SF 29

as introduced - 84th Legislature, 2005 1st Special Session (2005 - 2005) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; various public pension plans;
clarifying and revising various plan provisions;
eliminating obsolete provisions; defining final
average salary; modifying the definition of allowable
service to include time on strike; permitting judges
to purchase service credit for an authorized leave;
requiring specified payments; clarifying references to
actuarial services in determining actuarial
equivalence; defining covered salary to include
certain employer contributions to supplemental
retirement plans; specifying itemized detail of plan
administrative expenses in annual financial reporting;
excluding police officers of the University of
Minnesota from the public employees police and fire
fund; clarifying collection procedures relating to
charter schools; adding a uniform nonassignment and
legal process exemption provision; providing for
various member and employer contribution rate
increases; adding employees of Bridges Medical
Services, Hutchinson Area Health Care, and Northfield
Hospital to privatization coverage; extending date for
filing special law approval with the secretary of
state for the RenVilla Nursing Home; requiring the
privatization periodic filing of updated copies of
articles of incorporation and bylaws; modifying a
higher education individual retirement account plan
investment option provision; implementing the
recommendations of the Volunteer Firefighter Relief
Association working group of the state auditor;
modifying the trigger date for filing financial
reports; revising the per firefighter financing
requirements for monthly benefit service pensions;
modifying the options for crediting interest on
deferred service pensions; clarifying the deferred
service pension options available to defined
contribution plans; providing for the crediting of
service during military service leaves; requiring the
amortization of experience losses; clarifying the
compliance requirements for the qualification for fire
state aid; modifying a limit on mutual fund
investments; clarifying corporate stock and
exchange-traded funds investment authority; modifying
the municipal representation requirements on relief
association governing boards; clarifying exemptions
from process and taxation; providing that certain laws
do not apply to the consolidation of specified
volunteer firefighter relief associations; providing
an ad hoc postretirement adjustment to Eveleth police
and fire trust fund benefit recipients; authorizing
the Maplewood Firefighters Relief Association to
transfer assets to the Oakdale Firefighters Relief
Association to cover service credits earned by certain
individuals; restructuring the statewide Teachers
Retirement Fund Association fund and benefit plan;
providing a special post retirement adjustment to
certain pre-1969 teachers; changing deferred annuities
augmentation for new retirement plan members; creating
a public pension plan default insurance pool;
increasing the maximum retirement plan covered salary
figure; providing certain early retirement incentives;
creating a task force to study creation of a statewide
volunteer firefighter retirement plan; appropriating
money; amending Minnesota Statutes 2004, sections
3A.01, subdivisions 1, 2, 6, 8, by adding
subdivisions; 3A.011; 3A.02, subdivisions 1, 1b, 3, 4,
5; 3A.03, subdivisions 1, 2; 3A.04, subdivisions 1, 2,
3, 4, by adding a subdivision; 3A.05; 3A.07; 3A.10,
subdivision 1; 3A.12; 3A.13; 43A.17, subdivision 9;
69.011, subdivision 2b, by adding a subdivision;
69.021, subdivisions 5, 11; 69.051, subdivisions 1,
1a; 69.33; 69.77, subdivision 4; 69.771; 69.772,
subdivisions 3, 4; 69.773, subdivisions 4, 5; 69.775;
352.01, subdivisions 2a, 4, 5, 12, 13, 21, 23, by
adding a subdivision; 352.021, subdivisions 1, 2, 3,
4; 352.04, subdivisions 1, 2, 3, 12; 352.041,
subdivisions 1, 2, 3, 5; 352.115, subdivisions 2, 3;
352.116, subdivision 1a; 352.15, subdivisions 1, 3, 4;
352.22, subdivision 10; 352.72, subdivision 2; 352.87,
subdivision 3; 352.91, by adding a subdivision;
352.911, subdivision 5; 352.92, subdivisions 1, 2;
352.93, subdivision 1; 352B.01, subdivisions 1, 2, 3,
11; 352B.02, subdivisions 1a, 1c, 1d, 1e; 352B.071;
352B.30, subdivision 2; 352C.021, by adding a
subdivision; 352C.091, subdivision 1; 352C.10;
352D.01; 352D.015, subdivisions 3, 4; 352D.02,
subdivision 1; 352D.03; 352D.04, subdivision 2;
352D.05, subdivision 4; 352D.085, subdivision 1;
352D.09, subdivisions 5, 7; 352D.12; 353.01,
subdivisions 6, 10, 14, 32, 33, by adding a
subdivision; 353.025; 353.026; 353.027; 353.028;
353.14; 353.15, subdivisions 1, 3; 353.27,
subdivisions 1, 2, 3, 3a, 11, by adding a subdivision;
353.271; 353.28, subdivisions 5, 6; 353.29,
subdivision 3; 353.30, subdivision 5; 353.31,
subdivision 1c; 353.32, subdivision 9; 353.33,
subdivisions 3, 12; 353.64, by adding a subdivision;
353.65, subdivisions 2, 3, 6; 353.651, subdivision 3;
353.656, subdivision 1; 353.71, subdivision 2;
353B.02, subdivision 10; 353E.01, subdivision 5;
353E.05; 353F.02, subdivision 4; 354.05, subdivisions
2, 7, 13, 35, by adding a subdivision; 354.091;
354.094, subdivision 1; 354.10, subdivisions 1, 3, 4;
354.33, subdivision 5; 354.39; 354.41, subdivision 2;
354.42, subdivisions 2, 3, by adding subdivisions;
354.44, subdivisions 2, 6; 354.55, subdivision 11;
354A.011, subdivisions 3a, 15a, 24, 27, by adding a
subdivision; 354A.021, subdivisions 1, 4, 5, by adding
a subdivision; 354A.092; 354A.093, subdivision 1;
354A.095; 354A.096; 354A.097, subdivision 1; 354A.12,
subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30;
354A.31, subdivisions 4, 4a, 5, 7; 354A.32,
subdivision 1; 354A.37, subdivision 2; 354A.39;
354A.40, subdivision 1; 354A.41; 354B.21, subdivisions
2, 3; 354B.25, subdivision 2; 355.01, subdivision 3e;
356.20, subdivisions 2, 4; 356.214, subdivision 1;
356.215, subdivisions 8, 11; 356.216; 356.24,
subdivision 1; 356.30, subdivisions 1, 3; 356.302,
subdivision 7; 356.303, subdivision 4; 356.315, by
adding a subdivision; 356.42, subdivision 3; 356.465,
subdivision 3; 356.47, subdivision 3; 356.551;
356.611, subdivision 1; 356.65, subdivision 2;
356A.06, subdivision 7; 383B.46, subdivision 2;
383B.47; 383B.48; 383B.49; 422A.01, subdivisions 6,
11, by adding subdivisions; 422A.05, subdivision 2c;
422A.06, subdivisions 3, 5, 7, 8; 422A.10,
subdivisions 1, 2; 422A.101, subdivision 3; 422A.15,
subdivision 1; 422A.16, subdivision 9; 422A.22,
subdivisions 1, 3, 4, 6; 422A.231; 422A.24; 423A.02,
subdivision 1b; 423B.01, by adding a subdivision;
423B.05, subdivision 3; 423B.09, subdivision 1, by
adding a subdivision; 423B.10, subdivision 1; 423B.17;
423C.01, by adding a subdivision; 423C.05, subdivision
2; 423C.09; 424A.02, subdivisions 3, 4, 7; 424A.04,
subdivision 1; 424B.10, subdivision 1; 471A.10;
490.121, subdivisions 1, 4, 6, 7, 13, 14, 15, 20, 21,
22, by adding subdivisions; 490.122; 490.123,
subdivisions 1, 1a, 1b, 1c, 2, 3; 490.124,
subdivisions 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13;
490.125, subdivisions 1, 2; 490.126; 490.133; 525.05;
Laws 1999, chapter 222, article 16, section 16, as
amended; Laws 2000, chapter 461, article 4, section 4,
as amended; Laws 2004, chapter 267, article 12,
section 4; proposing coding for new law in Minnesota
Statutes, chapters 128D; 352C; 354; 356; 383B; 423C;
424A; proposing coding for new law as Minnesota
Statutes, chapter 490A; repealing Minnesota Statutes
2004, sections 3A.01, subdivisions 3, 4, 6a, 7; 3A.02,
subdivision 2; 3A.04, subdivision 1a; 3A.09; 352.119,
subdivision 1; 352.15, subdivision 1a; 352C.01;
352C.011; 352C.021; 352C.031; 352C.033; 352C.04;
352C.051; 352C.09; 352C.091, subdivisions 2, 3;
353.15, subdivision 2; 353.29, subdivision 2; 353.34,
subdivision 3b; 353.36, subdivisions 2, 2a, 2b, 2c;
353.46, subdivision 4; 353.651, subdivision 2;
353.663; 353.74; 353.75; 354.10, subdivision 2;
354.59; 354A.051; 354A.105; 354A.23, subdivision 1;
354A.28; 422A.101, subdivision 4; 422A.22,
subdivisions 2, 5; 422A.221; 490.021; 490.025;
490.101; 490.102; 490.103; 490.105; 490.106; 490.107;
490.108; 490.109; 490.1091; 490.12; 490.121,
subdivisions 2, 3, 5, 8, 9, 10, 11, 12, 16, 17, 18,
19, 20; 490.124, subdivision 6; 490.132; 490.15;
490.16; 490.18.

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

2005 OMNIBUS RETIREMENT BILL

ARTICLE 1

CLARIFICATION AND RECODIFICATION OF
STATEWIDE SPECIALTY RETIREMENT PLANS

Section 1.

Minnesota Statutes 2004, section 3A.01,
subdivision 1, is amended to read:

Subdivision 1.

Purposes.

Each of the terms defined in
this section,for the purposes of this chapter shall be
given has the meanings meaning ascribed to them.

Sec. 2.

Minnesota Statutes 2004, section 3A.01, is amended
by adding a subdivision to read:

Subd. 1a.

Actuarial equivalent.

"Actuarial equivalent"
means the condition of one allowance or benefit having an equal
actuarial present value to another allowance or benefit,
determined by the actuary retained under section 356.214 as of a
given date at a specified age with each actuarial present value
based on the mortality table applicable for the plan and
approved under section 356.215, subdivision 18, and using the
applicable preretirement or postretirement interest rate
assumption specified in section 356.215, subdivision 8.

Sec. 3.

Minnesota Statutes 2004, section 3A.01, is amended
by adding a subdivision to read:

Subd. 1b.

Average monthly salary.

"Average monthly
salary" means the average of the member's highest five
successive years of salary that was received as a member of the
legislature and upon which the member has made contributions
under section 3A.03, subdivision 1, or for which the member of
the legislature has made payments for past service under
Minnesota Statutes 2004, section 3A.02, subdivision 2, or has
made, before July 1, 1994, payments in lieu of contributions
under Minnesota Statutes 1992, section 3A.031.

Sec. 4.

Minnesota Statutes 2004, section 3A.01, is amended
by adding a subdivision to read:

Subd. 1c.

Constitutional officer.

"Constitutional
officer" means a person who was duly elected, qualifies for, and
serves as the governor, the lieutenant governor, the attorney
general, the secretary of state, or the state auditor of the
state of Minnesota.

Sec. 5.

Minnesota Statutes 2004, section 3A.01,
subdivision 2, is amended to read:

Subd. 2.

Dependent child.

(a) "Dependent child" means
any natural or adopted child of a deceased member of the
legislature or a former legislator who is under the age of 18,
or who is under the age of 22 and is a full-time student, and
who,in either case,is unmarried and was actually dependent for
more than one-half of support upon such the legislator for a
period of at least 90 days immediately prior to before the
legislator's death. It

(b) The term also includes any child of the member of the
legislature or former legislator who was conceived during the
lifetime of, and who was born after the death of, the member or
former legislator. This subdivision shall be retroactive as to
any dependent child under the age of 22 years as of April 1,
1975.

Sec. 6.

Minnesota Statutes 2004, section 3A.01,
subdivision 6, is amended to read:

Subd. 6.

Director.

"Director" means the executive
director of the Minnesota State Retirement System who was
appointed under section 352.03, subdivision 5.

Sec. 7.

Minnesota Statutes 2004, section 3A.01, is amended
by adding a subdivision to read:

Subd. 6b.

Former legislator.

"Former legislator" means a
legislator who has ceased to be a member of the legislature for
any reason, including, but not limited to, the expiration of the
term for which a member of the legislature was elected or the
death of the member.

Sec. 8.

Minnesota Statutes 2004, section 3A.01, is amended
by adding a subdivision to read:

Subd. 6c.

Member of the legislature.

"Member of the
legislature" means a person who was a member of the house of
representatives or of the senate of the state of Minnesota who
has subscribed to the oath of office after July 1, 1965, and who
was first elected to a legislative office before July 1, 1997,
and retained coverage by the plan under Laws 1997, chapter 233,
article 2, section 15.

Sec. 9.

Minnesota Statutes 2004, section 3A.01,
subdivision 8, is amended to read:

Subd. 8.

Normal retirement age.

"Normal retirement age"
means the age of 60 years with regard to any member of the
legislature whose service terminates prior to the beginning of
the 1981 legislative session, and the age of 62 years with
regard to any member of the legislature whose service terminates
after the beginning of the 1981 session.

Sec. 10.

Minnesota Statutes 2004, section 3A.01, is
amended by adding a subdivision to read:

Subd. 9.

Retirement.

"Retirement" means the period of
time after which a former legislator is entitled to a retirement
allowance.

Sec. 11.

Minnesota Statutes 2004, section 3A.01, is
amended by adding a subdivision to read:

Subd. 10.

Salary.

(a) "Salary" means the regular
compensation payable under law to a member of the legislature
and paid to the person for service as a legislator.

(b) The term includes the monthly compensation paid to the
member of the legislature and the per diem payments paid during
a regular or special session to the member of the legislature.

(c) The term does not include per diem payments paid to a
member of the legislature other than during the regular or
special session; additional compensation attributable to a
leadership position under section 3.099, subdivision 3; living
expense payments under section 3.101; and special session living
expense payments under section 3.103.

Sec. 12.

Minnesota Statutes 2004, section 3A.011, is
amended to read:

3A.011 ADMINISTRATION OF PLAN.

The executive director and the board of directors of the
Minnesota State Retirement System shall administer the
legislators retirement plan in accordance with this chapter and
chapter 356A.

Sec. 13.

Minnesota Statutes 2004, section 3A.02,
subdivision 1, is amended to read:

Subdivision 1.

Qualifications.

(a) A former legislator
is entitled, upon written application to the director, to
receive a retirement allowance monthly, if the person:

(1) has either served at least six full years, without
regard to the application of section 3A.10, subdivision 2, or
has served during all or part of four regular sessions as a
member of the legislature, which service need not be continuous;

(2) has attained the normal retirement age;

(3) has retired as a member of the legislature; and

(4) has made all contributions provided for in section
3A.03, has made payments for past service under subdivision 2,
or has made payments in lieu of contributions under Minnesota
Statutes 1992, section 3A.031, prior to before July 1, 1994.

(b) This paragraph applies to members of the legislature
who terminate service as a legislator before July 1, 1997. For
service rendered before the beginning of the 1979 legislative
session, but not to exceed eight years of service, the
retirement allowance is an amount equal to five percent per year
of service of that member's average monthly salary. For service
in excess of eight years rendered before the beginning of the
1979 legislative session, and for service rendered after the
beginning of the 1979 legislative session,Unless the former
legislator has legislative service before January 1, 1979,the
retirement allowance is an amount equal to 2-1/2 percent per
year of service of that member's average monthly salary.

(c) This paragraph applies to members of the legislature
who terminate service as a legislator after June 30, 1997. The
retirement allowance is an amount equal to the applicable rate
or rates under paragraph (b) per year of service of the member's
average monthly salary and adjusted for that person on an
actuarial equivalent basis to reflect the change in the
postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent. The
adjustment must be calculated by or, alternatively, the
adjustment procedure must be specified by, the actuary retained
by the Legislative Commission on Pensions and Retirement under
section 356.214. The purpose of this adjustment is to ensure
that the total amount of benefits that the actuary predicts an
individual member will receive over the member's lifetime under
this paragraph will be the same as the total amount of benefits
the actuary predicts the individual member would receive over
the member's lifetime under the law in effect before enactment
of this paragraph. If the former legislator has legislative
service before January 1, 1979, the person's benefit must
include the additional benefit amount in effect on January 1,
1979, and adjusted as otherwise provided in this paragraph.

(d) (c) The retirement allowance accrues beginning with the
first day of the month of receipt of the application, but not
before age 60, and for the remainder of the former legislator's
life, if the former legislator is not serving as a member of the
legislature or as a constitutional officer or commissioner as
defined in section 352C.021, subdivisions 2 and 3 3A.01,
subdivision 1c. The annuity does not begin to accrue prior to
before the person's retirement as a legislator. No annuity
payment may be made retroactive for more than 180 days before
the date that the annuity application is filed with the director.

(e) (d) Any member who has served during all or part of
four regular sessions is considered to have served eight years
as a member of the legislature.

(f) (e) The retirement allowance ceases with the last
payment that accrued to the retired legislator during the
retired legislator's lifetime, except that the surviving spouse,
if any, is entitled to receive the retirement allowance of the
retired legislator for the calendar month in which the retired
legislator died.

Sec. 14.

Minnesota Statutes 2004, section 3A.02,
subdivision 1b, is amended to read:

Subd. 1b.

Reduced retirement allowance.

(a) Upon
separation from service after the beginning of the 1981
legislative session, a former member of the legislature who has
attained the age set by the board of directors of the Minnesota
State Retirement System and who is otherwise qualified in
accordance with under subdivision 1 is entitled,upon making
written application on forms supplied a form prescribed by the
director,to a reduced retirement allowance in . The reduced
retirement allowance is an amount equal to the retirement
allowance specified in subdivision 1, paragraph (b), that is
reduced so that the reduced annuity allowance is the actuarial
equivalent of the annuity allowance that would be payable if the
former member of the legislature deferred receipt of the annuity
allowance and the annuity allowance amount were was augmented
at an annual rate of three percent compounded annually from the
date the annuity allowance begins to accrue until age 62.

(b) The age set by the board of directors under paragraph
(a) cannot be less an earlier age than the early retirement age
under section 352.116, subdivision 1a.

(c) If there is an actuarial cost to the plan of resetting
the early retirement age under paragraph (a), the retired
legislator is required to pay an additional amount to cover the
full actuarial value. The additional amount must be paid in a
lump sum within 30 days of the certification of the amount by
the executive director.

(d) The executive director of the Minnesota State
Retirement System shall report to the Legislative Commission on
Pensions and Retirement on the utilization of this
provision annually on or before September 1, 2000.

Sec. 15.

Minnesota Statutes 2004, section 3A.02,
subdivision 3, is amended to read:

Subd. 3.

Appropriation.

The amounts required for payment
of retirement allowances provided by this section are
appropriated annually to the director from the participation of
the legislators retirement plan in the Minnesota postretirement
investment fund and shall . The retirement allowance must be
paid monthly to the recipients entitled thereto to those
retirement allowances.

Sec. 16.

Minnesota Statutes 2004, section 3A.02,
subdivision 4, is amended to read:

Subd. 4.

Deferred annuities augmentation.

(a) The
deferred annuity retirement allowance of any former legislator
must be augmented as provided herein.

(b) The required reserves applicable to the
deferred annuity retirement allowance, determined as of the date
the benefit begins to accrue using an appropriate mortality
table and an interest assumption of six percent, must be
augmented from the first of the month following the termination
of active service, or July 1, 1973, whichever is later, to the
first day of the month in which the annuity allowance begins to
accrue, at the following annually compounded rate of five
percent per annum compounded annually until January 1, 1981, and
thereafter at the rate of three percent per annum compounded
annually until January 1 of the year in which the former
legislator attains age 55. From that date to the effective date
of retirement, the rate is five percent compounded annually.or
rates:

rate period
(1) five percent until January 1, 1981

(2) three percent from January 1, 1981, or from the
first day of the month following
the termination of active service,
whichever is later, until January 1
of the year in which the former
legislator attains age 55
(3) five percent from the period end date under
clause (2) to the effective date
of retirement.

(b) The retirement allowance of, or the survivor benefit
payable on behalf of, a former member of the legislature who
terminated service before July 1, 1997, which is not first
payable until after June 30, 1997, must be increased on an
actuarial equivalent basis to reflect the change in the
postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a
calculation procedure and tables adopted by the board of
directors of the Minnesota State Retirement System and approved
by the actuary retained by the Legislative Commission on
Pensions and Retirement.

Sec. 17.

Minnesota Statutes 2004, section 3A.02,
subdivision 5, is amended to read:

Subd. 5.

Optional annuities.

(a) The board of directors
shall establish an optional retirement annuity in the form of a
joint and survivor annuity and an optional retirement annuity in
the form of a period certain and life thereafter. Except as
provided in paragraph (b), these optional annuity forms must be
actuarially equivalent to the normal annuity allowance computed
under this section, plus the actuarial value of any surviving
spouse benefit otherwise potentially payable at the time of
retirement under section 3A.04, subdivision 1. An individual
selecting an optional annuity under this subdivision waives and
the person's spouse waive any rights to surviving spouse
benefits under section 3A.04, subdivision 1.

(b) If a retired legislator selects the joint and survivor
annuity option, the retired legislator must receive a normal
single-life annuity allowance if the designated optional annuity
beneficiary dies before the retired legislator and no reduction
may be made in the annuity to provide for restoration of the
normal single-life annuity allowance in the event of the death
of the designated optional annuity beneficiary.

(c) The surviving spouse of a legislator who has attained
at least age 60 and who dies while a member of the legislature
may elect an optional joint and survivor annuity under paragraph
(a), in lieu of surviving spouse benefits under section 3A.04,
subdivision 1.

Sec. 18.

Minnesota Statutes 2004, section 3A.03,
subdivision 1, is amended to read:

Subdivision 1.

Percentage.

(a) Every member of the
legislature shall contribute nine percent of total salary,.

(b) The contribution must be made by payroll deduction,
to and must be paid into the state treasury and deposited in the
general fund. It shall be the duty of

(c) The director to must record the periodic contributions
of each member of the legislature and must credit such each
contribution to the member's account.

Sec. 19.

Minnesota Statutes 2004, section 3A.03,
subdivision 2, is amended to read:

Subd. 2.

Refund.

(a) A former member who has made
contributions under subdivision 1 and who is no longer a member
of the legislature is entitled to receive, upon written
application to the executive director on a form prescribed by
the executive director, a refund from the general fund of all
contributions credited to the member's account with interest
computed as provided in section 352.22, subdivision 2.

(b) The refund of contributions as provided in paragraph (a)
terminates all rights of a former member of the legislature and
the survivors of the former member under this chapter.

(c) If the former member of the legislature again becomes a
member of the legislature after having taken a refund as
provided in paragraph (a), the member must be considered is a
new member of this plan the unclassified employees retirement
program of the Minnesota State Retirement System.

(d) However, the member may reinstate the rights and credit
for service previously forfeited under this chapter if the
member repays all refunds taken,plus interest at an annual rate
of 8.5 percent compounded annually from the date on which the
refund was taken to the date on which the refund is repaid.

(d) (e) No person may be required to apply for or to accept
a refund.

Sec. 20.

Minnesota Statutes 2004, section 3A.04,
subdivision 1, is amended to read:

Subdivision 1.

Surviving spouse.

(a) Upon the death of a
member of the legislature while serving as such a member after
June 30, 1973, or upon the death of a former member of the
legislature with at least the number of six full years of
service as required by section 3A.02, subdivision 1, clause
(1) or service in all or part of four regular legislative
sessions, the surviving spouse shall be paid is entitled to a
survivor benefit in the amount of .

(b) The surviving spouse benefit is one-half of the
retirement allowance of the member of the legislature computed
as though the member were at least normal retirement age on the
date of death and based upon the member's allowable service
or upon eight years,whichever is greater. The augmentation
provided in section 3A.02, subdivision 4, if applicable, shall
must be applied for the period up to, and including,the month
of death.

(c) Upon the death of a former legislator receiving a
retirement allowance, the surviving spouse shall be is entitled
to one-half of the amount of the retirement allowance being paid
to the legislator. Such

(d) The surviving spouse benefit shall be paid during is
payable for the lifetime of the surviving spouse.

Sec. 21.

Minnesota Statutes 2004, section 3A.04,
subdivision 2, is amended to read:

Subd. 2.

Dependent children.

(a) Upon the death of a
member of the legislature while serving as a member, or upon the
death of a former member of the legislature who has rendered at
least the number of six full years of service as required by
section 3A.02, subdivision 1, clause (1) or service in all or
part of four regular legislative sessions and who was not
receiving a retirement allowance, each dependent child of the
member or former legislator shall be is entitled to receive a
survivor benefit in the following amount:

(1) for the first dependent child, a monthly allowance
which equals benefit equal to 25 percent of the monthly
retirement allowance of the member of the legislature or the
former legislator computed as though the member or the former
legislator had attained at least the normal retirement age on
the date of death and based upon the average monthly salary as
of the date of death or as of the date of termination, whichever
is applicable applies, and the member's allowable service or
eight years,whichever is greater;

(2) for each additional dependent child, a monthly
allowance which equals benefit equal to 12-1/2 percent of the
monthly retirement allowance of the member or the former
legislator computed as provided in the case of the first child
clause (1); but and

(3) the total amount paid to the surviving spouse and to
the dependent child or children shall may not exceed,in any
one month,100 percent of the monthly retirement allowance of
the member or of the former legislator computed as provided in
the case of the first child clause (1).

(b) The augmentation provided in section 3A.02, subdivision
4, if applicable, shall be applied applies from the first day of
the month next following the date of the termination of the
person from service as a member of the legislature to the month
of the death of the person.

(c) Upon the death of a former legislator who was receiving
a retirement allowance, the a surviving dependent child shall be
is entitled to the applicable percentage specified above in
paragraph (a), clause (1) or (2), whichever applies,of the
amount of the allowance which was paid to the former legislator
for the month immediately prior to before the date of death of
the former legislator.

(d) The payments for dependent children shall must be made
to the surviving spouse or to the guardian of the estate of the
dependent children, if there is one.

Sec. 22.

Minnesota Statutes 2004, section 3A.04,
subdivision 3, is amended to read:

Subd. 3.

Payment.

The surviving spouse's spouse and
dependent children's child or children survivor benefits payable
under this section shall be paid are payable by the director
monthly in the same manner as retirement allowances are
authorized to be paid by this chapter.

Sec. 23.

Minnesota Statutes 2004, section 3A.04,
subdivision 4, is amended to read:

Subd. 4.

Death refunds.

(a) Upon the death of a member
of the legislature or of a former legislator who was not
receiving a retirement allowance,without leaving either a
surviving spouse or a dependent child or dependent children, the
last designated beneficiary named on a form that was filed with
the director before the death of the legislator, or if no
designation is filed, the estate of the member or the former
legislator, upon application, shall be is entitled to a refund.

(b) The refund is the amount of contributions credited to
the person's account plus interest as provided in section 3A.03,
subdivision 2, clause (2) paragraph (a).

Sec. 24.

Minnesota Statutes 2004, section 3A.04, is
amended by adding a subdivision to read:

Subd. 5.

Appropriation.

The survivor benefits and the
death refunds authorized by this section are appropriated to the
director from the general fund when they are due and payable.

Sec. 25.

Minnesota Statutes 2004, section 3A.05, is
amended to read:

3A.05 APPLICATION FOR SURVIVOR BENEFIT.

(a) Applications for survivor benefits pursuant to under
section 3A.04shall must be filed with the director by the
surviving spouse and dependent child or children entitled to
benefits pursuant to under section 3A.04, or by the guardian of
the estate, if there is one, of the dependent child or children.

(b) Survivor benefits shall accrue as of the first day of
the month following the death of the member of the legislature
or former legislator and payments shall commence as of the first
of the month next following the filing of the application,
and shall be are retroactive to the date the benefit accrues;
provided, however, that no payment shall be retroactive for more
than or the first of the month occurring 12 months prior
to before the month in which the application is filed with the
director, whichever is earlier.

Sec. 26.

Minnesota Statutes 2004, section 3A.07, is
amended to read:

3A.07 APPLICATION.

(a) Except as provided in paragraph (b), this chapter
applies to members of the legislature in service after July 1,
1965, who otherwise meet the requirements of this chapter.

(b) Members of the legislature who were elected for the
first time after June 30, 1997, or members of the legislature
who were elected before July 1, 1997, and who, after July 1,
1998, elect not to be members of the plan established by this
chapter are covered by the unclassified employees retirement
program governed by chapter 352D.

(c) The post-July 1, 1998, coverage election under
paragraph (b) is irrevocable and must be made on a form
prescribed by the director. The second chance referendum
election under Laws 2002, chapter 392, article 15, also is
irrevocable.

Sec. 27.

Minnesota Statutes 2004, section 3A.10,
subdivision 1, is amended to read:

Subdivision 1.

Service credit for legislative term.

(a)
In the case of a member of the house of representatives,one
full term of office shall must be considered two full years of
service,notwithstanding the fact that the oath of office may be
was taken on different days each biennium.

(b) In the case of a member of the senate, one full term of
office shall must be considered four full years of service,
notwithstanding the fact that the oath of office may be was
taken on different days at the start of each term.

(c) For purposes of this chapter, a legislative term shall
must be deemed to commence on January 1st 1 and to end on
December 31st 31.

Sec. 28.

Minnesota Statutes 2004, section 3A.12, is
amended to read:

3A.12 COVERAGE BY MORE THAN ONE RETIREMENT SYSTEM OR
ASSOCIATION.

Subdivision 1.

Entitlement to annuity.

(a) Any
legislator who has been an employee covered by a member of a
retirement plan listed in paragraph (b) is entitled, when
otherwise qualified, to a retirement allowance or annuity from
each plan if the total allowable service in all plans or in any
two of these plans totals ten or more years.

(b) This section applies to any retirement plan or program
administered by the Minnesota State Retirement System, or a
member of any retirement plan administered by the Public
Employees Retirement Association,including the Public Employees
Retirement Association police and fire fund, or the Teachers
Retirement Association, or the Minneapolis employees
retirement Fund plan, or the State Patrol retirement fund plan,
or any other public employee retirement system in the state of
Minnesota having a like provision but excluding all .

(c) This section does not apply to other funds retirement
plans providing benefits for police or firefighters, shall be
entitled when qualified to an annuity from each fund if the
total allowable service for which the legislator has credit in
all funds or in any two of these funds totals ten or more years,
provided .

(d) No portion of the allowable service upon which the
retirement annuity from one fund plan is based is again used in
the computation for benefits from another fund plan. The
annuity from each fund shall plan must be determined by the
appropriate provisions of the law,except that the requirement
that a person must have at least ten a minimum number of years
of allowable service in the respective system or
association shall does not apply for the purposes of this
section provided if the combined service in two or more of these
funds plans equals ten or more years. The augmentation of
deferred annuities provided in section 3A.02, subdivision
4, shall apply applies to the annuities accruing hereunder under
this section.

Subd. 2.

Refund repayment.

Any A former legislator who
has received a refund as provided in section 3A.03, subdivision
2, who is a currently contributing member of a retirement fund
plan specified in subdivision 1, paragraph (b), may repay the
refund as provided in section 3A.03, subdivision 2. Any A
member of the legislature who has received a refund from any of
the funds retirement plans specified in subdivision 1,may repay
the refund to the respective fund plan under such terms and
conditions consistent with the law governing such fund the
retirement plan if the law governing such fund the plan permits
the repayment of refunds. If the total amount to be repaid,
including principal and interest exceeds $2,000, repayment may
be made in three equal installments over a period of 18 months,
with the interest accrued during the period of the repayment
added to the final installment.

Sec. 29.

Minnesota Statutes 2004, section 3A.13, is
amended to read:

3A.13 EXEMPTION FROM PROCESS AND TAXATION; HEALTH PREMIUM
DEDUCTION.

(a) The provisions of section 352.15shall apply to the
legislators retirement plan, chapter 3A.

(b) The executive director of the Minnesota State
Retirement System must, at the request of a retired legislator
who is enrolled in a health insurance plan covering state
employees, deduct the person's health insurance premiums from
the person's annuity and transfer the amount of the premium to a
health insurance carrier covering state employees.

Sec. 30.

[352C.001] RETIREMENT PLAN; APPLICATION.

(a) The retirement plan applicable to a former
constitutional officer who was first elected to a constitutional
office after July 1, 1967, and before July 1, 1997, is the
applicable portions of this chapter and chapter 356 in effect on
the date on which the person terminated active service as a
constitutional officer.

(b) Nothing in this section or section 31 or 84,
subdivision 2, is intended to reduce the benefits of former
constitutional officers or to adversely modify their eligibility
for benefits in effect as of the day before the effective date
of this section.

Sec. 31.

Minnesota Statutes 2004, section 352C.091,
subdivision 1, is amended to read:

Subdivision 1.

Administrative agency and standards.

This
chapter (a) The elected officers retirement plan must be
administered by the board of directors and the executive
director of the Minnesota State Retirement System.

(b) The elected state officers retirement plan must be
administered consistent with this chapter the applicable
statutory provisions governing the plan and chapters 356 and
356A.

Sec. 32.

Minnesota Statutes 2004, section 352C.10, is
amended to read:

352C.10 BENEFIT ADJUSTMENTS.

Retirement allowances payable to retired constitutional
officers pursuant to section 352C.031 and surviving spouse
benefits payable pursuant to section 352C.04, shall must be
adjusted in the same manner, at the same times and in the same
amounts as are benefits payable from the Minnesota
postretirement investment fund to retirees of a participating
public pension fund.

Sec. 33.

Minnesota Statutes 2004, section 352D.02,
subdivision 1, is amended to read:

Subdivision 1.

Coverage.

(a) Employees enumerated in
paragraph (c), clauses (2), (3), (4), and (6) to (14), if they
are in the unclassified service of the state or Metropolitan
Council and are eligible for coverage under the general state
employees retirement plan under chapter 352, are participants in
the unclassified plan under this chapter unless the employee
gives notice to the executive director of the Minnesota State
Retirement System within one year following the commencement of
employment in the unclassified service that the employee desires
coverage under the general state employees retirement plan. For
the purposes of this chapter, an employee who does not file
notice with the executive director is deemed to have exercised
the option to participate in the unclassified plan.

(b) Persons referenced in paragraph (c), clauses (1) and
clause (5), are participants in the unclassified program under
this chapter unless the person is eligible to elect different
coverage under section 3A.07or 352C.011 and, after July 1,
1998, elects elected retirement coverage by the applicable
alternative retirement plan. Persons referenced in paragraph
(c), clause (15), are participants in the unclassified program
under this chapter for judicial employment in excess of the
service credit limit in section 490.121, subdivision 22.

(c) Enumerated employees and referenced persons are:

(1) the governor, the lieutenant governor, the secretary of
state, the state auditor, and the attorney general;

(2) an employee in the Office of the Governor, Lieutenant
Governor, Secretary of State, State Auditor, Attorney General;

(3) an employee of the State Board of Investment;

(4) the head of a department, division, or agency created
by statute in the unclassified service, an acting department
head subsequently appointed to the position, or an employee
enumerated in section 15A.0815 or 15A.083, subdivision 4;

(5) a member of the legislature;

(6) a full-time unclassified employee of the legislature or
a commission or agency of the legislature who is appointed
without a limit on the duration of the employment or a temporary
legislative employee having shares in the supplemental
retirement fund as a result of former employment covered by this
chapter, whether or not eligible for coverage under the
Minnesota State Retirement System;

(7) a person who is employed in a position established
under section 43A.08, subdivision 1, clause (3), or in a
position authorized under a statute creating or establishing a
department or agency of the state, which is at the deputy or
assistant head of department or agency or director level;

(8) the regional administrator, or executive director of
the Metropolitan Council, general counsel, division directors,
operations managers, and other positions as designated by the
council, all of which may not exceed 27 positions at the council
and the chair;

(9) the executive director, associate executive director,
and not to exceed nine positions of the Higher Education
Services Office in the unclassified service, as designated by
the Higher Education Services Office before January 1, 1992, or
subsequently redesignated with the approval of the board of
directors of the Minnesota State Retirement System, unless the
person has elected coverage by the individual retirement account
plan under chapter 354B;

(10) the clerk of the appellate courts appointed under
article VI, section 2, of the Constitution of the state of
Minnesota;

(11) the chief executive officers of correctional
facilities operated by the Department of Corrections and of
hospitals and nursing homes operated by the Department of Human
Services;

(12) an employee whose principal employment is at the state
ceremonial house;

(13) an employee of the Minnesota Educational Computing
Corporation;

(14) an employee of the State Lottery who is covered by the
managerial plan established under section 43A.18, subdivision 3;
and

(15) a judge who has exceeded the service credit limit in
section 490.121, subdivision 22.

Sec. 34.

Minnesota Statutes 2004, section 355.01,
subdivision 3e, is amended to read:

Subd. 3e.

Judge.

"Judge" means a judge as defined in
section 490.121, subdivision 3 21a.

Sec. 35.

Minnesota Statutes 2004, section 356.65,
subdivision 2, is amended to read:

Subd. 2.

Disposition of abandoned amounts.

Any unclaimed
public pension fund amounts existing in any public pension fund
are presumed to be abandoned, but are not subject to the
provisions of sections 345.31 to 345.60. Unless the benefit
plan of the public pension fund specifically provides for a
different disposition of unclaimed or abandoned funds or
amounts, any unclaimed public pension fund amounts cancel and
must be credited to the public pension fund. If the unclaimed
public pension fund amount exceeds $25 and the inactive or
former member again becomes a member of the applicable public
pension plan or applies for a retirement annuity under section
3A.12, 352.72, 352B.30, 352C.051,353.71, 354.60, 356.30, or
422A.16, subdivision 8, whichever applies, the canceled amount
must be restored to the credit of the person.

Sec. 36.

Minnesota Statutes 2004, section 490.121,
subdivision 1, is amended to read:

Subdivision 1.

Scope.

For purposes of sections 490.121
to 490.132, unless the context clearly indicates otherwise, each
of the terms defined in this section have has the meanings
meaning given them unless the context clearly indicates
otherwise it.

Sec. 37.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 2a.

Actuarial equivalent.

"Actuarial equivalent"
means the condition of one annuity or benefit having an equal
actuarial present value as another annuity or benefit,
determined as of a given date with each actuarial present value
based on the appropriate mortality table adopted by the board of
directors of the Minnesota State Retirement System based on the
experience of the fund as recommended by the actuary retained
under section 356.214 and approved under section 356.215,
subdivision 18, and using the applicable preretirement or
postretirement interest rate assumption specified in section
356.215, subdivision 8.

Sec. 38.

Minnesota Statutes 2004, section 490.121,
subdivision 4, is amended to read:

Subd. 4.

Allowable service.

(a) "Allowable service"
means any calendar month, subject to the service credit limit in
subdivision 22, served as a judge at any time, or during which
the judge received compensation for that service from the state,
municipality, or county, whichever applies, and for which the
judge made any required member contribution. It also includes
any month served as a referee in probate for all referees in
probate who were in office prior to before January 1, 1974.

(b) "Allowable service" does not mean service as a retired
judge.

Sec. 39.

Minnesota Statutes 2004, section 490.121,
subdivision 6, is amended to read:

Subd. 6.

Annuity.

"Annuity" means the payments that are
made each year to an annuitant from the judges' retirement fund,
pursuant to the provisions of under sections 490.121 to 490.132.

Sec. 40.

Minnesota Statutes 2004, section 490.121,
subdivision 7, is amended to read:

Subd. 7.

Annuitant.

"Annuitant" means a former judge, a
surviving spouse,or a dependent child who is entitled to and is
receiving an annuity under the provisions of sections 490.121 to
490.132.

Sec. 41.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 7a.

Approved actuary.

"Approved actuary" means an
actuary as defined in section 356.215, subdivision 1, paragraph
(c).

Sec. 42.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 7b.

Court.

"Court" means any court of this state
that is established by the Minnesota Constitution.

Sec. 43.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 7c.

Dependent surviving child.

"Dependent
surviving child" means any natural or adopted child of a
deceased judge who has not reached the age of 18 years, or
having reached the age of 18, is under age 22 and who is a
full-time student throughout the normal school year, is
unmarried, and is actually dependent for more than one-half of
the child's support upon the judge for a period of at least 90
days before the judge's death. It also includes any natural
child of the judge who was born after the death of the judge.

Sec. 44.

Minnesota Statutes 2004, section 490.121,
subdivision 13, is amended to read:

Subd. 13.

Disability.

"Disability" means the permanent
inability of a judge to continue to perform the functions of
judge by reason of a physical or mental impairment resulting
from a sickness or an injury.

Sec. 45.

Minnesota Statutes 2004, section 490.121,
subdivision 14, is amended to read:

Subd. 14.

Disability retirement date.

"Disability
retirement date" means the last day of the first month after the
date on which the governor determines, upon receipt of the
voluntary application by the judge or otherwise, that a judge
suffers from a disability.

Sec. 46.

Minnesota Statutes 2004, section 490.121,
subdivision 15, is amended to read:

Subd. 15.

Disability retirement annuity.

"Disability
retirement annuity" means an annuity to which a judge is
entitled under section 490.124, subdivisions 1 and 4,after the
retirement for reason of the judge because of a disability.

Sec. 47.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 15a.

Early retirement date.

"Early retirement date"
means the last day of the month after a judge attains the age of
60 but before the judge reaches the normal retirement date.

Sec. 48.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 15b.

Early retirement annuity.

"Early retirement
annuity" means an annuity to which a judge is entitled under
section 490.124, subdivisions 1 and 3, upon retirement by the
judge at an early retirement date.

Sec. 49.

Minnesota Statutes 2004, section 490.121,
subdivision 21, is amended to read:

Subd. 21.

Final average compensation.

"Final average
compensation" means the total amount of the salary payable to a
judge in the highest five years out of the last ten years prior
to before the event of maturity of benefits termination of
judicial service, divided by five; provided, however, that if
the number of years of service by the judge equals or exceeds
ten. If the number of years of service by the judge is less
than ten, but more than five, the highest five shall years of
salary must be counted, and .If the number of years of service
by the judge is less than five, the aggregate salary in such for
the period shall of service must be divided by the number of
months in such the period and multiplied by 12.

Sec. 50.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 21a.

Judge.

"Judge" means a judge or a justice of
any court as defined under subdivision 7b.

Sec. 51.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 21b.

Judges' retirement fund; retirement fund;
fund.

"Judges' retirement fund," "retirement fund," or "fund"
means the fund created by section 490.123.

Sec. 52.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 21c.

Mandatory retirement date.

"Mandatory
retirement date" means the last day of the month in which a
judge has attained 70 years of age.

Sec. 53.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 21d.

Normal retirement annuity.

Except as
otherwise provided in sections 490.121 to 490.132, "normal
retirement annuity" means an annuity to which a judge is
entitled under section 490.124, subdivision 1, upon retirement
on or after the normal retirement date of the judge.

Sec. 54.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 21e.

Normal retirement date.

"Normal retirement
date" means the last day of the month in which a judge attains
the age of 65.

Sec. 55.

Minnesota Statutes 2004, section 490.121,
subdivision 22, is amended to read:

Subd. 22.

Service credit limit.

"Service credit limit"
means the greater of: (1) 24 years of allowable service
under this chapter 490; or (2) for judges with allowable service
rendered prior to before July 1, 1980, the number of years of
allowable service under chapter 490, which, when multiplied by
the percentage listed in section 356.315, subdivision 7 or 8,
whichever is applicable to each year of service, equals 76.8.

Sec. 56.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 23.

Surviving spouse.

"Surviving spouse" means the
surviving legally married spouse of a deceased judge.

Sec. 57.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 24.

Survivor's annuity.

"Survivor's annuity" means
an annuity to which a surviving spouse or dependent child is
entitled under section 490.124, subdivision 9.

Sec. 58.

Minnesota Statutes 2004, section 490.122, is
amended to read:

490.122 ADMINISTRATION OF JUDGES' RETIREMENT.

Subdivision 1.

Administration.

The policy-making,
management, and administrative functions governing the operation
of the judges' retirement fund and the administration
of sections 490.121 to 490.132 this chapter are vested in the
board of directors and executive director of the Minnesota State
Retirement System with such . In administering the plan and
fund, the board and the director have the same duties,
authority, and responsibility as are provided in chapter 352.

Subd. 2.

Inapplicability of certain laws.

Except as
otherwise specified, no provision of chapter 352 applies to the
judges' retirement fund or any judge.

Subd. 3.

Fiduciary responsibility.

Fiduciary
activities of relating to the uniform judges' retirement and
Survivors' Annuities for Judges plan must be undertaken in a
manner consistent with chapter 356A.

Sec. 59.

Minnesota Statutes 2004, section 490.123,
subdivision 1, is amended to read:

Subdivision 1.

Fund creation; revenue and authorized
disbursements.

(a) There is created a special fund to be known
as the "judges' retirement fund."

(b) The judges' retirement fund must be credited with all
contributions,;all interest, dividends, and other investment
proceeds;and all other income authorized by this chapter or
other applicable law.

(c) From this fund there are appropriated the payments
authorized by sections 490.121 to 490.132, in the amounts and at
the times provided, including the necessary and reasonable
expenses of the Minnesota State Retirement System in
administering the fund and the transfers to the Minnesota
postretirement investment fund.

Sec. 60.

Minnesota Statutes 2004, section 490.123,
subdivision 1a, is amended to read:

Subd. 1a.

Member contribution rates.

(a) A judge who is
covered by the federal Old Age, Survivors, Disability, and
Health Insurance Program and whose service does not exceed the
service credit limit in section 490.121, subdivision 22, shall
contribute to the fund from each salary payment a sum equal to
8.00 percent of salary.

(b) A judge not so covered whose service does not exceed
the service credit limit in section 490.121, subdivision 22,
shall contribute to the fund from each salary payment a sum
equal to 8.15 percent of salary.

(c) The contribution under this subdivision is payable by
salary deduction. The deduction must be made by the state court
administrator under section 352.04, subdivisions 4, 5, and 8.

Sec. 61.

Minnesota Statutes 2004, section 490.123,
subdivision 1b, is amended to read:

Subd. 1b.

Employer contribution rate.

(a) The employer
contribution rate to the fund on behalf of a judge is 20.5
percent of salary and . The employer contribution obligation
continues after a judge exceeds the service credit limit in
section 490.121, subdivision 22.

(b) The employer contribution must be paid by the state
court administrator and . The employer contribution is payable
at the same time as member contributions are made under
subdivision 1a or as employee contributions are made to the
unclassified plan in program governed by chapter 352D for judges
whose service exceeds the limit in section 490.121, subdivision
22, are remitted.

Sec. 62.

Minnesota Statutes 2004, section 490.123,
subdivision 1c, is amended to read:

Subd. 1c.

Additional employer contribution.

In the event
that If the employer contribution under subdivision 1b and the
assets of the judges retirement fund are insufficient to meet
reserve transfers to the Minnesota postretirement investment
fund or payments of survivor benefits before July 1, 1993 in a
month, the necessary amount is appropriated from the general
fund to the executive director of the Minnesota State Retirement
System, upon the certification of the required amount by the
executive director to the commissioner of finance.

Sec. 63.

Minnesota Statutes 2004, section 490.123,
subdivision 2, is amended to read:

Subd. 2.

Commissioner of finance.

The commissioner of
finance shall be is the ex officio treasurer of the judges'
retirement fund and the . The commissioner's general bond to the
state shall must be so conditioned as to cover all liability for
acting as the treasurer of this the fund. All moneys money
received by the commissioner pursuant to under this section
shall must be set aside in the state treasury to the credit of
the judges' retirement fund. The commissioner shall transmit
monthly to the executive director described in section 352.03,
subdivision 5, a detailed statement of all amounts so received
and credited to the fund. The commissioner shall pay out the
fund only upon vouchers signed by said executive director;
provided that vouchers for investment may be signed by the
secretary of the State Board of Investment.

Sec. 64.

Minnesota Statutes 2004, section 490.123,
subdivision 3, is amended to read:

Subd. 3.

Investment.

(a) The executive director referred
to in subdivision 2 of the Minnesota State Retirement System
shall, from time to time, certify to the State Board of
Investment such portions of the judges' retirement fund as in
the director's judgment may not be required for immediate use.

(b) Assets from the judges' retirement fund shall must be
transferred to the Minnesota postretirement investment fund for
retirement and disability benefits as provided in sections
11A.18 and 352.119.

(c) The State Board of Investment shall thereupon invest
and reinvest sums so transferred, or certified, in such
securities as are duly authorized legal investments for such
purposes under section 11A.24in compliance with sections
356A.04 and 356A.06.

Sec. 65.

Minnesota Statutes 2004, section 490.124,
subdivision 1, is amended to read:

Subdivision 1.

Basic retirement annuity.

(a) Except as
qualified hereinafter from and after the mandatory retirement
date, the normal retirement date, the early retirement date, or
one year from the disability retirement date, as the case may
be, a retiring judge is eligible to receive a retirement annuity
shall be payable to a retiring judge from the judges' retirement
fund in .

(b) The retirement annuity is an amount equal to: (1) the
percent specified in section 356.315, subdivision 7, multiplied
by the judge's final average compensation with that result then
multiplied by the number of years and fractions of years of
allowable service rendered prior to before July 1, 1980; plus
(2) the percent specified in section 356.315, subdivision 8,
multiplied by the judge's final average compensation with that
result then multiplied by the number of years and fractions of
years of allowable service rendered after June 30, 1980.

(c) Service that exceeds the service credit limit in
section 490.121, subdivision 22, must be excluded in calculating
the retirement annuity, but the compensation earned by the judge
during this period of judicial service must be used in
determining a judge's final average compensation and calculating
the retirement annuity.

Sec. 66.

Minnesota Statutes 2004, section 490.124,
subdivision 2, is amended to read:

Subd. 2.

Minimum service requirement; extension of term.

No (a) Unless section 356.30 applies, a judge shall be is not
eligible for an annuity at the normal retirement date or the
early retirement date if the judge has less than five years of
allowable service.

(b) A judge who shall retire retires on or, as permitted
under sections 490.121 to 490.132, after the judge's mandatory
retirement date, shall be is entitled to a proportionate annuity
based upon the allowable service of the judge at the date of
retirement.

A judge who was in office on December 31, 1973, and
thereafter and who, by the date on which the current term
expires, would not be eligible to retire with full benefits
under statutes in effect on December 31, 1973, may apply to the
governor for an extension to serve up to three additional years,
stating the intention of the judge to retire upon attaining
eligibility to receive a retirement allowance. Notwithstanding
section 490.125, the governor shall forthwith make a written
order accepting the retirement application, and extending the
term of office of the judge for the period of time, not to
exceed three years, as may be necessary to make the judge
eligible for retirement, solely for purposes of computing
benefits hereunder.

Sec. 67.

Minnesota Statutes 2004, section 490.124,
subdivision 3, is amended to read:

Subd. 3.

Early reduced retirement.

The retirement
annuity provided by under subdivision 1 of any judge electing
who elects to retire at an early retirement date shall must be
reduced by one-half of one percent per month from the retirement
date to the normal retirement date.

Sec. 68.

Minnesota Statutes 2004, section 490.124,
subdivision 4, is amended to read:

Subd. 4.

Disability retirement.

(a) When the governor
determines that a judge is disabled under section 490.121,
subdivision 13, notice of the governor's determination must be
sent to the judge, to the chief justice of the Supreme Court, to
the state court administrator, and to the executive director of
the Minnesota State Retirement System.

(b) From and after disability retirement date, a disabled
judge shall be is entitled to continuation of the judge's full
salary payable by the judge's employer, as if the judge's office
were not vacated by retirement, for a period of up to one full
year, but in no event beyond the judge's mandatory retirement
date. During this year the judge will is entitled to earn
additional service credit in the judges' retirement plan. The
salary earned will be payable to a disabled judge is subject to
retirement deductions and will must be included in computing
final average compensation of the judge. Thereafter

(c) At the conclusion of the year of continued salary
following a disability or upon the judge's mandatory retirement
date, whichever is earlier, the disabled judge is entitled to a
disability retirement annuity computed as provided in
subdivision 1 shall be paid, provided that . If the computed
retirement annuity is a smaller amount,the judge shall is
entitled to receive a minimum annuity of 25 percent of the
judge's final average compensation.

Sec. 69.

Minnesota Statutes 2004, section 490.124,
subdivision 5, is amended to read:

Subd. 5.

Deferred benefits.

(a) Any A benefit to which a
judge is entitled under this section may be deferred until the
early or normal retirement date or later, notwithstanding the
termination of such the judge's service prior thereto.

(b) The retirement annuity of, or the survivor benefit
payable on behalf of, a former judge, who terminated service
before July 1, 1997, which is not first payable until after June
30, 1997, must be increased on an actuarial equivalent basis to
reflect the change in the postretirement interest rate actuarial
assumption under section 356.215, subdivision 8, from five
percent to six percent under a calculation procedure and tables
adopted by the board of directors of the Minnesota State
Retirement System and approved by the actuary retained by the
Legislative Commission on Pensions and Retirement under section
356.214.

Sec. 70.

Minnesota Statutes 2004, section 490.124,
subdivision 8, is amended to read:

Subd. 8.

Exclusive normal retirement benefits.

Any (a)
Except as provided in paragraph (b), a judge who retires after
December 31, 1973, shall be is entitled to a retirement pension,
retirement compensation or other retirement payment under
statutes applicable solely to judges pursuant to under this
section only, except that any such .

(b) A judge who was in office prior to before January 1,
1974, who retires at or after normal retirement age may then
elect to receive during the judge's lifetime a normal retirement
annuity computed on the basis of retirement compensation
provided for such judge under statutes in effect on December 31,
1973, in lieu of the amount of normal retirement annuity
otherwise computed under sections 490.121 to 490.132.

For purposes of this subdivision, the Conciliation Court of
the city of Duluth shall be deemed to have been a court of
record by the statutes in effect on December 31, 1973.

Sec. 71.

Minnesota Statutes 2004, section 490.124,
subdivision 9, is amended to read:

Subd. 9.

Survivors' annuity.

(a) Upon the death of a
judge prior to before retirement, or upon the death of a person
who has qualified for an annuity under this section but who
ceases to be a judge prior to before retirement and has who not
received a refund of contributions pursuant to under subdivision
12, a surviving spouse is entitled to,or, if there be no
surviving spouse, dependent children, shall are entitled to
receive an annuity, payable monthly, equal in total to 60
percent of the normal retirement annuity which would have been
payable to the judge or former judge had the date of death been
the normal retirement date, provided that the .

(b) The annuity payable to a surviving spouse or to
dependent children shall receive an annuity is an amount of not
less than 25 percent of the judge's or the former judge's final
average compensation.

If a judge, whose surviving spouse was not entitled to
survivors benefits provided solely for judges under statutes in
effect prior to January 1, 1974, shall have died prior to
retirement on or after May 23, 1973 and before January 1, 1974,
a surviving spouse and dependent children, if any, shall be
entitled to survivors benefits as provided hereunder as if such
judge had died on January 1, 1974.

Sec. 72.

Minnesota Statutes 2004, section 490.124,
subdivision 10, is amended to read:

Subd. 10.

Prior survivors' benefits; limitation.

(a)
Benefits provided pursuant to under Minnesota Statutes 2004,
section 490.102, subdivision 6, or 490.1091, for a surviving
spouse of a retired judge, payable after the death of the judge,
shall be are limited to:

(a) spouses of judges who have retired prior to before
January 1, 1974; and .

(b) spouses of judges in office on December 31, 1973 and
thereafter who elect to continue contributions pursuant to
section 490.102, subdivision 6 or 490.109. The contributions
shall be in addition to contributions pursuant to section
490.123, and upon retirement the judge may not elect to receive
any optional annuity pursuant to subdivision 11 unless the judge
and the spouse shall waive any benefits pursuant to section
490.102, subdivision 6 or 490.1091.

No other judge in office on or after January 1, 1974, shall
be is required to contribute pursuant to under Minnesota
Statutes 2004,section 490.102, subdivision 6,or 490.109.

Sec. 73.

Minnesota Statutes 2004, section 490.124,
subdivision 11, is amended to read:

Subd. 11.

limitation on survivor benefits;optional
annuities.

(a) No survivor or death benefits may be paid in
connection with the death of a judge who retires after December
31, 1973, except as otherwise provided in sections 490.121 to
490.132.

(b) Except as provided in subdivision 10, a judge may elect
to receive, instead of the normal retirement annuity, an
optional retirement annuity in the form of either (1) an annuity
payable for a period certain and for life after that period, (2)
a joint and survivor annuity without reinstatement in the event
of if the designated beneficiary predeceasing predeceases the
retired judge, or (3) a joint and survivor annuity with
reinstatement in the event of if the designated beneficiary
predeceasing predeceases the retired judge.

(c) An optional retirement annuity must be actuarially
equivalent to a single-life annuity with no term certain and
must be established by the board of directors of the Minnesota
State Retirement System. In establishing these optional
retirement annuity forms, the board shall obtain the written
recommendation of the actuary retained by the Legislative
Commission on Pensions and Retirement under section 356.214.
The recommendations must be retained as a part of the permanent
records of the board.

Sec. 74.

Minnesota Statutes 2004, section 490.124,
subdivision 12, is amended to read:

Subd. 12.

Refund.

(a) A person who ceases to be a
judge but who does not qualify for a retirement annuity or other
benefit under section 490.121 is entitled to a refund in an
amount that is equal to all of the member's employee
contributions to the judges' retirement fund plus interest
computed under section 352.22, subdivision 2.

(b) A refund of contributions under paragraph (a)
terminates all service credits and all rights and benefits of
the judge and the judge's survivors under this chapter.

(c) A person who becomes a judge again after taking a
refund under paragraph (a) may reinstate the previously
terminated allowable service credits credit, rights, and
benefits by repaying the total amount of the previously received
refund. The refund repayment must include interest on the total
amount previously received at an annual rate of 8.5 percent,
compounded annually,from the date on which the refund was
received until the date on which the refund is repaid.

Sec. 75.

Minnesota Statutes 2004, section 490.124,
subdivision 13, is amended to read:

Subd. 13.

Death refund.

If a judge who has not received
other benefits under this chapter dies and there are no survivor
benefits payable under this chapter, a refund plus interest as
provided in subdivision 12 is payable to the last designated
beneficiary named on a form filed with the director before the
death of the judge, or,if no designation is on file, the refund
is payable to the estate of the deceased judge.

Sec. 76.

Minnesota Statutes 2004, section 490.125,
subdivision 1, is amended to read:

Subdivision 1.

Mandatory retirement age.

Except as
otherwise provided in sections 490.121 to 490.132, each a judge
shall retire terminate active service as a judge on the judge's
mandatory retirement date.

Sec. 77.

Minnesota Statutes 2004, section 490.125,
subdivision 2, is amended to read:

Subd. 2.

Exception.

Except as provided by sections
490.025, subdivision 3, 490.102, subdivisions 3 and 3a and
490.12, subdivision 2,Any judge in office on December 31, 1973
who shall have attained 70 years of age on or prior to such date
shall retire upon the expiration of the term of office of such
judge.

Sec. 78.

Minnesota Statutes 2004, section 490.126, is
amended to read:

490.126 PROCEDURES.

Subdivision 1.

Compulsory retirement.

Proceedings for
compulsory retirement of a judge, if necessary, shall must be
conducted in accordance with rules issued by the Supreme Court
pursuant to under section 490.16 490A.02.

Subd. 2.

Vacancies.

Any judge may make written
application to the governor for retirement. The governor
thereupon shall direct the judge's retirement by written order
which, when filed in the Office of the Secretary of State, shall
effect effects a vacancy in the office to be filled as provided
by law.

Subd. 3.

Application for annuity or refund.

An
application for an annuity or a refund under sections 490.121 to
490.132 may be made by the potential annuitant or by someone
authorized to act for the potential annuitant. Every
application for an annuity or refund, with accompanied by a
proof of age and by a record of years of service when
required, shall must be submitted to the governing
body executive director of the Minnesota State Retirement System
in a form prescribed by it the director.

Subd. 4.

Manner of payment.

Unless otherwise
specifically provided by statute or agreed upon by the annuitant
and the governing body board of directors of the Minnesota State
Retirement System, annuities payable under sections 490.121 to
490.132 shall must be paid in the manner and at the intervals as
prescribed by the executive director of the Minnesota State
Retirement System. The annuity shall cease ceases with the last
payment received by the annuitant while living.

Subd. 5.

Exemption from process; no assignment.

None of
the money, annuities, or other benefits provided in this chapter
is assignable either in law or equity or is subject to state
estate tax, or to execution, levy, attachment, garnishment, or
other legal process, except as provided in section 518.58,
518.581, or 518.6111.

Sec. 79.

Minnesota Statutes 2004, section 490.133, is
amended to read:

490.133 RETIREMENT; TRANSITION PROVISIONS; TRANSFER TO
COURT OF APPEALS.

(a) If a judge to whom or to whose survivors benefits would
be payable under Minnesota Statutes 2004,sections 490.101 to
490.12, is elected or appointed to the Court of Appeals, that
judge and the judge's survivors, shall continue to be eligible
for benefits under those sections and not under sections 490.121
to 490.132.

(b) In that the case of a judge to whom paragraph (a)
applies, the service of the judge in the Court of Appeals shall
must be added to the prior service as district judge, probate
judge, or judge of any other court of record in determining
eligibility and the compensation of a judge of the Court of
Appeals at the time of the judge's death, disability, or
retirement shall be is the "compensation allotted to the office"
for the purposes of calculating benefit amounts.

(c) All other judges of the Court of Appeals and their
survivors shall be are subject to the retirement and survivor's
annuity provisions of sections 490.121 to 490.132.

Sec. 80.

[490A.01] BOARD OF JUDICIAL STANDARDS;
ESTABLISHMENT.

Subdivision 1.

Establishment; composition.

The Board on
Judicial Standards is established. The board is a continuation
of the board established by Laws 1971, chapter 909, sections 1
and 2, as amended. For the purposes of this chapter, "board"
means the Board on Judicial Standards.

Subd. 2.

Composition; appointment.

(a) The board
consists of one judge of the Court of Appeals, three trial court
judges, two lawyers who have practiced law in the state for at
least ten years, and four citizens who are not judges, retired
judges, or lawyers.

(b) All members must be appointed by the governor with the
advice and consent of the senate. Senate confirmation is not
required for judicial members.

Subd. 3.

Term maximum; membership termination.

No member
may serve more than two full four-year terms or their equivalent.
Membership terminates if a member ceases to hold the position
that qualified the member for appointment.

Subd. 4.

Member terms; compensation; removal.

The
membership terms, compensation, removal of members, and filling
of vacancies on the board are as provided in section 15.0575.

Subd. 5.

Executive secretary appointment; salary.

(a)
The board shall appoint the executive secretary.

(b) The salary of the executive secretary of the board is
85 percent of the maximum salary provided for an administrative
law judge under section 15A.083, subdivision 6a.

Sec. 81.

[490A.02] JUDICIAL STANDARDS BOARD; POWERS.

Subdivision 1.

Judicial disqualification.

A judge is
disqualified from acting as a judge, without a loss of salary,
while there is pending an indictment or any information charging
the judge with a crime that is punishable as a felony under
either Minnesota law or federal law, or while there is pending a
recommendation to the Supreme Court by the Board on Judicial
Standards for the judge's removal or retirement.

Subd. 2.

Judicial suspension.

On receipt of a
recommendation of the Board on Judicial Standards or on its own
motion, the Supreme Court may suspend a judge from office
without salary when the judge pleads guilty to or no contest to
or is found guilty of a crime that is punishable as a felony
under either Minnesota law or federal law or any other crime
that involves moral turpitude. If the conviction is reversed,
the suspension terminates and the judge must be paid a salary
for the period of suspension. If the judge is suspended and the
conviction becomes final, the Supreme Court shall remove the
judge from office.

Subd. 3.

Judicial disability.

On receipt of a
recommendation of the Board on Judicial Standards, the Supreme
Court may retire a judge for a disability that the court
determines seriously interferes with the performance of the
judge's duties and is or is likely to become permanent, and
censure or remove a judge for an action or inaction that may
constitute persistent failure to perform the judge's duties,
incompetence in performing the judge's duties, habitual
intemperance, or conduct prejudicial to the administration of
justice that brings the judicial office into disrepute.

Subd. 4.

Authority to reopen matters.

The board is
specifically empowered to reopen any matter wherein any
information or evidence was previously precluded by a statute of
limitations or by a previously existing provision of time
limitation.

Subd. 5.

Retirement status.

(a) A judge who is retired
by the Supreme Court must be considered to have retired
voluntarily.

(b) This section and section 490A.01 must not affect the
right of a judge who is suspended, retired, or removed hereunder
from qualifying for any pension or other retirement benefits to
which the judge would otherwise be entitled by law to receive.

Subd. 6.

Eligibility for judicial office; practice
law.

A judge removed by the Supreme Court is ineligible for any
future service in a judicial office. The question of the right
of a removed judge to practice law in this state must be
referred to the proper authority for review.

Subd. 7.

Supreme court rules.

The Supreme Court shall
make rules to implement this section.

Sec. 82.

[490A.03] PERSONS AFFECTED.

The provisions of sections 490A.01 and 490A.02 apply to all
judges, judicial officers, and referees.

Sec. 83.

Minnesota Statutes 2004, section 525.05, is
amended to read:

525.05 JUDGE OR REFEREE; GROUNDS FOR DISQUALIFICATION.

The following shall be grounds for disqualification of any
judge or referee from acting in any matter: (1) That the judge
or the judge's spouse or any of either of their kin nearer than
first cousin is interested as representative, heir, devisee,
legatee, ward, or creditor in the estate involved therein; (2)
that it involves the validity or interpretation of a will drawn
or witnessed by the judge; (3) that the judge may be a necessary
witness in the matter; (4) that it involves a property right in
respect to which the judge has been engaged or is engaged as an
attorney; or (5) that the judge was engaged in a joint
enterprise for profit with the decedent at the time of death or
that the judge is then engaged in a joint enterprise for profit
with any person interested in the matter as representative,
heir, devisee, legatee, ward, or creditor. When grounds for
disqualification exist, the judge may, and upon proper petition
of any person interested in the estate must, request another
judge or a judge who has retired as provided in section 490.12,
subdivision 2,to act in the judge's stead in the matter.

Sec. 84. REPEALER; EFFECT ON BENEFIT COVERAGE.

Subdivision 1.

Legislators retirement plan; repealed as
obsolete.

Minnesota Statutes 2004, sections 3A.01, subdivisions
3, 4, 6a, and 7; 3A.02, subdivision 2; 3A.04, subdivision 1a;
and 3A.09, are repealed.

Subd. 2.

Elective state officers retirement plan;
repealed as obsolete.

Minnesota Statutes 2004, sections
352C.01; 352C.011; 352C.021; 352C.031; 352C.033; 352C.04;
352C.051; 352C.09; and 352C.091, subdivisions 2 and 3, are
repealed.

Subd. 3.

Judicial retirement plans; repealed as
obsolete.

Minnesota Statutes 2004, sections 490.021; 490.025;
490.101; 490.102; 490.103; 490.105; 490.106; 490.107; 490.108;
490.109; 490.1091; 490.12; 490.121, subdivisions 2, 3, 5, 8, 9,
10, 11, 12, 16, 17, 18, 19, and 20; 490.124, subdivision 6; and
490.132, are repealed.

Subd. 4.

Judicial standards board; repealed for
relocation as minnesota statutes, chapter 490a.

Minnesota
Statutes 2004, sections 490.15, 490.16, and 490.18, are repealed.

Subd. 5.

Uniform judicial retirement plan; no benefit
diminishment intended; procedure.

Sections 36 to 79 are not
intended to reduce or increase the entitlement of active,
deferred, or retired judges to retirement annuities or benefits
as of July 1, 2005, as reflected in the records of the Minnesota
State Retirement System. If the executive director of the
Minnesota State Retirement System determines that any provisions
of sections 36 to 79 function to modify, impair, or diminish the
retirement annuity or benefit entitlement of any judge that had
accrued or earned before July 1, 2005, the executive director
shall certify that determination and a recommendation as to the
required legislative correction to the chair of the Legislative
Commission on Pensions and Retirement, the chair of the senate
State and Local Government Operations Committee, the chair of
the house Governmental Operations and Veterans Affairs Policy
Committee, and the executive director of the Legislative
Commission on Pensions and Retirement on or before the October 1
next following that determination.

Sec. 85. REVISOR INSTRUCTIONS.

(a) In Minnesota Statutes, chapters 352, 352D, 355, 356,
and 487, the revisor of statutes shall change references to
"sections 490.121 to 490.132" to "chapter 490".

(b) In Minnesota Statutes, chapter 490, the revisor of
statutes shall change references to "sections 490.121 to
490.132" to "this chapter".

(c) In Minnesota Statutes, sections 175A.01, subdivision 4,
and 271.01, subdivision 1, the revisor of statutes shall change
references to "sections 490.15 and 490.16" to "sections 490A.01
and 490A.02".

Sec. 86. EFFECTIVE DATE.

Sections 1 to 84 are effective on July 1, 2005.

ARTICLE 2

COVERED SALARY; AVERAGE SALARY

Section 1.

Minnesota Statutes 2004, section 352.01,
subdivision 13, is amended to read:

Subd. 13.

Salary.

(a) Subject to the limitations of
section 356.611,"salary" means wages, or other periodic
compensation, paid to an employee before deductions for deferred
compensation, supplemental retirement plans, or other voluntary
salary reduction programs.

(b) "Salary" does not include:

(1) lump sum sick leave payments;

(2) severance payments;

(3) lump sum annual leave payments and overtime payments
made at the time of separation from state service;

(4) payments in lieu of any employer-paid group insurance
coverage, including the difference between single and family
rates that may be paid to an employee with single coverage;

(5) payments made as an employer-paid fringe benefit;

(6) workers' compensation payments;

(7) employer contributions to a deferred compensation or
tax sheltered annuity program; and

(8) amounts contributed under a benevolent vacation and
sick leave donation program.

(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 352.01, is
amended by adding a subdivision to read:

Subd. 14a.

Average salary.

(a) "Average salary" means
the average of the highest five successive years of salary upon
which the employee has made contributions to the retirement fund
by payroll deductions. Average salary must be based upon all
allowable service if this service is less than five years.

(b) "Average salary" does not include the payment of
accrued unused annual leave or overtime paid at time of final
separation from state service if paid in a lump sum nor does it
include the reduced salary, if any, paid during the period the
employee is entitled to workers' compensation benefit payments
for temporary disability.

(c) For an employee covered by the correctional state
employees retirement plan, "average salary" means the average of
the monthly salary during the employee's highest five successive
years of salary as an employee covered by the general state
employees retirement plan, or the correctional state employees
retirement plan, or by a combination of the two. If the total
of the covered service is less than five years, the
determination of average salary must be based on all allowable
service.

Sec. 3.

Minnesota Statutes 2004, section 352.115,
subdivision 2, is amended to read:

Subd. 2.

average salary normal retirement annuity.

The
retirement annuity hereunder payable at normal retirement age or
thereafter must be computed in accordance with the applicable
provisions of the formula stated in subdivision 3, on the basis
of the employee's average salary for the period of allowable
service. This retirement annuity is known as the "normal"
retirement annuity.

For each year of allowable service, "average salary" of an
employee in determining a retirement annuity means the average
of the highest five successive years of salary upon which the
employee has made contributions to the retirement fund by
payroll deductions. Average salary must be based upon all
allowable service if this service is less than five years.

"Average salary" does not include the payment of accrued
unused annual leave or overtime paid at time of final separation
from state service if paid in a lump sum nor does it include the
reduced salary, if any, paid during the period the employee is
entitled to workers' compensation benefit payments for temporary
disability.

Sec. 4.

Minnesota Statutes 2004, section 352.115,
subdivision 3, is amended to read:

Subd. 3.

Retirement annuity formula.

(a) This paragraph,
in conjunction with section 352.116, subdivision 1, applies to a
person who became a covered employee or a member of a pension
fund listed in section 356.30, subdivision 3, before July 1,
1989, unless paragraph (b), in conjunction with section 352.116,
subdivision 1a, produces a higher annuity amount, in which case
paragraph (b) will apply. The employee's average salary, as
defined in section 352.01,subdivision 2 14a, multiplied by the
percent specified in section 356.315, subdivision 1, per year of
allowable service for the first ten years and the percent
specified in section 356.315, subdivision 2, for each later year
of allowable service and pro rata for completed months less than
a full year shall determine the amount of the retirement annuity
to which the employee is entitled.

(b) This paragraph applies to a person who has become at
least 55 years old and first became a covered employee after
June 30, 1989, and to any other covered employee who has become
at least 55 years old and whose annuity amount, when calculated
under this paragraph and in conjunction with section 352.116,
subdivision 1a, is higher than it is when calculated under
paragraph (a), in conjunction with section 352.116, subdivision
1. The employee's average salary, as defined in section 352.01,
subdivision 2 14a, multiplied by the percent specified in
section 356.315, subdivision 2, for each year of allowable
service and pro rata for months less than a full year shall
determine the amount of the retirement annuity to which the
employee is entitled.

Sec. 5.

Minnesota Statutes 2004, section 352.87,
subdivision 3, is amended to read:

Subd. 3.

Retirement annuity formula.

A person specified
in subdivision 1 will have is entitled to receive a retirement
annuity applicable for allowable service credit under this
section calculated by multiplying the employee's average salary,
as defined in section 352.115 352.01, subdivision 2 14a, by the
percent specified in section 356.315, subdivision 2a, for each
year or portions of a year of allowable service credit. No
reduction for retirement prior to before the normal retirement
age, as specified in section 352.01, subdivision 25, applies to
service to which this section applies.

Sec. 6.

Minnesota Statutes 2004, section 352.93,
subdivision 1, is amended to read:

Subdivision 1.

Basis of annuity; when to apply.

After
separation from state service, an employee covered under section
352.91 who has reached age 55 years and has credit for at least
three years of covered correctional service or a combination of
covered correctional service and regular Minnesota general
employees state retirement System plan service is entitled upon
application to a retirement annuity under this section,based
only on covered correctional employees' service. Application
may be made no earlier than 60 days before the date the employee
is eligible to retire by reason of both age and service
requirements.

In this section, "average salary" means the average of the
monthly salary during the employee's highest five successive
years of salary as an employee covered by the Minnesota State
Retirement System. Average salary must be based upon all
allowable service if this service is less than five years.

Sec. 7.

Minnesota Statutes 2004, section 352B.01,
subdivision 11, is amended to read:

Subd. 11.

Average monthly salary.

(a) Subject to the
limitations of section 356.611,"average monthly salary" means
the average of the highest monthly salaries for five years of
service as a member upon which contributions were deducted from
pay under section 352B.02, or upon which appropriate
contributions or payments were made to the fund to receive
allowable service and salary credit as specified under the
applicable law. Average monthly salary must be based upon all
allowable service if this service is less than five years.

(b) "Average monthly salary" means the salary of the member
as defined in section 352.01, subdivision 13. "Average monthly
salary" does not include any lump-sum annual leave payments and
overtime payments made at the time of separation from state
service, any amounts of severance pay, or any reduced salary
paid during the period the person is entitled to workers'
compensation benefit payments for temporary disability.

(c) A member on leave of absence receiving temporary
workers' compensation payments and a reduced salary or no salary
from the employer who is entitled to allowable service credit
for the period of absence may make payment to the fund for the
difference between salary received, if any, and the salary the
member would normally receive if not on leave of absence during
the period. The member shall pay an amount equal to the member
and employer contribution rate under section 352B.02,
subdivisions 1b and 1c, on the differential salary amount for
the period of the leave of absence. The employing department,
at its option, may pay the employer amount on behalf of the
member. Payment made under this subdivision must include
interest at the rate of 8.5 percent per year, and must be
completed within one year of the return from the leave of
absence.

Sec. 8.

Minnesota Statutes 2004, section 352C.021, is
amended by adding a subdivision to read:

Subd. 1a.

Average salary.

"Average salary," for purposes
of calculating the normal retirement annuity under section
352C.031, subdivision 4, means the average of the highest five
successive years of salary upon which contributions have been
made under section 352C.09.

Sec. 9.

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

Subd. 10.

Salary.

(a) Subject to the limitations of
section 356.611,"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;

(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 when the contribution is from mandatory
withholdings from employees' wages;and

(2) (3) 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. 10.

Minnesota Statutes 2004, section 353.01, is
amended by adding a subdivision to read:

Subd. 17a.

Average salary.

(a) "Average salary," for
purposes of calculating a retirement annuity under section
353.29, subdivision 3, means an amount equivalent to the average
of the highest salary of the member, police officer, or
firefighter, whichever applies, upon which employee
contributions were paid for any five successive years of
allowable service, based on dates of salary periods as listed on
salary deduction reports. Average salary must be based upon all
allowable service if this service is less than five years.

(b) "Average salary" may not include any reduced salary
paid during a period in which the employee is entitled to
benefit payments from workers' compensation for temporary
disability, unless the average salary is higher, including this
period.

Sec. 11.

Minnesota Statutes 2004, section 353.29,
subdivision 3, is amended to read:

Subd. 3.

Retirement annuity formula.

(a) This paragraph,
in conjunction with section 353.30, subdivisions 1, 1a, 1b, and
1c, applies to any member who first became a public employee or
a member of a pension fund listed in section 356.30, subdivision
3, before July 1, 1989, unless paragraph (b), in conjunction
with section 353.30, subdivision 5, produces a higher annuity
amount, in which case paragraph (b) will apply. The average
salary as defined in section 353.01,subdivision 2 17a,
multiplied by the percent specified in section 356.315,
subdivision 3, for each year of allowable service for the first
ten years and thereafter by the percent specified in section
356.315, subdivision 4, per year of allowable service and
completed months less than a full year for the "basic member,"
and the percent specified in section 356.315, subdivision 1, for
each year of allowable service for the first ten years and
thereafter by the percent specified in section 356.315,
subdivision 2, per year of allowable service and completed
months less than a full year for the "coordinated member," shall
determine the amount of the "normal" retirement annuity.

(b) This paragraph applies to a member who has become at
least 55 years old and first became a public employee after June
30, 1989, and to any other member whose annuity amount, when
calculated under this paragraph and in conjunction with section
353.30, subdivision 5, is higher than it is when calculated
under paragraph (a), in conjunction with section 353.30,
subdivisions 1, 1a, 1b, and 1c. The average salary, as defined
in section 353.01,subdivision 2 17a, multiplied by the percent
specified in section 356.315, subdivision 4, for each year of
allowable service and completed months less than a full year for
a basic member and the percent specified in section 356.315,
subdivision 2, per year of allowable service and completed
months less than a full year for a coordinated member, shall
determine the amount of the normal retirement annuity.

Sec. 12.

Minnesota Statutes 2004, section 353.33,
subdivision 3, is amended to read:

Subd. 3.

Computation of benefits.

This disability
benefit is an amount equal to the normal annuity payable to a
member who has reached normal retirement age with the same
number of years of allowable service and the same average
salary, as provided in section 353.01, subdivision 17a, and
section 353.29, subdivisions 2 and subdivision 3.

A basic member shall receive a supplementary monthly
benefit of $25 to age 65 or the five-year anniversary of the
effective date of the disability benefit, whichever is later.

If the disability benefits under this subdivision exceed
the average salary as defined in section 353.29 353.01,
subdivision 2 17a, the disability benefits must be reduced to an
amount equal to said the average salary.

Sec. 13.

Minnesota Statutes 2004, section 353.651,
subdivision 3, is amended to read:

Subd. 3.

Retirement annuity formula.

The average salary
as defined in section 353.01,subdivision 2 17a, multiplied by
the percent specified in section 356.315, subdivision 6, per
year of allowable service determines the amount of the normal
retirement annuity. If the member has earned allowable service
for performing services other than those of a police officer or
firefighter, the annuity representing such that service is must
be computed under sections 353.29 and 353.30.

Sec. 14.

Minnesota Statutes 2004, section 353.656,
subdivision 1, is amended to read:

Subdivision 1.

In line of duty; computation of benefits.

A member of the police and fire plan who becomes disabled and
physically unfit to perform duties as a police officer,
firefighter, or paramedic as defined under section 353.64,
subdivision 10, as a direct result of an injury, sickness, or
other disability incurred in or arising out of any act of duty,
which has or is expected to render the member physically or
mentally unable to perform the duties as a police officer,
firefighter, or paramedic as defined under section 353.64,
subdivision 10, for a period of at least one year, shall receive
disability benefits during the period of such disability. The
benefits must be in an amount equal to 60 percent of the
"average salary" as defined in section 353.651 353.01,
subdivision 2 17a, plus an additional percent specified in
section 356.315, subdivision 6, of that average salary for each
year of service in excess of 20 years. If the disability under
this subdivision occurs before the member has at least five
years of allowable service credit in the police and fire plan,
the disability benefit must be computed on the "average salary"
from which deductions were made for contribution to the police
and fire fund.

Sec. 15.

Minnesota Statutes 2004, section 353B.02,
subdivision 10, is amended to read:

Subd. 10.

Salary.

(a) "Salary" under this chapter is
subject to the limitations of section 356.611.

(b) "Salary" for benefit computation and contribution
purposes means the salary of a first class or first grade
firefighter or patrol officer, whichever applies, for the former
members of the following consolidating relief associations:

(1) Anoka Police Relief Association;

(2) Austin Firefighters Relief Association;

(3) Austin Police Relief Association;

(4) Columbia Heights Fire Department Relief Association,
Paid Division;

(5) Fairmont Police Benefit Association;

(6) Faribault Fire Department Relief Association;

(7) Mankato Fire Department Relief Association;

(8) Minneapolis Fire Department Relief Association;

(9) Minneapolis Police Relief Association;

(10) Richfield Fire Department Relief Association;

(11) Rochester Fire Department Relief Association;

(12) Rochester Police Relief Association;

(13) St. Cloud Fire Department Relief Association;

(14) St. Cloud Police Relief Association;

(15) St. Paul Fire Department Relief Association;

(16) South St. Paul Firefighters Relief Association;

(17) West St. Paul Firefighters Relief Association;

(18) West St. Paul Police Relief Association; and

(19) Winona Fire Department Relief Association.

(b) (c) "Salary" for benefit computation purposes means the
salary of a first grade patrol officer for the second month of
the previous fiscal year and for contribution purposes means the
current salary of a first grade patrol officer, for the former
members of the following consolidating relief associations:

(1) Bloomington Police Relief Association;

(2) Crystal Police Relief Association;

(3) Fridley Police Pension Association;

(4) Richfield Police Relief Association;

(5) St. Louis Park Police Relief Association; and

(6) Winona Police Relief Association.

(c) (d) "Salary" for benefit computation purposes means the
final salary and for contribution purposes means the current
salary for the former members of the following consolidating
relief associations:

(1) Albert Lea Firefighters Relief Association;

(2) Albert Lea Police Relief Association;

(3) Buhl Police Relief Association;

(4) Chisholm Firefighters Relief Association;

(5) Crookston Fire Department Relief Association;

(6) Crookston Police Relief Association;

(7) Faribault Police Benefit Association;

(8) Red Wing Police Relief Association; and

(9) Virginia Fire Department Relief Association.

(d) (e) "Salary" for benefit computation purposes means the
average earnings or salary for the final six months of
employment before retirement and for contribution purposes means
the current salary for the former members of the following
consolidating relief associations:

(1) Chisholm Police Relief Association;

(2) Hibbing Firefighters Relief Association; and

(3) Hibbing Police Relief Association.

(e) (f) "Salary" for benefit computation purposes means the
greater of the final salary at retirement or the highest salary
of a patrol officer and for contribution purposes means the
greater of the current salary or the current highest salary of a
patrol officer for the former members of the following
consolidating relief associations:

(1) Brainerd Police Benefit Association; and

(2) New Ulm Police Relief Association.

(f) (g) "Salary" for benefit computation and contribution
purposes means the following for the former members of the
consolidating relief associations as indicated:

(1) salary of a top grade patrol officer, including
longevity pay and education incentive pay in an amount not to
exceed $235 per month, Columbia Heights Police Relief
Association;

(2) maximum pay of a firefighter, including overtime
payments for a regular workweek of a firefighter mandated by the
federal Fair Labor Standards Act of 1938, as amended, Duluth
Firefighters Relief Association;

(3) salary of a first class patrol officer with 16 years of
service, Duluth Police Pension Association;

(4) base salary for the rank currently held, plus longevity
pay, pay for eligibility for next higher rank and pay for first
aid care, Mankato Police Benefit Association;

(5) average annual salary for highest three paid years for
benefit computation purposes and current salary for contribution
purposes, Red Wing Fire Department Relief Association;

(6) pay of the highest grade full-time firefighter, St.
Louis Park Fire Department Relief Association;

(7) maximum monthly pay of a patrol officer, St. Paul
Police Relief Association;

(8) prevailing base pay of rank held at retirement for
benefit computation purposes and current salary for contribution
purposes, South St. Paul Police Relief Association; and

(9) prevailing pay for rank held for at least six months
before retirement for benefit computation purposes and current
salary for contribution purposes, Virginia Police Relief
Association.

Sec. 16.

Minnesota Statutes 2004, section 354.05, is
amended by adding a subdivision to read:

Subd. 13a.

Average salary.

(a) "Average salary," for the
purpose of determining the member's retirement annuity, means
the average salary upon which contributions were made for the
highest five successive years of formula service credit.

(b) "Average salary" may not include any more than the
equivalent of 60 monthly salary payments.

(c) "Average salary" must be based upon all years of
formula service credit if this service credit is less than five
years.

Sec. 17.

Minnesota Statutes 2004, section 354.05,
subdivision 35, is amended to read:

Subd. 35.

Salary.

(a) Subject to the limitations of
section 356.611,"salary" means the periodic compensation, upon
which member contributions are required before deductions for
deferred compensation, supplemental retirement plans, or other
voluntary salary reduction programs.

(b) "Salary" does not mean:

(1) lump sum annual leave payments;

(2) lump sum wellness and sick leave payments;

(3) 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;

(4) any form of payment made in lieu of any other
employer-paid fringe benefit or expense;

(5) any form of severance payments;

(6) workers' compensation payments;

(7) disability insurance payments, including self-insured
disability payments;

(8) payments to school principals and all other
administrators for services that are in addition to the normal
work year contract if these additional services are performed on
an extended duty day, Saturday, Sunday, holiday, annual leave
day, sick leave day, or any other nonduty day;

(9) payments under section 356.24, subdivision 1, clause
(4); and

(10) payments made under section 122A.40, subdivision 12,
except for payments for sick leave that are accumulated under
the provisions of a uniform school district policy that applies
equally to all similarly situated persons in the district.

(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. 18.

Minnesota Statutes 2004, section 354.44,
subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement
annuity.

(a) The formula retirement annuity must be computed in
accordance with the applicable provisions of the formulas stated
in paragraph (b) or (d) on the basis of each member's average
salary under section 354.05, subdivision 13a,for the period of
the member's formula service credit.

For all years of formula service credit, "average salary,"
for the purpose of determining the member's retirement annuity,
means the average salary upon which contributions were made and
upon which payments were made to increase the salary limitation
provided in Minnesota Statutes 1971, section 354.511, for the
highest five successive years of formula service credit
provided, however, that such "average salary" shall not include
any more than the equivalent of 60 monthly salary payments.
Average salary must be based upon all years of formula service
credit if this service credit is less than five years.

(b) This paragraph, in conjunction with paragraph (c),
applies to a person who first became a member of the association
or a member of a pension fund listed in section 356.30,
subdivision 3, before July 1, 1989, unless paragraph (d), in
conjunction with paragraph (e), produces a higher annuity
amount, in which case paragraph (d) applies. The average salary
as defined in paragraph (a) section 354.05, subdivision 13a,
multiplied by the following percentages per year of formula
service credit shall determine the amount of the annuity to
which the member qualifying therefor is entitled:

Coordinated Member Basic Member

Each year of service the percent the percent

during first ten specified in specified in

section 356.315, section 356.315,

subdivision 1, subdivision 3,

per year per year

Each year of service the percent the percent

thereafter specified in specified in

section 356.315, section 356.315,

subdivision 2, subdivision 4,

per year per year

(c)(i) This paragraph applies only to a person who first
became a member of the association or a member of a pension fund
listed in section 356.30, subdivision 3, before July 1, 1989,
and whose annuity is higher when calculated under paragraph (b),
in conjunction with this paragraph than when calculated under
paragraph (d), in conjunction with paragraph (e).

(ii) Where any member retires prior to normal retirement
age under a formula annuity, the member shall be paid a
retirement annuity in an amount equal to the normal annuity
provided in paragraph (b) reduced by one-quarter of one percent
for each month that the member is under normal retirement age at
the time of retirement except that for any member who has 30 or
more years of allowable service credit, the reduction shall be
applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable
service totals 90 years is entitled, upon application, to a
retirement annuity in an amount equal to the normal annuity
provided in paragraph (b), without any reduction by reason of
early retirement.

(d) This paragraph applies to a member who has become at
least 55 years old and first became a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity amount when calculated
under this paragraph and in conjunction with paragraph (e), is
higher than it is when calculated under paragraph (b), in
conjunction with paragraph (c). The average salary, as defined
in paragraph (a) section 354.05, subdivision 13a,multiplied by
the percent specified by section 356.315, subdivision 4, for
each year of service for a basic member and by the percent
specified in section 356.315, subdivision 2, for each year of
service for a coordinated member shall determine the amount of
the retirement annuity to which the member is entitled.

(e) This paragraph applies to a person who has become at
least 55 years old and first becomes a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity is higher when calculated
under paragraph (d) in conjunction with this paragraph than when
calculated under paragraph (b), in conjunction with paragraph
(c). An employee who retires under the formula annuity before
the normal retirement age shall be paid the normal annuity
provided in paragraph (d) reduced so that the reduced annuity is
the actuarial equivalent of the annuity that would be payable to
the employee if the employee deferred receipt of the annuity and
the annuity amount were augmented at an annual rate of three
percent compounded annually from the day the annuity begins to
accrue until the normal retirement age.

(f) No retirement annuity is payable to a former employee
with a salary that exceeds 95 percent of the governor's salary
unless and until the salary figures used in computing the
highest five successive years average salary under paragraph (a)
have been audited by the Teachers Retirement Association and
determined by the executive director to comply with the
requirements and limitations of section 354.05, subdivisions 35
and 35a.

Sec. 19.

Minnesota Statutes 2004, section 354A.011, is
amended by adding a subdivision to read:

Subd. 7a.

Average salary.

"Average salary," for purposes
of computing a normal coordinated program retirement annuity
under section 354A.31, subdivision 4 or 4a, means an amount
equal to the average salary upon which contributions were made
for the highest five successive years of service credit but may
not, in any event, include any more than the equivalent of 60
monthly salary payments. Average salary must be based upon all
years of service credit if this service credit is less than five
years.

Sec. 20.

Minnesota Statutes 2004, section 354A.011,
subdivision 24, is amended to read:

Subd. 24.

Salary; covered salary.

(a) Subject to the
limitations of section 356.611,"salary" or "covered salary"
means the entire compensation, upon which member contributions
are required and made, that is paid to a teacher before
deductions for deferred compensation, supplemental retirement
plans, or other voluntary salary reduction programs.

(b) "Salary" does not mean:

(1) lump sum annual leave payments;

(2) lump sum wellness and sick leave payments;

(3) 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 secretary or director to be ineligible;

(4) any form of payment that is made in lieu of any other
employer-paid fringe benefit or expense;

(5) any form of severance payments;

(6) workers' compensation payments;

(7) disability insurance payments, including self-insured
disability payments;

(8) payments to school principals and all other
administrators for services that are in addition to the normal
work year contract if these additional services are performed on
an extended duty day, Saturday, Sunday, holiday, annual leave
day, sick leave day, or any other nonduty day;

(9) payments under section 356.24, subdivision 1, clause
(4)(ii); and

(10) payments made under section 122A.40, subdivision 12,
except for payments for sick leave that are accumulated under
the provisions of a uniform school district policy that applies
equally to all similarly situated persons in the district.

(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. 21.

Minnesota Statutes 2004, section 354A.31,
subdivision 4, is amended to read:

Subd. 4.

Computation of the normal coordinated retirement
annuity; minneapolis and st. paul funds.

(a) This subdivision
applies to the coordinated programs of the Minneapolis Teachers
Retirement Fund Association and the St. Paul Teachers Retirement
Fund Association.

(b) The normal coordinated retirement annuity shall be is
an amount equal to a retiring coordinated member's average
salary under section 354A.011, subdivision 7a,multiplied by the
retirement annuity formula percentage. Average salary for
purposes of this section shall mean an amount equal to the
average salary upon which contributions were made for the
highest five successive years of service credit, but which shall
not in any event include any more than the equivalent of 60
monthly salary payments. Average salary must be based upon all
years of service credit if this service credit is less than five
years.

(c) This paragraph, in conjunction with subdivision 6,
applies to a person who first became a member or a member in a
pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, unless paragraph (d), in conjunction with
subdivision 7, produces a higher annuity amount, in which case
paragraph (d) will apply. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 1, per year for each
year of coordinated service for the first ten years and the
percent specified in section 356.315, subdivision 2, for each
year of coordinated service thereafter.

(d) This paragraph applies to a person who has become at
least 55 years old and who first becomes a member after June 30,
1989, and to any other member who has become at least 55 years
old and whose annuity amount, when calculated under this
paragraph and in conjunction with subdivision 7 is higher than
it is when calculated under paragraph (c), in conjunction with
the provisions of subdivision 6. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 2, for each year of
coordinated service.

Sec. 22.

Minnesota Statutes 2004, section 354A.31,
subdivision 4a, is amended to read:

Subd. 4a.

Computation of the normal coordinated
retirement annuity; duluth fund.

(a) This subdivision applies
to the new law coordinated program of the Duluth Teachers
Retirement Fund Association.

(b) The normal coordinated retirement annuity is an amount
equal to a retiring coordinated member's average salary under
section 354A.011, subdivision 7a,multiplied by the retirement
annuity formula percentage. Average salary for purposes of this
section means an amount equal to the average salary upon which
contributions were made for the highest five successive years of
service credit, but may not in any event include any more than
the equivalent of 60 monthly salary payments. Average salary
must be based upon all years of service credit if this service
credit is less than five years.

(c) This paragraph, in conjunction with subdivision 6,
applies to a person who first became a member or a member in a
pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, unless paragraph (d), in conjunction with
subdivision 7, produces a higher annuity amount, in which case
paragraph (d) applies. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 1, per year for each
year of coordinated service for the first ten years and the
percent specified in section 356.315, subdivision 2, for each
subsequent year of coordinated service.

(d) This paragraph applies to a person who is at least 55
years old and who first becomes a member after June 30, 1989,
and to any other member who is at least 55 years old and whose
annuity amount, when calculated under this paragraph and in
conjunction with subdivision 7, is higher than it is when
calculated under paragraph (c) in conjunction with subdivision
6. The retirement annuity formula percentage for purposes of
this paragraph is the percent specified in section 356.315,
subdivision 2, for each year of coordinated service.

Sec. 23.

Minnesota Statutes 2004, section 356.611,
subdivision 1, is amended to read:

Subdivision 1.

State salary limitations.

(a)
Notwithstanding any provision of law, bylaws, articles of
incorporation, retirement and disability allowance plan
agreements, or retirement plan contracts to the contrary, the
covered salary for pension purposes for a plan participant of a
covered retirement fund enumerated in section 356.30,
subdivision 3, may not exceed 95 110 percent of the salary
established for the governor under section 15A.082 at the time
the person received the salary.

(b) This section does not apply to a salary paid:

(1) to the governor or to a judge;

(2) to an employee or an elected official who is not
subject to the limit as specified under section 43A.17,
subdivision 9;

(3) to an employee of a political subdivision in a position
that is excluded from the limit as specified under section
43A.17, subdivision 9;

(3) (4) to a state employee as defined under section
43A.02, subdivision 21;

(4) (5) to an employee of Gillette Hospital who is covered
by the general state employees retirement plan of the Minnesota
State Retirement System;

(5) (6) to an employee of the Minnesota Crop Improvement
Council; or

(6) (7) to an employee of the Minnesota Historical Society;

(8) to an employee of the Southern Minnesota Municipal
Power Association; or

(9) to the director of the Duluth Port Authority.

(c) The limited covered salary determined under this
section must be used in determining employee and employer
contributions and in determining retirement annuities and other
benefits under the respective covered retirement fund and under
this chapter.

Sec. 24.

Minnesota Statutes 2004, section 422A.01, is
amended by adding a subdivision to read:

Subd. 4a.

Average salary.

(a) "Average salary" means the
arithmetic average annual salary, wages, or compensation of the
member from the city for any five calendar years out of the last
ten calendar years of service, except as provided for in section
422A.16, which may include the year in which the employee
retires, as selected by the employee.

(b) A member with more than five calendar years of service,
but less than ten calendar years, may select any five calendar
years of service to determine the average salary. A member with
less than five years of service with the city shall use all
earnings to determine the average salary.

Sec. 25.

Minnesota Statutes 2004, section 422A.01, is
amended by adding a subdivision to read:

Subd. 13a.

Covered salary.

"Salary" is subject to the
limitations of section 356.611.

Sec. 26.

Minnesota Statutes 2004, section 422A.15,
subdivision 1, is amended to read:

Subdivision 1.

Formula pension and annuity.

Except as
otherwise provided in subdivision 3, each contributing member
who, at the time of retirement, fulfills the conditions
necessary to enable the member to retire, shall is entitled to
receive what shall be known as a "formula pension and annuity"
equal to two percent for each year of allowable service for the
first ten years and thereafter 2.5 percent per year of allowable
service of the arithmetic average annual salary, wages or
compensation of the member from the city for any five calendar
years out of the last ten calendar years of service except as
provided for in section 422A.16, which may include the year in
which the employee retires, as selected by the employee,
multiplied by the years of service credited by the retirement
fund. The formula pension and annuity shall must be computed on
the single life plan but subject to the option selections
provided for in section 422A.17.

In order to be entitled to the formula pension and annuity
herein provided for, the retiring employee at the time of
cessation of employment and of actual retirement shall must have
attained the age of 60 years or have been employed by the city
not less than 30 years, or meet the qualifications provided for
in section 422A.16, and in addition thereto have contributed to
the retirement fund at the percentage rate prescribed by the
retirement law applicable when the salary, wages or compensation
was paid on all salaries, wages, or compensation received from
the city or from an applicable employing unit. The years of
service to be applied in the formula pension and annuity shall
must be found and determined by the retirement board, except
that no credit shall may be allowed for any year in which a back
charge is owing at time of retirement and the earnings from any
year in which a back charge is owing shall may not be used in
determining the average annual salary.

Sec. 27.

Minnesota Statutes 2004, section 422A.16,
subdivision 9, is amended to read:

Subd. 9.

Incompetency or death of member.

Any member of
the contributing class who becomes permanently separated from
the service of the city under subdivision 8, may, by an
instrument in writing, filed with the municipal employees
retirement board within 30 days after such the separation
becomes permanent, elect to allow the member contributions
to such the fund to the date of separation to remain on deposit
in such the fund, and in such the event the member shall be
is entitled to receive a retirement allowance at age 65,
provided the member, or someone acting in the member's behalf if
the member be incompetent, shall must make a written application
for such the retirement allowance in the same manner provided
for in section 422A.17 and in accordance with the provisions of
section 422A.15, subdivision 1,except for determining
average annual salary. A member with more than five calendar
years of service but less than ten calendar years may select any
five calendar years of service to determine the average annual
salary. A member with less than five years of service with the
city shall use all earnings to determine the average annual
salary.

If the contributing member dies before reaching the age of
65 years, or having attained the age of 65 years without having
made the election provided for herein, the net accumulated
amount of deductions from the member's salary, pay or
compensation, plus interest, to the member's credit on date of
death shall be paid is payable to such the person or persons as
have been nominated by written designation filed with the
retirement board, in such the form as that the retirement board
shall require requires.

If the employee fails to make a designation, or if the
person or persons designated by such the employee predeceases
such the employee, the net accumulated credit to such the
employee's account on date of death shall be paid is payable to
such the employee's estate.

The provisions of subdivisions 4, 5,and 6 shall also apply
to any member qualifying for benefits under this subdivision,
except for purposes of this subdivision the age referred to in
subdivision 4 shall be is 65 years.

Sec. 28.

Minnesota Statutes 2004, section 423B.01, is
amended by adding a subdivision to read:

Subd. 22.

Covered salary.

"Salary" is subject to the
limitations of section 356.611.

Sec. 29.

Minnesota Statutes 2004, section 423C.01, is
amended by adding a subdivision to read:

Subd. 29.

Covered salary.

"Salary" is subject to the
limitations of section 356.611.

Sec. 30.

Minnesota Statutes 2004, section 490.121,
subdivision 21, is amended to read:

Subd. 21.

Final average compensation.

"Final average
compensation" means the total amount of salary payable to a
judge in the highest five years out of the last ten years prior
to before the event of maturity of benefits termination of
judicial service, divided by five; provided, however, that if
the number of years of service by the judge equals or exceeds
ten. If the number of years of service by the judge is less
than ten, but more than five,the highest five shall years of
salary must be counted, and .If the number of years of service
by the judge is less than five, the aggregate salary in such for
the period shall of service must be divided by the number of
months in such the period and multiplied by 12.

Sec. 31.

Minnesota Statutes 2004, section 490.121, is
amended by adding a subdivision to read:

Subd. 21a.

Covered salary limitation.

"Final average
compensation" is subject to the limitations of section 356.611.

Sec. 32. REPEALER.

Minnesota Statutes 2004, sections 352C.031, subdivision 3;
353.29, subdivision 2; and 353.651, subdivision 2, are repealed.

Sec. 33. EFFECTIVE DATE.

This article is effective on the day following final
enactment except that section 23 applies retroactively from
April 28, 1994.

ARTICLE 3

ALLOWABLE SERVICE CREDIT

Section 1.

[356.195] SERVICE CREDIT PURCHASE PROCEDURES
FOR STRIKE PERIODS.

Subdivision 1.

Covered plans.

This section applies to
all defined benefit plans specified in section 356.30,
subdivision 3.

Subd. 2.

Purchase procedure for strike periods.

(a) An
employee covered by a plan specified in subdivision 1 may
purchase allowable service credit in the applicable plan for any
period of time during which the employee was on a public
employee strike without pay, not to exceed a period of one year,
if the employee makes a payment in lieu of salary deductions as
specified in paragraph (b) or (c), whichever applies. The
employing unit, at its option, may pay the employer portion of
the amount specified in paragraph (b) on behalf of its employees.

(b) If payment is received by the applicable pension plan
executive director within one year from the end of the strike,
the payment amount is equal to the applicable employee and
employer contribution rates specified in law for the applicable
plan during the strike period, applied to the employee's rate of
salary in effect at the conclusion of the strike for the period
of the strike without pay, plus compound interest at a monthly
rate of 0.71 percent from the last day of the strike period
until the date payment is received.

(c) If payment is received by the applicable pension fund
director after one year and before five years from the end of
the strike, the payment amount is the amount determined under
section 356.551.

(d) Payments may not be made more than five years after the
end of the strike.

Sec. 2.

Minnesota Statutes 2004, section 490.121,
subdivision 4, is amended to read:

Subd. 4.

Allowable service.

(a) "Allowable service"
means any calendar month, subject to the service credit limit in
subdivision 22, served as a judge at any time, or served as a
referee in probate for all referees in probate who were in
office prior to January 1, 1974.

(b) "Allowable service" also means a period of authorized
leave of absence for which the judge has made a payment in lieu
of contributions, not in an amount in excess of the service
credit limit under subdivision 22. To obtain the service
credit, the judge shall pay an amount equal to the normal cost
of the judges retirement plan on the date of return from the
leave of absence, as determined in the most recent actuarial
report for the plan filed with the Legislative Commission on
Pensions and Retirement, multiplied by the judge's average
monthly salary rate during the authorized leave of absence and
multiplied by the number of months of the authorized leave of
absence, plus annual compound interest at the rate of 8.5
percent from the date of the termination of the leave to the
date on which payment is made. The payment must be made within
one year of the date on which the authorized leave of absence
terminated. Service credit for an authorized leave of absence
is in addition to a uniformed service leave under section
490.1211.

Sec. 3.

Laws 1999, chapter 222, article 16, section 16, as
amended by Laws 2002, chapter 392, article 7, section 1, and
Laws 2003, First Special Session chapter 12, article 6, section
2, and Laws 2004, chapter 267, article 17, section 6, is amended
to read:

Sec. 16REPEALER.

(a) Sections 2 to 6 and 8 to 13 are repealed on May 16,
2004.

(b) Sections 1 and 7 are repealed on May 16, 2006 2007.

Sec. 4.

Laws 2000, chapter 461, article 4, section 4, as
amended by Laws 2003, First Special Session chapter 12, article
6, section 3, and Laws 2004, chapter 267, article 17, section 7,
is amended to read:

Sec. 4EFFECTIVE DATE; SUNSET REPEALER.

(a) Sections 1, 2, and 3 are effective on the day following
final enactment.

(b) Sections 1, 2, and 3, are repealed on May 16, 2006 2007.

Sec. 5. METRO TRANSIT STRIKE PROVISION.

Notwithstanding the payment deadline specified in Minnesota
Statutes, section 356.195, subdivision 2, paragraph (b), a Metro
Transit employee covered by the general state employees
retirement plan of the Minnesota State Retirement System who was
on strike on or after January 1, 2004, and before the effective
date of this section, is authorized to make a payment under that
paragraph on or before one year after the effective date of this
section.

Sec. 6. CROSBY-IRONTON PUBLIC SCHOOL STRIKE PROVISION.

Notwithstanding the payment deadline specified in Minnesota
Statutes, section 356.195, subdivision 2, paragraph (b), a
Crosby-Ironton public school teacher covered by the Teachers
Retirement Association who was on strike during a period that
included April 1, 2005, and before the effective date of this
section, is authorized to make a payment under that paragraph on
or before one year after the effective date of this section.

Sec. 7. UNIVERSITY OF MINNESOTA STRIKE PROVISION.

Notwithstanding the payment deadline specified in Minnesota
Statutes, section 356.195, subdivision 2, paragraph (b), a
University of Minnesota employee covered by the Minnesota State
Retirement System who was on strike on or after October 21, 2003
and before the effective date of this section, is authorized to
make a payment under that paragraph on or before one year after
the effective date of this section.

Sec. 8. EFFECTIVE DATE.

(a) Sections 1 and 3 to 7 are effective the day following
final enactment.

(b) Section 2 is effective retroactively from January 1,
2005, and applies to any person who was in active service as a
judge on or after that date and applies to an authorized leave
of absence that occurred before or after that date. For a
person for whom section 2 is retroactive, the equivalent
contribution payment must be made on or before July 1, 2006.

ARTICLE 4

ACTUARIAL FINANCIAL
REPORTING AND OTHER GENERALLY
APPLICABLE ADMINISTRATIVE CHANGES

Section 1.

Minnesota Statutes 2004, section 352.01,
subdivision 12, is amended to read:

Subd. 12.

Actuarial equivalent.

"Actuarial equivalent"
means the condition of one annuity or benefit having an equal
actuarial present value as another annuity or benefit,
determined as of a given date at a specified age with each
actuarial present value based on the appropriate mortality table
adopted by the board of directors based on the experience of the
fund as recommended by the actuary retained by the Legislative
Commission on Pensions and Retirement under section 356.214, and
approved under section 356.215, subdivision 18,and using the
applicable preretirement or postretirement interest rate
assumption specified in section 356.215, subdivision 8.

Sec. 2.

Minnesota Statutes 2004, section 353.01,
subdivision 14, is amended to read:

Subd. 14.

Actuarial equivalent.

"Actuarial equivalent"
means the condition of one annuity or benefit having an equal
actuarial present value as another annuity or benefit,
determined as of a given date with each actuarial present value
based on the appropriate mortality table adopted by the board of
trustees based on the experience of the fund as recommended by
the actuary retained by the Legislative Commission on Pensions
and Retirement under section 356.214, and approved under section
356.215, subdivision 18,and using the applicable preretirement
or postretirement interest rate assumption specified in section
356.215, subdivision 8.

Sec. 3.

Minnesota Statutes 2004, section 354.05,
subdivision 7, is amended to read:

Subd. 7.

Actuarial equivalent.

"Actuarial equivalent"
means the condition of one annuity or benefit having an equal
actuarial present value as another annuity or benefit,
determined as of a given date with each actuarial present value
based on the appropriate mortality table adopted by the board of
trustees based on the experience of the association as
recommended by the actuary retained by the Legislative
Commission on Pensions and Retirement under section 356.214, and
approved under section 356.215, subdivision 18,and using the
applicable preretirement or postretirement interest rate
assumption specified in section 356.215, subdivision 8.

Sec. 4.

Minnesota Statutes 2004, section 354.094,
subdivision 1, is amended to read:

Subdivision 1.

Service credit contributions.

(a) Upon
granting any extended leave of absence under section 122A.46 or
136F.43, the employing unit granting the leave must certify the
leave to the association on a form specified by the executive
director. A member granted an extended leave of absence under
section 122A.46 or 136F.43 may pay employee contributions and
receive allowable service credit toward annuities and other
benefits under this chapter, for each year of the leave,
provided that the member and the employing board make the
required employer contribution in any proportion they may agree
upon, during the period of the leave. The employer may enter
into an agreement with the exclusive bargaining representative
of the teachers in the district under which, for an individual
teacher, all or a portion of the employee's contribution is paid
by the employer. Any such agreement must include a sunset of
eligibility to qualify for the payment and must not be a part of
the collective bargaining agreement. The leave period must not
exceed five years. A member may not receive more than five
years of allowable service credit under this section. The
employee and employer contributions must be based upon the rates
of contribution prescribed by section 354.42 for the salary
received during the year immediately preceding the extended
leave.

(b) Employee contribution payments for the years for which
a member is receiving service credit while on extended leave
must be made on or before the later of June 30 of each fiscal
year for which service credit is to be received or within 30
days after first notification of the amount due, if requested by
the member, is given by the association. If payment is to be
made by a transfer of pretax assets authorized under section
356.441, payment is authorized after June 30 of the fiscal year
providing that authorization for the asset transfer has been
received by the applicable third party administrator by June 30,
and the payment must include interest at a rate of .708 percent
per month from June 30 through the end of the month in which
payment is received.No payment is permitted after the
following September 30. Payments received after June 30 must
include interest at an annual rate of 8.5 percent from June 30
through the end of the month in which payment is received.

(c) Notwithstanding the provisions of any agreements to the
contrary, employee and employer contributions may not be made to
receive allowable service credit if the member does not have
full reinstatement rights as provided in section 122A.46 or
136F.43, both during and at the end of the extended leave.

(d) Any school district paying the employee's retirement
contributions under this section shall forward to the applicable
retirement association or retirement fund a copy of the
agreement executed by the school district and the employee.

Sec. 5.

Minnesota Statutes 2004, section 354A.011,
subdivision 3a, is amended to read:

Subd. 3a.

Actuarial equivalent.

"Actuarial equivalent"
means the condition of one annuity or benefit having an equal
actuarial present value as another annuity or benefit,
determined as of a given date with each actuarial present value
based on the appropriate mortality table adopted by the
appropriate board of trustees based on the experience of that
retirement fund association as recommended by the actuary
retained by the Legislative Commission on Pensions and
Retirement under section 356.214, and approved under section
356.215, subdivision 18,and using the applicable preretirement
or postretirement interest rate assumption specified in section
356.215, subdivision 8.

Sec. 6.

Minnesota Statutes 2004, section 356.20,
subdivision 4, is amended to read:

Subd. 4.

Contents of financial report.

(a) The financial
report required by this section must contain financial
statements and disclosures that indicate the financial
operations and position of the retirement plan and fund. The
report must conform with generally accepted governmental
accounting principles, applied on a consistent basis. The
report must be audited. The report must include, as part of its
exhibits or its footnotes, an actuarial disclosure item based on
the actuarial valuation calculations prepared by the
commission-retained actuary retained under section 356.214 or by
the actuary retained by the retirement fund or plan, if
applicable whichever applies, according to applicable actuarial
requirements enumerated in section 356.215, and specified in the
most recent standards for actuarial work adopted by the
Legislative Commission on Pensions and Retirement. The accrued
assets, the accrued liabilities, including accrued reserves, and
the unfunded actuarial accrued liability of the fund or plan
must be disclosed. The disclosure item must contain a
declaration by the actuary retained by the Legislative
Commission on Pensions and Retirement under section 356.214 or
the actuary retained by the fund or plan, whichever applies,
specifying that the required reserves for any retirement,
disability, or survivor benefits provided under a benefit
formula are computed in accordance with the entry age actuarial
cost method and in accordance with the most recent applicable
standards for actuarial work adopted by the Legislative
Commission on Pensions and Retirement.

(b) Assets of the fund or plan contained in the disclosure
item must include the following statement of the actuarial value
of current assets as defined in section 356.215, subdivision 1:

Value Value

at cost at market

Cash, cash equivalents, and

short-term securities ......... .........

Accounts receivable ......... .........

Accrued investment income ......... .........

Fixed income investments ......... .........

Equity investments other

than real estate ......... .........

Real estate investments ......... .........

Equipment ......... .........

Equity Participation in the Minnesota

postretirement investment

fund or the retirement

benefit fund......... .........

Other ......... .........

Total assets

Value at cost .........

Value at market .........

Actuarial value of current assets .........

(c) The unfunded actuarial accrued liability of the fund or
plan contained in the disclosure item must include the following
measures of unfunded actuarial accrued liability, using
the actuarial value of current assets:

(1) the unfunded actuarial accrued liability, determined by
subtracting the current assets and the present value of future
normal costs from the total current and expected future benefit
obligations; and

(2) the unfunded pension benefit obligation, determined by
subtracting the current assets from the actuarial present value
of credited projected benefits.

If the current assets of the fund or plan exceed the
actuarial accrued liabilities, the excess must be disclosed and
indicated as a surplus.

(d) The pension benefit obligations schedule included in
the disclosure must contain the following information on the
benefit obligations:

(1) the pension benefit obligation, determined as the
actuarial present value of credited projected benefits on
account of service rendered to date, separately identified as
follows:

(i) for annuitants;
retirement annuities;
disability benefits;
surviving spouse and child benefits;
(ii) for former members without vested rights;
(iii) for deferred annuitants' benefits, including
any augmentation;
(iv) for active employees;
accumulated employee contributions,
including allocated investment income;
employer-financed benefits vested;
employer-financed benefits nonvested;
total pension benefit obligation; and

(2) if there are additional benefits not appropriately
covered by the foregoing items of benefit obligations, a
separate identification of the obligation.

(e) The report must contain an itemized exhibit describing
the administrative expenses of the plan, including, but not
limited to, the following items, classified on a consistent
basis from year to year, and with any further meaningful detail:

(1) personnel expenses;

(2) communication-related expenses;

(3) office building and maintenance expenses;

(4) professional services fees; and

(5) other expenses.

(f) The report must contain an itemized exhibit describing
the investment expenses of the plan, including, but not limited
to, the following items, classified on a consistent basis from
year to year, and with any further meaningful detail:

(1) internal investment-related expenses; and

(2) external investment-related expenses.

(g) Any additional statements or exhibits or more detailed
or subdivided itemization of a disclosure item that will enable
the management of the fund to portray a true interpretation of
the fund's financial condition must be included in the
additional statements or exhibits.

Sec. 7.

Minnesota Statutes 2004, section 356.47,
subdivision 3, is amended to read:

Subd. 3.

Payment.

(a) Upon the retired member attaining
the age of 65 years or upon the first day of the month next
following the month occurring one year after the termination of
the reemployment that gave rise to the limitation, whichever is
later, and the filing of a written application, the retired
member is entitled to the payment, in a lump sum, of the value
of the person's amount under subdivision 2, plus interest at the
compound annual rate of six percent from the date that the
amount was deducted from the retirement annuity to the date of
payment.

(b) The written application must be on a form prescribed by
the chief administrative officer of the applicable retirement
plan.

(c) If the retired member dies before the payment provided
for in paragraph (a) is made, the amount is payable, upon
written application, to the deceased person's surviving spouse,
or if none, to the deceased person's designated beneficiary, or
if none, to the deceased person's estate.

(d) In lieu of the direct payment of the person's amount
under subdivision 2, on or after the payment date under
paragraph (a), if the federal Internal Revenue Code so permits,
the retired member may elect to have all or any portion of the
payment amount under this section paid in the form of a direct
rollover to an eligible retirement plan as defined in section
402(c) of the federal Internal Revenue Code that is specified by
the retired member. If the retired member dies with a balance
remaining payable under this section, the surviving spouse of
the retired member, or if none, the deceased person's designated
beneficiary, or if none, the administrator of the deceased
person's estate may elect a direct rollover under this paragraph.

Sec. 8.

Minnesota Statutes 2004, section 422A.01,
subdivision 6, is amended to read:

Subd. 6.

Present worth or present value.

"Present worth"
or "present value" means that the present amount of money if
increased at the applicable postretirement or preretirement
interest rate assumption specified in section 356.215,
subdivision 8, and based on the mortality table adopted by the
board of trustees based on the experience of the fund as
recommended by the actuary retained by the Legislative
Commission on Pensions and Retirement under section 356.214, and
approved under section 356.215, subdivision 18,will at
retirement equal the actuarial accrued liability of the annuity
already earned.

Sec. 9.

Minnesota Statutes 2004, section 490.121,
subdivision 20, is amended to read:

Subd. 20.

Actuarial equivalent.

"Actuarial equivalent"
means the condition of one annuity or benefit having an equal
actuarial present value as another annuity or benefit,
determined as of a given date with each actuarial present value
based on the appropriate mortality table adopted by the board of
trustees directors of the Minnesota State Retirement System
based on the experience of the fund as recommended by
the commission-retained actuary retained under section 356.214,
and approved under section 356.215, subdivision 18,and using
the applicable preretirement or postretirement interest rate
assumption specified in section 356.215, subdivision 8.

Sec. 10. EFFECTIVE DATE.

(a) Sections 1 to 3, 5, 8, and 9 are effective on July 1,
2005.

(b) Section 4 is effective the day following final
enactment.

(c) Section 6 is effective the day following final
enactment and applies to annual financial reporting occurring on
or after June 30, 2005.

(d) Section 7 is effective July 1, 2005, and applies to
retired members with an amount in a reemployed annuitant's
account on or after that date.

ARTICLE 5

MEMBERSHIP INCLUSIONS
AND EXCLUSIONS

Section 1.

Minnesota Statutes 2004, section 69.011, is
amended by adding a subdivision to read:

Subd. 2c.

Ineligibility of certain police officers.

A
police officer employed by the University of Minnesota who is
required by the Board of Regents to be a member of the
University of Minnesota faculty retirement plan is not eligible
to be included in any police state aid certification under this
section.

Sec. 2.

Minnesota Statutes 2004, section 352.01,
subdivision 2a, is amended to read:

Subd. 2a.

Included employees.

(a) "State employee"
includes:

(1) employees of the Minnesota Historical Society;

(2) employees of the State Horticultural Society;

(3) employees of the Disabled American Veterans, Department
of Minnesota, Veterans of Foreign Wars, Department of Minnesota,
if employed before July 1, 1963;

(4) employees of the Minnesota Crop Improvement
Association;

(5) employees of the adjutant general who are paid from
federal funds and who are not covered by any federal civilian
employees retirement system;

(6) employees of the Minnesota State Colleges and
Universities employed under the university or college activities
program;

(7) currently contributing employees covered by the system
who are temporarily employed by the legislature during a
legislative session or any currently contributing employee
employed for any special service as defined in subdivision 2b,
clause (8);

(8) employees of the Armory Building Commission;

(9) employees of the legislature appointed without a limit
on the duration of their employment and persons employed or
designated by the legislature or by a legislative committee or
commission or other competent authority to conduct a special
inquiry, investigation, examination, or installation;

(10) trainees who are employed on a full-time established
training program performing the duties of the classified
position for which they will be eligible to receive immediate
appointment at the completion of the training period;

(11) employees of the Minnesota Safety Council;

(12) any employees on authorized leave of absence from the
Transit Operating Division of the former Metropolitan Transit
Commission who are employed by the labor organization which is
the exclusive bargaining agent representing employees of the
Transit Operating Division;

(13) employees of the Metropolitan Council, Metropolitan
Parks and Open Space Commission, Metropolitan Sports Facilities
Commission, Metropolitan Mosquito Control Commission, or
Metropolitan Radio Board unless excluded or covered by another
public pension fund or plan under section 473.415, subdivision
3;

(14) judges of the Tax Court;

(15) personnel employed on June 30, 1992, by the University
of Minnesota in the management, operation, or maintenance of its
heating plant facilities, whose employment transfers to an
employer assuming operation of the heating plant facilities, so
long as the person is employed at the University of Minnesota
heating plant by that employer or by its successor organization;
and

(16) seasonal help in the classified service employed by
the Department of Revenue; and

(17) persons employed by the Department of Commerce as a
peace officer in the Insurance Fraud Prevention Division under
section 45.0135 who have attained the mandatory retirement age
specified in section 43A.34, subdivision 4.

(b) Employees specified in paragraph (a), clause (15), are
included employees under paragraph (a) if employer and employee
contributions are made in a timely manner in the amounts
required by section 352.04. Employee contributions must be
deducted from salary. Employer contributions are the sole
obligation of the employer assuming operation of the University
of Minnesota heating plant facilities or any successor
organizations to that employer.

Sec. 3.

Minnesota Statutes 2004, section 352.91, is
amended by adding a subdivision to read:

Subd. 4a.

Process for evaluating and recommending
potential employment positions for membership inclusion.

(a)
The Department of Corrections and the Department of Human
Services must establish a procedure for evaluating periodic
requests by department employees for qualification for
recommendation by the commissioner for inclusion of the
employment position in the correctional facility or human
services facility in the correctional retirement plan and for
periodically determining employment positions that no longer
qualify for continued correctional retirement plan coverage.

(b) The procedure must provide for an evaluation of the
extent of the employee's working time spent in direct contact
with patients or inmates, the extent of the physical hazard that
the employee is routinely subjected to in the course of
employment, and the extent of intervention routinely expected of
the employee in the event of a facility incident. The
percentage of routine direct contact with inmates or patients
may not be less than 75 percent.

(c) The applicable commissioner shall notify the employee
of the determination of the appropriateness of recommending the
employment position for inclusion in the correctional retirement
plan, if the evaluation procedure results in a finding that the
employee:

(1) routinely spends 75 percent of the employee's time in
direct contact with inmates or patients; and

(2) is regularly engaged in the rehabilitation, treatment,
custody, or supervision of inmates or patients.

(d) After providing the affected employee an opportunity to
dispute or clarify any evaluation determinations, if the
commissioner determines that the employment position is
appropriate for inclusion in the correctional retirement plan,
the commissioner shall forward that recommendation and
supporting documentation to the chair of the Legislative
Commission on Pensions and Retirement, the chair of the State
and Local Governmental Operations Committee of the senate, the
chair of the Governmental Operations and Veterans Affairs Policy
Committee of the house of representatives, and the executive
director of the Legislative Commission on Pensions and
Retirement in the form of the appropriate proposed legislation.
The recommendation must be forwarded to the legislature before
January 15 for the recommendation to be considered in that
year's legislative session.

Sec. 4.

Minnesota Statutes 2004, section 352B.01,
subdivision 2, is amended to read:

Subd. 2.

Member.

"Member" means:

(1) a State Patrol member currently employed after June 30,
1943, under section 299D.03 by the state, who is a peace officer
under section 626.84, and whose salary or compensation is paid
out of state funds;

(2) a conservation officer employed under section 97A.201,
currently employed by the state, whose salary or compensation is
paid out of state funds;

(3) a crime bureau officer who was employed by the crime
bureau and was a member of the Highway Patrolmen's retirement
fund on July 1, 1978, whether or not that person has the power
of arrest by warrant after that date, or who is employed as
police personnel, with powers of arrest by warrant under section
299C.04, and who is currently employed by the state, and whose
salary or compensation is paid out of state funds;

(4) a person who is employed by the state in the Department
of Public Safety in a data processing management position with
salary or compensation paid from state funds, who was a crime
bureau officer covered by the State Patrol retirement plan on
August 15, 1987, and who was initially hired in the data
processing management position within the department during
September 1987, or January 1988, with membership continuing for
the duration of the person's employment in that position,
whether or not the person has the power of arrest by warrant
after August 15, 1987;

(5) a public safety employee defined as a peace officer in
section 626.84, subdivision 1, paragraph (c), and employed with
the Division of Alcohol and Gambling Enforcement under section
299L.01; and

(6) a Fugitive Apprehension Unit officer after October 31,
2000, employed by the Office of Special Investigations of the
Department of Corrections who is a peace officer under section
626.84; and

(7) an employee of the Department of Commerce defined as a
peace officer in section 626.84, subdivision 1, paragraph (c),
who is employed by the Division of Insurance Fraud Prevention
under section 45.0135 after January 1, 2005, and who has not
attained the mandatory retirement age specified in section
43A.34, subdivision 4.

Sec. 5.

Minnesota Statutes 2004, section 353.01,
subdivision 6, is amended to read:

Subd. 6.

Governmental subdivision.

(a) "Governmental
subdivision" means a county, city, town, school district within
this state, or a department or unit of state government, or any
public body whose revenues are derived from taxation, fees,
assessments or from other sources.

(b) Governmental subdivision also means the Public
Employees Retirement Association, the League of Minnesota
Cities, the Association of Metropolitan Municipalities, public
hospitals owned or operated by, or an integral part of, a
governmental subdivision or governmental subdivisions, the
Association of Minnesota Counties, the Metropolitan Intercounty
Association, the Minnesota Municipal Utilities Association, the
Metropolitan Airports Commission, the University of Minnesota
with respect to police officers covered by the public employees
police and fire retirement plan,the Minneapolis Employees
Retirement Fund for employment initially commenced after June
30, 1979, the Range Association of Municipalities and Schools,
soil and water conservation districts, economic development
authorities created or operating under sections 469.090 to
469.108, the Port Authority of the city of St. Paul, the Spring
Lake Park Fire Department, incorporated, the Lake Johanna
Volunteer Fire Department, incorporated, the Red Wing
Environmental Learning Center, and the Dakota County
Agricultural Society.

(c) Governmental subdivision does not mean any municipal
housing and redevelopment authority organized under the
provisions of sections 469.001 to 469.047; or any port authority
organized under sections 469.048 to 469.089 other than the Port
Authority of the city of St. Paul; or any hospital district
organized or reorganized prior to July 1, 1975, under sections
447.31 to 447.37 or the successor of the district, nor the
Minneapolis Community Development Agency.

Sec. 6.

Minnesota Statutes 2004, section 353.64, is
amended by adding a subdivision to read:

Subd. 6a.

University of minnesota police officers;
inclusions and exclusions.

(a) Unless paragraph (b) applies, a
person who is employed as a peace officer by the University of
Minnesota at any campus or facility of the university, who is
required by the university to be and is licensed as a peace
officer by the Minnesota Peace Officer Standards and Training
Board under sections 626.84 to 626.863, and who has the full
power of arrest is a member of the public employees police and
fire retirement plan.

(b) A police officer employed by the University of
Minnesota who is required by the Board of Regents to contribute
to the University of Minnesota faculty retirement plan is not
eligible to be a member of the public employees police and fire
retirement plan.

Sec. 7.

Minnesota Statutes 2004, section 354B.21,
subdivision 2, is amended to read:

Subd. 2.

Coverage; election.

(a) An eligible person is
entitled to elect coverage by the plan. If the eligible person
does not make a timely election of coverage by the plan, the
person has the coverage specified in subdivision 3.

(b) For eligible persons who were employed by the former
state university system or the former community college system
before May 1, 1995, the person has the retirement coverage that
the person had for employment immediately before May 1, 1995.

(c) (b) For all other eligible persons, the election of
coverage must be made within 90 days of May 10, 1995, or 90 days
of receiving notice from the employer of the options available
under this section, whichever occurs later unless otherwise
specified in this section, the eligible person is authorized to
elect prospective Teachers Retirement Association plan coverage
rather than coverage by the plan established by this chapter.
The election of prospective Teachers Retirement Association plan
coverage shall be made within one year of commencing eligible
Minnesota State Colleges and Universities system employment. If
an election is not made within the specified election period due
to a termination of Minnesota State Colleges and Universities
system employment, an election may be made within 90 days of
returning to eligible Minnesota State Colleges and Universities
system employment. All elections are irrevocable. Before
making an election, the eligible person must be covered by the
plan indicated as default coverage under subdivision 3.

(c) A purchase of service credit in the Teachers Retirement
Association plan for any period or periods of Minnesota State
Colleges and Universities system employment occurring prior to
the election under paragraph (b) is prohibited.

Sec. 8.

Minnesota Statutes 2004, section 354B.21,
subdivision 3, is amended to read:

Subd. 3.

Default coverage.

(a) Prior to making an
election under subdivision 2, or if an eligible person fails to
elect coverage by the plan under subdivision 2 or if the person
fails to make a timely election, the following retirement
coverage applies:

(1) for employees of the board who are employed in faculty
positions in the technical colleges, in the state universities
or in the community colleges, the retirement coverage is by the
plan established by this chapter;

(2) for employees of the board who are employed in faculty
positions in the technical colleges, the retirement coverage is
by the plan established by this chapter unless on June 30, 1997,
the employee was a member of the Teachers Retirement Association
established under chapter 354 and then the retirement coverage
is by the Teachers Retirement Association, or, unless the
employee was a member of a first class city teacher retirement
fund established under chapter 354A on June 30, 1995, and then
the retirement coverage is by the Duluth Teachers Retirement
Fund Association if the person was a member of that plan on June
30, 1995, or the Minneapolis Teachers Retirement Fund
Association if the person was a member of that plan on June 30,
1995, or the St. Paul Teachers Retirement Fund Association if
the person was a member of that plan on June 30, 1995; and

(3) for employees of the board who are employed in eligible
unclassified administrative positions, the retirement coverage
is by the plan established by this chapter.

(b) If an employee fails to correctly certify prior
membership in the Teachers Retirement Association to the
Minnesota State colleges and Universities system, the system
shall not pay interest on employee contributions, employer
contributions, and additional employer contributions to the
Teachers Retirement Association under section 354.52,
subdivision 4.

Sec. 9. EFFECTIVE DATE.

(a) Sections 1, 3, 5, and 6 are effective July 1, 2005.

(b) Sections 2 and 4 are effective retroactively from
January 1, 2005.

(c) Sections 7 and 8 are effective on the day following
final enactment.

ARTICLE 6

VARIOUS RETIREMENT PLAN CONTRIBUTIONS
AND CONTRIBUTION RATE INCREASES

Section 1.

Minnesota Statutes 2004, section 352.04,
subdivision 2, is amended to read:

Subd. 2.

Employee contributions.

(a) The employee
contribution to the fund must be equal to 4.0 percent the
following percentage of salary.:

Effective before July 1, 2007 4.00
Effective July 1, 2007 4.25
Effective July 1, 2008 4.50
Effective July 1, 2009 4.75
Effective July 1, 2010 5.00

(b) These contributions must be made by deduction from
salary as provided in subdivision 4.

Sec. 2.

Minnesota Statutes 2004, section 352.04,
subdivision 3, is amended to read:

Subd. 3.

Employer contributions.

The employer
contribution to the fund must be equal to 4.0 percent the
following percentage of salary.:

Effective before July 1, 2007 4.00
Effective July 1, 2007 4.25
Effective July 1, 2008 4.50
Effective July 1, 2009 4.75
Effective July 1, 2010 5.00

Sec. 3.

Minnesota Statutes 2004, section 352.92,
subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

Employee
contributions of covered correctional employees must be in an
amount equal to 5.69 percent the following percentage of salary
.:

Effective before July 1, 2007 5.69
Effective July 1, 2007 6.40
Effective July 1, 2008 7.00
Effective July 1, 2009 7.70
Effective July 1, 2010 8.60

Sec. 4.

Minnesota Statutes 2004, section 352.92,
subdivision 2, is amended to read:

Subd. 2.

Employer contributions.

The employer shall
contribute for covered correctional employees an amount equal to
7.98 percent the following percentage of salary.:

Effective before July 1, 2007 7.98
Effective July 1, 2007 9.10
Effective July 1, 2008 10.10
Effective July 1, 2009 11.10
Effective July 1, 2010 12.10

Sec. 5.

Minnesota Statutes 2004, section 352B.02,
subdivision 1a, is amended to read:

Subd. 1a.

Member contributions.

Each member shall pay a
sum equal to 8.40 percent the following percentage of the
member's salary, which shall constitute constitutes the member
contribution to the fund.:

Effective before July 1, 2007 8.40
Effective July 1, 2007 9.10
Effective July 1, 2008 9.80

Sec. 6.

Minnesota Statutes 2004, section 352B.02,
subdivision 1c, is amended to read:

Subd. 1c.

Employer contributions.

(a) In addition to
member contributions, department heads shall pay a sum equal to
12.60 percent the following percentage of the salary upon which
deductions were made, which shall constitute constitutes the
employer contribution to the fund.:

Effective before July 1, 2007 12.60
Effective July 1, 2007 13.60
Effective July 1, 2008 14.60

(b) Department contributions must be paid out of money
appropriated to departments for this purpose.

Sec. 7.

Minnesota Statutes 2004, section 352D.04,
subdivision 2, is amended to read:

Subd. 2.

Contribution rates.

(a) The money used to
purchase shares under this section is the employee and employer
contributions provided in this subdivision.

(b) The employee contribution is an amount equal to the
employee contribution specified in section 352.04, subdivision 2
four percent of salary.

(c) The employer contribution is an amount equal to six
percent of salary.

(d) These contributions must be made in the manner provided
in section 352.04, subdivisions 4, 5, and 6.

(e) For members of the legislature, the contributions under
this subdivision also must be made on per diem payments received
during a regular or special legislative session, but may not be
made on per diem payments received outside of a regular or
special legislative session, on the additional compensation
attributable to a leadership position under section 3.099,
subdivision 3, living expense payments under section 3.101, or
special session living expense payments under section 3.103.

(f) For a judge who is a member of the unclassified plan
under section 352D.02, subdivision 1, paragraph (c), clause
(16), the employee contribution rate is eight percent of salary,
and there is no employer contribution.

Sec. 8.

Minnesota Statutes 2004, section 353.27,
subdivision 2, is amended to read:

Subd. 2.

Employee contribution.

(a) The employee
contribution is the following applicable percentage of the total
salary amount for a "basic member" and for a "coordinated
member":

Basic Coordinated
Program Program
Before January 1, 2002 8.75 4.75
Effective January 1, 2002
Effective before January 1, 2006 9.10 5.10
Effective January 1, 2006 9.10 5.50
Effective January 1, 2007 9.10 5.75
Effective January 1, 2008 9.10 6.00 plus any
contribution
rate adjustment
under
subdivision 3b

(b) These contributions must be made by deduction from
salary as defined in section 353.01, subdivision 10,in the
manner provided in subdivision 4. Where If any portion of a
member's salary is paid from other than public funds, such the
member's employee contribution must be based on the total salary
received by the member from all sources.

Sec. 9.

Minnesota Statutes 2004, section 353.27,
subdivision 3, is amended to read:

Subd. 3.

Employer contribution.

(a) The employer
contribution is the following applicable percentage of the total
salary amount for "basic members" and for "coordinated members":

Basic Coordinated
Program Program
Before January 1, 2002 8.75 4.75
Effective January 1, 2002
Effective before January 1, 2006 9.10 5.10
Effective January 1, 2006 9.10 5.50
Effective January 1, 2007 9.10 5.75
Effective January 1, 2008 9.10 6.00 plus any
contribution
rate adjustment
under
subdivision 3b

(b) This contribution must be made from funds available to
the employing subdivision by the means and in the manner
provided in section 353.28.

Sec. 10.

Minnesota Statutes 2004, section 353.27,
subdivision 3a, is amended to read:

Subd. 3a.

Additional employer contribution.

(a) An
additional employer contribution must be made equal to (1) 2.68
percent of the following applicable percentage of the total
salary of each amount for "basic member members ";and (2)
.43 percent of the total salary of each for "coordinated member.
members ":

Basic Coordinated
Program Program
Effective before January 1, 2006 2.68 .43
Effective January 1, 2006 2.68 .50
Effective January 1, 2009 2.68 .75
Effective January 1, 2010 2.68 1.00

These contributions must be made from funds available to
the employing subdivision by the means and in the manner
provided in section 353.28.

(b) The coordinated program contribution rates set forth in
paragraph (a) effective for January 1, 2009, or January 1, 2010,
must not be implemented if, following receipt of the July 1,
2008, or July 1, 2009, annual actuarial valuation reports under
section 356.215, respectively, the actuarially required
contributions are equal to or less than the total rates under
this section in effect as of January 1, 2008.

(c) This subdivision is repealed once the actuarial value
of the assets of the plan equal or exceed the actuarial accrued
liability of the plan as determined by the actuary retained by
the Legislative Commission on Pensions and Retirement under
section 356.215. The repeal is effective on the first day of
the first full pay period occurring after March 31 of the
calendar year following the issuance of the actuarial valuation
upon which the repeal is based.

Sec. 11.

Minnesota Statutes 2004, section 353.27, is
amended by adding a subdivision to read:

Subd. 3b.

Change in employee and employer contributions
in certain instances.

(a) For purposes of this section, a
contribution sufficiency exists if the total of the employee
contribution under subdivision 2, the employer contribution
under subdivision 3, the additional employer contribution under
subdivision 3a, and any additional contribution previously
imposed under this subdivision exceeds the total of the normal
cost, the administrative expenses, and the amortization
contribution of the retirement plan as reported in the most
recent actuarial valuation of the retirement plan prepared by
the actuary retained under section 356.214 and prepared under
section 356.215 and the standards for actuarial work of the
Legislative Commission on Pensions and Retirement. For purposes
of this section, a contribution deficiency exists if the total
of the employee contributions under subdivision 2, the employer
contributions under subdivision 3, the additional employer
contribution under subdivision 3a, and any additional
contribution previously imposed under this subdivision is less
than the total of the normal cost, the administrative expenses,
and the amortization contribution of the retirement plan as
reported in the most recent actuarial valuation of the
retirement plan prepared by the actuary retained under section
356.214 and prepared under section 356.215 and the standards for
actuarial work of the Legislative Commission on Pensions and
Retirement.

(b) Employee and employer contributions under subdivisions
2 and 3 must be adjusted:

(1) if, after July 1, 2010, the regular actuarial
valuations of the general employees retirement plan of the
Public Employees Retirement Association under section 356.215
indicate that there is a contribution sufficiency under
paragraph (a) equal to or greater than 0.5 percent of covered
payroll for two consecutive years, the coordinated program
employee and employer contribution rates must be decreased as
determined under paragraph (c) to a level such that the
sufficiency equals no more than 0.25 percent of covered payroll
based on the most recent actuarial valuation; or

(2) if, after July 1, 2010, the regular actuarial
valuations of the general employees retirement plan of the
Public Employees Retirement Association under section 356.215
indicate that there is a deficiency equal to or greater than 0.5
percent of covered payroll for two consecutive years, the
coordinated program employee and employer contribution rates
must be increased as determined under paragraph (c) to a level
such that no deficiency exists based on the most recent
actuarial valuation.

(c) The contribution rate increase or decrease must be
determined by the executive director of the Public Employees
Retirement Association, must be reported to the chair and the
executive director of the Legislative Commission on Pensions and
Retirement on or before the next February 1, and, if the
Legislative Commission on Pensions and Retirement does not
recommend against the rate change or does not recommend a
modification in the rate change, is effective on the next July 1
following the determination by the executive director that a
contribution deficiency or sufficiency has existed for two
consecutive fiscal years based on the most recent actuarial
valuations under section 356.215. If the actuarially required
contribution exceeds or is less than the total support provided
by the combined employee and employer contribution rates by more
than 0.5 percent of covered payroll, the coordinated program
employee and employer contribution rates must be adjusted
incrementally over one or more years to a level such that there
remains a contribution sufficiency of no more than 0.25 percent
of covered payroll.

(d) No incremental adjustment may exceed 0.25 percent for
either the coordinated program employee and employer
contribution rates per year in which any adjustment is
implemented. A contribution rate adjustment under this
subdivision must not be made until at least two years have
passed since fully implementing a previous adjustment under this
subdivision.

Sec. 12.

Minnesota Statutes 2004, section 353.28,
subdivision 5, is amended to read:

Subd. 5.

Interest charges chargeable on amounts due.

Any
amount due under this section or section 353.27, subdivision 4,
is payable with interest at an annual compound rate of 8.5
percent compounded annually from the date due until the date
payment is received by the association, with a minimum interest
charge of $10. Interest for past due payments of excess police
state aid under section 69.031, subdivision 5, must be charged
at an annual rate of 8.5 percent compounded annually.

Sec. 13.

Minnesota Statutes 2004, section 353.28,
subdivision 6, is amended to read:

Subd. 6.

failure to pay collection of unpaid amounts.

(a)
If the a governmental subdivision which receives the direct
proceeds of property taxation fails to pay amounts an amount due
under chapters chapter 353, 353A, 353B, 353C, and or 353D or
fails to make payments of excess police state aid to the public
employees police and fire fund under section 69.031, subdivision
5, the executive director shall certify those amounts the amount
to the governmental subdivision for payment. If the
governmental subdivision fails to remit the sum so due in a
timely fashion, the executive director shall certify amounts the
amount to the applicable county auditor for collection. The
county auditor shall collect such amounts the amount out of the
revenue of the governmental subdivision, or shall add them the
amount to the levy of the governmental subdivision and make
payment directly to the association. This tax shall must be
levied, collected, and apportioned in the manner that other
taxes are levied, collected, and apportioned.

(b) If a governmental subdivision which is not funded
directly from the proceeds of property taxation fails to pay an
amount due under this chapter, the executive director shall
certify the amount to the governmental subdivision for payment.
If the governmental subdivision fails to pay the amount for a
period of 60 days after certification, the executive director
shall certify the amount to the commissioner of finance, who
shall deduct the amount from any subsequent state-aid payment or
state appropriation amount applicable to the governmental
subdivision.

Sec. 14.

Minnesota Statutes 2004, section 353.65,
subdivision 2, is amended to read:

Subd. 2.

Employee contribution rate.

(a) The employee
contribution is an amount equal to 6.2 percent the following
percentage of the total salary of the member.:

Effective before July 1, 2006 6.20
Effective July 1, 2006 7.00
Effective July 1, 2007 7.80
Effective July 1, 2008 8.60
Effective July 1, 2009 9.40

(b) This contribution must be made by deduction from salary
in the manner provided in subdivision 4. Where any portion of a
member's salary is paid from other than public funds, the
member's employee contribution is based on the total salary
received from all sources.

Sec. 15.

Minnesota Statutes 2004, section 353.65,
subdivision 3, is amended to read:

Subd. 3.

Employer contribution rate.

(a) The employer
contribution shall be is an amount equal to 9.3 percent the
following percentage of the total salary of every member.:

Effective before July 1, 2006 9.30
Effective July 1, 2006 10.50
Effective July 1, 2007 11.70
Effective July 1, 2008 12.90
Effective July 1, 2009 14.10

(b) This contribution shall must be made from funds
available to the employing subdivision by the means and in the
manner provided in section 353.28.

Sec. 16. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION;
INTEREST ON SERVICE CREDIT PURCHASE PAYMENT RETURN.

If a former employee of the Minneapolis Community
Development Agency made a prior service credit purchase payment
under Minnesota Statutes 2002, section 356.55, in an amount that
is greater than the actually required payment amount because of
the use of an inaccurate salary figure or other similar
reporting or clerical error, the general employees retirement
plan of the Public Employees Retirement Association may pay
interest on the overage amount at an annual compound rate of six
percent per year.

Sec. 17. RETURN OF PRIOR SERVICE CREDIT PURCHASE PAYMENT
FOR CERTAIN MINNEAPOLIS CITY EMPLOYEES.

(a) An eligible person, upon written application, may
receive a return of a prior service credit purchase payment
under Minnesota Statutes 2002, section 356.55, plus interest on
the amount at an annual compound rate of six percent per year.
The return amount and interest must be made in an
institution-to-institution transfer to a federal tax qualified
retirement plan or account and may not be paid directly to an
individual.

(b) An eligible person is a person who was an employee of
the Minneapolis Community Development Agency and made a payment
for the purchase of prior service credit under Laws 2003,
chapter 127, article 12, section 31, subdivision 4, and
Minnesota Statutes 2002, section 356.55, in an erroneous amount
because of an inaccurate salary figure supplied by the employing
agency.

Sec. 18. APPROPRIATION.

For each of fiscal years 2006 and 2007, $2,000,000 is
appropriated from the general fund to the commissioner of
finance to be distributed to counties and home rule charter and
statutory cities in proportion to each of their shares of the
total additional employer contributions for all counties and
cities under this article.

Sec. 19. EFFECTIVE DATE.

(a) Sections 1 to 15 and 18 are effective July 1, 2005.

(b) Sections 16 and 17 are effective the day following
final enactment.

(c) Section 17 expires September 30, 2005.

ARTICLE 7

PENSION BENEFITS UPON PRIVATIZATION

Section 1.

Minnesota Statutes 2004, section 353F.02,
subdivision 4, is amended to read:

Subd. 4.

Medical facility.

"Medical facility" means:

(1) Bridges Medical Services;

(2) the Fair Oaks Lodge, Wadena;

(2) (3) the Glencoe Area Health Center;

(3) (4) the Hutchinson Area Health Care;

(5) the Kanabec Hospital;

(4) (6) the Luverne Public Hospital;

(7) the Northfield Hospital;

(5) (8) the RenVilla Nursing Home;

(6) (9) the Renville County Hospital in Olivia;

(7) (10) the St. Peter Community Healthcare Center; and

(8) (11) the Waconia-Ridgeview Medical Center.

Sec. 2.

Minnesota Statutes 2004, section 471A.10, is
amended to read:

471A.10 PUBLIC EMPLOYEE LAWS; SALE OR LEASE OF EXISTING
FACILITY.

(a) Unless expressly provided therein, and except as
provided in this section, no state law, charter provision, or
ordinance of a municipality relating to public employees shall
apply to a person solely by reason of that person's employment
by a private vendor in connection with services rendered under a
service contract.

(b) A private vendor purchasing or leasing existing related
facilities from a municipality or operating or maintaining the
facility shall recognize all exclusive bargaining
representatives and existing labor agreements and those
agreements shall remain in force until they expire by their
terms. Persons who are not who were employed by a municipality
in a related facility at the time of and who were members of the
Public Employees Retirement Association general plan due to that
employment are not permitted to remain as active members of the
plan following a lease or purchase of the facility by the a
private vendor are not "public employees" within the meaning of
the Public Employees Retirement Act, chapter 353. Persons
employed by a municipality in a related facility at the time of
a lease or purchase of the facility by a private vendor shall
continue to be considered to be "public employees" within the
meaning of the Public Employees Retirement Act, chapter 353, but
may elect to terminate their participation in the Public
Employees Retirement Association as provided in this section.
Each such employee may exercise the election annually on the
anniversary of the person's initial employment by the
municipality. An employee electing to terminate participation
in the association is entitled to benefits that the employee
would be entitled to if terminating public employment and may
participate in a retirement program established by the private
vendor.

Sec. 3.

Laws 2004, chapter 267, article 12, section 4, is
amended to read:

Sec. 4EFFECTIVE DATE.

(a) Section 1, relating to the Fair Oaks Lodge, Wadena, is
effective upon the latter of:

(1) the day after the governing body of Todd County and its
chief clerical officer timely complete their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3; and

(2) the day after the governing body of Wadena County and
its chief clerical officer timely complete their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.

(b) Section 1, relating to the RenVilla Nursing Home, is
effective upon the latter of:

(1) the day after the governing body of the city of
Renville and its chief clerical officer timely complete their
compliance with Minnesota Statutes, section 645.021,
subdivisions 2 and 3, except that the certificate of approval
must be filed before January 1, 2006; and

(2) the first day of the month next following certification
to the governing body of the city of Renville by the executive
director of the Public Employees Retirement Association that the
actuarial accrued liability of the special benefit coverage
proposed for extension to the privatized RenVilla Nursing Home
employees under section 1 does not exceed the actuarial gain
otherwise to be accrued by the Public Employees Retirement
Association, as calculated by the consulting actuary retained by
the Legislative Commission on Pensions and Retirement, or the
actuary retained under Minnesota Statutes, section 356.214,
whichever is applicable.

(c) The cost of the actuarial calculations must be borne by
the city of Renville or the purchaser of the RenVilla Nursing
Home.

(d) Section 1, relating to the St. Peter Community
Healthcare Center, is effective upon the latter of:

(1) the day after the governing body of the city of St.
Peter and its chief clerical officer timely complete their
compliance with Minnesota Statutes, section 645.021,
subdivisions 2 and 3; and

(2) the first day of the month next following certification
to the governing body of the city of St. Peter by the executive
director of the Public Employees Retirement Association that the
actuarial accrued liability of the special benefit coverage
proposed for extension to the privatized St. Peter Community
Healthcare Center employees under section 1 does not exceed the
actuarial gain otherwise to be accrued by the Public Employees
Retirement Association, as calculated by the consulting actuary
retained by the Legislative Commission on Pensions and
Retirement, or the actuary retained under Minnesota Statutes,
section 356.214, whichever is applicable.

(e) The cost of the actuarial calculations must be borne by
the city of St. Peter or the purchaser of the St. Peter
Community Healthcare Center.

(f) If the required actions under paragraphs (b) and (c)
occur, section 1 applies retroactively to the RenVilla Nursing
Home as of the date of privatization.

(g) If the required actions under paragraph (a) occur,
section 1 applies retroactively to Fair Oaks Lodge, Wadena, as
of January 1, 2004.

(h) Sections 2 and 3 are effective on the day following
final enactment.

Sec. 4. EFFECTIVE DATE.

(a) Section 1, relating to Bridges Medical Services, is
effective upon the later of:

(1) the day after the governing body of the city of Ada and
its chief clerical officer timely complete their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3; and

(2) the first day of the month next following certification
to the governing body of the city of Ada by the executive
director of the Public Employees Retirement Association that the
actuarial accrued liability of the special benefit coverage
proposed for extension to the privatized Bridges Medical
Services employees under section 1 does not exceed the actuarial
gain otherwise to be accrued by the Public Employees Retirement
Association, as calculated by the consulting actuary retained
under Minnesota Statutes, section 356.214.

(b) Section 1, relating to the Hutchinson Area Health Care,
is effective upon the later of:

(1) the day after the governing body of the city of
Hutchinson and its chief clerical officer timely complete their
compliance with Minnesota Statutes, section 645.021,
subdivisions 2 and 3; and

(2) the first day of the month next following certification
to the governing body of the city of Hutchinson by the executive
director of the Public Employees Retirement Association that the
actuarial accrued liability of the special benefit coverage
proposed for extension to the privatized Hutchinson Area Health
Care employees under section 1 does not exceed the actuarial
gain otherwise to be accrued by the Public Employees Retirement
Association, as calculated by the consulting actuary retained by
the Legislative Commission on Pensions and Retirement.

(c) Section 1, relating to the Northfield Hospital, is
effective upon the later of:

(1) the day after the governing body of the city of
Northfield and its chief clerical officer timely complete their
compliance with Minnesota Statutes, section 645.021,
subdivisions 2 and 3; and

(2) the first day of the month next following certification
to the governing body of the city of Northfield by the executive
director of the Public Employees Retirement Association that the
actuarial accrued liability of the special benefit coverage
proposed for extension to the privatized Northfield Hospital
employees under section 1 does not exceed the actuarial gain
otherwise to be accrued by the Public Employees Retirement
Association, as calculated by the consulting actuary retained by
the Legislative Commission on Pensions and Retirement.

(d) The cost of the actuarial calculations must be borne by
the facility, the city in which the facility is located, or the
purchaser of the facility.

(e) If the required actions in paragraphs (a), (b), or (c)
and (d) occur, section 1 applies retroactively to the date of
privatization.

(f) Section 2 is effective the day following final
enactment and applies to privatizations occurring on or after
the effective date.

(g) Section 3 is effective the day following final
enactment.

ARTICLE 8

FIRST CLASS CITY TEACHER
RETIREMENT FUND ASSOCIATIONS

Section 1.

Minnesota Statutes 2004, section 354A.021, is
amended by adding a subdivision to read:

Subd. 9.

Updated articles of incorporation and bylaws;
filing.

(a) On or before July 1, 2006, and within six months of
the date of the approval of any amendment to the articles of
incorporation or bylaws, the chief administrative officer of
each first class city teacher retirement fund association shall
prepare and publish an updated compilation of the articles of
incorporation and the bylaws of the association.

(b) The chief administrative officer of the first class
city teacher retirement fund association must certify the
accuracy and the completeness of the compilation.

(c) The compilation of the articles of incorporation and
bylaws of a first class city teacher retirement fund association
must contain an index.

(d) The compilation must be made available to association
members and other interested parties. The association may
charge a fee for a copy that reflects the price of printing or
otherwise producing the copy. Two copies of the compilation
must be filed, without charge, by each retirement fund
association with the Legislation Commission on Pensions and
Retirement, the Legislative Reference Library, the state
auditor, the commissioner of education, the chancellor of the
Minnesota State Colleges and Universities system, and the
superintendent of the applicable school district.

(e) A first class city teacher retirement fund association
may contract with the revisor of statutes for the preparation of
the compilation.

(f) If a first class city teacher retirement fund
association makes an updated copy of its articles of
incorporation and bylaws available on its Web site, the
retirement fund association is not obligated to file a hard copy
of the documents under paragraph (d) for the applicable filing
period.

Sec. 2. EFFECTIVE DATE.

Section 1 is effective July 1, 2005.

ARTICLE 9

MINNESOTA STATE COLLEGES AND UNIVERSITIES
INDIVIDUAL RETIREMENT ACCOUNT PLAN CHANGES

Section 1.

Minnesota Statutes 2004, section 354B.25,
subdivision 2, is amended to read:

Subd. 2.

Investment options.

(a) The plan administrator
shall arrange for the purchase of investment products.

(b) The investment products must be purchased with
contributions under section 354B.23 or with money or assets
otherwise provided by law by authority of the board.

(c) Various investment accounts offered through the
Minnesota supplemental investment fund established under section
11A.17 and administered by the State Board of Investment is one
of the may be included as investment products for the individual
retirement account plan. Direct access must also be provided to
lower expense and no-load mutual funds, as those terms are
defined by the federal Securities and Exchange Commission,
including stock funds, bond funds, and balanced funds. Other
investment products or combination of investment products which
may be included are:

(1) savings accounts at federally insured financial
institutions;

(2) life insurance contracts, fixed and variable annuity
contracts from companies that are subject to regulation by the
commerce commissioner;

(3) investment options from open-ended investment companies
registered under the federal Investment Company Act of 1940,
United States Code, title 15, sections 80a-1 to 80a-64;

(4) investment options from a firm that is a registered
investment advisor under the federal Investment Advisers Act of
1940, United States Code, title 15, sections 80b-1 to 80b-21;
and

(5) investment options of a bank as defined in United
States Code, title 15, section 80b-2, subsection (a), paragraph
2, or a bank holding company as defined in the Bank Holding
Company Act of 1956, United States Code, title 12, section 1841,
subsection (a), paragraph (1).

Sec. 2. EFFECTIVE DATE.

Section 1 is effective the day following final enactment.

ARTICLE 10

SUPPLEMENTAL RETIREMENT PLANS

Section 1.

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 or to
a laborer's 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 $2,000 $5,000 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 $2,000 $5,000 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
$2,000 $5,000 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 at the
date of retirement or the termination of active employment.

Sec. 2. EFFECTIVE DATE.

Section 1 is effective the day following final enactment.

ARTICLE 11

VOLUNTEER FIREFIGHTER RELIEF
ASSOCIATION CHANGES

Section 1.

Minnesota Statutes 2004, section 69.051,
subdivision 1, is amended to read:

Subdivision 1.

Financial report and audit.

The board of
each salaried firefighters' relief association, police relief
association, and volunteer firefighters' relief association as
defined in section 424A.001, subdivision 4, with assets of at
least $200,000 or liabilities of at least $200,000 in the prior
year or in any previous year, according to the most recent
applicable actuarial valuation or financial report if no
valuation is required, shall:

(1) prepare a financial report covering the special and
general funds of the relief association for the preceding fiscal
year on a form prescribed by the state auditor. The financial
report shall must contain financial statements and disclosures
which present the true financial condition of the relief
association and the results of relief association operations in
conformity with generally accepted accounting principles and in
compliance with the regulatory, financing and funding provisions
of this chapter and any other applicable laws. The financial
report shall must be countersigned by the municipal clerk or
clerk-treasurer of the municipality in which the relief
association is located if the relief association is a
firefighters' relief association which is directly associated
with a municipal fire department or is a police relief
association, or countersigned by the secretary of the
independent nonprofit firefighting corporation and by the
municipal clerk or clerk-treasurer of the largest municipality
in population which contracts with the independent nonprofit
firefighting corporation if the volunteer firefighter relief
association is a subsidiary of an independent nonprofit
firefighting corporation;

(2) file the financial report in its office for public
inspection and present it to the city council after the close of
the fiscal year. One copy of the financial report shall must be
furnished to the state auditor after the close of the fiscal
year; and

(3) submit to the state auditor audited financial
statements which have been attested to by a certified public
accountant, public accountant, or the state auditor within 180
days after the close of the fiscal year. The state auditor may
accept this report in lieu of the report required in clause (2).

Sec. 2.

Minnesota Statutes 2004, section 69.051,
subdivision 1a, is amended to read:

Subd. 1a.

Financial statement.

(a) The board of each
volunteer firefighters' relief association, as defined in
section 424A.001, subdivision 4, with assets of less than
$200,000 and liabilities less than $200,000, according to the
most recent financial report, shall that is not required to file
a financial report and audit under subdivision 1 must prepare a
detailed statement of the financial affairs for the preceding
fiscal year of the relief association's special and general
funds in the style and form prescribed by the state auditor.
The detailed statement must show the sources and amounts of all
money received; all disbursements, accounts payable and accounts
receivable; the amount of money remaining in the treasury; total
assets including a listing of all investments; the accrued
liabilities; and all items necessary to show accurately the
revenues and expenditures and financial position of the relief
association.

(b) The detailed financial statement required under
paragraph (a) must be certified by an independent public
accountant or auditor or by the auditor or accountant who
regularly examines or audits the financial transactions of the
municipality. In addition to certifying the financial condition
of the special and general funds of the relief association, the
accountant or auditor conducting the examination shall give an
opinion as to the condition of the special and general funds of
the relief association, and shall comment upon any exceptions to
the report. The independent accountant or auditor shall must
have at least five years of public accounting, auditing, or
similar experience, and shall must not be an active, inactive,
or retired member of the relief association or the fire or
police department.

(c) The detailed statement required under paragraph (a)
must be countersigned by the municipal clerk or clerk-treasurer
of the municipality, or, where applicable, by the secretary of
the independent nonprofit firefighting corporation and by the
municipal clerk or clerk-treasurer of the largest municipality
in population which contracts with the independent nonprofit
firefighting corporation if the relief association is a
subsidiary of an independent nonprofit firefighting corporation.

(d) The volunteer firefighters' relief association board
must file the detailed statement required under paragraph (a) in
the relief association office for public inspection and present
it to the city council within 45 days after the close of the
fiscal year, and must submit a copy of the detailed statement to
the state auditor within 90 days of the close of the fiscal year.

Sec. 3.

Minnesota Statutes 2004, section 69.771, is
amended to read:

69.771 VOLUNTEER FIREFIGHTERS' RELIEF ASSOCIATION
FINANCING GUIDELINES ACT; APPLICATION.

Subdivision 1.

Covered relief associations.

The
applicable provisions of sections 69.771 to 69.776shall apply
to any firefighters' relief association other than a relief
association enumerated in section 69.77, subdivision 1a, which
is organized under any laws of this state, which is composed of
volunteer firefighters or is composed partially of volunteer
firefighters and partially of salaried firefighters with
retirement coverage provided by the public employees police and
fire fund and which, in either case,operates subject to the
service pension minimum requirements for entitlement and
maximums contained in section 424A.02, or subject to a special
law modifying those requirements or maximums.

Subd. 2.

Authorized employer support for a relief
association.

Notwithstanding any law to the contrary, a
municipality may lawfully contribute public funds, including the
transfer of any applicable fire state aid, or may levy property
taxes for the support of a firefighters' relief association
specified in subdivision 1, however organized, which provides
retirement coverage or pays a service pension to retired
firefighter or a retirement benefit to a disabled firefighter or
a surviving dependent of either an active or retired firefighter
for the operation and maintenance of the relief association only
if the municipality and the relief association both comply with
the applicable provisions of sections 69.771 to 69.776.

Subd. 3.

Remedy for noncompliance; determination.

Any (a) A municipality in which there exists a firefighters'
relief association as specified in subdivision 1 which does not
comply with the applicable provisions of sections 69.771 to
69.776 or the provisions of any applicable special law relating
to the funding or financing of the association shall does not
qualify initially to receive, or be and is not entitled
subsequently to retain, fire state aid pursuant to under
sections 69.011 to 69.051 until the reason for the
disqualification specified by the state auditor is remedied,
whereupon the municipality or relief association, if otherwise
qualified, shall be is entitled to again receive fire state aid
for the year occurring immediately subsequent to the year in
which the disqualification is remedied.

(b) The state auditor shall determine if a municipality to
which a firefighters' relief association is directly associated
or a firefighters' relief association fails to comply with the
provisions of sections 69.771 to 69.776 or the funding or
financing provisions of any applicable special law based upon
the information contained in the annual financial report of the
firefighters' relief association required pursuant to under
section 69.051., the actuarial valuation of the relief
association, if applicable, the relief association officers'
financial requirements of the relief association and minimum
municipal obligation determination documentation under section
69.772, subdivisions 3 and 4; 69.773, subdivisions 4 and 5; or
69.774, subdivision 2, if requested to be filed by the state
auditor, the applicable municipal or nonprofit firefighting
corporation budget, if requested to be filed by the state
auditor, and any other relevant documents or reports obtained by
the state auditor.

(c) The municipality or nonprofit firefighting corporation
and the associated relief association are not eligible to
receive or to retain fire state aid if:

(1) the relief association fails to prepare or to file the
financial report or financial statement under section 69.051;

(2) the relief association treasurer is not bonded in the
manner and in the amount required by section 69.051, subdivision
2;

(3) the relief association officers fail to determine or
improperly determine the accrued liability and the annual
accruing liability of the relief association under section
69.772, subdivisions 2, 2a, and 3, paragraph (c), clause (2), if
applicable;

(4) if applicable, the relief association officers fail to
obtain and file a required actuarial valuation or the officers
file an actuarial valuation that does not contain the special
fund actuarial liability calculated under the entry age normal
actuarial cost method, the special fund current assets, the
special fund unfunded actuarial accrued liability, the special
fund normal cost under the entry age normal actuarial cost
method, the amortization requirement for the special fund
unfunded actuarial accrued liability by the applicable target
date, a summary of the applicable benefit plan, a summary of the
membership of the relief association, a summary of the actuarial
assumptions used in preparing the valuation, and a signed
statement by the actuary attesting to its results and certifying
to the qualifications of the actuary as an approved actuary
under section 356.215, subdivision 1, paragraph (c);

(5) the municipality failed to provide a municipal
contribution, or the nonprofit firefighting corporation failed
to provide a corporate contribution, in the amount equal to the
minimum municipal obligation if the relief association is
governed under section 69.772, or the amount necessary, when
added to the fire state aid actually received in the plan year
in question, to at least equal in total the calculated annual
financial requirements of the special fund of the relief
association if the relief association is governed under section
69.773, and, if the municipal or corporate contribution is
deficient, the municipality failed to include the minimum
municipal obligation certified under section 69.772, subdivision
3, or 69.773, subdivision 5, in its budget and tax levy or the
nonprofit firefighting corporation failed to include the minimum
corporate obligation certified under section 69.774, subdivision
2, in the corporate budget;

(6) the relief association did not receive municipal
ratification for the most recent plan amendment when municipal
ratification was required under section 69.772, subdivision 6;
69.773, subdivision 6; or 424A.02, subdivision 10;

(7) the relief association invested special fund assets in
an investment security that is not authorized under section
69.775;

(8) the relief association had an administrative expense
that is not authorized under section 69.80 or 424A.05,
subdivision 3, or the municipality had an expenditure that is
not authorized under section 424A.08;

(9) the relief association officers fail to provide a
complete and accurate public pension plan investment portfolio
and performance disclosure under section 356.219;

(10) the relief association fails to obtain the
acknowledgment from a broker of the statement of investment
restrictions under section 356A.06, subdivision 8b;

(11) the relief association officers permitted to occur a
prohibited transaction under section 356A.06, subdivision 9, or
424A.001, subdivision 7, or failed to undertake correction of a
prohibited transaction that did occur; or

(12) the relief association pays a defined benefit service
pension in an amount that is in excess of the applicable service
pension maximum under section 424A.02, subdivision 3.

Sec. 4.

Minnesota Statutes 2004, section 69.772,
subdivision 3, is amended to read:

Subd. 3.

Financial requirements of relief association;
minimum obligation of municipality.

(a) During the month of
July, the officers of the relief association shall determine the
overall funding balance of the special fund for the current
calendar year, the financial requirements of the special fund
for the following calendar year and the minimum obligation of
the municipality with respect to the special fund for the
following calendar year in accordance with the requirements of
this subdivision.

(1) (b) The overall funding balance of the special fund for
the current calendar year shall must be determined in the
following manner:

(a) (1) The total accrued liability of the special fund for
all active and deferred members of the relief association as of
December 31 of the current year shall must be calculated
pursuant to under subdivisions 2 and 2a, if applicable.

(b) (2) The total present assets of the special fund
projected to December 31 of the current year, including receipts
by and disbursements from the special fund anticipated to occur
on or before December 31 shall , must be calculated. To the
extent possible, for those assets for which a market value is
readily ascertainable, the current market value as of the date
of the calculation for those assets shall must be utilized in
making this calculation. For any asset for which no market
value is readily ascertainable, the cost value or the book
value, whichever is applicable, shall must be utilized in making
this calculation.

(c) (3) The amount of the total present assets of the
special fund calculated pursuant to under clause (b) shall (2)
must be subtracted from the amount of the total accrued
liability of the special fund calculated pursuant to under
clause (a) (1). If the amount of total present assets exceeds
the amount of the total accrued liability, then the special fund
shall be is considered to have a surplus over full funding. If
the amount of the total present assets is less than the amount
of the total accrued liability, then the special fund shall be
is considered to have a deficit from full funding. If the
amount of total present assets is equal to the amount of the
total accrued liability, then the special fund shall be is
considered to be fully funded.

(2) (c) The financial requirements of the special fund for
the following calendar year shall must be determined in the
following manner:

(a) (1) The total accrued liability of the special fund for
all active and deferred members of the relief association as of
December 31 of the calendar year next following the current
calendar year shall must be calculated pursuant to under
subdivisions 2 and 2a, if applicable.

(b) (2) The increase in the total accrued liability of the
special fund for the following calendar year over the total
accrued liability of the special fund for the current year shall
must be calculated.

(c) (3) The amount of anticipated future administrative
expenses of the special fund shall must be calculated by
multiplying the dollar amount of the administrative expenses of
the special fund for the most recent prior calendar year by the
factor of 1.035.

(d) (4) If the special fund is fully funded, the financial
requirement requirements of the special fund for the following
calendar year shall be are the figure which represents the
increase in the total accrued liability of the special fund as
amounts calculated pursuant to subclause (b) under clauses (2)
and (3).

(e) (5) If the special fund has a deficit from full
funding, the financial requirements of the special fund for the
following calendar year shall be are the financial requirements
of the special fund calculated as though the special fund were
fully funded pursuant to subclause (d) under clause (4) plus an
amount equal to one-tenth of the original amount of the deficit
from full funding of the special fund as determined pursuant to
this section for the calendar year 1971 until that deficit from
full funding is fully retired, and plus an amount equal to
one-tenth of the increase in the deficit from full funding of
the special fund under clause (2) resulting either from an
increase in the amount of the service pension accruing after
December 31, 1971 occurring in the last ten years or from a net
annual investment loss occurring during the last ten years until
each increase in the deficit from full funding is fully
retired. The annual amortization contribution under this clause
may not exceed the amount of the deficit from full funding.

(f) (6) If the special fund has a surplus over full
funding, the financial requirements of the special fund for the
following calendar year shall be are the financial requirements
of the special fund calculated as though the special fund were
fully funded pursuant to subclause (d) under clause (4) reduced
by an amount equal to one-tenth of the amount of the surplus
over full funding of the special fund.

(3) (d) The minimum obligation of the municipality with
respect to the special fund shall be is the financial
requirements of the special fund reduced by the amount of any
fire state aid payable pursuant to under sections 69.011 to
69.051 reasonably anticipated to be received by the municipality
for transmittal to the special fund during the following
calendar year, an amount of interest on the assets of the
special fund projected to the beginning of the following
calendar year calculated at the rate of five percent per annum,
and the amount of any anticipated contributions to the special
fund required by the relief association bylaws from the active
members of the relief association reasonably anticipated to be
received during the following calendar year. A reasonable
amount of anticipated fire state aid is an amount that does not
exceed the fire state aid actually received in the prior year
multiplied by the factor 1.035.

Sec. 5.

Minnesota Statutes 2004, section 69.772,
subdivision 4, is amended to read:

Subd. 4.

Certification of financial requirements and
minimum municipal obligation; levy.

(a) The officers of the
relief association shall certify the financial requirements of
the special fund of the relief association and the minimum
obligation of the municipality with respect to the special fund
of the relief association as determined pursuant to under
subdivision 3 to the governing body of the municipality on or
before August 1 of each year. The financial requirements of the
relief association and the minimum municipal obligation must be
included in the financial report or financial statement under
section 69.051.

(b) The municipality shall provide for at least the minimum
obligation of the municipality with respect to the special fund
of the relief association by tax levy or from any other source
of public revenue.

(c) The municipality may levy taxes for the payment of the
minimum municipal obligation without any limitation as to rate
or amount and irrespective of any limitations imposed by other
provisions of law upon the rate or amount of taxation until the
balance of the special fund or any fund of the relief
association has attained a specified level. In addition, any
taxes levied pursuant to under this section shall must not cause
the amount or rate of any other taxes levied in that year or to
be levied in a subsequent year by the municipality which are
subject to a limitation as to rate or amount to be reduced.

(d) If the municipality does not include the full amount of
the minimum municipal obligations in its levy for any year, the
officers of the relief association shall certify that amount to
the county auditor, who shall spread a levy in the amount of the
certified minimum municipal obligation on the taxable property
of the municipality.

(e) If the state auditor determines that a municipal
contribution actually made in a plan year was insufficient under
section 69.771, subdivision 3, paragraph (c), clause (5), the
state auditor may request a copy of the certifications under
this subdivision from the relief association or from the city.
The relief association or the city, whichever applies, must
provide the certifications within 14 days of the date of the
request from the state auditor.

Sec. 6.

Minnesota Statutes 2004, section 69.773,
subdivision 4, is amended to read:

Subd. 4.

Financial requirements of special fund.

Prior
to (a) On or before August 1 of each year, the officers of the
relief association shall determine the financial requirements of
the special fund of the relief association in accordance with
the requirements of this subdivision.

(b) The financial requirements of the relief
association shall must be based on the most recent actuarial
valuation of the special fund prepared in accordance with
subdivision 2. If the relief association has an unfunded
actuarial accrued liability as reported in the most recent
actuarial valuation, the financial requirements shall must be
determined by adding the figures calculated pursuant to under
paragraph (d),clauses (a) (1), (b) (2), and (c) (3). If
the relief association does not have an unfunded actuarial
accrued liability as reported in the most recent actuarial
valuation, the financial requirements shall must be an amount
equal to the figure calculated pursuant to under paragraph (d),
clauses (a) (1) and (b) (2), reduced by an amount equal to
one-tenth of the amount of any assets in excess of the actuarial
accrued liability of the relief association.

(c) The determination of whether or not the relief
association has an unfunded actuarial accrued liability
shall must be based on the current market value of assets for
which a market value is readily ascertainable and the cost or
book value, whichever is applicable, for assets for which no
market value is readily ascertainable.

(a) (d) The components of the financial requirements of the
relief association are the following:

(1) The normal level cost requirement for the following
year, expressed as a dollar amount, shall be is the figure for
the normal level cost of the relief association as reported in
the actuarial valuation.

(b) (2) The amount of anticipated future administrative
expenses of the special fund shall must be calculated by
multiplying the dollar amount of the administrative expenses of
the special fund for the most recent prior calendar year by the
factor of 1.035.

(c) (3) The amortization contribution requirement to retire
the current unfunded actuarial accrued liability by the
established date for full funding shall be is the figure for the
amortization contribution as reported in the actuarial
valuation. If there has not been a change in the actuarial
assumptions used for calculating the actuarial accrued liability
of the special fund, a change in the bylaws of the relief
association governing the service pensions, retirement benefits,
or both,payable from the special fund,or a change in the
actuarial cost method used to value all or a portion of the
special fund which change or changes, which by themselves,
without inclusion of any other items of increase or decrease,
produce a net increase in the unfunded actuarial accrued
liability of the special fund since December 31, 1970, the
established date for full funding shall be is the December 31,
1990 occurring ten years later. If there has been a change in
the actuarial assumptions used for calculating the actuarial
accrued liability of the special fund, a change in the bylaws of
the relief association governing the service pensions,
retirement benefits, or both payable from the special fund or a
change in the actuarial cost method used to value all or a
portion of the special fund and the change or changes, by
themselves and without inclusion of any other items of increase
or decrease, produce a net increase in the unfunded actuarial
accrued liability of the special fund since December 31, 1970,
but prior to January 1, 1979 within the past 20 years, the
established date for full funding shall be December 31, 1998,
and if there has been a change since December 31, 1978, the
established date for full funding shall must be determined using
the following procedure:

(i) the unfunded actuarial accrued liability of the special
fund attributable to experience losses that have occurred since
the most recent prior actuarial valuation must be determined and
the level annual dollar contribution needed to amortize the
experience loss over a period of ten years ending on the
December 31 occurring ten years later must be calculated;

(ii) the unfunded actuarial accrued liability of the
special fund shall must be determined in accordance with the
provisions governing service pensions, retirement benefits, and
actuarial assumptions in effect before an applicable change;

(ii) (iii) the level annual dollar contribution needed to
amortize this unfunded actuarial accrued liability amount by the
date for full funding in effect prior to before the change shall
must be calculated using the interest assumption specified in
section 356.215, subdivision 8, in effect before any applicable
change;

(iii) (iv) the unfunded actuarial accrued liability of the
special fund shall must be determined in accordance with any new
provisions governing service pensions, retirement benefits, and
actuarial assumptions and the remaining provisions governing
service pensions, retirement benefits, and actuarial assumptions
in effect before an applicable change;

(iv) (v) the level annual dollar contribution needed to
amortize the difference between the unfunded actuarial accrued
liability amount calculated pursuant to subclause (i) under item
(ii) and the unfunded actuarial accrued liability amount
calculated pursuant to subclause (iii) under item (iv) over a
period of 20 years starting December 31 of the year in which the
change is effective shall must be calculated using the interest
assumption specified in section 356.215, subdivision 8, in
effect after any applicable change;

(v) (vi) the annual amortization contribution calculated
pursuant to subclause (iv) shall under item (v) must be added to
the annual amortization contribution calculated pursuant to
subclause (ii) under items (i) and (iii);

(vi) (vii) the period in which the unfunded actuarial
accrued liability amount determined in subclause (iii) item (iv)
will be amortized by the total annual amortization contribution
computed pursuant to subclause (v) shall under item (vi) must be
calculated using the interest assumption specified in section
356.215, subdivision 8, in effect after any applicable change,
rounded to the nearest integral number of years, but which shall
must not exceed a period of 20 years from the end of the year in
which the determination of the date for full funding using this
procedure is made and which shall must not be less than the
period of years beginning in the year in which the determination
of the date for full funding using this procedure is made and
ending by the date for full funding in effect before the change;

(vii) (viii) the period determined pursuant to subclause
(vi) shall under item (vii) must be added to the date as of
which the actuarial valuation was prepared and the resulting
date shall be is the new date for full funding.

Sec. 7.

Minnesota Statutes 2004, section 69.773,
subdivision 5, is amended to read:

Subd. 5.

Minimum municipal obligation.

(a) The officers
of the relief association shall determine the minimum obligation
of the municipality with respect to the special fund of the
relief association for the following calendar year prior to on
or before August 1 of each year in accordance with the
requirements of this subdivision.

(b) The minimum obligation of the municipality with respect
to the special fund shall be is an amount equal to the financial
requirements of the special fund of the relief association
determined pursuant to under subdivision 4, reduced by the
estimated amount of any fire state aid payable pursuant to under
sections 69.011 to 69.051reasonably anticipated to be received
by the municipality for transmittal to the special fund of the
relief association during the following year and the amount of
any anticipated contributions to the special fund required by
the relief association bylaws from the active members of the
relief association reasonably anticipated to be received during
the following calendar year. A reasonable amount of anticipated
fire state aid is an amount that does not exceed the fire state
aid actually received in the prior year multiplied by the factor
1.035.

(c) The officers of the relief association shall certify
the financial requirements of the special fund of the relief
association and the minimum obligation of the municipality with
respect to the special fund of the relief association as
determined pursuant to under subdivision 4 and this subdivision
to the governing body of the municipality by August 1 of each
year. The financial requirements of the relief association and
the minimum municipal obligation must be included in the
financial report or financial statement under section 69.051.

(d) The municipality shall provide for at least the minimum
obligation of the municipality with respect to the special fund
of the relief association by tax levy or from any other source
of public revenue. The municipality may levy taxes for the
payment of the minimum municipal obligation without any
limitation as to rate or amount and irrespective of any
limitations imposed by other provisions of law or charter upon
the rate or amount of taxation until the balance of the special
fund or any fund of the relief association has attained a
specified level. In addition, any taxes levied pursuant to
under this section shall must not cause the amount or rate of
any other taxes levied in that year or to be levied in a
subsequent year by the municipality which are subject to a
limitation as to rate or amount to be reduced.

(e) If the municipality does not include the full amount of
the minimum municipal obligation in its levy for any year, the
officers of the relief association shall certify that amount to
the county auditor, who shall spread a levy in the amount of the
minimum municipal obligation on the taxable property of the
municipality.

(f) If the state auditor determines that a municipal
contribution actually made in a plan year was insufficient under
section 69.771, subdivision 3, paragraph (c), clause (5), the
state auditor may request from the relief association or from
the city a copy of the certifications under this subdivision.
The relief association or the city, whichever applies, must
provide the certifications within 14 days of the date of the
request from the state auditor.

Sec. 8.

Minnesota Statutes 2004, section 69.775, is
amended to read:

69.775 INVESTMENTS.

(a) The special fund assets of the a relief associations
association governed by sections 69.771 to 69.776 must be
invested in securities that are authorized investments under
section 356A.06, subdivision 6 or 7.

(b) Notwithstanding the foregoing, up to 75 percent of the
market value of the assets of the special fund, not including
any money market mutual funds,may be invested in open-end
investment companies registered under the federal Investment
Company Act of 1940, if the portfolio investments of the
investment companies comply with the type of securities
authorized for investment under section 356A.06, subdivision 7.

(c) Securities held by the associations before June 2,
1989, that do not meet the requirements of this section may be
retained after that date if they were proper investments for the
association on that date.

(d) The governing board of the association may select and
appoint investment agencies to act for and in its behalf or may
certify special fund assets for investment by the State Board of
Investment under section 11A.17.

(e) The governing board of the association may certify
general fund assets of the relief association for investment by
the State Board of Investment in fixed income pools or in a
separately managed account at the discretion of the State Board
of Investment as provided in section 11A.14.

(f) The governing board of the association may select and
appoint a qualified private firm to measure management
performance and return on investment, and the firm shall use the
formula or formulas developed by the state board under section
11A.04, clause (11).

Sec. 9.

Minnesota Statutes 2004, section 356A.06,
subdivision 7, is amended to read:

Subd. 7.

Expanded list of authorized investment
securities.

(a) [AUTHORITY.] Except to the extent otherwise
authorized by law or bylaws, a covered pension plan not
described by subdivision 6, paragraph (a), may invest its assets
only in accordance with this subdivision.

(b) [SECURITIES GENERALLY.] The covered pension plan has
the authority to purchase, sell, lend, or exchange the
securities specified in paragraphs (c) to (g) (h), including
puts and call options and future contracts traded on a contract
market regulated by a governmental agency or by a financial
institution regulated by a governmental agency. These
securities may be owned as units in commingled trusts that own
the securities described in paragraphs (c) to (g) (h).

(c) [GOVERNMENT OBLIGATIONS.] The covered pension plan may
invest funds in governmental bonds, notes, bills, mortgages, and
other evidences of indebtedness provided the issue is backed by
the full faith and credit of the issuer or the issue is rated
among the top four quality rating categories by a nationally
recognized rating agency. The obligations in which funds may be
invested under this paragraph include guaranteed or insured
issues of (1) the United States, its agencies, its
instrumentalities, or organizations created and regulated by an
act of Congress; (2) Canada and its provinces, provided the
principal and interest is payable in United States dollars; (3)
the states and their municipalities, political subdivisions,
agencies, or instrumentalities; (4) the International Bank for
Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank, the African Development Bank,
or any other United States government sponsored organization of
which the United States is a member, provided the principal and
interest is payable in United States dollars.

(d) [CORPORATE OBLIGATIONS.] The covered pension plan may
invest funds in bonds, notes, debentures, transportation
equipment obligations, or any other longer term evidences of
indebtedness issued or guaranteed by a corporation organized
under the laws of the United States or any state thereof, or the
Dominion of Canada or any province thereof if they conform to
the following provisions:

(1) the principal and interest of obligations of
corporations incorporated or organized under the laws of the
Dominion of Canada or any province thereof must be payable in
United States dollars; and

(2) obligations must be rated among the top four quality
categories by a nationally recognized rating agency.

(e) [OTHER OBLIGATIONS.] (1) The covered pension plan may
invest funds in bankers acceptances, certificates of deposit,
deposit notes, commercial paper, mortgage participation
certificates and pools, asset backed securities, repurchase
agreements and reverse repurchase agreements, guaranteed
investment contracts, savings accounts, and guaranty fund
certificates, surplus notes, or debentures of domestic mutual
insurance companies if they conform to the following provisions:

(i) bankers acceptances and deposit notes of United States
banks are limited to those issued by banks rated in the highest
four quality categories by a nationally recognized rating
agency;

(ii) certificates of deposit are limited to those issued by
(A) United States banks and savings institutions that are rated
in the highest four quality categories by a nationally
recognized rating agency or whose certificates of deposit are
fully insured by federal agencies; or (B) credit unions in
amounts up to the limit of insurance coverage provided by the
National Credit Union Administration;

(iii) commercial paper is limited to those issued by United
States corporations or their Canadian subsidiaries and rated in
the highest two quality categories by a nationally recognized
rating agency;

(iv) mortgage participation or pass through certificates
evidencing interests in pools of first mortgages or trust deeds
on improved real estate located in the United States where the
loan to value ratio for each loan as calculated in accordance
with section 61A.28, subdivision 3, does not exceed 80 percent
for fully amortizable residential properties and in all other
respects meets the requirements of section 61A.28, subdivision
3;

(v) collateral for repurchase agreements and reverse
repurchase agreements is limited to letters of credit and
securities authorized in this section;

(vi) guaranteed investment contracts are limited to those
issued by insurance companies or banks rated in the top four
quality categories by a nationally recognized rating agency or
to alternative guaranteed investment contracts where the
underlying assets comply with the requirements of this
subdivision;

(vii) savings accounts are limited to those fully insured
by federal agencies; and

(viii) asset backed securities must be rated in the top
four quality categories by a nationally recognized rating agency.

(2) Sections 16A.58, 16C.03, subdivision 4, and 16C.05 do
not apply to certificates of deposit and collateralization
agreements executed by the covered pension plan under clause
(1), item (ii).

(3) In addition to investments authorized by clause (1),
item (iv), the covered pension plan may purchase from the
Minnesota Housing Finance Agency all or any part of a pool of
residential mortgages, not in default, that has previously been
financed by the issuance of bonds or notes of the agency. The
covered pension plan may also enter into a commitment with the
agency, at the time of any issue of bonds or notes, to purchase
at a specified future date, not exceeding 12 years from the date
of the issue, the amount of mortgage loans then outstanding and
not in default that have been made or purchased from the
proceeds of the bonds or notes. The covered pension plan may
charge reasonable fees for any such commitment and may agree to
purchase the mortgage loans at a price sufficient to produce a
yield to the covered pension plan comparable, in its judgment,
to the yield available on similar mortgage loans at the date of
the bonds or notes. The covered pension plan may also enter
into agreements with the agency for the investment of any
portion of the funds of the agency. The agreement must cover
the period of the investment, withdrawal privileges, and any
guaranteed rate of return.

(f) [CORPORATE STOCKS.] The covered pension plan may
invest funds in stocks or convertible issues of any corporation
organized under the laws of the United States or the states
thereof, any corporation organized under the laws of the
Dominion of Canada or its provinces, or any corporation listed
on the New York Stock Exchange or the American Stock Exchange an
exchange regulated by an agency of the United States or of the
Canadian national government, if they conform to the following
provisions:

(1) the aggregate value of corporate stock investments, as
adjusted for realized profits and losses, must not exceed 85
percent of the market or book value, whichever is less, of a
fund, less the aggregate value of investments according to
subdivision 6 paragraph (h);

(2) investments must not exceed five percent of the total
outstanding shares of any one corporation.

(g) [EXCHANGE TRADED FUNDS.] The covered pension plan may
invest funds in exchange traded funds, subject to the maximums,
the requirements, and the limitations set forth in paragraph
(d), (e), (f), or (h), whichever applies.

(h) [OTHER INVESTMENTS.] (1) In addition to the
investments authorized in paragraphs (b) to (f) (g), and subject
to the provisions in clause (2), the covered pension plan may
invest funds in:

(i) venture capital investment businesses through
participation in limited partnerships and corporations;

(ii) real estate ownership interests or loans secured by
mortgages or deeds of trust through investment in limited
partnerships, bank sponsored collective funds, trusts, and
insurance company commingled accounts, including separate
accounts;

(iii) regional and mutual funds through bank sponsored
collective funds and open-end investment companies registered
under the Federal Investment Company Act of 1940;

(iv) resource investments through limited partnerships,
private placements, and corporations; and

(v) international securities.

(2) The investments authorized in clause (1) must conform
to the following provisions:

(i) the aggregate value of all investments made according
to clause (1) may not exceed 35 percent of the market value of
the fund for which the covered pension plan is investing;

(ii) there must be at least four unrelated owners of the
investment other than the state board covered pension plan for
investments made under clause (1), item (i), (ii), (iii), or
(iv);

(iii) covered pension plan participation in an investment
vehicle is limited to 20 percent thereof for investments made
under clause (1), item (i), (ii), (iii), or (iv); and

(iv) covered pension plan participation in a limited
partnership does not include a general partnership interest or
other interest involving general liability. The covered pension
plan may not engage in any activity as a limited partner which
creates general liability.

Sec. 10.

Minnesota Statutes 2004, section 424A.02,
subdivision 3, is amended to read:

Subd. 3.

Flexible service pension maximums.

(a) Annually
on or before August 1 as part of the certification of the
financial requirements and minimum municipal obligation
determined under section 69.772, subdivision 4, or 69.773,
subdivision 5, as applicable, the secretary or some other
official of the relief association designated in the bylaws of
each relief association shall calculate and certify to the
governing body of the applicable qualified municipality the
average amount of available financing per active covered
firefighter for the most recent three-year period. The amount
of available financing shall include any amounts of fire state
aid received or receivable by the relief association, any
amounts of municipal contributions to the relief association
raised from levies on real estate or from other available
revenue sources exclusive of fire state aid, and one-tenth of
the amount of assets in excess of the accrued liabilities of the
relief association calculated under section 69.772, subdivision
2; 69.773, subdivisions 2 and 4; or 69.774, subdivision 2, if
any.

(b) The maximum service pension which the relief
association has authority to provide for in its bylaws for
payment to a member retiring after the calculation date when the
minimum age and service requirements specified in subdivision 1
are met must be determined using the table in paragraph (c) or
(d), whichever applies.

(c) For a relief association where the governing bylaws
provide for a monthly service pension to a retiring member, the
maximum monthly service pension amount per month for each year
of service credited that may be provided for in the bylaws is
the greater of the service pension amount provided for in the
bylaws on the date of the calculation of the average amount of
the available financing per active covered firefighter or the
maximum service pension figure corresponding to the average
amount of available financing per active covered firefighter:

Minimum Average Amount of Maximum Service Pension
Available Financing per Amount Payable per Month
Firefighter for Each Year of Service

$... $ .25
42 41.50
84 81 1.00
126 122 1.50
168 162 2.00
209 203 2.50
252 243 3.00
294 284 3.50
335 324 4.00
378 365 4.50
420 405 5.00
503 486 6.00
587 567 7.00
672 648 8.00
755 729 9.00
839 810 10.00
923 891 11.00
1007 972 12.00
1090 1053 13.00
1175 1134 14.00
1259 1215 15.00
1342 1296 16.00
1427 1377 17.00
1510 1458 18.00
1594 1539 19.00
1677 1620 20.00
1762 1701 21.00
1845 1782 22.00
1888 1823 22.50
1929 1863 23.00
2014 1944 24.00
2098 2025 25.00
2183 2106 26.00
2267 2187 27.00
2351 2268 28.00
2436 2349 29.00
2520 2430 30.00
2604 2511 31.00
2689 2592 32.00
2773 2673 33.00
2857 2754 34.00
2942 2834 35.00
3026 2916 36.00
3110 2997 37.00
3194 3078 38.00
3278 3159 39.00
3362 3240 40.00
3446 3321 41.00
3530 3402 42.00
3614 3483 43.00
3698 3564 44.00
3782 3645 45.00
3866 3726 46.00
3950 3807 47.00
4034 3888 48.00
4118 3969 49.00
4202 4050 50.00
4286 4131 51.00
4370 4212 52.00

Effective beginning December 31, 2003:

4454 4293 53.00
4538 4374 54.00
4622 4455 55.00
4706 4536 56.00

(d) For a relief association in which the governing bylaws
provide for a lump sum service pension to a retiring member, the
maximum lump sum service pension amount for each year of service
credited that may be provided for in the bylaws is the greater
of the service pension amount provided for in the bylaws on the
date of the calculation of the average amount of the available
financing per active covered firefighter or the maximum service
pension figure corresponding to the average amount of available
financing per active covered firefighter for the applicable
specified period:

Minimum Average Amount Maximum Lump Sum Service
of Available Financing Pension Amount Payable
per Firefighter for Each Year of Service

$.. $10
11 20
16 30
23 40
27 50
32 60
43 80
54 100
65 120
77 140
86 160
97 180
108 200
131 240
151 280
173 320
194 360
216 400
239 440
259 480
281 520
302 560
324 600
347 640
367 680
389 720
410 760
432 800
486 900
540 1000
594 1100
648 1200
702 1300
756 1400
810 1500
864 1600
918 1700
972 1800
1026 1900
1080 2000
1134 2100
1188 2200
1242 2300
1296 2400
1350 2500
1404 2600
1458 2700
1512 2800
1566 2900
1620 3000
1672 3100
1726 3200
1753 3250
1780 3300
1820 3375

1834 3400
1888 3500

1942 3600
1996 3700
2023 3750

2050 3800
2104 3900
2158 4000

2212 4100
2265 4200
2319 4300
2373 4400
2427 4500
2481 4600
2535 4700
2589 4800
2643 4900
2697 5000
2751 5100
2805 5200
2859 5300
2913 5400
2967 5500

3021 5600

3075 5700

3129 5800

3183 5900

3237 6000

3291 6100

3345 6200

3399 6300

3453 6400

3507 6500

3561 6600

3615 6700

3669 6800

3723 6900

3777 7000

Effective beginning December 31, 2003:

3831 7100

3885 7200

3939 7300

3993 7400

4047 7500

(e) For a relief association in which the governing bylaws
provide for a monthly benefit service pension as an alternative
form of service pension payment to a lump sum service pension,
the maximum service pension amount for each pension payment type
must be determined using the applicable table contained in this
subdivision.

(f) If a relief association establishes a service pension
in compliance with the applicable maximum contained in paragraph
(c) or (d) and the minimum average amount of available financing
per active covered firefighter is subsequently reduced because
of a reduction in fire state aid or because of an increase in
the number of active firefighters, the relief association may
continue to provide the prior service pension amount specified
in its bylaws, but may not increase the service pension amount
until the minimum average amount of available financing per
firefighter under the table in paragraph (c) or (d), whichever
applies, permits.

(g) No relief association is authorized to provide a
service pension in an amount greater than the largest applicable
flexible service pension maximum amount even if the amount of
available financing per firefighter is greater than the
financing amount associated with the largest applicable flexible
service pension maximum.

Sec. 11.

Minnesota Statutes 2004, section 424A.02,
subdivision 4, is amended to read:

Subd. 4.

Defined contribution lump sum service
pensions.

(a) If the bylaws governing the relief association so
provide exclusively, the relief association may pay a defined
contribution lump sum service pension in lieu of any defined
benefit service pension governed by subdivision 2.

(b) An individual account for each firefighter who is a
member of the relief association shall must be established. To
each individual active member account shall must be credited a
right to an equal share of: (a) (1) any amounts of fire state
aid received by the relief association; (b) (2) any amounts of
municipal contributions to the relief association raised from
levies on real estate or from other available revenue sources
exclusive of fire state aid; and (c) (3) any amounts equal to
the share of the assets of the special fund to the credit
of: (1) (i) any former member who terminated active service
with the fire department to which the relief association is
associated prior to before meeting the minimum service
requirement provided for in subdivision 1 and has not returned
to active service with the fire department for a period no
shorter than five years; or (2) (ii) any retired member who
retired prior to before obtaining a full nonforfeitable interest
in the amounts credited to the individual member
account pursuant to under subdivision 2 and any applicable
provision of the bylaws of the relief association. In addition,
any interest or investment income earned return on the assets of
the special fund shall must be credited in proportion to the
share of the assets of the special fund to the credit of each
individual active member account through the date on which the
investment return is recognized by and credited to the special
fund.

(c) At the time of retirement pursuant to under subdivision
1 and any applicable provision of the bylaws of the relief
association, a retiring member shall be is entitled to that
portion of the assets of the special fund to the credit of the
member in the individual member account which is
nonforfeitable pursuant to under subdivision 2 and any
applicable provision of the bylaws of the relief association
based on the number of years of service to the credit of the
retiring member.

Sec. 12.

Minnesota Statutes 2004, section 424A.02,
subdivision 7, is amended to read:

Subd. 7.

Deferred service pensions.

(a) A member of a
relief association to which this section applies is entitled to
a deferred service pension if the member:

(1) has completed the lesser of the minimum period of
active service with the fire department specified in the bylaws
or 20 years of active service with the fire department;

(2) has completed at least five years of active membership
in the relief association; and

(3) separates from active service and membership before
reaching age 50 or the minimum age for retirement and
commencement of a service pension specified in the bylaws
governing the relief association if that age is greater than age
50.

(b) The deferred service pension starts is payable when the
former member reaches age 50,or the minimum age specified in
the bylaws governing the relief association if that age is
greater than age 50,and when the former member makes a valid
written application.

(c) A relief association that provides a lump sum service
pension governed by subdivision 3 may, when its governing bylaws
so provide, pay interest on the deferred lump sum service
pension during the period of deferral. If provided for in the
bylaws, interest must be paid in one of the following manners:

(1) at the investment performance rate actually earned on
that portion of the assets if the deferred benefit amount is
invested by the relief association in a separate account
established and maintained by the relief association or if the
deferred benefit amount is invested in a separate investment
vehicle held by the relief association;

(2) at the an interest rate of up to five percent,
compounded annually, as set by the board of directors and
approved as provided in subdivision 10; or

(3) at a rate equal to the actual time weighted total rate
of return investment performance of the special fund as reported
by the Office of the State Auditor under section 356.219, up to
five percent, compounded annually, and applied consistently for
all deferred service pensioners.

(d) A relief association may not use the method provided
for in paragraph (c),clause (3), until it has modified its
bylaws to be consistent with that clause.

(d) Interest under paragraph (c), clause (2) or (3), is
payable from the first day of the month next following the date
on which the municipality has approved the deferred service
pension interest rate established by the board of trustees or
from the first day of the month next following the date on which
the member separated from active fire department service and
relief association membership, whichever is later, to the last
day of the month immediately before the month in which the
deferred member becomes eligible to begin receipt of the service
pension and applies for the deferred service pension.

(e) A relief association that provides a defined
contribution service pension may, if its governing bylaws so
provide, credit interest or additional investment performance on
the deferred lump sum service pension during the period of
deferral. If provided for in the bylaws, the interest must be
paid in one of the manners specified in paragraph (c) or
alternatively the relief association may credit any investment
return on the assets of the special fund of the defined
contribution volunteer firefighter relief association in
proportion to the share of the assets of the special fund to the
credit of each individual deferred member account through the
date on which the investment return is recognized by and
credited to the special fund.

(f) For a deferred service pension that is transferred to a
separate account established and maintained by the relief
association or separate investment vehicle held by the relief
association, the deferred member bears the full investment risk
subsequent to transfer and in calculating the accrued liability
of the volunteer firefighters relief association that pays a
lump sum service pension, the accrued liability for deferred
service pensions is equal to the separate relief association
account balance or the fair market value of the separate
investment vehicle held by the relief association.

(f) (g) The deferred service pension is governed by and
must be calculated under the general statute, special law,
relief association articles of incorporation, and relief
association bylaw provisions applicable on the date on which the
member separated from active service with the fire department
and active membership in the relief association.

Sec. 13.

[424A.021] CREDIT FOR BREAK IN SERVICE TO
PROVIDE UNIFORMED SERVICE.

Subdivision 1.

Authorization.

Subject to restrictions
stated in this section, a volunteer firefighter who is absent
from firefighting service due to service in the uniformed
services, as defined in United States Code, title 38, section
4303(13), may obtain service credit if the relief association is
a defined benefit plan or an allocation of any fire state aid,
any municipal contributions, and any investment return received
by the relief association if the relief association is a defined
contribution plan for the period of the uniformed service, not
to exceed five years, unless a longer period is required under
United States Code, title 38, section 4312.

Subd. 2.

Limitations.

(a) To be eligible for service
credit or an investment return allocation under this section,
the volunteer firefighter must return to firefighting service
with coverage by the same relief association or by the successor
to that relief association upon discharge from service in the
uniformed service within the time frame required in United
States Code, title 38, section 4312(e).

(b) Service credit or an investment return allocation is
not authorized if the firefighter separates from uniformed
service with a dishonorable or bad conduct discharge or under
other than honorable conditions.

(c) Service credit or an investment return allocation is
not authorized if the firefighter fails to provide notice to the
fire department that the individual is leaving to provide
service in the uniformed service, unless it is not feasible to
provide that notice due to the emergency nature of the situation.

Sec. 14.

Minnesota Statutes 2004, section 424A.04,
subdivision 1, is amended to read:

Subdivision 1.

Membership.

(a) Every A relief
association that is directly associated with a municipal fire
department shall must be managed by a board of trustees
consisting of nine members. Six trustees shall must be elected
from the membership of the relief association and three trustees
shall must be drawn from the officials of the municipalities
served by the fire department to which the relief association is
directly associated. The bylaws of a relief association which
provides a monthly benefit service pension may provide that one
of the six trustees elected from the relief
association membership may be a retired member receiving a
monthly pension who is elected by the membership of the relief
association. The three ex officio municipal trustees shall be
the mayor, the clerk, clerk-treasurer or finance director,must
be one elected municipal official and one elected or appointed
municipal official who are designated as municipal
representatives by the municipal governing board annually and
the chief of the municipal fire department.

(b) Every A relief association that is a subsidiary of an
independent nonprofit firefighting corporation shall must be
managed by a board of trustees consisting of ten nine members.
Six trustees shall must be elected from the membership of the
relief association, three two trustees shall must be drawn from
the officials of the municipalities served by the fire
department to which the relief association is directly
associated, and one trustee shall be the fire chief serving with
the independent nonprofit firefighting corporation. The bylaws
of a relief association may provide that one of the six trustees
elected from the relief association membership may be a retired
member receiving a monthly pension who is elected by the
membership of the relief association. The three ex officio two
municipal trustees who are the elected officials shall must
be elected or appointed municipal officials,selected as follows:

(1) if only one municipality contracts with the independent
nonprofit firefighting corporation, the ex officio municipal
trustees shall must be three elected two officials of the
contracting municipality who are designated annually by the
governing body of the municipality;

(2) if two municipalities contract with the independent
nonprofit firefighting corporation, the ex officio trustees
shall be two elected officials of the largest municipality in
population and one elected official of the next largest
municipality in population who are designated by the governing
bodies of the applicable municipalities;or

(3) (2) if three two or more municipalities contract with
the independent nonprofit corporation, the ex officio municipal
trustees shall must be one elected official of from each of
the three two largest municipalities in population who are
designated annually by the governing bodies of the applicable
municipalities.

(c) The municipal trustees for a relief association that is
directly associated with a fire department operated as or by a
joint powers entity must be designated annually by the joint
powers board. The municipal trustees for a relief association
that is directly associated with a fire department service area
township must be designated by the township board.

(d) If a relief association lacks the ex officio municipal
board members provided for in paragraph (a), (b),or (b) (c)
because the fire department is not located in or associated with
an organized municipality, joint powers entity, or township,the
ex officio municipal board members must be appointed from the
fire department service area by the board of commissioners of
the applicable county.

(e) The term of these appointed ex officio municipal board
members is three years one year or until the person's successor
is qualified, whichever is later.

(d) An ex officio (f) A municipal trustee under paragraph
(a), (b), or (c) shall have , or (d) has all the rights and
duties accorded to any other trustee,except the right to be an
officer of the relief association board of trustees.

(e) (g) A board shall must have at least three officers,
which shall be who are a president, a secretary and a treasurer.
These officers shall must be elected from among the elected
trustees by either the full board of trustees or by the
membership, as specified in the bylaws, and .In no event shall
may any trustee hold more than one officer position at any one
time. The terms of the elected trustees and of the officers of
the board shall must be specified in the bylaws of the relief
association, but shall may not exceed three years. If the term
of the elected trustees exceeds one year, the election of the
various trustees elected from the membership shall initially and
shall thereafter continue to must be staggered on as equal a
basis as is practicable.

Sec. 15.

Minnesota Statutes 2004, section 424B.10,
subdivision 1, is amended to read:

Subdivision 1.

Benefits.

(a) Notwithstanding any
provision of section 424A.02, subdivision 3, to the contrary,
the service pension of the subsequent relief association as of
the effective date of consolidation is either the service
pension amount specified in clause (1) or the service pension
amounts specified in clause (2), as provided for in the
consolidated relief association's articles of incorporation or
bylaws:

(1) the highest dollar amount service pension amount of any
prior volunteer firefighters relief association in effect
immediately before the consolidation initiation if the pension
amount was implemented consistent with section 424A.02; or

(2) for service rendered by each individual volunteer
firefighter before consolidation, the service pension amount
under the consolidating volunteer firefighters relief
association that the firefighter belonged to immediately before
the consolidation if the pension amount was implemented
consistent with section 424A.02 and for service rendered after
the effective date of the consolidation, the highest dollar
amount service pension of any of the consolidating volunteer
firefighters relief associations in effect immediately before
the consolidation if the pension amount was implemented
consistent with section 424A.02.

(b) Any increase in the service pension amount beyond the
amount implemented under paragraph (a) must conform with the
requirements and limitations of sections 69.771 to 69.775 and
424A.02.

Sec. 16. STUDY OF STATEWIDE LUMP-SUM VOLUNTEER
FIREFIGHTER RETIREMENT PLAN; CREATION OF TASK FORCE.

Subdivision 1.

Task force membership.

(a) A statewide
Volunteer Firefighter Retirement Plan Study Task Force is
created.

(b) The task force members are:

(1) four members appointed by the president of the
Minnesota Area Relief Association coalition;

(2) four members appointed by the president of the
Minnesota State Fire Department Association;

(3) four members appointed by the president of the
Minnesota State Fire Chiefs Association;

(4) four members appointed by the board of directors of the
League of Minnesota Cities;

(5) two members appointed by the board of directors of the
Insurance Federation of Minnesota;

(6) two members appointed by the board of directors of the
Minnesota Association of Farm Mutual Insurance Companies; and

(7) the Minnesota state auditor or the auditor's designee.

(c) Appointments must be made on or before July 1, 2005.
If the appointment is not made in a timely manner, or if there
is a vacancy, the state auditor shall appoint the task force
member or the replacement member.

(d) The chair of the task force shall be selected by the
task force.

(e) Administrative services for the task force must be
provided by the Department of Public Safety.

Subd. 2.

Task force duties.

(a) The task force shall
conduct fact finding regarding the creation of a statewide
volunteer firefighter retirement plan.

(b) The task force shall recommend the investment vehicle
or vehicles to be utilized by the plan, the administration and
corporate governance structure of the plan, the incentives
needed to formulate the plan, the limitations applicable to the
plan, and the state resources needed to be dedicated to the plan.

Subd. 3.

Report.

The task force shall prepare a report
detailing its findings about a potential statewide volunteer
firefighter retirement plan. The report is due January 15,
2006, and must be filed with the Legislative Reference Library;
the chair of the Legislative Commission on Pensions and
Retirement; the chair of the State and Local Government
Operations Committee of the senate; the chair of the State
Government Budget Division, Environment, Agriculture, and
Economic Development Budget Division, and Public Safety Budget
Division of the senate Finance Committee; the chair of the
Governmental Operations and Veterans Affairs Policy Committee of
the house of representatives; and the chair of the State
Government Finance Committee of the house of representatives.

Sec. 17. APPROPRIATION.

$40,000 is appropriated from the general fund in fiscal
year 2006 to the commissioner of public safety to hire a
consultant to assist the statewide Volunteer Firefighter
Retirement Plan Study Task Force.

Sec. 18. EFFECTIVE DATE.

(a) Sections 1 to 12 and 14 to 17 are effective July 1,
2005.

(b) Section 13 is effective July 1, 2005, and applies to
breaks in service that end on or after that date.

ARTICLE 12

VARIOUS CORRECTIONS
AND CLARIFICATIONS

Section 1.

Minnesota Statutes 2004, section 3A.13, is
amended to read:

3A.13 EXEMPTION FROM PROCESS AND TAXATION; HEALTH PREMIUM
DEDUCTION.

(a) The provisions of section 352.15 shall 356.401 apply to
the legislators retirement plan, chapter 3A.

(b) The executive director of the Minnesota State
Retirement System must, at the request of a retired legislator
who is enrolled in a health insurance plan covering state
employees, deduct the person's health insurance premiums from
the person's annuity and transfer the amount of the premium to a
health insurance carrier covering state employees.

Sec. 2.

Minnesota Statutes 2004, section 69.011,
subdivision 2b, is amended to read:

Subd. 2b.

Departments of natural resources and public
safety.

(a) On or before July 1, 1997, the commissioner of
natural resources shall certify one-half of the number of peace
officers as defined in subdivision 1, clause (g), employed by
the Enforcement Division during calendar year 1996 and the
commissioner of public safety shall certify one-half of the
number of peace officers as defined in subdivision 1, clause
(g), employed by the Bureau of Criminal Apprehension, the
Gambling Enforcement Division, and the State Patrol Division
during calendar year 1996.

(b) On or before March 15, 1998, the commissioner of
natural resources shall certify seven-tenths of the number of
peace officers as defined in subdivision 1, clause (g), employed
by the Enforcement Division and the commissioner of public
safety shall certify seven-tenths of the number of peace
officers as defined in subdivision 1, clause (g), employed by
the Bureau of Criminal Apprehension, the Gambling Enforcement
Division, and the State Patrol Division.

(c) On or before March 15, 1999, and annually on or before
each March 15 thereafter, the commissioner of natural resources
shall certify the number of peace officers as defined in
subdivision 1, clause (g), employed by the Enforcement Division
and the commissioner of public safety shall certify the number
of peace officers as defined in subdivision 1, clause (g),
employed by the Bureau of Criminal Apprehension, the Gambling
Enforcement Division, and the State Patrol Division.

(d) (b) The certification must be on a form prescribed by
the commissioner. Peace officers certified under this paragraph
must be included in the total certifications under subdivision 2.

Sec. 3.

Minnesota Statutes 2004, section 69.021,
subdivision 5, is amended to read:

Subd. 5.

Calculation of state aid.

(a) The amount of
fire state aid available for apportionment, before the addition
of the minimum fire state aid allocation amount under
subdivision 7, is equal to 107 percent of the amount of premium
taxes paid to the state upon the fire, lightning, sprinkler
leakage, and extended coverage premiums reported to the
commissioner by insurers on the Minnesota Firetown Premium
Report. This amount shall must be reduced by the amount
required to pay the state auditor's costs and expenses of the
audits or exams of the firefighters relief associations.

The total amount for apportionment in respect to fire state
aid must not be less than two percent of the premiums reported
to the commissioner by insurers on the Minnesota Firetown
Premium Report after subtracting the following amounts:

(1) the amount required to pay the state auditor's costs
and expenses of the audits or exams of the firefighters relief
associations; and

(2) one percent of the premiums reported by town and
farmers' mutual insurance companies and mutual property and
casualty companies with total assets of $5,000,000 or less.

(b) The total amount for apportionment as police state aid
is equal to 104 percent of the amount of premium taxes paid to
the state on the premiums reported to the commissioner by
insurers on the Minnesota Aid to Police Premium Report, reduced
by the amount required to pay the costs and expenses of the
state auditor for audits or exams of police relief
associations. The total amount for apportionment in respect to
the police state aid program must not be less than two percent
of the amount of premiums reported to the commissioner by
insurers on the Minnesota Aid to Police Premium Report after
subtracting the amount required to pay the state auditor's cost
and expenses of the audits or exams of the police relief
associations.

(c) The commissioner shall calculate the percentage of
increase or decrease reflected in the apportionment over or
under the previous year's available state aid using the same
premiums as a basis for comparison.

(d) The amount for apportionment in respect to peace
officer state aid under paragraph (b) must be further reduced by
$1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000,
and $2,404,000 in fiscal year 2001. These reductions in this
paragraph cancel to the general fund.

(e) In addition to the amount for apportionment of police
state aid under paragraph (b), each year $100,000 shall must be
apportioned for police state aid. An amount sufficient to pay
this increase is annually appropriated from the general fund.

Sec. 4.

Minnesota Statutes 2004, section 69.021,
subdivision 11, is amended to read:

Subd. 11.

Excess police state-aid holding account.

(a)
The excess police state-aid holding account is established in
the general fund. The excess police state-aid holding account
must be administered by the commissioner.

(b) Excess police state aid determined according to
subdivision 10, must be deposited in the excess police state-aid
holding account.

(c) From the balance in the excess police state-aid holding
account, $900,000 is appropriated to and must be transferred
annually to the ambulance service personnel longevity award and
incentive suspense account established by section 144E.42,
subdivision 2.

(d) If a police officer stress reduction program is created
by law and money is appropriated for that program, an amount
equal to that appropriation must be transferred to the
administrator of that program from the balance in the excess
police state-aid holding account.

(e) On October 1, 1997, and annually on each subsequent
October 1,one-half of the balance of the excess police
state-aid holding account remaining after the deductions under
paragraphs (c) and (d) is appropriated for additional
amortization aid under section 423A.02, subdivision 1b.

(f) Annually, the remaining balance in the excess police
state-aid holding account, after the deductions under paragraphs
(c), (d), and (e), cancels to the general fund.

Sec. 5.

Minnesota Statutes 2004, section 69.33, is amended
to read:

69.33 NAMES OF ASSOCIATIONS REPORTED TO INSURANCE
COMPANIES.

The commissioner shall enclose in the annual statement
blank that is sent to all fire insurance companies doing
business in this state a blank form containing the names of all
firefighters' relief associations in all cities of the first
class and the names of the cities and require these companies,
at the time of making their annual statements to the
commissioner, to state on these blanks the amount of premiums
received by them upon properties insured within the corporate
limits of the cities named thereon during the year ending
December 31st last past. Thereafter, before July first each
year, the commissioner shall certify to the commissioner of
finance the information thus obtained, together with the amount
of the tax for the benefit of the relief association pension
plans covering firefighters in cities of the first class paid in
such year by these companies upon these insurance premiums.

Sec. 6.

Minnesota Statutes 2004, section 69.773,
subdivision 4, is amended to read:

Subd. 4.

Financial requirements of special fund.

Prior
to Before August 1 of each year, the officers of the relief
association shall determine the financial requirements of the
special fund of the relief association in accordance with the
requirements of this subdivision. The financial requirements of
the relief association shall must be based on the most recent
actuarial valuation of the special fund prepared in accordance
with subdivision 2. If the relief association has an unfunded
actuarial accrued liability as reported in the most recent
actuarial valuation, the financial requirements shall must be
determined by adding the figures calculated pursuant to under
clauses (a), (b), and (c). If the relief association does not
have an unfunded actuarial accrued liability as reported in the
most recent actuarial valuation, the financial requirements
shall must be an amount equal to the figure calculated pursuant
to under clauses (a) and (b), reduced by an amount equal to
one-tenth of the amount of any assets in excess of the actuarial
accrued liability of the relief association. The determination
of whether or not the relief association has an unfunded
actuarial accrued liability shall must be based on the current
market value of assets for which a market value is readily
ascertainable and the cost or book value, whichever is
applicable, for assets for which no market value is readily
ascertainable.

(a) The normal level cost requirement for the following
year, expressed as a dollar amount, shall be is the figure for
the normal level cost of the relief association as reported in
the actuarial valuation.

(b) The amount of anticipated future administrative
expenses of the special fund shall must be calculated by
multiplying the dollar amount of the administrative expenses of
the special fund for the most recent year by the factor of 1.035.

(c) The amortization contribution requirement to retire the
current unfunded actuarial accrued liability by the established
date for full funding shall be is the figure for the
amortization contribution as reported in the actuarial
valuation. If there has not been a change in the actuarial
assumptions used for calculating the actuarial accrued liability
of the special fund, a change in the bylaws of the relief
association governing the service pensions, retirement benefits,
or both payable from the special fund or a change in the
actuarial cost method used to value all or a portion of the
special fund which change or changes, which by themselves
without inclusion of any other items of increase or decrease,
produce a net increase in the unfunded actuarial accrued
liability of the special fund since December 31, 1970, the
established date for full funding shall be December 31, 1990.
If there has been a change in the actuarial assumptions used for
calculating the actuarial accrued liability of the special fund,
a change in the bylaws of the relief association governing the
service pensions, retirement benefits, or both payable from the
special fund or a change in the actuarial cost method used to
value all or a portion of the special fund and the change or
changes, by themselves and without inclusion of any other items
of increase or decrease, produce a net increase in the unfunded
actuarial accrued liability of the special fund since December
31, 1970, but prior to January 1, 1979, the established date for
full funding shall be December 31, 1998, and if there has been a
change since December 31, 1978, the established date for full
funding shall must be determined using the following procedure:

(i) the unfunded actuarial accrued liability of the special
fund shall must be determined in accordance with the provisions
governing service pensions, retirement benefits, and actuarial
assumptions in effect before an applicable change;

(ii) the level annual dollar contribution needed to
amortize this unfunded actuarial accrued liability amount by the
date for full funding in effect prior to before the change shall
must be calculated using the interest assumption specified in
section 356.215, subdivision 8, in effect before any applicable
change;

(iii) the unfunded actuarial accrued liability of the
special fund shall must be determined in accordance with any new
provisions governing service pensions, retirement benefits, and
actuarial assumptions and the remaining provisions governing
service pensions, retirement benefits, and actuarial assumptions
in effect before an applicable change;

(iv) the level annual dollar contribution needed to
amortize the difference between the unfunded actuarial accrued
liability amount calculated pursuant to under subclause (i) and
the unfunded actuarial accrued liability amount
calculated pursuant to under subclause (iii) over a period of 20
years starting December 31 of the year in which the change is
effective shall must be calculated using the interest assumption
specified in section 356.215, subdivision 8, in effect after any
applicable change;

(v) the annual amortization contribution calculated
pursuant to under subclause (iv) shall must be added to the
annual amortization contribution calculated pursuant to under
subclause (ii);

(vi) the period in which the unfunded actuarial accrued
liability amount determined in subclause (iii) will be amortized
by the total annual amortization contribution computed pursuant
to under subclause (v) shall must be calculated using the
interest assumption specified in section 356.215, subdivision 8,
in effect after any applicable change, rounded to the nearest
integral number of years, but which shall does not exceed a
period of 20 years from the end of the year in which the
determination of the date for full funding using this procedure
is made and which shall is not be less than the period of years
beginning in the year in which the determination of the date for
full funding using this procedure is made and ending by the date
for full funding in effect before the change;

(vii) the period determined pursuant to under subclause (vi)
shall must be added to the date as of which the actuarial
valuation was prepared and the resulting date shall be is the
new date for full funding.

Sec. 7.

Minnesota Statutes 2004, section 352.01,
subdivision 4, is amended to read:

Subd. 4.

Accumulated contributions.

"Accumulated
contributions" means the total, exclusive of interest, of (1)
the sums deducted from the salary of an employee, (2) the amount
of payments, including assessments, paid by the employee in lieu
of salary deductions and all other payments made under Laws
1929, chapter 191, as amended,this chapter and credited to the
employee's individual account in the retirement fund.

Sec. 8.

Minnesota Statutes 2004, section 352.01,
subdivision 5, is amended to read:

Subd. 5.

Retirement fund.

(a) "Retirement fund" means
the general state employees retirement fund created by section
352.04, subdivision 1, with respect to the general state
employees retirement plan or the correctional state employees
retirement fund created by section 352.911, subdivision 1, with
respect to the correctional state employees retirement plan.

(b) " The retirement fund " includes the aggregate of
accumulated contributions of employees covered by the applicable
plan, and all other funds paid into the state treasury or
received by the director under Laws 1929, chapter 191, as
amended this chapter, together with all income and profits from
the money and interest on it, including contributions on the
part of the federal government, the state, and state departments.

Sec. 9.

Minnesota Statutes 2004, section 352.01,
subdivision 21, is amended to read:

Subd. 21.

Accrued annuities.

(a) In this chapter and
chapters 3A, 352B, 352C, and 490, "accrued annuity" means an
annuity that had become payable to a retired employee in the
lifetime of the employee.

(b) An annuity or benefit authorized as provided in this
chapter and chapters 3A, 352B, 352C, and 490 becomes payable on
the first day of each calendar month for that calendar month and
is to must be paid on the first day of each calendar month
beginning with benefits payable on and after December 1, 1977.

(c) Notwithstanding any provision to the contrary in this
chapter and chapters 3A, 352B, 352C, and 490, benefit payment
authorized as "payable for life" is payable for the entire month
in which death occurs, and the benefit payment for the month of
death is payable to the surviving spouse or other beneficiary
only if the annuitant dies before negotiating the benefit check.

Sec. 10.

Minnesota Statutes 2004, section 352.01,
subdivision 23, is amended to read:

Subd. 23.

Coverage or covered by the system.

"Coverage"
or "covered by the system" means that a state employees employee
who serve serves the state of Minnesota and make makes the
required employee contributions to the retirement fund will is,
by reason of these contributions become ,entitled to either (1)
a retirement annuity, or (2) a disability benefit, or (3) a
refund of accumulated contributions, as provided in this chapter.

Sec. 11.

Minnesota Statutes 2004, section 352.021,
subdivision 1, is amended to read:

Subdivision 1.

Establishment.

(a) There is established
the general state employees retirement plan of the Minnesota
State Retirement System for state employees.

(b) The system general state employees retirement plan is a
continuation of the State Employees Retirement Association.

(c) Any person who was a member of the State Employees
Retirement Association on June 30, 1967, is covered by
the system general state employees retirement plan and is
entitled to all benefits provided by the system plan upon
fulfilling the age, service, contribution, and other
requirements of this chapter.

Sec. 12.

Minnesota Statutes 2004, section 352.021,
subdivision 2, is amended to read:

Subd. 2.

State employees covered.

Every person who is a
state employee, as defined in section 352.01, on July 1, 1967,
or becomes a state employee after that date as defined in
section 352.01 is covered by the system general state employees
retirement plan. Acceptance of state employment or continuance
in state service is deemed to be consent to have deductions made
from salary for deposit to the credit of the account of the
state employee in the retirement fund.

Sec. 13.

Minnesota Statutes 2004, section 352.021,
subdivision 3, is amended to read:

Subd. 3.

Optional exemptions.

Any person who is
appointed by the governor or lieutenant governor may request
exemption from coverage by the general state employees
retirement plan under this chapter if the appointee is not so
covered at by the plan on the date of appointment. To qualify
for this exemption, a written request must be made within 90
days from the date of entering upon the duties of the position
to which the person is appointed. After making the request, a
person requesting the exemption is not entitled to coverage by
the general state employees retirement plan while employed in
the position that entitled that person to an exemption from
coverage.

Sec. 14.

Minnesota Statutes 2004, section 352.021,
subdivision 4, is amended to read:

Subd. 4.

Reentering service after refund.

When a former
employee who has withdrawn accumulated contributions reenters
employment in a position entitled to coverage under the
system general state employees retirement plan, the employee
shall must be covered by the system plan on the same basis as a
new employee and is not entitled to credit for any former
service. The annuity rights forfeited when taking a refund can
only be restored as provided in this chapter.

Sec. 15.

Minnesota Statutes 2004, section 352.04,
subdivision 1, is amended to read:

Subdivision 1.

Fund created.

(a) There is created a
special fund to be known as the general state employees
retirement fund. In that fund there shall be deposited
employees , employee contributions, employers employer
contributions, and other amounts authorized by law must be
deposited.

(b) Effective July 1, 1969,The general state employees
retirement plan of the Minnesota State Retirement System shall
must participate in the Minnesota postretirement investment fund.
In that fund there shall be deposited The amounts provided in
section 352.119must be deposited in the Minnesota
postretirement investment fund.

Sec. 16.

Minnesota Statutes 2004, section 352.04,
subdivision 12, is amended to read:

Subd. 12.

Fund disbursement restricted.

The general
state employees retirement fund and the participation in the
Minnesota postretirement investment fund must be disbursed only
for the purposes provided by law. The expenses of the system
and any benefits provided by law, other than benefits payable
from the Minnesota postretirement investment fund, must be paid
from the general state employees retirement fund. The
retirement allowances, retirement annuities, and disability
benefits, as well as refunds of any sum remaining to the credit
of a deceased retired employee or a disabled employee must be
paid only from the general state employees retirement fund after
the needs have been certified and the amounts withdrawn from the
participation in the Minnesota postretirement investment fund
under section 11A.18. The amounts necessary to make the
payments from the general state employees retirement fund and
the participation in the Minnesota postretirement investment
fund are annually appropriated from these funds for those
purposes.

Sec. 17.

Minnesota Statutes 2004, section 352.041,
subdivision 1, is amended to read:

Subdivision 1.

Allowable service credit.

Any (a) An
employee covered by the system general state employees
retirement plan who is given a leave of absence for employment
by a political subdivision of the state shall remains a member
of the plan and must continue to pay member contributions into
the general state employees retirement fund for the period of
leave.

(b) Upon payment of member contributions,the employee must
be given allowable service credit as a state employee on the
records of the system retirement plan as though the employee had
received salary from the state during the leave. Payments into
the retirement fund shall must be at the rate required in
section 352.04, subdivision 2, and must be based upon the salary
received from the political subdivision subject to the maximum
amount, if any.

Sec. 18.

Minnesota Statutes 2004, section 352.041,
subdivision 2, is amended to read:

Subd. 2.

Employee contributions, procedure.

The officer
or employee who is authorized by law to pay salaries to
employees of the political subdivision which is employing a
state employee shall have must deduct employee contributions
deducted for the general state employees retirement plan under
section 352.04, subdivision 2,from the salary of each employee
who is on leave of absence from state service on each payroll
abstract and shall must pay the sum to the director following
the conclusion of each pay period.

Sec. 19.

Minnesota Statutes 2004, section 352.041,
subdivision 3, is amended to read:

Subd. 3.

Employer contributions, procedure.

The officer
or employee who is authorized by law to pay salaries to
employees of the political subdivision which is employing a
state employee covered by the system shall general state
employees retirement plan also must have employer contributions
made to the general state employees retirement fund on following
the conclusion of each payroll abstract in the amount required
by section 352.04, subdivision 3. These contributions are to
must be charged to the political subdivision as an
administrative cost.

Sec. 20.

Minnesota Statutes 2004, section 352.041,
subdivision 5, is amended to read:

Subd. 5.

Employer contributions, leaves of absence; tax
levies.

(a) Every political subdivision which is employing a
state employee covered by the system on leave of absence from
state service for employment by a political subdivision of the
state shall must pay into the general state employees retirement
fund the amount of the employer contribution required by law for
state employees covered by the system under section 352.04,
subdivision 3.

(b) Employing political subdivisions, except other than
school districts,may levy taxes necessary for the payment of
employer contributions without limitation as to rate or amount.
The levy of the taxes does not reduce the amount of other
taxes to that may be levied by political subdivisions,
except other than school districts,which are subject to any
limitation.

Sec. 21.

Minnesota Statutes 2004, section 352.15,
subdivision 1, is amended to read:

Subdivision 1.

Exemption; exceptions.

None of the money,
annuities, or other benefits mentioned in this chapter is
assignable either in law or in equity or subject to execution,
levy, attachment, garnishment, or other legal process, except as
provided in subdivision 1a or section 518.58, 518.581, or
518.6111. The provisions of section 356.401 apply to the general
state employees retirement plan and to the correctional state
employees retirement plan.

Sec. 22.

Minnesota Statutes 2004, section 352.15,
subdivision 3, is amended to read:

Subd. 3.

Deducting health or dental insurance premiums.

The board may direct authorize, at its discretion, the deduction
of a retiree's health or dental insurance premiums and transfer
of the amounts to a health or dental insurance carrier covering
state employees. The insurance carrier must certify that the
retired employee has signed an authorization for the deduction
and provide a computer readable roster of covered retirees and
amounts. The health or dental insurance carrier must refund
deductions withheld from a retiree's check in error directly to
the retiree. The board shall require that the insurance carrier
to reimburse the fund for the administrative expense of
withholding the premium amounts. The insurance carrier shall
assume liability for any failure of the system to properly
withhold the premium amounts.

Sec. 23.

Minnesota Statutes 2004, section 352.15,
subdivision 4, is amended to read:

Subd. 4.

Direct transfer of refunds.

A direct transfer
of account refunds under this chapter may be made to an
individual retirement savings accounts account or a qualified
retirement plans plan of the person upon the receipt of an
application for transfer by a former employee, on forms
acceptable to the executive director.

Sec. 24.

Minnesota Statutes 2004, section 352.22,
subdivision 10, is amended to read:

Subd. 10.

Other refunds.

Former employees covered by the
system are entitled to apply for refunds if they are or become
members of the State Patrol retirement fund, the state Teachers
Retirement Association, or employees of the University of
Minnesota excluded from coverage under the system by action of
the Board of Regents; or labor service employees, excluded from
coverage under section 352.01, subdivision 2b, clause (25);or
employees of the adjutant general who under federal law
effectually elect membership in a federal retirement system; or
officers or employees of the senate or house of representatives,
excluded from coverage under section 352.01, subdivision 2b,
clause (8) (7). The refunds must include accumulated
contributions plus interest as provided in subdivision 2. These
employees may apply for a refund once 30 days or more have
elapsed after their coverage ceases, even if they continue in
state service but in positions not covered by this chapter.

Sec. 25.

Minnesota Statutes 2004, section 352B.01,
subdivision 1, is amended to read:

Subdivision 1.

Scope.

In this chapter, each of the terms
defined in this section have has the meanings meaning given
them to it.

Sec. 26.

Minnesota Statutes 2004, section 352B.01,
subdivision 2, is amended to read:

Subd. 2.

Member.

"Member" means:

(1) a State Patrol member currently employed after June 30,
1943,under section 299D.03 by the state, who is a peace officer
under section 626.84, and whose salary or compensation is paid
out of state funds;

(2) a conservation officer employed under section 97A.201,
currently employed by the state, whose salary or compensation is
paid out of state funds;

(3) a crime bureau officer who was employed by the crime
bureau and was a member of the Highway Patrolmen's retirement
fund on July 1, 1978, whether or not that person has the power
of arrest by warrant after that date, or who is employed as
police personnel, with powers of arrest by warrant under section
299C.04, and who is currently employed by the state, and whose
salary or compensation is paid out of state funds;

(4) a person who is employed by the state in the Department
of Public Safety in a data processing management position with
salary or compensation paid from state funds, who was a crime
bureau officer covered by the State Patrol retirement plan on
August 15, 1987, and who was initially hired in the data
processing management position within the department during
September 1987, or January 1988, with membership continuing for
the duration of the person's employment in that position,
whether or not the person has the power of arrest by warrant
after August 15, 1987;

(5) a public safety employee defined as who is a peace
officer in under section 626.84, subdivision 1, paragraph (c),
and who is employed with by the Division of Alcohol and Gambling
Enforcement under section 299L.01; and

(6) a Fugitive Apprehension Unit officer after October 31,
2000, who is employed by the Office of Special Investigations of
the Department of Corrections and who is a peace officer under
section 626.84.

Sec. 27.

Minnesota Statutes 2004, section 352B.01,
subdivision 3, is amended to read:

Subd. 3.

Allowable service.

(a) "Allowable service"
means:

(1) for members defined in subdivision 2, clause (a) (1),
monthly service is granted for in any month for which payments
have been made to the State Patrol retirement fund, and

(2) for members defined in subdivision 2, clauses (b) (2)
and (c) (3), service for which payments have been made to the
State Patrol retirement fund, service for which payments were
made to the State Police officers retirement fund after June 30,
1961, and all prior service which was credited to a member for
service on or before June 30, 1961.

(b) Allowable service also includes any period of absence
from duty by a member who, by reason of injury incurred in the
performance of duty, is temporarily disabled and for which
disability the state is liable under the workers' compensation
law, until the date authorized by the executive director for
commencement of payment of a disability benefit or return to
employment.

(c) MS 2002 (Expired)

(d) Allowable service means service in a month during which
a member is paid a salary from which a member contribution is
deducted, deposited, and credited in the State Patrol retirement
fund.

Sec. 28.

Minnesota Statutes 2004, section 352B.02,
subdivision 1e, is amended to read:

Subd. 1e.

Audit; actuarial valuation.

The legislative
auditor shall audit the fund. Any actuarial valuation of the
fund required under section 356.215 must be prepared by the
actuary retained under section 356.214. Any approved actuary
retained by the executive director under section 352.03,
subdivision 6, may perform actuarial valuations and experience
studies to supplement those performed by the commission-retained
actuary retained under section 356.214. Any supplemental
actuarial valuation or experience studies shall must be filed
with the executive director of the Legislative Commission on
Pensions and Retirement.

Sec. 29.

Minnesota Statutes 2004, section 352B.071, is
amended to read:

352B.071 EXEMPTION FROM PROCESS.

None of the money, annuities, or other benefits provided
for in this chapter is assignable either in law or in equity or
be subject to execution, levy, attachment, garnishment, or other
legal process, except as provided in section 518.58, 518.581, or
518.6111. The provisions of section 356.401 apply to the State
Patrol retirement fund.

Sec. 30.

Minnesota Statutes 2004, section 352D.01, is
amended to read:

352D.01 ESTABLISHMENT.

There is hereby established within the Minnesota State
Retirement System a retirement program for certain public
employees to be known as the Minnesota unclassified employees
retirement program, which shall be . The program must be
administered by the Minnesota State Retirement System.

Sec. 31.

Minnesota Statutes 2004, section 352D.015,
subdivision 3, is amended to read:

Subd. 3.

Supplemental investment fund.

"Supplemental
investment fund" means the fund established and governed by
section 11A.17.

Sec. 32.

Minnesota Statutes 2004, section 352D.015,
subdivision 4, is amended to read:

Subd. 4.

General fund.

"General fund" means the general
state employees retirement fund except the moneys for the
unclassified program.

Sec. 33.

Minnesota Statutes 2004, section 352D.03, is
amended to read:

352D.03 TRANSFER OF ASSETS.

Unless an eligible employee enumerated in section 352D.02,
subdivision 1 or 1a, has elected coverage under the individual
retirement account plan under chapter 354B, a sum of money
representing the assets credited to each employee exercising the
option contained in section 352D.02, plus an equal employer
contribution together with interest for the employment period at
the actuarially assumed rates applicable preretirement interest
actuarial assumption rate during this period, compounded
annually, shall must be used for the purchase of shares on
behalf of each employee in the accounts of the supplemental
retirement fund established by section 11A.17. Any employer's
contribution to amortize the deficit in the state employee's
retirement fund shall not, however, be used for the purchase of
shares.

Sec. 34.

Minnesota Statutes 2004, section 352D.05,
subdivision 4, is amended to read:

Subd. 4.

Repayment of refund.

(a) A participant in the
unclassified program may repay regular refunds taken pursuant to
under section 352.22, as provided in section 352.23.

(b) A participant in the unclassified program or an
employee covered by the general plan who has withdrawn the value
of the total shares may repay the refund taken and thereupon
restore the service credit, rights and benefits forfeited by
paying into the fund the amount refunded plus interest at an
annual rate of 8.5 percent compounded annually from the date
that the refund was taken until the date that the refund is
repaid. If the participant had withdrawn only the employee
shares as permitted under prior laws, repayment shall must be
pro rata. Payment shall

(c) Except as provided in section 356.441, the repayment of
a refund under this section must be made in a lump sum.

Sec. 35.

Minnesota Statutes 2004, section 352D.085,
subdivision 1, is amended to read:

Subdivision 1.

Combined service.

Except as provided in
section 356.30, 356.302, or 356.303,service under the
unclassified program for which the employee has been credited
with employee shares may be used for the limited purpose of
qualifying for benefits under sections 352.115, 352.72,
subdivision 1, 352.113, 354.44, 354.45, 354.48, and 354.60;
provided such . The service also may not be used to qualify for
a disability benefit under section 352.113 or 354.48 if a
participant was under the unclassified program at the time of
the disability, and provided further that . Also,the years of
service and salary paid while the participant was in the
unclassified program shall may not be used in determining the
amount of benefits.

Sec. 36.

Minnesota Statutes 2004, section 352D.09,
subdivision 5, is amended to read:

Subd. 5.

Unclaimed benefits.

If the beneficiary,
surviving spouse or estate has not made application for benefits
within ten years after the date of the death of a participant,
the value of the shares shall be is appropriated to the regular
general state employees retirement fund and the provisions of
section 352.12, subdivision 12shall ,govern. If a former
participant fails to make a claim for benefits within five years
after the termination of covered service or by age 70, whichever
is later, the value of the shares shall be is appropriated to
the general state employees retirement fund and the provisions
of section 352.22, subdivision 8, shall apply.

Sec. 37.

Minnesota Statutes 2004, section 352D.12, is
amended to read:

352D.12 TRANSFER OF PRIOR SERVICE CONTRIBUTIONS.

(a) An employee who is a participant in the unclassified
program and who has prior service credit in a covered plan under
chapters 3A,chapter 352, 352C,353, 354, 354A, and or 422A
may, within the time limits specified in this section, elect to
transfer to the unclassified program prior service contributions
to one or more of those plans. Participants with six or more
years of prior service credit in a plan governed by chapter 3A
or 352C on July 1, 1998, may not transfer prior service
contributions. Participants with less than six years of prior
service credit in a plan governed by chapter 3A or 352C on July
1, 1998, must be contributing to the unclassified plan on or
after January 5, 1999, in order to transfer prior contributions.

(b) For participants with prior service credit in a plan
governed by chapter 352, 353, 354, 354A, or 422A, "prior service
contributions" means the accumulated employee and equal employer
contributions with interest at an annual rate of 8.5 percent
compounded annually, based on fiscal year balances. For
participants with less than six years of service credit as of
July 1, 1998, and with prior service credit in a plan governed
by chapter 3A or 352C, "prior service contributions" means an
amount equal to twice the amount of the accumulated member
contributions plus annual compound interest at the rate of 8.5
percent, computed on fiscal year balances.

(c) If a participant has taken a refund from a retirement
plan listed in this section, the participant may repay the
refund to that plan, notwithstanding any restrictions on
repayment to that plan, plus 8.5 percent interest compounded
annually and have the accumulated employee and equal employer
contributions transferred to the unclassified program with
interest at an annual rate of 8.5 percent compounded annually
based on fiscal year balances. If a person repays a refund and
subsequently elects to have the money transferred to the
unclassified program, the repayment amount, including interest,
is added to the fiscal year balance in the year which the
repayment was made.

(d) A participant electing to transfer prior service
contributions credited to a retirement plan governed by chapter
352, 353, 354, 354A, or 422A as provided under this section must
complete the a written application for the transfer and repay
any refund within one year of the commencement of the employee's
participation in the unclassified program. A participant
electing to transfer prior service contributions credited to a
retirement plan governed by chapter 3A or 352C as provided under
this section must complete the application for the transfer and
repay any refund between January 5, 1999, and June 1, 1999, if
the employee commenced participation in the unclassified program
before January 5, 1999, or within one year of the commencement
of the employee's participation in the unclassified program if
the employee commenced participation in the unclassified program
after January 4, 1999.

Sec. 38.

Minnesota Statutes 2004, section 353.01,
subdivision 32, is amended to read:

Subd. 32.

Coordinated member.

"Coordinated member" means
any a public employee, including any a public hospital employee,
who is covered by any an agreement or modification made between
the state and the Secretary of Health, Education and Welfare
Human Services, making the provisions of the federal Old Age,
Survivors and Disability Insurance Act applicable to the member
if the membership eligibility criteria are met under this
chapter. A coordinated member also is a former basic member who
has a complete and continuous separation for at least 30 days
from employment as a public employee meeting the requirements
specified in subdivision 28, paragraphs (a) and (b), and who
reenters public service as a public employee and meets the
membership eligibility criteria under this chapter.

Sec. 39.

Minnesota Statutes 2004, section 353.01,
subdivision 33, is amended to read:

Subd. 33.

Basic member.

"Basic member" means any a
public employee, including any a public hospital employee, who
is not covered by any agreement or modification made between the
state and the Secretary of Health, Education and Welfare Human
Services.

Sec. 40.

Minnesota Statutes 2004, section 353.025, is
amended to read:

353.025 RANGE ASSOCIATION OF MUNICIPALITIES AND SCHOOLS.

From and after January 1, 1982,Employees of the Range
Association of Municipalities and Schools hereinafter referred
to as the association, shall become are coordinated members of
the general employees retirement plan of the Public Employees
Retirement Association unless specifically exempt under section
353.01, subdivision 2b, and .The Range Association shall be
deemed to be of Municipalities and Schools is a governmental
subdivision for the purposes of this chapter.

Sec. 41.

Minnesota Statutes 2004, section 353.026, is
amended to read:

353.026 COVERAGE FOR CERTAIN MUNICIPAL AND SCHOOL DISTRICT
EMPLOYEES.

Any person who was employed by the city of Minneapolis,
Special School District No. 1, or public corporation as defined
in section 422A.01, subdivision 9, on or after July 1, 1978,and
prior to before July 1, 1979, and who was excluded from
retirement coverage by the coordinated program of the
Minneapolis municipal employees retirement fund pursuant to
under section 422A.09, subdivision 3, shall be is entitled to
retirement coverage by the general employees retirement plan of
the Public Employees Retirement Association unless specifically
excluded pursuant to under section 353.01, subdivision 2b, from
and after May 19, 1981.

Sec. 42.

Minnesota Statutes 2004, section 353.027, is
amended to read:

353.027 RETENTION OF COVERAGE FOR CERTAIN MUNICIPAL COURT
EMPLOYEES.

Any person employed on January 1, 1975, by a municipal
court established pursuant to under Minnesota Statutes 1957,
section 488.03,and located in the cities of New Brighton,
Roseville, Maplewood, North Saint Paul, White Bear Lake,or St.
Paul shall be is eligible for membership in the general
employees retirement plan of the Public Employees Retirement
Association and shall retain retains any rights or benefits the
person had attained as a member of the general employees
retirement plan of the association on January 1, 1975, so long
as the person remains an employee of the municipal court of
Ramsey County.

Sec. 43.

Minnesota Statutes 2004, section 353.028, is
amended to read:

353.028 CITY MANAGERS; ELECTION; DEFERRED COMPENSATION.

Subdivision 1.

Definitions.

(a) For purposes of this
section, each of the terms in this subdivision has the meaning
indicated.

(b) "City manager" means (1) a person who is duly appointed
to and is holding the position of city manager in a Plan B
statutory city or in a home rule city operating under the
"council-manager" form of government, or (2) a person who is
appointed to and is holding the position of chief administrative
officer of a home rule charter city or a statutory city pursuant
to under a charter provision, ordinance, or resolution
establishing such a position and prescribing its duties and
responsibilities.

(c) "Governing body" means the city council of the city
employing the city manager.

(d) "Election" means the election described in subdivision
2.

Subd. 2.

Election.

(a) A city manager may elect to be
excluded from membership in the general employees retirement
plan of the Public Employees Retirement Association. The
election of exclusion must be made within six months following
the commencement of employment, must be made in writing on a
form prescribed by the executive director, and must be approved
by a resolution of adopted by the governing body of the city.
The election of exclusion is not effective until it is filed
with the executive director. Membership of a city manager in
the association general employees retirement plan ceases on the
date the written election is received by the executive director
or upon a later date specified. Employee and employer
contributions made on behalf of a person exercising the option
to be excluded from membership under this section must be
refunded in accordance with section 353.27, subdivision 7.

(b) A city manager who has elected exclusion under this
subdivision may elect to revoke that action by filing a written
notice with the executive director. The notice must be on a
form prescribed by the executive director and must be approved
by a resolution of the governing body of the city. Membership
of the city manager in the association resumes prospectively
from the date of the first day of the pay period for which
contributions were deducted or, if pay period coverage dates are
not provided, the date on which the notice of revocation or
contributions are received in the office of the association,
provided that the notice of revocation is received by the
association within 60 days of the receipt of contributions.

(c) An election under paragraph (b) is irrevocable. Any
election under paragraph (a) or (b) must include a statement
that the individual will not seek authorization to purchase
service credit for any period of excluded service.

Subd. 3.

Deferred compensation; city contribution.

If an
election of exclusion is made, and if the city manager and the
governing body of the city additionally agree in writing that
the additional compensation is to be deferred and shall is to be
contributed on behalf of the city manager to a deferred
compensation program which meets the requirements of section 457
of the Internal Revenue Code of 1954 1986, as amended through
December 31, 1980, the governing body may compensate the city
manager, in addition to the salary allowed under any limitation
imposed on salaries by law or charter, in an amount equal to the
employer contribution which would be required by section 353.27,
subdivision 3, if the city manager were a member of the
association general employees retirement plan.

Subd. 4.

Refunds; deferred annuity.

A city manager who
makes an election to be excluded from membership is entitled to
a refund of accumulated deductions or, if otherwise qualified, a
deferred annuity in the manner provided by under section 353.34,
at the option of the manager.

Subd. 5.

Election; other employment.

If a city manager
who has made an election to be excluded subsequently accepts
employment in another governmental subdivision or subsequently
accepts employment other than as a city manager in the same
city, the election shall be deemed to have been is rescinded on
the effective date of employment.

Sec. 44.

Minnesota Statutes 2004, section 353.14, is
amended to read:

353.14 BENEFITS FROM OTHER FUNDS.

No annuity or benefit provided by this chapter shall may be
affected, diminished, or impaired by any pension, benefit, or
annuity which any member or survivor is entitled to receive from
a tax supported public retirement plan or system authorized by
any other law, for based on service that is different service
than the service for which the member or survivor is entitled to
receive benefit or annuity from a retirement plan administered
by the Public Employees Retirement Association.

Sec. 45.

Minnesota Statutes 2004, section 353.15,
subdivision 1, is amended to read:

Subdivision 1.

Exemption; exceptions.

No money, annuity,
or benefit provided for in this chapter is assignable or subject
to execution, levy, attachment, garnishment, or legal process,
except as provided in subdivision 2 or section 518.58, 518.581,
or 518.6111. The provisions of section 356.401 apply to the
general employees retirement plan, to the public employees
police and fire retirement plan, and to the local government
correctional service retirement plan.

Sec. 46.

Minnesota Statutes 2004, section 353.15,
subdivision 3, is amended to read:

Subd. 3.

Payment to public bodies.

If,in the judgment
of the executive director,conditions so warrant, payment of an
annuity, a retirement benefit, or a refund may be made to a
public body in behalf of an annuitant, disabilitant, or survivor
upon such terms as the executive director may prescribe.

Sec. 47.

Minnesota Statutes 2004, section 353.27,
subdivision 11, is amended to read:

Subd. 11.

Employers; required to furnish requested
information.

(a) All governmental subdivisions shall furnish
promptly such other information relative to the employment
status of all employees or former employees, including,but not
limited to,payroll abstracts pertaining to all past and present
employees, as may be requested by the association or its
executive director, including schedules of salaries applicable
to various categories of employment.

(b) In the event payroll abstract records have been lost or
destroyed, for whatever reason or in whatever manner, so that
such schedules of salaries cannot be furnished therefrom, the
employing governmental subdivision, in lieu thereof, shall
furnish to the association an estimate of the earnings of any
employee or former employee for any period as may be requested
by the association or its executive director. Should If the
association receive such schedules is provided a schedule of
estimated earnings, the executive director is hereby authorized
to use the same as a basis for making whatever computations
might be necessary for determining obligations of the employee
and employer to the retirement fund. If estimates are not
furnished by the employer pursuant to at the request of the
association or its executive director, the association executive
director may estimate the obligations of the employee and
employer to the retirement fund based upon such those records as
that are in its possession. Where payroll abstracts have been
lost or destroyed, the governmental agency need not furnish any
information pertaining to employment prior to July 1, 1963. The
association shall make no estimate of any obligation of any
employee, former employee, or employer covering employment prior
to July 1, 1963.

Sec. 48.

Minnesota Statutes 2004, section 353.271, is
amended to read:

353.271 PARTICIPATION IN MINNESOTA POSTRETIREMENT
INVESTMENT FUND.

Subdivision 1.

Authorization.

The general employees
retirement plan of the Public Employees Retirement Association,
including the public employees police and fire fund but
excluding the various local relief association consolidation
accounts, is retirement plan, and the local government
correctional service retirement plan are authorized to
participate in the Minnesota postretirement investment fund.
There shall be is one general participation in the Minnesota
postretirement investment fund for all purposes by each plan of
the Public Employees Retirement fund and one general
participation in the Minnesota postretirement investment fund
for all purposes by the public employees police and fire
fund Association.

Subd. 2.

Valuation of assets; adjustment of benefits.

(1) (a) The required reserves for retirement annuities payable
as provided in this chapter other than those payable from the
various local relief association consolidation accounts, as
determined in accordance with the appropriate mortality table
adopted by the board of trustees based on the experience of the
fund as recommended by the actuary retained by the Legislative
Commission on Pensions and Retirement under section 356.214, and
approved under section 356.215, subdivision 18, and using the
postretirement interest assumption specified in section 356.215,
subdivision 8, shall must be transferred to the Minnesota
postretirement investment fund as of the last business day of
the month in which the retirement annuity begins.

(2) (b) Annuity payments other than those payable from the
various local relief association consolidation accounts
shall must be adjusted in accordance with the provisions of
section 11A.18.

(3) (c) Increases in payments pursuant to under this
section or from the various local relief association
consolidation accounts, if applicable, will must be made
automatically unless the intended recipient files written notice
with the executive director of the Public Employees Retirement
Association requesting that the increase shall not be made.

Sec. 49.

Minnesota Statutes 2004, section 353.31,
subdivision 1c, is amended to read:

Subd. 1c.

Coordinated members.

Except for benefits
provided under section 353.32, subdivisions 1 and 1a,no
survivor benefits are payable to the surviving spouse or
dependent children of a deceased coordinated member.

Sec. 50.

Minnesota Statutes 2004, section 353.32,
subdivision 9, is amended to read:

Subd. 9.

Payment to a minor.

If a member or former
member dies having named as beneficiary a person who is a minor
at the time of the application for refund, the board may make
the payment (a) (1) directly to the minor, (b) (2) to any
a person who has legally qualified and is acting as guardian of
the minor's person or property in any jurisdiction, or (c) (3)
to either parent of the minor or to any an adult person with
whom the minor may at the time be living, provided only that .
The parent or other person to whom any amount is to be
paid shall have advised must advise the board in writing that
the amount will be held or used in trust for the benefit of such
minor. Any annuity or disability benefit payable at the time of
death of an annuitant or recipient of a disability benefit,
which is payable to a beneficiary who is a minor, may be paid in
the same manner. Such The payment shall be is a bar to recovery
by any other person or persons.

Sec. 51.

Minnesota Statutes 2004, section 353.33,
subdivision 12, is amended to read:

Subd. 12.

Basic disability survivor benefits.

If a basic
member who is receiving a disability benefit under subdivision 3:

(a) (1) dies before attaining age 65 or within five years
of the effective date of the disability, whichever is later, the
surviving spouse shall is entitled to receive a survivor benefit
under section 353.31, unless the surviving spouse elected to
receive a refund under section 353.32, subdivision 1.;

(b) (2) is living at age 65 or five years after the
effective date of the disability, whichever is later, the basic
member may continue to receive a normal disability benefit, or
elect a joint and survivor optional annuity under section
353.31, subdivision 1b. The election of the joint and survivor
optional annuity must occur within 90 days of attaining age 65
or of reaching the five-year anniversary of the effective date
of the disability benefit, whichever is later. The optional
annuity takes effect on the first day of the month following the
month in which the person attains age 65 or reaches the
five-year anniversary of the effective date of the disability
benefit, whichever is later.; or

(c) (3) if there is a dependent child or children under
paragraph (a) or (b) clause (1) or (2), the association shall
grant dependent child is entitled to a dependent child benefit
under section 353.31, subdivision 1b, paragraph (b).

Sec. 52.

Minnesota Statutes 2004, section 354.091, is
amended to read:

354.091 SERVICE CREDIT.

(a) In computing service credit, no teacher shall may
receive credit for more than one year of teaching service for
any fiscal year. Commencing July 1, 1961 Additionally, in
crediting allowable service:

(1) if a teacher teaches less than five hours in a day,
service credit must be given for the fractional part of the day
as the term of service performed bears to five hours;

(2) if a teacher teaches five or more hours in a day,
service credit must be given for only one day;

(3) if a teacher teaches at least 170 full days in any
fiscal year, service credit must be given for a full year of
teaching service; and

(4) if a teacher teaches for only a fractional part of the
year, service credit must be given for such fractional part of
the year in the same relationship as the period of service
performed bears to 170 days.

(b) A teacher shall must receive a full year of service
credit based on the number of days in the employer's full school
year if it that school year is less than 170 days. Teaching
service performed before July 1, 1961, must be computed under
the law in effect at the time it was performed.

(c) A teacher must not lose or gain retirement service
credit as a result of the employer converting to a flexible or
alternate work schedule. If the employer converts to a flexible
or alternate work schedule, the forms for reporting teaching
service and the procedures for determining service credit must
be determined by the executive director with the approval of the
board of trustees.

(d) For all services rendered on or after July 1, 2003,
service credit for all members employed by the Minnesota State
Colleges and Universities system must be determined:

(1) for full-time employees, by the definition of full-time
employment contained in the collective bargaining agreement for
those units listed in section 179A.10, subdivision 2, or
contained in the applicable personnel or salary plan for those
positions designated in section 179A.10, subdivision 1;

(2) for part-time employees, by the appropriate proration
of full-time equivalency based on the provisions contained in
the collective bargaining agreement for those units listed in
section 179A.10, subdivision 2, or contained in the applicable
personnel or salary plan for those positions designated in
section 179A.10, subdivision 1, and the applicable procedures of
the Minnesota State Colleges and Universities system; and

(3) in no case may a member receive more than one year of
service credit for any fiscal year.

Sec. 53.

Minnesota Statutes 2004, section 354.10,
subdivision 1, is amended to read:

Subdivision 1.

Exemption; exceptions.

(a) The provisions
of section 356.401 apply to the teachers retirement plan.

(b) The right of a teacher to take advantage of the
benefits provided by this chapter, is a personal right only and
is not assignable. All money to the credit of a teacher's
account in the fund or any money payable to the teacher from the
fund belongs to the state of Minnesota until actually paid to
the teacher or a beneficiary under this chapter.

(c) The association may acknowledge a properly completed
power of attorney form. An assignment or attempted assignment
of a teacher's interest in the fund, or of the beneficiary's
interest in the fund, by a teacher or a beneficiary is void and
exempt from garnishment or levy under attachment or execution,
except as provided in subdivision 2 or 3, or section 518.58,
518.581, or 518.6111.

Sec. 54.

Minnesota Statutes 2004, section 354.10,
subdivision 3, is amended to read:

Subd. 3.

Payment to public bodies.

If,in the judgment
of the executive director,conditions so warrant, payment of an
annuity, a retirement benefit, or a refund may be made to a
public body in behalf of an annuitant, disabilitant, or survivor
upon such terms as the executive director may prescribe.

Sec. 55.

Minnesota Statutes 2004, section 354.10,
subdivision 4, is amended to read:

Subd. 4.

Changes in designated beneficiaries.

Any (a) A
beneficiary designated by a retiree or member under section
354.05, subdivision 22, may be changed or revoked by the retiree
or member on a form provided by the executive director.

(b) A change or revocation made under this subdivision is
valid only if the properly completed form is received by the
association on or before the date of death of the retiree or the
member.

(c) If a designated beneficiary dies before the retiree or
member designating the beneficiary,and a new beneficiary is not
designated, the retiree's or member's estate is the beneficiary.

Sec. 56.

Minnesota Statutes 2004, section 354.33,
subdivision 5, is amended to read:

Subd. 5.

Retirees not eligible for federal benefits.

Notwithstanding the provisions of section 354.55, subdivision 3,
when any person retires after July 1, 1973,who (a) (1) has ten
or more years of allowable service, and (b) (2) does not have
any retroactive Social Security coverage by reason of the
person's position in the retirement system, and (c) (3) does not
qualify for federal old age and survivor primary benefits at the
time of retirement, the annuity shall must be computed under
section 354.44, subdivision 2,of the law in effect on June 30,
1969, except that accumulations after June 30, 1957, shall must
be calculated using the same mortality table and interest
assumption as are used to transfer the required reserves to the
Minnesota postretirement investment fund.

Sec. 57.

Minnesota Statutes 2004, section 354.39, is
amended to read:

354.39 EFFECTIVE DATE; APPLICATION.

After July 1, 1971, any A member of the Teachers Retirement
Association who is employed in a new state university and or any
other new institutions institution of higher learning not
included in any agreement or modification made between the state
and the federal Secretary of Health, Education and Welfare Human
Services, making the provisions of the federal Old Age and ,
Survivors and Disability Insurance Act applicable to such
members, shall must be covered under the provisions of this
chapter applicable to coordinated members.

Sec. 58.

Minnesota Statutes 2004, section 354.41,
subdivision 2, is amended to read:

Subd. 2.

Teachers.

Every teacher after June 30, 1957,in
the service or entering the service of the state or one of its
governmental subdivision subdivisions as a teacher, except
persons specially specifically excluded, shall must become a
member of the association by the acceptance of such employment.

Sec. 59.

Minnesota Statutes 2004, section 354.42, is
amended by adding a subdivision to read:

Subd. 1a.

Teachers retirement fund.

(a) Within the
Teachers Retirement Association and the state treasury is
created a special retirement fund, which must include all the
assets of the Teachers Retirement Association and all revenue of
the association. The fund is the continuation of the fund
established under Laws 1931, chapter 406, section 2,
notwithstanding the repeal of Minnesota Statutes 1973, section
354.42, subdivision 1, by Laws 1974, chapter 289, section 59.

(b) The teachers retirement fund must be credited with all
employee and employer contributions, all investment revenue and
gains, and all other income authorized by law.

(c) From the teachers retirement fund is appropriated the
payments of annuities and benefits authorized by this chapter,
the transfers to the Minnesota postretirement investment fund,
and the reasonable and necessary expenses of administering the
fund and the association.

Sec. 60.

Minnesota Statutes 2004, section 354.44,
subdivision 2, is amended to read:

Subd. 2.

Computation of money purchase annuity.

(a) The
amount of retirement annuity is an amount equal to double the
annuity which could be purchased by the member's accumulated
deductions plus interest thereon. The annuity shall must be
determined by the member's age, sex, double the amount of
accumulated deductions, double the amount of interest earned on
the accumulated deductions, and the appropriate mortality tables
and interest rates. To determine the amount of the annuity for
a basic member, the accumulated deductions prior to before July
1, 1957, and the accumulated deductions subsequent to after July
1, 1957, shall must be considered separately.

(1) (b) For service rendered prior to before July 1, 1957,
the accumulated deductions for any a member shall must be
carried forward at a fixed amount which is shown credited to the
member's account as of that date. That fixed amount shall must
also include any payments in lieu of salary deductions which are
to be made in the future and are were actually so made pursuant
to under an agreement executed between the member and the board
as authorized by section 354.50 or any other authorized payments
made by the member to the fund. The annuity granted with
respect to the period shall must be determined as follows:

(a) (1) the fixed amount of the accumulated deductions for
the period including the interest credited on the amount as
earned up to July 1, 1957.; and

(b) (2) annuity purchase rates based on the applicable
mortality table established by the board and the interest rate
assumption in effect prior to before July 1, 1957, in the case
of basic members and an annuity purchase rate based on an
appropriate annuity table of mortality established by the board
as provided in section 354.07, subdivision 1, and using the
applicable postretirement interest rate assumption specified in
section 356.215, subdivision 8, in the case of coordinated
members.

(2) (c) For service rendered subsequent to after July 1,
1957, the accumulated deductions for any a member shall must
consist of the amounts actually credited to the member's account
by reason of salary deductions. The annuity granted with
respect to the period shall must be determined by the following:

(a) (1) accumulated deductions for the period;

(b) (2) interest credited on these accumulated deductions
from July 1, 1957, to the date of retirement;

(c) (3) interest credited on accumulated deductions
including prior credited interest provided in paragraph (1) (b)
from July 1, 1957, to the date of retirement;

(d) (4) after the amount available for an annuity granted
with respect to the person is determined in accordance with the
provisions of this subdivision, an additional amount equal to 20
percent of the sum of clause (2)(a) (1) plus interest credited
to members a member's account from July 1, 1957, to date of
retirement is to be added. This added amount is not to be
doubled as provided for other amounts determined in this
subdivision; and

(e) (5) the annuity purchase rate based on an appropriate
annuity table of mortality established by the board as provided
in section 354.07, subdivision 1, and using the applicable
postretirement interest rate assumption specified in section
356.215, subdivision 8.

Sec. 61.

Minnesota Statutes 2004, section 354A.021,
subdivision 5, is amended to read:

Subd. 5.

Tax sheltered annuity program and fund.

Any A
teachers retirement fund association may establish a tax
sheltered annuity program and fund meeting the requirements of
section 403(b) of the Internal Revenue Code of 1986, as amended
through December 31, 1992, which shall must include all assets
which were acquired for the specific purpose of being credited
to the program and fund and to which shall must be credited all
employee contributions,and employer contributions,if
negotiated under a collective bargaining agreement, designated
for this purpose and all interest income attributable to the
assets of the program and fund.

Sec. 62.

Minnesota Statutes 2004, section 354A.097,
subdivision 1, is amended to read:

Subdivision 1.

Service credit purchase authorized.

A
teacher who has at least three years of allowable service credit
with the teachers retirement fund association and who performed
service in the United States armed forces before becoming a
teacher as defined in section 354A.011, subdivision 27, or who
failed to obtain service credit for a military leave of absence
period under section 354A.093, is entitled to purchase allowable
service credit for the initial period of enlistment, induction,
or call to active duty without any voluntary extension by making
payment under section 356.55 provided 356.551 if the teacher has
not purchased service credit from another Minnesota defined
benefit public employee pension plan for the same period of
service.

Sec. 63.

Minnesota Statutes 2004, section 354A.31,
subdivision 5, is amended to read:

Subd. 5.

Unreduced normal retirement annuity.

Upon
retirement at normal retirement age with at least three years of
service credit, a coordinated member shall be is entitled to a
normal retirement annuity calculated pursuant to under
subdivision 4 or 4a, whichever applies.

Sec. 64.

[356.401] EXEMPTION FROM PROCESS.

Subdivision 1.

Exemption; exceptions.

None of the money,
annuities, or other benefits provided for in the governing law
of a covered retirement plan is assignable either in law or in
equity or subject to state estate tax, or to execution, levy,
attachment, garnishment, or other legal process, except as
provided in subdivision 2 or section 518.58, 518.581, or
518.6111.

Subd. 2.

Automatic deposits.

(a) The chief
administrative officer of a covered retirement plan may remit,
through an automatic deposit system, annuity, benefit, or refund
payments only to a financial institution associated with the
National Automated Clearinghouse Association or a comparable
successor organization that is trustee for a person who is
eligible to receive the annuity, benefit, or refund.

(b) Upon the request of a retiree, disabilitant, survivor,
or former member, the chief administrative officer of a covered
retirement plan may remit the annuity, benefit, or refund check
to the applicable financial institution for deposit in the
person's individual account or the person's joint account. An
overpayment to a joint account after the death of the annuitant
or benefit recipient must be repaid to the fund of the
applicable covered retirement plan by the joint tenant if the
overpayment is not repaid to that fund by the financial
institution associated with the National Automated Clearinghouse
Association or its successor. The governing board of the
covered retirement plan may prescribe the conditions under which
these payments may be made.

Subd. 3.

Covered retirement plans.

The provisions of
this section apply to the following retirement plans:

(1) the legislators retirement plan, established by chapter
3A;

(2) the general state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(3) the correctional state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(4) the State Patrol retirement plan, established by
chapter 352B;

(5) the elective state officers retirement plan,
established by chapter 352C;

(6) the unclassified state employees retirement program,
established by chapter 352D;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established by chapter 353;

(8) the public employees police and fire plan of the Public
Employees Retirement Association, established by chapter 353;

(9) the public employees defined contribution plan,
established by chapter 353D;

(10) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
by chapter 353E;

(11) the Teachers Retirement Association, established by
chapter 354;

(12) the Duluth Teachers Retirement Fund Association,
established by chapter 354A;

(13) the Minneapolis Teachers Retirement Fund Association,
established by chapter 354A;

(14) the St. Paul Teachers Retirement Fund Association,
established by chapter 354A;

(15) the individual retirement account plan, established by
chapter 354B;

(16) the higher education supplemental retirement plan,
established by chapter 354C;

(17) the Minneapolis employees retirement fund, established
by chapter 422A;

(18) the Minneapolis Police Relief Association, established
by chapter 423B;

(19) the Minneapolis Firefighters Relief Association,
established by chapter 423C; and

(20) the judges' retirement fund, established by sections
490.121 to 490.132.

Sec. 65.

Minnesota Statutes 2004, section 356.551, is
amended to read:

356.551 POST JULY 1, 2003 2004, PRIOR SERVICE CREDIT
PURCHASE PAYMENT AMOUNT DETERMINATION PROCEDURE.

Subdivision 1.

Application.

(a) Unless the prior service
credit purchase authorization special law or general statute
provision explicitly specifies a different purchase payment
amount determination procedure, and if section 356.55 has
expired,this section governs the determination of the prior
service credit purchase payment amount of any prior service
credit purchase.

(b) The purchase payment amount determination procedure
must recognize any service credit accrued to the purchaser in a
pension plan enumerated in section 356.30, subdivision 3.

(c) Any service credit in a Minnesota defined benefit
public employee pension plan available to be reinstated by the
purchaser through the repayment of a refund of member or
employee contributions previously received must be repaid in
full before any purchase of prior service credit payment is made
under this section.

Subd. 2.

Determination.

(a) Unless the minimum purchase
amount set forth in paragraph (c) applies,the prior service
credit purchase amount is an amount equal to the actuarial
present value, on the date of payment, as calculated by the
chief administrative officer of the pension plan and reviewed by
the actuary retained by the Legislative Commission on Pensions
and Retirement under section 356.214, of the amount of the
additional retirement annuity obtained by the acquisition of the
additional service credit in this section.

(b) Calculation of this amount must be made using the
preretirement interest rate applicable to the public pension
plan specified in section 356.215, subdivision 4d 8, and the
mortality table adopted for the public pension plan. The
calculation must assume continuous future service in the public
pension plan until, and retirement at, the age at which the
minimum requirements of the fund for normal retirement or
retirement with an annuity unreduced for retirement at an early
age, including section 356.30, are met with the additional
service credit purchased. The calculation must also assume a
full-time equivalent salary, or actual salary, whichever is
greater, and a future salary history that includes annual salary
increases at the applicable salary increase rate for the plan
specified in section 356.215, subdivision 4d.

(c) The prior service credit purchase amount may not be
less than the amount determined by applying the current employee
or member contribution rate, the employer contribution rate, and
the additional employer contribution rate, if any, to the
person's current annual salary and multiplying that result by
the number of whole and fraction years of service to be
purchased.

(d) Payment must be made in one lump sum within one year of
the prior service credit authorization. Payment of the amount
calculated under this section must be made by the applicable
eligible person.

(e) However, the current employer or the prior employer
may, at its discretion, pay all or any portion of the payment
amount that exceeds an amount equal to the employee contribution
rates in effect during the period or periods of prior service
applied to the actual salary rates in effect during the period
or periods of prior service, plus interest at the rate of 8.5
percent a year compounded annually from the date on which the
contributions would otherwise have been made to the date on
which the payment is made. If the employer agrees to payments
under this subdivision, the purchaser must make the employee
payments required under this subdivision within 290 90 days of
the prior service credit authorization. If that employee
payment is made, the employer payment under this subdivision
must be remitted to the chief administrative officer of the
public pension plan within 60 days of receipt by the chief
administrative officer of the employee payments specified under
this subdivision.

Subd. 3.

Documentation.

The prospective prior service
credit purchaser must provide any relevant documentation
required by the chief administrative officer of the applicable
public pension plan to determine eligibility for the prior
service credit under this section.

Subd. 4.

Payment precondition for credit grant.

Service
credit for the purchase period must be granted by the public
pension plan to the purchaser upon receipt of the full purchase
payment amount specified in subdivision 2.

Sec. 66.

Minnesota Statutes 2004, section 356A.06,
subdivision 7, is amended to read:

Subd. 7.

Expanded list of authorized investment
securities.

(a) [AUTHORITY.] Except to the extent otherwise
authorized by law or bylaws, a covered pension plan not
described by subdivision 6, paragraph (a), may invest its assets
only in accordance with this subdivision.

(b) [SECURITIES GENERALLY.] The covered pension plan has
the authority to purchase, sell, lend, or exchange the
securities specified in paragraphs (c) to (g), including puts
and call options and future contracts traded on a contract
market regulated by a governmental agency or by a financial
institution regulated by a governmental agency. These
securities may be owned as units in commingled trusts that own
the securities described in paragraphs (c) to (g).

(c) [GOVERNMENT OBLIGATIONS.] The covered pension plan may
invest funds in governmental bonds, notes, bills, mortgages, and
other evidences of indebtedness provided the issue is backed by
the full faith and credit of the issuer or the issue is rated
among the top four quality rating categories by a nationally
recognized rating agency. The obligations in which funds may be
invested under this paragraph include guaranteed or insured
issues of (1) the United States, its agencies, its
instrumentalities, or organizations created and regulated by an
act of Congress; (2) Canada and its provinces, provided the
principal and interest is payable in United States dollars; (3)
the states and their municipalities, political subdivisions,
agencies, or instrumentalities; (4) the International Bank for
Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank, the African Development Bank,
or any other United States government sponsored organization of
which the United States is a member, provided the principal and
interest is payable in United States dollars.

(d) [CORPORATE OBLIGATIONS.] The covered pension plan may
invest funds in bonds, notes, debentures, transportation
equipment obligations, or any other longer term evidences of
indebtedness issued or guaranteed by a corporation organized
under the laws of the United States or any state thereof, or the
Dominion of Canada or any province thereof if they conform to
the following provisions:

(1) the principal and interest of obligations of
corporations incorporated or organized under the laws of the
Dominion of Canada or any province thereof must be payable in
United States dollars; and

(2) obligations must be rated among the top four quality
categories by a nationally recognized rating agency.

(e) [OTHER OBLIGATIONS.] (1) The covered pension plan may
invest funds in bankers acceptances, certificates of deposit,
deposit notes, commercial paper, mortgage participation
certificates and pools, asset backed securities, repurchase
agreements and reverse repurchase agreements, guaranteed
investment contracts, savings accounts, and guaranty fund
certificates, surplus notes, or debentures of domestic mutual
insurance companies if they conform to the following provisions:

(i) bankers acceptances and deposit notes of United States
banks are limited to those issued by banks rated in the highest
four quality categories by a nationally recognized rating
agency;

(ii) certificates of deposit are limited to those issued by
(A) United States banks and savings institutions that are rated
in the highest four quality categories by a nationally
recognized rating agency or whose certificates of deposit are
fully insured by federal agencies; or (B) credit unions in
amounts up to the limit of insurance coverage provided by the
National Credit Union Administration;

(iii) commercial paper is limited to those issued by United
States corporations or their Canadian subsidiaries and rated in
the highest two quality categories by a nationally recognized
rating agency;

(iv) mortgage participation or pass through certificates
evidencing interests in pools of first mortgages or trust deeds
on improved real estate located in the United States where the
loan to value ratio for each loan as calculated in accordance
with section 61A.28, subdivision 3, does not exceed 80 percent
for fully amortizable residential properties and in all other
respects meets the requirements of section 61A.28, subdivision
3;

(v) collateral for repurchase agreements and reverse
repurchase agreements is limited to letters of credit and
securities authorized in this section;

(vi) guaranteed investment contracts are limited to those
issued by insurance companies or banks rated in the top four
quality categories by a nationally recognized rating agency or
to alternative guaranteed investment contracts where the
underlying assets comply with the requirements of this
subdivision;

(vii) savings accounts are limited to those fully insured
by federal agencies; and

(viii) asset backed securities must be rated in the top
four quality categories by a nationally recognized rating agency.

(2) Sections 16A.58, 16C.03, subdivision 4, and 16C.05 do
not apply to certificates of deposit and collateralization
agreements executed by the covered pension plan under clause
(1), item (ii).

(3) In addition to investments authorized by clause (1),
item (iv), the covered pension plan may purchase from the
Minnesota Housing Finance Agency all or any part of a pool of
residential mortgages, not in default, that has previously been
financed by the issuance of bonds or notes of the agency. The
covered pension plan may also enter into a commitment with the
agency, at the time of any issue of bonds or notes, to purchase
at a specified future date, not exceeding 12 years from the date
of the issue, the amount of mortgage loans then outstanding and
not in default that have been made or purchased from the
proceeds of the bonds or notes. The covered pension plan may
charge reasonable fees for any such commitment and may agree to
purchase the mortgage loans at a price sufficient to produce a
yield to the covered pension plan comparable, in its judgment,
to the yield available on similar mortgage loans at the date of
the bonds or notes. The covered pension plan may also enter
into agreements with the agency for the investment of any
portion of the funds of the agency. The agreement must cover
the period of the investment, withdrawal privileges, and any
guaranteed rate of return.

(f) [CORPORATE STOCKS.] The covered pension plan may
invest funds in stocks or convertible issues of any corporation
organized under the laws of the United States or the states
thereof, the Dominion of Canada or its provinces, or any
corporation listed on the New York Stock Exchange or the
American Stock Exchange, if they conform to the following
provisions:

(1) the aggregate value of corporate stock investments, as
adjusted for realized profits and losses, must not exceed 85
percent of the market or book value, whichever is less, of a
fund, less the aggregate value of investments according to
subdivision 6 paragraph (g);

(2) investments must not exceed five percent of the total
outstanding shares of any one corporation.

(g) [OTHER INVESTMENTS.] (1) In addition to the
investments authorized in paragraphs (b) to (f), and subject to
the provisions in clause (2), the covered pension plan may
invest funds in:

(i) venture capital investment businesses through
participation in limited partnerships and corporations;

(ii) real estate ownership interests or loans secured by
mortgages or deeds of trust through investment in limited
partnerships, bank sponsored collective funds, trusts, and
insurance company commingled accounts, including separate
accounts;

(iii) regional and mutual funds through bank sponsored
collective funds and open-end investment companies registered
under the Federal Investment Company Act of 1940;

(iv) resource investments through limited partnerships,
private placements, and corporations; and

(v) international securities.

(2) The investments authorized in clause (1) must conform
to the following provisions:

(i) the aggregate value of all investments made according
to clause (1) may not exceed 35 percent of the market value of
the fund for which the covered pension plan is investing;

(ii) there must be at least four unrelated owners of the
investment other than the state board covered pension plan for
investments made under clause (1), item (i), (ii), (iii), or
(iv);

(iii) covered pension plan participation in an investment
vehicle is limited to 20 percent thereof for investments made
under clause (1), item (i), (ii), (iii), or (iv); and

(iv) covered pension plan participation in a limited
partnership does not include a general partnership interest or
other interest involving general liability. The covered pension
plan may not engage in any activity as a limited partner which
creates general liability.

Sec. 67.

Minnesota Statutes 2004, section 422A.01,
subdivision 11, is amended to read:

Subd. 11.

Employee.

"Employee" means any a person who is
not exempted from the contributing class pursuant to under
section 422A.09, subdivision 3, who is was employed before July
1, 1979,by and paid, in whole or in part, by the city or any of
its boards, departments, or commissions, operated as a
department of city government or independently if financed in
whole or in part by city funds, including any a person who was
employed by a public corporation as herein defined, and
including any a person who was employed before July 1, 1979,by
Special School District No. 1, and who is not a member of any
other retirement system, and also including any a person who
is was employed before July 1, 1973,by the county of Hennepin,
who was entitled by law to elect and has elected to retain
membership in the municipal Minneapolis Employees Retirement
Fund and who makes any required member contributions to the fund
and who remains so employed.

Sec. 68.

Minnesota Statutes 2004, section 422A.06,
subdivision 7, is amended to read:

Subd. 7.

Disability benefit fund.

(a) The required
reserves for disability allowances which become effective after
December 31, 1973, shall be transferred from the deposit
accumulation fund to the A disability benefit fund is
established, containing the required reserves for disability
allowances under this chapter. A proportionate share of income
from investments shall must be allocated to this fund.
There shall must be paid from this fund the disability
allowances which become effective after December 31, 1973
payable under this chapter.

(b) In the event of the termination of any disability
allowance for any reason other than the death of the recipient,
the balance of the required reserves for the disability
allowance as of the date of the termination shall must be
transferred from the disability benefit fund to the deposit
accumulation fund.

(c) At the end of each fiscal year, as part of the annual
actuarial valuation, a determination shall must be made of the
required reserves for all disability allowances being paid from
the disability benefit fund. Any excess of assets over
actuarial required reserves in the disability benefit fund shall
must be transferred to the deposit accumulation fund. Any
excess of actuarial reserves over assets in the disability
benefit fund shall must be funded by a transfer of the
appropriate amount of assets from the deposit accumulation fund.

Sec. 69.

Minnesota Statutes 2004, section 422A.10,
subdivision 1, is amended to read:

Subdivision 1.

member contribution rate ; deductions.

(a)
There shall must be deducted and withheld from the basic salary,
pay or compensation of each employee in the contributing class,
prior to January 1, 1980 an amount equal to 7-1/4 percent, after
December 31, 1979 but prior to January 1, 1981 an amount equal
to 8-1/4 percent and after December 31, 1980 an amount equal to
9-1/4 percent of such salary, pay or compensation, except as
hereinafter provided.

(b) The retirement board may increase the percentage rate
of contribution to the retirement fund of any employee or
employees for the purpose of establishing and maintaining on an
actuarial basis a plan of insurance, survivors' benefits, or
other type of benefit or benefits, the cost of which shall must
be paid out of such extra percentage so authorized and deducted
from the employee's compensation, except as hereinafter
provided. Any plan or plans so established and placed in
operation may be amended from time to time, or may be abandoned,
but if abandoned, any surplus remaining from the operation of a
plan shall must be the property of the fund, and shall must be
credited to the reserve for loss in investment account.

Sec. 70.

Minnesota Statutes 2004, section 422A.10,
subdivision 2, is amended to read:

Subd. 2.

consent to deductions mandatory member
contributions.

Every employee to whom sections 422A.01 to
422A.25 this chapter applies who shall continue in the service
after the passage of Laws 1919, chapter 522, as well as every
person to whom sections 422A.01 to 422A.25 applies who may
hereafter be appointed to a position or place, shall be is
deemed to consent and agree to the deductions made and provided
for herein, and payment with such reductions, for service, shall
be are a full and complete discharge and acquittance of all
claims and demands for all services rendered by such person
during the period covered by such payment; except the person's
claim to the benefits to which the person may be entitled under
the provisions of sections 422A.01 to 422A.25 this chapter.

Sec. 71.

Minnesota Statutes 2004, section 422A.22,
subdivision 1, is amended to read:

Subdivision 1.

Retention; transfer.

(a) If an employee
to whom sections 422A.01 to 422A.25 this chapter applies becomes
absolutely separated from the active service prior to before
attaining the minimum retirement age established in section
422A.13, the employee is entitled to a refund of the net
accumulated amount of deduction from salary, pay, or
compensation, made for the purpose of accumulating a fund from
which to pay retirement allowances, shall be returned to such
employee,with interest at the annual compound rate of six
percent.

(b) Any contributing employee who separates from a
department, board or commission of the city whose employees are
covered by a fund organized under sections 422A.01 to 422A.25
this chapter, and becomes an employee of a department or board
of the same city, whose employees are covered by a retirement
fund or relief association by whatever name known, organized
under any other law and supported in whole or in part by taxes
on the same city, shall have has the option of:

(1) retaining their membership in the fund organized under
sections 422A.01 to 422A.25 this chapter, regardless of the
provisions of any law, rule, bylaw or other action requiring
membership in any other retirement fund or relief association
however organized.; or

(2) transferring to the fund or association covering the
employees of the department or board to which they are
transferring, providing they are eligible for membership therein.

(c) Any contributing employee who elects to transfer to
another fund or association as herein provided in paragraph (b),
clause (2), shall must make such election within one year from
the date of separation from the city service covered by this
fund. If the contributing employee elects to transfer to
another fund as herein provided, the employee is entitled to a
refund of the net accumulated contributions made by such
employee to the fund organized under sections 422A.01 to
422A.25, shall be returned to the employee this chapter with
interest at the annual compound rate of six percent.

Sec. 72.

Minnesota Statutes 2004, section 422A.22,
subdivision 3, is amended to read:

Subd. 3.

Limitation on eligibility.

No employee of the
city shall be is eligible to be a member of,or receive benefits
from,more than one retirement plan or fund of the city for the
same period of service.

Sec. 73.

Minnesota Statutes 2004, section 422A.22,
subdivision 4, is amended to read:

Subd. 4.

Death-while-active refund.

(a) Upon the death
of an active member prior to before the employee's termination
of active service, there shall be paid to the beneficiary or
beneficiaries designated by the member on a form specified by
the executive director and filed with the retirement board,are
entitled to receive the net accumulated employee deductions from
salary, pay, or compensation, including interest under
subdivision 1, paragraph (a),compounded annually to the date of
the member's death. The amount must not include any
contributions made by the employee or on the employee's behalf,
or any interest or investment earnings on those contributions,
which were allocated to the survivor benefit fund under section
422A.06, subdivision 6.

(b) If the employee fails to make a designation, or if the
beneficiary or beneficiaries designated by the employee
predeceases the employee, the benefit specified in paragraph (a)
must be paid to the deceased employee's estate is entitled to
the benefit specified in paragraph (a).

(c) A benefit payable under this subdivision is in addition
to any applicable survivor benefit under section 422A.23.

Sec. 74.

Minnesota Statutes 2004, section 422A.22,
subdivision 6, is amended to read:

Subd. 6.

Refund; municipal employees retirement fund.

Any A person who has received a refund from the municipal
Minneapolis Employees Retirement Fund, and who is a member of a
public retirement system included in section 422A.16,
subdivision 8, may repay such refund with interest at a compound
annual rate of 8.5 percent to the municipal Minneapolis
Employees Retirement Fund. If a refund is repaid to the fund
and if more than one refund has been received from the fund, all
refunds must be repaid. Repayment shall must be made as
provided in sections 422A.01 to 422A.25 this chapter.

Sec. 75.

Minnesota Statutes 2004, section 422A.231, is
amended to read:

422A.231 COST ALLOCATION.

(a) Notwithstanding any law to the contrary, all current
and future contribution requirements due to this article are
payable by the participating contributing employing units other
than the state of Minnesota.

(b) In each actuarial valuation of the retirement fund, the
actuary retained by the Legislative Commission on Pensions and
Retirement under section 356.214 shall include an exhibit on the
impact of the benefit increases contained in this article on the
survivor benefit fund. The actuary shall calculate the expected
change in the present value of the future benefits payable from
the survivor benefit fund attributable to this article, using
the actuarial method and assumptions applicable to the
Minneapolis Employees Retirement Fund, from the prior actuarial
valuation and shall compare that result with the actual change
in the present value of future benefits payable from the
survivor benefit fund attributable to this article from the
prior actuarial valuation.

(c) The executive director shall assess each participating
employer, other than the state of Minnesota, its proportional
share of the net increase amount calculated under paragraph
(b). The assessment must be made on the first business day of
the following February, plus compound interest at an annual rate
of six percent on the amount from the actuarial valuation date
to the date of payment.

Sec. 76.

Minnesota Statutes 2004, section 422A.24, is
amended to read:

422A.24 ALLOWANCES NOT ASSIGNABLE OR SUBJECT TO PROCESS.

No money payable pursuant to this chapter shall be
assignable either in law or equity or be subject to execution,
levy, attachment, garnishment, or other legal process, except as
provided in section 518.58, 518.581, or 518.6111, nor shall any
of the proceeds of payments due pursuant to this chapter be
subject to the inheritance tax provisions of this state upon
transfer to a surviving spouse or minor or dependent child of
the decedent or a trust for their benefit. The provisions of
section 356.401 apply to the Minneapolis employees retirement
plan.

Sec. 77.

Minnesota Statutes 2004, section 423B.17, is
amended to read:

423B.17 PAYMENTS EXEMPT FROM PROCESS.

A payment made by the association under a provision of
sections 423B.01 to 423B.18, as amended, is exempt from legal
process except as provided in section 518.58, 518.581, or
518.6111. No person entitled to a payment may assign the same.
The association may not recognize an assignment or pay a sum on
account of an assignment. The provisions of section 356.401
apply to the Minneapolis Police Relief Association.

Sec. 78.

Minnesota Statutes 2004, section 423C.09, is
amended to read:

423C.09 PAYMENTS EXEMPT FROM PROCESS.

All payments made, or to be made, by the association under
this chapter shall be totally exempt from garnishment,
execution, or other legal process, except as provided in section
518.58, 518.581, or 518.6111. No person entitled to a payment
shall have the right to assign the name, nor shall the
association have authority to recognize any assignment or to pay
any sum on account thereof. Any attempt to transfer any right
or claim, or any part thereof, shall be void. The provisions of
section 356.401 apply to the Minneapolis Firefighters Relief
Association.

Sec. 79.

Minnesota Statutes 2004, section 490.126,
subdivision 5, is amended to read:

Subd. 5.

Exemption from process; no assignment.

None of
the money, annuities, or other benefits provided in this chapter
is assignable either in law or equity or is subject to
execution, levy, attachment, garnishment, or other legal
process, except as provided in section 518.58, 518.581, or
518.6111. The provisions of section 356.401 apply to the judges
retirement plan.

Sec. 80. REVISOR'S INSTRUCTION.

In the next edition and subsequent editions of Minnesota
Statutes, the revisor of statutes shall replace the reference to
"sections 422A.01 to 422A.25" with the reference to "this
chapter" wherever the reference appears in Minnesota Statutes,
chapter 422A.

Sec. 81. REPEALER.

(a) Minnesota Statutes 2004, section 352.119, subdivision
1, is repealed.

(b) Minnesota Statutes 2004, sections 353.34, subdivision
3b; 353.36, subdivisions 2, 2a, 2b, and 2c; 353.46, subdivision
4; 353.663; 353.74; and 353.75, are repealed.

(c) Minnesota Statutes 2004, section 354.59, is repealed.

(d) Minnesota Statutes 2004, sections 422A.22, subdivisions
2 and 5; and 422A.221, are repealed.

(e) Minnesota Statutes 2004, sections 352.15, subdivision
1a; 353.15, subdivision 2; and 354.10, subdivision 2, are
repealed.

Sec. 82. EFFECTIVE DATE.

(a) Sections 1 to 73 and 75 to 81 are effective July 1,
2005.

(b) Section 74 is effective January 1, 2006.

(c) Sections 1, 21, 22, 23, 29, 45, 46, 53, 64, 76, 77, 78,
79, and 81, paragraph (e), do not apply to any cause of action
that is proceeding on the date of enactment or to any cause of
action for which the applicable statute of limitations has not
expired as of the date of enactment.

ARTICLE 13

LOCAL RETIREMENT PLANS

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, the Fairmont Police Relief Association, the
Minneapolis Firefighters Relief Association, and the Virginia
Fire Department Relief Association, by the date determined under
section 356.216, paragraph (a), clause (2), for the Bloomington
Fire Department Relief Association, and by December 31, 2020,
for the Minneapolis Police Relief Association,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
Bloomington Fire Department
Relief Association 6.0 6.0
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

Bloomington Fire Department Relief

Association 4.0

(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, except that if the actuarial
report for the Bloomington Fire Department Relief Association
indicates an unfunded actuarial accrued liability, the unfunded
obligation is to be amortized on a level dollar basis by
December 31 of the year occurring 20 years later, and if
subsequent actuarial valuations for the Bloomington Fire
Department Relief Association determine a net actuarial
experience loss incurred during the year which ended as of the
day before the most recent actuarial valuation date, any
unfunded liability due to that loss is to be amortized on a
level dollar basis by December 31 of the year occurring 20 years
later and except that the amortization date for the Minneapolis
Police Relief Association is December 31, 2020;

(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.

Sec. 4.

Minnesota Statutes 2004, section 383B.46,
subdivision 2, is amended to read:

Subd. 2.

Establishment of account; contributions.

The
county of Hennepin shall deduct from the salary of every person
who is eligible for coverage and who elected to retain or obtain
coverage by the Hennepin County supplemental retirement program
a sum equal to one percent of the total salary of the person.
Any classified or unclassified employee who is employed in
subsidized on-the-job training, work experience or public
service employment as an enrollee under the federal
Comprehensive Employment and Training Act shall not be included
in the supplemental retirement account from and after March 30,
1978 unless the employee has as of the later of March 30, 1978
or the date of employment sufficient service credit in the
public employees retirement fund or the Minneapolis municipal
employees retirement fund, whichever is applicable, to meet the
minimum vesting requirements for a deferred retirement annuity,
or the county agrees in writing to make the required employer
contributions on account of the individual from revenue sources
other than funds provided under the federal Comprehensive
Employment and Training Act, or the employee agrees in writing
to make the required employer contribution in addition to the
employee contribution. The deduction shall be made in the same
manner as other retirement deductions are made from the salary
of the person. An amount equal to the amounts deducted during
each payroll period shall be contributed by the county of
Hennepin. The total amount deducted and contributed shall be
deposited to the credit of the supplemental retirement account
in the treasury of the county of Hennepin a separate account
administered by the Minnesota State Retirement System on behalf
of Hennepin County. The Hennepin County supplemental retirement
account is hereby established as an account separate and
distinct from other funds, accounts, or assets of the county of
Hennepin.

Sec. 5.

Minnesota Statutes 2004, section 383B.47, is
amended to read:

383B.47 PARTICIPATION IN MINNESOTA SUPPLEMENTAL INVESTMENT
FUND.

With the moneys deposited to the credit of the supplemental
retirement account in the treasury of the county of Hennepin,
the county of Hennepin , the Minnesota State Retirement System
shall purchase shares on behalf of Hennepin County in the
accounts of the Minnesota supplemental investment fund as
provided in section 383B.48.

Sec. 6.

Minnesota Statutes 2004, section 383B.48, is
amended to read:

383B.48 BUYING STATE SUPPLEMENTAL INVESTMENT FUND SHARES.

At the time a person becomes eligible for coverage and
elects to obtain coverage by the Hennepin County supplemental
retirement program and before November 1 of each subsequent
year,A participant in the Hennepin County supplemental
retirement program shall indicate in writing on a form provided
by the county of Hennepin the account of the Minnesota
supplemental investment fund in which the participant wishes
salary deductions and county matching contributions attributable
to salary deductions to be invested for the subsequent 12-month
period such time as allowed by the Minnesota State Retirement
System. For that 12-month period,The county of Hennepin
Minnesota State Retirement System shall purchase with the salary
deductions and county matching funds attributable to the salary
deductions shares in the appropriate account of the Minnesota
supplemental investment fund in accordance with the indicated
preferences of the participant. However, the county of Hennepin
has the authority to determine which accounts of the Minnesota
supplemental investment fund will be available for participant
investment. The shares purchased must stand in the name of the
county of Hennepin. A record must be kept by the county of
Hennepin Minnesota State Retirement System indicating the number
of shares in each account of the Minnesota supplemental
investment fund purchased with the salary deductions and county
matching funds attributable to the salary deductions of each
participant. The record must be known as the "participant's
share account record." The participant's share account record
must show, in addition to the number of shares in the account,
any cash balance of salary deductions or county matching funds
attributable to those deductions which stand uninvested in
shares. At the option of the county of Hennepin, and subject to
any terms and conditions established and communicated in writing
by the county to a participant, the participant may designate no
more often than once each calendar quarter month that prior
salary deductions and county matching contributions attributable
to the salary deductions, together with any interest earned, be
reinvested in another account of the Minnesota supplemental
investment fund made available by the county of Hennepin.

Sec. 7.

Minnesota Statutes 2004, section 383B.49, is
amended to read:

383B.49 SUPPLEMENTAL RETIREMENT BENEFITS; REDEMPTION OF
SHARES.

When requested to do so, in writing, on forms provided by
the county Minnesota State Retirement System, by a participant,
surviving spouse, a guardian of a surviving child or a personal
representative, whichever is applicable, the county of Hennepin
Minnesota State Retirement System shall on behalf of Hennepin
County redeem shares in the accounts of the Minnesota
supplemental investment fund standing in a participant's share
account record under the following circumstances and in
accordance with the laws and regulations governing the Minnesota
supplemental investment fund:

(1) A participant who is no longer employed by the county
of Hennepin is entitled to receive the cash realized on the
redemption of the shares to the credit of the participant's
share account record of the person. The participant may request
the redemption of all or a portion of the shares in the
participant's share account record of the person, but may not
request more than one redemption in any one calendar year. If
only a portion of the shares in the participant's share account
record is requested to be redeemed the person may request to
redeem not less than 20 percent of the shares in any one
calendar year and the redemption must be completed in no more
than five years. The person may select annual redemption in a
single lump sum or in monthly payments.An election is
irrevocable except that a participant may request an amendment
of the election to redeem all of the person's remaining shares.
All requests under this paragraph are subject to application to
and approval of the Hennepin County administrator, in the sole
discretion of the administrator Minnesota State Retirement
System upon verification by Hennepin County through the county
administrator of the recipient's eligibility to redeem funds.

(2) In the event of the death of a participant leaving a
surviving spouse, the surviving spouse is entitled to receive
the cash realized on the redemption of all or a portion of the
shares in the participant's share account record of the deceased
spouse, but in no event may the spouse request more than one
redemption in each calendar year. If only a portion of the
shares in the participant's share account record is requested to
be redeemed, the surviving spouse may request the redemption of
not less than 20 percent of the shares in any one calendar year.
The surviving spouse may elect annual redemption in a single
lump sum payment or in monthly payments.Redemption must be
completed in no more than five years. An election is
irrevocable except that the surviving spouse may request an
amendment of the election to redeem all of the participant's
remaining shares. All requests under this paragraph are subject
to application to and approval of the Hennepin County
administrator, in the sole discretion of the
administrator Minnesota State Retirement System upon
verification by Hennepin County through the county administrator
of the recipient's eligibility to redeem funds. Upon the death
of the surviving spouse, any shares remaining in the
participant's share account record must be redeemed on behalf of
Hennepin County by the county of Hennepin Minnesota State
Retirement System and the cash realized from the redemption
distributed to the estate of the surviving spouse.

(3) In the event of the death of a participant leaving no
surviving spouse, but leaving a minor surviving child or minor
surviving children, the guardianship estate of the minor child
is, or the guardianship estates of the minor children are,
entitled to receive the cash realized on the redemption of all
shares to the credit of the participant's share account record
of the deceased participant. In the event of minor surviving
children, the cash realized must be paid in equal shares to the
guardianship estates of the minor surviving children.

(4) In the event of the death of a participant leaving no
surviving spouse and no minor surviving children, the estate of
the deceased participant is entitled to receive the cash
realized on the redemption of all shares to the credit of the
participant's share account record of the deceased participant.

Sec. 8.

[383B.491] MINNESOTA STATE RETIREMENT SYSTEM
BILLING AUTHORITY.

The Minnesota State Retirement System executive director is
authorized to enter into an interagency agreement with Hennepin
County under which the Minnesota State Retirement System would
directly bill the county for the cost of the Minnesota State
Retirement System's administration of the Hennepin County
Supplemental Retirement Plan.

Sec. 9.

Minnesota Statutes 2004, section 423B.05,
subdivision 3, is amended to read:

Subd. 3.

Continuation of board.

Notwithstanding the
provisions of section 423A.01, subdivision 2, or any other law,
the board of trustees and its successors established under
subdivision 1 shall continue to govern the association until
there are no more than 100 350 members of the police pension
fund. The fund thereafter must become a trust fund in
accordance with section 423A.01, subdivision 2.

Sec. 10.

Minnesota Statutes 2004, section 423B.09,
subdivision 1, is amended to read:

Subdivision 1.

Minneapolis police; persons entitled to
receive pensions.

The association shall grant pensions payable
from the police pension fund in monthly installments to persons
entitled to pensions in the manner and for the following
purposes.

(a) When the actuarial value of assets of the fund
according to the most recent annual actuarial valuation
performed in accordance with sections 356.215 and 356.216 is
less than 90 percent of the actuarial accrued liabilities,An
active member or a deferred pensioner who has performed duty as
a member of the police department of the city for five years or
more, upon written application after retiring from duty and
reaching at least age 50, is entitled to be paid monthly for
life a service pension equal to eight units. For full years of
service beyond five years, the service pension increases by 1.6
units for each full year, to a maximum of 40 units. When the
actuarial value of assets of the fund according to the most
recent annual actuarial valuation prepared in accordance with
sections 356.215 and 356.216 is greater than 90 percent of
actuarial accrued liabilities,.Active members, deferred
members, and service pensioners are entitled to a service
pension according to the following schedule:

5 years 8.0 units
6 years 9.6 units
7 years 11.2 units
8 years 12.8 units
9 years 14.4 units
10 years 16.0 units
11 years 17.6 units
12 years 19.2 units
13 years 20.8 units
14 years 22.4 units
15 years 24.0 units
16 years 25.6 units
17 years 27.2 units
18 years 28.8 units
19 years 30.4 units

A B
20 years 34.0 34.5 units 35.0 units
21 years 35.6 36.1 units 36.6 units
22 years 37.2 37.7 units 38.2 units
23 years 38.8 39.3 units 39.8 units
24 years 40.4 40.9 units 41.4 units
25 years 42.0 42.5 units 43.0 units

Column A is applicable until December 31, 2005, and applies
retroactively to January 1, 2005, for a service pensioner who
retired before January 1, 2005. Column B applies on and after
January 1, 2006.

Fractional years of service may not be used in computing
pensions.

(b) An active member who after five years' service but less
than 20 years' service with the police department of the city,
becomes superannuated so as to be permanently unable to perform
the person's assigned duties, is entitled to be paid monthly for
life a superannuation pension equal to four units for five years
of service and an additional two units for each full year of
service over five years and less than 20 years.

(c) An active member who is not eligible for a service
pension and who, while a member of the police department of the
city, becomes diseased or sustains an injury while in the
service that permanently unfits the member for the performance
of police duties is entitled to be paid monthly for life a
pension equal to 34 units while so disabled.

Sec. 11.

Minnesota Statutes 2004, section 423B.09, is
amended by adding a subdivision to read:

Subd. 7.

Additional unit.

The additional half units
provided to members by subdivision 1 must also be provided under
the same terms and at the same time as applicable under
subdivision 1 to members who selected a joint annuity option
under subdivision 6 and must be in an amount that is actuarially
equivalent to the service pension and the automatic survivor
coverage for that additional unit.

Sec. 12.

Minnesota Statutes 2004, section 423B.10,
subdivision 1, is amended to read:

Subdivision 1.

Entitlement; benefit amount.

(a) The
surviving spouse of a deceased service pensioner, disability
pensioner, deferred pensioner, superannuation pensioner, or
active member, who was the legally married spouse of the
decedent, residing with the decedent, and who was married while
or before the time the decedent was on the payroll of the police
department, and who, if the deceased member was a service or
deferred pensioner, was legally married to the member for a
period of at least one year before retirement from the police
department, is entitled to a surviving spouse benefit. The
surviving spouse benefit is equal to 22 22.5 units per month
until December 31, 2005, and 23 units per month beginning on
January 1, 2006,if the person is the surviving spouse of a
deceased active member or disabilitant. The surviving spouse
benefit is equal to six units per month, plus an additional one
unit for each year of service to the credit of the decedent in
excess of five years, to a maximum of 22 22.5 units per month
until December 31, 2005, and 23 units per month beginning on
January 1, 2006, if the person is the surviving spouse of a
deceased service pensioner, deferred pensioner, or
superannuation pensioner. The surviving spouse benefit is
payable for the life of the surviving spouse.

(b) A surviving child of a deceased service pensioner,
disability pensioner, deferred pensioner, superannuation
pensioner, or active member, who was living while the decedent
was an active member of the police department or was born within
nine months after the decedent terminated active service in the
police department, is entitled to a surviving child benefit.
The surviving child benefit is equal to eight units per month if
the person is the surviving child of a deceased active member or
disabilitant. The surviving child benefit is equal to two units
per month, plus an additional four-tenths of one unit per month
for each year of service to the credit of the decedent in excess
of five years, to a maximum of eight units, if the person is the
surviving child of a deceased service pensioner, deferred
pensioner, or superannuation pensioner. The surviving child
benefit is payable until the person attains age 18, or, if in
full-time attendance during the normal school year, in a school
approved by the board of directors, until the person receives a
bachelor's degree or attains the age of 22 years, whichever
occurs first. In the event of the death of both parents leaving
a surviving child or children entitled to a surviving child
benefit as determined in this paragraph, the surviving child is,
or the surviving children are, entitled to a surviving child
benefit in such sums as determined by the board of directors to
be necessary for the care and education of such surviving child
or children, but not to exceed the family maximum benefit per
month, to the children of any one family.

(c) The surviving spouse and surviving child benefits are
subject to a family maximum benefit. The family maximum benefit
is 41 units per month.

(d) A surviving spouse who is otherwise not qualified may
receive a benefit if the surviving spouse was married to the
decedent for a period of five years and was residing with the
decedent at the time of death. The surviving spouse benefit is
the same as that provided in paragraph (a), except that if the
surviving spouse is younger than the decedent, the surviving
spouse benefit must be actuarially equivalent to a surviving
spouse benefit that would have been paid to the member's spouse
had the member been married to a person of the same age or a
greater age than the member's age before retirement.

(e) For any surviving spouse who began receiving survivor
benefits before January 1, 2005, the half-unit increase under
paragraph (a) is effective retroactive to January 1, 2005.

Sec. 13.

Minnesota Statutes 2004, section 423C.05,
subdivision 2, is amended to read:

Subd. 2.

Service pension.

(a) An active A member who has
performed duty for the fire department for five years or more,
upon written application after retiring from duty and reaching
at least age 50, is entitled to be paid monthly for life a
service pension under paragraph (b).

(b) Based on the percentage that the actuarial value of
assets of the special fund equal to the actuarial accrued
liabilities of the special fund according to the most recent
annual actuarial valuation of the relief association prepared in
accordance with sections 356.215 and 356.216,The amount of the
service pension is as follows:

Length of Service Service Service
allowable pension pension pension
service payable if payable payable if
credit under 90 if greater greater
percent than 89.99 than 92.49
percent and percent
less than Number of
92.5 percent units

5 years-8.0 units 8.0 units
6 years-9.6 units 9.6 units
7 years-11.2 units 11.2 units
8 years-12.8 units 12.8 units
9 years-14.4 units 14.4 units
10 years 16.0 units 16.0 units 16.0 units
11 years 17.6 units 17.6 units 17.6 units
12 years 19.2 units 19.2 units 19.2 units
13 years 20.8 units 20.8 units 20.8 units
14 years 22.4 units 22.4 units 22.4 units
15 years 24.0 units 24.0 units 24.0 units
16 years 25.6 units 25.6 units 25.6 units
17 years 27.2 units 27.2 units 27.2 units
18 years 28.8 units 28.8 units 28.8 units
19 years 30.4 units 30.4 units 30.4 units
20 years 33.0 units 33.5 units 34.0 units
21 years 34.6 units 35.1 units 35.6 units
22 years 36.2 units 37.7 units 37.2 units
23 years 37.8 units 38.3 units 38.8 units
24 years 39.4 units 39.9 units 40.4 units
25 years
or more 41.0 units 41.5 units 42.0 units

(c) A member entitled to a benefit under this subdivision
may elect to have it paid as an optional retirement annuity
pursuant to the conditions set forth in subdivision 8. A member
receiving a benefit pursuant to subdivision 5 or 6 shall not
simultaneously be entitled to a benefit under this subdivision.

Sec. 14.

[423C.16] RECOMPUTATION OF DISABLED BENEFIT
PROHIBITED.

Notwithstanding section 423A.11, the Board of Trustees of
the Minneapolis Firefighters Relief Association shall not
recompute the disability benefit of a member who became
permanently disabled as the result of a service-related disease
or injury. Any prior recomputation of a disabled member's
service-related disability pension shall be revoked upon the
member's request and upon the member's signed and sworn
agreement to waive any right to a recomputation of the benefit
in the future. Non-service-related disability pension benefits
that were recomputed at full 25-year service pensions shall
remain in effect.

Sec. 15. NO REDUCTION OF BENEFITS.

When a pension benefit is properly paid in accordance with
the laws governing the Minneapolis Police Relief Association or
the Minneapolis Firefighters Relief Association, whichever
apply, to any member, the dollar amount of the pension a member
received may not be reduced if the city of Minneapolis and the
collective bargaining agent representing active police officers
or firefighters enter into or are required to abide by an
agreement that would otherwise require the association to reduce
the dollar amount of a pension that had properly been paid to
any member.

Sec. 16. AURORA, BIWABIK CITY, HOYT LAKES, AND PALO
VOLUNTEER FIREFIGHTER RELIEF ASSOCIATIONS; CONSOLIDATION.

(a) This section applies to consolidation of any
combination of two or more of the following volunteer
firefighter relief associations: Aurora, Biwabik City, Hoyt
Lakes, and Palo.

(b) Notwithstanding Minnesota Statutes, section 424B.10,
subdivision 1, paragraph (a), the service pension to be paid by
the relief association existing after the consolidation is as
follows:

(1) for the service rendered by each individual volunteer
firefighter before the effective date of the consolidation, the
service pension amount is the amount payable to that volunteer
firefighter under the articles of incorporation or bylaws of the
consolidating volunteer firefighters relief association that the
firefighter was a member of immediately before the
consolidation;

(2) for the service rendered after the effective date of
the consolidation, the service pension amount is the highest
dollar amount service pension of any of the consolidating
volunteer firefighters relief associations under the articles of
incorporation or bylaws in effect immediately before the
consolidation; and

(3) after consolidation, increases in the amounts
established in clauses (1) and (2) may be implemented if
consistent with applicable requirements of Minnesota Statutes,
chapters 69 and 424A.

Sec. 17. EVELETH RETIRED POLICE AND FIRE TRUST FUND; AD
HOC POSTRETIREMENT ADJUSTMENT.

(a) In addition to the current pensions and other
retirement benefits payable, the pensions and retirement
benefits payable to retired police officers and firefighters and
their surviving spouses by the Eveleth police and fire trust
fund are increased by $100 per month. Increases are retroactive
from January 1, 2005.

(b) Following the January 1, 2005, effective date of the
benefit increase provided under paragraph (a), every two years
thereafter, to be effective no earlier than the applicable
January 1, the city council of the city of Eveleth is authorized
to provide permanent, uniform benefit increases, not less than
$10 per month nor to exceed $100 per month, to any remaining
retirees and survivors receiving benefits from the Eveleth
police and fire trust fund. Any given benefit improvement under
this paragraph is not effective unless the city council passes a
resolution approving the increase.

(c) Within 30 days following the approval of a resolution
under paragraph (b), the chief administrative officer of the
city of Eveleth shall file a copy of the resolution with the
executive director of the Legislative Commission on Pensions and
Retirement, with the chair of the house Governmental Operations
and Veterans Affairs Committee, and with the chair of the senate
State and Local Government Operations Committee. Along with a
copy of the resolution, the city's chief administrative officer
must send a statement indicating the age of each benefit
recipient and the retirement benefit or survivor benefit being
received before and after the benefit increase.

Sec. 18. MAPLEWOOD AND OAKDALE VOLUNTEER FIREFIGHTER
RELIEF ASSOCIATIONS; TRANSFER OF ASSETS.

Notwithstanding any limitations in Minnesota Statutes,
section 424A.02, subdivision 13, or any other provision of law
to the contrary, if an agreement between the affected relief
associations and cities is reached as provided in this section,
the Maplewood Firefighters Relief Association may transfer
assets from its special fund to the Oakdale Fire Department
Relief Association representing the value of the accumulated
service credit for the current members of the Oakdale Fire
Department Relief Association who are currently eligible to
receive a combined service pension for firefighter service in
both associations. The transfer of the assets from the
Maplewood Firefighters Relief Association to the Oakdale Fire
Department Relief Association must be in an amount representing
the cumulative value of the service credit earned by the members
of the Oakdale Fire Department Relief Association who are
currently eligible to receive a combined service pension for
firefighting service in both associations for the service credit
that they accrued while working for the Maplewood Fire
Department. The amount of the assets, liabilities, and service
credit to be transferred must be specified in a joint agreement
negotiated by the secretaries of the two relief associations and
ratified by the boards of trustees of both relief associations
and of the cities of Maplewood and Oakdale. The agreement must
specify by name or other appropriate means the firefighters
affected by the liability, asset, and service credit transfer.
The ratification must be expressed in the form of resolutions
adopted by each entity. The agreements must specify the amount
of assets to be transferred, the amount of liabilities to be
transferred, and the amount of service credit each of the
applicable individuals will receive in the Oakdale Fire
Department Relief Association. Upon the ratification of the
agreement by both relief associations and both cities, the
assets, liabilities, and service credit of the applicable
individuals must be transferred to the Oakdale Fire Department
Relief Association, and the Maplewood Firefighters Relief
Association is relieved of any obligation to the individuals. A
certified copy of the ratified agreement must be filed with the
state auditor and with the secretary of state.

Sec. 19. EFFECTIVE DATE; LOCAL APPROVAL.

(a) Sections 1 and 3 with respect to the Bloomington Fire
Department Relief Association and section 2 are effective the
day after the date on which the city council of the city of
Bloomington and its chief clerical officer timely complete their
compliance with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.

(b) Sections 1, 3, and 15, with respect to the Minneapolis
Police Relief Association, 9, 10, 11, and 12 are not severable
and are effective the day after the date on which the city
council of the city of Minneapolis and the chief clerical
officer of the city of Minneapolis timely complete their
compliance with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.

(c) Sections 4, 5, 6, 7, and 8 are effective on the day
after the board of Hennepin County and its chief clerical
officer complete in a timely manner their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.

(d) Sections 13, 14, and 15, with respect to the
Minneapolis Firefighters Relief Association, are effective on
the day after the governing body of the city of Minneapolis and
its chief clerical officer timely complete their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.

(e) Section 17 is effective the day after the date on which
the city council of the city of Eveleth and its chief clerical
officer timely complete their compliance with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.

(f) Section 16 is effective with respect to a volunteer
firefighters relief association listed in column A the day after
the governing body of the municipality listed in column B and
its chief clerical officer timely complete compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.

A B
Aurora city of Aurora
Biwabik city of Biwabik
Hoyt Lakes city of Hoyt Lakes
Palo town of White

(g) Section 18 is effective the day after the governing
body of the city of Maplewood, the governing body of the city of
Oakdale, the Maplewood chief clerical officer, and the Oakdale
chief clerical officer complete their compliance with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.

ARTICLE 14

MINNEAPOLIS EMPLOYEES RETIREMENT
FUND CHANGES

Section 1.

Minnesota Statutes 2004, section 43A.17,
subdivision 9, is amended to read:

Subd. 9.

Political subdivision compensation limit.

(a)
The salary and the value of all other forms of compensation of a
person employed by a political subdivision of this state,
excluding a school district, or employed under section 422A.03
may not exceed 95 percent of the salary of the governor as set
under section 15A.082, except as provided in this subdivision.
For purposes of this subdivision, "political subdivision of this
state" includes a statutory or home rule charter city, county,
town, metropolitan or regional agency, or other political
subdivision, but does not include a hospital, clinic, or health
maintenance organization owned by such a governmental unit or a
retirement plan governed by chapter 422A.

(b) Deferred compensation and payroll allocations to
purchase an individual annuity contract for an employee are
included in determining the employee's salary. Other forms of
compensation which shall be included to determine an employee's
total compensation are all other direct and indirect items of
compensation which are not specifically excluded by this
subdivision. Other forms of compensation which shall not be
included in a determination of an employee's total compensation
for the purposes of this subdivision are:

(1) employee benefits that are also provided for the
majority of all other full-time employees of the political
subdivision, vacation and sick leave allowances, health and
dental insurance, disability insurance, term life insurance, and
pension benefits or like benefits the cost of which is borne by
the employee or which is not subject to tax as income under the
Internal Revenue Code of 1986;

(2) dues paid to organizations that are of a civic,
professional, educational, or governmental nature; and

(3) reimbursement for actual expenses incurred by the
employee which the governing body determines to be directly
related to the performance of job responsibilities, including
any relocation expenses paid during the initial year of
employment.

The value of other forms of compensation shall be the
annual cost to the political subdivision for the provision of
the compensation.

(c) The salary of a medical doctor or doctor of osteopathy
occupying a position that the governing body of the political
subdivision has determined requires an M.D. or D.O. degree is
excluded from the limitation in this subdivision.

(d) The commissioner may increase the limitation in this
subdivision for a position that the commissioner has determined
requires special expertise necessitating a higher salary to
attract or retain a qualified person. The commissioner shall
review each proposed increase giving due consideration to salary
rates paid to other persons with similar responsibilities in the
state and nation. The commissioner may not increase the
limitation until the commissioner has presented the proposed
increase to the Legislative Coordinating Commission and received
the commission's recommendation on it. The recommendation is
advisory only. If the commission does not give its
recommendation on a proposed increase within 30 days from its
receipt of the proposal, the commission is deemed to have made
no recommendation.

Sec. 2.

Minnesota Statutes 2004, section 422A.05,
subdivision 2c, is amended to read:

Subd. 2c.

Minneapolis employees retirement fund
investment authority.

(a) For investments made on or after July
1, 1991, the board shall invest funds only in investments
authorized by section 356A.06, subdivision 7.

(b) However, in addition to real estate investments
authorized under paragraph (a), the board may also make loans to
purchasers of Minnesota situs nonfarm residential real estate
that is owned by the Minneapolis Employees Retirement Fund. The
loans must be secured by mortgages or deeds of trust.

(c) For investments made before July 1, 1991, the board
may, but is not required to, comply with paragraph (a).
However, with respect to these investments, the board shall act
in accordance with subdivision 2a and chapter 356A.

(d) The board may certify assets for investment by the
State Board of Investment under sections 11A.14 and 11A.17.

Sec. 3.

Minnesota Statutes 2004, section 422A.06,
subdivision 3, is amended to read:

Subd. 3.

Deposit accumulation fund.

(a) The deposit
accumulation fund consists of the assets held in the fund,
including amounts contributed by or for employees, amounts
contributed by the city, amounts contributed by municipal
activities supported in whole or in part by revenues other than
taxes and amounts contributed by any public corporation, amounts
paid by the state, and by income from investments.

(b) There must be paid from the fund the amounts required
to be transferred to the retirement benefit fund, or the
disability benefit fund, refunds of contributions, including the
death-while-active refund specified in section 422A.22,
subdivision 4, postretirement increases in retirement allowances
granted under Laws 1965, chapter 688, or Laws 1969, chapter 859,
and expenses of the administration of the retirement fund which
were not charged by the retirement board against the income of
the retirement benefit fund from investments as the cost of
handling the investments of the retirement benefit fund.

(c) To the extent that the deposit accumulation fund has
insufficient assets to transfer the total value of the required
reserves for retirement annuities to either the disability
benefit fund under subdivisions 5 and 7 or the retirement
benefit fund under subdivisions 5 and 8 as required, the deposit
accumulation fund has a transfer amount payable on which an
interest charge accrues. The executive director must determine
the interest charge for the period that transfer amount payable
remains unpaid at an annual rate equal to five percent plus the
percentage increase in the amount of the annual Consumer Price
Index for urban wage earners and clerical workers as calculated
by the Bureau of Labor Statistics of the United States
Department of Labor from the previous June 30. The interest
charge must be reflected in the books of the Minneapolis
Employees Retirement Fund and assessed against the deposit
accumulation fund based on the average quarterly transfer amount
payable balance outstanding. Any revenue received by the
deposit accumulation fund subsequent to unpaid transfers must be
transferred from the deposit accumulation fund to the disability
benefit fund or to the retirement fund, whichever applies, must
first be applied to any remaining interest charge and then must
be applied to the principal amount of transfer amount payable
outstanding.

Sec. 4.

Minnesota Statutes 2004, section 422A.06,
subdivision 5, is amended to read:

Subd. 5.

Transfer of reserves to retirement benefit fund;
adjustments of annuities and benefits.

(a) Assets equal to the
required reserves for retirement annuities as determined in
accordance with the appropriate mortality table adopted by the
board of trustees based on the experience of the fund as
recommended by the commission-retained actuary retained under
section 356.214 and using the postretirement interest assumption
specified in section 356.215, subdivision 8, shall must be
transferred to the disability benefit fund as provided in
subdivision 7, or the retirement benefit fund, except for any
amounts payable from the survivor benefit fund, as of date of
retirement.

(b) If a full transfer amount is not payable from the
deposit accumulation fund, the applicable fund must be credited
with an interest-bearing transfer amount receivable.

(b) (c) Annuity payments shall must be adjusted in
accordance with this chapter, except that no minimum retirement
payments described in this chapter shall must include any
amounts payable from the survivors' benefit fund or disability
benefit fund and supplemented benefits specifically financed by
statute.

(c) (d) Increases in annuity payments pursuant to under
this section shall be made automatically unless written notice
on a form prescribed by the board is filed with the retirement
board requesting that the increase not be made.

(d) (e) Any additional annuity which began to accrue on
July 1, 1973, or which began to accrue on January 1, 1974,
pursuant to Laws 1973, chapter 770, section 1, shall must be
considered as part of the base amount to be used in determining
any postretirement adjustments payable pursuant to under the
provisions of subdivision 8.

Sec. 5.

Minnesota Statutes 2004, section 422A.06,
subdivision 7, is amended to read:

Subd. 7.

Disability benefit fund.

(a) Unless subdivision
3, paragraph (c), applies,the required reserves for disability
allowances which become effective after December 31, 1973, shall
must be transferred from the deposit accumulation fund to the
disability benefit fund. A proportionate share of income from
investments shall must be allocated to this fund and any
interest charge under subdivision 3, paragraph (c), must be
credited to the fund. There shall be paid From this fund,the
disability allowances which become effective after December 31,
1973, must be paid.

(b) In the event of termination of any disability allowance
for any reason other than the death of the recipient, the
balance of the required reserves for the disability allowance as
of the date of termination shall must be transferred from the
disability benefit fund to the deposit accumulation fund.

(c) At the end of each fiscal year, as part of the annual
actuarial valuation, a determination shall must be made of the
required reserves for all disability allowances being paid from
the disability benefit fund. Any excess of assets over
actuarial required reserves in the disability benefit fund shall
must be transferred to the deposit accumulation fund. Unless
subdivision 3, paragraph (c), applies,any excess of actuarial
reserves over assets in the disability benefit fund shall must
be funded by a transfer of the appropriate amount of assets from
the deposit accumulation fund.

Sec. 6.

Minnesota Statutes 2004, section 422A.06,
subdivision 8, is amended to read:

Subd. 8.

Retirement benefit fund.

(a) The retirement
benefit fund shall consist consists of amounts held for payment
of retirement allowances for members retired pursuant to under
this chapter, including any transfer amount payable under
subdivision 3, paragraph (c).

(b) Unless subdivision 3, paragraph (c), applies,assets
equal to the required reserves for retirement
allowances pursuant to under this chapter determined in
accordance with the appropriate mortality table adopted by the
board of trustees based on the experience of the fund as
recommended by the commission-retained actuary shall retained
under section 356.214, must be transferred from the deposit
accumulation fund to the retirement benefit fund as of the last
business day of the month in which the retirement allowance
begins. The income from investments of these assets shall must
be allocated to this fund and any interest charge under
subdivision 3, paragraph (c), must be credited to the fund.
There shall must be paid from this fund the retirement annuities
authorized by law. A required reserve calculation for the
retirement benefit fund must be made by the actuary retained by
the Legislative Commission on Pensions and Retirement under
section 356.214 and must be certified to the retirement board by
the commission-retained actuary.

(c) The retirement benefit fund shall must be governed by
the applicable laws governing the accounting and audit
procedures, investment, actuarial requirements, calculation and
payment of postretirement benefit adjustments, discharge of any
deficiency in the assets of the fund when compared to the
actuarially determined required reserves, and other applicable
operations and procedures regarding the Minnesota postretirement
investment fund in effect on June 30, 1997, established under
Minnesota Statutes 1996, section 11A.18, and any legal or
administrative interpretations of those laws of the State Board
of Investment, the legal advisor to the Board of Investment and
the executive director of the State Board of Investment in
effect on June 30, 1997. If a deferred yield adjustment account
is established for the Minnesota postretirement investment fund
before June 30, 1997, under Minnesota Statutes 1996, section
11A.18, subdivision 5, the retirement board shall also establish
and maintain a deferred yield adjustment account within this
fund.

(d) Annually, following the calculation of any
postretirement adjustment payable from the retirement benefit
fund, the board of trustees shall submit a report to the
executive director of the Legislative Commission on Pensions and
Retirement and to the commissioner of finance indicating the
amount of any postretirement adjustment and the underlying
calculations on which that postretirement adjustment amount is
based, including the amount of dividends, the amount of
interest, and the amount of net realized capital gains or losses
utilized in the calculations.

(e) With respect to a former contributing member who began
receiving a retirement annuity or disability benefit under
section 422A.151, paragraph (a), clause (2), after June 30,
1997, or with respect to a survivor of a former contributing
member who began receiving a survivor benefit under section
422A.151, paragraph (a), clause (2), after June 30, 1997, the
reserves attributable to the one percent lower amount of the
cost-of-living adjustment payable to those annuity or benefit
recipients annually must be transferred back to the deposit
accumulation fund to the credit of the Metropolitan Airports
Commission. The calculation of this annual reduced
cost-of-living adjustment reserve transfer must be reviewed by
the actuary retained by the Legislative Commission on Pensions
and Retirement under section 356.214.

Sec. 7.

Minnesota Statutes 2004, section 422A.101,
subdivision 3, is amended to read:

Subd. 3.

State contributions.

(a) Subject to the
limitation set forth in paragraph (c), the state shall pay to
the Minneapolis Employees Retirement Fund annually an amount
equal to the amount calculated under paragraph (b).

(b) The payment amount is an amount equal to the financial
requirements of the Minneapolis Employees Retirement Fund
reported in the actuarial valuation of the fund prepared by the
commission-retained actuary pursuant to section 356.215 for the
most recent year but based on a target date for full
amortization of the unfunded actuarial accrued liabilities by
June 30, 2020, less the amount of employee contributions
required pursuant to section 422A.10, and the amount of employer
contributions required pursuant to subdivisions 1a, 2, and 2a.
Payments shall be made September 15 annually.

(c) The annual state contribution under this subdivision
may not exceed $9,000,000, plus the cost of the annual
supplemental benefit determined under section 356.43.

(d) If the amount determined under paragraph (b) exceeds
$11,910,000 $9,000,000, the excess must be allocated to and paid
to the fund by the employers identified in subdivisions 1a and
2, other than units of metropolitan government. Each employer's
share of the excess is proportionate to the employer's share of
the fund's unfunded actuarial accrued liability as disclosed in
the annual actuarial valuation prepared by the actuary
retained by the Legislative Commission on Pensions and
Retirement under section 356.214 compared to the total unfunded
actuarial accrued liability attributed to all employers
identified in subdivisions 1a and 2, other than units of
metropolitan government. Payments must be made in equal
installments as set forth in paragraph (b).

Sec. 8. REPEALER.

Minnesota Statutes 2004, section 422A.101, subdivision 4,
is repealed.

Sec. 9. EFFECTIVE DATE; LOCAL APPROVAL.

Sections 1 to 8 are effective on the day after the city
council of the city of Minneapolis and its chief clerical
officer timely complete their compliance with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.

ARTICLE 15

ONE PERSON AND SMALL GROUP
RETIREMENT CHANGES

Section 1. SURVIVOR BENEFIT FOR ST. LOUIS PARK POLICE
OFFICER KILLED IN IRAQ CONFLICT.

Subdivision 1.

Eligibility.

(a) Notwithstanding any
provision of Minnesota Statutes, section 353.657, subdivision 1,
regarding required length of marriage, an eligible person
described in paragraph (b) is authorized to apply for a
surviving spouse annuity from the public employees police and
fire retirement plan to be computed under Minnesota Statutes,
section 353.657, subdivision 2.

(b) An eligible person for purposes of paragraph (a) is the
surviving spouse of a deceased public employees police and fire
retirement plan member who:

(1) was born on October 29, 1979;

(2) was a member of the public employees police and fire
retirement plan commencing on January 24, 2004, due to
employment as a police officer by the city of St. Louis Park;
and

(3) died on February 21, 2005, while providing military
service in Iraq.

Subd. 2.

Application process.

An eligible person
described in subdivision 1 is authorized to apply for the
applicable surviving spouse annuity on a form or forms provided
by the executive director of the Public Employees Retirement
Association. The person must provide sufficient documentation
of eligibility to the executive director, as the executive
director may prescribe.

Subd. 3.

Refund repayment authorization.

An annuity
under this section is in lieu of any death refund to which an
eligible person would otherwise be entitled. If an eligible
person has received a death refund, that person is authorized to
repay that refund, under the terms specified in Minnesota
Statutes, section 353.35, notwithstanding any law to the
contrary.

Subd. 4.

Retroactive application.

If a valid benefit
application is made by an eligible person under this section,
the monthly annuity payments commence retroactive to February
21, 2005.

Sec. 2. PURCHASE OF PRIOR SERVICE CREDIT.

(a) An eligible person described in paragraph (b) is
entitled to purchase up to one year of allowable service credit
from the Teachers Retirement Association for the 2003-2004
school year. The service credit purchase under this section
must be made in accordance with Minnesota Statutes, section
356.551, except as otherwise stated in this section.

(b) An eligible person is a person who:

(1) is currently a member of the Teachers Retirement
Association;

(2) was born on April 2, 1949;

(3) has been employed by Independent School District No.
11, Anoka-Hennepin, since the 1971-1972 school year;

(4) applied for and was granted an extended leave of
absence from Independent School District No. 11, Anoka-Hennepin,
for the 2002-2003, 2003-2004, and 2004-2005 school years under
Minnesota Statutes, section 122A.46;

(5) was unable to make timely payment for the 2003-2004
school year under Minnesota Statutes, section 354.094, because
of a problem in transferring funds from the individual's
tax-sheltered annuity account; and

(6) was not permitted by the Teachers Retirement
Association to make payment after June 30, 2004, with interest.

(c) Notwithstanding Minnesota Statutes, section 356.551,
payment must be made by September 1, 2005, or prior to
termination of service, whichever is earlier, and the employee
payment amount is an amount equal to the employee contribution
rate in effect during the 2003-2004 school year applied to the
eligible individual's salary in the year prior to the leave,
plus .708 percent monthly interest from June 30, 2004, until the
end of the month in which payment is made. If the full payment
required under this paragraph is made, then notwithstanding
Minnesota Statutes, section 354.094, the individual is
authorized under Minnesota Statutes, section 354.094, to make
the required contribution for the 2004-2005 school year, and any
subsequent years of the leave. Notwithstanding payment
deadlines in Minnesota Statutes, section 354.094, the employee
contribution for the 2004-2005 school year must be made on or
before September 30, 2005, with .708 percent monthly interest
from June 30, 2005, until paid.

(d) If payment is received under paragraph (c), the
executive director of the Teachers Retirement Association shall
bill Independent School District No. 11, Anoka-Hennepin, for the
employer contribution that would have been made on behalf of the
eligible person for the 2003-2004 fiscal year under Minnesota
Statutes, section 354.094. The remainder of the full actuarial
value payment under Minnesota Statutes, section 356.551, is
waived. If the school district fails to make payment under this
paragraph within 30 days of notification of the amount due, the
executive director shall notify the commissioner of the
Department of Finance of that fact and the employer payment
amount must be deducted from any subsequent state aid to the
school district.

Sec. 3. EFFECTIVE DATE.

(a) For purposes of determining whether section 1 becomes
effective, the board of trustees of the Public Employees
Retirement Association must be considered to be comparable to
the city council of a local government unit.

(b) Section 1 is effective on the day after the board of
trustees of the Public Employees Retirement Association and its
executive director complete in a timely manner their compliance
with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

(c) Section 2 is effective on the day following final
enactment.

ARTICLE 16

TEACHER RETIREMENT FUND AND
BENEFIT RESTRUCTURING

Section 1.

[128D.18] FUNDING OF UNFUNDED PENSION
LIABILITIES.

Subdivision 1.

Financing authority.

Notwithstanding any
other law to the contrary, Special School District No. 1,
Minneapolis, may finance all or a portion of the current and
future unfunded actuarial accrued liability of the former
Minneapolis Teachers Retirement Fund Association through the
issuance of pension obligation bonds under this section.

Subd. 2.

Use of proceeds.

The proceeds of the bonds
issued, less costs, must be paid to the State Board of
Investment to be deposited as a payment toward the funding of
the unfunded actuarial accrued liability of the former
Minneapolis Teachers Retirement Fund Association owed by Special
School District No. 1, Minneapolis, and must be credited as an
asset of the Teachers Retirement Association.

Subd. 3.

Appropriations.

Notwithstanding any law to the
contrary, special direct state aid, matching aid, and other
contributions levied for the Teachers Retirement Association
under section 354A.12, subdivisions 3a and 3b, and amortization
or supplementary amortization state aid reallocated to the
Teachers Retirement Association under section 423A.02 are
pledged and appropriated to the payment of the bonds and must be
transferred to Special School District No. 1, Minneapolis, and
additional employer contributions levied by Special School
District No. 1, Minneapolis, under section 354A.12, subdivision
3b, shall be retained by the district to the extent required to
pay debt service on the bonds for the succeeding 12-month period
or a longer period established pursuant to the resolution of the
district authorizing the bonds.

Subd. 4.

No election.

No election of the voters of the
district shall be required to issue bonds authorized by this
section.

Subd. 5.

Terms and sale of bonds.

The bonds issued
pursuant to this section shall bear interest at the rate or
rates and mature on the date or dates not more than 30 years
from the date of issue as the district shall determine by
resolution. Interest may be at a fixed or variable rate. The
bonds may be sold and issued on terms and in a manner that
Special School District No. 1, Minneapolis, determines is in its
best interests and in the best interests of the state.

Subd. 6.

This section prevails.

Notwithstanding any
other law to the contrary, this section shall apply to the
issuance and sale of the bonds and to the purposes for which the
bonds may be issued.

Subd. 7.

State pledge against impairment of
contracts.

The state pledges and agrees with the holders of
bonds issued under this section that the state will not limit or
alter the rights vested in Special School District No. 1,
Minneapolis, to fulfill the terms of any agreements made with
the bondholders or in any way impair the rights and remedies of
the holders until the bonds, together with interest on them,
with interest on any unpaid installments of interest, and all
costs and expenses in connection with any action or proceeding
by or on behalf of the bondholders, are fully met and
discharged. The district may include this pledge and agreement
of the state in any agreement with the holders of bonds issued
under this section.

Subd. 8.

Not net debt.

Bonds ended under this section
not in default shall not be deemed net debt under any law
limiting indebtedness.

Subd. 9.

Aid reduction for repayment.

If the amount
transferred by Special School District No. 1, Minneapolis, to
the paying agent for the bonds is insufficient to pay required
debt service, the paying agent shall notify the commissioner of
finance. The commissioner shall reduce any and all unrestricted
state aids generally available to the school district by the
amount of the deficiency and pay the amounts to the paying agent
for the bonds for the payment of debt service. If the state
aids are reduced pursuant to this subdivision, the district may
levy a tax in the amount of the reduction in state aid.
Notwithstanding any other law to the contrary, no election of
the voters of the district is required for the levy and the levy
is not subject to other levy limitations.

Sec. 2.

[128D.181] AID REDEDICATION.

Notwithstanding any law to the contrary and subject to
section 2, special direct state aid previously paid to the
Minneapolis Teachers Retirement Fund Association under section
354A.12, subdivision 3a, must be paid to the Teachers Retirement
Association.

Sec. 3.

Minnesota Statutes 2004, section 354.05,
subdivision 2, is amended to read:

Subd. 2.

Teacher.

(a) "Teacher" means:

(1) a person who renders service as a teacher, supervisor,
principal, superintendent, librarian, nurse, counselor, social
worker, therapist, or psychologist in a public school of the
state located outside of the corporate limits of a city of the
first class the city of Duluth or the city of St. Paul, or in
any charter school, irrespective of the location of the school,
or in any charitable, penal, or correctional institutions of a
governmental subdivision, or who is engaged in educational
administration in connection with the state public school
system, but excluding the University of Minnesota, whether the
position be a public office or an employment, and not including
the members or officers of any general governing or managing
board or body;

(2) an employee of the Teachers Retirement Association;

(3) a person who renders teaching service on a part-time
basis and who also renders other services for a single employing
unit. A person whose teaching service comprises at least 50
percent of the combined employment salary is a member of the
association for all services with the single employing unit. If
the person's teaching service comprises less than 50 percent of
the combined employment salary, the executive director must
determine whether all or none of the combined service is covered
by the association; or

(4) a person who is not covered by the plans established
under chapter 352D, 354A, or 354B and who is employed by the
Board of Trustees of the Minnesota State Colleges and
Universities system in an unclassified position as:

(i) a president, vice-president, or dean;

(ii) a manager or a professional in an academic or an
academic support program other than specified in item (i);

(iii) an administrative or a service support faculty
position; or

(iv) a teacher or a research assistant.

(b) "Teacher" does not mean:

(1) a person who works for a school or institution as an
independent contractor as defined by the Internal Revenue
Service;

(2) a person who renders part-time teaching service or who
is a customized trainer as defined by the Minnesota State
Colleges and Universities system if (i) the service is
incidental to the regular nonteaching occupation of the person;
and (ii) the employer stipulates annually in advance that the
part-time teaching service or customized training service will
not exceed 300 hours in a fiscal year and retains the
stipulation in its records; and (iii) the part-time teaching
service or customized training service actually does not exceed
300 hours in a fiscal year; or

(3) a person exempt from licensure under section 122A.30.

Sec. 4.

Minnesota Statutes 2004, section 354.05,
subdivision 13, is amended to read:

Subd. 13.

Allowable service.

"Allowable service" means:

(1) Any service rendered by a teacher for which on or
before July 1, 1957, the teacher's account in the retirement
fund was credited by reason of employee contributions in the
form of salary deductions, payments in lieu of salary
deductions, or in any other manner authorized by Minnesota
Statutes 1953, sections 135.01 to 135.13, as amended by Laws
1955, chapters 361, 549, 550, 611, or

(2) Any service rendered by a teacher for which on or
before July 1, 1961, the teacher elected to obtain credit for
service by making payments to the fund pursuant to Minnesota
Statutes 1980, section 354.09 and section 354.51, or

(3) Any service rendered by a teacher after July 1, 1957,
for any calendar month when the member receives salary from
which deductions are made, deposited and credited in the fund,
or

(4) Any service rendered by a person after July 1, 1957,
for any calendar month where payments in lieu of salary
deductions are made, deposited and credited into the fund as
provided in Minnesota Statutes 1980, section 354.09, subdivision
4, and section 354.53, or

(5) Any service rendered by a teacher for which the teacher
elected to obtain credit for service by making payments to the
fund pursuant to Minnesota Statutes 1980, section 354.09,
subdivisions 1 and 4, sections 354.50, 354.51, Minnesota
Statutes 1957, section 135.41, subdivision 4, Minnesota Statutes
1971, section 354.09, subdivision 2, or Minnesota Statutes, 1973
Supplement, section 354.09, subdivision 3, or

(6) Both service during years of actual membership in the
course of which contributions were currently made and service in
years during which the teacher was not a member but for which
the teacher later elected to obtain credit by making payments to
the fund as permitted by any law then in effect, or

(7) Any service rendered where contributions were made and
no allowable service credit was established because of the
limitations contained in Minnesota Statutes 1957, section
135.09, subdivision 2, as determined by the ratio between the
amounts of money credited to the teacher's account in a fiscal
year and the maximum retirement contribution allowable for that
year, or

(8) MS 2002 (Expired)

(9) A period of time during which a teacher who is a state
employee was on strike without pay, not to exceed a period of
one year, if the teacher makes a payment in lieu of salary
deductions or makes a prior service credit purchase payment,
whichever applies. If the payment is made within 12 months, the
payment by the teacher must be an amount equal to the employee
and employer contribution rates set forth in section 354.42,
subdivisions 2 and 3, applied to the teacher's rate of salary in
effect on the conclusion of the strike for the period of the
strike without pay, plus compound interest at a monthly rate of
0.71 percent from the last day of the strike until the date of
payment. If the payment by the employee is not made within 12
months, the payment must be in an amount equal to the payment
amount determined under section 356.55 or 356.551, whichever
applies, or

(10) A period of service before July 1, 2005, that was
credited by the Minneapolis Teachers Retirement Fund Association
and that was rendered by a teacher as an employee of Special
School District No. 1, Minneapolis, or by an employee of the
Minneapolis Teachers Retirement Fund Association who was a
member of the Minneapolis Teachers Retirement Fund Association
by virtue of that employment, who has not begun receiving an
annuity or other retirement benefit from the former Minneapolis
Teachers Retirement Fund Association calculated in whole or in
part on that service before July 1, 2005, and who has not taken
a refund of member contributions related to that service unless
the refund is repaid under section 354.50, subdivision 4.

Sec. 5.

Minnesota Statutes 2004, section 354.42,
subdivision 2, is amended to read:

Subd. 2.

Employee.

(a) The employee contribution to the
fund is an amount equal to 5.0 the following percentage of the
salary of a member:

(1) after July 1, 2005, for a teacher employed by Special
School District No. 1, Minneapolis, 5.5 percent if the teacher
is a coordinated member and 9.0 percent if the teacher is a
basic member;

(2) for every other teacher, after July 1, 2005, 5.5
percent of if the salary of every teacher is a coordinated
member and 9.0 percent of if the salary of every teacher is a
basic member.

(b) This contribution must be made by deduction from
salary. Where any portion of a member's salary is paid from
other than public funds, the member's employee contribution must
be based on the entire salary received.

Sec. 6.

Minnesota Statutes 2004, section 354.42,
subdivision 3, is amended to read:

Subd. 3.

Employer.

(a) The employer contribution to the
fund by Special School District No. 1, Minneapolis, after July
1, 2005, is an amount equal to 8.64 percent of the salary of
each of its teachers who is a coordinated member and 12.64
percent of the salary of each of its teachers who is a basic
member.

(b) The employer contribution to the fund for every other
employer, after July 1, 2005,is an amount equal to 5.0 5.5
percent of the salary of each coordinated member and 9.0 percent
of the salary of each basic member.

(c) As payment toward the cost of the unfunded actuarial
accrued liability transferred to the Teachers Retirement
Association from the former Minneapolis Teachers Retirement Fund
Association, a supplemental contribution of 0.26 percent of the
covered payroll of the fund must be made each fiscal year
through June 30, 2035. One-third of the dollar amount of this
supplemental contribution must be paid each by Special School
District No. 1, Minneapolis, the city of Minneapolis, and the
state of Minnesota. On or before October 1, annually, the
executive director of the Teachers Retirement Association shall
calculate the expected total dollar amount of the supplemental
contribution for the calendar year and shall certify the portion
payable by each governmental entity. The amount is payable in
full on or before the following June 1.

Sec. 7.

Minnesota Statutes 2004, section 354.44,
subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement
annuity.

(a) The formula retirement annuity must be computed in
accordance with the applicable provisions of the formulas stated
in paragraph (b) or (d) on the basis of each member's average
salary for the period of the member's formula service credit.

For all years of formula service credit, "average salary,"
for the purpose of determining the member's retirement annuity,
means the average salary upon which contributions were made and
upon which payments were made to increase the salary limitation
provided in Minnesota Statutes 1971, section 354.511, for the
highest five successive years of formula service credit
provided, however, that such "average salary" shall not include
any more than the equivalent of 60 monthly salary payments.
Average salary must be based upon all years of formula service
credit if this service credit is less than five years.

(b) This paragraph, in conjunction with paragraph (c),
applies to a person who first became a member of the association
or a member of a pension fund listed in section 356.30,
subdivision 3, before July 1, 1989, unless paragraph (d), in
conjunction with paragraph (e), produces a higher annuity
amount, in which case paragraph (d) applies. The average salary
as defined in paragraph (a), multiplied by the following
percentages per year of formula service credit shall determine
the amount of the annuity to which the member qualifying
therefor is entitled for service rendered before July 1, 2005:

Coordinated Member Basic Member

Each year of service the percent the percent

during first ten specified in specified in

section 356.315, section 356.315,

subdivision 1, subdivision 3,

per year per year

Each year of service the percent the percent

thereafter specified in specified in

section 356.315, section 356.315,

subdivision 2, subdivision 4,

per year per year

For service rendered on or after July 1, 2005, the average
salary as defined in paragraph (a), multiplied by the following
percentages per year of service credit, determines the amount of
the annuity to which the member qualifying therefor is entitled:

Coordinated Member Basic Member

Each year of service the percent the percent

during first ten specified in specified in

section 356.315, section 356.315,

subdivision 1a, subdivision 3,

per year per year

Coordinated Member Basic Member

Each year of service the percent the percent

after ten years of specified in specified in

service section 356.315, section 356.315,

subdivision 2a, subdivision 4,

per year per year

(c)(i) This paragraph applies only to a person who first
became a member of the association or a member of a pension fund
listed in section 356.30, subdivision 3, before July 1, 1989,
and whose annuity is higher when calculated under paragraph (b),
in conjunction with this paragraph than when calculated under
paragraph (d), in conjunction with paragraph (e).

(ii) Where any member retires prior to normal retirement
age under a formula annuity, the member shall be paid a
retirement annuity in an amount equal to the normal annuity
provided in paragraph (b) reduced by one-quarter of one percent
for each month that the member is under normal retirement age at
the time of retirement except that for any member who has 30 or
more years of allowable service credit, the reduction shall be
applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable
service totals 90 years is entitled, upon application, to a
retirement annuity in an amount equal to the normal annuity
provided in paragraph (b), without any reduction by reason of
early retirement.

(d) This paragraph applies to a member who has become at
least 55 years old and first became a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity amount when calculated
under this paragraph and in conjunction with paragraph (e), is
higher than it is when calculated under paragraph (b), in
conjunction with paragraph (c). For a basic member,the average
salary, as defined in paragraph (a) multiplied by the percent
specified by section 356.315, subdivision 4, for each year of
service for a basic member and by the percent specified in
section 356.315, subdivision 2, for each year of service for a
coordinated member shall determine the amount of the retirement
annuity to which the basic member is entitled. For a
coordinated member, the average salary, as defined in paragraph
(a) multiplied by the percent specified in section 356.315,
subdivision 2, for each year of service rendered before July 1,
2005, and by the percent specified in section 356.315,
subdivision 2a, for each year of service rendered on or after
July 1, 2005, determines the amount of the retirement annuity to
which the coordinated member is entitled.

(e) This paragraph applies to a person who has become at
least 55 years old and first becomes a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity is higher when calculated
under paragraph (d) in conjunction with this paragraph than when
calculated under paragraph (b), in conjunction with paragraph
(c). An employee who retires under the formula annuity before
the normal retirement age shall be paid the normal annuity
provided in paragraph (d) reduced so that the reduced annuity is
the actuarial equivalent of the annuity that would be payable to
the employee if the employee deferred receipt of the annuity and
the annuity amount were augmented at an annual rate of three
percent compounded annually from the day the annuity begins to
accrue until the normal retirement age.

(f) No retirement annuity is payable to a former employee
with a salary that exceeds 95 percent of the governor's salary
unless and until the salary figures used in computing the
highest five successive years average salary under paragraph (a)
have been audited by the Teachers Retirement Association and
determined by the executive director to comply with the
requirements and limitations of section 354.05, subdivisions 35
and 35a.

Sec. 8.

[354.70] CONSOLIDATION OF THE MINNEAPOLIS
TEACHERS RETIREMENT FUND ASSOCIATION.

Subdivision 1.

Membership transfer.

All active,
inactive, and retired members of the Minneapolis Teachers
Retirement Fund Association are transferred to the Teachers
Retirement Association and are no longer members of the
Minneapolis Teachers Retirement Fund Association as of the
effective date of this section.

Subd. 2.

Tra membership.

A person first hired as a
teacher by Special School District No. 1, Minneapolis, after the
effective date of this section and who is a teacher as defined
in section 354.05, subdivision 2, is a member of the Teachers
Retirement Association for the person's teaching service.

Subd. 3.

Service credit and liability transfer.

All
allowable service and salary credit of the members and other
individuals transferred under subdivision 1 as specified in the
records of the Minneapolis Teachers Retirement Fund Association
on the transfer date is allowable service credit under section
354.05, subdivision 13, formula service credit under section
354.05, subdivision 25, and salary credit under section 354.05,
subdivision 35, for the Teachers Retirement Association.

Subd. 4.

Transfer of records.

On the effective date of
this section, the chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall effect a
transfer of all records and documents relating to the funds and
the benefit plans of the association to the executive director
of the Teachers Retirement Association. To the extent possible,
original copies of all records and documents must be
transferred. The chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall certify
the accuracy of all records and documents for which the transfer
of original copies was not possible.

Subd. 5.

Transfer of assets.

(a) On the effective date
of this section, the chief administrative officer of the
Minneapolis Teachers Retirement Fund Association shall transfer
to the Teachers Retirement Association the entire assets of the
Minneapolis Teachers Retirement Fund Association. The transfer
of the assets of the Minneapolis Teachers Retirement Fund
Association must include any accounts receivable that are
determined by the executive director of the State Board of
Investment as reasonably capable of being collected. Legal
title to account receivables that are determined by the
executive director of the State Board of Investment as not
reasonably capable of being collected transfers to Special
School District No. 1, Minneapolis, as of the date of the
determination of the executive director of the State Board of
Investment. If the account receivables transferred to Special
School District No. 1, Minneapolis, are subsequently recovered
by the school district, the superintendent of Special School
District No. 1, Minneapolis, shall transfer the recovered amount
to the executive director of the Teachers Retirement
Association, in cash, for deposit in the teachers retirement
fund, less the reasonable expenses of the school district
related to the recovery.

(b) As of the effective date of this section, subject to
the authority of the State Board of Investment, the board of
directors of the Teachers Retirement Association has legal title
to and management responsibility for any transferred assets
under this subdivision as trustees for any person having a
beneficial interest in the Minneapolis Teachers Retirement Fund
Association. The Teachers Retirement Association is the
successor in interest for all claims for and against the former
coordinated program of the Minneapolis Teachers Retirement Fund
Association with respect to the retirement fund association,
except a claim against the Minneapolis Teachers Retirement Fund
Association or any person connected with the fund association in
a fiduciary capacity, based on any act or acts by that person
which were not done in good faith and which constituted a breach
of the obligation of the person as a fiduciary. As the
successor in interest, the Teachers Retirement Association may
assert any applicable defense in any judicial proceeding which
the board of the Minneapolis Teachers Retirement Fund
Association would have otherwise been entitled to assert
relating to the coordinated program.

(c) From the assets of the Minneapolis Teachers Retirement
Fund Association transferred to the Teachers Retirement
Association, an amount equal to the percentage figure that
represents the ratio between the market value of the Minnesota
postretirement investment fund as of June 30, 2005, and the
required reserves of the Minnesota postretirement investment
fund as of June 30, 2005, applied to the present value of future
benefits payable to annuitants of the former Minneapolis
Teachers Retirement Fund Association as of June 30, 2005,
including any postretirement adjustment from the Minnesota
postretirement investment fund expected to be payable on January
1, 2006, must be transferred to the Minnesota postretirement
investment fund. The executive director of the State Board of
Investment shall estimate this ratio at the time of the
transfer. By January 1, 2006, after all necessary financial
information becomes available to determine the actual funded
ratio of the Minnesota postretirement investment fund, the
postretirement fund must refund to the Teachers Retirement
Association any excess assets or the Teachers Retirement
Association must contribute any deficiency to the Minnesota
postretirement investment fund with interest under section
11A.18, subdivision 6. The balance of the assets of the former
Minneapolis Teachers Retirement Fund Association after the
transfer to the Minnesota postretirement investment fund must be
credited to the Teachers Retirement Association.

If the assets transferred by the Minneapolis Teachers
Retirement Fund Association to the Teachers Retirement
Association are insufficient to meet its obligation to the
Minnesota postretirement investment fund, additional assets must
be transferred by the executive director of the Teachers
Retirement Association to meet the amount required.

Subd. 6.

Benefit calculation.

(a) For every deferred,
inactive, disabled, and retired member of the Minneapolis
Teachers Retirement Fund Association transferred under
subdivision 1, and the survivors of these members, annuities or
benefits earned before the date of the transfer, other than
future postretirement adjustments, must be calculated and paid
by the Teachers Retirement Association under the laws, articles
of incorporation, and bylaws of the former Minneapolis Teachers
Retirement Fund Association that were in effect relative to the
person on the date of the person's termination of active service
covered by the former Minneapolis Teachers Retirement Fund
Association.

(b) Former Minneapolis Teachers Retirement Fund Association
members who retired before July 1, 2005, must receive
postretirement adjustments after December 31, 2005, only as
provided in section 11A.18. All other benefit recipients of the
former Minneapolis Teachers Retirement Fund Association must
receive postretirement adjustments after December 31, 2005, only
as provided in section 356.41.

Subd. 7.

Termination of the minneapolis teachers
retirement fund association.

As of the effective date of this
section and upon the transfer of administration, records,
assets, and liabilities from the Minneapolis Teachers Retirement
Fund Association to the Teachers Retirement Association, the
Minneapolis Teachers Retirement Fund Association ceases to exist
as a Minnesota public pension plan.

Sec. 9.

[354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND
STATE AID REDEDICATED.

Subdivision 1.

Appropriation.

The positive difference,
if any, between the actual state aid paid to the Minneapolis
Employees Retirement Fund under section 422A.101, subdivision 3,
and $8,065,000 annually is appropriated from the general fund to
the commissioner of finance for deposit in the Teachers
Retirement Association to offset all or a portion of the current
and future unfunded actuarial accrued liability of the
Minneapolis Teachers Retirement Fund Association.

Subd. 2.

Financial requirements.

The appropriation in
subdivision 1 is available to the extent that financial
requirements of the Minneapolis Employees Retirement Fund under
section 422A.101, subdivision 3, have been satisfied.

Sec. 10.

Minnesota Statutes 2004, section 354A.011,
subdivision 15a, is amended to read:

Subd. 15a.

Normal retirement age.

"Normal retirement
age" means age 65 for a person who first became a member of the
coordinated program of the Minneapolis or St. Paul Teachers
Retirement Fund Association or the new law coordinated program
of the Duluth Teachers Retirement Fund Association or a member
of a pension fund listed in section 356.30, subdivision 3,
before July 1, 1989. For a person who first became a member of
the coordinated program of the Minneapolis or St. Paul Teachers
Retirement Fund Association or the new law coordinated program
of the Duluth Teachers Retirement Fund Association after June
30, 1989, normal retirement age means the higher of age 65 or
retirement age, as defined in United States Code, title 42,
section 416(l), as amended, but not to exceed age 66. For a
person who is a member of the basic program of the Minneapolis
or St. Paul Teachers Retirement Fund Association or the old law
coordinated program of the Duluth Teachers Retirement Fund
Association, normal retirement age means the age at which a
teacher becomes eligible for a normal retirement annuity
computed upon meeting the age and service requirements specified
in the applicable provisions of the articles of incorporation or
bylaws of the respective teachers retirement fund association.

Sec. 11.

Minnesota Statutes 2004, section 354A.011,
subdivision 27, is amended to read:

Subd. 27.

Teacher.

(a) "Teacher" means any person who
renders service for a public school district, other than a
charter school, located in the corporate limits of one of the
cities of the first class which was so classified on January 1,
1979 Duluth and St. Paul, as any of the following:

(1) a full-time employee in a position for which a valid
license from the state Department of Education is required;

(2) an employee of the teachers retirement fund association
located in the city of the first class unless the employee has
exercised the option pursuant to Laws 1955, chapter 10, section
1, to retain membership in the Minneapolis Employees Retirement
Fund established pursuant to chapter 422A;

(3) a part-time employee in a position for which a valid
license from the state Department of Education is required; or

(4) a part-time employee in a position for which a valid
license from the state Department of Education is required who
also renders other nonteaching services for the school district,
unless the board of trustees of the teachers retirement fund
association determines that the combined employment is on the
whole so substantially dissimilar to teaching service that the
service may not be covered by the association.

(b) The term does not mean any person who renders service
in the school district as any of the following:

(1) an independent contractor or the employee of an
independent contractor;

(2) an employee who is a full-time teacher covered by the
Teachers Retirement Association or by another teachers
retirement fund association established pursuant to this chapter
or chapter 354;

(3) an employee exempt from licensure pursuant to section
122A.30;

(4) an employee who is a teacher in a technical college
located in a city of the first class unless the person elects
coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2;

(5) a teacher employed by a charter school, irrespective of
the location of the school; or

(6) an employee who is a part-time teacher in a technical
college in a city of the first class and who has elected
coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2, but (i)
the teaching service is incidental to the regular nonteaching
occupation of the person; (ii) the applicable technical college
stipulates annually in advance that the part-time teaching
service will not exceed 300 hours in a fiscal year; and (iii)
the part-time teaching actually does not exceed 300 hours in the
fiscal year to which the certification applies.

Sec. 12.

Minnesota Statutes 2004, section 354A.021,
subdivision 1, is amended to read:

Subdivision 1.

Establishment.

There is established a
teachers retirement fund association in each of the cities of
the first class which were so classified on January 1,
1979 Duluth and St. Paul. The associations shall be known
respectively as the "Duluth Teachers Retirement Fund
Association," the "Minneapolis Teachers Retirement Fund
Association" and the "St. Paul Teachers Retirement Fund
Association." Each association shall be a continuation of the
teachers retirement fund association with the same corporate
name established pursuant to the authorization contained in Laws
1909, chapter 343, section 1.

Sec. 13.

Minnesota Statutes 2004, section 354A.092, is
amended to read:

354A.092 SABBATICAL LEAVE.

Any teacher in the coordinated program of either the
Minneapolis Teachers Retirement Fund Association or the St.
Paul Teachers Retirement Fund Association or any teacher in the
new law coordinated program of the Duluth Teachers Retirement
Fund Association who is granted a sabbatical leave shall be
entitled to receive allowable service credit in the applicable
association for periods of sabbatical leave. To obtain the
service credit, the teacher on sabbatical leave shall make an
employee contribution to the applicable association. No teacher
shall be entitled to receive more than three years of allowable
service credit pursuant to this section for a period or periods
of sabbatical leave during any ten consecutive fiscal or
calendar years, whichever is the applicable plan year for the
teachers retirement fund association. If the teacher granted a
sabbatical leave makes the employee contribution for a period of
sabbatical leave pursuant to this section, the employing unit
shall make an employer contribution on behalf of the teacher to
the applicable association for that period of sabbatical leave
in the manner described in section 354A.12, subdivision 2a. The
employee and employer contributions shall be in an amount equal
to the employee and employer contribution rates in effect for
other active members of the association covered by the same
program applied to a salary figure equal to the teacher's actual
covered salary for the plan year immediately preceding the
sabbatical leave period. Payment of the employee contribution
authorized pursuant to this section shall be made by the teacher
on or before June 30 of year next following the year in which
the sabbatical leave terminated and shall be made without
interest. For sabbatical leaves taken after June 30, 1986, the
required employer contributions shall be paid by the employing
unit within 30 days after notification by the association of the
amount due. If the employee contributions for the sabbatical
leave period are less than an amount equal to the applicable
contribution rate applied to a salary figure equal to the
teacher's actual covered salary for the plan year immediately
preceding the sabbatical leave period, service credit shall be
prorated. The prorated service credit shall be determined by
the ratio between the amount of the actual payment which was
made and the full contribution amount payable pursuant to this
section.

Sec. 14.

Minnesota Statutes 2004, section 354A.093,
subdivision 1, is amended to read:

Subdivision 1.

Eligibility.

Any teacher in the
coordinated program of either the Minneapolis Teachers
Retirement Fund Association or the St. Paul Teachers Retirement
Fund Association or any teacher in the new law coordinated
program of the Duluth Teachers Retirement Fund Association who
is absent from employment by reason of service in the uniformed
services as defined in United States Code, title 38, section
4303(13) and who returns to the employer providing active
teaching service upon discharge from uniformed service within
the time frames required under United States Code, title 38,
section 4312(e), may receive allowable service credit in the
applicable association for all or a portion of the period of
uniformed service, provided that the teacher did not separate
from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions.

Sec. 15.

Minnesota Statutes 2004, section 354A.095, is
amended to read:

354A.095 PARENTAL AND MATERNITY LEAVE.

Basic or coordinated members of the St. Paul Teachers
Retirement Fund Association, the Minneapolis Teachers Retirement
Fund Association,and new coordinated members of the Duluth
Teachers Retirement Fund Association, who are granted parental
or maternity leave of absence by the employing authority, are
entitled to obtain service credit not to exceed one year for the
period of leave upon payment to the applicable fund by the end
of the fiscal year following the fiscal year in which the leave
of absence terminated. The amount of the payment must include
the total required employee and employer contributions for the
period of leave prescribed in section 354A.12. Payment must be
based on the member's average monthly salary rate upon return to
teaching service, and is payable without interest. Payment must
be accompanied by a certified or otherwise adequate copy of the
resolution or action of the employing authority granting or
approving the leave.

Sec. 16.

Minnesota Statutes 2004, section 354A.096, is
amended to read:

354A.096 MEDICAL LEAVE.

Any teacher in the coordinated program of either the
Minneapolis Teachers Retirement Fund Association or the St. Paul
Teachers Retirement Fund Association or the new law coordinated
program of the Duluth Teachers Retirement Fund Association who
is on an authorized medical leave of absence and subsequently
returns to teaching service is entitled to receive allowable
service credit, not to exceed one year, for the period of leave,
upon making the prescribed payment to the fund. This payment
must include the required employee and employer contributions at
the rates specified in section 354A.12, subdivisions 1 and 2, as
applied to the member's average full-time monthly salary rate on
the date the leave of absence commenced plus annual interest at
the rate of 8.5 percent per year from the end of the fiscal year
during which the leave terminates to the end of the month during
which payment is made. The member must pay the total amount
required unless the employing unit, at its option, pays the
employer contributions. The total amount required must be paid
by the end of the fiscal year following the fiscal year in which
the leave of absence terminated or before the member retires,
whichever is earlier. Payment must be accompanied by a copy of
the resolution or action of the employing authority granting the
leave and the employing authority, upon granting the leave, must
certify the leave to the association in a manner specified by
the executive director. A member may not receive more than one
year of allowable service credit during any fiscal year by
making payment under this section. A member may not receive
disability benefits under section 354A.36 and receive allowable
service credit under this section for the same period of time.

Sec. 17.

Minnesota Statutes 2004, section 354A.12,
subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

The contribution
required to be paid by each member of a teachers retirement fund
association shall not be less than the percentage of total
salary specified below for the applicable association and
program:

Association and Program Percentage of

Total Salary

Duluth Teachers Retirement

Association

old law and new law

coordinated programs 5.5 percent

Minneapolis Teachers Retirement

Association

basic program 8.5 percent

coordinated program 5.5 percent

St. Paul Teachers Retirement

Association

basic program 8 percent

coordinated program 5.5 percent

Contributions shall be made by deduction from salary and
must be remitted directly to the respective teachers retirement
fund association at least once each month.

Sec. 18.

Minnesota Statutes 2004, section 354A.12,
subdivision 2, is amended to read:

Subd. 2.

Retirement contribution levy disallowed.

Except
as provided in subdivision 3b and in section 423A.02,
subdivision 3, with respect to the city of Minneapolis and
special school district No. 1 and in section 423A.02,
subdivision 3, with respect to independent school district No.
625, notwithstanding any law to the contrary, levies for
teachers retirement fund associations in the cities of the first
class Duluth and St. Paul, including levies for any employer
Social Security taxes for teachers covered by the Duluth
Teachers Retirement Fund Association or the Minneapolis Teachers
Retirement Fund Association or the St. Paul Teachers Retirement
Fund Association, are disallowed.

Sec. 19.

Minnesota Statutes 2004, section 354A.12,
subdivision 2a, is amended to read:

Subd. 2a.

Employer regular and additional contribution
rates.

(a) The employing units shall make the following
employer contributions to teachers retirement fund associations:

(1) for any coordinated member of a teachers retirement
fund association in a city of the first class, the employing
unit shall pay the employer Social Security taxes in accordance
with section 355.46, subdivision 3, clause (b);

(2) for any coordinated member of one of the following
teachers retirement fund associations in a city of the first
class, the employing unit shall make a regular employer
contribution to the respective retirement fund association in an
amount equal to the designated percentage of the salary of the
coordinated member as provided below:

Duluth Teachers Retirement
Fund Association 4.50 percent
Minneapolis Teachers Retirement
Fund Association 4.50 percent
St. Paul Teachers Retirement
Fund Association 4.50 percent;

(3) for any basic member of one of the following St. Paul
Teachers Retirement Fund associations in a city of the first
class Association, the employing unit shall make a regular
employer contribution to the respective retirement fund in an
amount equal to the designated percentage 8.00 percent of the
salary of the basic member as provided below:

Minneapolis Teachers Retirement

Fund Association 8.50 percent

St. Paul Teachers Retirement

Fund Association 8.00 percent ;

(4) for a basic member of a the St. Paul Teachers
Retirement Fund Association in a city of the first class, the
employing unit shall make an additional employer contribution to
the respective fund in an amount equal to the designated
percentage 3.64 percent of the salary of the basic member, as
provided below:

Minneapolis Teachers Retirement

Fund Association

July 1, 1993 - June 30, 1994 4.85 percent

July 1, 1994, and thereafter 3.64 percent

St. Paul Teachers Retirement

Fund Association

July 1, 1993 - June 30, 1995 4.63 percent

July 1, 1995, and thereafter 3.64 percent ;

(5) for a coordinated member of a teachers retirement fund
association in a city of the first class, the employing unit
shall make an additional employer contribution to the respective
fund in an amount equal to the applicable percentage of the
coordinated member's salary, as provided below:

Duluth Teachers Retirement

Fund Association 1.29 percent

Minneapolis Teachers Retirement

Fund Association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994, and thereafter 3.64 percent

St. Paul Teachers Retirement

Fund Association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994 - June 30, 1995 1.50 percent

July 1, 1997, and thereafter 3.84 percent.

(b) The regular and additional employer contributions must
be remitted directly to the respective teachers retirement fund
association at least once each month. Delinquent amounts are
payable with interest under the procedure in subdivision 1a.

(c) Payments of regular and additional employer
contributions for school district or technical college employees
who are paid from normal operating funds must be made from the
appropriate fund of the district or technical college.

Sec. 20.

Minnesota Statutes 2004, section 354A.12,
subdivision 3a, is amended to read:

Subd. 3a.

Special direct state aid to first class city
teachers retirement fund associations.

(a) In fiscal year 1998,
the state shall pay $4,827,000 to the St. Paul Teachers
Retirement Fund Association, $17,954,000 to the Minneapolis
Teachers Retirement Fund Association, and $486,000 to the Duluth
Teachers Retirement Fund Association. In each subsequent fiscal
year after fiscal year 2005, these payments to the first class
city teachers retirement fund associations must be $2,827,000
for St. Paul, $12,954,000 to the Teachers Retirement Association
for the former Minneapolis Teachers Retirement Fund Association,
and $486,000 for Duluth.

(b) The direct state aids under this subdivision are
payable October 1 annually. The commissioner of finance shall
pay the direct state aid. The amount required under this
subdivision is appropriated annually from the general fund to
the commissioner of finance.

Sec. 21.

Minnesota Statutes 2004, section 354A.12,
subdivision 3b, is amended to read:

Subd. 3b.

Special direct state matching aid to the
minneapolis teachers retirement fund association.

(a) Special
School District No. 1 may must make an additional employer
contribution to the Minneapolis Teachers Retirement Fund
Association. The city of Minneapolis may must make a
contribution to the Minneapolis Teachers Retirement Fund
Association. This contribution may must be made by a levy of
the board of estimate and taxation of the city of Minneapolis
and the levy, if made, is classified as that of a special taxing
district for purposes of sections 275.065 and 276.04, and for
all other property tax purposes.

(b) For every $1,000 $1,125,000 must be contributed in
equal proportion by Special School District No. 1 and $1,125,000
must be contributed by the city of Minneapolis to
the Minneapolis Teachers Retirement Fund Association under
paragraph (a),and the state shall pay to the Minneapolis
Teachers Retirement Fund Association $1,000, but not to
exceed $2,500,000 in total in each fiscal year 1994. The
superintendent of Special School District No. 1, the mayor of
the city of Minneapolis, and the executive director of
the Minneapolis Teachers Retirement Fund Association shall
jointly certify to the commissioner of finance the total amount
that has been contributed by Special School District No. 1 and
by the city of Minneapolis to the Minneapolis Teachers
Retirement Fund Association. Any certification to the
commissioner of education must be made quarterly. If the total
certifications for a fiscal year exceed the maximum annual
direct state matching aid amount in any quarter, the amount of
direct state matching aid payable to the Minneapolis Teachers
Retirement Fund Association must be limited to the balance of
the maximum annual direct state matching aid amount available.
The amount required under this paragraph, subject to the maximum
direct state matching aid amount, is appropriated annually to
the commissioner of finance.

(c) The commissioner of finance may prescribe the form of
the certifications required under paragraph (b).

Sec. 22.

Minnesota Statutes 2004, section 354A.12,
subdivision 3c, is amended to read:

Subd. 3c.

Termination of supplemental contributions and
direct matching and state aid.

(a) The supplemental
contributions payable to the Minneapolis Teachers Retirement
Fund Association by special school district No. 1 and the city
of Minneapolis under section 423A.02, subdivision 3, or to the
St. Paul Teachers Retirement Fund Association by Independent
School District No. 625 under section 423A.02, subdivision 3, or
the direct state aids under subdivision 3a to the first class
city St. Paul Teachers Retirement associations, and the direct
matching and state aid under subdivision 3b to the Minneapolis
Teachers Retirement Fund Association terminate for the
respective fund at the end of the fiscal year in which the
accrued liability funding ratio for that fund, as determined in
the most recent actuarial report for that fund by the actuary
retained by the Legislative Commission on Pensions and
Retirement, equals or exceeds the accrued liability funding
ratio for the teachers retirement association, as determined in
the most recent actuarial report for the Teachers Retirement
Association by the actuary retained by the Legislative
Commission on Pensions and Retirement.

(b) If the state direct matching, state supplemental, or
state aid is terminated for a first class city teachers
retirement fund association under paragraph (a), it may not
again be received by that fund.

(c) If either the Minneapolis Teachers Retirement Fund
Association,the St. Paul Teachers Retirement Fund Association,
or the Duluth Teachers Retirement Fund Association remain is
funded at less than the funding ratio applicable to the teachers
retirement association when the provisions of paragraph (b)
become effective, then any state aid not previously distributed
to that association must be immediately transferred to the other
associations in proportion to the relative sizes of their
unfunded actuarial accrued liabilities Teachers Retirement
Association.

Sec. 23.

Minnesota Statutes 2004, section 354A.12,
subdivision 3d, is amended to read:

Subd. 3d.

Supplemental administrative expense
assessment.

(a) The active and retired membership of the
Minneapolis Teachers Retirement Fund Association and of the St.
Paul Teachers Retirement Fund Association is responsible for
defraying supplemental administrative expenses other than
investment expenses of the respective teacher retirement fund
association.

(b) Investment expenses of the teachers retirement fund
association are those expenses incurred by or on behalf of the
retirement fund in connection with the investment of the assets
of the retirement fund other than investment security
transaction costs. Other administrative expenses are all
expenses incurred by or on behalf of the retirement fund for all
other retirement fund functions other than the investment of
retirement fund assets. Investment and other administrative
expenses must be accounted for using generally accepted
accounting principles and in a manner consistent with the
comprehensive annual financial report of the teachers retirement
fund association for the immediately previous fiscal year under
section 356.20.

(c) Supplemental administrative expenses other than
investment expenses of a first class city teacher the St. Paul
Teachers Retirement Fund Association are those expenses for the
fiscal year that:

(1) exceed, for the St. Paul Teachers Retirement Fund
Association,$443,745, or for the Minneapolis Teacher Retirement
Fund Association $671,513,plus, in each case,an additional
amount derived by applying the percentage increase in the
Consumer Price Index for Urban Wage Earners and Clerical Workers
All Items Index published by the Bureau of Labor Statistics of
the United States Department of Labor since July 1, 2001, to the
applicable dollar amount; and

(2) exceed the amount computed by applying the most recent
percentage of pay administrative expense amount, other than
investment expenses, for the teachers retirement association
governed by chapter 354 to the covered payroll of the respective
teachers retirement fund association for the fiscal year.

(d) The board of trustees of each first class city the St.
Paul Teachers Retirement Fund Association shall allocate the
total dollar amount of supplemental administrative expenses
other than investment expenses determined under paragraph (c),
clause (2), among the various active and retired membership
groups of the teachers retirement fund association and shall
assess the various membership groups their respective share of
the supplemental administrative expenses other than investment
expenses, in amounts determined by the board of trustees. The
supplemental administrative expense assessments must be paid by
the membership group in a manner determined by the board of
trustees of the respective teachers retirement association.
Supplemental administrative expenses payable by the active
members of the pension plan must be picked up by the employer in
accordance with section 356.62.

(e) With respect to the St. Paul Teachers Retirement Fund
Association, the supplemental administrative expense assessment
must be fully disclosed to the various active and retired
membership groups of the teachers retirement fund association.
The chief administrative officer of the St. Paul Teachers
Retirement Fund Association shall prepare a supplemental
administrative expense assessment disclosure notice, which must
include the following:

(1) the total amount of administrative expenses of the St.
Paul Teachers Retirement Fund Association, the amount of the
investment expenses of the St. Paul Teachers Retirement Fund
Association, and the net remaining amount of administrative
expenses of the St. Paul Teachers Retirement Fund Association;

(2) the amount of administrative expenses for the St. Paul
Teachers Retirement Fund Association that would be equivalent to
the teachers retirement association noninvestment administrative
expense level described in paragraph (c);

(3) the total amount of supplemental administrative
expenses required for assessment calculated under paragraph (c);

(4) the portion of the total amount of the supplemental
administrative expense assessment allocated to each membership
group and the rationale for that allocation;

(5) the manner of collecting the supplemental
administrative expense assessment from each membership group,
the number of assessment payments required during the year, and
the amount of each payment or the procedure used to determine
each payment; and

(6) any other information that the chief administrative
officer determines is necessary to fairly portray the manner in
which the supplemental administrative expense assessment was
determined and allocated.

(f) The disclosure notice must be provided annually in the
annual report of the association.

(g) The supplemental administrative expense assessments
must be deposited in the applicable teachers retirement fund
upon receipt.

(h) Any omitted active membership group assessments that
remain undeducted and unpaid to the teachers retirement fund
association for 90 days must be paid by the respective school
district. The school district may recover any omitted active
membership group assessment amounts that it has previously
paid. The teachers retirement fund association shall deduct any
omitted retired membership group assessment amounts from the
benefits next payable after the discovery of the omitted amounts.

Sec. 24.

Minnesota Statutes 2004, section 354A.30, is
amended to read:

354A.30 MINNEAPOLIS AND ST. PAUL TEACHERS RETIREMENT
FUND ASSOCIATIONS ASSOCIATION; COORDINATED PROGRAM.

There is established a coordinated program within the
Minneapolis Teachers Retirement Fund Association and a
coordinated program within the St. Paul Teachers Retirement Fund
Association to provide retirement coverage for teachers who are
covered by an agreement or modification made between the state
and the secretary of health, education and welfare making the
provisions of the federal Old Age, Survivors and Disability
Insurance Act applicable to certain teachers covered by the
teachers retirement fund association. The provisions governing
the coordinated program shall be sections 354A.31 to 354A.41 and
any other applicable provisions of this chapter.

Sec. 25.

Minnesota Statutes 2004, section 354A.31,
subdivision 4, is amended to read:

Subd. 4.

Computation of the normal coordinated retirement
annuity; minneapolis and st. paul funds.

(a) This subdivision
applies to the coordinated programs program of the Minneapolis
Teachers Retirement Fund Association and the St. Paul Teachers
Retirement Fund Association.

(b) The normal coordinated retirement annuity shall be an
amount equal to a retiring coordinated member's average salary
multiplied by the retirement annuity formula percentage.
Average salary for purposes of this section shall mean an amount
equal to the average salary upon which contributions were made
for the highest five successive years of service credit, but
which shall not in any event include any more than the
equivalent of 60 monthly salary payments. Average salary must
be based upon all years of service credit if this service credit
is less than five years.

(c) This paragraph, in conjunction with subdivision 6,
applies to a person who first became a member or a member in a
pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, unless paragraph (d), in conjunction with
subdivision 7, produces a higher annuity amount, in which case
paragraph (d) will apply. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 1, per year for each
year of coordinated service for the first ten years and the
percent specified in section 356.315, subdivision 2, for each
year of coordinated service thereafter.

(d) This paragraph applies to a person who has become at
least 55 years old and who first becomes a member after June 30,
1989, and to any other member who has become at least 55 years
old and whose annuity amount, when calculated under this
paragraph and in conjunction with subdivision 7 is higher than
it is when calculated under paragraph (c), in conjunction with
the provisions of subdivision 6. The retirement annuity formula
percentage for purposes of this paragraph is the percent
specified in section 356.315, subdivision 2, for each year of
coordinated service.

Sec. 26.

Minnesota Statutes 2004, section 354A.32,
subdivision 1, is amended to read:

Subdivision 1.

Optional forms generally.

The boards
board of the Minneapolis and the St. Paul Teachers Retirement
Fund Associations Association shall each establish for the
coordinated program and the board of the Duluth Teachers
Retirement Fund Association shall establish for the new law
coordinated program an optional retirement annuity which shall
take the form of a joint and survivor annuity. Each board may
also in its discretion establish an optional annuity which shall
take the form of an annuity payable for a period certain and for
life thereafter. Each board shall also establish an optional
retirement annuity that guarantees payment of the balance of the
annuity recipient's accumulated deductions to a designated
beneficiary upon the death of the annuity recipient. Except as
provided in subdivision 1a, optional annuity forms shall be the
actuarial equivalent of the normal forms provided in section
354A.31. In establishing these optional annuity forms, the
board shall obtain the written recommendation of the
commission-retained actuary. The recommendation shall be a part
of the permanent records of the board.

Sec. 27.

Minnesota Statutes 2004, section 354A.39, is
amended to read:

354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS;
ANNUITY.

Any person who has been a member of the Minnesota State
Retirement System, the Public Employees Retirement Association
including the Public Employees Retirement Association Police and
Fire Fund, the Teachers Retirement Association, the Minnesota
State Patrol Retirement Association, the legislators retirement
plan, the constitutional officers retirement plan, the
Minneapolis Employees Retirement Fund, the Duluth Teachers
Retirement Fund Association new law coordinated program, the
Minneapolis Teachers Retirement Fund Association coordinated
program,the St. Paul Teachers Retirement Fund Association
coordinated program, or any other public employee retirement
system in the state of Minnesota having a like provision but
excluding all other funds providing retirement benefits for
police officers or firefighters shall be entitled when qualified
to an annuity from each fund if the person's total allowable
service in all of the funds or in any two or more of the funds
totals three or more years, provided that no portion of the
allowable service upon which the retirement annuity from one
fund is based is used again in the computation for a retirement
annuity from another fund and provided further that the person
has not taken a refund from any of funds or associations since
the person's membership in the fund or association has
terminated. The annuity from each fund or association shall be
determined by the appropriate provisions of the law governing
each fund or association, except that the requirement that a
person must have at least three years of allowable service in
the respective fund or association shall not apply for the
purposes of this section, provided that the aggregate service in
two or more of these funds equals three or more years.

Sec. 28.

Minnesota Statutes 2004, section 354A.40,
subdivision 1, is amended to read:

Subdivision 1.

Retirement annuity.

Any coordinated
member of either the Minneapolis Teachers Retirement Fund
Association or of the St. Paul Teachers Retirement Fund
Association who has credited service prior to July 1, 1978 shall
be entitled to receive a retirement annuity when otherwise
qualified, the calculation of which shall utilize the applicable
retirement annuity formula specified in articles of
incorporation and bylaws of the teachers retirement fund
association governing the basic program for that portion of
credited service which was served prior to July 1, 1978, and the
retirement annuity formula specified in section 354A.31 for the
remainder of the member's credited service, both applied to the
member's average salary as specified in section 354A.31,
subdivision 4. The formula percentages to be used in
calculating the coordinated portion of the retirement annuity or
coordinated service under this section shall recognize the
coordinated service as a continuation of any service prior to
July 1, 1978.

Sec. 29.

Minnesota Statutes 2004, section 354A.41, is
amended to read:

354A.41 ADMINISTRATION OF COORDINATED PROGRAM.

Subdivision 1.

Administrative provisions.

The provisions
of the articles of incorporation and bylaws of the Minneapolis
or the St. Paul Teachers Retirement Fund Association, whichever
is applicable,relating to the administration of the fund shall
govern the administration of the coordinated program and the
provisions of the articles of incorporation and bylaws of the
Duluth Teachers Retirement Fund Association relating to the
administration of the fund shall govern the administration of
the new law coordinated program in instances where the
administrative provisions are not inconsistent with the
provisions of sections 354A.31 to 354A.41, including but not
limited to provisions relating to the composition and function
of the board of trustees, the investment of assets of the
teachers retirement fund association, and the definition of the
plan year.

Subd. 2.

Actuarial valuations.

In any actuarial
valuation of the Minneapolis Teachers Retirement Fund
Association, the St. Paul Teachers Retirement Fund Association,
or the Duluth Teachers Retirement Fund Association under section
356.215 prepared by the commission-retained actuary or
supplemental actuarial valuation prepared by an approved actuary
retained by the teachers retirement fund association, there
shall be included a finding of the condition of the fund showing
separately the basic and coordinated programs or the old law
coordinated and new law coordinated programs, as appropriate.
The finding shall include the level normal cost and the
applicable employee and employer contribution rates for each
program.

Sec. 30.

Minnesota Statutes 2004, section 356.20,
subdivision 2, is amended to read:

Subd. 2.

Covered public pension plans and funds.

This
section applies to the following public pension plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System;

(2) the general employees retirement plan of the Public
Employees Retirement Association;

(3) the Teachers Retirement Association;

(4) the State Patrol retirement plan;

(5) the Minneapolis Teachers Retirement Fund Association;

(6) the St. Paul Teachers Retirement Fund Association;

(7) (6) the Duluth Teachers Retirement Fund Association;

(8) (7) the Minneapolis Employees Retirement Fund;

(9) (8) the University of Minnesota faculty retirement
plan;

(10) (9) the University of Minnesota faculty supplemental
retirement plan;

(11) (10) the judges retirement fund;

(12) (11) a police or firefighter's relief association
specified or described in section 69.77, subdivision 1a, or
69.771, subdivision 1;

(13) (12) the public employees police and fire plan of the
Public Employees Retirement Association;

(14) (13) the correctional state employees retirement plan
of the Minnesota State Retirement System; and

(15) (14) the local government correctional service
retirement plan of the Public Employees Retirement Association.

Sec. 31.

Minnesota Statutes 2004, section 356.214,
subdivision 1, is amended to read:

Subdivision 1.

Joint retention.

(a) The chief
administrative officers of the Minnesota State Retirement
System, the Public Employees Retirement Association, the
Teachers Retirement Association, the Duluth Teachers Retirement
Fund Association, the Minneapolis Teachers Retirement Fund
Association,the Minneapolis Employees Retirement Fund, and the
St. Paul Teachers Retirement Fund Association, jointly, on
behalf of the state, its employees, its taxpayers, and its
various public pension plans, shall contract with an established
actuarial consulting firm to conduct annual actuarial valuations
and related services for the retirement plans named in paragraph
(b). The principal from the actuarial consulting firm on the
contract must be an approved actuary under section 356.215,
subdivision 1, paragraph (c). Prior to becoming effective, the
contract under this section is subject to a review and approval
by the Legislative Commission on Pensions and Retirement.

(b) The contract for actuarial services must include the
preparation of actuarial valuations and related actuarial work
for the following retirement plans:

(1) the teachers retirement plan, Teachers Retirement
Association;

(2) the general state employees retirement plan, Minnesota
State Retirement System;

(3) the correctional employees retirement plan, Minnesota
State Retirement System;

(4) the State Patrol retirement plan, Minnesota State
Retirement System;

(5) the judges retirement plan, Minnesota State Retirement
System;

(6) the Minneapolis employees retirement plan, Minneapolis
Employees Retirement Fund;

(7) the public employees retirement plan, Public Employees
Retirement Association;

(8) the public employees police and fire plan, Public
Employees Retirement Association;

(9) the Duluth teachers retirement plan, Duluth Teachers
Retirement Fund Association;

(10) the Minneapolis teachers retirement plan, Minneapolis
Teachers Retirement Fund Association;

(11) the St. Paul teachers retirement plan, St. Paul
Teachers Retirement Fund Association;

(12) (11) the legislators retirement plan, Minnesota State
Retirement System;

(13) (12) the elective state officers retirement plan,
Minnesota State Retirement System; and

(14) (13) local government correctional service retirement
plan, Public Employees Retirement Association.

(c) The contract must require completion of the annual
actuarial valuation calculations on a fiscal year basis, with
the contents of the actuarial valuation calculations as
specified in section 356.215, and in conformity with the
standards for actuarial work adopted by the Legislative
Commission on Pensions and Retirement.

The contract must require completion of annual experience
data collection and processing and a quadrennial published
experience study for the plans listed in paragraph (b), clauses
(1), (2), and (7), as provided for in the standards for
actuarial work adopted by the commission. The experience data
collection, processing, and analysis must evaluate the following:

(1) individual salary progression;

(2) the rate of return on investments based on the current
asset value;

(3) payroll growth;

(4) mortality;

(5) retirement age;

(6) withdrawal; and

(7) disablement.

The contract must include provisions for the preparation of
cost analyses by the jointly retained actuary for proposed
legislation that include changes in benefit provisions or
funding policies prior to their consideration by the Legislative
Commission on Pensions and Retirement.

(d) The actuary retained by the joint retirement systems
shall annually prepare a report to the legislature, including a
commentary on the actuarial valuation calculations for the plans
named in paragraph (b) and summarizing the results of the
actuarial valuation calculations. The actuary shall include
with the report the actuary's recommendations to the legislature
concerning the appropriateness of the support rates to achieve
proper funding of the retirement plans by the required funding
dates. The actuary shall, as part of the quadrennial experience
study, include recommendations to the legislature on the
appropriateness of the actuarial valuation assumptions required
for evaluation in the study.

(e) If the actuarial gain and loss analysis in the
actuarial valuation calculations indicates a persistent pattern
of sizable gains or losses, as directed by the joint retirement
systems or as requested by the chair of the Legislative
Commission on Pensions and Retirement, the actuary shall prepare
a special experience study for a plan listed in paragraph (b),
clause (3), (4), (5), (6), (8), (9), (10), (11), (12), (13),or
(14) (13), in the manner provided for in the standards for
actuarial work adopted by the commission.

(f) The term of the contract between the joint retirement
systems and the actuary retained may not exceed five years. The
joint retirement system administrative officers shall establish
procedures for the consideration and selection of contract
bidders and the requirements for the contents of an actuarial
services contract under this section. The procedures and
requirements must be submitted to the Legislative Commission on
Pensions and Retirement for review and comment prior to final
approval by the joint administrators. The contract is subject
to the procurement procedures under chapter 16C. The
consideration of bids and the selection of a consulting
actuarial firm by the chief administrative officers must occur
at a meeting that is open to the public and reasonable timely
public notice of the date and the time of the meeting and its
subject matter must be given.

(g) The actuarial services contract may not limit the
ability of the Minnesota legislature and its standing committees
and commissions to rely on the actuarial results of the work
prepared under the contract.

(h) The joint retirement systems shall designate one of the
retirement system executive directors as the actuarial services
contract manager.

Sec. 32.

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
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 G
State Patrol retirement plan assumption H G
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 G
teachers retirement plan assumption D
Duluth teachers retirement plan assumption E
Minneapolis teachers retirement plan assumption F
St. Paul teachers retirement plan assumption G F

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 F H G
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 8.006.50 6.90 7.7500
18 6.85 6.85 11.50 8.10 8.006.50 6.90 7.7500
19 6.80 6.80 11.50 8.05 8.006.50 6.90 7.7500
20 6.75 6.40 11.50 6.00 6.906.50 6.90 7.7500
21 6.75 6.40 11.50 6.00 6.906.50 6.90 7.1454
22 6.75 6.40 11.00 6.00 6.906.50 6.90 7.0725
23 6.75 6.40 10.50 6.00 6.856.50 6.85 7.0544
24 6.75 6.40 10.00 6.00 6.806.50 6.80 7.0363
25 6.75 6.40 9.50 6.00 6.756.50 6.75 7.0000
26 6.75 6.36 9.20 6.00 6.706.50 6.70 7.0000
27 6.75 6.32 8.90 6.00 6.656.50 6.65 7.0000
28 6.75 6.28 8.60 6.00 6.606.50 6.60 7.0000
29 6.75 6.24 8.30 6.00 6.556.50 6.55 7.0000
30 6.75 6.20 8.00 6.00 6.506.50 6.50 7.0000
31 6.75 6.16 7.80 6.00 6.456.50 6.45 7.0000
32 6.75 6.12 7.60 6.00 6.406.50 6.40 7.0000
33 6.75 6.08 7.40 6.00 6.356.50 6.35 7.0000
34 6.75 6.04 7.20 6.00 6.306.50 6.30 7.0000
35 6.75 6.00 7.00 6.00 6.256.50 6.25 7.0000
36 6.75 5.96 6.80 6.00 6.206.50 6.20 6.9019
37 6.75 5.92 6.60 6.00 6.156.50 6.15 6.8074
38 6.75 5.88 6.40 5.90 6.106.50 6.10 6.7125
39 6.75 5.84 6.20 5.80 6.056.50 6.05 6.6054
40 6.75 5.80 6.00 5.70 6.006.50 6.00 6.5000
41 6.75 5.76 5.90 5.60 5.906.50 5.95 6.3540
42 6.75 5.72 5.80 5.50 5.806.50 5.90 6.2087
43 6.65 5.68 5.70 5.40 5.706.50 5.85 6.0622
44 6.55 5.64 5.60 5.30 5.606.50 5.80 5.9048
45 6.45 5.60 5.50 5.20 5.506.50 5.75 5.7500
46 6.35 5.56 5.45 5.10 5.406.40 5.70 5.6940
47 6.25 5.52 5.40 5.00 5.306.30 5.65 5.6375
48 6.15 5.48 5.35 5.00 5.206.20 5.60 5.5822
49 6.05 5.44 5.30 5.00 5.106.10 5.55 5.5404
50 5.95 5.40 5.25 5.00 5.006.00 5.50 5.5000
51 5.85 5.36 5.25 5.00 5.005.90 5.45 5.4384
52 5.75 5.32 5.25 5.00 5.005.80 5.40 5.3776
53 5.65 5.28 5.25 5.00 5.005.70 5.35 5.3167
54 5.55 5.24 5.25 5.00 5.005.60 5.30 5.2826
55 5.45 5.20 5.25 5.00 5.005.50 5.25 5.2500
56 5.35 5.16 5.25 5.00 5.005.40 5.20 5.2500
57 5.25 5.12 5.25 5.00 5.005.30 5.15 5.2500
58 5.25 5.08 5.25 5.10 5.005.20 5.10 5.2500
59 5.25 5.04 5.25 5.20 5.005.10 5.05 5.2500
60 5.25 5.00 5.25 5.30 5.005.00 5.00 5.2500
61 5.25 5.00 5.25 5.40 5.005.00 5.00 5.2500
62 5.25 5.00 5.25 5.50 5.005.00 5.00 5.2500
63 5.25 5.00 5.25 5.60 5.005.00 5.00 5.2500
64 5.25 5.00 5.25 5.70 5.005.00 5.00 5.2500
65 5.25 5.00 5.25 5.70 5.005.00 5.00 5.2500
66 5.25 5.00 5.25 5.70 5.005.00 5.00 5.2500
67 5.25 5.00 5.25 5.70 5.005.00 5.00 5.2500
68 5.25 5.00 5.25 5.70 5.005.00 5.00 5.2500
69 5.25 5.00 5.25 5.70 5.005.00 5.00 5.2500
70 5.25 5.00 5.25 5.70 5.005.00 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. 33.

Minnesota Statutes 2004, section 356.215,
subdivision 11, is amended to read:

Subd. 11.

Amortization contributions.

(a) In addition to
the exhibit indicating the level normal cost, the actuarial
valuation must contain an exhibit indicating the additional
annual contribution sufficient to amortize the unfunded
actuarial accrued liability. For funds governed by chapters 3A,
352, 352B, 352C, 353, 354, 354A, and 490, the additional
contribution must be calculated on a level percentage of covered
payroll basis by the established date for full funding in effect
when the valuation is prepared. For funds governed by chapter
3A, sections 352.90 through 352.951, chapters 352B, 352C,
sections 353.63 through 353.68, and chapters 353C, 354A, and
490, the level percent additional contribution must be
calculated assuming annual payroll growth of 6.5 percent. For
funds governed by sections 352.01 through 352.86 and chapter
354, the level percent additional contribution must be
calculated assuming an annual payroll growth of five percent.
For the fund governed by sections 353.01 through 353.46, the
level percent additional contribution must be calculated
assuming an annual payroll growth of six percent. For all other
funds, the additional annual contribution must be calculated on
a level annual dollar amount basis.

(b) For any fund other than the Minneapolis Employees
Retirement Fund and the Public Employees Retirement Association
general plan, if there has not been a change in the actuarial
assumptions used for calculating the actuarial accrued liability
of the fund, a change in the benefit plan governing annuities
and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability
of all or a portion of the fund, or a combination of the three,
which change or changes by itself or by themselves without
inclusion of any other items of increase or decrease produce a
net increase in the unfunded actuarial accrued liability of the
fund, the established date for full funding is the first
actuarial valuation date occurring after June 1, 2020.

(c) For any fund or plan other than the Minneapolis
Employees Retirement Fund and the Public Employees Retirement
Association general plan, if there has been a change in any or
all of the actuarial assumptions used for calculating the
actuarial accrued liability of the fund, a change in the benefit
plan governing annuities and benefits payable from the fund, a
change in the actuarial cost method used in calculating the
actuarial accrued liability of all or a portion of the fund, or
a combination of the three, and the change or changes, by itself
or by themselves and without inclusion of any other items of
increase or decrease, produce a net increase in the unfunded
actuarial accrued liability in the fund, the established date
for full funding must be determined using the following
procedure:

(i) the unfunded actuarial accrued liability of the fund
must be determined in accordance with the plan provisions
governing annuities and retirement benefits and the actuarial
assumptions in effect before an applicable change;

(ii) the level annual dollar contribution or level
percentage, whichever is applicable, needed to amortize the
unfunded actuarial accrued liability amount determined under
item (i) by the established date for full funding in effect
before the change must be calculated using the interest
assumption specified in subdivision 8 in effect before the
change;

(iii) the unfunded actuarial accrued liability of the fund
must be determined in accordance with any new plan provisions
governing annuities and benefits payable from the fund and any
new actuarial assumptions and the remaining plan provisions
governing annuities and benefits payable from the fund and
actuarial assumptions in effect before the change;

(iv) the level annual dollar contribution or level
percentage, whichever is applicable, needed to amortize the
difference between the unfunded actuarial accrued liability
amount calculated under item (i) and the unfunded actuarial
accrued liability amount calculated under item (iii) over a
period of 30 years from the end of the plan year in which the
applicable change is effective must be calculated using the
applicable interest assumption specified in subdivision 8 in
effect after any applicable change;

(v) the level annual dollar or level percentage
amortization contribution under item (iv) must be added to the
level annual dollar amortization contribution or level
percentage calculated under item (ii);

(vi) the period in which the unfunded actuarial accrued
liability amount determined in item (iii) is amortized by the
total level annual dollar or level percentage amortization
contribution computed under item (v) must be calculated using
the interest assumption specified in subdivision 8 in effect
after any applicable change, rounded to the nearest integral
number of years, but not to exceed 30 years from the end of the
plan year in which the determination of the established date for
full funding using the procedure set forth in this clause is
made and not to be less than the period of years beginning in
the plan year in which the determination of the established date
for full funding using the procedure set forth in this clause is
made and ending by the date for full funding in effect before
the change; and

(vii) the period determined under item (vi) must be added
to the date as of which the actuarial valuation was prepared and
the date obtained is the new established date for full funding.

(d) For the Minneapolis Employees Retirement Fund, the
established date for full funding is June 30, 2020.

(e) For the general employees retirement plan of the Public
Employees Retirement Association, the established date for full
funding is June 30, 2031.

(f) For the Teachers Retirement Association, the
established date for full funding is June 30, 2035.

(g) For the retirement plans for which the annual actuarial
valuation indicates an excess of valuation assets over the
actuarial accrued liability, the valuation assets in excess of
the actuarial accrued liability must be recognized as a
reduction in the current contribution requirements by an amount
equal to the amortization of the excess expressed as a level
percentage of pay over a 30-year period beginning anew with each
annual actuarial valuation of the plan.

Sec. 34.

Minnesota Statutes 2004, section 356.30,
subdivision 3, is amended to read:

Subd. 3.

Covered plans.

This section applies to the
following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(2) the correctional state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(3) the unclassified employees retirement program,
established under chapter 352D;

(4) the State Patrol retirement plan, established under
chapter 352B;

(5) the legislators retirement plan, established under
chapter 3A;

(6) the elective state officers' retirement plan,
established under chapter 352C;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established under chapter 353;

(8) the public employees police and fire retirement plan of
the Public Employees Retirement Association, established under
chapter 353;

(9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
under chapter 353E;

(10) the Teachers Retirement Association, established under
chapter 354;

(11) the Minneapolis Employees Retirement Fund, established
under chapter 422A;

(12) the Minneapolis Teachers Retirement Fund Association,
established under chapter 354A;

(13) the St. Paul Teachers Retirement Fund Association,
established under chapter 354A;

(14) (13) the Duluth Teachers Retirement Fund Association,
established under chapter 354A; and

(15) (14) the judges' retirement fund, established by
sections 490.121 to 490.132.

Sec. 35.

Minnesota Statutes 2004, section 356.302,
subdivision 7, is amended to read:

Subd. 7.

Covered retirement plans.

This section applies
to the following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(2) the unclassified state employees retirement program of
the Minnesota State Retirement System, established by chapter
352D;

(3) the general employees retirement plan of the Public
Employees Retirement Association, established by chapter 353;

(4) the Teachers Retirement Association, established by
chapter 354;

(5) the Duluth Teachers Retirement Fund Association,
established by chapter 354A;

(6) the Minneapolis Teachers Retirement Fund Association,
established by chapter 354A;

(7) the St. Paul Teachers Retirement Fund Association,
established by chapter 354A;

(8) (7) the Minneapolis Employees Retirement Fund,
established by chapter 422A;

(9) (8) the state correctional employees retirement plan of
the Minnesota State Retirement System, established by chapter
352;

(10) (9) the State Patrol retirement plan, established by
chapter 352B;

(11) (10) the public employees police and fire plan of the
Public Employees Retirement Association, established by chapter
353;

(12) (11) the local government correctional service
retirement plan of the Public Employees Retirement Association,
established by chapter 353E; and

(13) (12) the judges' retirement plan, established by
sections 490.121 to 490.132.

Sec. 36.

Minnesota Statutes 2004, section 356.303,
subdivision 4, is amended to read:

Subd. 4.

Covered retirement plans.

This section applies
to the following retirement plans:

(1) the legislators retirement plan, established by chapter
3A;

(2) the general state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(3) the correctional state employees retirement plan of the
Minnesota State Retirement System, established by chapter 352;

(4) the State Patrol retirement plan, established by
chapter 352B;

(5) the elective state officers retirement plan,
established by chapter 352C;

(6) the unclassified state employees retirement program,
established by chapter 352D;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established by chapter 353;

(8) the public employees police and fire plan of the Public
Employees Retirement Association, established by chapter 353;

(9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
by chapter 353E;

(10) the Teachers Retirement Association, established by
chapter 354;

(11) the Duluth Teachers Retirement Fund Association,
established by chapter 354A;

(12) the Minneapolis Teachers Retirement Fund Association,
established by chapter 354A;

(13) the St. Paul Teachers Retirement Fund Association,
established by chapter 354A;

(14) (13) the Minneapolis Employees Retirement Fund,
established by chapter 422A; and

(15) (14) the judges' retirement fund, established by
sections 490.121 to 490.132.

Sec. 37.

Minnesota Statutes 2004, section 356.315, is
amended by adding a subdivision to read:

Subd. 1a.

Coordinated plan members.

The applicable
benefit accrual rate is 1.5 percent.

Sec. 38.

Minnesota Statutes 2004, section 356.42,
subdivision 3, is amended to read:

Subd. 3.

Covered retirement plans.

The postretirement
adjustment provided in this section applies to the following
retirement funds:

(1) the general employees retirement plans of the Public
Employees Retirement Association;

(2) the public employees police and fire plan of the Public
Employees Retirement Association;

(3) the teachers retirement association;

(4) the State Patrol retirement plan;

(5) the state employees retirement plan of the Minnesota
State Retirement System;

(6) the Minneapolis Teachers Retirement Fund Association
established under chapter 354A;

(7) the St. Paul Teachers Retirement Fund Association
established under chapter 354A; and

(8) (7) the Duluth Teachers Retirement Fund Association
established under chapter 354A.

Sec. 39.

Minnesota Statutes 2004, section 356.465,
subdivision 3, is amended to read:

Subd. 3.

Covered retirement plans.

The provisions of
this section apply to the following retirement plans:

(1) the general state employees retirement plan of the
Minnesota State Retirement System established under chapter 352;

(2) the correctional state employees retirement plan of the
Minnesota State Retirement System established under chapter 352;

(3) the State Patrol retirement plan established under
chapter 352B;

(4) the legislators retirement plan established under
chapter 3A;

(5) the judges retirement plan established under chapter
490;

(6) the general employees retirement plan of the Public
Employees Retirement Association established under chapter 353;

(7) the public employees police and fire plan of the Public
Employees Retirement Association established under chapter 353;

(8) the teachers retirement plan established under chapter
354;

(9) the Duluth Teachers Retirement Fund Association
established under chapter 354A;

(10) the St. Paul Teachers Retirement Fund Association
established under chapter 354A;

(11) the Minneapolis Teachers Retirement Fund Association
established under chapter 354A;

(12) the Minneapolis employees retirement plan established
under chapter 422A;

(13) (12) the Minneapolis Firefighters Relief Association
established under chapter 423C;

(14) (13) the Minneapolis Police Relief Association
established under chapter 423B; and

(15) (14) the local government correctional service
retirement plan of the Public Employees Retirement Association
established under chapter 353E.

Sec. 40.

Minnesota Statutes 2004, section 423A.02,
subdivision 1b, is amended to read:

Subd. 1b.

Additional amortization state aid.

(a)
Annually, on October 1, the commissioner of revenue shall
allocate the additional amortization state aid transferred under
section 69.021, subdivision 11, to:

(1) all police or salaried firefighters relief associations
governed by and in full compliance with the requirements of
section 69.77, that had an unfunded actuarial accrued liability
in the actuarial valuation prepared under sections 356.215 and
356.216 as of the preceding December 31;

(2) all local police or salaried firefighter consolidation
accounts governed by chapter 353A that are certified by the
executive director of the public employees retirement
association as having for the current fiscal year an additional
municipal contribution amount under section 353A.09, subdivision
5, paragraph (b), and that have implemented section 353A.083,
subdivision 1, if the effective date of the consolidation
preceded May 24, 1993, and that have implemented section
353A.083, subdivision 2, if the effective date of the
consolidation preceded June 1, 1995; and

(3) the municipalities that are required to make an
additional municipal contribution under section 353.665,
subdivision 8, for the duration of the required additional
contribution.

(b) The commissioner shall allocate the state aid on the
basis of the proportional share of the relief association or
consolidation account of the total unfunded actuarial accrued
liability of all recipient relief associations and consolidation
accounts as of December 31, 1993, for relief associations, and
as of June 30, 1994, for consolidation accounts.

(c) Beginning October 1, 2000, and annually thereafter, the
commissioner shall allocate the state aid, including any state
aid in excess of the limitation in subdivision 4, on the
following basis:

(1) 64.5 percent to the municipalities to which section
353.665, subdivision 8, paragraph (b), or 353A.09, subdivision
5, paragraph (b), apply for distribution in accordance with
paragraph (b) and subject to the limitation in subdivision 4;

(2) 34.2 percent to the city of Minneapolis to fund any
unfunded actuarial accrued liability in the actuarial valuation
prepared under sections 356.215 and 356.216 as of the preceding
December 31 for the Minneapolis Police Relief Association or the
Minneapolis Fire Department Relief Association; and

(3) 1.3 percent to the city of Virginia to fund any
unfunded actuarial accrued liability in the actuarial valuation
prepared under sections 356.215 and 356.216 as of the preceding
December 31 for the Virginia Fire Department Relief Association.

If there is no unfunded actuarial accrued liability in both
the Minneapolis Police Relief Association and the Minneapolis
Fire Department Relief Association as disclosed in the most
recent actuarial valuations for the relief associations prepared
under sections 356.215 and 356.216, the commissioner shall
allocate that 34.2 percent of the aid as follows: 49 percent to
the Minneapolis Teachers Retirement Fund Association, 21 percent
to the St. Paul Teachers Retirement Fund Association, and 30
percent as additional funding to support minimum fire state aid
for volunteer firefighters relief associations. If there is no
unfunded actuarial accrued liability in the Virginia Fire
Department Relief Association as disclosed in the most recent
actuarial valuation for the relief association prepared under
sections 356.215 and 356.216, the commissioner shall allocate
that 1.3 percent of the aid as follows: 49 percent to the
Minneapolis Teachers Retirement Fund Association, 21 percent to
the St. Paul Teachers Retirement Fund Association, and 30
percent as additional funding to support minimum fire state aid
for volunteer firefighters relief associations. The allocation
must be made by the commissioner at the same time and under the
same procedures as specified in subdivision 3. With respect to
the Minneapolis Teachers Retirement Fund Association or the St.
Paul Teachers Retirement Fund Association, annually, beginning
on July 1, 2005, if the applicable teacher's association
five-year average time-weighted rate of investment return does
not equal or exceed the performance of a composite portfolio
assumed passively managed (indexed) invested ten percent in cash
equivalents, 60 percent in bonds and similar debt securities,
and 30 percent in domestic stock calculated using the formula
under section 11A.04, clause (11), the aid allocation to that
retirement fund under this section ceases until the five-year
annual rate of investment return equals or exceeds the
performance of that composite portfolio.

(d) The amounts required under this subdivision are
annually appropriated to the commissioner of revenue.

Sec. 41. FULL FUNDING DATE.

Notwithstanding any other law to the contrary, for the
Teachers Retirement Association, the established date for full
funding is 2035.

Sec. 42. MTRFA EMPLOYEE JOB PREFERENCE.

An employee of the Minneapolis Teachers Retirement Fund
Association on the date of enactment has an employment
preference for subsequent employment by the Teachers Retirement
Association, the Minnesota State Retirement System, or the
Public Employees Retirement Association equivalent to the
preference provided to armed forces veterans under state law and
Department of Employee Relations practice.

Sec. 43. MTRFA ARTICLES AND BYLAWS; REPEAL;
APPLICABILITY.

(a) The articles of incorporation and bylaws of the
Minneapolis Teachers Retirement Fund Association are repealed
and have application only as provided in section 6, subdivision
6, and paragraph (b).

(b) The articles of incorporation and bylaws of the
Minneapolis Teachers Retirement Fund Association only apply to
members of the former Minneapolis Teachers Retirement Fund
Association with service credit in the plan on or before June
30, 2005, and apply solely for purposes of determining the
retirement annuity for or benefit on behalf of a member of the
basic program of that retirement plan.

(c) No annuity adjustment or increase under article 30 of
the articles of incorporation of the Minneapolis Teachers
Retirement Fund Association is applicable or payable after June
30, 2005.

Sec. 44. EDUCATION RESERVE ACCOUNT TRANSFERS.

Notwithstanding any other law to the contrary, any deposit
into the education reserve account of the increased amount of
the state general levy under Minnesota Statutes, section
275.025, over the state general levy base amount for taxes
payable in 2002, is first effective for property taxes remitted
to the state after June 30, 2008.

Sec. 45. APPROPRIATION.

(a) $2,500,000 is appropriated from the education reserve
account in the special revenue fund to the commissioner of
finance for transfer to the teachers retirement fund as required
by section 6. $1,250,000 is for the fiscal year ending June 30,
2006, and $1,250,000 is for the fiscal year ending June 30, 2007.
Additionally, $2,500,000 is appropriated from the general fund
to the commissioner of finance for transfer to the teachers
retirement fund as required by section 6. $1,250,000 is for the
fiscal year ending June 30, 2006, and $1,250,000 is for the
fiscal year ending June 30, 2007.

(b) For fiscal years 2006 and 2007 only, the amount
necessary to make state aid payments for the additional employer
contributions required under Minnesota Statutes, section 354.42,
subdivision 3, is appropriated from the general fund.

Sec. 46. REPEALER.

Minnesota Statutes 2004, sections 354A.051; 354A.105;
354A.23, subdivision 1; and 354A.28, are repealed.

Sec. 47. EFFECTIVE DATE.

(a) Sections 1, 2, 20, and 21 are effective the day
following final enactment.

(b) Section 8 is effective June 30, 2005.

(c) Sections 3 to 7, 9 to 19, and 22 to 46 are effective
the day following final enactment.

ARTICLE 17

PRE-1969 TEACHER SPECIAL POSTRETIREMENT
ADJUSTMENT

Section 1.

[354.551] ADDITIONAL BENEFIT FOR CERTAIN
TEACHERS.

Subdivision 1.

Additional benefit entitlement.

If there
is an appropriation for this purpose and to the extent of that
appropriation, eligible retired teachers as defined in
subdivision 2 are entitled to receive the additional benefit
amount determined under subdivision 3 unless the applicable
person files a written notification with the executive director
of the Teachers Retirement Association that the additional
benefit not be paid.

Subd. 2.

Eligibility.

An eligible person for purposes of
this section is a person who:

(1) was a teacher as defined in section 354.05, subdivision
2;

(2) rendered teaching service as defined in section 354.05,
subdivision 3, either during the 1968-1969 school year, but was
not covered by the improved money purchase program savings
clause in section 354.55, subdivision 17, or before the
1968-1969 school year, did not take a refund of member
contributions upon the termination of teacher service, and was
eligible to make an election under Minnesota Statutes 1971,
section 354.55, subdivision 8.

Subd. 3.

Determination of additional benefit amount.

(a)
By July 1, annually, the executive director of the Teachers
Retirement Association shall determine which retired teachers
are eligible to receive an additional benefit amount under this
section and the amount of each person's additional benefit
amount.

If the applicable appropriation permits, as determined by
the executive director of the Teachers Retirement Association,
the increase amount is 45 percent of the difference, if a
positive number, obtained by subtracting the single life annuity
amount initially payable upon retirement under section 354.44,
subdivision 6, from a comparable single life annuity amount
computed as of the same date under section 354.44, subdivision
2. If the applicable appropriation does not permit the full
postretirement adjustment payment amount as determined by the
executive director of the Teachers Retirement Association, the
increase amount is that portion of the full increase amount that
bears the same relationship to the full increase amount that the
appropriation bears to the full required funding for the full
increase amount.

(b) The additional retirement benefit is payable beginning
July 1, 2005, for persons who were receiving a retirement
annuity on June 1, 2005, or with the initial retirement annuity
payment for persons who were active, deferred, or inactive
members on June 1, 2005.

Subd. 4.

Duration of additional benefit.

If the
appropriations permit, the additional benefit amount is payable
for life or for the duration of the selected optional annuity
form, whichever applies.

Subd. 5.

No payment to estate; no retroactivity.

(a)
Nothing in this section authorizes the payment of an additional
benefit amount under this section to an estate or to a survivor
or beneficiary other than under an optional annuity form.

(b) Nothing in this section authorizes the payment of an
additional benefit amount for any period before July 1, 2005.

(c) Nothing in this section authorizes the payment of an
additional benefit amount to a person who was or is entitled to
have their retirement annuity calculated under section 354.44,
subdivision 2.

Sec. 2. APPROPRIATION.

There is appropriated from the education reserve account in
the special revenue fund to the executive director of the
Teachers Retirement Association for the purposes of the special
postretirement adjustment under section 1 $11,000,000 for the
year ending June 30, 2006, and $11,000,000 for the year ending
June 30, 2007.

Sec. 3. EFFECTIVE DATE.

Sections 1 and 2 are effective on July 1, 2005.

ARTICLE 18

PENSION DEFAULT INSURANCE POOL

Section 1.

Minnesota Statutes 2004, section 352.04,
subdivision 12, is amended to read:

Subd. 12.

Fund disbursement restricted.

(a) The state
employees retirement fund and the participation in the Minnesota
postretirement investment fund must be disbursed only for the
purposes provided by law.

(b) The expenses of the system, the pension default
insurance pool charge under section 356.95,and any benefits
provided by law, other than benefits payable from the Minnesota
postretirement investment fund, must be paid from the state
employees retirement fund.

(c) The retirement allowances, retirement annuities, and
disability benefits, as well as refunds of any sum remaining to
the credit of a deceased retired employee or a disabled employee
must be paid only from the state employees retirement fund after
the needs have been certified and the amounts withdrawn from the
participation in the Minnesota postretirement investment fund
under section 11A.18.

(d) The amounts necessary to make the payments from the
state employees retirement fund and the participation in the
Minnesota postretirement investment fund are annually
appropriated from these funds for those purposes.

Sec. 2.

Minnesota Statutes 2004, section 352.911,
subdivision 5, is amended to read:

Subd. 5.

Fund disbursement restricted.

(a) The
correctional employees retirement fund and its share of
participation in the Minnesota postretirement investment fund
shall be disbursed only for the purposes provided for in the
applicable provisions in this chapter.

(b) The proportional share of the expenses of the system,
the pension default insurance pool charge under section 356.95,
and any benefits provided in sections 352.90 to 352.951, other
than benefits payable from the Minnesota postretirement
investment fund, shall be paid from the correctional employees
retirement fund.

(c) The retirement allowances, retirement annuities, the
disability benefits, the survivorship benefits, and any refunds
of accumulated deductions shall be paid only from the
correctional employees retirement fund after those needs have
been certified by the executive director and the amounts
withdrawn from the share of participation in the Minnesota
postretirement fund under section 11A.18.

(d) The amounts necessary to make the payments from the
correctional employees retirement fund and the participation in
the Minnesota postretirement investment fund are annually
appropriated from those funds for those purposes.

Sec. 3.

Minnesota Statutes 2004, section 352B.02,
subdivision 1d, is amended to read:

Subd. 1d.

Fund revenue and expenses.

The amounts
provided for in this section must be credited to the State
Patrol retirement fund. All money received must be deposited by
the commissioner of finance in the State Patrol retirement
fund. The fund must be used to pay the administrative expenses
of the retirement fund, the pension default insurance pool
charge under section 356.95,and the benefits and annuities
provided in this chapter. Appropriate amounts shall be
transferred to or withdrawn from the Minnesota postretirement
investment fund as provided in section 352B.26.

Sec. 4.

Minnesota Statutes 2004, section 352D.09,
subdivision 7, is amended to read:

Subd. 7.

Administrative fees.

The board of directors
shall establish a budget and charge participants a fee to pay
the administrative expenses of the unclassified program and the
pension default insurance pool charge under section 356.95.
Fees cannot be charged on contributions and investment returns
attributable to contributions made before July 1, 1992. Annual
total fees charged for plan administration cannot exceed 10/100
of one percent of the contributions and investment returns
attributable to contributions made on or after July 1, 1992.

Sec. 5.

Minnesota Statutes 2004, section 353.27,
subdivision 1, is amended to read:

Subdivision 1.

Income; disbursements.

There is a special
fund known as the "public employees retirement fund," the
"retirement fund," or the "fund," which shall include all the
assets of the association. This fund shall be credited with all
contributions, all interest and all other income authorized by
law. From this fund there is appropriated the payments
authorized by this chapter in the amounts and at such time
provided herein, including the expenses of administering the
fund, including the pension default insurance pool charge under
section 356.95,and including the proper share of the Minnesota
postretirement investment fund.

Sec. 6.

Minnesota Statutes 2004, section 353.65,
subdivision 6, is amended to read:

Subd. 6.

Fund.

All contributions other than the excess
contribution established by section 69.031, subdivision 5,
paragraphs (2), clauses (b) and (c), and (3) shall be credited
to the fund and all interest and other income of the fund shall
be credited to said fund. The retirement fund shall be
disbursed only for the purposes herein provided. The expenses
of said fund, the pension default insurance pool charge,and the
annuities herein provided upon retirement shall be paid from
said fund.

Sec. 7.

Minnesota Statutes 2004, section 353E.01,
subdivision 5, is amended to read:

Subd. 5.

Fund disbursement restricted.

(a) The public
employees local government correctional service retirement fund
and its share of participation in the Minnesota postretirement
investment fund may be disbursed only for the purposes provided
for in this chapter.

(b) The proportional share of the necessary and reasonable
administrative expenses of the association, the pension default
insurance pool charge under section 356.95,and any benefits
provided in this chapter, other than benefits payable from the
Minnesota postretirement investment fund, must be paid from the
public employees local government correctional service
retirement fund. Retirement annuities, disability benefits,
survivorship benefits, and any refunds of accumulated deductions
may be paid only from the correctional service retirement fund
after those needs have been certified by the executive director
and any applicable amounts withdrawn from the share of
participation in the Minnesota postretirement fund under section
11A.18.

(c) The amounts necessary to make the payments from the
public employees local government correctional service
retirement fund and its participation in the Minnesota
postretirement investment fund are annually appropriated from
those funds for those purposes.

Sec. 8.

Minnesota Statutes 2004, section 354.42, is
amended by adding a subdivision to read:

Subd. 8.

Pension default charge.

The pension default
insurance pool charge under section 356.95 must be paid from the
Teachers Retirement Association.

Sec. 9.

Minnesota Statutes 2004, section 354A.021,
subdivision 4, is amended to read:

Subd. 4.

Fund disbursement restricted.

The assets of the
special retirement fund shall be disbursed only for the purposes
provided for in this chapter, the articles of incorporation or
bylaws in effect as of March 31, 1975, and the articles of
incorporation or bylaws adopted subsequent to March 31, 1975 in
accordance with the provisions of section 354A.12. The pension
default insurance pool charge under section 356.95 and all
appropriate expenses of and any authorized benefits provided by
the teachers retirement fund association shall be paid from the
special retirement fund. Amounts necessary to make payments
from the special retirement fund of a teachers retirement fund
association are hereby appropriated.

Sec 10. [356.95] [PENSION DEFAULT INSURANCE POOL.]

Subdivision 1.

Default insurance; legislative
findings.

The legislature finds that some Minnesota public
pension plans have periodic funding difficulties and could
default on the payment of retirement benefits in the future.
The legislature further finds that a potential default may occur
at a time when timely corrective legislative responses may not
be possible, causing significant potential economic harm to
affected benefit recipients. To provide emergency funding
resources for a Minnesota public pension plan facing a default
in the payment of retirement benefits, the legislature is
establishing an insurance pool to have resources for a temporary
remedy for a defaulting pension plan.

Subd. 2.

Default insurance charge.

(a) In fiscal year
2006, the pension default insurance charge is $0.10 per month
per active member and benefit recipient of a covered retirement
plan.

(b) The pension default insurance charge must be reassessed
by the commissioner of finance, who shall revise the charge
upward or downward based on an assessment of the potential risk
of a future retirement plan default. The consulting actuary
retained under section 356.214 shall provide an assessment of
the relative probability of future retirement plan defaults as
part of the actuarial valuation reports performed annually.

Subd. 3.

Receipt of charges; investment.

The pension
default insurance charge is payable to the commissioner of
finance for deposit in a special pension default insurance pool
fund in the state treasury. The special default insurance pool
fund must be invested by the State Board of Investment in
investments authorized under section 11A.24.

Subd. 4.

Disbursements.

(a) The chief administrative
officer of a covered retirement plan facing imminent default in
the payment of retirement annuities and benefits is authorized
to apply to the commissioner of finance for the transfer of
assets to forestall the default.

(b) If the commissioner of finance finds that a covered
retirement plan is facing an imminent default, the commissioner
may transfer the necessary amount of assets to avert the
expected default from the pension default insurance pool.

Subd. 5.

Covered retirement plans.

The retirement plans
covered by the pension default insurance pool are:

(1) the general state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(2) the correctional state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;

(3) the unclassified employees retirement program,
established under chapter 352D;

(4) the State Patrol retirement plan, established under
chapter 352B;

(5) the legislators retirement plan, established under
chapter 3A;

(6) the elective state officers' retirement plan,
established under chapter 352C;

(7) the general employees retirement plan of the Public
Employees Retirement Association, established under chapter 353;

(8) the public employees police and fire retirement plan of
the Public Employees Retirement Association, established under
chapter 353;

(9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
under chapter 353E;

(10) the Teachers Retirement Association, established under
chapter 354;

(11) the Minneapolis Employees Retirement Fund, established
under chapter 422A;

(12) the Minneapolis Teachers Retirement Fund Association,
established under chapter 354A;

(13) the St. Paul Teachers Retirement Fund Association,
established under chapter 354A;

(14) the Duluth Teachers Retirement Fund Association,
established under chapter 354A; and

(15) the judges' retirement fund, established by sections
490.121 to 490.132.

Sec. 11. EFFECTIVE DATE.

Sections 1 to 10 are effective on the day following final
enactment.

ARTICLE 19

DEFERRED ANNUITIES AUGMENTATION

Section 1.

Minnesota Statutes 2004, section 352.116,
subdivision 1a, is amended to read:

Subd. 1a.

Actuarial reduction for early retirement.

This
subdivision applies to a person who has become at least 55 years
old and first became a covered employee after June 30, 1989, and
to any other covered employee who has become at least 55 years
old and whose annuity is higher when calculated under section
352.115, subdivision 3, paragraph (b), in conjunction with this
subdivision than when calculated under section 352.115,
subdivision 3, paragraph (a), in conjunction with subdivision 1.
A covered employee who retires before the normal retirement age
shall be paid the normal retirement annuity provided in section
352.115, subdivisions 2 and 3, paragraph (b), reduced so that
the reduced annuity is the actuarial equivalent of the annuity
that would be payable to the employee if the employee deferred
receipt of the annuity and the annuity amount were augmented at
an annual rate of three percent compounded annually from the day
the annuity begins to accrue until the normal retirement age, if
the employee became an employee before July 1, 2005, and is the
actuarial equivalent of this annuity that would be payable to
the employee if the employee deferred receipt of the annuity if
the employee initially became an employee after June 30, 2005.

Sec. 2.

Minnesota Statutes 2004, section 352.72,
subdivision 2, is amended to read:

Subd. 2.

Computation of deferred annuity.

(a) The
deferred annuity, if any, accruing under subdivision 1, or
section 352.22, subdivision 3, must be computed as provided in
section 352.22, subdivision 3, on the basis of allowable service
before termination of state service and augmented as provided
herein.

(b) If the employee became an employee before July 1, 2005,
the required reserves applicable to a deferred annuity or to an
annuity for which a former employee was eligible but had not
applied or to any deferred segment of an annuity must be
determined as of the date the benefit begins to accrue and
augmented by interest compounded annually from the first day of
the month following the month in which the employee ceased to be
a state employee, or July 1, 1971, whichever is later, to the
first day of the month in which the annuity begins to accrue.
The rates of interest used for this purpose must be five percent
compounded annually until January 1, 1981, and three percent
compounded annually thereafter until January 1 of the year
following the year in which the former employee attains age 55.
From that date to the effective date of retirement, the rate is
five percent compounded annually. If a person has more than one
period of uninterrupted service, the required reserves related
to each period must be augmented by interest under this
subdivision. The sum of the augmented required reserves so
determined is the present value of the annuity. "Uninterrupted
service" for the purpose of this subdivision means periods of
covered employment during which the employee has not been
separated from state service for more than two years. If a
person repays a refund, the service restored by the repayment
must be considered continuous with the next period of service
for which the employee has credit with this system. The formula
percentages used for each period of uninterrupted service must
be those applicable to a new employee. The mortality table and
interest assumption used to compute the annuity must be those in
effect when the employee files application for annuity. This
section does not reduce the annuity otherwise payable under this
chapter.

(c) If the employee initially became an employee after June
30, 2005, no augmentation is payable on a deferred annuity.

(b) (d) The retirement annuity or disability benefit of, or
the survivor benefit payable on behalf of, a former state
employee who terminated service before July 1, 1997, which is
not first payable until after June 30, 1997, must be increased
on an actuarial equivalent basis to reflect the change in the
postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a
calculation procedure and the tables adopted by the board and
approved by the actuary retained by the Legislative Commission
on Pensions and Retirement.

Sec. 3.

Minnesota Statutes 2004, section 352B.30,
subdivision 2, is amended to read:

Subd. 2.

Computation of deferred annuity.

(a) Deferred
annuities must be computed according to this chapter on the
basis of allowable service before termination of service and
augmented as provided in this chapter.

(b) If the member became a member before July 1, 2005,the
required reserves applicable to a deferred annuity must be
augmented by interest compounded annually from the first day of
the month following the month in which the member terminated
service, or July 1, 1971, whichever is later, to the first day
of the month in which the annuity begins to accrue. The rates
of interest used for this purpose shall be five percent per year
compounded annually until January 1, 1981, and after that date
three percent per year compounded annually. The mortality table
and interest assumption used to compute the annuity shall be
those in effect when the member files application for annuity.

(c) If the member initially became a member after June 30,
2005, no augmentation is payable on a deferred annuity.

Sec. 4.

Minnesota Statutes 2004, section 353.30,
subdivision 5, is amended to read:

Subd. 5.

Actuarial reduction for early retirement.

This
subdivision applies to a member who has become at least 55 years
old and first became a public employee after June 30, 1989, and
to any other member who has become at least 55 years old and
whose annuity is higher when calculated under section 353.29,
subdivision 3, paragraph (b), in conjunction with this
subdivision than when calculated under section 353.29,
subdivision 3, paragraph (a), in conjunction with subdivision 1,
1a, 1b, or 1c. An employee who retires before normal retirement
age shall be paid the retirement annuity provided in section
353.29, subdivision 3, paragraph (b), reduced so that the
reduced annuity is the actuarial equivalent of the annuity that
would be payable to the employee if the employee deferred
receipt of the annuity and the annuity amount were augmented at
an annual rate of three percent compounded annually from the day
the annuity begins to accrue until the normal retirement age if
the member became a member before July 1, 2005, and is the
actuarial equivalent of the annuity that would be payable to the
member if the member deferred receipt of the annuity if the
member initially became a member after June 30, 2005.

Sec. 5.

Minnesota Statutes 2004, section 353.71,
subdivision 2, is amended to read:

Subd. 2.

Deferred annuity computation; augmentation.

(a)
The deferred annuity accruing under subdivision 1, or under
sections 353.34, subdivision 3, and 353.68, subdivision 4, must
be computed on the basis of allowable service prior to the
termination of public service and augmented as provided in this
paragraph.

(b) The required reserves applicable to a deferred annuity,
or to any deferred segment of an annuity must be determined as
of the first day of the month following the month in which the
former member ceased to be a public employee, or July 1, 1971,
whichever is later. If the member became a member before July
1, 2005,these required reserves must be augmented at the rate
of five percent annually compounded annually until January 1,
1981, and at the rate of three percent thereafter until January
1 of the year following the year in which the former member
attains age 55. From that date to the effective date of
retirement, the rate is five percent compounded annually. If a
person has more than one period of uninterrupted service, the
required reserves related to each period must be augmented as
specified in this paragraph. The sum of the augmented required
reserves is the present value of the annuity. Uninterrupted
service for the purpose of this subdivision means periods of
covered employment during which the employee has not been
separated from public service for more than two years. If a
person repays a refund, the restored service must be considered
as continuous with the next period of service for which the
employee has credit with this association. This section must not
reduce the annuity otherwise payable under this chapter. This
paragraph applies to individuals who become deferred annuitants
on or after July 1, 1971. For a member who became a deferred
annuitant before July 1, 1971, the paragraph applies from July
1, 1971, if the former active member applies for an annuity
after July 1, 1973.

(c) If the member initially became a member after June 30,
2005, no augmentation is payable on a deferred annuity.

(b) (d) The retirement annuity or disability benefit of, or
the survivor benefit payable on behalf of, a former member who
terminated service before July 1, 1997, or the survivor benefit
payable on behalf of a basic or police and fire member who was
receiving disability benefits before July 1, 1997, which is
first payable after June 30, 1997, must be increased on an
actuarial equivalent basis to reflect the change in the
postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a
calculation procedure and tables adopted by the board and
approved by the actuary retained by the Legislative Commission
on Pensions and Retirement.

Sec. 6.

Minnesota Statutes 2004, section 353E.05, is
amended to read:

353E.05 AUGMENTATION IN CERTAIN CASES.

Unless prior service has been transferred or unless a
combined service annuity under section 356.30 has been elected,
an employee who becomes a local government correctional employee
after being a member of the Public Employees Retirement
Association or the public employees police and fire fund is
covered under section 353.71, subdivision 2, with respect to
that prior service. An employee who became an employee before
July 1, 2005, and who becomes a member of the Public Employees
Retirement Association or the public employees police and fire
plan after being a local government correctional employee is
also covered under section 353.71, subdivision 2, with respect
to that prior service, unless calculated under section 356.30.

Sec. 7.

Minnesota Statutes 2004, section 354.44,
subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement
annuity.

(a) The formula retirement annuity must be computed in
accordance with the applicable provisions of the formulas stated
in paragraph (b) or (d) on the basis of each member's average
salary for the period of the member's formula service credit.

For all years of formula service credit, "average salary,"
for the purpose of determining the member's retirement annuity,
means the average salary upon which contributions were made and
upon which payments were made to increase the salary limitation
provided in Minnesota Statutes 1971, section 354.511, for the
highest five successive years of formula service credit
provided, however, that such "average salary" shall not include
any more than the equivalent of 60 monthly salary payments.
Average salary must be based upon all years of formula service
credit if this service credit is less than five years.

(b) This paragraph, in conjunction with paragraph (c),
applies to a person who first became a member of the association
or a member of a pension fund listed in section 356.30,
subdivision 3, before July 1, 1989, unless paragraph (d), in
conjunction with paragraph (e), produces a higher annuity
amount, in which case paragraph (d) applies. The average salary
as defined in paragraph (a), multiplied by the following
percentages per year of formula service credit shall determine
the amount of the annuity to which the member qualifying
therefor is entitled:

Coordinated Member Basic Member

Each year of service the percent the percent

during first ten specified in specified in

section 356.315, section 356.315,

subdivision 1, subdivision 3,

per year per year

Each year of service the percent the percent

thereafter specified in specified in

section 356.315, section 356.315,

subdivision 2, subdivision 4,

per year per year

(c)(i) This paragraph applies only to a person who first
became a member of the association or a member of a pension fund
listed in section 356.30, subdivision 3, before July 1, 1989,
and whose annuity is higher when calculated under paragraph (b),
in conjunction with this paragraph than when calculated under
paragraph (d), in conjunction with paragraph (e).

(ii) Where any member retires prior to normal retirement
age under a formula annuity, the member shall be paid a
retirement annuity in an amount equal to the normal annuity
provided in paragraph (b) reduced by one-quarter of one percent
for each month that the member is under normal retirement age at
the time of retirement except that for any member who has 30 or
more years of allowable service credit, the reduction shall be
applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable
service totals 90 years is entitled, upon application, to a
retirement annuity in an amount equal to the normal annuity
provided in paragraph (b), without any reduction by reason of
early retirement.

(d) This paragraph applies to a member who has become at
least 55 years old and first became a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity amount when calculated
under this paragraph and in conjunction with paragraph (e), is
higher than it is when calculated under paragraph (b), in
conjunction with paragraph (c). The average salary, as defined
in paragraph (a) multiplied by the percent specified by section
356.315, subdivision 4, for each year of service for a basic
member and by the percent specified in section 356.315,
subdivision 2, for each year of service for a coordinated member
shall determine the amount of the retirement annuity to which
the member is entitled.

(e) This paragraph applies to a person who has become at
least 55 years old and first becomes a member of the association
after June 30, 1989, and to any other member who has become at
least 55 years old and whose annuity is higher when calculated
under paragraph (d) in conjunction with this paragraph than when
calculated under paragraph (b), in conjunction with paragraph
(c). An employee who retires under the formula annuity before
the normal retirement age shall be paid the normal annuity
provided in paragraph (d) reduced so that the reduced annuity is
the actuarial equivalent of the annuity that would be payable to
the employee if the employee deferred receipt of the annuity and
the annuity amount were augmented at an annual rate of three
percent compounded annually from the day the annuity begins to
accrue until the normal retirement age if the employee became an
employee before July 1, 2005, and is the actuarial equivalent of
the annuity that would be payable to the employee if the
employee initially became a member after June 30, 2005.

(f) No retirement annuity is payable to a former employee
with a salary that exceeds 95 percent of the governor's salary
unless and until the salary figures used in computing the
highest five successive years average salary under paragraph (a)
have been audited by the Teachers Retirement Association and
determined by the executive director to comply with the
requirements and limitations of section 354.05, subdivisions 35
and 35a.

Sec. 8.

Minnesota Statutes 2004, section 354.55,
subdivision 11, is amended to read:

Subd. 11.

Deferred annuity; augmentation.

(a) Any person
covered under section 354.44, subdivision 6, who ceases to
render teaching service, may leave the person's accumulated
deductions in the fund for the purpose of receiving a deferred
annuity at retirement. Eligibility for an annuity under this
subdivision is governed pursuant to section 354.44, subdivision
1, or 354.60.

(b) The amount of the deferred retirement annuity is
determined by section 354.44, subdivision 6, and augmented as
provided in this subdivision. The required reserves related to
that portion of the annuity which had accrued when the member
ceased to render teaching service must be augmented by interest
compounded annually from the first day of the month following
the month during which the member ceased to render teaching
service to the effective date of retirement. There shall be no
augmentation if this period is less than three months or if this
period commences prior to July 1, 1971. If the member became a
member before July 1, 2005,the rates of interest used for this
purpose must be five percent compounded annually commencing July
1, 1971, until January 1, 1981, and three percent compounded
annually thereafter until January 1 of the year following the
year in which the former member attains age 55. From that date
to the effective date of retirement, the rate is five percent
compounded annually. If a person has more than one period of
uninterrupted service, a separate average salary determined
under section 354.44, subdivision 6, must be used for each
period and the required reserves related to each period must be
augmented by interest pursuant to this subdivision. The sum of
the augmented required reserves so determined shall be the basis
for purchasing the deferred annuity. If a person repays a
refund, the service restored by the repayment must be considered
as continuous with the next period of service for which the
person has credit with this fund. If a person does not render
teaching service in any one fiscal year or more consecutive
fiscal years and then resumes teaching service, the formula
percentages used from the date of the resumption of teaching
service must be those applicable to new members. The mortality
table and interest assumption used to compute the annuity must
be the applicable mortality table established by the board under
section 354.07, subdivision 1, and the interest rate assumption
under section 356.215 in effect when the member retires. A
period of uninterrupted service for the purposes of this
subdivision means a period of covered teaching service during
which the member has not been separated from active service for
more than one fiscal year.

(c) In no case shall the annuity payable under this
subdivision be less than the amount of annuity payable pursuant
to section 354.44, subdivision 6. If the member initially
became a member after June 30, 2005, no augmentation is payable
on a deferred annuity.

(d) The requirements and provisions for retirement before
normal retirement age contained in section 354.44, subdivision
6, clause (3) or (5), shall also apply to an employee fulfilling
the requirements with a combination of service as provided in
section 354.60.

(e) The augmentation provided by this subdivision applies
to the benefit provided in section 354.46, subdivision 2.

(f) The augmentation provided by this subdivision shall not
apply to any period in which a person is on an approved leave of
absence from an employer unit covered by the provisions of this
chapter.

(g) The retirement annuity or disability benefit of, or the
survivor benefit payable on behalf of, a former teacher who
terminated service before July 1, 1997, which is not first
payable until after June 30, 1997, must be increased on an
actuarial equivalent basis to reflect the change in the
postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a
calculation procedure and tables adopted by the board as
recommended by an approved actuary and approved by the actuary
retained by the Legislative Commission on Pensions and
Retirement.

Sec. 9.

Minnesota Statutes 2004, section 354A.31,
subdivision 7, is amended to read:

Subd. 7.

Actuarial reduction for early retirement.

This
subdivision applies to a person who has become at least 55 years
old and first becomes a coordinated member after June 30, 1989,
and to any other coordinated member who has become at least 55
years old and whose annuity is higher when calculated using the
retirement annuity formula percentage in subdivision 4,
paragraph (d), and subdivision 4a, paragraph (d), in conjunction
with this subdivision than when calculated under subdivision 4,
paragraph (c), or subdivision 4a, paragraph (c), in conjunction
with subdivision 6. A coordinated member who retires before the
full benefit age shall be paid the retirement annuity calculated
using the retirement annuity formula percentage in subdivision
4, paragraph (d), or subdivision 4a, paragraph (d), reduced so
that the reduced annuity is the actuarial equivalent of the
annuity that would be payable to the member if the member
deferred receipt of the annuity and the annuity amount were
augmented at an annual rate of three percent compounded annually
from the day the annuity begins to accrue until the normal
retirement age if the member became a member before July 1,
2005, and is the actuarial equivalent of the annuity that would
be payable to the member if the member initially became a member
after June 30, 2005.

Sec. 10.

Minnesota Statutes 2004, section 354A.37,
subdivision 2, is amended to read:

Subd. 2.

Eligibility for deferred retirement annuity.

(a) Any coordinated member who ceases to render teaching
services for the school district in which the teachers
retirement fund association is located, with sufficient
allowable service credit to meet the minimum service
requirements specified in section 354A.31, subdivision 1, shall
be entitled to a deferred retirement annuity in lieu of a refund
pursuant to subdivision 1. The deferred retirement annuity
shall be computed pursuant to section 354A.31 and shall be
augmented as provided in this subdivision. The deferred annuity
shall commence upon application after the person on deferred
status attains at least the minimum age specified in section
354A.31, subdivision 1.

(b) If the coordinated member became a member before July
1, 2005,the monthly annuity amount that had accrued when the
member ceased to render teaching service must be augmented from
the first day of the month following the month during which the
member ceased to render teaching service to the effective date
of retirement. There is no augmentation if this period is less
than three months. The rate of augmentation is three percent
compounded annually until January 1 of the year following the
year in which the former member attains age 55, and five percent
compounded annually after that date to the effective date of
retirement. If a person has more than one period of
uninterrupted service, a separate average salary determined
under section 354A.31 must be used for each period, and the
monthly annuity amount related to each period must be augmented
as provided in this subdivision. The sum of the augmented
monthly annuity amounts determines the total deferred annuity
payable. If a person repays a refund, the service restored by
the repayment must be considered as continuous with the next
period of service for which the person has credit with the
fund. If a person does not render teaching services in any one
fiscal year or more consecutive fiscal years and then resumes
teaching service, the formula percentages used from the date of
resumption of teaching service are those applicable to new
members. The mortality table and interest assumption used to
compute the annuity are the table established by the fund to
compute other annuities, and the interest assumption under
section 356.215 in effect when the member retires. A period of
uninterrupted service for the purpose of this subdivision means
a period of covered teaching service during which the member has
not been separated from active service for more than one fiscal
year. The augmentation provided by this subdivision applies to
the benefit provided in section 354A.35, subdivision 2. The
augmentation provided by this subdivision does not apply to any
period in which a person is on an approved leave of absence from
an employer unit.

(c) If the coordinated member initially became a member
after June 30, 2005, no augmentation is payable on a deferred
annuity.

Sec. 11.

Minnesota Statutes 2004, section 356.30,
subdivision 1, is amended to read:

Subdivision 1.

Eligibility; computation of annuity.

(a)
Notwithstanding any provisions of the laws governing the
retirement plans enumerated in subdivision 3, a person who has
met the qualifications of paragraph (b) may elect to receive a
retirement annuity from each enumerated retirement plan in which
the person has at least one-half year of allowable service,
based on the allowable service in each plan, subject to the
provisions of paragraph (c).

(b) A person may receive, upon retirement, a retirement
annuity from each enumerated retirement plan in which the person
has at least one-half year of allowable service, and, if the
person was a member of a covered retirement plan on or before
July 1, 2005,augmentation of a deferred annuity calculated
under the laws governing each public pension plan or fund named
in subdivision 3, from the date the person terminated all public
service if:

(1) the person has allowable service totaling an amount
that allows the person to receive an annuity in any two or more
of the enumerated plans; and

(2) the person has not begun to receive an annuity from any
enumerated plan or the person has made application for benefits
from each applicable plan and the effective dates of the
retirement annuity with each plan under which the person chooses
to receive an annuity are within a one-year period.

(c) The retirement annuity from each plan must be based
upon the allowable service, accrual rates, and average salary in
the applicable plan except as further specified or modified in
the following clauses:

(1) the laws governing annuities must be the law in effect
on the date of termination from the last period of public
service under a covered retirement plan with which the person
earned a minimum of one-half year of allowable service credit
during that employment;

(2) the "average salary" on which the annuity from each
covered plan in which the employee has credit in a formula plan
must be based on the employee's highest five successive years of
covered salary during the entire service in covered plans;

(3) the accrual rates to be used by each plan must be those
percentages prescribed by each plan's formula as continued for
the respective years of allowable service from one plan to the
next, recognizing all previous allowable service with the other
covered plans;

(4) the allowable service in all the plans must be combined
in determining eligibility for and the application of each
plan's provisions in respect to reduction in the annuity amount
for retirement prior to normal retirement age; and

(5) the annuity amount payable for any allowable service
under a nonformula plan of a covered plan must not be affected,
but such service and covered salary must be used in the above
calculation.

(d) This section does not apply to any person whose final
termination from the last public service under a covered plan
was before May 1, 1975.

(e) For the purpose of computing annuities under this
section, the accrual rates used by any covered plan, except the
public employees police and fire plan, the judges' retirement
fund, and the State Patrol retirement plan, must not exceed the
percent specified in section 356.315, subdivision 4, per year of
service for any year of service or fraction thereof. The
formula percentage used by the judges' retirement fund must not
exceed the percentage rate specified in section 356.315,
subdivision 8, per year of service for any year of service or
fraction thereof. The accrual rate used by the public employees
police and fire plan and the State Patrol retirement plan must
not exceed the percentage rate specified in section 356.315,
subdivision 6, per year of service for any year of service or
fraction thereof. The accrual rate or rates used by the
legislators retirement plan and the elective state officers
retirement plan must not exceed 2.5 percent, but this limit does
not apply to the adjustment provided under section 3A.02,
subdivision 1, paragraph (c), or 352C.031, paragraph (b).

(f) Any period of time for which a person has credit in
more than one of the covered plans must be used only once for
the purpose of determining total allowable service.

(g) If the period of duplicated service credit is more than
one-half year, or the person has credit for more than one-half
year, with each of the plans, each plan must apply its formula
to a prorated service credit for the period of duplicated
service based on a fraction of the salary on which deductions
were paid to that fund for the period divided by the total
salary on which deductions were paid to all plans for the period.

(h) If the period of duplicated service credit is less than
one-half year, or when added to other service credit with that
plan is less than one-half year, the service credit must be
ignored and a refund of contributions made to the person in
accord with that plan's refund provisions.

Sec. 12. EFFECTIVE DATE.

Sections 1 to 11 are effective on July 1, 2005.

ARTICLE 20

EARLY RETIREMENT INCENTIVES

Section 1. EARLY RETIREMENT INCENTIVE.

Subdivision 1.

Eligibility.

An appointing authority in
the executive or legislative branch of state government or the
Board of Public Defense or the Minnesota Historical Society or
any school district may offer the early retirement incentive in
this section to an employee who:

(1) has at least five years of allowable service in one or
more of the funds listed in Minnesota Statutes, section 356.30,
subdivision 3, or has at least five years of coverage by the
individual retirement account plan governed by Minnesota
Statutes, chapter 354B, and upon retirement is immediately
eligible for a retirement annuity or benefit from one or more of
these funds; and

(2) terminates state or teaching service after the
effective date of this section and before September 1, 2005.

Subd. 2.

Incentive.

(a) For an employee eligible under
subdivision 1, the employer may provide an amount up to $17,000,
to be used:

(1) for an employee who terminates state service after the
effective date of this section and on or before July 15, 2005,
for deposit in the employee's account in the health care savings
plan established by Minnesota Statutes, section 352.98; or

(2) for an employee who terminates state service after July
15, 2005, and before September 1, 2005:

(i) notwithstanding Minnesota Statutes, section 352.01,
subdivision 11, or 354.05, subdivision 13, whichever applies,
for purchase of service credit for unperformed service
sufficient to enable the employee to retire under Minnesota
Statutes, section 352.116, subdivision 1, paragraph (b); 353.30;
or 354.44, subdivision 6, paragraph (b), whichever applies; or

(ii) for purchase of a lifetime annuity or annuity for a
specific number of years from the state unclassified retirement
program to provide additional benefits under Minnesota Statutes,
section 352D.06, subdivision 1.

(b) An employee is eligible for the payment under paragraph
(a), clause (2), item (i), if the employee uses money from a
deferred compensation account that, combined with the payment
under paragraph (a), clause (2), item (i), would be sufficient
to purchase enough service credit to qualify for retirement
under Minnesota Statutes, section 352.116, subdivision 1,
paragraph (b); 353.30, subdivision 1a; or 354.44, subdivision 6,
paragraph (b), whichever applies.

Subd. 3.

Designation of positions; employer
discretion.

Before offering an incentive under this section, an
appointing authority must designate the job classifications or
positions within job classifications that qualify for the
incentive. The appointing authority may modify this designation
at any time. Designation of positions eligible for the
incentive under this section, participation of individual
employees, and the amount of the payment under this section are
at the sole discretion of the appointing authority. Unilateral
implementation of this section by the employer is not an unfair
labor practice under Minnesota Statutes, chapter 179A.

Sec. 2. POSTRETIREMENT EMPLOYMENT.

(a) This section applies to a state employee who:

(1) on the effective date of this section is regularly
scheduled to work 1,044 or more hours a year in a position
covered by the Minnesota state retirement system general
employees retirement plan, correctional plan, or unclassified
plan;

(2) enters into an agreement with the appointing authority
to work a reduced schedule that is both (i) a reduction of at
least 25 percent from the number of regularly scheduled work
hours; and (ii) 1,044 hours or less in the covered position; and

(3) at the time of entering into the agreement under clause
(2), meets the age and service requirements necessary to receive
an unreduced retirement benefit from the plan.

(b) Notwithstanding any law to the contrary, for service
under an agreement entered into under paragraph (a), an employee:

(1) may receive a retirement annuity from the plan without
separating from state service; and

(2) is not subject to the cessation of annuity provisions
in Minnesota Statutes, section 352.115, subdivision 10.

(c) The amount of hours worked, the work schedule, and the
duration of the phased retirement employment must be mutually
agreed to by the employee and the appointing authority. The
appointing authority may not require a person to waive any
rights under a collective bargaining agreement as a condition of
participation under this section. The appointing authority has
sole discretion to determine if and the extent to which phased
retirement under this section is available to an employee. Upon
expiration of an agreement entered into under this section, the
appointing authority must restore the position to its status
prior to the agreement.

(d) Notwithstanding any law to the contrary, a person may
not earn service credit in the Minnesota state retirement system
for employment covered under this section, and employer
contributions and payroll deductions for the retirement fund
must not be made based on earnings of a person working under
this section. No change shall be made to a monthly annuity or
retirement allowance based on employment under this section.

(e) A person who works under this section is a member of
the appropriate bargaining unit; is covered by the appropriate
collective bargaining contract or compensation plan; and is
eligible for health care coverage as provided in the collective
bargaining contract or compensation plan.

(f) An agreement under this section may apply only to work
through June 30, 2007.

Sec. 3. VOLUNTARY HOUR REDUCTION PLAN.

(a) This section applies to a state employee who:

(1) on the effective date of this section is regularly
scheduled to work 1,044 or more hours a year in a position
covered by a pension plan administered by the Minnesota state
retirement system; and

(2) enters into an agreement with the appointing authority
to work a reduced schedule of 1,044 hours or less in the covered
position.

(b) Notwithstanding any law to the contrary, for service
under an agreement entered into under paragraph (a),
contributions may be made to the applicable plan of the
Minnesota state retirement system as if the employee had not
reduced hours. The employee must pay the additional employee
contributions and the employer must pay the additional employer
contributions necessary to bring the service credit and salary
up to the level prior to the voluntary reduction in hours.
Contributions must be made in a time and manner prescribed by
the executive director of the Minnesota state retirement system.

(c) The amount of hours worked, the work schedule, and the
duration of the voluntary hour reduction must be mutually agreed
to by the employee and the appointing authority. The appointing
authority may not require a person to waive any rights under a
collective bargaining agreement as a condition of participation
under this section. The appointing authority has sole
discretion to determine if and the extent to which voluntary
hour reduction under this section is available to an employee.

(d) A person who works under this section is a member of
the appropriate bargaining unit; is covered by the appropriate
collective bargaining contract or compensation plan; and is
eligible for health care coverage as provided in the collective
bargaining contract or compensation plan.

(e) An agreement under this section may apply only to work
through June 30, 2007.

Sec. 4. VOLUNTARY UNPAID LEAVE OF ABSENCE.

Appointing authorities in state government may allow each
employee to take unpaid leaves of absence for up to 1,044 hours
between June 1, 2005, and June 30, 2007. Each appointing
authority approving such a leave shall allow the employee to
continue accruing vacation and sick leave, be eligible for paid
holidays and insurance benefits, accrue seniority, and accrue
service credit and credited salary in the state retirement plans
as if the employee had actually been employed during the time of
leave. An employee covered by the unclassified plan may
voluntarily make both the employee and employer contributions to
the unclassified plan during the leave of absence. For
employees covered by another retirement plan administered by the
Minnesota State Retirement System, the employee must pay the
additional employee contributions and the employer must pay the
additional employer contributions necessary to bring the service
credit and salary credit up to the level prior to the voluntary
reduction in hours. Contributions must be made at a time and in
a manner prescribed by the executive director of the Minnesota
State Retirement System. If the leave of absence is for one
full pay period or longer, any holiday pay shall be included in
the first payroll warrant after return from the leave of
absence. The appointing authority shall attempt to grant
requests for the unpaid leaves of absence consistent with the
need to continue efficient operation of the agency. However,
each appointing authority shall retain discretion to grant or
refuse to grant requests for leaves of absence and to schedule
and cancel leaves, subject to the applicable provisions of
collective bargaining agreements and compensation plans.

Sec. 5. RELATIONSHIP OF SECTIONS.

(a) An employee covered by a phased retirement agreement
under section 2 may not be covered by the voluntary hour
reduction provisions of section 3 or by a voluntary unpaid leave
of absence agreement under section 4 during the same time period
or any later time period.

(b) An employee covered by the voluntary hour reduction
provisions of section 3:

(1) may not be covered by a phased retirement agreement
under section 2 during the same time period, but may be covered
by a phased retirement agreement under section 2 during a later
time period; and

(2) may be covered by the voluntary leave of absence
provision of section 4 during an earlier or later time period.

(c) An employee may receive the early retirement incentive
in section 1 after being covered under section 2, 3, or 4. An
employee who receives an incentive under section 1 may not later
be covered by section 2, 3, or 4.

Sec. 6. EFFECTIVE DATE.

Sections 1 to 5 are effective the day following final
enactment.