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SF 430

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to retirement; correcting errors and omissions in 2006 omnibus
retirement and other legislation; amending Minnesota Statutes 2006, sections
3A.05; 354.44, subdivision 6; 354A.12, subdivisions 3c, 3d; 356A.06,
subdivision 6; Laws 2006, chapter 271, article 2, sections 12, subdivision 1; 13,
subdivision 3; article 14, section 2, subdivision 3.

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

Section 1.

Minnesota Statutes 2006, section 3A.05, is amended to read:


3A.05 APPLICATION FOR SURVIVOR BENEFIT.

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

(b) Survivor benefits accrue as of the first day of the month following the death of
the member of the legislature or former legislator and payments commence as of the first
of the month next following the filing of the application, and are retroactive to the date the
benefit accrues or the first of the month occurring 12 months before the month in which
the application is filed with the director, whichever is deleted text begin earlierdeleted text end new text begin laternew text end .

Sec. 2.

Minnesota Statutes 2006, section 354.44, subdivision 6, is amended to read:


Subd. 6.

Computation of formula program retirement annuity.

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

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first
became a member of the association or a member of a pension fund listed in section
356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with
paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The
average salary as defined in section 354.05, subdivision 13a, multiplied by the following
percentages per year of formula service credit shall determine the amount of the annuity to
which the member qualifying therefor is entitled for service rendered before July 1, 2006:

Coordinated Member
Basic Member
Each year of service
during first ten
the percent specified
in section 356.315,
subdivision 1, per year
the percent
specified in
section 356.315,
subdivision 3, per
year
Each year of service
thereafter
the percent specified
in section 356.315,
subdivision 2, per year
the percent
specified in
section 356.315,
subdivision 4, per
year

For service rendered on or after July 1, 2006, the average salary as defined in section
354.05, subdivision 13a, multiplied by the following percentages per year of service credit,
determines the amount the annuity to which the member qualifying therefor isnew text begin entitlednew text end :

Coordinated Member
Basic Member
Each year of service
during first ten
the percent specified
in section 356.315,
subdivision 1a, per year
the percent
specified in
section 356.315,
subdivision 3, per
year
Each year of service after
ten years of service
the percent specified
in section 356.315,
subdivision 2b, per year
the percent
specified in
section 356.315,
subdivision 4, per
year

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

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

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

(d) This paragraph applies to a member who has become at least 55 years old and
first became a member of the association after June 30, 1989, and to any other member
who has become at least 55 years old and whose annuity amount when calculated under
this paragraph and in conjunction with paragraph (e), is higher than it is when calculated
under paragraph (b), in conjunction with paragraph (c). For a basic member, the average
salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified
by section 356.315, subdivision 4, for each year of service for a basic member shall
determine the amount of the retirement annuity to which the basic member is entitled.
The annuity of a basic member who was a member of the former Minneapolis Teachers
Retirement Fund Association as of June 30, 2006, must be determined according to the
annuity formula under the articles of incorporation of the former Minneapolis Teachers
Retirement Fund Association in effect as of that date. For a coordinated member, the
average salary, as defined in section 354.05, subdivision 13a, multiplied by the percent
specified in section 356.315, subdivision 2, for each year of service rendered before July
1, 2006, and by the percent specified in section 356.315, subdivision 2b, for each year of
service rendered on or after July 1, 2006, determines the amount of the retirement annuity
to which the coordinated member is entitled.

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

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

Sec. 3.

Minnesota Statutes 2006, 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, deleted text begin whichdeleted text end must continue to be paid to the Teachers
Retirement Association until 2037deleted text begin , ordeleted text end new text begin . The supplemental contributions payablenew text end 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 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. 4.

Minnesota Statutes 2006, section 354A.12, subdivision 3d, is amended to read:


Subd. 3d.

Supplemental administrative expense assessment.

(a) The active and
retired membership of the St. Paul Teachers Retirement Fund Association is responsible
for defraying supplemental administrative expenses other than investment expenses of the
respective teacher retirement fund association.

(b) Investment expenses of the teachers retirement fund association are those
expenses incurred by or on behalf of the retirement fund in connection with the investment
of the assets of the retirement fund other than investment security transaction costs. Other
administrative expenses are all expenses incurred by or on behalf of the retirement fund
for all other retirement fund functions other than the investment of retirement fund assets.
Investment and other administrative expenses must be accounted for using generally
accepted accounting principles and in a manner consistent with the comprehensive annual
financial report of the teachers retirement fund association for the immediately previous
fiscal year under section 356.20.

(c) Supplemental administrative expenses other than investment expenses of the St.
Paul Teachers Retirement Fund Association are those expenses for the fiscal year that:

(1) exceed, for the St. Paul Teachers Retirement Fund Association, $443,745 new text begin plus
new text end an additional amount derived by applying the percentage increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers All Items Index published by the
Bureau of Labor Statistics of the United States Department of Labor since July 1, 2001,
to the dollar amount; and

(2) exceed the amount computed by applying the most recent percentage of
pay administrative expense amount, other than investment expenses, for the teachers
retirement association governed by chapter 354 to the covered payroll of the respective
teachers retirement fund association for the fiscal year.

(d) The board of trustees of the St. Paul Teachers Retirement Fund Association
shall allocate the total dollar amount of supplemental administrative expenses other than
investment expenses determined under paragraph (c), clause (2), among the various active
and retired membership groups of the teachers retirement fund association and shall assess
the various membership groups their respective share of the supplemental administrative
expenses other than investment expenses, in amounts determined by the board of trustees.
The supplemental administrative expense assessments must be paid by the membership
group in a manner determined by the board of trustees of the respective teachers retirement
association. Supplemental administrative expenses payable by the active members of the
pension plan must be picked up by the employer in accordance with section 356.62.

(e) With respect to the St. Paul Teachers Retirement Fund Association, the
supplemental administrative expense assessment must be fully disclosed to the various
active and retired membership groups of the teachers retirement fund association. The
chief administrative officer of the St. Paul Teachers Retirement Fund Association shall
prepare a supplemental administrative expense assessment disclosure notice, which must
include the following:

(1) the total amount of administrative expenses of the St. Paul Teachers Retirement
Fund Association, the amount of the investment expenses of the St. Paul Teachers
Retirement Fund Association, and the net remaining amount of administrative expenses of
the St. Paul Teachers Retirement Fund Association;

(2) the amount of administrative expenses for the St. Paul Teachers Retirement Fund
Association that would be equivalent to the teachers retirement association noninvestment
administrative expense level described in paragraph (c);

(3) the total amount of supplemental administrative expenses required for assessment
calculated under paragraph (c);

(4) the portion of the total amount of the supplemental administrative expense
assessment allocated to each membership group and the rationale for that allocation;

(5) the manner of collecting the supplemental administrative expense assessment
from each membership group, the number of assessment payments required during the
year, and the amount of each payment or the procedure used to determine each payment;
and

(6) any other information that the chief administrative officer determines is necessary
to fairly portray the manner in which the supplemental administrative expense assessment
was determined and allocated.

(f) The disclosure notice must be provided annually in the annual report of the
association.

(g) The supplemental administrative expense assessments must be deposited in the
applicable teachers retirement fund upon receipt.

(h) Any omitted active membership group assessments that remain undeducted
and unpaid to the teachers retirement fund association for 90 days must be paid by the
respective school district. The school district may recover any omitted active membership
group assessment amounts that it has previously paid. The teachers retirement fund
association shall deduct any omitted retired membership group assessment amounts from
the benefits next payable after the discovery of the omitted amounts.

Sec. 5.

Minnesota Statutes 2006, section 356A.06, subdivision 6, is amended to read:


Subd. 6.

Limited list of authorized investment securities.

(a) Except to the
extent otherwise authorized by law, a covered pension plan may invest its assets only in
investment securities authorized by this subdivision if the plan does not:

(1) have assets with a book value in excess of $1,000,000;

(2) use the services of an investment advisor registered with the Securities and
Exchange Commission in accordance with the Investment Advisers Act of 1940, or
registered as an investment advisor in accordance with sections 80A.58, and deleted text begin 80A.59deleted text end new text begin
80A.60
new text end , for the investment of at least 60 percent of its assets, calculated on book value;

(3) use the services of the State Board of Investment for the investment of at least 60
percent of its assets, calculated on book value; or

(4) use a combination of the services of an investment advisor meeting the
requirements of clause (2) and the services of the State Board of Investment for the
investment of at least 75 percent of its assets, calculated on book value.

(b) Investment securities authorized for a pension plan covered by this subdivision
are:

(1) certificates of deposit issued, to the extent of available insurance or
collateralization, by a financial institution that is a member of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation, is insured
by the National Credit Union Administration, or is authorized to do business in this state
and has deposited with the chief administrative officer of the plan a sufficient amount of
marketable securities as collateral in accordance with section 118A.03;

(2) savings accounts, to the extent of available insurance, with a financial institution
that is a member of the Federal Deposit Insurance Corporation or the Federal Savings
and Loan Insurance Corporation;

(3) governmental obligations, including bonds, notes, bills, or other fixed
obligations, issued by the United States, an agency or instrumentality of the United States,
an organization established and regulated by an act of Congress or by a state, state agency
or instrumentality, municipality, or other governmental or political subdivision that:

(i) for the obligation in question, issues an obligation that equals or exceeds the
stated investment yield of debt securities not exempt from federal income taxation and of
comparable quality;

(ii) for an obligation that is a revenue bond, has been completely self-supporting
for the last five years; and

(iii) for an obligation other than a revenue bond, has issued an obligation backed by
the full faith and credit of the applicable taxing jurisdiction and has not been in default on
the payment of principal or interest on the obligation in question or any other nonrevenue
bond obligation during the preceding ten years;

(4) corporate obligations, including bonds, notes, debentures, or other regularly
issued and readily marketable evidences of indebtedness issued by a corporation organized
under the laws of any state that during the preceding five years has had on average
annual net pretax earnings at least 50 percent greater than the annual interest charges
and principal payments on the total issued debt of the corporation during that period
and that, for the obligation in question, has issued an obligation rated in one of the top
three quality categories by Moody's Investors Service, Incorporated, or Standard and
Poor's Corporation; and

(5) shares in an open-end investment company registered under the federal
Investment Company Act of 1940, if the portfolio investments of the company are limited
to investments that meet the requirements of clauses (1) to (4).

Sec. 6.

Laws 2006, chapter 271, article 2, section 12, subdivision 1, is amended to read:


Subdivision 1.

Election of prior state coverage.

(a) An employee in the
occupational position of laundry coordinator or delivery van driver at the Minnesota
Correctional Facility-Faribault who has future retirement coverage transferred to the
correctional state employees retirement plan under section 5 is entitled to elect to obtain
prior service credit for eligible correctional state service performed after June 30, 1997,
and before July 1, 2006, with the Department of Corrections and an employee who had
future retirement coverage transferred to the correctional state employees retirement
plan under Laws 2004, chapter 267, article 1, section 1, is entitled to elect to obtain
prior service credit for eligible correctional state service performed at the Minnesota
Correctional Facility-Rush City before August 1, 2004. All prior service credit in either
instance must be purchased.

(b) Eligible correctional state service is either a prior period of continuous service
after June 30, 1997, at the Minnesota Correctional Facility-Faribault, or a prior period
of continuous service at the Minnesota Correctional Facility-Rush City before August 1,
2004, whichever applies, performed as an employee of the Department of Corrections that
would have been eligible for the correctional state employees retirement plan coverage
under section 1, if that prior service had been performed after August 1, 2004, or June 30,
2006, rather than before August 1, 2004, or July 1, 2006, whichever applies. Service is
continuous if there has been no period of discontinuation of eligible state service for a
period greater than 30 calendar days.

(c) The commissioner of corrections shall certify eligible correctional state service
to the commissioner of employee relations and to the executive director of the Minnesota
State Retirement System.

(d) A correctional employee covered under deleted text begin section 1deleted text end new text begin this subdivision new text end is entitled to
purchase the past service if the department certifies that the employee met the eligibility
requirements for coverage. The employee must make additional employee contributions.
Payment for past service must be completed by June 30, 2007.

Sec. 7.

Laws 2006, chapter 271, article 2, section 13, subdivision 3, is amended to read:


Subd. 3.

Employee equivalent contribution.

To receive the transfer of service
credit specified in subdivision 1, the individual must pay to the executive director of the
Minnesota State Retirement System the difference between the employee contribution rate
for the general state employees retirement plan and the employee contribution rate for the
correctional state employees retirement plan in effect during the period eligible for transfer
applied to the eligible individual's salary at the time each additional contribution would
have been deducted from pay if coverage had been provided by the correctional state
employees retirement plan. These amounts shall be paid in a lump sum by September 1,
deleted text begin 2005deleted text end new text begin 2007new text end , or prior to termination of service, whichever is earlier, plus 8.5 percent annual
compound interest from the applicable payroll deduction date until paid.

Sec. 8.

Laws 2006, chapter 271, article 14, section 2, subdivision 3, is amended to read:


Subd. 3.

Payment.

If an eligible person meets the requirements to purchase service
credit under this section, the public employees police and fire fund must be paid the
amount determined under Minnesota Statutes, section 356.551.new text begin Of this amount:
new text end

new text begin (1) the eligible person must pay an amount equal to the employee contribution rate
during the period of service to be purchased, applied to the actual salary in effect during
that period, plus interest at the rate of 8.5 percent per year compounded annually from
the date on which the contributions should have been made to the date on which payment
is made under this section; and
new text end

new text begin (2) the city of Faribault must pay the remainder of the amount determined under
Minnesota Statutes, section 356.551.
new text end

Sec. 9. new text begin EFFECTIVE DATES; RETROACTIVITY.
new text end

new text begin (a) Sections 1, 2, 3, 4, and 7 are effective retroactively from July 1, 2006.
new text end

new text begin (b) Section 5 is effective August 1, 2007.
new text end

new text begin (c) Section 6 is effective retroactively from June 14, 2006.
new text end

new text begin (d) Section 8 is effective retroactively from June 2, 2006.
new text end