SF 429

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; retirement plans covered by the combined service annuity
provision; updating and making more consistent the definitions of "salary"
and "average salary"; amending Minnesota Statutes 2006, sections 352.01,
subdivisions 13, 14a, by adding a subdivision; 352B.01, subdivision 11, by
adding subdivisions; 353.01, subdivisions 10, 17a, by adding a subdivision;
354.05, subdivisions 13a, 35, 35a; 354A.011, subdivisions 7a, 24, by adding a
subdivision; 422A.01, subdivisions 4a, 13a, by adding a subdivision; 422A.15,
subdivision 1; 490.121, subdivision 21, by adding subdivisions.

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

Section 1.

Minnesota Statutes 2006, section 352.01, subdivision 13, is amended to read:

Subd. 13.

Salary.

(a) Subject to the limitations of section 356.611, "salary"
means deleted text begin wages, or other deleted text end new text begin the new text end periodic compensation deleted text begin , deleted text end new text begin upon which employee contributions
are required and made and that is new text end paid to an employee before deductions new text begin are made new text end for
deferred compensation, supplemental retirement plans, or other voluntary salary reduction
programs.

(b) deleted text begin " deleted text end Salary deleted text begin " deleted text end does not deleted text begin include deleted text end new text begin mean new text end :

(1) deleted text begin lump sum deleted text end new text begin lump-sum new text end sick leave payments;

(2) severance payments new text begin , including payments referenced in section 356.24,
subdivision 1, clause (4) new text end ;

(3) deleted text begin lump sum deleted text end new text begin lump-sum new text end annual leave payments deleted text begin and deleted text end new text begin ;
new text end

new text begin (4) new text end overtime payments made at the time of separation from deleted text begin state deleted text end new text begin active new text end service;

deleted text begin (4) deleted text end new text begin (5) lump-sum wellness payments;
new text end

new text begin (6) employer-paid amounts used by an employee towards the cost of insurance
coverage, employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health
care expense accounts, or day care expenses;
new text end

new text begin (7) new text end payments new text begin made new text end in lieu of any employer-paid group insurance coverage, including
the difference between single and family rates that may be paid to an employee with single
coverage new text begin and certain amounts determined by the executive director to be ineligible new text end ;

deleted text begin (5) deleted text end new text begin (8) new text end payments made as an employer-paid fringe benefit;

deleted text begin (6) deleted text end new text begin (9) new text end workers' compensation payments;

deleted text begin (7) deleted text end new text begin (10) expense reimbursements;
new text end

new text begin (11) disability insurance payments, including self-insured disability payments;
new text end

new text begin (12) lump-sum settlements that are not directly associated with a specific earnings
period;
new text end

new text begin (13) payments made to a suspended employee or made to an employee who is
placed on a health-related leave of absence unless the payments are periodic payments
of accumulated amounts under the provisions of a uniform policy of the employing unit
applied equally to all similarly situated employees;
new text end

new text begin (14) new text end employer contributions to a deferred compensation or deleted text begin tax sheltered deleted text end new text begin tax-sheltered
new text end annuity program; and

deleted text begin (8) deleted text end new text begin (15) new text end amounts contributed under a benevolent vacation deleted text begin and deleted text end new text begin or new text end sick leave donation
program new text begin that is authorized by the employing unit or provided in a collectively bargained
agreement new text end .

(c) new text begin Salary includes new text end amounts provided to an employee by the employer through a
grievance proceeding or a legal settlement deleted text begin are salary deleted text end only if the settlement deleted text begin is deleted text end new text begin terms are
new text end reviewed by the executive director and the amounts are determined by the executive
director to be consistent with paragraph (a) and new text begin with new text end prior determinations.

Sec. 2.

Minnesota Statutes 2006, section 352.01, is amended by adding a subdivision
to read:

new text begin Subd. 13b. new text end

new text begin Severance payments. new text end

new text begin "Severance payments" include, but are not
limited to:
new text end

new text begin (1) payments to an employee in order to induce the employee to terminate
employment or as consideration for an agreement to terminate employment;
new text end

new text begin (2) payments, or that portion of payments, that are not clearly compensation for the
performance of services by the employee to the employer;
new text end

new text begin (3) payments to an employee or to a former employee for service as an advisor to a
successor or as a consultant to the employer under an agreement to terminate employment
that occurs within two years or less of the execution of the agreement for compensation
that is significantly different than the most recent prior contract salary;
new text end

new text begin (4) payments under a procedure that allows the employee to designate the time of
payment if the payments are made during the period of service credit used to compute a
benefit or annuity under section 352.113; 352.115; 352.116; or 352.12, subdivision 2; and
new text end

new text begin (5) lump-sum payments during the time period that contains the average salary for
additional services that were performed without pay during other years of salary.
new text end

Sec. 3.

Minnesota Statutes 2006, section 352.01, subdivision 14a, is amended to read:

Subd. 14a.

Average salary.

(a) "Average salary" means the average of the highest
five successive years of salary upon which the employee has made contributions to the
retirement fund by payroll deductions. Average salary must be based upon all allowable
service if this service is less than five years. new text begin Average salary may not include any more
than the equivalent of 60 monthly salary payments.
new text end

(b) deleted text begin " deleted text end Average salary deleted text begin " deleted text end does not include the payment of accrued unused annual leave
or overtime paid at time of final separation from state service if paid in a lump sum deleted text begin nor deleted text end
new text begin and new text end does deleted text begin it deleted text end new text begin not new text end include the reduced salary, if any, paid during the period new text begin that new text end the employee
is entitled to workers' compensation benefit payments for new text begin a new text end temporary disability.

(c) For an employee covered by the correctional state employees retirement plan,
deleted text begin " deleted text end average salary deleted text begin " deleted text end means the average of the monthly salary during the employee's highest
five successive years of salary as an employee covered by the general state employees
retirement plan, or the correctional state employees retirement plan, or by a combination
of the two. If the total of the covered service is less than five years, the determination of
average salary must be based on all allowable service.

Sec. 4.

Minnesota Statutes 2006, section 352B.01, is amended by adding a subdivision
to read:

new text begin Subd. 10a. new text end

new text begin Salary. new text end

new text begin (a) Subject to the limitations of section 356.611, "salary" means
the periodic compensation upon which employee contributions are required and made
and that is paid to a member before deductions are made for deferred compensation,
supplemental retirement plans, or other voluntary salary reduction programs.
new text end

new text begin (b) Salary does not mean:
new text end

new text begin (1) lump-sum sick leave payments;
new text end

new text begin (2) severance payments including payments referenced in section 356.24,
subdivision 1, clause (4);
new text end

new text begin (3) lump-sum annual leave payments;
new text end

new text begin (4) overtime payments made at the time of separation from active service;
new text end

new text begin (5) lump-sum wellness payments;
new text end

new text begin (6) employer-paid amounts used by a member towards the cost of insurance
coverage, employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health
care expense accounts, or day care expenses;
new text end

new text begin (7) payments made in lieu of any employer-paid group insurance coverage, including
the difference between single and family rates that may be paid to a member with single
coverage and certain amounts determined by the executive director to be ineligible;
new text end

new text begin (8) payments made as an employer-paid fringe benefit;
new text end

new text begin (9) workers' compensation payments;
new text end

new text begin (10) expense reimbursements;
new text end

new text begin (11) disability insurance payments, including self-insured disability payments;
new text end

new text begin (12) lump-sum settlements that are not directly associated with a specific earnings
period;
new text end

new text begin (13) payments made to a suspended member or made to a member who is placed
on a health-related leave of absence unless the payments are periodic payments of
accumulated amounts under the provisions of a uniform policy of the employing unit
applied equally to all similarly situated employees;
new text end

new text begin (14) employer contributions to a deferred compensation or tax-sheltered annuity
program; and
new text end

new text begin (15) amounts contributed under a benevolent vacation or sick leave donation program
that is authorized by the employing unit or provided in a collectively bargained agreement.
new text end

new text begin (c) Salary includes amounts provided to an employee by the employer through a
grievance proceeding or a legal settlement only if the settlement terms are reviewed by
the executive director and the amounts are determined by the executive director to be
consistent with paragraph (a) and with prior determinations.
new text end

Sec. 5.

Minnesota Statutes 2006, section 352B.01, is amended by adding a subdivision
to read:

new text begin Subd. 10b. new text end

new text begin Severance payments. new text end

new text begin "Severance payments" include, but are not
limited to:
new text end

new text begin (1) payments to a member in order to induce the member to terminate employment
or as consideration for an agreement to terminate employment;
new text end

new text begin (2) payments, or that portion of payments, that are not clearly compensation for the
performance of services by the member to the employer;
new text end

new text begin (3) payments to an employee or to a former employee for service as an advisor to a
successor or as a consultant to the employer under an agreement to terminate employment
that occurs within two years or less of the execution of the agreement for compensation
that is significantly different than the most recent prior contract salary;
new text end

new text begin (4) payments under a procedure that allows the member to designate the time of
payment if the payments are made during the period of service credit used to compute
a benefit or annuity under section 352B.08; 352B.10; or 352B.11, subdivisions 2, 2b,
and 2c; and
new text end

new text begin (5) lump-sum payments during the time period that contains the average salary for
additional services that were performed without pay during other years of salary.
new text end

Sec. 6.

Minnesota Statutes 2006, section 352B.01, subdivision 11, is amended to read:

Subd. 11.

Average monthly salary.

(a) Subject to the limitations of section
356.611, "average monthly salary" means the average of the highest monthly salaries for
five new text begin successive new text end years of service as a member upon which contributions were deducted
from pay under section 352B.02, or upon which appropriate contributions or payments
were made to the fund to receive allowable service and salary credit as specified under the
applicable law. Average monthly salary must be based upon all allowable service if this
service is less than five years. new text begin "Average salary" may not include more than the equivalent
of 60 monthly salary payments.
new text end

(b) deleted text begin "Average monthly salary" means the salary of the member as defined in section
352.01, subdivision 13. deleted text end deleted text begin " deleted text end Average monthly salary deleted text begin " deleted text end does not include any lump-sum annual
leave payments and overtime payments made at the time of separation from state service,
any amounts of severance pay, or any reduced salary paid during the period new text begin that new text end the person
is entitled to workers' compensation benefit payments for new text begin a new text end temporary disability.

deleted text begin (c) A member on leave of absence receiving temporary workers' compensation
payments and a reduced salary or no salary from the employer who is entitled to allowable
service credit for the period of absence may make payment to the fund for the difference
between salary received, if any, and the salary the member would normally receive if not
on leave of absence during the period. The member shall pay an amount equal to the
member and employer contribution rate under section deleted text begin 352B.02, subdivisions 1b and 1c deleted text end ,
on the differential salary amount for the period of the leave of absence. The employing
department, at its option, may pay the employer amount on behalf of the member. Payment
made under this subdivision must include interest at the rate of 8.5 percent per year, and
must be completed within one year of the return from the leave of absence.
deleted text end

Sec. 7.

Minnesota Statutes 2006, section 352B.01, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Service credit for workers' compensation leave of absence. new text end

new text begin A member
on leave of absence receiving temporary workers' compensation payments and a reduced
salary or no salary from the employer who is entitled to allowable service credit for the
period of absence may make payment to the fund for the difference between salary
received, if any, and the salary the member would normally receive if not on leave of
absence during the period. The member shall pay an amount equal to the member
and employer contribution rate under section new text begin 352B.02, subdivisions 1b and 1c new text end , on
the differential salary amount for the period of the leave of absence. The employing
department, at its option, may pay the employer amount on behalf of the member. Payment
made under this subdivision must include interest at the rate of 8.5 percent per year, and
must be completed within one year of the return from the leave of absence.
new text end

Sec. 8.

Minnesota Statutes 2006, section 353.01, subdivision 10, is amended to read:

Subd. 10.

Salary.

(a) Subject to the limitations of section 356.611, "salary" means:

(1) the periodic compensation of a public employee deleted text begin , deleted text end new text begin upon which employee
contributions are required and that is paid new text end before deductions new text begin are made new text end for deferred
compensation, supplemental retirement plans, or other voluntary salary reduction
programs, and also means "wages" and includes net income from fees;

(2) for a public employee who is covered by a supplemental retirement plan under
section 356.24, subdivision 1, clause (8), (9), or (10), which require all plan contributions
be made by the employer, the contribution to the applicable supplemental retirement plan
when the contribution is from mandatory withholdings from employees' wages; and

(3) 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 coverage either
under the public employees police and fire fund benefit plan under section 353A.08
following the consolidation or under section 353.665, subdivision 4, the rate of salary
upon which member contributions to the special fund of the relief association were made
prior to the effective date of the consolidation as specified by law and by bylaw provisions
governing the relief association on the date of the initiation of the consolidation procedure
and the actual periodic compensation of the public employee after the effective date of
consolidation.

(b) Salary does not mean:

(1) the fees paid to district court reporters deleted text begin , deleted text end new text begin ;
new text end

new text begin (2) new text end unused annual vacation or sick leave payments, in deleted text begin lump-sum deleted text end new text begin a lump sum new text end or new text begin in
new text end periodic payments deleted text begin , deleted text end new text begin ;
new text end

new text begin (3) new text end severance payments, new text begin including payments referenced in section 356.24,
subdivision 1, clause (4);
new text end

new text begin (4) new text end reimbursement of expenses deleted text begin , deleted text end new text begin ;
new text end

new text begin (5) new text end lump-sum settlements new text begin that are new text end not deleted text begin attached to deleted text end new text begin directly associated with new text end a specific
earnings period deleted text begin , or deleted text end new text begin ;
new text end

new text begin (6) new text end workers' compensation payments;

deleted text begin (2) deleted text end new text begin (7) new text end employer-paid amounts used by an employee deleted text begin toward deleted text end new text begin towards new text end the cost of
insurance coverage, employer-paid fringe benefits, flexible spending accounts, cafeteria
plans, health care expense accounts, new text begin or new text end day care expenses deleted text begin , or any deleted text end new text begin ;
new text end

new text begin (8) new text end payments new text begin made new text end in lieu of any employer-paid group insurance coverage, including
the difference between single and family rates that may be paid to a member with single
coverage and certain amounts determined by the executive director to be ineligible;

deleted text begin (3) deleted text end new text begin (9) new text end the amount equal to that which the employing governmental subdivision
would otherwise pay toward single or family insurance coverage for a covered employee
when, through a contract or agreement with some new text begin , new text end but not all new text begin , new text end employees, the employer:

(i) discontinues, or for new hires does not provide, payment toward the cost of the
employee's selected insurance coverages under a group plan offered by the employer;

(ii) makes the employee solely responsible for all contributions toward the cost of
the employee's selected insurance coverages under a group plan offered by the employer,
including any amount the employer makes toward other employees' selected insurance
coverages under a group plan offered by the employer; deleted text begin and deleted text end new text begin or
new text end

(iii) provides increased salary rates for employees who do not have any
employer-paid group insurance coverages;

deleted text begin (4) deleted text end new text begin (10) lump-sum wellness payments;
new text end

new text begin (11) overtime payments made at the time of separation from active service;
new text end

new text begin (12) payments made as an employer-paid fringe benefit;
new text end

new text begin (13) disability insurance payments, including self-insured disability payments;
new text end

new text begin (14) payments made to a suspended employee or made to an employee who has been
placed on a health-related leave of absence unless the payments are periodic payments
of accumulated amounts under the provisions of a uniform policy of the employing unit
applied equally to all similarly situated employees;
new text end

new text begin (15) employer contributions to a deferred compensation or tax-sheltered annuity
program;
new text end

new text begin (16) payments to school district administrators for services that are in addition to the
normal work year contract if the additional services are performed on an extended day, a
nonwork year, a holiday, an annual leave day, a sick leave day, or any other nonduty day;
new text end

new text begin (17) amounts contributed under a benevolent vacation or sick leave donation
program that is authorized by the employing unit or is provided in a collectively bargained
agreement;
new text end

new text begin (18) new text end except as provided in section 353.86 or 353.87, new text begin the new text end compensation of any kind
paid to volunteer ambulance service personnel or volunteer firefighters, as defined in
subdivision 35 or 36; and

deleted text begin (5) deleted text end new text begin (19) new text end the amount of compensation that exceeds the limitation provided in section
356.611.

(c) new text begin Salary includes new text end amounts provided to an employee by the employer through a
grievance proceeding or a legal settlement deleted text begin are salary deleted text end only if the settlement deleted text begin is deleted text end new text begin terms are
new text end reviewed by the executive director and the amounts are determined by the executive
director to be consistent with paragraph (a) and new text begin with new text end prior determinations.

Sec. 9.

Minnesota Statutes 2006, section 353.01, is amended by adding a subdivision
to read:

new text begin Subd. 10a. new text end

new text begin Severance payments. new text end

new text begin "Severance payments" include, but are not
limited to:
new text end

new text begin (1) payments to an employee in order to induce the employee to terminate
employment or as consideration for an agreement to terminate employment;
new text end

new text begin (2) payments, or that portion of payments, that are not clearly compensation for the
performance of services by the employee to the employer;
new text end

new text begin (3) payments to an employee or to a former employee for service as an advisor to a
successor or as a consultant to the employer under an agreement to terminate employment
that occurs within two years or less of the execution of the agreement for compensation
that is significantly different than the most recent prior contract salary;
new text end

new text begin (4) payments under a procedure that allows the employee to designate the time of
payment if the payments are made during the period of service credit used to compute a
benefit or annuity under section 353.29; 353.30; 353.31; or 353.32, subdivision 1a; and
new text end

new text begin (5) lump-sum payments during the time period that contains the average salary for
additional services that were performed without pay during other years of salary.
new text end

Sec. 10.

Minnesota Statutes 2006, section 353.01, subdivision 17a, is amended to read:

Subd. 17a.

Average salary.

(a) "Average salary," for purposes of calculating a
retirement annuity under section 353.29, subdivision 3, means an amount equivalent to
the average of the highest salary of the member, police officer, or firefighter, whichever
applies, upon which employee contributions were paid for any five successive years of
allowable service, based on new text begin the new text end dates of new text begin the applicable new text end salary periods as listed on new text begin the
respective new text end salary deduction reports. Average salary must be based upon all allowable
service if this service is less than five years. new text begin Average salary may not include more than the
equivalent of 60 monthly salary payments.
new text end

(b) deleted text begin " deleted text end Average salary deleted text begin " deleted text end may not include any reduced salary paid during a period
in which the employee is entitled to benefit payments from new text begin the new text end workers' compensation
new text begin program new text end for new text begin a new text end temporary disability, unless the average salary is higher deleted text begin , deleted text end new text begin by new text end including this
period.

Sec. 11.

Minnesota Statutes 2006, section 354.05, subdivision 13a, is amended to read:

Subd. 13a.

Average salary.

(a) "Average salary," for the purpose of determining
the member's retirement annuity new text begin under section 354.44, subdivision 6 new text end , means the average
salary upon which contributions were made for the highest five successive years of
formula service credit.

(b) deleted text begin " deleted text end Average salary deleted text begin " deleted text end may not include any more than the equivalent of 60 monthly
salary payments.

(c) deleted text begin " deleted text end Average salary deleted text begin " deleted text end must be based upon all years of formula service credit if deleted text begin this deleted text end
new text begin the total formula new text end service credit is less than five years.

Sec. 12.

Minnesota Statutes 2006, section 354.05, subdivision 35, is amended to read:

Subd. 35.

Salary.

(a) Subject to the limitations of section 356.611, "salary" means
the periodic compensation deleted text begin , deleted text end upon which member contributions are required new text begin and made
and that is paid to a teacher new text end before deductions new text begin are made new text end for deferred compensation,
supplemental retirement plans, or other voluntary salary reduction programs.

(b) deleted text begin " deleted text end Salary deleted text begin " deleted text end does not mean:

(1) deleted text begin lump sum deleted text end new text begin lump-sum new text end annual leave payments;

(2) deleted text begin lump sum deleted text end new text begin lump-sum new text end wellness deleted text begin and deleted text end new text begin payments;
new text end

new text begin (3) lump-sum new text end sick leave payments;

deleted text begin (3) deleted text end new text begin (4) new text end employer-paid amounts used by an employee toward the cost of insurance
coverage, employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health
care expense accounts, new text begin or new text end day care expenses deleted text begin , or any deleted text end new text begin ;
new text end

new text begin (5) new text end payments new text begin made new text end in lieu of any employer-paid group insurance coverage, including
the difference between single and family rates that may be paid to a member with single
coverage and certain amounts determined by the executive director to be ineligible;

deleted text begin (4) deleted text end new text begin (6) payments made as an employer-paid fringe benefit;
new text end

new text begin (7) new text end any form of payment made in lieu of any other employer-paid fringe benefit or
expense;

deleted text begin (5) deleted text end new text begin (8) new text end any form of severance payments;

deleted text begin (6) deleted text end new text begin (9) new text end workers' compensation payments;

deleted text begin (7) deleted text end new text begin (10) new text end disability insurance payments, including self-insured disability payments;

deleted text begin (8) deleted text end new text begin (11) overtime payments made at the time of separation from active service;
new text end

new text begin (12) expense reimbursements;
new text end

new text begin (13) lump-sum settlements that are not directly associated with a specific earnings
period;
new text end

new text begin (14) new text end payments to school principals and all other administrators for services that are
in addition to the normal work year contract if these additional services are performed
on an extended duty day, Saturday, Sunday, holiday, annual leave day, sick leave day, or
any other nonduty day;

deleted text begin (9) deleted text end new text begin (15) employer contributions to a deferred compensation or tax-sheltered annuity
program;
new text end

new text begin (16) amounts contributed under a benevolent vacation or sick leave donation program
that is authorized by the employing unit or provided in a collectively bargained agreement;
new text end

new text begin (17) new text end payments under section 356.24, subdivision 1, clause (4); and

deleted text begin (10) deleted text end new text begin (18) new text end payments made under section 122A.40, subdivision 12, except for
payments for sick leave that are accumulated under the provisions of a uniform school
district policy that applies equally to all similarly situated persons in the district.

(c) new text begin Salary includes new text end amounts provided to an employee by the employer through a
grievance proceeding or a legal settlement deleted text begin are salary deleted text end only if the settlement deleted text begin is deleted text end new text begin terms are
new text end reviewed by the executive director and the amounts are determined by the executive
director to be consistent with paragraph (a) and new text begin with new text end prior determinations.

Sec. 13.

Minnesota Statutes 2006, section 354.05, subdivision 35a, is amended to read:

Subd. 35a.

Severance payments.

Severance payments include, but are not limited
to:

(1) payments to an employee new text begin in order new text end to new text begin induce the teacher to new text end terminate employment new text begin
or as consideration for an agreement to terminate employment new text end ;

(2) payments, or that portion of payments, that are not clearly new text begin compensation new text end for the
performance of services by the employee to the employer;

(3) payments to an administrator or new text begin to a new text end former administrator deleted text begin serving deleted text end new text begin for service new text end as an
advisor to a successor or as a consultant to the employer under an agreement to terminate
employment new text begin that occurs new text end within two years or less of the execution of the agreement for
compensation that is significantly different than the most recent new text begin prior new text end contract salary;

(4) payments under a procedure that allows the employee to designate the time of
payment if the payments are made during the period of formula service credit used to
compute a benefit or annuity under section 354.44, subdivision 6 deleted text begin or 7 deleted text end ; 354.46, subdivision
1 or 2; or 354.48, subdivision 3; and

(5) deleted text begin lump sum deleted text end new text begin lump-sum new text end payments during the time period that contains the deleted text begin highest
five successive years of deleted text end new text begin average new text end salary for additional services new text begin that were new text end performed without
pay during other years of salary.

Sec. 14.

Minnesota Statutes 2006, section 354A.011, subdivision 7a, is amended to
read:

Subd. 7a.

Average salary.

new text begin (a) new text end "Average salary," for purposes of computing a normal
coordinated program retirement annuity under section 354A.31, subdivision 4 or 4a,
means an amount equal to the average salary upon which contributions were made for the
highest five successive years of service credit deleted text begin but deleted text end new text begin .
new text end

new text begin (b) Average salary new text end may not, in any event, include any more than the equivalent of 60
monthly salary payments. Average salary must be based upon all years of service credit if
deleted text begin this deleted text end new text begin total new text end service credit is less than five years.

Sec. 15.

Minnesota Statutes 2006, section 354A.011, subdivision 24, is amended to
read:

Subd. 24.

Salary; covered salary.

(a) Subject to the limitations of section 356.611,
"salary" or "covered salary" means the deleted text begin entire deleted text end new text begin periodic new text end compensation deleted text begin , deleted text end upon which member
contributions are required and made deleted text begin , deleted text end that is paid to a teacher before deductions new text begin are made
new text end for deferred compensation, supplemental retirement plans, or other voluntary salary
reduction programs.

(b) deleted text begin " deleted text end Salary deleted text begin " deleted text end does not mean:

(1) deleted text begin lump sum deleted text end new text begin lump-sum new text end annual leave payments;

(2) deleted text begin lump sum deleted text end new text begin lump-sum new text end wellness deleted text begin and deleted text end new text begin payments;
new text end

new text begin (3) new text end sick leave payments;

deleted text begin (3) deleted text end new text begin (4) new text end employer-paid amounts used by an employee toward the cost of insurance
coverage, employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health
care expense accounts, new text begin or new text end day care expenses deleted text begin , or any deleted text end new text begin ;
new text end

new text begin (5) new text end payments in lieu of any employer-paid group insurance coverage, including the
difference between single and family rates that may be paid to a member with single
coverage, and certain amounts determined by the executive secretary or director to be
ineligible;

deleted text begin (4) deleted text end new text begin (6) payments made as an employer-paid fringe benefit;
new text end

new text begin (7) new text end any form of payment that is made in lieu of any other employer-paid fringe
benefit or expense;

deleted text begin (5) deleted text end new text begin (8) new text end any form of severance payments;

deleted text begin (6) deleted text end new text begin (9) new text end workers' compensation payments;

deleted text begin (7) deleted text end new text begin (10) new text end disability insurance payments, including self-insured disability payments;

deleted text begin (8) deleted text end new text begin (11) overtime payments made at the time of separation from active service;
new text end

new text begin (12) expense reimbursements;
new text end

new text begin (13) lump-sum settlements that are not directly associated with a specific earnings
period;
new text end

new text begin (14) new text end payments to school principals and all other administrators for services that are
in addition to the normal work year contract if these additional services are performed
on an extended duty day, Saturday, Sunday, holiday, annual leave day, sick leave day, or
any other nonduty day;

deleted text begin (9) deleted text end new text begin (15) employer contributions to a deferred compensation or tax-sheltered annuity
program;
new text end

new text begin (16) amounts contributed under a benevolent vacation or sick leave donation program
that is authorized by the employing unit or provided in a collectively bargained agreement;
new text end

new text begin (17) new text end payments under section 356.24, subdivision 1, clause (4)(ii); and

deleted text begin (10) deleted text end new text begin (18) new text end payments made under section 122A.40, subdivision 12, except for
payments for sick leave that are accumulated under the provisions of a uniform school
district policy that applies equally to all similarly situated persons in the district.

(c) new text begin Salary includes new text end amounts provided to an employee by the employer through a
grievance proceeding or a legal settlement deleted text begin are salary deleted text end only if the settlement deleted text begin is deleted text end new text begin terms are
new text end reviewed by the executive director and the amounts are determined by the executive
director to be consistent with paragraph (a) and new text begin with new text end prior determinations.

Sec. 16.

Minnesota Statutes 2006, section 354A.011, is amended by adding a
subdivision to read:

new text begin Subd. 25a. new text end

new text begin Severance payments. new text end

new text begin "Severance payments" include, but are not
limited to:
new text end

new text begin (1) payments to an employee in order to induce the employee to terminate
employment or as consideration for an agreement to terminate employment;
new text end

new text begin (2) payments, or that portion of payments, that are not clearly compensation for the
performance of services by the employee to the employer;
new text end

new text begin (3) payments to an administrator or to a former administrator for service as an
advisor to a successor or as a consultant to the employer under an agreement to terminate
employment that occurs within two years or less of the execution of the agreement for
compensation that is significantly different than the most recent prior contract salary;
new text end

new text begin (4) payments under a procedure that allows the employee to designate the time of
payment if the payments are made during the period of service credit used to compute a
benefit or annuity under section 354A.31; 354A.35; or 354A.36; and
new text end

new text begin (5) lump-sum payments during the time period that contains the average salary for
additional services that were performed without pay during other years of salary.
new text end

Sec. 17.

Minnesota Statutes 2006, section 422A.01, subdivision 4a, is amended to read:

Subd. 4a.

Average salary.

(a) "Average salary" new text begin for purposes of calculating a service
allowance under section 422A.15, subdivision 1, new text end means the arithmetic average annual
salary, wages, or compensation of the member from the city for any five calendar years out
of the last ten calendar years of service, except as provided for in section 422A.16, which
may include the year in which the employee retires, as selected by the employee.

(b) A member with more than five calendar years of service, but less than ten
calendar years, may select any five calendar years of service to determine the average
salary. A member with less than five years of service with the city shall use all earnings
to determine the average salary.

new text begin (c) Average salary may not include more than the equivalent of 60 monthly salary
payments.
new text end

Sec. 18.

Minnesota Statutes 2006, section 422A.01, subdivision 13a, is amended to
read:

Subd. 13a.

Covered salary.

deleted text begin "Salary" is deleted text end new text begin (a) new text end Subject to the limitations of section
356.611 new text begin , "salary" means the periodic compensation upon which member contributions
are required and made and that is paid to a judge before deductions are made for deferred
compensation, supplemental retirement plans, or other voluntary salary reduction
programs new text end .

new text begin (b) Salary does not mean:
new text end

new text begin (1) lump-sum sick leave payments;
new text end

new text begin (2) severance payments including payments referenced in section 356.24,
subdivision 1, clause (4);
new text end

new text begin (3) lump-sum annual leave payments;
new text end

new text begin (4) overtime payments made at the time of separation from active service;
new text end

new text begin (5) lump-sum wellness payments;
new text end

new text begin (6) employer-paid amounts used by a judge towards the cost of insurance coverage,
employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health care
expense accounts, or day care expenses;
new text end

new text begin (7) payments made in lieu of any employer-paid group insurance coverage, including
the difference between single and family rates that may be paid to a judge with single
coverage and certain amounts determined by the executive director to be ineligible;
new text end

new text begin (8) payments made as an employer-paid fringe benefit;
new text end

new text begin (9) workers' compensation payments;
new text end

new text begin (10) expense reimbursements;
new text end

new text begin (11) disability insurance payments, including self-insured disability payments;
new text end

new text begin (12) lump-sum settlements that are not directly associated with a specific earnings
period;
new text end

new text begin (13) payments made to a suspended judge or made to a judge who is placed on a
health-related leave of absence unless the payments are periodic payments of accumulated
amounts under the provisions of a uniform policy of the employing unit applied equally to
all similarly situated employees;
new text end

new text begin (14) employer contributions to a deferred compensation or tax-sheltered annuity
program; and
new text end

new text begin (15) amounts contributed under a benevolent vacation or sick leave donation
program that is authorized by the employing unit.
new text end

new text begin (c) Salary includes amounts provided to a judge by the employer through a grievance
proceeding or a legal settlement only if the settlement terms are reviewed by the executive
director and the amounts are determined by the executive director to be consistent with
paragraph (a) and with prior determinations.
new text end

Sec. 19.

Minnesota Statutes 2006, section 422A.01, is amended by adding a
subdivision to read:

new text begin Subd. 13b. new text end

new text begin Severance payments. new text end

new text begin "Severance payments" include, but are not
limited to:
new text end

new text begin (1) payments to a member in order to induce the member to terminate employment
or as consideration for an agreement to terminate employment;
new text end

new text begin (2) payments, or that portion of payments, that are not clearly compensation for the
performance of services by the member to the employer;
new text end

new text begin (3) payments to a member or to a former member for service as an advisor to a
successor or as a consultant to the employer under an agreement to terminate employment
that occurs within two years or less of the execution of the agreement for compensation
that is significantly different than the most recent prior contract salary;
new text end

new text begin (4) payments under a procedure that allows the member to designate the time of
payment if the payments are made during the period of service credit used to compute
a benefit or annuity under section 354.44, subdivision 6; 354.46, subdivision 1 or 2; or
354.48, subdivision 3; and
new text end

new text begin (5) lump-sum payments during the time period that contains the average salary for
additional services that were performed without pay during other years of salary.
new text end

Sec. 20.

Minnesota Statutes 2006, section 422A.15, subdivision 1, is amended to read:

Subdivision 1.

Formula pension and annuity.

Except as otherwise provided in
subdivision 3, each contributing member who, at the time of retirement, fulfills the
conditions necessary to enable the member to retire is entitled to receive a "formula
pension and annuity" equal to two percent for each year of allowable service for the first
ten years and thereafter 2.5 percent per year of allowable service of deleted text begin the deleted text end average salary,
multiplied by the years of service credited by the retirement fund. The formula pension
and annuity must be computed on the single life plan but new text begin is new text end subject to the option selections
provided for in section 422A.17.

In order to be entitled to the formula pension and annuity herein provided for, the
retiring employee at the time of cessation of employment and of actual retirement must
have attained the age of 60 years or have been employed by the city not less than 30 years,
or meet the qualifications provided for in section 422A.16, and in addition thereto have
contributed to the retirement fund at the percentage rate prescribed by the retirement law
applicable when the salary, wages or compensation was paid on all salaries, wages, or
compensation received from the city or from an applicable employing unit. The years of
service to be applied in the formula pension and annuity must be found and determined by
the retirement board, except that no credit may be allowed for any year in which a back
charge is owing at time of retirement and the earnings from any year in which a back
charge is owing may not be used in determining the average salary.

Sec. 21.

Minnesota Statutes 2006, section 490.121, subdivision 21, is amended to read:

Subd. 21.

Final average compensation.

"Final average compensation" means
the total amount of salary payable to a judge in the highest five years out of the last ten
years before the termination of judicial service, divided by five if the number of years of
new text begin allowable new text end service by the judge equals or exceeds ten. If the number of years of service by
the judge is less than ten new text begin years new text end , but more than five new text begin years new text end , the highest five years of salary
must be counted. If the number of years of service by the judge is less than five new text begin years new text end , the
aggregate salary for the period of service must be divided by the number of months in
the period new text begin of allowable service new text end and new text begin the results must be new text end multiplied by 12. new text begin Final average
compensation may not include more than the equivalent of 60 monthly salary payments.
new text end

Sec. 22.

Minnesota Statutes 2006, section 490.121, is amended by adding a subdivision
to read:

new text begin Subd. 21g. new text end

new text begin Salary. new text end

new text begin (a) Subject to the limitations of section 356.611, "salary"
means the periodic compensation upon which member contributions are required and
made and that is paid to a judge before deductions are made for deferred compensation,
supplemental retirement plans, or other voluntary salary reduction programs.
new text end

new text begin (b) Salary does not mean:
new text end

new text begin (1) lump-sum sick leave payments;
new text end

new text begin (2) severance payments including payments referenced in section 356.24,
subdivision 1, clause (4);
new text end

new text begin (3) lump-sum annual leave payments;
new text end

new text begin (4) overtime payments made at the time of separation from active service;
new text end

new text begin (5) lump-sum wellness payments;
new text end

new text begin (6) employer-paid amounts used by a judge towards the cost of insurance coverage,
employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health care
expense accounts, or day care expenses;
new text end

new text begin (7) payments made in lieu of any employer-paid group insurance coverage, including
the difference between single and family rates that may be paid to a judge with single
coverage and certain amounts determined by the executive director to be ineligible;
new text end

new text begin (8) payments made as an employer-paid fringe benefit;
new text end

new text begin (9) workers' compensation payments;
new text end

new text begin (10) expense reimbursements;
new text end

new text begin (11) disability insurance payments, including self-insured disability payments;
new text end

new text begin (12) lump-sum settlements that are not directly associated with a specific earnings
period;
new text end

new text begin (13) payments made to a suspended judge or made to a judge who is placed on a
health-related leave of absence unless the payments are periodic payments of accumulated
amounts under the provisions of a uniform policy of the employing unit applied equally
to all similarly situated judges;
new text end

new text begin (14) employer contributions to a deferred compensation or tax-sheltered annuity
program; and
new text end

new text begin (15) amounts contributed under a benevolent vacation or sick leave donation program
that is authorized by the employing unit or provided in a collectively bargained agreement.
new text end

new text begin (c) Salary includes amounts provided to a judge by the employer through a grievance
proceeding or a legal settlement only if the settlement terms are reviewed by the executive
director and the amounts are determined by the executive director to be consistent with
paragraph (a) and with prior determinations.
new text end

Sec. 23.

Minnesota Statutes 2006, section 490.121, is amended by adding a subdivision
to read:

new text begin Subd. 22a. new text end

new text begin Severance payments. new text end

new text begin "Severance payments" include, but are not
limited to:
new text end

new text begin (1) payments to a judge in order to induce the judge to terminate employment or as
consideration for an agreement to terminate employment;
new text end

new text begin (2) payments, or that portion of payments, that are not clearly compensation for the
performance of services by the judge to the employer;
new text end

new text begin (3) payments to a judge or to a former judge for service as an advisor to a successor
or as a consultant to the employer under an agreement to terminate employment that
occurs within two years or less of the execution of the agreement for compensation that is
significantly different than the most recent prior contract salary;
new text end

new text begin (4) payments under a procedure that allows the judge to designate the time of
payment if the payments are made during the period of service credit used to compute a
benefit or annuity under section 490.124, subdivision 1, 3, 4, or 9; and
new text end

new text begin (5) lump-sum payments during the time period that contains the average salary for
additional services that were performed without pay during other years of salary.
new text end

Sec. 24. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 23 are effective July 1, 2007.
new text end