Engrossments
Introduction		Posted on 02/19/2008

Section 1.

Minnesota Statutes 2006, section 352.03, subdivision 6, is amended to read:

Subd. 6.

Duties and powers of executive director.

new text begin (a) new text end The management of the
system is vested in the director, who is the executive and administrative head of the
system. The director shall be deleted text begin advisordeleted text end new text begin an adviser new text end to the board on matters pertaining to the
system and shall also act as the secretary of the board. The director shall:

(1) attend meetings of the board;

(2) prepare and recommend to the board appropriate rules to carry out this chapter;

(3) establish and maintain an adequate system of records and accounts following
recognized accounting principles and controls;

(4) designate an assistant director with the approval of the board;

(5) appoint any employees, both permanent and temporary, that are necessary to
carry out the provisions of this chapter;

(6) organize the work of the system as the director deems necessary to fulfill the
functions of the system, and define the duties of its employees and delegate to them any
powers or duties, subject to the control of the director and under conditions the director
may prescribe. Appointments to exercise delegated power must be by written order and
shall be filed with the secretary of state;

(7) with the advice and consent of the board, contract for the services of an approved
actuary, professional management services, and any other consulting services as necessary
and fix the compensation for those servicesnew text begin ;new text end deleted text begin . The contracts are not subject to competitive
bidding under chapter 16C. Any approved actuary retained by the executive director
shall function as the actuarial advisor of the board and the executive director, and may
perform actuarial valuations and experience studies to supplement those performed by
the actuary retained under section 356.214. Any supplemental actuarial valuations or
experience studies shall be filed with the executive director of the Legislative Commission
on Pensions and Retirement. Professional management services may not be contracted for
more often than once in six years. Copies of professional management survey reports must
be transmitted to the secretary of the senate, the chief clerk of the house of representatives,
and the Legislative Reference Library as provided by section 3.195, and to the executive
director of the commission at the time as reports are furnished to the board. Only
management firms experienced in conducting management surveys of federal, state, or
local public retirement systems are qualified to contract with the director;deleted text end

(8) with the advice and consent of the boardnew text begin ,new text end provide in-service training for the
employees of the system;

(9) make refunds of accumulated contributions to former state employees and to the
designated beneficiary, surviving spouse, legal representative, or next of kin of deceased
state employees or deceased former state employees, as provided in this chapter;

(10) determine the amount of the annuities and disability benefits of employees
covered by the system and authorize payment of the annuities and benefits beginning as
of the dates on which the annuities and benefits begin to accrue, in accordance with the
provisions of this chapter;

(11) pay annuities, refunds, survivor benefits, salaries, and necessary operating
expenses of the system;

(12) certify funds available for investment to the State Board of Investment;

(13) with the advice and approval of the board request the State Board of Investment
to sell securities when the director determines that funds are needed for the system;

(14) prepare and submit to the board and the legislature an annual financial report
covering the operation of the system, as required by section 356.20;

(15) prepare and submit biennial and annual budgets to the board and with the
approval of the board submit the budgets to the Department of Finance; and

(16) with the approval of the board, perform other duties required to administer the
retirement and other provisions of this chapter and to do its business.

new text begin (b) Contracts under paragraph (a), clause (7), are not subject to competitive bidding
under chapter 16C.
new text end

new text begin (c) An approved actuary retained by the executive director shall function as the
actuarial adviser of the board and the executive director. The approved actuary may
perform benefit increase cost estimates, actuarial valuations, and experience studies to
supplement those performed by the actuary retained under section 356.214. Supplemental
benefit increase cost estimates, actuarial valuations, and experience studies must be filed
with the executive director of the Legislative Commission on Pensions and Retirement.
new text end

new text begin (d) Professional management services may not be contracted for more often than
once in six years. The executive director shall transmit copies of professional management
survey reports to the secretary of the senate, the chief clerk of the house of representatives,
and the Legislative Reference Library, as provided by section 3.195, and to the executive
director of the commission at the same time as reports are furnished to the board. Only
management firms experienced in conducting management surveys of federal, state, or
local public retirement systems are qualified to contract with the director.
new text end

Sec. 2.

Minnesota Statutes 2006, section 352.116, subdivision 4, is amended to read:

Subd. 4.

Determining actuarial equivalency.

In establishing the procedure for
determining the actuarial equivalency of early retirement annuities as required under
subdivision 1a or in establishing actuarial equivalent optional retirement annuity forms
as required under subdivision 3, the board shall obtain the written deleted text begin recommendationdeleted text end
new text begin certification new text end of the new text begin accuracy of the applicable calculation tables from the new text end actuary retained
under section 356.214. The recommendations deleted text begin shalldeleted text end new text begin must new text end be new text begin made new text end a part of the permanent
records of the board.

Sec. 3.

Minnesota Statutes 2006, section 352.119, subdivision 2, is amended to read:

Subd. 2.

Valuation of assets; adjustment of benefits.

(a) The required reserves for
retirement annuities or disability benefits under this chapter as determined in accordance
with the appropriate mortality table adopted by the board of directors based on experience
of the fund as recommended new text begin as accurate new text end by the actuary retained under section 356.214 and
using the new text begin postretirement new text end interest new text begin rate new text end assumption specified in section 356.215, subdivision
8, must be transferred to the Minnesota postretirement investment fund as of the last
business day of the month in which the retirement annuity or disability benefit begins.

(b) Annuity and benefit payments must be adjusted deleted text begin in accordance withdeleted text end new text begin as provided
in new text end section 11A.18.

Sec. 4.

Minnesota Statutes 2006, 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. 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, and from that date to the effective date of retirement, the rate is five percent
compounded annually if the employee became an employee before July 1, 2006, and at
2.5 percent compounded annually if the employee becomes an employee after June 30,
2006. 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.

(b) 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 deleted text begin approveddeleted text end new text begin certified as accurate new text end by the
actuary retained under section 356.214.

Sec. 5.

Minnesota Statutes 2006, section 352.931, subdivision 2, is amended to read:

Subd. 2.

Surviving spouse coverage; term certain.

In lieu of the 100 percent
optional annuity under subdivision 1, the surviving spouse of a deceased employee may
elect to receive survivor coverage in a term certain of ten, 15, or 20 years. The monthly
term certain annuity must be actuarially equivalent to the 100 percent optional annuity
under subdivision 1 and must be deleted text begin approveddeleted text end new text begin certified as accurate new text end by the actuary retained
under section 356.214. The optional annuity ceases upon the expiration of the term certain
period. If a survivor elects a term certain annuity and dies before the expiration of the
specified term certain period, the commuted value of the remaining annuity payments
must be paid in a lump sum to the survivor's estate.

Sec. 6.

Minnesota Statutes 2006, section 352B.08, subdivision 3, is amended to read:

Subd. 3.

Optional annuity forms.

new text begin (a) new text end In lieu of the single life annuity provided in
subdivision 2, the member or former member may elect an optional annuity form.

new text begin (b) new text end The board of the Minnesota state retirement system shall establish a joint and
survivor annuity, payable to a designated beneficiary for life, adjusted to the actuarial
equivalent value of the single life annuity. The board shall also establish an additional
optional annuity with an actuarial equivalent value of the single life annuity in the form of
a joint and survivor annuity which provides that the elected annuity be reinstated to the
single life annuity provided in subdivision 2, if after commencing the elected joint and
survivor annuity, the designated beneficiary dies before the member, which reinstatement
is not retroactive but takes effect for the first full month occurring after the death of the
designated beneficiary. The board may also establish other actuarial equivalent value
optional annuity forms.

new text begin (c) new text end In establishing actuarial equivalent value optional annuity forms, each optional
annuity form deleted text begin shalldeleted text end new text begin must new text end have the same present value as a regular single life annuity
using the mortality table adopted by the board and the interest assumption specified in
section 356.215, subdivision 8, and the board shall obtain the written deleted text begin recommendationdeleted text end
new text begin certification new text end of the new text begin accuracy of the applicable calculation tables from the new text end actuary retained
under section 356.214. These deleted text begin recommendationsdeleted text end new text begin certificates new text end shall be a part of the
permanent records of the board.

Sec. 7.

Minnesota Statutes 2006, section 352B.26, subdivision 3, is amended to read:

Subd. 3.

Valuation of assets; adjustment of benefits.

(a) For former members
beginning receipt of annuities and qualified recipients of joint and survivor annuities and
surviving spouse benefits, the required reserves must be determined in accordance with
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 new text begin as accurate
new text end by the actuary retained under section 356.214 and using the new text begin postretirement new text end interest
new text begin rate new text end assumption specified in section 356.215, subdivision 8. Assets representing the
required reserves for these annuities must be transferred to the Minnesota postretirement
investment fund as of the last business day of the month in which the retirement annuity
begins as specified in section 11A.18.

(b) Annuity payments must be adjusted in accordance with section 11A.18.

(c) An increase in annuity payments under this section must be made automatically
unless written notice is filed by the annuitant with the executive director of the Minnesota
State Retirement System requesting that the increase not be made.

Sec. 8.

Minnesota Statutes 2006, section 352B.30, subdivision 2, is amended to read:

Subd. 2.

Computation of deferred annuity.

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. 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 if
the employee became an employee before July 1, 2006, and at 2.5 percent compounded
annually if the employee becomes an employee after June 30, 2006. The mortality table
and interest assumption used to compute the annuity deleted text begin shalldeleted text end new text begin must new text end be those in effect when
the member files application for annuity.

Sec. 9.

Minnesota Statutes 2006, 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
deleted text begin recommendeddeleted text end new text begin certified new text end 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. 10.

Minnesota Statutes 2007 Supplement, section 353.03, subdivision 3a, is
amended to read:

Subd. 3a.

Executive director.

(a) Appointment. The board shall appoint an
executive director on the basis of education, experience in the retirement field, and
leadership ability. The executive director must have had at least five years' experience in
an executive level management position, which has included responsibility for pensions,
deferred compensation, or employee benefits. The executive director serves at the pleasure
of the board. The salary of the executive director is as provided by section 15A.0815.

(b) Duties. The management of the association is vested in the executive director
who shall be the executive and administrative head of the association. The executive
director shall act as new text begin an new text end adviser to the board on all matters pertaining to the association and
shall also act as the secretary of the board. The executive director shall:

(1) attend all meetings of the board;

(2) prepare and recommend to the board appropriate rules to carry out the provisions
of this chapter;

(3) establish and maintain an adequate system of records and accounts following
recognized accounting principles and controls;

(4) designate, with the approval of the board, up to two persons who may serve in
the unclassified service and whose salaries are set in accordance with section 43A.18,
subdivision 3, appoint a confidential secretary in the unclassified service, and appoint
employees to carry out this chapter, who are subject to chapters 43A and 179A in the same
manner as are executive branch employees;

(5) organize the work of the association as the director deems necessary to fulfill
the functions of the association, and define the duties of its employees and delegate to
them any powers or duties, subject to the control of, and under such conditions as, the
executive director may prescribe;

(6) with the approval of the board, contract for the services of an approved actuary,
professional management services, and any other consulting services as necessary
to fulfill the purposes of this chapternew text begin ;new text end deleted text begin . All contracts are subject to chapter 16C. The
commissioner of administration shall not approve, and the association shall not enter
into, any contract to provide lobbying services or legislative advocacy of any kind.
Any approved actuary retained by the executive director shall function as the actuarial
advisor of the board and the executive director and may perform actuarial valuations and
experience studies to supplement those performed by the actuary retained under section
356.214. Any supplemental actuarial valuations or experience studies shall be filed with
the executive director of the Legislative Commission on Pensions and Retirement. Copies
of professional management survey reports shall be transmitted to the secretary of the
senate, the chief clerk of the house of representatives, and the Legislative Reference
Library as provided by section 3.195, and to the executive director of the commission at
the same time as reports are furnished to the board. Only management firms experienced
in conducting management surveys of federal, state, or local public retirement systems
shall be qualified to contract with the director hereunder;deleted text end

(7) with the approval of the board provide in-service training for the employees
of the association;

(8) make refunds of accumulated contributions to former members and to the
designated beneficiary, surviving spouse, legal representative or next of kin of deceased
members or deceased former members, as provided in this chapter;

(9) determine the amount of the annuities and disability benefits of members covered
by the association and authorize payment of the annuities and benefits beginning as of
the dates on which the annuities and benefits begin to accrue, in accordance with the
provisions of this chapter;

(10) pay annuities, refunds, survivor benefits, salaries, and necessary operating
expenses of the association;

(11) prepare and submit to the board and the legislature an annual financial report
covering the operation of the association, as required by section 356.20;

(12) prepare and submit biennial and annual budgets to the board for its approval
and submit the approved budgets to the Department of Finance for approval by the
commissioner;

(13) reduce all or part of the accrued interest payable under section 353.27,
subdivisions 12, 12a, and 12b, or 353.28, subdivision 5, upon receipt of proof by the
association of an unreasonable processing delay or other extenuating circumstances of
the employing unit. The executive director shall prescribe and submit for approval by the
board the conditions under which such interest may be reduced; and

(14) with the approval of the board, perform such other duties as may be required for
the administration of the association and the other provisions of this chapter and for the
transaction of its business.

new text begin (c) Contract limitations. Contracts under paragraph (b), clause (6), are subject to
chapter 16C. The commissioner of administration shall not approve, and the association
may not enter into, any contract to provide lobbying services or legislative advocacy
of any kind. The approved actuary retained by the executive director shall function as
the actuarial adviser of the board and of the executive director and may perform benefit
increase cost estimates, actuarial valuations, and experience studies to supplement
those performed by the actuary retained under section 356.214. Supplemental benefit
increase cost estimates, actuarial valuations, and experience studies must be filed with the
executive director of the Legislative Commission on Pensions and Retirement. Copies
of provisional management survey reports must be transmitted to the secretary of the
senate, the chief clerk of the house of representatives, and the Legislative Reference
Library, as provided by section 3.195, and to the executive director of the commission at
the same time as reports are furnished to the board. Only management firms experienced
in conducting management surveys of federal, state, or local public retirement systems
are qualified to contract with the director.
new text end

Sec. 11.

Minnesota Statutes 2006, section 353.271, subdivision 2, is amended to read:

Subd. 2.

Valuation of assets; adjustment of benefits.

(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 new text begin as accurate new text end by the actuary retained under section 356.214,
and approved under section 356.215, subdivision 18, and using the postretirement interest
new text begin rate new text end assumption specified in section 356.215, subdivision 8, must be transferred to the
Minnesota postretirement investment fund as of the last business day of the month in
which the retirement annuity begins.

(b) Annuity payments must be adjusted deleted text begin in accordance with the provisions ofdeleted text end new text begin as
provided in new text end section 11A.18.

(c) Increases in payments under this section 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 not be made.

Sec. 12.

Minnesota Statutes 2006, section 353.29, subdivision 6, is amended to read:

Subd. 6.

Retirement before eligibility for Social Security benefits.

A member
or former member who retires before becoming eligible for Social Security retirement
benefits may elect to receive an optional retirement annuity from the association that
provides for different annuity amounts over different periods of retirement. The election of
this optional retirement annuity must be exercised by making new text begin a written new text end application to the
deleted text begin board of trusteesdeleted text end new text begin executive directornew text end . The optional annuity must take the form of an annuity
payable for the period before the annuitant becomes eligible for Social Security old age
retirement benefits in a greater amount than the amount of the annuity calculated under
subdivisions 2 and 3 on the basis of the age of the annuitant at retirement. The optional
annuity must be the actuarial equivalent of the normal retirement annuity computed on
the basis of age at retirement. This greater amount must be paid until the annuitant
reaches age 62, at which time the payment from the association must be reduced. The
board of trustees shall establish the method of computing the optional retirement annuity
under this subdivision. In establishing the method of computing the optional retirement
annuity, the board of trustees shall obtain the written deleted text begin approvaldeleted text end new text begin recommendation new text end of the
actuary retained under section 356.214new text begin as to the accuracy of the computation methodnew text end . The
recommendations must be a part of the permanent records of the board of trustees.

Sec. 13.

Minnesota Statutes 2006, section 353.30, subdivision 3, is amended to read:

Subd. 3.

Optional retirement annuity forms.

new text begin (a) new text end The board of trustees shall
establish optional annuities which deleted text begin shalldeleted text end new text begin must new text end take the form of a joint and survivor annuity.
Except as provided in subdivision 3a, the optional annuity forms deleted text begin shalldeleted text end new text begin must new text end be actuarially
equivalent to the forms provided in section 353.29 and subdivisions 1, 1a, 1b, 1c, and 5.

new text begin (b) new text end In establishing those optional forms, the board shall obtain the written
deleted text begin recommendationdeleted text end new text begin certification new text end of the actuary retained under section 356.214. The
deleted text begin recommendations shalldeleted text end new text begin certification must new text end be a part of the permanent records of the board.
A member or former member may select an optional form of annuity in lieu of accepting
any other form of annuity which might otherwise be available.

Sec. 14.

Minnesota Statutes 2006, section 353.30, subdivision 5, is amended to read:

Subd. 5.

Actuarial reduction for early retirement.

new text begin (a) new text end 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.

new text begin (b) new text end 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 employee became an
employee before July 1, 2006, and at 2.5 percent compounded annually from the day the
annuity begins to accrue until the normal retirement age if the employee initially becomes
an employee after June 30, 2006.

new text begin (c) The board shall establish the procedure for determining actuarial equivalency
after obtaining a certification that the procedure was accurate from the actuary retained
under section 356.214.
new text end

Sec. 15.

Minnesota Statutes 2006, 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. 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. 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 and from that
date to the effective date of retirement, the rate is five percent compounded annually if
the employee became an employee before July 1, 2006, and at 2.5 percent compounded
annually if the employee becomes an employee after June 30, 2006. 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.

(b) 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 deleted text begin approveddeleted text end new text begin certified as
accurate new text end by the actuary retained under section 356.214.

Sec. 16.

Minnesota Statutes 2006, section 353.88, is amended to read:

353.88 PENALTY FOR MEMBERSHIP MISCERTIFICATIONS AND
CERTIFICATION FAILURES.

(a) If the board of trustees of the Public Employees Retirement Association, upon
the recommendation of the executive director, determines that a governmental subdivision
has certified a public employee for membership in the public employees police and
fire retirement plan when the public employee was not eligible for that retirement
plan coverage, the public employee must be covered by the correct retirement plan
for subsequent service, the public employee retains the coverage for the period of the
misclassification, and the governmental subdivision shall pay in a lump sum the difference
in the actuarial present value of the retirement annuities to which the public employee
would have been entitled if the public employee was properly classifiednew text begin as calculated
by the actuary retained under section 356.214new text end . The governmental subdivision payment
is payable within 30 days of the board's determination. If unpaid, it must be collected
under section 353.28. The lump sum payment must be deposited in the public employees
retirement fund.

(b) If the executive director of the Public Employees Retirement Association
determines that a governmental subdivision has failed to certify a person for retirement
plan membership and coverage under this chapter, in addition to the procedures under
section 353.27, subdivision 4, 9, 10, 11, 12, 12a, or 12b, the director shall charge a fine of
$25 for each membership certification failure.

Sec. 17.

Minnesota Statutes 2006, section 353A.08, subdivision 2, is amended to read:

Subd. 2.

Election of coverage by current deferred retirees.

(a) Any person who
has terminated active employment as a police officer or firefighter, whichever applies,
with the municipality, has sufficient credit for service to entitle the person to an eventual
service pension and has not taken a refund of accumulated member contributions, if
applicable, deleted text begin shall havedeleted text end new text begin has new text end the option to elect to have benefit coverage provided under the
relevant provisions of the public employees police and fire fund benefit plan or to retain
benefit coverage provided by the relief association benefit plan in effect on the effective
date of consolidation. The relevant provisions of the public employees police and fire
fund benefit plan for the person electing that benefit coverage deleted text begin shall bedeleted text end new text begin are new text end the provisions
specified in subdivision 1.

The election deleted text begin shalldeleted text end new text begin must new text end be made when the person files an application for receipt of
the deferred service pension and shall accompany that application.

(b) The retirement annuity for a deferred member of a consolidated local relief
association which consolidated before July 1, 1997, who elected the relevant provisions
of the public employees police and fire fund benefit plan under subdivision 1 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 trustees of
the Public Employees Retirement Association and deleted text begin approveddeleted text end new text begin certified as accurate new text end by the
actuary retained under section 356.214.

Sec. 18.

Minnesota Statutes 2006, section 354.06, subdivision 2a, is amended to read:

Subd. 2a.

Duties of executive director.

new text begin (a) new text end The management of the association is
vested in the executive director who deleted text begin shall bedeleted text end new text begin is new text end the executive and administrative head of
the association. The executive director shall act as deleted text begin advisordeleted text end new text begin an adviser new text end to the board on all
matters pertaining to the association and shall also act as the secretary of the board. The
executive director shall:

(1) attend all meetings of the board;

(2) prepare and recommend to the board appropriate rules to carry out the provisions
of this chapter;

(3) establish and maintain an adequate system of records and accounts following
recognized accounting principles and controls;

(4) designate an assistant executive director in the unclassified service and two
assistant executive directors in the classified service with the approval of the board, and
appoint such employees, both permanent and temporary, as are necessary to carry out the
provisions of this chapter;

(5) organize the work of the association as the director deems necessary to fulfill the
functions of the association, and define the duties of its employees and delegate to them
any powers or duties, subject to the director's control and under such conditions as the
director may prescribe;

(6) with the approval of the board, contract and set the compensation for the services
of an approved actuary, professional management services, and any other consulting
servicesnew text begin ;new text end deleted text begin . These contracts are not subject to the competitive bidding procedure prescribed
by chapter 16C. An approved actuary retained by the executive director shall function as
the actuarial advisor of the board and the executive director and may perform actuarial
valuations and experience studies to supplement those performed by the actuary retained
under section 356.214. Any supplemental actuarial valuations or experience studies shall
be filed with the executive director of the Legislative Commission on Pensions and
Retirement. Copies of professional management survey reports must be transmitted to the
secretary of the senate, the chief clerk of the house of representatives, and the Legislative
Reference Library as provided by section 3.195, and to the executive director of the
commission at the same time as reports are furnished to the board. Only management
firms experienced in conducting management surveys of federal, state, or local public
retirement systems are qualified to contract with the executive director;deleted text end

(7) with the approval of the board, provide in-service training for the employees
of the association;

(8) make refunds of accumulated contributions to former members and to the
designated beneficiary, surviving spouse, legal representative, or next of kin of deceased
members or deceased former members, under this chapter;

(9) determine the amount of the annuities and disability benefits of members covered
by the association and authorize payment of the annuities and benefits beginning as of the
dates on which the annuities and benefits begin to accrue, under this chapter;

(10) pay annuities, refunds, survivor benefits, salaries, and necessary operating
expenses of the association;

(11) prepare and submit to the board and the legislature an annual financial report
covering the operation of the association, as required by section 356.20;

(12) certify funds available for investment to the State Board of Investment;

(13) with the advice and approval of the board, request the State Board of Investment
to sell securities on determining that funds are needed for the purposes of the association;

(14) prepare and submit biennial and annual budgets to the board and with the
approval of the board submit those budgets to the Department of Finance; and

(15) with the approval of the board, perform such other duties as may be required for
the administration of the association and the other provisions of this chapter and for the
transaction of its business.

new text begin (b) new text end The executive director may:

deleted text begin (i)deleted text end new text begin (1) new text end reduce all or part of the accrued interest and fines payable by an employing
unit for reporting requirements under section 354.52, based on an evaluation of any
extenuating circumstances of the employing unit;

deleted text begin (ii)deleted text end new text begin (2) new text end assign association employees to conduct field audits of an employing unit to
ensure compliance with the provisions of this chapter; and

deleted text begin (iii)deleted text end new text begin (3) new text end recover overpayments, if not repaid to the association, by suspending
or reducing the payment of a retirement annuity, refund, disability benefit, survivor
benefit, or optional annuity under this chapter until the overpayment, plus interest, has
been recovered.

new text begin (c) Contracts under paragraph (a), clause (6), are not subject to the competitive
bidding procedure prescribed by chapter 16C.
new text end

new text begin (d) An approved actuary retained by the executive director shall function as the
actuarial adviser of the board and the executive director and may perform benefit increase
cost estimates, actuarial valuations, and experience studies to supplement those performed
by the actuary retained under section 356.214. Supplemental benefit increase cost
estimates, actuarial valuations, and experience studies must be filed with the executive
director of the Legislative Commission on Pensions and Retirement.
new text end

new text begin (e) The executive director shall transmit copies of professional management survey
reports to the secretary of the senate, the chief clerk of the house of representatives, and
the Legislative Reference Library, as provided by section 3.195, and to the executive
director of the commission at the same time as reports are furnished to the board. Only
management firms experienced in conducting management surveys of federal, state, or
local public retirement systems are qualified to contract with the executive director.
new text end

Sec. 19.

Minnesota Statutes 2006, section 354.07, subdivision 1, is amended to read:

Subdivision 1.

General powers of board.

The board has the power to frame bylaws
for its own government and for the management of the association not inconsistent with the
laws of the state and to modify them at its pleasure; to adopt, alter, and enforce reasonable
rules not inconsistent with the laws of the state for the administration and management of
the association, for the payment and collection of payments from members, and for the
payment of withdrawals and benefits; to pass upon and allow or disallow applications for
membership in the association and for credit for teaching service; to pass upon and allow
or disallow claims for withdrawals, pensions, or benefits payable by the fund; to adopt
an appropriate mortality table based on experience of the association as deleted text begin recommendeddeleted text end
new text begin certified as accurate new text end by the actuary retained under section 356.214 and using the applicable
postretirement interest assumption specified in section 356.215, subdivision 8; to provide
for the payment out of the fund of necessary expenses for the administration by the
association and of claims for withdrawals, pensions, or benefits allowed.

Sec. 20.

Minnesota Statutes 2007 Supplement, section 354.35, subdivision 2, is
amended to read:

Subd. 2.

Election of accelerated annuity.

(a) Any coordinated member who retires
before normal retirement age may elect to receive an optional accelerated retirement
annuity from the association which provides for different annuity amounts over different
periods of retirement. The optional accelerated retirement annuity must take the form of
an annuity payable for the period before the member attains age 65, or normal retirement
age, in a greater amount than the amount of the annuity calculated under section 354.44 on
the basis of the age of the member at retirement, but the optional accelerated retirement
annuity must be the actuarial equivalent of the member's annuity computed on the basis of
the member's age at retirement. The greater amount must be paid until the retiree reaches
age 65, or normal retirement age, and at that time the payment from the association must
be reduced. For each year the retiree is under age 65, or normal retirement age, up to five
percent of the total life annuity required reserves may be used to accelerate the optional
retirement annuity under this section.

(b) Members who retire before age 62 may elect to have the annuity under this
subdivision accelerated to age 62 rather than normal retirement age or age 65.

(c) The method of computing the optional accelerated retirement annuity provided
in this subdivision is established by the board of trustees. In establishing the method
of computing the optional accelerated retirement annuity or any modification of that
procedure, the board of trustees must obtain the written deleted text begin approvaldeleted text end new text begin certification new text end of new text begin accuracy
from new text end the actuary retained under section 356.214. The written deleted text begin approvaldeleted text end new text begin certification new text end must
be a part of the permanent records of the board of trustees. The election of an optional
accelerated retirement annuity is exercised by making an application on a form provided
by the executive director.

Sec. 21.

Minnesota Statutes 2006, section 354.45, subdivision 1, is amended to read:

Subdivision 1.

Optional annuity forms.

The retirement board shall establish
optional annuities at retirement which deleted text begin shalldeleted text end new text begin must new text end take the form of an annuity payable for a
period certain and for life thereafter or the form of a joint and survivor annuity. The board
shall also establish an optional annuity which deleted text begin shalldeleted text end new text begin must new text end take the form of a guaranteed
refund annuity paying the annuitant a fixed amount for life with the guarantee that in the
event of death the balance of the accumulated deductions and interest accrued to the date
of retirement deleted text begin will be paiddeleted text end new text begin is payable new text end to the designated beneficiary. Except as provided
in subdivision 1a, any optional annuity forms deleted text begin shalldeleted text end new text begin must new text end be actuarially equivalent to the
normal forms provided in section 354.44. In establishing these optional annuity forms, the
board shall obtain the written deleted text begin recommendationdeleted text end new text begin certification of accuracy new text end of the actuary
retained under section 356.214. The deleted text begin recommendations shalldeleted text end new text begin certification must new text end be a part of
the permanent records of the board.

Sec. 22.

Minnesota Statutes 2006, 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 deleted text begin shall bedeleted text end new text begin is new text end no augmentation if
this period is less than three months or if this period commences prior to July 1, 1971.
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 and from that date to the effective date of retirement, the rate is five percent
compounded annually if the employee became an employee before July 1, 2006, and at
2.5 percent compounded annually if the employee becomes an employee after June 30,
2006. 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 deleted text begin shall bedeleted text end new text begin is new text end 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 deleted text begin shalldeleted text end new text begin may new text end the annuity payable under this subdivision be less than the
amount of annuity payable pursuant to section 354.44, subdivision 6.

(d) The requirements and provisions for retirement before normal retirement age
contained in section 354.44, subdivision 6, clause (3) or (5), deleted text begin shalldeleted text end 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 deleted text begin shalldeleted text end new text begin does new text end 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 deleted text begin recommendeddeleted text end new text begin certified as accurate new text end by deleted text begin an approved actuary
and approved bydeleted text end the actuary retained under section 356.214.

Sec. 23.

Minnesota Statutes 2006, 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 deleted text begin recommendeddeleted text end new text begin certified as accurate new text end 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. 24.

Minnesota Statutes 2006, section 354A.021, subdivision 7, is amended to read:

Subd. 7.

Actuarial consultant.

The board of trustees or directors of each teachers
retirement fund association may contract for the services of an approved actuary and fix
the reasonable compensation for those services. deleted text begin Anydeleted text end new text begin An new text end approved actuary retained by
the board deleted text begin shall function asdeleted text end new text begin is new text end the actuarial deleted text begin advisordeleted text end new text begin adviser new text end to the board and may perform
new text begin benefit increase cost estimates, new text end actuarial valuationsnew text begin ,new text end and experience studies to supplement
those performed by the actuary retained under section 356.214. deleted text begin Anydeleted text end Supplemental new text begin benefit
increase cost estimates, new text end actuarial valuations deleted text begin ordeleted text end new text begin , and new text end experience studies must be filed with
the executive director of the Legislative Commission on Pensions and Retirement.

Sec. 25.

Minnesota Statutes 2007 Supplement, 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, must continue to be paid to the Teachers Retirement
Association until 2037. The supplemental contributions payable 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 St. Paul
Teachers Retirement Fund Association terminate 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 under section 356.214, 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 under section 356.214.

(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 the St. Paul Teachers Retirement Fund Association is funded at new text begin or in excess of
new text end the funding ratio applicable to the Teachers Retirement Association when the provisions
of paragraph (b) become effective, then any state aid previously distributed to that
association must be immediately transferred to the Teachers Retirement Association.

Sec. 26.

Minnesota Statutes 2006, 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 deleted text begin shalldeleted text end new text begin must new text end 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 deleted text begin reduceddeleted text end new text begin resulting new text end 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 employee became an employee before July 1, 2006, and at
2.5 percent compounded annually from the day the annuity begins to accrue until the
normal retirement age if the person initially becomes a teacher after June 30, 2006.new text begin The
actuarial equivalency must be determined using a procedure certified as accurate by the
actuary retained under section 356.214.
new text end

Sec. 27.

Minnesota Statutes 2006, section 354A.32, subdivision 1, is amended to read:

Subdivision 1.

Optional forms generally.

The board of the St. Paul Teachers
Retirement Fund Association shall 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 deleted text begin shalldeleted text end new text begin must new text end take the form of a
joint and survivor annuity. Each board may alsonew text begin ,new text end in its discretionnew text begin ,new text end establish an optional
annuity which deleted text begin shall takedeleted text end new text begin takes new text end the form of an annuity payable for a period certain and for
life thereafter. Each board deleted text begin shalldeleted text end new text begin must new text end 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 deleted text begin shalldeleted text end new text begin must new text end 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 deleted text begin recommendationdeleted text end new text begin certification new text end of the new text begin accuracy of the actuarial
equivalence determination procedure from the new text end actuary retained under section 356.214. The
recommendation deleted text begin shalldeleted text end new text begin must new text end be new text begin retained as new text end a part of the permanent records of the board.

Sec. 28.

Minnesota Statutes 2006, section 354A.33, is amended to read:

354A.33 SOCIAL SECURITY LEVELING ADJUSTMENT OPTION.

Any coordinated member who retires deleted text begin prior todeleted text end new text begin before new text end the deleted text begin timedeleted text end new text begin date on which new text end the
member becomes eligible for Social Security old age retirement benefits deleted text begin shall bedeleted text end new text begin is
new text end entitled to elect to receive a Social Security leveling adjustment optional annuity from the
teachers retirement fund association. The Social Security leveling adjustment optional
annuity deleted text begin shalldeleted text end new text begin must new text end be established by the board of the teachers retirement fund association.
deleted text begin It shalldeleted text end new text begin The option must new text end take the form of an annuity payable for the period deleted text begin prior todeleted text end
new text begin before new text end the member's becoming eligible for Social Security old age retirement benefits in
an amount greater than the amount of the member's annuity calculated deleted text begin pursuant todeleted text end new text begin under
new text end section 354A.31 on the basis of the age of the member at retirement but equal insofar as
possible to the Social Security old age retirement benefit and the adjusted retirement
annuity amounts payable immediately subsequent to becoming eligible for Social Security
old age retirement benefits in an amount less than the amount of the member's annuity
calculated deleted text begin pursuant todeleted text end new text begin under new text end section 354A.31 on the basis of the age of the member at
retirement. The optional form deleted text begin shalldeleted text end new text begin must new text end be the actuarial equivalent to the normal forms
provided in section 354A.31. In establishing the optional form, the board shall obtain
the written deleted text begin recommendationdeleted text end new text begin certification new text end of the actuary retained under section 356.214
and the deleted text begin recommendation shalldeleted text end new text begin certification must new text end be new text begin retained as new text end a part of the permanent
records of the board.

Sec. 29.

Minnesota Statutes 2006, section 354A.37, subdivision 2, is amended to read:

Subd. 2.

Eligibility for deferred retirement annuity.

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, deleted text begin shall bedeleted text end new text begin is
new text end entitled to a deferred retirement annuity in lieu of a refund deleted text begin pursuant todeleted text end new text begin under new text end subdivision
1. The deferred retirement annuity deleted text begin shalldeleted text end new text begin must new text end be computed deleted text begin pursuant todeleted text end new text begin under new text end section
354A.31 and deleted text begin shalldeleted text end new text begin must new text end be augmented as provided in this subdivision. The deferred
annuity deleted text begin shalldeleted text end new text begin must new text end commence upon application after the person on deferred status attains
at least the minimum age specified in section 354A.31, subdivision 1.

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 the employee
became an employee before July 1, 2006, and at 2.5 percent compounded annually if
the employee becomes an employee after June 30, 2006. 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. new text begin The calculation procedure must be certified as accurate by the actuary
retained under section 356.214. new text end 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.

Sec. 30.

Minnesota Statutes 2006, section 356.20, subdivision 3, is amended to read:

Subd. 3.

Filing requirement.

The financial report is a public record. A copy of the
report or a synopsis of the report containing the information required by this section must
be distributed annually to each member of the deleted text begin funddeleted text end new text begin retirement plan new text end and to the governing
body of each governmental subdivision of the state which makes employers contributions
thereto or in whose behalf taxes are levied for the employers' contribution. A signed copy
of the report must be delivered to the executive director of the Legislative Commission
on Pensions and Retirement and to the Legislative Reference Library not later than six
months after the close of each fiscal year or one month following the completion and
delivery to the retirement deleted text begin funddeleted text end new text begin plan new text end of the actuarial valuation report of the fund by the
actuary retained under section 356.214, if applicable, whichever is later.

Sec. 31.

Minnesota Statutes 2006, 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
actuary retained under section 356.214 or by the actuary retained by the retirement fund or
plan, 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 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 methodnew text begin , under section 356.215,new text end 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 deleted text begin the actuarial value ofdeleted text end current assets as defined in section 356.215,
subdivision 1new text begin , paragraph (f)new text end :

		Value at cost	Value 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		.	.
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 deleted text begin foregoing items
ofdeleted text end benefit deleted text begin obligationsdeleted text end new text begin obligation items under clause (1)new text end , 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. 32.

Minnesota Statutes 2006, section 356.215, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of sections 3.85 and 356.20 to
356.23, each of the terms in the following paragraphs has the meaning given.

(b) "Actuarial valuation" means a set of calculations prepared by the actuary
retained under section 356.214 if so required under section 3.85, or otherwise, by an
approved actuary, to determine the normal cost and the accrued actuarial liabilities of
a benefit plan, according to the entry age actuarial cost method and based upon stated
assumptions including, but not limited to rates of interest, mortality, salary increase,
disability, withdrawal, and retirement and to determine the payment necessary to amortize
over a stated period any unfunded accrued actuarial liability disclosed as a result of the
actuarial valuation of the benefit plan.

(c) "Approved actuary" means a person who is regularly engaged in the business
of providing actuarial services and who has at least 15 years of service to major public
employee pension or retirement funds or who is a fellow in the Society of Actuaries.

(d) "Entry age actuarial cost method" means an actuarial cost method under which
the actuarial present value of the projected benefits of each individual currently covered
by the benefit plan and included in the actuarial valuation is allocated on a level basis over
the service of the individual, if the benefit plan is governed by section 69.773, or over the
earnings of the individual, if the benefit plan is governed by any other law, between the
entry age and the assumed exit age, with the portion of the actuarial present value which is
allocated to the valuation year to be the normal cost and the portion of the actuarial present
value not provided for at the valuation date by the actuarial present value of future normal
costs to be the actuarial accrued liability, with aggregation in the calculation process to be
the sum of the calculated result for each covered individual and with recognition given to
any different benefit formulas which may apply to various periods of service.

(e) "Experience study" means a report providing experience data and an actuarial
analysis of the adequacy of the actuarial assumptions on which actuarial valuations are
based.

(f) "Current assets" meansdeleted text begin :
deleted text end

deleted text begin (1) for the July 1, 2001, actuarial valuation, the market value of all assets as of
June 30, 2001, reduced by:
deleted text end

deleted text begin (i) 30 percent of the difference between the market value of all assets as of June 30,
1999, and the actuarial value of assets used in the July 1, 1999, actuarial valuation;
deleted text end

deleted text begin (ii) 60 percent of the difference between the actual net change in the market value of
assets between June 30, 1999, and June 30, 2000, and the computed increase in the market
value of assets between June 30, 1999, and June 30, 2000, if the assets had increased at
the percentage preretirement interest rate assumption used in the July 1, 1999, actuarial
valuation; and
deleted text end

deleted text begin (iii) 80 percent of the difference between the actual net change in the market value
of assets between June 30, 2000, and June 30, 2001, and the computed increase in
the market value of assets between June 30, 2000, and June 30, 2001, if the assets had
increased at the percentage preretirement interest rate assumption used in the July 1,
2000, actuarial valuation;
deleted text end

deleted text begin (2) for the July 1, 2002, actuarial valuation, the market value of all assets as of
June 30, 2002, reduced by:
deleted text end

deleted text begin (i) ten percent of the difference between the market value of all assets as of June 30,
1999, and the actuarial value of assets used in the July 1, 1999, actuarial valuation;
deleted text end

deleted text begin (ii) 40 percent of the difference between the actual net change in the market value of
assets between June 30, 1999, and June 30, 2000, and the computed increase in the market
value of assets between June 30, 1999, and June 30, 2000, if the assets had increased at
the percentage preretirement interest rate assumption used in the July 1, 1999, actuarial
valuation;
deleted text end

deleted text begin (iii) 60 percent of the difference between the actual net change in the market value
of assets between June 30, 2000, and June 30, 2001, and the computed increase in
the market value of assets between June 30, 2000, and June 30, 2001, if the assets had
increased at the percentage preretirement interest rate assumption used in the July 1, 2000,
actuarial valuation; and
deleted text end

deleted text begin (iv) 80 percent of the difference between the actual net change in the market value of
assets between June 30, 2001, and June 30, 2002, and the computed increase in the market
value of assets between June 30, 2001, and June 30, 2002, if the assets had increased at
the percentage preretirement interest rate assumption used in the July 1, 2001, actuarial
valuation; or
deleted text end

deleted text begin (3) for any actuarial valuation after July 1, 2002,deleted text end the market value of all assets
as of the preceding June 30, reduced by:

deleted text begin (i)deleted text end new text begin (1) new text end 20 percent of the difference between the actual net change in the market value
of assets between the June 30 that occurred three years earlier and the June 30 that occurred
four years earlier and the computed increase in the market value of assets over that
fiscal year period if the assets had increased at the percentage preretirement interest rate
assumption used in the actuarial valuation for the July 1 that occurred four years earlier;

deleted text begin (ii)deleted text end new text begin (2) new text end 40 percent of the difference between the actual net change in the market value
of assets between the June 30 that occurred two years earlier and the June 30 that occurred
three years earlier and the computed increase in the market value of assets over that
fiscal year period if the assets had increased at the percentage preretirement interest rate
assumption used in the actuarial valuation for the July 1 that occurred three years earlier;

deleted text begin (iii)deleted text end new text begin (3) new text end 60 percent of the difference between the actual net change in the market
value of assets between the June 30 that occurred one year earlier and the June 30 that
occurred two years earlier and the computed increase in the market value of assets over
that fiscal year period if the assets had increased at the percentage preretirement interest
rate assumption used in the actuarial valuation for the July 1 that occurred two years
earlier; and

deleted text begin (iv)deleted text end new text begin (4) new text end 80 percent of the difference between the actual net change in the market
value of assets between the immediately prior June 30 and the June 30 that occurred one
year earlier and the computed increase in the market value of assets over that fiscal year
period if the assets had increased at the percentage preretirement interest rate assumption
used in the actuarial valuation for the July 1 that occurred one year earlier.

(g) "Unfunded actuarial accrued liability" means the total current and expected
future benefit obligations, reduced by the sum of current assets and the present value of
future normal costs.

(h) "Pension benefit obligation" means the actuarial present value of credited
projected benefits, determined as the actuarial present value of benefits estimated to be
payable in the future as a result of employee service attributing an equal benefit amount,
including the effect of projected salary increases and any step rate benefit accrual rate
differences, to each year of credited and expected future employee service.

Sec. 33.

Minnesota Statutes 2006, section 356.215, subdivision 2, is amended to read:

Subd. 2.

Requirements.

(a) It is the policy of the legislature that it is necessary
and appropriate to determine annually the financial status of tax supported retirement and
pension plans for public employees. To achieve this goal:

(1) the actuary retained under section 356.214 shall prepare annual actuarial
valuations of the retirement plans enumerated in section 356.214, subdivision 1, paragraph
(b), and quadrennial experience studies of the retirement plans enumerated in section
356.214, subdivision 1, paragraph (b), clauses (1), (2), and (7); and

(2) new text begin at Department of Finance expense, new text end the commissioner of finance may have
deleted text begin prepared bydeleted text end the actuary retained deleted text begin by the commissiondeleted text end new text begin under section 356.214new text end , new text begin prepare new text end two
years after each set of quadrennial experience studies, quadrennial projection valuations
of deleted text begin at leastdeleted text end one new text begin or more new text end of the retirement plans enumerated in section 6, subdivision 1,
paragraph (b), for which the commissioner determines that the analysis may be beneficial.

(b) The governing or managing board or administrative officials of each public
pension and retirement fund or plan enumerated in section 356.20, subdivision 2, clauses
(9), (10), and (12), deleted text begin shalldeleted text end new text begin must new text end have prepared by an approved actuary annual actuarial
valuations of their respective funds as provided in this section.

deleted text begin Thisdeleted text end new text begin (c) The actuarial valuation new text end requirement also applies to any fund or plan that
is the successor to any organization enumerated in section 356.20, subdivision 2, or
to the governing or managing board or administrative officials of any newly formed
retirement fund, plan, or association operating under the control or supervision of any
public employee group, governmental unit, or institution receiving a portion of its support
through legislative appropriations, and any local police or fire fund to which section
356.216 applies.

Sec. 34.

Minnesota Statutes 2006, section 356.215, subdivision 2a, is amended to read:

Subd. 2a.

Projection valuation requirements.

(a) A quadrennial projection
valuation authorized under subdivision 2 is intended to serve as an additional analytical
tool with which policy makers may assess the future funding status of public plans through
forecasting and testing various potential outcomes over time if certain plan assumptions or
valuation methods were to be modified.

(b) In consultation with the retirement fund directors, the state economist, the
state demographer, the commissioner of finance, and the commissioner of employee
relations, the actuary retained under section 356.214 shall perform the quadrennial
projection valuations on behalf of the commissioner of financenew text begin , if requested to do so by
the commissioner of financenew text end , testing future implications for plan funding by modifying
assumptions and methods currently in place. The actuary retained under section 356.214
shall provide advice to the commissioner as to the periods over which such projections
should be made, the nature and scope of the scenarios to be analyzed, and the measures of
funding status to be employed, and shall report the results of these analyses in the same
manner as for quadrennial experience studies.

Sec. 35.

Minnesota Statutes 2006, section 356.215, subdivision 17, is amended to read:

Subd. 17.

Actuarial services by approved actuaries.

(a) The new text begin benefit increase cost
estimate, the new text end actuarial valuation deleted text begin ordeleted text end new text begin , and the new text end quadrennial experience study must be made
and any actuarial consulting services for a retirement fund or plan must be provided by an
approved actuary. The new text begin benefit increase cost estimate, the new text end actuarial valuation deleted text begin ordeleted text end new text begin , and the
new text end quadrennial experience study must include a signed written declaration that it has been
prepared according to sections 356.20 to 356.23 and according to the most recent standards
for actuarial work adopted by the Legislative Commission on Pensions and Retirement.

(b) new text begin Benefit increase cost estimates, new text end actuarial valuations deleted text begin ordeleted text end new text begin , andnew text end experience studies
prepared by an approved actuary retained by a retirement fund or plan must be submitted
to the Legislative Commission on Pensions and Retirement within ten days of the
submission of the document to the retirement fund or plan.

Sec. 36.

Minnesota Statutes 2006, section 356.215, subdivision 18, is amended to read:

Subd. 18.

Establishment of actuarial assumptions.

(a) The actuarial assumptions
used for the preparation of actuarial valuations under this section that are other than
those set forth in this section may be changed only with the approval of the Legislative
Commission on Pensions and Retirement.

(b) A change in the applicable actuarial assumptions may be proposed by the
governing board of the applicable pension fund or relief association, by the actuary
retained deleted text begin by the joint retirement systemsdeleted text end under section 356.214deleted text begin ,deleted text end new text begin ;new text end by the actuarial deleted text begin advisordeleted text end
new text begin adviser new text end to a pension fund governed by chapter 352, 353, 354, or 354Adeleted text begin ,deleted text end new text begin ;new text end or by the actuary
retained by a local police or firefighters relief association governed by sections 69.77 or
69.771 to 69.776, if one is retained.

Sec. 37.

Minnesota Statutes 2006, section 356.551, subdivision 2, is amended to read:

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 new text begin for accuracy new text end by the actuary retained 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 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 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.

Sec. 38.

Minnesota Statutes 2006, section 422A.01, subdivision 7, is amended to read:

Subd. 7.

Actuarial equivalent.

"Actuarial equivalent" means the condition
of one annuity or benefit having an equal present worth or present value as another
annuity or benefitnew text begin determined as of a given date with each actuarial present value based
on the appropriate mortality table adopted by the board based on the experience of the
retirement plan as certified as accurate 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 8new text end .

Sec. 39.

Minnesota Statutes 2006, section 422A.04, subdivision 2, is amended to read:

Subd. 2.

Actuarial data.

The board shall keepnew text begin ,new text end in new text begin a new text end convenient formnew text begin ,new text end any data
new text begin that is new text end necessary for the preparation of the annual actuarial valuation of the fund created
by this chapter. The actuarial valuation of the fund deleted text begin shall bedeleted text end new text begin must be prepared by the
actuary retained under section 356.214 and is new text end governed by the provisions of chapter 356new text begin
and the standards for actuarial work adopted by the Legislative Commission on Pensions
and Retirementnew text end .

Sec. 40.

Minnesota Statutes 2006, section 422A.04, subdivision 3, is amended to read:

Subd. 3.

Experience data and mortality tables.

The board shall prepare and
keep any needful tables, records, and accounts required for carrying out the provisions
of sections 422A.01 to 422A.25, including data showing the mortality and disability
experience of the officers and employees of the service and the date of withdrawal from
service, and any other information that may serve as a guide for future actuarial valuations
and adjustments in the actuarial assumptions for the retirement fund. Mortality tables
deleted text begin shalldeleted text end new text begin must new text end be adopted and may be modified from time to time by the board based on the
experience of the fund as recommended by the actuary retained under section 356.214 as a
basis of calculation for retirement allowances, with deleted text begin any recommendationdeleted text end new text begin a certification as
to accuracy new text end by the actuary retained as a part of the permanent records of the boardnew text begin and any
assumption change approved as required under section 356.215, subdivision 18new text end .

Sec. 41.

Minnesota Statutes 2006, section 422A.06, subdivision 2, is amended to read:

Subd. 2.

Actuarial valuation required.

As of July 1 of each year, an actuarial
valuation of the retirement fund deleted text begin shalldeleted text end new text begin must new text end be prepared by the actuary retained deleted text begin by the joint
retirement systemsdeleted text end under section 356.214 and filed in conformance with the provisions
and requirements of sections 356.215 to 356.23. Experience studies deleted text begin shalldeleted text end new text begin must new text end be prepared
at those times required by statute, required by the standards for actuarial work adopted by
the Legislative Commission on Pensions and Retirement or ordered by the board.

The board may contract for the services of an approved actuary and fix the
reasonable compensation for those services. Any approved actuary retained by the board
deleted text begin shall functiondeleted text end new text begin functions new text end as the actuarial deleted text begin advisordeleted text end new text begin adviser new text end to the board and may perform
new text begin benefit increase cost estimates, new text end actuarial valuationsnew text begin ,new text end and experience studies to supplement
those performed by the actuary retained deleted text begin by the joint retirement systemsdeleted text end under section
356.214. deleted text begin Anydeleted text end new text begin Benefit increase cost estimates, new text end supplemental actuarial valuations deleted text begin ordeleted text end new text begin , andnew text end
experience studies new text begin prepared by an approved actuary retained by the board new text end must be filed
with the executive director of the Legislative Commission on Pensions and Retirementnew text begin
at the same time as the document is filed with the boardnew text end .

Sec. 42.

Minnesota Statutes 2007 Supplement, section 422A.06, subdivision 8, is
amended to read:

Subd. 8.

Retirement benefit fund.

(a) The retirement benefit fund consists of
amounts held for payment of retirement allowances for members retired 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 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 actuary 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 must be allocated to this fund and any interest charge under subdivision
3, paragraph (c), must be credited to the fund. There 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 under section 356.214 and must be
certified to the retirement board by deleted text begin thedeleted text end new text begin that new text end actuary deleted text begin retained under section 356.214deleted text end .

(c) The retirement benefit fund 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 deleted text begin advisordeleted text end new text begin adviser new text end 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 deleted text begin isdeleted text end new text begin was new text end established for the Minnesota postretirement investment fund
before June 30, 1997, under Minnesota Statutes 1996, section 11A.18, subdivision 5,
the retirement board deleted text begin shalldeleted text end also new text begin must new text end 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
new text begin and unrealized new text end 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 under section 356.214.

Sec. 43.

Minnesota Statutes 2006, section 422A.101, subdivision 1, is amended to read:

Subdivision 1.

Financial requirements of fund.

deleted text begin Prior todeleted text end new text begin (a) Before new text end July 31
annually, the retirement board, in consultation with the actuary retained under section
356.214, shall prepare an itemized statement of the financial requirements of the fund
for the succeeding fiscal year. A copy of the statement deleted text begin shalldeleted text end new text begin must new text end be submitted to the
city council, the board of estimate and taxation of the city, the managing board or chief
administrative officer of each city owned public utility, improvement project or municipal
activity supported in whole or in part by revenues other than real estate taxes, public
corporation, or unit of metropolitan government employing members of the fund, the
board of Special School District No. 1, and the state commissioner of finance deleted text begin prior todeleted text end new text begin on
or before new text end July 31 annually.

new text begin (b)new text end The statement deleted text begin shalldeleted text end new text begin must new text end be itemized and deleted text begin shalldeleted text end new text begin must new text end include the following:

(1) an estimate of the administrative expenses of the fund for the following year,
including the amount necessary to amortize through June 30, 2020, the annual costs that
are determined by the retirement board to be related to investment activities of the deposit
accumulation fund other than actual investment transaction amounts;

(2) an estimate of the normal cost of the fund expressed as a dollar amount, which
deleted text begin shalldeleted text end new text begin must new text end be determined by applying the normal cost of the fund as reported in the most
recent actuarial valuation prepared by the actuary retained under section 356.214 and
expressed as a percentage of covered payroll to the estimated total covered payroll of all
employees covered by the fund for the following year;

(3) an estimate of the contribution required to amortize on a level annual dollar basis
the unfunded actuarial accrued liability of the fund by June 30, 2020, using an interest rate
of six percent compounded annuallynew text begin ,new text end as reported in the most recent actuarial valuationdeleted text begin ,deleted text end
prepared by the actuary retained under section 356.214new text begin ,new text end expressed as a dollar amount. In
determining the amount of the unfunded actuarial accrued liability of the fund, all assets
other than the assets of the retirement benefit fund deleted text begin shalldeleted text end new text begin must new text end be valued as current assets
as defined under section 356.215, subdivision 1, deleted text begin clause (6)deleted text end new text begin paragraph (f)new text end , and the assets
of the retirement benefit fund deleted text begin shalldeleted text end new text begin must new text end be valued new text begin as an amount new text end equal to the actuarially
determined required reserves for benefits payable from that fund; new text begin and
new text end

(4) the amount of any deficiency in the actual amount of any employer contribution
provided for in this section when compared to the required contribution amount certified
for the previous year, plus interest on the amount at the rate of six percent per annum.

Sec. 44.

Minnesota Statutes 2006, section 422A.101, subdivision 1a, is amended to
read:

Subd. 1a.

City contributions.

deleted text begin Prior todeleted text end new text begin (a) Before new text end August 31 of each year, the
retirement board shall prepare an itemized statement of the financial requirements of the
fund payable by the city for the succeeding fiscal yeardeleted text begin , anddeleted text end new text begin .new text end A copy of the statement
deleted text begin shalldeleted text end new text begin must new text end be submitted to the board of estimate and taxation and to the city council by
September 15new text begin annuallynew text end .

new text begin (b)new text end The financial requirements of the fund payable by the city deleted text begin shalldeleted text end new text begin must new text end be
calculated as follows:

deleted text begin (a)deleted text end new text begin (1) new text end a regular employer contribution of an amount equal to the percentagenew text begin ,new text end
rounded to the nearest two decimal places of the salaries and wages of all employees
covered by the retirement fund which equals the difference between the level normal cost
plus administrative cost as reported in the annual actuarial valuation prepared by the
actuary retained under section 356.214 and the employee contributions provided for in
section 422A.10 less any amounts contributed toward the payment of the balance of
the normal cost not paid by employee contributions by any city owned public utility,
improvement project, other municipal activities supported in whole or in part by revenues
other than real estate taxes, any public corporation, any employing unit of metropolitan
government, or by Special School District No. 1 deleted text begin pursuant todeleted text end new text begin under new text end subdivision 2;

deleted text begin (b)deleted text end new text begin (2) new text end an additional employer contribution of an amount equal to the percent
specified in section 353.27, subdivision 3a, clause (a), multiplied by the salaries and wages
of all employees covered by the retirement fund less any amounts contributed toward
amortization of the unfunded actuarial accrued liability by June 30, 2020, attributable to
their respective covered employees by any city owned public utility, improvement project,
other municipal activities supported in whole or in part by revenues other than real estate
taxes, any public corporation, any employing unit of metropolitan government, or by
Special School District No. 1 deleted text begin pursuant todeleted text end new text begin under new text end subdivision 2; and

deleted text begin (c)deleted text end new text begin (3) new text end a proportional share of an additional employer amortization contribution of
an amount equal to $3,900,000 annually until June 30, 2020, based upon the share of the
fund's unfunded actuarial accrued liability attributed to the city as disclosed in the annual
actuarial valuation prepared by the actuary retained under section 356.214.

new text begin (c) new text end The city council shall, in addition to other taxes levied by the city, annually levy
a tax equal to the amount of the financial requirements of the fund which are payable by
the city. The tax, when levied, deleted text begin shalldeleted text end new text begin must new text end be extended upon the county lists and deleted text begin shalldeleted text end new text begin must
new text end be collected and enforced in the same manner as other taxes levied by the city. If the city
does not levy a tax sufficient to meet the requirements of this subdivision, the retirement
board shall submit the tax levy statement directly to the county auditor, who shall levy the
tax. The tax, when levied, deleted text begin shalldeleted text end new text begin must new text end be extended upon the county lists and deleted text begin shalldeleted text end new text begin must new text end be
collected and paid into the city treasury to the credit of the retirement fund. Any amount
to the credit of the retirement fund deleted text begin shall constitutedeleted text end new text begin constitutes new text end a special fund and deleted text begin shalldeleted text end new text begin may
new text end be used only for the payment of obligations authorized deleted text begin pursuant todeleted text end new text begin under new text end this chapter.

Sec. 45.

Minnesota Statutes 2006, section 422A.101, subdivision 2, is amended to read:

Subd. 2.

Contributions by or for city-owned public utilities, improvements,
or municipal activities.

new text begin (a) new text end Contributions by or for any city-owned public utility,
improvement project, and other municipal activities supported in whole or in part by
revenues other than real estate taxes, any public corporation, any employing unit of
metropolitan government, Special School District No. 1, or Hennepin County, on deleted text begin accountdeleted text end
new text begin behalf new text end of any employee covered by the fund, deleted text begin shalldeleted text end new text begin must new text end be calculated as follows:

deleted text begin (a)deleted text end new text begin (1) new text end a regular employer contribution of an amount equal to the percentage
rounded to the nearest two decimal places of the salaries and wages of all employees of
the employing unit covered by the retirement fund which equals the difference between
the level normal cost plus administrative cost reported in the annual actuarial valuation
prepared by the actuary retained under section 356.214 and the employee contributions
provided for in section 422A.10;

deleted text begin (b)deleted text end new text begin (2) new text end an additional employer contribution of an amount equal to the percent
specified in section 353.27, subdivision 3a, clause (a), multiplied by the salaries and wages
of all employees of the employing unit covered by the retirement fund; new text begin and
new text end

deleted text begin (c)deleted text end new text begin (3) new text end a proportional share of an additional employer amortization contribution of
an amount equal to $3,900,000 annually until June 30, 2020, based upon the share of the
fund's unfunded actuarial accrued liability attributed to the employer as disclosed in the
annual actuarial valuation prepared by the actuary retained under section 356.214.

new text begin (b) new text end The city council or any board or commission may, by proper action, provide for
the inclusion of the cost of the retirement contributions for employees of any city-owned
public utility or for persons employed in any improvement project or other municipal
activity supported in whole or in part by revenues other than taxes who are covered by
the retirement fund in the cost of operating the utility, improvement project, or municipal
activity. The cost of retirement contributions for these employees deleted text begin shalldeleted text end new text begin must new text end be determined
by the retirement board and the respective governing bodies having jurisdiction over the
financing of these operating costs.

new text begin (c) new text end The cost of the employer contributions on behalf of employees of Special School
District No. 1 who are covered by the retirement fund deleted text begin shall bedeleted text end new text begin is new text end the obligation of the
school district. Contributions by the school district to the retirement fund or any other
public pension or retirement fund of which its employees are members must be remitted
to the fund each month. An amount due and not transmitted begins to accrue interest at
the rate of six percent compounded annually 15 days after the date due. The retirement
board shall prepare an itemized statement of the financial requirements of the fund
payable by the school district, which deleted text begin shalldeleted text end new text begin must new text end be submitted deleted text begin prior todeleted text end new text begin before new text end September
15. Contributions by the school district deleted text begin shalldeleted text end new text begin must new text end be made at times designated by the
retirement board. The school district may levy for its contribution to the retirement fund
only to the extent permitted deleted text begin pursuant todeleted text end new text begin under new text end section 126C.41, subdivision 3.

new text begin (d) new text end The cost of the employer contributions on behalf of elective officers or other
employees of Hennepin County who are covered by the retirement fund deleted text begin pursuant todeleted text end new text begin under
new text end section 422A.09, subdivision 3, clause (2), 422A.22, subdivision 2, or 488A.115, or Laws
1973, chapter 380, section 3, Laws 1975, chapter 402, section 2, or any other applicable
law deleted text begin shall bedeleted text end new text begin is new text end the obligation of Hennepin County. The retirement board shall prepare an
itemized statement of the financial requirements of the fund payable by Hennepin County,
which deleted text begin shalldeleted text end new text begin must new text end be submitted deleted text begin prior todeleted text end new text begin before new text end September 15. Contributions by Hennepin
County deleted text begin shalldeleted text end new text begin must new text end be made at times designated by the retirement board. Hennepin County
may levy for its contribution to the retirement fund.

Sec. 46.

Minnesota Statutes 2006, section 422A.101, subdivision 2a, is amended to
read:

Subd. 2a.

Contributions by Metropolitan Airports Commission and
Metropolitan Council.

The Metropolitan Airports Commission and the Metropolitan
Council shall pay to the Minneapolis Employees Retirement Fund annuallynew text begin ,new text end in
installments as specified in subdivision 3new text begin ,new text end the share of the additional support rate required
for full amortization of the unfunded actuarial accrued liabilities by June 30, 2020,
that is attributable to employees of the airports commission or former Metropolitan
Waste Control Commission who are members of the fund. The amount of the payment
deleted text begin shalldeleted text end new text begin must new text end be determined as if the airport commission and Metropolitan Council's
employer contributions determined under subdivision 2 had also included a proportionate
share of a $1,000,000 annual employer amortization contribution. The amount of this
$1,000,000 annual employer amortization contribution that would have been allocated to
the commission or council would have been based on the share of the fund's unfunded
actuarial accrued liability attributed to the commission or council compared to the total
unfunded actuarial accrued liability attributed to all employers under subdivisions 1a and
2. The determinations required under this subdivision must be based on the most recent
actuarial valuation prepared by the actuary retained under section 356.214.

Sec. 47.

Minnesota Statutes 2007 Supplement, 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 actuary retained under section 356.214 consistent with section 356.215
for the most recent yearnew text begin ,new text end 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 under section 422A.10, and the amount of employer contributions required under
subdivisions 1a, 2, and 2a. Payments deleted text begin shalldeleted text end new text begin must new text end 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 $9,000,000, the excess
must be allocated to and new text begin must be new text end 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 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. 48.

Minnesota Statutes 2006, section 422A.15, subdivision 2, is amended to read:

Subd. 2.

Withdrawal of voluntary contributions.

new text begin (a) new text end Voluntary additions to the
employee's deposits made by the employee under section 422A.10 may be withdrawn
new text begin in a lump sum new text end by the retiring employee deleted text begin or,deleted text end new text begin .new text end With the approval of the retirement board,
deleted text begin applieddeleted text end new text begin voluntary additions to the employee's deposits may be used new text end to deleted text begin thedeleted text end purchase deleted text begin ofdeleted text end an
additional annuity computed and determined under a procedure specified by the actuary
retained under section 356.214 utilizing the appropriate mortality table established by the
board of trustees based on the experience of the fund as deleted text begin recommendeddeleted text end new text begin certified as accurate
new text end by the actuary retained under section 356.214 and using the applicable postretirement
interest rate assumption specified in section 356.215, subdivision 8.

Sec. 49.

Minnesota Statutes 2006, section 422A.15, subdivision 3, is amended to read:

Subd. 3.

Optional defined contribution annuity.

In lieu of the formula pension
and annuity, a person who was a contributing member on April 28, 1973, who is eligible to
retire and who ceases to be employed and who qualifies for retirement deleted text begin shall have the option
of electingdeleted text end new text begin may elect new text end to receive a retirement allowance known as "the $2 bill and annuity."

If a member of the contributing class makes the election provided for in this section,
the member deleted text begin shalldeleted text end new text begin is entitled to new text end receive a minimum pension of $2 per month for each
year of service. The pension deleted text begin shalldeleted text end new text begin must new text end be the actuarial equivalent of the accumulated
amounts of the annual installments as may be fixed and designated by law throughout
the period of service of the retiring employee, not to exceed 25 years, accumulated
to the date of retirement at six percent compound interest, and such extra credit to be
provided by the city as will produce the minimum pension of $2 per month for each
year of service. The pension deleted text begin shall bedeleted text end new text begin is new text end in addition to the annuity. The annuity deleted text begin shalldeleted text end
new text begin must new text end be deleted text begin indeleted text end the actuarial equivalent of the net accumulated contributions to the credit of the
retiring employee, calculated at the date of retirement. For the purposes of this chapter,
the "service allowance" for members of the contributing class deleted text begin shall consistdeleted text end new text begin consists new text end of an
"annuity" and a "pension."

The pension provided for deleted text begin herein shalldeleted text end new text begin in this subdivision must new text end be the actuarial
equivalent of the accumulated annual installments of $2 per month for each year of
service. The sum of $2 deleted text begin shalldeleted text end new text begin must new text end be computed as a single life annuity and new text begin is new text end subject to
the option selections provided for in section 422A.17. The pension and annuity provided
for in this subdivision deleted text begin shalldeleted text end new text begin must new text end be first paid from the contributing member's own
contributions and normal earned credits, plus interest, until those credits are exhausted.

The retirement allowance provided under this subdivision or any optional annuity
form of the retirement allowance deleted text begin shalldeleted text end new text begin must new text end be computed and determined under a
procedure specified by the actuary retained under section 356.214 utilizing the appropriate
mortality table established by the board of trustees based on the experience of the fund
as deleted text begin recommendeddeleted text end new text begin certified new text end by the actuary retained under section 356.214 and using
the applicable postretirement interest rate assumption specified in section 356.215,
subdivision 8.

Sec. 50.

Minnesota Statutes 2006, section 422A.16, subdivision 2, is amended to read:

Subd. 2.

Deferred defined contribution annuity.

A person who deleted text begin isdeleted text end new text begin was new text end a member
of the contributing class on April 28, 1973, and who makes the election provided for
in this subdivision and in subdivision 1, may, upon attaining the age of 55 years, but
before attaining the age of 65 years, or someone acting in the member's behalf, may
make application to receive the retirement allowance provided for in section 422A.15,
subdivision 3, or an optional retirement allowance in the manner provided for by section
422A.17. The retirement allowance deleted text begin shalldeleted text end new text begin must new text end be the actuarial equivalent of the city's
contribution and the member's deposit, as they were on the date the separation becomes
permanent, plus interest, as provided for in section 422A.12.

The retirement allowance provided under this subdivision or any optional annuity
form of the retirement allowance deleted text begin shalldeleted text end new text begin must new text end be computed and determined under a
procedure specified by the actuary retained under section 356.214 utilizing the appropriate
mortality table established by the board of trustees based on the experience of the fund
as deleted text begin recommendeddeleted text end new text begin certified new text end by the actuary retained under section 356.214 and using
the applicable postretirement interest rate assumption specified in section 356.215,
subdivision 8.

Sec. 51.

Minnesota Statutes 2006, section 422A.17, is amended to read:

422A.17 RETIREMENT ALLOWANCE; OPTIONS.

At retirement, any employee who is eligible to receive a service allowance may elect
to receive benefits in a retirement allowance payable throughout life or may on retirement
elect to receive the actuarial equivalent at that time of annuity, pension, or retirement
allowance in a lesser annuity, or a lesser pension, or a lesser retirement allowance, payable
throughout life, with the provisions that:

Option I. If the benefit recipient dies before receiving in payments an amount equal
to the present value of the benefit recipient's annuity, pension, or retirement allowance,
as of the date of the benefit recipient's retirement, the balance deleted text begin shall be paiddeleted text end new text begin is payable
new text end to the benefit recipient's legal representatives or to such person as the benefit recipient
deleted text begin shall nominatedeleted text end new text begin nominates new text end by written designation duly acknowledged and filed with the
retirement board as of the date of retirement, or

Option II. Upon the death of the benefit recipient, the benefit recipient's annuity,
pension, or retirement allowance deleted text begin shall be continueddeleted text end new text begin continues new text end throughout the life of and
paid to the person as the benefit recipient deleted text begin shall nominatedeleted text end new text begin nominates new text end by written designation
duly acknowledged and filed with the retirement board as of the date of retirement, or

Option III. Upon death of the benefit recipient, one-half of the benefit recipient's
annuity, pension, or retirement allowance deleted text begin shall be continueddeleted text end new text begin continues new text end throughout the life
of and paid to the person as the benefit recipient deleted text begin shall nominatedeleted text end new text begin nominates new text end by written
designation duly acknowledged and filed with the retirement board as of the date of
retirement, or

Option IV. Other optional retirement allowance forms, including a new text begin bounceback
new text end joint and survivor option under which the benefit recipient receives a normal single-life
annuity if the designated optional annuity beneficiary dies before the benefit recipient,
deleted text begin shall be paiddeleted text end new text begin are payable new text end to the benefit recipient or other person or persons the benefit
recipient nominatesdeleted text begin , provided thatdeleted text end new text begin if new text end the optional annuity is of equivalent actuarial value
to the applicable single life annuity calculated under section 422A.15 and is approved
by the retirement board.

deleted text begin Anydeleted text end new text begin An new text end optional retirement allowance deleted text begin shalldeleted text end new text begin must new text end be computed and determined
under a procedure specified by the actuary retained under section 356.214 utilizing the
appropriate mortality table established by the board of trustees based on the experience
of the fund as deleted text begin recommendeddeleted text end new text begin certified new text end by the actuary retained under section 356.214 and
using the applicable postretirement interest rate assumption specified in section 356.215,
subdivision 8.

In adopting optional annuity forms, the board of trustees deleted text begin shalldeleted text end new text begin must new text end obtain the
written deleted text begin recommendation ofdeleted text end new text begin certification of accuracy from new text end the actuary retained under
section 356.214. The deleted text begin recommendations shalldeleted text end new text begin certifications must new text end be a part of the permanent
records of the board of trustees.

Sec. 52.

Minnesota Statutes 2006, section 422A.23, subdivision 12, is amended to read:

Subd. 12.

Determination of annuity.

The survivor annuities payable under this
section must be computed and determined under a procedure specified by the actuary
retained under section 356.214 utilizing the appropriate mortality table based on the
experience of the fund as recommended by that actuary and approved by the Legislative
Commission on Pensions and Retirement new text begin under section 356.215, subdivision 18, new text end and
using the applicable postretirement interest rate assumption specified in section 356.215,
subdivision 8.

Sec. 53.

Minnesota Statutes 2006, 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 deleted text begin this articledeleted text end new text begin Laws 1999, chapter 222, article 17, new text end 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 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 deleted text begin this articledeleted text end new text begin Laws 1999, chapter 222, article 17new text end , 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. 54.

Minnesota Statutes 2006, section 490.121, subdivision 2a, is amended 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 deleted text begin recommendeddeleted text end new text begin certified as accurate new text end 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. 55.

Minnesota Statutes 2006, 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 this chapter.

(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 new text begin of the single life annuity amount new text end if the designated
beneficiary predeceases the retired judge, or (3) a new text begin bounceback new text end joint and survivor annuity
with reinstatement new text begin of the single life annuity amount new text end if the designated beneficiary
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 deleted text begin recommendation ofdeleted text end new text begin certification of accuracy by
new text end the actuary retained under section 356.214. The deleted text begin recommendationsdeleted text end new text begin certifications new text end must be
retained as a part of the permanent records of the board.

Sec. 56. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 55 are effective July 1, 2008.
new text end

SF 2923

Bill Text Versions

Current Version - as introduced

ARTICLE 1

ACTUARY RETAINED BY THE LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT

Section 1.

new text begin Subd. 13. new text end

new text begin Retention of actuary. new text end

Sec. 2.

356.214 ACTUARIAL VALUATION PREPARATION; deleted text begin JOINTdeleted text end RETENTION OF CONSULTING ACTUARY.

Subdivision 1.

Joint retention.

Subd. 2.

new text begin Actuarial revolving account; new text end allocation of actuarial costsnew text begin ; appropriationnew text end .

Subd. 3.

Reporting to deleted text begin commissiondeleted text end new text begin retirement plansnew text end .

Sec. 3. new text begin TEMPORARY PROVISION; CONTINUATION OF EXISTING CONTRACT.new text end

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

ARTICLE 2

CONFORMING CHANGES

Section 1.

Subd. 6.

Duties and powers of executive director.

Sec. 2.

Subd. 4.

Determining actuarial equivalency.

Sec. 3.

Subd. 2.

Valuation of assets; adjustment of benefits.

Sec. 4.

Subd. 2.

Computation of deferred annuity.

Sec. 5.

Subd. 2.

Surviving spouse coverage; term certain.

Sec. 6.

Subd. 3.

Optional annuity forms.

Sec. 7.

Subd. 3.

Valuation of assets; adjustment of benefits.

Sec. 8.

Subd. 2.

Computation of deferred annuity.

Sec. 9.

Subd. 14.

Actuarial equivalent.

Sec. 10.

Subd. 3a.

Executive director.

Sec. 11.

Subd. 2.

Valuation of assets; adjustment of benefits.

Sec. 12.

Subd. 6.

Retirement before eligibility for Social Security benefits.

Sec. 13.

Subd. 3.

Optional retirement annuity forms.

Sec. 14.

Subd. 5.

Actuarial reduction for early retirement.

Sec. 15.

Subd. 2.

Deferred annuity computation; augmentation.

Sec. 16.

353.88 PENALTY FOR MEMBERSHIP MISCERTIFICATIONS AND CERTIFICATION FAILURES.

Sec. 17.

Subd. 2.

Election of coverage by current deferred retirees.

Sec. 18.

Subd. 2a.

Duties of executive director.

Sec. 19.

Subdivision 1.

General powers of board.

Sec. 20.

Subd. 2.

Election of accelerated annuity.

Sec. 21.

ACTUARY RETAINED BY THE LEGISLATIVE COMMISSION
ON PENSIONS AND RETIREMENT

356.214 ACTUARIAL VALUATION PREPARATION; deleted text begin JOINTdeleted text end RETENTION
OF CONSULTING ACTUARY.

new text begin Actuarial revolving account; new text end allocation of actuarial costsnew text begin ;
appropriationnew text end .

Sec. 3. new text begin TEMPORARY PROVISION; CONTINUATION OF EXISTING
CONTRACT.
new text end

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

353.88 PENALTY FOR MEMBERSHIP MISCERTIFICATIONS AND
CERTIFICATION FAILURES.

Termination of supplemental contributions and direct matching
and state aid.