SF 1682

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; Public Employees Retirement
Association; defining covered salary to include
certain employer contributions to supplemental
retirement plans; amending Minnesota Statutes 2004,
sections 353.01, subdivision 10; 356.24, subdivision 1.

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

Section 1.

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

Subd. 10.

Salary.

(a) "Salary" means:

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

new text begin (2) for a public employee who is covered by a supplemental
retirement plan under section 356.24, subdivision 1, clause (8),
(9), or (10), which require all plan contributions be made by
the employer, the contribution to the applicable supplemental
retirement plan; new text end and

deleted text begin (2) deleted text end new text begin (3) new text end for a public employee who has prior service covered
by a local police or firefighters relief association that has
consolidated with the Public Employees Retirement Association or
to which section 353.665 applies and who has elected coverage
either under the public employees police and fire fund benefit
plan under section 353A.08 following the consolidation or under
section 353.665, subdivision 4, the rate of salary upon which
member contributions to the special fund of the relief
association were made prior to the effective date of the
consolidation as specified by law and by bylaw provisions
governing the relief association on the date of the initiation
of the consolidation procedure and the actual periodic
compensation of the public employee after the effective date of
consolidation.

(b) Salary does not mean:

(1) the fees paid to district court reporters, unused
annual vacation or sick leave payments, in lump-sum or periodic
payments, severance payments, reimbursement of expenses,
lump-sum settlements not attached to a specific earnings period,
or workers' compensation payments;

(2) employer-paid amounts used by an employee toward the
cost of insurance coverage, employer-paid fringe benefits,
flexible spending accounts, cafeteria plans, health care expense
accounts, day care expenses, or any payments in lieu of any
employer-paid group insurance coverage, including the difference
between single and family rates that may be paid to a member
with single coverage and certain amounts determined by the
executive director to be ineligible;

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

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

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

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

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

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

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

Sec. 2.

Minnesota Statutes 2004, section 356.24,
subdivision 1, is amended to read:

Subdivision 1.

Restriction; exceptions.

It is unlawful
for a school district or other governmental subdivision or state
agency to levy taxes for, or to contribute public funds to a
supplemental pension or deferred compensation plan that is
established, maintained, and operated in addition to a primary
pension program for the benefit of the governmental subdivision
employees other than:

(1) to a supplemental pension plan that was established,
maintained, and operated before May 6, 1971;

(2) to a plan that provides solely for group health,
hospital, disability, or death benefits;

(3) to the individual retirement account plan established
by chapter 354B;

(4) to a plan that provides solely for severance pay under
section 465.72 to a retiring or terminating employee;

(5) for employees other than personnel employed by the
Board of Trustees of the Minnesota State Colleges and
Universities and covered under the Higher Education Supplemental
Retirement Plan under chapter 354C, if the supplemental plan
coverage is provided for in a personnel policy of the public
employer or in the collective bargaining agreement between the
public employer and the exclusive representative of public
employees in an appropriate unit, in an amount matching employee
contributions on a dollar for dollar basis, but not to exceed an
employer contribution of $2,000 a year per employee;

(i) to the state of Minnesota deferred compensation plan
under section 352.96; or

(ii) in payment of the applicable portion of the
contribution made to any investment eligible under section
403(b) of the Internal Revenue Code, if the employing unit has
complied with any applicable pension plan provisions of the
Internal Revenue Code with respect to the tax-sheltered annuity
program during the preceding calendar year;

(6) for personnel employed by the Board of Trustees of the
Minnesota State Colleges and Universities and not covered by
clause (5), to the supplemental retirement plan under chapter
354C, if the supplemental plan coverage is provided for in a
personnel policy or in the collective bargaining agreement of
the public employer with the exclusive representative of the
covered employees in an appropriate unit, in an amount matching
employee contributions on a dollar for dollar basis, but not to
exceed an employer contribution of $2,700 a year for each
employee;

(7) to a supplemental plan or to a governmental trust to
save for postretirement health care expenses qualified for
tax-preferred treatment under the Internal Revenue Code, if the
supplemental plan coverage is provided for in a personnel policy
or in the collective bargaining agreement of a public employer
with the exclusive representative of the covered employees in an
appropriate unit;

(8) to the laborer's national industrial pension fund new text begin or to
a laborer's local pension fund new text end for the employees of a
governmental subdivision who are covered by a collective
bargaining agreement that provides for coverage by that fund and
that sets forth a fund contribution rate, but not to exceed an
employer contribution of deleted text begin $2,000 deleted text end new text begin $5,000 new text end per year per employee;

(9) to the plumbers' and pipefitters' national pension fund
or to a plumbers' and pipefitters' local pension fund for the
employees of a governmental subdivision who are covered by a
collective bargaining agreement that provides for coverage by
that fund and that sets forth a fund contribution rate, but not
to exceed an employer contribution of deleted text begin $2,000 deleted text end new text begin $5,000 new text end per year per
employee;

(10) to the international union of operating engineers
pension fund for the employees of a governmental subdivision who
are covered by a collective bargaining agreement that provides
for coverage by that fund and that sets forth a fund
contribution rate, but not to exceed an employer contribution of
deleted text begin $2,000 deleted text end new text begin $5,000 new text end per year per employee; or

(11) to a supplemental plan organized and operated under
the federal Internal Revenue Code, as amended, that is wholly
and solely funded by the employee's accumulated sick leave,
accumulated vacation leave, and accumulated severance pay.

Sec. 3. new text begin APPLICATION TO CERTAIN SALARY AMOUNTS.
new text end

new text begin (a) Any employer contribution to the international union of
operating engineers pension fund made on behalf of a public
employee under Minnesota Statutes 2002, section 356.24,
subdivision 1, clause (10), must be considered salary under
Minnesota Statutes, section 353.01, subdivision 10, if the
public employee made employee contributions on the salary amount.
new text end

new text begin (b) A public employee under Minnesota Statutes, section
353.01, subdivision 2, may make the equivalent employee
contribution on any supplemental retirement fund contribution
since July 1, 2002, with annual compound interest at the rate of
8.5 percent from the date on which the contribution should have
been made if the contribution was made in a timely fashion until
the date on which payment is made.
new text end

new text begin (c) If a public employee makes the equivalent employee
contribution under paragraph (b), the public employee's employer
shall make an equivalent employer contribution equal to the
equivalent employee contribution multiplied by the factor
1.0843. The amount is payable within 30 days of the
notification by the executive director of the Public Employees
Retirement Association that the public employee made the
equivalent contribution. If the employing unit fails to pay the
required amount in a timely fashion, the executive director
shall recover the amount either under Minnesota Statutes,
section 353.28, subdivision 6, or by certifying the amount to
the commissioner of finance, who shall deduct the amount from
any state aid amount or state payment amount attributable to the
employing unit.
new text end

Sec. 4. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 3 are effective the day following final
enactment.
new text end