SF 2038

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

A bill for an act
relating to retirement; extending the deadline for
full funding for the Bloomington Fire Department
Relief Association; increasing interest rate
assumption; amending Minnesota Statutes 2004, sections
69.77, subdivision 4; 356.215, subdivision 8; 356.216.

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

Section 1.

Minnesota Statutes 2004, section 69.77,
subdivision 4, is amended to read:

Subd. 4.

Relief association financial requirements;
minimum municipal obligation.

(a) The officers of the relief
association shall determine the financial requirements of the
relief association and minimum obligation of the municipality
for the following calendar year in accordance with the
requirements of this subdivision. The financial requirements of
the relief association and the minimum obligation of the
municipality must be determined on or before the submission date
established by the municipality under subdivision 5.

(b) The financial requirements of the relief association
for the following calendar year must be based on the most recent
actuarial valuation or survey of the special fund of the
association if more than one fund is maintained by the
association, or of the association, if only one fund is
maintained, prepared in accordance with sections 356.215,
subdivisions 4 to 15, and 356.216, as required under subdivision
10. If an actuarial estimate is prepared by the actuary of the
relief association as part of obtaining a modification of the
benefit plan of the relief association and the modification is
implemented, the actuarial estimate must be used in calculating
the subsequent financial requirements of the relief association.

(c) If the relief association has an unfunded actuarial
accrued liability as reported in the most recent actuarial
valuation or survey, the total of the amounts calculated under
clauses (1), (2), and (3), constitute the financial requirements
of the relief association for the following year. If the relief
association does not have an unfunded actuarial accrued
liability as reported in the most recent actuarial valuation or
survey, the amount calculated under clauses (1) and (2)
constitute the financial requirements of the relief association
for the following year. The financial requirement elements are:

(1) the normal level cost requirement for the following
year, expressed as a dollar amount, which must be determined by
applying the normal level cost of the relief association as
reported in the actuarial valuation or survey and expressed as a
percentage of covered payroll to the estimated covered payroll
of the active membership of the relief association, including
any projected change in the active membership, for the following
year;

(2) for the Bloomington Fire Department Relief Association,
the Fairmont Police Relief Association, and the Virginia Fire
Department Relief Association, to the dollar amount of normal
cost determined under clause (1) must be added an amount equal
to the dollar amount of the administrative expenses of the
special fund of the association if more than one fund is
maintained by the association, or of the association if only one
fund is maintained, for the most recent year, multiplied by the
factor of 1.035. The administrative expenses are those
authorized under section 69.80. No amount of administrative
expenses under this clause are to be included in the financial
requirements of the Minneapolis Firefighters Relief Association
or the Minneapolis Police Relief Association; and

(3) to the dollar amount of normal cost and expenses
determined under clauses (1) and (2) must be added an amount
equal to the level annual dollar amount which is sufficient to
amortize the unfunded actuarial accrued liability by December
31, 2010, new text begin for the Fairmont Police Relief Association, the
Minneapolis Firefighters Relief Association, the Minneapolis
Police Relief Association, and the Virginia Fire Department
Relief Association, and by December 31, 2031, for the
Bloomington Fire Department Relief Association, new text end as determined
from the actuarial valuation or survey of the fund, using an
interest assumption set at the applicable rate specified in
section 356.215, subdivision 8. The amortization date specified
in this clause applies to all local police or salaried
firefighters' relief associations and that date supersedes any
amortization date specified in any applicable special law.

(d) The minimum obligation of the municipality is an amount
equal to the financial requirements of the relief association
reduced by the estimated amount of member contributions from
covered salary anticipated for the following calendar year and
the estimated amounts anticipated for the following calendar
year from the applicable state aid program established under
sections 69.011 to 69.051 receivable by the relief association
after any allocation made under section 69.031, subdivision 5,
paragraph (b), clause (2), or 423A.01, subdivision 2, clause
(6), from the local police and salaried firefighters' relief
association amortization aid program established under section
423A.02, subdivision 1, from the supplementary amortization
state-aid program established under section 423A.02, subdivision
1a, and from the additional amortization state aid under section
423A.02, subdivision 1b.

Sec. 2.

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

Subd. 8.

Interest and salary assumptions.

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

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

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

(1) single rate future salary increase assumption

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

(2) modified single rate future salary increase assumption

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

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

future salary
plan increase assumption
general state employees select calculation and
retirement plan assumption A
correctional state employees
retirement plan assumption H
State Patrol retirement plan assumption H
general public employees select calculation and
retirement plan assumption B
public employees police and fire
fund retirement plan assumption C
local government correctional service
retirement plan assumption H
teachers retirement plan assumption D
Duluth teachers retirement plan assumption E
Minneapolis teachers retirement plan assumption F
St. Paul teachers retirement plan assumption G

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

The ultimate future salary increase assumption is:

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

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

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

Sec. 3.

Minnesota Statutes 2004, section 356.216, is
amended to read:

356.216 CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE
AND FIRE FUNDS.

(a) The provisions of section 356.215 that govern the
contents of actuarial valuations must apply to any local police
or fire pension fund or relief association required to make an
actuarial report under this section, except as follows:

(1) in calculating normal cost and other requirements, if
required to be expressed as a level percentage of covered
payroll, the salaries used in computing covered payroll must be
the maximum rate of salary on which retirement and survivorship
credits and amounts of benefits are determined and from which
any member contributions are calculated and deducted;

(2) in lieu of the amortization date specified in section
356.215, subdivision 11, the appropriate amortization target
date specified in section 69.77, subdivision 4, or 69.773,
subdivision 4, clause (c), must be used in calculating any
required amortization contribution new text begin , except that the amortization
date for the Bloomington Fire Department Relief Association is
December 31, 2031, and this date shall automatically be extended
to match the date for full funding required for the Public
Employees Retirement Association under section 356.215,
subdivision 11, paragraph (e) new text end ;

(3) in addition to the tabulation of active members and
annuitants provided for in section 356.215, subdivision 13, the
member contributions for active members for the calendar year
and the prospective annual retirement annuities under the
benefit plan for active members must be reported;

(4) actuarial valuations required under section 69.773,
subdivision 2, must be made at least every four years and
actuarial valuations required under section 69.77 shall be made
annually;

(5) the actuarial balance sheet showing accrued assets
valued at market value if the actuarial valuation is required to
be prepared at least every four years or valued as current
assets under section 356.215, subdivision 1, clause (6), or
paragraph (b), whichever applies, if the actuarial valuation is
required to be prepared annually, actuarial accrued liabilities,
and the unfunded actuarial accrued liability must include the
following required reserves:

(i) For active members
1. Retirement benefits
2. Disability benefits
3. Refund liability due to death or withdrawal
4. Survivors' benefits
(ii) For deferred annuitants' benefits
(iii) For former members without vested rights
(iv) For annuitants
1. Retirement annuities
2. Disability annuities
3. Surviving spouses' annuities
4. Surviving children's annuities

In addition to those required reserves, separate items must
be shown for additional benefits, if any, which may not be
appropriately included in the reserves listed above; and

(6) actuarial valuations are due by the first day of the
seventh month after the end of the fiscal year which the
actuarial valuation covers.

(b) For the Minneapolis Firefighters Relief Association or
the Minneapolis Police Relief Association, the following
provisions additionally apply:

(1) in calculating the actuarial balance sheet, unfunded
actuarial accrued liability, and amortization contribution of
the relief association, "current assets" means the value of all
assets at cost, including realized capital gains and losses,
plus or minus, whichever applies, the average value of total
unrealized capital gains or losses for the most recent
three-year period ending with the end of the plan year
immediately preceding the actuarial valuation report
transmission date; and

(2) in calculating the applicable portions of the actuarial
valuation, an annual preretirement interest assumption of six
percent, an annual postretirement interest assumption of six
percent, and an annual salary increase assumption of four
percent must be used.

new text begin (c) For the Bloomington Fire Department Relief Association,
the following provision additionally applies: in calculating
the actuarial balance sheet, unfunded actuarial accrued
liability, and amortization contribution of the relief
association, "current assets" means the value of all assets at
cost, including realized capital gains and losses, plus or
minus, whichever applies, the average value of total unrealized
capital gains or losses for the most recent five-year period
ending with the end of the plan year immediately preceding the
actuarial valuation report transmission date.
new text end

Sec. 4. new text begin LOCAL APPROVAL; NONSEVERABILITY.
new text end

new text begin Sections 1 to 4 are not severable and are effective the day
after the date of the approval by the city council of the city
of Bloomington and upon timely completion by the chief clerical
officer of the city of Bloomington of compliance with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.
new text end