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HF 1123

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:44am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to retirement; specifying a new process for computing Teachers
Retirement Association service credit; authorizing deduction of other
benefits received from Teachers Retirement Association refunds; expanding
postretirement option program eligibility to include all state employees with
Public Employees Retirement Association coverage; revising Public Employees
Retirement Association erroneous receipts provision to provide interest on
employee contribution overpayments; creating Teachers Retirement Association
full actuarial value uncredited military service provision; making administrative
revisions and technical corrections in various retirement provisions; amending
Minnesota Statutes 2008, sections 43A.346, subdivisions 2, 6; 352B.02,
subdivisions 1a, 1c; 353.01, subdivision 16; 353.0161, subdivision 1; 353.27,
subdivisions 2, 3, 7; 353.33, subdivisions 1, 11, 12, by adding a subdivision;
353.65, subdivisions 2, 3; 353A.08, subdivision 6a; 354.05, by adding
subdivisions; 354.091; 354.42, subdivision 2; 354.44, subdivisions 4, 5;
354.47, subdivision 1; 354.48, subdivisions 4, 6; 354.49, subdivision 2; 354.52,
subdivisions 2a, 4b, 6, by adding a subdivision; 354.55, subdivision 11; 354.66,
subdivision 3; 354A.096; 354A.12, subdivision 2a, by adding a subdivision;
354A.36, subdivision 6; 356.401, subdivision 2; 356.465, subdivision 1, by
adding a subdivision; 356.611, subdivisions 3, 4; 356.635, subdivisions 6, 7;
356.96, subdivision 5; proposing coding for new law in Minnesota Statutes,
chapter 354; repealing Minnesota Statutes 2008, sections 354.06, subdivision 6;
354.55, subdivision 14.

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

Section 1.

Minnesota Statutes 2008, section 43A.346, subdivision 2, is amended to
read:


Subd. 2.

Eligibility.

(a) This section applies to a terminated state employee who:

(1) for at least the five years immediately preceding separation under clause (2),
was regularly scheduled to work 1,044 or more hours per year in a position covered by
a pension plan administered by the Minnesota State Retirement System or the Public
Employees Retirement Association;

(2) terminated state or Metropolitan Council employment;

(3) at the time of termination under clause (2), met the age and service requirements
necessary to receive an unreduced retirement annuity from the plan and satisfied
requirements for the commencement of the retirement annuity or, for a terminated
employee under the unclassified employees retirement plan, met the age and service
requirements necessary to receive an unreduced retirement annuity from the plan and
satisfied requirements for the commencement of the retirement annuity or elected a
lump-sum payment; and

(4) agrees to accept a postretirement option position with the same or a different
appointing authority, working a reduced schedule that is both (i) a reduction of at least 25
percent from the employee's number of previously regularly scheduled work hours; and
(ii) 1,044 hours or less in state or Metropolitan Council service.

(b) For purposes of this section, an unreduced retirement annuity includes a
retirement annuity computed under a provision of law which permits retirement, without
application of an earlier retirement reduction factor, whenever age plus years of allowable
service total at least 90.

(c) For purposes of this section, as it applies to deleted text beginstaffdeleted text end new text beginstate employees who are
members
new text endof the Public Employees Retirement Association who are at least age 62, the
length of separation requirement and termination of service requirement prohibiting return
to work agreements under section 353.01, subdivisions 11a and 28, are not applicable.

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.

Minnesota Statutes 2008, section 43A.346, subdivision 6, is amended to read:


Subd. 6.

Duration.

Postretirement option employment shall be for an initial period
not to exceed one year. During that period, the appointing authority may not modify the
conditions specified in the written offer without the person's consent, except as required
by law or by the collective bargaining agreement or compensation plan applicable to the
person. At the end of the initial period, the appointing authority has sole discretion to
determine if the offer of a postretirement option position will be renewed, renewed with
modifications, or terminated. deleted text beginIf the person is under age 62, an offer of renewal and any
related verbal offer or agreement must not be made until at least 30 days after termination
of the person's previous postretirement option employment.
deleted text end Postretirement option
employment may be renewed for periods of up to one year, not to exceed a total duration
of five years. No person shall be employed in one or a combination of postretirement
option positions under this section for a total of more than five years.

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.

Minnesota Statutes 2008, section 352B.02, subdivision 1a, is amended to read:


Subd. 1a.

Member contributions.

(a) deleted text beginEachdeleted text end new text beginThe new text endmember deleted text beginshall pay a sum equal to
the following
deleted text end new text begincontribution is 10.40 new text endpercent of the member's salarydeleted text begin, which constitutes the
member contribution to the fund:
deleted text endnew text begin.new text end

deleted text begin before July 1, 2007
deleted text end
deleted text begin 8.40
deleted text end
deleted text begin from July 1, 2007, to June 30, 2008
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin from July 1, 2008, to June 30, 2009
deleted text end
deleted text begin 9.80
deleted text end
deleted text begin from July 1, 2009, and thereafter
deleted text end
deleted text begin 10.40.
deleted text end

(b) These contributions must be made by deduction from salary as provided in
section 352.04, subdivision 4.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 4.

Minnesota Statutes 2008, section 352B.02, subdivision 1c, is amended to read:


Subd. 1c.

Employer contributions.

(a) In addition to member contributions,
department heads shall pay a sum equal to deleted text beginthe followingdeleted text end new text begin15.60 new text endpercent of the salary upon
which deductions were made, which shall constitute the employer contribution to the funddeleted text begin:deleted text endnew text begin.new text end

deleted text begin before July 1, 2007
deleted text end
deleted text begin 12.60
deleted text end
deleted text begin from July 1, 2007, to June 30, 2008
deleted text end
deleted text begin 13.60
deleted text end
deleted text begin from July 1, 2008, to June 30, 2009
deleted text end
deleted text begin 14.60
deleted text end
deleted text begin from July 1, 2009, and thereafter
deleted text end
deleted text begin 15.60.
deleted text end

(b) Department contributions must be paid out of money appropriated to departments
for this purpose.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 5.

Minnesota Statutes 2008, 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
new text begin deductions were withheld from salary and new text endcontributions were madedeleted text begin,deleted text end new text begin at the applicable rates
under section 353.27, 353.65, or 353E.03;
new text end

new text begin (2) new text endperiods new text beginof service new text endcovered by payments in lieu of salary deductions under deleted text beginsectiondeleted text endnew text begin
sections 353.27, subdivision 12, and
new text end 353.35;

deleted text begin (2)deleted text end new text begin(3) new text endservice 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;

deleted text begin (3)deleted text end new text begin(4) new text enda period of authorized leave of absence with pay from which deductions for
employee contributions are made, deposited, and credited to the fund;

deleted text begin (4)deleted text end new text begin(5) new text enda period of authorized personal, parental, or medical leave of absence without
pay, including a leave of absence covered under the federal Family Medical Leave Act,
that does not exceed one year, and for which a member obtained service credit for each
month in the leave period by payment under section 353.0161 to the fund made in place of
salary deductions. An employee must return to public service and render a minimum of
three months of allowable service in order to be eligible to make payment under section
353.0161 for a subsequent authorized leave of absence without pay. Upon payment, the
employee must be granted allowable service credit for the purchased period;

deleted text begin (5)deleted text end new text begin(6) new text enda 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 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 rate of 8.5 percent a year, 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 8.5 percent interest, 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 deleted text begin20deleted text end new text begin30 new text enddays 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;

deleted text begin (6)deleted text end new text begin(7) new text endan 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; deleted text beginor
deleted text end

deleted text begin (7)deleted text end new text begin(8) new text enda period 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 new text beginwith
the same governmental subdivision
new text endupon 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 is 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 deleted text begin20deleted text end new text begin30 new text enddays 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 a rate of 8.5 percent
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 perioddeleted text begin.deleted text endnew text begin; or
new text end

new text begin (9) a period specified under subdivision 40.
new text end

(b) For calculating benefits under sections 353.30, 353.31, 353.32, and 353.33 for
state officers and employees displaced by the Community Corrections Act, chapter 401,
and transferred into county service under section 401.04, "allowable service" means the
combined years of allowable service as defined in paragraph (a), clauses (1) to (6), and
section 352.01, subdivision 11.

(c) For a public employee who has prior service covered by a local police or
firefighters relief association that has consolidated with the Public Employees Retirement
Association or to which section 353.665 applies, and who has elected the type of benefit
coverage provided by the public employees police and fire fund either under section
353A.08 following the consolidation or under section 353.665, subdivision 4, "applicable
service" is a period of service credited by the local police or firefighters relief association
as of the effective date of the consolidation based on law and on bylaw provisions
governing the relief association on the date of the initiation of the consolidation procedure.

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

(e) MS 2002 [Expired]

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2008, section 353.0161, subdivision 1, is amended to read:


Subdivision 1.

Application.

This section applies to employees covered by any plan
specified in this chapter or chapter 353E for any period of authorized leave of absence
specified in section 353.01, subdivision 16, paragraph (a), clause deleted text begin(4)deleted text endnew text begin (5)new text end, for which the
employee obtains credit for allowable service by making payment as specified in this
section to the applicable fund.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2008, section 353.27, subdivision 2, is amended to read:


Subd. 2.

Employee contribution.

(a) new text beginFor a basic member, new text endthe employee
contribution is deleted text beginthe following applicable percentage of the totaldeleted text end new text begin9.10 percent of new text endsalarydeleted text begin
amount for a "basic member" and
deleted text endnew text begin.new text end For a deleted text begin"coordinated member":deleted text endnew text begin coordinated member,
the employee contribution is six percent of salary plus any contribution rate adjustment
under subdivision 3b.
new text end

deleted text begin Basic Program
deleted text end
deleted text begin Coordinated Program
deleted text end
deleted text begin Effective before January 1, 2006
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 5.10
deleted text end
deleted text begin Effective January 1, 2006
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 5.50
deleted text end
deleted text begin Effective January 1, 2007
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 5.75
deleted text end
deleted text begin Effective January 1, 2008
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 6.00 plus any contribution
rate adjustment under
subdivision 3b
deleted text end

(b) These contributions must be made by deduction from salary as defined in section
353.01, subdivision 10, in the manner provided in subdivision 4. If any portion of a
member's salary is paid from other than public funds, the member's employee contribution
must be based on the total salary received by the member from all sources.

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2008, section 353.27, subdivision 3, is amended to read:


Subd. 3.

Employer contribution.

(a) new text beginFor a basic member, new text endthe employer
contribution is deleted text beginthe following applicable percentage of the totaldeleted text end new text begin9.10 percent of new text endsalary
deleted text begin amount for "basic members" anddeleted text endnew text begin.new text end For deleted text begin"coordinated members":deleted text endnew text begin a coordinated member,
the employer contribution is six percent of salary plus any contribution rate adjustment
under subdivision 3b.
new text end

deleted text begin Basic Program
deleted text end
deleted text begin Coordinated Program
deleted text end
deleted text begin Effective before January 1, 2006
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 5.10
deleted text end
deleted text begin Effective January 1, 2006
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 5.50
deleted text end
deleted text begin Effective January 1, 2007
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 5.75
deleted text end
deleted text begin Effective January 1, 2008
deleted text end
deleted text begin 9.10
deleted text end
deleted text begin 6.00 plus any contribution
rate adjustment under
subdivision 3b
deleted text end

(b) This contribution must be made from funds available to the employing
subdivision by the means and in the manner provided in section 353.28.

new text begin EFFECTIVE DATE. new text end

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

Sec. 9.

Minnesota Statutes 2008, section 353.27, subdivision 7, is amended to read:


Subd. 7.

Adjustment for erroneous receipts or disbursements.

(a) Except
as provided in paragraph (b), erroneous employee deductions and erroneous employer
contributions and additional employer contributions for a person, who otherwise does not
qualify for membership under this chapter, are considered:

(1) valid if the initial erroneous deduction began before January 1, 1990. Upon
determination of the error by the association, the person may continue membership in the
association while employed in the same position for which erroneous deductions were
taken, or file a written election to terminate membership and apply for a refund upon
termination of public service or defer an annuity under section 353.34; or

(2) invalid, if the initial erroneous employee deduction began on or after January 1,
1990. Upon determination of the error, the association shall refund all erroneous employee
deductions and all erroneous employer contributions as specified in paragraph (d). No
person may claim a right to continued or past membership in the association based on
erroneous deductions which began on or after January 1, 1990.

(b) Erroneous deductions taken from the salary of a person who did not qualify
for membership in the association by virtue of concurrent employment before July 1,
1978, which required contributions to another retirement fund or relief association
established for the benefit of officers and employees of a governmental subdivision, are
invalid. Upon discovery of the error, the association shall remove all invalid service and,
upon termination of public service, the association shall refund all erroneous employee
deductions to the person, with interest new text beginas determined new text endunder section 353.34, subdivision 2,
and all erroneous employer contributions new text beginwithout interest new text endto the employer. This paragraph
has both retroactive and prospective application.

(c) Employer contributions and employee deductions taken in error from amounts
which are not salary under section 353.01, subdivision 10, are invalid upon discovery by
the association and must be refunded as specified in paragraph (d).

(d) Upon discovery of the receipt of erroneous deductions and contributions under
paragraph (a), clause (2), or paragraph (c), the association must require the employer to
discontinue the erroneous employee deductions and erroneous employer contributions.
Upon discontinuation, the association either must refund the invalid employee deductions
to the person deleted text beginwithoutdeleted text end new text beginwith new text endinterest new text beginas determined under section 353.34, subdivision 2, new text endand
the invalid employer contributions new text beginwithout interest new text endto the employer or provide a credit
against future contributions payable by the employer for the amount of all erroneous
deductions and contributions. If the employing unit receives a credit under this paragraph,
the employing unit is responsible for refunding to the applicable employee any amount
that had been erroneously deducted from the person's salarynew text begin, with interest as specified
in this paragraph
new text end. In the event that a retirement annuity or disability benefit has been
computed using invalid service or salary, the association must adjust the annuity or benefit
and recover any overpayment under subdivision 7b.

(e) In the event that a salary warrant or check from which a deduction for the
retirement fund was taken has been canceled or the amount of the warrant or check
returned to the funds of the department making the payment, a refund of the sum
deducted, or any portion of it that is required to adjust the deductions, must be made
to the department or institution.

(f) Any refund to a member under this subdivision that is reasonably determined
to cause the plan to fail to be a qualified plan under section 401(a) of the federal
Internal Revenue Code, as amended, may not be refunded and instead must be credited
against future contributions payable by the employer. The employer receiving the
credit is responsible for refunding to the applicable employee any amount that had been
erroneously deducted from the person's salarynew text begin, with interest as specified in paragraph (d)new text end.

new text begin (g) Notwithstanding the payment of interest on erroneously reported employee
contributions provided for under this section, the association may correct plan operational
failures by applying the procedures defined in the Internal Revenue Service Employee
Plans Compliance Resolution System's Revenue Procedures.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section applies to any refund issued on or after June
1, 2009.
new text end

Sec. 10.

Minnesota Statutes 2008, section 353.33, subdivision 1, is amended to read:


Subdivision 1.

Age, service, and salary requirements.

A coordinated new text beginor basic
new text endmember who has at least three years of allowable service and becomes totally and
permanently disabled before normal retirement age, deleted text beginand a basic member who has at least
three years of allowable service and who becomes totally and permanently disabled,
deleted text end upon
application as defined under section 353.031, is entitled to a disability benefit in an amount
determined under subdivision 3. If the disabled person's public service has terminated
at any time, at least two of the required three years of allowable service must have been
rendered after last becoming an active member.

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2008, section 353.33, is amended by adding a subdivision
to read:


new text begin Subd. 1a. new text end

new text begin Benefit restriction. new text end

new text begin No person is entitled to receive disability benefits
and a retirement annuity at the same time.
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. 12.

Minnesota Statutes 2008, section 353.33, subdivision 11, is amended to read:


Subd. 11.

Coordinated member new text begindisabilitant transfer to new text endretirement status.

deleted text beginNo
person is entitled to receive disability benefits and a retirement annuity at the same time.
deleted text end
The disability benefits paid to a coordinated member must terminate when the person
reaches normal retirement age. If the coordinated member is still totally and permanently
disabled upon attaining normal retirement age, the coordinated member is deemed to be on
retirement status. If an optional annuity is elected under subdivision 3a, the coordinated
member shall receive an annuity under the terms of the optional annuity previously
elected, or, if an optional annuity is not elected under subdivision 3a, the coordinated
member may elect to receive a normal retirement annuity under section 353.29 or an
annuity equal to the disability benefit paid before the coordinated member reaches normal
retirement age, whichever amount is greater, or elect to receive an optional annuity
under section 353.30, subdivision 3. The annuity of a disabled coordinated member who
attains normal retirement age must be computed under the law in effect upon attainment
of normal retirement age. Election of an optional annuity must be made before the
coordinated member attains normal retirement age. If an optional annuity is elected, the
election is effective on the date on which the person attains normal retirement age and
the optional annuity begins to accrue on the first day of the month next following the
month in which the person attains that age.

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

Minnesota Statutes 2008, section 353.33, subdivision 12, is amended to read:


Subd. 12.

Basic deleted text begindisabilitydeleted text end new text begindisabilitant transfer to retirement status; new text endsurvivor
benefits.

new text begin(a) new text endIf a basic member who is receiving a disability benefit under subdivision 3deleted text begin:
deleted text end

deleted text begin (1)deleted text end dies before attaining age 65 or within five years of the effective date of the
disability, whichever is later, the surviving spouse is entitled to receive a survivor
benefit under section 353.31, deleted text beginunlessdeleted text end new text beginand any dependent child or children are entitled to
dependent child benefits under section 353.31, subdivision 1b, paragraph (b). If there are
no dependent children, in lieu of the survivor benefit specified under section 353.31,
new text endthe
surviving spouse deleted text beginelecteddeleted text end new text beginmay elect new text endto receive a refund under section 353.32, subdivision 1deleted text begin;deleted text endnew text begin.
new text end

deleted text begin (2)deleted text end new text begin(b) If a basic member who is receiving a disability benefit under subdivision 3 new text endis
living at age 65 or five years after the effective date of the disability, whichever is later, the
basic member may deleted text begincontinue todeleted text end receive a normal new text beginretirement annuity equal to the new text enddisability
benefitnew text begin previously received, adjusted for the amount no longer payable under subdivision
3, paragraph (b)
new text end, or new text beginthe person may new text endelect a joint and survivor optional annuity under
section 353.31, subdivision 1b. The election of the joint and survivor optional annuity
must occur within 90 days of attaining age 65 or of reaching the five-year anniversary
of the effective date of the disability benefit, whichever is later. The optional annuity
takes effect on the first day of the month following the month in which the person attains
age 65 or reaches the five-year anniversary of the effective date of the disability benefit,
whichever is laterdeleted text begin; ordeleted text endnew text begin.
new text end

deleted text begin (3) if there is a dependent child or children under clause (1) or (2), the dependent
child is entitled to a dependent child benefit under section 353.31, subdivision 1b,
paragraph (b).
deleted 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. 14.

Minnesota Statutes 2008, section 353.65, subdivision 2, is amended to read:


Subd. 2.

Employee contribution deleted text beginratedeleted text end.

deleted text begin(a)deleted text end The employee contribution is deleted text beginan amount
equal to the
deleted text end new text begin9.4 new text endpercent of the deleted text begintotaldeleted text end salary of the member deleted text beginspecified in paragraph (b)deleted text end. This
contribution must be made by deduction from salary in the manner provided in subdivision
4. Where any portion of a member's salary is paid from other than public funds, the
member's employee contribution is based on the total salary received from all sources.

deleted text begin (b) For calendar year 2006, the employee contribution rate is 7.0 percent. For
calendar year 2007, the employee contribution rate is 7.8 percent. For calendar year 2008,
the employee contribution rate is 8.6 percent. For calendar year 2009 and thereafter, the
employee contribution rate is 9.4 percent.
deleted 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. 15.

Minnesota Statutes 2008, section 353.65, subdivision 3, is amended to read:


Subd. 3.

Employer contribution deleted text beginratedeleted text end.

deleted text begin(a)deleted text end The employer contribution deleted text beginshall be an
amount equal to the
deleted text end new text beginis 14.1 new text endpercent of the deleted text begintotaldeleted text end salary of deleted text begineverydeleted text end new text beginthe new text endmember deleted text beginas specified in
paragraph (b)
deleted text end. This contribution deleted text beginshalldeleted text end new text beginmust new text endbe made from funds available to the employing
subdivision by the means and in the manner provided in section 353.28.

deleted text begin (b) For calendar year 2006, the employer contribution rate is 10.5 percent. For
calendar year 2007, the employer contribution rate is 11.7 percent. For calendar year 2008,
the employer contribution rate is 12.9 percent. For calendar year 2009 and thereafter, the
employer contribution rate is 14.1 percent.
deleted 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. 16.

Minnesota Statutes 2008, section 353A.08, subdivision 6a, is amended to read:


Subd. 6a.

Military service contribution and refund.

A person who was an active
member of a local police or firefighters relief association upon its consolidation with the
public employees retirement association, and who was otherwise eligible for automatic
service credit for military service under Minnesota Statutes 2000, section 423.57, and
who has not elected the type of benefit coverage provided by the public employees
police and fire fund at the time of consolidation, must make employee contributions
under section 353.01, subdivision 16, paragraph deleted text begin(h)deleted text endnew text begin (a), clause (8)new text end, to receive allowable
service credit from the association for a military service leave after the effective date of the
consolidation. A person who later elects, under subdivision 3, to retain benefit coverage
under the bylaws of the local relief association is eligible for a refund from the association
at the time of retirement. The association shall refund the employee contributions
plus interest at the rate of six percent, compounded quarterly, from the date on which
contributions were made until the first day of the month in which the refund is paid. The
employer shall receive a refund of the employer contributions. The association shall not
pay a refund to a person who later elects, under subdivision 3, the type of benefit coverage
provided by the public employees police and fire fund or to the person's employer.

new text begin EFFECTIVE DATE. new text end

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

Sec. 17.

Minnesota Statutes 2008, section 354.05, is amended by adding a subdivision
to read:


new text begin Subd. 41. new text end

new text begin Annual base salary. new text end

new text begin (a) "Annual base salary" means:
new text end

new text begin (1) for an independent school district or educational cooperative, the lowest full-time
Bachelor of Arts (BA) base contract salary for the previous fiscal year for that employing
unit;
new text end

new text begin (2) for a charter school, the lowest starting annual salary for a full-time licensed
teacher employed during the previous fiscal year for that employing unit; and
new text end

new text begin (3) for a state agency or professional organization, the lowest starting annual salary
for a full-time Teachers Retirement Association covered position for the previous fiscal
year for that employing unit.
new text end

new text begin (b) If there is no previous fiscal year data because an employer unit is new and
paragraph (c) does not apply, the annual base salary for the first year of operation will be
as stated in paragraph (a), except that the base contract salary for the current fiscal year,
rather than the previous fiscal year, must be used.
new text end

new text begin (c) For a new employer unit created as a result of a merger or consolidation, the
annual base salary will be the lowest annual base salary as specified in paragraph (a) for
any of the employer units involved in the merger or consolidation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2010.
new text end

Sec. 18.

Minnesota Statutes 2008, section 354.05, is amended by adding a subdivision
to read:


new text begin Subd. 42. new text end

new text begin Fiscal year. new text end

new text begin The fiscal year of the association begins on July 1 of each
calendar year and ends on June 30 of the following calendar year.
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. 19.

Minnesota Statutes 2008, section 354.091, is amended to read:


354.091 SERVICE CREDIT.

new text begin Subdivision 1. new text end

new text begin Definition; monthly base salary. new text end

new text begin For purposes of this section,
"monthly base salary" means the annual base salary, as defined in section 354.05,
subdivision 41, divided by 12.
new text end

new text begin Subd. 2. new text end

new text begin Service credit annual limit. new text end

deleted text begin(a) In computing service credit,deleted text end No teacher
may receive credit for more than one year of teaching service for any fiscal year.
deleted text begin Additionally, in crediting allowable service:
deleted text end

deleted text begin (1) if a teacher teaches less than five hours in a day, service credit must be given for
the fractional part of the day as the term of service performed bears to five hours;
deleted text end

deleted text begin (2) if a teacher teaches five or more hours in a day, service credit must be given for
only one day;
deleted text end

deleted text begin (3) if a teacher teaches at least 170 full days in any fiscal year, service credit must be
given for a full year of teaching service; and
deleted text end

deleted text begin (4) if a teacher teaches for only a fractional part of the year, service credit must be
given for such fractional part of the year in the same relationship as the period of service
performed bears to 170 days.
deleted text end

deleted text begin (b) A teacher must receive a full year of service credit based on the number of days
in the employer's full school year if that school year is less than 170 days. Teaching
service performed before July 1, 1961, must be computed under the law in effect at the
time it was performed.
deleted text end

deleted text begin (c) A teacher must not lose or gain retirement service credit as a result of the
employer converting to a flexible or alternate work schedule. If the employer converts
to a flexible or alternate work schedule, the forms for reporting teaching service and the
procedures for determining service credit must be determined by the executive director
with the approval of the board of trustees.
deleted text end

new text begin Subd. 3. new text end

new text begin Service credit calculation. new text end

new text begin (a) Except as specified in subdivisions 4 and
5, service credit will be calculated monthly by dividing the teacher's monthly salary by
the monthly base salary for the teacher's employing unit and multiplying the result by
11.1 percent.
new text end

new text begin (b) For purposes of computing service credit, salary will be allocated to each
calendar month based on the pay period begin and end dates. If the pay period covers
more than one calendar month, the salary must be allocated based on the number of days
in each calendar month.
new text end

new text begin (c) A teacher may not receive more than 11.1 percent of a year's service credit in
a calendar month.
new text end

new text begin (d) Annual service credit is calculated by adding the allowable monthly service
credit for all 12 months of the fiscal year with the result rounded to two decimal places,
subject to the annual limit specified in subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Service credit determination for Minnesota State Colleges and
Universities system teachers.
new text end

deleted text begin(d)deleted text end For all services rendered on or after July 1, 2003,
service credit for all members employed by the Minnesota State Colleges and Universities
system must be determined:

(1) for full-time employees, by the definition of full-time employment contained in
the collective bargaining agreement for those units listed in section 179A.10, subdivision
2
, or contained in the applicable personnel or salary plan for those positions designated in
section 179A.10, subdivision 1;new text begin and
new text end

(2) for part-time employees, by the appropriate proration of full-time equivalency
based on the provisions contained in the collective bargaining agreement for those units
listed in section 179A.10, subdivision 2, or contained in the applicable personnel or salary
plan for those positions designated in section 179A.10, subdivision 1, and the applicable
procedures of the Minnesota State Colleges and Universities systemdeleted text begin; anddeleted text endnew text begin.
new text end

deleted text begin (3) in no case may a member receive more than one year of service credit for any
fiscal year.
deleted text end

new text begin Subd. 5. new text end

new text begin Service credit procedure, nontraditional schedules. new text end

new text begin For employer units
that have nontraditional work schedules or pay schedules, the procedure for determining
service credit must be approved by the executive director.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for teaching service performed after
June 30, 2010.
new text end

Sec. 20.

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


Subd. 2.

Employeenew text begin contributionnew text end.

(a) new text beginFor a basic member, new text endthe employee
contribution to the fund is deleted text beginan amount equal to the following percentagedeleted text end new text begin9.0 percent new text endof the
new text begin member's new text endsalary deleted text beginof a member:deleted text endnew text begin. For a coordinated member, the employee contribution is
5.5 percent of the member's salary.
new text end

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

(b) 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 the day following final enactment.
new text end

Sec. 21.

Minnesota Statutes 2008, section 354.44, subdivision 4, is amended to read:


Subd. 4.

Retirement annuity accrual date.

(a) An annuity payment begins to
accrue, provided that the age and service requirements under subdivision 1 are satisfied,
after the termination of teaching service, or after the application for retirement has been
filed with the deleted text beginboard, whichever is laterdeleted text endnew text begin executive directornew text end, as follows:

(1) on the deleted text begin16thdeleted text end day deleted text beginofdeleted text end new text beginafter new text endthe deleted text beginmonth ofdeleted text end termination deleted text beginor filing if the termination or
filing occurs on or before the 15th day of the month
deleted text endnew text begin of teaching servicenew text end;

(2) on the deleted text beginfirst day of the month following the month of termination or filing if
the termination or filing occurs on or after the 16th day of the month
deleted text endnew text begin day of receipt of
application if the application is filed with the executive director after the six-month period
that occurs immediately following the termination of teaching service
new text end;

(3) on July 1 for all school principals and other administrators who receive a full
annual contract salary during the fiscal year for performance of a full year's contract
duties; or

deleted text begin (4) a later date to be either the first or the 16th day of a month occurring within the
six-month period immediately following the termination of teaching service as specified
under paragraph (b) by the member.
deleted text end

deleted text begin (b)deleted text end new text begin(4) new text endIf an application for retirement is filed with the deleted text beginboarddeleted text end new text beginexecutive director
new text endduring the six-month period that occurs immediately following the termination of teaching
service, the annuity may begin to accrue as if the application for retirement had been filed
with the board on the date teaching service terminated deleted text beginor a later date under paragraph
(a), clause (4)
deleted text end.

new text begin (b) A member, or a person authorized to act on behalf of the member, may specify a
different date of retirement from that determined in paragraph (a), as follows:
new text end

new text begin (1) if the application is filed on or before the date of termination of teaching service,
the accrual date may be a date no earlier than the day after the termination of teaching
service and no later than six months after the termination date; or
new text end

new text begin (2) if the application is filed during the six-month period that occurs immediately
following the termination of teaching service, the accrual date may begin to accrue
retroactively, but no earlier than the day after teaching service terminated and no later
than six months after the termination date.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2010.
new text end

Sec. 22.

Minnesota Statutes 2008, section 354.44, subdivision 5, is amended to read:


Subd. 5.

Resumption of teaching service after retirement.

(a) Any person who
retired under the provisions of this chapter and has thereafter resumed teaching in any
employer unit to which this chapter applies is eligible to continue to receive payments in
accordance with the annuity except that all or a portion of the annuity payments must be
deferred during the calendar year immediately following deleted text beginany calendardeleted text end new text beginthe fiscal new text endyear in
which the person's salary from the teaching service is in an amount greater than $46,000.
The amount of the annuity deferral is one-half of the salary amount in excess of $46,000
and must be deducted from the annuity payable for the calendar year immediately
following the deleted text begincalendardeleted text end new text beginfiscal new text endyear in which the excess amount was earned.

(b) If the person is retired for only a fractional part of the deleted text begincalendardeleted text end new text beginfiscal new text endyear during
the initial year of retirement, the maximum reemployment salary exempt from triggering a
deferral as specified in this subdivision must be prorated for that deleted text begincalendardeleted text end new text beginfiscal new text endyear.

(c) After a person has reached the Social Security normal retirement age, no deferral
requirement is applicable regardless of the amount of salary.

(d) The amount of the retirement annuity deferral must be handled or disposed
of as provided in section 356.47.

(e) For the purpose of this subdivision, salary from teaching service includes, but is
not limited to:

(1) all income for services performed as a consultant or an independent contractor
for an employer unit covered by the provisions of this chapter; and

(2) the greater of either the income received or an amount based on the rate paid
with respect to an administrative position, consultant, or independent contractor in an
employer unit with approximately the same number of pupils and at the same level as the
position occupied by the person who resumes teaching service.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2010.
new text end

Sec. 23.

Minnesota Statutes 2008, section 354.47, subdivision 1, is amended to read:


Subdivision 1.

Death before retirement.

(a) If a member dies before retirement
and is covered under section 354.44, subdivision 2, and neither an optional annuity, nor a
reversionary annuity, nor a benefit under section 354.46, subdivision 1, is payable to the
survivors if the member was a basic member, then the surviving spouse, or if there is no
surviving spouse, the designated beneficiary is entitled to an amount equal to the member's
accumulated deductions with interest credited to the account of the member to the date of
death of the member. If the designated beneficiary is a minor, interest must be credited to
the date the beneficiary reaches legal age, or the date of receipt, whichever is earlier.

(b) If a member dies before retirement and is covered under section 354.44,
subdivision 6
, and neither an optional annuity, nor reversionary annuity, nor the benefit
described in section 354.46, subdivision 1, is payable to the survivors if the member
was a basic member, then the surviving spouse, or if there is no surviving spouse,
the designated beneficiary is entitled to an amount equal to the member's accumulated
deductions credited to the account of the member as of June 30, 1957, and from July 1,
1957, to the date of death of the member, the member's accumulated deductions plus
six percent interest compounded annually.

(c) If the designated beneficiary under paragraph (b) is a minor, any interest credited
under that paragraph must be credited to the date the beneficiary reaches legal age, or
the date of receipt, whichever is earlier.

new text begin (d) The amount of any refund payable under this subdivision must be reduced by
any permanent disability payment under section 354.48 received by the member.
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. 24.

Minnesota Statutes 2008, section 354.48, subdivision 4, is amended to read:


Subd. 4.

Determination by executive director.

(a) The executive director shall
have the member examined by at least two licensed physicians, licensed chiropractors,
or licensed psychologists deleted text beginselected by the medical adviserdeleted text end.

(b) These physicians, chiropractors, or psychologists with respect to a mental
impairment, shall make written reports to the executive director concerning the member's
disability, including expert opinions as to whether or not the member is permanently and
totally disabled within the meaning of section 354.05, subdivision 14.

(c) The executive director shall also obtain written certification from the last
employer stating whether or not the member was separated from service because of
a disability which would reasonably prevent further service to the employer and as a
consequence the member is not entitled to compensation from the employer.

(d) If, upon the consideration of the reports of the physicians, chiropractors, or
psychologists and any other evidence presented by the member or by others interested
therein, the executive director finds that the member is totally and permanently disabled,
the executive director shall grant the member a disability benefit.

(e) An employee who is placed on leave of absence without compensation because
of disability is not barred from receiving a disability benefit.

new text begin EFFECTIVE DATE. new text end

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

Sec. 25.

Minnesota Statutes 2008, section 354.48, subdivision 6, is amended to read:


Subd. 6.

Regular physical examinations.

At least once each year during the first
five years following the allowance of a disability benefit to any member, and at least once
in every three-year period thereafter, the executive director deleted text beginshalldeleted text end new text beginmay new text endrequire the disability
deleted text begin beneficiarydeleted text end new text beginrecipient new text endto undergo an expert examination by a physician or physicians,
by a chiropractor or chiropractors, or by one or more psychologists with respect to a
mental impairment, engaged by the executive director. If an examination indicates that the
member is no longer permanently and totally disabled or that the member is engaged or is
able to engage in a substantial gainful occupation, payments of the disability benefit by
the association must be discontinued. The payments must be discontinued as soon as the
member is reinstated to the payroll following sick leave, but payment may not be made for
more than 60 days after the physicians, the chiropractors, or the psychologists engaged by
the executive director find that the person is no longer permanently and totally disabled.

new text begin EFFECTIVE DATE. new text end

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

Sec. 26.

Minnesota Statutes 2008, section 354.49, subdivision 2, is amended to read:


Subd. 2.

Calculation.

new text begin(a) new text endExcept as provided in section 354.44, subdivision 1,
any person who ceases to be a member by reason of termination of teaching service,
shall receive a refund in an amount equal to the accumulated deductions credited to the
account as of June 30, 1957, and after July 1, 1957, the accumulated deductions with
interest at the rate of six percent per annum compounded annually. For the purpose of
this subdivision, interest shall be computed on fiscal year end balances to the first day of
the month in which the refund is issued.

new text begin (b) If the person has received permanent disability payments under section 354.48,
the refund amount must be reduced by the amount of those payments.
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. 27.

Minnesota Statutes 2008, section 354.52, subdivision 2a, is amended to read:


Subd. 2a.

deleted text beginAnnualdeleted text end Postretirement income deleted text beginreportsdeleted text endnew text begin reportingnew text end.

deleted text beginOn or before each
February 15, a representative authorized by an
deleted text end new text beginEach new text endemploying unit must report to the
executive director the amount of income earned during the previous deleted text begincalendardeleted text end new text beginfiscal new text endyear
by each retiree for teaching service performed after retirement. This deleted text beginannual report must bedeleted text end
new text begin shall be done through the payroll reporting system and is new text endbased on reemployment income
as defined in section 354.44, subdivision 5deleted text begin, and it must be made on a form provided by the
executive director
deleted text end. deleted text beginSigningdeleted text end new text beginSubmitting new text endthe deleted text beginreportdeleted text end new text beginsalary data through payroll reporting
new text endhas the force and effect of an oath as to the correctness of the amount of postretirement
reemployment income earned.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2010.
new text end

Sec. 28.

Minnesota Statutes 2008, section 354.52, subdivision 4b, is amended to read:


Subd. 4b.

Payroll cycle reporting requirements.

An employing unit shall provide
the following data to the association for payroll warrants on an ongoing basis within 14
calendar days after the date of the payroll warrant in a format prescribed by the executive
director:

(1) association member number;

(2) employer-assigned employee number;

(3) Social Security number;

(4) amount of each salary deduction;

(5) amount of salary as defined in section 354.05, subdivision 35, from which each
deduction was made;

(6) reason for payment;

(7) deleted text beginservice credit;
deleted text end

deleted text begin (8)deleted text end the beginning and ending dates of the payroll period covered and the date
of actual payment;

deleted text begin (9)deleted text end new text begin(8) new text endfiscal year of salary earnings;

deleted text begin (10)deleted text end new text begin(9) new text endtotal remittance amount including employee, employer, and additional
employer contributions; deleted text beginand
deleted text end

new text begin (10) reemployed annuitant salary under section 354.44, subdivision 5; and
new text end

(11) other information as may be required by the executive director.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2010, except for the
striking of clause (7), which is effective July 1, 2010.
new text end

Sec. 29.

Minnesota Statutes 2008, section 354.52, is amended by adding a subdivision
to read:


new text begin Subd. 4d. new text end

new text begin Annual base salary reporting. new text end

new text begin An employing unit must provide the
following data to the association on or before June 30 of each fiscal year:
new text end

new text begin (1) annual base salary, as defined in section 354.05, subdivision 41; and
new text end

new text begin (2) beginning and ending dates for the regular school work year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 30.

Minnesota Statutes 2008, section 354.52, subdivision 6, is amended to read:


Subd. 6.

Noncompliance consequences.

new text begin(a) new text endAn employing unit that does not
comply with the reporting requirements under subdivision 2a, 4a, deleted text beginordeleted text end 4bnew text begin, or 4d,new text end must pay a
fine of $5 per calendar day until the association receives the required data.

new text begin (b) If the annual base salary required to be reported under subdivision 4d has not
been settled or determined as of June 16, the fine must commence if the annual base salary
has not been reported to the association within 14 days following the settlement date.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 31.

new text begin [354.543] PRIOR OR UNCREDITED MILITARY SERVICE CREDIT
PURCHASE.
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) If paragraph (b) does not
apply, a teacher who has at least three years of allowable service credit with the Teachers
Retirement Association and who performed service in the United States armed forces
before becoming a teacher as defined in section 354.05, subdivision 2, or who failed
to obtain service credit for a military leave of absence under the provisions of section
354.53, is entitled to purchase allowable and formula service credit for the initial period of
enlistment, induction, or call to active duty without any voluntary extension by making
payment under section 356.551.
new text end

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

new text begin (1) the teacher separated from service with the United States armed forces with a
dishonorable or bad conduct discharge or under other than honorable conditions; or
new text end

new text begin (2) the teacher has purchased or otherwise received service credit from any
Minnesota defined benefit public employee pension plan, other than a volunteer fire plan,
for the same period of service.
new text end

new text begin Subd. 2. new text end

new text begin Application and documentation. new text end

new text begin A teacher 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 teacher'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 Service credit grant. new text end

new text begin Allowable and formula service credit for the
purchase period must be granted by the Teachers Retirement Association to the purchasing
teacher upon receipt of the purchase payment amount. Payment must be made before the
teacher's termination of teaching service.
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. 32.

Minnesota Statutes 2008, section 354.55, subdivision 11, is amended to read:


Subd. 11.

Deferred annuity; augmentation.

(a) Any person covered under section
354.44, subdivision 6, who ceases to render teaching service, may leave the person's
accumulated deductions in the fund for the purpose of receiving a deferred annuity at
retirement. deleted text beginEligibility for an annuity under this subdivision is governed pursuant to
section 354.44, subdivision 1, or 354.60.
deleted text end

(b) The amount of the deferred retirement annuity is determined by section 354.44,
subdivision 6
, and augmented as provided in this subdivision. The required reserves
deleted text begin related to that portion ofdeleted text end new text beginfor new text endthe annuity which had accrued when the member ceased to
render teaching service must be augmentednew text begin, as further specified in this subdivision,new text end by
interest compounded annually from the first day of the month following the month during
which the member ceased to render teaching service to the effective date of retirement.

new text begin (c)new text end There shall be no augmentation if deleted text beginthisdeleted text end new text beginthe deferral new text endperiod is less than three months
or if deleted text beginthis period commences prior todeleted text end new text begindeferral commenced before new text endJuly 1, 1971. deleted text beginThe rates of
interest used for this purpose must be five percent compounded annually commencing
July 1, 1971, until January 1, 1981, and three percent compounded annually thereafter
until January 1 of the year following the year in which the former member attains age 55
and from that date to the effective date of retirement, the rate is five percent compounded
annually 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.
deleted text end

new text begin (d) For persons who became covered employees before July 1, 2006, with a deferral
period commencing after June 30, 1971, the annuity must be augmented using five
percent interest compounded annually until January 1, 1981, and three percent interest
compounded annually thereafter until January 1 of the year following the year in which
the deferred annuitant attains age 55. From that date to the effective date of retirement, the
rate is five percent compounded annually.
new text end

new text begin (e) For persons who become covered employees after June 30, 2006, the interest rate
used to augment the deferred annuity is 2.5 percent interest compounded annually.
new text end

new text begin (f)new text end If a person has more than one period of uninterrupted service, a separate average
salary determined under section 354.44, subdivision 6, must be used for each period and
the required reserves related to each period must be augmented deleted text beginby interest pursuant todeleted text end new text beginas
specified in
new text endthis subdivision. The sum of the augmented required reserves deleted text beginso determined
shall be the basis for purchasing
deleted text end new text beginis the present value of new text endthe deleted text begindeferreddeleted text end annuity.new text begin For the
purposes of this subdivision, "period of uninterrupted service" means a period of covered
teaching service during which the member has not been separated from active service for
more than one fiscal year.
new text end

new text begin (g)new text end If a person repays a refund, the service restored by the repayment must be
considered as continuous with the next period of service for which the person has
new text begin allowable service new text endcredit deleted text beginwith this funddeleted text endnew text begin in the Teachers Retirement Associationnew text end.

new text begin (h)new text end If a person does not render teaching service in any one fiscal year or more
consecutive fiscal years and then resumes teaching service, the formula percentages used
from the date of the resumption of teaching service must be those applicable to new
members.

new text begin (i)new text end The mortality table and interest assumption used to compute the annuity must be
the applicable mortality table established by the board under section 354.07, subdivision
1
, and the interest rate assumption under section 356.215 in effect when the member
retires. deleted text beginA period of uninterrupted service for the purposes of this subdivision means a
period of covered teaching service during which the member has not been separated from
active service for more than one fiscal year.
deleted text end

deleted text begin (c)deleted text end new text begin(j) new text endIn no case shall the annuity payable under this subdivision be less than the
amount of annuity payable deleted text beginpursuant todeleted text end new text beginunder new text endsection 354.44, subdivision 6.

deleted text begin (d)deleted text end new text begin(k) new text endThe requirements and provisions for retirement before normal retirement
age contained in section 354.44, subdivision 6, deleted text beginclause (3) or (5),deleted text end shall also apply to an
employee fulfilling the requirements with a combination of service as provided in section
354.60.

deleted text begin (e)deleted text end new text begin(l) new text endThe augmentation provided by this subdivision applies to the benefit provided
in section 354.46, subdivision 2.

deleted text begin (f)deleted text end new text begin(m) new text endThe augmentation provided by this subdivision shall not apply to any period
in which a person is on an approved leave of absence from an employer unit covered
by the provisions of this chapter.

deleted text begin (g)deleted text end new text begin(n) new text endThe retirement annuity or disability benefit of, or the survivor benefit payable
on behalf of, a former teacher who terminated service before July 1, 1997, which is not
first payable until after June 30, 1997, must be increased on an actuarial equivalent basis
to reflect the change in the postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a calculation procedure and
tables adopted by the board as recommended by an approved actuary and approved by the
actuary retained under section 356.214.

new text begin EFFECTIVE DATE. new text end

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

Sec. 33.

Minnesota Statutes 2008, section 354.66, subdivision 3, is amended to read:


Subd. 3.

Part-time teaching position, defined.

(a) For purposes of this section,
the term "part-time teaching position" means a teaching position within the district in
which the teacher is deleted text beginemployed for at least 50 full days or a fractional equivalent thereof as
prescribed in section 354.091, and for which the teacher is
deleted text end compensated deleted text beginindeleted text end new text beginfor new text endan amount
new text begin of at least 30 percent, but new text endnot exceeding 80 percent of the compensation established by the
board for a full-time teacher with identical education and experience with the employing
unit.

(b) For a teacher to which subdivision 1c, paragraph (b), applies, the term "part-time
teaching position" means a teaching position within the district in which the teacher is
deleted text begin employed for at least 25 full days or a fractional equivalent thereof as prescribed in section
354.091, and for which the teacher is
deleted text end compensated deleted text beginindeleted text end new text beginfor new text endan amount new text beginof at least 15 percent,
but
new text endnot exceeding 40 percent of the compensation established by the board for a full-time
teacher, with identical education and experience with the employing unit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for service provided after June 30,
2010.
new text end

Sec. 34.

Minnesota Statutes 2008, section 354A.096, is amended to read:


354A.096 MEDICAL LEAVE.

Any teacher in the coordinated program of the St. Paul Teachers Retirement Fund
Association or the new law coordinated program of the Duluth Teachers Retirement Fund
Association who is on an authorized medical leave of absence and subsequently returns
to teaching service is entitled to receive allowable service credit, not to exceed one year,
for the period of leave, upon making the prescribed payment to the fund. This payment
must include the required employee and employer contributions at the rates specified in
section 354A.12, subdivisions 1 and deleted text begin2deleted text endnew text begin 2anew text end, as applied to the member's average full-time
monthly salary rate on the date the leave of absence commenced plus annual interest at
the rate of 8.5 percent per year from the end of the fiscal year during which the leave
terminates to the end of the month during which payment is made. The member must pay
the total amount required unless the employing unit, at its option, pays the employer
contributions. The total amount required must be paid by the end of the fiscal year
following the fiscal year in which the leave of absence terminated or before the member
retires, whichever is earlier. Payment must be accompanied by a copy of the resolution or
action of the employing authority granting the leave and the employing authority, upon
granting the leave, must certify the leave to the association in a manner specified by the
executive director. A member may not receive more than one year of allowable service
credit during any fiscal year by making payment under this section. A member may not
receive disability benefits under section 354A.36 and receive allowable service credit
under this section for the same period of time.

new text begin EFFECTIVE DATE. new text end

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

Sec. 35.

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


Subd. 2a.

Employer regular and additional deleted text begincontribution ratesdeleted text endnew text begin contributionsnew text end.

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

(1) deleted text beginfor 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;
deleted text end

deleted text begin (2)deleted text end 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
4.50 percent
St. Paul Teachers Retirement
Fund Association
4.50 percent

deleted text begin (3)deleted text end new text begin(2) 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 end new text begin(3) new text endfor 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 end new text begin(4) new text endfor 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
new text begin 3.84 percent
new text end
deleted text begin deleted text end deleted text begin July 1, 1993 - June 30, 1994
deleted text end
deleted text begin deleted text end deleted text begin 0.50 percent
deleted text end
deleted text begin deleted text end deleted text begin July 1, 1994 - June 30, 1995
deleted text end
deleted text begin deleted text end deleted text begin 1.50 percent
deleted text end
deleted text begin deleted text end deleted text begin July 1, 1997, and thereafter
deleted text end
deleted text begin deleted text end deleted text begin 3.84 percent
deleted text end

(b) The 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.

(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.

new text begin EFFECTIVE DATE. new text end

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

Sec. 36.

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


new text begin Subd. 6. new text end

new text begin Erroneous salary deductions or direct payments. new text end

new text begin (a) Deductions taken
from the salary of an employee for the retirement fund in error must be refunded to the
employee upon the discovery of the error and after the verification of the error by the
employing unit making the deduction. The corresponding employer contribution and
additional employer contribution amounts attributable to the erroneous salary deduction
must be refunded to the employing unit.
new text end

new text begin (b) If salary deductions and employer contributions were erroneously transmitted
to the retirement fund and should have been transmitted to another Minnesota public
pension plan, the executive director must transfer these salary deductions and employer
contributions to the appropriate public pension fund without interest. For purposes of this
paragraph, a "Minnesota public pension plan" means a plan specified in section 356.30,
subdivision 3, or the plan governed by chapter 354B.
new text end

new text begin (c) A potential transfer under paragraph (b) that would cause the plan to fail to be a
qualified plan under section 401(a) of the Internal Revenue Code, as amended, must not
be made by the executive director. Within 30 days after being notified by the executive
director of the appropriate teachers retirement fund association of an unmade potential
transfer under this paragraph, the employer of the affected person must transmit an
amount representing the applicable salary deductions and employer contributions, without
interest, to the retirement fund of the appropriate Minnesota public pension plan fund.
The retirement association must provide a credit for the amount of the erroneous salary
deductions and employer contributions against future contributions from the employer.
new text end

new text begin (d) Erroneous direct payments of member-paid contributions or erroneous salary
deductions that were not refunded during the regular payroll cycle processing must be
refunded to the member, plus interest computed using the rate and method specified in
section 354A.37, subdivision 3.
new text end

new text begin (e) Any refund under this subdivision that would cause the plan to fail to be a
qualified plan under section 401(a) of the Internal Revenue Code, as amended, may not
be refunded and instead must be credited against future contributions payable by the
employer. The employer is responsible for refunding to the applicable employee any
amount that was erroneously deducted from the salary of the employee, with interest as
specified in paragraph (d).
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. 37.

Minnesota Statutes 2008, section 354A.36, subdivision 6, is amended to read:


Subd. 6.

Requirement for regular physical examinations.

At least once each year
during the first five years following the granting of a disability benefit to a coordinated
member by the board and at least once in every three year period thereafter, the board deleted text beginshalldeleted text end
new text begin may new text endrequire the disability benefit recipient to undergo an expert examination as a condition
for continued entitlement of the benefit recipient to receive a disability benefit. new text beginIf the board
requires an examination,
new text endthe expert examination must be made at the place of residence of
the disability benefit recipient or at any other place mutually agreeable to the disability
benefit recipient and the board. The expert examination must be made by a physician or
physicians, by a chiropractor or chiropractors, or by one or more psychologists engaged
by the board. The physician or physicians, the chiropractor or chiropractors, or the
psychologist or psychologists with respect to a mental impairment, conducting the expert
examination shall make a written report to the board concerning the disability benefit
recipient and the recipient's disability, including a statement of the expert opinion of
the physician, chiropractor, or psychologist as to whether or not the member remains
permanently and totally disabled within the meaning of section 354A.011, subdivision
14
. If the board determines from consideration of the written expert examination report
of the physician, of the chiropractor, or of the psychologist, with respect to a mental
impairment, that the disability benefit recipient is no longer permanently and totally
disabled or if the board determines that the benefit recipient is engaged or is able to
engage in a gainful occupation, unless the disability benefit recipient is partially employed
under subdivision 7, then further disability benefit payments from the fund must be
discontinued. The discontinuation of disability benefits must occur immediately if the
disability recipient is reinstated to the district payroll following sick leave and within 60
days of the determination by the board following the expert examination and report of the
physician or physicians, chiropractor or chiropractors, or psychologist or psychologists
engaged by the board that the disability benefit recipient is no longer permanently and
totally disabled within the meaning of section 354A.011, subdivision 14.

new text begin EFFECTIVE DATE. new text end

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

Sec. 38.

Minnesota Statutes 2008, section 356.401, subdivision 2, is amended to read:


Subd. 2.

Automatic deposits.

(a) The chief administrative officer of a covered
retirement plan may remit, through an automatic deposit system, annuity, benefit, or
refund payments only to a financial institution associated with the National Automated
Clearinghouse Association or a comparable successor organization that is trustee for a
person who is eligible to receive the annuity, benefit, or refund.

(b) Upon the request of a retiree, disabilitant, survivor, or former member, the chief
administrative officer of a covered retirement plan may remit the annuity, benefit, or
refund deleted text begincheckdeleted text end new text beginpayment new text endto the applicable financial institution for deposit in the person's
individual account or the person's joint account. new text beginIf an overpayment of benefits is paid
after the death of the annuitant or benefit recipient, the chief administrative officer of
the pension plan is authorized to issue an administrative subpoena consistent with the
requirements of section 13A.02, requiring the applicable financial institution to disclose
the names of all joint and co-owners of the account and a description of all deposits to,
and withdrawals from, the account which take place on or after the death of the annuitant
or benefit recipient.
new text endAn overpayment to a joint account after the death of the annuitant or
benefit recipient must be repaid to the fund of the applicable covered retirement plan by
the joint tenant if the overpayment is not repaid to that fund by the financial institution
associated with the National Automated Clearinghouse Association or its successor. The
governing board of the covered retirement plan may prescribe the conditions under which
these payments may be made.

new text begin EFFECTIVE DATE. new text end

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

Sec. 39.

Minnesota Statutes 2008, section 356.465, subdivision 1, is amended to read:


Subdivision 1.

Inclusion as recipient.

deleted text beginNotwithstanding any provision to the
contrary of the laws, articles of incorporation, or bylaws governing a covered retirement
plan specified in subdivision 3,
deleted text end A retiring member may designate a qualified supplemental
needs trust under subdivision 2 as the remainder recipient on an optional retirement
annuity form for a period not to exceed the lifetime of the beneficiary of the supplemental
needs trust.

new text begin EFFECTIVE DATE. new text end

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

Sec. 40.

Minnesota Statutes 2008, section 356.465, is amended by adding a subdivision
to read:


new text begin Subd. 4. new text end

new text begin Expanded eligibility. new text end

new text begin (a) Notwithstanding subdivision 1, for a retirement
plan specified in paragraph (b), a designation under subdivision 1 may be made by an
active, disabled, deferred, or retiring member.
new text end

new text begin (b) The applicable plan is the Teachers Retirement Association.
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. 41.

Minnesota Statutes 2008, section 356.611, subdivision 3, is amended to read:


Subd. 3.

Maximum benefit limitations.

A member's annual benefit, if necessary,
must be reduced to the extent required by section 415(b) of the Internal Revenue Code,
as adjusted by the United States secretary of the treasury under section 415(d) of the
Internal Revenue Codenew text begin for any applicable increases in the cost of living after the member's
termination of employment
new text end. For purposes of section 415 of the Internal Revenue Code, the
limitation year of a pension plan covered by this section must be the fiscal year or calendar
year of that plan, whichever is applicable. deleted text beginThe accrued benefit limitation described in
section 415(e) of the Internal Revenue Code must cease to be effective for limitation
years beginning after December 31, 1999.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 42.

Minnesota Statutes 2008, section 356.611, subdivision 4, is amended to read:


Subd. 4.

Compensation.

(a) For purposes of this section, compensation means a
member's compensation actually paid or made available for any limitation year deleted text begindetermined
as provided by
deleted text end new text beginincluding items described in new text endtreasury regulation section deleted text begin1.415-2(d)(10)deleted text endnew text begin
1.415-2(d)(2) and excluding items described in treasury regulation section 1.415-2(d)(3)
new text end.

(b) Compensation for any period includes:

(1) any elective deferral as defined in section 402(g)(3) of the Internal Revenue Code;

(2) any elective amounts that are not includable in a member's gross income by
reason of sections 125 or 457 of the Internal Revenue Code; and

(3) any elective amounts that are not includable in a member's gross income by
reason of section 132(f)(4) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 43.

Minnesota Statutes 2008, section 356.635, subdivision 6, is amended to read:


Subd. 6.

Eligible retirement plan.

(a) An "eligible retirement plan" is:

(1) an individual retirement account under section 408(a) of the Internal Revenue
Code;

(2) an individual retirement annuity plan under section 408(b) of the Internal
Revenue Code;

(3) an annuity plan under section 403(a) of the Internal Revenue Code;

(4) a qualified trust plan under section 401(a) of the Internal Revenue Code that
accepts the distributee's eligible rollover distribution;

(5) an annuity contract under section 403(b) of the Internal Revenue Code; deleted text beginor
deleted text end

(6) an eligible deferred compensation plan under section 457(b) of the Internal
Revenue Code, which is maintained by a state or local government and which agrees to
separately account for the amounts transferred into the plandeleted text begin.deleted text endnew text begin; or
new text end

new text begin (7) in the case of an eligible rollover distribution to a nonspousal beneficiary, an
individual account or annuity treated as an inherited individual retirement account under
section 402(c)(11) of the Internal Revenue Code.
new text end

(b) For distributions of after-tax contributions which are not includable in gross
income, the after-tax portion may be transferred only to an individual retirement account
or annuity described in section 408(a) or (b) of the Internal Revenue Code, or to a qualified
defined contribution plan described in either section 401(a) or 403(a) of the Internal
Revenue Code, that agrees to separately account for the amounts transferred, including
separately accounting for the portion of the distribution which is includable in gross
income and the portion of the distribution which is not includable.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 44.

Minnesota Statutes 2008, section 356.635, subdivision 7, is amended to read:


Subd. 7.

Distributee.

A "distributee" is:

(1) an employee or a former employee;

(2) the surviving spouse of an employee or former employee; deleted text beginor
deleted text end

(3) the former spouse of the employee or former employee who is the alternate payee
under a qualified domestic relations order as defined in section 414(p) of the Internal
Revenue Code, or who is a recipient of a court-ordered equitable distribution of marital
property, as provided in section 518.58deleted text begin.deleted text endnew text begin; ornew text end

new text begin (4) a nonspousal beneficiary of an employee or former employee who qualifies
for a distribution under the plan and is a designated beneficiary as defined in section
401(a)(9)(E) of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 45.

Minnesota Statutes 2008, section 356.96, subdivision 5, is amended to read:


Subd. 5.

Petition for review.

(a) A person who claims a right under subdivision 2
may petition for a review of that decision by the governing board of the covered pension
plan.

(b) A petition under this section must be sent to the chief administrative officer by
mail and must be postmarked no later than 60 days after the person received the notice
required by subdivision 3. The petition must include the person's statement of the reason
or reasons that the person believes the decision of the chief administrative officer should
be reversed or modified. The petition may include all documentation and written materials
that the petitioner deems to be relevant. new text beginIn developing a record for review by the board
when a decision is appealed, the executive director may direct that the applicant participate
in a fact-finding session conducted by an administrative law judge assigned by the Office
of Administrative Hearings and, as applicable, a vocational assessment conducted by a
qualified rehabilitation counselor on contract with the applicable retirement system.
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. 46. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, sections 354.06, subdivision 6; and 354.55, subdivision
14,
new text end new text begin are repealed.
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