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HF 592

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:39am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to retirement; amending teacher retirement provisions; adjusting
contribution rates; adjusting state aid; redefining terms; amending Minnesota
Statutes 2008, sections 127A.50, subdivision 1; 354.05, subdivision 38; 354.42,
subdivisions 2, 3, by adding subdivisions; 354.44, subdivision 6; 354A.011,
subdivision 15a; 354A.12, subdivisions 1, 2a, by adding subdivisions; 354A.31,
subdivisions 4, 4a, 7; 356.315, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2008, section 127A.50, subdivision 1, is amended to
read:


Subdivision 1.

Aid adjustment.

Beginning in fiscal year 1998 and each year
thereafter, the commissioner of education shall adjust state aid payments to school
operating funds for Independent School District No. 625 and Independent School District
No. 709 by the net amount of clauses (1) deleted text beginanddeleted text endnew text begin,new text end (2),new text begin and (5),new text end for Special School District
No. 1 by the net amount of clauses (1), (2), deleted text beginanddeleted text end (4),new text begin and (5),new text end and for all other districts,
including charter schools, but excluding any education organizations that are prohibited
from receiving direct state aids under section 123A.26 or 125A.75, subdivision 7, by the
net amount of clauses (1), (2), (3), deleted text beginanddeleted text end (4)new text begin, and (5)new text end:

(1) a decrease equal to each district's share of the fiscal year 1997 adjustment
effected under Minnesota Statutes 1996, section 124.2139;

(2) an increase equal to one percent of the salaries paid to members of the general
plan of the Public Employees Retirement Association in fiscal year 1997, multiplied by
0.35 for fiscal year 1998 and 0.70 each year thereafter;

(3) a decrease equal to 2.34 percent of the salaries paid to members of the Teachers
Retirement Association in fiscal year 1997; deleted text beginanddeleted text end

(4) an increase equal to 0.5 percent of the salaries paid to members of the Teachers
Retirement Association in fiscal year 2007deleted text begin.deleted text endnew text begin; andnew text end

new text begin (5) an increase equal to the specified percentage of the salaries paid to members of
the Teachers Retirement Association, the St. Paul Teachers Retirement Fund Association,
and the Duluth Teachers Retirement Fund Association in fiscal year 2012 as follows:
new text end

new text begin fiscal year 2012
new text end
new text begin 0.5 percent
new text end
new text begin fiscal year 2013
new text end
new text begin 0.5 percent
new text end
new text begin fiscal year 2014
new text end
new text begin 0.5 percent
new text end
new text begin fiscal year 2015 and each fiscal year
thereafter
new text end
new text begin 0.5 percent
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 2.

Minnesota Statutes 2008, section 354.05, subdivision 38, is amended to read:


Subd. 38.

Normal retirement age.

"Normal retirement age" means age 65 deleted text beginfor a
person who first became a member of the association or a member of a pension fund listed
in section 356.30, subdivision 3, before July 1, 1989. For a person who first becomes a
member of the association after June 30, 1989, normal retirement age means the higher
of age 65 or "retirement age," as defined in United States Code, title 42, section 416(l),
as amended, but not to exceed age 66
deleted text endnew text begin. For a person with 30 years of service, normal
retirement age means age 62
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 3.

Minnesota Statutes 2008, section 354.42, subdivision 2, is amended to read:


Subd. 2.

Employee.

(a) The employee contribution to the fund is an amount equal
to the following percentage of the salary of a member:

deleted text begin (1) after July 1, 2006, for a teacher employed by Special School District No. 1,
Minneapolis, 5.5 percent if the teacher is a coordinated member, and 9.0 percent if the
teacher is a basic member;
deleted text end

deleted text begin (2) for every other teacher, after July 1, 2006, 5.5 percent if the teacher is a
coordinated member and 9.0 percent if the teacher is a basic member.
deleted text end

new text begin Period
new text end
new text begin Coordinated Member
new text end
new text begin Basic Member
new text end
new text begin (1) before July 1, 2011
new text end
new text begin 5.5 percent
new text end
new text begin 9 percent
new text end
new text begin (2) after June 30, 2011, and before July
1, 2012
new text end
new text begin 6 percent
new text end
new text begin 9 percent
new text end
new text begin (3) after June 30, 2012, and before July
1, 2013
new text end
new text begin 6.5 percent
new text end
new text begin 9 percent
new text end
new text begin (4) unless paragraph (c) applies, after
June 30, 2013, and before July 1, 2014
new text end
new text begin 7 percent
new text end
new text begin 9 percent
new text end
new text begin (5) unless paragraph (c) applies, after
June 30, 2014
new text end
new text begin 7.5 percent
new text end
new text begin 9 percent
new text end

new text begin (b) When an employee contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
new text end

new text begin (c) After July 1, 2012, a scheduled contribution increase under paragraph (a),
clause (4) or (5), is suspended if the most recent actuarial valuation prepared under
section 356.215 indicates that there is no contribution deficiency when the total employee
contributions, employer contributions under subdivision 3, and direct state aid under
section 354A.12 and chapter 422A are compared to the actuarial required contributions of
the retirement plan.
new text end

deleted text begin (b)deleted text endnew text begin (d)new text end This contribution must be made by deduction from salary. Where any
portion of a member's salary is paid from other than public funds, the member's employee
contribution must be based on the entire salary received.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 4.

Minnesota Statutes 2008, section 354.42, subdivision 3, is amended to read:


Subd. 3.

Employer.

(a) The regular employer contribution to the fund by Special
School District No. 1, Minneapolis, after July 1, 2006, and before July 1, 2007, is an
amount equal to 5.0 percent of the salary of each of its teachers who is a coordinated
member and 9.0 percent of the salary of each of its teachers who is a basic member. After
July 1, 2007,new text begin and before July 1, 2011,new text end the regular employer contribution to the fund by
Special School District No. 1, Minneapolis, is an amount equal to 5.5 percent of salary of
each coordinated member and 9.5 percent of salary of each basic member. The additional
employer contribution to the fund by Special School District No. 1, Minneapolis, after
July 1, 2006, is an amount equal to 3.64 percent of the salary of each teacher who is a
coordinated member or is a basic member.new text begin The regular employer contribution to the
fund by Special School District No. 1, Minneapolis, is an amount equal to the following
percentage of the salary of each teacher:
new text end

new text begin Period
new text end
new text begin Coordinated Member
new text end
new text begin Basic Member
new text end
new text begin (1) before July 1, 2011
new text end
new text begin 5.5 percent
new text end
new text begin 9.5 percent
new text end
new text begin (2) after June 30, 2011, and before July
1, 2012
new text end
new text begin 6 percent
new text end
new text begin 9.5 percent
new text end
new text begin (3) after June 30, 2012, and before July
1, 2013
new text end
new text begin 6.5 percent
new text end
new text begin 9.5 percent
new text end
new text begin (4) unless paragraph (d) applies, after
June 30, 2013, and before July 1, 2014
new text end
new text begin 7 percent
new text end
new text begin 9.5 percent
new text end
new text begin (5) unless paragraph (d) applies, after
June 30, 2014
new text end
new text begin 7.5 percent
new text end
new text begin 9.5 percent
new text end

new text begin (b) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
new text end

deleted text begin (b)deleted text endnew text begin (c)new text end The employer contribution to the fund for every other employer is an amount
equal to 5.0 percent of the salary of each coordinated member and 9.0 percent of the salary
of each basic member before July 1, 2007, and 5.5 percent of the salary of each coordinated
member and 9.5 percent of the salary of each basic member after June 30, 2007deleted text begin.deleted text endnew text begin, and
before July 1, 2011. The regular employer contribution to the fund by every other
employer is an amount equal to the following percentage of the salary of each teacher:
new text end

new text begin Period
new text end
new text begin Coordinated Member
new text end
new text begin Basic Member
new text end
new text begin (1) after June 30, 2011, and before July
1, 2012
new text end
new text begin 6 percent
new text end
new text begin 9.5 percent
new text end
new text begin (2) after June 30, 2012, and before July
1, 2013
new text end
new text begin 6.5 percent
new text end
new text begin 9.5 percent
new text end
new text begin (3) unless paragraph (d) applies, after
June 30, 2013, and before July 1, 2014
new text end
new text begin 7 percent
new text end
new text begin 9.5 percent
new text end
new text begin (4) unless paragraph (d) applies, after
June 30, 2014
new text end
new text begin 7.5 percent
new text end
new text begin 9.5 percent
new text end

new text begin (d) After July 1, 2012, a scheduled contribution increase under paragraph (a), clause
(4) or (5), and paragraph (c), clause (3) or (4), is suspended if the most recent actuarial
valuation prepared under section 356.215 indicates that there is no contribution deficiency
when the total employee contributions, employer contributions under subdivision 3, and
direct state aid under section 354A.12 and chapter 422A are compared to the actuarial
required contributions of the retirement plan.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 5.

Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:


new text begin Subd. 4a. new text end

new text begin Application. new text end

new text begin This section applies to the Teachers Retirement Association
under this chapter.
new text end

Sec. 6.

Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:


new text begin Subd. 4b. new text end

new text begin Determination. new text end

new text begin (a) For purposes of this section, a contribution
sufficiency exists if, for purposes of the applicable plan, 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 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, for the applicable
plan, the total 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 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

Sec. 7.

Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:


new text begin Subd. 4c. new text end

new text begin Contribution rate revision. new text end

new text begin Notwithstanding the contribution rate
provisions stated in plan law, the employee and employer contribution rates must be
adjusted:
new text end

new text begin (1) if after July 1, 2014, the regular actuarial valuations of the applicable plan under
section 356.215 indicate that there is a contribution sufficiency under subdivision 2 equal
to or greater than 0.5 percent of covered payroll for two consecutive years, the employee
and employer contribution rates for the applicable plan must be decreased as determined
under subdivision 4 to a level such that the sufficiency equals no more than 0.25 percent of
covered payroll based on the most recent actuarial valuation; or
new text end

new text begin (2) if after July 1, 2014, the regular actuarial valuations of the applicable plan under
section 356.215 indicate that there is a deficiency equal to or greater than 0.5 percent of
covered payroll for two consecutive years, the employee and employer contribution rates
for the applicable plan must be increased as determined under subdivision 4 to a level such
that no deficiency exists based on the most recent actuarial valuation.
new text end

Sec. 8.

Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:


new text begin Subd. 4d. new text end

new text begin Reporting, commission review. new text end

new text begin (a) The contribution rate increase
or decrease must be determined by the executive director of the Teachers Retirement
Association, must be reported to the chair and the executive director of the Legislative
Commission on Pensions and Retirement on or before the next February 1, and, if the
Legislative Commission on Pensions and Retirement does not recommend against the
rate change or does not recommend a modification in the rate change, is effective on the
next July 1 following the determination by the executive director that a contribution
deficiency or sufficiency has existed for two consecutive fiscal years based on the most
recent actuarial valuations under section 356.215. If the actuarially required contribution
exceeds or is less than the total support provided by the combined employee and employer
contribution rates for the applicable plan by more than 0.5 percent of covered payroll, the
applicable plan employee and employer contribution rates must be adjusted incrementally
over one or more years to a level such that there remains a contribution sufficiency of no
more than 0.25 percent of covered payroll.
new text end

new text begin (b) No incremental adjustment may exceed 0.25 percent of payroll for either the
employee or employer contribution rates per year in which any adjustment is implemented.
For an applicable plan, a contribution rate adjustment under this section must not be
made until at least two years have passed since fully implementing a previous adjustment
under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 9.

Minnesota Statutes 2008, section 354.44, subdivision 6, is amended to read:


Subd. 6.

Computation of formula program retirement annuity.

(a) The formula
retirement annuity must be computed in accordance with the applicable provisions of the
formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
section 354.05, subdivision 13a, for the period of the member's formula service credit.

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first
became a member of the association or a member of a pension fund listed in section
356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with
paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The
average salary as defined in section 354.05, subdivision 13a, multiplied by the following
percentages per year of formula service credit shall determine the amount of the annuity to
which the member qualifying therefor is entitled for service rendered before July 1, 2006:

Coordinated Member
Basic Member
Each year of service during
first ten
the percent specified
in section 356.315,
subdivision 1, per year
the percent specified
in section 356.315,
subdivision 3, per year
Each year of service
thereafter
the percent specified
in section 356.315,
subdivision 2, per year
the percent specified
in section 356.315,
subdivision 4, per year

For service rendered on or after July 1, 2006, the average salary as defined in section
354.05, subdivision 13a, multiplied by the following percentages per year of service credit,
determines the amount the annuity to which the member qualifying therefor is entitled:

Coordinated Member
Basic Member
Each year of service during
first ten
the percent specified
in section 356.315,
subdivision 1a, per year
the percent specified
in section 356.315,
subdivision 3, per year
Each year of service after
ten years of service
the percent specified
in section 356.315,
subdivision 2b, per year
the percent specified
in section 356.315,
subdivision 4, per year

(c)(i) This paragraph applies only to a person who first became a member of the
association or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in
conjunction with this paragraph than when calculated under paragraph (d), in conjunction
with paragraph (e).

(ii) Where any member retires prior to normal retirement age under a formula
annuity, the member shall be paid a retirement annuity in an amount equal to the normal
annuity provided in paragraph (b) reduced by one-quarter of one percent for each month
that the member is under normal retirement age at the time of retirement except that for
any member who has 30 or more years of allowable service credit, the reduction shall be
applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable service totals 90 years
is entitled, upon application, to a retirement annuity in an amount equal to the normal
annuity provided in paragraph (b), without any reduction by reason of early retirement.

(d) This paragraph applies to a member who has become at least 55 years old and
first became a member of the association after June 30, 1989, and to any other member
who has become at least 55 years old and whose annuity amount when calculated under
this paragraph and in conjunction with paragraph (e), is higher than it is when calculated
under paragraph (b), in conjunction with paragraph (c). For a basic member, the average
salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified
by section 356.315, subdivision 4, for each year of service for a basic member shall
determine the amount of the retirement annuity to which the basic member is entitled.
The annuity of a basic member who was a member of the former Minneapolis Teachers
Retirement Fund Association as of June 30, 2006, must be determined according to the
annuity formula under the articles of incorporation of the former Minneapolis Teachers
Retirement Fund Association in effect as of that date. For a coordinated member, the
average salary, as defined in section 354.05, subdivision 13a, multiplied by the percent
specified in section 356.315, subdivision 2, for each year of service rendered before July
1, 2006, deleted text beginanddeleted text end by the percent specified in section 356.315, subdivision 2b, for each year
of service rendered on or after July 1, 2006new text begin, and before July 1, 2011, and by the percent
specified in section 356.315, subdivision 2c, for each year of service rendered after June
30, 2011
new text end, determines the amount of the retirement annuity to which the coordinated
member is entitled.new text begin If the member has 30 or more years of service credit, the minimum
age requirement of this paragraph does not apply.
new text end

(e) This paragraph applies to a person who has become at least 55 years old and first
becomes a member of the association after June 30, 1989, and to any other member who
has become at least 55 years old and whose annuity is higher when calculated under
paragraph (d) in conjunction with this paragraph than when calculated under paragraph
(b), in conjunction with paragraph (c). An employee who retires under the formula
annuity before the normal retirement age new text beginas defined by section 354.05, subdivision 38,
new text endshall be paid the normal annuity provided in paragraph (d) reduced so that the reduced
annuity is the actuarial equivalent of the annuity that would be payable to the employee if
the employee deferred receipt of the annuity and the annuity amount were augmented at
an annual rate of three percent compounded annually from the day the annuity begins to
accrue until the normal retirement age if the employee became an employee before July
1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee
after June 30, 2006.new text begin If the member has 30 or more years of service credit, the minimum
age requirement of this paragraph does not apply.
new text end

(f) No retirement annuity is payable to a former employee with a salary that exceeds
95 percent of the governor's salary unless and until the salary figures used in computing
the highest five successive years average salary under paragraph (a) have been audited by
the Teachers Retirement Association and determined by the executive director to comply
with the requirements and limitations of section 354.05, subdivisions 35 and 35a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 10.

Minnesota Statutes 2008, section 354A.011, subdivision 15a, is amended to
read:


Subd. 15a.

Normal retirement age.

"Normal retirement age" means age 65 deleted text beginfor a
person who first became a member of the coordinated program of the St. Paul Teachers
Retirement Fund Association or the new law coordinated program of the Duluth Teachers
Retirement Fund Association or a member of a pension fund listed in section 356.30,
subdivision 3
, before July 1, 1989. For a person who first became a member of the
coordinated program of the St. Paul Teachers Retirement Fund Association or the new law
coordinated program of the Duluth Teachers Retirement Fund Association after June 30,
1989, normal retirement age means the higher of age 65 or retirement age, as defined in
United States Code, title 42, section 416(l), as amended, but not to exceed age 66
deleted text end.new text begin For a
person with 30 years of service, normal retirement age means age 62.
new text end For a person who is
a member of the basic program of the St. Paul Teachers Retirement Fund Association or
the old law coordinated program of the Duluth Teachers Retirement Fund Association,
normal retirement age means the age at which a teacher becomes eligible for a normal
retirement annuity computed upon meeting the age and service requirements specified
in the applicable provisions of the articles of incorporation or bylaws of the respective
teachers retirement fund association.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 11.

Minnesota Statutes 2008, section 354A.12, subdivision 1, is amended to read:


Subdivision 1.

Employee contributions.

new text begin(a) new text endThe contribution required to be paid
by each member of a teachers retirement fund association shall not be less than the
percentage of total salary specified below for the applicable association and program:

Association and Program
Percentage of Total Salary
Duluth Teachers Retirement Fund Association
old law and new law
coordinated programs
deleted text begin 5.5 percent
deleted text end
new text begin (1) before July 1, 2011
new text end
new text begin 5.5 percent
new text end
new text begin (2) after June 30, 2011, and before July 1, 2012
new text end
new text begin 6 percent
new text end
new text begin (3) after June 30, 2012, and before July 1, 2013
new text end
new text begin 6.5 percent
new text end
new text begin (4) unless paragraph (b) applies, after June 30,
2013, and before July 1, 2014
new text end
new text begin 7 percent
new text end
new text begin (5) unless paragraph (b) applies, after June 30,
2014
new text end
new text begin 7.5 percent
new text end
St. Paul Teachers Retirement Fund Association
basic program
8 percent
coordinated program
deleted text begin 5.5 percent
deleted text end
new text begin (6) before July 1, 2011
new text end
new text begin 5.5 percent
new text end
new text begin (7) after June 30, 2011, and before July 1, 2012
new text end
new text begin 6 percent
new text end
new text begin (8) after June 30, 2012, and before July 1, 2013
new text end
new text begin 6.5 percent
new text end
new text begin (9) unless paragraph (b) applies, after June 30,
2013, and before July 1, 2014
new text end
new text begin 7 percent
new text end
new text begin (10) unless paragraph (b) applies, after June 30,
2014
new text end
new text begin 7.5 percent
new text end

new text begin (b) When an employee contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
new text end

new text begin (c) After July 1, 2012, a scheduled contribution increase under paragraph (a),
clause (4), (5), (9), or (10), is suspended if the most recent actuarial valuation prepared
under section 356.215 indicates that there is no contribution deficiency when the total
employee contributions, employer contributions under subdivision 3, and direct state aid
are compared to the actuarial required contributions of the retirement plan.
new text end

new text begin (d) new text endContributions shall be made by deduction from salary and must be remitted
directly to the respective teachers retirement fund association at least once each month.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 12.

Minnesota Statutes 2008, section 354A.12, subdivision 2a, is amended to read:


Subd. 2a.

Employer regular and additional contribution rates.

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

(1) for any coordinated member of a teachers retirement fund association in a city of
the first class, the employing unit shall pay the employer Social Security taxes;

(2) for any coordinated member of one of the following teachers retirement fund
associations in a city of the first class, the employing unit shall make a regular employer
contribution to the respective retirement fund association in an amount equal to the
designated percentage of the salary of the coordinated member as provided below:

Duluth Teachers Retirement
Fund Association
deleted text begin 4.50 percent
deleted text end
new text begin (A) before July 1, 2011
new text end
new text begin 4.5 percent
new text end
new text begin (B) after June 30, 2011, and
before July 1, 2012
new text end
new text begin 5 percent
new text end
new text begin (C) after June 30, 2012, and
before July 1, 2013
new text end
new text begin 5.5 percent
new text end
new text begin (D) unless clause (3) applies,
after June 30, 2013, and before
July 1, 2014
new text end
new text begin 6 percent
new text end
new text begin (E) unless clause (3) applies,
after June 30, 2014
new text end
new text begin 6.5 percent
new text end
St. Paul Teachers Retirement
Fund Association
deleted text begin 4.50 percent
deleted text end
new text begin (F) before July 1, 2011
new text end
new text begin 4.5 percent
new text end
new text begin (G) after June 30, 2011, and
before July 1, 2012
new text end
new text begin 5 percent
new text end
new text begin (H) after June 30, 2012, and
before July 1, 2013
new text end
new text begin 5.5 percent
new text end
new text begin (I) unless clause (3) applies,
after June 30, 2013, and before
July 1, 2014
new text end
new text begin 6 percent
new text end
new text begin (J) unless clause (3) applies,
after June 30, 2014
new text end
new text begin 6.5 percent
new text end

(3) new text beginAfter July 1, 2012, a scheduled contribution increase under paragraph (a), clause
(2), item (D), (E), (I), or (J), is suspended if the most recent actuarial valuation prepared
under section 356.215 indicates that there is no contribution deficiency when the total
employee contributions, employer contributions under subdivision 3, and direct state aid
are compared to the actuarial required contributions of the retirement plan;
new text end

new text begin (4) new text endfor 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 equal to 8.00 percent of the salary of the basic member;

deleted text begin (4)deleted text endnew text begin (5)new text end 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;

deleted text begin (5)deleted text endnew text begin (6)new text end for a coordinated member of a teachers retirement fund association in a city
of the first class, the employing unit shall make an additional employer contribution to
the respective fund in an amount equal to the applicable percentage of the coordinated
member's salary, as provided below:

Duluth Teachers Retirement
Fund Association
1.29 percent
St. Paul Teachers Retirement
Fund Association
July 1, 1993 - June 30, 1994
0.50 percent
July 1, 1994 - June 30, 1995
1.50 percent
July 1, 1997, and thereafter
3.84 percent

(b) new text beginWhen an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
new text end

new text begin (c)new text endThe regular and additional employer contributions must be remitted directly to
the respective teachers retirement fund association at least once each month. Delinquent
amounts are payable with interest under the procedure in subdivision 1a.

deleted text begin (c)deleted text endnew text begin (d)new text end 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 13.

Minnesota Statutes 2008, section 354A.12, is amended by adding a
subdivision to read:


new text begin Subd. 3e. new text end

new text begin Application. new text end

new text begin This section applies to the Duluth Teachers Retirement Fund
Association or the St. Paul Teachers Retirement Fund Association under this chapter.
new text end

Sec. 14.

Minnesota Statutes 2008, section 354A.12, is amended by adding a
subdivision to read:


new text begin Subd. 4a. new text end

new text begin Determination. new text end

new text begin (a) For purposes of this section, a contribution sufficiency
exists if, for purposes of the applicable plan, 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 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, for the applicable
plan, the total employee contributions, 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 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

Sec. 15.

Minnesota Statutes 2008, section 354A.12, is amended by adding a
subdivision to read:


new text begin Subd. 4b. new text end

new text begin Contribution rate revision. new text end

new text begin Notwithstanding the contribution rate
provisions stated in plan law, the employee and employer contribution rates must be
adjusted:
new text end

new text begin (1) if after July 1, 2014, the regular actuarial valuations of the applicable plan under
section 356.215 indicate that there is a contribution sufficiency under subdivision 2 equal
to or greater than 0.5 percent of covered payroll for two consecutive years, the employee
and employer contribution rates for the applicable plan must be decreased as determined
under subdivision 4 to a level such that the sufficiency equals no more than 0.25 percent of
covered payroll based on the most recent actuarial valuation; or
new text end

new text begin (2) if after July 1, 2014, the regular actuarial valuations of the applicable plan under
section 356.215 indicate that there is a deficiency equal to or greater than 0.5 percent of
covered payroll for two consecutive years, the employee and employer contribution rates
for the applicable plan must be increased as determined under subdivision 4 to a level such
that no deficiency exists based on the most recent actuarial valuation.
new text end

Sec. 16.

Minnesota Statutes 2008, section 354A.12, is amended by adding a
subdivision to read:


new text begin Subd. 4c. new text end

new text begin Reporting, commission review. new text end

new text begin (a) The contribution rate increase or
decrease must be determined by the executive director of the Duluth Teachers Retirement
Fund Association or the St. Paul Teachers Retirement Fund Association, and must be
reported to the chair and the executive director of the Legislative Commission on Pensions
and Retirement on or before the next February 1, and, if the Legislative Commission
on Pensions and Retirement does not recommend against the rate change or does not
recommend a modification in the rate change, is effective on the next July 1 following
the determination by the executive director that a contribution deficiency or sufficiency
has existed for two consecutive fiscal years based on the most recent actuarial valuations
under section 356.215. If the actuarially required contribution exceeds or is less than
the total support provided by the combined employee and employer contribution rates
for the applicable plan by more than 0.5 percent of covered payroll, the applicable plan
employee and employer contribution rates must be adjusted incrementally over one or
more years to a level such that there remains a contribution sufficiency of no more than
0.25 percent of covered payroll.
new text end

new text begin (b) No incremental adjustment may exceed 0.25 percent of payroll for either the
employee or employer contribution rates per year in which any adjustment is implemented.
For an applicable plan, a contribution rate adjustment under this section must not be
made until at least two years have passed since fully implementing a previous adjustment
under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 17.

Minnesota Statutes 2008, section 354A.31, subdivision 4, is amended to read:


Subd. 4.

Computation of normal coordinated retirement annuity; St. Paul
fund.

(a) This subdivision applies to the coordinated program of the St. Paul Teachers
Retirement Fund Association.

(b) The normal coordinated retirement annuity is an amount equal to a retiring
coordinated member's average salary under section 354A.011, subdivision 7a, multiplied
by the retirement annuity formula percentage.

(c) This paragraph, in conjunction with subdivision 6, applies to a person who first
became a member or a member in a pension fund listed in section 356.30, subdivision 3,
before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a
higher annuity amount, in which case paragraph (d) will apply. deleted text beginThe retirement annuity
formula percentage for purposes of this paragraph is the percent specified in section
356.315, subdivision 1, per year for each year of coordinated service for the first ten years
and the percent specified in section 356.315, subdivision 2, for each year of coordinated
service thereafter.
deleted text endnew text begin The average salary multiplied by the following retirement annuity
formula percentage per year of allowable service shall determine the amount of the
annuity to which the member qualifying therefor is entitled for service rendered before
July 1, 2011:
new text end

new text begin Each year of service during first ten years
new text end
new text begin the percent specified in section 356.315,
subdivision 1, per year
new text end
new text begin Each year of service thereafter
new text end
new text begin the percent specified in section 356.315,
subdivision 2, per year
new text end

new text begin For service rendered on or after July 1, 2011, the average salary multiplied by the
following retirement annuity formula percentage per year of allowable service, determines
the amount of the annuity to which the member qualifying therefor is entitled:
new text end

new text begin Each year of service during first ten years
new text end
new text begin the percent specified in section 356.315,
subdivision 1a, per year
new text end
new text begin Each year of service thereafter
new text end
new text begin the percent specified in section 356.315,
subdivision 2b, per year
new text end

(d) This paragraph applies to a person who has become at least 55 years old and who
first becomes a member after June 30, 1989, and to any other member who has become
at least 55 years old and whose annuity amount, when calculated under this paragraph
and in conjunction with subdivision 7 is higher than it is when calculated under paragraph
(c), in conjunction with the provisions of subdivision 6. The retirement annuity formula
percentage for purposes of this paragraph is the percent specified in section 356.315,
subdivision 2
, for each year of coordinated servicenew text begin before July 1, 2011, and by the percent
specified in section 356.315, subdivision 2c, for each year of service rendered after
June 30, 2011. If the member has 30 or more years of service credit, the minimum age
requirement of this paragraph does not apply
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 18.

Minnesota Statutes 2008, section 354A.31, subdivision 4a, is amended to read:


Subd. 4a.

Computation of normal coordinated retirement annuity; Duluth
fund.

(a) This subdivision applies to the new law coordinated program of the Duluth
Teachers Retirement Fund Association.

(b) The normal coordinated retirement annuity is an amount equal to a retiring
coordinated member's average salary under section 354A.011, subdivision 7a, multiplied
by the retirement annuity formula percentage.

(c) This paragraph, in conjunction with subdivision 6, applies to a person who first
became a member or a member in a pension fund listed in section 356.30, subdivision 3,
before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a
higher annuity amount, in which case paragraph (d) applies. deleted text beginThe retirement annuity
formula percentage for purposes of this paragraph is the percent specified in section
356.315, subdivision 1, per year for each year of coordinated service for the first ten
years and the percent specified in section 356.315, subdivision 2, for each subsequent
year of coordinated service.
deleted text endnew text begin The average salary multiplied by the following retirement
annuity formula percentage per year of allowable service shall determine the amount
of the annuity to which the member qualifying therefor is entitled for service rendered
before July 1, 2011:
new text end

new text begin Each year of service during first ten years
new text end
new text begin the percent specified in section 356.315,
subdivision 1, per year
new text end
new text begin Each year of service thereafter
new text end
new text begin the percent specified in section 356.315,
subdivision 2, per year
new text end

new text begin For service rendered on or after July 1, 2011, the average salary multiplied by the
following retirement annuity formula percentage per year of allowable service, determines
the amount of the annuity to which the member qualifying therefor is entitled:
new text end

new text begin Each year of service during first ten years
new text end
new text begin the percent specified in section 356.315,
subdivision 1a, per year
new text end
new text begin Each year of service thereafter
new text end
new text begin the percent specified in section 356.315,
subdivision 2b, per year
new text end

(d) This paragraph applies to a person who is at least 55 years old and who first
becomes a member after June 30, 1989, and to any other member who is at least 55 years
old and whose annuity amount, when calculated under this paragraph and in conjunction
with subdivision 7, is higher than it is when calculated under paragraph (c) in conjunction
with subdivision 6. The retirement annuity formula percentage for purposes of this
paragraph is the percent specified in section 356.315, subdivision 2, for each year of
coordinated servicenew text begin before July 1, 2011, and by the percent specified in section 356.315,
subdivision 2c, for each year of service rendered after June 30, 2011. If the member
has 30 or more years of service credit, the minimum age requirement of this paragraph
does not apply
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 19.

Minnesota Statutes 2008, section 354A.31, subdivision 7, is amended to read:


Subd. 7.

Actuarial reduction for early retirement.

This subdivision applies to
a person who has become at least 55 years old and first becomes a coordinated member
after June 30, 1989, and to any other coordinated member who has become at least 55
years old and whose annuity is higher when calculated using the retirement annuity
formula percentage in subdivision 4, paragraph (d), and subdivision 4a, paragraph (d), in
conjunction with this subdivision than when calculated under subdivision 4, paragraph
(c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6. A coordinated
member who retires before the full benefit agenew text begin as defined by section 354A.011, subdivision
15a,
new text end shall be paid the retirement annuity calculated using the retirement annuity formula
percentage in subdivision 4, paragraph (d), or subdivision 4a, paragraph (d), reduced so
that the reduced annuity is the actuarial equivalent of the annuity that would be payable
to the member if the member deferred receipt of the annuity and the annuity amount
were augmented at an annual rate of three percent compounded annually from the day
the annuity begins to accrue until the normal retirement age if the employee became an
employee before July 1, 2006, and at 2.5 percent compounded annually from the day the
annuity begins to accrue until the normal retirement age if the person initially becomes
a teacher after June 30, 2006.new text begin If the member has 30 or more years of service credit, the
minimum age requirement of this paragraph does not apply.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end

Sec. 20.

Minnesota Statutes 2008, section 356.315, is amended by adding a subdivision
to read:


new text begin Subd. 2c. new text end

new text begin Certain coordinated members. new text end

new text begin The applicable benefit accrual rate
is 2.1 percent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2011.
new text end