SF 1057

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; statewide and major local
retirement plans; providing for various member and
employer contribution rate increases; restructuring
the statewide Teachers Retirement Association fund and
benefit plan; providing a special postretirement
adjustment to certain pre-1969 teachers; changing
deferred annuities augmentation for new retirement
plan members; creating a public pension plan default
insurance pool; increasing the maximum retirement plan
covered salary figure; providing certain early
retirement incentives; creating a task force to study
creation of a statewide volunteer firefighter
retirement plan; appropriating money; amending
Minnesota Statutes 2004, sections 352.01, subdivision
13; 352.04, subdivisions 2, 3, 12; 352.116,
subdivision 1a; 352.72, subdivision 2; 352.911,
subdivision 5; 352.92, subdivisions 1, 2; 352B.01,
subdivision 11; 352B.02, subdivisions 1a, 1c, 1d;
352B.30, subdivision 2; 352D.04, subdivision 2;
352D.09, subdivision 7; 353.01, subdivision 10;
353.27, subdivisions 1, 2, 3, 3a, by adding a
subdivision; 353.30, subdivision 5; 353.65,
subdivisions 2, 3, 6; 353.71, subdivision 2; 353B.02,
subdivision 10; 353E.01, subdivision 5; 353E.05;
354.05, subdivisions 2, 13, 35; 354.42, subdivisions
2, 3, by adding a subdivision; 354.44, subdivision 6;
354.55, subdivision 11; 354A.011, subdivisions 15a,
24, 27; 354A.021, subdivisions 1, 4; 354A.092;
354A.093, subdivision 1; 354A.095; 354A.096; 354A.12,
subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30;
354A.31, subdivisions 4, 7; 354A.32, subdivision 1;
354A.37, subdivision 2; 354A.39; 354A.40, subdivision
1; 354A.41; 356.20, subdivision 2; 356.214,
subdivision 1; 356.215, subdivision 8; 356.30,
subdivisions 1, 3; 356.302, subdivision 7; 356.303,
subdivision 4; 356.315, by adding a subdivision;
356.42, subdivision 3; 356.465, subdivision 3;
356.611, subdivision 1; 422A.01, by adding a
subdivision; 423A.02, subdivision 1b; 423B.01, by
adding a subdivision; 423C.01, by adding a
subdivision; 490.121, by adding a subdivision;
proposing coding for new law in Minnesota Statutes,
chapters 126C; 128D; 354; 356; repealing Minnesota
Statutes 2004, sections 354A.051; 354A.105; 354A.23,
subdivision 1; 354A.28.

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

ARTICLE 1

VARIOUS RETIREMENT PLAN CONTRIBUTION
RATE INCREASES

Section 1.

Minnesota Statutes 2004, section 352.04,
subdivision 2, is amended to read:

Subd. 2.

Employee contributions.

The employee
contribution to the fund must be equal to 4.0 percent of
salary. new text begin Beginning on July 1, 2007, the employee contribution
must be equal to 4.25 percent of salary. Beginning on July 1,
2008, the employee contribution must be equal to 4.50 percent of
salary. Beginning on July 1, 2009, the employee contribution
must be equal to 4.75 percent of salary. Beginning on July 1,
2010, the employee contribution must be equal to 5.0 percent of
salary. new text end These contributions must be made by deduction from
salary as provided in subdivision 4.

Sec. 2.

Minnesota Statutes 2004, section 352.04,
subdivision 3, is amended to read:

Subd. 3.

Employer contributions.

The employer
contribution to the fund must be equal to 4.0 percent of
salary. new text begin Beginning on July 1, 2007, the employer contribution
must be equal to 4.25 percent of salary. Beginning on July 1,
2008, the employer contribution must be equal to 4.50 percent of
salary. Beginning on July 1, 2009, the employer contribution
must be equal to 4.75 percent of salary. Beginning on July 1,
2010, the employer contribution must be equal to 5.0 percent of
salary.
new text end

Sec. 3.

Minnesota Statutes 2004, section 352.92,
subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

Employee
contributions of covered correctional employees must be in an
amount equal to deleted text begin 5.69 deleted text end new text begin a new text end percent of salary. new text begin Beginning July 1,
2007, through June 30, 2008, the employee contribution must be
equal to 6.4 percent of salary. Beginning July 1, 2008, through
June 30, 2009, the employee contribution must be equal to 7.0
percent of salary. Beginning July 1, 2009, through June 30,
2010, the employee contribution must be equal to 7.7 percent of
salary. Beginning July 1, 2010, the ongoing employee
contribution must be equal to 8.6 percent of salary.
new text end

Sec. 4.

Minnesota Statutes 2004, section 352.92,
subdivision 2, is amended to read:

Subd. 2.

Employer contributions.

The employer shall
contribute for covered correctional employees an amount equal to
deleted text begin 7.98 deleted text end new text begin a new text end percent of salary. new text begin Beginning July 1, 2007, through June
30, 2008, the employer contribution must be equal to 9.1 percent
of salary. Beginning July 1, 2008, through June 30, 2009, the
employer contribution must be equal to 10.1 percent of salary.
Beginning July 1, 2009, through June 30, 2010, the employer
contribution must be equal to 11.1 percent of salary. Beginning
July 1, 2010, the ongoing employer contribution must be equal to
12.1 percent of salary.
new text end

Sec. 5.

Minnesota Statutes 2004, section 352B.02,
subdivision 1a, is amended to read:

Subd. 1a.

Member contributions.

Each member shall pay a
sum equal to deleted text begin 8.40 deleted text end new text begin a new text end percent of the member's salary, which shall
constitute the member contribution to the fund. new text begin Beginning July
1, 2007, through June 30, 2008, each member contribution shall
be equal to 9.1 percent of salary. Beginning July 1, 2008, the
ongoing member contribution amount shall be equal to 9.8 percent
of salary.
new text end

Sec. 6.

Minnesota Statutes 2004, section 352B.02,
subdivision 1c, is amended to read:

Subd. 1c.

Employer contributions.

In addition to member
contributions, department heads shall pay a sum equal to deleted text begin 12.60 deleted text end new text begin a
new text end percent of the salary upon which deductions were made, which
shall constitute the employer contribution to the fund.
new text begin Beginning July 1, 2007, through June 30, 2008, the employer
contribution shall be equal to 13.6 percent of salary.
Beginning July 1, 2008, the ongoing employer contribution amount
shall be equal to 14.6 percent of salary. new text end Department
contributions must be paid out of money appropriated to
departments for this purpose.

Sec. 7.

Minnesota Statutes 2004, section 352D.04,
subdivision 2, is amended to read:

Subd. 2.

Contribution rates.

(a) The money used to
purchase shares under this section is the employee and employer
contributions provided in this subdivision.

(b) The employee contribution is an amount equal to deleted text begin the
employee contribution specified in section 352.04, subdivision 2
deleted text end new text begin four percent of salary new text end .

(c) The employer contribution is an amount equal to six
percent of salary.

(d) These contributions must be made in the manner provided
in section 352.04, subdivisions 4, 5, and 6.

(e) For members of the legislature, the contributions under
this subdivision also must be made on per diem payments received
during a regular or special legislative session, but may not be
made on per diem payments received outside of a regular or
special legislative session, on the additional compensation
attributable to a leadership position under section 3.099,
subdivision 3, living expense payments under section 3.101, or
special session living expense payments under section 3.103.

(f) For a judge who is a member of the unclassified plan
under section 352D.02, subdivision 1, paragraph (c), clause
(16), the employee contribution rate is eight percent of salary,
and there is no employer contribution.

Sec. 8.

Minnesota Statutes 2004, section 353.27,
subdivision 2, is amended to read:

Subd. 2.

Employee contribution.

(a) The employee
contribution is the following applicable percentage of new text begin the new text end total
salary amount for a "basic member" and for a "coordinated
member":

Basic Coordinated
Program Program
deleted text begin Before January 1, 2002 deleted text end deleted text begin 8.75 deleted text end deleted text begin 4.75
Effective January 1, 2002
deleted text end new text begin Effective before January 1, 2006 new text end 9.10 5.10
new text begin Effective January 1, 2006 new text end new text begin 9.10 new text end new text begin 5.50
Effective January 1, 2007 new text end new text begin 9.10 new text end new text begin 5.75
Effective January 1, 2008 new text end new text begin 9.10 new text end new text begin 6.00 plus any
contribution
rate adjustment
under
subdivision 3b
new text end

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

Sec. 9.

Minnesota Statutes 2004, section 353.27,
subdivision 3, is amended to read:

Subd. 3.

Employer contribution.

(a) The employer
contribution is the following applicable percentage of new text begin the new text end total
salary amount new text begin for "basic members" and for "coordinated members" new text end :

Basic Coordinated
Program Program
deleted text begin Before January 1, 2002 deleted text end deleted text begin 8.75 deleted text end deleted text begin 4.75
Effective January 1, 2002
deleted text end new text begin Effective before January 1, 2006 new text end 9.10 5.10
new text begin Effective January 1, 2006 new text end new text begin 9.10 new text end new text begin 5.50
Effective January 1, 2007 new text end new text begin 9.10 new text end new text begin 5.75
Effective January 1, 2008 new text end new text begin 9.10 new text end new text begin 6.00 plus any
contribution
rate adjustment
under
subdivision 3b
new text end

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

Sec. 10.

Minnesota Statutes 2004, section 353.27,
subdivision 3a, is amended to read:

Subd. 3a.

Additional employer contribution.

(a) An
additional employer contribution must be made equal to deleted text begin (1) 2.68
percent of deleted text end the new text begin following applicable percentage of the new text end total
salary deleted text begin of each deleted text end new text begin amount for new text end "basic deleted text begin member deleted text end new text begin members new text end " deleted text begin ; deleted text end and deleted text begin (2)
.43 percent of the total salary of each deleted text end new text begin for new text end "coordinated deleted text begin member.
deleted text end new text begin members new text end " new text begin :
new text end

new text begin Basic new text end new text begin Coordinated
Program new text end new text begin Program
Effective before January 1, 2006 new text end new text begin 2.68 new text end new text begin .43
Effective January 1, 2006 new text end new text begin 2.68 new text end new text begin .50
Effective January 1, 2009 new text end new text begin 2.68 new text end new text begin .75
Effective January 1, 2010 new text end new text begin 2.68 new text end new text begin 1.00
new text end

These contributions must be made from funds available to
the employing subdivision by the means and in the manner
provided in section 353.28.

(b) new text begin The coordinated program contribution rates set forth in
paragraph (a) effective for January 1, 2009, or January 1, 2010,
must not be implemented if, following receipt of the July 1,
2008, or July 1, 2009, annual actuarial valuation reports under
section 356.215, respectively, the actuarially required
contributions are equal to or less than the total rates under
this section in effect as of January 1, 2008.
new text end

new text begin (c) new text end This subdivision is repealed once the actuarial value
of the assets of the plan equal or exceed the actuarial accrued
liability of the plan as determined by the actuary retained by
the Legislative Commission on Pensions and Retirement under
section 356.215. The repeal is effective on the first day of
the first full pay period occurring after March 31 of the
calendar year following the issuance of the actuarial valuation
upon which the repeal is based.

Sec. 11.

Minnesota Statutes 2004, section 353.27, is
amended by adding a subdivision to read:

new text begin Subd. 3b. new text end

new text begin Change in employee and employer contributions
in certain instances. new text end

new text begin (a) For purposes of this section, a
contribution sufficiency exists if the total of the employee
contribution under subdivision 2, the employer contribution
under subdivision 3, the additional employer contribution under
subdivision 3a, and any additional contribution previously
imposed under this subdivision exceeds the total of the normal
cost, the administrative expenses, and the amortization
contribution of the retirement plan as reported in the most
recent actuarial valuation of the retirement plan prepared by
the actuary retained under section 356.214 and prepared under
section 356.215 and the standards for actuarial work of the
Legislative Commission on Pensions and Retirement. For purposes
of this section, a contribution deficiency exists if the total
of the employee contributions under subdivision 2, the employer
contributions under subdivision 3, the additional employer
contribution under subdivision 3a, and any additional
contribution previously imposed under this subdivision is less
than the total of the normal cost, the administrative expenses,
and the amortization contribution of the retirement plan as
reported in the most recent actuarial valuation of the
retirement plan prepared by the actuary retained under section
356.214 and prepared under section 356.215 and the standards for
actuarial work of the Legislative Commission on Pensions and
Retirement.
new text end

new text begin (b) Employee and employer contributions under subdivisions
2 and 3 must be adjusted:
new text end

new text begin (1) if, after July 1, 2010, the regular actuarial
valuations of the general employees retirement plan of the
Public Employees Retirement Association under section 356.215
indicate that there is a contribution sufficiency under
paragraph (a) equal to or greater than 0.5 percent of covered
payroll for two consecutive years, the coordinated program
employee and employer contribution rates must be decreased as
determined under paragraph (c) to a level such that the
sufficiency equals no more than 0.25 percent of covered payroll
based on the most recent actuarial valuation; or
new text end

new text begin (2) if, after July 1, 2010, the regular actuarial
valuations of the general employees retirement plan of the
Public Employees Retirement Association under section 356.215
indicate that there is a deficiency equal to or greater than 0.5
percent of covered payroll for two consecutive years, the
coordinated program employee and employer contribution rates
must be increased as determined under paragraph (c) to a level
such that no deficiency exists based on the most recent
actuarial valuation.
new text end

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

new text begin (d) No incremental adjustment may exceed 0.25 percent for
either the coordinated program employee and employer
contribution rates per year in which any adjustment is
implemented. A contribution rate adjustment under this
subdivision must not be made until at least two years have
passed since fully implementing a previous adjustment under this
subdivision.
new text end

Sec. 12.

Minnesota Statutes 2004, section 353.65,
subdivision 2, is amended to read:

Subd. 2.

Employee contribution rate.

new text begin (a) new text end The employee
contribution is an amount equal to deleted text begin 6.2 deleted text end new text begin the new text end percent of the total
salary of the member new text begin specified in paragraph (b) new text end . This
contribution must be made by deduction from salary in the manner
provided in subdivision 4. Where any portion of a member's
salary is paid from other than public funds, the member's
employee contribution is based on the total salary received from
all sources.

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

Sec. 13.

Minnesota Statutes 2004, section 353.65,
subdivision 3, is amended to read:

Subd. 3.

Employer contribution rate.

new text begin (a) new text end The employer
contribution shall be an amount equal to deleted text begin 9.3 deleted text end new text begin the new text end percent of the
total salary of every member new text begin as specified in paragraph (b) new text end .
This contribution shall be made from funds available to the
employing subdivision by the means and in the manner provided in
section 353.28.

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

Sec. 14. new text begin EFFECTIVE DATE.
new text end

new text begin (a) Sections 1, 2, and 7 are effective on July 1, 2007.
new text end

new text begin (b) Sections 3 to 6 are effective on July 1, 2005.
new text end

new text begin (c) Sections 8 to 13 are effective on January 1, 2006.
new text end

ARTICLE 2

TEACHER RETIREMENT FUND AND
BENEFIT RESTRUCTURING

Section 1.

new text begin [126C.458] LEVY FOR EARLY RETIREMENT COSTS.
new text end

new text begin Each year, a school district may levy for the additional
employer contributions required under section 354.42,
subdivision 3.
new text end

Sec. 2.

new text begin [128D.18] FUNDING OF UNFUNDED PENSION
LIABILITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Financing authority. new text end

new text begin Notwithstanding any
other law to the contrary, Special School District No. 1,
Minneapolis, may finance all or a portion of the current and
future unfunded actuarial accrued liability of the former
Minneapolis Teachers Retirement Fund Association through the
issuance of pension obligation bonds under this section.
new text end

new text begin Subd. 2. new text end

new text begin Use of proceeds. new text end

new text begin The proceeds of the bonds
issued, less costs, must be paid to the State Board of
Investment to be deposited as a payment toward the funding of
the unfunded actuarial accrued liability of the former
Minneapolis Teachers Retirement Fund Association owed by Special
School District No. 1, Minneapolis, and must be credited as an
asset of the Teachers Retirement Association.
new text end

new text begin Subd. 3. new text end

new text begin Appropriations. new text end

new text begin Notwithstanding any law to the
contrary, special direct state aid, matching aid, and other
contributions levied for the Teachers Retirement Association
under section 354A.12, subdivisions 3a and 3b, and amortization
or supplementary amortization state aid reallocated to the
Teachers Retirement Association under section 423A.02 are
pledged and appropriated to the payment of the bonds and must be
transferred to Special School District No. 1, Minneapolis, and
additional employer contributions levied by Special School
District No. 1, Minneapolis, under section 354A.12, subdivision
3b, shall be retained by the district to the extent required to
pay debt service on the bonds for the succeeding 12-month period
or a longer period established pursuant to the resolution of the
district authorizing the bonds.
new text end

new text begin Subd. 4. new text end

new text begin No election. new text end

new text begin No election of the voters of the
district shall be required to issue bonds authorized by this
section.
new text end

new text begin Subd. 5. new text end

new text begin Terms and sale of bonds. new text end

new text begin The bonds issued
pursuant to this section shall bear interest at the rate or
rates and mature on the date or dates not more than 30 years
from the date of issue as the district shall determine by
resolution. Interest may be at a fixed or variable rate. The
bonds may be sold and issued on terms and in a manner that
Special School District No. 1, Minneapolis, determines is in its
best interests and in the best interests of the state.
new text end

new text begin Subd. 6. new text end

new text begin This section prevails. new text end

new text begin Notwithstanding any
other law to the contrary, this section shall apply to the
issuance and sale of the bonds and to the purposes for which the
bonds may be issued.
new text end

new text begin Subd. 7. new text end

new text begin State pledge against impairment of
contracts. new text end

new text begin The state pledges and agrees with the holders of
bonds issued under this section that the state will not limit or
alter the rights vested in Special School District No. 1,
Minneapolis, to fulfill the terms of any agreements made with
the bondholders or in any way impair the rights and remedies of
the holders until the bonds, together with interest on them,
with interest on any unpaid installments of interest, and all
costs and expenses in connection with any action or proceeding
by or on behalf of the bondholders, are fully met and
discharged. The district may include this pledge and agreement
of the state in any agreement with the holders of bonds issued
under this section.
new text end

new text begin Subd. 8. new text end

new text begin Not net debt. new text end

new text begin Bonds ended under this section
not in default shall not be deemed net debt under any law
limiting indebtedness.
new text end

new text begin Subd. 9. new text end

new text begin Aid reduction for repayment. new text end

new text begin If the amount
transferred by Special School District No. 1, Minneapolis, to
the paying agent for the bonds is insufficient to pay required
debt service, the paying agent shall notify the commissioner of
finance. The commissioner shall reduce any and all unrestricted
state aids generally available to the school district by the
amount of the deficiency and pay the amounts to the paying agent
for the bonds for the payment of debt service. If the state
aids are reduced pursuant to this subdivision, the district may
levy a tax in the amount of the reduction in state aid.
Notwithstanding any other law to the contrary, no election of
the voters of the district is required for the levy and the levy
is not subject to other levy limitations.
new text end

Sec. 3.

new text begin [128D.181] AID REDEDICATION.
new text end

new text begin Notwithstanding any law to the contrary and subject to
section 2, special direct state aid previously paid to the
Minneapolis Teachers Retirement Fund Association under section
354A.12, subdivision 3a, must be paid to the Teachers Retirement
Association.
new text end

Sec. 4.

Minnesota Statutes 2004, section 354.05,
subdivision 2, is amended to read:

Subd. 2.

Teacher.

(a) "Teacher" means:

(1) a person who renders service as a teacher, supervisor,
principal, superintendent, librarian, nurse, counselor, social
worker, therapist, or psychologist in a public school of the
state located outside of the corporate limits of deleted text begin a city of the
first class deleted text end new text begin the city of Duluth or the city of St. Paul new text end , or in
any charter school, irrespective of the location of the school,
or in any charitable, penal, or correctional institutions of a
governmental subdivision, or who is engaged in educational
administration in connection with the state public school
system, but excluding the University of Minnesota, whether the
position be a public office or an employment, and not including
the members or officers of any general governing or managing
board or body;

(2) an employee of the Teachers Retirement Association;

(3) a person who renders teaching service on a part-time
basis and who also renders other services for a single employing
unit. A person whose teaching service comprises at least 50
percent of the combined employment salary is a member of the
association for all services with the single employing unit. If
the person's teaching service comprises less than 50 percent of
the combined employment salary, the executive director must
determine whether all or none of the combined service is covered
by the association; or

(4) a person who is not covered by the plans established
under chapter 352D, 354A, or 354B and who is employed by the
Board of Trustees of the Minnesota State Colleges and
Universities system in an unclassified position as:

(i) a president, vice-president, or dean;

(ii) a manager or a professional in an academic or an
academic support program other than specified in item (i);

(iii) an administrative or a service support faculty
position; or

(iv) a teacher or a research assistant.

(b) "Teacher" does not mean:

(1) a person who works for a school or institution as an
independent contractor as defined by the Internal Revenue
Service;

(2) a person who renders part-time teaching service or who
is a customized trainer as defined by the Minnesota State
Colleges and Universities system if (i) the service is
incidental to the regular nonteaching occupation of the person;
and (ii) the employer stipulates annually in advance that the
part-time teaching service or customized training service will
not exceed 300 hours in a fiscal year and retains the
stipulation in its records; and (iii) the part-time teaching
service or customized training service actually does not exceed
300 hours in a fiscal year; or

(3) a person exempt from licensure under section 122A.30.

Sec. 5.

Minnesota Statutes 2004, section 354.05,
subdivision 13, is amended to read:

Subd. 13.

Allowable service.

"Allowable service" means:

(1) Any service rendered by a teacher for which on or
before July 1, 1957, the teacher's account in the retirement
fund was credited by reason of employee contributions in the
form of salary deductions, payments in lieu of salary
deductions, or in any other manner authorized by Minnesota
Statutes 1953, sections 135.01 to 135.13, as amended by Laws
1955, chapters 361, 549, 550, 611, or

(2) Any service rendered by a teacher for which on or
before July 1, 1961, the teacher elected to obtain credit for
service by making payments to the fund pursuant to Minnesota
Statutes 1980, section 354.09 and section 354.51, or

(3) Any service rendered by a teacher after July 1, 1957,
for any calendar month when the member receives salary from
which deductions are made, deposited and credited in the fund,
or

(4) Any service rendered by a person after July 1, 1957,
for any calendar month where payments in lieu of salary
deductions are made, deposited and credited into the fund as
provided in Minnesota Statutes 1980, section 354.09, subdivision
4, and section 354.53, or

(5) Any service rendered by a teacher for which the teacher
elected to obtain credit for service by making payments to the
fund pursuant to Minnesota Statutes 1980, section 354.09,
subdivisions 1 and 4, sections 354.50, 354.51, Minnesota
Statutes 1957, section 135.41, subdivision 4, Minnesota Statutes
1971, section 354.09, subdivision 2, or Minnesota Statutes, 1973
Supplement, section 354.09, subdivision 3, or

(6) Both service during years of actual membership in the
course of which contributions were currently made and service in
years during which the teacher was not a member but for which
the teacher later elected to obtain credit by making payments to
the fund as permitted by any law then in effect, or

(7) Any service rendered where contributions were made and
no allowable service credit was established because of the
limitations contained in Minnesota Statutes 1957, section
135.09, subdivision 2, as determined by the ratio between the
amounts of money credited to the teacher's account in a fiscal
year and the maximum retirement contribution allowable for that
year, or

(8) MS 2002 (Expired)

(9) A period of time during which a teacher who is a state
employee was on strike without pay, not to exceed a period of
one year, if the teacher makes a payment in lieu of salary
deductions or makes a prior service credit purchase payment,
whichever applies. If the payment is made within 12 months, the
payment by the teacher must be an amount equal to the employee
and employer contribution rates set forth in section 354.42,
subdivisions 2 and 3, applied to the teacher's rate of salary in
effect on the conclusion of the strike for the period of the
strike without pay, plus compound interest at a monthly rate of
0.71 percent from the last day of the strike until the date of
payment. If the payment by the employee is not made within 12
months, the payment must be in an amount equal to the payment
amount determined under section 356.55 or 356.551, whichever
applies new text begin , or
new text end

new text begin (10) A period of service before July 1, 2005, that was
credited by the Minneapolis Teachers Retirement Fund Association
and that was rendered by a teacher as an employee of Special
School District No. 1, Minneapolis, or by an employee of the
Minneapolis Teachers Retirement Fund Association who was a
member of the Minneapolis Teachers Retirement Fund Association
by virtue of that employment, who has not begun receiving an
annuity or other retirement benefit from the former Minneapolis
Teachers Retirement Fund Association calculated in whole or in
part on that service before July 1, 2005, and who has not taken
a refund of member contributions related to that service unless
the refund is repaid under section 354.50, subdivision 4 new text end .

Sec. 6.

Minnesota Statutes 2004, section 354.42,
subdivision 2, is amended to read:

Subd. 2.

Employee.

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

new text begin (1) after July 1, 2005, for a teacher employed by Special
School District No. 1, Minneapolis, 5.5 percent if the teacher
is a coordinated member and 9.0 percent if the teacher is a
basic member;
new text end

new text begin (2) for every other teacher, new text end deleted text begin 5.0 deleted text end new text begin 5.5 new text end percent deleted text begin of deleted text end new text begin if new text end the
deleted text begin salary of every deleted text end new text begin teacher is a new text end coordinated member and 9.0 percent
deleted text begin of deleted text end new text begin if new text end the deleted text begin salary of every deleted text end new text begin teacher is a new text end basic member.

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

Sec. 7.

Minnesota Statutes 2004, section 354.42,
subdivision 3, is amended to read:

Subd. 3.

Employer.

new text begin (a) The employer contribution to the
fund by Special School District No. 1, Minneapolis, is an amount
equal to 8.64 percent of the salary of each of its teachers who
is a coordinated member and 12.64 percent of the salary of each
of its teachers who is a basic member.
new text end

new text begin (b) new text end The employer contribution to the fund new text begin for every other
employer new text end is an amount equal to deleted text begin 5.0 deleted text end new text begin 5.5 new text end percent of the salary of
each coordinated member and 9.0 percent of the salary of each
basic member.

new text begin (c) As payment toward the cost of the unfunded actuarial
accrued liability transferred to the Teachers Retirement
Association from the former Minneapolis Teachers Retirement Fund
Association, a supplemental contribution of 0.26 percent of the
covered payroll of the fund must be made each fiscal year
through June 30, 2035. One-third of the dollar amount of this
supplemental contribution must be paid each by Special School
District No. 1, Minneapolis, the city of Minneapolis, and the
state of Minnesota. On or before October 1, annually, the
executive director of the Teachers Retirement Association shall
calculate the expected total dollar amount of the supplemental
contribution for the calendar year and shall certify the portion
payable by each governmental entity. The amount is payable in
full on or before the following June 1.
new text end

Sec. 8.

Minnesota Statutes 2004, section 354.44,
subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement
annuity.

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

For all years of formula service credit, "average salary,"
for the purpose of determining the member's retirement annuity,
means the average salary upon which contributions were made and
upon which payments were made to increase the salary limitation
provided in Minnesota Statutes 1971, section 354.511, for the
highest five successive years of formula service credit
provided, however, that such "average salary" shall not include
any more than the equivalent of 60 monthly salary payments.
Average salary must be based upon all years of formula service
credit if this service credit is less than five years.

(b) This paragraph, in conjunction with paragraph (c),
applies to a person who first became a member of the association
or a member of a pension fund listed in section 356.30,
subdivision 3, before July 1, 1989, unless paragraph (d), in
conjunction with paragraph (e), produces a higher annuity
amount, in which case paragraph (d) applies. The average salary
as defined in paragraph (a), multiplied by the following
percentages per year of formula service credit shall determine
the amount of the annuity to which the member qualifying
therefor is entitled new text begin for service rendered prior to July 1, 2005 new text end :

Coordinated Member Basic Member

Each year of service the percent the percent

during first ten specified in specified in

section 356.315, section 356.315,

subdivision 1, subdivision 3,

per year per year

Each year of service the percent the percent

thereafter specified in specified in

section 356.315, section 356.315,

subdivision 2, subdivision 4,

per year per year

new text begin For service rendered on or after July 1, 2005, the average
salary as defined in paragraph (a), multiplied by the following
percentages per year of service credit shall determine the
amount of the annuity to which the member qualifying therefor is
entitled:
new text end

new text begin Coordinated Member new text end new text begin Basic Member
new text end

new text begin Each year of service new text end new text begin the percent new text end new text begin the percent
new text end

new text begin during first ten new text end new text begin specified in new text end new text begin specified in
new text end

new text begin section 356.315, new text end new text begin section 356.315,
new text end

new text begin subdivision 1a, new text end new text begin subdivision 3,
new text end

new text begin per year new text end new text begin per year
new text end

new text begin Coordinated Member new text end new text begin Basic Member
new text end

new text begin Each year of service new text end new text begin the percent new text end new text begin the percent
new text end

new text begin after ten years of new text end new text begin specified in new text end new text begin specified in
new text end

new text begin service new text end new text begin section 356.315, new text end new text begin section 356.315,
new text end

new text begin subdivision 2a, new text end new text begin subdivision 4,
new text end

new text begin per year new text end new text begin per year
new text end

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

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

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

(d) This paragraph applies to a member who has become at
least 55 years old and first became a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity amount when calculated
under this paragraph and in conjunction with paragraph (e), is
higher than it is when calculated under paragraph (b), in
conjunction with paragraph (c). new text begin For a basic member, new text end the average
salary, as defined in paragraph (a) multiplied by the percent
specified by section 356.315, subdivision 4, for each year of
service for a basic member deleted text begin and by the percent specified in
section 356.315, subdivision 2, for each year of service for a
coordinated member deleted text end shall determine the amount of the retirement
annuity to which the new text begin basic new text end member is entitled. new text begin For a
coordinated member, the average salary, as defined in paragraph
(a) multiplied by the percent specified in section 356.315,
subdivision 2, for each year of service rendered prior to July
1, 2005, and by the percent specified in section 356.315,
subdivision 2a, for each year of service rendered on or after
July 1, 2005, shall determine the amount of the retirement
annuity to which the coordinated member is entitled.
new text end

(e) This paragraph applies to a person who has become at
least 55 years old and first becomes a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity is higher when calculated
under paragraph (d) in conjunction with this paragraph than when
calculated under paragraph (b), in conjunction with paragraph
(c). An employee who retires under the formula annuity before
the normal retirement age shall be paid the normal annuity
provided in paragraph (d) reduced so that the reduced annuity is
the actuarial equivalent of the annuity that would be payable to
the employee if the employee deferred receipt of the annuity and
the annuity amount were augmented at an annual rate of three
percent compounded annually from the day the annuity begins to
accrue until the normal retirement age.

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

Sec. 9.

new text begin [354.70] CONSOLIDATION OF THE MINNEAPOLIS
TEACHERS RETIREMENT FUND ASSOCIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Membership transfer. new text end

new text begin All active,
inactive, and retired members of the Minneapolis Teachers
Retirement Fund Association are transferred to the Teachers
Retirement Association and are no longer members of the
Minneapolis Teachers Retirement Fund Association as of the
effective date of this section.
new text end

new text begin Subd. 2. new text end

new text begin Tra membership. new text end

new text begin A person first hired as a
teacher by Special School District No. 1, Minneapolis, after the
effective date of this section and who is a teacher as defined
in section 354.05, subdivision 2, is a member of the Teachers
Retirement Association for the person's teaching service.
new text end

new text begin Subd. 3. new text end

new text begin Service credit and liability transfer. new text end

new text begin All
allowable service and salary credit of the members and other
individuals transferred under subdivision 1 as specified in the
records of the Minneapolis Teachers Retirement Fund Association
on the transfer date is allowable service credit under section
354.05, subdivision 13, formula service credit under section
354.05, subdivision 25, and salary credit under section 354.05,
subdivision 35, for the Teachers Retirement Association.
new text end

new text begin Subd. 4. new text end

new text begin Transfer of records. new text end

new text begin On the effective date of
this section, the chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall effect a
transfer of all records and documents relating to the funds and
the benefit plans of the association to the executive director
of the Teachers Retirement Association. To the extent possible,
original copies of all records and documents must be
transferred. The chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall certify
the accuracy of all records and documents for which the transfer
of original copies was not possible.
new text end

new text begin Subd. 5. new text end

new text begin Transfer of assets. new text end

new text begin (a) On the effective date
of this section, the chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall transfer
to the Teachers Retirement Association the entire assets of the
Minneapolis Teachers Retirement Fund Association. The transfer
of the assets of the Minneapolis Teachers Retirement Fund
Association must include any accounts receivable that are
determined by the executive director of the State Board of
Investment as reasonably capable of being collected. Legal
title to account receivables that are determined by the
executive director of the State Board of Investment as not
reasonably capable of being collected transfers to Special
School District No. 1, Minneapolis, as of the date of the
determination of the executive director of the State Board of
Investment. If the account receivables transferred to Special
School District No. 1, Minneapolis, are subsequently recovered
by the school district, the superintendent of Special School
District No. 1, Minneapolis, shall transfer the recovered amount
to the executive director of the Teachers Retirement
Association, in cash, for deposit in the teachers retirement
fund, less the reasonable expenses of the school district
related to the recovery.
new text end

new text begin (b) As of the effective date of this section, subject to
the authority of the State Board of Investment, the board of
directors of the Teachers Retirement Association has legal title
to and management responsibility for any transferred assets
under this subdivision as trustees for any person having a
beneficial interest in the Minneapolis Teachers Retirement Fund
Association. The Teachers Retirement Association is the
successor in interest for all claims for and against the former
coordinated program of the Minneapolis Teachers Retirement Fund
Association with respect to the retirement fund association,
except a claim against the Minneapolis Teachers Retirement Fund
Association or any person connected with the fund association in
a fiduciary capacity, based on any act or acts by that person
which were not done in good faith and which constituted a breach
of the obligation of the person as a fiduciary. As the
successor in interest, the Teachers Retirement Association may
assert any applicable defense in any judicial proceeding which
the board of the Minneapolis Teachers Retirement Fund
Association would have otherwise been entitled to assert
relating to the coordinated program.
new text end

new text begin (c) From the assets of the Minneapolis Teachers Retirement
Fund Association transferred to the Teachers Retirement
Association, an amount equal to the percentage figure that
represents the ratio between the market value of the Minnesota
postretirement investment fund as of June 30, 2005, and the
required reserves of the Minnesota postretirement investment
fund as of June 30, 2005, applied to the present value of future
benefits payable to annuitants of the former Minneapolis
Teachers Retirement Fund Association as of June 30, 2005,
including any postretirement adjustment from the Minnesota
postretirement investment fund expected to be payable on January
1, 2006, must be transferred to the Minnesota postretirement
investment fund. The executive director of the State Board of
Investment shall estimate this ratio at the time of the
transfer. By January 1, 2006, after all necessary financial
information becomes available to determine the actual funded
ratio of the Minnesota postretirement investment fund, the
postretirement fund must refund to the Teachers Retirement
Association any excess assets or the Teachers Retirement
Association must contribute any deficiency to the Minnesota
postretirement investment fund with interest under section
11A.18, subdivision 6. The balance of the assets of the former
Minneapolis Teachers Retirement Fund Association after the
transfer to the Minnesota postretirement investment fund must be
credited to the Teachers Retirement Association.
new text end

new text begin If the assets transferred by the Minneapolis Teachers
Retirement Fund Association to the Teachers Retirement
Association are insufficient to meet its obligation to the
Minnesota postretirement investment fund, additional assets must
be transferred by the executive director of the Teachers
Retirement Association to meet the amount required.
new text end

new text begin Subd. 6. new text end

new text begin Benefit calculation. new text end

new text begin (a) For every deferred,
inactive, disabled, and retired member of the Minneapolis
Teachers Retirement Fund Association transferred under
subdivision 1, and the survivors of these members, annuities or
benefits earned before the date of the transfer, other than
future postretirement adjustments, must be calculated and paid
by the Teachers Retirement Association under the laws, articles
of incorporation, and bylaws of the former Minneapolis Teachers
Retirement Fund Association that were in effect relative to the
person on the date of the person's termination of active service
covered by the former Minneapolis Teachers Retirement Fund
Association.
new text end

new text begin (b) Former Minneapolis Teachers Retirement Fund Association
members who retired before July 1, 2005, must receive
postretirement adjustments after January 1, 2006, only as
provided in section 11A.18. All other benefit recipients of the
former Minneapolis Teachers Retirement Fund Association must
receive postretirement adjustments after January 1, 2006, only
as provided in section 356.41.
new text end

new text begin Subd. 7. new text end

new text begin Termination of the minneapolis teachers
retirement fund association. new text end

new text begin As of the effective date of this
section and upon the transfer of administration, records,
assets, and liabilities from the Minneapolis Teachers Retirement
Fund Association to the Teachers Retirement Association, the
Minneapolis Teachers Retirement Fund Association ceases to exist
as a Minnesota public pension plan.
new text end

Sec. 10.

new text begin [354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND
STATE AID REDEDICATED.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin The positive difference,
if any, between the actual state aid paid to the Minneapolis
Employees Retirement Fund under section 422A.101, subdivision 3,
and $8,065,000 annually is appropriated from the general fund to
the commissioner of finance for deposit in the Teachers
Retirement Association to offset all or a portion of the current
and future unfunded actuarial accrued liability of the
Minneapolis Teachers Retirement Fund Association.
new text end

new text begin Subd. 2. new text end

new text begin Financial requirements. new text end

new text begin The appropriation in
subdivision 1 is available to the extent that financial
requirements of the Minneapolis Employees Retirement Fund under
section 422A.101, subdivision 3, have been satisfied.
new text end

Sec. 11.

Minnesota Statutes 2004, section 354A.011,
subdivision 15a, is amended to read:

Subd. 15a.

Normal retirement age.

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

Sec. 12.

Minnesota Statutes 2004, section 354A.011,
subdivision 27, is amended to read:

Subd. 27.

Teacher.

(a) "Teacher" means any person who
renders service for a public school district, other than a
charter school, located in the corporate limits of deleted text begin one of deleted text end the
cities of deleted text begin the first class which was so classified on January 1,
1979 deleted text end new text begin Duluth and St. Paul new text end , as any of the following:

(1) a full-time employee in a position for which a valid
license from the state Department of Education is required;

(2) an employee of the teachers retirement fund association
located in the city of the first class unless the employee has
exercised the option pursuant to Laws 1955, chapter 10, section
1, to retain membership in the Minneapolis Employees Retirement
Fund established pursuant to chapter 422A;

(3) a part-time employee in a position for which a valid
license from the state Department of Education is required; or

(4) a part-time employee in a position for which a valid
license from the state Department of Education is required who
also renders other nonteaching services for the school district,
unless the board of trustees of the teachers retirement fund
association determines that the combined employment is on the
whole so substantially dissimilar to teaching service that the
service may not be covered by the association.

(b) The term does not mean any person who renders service
in the school district as any of the following:

(1) an independent contractor or the employee of an
independent contractor;

(2) an employee who is a full-time teacher covered by the
Teachers Retirement Association or by another teachers
retirement fund association established pursuant to this chapter
or chapter 354;

(3) an employee exempt from licensure pursuant to section
122A.30;

(4) an employee who is a teacher in a technical college
located in a city of the first class unless the person elects
coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2;

(5) a teacher employed by a charter school, irrespective of
the location of the school; or

(6) an employee who is a part-time teacher in a technical
college in a city of the first class and who has elected
coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2, but (i)
the teaching service is incidental to the regular nonteaching
occupation of the person; (ii) the applicable technical college
stipulates annually in advance that the part-time teaching
service will not exceed 300 hours in a fiscal year; and (iii)
the part-time teaching actually does not exceed 300 hours in the
fiscal year to which the certification applies.

Sec. 13.

Minnesota Statutes 2004, section 354A.021,
subdivision 1, is amended to read:

Subdivision 1.

Establishment.

There is established a
teachers retirement fund association in each of the cities of
deleted text begin the first class which were so classified on January 1,
1979 deleted text end new text begin Duluth and St. Paul new text end . The associations shall be known
respectively as the "Duluth Teachers Retirement Fund
Association deleted text begin , deleted text end " deleted text begin the "Minneapolis Teachers Retirement Fund
Association" deleted text end and the "St. Paul Teachers Retirement Fund
Association." Each association shall be a continuation of the
teachers retirement fund association with the same corporate
name established pursuant to the authorization contained in Laws
1909, chapter 343, section 1.

Sec. 14.

Minnesota Statutes 2004, section 354A.092, is
amended to read:

354A.092 SABBATICAL LEAVE.

Any teacher in the coordinated program of deleted text begin either the
Minneapolis Teachers Retirement Fund Association or deleted text end the St.
Paul Teachers Retirement Fund Association or any teacher in the
new law coordinated program of the Duluth Teachers Retirement
Fund Association who is granted a sabbatical leave shall be
entitled to receive allowable service credit in the applicable
association for periods of sabbatical leave. To obtain the
service credit, the teacher on sabbatical leave shall make an
employee contribution to the applicable association. No teacher
shall be entitled to receive more than three years of allowable
service credit pursuant to this section for a period or periods
of sabbatical leave during any ten consecutive fiscal or
calendar years, whichever is the applicable plan year for the
teachers retirement fund association. If the teacher granted a
sabbatical leave makes the employee contribution for a period of
sabbatical leave pursuant to this section, the employing unit
shall make an employer contribution on behalf of the teacher to
the applicable association for that period of sabbatical leave
in the manner described in section 354A.12, subdivision 2a. The
employee and employer contributions shall be in an amount equal
to the employee and employer contribution rates in effect for
other active members of the association covered by the same
program applied to a salary figure equal to the teacher's actual
covered salary for the plan year immediately preceding the
sabbatical leave period. Payment of the employee contribution
authorized pursuant to this section shall be made by the teacher
on or before June 30 of year next following the year in which
the sabbatical leave terminated and shall be made without
interest. For sabbatical leaves taken after June 30, 1986, the
required employer contributions shall be paid by the employing
unit within 30 days after notification by the association of the
amount due. If the employee contributions for the sabbatical
leave period are less than an amount equal to the applicable
contribution rate applied to a salary figure equal to the
teacher's actual covered salary for the plan year immediately
preceding the sabbatical leave period, service credit shall be
prorated. The prorated service credit shall be determined by
the ratio between the amount of the actual payment which was
made and the full contribution amount payable pursuant to this
section.

Sec. 15.

Minnesota Statutes 2004, section 354A.093,
subdivision 1, is amended to read:

Subdivision 1.

Eligibility.

Any teacher in the
coordinated program of deleted text begin either the Minneapolis Teachers
Retirement Fund Association or deleted text end the St. Paul Teachers Retirement
Fund Association or any teacher in the new law coordinated
program of the Duluth Teachers Retirement Fund Association who
is absent from employment by reason of service in the uniformed
services as defined in United States Code, title 38, section
4303(13) and who returns to the employer providing active
teaching service upon discharge from uniformed service within
the time frames required under United States Code, title 38,
section 4312(e), may receive allowable service credit in the
applicable association for all or a portion of the period of
uniformed service, provided that the teacher did not separate
from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions.

Sec. 16.

Minnesota Statutes 2004, section 354A.095, is
amended to read:

354A.095 PARENTAL AND MATERNITY LEAVE.

Basic or coordinated members of the St. Paul Teachers
Retirement Fund Association deleted text begin , the Minneapolis Teachers Retirement
Fund Association, deleted text end and new coordinated members of the Duluth
Teachers Retirement Fund Association, who are granted parental
or maternity leave of absence by the employing authority, are
entitled to obtain service credit not to exceed one year for the
period of leave upon payment to the applicable fund by the end
of the fiscal year following the fiscal year in which the leave
of absence terminated. The amount of the payment must include
the total required employee and employer contributions for the
period of leave prescribed in section 354A.12. Payment must be
based on the member's average monthly salary rate upon return to
teaching service, and is payable without interest. Payment must
be accompanied by a certified or otherwise adequate copy of the
resolution or action of the employing authority granting or
approving the leave.

Sec. 17.

Minnesota Statutes 2004, section 354A.096, is
amended to read:

354A.096 MEDICAL LEAVE.

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

Sec. 18.

Minnesota Statutes 2004, section 354A.12,
subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

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

Association and Program Percentage of

Total Salary

Duluth Teachers Retirement

Association

old law and new law

coordinated programs 5.5 percent

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Association
deleted text end

deleted text begin basic program deleted text end deleted text begin 8.5 percent
deleted text end

deleted text begin coordinated program deleted text end deleted text begin 5.5 percent
deleted text end

St. Paul Teachers Retirement

Association

basic program 8 percent

coordinated program 5.5 percent

Contributions shall be made by deduction from salary and
must be remitted directly to the respective teachers retirement
fund association at least once each month.

Sec. 19.

Minnesota Statutes 2004, section 354A.12,
subdivision 2, is amended to read:

Subd. 2.

Retirement contribution levy disallowed.

Except
as provided in deleted text begin subdivision 3b and in section 423A.02,
subdivision 3, with respect to the city of Minneapolis and
special school district No. 1 and in deleted text end section 423A.02,
subdivision 3, with respect to independent school district No.
625, notwithstanding any law to the contrary, levies for
teachers retirement fund associations in new text begin the new text end cities of deleted text begin the first
class deleted text end new text begin Duluth and St. Paul new text end , including levies for any employer
Social Security taxes for teachers covered by the Duluth
Teachers Retirement Fund Association or the deleted text begin Minneapolis Teachers
Retirement Fund Association or the deleted text end St. Paul Teachers Retirement
Fund Association, are disallowed.

Sec. 20.

Minnesota Statutes 2004, section 354A.12,
subdivision 2a, is amended to read:

Subd. 2a.

Employer regular and additional contribution
rates.

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

(1) for any coordinated member of a teachers retirement
fund association in a city of the first class, the employing
unit shall pay the employer Social Security taxes in accordance
with section 355.46, subdivision 3, clause (b);

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

Duluth Teachers Retirement
Fund Association 4.50 percent
deleted text begin Minneapolis Teachers Retirement
Fund Association deleted text end deleted text begin 4.50 percent
deleted text end St. Paul Teachers Retirement
Fund Association 4.50 percent;

(3) for any basic member of deleted text begin one of deleted text end the deleted text begin following deleted text end new text begin St. Paul
new text end Teachers Retirement Fund deleted text begin associations in a city of the first
class deleted text end new text begin Association new text end , the employing unit shall make a regular
employer contribution to the respective retirement fund in an
amount equal to deleted text begin the designated percentage deleted text end new text begin 8.00 percent new text end of the
salary of the basic member deleted text begin as provided below:
deleted text end

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Fund Association deleted text end deleted text begin 8.50 percent
deleted text end

deleted text begin St. Paul Teachers Retirement
deleted text end

deleted text begin Fund Association deleted text end deleted text begin 8.00 percent deleted text end new text begin ;
new text end

(4) for a basic member of deleted text begin a deleted text end new text begin the St. Paul new text end Teachers
Retirement Fund Association deleted text begin in a city of the first class deleted text end , the
employing unit shall make an additional employer contribution to
the respective fund in an amount equal to deleted text begin the designated
percentage deleted text end new text begin 3.64 percent new text end of the salary of the basic member deleted text begin , as
provided below:
deleted text end

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Fund Association
deleted text end

deleted text begin July 1, 1993 - June 30, 1994 deleted text end deleted text begin 4.85 percent
deleted text end

deleted text begin July 1, 1994, and thereafter deleted text end deleted text begin 3.64 percent
deleted text end

deleted text begin St. Paul Teachers Retirement
deleted text end

deleted text begin Fund Association
deleted text end

deleted text begin July 1, 1993 - June 30, 1995 deleted text end deleted text begin 4.63 percent
deleted text end

deleted text begin July 1, 1995, and thereafter deleted text end deleted text begin 3.64 percent deleted text end new text begin ;
new text end

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

Duluth Teachers Retirement

Fund Association 1.29 percent

deleted text begin Minneapolis Teachers Retirement
deleted text end

deleted text begin Fund Association
deleted text end

deleted text begin July 1, 1993 - June 30, 1994 deleted text end deleted text begin 0.50 percent
deleted text end

deleted text begin July 1, 1994, and thereafter deleted text end deleted text begin 3.64 percent
deleted text end

St. Paul Teachers Retirement

Fund Association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994 - June 30, 1995 1.50 percent

July 1, 1997, and thereafter 3.84 percent new text begin .
new text end

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

(c) Payments of regular and additional employer
contributions for school district or technical college employees
who are paid from normal operating funds must be made from the
appropriate fund of the district or technical college.

Sec. 21.

Minnesota Statutes 2004, section 354A.12,
subdivision 3a, is amended to read:

Subd. 3a.

Special direct state aid to first class city
teachers retirement fund associations.

(a) In fiscal year 1998,
the state shall pay $4,827,000 to the St. Paul Teachers
Retirement Fund Association, $17,954,000 to the Minneapolis
Teachers Retirement Fund Association, and $486,000 to the Duluth
Teachers Retirement Fund Association. In each deleted text begin subsequent deleted text end fiscal
year new text begin after fiscal year 2005 new text end , these payments to the first class
city teachers retirement fund associations must be $2,827,000
for St. Paul, $12,954,000 new text begin to the Teachers Retirement Association
new text end for new text begin the former new text end Minneapolis new text begin Teachers Retirement Fund Association new text end ,
and $486,000 for Duluth.

(b) The direct state aids under this subdivision are
payable October 1 annually. The commissioner of finance shall
pay the direct state aid. The amount required under this
subdivision is appropriated annually from the general fund to
the commissioner of finance.

Sec. 22.

Minnesota Statutes 2004, section 354A.12,
subdivision 3b, is amended to read:

Subd. 3b.

Special direct state matching aid to the
deleted text begin minneapolis deleted text end teachers retirement deleted text begin fund deleted text end association.

(a) Special
School District No. 1 deleted text begin may deleted text end new text begin must new text end make an additional employer
contribution to the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund
deleted text end Association. The city of Minneapolis deleted text begin may deleted text end new text begin must new text end make a
contribution to the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund
deleted text end Association. This contribution deleted text begin may deleted text end new text begin must new text end be made by a levy of
the board of estimate and taxation of the city of Minneapolis
and the levy, if made, is classified as that of a special taxing
district for purposes of sections 275.065 and 276.04, and for
all other property tax purposes.

(b) deleted text begin For every $1,000 deleted text end new text begin $1,125,000 must be new text end contributed deleted text begin in
equal proportion deleted text end by Special School District No. 1 and new text begin $1,125,000
must be contributed new text end by the city of Minneapolis to
the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end Association under
paragraph (a) deleted text begin , deleted text end new text begin and new text end the state shall pay to the deleted text begin Minneapolis
deleted text end Teachers Retirement deleted text begin Fund deleted text end Association deleted text begin $1,000, but not to
exceed deleted text end $2,500,000 deleted text begin in total in deleted text end new text begin each new text end fiscal year deleted text begin 1994 deleted text end . The
superintendent of Special School District No. 1, the mayor of
the city of Minneapolis, and the executive director of
the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end Association shall
jointly certify to the commissioner of finance the total amount
that has been contributed by Special School District No. 1 and
by the city of Minneapolis to the deleted text begin Minneapolis deleted text end Teachers
Retirement deleted text begin Fund deleted text end Association. Any certification to the
commissioner of education must be made quarterly. If the total
certifications for a fiscal year exceed the maximum annual
direct state matching aid amount in any quarter, the amount of
direct state matching aid payable to the deleted text begin Minneapolis deleted text end Teachers
Retirement deleted text begin Fund deleted text end Association must be limited to the balance of
the maximum annual direct state matching aid amount available.
The amount required under this paragraph, subject to the maximum
direct state matching aid amount, is appropriated annually to
the commissioner of finance.

(c) The commissioner of finance may prescribe the form of
the certifications required under paragraph (b).

Sec. 23.

Minnesota Statutes 2004, section 354A.12,
subdivision 3c, is amended to read:

Subd. 3c.

Termination of supplemental contributions and
direct matching and state aid.

(a) The supplemental
contributions payable to the deleted text begin Minneapolis Teachers Retirement
Fund Association by special school district No. 1 and the city
of Minneapolis under section 423A.02, subdivision 3, or to the
deleted text end St. Paul Teachers Retirement Fund Association by Independent
School District No. 625 under section 423A.02, subdivision 3, or
the direct state aids under subdivision 3a to the deleted text begin first class
city deleted text end new text begin St. Paul new text end Teachers Retirement deleted text begin associations, and the direct
matching and state aid under subdivision 3b to the Minneapolis
Teachers Retirement deleted text end Fund Association terminate deleted text begin for the
respective fund deleted text end at the end of the fiscal year in which the
accrued liability funding ratio for that fund, as determined in
the most recent actuarial report for that fund by the actuary
retained by the Legislative Commission on Pensions and
Retirement, equals or exceeds the accrued liability funding
ratio for the teachers retirement association, as determined in
the most recent actuarial report for the Teachers Retirement
Association by the actuary retained by the Legislative
Commission on Pensions and Retirement.

(b) If the state direct matching, state supplemental, or
state aid is terminated for a first class city teachers
retirement fund association under paragraph (a), it may not
again be received by that fund.

(c) If deleted text begin either the Minneapolis Teachers Retirement Fund
Association, deleted text end the St. Paul Teachers Retirement Fund Association deleted text begin ,
or the Duluth Teachers Retirement Fund Association remain deleted text end new text begin is
new text end funded at deleted text begin less than deleted text end the funding ratio applicable to the teachers
retirement association when the provisions of paragraph (b)
become effective, then any state aid deleted text begin not deleted text end new text begin previously new text end distributed
to that association must be immediately transferred to the deleted text begin other
associations in proportion to the relative sizes of their
unfunded actuarial accrued liabilities deleted text end new text begin Teachers Retirement
Association new text end .

Sec. 24.

Minnesota Statutes 2004, section 354A.12,
subdivision 3d, is amended to read:

Subd. 3d.

Supplemental administrative expense
assessment.

(a) The active and retired membership of the
deleted text begin Minneapolis Teachers Retirement Fund Association and of the deleted text end St.
Paul Teachers Retirement Fund Association is responsible for
defraying supplemental administrative expenses other than
investment expenses of the respective teacher retirement fund
association.

(b) Investment expenses of the teachers retirement fund
association are those expenses incurred by or on behalf of the
retirement fund in connection with the investment of the assets
of the retirement fund other than investment security
transaction costs. Other administrative expenses are all
expenses incurred by or on behalf of the retirement fund for all
other retirement fund functions other than the investment of
retirement fund assets. Investment and other administrative
expenses must be accounted for using generally accepted
accounting principles and in a manner consistent with the
comprehensive annual financial report of the teachers retirement
fund association for the immediately previous fiscal year under
section 356.20.

(c) Supplemental administrative expenses other than
investment expenses of deleted text begin a first class city teacher deleted text end new text begin the St. Paul
Teachers new text end Retirement Fund Association are those expenses for the
fiscal year that:

(1) exceed, for the St. Paul Teachers Retirement Fund
Association new text begin , new text end $443,745 deleted text begin , or for the Minneapolis Teacher Retirement
Fund Association $671,513, deleted text end plus deleted text begin , in each case, deleted text end an additional
amount derived by applying the percentage increase in the
Consumer Price Index for Urban Wage Earners and Clerical Workers
All Items Index published by the Bureau of Labor Statistics of
the United States Department of Labor since July 1, 2001, to the
deleted text begin applicable deleted text end dollar amount; and

(2) exceed the amount computed by applying the most recent
percentage of pay administrative expense amount, other than
investment expenses, for the teachers retirement association
governed by chapter 354 to the covered payroll of the respective
teachers retirement fund association for the fiscal year.

(d) The board of trustees of deleted text begin each first class city deleted text end new text begin the St.
Paul new text end Teachers Retirement Fund Association shall allocate the
total dollar amount of supplemental administrative expenses
other than investment expenses determined under paragraph (c),
clause (2), among the various active and retired membership
groups of the teachers retirement fund association and shall
assess the various membership groups their respective share of
the supplemental administrative expenses other than investment
expenses, in amounts determined by the board of trustees. The
supplemental administrative expense assessments must be paid by
the membership group in a manner determined by the board of
trustees of the respective teachers retirement association.
Supplemental administrative expenses payable by the active
members of the pension plan must be picked up by the employer in
accordance with section 356.62.

(e) With respect to the St. Paul Teachers Retirement Fund
Association, the supplemental administrative expense assessment
must be fully disclosed to the various active and retired
membership groups of the teachers retirement fund association.
The chief administrative officer of the St. Paul Teachers
Retirement Fund Association shall prepare a supplemental
administrative expense assessment disclosure notice, which must
include the following:

(1) the total amount of administrative expenses of the St.
Paul Teachers Retirement Fund Association, the amount of the
investment expenses of the St. Paul Teachers Retirement Fund
Association, and the net remaining amount of administrative
expenses of the St. Paul Teachers Retirement Fund Association;

(2) the amount of administrative expenses for the St. Paul
Teachers Retirement Fund Association that would be equivalent to
the teachers retirement association noninvestment administrative
expense level described in paragraph (c);

(3) the total amount of supplemental administrative
expenses required for assessment calculated under paragraph (c);

(4) the portion of the total amount of the supplemental
administrative expense assessment allocated to each membership
group and the rationale for that allocation;

(5) the manner of collecting the supplemental
administrative expense assessment from each membership group,
the number of assessment payments required during the year, and
the amount of each payment or the procedure used to determine
each payment; and

(6) any other information that the chief administrative
officer determines is necessary to fairly portray the manner in
which the supplemental administrative expense assessment was
determined and allocated.

(f) The disclosure notice must be provided annually in the
annual report of the association.

(g) The supplemental administrative expense assessments
must be deposited in the applicable teachers retirement fund
upon receipt.

(h) Any omitted active membership group assessments that
remain undeducted and unpaid to the teachers retirement fund
association for 90 days must be paid by the respective school
district. The school district may recover any omitted active
membership group assessment amounts that it has previously
paid. The teachers retirement fund association shall deduct any
omitted retired membership group assessment amounts from the
benefits next payable after the discovery of the omitted amounts.

Sec. 25.

Minnesota Statutes 2004, section 354A.30, is
amended to read:

354A.30 deleted text begin MINNEAPOLIS AND deleted text end ST. PAUL TEACHERS RETIREMENT
FUND deleted text begin ASSOCIATIONS deleted text end new text begin ASSOCIATION new text end ; COORDINATED PROGRAM.

There is established a coordinated program within the
deleted text begin Minneapolis Teachers Retirement Fund Association and a
coordinated program within the deleted text end St. Paul Teachers Retirement Fund
Association to provide retirement coverage for teachers who are
covered by an agreement or modification made between the state
and the secretary of health, education and welfare making the
provisions of the federal Old Age, Survivors and Disability
Insurance Act applicable to certain teachers covered by the
teachers retirement fund association. The provisions governing
the coordinated program shall be sections 354A.31 to 354A.41 and
any other applicable provisions of this chapter.

Sec. 26.

Minnesota Statutes 2004, section 354A.31,
subdivision 4, is amended to read:

Subd. 4.

Computation of the normal coordinated retirement
annuity; deleted text begin minneapolis and deleted text end st. paul deleted text begin funds deleted text end .

(a) This subdivision
applies to the coordinated deleted text begin programs deleted text end new text begin program new text end of the deleted text begin Minneapolis
Teachers Retirement Fund Association and the deleted text end St. Paul Teachers
Retirement Fund Association.

(b) The normal coordinated retirement annuity shall be an
amount equal to a retiring coordinated member's average salary
multiplied by the retirement annuity formula percentage.
Average salary for purposes of this section shall mean an amount
equal to the average salary upon which contributions were made
for the highest five successive years of service credit, but
which shall 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 this service credit
is less than five years.

(c) This paragraph, in conjunction with subdivision 6,
applies to a person who first became a member or a member in a
pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, unless paragraph (d), in conjunction with
subdivision 7, produces a higher annuity amount, in which case
paragraph (d) will apply. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 1, per year for each
year of coordinated service for the first ten years and the
percent specified in section 356.315, subdivision 2, for each
year of coordinated service thereafter.

(d) This paragraph applies to a person who has become at
least 55 years old and who first becomes a member after June 30,
1989, and to any other member who has become at least 55 years
old and whose annuity amount, when calculated under this
paragraph and in conjunction with subdivision 7 is higher than
it is when calculated under paragraph (c), in conjunction with
the provisions of subdivision 6. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 2, for each year of
coordinated service.

Sec. 27.

Minnesota Statutes 2004, section 354A.32,
subdivision 1, is amended to read:

Subdivision 1.

Optional forms generally.

The deleted text begin boards
deleted text end new text begin board new text end of the deleted text begin Minneapolis and the deleted text end St. Paul Teachers Retirement
Fund deleted text begin Associations deleted text end new text begin Association new text end shall deleted text begin each deleted text end establish for the
coordinated program and the board of the Duluth Teachers
Retirement Fund Association shall establish for the new law
coordinated program an optional retirement annuity which shall
take the form of a joint and survivor annuity. Each board may
also in its discretion establish an optional annuity which shall
take the form of an annuity payable for a period certain and for
life thereafter. Each board shall also establish an optional
retirement annuity that guarantees payment of the balance of the
annuity recipient's accumulated deductions to a designated
beneficiary upon the death of the annuity recipient. Except as
provided in subdivision 1a, optional annuity forms shall be the
actuarial equivalent of the normal forms provided in section
354A.31. In establishing these optional annuity forms, the
board shall obtain the written recommendation of the
commission-retained actuary. The recommendation shall be a part
of the permanent records of the board.

Sec. 28.

Minnesota Statutes 2004, section 354A.39, is
amended to read:

354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS;
ANNUITY.

Any person who has been a member of the Minnesota State
Retirement System, the Public Employees Retirement Association
including the Public Employees Retirement Association Police and
Fire Fund, the Teachers Retirement Association, the Minnesota
State Patrol Retirement Association, the legislators retirement
plan, the constitutional officers retirement plan, the
Minneapolis Employees Retirement Fund, the Duluth Teachers
Retirement Fund Association new law coordinated program, deleted text begin the
Minneapolis Teachers Retirement Fund Association coordinated
program, deleted text end the St. Paul Teachers Retirement Fund Association
coordinated program, or any other public employee retirement
system in the state of Minnesota having a like provision but
excluding all other funds providing retirement benefits for
police officers or firefighters shall be entitled when qualified
to an annuity from each fund if the person's total allowable
service in all of the funds or in any two or more of the funds
totals three or more years, provided that no portion of the
allowable service upon which the retirement annuity from one
fund is based is used again in the computation for a retirement
annuity from another fund and provided further that the person
has not taken a refund from any of funds or associations since
the person's membership in the fund or association has
terminated. The annuity from each fund or association shall be
determined by the appropriate provisions of the law governing
each fund or association, except that the requirement that a
person must have at least three years of allowable service in
the respective fund or association shall not apply for the
purposes of this section, provided that the aggregate service in
two or more of these funds equals three or more years.

Sec. 29.

Minnesota Statutes 2004, section 354A.40,
subdivision 1, is amended to read:

Subdivision 1.

Retirement annuity.

Any coordinated
member of deleted text begin either the Minneapolis Teachers Retirement Fund
Association or of deleted text end the St. Paul Teachers Retirement Fund
Association who has credited service prior to July 1, 1978 shall
be entitled to receive a retirement annuity when otherwise
qualified, the calculation of which shall utilize the applicable
retirement annuity formula specified in articles of
incorporation and bylaws of the teachers retirement fund
association governing the basic program for that portion of
credited service which was served prior to July 1, 1978, and the
retirement annuity formula specified in section 354A.31 for the
remainder of the member's credited service, both applied to the
member's average salary as specified in section 354A.31,
subdivision 4. The formula percentages to be used in
calculating the coordinated portion of the retirement annuity or
coordinated service under this section shall recognize the
coordinated service as a continuation of any service prior to
July 1, 1978.

Sec. 30.

Minnesota Statutes 2004, section 354A.41, is
amended to read:

354A.41 ADMINISTRATION OF COORDINATED PROGRAM.

Subdivision 1.

Administrative provisions.

The provisions
of the articles of incorporation and bylaws of the deleted text begin Minneapolis
or the deleted text end St. Paul Teachers Retirement Fund Association deleted text begin , whichever
is applicable, deleted text end relating to the administration of the fund shall
govern the administration of the coordinated program and the
provisions of the articles of incorporation and bylaws of the
Duluth Teachers Retirement Fund Association relating to the
administration of the fund shall govern the administration of
the new law coordinated program in instances where the
administrative provisions are not inconsistent with the
provisions of sections 354A.31 to 354A.41, including but not
limited to provisions relating to the composition and function
of the board of trustees, the investment of assets of the
teachers retirement fund association, and the definition of the
plan year.

Subd. 2.

Actuarial valuations.

In any actuarial
valuation of the deleted text begin Minneapolis Teachers Retirement Fund
Association, the deleted text end St. Paul Teachers Retirement Fund Association deleted text begin ,
deleted text end or the Duluth Teachers Retirement Fund Association under section
356.215 prepared by the commission-retained actuary or
supplemental actuarial valuation prepared by an approved actuary
retained by the teachers retirement fund association, there
shall be included a finding of the condition of the fund showing
separately the basic and coordinated programs or the old law
coordinated and new law coordinated programs, as appropriate.
The finding shall include the level normal cost and the
applicable employee and employer contribution rates for each
program.

Sec. 31.

Minnesota Statutes 2004, section 356.20,
subdivision 2, is amended to read:

Subd. 2.

Covered public pension plans and funds.

This
section applies to the following public pension plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System;

(2) the general employees retirement plan of the Public
Employees Retirement Association;

(3) the Teachers Retirement Association;

(4) the State Patrol retirement plan;

(5) the deleted text begin Minneapolis Teachers Retirement Fund Association;
deleted text end

deleted text begin (6) the deleted text end St. Paul Teachers Retirement Fund Association;

deleted text begin (7) deleted text end new text begin (6) new text end the Duluth Teachers Retirement Fund Association;

deleted text begin (8) deleted text end new text begin (7) new text end the Minneapolis Employees Retirement Fund;

deleted text begin (9) deleted text end new text begin (8) new text end the University of Minnesota faculty retirement
plan;

deleted text begin (10) deleted text end new text begin (9) new text end the University of Minnesota faculty supplemental
retirement plan;

deleted text begin (11) deleted text end new text begin (10) new text end the judges retirement fund;

deleted text begin (12) deleted text end new text begin (11) new text end a police or firefighter's relief association
specified or described in section 69.77, subdivision 1a, or
69.771, subdivision 1;

deleted text begin (13) deleted text end new text begin (12) new text end the public employees police and fire plan of the
Public Employees Retirement Association;

deleted text begin (14) deleted text end new text begin (13) new text end the correctional state employees retirement plan
of the Minnesota State Retirement System; and

deleted text begin (15) deleted text end new text begin (14) new text end the local government correctional service
retirement plan of the Public Employees Retirement Association.

Sec. 32.

Minnesota Statutes 2004, section 356.214,
subdivision 1, is amended to read:

Subdivision 1.

Joint retention.

(a) The chief
administrative officers of the Minnesota State Retirement
System, the Public Employees Retirement Association, the
Teachers Retirement Association, the Duluth Teachers Retirement
Fund Association, deleted text begin the Minneapolis Teachers Retirement Fund
Association, deleted text end the Minneapolis Employees Retirement Fund, and the
St. Paul Teachers Retirement Fund Association, jointly, on
behalf of the state, its employees, its taxpayers, and its
various public pension plans, shall contract with an established
actuarial consulting firm to conduct annual actuarial valuations
and related services for the retirement plans named in paragraph
(b). The principal from the actuarial consulting firm on the
contract must be an approved actuary under section 356.215,
subdivision 1, paragraph (c). Prior to becoming effective, the
contract under this section is subject to a review and approval
by the Legislative Commission on Pensions and Retirement.

(b) The contract for actuarial services must include the
preparation of actuarial valuations and related actuarial work
for the following retirement plans:

(1) the teachers retirement plan, Teachers Retirement
Association;

(2) the general state employees retirement plan, Minnesota
State Retirement System;

(3) the correctional employees retirement plan, Minnesota
State Retirement System;

(4) the State Patrol retirement plan, Minnesota State
Retirement System;

(5) the judges retirement plan, Minnesota State Retirement
System;

(6) the Minneapolis employees retirement plan, Minneapolis
Employees Retirement Fund;

(7) the public employees retirement plan, Public Employees
Retirement Association;

(8) the public employees police and fire plan, Public
Employees Retirement Association;

(9) the Duluth teachers retirement plan, Duluth Teachers
Retirement Fund Association;

(10) the deleted text begin Minneapolis teachers retirement plan, Minneapolis
Teachers Retirement Fund Association;
deleted text end

deleted text begin (11) the deleted text end St. Paul teachers retirement plan, St. Paul
Teachers Retirement Fund Association;

deleted text begin (12) deleted text end new text begin (11) new text end the legislators retirement plan, Minnesota State
Retirement System;

deleted text begin (13) deleted text end new text begin (12) new text end the elective state officers retirement plan,
Minnesota State Retirement System; and

deleted text begin (14) deleted text end new text begin (13) new text end local government correctional service retirement
plan, Public Employees Retirement Association.

(c) The contract must require completion of the annual
actuarial valuation calculations on a fiscal year basis, with
the contents of the actuarial valuation calculations as
specified in section 356.215, and in conformity with the
standards for actuarial work adopted by the Legislative
Commission on Pensions and Retirement.

The contract must require completion of annual experience
data collection and processing and a quadrennial published
experience study for the plans listed in paragraph (b), clauses
(1), (2), and (7), as provided for in the standards for
actuarial work adopted by the commission. The experience data
collection, processing, and analysis must evaluate the following:

(1) individual salary progression;

(2) the rate of return on investments based on the current
asset value;

(3) payroll growth;

(4) mortality;

(5) retirement age;

(6) withdrawal; and

(7) disablement.

The contract must include provisions for the preparation of
cost analyses by the jointly retained actuary for proposed
legislation that include changes in benefit provisions or
funding policies prior to their consideration by the Legislative
Commission on Pensions and Retirement.

(d) The actuary retained by the joint retirement systems
shall annually prepare a report to the legislature, including a
commentary on the actuarial valuation calculations for the plans
named in paragraph (b) and summarizing the results of the
actuarial valuation calculations. The actuary shall include
with the report the actuary's recommendations to the legislature
concerning the appropriateness of the support rates to achieve
proper funding of the retirement plans by the required funding
dates. The actuary shall, as part of the quadrennial experience
study, include recommendations to the legislature on the
appropriateness of the actuarial valuation assumptions required
for evaluation in the study.

(e) If the actuarial gain and loss analysis in the
actuarial valuation calculations indicates a persistent pattern
of sizable gains or losses, as directed by the joint retirement
systems or as requested by the chair of the Legislative
Commission on Pensions and Retirement, the actuary shall prepare
a special experience study for a plan listed in paragraph (b),
clause (3), (4), (5), (6), (8), (9), (10), (11), (12), deleted text begin (13), deleted text end or
deleted text begin (14) deleted text end new text begin (13) new text end , in the manner provided for in the standards for
actuarial work adopted by the commission.

(f) The term of the contract between the joint retirement
systems and the actuary retained may not exceed five years. The
joint retirement system administrative officers shall establish
procedures for the consideration and selection of contract
bidders and the requirements for the contents of an actuarial
services contract under this section. The procedures and
requirements must be submitted to the Legislative Commission on
Pensions and Retirement for review and comment prior to final
approval by the joint administrators. The contract is subject
to the procurement procedures under chapter 16C. The
consideration of bids and the selection of a consulting
actuarial firm by the chief administrative officers must occur
at a meeting that is open to the public and reasonable timely
public notice of the date and the time of the meeting and its
subject matter must be given.

(g) The actuarial services contract may not limit the
ability of the Minnesota legislature and its standing committees
and commissions to rely on the actuarial results of the work
prepared under the contract.

(h) The joint retirement systems shall designate one of the
retirement system executive directors as the actuarial services
contract manager.

Sec. 33.

Minnesota Statutes 2004, section 356.215,
subdivision 8, is amended to read:

Subd. 8.

Interest and salary assumptions.

(a) The
actuarial valuation must use the applicable following
preretirement interest assumption and the applicable following
postretirement interest assumption:

preretirement postretirement
interest rate interest rate
plan assumption assumption
general state employees
retirement plan 8.5% 6.0%
correctional state employees
retirement plan 8.5 6.0
State Patrol retirement plan 8.5 6.0
legislators retirement plan 8.5 6.0
elective state officers
retirement plan 8.5 6.0
judges retirement plan 8.5 6.0
general public employees
retirement plan 8.5 6.0
public employees police and fire
retirement plan 8.5 6.0
local government correctional
service retirement plan 8.5 6.0
teachers retirement plan 8.5 6.0
Minneapolis employees
retirement plan 6.0 5.0
Duluth teachers retirement plan 8.5 8.5
deleted text begin Minneapolis teachers retirement
plan deleted text end deleted text begin 8.5 deleted text end deleted text begin 8.5
deleted text end St. Paul teachers retirement
plan 8.5 8.5
Minneapolis Police Relief
Association 6.0 6.0
Fairmont Police Relief
Association 5.0 5.0
Minneapolis Fire Department
Relief Association 6.0 6.0
Virginia Fire Department
Relief Association 5.0 5.0
local monthly benefit volunteer
firefighters relief associations 5.0 5.0

(b) The actuarial valuation must use the applicable
following single rate future salary increase assumption, the
applicable following modified single rate future salary increase
assumption, or the applicable following graded rate future
salary increase assumption:

(1) single rate future salary increase assumption

future salary
plan increase assumption
legislators retirement plan 5.0%
elective state officers retirement
plan 5.0
judges retirement plan 5.0
Minneapolis Police Relief Association 4.0
Fairmont Police Relief
Association 3.5
Minneapolis Fire Department Relief
Association 4.0
Virginia Fire Department
Relief Association 3.5

(2) modified single rate future salary increase assumption

future salary
plan increase assumption
Minneapolis employees the prior calendar year
retirement plan amount increased first by
1.0198 percent to prior
fiscal year date and
then increased by 4.0
percent annually for
each future year

(3) select and ultimate future salary increase assumption
or graded rate future salary increase assumption

future salary
plan increase assumption
general state employees select calculation and
retirement plan assumption A
correctional state employees
retirement plan assumption deleted text begin H deleted text end new text begin G
new text end State Patrol retirement plan assumption deleted text begin H deleted text end new text begin G
new text end general public employees select calculation and
retirement plan assumption B
public employees police and fire
fund retirement plan assumption C
local government correctional service
retirement plan assumption deleted text begin H deleted text end new text begin G
new text end teachers retirement plan assumption D
Duluth teachers retirement plan assumption E
deleted text begin Minneapolis teachers retirement plan deleted text end deleted text begin assumption F
deleted text end St. Paul teachers retirement plan assumption deleted text begin G deleted text end new text begin F
new text end
The select calculation is:
during the ten-year select period, a designated percent
is multiplied by the result of ten minus T, where T is
the number of completed years of service, and is added
to the applicable future salary increase assumption. The
designated percent is 0.2 percent for the correctional state
employees retirement plan, the State Patrol retirement
plan, the public employees police and fire plan, and the
local government correctional service plan; 0.3 percent
for the general state employees retirement plan, the
general public employees retirement plan, the teachers
retirement plan, the Duluth Teachers Retirement Fund
Association, and the St. Paul Teachers Retirement Fund
Association; and 0.4 percent for the Minneapolis Teachers
Retirement Fund Association.

The ultimate future salary increase assumption is:

age A B C D E deleted text begin F deleted text end deleted text begin G deleted text end new text begin F new text end deleted text begin H deleted text end new text begin G
new text end 16 6.95% 6.95% 11.50% 8.20% 8.00% deleted text begin 6.50% deleted text end 6.90% 7.7500
17 6.90 6.90 11.50 8.15 8.00 deleted text begin 6.50 deleted text end 6.90 7.7500
18 6.85 6.85 11.50 8.10 8.00 deleted text begin 6.50 deleted text end 6.90 7.7500
19 6.80 6.80 11.50 8.05 8.00 deleted text begin 6.50 deleted text end 6.90 7.7500
20 6.75 6.40 11.50 6.00 6.90 deleted text begin 6.50 deleted text end 6.90 7.7500
21 6.75 6.40 11.50 6.00 6.90 deleted text begin 6.50 deleted text end 6.90 7.1454
22 6.75 6.40 11.00 6.00 6.90 deleted text begin 6.50 deleted text end 6.90 7.0725
23 6.75 6.40 10.50 6.00 6.85 deleted text begin 6.50 deleted text end 6.85 7.0544
24 6.75 6.40 10.00 6.00 6.80 deleted text begin 6.50 deleted text end 6.80 7.0363
25 6.75 6.40 9.50 6.00 6.75 deleted text begin 6.50 deleted text end 6.75 7.0000
26 6.75 6.36 9.20 6.00 6.70 deleted text begin 6.50 deleted text end 6.70 7.0000
27 6.75 6.32 8.90 6.00 6.65 deleted text begin 6.50 deleted text end 6.65 7.0000
28 6.75 6.28 8.60 6.00 6.60 deleted text begin 6.50 deleted text end 6.60 7.0000
29 6.75 6.24 8.30 6.00 6.55 deleted text begin 6.50 deleted text end 6.55 7.0000
30 6.75 6.20 8.00 6.00 6.50 deleted text begin 6.50 deleted text end 6.50 7.0000
31 6.75 6.16 7.80 6.00 6.45 deleted text begin 6.50 deleted text end 6.45 7.0000
32 6.75 6.12 7.60 6.00 6.40 deleted text begin 6.50 deleted text end 6.40 7.0000
33 6.75 6.08 7.40 6.00 6.35 deleted text begin 6.50 deleted text end 6.35 7.0000
34 6.75 6.04 7.20 6.00 6.30 deleted text begin 6.50 deleted text end 6.30 7.0000
35 6.75 6.00 7.00 6.00 6.25 deleted text begin 6.50 deleted text end 6.25 7.0000
36 6.75 5.96 6.80 6.00 6.20 deleted text begin 6.50 deleted text end 6.20 6.9019
37 6.75 5.92 6.60 6.00 6.15 deleted text begin 6.50 deleted text end 6.15 6.8074
38 6.75 5.88 6.40 5.90 6.10 deleted text begin 6.50 deleted text end 6.10 6.7125
39 6.75 5.84 6.20 5.80 6.05 deleted text begin 6.50 deleted text end 6.05 6.6054
40 6.75 5.80 6.00 5.70 6.00 deleted text begin 6.50 deleted text end 6.00 6.5000
41 6.75 5.76 5.90 5.60 5.90 deleted text begin 6.50 deleted text end 5.95 6.3540
42 6.75 5.72 5.80 5.50 5.80 deleted text begin 6.50 deleted text end 5.90 6.2087
43 6.65 5.68 5.70 5.40 5.70 deleted text begin 6.50 deleted text end 5.85 6.0622
44 6.55 5.64 5.60 5.30 5.60 deleted text begin 6.50 deleted text end 5.80 5.9048
45 6.45 5.60 5.50 5.20 5.50 deleted text begin 6.50 deleted text end 5.75 5.7500
46 6.35 5.56 5.45 5.10 5.40 deleted text begin 6.40 deleted text end 5.70 5.6940
47 6.25 5.52 5.40 5.00 5.30 deleted text begin 6.30 deleted text end 5.65 5.6375
48 6.15 5.48 5.35 5.00 5.20 deleted text begin 6.20 deleted text end 5.60 5.5822
49 6.05 5.44 5.30 5.00 5.10 deleted text begin 6.10 deleted text end 5.55 5.5404
50 5.95 5.40 5.25 5.00 5.00 deleted text begin 6.00 deleted text end 5.50 5.5000
51 5.85 5.36 5.25 5.00 5.00 deleted text begin 5.90 deleted text end 5.45 5.4384
52 5.75 5.32 5.25 5.00 5.00 deleted text begin 5.80 deleted text end 5.40 5.3776
53 5.65 5.28 5.25 5.00 5.00 deleted text begin 5.70 deleted text end 5.35 5.3167
54 5.55 5.24 5.25 5.00 5.00 deleted text begin 5.60 deleted text end 5.30 5.2826
55 5.45 5.20 5.25 5.00 5.00 deleted text begin 5.50 deleted text end 5.25 5.2500
56 5.35 5.16 5.25 5.00 5.00 deleted text begin 5.40 deleted text end 5.20 5.2500
57 5.25 5.12 5.25 5.00 5.00 deleted text begin 5.30 deleted text end 5.15 5.2500
58 5.25 5.08 5.25 5.10 5.00 deleted text begin 5.20 deleted text end 5.10 5.2500
59 5.25 5.04 5.25 5.20 5.00 deleted text begin 5.10 deleted text end 5.05 5.2500
60 5.25 5.00 5.25 5.30 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
61 5.25 5.00 5.25 5.40 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
62 5.25 5.00 5.25 5.50 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
63 5.25 5.00 5.25 5.60 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
64 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
65 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
66 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
67 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
68 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
69 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
70 5.25 5.00 5.25 5.70 5.00 deleted text begin 5.00 deleted text end 5.00 5.2500
71 5.25 5.00 5.70

(c) The actuarial valuation must use the applicable
following payroll growth assumption for calculating the
amortization requirement for the unfunded actuarial accrued
liability where the amortization retirement is calculated as a
level percentage of an increasing payroll:

payroll growth
plan assumption
general state employees retirement plan 5.00%
correctional state employees retirement plan 5.00
State Patrol retirement plan 5.00
legislators retirement plan 5.00
elective state officers retirement plan 5.00
judges retirement plan 5.00
general public employees retirement plan 6.00
public employees police and fire
retirement plan 6.00
local government correctional service
retirement plan 6.00
teachers retirement plan 5.00
Duluth teachers retirement plan 5.00
deleted text begin Minneapolis teachers retirement plan deleted text end deleted text begin 5.00
deleted text end St. Paul teachers retirement plan 5.00

Sec. 34.

Minnesota Statutes 2004, section 356.30,
subdivision 3, is amended to read:

Subd. 3.

Covered plans.

This section applies to the
following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(2) the correctional state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(3) the unclassified employees retirement program,
established under chapter 352D;

(4) the State Patrol retirement plan, established under
chapter 352B;

(5) the legislators retirement plan, established under
chapter 3A;

(6) the elective state officers' retirement plan,
established under chapter 352C;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established under chapter 353;

(8) the public employees police and fire retirement plan of
the Public Employees Retirement Association, established under
chapter 353;

(9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
under chapter 353E;

(10) the Teachers Retirement Association, established under
chapter 354;

(11) the Minneapolis Employees Retirement Fund, established
under chapter 422A;

(12) the deleted text begin Minneapolis Teachers Retirement Fund Association,
established under chapter 354A;
deleted text end

deleted text begin (13) the deleted text end St. Paul Teachers Retirement Fund Association,
established under chapter 354A;

deleted text begin (14) deleted text end new text begin (13) new text end the Duluth Teachers Retirement Fund Association,
established under chapter 354A; and

deleted text begin (15) deleted text end new text begin (14) new text end the judges' retirement fund, established by
sections 490.121 to 490.132.

Sec. 35.

Minnesota Statutes 2004, section 356.302,
subdivision 7, is amended to read:

Subd. 7.

Covered retirement plans.

This section applies
to the following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(2) the unclassified state employees retirement program of
the Minnesota State Retirement System, established by chapter
352D;

(3) the general employees retirement plan of the Public
Employees Retirement Association, established by chapter 353;

(4) the Teachers Retirement Association, established by
chapter 354;

(5) the Duluth Teachers Retirement Fund Association,
established by chapter 354A;

(6) the deleted text begin Minneapolis Teachers Retirement Fund Association,
established by chapter 354A;
deleted text end

deleted text begin (7) the deleted text end St. Paul Teachers Retirement Fund Association,
established by chapter 354A;

deleted text begin (8) deleted text end new text begin (7) new text end the Minneapolis Employees Retirement Fund,
established by chapter 422A;

deleted text begin (9) deleted text end new text begin (8) new text end the state correctional employees retirement plan of
the Minnesota State Retirement System, established by chapter
352;

deleted text begin (10) deleted text end new text begin (9) new text end the State Patrol retirement plan, established by
chapter 352B;

deleted text begin (11) deleted text end new text begin (10) new text end the public employees police and fire plan of the
Public Employees Retirement Association, established by chapter
353;

deleted text begin (12) deleted text end new text begin (11) new text end the local government correctional service
retirement plan of the Public Employees Retirement Association,
established by chapter 353E; and

deleted text begin (13) deleted text end new text begin (12) new text end the judges' retirement plan, established by
sections 490.121 to 490.132.

Sec. 36.

Minnesota Statutes 2004, section 356.303,
subdivision 4, is amended to read:

Subd. 4.

Covered retirement plans.

This section applies
to the following retirement plans:

(1) the legislators retirement plan, established by chapter
3A;

(2) the general state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(3) the correctional state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(4) the State Patrol retirement plan, established by
chapter 352B;

(5) the elective state officers retirement plan,
established by chapter 352C;

(6) the unclassified state employees retirement program,
established by chapter 352D;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established by chapter 353;

(8) the public employees police and fire plan of the Public
Employees Retirement Association, established by chapter 353;

(9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
by chapter 353E;

(10) the Teachers Retirement Association, established by
chapter 354;

(11) the Duluth Teachers Retirement Fund Association,
established by chapter 354A;

(12) the deleted text begin Minneapolis Teachers Retirement Fund Association,
established by chapter 354A;
deleted text end

deleted text begin (13) the deleted text end St. Paul Teachers Retirement Fund Association,
established by chapter 354A;

deleted text begin (14) deleted text end new text begin (13) new text end the Minneapolis Employees Retirement Fund,
established by chapter 422A; and

deleted text begin (15) deleted text end new text begin (14) new text end the judges' retirement fund, established by
sections 490.121 to 490.132.

Sec. 37.

Minnesota Statutes 2004, section 356.315, is
amended by adding a subdivision to read:

new text begin Subd. 1a. new text end

new text begin Coordinated plan members. new text end

new text begin The applicable
benefit accrual rate is 1.5 percent.
new text end

Sec. 38.

Minnesota Statutes 2004, section 356.42,
subdivision 3, is amended to read:

Subd. 3.

Covered retirement plans.

The postretirement
adjustment provided in this section applies to the following
retirement funds:

(1) the general employees retirement plans of the Public
Employees Retirement Association;

(2) the public employees police and fire plan of the Public
Employees Retirement Association;

(3) the teachers retirement association;

(4) the State Patrol retirement plan;

(5) the state employees retirement plan of the Minnesota
State Retirement System;

(6) the deleted text begin Minneapolis Teachers Retirement Fund Association
established under chapter 354A;
deleted text end

deleted text begin (7) the deleted text end St. Paul Teachers Retirement Fund Association
established under chapter 354A; and

deleted text begin (8) deleted text end new text begin (7) new text end the Duluth Teachers Retirement Fund Association
established under chapter 354A.

Sec. 39.

Minnesota Statutes 2004, section 356.465,
subdivision 3, is amended to read:

Subd. 3.

Covered retirement plans.

The provisions of
this section apply to the following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System established under chapter 352;

(2) the correctional state employees retirement plan of the
Minnesota State Retirement System established under chapter 352;

(3) the State Patrol retirement plan established under
chapter 352B;

(4) the legislators retirement plan established under
chapter 3A;

(5) the judges retirement plan established under chapter
490;

(6) the general employees retirement plan of the Public
Employees Retirement Association established under chapter 353;

(7) the public employees police and fire plan of the Public
Employees Retirement Association established under chapter 353;

(8) the teachers retirement plan established under chapter
354;

(9) the Duluth Teachers Retirement Fund Association
established under chapter 354A;

(10) the St. Paul Teachers Retirement Fund Association
established under chapter 354A;

(11) the deleted text begin Minneapolis Teachers Retirement Fund Association
established under chapter 354A;
deleted text end

deleted text begin (12) the deleted text end Minneapolis employees retirement plan established
under chapter 422A;

deleted text begin (13) deleted text end new text begin (12) new text end the Minneapolis Firefighters Relief Association
established under chapter 423C;

deleted text begin (14) deleted text end new text begin (13) new text end the Minneapolis Police Relief Association
established under chapter 423B; and

deleted text begin (15) deleted text end new text begin (14) new text end the local government correctional service
retirement plan of the Public Employees Retirement Association
established under chapter 353E.

Sec. 40.

Minnesota Statutes 2004, section 423A.02,
subdivision 1b, is amended to read:

Subd. 1b.

Additional amortization state aid.

(a)
Annually, on October 1, the commissioner of revenue shall
allocate the additional amortization state aid transferred under
section 69.021, subdivision 11, to:

(1) all police or salaried firefighters relief associations
governed by and in full compliance with the requirements of
section 69.77, that had an unfunded actuarial accrued liability
in the actuarial valuation prepared under sections 356.215 and
356.216 as of the preceding December 31;

(2) all local police or salaried firefighter consolidation
accounts governed by chapter 353A that are certified by the
executive director of the public employees retirement
association as having for the current fiscal year an additional
municipal contribution amount under section 353A.09, subdivision
5, paragraph (b), and that have implemented section 353A.083,
subdivision 1, if the effective date of the consolidation
preceded May 24, 1993, and that have implemented section
353A.083, subdivision 2, if the effective date of the
consolidation preceded June 1, 1995; and

(3) the municipalities that are required to make an
additional municipal contribution under section 353.665,
subdivision 8, for the duration of the required additional
contribution.

(b) The commissioner shall allocate the state aid on the
basis of the proportional share of the relief association or
consolidation account of the total unfunded actuarial accrued
liability of all recipient relief associations and consolidation
accounts as of December 31, 1993, for relief associations, and
as of June 30, 1994, for consolidation accounts.

(c) Beginning October 1, 2000, and annually thereafter, the
commissioner shall allocate the state aid, including any state
aid in excess of the limitation in subdivision 4, on the
following basis:

(1) 64.5 percent to the municipalities to which section
353.665, subdivision 8, paragraph (b), or 353A.09, subdivision
5, paragraph (b), apply for distribution in accordance with
paragraph (b) and subject to the limitation in subdivision 4;

(2) 34.2 percent to the city of Minneapolis to fund any
unfunded actuarial accrued liability in the actuarial valuation
prepared under sections 356.215 and 356.216 as of the preceding
December 31 for the Minneapolis Police Relief Association or the
Minneapolis Fire Department Relief Association; and

(3) 1.3 percent to the city of Virginia to fund any
unfunded actuarial accrued liability in the actuarial valuation
prepared under sections 356.215 and 356.216 as of the preceding
December 31 for the Virginia Fire Department Relief Association.

If there is no unfunded actuarial accrued liability in both
the Minneapolis Police Relief Association and the Minneapolis
Fire Department Relief Association as disclosed in the most
recent actuarial valuations for the relief associations prepared
under sections 356.215 and 356.216, the commissioner shall
allocate that 34.2 percent of the aid as follows: 49 percent to
the deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end Association, 21 percent
to the St. Paul Teachers Retirement Fund Association, and 30
percent as additional funding to support minimum fire state aid
for volunteer firefighters relief associations. If there is no
unfunded actuarial accrued liability in the Virginia Fire
Department Relief Association as disclosed in the most recent
actuarial valuation for the relief association prepared under
sections 356.215 and 356.216, the commissioner shall allocate
that 1.3 percent of the aid as follows: 49 percent to the
deleted text begin Minneapolis deleted text end Teachers Retirement deleted text begin Fund deleted text end Association, 21 percent to
the St. Paul Teachers Retirement Fund Association, and 30
percent as additional funding to support minimum fire state aid
for volunteer firefighters relief associations. The allocation
must be made by the commissioner at the same time and under the
same procedures as specified in subdivision 3. With respect to
the deleted text begin Minneapolis Teachers Retirement Fund Association or the deleted text end St.
Paul Teachers Retirement Fund Association, annually, beginning
on July 1, 2005, if the applicable teacher's association
five-year average time-weighted rate of investment return does
not equal or exceed the performance of a composite portfolio
assumed passively managed (indexed) invested ten percent in cash
equivalents, 60 percent in bonds and similar debt securities,
and 30 percent in domestic stock calculated using the formula
under section 11A.04, clause (11), the aid allocation to that
retirement fund under this section ceases until the five-year
annual rate of investment return equals or exceeds the
performance of that composite portfolio.

(d) The amounts required under this subdivision are
annually appropriated to the commissioner of revenue.

Sec. 41. new text begin FULL FUNDING DATE.
new text end

new text begin Notwithstanding any other law to the contrary, for the
Teachers Retirement Association, the established date for full
funding is 2035.
new text end

Sec. 42. new text begin MTRFA EMPLOYEE JOB PREFERENCE.
new text end

new text begin An employee of the Minneapolis Teachers Retirement Fund
Association on the date of enactment has an employment
preference for subsequent employment by the Teachers Retirement
Association, the Minnesota State Retirement System, or the
Public Employees Retirement Association equivalent to the
preference provided to armed forces veterans under state law and
Department of Employee Relations practice.
new text end

Sec. 43. new text begin MTRFA ARTICLES AND BYLAWS; REPEAL;
APPLICABILITY.
new text end

new text begin (a) The articles of incorporation and bylaws of the
Minneapolis Teachers Retirement Fund Association are repealed
and have application only as provided in section 6, subdivision
6, and paragraph (b).
new text end

new text begin (b) The articles of incorporation and bylaws of the
Minneapolis Teachers Retirement Fund Association only apply to
members of the former Minneapolis Teachers Retirement Fund
Association with service credit in the plan on or before June
30, 2005, and apply solely for purposes of determining the
retirement annuity for or benefit on behalf of a member of the
basic program of that retirement plan.
new text end

new text begin (c) No annuity adjustment or increase under article 30 of
the articles of incorporation of the Minneapolis Teachers
Retirement Fund Association is applicable or payable after June
30, 2005.
new text end

Sec. 44. new text begin APPROPRIATION.
new text end

new text begin $2,500,000 is appropriated from the education reserve
account in the special revenue fund to the commissioner of
finance for transfer to the teachers retirement fund as required
by section 7. $1,250,000 is for the fiscal year ending June 30,
2006, and $1,250,000 is for the fiscal year ending June 30, 2007.
new text end

Sec. 45. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 354A.051; 354A.105;
354A.23, subdivision 1; and 354A.28, are repealed.
new text end

Sec. 46. new text begin EFFECTIVE DATE.
new text end

new text begin (a) Sections 1, 2, 3, 21, and 22 are effective on the day
following final enactment.
new text end

new text begin (b) Sections 4 to 20 and 23 to 45 are effective on the day
following final enactment.
new text end

ARTICLE 3

PRE-1969 TEACHER SPECIAL POSTRETIREMENT
ADJUSTMENT

Section 1.

new text begin [354.551] ADDITIONAL BENEFIT FOR CERTAIN
TEACHERS.
new text end

new text begin Subdivision 1. new text end

new text begin Additional benefit entitlement. new text end

new text begin If there
is an appropriation for this purpose and to the extent of that
appropriation, eligible retired teachers as defined in
subdivision 2 are entitled to receive the additional benefit
amount determined under subdivision 3 unless the applicable
person files a written notification with the executive director
of the Teachers Retirement Association that the additional
benefit not be paid.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility. new text end

new text begin An eligible person for purposes of
this section is a person who:
new text end

new text begin (1) was a teacher as defined in section 354.05, subdivision
2;
new text end

new text begin (2) rendered teaching service as defined in section 354.05,
subdivision 3, either during the 1968-1969 school year, but was
not covered by the improved money purchase program savings
clause in section 354.55, subdivision 17, or before the
1968-1969 school year, did not take a refund of member
contributions upon the termination of teacher service, and was
eligible to make an election under Minnesota Statutes 1971,
section 354.55, subdivision 8.
new text end

new text begin Subd. 3. new text end

new text begin Determination of additional benefit amount. new text end

new text begin (a)
By July 1, annually, the executive director of the Teachers
Retirement Association shall determine which retired teachers
are eligible to receive an additional benefit amount under this
section and the amount of each person's additional benefit
amount.
new text end

new text begin If the applicable appropriation permits, as determined by
the executive director of the Teachers Retirement Association,
the increase amount is 45 percent of the difference, if a
positive number, obtained by subtracting the single life annuity
amount initially payable upon retirement under section 354.44,
subdivision 6, from a comparable single life annuity amount
computed as of the same date under section 354.44, subdivision
2. If the applicable appropriation does not permit the full
postretirement adjustment payment amount as determined by the
executive director of the Teachers Retirement Association, the
increase amount is that portion of the full increase amount that
bears the same relationship to the full increase amount that the
appropriation bears to the full required funding for the full
increase amount.
new text end

new text begin (b) The additional retirement benefit is payable beginning
July 1, 2005, for persons who were receiving a retirement
annuity on June 1, 2005, or with the initial retirement annuity
payment for persons who were active, deferred, or inactive
members on June 1, 2005.
new text end

new text begin Subd. 4. new text end

new text begin Duration of additional benefit. new text end

new text begin If the
appropriations permit, the additional benefit amount is payable
for life or for the duration of the selected optional annuity
form, whichever applies.
new text end

new text begin Subd. 5. new text end

new text begin No payment to estate; no retroactivity. new text end

new text begin (a)
Nothing in this section authorizes the payment of an additional
benefit amount under this section to an estate or to a survivor
or beneficiary other than under an optional annuity form.
new text end

new text begin (b) Nothing in this section authorizes the payment of an
additional benefit amount for any period before July 1, 2005.
new text end

new text begin (c) Nothing in this section authorizes the payment of an
additional benefit amount to a person who was or is entitled to
have their retirement annuity calculated under section 354.44,
subdivision 2.
new text end

Sec. 2. new text begin APPROPRIATION.
new text end

new text begin There is appropriated from the education reserve account in
the special revenue fund to the executive director of the
Teachers Retirement Association for the purposes of the special
postretirement adjustment under section 1 $11,000,000 for the
year ending June 30, 2006, and $11,000,000 for the year ending
June 30, 2007.
new text end

Sec. 3. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 and 2 are effective on July 1, 2005.
new text end

ARTICLE 4

PENSION DEFAULT INSURANCE POOL

Section 1.

Minnesota Statutes 2004, section 352.04,
subdivision 12, is amended to read:

Subd. 12.

Fund disbursement restricted.

new text begin (a) new text end The state
employees retirement fund and the participation in the Minnesota
postretirement investment fund must be disbursed only for the
purposes provided by law.

new text begin (b) new text end The expenses of the system new text begin , the pension default
insurance pool charge under section 356.95, new text end and any benefits
provided by law, other than benefits payable from the Minnesota
postretirement investment fund, must be paid from the state
employees retirement fund.

new text begin (c) new text end The retirement allowances, retirement annuities, and
disability benefits, as well as refunds of any sum remaining to
the credit of a deceased retired employee or a disabled employee
must be paid only from the state employees retirement fund after
the needs have been certified and the amounts withdrawn from the
participation in the Minnesota postretirement investment fund
under section 11A.18.

new text begin (d) new text end The amounts necessary to make the payments from the
state employees retirement fund and the participation in the
Minnesota postretirement investment fund are annually
appropriated from these funds for those purposes.

Sec. 2.

Minnesota Statutes 2004, section 352.911,
subdivision 5, is amended to read:

Subd. 5.

Fund disbursement restricted.

new text begin (a) new text end The
correctional employees retirement fund and its share of
participation in the Minnesota postretirement investment fund
shall be disbursed only for the purposes provided for in the
applicable provisions in this chapter.

new text begin (b) new text end The proportional share of the expenses of the system new text begin ,
the pension default insurance pool charge under section 356.95,
new text end and any benefits provided in sections 352.90 to 352.951, other
than benefits payable from the Minnesota postretirement
investment fund, shall be paid from the correctional employees
retirement fund.

new text begin (c) new text end The retirement allowances, retirement annuities, the
disability benefits, the survivorship benefits, and any refunds
of accumulated deductions shall be paid only from the
correctional employees retirement fund after those needs have
been certified by the executive director and the amounts
withdrawn from the share of participation in the Minnesota
postretirement fund under section 11A.18.

new text begin (d) new text end The amounts necessary to make the payments from the
correctional employees retirement fund and the participation in
the Minnesota postretirement investment fund are annually
appropriated from those funds for those purposes.

Sec. 3.

Minnesota Statutes 2004, section 352B.02,
subdivision 1d, is amended to read:

Subd. 1d.

Fund revenue and expenses.

The amounts
provided for in this section must be credited to the State
Patrol retirement fund. All money received must be deposited by
the commissioner of finance in the State Patrol retirement
fund. The fund must be used to pay the administrative expenses
of the retirement fund, new text begin the pension default insurance pool
charge under section 356.95, new text end and the benefits and annuities
provided in this chapter. Appropriate amounts shall be
transferred to or withdrawn from the Minnesota postretirement
investment fund as provided in section 352B.26.

Sec. 4.

Minnesota Statutes 2004, 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 new text begin and the
pension default insurance pool charge under section 356.95 new text end .
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.

Sec. 5.

Minnesota Statutes 2004, section 353.27,
subdivision 1, is amended to read:

Subdivision 1.

Income; disbursements.

There is a special
fund known as the "public employees retirement fund," the
"retirement fund," or the "fund," which shall include all the
assets of the association. This fund shall be credited with all
contributions, all interest and all other income authorized by
law. From this fund there is appropriated the payments
authorized by this chapter in the amounts and at such time
provided herein, including the expenses of administering the
fund, new text begin including the pension default insurance pool charge under
section 356.95, new text end and including the proper share of the Minnesota
postretirement investment fund.

Sec. 6.

Minnesota Statutes 2004, section 353.65,
subdivision 6, is amended to read:

Subd. 6.

Fund.

All contributions other than the excess
contribution established by section 69.031, subdivision 5,
paragraphs (2), clauses (b) and (c), and (3) shall be credited
to the fund and all interest and other income of the fund shall
be credited to said fund. The retirement fund shall be
disbursed only for the purposes herein provided. The expenses
of said fund new text begin , the pension default insurance pool charge, new text end and the
annuities herein provided upon retirement shall be paid from
said fund.

Sec. 7.

Minnesota Statutes 2004, section 353E.01,
subdivision 5, is amended to read:

Subd. 5.

Fund disbursement restricted.

(a) The public
employees local government correctional service retirement fund
and its share of participation in the Minnesota postretirement
investment fund may be disbursed only for the purposes provided
for in this chapter.

(b) The proportional share of the necessary and reasonable
administrative expenses of the association new text begin , the pension default
insurance pool charge under section 356.95, new text end and any benefits
provided in this chapter, other than benefits payable from the
Minnesota postretirement investment fund, must be paid from the
public employees local government correctional service
retirement fund. Retirement annuities, disability benefits,
survivorship benefits, and any refunds of accumulated deductions
may be paid only from the correctional service retirement fund
after those needs have been certified by the executive director
and any applicable amounts withdrawn from the share of
participation in the Minnesota postretirement fund under section
11A.18.

(c) The amounts necessary to make the payments from the
public employees local government correctional service
retirement fund and its participation in the Minnesota
postretirement investment fund are annually appropriated from
those funds for those purposes.

Sec. 8.

Minnesota Statutes 2004, section 354.42, is
amended by adding a subdivision to read:

new text begin Subd. 8. new text end

new text begin Pension default charge. new text end

new text begin The pension default
insurance pool charge under section 356.95 must be paid from the
Teachers Retirement Association.
new text end

Sec. 9.

Minnesota Statutes 2004, section 354A.021,
subdivision 4, is amended to read:

Subd. 4.

Fund disbursement restricted.

The assets of the
special retirement fund shall be disbursed only for the purposes
provided for in this chapter, the articles of incorporation or
bylaws in effect as of March 31, 1975, and the articles of
incorporation or bylaws adopted subsequent to March 31, 1975 in
accordance with the provisions of section 354A.12. new text begin The pension
default insurance pool charge under section 356.95 and new text end all
appropriate expenses of and any authorized benefits provided by
the teachers retirement fund association shall be paid from the
special retirement fund. Amounts necessary to make payments
from the special retirement fund of a teachers retirement fund
association are hereby appropriated.

Sec 10. [356.95] [PENSION DEFAULT INSURANCE POOL.]

new text begin Subdivision 1. new text end

new text begin Default insurance; legislative
findings. new text end

new text begin The legislature finds that some Minnesota public
pension plans have periodic funding difficulties and could
default on the payment of retirement benefits in the future.
The legislature further finds that a potential default may occur
at a time when timely corrective legislative responses may not
be possible, causing significant potential economic harm to
affected benefit recipients. To provide emergency funding
resources for a Minnesota public pension plan facing a default
in the payment of retirement benefits, the legislature is
establishing an insurance pool to have resources for a temporary
remedy for a defaulting pension plan.
new text end

new text begin Subd. 2. new text end

new text begin Default insurance charge. new text end

new text begin (a) In fiscal year
2006, the pension default insurance charge is $0.10 per month
per active member and benefit recipient of a covered retirement
plan.
new text end

new text begin (b) The pension default insurance charge must be reassessed
by the commissioner of finance, who shall revise the charge
upward or downward based on an assessment of the potential risk
of a future retirement plan default. The consulting actuary
retained under section 356.214 shall provide an assessment of
the relative probability of future retirement plan defaults as
part of the actuarial valuation reports performed annually.
new text end

new text begin Subd. 3. new text end

new text begin Receipt of charges; investment. new text end

new text begin The pension
default insurance charge is payable to the commissioner of
finance for deposit in a special pension default insurance pool
fund in the state treasury. The special default insurance pool
fund must be invested by the State Board of Investment in
investments authorized under section 11A.24.
new text end

new text begin Subd. 4. new text end

new text begin Disbursements. new text end

new text begin (a) The chief administrative
officer of a covered retirement plan facing imminent default in
the payment of retirement annuities and benefits is authorized
to apply to the commissioner of finance for the transfer of
assets to forestall the default.
new text end

new text begin (b) If the commissioner of finance finds that a covered
retirement plan is facing an imminent default, the commissioner
may transfer the necessary amount of assets to avert the
expected default from the pension default insurance pool.
new text end

new text begin Subd. 5. new text end

new text begin Covered retirement plans. new text end

new text begin The retirement plans
covered by the pension default insurance pool are:
new text end

new text begin (1) the general state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;
new text end

new text begin (2) the correctional state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;
new text end

new text begin (3) the unclassified employees retirement program,
established under chapter 352D;
new text end

new text begin (4) the State Patrol retirement plan, established under
chapter 352B;
new text end

new text begin (5) the legislators retirement plan, established under
chapter 3A;
new text end

new text begin (6) the elective state officers' retirement plan,
established under chapter 352C;
new text end

new text begin (7) the general employees retirement plan of the Public
Employees Retirement Association, established under chapter 353;
new text end

new text begin (8) the public employees police and fire retirement plan of
the Public Employees Retirement Association, established under
chapter 353;
new text end

new text begin (9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
under chapter 353E;
new text end

new text begin (10) the Teachers Retirement Association, established under
chapter 354;
new text end

new text begin (11) the Minneapolis Employees Retirement Fund, established
under chapter 422A;
new text end

new text begin (12) the Minneapolis Teachers Retirement Fund Association,
established under chapter 354A;
new text end

new text begin (13) the St. Paul Teachers Retirement Fund Association,
established under chapter 354A;
new text end

new text begin (14) the Duluth Teachers Retirement Fund Association,
established under chapter 354A; and
new text end

new text begin (15) the judges' retirement fund, established by sections
490.121 to 490.132.
new text end

Sec. 11. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 10 are effective on the day following final
enactment.
new text end

ARTICLE 5

DEFERRED ANNUITIES AUGMENTATION

Section 1.

Minnesota Statutes 2004, section 352.116,
subdivision 1a, is amended to read:

Subd. 1a.

Actuarial reduction for early retirement.

This
subdivision applies to a person who has become at least 55 years
old and first became a covered employee after June 30, 1989, and
to any other covered employee who has become at least 55 years
old and whose annuity is higher when calculated under section
352.115, subdivision 3, paragraph (b), in conjunction with this
subdivision than when calculated under section 352.115,
subdivision 3, paragraph (a), in conjunction with subdivision 1.
A covered employee who retires before the normal retirement age
shall be paid the normal retirement annuity provided in section
352.115, subdivisions 2 and 3, paragraph (b), reduced so that
the reduced annuity is the actuarial equivalent of the annuity
that would be payable to the employee if the employee deferred
receipt of the annuity and the annuity amount were augmented at
an annual rate of three percent compounded annually from the day
the annuity begins to accrue until the normal retirement age new text begin , if
the employee became an employee before July 1, 2005, and is the
actuarial equivalent of this annuity that would be payable to
the employee if the employee deferred receipt of the annuity if
the employee initially became an employee after June 30, 2005 new text end .

Sec. 2.

Minnesota Statutes 2004, section 352.72,
subdivision 2, is amended to read:

Subd. 2.

Computation of deferred annuity.

(a) The
deferred annuity, if any, accruing under subdivision 1, or
section 352.22, subdivision 3, must be computed as provided in
section 352.22, subdivision 3, on the basis of allowable service
before termination of state service and augmented as provided
herein.

new text begin (b) If the employee became an employee before July 1, 2005,
new text end the required reserves applicable to a deferred annuity or to an
annuity for which a former employee was eligible but had not
applied or to any deferred segment of an annuity must be
determined as of the date the benefit begins to accrue and
augmented by interest compounded annually from the first day of
the month following the month in which the employee ceased to be
a state employee, or July 1, 1971, whichever is later, to the
first day of the month in which the annuity begins to accrue.
The rates of interest used for this purpose must be five percent
compounded annually until January 1, 1981, and three percent
compounded annually thereafter until January 1 of the year
following the year in which the former employee attains age 55.
From that date to the effective date of retirement, the rate is
five percent compounded annually. If a person has more than one
period of uninterrupted service, the required reserves related
to each period must be augmented by interest under this
subdivision. The sum of the augmented required reserves so
determined is the present value of the annuity. "Uninterrupted
service" for the purpose of this subdivision means periods of
covered employment during which the employee has not been
separated from state service for more than two years. If a
person repays a refund, the service restored by the repayment
must be considered continuous with the next period of service
for which the employee has credit with this system. The formula
percentages used for each period of uninterrupted service must
be those applicable to a new employee. The mortality table and
interest assumption used to compute the annuity must be those in
effect when the employee files application for annuity. This
section does not reduce the annuity otherwise payable under this
chapter.

new text begin (c) If the employee initially became an employee after June
30, 2005, no augmentation is payable on a deferred annuity.
new text end

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

Sec. 3.

Minnesota Statutes 2004, section 352B.30,
subdivision 2, is amended to read:

Subd. 2.

Computation of deferred annuity.

new text begin (a) new text end Deferred
annuities must be computed according to this chapter on the
basis of allowable service before termination of service and
augmented as provided in this chapter.

new text begin (b) If the member became a member before July 1, 2005, new text end the
required reserves applicable to a deferred annuity must be
augmented by interest compounded annually from the first day of
the month following the month in which the member terminated
service, or July 1, 1971, whichever is later, to the first day
of the month in which the annuity begins to accrue. The rates
of interest used for this purpose shall be five percent per year
compounded annually until January 1, 1981, and after that date
three percent per year compounded annually. The mortality table
and interest assumption used to compute the annuity shall be
those in effect when the member files application for annuity.

new text begin (c) If the member initially became a member after June 30,
2005, no augmentation is payable on a deferred annuity.
new text end

Sec. 4.

Minnesota Statutes 2004, section 353.30,
subdivision 5, is amended to read:

Subd. 5.

Actuarial reduction for early retirement.

This
subdivision applies to a member who has become at least 55 years
old and first became a public employee after June 30, 1989, and
to any other member who has become at least 55 years old and
whose annuity is higher when calculated under section 353.29,
subdivision 3, paragraph (b), in conjunction with this
subdivision than when calculated under section 353.29,
subdivision 3, paragraph (a), in conjunction with subdivision 1,
1a, 1b, or 1c. An employee who retires before normal retirement
age shall be paid the retirement annuity provided in section
353.29, subdivision 3, paragraph (b), reduced so that the
reduced annuity is the actuarial equivalent of the annuity that
would be payable to the employee if the employee deferred
receipt of the annuity and the annuity amount were augmented at
an annual rate of three percent compounded annually from the day
the annuity begins to accrue until the normal retirement age new text begin if
the member became a member before July 1, 2005, and is the
actuarial equivalent of the annuity that would be payable to the
member if the member deferred receipt of the annuity if the
member initially became a member after June 30, 2005 new text end .

Sec. 5.

Minnesota Statutes 2004, section 353.71,
subdivision 2, is amended to read:

Subd. 2.

Deferred annuity computation; augmentation.

(a)
The deferred annuity accruing under subdivision 1, or under
sections 353.34, subdivision 3, and 353.68, subdivision 4, must
be computed on the basis of allowable service prior to the
termination of public service and augmented as provided in this
paragraph.

new text begin (b) new text end The required reserves applicable to a deferred annuity,
or to any deferred segment of an annuity must be determined as
of the first day of the month following the month in which the
former member ceased to be a public employee, or July 1, 1971,
whichever is later. new text begin If the member became a member before July
1, 2005, new text end these required reserves must be augmented at the rate
of five percent annually compounded annually until January 1,
1981, and at the rate of three percent thereafter until January
1 of the year following the year in which the former member
attains age 55. From that date to the effective date of
retirement, the rate is five percent compounded annually. If a
person has more than one period of uninterrupted service, the
required reserves related to each period must be augmented as
specified in this paragraph. The sum of the augmented required
reserves is the present value of the annuity. Uninterrupted
service for the purpose of this subdivision means periods of
covered employment during which the employee has not been
separated from public service for more than two years. If a
person repays a refund, the restored service must be considered
as continuous with the next period of service for which the
employee has credit with this association. This section must not
reduce the annuity otherwise payable under this chapter. This
paragraph applies to individuals who become deferred annuitants
on or after July 1, 1971. For a member who became a deferred
annuitant before July 1, 1971, the paragraph applies from July
1, 1971, if the former active member applies for an annuity
after July 1, 1973.

new text begin (c) If the member initially became a member after June 30,
2005, no augmentation is payable on a deferred annuity.
new text end

deleted text begin (b) deleted text end new text begin (d) new text end The retirement annuity or disability benefit of, or
the survivor benefit payable on behalf of, a former member who
terminated service before July 1, 1997, or the survivor benefit
payable on behalf of a basic or police and fire member who was
receiving disability benefits before July 1, 1997, which is
first payable after June 30, 1997, must be increased on an
actuarial equivalent basis to reflect the change in the
postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a
calculation procedure and tables adopted by the board and
approved by the actuary retained by the Legislative Commission
on Pensions and Retirement.

Sec. 6.

Minnesota Statutes 2004, section 353E.05, is
amended to read:

353E.05 AUGMENTATION IN CERTAIN CASES.

Unless prior service has been transferred or unless a
combined service annuity under section 356.30 has been elected,
an employee who becomes a local government correctional employee
after being a member of the Public Employees Retirement
Association or the public employees police and fire fund is
covered under section 353.71, subdivision 2, with respect to
that prior service. An employee new text begin who became an employee before
July 1, 2005, and new text end who becomes a member of the Public Employees
Retirement Association or the public employees police and fire
plan after being a local government correctional employee is
also covered under section 353.71, subdivision 2, with respect
to that prior service, unless calculated under section 356.30.

Sec. 7.

Minnesota Statutes 2004, section 354.44,
subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement
annuity.

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

For all years of formula service credit, "average salary,"
for the purpose of determining the member's retirement annuity,
means the average salary upon which contributions were made and
upon which payments were made to increase the salary limitation
provided in Minnesota Statutes 1971, section 354.511, for the
highest five successive years of formula service credit
provided, however, that such "average salary" shall not include
any more than the equivalent of 60 monthly salary payments.
Average salary must be based upon all years of formula service
credit if this service credit is less than five years.

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

Coordinated Member Basic Member

Each year of service the percent the percent

during first ten specified in specified in

section 356.315, section 356.315,

subdivision 1, subdivision 3,

per year per year

Each year of service the percent the percent

thereafter specified in specified in

section 356.315, section 356.315,

subdivision 2, subdivision 4,

per year per year

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

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

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

(d) This paragraph applies to a member who has become at
least 55 years old and first became a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity amount when calculated
under this paragraph and in conjunction with paragraph (e), is
higher than it is when calculated under paragraph (b), in
conjunction with paragraph (c). The average salary, as defined
in paragraph (a) multiplied by the percent specified by section
356.315, subdivision 4, for each year of service for a basic
member and by the percent specified in section 356.315,
subdivision 2, for each year of service for a coordinated member
shall determine the amount of the retirement annuity to which
the member is entitled.

(e) This paragraph applies to a person who has become at
least 55 years old and first becomes a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity is higher when calculated
under paragraph (d) in conjunction with this paragraph than when
calculated under paragraph (b), in conjunction with paragraph
(c). An employee who retires under the formula annuity before
the normal retirement age shall be paid the normal annuity
provided in paragraph (d) reduced so that the reduced annuity is
the actuarial equivalent of the annuity that would be payable to
the employee if the employee deferred receipt of the annuity and
the annuity amount were augmented at an annual rate of three
percent compounded annually from the day the annuity begins to
accrue until the normal retirement age new text begin if the employee became an
employee before July 1, 2005, and is the actuarial equivalent of
the annuity that would be payable to the employee if the
employee initially became a member after June 30, 2005 new text end .

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

Sec. 8.

Minnesota Statutes 2004, section 354.55,
subdivision 11, is amended to read:

Subd. 11.

Deferred annuity; augmentation.

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

(b) The amount of the deferred retirement annuity is
determined by section 354.44, subdivision 6, and augmented as
provided in this subdivision. The required reserves related to
that portion of the annuity which had accrued when the member
ceased to render teaching service must be augmented by interest
compounded annually from the first day of the month following
the month during which the member ceased to render teaching
service to the effective date of retirement. There shall be no
augmentation if this period is less than three months or if this
period commences prior to July 1, 1971. new text begin If the member became a
member before July 1, 2005, new text end the rates of interest used for this
purpose must be five percent compounded annually commencing July
1, 1971, until January 1, 1981, and three percent compounded
annually thereafter until January 1 of the year following the
year in which the former member attains age 55. From that date
to the effective date of retirement, the rate is five percent
compounded annually. If a person has more than one period of
uninterrupted service, a separate average salary determined
under section 354.44, subdivision 6, must be used for each
period and the required reserves related to each period must be
augmented by interest pursuant to this subdivision. The sum of
the augmented required reserves so determined shall be the basis
for purchasing the deferred annuity. If a person repays a
refund, the service restored by the repayment must be considered
as continuous with the next period of service for which the
person has credit with this fund. If a person does not render
teaching service in any one fiscal year or more consecutive
fiscal years and then resumes teaching service, the formula
percentages used from the date of the resumption of teaching
service must be those applicable to new members. The mortality
table and interest assumption used to compute the annuity must
be the applicable mortality table established by the board under
section 354.07, subdivision 1, and the interest rate assumption
under section 356.215 in effect when the member retires. A
period of uninterrupted service for the purposes of this
subdivision means a period of covered teaching service during
which the member has not been separated from active service for
more than one fiscal year.

(c) In no case shall the annuity payable under this
subdivision be less than the amount of annuity payable pursuant
to section 354.44, subdivision 6. new text begin If the member initially
became a member after June 30, 2005, no augmentation is payable
on a deferred annuity.
new text end

(d) The requirements and provisions for retirement before
normal retirement age contained in section 354.44, subdivision
6, clause (3) or (5), shall also apply to an employee fulfilling
the requirements with a combination of service as provided in
section 354.60.

(e) The augmentation provided by this subdivision applies
to the benefit provided in section 354.46, subdivision 2.

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

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

Sec. 9.

Minnesota Statutes 2004, section 354A.31,
subdivision 7, is amended to read:

Subd. 7.

Actuarial reduction for early retirement.

This
subdivision applies to a person who has become at least 55 years
old and first becomes a coordinated member after June 30, 1989,
and to any other coordinated member who has become at least 55
years old and whose annuity is higher when calculated using the
retirement annuity formula percentage in subdivision 4,
paragraph (d), and subdivision 4a, paragraph (d), in conjunction
with this subdivision than when calculated under subdivision 4,
paragraph (c), or subdivision 4a, paragraph (c), in conjunction
with subdivision 6. A coordinated member who retires before the
full benefit age shall be paid the retirement annuity calculated
using the retirement annuity formula percentage in subdivision
4, paragraph (d), or subdivision 4a, paragraph (d), reduced so
that the reduced annuity is the actuarial equivalent of the
annuity that would be payable to the member if the member
deferred receipt of the annuity and the annuity amount were
augmented at an annual rate of three percent compounded annually
from the day the annuity begins to accrue until the normal
retirement age new text begin if the member became a member before July 1,
2005, and is the actuarial equivalent of the annuity that would
be payable to the member if the member initially became a member
after June 30, 2005 new text end .

Sec. 10.

Minnesota Statutes 2004, section 354A.37,
subdivision 2, is amended to read:

Subd. 2.

Eligibility for deferred retirement annuity.

new text begin (a) new text end Any coordinated member who ceases to render teaching
services for the school district in which the teachers
retirement fund association is located, with sufficient
allowable service credit to meet the minimum service
requirements specified in section 354A.31, subdivision 1, shall
be entitled to a deferred retirement annuity in lieu of a refund
pursuant to subdivision 1. The deferred retirement annuity
shall be computed pursuant to section 354A.31 and shall be
augmented as provided in this subdivision. The deferred annuity
shall commence upon application after the person on deferred
status attains at least the minimum age specified in section
354A.31, subdivision 1.

new text begin (b) If the coordinated member became a member before July
1, 2005, new text end the monthly annuity amount that had accrued when the
member ceased to render teaching service must be augmented from
the first day of the month following the month during which the
member ceased to render teaching service to the effective date
of retirement. There is no augmentation if this period is less
than three months. The rate of augmentation is three percent
compounded annually until January 1 of the year following the
year in which the former member attains age 55, and five percent
compounded annually after that date to the effective date of
retirement. If a person has more than one period of
uninterrupted service, a separate average salary determined
under section 354A.31 must be used for each period, and the
monthly annuity amount related to each period must be augmented
as provided in this subdivision. The sum of the augmented
monthly annuity amounts determines the total deferred annuity
payable. If a person repays a refund, the service restored by
the repayment must be considered as continuous with the next
period of service for which the person has credit with the
fund. If a person does not render teaching services in any one
fiscal year or more consecutive fiscal years and then resumes
teaching service, the formula percentages used from the date of
resumption of teaching service are those applicable to new
members. The mortality table and interest assumption used to
compute the annuity are the table established by the fund to
compute other annuities, and the interest assumption under
section 356.215 in effect when the member retires. A period of
uninterrupted service for the purpose of this subdivision means
a period of covered teaching service during which the member has
not been separated from active service for more than one fiscal
year. The augmentation provided by this subdivision applies to
the benefit provided in section 354A.35, subdivision 2. The
augmentation provided by this subdivision does not apply to any
period in which a person is on an approved leave of absence from
an employer unit.

new text begin (c) If the coordinated member initially became a member
after June 30, 2005, no augmentation is payable on a deferred
annuity.
new text end

Sec. 11.

Minnesota Statutes 2004, section 356.30,
subdivision 1, is amended to read:

Subdivision 1.

Eligibility; computation of annuity.

(a)
Notwithstanding any provisions of the laws governing the
retirement plans enumerated in subdivision 3, a person who has
met the qualifications of paragraph (b) may elect to receive a
retirement annuity from each enumerated retirement plan in which
the person has at least one-half year of allowable service,
based on the allowable service in each plan, subject to the
provisions of paragraph (c).

(b) A person may receive, upon retirement, a retirement
annuity from each enumerated retirement plan in which the person
has at least one-half year of allowable service, and new text begin , if the
person was a member of a covered retirement plan on or before
July 1, 2005, new text end augmentation of a deferred annuity calculated
under the laws governing each public pension plan or fund named
in subdivision 3, from the date the person terminated all public
service if:

(1) the person has allowable service totaling an amount
that allows the person to receive an annuity in any two or more
of the enumerated plans; and

(2) the person has not begun to receive an annuity from any
enumerated plan or the person has made application for benefits
from each applicable plan and the effective dates of the
retirement annuity with each plan under which the person chooses
to receive an annuity are within a one-year period.

(c) The retirement annuity from each plan must be based
upon the allowable service, accrual rates, and average salary in
the applicable plan except as further specified or modified in
the following clauses:

(1) the laws governing annuities must be the law in effect
on the date of termination from the last period of public
service under a covered retirement plan with which the person
earned a minimum of one-half year of allowable service credit
during that employment;

(2) the "average salary" on which the annuity from each
covered plan in which the employee has credit in a formula plan
must be based on the employee's highest five successive years of
covered salary during the entire service in covered plans;

(3) the accrual rates to be used by each plan must be those
percentages prescribed by each plan's formula as continued for
the respective years of allowable service from one plan to the
next, recognizing all previous allowable service with the other
covered plans;

(4) the allowable service in all the plans must be combined
in determining eligibility for and the application of each
plan's provisions in respect to reduction in the annuity amount
for retirement prior to normal retirement age; and

(5) the annuity amount payable for any allowable service
under a nonformula plan of a covered plan must not be affected,
but such service and covered salary must be used in the above
calculation.

(d) This section does not apply to any person whose final
termination from the last public service under a covered plan
was before May 1, 1975.

(e) For the purpose of computing annuities under this
section, the accrual rates used by any covered plan, except the
public employees police and fire plan, the judges' retirement
fund, and the State Patrol retirement plan, must not exceed the
percent specified in section 356.315, subdivision 4, per year of
service for any year of service or fraction thereof. The
formula percentage used by the judges' retirement fund must not
exceed the percentage rate specified in section 356.315,
subdivision 8, per year of service for any year of service or
fraction thereof. The accrual rate used by the public employees
police and fire plan and the State Patrol retirement plan must
not exceed the percentage rate specified in section 356.315,
subdivision 6, per year of service for any year of service or
fraction thereof. The accrual rate or rates used by the
legislators retirement plan and the elective state officers
retirement plan must not exceed 2.5 percent, but this limit does
not apply to the adjustment provided under section 3A.02,
subdivision 1, paragraph (c), or 352C.031, paragraph (b).

(f) Any period of time for which a person has credit in
more than one of the covered plans must be used only once for
the purpose of determining total allowable service.

(g) If the period of duplicated service credit is more than
one-half year, or the person has credit for more than one-half
year, with each of the plans, each plan must apply its formula
to a prorated service credit for the period of duplicated
service based on a fraction of the salary on which deductions
were paid to that fund for the period divided by the total
salary on which deductions were paid to all plans for the period.

(h) If the period of duplicated service credit is less than
one-half year, or when added to other service credit with that
plan is less than one-half year, the service credit must be
ignored and a refund of contributions made to the person in
accord with that plan's refund provisions.

Sec. 12. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 11 are effective on July 1, 2005.
new text end

ARTICLE 6

MAXIMUM RETIREMENT PLAN
COVERED SALARY

Section 1.

Minnesota Statutes 2004, section 352.01,
subdivision 13, is amended to read:

Subd. 13.

Salary.

(a) new text begin Subject to the limitations of
section 356.611, new text end "salary" means wages, or other periodic
compensation, paid to an employee before deductions for deferred
compensation, supplemental retirement plans, or other voluntary
salary reduction programs.

(b) "Salary" does not include:

(1) lump sum sick leave payments;

(2) severance payments;

(3) lump sum annual leave payments and overtime payments
made at the time of separation from state service;

(4) payments 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;

(5) payments made as an employer-paid fringe benefit;

(6) workers' compensation payments;

(7) employer contributions to a deferred compensation or
tax sheltered annuity program; and

(8) amounts contributed under a benevolent vacation and
sick leave donation program.

(c) Amounts provided to an employee by the employer through
a grievance proceeding or a legal settlement are salary only if
the settlement is reviewed by the executive director and the
amounts are determined by the executive director to be
consistent with paragraph (a) and prior determinations.

Sec. 2.

Minnesota Statutes 2004, section 352B.01,
subdivision 11, is amended to read:

Subd. 11.

Average monthly salary.

(a) new text begin Subject to the
limitations of section 356.611, new text end "average monthly salary" means
the average of the highest monthly salaries for five 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.

(b) "Average monthly salary" means the salary of the member
as defined in section 352.01, subdivision 13. "Average monthly
salary" 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 the person is entitled to workers'
compensation benefit payments for temporary disability.

(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 352B.02,
subdivisions 1b and 1c, 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.

Sec. 3.

Minnesota Statutes 2004, section 353.01,
subdivision 10, is amended to read:

Subd. 10.

Salary.

(a) new text begin Subject to the limitations of
section 356.611, new text end "salary" means:

(1) the periodic compensation of a public employee, before
deductions for deferred compensation, supplemental retirement
plans, or other voluntary salary reduction programs, and also
means "wages" and includes net income from fees; and

(2) 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, unused
annual vacation or sick leave payments, in lump-sum or periodic
payments, severance payments, reimbursement of expenses,
lump-sum settlements not attached to a specific earnings period,
or workers' compensation payments;

(2) 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, day care expenses, or any 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 director to be ineligible;

(3) 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 but not all 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; and

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

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

(5) the amount of compensation that exceeds the limitation
provided in section 356.611.

(c) Amounts provided to an employee by the employer through
a grievance proceeding or a legal settlement are salary only if
the settlement is reviewed by the executive director and the
amounts are determined by the executive director to be
consistent with paragraph (a) and prior determinations.

Sec. 4.

Minnesota Statutes 2004, section 353B.02,
subdivision 10, is amended to read:

Subd. 10.

Salary.

(a) new text begin "Salary" under this chapter is
subject to the limitations of section 356.611.
new text end

new text begin (b) new text end "Salary" for benefit computation and contribution
purposes means the salary of a first class or first grade
firefighter or patrol officer, whichever applies, for the former
members of the following consolidating relief associations:

(1) Anoka Police Relief Association;

(2) Austin Firefighters Relief Association;

(3) Austin Police Relief Association;

(4) Columbia Heights Fire Department Relief Association,
Paid Division;

(5) Fairmont Police Benefit Association;

(6) Faribault Fire Department Relief Association;

(7) Mankato Fire Department Relief Association;

(8) Minneapolis Fire Department Relief Association;

(9) Minneapolis Police Relief Association;

(10) Richfield Fire Department Relief Association;

(11) Rochester Fire Department Relief Association;

(12) Rochester Police Relief Association;

(13) St. Cloud Fire Department Relief Association;

(14) St. Cloud Police Relief Association;

(15) St. Paul Fire Department Relief Association;

(16) South St. Paul Firefighters Relief Association;

(17) West St. Paul Firefighters Relief Association;

(18) West St. Paul Police Relief Association; and

(19) Winona Fire Department Relief Association.

deleted text begin (b) deleted text end new text begin (c) new text end "Salary" for benefit computation purposes means the
salary of a first grade patrol officer for the second month of
the previous fiscal year and for contribution purposes means the
current salary of a first grade patrol officer, for the former
members of the following consolidating relief associations:

(1) Bloomington Police Relief Association;

(2) Crystal Police Relief Association;

(3) Fridley Police Pension Association;

(4) Richfield Police Relief Association;

(5) St. Louis Park Police Relief Association; and

(6) Winona Police Relief Association.

deleted text begin (c) deleted text end new text begin (d) new text end "Salary" for benefit computation purposes means the
final salary and for contribution purposes means the current
salary for the former members of the following consolidating
relief associations:

(1) Albert Lea Firefighters Relief Association;

(2) Albert Lea Police Relief Association;

(3) Buhl Police Relief Association;

(4) Chisholm Firefighters Relief Association;

(5) Crookston Fire Department Relief Association;

(6) Crookston Police Relief Association;

(7) Faribault Police Benefit Association;

(8) Red Wing Police Relief Association; and

(9) Virginia Fire Department Relief Association.

deleted text begin (d) deleted text end new text begin (e) new text end "Salary" for benefit computation purposes means the
average earnings or salary for the final six months of
employment before retirement and for contribution purposes means
the current salary for the former members of the following
consolidating relief associations:

(1) Chisholm Police Relief Association;

(2) Hibbing Firefighters Relief Association; and

(3) Hibbing Police Relief Association.

deleted text begin (e) deleted text end new text begin (f) new text end "Salary" for benefit computation purposes means the
greater of the final salary at retirement or the highest salary
of a patrol officer and for contribution purposes means the
greater of the current salary or the current highest salary of a
patrol officer for the former members of the following
consolidating relief associations:

(1) Brainerd Police Benefit Association; and

(2) New Ulm Police Relief Association.

deleted text begin (f) deleted text end new text begin (g) new text end "Salary" for benefit computation and contribution
purposes means the following for the former members of the
consolidating relief associations as indicated:

(1) salary of a top grade patrol officer, including
longevity pay and education incentive pay in an amount not to
exceed $235 per month, Columbia Heights Police Relief
Association;

(2) maximum pay of a firefighter, including overtime
payments for a regular workweek of a firefighter mandated by the
federal Fair Labor Standards Act of 1938, as amended, Duluth
Firefighters Relief Association;

(3) salary of a first class patrol officer with 16 years of
service, Duluth Police Pension Association;

(4) base salary for the rank currently held, plus longevity
pay, pay for eligibility for next higher rank and pay for first
aid care, Mankato Police Benefit Association;

(5) average annual salary for highest three paid years for
benefit computation purposes and current salary for contribution
purposes, Red Wing Fire Department Relief Association;

(6) pay of the highest grade full-time firefighter, St.
Louis Park Fire Department Relief Association;

(7) maximum monthly pay of a patrol officer, St. Paul
Police Relief Association;

(8) prevailing base pay of rank held at retirement for
benefit computation purposes and current salary for contribution
purposes, South St. Paul Police Relief Association; and

(9) prevailing pay for rank held for at least six months
before retirement for benefit computation purposes and current
salary for contribution purposes, Virginia Police Relief
Association.

Sec. 5.

Minnesota Statutes 2004, section 354.05,
subdivision 35, is amended to read:

Subd. 35.

Salary.

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

(b) "Salary" does not mean:

(1) lump sum annual leave payments;

(2) lump sum wellness and sick leave payments;

(3) 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, day care expenses, or any 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 director to be ineligible;

(4) any form of payment made in lieu of any other
employer-paid fringe benefit or expense;

(5) any form of severance payments;

(6) workers' compensation payments;

(7) disability insurance payments, including self-insured
disability payments;

(8) 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;

(9) payments under section 356.24, subdivision 1, clause
(4); and

(10) 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) Amounts provided to an employee by the employer through
a grievance proceeding or a legal settlement are salary only if
the settlement is reviewed by the executive director and the
amounts are determined by the executive director to be
consistent with paragraph (a) and prior determinations.

Sec. 6.

Minnesota Statutes 2004, section 354A.011,
subdivision 24, is amended to read:

Subd. 24.

Salary; covered salary.

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

(b) "Salary" does not mean:

(1) lump sum annual leave payments;

(2) lump sum wellness and sick leave payments;

(3) 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, day care expenses, or any 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;

(4) any form of payment that is made in lieu of any other
employer-paid fringe benefit or expense;

(5) any form of severance payments;

(6) workers' compensation payments;

(7) disability insurance payments, including self-insured
disability payments;

(8) 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;

(9) payments under section 356.24, subdivision 1, clause
(4)(ii); and

(10) 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) Amounts provided to an employee by the employer through
a grievance proceeding or a legal settlement are salary only if
the settlement is reviewed by the executive director and the
amounts are determined by the executive director to be
consistent with paragraph (a) and prior determinations.

Sec. 7.

Minnesota Statutes 2004, section 356.611,
subdivision 1, is amended to read:

Subdivision 1.

State salary limitations.

(a)
Notwithstanding any provision of law, bylaws, articles of
incorporation, retirement and disability allowance plan
agreements, or retirement plan contracts to the contrary, the
covered salary for pension purposes for a plan participant of a
covered retirement fund enumerated in section 356.30,
subdivision 3, may not exceed deleted text begin 95 deleted text end new text begin 110 new text end percent of the salary
established for the governor under section 15A.082 at the time
the person received the salary.

(b) This section does not apply to a salary paid:

(1) to the governor or to a judge;

(2) new text begin to an employee or an elected official who is not
subject to the limit as specified under section 43A.17,
subdivision 9;
new text end

new text begin (3) new text end to an employee of a political subdivision in a position
that is excluded from the limit as specified under section
43A.17, subdivision 9;

deleted text begin (3) deleted text end new text begin (4) new text end to a state employee as defined under section
43A.02, subdivision 21;

deleted text begin (4) deleted text end new text begin (5) new text end to an employee of Gillette Hospital who is covered
by the general state employees retirement plan of the Minnesota
State Retirement System;

deleted text begin (5) deleted text end new text begin (6) new text end to an employee of the Minnesota Crop Improvement
Council; deleted text begin or
deleted text end

deleted text begin (6) deleted text end new text begin (7) new text end to an employee of the Minnesota Historical Society new text begin ;
new text end

new text begin (8) to an employee of the Southern Minnesota Municipal
Power Association; or
new text end

new text begin (9) to the director of the Duluth Port Authority new text end .

(c) The limited covered salary determined under this
section must be used in determining employee and employer
contributions and in determining retirement annuities and other
benefits under the respective covered retirement fund and under
this chapter.

Sec. 8.

Minnesota Statutes 2004, section 422A.01, is
amended by adding a subdivision to read:

new text begin Subd. 13a. new text end

new text begin Covered salary. new text end

new text begin "Salary" is subject to the
limitations of section 356.611.
new text end

Sec. 9.

Minnesota Statutes 2004, section 423B.01, is
amended by adding a subdivision to read:

new text begin Subd. 22. new text end

new text begin Covered salary. new text end

new text begin "Salary" is subject to the
limitations of section 356.611.
new text end

Sec. 10.

Minnesota Statutes 2004, section 423C.01, is
amended by adding a subdivision to read:

new text begin Subd. 29. new text end

new text begin Covered salary. new text end

new text begin "Salary" is subject to the
limitations of section 356.611.
new text end

Sec. 11.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

new text begin Subd. 21a. new text end

new text begin Covered salary limitation. new text end

new text begin "Final average
compensation" is subject to the limitations of section 356.611.
new text end

Sec. 12. new text begin EFFECTIVE DATE.
new text end

new text begin This article is effective the day following final
enactment, except that section 7 applies retroactively to April
28, 1994.
new text end

ARTICLE 7

EARLY RETIREMENT INCENTIVES

Section 1. new text begin EARLY RETIREMENT INCENTIVE.
new text end

new text begin Subdivision 1. new text end

new text begin Eligibility. new text end

new text begin An appointing authority in
the executive or legislative branch of state government or the
Board of Public Defense or the Minnesota Historical Society or
any school district may offer the early retirement incentive in
this section to an employee who:
new text end

new text begin (1) has at least five years of allowable service in one or
more of the funds listed in Minnesota Statutes, section 356.30,
subdivision 3, or has at least five years of coverage by the
individual retirement account plan governed by Minnesota
Statutes, chapter 354b, and upon retirement is immediately
eligible for a retirement annuity or benefit from one or more of
these funds; and
new text end

new text begin (2) terminates state or teaching service after the
effective date of this section and before September 1, 2005.
new text end

new text begin Subd. 2. new text end

new text begin Incentive. new text end

new text begin (a) For an employee eligible under
subdivision 1, the employer may provide an amount up to $17,000,
to be used:
new text end

new text begin (1) for an employee who terminates state service after the
effective date of this section and on or before July 15, 2005,
for deposit in the employee's account in the health care savings
plan established by Minnesota Statutes, section 352.98; or
new text end

new text begin (2) for an employee who terminates state service after July
15, 2005, and before September 1, 2005:
new text end

new text begin (i) notwithstanding Minnesota Statutes, section 352.01,
subdivision 11, or 354.05, subdivision 13, whichever applies,
for purchase of service credit for unperformed service
sufficient to enable the employee to retire under Minnesota
Statutes, section 352.116, subdivision 1, paragraph (b); 353.30;
or 354.44, subdivision 6, paragraph (b), whichever applies; or
new text end

new text begin (ii) for purchase of a lifetime annuity or annuity for a
specific number of years from the state unclassified retirement
program to provide additional benefits under Minnesota Statutes,
section 352D.06, subdivision 1.
new text end

new text begin (b) An employee is eligible for the payment under paragraph
(a), clause (2), item (i), if the employee uses money from a
deferred compensation account that, combined with the payment
under paragraph (a), clause (2), item (i), would be sufficient
to purchase enough service credit to qualify for retirement
under Minnesota Statutes, section 352.116, subdivision 1,
paragraph (b); 353.30, subdivision 1a; or 354.44, subdivision 6,
paragraph (b), whichever applies.
new text end

new text begin Subd. 3. new text end

new text begin Designation of positions; employer
discretion. new text end

new text begin Before offering an incentive under this section, an
appointing authority must designate the job classifications or
positions within job classifications that qualify for the
incentive. The appointing authority may modify this designation
at any time. Designation of positions eligible for the
incentive under this section, participation of individual
employees, and the amount of the payment under this section are
at the sole discretion of the appointing authority. Unilateral
implementation of this section by the employer is not an unfair
labor practice under Minnesota Statutes, chapter 179A.
new text end

Sec. 2. new text begin POSTRETIREMENT EMPLOYMENT.
new text end

new text begin (a) This section applies to a state employee who:
new text end

new text begin (1) on the effective date of this section is regularly
scheduled to work 1,044 or more hours a year in a position
covered by the Minnesota state retirement system general
employees retirement plan, correctional plan, or unclassified
plan;
new text end

new text begin (2) enters into an agreement with the appointing authority
to work a reduced schedule that is both (i) a reduction of at
least 25 percent from the number of regularly scheduled work
hours; and (ii) 1,044 hours or less in the covered position; and
new text end

new text begin (3) at the time of entering into the agreement under clause
(2), meets the age and service requirements necessary to receive
an unreduced retirement benefit from the plan.
new text end

new text begin (b) Notwithstanding any law to the contrary, for service
under an agreement entered into under paragraph (a), an employee:
new text end

new text begin (1) may receive a retirement annuity from the plan without
separating from state service; and
new text end

new text begin (2) is not subject to the cessation of annuity provisions
in Minnesota Statutes, section 352.115, subdivision 10.
new text end

new text begin (c) The amount of hours worked, the work schedule, and the
duration of the phased retirement employment must be mutually
agreed to by the employee and the appointing authority. The
appointing authority may not require a person to waive any
rights under a collective bargaining agreement as a condition of
participation under this section. The appointing authority has
sole discretion to determine if and the extent to which phased
retirement under this section is available to an employee. Upon
expiration of an agreement entered into under this section, the
appointing authority must restore the position to its status
prior to the agreement.
new text end

new text begin (d) Notwithstanding any law to the contrary, a person may
not earn service credit in the Minnesota state retirement system
for employment covered under this section, and employer
contributions and payroll deductions for the retirement fund
must not be made based on earnings of a person working under
this section. No change shall be made to a monthly annuity or
retirement allowance based on employment under this section.
new text end

new text begin (e) A person who works under this section is a member of
the appropriate bargaining unit; is covered by the appropriate
collective bargaining contract or compensation plan; and is
eligible for health care coverage as provided in the collective
bargaining contract or compensation plan.
new text end

new text begin (f) An agreement under this section may apply only to work
through June 30, 2007.
new text end

Sec. 3. new text begin VOLUNTARY HOUR REDUCTION PLAN.
new text end

new text begin (a) This section applies to a state employee who:
new text end

new text begin (1) on the effective date of this section is regularly
scheduled to work 1,044 or more hours a year in a position
covered by a pension plan administered by the Minnesota state
retirement system; and
new text end

new text begin (2) enters into an agreement with the appointing authority
to work a reduced schedule of 1,044 hours or less in the covered
position.
new text end

new text begin (b) Notwithstanding any law to the contrary, for service
under an agreement entered into under paragraph (a),
contributions may be made to the applicable plan of the
Minnesota state retirement system as if the employee had not
reduced hours. The employee must pay the additional employee
contributions and the employer must pay the additional employer
contributions necessary to bring the service credit and salary
up to the level prior to the voluntary reduction in hours.
Contributions must be made in a time and manner prescribed by
the executive director of the Minnesota state retirement system.
new text end

new text begin (c) The amount of hours worked, the work schedule, and the
duration of the voluntary hour reduction must be mutually agreed
to by the employee and the appointing authority. The appointing
authority may not require a person to waive any rights under a
collective bargaining agreement as a condition of participation
under this section. The appointing authority has sole
discretion to determine if and the extent to which voluntary
hour reduction under this section is available to an employee.
new text end

new text begin (d) A person who works under this section is a member of
the appropriate bargaining unit; is covered by the appropriate
collective bargaining contract or compensation plan; and is
eligible for health care coverage as provided in the collective
bargaining contract or compensation plan.
new text end

new text begin (e) An agreement under this section may apply only to work
through June 30, 2007.
new text end

Sec. 4. new text begin VOLUNTARY UNPAID LEAVE OF ABSENCE.
new text end

new text begin Appointing authorities in state government may allow each
employee to take unpaid leaves of absence for up to 1,044 hours
between June 1, 2005, and June 30, 2007. Each appointing
authority approving such a leave shall allow the employee to
continue accruing vacation and sick leave, be eligible for paid
holidays and insurance benefits, accrue seniority, and accrue
service credit and credited salary in the state retirement plans
as if the employee had actually been employed during the time of
leave. An employee covered by the unclassified plan may
voluntarily make both the employee and employer contributions to
the unclassified plan during the leave of absence. For
employees covered by another retirement plan administered by the
Minnesota State Retirement System, the employee must pay the
additional employee contributions and the employer must pay the
additional employer contributions necessary to bring the service
credit and salary credit up to the level prior to the voluntary
reduction in hours. Contributions must be made at a time and in
a manner prescribed by the executive director of the Minnesota
State Retirement System. If the leave of absence is for one
full pay period or longer, any holiday pay shall be included in
the first payroll warrant after return from the leave of
absence. The appointing authority shall attempt to grant
requests for the unpaid leaves of absence consistent with the
need to continue efficient operation of the agency. However,
each appointing authority shall retain discretion to grant or
refuse to grant requests for leaves of absence and to schedule
and cancel leaves, subject to the applicable provisions of
collective bargaining agreements and compensation plans.
new text end

Sec. 5. new text begin RELATIONSHIP OF SECTIONS.
new text end

new text begin (a) An employee covered by a phased retirement agreement
under section 2 may not be covered by the voluntary hour
reduction provisions of section 3 or by a voluntary unpaid leave
of absence agreement under section 4 during the same time period
or any later time period.
new text end

new text begin (b) An employee covered by the voluntary hour reduction
provisions of section 3:
new text end

new text begin (1) may not be covered by a phased retirement agreement
under section 2 during the same time period, but may be covered
by a phased retirement agreement under section 2 during a later
time period; and
new text end

new text begin (2) may be covered by the voluntary leave of absence
provision of section 4 during an earlier or later time period.
new text end

new text begin (c) An employee may receive the early retirement incentive
in section 1 after being covered under section 2, 3, or 4. An
employee who receives an incentive under section 1 may not later
be covered by section 2, 3, or 4.
new text end

Sec. 6. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 5 are effective the day following final
enactment.
new text end

ARTICLE 8

STATEWIDE VOLUNTEER FIREFIGHTER TASK FORCE STUDY

Section 1. new text begin STUDY OF STATEWIDE LUMP-SUM VOLUNTEER
FIREFIGHTER RETIREMENT PLAN; CREATION OF TASK FORCE.
new text end

new text begin Subdivision 1. new text end

new text begin Task force membership. new text end

new text begin (a) A statewide
Volunteer Firefighter Retirement Plan Study Task Force is
created.
new text end

new text begin (b) The task force members are:
new text end

new text begin (1) four members appointed by the president of the
Minnesota Area Relief Association coalition;
new text end

new text begin (2) four members appointed by the president of the
Minnesota State Fire Department Association;
new text end

new text begin (3) four members appointed by the president of the
Minnesota State Fire Chiefs Association;
new text end

new text begin (4) four members appointed by the board of directors of the
League of Minnesota Cities;
new text end

new text begin (5) two members appointed by the board of directors of the
Insurance Federation of Minnesota;
new text end

new text begin (6) two members appointed by the board of directors of the
Minnesota Association of Farm Mutual Insurance Companies; and
new text end

new text begin (7) the Minnesota state auditor or the auditor's designee.
new text end

new text begin (c) Appointments must be made on or before July 1, 2005.
If the appointment is not made in a timely manner, or if there
is a vacancy, the state auditor shall appoint the task force
member or the replacement member.
new text end

new text begin (d) The chair of the task force shall be selected by the
task force.
new text end

new text begin (e) Administrative services for the task force must be
provided by the Department of Public Safety.
new text end

new text begin Subd. 2. new text end

new text begin Task force duties. new text end

new text begin (a) The task force shall
conduct fact finding regarding the creation of a statewide
volunteer firefighter retirement plan.
new text end

new text begin (b) The task force shall recommend the investment vehicle
or vehicles to be utilized by the plan, the administration and
corporate governance structure of the plan, the incentives
needed to formulate the plan, the limitations applicable to the
plan, and the state resources needed to be dedicated to the plan.
new text end

new text begin Subd. 3. new text end

new text begin Report. new text end

new text begin The task force shall prepare a report
detailing its findings about a potential statewide volunteer
firefighter retirement plan. The report is due January 15,
2006, and must be filed with the Legislative Reference Library;
the chair of the Legislative Commission on Pensions and
Retirement; the chair of the State and Local Government
Operations Committee of the senate; the chair of the State
Government Budget Division, Environment, Agriculture, and
Economic Development Budget Division, and Public Safety Budget
Division of the senate Finance Committee; the chair of the
Governmental Operations and Veterans Affairs Policy Committee of
the house of representatives; and the chair of the State
Government Finance Committee of the house of representatives.
new text end

Sec. 2. new text begin APPROPRIATION.
new text end

new text begin $40,000 is appropriated from the general fund in fiscal
year 2006 to the commissioner of public safety to hire a
consultant to assist the statewide Volunteer Firefighter
Retirement Plan Study Task Force.
new text end

Sec. 3. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 and 2 are effective the day following final
enactment.
new text end