as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to retirement; increasing pension benefit 1.3 accrual rates; adjusting financing for pension plans; 1.4 adding supplemental financial conditions information 1.5 for pension funds; authorizing defined contribution 1.6 early retirement options; reducing appropriations; 1.7 appropriating money; amending Minnesota Statutes 1994, 1.8 sections 3A.02, subdivision 4; 3A.07; 11A.18, 1.9 subdivision 9; 273.1398, by adding a subdivision; 1.10 352.04, subdivision 3; 352.115, subdivision 3; 352.72, 1.11 subdivision 2; 352.92, subdivisions 1 and 2; 352.93, 1.12 subdivisions 2, 3, and by adding a subdivision; 1.13 352.95, subdivisions 1 and 5; 352B.30, by adding a 1.14 subdivision; 352C.031, subdivision 4; 352C.033; 1.15 353.01, subdivisions 2a and 2b; 353.27, subdivisions 2 1.16 and 3a; 353.29, subdivision 3; 353.651, subdivision 3; 1.17 353.656, subdivision 1; 353.71, subdivision 2; 1.18 353A.08, subdivision 1; 353C.06, subdivisions 3, 4, 1.19 and by adding a subdivision; 353C.08, subdivision 1; 1.20 353C.09; 354.42, subdivisions 2, 3, and 5; 354.53, 1.21 subdivision 1; 354.55, subdivision 11; 354A.12, 1.22 subdivisions 2a; 3a; and 3c; 356.215, subdivisions 1 1.23 and 4, and by adding a subdivision; 356.25; 356.88, by 1.24 adding a subdivision; and 490.124, subdivision 1; 1.25 Minnesota Statutes 1995 Supplement, sections 3A.02, 1.26 subdivision 1; 352B.08, subdivision 2; 352B.10, 1.27 subdivision 1; 352D.02, subdivision 1; 353A.083, by 1.28 adding a subdivision; 354.44, subdivision 6; 354A.12, 1.29 subdivisions 1 and 3b; 354A.27, subdivision 5; 1.30 354A.31, subdivisions 4 and 4a; 356.215, subdivision 1.31 4d; and 356.30, subdivision 1; proposing coding for 1.32 new law in Minnesota Statutes, chapters 124A; 352; 1.33 352C; 352E; and 356; repealing Minnesota Statutes 1.34 1994, sections 356.70; and 356.88, subdivision 2. 1.35 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.36 Section 1. Minnesota Statutes 1995 Supplement, section 1.37 3A.02, subdivision 1, is amended to read: 1.38 Subdivision 1. [QUALIFICATIONS.] (a) A former legislator 1.39 is entitled, upon written application to the director, to 1.40 receive a retirement allowance monthly, if the person: 2.1 (1) has served at least six full years, without regard to 2.2 the application of section 3A.10, subdivision 2, or has served 2.3 during all or part of four regular sessions as a member of the 2.4 legislature, which service need not be continuous; 2.5 (2) has attained the normal retirement age; 2.6 (3) has retired as a member of the legislature; and 2.7 (4) has made all contributions provided for in section 2.8 3A.03, has made payments for past service under subdivision 2, 2.9 or has made payments in lieu of contributions under Minnesota 2.10 Statutes 1992, section 3A.031, prior to July 1, 1994. 2.11 (b) For service rendered before the beginning of the 1979 2.12 legislative session, but not to exceed eight years of service, 2.13 the retirement allowance is an amount equal to five percent per 2.14 year of service of that member's average monthly salary. For 2.15 service in excess of eight years rendered before the beginning 2.16 of the 1979 legislative session, and for service rendered after 2.17 the beginning of the 1979 legislative session, the retirement 2.18 allowance is an amount equal to2-1/2 percentan amount per year 2.19 of service of that member's average monthly salary calculated by 2.20 the actuary to provide a benefit that is actuarially equivalent 2.21 to the benefit that would have been provided under the 2.22 provisions of Minnesota Statutes in effect on January 1, 1996. 2.23 (c) The retirement allowance accrues beginning with the 2.24 first day of the month of receipt of the application, but not 2.25 before age 60, and for the remainder of the former legislator's 2.26 life, if the former legislator is not serving as a member of the 2.27 legislature or as a constitutional officer or commissioner as 2.28 defined in section 352C.021, subdivisions 2 and 3. The annuity 2.29 shall not begin to accrue prior to retirement as a legislator. 2.30 No annuity payment shall be made retroactive for more than 180 2.31 days before the date the annuity application is filed with the 2.32 director. 2.33 (d) Any member who has served during all or part of four 2.34 regular sessions is considered to have served eight years as a 2.35 member of the legislature. 2.36 (e) The retirement allowance ceases with the last payment 3.1 that accrued to the retired legislator during the retired 3.2 legislator's lifetime, except that the surviving spouse, if any, 3.3 is entitled to the retirement allowance for the calendar month 3.4 in which the retired legislator died. 3.5 Sec. 2. Minnesota Statutes 1994, section 3A.02, 3.6 subdivision 4, is amended to read: 3.7 Subd. 4. [DEFERRED ANNUITIES AUGMENTATION.] The deferred 3.8 annuity of any former legislator shall be augmented as provided 3.9 herein. The required reserves applicable to the deferred 3.10 annuity, determined as of the date the benefit begins to accrue 3.11 using an appropriate mortality table and an interest assumption 3.12 offivesix percent, shall be augmented from the first of the 3.13 month following termination of service, or July 1, 1973, 3.14 whichever is later, to the first day of the month in which the 3.15 annuity begins to accrue, at the rate of five percent per annum 3.16 compounded annually until January 1, 1981, and thereafter at the 3.17 rate of three percent per annum compounded annually until 3.18 January 1 of the year in which the former legislator attains age 3.19 55. From that date to the effective date of retirement, the 3.20 rate is five percent compounded annually. 3.21 The survivor or retirement benefit to a former member or 3.22 survivor of a former member who terminated service before July 3.23 1, 1996, is determined under the laws in effect on the date of 3.24 termination and is increased to reflect the change in the 3.25 postretirement fund interest assumption from five percent to six 3.26 percent. The benefit payable under the six percent 3.27 postretirement interest assumption must be actuarially 3.28 equivalent to the benefit payable under the five percent 3.29 interest assumption and must be based on tables adopted by the 3.30 board of directors as recommended by an approved actuary and 3.31 approved by the actuary retained by the legislative commission 3.32 on pensions and retirement. 3.33 Sec. 3. Minnesota Statutes 1994, section 3A.07, is amended 3.34 to read: 3.35 3A.07 [APPLICATION.] 3.36 This chapter applies to members of the legislature in 4.1 service upon July 1, 1965, or thereafter, who otherwise meet the 4.2 requirements of this chapter. It does not apply to first-time 4.3 members elected after July 1, 1996. Members elected for the 4.4 first time after July 1, 1996, shall be covered by the state 4.5 employees unclassified plan as established in chapter 352E. 4.6 Sec. 4. Minnesota Statutes 1994, section 11A.18, 4.7 subdivision 9, is amended to read: 4.8 Subd. 9. [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 4.9 Annually, following June 30, the state board shall use the 4.10 procedures in paragraphs (b), (c), and (d) to determine whether 4.11 a postretirement adjustment is payable and to determine the 4.12 amount of any postretirement adjustment. 4.13 (b) If the Consumer Price Index for urban wage earners and 4.14 clerical workers all items index published by the Bureau of 4.15 Labor Statistics of the United States Department of Labor 4.16 increases from June 30 of the preceding year to June 30 of the 4.17 current year, the state board shall certify the percentage 4.18 increase. The amount certified may not exceed the lesser of the 4.19 difference between the preretirement interest assumption and 4.20 postretirement interest assumption in section 356.215, 4.21 subdivision 4d, paragraph (a), or3.52.5 percent. 4.22 (c) In addition to any percentage increase certified under 4.23 paragraph (b), the board shall use the following procedures to 4.24 determine if a postretirement adjustment is payable under this 4.25 paragraph: 4.26 (1) The state board shall determine the market value of the 4.27 fund on June 30 of that year; 4.28 (2) The amount of reserves required for the annuity or 4.29 benefit payable to an annuitant and benefit recipient of the 4.30 participating public pension plans or funds shall be determined 4.31 by the commission-retained actuary as of the current June 30. 4.32 An annuitant or benefit recipient who has been receiving an 4.33 annuity or benefit for at least 12 full months as of the current 4.34 June 30 is eligible to receive a full postretirement 4.35 adjustment. An annuitant or benefit recipient who has been 4.36 receiving an annuity or benefit for at least one full month, but 5.1 less than 12 full months as of the current June 30, is eligible 5.2 to receive a partial postretirement adjustment. Each fund shall 5.3 report separately the amount of the reserves for those 5.4 annuitants and benefit recipients who are eligible to receive a 5.5 full postretirement benefit adjustment. This amount is known as 5.6 "eligible reserves." Each fund shall also report separately the 5.7 amount of the reserves for those annuitants and benefit 5.8 recipients who are not eligible to receive a postretirement 5.9 adjustment. This amount is known as "noneligible reserves." 5.10 For an annuitant or benefit recipient who is eligible to receive 5.11 a partial postretirement adjustment, each fund shall report 5.12 separately as additional "eligible reserves" an amount that 5.13 bears the same ratio to the total reserves required for the 5.14 annuitant or benefit recipient as the number of full months of 5.15 annuity or benefit receipt as of the current June 30 bears to 12 5.16 full months. The remainder of the annuitant's or benefit 5.17 recipient's reserves shall be separately reported as additional 5.18 "noneligible reserves." The amount of "eligible" and 5.19 "noneligible" required reserves shall be certified to the board 5.20 by the commission-retained actuary as soon as is practical 5.21 following the current June 30; 5.22 (3) The state board shall determine the percentage increase 5.23 certified under paragraph (b) multiplied by the eligible 5.24 required reserves, as adjusted for mortality gains and losses 5.25 under subdivision 11, determined under clause (2); 5.26 (4) The state board shall add the amount of reserves 5.27 required for the annuities or benefits payable to annuitants and 5.28 benefit recipients of the participating public pension plans or 5.29 funds as of the current June 30 to the amount determined under 5.30 clause (3); 5.31 (5) The state board shall subtract the amount determined 5.32 under clause (4) from the market value of the fund determined 5.33 under clause (1); 5.34 (6) The state board shall adjust the amount determined 5.35 under clause (5) by the cumulative current balance determined 5.36 pursuant to clause (8) and any negative balance carried forward 6.1 under clause (9); 6.2 (7) A positive amount resulting from the calculations in 6.3 clauses (1) to (6) is the excess market value. A negative 6.4 amount is the negative balance; 6.5 (8) The state board shall allocate one-fifth of the excess 6.6 market value or one-fifth of the negative balance to each of 6.7 five consecutive years, beginning with the fiscal year ending 6.8 the current June 30; and 6.9 (9) To calculate the postretirement adjustment under this 6.10 paragraph based on investment performance for a fiscal year, the 6.11 state board shall add together all excess market value allocated 6.12 to that year and subtract from the sum all negative balances 6.13 allocated to that year. If this calculation results in a 6.14 negative number, the entire negative balance must be carried 6.15 forward and allocated to the next year. If the resulting amount 6.16 is positive, a postretirement adjustment is payable under this 6.17 paragraph. The board shall express a positive amount as a 6.18 percentage of the total eligible required reserves certified to 6.19 the board under clause (2). 6.20 (d) The state board shall determine the amount of any 6.21 postretirement adjustment which is payable using the following 6.22 procedure: 6.23 (1) The total "eligible" required reserves as of the first 6.24 of January next following the end of the fiscal year for the 6.25 annuitants and benefit recipients eligible to receive a full or 6.26 partial postretirement adjustment as determined by clause (2) 6.27 shall be certified to the state board by the commission-retained 6.28 actuary. The total "eligible" required reserves shall be 6.29 determined by the commission-retained actuary on the assumption 6.30 that all annuitants and benefit recipients eligible to receive a 6.31 full or partial postretirement adjustment will be alive on the 6.32 January 1 in question; and 6.33 (2) The state board shall add the percentage certified 6.34 under paragraph (b) to any positive percentage calculated under 6.35 paragraph (c). The board shall not subtract from the percentage 6.36 certified under paragraph (b) any negative amount calculated 7.1 under paragraph (c). The sum of these percentages shall be 7.2 carried to five decimal places and shall be certified to each 7.3 participating public pension fund or plan as the full 7.4 postretirement adjustment percentage. 7.5 (e) A retirement annuity payable in the event of retirement 7.6 before becoming eligible for social security benefits as 7.7 provided in section 352.116, subdivision 3; 353.29, subdivision 7.8 6; or 354.35 must be treated as the sum of a period certain 7.9 retirement annuity and a life retirement annuity for the 7.10 purposes of any postretirement adjustment. The period certain 7.11 retirement annuity plus the life retirement annuity shall be the 7.12 annuity amount payable until age 62 or 65, whichever applies. A 7.13 postretirement adjustment granted on the period certain 7.14 retirement annuity must terminate when the period certain 7.15 retirement annuity terminates. 7.16 Sec. 5. [124A.74] [REDUCING AID; TRA.] 7.17 Beginning in fiscal year 1997 and continuing for every year 7.18 thereafter, the commissioner of children, families, and learning 7.19 will reduce payments to school operating funds by an amount 7.20 equal to .64 percent of the salaries paid to members of the 7.21 state teachers retirement association in fiscal year 1996. 7.22 These reductions shall be taken first from the schools share of 7.23 the homestead and agricultural credit aid in excess of the total 7.24 amount needed from the district assuming full phase-in of the 7.25 special education funding changes authorized in 1995. If the 7.26 amount needed is not available from HACA, the additional amounts 7.27 needed may be taken from other aids received by the school 7.28 district. 7.29 Sec. 6. [124A.75] [INCREASING AID; INDEPENDENT SCHOOL 7.30 DISTRICT NO. 709, DULUTH.] 7.31 Beginning in fiscal year 1997 and continuing for every year 7.32 thereafter until the Duluth teachers retirement fund association 7.33 has a funding sufficiency, the commissioner of finance will pay 7.34 independent school district No. 709, Duluth, $436,200. 7.35 Sec. 7. Minnesota Statutes 1994, section 273.1398, is 7.36 amended by adding a subdivision to read: 8.1 Subd. 2e. Beginning with payments made to cities, 8.2 counties, towns, schools, and other local government units in 8.3 fiscal year 1997, and continuing for every year thereafter, the 8.4 commissioner of revenue will increase HACA payments by an amount 8.5 equal to .34 percent of the salaries paid to members of the 8.6 general plan of the public employees retirement fund in fiscal 8.7 year 1996. 8.8 Sec. 8. Minnesota Statutes 1994, section 352.04, 8.9 subdivision 3, is amended to read: 8.10 Subd. 3. [EMPLOYER CONTRIBUTIONS.](a)The employer 8.11 contribution to the fund must be equal to4.24.10 percent of 8.12 salary. 8.13(b)By January 1 of each year, the board of directors shall 8.14 report to the legislative commission on pensions and retirement, 8.15 the chair of the committee on appropriations of the house of 8.16 representatives, and the chair of the committee on finance of 8.17 the senate on the amount raised by the employer and employee 8.18 contribution rates in effect and whether the total amount is 8.19 less than, the same as, or more than the actuarial requirement 8.20 determined under section 356.215. 8.21(c) If the legislative commission on pensions and8.22retirement, based on the most recent valuation performed by its8.23actuary, determines that the total amount raised by the employer8.24and employee contributions under subdivision 2 and paragraph (b)8.25is less than the actuarial requirements determined under section8.26356.215, the employer and employee rates must be increased by8.27equal amounts as necessary to meet the actuarial requirements.8.28The employee rate may not exceed 4.15 percent of salary and the8.29employer rate may not exceed 4.29 percent of salary. The8.30increases are effective on the next January 1 following the8.31determination by the commission. The executive director of the8.32Minnesota state retirement system shall notify employing units8.33of any increases under this paragraph.8.34 Sec. 9. Minnesota Statutes 1994, section 352.115, 8.35 subdivision 3, is amended to read: 8.36 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 9.1 in conjunction with section 352.116, subdivision 1, applies to a 9.2 person who became a covered employee or a member of a pension 9.3 fund listed in section 356.30, subdivision 3, before July 1, 9.4 1989, unless paragraph (b), in conjunction with section 352.116, 9.5 subdivision 1a, produces a higher annuity amount, in which case 9.6 paragraph (b) will apply. The employee's average salary, as 9.7 defined in subdivision 2, multiplied byone percentthe amount 9.8 specified in section 356.19, subdivision 1, per year of 9.9 allowable service for the first ten years and1.5 percentthe 9.10 amount specified in section 356.19, subdivision 2, for each 9.11 later year of allowable service and pro rata for completed 9.12 months less than a full year shall determine the amount of the 9.13 retirement annuity to which the employee is entitled. 9.14 (b) This paragraph applies to a person who has become at 9.15 least 55 years old and first became a covered employee after 9.16 June 30, 1989, and to any other covered employee who has become 9.17 at least 55 years old and whose annuity amount, when calculated 9.18 under this paragraph and in conjunction with section 352.116, 9.19 subdivision 1a, is higher than it is when calculated under 9.20 paragraph (a), in conjunction with section 352.116, subdivision 9.21 1. The employee's average salary, as defined in subdivision 2, 9.22 multiplied by1.5 percentthe amount specified in section 9.23 356.19, subdivision 2, for each year of allowable service and 9.24 pro rata for months less than a full year shall determine the 9.25 amount of the retirement annuity to which the employee is 9.26 entitled. 9.27 Sec. 10. Minnesota Statutes 1994, section 352.72, 9.28 subdivision 2, is amended to read: 9.29 Subd. 2. [COMPUTATION OF DEFERRED ANNUITY.] The deferred 9.30 annuity, if any, accruing under subdivision 1, or section 9.31 352.22, subdivision 3, must be computed as provided in section 9.32 352.22, subdivision 3, on the basis of allowable service before 9.33 termination of state service and augmented as provided herein. 9.34 The required reserves applicable to a deferred annuity or to an 9.35 annuity for which a former employee was eligible but had not 9.36 applied or to any deferred segment of an annuity must be 10.1 determined as of the date the benefit begins to accrue and 10.2 augmented by interest compounded annually from the first day of 10.3 the month following the month in which the employee ceased to be 10.4 a state employee, or July 1, 1971, whichever is later, to the 10.5 first day of the month in which the annuity begins to accrue. 10.6 The rates of interest used for this purpose must be five percent 10.7 compounded annually until January 1, 1981, and three percent 10.8 compounded annually thereafter until January 1 of the year 10.9 following the year in which the former employee attains age 55. 10.10 From that date to the effective date of retirement, the rate is 10.11 five percent compounded annually. If a person has more than one 10.12 period of uninterrupted service, the required reserves related 10.13 to each period must be augmented by interest under this 10.14 subdivision. The sum of the augmented required reserves so 10.15 determined is the present value of the annuity. "Uninterrupted 10.16 service" for the purpose of this subdivision means periods of 10.17 covered employment during which the employee has not been 10.18 separated from state service for more than two years. If a 10.19 person repays a refund, the service restored by the repayment 10.20 must be considered continuous with the next period of service 10.21 for which the employee has credit with this system. The formula 10.22 percentages used for each period of uninterrupted service must 10.23 be those applicable to a new employee. The mortality table and 10.24 interest assumption used to compute the annuity must be those in 10.25 effect when the employee files application for annuity. This 10.26 section shall not reduce the annuity otherwise payable under 10.27 this chapter. 10.28 The survivor or retirement benefit to a former member or 10.29 survivor of a former member who terminated service before July 10.30 1, 1996, is determined under the laws in effect on the date of 10.31 termination and are increased to reflect the change in the 10.32 postretirement fund interest assumption from five percent to six 10.33 percent. The benefit payable under the six percent 10.34 postretirement interest assumption must be actuarially 10.35 equivalent to the benefit payable under the five percent 10.36 interest assumption and must be based on tables adopted by the 11.1 board of directors as recommended by an approved actuary, and 11.2 approved by the actuary retained by the legislative commission 11.3 on pensions and retirement. 11.4 Sec. 11. Minnesota Statutes 1994, section 352.92, 11.5 subdivision 1, is amended to read: 11.6 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] Beginning with 11.7 the first full pay period after July 1, 1984, in lieu of 11.8 employee contributions payable under section 352.04, subdivision 11.9 2, contributions by covered correctional employees must be in an 11.10 amount equal to4.905.2 percent of salary. 11.11 Sec. 12. Minnesota Statutes 1994, section 352.92, 11.12 subdivision 2, is amended to read: 11.13 Subd. 2. [EMPLOYER CONTRIBUTIONS.](a)In lieu of employer 11.14 contributions payable under section 352.04, subdivision 3, the 11.15 employer shall contribute for covered correctional employees an 11.16 amount equal to6.276.57 percent of salary. 11.17(b) By January 1 of each year, the board of directors shall11.18report to the legislative commission on pensions and retirement,11.19the chair of the committee on appropriations of the house of11.20representatives, and the chair of the committee on finance of11.21the senate on the amount raised by the employer and employee11.22contribution rates in effect and whether the total amount is11.23less than, the same as, or more than the actuarial requirement11.24determined under section 356.215.11.25 Sec. 13. Minnesota Statutes 1994, section 352.93, 11.26 subdivision 2, is amended to read: 11.27 Subd. 2. [CALCULATING MONTHLY ANNUITY.] The monthly 11.28 annuity under this section must be determined by multiplying the 11.29 average monthly salary by the number of years, or completed 11.30 months, of covered correctional service by2.5 percentthe 11.31 amount specified in section 356.19, subdivision 5. However, the 11.32 monthly annuity must not exceed 75 percent of the average 11.33 monthly salary. 11.34 Sec. 14. Minnesota Statutes 1994, section 352.93, 11.35 subdivision 3, is amended to read: 11.36 Subd. 3. [PAYMENTS; DURATION AND AMOUNT.] The annuity 12.1 under this section shall begin to accrue as provided in section 12.2 352.115, subdivision 8., and must be paid for an additional 8412.3full calendar months or to the first of the month following the12.4month in which the employee attains normal retirement age,12.5whichever occurs first, except that payment must not cease12.6before the first of the month following the month in which the12.7employee becomes 62. It must then be reduced to the amount as12.8calculated at normal retirement age under section 352.115,12.9except that if this amount, when added to that portion of the12.10social security benefit based on state service the employee12.11would be eligible to receive at the time, is less than the12.12benefit payable under subdivision 2, the retired employee shall12.13receive an amount that when added to the social security benefit12.14will equal the amount payable under subdivision 2. If the12.15employee retired prior to age 55, the reduced benefit as12.16calculated under section 352.115 must be actuarially reduced as12.17provided in subdivision 2a.12.18When an annuity is reduced under this subdivision, the12.19percentage adjustments, if any, that have been applied to the12.20original annuity under section 11A.18, before the reduction,12.21must be compounded and applied to the reduced annuity. A former12.22correctional employee employed by the state in a position12.23covered by the regular plan or the unclassified employees12.24retirement program between the age of 58 and normal retirement12.25age shall receive a partial return of correctional contributions12.26at retirement with six percent interest based on the following12.27formula:12.28 12.29Employee contributionsYears and complete12.30contributed as amonths of regular12.31correctional employeeservice between12.32in excess of theage 58 and the12.33contributions thenormal retirement age12.34employee would haveX.....................12.35contributed as anumber of years between12.36regular employeeage 58 and normal13.1retirement age13.2 Sec. 15. Minnesota Statutes 1994, section 352.93, is 13.3 amended by adding a subdivision to read: 13.4 Subd. 3a. The board may establish an optional annuity to 13.5 pay a higher amount from the date of retirement until a point an 13.6 employee can reasonably be expected to begin drawing social 13.7 security benefits, at which time the monthly benefits will be 13.8 reduced. These higher payments must be actuarially equivalent 13.9 to the single life annuity as provided under subdivision 2 or 13.10 2a. The optional annuities must be approved by the actuary 13.11 retained by the legislative commission on pensions and 13.12 retirement. 13.13 Sec. 16. [352.931] [SURVIVOR BENEFITS.] 13.14 Subdivision 1. [SURVIVING SPOUSE BENEFIT.] (a) If an 13.15 employee has credit for at least three years allowable service 13.16 and dies before an annuity or disability benefit has become 13.17 payable, notwithstanding any designation of beneficiary to the 13.18 contrary, the surviving spouse of the employee may elect to 13.19 receive, in lieu of the refund with interest, an annuity equal 13.20 to the joint and 100 percent survivor annuity which the employee 13.21 could have qualified for had the employee terminated service on 13.22 the date of death. 13.23 (b) If the employee was under age 55 and has credit for at 13.24 least three years of allowable service credit on the date of 13.25 death but did not yet qualify for retirement, the surviving 13.26 spouse may elect to receive a 100 percent joint and survivor 13.27 annuity based on the age of the employee and surviving spouse at 13.28 the time of death. The annuity is payable using the early 13.29 retirement reduction under section 352.93, subdivision 2a, to 13.30 age 50 and one-half of the early retirement reduction from age 13.31 50 to the age payment begins. 13.32 The surviving spouse eligible for surviving spouse benefits 13.33 under paragraph (a) may apply for the annuity at any time after 13.34 the date on which the deceased employee would have attained the 13.35 required age for retirement based on the employee's allowable 13.36 service. The surviving spouse eligible for surviving spouse 14.1 benefits under paragraph (b) may apply for the annuity at any 14.2 time after the employee's death. Sections 352.22, subdivision 14.3 3, and 352.72, subdivision 2, apply to a deferred annuity or 14.4 surviving spouse benefit payable under this subdivision. The 14.5 annuity must cease with the last payment received by the 14.6 surviving spouse in the lifetime of the surviving spouse, or 14.7 upon expiration of a term certain benefit payment to a surviving 14.8 spouse under subdivision 2. An amount equal to the excess, if 14.9 any, of the accumulated contributions credited to the account of 14.10 the deceased employee in excess of the total of the benefits 14.11 paid and payable to the surviving spouse must be paid to the 14.12 decreased employee's last designated beneficiary or, if none, as 14.13 specified under section 352.12, subdivision 1. 14.14 Any employee may request in writing that this subdivision 14.15 not apply and that payment be made only to a designated 14.16 beneficiary as otherwise provided by this chapter. 14.17 Subd. 2. [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In lieu 14.18 of the 100 percent optional annuity under subdivision 1, the 14.19 surviving spouse of a deceased employee may elect to receive 14.20 survivor coverage in a term certain of five, ten, 15, or 20 14.21 years, but monthly payments must not exceed 75 percent of the 14.22 average high-five monthly salary of the deceased employee. The 14.23 monthly term certain annuity must be actuarially equivalent to 14.24 the 100 percent optional annuity under subdivision 1. 14.25 If a survivor elects a term certain annuity and dies before 14.26 the expiration of the specified term certain period, the 14.27 commuted value of the remaining annuity payments must be paid in 14.28 a lump sum to the survivor's estate. 14.29 Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 14.30 no surviving spouse eligible for benefits under subdivision 2, a 14.31 dependent child or children as defined in section 352.01, 14.32 subdivision 26, is eligible for monthly payments. Payments to a 14.33 dependent child must be paid from the date of the employee's 14.34 death to the date the dependent child attains age 20 if the 14.35 child is under age 15. If the child is 15 years or older on the 14.36 date of death, payment must be made for five years. The payment 15.1 to a dependent child is an amount actuarially equivalent to the 15.2 value of a 100 percent optional annuity using the age of the 15.3 employee and age of the dependent child at the date of death in 15.4 lieu of the age of the surviving spouse. If there is more than 15.5 one dependent child, each dependent child shall receive a 15.6 proportionate share of the actuarial value of the employee's 15.7 account. 15.8 Sec. 17. Minnesota Statutes 1994, section 352.95, 15.9 subdivision 1, is amended to read: 15.10 Subdivision 1. [JOB-RELATED DISABILITY.] A covered 15.11 correctional employee who becomes disabled and physically unfit 15.12 to perform the duties of the position as a direct result of an 15.13 injury, sickness, or other disability incurred in or arising out 15.14 of any act of duty that makes the employee physically or 15.15 mentally unable to perform the duties, is entitled to a 15.16 disability benefit based on covered correctional service only. 15.17 The benefit amount must equal 50 percent of the average salary 15.18 defined in section 352.93, plus an additional2-1/2 percent15.19 amount equal to that specified in section 356.19, subdivision 5, 15.20 for each year of covered correctional service in excess of2021 15.21 years, nine months, prorated for completed months. 15.22 Sec. 18. Minnesota Statutes 1994, section 352.95, 15.23 subdivision 5, is amended to read: 15.24 Subd. 5. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 15.25 disability benefit paid to a disabled correctional employee 15.26 under this section shall terminate at the end of the month in 15.27 which the employee reaches age 62. If the disabled correctional 15.28 employee is still disabled when the employee reaches age 62, the 15.29 employee shall be deemed to be a retired employee. If the 15.30 employee had elected an optional annuity under subdivision 1a, 15.31 the employee shall receive an annuity in accordance with the 15.32 terms of the optional annuity previously elected. If the 15.33 employee had not elected an optional annuity under subdivision 15.34 1a, the employee may within 90 days of attaining age 65 or 15.35 reaching the five-year anniversary of the effective date of the 15.36 disability benefit, whichever is later, either elect to receive 16.1 a normal retirement annuity computed in the manner provided in 16.2 section352.115352.93 or elect to receive an optional annuity 16.3 as provided in section 352.116, subdivision 3, based on the same 16.4 length of service as used in the calculation of the disability 16.5 benefit. Election of an optional annuity must be made within 90 16.6 days before attaining age 65 or reaching the five-year 16.7 anniversary of the effective date of the disability benefit, 16.8 whichever is later.The reduction for retirement before normal16.9retirement age as provided in section 352.116, subdivision 1 or16.101a, does not apply. The savings clause provision of section16.11352.93, subdivision 3, applies.If an optional annuity is 16.12 elected, the optional annuity shall begin to accrue on the first 16.13 of the month following the month in which the employee reaches 16.14 age 65 or the five-year anniversary of the effective date of the 16.15 disability benefit, whichever is later. 16.16 Sec. 19. Minnesota Statutes 1995 Supplement, section 16.17 352B.08, subdivision 2, is amended to read: 16.18 Subd. 2. [NORMAL RETIREMENT ANNUITY.] The annuity must be 16.19 paid in monthly installments. The annuity shall be equal to the 16.20 amount determined by multiplying the average monthly salary of 16.21 the member by2.65 percentthe amount specified in section 16.22 356.19, subdivision 6, for each year and pro rata for completed 16.23 months of service. 16.24 Sec. 20. Minnesota Statutes 1995 Supplement, section 16.25 352B.10, subdivision 1, is amended to read: 16.26 Subdivision 1. [INJURIES, PAYMENT AMOUNTS.] Any member who 16.27 becomes disabled and physically or mentally unfit to perform 16.28 duties as a direct result of an injury, sickness, or other 16.29 disability incurred in or arising out of any act of duty, shall 16.30 receive disability benefits while disabled. The benefits must 16.31 be paid in monthly installments equal to the member's average 16.32 monthly salary multiplied by5358 percent, plus an additional 16.332.65 percentamount equal to that specified in section 356.19, 16.34 subdivision 6, for each year and pro rata for completed months 16.35 of service in excess of 20 years, if any. 16.36 Sec. 21. Minnesota Statutes 1994, section 352B.30, is 17.1 amended by adding a subdivision to read: 17.2 Subd. 4. The survivor or retirement benefit to a former 17.3 member or survivor of a former member who terminated service 17.4 before July 1, 1996, is determined under the laws in effect on 17.5 the date of termination and is increased to reflect the change 17.6 in the postretirement fund interest assumption from five percent 17.7 to six percent. The benefit payable under the six percent 17.8 postretirement interest assumption must be actuarially 17.9 equivalent to the benefit payable under the five percent 17.10 interest assumption and must be based on tables adopted by the 17.11 board of directors as recommended by an approved actuary and 17.12 approved by the actuary retained by the legislative commission 17.13 on pensions and retirement. 17.14 Sec. 22. [352C.011] [APPLICABILITY.] 17.15 This chapter applies only to constitutional officers 17.16 elected prior to July 1, 1996, to any constitutional office. 17.17 Persons elected for the first time to any constitutional office 17.18 after July 1, 1996, shall be covered by the state employees 17.19 unclassified plan established in chapter 352E. 17.20 Sec. 23. Minnesota Statutes 1994, section 352C.031, 17.21 subdivision 4, is amended to read: 17.22 Subd. 4. [RETIREMENT ALLOWANCE FORMULA.]The average17.23salary multiplied by 2-1/2 percent for each year of allowable17.24service and pro rata for completed months less than a full year17.25shall determine the amount of the normal retirement17.26allowance.The amount of the normal retirement allowance shall 17.27 be the product of: (1) the number of years of allowable service 17.28 with pro rata service awarded for completed months less than a 17.29 full year, and (2) an amount calculated by the actuary to 17.30 provide a benefit that is actuarially equivalent to the benefit 17.31 that would have been provided under the provisions of Minnesota 17.32 Statutes in effect as of January 1, 1996. 17.33 Sec. 24. Minnesota Statutes 1994, section 352C.033, is 17.34 amended to read: 17.35 352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 17.36 The deferred retirement allowance for any former 18.1 constitutional officer shall be augmented as provided in this 18.2 section. The required reserves applicable to the deferred 18.3 retirement allowance, determined as of the date the retirement 18.4 allowance begins to accrue using the appropriate mortality table 18.5 and an interest assumption offivesix percent, shall be 18.6 augmented from the first of the month following termination of 18.7 service as a constitutional officer, or January 1, 1979, 18.8 whichever is later, to the first day of the month in which the 18.9 annuity begins to accrue, at the rate of five percent per annum 18.10 compounded annually until January 1, 1981, and thereafter at the 18.11 rate of three percent per annum compounded annually until 18.12 January 1 of the year in which the former constitutional officer 18.13 attains age 55. From that date to the effective date of 18.14 retirement, the rate is five percent compounded annually. 18.15 The survivor or retirement benefit to a former member or 18.16 survivor of a former member who terminated service before July 18.17 1, 1996, is determined under the laws in effect on the date of 18.18 termination and are increased to reflect the change in the 18.19 postretirement fund interest assumption from five percent to six 18.20 percent. The benefit payable under the six percent 18.21 postretirement interest assumption must be actuarially 18.22 equivalent to the benefit payable under the five percent 18.23 interest assumption and must be based on tables adopted by the 18.24 board of directors as recommended by an approved actuary, and 18.25 approved by the actuary retained by the legislative commission 18.26 on pensions and retirement. 18.27 Sec. 25. Minnesota Statutes 1995 Supplement, section 18.28 352D.02, subdivision 1, is amended to read: 18.29 Subdivision 1. [COVERAGE.] (a) Employees enumerated in 18.30 paragraph (b), if they are in the unclassified service of the 18.31 state or metropolitan council and are eligible for coverage 18.32 under the general state employees retirement plan under chapter 18.33 352, are participants in the unclassified program under this 18.34 chapter unless the employee gives notice to the executive 18.35 director of the Minnesota state retirement system within one 18.36 year following the commencement of employment in the 19.1 unclassified service that the employee desires coverage under 19.2 the general state employees retirement plan. For the purposes 19.3 of this chapter, an employee who does not file notice with the 19.4 executive director is deemed to have exercised the option to 19.5 participate in the unclassified plan. 19.6 (b) Enumerated employees are: 19.7 (1) an employee in the office of the governor, lieutenant 19.8 governor, secretary of state, state auditor, state treasurer, 19.9 attorney general,; or an employee of the state board of 19.10 investment; 19.11 (2) the head of a department, division, or agency created 19.12 by statute in the unclassified service, an acting department 19.13 head subsequently appointed to the position, or an employee 19.14 enumerated in section 15A.081, subdivision 1 or 15A.083, 19.15 subdivision 4; 19.16 (3) a permanent, full-time unclassified employee of the 19.17 legislature or a commission or agency of the legislature or a 19.18 temporary legislative employee having shares in the supplemental 19.19 retirement fund as a result of former employment covered by this 19.20 chapter, whether or not eligible for coverage under the 19.21 Minnesota state retirement system; 19.22 (4) a person who is employed in a position established 19.23 under section 43A.08, subdivision 1, clause (3), or in a 19.24 position authorized under a statute creating or establishing a 19.25 department or agency of the state, which is at the deputy or 19.26 assistant head of department or agency or director level; 19.27 (5) the regional administrator, or executive director of 19.28 the metropolitan council, general counsel, division directors, 19.29 operations managers, and other positions as designated by the 19.30 council, all of which may not exceed 27 positions at the council 19.31 and the chair, provided that upon initial designation of all 19.32 positions provided for in this clause, no further designations 19.33 or redesignations may be made without approval of the board of 19.34 directors of the Minnesota state retirement system; 19.35 (6) the executive director, associate executive director, 19.36 and not to exceed nine positions of the higher education 20.1 services office in the unclassified service, as designated by 20.2 the higher education services office before January 1, 1992, or 20.3 subsequently redesignated with the approval of the board of 20.4 directors of the Minnesota state retirement system, unless the 20.5 person has elected coverage by the individual retirement account 20.6 plan under chapter 354B; 20.7 (7) the clerk of the appellate courts appointed under 20.8 article VI, section 2, of the Constitution of the state of 20.9 Minnesota; 20.10 (8) the chief executive officers of correctional facilities 20.11 operated by the department of corrections and of hospitals and 20.12 nursing homes operated by the department of human services; 20.13 (9) an employee whose principal employment is at the state 20.14 ceremonial house; 20.15 (10) an employee of the Minnesota educational computing 20.16 corporation; 20.17 (11) an employee of the world trade center board; and 20.18 (12) an employee of the state lottery board who is covered 20.19 by the managerial plan established under section 43A.18, 20.20 subdivision 3. 20.21 Sec. 26. [352E.01] [ESTABLISHMENT.] 20.22 There is hereby established within the Minnesota state 20.23 retirement system a retirement program for legislators and 20.24 constitutional officers to be known as the Minnesota elected 20.25 state officers retirement plan, which shall be administered by 20.26 the Minnesota state retirement system. 20.27 Sec. 27. [352E.02] [DEFINITIONS.] 20.28 Subdivision 1. As used in this chapter, unless the context 20.29 or subject matter indicates otherwise, the following terms shall 20.30 have the meanings given. 20.31 Subd. 2. "Elected officers plan" means the program 20.32 established by this chapter. 20.33 Subd. 3. "Supplemental fund" means the fund established 20.34 and governed by section 11A.17. 20.35 Subd. 4. "Covered employment" means employment covered by 20.36 this chapter. 21.1 Subd. 5. "Employee shares" means shares in the 21.2 supplemental fund purchased with the elected officer's 21.3 contributions. 21.4 Subd. 6. "Employer shares" means shares in the 21.5 supplemental fund purchased with the employer's contributions. 21.6 Subd. 7. "Total shares" means all the employee shares and 21.7 employer shares credited to a participant. Where applicable, 21.8 the term "contributions" shall mean "shares." 21.9 Subd. 8. "Value" means cash value at the end of the month 21.10 following receipt of an application. If no application is 21.11 required, "value" means the cash value at the end of the month 21.12 in which the event necessitating the transfer occurs. 21.13 Sec. 28. [352E.03] [COVERAGE.] 21.14 First-time constitutional officers elected to any 21.15 constitutional office and first-time legislators elected after 21.16 July 1, 1996, are eligible for coverage under the elected 21.17 officers plan. 21.18 Sec. 29. [352E.04] [INVESTMENT OPTIONS.] 21.19 Subdivision 1. (a) An employee may elect to purchase 21.20 shares in one or a combination of the income share account, the 21.21 growth share account, the international share account, the money 21.22 market account, the bond market account, the fixed interest 21.23 account, or the common stock index account established in 21.24 section 11A.17. The employee may elect to participate in one or 21.25 more of the investment accounts in the fund by specifying, on a 21.26 form provided by the executive director, the percentage of the 21.27 employee's contributions provided in subdivision 2 to be used to 21.28 purchase shares in each of the account. 21.29 (b) A participant may indicate in writing on forms provided 21.30 by the Minnesota state retirement system a choice of options for 21.31 subsequent purchases of shares. Until a different written 21.32 indication is made by the participant, the executive director 21.33 shall purchase shares in the supplemental fund as selected by 21.34 the participant. If no initial option is chosen, 100 percent 21.35 income shares must by purchased for a participant. A change in 21.36 choice of investment options is effective no later than the 22.1 first pay date first occurring after 30 days following the 22.2 receipt of the request for a change. 22.3 (c) A participant or former participant may also change the 22.4 investment options selected for all or a portion of the 22.5 participant's shares previously purchased in accounts. 22.6 Subd. 2. The money used to purchase shares under this 22.7 section shall be the employee and employer contributions 22.8 provided in this subdivision. 22.9 (a) The employee contribution shall be five percent of 22.10 salary. 22.11 (b) The employer contribution shall be an amount equal to 22.12 five percent of salary. These contributions shall be made by 22.13 deduction from salary in the manner provided in section 352.04, 22.14 subdivisions 4, 5, and 6. 22.15 Sec. 30. [352E.05] [WITHDRAWAL OPTIONS.] 22.16 Subdivision 1. No withdrawal of shares shall be permitted 22.17 prior to termination of covered employment. 22.18 Subd. 2. After termination of covered employment or any 22.19 time thereafter, a participant is entitled, upon application, to 22.20 withdraw the cash value of the participant's total shares or 22.21 leave such shares on deposit with the supplemental retirement 22.22 fund. Shares not withdrawn remain on deposit with the 22.23 supplemental retirement fund until the former participant 22.24 becomes at least 55 years old, and applies for an annuity under 22.25 section 352D.06, subdivision 1. 22.26 Sec. 31. [352E.06] [ANNUITIES.] 22.27 Subdivision 1. When a participant attains at least age 55, 22.28 is retired from covered service, and applies for a retirement 22.29 annuity, the cash value of the participant's shares shall be 22.30 transferred to the Minnesota postretirement investment fund and 22.31 used to provide an annuity for the retired employee based upon 22.32 the participant's age when the benefit begins to accrue 22.33 according to the reserve basis used by the state employees 22.34 retirement fund in determining pensions and reserves. 22.35 Subd. 2. A participant has the option in an application 22.36 for an annuity to apply for and receive the value of one-half of 23.1 the total shares and thereafter receive an annuity, as provided 23.2 in subdivision 1, based on the value of one-half of the total 23.3 shares. 23.4 Subd. 3. An annuity herein shall begin to accrue the first 23.5 day of the first full month after an application is received or 23.6 after termination of state service, whichever is later. 23.7 Sec. 32. [352E.07] [DISABILITY BENEFITS.] 23.8 Subdivision 1. A participant who becomes totally and 23.9 permanently disabled has the option, even if on leave of absence 23.10 without pay, to receive: 23.11 (1) the value of the participant's total shares; 23.12 (2) the value of one-half of the total shares and an 23.13 annuity based on the value of one-half of the total shares; or 23.14 (3) an annuity based on the value of the participant's 23.15 total shares. 23.16 Subd. 2. The annuity payable under this section shall 23.17 begin to accrue the first day of the month following the day of 23.18 disability and shall be based on the participant's age when the 23.19 annuity begins to accrue. The shares shall be valued as of the 23.20 end of the month following authorization of payments. 23.21 Subd. 3. The benefits payable under this section shall not 23.22 be reduced by amounts received or receivable under applicable 23.23 workers' compensation laws. 23.24 Subd. 4. A participant who returns to covered service 23.25 after receiving benefits under this section shall not be 23.26 required or allowed to repay such benefits. 23.27 Sec. 33. [352E.08] [DEATH BENEFITS.] 23.28 Subdivision 1. If a participant dies leaving a spouse and 23.29 there is no named beneficiary who survives to receive payment or 23.30 the spouse is named beneficiary, the spouse may receive: 23.31 (1) the value of the participants total shares; 23.32 (2) the value of one-half of the total shares and beginning 23.33 at age 55 or thereafter receive an annuity based on the value of 23.34 one-half of the total shares, provided that if the spouse dies 23.35 before receiving any annuity payments the value of said shares 23.36 shall be paid to the spouse's children in equal shares, but if 24.1 no such children survive then to the parents of the spouse in 24.2 equal shares, but if no such children or parents survive, then 24.3 to the estate of the spouse; or 24.4 (3) beginning at age 55 or thereafter, an annuity based on 24.5 the value of the total shares, provided that if the spouse dies 24.6 before receiving any annuity payments the value of said shares 24.7 shall be paid to the spouse's children in equal shares, but if 24.8 no such children survive then to the parents of the spouse in 24.9 equal shares, but if no such children or parent survive, then to 24.10 the estate of the spouse; and further provided, if said spouse 24.11 dies after receiving annuity payments but before receiving 24.12 payments equal to the value of the employee shares, the value of 24.13 the employee shares remaining shall be paid to the spouse's 24.14 children in equal shares, but if no such children survive then 24.15 to the parents of the spouse in equal shares, but if no such 24.16 children or parents survive, then to the estate of the spouse. 24.17 Subd. 2. If a participant dies and has named a 24.18 beneficiary, the value of the total shares shall be paid to such 24.19 beneficiary, but if such beneficiary dies before receiving 24.20 payment, or if no beneficiary has been named and there is no 24.21 spouse, the value of said shares shall be paid to the children 24.22 of the participant in equal shares, but if no such children 24.23 survive then in equal shares to the parents of the participant, 24.24 but if no such children or parents survive, then to the estate 24.25 of the participant. 24.26 Sec. 34. [352E.09] [ADMINISTRATION.] 24.27 Subdivision 1. The elected state officers retirement plan 24.28 and the provisions of this chapter must be administered by the 24.29 Minnesota state retirement system. Fiduciary activities of the 24.30 unclassified employees retirement plan must be undertaken in a 24.31 manner consistent with chapter 356A. 24.32 Subd. 2. Whenever redemption or purchases from the 24.33 supplemental retirement fund are required to be made, the 24.34 executive director shall make them. 24.35 Subd. 3. The executive director shall annually distribute 24.36 the prospectus prepared by the supplemental fund, by July 1 or 25.1 when received from such fund, whichever is later, to each 25.2 participant in covered employment. 25.3 Subd. 4. Whenever benefits or withdrawals are authorized 25.4 or required to be paid, payment shall be made only after receipt 25.5 of an application signed by the person or representative 25.6 authorized to receive the benefit or withdrawal. Such 25.7 application shall be made only on forms authorized by the 25.8 executive director. 25.9 Subd. 5. If the beneficiary, surviving spouse, or estate 25.10 has not made application for benefits within ten years after the 25.11 date of death of a participant, the value of the shares shall be 25.12 appropriated to the regular fund according to section 352.12, 25.13 subdivision 12. If a former participant fails to make a claim 25.14 for benefits within five years after termination of covered 25.15 service or by age 70, whichever is later, the value of the 25.16 shares are appropriated to the general employees retirement fund 25.17 according to section 352.22, subdivision 8. 25.18 Subd. 6. Up to four-tenths of one percent of salary shall 25.19 be deducted from the employee contributions and up to 25.20 four-tenths of one percent salary shall be deducted from the 25.21 employer contributions, as authorized by section 352E.04, 25.22 subdivision 2, to pay the administrative expenses of the elected 25.23 state officers plan. 25.24 Sec. 35. Minnesota Statutes 1994, section 353.01, 25.25 subdivision 2a, is amended to read: 25.26 Subd. 2a. [INCLUDED EMPLOYEES.] Public employees whose 25.27 salary from one governmental subdivision exceeds $425 in any 25.28 month shall participate as members of the association. If the 25.29 salary of an employee is less than $425 in a subsequent month, 25.30 the employee retains membership eligibility. The following 25.31 persons are considered public employees: 25.32 (1) employees whose annual salary from one governmental 25.33 subdivision exceeds a stipulation prepared in advance, in 25.34 writing, to be not more than $5,100 per calendar year or per 25.35 school year for school employees for employment expected to be 25.36 of a full year's duration or more than the prorated portion of 26.1 $5,100 per employment period expected to be of less than a full 26.2 year's duration. If compensation from one governmental 26.3 subdivision to an employee under this clause exceeds $5,100 per 26.4 calendar year or school year after being stipulated in advance 26.5 not to exceed that amount, the stipulation is no longer valid 26.6 and contributions must be made on behalf of the employee under 26.7 section 353.27, subdivision 12, from the month in which the 26.8 employee's salary first exceeded $425; 26.9 (2) employees whose total salary from concurrent 26.10 nontemporary positions in one governmental subdivision exceeds 26.11 $425 in any month; 26.12 (3) elected officers elected for the first time prior to 26.13 July 1, 1996, for service to which they were elected by the 26.14 public-at-large, or persons appointed to fill a vacancy in an 26.15 elective office, who elect to participate by filing an 26.16 application for membership, but not for service on a joint or 26.17 regional board that is a governmental subdivision under 26.18 subdivision 6, paragraph (a), unless the salary earned for that 26.19 service exceeds $425 in any month. The option to become a 26.20 member, once exercised, may not be withdrawn during the 26.21 incumbency of the person in office; 26.22 (4) members who are appointed by the governor to be a state 26.23 department head and elect not to be covered by the Minnesota 26.24 state retirement system under section 352.021; 26.25 (5) employees of elected officers; 26.26 (6) persons who elect to remain members under section 26.27 136C.75, or 480.181, subdivision 2; 26.28 (7) employees of a school district who receive separate 26.29 salaries for driving their own buses; 26.30 (8) employees of the Minnesota association of townships 26.31 when the board of the association, at its option, certifies to 26.32 the executive director that its employees are to be included for 26.33 purposes of retirement coverage, in which case coverage of all 26.34 employees of the association is permanent; 26.35 (9) employees of a county historical society who are county 26.36 employees; 27.1 (10) employees of a county historical society located in 27.2 the county whom the county, at its option, certifies to the 27.3 executive director to be county employees for purposes of 27.4 retirement coverage under this chapter, which status must be 27.5 accorded to all similarly situated county historical society 27.6 employees and, once established, must continue as long as a 27.7 person is an employee of the county historical society and is 27.8 not excluded under subdivision 2b; and 27.9 (11) employees who became members before July 1, 1988, 27.10 based on the total salary of positions held in more than one 27.11 governmental subdivision. 27.12 Sec. 36. Minnesota Statutes 1994, section 353.01, 27.13 subdivision 2b, is amended to read: 27.14 Subd. 2b. [EXCLUDED EMPLOYEES.] The following public 27.15 employees shall not participate as members of the association: 27.16 (1) elected public officers elected for the first time 27.17 after July 1, 1996, or persons appointed to fill a vacancy after 27.18 July 1, 1996; 27.19 (2) elected public officers elected for the first time 27.20 prior to July 1, 1996, or persons appointed to fill a vacancy in 27.21 an elective office prior to July 1, 1996, who do not elect to 27.22 participate in the association by filing an application for 27.23 membership; 27.24(2)(3) election officers; 27.25(3)(4) patient and inmate personnel who perform services 27.26 in charitable, penal, or correctional institutions of a 27.27 governmental subdivision; 27.28(4)(5) employees who are hired for a temporary position 27.29 under subdivision 12a, and employees who resign from a 27.30 nontemporary position and accept a temporary position within 30 27.31 days in the same governmental subdivision, but not those 27.32 employees who are hired for an unlimited period but are serving 27.33 a probationary period. If the period of employment extends 27.34 beyond six consecutive months and the employee earns more than 27.35 $425 from one governmental subdivision in any one calendar 27.36 month, the department head shall report the employee for 28.1 membership and require employee deductions be made on behalf of 28.2 the employee under section 353.27, subdivision 4. 28.3 Membership eligibility of an employee who resigns or is 28.4 dismissed from a temporary position and within 30 days accepts 28.5 another temporary position in the same governmental subdivision 28.6 is determined on the total length of employment rather than on 28.7 each separate position. Membership eligibility of an employee 28.8 who holds concurrent temporary and nontemporary positions in one 28.9 governmental subdivision is determined by the length of 28.10 employment and salary of each separate position; 28.11(5)(6) employees whose actual salary from one governmental 28.12 subdivision does not exceed $425 per month, or whose annual 28.13 salary from one governmental subdivision does not exceed a 28.14 stipulation prepared in advance, in writing, that the salary 28.15 must not exceed $5,100 per calendar year or per school year for 28.16 school employees for employment expected to be of a full year's 28.17 duration or more than the prorated portion of $5,100 per 28.18 employment period for employment expected to be of less than a 28.19 full year's duration; 28.20(6)(7) employees who are employed by reason of work 28.21 emergency caused by fire, flood, storm, or similar disaster; 28.22(7)(8) employees who by virtue of their employment in one 28.23 governmental subdivision are required by law to be a member of 28.24 and to contribute to any of the plans or funds administered by 28.25 the Minnesota state retirement system, the teachers retirement 28.26 association, the Duluth teachers retirement fund association, 28.27 the Minneapolis teachers retirement association, the St. Paul 28.28 teachers retirement fund association, the Minneapolis employees 28.29 retirement fund, or any police or firefighters relief 28.30 association governed by section 69.77 that has not consolidated 28.31 with the public employees retirement association, or any police 28.32 or firefighters relief association that has consolidated with 28.33 the public employees retirement association but whose members 28.34 have not elected the type of benefit coverage provided by the 28.35 public employees police and fire fund under sections 353A.01 to 28.36 353A.10. This clause must not be construed to prevent a person 29.1 from being a member of and contributing to the public employees 29.2 retirement association and also belonging to and contributing to 29.3 another public pension fund for other service occurring during 29.4 the same period of time. A person who meets the definition of 29.5 "public employee" in subdivision 2 by virtue of other service 29.6 occurring during the same period of time becomes a member of the 29.7 association unless contributions are made to another public 29.8 retirement fund on the salary based on the other service or to 29.9 the teachers retirement association by a teacher as defined in 29.10 section 354.05, subdivision 2; 29.11(8)(9) persons who are excluded from coverage under the 29.12 federal Old Age, Survivors, Disability, and Health Insurance 29.13 Program for the performance of service as specified in United 29.14 States Code, title 42, section 410(a)(8)(A), as amended through 29.15 January 1, 1987, if no irrevocable election of coverage has been 29.16 made under section 3121(r) of the Internal Revenue Code of 1954, 29.17 as amended; 29.18(9)(10) full-time students who are enrolled and are 29.19 regularly attending classes at an accredited school, college, or 29.20 university and who are part-time employees as defined by a 29.21 governmental subdivision; 29.22(10)(11) resident physicians, medical interns, and 29.23 pharmacist residents and pharmacist interns who are serving in a 29.24 degree or residency program in public hospitals; 29.25(11)(12) students who are serving in an internship or 29.26 residency program sponsored by an accredited educational 29.27 institution; 29.28(12)(13) persons who hold a part-time adult supplementary 29.29 technical college license who render part-time teaching service 29.30 in a technical college; 29.31(13)(14) foreign citizens working for a governmental 29.32 subdivision with a work permit of less than three years, or an 29.33 H-1b visa valid for less than three years of employment. Upon 29.34 notice to the association that the work permit or visa extends 29.35 beyond the three-year period, the foreign citizens are eligible 29.36 for membership from the date of the extension; 30.1(14)(15) public hospital employees who elected not to 30.2 participate as members of the association before 1972 and who 30.3 did not elect to participate from July 1, 1988 to October 1, 30.4 1988; 30.5(15)(16) except as provided in section 353.86, volunteer 30.6 ambulance service personnel, as defined in subdivision 35, but 30.7 persons who serve as volunteer ambulance service personnel may 30.8 still qualify as public employees under subdivision 2 and may be 30.9 members of the public employees retirement association and 30.10 participants in the public employees retirement fund or the 30.11 public employees police and fire fund on the basis of 30.12 compensation received from public employment service other than 30.13 service as volunteer ambulance service personnel; and 30.14(16)(17) except as provided in section 353.87, volunteer 30.15 firefighters, as defined in subdivision 36, engaging in 30.16 activities undertaken as part of volunteer firefighter duties; 30.17 provided that a person who is a volunteer firefighter may still 30.18 qualify as a public employee under subdivision 2 and may be a 30.19 member of the public employees retirement association and a 30.20 participant in the public employees retirement fund or the 30.21 public employees police and fire fund on the basis of 30.22 compensation received from public employment activities other 30.23 than those as a volunteer firefighter. 30.24 Sec. 37. Minnesota Statutes 1994, section 353.27, 30.25 subdivision 2, is amended to read: 30.26 Subd. 2. [EMPLOYEE CONTRIBUTION.] The employee 30.27 contribution shall be an amount (a) for a "basic member" equal 30.28 to8.23.... percent of total salary; and (b) for a 30.29 "coordinated member" equal to4.23.... percent of total 30.30 salary. These contributions shall be made by deduction from 30.31 salary in the manner provided in subdivision 4. Where any 30.32 portion of a member's salary is paid from other than public 30.33 funds, such member's employee contribution shall be based on the 30.34 total salary received from all sources. 30.35 Sec. 38. Minnesota Statutes 1994, section 353.27, 30.36 subdivision 3a, is amended to read: 31.1 Subd. 3a. [ADDITIONAL EMPLOYER CONTRIBUTION.]An31.2additional employer contribution shall be made equal to (a)31.32-1/2 percent of the total salary of each "basic member"; and31.4(b) one-quarter of one percent of the total salary of each31.5"coordinated member."If the total financing requirements, as 31.6 determined under the provisions of section 356.215 are not 31.7 covered by the employer and employee contributions specified in 31.8 subdivisions 2 and 3, an additional employer contribution shall 31.9 be made equal to the difference between total financing 31.10 requirements and the sum of the subdivision 2 and subdivision 3 31.11 contributions, but not in an amount greater than ... percent of 31.12 the salary of each covered member. The board shall annually 31.13 adjust the amount of the required additional employer 31.14 contribution. If the adjustment is an increase over the rate 31.15 for the preceding year, the adjustment cannot exceed one-fourth 31.16 of one percent per year. This subdivision is repealed effective 31.17 July 1, 2021. These contributions shall be made from funds 31.18 available to the employing subdivision by the means and in the 31.19 manner provided in section 353.28. 31.20 Sec. 39. Minnesota Statutes 1994, section 353.29, 31.21 subdivision 3, is amended to read: 31.22 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 31.23 in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 31.24 1c, applies to any member who first became a public employee or 31.25 a member of a pension fund listed in section 356.30, subdivision 31.26 3, before July 1, 1989, unless paragraph (b), in conjunction 31.27 with section 353.30, subdivision 5, produces a higher annuity 31.28 amount, in which case paragraph (b) will apply. The average 31.29 salary as defined in subdivision 2, multiplied bytwo31.30percentthe amount specified in section 356.19, subdivision 3, 31.31 for each year of allowable service for the first ten years and 31.32 thereafter by2.5 percentthe amount specified in section 31.33 356.19, subdivision 4, per year of allowable service and 31.34 completed months less than a full year for the "basic member," 31.35 andone percentthe amount specified in section 356.19, 31.36 subdivision 1, for each year of allowable service for the first 32.1 ten years and thereafter by1.5 percentthe amount specified in 32.2 section 356.19, subdivision 2, per year of allowable service and 32.3 completed months less than a full year for the "coordinated 32.4 member," shall determine the amount of the "normal" retirement 32.5 annuity. 32.6 (b) This paragraph applies to a member who has become at 32.7 least 55 years old and first became a public employee after June 32.8 30, 1989, and to any other member whose annuity amount, when 32.9 calculated under this paragraph and in conjunction with section 32.10 353.30, subdivision 5, is higher than it is when calculated 32.11 under paragraph (a), in conjunction with section 353.30, 32.12 subdivisions 1, 1a, 1b, and 1c. The average salary, as defined 32.13 in subdivision 2, multiplied by2.5 percentthe amount specified 32.14 in section 356.19, subdivision 4, for each year of allowable 32.15 service and completed months less than a full year for a basic 32.16 member and1.5 percentthe amount specified in section 356.19, 32.17 subdivision 2, per year of allowable service and completed 32.18 months less than a full year for a coordinated member, shall 32.19 determine the amount of the normal retirement annuity. 32.20 Sec. 40. Minnesota Statutes 1994, section 353.651, 32.21 subdivision 3, is amended to read: 32.22 Subd. 3. [RETIREMENT ANNUITY FORMULA.] The average salary 32.23 as defined in subdivision 2, multiplied by2.65 percentthe 32.24 amount specified in section 356.19, subdivision 6, per year of 32.25 allowable service determines the amount of the normal retirement 32.26 annuity. If the member has earned allowable service for 32.27 performing services other than those of a police officer or 32.28 firefighter, the annuity representing such service is computed 32.29 under sections 353.29 and 353.30. 32.30 Sec. 41. Minnesota Statutes 1994, section 353.656, 32.31 subdivision 1, is amended to read: 32.32 Subdivision 1. [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 32.33 A member of the police and fire fund who becomes disabled and 32.34 physically unfit to perform duties as a police officer or 32.35 firefighter subsequent to June 30, 1973, as a direct result of 32.36 an injury, sickness, or other disability incurred in or arising 33.1 out of any act of duty, which has or is expected to render the 33.2 member physically or mentally unable to perform duties as a 33.3 police officer or firefighter for a period of at least one year, 33.4 shall receive disability benefits during the period of such 33.5 disability. The benefits must be in an amount equal to5358 33.6 percent of the "average salary" under subdivision 3, plus an 33.7 additional2.65 percentamount specified in section 356.19, 33.8 subdivision 6, of said average salary for each year of service 33.9 in excess of 20 years. Should disability under this subdivision 33.10 occur before the member has at least five years of allowable 33.11 service credit in the police and fire fund, the disability 33.12 benefit must be computed on the "average salary" from which 33.13 deductions were made for contribution to the police and fire 33.14 fund. 33.15 Sec. 42. Minnesota Statutes 1994, section 353.71, 33.16 subdivision 2, is amended to read: 33.17 Subd. 2. [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] The 33.18 deferred annuity, if any, accruing under subdivision 1, or 33.19 sections 353.34, subdivision 3, and 353.68, subdivision 4, shall 33.20 be computed in the manner provided in said sections, on the 33.21 basis of allowable service prior to termination of public 33.22 service and augmented as provided herein. The required reserves 33.23 applicable to a deferred annuity, or to an annuity for which a 33.24 former member was eligible but had not applied, or to any 33.25 deferred segment of an annuity shall be determined as of the 33.26 date the annuity begins to accrue and shall be augmented from 33.27 the first day of the month following the month in which the 33.28 former member ceased to be a public employee, or July 1, 1971, 33.29 whichever is later, to the first day of the month in which the 33.30 annuity begins to accrue, at the rate of five percent per annum 33.31 compounded annually until January 1, 1981, and at the rate of 33.32 three percent thereafter until January 1 of the year following 33.33 the year in which the former member attains age 55. From that 33.34 date to the effective date of retirement, the rate is five 33.35 percent per annum compounded annually. If a person has more 33.36 than one period of uninterrupted service, the required reserves 34.1 related to each period shall be augmented by interest pursuant 34.2 to this subdivision. The sum of the augmented required reserves 34.3 so determined shall be the present value of the annuity. 34.4 Uninterrupted service for the purpose of this subdivision shall 34.5 mean periods of covered employment during which the employee has 34.6 not been separated from public service for more than two years. 34.7 If a person repays a refund, the service restored thereby shall 34.8 be considered as continuous with the next period of service for 34.9 which the employee has credit with this association. The formula 34.10 percentages used for each period of uninterrupted service shall 34.11 be those as would be applicable to a new employee. This section 34.12 shall not reduce the annuity otherwise payable under this 34.13 chapter. This subdivision shall apply to deferred annuitants of 34.14 record on July 1, 1971, and to employees who thereafter become 34.15 deferred annuitants; it shall also apply from July 1, 1971, to 34.16 former members who make application for an annuity after July 1, 34.17 1973. 34.18 The survivor or retirement benefit to a former member or 34.19 survivor of a former member who terminated service before July 34.20 1, 1996, is determined under the laws in effect on the date of 34.21 termination and are increased to reflect the change in the 34.22 postretirement fund interest assumption from five percent to six 34.23 percent. The benefit payable under the six percent 34.24 postretirement interest assumption must be actuarially 34.25 equivalent to the benefit payable under the five percent 34.26 interest assumption and must be based on tables adopted by the 34.27 board of trustees as recommended by an approved actuary, and 34.28 approved by the actuary retained by the legislative commission 34.29 on pensions and retirement. 34.30 Sec. 43. Minnesota Statutes 1994, section 353A.08, 34.31 subdivision 1, is amended to read: 34.32 Subdivision 1. [ELECTION OF COVERAGE BY CURRENT RETIREES.] 34.33 A person who is receiving a service pension, disability benefit, 34.34 or survivorship benefit is eligible to elect benefit coverage 34.35 provided under the relevant provisions of the public employees 34.36 police and fire fund benefit plan or to retain benefit coverage 35.1 provided under the relief association benefit plan in effect on 35.2 the effective date of the consolidation. The relevant 35.3 provisions of the public employees police and fire fund benefit 35.4 plan for the person electing that benefit coverage are limited 35.5 to participation in the Minnesota postretirement investment fund 35.6 for any future postretirement adjustments based on the amount of 35.7 the benefit or pension payable on December 31, if December 31 is 35.8 the effective date of consolidation, or on the December 1 35.9 following the effective date of the consolidation, if other than 35.10 December 31. The survivorship benefit payable on behalf of any 35.11 service pension or disability benefit recipient who elects 35.12 benefit coverage under the public employees police and fire fund 35.13 benefit plan must be calculated under the relief association 35.14 benefit plan and is subject to participation in the Minnesota 35.15 postretirement investment fund for any future postretirement 35.16 adjustments based on the amount of the survivorship benefit 35.17 payable. A survivorship benefit payable after June 30, 1996, 35.18 that is based on the account of a service benefit recipient 35.19 participating in the Minnesota postretirement investment fund 35.20 before July 1, 1996, must be permanently increased to reflect 35.21 the change in the postretirement fund interest assumption from 35.22 five to six percent. The benefit payable under the six percent 35.23 postretirement interest assumption must be actuarially 35.24 equivalent to the benefit payable under the five percent 35.25 interest assumption and must be based on tables adopted by the 35.26 board of trustees as recommended by an approved actuary, and 35.27 approved by the actuary retained by the legislative commission 35.28 on pensions and retirement. 35.29 By electing the public employees police and fire fund 35.30 benefit plan, a current service pension or disability benefit 35.31 recipient who, as of the first January 1 occurring after the 35.32 effective date of consolidation, has been receiving the pension 35.33 or benefit for at least seven months, or any survivor benefit 35.34 recipient who, as of the first January 1 occurring after the 35.35 effective date of consolidation, has been receiving the benefit 35.36 on the person's own behalf or in combination with a prior 36.1 applicable service pension or disability benefit for at least 36.2 seven months is eligible to receive a partial adjustment payable 36.3 from the Minnesota postretirement investment fund under section 36.4 11A.18, subdivision 9. 36.5 The election by any pension or benefit recipient must be 36.6 made on or before the deadline established by the board of the 36.7 public employees retirement association in a manner that 36.8 recognizes the number of persons eligible to make the election 36.9 and the anticipated time required to conduct any required 36.10 benefit counseling. 36.11 Sec. 44. Minnesota Statutes 1995 Supplement, section 36.12 353A.083, is amended by adding a subdivision to read: 36.13 Subd. 3. [PRE-1996 CONSOLIDATIONS.] (a) For any 36.14 consolidation account in effect on July 1, 1996, for which the 36.15 city has approved the July 1, 1993, police and fire benefit 36.16 provisions, the retirement annuity formula and disability 36.17 benefits that apply to consolidation account members who have 36.18 elected or will elect the benefit plan coverage under section 36.19 353A.08 are the relevant provisions of the public employee 36.20 police and fire benefit plan under chapter 353. 36.21 (b) If the consolidated plan's city has not approved the 36.22 July 1, 1993, police and fire plan benefit provisions, the 36.23 retirement annuity formula and disability benefits payable to 36.24 consolidation account members who have elected or will elect the 36.25 benefit plan coverage under section 353A.08 must be increased to 36.26 reflect the change in the postretirement fund interest 36.27 assumption from five to six percent. The benefit payable under 36.28 the six percent postretirement interest assumption must be 36.29 actuarially equivalent to the benefit payable under the five 36.30 percent interest assumption and must be based on tables adopted 36.31 by the board of trustees as recommended by an approved actuary, 36.32 and approved by the actuary retained by the legislative 36.33 commission on pensions and retirement. 36.34 Sec. 45. Minnesota Statutes 1994, section 353C.06, 36.35 subdivision 3, is amended to read: 36.36 Subd. 3. [ANNUITY AMOUNT.] The average salary as defined 37.1 in subdivision 2, multiplied bytwo percent for each year of37.2allowable service for the first ten years and 2.5 percent for37.3each additional year of allowable service,the amount specified 37.4 in section 356.19, subdivision 5, and pro rata for completed 37.5 months less than a full year, determines the amount of the 37.6 normal annuity. If a person has earned allowable service in the 37.7 public employees retirement association or the public employees 37.8 police and fire fund prior to participation under this chapter, 37.9 the annuity representing such service must be computed in 37.10 accordance with the formula under sections 353.29 and 353.30 or 37.11 353.651, whichever applies. 37.12 Sec. 46. Minnesota Statutes 1994, section 353C.06, is 37.13 amended by adding a subdivision to read: 37.14 Subd. 3a. The board may establish an optional annuity to 37.15 pay a higher amount from the date of retirement until a point an 37.16 employee can reasonably be expected to begin drawing social 37.17 security benefits, at which time the monthly benefits will be 37.18 reduced. These higher payments must be actuarially equivalent 37.19 to the single life annuity as provided under subdivision 3. The 37.20 optional annuities must be approved by the actuary retained by 37.21 the legislative commission on pensions and retirement. 37.22 Sec. 47. Minnesota Statutes 1994, section 353C.06, 37.23 subdivision 4, is amended to read: 37.24 Subd. 4. [ACCRUAL AND DURATION.] The annuity under this 37.25 section begins to accrue as provided in section 353.29, 37.26 subdivision 7. The annuity is payable for the life of the 37.27 recipient, or in accordance with the terms of any optional 37.28 annuity form selected., and is payable for 84 full calendar37.29months or to the first of the month following the month in which37.30the employee attains the normal retirement age, whichever occurs37.31first. After a recipient has received the annuity calculated37.32under this formula for 84 full calendar months or to the first37.33of the month following the month in which the employee attains37.34the normal retirement age, whichever occurs first, the benefit37.35must be recomputed in accordance with the coordinated formula in37.36sections 353.29 and 353.30, except that if this amount, when38.1added to the social security benefit based on public service the38.2employee is eligible to receive at that time, is less than the38.3benefit payable under subdivision 3, the retired employee is38.4entitled to receive an amount payable under subdivision 3, less38.5any amount payable from social security based on public service38.6used in the benefit calculation. When an annuity is reduced38.7under this subdivision, any percentage of adjustments that have38.8been applied to the original annuity under section 11A.18,38.9before the reduction, must be compounded and applied to the38.10reduced annuity.38.11 Sec. 48. Minnesota Statutes 1994, section 353C.08, 38.12 subdivision 1, is amended to read: 38.13 Subdivision 1. [DUTY DISABILITY QUALIFICATION 38.14 REQUIREMENTS.] A local government correctional employee who 38.15 becomes disabled and physically unfit to perform the duties of 38.16 the position as a direct result of an injury, sickness, or other 38.17 disability incurred in or arising out of any act of duty that 38.18 renders the employee physically or mentally unable to perform 38.19 the employee's duties, is entitled to a disability benefit based 38.20 on covered service only in an amount equal to4546 percent of 38.21 the average salary defined in section 353C.06, subdivision 2, 38.22 plus an additional2.5 percentamount specified in section 38.23 356.19, subdivision 5, for each year of covered service in 38.24 excess of 20 years. 38.25 Sec. 49. Minnesota Statutes 1994, section 353C.09, is 38.26 amended to read: 38.27 353C.09 [SURVIVING SPOUSE OPTIONAL ANNUITY.] 38.28 Subdivision 1. (a) If a member or former member of the 38.29 local government correctional service retirement plan has 38.30 attained the age of at least 50 years and has credit for not 38.31 less than three years of allowable service, or who has credit 38.32 for not less than 30 years of allowable service, regardless of 38.33 age attained, dies before the annuity or disability benefit has 38.34 become payable, notwithstanding any designation of beneficiary 38.35 to the contrary, the surviving spouse may elect to receive, in 38.36 lieu of a refund with interest provided in section 353.32, 39.1 subdivision 1, an annuity equal to the 100 percent joint and 39.2 survivor annuity for which the member could have qualified had 39.3 the member terminated service on the date of death. The 39.4 surviving spouse may apply for the annuity at any time after the 39.5 date on which the deceased employee would have attained the 39.6 required age for retirement based on the employee's allowable 39.7 service. The annuity must be computed on the formulas 39.8 undersections 353.29, subdivisions 2 and 3, and 353.30,39.9subdivisions 1, 1a, 1b, and 1csection 353C.06, subdivision 3. 39.10 (b) If the employee was under age 55 and has credit for at 39.11 least three years of allowable service credit on the date of 39.12 death but did not yet qualify for retirement, the surviving 39.13 spouse may elect to receive a 100 percent joint and survivor 39.14 annuity based on the age of the employee and surviving spouse at 39.15 the time of death. The annuity is payable using an actuarial 39.16 equivalent reduction to age 50 and one-half of the actuarial 39.17 equivalent reduction from age 50 to the age payment begins. 39.18 The surviving spouse eligible for surviving spouse benefits 39.19 under paragraph (a) may apply for the annuity at any time after 39.20 the date on which the deceased employee would have attained the 39.21 required age for retirement based on the employee's allowable 39.22 service. The surviving spouse eligible for surviving spouse 39.23 benefits under paragraph (b) may apply for the annuity at any 39.24 time after the employee's death. 39.25 (c) Sections 353.34, subdivision 3, and 353.71, subdivision 39.26 2, apply to a deferred annuity payable under this subdivision. 39.27 No payment may accrue beyond the end of the month in which 39.28 entitlement to the annuity has terminated. An amount equal to 39.29 any excess of the accumulated contributions that were credited 39.30 to the account of the deceased employee over and above the total 39.31 of the annuities paid and payable to the surviving spouse must 39.32 be paid to the deceased member's last designated beneficiary or, 39.33 if none, to the legal representative of the estate of the 39.34 deceased member. A member may specify in writing that this 39.35 subdivision does not apply and that payment must be made only to 39.36 the designated beneficiary, as otherwise provided by this 40.1 chapter. 40.2 Subd. 2. [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In lieu 40.3 of the 100 percent optional annuity under subdivision 1, the 40.4 surviving spouse of a deceased employee may elect to receive 40.5 survivor coverage in a term certain of five, ten, 15, or 20 40.6 years, but monthly payments must not exceed 75 percent of the 40.7 average high-five monthly salary of the deceased employee. The 40.8 monthly term certain annuity must be actuarially equivalent to 40.9 the 100 percent optional annuity under subdivision 1. 40.10 If a survivor elects a term certain annuity and dies before 40.11 the expiration of the specified term certain period, the 40.12 commuted value of the remaining annuity payments must be paid in 40.13 a lump sum to the survivor's estate. 40.14 Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 40.15 no surviving spouse eligible for benefits under subdivision 2, a 40.16 dependent child or children as defined in section 353.01, 40.17 subdivision 15, is eligible for monthly payments. Payments to a 40.18 dependent child must be paid from the date of the employee's 40.19 death to the date the dependent child attains age 20 if the 40.20 child is under age 15. If the child is 15 years or older on the 40.21 date of death, payment must be made for five years. The payment 40.22 to a dependent child is an amount actuarially equivalent to the 40.23 value of a 100 percent optional annuity using the age of the 40.24 employee and age of the dependent child at the date of death in 40.25 lieu of the age of the surviving spouse. If there is more than 40.26 one dependent child, each dependent child shall receive a 40.27 proportionate share of the actuarial value of the employee's 40.28 account. 40.29 Sec. 50. Minnesota Statutes 1994, section 354.42, 40.30 subdivision 2, is amended to read: 40.31 Subd. 2. [EMPLOYEE.] The employee contribution to the fund 40.32 shall be an amount equal to6.55.05 percent of the salary of 40.33 every coordinated member and10.59.05 percent of the salary of 40.34 every basic member. This contribution shall be made by 40.35 deduction from salary. Where any portion of a member's salary 40.36 is paid from other than public funds, such member's employee 41.1 contribution shall be based on the entire salary received. 41.2 Sec. 51. Minnesota Statutes 1994, section 354.42, 41.3 subdivision 3, is amended to read: 41.4 Subd. 3. [EMPLOYER.] The employer contribution to the fund 41.5 shall be an amount equal to4-1/25.05 percent of the salary of 41.6 each coordinated member and8-1/29.05 percent of the salary of 41.7 each basic member. 41.8 Sec. 52. Minnesota Statutes 1994, section 354.42, 41.9 subdivision 5, is amended to read: 41.10 Subd. 5. [ADDITIONAL EMPLOYER CONTRIBUTION.]To amortize41.11the unfunded actuarial accrued liability computed under the41.12entry age actuarial cost method and disclosed under the annual41.13actuarial valuations prepared by the commission-retained actuary41.14under section 356.215, an additional employer contribution shall41.15be made in the amount of 3.64 percent of the salary of each41.16member.If the total financing requirements as determined under 41.17 the provisions of section 356.215 are not covered by the 41.18 employer and employee contributions specified in subdivisions 2 41.19 and 3, an additional employer contribution shall be made equal 41.20 to the difference between total financing requirements and the 41.21 sum of the subdivision 2 and subdivision 3 contributions, but 41.22 not in an amount greater than 2.45 percent of the salary of each 41.23 covered member. The board shall annually adjust the amount of 41.24 the required additional employer contribution. If the 41.25 adjustment is an increase over the rate for the preceding year, 41.26 the adjustment cannot exceed one-fourth of one percent per year. 41.27 This subdivision is repealed effective July 1, 2021. 41.28 This contribution must be made in the manner provided in 41.29 section 354.52, subdivision 4. 41.30 By January 1 of each year, the board of directors shall 41.31 report to the legislative commission on pensions and retirement, 41.32 the chair of the committee on appropriations of the house of 41.33 representatives, and the chair of the committee on finance of 41.34 the senate on the amount raised by the additional employer 41.35 contribution rate in effect and whether that amount is less 41.36 than, the same as, or more than the required amortization 42.1 contribution determined under section 356.215. 42.2 Sec. 53. Minnesota Statutes 1995 Supplement, section 42.3 354.44, subdivision 6, is amended to read: 42.4 Subd. 6. [COMPUTATION OF FORMULA PROGRAM RETIREMENT 42.5 ANNUITY.] (1) The formula retirement annuity hereunder shall be 42.6 computed in accordance with the applicable provisions of the 42.7 formulas stated in clause (2) or (4) on the basis of each 42.8 member's average salary for the period of the member's formula 42.9 service credit. 42.10 For all years of formula service credit, "average salary," 42.11 for the purpose of determining the member's retirement annuity, 42.12 means the average salary upon which contributions were made and 42.13 upon which payments were made to increase the salary limitation 42.14 provided in Minnesota Statutes 1971, section 354.511, for the 42.15 highest five successive years of formula service credit 42.16 provided, however, that such "average salary" shall not include 42.17 any more than the equivalent of 60 monthly salary payments. 42.18 Average salary must be based upon all years of formula service 42.19 credit if this service credit is less than five years. 42.20 (2) This clause, in conjunction with clause (3), applies to 42.21 a person who first became a member of the association or a 42.22 member of a pension fund listed in section 356.30, subdivision 42.23 3, before July 1, 1989, unless clause (4), in conjunction with 42.24 clause (5), produces a higher annuity amount, in which case 42.25 clause (4) applies. The average salary as defined in clause 42.26 (1), multiplied by the following percentages per year of formula 42.27 service credit shall determine the amount of the annuity to 42.28 which the member qualifying therefor is entitled: 42.29 Coordinated Member Basic Member 42.30 Each year of service1.13 percent2.13 percent42.31 the amount the amount 42.32 specified in specified in 42.33 section 356.19, section 356.19, 42.34 subdivision 1 subdivision 3 42.35 during first ten per year per year 42.36 Each year of service1.63 percent2.63 percent43.1 the amount the amount 43.2 specified in specified in 43.3 section 356.19, section 356.19, 43.4 subdivision 2 subdivision 4 43.5 thereafter per year per year 43.6 (3)(i) This clause applies only to a person who first 43.7 became a member of the association or a member of a pension fund 43.8 listed in section 356.30, subdivision 3, before July 1, 1989, 43.9 and whose annuity is higher when calculated under clause (2), in 43.10 conjunction with this clause than when calculated under clause 43.11 (4), in conjunction with clause (5). 43.12 (ii) Where any member retires prior to normal retirement 43.13 age under a formula annuity, the member shall be paid a 43.14 retirement annuity in an amount equal to the normal annuity 43.15 provided in clause (2) reduced by one-quarter of one percent for 43.16 each month that the member is under normal retirement age at the 43.17 time of retirement except that for any member who has 30 or more 43.18 years of allowable service credit, the reduction shall be 43.19 applied only for each month that the member is under age 62. 43.20 (iii) Any member whose attained age plus credited allowable 43.21 service totals 90 years is entitled, upon application, to a 43.22 retirement annuity in an amount equal to the normal annuity 43.23 provided in clause (2), without any reduction by reason of early 43.24 retirement. 43.25 (4) This clause applies to a member who has become at least 43.26 55 years old and first became a member of the association after 43.27 June 30, 1989, and to any other member who has become at least 43.28 55 years old and whose annuity amount when calculated under this 43.29 clause and in conjunction with clause (5), is higher than it is 43.30 when calculated under clause (2), in conjunction with clause (3). 43.31 The average salary, as defined in clause (1) multiplied by2.6343.32percentthe amount specified by section 356.19, subdivision 4, 43.33 for each year of service for a basic member and by1.63 percent43.34 the amount specified in section 356.19, subdivision 2, for each 43.35 year of service for a coordinated member shall determine the 43.36 amount of the retirement annuity to which the member is entitled. 44.1 (5) This clause applies to a person who has become at least 44.2 55 years old and first becomes a member of the association after 44.3 June 30, 1989, and to any other member who has become at least 44.4 55 years old and whose annuity is higher when calculated under 44.5 clause (4) in conjunction with this clause than when calculated 44.6 under clause (2), in conjunction with clause (3). An employee 44.7 who retires under the formula annuity before the normal 44.8 retirement age shall be paid the normal annuity provided in 44.9 clause (4) reduced so that the reduced annuity is the actuarial 44.10 equivalent of the annuity that would be payable to the employee 44.11 if the employee deferred receipt of the annuity and the annuity 44.12 amount were augmented at an annual rate of three percent 44.13 compounded annually from the day the annuity begins to accrue 44.14 until the normal retirement age. 44.15 Sec. 54. Minnesota Statutes 1994, section 354.53, 44.16 subdivision 1, is amended to read: 44.17 Subdivision 1. [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 44.18 employee given a leave of absence to enter military service and 44.19 who returns to teaching service upon discharge from military 44.20 service as provided in section 192.262, shall obtain credit for 44.21 the period of military service but shall not receive credit for 44.22 any voluntary extension of military service at the instance of 44.23 the member beyond the initial period of enlistment, induction or 44.24 call to active duty. The member shall obtain credit by paying 44.25 into the fund an employee contribution based upon the salary of 44.26 the member at the date of return from military service. The 44.27 amount of this contribution shall beas follows:44.28 44.29PeriodBasic MemberCoordinated Member44.30July 1, 19738 percent4 percent44.31thru44.32June 30, 197944.33July 1, 197944.34and8.5 percent4.5 percent44.35thereafter44.36The contributions specified in this subdivision shall be45.1 amounts based on contribution rates in effect at the time 45.2 military service was performed multiplied by the number of years 45.3 of military service together with interest thereon at an annual 45.4 rate of 8.5 percent compounded annually from the time the 45.5 military service was rendered to the first date of payment. The 45.6 employer contribution and additional contribution provided in 45.7 section 354.42 shall be paid by the unit in the manner provided 45.8 in section 354.43. 45.9 Sec. 55. Minnesota Statutes 1994, section 354.55, 45.10 subdivision 11, is amended to read: 45.11 Subd. 11. [DEFERRED ANNUITY; AUGMENTATION.] Any person 45.12 covered under section 354.44, subdivision 6, who ceases to 45.13 render teaching service, may leave the person's accumulated 45.14 deductions in the fund for the purpose of receiving a deferred 45.15 annuity at retirement. Eligibility for an annuity under this 45.16 subdivision shall be governed pursuant to section 354.44, 45.17 subdivision 1, or 354.60. 45.18 The amount of the deferred retirement annuity shall be 45.19 determined by section 354.44, subdivision 6, and augmented as 45.20 provided in this subdivision. The required reserves related to 45.21 that portion of the annuity which had accrued when the member 45.22 ceased to render teaching service shall be augmented by interest 45.23 compounded annually from the first day of the month following 45.24 the month during which the member ceased to render teaching 45.25 service to the effective date of retirement. There shall be no 45.26 augmentation if this period is less than three months or if this 45.27 period commences prior to July 1, 1971. The rates of interest 45.28 used for this purpose shall be five percent compounded annually 45.29 commencing July 1, 1971, until January 1, 1981, and three 45.30 percent compounded annually thereafter until January 1 of the 45.31 year following the year in which the former member attains age 45.32 55. From that date to the effective date of retirement, the 45.33 rate is five percent compounded annually. If a person has more 45.34 than one period of uninterrupted service, a separate average 45.35 salary determined under section 354.44, subdivision 6, must be 45.36 used for each period and the required reserves related to each 46.1 period shall be augmented by interest pursuant to this 46.2 subdivision. The sum of the augmented required reserves so 46.3 determined shall be the basis for purchasing the deferred 46.4 annuity. If a person repays a refund, the service restored by 46.5 the repayment must be considered as continuous with the next 46.6 period of service for which the person has credit with this 46.7 fund. If a person does not render teaching service in any one 46.8 fiscal year or more consecutive fiscal years and then resumes 46.9 teaching service, the formula percentages used from the date of 46.10 the resumption of teaching service shall be those applicable to 46.11 new members. The mortality table and interest assumption used 46.12 to compute the annuity shall be the applicable mortality table 46.13 established by the board under section 354.07, subdivision 1, 46.14 and the interest rate assumption under section 356.215 in effect 46.15 when the member retires. A period of uninterrupted service for 46.16 the purposes of this subdivision means a period of covered 46.17 teaching service during which the member has not been separated 46.18 from active service for more than one fiscal year. 46.19 In no case shall the annuity payable under this subdivision 46.20 be less than the amount of annuity payable pursuant to section 46.21 354.44, subdivision 6. 46.22 The requirements and provisions for retirement before 46.23 normal retirement age contained in section 354.44, subdivision 46.24 6, clause (3) or (5), shall also apply to an employee fulfilling 46.25 the requirements with a combination of service as provided in 46.26 section 354.60. 46.27 The augmentation provided by this subdivision applies to 46.28 the benefit provided in section 354.46, subdivision 2. 46.29 The augmentation provided by this subdivision shall not 46.30 apply to any period in which a person is on an approved leave of 46.31 absence from an employer unit covered by the provisions of this 46.32 chapter. 46.33 The survivor or retirement benefit to a former member or 46.34 survivor of a former member who terminated service before July 46.35 1, 1996, is determined under the laws in effect on the date of 46.36 termination and are increased to reflect the change in the 47.1 postretirement fund interest assumption from five percent to six 47.2 percent. The benefit payable under the six percent 47.3 postretirement interest assumption must be actuarially 47.4 equivalent to the benefit payable under the five percent 47.5 interest assumption and must be based on tables adopted by the 47.6 board of trustees as recommended by an approved actuary, and 47.7 approved by the actuary retained by the legislative commission 47.8 on pensions and retirement. 47.9 Sec. 56. Minnesota Statutes 1995 Supplement, section 47.10 354A.12, subdivision 1, is amended to read: 47.11 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] The contribution 47.12 required to be paid by each member of a teachers retirement fund 47.13 association shall not be less than the percentage of total 47.14 salary specified below for the applicable association and 47.15 program: 47.16 Association and Program Percentage of 47.17 Total Salary 47.18 Duluth teachers retirement 47.19 association 47.20 old law and new law 47.21 coordinated programs5.5... percent 47.22 Minneapolis teachers retirement 47.23 association 47.24 basic program 8.5 percent 47.25 coordinated program4.5... percent 47.26 St. Paul teachers retirement 47.27 association 47.28 basic program 8 percent 47.29 coordinated program4.5... percent 47.30 Contributions shall be made by deduction from salary and 47.31 must be remitted directly to the respective teachers retirement 47.32 fund association at least once each month. 47.33 Sec. 57. Minnesota Statutes 1994, section 354A.12, 47.34 subdivision 2a, is amended to read: 47.35 Subd. 2a. [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 47.36 RATES.] (a) The employing units shall make the following 48.1 employer contributions to teachers retirement fund associations: 48.2 (1) for any coordinated member of a teachers retirement 48.3 fund association in a city of the first class, the employing 48.4 unit shall pay the employer social security taxes in accordance 48.5 with section 355.46, subdivision 3, clause (b); 48.6 (2) for any coordinated member of one of the following 48.7 teachers retirement fund associations in a city of the first 48.8 class, the employing unit shall make a regular employer 48.9 contribution to the respective retirement fund association in an 48.10 amount equal to the designated percentage of the salary of the 48.11 coordinated member as provided below: 48.12 Duluth teachers retirement 48.13 fund association4.50.... percent 48.14 Minneapolis teachers retirement 48.15 fund association4.50.... percent 48.16 St. Paul teachers retirement 48.17 fund association4.50.... percent; 48.18 (3) for any basic member of one of the following teachers 48.19 retirement fund associations in a city of the first class, the 48.20 employing unit shall make a regular employer contribution to the 48.21 respective retirement fund in an amount equal to the designated 48.22 percentage of the salary of the basic member as provided below: 48.23 Minneapolis teachers retirement 48.24 fund association8.50.... percent 48.25 St. Paul teachers retirement 48.26 fund association8.00.... percent 48.27 (4) for a basic member of a teachers retirement fund 48.28 association in a city of the first class, the employing unit 48.29 shall make an additional employer contribution to the respective 48.30 fund in an amount equal to the designated percentage of the 48.31 salary of the basic member, as provided below: 48.32 Minneapolis teachers retirement 48.33 fund association 48.34 July 1, 1993 - June 30, 1994 4.85 percent 48.35 July 1, 1994, and thereafter 3.64 percent 48.36 St. Paul teachers retirement 49.1 fund association 49.2 July 1, 1993 - June 30, 1995 4.63 percent 49.3 July 1, 1995, and thereafter 3.64 percent 49.4 (5) for a coordinated member of a teachers retirement fund 49.5 association in a city of the first class, the employing unit 49.6 shall make an additional employer contribution to the respective 49.7 fund in an amount equal to the applicable percentage of the 49.8 coordinated member's salary, as provided below: 49.9 Duluth teachers retirement 49.10 fund association1.293.50 percent 49.11 Minneapolis teachers retirement 49.12 fund association 49.13 July 1, 1993 - June 30, 1994 0.50 percent 49.14 July 1, 1994, and thereafter 3.64 percent 49.15 St. Paul teachers retirement 49.16 fund association 49.17 July 1, 1993 - June 30, 1994 0.50 percent 49.18 July 1, 1994 - June 30, 1995 1.50 percent 49.19 July 1, 1995, and thereafter 3.64 percent 49.20 (b) The regular and additional employer contributions must 49.21 be remitted directly to the respective teachers retirement fund 49.22 association at least once each month. Delinquent amounts are 49.23 payable with interest under the procedure in subdivision 1a. 49.24 (c) Payments of regular and additional employer 49.25 contributions for school district or technical college employees 49.26 who are paid from normal operating funds must be made from the 49.27 appropriate fund of the district or technical college. 49.28 Sec. 58. Minnesota Statutes 1994, section 354A.12, 49.29 subdivision 3a, is amended to read: 49.30 Subd. 3a. [SPECIAL DIRECT STATE AID TO ST. PAUL TEACHERS 49.31 RETIREMENT FUND ASSOCIATION.] (a) The state shall pay to the St. 49.32 Paul teachers retirement fund association $500,000 in fiscal 49.33 year 1994. In fiscal year 1996, the state shall pay the St. 49.34 Paul teachers retirement fund association $........ In fiscal 49.35 year 1997, the state shall pay $........ In each subsequent 49.36 fiscal year, the payment to the St. Paul teachers retirement 50.1 fund association must be increased at the same rate as the 50.2 increase in the general education revenue formula allowance 50.3 under section 124A.22, subdivision 2, in subsequent fiscal years. 50.4 (b) The direct state aid is payable October 1 annually. 50.5 The commissioner of finance shall pay the direct state aid. The 50.6 amount required under this subdivision is appropriated annually 50.7 to the commissioner of finance. 50.8 (c) In addition to the amount in paragraph (a), the 50.9 commissioner of finance shall annually pay to the St. Paul 50.10 teachers retirement fund association 30 percent of the amount of 50.11 the decrease from the fiscal year 1996 appropriation 50.12 requirements for state aid to the Minneapolis employees 50.13 retirement fund, and 30 percent of the amount of the decrease 50.14 from the fiscal year 1996 appropriation requirements, before 50.15 reductions due to investment contingent postretirement 50.16 adjustments, for state police/fire amortization aid and 50.17 supplemental amortization aid. 50.18 Sec. 59. Minnesota Statutes 1995 Supplement, section 50.19 354A.12, subdivision 3b, is amended to read: 50.20 Subd. 3b. [SPECIAL DIRECT STATE MATCHING AID TO THE 50.21 MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special 50.22 school district No. 1 may make an additional employer 50.23 contribution to the Minneapolis teachers retirement fund 50.24 association. The city of Minneapolis may make a contribution to 50.25 the Minneapolis teachers retirement fund association. This 50.26 contribution may be made by a levy of the board of estimate and 50.27 taxation of the city of Minneapolis, and the levy, if made, is 50.28 classified as that of a special taxing district for purposes of 50.29 sections 275.065 and 276.04, and for all other property tax 50.30 purposes. 50.31 (b) For every $1,000 contributed in equal proportion by 50.32 special school district No. 1 and by the city of Minneapolis to 50.33 the Minneapolis teachers retirement fund association under 50.34 paragraph (a), the state shall pay to the Minneapolis teachers 50.35 retirement fund association $1,000, but not to exceed $2,500,000 50.36 in total in fiscal year 1994. The total amount available for 51.1 each subsequent fiscal year must be increased at the same rate 51.2 as the increase in the general education revenue formula 51.3 allowance under section 124A.22, subdivision 2, in subsequent 51.4 fiscal years. The superintendent of special school district No. 51.5 1, the mayor of the city of Minneapolis, and the executive 51.6 director of the Minneapolis teachers retirement fund association 51.7 shall jointly certify to the commissioner of finance the total 51.8 amount that has been contributed by special school district No. 51.9 1 and by the city of Minneapolis to the Minneapolis teachers 51.10 retirement fund association. Any certification to the 51.11 commissioner of children, families, and learning must be made 51.12 quarterly. If the total certifications for a fiscal year exceed 51.13 the maximum annual direct state matching aid amount in any 51.14 quarter, the amount of direct state matching aid payable to the 51.15 Minneapolis teachers retirement fund association must be limited 51.16 to the balance of the maximum annual direct state matching aid 51.17 amount available. The amount required under this paragraph, 51.18 subject to the maximum direct state matching aid amount, is 51.19 appropriated annually to the commissioner of finance. 51.20 (c) The commissioner of finance may prescribe the form of 51.21 the certifications required under paragraph (b). 51.22 (d) In addition to the amount determined according to 51.23 paragraph (b), the state shall annually pay to the Minneapolis 51.24 teachers retirement fund $....... starting in fiscal year 1997. 51.25 (e) In addition to the amount in paragraphs (b) and (d), 51.26 the commissioner of finance shall annually pay to the 51.27 Minneapolis teachers retirement fund association 70 percent of 51.28 the amount of the decrease from the fiscal year 1996 51.29 appropriation requirements for state aid to the Minneapolis 51.30 employees retirement fund, and 70 percent of the amount of the 51.31 decrease from the fiscal year 1996 appropriation requirements, 51.32 before reductions due to investment contingent postretirement 51.33 adjustments, for state police/fire amortization aid and 51.34 supplemental amortization aid. 51.35 Sec. 60. Minnesota Statutes 1994, section 354A.12, 51.36 subdivision 3c, is amended to read: 52.1 Subd. 3c. [TERMINATION OF DIRECT STATE MATCHING AID.] (a) 52.2 The direct state aid under subdivision 3a to the St. Paul 52.3 teachers retirement association and the direct state aid under 52.4 subdivision 3b to the Minneapolis teachers retirement fund 52.5 association terminates for the respective fund at the end of the 52.6 fiscal year in which the unfunded accrued liabilityfunding52.7ratiofor that fund, as determined in the most recent actuarial 52.8 report for that fund by the actuary retained by the legislative 52.9 commission on pensions and retirement,equals or exceeds the52.10accrued liability funding ratio for the teachers retirement52.11association, as determined in the most recent actuarial report52.12for the teachers retirement association by the actuary retained52.13by the legislative commission on pensions and retirementhas 52.14 been eliminated, but in no case shall be paid after June 30, 52.15 2020. 52.16 (b) If the state aid is terminated for the St. Paul 52.17 teachers retirement fund association or the Minneapolis teachers 52.18 retirement fund association under paragraph (a), it may not 52.19 again be received by that fund. 52.20 Sec. 61. Minnesota Statutes 1995 Supplement, section 52.21 354A.27, subdivision 5, is amended to read: 52.22 Subd. 5. [CALCULATION OF POSTRETIREMENT ADJUSTMENTS.] (a) 52.23 Annually, after June 30, the board of trustees determines the 52.24 amount of any postretirement adjustment using the procedures in 52.25 this subdivision and subdivision 6. 52.26 (b) Each person who has been receiving an annuity or 52.27 benefit under the articles of incorporation, bylaws, or under 52.28 this section for at least 12 months as of the date of the 52.29 postretirement adjustment shall be eligible for a postretirement 52.30 adjustment. The postretirement adjustment shall be payable each 52.31 January 1. The postretirement adjustment shall be equal totwo52.32 2.5 percent of the annuity or benefit to which the person is 52.33 entitled one month prior to the payment of the postretirement 52.34 adjustment. 52.35 Sec. 62. Minnesota Statutes 1995 Supplement, section 52.36 354A.31, subdivision 4, is amended to read: 53.1 Subd. 4. [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 53.2 ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 53.3 applies to the coordinated programs of the Minneapolis teachers 53.4 retirement fund association and the St. Paul teachers retirement 53.5 fund association. 53.6 (b) The normal coordinated retirement annuity shall be an 53.7 amount equal to a retiring coordinated member's average salary 53.8 multiplied by the retirement annuity formula percentage. 53.9 Average salary for purposes of this section shall mean an amount 53.10 equal to the average salary upon which contributions were made 53.11 for the highest five successive years of service credit, but 53.12 which shall not in any event include any more than the 53.13 equivalent of 60 monthly salary payments. Average salary must 53.14 be based upon all years of service credit if this service credit 53.15 is less than five years. 53.16 (c) This paragraph, in conjunction with subdivision 6, 53.17 applies to a person who first became a member or a member in a 53.18 pension fund listed in section 356.30, subdivision 3, before 53.19 July 1, 1989, unless paragraph (d), in conjunction with 53.20 subdivision 7, produces a higher annuity amount, in which case 53.21 paragraph (d) will apply. The retirement annuity formula 53.22 percentage for purposes of this paragraph isone1.2 percent per 53.23 year for each year of coordinated service for the first ten 53.24 years and1.51.7 percent for each year of coordinated service 53.25 thereafter. 53.26 (d) This paragraph applies to a person who has become at 53.27 least 55 years old and who first becomes a member after June 30, 53.28 1989, and to any other member who has become at least 55 years 53.29 old and whose annuity amount, when calculated under this 53.30 paragraph and in conjunction with subdivision 7 is higher than 53.31 it is when calculated under paragraph (c), in conjunction with 53.32 the provisions of subdivision 6. The retirement annuity formula 53.33 percentage for purposes of this paragraph is1.51.7 percent for 53.34 each year of coordinated service. 53.35 Sec. 63. Minnesota Statutes 1995 Supplement, section 53.36 354A.31, subdivision 4a, is amended to read: 54.1 Subd. 4a. [COMPUTATION OF THE NORMAL COORDINATED 54.2 RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 54.3 to the new law coordinated program of the Duluth teachers 54.4 retirement fund association. 54.5 (b) The normal coordinated retirement annuity is an amount 54.6 equal to a retiring coordinated member's average salary 54.7 multiplied by the retirement annuity formula percentage. 54.8 Average salary for purposes of this section means an amount 54.9 equal to the average salary upon which contributions were made 54.10 for the highest five successive years of service credit, but may 54.11 not in any event include any more than the equivalent of 60 54.12 monthly salary payments. Average salary must be based upon all 54.13 years of service credit if this service credit is less than five 54.14 years. 54.15 (c) This paragraph, in conjunction with subdivision 6, 54.16 applies to a person who first became a member or a member in a 54.17 pension fund listed in section 356.30, subdivision 3, before 54.18 July 1, 1989, unless paragraph (d), in conjunction with 54.19 subdivision 7, produces a higher annuity amount, in which case 54.20 paragraph (d) applies. The retirement annuity formula 54.21 percentage for purposes of this paragraph is1.131.2 percent 54.22 per year for each year of coordinated service for the first ten 54.23 years and1.631.7 percent for each subsequent year of 54.24 coordinated service. 54.25 (d) This paragraph applies to a person who is at least 55 54.26 years old and who first becomes a member after June 30, 1989, 54.27 and to any other member who is at least 55 years old and whose 54.28 annuity amount, when calculated under this paragraph and in 54.29 conjunction with subdivision 7, is higher than it is when 54.30 calculated under paragraph (c) in conjunction with subdivision 54.31 6. The retirement annuity formula percentage for purposes of 54.32 this paragraph is1.631.7 percent for each year of coordinated 54.33 service. 54.34 Sec. 64. [356.19] [RETIREMENT BENEFIT ACCRUAL RATES.] 54.35 The benefit accrual rates contained in this section shall 54.36 be used to determine benefits in those sections of Minnesota 55.1 Statutes in which they are referenced. 55.2 Subdivision 1. [COORDINATED PLAN MEMBERS.] 1.2 percent. 55.3 Subd. 2. [COORDINATED PLAN MEMBERS.] 1.7 percent. 55.4 Subd. 3. [BASIC PLAN MEMBERS.] 2.2 percent. 55.5 Subd. 4. [BASIC PLAN MEMBERS.] 2.7 percent. 55.6 Subd. 5. [CORRECTIONAL PLAN MEMBERS.] 2.3 percent. 55.7 Subd. 6. [STATE TROOPERS PLAN MEMBERS AND POLICE/FIRE PLAN 55.8 MEMBERS.] 2.9 percent. 55.9 Subd. 7. [JUDGES RETIREMENT PLAN.] 3.2 percent. 55.10 Sec. 65. Minnesota Statutes 1994, section 356.215, 55.11 subdivision 1, is amended to read: 55.12 Subdivision 1. [DEFINITIONS.] For the purposes of sections 55.13 3.85 and 356.20 to 356.23, each of the following terms have the 55.14 meaning given: 55.15 (1) "Actuarial valuation" means a set of calculations 55.16 prepared by the actuary retained by the legislative commission 55.17 on pensions and retirement if so required under section 3.85, or 55.18 otherwise, by an approved actuary, to determine the normal cost 55.19 and the accrued actuarial liabilities of a benefit plan, 55.20 according to the entry age actuarial cost method and based upon 55.21 stated assumptions including, but not limited to rates of 55.22 interest, mortality, salary increase, disability, withdrawal, 55.23 and retirement and to determine the payment necessary to 55.24 amortize over a stated period any unfunded accrued actuarial 55.25 liability disclosed as a result of the actuarial valuation of 55.26 the benefit plan. 55.27 (2) "Approved actuary" means a person who is regularly 55.28 engaged in the business of providing actuarial services and who 55.29 has at least 15 years of service to major public employee 55.30 pension or retirement funds or who is a fellow in the society of 55.31 actuaries. 55.32 (3) "Entry age actuarial cost method" means an actuarial 55.33 cost method under which the actuarial present value of the 55.34 projected benefits of each individual currently covered by the 55.35 benefit plan and included in the actuarial valuation is 55.36 allocated on a level basis over the service of the individual if 56.1 the benefit plan is governed by section 69.773 or over the 56.2 earnings of the individual if the benefit plan is governed by 56.3 any other law between the entry age and the assumed exit age, 56.4 with the portion of this actuarial present value which is 56.5 allocated to the valuation year to be the normal cost and the 56.6 portion of this actuarial present value not provided for at the 56.7 valuation date by the actuarial present value of future normal 56.8 costs to be the actuarial accrued liability, with aggregation in 56.9 the calculation process to be the sum of the calculated result 56.10 for each covered individual and with recognition given to any 56.11 different benefit formulas which may apply to various periods of 56.12 service. 56.13 (4) "Experience study" means a report providing experience 56.14 data and an actuarial analysis of the adequacy of the actuarial 56.15 assumptions on which actuarial valuations are based. 56.16 (5) "Current assets" means the value of all assets at cost, 56.17 including realized capital gains or losses, plus one-third of 56.18 any unrealized capital gains or losses except for funds governed 56.19 by chapter 354A, in which case "current assets" means the value 56.20 of all assets at cost, including realized capital gains and 56.21 losses, plus or minus, whichever applies, the average value of 56.22 total unrealized capital gains or losses for the most recent 56.23 three-year period ending with the end of the plan year 56.24 immediately preceding the actuarial valuation report 56.25 transmission date. 56.26 (6) "Unfunded actuarial accrued liability" means the total 56.27 current and expected future benefit obligations, reduced by the 56.28 sum of current assets and the present value of future normal 56.29 costs. 56.30 (7) "Pension benefit obligation" means the actuarial 56.31 present value of credited projected benefits, determined as the 56.32 actuarial present value of benefits estimated to be payable in 56.33 the future as a result of employee service attributing an equal 56.34 benefit amount, including the effect of projected salary 56.35 increases and any step rate benefit accrual rate differences, to 56.36 each year of credited and expected future employee service. 57.1 Sec. 66. Minnesota Statutes 1994, section 356.215, 57.2 subdivision 4, is amended to read: 57.3 Subd. 4. [ACTUARIAL VALUATION; CONTENTS.] The actuarial 57.4 valuation must be made in conformity with the requirements of 57.5 the definition contained in subdivision 1 and the most recent 57.6 standards for actuarial work adopted by the legislative 57.7 commission on pensions and retirement. The actuarial valuation 57.8 must measure all aspects of the benefit plan of the fund in 57.9 accordance with changes in benefit plans, if any, and salaries 57.10 reasonably anticipated to be in force during the ensuing fiscal 57.11 year. The actuarial valuation must be prepared in accordance 57.12 with the entry age actuarial cost method. 57.13 The actuarial valuation required under this section must 57.14 include the information required in subdivisions 4a to4k4l. 57.15 Sec. 67. Minnesota Statutes 1995 Supplement, section 57.16 356.215, subdivision 4d, is amended to read: 57.17 Subd. 4d. [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 57.18 governed by chapters 352B, 353C, and by sections 352.90 through 57.19 352.951 and 353.63 through 353.68, the actuarial valuation must 57.20 use a preretirement interest assumption of 8.5 percent, a 57.21 postretirement interest assumption offivesix percent, and a 57.22 future salary increase assumption of 6.5 percent. 57.23 (b) For funds governed by chapter 354A, the actuarial 57.24 valuation must use preretirement and postretirement assumptions 57.25 of 8.5 percent and a future salary increase assumption of 6.5 57.26 percent, but the actuarial valuation must reflect the payment of 57.27 postretirement adjustments to retirees, based on the methods 57.28 specified in the bylaws of the fund as approved by the 57.29 legislature. For a fund governed by chapter 422A, the actuarial 57.30 valuation shall use a preretirement interest assumption of six 57.31 percent, a postretirement interest assumption of five percent, 57.32 and an assumption that in each future year the salary on which a 57.33 retirement or other benefit is based is 1.04 multiplied by the 57.34 salary for the preceding year. 57.35 (c) For all other funds not specified in paragraph (a), 57.36 (b), (d), or (e), the actuarial valuation must use a 58.1 preretirement interest assumption of five percent, a 58.2 postretirement interest assumption of five percent, and a future 58.3 salary increase assumption of 3.5 percent. 58.4 (d) For funds governed by chapters 3A, 352C, and 490, the 58.5 actuarial valuation must use a preretirement interest assumption 58.6 of 8.5 percent, a postretirement interest assumption offivesix 58.7 percent, and a future salary increase assumption of 6.5 percent 58.8 in each future year in which the salary amount payable is not 58.9 determinable from section 3.099, 15A.081, subdivision 6, or 58.10 15A.083, subdivision 1, whichever applies, or from applicable 58.11 compensation council recommendations under section 15A.082. 58.12 (e) For funds governed by sections 352.01 through 352.86, 58.13 353.01 through 353.46, and chapter 354, the actuarial valuation 58.14 must use a preretirement interest assumption of 8.5, a 58.15 postretirement interest assumption offivesix percent, and a 58.16 graded rate future salary increase assumption as follows: 58.17 General state General public 58.18 employees employees Teachers 58.19 retirement retirement retirement 58.20 age plan plan plan 58.21 16 7.2500% 8.71% 7.25% 58.22 17 7.2500 8.71 7.25 58.23 18 7.2500 8.70 7.25 58.24 19 7.2500 8.70 7.25 58.25 20 7.2500 7.70 7.25 58.26 21 7.1454 7.70 7.25 58.27 22 7.1094 7.70 7.25 58.28 23 7.0725 7.70 7.20 58.29 24 7.0363 7.70 7.15 58.30 25 7.0000 7.60 7.10 58.31 26 7.0000 7.51 7.05 58.32 27 7.0000 7.39 7.00 58.33 28 7.0000 7.30 7.00 58.34 29 7.0000 7.20 7.00 58.35 30 7.0000 7.20 7.00 58.36 31 7.0000 7.10 7.00 59.1 32 7.0000 7.10 7.00 59.2 33 7.0000 7.00 7.00 59.3 34 7.0000 7.00 7.00 59.4 35 7.0000 6.90 7.00 59.5 36 6.9019 6.80 7.00 59.6 37 6.8074 6.70 7.00 59.7 38 6.7125 6.60 6.90 59.8 39 6.6054 6.50 6.80 59.9 40 6.5000 6.40 6.70 59.10 41 6.3540 6.30 6.60 59.11 42 6.2087 6.30 6.50 59.12 43 6.0622 6.30 6.35 59.13 44 5.9048 6.20 6.20 59.14 45 5.7500 6.20 6.05 59.15 46 5.6940 6.09 5.90 59.16 47 5.6375 6.00 5.75 59.17 48 5.5822 5.90 5.70 59.18 49 5.5405 5.80 5.65 59.19 50 5.5000 5.70 5.60 59.20 51 5.4384 5.70 5.55 59.21 52 5.3776 5.70 5.50 59.22 53 5.3167 5.70 5.45 59.23 54 5.2826 5.70 5.40 59.24 55 5.2500 5.70 5.35 59.25 56 5.2500 5.70 5.30 59.26 57 5.2500 5.70 5.25 59.27 58 5.2500 5.70 5.25 59.28 59 5.2500 5.70 5.25 59.29 60 5.2500 5.00 5.25 59.30 61 5.2500 5.00 5.25 59.31 62 5.2500 5.00 5.25 59.32 63 5.2500 5.00 5.25 59.33 64 5.2500 5.00 5.25 59.34 65 5.2500 5.00 5.25 59.35 66 5.2500 5.00 5.25 59.36 67 5.2500 5.00 5.25 60.1 68 5.2500 5.00 5.25 60.2 69 5.2500 5.00 5.25 60.3 70 5.2500 5.00 5.25 60.4 Sec. 68. Minnesota Statutes 1994, section 356.215, is 60.5 amended by adding a subdivision to read: 60.6 Subd. 4l. [EVALUATION OF CONTRIBUTION RATES TO FULLY FUND 60.7 PROJECTED PENSION BENEFIT OBLIGATION BY AMORTIZATION TARGET 60.8 DATE.] The actuarial valuation must contain a projection by year 60.9 to the year 2020 of the projected pension benefit obligation 60.10 assuming continuous entry and exit of members from the fund that 60.11 is consistent with findings of experience studies examining 60.12 employee turnover and entry characteristics. Assumptions about 60.13 new entrants to the fund in future years shall be developed in 60.14 consultation with the state demographer and state economist. 60.15 The actuarial valuation shall estimate the level percent of 60.16 payroll contribution required to fully fund the projected 60.17 pension benefit obligation by the amortization target date. 60.18 Sec. 69. Minnesota Statutes 1994, section 356.25, is 60.19 amended to read: 60.20 356.25 [LOCAL GOVERNMENTAL PENSION FUND PROHIBITIONS; 60.21 EXCLUSIONS.] 60.22 Subdivision 1. Notwithstanding any other provision of law 60.23 or charter, no city, county, public agency or instrumentality, 60.24 or other political subdivision shall, after August 1, 1975, 60.25 establish for any of its employees any local pension plan or 60.26 fund financed in whole or in part from public funds, other than 60.27 a volunteer firefighter's relief association established 60.28 pursuant to chapter 424A and governed by sections 69.771 to 60.29 69.776. 60.30 Subd. 2. The provision of early retirement options to 60.31 employees can under some circumstances be beneficial to public 60.32 employers as they downsize, reorganize the delivery of services, 60.33 or change the means of delivering services so that greater 60.34 efficiencies and effectiveness are achieved. The employing 60.35 entity can best weigh the costs and benefits of offering early 60.36 retirement options. Therefore, the employing entity should have 61.1 greater flexibility in offering such options, and should also 61.2 have the responsibility to pay for them. 61.3 Notwithstanding subdivision 1, a city, county, public 61.4 agency or instrumentality, or other political subdivision may 61.5 purchase from a licensed annuity company for an employee who is 61.6 55 years old or older a supplemental defined contribution 61.7 annuity for early retirement if the employee is part of a work 61.8 unit within the entity that is reorganizing services, reducing 61.9 the number of staff on a planned long-term basis, or changing 61.10 the delivery of a service to achieve greater efficiencies or 61.11 effectiveness. The offer by the employer to purchase such a 61.12 supplemental annuity shall not extend beyond one year, and can 61.13 be made only to employees who retire within the year. 61.14 Provision of the supplemental annuity under this 61.15 subdivision shall be annually reported to either the legislative 61.16 auditor or the state auditor, depending on which one has audit 61.17 responsibilities for the entity. If the auditor finds that the 61.18 entity has expended public funds for the purchase of the 61.19 supplemental annuity but has not reorganized services, reduced 61.20 the number of staff on a long-term basis, or changed the 61.21 delivery of services to achieve greater efficiency or 61.22 effectiveness, the auditor shall issue a finding that the 61.23 provision has been misused. An entity for which such a finding 61.24 has been issued may not offer annuities under this subdivision 61.25 for a period of five years after the finding is issued. 61.26 Sec. 70. Minnesota Statutes 1995 Supplement, section 61.27 356.30, subdivision 1, is amended to read: 61.28 Subdivision 1. [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 61.29 Notwithstanding any provisions to the contrary of the laws 61.30 governing the funds enumerated in subdivision 3, a person who 61.31 has met the qualifications of clause (2) may elect to receive a 61.32 retirement annuity from each fund in which the person has at 61.33 least six months allowable service, based on the allowable 61.34 service in each fund, subject to the provisions of clause (3). 61.35 (2) A person may receive upon retirement a retirement 61.36 annuity from each fund in which the person has at least six 62.1 months allowable service, and augmentation of a deferred annuity 62.2 calculated under the laws governing each public pension plan or 62.3 fund named in subdivision 3, from the date the person terminated 62.4 all public service if: 62.5 (a) the person has allowable service totaling an amount 62.6 that allows the person to receive an annuity in any two or more 62.7 of the enumerated funds; and 62.8 (b) the person has not begun to receive an annuity from any 62.9 enumerated fund or the person has made application for benefits 62.10 from all funds and the effective dates of the retirement annuity 62.11 with each fund under which the person chooses to receive an 62.12 annuity are within a one-year period. 62.13 (3) The retirement annuity from each fund must be based 62.14 upon the allowable service in each fund, except that: 62.15 (a) The laws governing annuities must be the law in effect 62.16 on the date of termination from the last period of public 62.17 service under a covered fund with which the person earned a 62.18 minimum of one-half year of allowable service credit during that 62.19 employment. 62.20 (b) The "average salary" on which the annuity from each 62.21 covered fund in which the employee has credit in a formula plan 62.22 shall be based on the employee's highest five successive years 62.23 of covered salary during the entire service in covered funds. 62.24 (c) The formula percentages to be used by each fund must be 62.25 those percentages prescribed by each fund's formula as continued 62.26 for the respective years of allowable service from one fund to 62.27 the next, recognizing all previous allowable service with the 62.28 other covered funds. 62.29 (d) Allowable service in all the funds must be combined in 62.30 determining eligibility for and the application of each fund's 62.31 provisions in respect to actuarial reduction in the annuity 62.32 amount for retirement prior to normal retirement. 62.33 (e) The annuity amount payable for any allowable service 62.34 under a nonformula plan of a covered fund must not be affected 62.35 but such service and covered salary must be used in the above 62.36 calculation. 63.1 (f) This section shall not apply to any person whose final 63.2 termination from the last public service under a covered fund is 63.3 prior to May 1, 1975. 63.4 (g) For the purpose of computing annuities under this 63.5 section the formula percentages used by any covered fund, except 63.6the basic program of the teachers retirement association,the 63.7 public employees police and fire fund, and the state patrol 63.8 retirement fund, must not exceed2-1/2 percentthe amount 63.9 specified in section 356.19, subdivision 4, per year of service 63.10 for any year of service or fraction thereof. The formula 63.11 percentage used by the public employees police and fire fund and 63.12 the state patrol retirement fund must not exceed2.6563.13percentthe amount specified in section 356.19, subdivision 6, 63.14 per year of service for any year of service or fraction 63.15 thereof.The formula percentage used by the teachers retirement63.16association must not exceed 2.63 percent per year of basic63.17program service for any year of basic program service or63.18fraction thereof.63.19 (h) Any period of time for which a person has credit in 63.20 more than one of the covered funds must be used only once for 63.21 the purpose of determining total allowable service. 63.22 (i) If the period of duplicated service credit is more than 63.23 six months, or the person has credit for more than six months 63.24 with each of the funds, each fund shall apply its formula to a 63.25 prorated service credit for the period of duplicated service 63.26 based on a fraction of the salary on which deductions were paid 63.27 to that fund for the period divided by the total salary on which 63.28 deductions were paid to all funds for the period. 63.29 (j) If the period of duplicated service credit is less than 63.30 six months, or when added to other service credit with that fund 63.31 is less than six months, the service credit must be ignored and 63.32 a refund of contributions made to the person in accord with that 63.33 fund's refund provisions. 63.34 Sec. 71. Minnesota Statutes 1994, section 356.88, is 63.35 amended by adding a subdivision to read: 63.36 Subd. 3. [FUTURE ACCRUAL RATE CHANGES.] Future changes in 64.1 Minnesota Statutes increasing the benefit accrual rates beyond 64.2 those effect on July 1, 1996, used to calculate retirement 64.3 benefits shall only apply to service credited after the 64.4 effective date of future accrual rate change. 64.5 Sec. 72. Minnesota Statutes 1994, section 490.124, 64.6 subdivision 1, is amended to read: 64.7 Subdivision 1. [BASIC RETIREMENT ANNUITY.] Except as 64.8 qualified hereinafter from and after mandatory retirement date, 64.9 normal retirement date, early retirement date, or one year from 64.10 the disability retirement date, as the case may be, a retirement 64.11 annuity shall be payable to a retiring judge from the judges' 64.12 retirement fund in an amount equal to: (1)2-1/2 percent ofthe 64.13 amount specified in section 356.19, subdivision 4, times the 64.14 judge's final average compensation multiplied by the number of 64.15 years and fractions of years of allowable service rendered prior 64.16 to July 1, 1980; plus (2)three percent ofthe amount specified 64.17 in section 356.19, subdivision 7, times the judge's final 64.18 average compensation multiplied by the number of years and 64.19 fractions of years of allowable service rendered after June 30, 64.20 1980; provided that the annuity shall not exceed6570 percent 64.21 of the judge's annual salary for the 12 months immediately 64.22 preceding retirement. 64.23 A monthly survivor, disability, and retirement benefit 64.24 payable on June 30, 1996, is permanently increased effective 64.25 July 1, 1996, to reflect the change in the postretirement fund 64.26 interest assumption from five to six percent. The benefit 64.27 payable under the six percent postretirement interest assumption 64.28 must be actuarially equivalent to the benefit payable under the 64.29 five percent interest assumption and must be based on tables 64.30 adopted by the board of trustees as recommended by an approved 64.31 actuary, and approved by the actuary retained by the legislative 64.32 commission on pensions and retirement. The increase must be 64.33 made to disabilitants and survivors who are not participants in 64.34 the postretirement fund, but who are eligible for the same 64.35 increase as postretirement fund participants. 64.36 Sec. 73. [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION 65.1 POSTRETIREMENT ADJUSTMENT.] 65.2 Subdivision 1. [ARTICLES OF INCORPORATION AND BYLAWS.] As 65.3 provided in Minnesota Statutes, section 354A.12, subdivision 4, 65.4 permission is granted for the St. Paul teachers retirement fund 65.5 association to amend its articles of incorporation and bylaws to 65.6 provide postretirement adjustments as provided in subdivisions 2 65.7 to 6. 65.8 Subd. 2. [POSTRETIREMENT ADJUSTMENT MODIFICATION.] Any 65.9 postretirement adjustment described in the articles and bylaws 65.10 of St. Paul teachers retirement fund must be computed and paid 65.11 as described in this section. 65.12 Subd. 3. [CALCULATION OF POSTRETIREMENT ADJUSTMENTS.] (a) 65.13 Annually, after June 30, the board of trustees must determine 65.14 the amount of any postretirement adjustment using the procedures 65.15 in this subdivision and subdivision 4. 65.16 (b) Each eligible person who has been receiving an annuity 65.17 or benefit under the articles of incorporation or the bylaws for 65.18 at least 12 months as of the end of the fiscal year shall 65.19 receive a postretirement adjustment. The postretirement 65.20 adjustment is payable each January 1. The postretirement 65.21 adjustment shall be equal to the lesser of the following 65.22 percentages, applied to the annuity or benefit to which the 65.23 person is entitled before payment of the adjustment: 65.24 (1) the increase in the consumer price index for urban wage 65.25 earners and clerical workers all items index as published by the 65.26 United States Department of Labor Bureau of Labor Statistics for 65.27 the 12 months ending June 30 of the year in which the 65.28 calculation is made; or 65.29 (2) 2.5 percent. 65.30 Subd. 4. [ADDITIONAL INCREASE.] (a) In addition to the 65.31 postretirement increase granted under subdivision 3, an 65.32 additional percentage increase must be computed and paid under 65.33 this subdivision. 65.34 (b) The board of trustees shall determine the number of 65.35 annuitants or eligible benefit recipients who have been 65.36 receiving an annuity or benefit for at least 12 months as of the 66.1 current June 30. These recipients are entitled to receive the 66.2 surplus investment earnings additional postretirement increase. 66.3 (c) Annually, as of June 30, the board shall determine the 66.4 five-year annualized rate of return attributable to the assets 66.5 of the St. Paul teachers retirement fund association under the 66.6 formula or formulas specified in Minnesota Statutes, section 66.7 11A.04, clause (11). 66.8 (d) The board shall determine the amount of excess 66.9 five-year annualized rate of return over the preretirement 66.10 interest assumption specified in section 356.215. 66.11 (e) The additional percentage increase must be determined 66.12 by multiplying the quantity one minus the rate of contribution 66.13 deficiency, as specified in the most recent actuarial report of 66.14 the actuary retained by the legislative commission on pensions 66.15 and retirement, times the rate of return excess as determined in 66.16 paragraph (d). 66.17 (f) The additional increase is payable to all annuitants or 66.18 eligible benefit recipients on the following January 1. 66.19 Subd. 5. [EFFECT ON ANNUITY.] The increases calculated 66.20 under subdivisions 3 and 4 must be included in all annuities or 66.21 benefits paid to the recipient after the increases take effect. 66.22 Subd. 6. [LUMP-SUM POSTRETIREMENT ADJUSTMENT TRANSITION.] 66.23 This subdivision applies to all annuitants and beneficiaries of 66.24 the association who received a lump-sum postretirement 66.25 adjustment before the calculation of the first postretirement 66.26 adjustment under subdivisions 3 to 5. Before the calculation of 66.27 the first postretirement adjustment under subdivisions 3 to 5, 66.28 the annual retirement annuity or benefit of such a person must 66.29 be increased by the lesser of the following amounts: 66.30 (1) the amount of the lump-sum postretirement adjustment 66.31 paid to the person in 1996 before the effective date of this 66.32 section; or 66.33 (2) the percentage increase in the consumer price index for 66.34 urban wage earners and clerical workers all items index 66.35 published by the United States Department of Labor Bureau of 66.36 Labor Statistics, from the date of retirement of the person 67.1 whose service is the basis of the benefit to June 30, 1996, 67.2 applied to the annual annuity or benefit to which the person is 67.3 entitled before calculation of the first postretirement 67.4 adjustment under subdivisions 3 to 5. 67.5 Sec. 74. [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 67.6 INCREASE FORMULAS.] 67.7 In accordance with Minnesota Statutes, section 354A.12, 67.8 subdivision 4, approval is granted for the Duluth teachers 67.9 retirement fund association to amend its articles of 67.10 incorporation or bylaws by increasing the formula percentage 67.11 used in computing annuities for old law coordinated program 67.12 members in the Duluth teachers retirement fund association to 67.13 1.45 percent for each year of credited service. 67.14 Sec. 75. [DULUTH OLD PLAN BYLAWS.] 67.15 In accordance with Minnesota Statutes, section 354A.12, 67.16 subdivision 4, the Duluth teachers retirement fund association 67.17 shall amend its articles of incorporation or bylaws to conform 67.18 to sections .. and ... 67.19 Sec. 76. [APPROPRIATION; DEPARTMENT OF CORRECTIONS.] 67.20 For fiscal year 1997, $300,000 from the general fund is 67.21 added to the base funding for the department of corrections. 67.22 Sec. 77. [APPROPRIATION REDUCTION; MNSCU.] 67.23 For fiscal year 1997, the commissioner of finance shall 67.24 reduce the base appropriation for the Minnesota state colleges 67.25 and universities by an amount equal to .64 percent of the 67.26 salaries of employees covered by either the coordinated or basic 67.27 retirement plans of the statewide teachers retirement 67.28 association. 67.29 Sec. 78. [APPROPRIATION REDUCTION; MISCELLANEOUS.] 67.30 For fiscal year 1997, the commissioner of finance shall 67.31 reduce the base appropriations of state agencies, the University 67.32 of Minnesota, and the Minnesota state colleges and universities, 67.33 by an amount equal to .1 percent of the general fund supported 67.34 salaries of employees who are members of the general plan of the 67.35 Minnesota state retirement system. 67.36 Sec. 79. [REPEALER.] 68.1 Minnesota Statutes 1994, sections 356.70; and 356.88, 68.2 subdivision 2, are repealed. 68.3 Sec. 80. [EFFECTIVE DATES.] 68.4 Section 16 is effective the first full pay period after 68.5 December 31, 1996. Sections 4 and 8 are effective the first 68.6 full pay period after June 30, 1996. Sections 40 and 41 are 68.7 effective for all salary paid July 1, 1996, or later. All other 68.8 sections are effective July 1, 1996.