     (10) persons who are employed for professional services 
 13.33  where the service is incidental to their regular professional 
 13.34  duties and whose compensation is paid on a per diem basis; 
 13.35     (11) employees of the Sibley House Association; 
 13.36     (12) the members of any state board or commission who serve 
 14.1   the state intermittently and are paid on a per diem basis; the 
 14.2   secretary, secretary-treasurer, and treasurer of those boards if 
 14.3   their compensation is $5,000 or less per year, or, if they are 
 14.4   legally prohibited from serving more than three years; and the 
 14.5   board of managers of the state agricultural society and its 
 14.6   treasurer unless the treasurer is also its full-time secretary; 
 14.7      (13) state troopers; 
 14.8      (14) temporary employees of the Minnesota state fair who 
 14.9   are employed on or after July 1 for a period not to extend 
 14.10  beyond October 15 of that year; and persons who are employed at 
 14.11  any time by the state fair administration for special events 
 14.12  held on the fairgrounds; 
 14.13     (15) emergency employees who are in the classified service; 
 14.14  except that if an emergency employee, within the same pay 
 14.15  period, becomes a provisional or probationary employee on other 
 14.16  than a temporary basis, the employee shall be considered a 
 14.17  "state employee" retroactively to the beginning of the pay 
 14.18  period; 
 14.19     (16) persons who are described in section 352B.01, 
 14.20  subdivision 2, clauses (2) to (6); 
 14.21     (17) temporary employees in the classified service, and 
 14.22  temporary employees in the unclassified service who are 
 14.23  appointed for a definite period of not more than six months and 
 14.24  who are employed less than six months in any one-year period; 
 14.25     (18) trainee employees, except those listed in subdivision 
 14.26  2a, clause (10); 
 14.27     (19) persons whose compensation is paid on a fee basis; 
 14.28     (20) state employees who are employed by the board of 
 14.29  trustees of the Minnesota state colleges and universities in 
 14.30  unclassified positions enumerated in section 43A.08, subdivision 
 14.31  1, clause (9); 
 14.32     (21) state employees who in any year have credit for 12 
 14.33  months service as teachers in the public schools of the state 
 14.34  and as teachers are members of the teachers retirement 
 14.35  association or a retirement system in St. Paul, Minneapolis, or 
 14.36  Duluth, except for incidental employment as a state employee not 
 15.1   covered by one of the teacher retirement associations or 
 15.2   systems; 
 15.3      (22) employees of the adjutant general who are employed on 
 15.4   an unlimited intermittent or temporary basis in the classified 
 15.5   or unclassified service for the support of army and air national 
 15.6   guard training facilities; 
 15.7      (23) chaplains and nuns who are excluded from coverage 
 15.8   under the federal Old Age, Survivors, Disability, and Health 
 15.9   Insurance Program for the performance of service as specified in 
 15.10  United States Code, title 42, section 410(a)(8)(A), as amended, 
 15.11  if no irrevocable election of coverage has been made under 
 15.12  section 3121(r) of the Internal Revenue Code of 1986, as amended 
 15.13  through December 31, 1992; 
 15.14     (24) examination monitors who are employed by departments, 
 15.15  agencies, commissions, and boards to conduct examinations 
 15.16  required by law; 
 15.17     (25) persons who are appointed to serve as members of 
 15.18  fact-finding commissions or adjustment panels, arbitrators, or 
 15.19  labor referees under chapter 179; 
 15.20     (26) temporary employees who are employed for limited 
 15.21  periods under any state or federal program for training or 
 15.22  rehabilitation, including persons who are employed for limited 
 15.23  periods from areas of economic distress, but not including 
 15.24  skilled and supervisory personnel and persons having civil 
 15.25  service status covered by the system; 
 15.26     (27) full-time students who are employed by the Minnesota 
 15.27  historical society intermittently during part of the year and 
 15.28  full-time during the summer months; 
 15.29     (28) temporary employees who are appointed for not more 
 15.30  than six months, of the metropolitan council and of any of its 
 15.31  statutory boards, if the board members are appointed by the 
 15.32  metropolitan council; 
 15.33     (29) persons who are employed in positions designated by 
 15.34  the department of employee relations as student workers; 
 15.35     (30) members of trades who are employed by the successor to 
 15.36  the metropolitan waste control commission, who have trade union 
 16.1   pension plan coverage under a collective bargaining agreement, 
 16.2   and who are first employed after June 1, 1977; 
 16.3      (31) persons who are employed in subsidized on-the-job 
 16.4   training, work experience, or public service employment as 
 16.5   enrollees under the federal Comprehensive Employment and 
 16.6   Training Act after March 30, 1978, unless the person has as of 
 16.7   the later of March 30, 1978, or the date of employment 
 16.8   sufficient service credit in the retirement system to meet the 
 16.9   minimum vesting requirements for a deferred annuity, or the 
 16.10  employer agrees in writing on forms prescribed by the director 
 16.11  to make the required employer contributions, including any 
 16.12  employer additional contributions, on account of that person 
 16.13  from revenue sources other than funds provided under the federal 
 16.14  Comprehensive Employment and Training Act, or the person agrees 
 16.15  in writing on forms prescribed by the director to make the 
 16.16  required employer contribution in addition to the required 
 16.17  employee contribution; 
 16.18     (32) off-duty peace officers while employed by the 
 16.19  metropolitan council; 
 16.20     (33) persons who are employed as full-time police officers 
 16.21  by the metropolitan council and as police officers are members 
 16.22  of the public employees police and fire fund; 
 16.23     (34) persons who are employed as full-time firefighters by 
 16.24  the department of military affairs and as firefighters are 
 16.25  members of the public employees police and fire fund; 
 16.26     (35) foreign citizens with a work permit of less than three 
 16.27  years, or an H-1b/JV visa valid for less than three years of 
 16.28  employment, unless notice of extension is supplied which allows 
 16.29  them to work for three or more years as of the date the 
 16.30  extension is granted, in which case they are eligible for 
 16.31  coverage from the date extended; and 
 16.32     (36) persons who are employed by the board of trustees of 
 16.33  the Minnesota state colleges and universities and who elect to 
 16.34  remain members of the public employees retirement association or 
 16.35  the Minneapolis employees retirement fund, whichever applies, 
 16.36  under section 136C.75.  
 17.1      Sec. 2.  [EFFECTIVE DATE.] 
 17.2      Section 1 is effective July 1, 2003. 
 17.3                              ARTICLE 6
 17.4                               REFUNDS
 17.5      Section 1.  Minnesota Statutes 2002, section 3A.03, 
 17.6   subdivision 2, is amended to read: 
 17.7      Subd. 2.  [REFUND.] (a) Any former member who has made 
 17.8   contributions under subdivision 1 and who is no longer a member 
 17.9   of the legislature is entitled to receive, upon written 
 17.10  application to the executive director on a form prescribed by 
 17.11  the executive director, a refund of all contributions credited 
 17.12  to the member's account with interest at an annual rate of six 
 17.13  percent compounded annually computed as provided in section 
 17.14  352.22, subdivision 2. 
 17.15     (b) The refund of contributions as provided in paragraph (a)
 17.16  terminates all rights of a former member of the legislature or 
 17.17  the survivors of the former member under this chapter. 
 17.18     (c) If the former member of the legislature again becomes a 
 17.19  member of the legislature after having taken a refund as 
 17.20  provided in paragraph (a), the member must be considered a new 
 17.21  member of this plan.  However, a new the member may reinstate 
 17.22  the rights and credit for service forfeited if the new member 
 17.23  repays all refunds taken plus interest at an annual rate of 8.5 
 17.24  percent compounded annually.  
 17.25     (c) (d) No person may be required to apply for or to accept 
 17.26  a refund. 
 17.27     Sec. 2.  Minnesota Statutes 2002, section 352.12, 
 17.28  subdivision 1, is amended to read: 
 17.29     Subdivision 1.  [DEATH BEFORE TERMINATION OF SERVICE.] If 
 17.30  an employee dies before state service has terminated and neither 
 17.31  a survivor annuity nor a reversionary annuity is payable, or if 
 17.32  a former employee who has sufficient service credit to be 
 17.33  entitled to an annuity dies before the benefit has become 
 17.34  payable, the executive director shall make a refund with 
 17.35  interest to the last designated beneficiary or, if there is 
 17.36  none, to the surviving spouse or, if none, to the employee's 
 18.1   surviving children in equal shares or, if none, to the 
 18.2   employee's surviving parents in equal shares or, if none, to the 
 18.3   representative of the estate in an amount equal to the 
 18.4   accumulated employee contributions plus interest at the rate of 
 18.5   six percent per annum compounded annually.  Interest must be 
 18.6   computed as provided in section 352.22, subdivision 2, to the 
 18.7   first day of the month in which the refund is processed.  Upon 
 18.8   the death of an employee who has received a refund that was 
 18.9   later repaid in full, interest must be paid on the repaid refund 
 18.10  only from the date of repayment.  If the repayment was made in 
 18.11  installments, interest must be paid only from the date 
 18.12  installment payments began.  The designated beneficiary, 
 18.13  surviving spouse, or representative of the estate of an employee 
 18.14  who had received a disability benefit is not entitled to 
 18.15  interest upon any balance remaining to the decedent's credit in 
 18.16  the fund at the time of death, unless death occurred before any 
 18.17  payment could be negotiated.  
 18.18     Sec. 3.  Minnesota Statutes 2002, section 352.12, 
 18.19  subdivision 6, is amended to read: 
 18.20     Subd. 6.  [DEATH AFTER SERVICE TERMINATION.] Except as 
 18.21  provided in subdivision 1, if a former employee covered by the 
 18.22  system dies and has not received an annuity, a retirement 
 18.23  allowance, or a disability benefit, a refund must be made to the 
 18.24  last designated beneficiary or, if there is none, to the 
 18.25  surviving spouse or, if none, to the employee's surviving 
 18.26  children in equal shares or, if none, to the employee's 
 18.27  surviving parents in equal shares or, if none, to the 
 18.28  representative of the estate in an amount equal to accumulated 
 18.29  employee contributions plus interest.  The refund must include 
 18.30  interest at the rate of six percent per year compounded 
 18.31  annually.  The interest on the refund must be computed as 
 18.32  provided in section 352.22, subdivision 2. 
 18.33     Sec. 4.  Minnesota Statutes 2002, section 352.12, 
 18.34  subdivision 7, is amended to read: 
 18.35     Subd. 7.  [ABSENCE OF OPTIONAL OR REVERSIONARY ANNUITY.] 
 18.36  Upon the death of a retired employee who selected neither an 
 19.1   optional annuity or a reversionary annuity, a refund must be 
 19.2   paid in an amount equal to the excess, if any, of the 
 19.3   accumulated contributions, plus interest computed as provided in 
 19.4   section 352.22, subdivision 2, to the credit of the retired 
 19.5   employee immediately before retirement in excess of the sum of 
 19.6   (1) all annuities, retirement allowances, and disability 
 19.7   benefits that had been received and had accrued in the lifetime 
 19.8   of the decedent, and (2) the annuity, retirement allowance, or 
 19.9   disability benefit if not negotiated, payable to the surviving 
 19.10  spouse under section 352.115, subdivision 8, or 352.113, 
 19.11  subdivision 4, for the calendar month in which the retired 
 19.12  employee died.  The net refund amount must be paid to the named 
 19.13  beneficiary or, if there be is none, to the surviving spouse or, 
 19.14  if none, to the employee's surviving children in equal shares 
 19.15  or, if none, to the employee's surviving parents in equal shares 
 19.16  or, if none, to the representative of the estate. 
 19.17     Sec. 5.  Minnesota Statutes 2002, section 352.12, 
 19.18  subdivision 8, is amended to read: 
 19.19     Subd. 8.  [OPTIONAL OR REVERSIONARY ANNUITY.] If the last 
 19.20  eligible recipient of an optional annuity dies and the total 
 19.21  amounts paid under it are less than the accumulated 
 19.22  contributions to the credit of the retired employee immediately 
 19.23  before retirement, the balance of accumulated contributions plus 
 19.24  interest computed as provided in section 352.22, subdivision 2, 
 19.25  must be paid to the person designated by the retired employee in 
 19.26  writing to receive payment.  If no designation has been made by 
 19.27  the retired employee, the remaining balance of accumulated 
 19.28  contributions plus interest computed as provided in section 
 19.29  352.22, subdivision 2, must be paid to the surviving children of 
 19.30  the deceased recipient of the optional annuity in equal shares. 
 19.31  If there are no surviving children, payment must be made to the 
 19.32  deceased recipient's parents or, if none, to the representative 
 19.33  of the deceased recipient's estate.  
 19.34     Sec. 6.  Minnesota Statutes 2002, section 352.12, 
 19.35  subdivision 11, is amended to read: 
 19.36     Subd. 11.  [DEATH OF DISABILITY ANNUITANT.] If an employee 
 20.1   who has received a disability benefit dies, a payment must be 
 20.2   made of an amount equal to the excess, if any, of the 
 20.3   accumulated contributions plus interest computed as provided in 
 20.4   section 352.22, subdivision 2, to the credit of the employee at 
 20.5   the time the disability benefit began to accrue over and above 
 20.6   in excess of the aggregate sum of (1) all disability benefits 
 20.7   received and which had accrued during life, and (2) the benefit 
 20.8   for the month in which the disabled employee died, payable, if 
 20.9   applicable, to the surviving spouse under section 352.113, 
 20.10  subdivision 4.  The payment must be paid to the last designated 
 20.11  beneficiary or, if there be none, to the surviving spouse, or if 
 20.12  none, to the employee's surviving children in equal shares or, 
 20.13  if none, to the employee's surviving parents in equal shares or, 
 20.14  if none, to the representative of the estate.  
 20.15     Sec. 7.  Minnesota Statutes 2002, section 352.22, 
 20.16  subdivision 2, is amended to read: 
 20.17     Subd. 2.  [AMOUNT OF REFUND.] Except as provided in 
 20.18  subdivision 3, the refund payable to a person who ceased to be a 
 20.19  state employee by reason of termination of state service is in 
 20.20  an amount equal to employee accumulated contributions plus 
 20.21  interest at the rate of six percent per year compounded annually 
 20.22  daily.  Included with the refund is any interest paid as part of 
 20.23  repayment of a past refund, plus interest thereon from the date 
 20.24  of repayment.  Interest must be computed to the first day of the 
 20.25  month in which the refund is processed and must be based on 
 20.26  fiscal year or monthly balances, whichever applies. 
 20.27     Sec. 8.  Minnesota Statutes 2002, section 352B.11, 
 20.28  subdivision 1, is amended to read: 
 20.29     Subdivision 1.  [REFUND OF PAYMENTS.] A member who has not 
 20.30  received other benefits under this chapter is entitled to a 
 20.31  refund of payments made by salary deduction, plus interest, if 
 20.32  the member is separated, either voluntarily or involuntarily, 
 20.33  from state service that entitled the member to membership.  In 
 20.34  the event of the member's death, if there are no survivor 
 20.35  benefits payable under this chapter, a refund plus interest is 
 20.36  payable to the last designated beneficiary on a form filed with 
 21.1   the director before death, or if no designation is filed, the 
 21.2   refund is payable to the member's estate.  Interest under this 
 21.3   subdivision must be computed at the rate of six percent a year, 
 21.4   compounded annually calculated as provided in section 352.22, 
 21.5   subdivision 2.  To receive a refund, application must be made on 
 21.6   a form prescribed by the executive director. 
 21.7      Sec. 9.  Minnesota Statutes 2002, section 356.441, is 
 21.8   amended to read: 
 21.9      356.441 [REPAYMENT OF REFUNDS PAYMENT ACCEPTANCE ALLOWED.] 
 21.10     Subdivision 1.  [PAYMENT AUTHORIZATION.] The payment for 
 21.11  the purchase of allowable service credit, the repayment of a 
 21.12  refund and interest on that refund, or the payment of equivalent 
 21.13  contributions and interest for an eligible leave of absence, as 
 21.14  permitted under laws governing any public pension plan in 
 21.15  Minnesota, may be made: 
 21.16     (1) with funds distributed or transferred from a plan 
 21.17  qualified under the federal Internal Revenue Code of 1986, 
 21.18  section 401, subsection (a) or (k); 403; 408; or 457, subsection 
 21.19  (b), as amended through December 31, 1988, or an annuity 
 21.20  qualified under the federal Internal Revenue Code of 1986, 
 21.21  section 403(a).  Repayment may also be made from time to time; 
 21.22  or 
 21.23     (2) with funds distributed from an individual retirement 
 21.24  account used solely to receive a or individual retirement 
 21.25  annuity, if done solely in a manner that is eligible for 
 21.26  treatment as a nontaxable rollover from that type of a plan or 
 21.27  annuity or transfer under the applicable federal law.  The 
 21.28  repaid refund 
 21.29     Subd. 2.  [SEPARATE ACCOUNTING REQUIREMENT.] Nontaxable 
 21.30  rollovers or transfer amounts under subdivision 1 received by a 
 21.31  public pension fund must be separately accounted for as member 
 21.32  contributions not previously taxed.  Before accepting 
 21.33  any rollovers or transfers to which this section applies, the 
 21.34  executive director must require the member to provide written 
 21.35  documentation to demonstrate that the amounts to be rolled over 
 21.36  or transferred are eligible for a tax-free rollover or transfer 
 22.1   and qualify for that treatment under the federal Internal 
 22.2   Revenue Code of 1986, as amended.  
 22.3      Sec. 10.  Minnesota Statutes 2002, section 490.124, 
 22.4   subdivision 12, is amended to read: 
 22.5      Subd. 12.  [REFUND.] (a) Any person who ceases to be a 
 22.6   judge but who does not qualify for a retirement annuity or other 
 22.7   benefit under section 490.121 shall be entitled to a refund in 
 22.8   an amount equal to all the person's member's employee 
 22.9   contributions to the judges' retirement fund plus interest 
 22.10  computed to the first day of the month in which the refund is 
 22.11  processed based on fiscal year balances at an annual rate of 
 22.12  five percent compounded annually under section 352.22, 
 22.13  subdivision 2. 
 22.14     (b) A refund of contributions under paragraph (a) 
 22.15  terminates all service credits and all rights and benefits of 
 22.16  the judge and the judge's survivors.  A person who becomes a 
 22.17  judge again after taking a refund under paragraph (a) may 
 22.18  reinstate previously terminated service credits, rights, and 
 22.19  benefits by repaying all refunds including interest.  A The 
 22.20  refund repayment must include interest on the total amount 
 22.21  previously received at an annual rate of 8.5 percent compounded 
 22.22  annually. 
 22.23     Sec. 11.  [EFFECTIVE DATE.] 
 22.24     (a) Sections 1 to 10 are effective July 1, 2003. 
 22.25     (b) Consistent with Minnesota Statutes, section 645.21, and 
 22.26  public pension policy in general, the increased interest rate 
 22.27  provided on a refund under section 10 applies only to judges 
 22.28  whose termination of service occurs on or after July 1, 2003. 
 22.29                             ARTICLE 7
 22.30                         SURVIVOR BENEFITS
 22.31     Section 1.  Minnesota Statutes 2002, section 352.12, 
 22.32  subdivision 2a, is amended to read: 
 22.33     Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] (a) In 
 22.34  lieu of the 100 percent optional annuity under subdivision 2, or 
 22.35  refund under subdivision 1, the surviving spouse of a deceased 
 22.36  employee or former employee may elect to receive survivor 
 23.1   coverage in a term certain of five, six, ten, 15, or 20 years, 
 23.2   but monthly payments must not exceed 75 percent of the average 
 23.3   high-five monthly salary of the deceased employee or former 
 23.4   employee.  The monthly term certain annuity must be actuarially 
 23.5   equivalent to the 100 percent optional annuity under subdivision 
 23.6   2. 
 23.7      (b) If a survivor elects a term certain annuity and dies 
 23.8   before the expiration of the specified term certain period, the 
 23.9   commuted value of the remaining annuity payments must be paid in 
 23.10  a lump sum to the survivor's estate. 
 23.11     Sec. 2.  Minnesota Statutes 2002, section 352B.10, 
 23.12  subdivision 5, is amended to read: 
 23.13     Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 23.14  disabilitant may, in lieu of spousal survivorship coverage under 
 23.15  section 352B.11, subdivision 2 subdivisions 2b and 2c, choose 
 23.16  the normal disability benefit or an optional annuity as provided 
 23.17  in section 352B.08, subdivision 3.  The choice of an optional 
 23.18  annuity must be made before commencement of payment of the 
 23.19  disability benefit, or within 90 days of attaining before 
 23.20  reaching age 65 or reaching the five-year anniversary of the 
 23.21  effective date of the disability benefit, whichever is 
 23.22  later.  It The optional annuity is effective on the date on 
 23.23  which the disability benefit begins to accrue, or the month 
 23.24  following attainment of age 65 or the five-year anniversary of 
 23.25  the effective date of the disability benefit, whichever is later.
 23.26     Sec. 3.  Minnesota Statutes 2002, section 352B.11, 
 23.27  subdivision 2, is amended to read: 
 23.28     Subd. 2.  [DEATH; PAYMENT TO SPOUSE AND DEPENDENT CHILDREN; 
 23.29  FAMILY MAXIMUMS.] If a member serving actively as a member, or a 
 23.30  member or former member receiving the disability benefit before 
 23.31  attaining age 65 or reaching the five-year anniversary of the 
 23.32  effective date of the disability benefit, whichever is later, 
 23.33  provided by section 352B.10, subdivisions 1 and 2, dies from any 
 23.34  cause before attaining age 65 or reaching the five-year 
 23.35  anniversary of the effective date of the disability benefit, 
 23.36  whichever is later, the surviving spouse and dependent children 
 24.1   are entitled to benefit payments as follows: 
 24.2      (a) A member with at least three years of allowable service 
 24.3   is deemed to have elected a 100 percent joint and survivor 
 24.4   annuity payable to a surviving spouse only on or after the date 
 24.5   the member or former member became or would have become 55. 
 24.6      (b) The surviving spouse of a member who had credit for 
 24.7   less than three years of service shall receive, for life, a 
 24.8   monthly annuity equal to 50 percent of that part of the average 
 24.9   monthly salary of the member from which deductions were made for 
 24.10  retirement.  
 24.11     (c) The surviving spouse of a member who had credit for at 
 24.12  least three years service and who died after becoming 55 years 
 24.13  old, may elect to receive a 100 percent joint and survivor 
 24.14  annuity, for life, notwithstanding a subsequent remarriage, in 
 24.15  lieu of the annuity prescribed in paragraph (b). 
 24.16     (d) The surviving spouse of any member who had credit for 
 24.17  three years or more and who was not 55 years old at death, shall 
 24.18  receive the benefit equal to 50 percent of the average monthly 
 24.19  salary as described in clause (b) until the deceased member 
 24.20  would have become 55 years old, and beginning the first of the 
 24.21  month following that date, may elect to receive the 100 percent 
 24.22  joint and survivor annuity.  
 24.23     (e) Each dependent child, as defined in section 352B.01, 
 24.24  subdivision 10, shall receive a monthly annuity equal to ten 
 24.25  12.5 percent of that part of the average monthly salary of the 
 24.26  former deceased member from which deductions were made for 
 24.27  retirement.  A dependent child over 18 and under 23 years of age 
 24.28  also may receive the monthly benefit provided in this section, 
 24.29  if the child is continuously attending an accredited school as a 
 24.30  full-time student during the normal school year as determined by 
 24.31  the director.  If the child does not continuously attend school 
 24.32  but separates from full-time attendance during any part of a 
 24.33  school year, the annuity shall cease at the end of the month of 
 24.34  separation.  In addition, a payment of $20 per month shall be 
 24.35  prorated equally to surviving dependent children when the former 
 24.36  member is survived by one or more dependent children.  Payments 
 25.1   for the benefit of any qualified dependent child must be made to 
 25.2   the surviving spouse, or if there is none, to the legal guardian 
 25.3   of the child.  The maximum monthly benefit for any one family, 
 25.4   including a surviving spouse benefit, if applicable, must not be 
 25.5   less than 50 percent nor exceed 70 75 percent of the average 
 25.6   monthly salary for any number of children of the deceased member.
 25.7      (f) If the member dies under circumstances that entitle the 
 25.8   surviving spouse and dependent children to receive benefits 
 25.9   under the workers' compensation law, the workers' compensation 
 25.10  benefits received by them must not be deducted from the benefits 
 25.11  payable under this section. 
 25.12     (g) The surviving spouse of a deceased former member who 
 25.13  had credit for three or more years of allowable service, but not 
 25.14  the spouse of a former member receiving a disability benefit 
 25.15  under section 352B.10, subdivision 2, is entitled to receive the 
 25.16  100 percent joint and survivor annuity at the time the deceased 
 25.17  member would have become 55 years old.  If a former member dies 
 25.18  who does not qualify for other benefits under this chapter, the 
 25.19  surviving spouse or, if none, the children or heirs are entitled 
 25.20  to a refund of the accumulated deductions left in the fund plus 
 25.21  interest at the rate of six percent per year compounded annually.
 25.22     Sec. 4.  Minnesota Statutes 2002, section 352B.11, is 
 25.23  amended by adding a subdivision to read: 
 25.24     Subd. 2b.  [SURVIVING SPOUSE BENEFIT ELIGIBILITY.] (a) If 
 25.25  an active member with three or more years of allowable service 
 25.26  dies before attaining age 55, the surviving spouse is entitled 
 25.27  to the benefit specified in subdivision 2c, paragraph (b). 
 25.28     (b) If an active member with less than three years of 
 25.29  allowable service dies at any age, the surviving spouse is 
 25.30  authorized to receive the benefit specified in subdivision 2c, 
 25.31  paragraph (c). 
 25.32     (c) If an active member with three or more years of 
 25.33  allowable service dies on or after attaining exact age 55, the 
 25.34  surviving spouse is authorized to receive the benefits specified 
 25.35  in subdivision 2c, paragraph (d). 
 25.36     (d) If a disabilitant dies while receiving a disability 
 26.1   benefit under section 352B.10 or before the benefit under that 
 26.2   section commenced, and an optional annuity was not elected under 
 26.3   section 352B.10, subdivision 5, the surviving spouse is 
 26.4   authorized to receive the benefit specified in subdivision 2c, 
 26.5   paragraph (b). 
 26.6      (e) If a former member with three or more years of 
 26.7   allowable service, who terminated from service and has not 
 26.8   received a refund or commenced receipt of any other benefit 
 26.9   provided by this chapter, dies, the surviving spouse is 
 26.10  authorized to receive the benefit specified in subdivision 2c, 
 26.11  paragraph (e).  
 26.12     (f) If a former member with less than three years of 
 26.13  allowable service, who terminated from service and has not 
 26.14  received a refund or commenced receipt of any other benefit, if 
 26.15  applicable, provided by this chapter, dies, the surviving spouse 
 26.16  is authorized to receive the refund specified in subdivision 2c, 
 26.17  paragraph (f). 
 26.18     Sec. 5.  Minnesota Statutes 2002, section 352B.11, is 
 26.19  amended by adding a subdivision to read: 
 26.20     Subd. 2c.  [SURVIVING SPOUSE BENEFIT ENTITLEMENTS.] (a) A 
 26.21  surviving spouse specified in subdivision 2b is eligible to 
 26.22  receive, following the filing of a valid application and 
 26.23  consistent with any other applicable requirements, a benefit as 
 26.24  specified in this subdivision.  A 100 percent joint and survivor 
 26.25  annuity under paragraph (b) is to be computed assuming exact age 
 26.26  55 for the deceased and the age of the surviving spouse on that 
 26.27  same date.  A 100 percent joint and survivor annuity under 
 26.28  paragraph (d) or (e) is to be computed using the age of the 
 26.29  deceased on the date of death and the age of the surviving 
 26.30  spouse on that same date. 
 26.31     (b) For a surviving spouse specified in subdivision 2b, 
 26.32  paragraph (a) or (d), the surviving spouse benefit is a benefit 
 26.33  for life equal to 50 percent of the average monthly salary of 
 26.34  the deceased.  When the deceased would have attained exact age 
 26.35  55, in lieu of continued receipt of the prior benefit, the 
 26.36  surviving spouse is eligible to commence receipt of the second 
 27.1   half of a 100 percent joint and survivor annuity, if this 
 27.2   provides a larger benefit. 
 27.3      (c) For a surviving spouse specified in subdivision 2b, 
 27.4   paragraph (b), the surviving spouse benefit is a benefit for 
 27.5   life equal to 50 percent of the average monthly salary of the 
 27.6   deceased. 
 27.7      (d) For a surviving spouse specified in subdivision 2b, 
 27.8   paragraph (c), the surviving spouse benefit is a benefit for 
 27.9   life equal to 50 percent of the average monthly salary of the 
 27.10  deceased, or the second half of a 100 percent joint and survivor 
 27.11  annuity, whichever is larger. 
 27.12     (e) For a surviving spouse specified in subdivision 2b, 
 27.13  paragraph (e), the surviving spouse benefit is the second half 
 27.14  of a 100 percent joint and survivor annuity, commencing on the 
 27.15  first of the month following the deceased's date of death, or 
 27.16  the first of the month following the date the deceased would 
 27.17  have attained age 55, whichever is later. 
 27.18     (f) For a surviving spouse specified in subdivision 2b, 
 27.19  paragraph (f), the surviving spouse or, if none, the children 
 27.20  or, if none, the deceased's estate, is entitled to a refund of 
 27.21  the employee contributions plus interest computed as specified 
 27.22  in subdivision 1. 
 27.23     Sec. 6.  Minnesota Statutes 2002, section 352B.11, is 
 27.24  amended by adding a subdivision to read: 
 27.25     Subd. 2d.  [COORDINATION WITH WORKERS' COMPENSATION 
 27.26  BENEFITS.] If the deceased died under circumstances that entitle 
 27.27  the surviving spouse and dependent children to receive benefits 
 27.28  under workers' compensation law, the workers' compensation 
 27.29  benefits received by them must not be deducted from the benefits 
 27.30  payable under this section. 
 27.31     Sec. 7.  Minnesota Statutes 2002, section 352D.075, 
 27.32  subdivision 2, is amended to read: 
 27.33     Subd. 2.  [SURVIVING SPOUSE BENEFIT.] If a participant or 
 27.34  former participant dies leaving a spouse and there is no named 
 27.35  beneficiary who survives to receive payment or the spouse is 
 27.36  named beneficiary before an annuity or disability benefit 
 28.1   becomes payable and notwithstanding any designation of 
 28.2   beneficiary to the contrary, the surviving spouse may receive: 
 28.3      (1) the value of the participant's total shares; 
 28.4      (2) The partial value of one-half of the total shares and 
 28.5   beginning at age 55 or thereafter any time after the 
 28.6   participant's death receive an annuity based on the remaining 
 28.7   value of one-half of the total shares, provided that if the 
 28.8   spouse dies before receiving any annuity payments the value of 
 28.9   said shares shall be paid to the spouse's children in equal 
 28.10  shares, but if no such children survive then to the parents of 
 28.11  the spouse in equal shares, but if no such children or parents 
 28.12  survive, then to the estate of the spouse; or 
 28.13     (3) Beginning at age 55 or thereafter after the 
 28.14  participant's death receive an annuity based on the value of the 
 28.15  total shares, provided that if the spouse dies before receiving 
 28.16  any annuity payments the value of said shares shall be paid to 
 28.17  the spouse's children in equal shares, but if no such children 
 28.18  survive then to the parents of the spouse in equal shares, but 
 28.19  if no such children or parents survive, then to the estate of 
 28.20  the spouse; and further provided, if said spouse dies after 
 28.21  receiving annuity payments but before receiving payments equal 
 28.22  to the value of the employee shares, the value of the employee 
 28.23  shares remaining shall be paid to the spouse's children in equal 
 28.24  shares, but if no such children survive then to the parents of 
 28.25  the spouse in equal shares, but if no such children or parents 
 28.26  survive, then to the estate of the spouse.  
 28.27     Sec. 8.  Minnesota Statutes 2002, section 352D.075, is 
 28.28  amended by adding a subdivision to read: 
 28.29     Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 
 28.30  lieu of the annuity under subdivision 2, clause (2) or (3), or a 
 28.31  distribution under subdivision 2, clause (1), the surviving 
 28.32  spouse of a deceased participant may elect to receive survivor 
 28.33  coverage in a term certain of five, six, 15, or 20 years, based 
 28.34  on the value of remaining shares.  The monthly term certain must 
 28.35  be actuarially equivalent to the lifetime monthly annuity. 
 28.36     Sec. 9.  Minnesota Statutes 2002, section 352D.075, 
 29.1   subdivision 3, is amended to read: 
 29.2      Subd. 3.  If a participant dies and has named a beneficiary 
 29.3   no surviving spouse, the value of the total shares shall be paid 
 29.4   to such a designated beneficiary, but if such the beneficiary 
 29.5   dies before receiving payment, or if no beneficiary has been 
 29.6   named and there is no spouse, the value of said the shares shall 
 29.7   be paid to the children of the participant in equal shares, but 
 29.8   or if no such children survive then in equal shares to the 
 29.9   parents of the participant, but or if no such children or 
 29.10  parents survive, then to the estate of the participant.  
 29.11     Sec. 10.  [EFFECT ON STATE PATROL PLAN BENEFITS.] 
 29.12     Sections 2 and 4 through 6 are not intended to increase, 
 29.13  modify, impair, or diminish the benefit entitlements specified 
 29.14  in Minnesota Statutes, chapter 352B.  If the Minnesota state 
 29.15  retirement system executive director determines that any 
 29.16  provision of those sections does increase, modify, impair, or 
 29.17  diminish the benefit entitlements as reflected in applicable law 
 29.18  just prior to the effective date of this section, the executive 
 29.19  director shall certify that determination and a recommendation 
 29.20  as to the required legislative correction to the chairs of the 
 29.21  legislative commission on pensions and retirement, the house 
 29.22  governmental operations committee, the senate governmental 
 29.23  operations committee, and the executive director of the 
 29.24  legislative commission on pensions and retirement.  
 29.25     Sec. 11.  [EFFECTIVE DATE.] 
 29.26     Sections 1 to 10 are effective July 1, 2003. 
 29.27                             ARTICLE 8
 29.28                             TECHNICAL
 29.29     Section 1.  Minnesota Statutes 2002, section 352.22, 
 29.30  subdivision 3, is amended to read: 
 29.31     Subd. 3.  [DEFERRED ANNUITY.] (a) An employee who has at 
 29.32  least three years of allowable service when termination occurs 
 29.33  may elect to leave the accumulated contributions in the fund and 
 29.34  be entitled to a deferred retirement annuity.  The annuity must 
 29.35  be computed under the law in effect when state service 
 29.36  terminated, on the basis of allowable service before termination 
 30.1   of service. 
 30.2      (b) An employee on layoff or on leave of absence without 
 30.3   pay, except a leave of absence for health reasons, who does not 
 30.4   return to state service shall have an annuity, deferred annuity, 
 30.5   or other benefit to which the employee may become entitled 
 30.6   computed under the law in effect on the employee's last working 
 30.7   day. 
 30.8      (c) No application for a deferred annuity may be made more 
 30.9   than 60 days before the time the former employee reaches the 
 30.10  required age for entitlement to the payment of the annuity.  The 
 30.11  deferred annuity begins to accrue no earlier than 60 days before 
 30.12  the date the application is filed in the office of the system, 
 30.13  but not (1) before the date the employee reaches the required 
 30.14  age for entitlement to the annuity nor (2) before the day 
 30.15  following the termination of state service in a position not 
 30.16  covered by the retirement system. 
 30.17     (d) Application for the accumulated contributions left on 
 30.18  deposit with the fund may be made at any time after 30 days 
 30.19  following the date of termination of service. 
 30.20     Sec. 2.  Minnesota Statutes 2002, section 352D.02, 
 30.21  subdivision 3, is amended to read: 
 30.22     Subd. 3.  [ELECTION IRREVOCABLE REVISION TO GENERAL PLAN.] 
 30.23  An election to not participate is irrevocable during any period 
 30.24  of covered employment.  An employee credited with employee 
 30.25  shares in the unclassified program, after acquiring credit for 
 30.26  ten years of allowable service but prior to and within one month 
 30.27  following termination of covered employment, may, 
 30.28  notwithstanding other provisions of this subdivision, elect to 
 30.29  terminate participation in the unclassified plan and be covered 
 30.30  by the regular general plan by filing such a written election 
 30.31  with the executive director.  The executive director 
 30.32  shall thereupon then redeem the employee's total shares and 
 30.33  shall credit to the employee's account in the regular general 
 30.34  plan the amount of contributions that would have been so 
 30.35  credited had the employee been covered by the regular general 
 30.36  plan during the employee's entire covered employment.  The 
 31.1   balance of money so redeemed and not credited to the employee's 
 31.2   account shall be transferred to the state contribution reserve 
 31.3   of the state employees retirement fund, except that (1) the 
 31.4   employee contribution paid to the unclassified plan must be 
 31.5   compared to (2) the employee contributions that would have been 
 31.6   paid to the general plan for the comparable period, if the 
 31.7   individual had been covered by that plan.  If clause (1) is 
 31.8   greater than clause (2), the difference must be refunded to the 
 31.9   employee as provided in section 352.22.  If clause (2) is 
 31.10  greater than clause (1), the difference must be paid by the 
 31.11  employee within six months of electing general plan coverage or 
 31.12  before the effective date of the annuity, whichever is sooner.  
 31.13     Sec. 3.  Minnesota Statutes 2002, section 352D.04, 
 31.14  subdivision 2, is amended to read: 
 31.15     Subd. 2.  [CONTRIBUTION RATES.] (a) Except as specified in 
 31.16  paragraph (c), the money used to purchase shares under this 
 31.17  section is the employee and employer contributions provided in 
 31.18  this subdivision are used to purchase shares under this section. 
 31.19     (b) For an employee other than a judge specified in 
 31.20  paragraph (g), the employee contribution is an amount equal to 
 31.21  the employee contribution specified in section 352.04, 
 31.22  subdivision 2. 
 31.23     (c) For an employee other than a judge specified in 
 31.24  paragraph (g), the employer contribution is an amount equal to 
 31.25  six percent of salary.  
 31.26     (d) The employer contribution under paragraph (c) must 
 31.27  include an employer additional contribution equal to 1.5 percent 
 31.28  of salary.  
 31.29     (e) The employer additional contribution collected under 
 31.30  paragraph (d) is not credited to any employee's account and is 
 31.31  not used to purchase shares.  Amounts collected under that 
 31.32  paragraph will be held in a separate reserve account within the 
 31.33  Minnesota state retirement system and are to be used to offset 
 31.34  costs incurred by the general plan when an unclassified plan 
 31.35  member reverts to the general plan, when mortality adjustments 
 31.36  are made relating to these transferred members, and to offset 
 32.1   any other costs relating to these transferred members as deemed 
 32.2   necessary by the executive director.  All assets of this reserve 
 32.3   account are to be invested by the state board of investment in 
 32.4   one or more of the investment options established under section 
 32.5   11A.17, as deemed appropriate by the state board of investment 
 32.6   given the nature and purpose of the reserve account established 
 32.7   under this paragraph. 
 32.8      (f) These contributions must be made in the manner provided 
 32.9   in section 352.04, subdivisions 4, 5, and 6. 
 32.10     (e) (g) For members of the legislature, the contributions 
 32.11  under this subdivision also must be made on per diem payments 
 32.12  received during a regular or special legislative session, but 
 32.13  may not be made on per diem payments received outside of a 
 32.14  regular or special legislative session, on the additional 
 32.15  compensation attributable to a leadership position under section 
 32.16  3.099, subdivision 3, living expense payments under section 
 32.17  3.101, or special session living expense payments under section 
 32.18  3.103. 
 32.19     (f) (h) For a judge who is a member of the unclassified 
 32.20  plan under section 352D.02, subdivision 1, paragraph (c), clause 
 32.21  (16), the employee contribution rate is eight percent of salary, 
 32.22  and there is no employer contribution. 
 32.23     Sec. 4.  [REPEALER.] 
 32.24     Minnesota Statutes 2002, sections 352D.02, subdivision 5; 
 32.25  and 490.11, are repealed.  
 32.26     Sec. 5.  [EFFECTIVE DATE.] 
 32.27     Sections 1 to 4 are effective July 1, 2003.