HF 176

3rd Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to retirement; public employees retirement 
  1.3             association; creating a local government correctional 
  1.4             service retirement plan; modifying actuarial cost 
  1.5             provision; providing a special property tax levy for 
  1.6             certain county retirement contributions; amending 
  1.7             Minnesota Statutes 1998, sections 3.85, subdivisions 
  1.8             11 and 12; 273.1385, subdivision 2; 275.70, 
  1.9             subdivision 5; 353.27, subdivisions 2 and 3; 356.19, 
  1.10            by adding a subdivision; 356.20, subdivision 2; 
  1.11            356.30, subdivision 3; 356.302, subdivision 7; and 
  1.12            356.303, subdivision 4; proposing coding for new law 
  1.13            as Minnesota Statutes, chapter 353E; repealing 
  1.14            Minnesota Statutes 1998, section 353.33, subdivision 
  1.15            3a. 
  1.16  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.17     Section 1.  Minnesota Statutes 1998, section 3.85, 
  1.18  subdivision 11, is amended to read: 
  1.19     Subd. 11.  [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The 
  1.20  commission shall contract with an established actuarial 
  1.21  consulting firm to conduct annual actuarial valuations for the 
  1.22  retirement plans named in paragraph (b).  The contract must 
  1.23  include provisions for performing cost analyses of proposals for 
  1.24  changes in benefit and funding policies.  
  1.25     (b) The contract for actuarial valuation must include the 
  1.26  following retirement plans:  
  1.27     (1) the teachers retirement plan, teachers retirement 
  1.28  association; 
  1.29     (2) the general state employees retirement plan, Minnesota 
  1.30  state retirement system; 
  2.1      (3) the correctional employees retirement plan, Minnesota 
  2.2   state retirement system; 
  2.3      (4) the state patrol retirement plan, Minnesota state 
  2.4   retirement system; 
  2.5      (5) the judges retirement plan, Minnesota state retirement 
  2.6   system; 
  2.7      (6) the Minneapolis employees retirement plan, Minneapolis 
  2.8   employees retirement fund; 
  2.9      (7) the public employees retirement plan, public employees 
  2.10  retirement association; 
  2.11     (8) the public employees police and fire plan, public 
  2.12  employees retirement association; 
  2.13     (9) the Duluth teachers retirement plan, Duluth teachers 
  2.14  retirement fund association; 
  2.15     (10) the Minneapolis teachers retirement plan, Minneapolis 
  2.16  teachers retirement fund association; 
  2.17     (11) the St. Paul teachers retirement plan, St. Paul 
  2.18  teachers retirement fund association; 
  2.19     (12) the legislators retirement plan, Minnesota state 
  2.20  retirement system; and 
  2.21     (13) the elective state officers retirement plan, Minnesota 
  2.22  state retirement system; and 
  2.23     (14) local government correctional service retirement plan, 
  2.24  public employees retirement association.  
  2.25     (c) The contract must specify completion of annual 
  2.26  actuarial valuation calculations on a fiscal year basis with 
  2.27  their contents as specified in section 356.215, and the 
  2.28  standards for actuarial work adopted by the commission.  
  2.29     The contract must specify completion of annual experience 
  2.30  data collection and processing and a quadrennial published 
  2.31  experience study for the plans listed in paragraph (b), clauses 
  2.32  (1), (2), and (7), as provided for in the standards for 
  2.33  actuarial work adopted by the commission.  The experience data 
  2.34  collection, processing, and analysis must evaluate the following:
  2.35     (1) individual salary progression; 
  2.36     (2) rate of return on investments based on current asset 
  3.1   value; 
  3.2      (3) payroll growth; 
  3.3      (4) mortality; 
  3.4      (5) retirement age; 
  3.5      (6) withdrawal; and 
  3.6      (7) disablement.  
  3.7      (d) The actuary retained by the commission shall annually 
  3.8   prepare a report to the legislature, including the commentary on 
  3.9   the actuarial valuation calculations for the plans named in 
  3.10  paragraph (b) and summarizing the results of the actuarial 
  3.11  valuation calculations.  The commission-retained actuary shall 
  3.12  include with the report the actuary's recommendations concerning 
  3.13  the appropriateness of the support rates to achieve proper 
  3.14  funding of the retirement funds by the required funding dates.  
  3.15  The commission-retained actuary shall, as part of the 
  3.16  quadrennial published experience study, include recommendations 
  3.17  to the legislature on the appropriateness of the actuarial 
  3.18  valuation assumptions required for evaluation in the study.  
  3.19     (e) If the actuarial gain and loss analysis in the 
  3.20  actuarial valuation calculations indicates a persistent pattern 
  3.21  of sizable gains or losses, as directed by the commission, the 
  3.22  actuary retained by the commission shall prepare a special 
  3.23  experience study for a plan listed in paragraph (b), clause (3), 
  3.24  (4), (5), (6), (8), (9), (10), (11), (12), or (13), or (14), in 
  3.25  the manner provided for in the standards for actuarial work 
  3.26  adopted by the commission. 
  3.27     (f) The term of the contract between the commission and the 
  3.28  actuary retained by the commission is four years.  The contract 
  3.29  is subject to competitive bidding procedures as specified by the 
  3.30  commission. 
  3.31     Sec. 2.  Minnesota Statutes 1998, section 3.85, subdivision 
  3.32  12, is amended to read: 
  3.33     Subd. 12.  [ALLOCATION OF ACTUARIAL COST.] (a) The 
  3.34  commission shall assess each retirement plan specified in 
  3.35  subdivision 11, paragraph (b), its appropriate portion of the 
  3.36  compensation paid to the actuary retained by the commission for 
  4.1   the actuarial valuation calculations, quadrennial projection 
  4.2   valuations, and quadrennial experience studies.  The total 
  4.3   assessment is 100 percent of the amount of contract compensation 
  4.4   for the actuarial consulting firm retained by the commission for 
  4.5   actuarial valuation calculations, including the public employees 
  4.6   police and fire plan consolidation accounts of the public 
  4.7   employees retirement association, annual experience data 
  4.8   collection and processing, quadrennial projection valuations, 
  4.9   and quadrennial experience studies.  
  4.10     The portion of the total assessment payable by each 
  4.11  retirement system or pension plan must be determined as follows: 
  4.12     (1) Each pension plan specified in subdivision 11, 
  4.13  paragraph (b), clauses (1) to (13) (14), must pay the following 
  4.14  indexed amount based on its total active, deferred, inactive, 
  4.15  and benefit recipient membership: 
  4.16         up to 2,000 members, inclusive         $2.55 per member 
  4.17         2,001 through 10,000 members           $1.13 per member 
  4.18         over 10,000 members                    $0.11 per member  
  4.19     The amount specified is applicable for the assessment of 
  4.20  the July 1, 1991, to June 30, 1992, fiscal year actuarial 
  4.21  compensation amounts.  For the July 1, 1992, to June 30, 1993, 
  4.22  fiscal year and subsequent fiscal year actuarial compensation 
  4.23  amounts, the amount specified must be increased at the same 
  4.24  percentage increase rate as the implicit price deflator for 
  4.25  state and local government purchases of goods and services for 
  4.26  the 12-month period ending with the first quarter of the 
  4.27  calendar year following the completion date for the actuarial 
  4.28  valuation calculations, as published by the federal Department 
  4.29  of Commerce, and rounded upward to the nearest full cent. 
  4.30     (2) The total per-member portion of the allocation must be 
  4.31  determined, and that total per-member amount must be subtracted 
  4.32  from the total amount for allocation.  Of the remainder dollar 
  4.33  amount, the following per-retirement system and per-pension plan 
  4.34  charges must be determined and the charges must be paid by the 
  4.35  system or plan: 
  4.36     (i) 37.87 percent is the total additional per-retirement 
  5.1   system charge, of which one-seventh must be paid by each 
  5.2   retirement system specified in subdivision 11, paragraph (b), 
  5.3   clauses (1), (2), (6), (7), (9), (10), and (11). 
  5.4      (ii) 62.13 percent is the total additional per-pension plan 
  5.5   charge, of which one-thirteenth one-fourteenth must be paid by 
  5.6   each pension plan specified in subdivision 11, paragraph (b), 
  5.7   clauses (1) to (13) (14).  
  5.8      (b) The assessment must be made following the completion of 
  5.9   the actuarial valuation calculations and the experience 
  5.10  analysis.  The amount of the assessment is appropriated from the 
  5.11  retirement fund applicable to the retirement plan.  Receipts 
  5.12  from assessments must be deposited in the state treasury and 
  5.13  credited to the general fund. 
  5.14     Sec. 3.  Minnesota Statutes 1998, section 273.1385, 
  5.15  subdivision 2, is amended to read: 
  5.16     Subd. 2.  [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID 
  5.17  REDUCTIONS.] (a) The aid amount received by any jurisdiction in 
  5.18  fiscal year 2000 or any year thereafter may not exceed the 
  5.19  amount it received in fiscal year 1999.  The commissioner may, 
  5.20  from time to time, request the most recent fiscal year payroll 
  5.21  information by jurisdiction to be certified by the executive 
  5.22  director of the public employees retirement association.  For 
  5.23  any jurisdiction where newly certified public employees 
  5.24  retirement association general plan payroll is significantly 
  5.25  lower than the fiscal 1997 amount, as determined by the 
  5.26  commissioner, the commissioner shall recalculate the aid amount 
  5.27  based on the most recent fiscal year payroll information, 
  5.28  certify the recalculated aid amount for the next distribution 
  5.29  year, and permanently reduce the aid amount to that jurisdiction.
  5.30     (b) Aid to a jurisdiction must not be reduced under this 
  5.31  section due to a transfer of an employee from the general plan 
  5.32  of the public employees retirement association to the local 
  5.33  government correctional service plan administered by the public 
  5.34  employees retirement association.  The executive director of the 
  5.35  public employees retirement association must provide the 
  5.36  commissioner of revenue with any information requested by the 
  6.1   commissioner to administer this paragraph. 
  6.2      Sec. 4.  Minnesota Statutes 1998, section 275.70, 
  6.3   subdivision 5, is amended to read: 
  6.4      Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
  6.5   portions of ad valorem taxes levied by a local governmental unit 
  6.6   for the following purposes or in the following manner: 
  6.7      (1) to pay the costs of the principal and interest on 
  6.8   bonded indebtedness or to reimburse for the amount of liquor 
  6.9   store revenues used to pay the principal and interest due on 
  6.10  municipal liquor store bonds in the year preceding the year for 
  6.11  which the levy limit is calculated; 
  6.12     (2) to pay the costs of principal and interest on 
  6.13  certificates of indebtedness issued for any corporate purpose 
  6.14  except for the following: 
  6.15     (i) tax anticipation or aid anticipation certificates of 
  6.16  indebtedness; 
  6.17     (ii) certificates of indebtedness issued under sections 
  6.18  298.28 and 298.282; 
  6.19     (iii) certificates of indebtedness used to fund current 
  6.20  expenses or to pay the costs of extraordinary expenditures that 
  6.21  result from a public emergency; or 
  6.22     (iv) certificates of indebtedness used to fund an 
  6.23  insufficiency in tax receipts or an insufficiency in other 
  6.24  revenue sources; 
  6.25     (3) to provide for the bonded indebtedness portion of 
  6.26  payments made to another political subdivision of the state of 
  6.27  Minnesota; 
  6.28     (4) to fund payments made to the Minnesota state armory 
  6.29  building commission under section 193.145, subdivision 2, to 
  6.30  retire the principal and interest on armory construction bonds; 
  6.31     (5) for unreimbursed expenses related to flooding that 
  6.32  occurred during the first half of calendar year 1997, as allowed 
  6.33  by the commissioner of revenue under section 275.74, paragraph 
  6.34  (b); 
  6.35     (6) for local units of government located in an area 
  6.36  designated by the Federal Emergency Management Agency pursuant 
  7.1   to a major disaster declaration issued for Minnesota by 
  7.2   President Clinton after April 1, 1997, and before June 11, 1997, 
  7.3   for the amount of tax dollars lost due to abatements authorized 
  7.4   under section 273.123, subdivision 7, and Laws 1997, chapter 
  7.5   231, article 2, section 64, to the extent that they are related 
  7.6   to the major disaster and to the extent that neither the state 
  7.7   or federal government reimburses the local government for the 
  7.8   amount lost; 
  7.9      (7) property taxes approved by voters which are levied 
  7.10  against the referendum market value as provided under section 
  7.11  275.61; 
  7.12     (8) to fund matching requirements needed to qualify for 
  7.13  federal or state grants or programs to the extent that either 
  7.14  (i) the matching requirement exceeds the matching requirement in 
  7.15  calendar year 1997, or (ii) it is a new matching requirement 
  7.16  that didn't exist prior to 1998; 
  7.17     (9) to pay the expenses reasonably and necessarily incurred 
  7.18  in preparing for or repairing the effects of natural disaster 
  7.19  including the occurrence or threat of widespread or severe 
  7.20  damage, injury, or loss of life or property resulting from 
  7.21  natural causes, in accordance with standards formulated by the 
  7.22  emergency services division of the state department of public 
  7.23  safety, as allowed by the commissioner of revenue under section 
  7.24  275.74, paragraph (b); 
  7.25     (10) for the amount of tax revenue lost due to abatements 
  7.26  authorized under section 273.123, subdivision 7, for damage 
  7.27  related to the tornadoes of March 29, 1998, to the extent that 
  7.28  neither the state or federal government provides reimbursement 
  7.29  for the amount lost; 
  7.30     (11) pay amounts required to correct an error in the levy 
  7.31  certified to the county auditor by a city or county in a levy 
  7.32  year, but only to the extent that when added to the preceding 
  7.33  year's levy it is not in excess of an applicable statutory, 
  7.34  special law or charter limitation, or the limitation imposed on 
  7.35  the governmental subdivision by sections 275.70 to 275.74 in the 
  7.36  preceding levy year; and 
  8.1      (12) to pay an abatement under section 469.1815; and 
  8.2      (13) to pay the employer contribution to the local 
  8.3   government correctional service retirement plan under section 
  8.4   353E.03, subdivision 2, to the extent that the employer 
  8.5   contribution exceeds 5.49 percent of total salary.  
  8.6      Sec. 5.  Minnesota Statutes 1998, section 353.27, 
  8.7   subdivision 2, is amended to read: 
  8.8      Subd. 2.  [EMPLOYEE CONTRIBUTION.] (a) Except as provided 
  8.9   in paragraph (b), The employee contribution shall be is an 
  8.10  amount (1) for a "basic member" equal to 8.75 percent of total 
  8.11  salary; and (2) for a "coordinated member" equal to 4.75 percent 
  8.12  of total salary. 
  8.13     (b) For local government correctional service employees, as 
  8.14  defined in section 353.33, subdivision 3a, the employee 
  8.15  contribution is an amount equal to 4.96 percent of total salary. 
  8.16     (c) These contributions must be made by deduction from 
  8.17  salary in the manner provided in subdivision 4.  Where any 
  8.18  portion of a member's salary is paid from other than public 
  8.19  funds, such member's employee contribution must be based on the 
  8.20  total salary received from all sources. 
  8.21     Sec. 6.  Minnesota Statutes 1998, section 353.27, 
  8.22  subdivision 3, is amended to read: 
  8.23     Subd. 3.  [EMPLOYER CONTRIBUTION.] (a) Except as provided 
  8.24  in paragraph (b), The employer contribution shall be is an 
  8.25  amount equal to the employee contribution under subdivision 2. 
  8.26     (b) On behalf of local government correctional service 
  8.27  employees, as defined in section 353.33, subdivision 3a, the 
  8.28  employer contribution is an amount equal to 5.06 percent of 
  8.29  total salary. 
  8.30     (c) This contribution shall must be made from funds 
  8.31  available to the employing subdivision by the means and in the 
  8.32  manner provided in section 353.28. 
  8.33     Sec. 7.  [353E.01] [LOCAL GOVERNMENT CORRECTIONAL SERVICE 
  8.34  RETIREMENT PLAN.] 
  8.35     Subdivision 1.  [PLAN ADMINISTRATION; FUND.] (a) The public 
  8.36  employees local government correctional service retirement plan 
  9.1   is established as a separate plan to be administered by the 
  9.2   board of trustees and the executive director of the public 
  9.3   employees retirement association. 
  9.4      (b) The board of trustees and the executive director shall 
  9.5   undertake their activities in a manner consistent with chapter 
  9.6   356A.  
  9.7      (c) The association shall maintain a special fund to be 
  9.8   known as the public employees local government correctional 
  9.9   service retirement fund. 
  9.10     Subd. 2.  [REVENUE SOURCES.] Member contributions under 
  9.11  section 353E.03, subdivision 1, and employer contributions under 
  9.12  section 353E.03, subdivision 2, and other amounts authorized by 
  9.13  law, including any investment return on invested fund assets, 
  9.14  must be deposited in the fund.  
  9.15     Subd. 3.  [INVESTMENT.] (a) The public employees local 
  9.16  government correctional service retirement fund participates in 
  9.17  the Minnesota postretirement investment fund.  
  9.18     (b) The amounts provided in section 353.271 must be 
  9.19  deposited in that fund.  
  9.20     (c) The balance of any assets of the fund must be deposited 
  9.21  in the Minnesota combined investment fund as provided in section 
  9.22  11A.14, if applicable, or otherwise invested under section 
  9.23  11A.23. 
  9.24     Subd. 4.  [COLLECTION OF CONTRIBUTIONS.] The collection of 
  9.25  member and employer contributions is governed by section 353.27, 
  9.26  subdivisions 4, 7, 7b, 10, 11, and 12. 
  9.27     Subd. 5.  [FUND DISBURSEMENT RESTRICTED.] (a) The public 
  9.28  employees local government correctional service retirement fund 
  9.29  and its share of participation in the Minnesota postretirement 
  9.30  investment fund may be disbursed only for the purposes provided 
  9.31  for in this chapter.  
  9.32     (b) The proportional share of the necessary and reasonable 
  9.33  administrative expenses of the association and any benefits 
  9.34  provided in this chapter, other than benefits payable from the 
  9.35  Minnesota postretirement investment fund, must be paid from the 
  9.36  public employees local government correctional service 
 10.1   retirement fund.  Retirement annuities, disability benefits, 
 10.2   survivorship benefits, and any refunds of accumulated deductions 
 10.3   may be paid only from the correctional service retirement fund 
 10.4   after those needs have been certified by the executive director 
 10.5   and any applicable amounts withdrawn from the share of 
 10.6   participation in the Minnesota postretirement fund under section 
 10.7   11A.18.  
 10.8      (c) The amounts necessary to make the payments from the 
 10.9   public employees local government correctional service 
 10.10  retirement fund and its participation in the Minnesota 
 10.11  postretirement investment fund are annually appropriated from 
 10.12  those funds for those purposes. 
 10.13     Sec. 8.  [353E.02] [CORRECTIONAL SERVICE EMPLOYEES.] 
 10.14     A local government correctional service employee is a 
 10.15  person who: 
 10.16     (1) is employed in a county-administered jail or 
 10.17  correctional facility or in a regional correctional facility 
 10.18  administered by multiple counties; 
 10.19     (2) spends at least 95 percent of the employee's working 
 10.20  time in direct contact with persons confined in the jail or 
 10.21  facility, as certified in writing, in advance, by the employer 
 10.22  to the executive director of the association; and 
 10.23     (3) is a "public employee" as defined in section 353.01, 
 10.24  but is not a member of the public employees police and fire fund.
 10.25     Sec. 9.  [353E.03] [CORRECTIONAL SERVICE PLAN 
 10.26  CONTRIBUTIONS.] 
 10.27     Subdivision 1.  [MEMBER CONTRIBUTIONS.] A local government 
 10.28  correctional service employee shall make an employee 
 10.29  contribution in an amount equal to 5.83 percent of salary. 
 10.30     Subd. 2.  [EMPLOYER CONTRIBUTIONS.] The employer shall 
 10.31  contribute for a local government correctional service employee 
 10.32  an amount equal to 8.75 percent of salary. 
 10.33     Sec. 10.  [353E.04] [CORRECTIONAL SERVICE PLAN RETIREMENT 
 10.34  ANNUITY.] 
 10.35     Subdivision 1.  [ELIGIBILITY REQUIREMENTS.] After 
 10.36  termination of public employment, an employee covered under 
 11.1   section 353E.02 who has attained the age of at least 55 years 
 11.2   and has credit for not less than three years of coverage in the 
 11.3   local government correctional service plan is entitled, upon 
 11.4   application, to a normal retirement annuity.  Instead of a 
 11.5   normal retirement annuity, a retiring employee may elect to 
 11.6   receive the optional annuity provided in section 353.30, 
 11.7   subdivision 3. 
 11.8      Subd. 2.  [AVERAGE SALARY BASE.] In calculating the annuity 
 11.9   under subdivision 3, "average salary" means an amount equivalent 
 11.10  to the average of the highest salary earned as a local 
 11.11  government correctional employee upon which employee 
 11.12  contributions were paid for any five successive years of 
 11.13  allowable service.  Average salary must be based on all 
 11.14  allowable service if this service is less than five years. 
 11.15     Subd. 3.  [ANNUITY AMOUNT.] The average salary as defined 
 11.16  in subdivision 2, multiplied by the percent specified in section 
 11.17  356.19, subdivision 5a, for each year of allowable service, 
 11.18  determines the amount of the normal retirement annuity.  If a 
 11.19  person has earned allowable service in the public employees 
 11.20  retirement association or the public employees police and fire 
 11.21  fund prior to participation under this chapter, the retirement 
 11.22  annuity representing such service must be computed in accordance 
 11.23  with the formula specified in sections 353.29 and 353.30 or 
 11.24  353.651, whichever applies. 
 11.25     Subd. 4.  [EARLY RETIREMENT.] An employee covered under 
 11.26  section 353E.02 who has attained the age of at least 50 years 
 11.27  and has credit for not less than three years of coverage in the 
 11.28  local government correctional service plan is entitled, upon 
 11.29  application, to a reduced retirement annuity equal to the 
 11.30  annuity calculated under subdivision 3, reduced so that the 
 11.31  reduced annuity is the actuarial equivalent of the annuity that 
 11.32  would be payable if the employee deferred receipt of the annuity 
 11.33  from the day the annuity begins to accrue until age 55. 
 11.34     Subd. 5.  [ACCRUAL AND DURATION.] The retirement annuity 
 11.35  under this section begins to accrue as provided in section 
 11.36  353.29, subdivision 7.  The retirement annuity is payable for 
 12.1   the life of the recipient, or in accordance with the terms of 
 12.2   any optional annuity form selected by the retiring member. 
 12.3      Subd. 6.  [MULTIPLE SERVICE LIMITATION.] A former employee 
 12.4   who has both public employees retirement plan and public 
 12.5   employees local government correctional retirement plan credited 
 12.6   service must, if qualified, receive a retirement annuity from 
 12.7   each retirement plan that takes into account both periods of 
 12.8   service and both covered salary amounts, but no period of 
 12.9   service may be used more than once in calculating the annuity. 
 12.10     Sec. 11.  [353E.05] [AUGMENTATION IN CERTAIN CASES.] 
 12.11     Unless prior service has been transferred or unless a 
 12.12  combined service annuity under section 356.30 has been elected, 
 12.13  an employee who becomes a local government correctional employee 
 12.14  after being a member of the public employees retirement 
 12.15  association or the public employees police and fire fund is 
 12.16  covered under section 353.71, subdivision 2, with respect to 
 12.17  that prior service.  An employee who becomes a member of the 
 12.18  public employees retirement association or the public employees 
 12.19  police and fire plan after being a local government correctional 
 12.20  employee is also covered under section 353.71, subdivision 2, 
 12.21  with respect to that prior service, unless calculated under 
 12.22  section 356.30. 
 12.23     Sec. 12.  [353E.06] [DISABILITY BENEFITS.] 
 12.24     Subdivision 1.  [DUTY DISABILITY QUALIFICATION 
 12.25  REQUIREMENTS.] A local government correctional employee who 
 12.26  becomes disabled and physically or mentally unfit to perform the 
 12.27  duties of the position as a direct result of an injury, 
 12.28  sickness, or other disability that is medically determinable, 
 12.29  that was incurred in or arose out of any act of duty, and that 
 12.30  renders the employee physically or mentally unable to perform 
 12.31  the employee's duties, is entitled to a disability benefit.  The 
 12.32  disability benefit must be based on covered service under this 
 12.33  chapter only and is an amount equal to 47.5 percent of the 
 12.34  average salary defined in section 353E.04, subdivision 2, plus 
 12.35  an additional percent equal to that specified in section 356.19, 
 12.36  subdivision 5a, for each year of covered service under this 
 13.1   chapter in excess of 25 years. 
 13.2      Subd. 2.  [NONDUTY DISABILITY QUALIFICATION 
 13.3   REQUIREMENTS.] A local government correctional employee who has 
 13.4   at least one year of covered service under this chapter and 
 13.5   becomes disabled and physically or mentally unfit to perform the 
 13.6   duties of the position because of sickness or injury that is 
 13.7   medically determinable and that occurs while not engaged in 
 13.8   covered employment, is entitled to a disability benefit based on 
 13.9   covered service under this chapter.  The disability benefit must 
 13.10  be computed in the same manner as an annuity under section 
 13.11  353E.04, subdivision 3, and as though the employee had at least 
 13.12  ten years of covered correctional service. 
 13.13     Subd. 3.  [OPTIONAL ANNUITY.] A disabled local government 
 13.14  correctional employee may elect the normal disability benefit or 
 13.15  an optional annuity as provided in section 353.30, subdivision 
 13.16  3.  The election of an optional annuity must be made before the 
 13.17  commencement of payment of the disability benefit and is 
 13.18  effective on the date on which the disability benefit begins to 
 13.19  accrue as provided in section 353.33, subdivision 2.  Upon 
 13.20  becoming effective, the optional annuity begins to accrue on the 
 13.21  same date as provided for the disability benefit. 
 13.22     Subd. 4.  [DISABILITY BENEFIT APPLICATION.] A claim or 
 13.23  demand for a disability benefit must be initiated by written 
 13.24  application in the manner and form prescribed by the executive 
 13.25  director, filed in the office of the association, showing 
 13.26  compliance with the statutory conditions qualifying the 
 13.27  applicant for a disability benefit.  A member or former member 
 13.28  who became disabled during a period of membership may file an 
 13.29  application for disability benefits within three years following 
 13.30  termination of local government correctional service, but not 
 13.31  after that time has elapsed.  The disability benefit begins to 
 13.32  accrue the day following the commencement of disability, 90 days 
 13.33  preceding the filing of the application, or, if annual or sick 
 13.34  leave is paid for more than the 90-day period, from the date 
 13.35  salary ceased, whichever is latest.  No payment may accrue 
 13.36  beyond the end of the month in which entitlement has 
 14.1   terminated.  If the disabilitant dies before negotiating the 
 14.2   check for the month in which death occurs, payment must be made 
 14.3   to the optional annuitant or beneficiary. 
 14.4      Subd. 5.  [DISABILITY BENEFIT TERMINATION.] The disability 
 14.5   benefit paid to a disabled local government correctional 
 14.6   employee terminates at the end of the month in which the 
 14.7   employee reaches age 65.  If the disabled local government 
 14.8   correctional employee is still disabled when the employee 
 14.9   reaches age 65, the employee is deemed to be a retired employee 
 14.10  and, if the employee had elected an optional annuity under 
 14.11  subdivision 3, must receive an annuity in accordance with the 
 14.12  terms of the optional annuity previously elected.  If the 
 14.13  employee had not elected an optional annuity under subdivision 
 14.14  3, the employee may elect either to receive a normal retirement 
 14.15  annuity computed in the manner provided in section 353E.04, 
 14.16  subdivision 3, or to receive an optional annuity as provided in 
 14.17  section 353.30, subdivision 3, based on the same length of 
 14.18  service as used in the calculation of the disability benefit.  
 14.19  Election of an optional annuity must be made within 90 days 
 14.20  before attaining the age of 65 years, or reaching the five-year 
 14.21  anniversary of the effective date of the disability benefit, 
 14.22  whichever is later. 
 14.23     Subd. 6.  [RESUMPTION OF EMPLOYMENT.] If a disabled 
 14.24  employee resumes a gainful occupation from which earnings are 
 14.25  less than salary received at the date of disability or the 
 14.26  salary currently paid for similar positions, or should the 
 14.27  employee be entitled to receive workers' compensation benefits, 
 14.28  the disability benefit must be continued in an amount that, when 
 14.29  added to such earnings and workers' compensation benefits, does 
 14.30  not exceed the salary received at the date of disability or the 
 14.31  salary currently payable for the same employment position or an 
 14.32  employment position substantially similar to the one the person 
 14.33  held as of the date of the disability, whichever is greater. 
 14.34     Subd. 7.  [COMBINED SERVICE DISABILITY BENEFIT.] If the 
 14.35  employee is entitled to receive a disability benefit as provided 
 14.36  in subdivision 1 or 2 and has credit for less covered 
 15.1   correctional service than the length of service upon which the 
 15.2   correctional disability benefit is based, and also has credit 
 15.3   for public employees retirement plan service, the employee is 
 15.4   entitled to a disability benefit or deferred retirement annuity 
 15.5   based on the regular plan service only for the service that, 
 15.6   when combined with the correctional service, exceeds the number 
 15.7   of years on which the correctional disability benefit is based.  
 15.8   The disabled employee who also has credit for regular plan 
 15.9   service must in all respects qualify under section 353.33 to be 
 15.10  entitled to receive a disability benefit based on the public 
 15.11  employees retirement plan service, except that the service may 
 15.12  be combined to satisfy length of service requirements.  Any 
 15.13  deferred annuity to which the employee may be entitled based on 
 15.14  public employees retirement plan service must be augmented as 
 15.15  provided in section 353.71 while the employee is receiving a 
 15.16  disability benefit under this section. 
 15.17     Subd. 8.  [CONTINUING BENEFIT ELIGIBILITY.] Continuing 
 15.18  eligibility for a disability benefit is subject to section 
 15.19  353.33, subdivision 6. 
 15.20     Sec. 13.  [353E.07] [SURVIVOR BENEFITS.] 
 15.21     Subdivision 1.  [MEMBER AT LEAST AGE 50.] If a member or 
 15.22  former member of the local government correctional service 
 15.23  retirement plan who has attained the age of at least 50 years 
 15.24  and has credit for not less than three years of allowable 
 15.25  service dies before the annuity or disability benefit has become 
 15.26  payable, notwithstanding any designation of beneficiary to the 
 15.27  contrary, the surviving spouse may elect to receive, in lieu of 
 15.28  a refund with interest provided in section 353.32, subdivision 
 15.29  1, a surviving spouse annuity equal to the 100 percent joint and 
 15.30  survivor annuity for which the member could have qualified had 
 15.31  the member terminated service on the date of death. 
 15.32     Subd. 2.  [MEMBER NOT YET AGE 50.] If the member was under 
 15.33  age 50, dies, and had credit for not less than three years of 
 15.34  allowable service on the date of death but did not yet qualify 
 15.35  for retirement, the surviving spouse may elect to receive a 100 
 15.36  percent joint and survivor annuity based on the age of the 
 16.1   employee and the surviving spouse at the time of death.  The 
 16.2   annuity is payable using the early retirement reduction under 
 16.3   section 353E.04, subdivision 4, to age 50 and one-half the early 
 16.4   retirement reduction from age 50 to the age payment begins.  
 16.5   Sections 353.34, subdivision 3, and 353.71, subdivision 2, apply 
 16.6   to a deferred annuity or surviving spouse benefit payable under 
 16.7   this subdivision. 
 16.8      Subd. 3.  [ELECTION; ACCRUAL.] A surviving spouse election 
 16.9   under subdivisions 1 and 2 may be made at any time after the 
 16.10  date of death of the local government correctional service 
 16.11  employee.  The surviving spouse benefit begins to accrue as of 
 16.12  the first of the next month following the date on which the 
 16.13  application for the benefit was filed. 
 16.14     Subd. 4.  [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 
 16.15  lieu of the 100 percent optional annuity under subdivision 1, 
 16.16  the surviving spouse of a deceased local government correctional 
 16.17  service employee may elect to receive survivor coverage in a 
 16.18  term certain of ten, 15, or 20 years.  The monthly term certain 
 16.19  annuity must be actuarially equivalent to the 100 percent 
 16.20  optional annuity under subdivision 1 and must be based on tables 
 16.21  approved by the actuary retained by the legislative commission 
 16.22  on pensions and retirement.  The optional annuity ceases upon 
 16.23  the expiration of the term certain period.  If a survivor elects 
 16.24  a term certain annuity and dies before the expiration of the 
 16.25  specified term certain period, the commuted value of the 
 16.26  remaining annuity payments must be paid in a lump sum to the 
 16.27  survivor's estate. 
 16.28     Subd. 5.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 16.29  no surviving spouse eligible for benefits under subdivisions 1, 
 16.30  2, and 4, a dependent child as defined in section 353.01, 
 16.31  subdivision 15a, is eligible for a dependent child survivor 
 16.32  benefit.  Benefits to a dependent child must be paid from the 
 16.33  date of the employee's death to the date the dependent child 
 16.34  attains age 20 if the child is under age 15 on the date of 
 16.35  death.  If the child is 15 years or older on the date of death, 
 16.36  the benefit is payable for five years.  The payment to a 
 17.1   dependent child is an amount actuarially equivalent to the value 
 17.2   of a 100 percent joint and survivor optional annuity using the 
 17.3   age of the employee and age of the dependent child at the date 
 17.4   of death in lieu of the age of the surviving spouse.  If there 
 17.5   is more than one dependent child, each dependent child shall 
 17.6   receive a proportionate share of the actuarial value of the 
 17.7   employee's account, with the amount of the benefit payable to 
 17.8   each child to be determined based on the portion of the total 
 17.9   eligibility period that each child is eligible.  The process for 
 17.10  calculating the dependent child survivor benefit must be 
 17.11  approved by the actuary retained by the legislative commission 
 17.12  on pensions and retirement. 
 17.13     Subd. 6.  [PAYMENT TO DESIGNATED BENEFICIARY.] An amount 
 17.14  equal to any excess of the accumulated contributions that were 
 17.15  credited to the account of the deceased employee over and above 
 17.16  the total of the annuities paid and payable to the surviving 
 17.17  spouse or dependent children must be paid to the deceased 
 17.18  member's last designated beneficiary or, if none, to the legal 
 17.19  representative of the estate of the deceased member. 
 17.20     Subd. 7.  [ELECTION THAT SECTION DOES NOT APPLY.] A member 
 17.21  may specify in writing that this section does not apply and that 
 17.22  payment must be made only to the designated beneficiary, as 
 17.23  otherwise provided by this chapter. 
 17.24     Sec. 14.  [353E.08] [SCOPE AND APPLICATION.] 
 17.25     The general provisions of chapter 353 apply to the local 
 17.26  government correctional service retirement plan except where 
 17.27  otherwise specifically provided in sections 353E.01 to 353E.07.  
 17.28     Sec. 15.  Minnesota Statutes 1998, section 356.19, is 
 17.29  amended by adding a subdivision to read: 
 17.30     Subd. 5a.  [LOCAL GOVERNMENT CORRECTIONAL SERVICE 
 17.31  PLAN.] The applicable benefit accrual rate is 1.9 percent.  
 17.32     Sec. 16.  Minnesota Statutes 1998, section 356.20, 
 17.33  subdivision 2, is amended to read: 
 17.34     Subd. 2.  [COVERED PUBLIC PENSION FUNDS.] This section 
 17.35  applies to the following public pension plans: 
 17.36     (1) State employees retirement fund. 
 18.1      (2) Public employees retirement fund. 
 18.2      (3) Teachers retirement association. 
 18.3      (4) State patrol retirement fund. 
 18.4      (5) Minneapolis teachers retirement fund association. 
 18.5      (6) St. Paul teachers retirement fund association. 
 18.6      (7) Duluth teachers retirement fund association. 
 18.7      (8) Minneapolis employees retirement fund. 
 18.8      (9) University of Minnesota faculty retirement plan. 
 18.9      (10) University of Minnesota faculty supplemental 
 18.10  retirement plan. 
 18.11     (11) Judges retirement fund. 
 18.12     (12) Any police or firefighter's relief association 
 18.13  enumerated in section 69.77, subdivision 1a, or 69.771, 
 18.14  subdivision 1. 
 18.15     (13) Public employees police and fire fund.  
 18.16     (14) Minnesota state retirement system correctional 
 18.17  officers retirement fund.  
 18.18     (15) Public employees local government correctional service 
 18.19  retirement plan. 
 18.20     Sec. 17.  Minnesota Statutes 1998, section 356.30, 
 18.21  subdivision 3, is amended to read: 
 18.22     Subd. 3.  [COVERED FUNDS.] This section applies to the 
 18.23  following retirement funds: 
 18.24     (1) state employees retirement fund, established pursuant 
 18.25  to chapter 352; 
 18.26     (2) correctional employees retirement program, established 
 18.27  pursuant to chapter 352; 
 18.28     (3) unclassified employees retirement plan, established 
 18.29  pursuant to chapter 352D; 
 18.30     (4) state patrol retirement fund, established pursuant to 
 18.31  chapter 352B; 
 18.32     (5) legislators retirement plan, established pursuant to 
 18.33  chapter 3A; 
 18.34     (6) elective state officers' retirement plan, established 
 18.35  pursuant to chapter 352C; 
 18.36     (7) public employees retirement association, established 
 19.1   pursuant to chapter 353; 
 19.2      (8) public employees police and fire fund, established 
 19.3   pursuant to chapter 353; 
 19.4      (9) public employees local government correctional service 
 19.5   retirement plan, established pursuant to chapter 353E; 
 19.6      (10) teachers retirement association, established pursuant 
 19.7   to chapter 354; 
 19.8      (10) (11) Minneapolis employees retirement fund, 
 19.9   established pursuant to chapter 422A; 
 19.10     (11) (12) Minneapolis teachers retirement fund association, 
 19.11  established pursuant to chapter 354A; 
 19.12     (12) (13) St. Paul teachers retirement fund association, 
 19.13  established pursuant to chapter 354A; 
 19.14     (13) (14) Duluth teachers retirement fund association, 
 19.15  established pursuant to chapter 354A; and 
 19.16     (14) (15) judges' retirement fund, established by sections 
 19.17  490.121 to 490.132. 
 19.18     Sec. 18.  Minnesota Statutes 1998, section 356.302, 
 19.19  subdivision 7, is amended to read: 
 19.20     Subd. 7.  [COVERED RETIREMENT PLANS.] This section applies 
 19.21  to the following retirement plans: 
 19.22     (1) state employees retirement fund, established by chapter 
 19.23  352; 
 19.24     (2) unclassified employees retirement plan, established by 
 19.25  chapter 352D; 
 19.26     (3) public employees retirement association, established by 
 19.27  chapter 353; 
 19.28     (4) teachers retirement association, established by chapter 
 19.29  354; 
 19.30     (5) Duluth teachers retirement fund association, 
 19.31  established by chapter 354A; 
 19.32     (6) Minneapolis teachers retirement fund association, 
 19.33  established by chapter 354A; 
 19.34     (7) St. Paul teachers retirement fund association, 
 19.35  established by chapter 354A; 
 19.36     (8) Minneapolis employees retirement fund, established by 
 20.1   chapter 422A; 
 20.2      (9) correctional employees retirement plan, established by 
 20.3   chapter 352; 
 20.4      (10) state patrol retirement fund, established by chapter 
 20.5   352B; 
 20.6      (11) public employees police and fire fund, established by 
 20.7   chapter 353; and 
 20.8      (12) public employees local government correctional service 
 20.9   retirement plan, established by chapter 353E; and 
 20.10     (13) judges' retirement fund, established by sections 
 20.11  490.121 to 490.132. 
 20.12     Sec. 19.  Minnesota Statutes 1998, section 356.303, 
 20.13  subdivision 4, is amended to read: 
 20.14     Subd. 4.  [COVERED RETIREMENT PLANS.] This section applies 
 20.15  to the following retirement plans: 
 20.16     (1) legislators retirement plan, established by chapter 3A; 
 20.17     (2) state employees retirement fund, established by chapter 
 20.18  352; 
 20.19     (3) correctional employees retirement plan, established by 
 20.20  chapter 352; 
 20.21     (4) state patrol retirement fund, established by chapter 
 20.22  352B; 
 20.23     (5) elective state officers retirement plan, established by 
 20.24  chapter 352C; 
 20.25     (6) unclassified employees retirement plan, established by 
 20.26  chapter 352D; 
 20.27     (7) public employees retirement association, established by 
 20.28  chapter 353; 
 20.29     (8) public employees police and fire fund, established by 
 20.30  chapter 353; 
 20.31     (9) public employees local government correctional service 
 20.32  retirement plan, established by chapter 353E; 
 20.33     (10) teachers retirement association, established by 
 20.34  chapter 354; 
 20.35     (10) (11) Duluth teachers retirement fund association, 
 20.36  established by chapter 354A; 
 21.1      (11) (12) Minneapolis teachers retirement fund association, 
 21.2   established by chapter 354A; 
 21.3      (12) (13) St. Paul teachers retirement fund association, 
 21.4   established by chapter 354A; 
 21.5      (13) (14) Minneapolis employees retirement fund, 
 21.6   established by chapter 422A; and 
 21.7      (14) (15) judges' retirement fund, established by sections 
 21.8   490.121 to 490.132. 
 21.9      Sec. 20.  [REPEALER.] 
 21.10     Minnesota Statutes 1998, section 353.33, subdivision 3a, is 
 21.11  repealed. 
 21.12     Sec. 21.  [EFFECTIVE DATE.] 
 21.13     Sections 1 to 8 and 10 to 19 are effective on July 1, 1999. 
 21.14  Section 9 is effective on the first day of the first payroll 
 21.15  period beginning after June 30, 1999.