4th Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to retirement; increasing pension benefit 1.3 accrual rates; adjusting financing for pension plans; 1.4 adding supplemental financial conditions information 1.5 for pension funds; reducing appropriations; modifying 1.6 or establishing various pension aids; appropriating 1.7 money; amending Minnesota Statutes 1996, sections 1.8 3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 1.9 and 4; 3A.07; 11A.18, subdivision 9; 69.011, 1.10 subdivisions 1, 2, and by adding a subdivision; 1.11 69.021, subdivisions 5, 7a, 10, and 11; 69.031, 1.12 subdivision 5; 352.01, subdivision 25; 352.04, 1.13 subdivisions 2 and 3; 352.115, subdivision 3; 352.72, 1.14 subdivision 2; 352.92, subdivisions 1 and 2; 352.93, 1.15 subdivisions 2, 3, and by adding a subdivision; 1.16 352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a 1.17 and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, 1.18 subdivision 1; 352B.30, by adding a subdivision; 1.19 352C.031, subdivision 4; 352C.033; 352D.02, 1.20 subdivisions 1 and 2; 352D.04, subdivisions 1 and 2; 1.21 353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 1.22 353.29, subdivision 3; 353.651, subdivision 3; 1.23 353.656, subdivision 1; 353.71, subdivision 2; 1.24 353A.08, subdivisions 1 and 2; 353A.083, by adding a 1.25 subdivision; 354.05, subdivision 38; 354.42, 1.26 subdivisions 2, 3, and 5; 354.44, subdivision 6, and 1.27 by adding a subdivision; 354.53, subdivision 1; 1.28 354.55, subdivision 11; 354A.011, subdivision 15a; 1.29 354A.12, subdivisions 1, 2a, 3a, 3b, and 3c; 354A.31, 1.30 subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, 1.31 subdivisions 2, 4d, and 4g; 356.217; 356.30, 1.32 subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, 1.33 subdivision 8; 422A.151; 423B.01, subdivision 9, and 1.34 by adding a subdivision; 423B.06, by adding a 1.35 subdivision; 423B.07; 423B.09, subdivision 1, and by 1.36 adding a subdivision; 423B.10, subdivision 1; 423B.15, 1.37 subdivisions 2, 3, 6, and by adding a subdivision; and 1.38 490.124, subdivisions 1 and 5; Laws 1965, chapter 519, 1.39 section 1, as amended; Laws 1979, chapter 109, section 1.40 1, as amended; Laws 1989, chapter 319, article 19, 1.41 section 7, subdivisions 1, as amended, 3, 4, as 1.42 amended, and 7; Laws 1993, chapter 125, article 1, 1.43 section 1; and Laws 1996, chapter 448, article 1, 1.44 section 3; proposing coding for new law in Minnesota 1.45 Statutes, chapters 124; 273; 352; 352C; 354A; 355; and 1.46 356; repealing Minnesota Statutes 1996, sections 2.1 124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 2.2 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 2.3 353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 2.4 356.88, subdivision 2; Laws 1985, chapter 259, section 2.5 3; and Laws 1993, chapter 336, article 3, section 1. 2.6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.7 ARTICLE 1 2.8 PENSION UNIFORMITY PROVISIONS 2.9 Section 1. Minnesota Statutes 1996, section 3.85, 2.10 subdivision 11, is amended to read: 2.11 Subd. 11. [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The 2.12 commission shall contract with an established actuarial 2.13 consulting firm to conduct annual actuarial valuations for the 2.14 retirement plans named in paragraph (b). The contract must 2.15 include provisions for performing cost analyses of proposals for 2.16 changes in benefit and funding policies. 2.17 (b) The contract for actuarial valuation must include the 2.18 following retirement plans: 2.19 (1) the teachers retirement plan, teachers retirement 2.20 association; 2.21 (2) the general state employees retirement plan, Minnesota 2.22 state retirement system; 2.23 (3) the correctional employees retirement plan, Minnesota 2.24 state retirement system; 2.25 (4) the state patrol retirement plan, Minnesota state 2.26 retirement system; 2.27 (5) the judges retirement plan, Minnesota state retirement 2.28 system; 2.29 (6) the Minneapolis employees retirement plan, Minneapolis 2.30 employees retirement fund; 2.31 (7) the public employees retirement plan, public employees 2.32 retirement association; 2.33 (8) the public employees police and fire plan, public 2.34 employees retirement association; 2.35 (9) the Duluth teachers retirement plan, Duluth teachers 2.36 retirement fund association; 2.37 (10) the Minneapolis teachers retirement plan, Minneapolis 2.38 teachers retirement fund association; 3.1 (11) the St. Paul teachers retirement plan, St. Paul 3.2 teachers retirement fund association; 3.3 (12) the legislators retirement plan, Minnesota state 3.4 retirement system; and 3.5 (13) the elective state officers retirement plan, Minnesota 3.6 state retirement system; and3.7(14) the public employees local government correctional3.8service retirement plan, public employees retirement3.9association, if there are any participants in that plan. 3.10 (c) The contract must specify completion of annual 3.11 actuarial valuation calculations on a fiscal year basis with 3.12 their contents as specified in section 356.215, and the 3.13 standards for actuarial work adopted by the commission. 3.14 The contract must specify completion of annual experience 3.15 data collection and processing and a quadrennial published 3.16 experience study for the plans listed in paragraph (b), clauses 3.17 (1), (2), and (7), as provided for in the standards for 3.18 actuarial work adopted by the commission. The experience data 3.19 collection, processing, and analysis must evaluate the following: 3.20 (1) individual salary progression; 3.21 (2) rate of return on investments based on current asset 3.22 value; 3.23 (3) payroll growth; 3.24 (4) mortality; 3.25 (5) retirement age; 3.26 (6) withdrawal; and 3.27 (7) disablement. 3.28 (d) The actuary retained by the commission shall annually 3.29 prepare a report to the legislature, including the commentary on 3.30 the actuarial valuation calculations for the plans named in 3.31 paragraph (b) and summarizing the results of the actuarial 3.32 valuation calculations. The commission-retained actuary shall 3.33 include with the report the actuary's recommendations concerning 3.34 the appropriateness of the support rates to achieve proper 3.35 funding of the retirement funds by the required funding dates. 3.36 The commission-retained actuary shall, as part of the 4.1 quadrennial published experience study, include recommendations 4.2 to the legislature on the appropriateness of the actuarial 4.3 valuation assumptions required for evaluation in the study. 4.4 (e) If the actuarial gain and loss analysis in the 4.5 actuarial valuation calculations indicates a persistent pattern 4.6 of sizable gains or losses, as directed by the commission, the 4.7 actuary retained by the commission shall prepare a special 4.8 experience study for a plan listed in paragraph (b), clause (3), 4.9 (4), (5), (6), (8), (9), (10), (11), (12), or (13),or (14),in 4.10 the manner provided for in the standards for actuarial work 4.11 adopted by the commission. 4.12 (f) The term of the contract between the commission and the 4.13 actuary retained by the commission is two years, plus not to 4.14 exceed two one-year extensions before competitive bidding. The 4.15 contract is subject to competitive bidding procedures as 4.16 specified by the commission. 4.17 Sec. 2. Minnesota Statutes 1996, section 3.85, subdivision 4.18 12, is amended to read: 4.19 Subd. 12. [ALLOCATION OF ACTUARIAL COST.] (a) The 4.20 commission shall assess each retirement plan specified in 4.21 subdivision 11, paragraph (b), the compensation paid to the 4.22 actuary retained by the commission for the actuarial valuation 4.23 calculations, quadrennial projection valuations, and quadrennial 4.24 experience studies. The assessment is 100 percent of the amount 4.25 of contract compensation for the actuarial consulting firm 4.26 retained by the commission for actuarial valuation calculations, 4.27 including the public employees police and fire plan 4.28 consolidation accounts of the public employees retirement 4.29 association, annual experience data collection and processing, 4.30 and quadrennial experience studies. 4.31 The portion of the total assessment payable by each 4.32 retirement system or pension plan must be determined as follows: 4.33 (1) Each pension plan specified in subdivision 11, 4.34 paragraph (b), clauses (1) to(14)(13), must pay the following 4.35 indexed amount based on its total active, deferred, inactive, 4.36 and benefit recipient membership: 5.1 up to 2,000 members, inclusive $2.55 per member 5.2 2,001 through 10,000 members $1.13 per member 5.3 over 10,000 members $0.11 per member 5.4 The amount specified is applicable for the assessment of 5.5 the July 1, 1991, to June 30, 1992, fiscal year actuarial 5.6 compensation amounts. For the July 1, 1992, to June 30, 1993, 5.7 fiscal year and subsequent fiscal year actuarial compensation 5.8 amounts, the amount specified must be increased at the same 5.9 percentage increase rate as the implicit price deflator for 5.10 state and local government purchases of goods and services for 5.11 the 12-month period ending with the first quarter of the 5.12 calendar year following the completion date for the actuarial 5.13 valuation calculations, as published by the federal Department 5.14 of Commerce, and rounded upward to the nearest full cent. 5.15 (2) The total per-member portion of the allocation must be 5.16 determined, and that total per-member amount must be subtracted 5.17 from the total amount for allocation. Of the remainder dollar 5.18 amount, the following per-retirement system and per-pension plan 5.19 charges must be determined and the charges must be paid by the 5.20 system or plan: 5.21 (i) 37.87 percent is the total additional per-retirement 5.22 system charge, of which one-seventh must be paid by each 5.23 retirement system specified in subdivision 11, paragraph (b), 5.24 clauses (1), (2), (6), (7), (9), (10), and (11). 5.25 (ii) 62.13 percent is the total additional per-pension plan 5.26 charge, of which one-thirteenth must be paid by each pension 5.27 plan specified in subdivision 11, paragraph (b), clauses (1) to 5.28 (13), if there are not any participants in the plan specified in5.29subdivision 11, paragraph (b), clause (14), or of which5.30one-fourteenth must be paid by each pension plan specified in5.31subdivision 11, paragraph (b), clauses (1) to (14), if there are5.32participants in the plan specified in subdivision 11, paragraph5.33(b), clause (14). 5.34 (b) The assessment must be made following the completion of 5.35 the actuarial valuation calculations and the experience 5.36 analysis. The amount of the assessment is appropriated from the 6.1 retirement fund applicable to the retirement plan. Receipts 6.2 from assessments must be deposited in the state treasury and 6.3 credited to the general fund. 6.4 Sec. 3. Minnesota Statutes 1996, section 3A.02, 6.5 subdivision 1, is amended to read: 6.6 Subdivision 1. [QUALIFICATIONS.] (a) A former legislator 6.7 is entitled, upon written application to the director, to 6.8 receive a retirement allowance monthly, if the person: 6.9 (1) has served at least six full years, without regard to 6.10 the application of section 3A.10, subdivision 2, or has served 6.11 during all or part of four regular sessions as a member of the 6.12 legislature, which service need not be continuous; 6.13 (2) has attained the normal retirement age; 6.14 (3) has retired as a member of the legislature; and 6.15 (4) has made all contributions provided for in section 6.16 3A.03, has made payments for past service under subdivision 2, 6.17 or has made payments in lieu of contributions under Minnesota 6.18 Statutes 1992, section 3A.031, prior to July 1, 1994. 6.19 (b) This paragraph applies to members of the legislature 6.20 who terminate service as a legislator before July 1, 1997. For 6.21 service rendered before the beginning of the 1979 legislative 6.22 session, but not to exceed eight years of service, the 6.23 retirement allowance is an amount equal to five percent per year 6.24 of service of that member's average monthly salary. For service 6.25 in excess of eight years rendered before the beginning of the 6.26 1979 legislative session, and for service rendered after the 6.27 beginning of the 1979 legislative session, the retirement 6.28 allowance is an amount equal to 2-1/2 percent per year of 6.29 service of that member's average monthly salary. 6.30 (c) This paragraph applies to members of the legislature 6.31 who terminate service as a legislator after June 30, 1997. The 6.32 retirement allowance is an amount equal to the applicable rate 6.33 or rates under paragraph (b) per year of service of the member's 6.34 average monthly salary adjusted for that person on an actuarial 6.35 equivalent basis to reflect the change in the postretirement 6.36 interest rate actuarial assumption under section 356.215, 7.1 subdivision 4d, from five percent to six percent. The 7.2 adjustment must be calculated by or, alternatively, the 7.3 adjustment procedure must be specified by, the actuary retained 7.4 by the legislative commission on pensions and retirement. The 7.5 purpose of this adjustment is to ensure that the total amount of 7.6 benefits that the actuary predicts an individual member will 7.7 receive over the member's lifetime under this paragraph will be 7.8 the same as the total amount of benefits the actuary predicts 7.9 the individual member would receive over the member's lifetime 7.10 under the law in effect before enactment of this paragraph. 7.11 (d) The retirement allowance accrues beginning with the 7.12 first day of the month of receipt of the application, but not 7.13 before age 60, and for the remainder of the former legislator's 7.14 life, if the former legislator is not serving as a member of the 7.15 legislature or as a constitutional officer or commissioner as 7.16 defined in section 352C.021, subdivisions 2 and 3. The annuity 7.17shalldoes not begin to accrue prior to retirement as a 7.18 legislator. No annuity paymentshallmay be made retroactive 7.19 for more than 180 days before the date the annuity application 7.20 is filed with the director. 7.21(d)(e) Any member who has served during all or part of 7.22 four regular sessions is considered to have served eight years 7.23 as a member of the legislature. 7.24(e)(f) The retirement allowance ceases with the last 7.25 payment that accrued to the retired legislator during the 7.26 retired legislator's lifetime, except that the surviving spouse, 7.27 if any, is entitled to the retirement allowance for the calendar 7.28 month in which the retired legislator died. 7.29 Sec. 4. Minnesota Statutes 1996, section 3A.02, 7.30 subdivision 4, is amended to read: 7.31 Subd. 4. [DEFERRED ANNUITIES AUGMENTATION.] (a) The 7.32 deferred annuity of any former legislatorshallmust be 7.33 augmented as provided herein. The required reserves applicable 7.34 to the deferred annuity, determined as of the date the benefit 7.35 begins to accrue using an appropriate mortality table and an 7.36 interest assumption offivesix percent,shallmust be augmented 8.1 from the first of the month following termination of service, or 8.2 July 1, 1973, whichever is later, to the first day of the month 8.3 in which the annuity begins to accrue, at the rate of five 8.4 percent per annum compounded annually until January 1, 1981, and 8.5 thereafter at the rate of three percent per annum compounded 8.6 annually until January 1 of the year in which the former 8.7 legislator attains age 55. From that date to the effective date 8.8 of retirement, the rate is five percent compounded annually. 8.9 (b) The retirement allowance of, or the survivor benefit 8.10 payable on behalf of, a former member of the legislature who 8.11 terminated service before July 1, 1997, which is not first 8.12 payable until after June 30, 1997, must be increased on an 8.13 actuarial equivalent basis to reflect the change in the 8.14 postretirement interest rate actuarial assumption under section 8.15 356.215, subdivision 4d, from five percent to six percent under 8.16 a calculation procedure and tables adopted by the board of 8.17 directors of the Minnesota state retirement system and approved 8.18 by the actuary retained by the legislative commission on 8.19 pensions and retirement. 8.20 Sec. 5. Minnesota Statutes 1996, section 11A.18, 8.21 subdivision 9, is amended to read: 8.22 Subd. 9. [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 8.23 Annually, following June 30, the state board shall use the 8.24 procedures in paragraphs (b), (c), and (d) to determine whether 8.25 a postretirement adjustment is payable and to determine the 8.26 amount of any postretirement adjustment. 8.27 (b) If the Consumer Price Index for urban wage earners and 8.28 clerical workers all items index published by the Bureau of 8.29 Labor Statistics of the United States Department of Labor 8.30 increases from June 30 of the preceding year to June 30 of the 8.31 current year, the state board shall certify the percentage 8.32 increase. The amount certifiedmaymust not exceed the lesser 8.33 of the difference between the preretirement interest assumption 8.34 and postretirement interest assumption in section 356.215, 8.35 subdivision 4d, paragraph (a), or3.52.5 percent. For the 8.36 Minneapolis employees retirement fund, the amount certified must 9.1 not exceed 3.5 percent. 9.2 (c) In addition to any percentage increase certified under 9.3 paragraph (b), the board shall use the following procedures to 9.4 determine if a postretirement adjustment is payable under this 9.5 paragraph: 9.6 (1) The state board shall determine the market value of the 9.7 fund on June 30 of that year; 9.8 (2) The amount of reserves required for the annuity or 9.9 benefit payable to an annuitant and benefit recipient of the 9.10 participating public pension plans or fundsshallmust be 9.11 determined by the commission-retained actuary as of the current 9.12 June 30. An annuitant or benefit recipient who has been 9.13 receiving an annuity or benefit for at least 12 full months as 9.14 of the current June 30 is eligible to receive a full 9.15 postretirement adjustment. An annuitant or benefit recipient 9.16 who has been receiving an annuity or benefit for at least one 9.17 full month, but less than 12 full months as of the current June 9.18 30, is eligible to receive a partial postretirement adjustment. 9.19 Each fund shall report separately the amount of the reserves for 9.20 those annuitants and benefit recipients who are eligible to 9.21 receive a full postretirement benefit adjustment. This amount 9.22 is known as "eligible reserves." Each fund shall also report 9.23 separately the amount of the reserves for those annuitants and 9.24 benefit recipients who are not eligible to receive a 9.25 postretirement adjustment. This amount is known as "noneligible 9.26 reserves." For an annuitant or benefit recipient who is 9.27 eligible to receive a partial postretirement adjustment, each 9.28 fund shall report separately as additional "eligible reserves" 9.29 an amount that bears the same ratio to the total reserves 9.30 required for the annuitant or benefit recipient as the number of 9.31 full months of annuity or benefit receipt as of the current June 9.32 30 bears to 12 full months. The remainder of the annuitant's or 9.33 benefit recipient's reservesshallmust be separately reported 9.34 as additional "noneligible reserves." The amount of "eligible" 9.35 and "noneligible" required reservesshallmust be certified to 9.36 the board by the commission-retained actuary as soon as is 10.1 practical following the current June 30; 10.2 (3) The state board shall determine the percentage increase 10.3 certified under paragraph (b) multiplied by the eligible 10.4 required reserves, as adjusted for mortality gains and losses 10.5 under subdivision 11, determined under clause (2); 10.6 (4) The state board shall add the amount of reserves 10.7 required for the annuities or benefits payable to annuitants and 10.8 benefit recipients of the participating public pension plans or 10.9 funds as of the current June 30 to the amount determined under 10.10 clause (3); 10.11 (5) The state board shall subtract the amount determined 10.12 under clause (4) from the market value of the fund determined 10.13 under clause (1); 10.14 (6) The state board shall adjust the amount determined 10.15 under clause (5) by the cumulative current balance determined 10.16 pursuant to clause (8) and any negative balance carried forward 10.17 under clause (9); 10.18 (7) A positive amount resulting from the calculations in 10.19 clauses (1) to (6) is the excess market value. A negative 10.20 amount is the negative balance; 10.21 (8) The state board shall allocate one-fifth of the excess 10.22 market value or one-fifth of the negative balance to each of 10.23 five consecutive years, beginning with the fiscal year ending 10.24 the current June 30; and 10.25 (9) To calculate the postretirement adjustment under this 10.26 paragraph based on investment performance for a fiscal year, the 10.27 state board shall add together all excess market value allocated 10.28 to that year and subtract from the sum all negative balances 10.29 allocated to that year. If this calculation results in a 10.30 negative number, the entire negative balance must be carried 10.31 forward and allocated to the next year. If the resulting amount 10.32 is positive, a postretirement adjustment is payable under this 10.33 paragraph. The board shall express a positive amount as a 10.34 percentage of the total eligible required reserves certified to 10.35 the board under clause (2). 10.36 (d) The state board shall determine the amount of any 11.1 postretirement adjustment which is payable using the following 11.2 procedure: 11.3 (1) The total "eligible" required reserves as of the first 11.4 of January next following the end of the fiscal year for the 11.5 annuitants and benefit recipients eligible to receive a full or 11.6 partial postretirement adjustment as determined by clause (2) 11.7shallmust be certified to the state board by the 11.8 commission-retained actuary. The total "eligible" required 11.9 reservesshallmust be determined by the commission-retained 11.10 actuary on the assumption that all annuitants and benefit 11.11 recipients eligible to receive a full or partial postretirement 11.12 adjustment will be alive on the January 1 in question; and 11.13 (2) The state board shall add the percentage certified 11.14 under paragraph (b) to any positive percentage calculated under 11.15 paragraph (c). The board shall not subtract from the percentage 11.16 certified under paragraph (b) any negative amount calculated 11.17 under paragraph (c). The sum of these percentagesshallmust be 11.18 carried to five decimal places andshallmust be certified to 11.19 each participating public pension fund or plan as the full 11.20 postretirement adjustment percentage. 11.21 (e) A retirement annuity payable in the event of retirement 11.22 before becoming eligible for social security benefits as 11.23 provided in section 352.116, subdivision 3; 353.29, subdivision 11.24 6; or 354.35 must be treated as the sum of a period certain 11.25 retirement annuity and a life retirement annuity for the 11.26 purposes of any postretirement adjustment. The period certain 11.27 retirement annuity plus the life retirement annuityshallmust 11.28 be the annuity amount payable until age 62 or 65, whichever 11.29 applies. A postretirement adjustment granted on the period 11.30 certain retirement annuity must terminate when the period 11.31 certain retirement annuity terminates. 11.32 Sec. 6. Minnesota Statutes 1996, section 69.011, 11.33 subdivision 1, is amended to read: 11.34 Subdivision 1. [DEFINITIONS.] Unless the language or 11.35 context clearly indicates that a different meaning is intended, 11.36 the following words and terms shall for the purposes of this 12.1 chapter and chapters 423, 423A, 424 and 424A have the meanings 12.2 ascribed to them: 12.3 (a) "Commissioner" means the commissioner of revenue. 12.4 (b) "Municipality" means any home rule charter or statutory 12.5 city, organized town or park district subject to chapter 398, 12.6 the University of Minnesota, and, for purposes of the fire state 12.7 aid program only, an American Indian tribal government entity 12.8 located within a federally recognized American Indian 12.9 reservation, and, for purposes of the police state aid program 12.10 only, the metropolitan airports commission, with respect to 12.11employeespeace officers covered under chapter 422A, or the 12.12 department of natural resources and the department of public 12.13 safety with respect to peace officers covered under chapter 352B. 12.14 (c) "Minnesota Firetown Premium Report" means a form 12.15 prescribed by the commissioner containing space for reporting by 12.16 insurers of fire, lightning, sprinkler leakage and extended 12.17 coverage premiums received upon risks located or to be performed 12.18 in this state less return premiums and dividends. 12.19 (d) "Firetown" means the area serviced by any municipality 12.20 having a qualified fire department or a qualified incorporated 12.21 fire department having a subsidiary volunteer firefighters' 12.22 relief association. 12.23 (e) "Market value" means latest available market value of 12.24 all property in a taxing jurisdiction, whether the property is 12.25 subject to taxation, or exempt from ad valorem taxation obtained 12.26 from information which appears on abstracts filed with the 12.27 commissioner of revenue or equalized by the state board of 12.28 equalization. 12.29 (f) "Minnesota Aid to Police Premium Report" means a form 12.30 prescribed by the commissioner for reporting by each fire and 12.31 casualty insurer of all premiums received upon direct business 12.32 received by it in this state, or by its agents for it, in cash 12.33 or otherwise, during the preceding calendar year, with reference 12.34 to insurance written for insuring against the perils contained 12.35 in auto insurance coverages as reported in the Minnesota 12.36 business schedule of the annual financial statement which each 13.1 insurer is required to file with the commissioner in accordance 13.2 with the governing laws or rules less return premiums and 13.3 dividends. 13.4 (g) "Peace officer" means any person: 13.5 (1) whose primary source of income derived from wages is 13.6 from direct employment by a municipality or county as a law 13.7 enforcement officer on a full-time basis of not less than 30 13.8 hours per week; 13.9 (2) who has been employed for a minimum of six months prior 13.10 to December 31 preceding the date of the current year's 13.11 certification under subdivision 2, clause (b); 13.12 (3) who is sworn to enforce the general criminal laws of 13.13 the state and local ordinances; 13.14 (4) who is licensed by the peace officers standards and 13.15 training board and is authorized to arrest with a warrant; and 13.16 (5) who is a member of a local police relief association to 13.17 which section 69.77 applies, the state patrol retirement plan, 13.18 the public employees police and fire fund, or the Minneapolis 13.19 employees retirement fund. 13.20 (h) "Full-time equivalent number of peace officers 13.21 providing contract service" means the integral or fractional 13.22 number of peace officers which would be necessary to provide the 13.23 contract service if all peace officers providing service were 13.24 employed on a full-time basis as defined by the employing unit 13.25 and the municipality receiving the contract service. 13.26 (i) "Retirement benefits other than a service pension" 13.27 means any disbursement authorized under section 424A.05, 13.28 subdivision 3, clauses (2), (3) and (4). 13.29 (j) "Municipal clerk, municipal clerk-treasurer or county 13.30 auditor" means the person who was elected or appointed to the 13.31 specified position or, in the absence of the person, another 13.32 person who is designated by the applicable governing body. In a 13.33 park district the clerk is the secretary of the board of park 13.34 district commissioners. In the case of the University of 13.35 Minnesota, the clerk is that official designated by the board of 13.36 regents. For the metropolitan airports commission, the clerk is 14.1 the person designated by the commission. For the department of 14.2 natural resources or the department of public safety, the clerk 14.3 is the respective commissioner. 14.4 Sec. 7. Minnesota Statutes 1996, section 69.011, 14.5 subdivision 2, is amended to read: 14.6 Subd. 2. [QUALIFICATION FOR FIRE OR POLICE STATE AID.] (a) 14.7 In order to qualify to receive fire state aid, on or before 14.8 March 15 annually, in conjunction with the financial report 14.9 required pursuant to section 69.051, the clerk of each 14.10 municipality having a duly organized fire department as provided 14.11 in subdivision 4, or the secretary of each independent nonprofit 14.12 firefighting corporation having a subsidiary incorporated 14.13 firefighters' relief association whichever is applicable, and 14.14 the fire chief, shall jointly certify the existence of the 14.15 municipal fire department or of the independent nonprofit 14.16 firefighting corporation, whichever is applicable, which meets 14.17 the minimum qualification requirements set forth in this 14.18 subdivision, and the fire personnel and equipment of the 14.19 municipal fire department or the independent nonprofit 14.20 firefighting corporation as of the preceding December 31. 14.21 Certification shall be made to the commissioner on a form 14.22 prescribed by the commissioner and shall include any other facts 14.23 the commissioner may require. The certification shall be made 14.24 to the commissioner in duplicate. Each copy of the certificate 14.25 shall be duly executed and deemed an original. The commissioner 14.26 shall forward one copy to the auditor of the county wherein the 14.27 fire department is located and retain one copy. 14.28 (b) On or before March 15 annually the clerk of each 14.29 municipality having a duly organized police department and 14.30 having a duly incorporated relief association shall certify that 14.31 fact to the county auditor of the county where the police 14.32 department is located and to the commissioner on a form 14.33 prescribed by the commissioner together with the other facts the 14.34 commissioner or auditor may require. 14.35 Except as provided in subdivision 2b, on or before March 15 14.36 annually, the clerk of each municipality and the auditor of each 15.1 county employing one or more peace officers as defined in 15.2 subdivision 1, clause(h)(g), shall certify the number of such 15.3 peace officers to the commissioner on forms prescribed by the 15.4 commissioner. Credit for officers employed less than a full 15.5 year shall be apportioned. Each full month of employment of a 15.6 qualifying officer during the calendar year shall entitle the 15.7 employing municipality or county to credit for 1/12 of the 15.8 payment for employment of a peace officer for the entire year. 15.9 For purposes of sections 69.011 to 69.051, employment of a peace 15.10 officer shall commence when the peace officer is entered on the 15.11 payroll of the respective municipal police department or county 15.12 sheriff's department. No peace officer shall be included in the 15.13 certification of the number of peace officers by more than one 15.14 municipality or county for the same month. 15.15 Sec. 8. Minnesota Statutes 1996, section 69.011, is 15.16 amended by adding a subdivision to read: 15.17 Subd. 2b. [DEPARTMENTS OF NATURAL RESOURCES AND PUBLIC 15.18 SAFETY.] (a) On or before July 1, 1997, the commissioner of 15.19 natural resources shall certify one-half of the number of peace 15.20 officers as defined in subdivision 1, clause (g), employed by 15.21 the enforcement division during calendar year 1996 and the 15.22 commissioner of public safety shall certify one-half of the 15.23 number of peace officers as defined in subdivision 1, clause 15.24 (g), employed by the bureau of criminal apprehension, the 15.25 gambling enforcement division, and the state patrol division 15.26 during calendar year 1996. 15.27 (b) On or before March 15, 1998, the commissioner of 15.28 natural resources shall certify seven-tenths of the number of 15.29 peace officers as defined in subdivision 1, clause (g), employed 15.30 by the enforcement division and the commissioner of public 15.31 safety shall certify seven-tenths of the number of peace 15.32 officers as defined in subdivision 1, clause (g), employed by 15.33 the bureau of criminal apprehension, the gambling enforcement 15.34 division, and the state patrol division. 15.35 (c) On or before March 15, 1999, and annually on or before 15.36 March 15, thereafter, the commissioner of natural resources 16.1 shall certify the number of peace officers as defined in 16.2 subdivision 1, clause (g), employed by the enforcement division 16.3 and the commissioner of public safety shall certify the number 16.4 of peace officers as defined in subdivision 1, clause (g), 16.5 employed by the bureau of criminal apprehension, the gambling 16.6 enforcement division, and the state patrol division. 16.7 (d) The certification must be on a form prescribed by the 16.8 commissioner. Peace officers certified under this paragraph 16.9 must be included in the total certifications under subdivision 2. 16.10 Sec. 9. Minnesota Statutes 1996, section 69.021, 16.11 subdivision 5, is amended to read: 16.12 Subd. 5. [CALCULATION OF STATE AID.] (a) The amount of 16.13 fire state aid available for apportionment shall be equal to 107 16.14 percent of the amount of premium taxes paid to the state upon 16.15 the fire, lightning, sprinkler leakage, and extended coverage 16.16 premiums reported to the commissioner by insurers on the 16.17 Minnesota Firetown Premium Report. This amount shall be reduced 16.18 by the amount required to pay the state auditor's costs and 16.19 expenses of the audits or exams of the firefighters relief 16.20 associations. 16.21 (b) The total amount for apportionment in respect to peace 16.22 officer state aid is equal to 104 percent of the amount of 16.23 premium taxes paid to the state upon the premiums reported to 16.24 the commissioner by insurers on the Minnesota Aid to Police 16.25 Premium Report, plus the payment amounts received under section 16.26 60A.152 since the last aid apportionment, and reduced by the 16.27 amount required to pay the state auditor's costs and expenses of 16.28 the audits or exams of the police relief associations. The 16.29 total amount for apportionment in respect to firefighters state 16.30 aid shall not be less than two percent of the premiums reported 16.31 to the commissioner by insurers on the Minnesota Firetown 16.32 Premium Report after subtracting (1) the amount required to pay 16.33 the state auditor's costs and expenses of the audits or exams of 16.34 the firefighters relief associations, and (2) one percent of the 16.35 premiums reported by town and farmers' mutual insurance 16.36 companies and mutual property and casualty companies with total 17.1 assets of $5,000,000 or less. The total amount for 17.2 apportionment in respect to the police state aid program shall 17.3 not be less than two percent of the amount of premiums reported 17.4 to the commissioner by insurers on the Minnesota Aid to Police 17.5 Premium Report after subtracting the amount required to pay the 17.6 state auditor's cost and expenses of the audits or exams of the 17.7 police relief associations. The commissioner shall calculate 17.8 the percentage of increase or decrease reflected in the 17.9 apportionment over or under the previous year's available state 17.10 aid using the same premiums as a basis for comparison. 17.11 (c) The amount for apportionment in respect to peace 17.12 officer state aid under paragraph (b) must be further reduced by 17.13 $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 17.14 and $2,404,000 in fiscal year 2001. These reductions in this 17.15 paragraph cancel to the general fund. 17.16 Sec. 10. Minnesota Statutes 1996, section 69.021, 17.17 subdivision 7a, is amended to read: 17.18 Subd. 7a. [APPORTIONMENT OF POLICE STATE AID.] (a) The 17.19 commissioner shall apportion the state peace officer aid to each 17.20 municipality and to the county in the following manner: 17.21 (1) for all municipalities maintaining police departments 17.22and the county, counties, the department of natural resources, 17.23 and the department of public safety, the police state aid must 17.24 be distributed in proportion to the total number of peace 17.25 officers, as determined under section 69.011, subdivision 1, 17.26 clause (g), and subdivision 2, clause (b), employed by 17.27 eachmunicipality and by the countyemploying unit for 12 17.28 calendar months and the proportional or fractional number who 17.29 were employed less than 12 months; 17.30 (2) for each municipality which contracts with the county 17.31 for police service, a proportionate amount of the state aid 17.32 distributed to the county based on the full-time equivalent 17.33 number of peace officers providing contract service must be 17.34 credited against the municipality's contract obligation; and 17.35 (3) for each municipality which contracts with another 17.36 municipality for police service, a proportionate amount of the 18.1 state aid distributed to the municipality providing contract 18.2 service based on the full-time equivalent number of peace 18.3 officers providing contract service on a full-time equivalent 18.4 basis must be credited against the contract obligation of the 18.5 municipality receiving contract service. 18.6 (b) No municipality entitled to receive state peace officer 18.7 aid may be apportioned less state peace officer aid for any year 18.8 under Laws 1976, chapter 315, than the amount which was 18.9 apportioned to it for calendar year 1975 based on premiums 18.10 reported to the commissioner for calendar year 1974; provided, 18.11 the amount of state peace officer aid to other municipalities 18.12 within the county and to the county must be adjusted in 18.13 proportion to the total number of peace officers in the 18.14 municipalities and the county, so that the amount of state peace 18.15 officer aid apportioned does not exceed the amount of state 18.16 peace officer aid available for apportionment. 18.17 Sec. 11. Minnesota Statutes 1996, section 69.021, 18.18 subdivision 10, is amended to read: 18.19 Subd. 10. [REDUCTION IN POLICE STATE AID 18.20 APPORTIONMENT.] (a) The commissioner of revenue shall reduce the 18.21 apportionment of police state aid under subdivisions 5, 18.22 paragraph (b), 6, and77a, for eligible employer units by 18.23 any excess police state aid. 18.24 (b) "Excess police state aid" is: 18.25 (1) for counties and for municipalities in which police 18.26 retirement coverage is provided wholly by the public employees 18.27 police and fire fund and all police officers are members of the 18.28 plan governed by sections 353.63 to 353.657, the amount in 18.29 excess of the employer's total prior calendar year obligation 18.30under section 353.65,as defined in paragraph (c), as certified 18.31 by the executive director of the public employees retirement 18.32 association.; 18.33 (2) for municipalities in which police retirement coverage 18.34 is provided in part by the public employees police and fire fund 18.35 governed by sections 353.63 to 353.657 and in part by a local 18.36 police consolidation account governed by chapter 353A, the 19.1 amount in excess of the employer's total prior calendar year 19.2 obligation as defined in paragraph (c), as certified by the 19.3 executive director of the public employees retirement 19.4 association; 19.5 (3) for municipalities in which police retirement coverage 19.6 is provided in part by the public employees police and fire fund 19.7 governed by sections 353.63 to 353.657 and in part by a local 19.8 police relief association governed by sections 69.77 and 19.9 423A.01, the amount in excess of the employer's total prior 19.10 calendar year obligation as defined in paragraph (c), as 19.11 certified by the executive director of the public employees 19.12 retirement association, plus the amount of the financial 19.13 requirements of the relief association certified to the 19.14 applicable municipality during the prior calendar year under 19.15 section 69.77, subdivisions 2b and 2c, reduced by the amount of 19.16 member contributions deducted from the covered salary of the 19.17 relief association during the prior calendar year under section 19.18 69.77, subdivision 2a, as certified by the chief administrative 19.19 officer of the applicable municipality; 19.20 (4) for the metropolitan airports commission, if there are 19.21 police officers hired before July 1, 1978, with retirement 19.22 coverage by the Minneapolis employees retirement fund remaining, 19.23 the amount in excess of the commission's total prior calendar 19.24 year obligation as defined in paragraph (c), as certified by the 19.25 executive director of the public employees retirement 19.26 association, plus the amount determined by expressing the 19.27 commission's total prior calendar year contribution to the 19.28 Minneapolis employees retirement fund under section 422A.101, 19.29 subdivisions 2 and 2a, as a percentage of the commission's total 19.30 prior calendar year covered payroll for commission employees 19.31 covered by the Minneapolis employees retirement fund and 19.32 applying that percentage to the commission's total prior 19.33 calendar year covered payroll for commission police officers 19.34 covered by the Minneapolis employees retirement fund, as 19.35 certified by the chief administrative officer of the 19.36 metropolitan airports commission; and 20.1 (5) for the department of natural resources and for the 20.2 department of public safety, the amount in excess of the 20.3 employer's total prior calendar year obligation under section 20.4 352B.02, subdivision 1c, for plan members who are peace officers 20.5 under section 69.011, subdivision 1, clause (g), as certified by 20.6 the executive director of the Minnesota state retirement system. 20.7 (c) The employer's total prior calendar year obligation 20.8 with respect to the public employees police and fire plan is the 20.9 total prior calendar year obligation under section 353.65, 20.10 subdivision 3, for police officers as defined in section 353.64, 20.11 subdivision 2, and the actual total prior calendar year 20.12 obligation under section 353.65, subdivision 3, for 20.13 firefighters, as defined in section 353.64, subdivision 3, but 20.14 not to exceed for those firefighters the applicable following 20.15 amount: 20.16 municipality maximum amount 20.17 Albert Lea $54,157.01 20.18 Anoka 10,399.31 20.19 Apple Valley 5,442.44 20.20 Austin 49,864.73 20.21 Bemidji 27,671.38 20.22 Brooklyn Center 6,605.92 20.23 Brooklyn Park 24,002.26 20.24 Burnsville 15,956.00 20.25 Cloquet 4,260.49 20.26 Coon Rapids 39,920.00 20.27 Cottage Grove 8,588.48 20.28 Crystal 5,855.00 20.29 East Grand Forks 51,009.88 20.30 Edina 32,251.00 20.31 Elk River 5,216.55 20.32 Ely 13,584.16 20.33 Eveleth 16,288.27 20.34 Fergus Falls 6,742.00 20.35 Fridley 33,420.64 20.36 Golden Valley 11,744.61 21.1 Hastings 16,561.00 21.2 Hopkins 4,324.23 21.3 International Falls 14,400.69 21.4 Lakeville 782.35 21.5 Lino Lakes 5,324.00 21.6 Little Falls 7,889.41 21.7 Maple Grove 6,707.54 21.8 Maplewood 8,476.69 21.9 Minnetonka 10,403.00 21.10 Montevideo 1,307.66 21.11 Moorhead 68,069.26 21.12 New Hope 6,739.72 21.13 North St. Paul 4,241.14 21.14 Northfield 770.63 21.15 Owatonna 37,292.67 21.16 Plymouth 6,754.71 21.17 Red Wing 3,504.01 21.18 Richfield 53,757.96 21.19 Rosemount 1,712.55 21.20 Roseville 9,854.51 21.21 St. Anthony 33,055.00 21.22 St. Louis Park 53,643.11 21.23 Thief River Falls 28,365.04 21.24 Virginia 31,164.46 21.25 Waseca 11,135.17 21.26 West St. Paul 15,707.20 21.27 White Bear Lake 6,521.04 21.28 Woodbury 3,613.00 21.29 any other municipality 0.00 21.30 (d) The totalshallamount of excess police state aid must 21.31 be deposited ina separatethe excess police state-aid account 21.32 in the general fund, administered and distributed as provided in 21.33 subdivision 11. 21.34 Sec. 12. Minnesota Statutes 1996, section 69.021, 21.35 subdivision 11, is amended to read: 21.36 Subd. 11. [EXCESS POLICE STATE-AID HOLDING ACCOUNT.] (a) 22.1 An excess police state-aid holding account is established in the 22.2 general fund. 22.3 (b) Excess police state aid determined according to section 22.4 69.021, subdivision 10, must be deposited in the excess police 22.5 state-aid holding account. 22.6 (c) From the balance in the excess police state-aid holding 22.7 account, $1,000,000 must be transferred annually to the 22.8 ambulance service personnel longevity award and incentive 22.9 suspense account established by section 144C.03, subdivision 2. 22.10 (d) If a police officer stress reduction program is created 22.11 by law and money is appropriated for that program, an amount 22.12 equal to that appropriation must be transferred from the balance 22.13 in the excess police state-aid holding account. 22.14 (e) On October 1, 1997, andannually on each October 1,on 22.15 October 1, 2001, and annually on October 1 thereafter, one-half 22.16 of the balance of the excess police state-aid holding account 22.17 remaining after deductions under paragraphs (c) and (d) is 22.18 appropriated for additional amortization aid under section 22.19 423A.02, subdivision 1b. 22.20 (f) On October 1, 1998, and annually each October 1 in 1999 22.21 and 2000, the entire balance of the excess police state-aid 22.22 holding account remaining after transfers under paragraphs (c) 22.23 and (d) is appropriated for additional amortization aid under 22.24 section 423A.02, subdivision 1b. 22.25 (g) The remaining balance in the excess police state-aid 22.26 holding account, after the deductions under paragraphs (c), (d), 22.27 and (e), cancels to the general fund. 22.28 Sec. 13. Minnesota Statutes 1996, section 69.031, 22.29 subdivision 5, is amended to read: 22.30 Subd. 5. [DEPOSIT OF STATE AID.](1)(a) The municipal 22.31 treasurer, on receiving the fire state aid, shall within 30 days 22.32 after receipt transmit it to the treasurer of the duly 22.33 incorporated firefighters' relief association if there is one 22.34 organized and the association has filed a financial report with 22.35 the municipality; but if there is no relief association 22.36 organized, or if any association dissolve, be removed, or has 23.1 heretofore dissolved, or has been removed as trustees of state 23.2 aid, then the treasurer of the municipality shall keep the money 23.3 in the municipal treasury as provided for in section 424A.08 and 23.4 shall be disbursed only for the purposes and in the manner set 23.5 forth in that section. 23.6(2)(b) The municipal treasurer, upon receipt of the police 23.7 state aid, shall disburse the police state aid in the following 23.8 manner: 23.9(a)(1) For a municipality in which a local police relief 23.10 association exists and all peace officers are members of the 23.11 association, the total state aid shall be transmitted to the 23.12 treasurer of the relief association within 30 days of the date 23.13 of receipt, and the treasurer of the relief association shall 23.14 immediately deposit the total state aid in the special fund of 23.15 the relief association; 23.16(b)(2) For a municipality in which police retirement 23.17 coverage is provided by the public employees police and fire 23.18 fund and all peace officers are members of the fund, the total 23.19 state aid shall be applied toward the municipality's employer 23.20 contribution to the public employees police and fire fund 23.21 pursuant to section 353.65, subdivision 3; or 23.22(c)(3) For a municipality other than a city of the first 23.23 class with a population of more than 300,000 in which both a 23.24 police relief association exists and police retirement coverage 23.25 is provided in part by the public employees police and fire 23.26 fund, the municipality may elect at its option to transmit the 23.27 total state aid to the treasurer of the relief association as 23.28 provided in clause (a), to use the total state aid to apply 23.29 toward the municipality's employer contribution to the public 23.30 employees police and fire fund subject to all the provisions set 23.31 forth in clause (b), or to allot the total state aid 23.32 proportionately to be transmitted to the police relief 23.33 association as provided in this subdivision and to apply toward 23.34 the municipality's employer contribution to the public employees 23.35 police and fire fund subject to the provisions of clause (b) on 23.36 the basis of the respective number of active full-time peace 24.1 officers, as defined in section 69.011, subdivision 1, clause 24.2 (g). 24.3 For a city of the first class with a population of more 24.4 than 300,000, in addition, the city may elect to allot the 24.5 appropriate portion of the total police state aid to apply 24.6 toward the employer contribution of the city to the public 24.7 employees police and fire fund based on the covered salary of 24.8 police officers covered by the fund each payroll period and to 24.9 transmit the balance to the police relief association. 24.10(3)(c) The county treasurer, upon receipt of the police 24.11 state aid for the county, shall apply the total state aid toward 24.12 the county's employer contribution to the public employees 24.13 police and fire fund pursuant to section 353.65, subdivision 3. 24.14(4)(d) The designated metropolitan airports commission 24.15 official, upon receipt of the police state aid for the 24.16 metropolitan airports commission, shall apply the total police 24.17 state aid toward the commission's employer contribution to the 24.18 Minneapolis employees retirement fund under section 422A.101, 24.19 subdivision 2a. 24.20 (e) The police state aid apportioned to the departments of 24.21 public safety and natural resources under section 69.021, 24.22 subdivision 7a, is appropriated to the commissioner of finance 24.23 for transfer to the funds and accounts from which the salaries 24.24 of peace officers certified under section 69.011, subdivision 24.25 2a, are paid. The commissioner of revenue shall certify to the 24.26 commissioners of public safety, natural resources, and finance 24.27 the amounts to be transferred from the appropriation for police 24.28 state aid. The commissioners of public safety and natural 24.29 resources shall certify to the commissioner of finance the 24.30 amounts to be credited to each of the funds and accounts from 24.31 which the peace officers employed by their respective 24.32 departments are paid. Each commissioner must allocate the 24.33 police state aid first for employer contributions for employees 24.34 funded from the general fund and then for employer contributions 24.35 for employees funded from other funds. For peace officers whose 24.36 salaries are paid from the general fund, the amounts transferred 25.1 from the appropriation for police state aid must be canceled to 25.2 the general fund. 25.3 Sec. 14. [124.2141] [AID ADJUSTMENTS DUE TO CHANGES IN 25.4 EMPLOYER RETIREMENT CONTRIBUTION RATES.] 25.5 Subdivision 1. [AID ADJUSTMENT.] Beginning in fiscal year 25.6 1998 and each year thereafter, the commissioner of children, 25.7 families, and learning shall adjust state aid payments to school 25.8 operating funds for independent school district No. 625, 25.9 independent school district No. 709 and special school district 25.10 No. 1, by the net amount of clauses (1) and (2) and for all 25.11 other districts, including charter schools, but excluding any 25.12 education organizations that are prohibited from receiving 25.13 direct state aids under section 124.193 or 124.32, subdivision 25.14 12, by the net amount of clauses (1), (2) and (3): 25.15 (1) a decrease equal to each district's share of the fiscal 25.16 year 1997 adjustment effected under Minnesota Statutes 1996, 25.17 section 124.2139; 25.18 (2) an increase equal to one percent of the salaries paid 25.19 to members of the general plan of the public employees 25.20 retirement association in fiscal year 1997, multiplied by 0.35 25.21 for fiscal year 1998 and 0.70 each year thereafter; 25.22 (3) a decrease equal to 2.34 percent of the salaries paid 25.23 to members of the teachers retirement association in fiscal year 25.24 1997. 25.25 Subd. 2. [APPROPRIATION AND ESTIMATED NET SAVINGS.] The 25.26 amounts necessary to pay any positive net adjustments under this 25.27 section to any school district are appropriated annually from 25.28 the general fund to the commissioner of children, families, and 25.29 learning. The estimated net general fund savings under this 25.30 section is $29,819,000 in fiscal year 1998, and $26,997,000 in 25.31 each fiscal year thereafter. 25.32 Subd. 3. [LIMITS ON ADJUSTMENTS AND POTENTIAL REDUCTIONS.] 25.33 Increases to any school districts under subdivision 1, clause 25.34 (2), and decreases under subdivision 1, clauses (1) and (3), are 25.35 limited to the fiscal year 1999 amounts. The commissioner of 25.36 children, families, and learning may permanently reduce the 26.1 adjustments to school districts under subdivision 1, clauses (1) 26.2 and (2), in the same manner as prescribed for nonschool 26.3 jurisdictions under section 273.13985, subdivision 2. The 26.4 commissioner may, from time to time, require that the most 26.5 recent fiscal year payroll information be certified by the 26.6 executive director of the teachers retirement association. For 26.7 any school district where the newly certified teachers 26.8 retirement association payroll is significantly lower than the 26.9 fiscal 1997 amount as determined by the commissioner, the 26.10 commissioner shall recalculate the lower reduction under 26.11 subdivision 1, clause (3), and shall permanently reduce the 26.12 adjustment amount in subsequent years. 26.13 Subd. 4. [EFFECT OF REORGANIZATIONS.] The commissioner of 26.14 children, families, and learning shall reapportion the aid 26.15 adjustments to school districts under this section to account 26.16 for significant changes in boundaries or consolidations, as 26.17 determined by the commissioner. If a school district is 26.18 dissolved, or a school district function thereof is assumed by 26.19 either the state or a nonpublic organization, adjustments for 26.20 all or the appropriate fraction of the total payroll under this 26.21 section must terminate. 26.22 Subd. 5. [ADJUSTMENT TERMINATION.] All adjustments under 26.23 this section terminate on June 30, 2020. 26.24 Sec. 15. [273.1385] [AID FOR PUBLIC EMPLOYEES RETIREMENT 26.25 ASSOCIATION EMPLOYER CONTRIBUTION RATE INCREASE.] 26.26 Subdivision 1. [AID TO OFFSET RATE INCREASE.] Beginning 26.27 with the December 26, 1997, payment, and according to the 26.28 schedule for payment of local aid under section 477A.015 26.29 thereafter, the commissioner of revenue shall pay to each city, 26.30 county, town, and other nonschool jurisdiction an amount equal 26.31 to 0.35 percent of the fiscal year 1997 payroll for employees 26.32 who were members of the general plan of the public employees 26.33 retirement association. Except for the December 1997 26.34 distribution under this section, the amount of aid must be 26.35 certified before September 1 of the year preceding the 26.36 distribution year to the affected local government. The 27.1 executive director of the public employees retirement 27.2 association shall certify the general plan fiscal year covered 27.3 payroll and other information requested by the commissioner of 27.4 revenue, on or before August 1, 1997, and in subsequent years 27.5 where necessary, in order to facilitate administration of this 27.6 section. The amount necessary to make these aid payments is 27.7 appropriated annually from the general fund to the commissioner 27.8 of revenue. Expenditures under this section are estimated to be 27.9 $7,942,500 in fiscal year 1998, and $15,885,000 in each 27.10 subsequent fiscal year, less any future reductions under 27.11 subdivision 2. 27.12 Subd. 2. [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID 27.13 REDUCTIONS.] The aid amount received by any jurisdiction in 27.14 fiscal year 2000 or any year thereafter may not exceed the 27.15 amount it received in fiscal year 1999. The commissioner may, 27.16 from time to time, request the most recent fiscal year payroll 27.17 information by jurisdiction to be certified by the executive 27.18 director of the public employees retirement association. For 27.19 any jurisdiction where newly certified public employees 27.20 retirement association general plan payroll is significantly 27.21 lower than the fiscal 1997 amount, as determined by the 27.22 commissioner, the commissioner shall recalculate the aid amount 27.23 based on the most recent fiscal year payroll information, 27.24 certify the recalculated aid amount for the next distribution 27.25 year, and permanently reduce the aid amount to that jurisdiction. 27.26 Subd. 3. [EFFECT OF REORGANIZATIONS.] The commissioner of 27.27 revenue may adjust the aid amounts for separate jurisdictions to 27.28 account for significant changes in boundaries or in the form of 27.29 government, as determined by the commissioner. If a local 27.30 government function and the associated public employees 27.31 retirement association general plan payroll is assumed by either 27.32 the state, or a nonpublic organization, the aid amounts 27.33 attributable to the function under this section must terminate. 27.34 Subd. 4. [AID TERMINATION.] The aid provided under this 27.35 section terminates on June 30, 2020. 27.36 Sec. 16. Minnesota Statutes 1996, section 352.01, 28.1 subdivision 25, is amended to read: 28.2 Subd. 25. [NORMAL RETIREMENT AGE.] "Normal retirement age" 28.3 means age 65 for a person who first became a covered employee or 28.4 a member of a pension fund listed in section 356.30, subdivision 28.5 3, before July 1, 1989. For a person who first becomes a 28.6 covered employee after June 30, 1989, normal retirement age 28.7 means the higher of age 65 or "retirement age," as defined in 28.8 United States Code, title 42, section 416(l), as amended, but 28.9 not to exceed age 66. 28.10 Sec. 17. Minnesota Statutes 1996, section 352.04, 28.11 subdivision 2, is amended to read: 28.12 Subd. 2. [EMPLOYEE CONTRIBUTIONS.] The employee 28.13 contribution to the fund must be equal to4.074.0 percent of 28.14 salary. These contributions must be made by deduction from 28.15 salary as provided in subdivision 4. 28.16 Sec. 18. Minnesota Statutes 1996, section 352.04, 28.17 subdivision 3, is amended to read: 28.18 Subd. 3. [EMPLOYER CONTRIBUTIONS.](a)The employer 28.19 contribution to the fund must be equal to4.24.0 percent of 28.20 salary. 28.21(b) By January 1 of each year, the board of directors shall28.22report to the legislative commission on pensions and retirement,28.23the chair of the committee on appropriations of the house of28.24representatives, and the chair of the committee on finance of28.25the senate on the amount raised by the employer and employee28.26contribution rates in effect and whether the total amount is28.27less than, the same as, or more than the actuarial requirement28.28determined under section 356.215.28.29(c) If the legislative commission on pensions and28.30retirement, based on the most recent valuation performed by its28.31actuary, determines that the total amount raised by the employer28.32and employee contributions under subdivision 2 and paragraph (b)28.33is less than the actuarial requirements determined under section28.34356.215, the employer and employee rates must be increased by28.35equal amounts as necessary to meet the actuarial requirements.28.36The employee rate may not exceed 4.15 percent of salary and the29.1employer rate may not exceed 4.29 percent of salary. The29.2increases are effective on the next January 1 following the29.3determination by the commission. The executive director of the29.4Minnesota state retirement system shall notify employing units29.5of any increases under this paragraph.29.6 Sec. 19. Minnesota Statutes 1996, section 352.115, 29.7 subdivision 3, is amended to read: 29.8 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 29.9 in conjunction with section 352.116, subdivision 1, applies to a 29.10 person who became a covered employee or a member of a pension 29.11 fund listed in section 356.30, subdivision 3, before July 1, 29.12 1989, unless paragraph (b), in conjunction with section 352.116, 29.13 subdivision 1a, produces a higher annuity amount, in which case 29.14 paragraph (b) will apply. The employee's average salary, as 29.15 defined in subdivision 2, multiplied byonethe percent 29.16 specified in section 356.19, subdivision 1, per year of 29.17 allowable service for the first ten years and1.5the percent 29.18 specified in section 356.19, subdivision 2, for each later year 29.19 of allowable service and pro rata for completed months less than 29.20 a full year shall determine the amount of the retirement annuity 29.21 to which the employee is entitled. 29.22 (b) This paragraph applies to a person who has become at 29.23 least 55 years old and first became a covered employee after 29.24 June 30, 1989, and to any other covered employee who has become 29.25 at least 55 years old and whose annuity amount, when calculated 29.26 under this paragraph and in conjunction with section 352.116, 29.27 subdivision 1a, is higher than it is when calculated under 29.28 paragraph (a), in conjunction with section 352.116, subdivision 29.29 1. The employee's average salary, as defined in subdivision 2, 29.30 multiplied by1.5the percent specified in section 356.19, 29.31 subdivision 2, for each year of allowable service and pro rata 29.32 for months less than a full year shall determine the amount of 29.33 the retirement annuity to which the employee is entitled. 29.34 Sec. 20. Minnesota Statutes 1996, section 352.72, 29.35 subdivision 2, is amended to read: 29.36 Subd. 2. [COMPUTATION OF DEFERRED ANNUITY.] (a) The 30.1 deferred annuity, if any, accruing under subdivision 1, or 30.2 section 352.22, subdivision 3, must be computed as provided in 30.3 section 352.22, subdivision 3, on the basis of allowable service 30.4 before termination of state service and augmented as provided 30.5 herein. The required reserves applicable to a deferred annuity 30.6 or to an annuity for which a former employee was eligible but 30.7 had not applied or to any deferred segment of an annuity must be 30.8 determined as of the date the benefit begins to accrue and 30.9 augmented by interest compounded annually from the first day of 30.10 the month following the month in which the employee ceased to be 30.11 a state employee, or July 1, 1971, whichever is later, to the 30.12 first day of the month in which the annuity begins to accrue. 30.13 The rates of interest used for this purpose must be five percent 30.14 compounded annually until January 1, 1981, and three percent 30.15 compounded annually thereafter until January 1 of the year 30.16 following the year in which the former employee attains age 55. 30.17 From that date to the effective date of retirement, the rate is 30.18 five percent compounded annually. If a person has more than one 30.19 period of uninterrupted service, the required reserves related 30.20 to each period must be augmented by interest under this 30.21 subdivision. The sum of the augmented required reserves so 30.22 determined is the present value of the annuity. "Uninterrupted 30.23 service" for the purpose of this subdivision means periods of 30.24 covered employment during which the employee has not been 30.25 separated from state service for more than two years. If a 30.26 person repays a refund, the service restored by the repayment 30.27 must be considered continuous with the next period of service 30.28 for which the employee has credit with this system. The formula 30.29 percentages used for each period of uninterrupted service must 30.30 be those applicable to a new employee. The mortality table and 30.31 interest assumption used to compute the annuity must be those in 30.32 effect when the employee files application for annuity. This 30.33 sectionshalldoes not reduce the annuity otherwise payable 30.34 under this chapter. 30.35 (b) The retirement annuity or disability benefit of, or the 30.36 survivor benefit payable on behalf of, a former state employee 31.1 who terminated service before July 1, 1997, which is not first 31.2 payable until after June 30, 1997, must be increased on an 31.3 actuarial equivalent basis to reflect the change in the 31.4 postretirement interest rate actuarial assumption under section 31.5 356.215, subdivision 4d, from five percent to six percent under 31.6 a calculation procedure and the tables adopted by the board and 31.7 approved by the actuary retained by the legislative commission 31.8 on pensions and retirement. 31.9 Sec. 21. Minnesota Statutes 1996, section 352.92, 31.10 subdivision 1, is amended to read: 31.11 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.]Beginning with31.12the first full pay period after July 1, 1984, in lieu of31.13employee contributions payable under section 352.04, subdivision31.142,Employee contributionsbyof covered correctional employees 31.15 must be in an amount equal to4.905.50 percent of salary. 31.16 Sec. 22. Minnesota Statutes 1996, section 352.92, 31.17 subdivision 2, is amended to read: 31.18 Subd. 2. [EMPLOYER CONTRIBUTIONS.]In lieu of employer31.19contributions payable under section 352.04, subdivision 3,The 31.20 employer shall contribute for covered correctional employees an 31.21 amount equal to6.757.70 percent of salary. 31.22 Sec. 23. Minnesota Statutes 1996, section 352.93, 31.23 subdivision 2, is amended to read: 31.24 Subd. 2. [CALCULATING MONTHLY ANNUITY.] The monthly 31.25 annuity under this section must be determined by multiplying the 31.26 average monthly salary by the number of years, or completed 31.27 months, of covered correctional service by2.5the percent 31.28 specified in section 356.19, subdivision 5.However, the31.29monthly annuity must not exceed 75 percent of the average31.30monthly salary.31.31 Sec. 24. Minnesota Statutes 1996, section 352.93, 31.32 subdivision 3, is amended to read: 31.33 Subd. 3. [PAYMENTS; DURATION AND AMOUNTANNUITY ACCRUAL.] 31.34 The annuity under this sectionshallmust begin to accrue as 31.35 provided in section 352.115, subdivision 8., and must be paid31.36for an additional 84 full calendar months or to the first of the32.1month following the month in which the employee attains normal32.2retirement age, whichever occurs first, except that payment must32.3not cease before the first of the month following the month in32.4which the employee becomes 62. It must then be reduced to the32.5amount as calculated at normal retirement age under section32.6352.115, except that if this amount, when added to that portion32.7of the social security benefit based on state service the32.8employee would be eligible to receive at the time, is less than32.9the benefit payable under subdivision 2, the retired employee32.10shall receive an amount that when added to the social security32.11benefit will equal the amount payable under subdivision 2. If32.12the employee retired prior to age 55, the reduced benefit as32.13calculated under section 352.115 must be actuarially reduced as32.14provided in subdivision 2a.32.15When an annuity is reduced under this subdivision, the32.16percentage adjustments, if any, that have been applied to the32.17original annuity under section 11A.18, before the reduction,32.18must be compounded and applied to the reduced annuity. A former32.19correctional employee employed by the state in a position32.20covered by the regular plan or the unclassified employees32.21retirement program between the age of 58 and normal retirement32.22age shall receive a partial return of correctional contributions32.23at retirement with six percent interest based on the following32.24formula:32.25 32.26Employee contributionsYears and complete32.27contributed as amonths of regular32.28correctional employeeservice between32.29in excess of theage 58 and the32.30contributions thenormal retirement age32.31employee would haveX.....................32.32contributed as anumber of years between32.33regular employeeage 58 and normal32.34retirement age32.35 Sec. 25. Minnesota Statutes 1996, section 352.93, is 32.36 amended by adding a subdivision to read: 33.1 Subd. 3a. [OPTIONAL ANNUITIES.] The board may establish 33.2 optional annuity forms to pay a higher amount from the date of 33.3 retirement until an employee is first eligible to draw social 33.4 security benefits or up to the age the employee is eligible to 33.5 receive unreduced social security benefits, at which time the 33.6 monthly benefits must be reduced. The optional annuity forms 33.7 must be actuarially equivalent to the normal single life annuity 33.8 form provided in subdivision 2. The optional annuity forms must 33.9 be approved by the actuary retained by the legislative 33.10 commission on pensions and retirement. 33.11 Sec. 26. [352.931] [SURVIVOR BENEFITS.] 33.12 Subdivision 1. [SURVIVING SPOUSE BENEFIT.] (a) If the 33.13 correctional employee was at least age 50, has credit for at 33.14 least three years allowable service, and dies before an annuity 33.15 or disability benefit has become payable, notwithstanding any 33.16 designation of beneficiary to the contrary, the surviving spouse 33.17 of the employee may elect to receive, in lieu of the refund 33.18 under section 352.12, subdivision 1, an annuity for life equal 33.19 to the joint and 100 percent survivor annuity which the employee 33.20 could have qualified for had the employee terminated service on 33.21 the date of death. The election may be made at any time after 33.22 the date of death of the employee. The surviving spouse benefit 33.23 begins to accrue as of the first of the month next following the 33.24 date on which the application for the benefit was filed. 33.25 (b) If the employee was under age 50, dies, and had credit 33.26 for at least three years of allowable service credit on the date 33.27 of death but did not yet qualify for retirement, the surviving 33.28 spouse may elect to receive a 100 percent joint and survivor 33.29 annuity based on the age of the employee and surviving spouse at 33.30 the time of death. The annuity is payable using the early 33.31 retirement reduction under section 352.93, subdivision 2a, to 33.32 age 50, and one-half of the early retirement reduction from age 33.33 50 to the age payment begins. The surviving spouse eligible for 33.34 surviving spouse benefits under this paragraph may apply for the 33.35 annuity at any time after the employee's death. Sections 33.36 352.22, subdivision 3, and 352.72, subdivision 2, apply to a 34.1 deferred annuity or surviving spouse benefit payable under this 34.2 subdivision. 34.3 (c) The annuity must cease with the last payment received 34.4 by the surviving spouse in the lifetime of the surviving 34.5 spouse. Any employee may request in writing that this 34.6 subdivision not apply and that payment be made only to a 34.7 designated beneficiary as otherwise provided by this chapter. 34.8 Subd. 2. [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 34.9 lieu of the 100 percent optional annuity under subdivision 1, 34.10 the surviving spouse of a deceased employee may elect to receive 34.11 survivor coverage in a term certain of ten, 15, or 20 years. 34.12 The monthly term certain annuity must be actuarially equivalent 34.13 to the 100 percent optional annuity under subdivision 1 and must 34.14 be approved by the actuary retained by the legislative 34.15 commission on pensions and retirement. The optional annuity 34.16 ceases upon the expiration of the term certain period. If a 34.17 survivor elects a term certain annuity and dies before the 34.18 expiration of the specified term certain period, the commuted 34.19 value of the remaining annuity payments must be paid in a lump 34.20 sum to the survivor's estate. 34.21 Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 34.22 no surviving spouse eligible for benefits under subdivision 1, a 34.23 dependent child as defined in section 352.01, subdivision 26, is 34.24 eligible for a dependent child survivor benefit. Benefits to a 34.25 dependent child must be paid from the date of the employee's 34.26 death to the date the dependent child attains age 20 if the 34.27 child is under age 15 on the date of death. If the child is 15 34.28 years or older on the date of death, the benefit is payable for 34.29 five years. The payment to a dependent child is an amount 34.30 actuarially equivalent to the value of a 100 percent joint and 34.31 survivor optional annuity using the age of the employee and age 34.32 of the dependent child at the date of death in lieu of the age 34.33 of the surviving spouse. If there is more than one dependent 34.34 child, each dependent child shall receive a proportionate share 34.35 of the actuarial value of the employee's account, with the 34.36 amount of the benefit payable to each child to be determined 35.1 based on the portion of the total eligibility period that each 35.2 child is eligible. The process for calculating the dependent 35.3 child survivor benefit must be approved by the actuary retained 35.4 by the legislative commission on pensions and retirement. 35.5 Subd. 4. [DEATH REFUND.] An amount equal to the excess, if 35.6 any, of the accumulated contributions credited to the account of 35.7 the deceased employee in excess of the total of the benefits 35.8 paid to the surviving spouse and surviving child or children 35.9 must be paid to the deceased employee's last designated 35.10 beneficiary or, if none, as specified under section 352.12, 35.11 subdivision 1. 35.12 Subd. 5. [APPLICATION.] The benefit elections under this 35.13 section must be made on an application form prescribed by the 35.14 executive director and must be filed with the executive director. 35.15 Sec. 27. Minnesota Statutes 1996, section 352.95, 35.16 subdivision 1, is amended to read: 35.17 Subdivision 1. [JOB-RELATED DISABILITY.] A covered 35.18 correctional employee who becomes disabled and physically unfit 35.19 to perform the duties of the position as a direct result of an 35.20 injury, sickness, or other disability incurred in or arising out 35.21 of any act of duty that makes the employee physically or 35.22 mentally unable to perform the duties, is entitled to a 35.23 disability benefit based on covered correctional service only. 35.24 The benefit amount must equal 50 percent of the average salary 35.25 defined in section 352.93, plus an additional2-1/2percent 35.26 equal to that specified in section 356.19, subdivision 5, for 35.27 each year of covered correctional service in excess of 20 years, 35.28 ten months, prorated for completed months. 35.29 Sec. 28. Minnesota Statutes 1996, section 352.95, 35.30 subdivision 5, is amended to read: 35.31 Subd. 5. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 35.32 disability benefit paid to a disabled correctional employee 35.33 under this section shall terminate at the end of the month in 35.34 which the employee reaches age 62. If the disabled correctional 35.35 employee is still disabled when the employee reaches age 62, the 35.36 employee shall be deemed to be a retired employee. If the 36.1 employee had elected an optional annuity under subdivision 1a, 36.2 the employee shall receive an annuity in accordance with the 36.3 terms of the optional annuity previously elected. If the 36.4 employee had not elected an optional annuity under subdivision 36.5 1a, the employee may within 90 days of attaining age 65 or 36.6 reaching the five-year anniversary of the effective date of the 36.7 disability benefit, whichever is later, either elect to receive 36.8 a normal retirement annuity computed in the manner provided in 36.9 section352.115352.93 or elect to receive an optional annuity 36.10 as provided in section 352.116, subdivision 3, based on the same 36.11 length of service as used in the calculation of the disability 36.12 benefit. Election of an optional annuity must be made within 90 36.13 days before attaining age 65 or reaching the five-year 36.14 anniversary of the effective date of the disability benefit, 36.15 whichever is later.The reduction for retirement before normal36.16retirement age as provided in section 352.116, subdivision 1 or36.171a, does not apply. The savings clause provision of section36.18352.93, subdivision 3, applies.If an optional annuity is 36.19 elected, the optional annuity shall begin to accrue on the first 36.20 of the month following the month in which the employee reaches 36.21 age 65 or the five-year anniversary of the effective date of the 36.22 disability benefit, whichever is later. 36.23 Sec. 29. Minnesota Statutes 1996, section 352B.02, 36.24 subdivision 1a, is amended to read: 36.25 Subd. 1a. [MEMBER CONTRIBUTIONS.] Each member shall pay a 36.26 sum equal to8.928.40 percent of the member's salary, which 36.27 shall constitute the member contribution to the fund. 36.28 Sec. 30. Minnesota Statutes 1996, section 352B.02, 36.29 subdivision 1c, is amended to read: 36.30 Subd. 1c. [EMPLOYER CONTRIBUTIONS.](a)In addition to 36.31 member contributions, department heads shall pay a sum equal to 36.3214.8812.60 percent of the salary upon which deductions were 36.33 made, which shall constitute the employer contribution to the 36.34 fund. Department contributions must be paid out of money 36.35 appropriated to departments for this purpose. 36.36(b) By January 1 of each year, the board of directors shall37.1report to the legislative commission on pensions and retirement,37.2the chair of the committee on appropriations of the house of37.3representatives, and the chair of the committee on finance of37.4the senate on the amount raised by the employer and employee37.5contribution rates in effect and whether the total amount is37.6less than, the same as, or more than the actuarial requirement37.7determined under section 356.215.37.8 Sec. 31. Minnesota Statutes 1996, section 352B.08, 37.9 subdivision 2, is amended to read: 37.10 Subd. 2. [NORMAL RETIREMENT ANNUITY.] The annuity must be 37.11 paid in monthly installments. The annuity shall be equal to the 37.12 amount determined by multiplying the average monthly salary of 37.13 the member by2.65the percent specified in section 356.19, 37.14 subdivision 6, for each year and pro rata for completed months 37.15 of service. 37.16 Sec. 32. Minnesota Statutes 1996, section 352B.08, 37.17 subdivision 2a, is amended to read: 37.18 Subd. 2a. [EARLY RETIREMENT.] Any member who has become at 37.19 least 50 years old, or former member if service ended after June37.2030, 1989,and who has at least three years of allowable service 37.21 is entitled upon application to a reduced retirement annuity 37.22 equal to the annuity calculated under subdivision 2, reducedso37.23that the reduced annuity is the actuarial equivalent of the37.24annuity that would be payable if the member deferred receipt of37.25the annuity from the day the annuity begins to accrue to age37.2655by two-tenths of one percent for each month that the member 37.27 is under age 55 at the time of retirement. 37.28 Sec. 33. Minnesota Statutes 1996, section 352B.10, 37.29 subdivision 1, is amended to read: 37.30 Subdivision 1. [INJURIES, PAYMENT AMOUNTS.] Any member who 37.31 becomes disabled and physically or mentally unfit to perform 37.32 duties as a direct result of an injury, sickness, or other 37.33 disability incurred in or arising out of any act of duty, shall 37.34 receive disability benefits while disabled. The benefits must 37.35 be paid in monthly installments equal to the member's average 37.36 monthly salary multiplied by5360 percent, plus an additional 38.12.65percent equal to that specified in section 356.19, 38.2 subdivision 6, for each year and pro rata for completed months 38.3 of service in excess of 20 years, if any. 38.4 Sec. 34. Minnesota Statutes 1996, section 352B.30, is 38.5 amended by adding a subdivision to read: 38.6 Subd. 4. [1997 POSTRETIREMENT FUND INTEREST CHANGES.] The 38.7 retirement annuity or disability benefit of, or the survivor 38.8 benefit payable on behalf of, a former member who terminated 38.9 service before July 1, 1997, which is not first payable until 38.10 after June 30, 1997, must be increased on an actuarial 38.11 equivalent basis to reflect the change in the postretirement 38.12 interest rate actuarial assumption under section 356.215, 38.13 subdivision 4d, from five percent to six percent under a 38.14 calculation procedure and tables adopted by the board and 38.15 approved by the actuary retained by the legislative commission 38.16 on pensions and retirement. 38.17 Sec. 35. Minnesota Statutes 1996, section 352C.031, 38.18 subdivision 4, is amended to read: 38.19 Subd. 4. [RETIREMENT ALLOWANCE FORMULA.] (a) This 38.20 paragraph applies to constitutional officers who terminate that 38.21 service before July 1, 1997. The average salary multiplied by 38.22 2-1/2 percent for each year of allowable service and pro rata 38.23 for completed months less than a full year shall determine the 38.24 amount of the normal retirement allowance. 38.25 (b) This paragraph applies to constitutional officers who 38.26 terminate that service after June 30, 1997. The retirement 38.27 allowance is an amount equal to the rate under paragraph (a) per 38.28 year of service of the constitutional officer's average monthly 38.29 salary adjusted for that person on an actuarial equivalent basis 38.30 to reflect the change in the postretirement interest rate 38.31 actuarial assumption under section 356.215, subdivision 4d, from 38.32 five percent to six percent. The adjustment must be calculated 38.33 by or, alternatively, the adjustment procedure must be specified 38.34 by the actuary retained by the legislative commission on 38.35 pensions and retirement. 38.36 Sec. 36. Minnesota Statutes 1996, section 352C.033, is 39.1 amended to read: 39.2 352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 39.3 (a) The deferred retirement allowance for any former 39.4 constitutional officershallmust be augmented as provided in 39.5 this section. The required reserves applicable to the deferred 39.6 retirement allowance, determined as of the date the retirement 39.7 allowance begins to accrue using the appropriate mortality table 39.8 and an interest assumption offivesix percent, shall be 39.9 augmented from the first of the month following termination of 39.10 service as a constitutional officer, or January 1, 1979, 39.11 whichever is later, to the first day of the month in which the 39.12 annuity begins to accrue, at the rate of five percent per annum 39.13 compounded annually until January 1, 1981, and thereafter at the 39.14 rate of three percent per annum compounded annually until 39.15 January 1 of the year in which the former constitutional officer 39.16 attains age 55. From that date to the effective date of 39.17 retirement, the rate is five percent compounded annually. 39.18 (b) The retirement allowance of, or the survivor benefit 39.19 payable on behalf of, a former constitutional officer who 39.20 terminated service before July 1, 1997, which is not first 39.21 payable until after June 30, 1997, must be increased on an 39.22 actuarial equivalent basis to reflect the change in the 39.23 postretirement interest rate actuarial assumption under section 39.24 356.215, subdivision 4d, from five percent to six percent under 39.25 a calculation procedure and tables adopted by the board as 39.26 recommended by an approved actuary and approved by the actuary 39.27 retained by the legislative commission on pensions and 39.28 retirement. 39.29 Sec. 37. Minnesota Statutes 1996, section 353.01, 39.30 subdivision 37, is amended to read: 39.31 Subd. 37. [NORMAL RETIREMENT AGE.] "Normal retirement age" 39.32 means age 65 for a person who first became a public employee or 39.33 a member of a pension fund listed in section 356.30, subdivision 39.34 3, before July 1, 1989. For a person who first becomes a public 39.35 employee after June 30, 1989, "normal retirement age" means the 39.36 higher of age 65 or "retirement age," as defined in United 40.1 States Code, title 42, section 416(l), as amended, but not to 40.2 exceed age 66. 40.3 Sec. 38. Minnesota Statutes 1996, section 353.27, 40.4 subdivision 2, is amended to read: 40.5 Subd. 2. [EMPLOYEE CONTRIBUTION.] The employee 40.6 contribution shall be an amount (a) for a "basic member" equal 40.7 to8.238.75 percent of total salary; and (b) for a "coordinated 40.8 member" equal to4.234.75 percent of total salary. These 40.9 contributionsshallmust be made by deduction from salary in the 40.10 manner provided in subdivision 4. Where any portion of a 40.11 member's salary is paid from other than public funds, such 40.12 member's employee contributionshallmust be based on the total 40.13 salary received from all sources. 40.14 Sec. 39. Minnesota Statutes 1996, section 353.27, 40.15 subdivision 3a, is amended to read: 40.16 Subd. 3a. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An 40.17 additional employer contributionshallmust be made equal to (a) 40.182-1/22.68 percent of the total salary of each "basic member"; 40.19 and (b)one-quarter of one.43 percent of the total salary of 40.20 each "coordinated member." These contributionsshallmust be 40.21 made from funds available to the employing subdivision by the 40.22 means and in the manner provided in section 353.28. 40.23 (b) This subdivision is repealed once the actuarial value 40.24 of the assets of the plan equal or exceed the actuarial accrued 40.25 liability of the plan as determined by the actuary retained by 40.26 the legislative commission on pensions and retirement under 40.27 section 356.215. The repeal is effective on the first day of 40.28 the first full pay period occurring after March 31 of the 40.29 calendar year following the issuance of the actuarial valuation 40.30 upon which the repeal is based. 40.31 Sec. 40. Minnesota Statutes 1996, section 353.29, 40.32 subdivision 3, is amended to read: 40.33 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 40.34 in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 40.35 1c, applies to any member who first became a public employee or 40.36 a member of a pension fund listed in section 356.30, subdivision 41.1 3, before July 1, 1989, unless paragraph (b), in conjunction 41.2 with section 353.30, subdivision 5, produces a higher annuity 41.3 amount, in which case paragraph (b) will apply. The average 41.4 salary as defined in subdivision 2, multiplied bytwothe 41.5 percent specified in section 356.19, subdivision 3, for each 41.6 year of allowable service for the first ten years and thereafter 41.7 by2.5the percent specified in section 356.19, subdivision 4, 41.8 per year of allowable service and completed months less than a 41.9 full year for the "basic member," andonethe percent specified 41.10 in section 356.19, subdivision 1, for each year of allowable 41.11 service for the first ten years and thereafter by1.5the 41.12 percent specified in section 356.19, subdivision 2, per year of 41.13 allowable service and completed months less than a full year for 41.14 the "coordinated member," shall determine the amount of the 41.15 "normal" retirement annuity. 41.16 (b) This paragraph applies to a member who has become at 41.17 least 55 years old and first became a public employee after June 41.18 30, 1989, and to any other member whose annuity amount, when 41.19 calculated under this paragraph and in conjunction with section 41.20 353.30, subdivision 5, is higher than it is when calculated 41.21 under paragraph (a), in conjunction with section 353.30, 41.22 subdivisions 1, 1a, 1b, and 1c. The average salary, as defined 41.23 in subdivision 2, multiplied by2.5the percent specified in 41.24 section 356.19, subdivision 4, for each year of allowable 41.25 service and completed months less than a full year for a basic 41.26 member and1.5the percent specified in section 356.19, 41.27 subdivision 2, per year of allowable service and completed 41.28 months less than a full year for a coordinated member, shall 41.29 determine the amount of the normal retirement annuity. 41.30 Sec. 41. Minnesota Statutes 1996, section 353.651, 41.31 subdivision 3, is amended to read: 41.32 Subd. 3. [RETIREMENT ANNUITY FORMULA.] The average salary 41.33 as defined in subdivision 2, multiplied by2.65the percent 41.34 specified in section 356.19, subdivision 6, per year of 41.35 allowable service determines the amount of the normal retirement 41.36 annuity. If the member has earned allowable service for 42.1 performing services other than those of a police officer or 42.2 firefighter, the annuity representing such service is computed 42.3 under sections 353.29 and 353.30. 42.4 Sec. 42. Minnesota Statutes 1996, section 353.656, 42.5 subdivision 1, is amended to read: 42.6 Subdivision 1. [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 42.7 A member of the police and fire fund who becomes disabled and 42.8 physically unfit to perform duties as a police officer or 42.9 firefighter subsequent to June 30, 1973, as a direct result of 42.10 an injury, sickness, or other disability incurred in or arising 42.11 out of any act of duty, which has or is expected to render the 42.12 member physically or mentally unable to perform duties as a 42.13 police officer or firefighter for a period of at least one year, 42.14 shall receive disability benefits during the period of such 42.15 disability. The benefits must be in an amount equal to5360 42.16 percent of the "average salary" under subdivision 3, plus an 42.17 additional2.65percent specified in section 356.19, subdivision 42.18 6, of said average salary for each year of service in excess of 42.19 20 years. Should disability under this subdivision occur before 42.20 the member has at least five years of allowable service credit 42.21 in the police and fire fund, the disability benefit must be 42.22 computed on the "average salary" from which deductions were made 42.23 for contribution to the police and fire fund. 42.24 Sec. 43. Minnesota Statutes 1996, section 353.71, 42.25 subdivision 2, is amended to read: 42.26 Subd. 2. [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] (a) 42.27 The deferred annuity, if any, accruing under subdivision 1, or 42.28 sections 353.34, subdivision 3, and 353.68, subdivision 4,shall42.29 must be computed in the manner provided in said sections, on the 42.30 basis of allowable service prior to termination of public 42.31 service and augmented as provided herein. The required reserves 42.32 applicable to a deferred annuity, or to an annuity for which a 42.33 former member was eligible but had not applied, or to any 42.34 deferred segment of an annuity shall be determined as of the 42.35 date the annuity begins to accrue and shall be augmented from 42.36 the first day of the month following the month in which the 43.1 former member ceased to be a public employee, or July 1, 1971, 43.2 whichever is later, to the first day of the month in which the 43.3 annuity begins to accrue, at the rate of five percent per annum 43.4 compounded annually until January 1, 1981, and at the rate of 43.5 three percent thereafter until January 1 of the year following 43.6 the year in which the former member attains age 55. From that 43.7 date to the effective date of retirement, the rate is five 43.8 percent per annum compounded annually. If a person has more 43.9 than one period of uninterrupted service, the required reserves 43.10 related to each period shall be augmented by interest pursuant 43.11 to this subdivision. The sum of the augmented required reserves 43.12 so determined shall be the present value of the annuity. 43.13 Uninterrupted service for the purpose of this subdivision shall 43.14 mean periods of covered employment during which the employee has 43.15 not been separated from public service for more than two years. 43.16 If a person repays a refund, the service restored thereby shall 43.17 be considered as continuous with the next period of service for 43.18 which the employee has credit with this association. The formula 43.19 percentages used for each period of uninterrupted service shall 43.20 be those as would be applicable to a new employee. This section 43.21 shall not reduce the annuity otherwise payable under this 43.22 chapter. This subdivision shall apply to deferred annuitants of 43.23 record on July 1, 1971, and to employees who thereafter become 43.24 deferred annuitants; it shall also apply from July 1, 1971, to 43.25 former members who make application for an annuity after July 1, 43.26 1973. 43.27 (b) The retirement annuity or disability benefit of, or the 43.28 survivor benefit payable on behalf of, a former member who 43.29 terminated service before July 1, 1997, which is not first 43.30 payable until after June 30, 1997, must be increased on an 43.31 actuarial equivalent basis to reflect the change in the 43.32 postretirement interest rate actuarial assumption under section 43.33 356.215, subdivision 4d, from five percent to six percent under 43.34 a calculation procedure and tables adopted by the board and 43.35 approved by the actuary retained by the legislative commission 43.36 on pensions and retirement. 44.1 Sec. 44. Minnesota Statutes 1996, section 353A.08, 44.2 subdivision 1, is amended to read: 44.3 Subdivision 1. [ELECTION OF COVERAGE BY CURRENT RETIREES.] 44.4 A person who is receiving a service pension, disability benefit, 44.5 orsurvivorshipsurvivor benefit is eligible to elect benefit 44.6 coverage provided under the relevant provisions of the public 44.7 employees police and fire fund benefit plan or to retain benefit 44.8 coverage provided under the relief association benefit plan in 44.9 effect on the effective date of the consolidation. The relevant 44.10 provisions of the public employees police and fire fund benefit 44.11 plan for the person electing that benefit coverage are limited 44.12 to participation in the Minnesota postretirement investment fund 44.13 for any future postretirement adjustments based on the amount of 44.14 the benefit or pension payable on December 31, if December 31 is 44.15 the effective date of consolidation, or on the December 1 44.16 following the effective date of the consolidation, if other than 44.17 December 31. Thesurvivorshipsurvivor benefit payable on 44.18 behalf of any service pension or disability benefit recipient 44.19 who elects benefit coverage under the public employees police 44.20 and fire fund benefit plan must be calculated under the relief 44.21 association benefit plan and is subject to participation in the 44.22 Minnesota postretirement investment fund for any future 44.23 postretirement adjustments based on the amount of the 44.24survivorshipsurvivor benefit payable. 44.25 A survivor benefit calculated under the relief association 44.26 benefit plan which is first payable after June 30, 1997, to the 44.27 surviving spouse of a retired member of a consolidation account 44.28 who, before July 1, 1997, chose to participate in the Minnesota 44.29 postretirement investment fund as provided under this 44.30 subdivision must be increased on the effective date of the 44.31 survivor benefit on an actuarial equivalent basis to reflect the 44.32 change in the postretirement interest rate actuarial assumption 44.33 under section 356.215, subdivision 4d, from five percent to six 44.34 percent under a calculation procedure and tables adopted by the 44.35 board and approved by the actuary retained by the legislative 44.36 commission on pensions and retirement. 45.1 By electing the public employees police and fire fund 45.2 benefit plan, a current service pension or disability benefit 45.3 recipient who, as of the first January 1 occurring after the 45.4 effective date of consolidation, has been receiving the pension 45.5 or benefit for at least seven months, or any survivor benefit 45.6 recipient who, as of the first January 1 occurring after the 45.7 effective date of consolidation, has been receiving the benefit 45.8 on the person's own behalf or in combination with a prior 45.9 applicable service pension or disability benefit for at least 45.10 seven months is eligible to receive a partial adjustment payable 45.11 from the Minnesota postretirement investment fund under section 45.12 11A.18, subdivision 9. 45.13 The election by any pension or benefit recipient must be 45.14 made on or before the deadline established by the board of the 45.15 public employees retirement association in a manner that 45.16 recognizes the number of persons eligible to make the election 45.17 and the anticipated time required to conduct any required 45.18 benefit counseling. 45.19 Sec. 45. Minnesota Statutes 1996, section 353A.08, 45.20 subdivision 2, is amended to read: 45.21 Subd. 2. [ELECTION OF COVERAGE BY CURRENT DEFERRED 45.22 RETIREES.] (a) Any person who has terminated active employment 45.23 as a police officer or firefighter, whichever applies, with the 45.24 municipality, has sufficient credit for service to entitle the 45.25 person to an eventual service pension and has not taken a refund 45.26 of accumulated member contributions, if applicable, shall have 45.27 the option to elect to have benefit coverage provided under the 45.28 relevant provisions of the public employees police and fire fund 45.29 benefit plan or to retain benefit coverage provided by the 45.30 relief association benefit plan in effect on the effective date 45.31 of consolidation. The relevant provisions of the public 45.32 employees police and fire fund benefit plan for the person 45.33 electing that benefit coverage shall be the provisions specified 45.34 in subdivision 1. 45.35 The election shall be made when the person files an 45.36 application for receipt of the deferred service pension and 46.1 shall accompany that application. 46.2 (b) The retirement annuity for a deferred member of a 46.3 consolidated local relief association which consolidated before 46.4 July 1, 1997, who elected the relevant provisions of the public 46.5 employees police and fire fund benefit plan under subdivision 1 46.6 must be increased on an actuarial equivalent basis to reflect 46.7 the change in the postretirement interest rate actuarial 46.8 assumption under section 356.215, subdivision 4d, from five 46.9 percent to six percent under a calculation procedure and tables 46.10 adopted by the board of trustees of the public employees 46.11 retirement association and approved by the actuary retained by 46.12 the legislative commission on pensions and retirement. 46.13 Sec. 46. Minnesota Statutes 1996, section 353A.083, is 46.14 amended by adding a subdivision to read: 46.15 Subd. 3. [PRE-1997 CONSOLIDATION.] (a) For any 46.16 consolidation plan account in effect on July 1, 1997, the 46.17 applicable benefit plan coverage defined in paragraph (b) or (c) 46.18 applies unless the consolidation account's city approves the 46.19 extension of the post-June 30, 1997, public employees police and 46.20 fire fund benefit plan to the consolidation account members. 46.21 (b) If the applicable municipality has approved the July 1, 46.22 1993, public employees police and fire fund benefit provisions, 46.23 but has not approved the extension of the post-June 30, 1997, 46.24 public employees police and fire fund benefit provisions: 46.25 (1) the benefit accrual rate for calculating retirement 46.26 annuities that apply to consolidation account members who have 46.27 elected or elect coverage under the provisions of the public 46.28 employees police and fire fund benefit plan is 2.9 percent of 46.29 average salary under section 353.651, subdivision 2, per year of 46.30 allowable service; 46.31 (2) the optional survivor annuities payable to the 46.32 survivors of these consolidated members who elected coverage 46.33 under the provisions of the public employees police and fire 46.34 fund benefit plan must be determined using a benefit accrual 46.35 rate of 2.9 percent of average salary under section 353.651, 46.36 subdivision 2, per year of the member's allowable service; 47.1 (3) the disability benefit payable for these consolidated 47.2 members who elected or elect coverage under the provisions of 47.3 the public employees police and fire fund benefit plan and: 47.4 (i) who become disabled in the line of duty, as defined 47.5 under section 353.656, subdivision 1, is an amount equal to 58 47.6 percent of average salary under section 353.651, subdivision 2, 47.7 plus an additional 2.9 percent of that average salary for each 47.8 year of service in excess of 20 years; or 47.9 (ii) who become disabled because of sickness or injury 47.10 occurring while not on duty, as defined under section 353.656, 47.11 subdivision 3, is an amount equal to 43.50 percent of average 47.12 salary under section 353.651, subdivision 2, plus an additional 47.13 2.9 percent of that average salary for each year of service in 47.14 excess of 15 years. 47.15 (c) If the applicable municipality has not approved the 47.16 July 1, 1993, public employees police and fire fund benefit 47.17 provisions, and has not approved the extension of the post-June 47.18 30, 1997, public employees police and fire fund benefit 47.19 provisions: 47.20 (1) the benefit accrual rate for calculating retirement 47.21 annuities that apply to consolidation account members who have 47.22 elected or elect coverage under the provisions of the public 47.23 employees police and fire fund benefit plan is 2.74 percent of 47.24 average salary under section 353.651, subdivision 2, per year of 47.25 allowable service; 47.26 (2) the optional survivor annuities payable to the 47.27 survivors of these consolidated members who elected coverage 47.28 under the provisions of the public employees police and fire 47.29 fund benefit plan must be determined using a benefit accrual 47.30 rate of 2.74 percent of average salary under section 353.651, 47.31 subdivision 2, per year of the member's allowable service; 47.32 (3) the disability benefit payable for consolidated members 47.33 who elected or elect the coverage under the provisions of the 47.34 public employees police and fire fund benefit plan and: 47.35 (i) who become disabled in the line of duty, as defined 47.36 under section 353.656, subdivision 1, is an amount equal to 48.1 54.80 percent of the average salary under section 353.651, 48.2 subdivision 2, plus an additional 2.74 percent of that average 48.3 salary for each year of service in excess of 20 years; or 48.4 (ii) who become disabled because of sickness or injury 48.5 occurring while not on duty, as defined under section 353.656, 48.6 subdivision 3, is an amount equal to 41.10 percent of the 48.7 average salary under section 353.651, subdivision 2, plus an 48.8 additional 2.74 percent of that average salary for each year of 48.9 service in excess of 15 years. 48.10 Sec. 47. Minnesota Statutes 1996, section 354.05, 48.11 subdivision 38, is amended to read: 48.12 Subd. 38. [NORMAL RETIREMENT AGE.] "Normal retirement age" 48.13 means age 65 for a person who first became a member of the 48.14 association or a member of a pension fund listed in section 48.15 356.30, subdivision 3, before July 1, 1989. For a person who 48.16 first becomes a member of the association after June 30, 1989, 48.17 normal retirement age means the higher of age 65 or "retirement 48.18 age," as defined in United States Code, title 42, section 48.19 416(l), as amended, but not to exceed age 66. 48.20 Sec. 48. Minnesota Statutes 1996, section 354.42, 48.21 subdivision 2, is amended to read: 48.22 Subd. 2. [EMPLOYEE.] The employee contribution to the fund 48.23shall beis an amount equal to6.55.0 percent of the salary of 48.24 every coordinated member and10.59.0 percent of the salary of 48.25 every basic member. This contributionshallmust be made by 48.26 deduction from salary. Where any portion of a member's salary 48.27 is paid from other than public funds,suchthe member's employee 48.28 contributionshallmust be based on the entire salary received. 48.29 Sec. 49. Minnesota Statutes 1996, section 354.42, 48.30 subdivision 3, is amended to read: 48.31 Subd. 3. [EMPLOYER.] The employer contribution to the fund 48.32shall beis an amount equal to4-1/25.0 percent of the salary 48.33 of each coordinated member and8-1/29.0 percent of the salary 48.34 of each basic member. 48.35 Sec. 50. Minnesota Statutes 1996, section 354.42, 48.36 subdivision 5, is amended to read: 49.1 Subd. 5. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) To 49.2 amortize the unfunded actuarial accrued liability computed under 49.3 the entry age actuarial cost method and disclosed under the 49.4 annual actuarial valuations prepared by the commission-retained 49.5 actuary under section 356.215, an additional employer 49.6 contributionshallmust be made in the amount of3.641.64 49.7 percent of the salary of each member. 49.8 (b) This contribution must be made in the manner provided 49.9 in section 354.52, subdivision 4. 49.10 (c) This subdivision is repealed once the actuarial value 49.11 of the assets of the plan equal or exceed the actuarial accrued 49.12 liability of the plan as determined by the actuary retained by 49.13 the legislative commission on pensions and retirement under 49.14 section 356.215. The repeal is effective on the first day of 49.15 the first full pay period occurring after March 31 of the 49.16 calendar year following the issuance of the actuarial valuation 49.17 upon which the repeal is based. 49.18By January 1 of each year, the board of directors shall49.19report to the legislative commission on pensions and retirement,49.20the chair of the committee on appropriations of the house of49.21representatives, and the chair of the committee on finance of49.22the senate on the amount raised by the additional employer49.23contribution rate in effect and whether that amount is less49.24than, the same as, or more than the required amortization49.25contribution determined under section 356.215.49.26 Sec. 51. Minnesota Statutes 1996, section 354.44, 49.27 subdivision 6, is amended to read: 49.28 Subd. 6. [COMPUTATION OF FORMULA PROGRAM RETIREMENT 49.29 ANNUITY.] (1) The formula retirement annuityhereunder shall49.30 must be computed in accordance with the applicable provisions of 49.31 the formulas stated in clause (2) or (4) on the basis of each 49.32 member's average salary for the period of the member's formula 49.33 service credit. 49.34 For all years of formula service credit, "average salary," 49.35 for the purpose of determining the member's retirement annuity, 49.36 means the average salary upon which contributions were made and 50.1 upon which payments were made to increase the salary limitation 50.2 provided in Minnesota Statutes 1971, section 354.511, for the 50.3 highest five successive years of formula service credit 50.4 provided, however, that such "average salary" shall not include 50.5 any more than the equivalent of 60 monthly salary payments. 50.6 Average salary must be based upon all years of formula service 50.7 credit if this service credit is less than five years. 50.8 (2) This clause, in conjunction with clause (3), applies to 50.9 a person who first became a member of the association or a 50.10 member of a pension fund listed in section 356.30, subdivision 50.11 3, before July 1, 1989, unless clause (4), in conjunction with 50.12 clause (5), produces a higher annuity amount, in which case 50.13 clause (4) applies. The average salary as defined in clause 50.14 (1), multiplied by the following percentages per year of formula 50.15 service credit shall determine the amount of the annuity to 50.16 which the member qualifying therefor is entitled: 50.17 Coordinated Member Basic Member 50.18 Each year of service1.13the2.13the 50.19 during first ten percent percent 50.20 specified in specified in 50.21 section 356.19, section 356.19, 50.22 subdivision 1, subdivision 3, 50.23 per year per year 50.24 Each year of service1.63the2.63the 50.25 thereafter percent percent 50.26 specified in specified in 50.27 section 356.19, section 356.19, 50.28 subdivision 2, subdivision 4, 50.29 per year per year 50.30 (3)(i) This clause applies only to a person who first 50.31 became a member of the association or a member of a pension fund 50.32 listed in section 356.30, subdivision 3, before July 1, 1989, 50.33 and whose annuity is higher when calculated under clause (2), in 50.34 conjunction with this clause than when calculated under clause 50.35 (4), in conjunction with clause (5). 50.36 (ii) Where any member retires prior to normal retirement 51.1 age under a formula annuity, the member shall be paid a 51.2 retirement annuity in an amount equal to the normal annuity 51.3 provided in clause (2) reduced by one-quarter of one percent for 51.4 each month that the member is under normal retirement age at the 51.5 time of retirement except that for any member who has 30 or more 51.6 years of allowable service credit, the reduction shall be 51.7 applied only for each month that the member is under age 62. 51.8 (iii) Any member whose attained age plus credited allowable 51.9 service totals 90 years is entitled, upon application, to a 51.10 retirement annuity in an amount equal to the normal annuity 51.11 provided in clause (2), without any reduction by reason of early 51.12 retirement. 51.13 (4) This clause applies to a member who has become at least 51.14 55 years old and first became a member of the association after 51.15 June 30, 1989, and to any other member who has become at least 51.16 55 years old and whose annuity amount when calculated under this 51.17 clause and in conjunction with clause (5), is higher than it is 51.18 when calculated under clause (2), in conjunction with clause (3). 51.19 The average salary, as defined in clause (1) multiplied by2.6351.20 the percent specified by section 356.19, subdivision 4, for each 51.21 year of service for a basic member and by1.63the 51.22 percent specified in section 356.19, subdivision 2, for each 51.23 year of service for a coordinated member shall determine the 51.24 amount of the retirement annuity to which the member is entitled. 51.25 (5) This clause applies to a person who has become at least 51.26 55 years old and first becomes a member of the association after 51.27 June 30, 1989, and to any other member who has become at least 51.28 55 years old and whose annuity is higher when calculated under 51.29 clause (4) in conjunction with this clause than when calculated 51.30 under clause (2), in conjunction with clause (3). An employee 51.31 who retires under the formula annuity before the normal 51.32 retirement age shall be paid the normal annuity provided in 51.33 clause (4) reduced so that the reduced annuity is the actuarial 51.34 equivalent of the annuity that would be payable to the employee 51.35 if the employee deferred receipt of the annuity and the annuity 51.36 amount were augmented at an annual rate of three percent 52.1 compounded annually from the day the annuity begins to accrue 52.2 until the normal retirement age. 52.3 Sec. 52. Minnesota Statutes 1996, section 354.44, is 52.4 amended by adding a subdivision to read: 52.5 Subd. 6a. [EXTENSION OF 1997 PERMANENT INCREASE.] (a) A 52.6 percentage of the permanent increase for benefit recipients 52.7 effective July 1, 1997, under section 71, as specified in 52.8 paragraph (b), is payable to: 52.9 (1) a member who terminates service after June 30, 1997, 52.10 and whose benefit begins to accrue during the period of July 2, 52.11 1997, to July 1, 2002, based on the member's age at retirement. 52.12 (2) a member who is determined to be totally and 52.13 permanently disabled under section 354.05, subdivision 14, after 52.14 June 30, 1997, and whose benefit begins to accrue during the 52.15 period of July 2, 1997, to July 1, 2002, based on the member's 52.16 age at disability. 52.17 (3) the survivor of a member who terminates service and 52.18 dies after June 30, 1997, and whose benefit begins to accrue 52.19 during the period of July 2, 1997, to July 1, 2002. 52.20 (b) The percentage of the permanent increase is the amount 52.21 designated for the applicable beginning benefit accrual date, as 52.22 follows: 52.23 Beginning Benefit Percentage of 52.24 Accrual Date Permanent Increase 52.25 July 2, 1997 to July 1, 1998 50 percent 52.26 July 2, 1998 to July 1, 1999 40 percent 52.27 July 2, 1999 to July 1, 2000 30 percent 52.28 July 2, 2000 to July 1, 2001 20 percent 52.29 July 2, 2001 to July 1, 2002 10 percent 52.30 Sec. 53. Minnesota Statutes 1996, section 354.53, 52.31 subdivision 1, is amended to read: 52.32 Subdivision 1. [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 52.33 employee given a leave of absence to enter military service and 52.34 who returns to teaching service upon discharge from military 52.35 service as provided in section 192.262,shallmay obtain credit 52.36 for the period of military service but shall not receive credit 53.1 for any voluntary extension of military service at the instance 53.2 of the member beyond the initial period of enlistment, induction 53.3 or call to active duty. The member shall obtain credit by 53.4 paying into the fund an employee contribution based upon 53.5 thesalary of the member at the date of return from military53.6service. The amount of this contribution shall be as follows:53.7 53.8PeriodBasic MemberCoordinated Member53.9July 1, 19738 percent4 percent53.10thru53.11June 30, 197953.12July 1, 197953.13and 8.5 percent 4.5 percent53.14thereafter53.15The contributions specified in this subdivision shall be53.16 contribution rates in effect at the time that the military 53.17 service was performed multiplied by the annual salary rate of 53.18 the member for the year beginning with the date of return from 53.19 military service and the number of years of military service 53.20 together with interest thereon at an annual rate of 8.5 percent 53.21 compounded annually from the time the military service was 53.22 rendered to the first date of payment. The employer 53.23 contribution and additional contribution provided in section 53.24 354.42shallmust be paid by the employing unit at the rates in 53.25 effect at the time that the military service was performed, 53.26 applied to the annual salary rate of the member for the year 53.27 beginning with the date of return from military service, in the 53.28 manner provided in section 354.52, subdivision 4. 53.29 Sec. 54. Minnesota Statutes 1996, section 354.55, 53.30 subdivision 11, is amended to read: 53.31 Subd. 11. [DEFERRED ANNUITY; AUGMENTATION.] (a) Any person 53.32 covered under section 354.44, subdivision 6, who ceases to 53.33 render teaching service, may leave the person's accumulated 53.34 deductions in the fund for the purpose of receiving a deferred 53.35 annuity at retirement. Eligibility for an annuity under this 53.36 subdivisionshall beis governed pursuant to section 354.44, 54.1 subdivision 1, or 354.60. 54.2 (b) The amount of the deferred retirement annuityshall be54.3 is determined by section 354.44, subdivision 6, and augmented as 54.4 provided in this subdivision. The required reserves related to 54.5 that portion of the annuity which had accrued when the member 54.6 ceased to render teaching serviceshallmust be augmented by 54.7 interest compounded annually from the first day of the month 54.8 following the month during which the member ceased to render 54.9 teaching service to the effective date of retirement. There 54.10 shall be no augmentation if this period is less than three 54.11 months or if this period commences prior to July 1, 1971. The 54.12 rates of interest used for this purposeshallmust be five 54.13 percent compounded annually commencing July 1, 1971, until 54.14 January 1, 1981, and three percent compounded annually 54.15 thereafter until January 1 of the year following the year in 54.16 which the former member attains age 55. From that date to the 54.17 effective date of retirement, the rate is five percent 54.18 compounded annually. If a person has more than one period of 54.19 uninterrupted service, a separate average salary determined 54.20 under section 354.44, subdivision 6, must be used for each 54.21 period and the required reserves related to each periodshall54.22 must be augmented by interest pursuant to this subdivision. The 54.23 sum of the augmented required reserves so determined shall be 54.24 the basis for purchasing the deferred annuity. If a person 54.25 repays a refund, the service restored by the repayment must be 54.26 considered as continuous with the next period of service for 54.27 which the person has credit with this fund. If a person does 54.28 not render teaching service in any one fiscal year or more 54.29 consecutive fiscal years and then resumes teaching service, the 54.30 formula percentages used from the date of the resumption of 54.31 teaching serviceshallmust be those applicable to new members. 54.32 The mortality table and interest assumption used to compute the 54.33 annuityshallmust be the applicable mortality table established 54.34 by the board under section 354.07, subdivision 1, and the 54.35 interest rate assumption under section 356.215 in effect when 54.36 the member retires. A period of uninterrupted service for the 55.1 purposes of this subdivision means a period of covered teaching 55.2 service during which the member has not been separated from 55.3 active service for more than one fiscal year. 55.4 (c) In no case shall the annuity payable under this 55.5 subdivision be less than the amount of annuity payable pursuant 55.6 to section 354.44, subdivision 6. 55.7 (d) The requirements and provisions for retirement before 55.8 normal retirement age contained in section 354.44, subdivision 55.9 6, clause (3) or (5), shall also apply to an employee fulfilling 55.10 the requirements with a combination of service as provided in 55.11 section 354.60. 55.12 (e) The augmentation provided by this subdivision applies 55.13 to the benefit provided in section 354.46, subdivision 2. 55.14 (f) The augmentation provided by this subdivision shall not 55.15 apply to any period in which a person is on an approved leave of 55.16 absence from an employer unit covered by the provisions of this 55.17 chapter. 55.18 (g) The retirement annuity or disability benefit of, or the 55.19 survivor benefit payable on behalf of, a former teacher who 55.20 terminated service before July 1, 1997, which is not first 55.21 payable until after June 30, 1997, must be increased on an 55.22 actuarial equivalent basis to reflect the change in the 55.23 postretirement interest rate actuarial assumption under section 55.24 356.215, subdivision 4d, from five percent to six percent under 55.25 a calculation procedure and tables adopted by the board as 55.26 recommended by an approved actuary and approved by the actuary 55.27 retained by the legislative commission on pensions and 55.28 retirement. 55.29 Sec. 55. [356.19] [RETIREMENT BENEFIT FORMULA 55.30 PERCENTAGES.] 55.31 Subdivision 1. [COORDINATED PLAN MEMBERS.] The applicable 55.32 benefit accrual rate is 1.2 percent. 55.33 Subd. 2. [COORDINATED PLAN MEMBERS.] The applicable 55.34 benefit accrual rate is 1.7 percent. 55.35 Subd. 3. [BASIC PLAN MEMBERS.] The applicable benefit 55.36 accrual rate is 2.2 percent. 56.1 Subd. 4. [BASIC PLAN MEMBERS.] The applicable benefit 56.2 accrual rate is 2.7 percent. 56.3 Subd. 5. [CORRECTIONAL PLAN MEMBERS.] The applicable 56.4 benefit accrual rate is 2.4 percent. 56.5 Subd. 6. [STATE TROOPERS PLAN AND POLICE/FIRE PLAN 56.6 MEMBERS.] The applicable benefit accrual rate is 3.0 percent. 56.7 Subd. 7. [JUDGES PLAN.] The applicable benefit accrual 56.8 rate is 2.7 percent. 56.9 Subd. 8. [JUDGES PLAN.] The applicable benefit accrual 56.10 rate is 3.2 percent. 56.11 Subd. 9. [FUTURE BENEFIT ACCRUAL RATE INCREASES.] After 56.12 January 2, 1998, benefit accrual rate increases under this 56.13 section must apply only to allowable service or formula service 56.14 rendered after the effective date of the benefit accrual rate 56.15 increase. 56.16 Sec. 56. Minnesota Statutes 1996, section 356.20, 56.17 subdivision 2, is amended to read: 56.18 Subd. 2. [COVERED PUBLIC PENSION FUNDS.] This section 56.19 applies to the following public pension plans: 56.20 (1) State employees retirement fund. 56.21 (2) Public employees retirement fund. 56.22 (3) Teachers retirement association. 56.23 (4) State patrol retirement fund. 56.24 (5) Minneapolis teachers retirement fund association. 56.25 (6) St. Paul teachers retirement fund association. 56.26 (7) Duluth teachers retirement fund association. 56.27 (8) Minneapolis employees retirement fund. 56.28 (9) University of Minnesota faculty retirement plan. 56.29 (10) University of Minnesota faculty supplemental 56.30 retirement plan. 56.31 (11) Judges retirement fund. 56.32 (12) Any police or firefighter's relief association 56.33 enumerated in section 69.77, subdivision 1a or 69.771, 56.34 subdivision 1. 56.35 (13) Public employees police and fire fund. 56.36 (14) Minnesota state retirement system correctional 57.1 officers retirement fund. 57.2(15) Public employees local government correctional service57.3retirement plan.57.4 Sec. 57. Minnesota Statutes 1996, section 356.215, 57.5 subdivision 2, is amended to read: 57.6 Subd. 2. [REQUIREMENTS.] (a) It is the policy of the 57.7 legislature that it is necessary and appropriate to determine 57.8 annually the financial status of tax supported retirement and 57.9 pension plans for public employees. To achieve this goal, the 57.10 legislative commission on pensions and retirement shall have 57.11 prepared by the actuary retained by the commission annual 57.12 actuarial valuations of the retirement plans enumerated in 57.13 section 3.85, subdivision 11, paragraph (b),andquadrennial 57.14 experience studies of the retirement plans enumerated in section 57.15 3.85, subdivision 11, paragraph (b), clauses (1), (2), and (7), 57.16 and, two years after each set of quadrennial experience studies, 57.17 quadrennial projection valuations of the retirement plans 57.18 enumerated in section 3.85, subdivision 11, paragraph (b), 57.19 clauses (1), (2), and (7), and of any other retirement plan 57.20 enumerated in section 3.85, subdivision 11, paragraph (b), for 57.21 which it determines that the analysis is beneficial. The 57.22 governing or managing board or administrative officials of each 57.23 public pension and retirement fund or plan enumerated in section 57.24 356.20, subdivision 2, clauses (9), (10), and (12), shall have 57.25 prepared by an approved actuary annual actuarial valuations of 57.26 their respective funds as provided in this section. This 57.27 requirement also applies to any fund that is the successor to 57.28 any organization enumerated in section 356.20, subdivision 2, or 57.29 to the governing or managing board or administrative officials 57.30 of any newly formed retirement fund or association operating 57.31 under the control or supervision of any public employee group, 57.32 governmental unit, or institution receiving a portion of its 57.33 support through legislative appropriations, and any local police 57.34 or fire fund coming within the provisions of section 356.216. 57.35 (b) The quadrennial projection valuations required under 57.36 paragraph (a) are intended to serve as an additional analytical 58.1 tool with which policy makers may assess the future funding 58.2 status of public plans through forecasting and testing various 58.3 potential outcomes over time if certain plan assumptions or 58.4 valuation methods were to be modified. In consultation with the 58.5 executive director of the legislative commission on pensions and 58.6 retirement, the retirement fund directors, the state economist, 58.7 the state demographer, the commissioner of finance, and the 58.8 commissioner of employee relations, the actuary retained by the 58.9 legislative commission on pensions and retirement shall perform 58.10 the quadrennial projection valuations, testing future 58.11 implications for plan funding by modifying assumptions and 58.12 methods currently in place. The commission-retained actuary 58.13 shall provide advice to the commission as to the periods over 58.14 which such projections should be made, the nature and scope of 58.15 the scenarios to be analyzed, the measures of funding status to 58.16 be employed, and shall report the results of these analyses in 58.17 the same manner as for quadrennial experience studies. 58.18 Sec. 58. Minnesota Statutes 1996, section 356.215, 58.19 subdivision 4d, is amended to read: 58.20 Subd. 4d. [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 58.21 governed bychapterschapter 352B, 353C, and by sections 352.90 58.22 through 352.951 and 353.63 through 353.68, the actuarial 58.23 valuation must use a preretirement interest assumption of 8.5 58.24 percent, a postretirement interest assumption offivesix 58.25 percent, and a future salary increase assumption of 6.5 percent. 58.26 (b) For funds governed by chapter 354A, the actuarial 58.27 valuation must use preretirement and postretirement assumptions 58.28 of 8.5 percent and a future salary increase assumption of 6.5 58.29 percent, but the actuarial valuation must reflect the payment of 58.30 postretirement adjustments to retirees, based on the methods 58.31 specified in the bylaws of the fund as approved by the 58.32 legislature. For a fund governed by chapter 422A, the actuarial 58.33 valuation shall use a preretirement interest assumption of six 58.34 percent, a postretirement interest assumption of five percent, 58.35 and an assumption that in each future year the salary on which a 58.36 retirement or other benefit is based is 1.04 multiplied by the 59.1 salary for the preceding year. 59.2 (c) For all other funds not specified in paragraph (a), 59.3 (b), (d), or (e), the actuarial valuation must use a 59.4 preretirement interest assumption of five percent, a 59.5 postretirement interest assumption of five percent, and a future 59.6 salary increase assumption of 3.5 percent. 59.7 (d) For funds governed by chapters 3A, 352C, and 490, the 59.8 actuarial valuation must use a preretirement interest assumption 59.9 of 8.5 percent, a postretirement interest assumption offivesix 59.10 percent, and a future salary increase assumption of 6.5 percent 59.11 in each future year in which the salary amount payable is not 59.12 determinable from section 3.099, 15A.081, subdivision 6, or 59.13 15A.083, subdivision 1, whichever applies, or from applicable 59.14 compensation council recommendations under section 15A.082. 59.15 (e) For funds governed by sections 352.01 through 352.86, 59.16 353.01 through 353.46, and chapter 354, the actuarial valuation 59.17 must use a preretirement interest assumption of 8.5, a 59.18 postretirement interest assumption offivesix percent, and a 59.19 graded rate future salary increase assumption as follows: 59.20 General state General public 59.21 employees employees Teachers 59.22 retirement retirement retirement 59.23 Age plan plan plan 59.24 16 7.2500% 8.71% 7.25% 59.25 17 7.2500 8.71 7.25 59.26 18 7.2500 8.70 7.25 59.27 19 7.2500 8.70 7.25 59.28 20 7.2500 7.70 7.25 59.29 21 7.1454 7.70 7.25 59.30 22 7.1094 7.70 7.25 59.31 23 7.0725 7.70 7.20 59.32 24 7.0363 7.70 7.15 59.33 25 7.0000 7.60 7.10 59.34 26 7.0000 7.51 7.05 59.35 27 7.0000 7.39 7.00 59.36 28 7.0000 7.30 7.00 60.1 29 7.0000 7.20 7.00 60.2 30 7.0000 7.20 7.00 60.3 31 7.0000 7.10 7.00 60.4 32 7.0000 7.10 7.00 60.5 33 7.0000 7.00 7.00 60.6 34 7.0000 7.00 7.00 60.7 35 7.0000 6.90 7.00 60.8 36 6.9019 6.80 7.00 60.9 37 6.8074 6.70 7.00 60.10 38 6.7125 6.60 6.90 60.11 39 6.6054 6.50 6.80 60.12 40 6.5000 6.40 6.70 60.13 41 6.3540 6.30 6.60 60.14 42 6.2087 6.30 6.50 60.15 43 6.0622 6.30 6.35 60.16 44 5.9048 6.20 6.20 60.17 45 5.7500 6.20 6.05 60.18 46 5.6940 6.09 5.90 60.19 47 5.6375 6.00 5.75 60.20 48 5.5822 5.90 5.70 60.21 49 5.5405 5.80 5.65 60.22 50 5.5000 5.70 5.60 60.23 51 5.4384 5.70 5.55 60.24 52 5.3776 5.70 5.50 60.25 53 5.3167 5.70 5.45 60.26 54 5.2826 5.70 5.40 60.27 55 5.2500 5.70 5.35 60.28 56 5.2500 5.70 5.30 60.29 57 5.2500 5.70 5.25 60.30 58 5.2500 5.70 5.25 60.31 59 5.2500 5.70 5.25 60.32 60 5.2500 5.00 5.25 60.33 61 5.2500 5.00 5.25 60.34 62 5.2500 5.00 5.25 60.35 63 5.2500 5.00 5.25 60.36 64 5.2500 5.00 5.25 61.1 65 5.2500 5.00 5.25 61.2 66 5.2500 5.00 5.25 61.3 67 5.2500 5.00 5.25 61.4 68 5.2500 5.00 5.25 61.5 69 5.2500 5.00 5.25 61.6 70 5.2500 5.00 5.25 61.7 Sec. 59. Minnesota Statutes 1996, section 356.215, 61.8 subdivision 4g, is amended to read: 61.9 Subd. 4g. [AMORTIZATION CONTRIBUTIONS.] (a) In addition to 61.10 the exhibit indicating the level normal cost, the actuarial 61.11 valuation must contain an exhibit indicating the additional 61.12 annual contribution sufficient to amortize the unfunded 61.13 actuarial accrued liability. For funds governed by chapters 3A, 61.14 352, 352B, 352C, 353,353C,354, 354A, and 490, the additional 61.15 contribution must be calculated on a level percentage of covered 61.16 payroll basis by the established date for full funding in effect 61.17 when the valuation is prepared. For funds governed by chapter 61.18 3A, sections 352.90 through 352.951, chapters 352B, 352C, 61.19 sections 353.63 through 353.68, and chapters 353C, 354A, and 61.20 490, the level percent additional contribution must be 61.21 calculated assuming annual payroll growth of 6.5 percent. For 61.22 funds governed by sections 352.01 through 352.86 and chapter 61.23 354, the level percent additional contribution must be 61.24 calculated assuming an annual payroll growth of five percent. 61.25 For the fund governed by sections 353.01 through 353.46, the 61.26 level percent additional contribution must be calculated 61.27 assuming an annual payroll growth of six percent. For all other 61.28 funds, the additional annual contribution must be calculated on 61.29 a level annual dollar amount basis. 61.30 (b) For any fund other than the Minneapolis employees 61.31 retirement fund, after the first actuarial valuation date 61.32 occurring after June 1, 1989, if there has not been a change in 61.33 the actuarial assumptions used for calculating the actuarial 61.34 accrued liability of the fund, a change in the benefit plan 61.35 governing annuities and benefits payable from the fund, a change 61.36 in the actuarial cost method used in calculating the actuarial 62.1 accrued liability of all or a portion of the fund, or a 62.2 combination of the three, which change or changes by themselves 62.3 without inclusion of any other items of increase or decrease 62.4 produce a net increase in the unfunded actuarial accrued 62.5 liability of the fund, the established date for full funding for 62.6 the first actuarial valuation made after June 1, 1989, and each 62.7 successive actuarial valuation is the first actuarial valuation 62.8 date occurring after June 1, 2020. 62.9 (c) For any fund or plan other than the Minneapolis 62.10 employees retirement fund, after the first actuarial valuation 62.11 date occurring after June 1, 1989, if there has been a change in 62.12 any or all of the actuarial assumptions used for calculating the 62.13 actuarial accrued liability of the fund, a change in the benefit 62.14 plan governing annuities and benefits payable from the fund, a 62.15 change in the actuarial cost method used in calculating the 62.16 actuarial accrued liability of all or a portion of the fund, or 62.17 a combination of the three, and the change or changes, by 62.18 themselves and without inclusion of any other items of increase 62.19 or decrease, produce a net increase in the unfunded actuarial 62.20 accrued liability in the fund, the established date for full 62.21 funding must be determined using the following procedure: 62.22 (i) the unfunded actuarial accrued liability of the fund 62.23 must be determined in accordance with the plan provisions 62.24 governing annuities and retirement benefits and the actuarial 62.25 assumptions in effect before an applicable change; 62.26 (ii) the level annual dollar contribution or level 62.27 percentage, whichever is applicable, needed to amortize the 62.28 unfunded actuarial accrued liability amount determined under 62.29 item (i) by the established date for full funding in effect 62.30 before the change must be calculated using the interest 62.31 assumption specified in subdivision 4d in effect before the 62.32 change; 62.33 (iii) the unfunded actuarial accrued liability of the fund 62.34 must be determined in accordance with any new plan provisions 62.35 governing annuities and benefits payable from the fund and any 62.36 new actuarial assumptions and the remaining plan provisions 63.1 governing annuities and benefits payable from the fund and 63.2 actuarial assumptions in effect before the change; 63.3 (iv) the level annual dollar contribution or level 63.4 percentage, whichever is applicable, needed to amortize the 63.5 difference between the unfunded actuarial accrued liability 63.6 amount calculated under item (i) and the unfunded actuarial 63.7 accrued liability amount calculated under item (iii) over a 63.8 period of 30 years from the end of the plan year in which the 63.9 applicable change is effective must be calculated using the 63.10 applicable interest assumption specified in subdivision 4d in 63.11 effect after any applicable change; 63.12 (v) the level annual dollar or level percentage 63.13 amortization contribution under item (iv) must be added to the 63.14 level annual dollar amortization contribution or level 63.15 percentage calculated under item (ii); 63.16 (vi) the period in which the unfunded actuarial accrued 63.17 liability amount determined in item (iii) is amortized by the 63.18 total level annual dollar or level percentage amortization 63.19 contribution computed under item (v) must be calculated using 63.20 the interest assumption specified in subdivision 4d in effect 63.21 after any applicable change, rounded to the nearest integral 63.22 number of years, but not to exceed 30 years from the end of the 63.23 plan year in which the determination of the established date for 63.24 full funding using the procedure set forth in this clause is 63.25 made and not to be less than the period of years beginning in 63.26 the plan year in which the determination of the established date 63.27 for full funding using the procedure set forth in this clause is 63.28 made and ending by the date for full funding in effect before 63.29 the change; and 63.30 (vii) the period determined under item (vi) must be added 63.31 to the date as of which the actuarial valuation was prepared and 63.32 the date obtained is the new established date for full funding. 63.33 (d) For the Minneapolis employees retirement fund, the 63.34 established date for full funding is June 30, 2020. 63.35 (e) For the public employees retirement association police 63.36 and firefundplan, the correctional employees retirement plan 64.1 of the Minnesota state retirement system, and the state patrol 64.2 retirement plan, an excess of valuation assets over actuarial 64.3 accrued liabilitywillmust be amortized in the same manner over 64.4 the same period as an unfunded actuarial accrued liability 64.5 butwillmust serve to reduce the required contribution instead 64.6 of increasing it. 64.7 Sec. 60. Minnesota Statutes 1996, section 356.217, is 64.8 amended to read: 64.9 356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.] 64.10 (a)The actuary retained by the legislative commission on64.11pensions and retirement is not required to prepare actuarial64.12valuations of the public employees local government correctional64.13employees retirement plan unless the plan is implemented by a64.14county under section 353C.04.64.15(b)The cost of any requested benefit projections by the 64.16 commission-retained actuary relating to the Minnesota 64.17 postretirement investment fund for the state board of investment 64.18 is payable by the state board of investment. 64.19(c)(b) Actuarial valuations under section 356.215, for 64.20 July 1, 1991, and thereafter, are not required to have an 64.21 individual commentary section. The commentary section, if 64.22 omitted from the individual plan actuarial valuation, must be 64.23 included in an appropriate generalized format as part of the 64.24 report to the legislature under section 3.85, subdivision 11. 64.25(d)(c) Actuarial valuations under section 356.215, for 64.26 July 1, 1991, and thereafter, are not required to contain 64.27 separate actuarial valuation results for basic and coordinated 64.28 programs unless each program has a membership of at least ten 64.29 percent of the total membership of the fund. Actuarial 64.30 valuations under section 356.215, for July 1, 1991, and 64.31 thereafter, are not required to contain cash flow forecasts. 64.32(e)(d) Actuarial valuations of the public employees police 64.33 and fire fund local consolidation accounts for July 1, 1991, and 64.34 thereafter, are not required to contain separate tabulations or 64.35 summaries of active member, service retirement, disability 64.36 retirement, and survivor data for each local consolidation 65.1 account. 65.2(f)(e) The commission-retained actuary is: 65.3 (1) required to publish experience findings for plans for 65.4 which experience findings are required only on a quadrennial 65.5 basis for the four-year period ending June 30, 1992, and every 65.6 four years thereafter; 65.7 (2) not required to prepare a separate experience analysis 65.8 or publish separate experience findings for basic and 65.9 coordinated programs if separate actuarial valuation results for 65.10 the programs are not required; and 65.11 (3) not required to calculate investment rate of return 65.12 experience results on any basis other than current asset value 65.13 as defined in section 356.215, subdivision 1, clause (6). 65.14 Sec. 61. Minnesota Statutes 1996, section 356.30, 65.15 subdivision 1, is amended to read: 65.16 Subdivision 1. [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 65.17 Notwithstanding any provisions to the contrary of the laws 65.18 governing the funds enumerated in subdivision 3, a person who 65.19 has met the qualifications of clause (2) may elect to receive a 65.20 retirement annuity from each fund in which the person has at 65.21 least six months allowable service, based on the allowable 65.22 service in each fund, subject to the provisions of clause (3). 65.23 (2) A person may receive upon retirement a retirement 65.24 annuity from each fund in which the person has at least six 65.25 months allowable service, and augmentation of a deferred annuity 65.26 calculated under the laws governing each public pension plan or 65.27 fund named in subdivision 3, from the date the person terminated 65.28 all public service if: 65.29 (a) the person has allowable service totaling an amount 65.30 that allows the person to receive an annuity in any two or more 65.31 of the enumerated funds; and 65.32 (b) the person has not begun to receive an annuity from any 65.33 enumerated fund or the person has made application for benefits 65.34 from all funds and the effective dates of the retirement annuity 65.35 with each fund under which the person chooses to receive an 65.36 annuity are within a one-year period. 66.1 (3) The retirement annuity from each fund must be based 66.2 upon the allowable service in each fund, except that: 66.3 (a) The laws governing annuities must be the law in effect 66.4 on the date of termination from the last period of public 66.5 service under a covered fund with which the person earned a 66.6 minimum of one-half year of allowable service credit during that 66.7 employment. 66.8 (b) The "average salary" on which the annuity from each 66.9 covered fund in which the employee has credit in a formula plan 66.10 shall be based on the employee's highest five successive years 66.11 of covered salary during the entire service in covered funds. 66.12 (c) The formula percentages to be used by each fund must be 66.13 those percentages prescribed by each fund's formula as continued 66.14 for the respective years of allowable service from one fund to 66.15 the next, recognizing all previous allowable service with the 66.16 other covered funds. 66.17 (d) Allowable service in all the funds must be combined in 66.18 determining eligibility for and the application of each fund's 66.19 provisions in respect to actuarial reduction in the annuity 66.20 amount for retirement prior to normal retirement. 66.21 (e) The annuity amount payable for any allowable service 66.22 under a nonformula plan of a covered fund must not be affected 66.23 but such service and covered salary must be used in the above 66.24 calculation. 66.25 (f) This section shall not apply to any person whose final 66.26 termination from the last public service under a covered fund is 66.27 prior to May 1, 1975. 66.28 (g) For the purpose of computing annuities under this 66.29 section the formula percentages used by any covered fund, except 66.30the basic program of the teachers retirement association,the 66.31 public employees police and fire fund, and the state patrol 66.32 retirement fund, must not exceed2-1/2the percent specified in 66.33 section 356.19, subdivision 4, per year of service for any year 66.34 of service or fraction thereof. The formula percentage used by 66.35 the public employees police and fire fund and the state patrol 66.36 retirement fund must not exceed2.65the percent specified in 67.1 section 356.19, subdivision 6, per year of service for any year 67.2 of service or fraction thereof.The formula percentage used by67.3the teachers retirement association must not exceed 2.63 percent67.4per year of basic program service for any year of basic program67.5service or fraction thereof.The formula percentage used by the 67.6 legislators retirement plan and the elective state officers 67.7 retirement must not exceed 2.5 percent, but this limit does not 67.8 apply to the adjustment provided under section 3A.02, 67.9 subdivision 1, paragraph (c), or 352C.031, paragraph (b). 67.10 (h) Any period of time for which a person has credit in 67.11 more than one of the covered funds must be used only once for 67.12 the purpose of determining total allowable service. 67.13 (i) If the period of duplicated service credit is more than 67.14 six months, or the person has credit for more than six months 67.15 with each of the funds, each fund shall apply its formula to a 67.16 prorated service credit for the period of duplicated service 67.17 based on a fraction of the salary on which deductions were paid 67.18 to that fund for the period divided by the total salary on which 67.19 deductions were paid to all funds for the period. 67.20 (j) If the period of duplicated service credit is less than 67.21 six months, or when added to other service credit with that fund 67.22 is less than six months, the service credit must be ignored and 67.23 a refund of contributions made to the person in accord with that 67.24 fund's refund provisions. 67.25 Sec. 62. Minnesota Statutes 1996, section 356.30, 67.26 subdivision 3, is amended to read: 67.27 Subd. 3. [COVERED FUNDS.] This section applies to the 67.28 following retirement funds: 67.29 (1) state employees retirement fund, established pursuant 67.30 to chapter 352; 67.31 (2) correctional employees retirement program, established 67.32 pursuant to chapter 352; 67.33 (3) unclassified employees retirement plan, established 67.34 pursuant to chapter 352D; 67.35 (4) state patrol retirement fund, established pursuant to 67.36 chapter 352B; 68.1 (5) legislators' retirement plan, established pursuant to 68.2 chapter 3A; 68.3 (6) elective state officers' retirement plan, established 68.4 pursuant to chapter 352C; 68.5 (7) public employees retirement association, established 68.6 pursuant to chapter 353; 68.7 (8) public employees police and fire fund, established 68.8 pursuant to chapter 353; 68.9 (9) teachers retirement association, established pursuant 68.10 to chapter 354; 68.11 (10) Minneapolis employees retirement fund, established 68.12 pursuant to chapter 422A; 68.13 (11) Minneapolis teachers retirement fund association, 68.14 established pursuant to chapter 354A; 68.15 (12) St. Paul teachers retirement fund association, 68.16 established pursuant to chapter 354A; 68.17 (13) Duluth teachers retirement fund association, 68.18 established pursuant to chapter 354A; 68.19(14) public employees local government correctional service68.20retirement plan established by sections 353C.01 to 353C.10;and 68.21(15)(14) judges' retirement fund, established by sections 68.22 490.121 to 490.132. 68.23 Sec. 63. Minnesota Statutes 1996, section 356.32, 68.24 subdivision 2, is amended to read: 68.25 Subd. 2. [COVERED FUNDS.] The provisions of this section 68.26 shall apply to the following retirement funds: 68.27 (1) state employees retirement fund, established pursuant 68.28 to chapter 352; 68.29 (2) correctional employees retirement program, established 68.30 pursuant to chapter 352; 68.31 (3) state patrol retirement fund, established pursuant to 68.32 chapter 352B; 68.33 (4) public employees retirement fund, established pursuant 68.34 to chapter 353; 68.35 (5) public employees police and fire fund, established 68.36 pursuant to chapter 353; 69.1 (6) teachers retirement association, established pursuant 69.2 to chapter 354; 69.3 (7) Minneapolis employees retirement fund, established 69.4 pursuant to chapter 422A; 69.5 (8) Duluth teachers retirement fund association, 69.6 established pursuant to chapter 354A; 69.7 (9) Minneapolis teachers retirement fund association, 69.8 established pursuant to chapter 354A; and 69.9 (10) St. Paul teachers retirement fund association, 69.10 established pursuant to chapter 354A;69.11(11) public employees local government correctional service69.12retirement plan established by sections 353B.01 to 353B.10. 69.13 Sec. 64. Minnesota Statutes 1996, section 422A.06, 69.14 subdivision 8, is amended to read: 69.15 Subd. 8. [RETIREMENT BENEFIT FUND.] (a) The retirement 69.16 benefit fund shall consist of amounts held for payment of 69.17 retirement allowances for members retired pursuant to this 69.18 chapter. 69.19 (b) Assets equal to the required reserves for retirement 69.20 allowances pursuant to this chapter determined in accordance 69.21 with the appropriate mortality table adopted by the board of 69.22 trustees based on the experience of the fund as recommended by 69.23 the commission-retained actuary shall be transferred from the 69.24 deposit accumulation fund to the retirement benefit fund as of 69.25 the last business day of the month in which the retirement 69.26 allowance begins. The income from investments of these assets 69.27 shall be allocated to this fund. There shall be paid from this 69.28 fund the retirement annuities authorized by law. A required 69.29 reserve calculation for the retirement benefit fund must be made 69.30 by the actuary retained by the legislative commission on 69.31 pensions and retirement and must be certified to the retirement 69.32 board by the commission-retained actuary. 69.33 (c) The retirement benefit fund shall be governed by the 69.34 applicable laws governing the accounting and audit procedures, 69.35 investment, actuarial requirements, calculation and payment of 69.36 postretirement benefit adjustments, discharge of any deficiency 70.1 in the assets of the fund when compared to the actuarially 70.2 determined required reserves, and other applicable operations 70.3 and procedures regarding the Minnesota postretirement investment 70.4 fund in effect on June 30, 1997, establishedpursuant tounder 70.5 Minnesota Statutes 1996, section 11A.18, and any legal or 70.6 administrative interpretations of those laws of the state board 70.7 of investment, the legal advisor to the board of investment and 70.8 the executive director of the state board of investment in 70.9 effect on June 30, 1997. If a deferred yield adjustment account 70.10 is established for the Minnesota postretirement investment 70.11 fund before June 30, 1997, under Minnesota Statutes 1996, 70.12 section 11A.18, subdivision 5, the retirement board shall also 70.13 establish and maintain a deferred yield adjustment account 70.14 within this fund. 70.15 (d) Annually, following the calculation of any 70.16 postretirement adjustment payable from the retirement benefit 70.17 fund, the board of trustees shall submit a report to the 70.18 executive director of the legislative commission on pensions and 70.19 retirement and to the commissioner of finance indicating the 70.20 amount of any postretirement adjustment and the underlying 70.21 calculations on which that postretirement adjustment amount is 70.22 based, including the amount of dividends, the amount of 70.23 interest, and the amount of net realized capital gains or losses 70.24 utilized in the calculations. 70.25 (e) With respect to a former contributing member who began 70.26 receiving a retirement annuity or disability benefit under 70.27 section 422A.151, paragraph (a), clause (2), after June 30, 70.28 1997, or with respect to a survivor of a former contributing 70.29 member who began receiving a survivor benefit under section 70.30 422A.151, paragraph (a), clause (2), after June 30, 1997, the 70.31 reserves attributable to the one percent lower amount of the 70.32 cost-of-living adjustment payable to those annuity or benefit 70.33 recipients annually must be transferred back to the deposit 70.34 accumulation fund to the credit of the metropolitan airports 70.35 commission. The calculation of this annual reduced 70.36 cost-of-living adjustment reserve transfer must be reviewed by 71.1 the actuary retained by the legislative commission on pensions 71.2 and retirement. 71.3 Sec. 65. Minnesota Statutes 1996, section 422A.151, is 71.4 amended to read: 71.5 422A.151 [ALTERNATIVE CALCULATION OF ANNUITY.] 71.6 (a) In the case of a contributing member of the Minneapolis 71.7 employees retirement fund who is employed as a licensed peace 71.8 officer or firefighter with the metropolitan airports commission 71.9 and who retires, becomes disabled within the meaning of section 71.10 422A.18, or dies, the retirement, disability, or survivor 71.11 allowance is equal to the higher of the following: 71.12 (1) the retirement, disability, or survivor allowance 71.13 calculated for the person under the applicable provisions of the 71.14 Minneapolis employees retirement fund; or 71.15 (2) the retirement, disability, or survivor benefit that 71.16 the person would be entitled to upon meeting the applicable age 71.17 and allowable service requirements of section 353.651, 353.656, 71.18 or 353.657 if all employment as a licensed peace officer or 71.19 firefighter with the metropolitan airports commission had been 71.20 allowable service under the public employees retirement 71.21 association police and fire fund, instead of being covered by 71.22 the Minneapolis employees retirement fund. In computing the 71.23 alternative benefit under section 353.651, 353.656, or 353.657, 71.24 the applicable definitions and related provisions of chapter 353 71.25 must be used. 71.26 A firefighter or licensed peace officer terminating 71.27 employment by the metropolitan airports commission after June 71.28 30, 1997, or the survivor of a deceased firefighter or licensed 71.29 peace officer terminating employment by the metropolitan 71.30 airports commission after June 30, 1997, under section 353.651, 71.31 353.656, or 353.657, shall receive a one percent lower 71.32 cost-of-living adjustment than otherwise payable under section 71.33 422A.06, subdivision 5. If the cost-of-living adjustment 71.34 payable under section 422A.06, subdivision 5, is less than one 71.35 percent, the firefighter or licensed peace officer who retired 71.36 after June 30, 1997, must not have a reduction in the previously 72.1 received annuity or benefit amount, but future cost-of-living 72.2 adjustments must be modified equal to the percentage the benefit 72.3 would have been reduced below the person's current annuity or 72.4 benefit amount to reflect the one percent lower cost-of-living 72.5 adjustment under section 422A.06, subdivision 5. 72.6 (b) If a contributing member under paragraph (a) has 72.7 periods of coverage by the Minneapolis employees retirement fund 72.8 that include service other than employment as a licensed peace 72.9 officer or firefighter as well as employment as a licensed peace 72.10 officer or firefighter, the calculation of the benefit under 72.11 paragraph (a), clause (2), may only utilize service as a 72.12 licensed peace officer or firefighter employed by the 72.13 metropolitan airports commission. 72.14 Sec. 66. Minnesota Statutes 1996, section 490.124, 72.15 subdivision 1, is amended to read: 72.16 Subdivision 1. [BASIC RETIREMENT ANNUITY.] Except as 72.17 qualified hereinafter from and after mandatory retirement date, 72.18 normal retirement date, early retirement date, or one year from 72.19 the disability retirement date, as the case may be, a retirement 72.20 annuity shall be payable to a retiring judge from the judges' 72.21 retirement fund in an amount equal to: (1)2-1/2the percentof72.22 specified in section 356.19, subdivision 7, multiplied by the 72.23 judge's final average compensation multiplied by the number of 72.24 years and fractions of years of allowable service rendered prior 72.25 to July 1, 1980; plus (2)threethe percentofspecified in 72.26 section 356.19, subdivision 8, multiplied by the judge's final 72.27 average compensation multiplied by the number of years and 72.28 fractions of years of allowable service rendered after June 30, 72.29 1980; provided that the annuityshallmust not exceed6570 72.30 percent of the judge's annual salary for the 12 months 72.31 immediately preceding retirement. 72.32 Sec. 67. Minnesota Statutes 1996, section 490.124, 72.33 subdivision 5, is amended to read: 72.34 Subd. 5. [DEFERRED BENEFITS.] (a) Any benefit to which a 72.35 judge is entitled under this section may be deferred until early 72.36 or normal retirement date, notwithstanding termination of such 73.1 judge's service prior thereto. 73.2 (b) The retirement annuity of, or the survivor benefit 73.3 payable on behalf of, a former judge, who terminated service 73.4 before July 1, 1997, which is not first payable until after June 73.5 30, 1997, must be increased on an actuarial equivalent basis to 73.6 reflect the change in the postretirement interest rate actuarial 73.7 assumption under section 356.215, subdivision 4d, from five 73.8 percent to six percent under a calculation procedure and tables 73.9 adopted by the board of directors of the Minnesota state 73.10 retirement system and approved by the actuary retained by the 73.11 legislative commission on pensions and retirement. 73.12 Sec. 68. Laws 1996, chapter 448, article 1, section 3, is 73.13 amended to read: 73.14 Sec. 3. [EFFECTIVE DATE.] 73.15 (a) Sections 1 and 2 are effective on the day following 73.16 approval by the Itasca county board and compliance with 73.17 Minnesota Statutes, section 645.021. 73.18 (b) Notwithstanding Minnesota Statutes, section 645.021, 73.19 the approval and compliance required by paragraph (a) is 73.20 effective if accomplished before January 1, 1999. 73.21 Sec. 69. [APPROPRIATIONS; DEPARTMENT OF CORRECTIONS AND 73.22 LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.] 73.23 (a) $900,000 in fiscal year 1998 and $900,000 in fiscal 73.24 year 1999 is appropriated from the general fund to the 73.25 commissioner of corrections. The commissioner of finance shall 73.26 include this amount in the base budget for the agency when 73.27 developing the governor's budget recommendations for the 73.28 biennium ending June 30, 2001. 73.29 (b) For fiscal year 1999, $50,000 is appropriated to the 73.30 legislative coordinating commission for allocation to the 73.31 legislative commission on pensions and retirement. 73.32 Sec. 70. [APPROPRIATION REDUCTION.] 73.33 Subdivision 1. [REDUCTIONS BY RETIREMENT PLAN AND 73.34 EMPLOYER.] In fiscal years 1998 and 1999, the commissioner of 73.35 finance shall reduce allotments and cancel to the general fund 73.36 the amounts determined by multiplying the general fund supported 74.1 salaries of employees who are members of the teachers retirement 74.2 association according to clauses (1) and (2), and for employees 74.3 who are members of the general state employees retirement plan 74.4 of the Minnesota state retirement system according to clauses 74.5 (3), (4), and (5): 74.6 (1) 0.90 percent for the Minnesota state colleges and 74.7 universities; 74.8 (2) 1.50 percent for all agencies other than the Minnesota 74.9 state colleges and universities 74.10 (3) 0.20 percent for all agencies other than the Minnesota 74.11 state colleges and universities and the university of Minnesota; 74.12 (4) 0.12 percent for the Minnesota state colleges and 74.13 universities; 74.14 (5) 0.0728 percent for the university of Minnesota. 74.15 Subd. 2. [APPROPRIATION REDUCTIONS APPLIED TO BASE 74.16 BUDGETS.] The commissioner of finance shall include the 74.17 reductions under subdivision 1 when developing the base budgets 74.18 for all affected organizations as submitted with the governor's 74.19 recommended budget for the biennium ending June 30, 2001. 74.20 Subd. 3. [PROJECTED SAVINGS.] For the biennium ending June 74.21 30, 1999, the projected general fund savings attributable to the 74.22 reductions under subdivision 1 are as follows: 74.23 fiscal year 74.24 1998 1999 74.25 subdivision 1, clauses (1) and (2) $1,937,000 $2,053,000 74.26 subdivision 1, clauses (3) $1,162,000 $1,233,000 74.27 subdivision 1, clauses (4) and (5) $ 480,000 $ 509,000 74.28 Sec. 71. [APPROPRIATION] 74.29 For the fiscal years ending June 30, 1998, and June 30, 74.30 1999, the amounts transferred under section 13 to funds and 74.31 accounts from which the salaries of peace officers employed by 74.32 the department of natural resources are paid are appropriated 74.33 from those funds and accounts to the commissioner of natural 74.34 resources to assist in making the employer contributions to the 74.35 state patrol retirement plan under Minnesota Statutes, section 74.36 352B.02, subdivision 1c. Notwithstanding section 13, for fiscal 75.1 years 1998 and 1999, amounts transferred to the general fund for 75.2 peace officers employed by the department of natural resources 75.3 do not cancel but are appropriated to the commissioner of 75.4 natural resources to assist in making employer contributions to 75.5 the state patrol retirement plan. The amounts appropriated in 75.6 this section must be included in the department's budgetary base 75.7 for the next biennium. 75.8 Sec. 72. [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.] 75.9 A monthly survivor, disability, or retirement benefit paid 75.10 under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 352D, 75.11 353, 353A, 354, and 490 on June 30, 1997, is permanently 75.12 increased effective July 1, 1997, to reflect the change in the 75.13 postretirement fund interest assumption from five percent to six 75.14 percent. The benefit payable under the six percent 75.15 postretirement interest assumption must be actuarially 75.16 equivalent to the benefit payable under the five percent 75.17 interest assumption and must be based on tables adopted by the 75.18 applicable board and approved by the actuary retained by the 75.19 legislative commission on pensions and retirement. 75.20 Sec. 73. [ALTERNATIVE BENEFIT ADJUSTMENTS.] 75.21 If the permanent increase under section 71, along with the 75.22 annual cost-of-living adjustments paid during the ten years 75.23 after the effective date of this section averages less than 75.24 inflation as measured by the Consumer Price Index or 3.5 75.25 percent, whichever is lower, the executive directors of the 75.26 teachers retirement association, public employees retirement 75.27 association, and the Minnesota state retirement system shall 75.28 suggest alternative benefit adjustments for retirees receiving 75.29 benefits on June 30, 1997, who exceed their life expectancy by 75.30 three or more years. 75.31 Sec. 74. [MANDATED PENSION COMMISSION STUDY; DISPOSITION 75.32 OF PERA-P&F CONSOLIDATION ACCOUNTS.] 75.33 (a) The legislative commission on pensions and retirement, 75.34 in consultation with the affected constituencies, shall study 75.35 the advantages and disadvantages of the blending of some or all 75.36 local police and salaried firefighter consolidation accounts 76.1 into the public employees police and fire retirement plan 76.2 established under Minnesota Statutes, sections 353.63 to 353.68. 76.3 (b) The report must be transmitted on or before January 31, 76.4 1998, to the chair of the committee on governmental operations 76.5 and veterans of the senate, the chair of the governmental 76.6 operations budget division of the senate, the chair of the 76.7 committee on governmental operations of the house of 76.8 representatives, and the chair of the state government finance 76.9 division of the house of representatives. 76.10 Sec. 75. [MANDATED PENSION COMMISSION STUDY; FIRST CLASS 76.11 CITY TEACHER RETIREMENT FUND CONSOLIDATION OPTIONS.] 76.12 (a) The legislative commission on pensions and retirement, 76.13 in consultation with the affected constituencies, shall study 76.14 the advantages and disadvantages of the restructuring or the 76.15 consolidation of the first class city teacher retirement fund 76.16 associations and the statewide teachers retirement association. 76.17 In its deliberations, the commission shall review the future 76.18 state funding needs of the Minneapolis employees retirement fund 76.19 and other applicable state pension funding resources. 76.20 (b) The report must be transmitted on or before January 31, 76.21 1998, to the chair of the committee on governmental operations 76.22 and veterans of the senate, the chair of the governmental 76.23 operations budget division of the senate, the chair of the 76.24 committee on governmental operations of the house of 76.25 representatives, and the chair of the state governmental finance 76.26 division of the house of representatives. 76.27 Sec. 76. [TERMINATION DATE; CERTAIN TEACHERS.] 76.28 Notwithstanding Minnesota Statutes, section 354.44, 76.29 subdivision 4, for purposes of eligibility for retirement 76.30 benefits from the teachers retirement association, the 76.31 termination date of a teacher terminating active teaching 76.32 service at the end of the school year in a school where the 76.33 school year was disrupted or extended by flooding during the 76.34 first half of calendar year 1997 or by fire damage or fire loss 76.35 to school buildings or facilities during the 1996-1997 school 76.36 year must be determined by the closing date of the school 77.1 calendar in effect immediately before the flooding or in effect 77.2 immediately before the fire. 77.3 Sec. 77. [POLICE STATE AID ADJUSTMENT.] 77.4 The legislature determines that the total employer 77.5 contributions paid to the public employees police and fire fund 77.6 for calendar year 1995, as certified to the commissioner of 77.7 revenue by the public employees retirement association in August 77.8 1996 for determining the amount of police state aid to be 77.9 distributed in September 1996, were overstated for some of the 77.10 counties and cities and understated for other counties and 77.11 cities. The executive director of the public employees 77.12 retirement association shall certify to the commissioner of 77.13 revenue the amount of the overstated or understated 1995 77.14 calendar year employer contributions paid to the public 77.15 employees police and fire fund by each county and city; and the 77.16 commissioner of revenue shall adjust the October 1997 police 77.17 state aid distributions by the applicable amount of overpaid or 77.18 underpaid police state aid distributed in September 1996. 77.19 The estimated net adjustment for police state aid in the 77.20 fiscal year ending June 30, 1998, is $1,835,000. The expected 77.21 net reduction to future police state aid expenditures resulting 77.22 from this adjustment is 6.5 percent less each year. 77.23 Sec. 78. [REPEALER.] 77.24 (a) Minnesota Statutes 1996, sections 124.195, subdivision 77.25 12; 124.2139; 356.70; and 356.88, subdivision 2, are repealed. 77.26 (b) Minnesota Statutes 1996, sections 353C.01; 353C.02; 77.27 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 77.28 and 353C.10, are repealed. 77.29 Sec. 79. [EFFECTIVE DATES.] 77.30 Sections 38 and 39 are effective the first full pay period 77.31 after December 31, 1997. Sections 17, 18, 21, 22, 29, and 30 77.32 are effective the first full pay period after June 30, 1997. 77.33 Sections 48, 49, and 50 are effective for all salary paid July 77.34 1, 1997, or later. Sections 1 to 16, 19, 20, 23 to 28, 31 to 77.35 36, 37, 40 to 47, 51 to 67, 69 to 75, 77, and 78 are effective 77.36 July 1, 1997. Sections 68 and 76 are effective the day 78.1 following final enactment. 78.2 ARTICLE 2 78.3 LEGISLATORS AND CONSTITUTIONAL OFFICERS 78.4 Section 1. Minnesota Statutes 1996, section 3A.07, is 78.5 amended to read: 78.6 3A.07 [APPLICATION.] 78.7 (a) Except as provided in paragraph (b), this chapter 78.8 applies to members of the legislature in serviceuponafter July 78.9 1, 1965,or thereafter,who otherwise meet the requirements of 78.10 this chapter. 78.11 (b) Members of the legislature who were elected for the 78.12 first time after June 30, 1997, or members of the legislature 78.13 who were elected before July 1, 1997, and who, after July 1, 78.14 1998, elect not to be members of the plan established by this 78.15 chapter are covered by the unclassified employees retirement 78.16 program governed by chapter 352D. 78.17 (c) The post-July 1, 1998, coverage election under 78.18 paragraph (b) is irrevocable and must be made on a form 78.19 prescribed by the director. 78.20 Sec. 2. [352C.011] [APPLICABILITY.] 78.21 (a) Except as provided in paragraph (b), this chapter 78.22 applies only to constitutional officers first elected before 78.23 July 1, 1997, to a constitutional office. 78.24 (b) Constitutional officers elected for the first time to a 78.25 constitutional office after June 30, 1997, or constitutional 78.26 officers who were elected before July 1, 1997, and who, after 78.27 July 1, 1998, elect not to be members of the plan established by 78.28 this chapter are covered by the unclassified employees 78.29 retirement program governed by chapter 352D. 78.30 (c) The post-July 1, 1998, coverage election under 78.31 paragraph (b) is irrevocable and must be made on a form 78.32 prescribed by the executive director of the Minnesota state 78.33 retirement system. 78.34 Sec. 3. Minnesota Statutes 1996, section 352D.02, 78.35 subdivision 1, is amended to read: 78.36 Subdivision 1. [COVERAGE.] (a) Employees enumerated in 79.1 paragraph(b)(c), clauses 2, 3, 4, and 6 to 15, if they are in 79.2 the unclassified service of the state or metropolitan council 79.3 and are eligible for coverage under the general state employees 79.4 retirement plan under chapter 352, are participants in the 79.5 unclassified program under this chapter unless the employee 79.6 gives notice to the executive director of the Minnesota state 79.7 retirement system within one year following the commencement of 79.8 employment in the unclassified service that the employee desires 79.9 coverage under the general state employees retirement plan. For 79.10 the purposes of this chapter, an employee who does not file 79.11 notice with the executive director is deemed to have exercised 79.12 the option to participate in the unclassified plan. 79.13 (b) Persons referenced in paragraph (c), clauses (1) and 79.14 (5), are participants in the unclassified program under this 79.15 chapter unless the person is eligible to elect different 79.16 coverage under section 3A.07 or 352C.011 and, after July 1, 79.17 1998, elects retirement coverage by the applicable alternative 79.18 retirement plan. 79.19 (c) Enumerated employees and referenced persons are: 79.20 (1) the governor, the lieutenant governor, the secretary of 79.21 state, the state auditor, the state treasurer, and the attorney 79.22 general; 79.23 (2) an employee in the office of the governor, lieutenant 79.24 governor, secretary of state, state auditor, state treasurer, 79.25 attorney general, or; 79.26 (3) an employee of the state board of investment; 79.27(2)(4) the head of a department, division, or agency 79.28 created by statute in the unclassified service, an acting 79.29 department head subsequently appointed to the position, or an 79.30 employee enumerated in section 15A.081, subdivision 1 or 79.31 15A.083, subdivision 4; 79.32(3)(5) a member of the legislature; 79.33 (6) a permanent, full-time unclassified employee of the 79.34 legislature or a commission or agency of the legislature or a 79.35 temporary legislative employee having shares in the supplemental 79.36 retirement fund as a result of former employment covered by this 80.1 chapter, whether or not eligible for coverage under the 80.2 Minnesota state retirement system; 80.3(4)(7) a person who is employed in a position established 80.4 under section 43A.08, subdivision 1, clause (3), or in a 80.5 position authorized under a statute creating or establishing a 80.6 department or agency of the state, which is at the deputy or 80.7 assistant head of department or agency or director level; 80.8(5)(8) the regional administrator, or executive director 80.9 of the metropolitan council, general counsel, division 80.10 directors, operations managers, and other positions as 80.11 designated by the council, all of which may not exceed 27 80.12 positions at the council and the chair, provided that upon 80.13 initial designation of all positions provided for in this 80.14 clause, no further designations or redesignations may be made 80.15 without approval of the board of directors of the Minnesota 80.16 state retirement system; 80.17(6)(9) the executive director, associate executive 80.18 director, and not to exceed nine positions of the higher 80.19 education services office in the unclassified service, as 80.20 designated by the higher education services office before 80.21 January 1, 1992, or subsequently redesignated with the approval 80.22 of the board of directors of the Minnesota state retirement 80.23 system, unless the person has elected coverage by the individual 80.24 retirement account plan under chapter 354B; 80.25(7)(10) the clerk of the appellate courts appointed under 80.26 article VI, section 2, of the Constitution of the state of 80.27 Minnesota; 80.28(8)(11) the chief executive officers of correctional 80.29 facilities operated by the department of corrections and of 80.30 hospitals and nursing homes operated by the department of human 80.31 services; 80.32(9)(12) an employee whose principal employment is at the 80.33 state ceremonial house; 80.34(10)(13) an employee of the Minnesota educational 80.35 computing corporation; 80.36(11)(14) an employee of the world trade center board; and 81.1(12)(15) an employee of the state lottery board who is 81.2 covered by the managerial plan established under section 43A.18, 81.3 subdivision 3. 81.4 Sec. 4. Minnesota Statutes 1996, section 352D.02, 81.5 subdivision 2, is amended to read: 81.6 Subd. 2. [COVERAGE UPON EMPLOYMENT CHANGE.] A person 81.7 becoming a participant in the unclassified program by virtue of 81.8 employment in a position specified in subdivision 1, 81.9 clause(2)(4) and remaining in the unclassified service shall 81.10 remain a participant in the program even though the position the 81.11 person occupies is deleted from any of the sections referenced 81.12 in subdivision 1, clause(2)(4) by subsequent amendment, except 81.13 that a person shall not be eligible to elect the unclassified 81.14 program after separation from unclassified service if on the 81.15 return of the person to service, that position is not specified 81.16 in subdivision 1, clause(2)(4). Any person employed in a 81.17 position specified in subdivision 1 shall cease to participate 81.18 in the unclassified program in the event the position is placed 81.19 in the classified service. 81.20 Sec. 5. Minnesota Statutes 1996, section 352D.04, 81.21 subdivision 1, is amended to read: 81.22 Subdivision 1. [INVESTMENT OPTIONS.] (a)An employeeA 81.23 person exercising an option to participate in the retirement 81.24 program provided by this chapter may elect to purchase shares in 81.25 one or a combination of the income share account, the growth 81.26 share account, the international share account, the money market 81.27 account, the bond market account, the fixed interest account, or 81.28 the common stock index account established in section 11A.17. 81.29 Theemployeeperson may elect to participate in one or more of 81.30 the investment accounts in the fund by specifying, on a form 81.31 provided by the executive director, the percentage of 81.32 theemployee'sperson's contributions provided in subdivision 2 81.33 to be used to purchase shares in each of the accounts. 81.34 (b) A participant may indicate in writing on forms provided 81.35 by the Minnesota state retirement system a choice of options for 81.36 subsequent purchases of shares. Until a different written 82.1 indication is made by the participant, the executive director 82.2 shall purchase shares in the supplemental fund as selected by 82.3 the participant. If no initial option is chosen, 100 percent 82.4 income shares must be purchased for a participant. A change in 82.5 choice of investment option is effective no later than the first 82.6 pay date first occurring after 30 days following the receipt of 82.7 the request for a change. 82.8 (c) Shares in the fixed interest account attributable to 82.9 any guaranteed investment contract as of July 1, 1994, may not 82.10 be withdrawn from the fund or transferred to another account 82.11 until the guaranteed investment contract has expired, unless the 82.12 participant qualifies for withdrawal under section 352D.05 or 82.13 for benefit payments under sections 352D.06 to 352D.075. 82.14 (d) A participant or former participant may also change the 82.15 investment options selected for all or a portion of the 82.16 participant's shares previously purchased in accounts, subject 82.17 to the provisions of paragraph (c) concerning the fixed interest 82.18 account. Changes in investment options for the participant's 82.19 shares must be effected as soon as cash flow to an account 82.20 practically permits, but not later than six months after the 82.21 requested change. 82.22 Sec. 6. Minnesota Statutes 1996, section 352D.04, 82.23 subdivision 2, is amended to read: 82.24 Subd. 2. [CONTRIBUTION RATES.] (a) Themoneysmoney used 82.25 to purchase shares under this sectionshall beis the employee 82.26 and employer contributions provided in this subdivision. 82.27(a)(b) The employee contributionshall beis an amount 82.28 equal to the employee contribution specified in section 352.04, 82.29 subdivision 2. 82.30(b)(c) The employer contributionshall beis an amount 82.31 equal to six percent of salary. 82.32 (d) These contributionsshallmust be madeby deduction82.33from salaryin the manner provided in section 352.04, 82.34 subdivisions 4, 5, and 6. 82.35 (e) For members of the legislature, the contributions under 82.36 this subdivision also must be made on per diem payments received 83.1 during a regular or special legislative session, but may not be 83.2 made on per diem payments received outside of a regular or 83.3 special legislative session, on the additional compensation 83.4 attributable to a leadership position under section 3.099, 83.5 subdivision 3, living expense payments under section 3.101, or 83.6 special session living expense payments under section 3.103. 83.7 Sec. 7. [355.621] [LEGISLATORS AND CONSTITUTIONAL 83.8 OFFICERS; SOCIAL SECURITY COVERAGE REFERENDUM.] 83.9 Subdivision 1. [DEFINITIONS GENERALLY.] For the purposes 83.10 of sections 7 to 14, each of the terms defined in this section 83.11 has the indicated meaning. 83.12 Subd. 2. [ENABLING ACT.] "Enabling act" means sections 83.13 355.01 to 355.07. 83.14 Subd. 3. [LEGISLATOR.] "Legislator" means a member of the 83.15 legislature duly elected and sworn into office. 83.16 Subd. 4. [CONSTITUTIONAL OFFICER.] "Constitutional officer" 83.17 means the governor, the lieutenant governor, the attorney 83.18 general, the secretary of state, the state auditor, and the 83.19 state treasurer duly elected and sworn into office. 83.20 Subd. 5. [ADDITIONAL TERMS.] The terms "social security 83.21 act," "state agency," "employment," "wages," "contribution 83.22 fund," "federal insurance contributions act," and "political 83.23 subdivision" each have the meaning ascribed in the enabling act. 83.24 Sec. 8. [355.622] [REFERENDUM.] 83.25 Under the enabling act, the governor shall designate an 83.26 agency or individual to supervise a referendum to be held after 83.27 July 1, 1998, in accordance with provisions of section 83.28 218(d)(6)(c) of the Social Security Act, for legislators and for 83.29 constitutional officers. 83.30 Sec. 9. [355.623] [NOTICE OF REFERENDUM.] 83.31 The notice of referendum required by section 218(d) of the 83.32 Social Security Act that is to be provided to legislators and to 83.33 constitutional officers must contain a statement of the rights 83.34 which accrue under the Social Security Act. The statement must 83.35 be in the form that the agency or individual designated to 83.36 supervise the referendum deems necessary and sufficient to 84.1 inform legislators and constitutional officers of their Social 84.2 Security Act rights. The statement must also inform the 84.3 legislators and constitutional officers of the effect that 84.4 social security coverage will have on their future public 84.5 retirement coverage. 84.6 Sec. 10. [355.624] [DIVISION OF THE LEGISLATORS RETIREMENT 84.7 PLAN AND THE ELECTIVE STATE OFFICERS RETIREMENT PLAN.] 84.8 (a) In accord with section 218(d)(6)(c) of the Social 84.9 Security Act, the state agency shall divide the legislators 84.10 retirement plan into two parts or divisions and shall divide the 84.11 elective state officers retirement plan into two parts or 84.12 divisions. 84.13 (b) One division or part of the legislators retirement plan 84.14 must be composed of legislators who desire coverage under an 84.15 agreement under section 218(d) of the Social Security Act, and 84.16 those legislators must have their future public pension plan 84.17 coverage under chapter 352D. Also included in this division or 84.18 part are legislators who are elected after July 1, 1997. The 84.19 other division or part of the legislators retirement plan must 84.20 be composed of legislators who do not desire coverage under an 84.21 agreement under section 218(d) of the Social Security Act, and 84.22 those legislators must have their future public pension plan 84.23 coverage under chapter 3A. 84.24 (c) One division or part of the elective state officers 84.25 retirement plan must be composed of constitutional officers who 84.26 desire coverage under an agreement under section 218(d) of the 84.27 Social Security Act, and those constitutional officers must have 84.28 their future public pension plan coverage under chapter 352D. 84.29 Also included in this division or part are constitutional 84.30 officers who are elected after July 1, 1997. The other division 84.31 or part of the elective state officers retirement plan must be 84.32 composed of constitutional officers who do not desire coverage 84.33 under an agreement under section 218(d) of the Social Security 84.34 Act, and those constitutional officers must have their future 84.35 public pension plan coverage under chapter 352C. 84.36 Sec. 11. [355.625] [TRANSFER OF MEMBERS.] 85.1 In accord with section 218(d)(6)(f) of the Social Security 85.2 Act and when the legislators retirement plan or the elective 85.3 state officers retirement plan, whichever applies, is divided 85.4 into two parts or divisions, a legislator or constitutional 85.5 officer who does not desire coverage under an agreement under 85.6 section 218(d) of the Social Security Act may be transferred to 85.7 the other part or division if the agreement with the federal 85.8 Department of Health and Human Services so provides and if the 85.9 legislator or constitutional officer files with the state agency 85.10 a written request for the transfer. 85.11 Sec. 12. [355.626] [CERTIFICATION BY GOVERNOR.] 85.12 If the governor receives satisfactory evidence that the 85.13 conditions specified in section 218(d)(7) of the Social Security 85.14 Act have been met with respect to the legislators retirement 85.15 plan or the elective state officers retirement plan, whichever 85.16 applies, the governor shall so certify to the secretary of the 85.17 federal Department of Health and Human Services. 85.18 Sec. 13. [355.627] [AGREEMENTS WITH FEDERAL AGENCY.] 85.19 Upon the governor's certification under section 12, the 85.20 state agency, with the approval of the governor, is authorized 85.21 after June 30, 1998, to enter into or modify an agreement with 85.22 the secretary of the federal Department of Health and Human 85.23 Services with respect to legislators or constitutional officers, 85.24 whichever applies. 85.25 Sec. 14. [355.628] [SOCIAL SECURITY CONTRIBUTIONS.] 85.26 Subdivision 1. [EMPLOYER CONTRIBUTIONS.] Employer 85.27 contributions required under the agreement or modification under 85.28 section 13 and payments required by section 355.49 must be paid 85.29 by the senate, the house of representatives, or the relevant 85.30 constitutional office, whichever applies. 85.31 Subd. 2. [EMPLOYEE CONTRIBUTIONS; DEDUCTION FROM 85.32 WAGES.] (a) After the date on which the agreement or 85.33 modification under section 13 is executed, there must be paid as 85.34 a deduction from wages an employee contribution by legislators 85.35 or constitutional officers in an amount equal to the tax that 85.36 would be imposed by the Federal Insurance Contribution Act if 86.1 the service constituted employment within the meaning of the act. 86.2 (b) Contributions made under this subdivision must be paid 86.3 into the contribution fund in partial discharge of the employer 86.4 liability for social security coverage. 86.5 (c) A failure to deduct employee contributions does not 86.6 relieve the legislator or constitutional officer or the senate, 86.7 the house of representatives, or the relevant constitutional 86.8 office of the liability to make the contribution. 86.9 Sec. 15. [COVERAGE ELECTION.] 86.10 (a) Members of the legislature who were members of the 86.11 legislators retirement plan on the effective date of this 86.12 section and constitutional officers who were members of the 86.13 elective state officers retirement plan on the effective date of 86.14 this section may elect coverage by the unclassified employees 86.15 retirement program governed by Minnesota Statutes, chapter 352D, 86.16 instead of the prior retirement coverage, as part of the social 86.17 security referendum under section 10. 86.18 (b) The election of a retirement coverage change applies 86.19 only to prospective service as a member of the legislature or a 86.20 constitutional officer. The election must be made in 86.21 conjunction with the referendum selection under section 10. A 86.22 member of the legislature or a constitutional officer who elects 86.23 a retirement coverage change under this section is entitled to 86.24 an augmented deferred retirement annuity under Minnesota 86.25 Statutes, section 3A.02, subdivisions 1 and 4, or Minnesota 86.26 Statutes, sections 352C.031 and 352C.033, whichever applies, 86.27 notwithstanding any provision of law to the contrary. 86.28 (c) A member of the legislature or a constitutional officer 86.29 who elects a retirement coverage change under this section is 86.30 not entitled to a refund under Minnesota Statutes, section 86.31 3A.03, subdivision 2, or 352C.09, subdivision 2, whichever 86.32 applies, until the person terminates service as a member of the 86.33 legislature or a constitutional officer. 86.34 Sec. 16. [STUDY OF LEGISLATORS AND CONSTITUTIONAL OFFICER 86.35 PENSION COVERAGE.] 86.36 Subdivision 1. [STUDY MANDATE.] The legislative commission 87.1 on pensions and retirement shall study the issue of the 87.2 appropriate pension coverage for legislators and for 87.3 constitutional officers during the 1997-1998 interim. 87.4 Subd. 2. [STUDY CONTENTS.] At a minimum, the commission 87.5 must study the following: 87.6 (1) the appropriate member contribution rates to the 87.7 legislators retirement plan and the elective state officers 87.8 retirement plan and their adequacy in funding the normal cost 87.9 and administrative expenses of the applicable plan in comparison 87.10 to other public pension plans; 87.11 (2) the appropriateness of including new legislators and 87.12 constitutional officers and of including current legislators and 87.13 constitutional officers in coverage by the social security 87.14 program and the necessary adaptations to the defined 87.15 contribution plan coverage established in section 3 and the 87.16 legislators retirement plan established in Minnesota Statutes, 87.17 chapter 3A, or the elective state officers retirement plan 87.18 established in Minnesota Statutes, chapter 352C, to supplement 87.19 that coverage; and 87.20 (3) the appropriateness of permitting current legislators 87.21 and current constitutional officers to elect the defined 87.22 contribution plan coverage established in section 3 for future 87.23 service and the impact of the election on past service credit 87.24 under Minnesota Statutes, chapter 3A, or Minnesota Statutes, 87.25 chapter 352C. 87.26 Subd. 3. [STUDY PRINCIPLES.] The study must reflect the 87.27 following principles: 87.28 (1) to the extent practicable, the public pension plan 87.29 coverage to be provided to legislators and constitutional 87.30 officers should match or parallel the pension coverage provided 87.31 to legislative employees and agency heads; 87.32 (2) the public pension plan coverage to be provided to 87.33 legislators and constitutional officers may appropriately 87.34 reflect the part-time nature of legislative service for many 87.35 legislators and the unique character of elected public service 87.36 for other legislators and for constitutional officers; and 88.1 (3) the public pension coverage ultimately provided to 88.2 legislators and constitutional officers should conform with the 88.3 applicable provisions of the principles of pension policy of the 88.4 commission. 88.5 Subd. 4. [STUDY RESULTS.] The results of the study should 88.6 include any applicable proposed legislation, including, but not 88.7 limited to, amending or repealing, in whole or in part, sections 88.8 1 to 15. 88.9 Subd. 5. [REPORT.] The study and any recommended proposed 88.10 legislation must be reported to the 1998 legislative session. 88.11 Sec. 17. [EFFECTIVE DATE.] 88.12 Sections 1 to 6 and 16 are effective July 1, 1997. 88.13 Sections 7 to 15 are effective July 1, 1998. 88.14 ARTICLE 3 88.15 FIRST CLASS CITY TEACHER RETIREMENT FUNDS 88.16 Section 1. Minnesota Statutes 1996, section 354A.011, 88.17 subdivision 15a, is amended to read: 88.18 Subd. 15a. [NORMAL RETIREMENT AGE.] "Normal retirement 88.19 age" means age 65 for a person who first became a member of the 88.20 coordinated program of the Minneapolis or St. Paul teachers 88.21 retirement fund association or the new law coordinated program 88.22 of the Duluth teachers retirement fund association or a member 88.23 of a pension fund listed in section 356.30, subdivision 3, 88.24 before July 1, 1989. For a person who first became a member of 88.25 the coordinated program of the Minneapolis or St. Paul teachers 88.26 retirement fund association or the new law coordinated program 88.27 of the Duluth teachers retirement fund association after June 88.28 30, 1989, normal retirement age means the higher of age 65 or 88.29 retirement age, as defined in United States Code, title 42, 88.30 section 416(l), as amended, but not to exceed age 66. For a 88.31 person who is a member of the basic program of the Minneapolis 88.32 or St. Paul teachers retirement fund association or the old law 88.33 coordinated program of the Duluth teachers retirement fund 88.34 association, normal retirement age means the age at which a 88.35 teacher becomes eligible for a normal retirement annuity 88.36 computed upon meeting the age and service requirements specified 89.1 in the applicable provisions of the articles of incorporation or 89.2 bylaws of the respective teachers retirement fund association. 89.3 Sec. 2. Minnesota Statutes 1996, section 354A.12, 89.4 subdivision 1, is amended to read: 89.5 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] The contribution 89.6 required to be paid by each member of a teachers retirement fund 89.7 association shall not be less than the percentage of total 89.8 salary specified below for the applicable association and 89.9 program: 89.10 Association and Program Percentage of 89.11 Total Salary 89.12 Duluth teachers retirement 89.13 association 89.14 old law and new law 89.15 coordinated programs 5.5 percent 89.16 Minneapolis teachers retirement 89.17 association 89.18 basic program 8.5 percent 89.19 coordinated program4.55.5 percent 89.20 St. Paul teachers retirement 89.21 association 89.22 basic program 8 percent 89.23 coordinated program4.55.5 percent 89.24 Contributions shall be made by deduction from salary and 89.25 must be remitted directly to the respective teachers retirement 89.26 fund association at least once each month. 89.27 Sec. 3. Minnesota Statutes 1996, section 354A.12, 89.28 subdivision 2a, is amended to read: 89.29 Subd. 2a. [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 89.30 RATES.] (a) The employing units shall make the following 89.31 employer contributions to teachers retirement fund associations: 89.32 (1) for any coordinated member of a teachers retirement 89.33 fund association in a city of the first class, the employing 89.34 unit shall pay the employer social security taxes in accordance 89.35 with section 355.46, subdivision 3, clause (b); 89.36 (2) for any coordinated member of one of the following 90.1 teachers retirement fund associations in a city of the first 90.2 class, the employing unit shall make a regular employer 90.3 contribution to the respective retirement fund association in an 90.4 amount equal to the designated percentage of the salary of the 90.5 coordinated member as provided below: 90.6 Duluth teachers retirement 90.7 fund association 4.50 percent 90.8 Minneapolis teachers retirement 90.9 fund association 4.50 percent 90.10 St. Paul teachers retirement 90.11 fund association 4.50 percent; 90.12 (3) for any basic member of one of the following teachers 90.13 retirement fund associations in a city of the first class, the 90.14 employing unit shall make a regular employer contribution to the 90.15 respective retirement fund in an amount equal to the designated 90.16 percentage of the salary of the basic member as provided below: 90.17 Minneapolis teachers retirement 90.18 fund association 8.50 percent 90.19 St. Paul teachers retirement 90.20 fund association 8.00 percent 90.21 (4) for a basic member of a teachers retirement fund 90.22 association in a city of the first class, the employing unit 90.23 shall make an additional employer contribution to the respective 90.24 fund in an amount equal to the designated percentage of the 90.25 salary of the basic member, as provided below: 90.26 Minneapolis teachers retirement 90.27 fund association 90.28 July 1, 1993 - June 30, 1994 4.85 percent 90.29 July 1, 1994, and thereafter 3.64 percent 90.30 St. Paul teachers retirement 90.31 fund association 90.32 July 1, 1993 - June 30, 1995 4.63 percent 90.33 July 1, 1995, and thereafter 3.64 percent 90.34 (5) for a coordinated member of a teachers retirement fund 90.35 association in a city of the first class, the employing unit 90.36 shall make an additional employer contribution to the respective 91.1 fund in an amount equal to the applicable percentage of the 91.2 coordinated member's salary, as provided below: 91.3 Duluth teachers retirement 91.4 fund association 1.29 percent 91.5 Minneapolis teachers retirement 91.6 fund association 91.7 July 1, 1993 - June 30, 1994 0.50 percent 91.8 July 1, 1994, and thereafter 3.64 percent 91.9 St. Paul teachers retirement 91.10 fund association 91.11 July 1, 1993 - June 30, 1994 0.50 percent 91.12 July 1, 1994 - June 30, 1995 1.50 percent 91.13 July 1,19951997, and thereafter3.6491.14 3.84 percent 91.15 (b) The regular and additional employer contributions must 91.16 be remitted directly to the respective teachers retirement fund 91.17 association at least once each month. Delinquent amounts are 91.18 payable with interest under the procedure in subdivision 1a. 91.19 (c) Payments of regular and additional employer 91.20 contributions for school district or technical college employees 91.21 who are paid from normal operating funds must be made from the 91.22 appropriate fund of the district or technical college. 91.23 Sec. 4. Minnesota Statutes 1996, section 354A.12, 91.24 subdivision 3a, is amended to read: 91.25 Subd. 3a. [SPECIAL DIRECT STATE AID TOST. PAULFIRST 91.26 CLASS CITY TEACHERS RETIREMENT FUNDASSOCIATIONASSOCIATIONS.] 91.27 (a) In fiscal year 1998, the state shall pay $4,827,000 to the 91.28 St. Paul teachers retirement fund association$500,000 in fiscal91.29year 1994, $17,954,000 to the Minneapolis teachers retirement 91.30 fund association, and $486,000 to the Duluth teachers retirement 91.31 fund association. In each subsequent fiscal year,the payment91.32 these payments to theSt. Paulfirst class city teachers 91.33 retirement fundassociationassociations must beincreased at91.34the same rate as the increase in the general education revenue91.35formula allowance under section 124A.22, subdivision 2, in91.36subsequent fiscal years$2,827,000 for St. Paul, $12,954,000 for 92.1 Minneapolis, and $486,000 for Duluth. 92.2 (b) The direct stateaid isaids under this subdivision are 92.3 payable October 1 annually. The commissioner of finance shall 92.4 pay the direct state aid. The amount required under this 92.5 subdivision is appropriated annually from the general fund to 92.6 the commissioner of finance. 92.7 Sec. 5. Minnesota Statutes 1996, section 354A.12, 92.8 subdivision 3b, is amended to read: 92.9 Subd. 3b. [SPECIAL DIRECT STATE MATCHING AID TO THE 92.10 MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special 92.11 school district No. 1 may make an additional employer 92.12 contribution to the Minneapolis teachers retirement fund 92.13 association. The city of Minneapolis may make a contribution to 92.14 the Minneapolis teachers retirement fund association. This 92.15 contribution may be made by a levy of the board of estimate and 92.16 taxation of the city of Minneapolis,and the levy, if made, is 92.17 classified as that of a special taxing district for purposes of 92.18 sections 275.065 and 276.04, and for all other property tax 92.19 purposes. 92.20 (b) For every $1,000 contributed in equal proportion by 92.21 special school district No. 1 and by the city of Minneapolis to 92.22 the Minneapolis teachers retirement fund association under 92.23 paragraph (a), the state shall pay to the Minneapolis teachers 92.24 retirement fund association $1,000, but not to exceed $2,500,000 92.25 in total in fiscal year 1994.The total amount available for92.26each subsequent fiscal year must be increased at the same rate92.27as the increase in the general education revenue formula92.28allowance under section 124A.22, subdivision 2, in subsequent92.29fiscal years.The superintendent of special school district No. 92.30 1, the mayor of the city of Minneapolis, and the executive 92.31 director of the Minneapolis teachers retirement fund association 92.32 shall jointly certify to the commissioner of finance the total 92.33 amount that has been contributed by special school district No. 92.34 1 and by the city of Minneapolis to the Minneapolis teachers 92.35 retirement fund association. Any certification to the 92.36 commissioner of children, families, and learning must be made 93.1 quarterly. If the total certifications for a fiscal year exceed 93.2 the maximum annual direct state matching aid amount in any 93.3 quarter, the amount of direct state matching aid payable to the 93.4 Minneapolis teachers retirement fund association must be limited 93.5 to the balance of the maximum annual direct state matching aid 93.6 amount available. The amount required under this paragraph, 93.7 subject to the maximum direct state matching aid amount, is 93.8 appropriated annually to the commissioner of finance. 93.9 (c) The commissioner of finance may prescribe the form of 93.10 the certifications required under paragraph (b). 93.11 Sec. 6. Minnesota Statutes 1996, section 354A.12, 93.12 subdivision 3c, is amended to read: 93.13 Subd. 3c. [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND 93.14 DIRECT MATCHING AND STATE AID.] (a) The supplemental 93.15 contributions payable to the Minneapolis teachers retirement 93.16 fund association by special school district No. 1 and the city 93.17 of Minneapolis under section 423A.02, subdivision 3, or to the 93.18 St. Paul teachers retirement fund association by independent 93.19 school district No. 625 under section 423A.02, subdivision 3, or 93.20 the direct stateaidaids under subdivision 3a to theSt. Paul93.21 first class city teachers retirementassociationassociations, 93.22 and the direct matching and state aid under subdivision 3b to 93.23 the Minneapolis teachers retirement fund associationterminates93.24 terminate for the respective fund at the end of the fiscal year 93.25 in which the accrued liability funding ratio for that fund, as 93.26 determined in the most recent actuarial report for that fund by 93.27 the actuary retained by the legislative commission on pensions 93.28 and retirement, equals or exceeds the accrued liability funding 93.29 ratio for the teachers retirement association, as determined in 93.30 the most recent actuarial report for the teachers retirement 93.31 association by the actuary retained by the legislative 93.32 commission on pensions and retirement. 93.33 (b) If the state direct matching, state supplemental, or 93.34 state aid is terminated forthe St. Paula first class city 93.35 teachers retirement fund associationor the Minneapolis teachers93.36retirement fund associationunder paragraph (a), it may not 94.1 again be received by that fund. 94.2 (c) If either the Minneapolis teachers retirement fund 94.3 association,orthe St. Paul teachers retirement fund 94.4 association, or the Duluth teachers retirement fund association 94.5 remain funded at less than the funding ratio applicable to the 94.6 teachers retirement association when the provisions of paragraph 94.7 (b) become effective, then any state aid not distributed to that 94.8 association must be immediately transferred to the other 94.9associationassociations in proportion to the relative sizes of 94.10 their unfunded actuarial accrued liabilities. 94.11 Sec. 7. [354A.29] [ST. PAUL TEACHERS RETIREMENT FUND 94.12 ASSOCIATION POSTRETIREMENT ADJUSTMENT.] 94.13 Subdivision 1. [ARTICLES OF INCORPORATION AND 94.14 BYLAWS.] Permission is granted for the St. Paul teachers 94.15 retirement fund association under Minnesota Statutes, section 94.16 354A.12, subdivision 4, to amend its articles of incorporation 94.17 and bylaws to provide postretirement adjustments under this 94.18 section. 94.19 Subd. 2. [ELIMINATION OF PRIOR LUMP SUM POSTRETIREMENT 94.20 ADJUSTMENT MECHANISM.] As a condition precedent to the 94.21 implementation of subdivisions 3 through 6, the lump sum 94.22 postretirement adjustment mechanism in effect on the date of 94.23 enactment of this section must be eliminated and the articles of 94.24 incorporation and bylaws of the association must be amended 94.25 accordingly. 94.26 Subd. 3. [POSTRETIREMENT ADJUSTMENT.] (a) The 94.27 postretirement adjustment described in the articles and bylaws 94.28 of the St. Paul teachers retirement fund association must be 94.29 determined by the board annually after June 30 using the 94.30 procedures under this section. 94.31 (b) Each eligible person who has been receiving an annuity 94.32 or benefit under the articles of incorporation, the bylaws, or 94.33 this chapter for at least 12 months as of the end of the fiscal 94.34 year is eligible to receive a postretirement adjustment of 2.0 94.35 percent that is payable each January 1. 94.36 Subd. 4. [ADDITIONAL INVESTMENT PERCENTAGE 95.1 ADJUSTMENT.] (a) An excess investment earnings percentage 95.2 adjustment must be computed and paid under this subdivision to 95.3 those annuitants and eligible benefit recipients who have been 95.4 receiving an annuity or benefit for at least 12 months as 95.5 determined each June 30 by the board of trustees. 95.6 (b) The board shall also determine the five-year annualized 95.7 rate of return attributable to the assets of the St. Paul 95.8 teachers retirement fund association under the formula specified 95.9 in section 11A.04, clause (11), and the amount of the excess 95.10 five-year annualized rate of return over the preretirement 95.11 interest assumption specified in Minnesota Statutes, section 95.12 356.215. 95.13 (c) The excess investment percentage adjustment must be 95.14 determined by multiplying the quantity one minus the rate of 95.15 contribution deficiency, as specified in the most recent 95.16 actuarial report of the actuary retained by the legislative 95.17 commission on pensions and retirement under section 356.215, by 95.18 the rate of return excess as determined in paragraph (b). 95.19 (d) The excess investment percentage adjustment is payable 95.20 to all annuitants and benefit recipients on the following 95.21 January 1. 95.22 Subd. 5. [EFFECT ON ANNUITY.] The adjustments calculated 95.23 under subdivisions 3 and 4 must be included in all annuities or 95.24 benefits paid to the recipient after the adjustments take effect. 95.25 Subd. 6. [LUMP SUM POSTRETIREMENT ADJUSTMENT 95.26 TRANSITION.] This subdivision applies to all annuitants and 95.27 beneficiaries of the association who received a lump sum 95.28 postretirement adjustment before the calculation of the first 95.29 postretirement adjustment under subdivisions 3 and 4. Before 95.30 the calculation of the first postretirement adjustment under 95.31 subdivisions 3 and 4, the annual retirement annuity must be 95.32 increased by the amount of the lump sum postretirement 95.33 adjustment described in the association bylaws and paid to the 95.34 annuitant or beneficiary in 1997 before the effective date of 95.35 this section or if the annuitant or beneficiary was not eligible 95.36 for a lump sum postretirement adjustment, then the annual 96.1 benefit paid to that annuitant or benefit recipient must be 96.2 increased by the cumulative percentage increase in the Consumer 96.3 Price Index for urban wage earners and clerical workers All 96.4 Items Index published by the United States Department of Labor, 96.5 Bureau of Labor Statistics, from the date of the initial receipt 96.6 of a retirement annuity or benefit of the person whose service 96.7 is the basis of the benefit to June 30, 1997. 96.8 Sec. 8. Minnesota Statutes 1996, section 354A.31, 96.9 subdivision 4, is amended to read: 96.10 Subd. 4. [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 96.11 ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 96.12 applies to the coordinated programs of the Minneapolis teachers 96.13 retirement fund association and the St. Paul teachers retirement 96.14 fund association. 96.15 (b) The normal coordinated retirement annuity shall be an 96.16 amount equal to a retiring coordinated member's average salary 96.17 multiplied by the retirement annuity formula percentage. 96.18 Average salary for purposes of this section shall mean an amount 96.19 equal to the average salary upon which contributions were made 96.20 for the highest five successive years of service credit, but 96.21 which shall not in any event include any more than the 96.22 equivalent of 60 monthly salary payments. Average salary must 96.23 be based upon all years of service credit if this service credit 96.24 is less than five years. 96.25 (c) This paragraph, in conjunction with subdivision 6, 96.26 applies to a person who first became a member or a member in a 96.27 pension fund listed in section 356.30, subdivision 3, before 96.28 July 1, 1989, unless paragraph (d), in conjunction with 96.29 subdivision 7, produces a higher annuity amount, in which case 96.30 paragraph (d) will apply. The retirement annuity formula 96.31 percentage for purposes of this paragraph isonethe percent 96.32 specified in section 356.19, subdivision 1, per year for each 96.33 year of coordinated service for the first ten years and1.5the 96.34 percent specified in section 356.19, subdivision 2, for each 96.35 year of coordinated service thereafter. 96.36 (d) This paragraph applies to a person who has become at 97.1 least 55 years old and who first becomes a member after June 30, 97.2 1989, and to any other member who has become at least 55 years 97.3 old and whose annuity amount, when calculated under this 97.4 paragraph and in conjunction with subdivision 7 is higher than 97.5 it is when calculated under paragraph (c), in conjunction with 97.6 the provisions of subdivision 6. The retirement annuity formula 97.7 percentage for purposes of this paragraph is1.5the percent 97.8 specified in section 356.19, subdivision 2, for each year of 97.9 coordinated service. 97.10 Sec. 9. Minnesota Statutes 1996, section 354A.31, 97.11 subdivision 4a, is amended to read: 97.12 Subd. 4a. [COMPUTATION OF THE NORMAL COORDINATED 97.13 RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 97.14 to the new law coordinated program of the Duluth teachers 97.15 retirement fund association. 97.16 (b) The normal coordinated retirement annuity is an amount 97.17 equal to a retiring coordinated member's average salary 97.18 multiplied by the retirement annuity formula percentage. 97.19 Average salary for purposes of this section means an amount 97.20 equal to the average salary upon which contributions were made 97.21 for the highest five successive years of service credit, but may 97.22 not in any event include any more than the equivalent of 60 97.23 monthly salary payments. Average salary must be based upon all 97.24 years of service credit if this service credit is less than five 97.25 years. 97.26 (c) This paragraph, in conjunction with subdivision 6, 97.27 applies to a person who first became a member or a member in a 97.28 pension fund listed in section 356.30, subdivision 3, before 97.29 July 1, 1989, unless paragraph (d), in conjunction with 97.30 subdivision 7, produces a higher annuity amount, in which case 97.31 paragraph (d) applies. The retirement annuity formula 97.32 percentage for purposes of this paragraph is1.13the percent 97.33 specified in section 356.19, subdivision 1, per year for each 97.34 year of coordinated service for the first ten years and1.63the 97.35 percent specified in section 356.19, subdivision 2, for each 97.36 subsequent year of coordinated service. 98.1 (d) This paragraph applies to a person who is at least 55 98.2 years old and who first becomes a member after June 30, 1989, 98.3 and to any other member who is at least 55 years old and whose 98.4 annuity amount, when calculated under this paragraph and in 98.5 conjunction with subdivision 7, is higher than it is when 98.6 calculated under paragraph (c) in conjunction with subdivision 98.7 6. The retirement annuity formula percentage for purposes of 98.8 this paragraph is1.63the percent specified in section 356.19, 98.9 subdivision 2, for each year of coordinated service. 98.10 Sec. 10. Laws 1979, chapter 109, section 1, as amended by 98.11 Laws 1981, chapter 157, section 1, is amended to read: 98.12 Section 1. Authorization is hereby granted in accordance 98.13 with Minnesota Statutes, Section 354A.12, for the St. Paul 98.14 teachers retirement fund association to amend its bylaws as 98.15 follows: 98.16 (1)Paragraph 9 of Section 3 of Article IV of the bylaws98.17may be amended to provide a lump sum payment to annuitants and98.18survivor benefit recipients who have been receiving annuities or98.19benefits for at least three years, payable three months98.20following the end of a fiscal year. The payments shall only be98.21made if the investment income of the fund during the preceding98.22fiscal year was in excess of 5-1/2 percent of the asset value of98.23the fund at the end of that fiscal year. The amount that each98.24eligible annuitant or benefit recipient shall be entitled to98.25receive shall be determined as follows:98.26(a) The years of service of each annuitant as credited by98.27the fund and the years of service of each person on behalf of98.28whom a survivor benefit is paid as credited by the fund shall be98.29totaled;98.30(b) The dollar amount equal to one-half of one percent of98.31the asset value of the fund at the end of the previous fiscal98.32year shall be determined;98.33(c) The dollar amount determined pursuant to clause (b)98.34shall be divided by the aggregate years of credited service98.35totaled pursuant to clause (a), the result to be considered the98.36bonus figure per year of service credit;99.1(d) For each eligible annuitant and benefit recipient, the99.2payment shall be equal to the bonus figure per year of service99.3credit determined pursuant to clause (c) multiplied by each year99.4of service credited for that person by the fund.99.5(2)A new paragraph may be added to Section 2 of Article IV 99.6 of the bylaws to provide that any active member of the fund with 99.7 service credit prior to July 1, 1978 who elects in the social 99.8 security referendum to become a coordinated member shall be 99.9 entitled to a retirement annuity when otherwise qualified, the 99.10 calculation of which shall utilize the formula specified in Laws 99.11 1977, Chapter 429, Section 61 for that portion of credited 99.12 service which was served prior to July 1, 1978 and the new 99.13 coordinated formula specified in the bylaws for the remainder of 99.14 credited service, both applied to the average salary as 99.15 specified in Paragraph 2 of Section 1 of Article IX. The 99.16 formula percentages to be used in calculating the coordinated 99.17 portion of a retirement annuity on coordinated service shall 99.18 recognize the coordinated service as a continuation of any 99.19 service prior to July 1, 1978. 99.20(3)(2) Paragraph 5 of Section 3 of Article IV of the 99.21 bylaws in effect on June 1, 1978 may be amended to provide that 99.22 the recomputation of a disability benefit in an amount equal to 99.23 a service pension shall occur when the member attains the age of 99.24 60 years and shall be recomputed without any reduction for early 99.25 retirement, and that if the disability terminates prior to age 99.26 60 the member shall be eligible for benefits as provided in 99.27 Paragraph 1 of Section 3 of Article IV and the years of service 99.28 and final average salary accrued to disability termination date 99.29 would be used as provided in Paragraph 5 of Section 3 of Article 99.30 IV of the bylaws in effect June 1, 1978 and that Paragraph 3 of 99.31 Section 4 of Article IV be amended to conform to this provision. 99.32(4)(3) Article VIII of the bylaws in effect July 1, 1978 99.33 may be amended by adding a new section 5 providing augmentation 99.34 of benefits in the same manner as Minnesota Statutes 1978, 99.35 Section 354.55, Subdivision 11. 99.36 Sec. 11. [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 100.1 INCREASE FORMULAS.] 100.2 In accordance with Minnesota Statutes, section 354A.12, 100.3 subdivision 4, approval is granted for the Duluth teachers 100.4 retirement fund association to amend its articles of 100.5 incorporation or bylaws by increasing the formula percentage 100.6 used in computing annuities for old law coordinated program 100.7 members in the Duluth teachers retirement fund association to 100.8 1.45 percent for each year of credited service. 100.9 Sec. 12. [REPEALER.] 100.10 (a) Minnesota Statutes 1996, section 354A.12, subdivision 100.11 2b, is repealed. 100.12 (b) Laws 1985, chapter 259, section 3; and Laws 1993, 100.13 chapter 336, article 3, section 1, are repealed. 100.14 Sec. 13. [EFFECTIVE DATES.] 100.15 Sections 2 and 3 are effective for all salary paid on or 100.16 after July 1, 1997. Sections 1 and 4 to 12 are effective July 100.17 1, 1997. 100.18 ARTICLE 4 100.19 MINNEAPOLIS POLICE AND FIREFIGHTERS 100.20 Section 1. Minnesota Statutes 1996, section 423B.01, 100.21 subdivision 9, is amended to read: 100.22 Subd. 9. [EXCESS INVESTMENT INCOME.] "Excess investment 100.23 income" means the amount, if any, by which the average time 100.24 weighted total rate of return earned by the fund in the most 100.25 recent prior five fiscal years has exceeded the actual average 100.26 percentage increase in the current monthly salary of a first 100.27 grade patrol officer in the most recent prior five fiscal years 100.28 plus two percent, and must be expressed as a dollar amountand. 100.29 The amount may not exceed one percent of the total assets of the 100.30 fund, except when the actuarial value of assets of the fund 100.31 according to the most recent annual actuarial valuation prepared 100.32 in accordance with sections 356.215 and 356.216 is greater than 100.33 102 percent of its actuarial accrued liabilities, in which case 100.34 the amount must not exceed 1-1/2 percent of the total assets of 100.35 the fund, and does not exist unless the yearly average 100.36 percentage increase of the time weighted total rate of return of 101.1 the fund for the previous five years exceeds by two percent the 101.2 yearly average percentage increase in monthly salary of a first 101.3 grade patrol officer during the previous five calendar years. 101.4 Sec. 2. Minnesota Statutes 1996, section 423B.01 is 101.5 amended by adding a new subdivision to read: 101.6 Subd. 15. [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 101.7 or "actuarially equivalent" means the condition of one annuity 101.8 or benefit having an equal actuarial present value as another 101.9 annuity or benefit, determined as of a given date at a specified 101.10 age with each actuarial present value based on the appropriate 101.11 mortality table adopted by the board of directors based on the 101.12 experience of the fund and approved by the actuary retained by 101.13 the legislative commission on pensions and retirement and using 101.14 the applicable preretirement or postretirement interest rate 101.15 assumptions specified in section 356.216. 101.16 Sec. 3. Minnesota Statutes 1996, section 423B.06, is 101.17 amended by adding a subdivision to read: 101.18 Subd. 5. [TAX LEVY.] Notwithstanding any provision of 101.19 section 69.77 to the contrary, if in any year after the 101.20 actuarial value of assets of the fund according to the most 101.21 recent annual actuarial valuation prepared in accordance with 101.22 sections 356.215 and 356.216 is greater than 102 percent of the 101.23 actuarial accrued liabilities of the fund and subsequently the 101.24 actuarial value of assets are less than 100 percent of the 101.25 actuarial accrued liabilities, the city of Minneapolis is not 101.26 required to levy a property tax to amortize any unfunded 101.27 actuarial accrued liability unless the fund experiences two 101.28 successive years when the actuarial value of assets are less 101.29 than 100 percent of the actuarial accrued liabilities according 101.30 to the most recent annual actuarial valuation prepared in 101.31 accordance with sections 356.215 and 356.216. 101.32 Sec. 4. Minnesota Statutes 1996, section 423B.07, is 101.33 amended to read: 101.34 423B.07 [AUTHORIZED FUND DISBURSEMENTS.] 101.35 The police pension fund may be used only for the payment of: 101.36 (1) service, disability, or dependency pensions; 102.1 (2) notwithstanding a contrary provision of section 69.80, 102.2 the salary of the secretary of the association in an amount not 102.3 to exceed 30 percent of the base salary of a first grade patrol 102.4 officer, the salary of the president of the association in an 102.5 amount not to exceed ten percent of the base salary of a first 102.6 grade patrol officer, and the salaries of the other elected 102.7 members of the board of trustees in an amount not to exceed 102.8 three units; 102.9 (3) expenses of officers and employees of the association 102.10 in connection with the protection of the fund; 102.11 (4) expenses of operating and maintaining the association, 102.12 including the administrative expenses related to the 102.13 administration of the insurance plan authorized in section 102.14 423B.08; 102.15(5) support for hospital and medical insurance for102.16pensioners who have completed 20 years or more of service or102.17permanent disabilitants and surviving spouses of deceased active102.18members, disabilitants, or service pensioners who have completed102.1920 years or more of service in an amount equal to one unit per102.20month, to be added to the pension otherwise provided;102.21(6) health and welfare benefits of one unit per month in102.22addition to other benefits for members who retired after July 1,102.231980, and have completed 20 years or more of service or for102.24members who are permanent disabilitants;and 102.25(7)(5) other expenses authorized by section 69.80, or 102.26 other applicable law. 102.27 Sec. 5. Minnesota Statutes 1996, section 423B.09, 102.28 subdivision 1, is amended to read: 102.29 Subdivision 1. [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 102.30 RECEIVE PENSIONS.] The association shall grant pensions payable 102.31 from the police pension fund in monthly installments to persons 102.32 entitled to pensions in the manner and for the following 102.33 purposes. 102.34 (a) When the actuarial value of assets of the fund 102.35 according to the most recent annual actuarial valuation 102.36 performed in accordance with sections 356.215 and 356.216 is 103.1 less than 90 percent of the actuarial accrued liabilities, an 103.2 active member or a deferred pensioner who has performed duty as 103.3 a member of the police department of the city for five years or 103.4 more, upon written application after retiring from duty and 103.5 reaching at least age 50, is entitled to be paid monthly for 103.6 life a service pension equal to eight units. For full years of 103.7 service beyond five years, the service pension increases by 1.6 103.8 units for each full year, to a maximum of 40 units. When the 103.9 actuarial value of assets of the fund according to the most 103.10 recent annual actuarial valuation prepared in accordance with 103.11 sections 356.215 and 356.216 is greater than 90 percent of 103.12 actuarial accrued liabilities, active members, deferred members, 103.13 and service pensioners are entitled to a service pension 103.14 according to the following schedule: 103.15 5 years 8.0 units 103.16 6 years 9.6 units 103.17 7 years 11.2 units 103.18 8 years 12.8 units 103.19 9 years 14.4 units 103.20 10 years 16.0 units 103.21 11 years 17.6 units 103.22 12 years 19.2 units 103.23 13 years 20.8 units 103.24 14 years 22.4 units 103.25 15 years 24.0 units 103.26 16 years 25.6 units 103.27 17 years 27.2 units 103.28 18 years 28.8 units 103.29 19 years 30.4 units 103.30 20 years 34.0 units 103.31 21 years 35.6 units 103.32 22 years 37.2 units 103.33 23 years 38.8 units 103.34 24 years 40.4 units 103.35 25 years 42.0 units 103.36 Fractional years of service may not be used in computing 104.1 pensions. 104.2 (b) An active member who after five years' service but less 104.3 than 20 years' service with the police department of the city, 104.4 becomes superannuated so as to be permanently unable to perform 104.5 the person's assigned duties, is entitled to be paid monthly for 104.6 life a superannuation pension equal totwofour units for five 104.7 years of service and an additional two units for each full year 104.8 of service over five years and less than 20 years. 104.9 (c) An active member who is not eligible for a service 104.10 pension and who, while a member of the police department of the 104.11 city, becomes diseased or sustains an injury while in the 104.12 service that permanently unfits the member for the performance 104.13 of police duties is entitled to be paid monthly for life a 104.14 pension equal to3234 units while so disabled. 104.15 Sec. 6. Minnesota Statutes 1996, section 423B.09, is 104.16 amended by adding a subdivision to read: 104.17 Subd. 6. [OPTIONAL ANNUITIES.] A member who is retired or 104.18 disabled on the effective date of this subdivision may elect an 104.19 optional retirement annuity within 60 days of the effective date 104.20 instead of the normal retirement annuity. A member who retires 104.21 or becomes disabled after the effective date of this subdivision 104.22 may elect an optional retirement annuity prior to the receipt of 104.23 any benefits. The optional retirement annuity may be a 50 104.24 percent, a 75 percent, or a 100 percent joint and survivor 104.25 annuity without reinstatement in the event of the designated 104.26 beneficiary predeceasing the member or a 50 percent, a 75 104.27 percent, or a 100 percent joint and survivor annuity with 104.28 reinstatement in the event of the designated beneficiary 104.29 predeceasing the member. Optional retirement annuity forms must 104.30 be actuarially equivalent to the service pension and automatic 104.31 survivor coverage otherwise payable to the retiring member and 104.32 the member's beneficiaries. Once selected, the optional annuity 104.33 is irrevocable. 104.34 Sec. 7. Minnesota Statutes 1996, section 423B.10, 104.35 subdivision 1, is amended to read: 104.36 Subdivision 1. [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 105.1 surviving spouse of a deceased service pensioner, disability 105.2 pensioner, deferred pensioner, superannuation pensioner, or 105.3 active member, who was the legally married spouse of the 105.4 decedent, residing with the decedent, and who was married while 105.5 or before the time the decedent was on the payroll of the police 105.6 department, and who, if the deceased member was a service or 105.7 deferred pensioner, was legally married to the member for a 105.8 period of at least one year before retirement from the police 105.9 department, is entitled to a surviving spouse benefit. The 105.10 surviving spouse benefit is equal to2122 units per month if 105.11 the person is the surviving spouse of a deceased active member 105.12 or disabilitant. The surviving spouse benefit is equal to six 105.13 units per month, plus an additional one unit for each year of 105.14 service to the credit of the decedent in excess of five years, 105.15 to a maximum of2122 units per month, if the person is the 105.16 surviving spouse of a deceased service pensioner, deferred 105.17 pensioner, or superannuation pensioner. The surviving spouse 105.18 benefit is payable for the life of the surviving spouse. 105.19 (b) A surviving child of a deceased service pensioner, 105.20 disability pensioner, deferred pensioner, superannuation 105.21 pensioner, or active member, who was living while the decedent 105.22 was an active member of the police department or was born within 105.23 nine months after the decedent terminated active service in the 105.24 police department, is entitled to a surviving child benefit. 105.25 The surviving child benefit is equal to eight units per month if 105.26 the person is the surviving child of a deceased active member or 105.27 disabilitant. The surviving child benefit is equal to two units 105.28 per month, plus an additional four-tenths of one unit per month 105.29 for each year of service to the credit of the decedent in excess 105.30 of five years, to a maximum of eight units, if the person is the 105.31 surviving child of a deceased service pensioner, deferred 105.32 pensioner, or superannuation pensioner. The surviving child 105.33 benefit is payable until the person attains age 18, or, if in 105.34 full-time attendance during the normal school year, in a school 105.35 approved by the board of directors, until the person receives a 105.36 bachelor's degree or attains the age of 22 years, whichever 106.1 occurs first. In the event of the death of both parents leaving 106.2 a surviving child or children entitled to a surviving child 106.3 benefit as determined in this paragraph, the surviving child is, 106.4 or the surviving children are, entitled to a surviving child 106.5 benefit in such sums as determined by the board of directors to 106.6 be necessary for the care and education of such surviving child 106.7 or children, but not to exceed the family maximum benefit per 106.8 month, to the children of any one family. 106.9 (c) The surviving spouse and surviving child benefits are 106.10 subject to a family maximum benefit. The family maximum benefit 106.11 is4041 units per month. 106.12 (d) A surviving spouse who is otherwise not qualified may 106.13 receive a benefit if the surviving spouse was married to the 106.14 decedent for a period of five years and was residing with the 106.15 decedent at the time of death. The surviving spouse benefit is 106.16 the same as that provided in paragraph (a), except that if the 106.17 surviving spouse is younger than the decedent, the surviving 106.18 spouse benefit must be actuarially equivalent to a surviving 106.19 spouse benefit that would have been paid to the member's spouse 106.20 had the member been married to a person of the same age or a 106.21 greater age than the member's age before retirement. 106.22 Sec. 8. Minnesota Statutes 1996, section 423B.15, 106.23 subdivision 2, is amended to read: 106.24 Subd. 2. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 106.25 board of trustees of the relief association shall determine by 106.26 May 1 of each year whether or not the fund has excess investment 106.27 income. The amount of excess investment income, if any, must be 106.28 stated as a dollar amount and reported by the chief 106.29 administrative officer of the relief association to the mayor 106.30 and governing body of the city, the state auditor, the 106.31 commissioner of finance, and the executive director of the 106.32 legislative commission on pensions and retirement. The dollar 106.33 amount of excess investment income up to one percent of the 106.34 assets of the fund, except when the actuarial value of assets of 106.35 the fund according to the most recent annual actuarial valuation 106.36 prepared in accordance with sections 356.215 and 356.216 is 107.1 greater than 102 percent of its actuarial accrued liabilities in 107.2 which case the amount may not exceed 1-1/2 percent of the assets 107.3 of the fund, must be applied for the purpose specified in 107.4 subdivision 3. Excess investment income must not be considered 107.5 as income to or assets of the fund for actuarial valuations of 107.6 the fund for that year under sections 69.77, 356.215, and 107.7 356.216 and the provisions of this section except to offset the 107.8 annual postretirement payment. Additional investment income is 107.9 any realized or unrealized investment income other than the 107.10 excess investment income and must be included in the actuarial 107.11 valuations performed under sections 69.77, 356.215, and 356.216 107.12 and the provisions of this section. 107.13 Sec. 9. Minnesota Statutes 1996, section 423B.15, 107.14 subdivision 3, is amended to read: 107.15 Subd. 3. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 107.16 amount determined under subdivision 2 must be applied in 107.17 accordance with this subdivision. When the actuarial value of 107.18 assets of the fund according to the most recent annual actuarial 107.19 valuation prepared in accordance with sections 356.215 and 107.20 356.216 is less than 102 percent of its total actuarial 107.21 liabilities, the relief association shall apply the first 107.22 one-half of excess investment income to the payment of an annual 107.23 postretirement payment as specified in this subdivision.and the 107.24 second one-half of excess investment income up to one-half of 107.25 one percent of the assets of the fund must be applied to reduce 107.26 the state amortization state aid or supplementary amortization 107.27 state aid payments otherwise due to the relief association under 107.28 section 423A.02 for the current calendar year. When the 107.29 actuarial value of assets of the fund according to the most 107.30 recent annual actuarial valuation prepared in accordance with 107.31 sections 356.215 and 356.216 is less than 102 percent funded and 107.32 other conditions are met, the relief association shall pay an 107.33 annual postretirement payment to all eligible members in an 107.34 amount not to exceed one-half of one percent of the assets of 107.35 the fund. When the actuarial value of assets of the fund 107.36 according to the most recent annual actuarial valuation prepared 108.1 in accordance with sections 356.215 and 356.216 is greater than 108.2 102 percent of its actuarial accrued liabilities, the relief 108.3 association shall pay an annual postretirement payment to all 108.4 eligible members in an amount not to exceed 1-1/2 percent of the 108.5 assets of the fund. Payment of the annual postretirement 108.6 payment must be in a lump sum amount on June 1 following the 108.7 determination date in any year. Payment of the annual 108.8 postretirement payment may be made only if the average time 108.9 weighted total rate of return for the most recent prior five 108.10 years exceeds by two percent the actual average percentage 108.11 increase in the current monthly salary of a top grade patrol 108.12 officer in the most recent prior five fiscal years. The total 108.13 amount of all payments to members may not exceed the amount 108.14 determined under this subdivision. Payment to each eligible 108.15 member must be calculated by dividing the total number of 108.16 pension units to which eligible members are entitled into the 108.17 excess investment income available for distribution to members, 108.18 and then multiplying that result by the number of units to which 108.19 each eligible member is entitled to determine each eligible 108.20 member's annual postretirement payment. When the actuarial 108.21 value of assets of the fund according to the most recent annual 108.22 actuarial valuation prepared in accordance with sections 356.215 108.23 and 356.216 is less than 102 percent of its actuarial accrued 108.24 liabilities, payment to each eligible member may not exceed an 108.25 amount equal to the total monthly benefit that the eligible 108.26 member was entitled to in the prior year under the terms of the 108.27 benefit plan of the relief association or each eligible member's 108.28 proportionate share of the excess investment income, whichever 108.29 is less. When the actuarial value of assets of the fund 108.30 according to the most recent annual actuarial valuation prepared 108.31 in accordance with sections 356.215 and 356.216 is greater than 108.32 102 percent of its actuarial accrued liabilities, payment to 108.33 each eligible member must not exceed the member's proportionate 108.34 share of 1-1/2 percent of the assets of the fund. 108.35 A person who received a pension or benefit for the entire 108.36 12 months before the determination date is eligible for a full 109.1 annual postretirement payment. A person who received a pension 109.2 or benefit for less than 12 months before the determination date 109.3 is eligible for a prorated annual postretirement payment. 109.4 Sec. 10. Minnesota Statutes 1996, section 423B.15, 109.5 subdivision 6, is amended to read: 109.6 Subd. 6. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 109.7 No provision of or payment made under this section may be 109.8 interpreted or relied upon by any member of the relief 109.9 association to guarantee or entitle a member to annual 109.10 postretirement payments for a period when no excess investment 109.11 income is earned by the fund. If the actuarial value of assets 109.12 of the fund according to the most recent annual actuarial 109.13 valuation prepared in accordance with sections 356.215 and 109.14 356.216 is less than 102 percent of its actuarial accrued 109.15 liabilities, the distribution of assets under this section must 109.16 not exceed one-half of one percent. 109.17 Sec. 11. Minnesota Statutes 1996, section 423B.15, is 109.18 amended by adding a subdivision to read: 109.19 Subd. 7. [ANNUAL ACTUARIAL VALUATION DATE.] 109.20 Notwithstanding any provision of section 69.77, subdivision 2h, 109.21 356.215 or 356.216 to the contrary, the annual actuarial 109.22 valuation of the fund must be completed by May 1 of each year. 109.23 Sec. 12. Laws 1965, chapter 519, section 1, as amended by 109.24 Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, 109.25 section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 109.26 164, section 2; Laws 1990, chapter 589, article 1, section 5; 109.27 Laws 1992, chapter 454, section 2; and Laws 1994, chapter 591, 109.28 article 1, section 1, is amended to read: 109.29 Section 1. [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF 109.30 ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding 109.31 the provisions of Minnesota Statutes 1965, Section 69.48, to the 109.32 contrary, when a service pensioner, disability pensioner, or 109.33 deferred pensioner, or an active member of a relief association 109.34 dies, leaving: 109.35 (1) A surviving spouse who was a legally married spouse, 109.36 residing with the decedent, and who was married while or prior 110.1 to the time the decedent was on the payroll of the fire 110.2 department in the case of a deceased active member; and who, in 110.3 case the deceased member was a service or deferred pensioner was 110.4 legally married to the member at least five years before death; 110.5 or 110.6 (2) A child or children who were living while the deceased 110.7 was on the payroll of the fire department, or born within nine 110.8 months after the decedent was withdrawn from the payroll of the 110.9 fire department, the surviving spouse and the child or children 110.10 shall be entitled to a pension or pensions, as follows: 110.11 (a) To the surviving spouse, a pension of not less than 17 110.12 units, and not to exceed the total of 22 units per month, as the 110.13 bylaws of the association provide, for life;provided, that if110.14the spouse shall remarry then the pension shall cease and110.15terminate as of the date of remarriage; provided, further, if110.16the remarriage terminates for any reason, the surviving spouse110.17shall again be entitled to a pension as the bylaws of the110.18association provide;110.19 (b) To the child or children, if their other parent is 110.20 living, a pension of not to exceed eight units per month for 110.21 each child up to the time each child reaches the age of not less 110.22 than 16 years and not to exceed an age of 18 years; provided, 110.23 however, upon approval by the board of trustees, such a child 110.24 who is a full-time student, upon proof of compliance with the 110.25 provisions of this act, may be entitled to such pension so long 110.26 as the child is a full-time student and has not reached 22 years 110.27 of age, all in conformity with the bylaws of the association; 110.28 provided, further, the total pensions hereunder for the 110.29 surviving spouse and children of the deceased member shall not 110.30 exceed the sum of 41 units per month; 110.31 (c) A child or children of a deceased member after the 110.32 death of their other parent, or in the event their other parent 110.33 predeceases the member, be entitled to receive a pension or 110.34 pensions in such amount as the board of trustees of the 110.35 association shall deem necessary to properly support the child 110.36 or children until they reach the age of not less than 16 and not 111.1 more than 18 years; provided, however, upon approval by the 111.2 board of trustees, such a child who is a full-time student, upon 111.3 proof of compliance with the provisions of this act, may be 111.4 entitled to such pension so long as the child is a full-time 111.5 student and has not reached 22 years of age, as the bylaws of 111.6 the association may provide; but the total amount of the pension 111.7 or pensions hereunder for any child or children shall not exceed 111.8 the sum of 41 units per month; 111.9 (d) For the purposes of this act, a full-time student is 111.10 defined as an individual who is in full-time attendance as a 111.11 student at an educational institution. Whether or not the 111.12 student was in full-time attendance would be determined by the 111.13 board of trustees of the association in the light of the 111.14 standards and practices of the school involved. Specifically 111.15 excluded is a person who is paid by the person's employer while 111.16 attending school at the request of the person's employer. 111.17 Benefits may continue during any period of four calendar months 111.18 or less in any 12 month period in which a person does not attend 111.19 school if the person shows to the satisfaction of the board of 111.20 trustees that the person intends to continue in full-time school 111.21 attendance immediately after the end of the period. An 111.22 educational institution is defined so as to permit the payment 111.23 of benefits to students taking vocational or academic courses in 111.24 all approved, accredited or licensed schools, colleges, and 111.25 universities. The board of trustees shall make the final 111.26 determination of eligibility for benefits if any question arises 111.27 concerning the approved status of the educational institution 111.28 which the student attends or proposes to attend; 111.29 (e) In the event that a child who is receiving a pension as 111.30 provided above shall marry before the age of 22 years, the 111.31 pension shall cease as of the date of the marriage.; and 111.32 (f) A surviving spouse of a deceased service pensioner, 111.33 disability pensioner, deferred pensioner, or service pensioner 111.34 who is otherwise not qualified may receive a benefit if the 111.35 surviving spouse was legally married to the decedent for a 111.36 period of five years and was residing with the decedent at the 112.1 time of death. The surviving spouse benefit is the same as that 112.2 provided under paragraph (a), except that if the surviving 112.3 spouse is younger than the decedent, the surviving spouse 112.4 benefit must be actuarially equivalent to a surviving spouse 112.5 benefit that would have been paid to the member's spouse had the 112.6 member been married to a person of the same age or a greater age 112.7 than the member's age prior to retirement. A benefit paid under 112.8 this paragraph may be less than 17 units, notwithstanding the 17 112.9 unit minimum established under paragraph (a). 112.10 Sec. 13. Laws 1989, chapter 319, article 19, section 7, 112.11 subdivision 1, as amended by Laws 1992, chapter 471, article 2, 112.12 section 5, and Laws 1996, chapter 438, article 4, section 12, is 112.13 amended to read: 112.14 Subdivision 1. [MINNEAPOLIS FIRE DEPARTMENT RELIEF 112.15 ASSOCIATION; DEFINITIONS.] For the purposes of this section, 112.16 each of the terms in this subdivision have the meanings given 112.17 them in paragraphs (a) to (h). 112.18 (a) "Annual postretirement payment" means the payment of a 112.19 lump sum postretirement benefit to an eligible member on June 1 112.20 following the determination date in any year. 112.21 (b) "City" means the city of Minneapolis. 112.22 (c) "Determination date" means December 31 of each year. 112.23 (d) "Eligible member" means a person, including a service 112.24 pensioner, a disability pensioner, a survivor, or dependent of a 112.25 deceased active member, service pensioner, or disability 112.26 pensioner, who received a pension or benefit from the relief 112.27 association during the 12 months before the determination date. 112.28 A person who received a pension or benefit for the entire 12 112.29 months before the determination date is eligible for a full 112.30 annual postretirement payment. A person who received a pension 112.31 or benefit for less than 12 months before the determination date 112.32 is eligible for a prorated annual postretirement payment. 112.33 (e) "Excess investment income" means the amount by which 112.34 the average time weighted total rate of return earned by the 112.35 fund in the most recent prior five fiscal years has exceeded the 112.36 actual average percentage increase in the current monthly salary 113.1 of a top grade firefighter in the most recent prior five fiscal 113.2 years plus two percent. The excess investment income must be 113.3 expressed as a dollar amount and may not exceed one percent of 113.4 the total assets of the fund, except when the actuarial value of 113.5 assets of the fund according to the most recent annual actuarial 113.6 valuation prepared in accordance with Minnesota Statutes, 113.7 sections 356.215 and 356.216 is greater than 102 percent of its 113.8 actuarial accrued liabilities in which case the amount must not 113.9 exceed 1-1/2 percent of the assets of the funds. 113.10 (f) "Fund" means the Minneapolis fire department relief 113.11 association. 113.12 (g) "Relief association" means the Minneapolis fire 113.13 department relief association. 113.14 (h) "Time weighted total rate of return" means the 113.15 percentage amount determined by using the formula or formulas 113.16 established by the state board of investment under Minnesota 113.17 Statutes, section 11A.04, clause (11), and in effect on January 113.18 1, 1987. 113.19 Sec. 14. Laws 1989, chapter 319, article 19, section 7, 113.20 subdivision 3, is amended to read: 113.21 Subd. 3. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 113.22 board of trustees of the relief association shall determine by 113.23 May 1 of each year whether or not the relief association has 113.24 excess investment income. The amount of excess investment 113.25 income, if any, must be stated as a dollar amount and reported 113.26 by the chief administrative officer of the relief association to 113.27 the mayor and governing body of the city, the state auditor, the 113.28 commissioner of finance, and the executive director of the 113.29 legislative commission on pensions and retirement. The dollar 113.30 amount of excess investment income up to one percent of the 113.31 assets of the fund, except if the actuarial value of assets of 113.32 the fund according to the most recent annual actuarial valuation 113.33 prepared in accordance with Minnesota Statutes, sections 356.215 113.34 and 356.216 is greater than 102 percent of its actuarial accrued 113.35 liabilities, must be applied for the purpose specified in 113.36 subdivision 4. Excess investment income must not be considered 114.1 as income to or assets of the fund for actuarial valuations of 114.2 the fund for that year under sections 69.77, 356.215, and 114.3 356.216 and the provisions of this section except to offset the 114.4 annual postretirement payment. Additional investment income is 114.5 any realized or unrealized investment income other than the 114.6 excess investment income and must be included in the actuarial 114.7 valuations performed under sections 69.77, 356.215, and 356.216 114.8 and the provisions of this section. 114.9 Sec. 15. Laws 1989, chapter 319, article 19, section 7, 114.10 subdivision 4, as amended by Laws 1990, chapter 570, article 12, 114.11 section 63, Laws 1992, chapter 471, article 2, section 6, and 114.12 Laws 1996, chapter 438, article 4, section 13, is amended to 114.13 read: 114.14 Subd. 4. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 114.15 amount determined under subdivision 3 must be applied in 114.16 accordance with this subdivision. When the actuarial value of 114.17 assets of the fund according to the most recent annual actuarial 114.18 valuation prepared in accordance with Minnesota Statutes, 114.19 sections 356.215 and 356.216 is less than 102 percent of its 114.20 actuarial accrued liabilities, the relief association shall 114.21 apply the first one-half of one percent of assets which 114.22 constitute excess investment income to the payment of an annual 114.23 postretirement payment as specified in this subdivision.and the 114.24 second one-half of one percent of assets which constitute excess 114.25 investment income shall be applied to reduce the state 114.26 amortization state aid or supplementary amortization state aid 114.27 payments otherwise due to the relief association under section 114.28 423A.02 for the current calendar year. When the actuarial value 114.29 of assets of the fund according to the most recent annual 114.30 actuarial valuation prepared in accordance with Minnesota 114.31 Statutes, sections 356.215 and 356.216 is less than 102 percent 114.32 of its actuarial accrued liabilities, the relief association 114.33 shall pay an annual postretirement payment to all eligible 114.34 members in an amount not to exceed one-half of one percent of 114.35 the assets of the fund. Payment of the annual postretirement 114.36 payment must be in a lump sum amount on June 1 following the 115.1 determination date in any year. When the actuarial value of 115.2 assets of the fund according to the most recent annual actuarial 115.3 valuation prepared in accordance with Minnesota Statutes, 115.4 sections 356.215 and 356.216 is greater than 102 percent of its 115.5 actuarial accrued liabilities, the relief association shall pay 115.6 an annual postretirement payment to all eligible members in an 115.7 amount not to exceed 1-1/2 percent of the assets of the fund. 115.8 Payment of the annual postretirement payment may be made only if 115.9 the average time weighted total rate of return in the most 115.10 recent prior five fiscal years exceeds by two percent the actual 115.11 average percentage increase in the current monthly salary of a 115.12 top grade firefighter in the most recent prior five fiscal 115.13 years. The total amount of all payments to members may not 115.14 exceed the amount determined under subdivision 3. Payment to 115.15 each eligible member must be calculated by dividing the total 115.16 number of pension units to which eligible members are entitled 115.17 into the excess investment income available for distribution to 115.18 members, and then multiplying that result by the number of units 115.19 to which each eligible member is entitled to determine each 115.20 eligible member's annual postretirement payment. When the fund 115.21 actuarial value of assets according to the most recent annual 115.22 actuarial valuation prepared in accordance with Minnesota 115.23 Statutes, sections 356.215 and 356.216 is less than 102 percent 115.24 of its actuarial accrued liabilities, payment to each eligible 115.25 member may not exceed an amount equal to the total monthly 115.26 benefit that the eligible member was entitled to in the prior 115.27 year under the terms of the benefit plan of the relief 115.28 association or each eligible member's proportionate share of the 115.29 excess investment income, whichever is less. When the actuarial 115.30 value of assets of the fund according to the most recent annual 115.31 actuarial valuation prepared in accordance with Minnesota 115.32 Statutes, sections 356.215 and 356.216 is greater than 102 115.33 percent of its actuarial accrued liabilities, payment to each 115.34 eligible member may not exceed the member's proportionate share 115.35 of 1-1/2 percent of assets of the fund. 115.36 Sec. 16. Laws 1989, chapter 319, article 19, section 7, 116.1 subdivision 7, is amended to read: 116.2 Subd. 7. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 116.3 No provision of or payment made under this section may be 116.4 interpreted or relied upon by any member of the relief 116.5 association to guarantee or entitle a member to annual 116.6 postretirement payments for a period when no excess investment 116.7 income is earned by the fund. If the actuarial value of assets 116.8 of the fund according to the most recent annual actuarial 116.9 valuation prepared in accordance with Minnesota Statutes, 116.10 sections 356.215 and 356.216 is less than 102 percent of its 116.11 actuarial accrued liabilities, a distribution of the fund assets 116.12 must not exceed one-half of one percent. 116.13 Sec. 17. Laws 1993, chapter 125, article 1, section 1, is 116.14 amended to read: 116.15 Section 1. [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.] 116.16 Notwithstanding the provisions of Minnesota Statutes, 116.17 section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, 116.18 chapter 607, article XV, section 9, to the contrary, when the 116.19 actuarial value of assets of the fund according to the most 116.20 recent annual actuarial valuation prepared in accordance with 116.21 Minnesota Statutes, sections 356.215 and 356.216 is less than 90 116.22 percent of its actuarial accrued liabilities, the service 116.23 pensions payable by the Minneapolis fire department relief 116.24 association for members terminating active service as a 116.25 Minneapolis firefighter after June 1, 1993, must be computed as 116.26 follows: 116.27 length of service 116.28 credited service pension payable 116.29 10 years 16.0 units 116.30 11 years 17.6 units 116.31 12 years 19.2 units 116.32 13 years 20.8 units 116.33 14 years 22.4 units 116.34 15 years 24.0 units 116.35 16 years 25.6 units 116.36 17 years 27.2 units 117.1 18 years 28.8 units 117.2 19 years 30.4 units 117.3 20 years 33.0 units 117.4 21 years 34.6 units 117.5 22 years 36.2 units 117.6 23 years 37.8 units 117.7 24 years 39.4 units 117.8 25 years 41.0 units 117.9 When the actuarial value of assets of the fund according to 117.10 the most recent annual actuarial valuation prepared in 117.11 accordance with Minnesota Statutes, sections 356.215 and 356.216 117.12 is of greater than 90 percent of actuarial accrued liabilities, 117.13 the following schedule applies to all active members and retired 117.14 service pensioners who otherwise met the then existing 117.15 requirements to receive a benefit: 117.16 length of service 117.17 credited service pension payable 117.18 5 years 8.0 units 117.19 6 years 9.6 units 117.20 7 years 11.2 units 117.21 8 years 12.8 units 117.22 9 years 14.4 units 117.23 10 years 16.0 units 117.24 11 years 17.6 units 117.25 12 years 19.2 units 117.26 13 years 20.8 units 117.27 14 years 22.4 units 117.28 15 years 24.0 units 117.29 16 years 25.6 units 117.30 17 years 27.2 units 117.31 18 years 28.8 units 117.32 19 years 30.4 units 117.33 20 years33.033.5 units 117.34 21 years34.635.1 units 117.35 22 years36.237.7 units 117.36 23 years37.838.3 units 118.1 24 years39.439.9 units 118.2 25 years41.041.5 units 118.3 When the actuarial value of assets of the fund according to 118.4 the most recent annual actuarial valuation prepared in 118.5 accordance with Minnesota Statutes, sections 356.215 and 356.216 118.6 is of greater than 92.5 percent of actuarial accrued 118.7 liabilities, the following schedule applies to all active 118.8 members and retired service pensioners who otherwise met the 118.9 then existing requirements to receive a benefit: 118.10 length of service 118.11 credited service pension payable 118.12 5 years 8.0 units 118.13 6 years 9.6 units 118.14 7 years 11.2 units 118.15 8 years 12.8 units 118.16 9 years 14.4 units 118.17 10 years 16.0 units 118.18 11 years 17.6 units 118.19 12 years 19.2 units 118.20 13 years 20.8 units 118.21 14 years 22.4 units 118.22 15 years 24.0 units 118.23 16 years 25.6 units 118.24 17 years 27.2 units 118.25 18 years 28.8 units 118.26 19 years 30.4 units 118.27 20 years 34.0 units 118.28 21 years 35.6 units 118.29 22 years 37.2 units 118.30 23 years 38.8 units 118.31 24 years 40.4 units 118.32 25 years 42.0 units 118.33 Sec. 18. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; 118.34 OPTIONAL ANNUITIES.] 118.35 A member of the Minneapolis fire department relief 118.36 association who is retired or disabled on the effective date of 119.1 this section may elect an optional retirement annuity within 60 119.2 days of the effective date instead of the normal retirement 119.3 pension. A member who retires or becomes disabled after the 119.4 effective date of this section may elect an optional retirement 119.5 annuity prior to the receipt of any benefits. The optional 119.6 retirement annuity may be a 50 percent, a 75 percent, or a 100 119.7 percent joint and survivor annuity without reinstatement in the 119.8 event of the designated beneficiary predeceasing the member or a 119.9 joint and survivor annuity with reinstatement in the event of 119.10 the designated beneficiary predeceasing the member. An optional 119.11 retirement annuity must be actuarially equivalent to the service 119.12 pension and automatic survivor coverage otherwise payable to the 119.13 retiring member and the member's beneficiaries. Once selected, 119.14 the optional annuity is irrevocable. 119.15 Sec. 19. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION 119.16 TAX LEVY.] 119.17 If in any year after the Minneapolis fire department relief 119.18 actuarial value of assets of the association according to the 119.19 most recent annual actuarial valuation prepared in accordance 119.20 with Minnesota Statutes, sections 356.215 and 356.216 is greater 119.21 than 102 percent of the actuarial accrued liabilities of the 119.22 fund and subsequently the actuarial value of assets are less 119.23 than 100 percent of the actuarial accrued liabilities according 119.24 to the most recent annual actuarial valuation prepared in 119.25 accordance with Minnesota Statutes, sections 356.215 and 119.26 356.216, the city of Minneapolis is not required to levy a 119.27 property tax to fund any deficit unless the fund has two 119.28 successive years when the actuarial value of assets are less 119.29 than 100 percent of the actuarial accrued liabilities according 119.30 to the most recent annual actuarial valuation prepared in 119.31 accordance with Minnesota Statutes, sections 356.215 and 356.216. 119.32 Sec. 20. [ACTUARIAL VALUATION DATE.] 119.33 Notwithstanding Minnesota Statutes, section 69.77, 119.34 subdivision 2h, 356.215 or 356.216, the annual actuarial 119.35 valuation of the Minneapolis fire department relief association 119.36 must be completed by May 1 of each year. 120.1 Sec. 21. [ACTUARIAL EQUIVALENT.] 120.2 For the purposes of the Minneapolis fire department relief 120.3 association, "actuarial equivalent" or "actuarially equivalent" 120.4 means the condition of one annuity or benefit having an equal 120.5 actuarial present value as another annuity or benefit, 120.6 determined as of a given date at a specified age with each 120.7 actuarial present value based on the appropriate mortality table 120.8 adopted by the board of directors based on the experience of the 120.9 fund and approved by the actuary retained by the legislative 120.10 commission on pensions and retirement and using the applicable 120.11 preretirement or postretirement interest rate assumptions 120.12 specified in Minnesota Statutes, section 356.216. 120.13 Sec. 22. [BENEFIT EXCHANGE.] 120.14 The one unit health and welfare benefit granted to members 120.15 of the Minneapolis fire department relief association in Laws 120.16 1980, chapter 667, article XV, section 9, who retired after July 120.17 1, 1980, must be reduced by one-half unit upon the 120.18 implementation of the benefit improvement in section 17 when the 120.19 actuarial value of assets of the fund according to the most 120.20 recent annual actuarial valuation report under Minnesota 120.21 Statutes, sections 356.215 and 356.216 exceeds 90 percent of its 120.22 actuarial accrued liabilities and the benefit must be eliminated 120.23 when the actuarial value of assets of the fund exceeds 92.5 120.24 percent of its actuarial accrued liabilities and the benefit in 120.25 section 15 is fully implemented. 120.26 Sec. 23. [EFFECTIVE DATE.] 120.27 The sections of this article are effective on the day after 120.28 compliance by the governing body of the city of Minneapolis with 120.29 Minnesota Statutes, section 645.021, subdivision 2. Section 4 120.30 is effective when the provisions of section 5 take effect. The 120.31 disability pension and superannuation pension unit amount change 120.32 in section 5 is effective only when section 4 takes effect. 120.33 Sections 7 and 12 are effective retroactive to July 1, 1996 and 120.34 apply to all current spouses of members, except that the unit 120.35 increases for surviving spouses in section 7 shall not otherwise 120.36 increase the surviving spouse benefit beyond 22 units.