HF 549

as introduced - 91st Legislature (2019 - 2020) Posted on 01/31/2019 02:23pm

A bill for an act
relating to retirement; Public Employees Retirement Association; modifying
provisions allowing for the purchase of service credit for periods of military service;
amending Minnesota Statutes 2018, section 353.01, subdivision 16; proposing
coding for new law in Minnesota Statutes, chapter 353.

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

Section 1.

Minnesota Statutes 2018, section 353.01, subdivision 16, is amended to read:

Subd. 16.

Allowable service; limits and computation.

(a) "Allowable service" means:

(1) service during years of actual membership in the course of which employee deductions
were withheld from salary and contributions were made at the applicable rates under section
353.27, 353.65, or 353E.03;

(2) periods of service covered by payments in lieu of salary deductions under sections
353.27, subdivisions 12 and 12a, and 353.35;

(3) service in years during which the public employee was not a member but for which
the member later elected, while a member, to obtain credit by making payments to the fund
as permitted by any law then in effect;

(4) a period of authorized leave of absence during which the employee receives pay as
specified in subdivision 10, paragraph (a), clause (4) or (5), from which deductions for
employee contributions are made, deposited, and credited to the fund;

(5) a period of authorized leave of absence without pay, or with pay that is not included
in the definition of salary under subdivision 10, paragraph (a), clause (4) or (5), for which
salary deductions are not authorized, and for which a member obtained service credit for
up to 12 months of the authorized leave period by payment under section 353.0162, to the
fund made in place of salary deductions;

(6) a periodic, repetitive leave that is offered to all employees of a governmental
subdivision. The leave program may not exceed 208 hours per annual normal work cycle
as certified to the association by the employer. A participating member obtains service credit
by making employee contributions in an amount or amounts based on the member's average
salary, excluding overtime pay, that would have been paid if the leave had not been taken.
The employer shall pay the employer and additional employer contributions on behalf of
the participating member. The employee and the employer are responsible to pay interest
on their respective shares at the applicable rate or rates specified in section 356.59,
subdivision 3, compounded annually, from the end of the normal cycle until full payment
is made. An employer shall also make the employer and additional employer contributions,
plus interest at the applicable rate or rates specified in section 356.59, subdivision 3,
compounded annually, on behalf of an employee who makes employee contributions but
terminates public service. The employee contributions must be made within one year after
the end of the annual normal working cycle or within 30 days after termination of public
service, whichever is sooner. The executive director shall prescribe the manner and forms
to be used by a governmental subdivision in administering a periodic, repetitive leave. Upon
payment, the member must be granted allowable service credit for the purchased period;

(7) an authorized temporary or seasonal layoff under subdivision 12, limited to three
months allowable service per authorized temporary or seasonal layoff in one calendar year.
An employee who has received the maximum service credit allowed for an authorized
temporary or seasonal layoff must return to public service and must obtain a minimum of
three months of allowable service subsequent to the layoff in order to receive allowable
service for a subsequent authorized temporary or seasonal layoff;

(8) a period deleted text begin during which a member is absent from employment by a governmental
subdivision by reason of service in the uniformed services, as defined in United States Code,
title 38, section 4303(13), if the member returns to public service with the same governmental
subdivision upon discharge from service in the uniformed service within the time frames
required under United States Code, title 38, section 4312(e), provided that the member did
not separate from uniformed service with a dishonorable or bad conduct discharge or under
other than honorable conditions. The service must be credited if the member pays into the
fund equivalent employee contributions based upon the contribution rate or rates in effect
at the time that the uniformed service was performed multiplied by the full and fractional
years being purchased and applied to the annual salary rate. The annual salary rate is the
average annual salary during the purchase period that the member would have received if
the member had continued to be employed in covered employment rather than to provide
uniformed service, or, if the determination of that rate is not reasonably certain, the annual
salary rate is the member's average salary rate during the 12-month period of covered
employment rendered immediately preceding the period of the uniformed service. Payment
of the member equivalent contributions must be made during a period that begins with the
date on which the individual returns to public employment and that is three times the length
of the military leave period, or within five years of the date of discharge from the military
service, whichever is less. If the determined payment period is less than one year, the
contributions required under this clause to receive service credit may be made within one
year of the discharge date. Payment may not be accepted following 30 days after termination
of public service under subdivision 11a. If the member equivalent contributions provided
for in this clause are not paid in full, the member's allowable service credit must be prorated
by multiplying the full and fractional number of years of uniformed service eligible for
purchase by the ratio obtained by dividing the total member contributions received by the
total member contributions otherwise required under this clause. The equivalent employer
contribution, and, if applicable, the equivalent additional employer contribution must be
paid by the governmental subdivision employing the member if the member makes the
equivalent employee contributions. The employer payments must be made from funds
available to the employing unit, using the employer and additional employer contribution
rate or rates in effect at the time that the uniformed service was performed, applied to the
same annual salary rate or rates used to compute the equivalent member contribution. The
governmental subdivision involved may appropriate money for those payments. The amount
of service credit obtainable under this section may not exceed five years unless a longer
purchase period is required under United States Code, title 38, section 4312. The employing
unit shall pay interest on all equivalent member and employer contribution amounts payable
under this clause. Interest must be computed at the applicable rate or rates specified in
section 356.59, subdivision 3, compounded annually, from the end of each fiscal year of
the leave or the break in service to the end of the month in which the payment is received.
Upon payment, the employee must be granted allowable service credit for the purchased
period; or deleted text end new text begin of uniformed services leave purchased under section 353.014;
new text end

new text begin (9) a period of military service purchased under section 353.0141; or
new text end

deleted text begin (9) deleted text end new text begin (10) new text end a period specified under section 353.0162.

(b) No member may receive more than 12 months of allowable service credit in a year
either for vesting purposes or for benefit calculation purposes.

(c) For an active member who was an active member of the former Minneapolis
Firefighters Relief Association on December 29, 2011, "allowable service" is the period of
service credited by the Minneapolis Firefighters Relief Association as reflected in the
transferred records of the association up to December 30, 2011, and the period of service
credited under paragraph (a), clause (1), after December 30, 2011. For an active member
who was an active member of the former Minneapolis Police Relief Association on December
29, 2011, "allowable service" is the period of service credited by the Minneapolis Police
Relief Association as reflected in the transferred records of the association up to December
30, 2011, and the period of service credited under paragraph (a), clause (1), after December
30, 2011.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [353.014] FEDERALLY PROTECTED MILITARY LEAVE.
new text end

new text begin Subdivision 1. new text end

new text begin Service credit purchase authorized. new text end

new text begin (a) Unless prohibited under
paragraph (b), a member is eligible to purchase allowable service credit for one or more
periods of service during which a member is absent from employment by a governmental
subdivision by reason of service in the uniformed services, as defined in United States Code,
title 38, section 4303(13), if the member returns to public service with the same governmental
subdivision upon discharge from service in the uniformed services within the time frames
required under United States Code, title 38, section 4312(e).
new text end

new text begin (b) The purchase of allowable service credit is prohibited if the member separated from
uniformed service with a dishonorable or bad conduct discharge or under other than honorable
conditions.
new text end

new text begin Subd. 2. new text end

new text begin Payments required. new text end

new text begin (a) If the payments required by this section are made, a
member shall be granted allowable service credit for one or more periods of military service
as described in subdivision 1. The payments required by this section are equivalent employee
contributions as described in paragraph (b), equivalent employer contributions or additional
employer contributions as described in paragraph (c), and interest as described in paragraph
(d).
new text end

new text begin (b) The member shall pay into the fund within the time period described in subdivision
4 equivalent employee contributions based upon the contribution rate or rates in effect at
the time that the uniformed service was performed multiplied by the full and fractional years
being purchased and applied to the annual salary rate as defined in subdivision 3.
new text end

new text begin (c) If the member makes the payment under paragraph (b), the governmental subdivision
employing the member shall pay the equivalent employer contribution and, if applicable,
the equivalent additional employer contribution. The employer payments must be made
from funds available to the employing unit, using the employer and additional employer
contribution rate or rates in effect at the time that the uniformed service was performed,
applied to the same annual salary rate or rates used to compute the equivalent employee
contribution. The governmental subdivision involved may appropriate money for those
payments.
new text end

new text begin (d) The employing unit shall pay interest on all equivalent employee and employer
contribution amounts payable under this subdivision. Interest must be computed at the
applicable rate or rates specified in section 356.59, subdivision 3, compounded annually,
from the end of each fiscal year during the leave to the end of the month in which the
payment is received.
new text end

new text begin Subd. 3. new text end

new text begin Annual salary rate defined. new text end

new text begin The annual salary rate is the average annual salary
during the purchase period that the member would have received if the member had continued
to be employed in covered employment rather than take the uniformed services leave, or,
if the determination of that rate is not reasonably certain, the annual salary rate is the
member's average salary rate during the 12-month period of covered employment rendered
immediately preceding the period of the uniformed service.
new text end

new text begin Subd. 4. new text end

new text begin Time period for making member's payment. new text end

new text begin Payment of the employee
equivalent contributions must be made during a period that begins with the date on which
the member returns to public employment and that is three times the length of the military
leave period, or within five years of the date on which the member returns to public
employment, whichever is less.
new text end

new text begin Subd. 5. new text end

new text begin Employer required to notify. new text end

new text begin The employer shall notify the executive director,
on a form prescribed by the executive director, of the reemployment of a member who is
returning from service in the uniformed services as described in subdivision 1, and is eligible
to purchase service credit under this section. The employer must provide the notice within
14 days of the member's reemployment. The employer shall maintain a copy of the notice
in the member's employment file.
new text end

new text begin Subd. 6. new text end

new text begin Executive director required to notify. new text end

new text begin (a) Within 30 days of receipt of
notification from the employer under subdivision 5, the executive director shall notify the
reemployed member in writing of the right to purchase service credit and the amount of the
required payment and request a meeting with the member. The notification shall be mailed
to the member's last known address.
new text end

new text begin (b) The executive director shall provide the notice and meeting request described in
paragraph (a) to the reemployed member at least two times during the first six months of
the member's reemployment and approximately every six months thereafter until the end
of the payment period described in subdivision 4, unless:
new text end

new text begin (1) the member meets with the executive director or a designee of the executive director;
new text end

new text begin (2) the member makes a payment to purchase service credit covering a period under
subdivision 1; or
new text end

new text begin (3) the member notifies the executive director in writing that the member acknowledges
the right to purchase service credit and waives the right to a meeting.
new text end

new text begin (c) The executive director shall maintain a file for the member with copies of each notice
and the address to which the notice was sent, and, if a meeting occurs, the date, identity of
the person who conducted the meeting as the executive director's designee, and copies of
all documents provided to the member at the meeting.
new text end

new text begin Subd. 7. new text end

new text begin Maximum amount of service credit and proration if full payment is not
made. new text end

new text begin (a) The maximum amount of service credit that may be purchased under this section
is five years unless a longer purchase period is required to be offered under United States
Code, title 38, section 4312.
new text end

new text begin (b) If the employee equivalent contributions under subdivision 2 are not paid in full, the
member's allowable service credit must be prorated by multiplying the full and fractional
number of years of uniformed service eligible for purchase by the ratio obtained by dividing
the total employee contributions received by the total employee contributions otherwise
required under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

new text begin [353.0141] OTHER MILITARY LEAVE.
new text end

new text begin Subdivision 1. new text end

new text begin Service credit purchase authorized. new text end

new text begin (a) Unless prohibited under
paragraph (b), a member is eligible to purchase allowable service credit for one or more
periods of service in the uniformed services, as defined in United States Code, title 38,
section 4303(13), if the member has at least three years of allowable service credit with the
general employees retirement plan, the local government correctional employees retirement
plan under chapter 353E, or the public employees police and fire retirement plan and:
new text end

new text begin (1) the employee's service in the uniformed services occurred before becoming a public
employee as defined in section 353.01, subdivision 2; or
new text end

new text begin (2) the member failed to obtain service credit for a uniformed services leave of absence
under section 353.01, subdivision 16, paragraph (a), clause (8).
new text end

new text begin (b) A service credit purchase is prohibited if:
new text end

new text begin (1) the member separated from service in the uniformed services with a dishonorable
or bad conduct discharge or under other than honorable conditions; or
new text end

new text begin (2) the member has purchased or otherwise received service credit from any Minnesota
public employee pension plan for the same period of service in the uniformed services.
new text end

new text begin Subd. 2. new text end

new text begin Application and documentation. new text end

new text begin A member who desires to purchase service
credit under subdivision 1 must apply with the executive director to make the purchase. The
application must include all necessary documentation of the member's qualifications to
make the purchase, signed written permission to allow the executive director to request and
receive necessary verification of applicable facts and eligibility requirements, and any other
relevant information that the executive director may require.
new text end

new text begin Subd. 3. new text end

new text begin Purchase payment amount; service credit grant. new text end

new text begin (a) The purchase payment
amount is the amount determined under section 356.551.
new text end

new text begin (b) Allowable service credit for the purchase period must be granted by the applicable
plan to the purchasing member upon the executive director's receipt of the purchase payment
amount.
new text end

new text begin (c) Payment must be made before the effective date of the member's retirement.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end