as introduced - 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; authorizing defined contribution 1.6 early retirement options; reducing appropriations; 1.7 modifying homestead and agricultural credit aid; 1.8 appropriating money; amending Minnesota Statutes 1996, 1.9 sections 3A.02, subdivisions 1 and 4; 3A.07; 11A.18, 1.10 subdivision 9; 273.1398, by adding a subdivision; 1.11 352.01, subdivision 25; 352.04, subdivisions 2 and 3; 1.12 352.115, subdivision 3; 352.72, subdivision 2; 352.92, 1.13 subdivisions 1 and 2; 352.93, subdivisions 2, 3, and 1.14 by adding a subdivision; 352.95, subdivisions 1 and 5; 1.15 352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 1.16 2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a 1.17 subdivision; 352C.031, subdivision 4; 352C.033; 1.18 353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 1.19 353.29, subdivision 3; 353.651, subdivision 3; 1.20 353.656, subdivision 1; 353.71, subdivision 2; 1.21 353A.08, subdivision 1; 353A.083, by adding a 1.22 subdivision; 353C.06, subdivisions 3, 4, and by adding 1.23 a subdivision; 353C.08, subdivision 1; 353C.09; 1.24 354.05, subdivision 38; 354.42, subdivisions 2, 3, and 1.25 5; 354.44, subdivision 6; 354.53, subdivision 1; 1.26 354.55, subdivision 11; 354A.011, subdivision 15a; 1.27 354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, 1.28 subdivisions 4 and 4a; 356.215, subdivisions 1 and 4d; 1.29 356.25; 356.30, subdivision 1; 356.88, by adding a 1.30 subdivision; 423B.01, subdivision 9; 423B.06, by 1.31 adding a subdivision; 423B.07; 423B.09, subdivision 1, 1.32 and by adding a subdivision; 423B.10, subdivision 1; 1.33 423B.15, subdivisions 2, 3, and 6; and 490.124, 1.34 subdivision 1; Laws 1965, chapter 519, section 1, as 1.35 amended; Laws 1989, chapter 319, article 19, section 1.36 7, subdivisions 1, as amended, 3, 4, as amended, and 1.37 7; and Laws 1993, chapter 125, article 1, section 1; 1.38 proposing coding for new law in Minnesota Statutes, 1.39 chapters 124A; 352; 352C; and 356; proposing coding 1.40 for new law as Minnesota Statutes, chapter 352E; 1.41 repealing Minnesota Statutes 1996, sections 354A.12, 1.42 subdivision 2b; 356.70; and 356.88, subdivision 2. 1.43 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.44 ARTICLE 1 2.1 PENSION UNIFORMITY PROVISIONS 2.2 Section 1. Minnesota Statutes 1996, section 3A.02, 2.3 subdivision 1, is amended to read: 2.4 Subdivision 1. [QUALIFICATIONS.] (a) A former legislator 2.5 is entitled, upon written application to the director, to 2.6 receive a retirement allowance monthly, if the person: 2.7 (1) has served at least six full years, without regard to 2.8 the application of section 3A.10, subdivision 2, or has served 2.9 during all or part of four regular sessions as a member of the 2.10 legislature, which service need not be continuous; 2.11 (2) has attained the normal retirement age; 2.12 (3) has retired as a member of the legislature; and 2.13 (4) has made all contributions provided for in section 2.14 3A.03, has made payments for past service under subdivision 2, 2.15 or has made payments in lieu of contributions under Minnesota 2.16 Statutes 1992, section 3A.031, prior to July 1, 1994. 2.17 (b) For service rendered before the beginning of the 1979 2.18 legislative session, but not to exceed eight years of service, 2.19 the retirement allowance is an amount equal to five percent per 2.20 year of service of that member's average monthly salary. For 2.21 service in excess of eight years rendered before the beginning 2.22 of the 1979 legislative session, and for service rendered after 2.23 the beginning of the 1979 legislative session, the retirement 2.24 allowance is an amount equal to2-1/2 percentan amount per year 2.25 of service of that member's average monthly salary calculated by 2.26 the actuary to provide a benefit that is actuarially equivalent 2.27 for each individual to the benefit that would have been provided 2.28 under this chapter on January 1, 1997. 2.29 (c) The retirement allowance accrues beginning with the 2.30 first day of the month of receipt of the application, but not 2.31 before age 60, and for the remainder of the former legislator's 2.32 life, if the former legislator is not serving as a member of the 2.33 legislature or as a constitutional officer or commissioner as 2.34 defined in section 352C.021, subdivisions 2 and 3. The annuity 2.35shalldoes not begin to accrue prior to retirement as a 2.36 legislator. No annuity paymentshallmust be made retroactive 3.1 for more than 180 days before the date the annuity application 3.2 is filed with the director. 3.3 (d) Any member who has served during all or part of four 3.4 regular sessions is considered to have served eight years as a 3.5 member of the legislature. 3.6 (e) The retirement allowance ceases with the last payment 3.7 that accrued to the retired legislator during the retired 3.8 legislator's lifetime, except that the surviving spouse, if any, 3.9 is entitled to the retirement allowance for the calendar month 3.10 in which the retired legislator died. 3.11 Sec. 2. Minnesota Statutes 1996, section 3A.02, 3.12 subdivision 4, is amended to read: 3.13 Subd. 4. [DEFERRED ANNUITIES AUGMENTATION.] The deferred 3.14 annuity of any former legislatorshallmust be augmented as 3.15 provided herein. The required reserves applicable to the 3.16 deferred annuity, determined as of the date the benefit begins 3.17 to accrue using an appropriate mortality table and an interest 3.18 assumption offivesix percent,shallmust be augmented from the 3.19 first of the month following termination of service, or July 1, 3.20 1973, whichever is later, to the first day of the month in which 3.21 the annuity begins to accrue, at the rate of five percent per 3.22 annum compounded annually until January 1, 1981, and thereafter 3.23 at the rate of three percent per annum compounded annually until 3.24 January 1 of the year in which the former legislator attains age 3.25 55. From that date to the effective date of retirement, the 3.26 rate is five percent compounded annually. 3.27 The survivor or retirement benefit to a former member or 3.28 survivor of a former member who terminated service before July 3.29 1, 1997, must be determined under the laws in effect on the date 3.30 of termination and must be increased to reflect the change in 3.31 the postretirement fund interest assumption from five percent to 3.32 six percent. The benefit payable under the six percent 3.33 postretirement interest assumption must be actuarially 3.34 equivalent to the benefit payable under the five percent 3.35 interest assumption and must be based on tables adopted by the 3.36 board of directors of the Minnesota state retirement system as 4.1 recommended by an approved actuary and approved by the actuary 4.2 retained by the legislative commission on pensions and 4.3 retirement. 4.4 Sec. 3. Minnesota Statutes 1996, section 11A.18, 4.5 subdivision 9, is amended to read: 4.6 Subd. 9. [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 4.7 Annually, following June 30, the state board shall use the 4.8 procedures in paragraphs (b), (c), and (d) to determine whether 4.9 a postretirement adjustment is payable and to determine the 4.10 amount of any postretirement adjustment. 4.11 (b) If the Consumer Price Index for urban wage earners and 4.12 clerical workers all items index published by the Bureau of 4.13 Labor Statistics of the United States Department of Labor 4.14 increases from June 30 of the preceding year to June 30 of the 4.15 current year, the state board shall certify the percentage 4.16 increase. The amount certifiedmaymust not exceed the lesser 4.17 of the difference between the preretirement interest assumption 4.18 and postretirement interest assumption in section 356.215, 4.19 subdivision 4d, paragraph (a), or3.52.5 percent. The amount 4.20 certified for the fund governed under chapter 422A must not 4.21 exceed the lesser of the difference between the preretirement 4.22 interest assumption and postretirement interest assumption in 4.23 section 356.215, subdivision 4d, paragraph (b), or 3.5 percent. 4.24 (c) In addition to any percentage increase certified under 4.25 paragraph (b), the board shall use the following procedures to 4.26 determine if a postretirement adjustment is payable under this 4.27 paragraph: 4.28 (1) The state board shall determine the market value of the 4.29 fund on June 30 of that year; 4.30 (2) The amount of reserves required for the annuity or 4.31 benefit payable to an annuitant and benefit recipient of the 4.32 participating public pension plans or fundsshallmust be 4.33 determined by the commission-retained actuary as of the current 4.34 June 30. An annuitant or benefit recipient who has been 4.35 receiving an annuity or benefit for at least 12 full months as 4.36 of the current June 30 is eligible to receive a full 5.1 postretirement adjustment. An annuitant or benefit recipient 5.2 who has been receiving an annuity or benefit for at least one 5.3 full month, but less than 12 full months as of the current June 5.4 30, is eligible to receive a partial postretirement adjustment. 5.5 Each fund shall report separately the amount of the reserves for 5.6 those annuitants and benefit recipients who are eligible to 5.7 receive a full postretirement benefit adjustment. This amount 5.8 is known as "eligible reserves." Each fund shall also report 5.9 separately the amount of the reserves for those annuitants and 5.10 benefit recipients who are not eligible to receive a 5.11 postretirement adjustment. This amount is known as "noneligible 5.12 reserves." For an annuitant or benefit recipient who is 5.13 eligible to receive a partial postretirement adjustment, each 5.14 fund shall report separately as additional "eligible reserves" 5.15 an amount that bears the same ratio to the total reserves 5.16 required for the annuitant or benefit recipient as the number of 5.17 full months of annuity or benefit receipt as of the current June 5.18 30 bears to 12 full months. The remainder of the annuitant's or 5.19 benefit recipient's reservesshallmust be separately reported 5.20 as additional "noneligible reserves." The amount of "eligible" 5.21 and "noneligible" required reservesshallmust be certified to 5.22 the board by the commission-retained actuary as soon as is 5.23 practical following the current June 30; 5.24 (3) The state board shall determine the percentage increase 5.25 certified under paragraph (b) multiplied by the eligible 5.26 required reserves, as adjusted for mortality gains and losses 5.27 under subdivision 11, determined under clause (2); 5.28 (4) The state board shall add the amount of reserves 5.29 required for the annuities or benefits payable to annuitants and 5.30 benefit recipients of the participating public pension plans or 5.31 funds as of the current June 30 to the amount determined under 5.32 clause (3); 5.33 (5) The state board shall subtract the amount determined 5.34 under clause (4) from the market value of the fund determined 5.35 under clause (1); 5.36 (6) The state board shall adjust the amount determined 6.1 under clause (5) by the cumulative current balance determined 6.2 pursuant to clause (8) and any negative balance carried forward 6.3 under clause (9); 6.4 (7) A positive amount resulting from the calculations in 6.5 clauses (1) to (6) is the excess market value. A negative 6.6 amount is the negative balance; 6.7 (8) The state board shall allocate one-fifth of the excess 6.8 market value or one-fifth of the negative balance to each of 6.9 five consecutive years, beginning with the fiscal year ending 6.10 the current June 30; and 6.11 (9) To calculate the postretirement adjustment under this 6.12 paragraph based on investment performance for a fiscal year, the 6.13 state board shall add together all excess market value allocated 6.14 to that year and subtract from the sum all negative balances 6.15 allocated to that year. If this calculation results in a 6.16 negative number, the entire negative balance must be carried 6.17 forward and allocated to the next year. If the resulting amount 6.18 is positive, a postretirement adjustment is payable under this 6.19 paragraph. The board shall express a positive amount as a 6.20 percentage of the total eligible required reserves certified to 6.21 the board under clause (2). 6.22 (d) The state board shall determine the amount of any 6.23 postretirement adjustment which is payable using the following 6.24 procedure: 6.25 (1) The total "eligible" required reserves as of the first 6.26 of January next following the end of the fiscal year for the 6.27 annuitants and benefit recipients eligible to receive a full or 6.28 partial postretirement adjustment as determined by clause (2) 6.29shallmust be certified to the state board by the 6.30 commission-retained actuary. The total "eligible" required 6.31 reservesshallmust be determined by the commission-retained 6.32 actuary on the assumption that all annuitants and benefit 6.33 recipients eligible to receive a full or partial postretirement 6.34 adjustment will be alive on the January 1 in question; and 6.35 (2) The state board shall add the percentage certified 6.36 under paragraph (b) to any positive percentage calculated under 7.1 paragraph (c). The board shall not subtract from the percentage 7.2 certified under paragraph (b) any negative amount calculated 7.3 under paragraph (c). The sum of these percentagesshallmust be 7.4 carried to five decimal places andshallmust be certified to 7.5 each participating public pension fund or plan as the full 7.6 postretirement adjustment percentage. 7.7 (e) A retirement annuity payable in the event of retirement 7.8 before becoming eligible for social security benefits as 7.9 provided in section 352.116, subdivision 3; 353.29, subdivision 7.10 6; or 354.35 must be treated as the sum of a period certain 7.11 retirement annuity and a life retirement annuity for the 7.12 purposes of any postretirement adjustment. The period certain 7.13 retirement annuity plus the life retirement annuityshallmust 7.14 be the annuity amount payable until age 62 or 65, whichever 7.15 applies. A postretirement adjustment granted on the period 7.16 certain retirement annuity must terminate when the period 7.17 certain retirement annuity terminates. 7.18 Sec. 4. [124A.74] [ADJUSTMENT TO STATE AID DUE TO 1998 7.19 CHANGES IN EMPLOYER RETIREMENT CONTRIBUTIONS.] 7.20 Beginning in fiscal year 1998 and for each year thereafter, 7.21 the commissioner of children, families, and learning shall 7.22 adjust payments to school operating funds for districts other 7.23 than Nos. 625, 709, and special school district No. 1, by an 7.24 amount equal to the net value of the following calculation: .77 7.25 percent of the salaries paid to members of the general plan of 7.26 the public employees retirement association in fiscal year 1997, 7.27 less 1.5 percent of the salaries paid to members of the state 7.28 teachers retirement association in fiscal year 1997. For school 7.29 districts Nos. 625, 709, and special school district No. 1, the 7.30 commissioner shall increase payments to school operating funds 7.31 by .77 percent of the salaries paid to members of the general 7.32 plan of the public employees retirement association in fiscal 7.33 year 1997. 7.34 Sec. 5. Minnesota Statutes 1996, section 273.1398, is 7.35 amended by adding a subdivision to read: 7.36 Subd. 2e. [AID INCREASES.] Beginning with payments made to 8.1 cities, counties, towns, and other nonschool local government 8.2 units in fiscal year 1998, and continuing for each year 8.3 thereafter, the commissioner of revenue shall increase homestead 8.4 and agricultural credit aid payments by an amount equal to .77 8.5 percent of the salaries paid to members of the general plan of 8.6 the public employees retirement fund in fiscal year 1997. 8.7 Sec. 6. Minnesota Statutes 1996, section 352.01, 8.8 subdivision 25, is amended to read: 8.9 Subd. 25. [NORMAL RETIREMENT AGE.] "Normal retirement age" 8.10 means age 65 for a person who first became a covered employee or 8.11 a member of a pension fund listed in section 356.30, subdivision 8.12 3, before July 1, 1989. For a person who first becomes a 8.13 covered employee after June 30, 1989, normal retirement age 8.14 means the higher of age 65 or "retirement age," as defined in 8.15 United States Code, title 42, section 416(l), as amended, not to 8.16 exceed age 66. 8.17 Sec. 7. Minnesota Statutes 1996, section 352.04, 8.18 subdivision 2, is amended to read: 8.19 Subd. 2. [EMPLOYEE CONTRIBUTIONS.] The employee 8.20 contribution to the fund must be equal to4.074.0 percent of 8.21 salary. These contributions must be made by deduction from 8.22 salary as provided in subdivision 4. 8.23 Sec. 8. Minnesota Statutes 1996, section 352.04, 8.24 subdivision 3, is amended to read: 8.25 Subd. 3. [EMPLOYER CONTRIBUTIONS.](a)The employer 8.26 contribution to the fund must be equal to4.24.0 percent of 8.27 salary. 8.28(b) By January 1 of each year, the board of directors shall8.29report to the legislative commission on pensions and retirement,8.30the chair of the committee on appropriations of the house of8.31representatives, and the chair of the committee on finance of8.32the senate on the amount raised by the employer and employee8.33contribution rates in effect and whether the total amount is8.34less than, the same as, or more than the actuarial requirement8.35determined under section 356.215.8.36(c) If the legislative commission on pensions and9.1retirement, based on the most recent valuation performed by its9.2actuary, determines that the total amount raised by the employer9.3and employee contributions under subdivision 2 and paragraph (b)9.4is less than the actuarial requirements determined under section9.5356.215, the employer and employee rates must be increased by9.6equal amounts as necessary to meet the actuarial requirements.9.7The employee rate may not exceed 4.15 percent of salary and the9.8employer rate may not exceed 4.29 percent of salary. The9.9increases are effective on the next January 1 following the9.10determination by the commission. The executive director of the9.11Minnesota state retirement system shall notify employing units9.12of any increases under this paragraph.9.13 Sec. 9. Minnesota Statutes 1996, section 352.115, 9.14 subdivision 3, is amended to read: 9.15 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 9.16 in conjunction with section 352.116, subdivision 1, applies to a 9.17 person who became a covered employee or a member of a pension 9.18 fund listed in section 356.30, subdivision 3, before July 1, 9.19 1989, unless paragraph (b), in conjunction with section 352.116, 9.20 subdivision 1a, produces a higher annuity amount, in which case 9.21 paragraph (b) will apply. The employee's average salary, as 9.22 defined in subdivision 2, multiplied byonethe percent 9.23 specified in section 356.19, subdivision 1, per year of 9.24 allowable service for the first ten years and1.5the percent 9.25 specified in section 356.19, subdivision 2, for each later year 9.26 of allowable service and pro rata for completed months less than 9.27 a full year shall determine the amount of the retirement annuity 9.28 to which the employee is entitled. 9.29 (b) This paragraph applies to a person who has become at 9.30 least 55 years old and first became a covered employee after 9.31 June 30, 1989, and to any other covered employee who has become 9.32 at least 55 years old and whose annuity amount, when calculated 9.33 under this paragraph and in conjunction with section 352.116, 9.34 subdivision 1a, is higher than it is when calculated under 9.35 paragraph (a), in conjunction with section 352.116, subdivision 9.36 1. The employee's average salary, as defined in subdivision 2, 10.1 multiplied by1.5the percent specified in section 356.19, 10.2 subdivision 2, for each year of allowable service and pro rata 10.3 for months less than a full year shall determine the amount of 10.4 the retirement annuity to which the employee is entitled. 10.5 Sec. 10. Minnesota Statutes 1996, section 352.72, 10.6 subdivision 2, is amended to read: 10.7 Subd. 2. [COMPUTATION OF DEFERRED ANNUITY.] The deferred 10.8 annuity, if any, accruing under subdivision 1, or section 10.9 352.22, subdivision 3, must be computed as provided in section 10.10 352.22, subdivision 3, on the basis of allowable service before 10.11 termination of state service and augmented as provided herein. 10.12 The required reserves applicable to a deferred annuity or to an 10.13 annuity for which a former employee was eligible but had not 10.14 applied or to any deferred segment of an annuity must be 10.15 determined as of the date the benefit begins to accrue and 10.16 augmented by interest compounded annually from the first day of 10.17 the month following the month in which the employee ceased to be 10.18 a state employee, or July 1, 1971, whichever is later, to the 10.19 first day of the month in which the annuity begins to accrue. 10.20 The rates of interest used for this purpose must be five percent 10.21 compounded annually until January 1, 1981, and three percent 10.22 compounded annually thereafter until January 1 of the year 10.23 following the year in which the former employee attains age 55. 10.24 From that date to the effective date of retirement, the rate is 10.25 five percent compounded annually. If a person has more than one 10.26 period of uninterrupted service, the required reserves related 10.27 to each period must be augmented by interest under this 10.28 subdivision. The sum of the augmented required reserves so 10.29 determined is the present value of the annuity. "Uninterrupted 10.30 service" for the purpose of this subdivision means periods of 10.31 covered employment during which the employee has not been 10.32 separated from state service for more than two years. If a 10.33 person repays a refund, the service restored by the repayment 10.34 must be considered continuous with the next period of service 10.35 for which the employee has credit with this system. The formula 10.36 percentages used for each period of uninterrupted service must 11.1 be those applicable to a new employee. The mortality table and 11.2 interest assumption used to compute the annuity must be those in 11.3 effect when the employee files application for annuity. This 11.4 sectionshalldoes not reduce the annuity otherwise payable 11.5 under this chapter. 11.6 The survivor or retirement benefit to a former member or 11.7 survivor of a former member who terminated service before July 11.8 1, 1997, is determined under the laws in effect on the date of 11.9 termination and is increased to reflect the change in the 11.10 postretirement fund interest assumption from five percent to six 11.11 percent. The benefit payable under the six percent 11.12 postretirement interest assumption must be actuarially 11.13 equivalent to the benefit payable under the five percent 11.14 interest assumption and must be based on tables adopted by the 11.15 board as recommended by an approved actuary and approved by the 11.16 actuary retained by the legislative commission on pensions and 11.17 retirement. 11.18 Sec. 11. Minnesota Statutes 1996, section 352.92, 11.19 subdivision 1, is amended to read: 11.20 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.]Beginning with11.21the first full pay period after July 1, 1984, in lieu of11.22employee contributions payable under section 352.04, subdivision11.232,Employee contributionsbyof covered correctional employees 11.24 must be in an amount equal to4.905.50 percent of salary. 11.25 Sec. 12. Minnesota Statutes 1996, section 352.92, 11.26 subdivision 2, is amended to read: 11.27 Subd. 2. [EMPLOYER CONTRIBUTIONS.]In lieu of employer11.28contributions payable under section 352.04, subdivision 3,The 11.29 employer shall contribute for covered correctional employees an 11.30 amount equal to6.757.70 percent of salary. 11.31 Sec. 13. Minnesota Statutes 1996, section 352.93, 11.32 subdivision 2, is amended to read: 11.33 Subd. 2. [CALCULATING MONTHLY ANNUITY.] The monthly 11.34 annuity under this section must be determined by multiplying the 11.35 average monthly salary by the number of years, or completed 11.36 months, of covered correctional service by2.5the percent 12.1 specified in section 356.19, subdivision 5.However, the12.2monthly annuity must not exceed 75 percent of the average12.3monthly salary.12.4 Sec. 14. Minnesota Statutes 1996, section 352.93, 12.5 subdivision 3, is amended to read: 12.6 Subd. 3. [PAYMENTS; DURATION AND AMOUNT.] The annuity 12.7 under this sectionshallmust begin to accrue as provided in 12.8 section 352.115, subdivision 8., and must be paid for an12.9additional 84 full calendar months or to the first of the month12.10following the month in which the employee attains normal12.11retirement age, whichever occurs first, except that payment must12.12not cease before the first of the month following the month in12.13which the employee becomes 62. It must then be reduced to the12.14amount as calculated at normal retirement age under section12.15352.115, except that if this amount, when added to that portion12.16of the social security benefit based on state service the12.17employee would be eligible to receive at the time, is less than12.18the benefit payable under subdivision 2, the retired employee12.19shall receive an amount that when added to the social security12.20benefit will equal the amount payable under subdivision 2. If12.21the employee retired prior to age 55, the reduced benefit as12.22calculated under section 352.115 must be actuarially reduced as12.23provided in subdivision 2a.12.24When an annuity is reduced under this subdivision, the12.25percentage adjustments, if any, that have been applied to the12.26original annuity under section 11A.18, before the reduction,12.27must be compounded and applied to the reduced annuity. A former12.28correctional employee employed by the state in a position12.29covered by the regular plan or the unclassified employees12.30retirement program between the age of 58 and normal retirement12.31age shall receive a partial return of correctional contributions12.32at retirement with six percent interest based on the following12.33formula:12.34 12.35Employee contributionsYears and complete12.36contributed as amonths of regular13.1correctional employeeservice between13.2in excess of theage 58 and the13.3contributions thenormal retirement age13.4employee would haveX.....................13.5contributed as anumber of years between13.6regular employeeage 58 and normal13.7retirement age13.8 Sec. 15. Minnesota Statutes 1996, section 352.93, is 13.9 amended by adding a subdivision to read: 13.10 Subd. 3a. [OPTIONAL ANNUITY.] The board may establish an 13.11 optional annuity to pay a higher amount from the date of 13.12 retirement until an employee is first eligible to draw social 13.13 security benefits or up to the age the employee is eligible to 13.14 receive unreduced social security benefits, at which time the 13.15 monthly benefits must be actuarially reduced to equal the single 13.16 life annuity under subdivision 2. The optional annuities must 13.17 be approved by the actuary retained by the legislative 13.18 commission on pensions and retirement. 13.19 Sec. 16. [352.931] [SURVIVOR BENEFITS.] 13.20 Subdivision 1. [SURVIVING SPOUSE BENEFIT.] (a) If an 13.21 employee has credit for at least three years allowable service 13.22 and dies before an annuity or disability benefit has become 13.23 payable, notwithstanding any designation of beneficiary to the 13.24 contrary, the surviving spouse of the employee may elect to 13.25 receive, in lieu of the refund with interest, an annuity equal 13.26 to the joint and 100 percent survivor annuity which the employee 13.27 could have qualified for had the employee terminated service on 13.28 the date of death. 13.29 (b) If the employee was under age 50 and has credit for at 13.30 least three years of allowable service credit on the date of 13.31 death but did not yet qualify for retirement, the surviving 13.32 spouse may elect to receive a 100 percent joint and survivor 13.33 annuity based on the age of the employee and surviving spouse at 13.34 the time of death. The annuity is payable using the early 13.35 retirement reduction under section 352.93, subdivision 2a, to 13.36 age 50, and one-half of the early retirement reduction from age 14.1 50 to the age payment begins. The surviving spouse eligible for 14.2 surviving spouse benefits under paragraph (a) may apply for the 14.3 annuity at any time after the date on which the deceased 14.4 employee would have attained the required age for retirement 14.5 based on the employee's allowable service. The surviving spouse 14.6 eligible for surviving spouse benefits under this paragraph may 14.7 apply for the annuity at any time after the employee's death. 14.8 Sections 352.22, subdivision 3, and 352.72, subdivision 2, apply 14.9 to a deferred annuity or surviving spouse benefit payable under 14.10 this subdivision. The annuity must cease with the last payment 14.11 received by the surviving spouse in the lifetime of the 14.12 surviving spouse, or upon expiration of a term certain benefit 14.13 payment to a surviving spouse under subdivision 2. An amount 14.14 equal to the excess, if any, of the accumulated contributions 14.15 credited to the account of the deceased employee in excess of 14.16 the total of the benefits paid and payable to the surviving 14.17 spouse must be paid to the deceased employee's last designated 14.18 beneficiary or, if none, as specified under section 352.12, 14.19 subdivision 1. Any employee may request in writing that this 14.20 subdivision not apply and that payment be made only to a 14.21 designated beneficiary as otherwise provided by this chapter. 14.22 Subd. 2. [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 14.23 lieu of the 100 percent optional annuity under subdivision 1, 14.24 the surviving spouse of a deceased employee may elect to receive 14.25 survivor coverage in a term certain of ten, 15, or 20 years. 14.26 The monthly term certain annuity must be actuarially equivalent 14.27 to the 100 percent optional annuity under subdivision 1. If a 14.28 survivor elects a term certain annuity and dies before the 14.29 expiration of the specified term certain period, the commuted 14.30 value of the remaining annuity payments must be paid in a lump 14.31 sum to the survivor's estate. 14.32 Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 14.33 no surviving spouse eligible for benefits under subdivision 2, a 14.34 dependent child or children as defined in section 352.01, 14.35 subdivision 26, is eligible for monthly payments. Payments to a 14.36 dependent child must be paid from the date of the employee's 15.1 death to the date the dependent child attains age 20 if the 15.2 child is under age 15. If the child is 15 years or older on the 15.3 date of death, payment must be made for five years. The payment 15.4 to a dependent child is an amount actuarially equivalent to the 15.5 value of a 100 percent optional annuity using the age of the 15.6 employee and age of the dependent child at the date of death in 15.7 lieu of the age of the surviving spouse. If there is more than 15.8 one dependent child, each dependent child shall receive a 15.9 proportionate share of the actuarial value of the employee's 15.10 account. 15.11 Sec. 17. Minnesota Statutes 1996, section 352.95, 15.12 subdivision 1, is amended to read: 15.13 Subdivision 1. [JOB-RELATED DISABILITY.] A covered 15.14 correctional employee who becomes disabled and physically unfit 15.15 to perform the duties of the position as a direct result of an 15.16 injury, sickness, or other disability incurred in or arising out 15.17 of any act of duty that makes the employee physically or 15.18 mentally unable to perform the duties, is entitled to a 15.19 disability benefit based on covered correctional service only. 15.20 The benefit amount must equal 50 percent of the average salary 15.21 defined in section 352.93, plus an additional2-1/2percent 15.22 equal to that specified in section 356.19, subdivision 5, for 15.23 each year of covered correctional service in excess of 20 years, 15.24 ten months, prorated for completed months. 15.25 Sec. 18. Minnesota Statutes 1996, section 352.95, 15.26 subdivision 5, is amended to read: 15.27 Subd. 5. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 15.28 disability benefit paid to a disabled correctional employee 15.29 under this section shall terminate at the end of the month in 15.30 which the employee reaches age 62. If the disabled correctional 15.31 employee is still disabled when the employee reaches age 62, the 15.32 employee shall be deemed to be a retired employee. If the 15.33 employee had elected an optional annuity under subdivision 1a, 15.34 the employee shall receive an annuity in accordance with the 15.35 terms of the optional annuity previously elected. If the 15.36 employee had not elected an optional annuity under subdivision 16.1 1a, the employee may within 90 days of attaining age 65 or 16.2 reaching the five-year anniversary of the effective date of the 16.3 disability benefit, whichever is later, either elect to receive 16.4 a normal retirement annuity computed in the manner provided in 16.5 section352.115352.93 or elect to receive an optional annuity 16.6 as provided in section 352.116, subdivision 3, based on the same 16.7 length of service as used in the calculation of the disability 16.8 benefit. Election of an optional annuity must be made within 90 16.9 days before attaining age 65 or reaching the five-year 16.10 anniversary of the effective date of the disability benefit, 16.11 whichever is later.The reduction for retirement before normal16.12retirement age as provided in section 352.116, subdivision 1 or16.131a, does not apply. The savings clause provision of section16.14352.93, subdivision 3, applies.If an optional annuity is 16.15 elected, the optional annuity shall begin to accrue on the first 16.16 of the month following the month in which the employee reaches 16.17 age 65 or the five-year anniversary of the effective date of the 16.18 disability benefit, whichever is later. 16.19 Sec. 19. Minnesota Statutes 1996, section 352B.02, 16.20 subdivision 1a, is amended to read: 16.21 Subd. 1a. [MEMBER CONTRIBUTIONS.] Each member shall pay a 16.22 sum equal to8.928.40 percent of the member's salary, which 16.23 shall constitute the member contribution to the fund. 16.24 Sec. 20. Minnesota Statutes 1996, section 352B.02, 16.25 subdivision 1c, is amended to read: 16.26 Subd. 1c. [EMPLOYER CONTRIBUTIONS.](a)In addition to 16.27 member contributions, department heads shall pay a sum equal to 16.2814.8812.60 percent of the salary upon which deductions were 16.29 made, which shall constitute the employer contribution to the 16.30 fund. Department contributions must be paid out of money 16.31 appropriated to departments for this purpose. 16.32(b) By January 1 of each year, the board of directors shall16.33report to the legislative commission on pensions and retirement,16.34the chair of the committee on appropriations of the house of16.35representatives, and the chair of the committee on finance of16.36the senate on the amount raised by the employer and employee17.1contribution rates in effect and whether the total amount is17.2less than, the same as, or more than the actuarial requirement17.3determined under section 356.215.17.4 Sec. 21. Minnesota Statutes 1996, section 352B.08, 17.5 subdivision 2, is amended to read: 17.6 Subd. 2. [NORMAL RETIREMENT ANNUITY.] The annuity must be 17.7 paid in monthly installments. The annuity shall be equal to the 17.8 amount determined by multiplying the average monthly salary of 17.9 the member by2.65the percent specified in section 356.19, 17.10 subdivision 6, for each year and pro rata for completed months 17.11 of service. 17.12 Sec. 22. Minnesota Statutes 1996, section 352B.08, 17.13 subdivision 2a, is amended to read: 17.14 Subd. 2a. [EARLY RETIREMENT.] Any member who has become at 17.15 least 50 years old, or former member if service ended after June17.1630, 1989,and who has at least three years of allowable service 17.17 is entitled upon application to a reduced retirement annuity 17.18 equal to the annuity calculated under subdivision 2, reducedso17.19that the reduced annuity is the actuarial equivalent of the17.20annuity that would be payable if the member deferred receipt of17.21the annuity from the day the annuity begins to accrue to age17.2255by two-tenths of one percent for each month that the member 17.23 is under age 55 at the time of retirement. 17.24 Sec. 23. Minnesota Statutes 1996, section 352B.10, 17.25 subdivision 1, is amended to read: 17.26 Subdivision 1. [INJURIES, PAYMENT AMOUNTS.] Any member who 17.27 becomes disabled and physically or mentally unfit to perform 17.28 duties as a direct result of an injury, sickness, or other 17.29 disability incurred in or arising out of any act of duty, shall 17.30 receive disability benefits while disabled. The benefits must 17.31 be paid in monthly installments equal to the member's average 17.32 monthly salary multiplied by5360 percent, plus an additional 17.332.65percent equal to that specified in section 356.19, 17.34 subdivision 6, for each year and pro rata for completed months 17.35 of service in excess of 20 years, if any. 17.36 Sec. 24. Minnesota Statutes 1996, section 352B.30, is 18.1 amended by adding a subdivision to read: 18.2 Subd. 4. [POSTRETIREMENT FUND INTEREST CHANGES.] The 18.3 survivor or retirement benefit to a former member or survivor of 18.4 a former member who terminated service before July 1, 1997, must 18.5 be determined under the laws in effect on the date of 18.6 termination and must be increased to reflect the change in the 18.7 postretirement fund interest assumption from five percent to six 18.8 percent. The benefit payable under the six percent 18.9 postretirement interest assumption must be actuarially 18.10 equivalent to the benefit payable under the five percent 18.11 interest assumption and must be based on tables adopted by the 18.12 board as recommended by an approved actuary and approved by the 18.13 actuary retained by the legislative commission on pensions and 18.14 retirement. 18.15 Sec. 25. Minnesota Statutes 1996, section 352C.031, 18.16 subdivision 4, is amended to read: 18.17 Subd. 4. [RETIREMENT ALLOWANCE FORMULA.]The average18.18salary multiplied by 2-1/2 percent for each year of allowable18.19service and pro rata for completed months less than a full year18.20shall determineThe amount of the normal retirement allowance.18.21 must be the product of: 18.22 (1) the number of years of allowable service with pro rata 18.23 service awarded for completed months less than a full year; and 18.24 (2) an amount calculated by the actuary to provide a 18.25 benefit that is actuarially equivalent for each individual to 18.26 the benefit that would have been provided under the provisions 18.27 of Minnesota Statutes in effect as of January 1, 1997. 18.28 Sec. 26. Minnesota Statutes 1996, section 352C.033, is 18.29 amended to read: 18.30 352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 18.31 The deferred retirement allowance for any former 18.32 constitutional officershallmust be augmented as provided in 18.33 this section. The required reserves applicable to the deferred 18.34 retirement allowance, determined as of the date the retirement 18.35 allowance begins to accrue using the appropriate mortality table 18.36 and an interest assumption offivesix percent, shall be 19.1 augmented from the first of the month following termination of 19.2 service as a constitutional officer, or January 1, 1979, 19.3 whichever is later, to the first day of the month in which the 19.4 annuity begins to accrue, at the rate of five percent per annum 19.5 compounded annually until January 1, 1981, and thereafter at the 19.6 rate of three percent per annum compounded annually until 19.7 January 1 of the year in which the former constitutional officer 19.8 attains age 55. From that date to the effective date of 19.9 retirement, the rate is five percent compounded annually. 19.10 The survivor or retirement benefit to a former member or 19.11 survivor of a former member who terminated service before July 19.12 1, 1997, must be determined under the laws in effect on the date 19.13 of termination and must be increased to reflect the change in 19.14 the postretirement fund interest assumption from five percent to 19.15 six percent. The benefit payable under the six percent 19.16 postretirement interest assumption must be actuarially 19.17 equivalent to the benefit payable under the five percent 19.18 interest assumption and must be based on tables adopted by the 19.19 board as recommended by an approved actuary and approved by the 19.20 actuary retained by the legislative commission on pensions and 19.21 retirement. 19.22 Sec. 27. Minnesota Statutes 1996, section 353.01, 19.23 subdivision 37, is amended to read: 19.24 Subd. 37. [NORMAL RETIREMENT AGE.] "Normal retirement age" 19.25 means age 65 for a person who first became a public employee or 19.26 a member of a pension fund listed in section 356.30, subdivision 19.27 3, before July 1, 1989. For a person who first becomes a public 19.28 employee after June 30, 1989, "normal retirement age" means the 19.29 higher of age 65 or "retirement age," as defined in United 19.30 States Code, title 42, section 416(l), as amended, not to exceed 19.31 age 66. 19.32 Sec. 28. Minnesota Statutes 1996, section 353.27, 19.33 subdivision 2, is amended to read: 19.34 Subd. 2. [EMPLOYEE CONTRIBUTION.] The employee 19.35 contribution shall be an amount (a) for a "basic member" equal 19.36 to8.238.75 percent of total salary; and (b) for a "coordinated 20.1 member" equal to4.234.75 percent of total salary. These 20.2 contributionsshallmust be made by deduction from salary in the 20.3 manner provided in subdivision 4. Where any portion of a 20.4 member's salary is paid from other than public funds, such 20.5 member's employee contributionshallmust be based on the total 20.6 salary received from all sources. 20.7 Sec. 29. Minnesota Statutes 1996, section 353.27, 20.8 subdivision 3a, is amended to read: 20.9 Subd. 3a. [ADDITIONAL EMPLOYER CONTRIBUTION.] An 20.10 additional employer contributionshallmust be made equal to (a) 20.112-1/22.75 percent of the total salary of each "basic member"; 20.12 and (b)one-quarter of one.50 percent of the total salary of 20.13 each "coordinated member." These contributionsshallmust be 20.14 made from funds available to the employing subdivision by the 20.15 means and in the manner provided in section 353.28. This 20.16 subdivision is repealed if the plan is fully funded. 20.17 Sec. 30. Minnesota Statutes 1996, section 353.29, 20.18 subdivision 3, is amended to read: 20.19 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 20.20 in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 20.21 1c, applies to any member who first became a public employee or 20.22 a member of a pension fund listed in section 356.30, subdivision 20.23 3, before July 1, 1989, unless paragraph (b), in conjunction 20.24 with section 353.30, subdivision 5, produces a higher annuity 20.25 amount, in which case paragraph (b) will apply. The average 20.26 salary as defined in subdivision 2, multiplied bytwothe 20.27 percent specified in section 356.19, subdivision 3, for each 20.28 year of allowable service for the first ten years and thereafter 20.29 by2.5the percent specified in section 356.19, subdivision 4, 20.30 per year of allowable service and completed months less than a 20.31 full year for the "basic member," andonethe percent specified 20.32 in section 356.19, subdivision 1, for each year of allowable 20.33 service for the first ten years and thereafter by1.5the 20.34 percent specified in section 356.19, subdivision 2, per year of 20.35 allowable service and completed months less than a full year for 20.36 the "coordinated member," shall determine the amount of the 21.1 "normal" retirement annuity. 21.2 (b) This paragraph applies to a member who has become at 21.3 least 55 years old and first became a public employee after June 21.4 30, 1989, and to any other member whose annuity amount, when 21.5 calculated under this paragraph and in conjunction with section 21.6 353.30, subdivision 5, is higher than it is when calculated 21.7 under paragraph (a), in conjunction with section 353.30, 21.8 subdivisions 1, 1a, 1b, and 1c. The average salary, as defined 21.9 in subdivision 2, multiplied by2.5the percent specified in 21.10 section 356.19, subdivision 4, for each year of allowable 21.11 service and completed months less than a full year for a basic 21.12 member and1.5the percent specified in section 356.19, 21.13 subdivision 2, per year of allowable service and completed 21.14 months less than a full year for a coordinated member, shall 21.15 determine the amount of the normal retirement annuity. 21.16 Sec. 31. Minnesota Statutes 1996, section 353.651, 21.17 subdivision 3, is amended to read: 21.18 Subd. 3. [RETIREMENT ANNUITY FORMULA.] The average salary 21.19 as defined in subdivision 2, multiplied by2.65the percent 21.20 specified in section 356.19, subdivision 6, per year of 21.21 allowable service determines the amount of the normal retirement 21.22 annuity. If the member has earned allowable service for 21.23 performing services other than those of a police officer or 21.24 firefighter, the annuity representing such service is computed 21.25 under sections 353.29 and 353.30. 21.26 Sec. 32. Minnesota Statutes 1996, section 353.656, 21.27 subdivision 1, is amended to read: 21.28 Subdivision 1. [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 21.29 A member of the police and fire fund who becomes disabled and 21.30 physically unfit to perform duties as a police officer or 21.31 firefighter subsequent to June 30, 1973, as a direct result of 21.32 an injury, sickness, or other disability incurred in or arising 21.33 out of any act of duty, which has or is expected to render the 21.34 member physically or mentally unable to perform duties as a 21.35 police officer or firefighter for a period of at least one year, 21.36 shall receive disability benefits during the period of such 22.1 disability. The benefits must be in an amount equal to5360 22.2 percent of the "average salary" under subdivision 3, plus an 22.3 additional2.65percent specified in section 356.19, subdivision 22.4 6, of said average salary for each year of service in excess of 22.5 20 years. Should disability under this subdivision occur before 22.6 the member has at least five years of allowable service credit 22.7 in the police and fire fund, the disability benefit must be 22.8 computed on the "average salary" from which deductions were made 22.9 for contribution to the police and fire fund. 22.10 Sec. 33. Minnesota Statutes 1996, section 353.71, 22.11 subdivision 2, is amended to read: 22.12 Subd. 2. [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] The 22.13 deferred annuity, if any, accruing under subdivision 1, or 22.14 sections 353.34, subdivision 3, and 353.68, subdivision 4,shall22.15 must be computed in the manner provided in said sections, on the 22.16 basis of allowable service prior to termination of public 22.17 service and augmented as provided herein. The required reserves 22.18 applicable to a deferred annuity, or to an annuity for which a 22.19 former member was eligible but had not applied, or to any 22.20 deferred segment of an annuity shall be determined as of the 22.21 date the annuity begins to accrue and shall be augmented from 22.22 the first day of the month following the month in which the 22.23 former member ceased to be a public employee, or July 1, 1971, 22.24 whichever is later, to the first day of the month in which the 22.25 annuity begins to accrue, at the rate of five percent per annum 22.26 compounded annually until January 1, 1981, and at the rate of 22.27 three percent thereafter until January 1 of the year following 22.28 the year in which the former member attains age 55. From that 22.29 date to the effective date of retirement, the rate is five 22.30 percent per annum compounded annually. If a person has more 22.31 than one period of uninterrupted service, the required reserves 22.32 related to each period shall be augmented by interest pursuant 22.33 to this subdivision. The sum of the augmented required reserves 22.34 so determined shall be the present value of the annuity. 22.35 Uninterrupted service for the purpose of this subdivision shall 22.36 mean periods of covered employment during which the employee has 23.1 not been separated from public service for more than two years. 23.2 If a person repays a refund, the service restored thereby shall 23.3 be considered as continuous with the next period of service for 23.4 which the employee has credit with this association. The formula 23.5 percentages used for each period of uninterrupted service shall 23.6 be those as would be applicable to a new employee. This section 23.7 shall not reduce the annuity otherwise payable under this 23.8 chapter. This subdivision shall apply to deferred annuitants of 23.9 record on July 1, 1971, and to employees who thereafter become 23.10 deferred annuitants; it shall also apply from July 1, 1971, to 23.11 former members who make application for an annuity after July 1, 23.12 1973. 23.13 The survivor or retirement benefit to a former member or 23.14 survivor of a former member who terminated service before July 23.15 1, 1997, is determined under the laws in effect on the date of 23.16 termination and is increased to reflect the change in the 23.17 postretirement fund interest assumption from five percent to six 23.18 percent. The benefit payable under the six percent 23.19 postretirement interest assumption must be actuarially 23.20 equivalent to the benefit payable under the five percent 23.21 interest assumption and must be based on tables adopted by the 23.22 board as recommended by an approved actuary and approved by the 23.23 actuary retained by the legislative commission on pensions and 23.24 retirement. 23.25 Sec. 34. Minnesota Statutes 1996, section 353A.08, 23.26 subdivision 1, is amended to read: 23.27 Subdivision 1. [ELECTION OF COVERAGE BY CURRENT RETIREES.] 23.28 A person who is receiving a service pension, disability benefit, 23.29 orsurvivorshipsurvivor benefit is eligible to elect benefit 23.30 coverage provided under the relevant provisions of the public 23.31 employees police and fire fund benefit plan or to retain benefit 23.32 coverage provided under the relief association benefit plan in 23.33 effect on the effective date of the consolidation. The relevant 23.34 provisions of the public employees police and fire fund benefit 23.35 plan for the person electing that benefit coverage are limited 23.36 to participation in the Minnesota postretirement investment fund 24.1 for any future postretirement adjustments based on the amount of 24.2 the benefit or pension payable on December 31, if December 31 is 24.3 the effective date of consolidation, or on the December 1 24.4 following the effective date of the consolidation, if other than 24.5 December 31. Thesurvivorshipsurvivor benefit payable on 24.6 behalf of any service pension or disability benefit recipient 24.7 who elects benefit coverage under the public employees police 24.8 and fire fund benefit plan must be calculated under the relief 24.9 association benefit plan and is subject to participation in the 24.10 Minnesota postretirement investment fund for any future 24.11 postretirement adjustments based on the amount of the 24.12survivorshipsurvivor benefit payable. 24.13 A survivor benefit calculated under the relief association 24.14 benefit plan which is first payable after June 30, 1997, to the 24.15 surviving spouse of a retired member of a consolidation account 24.16 who, before July 1, 1997, chose to participate in the Minnesota 24.17 postretirement investment fund as provided under this 24.18 subdivision must be increased on the effective date of the 24.19 survivor benefit to reflect the change in the postretirement 24.20 fund interest assumption from five percent to six percent. The 24.21 benefit payable under the six percent postretirement interest 24.22 assumption must be actuarially equivalent to the benefit payable 24.23 under the five percent interest assumption and must be based on 24.24 tables adopted by the board as recommended by an approved 24.25 actuary and approved by the actuary retained by the legislative 24.26 commission on pensions and retirement. 24.27 By electing the public employees police and fire fund 24.28 benefit plan, a current service pension or disability benefit 24.29 recipient who, as of the first January 1 occurring after the 24.30 effective date of consolidation, has been receiving the pension 24.31 or benefit for at least seven months, or any survivor benefit 24.32 recipient who, as of the first January 1 occurring after the 24.33 effective date of consolidation, has been receiving the benefit 24.34 on the person's own behalf or in combination with a prior 24.35 applicable service pension or disability benefit for at least 24.36 seven months is eligible to receive a partial adjustment payable 25.1 from the Minnesota postretirement investment fund under section 25.2 11A.18, subdivision 9. 25.3 The election by any pension or benefit recipient must be 25.4 made on or before the deadline established by the board of the 25.5 public employees retirement association in a manner that 25.6 recognizes the number of persons eligible to make the election 25.7 and the anticipated time required to conduct any required 25.8 benefit counseling. 25.9 Sec. 35. Minnesota Statutes 1996, section 353A.083, is 25.10 amended by adding a subdivision to read: 25.11 Subd. 3. [PRE-1997 CONSOLIDATIONS.] (a) For any 25.12 consolidation account in effect on July 1, 1997, for which the 25.13 city has approved the July 1, 1993, police and fire benefit 25.14 provisions, the formula multiplier for calculating retirement 25.15 and survivor annuities that apply to consolidation account 25.16 members who have elected or elect the benefit plan coverage 25.17 under the provisions of the public employees police and fire 25.18 fund is 2.9 percent per year of allowable service. 25.19 The disability benefit payable for these consolidated 25.20 members who elected or elect the benefit plan coverage under the 25.21 provisions of the public employees police and fire fund: 25.22 (1) who become disabled in the line of duty, as defined 25.23 under section 353.656, subdivision 1, is an amount equal to 58 25.24 percent of the "average salary" under section 353.651, 25.25 subdivision 2, plus an additional 2.9 percent of said average 25.26 salary for each year of service in excess of 20 years; or 25.27 (2) who become disabled because of sickness or injury 25.28 occurring while not on duty, as defined under section 353.656, 25.29 subdivision 3, is an amount equal to 43.5 percent of the 25.30 "average salary" under section 353.651, subdivision 2, plus an 25.31 additional 2.9 percent of said average salary for each year of 25.32 service in excess of 15 years. 25.33 (b) If the consolidated plan's city has not approved the 25.34 July 1, 1993, police and fire plan benefit provisions, the 25.35 formula multiplier for calculating retirement and survivor 25.36 annuities that apply to consolidation account members who have 26.1 elected or elect the benefit plan coverage under the provisions 26.2 of the public employees police and fire fund is 2.74 percent per 26.3 year of allowable service. 26.4 The disability benefit payable for consolidated members who 26.5 elected or elect the benefit plan coverage under the provisions 26.6 of the public employees police and fire fund: 26.7 (1) who become disabled in the line of duty, as defined 26.8 under section 353.656, subdivision 1, is an amount equal to 26.9 54.80 percent of the "average salary" under section 353.651, 26.10 subdivision 2, plus an additional 2.74 percent of said average 26.11 salary for each year of service in excess of 20 years; or 26.12 (2) who become disabled because of sickness or injury 26.13 occurring while not on duty, as defined under section 353.656, 26.14 subdivision 3, is an amount equal to 41.10 percent of the 26.15 "average salary" under section 353.651, subdivision 2, plus an 26.16 additional 2.74 percent of said average salary for each year of 26.17 service in excess of 15 years. 26.18 (c) The applicable benefit plan coverage defined in 26.19 paragraph (a) or (b) applies unless the applicable municipality 26.20 approves the extension of the post June 30, 1997, public 26.21 employees police and fire fund benefit plan to the consolidation 26.22 account. 26.23 Sec. 36. Minnesota Statutes 1996, section 353C.06, 26.24 subdivision 3, is amended to read: 26.25 Subd. 3. [ANNUITY AMOUNT.] The average salary as defined 26.26 in subdivision 2, multiplied bytwo percent for each year of26.27allowable service for the first ten years and 2.5 percent for26.28each additional year of allowable servicethe percent specified 26.29 in section 356.19, subdivision 5, and pro rata for completed 26.30 months less than a full year, determines the amount of the 26.31 normal annuity. If a person has earned allowable service in the 26.32 public employees retirement association or the public employees 26.33 police and fire fund prior to participation under this chapter, 26.34 the annuity representing such service must be computed in 26.35 accordance with the formula under sections 353.29 and 353.30 or 26.36 353.651, whichever applies. 27.1 Sec. 37. Minnesota Statutes 1996, section 353C.06, is 27.2 amended by adding a subdivision to read: 27.3 Subd. 3a. [OPTIONAL ANNUITY.] The board may establish an 27.4 optional annuity to pay a higher amount from the date of 27.5 retirement until an employee is eligible to draw social security 27.6 benefits, at which time the monthly benefits must be actuarially 27.7 reduced to equal the single life annuity under subdivision 3. 27.8 The optional annuities must be approved by the actuary retained 27.9 by the legislative commission on pensions and retirement. 27.10 Sec. 38. Minnesota Statutes 1996, section 353C.06, 27.11 subdivision 4, is amended to read: 27.12 Subd. 4. [ACCRUAL AND DURATION.] The annuity under this 27.13 section begins to accrue as provided in section 353.29, 27.14 subdivision 7. The annuity is payable for the life of the 27.15 recipient, or in accordance with the terms of any optional 27.16 annuity form selected., and is payable for 84 full calendar27.17months or to the first of the month following the month in which27.18the employee attains the normal retirement age, whichever occurs27.19first. After a recipient has received the annuity calculated27.20under this formula for 84 full calendar months or to the first27.21of the month following the month in which the employee attains27.22the normal retirement age, whichever occurs first, the benefit27.23must be recomputed in accordance with the coordinated formula in27.24sections 353.29 and 353.30, except that if this amount, when27.25added to the social security benefit based on public service the27.26employee is eligible to receive at that time, is less than the27.27benefit payable under subdivision 3, the retired employee is27.28entitled to receive an amount payable under subdivision 3, less27.29any amount payable from social security based on public service27.30used in the benefit calculation. When an annuity is reduced27.31under this subdivision, any percentage of adjustments that have27.32been applied to the original annuity under section 11A.18,27.33before the reduction, must be compounded and applied to the27.34reduced annuity.27.35 Sec. 39. Minnesota Statutes 1996, section 353C.08, 27.36 subdivision 1, is amended to read: 28.1 Subdivision 1. [DUTY DISABILITY QUALIFICATION 28.2 REQUIREMENTS.] A local government correctional employee who 28.3 becomes disabled and physically unfit to perform the duties of 28.4 the position as a direct result of an injury, sickness, or other 28.5 disability incurred in or arising out of any act of duty that 28.6 renders the employee physically or mentally unable to perform 28.7 the employee's duties, is entitled to a disability benefit based 28.8 on covered service only in an amount equal to4550 percent of 28.9 the average salary defined in section 353C.06, subdivision 2, 28.10 plus an additional2.5percent specified in section 356.19, 28.11 subdivision 5, for each year of covered service in excess of 20 28.12 years, ten months. 28.13 Sec. 40. Minnesota Statutes 1996, section 353C.09, is 28.14 amended to read: 28.15 353C.09 [SURVIVING SPOUSE OPTIONAL ANNUITY.] 28.16 Subdivision 1. [ELIGIBILITY.] (a) If a member or former 28.17 member of the local government correctional service retirement 28.18 plan has attained the age of at least 50 years and has credit 28.19 for not less than three years of allowable service, or who has 28.20 credit for not less than 30 years of allowable service, 28.21 regardless of age attained, dies before the annuity or 28.22 disability benefit has become payable, notwithstanding any 28.23 designation of beneficiary to the contrary, the surviving spouse 28.24 may elect to receive, in lieu of a refund with interest provided 28.25 in section 353.32, subdivision 1, an annuity equal to the 100 28.26 percent joint and survivor annuity for which the member could 28.27 have qualified had the member terminated service on the date of 28.28 death. The surviving spouse may apply for the annuity at any 28.29 time after the date on which the deceased employee would have 28.30 attained the required age for retirement based on the employee's 28.31 allowable service. The annuity must be computed on the formulas 28.32 undersections 353.29, subdivisions 2 and 3, and 353.30,28.33subdivisions 1, 1a, 1b, and 1csection 353C.06, subdivision 3. 28.34 (b) If the employee was under age 55 and had credit for at 28.35 least three years of allowable service credit on the date of 28.36 death but did not yet qualify for retirement, the surviving 29.1 spouse may elect to receive a 100 percent joint and survivor 29.2 annuity based on the age of the employee and surviving spouse at 29.3 the time of death. The annuity is payable using an actuarial 29.4 equivalent reduction to age 50 and one-half of the actuarial 29.5 equivalent reduction from age 50 to the age payment begins. The 29.6 surviving spouse eligible for a surviving spouse benefit under 29.7 paragraph (a) may apply for the annuity at any time after the 29.8 date on which the deceased employee would have attained the 29.9 required age for retirement based on the employee's allowable 29.10 service. The surviving spouse eligible for surviving spouse 29.11 benefits under this paragraph may apply for the annuity at any 29.12 time after the employee's death. 29.13 (c) Sections 353.34, subdivision 3, and 353.71, subdivision 29.14 2, apply to a deferred annuity payable under this subdivision. 29.15 No payment may accrue beyond the end of the month in which 29.16 entitlement to the annuity has terminated. An amount equal to 29.17 any excess of the accumulated contributions that were credited 29.18 to the account of the deceased employee over and above the total 29.19 of the annuities paid and payable to the surviving spouse must 29.20 be paid to the deceased member's last designated beneficiary or, 29.21 if none, to the legal representative of the estate of the 29.22 deceased member. A member may specify in writing that this 29.23 subdivision does not apply and that payment must be made only to 29.24 the designated beneficiary, as otherwise provided by this 29.25 chapter. 29.26 Subd. 2. [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 29.27 lieu of the 100 percent optional annuity under subdivision 1, 29.28 the surviving spouse of a deceased employee may elect to receive 29.29 survivor coverage in a term certain of ten, 15, or 20 years. 29.30 The monthly term certain annuity must be actuarially equivalent 29.31 to the 100 percent optional annuity under subdivision 1. If a 29.32 survivor elects a term certain annuity and dies before the 29.33 expiration of the specified term certain period, the commuted 29.34 value of the remaining annuity payments must be paid in a lump 29.35 sum to the survivor's estate. 29.36 Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 30.1 no surviving spouse eligible for benefits under subdivision 2, a 30.2 dependent child or children as defined in section 353.01, 30.3 subdivision 15, is eligible for monthly payments. Payments to a 30.4 dependent child must be paid from the date of the employee's 30.5 death to the date the dependent child attains age 20 if the 30.6 child is under age 15. If the child is 15 years or older on the 30.7 date of death, payment must be made for five years. The payment 30.8 to a dependent child is an amount actuarially equivalent to the 30.9 value of a 100 percent optional annuity using the age of the 30.10 employee and age of the dependent child at the date of death in 30.11 lieu of the age of the surviving spouse. If there is more than 30.12 one dependent child, each dependent child shall receive a 30.13 proportionate share of the actuarial value of the employee's 30.14 account. 30.15 Sec. 41. Minnesota Statutes 1996, section 354.05, 30.16 subdivision 38, is amended to read: 30.17 Subd. 38. [NORMAL RETIREMENT AGE.] "Normal retirement age" 30.18 means age 65 for a person who first became a member of the 30.19 association or a member of a pension fund listed in section 30.20 356.30, subdivision 3, before July 1, 1989. For a person who 30.21 first becomes a member of the association after June 30, 1989, 30.22 normal retirement age means the higher of age 65 or "retirement 30.23 age," as defined in United States Code, title 42, section 30.24 416(l), as amended, not to exceed age 66. 30.25 Sec. 42. Minnesota Statutes 1996, section 354.42, 30.26 subdivision 2, is amended to read: 30.27 Subd. 2. [EMPLOYEE.] The employee contribution to the fund 30.28shall beis an amount equal to6.55.0 percent of the salary of 30.29 every coordinated member and10.59.0 percent of the salary of 30.30 every basic member. This contributionshallmust be made by 30.31 deduction from salary. Where any portion of a member's salary 30.32 is paid from other than public funds,suchthe member's employee 30.33 contributionshallmust be based on the entire salary received. 30.34 Sec. 43. Minnesota Statutes 1996, section 354.42, 30.35 subdivision 3, is amended to read: 30.36 Subd. 3. [EMPLOYER.] The employer contribution to the fund 31.1shall beis an amount equal to4-1/25.0 percent of the salary 31.2 of each coordinated member and8-1/29.0 percent of the salary 31.3 of each basic member. 31.4 Sec. 44. Minnesota Statutes 1996, section 354.42, 31.5 subdivision 5, is amended to read: 31.6 Subd. 5. [ADDITIONAL EMPLOYER CONTRIBUTION.] To amortize 31.7 the unfunded actuarial accrued liability computed under the 31.8 entry age actuarial cost method and disclosed under the annual 31.9 actuarial valuations prepared by the commission-retained actuary 31.10 under section 356.215, an additional employer contributionshall31.11 must be made in the amount of3.641.64 percent of the salary of 31.12 each member. 31.13 This contribution must be made in the manner provided in 31.14 section 354.52, subdivision 4. This subdivision is repealed if 31.15 the fund is fully funded. 31.16By January 1 of each year, the board of directors shall31.17report to the legislative commission on pensions and retirement,31.18the chair of the committee on appropriations of the house of31.19representatives, and the chair of the committee on finance of31.20the senate on the amount raised by the additional employer31.21contribution rate in effect and whether that amount is less31.22than, the same as, or more than the required amortization31.23contribution determined under section 356.215.31.24 Sec. 45. Minnesota Statutes 1996, section 354.44, 31.25 subdivision 6, is amended to read: 31.26 Subd. 6. [COMPUTATION OF FORMULA PROGRAM RETIREMENT 31.27 ANNUITY.] (1) The formula retirement annuityhereunder shall31.28 must be computed in accordance with the applicable provisions of 31.29 the formulas stated in clause (2) or (4) on the basis of each 31.30 member's average salary for the period of the member's formula 31.31 service credit. 31.32 For all years of formula service credit, "average salary," 31.33 for the purpose of determining the member's retirement annuity, 31.34 means the average salary upon which contributions were made and 31.35 upon which payments were made to increase the salary limitation 31.36 provided in Minnesota Statutes 1971, section 354.511, for the 32.1 highest five successive years of formula service credit 32.2 provided, however, that such "average salary" shall not include 32.3 any more than the equivalent of 60 monthly salary payments. 32.4 Average salary must be based upon all years of formula service 32.5 credit if this service credit is less than five years. 32.6 (2) This clause, in conjunction with clause (3), applies to 32.7 a person who first became a member of the association or a 32.8 member of a pension fund listed in section 356.30, subdivision 32.9 3, before July 1, 1989, unless clause (4), in conjunction with 32.10 clause (5), produces a higher annuity amount, in which case 32.11 clause (4) applies. The average salary as defined in clause 32.12 (1), multiplied by the following percentages per year of formula 32.13 service credit shall determine the amount of the annuity to 32.14 which the member qualifying therefor is entitled: 32.15 Coordinated Member Basic Member 32.16 Each year of service1.13the2.13the 32.17 during first ten percent percent 32.18 specified in specified in 32.19 section 356.19, section 356.19, 32.20 subdivision 1, subdivision 3, 32.21 per year per year 32.22 Each year of service1.63the2.63the 32.23 thereafter percent percent 32.24 specified in specified in 32.25 section 356.19, section 356.19, 32.26 subdivision 2, subdivision 4, 32.27 per year per year 32.28 (3)(i) This clause applies only to a person who first 32.29 became a member of the association or a member of a pension fund 32.30 listed in section 356.30, subdivision 3, before July 1, 1989, 32.31 and whose annuity is higher when calculated under clause (2), in 32.32 conjunction with this clause than when calculated under clause 32.33 (4), in conjunction with clause (5). 32.34 (ii) Where any member retires prior to normal retirement 32.35 age under a formula annuity, the member shall be paid a 32.36 retirement annuity in an amount equal to the normal annuity 33.1 provided in clause (2) reduced by one-quarter of one percent for 33.2 each month that the member is under normal retirement age at the 33.3 time of retirement except that for any member who has 30 or more 33.4 years of allowable service credit, the reduction shall be 33.5 applied only for each month that the member is under age 62. 33.6 (iii) Any member whose attained age plus credited allowable 33.7 service totals 90 years is entitled, upon application, to a 33.8 retirement annuity in an amount equal to the normal annuity 33.9 provided in clause (2), without any reduction by reason of early 33.10 retirement. 33.11 (4) This clause applies to a member who has become at least 33.12 55 years old and first became a member of the association after 33.13 June 30, 1989, and to any other member who has become at least 33.14 55 years old and whose annuity amount when calculated under this 33.15 clause and in conjunction with clause (5), is higher than it is 33.16 when calculated under clause (2), in conjunction with clause (3). 33.17 The average salary, as defined in clause (1) multiplied by2.6333.18 the percent specified by section 356.19, subdivision 4, for each 33.19 year of service for a basic member and by1.63the 33.20 percent specified in section 356.19, subdivision 2, for each 33.21 year of service for a coordinated member shall determine the 33.22 amount of the retirement annuity to which the member is entitled. 33.23 (5) This clause applies to a person who has become at least 33.24 55 years old and first becomes a member of the association after 33.25 June 30, 1989, and to any other member who has become at least 33.26 55 years old and whose annuity is higher when calculated under 33.27 clause (4) in conjunction with this clause than when calculated 33.28 under clause (2), in conjunction with clause (3). An employee 33.29 who retires under the formula annuity before the normal 33.30 retirement age shall be paid the normal annuity provided in 33.31 clause (4) reduced so that the reduced annuity is the actuarial 33.32 equivalent of the annuity that would be payable to the employee 33.33 if the employee deferred receipt of the annuity and the annuity 33.34 amount were augmented at an annual rate of three percent 33.35 compounded annually from the day the annuity begins to accrue 33.36 until the normal retirement age. 34.1 Sec. 46. Minnesota Statutes 1996, section 354.53, 34.2 subdivision 1, is amended to read: 34.3 Subdivision 1. [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 34.4 employee given a leave of absence to enter military service and 34.5 who returns to teaching service upon discharge from military 34.6 service as provided in section 192.262,shallmay obtain credit 34.7 for the period of military service but shall not receive credit 34.8 for any voluntary extension of military service at the instance 34.9 of the member beyond the initial period of enlistment, induction 34.10 or call to active duty. The member shall obtain credit by 34.11 paying into the fund an employee contribution based upon 34.12 thesalary of the member at the date of return from military34.13service. The amount of this contribution shall be as follows:34.1434.15PeriodBasic MemberCoordinated Member34.16July 1, 19738 percent4 percent34.17thru34.18June 30, 197934.19July 1, 197934.20and8.5 percent4.5 percent34.21thereafter34.22The contributions specified in this subdivision shall be34.23 contribution rates in effect at the time military service was 34.24 performed multiplied by the salary of the member at the date of 34.25 return from military service and the number of years of military 34.26 service together with interest thereon at an annual rate of 8.5 34.27 percent compounded annually from the time the military service 34.28 was rendered to the first date of payment. The employer 34.29 contribution and additional contribution provided in section 34.30 354.42shallmust be paid by the employer unit in the manner 34.31 provided in section 354.52, subdivision 4. 34.32 Sec. 47. Minnesota Statutes 1996, section 354.55, 34.33 subdivision 11, is amended to read: 34.34 Subd. 11. [DEFERRED ANNUITY; AUGMENTATION.] Any person 34.35 covered under section 354.44, subdivision 6, who ceases to 34.36 render teaching service, may leave the person's accumulated 35.1 deductions in the fund for the purpose of receiving a deferred 35.2 annuity at retirement. Eligibility for an annuity under this 35.3 subdivisionshall beis governed pursuant to section 354.44, 35.4 subdivision 1, or 354.60. 35.5 The amount of the deferred retirement annuityshall beis 35.6 determined by section 354.44, subdivision 6, and augmented as 35.7 provided in this subdivision. The required reserves related to 35.8 that portion of the annuity which had accrued when the member 35.9 ceased to render teaching serviceshallmust be augmented by 35.10 interest compounded annually from the first day of the month 35.11 following the month during which the member ceased to render 35.12 teaching service to the effective date of retirement. There 35.13 shall be no augmentation if this period is less than three 35.14 months or if this period commences prior to July 1, 1971. The 35.15 rates of interest used for this purposeshallmust be five 35.16 percent compounded annually commencing July 1, 1971, until 35.17 January 1, 1981, and three percent compounded annually 35.18 thereafter until January 1 of the year following the year in 35.19 which the former member attains age 55. From that date to the 35.20 effective date of retirement, the rate is five percent 35.21 compounded annually. If a person has more than one period of 35.22 uninterrupted service, a separate average salary determined 35.23 under section 354.44, subdivision 6, must be used for each 35.24 period and the required reserves related to each periodshall35.25 must be augmented by interest pursuant to this subdivision. The 35.26 sum of the augmented required reserves so determined shall be 35.27 the basis for purchasing the deferred annuity. If a person 35.28 repays a refund, the service restored by the repayment must be 35.29 considered as continuous with the next period of service for 35.30 which the person has credit with this fund. If a person does 35.31 not render teaching service in any one fiscal year or more 35.32 consecutive fiscal years and then resumes teaching service, the 35.33 formula percentages used from the date of the resumption of 35.34 teaching serviceshallmust be those applicable to new members. 35.35 The mortality table and interest assumption used to compute the 35.36 annuityshallmust be the applicable mortality table established 36.1 by the board under section 354.07, subdivision 1, and the 36.2 interest rate assumption under section 356.215 in effect when 36.3 the member retires. A period of uninterrupted service for the 36.4 purposes of this subdivision means a period of covered teaching 36.5 service during which the member has not been separated from 36.6 active service for more than one fiscal year. 36.7 In no case shall the annuity payable under this subdivision 36.8 be less than the amount of annuity payable pursuant to section 36.9 354.44, subdivision 6. 36.10 The requirements and provisions for retirement before 36.11 normal retirement age contained in section 354.44, subdivision 36.12 6, clause (3) or (5), shall also apply to an employee fulfilling 36.13 the requirements with a combination of service as provided in 36.14 section 354.60. 36.15 The augmentation provided by this subdivision applies to 36.16 the benefit provided in section 354.46, subdivision 2. 36.17 The augmentation provided by this subdivision shall not 36.18 apply to any period in which a person is on an approved leave of 36.19 absence from an employer unit covered by the provisions of this 36.20 chapter. 36.21 The survivor or retirement benefit to a member or survivor 36.22 of a member who terminated service before July 1, 1997, is 36.23 determined under the laws in effect on the date of termination 36.24 and is increased to reflect the change in the postretirement 36.25 fund interest assumption from five percent to six percent. The 36.26 benefit payable under the six percent postretirement interest 36.27 assumption must be actuarially equivalent to the benefit payable 36.28 under the five percent interest assumption, and must be based on 36.29 tables adopted by the board as recommended by an approved 36.30 actuary and approved by the actuary retained by the legislative 36.31 commission on pensions and retirement. 36.32 Sec. 48. [356.151] [EXPERIENCE STUDY.] 36.33 (a) A quadrennial experience study, if required, must 36.34 contain an actuarial analysis of the experience of the fund and 36.35 a comparison of the experience with the actuarial assumptions on 36.36 which the most recent actuarial valuation of the retirement fund 37.1 was based. 37.2 (b) The actuary retained by each of the public pension 37.3 funds named under section 356.30, subdivision 3, must use the 37.4 quadrennial experience study to project the pension benefit 37.5 obligation by year to the year 2020 assuming continuous entry 37.6 and exit of members from the fund that is consistent with those 37.7 findings examining employee turnover and entry characteristics. 37.8 The actuary shall develop assumptions about new entrants to the 37.9 fund in consultation with the state demographer and state 37.10 economist and must estimate the level percent of payroll 37.11 contribution required to fully fund the projected pension 37.12 benefit obligation by the amortization target date. 37.13 Sec. 49. [356.19] [RETIREMENT BENEFIT FORMULA 37.14 PERCENTAGES.] 37.15 Subdivision 1. [COORDINATED PLAN MEMBERS.] 1.2 percent. 37.16 Subd. 2. [COORDINATED PLAN MEMBERS.] 1.7 percent. 37.17 Subd. 3. [BASIC PLAN MEMBERS.] 2.2 percent. 37.18 Subd. 4. [BASIC PLAN MEMBERS.] 2.7 percent. 37.19 Subd. 5. [CORRECTIONAL PLAN MEMBERS.] 2.4 percent. 37.20 Subd. 6. [STATE TROOPERS PLAN AND POLICE/FIRE PLAN 37.21 MEMBERS.] 3.0 percent. 37.22 Subd. 7. [JUDGES PLAN.] 2.7 percent. 37.23 Subd. 8. [JUDGES PLAN.] 3.2 percent. 37.24 Sec. 50. Minnesota Statutes 1996, section 356.215, 37.25 subdivision 1, is amended to read: 37.26 Subdivision 1. [DEFINITIONS.] For the purposes of sections 37.27 3.85 and 356.20 to 356.23, each of the following terms have the 37.28 meaning given: 37.29 (1) "Actuarial valuation" means a set of calculations 37.30 prepared by the actuary retained by the legislative commission 37.31 on pensions and retirement if so required under section 3.85, or 37.32 otherwise, by an approved actuary, to determine the normal cost 37.33 and the accrued actuarial liabilities of a benefit plan, 37.34 according to the entry age actuarial cost method and based upon 37.35 stated assumptions including, but not limited to rates of 37.36 interest, mortality, salary increase, disability, withdrawal, 38.1 and retirement and to determine the payment necessary to 38.2 amortize over a stated period any unfunded accrued actuarial 38.3 liability disclosed as a result of the actuarial valuation of 38.4 the benefit plan. 38.5 (2) "Approved actuary" means a person who is regularly 38.6 engaged in the business of providing actuarial services and who 38.7 has at least 15 years of service to major public employee 38.8 pension or retirement funds or who is a fellow in the society of 38.9 actuaries. 38.10 (3) "Entry age actuarial cost method" means an actuarial 38.11 cost method under which the actuarial present value of the 38.12 projected benefits of each individual currently covered by the 38.13 benefit plan and included in the actuarial valuation is 38.14 allocated on a level basis over the service of the individual if 38.15 the benefit plan is governed by section 69.773 or over the 38.16 earnings of the individual if the benefit plan is governed by 38.17 any other law between the entry age and the assumed exit age, 38.18 with the portion of this actuarial present value which is 38.19 allocated to the valuation year to be the normal cost and the 38.20 portion of this actuarial present value not provided for at the 38.21 valuation date by the actuarial present value of future normal 38.22 costs to be the actuarial accrued liability, with aggregation in 38.23 the calculation process to be the sum of the calculated result 38.24 for each covered individual and with recognition given to any 38.25 different benefit formulas which may apply to various periods of 38.26 service. 38.27 (4) "Experience study" means a report providing experience 38.28 data and an actuarial analysis of the adequacy of the actuarial 38.29 assumptions on which actuarial valuations are based. 38.30 (5) "Current assets" means the value of all assets at cost, 38.31 including realized capital gains or losses, plus one-third of 38.32 any unrealized capital gains or losses except for funds governed 38.33 by chapter 354A, in which case current assets means the value of 38.34 all assets at cost, including realized capital gains and losses, 38.35 plus or minus, whichever applies, the average value of total 38.36 unrealized capital gains or losses for the most recent 39.1 three-year period ending with the end of the plan year 39.2 immediately preceding the actuarial valuation report 39.3 transmission date. 39.4 (6) "Unfunded actuarial accrued liability" means the total 39.5 current and expected future benefit obligations, reduced by the 39.6 sum of current assets and the present value of future normal 39.7 costs. 39.8 (7) "Pension benefit obligation" means the actuarial 39.9 present value of credited projected benefits, determined as the 39.10 actuarial present value of benefits estimated to be payable in 39.11 the future as a result of employee service attributing an equal 39.12 benefit amount, including the effect of projected salary 39.13 increases and any step rate benefit accrual rate differences, to 39.14 each year of credited and expected future employee service. 39.15 Sec. 51. Minnesota Statutes 1996, section 356.215, 39.16 subdivision 4d, is amended to read: 39.17 Subd. 4d. [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 39.18 governed by chapters 352B, 353C, and by sections 352.90 through 39.19 352.951 and 353.63 through 353.68, the actuarial valuation must 39.20 use a preretirement interest assumption of 8.5 percent, a 39.21 postretirement interest assumption offivesix percent, and a 39.22 future salary increase assumption of 6.5 percent. 39.23 (b) For funds governed by chapter 354A, the actuarial 39.24 valuation must use preretirement and postretirement assumptions 39.25 of 8.5 percent and a graded rate future salary increase 39.26 assumptionof 6.5 percentestablished using the provisions in 39.27 subdivision 7, but the actuarial valuation must reflect the 39.28 payment of postretirement adjustments to retirees, based on the 39.29 methods specified in the bylaws of the fund as approved by the 39.30 legislature. For a fund governed by chapter 422A, the actuarial 39.31 valuation shall use a preretirement interest assumption of six 39.32 percent, a postretirement interest assumption of five percent, 39.33 and an assumption that in each future year the salary on which a 39.34 retirement or other benefit is based is 1.04 multiplied by the 39.35 salary for the preceding year. 39.36 (c) For all other funds not specified in paragraph (a), 40.1 (b), (d), or (e), the actuarial valuation must use a 40.2 preretirement interest assumption of five percent, a 40.3 postretirement interest assumption of five percent, and a future 40.4 salary increase assumption of 3.5 percent. 40.5 (d) For funds governed by chapters 3A, 352C, and 490, the 40.6 actuarial valuation must use a preretirement interest assumption 40.7 of 8.5 percent, a postretirement interest assumption offivesix 40.8 percent, and a future salary increase assumption of 6.5 percent 40.9 in each future year in which the salary amount payable is not 40.10 determinable from section 3.099, 15A.081, subdivision 6, or 40.11 15A.083, subdivision 1, whichever applies, or from applicable 40.12 compensation council recommendations under section 15A.082. 40.13 (e) For funds governed by sections 352.01 through 352.86, 40.14 353.01 through 353.46, and chapter 354, the actuarial valuation 40.15 must use a preretirement interest assumption of 8.5, a 40.16 postretirement interest assumption offivesix percent, and a 40.17 graded rate future salary increase assumption as follows: 40.18 General state General public 40.19 employees employees Teachers 40.20 retirement retirement retirement 40.21 Age plan plan plan 40.22 16 7.2500% 8.71% 7.25% 40.23 17 7.2500 8.71 7.25 40.24 18 7.2500 8.70 7.25 40.25 19 7.2500 8.70 7.25 40.26 20 7.2500 7.70 7.25 40.27 21 7.1454 7.70 7.25 40.28 22 7.1094 7.70 7.25 40.29 23 7.0725 7.70 7.20 40.30 24 7.0363 7.70 7.15 40.31 25 7.0000 7.60 7.10 40.32 26 7.0000 7.51 7.05 40.33 27 7.0000 7.39 7.00 40.34 28 7.0000 7.30 7.00 40.35 29 7.0000 7.20 7.00 40.36 30 7.0000 7.20 7.00 41.1 31 7.0000 7.10 7.00 41.2 32 7.0000 7.10 7.00 41.3 33 7.0000 7.00 7.00 41.4 34 7.0000 7.00 7.00 41.5 35 7.0000 6.90 7.00 41.6 36 6.9019 6.80 7.00 41.7 37 6.8074 6.70 7.00 41.8 38 6.7125 6.60 6.90 41.9 39 6.6054 6.50 6.80 41.10 40 6.5000 6.40 6.70 41.11 41 6.3540 6.30 6.60 41.12 42 6.2087 6.30 6.50 41.13 43 6.0622 6.30 6.35 41.14 44 5.9048 6.20 6.20 41.15 45 5.7500 6.20 6.05 41.16 46 5.6940 6.09 5.90 41.17 47 5.6375 6.00 5.75 41.18 48 5.5822 5.90 5.70 41.19 49 5.5405 5.80 5.65 41.20 50 5.5000 5.70 5.60 41.21 51 5.4384 5.70 5.55 41.22 52 5.3776 5.70 5.50 41.23 53 5.3167 5.70 5.45 41.24 54 5.2826 5.70 5.40 41.25 55 5.2500 5.70 5.35 41.26 56 5.2500 5.70 5.30 41.27 57 5.2500 5.70 5.25 41.28 58 5.2500 5.70 5.25 41.29 59 5.2500 5.70 5.25 41.30 60 5.2500 5.00 5.25 41.31 61 5.2500 5.00 5.25 41.32 62 5.2500 5.00 5.25 41.33 63 5.2500 5.00 5.25 41.34 64 5.2500 5.00 5.25 41.35 65 5.2500 5.00 5.25 41.36 66 5.2500 5.00 5.25 42.1 67 5.2500 5.00 5.25 42.2 68 5.2500 5.00 5.25 42.3 69 5.2500 5.00 5.25 42.4 70 5.2500 5.00 5.25 42.5 Sec. 52. Minnesota Statutes 1996, section 356.25, is 42.6 amended to read: 42.7 356.25 [LOCAL GOVERNMENTAL PENSION FUNDPROHIBITIONS;42.8EXCLUSIONS.] 42.9 Subdivision 1. [PROHIBITIONS; EXCLUSIONS.] Notwithstanding 42.10 any other provision of law or charter, no city, county, public 42.11 agency or instrumentality, or other political subdivision shall, 42.12 after August 1, 1975, establish for any of its employees any 42.13 local pension plan or fund financed in whole or in part from 42.14 public funds, other than a volunteer firefighter's relief 42.15 association established pursuant to chapter 424A and governed by 42.16 sections 69.771 to 69.776. 42.17 Subd. 2. [SUPPLEMENTAL DEFINED CONTRIBUTION PLAN 42.18 LIMITATIONS.] Notwithstanding subdivision 1, a city, county, 42.19 public agency or instrumentality, or other political subdivision 42.20 may purchase, from a licensed annuity company for an employee 42.21 who is at least 55 years old, a supplemental defined 42.22 contribution annuity for early retirement if the employee is 42.23 part of a work unit within the employing entity that is 42.24 reorganizing services, reducing the number of employees on a 42.25 planned long-term basis, or changing the delivery of a service 42.26 to achieve greater efficiencies and effectiveness. The offer by 42.27 the employer to purchase a supplemental annuity must not extend 42.28 beyond one year or be made to employees who do not retire within 42.29 the year. Provision of the supplemental annuity under this 42.30 subdivision shall be annually reported to either the legislative 42.31 auditor or the state auditor, depending on which one has audit 42.32 responsibilities for the entity. If the applicable auditor 42.33 finds that the employer has expended public funds for the 42.34 purchase of the supplemental annuity but has not reorganized 42.35 services, reduced the number of staff on a long-term basis, or 42.36 changed the delivery of services to achieve greater efficiency 43.1 and effectiveness, the auditor shall issue a finding that the 43.2 provision has been misused. An employer for which such a 43.3 finding has been issued must not offer annuities under this 43.4 subdivision for a period of five years after the finding is 43.5 issued. 43.6 Sec. 53. Minnesota Statutes 1996, section 356.30, 43.7 subdivision 1, is amended to read: 43.8 Subdivision 1. [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 43.9 Notwithstanding any provisions to the contrary of the laws 43.10 governing the funds enumerated in subdivision 3, a person who 43.11 has met the qualifications of clause (2) may elect to receive a 43.12 retirement annuity from each fund in which the person has at 43.13 least six months allowable service, based on the allowable 43.14 service in each fund, subject to the provisions of clause (3). 43.15 (2) A person may receive upon retirement a retirement 43.16 annuity from each fund in which the person has at least six 43.17 months allowable service, and augmentation of a deferred annuity 43.18 calculated under the laws governing each public pension plan or 43.19 fund named in subdivision 3, from the date the person terminated 43.20 all public service if: 43.21 (a) the person has allowable service totaling an amount 43.22 that allows the person to receive an annuity in any two or more 43.23 of the enumerated funds; and 43.24 (b) the person has not begun to receive an annuity from any 43.25 enumerated fund or the person has made application for benefits 43.26 from all funds and the effective dates of the retirement annuity 43.27 with each fund under which the person chooses to receive an 43.28 annuity are within a one-year period. 43.29 (3) The retirement annuity from each fund must be based 43.30 upon the allowable service in each fund, except that: 43.31 (a) The laws governing annuities must be the law in effect 43.32 on the date of termination from the last period of public 43.33 service under a covered fund with which the person earned a 43.34 minimum of one-half year of allowable service credit during that 43.35 employment. 43.36 (b) The "average salary" on which the annuity from each 44.1 covered fund in which the employee has credit in a formula plan 44.2 shall be based on the employee's highest five successive years 44.3 of covered salary during the entire service in covered funds. 44.4 (c) The formula percentages to be used by each fund must be 44.5 those percentages prescribed by each fund's formula as continued 44.6 for the respective years of allowable service from one fund to 44.7 the next, recognizing all previous allowable service with the 44.8 other covered funds. 44.9 (d) Allowable service in all the funds must be combined in 44.10 determining eligibility for and the application of each fund's 44.11 provisions in respect to actuarial reduction in the annuity 44.12 amount for retirement prior to normal retirement. 44.13 (e) The annuity amount payable for any allowable service 44.14 under a nonformula plan of a covered fund must not be affected 44.15 but such service and covered salary must be used in the above 44.16 calculation. 44.17 (f) This section shall not apply to any person whose final 44.18 termination from the last public service under a covered fund is 44.19 prior to May 1, 1975. 44.20 (g) For the purpose of computing annuities under this 44.21 section the formula percentages used by any covered fund, except 44.22the basic program of the teachers retirement association,the 44.23 public employees police and fire fund, and the state patrol 44.24 retirement fund, must not exceed2-1/2the percent specified in 44.25 section 356.19, subdivision 4, per year of service for any year 44.26 of service or fraction thereof. The formula percentage used by 44.27 the public employees police and fire fund and the state patrol 44.28 retirement fund must not exceed2.65the percent specified in 44.29 section 356.19, subdivision 6, per year of service for any year 44.30 of service or fraction thereof.The formula percentage used by44.31the teachers retirement association must not exceed 2.63 percent44.32per year of basic program service for any year of basic program44.33service or fraction thereof.44.34 (h) Any period of time for which a person has credit in 44.35 more than one of the covered funds must be used only once for 44.36 the purpose of determining total allowable service. 45.1 (i) If the period of duplicated service credit is more than 45.2 six months, or the person has credit for more than six months 45.3 with each of the funds, each fund shall apply its formula to a 45.4 prorated service credit for the period of duplicated service 45.5 based on a fraction of the salary on which deductions were paid 45.6 to that fund for the period divided by the total salary on which 45.7 deductions were paid to all funds for the period. 45.8 (j) If the period of duplicated service credit is less than 45.9 six months, or when added to other service credit with that fund 45.10 is less than six months, the service credit must be ignored and 45.11 a refund of contributions made to the person in accord with that 45.12 fund's refund provisions. 45.13 Sec. 54. Minnesota Statutes 1996, section 356.88, is 45.14 amended by adding a subdivision to read: 45.15 Subd. 3. [FORMULA PERCENTAGE INCREASES.] After January 1, 45.16 1998, increases in the formula percentages used to calculate 45.17 retirement benefits must apply only to service credited after 45.18 the effective date of the formula percentage increase. 45.19 Sec. 55. Minnesota Statutes 1996, section 490.124, 45.20 subdivision 1, is amended to read: 45.21 Subdivision 1. [BASIC RETIREMENT ANNUITY.] Except as 45.22 qualified hereinafter from and after mandatory retirement date, 45.23 normal retirement date, early retirement date, or one year from 45.24 the disability retirement date, as the case may be, a retirement 45.25 annuity shall be payable to a retiring judge from the judges' 45.26 retirement fund in an amount equal to: (1)2-1/2the percentof45.27 specified in section 356.19, subdivision 7, multiplied by the 45.28 judge's final average compensation multiplied by the number of 45.29 years and fractions of years of allowable service rendered prior 45.30 to July 1, 1980; plus (2)threethe percentofspecified in 45.31 section 356.19, subdivision 8, multiplied by the judge's final 45.32 average compensation multiplied by the number of years and 45.33 fractions of years of allowable service rendered after June 30, 45.34 1980; provided that the annuityshallmust not exceed6570 45.35 percent of the judge's annual salary for the 12 months 45.36 immediately preceding retirement. 46.1 Sec. 56. [APPROPRIATION; DEPARTMENT OF CORRECTIONS.] 46.2 For fiscal year 1998, $936,360 from the general fund is 46.3 added to the base funding for the department of corrections. 46.4 Sec. 57. [APPROPRIATION REDUCTION; MINNESOTA STATE 46.5 COLLEGES AND UNIVERSITIES.] 46.6 For fiscal year 1998, the commissioner of finance shall 46.7 reduce the base appropriation for the Minnesota state colleges 46.8 and universities by an amount equal to nine-tenths of one 46.9 percent of the salaries of employees covered by either the 46.10 coordinated or basic retirement plans of the statewide teachers 46.11 retirement association. 46.12 Sec. 58. [APPROPRIATION REDUCTION.] 46.13 For fiscal year 1998, the commissioner of finance shall 46.14 reduce the base appropriations by an amount equal to 12/100 of 46.15 one percent of the general fund supported salaries of employees 46.16 who are members of the general plan of the Minnesota state 46.17 retirement system. 46.18 Sec. 59. [APPROPRIATION REDUCTION; STATE AGENCIES.] 46.19 For fiscal year 1998, the commissioner of finance shall 46.20 reduce the base appropriations of state agencies by an amount 46.21 equal to two-tenths of one percent of the general fund supported 46.22 salaries of employees who are members of the general plan of the 46.23 Minnesota state retirement system. 46.24 Sec. 60. [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.] 46.25 (a) A monthly survivor, disability, or retirement benefit 46.26 payable under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 46.27 352D, 353, 353A, 353C, 354, and 490 on June 30, 1997, is 46.28 permanently increased effective July 1, 1997, to reflect the 46.29 change in the postretirement fund interest assumption from five 46.30 percent to six percent. The benefit payable under the six 46.31 percent postretirement interest assumption must be actuarially 46.32 equivalent to the benefit payable under the five percent 46.33 interest assumption and must be based on tables adopted by the 46.34 applicable board as recommended by an approved actuary and 46.35 approved by the actuary retained by the legislative commission 46.36 on pensions and retirement. 47.1 (b) A member of the teachers retirement association who 47.2 terminates service after June 30, 1997, and whose effective date 47.3 of retirement occurs during the period of July 2, 1997 to July 47.4 2, 2002, must receive a percentage of the increase specified in 47.5 paragraph (a) based on the member's age at retirement as 47.6 specified below: 47.7 Retirement period Percentage of paragraph (a) 47.8 July 2, 1997 to July 1, 1998 50 percent 47.9 July 2, 1998 to July 1, 1999 40 percent 47.10 July 2, 1999 to July 1, 2000 30 percent 47.11 July 2, 2000 to July 1, 2001 20 percent 47.12 July 2, 2001 to July 1, 2002 10 percent 47.13 Sec. 61. [REPEALER.] 47.14 Minnesota Statutes 1996, sections 356.70; and 356.88, 47.15 subdivision 2, are repealed. 47.16 Sec. 62. [EFFECTIVE DATES.] 47.17 Sections 28 and 29 are effective the first full pay period 47.18 after December 31, 1997. Sections 7, 8, 11, 12, 19, and 20 are 47.19 effective the first full pay period after June 30, 1997. 47.20 Sections 42, 43, and 44 are effective for all salary paid July 47.21 1, 1997, or later. Sections 1 to 6, 9, 10, 13 to 18, 21 to 27, 47.22 30 to 41, and 45 to 61 are effective July 1, 1997. 47.23 ARTICLE 2 47.24 LEGISLATORS AND CONSTITUTIONAL OFFICERS 47.25 Section 1. Minnesota Statutes 1996, section 3A.07, is 47.26 amended to read: 47.27 3A.07 [APPLICATION.] 47.28 This chapter applies to members of the legislature in 47.29 service upon July 1, 1965, or thereafter, who otherwise meet the 47.30 requirements of this chapter, except that members elected for 47.31 the first time after June 30, 1997, are covered by the elected 47.32 officers plan in chapter 352E. 47.33 Sec. 2. [352C.011] [APPLICABILITY.] 47.34 This chapter applies only to constitutional officers first 47.35 elected before July 1, 1997, to a constitutional office. 47.36 Constitutional officers elected for the first time to a 48.1 constitutional office after June 30, 1997, are covered by the 48.2 elected officers plan under chapter 352E. 48.3 Sec. 3. [352E.051] [ESTABLISHMENT.] 48.4 A retirement program for legislators and constitutional 48.5 officers to be known as the elected officers plan is established 48.6 in the Minnesota state retirement system. 48.7 Sec. 4. [352E.052] [DEFINITIONS.] 48.8 Subdivision 1. [TERMS.] As used in this chapter, unless 48.9 the language, context, or subject matter indicates otherwise, 48.10 the terms in this section have the meanings given them. 48.11 Subd. 2. [COVERED EMPLOYMENT.] "Covered employment" means 48.12 employment covered by this chapter. 48.13 Subd. 3. [ELECTED OFFICERS PLAN.] "Elected officers plan" 48.14 means the retirement program established by this chapter for 48.15 legislators and constitutional officers who were elected for the 48.16 first time to their positions after June 30, 1997. 48.17 Subd. 4. [EMPLOYEE SHARES.] "Employee shares" means shares 48.18 in the supplemental fund purchased with the elected officer's 48.19 contributions. 48.20 Subd. 5. [EMPLOYER SHARES.] "Employer shares" means shares 48.21 in the supplemental fund purchased with the employer's 48.22 contributions. 48.23 Subd. 6. [SUPPLEMENTAL FUND.] "Supplemental fund" means 48.24 the fund established and governed by section 11A.17. 48.25 Subd. 7. [TOTAL SHARES.] "Total shares" means all the 48.26 employee shares and employer shares credited to a participant. 48.27 Where applicable, the term contributions shall mean shares. 48.28 Subd. 8. [VALUE.] "Value" means cash value at the end of 48.29 the month following receipt of an application. If no 48.30 application is required, value means the cash value at the end 48.31 of the month in which the event necessitating the transfer 48.32 occurs. 48.33 Sec. 5. [352E.053] [COVERAGE.] 48.34 First-time constitutional officers elected to any 48.35 constitutional office and first-time legislators elected after 48.36 June 30, 1997, are eligible for coverage under the elected 49.1 officers plan. 49.2 Sec. 6. [352E.054] [INVESTMENT OPTIONS.] 49.3 Subdivision 1. [PURCHASE OF SHARES.] (a) An employee may 49.4 elect to purchase shares in one or a combination of the income 49.5 share account, growth share account, international share 49.6 account, money market account, bond market account, fixed 49.7 interest account, or common stock index account established in 49.8 section 11A.17. The employee may elect to participate in one or 49.9 more of the investment accounts in the fund by specifying, on a 49.10 form provided by the executive director, the percentage of the 49.11 employee's contributions provided in subdivision 2 to be used to 49.12 purchase shares in each of the accounts. 49.13 (b) A participant may indicate in writing on forms provided 49.14 by the Minnesota state retirement system a choice of options for 49.15 subsequent purchases of shares. Until a different written 49.16 indication is made by the participant, the executive director 49.17 shall purchase shares in the supplemental fund as selected by 49.18 the participant. If no initial option is chosen, 100 percent 49.19 income shares must be purchased for a participant. 49.20 (c) A participant or former participant may also change the 49.21 investment options selected for all or a portion of the 49.22 participant's shares previously purchased in accounts. 49.23 Subd. 2. [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] The money 49.24 used to purchase shares under this section shall be the employee 49.25 and employer contributions provided in this subdivision. 49.26 (a) The employee contribution shall be five percent of 49.27 salary. 49.28 (b) The employer contribution must be an amount equal to 49.29 five percent of salary. 49.30 These contributions must be made by deduction from salary 49.31 in the manner provided in section 352.04, subdivisions 4, 5, and 49.32 6. 49.33 Sec. 7. [352E.055] [WITHDRAWAL OPTIONS.] 49.34 Subdivision 1. [PAYMENT AFTER TERMINATION.] No withdrawal 49.35 of shares shall be permitted prior to termination of covered 49.36 employment. 50.1 Subd. 2. [WITHDRAWAL OPTIONS.] After termination of 50.2 covered employment or any time thereafter, a participant is 50.3 entitled, upon application, to withdraw the cash value of the 50.4 participant's total shares or leave such shares on deposit with 50.5 the supplemental retirement fund. Shares not withdrawn remain 50.6 on deposit with the supplemental retirement fund until the 50.7 former participant becomes at least 55 years old, and applies 50.8 for an annuity under section 352E.06, subdivision 1. 50.9 Sec. 8. [352E.06] [ANNUITIES.] 50.10 Subdivision 1. [ANNUITY PURCHASE.] When a participant 50.11 attains at least age 55, is retired from covered service, and 50.12 applies for a retirement annuity, the cash value of the 50.13 participant's shares must be transferred to the Minnesota 50.14 postretirement investment fund and used to provide an annuity 50.15 for the retired employee based upon the participant's age when 50.16 the benefit begins to accrue according to the reserve basis used 50.17 by the state employees retirement fund in determining pensions 50.18 and reserves. 50.19 Subd. 2. [LUMP SUM PLUS ANNUITY OPTION.] A participant has 50.20 the option in an application for an annuity to apply for and 50.21 receive the value of one-half of the total shares and thereafter 50.22 receive an annuity, as provided in subdivision 1, based on the 50.23 value of one-half of the total shares. 50.24 Subd. 3. [ANNUITY ACCRUED.] An annuity herein begins to 50.25 accrue the first day of the first full month after an 50.26 application is received or after termination of state service, 50.27 whichever is later. 50.28 Sec. 9. [352E.07] [DISABILITY BENEFITS.] 50.29 Subdivision 1. [PAYMENT OPTION.] A participant who becomes 50.30 totally and permanently disabled has the option to receive: 50.31 (1) the value of the participant's total shares; 50.32 (2) the value of one-half of the total shares and an 50.33 annuity based on the value of one-half of the total shares; or 50.34 (3) an annuity based on the value of the participant's 50.35 total shares. 50.36 Subd. 2. [ACCRUAL.] The annuity payable under this section 51.1 begins to accrue the first day of the month following the day of 51.2 disability and is based on the participant's age when the 51.3 annuity begins to accrue. The shares must be valued as of the 51.4 end of the month following authorization of payments. 51.5 Subd. 3. [PAYMENT IN ADDITION TO WORKERS' 51.6 COMPENSATION.] The benefits payable under this section must not 51.7 be reduced by amounts received or receivable under applicable 51.8 workers' compensation laws. 51.9 Subd. 4. [REPAYMENT PROHIBITION.] A participant who 51.10 returns to covered service after receiving benefits under this 51.11 section shall not be required or allowed to repay such benefits. 51.12 Sec. 10. [352E.08] [DEATH BENEFITS.] 51.13 Subdivision 1. [SURVIVOR BENEFITS.] If a participant dies 51.14 leaving a spouse and there is no named beneficiary who survives 51.15 to receive payment or the spouse is named beneficiary, the 51.16 spouse may receive: 51.17 (1) the value of the participant's total shares; 51.18 (2) the value of one-half of the total shares, and 51.19 beginning at age 55 or thereafter, receive an annuity based on 51.20 the value of one-half of the total shares, provided that if the 51.21 spouse dies before receiving any annuity payments the value of 51.22 said shares shall be paid to the spouse's children in equal 51.23 shares, but if no such children survive, then to the parents of 51.24 the spouse in equal shares, but if no such children or parents 51.25 survive, then to the estate of the spouse; or 51.26 (3) beginning at age 55 or thereafter, an annuity based on 51.27 the value of the total shares, provided that if the spouse dies 51.28 before receiving any annuity payments the value of said shares 51.29 shall be paid to the spouse's children in equal shares, but if 51.30 no such children survive, then to the parents of the spouse in 51.31 equal shares, but if no such children or parent survive, then to 51.32 the estate of the spouse; and further provided, if said spouse 51.33 dies after receiving annuity payments but before receiving 51.34 payments equal to the value of the employee shares, the value of 51.35 the employee shares remaining shall be paid to the spouse's 51.36 children in equal shares, but if no such children survive, then 52.1 to the parents of the spouse in equal shares, but if no such 52.2 children or parents survive, then to the estate of the spouse. 52.3 Subd. 2. [PAYMENT WITHOUT BENEFICIARY DESIGNATION.] If a 52.4 participant dies and has named a beneficiary, the value of the 52.5 total shares must be paid to such beneficiary, but if such 52.6 beneficiary dies before receiving payment, or if no beneficiary 52.7 has been named and there is no spouse, the value of said shares 52.8 must be paid to the children of the participant in equal shares, 52.9 but if no such children survive then in equal shares to the 52.10 parents of the participant, but if no such children or parents 52.11 survive, then to the estate of the participant. 52.12 Sec. 11. [352E.09] [ADMINISTRATION.] 52.13 Subdivision 1. [FIDUCIARY RESPONSIBILITY.] The elected 52.14 officers plan and the provisions of this chapter must be 52.15 administered by the Minnesota state retirement system. 52.16 Fiduciary activities of the elected officers plan must be 52.17 undertaken in a manner consistent with chapter 356A. 52.18 Subd. 2. [REDEMPTION OR PURCHASE OF SHARES.] Whenever 52.19 redemption or purchases from the supplemental retirement fund 52.20 are required to be made, the executive director shall make them. 52.21 Subd. 3. [PROSPECTUS.] The executive director shall 52.22 annually distribute the prospectus prepared by the supplemental 52.23 fund to each participant in covered employment. 52.24 Subd. 4. [APPLICATION.] Whenever benefits or withdrawals 52.25 are authorized or required to be paid, payment must be made only 52.26 after receipt of an application signed by the person or 52.27 representative authorized to receive the benefit or withdrawal. 52.28 Such application must be made only on forms authorized by the 52.29 executive director. 52.30 Subd. 5. [DISBURSEMENT OF ACCOUNT.] If the beneficiary, 52.31 surviving spouse, or estate has not made application for 52.32 benefits within ten years after the date of death of a 52.33 participant, the value of the shares must be appropriated to the 52.34 regular fund according to section 352.12, subdivision 12. If a 52.35 former participant fails to make a claim for benefits within 52.36 five years after termination of covered service or by age 70, 53.1 whichever is later, the value of the shares are appropriated to 53.2 the general employees retirement fund according to section 53.3 352.22, subdivision 8. 53.4 Subd. 6. [ADMINISTRATIVE FEES.] Up to four-tenths of one 53.5 percent of salary must be deducted from the employee 53.6 contributions and up to four-tenths of one percent salary must 53.7 be deducted from the employer contributions, as authorized by 53.8 section 352E.054, subdivision 2, to pay the administrative 53.9 expenses of the elected state officers plan. 53.10 Sec. 12. [EFFECTIVE DATE.] 53.11 Sections 1 to 11 are effective July 1, 1997. 53.12 ARTICLE 3 53.13 FIRST CLASS CITY TEACHER RETIREMENT FUNDS 53.14 Section 1. Minnesota Statutes 1996, section 354A.011, 53.15 subdivision 15a, is amended to read: 53.16 Subd. 15a. [NORMAL RETIREMENT AGE.] "Normal retirement 53.17 age" means age 65 for a person who first became a member of the 53.18 coordinated program of the Minneapolis or St. Paul teachers 53.19 retirement fund association or the new law coordinated program 53.20 of the Duluth teachers retirement fund association or a member 53.21 of a pension fund listed in section 356.30, subdivision 3, 53.22 before July 1, 1989. For a person who first became a member of 53.23 the coordinated program of the Minneapolis or St. Paul teachers 53.24 retirement fund association or the new law coordinated program 53.25 of the Duluth teachers retirement fund association after June 53.26 30, 1989, normal retirement age means the higher of age 65 or 53.27 retirement age, as defined in United States Code, title 42, 53.28 section 416(l), as amended, not to exceed age 66. For a person 53.29 who is a member of the basic program of the Minneapolis or St. 53.30 Paul teachers retirement fund association or the old law 53.31 coordinated program of the Duluth teachers retirement fund 53.32 association, normal retirement age means the age at which a 53.33 teacher becomes eligible for a normal retirement annuity 53.34 computed upon meeting the age and service requirements specified 53.35 in the applicable provisions of the articles of incorporation or 53.36 bylaws of the respective teachers retirement fund association. 54.1 Sec. 2. Minnesota Statutes 1996, section 354A.12, 54.2 subdivision 1, is amended to read: 54.3 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] The contribution 54.4 required to be paid by each member of a teachers retirement fund 54.5 association shall not be less than the percentage of total 54.6 salary specified below for the applicable association and 54.7 program: 54.8 Association and Program Percentage of 54.9 Total Salary 54.10 Duluth teachers retirement 54.11 association 54.12 old law and new law 54.13 coordinated programs 5.5 percent 54.14 Minneapolis teachers retirement 54.15 association 54.16 basic program 8.5 percent 54.17 coordinated program4.55.5 percent 54.18 St. Paul teachers retirement 54.19 association 54.20 basic program 8 percent 54.21 coordinated program4.55.5 percent 54.22 Contributions shall be made by deduction from salary and 54.23 must be remitted directly to the respective teachers retirement 54.24 fund association at least once each month. 54.25 Sec. 3. Minnesota Statutes 1996, section 354A.12, 54.26 subdivision 2a, is amended to read: 54.27 Subd. 2a. [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 54.28 RATES.] (a) The employing units shall make the following 54.29 employer contributions to teachers retirement fund associations: 54.30 (1) for any coordinated member of a teachers retirement 54.31 fund association in a city of the first class, the employing 54.32 unit shall pay the employer social security taxes in accordance 54.33 with section 355.46, subdivision 3, clause (b); 54.34 (2) for any coordinated member of one of the following 54.35 teachers retirement fund associations in a city of the first 54.36 class, the employing unit shall make a regular employer 55.1 contribution to the respective retirement fund association in an 55.2 amount equal to the designated percentage of the salary of the 55.3 coordinated member as provided below: 55.4 Duluth teachers retirement 55.5 fund association 4.50 percent 55.6 Minneapolis teachers retirement 55.7 fund association 4.50 percent 55.8 St. Paul teachers retirement 55.9 fund association 4.50 percent; 55.10 (3) for any basic member of one of the following teachers 55.11 retirement fund associations in a city of the first class, the 55.12 employing unit shall make a regular employer contribution to the 55.13 respective retirement fund in an amount equal to the designated 55.14 percentage of the salary of the basic member as provided below: 55.15 Minneapolis teachers retirement 55.16 fund association 8.50 percent 55.17 St. Paul teachers retirement 55.18 fund association 8.00 percent 55.19 (4) for a basic member of a teachers retirement fund 55.20 association in a city of the first class, the employing unit 55.21 shall make an additional employer contribution to the respective 55.22 fund in an amount equal to the designated percentage of the 55.23 salary of the basic member, as provided below: 55.24 Minneapolis teachers retirement 55.25 fund association 55.26 July 1, 1993 - June 30, 1994 4.85 percent 55.27 July 1, 1994, and thereafter 3.64 percent 55.28 St. Paul teachers retirement 55.29 fund association 55.30 July 1, 1993 - June 30, 1995 4.63 percent 55.31 July 1, 1995, and thereafter 3.64 percent 55.32 (5) for a coordinated member of a teachers retirement fund 55.33 association in a city of the first class, the employing unit 55.34 shall make an additional employer contribution to the respective 55.35 fund in an amount equal to the applicable percentage of the 55.36 coordinated member's salary, as provided below: 56.1 Duluth teachers retirement 56.2 fund association 1.29 percent 56.3 Minneapolis teachers retirement 56.4 fund association 56.5 July 1, 1993 - June 30, 1994 0.50 percent 56.6 July 1, 1994, and thereafter 3.64 percent 56.7 St. Paul teachers retirement 56.8 fund association 56.9 July 1, 1993 - June 30, 1994 0.50 percent 56.10 July 1, 1994 - June 30, 1995 1.50 percent 56.11 July 1,19951997, and thereafter3.6456.12 3.84 percent 56.13 (b) The regular and additional employer contributions must 56.14 be remitted directly to the respective teachers retirement fund 56.15 association at least once each month. Delinquent amounts are 56.16 payable with interest under the procedure in subdivision 1a. 56.17 (c) Payments of regular and additional employer 56.18 contributions for school district or technical college employees 56.19 who are paid from normal operating funds must be made from the 56.20 appropriate fund of the district or technical college. 56.21 Sec. 4. Minnesota Statutes 1996, section 354A.12, 56.22 subdivision 3a, is amended to read: 56.23 Subd. 3a. [SPECIAL DIRECT STATE AID TOST. PAULFIRST 56.24 CLASS CITY TEACHERS RETIREMENT FUNDASSOCIATIONASSOCIATIONS.] 56.25 (a) In fiscal year 1998, the state shall pay $2,827,000 to the 56.26 St. Paul teachers retirement fund association$500,000 in fiscal56.27year 1994, $12,008,000 to the Minneapolis teachers retirement 56.28 fund association, and $486,000 to the Duluth teachers retirement 56.29 fund association. In each subsequent fiscal year,the payment56.30 these payments to theSt. Paulfirst class city teachers 56.31 retirement fundassociationassociations must beincreased56.32 changed at the same rate as theincreasechange in the general 56.33 education revenue formula allowance under section 124A.22, 56.34 subdivision 2, in subsequent fiscal years. 56.35 (b) The direct stateaid isaids under this subdivision are 56.36 payable October 1 annually. The commissioner of finance shall 57.1 pay the direct state aid. The amount required under this 57.2 subdivision is appropriated annually from the general fund to 57.3 the commissioner of finance. 57.4 Sec. 5. Minnesota Statutes 1996, section 354A.12, 57.5 subdivision 3c, is amended to read: 57.6 Subd. 3c. [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND 57.7 DIRECT MATCHING AND STATE AID.] (a) The supplemental 57.8 contributions payable to the Minneapolis teachers retirement 57.9 fund association by special school district No. 1 and the city 57.10 of Minneapolis under section 423A.02, subdivision 3, or to the 57.11 St. Paul teachers retirement fund association by independent 57.12 school district No. 625 under section 423A.02, subdivision 3, or 57.13 the direct stateaidaids under subdivision 3a to theSt. Paul57.14 first class city teachers retirementassociationassociations, 57.15 and the direct matching and state aid under subdivision 3b to 57.16 the Minneapolis teachers retirement fund association terminates 57.17 for the respective fund at the end of the fiscal year in which 57.18 the accrued liability funding ratio for that fund, as determined 57.19 in the most recent actuarial report for that fund by the actuary 57.20 retained by the legislative commission on pensions and 57.21 retirement, equals or exceeds the accrued liability funding 57.22 ratio for the teachers retirement association, as determined in 57.23 the most recent actuarial report for the teachers retirement 57.24 association by the actuary retained by the legislative 57.25 commission on pensions and retirement. 57.26 (b) If the state direct matching, state supplemental, or 57.27 state aid is terminated forthe St. Paula first class city 57.28 teachers retirement fund associationor the Minneapolis teachers57.29retirement fund associationunder paragraph (a), it may not 57.30 again be received by that fund. 57.31 (c) If either the Minneapolis teachers retirement fund 57.32 association,orthe St. Paul teachers retirement fund 57.33 association, or the Duluth teachers retirement fund association 57.34 remain funded at less than the funding ratio applicable to the 57.35 teachers retirement association when the provisions of paragraph 57.36 (b) become effective, then any state aid not distributed to that 58.1 association must be immediately transferred to the other 58.2associationassociations. 58.3 Sec. 6. Minnesota Statutes 1996, section 354A.31, 58.4 subdivision 4, is amended to read: 58.5 Subd. 4. [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 58.6 ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 58.7 applies to the coordinated programs of the Minneapolis teachers 58.8 retirement fund association and the St. Paul teachers retirement 58.9 fund association. 58.10 (b) The normal coordinated retirement annuity shall be an 58.11 amount equal to a retiring coordinated member's average salary 58.12 multiplied by the retirement annuity formula percentage. 58.13 Average salary for purposes of this section shall mean an amount 58.14 equal to the average salary upon which contributions were made 58.15 for the highest five successive years of service credit, but 58.16 which shall not in any event include any more than the 58.17 equivalent of 60 monthly salary payments. Average salary must 58.18 be based upon all years of service credit if this service credit 58.19 is less than five years. 58.20 (c) This paragraph, in conjunction with subdivision 6, 58.21 applies to a person who first became a member or a member in a 58.22 pension fund listed in section 356.30, subdivision 3, before 58.23 July 1, 1989, unless paragraph (d), in conjunction with 58.24 subdivision 7, produces a higher annuity amount, in which case 58.25 paragraph (d) will apply. The retirement annuity formula 58.26 percentage for purposes of this paragraph isonethe percent 58.27 specified in section 356.19, subdivision 1, per year for each 58.28 year of coordinated service for the first ten years and1.5the 58.29 percent specified in section 356.19, subdivision 2, for each 58.30 year of coordinated service thereafter. 58.31 (d) This paragraph applies to a person who has become at 58.32 least 55 years old and who first becomes a member after June 30, 58.33 1989, and to any other member who has become at least 55 years 58.34 old and whose annuity amount, when calculated under this 58.35 paragraph and in conjunction with subdivision 7 is higher than 58.36 it is when calculated under paragraph (c), in conjunction with 59.1 the provisions of subdivision 6. The retirement annuity formula 59.2 percentage for purposes of this paragraph is1.5the percent 59.3 specified in section 356.19, subdivision 2, for each year of 59.4 coordinated service. 59.5 Sec. 7. Minnesota Statutes 1996, section 354A.31, 59.6 subdivision 4a, is amended to read: 59.7 Subd. 4a. [COMPUTATION OF THE NORMAL COORDINATED 59.8 RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 59.9 to the new law coordinated program of the Duluth teachers 59.10 retirement fund association. 59.11 (b) The normal coordinated retirement annuity is an amount 59.12 equal to a retiring coordinated member's average salary 59.13 multiplied by the retirement annuity formula percentage. 59.14 Average salary for purposes of this section means an amount 59.15 equal to the average salary upon which contributions were made 59.16 for the highest five successive years of service credit, but may 59.17 not in any event include any more than the equivalent of 60 59.18 monthly salary payments. Average salary must be based upon all 59.19 years of service credit if this service credit is less than five 59.20 years. 59.21 (c) This paragraph, in conjunction with subdivision 6, 59.22 applies to a person who first became a member or a member in a 59.23 pension fund listed in section 356.30, subdivision 3, before 59.24 July 1, 1989, unless paragraph (d), in conjunction with 59.25 subdivision 7, produces a higher annuity amount, in which case 59.26 paragraph (d) applies. The retirement annuity formula 59.27 percentage for purposes of this paragraph is1.13the percent 59.28 specified in section 356.19, subdivision 1, per year for each 59.29 year of coordinated service for the first ten years and1.63the 59.30 percent specified in section 356.19, subdivision 2, for each 59.31 subsequent year of coordinated service. 59.32 (d) This paragraph applies to a person who is at least 55 59.33 years old and who first becomes a member after June 30, 1989, 59.34 and to any other member who is at least 55 years old and whose 59.35 annuity amount, when calculated under this paragraph and in 59.36 conjunction with subdivision 7, is higher than it is when 60.1 calculated under paragraph (c) in conjunction with subdivision 60.2 6. The retirement annuity formula percentage for purposes of 60.3 this paragraph is1.63the percent specified in section 356.19, 60.4 subdivision 2, for each year of coordinated service. 60.5 Sec. 8. [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION 60.6 POSTRETIREMENT ADJUSTMENT.] 60.7 Subdivision 1. [ARTICLES OF INCORPORATION AND 60.8 BYLAWS.] Permission is granted for the St. Paul teachers 60.9 retirement fund association under Minnesota Statutes, section 60.10 354A.12, subdivision 4, to amend its articles of incorporation 60.11 and bylaws to provide postretirement adjustments under this 60.12 section. 60.13 Subd. 2. [POSTRETIREMENT ADJUSTMENT.] (a) The 60.14 postretirement adjustment described in the articles and bylaws 60.15 of the St. Paul teachers retirement fund must be determined by 60.16 the board annually after June 30 using the procedures under this 60.17 section. 60.18 (b) Each eligible person who has been receiving an annuity 60.19 or benefit under the articles of incorporation or the bylaws for 60.20 at least 12 months as of the end of the fiscal year shall 60.21 receive a postretirement adjustment of 2.0 percent that is 60.22 payable each January 1. 60.23 Subd. 3. [ADDITIONAL INVESTMENT PERCENTAGE 60.24 ADJUSTMENT.] (a) An excess investment earnings percentage 60.25 adjustment must be computed and paid under this subdivision to 60.26 those annuitants and eligible benefit recipients who have been 60.27 receiving an annuity or benefit for at least 12 months as 60.28 determined each June 30 by the board of trustees. 60.29 (b) The board shall also determine the five-year annualized 60.30 rate of return attributable to the assets of the St. Paul 60.31 teachers retirement fund association under the formula specified 60.32 in Minnesota Statutes, section 11A.04, clause (11), and the 60.33 amount of the excess five-year annualized rate of return over 60.34 the preretirement interest assumption specified in Minnesota 60.35 Statutes, section 356.215. 60.36 (c) The excess investment percentage adjustment must be 61.1 determined by multiplying the quantity one minus the rate of 61.2 contribution deficiency, as specified in the most recent 61.3 actuarial report of the actuary retained by the legislative 61.4 commission on pensions and retirement, by the rate of return 61.5 excess as determined in paragraph (b). 61.6 (d) The excess investment percentage adjustment is payable 61.7 to all annuitants and benefit recipients on the following 61.8 January 1. 61.9 Subd. 4. [EFFECT ON ANNUITY.] The adjustments calculated 61.10 under subdivisions 2 and 3 must be included in all annuities or 61.11 benefits paid to the recipient after the adjustments take effect. 61.12 Subd. 5. [LUMP SUM POSTRETIREMENT ADJUSTMENT 61.13 TRANSITION.] This subdivision applies to all annuitants and 61.14 beneficiaries of the association who received a lump sum 61.15 postretirement adjustment before the calculation of the first 61.16 postretirement adjustment under subdivisions 2 and 3. Before 61.17 the calculation of the first postretirement adjustment under 61.18 subdivisions 2 and 3, the annual retirement annuity must be 61.19 increased by the amount of the lump sum postretirement 61.20 adjustment described in the association bylaws and paid to the 61.21 annuitant or beneficiary in 1997 before the effective date of 61.22 this section or if the annuitant or beneficiary was not eligible 61.23 for a lump sum postretirement adjustment, then the annual 61.24 benefit paid to that annuitant or benefit recipient must be 61.25 increased by the cumulative percentage increase in the Consumer 61.26 Price Index for urban wage earners and clerical workers All 61.27 Items Index published by the United States Department of Labor, 61.28 Bureau of Labor Statistics from the date of retirement of the 61.29 person whose service is the basis of the benefit to June 30, 61.30 1997. 61.31 Sec. 9. [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 61.32 INCREASE FORMULAS.] 61.33 In accordance with Minnesota Statutes, section 354A.12, 61.34 subdivision 4, approval is granted for the Duluth teachers 61.35 retirement fund association to amend its articles of 61.36 incorporation or bylaws by increasing the formula percentage 62.1 used in computing annuities for old law coordinated program 62.2 members in the Duluth teachers retirement fund association to 62.3 1.45 percent for each year of credited service. 62.4 Sec. 10. [REPEALER.] 62.5 Minnesota Statutes 1996, section 354A.12, subdivision 2b, 62.6 is repealed. 62.7 Sec. 11. [EFFECTIVE DATES.] 62.8 Sections 2 and 3 are effective for all salary paid on or 62.9 after July 1, 1997. Sections 1 and 4 to 10 are effective July 62.10 1, 1997. 62.11 ARTICLE 4 62.12 MINNEAPOLIS POLICE AND FIREFIGHTERS 62.13 Section 1. Minnesota Statutes 1996, section 423B.01, 62.14 subdivision 9, is amended to read: 62.15 Subd. 9. [EXCESS INVESTMENT INCOME.] "Excess investment 62.16 income" means the amount, if any, by which the average time 62.17 weighted total rate of return earned by the fund in the most 62.18 recentprior fivefiscalyearsyear has exceeded theactual62.19averageannual percentage increase in the current monthly salary 62.20 of a first grade patrol officer in the most recentprior five62.21 fiscalyearsyear plus two percent, and must be expressed as a 62.22 dollar amount and may not exceed one percent of the total assets 62.23 of the fund, except when the fund has actuarial assets of 62.24 greater than 102 percent of its actuarial accrued liabilities in 62.25 which case the amount must not exceed 1-1/2 percent of the total 62.26 assets of the fund, and does not exist unless the yearly average 62.27 percentage increase of the time weighted total rate of return of 62.28 the fund for the previous five years exceeds by two percent the 62.29 yearly average percentage increase in monthly salary of a first 62.30 grade patrol officer during the previous five calendar years. 62.31 Sec. 2. Minnesota Statutes 1996, section 423B.06, is 62.32 amended by adding a subdivision to read: 62.33 Subd. 5. [TAX LEVY.] If in any year after the fund has 62.34 actuarial assets greater than 102 percent of the actuarial 62.35 accrued liabilities of the fund and subsequently the actuarial 62.36 assets are less than 100 percent of the actuarial accrued 63.1 liabilities, the city of Minneapolis is not required to levy a 63.2 property tax to fund any deficit unless the fund has two 63.3 successive years when the actuarial assets are less than 100 63.4 percent of the actuarial accrued liabilities. 63.5 Sec. 3. Minnesota Statutes 1996, section 423B.07, is 63.6 amended to read: 63.7 423B.07 [AUTHORIZED FUND DISBURSEMENTS.] 63.8 The police pension fund may be used only for the payment of: 63.9 (1) service, disability, or dependency pensions; 63.10 (2) notwithstanding a contrary provision of section 69.80, 63.11 the salary of the secretary of the association in an amount not 63.12 to exceed 30 percent of the base salary of a first grade patrol 63.13 officer, the salary of the president of the association in an 63.14 amount not to exceed ten percent of the base salary of a first 63.15 grade patrol officer, and the salaries of the other elected 63.16 members of the board of trustees in an amount not to exceed 63.17 three units; 63.18 (3) expenses of officers and employees of the association 63.19 in connection with the protection of the fund; 63.20 (4) expenses of operating and maintaining the association; 63.21 (5) support for hospital and medical insurance for 63.22 pensioners who have completed 20 years or more of service or 63.23 permanent disabilitants and surviving spouses of deceased active 63.24 members, disabilitants, or service pensioners who have completed 63.25 20 years or more of service in an amount equal to one unit per 63.26 month, to be added to the pension otherwise provided; 63.27 (6) health and welfare benefits of one unit per monthin63.28addition to other benefitsfor members who retired after July 1, 63.29 1980, and have completed 20 years or more of service or for 63.30 members who are permanent disabilitants; and 63.31 (7) other expenses authorized by section 69.80, or other 63.32 applicable law. 63.33 Sec. 4. Minnesota Statutes 1996, section 423B.09, 63.34 subdivision 1, is amended to read: 63.35 Subdivision 1. [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 63.36 RECEIVE PENSIONS.] The association shall grant pensions payable 64.1 from the police pension fund in monthly installments to persons 64.2 entitled to pensions in the manner and for the following 64.3 purposes. 64.4 (a) An active member or a deferred pensioner who has 64.5 performed duty as a member of the police department of the city 64.6 for five years or more, upon written application after retiring 64.7 from duty and reaching at least age 50, is entitled to be paid 64.8 monthly for life a service pension equal to eight units. For 64.9 full years of service beyond five years, the service pension 64.10 increases by 1.6 units for each full year, to a maximum of 40 64.11 units. When the fund has actuarial assets of greater than 90 64.12 percent of actuarial accrued liabilities, active members, 64.13 deferred members, and service pensioners are entitled to a 64.14 service pension according to the following schedule: 64.15 5 years 8.0 units 64.16 6 years 9.6 units 64.17 7 years 11.2 units 64.18 8 years 12.8 units 64.19 9 years 14.4 units 64.20 10 years 16.0 units 64.21 11 years 17.6 units 64.22 12 years 19.2 units 64.23 13 years 20.8 units 64.24 14 years 22.4 units 64.25 15 years 24.0 units 64.26 16 years 25.6 units 64.27 17 years 27.2 units 64.28 18 years 28.8 units 64.29 19 years 30.4 units 64.30 20 years 34.0 units 64.31 21 years 35.6 units 64.32 22 years 37.2 units 64.33 23 years 38.8 units 64.34 24 years 40.4 units 64.35 25 years 42.0 units 64.36 Fractional years of service may not be used in computing 65.1 pensions. 65.2 (b) An active member who after five years' service but less 65.3 than 20 years' service with the police department of the city, 65.4 becomes superannuated so as to be permanently unable to perform 65.5 the person's assigned duties, is entitled to be paid monthly for 65.6 life a superannuation pension equal to two units for five years 65.7 of service and an additional two units for each full year of 65.8 service over five years and less than 20 years. 65.9 (c) An active member who is not eligible for a service 65.10 pension and who, while a member of the police department of the 65.11 city, becomes diseased or sustains an injury while in the 65.12 service that permanently unfits the member for the performance 65.13 of police duties is entitled to be paid monthly for life a 65.14 pension equal to 32 units while so disabled. 65.15 Sec. 5. Minnesota Statutes 1996, section 423B.09, is 65.16 amended by adding a subdivision to read: 65.17 Subd. 6. [OPTIONAL ANNUITIES.] A member who is retired on 65.18 the effective date of this subdivision may elect an optional 65.19 retirement annuity within 60 days of the effective date instead 65.20 of the normal retirement annuity. A member who retires after 65.21 the effective date of this subdivision may elect an optional 65.22 retirement annuity prior to the receipt of any benefits. The 65.23 optional retirement annuity may be a joint and survivor annuity 65.24 without reinstatement in the event of the designated beneficiary 65.25 predeceasing the member or a joint and survivor annuity with 65.26 reinstatement in the event of the designated beneficiary 65.27 predeceasing the member. An optional retirement annuity must be 65.28 actuarially equivalent to the normal single life annuity, as 65.29 projected using the actuarial assumption in sections 356.215 and 65.30 356.216, and established by the board with written 65.31 recommendation of the actuary retained by the legislative 65.32 commission on pensions and retirement. Once selected, the 65.33 optional annuity is irrevocable and subject to all other pension 65.34 benefits. 65.35 Sec. 6. Minnesota Statutes 1996, section 423B.10, 65.36 subdivision 1, is amended to read: 66.1 Subdivision 1. [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 66.2 surviving spouse of a deceased service pensioner, disability 66.3 pensioner, deferred pensioner, superannuation pensioner, or 66.4 active member, who was the legally married spouse of the 66.5 decedent, residing with the decedent, and who was married while 66.6 or before the time the decedent was on the payroll of the police 66.7 department, and who, if the deceased member was a service or 66.8 deferred pensioner, was legally married to the member for a 66.9 period of at least one year before retirement from the police 66.10 department, is entitled to a surviving spouse benefit. The 66.11 surviving spouse benefit is equal to 21 units per month if the 66.12 person is the surviving spouse of a deceased active member or 66.13 disabilitant. The surviving spouse benefit is equal to six 66.14 units per month, plus an additional one unit for each year of 66.15 service to the credit of the decedent in excess of five years, 66.16 to a maximum of 21 units per month, if the person is the 66.17 surviving spouse of a deceased service pensioner, deferred 66.18 pensioner, or superannuation pensioner. The surviving spouse 66.19 benefit is payable for the life of the surviving spouse. 66.20 (b) A surviving child of a deceased service pensioner, 66.21 disability pensioner, deferred pensioner, superannuation 66.22 pensioner, or active member, who was living while the decedent 66.23 was an active member of the police department or was born within 66.24 nine months after the decedent terminated active service in the 66.25 police department, is entitled to a surviving child benefit. 66.26 The surviving child benefit is equal to eight units per month if 66.27 the person is the surviving child of a deceased active member or 66.28 disabilitant. The surviving child benefit is equal to two units 66.29 per month, plus an additional four-tenths of one unit per month 66.30 for each year of service to the credit of the decedent in excess 66.31 of five years, to a maximum of eight units, if the person is the 66.32 surviving child of a deceased service pensioner, deferred 66.33 pensioner, or superannuation pensioner. The surviving child 66.34 benefit is payable until the person attains age 18, or, if in 66.35 full-time attendance during the normal school year, in a school 66.36 approved by the board of directors, until the person receives a 67.1 bachelor's degree or attains the age of 22 years, whichever 67.2 occurs first. In the event of the death of both parents leaving 67.3 a surviving child or children entitled to a surviving child 67.4 benefit as determined in this paragraph, the surviving child is, 67.5 or the surviving children are, entitled to a surviving child 67.6 benefit in such sums as determined by the board of directors to 67.7 be necessary for the care and education of such surviving child 67.8 or children, but not to exceed the family maximum benefit per 67.9 month, to the children of any one family. 67.10 (c) The surviving spouse and surviving child benefits are 67.11 subject to a family maximum benefit. The family maximum benefit 67.12 is 40 units per month. 67.13 (d) A surviving spouse who is otherwise not qualified may 67.14 receive a benefit if the surviving spouse was married to the 67.15 decedent for a period of five years and was residing with the 67.16 decedent at the time of death. The surviving spouse benefit is 67.17 the same as that provided in paragraph (a), except that if the 67.18 surviving spouse is younger than the decedent, the surviving 67.19 spouse benefit must be actuarially reduced to provide a benefit 67.20 equivalent to the average surviving spouse benefit paid by the 67.21 fund notwithstanding the 21 unit pension established under 67.22 paragraph (a). 67.23 Sec. 7. Minnesota Statutes 1996, section 423B.15, 67.24 subdivision 2, is amended to read: 67.25 Subd. 2. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 67.26 board of trustees of the relief association shall determine by 67.27 May 1 of each year whether or not the fund has excess investment 67.28 income. The amount of excess investment income, if any, must be 67.29 stated as a dollar amount and reported by the chief 67.30 administrative officer of the relief association to the mayor 67.31 and governing body of the city, the state auditor, the 67.32 commissioner of finance, and the executive director of the 67.33 legislative commission on pensions and retirement. The dollar 67.34 amount of excess investment income up to one percent of the 67.35 assets of the fund, except when the fund has actuarial assets of 67.36 greater than 102 percent of its actuarial accrued liabilities in 68.1 which case the amount may not exceed 1-1/2 percent of the assets 68.2 of the fund, must be applied for the purpose specified in 68.3 subdivision 3. Excess investment income must not be considered 68.4 as income to or assets of the fund for actuarial valuations of 68.5 the fund for that year under sections 69.77, 356.215, and 68.6 356.216 and the provisions of this section except to offset the 68.7 annual postretirement payment. Additional investment income is 68.8 any realized or unrealized investment income other than the 68.9 excess investment income and must be included in the actuarial 68.10 valuations performed under sections 69.77, 356.215, and 356.216 68.11 and the provisions of this section. 68.12 Sec. 8. Minnesota Statutes 1996, section 423B.15, 68.13 subdivision 3, is amended to read: 68.14 Subd. 3. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 68.15 amount determined under subdivision 2 must be applied in 68.16 accordance with this subdivision. When the fund has less than 68.17 102 percent of its total actuarial liabilities, the relief 68.18 association shall apply the first one-half of excess investment 68.19 income to the payment of an annual postretirement payment as 68.20 specified in this subdivision.and the second one-half of excess 68.21 investment income up to one-half of one percent of the assets of 68.22 the fund must be applied to reduce the state amortization state 68.23 aid or supplementary amortization state aid payments otherwise 68.24 due to the relief association under section 423A.02 for the 68.25 current calendar year. When the fund is less than 102 percent 68.26 funded and other conditions are met, the relief association 68.27 shall pay an annual postretirement payment to all eligible 68.28 members in an amount not to exceed one-half of one percent of 68.29 the assets of the fund. When the fund has actuarial assets of 68.30 greater than 102 percent of its actuarial accrued liabilities, 68.31 the relief association shall pay an annual postretirement 68.32 payment to all eligible members in an amount not to exceed 1-1/2 68.33 percent of the assets of the fund. Payment of the annual 68.34 postretirement payment must be in a lump sum amount on June 1 68.35 following the determination date in any year. Payment of the 68.36 annual postretirement payment may be made only if the average 69.1 time weighted total rate of returnfor the most recent prior69.2five yearsexceeds by two percent the actualaveragepercentage 69.3 increase in the current monthly salary of a top grade patrol 69.4 officer in the most recentprior fivefiscalyearsyear and the 69.5 yearly average percentage increase of the time weighted total 69.6 rate of return of the fund for the previous five years exceeds 69.7 by two percent the yearly average percentage increase in monthly 69.8 salary of a top grade patrol officer of the previous five 69.9 years. The total amount of all payments to members may not 69.10 exceed the amount determined under this subdivision. Payment to 69.11 each eligible member must be calculated by dividing the total 69.12 number of pension units to which eligible members are entitled 69.13 into the excess investment income available for distribution to 69.14 members, and then multiplying that result by the number of units 69.15 to which each eligible member is entitled to determine each 69.16 eligible member's annual postretirement payment. When the fund 69.17 has actuarial assets of less than 102 percent of its actuarial 69.18 accrued liabilities, payment to each eligible member may not 69.19 exceed an amount equal to the total monthly benefit that the 69.20 eligible member was entitled to in the prior year under the 69.21 terms of the benefit plan of the relief association or each 69.22 eligible member's proportionate share of the excess investment 69.23 income, whichever is less. When the fund has actuarial assets 69.24 of greater than 102 percent of its actuarial accrued 69.25 liabilities, payment to each eligible member must not exceed the 69.26 member's proportionate share of 1-1/2 percent of the assets of 69.27 the fund. 69.28 A person who received a pension or benefit for the entire 69.29 12 months before the determination date is eligible for a full 69.30 annual postretirement payment. A person who received a pension 69.31 or benefit for less than 12 months before the determination date 69.32 is eligible for a prorated annual postretirement payment. 69.33 Sec. 9. Minnesota Statutes 1996, section 423B.15, 69.34 subdivision 6, is amended to read: 69.35 Subd. 6. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 69.36 No provision of or payment made under this section may be 70.1 interpreted or relied upon by any member of the relief 70.2 association to guarantee or entitle a member to annual 70.3 postretirement payments for a period when no excess investment 70.4 income is earned by the fund. If the fund has actuarial assets 70.5 of less than 102 percent of its actuarial accrued liabilities, 70.6 the distribution of assets under this section must not exceed 70.7 one-half of one percent. 70.8 Sec. 10. Laws 1965, chapter 519, section 1, as amended by 70.9 Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, 70.10 section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 70.11 164, section 2; Laws 1992, chapter 454, section 2; and Laws 70.12 1994, chapter 591, article 1, section 1, is amended to read: 70.13 Section 1. [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF 70.14 ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding 70.15 the provisions of Minnesota Statutes 1965, Section 69.48, to the 70.16 contrary, when a service pensioner, disability pensioner, or 70.17 deferred pensioner, or an active member of a relief association 70.18 dies, leaving: 70.19 (1) A surviving spouse who was a legally married spouse, 70.20 residing with the decedent, and who was married while or prior 70.21 to the time the decedent was on the payroll of the fire 70.22 department in the case of a deceased active member; and who, in 70.23 case the deceased member was a service or deferred pensioner was 70.24 legally married to the member at least five years before death; 70.25 or 70.26 (2) A child or children who were living while the deceased 70.27 was on the payroll of the fire department, or born within nine 70.28 months after the decedent was withdrawn from the payroll of the 70.29 fire department, the surviving spouse and the child or children 70.30 shall be entitled to a pension or pensions, as follows: 70.31 (a) To the surviving spouse, a pension of not less than 17 70.32 units, and not to exceed the total of 22 units per month, as the 70.33 bylaws of the association provide, for life;provided, that if70.34the spouse shall remarry then the pension shall cease and70.35terminate as of the date of remarriage; provided, further, if70.36the remarriage terminates for any reason, the surviving spouse71.1shall again be entitled to a pension as the bylaws of the71.2association provide;71.3 (b) To the child or children, if their other parent is 71.4 living, a pension of not to exceed eight units per month for 71.5 each child up to the time each child reaches the age of not less 71.6 than 16 years and not to exceed an age of 18 years; provided, 71.7 however, upon approval by the board of trustees, such a child 71.8 who is a full-time student, upon proof of compliance with the 71.9 provisions of this act, may be entitled to such pension so long 71.10 as the child is a full-time student and has not reached 22 years 71.11 of age, all in conformity with the bylaws of the association; 71.12 provided, further, the total pensions hereunder for the 71.13 surviving spouse and children of the deceased member shall not 71.14 exceed the sum of 41 units per month; 71.15 (c) A child or children of a deceased member after the 71.16 death of their other parent, or in the event their other parent 71.17 predeceases the member, be entitled to receive a pension or 71.18 pensions in such amount as the board of trustees of the 71.19 association shall deem necessary to properly support the child 71.20 or children until they reach the age of not less than 16 and not 71.21 more than 18 years; provided, however, upon approval by the 71.22 board of trustees, such a child who is a full-time student, upon 71.23 proof of compliance with the provisions of this act, may be 71.24 entitled to such pension so long as the child is a full-time 71.25 student and has not reached 22 years of age, as the bylaws of 71.26 the association may provide; but the total amount of the pension 71.27 or pensions hereunder for any child or children shall not exceed 71.28 the sum of 41 units per month; 71.29 (d) For the purposes of this act, a full-time student is 71.30 defined as an individual who is in full-time attendance as a 71.31 student at an educational institution. Whether or not the 71.32 student was in full-time attendance would be determined by the 71.33 board of trustees of the association in the light of the 71.34 standards and practices of the school involved. Specifically 71.35 excluded is a person who is paid by the person's employer while 71.36 attending school at the request of the person's employer. 72.1 Benefits may continue during any period of four calendar months 72.2 or less in any 12 month period in which a person does not attend 72.3 school if the person shows to the satisfaction of the board of 72.4 trustees that the person intends to continue in full-time school 72.5 attendance immediately after the end of the period. An 72.6 educational institution is defined so as to permit the payment 72.7 of benefits to students taking vocational or academic courses in 72.8 all approved, accredited or licensed schools, colleges, and 72.9 universities. The board of trustees shall make the final 72.10 determination of eligibility for benefits if any question arises 72.11 concerning the approved status of the educational institution 72.12 which the student attends or proposes to attend; 72.13 (e) In the event that a child who is receiving a pension as 72.14 provided above shall marry before the age of 22 years, the 72.15 pension shall cease as of the date of the marriage.; and 72.16 (f) A surviving spouse of a deceased service pensioner, 72.17 disability pensioner, deferred pensioner, or service pensioner 72.18 who is otherwise not qualified may receive a benefit if the 72.19 surviving spouse was legally married to the decedent for a 72.20 period of five years and was residing with the decedent at the 72.21 time of death. The surviving spouse benefit is the same as that 72.22 provided under paragraph (a), except that if the surviving 72.23 spouse is younger than the decedent, the surviving spouse 72.24 benefit must be actuarially reduced to provide a benefit 72.25 equivalent to the average surviving spouse benefit paid by the 72.26 fund notwithstanding the 17 unit minimum established under 72.27 paragraph (a). 72.28 Sec. 11. Laws 1989, chapter 319, article 19, section 7, 72.29 subdivision 1, as amended by Laws 1992, chapter 471, article 2, 72.30 section 5, is amended to read: 72.31 Subdivision 1. [DEFINITIONS.] For the purposes of this 72.32 section, each of the terms in this subdivision have the meanings 72.33 given them in paragraphs (a) to (h). 72.34 (a) "Annual postretirement payment" means the payment of a 72.35 lump sum postretirement benefit to an eligible member on June 1 72.36 following the determination date in any year. 73.1 (b) "City" means the city of Minneapolis. 73.2 (c) "Determination date" means December 31 of each year. 73.3 (d) "Eligible member" means a person, including a service 73.4 pensioner, a disability pensioner, a survivor, or dependent of a 73.5 deceased active member, service pensioner, or disability 73.6 pensioner, who received a pension or benefit from the relief 73.7 association during the 12 months before the determination date. 73.8 A person who received a pension or benefit for the entire 12 73.9 months before the determination date is eligible for a full 73.10 annual postretirement payment. A person who received a pension 73.11 or benefit for less than 12 months before the determination date 73.12 is eligible for a prorated annual postretirement payment. 73.13 (e) "Excess investment income" means the amount by which 73.14 the time weighted total rate of return earned by the fund in the 73.15 most recent fiscal year has exceeded the actual percentage 73.16 increase in the current monthly salary of a top grade 73.17 firefighter in the most recent fiscal year plus two percent. 73.18 The excess investment income must be expressed as a dollar 73.19 amount and may not exceed one percent of the total assets of the 73.20 fund, except when the fund has actuarial assets of greater than 73.21 102 percent of its actuarial accrued liabilities in which case 73.22 the amount must not exceed 1-1/2 percent of the assets of the 73.23 funds, and does not exist unless the yearly average percentage 73.24 increase of the time weighted total rate of return of the fund 73.25 for the previous five years exceeds by two percent the yearly 73.26 average percentage increase in monthly salary of a top grade 73.27 firefighter during the previous five calendar years. 73.28 (f) "Fund" means the Minneapolis fire department relief 73.29 association. 73.30 (g) "Relief association" means the Minneapolis fire 73.31 department relief association. 73.32 (h) "Time weighted total rate of return" means the 73.33 percentage amount determined by using the formula or formulas 73.34 established by the state board of investment under Minnesota 73.35 Statutes, section 11A.04, clause (11), and in effect on January 73.36 1, 1987. 74.1 Sec. 12. Laws 1989, chapter 319, article 19, section 7, 74.2 subdivision 3, is amended to read: 74.3 Subd. 3. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 74.4 board of trustees of the relief association shall determine by 74.5 May 1 of each year whether or not the relief association has 74.6 excess investment income. The amount of excess investment 74.7 income, if any, must be stated as a dollar amount and reported 74.8 by the chief administrative officer of the relief association to 74.9 the mayor and governing body of the city, the state auditor, the 74.10 commissioner of finance, and the executive director of the 74.11 legislative commission on pensions and retirement. The dollar 74.12 amount of excess investment income up to one percent of the 74.13 assets of the fund, except if the fund has assets of greater 74.14 than 102 percent of its actuarial accrued liabilities, must be 74.15 applied for the purpose specified in subdivision 4. Excess 74.16 investment income must not be considered as income to or assets 74.17 of the fund for actuarial valuations of the fund for that year 74.18 under sections 69.77, 356.215, and 356.216 and the provisions of 74.19 this section except to offset the annual postretirement 74.20 payment. Additional investment income is any realized or 74.21 unrealized investment income other than the excess investment 74.22 income and must be included in the actuarial valuations 74.23 performed under sections 69.77, 356.215, and 356.216 and the 74.24 provisions of this section. 74.25 Sec. 13. Laws 1989, chapter 319, article 19, section 7, 74.26 subdivision 4, as amended by Laws 1990, chapter 570, article 12, 74.27 section 63, as amended by Laws 1992, chapter 472, article 2, 74.28 section 6, is amended to read: 74.29 Subd. 4. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 74.30 amount determined under subdivision 3 must be applied in 74.31 accordance with this subdivision. When the fund has actuarial 74.32 assets of less than 102 percent of its actuarial accrued 74.33 liabilities, the relief association shall apply the first 74.34 one-half of one percent of assets which constitute excess 74.35 investment income to the payment of an annual postretirement 74.36 payment as specified in this subdivision.and the second 75.1 one-half of one percent of assets which constitute excess 75.2 investment income shall be applied to reduce the state 75.3 amortization state aid or supplementary amortization state aid 75.4 payments otherwise due to the relief association under section 75.5 423A.02 for the current calendar year. When the fund has 75.6 actuarial assets of less than 102 percent of its actuarial 75.7 accrued liabilities, the relief association shall pay an annual 75.8 postretirement payment to all eligible members in an amount not 75.9 to exceed one-half of one percent of the assets of the fund. 75.10 Payment of the annual postretirement payment must be in a lump 75.11 sum amount on June 1 following the determination date in any 75.12 year. When the fund has actuarial assets greater than 102 75.13 percent of its actuarial accrued liabilities, the relief 75.14 association shall pay an annual postretirement payment to all 75.15 eligible members in an amount not to exceed 1-1/2 percent of the 75.16 assets of the fund. Payment of the annual postretirement 75.17 payment may be made only if the time weighted total rate of 75.18 return exceeds by two percent the actual percentage increase in 75.19 the current monthly salary of a top grade firefighter in the 75.20 most recent fiscal year and the yearly average percentage 75.21 increase of the time weighted total rate of return of the fund 75.22 for the previous five yearsexceeds by two percent the yearly75.23average percentage increase in monthly salary of a top grade75.24firefighter of the previous five years. The total amount of all 75.25 payments to members may not exceed the amount determined under 75.26 subdivision 3. Payment to each eligible member must be 75.27 calculated by dividing the total number of pension units to 75.28 which eligible members are entitled into the excess investment 75.29 income available for distribution to members, and then 75.30 multiplying that result by the number of units to which each 75.31 eligible member is entitled to determine each eligible member's 75.32 annual postretirement payment. When the fund has actuarial 75.33 assets of less than 102 percent of its actuarial accrued 75.34 liabilities, payment to each eligible member may not exceed an 75.35 amount equal to the total monthly benefit that the eligible 75.36 member was entitled to in the prior year under the terms of the 76.1 benefit plan of the relief association or each eligible member's 76.2 proportionate share of the excess investment income, whichever 76.3 is less. When the fund has actuarial assets of greater than 102 76.4 percent of its actuarial accrued liabilities, payment to each 76.5 eligible member may not exceed the member's proportionate share 76.6 of 1-1/2 percent of assets of the fund. 76.7 Sec. 14. Laws 1989, chapter 319, article 19, section 7, 76.8 subdivision 7, is amended to read: 76.9 Subd. 7. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 76.10 No provision of or payment made under this section may be 76.11 interpreted or relied upon by any member of the relief 76.12 association to guarantee or entitle a member to annual 76.13 postretirement payments for a period when no excess investment 76.14 income is earned by the fund. If the fund has actuarial assets 76.15 of less than 102 percent of its actuarial accrued liabilities, a 76.16 distribution of the fund assets must not exceed one-half of one 76.17 percent. 76.18 Sec. 15. Laws 1993, chapter 125, article 1, section 1, is 76.19 amended to read: 76.20 Section 1. [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.] 76.21 Notwithstanding the provisions of Minnesota Statutes, 76.22 section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, 76.23 chapter 607, article XV, section 9, to the contrary, the service 76.24 pensions payable by the Minneapolis fire department relief 76.25 association for members terminating active service as a 76.26 Minneapolis firefighter after June 1, 1993, must be computed as 76.27 follows: 76.28 length of service 76.29 credited service pension payable 76.30 10 years 16.0 units 76.31 11 years 17.6 units 76.32 12 years 19.2 units 76.33 13 years 20.8 units 76.34 14 years 22.4 units 76.35 15 years 24.0 units 76.36 16 years 25.6 units 77.1 17 years 27.2 units 77.2 18 years 28.8 units 77.3 19 years 30.4 units 77.4 20 years 33.0 units 77.5 21 years 34.6 units 77.6 22 years 36.2 units 77.7 23 years 37.8 units 77.8 24 years 39.4 units 77.9 25 years 41.0 units 77.10 When the fund has actuarial assets of greater than 90 77.11 percent of actuarial accrued liabilities, the following schedule 77.12 applies to all active members and retired service pensioners who 77.13 otherwise met the then existing requirements to receive a 77.14 benefit: 77.15 length of service 77.16 credited service pension payable 77.17 5 years 8.0 units 77.18 6 years 9.6 units 77.19 7 years 11.2 units 77.20 8 years 12.8 units 77.21 9 years 14.4 units 77.22 10 years 16.0 units 77.23 11 years 17.6 units 77.24 12 years 19.2 units 77.25 13 years 20.8 units 77.26 14 years 22.4 units 77.27 15 years 24.0 units 77.28 16 years 25.6 units 77.29 17 years 27.2 units 77.30 18 years 28.8 units 77.31 19 years 30.4 units 77.32 20 years33.033.5 units 77.33 21 years34.635.1 units 77.34 22 years36.237.7 units 77.35 23 years37.838.3 units 77.36 24 years39.439.9 units 78.1 25 years41.041.5 units 78.2 When the fund has actuarial assets of greater than 92.5 78.3 percent of actuarial accrued liabilities, the following schedule 78.4 applies to all active members and retired service pensioners who 78.5 otherwise met the then existing requirements to receive a 78.6 benefit: 78.7 length of service 78.8 credited service pension payable 78.9 5 years 8.0 units 78.10 6 years 9.6 units 78.11 7 years 11.2 units 78.12 8 years 12.8 units 78.13 9 years 14.4 units 78.14 10 years 16.0 units 78.15 11 years 17.6 units 78.16 12 years 19.2 units 78.17 13 years 20.8 units 78.18 14 years 22.4 units 78.19 15 years 24.0 units 78.20 16 years 25.6 units 78.21 17 years 27.2 units 78.22 18 years 28.8 units 78.23 19 years 30.4 units 78.24 20 years 34.0 units 78.25 21 years 35.6 units 78.26 22 years 37.2 units 78.27 23 years 38.8 units 78.28 24 years 40.4 units 78.29 25 years 42.0 units 78.30 Sec. 16. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; 78.31 OPTIONAL ANNUITIES.] 78.32 A member of the Minneapolis fire department relief 78.33 association who is retired on the effective date of this section 78.34 may elect an optional retirement annuity within 60 days of the 78.35 effective date instead of the normal retirement annuity. A 78.36 member who retires after the effective date of this section may 79.1 elect an optional retirement annuity prior to the receipt of any 79.2 benefits. The optional retirement annuity may be a joint and 79.3 survivor annuity without reinstatement in the event of the 79.4 designated beneficiary predeceasing the member or a joint and 79.5 survivor annuity with reinstatement in the event of the 79.6 designated beneficiary predeceasing the member. An optional 79.7 retirement annuity must be actuarially equivalent to the normal 79.8 single life annuity, as projected using the actuarial assumption 79.9 in Minnesota Statutes, sections 356.215 and 356.216, and 79.10 established by the board with written recommendation of the 79.11 actuary retained by the legislative commission on pensions and 79.12 retirement. Once selected, the optional annuity is irrevocable 79.13 and subject to all other pension benefits. 79.14 Sec. 17. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION 79.15 TAX LEVY.] 79.16 If in any year after the Minneapolis fire department relief 79.17 association has actuarial assets greater than 102 percent of the 79.18 actuarial accrued liabilities of the fund and subsequently the 79.19 actuarial assets are less than 100 percent of the actuarial 79.20 accrued liabilities, the city of Minneapolis is not required to 79.21 levy a property tax to fund any deficit unless the fund has two 79.22 successive years when the actuarial assets are less than 100 79.23 percent of the actuarial accrued liabilities. 79.24 Sec. 18. [EFFECTIVE DATE.] 79.25 Unless otherwise stated, the sections of this article are 79.26 effective on the day after compliance by the governing body of 79.27 the city of Minneapolis with Minnesota Statutes, section 79.28 645.021, subdivision 2. Section 3 is effective when the 79.29 provisions of section 4 take effect. Sections 6 and 10 are 79.30 effective retroactive to July 1, 1996.