1.1                          A bill for an act 
  1.2             relating to retirement; actuarial reporting 
  1.3             requirements; modifying the definition of the 
  1.4             actuarial value of pension plan assets; amending 
  1.5             Minnesota Statutes 1996, section 356.215, subdivision 
  1.6             1. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1996, section 356.215, 
  1.9   subdivision 1, is amended to read: 
  1.10     Subdivision 1.  [DEFINITIONS.] (a) For the purposes of 
  1.11  sections 3.85 and 356.20 to 356.23, each of the following terms 
  1.12  in the following paragraphs have the meaning given:. 
  1.13     (1) (b) "Actuarial valuation" means a set of calculations 
  1.14  prepared by the actuary retained by the legislative commission 
  1.15  on pensions and retirement if so required under section 3.85, or 
  1.16  otherwise, by an approved actuary, to determine the normal cost 
  1.17  and the accrued actuarial liabilities of a benefit plan, 
  1.18  according to the entry age actuarial cost method and based upon 
  1.19  stated assumptions including, but not limited to rates of 
  1.20  interest, mortality, salary increase, disability, withdrawal, 
  1.21  and retirement and to determine the payment necessary to 
  1.22  amortize over a stated period any unfunded accrued actuarial 
  1.23  liability disclosed as a result of the actuarial valuation of 
  1.24  the benefit plan. 
  1.25     (2) (c) "Approved actuary" means a person who is regularly 
  1.26  engaged in the business of providing actuarial services and who 
  2.1   has at least 15 years of service to major public employee 
  2.2   pension or retirement funds or who is a fellow in the society of 
  2.3   actuaries.  
  2.4      (3) (d) "Entry age actuarial cost method" means an 
  2.5   actuarial cost method under which the actuarial present value of 
  2.6   the projected benefits of each individual currently covered by 
  2.7   the benefit plan and included in the actuarial valuation is 
  2.8   allocated on a level basis over the service of the individual if 
  2.9   the benefit plan is governed by section 69.773 or over the 
  2.10  earnings of the individual if the benefit plan is governed by 
  2.11  any other law between the entry age and the assumed exit age, 
  2.12  with the portion of this actuarial present value which is 
  2.13  allocated to the valuation year to be the normal cost and the 
  2.14  portion of this actuarial present value not provided for at the 
  2.15  valuation date by the actuarial present value of future normal 
  2.16  costs to be the actuarial accrued liability, with aggregation in 
  2.17  the calculation process to be the sum of the calculated result 
  2.18  for each covered individual and with recognition given to any 
  2.19  different benefit formulas which may apply to various periods of 
  2.20  service. 
  2.21     (4) (e) "Experience study" means a report providing 
  2.22  experience data and an actuarial analysis of the adequacy of the 
  2.23  actuarial assumptions on which actuarial valuations are based. 
  2.24     (5) (f) "Current assets" means: 
  2.25     (1) for the July 1, 1996, actuarial valuation, the value of 
  2.26  all assets at cost, including realized capital gains or losses, 
  2.27  plus one-third of any unrealized capital gains or losses.; 
  2.28     (2) for the July 1, 1997, actuarial valuations, the market 
  2.29  value of all assets as of June 30, 1997, reduced by: 
  2.30     (i) 60 percent of the difference between the market value 
  2.31  of all assets as of June 30, 1996, and the actuarial value of 
  2.32  assets used in the July 1, 1996, actuarial valuation; and 
  2.33     (ii) 80 percent of the difference between the actual net 
  2.34  change in the market value of assets between June 30, 1996, and 
  2.35  June 30, 1997, and the computed increase in the market value of 
  2.36  assets between June 30, 1996, and June 30, 1997, if the assets 
  3.1   had increased at the percentage interest rate assumption used in 
  3.2   the July 1, 1996, actuarial valuation; 
  3.3      (3) for the July 1, 1998, actuarial valuation, the market 
  3.4   value of all assets as of June 30, 1998, reduced by: 
  3.5      (i) 30 percent of the difference between the market value 
  3.6   of all assets as of June 30, 1996, and the actuarial value of 
  3.7   assets used in the July 1, 1996, actuarial valuation; 
  3.8      (ii) 60 percent of the difference between the actual net 
  3.9   change in the market value of assets between June 30, 1996, and 
  3.10  June 30, 1997, and the computed increase in the market value of 
  3.11  assets between June 30, 1996, and June 30, 1997, if the assets 
  3.12  had increased at the percentage interest rate assumption used in 
  3.13  the July 1, 1996, actuarial valuation; and 
  3.14     (iii) 80 percent of the difference between the actual net 
  3.15  change in the market value of assets between June 30, 1997, and 
  3.16  June 30, 1998, and the computed increase in the market value of 
  3.17  assets between June 30, 1997, and June 30, 1998, if the assets 
  3.18  had increased at the percentage interest rate assumption used in 
  3.19  the July 1, 1997, actuarial valuation; 
  3.20     (4) for the July 1, 1999, actuarial valuation, the market 
  3.21  value of all assets as of June 30, 1999, reduced by: 
  3.22     (i) ten percent of the difference between the market value 
  3.23  of all assets as of June 30, 1996, and the actuarial value of 
  3.24  assets used in the July 1, 1996, actuarial valuation; 
  3.25     (ii) 40 percent of the difference between the actual net 
  3.26  change in the market value of assets between June 30, 1996, and 
  3.27  June 30, 1997, and the computed increase in the market value of 
  3.28  assets between June 30, 1996, and June 30, 1997, if the assets 
  3.29  had increased at the percentage interest rate assumption used in 
  3.30  the July 1, 1996, actuarial valuation; 
  3.31     (iii) 60 percent of the difference between the actual net 
  3.32  change in the market value of assets between June 30, 1997, and 
  3.33  June 30, 1998, and the computed increase in the market value of 
  3.34  assets between June 30, 1997, and June 30, 1998, if the assets 
  3.35  had increased at the percentage interest rate assumption used in 
  3.36  the July 1, 1997, actuarial valuation; and 
  4.1      (iv) 80 percent of the difference between the actual net 
  4.2   change in the market value of assets between June 30, 1998, and 
  4.3   June 30, 1999, and the computed increase in the market value of 
  4.4   assets between June 30, 1998, and June 30, 1999, if the assets 
  4.5   had increased at the percentage interest rate assumption used in 
  4.6   the July 1, 1998, actuarial valuation; or 
  4.7      (5) for any actuarial valuation after July 1, 1999, the 
  4.8   market value of all assets as of the preceding June 30, reduced 
  4.9   by: 
  4.10     (i) 20 percent of the difference between the actual net 
  4.11  change in the market value of assets between the June 30 that 
  4.12  occurred three years earlier and the June 30 that occurred four 
  4.13  years earlier and the computed increase in the market value of 
  4.14  assets over that fiscal year period if the assets had increased 
  4.15  at the percentage interest rate assumption used in the actuarial 
  4.16  valuation for the July 1 that occurred four years earlier; 
  4.17     (ii) 40 percent of the difference between the actual net 
  4.18  change in the market value of assets between the June 30 that 
  4.19  occurred two years earlier and the June 30 that occurred three 
  4.20  years earlier and the computed increase in the market value of 
  4.21  assets over that fiscal year period if the assets had increased 
  4.22  at the percentage interest rate assumption used in the actuarial 
  4.23  valuation for the July 1 that occurred three years earlier; 
  4.24     (iii) 60 percent of the difference between the actual net 
  4.25  change in the market value of assets between the June 30 that 
  4.26  occurred one year earlier and the June 30 that occurred two 
  4.27  years earlier and the computed increase in the market value of 
  4.28  assets over that fiscal year period if the assets had increased 
  4.29  at the percentage interest rate assumption used in the actuarial 
  4.30  valuation for the July 1 that occurred two years earlier; and 
  4.31     (iv) 80 percent of the difference between the actual net 
  4.32  change in the market value of assets between the immediately 
  4.33  prior June 30 and the June 30 that occurred one year earlier and 
  4.34  the computed increase in the market value of assets over that 
  4.35  fiscal year period if the assets had increased at the percentage 
  4.36  interest rate assumption used in the actuarial valuation for the 
  5.1   July 1 that occurred one year earlier. 
  5.2      (6) (g) "Unfunded actuarial accrued liability" means the 
  5.3   total current and expected future benefit obligations, reduced 
  5.4   by the sum of current assets and the present value of future 
  5.5   normal costs. 
  5.6      (7) (h) "Pension benefit obligation" means the actuarial 
  5.7   present value of credited projected benefits, determined as the 
  5.8   actuarial present value of benefits estimated to be payable in 
  5.9   the future as a result of employee service attributing an equal 
  5.10  benefit amount, including the effect of projected salary 
  5.11  increases and any step rate benefit accrual rate differences, to 
  5.12  each year of credited and expected future employee service. 
  5.13     Sec. 2.  [EFFECTIVE DATE.] 
  5.14     Section 1 is effective June 30, 1997.