Minnesota Legislature
SF 2286
as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am
Current Version - as introduced
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A bill for an act
relating to retirement; statewide and major local retirement plans; updating and
clarifying omitted salary deduction provisions; amending Minnesota Statutes
2006, sections 352.04, subdivision 8; 352B.02, by adding a subdivision; 353.27,
subdivisions 12, 12a, 12b; 353E.01, subdivision 4; 354.51, subdivision 5;
354A.12, subdivision 1a; 422A.10, by adding a subdivision; 490.123, by adding
a subdivision.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2006, section 352.04, subdivision 8, is amended to read:
Subd. 8.
Department required to pay omitted salary deductions.
(a) If a
department fails to take deductions past due for a period of 60 days or less from an
employee's salary as provided in deleted text begin this sectiondeleted text end new text begin subdivision 4new text end , those deductions must be
taken on later payroll abstracts.
(b) If a department fails to take deductions past due for a period in excess of 60 days
from an employee's salary as provided in deleted text begin this sectiondeleted text end new text begin subdivision 4new text end , the department,
and not the employee, must pay on later payroll abstracts the employee and employer
contributions and an amount equivalent to 8.5 percent of the total amount due in lieu of
interest, or if the delay in payment exceeds one year, 8.5 percent compound annual interestnew text begin
from the date on which the deduction was due until the date that payment is madenew text end .
(c) If a department fails to take deductions past due for a period of 60 days or less
and the employee is no longer in state service deleted text begin so thatdeleted text end new text begin andnew text end the required deductions cannot
be taken from the salary of the employee, the department must nevertheless pay the
required employer contributions. If any department fails to take deductions past due for a
period in excess of 60 days and the employee is no longer in state service, the omitted
contributions must be recovered new text begin as provided new text end under paragraph (b).
(d) If an employee from whose salary required deductions were past due for a period
of 60 days or less leaves state service before the payment of the omitted deductions and
subsequently returns to state service, the unpaid amount is considered the equivalent of a
refund. The employee accrues no right by reason of the unpaid amount, except that the
employee may pay the amount of omitted deductions new text begin as a refund repayment new text end as provided
in section 352.23.
new text begin
(e) The recovery of omitted deductions is not permitted after the expiration of three
calendar years after the calendar year in which the deductions and contributions were
due, but were omitted, unless the system has already commenced an action to recover
the omitted deductions and contributions. An action to recover omitted deductions and
contributions commences on the date that the system mails any written correspondence
to the employing unit requesting information from the employing unit upon which to
determine whether or not omitted deductions occurred.
new text end
Sec. 2.
Minnesota Statutes 2006, section 352B.02, is amended by adding a subdivision
to read:
new text begin Subd. 1f. new text end
new text begin Omitted salary deductions. new text end
new text begin
If a department fails to take deductions in a
timely manner, the omitted salary deductions must be recovered as provided in section
352.04, subdivision 8.
new text end
Sec. 3.
Minnesota Statutes 2006, section 353.27, subdivision 12, is amended to read:
Subd. 12.
Omitted salary deductions; obligations.
(a) In the case of new text begin an new text end omission
of required deductions from the salary of an employee, the department head or designee
shall immediately, upon discovery, report the employee for membership and deleted text begin deductdeleted text end new text begin makenew text end
the employee deductions under subdivision 4 during the current pay period or during the
pay period immediately following the discovery of the omission. Payment for the omitted
obligations may only be made in accordance with reporting procedures and methods
established by the executive director.
(b) When the entire omission period of an employee does not exceed 60 days, the
governmental subdivision deleted text begin maydeleted text end new text begin mustnew text end report and submit payment of the omitted employee
deductions and the omitted employer contributions through the reporting processes under
subdivision 4.
(c) When the omission period of an employee exceeds 60 days, the governmental
subdivision shall furnish to the association sufficient data and documentation upon which
the obligation for new text begin the new text end omitted employee and employer contributions can be calculated.
The omitted employee deductions must be deducted from the employee's subsequent
salary payment or payments and new text begin must be new text end remitted to the association. The employee shall
pay omitted employee deductions due for the 60 days prior to the end of the last pay
period in the omission period during which salary was earned. The employer shall pay
any remaining omitted employee deductions and any omitted employer contributions, plus
cumulative interest at an annual rate of 8.5 percent compounded annually, from the date
or dates each omitted employee contribution was first payablenew text begin on the date that payment
is madenew text end .
(d) An employer shall not hold an employee liable for omitted employee deductions
beyond the pay period dates under paragraph (c), nor attempt to recover from the
employee those employee deductions paid by the employer on behalf of the employee.
Omitted deductions due under paragraph (c) which are not paid by the employee constitute
a liability of the employer that failed to deleted text begin deductdeleted text end new text begin makenew text end the omitted deductions from the
employee's salary. The employer shall make payment with interest at an annual rate of
8.5 percent compounded annually. Omitted employee deductions are no longer due if an
employee terminates public service before making payment of new text begin the new text end omitted employee
deductions to the association, but the employer remains liable to pay omitted employer
contributions plus interest at an annual rate of 8.5 percent compounded annually from the
date the contributions were first payablenew text begin to the date that payment is madenew text end .
(e) The association may not commence new text begin an new text end action for the recovery of omitted
employee deductions and employer contributions after the expiration of three calendar
years after the calendar year in which the contributions and deductions were omitted.
Except as provided under paragraph (b), no payment new text begin of omitted deductions or
contributions new text end may be made or accepted unless the association has already commenced
new text begin an new text end action for recovery of omitted deductions. An action for recovery commences on the
date of the mailing of any written correspondence from the association new text begin to the employing
unit new text end requesting information from the governmental subdivision upon which to determine
whether or not omitted deductions occurred.
Sec. 4.
Minnesota Statutes 2006, section 353.27, subdivision 12a, is amended to read:
Subd. 12a.
Terminated employees: omitted deductions.
A terminated employee
who has a period of employment in which previously omitted employer contributions
were made under subdivision 12 but for whom no, or only partial, omitted employee
contributions have been made, or a member who had prior coverage in the association
for which previously omitted employer contributions were made under subdivision
12 but who terminated service before required omitted employee deductions could be
withheld from salary, may pay the omitted employee deductions for the period on which
omitted employer contributions were previously paid deleted text begin plusdeleted text end new text begin . The payment must includenew text end
interest at an annual rate of 8.5 percent compounded annuallynew text begin from the date on which the
contribution should have been made until the date on which the payment is madenew text end . A
terminated employee deleted text begin maydeleted text end new text begin mustnew text end pay the omitted employee deductions plus interest new text begin at the
rate of 8.5 percent per year new text end within six months of an initial notification from the association
of eligibility to pay those omitted deductions. If a terminated employee is reemployed in a
position covered under a public pension fund deleted text begin underdeleted text end new text begin listed in new text end section 356.30, subdivision 3,
and elects to pay new text begin the new text end omitted employee deductions, payment must be made no later than
six months after a subsequent termination of public service.
Sec. 5.
Minnesota Statutes 2006, section 353.27, subdivision 12b, is amended to read:
Subd. 12b.
Terminated employees: immediate eligibility.
If deductions were
omitted from salary adjustments or new text begin the new text end final salary deleted text begin ofdeleted text end new text begin payable tonew text end a terminated employee
who is immediately eligible to draw a monthly benefit, the employer shall pay the omitted
employer and employer additional contributions plus interest on both the employer and
employee amounts due at an annual rate of 8.5 percent compounded annuallynew text begin from the
date on which the contribution should have been made until the date on which the payment
is madenew text end . The employee shall pay the employee deductions within six months of an initial
notification from the association of new text begin the employee's new text end eligibility to pay omitted deductions
or the employee forfeits the right to make the payment.
Sec. 6.
Minnesota Statutes 2006, section 353E.01, subdivision 4, is amended to read:
Subd. 4.
Collection of contributions.
The collection of member and employer
contributions is governed by section 353.27, subdivisions 4, 7, 7b, 10, 11, deleted text begin anddeleted text end 12new text begin , 12a,
and 12bnew text end .
Sec. 7.
Minnesota Statutes 2006, section 354.51, subdivision 5, is amended to read:
Subd. 5.
Payment of shortages.
(a) Except as provided in paragraph (b), deleted text begin in the
event thatdeleted text end new text begin ifnew text end full required member contributions are not deducted from the salary of a
teacher, payment must be made as follows:
(1) Payment of shortages in member deductions on salary earned after June 30,
1957, and before July 1, 1981, may be made any time before new text begin July 1, 2007, or new text end retirementnew text begin ,
whichever is earliernew text end . Payment must include interest at an annual rate of 8.5 percent
compounded annually from the end of the fiscal year in which the shortage occurred to
the end of the month in which payment is made deleted text begin anddeleted text end new text begin .new text end The interest must be credited to the
fund. If payment of a shortage in deductions is not made, the formula service credit of the
member must be prorated under section 354.05, subdivision 25, clause (3).
(2) Payment of shortages in member deductions on salary earned after June 30,
1981, new text begin which are past due for a period of 60 days or less are payable by the teacher and the
employing unit must deduct the shortage amount from the teacher's subsequent salary.
new text end
new text begin (3) Payment of shortages in member deductions on salary earned after June 30,
1981, which are past due for a period of more than 60 days new text end are the sole obligation of the
employing unit and are payable by the employing unit upon notification by the executive
director of the shortage with interest at an annual rate of 8.5 percent compounded annually
from the end of the fiscal year in which the shortage occurred to the end of the month in
which payment is made and the interest must be credited to the fund. deleted text begin Effective July 1,
1986,deleted text end The employing unit shall also pay the employer contributions as specified in section
354.42, subdivisions 3 and 5 for the shortages. If the shortage payment is not paid by the
employing unit within 60 days of notification, the executive director shall certify the
amount of the shortage payment to the applicable county auditor, who shall spread a levy
in the amount of the shortage payment over the taxable property of the taxing district of
the employing unit if the employing unit is supported by property taxes, or new text begin shall certify
the amount new text end to the commissioner of finance, who shall deduct the amount from any state
aid or appropriation amount applicable to the employing unit if the employing unit is
not supported by property taxes.
deleted text begin (3)deleted text end new text begin (4)new text end Payment may not be made for shortages in member deductions on salary
earned before July 1, 1957, for shortages in member deductions on salary paid or payable
under paragraph (b), or for shortages in member deductions for persons employed by the
Minnesota State Colleges and Universities system in a faculty position or in an eligible
unclassified administrative position and whose employment was less than 25 percent
of a full academic year, exclusive of the summer session, for the applicable institution
that exceeds the most recent 36 months.
(b) For a person who is employed by the Minnesota State Colleges and Universities
system in a faculty position or in an eligible unclassified administrative position and
whose employment was less than 25 percent of a full academic year, exclusive of the
summer session, for the applicable institution, upon the person's election under section
354B.21 of retirement coverage under this chapter, the shortage in member deductions
on the salary for employment by the Minnesota State Colleges and Universities system
institution of less than 25 percent of a full academic year, exclusive of the summer session,
for the applicable institution for the most recent 36 months and the associated employer
contributions must be paid by the Minnesota State Colleges and Universities system
institution, plus annual compound interest at the rate of 8.5 percent from the end of the
fiscal year in which the shortage occurred to the end of the month in which the Teachers
Retirement Association coverage election is made. If the shortage payment is not made
by the institution within 60 days of notification, the executive director shall certify the
amount of the shortage payment to the commissioner of finance, who shall deduct the
amount from any state appropriation to the system. An individual electing coverage
under this paragraph shall repay the amount of the shortage in member deductions, plus
interest, through deduction from salary or compensation payments within the first year of
employment after the election under section 354B.21, subject to the limitations in section
16D.16. The Minnesota State Colleges and Universities system may use any means
available to recover amounts which were not recovered through deductions from salary or
compensation payments. No payment of the shortage in member deductions under this
paragraph may be made for a period longer than the most recent 36 months.
new text begin
(c) The recovery of shortages is not permitted after the expiration of three school
years after the school year in which the member deductions were due, but were unpaid,
unless the Teachers Retirement Association has already commenced an action to recover
the shortages. An action to recover shortages begins on the date that the association
mails any written correspondence to the employing unit requesting information from the
employing unit upon which to determine whether or not shortages occurred.
new text end
Sec. 8.
Minnesota Statutes 2006, section 354A.12, subdivision 1a, is amended to read:
Subd. 1a.
Obligation for omitted salary deductions.
new text begin
(a) If the full required
contributions are not deducted from the salary of a teacher and are past due for a period of
60 days or less, the omitted salary deductions are payable by the teacher, and the employing
unit must deduct the omitted amount from the subsequent salary payments of the teacher.
new text end
new text begin (b) new text end If the full required contributions are not deducted from the salary of a teachernew text begin
and are past due for a period of more than 60 daysnew text end , payment of the shortage in such
deductions is the sole obligation of the employing unit during the three-year period
following the end of the fiscal year in which the shortage occurred. The shortage is
payable by the employing unit upon notification of the shortage by the executive director
of the applicable retirement fund association.
new text begin (c) under either paragraph (a) or (b),new text end the employing unit shall also pay any employer
contributions related to the shortage.
new text begin (d) new text end The amount of the shortage in employee contributions and associated employer
contributions deleted text begin isdeleted text end new text begin arenew text end payable with interest at the preretirement interest assumption for the
retirement fund as specified in section 356.215, subdivision 8, stated as a monthly rate
from the date due until the date payment is received in the office of the association, with a
minimum interest charge of $10.
new text begin (e) new text end If the shortage payment and interest is not paid by the employing unit new text begin under
paragraph (b)new text end within 60 days of notification, the executive director new text begin or executive secretarynew text end
shall certify the amount of the shortage payment and interest to the commissioner
of finance, who shall deduct the amount from any state aid or appropriation amount
applicable to the employing unit.
Sec. 9.
Minnesota Statutes 2006, section 422A.10, is amended by adding a subdivision
to read:
new text begin Subd. 6. new text end
new text begin Omitted salary deductions. new text end
new text begin
(a) In the case of an omission of required
deductions from the salary of an employee of the contributing class, the employing unit
shall immediately, upon discovery, make the employee deductions under subdivision
1 during the current pay period or during the pay period immediately following the
discovery of the omission.
new text end
new text begin
(b) When the entire omission period of an employee does not exceed 60 days, the
employing unit must report the omission and submit the payment of the omitted employee
deductions and the omitted employer contributions.
new text end
new text begin
(c) If the entire omission period of an employee exceeds 60 days, the employing unit
shall furnish the retirement plan with sufficient data and documentation upon which the
obligation for the omitted employee and employer contributions can be calculated. The
employing unit must pay the omitted employee and employer contributions and an amount
equivalent to 8.5 percent of the total amount due in lieu of interest, or if the delay in
payment exceeds one year, percent compound annual interest from the date on which
the contribution was due to the date on which the payment is made.
new text end
new text begin
(d) The recovery of omitted deductions is not permitted after the expiration of three
calendar years after the calendar year in which the deductions were due, but were omitted,
unless the retirement plan administration has already commenced an action to recover
the omitted deductions. An action to recover omitted deductions commences on the date
that the retirement plan administration mails any written correspondence to the employing
unit requesting information from the employing unit from which to determine whether or
not omitted deductions occurred.
new text end
Sec. 10.
Minnesota Statutes 2006, section 490.123, is amended by adding a subdivision
to read:
new text begin Subd. 1f. new text end
new text begin Omitted salary deductions. new text end
new text begin
(a) In the case of an omission of required
deductions from the salary of a judge, the state court administrator shall immediately,
upon discovery, make the member contribution deductions under subdivision 1a during
the current pay period or during the pay period immediately following the discovery of
the omission.
new text end
new text begin
(b) When the entire omission period of a judge does not exceed 60 days, the state
court administrator must report the omission and submit the payment of the omitted
member contribution deductions and the omitted employer contributions.
new text end
new text begin
(c) If the entire omission period of a judge exceeds 60 days, the state court
administrator shall furnish the Minnesota State Retirement System with sufficient data
and documentation upon which the obligation for the omitted member and employer
contributions can be calculated. The state court administrator must pay the omitted
member and employer contributions and an amount equivalent to percent of the total
amount due in lieu of interest, or if the delay in payment exceeds one year, 8.5 percent
compound annual interest from the date on which the contribution was due to the date
on which the payment is made.
new text end
new text begin
(d) The recovery of omitted deductions is not permitted after the expiration of three
calendar years after the calendar year in which the deductions were due, but were omitted,
unless the Minnesota State Retirement System has already commenced an action to
recover the omitted deductions. An action to recover omitted deductions commences on
the date that the Minnesota State Retirement System mails any written correspondence to
the state court administrator requesting information from the administrator from which
to determine whether or not omitted deductions occurred.
new text end
Sec. 11. new text begin EFFECTIVE DATE.
new text end
new text begin
Sections 1 to 10 are effective July 1, 2007.
new text end