SF 889

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:17am

A bill for an act
relating to retirement; amending the Minnesota State Retirement System
unclassified program; amending Minnesota Statutes 2008, sections 352.01,
subdivisions 2a, 2b; 352D.015, subdivision 4; 352D.02, subdivisions 1, 1c, 1d,
2, 3, 4; 352D.03; 352D.04, subdivision 1; 352D.05, subdivision 4; 352D.09,
subdivision 7.

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

Section 1.

Minnesota Statutes 2008, section 352.01, subdivision 2a, is amended to read:

Subd. 2a.

Included employees.

(a) "State employee" includes:

(1) employees of the Minnesota Historical Society;

(2) employees of the State Horticultural Society;

(3) employees of the Minnesota Crop Improvement Association;

(4) employees of the adjutant general who are paid from federal funds and who are
not covered by any federal civilian employees retirement system;

(5) employees of the Minnesota State Colleges and Universities employed under the
university or college activities program;

(6) currently contributing employees covered by the system who are temporarily
employed by the legislature during a legislative session or any currently contributing
employee employed for any special service as defined in subdivision 2b, clause (8);

(7) employees of the legislature appointed without a limit on the duration of their
employment and persons employed or designated by the legislature or by a legislative
committee or commission or other competent authority to conduct a special inquiry,
investigation, examination, or installation;

(8) trainees who are employed on a full-time established training program
performing the duties of the classified position for which they will be eligible to receive
immediate appointment at the completion of the training period;

(9) employees of the Minnesota Safety Council;

(10) any employees on authorized leave of absence from the Transit Operating
Division of the former Metropolitan Transit Commission who are employed by the
labor organization which is the exclusive bargaining agent representing employees of
the Transit Operating Division;

(11) employees of the Metropolitan Council, Metropolitan Parks and Open Space
Commission, Metropolitan Sports Facilities Commission, Metropolitan Mosquito Control
Commission, or Metropolitan Radio Board unless excluded or covered by another public
pension fund or plan under section 473.415, subdivision 3;

(12) judges of the Tax Court;

(13) personnel employed on June 30, 1992, by the University of Minnesota in the
management, operation, or maintenance of its heating plant facilities, whose employment
transfers to an employer assuming operation of the heating plant facilities, so long as the
person is employed at the University of Minnesota heating plant by that employer or by its
successor organization;

(14) seasonal help in the classified service employed by the Department of Revenue;

(15) persons employed by the Department of Commerce as a peace officer in
the Insurance Fraud Prevention Division under section 45.0135 who have attained the
mandatory retirement age specified in section 43A.34, subdivision 4;

(16) employees of the University of Minnesota unless excluded under subdivision
2b, clause (3);

(17) employees of the Middle Management Association whose employment began
after July 1, 2007, and to whom section 352.029 does not apply; deleted text begin and
deleted text end

(18) employees of the Minnesota Government Engineers Council to whom section
352.029 does not apply deleted text begin . deleted text end new text begin ; and
new text end

new text begin (19) employees who have elected to transfer past service to the general employees
retirement plan under section 352D.02, subdivision 1d, paragraph (a), or who have not
elected to transfer to the unclassified program under section 352D.02, subdivision 1d,
paragraph (b).
new text end

(b) Employees specified in paragraph (a), clause (13), are included employees under
paragraph (a) if employer and employee contributions are made in a timely manner in the
amounts required by section 352.04. Employee contributions must be deducted from
salary. Employer contributions are the sole obligation of the employer assuming operation
of the University of Minnesota heating plant facilities or any successor organizations to
that employer.

Sec. 2.

Minnesota Statutes 2008, section 352.01, subdivision 2b, is amended to read:

Subd. 2b.

Excluded employees.

"State employee" does not include:

(1) students employed by the University of Minnesota, or the state colleges and
universities, unless approved for coverage by the Board of Regents of the University of
Minnesota or the Board of Trustees of the Minnesota State Colleges and Universities,
whichever is applicable;

(2) employees who are eligible for membership in the state Teachers Retirement
Association, except employees of the Department of Education who have chosen or may
choose to be covered by the general state employees retirement plan of the Minnesota
State Retirement System instead of the Teachers Retirement Association;

(3) employees of the University of Minnesota who are excluded from coverage by
action of the Board of Regents;

(4) officers and enlisted personnel in the National Guard and the naval militia who
are assigned to permanent peacetime duty and who under federal law are or are required to
be members of a federal retirement system;

(5) election officers;

(6) persons who are engaged in public work for the state but who are employed
by contractors when the performance of the contract is authorized by the legislature or
other competent authority;

(7) officers and employees of the senate, or of the house of representatives, or of a
legislative committee or commission who are temporarily employed;

(8) receivers, jurors, notaries public, and court employees who are not in the judicial
branch as defined in section 43A.02, subdivision 25, except referees and adjusters
employed by the Department of Labor and Industry;

(9) patient and inmate help in state charitable, penal, and correctional institutions
including the Minnesota Veterans Home;

(10) persons who are employed for professional services where the service is
incidental to their regular professional duties and whose compensation is paid on a per
diem basis;

(11) employees of the Sibley House Association;

(12) the members of any state board or commission who serve the state intermittently
and are paid on a per diem basis; the secretary, secretary-treasurer, and treasurer of those
boards if their compensation is $5,000 or less per year, or, if they are legally prohibited
from serving more than three years; and the board of managers of the State Agricultural
Society and its treasurer unless the treasurer is also its full-time secretary;

(13) state troopers and persons who are described in section 352B.01, subdivision 2,
clauses (2) to (6);

(14) temporary employees of the Minnesota State Fair who are employed on or
after July 1 for a period not to extend beyond October 15 of that year; and persons who
are employed at any time by the state fair administration for special events held on the
fairgrounds;

(15) emergency employees who are in the classified service; except that if an
emergency employee, within the same pay period, becomes a provisional or probationary
employee on other than a temporary basis, the employee shall be considered a "state
employee" retroactively to the beginning of the pay period;

(16) temporary employees in the classified service, and temporary employees in the
unclassified service who are appointed for a definite period of not more than six months
and who are employed less than six months in any one-year period;

(17) interns hired for six months or less and trainee employees, except those listed in
subdivision 2a, clause (8);

(18) persons whose compensation is paid on a fee basis or as an independent
contractor;

(19) state employees who are employed by the Board of Trustees of the Minnesota
State Colleges and Universities in unclassified positions enumerated in section 43A.08,
subdivision 1, clause (9);

(20) state employees who in any year have credit for 12 months service as teachers
in the public schools of the state and as teachers are members of the Teachers Retirement
Association or a retirement system in St. Paul, Minneapolis, or Duluth, except for
incidental employment as a state employee that is not covered by one of the teacher
retirement associations or systems;

(21) employees of the adjutant general who are employed on an unlimited
intermittent or temporary basis in the classified or unclassified service for the support of
Army and Air National Guard training facilities;

(22) chaplains and nuns who are excluded from coverage under the federal Old
Age, Survivors, Disability, and Health Insurance Program for the performance of service
as specified in United States Code, title 42, section 410(a)(8)(A), as amended, if no
irrevocable election of coverage has been made under section 3121(r) of the Internal
Revenue Code of 1986, as amended through December 31, 1992;

(23) examination monitors who are employed by departments, agencies,
commissions, and boards to conduct examinations required by law;

(24) persons who are appointed to serve as members of fact-finding commissions or
adjustment panels, arbitrators, or labor referees under chapter 179;

(25) temporary employees who are employed for limited periods under any state or
federal program for training or rehabilitation, including persons who are employed for
limited periods from areas of economic distress, but not including skilled and supervisory
personnel and persons having civil service status covered by the system;

(26) full-time students who are employed by the Minnesota Historical Society
intermittently during part of the year and full-time during the summer months;

(27) temporary employees who are appointed for not more than six months, of
the Metropolitan Council and of any of its statutory boards, if the board members are
appointed by the Metropolitan Council;

(28) persons who are employed in positions designated by the Department of
Finance as student workers;

(29) members of trades who are employed by the successor to the Metropolitan
Waste Control Commission, who have trade union pension plan coverage under a
collective bargaining agreement, and who are first employed after June 1, 1977;

(30) off-duty peace officers while employed by the Metropolitan Council;

(31) persons who are employed as full-time police officers by the Metropolitan
Council and as police officers are members of the public employees police and fire fund;

(32) persons who are employed as full-time firefighters by the Department of Military
Affairs and as firefighters are members of the public employees police and fire fund;

(33) foreign citizens with a work permit of less than three years, or an H-1b/JV visa
valid for less than three years of employment, unless notice of extension is supplied which
allows them to work for three or more years as of the date the extension is granted, in
which case they are eligible for coverage from the date extended; deleted text begin and deleted text end

(34) persons who are employed by the Board of Trustees of the Minnesota State
Colleges and Universities and who elected to remain members of the Public Employees
Retirement Association or the Minneapolis Employees Retirement Fund, whichever
applies, under Minnesota Statutes 1994, section 136C.75 deleted text begin . deleted text end new text begin ; and new text end

new text begin (35) employees who have elected to transfer service to the unclassified program
under section 352D.02, subdivision 1d, paragraph (b).
new text end

Sec. 3.

Minnesota Statutes 2008, section 352D.015, subdivision 4, is amended to read:

Subd. 4.

General deleted text begin fund deleted text end new text begin employees retirement plan new text end .

"General deleted text begin fund deleted text end new text begin employees
retirement plan new text end " means the general state employees retirement deleted text begin fund deleted text end new text begin plan under chapter
352 new text end except the moneys for the unclassified program.

Sec. 4.

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

Subdivision 1.

Coverage.

(a) Employees new text begin hired before July 1, 2009, new text end enumerated
in paragraph (c), clauses (2) deleted text begin , (3), deleted text end new text begin to new text end (4), (6) to (14), and (16) to (18), if they are in the
unclassified service of the state or Metropolitan Council and are eligible for coverage
under the general state employees retirement plan under chapter 352, are participants
in the unclassified program under this chapter unless the employee gives notice to the
executive director of the Minnesota State Retirement System within one year following
the commencement of employment in the unclassified service that the employee desires
coverage under the general state employees retirement plan. For the purposes of this
chapter, an employee who does not file notice with the executive director is deemed to
have exercised the option to participate in the unclassified program. new text begin Employees hired after
June 30, 2009, enumerated in paragraph (c), clauses (2) to (4), (6) to (14), and (16) to (18),
if they are in the unclassified service of the state or Metropolitan Council and are eligible
for coverage under the general state employees retirement plan under chapter 352 are
members of the general state employees retirement plan unless the elect coverage in the
unclassified program under section 352D.02, subdivision 1d, paragraph (b).
new text end

(b) Persons referenced in paragraph (c), clause (5), new text begin and first elected before July 1,
2009, new text end are participants in the unclassified program under this chapter unless the person was
eligible to elect different coverage under section 3A.07 and elected retirement coverage by
the applicable alternative retirement plan. Persons referenced in paragraph (c), clause (15),
are participants in the unclassified program under this chapter for judicial employment in
excess of the service credit limit in section 490.121, subdivision 22.

(c) Enumerated employees and referenced persons are:

(1) the governor, the lieutenant governor, the secretary of state, the state auditor,
and the attorney general;

(2) an employee in the Office of the Governor, Lieutenant Governor, Secretary
of State, State Auditor, Attorney General;

(3) an employee of the State Board of Investment;

(4) the head of a department, division, or agency created by statute in the unclassified
service, an acting department head subsequently appointed to the position, or an employee
enumerated in section 15A.0815 or 15A.083, subdivision 4;

(5) a member of the legislature;

(6) a full-time unclassified employee of the legislature or a commission or agency of
the legislature who is appointed without a limit on the duration of the employment or a
temporary legislative employee having shares in the supplemental retirement fund as a
result of former employment covered by this chapter, whether or not eligible for coverage
under the Minnesota State Retirement System;

(7) a person who is employed in a position established under section 43A.08,
subdivision 1, clause (3), or in a position authorized under a statute creating or establishing
a department or agency of the state, which is at the deputy or assistant head of department
or agency or director level;

(8) the regional administrator, or executive director of the Metropolitan Council,
general counsel, division directors, operations managers, and other positions as designated
by the council, all of which may not exceed 27 positions at the council and the chair;

(9) the executive director, associate executive director, and not to exceed nine
positions of the Minnesota Office of Higher Education in the unclassified service, as
designated by the Minnesota Office of Higher Education before January 1, 1992, or
subsequently redesignated with the approval of the board of directors of the Minnesota
State Retirement System, unless the person has elected coverage by the individual
retirement account plan under chapter 354B;

(10) the clerk of the appellate courts appointed under article VI, section 2, of the
Constitution of the state of Minnesota, the state court administrator and judicial district
administrators;

(11) the chief executive officers of correctional facilities operated by the Department
of Corrections and of hospitals and nursing homes operated by the Department of Human
Services;

(12) an employee whose principal employment is at the state ceremonial house;

(13) an employee of the Agricultural Utilization Research Institute;

(14) an employee of the State Lottery who is covered by the managerial plan
established under section 43A.18, subdivision 3;

(15) a judge who has exceeded the service credit limit in section 490.121,
subdivision 22;

(16) an employee of Enterprise Minnesota, Inc.;

(17) a person employed by the Minnesota State Colleges and Universities as faculty
or in an eligible unclassified administrative position as defined in section 354B.20,
subdivision 6, who was employed by the former state university or the former community
college system before May 1, 1995, and elected unclassified program coverage prior to
May 1, 1995; and

(18) a person employed by the Minnesota State Colleges and Universities who
was employed in state service before July 1, 1995, who subsequently is employed in an
eligible unclassified administrative position as defined in section 354B.20, subdivision
6, and who elects coverage by the unclassified program.

Sec. 5.

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

Subd. 1c.

Transfer of contributions.

An employee covered by the deleted text begin regular deleted text end new text begin general
employees retirement new text end plan who is subsequently employed as a full-time unclassified
employee of the legislature or any commission or agency of the legislature without a
limit on the duration of the employment may elect to transfer accumulated employee and
matching employer contributions, as provided in section 352D.03.

Sec. 6.

Minnesota Statutes 2008, section 352D.02, subdivision 1d, is amended to read:

Subd. 1d.

Election of program participation.

new text begin (a) new text end An employee new text begin hired before July
1, 2009, new text end who is a participant in the unclassified program by virtue of employment in a
position listed in subdivision 1 may elect to remain in the unclassified program upon
subsequent employment in an unlimited, full-time unclassified position that is not listed
in subdivision 1. To elect participation in the unclassified program, the employee must
give notice to the executive director of the Minnesota State Retirement System within
one year of the commencement of employment in an unclassified position that is not
listed in subdivision 1. Upon receipt of the notice, the executive director shall transfer
to the employee's account in the unclassified program an amount equal to the employer
and employee contributions with six percent interest to the deleted text begin regular deleted text end new text begin general employees
retirement new text end plan on the employee's behalf from the commencement of employment in the
position not listed in subdivision 1 to the receipt of the notice by the executive director.

new text begin (b) An employee hired after June 30, 2009, who is able to elect coverage in the
unclassified program by virtue of employment in a position listed in subdivision 1 is
a member of the general employees retirement plan unless they make an irrevocable
election to switch to the unclassified program. An employee may make an election to
switch from the general employees retirement plan to the unclassified program any time
within the first three years of service. To elect participation in the unclassified program,
the employee must give written notice to the executive director of the Minnesota State
Retirement System. Upon receipt of the notice, the executive director shall transfer to the
employee's unclassified program account an amount equal to the employer and employee
contributions with six percent interest compounded annually from the general employees
retirement plan.
new text end

Sec. 7.

Minnesota Statutes 2008, section 352D.02, subdivision 2, is amended to read:

Subd. 2.

Coverage upon employment change.

A person becoming a participant
in the unclassified program new text begin prior to July 1, 2009, new text end by virtue of employment in a position
specified in subdivision 1, clause (4), and remaining in the unclassified service shall
remain a participant in the program even though the position the person occupies is
deleted from any of the sections referenced in subdivision 1, clause (4), by subsequent
amendment, except that a person shall not be eligible to elect the unclassified program
after separation from unclassified service if on the return of the person to service, that
position is not specified in subdivision 1, clause (4). Any person employed in a position
specified in subdivision 1 shall cease to participate in the unclassified program in the event
the position is placed in the classified service.

Sec. 8.

Minnesota Statutes 2008, section 352D.02, subdivision 3, is amended to read:

Subd. 3.

Transfer to general new text begin employees retirement new text end plan.

(a) An employee
new text begin hired before July 1, 2009, new text end credited with employee shares in the unclassified program,
after acquiring credit for ten years of allowable service and not later than one month
following the termination of covered employment, may elect to terminate participation
in the unclassified program and be covered by the general new text begin employees retirement new text end plan by
filing a written election with the executive director. The executive director shall then
redeem the employee's total shares and shall credit to the employee's account in the
general new text begin employees retirement new text end plan the amount of contributions that would have been so
credited had the employee been covered by the general new text begin employees retirement new text end plan during
the employee's entire covered employment. The balance of money so redeemed and not
credited to the employee's account shall be transferred to the general new text begin employees retirement
new text end plan deleted text begin retirement fund deleted text end , except that (1) the employee contribution paid to the unclassified
program must be compared to (2) the employee contributions that would have been paid to
the general new text begin employees retirement new text end plan for the comparable period, if the individual had
been covered by that plan. If clause (1) is greater than clause (2), the difference must be
refunded to the employee as provided in section 352.22. If clause (2) is greater than
clause (1), the difference must be paid by the employee within six months of electing
general new text begin employees retirement new text end plan coverage or before the effective date of the annuity,
whichever is sooner.

(b) An election under paragraph (a) to transfer coverage to the general new text begin employees
retirement new text end plan is irrevocable during any period of covered employment.

Sec. 9.

Minnesota Statutes 2008, section 352D.02, subdivision 4, is amended to read:

Subd. 4.

Start of coverage.

When any person new text begin hired before July 1, 2009, new text end elects
participation in the unclassified program all contributions from the time first eligible to
make such an election shall be covered by the program.

Sec. 10.

Minnesota Statutes 2008, section 352D.03, is amended to read:

352D.03 TRANSFER OF ASSETS.

Unless an eligible employee enumerated in section 352D.02, subdivision 1, has
elected coverage under the individual retirement account plan under chapter 354B, a
sum of money representing the assets credited to each employee exercising the option
contained in section 352D.02, plus an equal employer contribution together with interest
for the employment period at deleted text begin the applicable preretirement interest actuarial assumption
rate during this period deleted text end new text begin six percent interest new text end , compounded annually, must be used for the
purchase of shares on behalf of each employee in the accounts of the supplemental
retirement fund established by section 11A.17.

Sec. 11.

Minnesota Statutes 2008, section 352D.04, subdivision 1, is amended to read:

Subdivision 1.

Investment options.

(a) A person exercising an option to participate
in the retirement program provided by this chapter may elect to purchase shares in one or a
combination of the income share account, the growth share account, the international share
account, the money market account, the bond market account, the fixed interest account, or
the common stock index account established in section 11A.17. The person may elect to
participate in one or more of the investment accounts in the fund by specifying, deleted text begin on a form deleted text end
new text begin in a manner new text end provided by the executive director, the percentage of the person's contributions
provided in subdivision 2 to be used to purchase shares in each of the accounts.

(b) A participant may indicate in deleted text begin writing on forms deleted text end new text begin a manner new text end provided by the
Minnesota State Retirement System a choice of options for subsequent purchases of
shares. Until a different written indication is made by the participant, the executive
director shall purchase shares in the supplemental fund as selected by the participant. If no
initial option is chosen, 100 percent income shares must be purchased for a participant.
A change in choice of investment option is effective no later than the first pay date first
occurring after 30 days following the receipt of the request for a change.

deleted text begin (c) Shares in the fixed interest account attributable to any guaranteed investment
contract as of July 1, 1994, may not be withdrawn from the fund or transferred to another
account until the guaranteed investment contract has expired, unless the participant
qualifies for withdrawal under section 352D.05 or for benefit payments under sections
352D.06 to 352D.075.
deleted text end

deleted text begin (d) deleted text end new text begin (c) new text end A participant or former participant may also change the investment options
selected for all or a portion of the participant's shares previously purchased in accounts,
subject to the deleted text begin provisions of paragraph (c) concerning the fixed interest account. Changes
in investment options for the participant's shares must be effected as soon as cash flow to
an account practically permits, but not later than six months after the requested change deleted text end new text begin
trading restrictions imposed on the investment option new text end .

Sec. 12.

Minnesota Statutes 2008, section 352D.05, subdivision 4, is amended to read:

Subd. 4.

Repayment of refund.

(a) A participant in the unclassified program may
repay regular refunds taken under section 352.22, as provided in section 352.23.

(b) A participant in the unclassified program or an employee covered by the general
new text begin employees retirement new text end plan who has withdrawn the value of the total shares may repay
the refund taken and thereupon restore the service credit, rights and benefits forfeited by
paying into the fund the amount refunded plus interest at an annual rate of 8.5 percent
compounded annually from the date that the refund was taken until the date that the refund
is repaid. If the participant had withdrawn only the employee shares as permitted under
prior laws, repayment must be pro rata.

(c) Except as provided in section 356.441, the repayment of a refund under this
section must be made in a lump sum.

Sec. 13.

Minnesota Statutes 2008, section 352D.09, subdivision 7, is amended to read:

Subd. 7.

Administrative fees.

The board of directors shall establish a budget
and charge participants a fee to pay the administrative expenses of the unclassified
program. deleted text begin Fees cannot be charged on contributions and investment returns attributable to
contributions made before July 1, 1992. Annual total fees charged for plan administration
cannot exceed 10/100 of one percent of the contributions and investment returns
attributable to contributions made on or after July 1, 1992.
deleted text end