HF 3375

as introduced - 89th Legislature (2015 - 2016) Posted on 03/23/2016 01:01pm

A bill for an act
relating to retirement; St. Paul Teachers Retirement Fund Association;
implementing a contribution rate stabilizer mechanism; amending Minnesota
Statutes 2014, section 354A.12, subdivisions 1, 2a, by adding subdivisions.

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

Section 1.

Minnesota Statutes 2014, section 354A.12, subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

(a) The contribution required to be paid
by each member of the St. Paul Teachers Retirement Fund Association is the percentage
of total salary specified below for the applicable association and program:

	Program	Percentage of Total Salary
St. Paul Teachers Retirement Fund Association
	basic program after June 30, 2014	9 percent
	basic program after June 30, 2015	9.5 percent
	basic program after June 30, 2016	10 percent
	coordinated program after June 30, 2014	6.5 percent
	coordinated program after June 30, 2015	7 percent
	coordinated program after June 30, 2016	7.5 percent

(b) Contributions must be made by deduction from salary and must be remitted
directly to the St. Paul Teachers Retirement Fund Association at least once each month.

(c) When an employee contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid by the employer with the first
payroll cycle reported.

new text begin (d) If a contribution rate revision is made under subdivisions 11 and 13, the
employee contributions under this subdivision must be adjusted accordingly.
new text end

Sec. 2.

Minnesota Statutes 2014, section 354A.12, subdivision 2a, is amended to read:

Subd. 2a.

Employer regular and additional contributions.

(a) The employing
units shall make the following employer contributions to the teachers retirement fund
association:

(1) for any coordinated member of the St. Paul Teachers Retirement Fund
Association, the employing unit shall make a regular employer contribution to the
retirement fund association in an amount equal to the designated percentage of the salary
of the coordinated member as provided below:

	after June 30, 2014	5.5 percent
	after June 30, 2015	6 percent
	after June 30, 2016	6.25 percent
	after June 30, 2017	6.5 percent

(2) for any basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make a regular employer contribution to the respective retirement
fund in an amount according to the schedule below:

	after June 30, 2014	9 percent of salary
	after June 30, 2015	9.5 percent of salary
	after June 30, 2016	9.75 percent of salary
	after June 30, 2017	10 percent of salary

(3) for a basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make an additional employer contribution to the respective fund in
an amount equal to 3.64 percent of the salary of the basic member;

(4) for a coordinated member of the St. Paul Teachers Retirement Fund Association,
the employing unit shall make an additional employer contribution to the respective fund
in an amount equal to 3.84 percent of the coordinated member's salary.

(b) The regular and additional employer contributions must be remitted directly to
the St. Paul Teachers Retirement Fund Association at least once each month. Delinquent
amounts are payable with interest under the procedure in subdivision 1a.

(c) Payments of regular and additional employer contributions for school district
or technical college employees who are paid from normal operating funds must be made
from the appropriate fund of the district or technical college.

(d) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid by the employer with the first
payroll cycle reported.

new text begin (e) If a contribution rate revision is made under subdivisions 11 and 13, the employer
contributions under this subdivision must be adjusted accordingly.
new text end

Sec. 3.

Minnesota Statutes 2014, section 354A.12, is amended by adding a subdivision
to read:

new text begin Subd. 10. new text end

new text begin Contribution sufficiency/deficiency. new text end

new text begin (a) For purposes of this section, a
contribution sufficiency exists if the total of the employee contributions, the employer
contributions, and any additional employer contributions, if applicable, exceeds the total
of the normal cost, the administrative expenses, and the amortization contribution of the
retirement plan as reported in the most recent actuarial valuation of the retirement plan
prepared by the approved actuary retained under section 356.214 and prepared under
section 356.215 and the standards for actuarial work of the Legislative Commission on
Pensions and Retirement.
new text end

new text begin (b) For purposes of this section, a contribution deficiency exists if the total of
the employee contributions, the employer contributions, and any additional employer
contributions are less than the total of the normal cost, the administrative expenses, and
the amortization contribution of the retirement plan as reported in the most recent actuarial
valuation of the retirement plan prepared by the approved actuary retained under section
356.214 and prepared under section 356.215 and the standards for actuarial work adopted
by the Legislative Commission on Pensions and Retirement.
new text end

Sec. 4.

Minnesota Statutes 2014, section 354A.12, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Contribution rate revision. new text end

new text begin (a) Notwithstanding the contribution rate
provisions under subdivisions 1 and 2a, the Board of Trustees of the St. Paul Teachers
Retirement Fund Association may adjust the employee and employer contribution rates if
the regular actuarial valuation of the plan under section 356.215 indicates that there is
a contribution sufficiency under subdivision 10 equal to or greater than one percent of
covered payroll or if the regular valuation of the plan under section 356.215 indicates that
there is a deficiency equal to or greater than one-half of one percent of covered payroll.
Any decrease in employee and employer contribution rates must not result in the total of
contribution rates that is less than the total of normal cost and administrative expenses.
new text end

new text begin (b) To determine if an adjustment is to be made, the board of trustees shall consult
with the approved actuary retained under section 356.214 and shall take into consideration
factors that include, but are not limited to, the contribution rates based on the actuarial
value of assets and contribution rates based on the market value of assets; the funded
ratio based on the actuarial value of assets and based on the market value of assets;
the number of years remaining to the amortization target date; the recent experience
of the investment markets; and the results of the 30-year funding, disbursements, and
contributions projections prepared every other year as required under the standards for
actuarial work adopted by the Legislative Commission on Pensions and Retirement.
new text end

Sec. 5.

Minnesota Statutes 2014, section 354A.12, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Contribution sufficiency measures. new text end

new text begin (a) A contribution sufficiency of up
to one percent of covered payroll must be held in reserve to be used to offset any future
actuarially required contributions that are more than the total combined employee and
employer contributions being collected.
new text end

new text begin (b) Before any reduction in contributions to eliminate a sufficiency in excess of up
to one percent of covered payroll may be recommended, the executive director must
review any need for a change in actuarial assumptions, as recommended by the actuary
retained under section 356.214 in the most recent experience study of the retirement plan,
that may result in an increase in the actuarially required contribution and must report to
the Legislative Commission on Pensions and Retirement any recommendation by the
board to use the sufficiency exceeding one percent of covered payroll to offset the impact
of an actuarial assumption change recommended by the actuary retained under section
356.214, subdivision 1, and reviewed by the actuary retained by the commission under
section 356.214, subdivision 4.
new text end

new text begin (c) A contribution sufficiency in excess of one percent of covered pay must not be
used to increase benefits, and a benefit increase must not be proposed that would initiate
an automatic adjustment under this section to increase contributions. A proposed benefit
improvement must include a recommendation, prepared by the actuary retained under
section 356.214, subdivision 1, and reviewed by the actuary retained by the Legislative
Commission on Pensions and Retirement under section 356.214, subdivision 4, on the
manner in which the benefit modification is to be funded.
new text end

Sec. 6.

Minnesota Statutes 2014, section 354A.12, is amended by adding a subdivision
to read:

new text begin Subd. 13. new text end

new text begin Reporting; commission review. new text end

new text begin A contribution rate adjustment must be
reported to the chair and the executive director of the Legislative Commission on Pensions
and Retirement by February 1 of the fiscal year in which an adjustment determination is
made under subdivision 11. If the Legislative Commission on Pensions and Retirement
does not recommend against the adjustment or does not recommend a modification to the
adjustment, the adjustment is effective on the July 1 next following the determination that
a contribution deficiency or sufficiency exists under subdivision 10.
new text end