HF 2114

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

A bill for an act
relating to retirement; statewide and major local
retirement plans; updating and clarifying omitted
salary deduction provisions; amending Minnesota
Statutes 2004, sections 352.04, subdivision 8;
352B.02, by adding a subdivision; 353.27, subdivisions
12, 12a, 12b; 353E.01, subdivision 4; 354.51,
subdivision 5; 354A.12, subdivision 1a; 422A.10, by
adding a subdivision; 490.123, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2004, section 352.04,
subdivision 8, is amended to read:

Subd. 8.

Department required to pay omitted salary
deductions.

(a) If a department fails to take deductions past
due for a period of 60 days or less from an employee's salary as
provided in deleted text begin this section deleted text end new text begin subdivision 4 new text end , those deductions must be
taken on later payroll abstracts.

(b) If a department fails to take deductions past due for a
period in excess of 60 days from an employee's salary as
provided in deleted text begin this section deleted text end new text begin subdivision 4 new text end , the department, and not
the employee, must pay on later payroll abstracts the employee
and employer contributions and an amount equivalent to 8.5
percent of the total amount due in lieu of interest, or if the
delay in payment exceeds one year, 8.5 percent compound annual
interest new text begin from the date on which the deduction was due until the
date that payment is made new text end .

(c) If a department fails to take deductions past due for a
period of 60 days or less and the employee is no longer in state
service deleted text begin so that deleted text end new text begin and new text end the required deductions cannot be taken from
the salary of the employee, the department must nevertheless pay
the required employer contributions. If any department fails to
take deductions past due for a period in excess of 60 days and
the employee is no longer in state service, the omitted
contributions must be recovered new text begin as provided new text end under paragraph (b).

(d) If an employee from whose salary required deductions
were past due for a period of 60 days or less leaves state
service before the payment of the omitted deductions and
subsequently returns to state service, the unpaid amount is
considered the equivalent of a refund. The employee accrues no
right by reason of the unpaid amount, except that the employee
may pay the amount of omitted deductions new text begin as a refund repayment
new text end as provided in section 352.23.

new text begin (e) The recovery of omitted deductions is not permitted
after the expiration of three calendar years after the calendar
year in which the deductions and contributions were due, but
were omitted, unless the system has already commenced an action
to recover the omitted deductions and contributions. An action
to recover omitted deductions and contributions commences on the
date that the system mails any written correspondence to the
employing unit requesting information from the employing unit
upon which to determine whether or not omitted deductions
occurred.
new text end

Sec. 2.

Minnesota Statutes 2004, section 352B.02, is
amended by adding a subdivision to read:

new text begin Subd. 1f. new text end

new text begin Omitted salary deductions. new text end

new text begin If a department
fails to take deductions in a timely manner, the omitted salary
deductions must be recovered as provided in section 352.04,
subdivision 8.
new text end

Sec. 3.

Minnesota Statutes 2004, section 353.27,
subdivision 12, is amended to read:

Subd. 12.

Omitted salary deductions; obligations.

(a) In
the case of new text begin an new text end omission of required deductions from the salary
of an employee, the department head or designee shall
immediately, upon discovery, report the employee for membership
and deleted text begin deduct deleted text end new text begin make new text end the employee deductions under subdivision 4
during the current pay period or during the pay period
immediately following the discovery of the omission. Payment
for the omitted obligations may only be made in accordance with
new text begin the new text end reporting procedures and methods established by the
executive director.

(b) When the entire omission period of an employee does not
exceed 60 days, the governmental subdivision deleted text begin may deleted text end new text begin must new text end report and
submit payment of the omitted employee deductions and the
omitted employer contributions through the reporting processes
under subdivision 4.

(c) When the omission period of an employee exceeds 60
days, the governmental subdivision shall furnish to the
association sufficient data and documentation upon which the
obligation for new text begin the new text end omitted employee and employer contributions
can be calculated. The omitted employee deductions must be
deducted from the employee's subsequent salary payment or
payments and new text begin must be new text end remitted to the association. The employee
shall pay omitted employee deductions due for the 60 days prior
to the end of the last pay period in the omission period during
which salary was earned. The employer shall pay any remaining
omitted employee deductions and any omitted employer
contributions, plus cumulative interest at an annual rate of 8.5
percent compounded annually, from the date or dates each omitted
employee contribution was first payable new text begin on the date that payment
is made new text end .

(d) An employer shall not hold an employee liable for
omitted employee deductions beyond the pay period dates under
paragraph (c), nor attempt to recover from the employee those
employee deductions paid by the employer on behalf of the
employee. Omitted deductions due under paragraph (c) which are
not paid by the employee constitute a liability of the employer
that failed to deleted text begin deduct deleted text end new text begin make new text end the omitted deductions from the
employee's salary. The employer shall make payment with
interest at an annual rate of 8.5 percent compounded annually.
Omitted employee deductions are no longer due if an employee
terminates public service before making payment of new text begin the new text end omitted
employee deductions to the association, but the employer remains
liable to pay omitted employer contributions plus interest at an
annual rate of 8.5 percent compounded annually from the date the
contributions were first payable new text begin to the date that payment is
made new text end .

(e) The association may not commence new text begin an new text end action for the
recovery of omitted employee deductions and employer
contributions after the expiration of three calendar years after
the calendar year in which the contributions and deductions were
omitted. Except as provided under paragraph (b), no payment new text begin of
omitted deductions or contributions new text end may be made or accepted
unless the association has already commenced new text begin an new text end action for
recovery of omitted deductions. An action for recovery
commences on the date of the mailing of any written
correspondence from the association new text begin to the employing unit
new text end requesting information from the governmental subdivision upon
which to determine whether or not omitted deductions occurred.

Sec. 4.

Minnesota Statutes 2004, section 353.27,
subdivision 12a, is amended to read:

Subd. 12a.

Terminated employees: omitted deductions.

A
terminated employee who has a period of employment in which
previously omitted employer contributions were made under
subdivision 12 but for whom no, or only partial, omitted
employee contributions have been made, or a member who had prior
coverage in the association for which previously omitted
employer contributions were made under subdivision 12 but who
terminated service before required omitted employee deductions
could be withheld from salary, may pay the omitted employee
deductions for the period on which omitted employer
contributions were previously paid deleted text begin plus deleted text end new text begin . The payment must
include new text end interest at an annual rate of 8.5 percent compounded
annually new text begin from the date on which the contribution should have
been made until the date on which the payment is made new text end . A
terminated employee deleted text begin may deleted text end new text begin must new text end pay the omitted employee deductions
plus interest new text begin at the rate of 8.5 percent per year new text end within six
months of an initial notification from the association of
eligibility to pay those omitted deductions. If a terminated
employee is reemployed in a position covered under a public
pension fund deleted text begin under deleted text end new text begin listed in new text end section 356.30, subdivision 3, and
elects to pay new text begin the new text end omitted employee deductions, payment must be
made no later than six months after a subsequent termination of
public service.

Sec. 5.

Minnesota Statutes 2004, section 353.27,
subdivision 12b, is amended to read:

Subd. 12b.

Terminated employees: immediate eligibility.

If deductions were omitted from salary adjustments or new text begin the new text end final
salary deleted text begin of deleted text end new text begin payable to new text end a terminated employee who is immediately
eligible to draw a monthly benefit, the employer shall pay the
omitted employer and employer additional contributions plus
interest on both the employer and employee amounts due at an
annual rate of 8.5 percent compounded annually new text begin from the date on
which the contribution should have been made until the date on
which the payment is made new text end . The employee shall pay the employee
deductions within six months of an initial notification from the
association of new text begin the employee's new text end eligibility to pay omitted
deductions or the employee forfeits the right to make the
payment.

Sec. 6.

Minnesota Statutes 2004, section 353E.01,
subdivision 4, is amended to read:

Subd. 4.

Collection of contributions.

The collection of
member and employer contributions is governed by section 353.27,
subdivisions 4, 7, 7b, 10, 11, deleted text begin and deleted text end 12 new text begin , 12a, and 12b new text end .

Sec. 7.

Minnesota Statutes 2004, section 354.51,
subdivision 5, is amended to read:

Subd. 5.

Payment of shortages.

(a) Except as provided in
paragraph (b), deleted text begin in the event that deleted text end new text begin if new text end full required member
contributions are not deducted from the salary of a teacher,
payment must be made as follows:

(1) Payment of shortages in member deductions on salary
earned after June 30, 1957, and before July 1, 1981, may be made
any time before new text begin July 1, 2005, or new text end retirement new text begin , whichever is
earlier new text end . Payment must include interest at an annual rate of 8.5
percent compounded annually from the end of the fiscal year in
which the shortage occurred to the end of the month in which
payment is made deleted text begin and deleted text end new text begin . new text end The interest must be credited to the
fund. If payment of a shortage in deductions is not made, the
formula service credit of the member must be prorated under
section 354.05, subdivision 25, clause (3).

(2) Payment of shortages in member deductions on salary
earned after June 30, 1981, new text begin which are past due for a period of
60 days or less are payable by the teacher and the employing
unit must deduct the shortage amount from the teacher's
subsequent salary.
new text end

new text begin (3) Payment of shortages in member deductions on salary
earned after June 30, 1981, which are past due for a period of
more than 60 days new text end are the sole obligation of the employing unit
and are payable by the employing unit upon notification by the
executive director of the shortage new text begin , new text end with interest at an annual
rate of 8.5 percent compounded annually from the end of the
fiscal year in which the shortage occurred to the end of the
month in which payment is made and the interest must be credited
to the fund. deleted text begin Effective July 1, 1986, deleted text end The employing unit shall
also pay the employer contributions as specified in section
354.42, subdivisions 3 and 5 for the shortages. If the shortage
payment is not paid by the employing unit within 60 days of
notification, the executive director shall certify the amount of
the shortage payment to the applicable county auditor, who shall
spread a levy in the amount of the shortage payment over the
taxable property of the taxing district of the employing unit if
the employing unit is supported by property taxes, or new text begin shall
certify the amount new text end to the commissioner of finance, who shall
deduct the amount from any state aid or appropriation amount
applicable to the employing unit if the employing unit is not
supported by property taxes.

deleted text begin (3) deleted text end new text begin (4) new text end Payment may not be made for shortages in member
deductions on salary earned before July 1, 1957, for shortages
in member deductions on salary paid or payable under paragraph
(b), or for shortages in member deductions for persons employed
by the Minnesota State Colleges and Universities system in a
faculty position or in an eligible unclassified administrative
position and whose employment was less than 25 percent of a full
academic year, exclusive of the summer session, for the
applicable institution that exceeds the most recent 36 months.

(b) For a person who is employed by the Minnesota State
Colleges and Universities system in a faculty position or in an
eligible unclassified administrative position and whose
employment was less than 25 percent of a full academic year,
exclusive of the summer session, for the applicable institution,
upon the person's election under section 354B.21 of retirement
coverage under this chapter, the shortage in member deductions
on the salary for employment by the Minnesota State Colleges and
Universities system institution of less than 25 percent of a
full academic year, exclusive of the summer session, for the
applicable institution for the most recent 36 months and the
associated employer contributions must be paid by the Minnesota
State Colleges and Universities system institution, plus annual
compound interest at the rate of 8.5 percent from the end of the
fiscal year in which the shortage occurred to the end of the
month in which the Teachers Retirement Association coverage
election is made. If the shortage payment is not made by the
institution within 60 days of notification, the executive
director shall certify the amount of the shortage payment to the
commissioner of finance, who shall deduct the amount from any
state appropriation to the system. An individual electing
coverage under this paragraph shall repay the amount of the
shortage in member deductions, plus interest, through deduction
from salary or compensation payments within the first year of
employment after the election under section 354B.21, subject to
the limitations in section 16D.16. The Minnesota State Colleges
and Universities system may use any means available to recover
amounts which were not recovered through deductions from salary
or compensation payments. No payment of the shortage in member
deductions under this paragraph may be made for a period longer
than the most recent 36 months.

new text begin (c) The recovery of shortages is not permitted after the
expiration of three school years after the school year in which
the member deductions were due, but were unpaid, unless the
Teachers Retirement Association has already commenced an action
to recover the shortages. An action to recover shortages begins
on the date that the association mails any written
correspondence to the employing unit requesting information from
the employing unit upon which to determine whether or not
shortages occurred.
new text end

Sec. 8.

Minnesota Statutes 2004, section 354A.12,
subdivision 1a, is amended to read:

Subd. 1a.

Obligation for omitted salary deductions.

new text begin (a)
If the full required contributions are not deducted from the
salary of a teacher and are past due for a period of 60 days or
less, the omitted salary deductions are payable by the teacher,
and the employing unit must deduct the omitted amount from the
subsequent salary payments of the teacher.
new text end

new text begin (b) new text end If the full required contributions are not deducted
from the salary of a teacher new text begin and are past due for a period of
more than 60 days new text end , payment of the shortage in such deductions is
the sole obligation of the employing unit during the three-year
period following the end of the fiscal year in which the
shortage occurred. The shortage is payable by the employing
unit upon notification of the shortage by the executive director
of the applicable retirement fund association.

new text begin (c) Under either paragraph (a) or (b), new text end the employing unit
shall also pay any employer contributions related to the
shortage.

new text begin (d) new text end The amount of the shortage in employee contributions
and associated employer contributions deleted text begin is deleted text end new text begin are new text end payable with
interest at the preretirement interest assumption for the
retirement fund as specified in section 356.215, subdivision 8,
stated as a monthly rate from the date due until the date
payment is received in the office of the association, with a
minimum interest charge of $10.

new text begin (e) new text end If the shortage payment and interest is not paid by the
employing unit new text begin under paragraph (b) new text end within 60 days of
notification, the executive director new text begin or executive secretary
new text end shall certify the amount of the shortage payment and interest to
the commissioner of finance, who shall deduct the amount from
any state aid or appropriation amount applicable to the
employing unit.

Sec. 9.

Minnesota Statutes 2004, section 422A.10, is
amended by adding a subdivision to read:

new text begin Subd. 4. new text end

new text begin Omitted salary deductions. new text end

new text begin (a) In the case of
an omission of required deductions from the salary of an
employee of the contributing class, the employing unit shall
immediately, upon discovery, make the employee deductions under
subdivision 1 during the current pay period or during the pay
period immediately following the discovery of the omission.
new text end

new text begin (b) When the entire omission period of an employee does not
exceed 60 days, the employing unit must report the omission and
submit the payment of the omitted employee deductions and the
omitted employer contributions.
new text end

new text begin (c) If the entire omission period of an employee exceeds 60
days, the employing unit shall furnish the retirement plan with
sufficient data and documentation upon which the obligation for
the omitted employee and employer contributions can be
calculated. The employing unit must pay the omitted employee
and employer contributions and an amount equivalent to 8.5
percent of the total amount due in lieu of interest, or if the
delay in payment exceeds one year, 8.5 percent compound annual
interest from the date on which the contribution was due to the
date on which the payment is made.
new text end

new text begin (d) The recovery of omitted deductions is not permitted
after the expiration of three calendar years after the calendar
year in which the deductions were due, but were omitted, unless
the retirement plan administration has already commenced an
action to recover the omitted deductions. An action to recover
omitted deductions commences on the date that the retirement
plan administration mails any written correspondence to the
employing unit requesting information from the employing unit
from which to determine whether or not omitted deductions
occurred.
new text end

Sec. 10.

Minnesota Statutes 2004, section 490.123, is
amended by adding a subdivision to read:

new text begin Subd. 1f. new text end

new text begin Omitted salary deductions. new text end

new text begin (a) In the case of
an omission of required deductions from the salary of a judge,
the state court administrator shall immediately, upon discovery,
make the member contribution deductions under subdivision 1a
during the current pay period or during the pay period
immediately following the discovery of the omission.
new text end

new text begin (b) When the entire omission period of a judge does not
exceed 60 days, the state court administrator must report the
omission and submit the payment of the omitted member
contribution deductions and the omitted employer contributions.
new text end

new text begin (c) If the entire omission period of a judge exceeds 60
days, the state court administrator shall furnish the Minnesota
State Retirement System with sufficient data and documentation
upon which the obligation for the omitted member and employer
contributions can be calculated. The state court administrator
must pay the omitted member and employer contributions and an
amount equivalent to 8.5 percent of the total amount due in lieu
of interest, or if the delay in payment exceeds one year, 8.5
percent compound annual interest from the date on which the
contribution was due to the date on which the payment is made.
new text end

new text begin (d) The recovery of omitted deductions is not permitted
after the expiration of three calendar years after the calendar
year in which the deductions were due, but were omitted, unless
the Minnesota State Retirement System has already commenced an
action to recover the omitted deductions. An action to recover
omitted deductions commences on the date that the Minnesota
State Retirement System mails any written correspondence to the
state court administrator requesting information from the
administrator from which to determine whether or not omitted
deductions occurred.
new text end

Sec. 11. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 10 are effective July 1, 2005.
new text end