SF 276

as introduced - 88th Legislature (2013 - 2014) Posted on 04/02/2013 04:31pm

A bill for an act
relating to retirement; Public Employees Retirement Association privatization
chapter; removing legislative approval requirements; modifying legislative
notification requirements; clarifying privatized public hospital pension benefit
eligibility; making various administrative changes; amending Minnesota Statutes
2012, sections 353F.02, subdivisions 3, 6, by adding a subdivision; 353F.025,
subdivisions 1, 2; 353F.03; 353F.04; 353F.05; 353F.051, subdivision 1; 353F.052;
353F.06; 353F.07; 353F.08; repealing Minnesota Statutes 2012, sections 353F.02,
subdivisions 4, 5; 353F.025, subdivision 3.

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

Section 1.

Minnesota Statutes 2012, section 353F.02, subdivision 3, is amended to read:

Subd. 3.

Effective date of privatization.

"Effective date of privatization" means
the date that the operation of the a medical facility or other public employing unit is
assumed by another employer or the date that the a medical facility or other public
employing unit is purchased by another employer and active membership in the Public
Employees Retirement Association consequently terminates.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2012, section 353F.02, is amended by adding a subdivision
to read:

Subd. 4a.

Privatized former public employer.

"Privatized former public
employer" means a medical facility or other public employing unit formerly included in
the definition of governmental subdivision under section 353.01, subdivision 6, that is
privatized and whose employees are certified for participation under this chapter.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2012, section 353F.02, subdivision 6, is amended to read:

Subd. 6.

Terminated medical facility or other Privatized former public
employing unit employee.

"Terminated medical facility or other (a) "Privatized former
public employing unit employee" means a person who:

(1) was employed by the privatized former public employer on the day before the
effective date by the medical facility or other public employing unit of privatization; or

(2) terminated employment with the medical facility or other privatized former
public employing unit employer on the day before the effective date; and

(3) was a participant in the general employees retirement plan of the Public
Employees Retirement Association at the time of termination of employment with the
medical facility or other privatized former public employing unit employer.

(b) "Privatized former public employee" does not mean a person who, on the day
before the effective date of privatization, was simultaneously employed with the privatized
former public employer and by a governmental subdivision under section 353.01,
subdivision 6, and who, after the effective date of privatization, continues to accrue
service credit under section 353.01, subdivision 16, through simultaneous employment
with a governmental subdivision.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2012, section 353F.025, subdivision 1, is amended to read:

Subdivision 1.

Eligibility determination.

(a) The chief clerical officer of a
governmental subdivision may submit a resolution from the governing body to the
executive director of the Public Employees Retirement Association which supports
providing coverage under this chapter for employees of that governmental subdivision
who are privatized, and which states that the governing body will pay for actuarial
calculations, as further specified in paragraph (c).

(b) The governing body must also provide a copy of any applicable purchase or
lease agreement and any other information requested by the executive director to allow the
executive director to verify that under the proposed employer change, the new employer
does not qualify as a governmental subdivision under section 353.01, subdivision 6,
making the employees ineligible for continued coverage as active members of the general
employees retirement plan of the Public Employees Retirement Association.

(c) Following receipt of a resolution and a determination by the executive director
that the new employer is not a governmental subdivision, the executive director shall
direct the consulting actuary retained under section 356.214 to determine whether the
general employees retirement plan of the Public Employees Retirement Association, if
coverage under this chapter is provided, is expected to receive a net gain or a net loss if
privatization occurs. A net gain is expected if the actuarial liability of the special benefit
coverage provided under this chapter, if extended to the applicable employees under the
privatization, is less than the actuarial gain otherwise to accrue to the plan. A net loss is
expected if the actuarial accrued liability of the special benefit coverage provided under
this chapter, if extended to the applicable employees under the privatization, is more than
the actuarial gain otherwise to accrue to the plan. The date of the actuarial calculations
used to make this determination must be within one year of the effective date, as defined
in section 353F.02, subdivision 3 of privatization.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2012, section 353F.025, subdivision 2, is amended to read:

Subd. 2.

Recommendation to legislature Reporting privatizations.

(a) If the
actuarial calculations under subdivision 1, paragraph (c), indicate that privatization can
be approved because a net gain to the general employees retirement plan of the Public
Employees Retirement Association is expected due to the privatization, or if paragraph (c)
(b) applies, the executive director shall, following acceptance of the actuarial calculations
by the board of trustees, forward a recommendation notice and supporting documentation
to the chair of the Legislative Commission on Pensions and Retirement, the chair of the
Governmental Operations, Reform, Technology and Elections Committee of the house of
representatives, the chair of the State and Local Government Operations and Oversight
Committee of the senate, and the executive director of the Legislative Commission
on Pensions and Retirement and the chairs and the ranking minority members of the
committees with jurisdiction over governmental operations in the house of representatives
and senate. The recommendation must be in the form of an addition to the definition of
"medical facility" under section 353F.02, subdivision 4, or to "other public employing
unit" under section 353F.02, subdivision 5, whichever is applicable. The recommendation
must be forwarded to the legislature before January 15 for the recommendation to be
considered in that year's legislative session. The recommendation may be included as part
of public pension administrative legislation under section 356B.05.

(b) If a medical facility or other public employing unit listed under section 353F.02,
subdivision 4 or 5, fails to privatize within one year of the final enactment date of the
legislation adding the entity to the applicable definition, its inclusion under this chapter is
voided, and the executive director shall include in the subsequent proposed legislation under
paragraph (a) a recommendation that the applicable entity be stricken from the definition.

(c) (b) If the calculations under subdivision 1, paragraph (c), indicate a net loss, the
executive director shall forward a recommendation recommend to the board of trustees
that the privatization be included as an addition under paragraph (a) approved if the chief
clerical officer of the applicable governmental subdivision submits a resolution from
the governing body specifying that a lump sum payment will be made to the executive
director Public Employees Retirement Association equal to the net loss, plus interest.
The interest must be computed using the applicable ultimate preretirement interest rate
assumption under section 356.215, subdivision 8, expressed as a monthly rate, from the
date of the actuarial valuation from which the actuarial accrued liability data was used to
determine the net loss in the actuarial study under subdivision 1, to the date of payment,
with annual compounding. Payment must be made on or after the effective date defined
under section 353F.02 of privatization.

(c) The Public Employees Retirement Association must maintain a list that includes
the names of all privatized former public employers in the association's comprehensive
annual financial report and on the association's Web site. Annually by March 1, the
association must submit to the executive director of the Legislative Commission on
Pensions and Retirement the names of any privatized former public employers approved
since the publication of the previous fiscal year's comprehensive annual financial report.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2012, section 353F.03, is amended to read:

353F.03 VESTING RULE FOR CERTAIN EMPLOYEES.

Notwithstanding any provision of chapter 353 to the contrary, a terminated medical
facility or other privatized former public employing unit employee is eligible to receive a
retirement annuity under section 353.29 of the edition of Minnesota Statutes published
in the year before the year in which the privatization occurred, without regard to the
requirement specified in section 353.01, subdivision 47.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2012, section 353F.04, is amended to read:

353F.04 AUGMENTATION INTEREST RATES FOR TERMINATED
MEDICAL OR OTHER PRIVATIZED FORMER PUBLIC EMPLOYING UNIT
FACILITY EMPLOYEES.

Subdivision 1.

Enhanced augmentation rates.

(a) The deferred annuity of a
terminated medical facility or other privatized former public employing unit employee is
subject to augmentation under section 353.71, subdivision 2, of the edition of Minnesota
Statutes published in the year in which the privatization occurred, except that the rate of
augmentation is as specified in this subdivision.

(b) This paragraph applies if the legislation adding the medical facility or other
employing unit to section 353F.02, subdivision 4 or 5, as applicable, effective date of
privatization was enacted before July 26, 2005, and became effective before January 1,
2008, for the Hutchinson Area Health Care on or before January 1, 2007, for all other
medical facilities and all other employing units and also applies to Hutchinson Area Health
Care with a privatization effective date of January 1, 2008. For a terminated medical
facility or other privatized former public employing unit employee, the augmentation
rate is 5.5 percent compounded annually until January 1 following the year in which the
person attains age 55. From that date to the effective date of retirement, the augmentation
rate is 7.5 percent compounded annually.

(c) If paragraph (b) is not applicable, and if the effective date of the privatization is
before January 1, 2011, the augmentation rate is four percent compounded annually until
January 1, following the year in which the person attains age 55. From that date to the
effective date of retirement, the augmentation rate is six percent compounded annually.

(d) If the effective date of the privatization is after December 31, 2010, the applicable
augmentation rate depends on the result of computations specified in section 353F.025,
subdivision 1. If those computations indicate no loss or a net gain to the fund of the
general employees retirement plan of the Public Employees Retirement Association, the
augmentation rate is 2.0 percent compounded annually until the effective date of retirement.
If the computations under that subdivision indicate a net loss to the fund if a 2.0 percent
augmentation rate is used, but a net gain or no loss if a 1.0 percent rate is used, then the
augmentation rate is 1.0 percent compounded annually until the effective date of retirement.

(e) The term "effective date of the privatization" as used in this subdivision means
the "effective date" as defined in section 353F.02, subdivision 3.

Subd. 2.

Exceptions.

The increased augmentation rates specified in subdivision
1 do not apply if the terminated medical facility or other to a privatized former public
employing unit employee:

(1) beginning the first of the month in which the privatized former public employee
becomes covered again by a retirement plan enumerated in section 356.30, subdivision 3, if
the employee continues to be covered and accrues at least six months of credited service; or

(2) beginning the first of the month after a privatized former public employee
terminates service with the successor entity; or

(2) (3) if the person begins receipt of a retirement annuity while employed by
the employer which assumed operations of or purchased the medical facility or other
privatized former public employing unit or purchased the medical facility or other public
employing unit employer.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2012, section 353F.05, is amended to read:

353F.05 AUTHORIZATION FOR ADDITIONAL ALLOWABLE SERVICE
FOR EARLY RETIREMENT PURPOSES.

(a) For the purpose of determining eligibility for early retirement benefits provided
under section 353.30, subdivision 1a, of the edition of Minnesota Statutes published in
the year before the year in which the privatization occurred, and notwithstanding any
provision of chapter 353, to the contrary, the years of allowable service for a terminated
medical facility or other privatized former public employing unit employee who transfers
employment on the effective date of privatization and does not apply for a refund of
contributions under section 353.34, subdivision 1, of the edition of Minnesota Statutes
published in the year before the year in which the privatization occurred, or any similar
provision, includes service with the successor employer to the medical facility or other
privatized former public employing unit employer following the effective date. The
successor employer shall provide any reports that the executive director of the Public
Employees Retirement Association may reasonably request to permit calculation of
benefits.

(b) To be eligible for early retirement benefits under this section, the individual must
separate from service with the successor to the privatized former public employer to the
medical facility. The terminated eligible individual privatized former public employee, or
an individual authorized to act on behalf of that individual employee, may apply for an
annuity following application procedures under section 353.29, subdivision 4.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2012, section 353F.051, subdivision 1, is amended to read:

Subdivision 1.

Eligibility.

A terminated medical facility or other privatized former
public employing unit employee who is totally and permanently disabled under Minnesota
Statutes 1998, section 353.01, subdivision 19, and who had a medically documented
preexisting condition of the disability before the termination of coverage, may apply for
a disability benefit.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 10.

Minnesota Statutes 2012, section 353F.052, is amended to read:

353F.052 APPLICATION OF SURVIVING SPOUSE, DEPENDENT CHILD
PROVISION.

Notwithstanding any provisions of law to the contrary, subdivisions within section
353.32 of the edition of Minnesota Statutes published in the year before the year in which
a privatization occurred, applicable to the surviving spouse or dependent children of a
former member as defined in section 353.01, subdivision 7a, apply to the survivors of a
terminated medical facility or other privatized former public employing unit employee.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2012, section 353F.06, is amended to read:

353F.06 APPLICATION OF REEMPLOYED ANNUITANT EARNINGS
LIMITATIONS.

Upon termination of service from the privatized former public employer or any
successor entity after the effective date of privatization, a privatized former public
employee must separate from any employment relationship with the privatized former
public employer or any successor entity for at least 30 days to qualify to receive a
retirement annuity under this chapter. If the privatized former public employee thereafter
resumes employment with the privatized former public employer or any successor entity
or a governmental subdivision under section 353.01, subdivision 6, the reemployed
annuitant earnings limitations of section 353.37 apply to any service by a terminated
medical facility or other public employing unit employee as an employee of the successor
employer to the medical facility.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Minnesota Statutes 2012, section 353F.07, is amended to read:

353F.07 EFFECT ON REFUND.

Notwithstanding any provision of chapter 353 to the contrary, terminated medical
facility or other privatized former public employing unit employees may receive a refund
of employee accumulated contributions plus interest as provided in section 353.34,
subdivision 2, at any time after the transfer of employment to the successor employer of
the terminated medical facility or other privatized former public employing unit employer.
If a terminated medical facility or other privatized former public employing unit employee
has received a refund from a pension plan listed in section 356.30, subdivision 3, the
person may not repay that refund unless the person again becomes a member of one of
those listed plans and complies with section 356.30, subdivision 2.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 13.

Minnesota Statutes 2012, section 353F.08, is amended to read:

353F.08 COUNSELING SERVICES.

The medical facility or other privatized former public employing unit employer and
the executive director of the Public Employees Retirement Association shall provide
terminated medical facility or other privatized former public employing unit employees
with counseling on their benefits available under the general employees retirement plan
of the Public Employees Retirement Association during the 90 days following a period
mutually agreed upon before or after the effective date of privatization.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 14. REPEALER.

Minnesota Statutes 2012, sections 353F.02, subdivisions 4 and 5; and 353F.025,
subdivision 3, are repealed.

EFFECTIVE DATE.

This section is effective the day following final enactment.