2nd Unofficial Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to retirement; merging the Minneapolis Teachers Retirement 1.3 Fund Association and the Teachers Retirement Association; modifying the 1.4 postretirement adjustment amount calculation; adjusting contribution rates; 1.5 limiting certain postretirement adjustments; making technical changes; providing 1.6 a benefit increase; making state aid adjustment; amending the powers and 1.7 duties of the State Board of Investment; requiring an analysis; requiring certain 1.8 studies; requiring certain reports; appropriating money; amending Minnesota 1.9 Statutes 2004, sections 11A.07, subdivision 5; 11A.18, subdivision 9; 43A.04, 1.10 subdivision 12; 127A.50, subdivision 1; 128D.10; 352.116, subdivision 1a; 1.11 352.72, subdivision 2; 352B.30, subdivision 2; 353.30, subdivision 5; 353.71, 1.12 subdivision 2; 354.05, subdivisions 2, 13; 354.42, subdivisions 2, 3; 354.55, 1.13 subdivision 11; 354A.011, subdivisions 15a, 27; 354A.021, subdivision 1.14 1; 354A.092; 354A.093, subdivision 1; 354A.095; 354A.096; 354A.12, 1.15 subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30; 354A.31, subdivision 7; 354A.32, 1.16 subdivision 1; 354A.37, subdivision 2; 354A.39; 354A.40, subdivision 1; 1.17 354A.41; 356.20, subdivision 2; 356.214, subdivision 1; 356.215, subdivision 11; 1.18 356.219, by adding subdivisions; 356.30, subdivisions 1, 3; 356.302, subdivision 1.19 7; 356.303, subdivision 4; 356.315, by adding subdivisions; 356.42, subdivision 1.20 3; 356.465, subdivision 3; 423A.02, subdivision 1b; Minnesota Statutes 2005 1.21 Supplement, sections 11A.04; 11A.07, subdivision 4; 354.44, subdivision 6; 1.22 354A.31, subdivision 4; 356.215, subdivision 8; Laws 2005, chapter 156, article 1.23 1, section 8; proposing coding for new law in Minnesota Statutes, chapters 128D; 1.24 354; 354A; repealing Minnesota Statutes 2004, sections 354A.051; 354A.105; 1.25 354A.23, subdivision 1; 354A.28. 1.26 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.27 ARTICLE 1 1.28 MINNESOTA POSTRETIREMENT 1.29 INVESTMENT FUND CHANGES 1.30 Section 1. Minnesota Statutes 2004, section 11A.18, subdivision 9, is amended to read: 1.31 Subd. 9. Calculation of postretirement adjustment. (a) Annually, following June 1.32 30, the state board shall use the procedures in paragraphs (b), (c), and (d) to determine 2.1 whether a postretirement adjustment is payable and to determine the amount of any 2.2 postretirement adjustment. 2.3 (b) If the Consumer Price Index for urban wage earners and clerical workers all 2.4 items index published by the Bureau of Labor Statistics of the United States Department 2.5 of Labor increases from June 30 of the preceding year to June 30 of the current year, 2.6 the state board shall certify the percentage increase. The amount certified must not 2.7 exceed the lesser of the difference between the preretirement interest assumption and 2.8 postretirement interest assumption in section 356.215, subdivision 8, paragraph (a), or 2.9 2.5 percent. For the Minneapolis Employees Retirement Fund, the amount certified must 2.10 not exceed 3.5 percent. 2.11 (c) In addition to any percentage increase certified under paragraph (b), the board 2.12 shall use the following procedures to determine if a postretirement adjustment is payable 2.13 under this paragraph: 2.14 (1) The state board shall determine the market value of the fund on June 30 of 2.15 that year; 2.16 (2) The amount of reserves required as of the current June 30 for the annuity or 2.17 benefit payable to an annuitant and benefit recipient of the participating public pension 2.18 plans or funds must be determined by thecommission-retainedactuaryas of the current2.19June 30retained under section 356.214. An annuitant or benefit recipient who has been 2.20 receiving an annuity or benefit for at least 12 full months as of the current June 30 is 2.21 eligible to receive a full postretirement adjustment. An annuitant or benefit recipient who 2.22 has been receiving an annuity or benefit for at least one full month, but less than 12 full 2.23 months as of the current June 30, is eligible to receive a partial postretirement adjustment. 2.24 Each fund shall report separately the amount of the reserves for those annuitants and 2.25 benefit recipients who are eligible to receive a full postretirement benefit adjustment. This 2.26 amount is known as "eligible reserves." Each fund shall also report separately the amount 2.27 of the reserves for those annuitants and benefit recipients who are not eligible to receive 2.28 a postretirement adjustment. This amount is known as "noneligible reserves." For an 2.29 annuitant or benefit recipient who is eligible to receive a partial postretirement adjustment, 2.30 each fund shall report separately as additional "eligible reserves" an amount that bears the 2.31 same ratio to the total reserves required for the annuitant or benefit recipient as the number 2.32 of full months of annuity or benefit receipt as of the current June 30 bears to 12 full 2.33 months. The remainder of the annuitant's or benefit recipient's reserves must be separately 2.34 reported as additional "noneligible reserves." The amount of "eligible" and "noneligible" 2.35 required reserves must be certified to the board by the commission-retained actuary as 2.36 soon as is practical following the current June 30; 3.1 (3) The state board shall determine the percentage increase certified under paragraph 3.2 (b) multiplied by the eligible required reserves, as adjusted for mortality gains and losses 3.3 under subdivision 11, determined under clause (2); 3.4 (4) The state board shall add the amount of reserves required for the annuities or 3.5 benefits payable to annuitants and benefit recipients of the participating public pension 3.6 plans or funds as of the current June 30 to the amount determined under clause (3); 3.7 (5) The state board shall subtract the amount determined under clause (4) from the 3.8 market value of the fund determined under clause (1); 3.9 (6) The state board shall adjust the amount determined under clause (5) by the 3.10 cumulative current balance determinedpursuant tounder clause (8) and any negative 3.11 balance carried forward under clause (9); 3.12 (7) A positive amount resulting from the calculations in clauses (1) to (6) is the 3.13 excess market value. A negative amount is the negative balance; 3.14 (8) The state board shall allocate one-fifth of the excess market value or one-fifth 3.15 of the negative balance to each of five consecutive years, beginning with the fiscal year 3.16 ending the current June 30; and 3.17 (9) To calculate the postretirement adjustment under this paragraph based on 3.18 investment performance for a fiscal year, the state board shall add together all excess 3.19 market value allocated to that year and subtract from the sum all negative balances 3.20 allocated to that year. If this calculation results in a negative number, the entire negative 3.21 balance must be carried forward and allocated to the next year. If the resulting amount is 3.22 positive, a postretirement adjustment is payable under this paragraph. The board shall 3.23 express a positive amount as a percentage of the total eligible required reserves certified to 3.24 the board under clause (2). 3.25 (d) The state board shall determine the amount of any postretirement adjustment 3.26 which is payable using the following procedure: 3.27 (1) The total "eligible" required reserves as of the first of January next following 3.28 the end of the fiscal year for the annuitants and benefit recipients eligible to receive a full 3.29 or partial postretirement adjustment as determined by clause (2) must be certified to the 3.30 state board by thecommission-retainedactuary retained under section 356.214. The total 3.31 "eligible" required reserves must be determined by thecommission-retainedactuary 3.32 retained under section 356.214 on the assumption that all annuitants and benefit recipients 3.33 eligible to receive a full or partial postretirement adjustment will be alive on the January 3.34 1 in question; and 3.35 (2) The state board shall add the percentage certified under paragraph (b) to any 3.36 positive percentage calculated under paragraph (c). The board shall not subtract from the 4.1 percentage certified under paragraph (b) any negative amount calculated under paragraph 4.2 (c). The sum of these percentages must be carried to five decimal places and must be 4.3 certified to each participating public pension fund or plan as the full postretirement 4.4 adjustment percentage. The full postretirement adjustment percentage certified to each 4.5 participating public pension plan or fund must not exceed five percent. For the Minneapolis 4.6 Employees Retirement Fund, no maximum percentage adjustment is applicable. 4.7 (e) A retirement annuity payable in the event of retirement before becoming eligible 4.8 for Social Security benefits as provided in section 352.116, subdivision 3; 353.29, 4.9 subdivision 6; or 354.35 must be treated as the sum of a period certain retirement annuity 4.10 and a life retirement annuity for the purposes of any postretirement adjustment. The 4.11 period certain retirement annuity plus the life retirement annuity must be the annuity 4.12 amount payable until age 62 or 65, whichever applies. A postretirement adjustment 4.13 granted on the period certain retirement annuity must terminate when the period certain 4.14 retirement annuity terminates. 4.15 Sec. 2. [354A.42] ST. PAUL TEACHER INCREASE LIMIT. 4.16 Notwithstanding any law to the contrary, the St. Paul Teachers Retirement Fund 4.17 Association may not pay a postretirement adjustment of more than five percent in any 4.18 year, effective July 1, 2010. 4.19 Sec. 3. EFFECTIVE DATE. 4.20 Section 1 is effective July 1, 2010. 4.21 ARTICLE 2 4.22 DEFERRED ANNUITY 4.23 AUGMENTATION RATE CHANGE 4.24 Section 1. Minnesota Statutes 2004, section 352.116, subdivision 1a, is amended to 4.25 read: 4.26 Subd. 1a. Actuarial reduction for early retirement. This subdivision applies to a 4.27 person who has become at least 55 years old and first became a covered employee after 4.28 June 30, 1989, and to any other covered employee who has become at least 55 years 4.29 old and whose annuity is higher when calculated under section 352.115, subdivision 3, 4.30 paragraph (b), in conjunction with this subdivision than when calculated under section 4.31 352.115, subdivision 3, paragraph (a), in conjunction with subdivision 1. A covered 4.32 employee who retires before the normal retirement age shall be paid the normal retirement 4.33 annuity provided in section 352.115, subdivisions 2 and 3, paragraph (b), reduced so 5.1 that the reduced annuity is the actuarial equivalent of the annuity that would be payable 5.2 to the employee if the employee deferred receipt of the annuity and the annuity amount 5.3 were augmented at an annual rate of three percent compounded annually from the day 5.4 the annuity begins to accrue until the normal retirement age if the employee became an 5.5 employee before July 1, 2006, and at an annual rate of 2.5 percent compounded annually 5.6 from the day the annuity begins to accrue until the normal retirement age if the employee 5.7 initially becomes an employee after June 30, 2006. 5.8 Sec. 2. Minnesota Statutes 2004, section 352.72, subdivision 2, is amended to read: 5.9 Subd. 2. Computation of deferred annuity. (a) The deferred annuity, if any, 5.10 accruing under subdivision 1, or section 352.22, subdivision 3, must be computed as 5.11 provided in section 352.22, subdivision 3, on the basis of allowable service before 5.12 termination of state service and augmented as provided herein. The required reserves 5.13 applicable to a deferred annuity or to an annuity for which a former employee was eligible 5.14 but had not applied or to any deferred segment of an annuity must be determined as of the 5.15 date the benefit begins to accrue and augmented by interest compounded annually from 5.16 the first day of the month following the month in which the employee ceased to be a state 5.17 employee, or July 1, 1971, whichever is later, to the first day of the month in which the 5.18 annuity begins to accrue. The rates of interest used for this purpose must be five percent 5.19 compounded annually until January 1, 1981, and three percent compounded annually 5.20 thereafter until January 1 of the year following the year in which the former employee 5.21 attains age 55., and from that date to the effective date of retirement, the rate is five percent 5.22 compounded annually if the employee became an employee before July 1, 2006, and at 5.23 2.5 percent compounded annually if the employee becomes an employee after June 30, 5.24 2006. If a person has more than one period of uninterrupted service, the required reserves 5.25 related to each period must be augmented by interest under this subdivision. The sum 5.26 of the augmented required reserves so determined is the present value of the annuity. 5.27 "Uninterrupted service" for the purpose of this subdivision means periods of covered 5.28 employment during which the employee has not been separated from state service for more 5.29 than two years. If a person repays a refund, the service restored by the repayment must be 5.30 considered continuous with the next period of service for which the employee has credit 5.31 with this system. The formula percentages used for each period of uninterrupted service 5.32 must be those applicable to a new employee. The mortality table and interest assumption 5.33 used to compute the annuity must be those in effect when the employee files application 5.34 for annuity. This section does not reduce the annuity otherwise payable under this chapter. 6.1 (b) The retirement annuity or disability benefit of, or the survivor benefit payable on 6.2 behalf of, a former state employee who terminated service before July 1, 1997, which is 6.3 not first payable until after June 30, 1997, must be increased on an actuarial equivalent 6.4 basis to reflect the change in the postretirement interest rate actuarial assumption under 6.5 section 356.215, subdivision 8, from five percent to six percent under a calculation 6.6 procedure and the tables adopted by the board and approved by the actuary retained by 6.7 the Legislative Commission on Pensions and Retirement. 6.8 Sec. 3. Minnesota Statutes 2004, section 352B.30, subdivision 2, is amended to read: 6.9 Subd. 2. Computation of deferred annuity. Deferred annuities must be computed 6.10 according to this chapter on the basis of allowable service before termination of service 6.11 and augmented as provided in this chapter. The required reserves applicable to a deferred 6.12 annuity must be augmented by interest compounded annually from the first day of the 6.13 month following the month in which the member terminated service, or July 1, 1971, 6.14 whichever is later, to the first day of the month in which the annuity begins to accrue. The 6.15 rates of interest used for this purpose shall be five percent per year compounded annually 6.16 until January 1, 1981, and after that date three percent per year compounded annually if 6.17 the employee became an employee before July 1, 2006, and at 2.5 percent compounded 6.18 annually if the employee becomes an employee after June 30, 2006. The mortality table 6.19 and interest assumption used to compute the annuity shall be those in effect when the 6.20 member files application for annuity. 6.21 Sec. 4. Minnesota Statutes 2004, section 353.30, subdivision 5, is amended to read: 6.22 Subd. 5. Actuarial reduction for early retirement. This subdivision applies to a 6.23 member who has become at least 55 years old and first became a public employee after 6.24 June 30, 1989, and to any other member who has become at least 55 years old and whose 6.25 annuity is higher when calculated under section 353.29, subdivision 3, paragraph (b), in 6.26 conjunction with this subdivision than when calculated under section 353.29, subdivision 6.27 3, paragraph (a), in conjunction with subdivision 1, 1a, 1b, or 1c. An employee who 6.28 retires before normal retirement age shall be paid the retirement annuity provided in 6.29 section 353.29, subdivision 3, paragraph (b), reduced so that the reduced annuity is the 6.30 actuarial equivalent of the annuity that would be payable to the employee if the employee 6.31 deferred receipt of the annuity and the annuity amount were augmented at an annual rate 6.32 of three percent compounded annually from the day the annuity begins to accrue until the 6.33 normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 7.1 percent compounded annually from the day the annuity begins to accrue until the normal 7.2 retirement age if the employee initially becomes an employee after June 30, 2006. 7.3 Sec. 5. Minnesota Statutes 2004, section 353.71, subdivision 2, is amended to read: 7.4 Subd. 2. Deferred annuity computation; augmentation. (a) The deferred 7.5 annuity accruing under subdivision 1, or under sections 353.34, subdivision 3, and 7.6 353.68, subdivision 4, must be computed on the basis of allowable service prior to the 7.7 termination of public service and augmented as provided in this paragraph. The required 7.8 reserves applicable to a deferred annuity, or to any deferred segment of an annuity must 7.9 be determined as of the first day of the month following the month in which the former 7.10 member ceased to be a public employee, or July 1, 1971, whichever is later. These 7.11 required reserves must be augmented at the rate of five percent annually compounded 7.12 annually until January 1, 1981, and at the rate of three percent thereafter until January 1 7.13 of the year following the year in which the former member attains age 55.and from that 7.14 date to the effective date of retirement, the rate is five percent compounded annually if 7.15 the employee became an employee before July 1, 2006, and at 2.5 percent compounded 7.16 annually if the employee becomes an employee after June 30, 2006. If a person has more 7.17 than one period of uninterrupted service, the required reserves related to each period 7.18 must be augmented as specified in this paragraph. The sum of the augmented required 7.19 reserves is the present value of the annuity. Uninterrupted service for the purpose of this 7.20 subdivision means periods of covered employment during which the employee has not 7.21 been separated from public service for more than two years. If a person repays a refund, 7.22 the restored service must be considered as continuous with the next period of service 7.23 for which the employee has credit with this association. This section must not reduce 7.24 the annuity otherwise payable under this chapter. This paragraph applies to individuals 7.25 who become deferred annuitants on or after July 1, 1971. For a member who became a 7.26 deferred annuitant before July 1, 1971, the paragraph applies from July 1, 1971, if the 7.27 former active member applies for an annuity after July 1, 1973. 7.28 (b) The retirement annuity or disability benefit of, or the survivor benefit payable on 7.29 behalf of, a former member who terminated service before July 1, 1997, or the survivor 7.30 benefit payable on behalf of a basic or police and fire member who was receiving disability 7.31 benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased 7.32 on an actuarial equivalent basis to reflect the change in the postretirement interest rate 7.33 actuarial assumption under section 356.215, subdivision 8, from five percent to six percent 7.34 under a calculation procedure and tables adopted by the board and approved by the actuary 7.35 retained by the Legislative Commission on Pensions and Retirement. 8.1 Sec. 6. Minnesota Statutes 2005 Supplement, section 354.44, subdivision 6, is 8.2 amended to read: 8.3 Subd. 6. Computation of formula program retirement annuity. (a) The formula 8.4 retirement annuity must be computed in accordance with the applicable provisions of the 8.5 formulas stated in paragraph (b) or (d) on the basis of each member's average salary under 8.6 section 354.05, subdivision 13a, for the period of the member's formula service credit. 8.7 (b) This paragraph, in conjunction with paragraph (c), applies to a person who first 8.8 became a member of the association or a member of a pension fund listed in section 8.9 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with 8.10 paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The 8.11 average salary as defined in section 354.05, subdivision 13a, multiplied by the following 8.12 percentages per year of formula service credit shall determine the amount of the annuity to 8.13 which the member qualifying therefor is entitled:8.14 Coordinated Member Basic Member 8.15 the percent 8.16 specified in 8.17 the percent specified section 356.315, 8.18 Each year of service in section 356.315, subdivision 3, per 8.19 during first ten subdivision 1, per year year 8.20 the percent 8.21 specified in 8.22 the percent specified section 356.315, 8.23 Each year of service in section 356.315, subdivision 4, per 8.24 thereafter subdivision 2, per year year 8.25 (c) (i) This paragraph applies only to a person who first became a member of 8.26 the association or a member of a pension fund listed in section 356.30, subdivision 3, 8.27 before July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in 8.28 conjunction with this paragraph than when calculated under paragraph (d), in conjunction 8.29 with paragraph (e). 8.30 (ii) Where any member retires prior to normal retirement age under a formula 8.31 annuity, the member shall be paid a retirement annuity in an amount equal to the normal 8.32 annuity provided in paragraph (b) reduced by one-quarter of one percent for each month 8.33 that the member is under normal retirement age at the time of retirement except that for 9.1 any member who has 30 or more years of allowable service credit, the reduction shall be 9.2 applied only for each month that the member is under age 62. 9.3 (iii) Any member whose attained age plus credited allowable service totals 90 years 9.4 is entitled, upon application, to a retirement annuity in an amount equal to the normal 9.5 annuity provided in paragraph (b), without any reduction by reason of early retirement. 9.6 (d) This paragraph applies to a member who has become at least 55 years old and 9.7 first became a member of the association after June 30, 1989, and to any other member 9.8 who has become at least 55 years old and whose annuity amount when calculated under 9.9 this paragraph and in conjunction with paragraph (e), is higher than it is when calculated 9.10 under paragraph (b), in conjunction with paragraph (c). The average salary, as defined in 9.11 section 354.05, subdivision 13a, multiplied by the percent specified by section 356.315, 9.12 subdivision 4, for each year of service for a basic member and by the percent specified in 9.13 section 356.315, subdivision 2, for each year of service for a coordinated member shall 9.14 determine the amount of the retirement annuity to which the member is entitled. 9.15 (e) This paragraph applies to a person who has become at least 55 years old and first 9.16 becomes a member of the association after June 30, 1989, and to any other member who 9.17 has become at least 55 years old and whose annuity is higher when calculated under 9.18 paragraph (d) in conjunction with this paragraph than when calculated under paragraph 9.19 (b), in conjunction with paragraph (c). An employee who retires under the formula annuity 9.20 before the normal retirement age shall be paid the normal annuity provided in paragraph 9.21 (d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would 9.22 be payable to the employee if the employee deferred receipt of the annuity and the annuity 9.23 amount were augmented at an annual rate of three percent compounded annually from the 9.24 day the annuity begins to accrue until the normal retirement age if the employee became 9.25 an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee 9.26 becomes an employee after June 30, 2006. 9.27 (f) No retirement annuity is payable to a former employee with a salary that exceeds 9.28 95 percent of the governor's salary unless and until the salary figures used in computing 9.29 the highest five successive years average salary under paragraph (a) have been audited by 9.30 the Teachers Retirement Association and determined by the executive director to comply 9.31 with the requirements and limitations of section 354.05, subdivisions 35 and 35a. 9.32 Sec. 7. Minnesota Statutes 2004, section 354.55, subdivision 11, is amended to read: 9.33 Subd. 11. Deferred annuity; augmentation. (a) Any person covered under section 9.34 354.44, subdivision 6, who ceases to render teaching service, may leave the person's 9.35 accumulated deductions in the fund for the purpose of receiving a deferred annuity at 10.1 retirement. Eligibility for an annuity under this subdivision is governed pursuant to 10.2 section 354.44, subdivision 1, or 354.60. 10.3 (b) The amount of the deferred retirement annuity is determined by section 354.44, 10.4 subdivision 6, and augmented as provided in this subdivision. The required reserves 10.5 related to that portion of the annuity which had accrued when the member ceased to 10.6 render teaching service must be augmented by interest compounded annually from the 10.7 first day of the month following the month during which the member ceased to render 10.8 teaching service to the effective date of retirement. There shall be no augmentation if 10.9 this period is less than three months or if this period commences prior to July 1, 1971. 10.10 The rates of interest used for this purpose must be five percent compounded annually 10.11 commencing July 1, 1971, until January 1, 1981, and three percent compounded annually 10.12 thereafter until January 1 of the year following the year in which the former member 10.13 attains age 55.and from that date to the effective date of retirement, the rate is five percent 10.14 compounded annually if the employee became an employee before July 1, 2006, and at 10.15 2.5 percent compounded annually if the employee becomes an employee after June 30, 10.16 2006. If a person has more than one period of uninterrupted service, a separate average 10.17 salary determined under section 354.44, subdivision 6, must be used for each period and 10.18 the required reserves related to each period must be augmented by interest pursuant to 10.19 this subdivision. The sum of the augmented required reserves so determined shall be the 10.20 basis for purchasing the deferred annuity. If a person repays a refund, the service restored 10.21 by the repayment must be considered as continuous with the next period of service for 10.22 which the person has credit with this fund. If a person does not render teaching service in 10.23 any one fiscal year or more consecutive fiscal years and then resumes teaching service, 10.24 the formula percentages used from the date of the resumption of teaching service must be 10.25 those applicable to new members. The mortality table and interest assumption used to 10.26 compute the annuity must be the applicable mortality table established by the board under 10.27 section 354.07, subdivision 1, and the interest rate assumption under section 356.215 in 10.28 effect when the member retires. A period of uninterrupted service for the purposes of this 10.29 subdivision means a period of covered teaching service during which the member has not 10.30 been separated from active service for more than one fiscal year. 10.31 (c) In no case shall the annuity payable under this subdivision be less than the 10.32 amount of annuity payable pursuant to section 354.44, subdivision 6. 10.33 (d) The requirements and provisions for retirement before normal retirement age 10.34 contained in section 354.44, subdivision 6, clause (3) or (5), shall also apply to an 10.35 employee fulfilling the requirements with a combination of service as provided in section 10.36 354.60. 11.1 (e) The augmentation provided by this subdivision applies to the benefit provided 11.2 in section 354.46, subdivision 2. 11.3 (f) The augmentation provided by this subdivision shall not apply to any period in 11.4 which a person is on an approved leave of absence from an employer unit covered by the 11.5 provisions of this chapter. 11.6 (g) The retirement annuity or disability benefit of, or the survivor benefit payable on 11.7 behalf of, a former teacher who terminated service before July 1, 1997, which is not first 11.8 payable until after June 30, 1997, must be increased on an actuarial equivalent basis to 11.9 reflect the change in the postretirement interest rate actuarial assumption under section 11.10 356.215, subdivision 8, from five percent to six percent under a calculation procedure and 11.11 tables adopted by the board as recommended by an approved actuary and approved by the 11.12 actuary retained by the Legislative Commission on Pensions and Retirement. 11.13 Sec. 8. Minnesota Statutes 2004, section 354A.31, subdivision 7, is amended to read: 11.14 Subd. 7. Actuarial reduction for early retirement. This subdivision applies to 11.15 a person who has become at least 55 years old and first becomes a coordinated member 11.16 after June 30, 1989, and to any other coordinated member who has become at least 55 11.17 years old and whose annuity is higher when calculated using the retirement annuity 11.18 formula percentage in subdivision 4, paragraph (d), and subdivision 4a, paragraph (d), in 11.19 conjunction with this subdivision than when calculated under subdivision 4, paragraph 11.20 (c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6. A coordinated 11.21 member who retires before the full benefit age shall be paid the retirement annuity 11.22 calculated using the retirement annuity formula percentage in subdivision 4, paragraph 11.23 (d), or subdivision 4a, paragraph (d), reduced so that the reduced annuity is the actuarial 11.24 equivalent of the annuity that would be payable to the member if the member deferred 11.25 receipt of the annuity and the annuity amount were augmented at an annual rate of three 11.26 percent compounded annually from the day the annuity begins to accrue until the normal 11.27 retirement age if the employee became an employee before July 1, 2006, and at 2.5 11.28 percent compounded annually from the day the annuity begins to accrue until the normal 11.29 retirement age if the person initially becomes a teacher after June 30, 2006. 11.30 Sec. 9. Minnesota Statutes 2004, section 354A.37, subdivision 2, is amended to read: 11.31 Subd. 2. Eligibility for deferred retirement annuity. Any coordinated member 11.32 who ceases to render teaching services for the school district in which the teachers 11.33 retirement fund association is located, with sufficient allowable service credit to meet 11.34 the minimum service requirements specified in section 354A.31, subdivision 1, shall be 12.1 entitled to a deferred retirement annuity in lieu of a refund pursuant to subdivision 1. The 12.2 deferred retirement annuity shall be computed pursuant to section 354A.31 and shall be 12.3 augmented as provided in this subdivision. The deferred annuity shall commence upon 12.4 application after the person on deferred status attains at least the minimum age specified in 12.5 section 354A.31, subdivision 1. 12.6 The monthly annuity amount that had accrued when the member ceased to render 12.7 teaching service must be augmented from the first day of the month following the month 12.8 during which the member ceased to render teaching service to the effective date of 12.9 retirement. There is no augmentation if this period is less than three months. The rate of 12.10 augmentation is three percent compounded annually until January 1 of the year following 12.11 the year in which the former member attains age 55, and five percent compounded 12.12 annually after that date to the effective date of retirement if the employee became an 12.13 employee before July 1, 2006, and at 2.5 percent compounded annually if the employee 12.14 becomes an employee after June 30, 2006. If a person has more than one period of 12.15 uninterrupted service, a separate average salary determined under section 354A.31 must 12.16 be used for each period, and the monthly annuity amount related to each period must be 12.17 augmented as provided in this subdivision. The sum of the augmented monthly annuity 12.18 amounts determines the total deferred annuity payable. If a person repays a refund, the 12.19 service restored by the repayment must be considered as continuous with the next period 12.20 of service for which the person has credit with the fund. If a person does not render 12.21 teaching services in any one fiscal year or more consecutive fiscal years and then resumes 12.22 teaching service, the formula percentages used from the date of resumption of teaching 12.23 service are those applicable to new members. The mortality table and interest assumption 12.24 used to compute the annuity are the table established by the fund to compute other 12.25 annuities, and the interest assumption under section 356.215 in effect when the member 12.26 retires. A period of uninterrupted service for the purpose of this subdivision means a 12.27 period of covered teaching service during which the member has not been separated from 12.28 active service for more than one fiscal year. 12.29 The augmentation provided by this subdivision applies to the benefit provided in 12.30 section 354A.35, subdivision 2. The augmentation provided by this subdivision does 12.31 not apply to any period in which a person is on an approved leave of absence from an 12.32 employer unit. 12.33 Sec. 10. Minnesota Statutes 2004, section 356.30, subdivision 1, is amended to read: 12.34 Subdivision 1. Eligibility; computation of annuity. (a) Notwithstanding any 12.35 provisions of the laws governing the retirement plans enumerated in subdivision 3, a 13.1 person who has met the qualifications of paragraph (b) may elect to receive a retirement 13.2 annuity from each enumerated retirement plan in which the person has at least one-half 13.3 year of allowable service, based on the allowable service in each plan, subject to the 13.4 provisions of paragraph (c). 13.5 (b) A person may receive, upon retirement, a retirement annuity from each 13.6 enumerated retirement plan in which the person has at least one-half year of allowable 13.7 service, and augmentation of a deferred annuity calculated at the appropriate rate under 13.8 the laws governing each public pension plan or fund named in subdivision 3, based on 13.9 the date of the person's initial entry into public employment from the date the person 13.10 terminated all public service if: 13.11 (1) the person has allowable service totaling an amount that allows the person to 13.12 receive an annuity in any two or more of the enumerated plans; and 13.13 (2) the person has not begun to receive an annuity from any enumerated plan or the 13.14 person has made application for benefits from each applicable plan and the effective 13.15 dates of the retirement annuity with each plan under which the person chooses to receive 13.16 an annuity are within a one-year period. 13.17 (c) The retirement annuity from each plan must be based upon the allowable service, 13.18 accrual rates, and average salary in the applicable plan except as further specified or 13.19 modified in the following clauses: 13.20 (1) the laws governing annuities must be the law in effect on the date of termination 13.21 from the last period of public service under a covered retirement plan with which the 13.22 person earned a minimum of one-half year of allowable service credit during that 13.23 employment; 13.24 (2) the "average salary" on which the annuity from each covered plan in which 13.25 the employee has credit in a formula plan must be based on the employee's highest five 13.26 successive years of covered salary during the entire service in covered plans; 13.27 (3) the accrual rates to be used by each plan must be those percentages prescribed by 13.28 each plan's formula as continued for the respective years of allowable service from one 13.29 plan to the next, recognizing all previous allowable service with the other covered plans; 13.30 (4) the allowable service in all the plans must be combined in determining eligibility 13.31 for and the application of each plan's provisions in respect to reduction in the annuity 13.32 amount for retirement prior to normal retirement age; and 13.33 (5) the annuity amount payable for any allowable service under a nonformula plan 13.34 of a covered plan must not be affected, but such service and covered salary must be used 13.35 in the above calculation. 14.1 (d) This section does not apply to any person whose final termination from the last 14.2 public service under a covered plan was before May 1, 1975. 14.3 (e) For the purpose of computing annuities under this section, the accrual rates 14.4 used by any covered plan, except the public employees police and fire plan, the judges' 14.5 retirement fund, and the State Patrol retirement plan, must not exceed the percent specified 14.6 in section 356.315, subdivision 4, per year of service for any year of service or fraction 14.7 thereof. The formula percentage used by the judges' retirement fund must not exceed the 14.8 percentage rate specified in section 356.315, subdivision 8, per year of service for any 14.9 year of service or fraction thereof. The accrual rate used by the public employees police 14.10 and fire plan and the State Patrol retirement plan must not exceed the percentage rate 14.11 specified in section 356.315, subdivision 6, per year of service for any year of service or 14.12 fraction thereof. The accrual rate or rates used by the legislators retirement plan and the 14.13 elective state officers retirement plan must not exceed 2.5 percent, but this limit does not 14.14 apply to the adjustment provided under section 3A.02, subdivision 1, paragraph (c), or 14.15 352C.031, paragraph (b). 14.16 (f) Any period of time for which a person has credit in more than one of the covered 14.17 plans must be used only once for the purpose of determining total allowable service. 14.18 (g) If the period of duplicated service credit is more than one-half year, or the person 14.19 has credit for more than one-half year, with each of the plans, each plan must apply its 14.20 formula to a prorated service credit for the period of duplicated service based on a fraction 14.21 of the salary on which deductions were paid to that fund for the period divided by the total 14.22 salary on which deductions were paid to all plans for the period. 14.23 (h) If the period of duplicated service credit is less than one-half year, or when 14.24 added to other service credit with that plan is less than one-half year, the service credit 14.25 must be ignored and a refund of contributions made to the person in accord with that 14.26 plan's refund provisions. 14.27 Sec. 11. EFFECTIVE DATE. 14.28 Sections 1 to 10 are effective July 1, 2006. 14.29 ARTICLE 3 14.30 TEACHERS RETIREMENT ASSOCIATION 14.31 COVERAGE AND BENEFIT RESTRUCTURING 14.32 Section 1. Minnesota Statutes 2004, section 127A.50, subdivision 1, is amended to 14.33 read: 15.1 Subdivision 1. Aid adjustment. Beginning in fiscal year 1998 and each year 15.2 thereafter, the commissioner of education shall adjust state aid payments to school 15.3 operating funds for Independent School District No. 625,and Independent School District 15.4 No. 709, and Special School District No. 1by the net amount of clauses (1) and (2), 15.5 for Special School District No. 1 by the net amount of clauses (1), (2), and (4), and for 15.6 all other districts, including charter schools, but excluding any education organizations 15.7 that are prohibited from receiving direct state aids under section 123A.26 or 125A.75, 15.8 subdivision 7, by the net amount of clauses (1), (2),and(3), and (4): 15.9 (1) a decrease equal to each district's share of the fiscal year 1997 adjustment 15.10 effected under Minnesota Statutes 1996, section 124.2139; 15.11 (2) an increase equal to one percent of the salaries paid to members of the general 15.12 plan of the Public Employees Retirement Association in fiscal year 1997, multiplied by 15.13 0.35 for fiscal year 1998 and 0.70 each year thereafter; 15.14 (3) a decrease equal to 2.34 percent of the salaries paid to members of the Teachers 15.15 Retirement Association in fiscal year 1997.; and 15.16 (4) an increase equal to 0.5 percent of the salaries paid to members of the Teachers 15.17 Retirement Association in fiscal year 2007. 15.18 EFFECTIVE DATE.This section is effective for revenue for fiscal year 2008. 15.19 Sec. 2. Minnesota Statutes 2004, section 128D.10, is amended to read: 15.20 128D.10 CONTINUITY ON TENURE, PENSIONS, AND RETIREMENT. 15.21 (a) The tenure, pension, and retirement provisions of any law applicable to 15.22 employees of the special school district of Minneapolis, including employees belonging15.23to the municipal employees retirement fund and those belonging to the Minneapolis15.24Teachers' Retirement Fund Associationbefore April 24, 1959, shall continue to be 15.25 applicable in the same manner and to the same extent to employees of the special 15.26 independent school district after April 24, 1959, except as otherwise provided in law. 15.27 (b) The provisions of any general law or laws which are applicable only to 15.28 independent school districts wholly or partially within cities of the first class shall not be 15.29 applicable to the special independent school district of Minneapolis. 15.30(c) The powers, duties, and corporate structure of the Minneapolis Teachers'15.31Retirement Fund Association, and the laws applicable thereto, shall be and remain the15.32same in the special independent school district of Minneapolis as at the time of enactment15.33of the within law, until changed in accordance with law.16.1 Sec. 3. [128D.19] AID REDEDICATION. 16.2 Notwithstanding any law to the contrary and subject to section 354A.12, subdivision 16.3 3c, special direct state aid previously paid to the Minneapolis Teachers Retirement Fund 16.4 Association under sections 354A.12, subdivisions 3a and 3b, and 423A.02, must be paid 16.5 to the Teachers Retirement Association. 16.6 Sec. 4. Minnesota Statutes 2004, section 354.05, subdivision 2, is amended to read: 16.7 Subd. 2. Teacher. (a) "Teacher" means: 16.8 (1) a person who renders service as a teacher, supervisor, principal, superintendent, 16.9 librarian, nurse, counselor, social worker, therapist, or psychologist in a public school of 16.10 the state located outside of the corporate limits ofa city of the first classthe city of Duluth 16.11 or the city of St. Paul, or in any charter school, irrespective of the location of the school, 16.12 or in any charitable, penal, or correctional institutions of a governmental subdivision, or 16.13 who is engaged in educational administration in connection with the state public school 16.14 system, but excluding the University of Minnesota, whether the position be a public office 16.15 or an employment, and not including the members or officers of any general governing or 16.16 managing board or body; 16.17 (2) an employee of the Teachers Retirement Association; 16.18 (3) a person who renders teaching service on a part-time basis and who also renders 16.19 other services for a single employing unit. A person whose teaching service comprises at 16.20 least 50 percent of the combined employment salary is a member of the association for all 16.21 services with the single employing unit. If the person's teaching service comprises less 16.22 than 50 percent of the combined employment salary, the executive director must determine 16.23 whether all or none of the combined service is covered by the association; or 16.24 (4) a person who is not covered by the plans established under chapter 352D, 354A, 16.25 or 354B and who is employed by the Board of Trustees of the Minnesota State Colleges 16.26 and Universities system in an unclassified position as: 16.27 (i) a president, vice-president, or dean; 16.28 (ii) a manager or a professional in an academic or an academic support program 16.29 other than specified in item (i); 16.30 (iii) an administrative or a service support faculty position; or 16.31 (iv) a teacher or a research assistant. 16.32 (b) "Teacher" does not mean: 16.33 (1) a person who works for a school or institution as an independent contractor as 16.34 defined by the Internal Revenue Service; 17.1 (2) a person who renders part-time teaching service or who is a customized trainer 17.2 as defined by the Minnesota State Colleges and Universities system if (i) the service is 17.3 incidental to the regular nonteaching occupation of the person; and (ii) the employer 17.4 stipulates annually in advance that the part-time teaching service or customized training 17.5 service will not exceed 300 hours in a fiscal year and retains the stipulation in its records; 17.6 and (iii) the part-time teaching service or customized training service actually does not 17.7 exceed 300 hours in a fiscal year; or 17.8 (3) a person exempt from licensure under section 122A.30. 17.9 Sec. 5. Minnesota Statutes 2004, section 354.05, subdivision 13, is amended to read: 17.10 Subd. 13. Allowable service. "Allowable service" means: 17.11 (1) Any service rendered by a teacher for which on or before July 1, 1957, the 17.12 teacher's account in the retirement fund was credited by reason of employee contributions 17.13 in the form of salary deductions, payments in lieu of salary deductions, or in any other 17.14 manner authorized by Minnesota Statutes 1953, sections 135.01 to 135.13, as amended by 17.15 Laws 1955, chapters 361, 549, 550, 611, or 17.16 (2) Any service rendered by a teacher for which on or before July 1, 1961, the 17.17 teacher elected to obtain credit for service by making payments to the fund pursuant to 17.18 Minnesota Statutes 1980, section 354.09 and section 354.51, or 17.19 (3) Any service rendered by a teacher after July 1, 1957, for any calendar month 17.20 when the member receives salary from which deductions are made, deposited and credited 17.21 in the fund, or 17.22 (4) Any service rendered by a person after July 1, 1957, for any calendar month 17.23 where payments in lieu of salary deductions are made, deposited and credited into the 17.24 fund as provided in Minnesota Statutes 1980, section 354.09, subdivision 4, and section 17.25 354.53, or 17.26 (5) Any service rendered by a teacher for which the teacher elected to obtain 17.27 credit for service by making payments to the fund pursuant to Minnesota Statutes 1980, 17.28 section 354.09, subdivisions 1 and 4, sections 354.50, 354.51, Minnesota Statutes 1957, 17.29 section 135.41, subdivision 4, Minnesota Statutes 1971, section 354.09, subdivision 2, or 17.30 Minnesota Statutes, 1973 Supplement, section 354.09, subdivision 3, or 17.31 (6) Both service during years of actual membership in the course of which 17.32 contributions were currently made and service in years during which the teacher was not a 17.33 member but for which the teacher later elected to obtain credit by making payments to the 17.34 fund as permitted by any law then in effect, or 18.1 (7) Any service rendered where contributions were made and no allowable service 18.2 credit was established because of the limitations contained in Minnesota Statutes 1957, 18.3 section 135.09, subdivision 2, as determined by the ratio between the amounts of money 18.4 credited to the teacher's account in a fiscal year and the maximum retirement contribution 18.5 allowable for that year, or 18.6 (8) MS 2002 (Expired) 18.7 (9) A period of time during which a teacher who is a state employee was on strike 18.8 without pay, not to exceed a period of one year, if the teacher makes a payment in lieu of 18.9 salary deductions or makes a prior service credit purchase payment, whichever applies. If 18.10 the payment is made within 12 months, the payment by the teacher must be an amount 18.11 equal to the employee and employer contribution rates set forth in section 354.42, 18.12 subdivisions 2 and 3, applied to the teacher's rate of salary in effect on the conclusion of 18.13 the strike for the period of the strike without pay, plus compound interest at a monthly rate 18.14 of 0.71 percent from the last day of the strike until the date of payment. If the payment by 18.15 the employee is not made within 12 months, the payment must be in an amount equal to 18.16 the payment amount determined under section 356.55 or 356.551, whichever applies, or 18.17 (10) A period of service before July 1, 2006, that was properly credited as allowable 18.18 service by the Minneapolis Teachers Retirement Fund Association, and that was rendered 18.19 by a teacher as an employee of Special School District No. 1, Minneapolis, or by an 18.20 employee of the Minneapolis Teachers Retirement Fund Association who was a member 18.21 of the Minneapolis Teachers Retirement Fund Association by virtue of that employment, 18.22 who has not begun receiving an annuity or other retirement benefit from the former 18.23 Minneapolis Teachers Retirement Fund Association calculated in whole or in part on that 18.24 service before July 1, 2006, and who has not taken a refund of member contributions 18.25 related to that service unless the refund is repaid under section 354.50, subdivision 4. 18.26 Service as an employee of Special School District No. 1, Minneapolis on or after July 1, 18.27 2006 is "allowable service" only as provided by this chapter. 18.28 Sec. 6. Minnesota Statutes 2004, section 354.42, subdivision 2, is amended to read: 18.29 Subd. 2. Employee. (a) The employee contribution to the fund is an amount equal 18.30 to5.0the following percentage of the salary of a member: 18.31 (1) after July 1, 2006, for a teacher employed by Special School District No. 1, 18.32 Minneapolis, 5.5 percent if the teacher is a coordinated member, and 9.0 percent if the 18.33 teacher is a basic member; 19.1 (2) for every other teacher, after July 1, 2006, 5.5 percentofif thesalary of every19.2 teacher is a coordinated member and 9.0 percentofif thesalary of everyteacher is a 19.3 basic member. 19.4 (b) This contribution must be made by deduction from salary. Where any portion 19.5 of a member's salary is paid from other than public funds, the member's employee 19.6 contribution must be based on the entire salary received. 19.7 Sec. 7. Minnesota Statutes 2004, section 354.42, subdivision 3, is amended to read: 19.8 Subd. 3. Employer. (a) The regular employer contribution to the fund by Special 19.9 School District No. 1, Minneapolis, after July 1, 2006, and before July 1, 2007, is an 19.10 amount equal to 5.00 percent of the salary of each of its teachers who is a coordinated 19.11 member and 9.00 percent of the salary of each of its teachers who is a basic member. After 19.12 July 1, 2007, the regular employer contribution to the fund by Special School District No. 19.13 1, Minneapolis, is an amount equal to 5.50 percent of salary of each coordinated member 19.14 and 9.50 percent of salary of each basic member. The additional employer contribution to 19.15 the fund by Special School District No. 1, Minneapolis, after July 1, 2006, is an amount 19.16 equal to 3.64 percent of the salary of each teacher who is a coordinated member or is a 19.17 basic member. 19.18 (b) The employer contribution to the fund for every other employer, is an amount 19.19 equal to 5.0 percent of the salary of each coordinated member and 9.0 percent of the salary 19.20 of each basic member before July 1, 2007, and 5.5 percent of the salary of each coordinated 19.21 member and 9.5 percent of the salary of each basic member after June 30, 2007. 19.22 Sec. 8. Minnesota Statutes 2005 Supplement, section 354.44, subdivision 6, is 19.23 amended to read: 19.24 Subd. 6. Computation of formula program retirement annuity. (a) The formula 19.25 retirement annuity must be computed in accordance with the applicable provisions of the 19.26 formulas stated in paragraph (b) or (d) on the basis of each member's average salary under 19.27 section 354.05, subdivision 13a, for the period of the member's formula service credit. 19.28 (b) This paragraph, in conjunction with paragraph (c), applies to a person who first 19.29 became a member of the association or a member of a pension fund listed in section 19.30 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with 19.31 paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The 19.32 average salary as defined in section 354.05, subdivision 13a, multiplied by the following 19.33 percentages per year of formula service credit shall determine the amount of the annuity to 19.34 which the member qualifying therefor is entitled for service rendered before July 1, 2006:20.1 Coordinated Member Basic Member 20.2 the percent 20.3 specified in 20.4 the percent specified section 356.315, 20.5 Each year of service in section 356.315, subdivision 3, per 20.6 during first ten subdivision 1, per year year 20.7 the percent 20.8 specified in 20.9 the percent specified section 356.315, 20.10 Each year of service in section 356.315, subdivision 4, per 20.11 thereafter subdivision 2, per year year 20.12 For service rendered on or after July 1, 2006, the average salary as defined in section 20.13 354.05, subdivision 13a, multiplied by the following percentages per year of service 20.14 credit, determines the amount the annuity to which the member qualifying therefor is:20.15 Coordinated Member Basic Member 20.16 the percent 20.17 specified in 20.18 the percent specified section 356.315, 20.19 Each year of service in section 356.315, subdivision 3, per 20.20 during first ten subdivision 1a, per year year 20.21 the percent 20.22 specified in 20.23 the percent specified section 356.315, 20.24 Each year of service after in section 356.315, subdivision 4, per 20.25 ten years of service subdivision 2b, per year year 20.26 (c)(i) This paragraph applies only to a person who first became a member of the 20.27 association or a member of a pension fund listed in section 356.30, subdivision 3, before 20.28 July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in 20.29 conjunction with this paragraph than when calculated under paragraph (d), in conjunction 20.30 with paragraph (e). 20.31 (ii) Where any member retires prior to normal retirement age under a formula 20.32 annuity, the member shall be paid a retirement annuity in an amount equal to the normal 20.33 annuity provided in paragraph (b) reduced by one-quarter of one percent for each month 21.1 that the member is under normal retirement age at the time of retirement except that for 21.2 any member who has 30 or more years of allowable service credit, the reduction shall be 21.3 applied only for each month that the member is under age 62. 21.4 (iii) Any member whose attained age plus credited allowable service totals 90 years 21.5 is entitled, upon application, to a retirement annuity in an amount equal to the normal 21.6 annuity provided in paragraph (b), without any reduction by reason of early retirement. 21.7 (d) This paragraph applies to a member who has become at least 55 years old and 21.8 first became a member of the association after June 30, 1989, and to any other member 21.9 who has become at least 55 years old and whose annuity amount when calculated under 21.10 this paragraph and in conjunction with paragraph (e), is higher than it is when calculated 21.11 under paragraph (b), in conjunction with paragraph (c). For a basic member, the average 21.12 salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified 21.13 by section 356.315, subdivision 4, for each year of service for a basic memberand by21.14the percent specified in section356.315, subdivision 2, for each year of service for a21.15coordinated membershall determine the amount of the retirement annuity to which the 21.16 basic member is entitled. The annuity of a basic member who was a member for the 21.17 former Minneapolis Teachers Retirement Fund Association as of June 30, 2006, must 21.18 be determined according to the annuity formula under the articles of incorporation of 21.19 the former Minneapolis Teachers Retirement Fund Association in effect as of that date. 21.20 For a coordinated member, the average salary, as defined in section 354.05, subdivision 21.21 13a, multiplied by the percent specified in section 356.315, subdivision 2, for each year 21.22 of service rendered before July 1, 2006, and by the percent specified in section 356.315, 21.23 subdivision 2b, for each year of service rendered on or after July 1, 2006, determines the 21.24 amount of the retirement annuity to which the coordinated member is entitled. 21.25 (e) This paragraph applies to a person who has become at least 55 years old and first 21.26 becomes a member of the association after June 30, 1989, and to any other member who 21.27 has become at least 55 years old and whose annuity is higher when calculated under 21.28 paragraph (d) in conjunction with this paragraph than when calculated under paragraph 21.29 (b), in conjunction with paragraph (c). An employee who retires under the formula annuity 21.30 before the normal retirement age shall be paid the normal annuity provided in paragraph 21.31 (d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would 21.32 be payable to the employee if the employee deferred receipt of the annuity and the annuity 21.33 amount were augmented at an annual rate of three percent compounded annually from the 21.34 day the annuity begins to accrue until the normal retirement age. 21.35 (f) No retirement annuity is payable to a former employee with a salary that exceeds 21.36 95 percent of the governor's salary unless and until the salary figures used in computing 22.1 the highest five successive years average salary under paragraph (a) have been audited by 22.2 the Teachers Retirement Association and determined by the executive director to comply 22.3 with the requirements and limitations of section 354.05, subdivisions 35 and 35a. 22.4 Sec. 9. [354.70] CONSOLIDATION OF MINNEAPOLIS TEACHERS 22.5 RETIREMENT FUND ASSOCIATION. 22.6 Subdivision 1. Membership transfer. All active, inactive, and retired members of 22.7 the Minneapolis Teachers Retirement Fund Association are transferred to the Teachers 22.8 Retirement Association and are no longer members of the Minneapolis Teachers 22.9 Retirement Fund Association as of July 1, 2006. 22.10 Subd. 2. TRA membership. A person first hired as a teacher by Special School 22.11 District No. 1, Minneapolis, after June 30, 2006, and who is a teacher as defined in 22.12 section 354.05, subdivision 2, is a member of the Teachers Retirement Association for the 22.13 person's teaching service. 22.14 Subd. 3. Service credit and liability transfer. All allowable service and salary 22.15 credit of the members and other individuals transferred under subdivision 1 as specified in 22.16 the records of the Minneapolis Teachers Retirement Fund Association on the transfer date 22.17 is allowable service credit under section 354.05, subdivision 13, formula service credit 22.18 under section 354.05, subdivision 25, and salary credit under section 354.05, subdivision 22.19 35, for the Teachers Retirement Association. 22.20 Subd. 4. Transfer of records. On or before June 30, 2006, the chief administrative 22.21 officer of the Minneapolis Teachers Retirement Fund Association shall transfer all 22.22 records and documents relating to the funds and the benefit plans of the association to the 22.23 executive director of the Teachers Retirement Association. To the extent possible, original 22.24 copies of all records and documents must be transferred. 22.25 Subd. 5. Transfer of assets. (a) On or before June 30, 2006, the chief administrative 22.26 officer of the Minneapolis Teachers Retirement Fund Association shall transfer to the 22.27 Teachers Retirement Association the entire assets of the special retirement fund of the 22.28 Minneapolis Teachers Retirement Fund Association. The transfer of the assets of the 22.29 Minneapolis Teachers Retirement Fund Association special retirement fund must include 22.30 any accounts receivable that are determined by the executive director of the State Board of 22.31 Investment as reasonably capable of being collected. Legal title to account receivables that 22.32 are determined by the executive director of the State Board of Investment as not reasonably 22.33 capable of being collected transfers to Special School District No. 1, Minneapolis, as of 22.34 the date of the determination of the executive director of the State Board of Investment. 22.35 If the account receivables transferred to Special School District No. 1, Minneapolis, 23.1 are subsequently recovered by the school district, the superintendent of Special School 23.2 District No. 1, Minneapolis, shall transfer the recovered amount to the executive director 23.3 of the Teachers Retirement Association, in cash, for deposit in the teachers retirement 23.4 fund, less the reasonable expenses of the school district related to the recovery. 23.5 (b) As of June 30, 2006, assets of the special retirement fund of the Minneapolis 23.6 Teachers Retirement Fund Association are assets of the Teachers Retirement Association 23.7 to be invested by the State Board of Investment pursuant to the provisions of section 23.8 354.07, subdivision 4. The Teachers Retirement Association is the successor in interest to 23.9 all claims which the Minneapolis Teachers Retirement Fund Association may have or may 23.10 assert against any person and is the successor in interest to all claims which could have 23.11 been asserted against the former Minneapolis Teachers Retirement Fund Association, 23.12 subject to the following exceptions and qualifications: 23.13 (1) the Teachers Retirement Association is not liable for any claim against the 23.14 Minneapolis Teachers Retirement Fund Association, its former board or board members, 23.15 which is founded upon a claim of breach of fiduciary duty, where the act or acts 23.16 constituting the claimed breach were not done in good faith; 23.17 (2) the Teachers Retirement Association may assert any applicable defense to any 23.18 claim in any judicial or administrative proceeding that the former Minneapolis Teachers 23.19 Retirement Fund Association or its Board would otherwise have been entitled to assert; 23.20 (3) the Teachers Retirement Association may assert any applicable defense that the 23.21 Teachers Retirement Association may assert in its capacity as a statewide agency; and 23.22 (4) the Teachers Retirement Association shall indemnify any former fiduciary of the 23.23 Minneapolis Teachers Retirement Fund Association consistent with the provisions of the 23.24 Public Pension Fiduciary Responsibility Act, in section 356A.11. 23.25 (c) From the assets of the former Minneapolis Teachers Retirement Fund Association 23.26 transferred to the Teachers Retirement Association, an amount equal to the percentage 23.27 figure that represents the ratio between the market value of the Minnesota postretirement 23.28 investment fund as of June 30, 2006, and the required reserves of the Minnesota post 23.29 retirement investment fund as of June 30, 2006, applied to the present value of future 23.30 benefits payable to annuitants of the former Minneapolis Teachers Retirement Fund 23.31 Association as of June 30, 2006, including any postretirement adjustment from the 23.32 Minnesota postretirement investment fund expected to be payable on January 1, 2007, 23.33 must be transferred to the Minnesota postretirement investment fund. The executive 23.34 director of the State Board of Investment shall estimate this ratio at the time of the 23.35 transfer. By January 1, 2007, after all necessary financial information becomes available 23.36 to determine the actual funded ratio of the Minnesota postretirement investment fund, the 24.1 postretirement investment fund must refund to the Teachers Retirement Association any 24.2 excess assets or the Teachers Retirement Association must contribute any deficiency 24.3 to the Minnesota postretirement investment fund with interest under section 11A.18, 24.4 subdivision 6. The balance of the assets of the former Minneapolis Teachers Retirement 24.5 Fund Association after the transfer to the Minnesota postretirement investment fund must 24.6 be credited to the Teachers Retirement Association. 24.7 If the assets transferred by the Minneapolis Teachers Retirement Fund Association 24.8 to the Teachers Retirement Association are insufficient to meet its obligation to the 24.9 Minnesota postretirement investment fund, additional assets must be transferred by the 24.10 executive director of the Teachers Retirement Association to meet the amount required. 24.11 Subd. 6. Benefit calculation. (a) For every deferred, inactive, disabled, and retired 24.12 member of the Minneapolis Teachers Retirement Fund Association transferred under 24.13 subdivision 1, and the survivors of these members, annuities or benefits earned before 24.14 the date of the transfer, other than future postretirement adjustments, must be calculated 24.15 and paid by the Teachers Retirement Association under the laws, articles of incorporation, 24.16 and bylaws of the former Minneapolis Teachers Retirement Fund Association that were 24.17 in effect relative to the person on the date of the person's termination of active service 24.18 covered by the former Minneapolis Teachers Retirement Fund Association. 24.19 (b) Former Minneapolis Teachers Retirement Fund Association members who retired 24.20 before July 1, 2006, must receive postretirement adjustments after December 31, 2006, 24.21 only as provided in section 11A.18. All other benefit recipients of the former Minneapolis 24.22 Teachers Retirement Fund Association must receive postretirement adjustments after 24.23 December 31, 2006, only as provided in section 356.41. 24.24 (c) This consolidation does not impair or diminish benefits for an active, deferred, 24.25 or retired member or a survivor of an active, deferred, or retired member under the 24.26 former Minneapolis Teachers Retirement Fund Association in existence at the time of the 24.27 consolidation, except that any future guaranteed or investment-related postretirement 24.28 adjustments must be paid after July 1, 2006, in accordance with paragraph (b), and all 24.29 benefits based on service on or after July 1, 2006 must be determined only by laws 24.30 governing the Teachers Retirement Association. 24.31 Subd. 7. Termination of Minneapolis Teachers Retirement Fund Association 24.32 special retirement fund. (a) As of June 30, 2006, the Minneapolis Teachers Retirement 24.33 Fund Association ceases to exist. 24.34 (b) Contracts, records, and obligations of the Minneapolis Teachers Retirement Fund 24.35 Association special retirement fund existing at the time of consolidation with the Teachers 24.36 Retirement Association are transferred to the Teachers Retirement Association pursuant to 25.1 the provisions of section 15.039, subdivisions 5 and 5a, except that contracts, records, and 25.2 obligations of the Minneapolis Teachers Retirement Fund Association special retirement 25.3 fund related to investment and safekeeping of assets are transferred to the State Board 25.4 of Investment pursuant to the provisions of section 15.039, subdivisions 5 and 5a. The 25.5 State Board of Investment has the authority to pay the investment-related liabilities and 25.6 obligations from the assets transferred from the Minnesota Teachers Retirement Fund 25.7 Association incurred by the Teachers Retirement Association. The audit or examination of 25.8 the Minneapolis Teachers Retirement Fund Association for year-end June 30, 2006 must 25.9 be performed by either the State Auditor or the Legislative Auditor under an agreement 25.10 with the Teachers Retirement Association. The costs of the audit or examination must 25.11 be paid by the Teachers Retirement Association. Between the date of enactment of this 25.12 section and June 30, 2006, the Minneapolis Teachers Retirement Fund Association cannot 25.13 incur a new or additional enforceable contractual liability or obligation without approval 25.14 of the Teachers Retirement Association. 25.15 Sec. 10. [354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND STATE 25.16 AID REDEDICATED. 25.17 Subdivision 1. Appropriation. The positive difference, if any, between the actual 25.18 state aid paid to the Minneapolis Employees Retirement fund under section 422A.101, 25.19 subdivision 3, and $8,065,000 annually is appropriated from the general fund to the 25.20 commissioner of finance for deposit in the Teachers Retirement Association to offset all or 25.21 a portion of the current and future unfunded actuarial accrued liability of the Minneapolis 25.22 Teachers Retirement Fund Association. 25.23 Subd. 2. Financial requirements. The appropriation in subdivision 1 is available 25.24 to the extent that financial requirements of the Minneapolis Employees Retirement Fund 25.25 under section 422A.101, subdivision 3, have been satisfied. 25.26 Sec. 11. Minnesota Statutes 2004, section 354A.011, subdivision 15a, is amended to 25.27 read: 25.28 Subd. 15a. Normal retirement age. "Normal retirement age" means age 65 for 25.29 a person who first became a member of the coordinated program of theMinneapolis or25.30 St. Paul Teachers Retirement Fund Association or the new law coordinated program of 25.31 the Duluth Teachers Retirement Fund Association or a member of a pension fund listed 25.32 in section 356.30, subdivision 3, before July 1, 1989. For a person who first became a 25.33 member of the coordinated program of theMinneapolis orSt. Paul Teachers Retirement 25.34 Fund Association or the new law coordinated program of the Duluth Teachers Retirement 26.1 Fund Association after June 30, 1989, normal retirement age means the higher of age 65 26.2 or retirement age, as defined in United States Code, title 42, section 416(l), as amended, 26.3 but not to exceed age 66. For a person who is a member of the basic program of the 26.4Minneapolis orSt. Paul Teachers Retirement Fund Association or the old law coordinated 26.5 program of the Duluth Teachers Retirement Fund Association, normal retirement age 26.6 means the age at which a teacher becomes eligible for a normal retirement annuity 26.7 computed upon meeting the age and service requirements specified in the applicable 26.8 provisions of the articles of incorporation or bylaws of the respective teachers retirement 26.9 fund association. 26.10 Sec. 12. Minnesota Statutes 2004, section 354A.011, subdivision 27, is amended to 26.11 read: 26.12 Subd. 27. Teacher. (a) "Teacher" means any person who renders service for a public 26.13 school district, other than a charter school, located in the corporate limits ofone ofthe 26.14cities of the first class which was so classified on January 1, 1979Duluth and St. Paul, 26.15 as any of the following: 26.16 (1) a full-time employee in a position for which a valid license from the state 26.17 Department of Education is required; 26.18 (2) an employee of the teachers retirement fund association located in the city of 26.19 the first class unless the employee has exercised the option pursuant to Laws 1955, 26.20 chapter 10, section 1, to retain membership in the Minneapolis Employees Retirement 26.21 Fund established pursuant to chapter 422A; 26.22 (3) a part-time employee in a position for which a valid license from the state 26.23 Department of Education is required; or 26.24 (4) a part-time employee in a position for which a valid license from the state 26.25 Department of Education is required who also renders other nonteaching services for the 26.26 school district, unless the board of trustees of the teachers retirement fund association 26.27 determines that the combined employment is on the whole so substantially dissimilar to 26.28 teaching service that the service may not be covered by the association. 26.29 (b) The term does not mean any person who renders service in the school district 26.30 as any of the following: 26.31 (1) an independent contractor or the employee of an independent contractor; 26.32 (2) an employee who is a full-time teacher covered by the Teachers Retirement 26.33 Association or by another teachers retirement fund association established pursuant to this 26.34 chapter or chapter 354; 26.35 (3) an employee exempt from licensure pursuant to section 122A.30; 27.1 (4) an employee who is a teacher in a technical college located in a city of the first 27.2 class unless the person elects coverage by the applicable first class city teacher retirement 27.3 fund association under section 354B.21, subdivision 2; 27.4 (5) a teacher employed by a charter school, irrespective of the location of the 27.5 school; or 27.6 (6) an employee who is a part-time teacher in a technical college in a city of the first 27.7 class and who has elected coverage by the applicable first class city teacher retirement 27.8 fund association under section 354B.21, subdivision 2, but (i) the teaching service is 27.9 incidental to the regular nonteaching occupation of the person; (ii) the applicable technical 27.10 college stipulates annually in advance that the part-time teaching service will not exceed 27.11 300 hours in a fiscal year; and (iii) the part-time teaching actually does not exceed 300 27.12 hours in the fiscal year to which the certification applies. 27.13 Sec. 13. Minnesota Statutes 2004, section 354A.021, subdivision 1, is amended to read: 27.14 Subdivision 1. Establishment. There is established a teachers retirement fund 27.15 association in each of the cities ofthe first class which were so classified on January 1,27.161979Duluth and St. Paul. The associations shall be known respectively as the "Duluth 27.17 Teachers Retirement Fund Association,"the "Minneapolis Teachers Retirement Fund27.18Association"and the "St. Paul Teachers Retirement Fund Association." Each association 27.19 shall be a continuation of the teachers retirement fund association with the same corporate 27.20 name established pursuant to the authorization contained in Laws 1909, chapter 343, 27.21 section 1. 27.22 Sec. 14. Minnesota Statutes 2004, section 354A.092, is amended to read: 27.23 354A.092 SABBATICAL LEAVE. 27.24 Any teacher in the coordinated program ofeither the Minneapolis Teachers27.25Retirement Fund Association orthe St. Paul Teachers Retirement Fund Association or 27.26 any teacher in the new law coordinated program of the Duluth Teachers Retirement 27.27 Fund Association who is granted a sabbatical leave shall be entitled to receive allowable 27.28 service credit in the applicable association for periods of sabbatical leave. To obtain the 27.29 service credit, the teacher on sabbatical leave shall make an employee contribution to the 27.30 applicable association. No teacher shall be entitled to receive more than three years of 27.31 allowable service credit pursuant to this section for a period or periods of sabbatical 27.32 leave during any ten consecutive fiscal or calendar years, whichever is the applicable 27.33 plan year for the teachers retirement fund association. If the teacher granted a sabbatical 27.34 leave makes the employee contribution for a period of sabbatical leave pursuant to this 28.1 section, the employing unit shall make an employer contribution on behalf of the teacher 28.2 to the applicable association for that period of sabbatical leave in the manner described 28.3 in section 354A.12, subdivision 2a. The employee and employer contributions shall be 28.4 in an amount equal to the employee and employer contribution rates in effect for other 28.5 active members of the association covered by the same program applied to a salary figure 28.6 equal to the teacher's actual covered salary for the plan year immediately preceding the 28.7 sabbatical leave period. Payment of the employee contribution authorized pursuant to this 28.8 section shall be made by the teacher on or before June 30 of year next following the year 28.9 in which the sabbatical leave terminated and shall be made without interest. For sabbatical 28.10 leaves taken after June 30, 1986, the required employer contributions shall be paid by the 28.11 employing unit within 30 days after notification by the association of the amount due. 28.12 If the employee contributions for the sabbatical leave period are less than an amount 28.13 equal to the applicable contribution rate applied to a salary figure equal to the teacher's 28.14 actual covered salary for the plan year immediately preceding the sabbatical leave period, 28.15 service credit shall be prorated. The prorated service credit shall be determined by the 28.16 ratio between the amount of the actual payment which was made and the full contribution 28.17 amount payable pursuant to this section. 28.18 Sec. 15. Minnesota Statutes 2004, section 354A.093, subdivision 1, is amended to read: 28.19 Subdivision 1. Eligibility. Any teacher in the coordinated program ofeither the28.20Minneapolis Teachers Retirement Fund Association orthe St. Paul Teachers Retirement 28.21 Fund Association or any teacher in the new law coordinated program of the Duluth 28.22 Teachers Retirement Fund Association who is absent from employment by reason of 28.23 service in the uniformed services as defined in United States Code, title 38, section 28.24 4303(13) and who returns to the employer providing active teaching service upon 28.25 discharge from uniformed service within the time frames required under United States 28.26 Code, title 38, section 4312(e), may receive allowable service credit in the applicable 28.27 association for all or a portion of the period of uniformed service, provided that the teacher 28.28 did not separate from uniformed service with a dishonorable or bad conduct discharge 28.29 or under other than honorable conditions. 28.30 Sec. 16. Minnesota Statutes 2004, section 354A.095, is amended to read: 28.31 354A.095 PARENTAL AND MATERNITY LEAVE. 28.32 Basic or coordinated members of the St. Paul Teachers Retirement Fund 28.33 Association, the Minneapolis Teachers Retirement Fund Association,and new coordinated 28.34 members of the Duluth Teachers Retirement Fund Association, who are granted parental 29.1 or maternity leave of absence by the employing authority, are entitled to obtain service 29.2 credit not to exceed one year for the period of leave upon payment to the applicable 29.3 fund by the end of the fiscal year following the fiscal year in which the leave of absence 29.4 terminated. The amount of the payment must include the total required employee and 29.5 employer contributions for the period of leave prescribed in section 354A.12. Payment 29.6 must be based on the member's average monthly salary rate upon return to teaching 29.7 service, and is payable without interest. Payment must be accompanied by a certified or 29.8 otherwise adequate copy of the resolution or action of the employing authority granting 29.9 or approving the leave. 29.10 Sec. 17. Minnesota Statutes 2004, section 354A.096, is amended to read: 29.11 354A.096 MEDICAL LEAVE. 29.12 Any teacher in the coordinated program ofeither the Minneapolis Teachers29.13Retirement Fund Association orthe St. Paul Teachers Retirement Fund Association or the 29.14 new law coordinated program of the Duluth Teachers Retirement Fund Association who is 29.15 on an authorized medical leave of absence and subsequently returns to teaching service 29.16 is entitled to receive allowable service credit, not to exceed one year, for the period of 29.17 leave, upon making the prescribed payment to the fund. This payment must include the 29.18 required employee and employer contributions at the rates specified in section 354A.12, 29.19 subdivisions 1 and 2, as applied to the member's average full-time monthly salary rate on 29.20 the date the leave of absence commenced plus annual interest at the rate of 8.5 percent per 29.21 year from the end of the fiscal year during which the leave terminates to the end of the 29.22 month during which payment is made. The member must pay the total amount required 29.23 unless the employing unit, at its option, pays the employer contributions. The total amount 29.24 required must be paid by the end of the fiscal year following the fiscal year in which the 29.25 leave of absence terminated or before the member retires, whichever is earlier. Payment 29.26 must be accompanied by a copy of the resolution or action of the employing authority 29.27 granting the leave and the employing authority, upon granting the leave, must certify 29.28 the leave to the association in a manner specified by the executive director. A member 29.29 may not receive more than one year of allowable service credit during any fiscal year by 29.30 making payment under this section. A member may not receive disability benefits under 29.31 section 354A.36 and receive allowable service credit under this section for the same 29.32 period of time. 29.33 Sec. 18. Minnesota Statutes 2004, section 354A.12, subdivision 1, is amended to read: 30.1 Subdivision 1. Employee contributions. The contribution required to be paid by 30.2 each member of a teachers retirement fund association shall not be less than the percentage 30.3 of total salary specified below for the applicable association and program:30.4 Association and Program Percentage of 30.5 Total Salary 30.6 Duluth Teachers Retirement Association 30.7 old law and new law 30.8 coordinated programs 5.5 percent 30.9 30.16 Contributions shall be made by deduction from salary and must be remitted directly 30.17 to the respective teachers retirement fund association at least once each month. 30.18 Sec. 19. Minnesota Statutes 2004, section 354A.12, subdivision 2, is amended to read: 30.19 Subd. 2. Retirement contribution levy disallowed. Except as provided in 30.20Minneapolis Teachers Retirement30.10Association30.11basic program8.5 percent30.12coordinated program5.5 percent30.13 St. Paul Teachers Retirement Association 30.14 basic program 8 percent 30.15 coordinated program 5.5 percentsubdivision 3b and in section423A.02, subdivision 3, with respect to the city of30.21Minneapolis and special school district No. 1 and insection 423A.02, subdivision 3, with 30.22 respect to independent school district No. 625, notwithstanding any law to the contrary, 30.23 levies for teachers retirement fund associations in the cities ofthe first classDuluth and St. 30.24 Paul, including levies for any employer Social Security taxes for teachers covered by the 30.25 Duluth Teachers Retirement Fund Association or theMinneapolis Teachers Retirement30.26Fund Association or theSt. Paul Teachers Retirement Fund Association, are disallowed. 30.27 Sec. 20. Minnesota Statutes 2004, section 354A.12, subdivision 2a, is amended to read: 30.28 Subd. 2a. Employer regular and additional contribution rates. (a) The 30.29 employing units shall make the following employer contributions to teachers retirement 30.30 fund associations: 31.1 (1) for any coordinated member of a teachers retirement fund association in a city 31.2 of the first class, the employing unit shall pay the employer Social Security taxes in 31.3 accordance with section 355.46, subdivision 3, clause (b); 31.4 (2) for any coordinated member of one of the following teachers retirement fund 31.5 associations in a city of the first class, the employing unit shall make a regular employer 31.6 contribution to the respective retirement fund association in an amount equal to the 31.7 designated percentage of the salary of the coordinated member as provided below:31.8 Duluth Teachers Retirement 31.9 Fund Association 4.50 percent 31.10 31.14 (3) for any basic member ofMinneapolis Teachers Retirement31.11Fund Association4.50 percent31.12 St. Paul Teachers Retirement 31.13 Fund Association 4.50 percentone ofthefollowingSt. Paul Teachers Retirement 31.15 Fundassociations in a city of the first classAssociation, the employing unit shall make a 31.16 regular employer contribution to the respective retirement fund in an amount equal tothe31.17designated percentage8.00 percent of the salary of the basic memberas provided below:;31.18 31.22 (4) for a basic member ofMinneapolis Teachers Retirement31.19Fund Association8.50 percent31.20St. Paul Teachers Retirement31.21Fund Association8.00 percentathe St. Paul Teachers Retirement Fund Associationin a31.23city of the first class, the employing unit shall make an additional employer contribution to 31.24 the respective fund in an amount equal tothe designated percentage3.64 percent of the 31.25 salary of the basic member, as provided below:;31.26 32.3 (5) for a coordinated member of a teachers retirement fund association in a city 32.4 of the first class, the employing unit shall make an additional employer contribution to 32.5 the respective fund in an amount equal to the applicable percentage of the coordinated 32.6 member's salary, as provided below:Minneapolis Teachers Retirement31.27Fund Association31.28July 1, 1993 - June 30, 19944.85 percent31.29July 1, 1994, and thereafter3.64 percent31.30St. Paul Teachers Retirement31.31Fund Association32.1July 1, 1993 - June 30, 19954.63 percent32.2July 1, 1995, and thereafter3.64 percent32.7 Duluth Teachers Retirement 32.8 Fund Association 1.29 percent 32.9 32.18 (b) The regular and additional employer contributions must be remitted directly to 32.19 the respective teachers retirement fund association at least once each month. Delinquent 32.20 amounts are payable with interest under the procedure in subdivision 1a. 32.21 (c) Payments of regular and additional employer contributions for school district 32.22 or technical college employees who are paid from normal operating funds must be made 32.23 from the appropriate fund of the district or technical college. 32.24 Sec. 21. Minnesota Statutes 2004, section 354A.12, subdivision 3a, is amended to read: 32.25 Subd. 3a. Special direct state aid to first class city teachers retirement fund 32.26 associations. (a) In fiscal year 1998, the state shall pay $4,827,000 to the St. Paul 32.27 Teachers Retirement Fund Association, $17,954,000 to the Minneapolis Teachers 32.28 Retirement Fund Association, and $486,000 to the Duluth Teachers Retirement Fund 32.29 Association. In eachMinneapolis Teachers Retirement32.10Fund Association32.11July 1, 1993 - June 30, 19940.50 percent32.12July 1, 1994, and thereafter3.64 percent32.13 St. Paul Teachers Retirement 32.14 Fund Association 32.15 July 1, 1993 - June 30, 1994 0.50 percent 32.16 July 1, 1994 - June 30, 1995 1.50 percent 32.17 July 1, 1997, and thereafter 3.84 percentsubsequentfiscal year after fiscal year 2006, these payments to the 32.30 first class city teachers retirement fund associations must be $2,827,000 for St. Paul, 33.1 $12,954,000 to the Teachers Retirement Association for the former Minneapolis Teachers 33.2 Retirement Fund Association, and $486,000 for Duluth. 33.3 (b) The direct state aids under this subdivision are payable October 1 annually. The 33.4 commissioner of finance shall pay the direct state aid. The amount required under this 33.5 subdivision is appropriated annually from the general fund to the commissioner of finance. 33.6 Sec. 22. Minnesota Statutes 2004, section 354A.12, subdivision 3b, is amended to read: 33.7 Subd. 3b. Special direct state matching aid to theMinneapolisTeachers 33.8 RetirementFundAssociation. (a) Special School District No. 1maymust make 33.9 an additional employer contribution to theMinneapolisTeachers Retirement Fund 33.10 Association. The city of Minneapolismaymust make a contribution to theMinneapolis33.11 Teachers RetirementFundAssociation. This contributionmaymust be made by a levy 33.12 of the board of estimate and taxation of the city of Minneapolis and the levy, if made, is 33.13 classified as that of a special taxing district for purposes of sections 275.065 and 276.04, 33.14 and for all other property tax purposes. 33.15 (b)For every $1,000$1,125,000 must be contributedin equal proportionby Special 33.16 School District No. 1 and $1,125,000 must be contributed by the city of Minneapolis to 33.17 theMinneapolisTeachers RetirementFundAssociation under paragraph (a), and the 33.18 state shall pay to theMinneapolisTeachers RetirementFundAssociation$1,000, but not33.19to exceed$2,500,000in total ineach fiscal year1994. The superintendent of Special 33.20 School District No. 1, the mayor of the city of Minneapolis, and the executive director 33.21 of theMinneapolisTeachers RetirementFundAssociation shall jointly certify to the 33.22 commissioner of finance the total amount that has been contributed by Special School 33.23 District No. 1 and by the city of Minneapolis to theMinneapolisTeachers Retirement 33.24FundAssociation. Any certification to the commissioner of education must be made 33.25 quarterly. If the total certifications for a fiscal year exceed the maximum annual direct state 33.26 matching aid amount in any quarter, the amount of direct state matching aid payable to the 33.27MinneapolisTeachers RetirementFundAssociation must be limited to the balance of the 33.28 maximum annual direct state matching aid amount available. The amount required under 33.29 this paragraph, subject to the maximum direct state matching aid amount, is appropriated 33.30 annually to the commissioner of finance. 33.31 (c) The commissioner of finance may prescribe the form of the certifications 33.32 required under paragraph (b). 33.33 Sec. 23. Minnesota Statutes 2004, section 354A.12, subdivision 3c, is amended to read: 34.1 Subd. 3c. Termination of supplemental contributions and direct matching 34.2 and state aid. (a) The supplemental contributions payable to the Minneapolis Teachers 34.3 Retirement Fund Association by Special School District No. 1 and the city of Minneapolis 34.4 under section 423A.02, subdivision 3, which must continue to be paid to the Teachers 34.5 Retirement Association until 2037, or to the St. Paul Teachers Retirement Fund 34.6 Association by Independent School District No. 625 under section 423A.02, subdivision 34.7 3, or the direct state aids under subdivision 3a to thefirst class citySt. Paul Teachers 34.8 Retirementassociations, and the direct matching and state aid under subdivision 3b to34.9the Minneapolis Teachers RetirementFund Association terminatefor the respective fund34.10 at the end of the fiscal year in which the accrued liability funding ratio for that fund, as 34.11 determined in the most recent actuarial report for that fund by the actuary retained by the 34.12 Legislative Commission on Pensions and Retirement, equals or exceeds the accrued 34.13 liability funding ratio for the teachers retirement association, as determined in the most 34.14 recent actuarial report for the Teachers Retirement Association by the actuary retained by 34.15 the Legislative Commission on Pensions and Retirement. 34.16 (b) If the state direct matching, state supplemental, or state aid is terminated for a 34.17 first class city teachers retirement fund association under paragraph (a), it may not again 34.18 be received by that fund. 34.19 (c) Ifeither the Minneapolis Teachers Retirement Fund Association,the St. 34.20 Paul Teachers Retirement Fund Association, or the Duluth Teachers Retirement Fund34.21Association remainis funded atless thanthe funding ratio applicable to the Teachers 34.22 Retirement Association when the provisions of paragraph (b) become effective, then any 34.23 state aidnotpreviously distributed to that association must be immediately transferred to 34.24 theother associations in proportion to the relative sizes of their unfunded actuarial accrued34.25liabilitiesTeachers Retirement Association. 34.26 Sec. 24. Minnesota Statutes 2004, section 354A.12, subdivision 3d, is amended to read: 34.27 Subd. 3d. Supplemental administrative expense assessment. (a) The active 34.28 and retired membership of theMinneapolis Teachers Retirement Fund Association and34.29of theSt. Paul Teachers Retirement Fund Association is responsible for defraying 34.30 supplemental administrative expenses other than investment expenses of the respective 34.31 teacher retirement fund association. 34.32 (b) Investment expenses of the teachers retirement fund association are those 34.33 expenses incurred by or on behalf of the retirement fund in connection with the investment 34.34 of the assets of the retirement fund other than investment security transaction costs. Other 34.35 administrative expenses are all expenses incurred by or on behalf of the retirement fund 35.1 for all other retirement fund functions other than the investment of retirement fund assets. 35.2 Investment and other administrative expenses must be accounted for using generally 35.3 accepted accounting principles and in a manner consistent with the comprehensive annual 35.4 financial report of the teachers retirement fund association for the immediately previous 35.5 fiscal year under section 356.20. 35.6 (c) Supplemental administrative expenses other than investment expenses ofa first35.7class city teacherthe St. Paul Teachers Retirement Fund Association are those expenses 35.8 for the fiscal year that: 35.9 (1) exceed, for the St. Paul Teachers Retirement Fund Association, $443,745, or35.10for the Minneapolis Teacher Retirement Fund Association $671,513, plus, in each case,35.11 an additional amount derived by applying the percentage increase in the Consumer Price 35.12 Index for Urban Wage Earners and Clerical Workers All Items Index published by the 35.13 Bureau of Labor Statistics of the United States Department of Labor since July 1, 2001, to 35.14 theapplicabledollar amount; and 35.15 (2) exceed the amount computed by applying the most recent percentage of 35.16 pay administrative expense amount, other than investment expenses, for the teachers 35.17 retirement association governed by chapter 354 to the covered payroll of the respective 35.18 teachers retirement fund association for the fiscal year. 35.19 (d) The board of trustees ofeach first class citythe St. Paul Teachers Retirement 35.20 Fund Association shall allocate the total dollar amount of supplemental administrative 35.21 expenses other than investment expenses determined under paragraph (c), clause (2), 35.22 among the various active and retired membership groups of the teachers retirement fund 35.23 association and shall assess the various membership groups their respective share of 35.24 the supplemental administrative expenses other than investment expenses, in amounts 35.25 determined by the board of trustees. The supplemental administrative expense assessments 35.26 must be paid by the membership group in a manner determined by the board of trustees 35.27 of the respective teachers retirement association. Supplemental administrative expenses 35.28 payable by the active members of the pension plan must be picked up by the employer in 35.29 accordance with section 356.62. 35.30 (e) With respect to the St. Paul Teachers Retirement Fund Association, the 35.31 supplemental administrative expense assessment must be fully disclosed to the various 35.32 active and retired membership groups of the teachers retirement fund association. The 35.33 chief administrative officer of the St. Paul Teachers Retirement Fund Association shall 35.34 prepare a supplemental administrative expense assessment disclosure notice, which must 35.35 include the following: 36.1 (1) the total amount of administrative expenses of the St. Paul Teachers Retirement 36.2 Fund Association, the amount of the investment expenses of the St. Paul Teachers 36.3 Retirement Fund Association, and the net remaining amount of administrative expenses of 36.4 the St. Paul Teachers Retirement Fund Association; 36.5 (2) the amount of administrative expenses for the St. Paul Teachers Retirement Fund 36.6 Association that would be equivalent to the teachers retirement association noninvestment 36.7 administrative expense level described in paragraph (c); 36.8 (3) the total amount of supplemental administrative expenses required for assessment 36.9 calculated under paragraph (c); 36.10 (4) the portion of the total amount of the supplemental administrative expense 36.11 assessment allocated to each membership group and the rationale for that allocation; 36.12 (5) the manner of collecting the supplemental administrative expense assessment 36.13 from each membership group, the number of assessment payments required during the 36.14 year, and the amount of each payment or the procedure used to determine each payment; 36.15 and 36.16 (6) any other information that the chief administrative officer determines is necessary 36.17 to fairly portray the manner in which the supplemental administrative expense assessment 36.18 was determined and allocated. 36.19 (f) The disclosure notice must be provided annually in the annual report of the 36.20 association. 36.21 (g) The supplemental administrative expense assessments must be deposited in the 36.22 applicable teachers retirement fund upon receipt. 36.23 (h) Any omitted active membership group assessments that remain undeducted 36.24 and unpaid to the teachers retirement fund association for 90 days must be paid by the 36.25 respective school district. The school district may recover any omitted active membership 36.26 group assessment amounts that it has previously paid. The teachers retirement fund 36.27 association shall deduct any omitted retired membership group assessment amounts from 36.28 the benefits next payable after the discovery of the omitted amounts. 36.29 Sec. 25. Minnesota Statutes 2004, section 354A.30, is amended to read: 36.30 354A.30MINNEAPOLIS ANDST. PAUL TEACHERS RETIREMENT FUND 36.31ASSOCIATIONSASSOCIATION; COORDINATED PROGRAM. 36.32 There is established a coordinated program within theMinneapolis Teachers36.33Retirement Fund Association and a coordinated program within theSt. Paul Teachers 36.34 Retirement Fund Association to provide retirement coverage for teachers who are covered 36.35 by an agreement or modification made between the state and the secretary of health, 37.1 education and welfare making the provisions of the federal Old Age, Survivors and 37.2 Disability Insurance Act applicable to certain teachers covered by the teachers retirement 37.3 fund association. The provisions governing the coordinated program shall be sections 37.4 354A.31 to 354A.41 and any other applicable provisions of this chapter. 37.5 Sec. 26. Minnesota Statutes 2005 Supplement, section 354A.31, subdivision 4, is 37.6 amended to read: 37.7 Subd. 4. Computation ofthenormal coordinated retirement annuity; 37.8Minneapolis andSt. Paulfundsfund. (a) This subdivision applies to the coordinated 37.9programsprogram of theMinneapolis Teachers Retirement Fund Association and theSt. 37.10 Paul Teachers Retirement Fund Association. 37.11 (b) The normal coordinated retirement annuity is an amount equal to a retiring 37.12 coordinated member's average salary under section 354A.011, subdivision 7a, multiplied 37.13 by the retirement annuity formula percentage. 37.14 (c) This paragraph, in conjunction with subdivision 6, applies to a person who first 37.15 became a member or a member in a pension fund listed in section 356.30, subdivision 3, 37.16 before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a 37.17 higher annuity amount, in which case paragraph (d) will apply. The retirement annuity 37.18 formula percentage for purposes of this paragraph is the percent specified in section 37.19 356.315, subdivision 1, per year for each year of coordinated service for the first ten years 37.20 and the percent specified in section 356.315, subdivision 2, for each year of coordinated 37.21 service thereafter. 37.22 (d) This paragraph applies to a person who has become at least 55 years old and who 37.23 first becomes a member after June 30, 1989, and to any other member who has become 37.24 at least 55 years old and whose annuity amount, when calculated under this paragraph 37.25 and in conjunction with subdivision 7 is higher than it is when calculated under paragraph 37.26 (c), in conjunction with the provisions of subdivision 6. The retirement annuity formula 37.27 percentage for purposes of this paragraph is the percent specified in section 356.315, 37.28 subdivision 2, for each year of coordinated service. 37.29 Sec. 27. Minnesota Statutes 2004, section 354A.32, subdivision 1, is amended to read: 37.30 Subdivision 1. Optional forms generally. Theboardsboard of theMinneapolis and37.31theSt. Paul Teachers Retirement FundAssociationsAssociation shalleachestablish for the 37.32 coordinated program and the board of the Duluth Teachers Retirement Fund Association 37.33 shall establish for the new law coordinated program an optional retirement annuity which 37.34 shall take the form of a joint and survivor annuity. Each board may also in its discretion 38.1 establish an optional annuity which shall take the form of an annuity payable for a period 38.2 certain and for life thereafter. Each board shall also establish an optional retirement 38.3 annuity that guarantees payment of the balance of the annuity recipient's accumulated 38.4 deductions to a designated beneficiary upon the death of the annuity recipient. Except as 38.5 provided in subdivision 1a, optional annuity forms shall be the actuarial equivalent of the 38.6 normal forms provided in section 354A.31. In establishing these optional annuity forms, 38.7 the board shall obtain the written recommendation of the commission-retained actuary. 38.8 The recommendation shall be a part of the permanent records of the board. 38.9 Sec. 28. Minnesota Statutes 2004, section 354A.39, is amended to read: 38.10 354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS; ANNUITY. 38.11 Any person who has been a member of the Minnesota State Retirement System, the 38.12 Public Employees Retirement Association including the Public Employees Retirement 38.13 Association Police and Fire Fund, the Teachers Retirement Association, the Minnesota 38.14 State Patrol Retirement Association, the legislators retirement plan, the constitutional 38.15 officers retirement plan, the Minneapolis Employees Retirement Fund, the Duluth 38.16 Teachers Retirement Fund Association new law coordinated program,the Minneapolis38.17Teachers Retirement Fund Association coordinated program,the St. Paul Teachers 38.18 Retirement Fund Association coordinated program, or any other public employee 38.19 retirement system in the state of Minnesota having a like provision but excluding all other 38.20 funds providing retirement benefits for police officers or firefighters shall be entitled 38.21 when qualified to an annuity from each fund if the person's total allowable service in all 38.22 of the funds or in any two or more of the funds totals three or more years, provided that 38.23 no portion of the allowable service upon which the retirement annuity from one fund is 38.24 based is used again in the computation for a retirement annuity from another fund and 38.25 provided further that the person has not taken a refund from any of funds or associations 38.26 since the person's membership in the fund or association has terminated. The annuity 38.27 from each fund or association shall be determined by the appropriate provisions of the 38.28 law governing each fund or association, except that the requirement that a person must 38.29 have at least three years of allowable service in the respective fund or association shall not 38.30 apply for the purposes of this section, provided that the aggregate service in two or more 38.31 of these funds equals three or more years. 38.32 Sec. 29. Minnesota Statutes 2004, section 354A.40, subdivision 1, is amended to read: 38.33 Subdivision 1. Retirement annuity. Any coordinated member ofeither the38.34Minneapolis Teachers Retirement Fund Association or ofthe St. Paul Teachers Retirement 39.1 Fund Association who has credited service prior to July 1, 1978 shall be entitled to 39.2 receive a retirement annuity when otherwise qualified, the calculation of which shall 39.3 utilize the applicable retirement annuity formula specified in articles of incorporation and 39.4 bylaws of the teachers retirement fund association governing the basic program for that 39.5 portion of credited service which was served prior to July 1, 1978, and the retirement 39.6 annuity formula specified in section 354A.31 for the remainder of the member's credited 39.7 service, both applied to the member's average salary as specified in section 354A.31, 39.8 subdivision 4. The formula percentages to be used in calculating the coordinated portion 39.9 of the retirement annuity or coordinated service under this section shall recognize the 39.10 coordinated service as a continuation of any service prior to July 1, 1978. 39.11 Sec. 30. Minnesota Statutes 2004, section 354A.41, is amended to read: 39.12 354A.41 ADMINISTRATION OF COORDINATED PROGRAM. 39.13 Subdivision 1. Administrative provisions. The provisions of the articles of 39.14 incorporation and bylaws of theMinneapolis or theSt. Paul Teachers Retirement 39.15 Fund Association, whichever is applicable,relating to the administration of the fund 39.16 shall govern the administration of the coordinatedprogramand basic programs and the 39.17 provisions of the articles of incorporation and bylaws of the Duluth Teachers Retirement 39.18 Fund Association relating to the administration of the fund shall govern the administration 39.19 of the new law coordinated program in instances where the administrative provisions are 39.20 not inconsistent with the provisions of sections 354A.31 to 354A.41, including but not 39.21 limited to provisions relating to the composition and function of the board of trustees, the 39.22 investment of assets of the teachers retirement fund association, and the definition of the 39.23 plan year. The administrative provisions in the articles of incorporation and the bylaws 39.24 of the Minneapolis Teachers Retirement Fund Association pertaining to the granting of 39.25 pension benefits of the basic and coordinated programs are no longer in effect after June 39.26 30, 2006. 39.27 Subd. 2. Actuarial valuations. In any actuarial valuation of theMinneapolis39.28Teachers Retirement Fund Association, theSt. Paul Teachers Retirement Fund 39.29 Association, or the Duluth Teachers Retirement Fund Association under section 356.215 39.30 prepared by the commission-retained actuary or supplemental actuarial valuation prepared 39.31 by an approved actuary retained by the teachers retirement fund association, there shall 39.32 be included a finding of the condition of the fund showing separately the basic and 39.33 coordinated programs or the old law coordinated and new law coordinated programs, as 39.34 appropriate. The finding shall include the level normal cost and the applicable employee 39.35 and employer contribution rates for each program. 40.1 Sec. 31. Minnesota Statutes 2004, section 356.20, subdivision 2, is amended to read: 40.2 Subd. 2. Covered public pension plans and funds. This section applies to the 40.3 following public pension plans: 40.4 (1) the general state employees retirement plan of the Minnesota State Retirement 40.5 System; 40.6 (2) the general employees retirement plan of the Public Employees Retirement 40.7 Association; 40.8 (3) the Teachers Retirement Association; 40.9 (4) the State Patrol retirement plan; 40.10 (5) theMinneapolis Teachers Retirement Fund Association;40.11(6) theSt. Paul Teachers Retirement Fund Association; 40.12(7)(6) the Duluth Teachers Retirement Fund Association; 40.13(8)(7) the Minneapolis Employees Retirement Fund; 40.14(9)(8) the University of Minnesota faculty retirement plan; 40.15(10)(9) the University of Minnesota faculty supplemental retirement plan; 40.16(11)(10) the judges retirement fund; 40.17(12)(11) a police or firefighter's relief association specified or described in section 40.18 69.77, subdivision 1a, or 69.771, subdivision 1; 40.19(13)(12) the public employees police and fire plan of the Public Employees 40.20 Retirement Association; 40.21(14)(13) the correctional state employees retirement plan of the Minnesota State 40.22 Retirement System; and 40.23(15)(14) the local government correctional service retirement plan of the Public 40.24 Employees Retirement Association. 40.25 Sec. 32. Minnesota Statutes 2004, section 356.214, subdivision 1, is amended to read: 40.26 Subdivision 1. Joint retention. (a) The chief administrative officers of the 40.27 Minnesota State Retirement System, the Public Employees Retirement Association, the 40.28 Teachers Retirement Association, the Duluth Teachers Retirement Fund Association, 40.29the Minneapolis Teachers Retirement Fund Association,the Minneapolis Employees 40.30 Retirement Fund, and the St. Paul Teachers Retirement Fund Association, jointly, on 40.31 behalf of the state, its employees, its taxpayers, and its various public pension plans, 40.32 shall contract with an established actuarial consulting firm to conduct annual actuarial 40.33 valuations and related services for the retirement plans named in paragraph (b). The 40.34 principal from the actuarial consulting firm on the contract must be an approved actuary 40.35 under section 356.215, subdivision 1, paragraph (c). Prior to becoming effective, 41.1 the contract under this section is subject to a review and approval by the Legislative 41.2 Commission on Pensions and Retirement. 41.3 (b) The contract for actuarial services must include the preparation of actuarial 41.4 valuations and related actuarial work for the following retirement plans: 41.5 (1) the teachers retirement plan, Teachers Retirement Association; 41.6 (2) the general state employees retirement plan, Minnesota State Retirement System; 41.7 (3) the correctional employees retirement plan, Minnesota State Retirement System; 41.8 (4) the State Patrol retirement plan, Minnesota State Retirement System; 41.9 (5) the judges retirement plan, Minnesota State Retirement System; 41.10 (6) the Minneapolis employees retirement plan, Minneapolis Employees Retirement 41.11 Fund; 41.12 (7) the public employees retirement plan, Public Employees Retirement Association; 41.13 (8) the public employees police and fire plan, Public Employees Retirement 41.14 Association; 41.15 (9) the Duluth teachers retirement plan, Duluth Teachers Retirement Fund 41.16 Association; 41.17(10) the Minneapolis teachers retirement plan, Minneapolis Teachers Retirement41.18Fund Association;41.19(11)(10) the St. Paul teachers retirement plan, St. Paul Teachers Retirement Fund 41.20 Association; 41.21(12)(11) the legislators retirement plan, Minnesota State Retirement System; 41.22(13)(12) the elective state officers retirement plan, Minnesota State Retirement 41.23 System; and 41.24(14)(13) local government correctional service retirement plan, Public Employees 41.25 Retirement Association. 41.26 (c) The contract must require completion of the annual actuarial valuation 41.27 calculations on a fiscal year basis, with the contents of the actuarial valuation calculations 41.28 as specified in section 356.215, and in conformity with the standards for actuarial work 41.29 adopted by the Legislative Commission on Pensions and Retirement. 41.30 The contract must require completion of annual experience data collection and 41.31 processing and a quadrennial published experience study for the plans listed in paragraph 41.32 (b), clauses (1), (2), and (7), as provided for in the standards for actuarial work adopted by 41.33 the commission. The experience data collection, processing, and analysis must evaluate 41.34 the following: 41.35 (1) individual salary progression; 41.36 (2) the rate of return on investments based on the current asset value; 42.1 (3) payroll growth; 42.2 (4) mortality; 42.3 (5) retirement age; 42.4 (6) withdrawal; and 42.5 (7) disablement. 42.6 The contract must include provisions for the preparation of cost analyses by the 42.7 jointly retained actuary for proposed legislation that include changes in benefit provisions 42.8 or funding policies prior to their consideration by the Legislative Commission on Pensions 42.9 and Retirement. 42.10 (d) The actuary retained by the joint retirement systems shall annually prepare a 42.11 report to the legislature, including a commentary on the actuarial valuation calculations 42.12 for the plans named in paragraph (b) and summarizing the results of the actuarial valuation 42.13 calculations. The actuary shall include with the report the actuary's recommendations 42.14 to the legislature concerning the appropriateness of the support rates to achieve proper 42.15 funding of the retirement plans by the required funding dates. The actuary shall, as part 42.16 of the quadrennial experience study, include recommendations to the legislature on the 42.17 appropriateness of the actuarial valuation assumptions required for evaluation in the study. 42.18 (e) If the actuarial gain and loss analysis in the actuarial valuation calculations 42.19 indicates a persistent pattern of sizable gains or losses, as directed by the joint retirement 42.20 systems or as requested by the chair of the Legislative Commission on Pensions and 42.21 Retirement, the actuary shall prepare a special experience study for a plan listed in 42.22 paragraph (b), clause (3), (4), (5), (6), (8), (9), (10), (11), (12),(13),or(14)(13), in the 42.23 manner provided for in the standards for actuarial work adopted by the commission. 42.24 (f) The term of the contract between the joint retirement systems and the actuary 42.25 retained may not exceed five years. The joint retirement system administrative officers 42.26 shall establish procedures for the consideration and selection of contract bidders and 42.27 the requirements for the contents of an actuarial services contract under this section. 42.28 The procedures and requirements must be submitted to the Legislative Commission on 42.29 Pensions and Retirement for review and comment prior to final approval by the joint 42.30 administrators. The contract is subject to the procurement procedures under chapter 16C. 42.31 The consideration of bids and the selection of a consulting actuarial firm by the chief 42.32 administrative officers must occur at a meeting that is open to the public and reasonable 42.33 timely public notice of the date and the time of the meeting and its subject matter must 42.34 be given. 43.1 (g) The actuarial services contract may not limit the ability of the Minnesota 43.2 legislature and its standing committees and commissions to rely on the actuarial results 43.3 of the work prepared under the contract. 43.4 (h) The joint retirement systems shall designate one of the retirement system 43.5 executive directors as the actuarial services contract manager. 43.6 Sec. 33. Minnesota Statutes 2005 Supplement, section 356.215, subdivision 8, is 43.7 amended to read: 43.8 Subd. 8. Interest and salary assumptions. (a) The actuarial valuation must use 43.9 the applicable following preretirement interest assumption and the applicable following 43.10 postretirement interest assumption:43.11 preretirement postretirement 43.12 interest rate interest rate 43.13 plan assumption assumption 43.14 general state employees retirement plan 8.5% 6.0% 43.15 correctional state employees retirement 43.16 plan 8.5 6.0 43.17 State Patrol retirement plan 8.5 6.0 43.18 legislators retirement plan 8.5 6.0 43.19 elective state officers retirement plan 8.5 6.0 43.20 judges retirement plan 8.5 6.0 43.21 general public employees retirement 43.22 plan 8.5 6.0 43.23 public employees police and fire 43.24 retirement plan 8.5 6.0 43.25 local government correctional service 43.26 retirement plan 8.5 6.0 43.27 teachers retirement plan 8.5 6.0 43.28 Minneapolis employees retirement plan 6.0 5.0 43.29 Duluth teachers retirement plan 8.5 8.5 43.30 44.11 (b) The actuarial valuation must use the applicable following single rate future salary 44.12 increase assumption, the applicable following modified single rate future salary increase 44.13 assumption, or the applicable following graded rate future salary increase assumption: 44.14 (1) single rate future salary increase assumptionMinneapolis teachers retirement plan8.58.543.31 St. Paul teachers retirement plan 8.5 8.5 44.1 Minneapolis Police Relief Association 6.0 6.0 44.2 Fairmont Police Relief Association 5.0 5.0 44.3 Minneapolis Fire Department Relief 44.4 Association 6.0 6.0 44.5 Virginia Fire Department Relief 44.6 Association 5.0 5.0 44.7 Bloomington Fire Department Relief 44.8 Association 6.0 6.0 44.9 local monthly benefit volunteer 44.10 firefighters relief associations 5.0 5.044.15 future salary 44.16 plan increase assumption 44.17 legislators retirement plan 5.0% 44.18 elective state officers retirement plan 5.0 44.19 judges retirement plan 5.0 44.20 Minneapolis Police Relief Association 4.0 44.21 Fairmont Police Relief Association 3.5 44.22 Minneapolis Fire Department Relief 44.23 Association 4.0 44.24 Virginia Fire Department Relief Association 3.5 44.25 Bloomington Fire Department Relief 44.26 Association 4.0 44.27 (2) modified single rate future salary increase assumption45.1 future salary 45.2 plan increase assumption 45.3 the prior calendar year amount 45.4 increased first by 1.0198 percent to 45.5 prior fiscal year date and then increased 45.6 Minneapolis employees by 4.0 percent annually for each future 45.7 retirement plan year 45.8 (3) select and ultimate future salary increase assumption or graded rate future salary 45.9 increase assumption45.10 future salary 45.11 plan increase assumption 45.12 general state employees 45.13 retirement plan select calculation and assumption A 45.14 correctional state employees 45.15 retirement plan assumption 45.28 The select calculation is: during the ten-year 45.29 select period, a designated percent is 45.30 multiplied by the result of ten minus T, 45.31 where T is the number of completed years of 45.32 service, and is added to the applicable future 46.1 salary increase assumption. The designated 46.2 percent is 0.2 percent for the correctional 46.3 state employees retirement plan, the State 46.4 Patrol retirement plan, the public employees 46.5 police and fire plan, and the local government 46.6 correctional service plan; and 0.3 percent for 46.7 the general state employees retirement plan, 46.8 the general public employees retirement 46.9 plan, the teachers retirement plan, the Duluth 46.10 Teachers Retirement Fund Association, 46.11 and the St. Paul Teachers Retirement 46.12 Fund AssociationHG 45.16 State Patrol retirement plan assumptionHG 45.17 general public employees 45.18 retirement plan select calculation and assumption B 45.19 public employees police and fire 45.20 fund retirement plan assumption C 45.21 local government correctional 45.22 service retirement plan assumptionHG 45.23 teachers retirement plan assumption D 45.24 Duluth teachers retirement plan assumption E 45.25Minneapolis teachers retirement45.26planassumption F45.27 St. Paul teachers retirement plan assumptionGF; and 0.4 percent for the46.13Minneapolis Teachers Retirement Fund46.14Association. 46.15 The ultimate future salary increase assumption is:46.16 age A B C D E 48.12 (c) The actuarial valuation must use the applicable following payroll growth 48.13 assumption for calculating the amortization requirement for the unfunded actuarial 48.14 accrued liability where the amortization retirement is calculated as a level percentage 48.15 of an increasing payroll:FGFHG 46.17 16 6.95% 6.95% 11.50% 8.20% 8.00%6.50%6.90% 7.7500 46.18 17 6.90 6.90 11.50 8.15 8.006.506.90 7.7500 46.19 18 6.85 6.85 11.50 8.10 8.006.506.90 7.7500 46.20 19 6.80 6.80 11.50 8.05 8.006.506.90 7.7500 46.21 20 6.75 6.40 11.50 6.00 6.906.506.90 7.7500 46.22 21 6.75 6.40 11.50 6.00 6.906.506.90 7.1454 46.23 22 6.75 6.40 11.00 6.00 6.906.506.90 7.0725 46.24 23 6.75 6.40 10.50 6.00 6.856.506.85 7.0544 46.25 24 6.75 6.40 10.00 6.00 6.806.506.80 7.0363 46.26 25 6.75 6.40 9.50 6.00 6.756.506.75 7.0000 46.27 26 6.75 6.36 9.20 6.00 6.706.506.70 7.0000 46.28 27 6.75 6.32 8.90 6.00 6.656.506.65 7.0000 46.29 28 6.75 6.28 8.60 6.00 6.606.506.60 7.0000 46.30 29 6.75 6.24 8.30 6.00 6.556.506.55 7.0000 46.31 30 6.75 6.20 8.00 6.00 6.506.506.50 7.0000 46.32 31 6.75 6.16 7.80 6.00 6.456.506.45 7.0000 47.1 32 6.75 6.12 7.60 6.00 6.406.506.40 7.0000 47.2 33 6.75 6.08 7.40 6.00 6.356.506.35 7.0000 47.3 34 6.75 6.04 7.20 6.00 6.306.506.30 7.0000 47.4 35 6.75 6.00 7.00 6.00 6.256.506.25 7.0000 47.5 36 6.75 5.96 6.80 6.00 6.206.506.20 6.9019 47.6 37 6.75 5.92 6.60 6.00 6.156.506.15 6.8074 47.7 38 6.75 5.88 6.40 5.90 6.106.506.10 6.7125 47.8 39 6.75 5.84 6.20 5.80 6.056.506.05 6.6054 47.9 40 6.75 5.80 6.00 5.70 6.006.506.00 6.5000 47.10 41 6.75 5.76 5.90 5.60 5.906.505.95 6.3540 47.11 42 6.75 5.72 5.80 5.50 5.806.505.90 6.2087 47.12 43 6.65 5.68 5.70 5.40 5.706.505.85 6.0622 47.13 44 6.55 5.64 5.60 5.30 5.606.505.80 5.9048 47.14 45 6.45 5.60 5.50 5.20 5.506.505.75 5.7500 47.15 46 6.35 5.56 5.45 5.10 5.406.405.70 5.6940 47.16 47 6.25 5.52 5.40 5.00 5.306.305.65 5.6375 47.17 48 6.15 5.48 5.35 5.00 5.206.205.60 5.5822 47.18 49 6.05 5.44 5.30 5.00 5.106.105.55 5.5404 47.19 50 5.95 5.40 5.25 5.00 5.006.005.50 5.5000 47.20 51 5.85 5.36 5.25 5.00 5.005.905.45 5.4384 47.21 52 5.75 5.32 5.25 5.00 5.005.805.40 5.3776 47.22 53 5.65 5.28 5.25 5.00 5.005.705.35 5.3167 47.23 54 5.55 5.24 5.25 5.00 5.005.605.30 5.2826 47.24 55 5.45 5.20 5.25 5.00 5.005.505.25 5.2500 47.25 56 5.35 5.16 5.25 5.00 5.005.405.20 5.2500 47.26 57 5.25 5.12 5.25 5.00 5.005.305.15 5.2500 47.27 58 5.25 5.08 5.25 5.10 5.005.205.10 5.2500 47.28 59 5.25 5.04 5.25 5.20 5.005.105.05 5.2500 47.29 60 5.25 5.00 5.25 5.30 5.005.005.00 5.2500 48.1 61 5.25 5.00 5.25 5.40 5.005.005.00 5.2500 48.2 62 5.25 5.00 5.25 5.50 5.005.005.00 5.2500 48.3 63 5.25 5.00 5.25 5.60 5.005.005.00 5.2500 48.4 64 5.25 5.00 5.25 5.70 5.005.005.00 5.2500 48.5 65 5.25 5.00 5.25 5.70 5.005.005.00 5.2500 48.6 66 5.25 5.00 5.25 5.70 5.005.005.00 5.2500 48.7 67 5.25 5.00 5.25 5.70 5.005.005.00 5.2500 48.8 68 5.25 5.00 5.25 5.70 5.005.005.00 5.2500 48.9 69 5.25 5.00 5.25 5.70 5.005.005.00 5.2500 48.10 70 5.25 5.00 5.25 5.70 5.005.005.00 5.2500 48.11 71 5.25 5.00 5.7048.16 payroll growth 48.17 plan assumption 48.18 general state employees retirement plan 5.00% 48.19 correctional state employees retirement plan 5.00 48.20 State Patrol retirement plan 5.00 48.21 legislators retirement plan 5.00 48.22 elective state officers retirement plan 5.00 48.23 judges retirement plan 5.00 48.24 general public employees retirement plan 6.00 48.25 public employees police and fire retirement 48.26 plan 6.00 48.27 local government correctional service 48.28 retirement plan 6.00 48.29 teachers retirement plan 5.00 48.30 Duluth teachers retirement plan 5.00 49.1 49.3 Sec. 34. Minnesota Statutes 2004, section 356.215, subdivision 11, is amended to read: 49.4 Subd. 11. Amortization contributions. (a) In addition to the exhibit indicating the 49.5 level normal cost, the actuarial valuation must contain an exhibit indicating the additional 49.6 annual contribution sufficient to amortize the unfunded actuarial accrued liability. For 49.7 funds governed by chapters 3A, 352, 352B, 352C, 353, 354, 354A, and 490, the additional 49.8 contribution must be calculated on a level percentage of covered payroll basis by the 49.9 established date for full funding in effect when the valuation is prepared. For funds 49.10 governed by chapter 3A, sections 352.90 through 352.951, chapters 352B, 352C, sections 49.11 353.63 through 353.68, and chapters 353C, 354A, and 490, the level percent additional 49.12 contribution must be calculated assuming annual payroll growth of 6.5 percent. For funds 49.13 governed by sections 352.01 through 352.86 and chapter 354, the level percent additional 49.14 contribution must be calculated assuming an annual payroll growth of five percent. For the 49.15 fund governed by sections 353.01 through 353.46, the level percent additional contribution 49.16 must be calculated assuming an annual payroll growth of six percent. For all other funds, 49.17 the additional annual contribution must be calculated on a level annual dollar amount basis. 49.18 (b) For any fund other than the Minneapolis Employees Retirement Fund and the 49.19 Public Employees Retirement Association general plan, if there has not been a change in 49.20 the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a 49.21 change in the benefit plan governing annuities and benefits payable from the fund, a 49.22 change in the actuarial cost method used in calculating the actuarial accrued liability of all 49.23 or a portion of the fund, or a combination of the three, which change or changes by itself 49.24 or by themselves without inclusion of any other items of increase or decrease produce a 49.25 net increase in the unfunded actuarial accrued liability of the fund, the established date for 49.26 full funding is the first actuarial valuation date occurring after June 1, 2020. 49.27 (c) For any fund or plan other than the Minneapolis Employees Retirement Fund and 49.28 the Public Employees Retirement Association general plan, if there has been a change in 49.29 any or all of the actuarial assumptions used for calculating the actuarial accrued liability 49.30 of the fund, a change in the benefit plan governing annuities and benefits payable from 49.31 the fund, a change in the actuarial cost method used in calculating the actuarial accrued 49.32 liability of all or a portion of the fund, or a combination of the three, and the change or 49.33 changes, by itself or by themselves and without inclusion of any other items of increase or 50.1 decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the 50.2 established date for full funding must be determined using the following procedure: 50.3 (i) the unfunded actuarial accrued liability of the fund must be determined in 50.4 accordance with the plan provisions governing annuities and retirement benefits and the 50.5 actuarial assumptions in effect before an applicable change; 50.6 (ii) the level annual dollar contribution or level percentage, whichever is applicable, 50.7 needed to amortize the unfunded actuarial accrued liability amount determined under item 50.8 (i) by the established date for full funding in effect before the change must be calculated 50.9 using the interest assumption specified in subdivision 8 in effect before the change; 50.10 (iii) the unfunded actuarial accrued liability of the fund must be determined in 50.11 accordance with any new plan provisions governing annuities and benefits payable from 50.12 the fund and any new actuarial assumptions and the remaining plan provisions governing 50.13 annuities and benefits payable from the fund and actuarial assumptions in effect before 50.14 the change; 50.15 (iv) the level annual dollar contribution or level percentage, whichever is applicable, 50.16 needed to amortize the difference between the unfunded actuarial accrued liability amount 50.17 calculated under item (i) and the unfunded actuarial accrued liability amount calculated 50.18 under item (iii) over a period of 30 years from the end of the plan year in which the 50.19 applicable change is effective must be calculated using the applicable interest assumption 50.20 specified in subdivision 8 in effect after any applicable change; 50.21 (v) the level annual dollar or level percentage amortization contribution under item 50.22 (iv) must be added to the level annual dollar amortization contribution or level percentage 50.23 calculated under item (ii); 50.24 (vi) the period in which the unfunded actuarial accrued liability amount determined 50.25 in item (iii) is amortized by the total level annual dollar or level percentage amortization 50.26 contribution computed under item (v) must be calculated using the interest assumption 50.27 specified in subdivision 8 in effect after any applicable change, rounded to the nearest 50.28 integral number of years, but not to exceed 30 years from the end of the plan year in 50.29 which the determination of the established date for full funding using the procedure set 50.30 forth in this clause is made and not to be less than the period of years beginning in the 50.31 plan year in which the determination of the established date for full funding using the 50.32 procedure set forth in this clause is made and ending by the date for full funding in effect 50.33 before the change; and 50.34 (vii) the period determined under item (vi) must be added to the date as of which 50.35 the actuarial valuation was prepared and the date obtained is the new established date 50.36 for full funding. 51.1 (d) For the Minneapolis Employees Retirement Fund, the established date for full 51.2 funding is June 30, 2020. 51.3 (e) For the general employees retirement plan of the Public Employees Retirement 51.4 Association, the established date for full funding is June 30, 2031. 51.5 (f) For the Teachers Retirement Association, the established date for full funding is 51.6 June 30, 2037. 51.7 (g) For the retirement plans for which the annual actuarial valuation indicates an 51.8 excess of valuation assets over the actuarial accrued liability, the valuation assets in 51.9 excess of the actuarial accrued liability must be recognized as a reduction in the current 51.10 contribution requirements by an amount equal to the amortization of the excess expressed 51.11 as a level percentage of pay over a 30-year period beginning anew with each annual 51.12 actuarial valuation of the plan. 51.13 Sec. 35. Minnesota Statutes 2004, section 356.30, subdivision 3, is amended to read: 51.14 Subd. 3. Covered plans. This section applies to the following retirement plans: 51.15 (1) the general state employees retirement plan of the Minnesota State Retirement 51.16 System, established under chapter 352; 51.17 (2) the correctional state employees retirement plan of the Minnesota State 51.18 Retirement System, established under chapter 352; 51.19 (3) the unclassified employees retirement program, established under chapter 352D; 51.20 (4) the State Patrol retirement plan, established under chapter 352B; 51.21 (5) the legislators retirement plan, established under chapter 3A; 51.22 (6) the elective state officers' retirement plan, established under chapter 352C; 51.23 (7) the general employees retirement plan of the Public Employees Retirement 51.24 Association, established under chapter 353; 51.25 (8) the public employees police and fire retirement plan of the Public Employees 51.26 Retirement Association, established under chapter 353; 51.27 (9) the local government correctional service retirement plan of the Public 51.28 Employees Retirement Association, established under chapter 353E; 51.29 (10) the Teachers Retirement Association, established under chapter 354; 51.30 (11) the Minneapolis Employees Retirement Fund, established under chapter 422A; 51.31Minneapolis teachers retirement plan5.0049.2 St. Paul teachers retirement plan 5.00(12) the Minneapolis Teachers Retirement Fund Association, established under51.32chapter 354A;51.33(13)(12) the St. Paul Teachers Retirement Fund Association, established under 51.34 chapter 354A; 52.1(14)(13) the Duluth Teachers Retirement Fund Association, established under 52.2 chapter 354A; and 52.3(15)(14) the judges' retirement fund, established by sections 490.121 to 490.132. 52.4 Sec. 36. Minnesota Statutes 2004, section 356.302, subdivision 7, is amended to read: 52.5 Subd. 7. Covered retirement plans. This section applies to the following 52.6 retirement plans: 52.7 (1) the general state employees retirement plan of the Minnesota State Retirement 52.8 System, established by chapter 352; 52.9 (2) the unclassified state employees retirement program of the Minnesota State 52.10 Retirement System, established by chapter 352D; 52.11 (3) the general employees retirement plan of the Public Employees Retirement 52.12 Association, established by chapter 353; 52.13 (4) the Teachers Retirement Association, established by chapter 354; 52.14 (5) the Duluth Teachers Retirement Fund Association, established by chapter 354A; 52.15(6) the Minneapolis Teachers Retirement Fund Association, established by chapter52.16354A;52.17(7)(6) the St. Paul Teachers Retirement Fund Association, established by chapter 52.18 354A; 52.19(8)(7) the Minneapolis Employees Retirement Fund, established by chapter 422A; 52.20(9)(8) the state correctional employees retirement plan of the Minnesota State 52.21 Retirement System, established by chapter 352; 52.22(10)(9) the State Patrol retirement plan, established by chapter 352B; 52.23(11)(10) the public employees police and fire plan of the Public Employees 52.24 Retirement Association, established by chapter 353; 52.25(12)(11) the local government correctional service retirement plan of the Public 52.26 Employees Retirement Association, established by chapter 353E; and 52.27(13)(12) the judges' retirement plan, established by sections 490.121 to 490.132. 52.28 Sec. 37. Minnesota Statutes 2004, section 356.303, subdivision 4, is amended to read: 52.29 Subd. 4. Covered retirement plans. This section applies to the following 52.30 retirement plans: 52.31 (1) the legislators retirement plan, established by chapter 3A; 52.32 (2) the general state employees retirement plan of the Minnesota State Retirement 52.33 System, established by chapter 352; 53.1 (3) the correctional state employees retirement plan of the Minnesota State 53.2 Retirement System, established by chapter 352; 53.3 (4) the State Patrol retirement plan, established by chapter 352B; 53.4 (5) the elective state officers retirement plan, established by chapter 352C; 53.5 (6) the unclassified state employees retirement program, established by chapter 53.6 352D; 53.7 (7) the general employees retirement plan of the Public Employees Retirement 53.8 Association, established by chapter 353; 53.9 (8) the public employees police and fire plan of the Public Employees Retirement 53.10 Association, established by chapter 353; 53.11 (9) the local government correctional service retirement plan of the Public 53.12 Employees Retirement Association, established by chapter 353E; 53.13 (10) the Teachers Retirement Association, established by chapter 354; 53.14 (11) the Duluth Teachers Retirement Fund Association, established by chapter 354A; 53.15(12) the Minneapolis Teachers Retirement Fund Association, established by chapter53.16354A;53.17(13)(12) the St. Paul Teachers Retirement Fund Association, established by chapter 53.18 354A; 53.19(14)(13) the Minneapolis Employees Retirement Fund, established by chapter 53.20 422A; and 53.21(15)(14) the judges' retirement fund, established by sections 490.121 to 490.132. 53.22 Sec. 38. Minnesota Statutes 2004, section 356.315, is amended by adding a subdivision 53.23 to read: 53.24 Subd. 1a. Coordinated plan members. The applicable benefit accrual rate is 53.25 1.4 percent. 53.26 Sec. 39. Minnesota Statutes 2004, section 356.315, is amended by adding a subdivision 53.27 to read: 53.28 Subd. 2b. Certain coordinated program members. The applicable benefit accrual 53.29 rate is 1.9 percent. 53.30 Sec. 40. Minnesota Statutes 2004, section 356.42, subdivision 3, is amended to read: 53.31 Subd. 3. Covered retirement plans. The postretirement adjustment provided in 53.32 this section applies to the following retirement funds: 54.1 (1) the general employees retirement plans of the Public Employees Retirement 54.2 Association; 54.3 (2) the public employees police and fire plan of the Public Employees Retirement 54.4 Association; 54.5 (3) the teachers retirement association; 54.6 (4) the State Patrol retirement plan; 54.7 (5) the state employees retirement plan of the Minnesota State Retirement System; 54.8(6) the Minneapolis Teachers Retirement Fund Association established under54.9chapter 354A;54.10(7)(6) the St. Paul Teachers Retirement Fund Association established under chapter 54.11 354A; and 54.12(8)(7) the Duluth Teachers Retirement Fund Association established under chapter 54.13 354A. 54.14 Sec. 41. Minnesota Statutes 2004, section 356.465, subdivision 3, is amended to read: 54.15 Subd. 3. Covered retirement plans. The provisions of this section apply to the 54.16 following retirement plans: 54.17 (1) the general state employees retirement plan of the Minnesota State Retirement 54.18 System established under chapter 352; 54.19 (2) the correctional state employees retirement plan of the Minnesota State 54.20 Retirement System established under chapter 352; 54.21 (3) the State Patrol retirement plan established under chapter 352B; 54.22 (4) the legislators retirement plan established under chapter 3A; 54.23 (5) the judges retirement plan established under chapter 490; 54.24 (6) the general employees retirement plan of the Public Employees Retirement 54.25 Association established under chapter 353; 54.26 (7) the public employees police and fire plan of the Public Employees Retirement 54.27 Association established under chapter 353; 54.28 (8) the teachers retirement plan established under chapter 354; 54.29 (9) the Duluth Teachers Retirement Fund Association established under chapter 54.30 354A; 54.31 (10) the St. Paul Teachers Retirement Fund Association established under chapter 54.32 354A; 54.33(11) the Minneapolis Teachers Retirement Fund Association established under54.34chapter 354A;55.1(12)(11) the Minneapolis employees retirement plan established under chapter 55.2 422A; 55.3(13)(12) the Minneapolis Firefighters Relief Association established under chapter 55.4 423C; 55.5(14)(13) the Minneapolis Police Relief Association established under chapter 55.6 423B; and 55.7(15)(14) the local government correctional service retirement plan of the Public 55.8 Employees Retirement Association established under chapter 353E. 55.9 Sec. 42. Minnesota Statutes 2004, section 423A.02, subdivision 1b, is amended to read: 55.10 Subd. 1b. Additional amortization state aid. (a) Annually, on October 1, the 55.11 commissioner of revenue shall allocate the additional amortization state aid transferred 55.12 under section 69.021, subdivision 11, to: 55.13 (1) all police or salaried firefighters relief associations governed by and in full 55.14 compliance with the requirements of section 69.77, that had an unfunded actuarial accrued 55.15 liability in the actuarial valuation prepared under sections 356.215 and 356.216 as of the 55.16 preceding December 31; 55.17 (2) all local police or salaried firefighter consolidation accounts governed by chapter 55.18 353A that are certified by the executive director of the public employees retirement 55.19 association as having for the current fiscal year an additional municipal contribution 55.20 amount under section 353A.09, subdivision 5, paragraph (b), and that have implemented 55.21 section 353A.083, subdivision 1, if the effective date of the consolidation preceded May 55.22 24, 1993, and that have implemented section 353A.083, subdivision 2, if the effective date 55.23 of the consolidation preceded June 1, 1995; and 55.24 (3) the municipalities that are required to make an additional municipal contribution 55.25 under section 353.665, subdivision 8, for the duration of the required additional 55.26 contribution. 55.27 (b) The commissioner shall allocate the state aid on the basis of the proportional share 55.28 of the relief association or consolidation account of the total unfunded actuarial accrued 55.29 liability of all recipient relief associations and consolidation accounts as of December 31, 55.30 1993, for relief associations, and as of June 30, 1994, for consolidation accounts. 55.31 (c) Beginning October 1, 2000, and annually thereafter, the commissioner shall 55.32 allocate the state aid, including any state aid in excess of the limitation in subdivision 55.33 4, on the following basis: 56.1 (1) 64.5 percent to the municipalities to which section 353.665, subdivision 56.2 8, paragraph (b), or 353A.09, subdivision 5, paragraph (b), apply for distribution in 56.3 accordance with paragraph (b) and subject to the limitation in subdivision 4; 56.4 (2) 34.2 percent to the city of Minneapolis to fund any unfunded actuarial accrued 56.5 liability in the actuarial valuation prepared under sections 356.215 and 356.216 as of the 56.6 preceding December 31 for the Minneapolis Police Relief Association or the Minneapolis 56.7 Fire Department Relief Association; and 56.8 (3) 1.3 percent to the city of Virginia to fund any unfunded actuarial accrued liability 56.9 in the actuarial valuation prepared under sections 356.215 and 356.216 as of the preceding 56.10 December 31 for the Virginia Fire Department Relief Association. 56.11 If there is no unfunded actuarial accrued liability in both the Minneapolis Police 56.12 Relief Association and the Minneapolis Fire Department Relief Association as disclosed 56.13 in the most recent actuarial valuations for the relief associations prepared under sections 56.14 356.215 and 356.216, the commissioner shall allocate that 34.2 percent of the aid as 56.15 follows: 49 percent to theMinneapolisTeachers RetirementFundAssociation, 21 percent 56.16 to the St. Paul Teachers Retirement Fund Association, and 30 percent as additional 56.17 funding to support minimum fire state aid for volunteer firefighters relief associations. 56.18 If there is no unfunded actuarial accrued liability in the Virginia Fire Department Relief 56.19 Association as disclosed in the most recent actuarial valuation for the relief association 56.20 prepared under sections 356.215 and 356.216, the commissioner shall allocate that 1.3 56.21 percent of the aid as follows: 49 percent to theMinneapolisTeachers RetirementFund56.22 Association, 21 percent to the St. Paul Teachers Retirement Fund Association, and 30 56.23 percent as additional funding to support minimum fire state aid for volunteer firefighters 56.24 relief associations. The allocation must be made by the commissioner at the same time and 56.25 under the same procedures as specified in subdivision 3. With respect to theMinneapolis56.26Teachers Retirement Fund Association or theSt. Paul Teachers Retirement Fund 56.27 Association, annually, beginning on July 1, 2005, if the applicable teacher's association 56.28 five-year average time-weighted rate of investment return does not equal or exceed the 56.29 performance of a composite portfolio assumed passively managed (indexed) invested ten 56.30 percent in cash equivalents, 60 percent in bonds and similar debt securities, and 30 percent 56.31 in domestic stock calculated using the formula under section 11A.04, clause (11), the aid 56.32 allocation to that retirement fund under this section ceases until the five-year annual rate 56.33 of investment return equals or exceeds the performance of that composite portfolio. 56.34 (d) The amounts required under this subdivision are annually appropriated to the 56.35 commissioner of revenue. 57.1 Sec. 43. MTRFA EMPLOYEES. 57.2 Effective June 30, 2006, the Minneapolis Teachers Retirement Fund Association 57.3 employees have their employment with the Minneapolis Teachers Retirement Fund 57.4 Association terminated and, effective July 1, 2006, the Minneapolis Teachers Retirement 57.5 Fund Association employees, excluding the Executive Director, become employees 57.6 of the Teachers Retirement Association until December 31, 2007. The commissioner 57.7 of employee relations shall place employees from the former Minneapolis Teachers 57.8 Retirement Fund Association into state service in their proper classifications, except that 57.9 employees are appointed without examination and must be compensated at their current 57.10 hourly salary rate. Employees must have their accumulated, but unused, vacation leave 57.11 balance as of June 30, 2006, posted to their credit by the Teachers Retirement Association 57.12 but if the employee has vacation time in excess of the applicable maximum no additional 57.13 vacation may accrue until the employee's balance falls below the maximum permitted 57.14 by the state for the employee's position. The employees must receive length of service 57.15 credit for vacation leave accrual for time served at the Minneapolis Teachers Retirement 57.16 Fund Association. Minneapolis Teachers Retirement Fund Association employees who 57.17 become employees of the Teachers Retirement Association effective on July 1, 2006 57.18 must be considered to have completed six months of continuous service for vacation use 57.19 purposes. Employees of the former Minneapolis Teachers Retirement Fund Association 57.20 appointed to the classified service are subject to a probationary period under the collective 57.21 bargaining agreement or compensation plan applicable to the employee's position at the 57.22 Teachers Retirement Association. Effective July 1, 2006, all transferred employees must 57.23 be enrolled in the state employees' group insurance program as provided in Minnesota 57.24 Statutes, sections 43A.22 to 43A.31 and the commissioner of employee relations shall 57.25 provide open enrollment in all state employee health and dental insurance plans with 57.26 no limitation on preexisting conditions except as specified in existing state employee 57.27 certificates of coverage. The commissioner of employee relations shall provide these 57.28 transferred employees with the opportunity to purchase optional life and disability 57.29 insurance as provided by the state group insurance program in accordance with the 57.30 policies of the department of employee relations. 57.31 Sec. 44. MTRFA ARTICLES AND BYLAWS; REPEAL; APPLICABILITY. 57.32 (a) The articles of incorporation and bylaws of the Minneapolis Teachers Retirement 57.33 Fund Association are repealed and have application only as provided in section 9, 57.34 subdivision 6, and in paragraph (b). 58.1 (b) The articles of incorporation and bylaws of the Minneapolis Teachers Retirement 58.2 Fund Association only apply to members of the former Minneapolis Teachers Retirement 58.3 Fund Association with service credit in the plan on or before June 30, 2006, and apply 58.4 solely for purposes of determining the retirement annuity for or benefit on behalf of a 58.5 member of the basic program of that retirement plan. 58.6 (c) No annuity adjustment or increase under article 30 of the articles of incorporation 58.7 of the Minneapolis Teachers Retirement Fund Association is applicable or payable after 58.8 June 30, 2006. 58.9 Sec. 45. REPEALER. 58.10 Minnesota Statutes 2004, sections 354A.051; 354A.105; 354A.23, subdivision 1; 58.11 and 354A.28, are repealed effective June 30, 2006. 58.12 Sec. 46. EFFECTIVE DATE. 58.13 Sections 2 to 45 are effective July 1, 2006, except that section 9, subdivision 7, is 58.14 effective the day following final enactment. 58.15 ARTICLE 4 58.16 STATE BOARD OF INVESTMENT 58.17 Section 1. Laws 2005, chapter 156, article 1, section 8, is amended to read:58.18 58.20 Sec. 2. Minnesota Statutes 2005 Supplement, section 11A.04, is amended to read: 58.21 11A.04 DUTIES AND POWERS. 58.22 The state board shall: 58.23 (1) Act as trustees for each fund for which it invests or manages money in 58.24 accordance with the standard of care set forth in section 11A.09 if state assets are involved 58.25 and in accordance with chapter 356A if pension assets are involved. 58.26 (2) Formulate policies and procedures deemed necessary and appropriate to carry 58.27 out its functions. Procedures adopted by the board must allow fund beneficiaries and 58.28 members of the public to become informed of proposed board actions. Procedures and 58.29 policies of the board are not subject to the Administrative Procedure Act. 58.30 (3) Employ an executive director as provided in section 11A.07. 58.31 (4) Employ investment advisors and consultants as it deems necessary. 59.1 (5) Prescribe policies concerning personal investments of all employees of the board 59.2 to prevent conflicts of interest. 59.3 (6) Maintain a record of its proceedings. 59.4 (7) As it deems necessary, establish advisory committees subject to section 15.059 to 59.5 assist the board in carrying out its duties. 59.6 (8) Not permit state funds to be used for the underwriting or direct purchase of 59.7 municipal securities from the issuer or the issuer's agent. 59.8 (9) Direct the commissioner of finance to sell property other than money that has 59.9 escheated to the state when the board determines that sale of the property is in the best 59.10 interest of the state. Escheated property must be sold to the highest bidder in the manner 59.11 and upon terms and conditions prescribed by the board. 59.12 (10) Undertake any other activities necessary to implement the duties and powers 59.13 set forth in this section. 59.14 (11) Establish a formula or formulas to measure management performance and 59.15 return on investment. Public pension funds in the state shall utilize the formula or 59.16 formulas developed by the state board. 59.17 (12) Except as otherwise provided in article XI, section 8, of the Constitution of the 59.18 state of Minnesota, employ, at its discretion, qualified private firms to invest and manage 59.19 the assets of funds over which the state board has investment management responsibility. 59.20 There is annually appropriated to the state board, from the assets of the funds for which 59.21 the state board utilizes a private investment manager, sums sufficient to pay the costs of 59.22 employing private firms. Each year, by January 15, the board shall report to the governor 59.23 and legislature on the cost and the investment performance of each investment manager 59.24 employed by the board. 59.25 (13) Adopt an investment policy statement that includes investment objectives, asset 59.26 allocation, and the investment management structure for the retirement fund assets under 59.27 its control. The statement may be revised at the discretion of the state board. The state 59.28 board shall seek the advice of the council regarding its investment policy statement. 59.29 Adoption of the statement is not subject to chapter 14. 59.30 (14) Adopt a compensation plan setting the terms and conditions of employment for 59.31 unclassified board employees who are not covered by a collective bargaining agreement. 59.32 There is annually appropriated to the state board, from the assets of the funds for 59.33 which the state board provides investment services, sums sufficient to pay the costs of 59.34 all necessary expenses for the administration of the board. These sums will be deposited 59.35 in the State Board of Investment operating account, which must be established by the 59.36 commissioner of finance. 60.1 Sec. 3. Minnesota Statutes 2005 Supplement, section 11A.07, subdivision 4, is 60.2 amended to read: 60.3 Subd. 4. Duties and powers. The director, at the direction of the state board, shall: 60.4 (1) plan, direct, coordinate, and execute administrative and investment functions 60.5 in conformity with the policies and directives of the state board and the requirements of 60.6 this chapter and of chapter 356A; 60.7 (2) prepare and submit biennial and annual budgets to the board and with the 60.8 approval of the board submit the budgets to the Department of Finance; 60.9 (3) employ professional and clerical staff as necessary. Employees whose primary 60.10 responsibility is to invest or manage money or employees who hold positions designated 60.11 as unclassified under section 43A.08, subdivision 1a, are in the unclassified service of the 60.12 state. Other employees are in the classified service. Unclassified employees who are 60.13 not covered by a collective bargaining agreement are employed under the terms and 60.14 conditions of the compensation plan approved under section 43A.18, subdivision 3b; 60.152,167,00058.19 Sec. 8. INVESTMENT BOARD 2,167,000 151,000(3)(4) report to the state board on all operations under the director's control and 60.16 supervision; 60.17(4)(5) maintain accurate and complete records of securities transactions and official 60.18 activities; 60.19(5)(6) establish a policy relating to the purchase and sale of securities on the basis of 60.20 competitive offerings or bids. The policy is subject to board approval; 60.21(6)(7) cause securities acquired to be kept in the custody of the commissioner of 60.22 finance or other depositories consistent with chapter 356A, as the state board deems 60.23 appropriate; 60.24(7)(8) prepare and file with the director of the Legislative Reference Library, by 60.25 December 31 of each year, a report summarizing the activities of the state board, the 60.26 council, and the director during the preceding fiscal year. The report must be prepared 60.27 so as to provide the legislature and the people of the state with a clear, comprehensive 60.28 summary of the portfolio composition, the transactions, the total annual rate of return, and 60.29 the yield to the state treasury and to each of the funds whose assets are invested by the 60.30 state board, and the recipients of business placed or commissions allocated among the 60.31 various commercial banks, investment bankers, and brokerage organizations. The report 60.32 must contain financial statements for funds managed by the board prepared in accordance 60.33 with generally accepted accounting principles; 60.34(8)(9) require state officials from any department or agency to produce and provide 60.35 access to any financial documents the state board deems necessary in the conduct of 60.36 its investment activities; 61.1(9)(10) receive and expend legislative appropriations; and 61.2(10)(11) undertake any other activities necessary to implement the duties and 61.3 powers set forth in this subdivision consistent with chapter 356A. 61.4 Sec. 4. Minnesota Statutes 2004, section 11A.07, subdivision 5, is amended to read: 61.5 Subd. 5. Apportionment of expenses.The executive director shall apportion the61.6actual expenses incurred by the board on an accrual basis among the several funds whose61.7assets are invested by the board based on the weighted average assets under management61.8during each quarter. The charge to each fund must be calculated, billed, and paid on a61.9quarterly basis in accordance with procedures for interdepartmental payments established61.10by the commissioner of finance. The amounts necessary to pay these charges are61.11appropriated from the investment earnings of each fund. Receipts must be credited to the61.12general fund as nondedicated receipts.The annual expenses incurred by the State Board 61.13 of Investment will be apportioned among the state general fund, the retirement funds 61.14 administered by the Minnesota State Retirement System, Public Employees Retirement 61.15 Association, and Teachers Retirement Association, and all other funds as follows: 61.16 (1) on a biennial basis, the State Board of Investment, in accordance with biennial 61.17 budget procedures established by the commissioner of finance, may request a direct 61.18 appropriation that represents the portion of the State Board of Investment expenses 61.19 necessary to provide investment services to the state general fund. This appropriation 61.20 must be deposited in the State Board of Investment operating account; 61.21 (2) the executive director shall apportion the actual expenses incurred by the State 61.22 Board of Investment, less the charge to the state general fund, among the funds whose 61.23 assets are invested by the State Board of Investment, with the exception of the state general 61.24 fund, based on the weighted average assets under management during the fiscal year. The 61.25 amounts necessary to pay these charges are apportioned from the investment earnings of 61.26 each fund. Receipts must be credited to the State Board of Investment operating account; 61.27 (3) the actual expenses apportioned and charged to the funds, with the exception 61.28 of the state general fund and the retirement funds administered by the Minnesota State 61.29 Retirement System, Public Employees Retirement Association, and Teachers Retirement 61.30 Association, must be calculated, billed, and paid on a quarterly basis in accordance with 61.31 procedures for interdepartmental payments established by the commissioner of finance; 61.32 and 61.33 (4) the annual estimated expenses to be incurred by the State Board of Investment 61.34 that will be payable by the retirement funds administered by the Minnesota State 61.35 Retirement System, Public Employees Retirement Association, and Teachers Retirement 62.1 Association must be deposited in the State Board of Investment operating account on the 62.2 first business day of each fiscal year. A reconciliation of the actual expenses compared to 62.3 the estimated costs must occur at the end of each fiscal year with any surplus or deficit 62.4 being credited or debited to each of the respective funds. The State Board of Investment 62.5 must present a statement of accrued actual expenses to each fund at the end of each 62.6 quarter during each fiscal year. 62.7 ARTICLE 5 62.8 BUDGET PRESENTATION OF 62.9 EMPLOYER PENSION CONTRIBUTIONS 62.10 Section 1. Minnesota Statutes 2004, section 43A.04, subdivision 12, is amended to 62.11 read: 62.12 Subd. 12. Total compensation reporting. (a) The commissioner, in consultation 62.13 with the commissioner of finance, shall report to the governor and the legislature by 62.14 January 15 each year on executive branch employee salary and benefits. The purpose of 62.15 the report is to assist in effective long-range planning and to provide data necessary to 62.16 compute annual and biennial costs related to the state workforce. The report must use data 62.17 available in the biennial budget system and other necessary sources. The report also must 62.18 be made available to the public in an electronic format. 62.19 (b) The report must be organized by agency. The report must list the salary or 62.20 hourly rate of pay for each agency employee. The report may list the employee by name 62.21 or by an identification number. 62.22 (c) The report must also include an estimate of the average cost to the state of 62.23 providing insurance and other benefits to a state employee. 62.24 (d) The report must also include the number of employees by agency or department, 62.25 separated by retirement plan membership, and for each plan, the total compensation, 62.26 the total employee retirement plan contribution, and the total employer retirement plan 62.27 contributions. 62.28 Sec. 2. EFFECTIVE DATE. 62.29 Section 1 is effective the day following final enactment. 62.30 ARTICLE 6 62.31 INVESTMENT PERFORMANCE REPORTING 62.32 Section 1. Minnesota Statutes 2004, section 356.219, is amended by adding a 62.33 subdivision to read: 63.1 Subd. 9. Data availability. Any information received by the state auditor under 63.2 this section, if the data are public, must be made available to individuals or organizations 63.3 which request that information. The state auditor is authorized to charge fees sufficient to 63.4 cover the cost of providing the requested information in usable formats. 63.5 Sec. 2. Minnesota Statutes 2004, section 356.219, is amended by adding a subdivision 63.6 to read: 63.7 Subd. 10. Pension performance reporting. In addition to report presentations 63.8 that the state auditor is required to provide elsewhere in this section, the state auditor 63.9 shall provide an analysis comparing the one year and the five year rate of return for each 63.10 pension fund and the benchmark rate of return for each fund. The state auditor shall select 63.11 the benchmark rate of return based on the best practice in the industry. 63.12 Sec. 3. EFFECTIVE DATE. 63.13 Sections 1 and 2 are effective the day following final enactment. 63.14 ARTICLE 7 63.15 STUDY OF COMPARATIVE 63.16 PUBLIC RETIREMENT PLAN PROVISIONS 63.17 Section 1. STUDY BY LEGISLATIVE COMMISSION ON PENSIONS AND 63.18 RETIREMENT. 63.19 (a) The Legislative Commission on Pensions and Retirement shall study the structure 63.20 and implications of procedures used by the Minnesota State Retirement System plans, 63.21 Public Employees Retirement Association plans, the Teachers Retirement Association, 63.22 the Minneapolis Employees Retirement Fund, the first class city teacher retirement fund 63.23 associations, and the Minneapolis police and fire relief associations to provide investment 63.24 performance based postretirement increases to plan benefit recipients. The study shall 63.25 include but not be limited to consideration of the ability of these systems offset the impact 63.26 of inflation; the cost, budget, and aid implications of these systems; and consistency 63.27 across plans. In addition, the study must compare Minnesota teacher retirement plans 63.28 with teacher pension plans in other states on the following items: normal retirement 63.29 age; penalties that attach to early retirement; taxation of benefits; and pension benefits, 63.30 including, but not limited to, the coordination with Social Security benefits, formula 63.31 multipliers, final average salary periods, and special early normal retirement provisions. 63.32 (b) The Legislative Commission on Pensions and Retirement shall produce a report 63.33 of the findings of the study. The Legislative Commission on Pensions and Retirement 64.1 shall include draft proposed legislation to implement any recommended changes included 64.2 in the report. 64.3 (c) The report must be filed by December 1, 2006, with the chairs of the Senate State 64.4 and Local Government Operations Committee, the Senate Finance Committee, the House 64.5 Government Operations and Veterans Affairs Committee, the House State Government 64.6 Finance Committee, and the House Ways and Means Committee. 64.7 Sec. 2. EFFECTIVE DATE. 64.8 Section 1 is effective the day following final enactment. 64.9 ARTICLE 8 64.10 STUDY OF STATEWIDE 64.11 RETIREMENT PLAN STRUCTURE 64.12 Section 1. STUDY BY LEGISLATIVE COMMISSION ON PENSIONS AND 64.13 RETIREMENT. 64.14 (a) The Legislative Commission on Pensions and Retirement shall study the structure 64.15 of the Minnesota combined investment funds under Minnesota Statutes, section 11A.14, 64.16 and the Minnesota postretirement investment fund under Minnesota Statutes, section 64.17 11A.18, including transfer requirements between these funds. 64.18 (b) The Legislative Commission on Pensions and Retirement shall produce a report 64.19 of the findings from the study. The Legislative Commission on Pensions and Retirement 64.20 shall include draft proposed legislation to implement any recommended changes included 64.21 in the report. 64.22 (c) The report must be filed by December 1, 2006, with the chairs of the Senate State 64.23 and Local Government Operations Committee, the Senate Finance Committee, the House 64.24 Government Operations and Veterans Affairs Committee, the House State Government 64.25 Finance Committee, and the House Ways and Means Committee. 64.26 Sec. 2. EFFECTIVE DATE. 64.27 Section 1 is effective the day following final enactment.