SF 1865

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

A bill for an act
relating to retirement; retirement coverage for school
administrators; providing school administrators with
an option to elect defined contribution plan coverage;
authorizing the Teachers Retirement Association to
enter into cooperative agreements with teacher
retirement systems of other states for the recognition
of combined service for benefit eligibility and
benefit calculations; proposing coding for new law in
Minnesota Statutes, chapters 354; 354B.

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

Section 1.

new text begin [354.415] SCHOOL ADMINISTRATORS; DEFINED
CONTRIBUTION PLAN COVERAGE.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this
section, the following terms have the meanings given.
new text end

new text begin (b) "School administrator" means a school superintendent,
an elementary school principal, a middle school or junior high
school principal, a high school principal, a school district
service provider administrator, a school district central office
administrator, or a special education director.
new text end

new text begin (c) "School district" means an independent school district,
a special school district, a cooperative school district, a
charter school, or an area learning center.
new text end

new text begin (d) "Governing body" means the primary policy setting and
budget setting board of a school district.
new text end

new text begin (e) "Election" means a school administrator election as
described in subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin School administrator election. new text end

new text begin (a) A school
administrator may elect to be excluded from membership in the
Teachers Retirement Association and to be included in the
retirement coverage under chapter 354B.
new text end

new text begin (b) The exclusion election must be made within three months
following the commencement of employment as a school
administrator, in writing on a form prescribed by the executive
director of the Teachers Retirement Association, and must be
approved by a resolution of the governing body of the school
district. The exclusion election is not effective until it is
filed with the executive director of the Teachers Retirement
Association.
new text end

new text begin (c) Membership in the Teachers Retirement Association
ceases on the date on which the written election is received by
the executive director of the Teachers Retirement Association
and the exclusion applies to the initial date of employment as a
school administrator. Member and employer contributions from
that date must be transferred to the school administrator's
account in the individual retirement account plan under chapter
354B.
new text end

new text begin (d) An election under this section is irrevocable. The
election form under this section must include a statement that
the school administrator will not seek authorization to purchase
service credit in the Teachers Retirement Association for any
period of excluded service.
new text end

new text begin Subd. 3. new text end

new text begin Contributions to individual retirement account
plan. new text end

new text begin If an election under this section is made, the member and
employer contributions for the applicable school administrator
must be deposited in the individual account of the school
administrator in the individual retirement account plan under
chapter 354B.
new text end

Sec. 2.

new text begin [354.515] COOPERATIVE PORTABILITY AGREEMENT WITH
OTHER STATE RETIREMENT SYSTEMS.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization. new text end

new text begin (a) The Teachers
Retirement Association may enter into a cooperative agreement
with the Wisconsin retirement system or any other qualified
governmental retirement plan to implement the interstate
combined service annuity under this section.
new text end

new text begin (b) A qualified governmental retirement plan is:
new text end

new text begin (1) a public employee retirement plan which either provides
retirement coverage to teachers exclusively or includes teachers
in its active member coverage group;
new text end

new text begin (2) is a defined benefit plan;
new text end

new text begin (3) has regular actuarial valuations generally in
conformance with the requirements of section 356.215; and
new text end

new text begin (4) has been funded over the past five years with total
contributions sufficient at least to meet the normal cost
requirements of the plan and amortize any unfunded actuarial
accrued liability.
new text end

new text begin Subd. 2. new text end

new text begin Terms of cooperative agreement. new text end

new text begin (a)
Notwithstanding any provision of this chapter or chapter 356 to
the contrary, an eligible person who has met the qualifications
of paragraph (b) may elect to receive a retirement annuity under
this chapter based on the final average salary of the person
credited by the Teachers Retirement Association or another
qualified governmental retirement plan and the allowable service
credited by the Teachers Retirement Association, subject to
paragraph (c).
new text end

new text begin (b) An eligible person must have:
new text end

new text begin (1) at least one-half year of allowable service in the
Teachers Retirement Association and in the other qualified
governmental retirement plan;
new text end

new text begin (2) combined service in the Teachers Retirement Association
and the other qualified governmental retirement plan of at least
three years or at least the minimum vesting period of the other
governmental retirement plan, whichever is longer; and
new text end

new text begin (3) not begun to receive an annuity from the Teachers
Retirement Association or the other qualified governmental
retirement plan.
new text end

new text begin (c) The retirement annuity from the Teachers Retirement
Association must be based on:
new text end

new text begin (1) the benefit plan in effect on the date of the
termination of active teaching service from the Teachers
Retirement Association or the other qualified governmental
retirement plan, whichever is later; and
new text end

new text begin (2) the allowable service, benefit accrual rates, and the
highest five successive years' average salary during the entire
service covered by either the Teachers Retirement Association or
the other qualified governmental retirement plan. The benefit
accrual rates used by each plan are those percentages in the
benefit plan as a continuation of allowable service from one
plan to the next plan, recognizing all previous allowable
service with the other plan. The allowable service credit in
all plans is combined in determining eligibility for and the
application of any early retirement annuity reduction rates.
new text end

new text begin (d) Any period of teaching service for which an eligible
person has credit in both the Teachers Retirement Association
and the other qualified governmental retirement plan may be used
only once for the purpose of determining total allowable service
for a retirement annuity under this section, with duplicated
service credit represented by the smaller total dollar amount of
member contributions ignored under this section.
new text end

new text begin (e) An eligible person is a person who:
new text end

new text begin (1) elects in writing to have the person's retirement
annuity for covered teaching service calculated under this
section;
new text end

new text begin (2) has not taken a refund of member contributions from
either plan or has repaid those member contribution refunds; and
new text end

new text begin (3) has sufficient combined teaching service to be eligible
for a retirement annuity.
new text end

new text begin (f) Any cooperative agreement under this section must
include retroactive application of the portability mechanism to
a person who was a Minnesota teacher before July 1, 2005, and
subsequently became a teacher in the state of the other
qualified governmental retirement plan.
new text end

new text begin Subd. 3. new text end

new text begin Determination of net annual cooperative
agreement actuarial liability. new text end

new text begin (a) The actuary retained under
section 356.214, as part of the annual actuarial valuation of
the Teachers Retirement Association, shall calculate the
actuarial present value of the additional benefits from the
Teachers Retirement Association obtained under this section by
retirees of each qualified governmental retirement plan during
the plan year.
new text end

new text begin (b) The executive director, annually, shall submit a report
to the Legislative Commission on Pensions and Retirement
comparing the additional liability results under paragraph (a)
with the comparable additional liability results related to the
Teachers Retirement Association calculated by the consulting
actuary retained by each qualified governmental retirement plan
with a cooperative agreement with the Teachers Retirement
Association. If the report indicates that the Teachers
Retirement Association has borne a net additional present value
of additional benefits with respect to a qualified governmental
retirement plan for a given year, the executive director shall
request a transfer of assets equal to the net amount. If the
applicable qualified governmental retirement plan does not remit
the requested transfer and the subsequent year's report again
indicates a net additional liability borne by the Teachers
Retirement Association with respect to that qualified
governmental retirement plan, the cooperative agreement
terminates as of the first day of the month next following
notification of the chief administrative officer of the
applicable qualified governmental retirement plan of that fact
by the executive director of the Teachers Retirement Association.
new text end

new text begin Subd. 4. new text end

new text begin Cooperative agreement formulation; adoption. new text end

new text begin (a)
The Teachers Retirement Association may approach any qualified
governmental retirement plan to consider formulating and
adopting a cooperative combined service recognition agreement
and may entertain approaches to that end by any qualified
governmental retirement plan.
new text end

new text begin (b) A cooperative agreement under this section must:
new text end

new text begin (1) contain, by explicit language or by appropriate
reference, the definition of a qualified person and the terms
set forth in subdivision 2;
new text end

new text begin (2) require that the actuarial present value of the
additional benefits obtained from each qualified governmental
retirement plan under the cooperative agreement procedure be
calculated by a consulting actuary who meets the definition of
section 356.215, subdivision 1, paragraph (c);
new text end

new text begin (3) provide for transfers of the calculated net
differential in pension plan liability;
new text end

new text begin (4) be subject to regular audits by an independent
certified public accountant; and
new text end

new text begin (5) be executed by the chief administrative officer of the
qualified governmental retirement plan, the chair of the board
of the qualified governmental retirement plan, and the governor
of the state.
new text end

Sec. 3.

new text begin [354B.215] INDIVIDUAL RETIREMENT ACCOUNT PLAN
COVERAGE FOR CERTAIN SCHOOL ADMINISTRATORS.
new text end

new text begin School administrators who elect to be excluded from the
Teachers Retirement Association under section 354.415 are
covered by the individual retirement account plan.
Contributions by or on behalf of affected school administrators
must be deposited in the applicable individual retirement
account.
new text end

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

new text begin Sections 1 to 3 are effective July 1, 2005.
new text end