SF 637

4th Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to retirement; increasing pension benefit 
  1.3             accrual rates; adjusting financing for pension plans; 
  1.4             adding supplemental financial conditions information 
  1.5             for pension funds; reducing appropriations; modifying 
  1.6             or establishing various pension aids; appropriating 
  1.7             money; amending Minnesota Statutes 1996, sections 
  1.8             3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 
  1.9             and 4; 3A.07; 11A.18, subdivision 9; 69.011, 
  1.10            subdivisions 1, 2, and by adding a subdivision; 
  1.11            69.021, subdivisions 5, 7a, 10, and 11; 69.031, 
  1.12            subdivision 5; 352.01, subdivision 25; 352.04, 
  1.13            subdivisions 2 and 3; 352.115, subdivision 3; 352.72, 
  1.14            subdivision 2; 352.92, subdivisions 1 and 2; 352.93, 
  1.15            subdivisions 2, 3, and by adding a subdivision; 
  1.16            352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a 
  1.17            and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, 
  1.18            subdivision 1; 352B.30, by adding a subdivision; 
  1.19            352C.031, subdivision 4; 352C.033; 352D.02, 
  1.20            subdivisions 1 and 2; 352D.04, subdivisions 1 and 2; 
  1.21            353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 
  1.22            353.29, subdivision 3; 353.651, subdivision 3; 
  1.23            353.656, subdivision 1; 353.71, subdivision 2; 
  1.24            353A.08, subdivisions 1 and 2; 353A.083, by adding a 
  1.25            subdivision; 354.05, subdivision 38; 354.42, 
  1.26            subdivisions 2, 3, and 5; 354.44, subdivision 6, and 
  1.27            by adding a subdivision; 354.53, subdivision 1; 
  1.28            354.55, subdivision 11; 354A.011, subdivision 15a; 
  1.29            354A.12, subdivisions 1, 2a, 3a, 3b, and 3c; 354A.31, 
  1.30            subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, 
  1.31            subdivisions 2, 4d, and 4g; 356.217; 356.30, 
  1.32            subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, 
  1.33            subdivision 8; 422A.151; 423B.01, subdivision 9, and 
  1.34            by adding a subdivision; 423B.06, by adding a 
  1.35            subdivision; 423B.07; 423B.09, subdivision 1, and by 
  1.36            adding a subdivision; 423B.10, subdivision 1; 423B.15, 
  1.37            subdivisions 2, 3, 6, and by adding a subdivision; and 
  1.38            490.124, subdivisions 1 and 5; Laws 1965, chapter 519, 
  1.39            section 1, as amended; Laws 1979, chapter 109, section 
  1.40            1, as amended; Laws 1989, chapter 319, article 19, 
  1.41            section 7, subdivisions 1, as amended, 3, 4, as 
  1.42            amended, and 7; Laws 1993, chapter 125, article 1, 
  1.43            section 1; and Laws 1996, chapter 448, article 1, 
  1.44            section 3; proposing coding for new law in Minnesota 
  1.45            Statutes, chapters 124; 273; 352; 352C; 354A; 355; and 
  1.46            356; repealing Minnesota Statutes 1996, sections 
  2.1             124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 
  2.2             353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 
  2.3             353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 
  2.4             356.88, subdivision 2; Laws 1985, chapter 259, section 
  2.5             3; and Laws 1993, chapter 336, article 3, section 1. 
  2.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.7                              ARTICLE 1 
  2.8                    PENSION UNIFORMITY PROVISIONS 
  2.9      Section 1.  Minnesota Statutes 1996, section 3.85, 
  2.10  subdivision 11, is amended to read: 
  2.11     Subd. 11.  [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The 
  2.12  commission shall contract with an established actuarial 
  2.13  consulting firm to conduct annual actuarial valuations for the 
  2.14  retirement plans named in paragraph (b).  The contract must 
  2.15  include provisions for performing cost analyses of proposals for 
  2.16  changes in benefit and funding policies.  
  2.17     (b) The contract for actuarial valuation must include the 
  2.18  following retirement plans:  
  2.19     (1) the teachers retirement plan, teachers retirement 
  2.20  association; 
  2.21     (2) the general state employees retirement plan, Minnesota 
  2.22  state retirement system; 
  2.23     (3) the correctional employees retirement plan, Minnesota 
  2.24  state retirement system; 
  2.25     (4) the state patrol retirement plan, Minnesota state 
  2.26  retirement system; 
  2.27     (5) the judges retirement plan, Minnesota state retirement 
  2.28  system; 
  2.29     (6) the Minneapolis employees retirement plan, Minneapolis 
  2.30  employees retirement fund; 
  2.31     (7) the public employees retirement plan, public employees 
  2.32  retirement association; 
  2.33     (8) the public employees police and fire plan, public 
  2.34  employees retirement association; 
  2.35     (9) the Duluth teachers retirement plan, Duluth teachers 
  2.36  retirement fund association; 
  2.37     (10) the Minneapolis teachers retirement plan, Minneapolis 
  2.38  teachers retirement fund association; 
  3.1      (11) the St. Paul teachers retirement plan, St. Paul 
  3.2   teachers retirement fund association; 
  3.3      (12) the legislators retirement plan, Minnesota state 
  3.4   retirement system; and 
  3.5      (13) the elective state officers retirement plan, Minnesota 
  3.6   state retirement system; and 
  3.7      (14) the public employees local government correctional 
  3.8   service retirement plan, public employees retirement 
  3.9   association, if there are any participants in that plan.  
  3.10     (c) The contract must specify completion of annual 
  3.11  actuarial valuation calculations on a fiscal year basis with 
  3.12  their contents as specified in section 356.215, and the 
  3.13  standards for actuarial work adopted by the commission.  
  3.14     The contract must specify completion of annual experience 
  3.15  data collection and processing and a quadrennial published 
  3.16  experience study for the plans listed in paragraph (b), clauses 
  3.17  (1), (2), and (7), as provided for in the standards for 
  3.18  actuarial work adopted by the commission.  The experience data 
  3.19  collection, processing, and analysis must evaluate the following:
  3.20     (1) individual salary progression; 
  3.21     (2) rate of return on investments based on current asset 
  3.22  value; 
  3.23     (3) payroll growth; 
  3.24     (4) mortality; 
  3.25     (5) retirement age; 
  3.26     (6) withdrawal; and 
  3.27     (7) disablement.  
  3.28     (d) The actuary retained by the commission shall annually 
  3.29  prepare a report to the legislature, including the commentary on 
  3.30  the actuarial valuation calculations for the plans named in 
  3.31  paragraph (b) and summarizing the results of the actuarial 
  3.32  valuation calculations.  The commission-retained actuary shall 
  3.33  include with the report the actuary's recommendations concerning 
  3.34  the appropriateness of the support rates to achieve proper 
  3.35  funding of the retirement funds by the required funding dates.  
  3.36  The commission-retained actuary shall, as part of the 
  4.1   quadrennial published experience study, include recommendations 
  4.2   to the legislature on the appropriateness of the actuarial 
  4.3   valuation assumptions required for evaluation in the study.  
  4.4      (e) If the actuarial gain and loss analysis in the 
  4.5   actuarial valuation calculations indicates a persistent pattern 
  4.6   of sizable gains or losses, as directed by the commission, the 
  4.7   actuary retained by the commission shall prepare a special 
  4.8   experience study for a plan listed in paragraph (b), clause (3), 
  4.9   (4), (5), (6), (8), (9), (10), (11), (12), or (13), or (14), in 
  4.10  the manner provided for in the standards for actuarial work 
  4.11  adopted by the commission. 
  4.12     (f) The term of the contract between the commission and the 
  4.13  actuary retained by the commission is two years, plus not to 
  4.14  exceed two one-year extensions before competitive bidding.  The 
  4.15  contract is subject to competitive bidding procedures as 
  4.16  specified by the commission. 
  4.17     Sec. 2.  Minnesota Statutes 1996, section 3.85, subdivision 
  4.18  12, is amended to read: 
  4.19     Subd. 12.  [ALLOCATION OF ACTUARIAL COST.] (a) The 
  4.20  commission shall assess each retirement plan specified in 
  4.21  subdivision 11, paragraph (b), the compensation paid to the 
  4.22  actuary retained by the commission for the actuarial valuation 
  4.23  calculations, quadrennial projection valuations, and quadrennial 
  4.24  experience studies.  The assessment is 100 percent of the amount 
  4.25  of contract compensation for the actuarial consulting firm 
  4.26  retained by the commission for actuarial valuation calculations, 
  4.27  including the public employees police and fire plan 
  4.28  consolidation accounts of the public employees retirement 
  4.29  association, annual experience data collection and processing, 
  4.30  and quadrennial experience studies.  
  4.31     The portion of the total assessment payable by each 
  4.32  retirement system or pension plan must be determined as follows: 
  4.33     (1) Each pension plan specified in subdivision 11, 
  4.34  paragraph (b), clauses (1) to (14) (13), must pay the following 
  4.35  indexed amount based on its total active, deferred, inactive, 
  4.36  and benefit recipient membership: 
  5.1          up to 2,000 members, inclusive         $2.55 per member 
  5.2          2,001 through 10,000 members           $1.13 per member 
  5.3          over 10,000 members                    $0.11 per member  
  5.4      The amount specified is applicable for the assessment of 
  5.5   the July 1, 1991, to June 30, 1992, fiscal year actuarial 
  5.6   compensation amounts.  For the July 1, 1992, to June 30, 1993, 
  5.7   fiscal year and subsequent fiscal year actuarial compensation 
  5.8   amounts, the amount specified must be increased at the same 
  5.9   percentage increase rate as the implicit price deflator for 
  5.10  state and local government purchases of goods and services for 
  5.11  the 12-month period ending with the first quarter of the 
  5.12  calendar year following the completion date for the actuarial 
  5.13  valuation calculations, as published by the federal Department 
  5.14  of Commerce, and rounded upward to the nearest full cent. 
  5.15     (2) The total per-member portion of the allocation must be 
  5.16  determined, and that total per-member amount must be subtracted 
  5.17  from the total amount for allocation.  Of the remainder dollar 
  5.18  amount, the following per-retirement system and per-pension plan 
  5.19  charges must be determined and the charges must be paid by the 
  5.20  system or plan: 
  5.21     (i) 37.87 percent is the total additional per-retirement 
  5.22  system charge, of which one-seventh must be paid by each 
  5.23  retirement system specified in subdivision 11, paragraph (b), 
  5.24  clauses (1), (2), (6), (7), (9), (10), and (11). 
  5.25     (ii) 62.13 percent is the total additional per-pension plan 
  5.26  charge, of which one-thirteenth must be paid by each pension 
  5.27  plan specified in subdivision 11, paragraph (b), clauses (1) to 
  5.28  (13), if there are not any participants in the plan specified in 
  5.29  subdivision 11, paragraph (b), clause (14), or of which 
  5.30  one-fourteenth must be paid by each pension plan specified in 
  5.31  subdivision 11, paragraph (b), clauses (1) to (14), if there are 
  5.32  participants in the plan specified in subdivision 11, paragraph 
  5.33  (b), clause (14). 
  5.34     (b) The assessment must be made following the completion of 
  5.35  the actuarial valuation calculations and the experience 
  5.36  analysis.  The amount of the assessment is appropriated from the 
  6.1   retirement fund applicable to the retirement plan.  Receipts 
  6.2   from assessments must be deposited in the state treasury and 
  6.3   credited to the general fund. 
  6.4      Sec. 3.  Minnesota Statutes 1996, section 3A.02, 
  6.5   subdivision 1, is amended to read: 
  6.6      Subdivision 1.  [QUALIFICATIONS.] (a) A former legislator 
  6.7   is entitled, upon written application to the director, to 
  6.8   receive a retirement allowance monthly, if the person: 
  6.9      (1) has served at least six full years, without regard to 
  6.10  the application of section 3A.10, subdivision 2, or has served 
  6.11  during all or part of four regular sessions as a member of the 
  6.12  legislature, which service need not be continuous; 
  6.13     (2) has attained the normal retirement age; 
  6.14     (3) has retired as a member of the legislature; and 
  6.15     (4) has made all contributions provided for in section 
  6.16  3A.03, has made payments for past service under subdivision 2, 
  6.17  or has made payments in lieu of contributions under Minnesota 
  6.18  Statutes 1992, section 3A.031, prior to July 1, 1994. 
  6.19     (b) This paragraph applies to members of the legislature 
  6.20  who terminate service as a legislator before July 1, 1997.  For 
  6.21  service rendered before the beginning of the 1979 legislative 
  6.22  session, but not to exceed eight years of service, the 
  6.23  retirement allowance is an amount equal to five percent per year 
  6.24  of service of that member's average monthly salary.  For service 
  6.25  in excess of eight years rendered before the beginning of the 
  6.26  1979 legislative session, and for service rendered after the 
  6.27  beginning of the 1979 legislative session, the retirement 
  6.28  allowance is an amount equal to 2-1/2 percent per year of 
  6.29  service of that member's average monthly salary. 
  6.30     (c) This paragraph applies to members of the legislature 
  6.31  who terminate service as a legislator after June 30, 1997.  The 
  6.32  retirement allowance is an amount equal to the applicable rate 
  6.33  or rates under paragraph (b) per year of service of the member's 
  6.34  average monthly salary adjusted for that person on an actuarial 
  6.35  equivalent basis to reflect the change in the postretirement 
  6.36  interest rate actuarial assumption under section 356.215, 
  7.1   subdivision 4d, from five percent to six percent.  The 
  7.2   adjustment must be calculated by or, alternatively, the 
  7.3   adjustment procedure must be specified by, the actuary retained 
  7.4   by the legislative commission on pensions and retirement.  The 
  7.5   purpose of this adjustment is to ensure that the total amount of 
  7.6   benefits that the actuary predicts an individual member will 
  7.7   receive over the member's lifetime under this paragraph will be 
  7.8   the same as the total amount of benefits the actuary predicts 
  7.9   the individual member would receive over the member's lifetime 
  7.10  under the law in effect before enactment of this paragraph. 
  7.11     (d) The retirement allowance accrues beginning with the 
  7.12  first day of the month of receipt of the application, but not 
  7.13  before age 60, and for the remainder of the former legislator's 
  7.14  life, if the former legislator is not serving as a member of the 
  7.15  legislature or as a constitutional officer or commissioner as 
  7.16  defined in section 352C.021, subdivisions 2 and 3.  The annuity 
  7.17  shall does not begin to accrue prior to retirement as a 
  7.18  legislator.  No annuity payment shall may be made retroactive 
  7.19  for more than 180 days before the date the annuity application 
  7.20  is filed with the director. 
  7.21     (d) (e) Any member who has served during all or part of 
  7.22  four regular sessions is considered to have served eight years 
  7.23  as a member of the legislature. 
  7.24     (e) (f) The retirement allowance ceases with the last 
  7.25  payment that accrued to the retired legislator during the 
  7.26  retired legislator's lifetime, except that the surviving spouse, 
  7.27  if any, is entitled to the retirement allowance for the calendar 
  7.28  month in which the retired legislator died. 
  7.29     Sec. 4.  Minnesota Statutes 1996, section 3A.02, 
  7.30  subdivision 4, is amended to read: 
  7.31     Subd. 4.  [DEFERRED ANNUITIES AUGMENTATION.] (a) The 
  7.32  deferred annuity of any former legislator shall must be 
  7.33  augmented as provided herein.  The required reserves applicable 
  7.34  to the deferred annuity, determined as of the date the benefit 
  7.35  begins to accrue using an appropriate mortality table and an 
  7.36  interest assumption of five six percent, shall must be augmented 
  8.1   from the first of the month following termination of service, or 
  8.2   July 1, 1973, whichever is later, to the first day of the month 
  8.3   in which the annuity begins to accrue, at the rate of five 
  8.4   percent per annum compounded annually until January 1, 1981, and 
  8.5   thereafter at the rate of three percent per annum compounded 
  8.6   annually until January 1 of the year in which the former 
  8.7   legislator attains age 55.  From that date to the effective date 
  8.8   of retirement, the rate is five percent compounded annually. 
  8.9      (b) The retirement allowance of, or the survivor benefit 
  8.10  payable on behalf of, a former member of the legislature who 
  8.11  terminated service before July 1, 1997, which is not first 
  8.12  payable until after June 30, 1997, must be increased on an 
  8.13  actuarial equivalent basis to reflect the change in the 
  8.14  postretirement interest rate actuarial assumption under section 
  8.15  356.215, subdivision 4d, from five percent to six percent under 
  8.16  a calculation procedure and tables adopted by the board of 
  8.17  directors of the Minnesota state retirement system and approved 
  8.18  by the actuary retained by the legislative commission on 
  8.19  pensions and retirement. 
  8.20     Sec. 5.  Minnesota Statutes 1996, section 11A.18, 
  8.21  subdivision 9, is amended to read: 
  8.22     Subd. 9.  [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 
  8.23  Annually, following June 30, the state board shall use the 
  8.24  procedures in paragraphs (b), (c), and (d) to determine whether 
  8.25  a postretirement adjustment is payable and to determine the 
  8.26  amount of any postretirement adjustment. 
  8.27     (b) If the Consumer Price Index for urban wage earners and 
  8.28  clerical workers all items index published by the Bureau of 
  8.29  Labor Statistics of the United States Department of Labor 
  8.30  increases from June 30 of the preceding year to June 30 of the 
  8.31  current year, the state board shall certify the percentage 
  8.32  increase.  The amount certified may must not exceed the lesser 
  8.33  of the difference between the preretirement interest assumption 
  8.34  and postretirement interest assumption in section 356.215, 
  8.35  subdivision 4d, paragraph (a), or 3.5 2.5 percent.  For the 
  8.36  Minneapolis employees retirement fund, the amount certified must 
  9.1   not exceed 3.5 percent. 
  9.2      (c) In addition to any percentage increase certified under 
  9.3   paragraph (b), the board shall use the following procedures to 
  9.4   determine if a postretirement adjustment is payable under this 
  9.5   paragraph: 
  9.6      (1) The state board shall determine the market value of the 
  9.7   fund on June 30 of that year; 
  9.8      (2) The amount of reserves required for the annuity or 
  9.9   benefit payable to an annuitant and benefit recipient of the 
  9.10  participating public pension plans or funds shall must be 
  9.11  determined by the commission-retained actuary as of the current 
  9.12  June 30.  An annuitant or benefit recipient who has been 
  9.13  receiving an annuity or benefit for at least 12 full months as 
  9.14  of the current June 30 is eligible to receive a full 
  9.15  postretirement adjustment.  An annuitant or benefit recipient 
  9.16  who has been receiving an annuity or benefit for at least one 
  9.17  full month, but less than 12 full months as of the current June 
  9.18  30, is eligible to receive a partial postretirement adjustment.  
  9.19  Each fund shall report separately the amount of the reserves for 
  9.20  those annuitants and benefit recipients who are eligible to 
  9.21  receive a full postretirement benefit adjustment.  This amount 
  9.22  is known as "eligible reserves."  Each fund shall also report 
  9.23  separately the amount of the reserves for those annuitants and 
  9.24  benefit recipients who are not eligible to receive a 
  9.25  postretirement adjustment.  This amount is known as "noneligible 
  9.26  reserves."  For an annuitant or benefit recipient who is 
  9.27  eligible to receive a partial postretirement adjustment, each 
  9.28  fund shall report separately as additional "eligible reserves" 
  9.29  an amount that bears the same ratio to the total reserves 
  9.30  required for the annuitant or benefit recipient as the number of 
  9.31  full months of annuity or benefit receipt as of the current June 
  9.32  30 bears to 12 full months.  The remainder of the annuitant's or 
  9.33  benefit recipient's reserves shall must be separately reported 
  9.34  as additional "noneligible reserves."  The amount of "eligible" 
  9.35  and "noneligible" required reserves shall must be certified to 
  9.36  the board by the commission-retained actuary as soon as is 
 10.1   practical following the current June 30; 
 10.2      (3) The state board shall determine the percentage increase 
 10.3   certified under paragraph (b) multiplied by the eligible 
 10.4   required reserves, as adjusted for mortality gains and losses 
 10.5   under subdivision 11, determined under clause (2); 
 10.6      (4) The state board shall add the amount of reserves 
 10.7   required for the annuities or benefits payable to annuitants and 
 10.8   benefit recipients of the participating public pension plans or 
 10.9   funds as of the current June 30 to the amount determined under 
 10.10  clause (3); 
 10.11     (5) The state board shall subtract the amount determined 
 10.12  under clause (4) from the market value of the fund determined 
 10.13  under clause (1); 
 10.14     (6) The state board shall adjust the amount determined 
 10.15  under clause (5) by the cumulative current balance determined 
 10.16  pursuant to clause (8) and any negative balance carried forward 
 10.17  under clause (9); 
 10.18     (7) A positive amount resulting from the calculations in 
 10.19  clauses (1) to (6) is the excess market value.  A negative 
 10.20  amount is the negative balance; 
 10.21     (8) The state board shall allocate one-fifth of the excess 
 10.22  market value or one-fifth of the negative balance to each of 
 10.23  five consecutive years, beginning with the fiscal year ending 
 10.24  the current June 30; and 
 10.25     (9) To calculate the postretirement adjustment under this 
 10.26  paragraph based on investment performance for a fiscal year, the 
 10.27  state board shall add together all excess market value allocated 
 10.28  to that year and subtract from the sum all negative balances 
 10.29  allocated to that year.  If this calculation results in a 
 10.30  negative number, the entire negative balance must be carried 
 10.31  forward and allocated to the next year.  If the resulting amount 
 10.32  is positive, a postretirement adjustment is payable under this 
 10.33  paragraph.  The board shall express a positive amount as a 
 10.34  percentage of the total eligible required reserves certified to 
 10.35  the board under clause (2).  
 10.36     (d) The state board shall determine the amount of any 
 11.1   postretirement adjustment which is payable using the following 
 11.2   procedure: 
 11.3      (1) The total "eligible" required reserves as of the first 
 11.4   of January next following the end of the fiscal year for the 
 11.5   annuitants and benefit recipients eligible to receive a full or 
 11.6   partial postretirement adjustment as determined by clause (2) 
 11.7   shall must be certified to the state board by the 
 11.8   commission-retained actuary.  The total "eligible" required 
 11.9   reserves shall must be determined by the commission-retained 
 11.10  actuary on the assumption that all annuitants and benefit 
 11.11  recipients eligible to receive a full or partial postretirement 
 11.12  adjustment will be alive on the January 1 in question; and 
 11.13     (2) The state board shall add the percentage certified 
 11.14  under paragraph (b) to any positive percentage calculated under 
 11.15  paragraph (c).  The board shall not subtract from the percentage 
 11.16  certified under paragraph (b) any negative amount calculated 
 11.17  under paragraph (c).  The sum of these percentages shall must be 
 11.18  carried to five decimal places and shall must be certified to 
 11.19  each participating public pension fund or plan as the full 
 11.20  postretirement adjustment percentage.  
 11.21     (e) A retirement annuity payable in the event of retirement 
 11.22  before becoming eligible for social security benefits as 
 11.23  provided in section 352.116, subdivision 3; 353.29, subdivision 
 11.24  6; or 354.35 must be treated as the sum of a period certain 
 11.25  retirement annuity and a life retirement annuity for the 
 11.26  purposes of any postretirement adjustment.  The period certain 
 11.27  retirement annuity plus the life retirement annuity shall must 
 11.28  be the annuity amount payable until age 62 or 65, whichever 
 11.29  applies.  A postretirement adjustment granted on the period 
 11.30  certain retirement annuity must terminate when the period 
 11.31  certain retirement annuity terminates. 
 11.32     Sec. 6.  Minnesota Statutes 1996, section 69.011, 
 11.33  subdivision 1, is amended to read: 
 11.34     Subdivision 1.  [DEFINITIONS.] Unless the language or 
 11.35  context clearly indicates that a different meaning is intended, 
 11.36  the following words and terms shall for the purposes of this 
 12.1   chapter and chapters 423, 423A, 424 and 424A have the meanings 
 12.2   ascribed to them: 
 12.3      (a) "Commissioner" means the commissioner of revenue. 
 12.4      (b) "Municipality" means any home rule charter or statutory 
 12.5   city, organized town or park district subject to chapter 398, 
 12.6   the University of Minnesota, and, for purposes of the fire state 
 12.7   aid program only, an American Indian tribal government entity 
 12.8   located within a federally recognized American Indian 
 12.9   reservation, and, for purposes of the police state aid program 
 12.10  only, the metropolitan airports commission, with respect to 
 12.11  employees peace officers covered under chapter 422A, or the 
 12.12  department of natural resources and the department of public 
 12.13  safety with respect to peace officers covered under chapter 352B.
 12.14     (c) "Minnesota Firetown Premium Report" means a form 
 12.15  prescribed by the commissioner containing space for reporting by 
 12.16  insurers of fire, lightning, sprinkler leakage and extended 
 12.17  coverage premiums received upon risks located or to be performed 
 12.18  in this state less return premiums and dividends. 
 12.19     (d) "Firetown" means the area serviced by any municipality 
 12.20  having a qualified fire department or a qualified incorporated 
 12.21  fire department having a subsidiary volunteer firefighters' 
 12.22  relief association. 
 12.23     (e) "Market value" means latest available market value of 
 12.24  all property in a taxing jurisdiction, whether the property is 
 12.25  subject to taxation, or exempt from ad valorem taxation obtained 
 12.26  from information which appears on abstracts filed with the 
 12.27  commissioner of revenue or equalized by the state board of 
 12.28  equalization. 
 12.29     (f) "Minnesota Aid to Police Premium Report" means a form 
 12.30  prescribed by the commissioner for reporting by each fire and 
 12.31  casualty insurer of all premiums received upon direct business 
 12.32  received by it in this state, or by its agents for it, in cash 
 12.33  or otherwise, during the preceding calendar year, with reference 
 12.34  to insurance written for insuring against the perils contained 
 12.35  in auto insurance coverages as reported in the Minnesota 
 12.36  business schedule of the annual financial statement which each 
 13.1   insurer is required to file with the commissioner in accordance 
 13.2   with the governing laws or rules less return premiums and 
 13.3   dividends. 
 13.4      (g) "Peace officer" means any person: 
 13.5      (1) whose primary source of income derived from wages is 
 13.6   from direct employment by a municipality or county as a law 
 13.7   enforcement officer on a full-time basis of not less than 30 
 13.8   hours per week; 
 13.9      (2) who has been employed for a minimum of six months prior 
 13.10  to December 31 preceding the date of the current year's 
 13.11  certification under subdivision 2, clause (b); 
 13.12     (3) who is sworn to enforce the general criminal laws of 
 13.13  the state and local ordinances; 
 13.14     (4) who is licensed by the peace officers standards and 
 13.15  training board and is authorized to arrest with a warrant; and 
 13.16     (5) who is a member of a local police relief association to 
 13.17  which section 69.77 applies, the state patrol retirement plan, 
 13.18  the public employees police and fire fund, or the Minneapolis 
 13.19  employees retirement fund. 
 13.20     (h) "Full-time equivalent number of peace officers 
 13.21  providing contract service" means the integral or fractional 
 13.22  number of peace officers which would be necessary to provide the 
 13.23  contract service if all peace officers providing service were 
 13.24  employed on a full-time basis as defined by the employing unit 
 13.25  and the municipality receiving the contract service. 
 13.26     (i) "Retirement benefits other than a service pension"  
 13.27  means any disbursement authorized under section 424A.05, 
 13.28  subdivision 3, clauses (2), (3) and (4).  
 13.29     (j) "Municipal clerk, municipal clerk-treasurer or county 
 13.30  auditor" means the person who was elected or appointed to the 
 13.31  specified position or, in the absence of the person, another 
 13.32  person who is designated by the applicable governing body.  In a 
 13.33  park district the clerk is the secretary of the board of park 
 13.34  district commissioners.  In the case of the University of 
 13.35  Minnesota, the clerk is that official designated by the board of 
 13.36  regents.  For the metropolitan airports commission, the clerk is 
 14.1   the person designated by the commission.  For the department of 
 14.2   natural resources or the department of public safety, the clerk 
 14.3   is the respective commissioner. 
 14.4      Sec. 7.  Minnesota Statutes 1996, section 69.011, 
 14.5   subdivision 2, is amended to read: 
 14.6      Subd. 2.  [QUALIFICATION FOR FIRE OR POLICE STATE AID.] (a) 
 14.7   In order to qualify to receive fire state aid, on or before 
 14.8   March 15 annually, in conjunction with the financial report 
 14.9   required pursuant to section 69.051, the clerk of each 
 14.10  municipality having a duly organized fire department as provided 
 14.11  in subdivision 4, or the secretary of each independent nonprofit 
 14.12  firefighting corporation having a subsidiary incorporated 
 14.13  firefighters' relief association whichever is applicable, and 
 14.14  the fire chief, shall jointly certify the existence of the 
 14.15  municipal fire department or of the independent nonprofit 
 14.16  firefighting corporation, whichever is applicable, which meets 
 14.17  the minimum qualification requirements set forth in this 
 14.18  subdivision, and the fire personnel and equipment of the 
 14.19  municipal fire department or the independent nonprofit 
 14.20  firefighting corporation as of the preceding December 31.  
 14.21  Certification shall be made to the commissioner on a form 
 14.22  prescribed by the commissioner and shall include any other facts 
 14.23  the commissioner may require.  The certification shall be made 
 14.24  to the commissioner in duplicate.  Each copy of the certificate 
 14.25  shall be duly executed and deemed an original.  The commissioner 
 14.26  shall forward one copy to the auditor of the county wherein the 
 14.27  fire department is located and retain one copy. 
 14.28     (b) On or before March 15 annually the clerk of each 
 14.29  municipality having a duly organized police department and 
 14.30  having a duly incorporated relief association shall certify that 
 14.31  fact to the county auditor of the county where the police 
 14.32  department is located and to the commissioner on a form 
 14.33  prescribed by the commissioner together with the other facts the 
 14.34  commissioner or auditor may require. 
 14.35     Except as provided in subdivision 2b, on or before March 15 
 14.36  annually, the clerk of each municipality and the auditor of each 
 15.1   county employing one or more peace officers as defined in 
 15.2   subdivision 1, clause (h) (g), shall certify the number of such 
 15.3   peace officers to the commissioner on forms prescribed by the 
 15.4   commissioner.  Credit for officers employed less than a full 
 15.5   year shall be apportioned.  Each full month of employment of a 
 15.6   qualifying officer during the calendar year shall entitle the 
 15.7   employing municipality or county to credit for 1/12 of the 
 15.8   payment for employment of a peace officer for the entire year.  
 15.9   For purposes of sections 69.011 to 69.051, employment of a peace 
 15.10  officer shall commence when the peace officer is entered on the 
 15.11  payroll of the respective municipal police department or county 
 15.12  sheriff's department.  No peace officer shall be included in the 
 15.13  certification of the number of peace officers by more than one 
 15.14  municipality or county for the same month. 
 15.15     Sec. 8.  Minnesota Statutes 1996, section 69.011, is 
 15.16  amended by adding a subdivision to read: 
 15.17     Subd. 2b.  [DEPARTMENTS OF NATURAL RESOURCES AND PUBLIC 
 15.18  SAFETY.] (a) On or before July 1, 1997, the commissioner of 
 15.19  natural resources shall certify one-half of the number of peace 
 15.20  officers as defined in subdivision 1, clause (g), employed by 
 15.21  the enforcement division during calendar year 1996 and the 
 15.22  commissioner of public safety shall certify one-half of the 
 15.23  number of peace officers as defined in subdivision 1, clause 
 15.24  (g), employed by the bureau of criminal apprehension, the 
 15.25  gambling enforcement division, and the state patrol division 
 15.26  during calendar year 1996. 
 15.27     (b) On or before March 15, 1998, the commissioner of 
 15.28  natural resources shall certify seven-tenths of the number of 
 15.29  peace officers as defined in subdivision 1, clause (g), employed 
 15.30  by the enforcement division and the commissioner of public 
 15.31  safety shall certify seven-tenths of the number of peace 
 15.32  officers as defined in subdivision 1, clause (g), employed by 
 15.33  the bureau of criminal apprehension, the gambling enforcement 
 15.34  division, and the state patrol division. 
 15.35     (c) On or before March 15, 1999, and annually on or before 
 15.36  March 15, thereafter, the commissioner of natural resources 
 16.1   shall certify the number of peace officers as defined in 
 16.2   subdivision 1, clause (g), employed by the enforcement division 
 16.3   and the commissioner of public safety shall certify the number 
 16.4   of peace officers as defined in subdivision 1, clause (g), 
 16.5   employed by the bureau of criminal apprehension, the gambling 
 16.6   enforcement division, and the state patrol division. 
 16.7      (d) The certification must be on a form prescribed by the 
 16.8   commissioner.  Peace officers certified under this paragraph 
 16.9   must be included in the total certifications under subdivision 2.
 16.10     Sec. 9.  Minnesota Statutes 1996, section 69.021, 
 16.11  subdivision 5, is amended to read: 
 16.12     Subd. 5.  [CALCULATION OF STATE AID.] (a) The amount of 
 16.13  fire state aid available for apportionment shall be equal to 107 
 16.14  percent of the amount of premium taxes paid to the state upon 
 16.15  the fire, lightning, sprinkler leakage, and extended coverage 
 16.16  premiums reported to the commissioner by insurers on the 
 16.17  Minnesota Firetown Premium Report.  This amount shall be reduced 
 16.18  by the amount required to pay the state auditor's costs and 
 16.19  expenses of the audits or exams of the firefighters relief 
 16.20  associations. 
 16.21     (b) The total amount for apportionment in respect to peace 
 16.22  officer state aid is equal to 104 percent of the amount of 
 16.23  premium taxes paid to the state upon the premiums reported to 
 16.24  the commissioner by insurers on the Minnesota Aid to Police 
 16.25  Premium Report, plus the payment amounts received under section 
 16.26  60A.152 since the last aid apportionment, and reduced by the 
 16.27  amount required to pay the state auditor's costs and expenses of 
 16.28  the audits or exams of the police relief associations.  The 
 16.29  total amount for apportionment in respect to firefighters state 
 16.30  aid shall not be less than two percent of the premiums reported 
 16.31  to the commissioner by insurers on the Minnesota Firetown 
 16.32  Premium Report after subtracting (1) the amount required to pay 
 16.33  the state auditor's costs and expenses of the audits or exams of 
 16.34  the firefighters relief associations, and (2) one percent of the 
 16.35  premiums reported by town and farmers' mutual insurance 
 16.36  companies and mutual property and casualty companies with total 
 17.1   assets of $5,000,000 or less.  The total amount for 
 17.2   apportionment in respect to the police state aid program shall 
 17.3   not be less than two percent of the amount of premiums reported 
 17.4   to the commissioner by insurers on the Minnesota Aid to Police 
 17.5   Premium Report after subtracting the amount required to pay the 
 17.6   state auditor's cost and expenses of the audits or exams of the 
 17.7   police relief associations.  The commissioner shall calculate 
 17.8   the percentage of increase or decrease reflected in the 
 17.9   apportionment over or under the previous year's available state 
 17.10  aid using the same premiums as a basis for comparison. 
 17.11     (c) The amount for apportionment in respect to peace 
 17.12  officer state aid under paragraph (b) must be further reduced by 
 17.13  $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 
 17.14  and $2,404,000 in fiscal year 2001.  These reductions in this 
 17.15  paragraph cancel to the general fund. 
 17.16     Sec. 10.  Minnesota Statutes 1996, section 69.021, 
 17.17  subdivision 7a, is amended to read: 
 17.18     Subd. 7a.  [APPORTIONMENT OF POLICE STATE AID.] (a) The 
 17.19  commissioner shall apportion the state peace officer aid to each 
 17.20  municipality and to the county in the following manner: 
 17.21     (1) for all municipalities maintaining police departments 
 17.22  and the county, counties, the department of natural resources, 
 17.23  and the department of public safety, the police state aid must 
 17.24  be distributed in proportion to the total number of peace 
 17.25  officers, as determined under section 69.011, subdivision 1, 
 17.26  clause (g), and subdivision 2, clause (b), employed by 
 17.27  each municipality and by the county employing unit for 12 
 17.28  calendar months and the proportional or fractional number who 
 17.29  were employed less than 12 months; 
 17.30     (2) for each municipality which contracts with the county 
 17.31  for police service, a proportionate amount of the state aid 
 17.32  distributed to the county based on the full-time equivalent 
 17.33  number of peace officers providing contract service must be 
 17.34  credited against the municipality's contract obligation; and 
 17.35     (3) for each municipality which contracts with another 
 17.36  municipality for police service, a proportionate amount of the 
 18.1   state aid distributed to the municipality providing contract 
 18.2   service based on the full-time equivalent number of peace 
 18.3   officers providing contract service on a full-time equivalent 
 18.4   basis must be credited against the contract obligation of the 
 18.5   municipality receiving contract service. 
 18.6      (b) No municipality entitled to receive state peace officer 
 18.7   aid may be apportioned less state peace officer aid for any year 
 18.8   under Laws 1976, chapter 315, than the amount which was 
 18.9   apportioned to it for calendar year 1975 based on premiums 
 18.10  reported to the commissioner for calendar year 1974; provided, 
 18.11  the amount of state peace officer aid to other municipalities 
 18.12  within the county and to the county must be adjusted in 
 18.13  proportion to the total number of peace officers in the 
 18.14  municipalities and the county, so that the amount of state peace 
 18.15  officer aid apportioned does not exceed the amount of state 
 18.16  peace officer aid available for apportionment. 
 18.17     Sec. 11.  Minnesota Statutes 1996, section 69.021, 
 18.18  subdivision 10, is amended to read: 
 18.19     Subd. 10.  [REDUCTION IN POLICE STATE AID 
 18.20  APPORTIONMENT.] (a) The commissioner of revenue shall reduce the 
 18.21  apportionment of police state aid under subdivisions 5, 
 18.22  paragraph (b), 6, and 7 7a, for eligible employer units by 
 18.23  any excess police state aid. 
 18.24     (b) "Excess police state aid" is: 
 18.25     (1) for counties and for municipalities in which police 
 18.26  retirement coverage is provided wholly by the public employees 
 18.27  police and fire fund and all police officers are members of the 
 18.28  plan governed by sections 353.63 to 353.657, the amount in 
 18.29  excess of the employer's total prior calendar year obligation 
 18.30  under section 353.65, as defined in paragraph (c), as certified 
 18.31  by the executive director of the public employees retirement 
 18.32  association.; 
 18.33     (2) for municipalities in which police retirement coverage 
 18.34  is provided in part by the public employees police and fire fund 
 18.35  governed by sections 353.63 to 353.657 and in part by a local 
 18.36  police consolidation account governed by chapter 353A, the 
 19.1   amount in excess of the employer's total prior calendar year 
 19.2   obligation as defined in paragraph (c), as certified by the 
 19.3   executive director of the public employees retirement 
 19.4   association; 
 19.5      (3) for municipalities in which police retirement coverage 
 19.6   is provided in part by the public employees police and fire fund 
 19.7   governed by sections 353.63 to 353.657 and in part by a local 
 19.8   police relief association governed by sections 69.77 and 
 19.9   423A.01, the amount in excess of the employer's total prior 
 19.10  calendar year obligation as defined in paragraph (c), as 
 19.11  certified by the executive director of the public employees 
 19.12  retirement association, plus the amount of the financial 
 19.13  requirements of the relief association certified to the 
 19.14  applicable municipality during the prior calendar year under 
 19.15  section 69.77, subdivisions 2b and 2c, reduced by the amount of 
 19.16  member contributions deducted from the covered salary of the 
 19.17  relief association during the prior calendar year under section 
 19.18  69.77, subdivision 2a, as certified by the chief administrative 
 19.19  officer of the applicable municipality; 
 19.20     (4) for the metropolitan airports commission, if there are 
 19.21  police officers hired before July 1, 1978, with retirement 
 19.22  coverage by the Minneapolis employees retirement fund remaining, 
 19.23  the amount in excess of the commission's total prior calendar 
 19.24  year obligation as defined in paragraph (c), as certified by the 
 19.25  executive director of the public employees retirement 
 19.26  association, plus the amount determined by expressing the 
 19.27  commission's total prior calendar year contribution to the 
 19.28  Minneapolis employees retirement fund under section 422A.101, 
 19.29  subdivisions 2 and 2a, as a percentage of the commission's total 
 19.30  prior calendar year covered payroll for commission employees 
 19.31  covered by the Minneapolis employees retirement fund and 
 19.32  applying that percentage to the commission's total prior 
 19.33  calendar year covered payroll for commission police officers 
 19.34  covered by the Minneapolis employees retirement fund, as 
 19.35  certified by the chief administrative officer of the 
 19.36  metropolitan airports commission; and 
 20.1      (5) for the department of natural resources and for the 
 20.2   department of public safety, the amount in excess of the 
 20.3   employer's total prior calendar year obligation under section 
 20.4   352B.02, subdivision 1c, for plan members who are peace officers 
 20.5   under section 69.011, subdivision 1, clause (g), as certified by 
 20.6   the executive director of the Minnesota state retirement system. 
 20.7      (c) The employer's total prior calendar year obligation 
 20.8   with respect to the public employees police and fire plan is the 
 20.9   total prior calendar year obligation under section 353.65, 
 20.10  subdivision 3, for police officers as defined in section 353.64, 
 20.11  subdivision 2, and the actual total prior calendar year 
 20.12  obligation under section 353.65, subdivision 3, for 
 20.13  firefighters, as defined in section 353.64, subdivision 3, but 
 20.14  not to exceed for those firefighters the applicable following 
 20.15  amount: 
 20.16    municipality                       maximum amount 
 20.17    Albert Lea                          $54,157.01
 20.18    Anoka                                10,399.31
 20.19    Apple Valley                          5,442.44 
 20.20    Austin                               49,864.73
 20.21    Bemidji                              27,671.38
 20.22    Brooklyn Center                       6,605.92
 20.23    Brooklyn Park                        24,002.26  
 20.24    Burnsville                           15,956.00 
 20.25    Cloquet                               4,260.49 
 20.26    Coon Rapids                          39,920.00 
 20.27    Cottage Grove                         8,588.48
 20.28    Crystal                               5,855.00
 20.29    East Grand Forks                     51,009.88
 20.30    Edina                                32,251.00
 20.31    Elk River                             5,216.55
 20.32    Ely                                  13,584.16
 20.33    Eveleth                              16,288.27
 20.34    Fergus Falls                          6,742.00
 20.35    Fridley                              33,420.64
 20.36    Golden Valley                        11,744.61 
 21.1     Hastings                             16,561.00 
 21.2     Hopkins                               4,324.23  
 21.3     International Falls                  14,400.69 
 21.4     Lakeville                               782.35 
 21.5     Lino Lakes                            5,324.00 
 21.6     Little Falls                          7,889.41 
 21.7     Maple Grove                           6,707.54 
 21.8     Maplewood                             8,476.69 
 21.9     Minnetonka                           10,403.00 
 21.10    Montevideo                            1,307.66 
 21.11    Moorhead                             68,069.26 
 21.12    New Hope                              6,739.72 
 21.13    North St. Paul                        4,241.14 
 21.14    Northfield                              770.63 
 21.15    Owatonna                             37,292.67 
 21.16    Plymouth                              6,754.71 
 21.17    Red Wing                              3,504.01 
 21.18    Richfield                            53,757.96 
 21.19    Rosemount                             1,712.55 
 21.20    Roseville                             9,854.51 
 21.21    St. Anthony                          33,055.00 
 21.22    St. Louis Park                       53,643.11 
 21.23    Thief River Falls                    28,365.04 
 21.24    Virginia                             31,164.46 
 21.25    Waseca                               11,135.17 
 21.26    West St. Paul                        15,707.20 
 21.27    White Bear Lake                       6,521.04 
 21.28    Woodbury                              3,613.00 
 21.29    any other municipality                    0.00 
 21.30     (d) The total shall amount of excess police state aid must 
 21.31  be deposited in a separate the excess police state-aid account 
 21.32  in the general fund, administered and distributed as provided in 
 21.33  subdivision 11. 
 21.34     Sec. 12.  Minnesota Statutes 1996, section 69.021, 
 21.35  subdivision 11, is amended to read: 
 21.36     Subd. 11.  [EXCESS POLICE STATE-AID HOLDING ACCOUNT.] (a) 
 22.1   An excess police state-aid holding account is established in the 
 22.2   general fund. 
 22.3      (b) Excess police state aid determined according to section 
 22.4   69.021, subdivision 10, must be deposited in the excess police 
 22.5   state-aid holding account. 
 22.6      (c) From the balance in the excess police state-aid holding 
 22.7   account, $1,000,000 must be transferred annually to the 
 22.8   ambulance service personnel longevity award and incentive 
 22.9   suspense account established by section 144C.03, subdivision 2. 
 22.10     (d) If a police officer stress reduction program is created 
 22.11  by law and money is appropriated for that program, an amount 
 22.12  equal to that appropriation must be transferred from the balance 
 22.13  in the excess police state-aid holding account. 
 22.14     (e) On October 1, 1997, and annually on each October 1, on 
 22.15  October 1, 2001, and annually on October 1 thereafter, one-half 
 22.16  of the balance of the excess police state-aid holding account 
 22.17  remaining after deductions under paragraphs (c) and (d) is 
 22.18  appropriated for additional amortization aid under section 
 22.19  423A.02, subdivision 1b. 
 22.20     (f) On October 1, 1998, and annually each October 1 in 1999 
 22.21  and 2000, the entire balance of the excess police state-aid 
 22.22  holding account remaining after transfers under paragraphs (c) 
 22.23  and (d) is appropriated for additional amortization aid under 
 22.24  section 423A.02, subdivision 1b. 
 22.25     (g) The remaining balance in the excess police state-aid 
 22.26  holding account, after the deductions under paragraphs (c), (d), 
 22.27  and (e), cancels to the general fund. 
 22.28     Sec. 13.  Minnesota Statutes 1996, section 69.031, 
 22.29  subdivision 5, is amended to read: 
 22.30     Subd. 5.  [DEPOSIT OF STATE AID.] (1) (a) The municipal 
 22.31  treasurer, on receiving the fire state aid, shall within 30 days 
 22.32  after receipt transmit it to the treasurer of the duly 
 22.33  incorporated firefighters' relief association if there is one 
 22.34  organized and the association has filed a financial report with 
 22.35  the municipality; but if there is no relief association 
 22.36  organized, or if any association dissolve, be removed, or has 
 23.1   heretofore dissolved, or has been removed as trustees of state 
 23.2   aid, then the treasurer of the municipality shall keep the money 
 23.3   in the municipal treasury as provided for in section 424A.08 and 
 23.4   shall be disbursed only for the purposes and in the manner set 
 23.5   forth in that section.  
 23.6      (2) (b) The municipal treasurer, upon receipt of the police 
 23.7   state aid, shall disburse the police state aid in the following 
 23.8   manner: 
 23.9      (a) (1) For a municipality in which a local police relief 
 23.10  association exists and all peace officers are members of the 
 23.11  association, the total state aid shall be transmitted to the 
 23.12  treasurer of the relief association within 30 days of the date 
 23.13  of receipt, and the treasurer of the relief association shall 
 23.14  immediately deposit the total state aid in the special fund of 
 23.15  the relief association; 
 23.16     (b) (2) For a municipality in which police retirement 
 23.17  coverage is provided by the public employees police and fire 
 23.18  fund and all peace officers are members of the fund, the total 
 23.19  state aid shall be applied toward the municipality's employer 
 23.20  contribution to the public employees police and fire fund 
 23.21  pursuant to section 353.65, subdivision 3; or 
 23.22     (c) (3) For a municipality other than a city of the first 
 23.23  class with a population of more than 300,000 in which both a 
 23.24  police relief association exists and police retirement coverage 
 23.25  is provided in part by the public employees police and fire 
 23.26  fund, the municipality may elect at its option to transmit the 
 23.27  total state aid to the treasurer of the relief association as 
 23.28  provided in clause (a), to use the total state aid to apply 
 23.29  toward the municipality's employer contribution to the public 
 23.30  employees police and fire fund subject to all the provisions set 
 23.31  forth in clause (b), or to allot the total state aid 
 23.32  proportionately to be transmitted to the police relief 
 23.33  association as provided in this subdivision and to apply toward 
 23.34  the municipality's employer contribution to the public employees 
 23.35  police and fire fund subject to the provisions of clause (b) on 
 23.36  the basis of the respective number of active full-time peace 
 24.1   officers, as defined in section 69.011, subdivision 1, clause 
 24.2   (g). 
 24.3      For a city of the first class with a population of more 
 24.4   than 300,000, in addition, the city may elect to allot the 
 24.5   appropriate portion of the total police state aid to apply 
 24.6   toward the employer contribution of the city to the public 
 24.7   employees police and fire fund based on the covered salary of 
 24.8   police officers covered by the fund each payroll period and to 
 24.9   transmit the balance to the police relief association. 
 24.10     (3) (c) The county treasurer, upon receipt of the police 
 24.11  state aid for the county, shall apply the total state aid toward 
 24.12  the county's employer contribution to the public employees 
 24.13  police and fire fund pursuant to section 353.65, subdivision 3. 
 24.14     (4) (d) The designated metropolitan airports commission 
 24.15  official, upon receipt of the police state aid for the 
 24.16  metropolitan airports commission, shall apply the total police 
 24.17  state aid toward the commission's employer contribution to the 
 24.18  Minneapolis employees retirement fund under section 422A.101, 
 24.19  subdivision 2a. 
 24.20     (e) The police state aid apportioned to the departments of 
 24.21  public safety and natural resources under section 69.021, 
 24.22  subdivision 7a, is appropriated to the commissioner of finance 
 24.23  for transfer to the funds and accounts from which the salaries 
 24.24  of peace officers certified under section 69.011, subdivision 
 24.25  2a, are paid.  The commissioner of revenue shall certify to the 
 24.26  commissioners of public safety, natural resources, and finance 
 24.27  the amounts to be transferred from the appropriation for police 
 24.28  state aid.  The commissioners of public safety and natural 
 24.29  resources shall certify to the commissioner of finance the 
 24.30  amounts to be credited to each of the funds and accounts from 
 24.31  which the peace officers employed by their respective 
 24.32  departments are paid.  Each commissioner must allocate the 
 24.33  police state aid first for employer contributions for employees 
 24.34  funded from the general fund and then for employer contributions 
 24.35  for employees funded from other funds.  For peace officers whose 
 24.36  salaries are paid from the general fund, the amounts transferred 
 25.1   from the appropriation for police state aid must be canceled to 
 25.2   the general fund. 
 25.3      Sec. 14.  [124.2141] [AID ADJUSTMENTS DUE TO CHANGES IN 
 25.4   EMPLOYER RETIREMENT CONTRIBUTION RATES.] 
 25.5      Subdivision 1.  [AID ADJUSTMENT.] Beginning in fiscal year 
 25.6   1998 and each year thereafter, the commissioner of children, 
 25.7   families, and learning shall adjust state aid payments to school 
 25.8   operating funds for independent school district No. 625, 
 25.9   independent school district No. 709 and special school district 
 25.10  No. 1, by the net amount of clauses (1) and (2) and for all 
 25.11  other districts, including charter schools, but excluding any 
 25.12  education organizations that are prohibited from receiving 
 25.13  direct state aids under section 124.193 or 124.32, subdivision 
 25.14  12, by the net amount of clauses (1), (2) and (3): 
 25.15     (1) a decrease equal to each district's share of the fiscal 
 25.16  year 1997 adjustment effected under Minnesota Statutes 1996, 
 25.17  section 124.2139; 
 25.18     (2) an increase equal to one percent of the salaries paid 
 25.19  to members of the general plan of the public employees 
 25.20  retirement association in fiscal year 1997, multiplied by 0.35 
 25.21  for fiscal year 1998 and 0.70 each year thereafter; 
 25.22     (3) a decrease equal to 2.34 percent of the salaries paid 
 25.23  to members of the teachers retirement association in fiscal year 
 25.24  1997.  
 25.25     Subd. 2.  [APPROPRIATION AND ESTIMATED NET SAVINGS.] The 
 25.26  amounts necessary to pay any positive net adjustments under this 
 25.27  section to any school district are appropriated annually from 
 25.28  the general fund to the commissioner of children, families, and 
 25.29  learning.  The estimated net general fund savings under this 
 25.30  section is $29,819,000 in fiscal year 1998, and $26,997,000 in 
 25.31  each fiscal year thereafter. 
 25.32     Subd. 3.  [LIMITS ON ADJUSTMENTS AND POTENTIAL REDUCTIONS.] 
 25.33  Increases to any school districts under subdivision 1, clause 
 25.34  (2), and decreases under subdivision 1, clauses (1) and (3), are 
 25.35  limited to the fiscal year 1999 amounts.  The commissioner of 
 25.36  children, families, and learning may permanently reduce the 
 26.1   adjustments to school districts under subdivision 1, clauses (1) 
 26.2   and (2), in the same manner as prescribed for nonschool 
 26.3   jurisdictions under section 273.13985, subdivision 2.  The 
 26.4   commissioner may, from time to time, require that the most 
 26.5   recent fiscal year payroll information be certified by the 
 26.6   executive director of the teachers retirement association.  For 
 26.7   any school district where the newly certified teachers 
 26.8   retirement association payroll is significantly lower than the 
 26.9   fiscal 1997 amount as determined by the commissioner, the 
 26.10  commissioner shall recalculate the lower reduction under 
 26.11  subdivision 1, clause (3), and shall permanently reduce the 
 26.12  adjustment amount in subsequent years. 
 26.13     Subd. 4.  [EFFECT OF REORGANIZATIONS.] The commissioner of 
 26.14  children, families, and learning shall reapportion the aid 
 26.15  adjustments to school districts under this section to account 
 26.16  for significant changes in boundaries or consolidations, as 
 26.17  determined by the commissioner.  If a school district is 
 26.18  dissolved, or a school district function thereof is assumed by 
 26.19  either the state or a nonpublic organization, adjustments for 
 26.20  all or the appropriate fraction of the total payroll under this 
 26.21  section must terminate. 
 26.22     Subd. 5.  [ADJUSTMENT TERMINATION.] All adjustments under 
 26.23  this section terminate on June 30, 2020. 
 26.24     Sec. 15.  [273.1385] [AID FOR PUBLIC EMPLOYEES RETIREMENT 
 26.25  ASSOCIATION EMPLOYER CONTRIBUTION RATE INCREASE.] 
 26.26     Subdivision 1.  [AID TO OFFSET RATE INCREASE.] Beginning 
 26.27  with the December 26, 1997, payment, and according to the 
 26.28  schedule for payment of local aid under section 477A.015 
 26.29  thereafter, the commissioner of revenue shall pay to each city, 
 26.30  county, town, and other nonschool jurisdiction an amount equal 
 26.31  to 0.35 percent of the fiscal year 1997 payroll for employees 
 26.32  who were members of the general plan of the public employees 
 26.33  retirement association.  Except for the December 1997 
 26.34  distribution under this section, the amount of aid must be 
 26.35  certified before September 1 of the year preceding the 
 26.36  distribution year to the affected local government.  The 
 27.1   executive director of the public employees retirement 
 27.2   association shall certify the general plan fiscal year covered 
 27.3   payroll and other information requested by the commissioner of 
 27.4   revenue, on or before August 1, 1997, and in subsequent years 
 27.5   where necessary, in order to facilitate administration of this 
 27.6   section.  The amount necessary to make these aid payments is 
 27.7   appropriated annually from the general fund to the commissioner 
 27.8   of revenue.  Expenditures under this section are estimated to be 
 27.9   $7,942,500 in fiscal year 1998, and $15,885,000 in each 
 27.10  subsequent fiscal year, less any future reductions under 
 27.11  subdivision 2. 
 27.12     Subd. 2.  [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID 
 27.13  REDUCTIONS.] The aid amount received by any jurisdiction in 
 27.14  fiscal year 2000 or any year thereafter may not exceed the 
 27.15  amount it received in fiscal year 1999.  The commissioner may, 
 27.16  from time to time, request the most recent fiscal year payroll 
 27.17  information by jurisdiction to be certified by the executive 
 27.18  director of the public employees retirement association.  For 
 27.19  any jurisdiction where newly certified public employees 
 27.20  retirement association general plan payroll is significantly 
 27.21  lower than the fiscal 1997 amount, as determined by the 
 27.22  commissioner, the commissioner shall recalculate the aid amount 
 27.23  based on the most recent fiscal year payroll information, 
 27.24  certify the recalculated aid amount for the next distribution 
 27.25  year, and permanently reduce the aid amount to that jurisdiction.
 27.26     Subd. 3.  [EFFECT OF REORGANIZATIONS.] The commissioner of 
 27.27  revenue may adjust the aid amounts for separate jurisdictions to 
 27.28  account for significant changes in boundaries or in the form of 
 27.29  government, as determined by the commissioner.  If a local 
 27.30  government function and the associated public employees 
 27.31  retirement association general plan payroll is assumed by either 
 27.32  the state, or a nonpublic organization, the aid amounts 
 27.33  attributable to the function under this section must terminate.  
 27.34     Subd. 4.  [AID TERMINATION.] The aid provided under this 
 27.35  section terminates on June 30, 2020.  
 27.36     Sec. 16.  Minnesota Statutes 1996, section 352.01, 
 28.1   subdivision 25, is amended to read: 
 28.2      Subd. 25.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 28.3   means age 65 for a person who first became a covered employee or 
 28.4   a member of a pension fund listed in section 356.30, subdivision 
 28.5   3, before July 1, 1989.  For a person who first becomes a 
 28.6   covered employee after June 30, 1989, normal retirement age 
 28.7   means the higher of age 65 or "retirement age," as defined in 
 28.8   United States Code, title 42, section 416(l), as amended, but 
 28.9   not to exceed age 66. 
 28.10     Sec. 17.  Minnesota Statutes 1996, section 352.04, 
 28.11  subdivision 2, is amended to read: 
 28.12     Subd. 2.  [EMPLOYEE CONTRIBUTIONS.] The employee 
 28.13  contribution to the fund must be equal to 4.07 4.0 percent of 
 28.14  salary.  These contributions must be made by deduction from 
 28.15  salary as provided in subdivision 4. 
 28.16     Sec. 18.  Minnesota Statutes 1996, section 352.04, 
 28.17  subdivision 3, is amended to read: 
 28.18     Subd. 3.  [EMPLOYER CONTRIBUTIONS.] (a) The employer 
 28.19  contribution to the fund must be equal to 4.2 4.0 percent of 
 28.20  salary. 
 28.21     (b) By January 1 of each year, the board of directors shall 
 28.22  report to the legislative commission on pensions and retirement, 
 28.23  the chair of the committee on appropriations of the house of 
 28.24  representatives, and the chair of the committee on finance of 
 28.25  the senate on the amount raised by the employer and employee 
 28.26  contribution rates in effect and whether the total amount is 
 28.27  less than, the same as, or more than the actuarial requirement 
 28.28  determined under section 356.215. 
 28.29     (c) If the legislative commission on pensions and 
 28.30  retirement, based on the most recent valuation performed by its 
 28.31  actuary, determines that the total amount raised by the employer 
 28.32  and employee contributions under subdivision 2 and paragraph (b) 
 28.33  is less than the actuarial requirements determined under section 
 28.34  356.215, the employer and employee rates must be increased by 
 28.35  equal amounts as necessary to meet the actuarial requirements.  
 28.36  The employee rate may not exceed 4.15 percent of salary and the 
 29.1   employer rate may not exceed 4.29 percent of salary.  The 
 29.2   increases are effective on the next January 1 following the 
 29.3   determination by the commission.  The executive director of the 
 29.4   Minnesota state retirement system shall notify employing units 
 29.5   of any increases under this paragraph. 
 29.6      Sec. 19.  Minnesota Statutes 1996, section 352.115, 
 29.7   subdivision 3, is amended to read: 
 29.8      Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 29.9   in conjunction with section 352.116, subdivision 1, applies to a 
 29.10  person who became a covered employee or a member of a pension 
 29.11  fund listed in section 356.30, subdivision 3, before July 1, 
 29.12  1989, unless paragraph (b), in conjunction with section 352.116, 
 29.13  subdivision 1a, produces a higher annuity amount, in which case 
 29.14  paragraph (b) will apply.  The employee's average salary, as 
 29.15  defined in subdivision 2, multiplied by one the percent 
 29.16  specified in section 356.19, subdivision 1, per year of 
 29.17  allowable service for the first ten years and 1.5 the percent 
 29.18  specified in section 356.19, subdivision 2, for each later year 
 29.19  of allowable service and pro rata for completed months less than 
 29.20  a full year shall determine the amount of the retirement annuity 
 29.21  to which the employee is entitled. 
 29.22     (b) This paragraph applies to a person who has become at 
 29.23  least 55 years old and first became a covered employee after 
 29.24  June 30, 1989, and to any other covered employee who has become 
 29.25  at least 55 years old and whose annuity amount, when calculated 
 29.26  under this paragraph and in conjunction with section 352.116, 
 29.27  subdivision 1a, is higher than it is when calculated under 
 29.28  paragraph (a), in conjunction with section 352.116, subdivision 
 29.29  1.  The employee's average salary, as defined in subdivision 2, 
 29.30  multiplied by 1.5 the percent specified in section 356.19, 
 29.31  subdivision 2, for each year of allowable service and pro rata 
 29.32  for months less than a full year shall determine the amount of 
 29.33  the retirement annuity to which the employee is entitled. 
 29.34     Sec. 20.  Minnesota Statutes 1996, section 352.72, 
 29.35  subdivision 2, is amended to read: 
 29.36     Subd. 2.  [COMPUTATION OF DEFERRED ANNUITY.] (a) The 
 30.1   deferred annuity, if any, accruing under subdivision 1, or 
 30.2   section 352.22, subdivision 3, must be computed as provided in 
 30.3   section 352.22, subdivision 3, on the basis of allowable service 
 30.4   before termination of state service and augmented as provided 
 30.5   herein.  The required reserves applicable to a deferred annuity 
 30.6   or to an annuity for which a former employee was eligible but 
 30.7   had not applied or to any deferred segment of an annuity must be 
 30.8   determined as of the date the benefit begins to accrue and 
 30.9   augmented by interest compounded annually from the first day of 
 30.10  the month following the month in which the employee ceased to be 
 30.11  a state employee, or July 1, 1971, whichever is later, to the 
 30.12  first day of the month in which the annuity begins to accrue.  
 30.13  The rates of interest used for this purpose must be five percent 
 30.14  compounded annually until January 1, 1981, and three percent 
 30.15  compounded annually thereafter until January 1 of the year 
 30.16  following the year in which the former employee attains age 55.  
 30.17  From that date to the effective date of retirement, the rate is 
 30.18  five percent compounded annually.  If a person has more than one 
 30.19  period of uninterrupted service, the required reserves related 
 30.20  to each period must be augmented by interest under this 
 30.21  subdivision.  The sum of the augmented required reserves so 
 30.22  determined is the present value of the annuity.  "Uninterrupted 
 30.23  service" for the purpose of this subdivision means periods of 
 30.24  covered employment during which the employee has not been 
 30.25  separated from state service for more than two years.  If a 
 30.26  person repays a refund, the service restored by the repayment 
 30.27  must be considered continuous with the next period of service 
 30.28  for which the employee has credit with this system.  The formula 
 30.29  percentages used for each period of uninterrupted service must 
 30.30  be those applicable to a new employee.  The mortality table and 
 30.31  interest assumption used to compute the annuity must be those in 
 30.32  effect when the employee files application for annuity.  This 
 30.33  section shall does not reduce the annuity otherwise payable 
 30.34  under this chapter. 
 30.35     (b) The retirement annuity or disability benefit of, or the 
 30.36  survivor benefit payable on behalf of, a former state employee 
 31.1   who terminated service before July 1, 1997, which is not first 
 31.2   payable until after June 30, 1997, must be increased on an 
 31.3   actuarial equivalent basis to reflect the change in the 
 31.4   postretirement interest rate actuarial assumption under section 
 31.5   356.215, subdivision 4d, from five percent to six percent under 
 31.6   a calculation procedure and the tables adopted by the board and 
 31.7   approved by the actuary retained by the legislative commission 
 31.8   on pensions and retirement. 
 31.9      Sec. 21.  Minnesota Statutes 1996, section 352.92, 
 31.10  subdivision 1, is amended to read: 
 31.11     Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] Beginning with 
 31.12  the first full pay period after July 1, 1984, in lieu of 
 31.13  employee contributions payable under section 352.04, subdivision 
 31.14  2, Employee contributions by of covered correctional employees 
 31.15  must be in an amount equal to 4.90 5.50 percent of salary.  
 31.16     Sec. 22.  Minnesota Statutes 1996, section 352.92, 
 31.17  subdivision 2, is amended to read: 
 31.18     Subd. 2.  [EMPLOYER CONTRIBUTIONS.] In lieu of employer 
 31.19  contributions payable under section 352.04, subdivision 3, The 
 31.20  employer shall contribute for covered correctional employees an 
 31.21  amount equal to 6.75 7.70 percent of salary.  
 31.22     Sec. 23.  Minnesota Statutes 1996, section 352.93, 
 31.23  subdivision 2, is amended to read: 
 31.24     Subd. 2.  [CALCULATING MONTHLY ANNUITY.] The monthly 
 31.25  annuity under this section must be determined by multiplying the 
 31.26  average monthly salary by the number of years, or completed 
 31.27  months, of covered correctional service by 2.5 the percent 
 31.28  specified in section 356.19, subdivision 5.  However, the 
 31.29  monthly annuity must not exceed 75 percent of the average 
 31.30  monthly salary.  
 31.31     Sec. 24.  Minnesota Statutes 1996, section 352.93, 
 31.32  subdivision 3, is amended to read: 
 31.33     Subd. 3.  [PAYMENTS; DURATION AND AMOUNT ANNUITY ACCRUAL.] 
 31.34  The annuity under this section shall must begin to accrue as 
 31.35  provided in section 352.115, subdivision 8., and must be paid 
 31.36  for an additional 84 full calendar months or to the first of the 
 32.1   month following the month in which the employee attains normal 
 32.2   retirement age, whichever occurs first, except that payment must 
 32.3   not cease before the first of the month following the month in 
 32.4   which the employee becomes 62.  It must then be reduced to the 
 32.5   amount as calculated at normal retirement age under section 
 32.6   352.115, except that if this amount, when added to that portion 
 32.7   of the social security benefit based on state service the 
 32.8   employee would be eligible to receive at the time, is less than 
 32.9   the benefit payable under subdivision 2, the retired employee 
 32.10  shall receive an amount that when added to the social security 
 32.11  benefit will equal the amount payable under subdivision 2.  If 
 32.12  the employee retired prior to age 55, the reduced benefit as 
 32.13  calculated under section 352.115 must be actuarially reduced as 
 32.14  provided in subdivision 2a.  
 32.15     When an annuity is reduced under this subdivision, the 
 32.16  percentage adjustments, if any, that have been applied to the 
 32.17  original annuity under section 11A.18, before the reduction, 
 32.18  must be compounded and applied to the reduced annuity.  A former 
 32.19  correctional employee employed by the state in a position 
 32.20  covered by the regular plan or the unclassified employees 
 32.21  retirement program between the age of 58 and normal retirement 
 32.22  age shall receive a partial return of correctional contributions 
 32.23  at retirement with six percent interest based on the following 
 32.24  formula: 
 32.25  
 32.26   Employee contributions             Years and complete    
 32.27   contributed as a                   months of regular     
 32.28   correctional employee              service between     
 32.29   in excess of the                   age 58 and the    
 32.30   contributions the                  normal retirement age 
 32.31   employee would have       X        ..................... 
 32.32   contributed as a                   number of years between
 32.33   regular employee                   age 58 and normal 
 32.34                                      retirement age 
 32.35     Sec. 25.  Minnesota Statutes 1996, section 352.93, is 
 32.36  amended by adding a subdivision to read: 
 33.1      Subd. 3a.  [OPTIONAL ANNUITIES.] The board may establish 
 33.2   optional annuity forms to pay a higher amount from the date of 
 33.3   retirement until an employee is first eligible to draw social 
 33.4   security benefits or up to the age the employee is eligible to 
 33.5   receive unreduced social security benefits, at which time the 
 33.6   monthly benefits must be reduced.  The optional annuity forms 
 33.7   must be actuarially equivalent to the normal single life annuity 
 33.8   form provided in subdivision 2.  The optional annuity forms must 
 33.9   be approved by the actuary retained by the legislative 
 33.10  commission on pensions and retirement. 
 33.11     Sec. 26.  [352.931] [SURVIVOR BENEFITS.] 
 33.12     Subdivision 1.  [SURVIVING SPOUSE BENEFIT.] (a) If the 
 33.13  correctional employee was at least age 50, has credit for at 
 33.14  least three years allowable service, and dies before an annuity 
 33.15  or disability benefit has become payable, notwithstanding any 
 33.16  designation of beneficiary to the contrary, the surviving spouse 
 33.17  of the employee may elect to receive, in lieu of the refund 
 33.18  under section 352.12, subdivision 1, an annuity for life equal 
 33.19  to the joint and 100 percent survivor annuity which the employee 
 33.20  could have qualified for had the employee terminated service on 
 33.21  the date of death.  The election may be made at any time after 
 33.22  the date of death of the employee.  The surviving spouse benefit 
 33.23  begins to accrue as of the first of the month next following the 
 33.24  date on which the application for the benefit was filed. 
 33.25     (b) If the employee was under age 50, dies, and had credit 
 33.26  for at least three years of allowable service credit on the date 
 33.27  of death but did not yet qualify for retirement, the surviving 
 33.28  spouse may elect to receive a 100 percent joint and survivor 
 33.29  annuity based on the age of the employee and surviving spouse at 
 33.30  the time of death.  The annuity is payable using the early 
 33.31  retirement reduction under section 352.93, subdivision 2a, to 
 33.32  age 50, and one-half of the early retirement reduction from age 
 33.33  50 to the age payment begins.  The surviving spouse eligible for 
 33.34  surviving spouse benefits under this paragraph may apply for the 
 33.35  annuity at any time after the employee's death.  Sections 
 33.36  352.22, subdivision 3, and 352.72, subdivision 2, apply to a 
 34.1   deferred annuity or surviving spouse benefit payable under this 
 34.2   subdivision.  
 34.3      (c) The annuity must cease with the last payment received 
 34.4   by the surviving spouse in the lifetime of the surviving 
 34.5   spouse.  Any employee may request in writing that this 
 34.6   subdivision not apply and that payment be made only to a 
 34.7   designated beneficiary as otherwise provided by this chapter. 
 34.8      Subd. 2.  [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 
 34.9   lieu of the 100 percent optional annuity under subdivision 1, 
 34.10  the surviving spouse of a deceased employee may elect to receive 
 34.11  survivor coverage in a term certain of ten, 15, or 20 years.  
 34.12  The monthly term certain annuity must be actuarially equivalent 
 34.13  to the 100 percent optional annuity under subdivision 1 and must 
 34.14  be approved by the actuary retained by the legislative 
 34.15  commission on pensions and retirement.  The optional annuity 
 34.16  ceases upon the expiration of the term certain period.  If a 
 34.17  survivor elects a term certain annuity and dies before the 
 34.18  expiration of the specified term certain period, the commuted 
 34.19  value of the remaining annuity payments must be paid in a lump 
 34.20  sum to the survivor's estate. 
 34.21     Subd. 3.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 34.22  no surviving spouse eligible for benefits under subdivision 1, a 
 34.23  dependent child as defined in section 352.01, subdivision 26, is 
 34.24  eligible for a dependent child survivor benefit.  Benefits to a 
 34.25  dependent child must be paid from the date of the employee's 
 34.26  death to the date the dependent child attains age 20 if the 
 34.27  child is under age 15 on the date of death.  If the child is 15 
 34.28  years or older on the date of death, the benefit is payable for 
 34.29  five years.  The payment to a dependent child is an amount 
 34.30  actuarially equivalent to the value of a 100 percent joint and 
 34.31  survivor optional annuity using the age of the employee and age 
 34.32  of the dependent child at the date of death in lieu of the age 
 34.33  of the surviving spouse.  If there is more than one dependent 
 34.34  child, each dependent child shall receive a proportionate share 
 34.35  of the actuarial value of the employee's account, with the 
 34.36  amount of the benefit payable to each child to be determined 
 35.1   based on the portion of the total eligibility period that each 
 35.2   child is eligible.  The process for calculating the dependent 
 35.3   child survivor benefit must be approved by the actuary retained 
 35.4   by the legislative commission on pensions and retirement. 
 35.5      Subd. 4.  [DEATH REFUND.] An amount equal to the excess, if 
 35.6   any, of the accumulated contributions credited to the account of 
 35.7   the deceased employee in excess of the total of the benefits 
 35.8   paid to the surviving spouse and surviving child or children 
 35.9   must be paid to the deceased employee's last designated 
 35.10  beneficiary or, if none, as specified under section 352.12, 
 35.11  subdivision 1. 
 35.12     Subd. 5.  [APPLICATION.] The benefit elections under this 
 35.13  section must be made on an application form prescribed by the 
 35.14  executive director and must be filed with the executive director.
 35.15     Sec. 27.  Minnesota Statutes 1996, section 352.95, 
 35.16  subdivision 1, is amended to read: 
 35.17     Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 35.18  correctional employee who becomes disabled and physically unfit 
 35.19  to perform the duties of the position as a direct result of an 
 35.20  injury, sickness, or other disability incurred in or arising out 
 35.21  of any act of duty that makes the employee physically or 
 35.22  mentally unable to perform the duties, is entitled to a 
 35.23  disability benefit based on covered correctional service only.  
 35.24  The benefit amount must equal 50 percent of the average salary 
 35.25  defined in section 352.93, plus an additional 2-1/2 percent 
 35.26  equal to that specified in section 356.19, subdivision 5, for 
 35.27  each year of covered correctional service in excess of 20 years, 
 35.28  ten months, prorated for completed months. 
 35.29     Sec. 28.  Minnesota Statutes 1996, section 352.95, 
 35.30  subdivision 5, is amended to read: 
 35.31     Subd. 5.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 
 35.32  disability benefit paid to a disabled correctional employee 
 35.33  under this section shall terminate at the end of the month in 
 35.34  which the employee reaches age 62.  If the disabled correctional 
 35.35  employee is still disabled when the employee reaches age 62, the 
 35.36  employee shall be deemed to be a retired employee.  If the 
 36.1   employee had elected an optional annuity under subdivision 1a, 
 36.2   the employee shall receive an annuity in accordance with the 
 36.3   terms of the optional annuity previously elected.  If the 
 36.4   employee had not elected an optional annuity under subdivision 
 36.5   1a, the employee may within 90 days of attaining age 65 or 
 36.6   reaching the five-year anniversary of the effective date of the 
 36.7   disability benefit, whichever is later, either elect to receive 
 36.8   a normal retirement annuity computed in the manner provided in 
 36.9   section 352.115 352.93 or elect to receive an optional annuity 
 36.10  as provided in section 352.116, subdivision 3, based on the same 
 36.11  length of service as used in the calculation of the disability 
 36.12  benefit.  Election of an optional annuity must be made within 90 
 36.13  days before attaining age 65 or reaching the five-year 
 36.14  anniversary of the effective date of the disability benefit, 
 36.15  whichever is later.  The reduction for retirement before normal 
 36.16  retirement age as provided in section 352.116, subdivision 1 or 
 36.17  1a, does not apply.  The savings clause provision of section 
 36.18  352.93, subdivision 3, applies.  If an optional annuity is 
 36.19  elected, the optional annuity shall begin to accrue on the first 
 36.20  of the month following the month in which the employee reaches 
 36.21  age 65 or the five-year anniversary of the effective date of the 
 36.22  disability benefit, whichever is later. 
 36.23     Sec. 29.  Minnesota Statutes 1996, section 352B.02, 
 36.24  subdivision 1a, is amended to read: 
 36.25     Subd. 1a.  [MEMBER CONTRIBUTIONS.] Each member shall pay a 
 36.26  sum equal to 8.92 8.40 percent of the member's salary, which 
 36.27  shall constitute the member contribution to the fund.  
 36.28     Sec. 30.  Minnesota Statutes 1996, section 352B.02, 
 36.29  subdivision 1c, is amended to read: 
 36.30     Subd. 1c.  [EMPLOYER CONTRIBUTIONS.] (a) In addition to 
 36.31  member contributions, department heads shall pay a sum equal to 
 36.32  14.88 12.60 percent of the salary upon which deductions were 
 36.33  made, which shall constitute the employer contribution to the 
 36.34  fund.  Department contributions must be paid out of money 
 36.35  appropriated to departments for this purpose. 
 36.36     (b) By January 1 of each year, the board of directors shall 
 37.1   report to the legislative commission on pensions and retirement, 
 37.2   the chair of the committee on appropriations of the house of 
 37.3   representatives, and the chair of the committee on finance of 
 37.4   the senate on the amount raised by the employer and employee 
 37.5   contribution rates in effect and whether the total amount is 
 37.6   less than, the same as, or more than the actuarial requirement 
 37.7   determined under section 356.215. 
 37.8      Sec. 31.  Minnesota Statutes 1996, section 352B.08, 
 37.9   subdivision 2, is amended to read: 
 37.10     Subd. 2.  [NORMAL RETIREMENT ANNUITY.] The annuity must be 
 37.11  paid in monthly installments.  The annuity shall be equal to the 
 37.12  amount determined by multiplying the average monthly salary of 
 37.13  the member by 2.65 the percent specified in section 356.19, 
 37.14  subdivision 6, for each year and pro rata for completed months 
 37.15  of service.  
 37.16     Sec. 32.  Minnesota Statutes 1996, section 352B.08, 
 37.17  subdivision 2a, is amended to read: 
 37.18     Subd. 2a.  [EARLY RETIREMENT.] Any member who has become at 
 37.19  least 50 years old, or former member if service ended after June 
 37.20  30, 1989, and who has at least three years of allowable service 
 37.21  is entitled upon application to a reduced retirement annuity 
 37.22  equal to the annuity calculated under subdivision 2, reduced so 
 37.23  that the reduced annuity is the actuarial equivalent of the 
 37.24  annuity that would be payable if the member deferred receipt of 
 37.25  the annuity from the day the annuity begins to accrue to age 
 37.26  55 by two-tenths of one percent for each month that the member 
 37.27  is under age 55 at the time of retirement. 
 37.28     Sec. 33.  Minnesota Statutes 1996, section 352B.10, 
 37.29  subdivision 1, is amended to read: 
 37.30     Subdivision 1.  [INJURIES, PAYMENT AMOUNTS.] Any member who 
 37.31  becomes disabled and physically or mentally unfit to perform 
 37.32  duties as a direct result of an injury, sickness, or other 
 37.33  disability incurred in or arising out of any act of duty, shall 
 37.34  receive disability benefits while disabled.  The benefits must 
 37.35  be paid in monthly installments equal to the member's average 
 37.36  monthly salary multiplied by 53 60 percent, plus an additional 
 38.1   2.65 percent equal to that specified in section 356.19, 
 38.2   subdivision 6, for each year and pro rata for completed months 
 38.3   of service in excess of 20 years, if any. 
 38.4      Sec. 34.  Minnesota Statutes 1996, section 352B.30, is 
 38.5   amended by adding a subdivision to read: 
 38.6      Subd. 4.  [1997 POSTRETIREMENT FUND INTEREST CHANGES.] The 
 38.7   retirement annuity or disability benefit of, or the survivor 
 38.8   benefit payable on behalf of, a former member who terminated 
 38.9   service before July 1, 1997, which is not first payable until 
 38.10  after June 30, 1997, must be increased on an actuarial 
 38.11  equivalent basis to reflect the change in the postretirement 
 38.12  interest rate actuarial assumption under section 356.215, 
 38.13  subdivision 4d, from five percent to six percent under a 
 38.14  calculation procedure and tables adopted by the board and 
 38.15  approved by the actuary retained by the legislative commission 
 38.16  on pensions and retirement. 
 38.17     Sec. 35.  Minnesota Statutes 1996, section 352C.031, 
 38.18  subdivision 4, is amended to read: 
 38.19     Subd. 4.  [RETIREMENT ALLOWANCE FORMULA.] (a) This 
 38.20  paragraph applies to constitutional officers who terminate that 
 38.21  service before July 1, 1997.  The average salary multiplied by 
 38.22  2-1/2 percent for each year of allowable service and pro rata 
 38.23  for completed months less than a full year shall determine the 
 38.24  amount of the normal retirement allowance. 
 38.25     (b) This paragraph applies to constitutional officers who 
 38.26  terminate that service after June 30, 1997.  The retirement 
 38.27  allowance is an amount equal to the rate under paragraph (a) per 
 38.28  year of service of the constitutional officer's average monthly 
 38.29  salary adjusted for that person on an actuarial equivalent basis 
 38.30  to reflect the change in the postretirement interest rate 
 38.31  actuarial assumption under section 356.215, subdivision 4d, from 
 38.32  five percent to six percent.  The adjustment must be calculated 
 38.33  by or, alternatively, the adjustment procedure must be specified 
 38.34  by the actuary retained by the legislative commission on 
 38.35  pensions and retirement. 
 38.36     Sec. 36.  Minnesota Statutes 1996, section 352C.033, is 
 39.1   amended to read: 
 39.2      352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 
 39.3      (a) The deferred retirement allowance for any former 
 39.4   constitutional officer shall must be augmented as provided in 
 39.5   this section.  The required reserves applicable to the deferred 
 39.6   retirement allowance, determined as of the date the retirement 
 39.7   allowance begins to accrue using the appropriate mortality table 
 39.8   and an interest assumption of five six percent, shall be 
 39.9   augmented from the first of the month following termination of 
 39.10  service as a constitutional officer, or January 1, 1979, 
 39.11  whichever is later, to the first day of the month in which the 
 39.12  annuity begins to accrue, at the rate of five percent per annum 
 39.13  compounded annually until January 1, 1981, and thereafter at the 
 39.14  rate of three percent per annum compounded annually until 
 39.15  January 1 of the year in which the former constitutional officer 
 39.16  attains age 55.  From that date to the effective date of 
 39.17  retirement, the rate is five percent compounded annually. 
 39.18     (b) The retirement allowance of, or the survivor benefit 
 39.19  payable on behalf of, a former constitutional officer who 
 39.20  terminated service before July 1, 1997, which is not first 
 39.21  payable until after June 30, 1997, must be increased on an 
 39.22  actuarial equivalent basis to reflect the change in the 
 39.23  postretirement interest rate actuarial assumption under section 
 39.24  356.215, subdivision 4d, from five percent to six percent under 
 39.25  a calculation procedure and tables adopted by the board as 
 39.26  recommended by an approved actuary and approved by the actuary 
 39.27  retained by the legislative commission on pensions and 
 39.28  retirement. 
 39.29     Sec. 37.  Minnesota Statutes 1996, section 353.01, 
 39.30  subdivision 37, is amended to read: 
 39.31     Subd. 37.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 39.32  means age 65 for a person who first became a public employee or 
 39.33  a member of a pension fund listed in section 356.30, subdivision 
 39.34  3, before July 1, 1989.  For a person who first becomes a public 
 39.35  employee after June 30, 1989, "normal retirement age" means the 
 39.36  higher of age 65 or "retirement age," as defined in United 
 40.1   States Code, title 42, section 416(l), as amended, but not to 
 40.2   exceed age 66. 
 40.3      Sec. 38.  Minnesota Statutes 1996, section 353.27, 
 40.4   subdivision 2, is amended to read: 
 40.5      Subd. 2.  [EMPLOYEE CONTRIBUTION.] The employee 
 40.6   contribution shall be an amount (a) for a "basic member" equal 
 40.7   to 8.23 8.75 percent of total salary; and (b) for a "coordinated 
 40.8   member" equal to 4.23 4.75 percent of total salary.  These 
 40.9   contributions shall must be made by deduction from salary in the 
 40.10  manner provided in subdivision 4.  Where any portion of a 
 40.11  member's salary is paid from other than public funds, such 
 40.12  member's employee contribution shall must be based on the total 
 40.13  salary received from all sources. 
 40.14     Sec. 39.  Minnesota Statutes 1996, section 353.27, 
 40.15  subdivision 3a, is amended to read: 
 40.16     Subd. 3a.  [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An 
 40.17  additional employer contribution shall must be made equal to (a) 
 40.18  2-1/2 2.68 percent of the total salary of each "basic member"; 
 40.19  and (b) one-quarter of one .43 percent of the total salary of 
 40.20  each "coordinated member."  These contributions shall must be 
 40.21  made from funds available to the employing subdivision by the 
 40.22  means and in the manner provided in section 353.28.  
 40.23     (b) This subdivision is repealed once the actuarial value 
 40.24  of the assets of the plan equal or exceed the actuarial accrued 
 40.25  liability of the plan as determined by the actuary retained by 
 40.26  the legislative commission on pensions and retirement under 
 40.27  section 356.215.  The repeal is effective on the first day of 
 40.28  the first full pay period occurring after March 31 of the 
 40.29  calendar year following the issuance of the actuarial valuation 
 40.30  upon which the repeal is based. 
 40.31     Sec. 40.  Minnesota Statutes 1996, section 353.29, 
 40.32  subdivision 3, is amended to read: 
 40.33     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 40.34  in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
 40.35  1c, applies to any member who first became a public employee or 
 40.36  a member of a pension fund listed in section 356.30, subdivision 
 41.1   3, before July 1, 1989, unless paragraph (b), in conjunction 
 41.2   with section 353.30, subdivision 5, produces a higher annuity 
 41.3   amount, in which case paragraph (b) will apply.  The average 
 41.4   salary as defined in subdivision 2, multiplied by two the 
 41.5   percent specified in section 356.19, subdivision 3, for each 
 41.6   year of allowable service for the first ten years and thereafter 
 41.7   by 2.5 the percent specified in section 356.19, subdivision 4, 
 41.8   per year of allowable service and completed months less than a 
 41.9   full year for the "basic member," and one the percent specified 
 41.10  in section 356.19, subdivision 1, for each year of allowable 
 41.11  service for the first ten years and thereafter by 1.5 the 
 41.12  percent specified in section 356.19, subdivision 2, per year of 
 41.13  allowable service and completed months less than a full year for 
 41.14  the "coordinated member," shall determine the amount of the 
 41.15  "normal" retirement annuity. 
 41.16     (b) This paragraph applies to a member who has become at 
 41.17  least 55 years old and first became a public employee after June 
 41.18  30, 1989, and to any other member whose annuity amount, when 
 41.19  calculated under this paragraph and in conjunction with section 
 41.20  353.30, subdivision 5, is higher than it is when calculated 
 41.21  under paragraph (a), in conjunction with section 353.30, 
 41.22  subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined 
 41.23  in subdivision 2, multiplied by 2.5 the percent specified in 
 41.24  section 356.19, subdivision 4, for each year of allowable 
 41.25  service and completed months less than a full year for a basic 
 41.26  member and 1.5 the percent specified in section 356.19, 
 41.27  subdivision 2, per year of allowable service and completed 
 41.28  months less than a full year for a coordinated member, shall 
 41.29  determine the amount of the normal retirement annuity. 
 41.30     Sec. 41.  Minnesota Statutes 1996, section 353.651, 
 41.31  subdivision 3, is amended to read: 
 41.32     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] The average salary 
 41.33  as defined in subdivision 2, multiplied by 2.65 the percent 
 41.34  specified in section 356.19, subdivision 6, per year of 
 41.35  allowable service determines the amount of the normal retirement 
 41.36  annuity.  If the member has earned allowable service for 
 42.1   performing services other than those of a police officer or 
 42.2   firefighter, the annuity representing such service is computed 
 42.3   under sections 353.29 and 353.30. 
 42.4      Sec. 42.  Minnesota Statutes 1996, section 353.656, 
 42.5   subdivision 1, is amended to read: 
 42.6      Subdivision 1.  [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 
 42.7   A member of the police and fire fund who becomes disabled and 
 42.8   physically unfit to perform duties as a police officer or 
 42.9   firefighter subsequent to June 30, 1973, as a direct result of 
 42.10  an injury, sickness, or other disability incurred in or arising 
 42.11  out of any act of duty, which has or is expected to render the 
 42.12  member physically or mentally unable to perform duties as a 
 42.13  police officer or firefighter for a period of at least one year, 
 42.14  shall receive disability benefits during the period of such 
 42.15  disability.  The benefits must be in an amount equal to 53 60 
 42.16  percent of the "average salary" under subdivision 3, plus an 
 42.17  additional 2.65 percent specified in section 356.19, subdivision 
 42.18  6, of said average salary for each year of service in excess of 
 42.19  20 years.  Should disability under this subdivision occur before 
 42.20  the member has at least five years of allowable service credit 
 42.21  in the police and fire fund, the disability benefit must be 
 42.22  computed on the "average salary" from which deductions were made 
 42.23  for contribution to the police and fire fund. 
 42.24     Sec. 43.  Minnesota Statutes 1996, section 353.71, 
 42.25  subdivision 2, is amended to read: 
 42.26     Subd. 2.  [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] (a) 
 42.27  The deferred annuity, if any, accruing under subdivision 1, or 
 42.28  sections 353.34, subdivision 3, and 353.68, subdivision 4, shall 
 42.29  must be computed in the manner provided in said sections, on the 
 42.30  basis of allowable service prior to termination of public 
 42.31  service and augmented as provided herein.  The required reserves 
 42.32  applicable to a deferred annuity, or to an annuity for which a 
 42.33  former member was eligible but had not applied, or to any 
 42.34  deferred segment of an annuity shall be determined as of the 
 42.35  date the annuity begins to accrue and shall be augmented from 
 42.36  the first day of the month following the month in which the 
 43.1   former member ceased to be a public employee, or July 1, 1971, 
 43.2   whichever is later, to the first day of the month in which the 
 43.3   annuity begins to accrue, at the rate of five percent per annum 
 43.4   compounded annually until January 1, 1981, and at the rate of 
 43.5   three percent thereafter until January 1 of the year following 
 43.6   the year in which the former member attains age 55.  From that 
 43.7   date to the effective date of retirement, the rate is five 
 43.8   percent per annum compounded annually.  If a person has more 
 43.9   than one period of uninterrupted service, the required reserves 
 43.10  related to each period shall be augmented by interest pursuant 
 43.11  to this subdivision.  The sum of the augmented required reserves 
 43.12  so determined shall be the present value of the annuity.  
 43.13  Uninterrupted service for the purpose of this subdivision shall 
 43.14  mean periods of covered employment during which the employee has 
 43.15  not been separated from public service for more than two years.  
 43.16  If a person repays a refund, the service restored thereby shall 
 43.17  be considered as continuous with the next period of service for 
 43.18  which the employee has credit with this association. The formula 
 43.19  percentages used for each period of uninterrupted service shall 
 43.20  be those as would be applicable to a new employee.  This section 
 43.21  shall not reduce the annuity otherwise payable under this 
 43.22  chapter.  This subdivision shall apply to deferred annuitants of 
 43.23  record on July 1, 1971, and to employees who thereafter become 
 43.24  deferred annuitants; it shall also apply from July 1, 1971, to 
 43.25  former members who make application for an annuity after July 1, 
 43.26  1973. 
 43.27     (b) The retirement annuity or disability benefit of, or the 
 43.28  survivor benefit payable on behalf of, a former member who 
 43.29  terminated service before July 1, 1997, which is not first 
 43.30  payable until after June 30, 1997, must be increased on an 
 43.31  actuarial equivalent basis to reflect the change in the 
 43.32  postretirement interest rate actuarial assumption under section 
 43.33  356.215, subdivision 4d, from five percent to six percent under 
 43.34  a calculation procedure and tables adopted by the board and 
 43.35  approved by the actuary retained by the legislative commission 
 43.36  on pensions and retirement. 
 44.1      Sec. 44.  Minnesota Statutes 1996, section 353A.08, 
 44.2   subdivision 1, is amended to read: 
 44.3      Subdivision 1.  [ELECTION OF COVERAGE BY CURRENT RETIREES.] 
 44.4   A person who is receiving a service pension, disability benefit, 
 44.5   or survivorship survivor benefit is eligible to elect benefit 
 44.6   coverage provided under the relevant provisions of the public 
 44.7   employees police and fire fund benefit plan or to retain benefit 
 44.8   coverage provided under the relief association benefit plan in 
 44.9   effect on the effective date of the consolidation.  The relevant 
 44.10  provisions of the public employees police and fire fund benefit 
 44.11  plan for the person electing that benefit coverage are limited 
 44.12  to participation in the Minnesota postretirement investment fund 
 44.13  for any future postretirement adjustments based on the amount of 
 44.14  the benefit or pension payable on December 31, if December 31 is 
 44.15  the effective date of consolidation, or on the December 1 
 44.16  following the effective date of the consolidation, if other than 
 44.17  December 31.  The survivorship survivor benefit payable on 
 44.18  behalf of any service pension or disability benefit recipient 
 44.19  who elects benefit coverage under the public employees police 
 44.20  and fire fund benefit plan must be calculated under the relief 
 44.21  association benefit plan and is subject to participation in the 
 44.22  Minnesota postretirement investment fund for any future 
 44.23  postretirement adjustments based on the amount of the 
 44.24  survivorship survivor benefit payable.  
 44.25     A survivor benefit calculated under the relief association 
 44.26  benefit plan which is first payable after June 30, 1997, to the 
 44.27  surviving spouse of a retired member of a consolidation account 
 44.28  who, before July 1, 1997, chose to participate in the Minnesota 
 44.29  postretirement investment fund as provided under this 
 44.30  subdivision must be increased on the effective date of the 
 44.31  survivor benefit on an actuarial equivalent basis to reflect the 
 44.32  change in the postretirement interest rate actuarial assumption 
 44.33  under section 356.215, subdivision 4d, from five percent to six 
 44.34  percent under a calculation procedure and tables adopted by the 
 44.35  board and approved by the actuary retained by the legislative 
 44.36  commission on pensions and retirement. 
 45.1      By electing the public employees police and fire fund 
 45.2   benefit plan, a current service pension or disability benefit 
 45.3   recipient who, as of the first January 1 occurring after the 
 45.4   effective date of consolidation, has been receiving the pension 
 45.5   or benefit for at least seven months, or any survivor benefit 
 45.6   recipient who, as of the first January 1 occurring after the 
 45.7   effective date of consolidation, has been receiving the benefit 
 45.8   on the person's own behalf or in combination with a prior 
 45.9   applicable service pension or disability benefit for at least 
 45.10  seven months is eligible to receive a partial adjustment payable 
 45.11  from the Minnesota postretirement investment fund under section 
 45.12  11A.18, subdivision 9. 
 45.13     The election by any pension or benefit recipient must be 
 45.14  made on or before the deadline established by the board of the 
 45.15  public employees retirement association in a manner that 
 45.16  recognizes the number of persons eligible to make the election 
 45.17  and the anticipated time required to conduct any required 
 45.18  benefit counseling.  
 45.19     Sec. 45.  Minnesota Statutes 1996, section 353A.08, 
 45.20  subdivision 2, is amended to read: 
 45.21     Subd. 2.  [ELECTION OF COVERAGE BY CURRENT DEFERRED 
 45.22  RETIREES.] (a) Any person who has terminated active employment 
 45.23  as a police officer or firefighter, whichever applies, with the 
 45.24  municipality, has sufficient credit for service to entitle the 
 45.25  person to an eventual service pension and has not taken a refund 
 45.26  of accumulated member contributions, if applicable, shall have 
 45.27  the option to elect to have benefit coverage provided under the 
 45.28  relevant provisions of the public employees police and fire fund 
 45.29  benefit plan or to retain benefit coverage provided by the 
 45.30  relief association benefit plan in effect on the effective date 
 45.31  of consolidation.  The relevant provisions of the public 
 45.32  employees police and fire fund benefit plan for the person 
 45.33  electing that benefit coverage shall be the provisions specified 
 45.34  in subdivision 1.  
 45.35     The election shall be made when the person files an 
 45.36  application for receipt of the deferred service pension and 
 46.1   shall accompany that application.  
 46.2      (b) The retirement annuity for a deferred member of a 
 46.3   consolidated local relief association which consolidated before 
 46.4   July 1, 1997, who elected the relevant provisions of the public 
 46.5   employees police and fire fund benefit plan under subdivision 1 
 46.6   must be increased on an actuarial equivalent basis to reflect 
 46.7   the change in the postretirement interest rate actuarial 
 46.8   assumption under section 356.215, subdivision 4d, from five 
 46.9   percent to six percent under a calculation procedure and tables 
 46.10  adopted by the board of trustees of the public employees 
 46.11  retirement association and approved by the actuary retained by 
 46.12  the legislative commission on pensions and retirement. 
 46.13     Sec. 46.  Minnesota Statutes 1996, section 353A.083, is 
 46.14  amended by adding a subdivision to read: 
 46.15     Subd. 3.  [PRE-1997 CONSOLIDATION.] (a) For any 
 46.16  consolidation plan account in effect on July 1, 1997, the 
 46.17  applicable benefit plan coverage defined in paragraph (b) or (c) 
 46.18  applies unless the consolidation account's city approves the 
 46.19  extension of the post-June 30, 1997, public employees police and 
 46.20  fire fund benefit plan to the consolidation account members. 
 46.21     (b) If the applicable municipality has approved the July 1, 
 46.22  1993, public employees police and fire fund benefit provisions, 
 46.23  but has not approved the extension of the post-June 30, 1997, 
 46.24  public employees police and fire fund benefit provisions: 
 46.25     (1) the benefit accrual rate for calculating retirement 
 46.26  annuities that apply to consolidation account members who have 
 46.27  elected or elect coverage under the provisions of the public 
 46.28  employees police and fire fund benefit plan is 2.9 percent of 
 46.29  average salary under section 353.651, subdivision 2, per year of 
 46.30  allowable service; 
 46.31     (2) the optional survivor annuities payable to the 
 46.32  survivors of these consolidated members who elected coverage 
 46.33  under the provisions of the public employees police and fire 
 46.34  fund benefit plan must be determined using a benefit accrual 
 46.35  rate of 2.9 percent of average salary under section 353.651, 
 46.36  subdivision 2, per year of the member's allowable service; 
 47.1      (3) the disability benefit payable for these consolidated 
 47.2   members who elected or elect coverage under the provisions of 
 47.3   the public employees police and fire fund benefit plan and: 
 47.4      (i) who become disabled in the line of duty, as defined 
 47.5   under section 353.656, subdivision 1, is an amount equal to 58 
 47.6   percent of average salary under section 353.651, subdivision 2, 
 47.7   plus an additional 2.9 percent of that average salary for each 
 47.8   year of service in excess of 20 years; or 
 47.9      (ii) who become disabled because of sickness or injury 
 47.10  occurring while not on duty, as defined under section 353.656, 
 47.11  subdivision 3, is an amount equal to 43.50 percent of average 
 47.12  salary under section 353.651, subdivision 2, plus an additional 
 47.13  2.9 percent of that average salary for each year of service in 
 47.14  excess of 15 years. 
 47.15     (c) If the applicable municipality has not approved the 
 47.16  July 1, 1993, public employees police and fire fund benefit 
 47.17  provisions, and has not approved the extension of the post-June 
 47.18  30, 1997, public employees police and fire fund benefit 
 47.19  provisions: 
 47.20     (1) the benefit accrual rate for calculating retirement 
 47.21  annuities that apply to consolidation account members who have 
 47.22  elected or elect coverage under the provisions of the public 
 47.23  employees police and fire fund benefit plan is 2.74 percent of 
 47.24  average salary under section 353.651, subdivision 2, per year of 
 47.25  allowable service; 
 47.26     (2) the optional survivor annuities payable to the 
 47.27  survivors of these consolidated members who elected coverage 
 47.28  under the provisions of the public employees police and fire 
 47.29  fund benefit plan must be determined using a benefit accrual 
 47.30  rate of 2.74 percent of average salary under section 353.651, 
 47.31  subdivision 2, per year of the member's allowable service; 
 47.32     (3) the disability benefit payable for consolidated members 
 47.33  who elected or elect the coverage under the provisions of the 
 47.34  public employees police and fire fund benefit plan and: 
 47.35     (i) who become disabled in the line of duty, as defined 
 47.36  under section 353.656, subdivision 1, is an amount equal to 
 48.1   54.80 percent of the average salary under section 353.651, 
 48.2   subdivision 2, plus an additional 2.74 percent of that average 
 48.3   salary for each year of service in excess of 20 years; or 
 48.4      (ii) who become disabled because of sickness or injury 
 48.5   occurring while not on duty, as defined under section 353.656, 
 48.6   subdivision 3, is an amount equal to 41.10 percent of the 
 48.7   average salary under section 353.651, subdivision 2, plus an 
 48.8   additional 2.74 percent of that average salary for each year of 
 48.9   service in excess of 15 years. 
 48.10     Sec. 47.  Minnesota Statutes 1996, section 354.05, 
 48.11  subdivision 38, is amended to read: 
 48.12     Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 48.13  means age 65 for a person who first became a member of the 
 48.14  association or a member of a pension fund listed in section 
 48.15  356.30, subdivision 3, before July 1, 1989.  For a person who 
 48.16  first becomes a member of the association after June 30, 1989, 
 48.17  normal retirement age means the higher of age 65 or "retirement 
 48.18  age," as defined in United States Code, title 42, section 
 48.19  416(l), as amended, but not to exceed age 66. 
 48.20     Sec. 48.  Minnesota Statutes 1996, section 354.42, 
 48.21  subdivision 2, is amended to read: 
 48.22     Subd. 2.  [EMPLOYEE.] The employee contribution to the fund 
 48.23  shall be is an amount equal to 6.5 5.0 percent of the salary of 
 48.24  every coordinated member and 10.5 9.0 percent of the salary of 
 48.25  every basic member.  This contribution shall must be made by 
 48.26  deduction from salary.  Where any portion of a member's salary 
 48.27  is paid from other than public funds, such the member's employee 
 48.28  contribution shall must be based on the entire salary received.  
 48.29     Sec. 49.  Minnesota Statutes 1996, section 354.42, 
 48.30  subdivision 3, is amended to read: 
 48.31     Subd. 3.  [EMPLOYER.] The employer contribution to the fund 
 48.32  shall be is an amount equal to 4-1/2 5.0 percent of the salary 
 48.33  of each coordinated member and 8-1/2 9.0 percent of the salary 
 48.34  of each basic member.  
 48.35     Sec. 50.  Minnesota Statutes 1996, section 354.42, 
 48.36  subdivision 5, is amended to read: 
 49.1      Subd. 5.  [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) To 
 49.2   amortize the unfunded actuarial accrued liability computed under 
 49.3   the entry age actuarial cost method and disclosed under the 
 49.4   annual actuarial valuations prepared by the commission-retained 
 49.5   actuary under section 356.215, an additional employer 
 49.6   contribution shall must be made in the amount of 3.64 1.64 
 49.7   percent of the salary of each member.  
 49.8      (b) This contribution must be made in the manner provided 
 49.9   in section 354.52, subdivision 4.  
 49.10     (c) This subdivision is repealed once the actuarial value 
 49.11  of the assets of the plan equal or exceed the actuarial accrued 
 49.12  liability of the plan as determined by the actuary retained by 
 49.13  the legislative commission on pensions and retirement under 
 49.14  section 356.215.  The repeal is effective on the first day of 
 49.15  the first full pay period occurring after March 31 of the 
 49.16  calendar year following the issuance of the actuarial valuation 
 49.17  upon which the repeal is based. 
 49.18     By January 1 of each year, the board of directors shall 
 49.19  report to the legislative commission on pensions and retirement, 
 49.20  the chair of the committee on appropriations of the house of 
 49.21  representatives, and the chair of the committee on finance of 
 49.22  the senate on the amount raised by the additional employer 
 49.23  contribution rate in effect and whether that amount is less 
 49.24  than, the same as, or more than the required amortization 
 49.25  contribution determined under section 356.215. 
 49.26     Sec. 51.  Minnesota Statutes 1996, section 354.44, 
 49.27  subdivision 6, is amended to read: 
 49.28     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
 49.29  ANNUITY.] (1) The formula retirement annuity hereunder shall 
 49.30  must be computed in accordance with the applicable provisions of 
 49.31  the formulas stated in clause (2) or (4) on the basis of each 
 49.32  member's average salary for the period of the member's formula 
 49.33  service credit.  
 49.34     For all years of formula service credit, "average salary," 
 49.35  for the purpose of determining the member's retirement annuity, 
 49.36  means the average salary upon which contributions were made and 
 50.1   upon which payments were made to increase the salary limitation 
 50.2   provided in Minnesota Statutes 1971, section 354.511, for the 
 50.3   highest five successive years of formula service credit 
 50.4   provided, however, that such "average salary" shall not include 
 50.5   any more than the equivalent of 60 monthly salary payments.  
 50.6   Average salary must be based upon all years of formula service 
 50.7   credit if this service credit is less than five years. 
 50.8      (2) This clause, in conjunction with clause (3), applies to 
 50.9   a person who first became a member of the association or a 
 50.10  member of a pension fund listed in section 356.30, subdivision 
 50.11  3, before July 1, 1989, unless clause (4), in conjunction with 
 50.12  clause (5), produces a higher annuity amount, in which case 
 50.13  clause (4) applies.  The average salary as defined in clause 
 50.14  (1), multiplied by the following percentages per year of formula 
 50.15  service credit shall determine the amount of the annuity to 
 50.16  which the member qualifying therefor is entitled: 
 50.17                         Coordinated Member   Basic Member
 50.18  Each year of service     1.13 the           2.13 the
 50.19   during first ten        percent            percent
 50.20                           specified in       specified in
 50.21                           section 356.19,    section 356.19,
 50.22                           subdivision 1,     subdivision 3,
 50.23                           per year           per year
 50.24  Each year of service     1.63 the           2.63 the
 50.25   thereafter              percent            percent
 50.26                           specified in       specified in
 50.27                           section 356.19,    section 356.19,
 50.28                           subdivision 2,     subdivision 4,
 50.29                           per year           per year
 50.30     (3)(i) This clause applies only to a person who first 
 50.31  became a member of the association or a member of a pension fund 
 50.32  listed in section 356.30, subdivision 3, before July 1, 1989, 
 50.33  and whose annuity is higher when calculated under clause (2), in 
 50.34  conjunction with this clause than when calculated under clause 
 50.35  (4), in conjunction with clause (5). 
 50.36     (ii) Where any member retires prior to normal retirement 
 51.1   age under a formula annuity, the member shall be paid a 
 51.2   retirement annuity in an amount equal to the normal annuity 
 51.3   provided in clause (2) reduced by one-quarter of one percent for 
 51.4   each month that the member is under normal retirement age at the 
 51.5   time of retirement except that for any member who has 30 or more 
 51.6   years of allowable service credit, the reduction shall be 
 51.7   applied only for each month that the member is under age 62. 
 51.8      (iii) Any member whose attained age plus credited allowable 
 51.9   service totals 90 years is entitled, upon application, to a 
 51.10  retirement annuity in an amount equal to the normal annuity 
 51.11  provided in clause (2), without any reduction by reason of early 
 51.12  retirement. 
 51.13     (4) This clause applies to a member who has become at least 
 51.14  55 years old and first became a member of the association after 
 51.15  June 30, 1989, and to any other member who has become at least 
 51.16  55 years old and whose annuity amount when calculated under this 
 51.17  clause and in conjunction with clause (5), is higher than it is 
 51.18  when calculated under clause (2), in conjunction with clause (3).
 51.19  The average salary, as defined in clause (1) multiplied by 2.63 
 51.20  the percent specified by section 356.19, subdivision 4, for each 
 51.21  year of service for a basic member and by 1.63 the 
 51.22  percent specified in section 356.19, subdivision 2, for each 
 51.23  year of service for a coordinated member shall determine the 
 51.24  amount of the retirement annuity to which the member is entitled.
 51.25     (5) This clause applies to a person who has become at least 
 51.26  55 years old and first becomes a member of the association after 
 51.27  June 30, 1989, and to any other member who has become at least 
 51.28  55 years old and whose annuity is higher when calculated under 
 51.29  clause (4) in conjunction with this clause than when calculated 
 51.30  under clause (2), in conjunction with clause (3).  An employee 
 51.31  who retires under the formula annuity before the normal 
 51.32  retirement age shall be paid the normal annuity provided in 
 51.33  clause (4) reduced so that the reduced annuity is the actuarial 
 51.34  equivalent of the annuity that would be payable to the employee 
 51.35  if the employee deferred receipt of the annuity and the annuity 
 51.36  amount were augmented at an annual rate of three percent 
 52.1   compounded annually from the day the annuity begins to accrue 
 52.2   until the normal retirement age. 
 52.3      Sec. 52.  Minnesota Statutes 1996, section 354.44, is 
 52.4   amended by adding a subdivision to read: 
 52.5      Subd. 6a.  [EXTENSION OF 1997 PERMANENT INCREASE.] (a) A 
 52.6   percentage of the permanent increase for benefit recipients 
 52.7   effective July 1, 1997, under section 71, as specified in 
 52.8   paragraph (b), is payable to: 
 52.9      (1) a member who terminates service after June 30, 1997, 
 52.10  and whose benefit begins to accrue during the period of July 2, 
 52.11  1997, to July 1, 2002, based on the member's age at retirement. 
 52.12     (2) a member who is determined to be totally and 
 52.13  permanently disabled under section 354.05, subdivision 14, after 
 52.14  June 30, 1997, and whose benefit begins to accrue during the 
 52.15  period of July 2, 1997, to July 1, 2002, based on the member's 
 52.16  age at disability. 
 52.17     (3) the survivor of a member who terminates service and 
 52.18  dies after June 30, 1997, and whose benefit begins to accrue 
 52.19  during the period of July 2, 1997, to July 1, 2002. 
 52.20     (b) The percentage of the permanent increase is the amount 
 52.21  designated for the applicable beginning benefit accrual date, as 
 52.22  follows: 
 52.23   Beginning Benefit                    Percentage of  
 52.24     Accrual Date                     Permanent Increase  
 52.25   July 2, 1997 to July 1, 1998          50 percent  
 52.26   July 2, 1998 to July 1, 1999          40 percent  
 52.27   July 2, 1999 to July 1, 2000          30 percent  
 52.28   July 2, 2000 to July 1, 2001          20 percent  
 52.29   July 2, 2001 to July 1, 2002          10 percent 
 52.30     Sec. 53.  Minnesota Statutes 1996, section 354.53, 
 52.31  subdivision 1, is amended to read: 
 52.32     Subdivision 1.  [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 
 52.33  employee given a leave of absence to enter military service and 
 52.34  who returns to teaching service upon discharge from military 
 52.35  service as provided in section 192.262, shall may obtain credit 
 52.36  for the period of military service but shall not receive credit 
 53.1   for any voluntary extension of military service at the instance 
 53.2   of the member beyond the initial period of enlistment, induction 
 53.3   or call to active duty.  The member shall obtain credit by 
 53.4   paying into the fund an employee contribution based upon 
 53.5   the salary of the member at the date of return from military 
 53.6   service.  The amount of this contribution shall be as follows: 
 53.7   
 53.8          Period          Basic Member     Coordinated Member
 53.9        July 1, 1973       8 percent          4 percent
 53.10  thru
 53.11  June 30, 1979
 53.12  July 1, 1979
 53.13  and 8.5 percent 4.5 percent
 53.14  thereafter
 53.15     The contributions specified in this subdivision shall be 
 53.16  contribution rates in effect at the time that the military 
 53.17  service was performed multiplied by the annual salary rate of 
 53.18  the member for the year beginning with the date of return from 
 53.19  military service and the number of years of military service 
 53.20  together with interest thereon at an annual rate of 8.5 percent 
 53.21  compounded annually from the time the military service was 
 53.22  rendered to the first date of payment.  The employer 
 53.23  contribution and additional contribution provided in section 
 53.24  354.42 shall must be paid by the employing unit at the rates in 
 53.25  effect at the time that the military service was performed, 
 53.26  applied to the annual salary rate of the member for the year 
 53.27  beginning with the date of return from military service, in the 
 53.28  manner provided in section 354.52, subdivision 4. 
 53.29     Sec. 54.  Minnesota Statutes 1996, section 354.55, 
 53.30  subdivision 11, is amended to read: 
 53.31     Subd. 11.  [DEFERRED ANNUITY; AUGMENTATION.] (a) Any person 
 53.32  covered under section 354.44, subdivision 6, who ceases to 
 53.33  render teaching service, may leave the person's accumulated 
 53.34  deductions in the fund for the purpose of receiving a deferred 
 53.35  annuity at retirement.  Eligibility for an annuity under this 
 53.36  subdivision shall be is governed pursuant to section 354.44, 
 54.1   subdivision 1, or 354.60. 
 54.2      (b) The amount of the deferred retirement annuity shall be 
 54.3   is determined by section 354.44, subdivision 6, and augmented as 
 54.4   provided in this subdivision.  The required reserves related to 
 54.5   that portion of the annuity which had accrued when the member 
 54.6   ceased to render teaching service shall must be augmented by 
 54.7   interest compounded annually from the first day of the month 
 54.8   following the month during which the member ceased to render 
 54.9   teaching service to the effective date of retirement.  There 
 54.10  shall be no augmentation if this period is less than three 
 54.11  months or if this period commences prior to July 1, 1971.  The 
 54.12  rates of interest used for this purpose shall must be five 
 54.13  percent compounded annually commencing July 1, 1971, until 
 54.14  January 1, 1981, and three percent compounded annually 
 54.15  thereafter until January 1 of the year following the year in 
 54.16  which the former member attains age 55.  From that date to the 
 54.17  effective date of retirement, the rate is five percent 
 54.18  compounded annually.  If a person has more than one period of 
 54.19  uninterrupted service, a separate average salary determined 
 54.20  under section 354.44, subdivision 6, must be used for each 
 54.21  period and the required reserves related to each period shall 
 54.22  must be augmented by interest pursuant to this subdivision.  The 
 54.23  sum of the augmented required reserves so determined shall be 
 54.24  the basis for purchasing the deferred annuity.  If a person 
 54.25  repays a refund, the service restored by the repayment must be 
 54.26  considered as continuous with the next period of service for 
 54.27  which the person has credit with this fund.  If a person does 
 54.28  not render teaching service in any one fiscal year or more 
 54.29  consecutive fiscal years and then resumes teaching service, the 
 54.30  formula percentages used from the date of the resumption of 
 54.31  teaching service shall must be those applicable to new members.  
 54.32  The mortality table and interest assumption used to compute the 
 54.33  annuity shall must be the applicable mortality table established 
 54.34  by the board under section 354.07, subdivision 1, and the 
 54.35  interest rate assumption under section 356.215 in effect when 
 54.36  the member retires.  A period of uninterrupted service for the 
 55.1   purposes of this subdivision means a period of covered teaching 
 55.2   service during which the member has not been separated from 
 55.3   active service for more than one fiscal year. 
 55.4      (c) In no case shall the annuity payable under this 
 55.5   subdivision be less than the amount of annuity payable pursuant 
 55.6   to section 354.44, subdivision 6. 
 55.7      (d) The requirements and provisions for retirement before 
 55.8   normal retirement age contained in section 354.44, subdivision 
 55.9   6, clause (3) or (5), shall also apply to an employee fulfilling 
 55.10  the requirements with a combination of service as provided in 
 55.11  section 354.60. 
 55.12     (e) The augmentation provided by this subdivision applies 
 55.13  to the benefit provided in section 354.46, subdivision 2. 
 55.14     (f) The augmentation provided by this subdivision shall not 
 55.15  apply to any period in which a person is on an approved leave of 
 55.16  absence from an employer unit covered by the provisions of this 
 55.17  chapter.  
 55.18     (g) The retirement annuity or disability benefit of, or the 
 55.19  survivor benefit payable on behalf of, a former teacher who 
 55.20  terminated service before July 1, 1997, which is not first 
 55.21  payable until after June 30, 1997, must be increased on an 
 55.22  actuarial equivalent basis to reflect the change in the 
 55.23  postretirement interest rate actuarial assumption under section 
 55.24  356.215, subdivision 4d, from five percent to six percent under 
 55.25  a calculation procedure and tables adopted by the board as 
 55.26  recommended by an approved actuary and approved by the actuary 
 55.27  retained by the legislative commission on pensions and 
 55.28  retirement. 
 55.29     Sec. 55.  [356.19] [RETIREMENT BENEFIT FORMULA 
 55.30  PERCENTAGES.] 
 55.31     Subdivision 1.  [COORDINATED PLAN MEMBERS.] The applicable 
 55.32  benefit accrual rate is 1.2 percent. 
 55.33     Subd. 2.  [COORDINATED PLAN MEMBERS.] The applicable 
 55.34  benefit accrual rate is 1.7 percent. 
 55.35     Subd. 3.  [BASIC PLAN MEMBERS.] The applicable benefit 
 55.36  accrual rate is 2.2 percent. 
 56.1      Subd. 4.  [BASIC PLAN MEMBERS.] The applicable benefit 
 56.2   accrual rate is 2.7 percent. 
 56.3      Subd. 5.  [CORRECTIONAL PLAN MEMBERS.] The applicable 
 56.4   benefit accrual rate is 2.4 percent. 
 56.5      Subd. 6.  [STATE TROOPERS PLAN AND POLICE/FIRE PLAN 
 56.6   MEMBERS.] The applicable benefit accrual rate is 3.0 percent. 
 56.7      Subd. 7.  [JUDGES PLAN.] The applicable benefit accrual 
 56.8   rate is 2.7 percent. 
 56.9      Subd. 8.  [JUDGES PLAN.] The applicable benefit accrual 
 56.10  rate is 3.2 percent. 
 56.11     Subd. 9.  [FUTURE BENEFIT ACCRUAL RATE INCREASES.] After 
 56.12  January 2, 1998, benefit accrual rate increases under this 
 56.13  section must apply only to allowable service or formula service 
 56.14  rendered after the effective date of the benefit accrual rate 
 56.15  increase. 
 56.16     Sec. 56.  Minnesota Statutes 1996, section 356.20, 
 56.17  subdivision 2, is amended to read: 
 56.18     Subd. 2.  [COVERED PUBLIC PENSION FUNDS.] This section 
 56.19  applies to the following public pension plans: 
 56.20     (1) State employees retirement fund. 
 56.21     (2) Public employees retirement fund. 
 56.22     (3) Teachers retirement association. 
 56.23     (4) State patrol retirement fund. 
 56.24     (5) Minneapolis teachers retirement fund association. 
 56.25     (6) St. Paul teachers retirement fund association. 
 56.26     (7) Duluth teachers retirement fund association. 
 56.27     (8) Minneapolis employees retirement fund. 
 56.28     (9) University of Minnesota faculty retirement plan. 
 56.29     (10) University of Minnesota faculty supplemental 
 56.30  retirement plan. 
 56.31     (11) Judges retirement fund. 
 56.32     (12) Any police or firefighter's relief association 
 56.33  enumerated in section 69.77, subdivision 1a or 69.771, 
 56.34  subdivision 1. 
 56.35     (13) Public employees police and fire fund.  
 56.36     (14) Minnesota state retirement system correctional 
 57.1   officers retirement fund.  
 57.2      (15) Public employees local government correctional service 
 57.3   retirement plan. 
 57.4      Sec. 57.  Minnesota Statutes 1996, section 356.215, 
 57.5   subdivision 2, is amended to read: 
 57.6      Subd. 2.  [REQUIREMENTS.] (a) It is the policy of the 
 57.7   legislature that it is necessary and appropriate to determine 
 57.8   annually the financial status of tax supported retirement and 
 57.9   pension plans for public employees.  To achieve this goal, the 
 57.10  legislative commission on pensions and retirement shall have 
 57.11  prepared by the actuary retained by the commission annual 
 57.12  actuarial valuations of the retirement plans enumerated in 
 57.13  section 3.85, subdivision 11, paragraph (b), and quadrennial 
 57.14  experience studies of the retirement plans enumerated in section 
 57.15  3.85, subdivision 11, paragraph (b), clauses (1), (2), and (7), 
 57.16  and, two years after each set of quadrennial experience studies, 
 57.17  quadrennial projection valuations of the retirement plans 
 57.18  enumerated in section 3.85, subdivision 11, paragraph (b), 
 57.19  clauses (1), (2), and (7), and of any other retirement plan 
 57.20  enumerated in section 3.85, subdivision 11, paragraph (b), for 
 57.21  which it determines that the analysis is beneficial.  The 
 57.22  governing or managing board or administrative officials of each 
 57.23  public pension and retirement fund or plan enumerated in section 
 57.24  356.20, subdivision 2, clauses (9), (10), and (12), shall have 
 57.25  prepared by an approved actuary annual actuarial valuations of 
 57.26  their respective funds as provided in this section.  This 
 57.27  requirement also applies to any fund that is the successor to 
 57.28  any organization enumerated in section 356.20, subdivision 2, or 
 57.29  to the governing or managing board or administrative officials 
 57.30  of any newly formed retirement fund or association operating 
 57.31  under the control or supervision of any public employee group, 
 57.32  governmental unit, or institution receiving a portion of its 
 57.33  support through legislative appropriations, and any local police 
 57.34  or fire fund coming within the provisions of section 356.216. 
 57.35     (b) The quadrennial projection valuations required under 
 57.36  paragraph (a) are intended to serve as an additional analytical 
 58.1   tool with which policy makers may assess the future funding 
 58.2   status of public plans through forecasting and testing various 
 58.3   potential outcomes over time if certain plan assumptions or 
 58.4   valuation methods were to be modified.  In consultation with the 
 58.5   executive director of the legislative commission on pensions and 
 58.6   retirement, the retirement fund directors, the state economist, 
 58.7   the state demographer, the commissioner of finance, and the 
 58.8   commissioner of employee relations, the actuary retained by the 
 58.9   legislative commission on pensions and retirement shall perform 
 58.10  the quadrennial projection valuations, testing future 
 58.11  implications for plan funding by modifying assumptions and 
 58.12  methods currently in place.  The commission-retained actuary 
 58.13  shall provide advice to the commission as to the periods over 
 58.14  which such projections should be made, the nature and scope of 
 58.15  the scenarios to be analyzed, the measures of funding status to 
 58.16  be employed, and shall report the results of these analyses in 
 58.17  the same manner as for quadrennial experience studies. 
 58.18     Sec. 58.  Minnesota Statutes 1996, section 356.215, 
 58.19  subdivision 4d, is amended to read: 
 58.20     Subd. 4d.  [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 
 58.21  governed by chapters chapter 352B, 353C, and by sections 352.90 
 58.22  through 352.951 and 353.63 through 353.68, the actuarial 
 58.23  valuation must use a preretirement interest assumption of 8.5 
 58.24  percent, a postretirement interest assumption of five six 
 58.25  percent, and a future salary increase assumption of 6.5 percent. 
 58.26     (b) For funds governed by chapter 354A, the actuarial 
 58.27  valuation must use preretirement and postretirement assumptions 
 58.28  of 8.5 percent and a future salary increase assumption of 6.5 
 58.29  percent, but the actuarial valuation must reflect the payment of 
 58.30  postretirement adjustments to retirees, based on the methods 
 58.31  specified in the bylaws of the fund as approved by the 
 58.32  legislature.  For a fund governed by chapter 422A, the actuarial 
 58.33  valuation shall use a preretirement interest assumption of six 
 58.34  percent, a postretirement interest assumption of five percent, 
 58.35  and an assumption that in each future year the salary on which a 
 58.36  retirement or other benefit is based is 1.04 multiplied by the 
 59.1   salary for the preceding year.  
 59.2      (c) For all other funds not specified in paragraph (a), 
 59.3   (b), (d), or (e), the actuarial valuation must use a 
 59.4   preretirement interest assumption of five percent, a 
 59.5   postretirement interest assumption of five percent, and a future 
 59.6   salary increase assumption of 3.5 percent. 
 59.7      (d) For funds governed by chapters 3A, 352C, and 490, the 
 59.8   actuarial valuation must use a preretirement interest assumption 
 59.9   of 8.5 percent, a postretirement interest assumption of five six 
 59.10  percent, and a future salary increase assumption of 6.5 percent 
 59.11  in each future year in which the salary amount payable is not 
 59.12  determinable from section 3.099, 15A.081, subdivision 6, or 
 59.13  15A.083, subdivision 1, whichever applies, or from applicable 
 59.14  compensation council recommendations under section 15A.082. 
 59.15     (e) For funds governed by sections 352.01 through 352.86, 
 59.16  353.01 through 353.46, and chapter 354, the actuarial valuation 
 59.17  must use a preretirement interest assumption of 8.5, a 
 59.18  postretirement interest assumption of five six percent, and a 
 59.19  graded rate future salary increase assumption as follows: 
 59.20          General state   General public   
 59.21            employees       employees         Teachers  
 59.22           retirement      retirement        retirement 
 59.23   Age        plan            plan              plan 
 59.24   16        7.2500%         8.71%              7.25%
 59.25   17        7.2500          8.71               7.25 
 59.26   18        7.2500          8.70               7.25 
 59.27   19        7.2500          8.70               7.25 
 59.28   20        7.2500          7.70               7.25 
 59.29   21        7.1454          7.70               7.25 
 59.30   22        7.1094          7.70               7.25 
 59.31   23        7.0725          7.70               7.20 
 59.32   24        7.0363          7.70               7.15 
 59.33   25        7.0000          7.60               7.10 
 59.34   26        7.0000          7.51               7.05 
 59.35   27        7.0000          7.39               7.00 
 59.36   28        7.0000          7.30               7.00 
 60.1    29        7.0000          7.20               7.00 
 60.2    30        7.0000          7.20               7.00 
 60.3    31        7.0000          7.10               7.00 
 60.4    32        7.0000          7.10               7.00 
 60.5    33        7.0000          7.00               7.00 
 60.6    34        7.0000          7.00               7.00 
 60.7    35        7.0000          6.90               7.00 
 60.8    36        6.9019          6.80               7.00 
 60.9    37        6.8074          6.70               7.00 
 60.10   38        6.7125          6.60               6.90 
 60.11   39        6.6054          6.50               6.80 
 60.12   40        6.5000          6.40               6.70 
 60.13   41        6.3540          6.30               6.60 
 60.14   42        6.2087          6.30               6.50 
 60.15   43        6.0622          6.30               6.35 
 60.16   44        5.9048          6.20               6.20 
 60.17   45        5.7500          6.20               6.05 
 60.18   46        5.6940          6.09               5.90 
 60.19   47        5.6375          6.00               5.75 
 60.20   48        5.5822          5.90               5.70 
 60.21   49        5.5405          5.80               5.65 
 60.22   50        5.5000          5.70               5.60 
 60.23   51        5.4384          5.70               5.55 
 60.24   52        5.3776          5.70               5.50 
 60.25   53        5.3167          5.70               5.45 
 60.26   54        5.2826          5.70               5.40 
 60.27   55        5.2500          5.70               5.35 
 60.28   56        5.2500          5.70               5.30 
 60.29   57        5.2500          5.70               5.25 
 60.30   58        5.2500          5.70               5.25 
 60.31   59        5.2500          5.70               5.25 
 60.32   60        5.2500          5.00               5.25 
 60.33   61        5.2500          5.00               5.25 
 60.34   62        5.2500          5.00               5.25 
 60.35   63        5.2500          5.00               5.25 
 60.36   64        5.2500          5.00               5.25 
 61.1    65        5.2500          5.00               5.25 
 61.2    66        5.2500          5.00               5.25 
 61.3    67        5.2500          5.00               5.25 
 61.4    68        5.2500          5.00               5.25 
 61.5    69        5.2500          5.00               5.25 
 61.6    70        5.2500          5.00               5.25 
 61.7      Sec. 59.  Minnesota Statutes 1996, section 356.215, 
 61.8   subdivision 4g, is amended to read: 
 61.9      Subd. 4g.  [AMORTIZATION CONTRIBUTIONS.] (a) In addition to 
 61.10  the exhibit indicating the level normal cost, the actuarial 
 61.11  valuation must contain an exhibit indicating the additional 
 61.12  annual contribution sufficient to amortize the unfunded 
 61.13  actuarial accrued liability.  For funds governed by chapters 3A, 
 61.14  352, 352B, 352C, 353, 353C, 354, 354A, and 490, the additional 
 61.15  contribution must be calculated on a level percentage of covered 
 61.16  payroll basis by the established date for full funding in effect 
 61.17  when the valuation is prepared.  For funds governed by chapter 
 61.18  3A, sections 352.90 through 352.951, chapters 352B, 352C, 
 61.19  sections 353.63 through 353.68, and chapters 353C, 354A, and 
 61.20  490, the level percent additional contribution must be 
 61.21  calculated assuming annual payroll growth of 6.5 percent.  For 
 61.22  funds governed by sections 352.01 through 352.86 and chapter 
 61.23  354, the level percent additional contribution must be 
 61.24  calculated assuming an annual payroll growth of five percent.  
 61.25  For the fund governed by sections 353.01 through 353.46, the 
 61.26  level percent additional contribution must be calculated 
 61.27  assuming an annual payroll growth of six percent.  For all other 
 61.28  funds, the additional annual contribution must be calculated on 
 61.29  a level annual dollar amount basis. 
 61.30     (b) For any fund other than the Minneapolis employees 
 61.31  retirement fund, after the first actuarial valuation date 
 61.32  occurring after June 1, 1989, if there has not been a change in 
 61.33  the actuarial assumptions used for calculating the actuarial 
 61.34  accrued liability of the fund, a change in the benefit plan 
 61.35  governing annuities and benefits payable from the fund, a change 
 61.36  in the actuarial cost method used in calculating the actuarial 
 62.1   accrued liability of all or a portion of the fund, or a 
 62.2   combination of the three, which change or changes by themselves 
 62.3   without inclusion of any other items of increase or decrease 
 62.4   produce a net increase in the unfunded actuarial accrued 
 62.5   liability of the fund, the established date for full funding for 
 62.6   the first actuarial valuation made after June 1, 1989, and each 
 62.7   successive actuarial valuation is the first actuarial valuation 
 62.8   date occurring after June 1, 2020.  
 62.9      (c) For any fund or plan other than the Minneapolis 
 62.10  employees retirement fund, after the first actuarial valuation 
 62.11  date occurring after June 1, 1989, if there has been a change in 
 62.12  any or all of the actuarial assumptions used for calculating the 
 62.13  actuarial accrued liability of the fund, a change in the benefit 
 62.14  plan governing annuities and benefits payable from the fund, a 
 62.15  change in the actuarial cost method used in calculating the 
 62.16  actuarial accrued liability of all or a portion of the fund, or 
 62.17  a combination of the three, and the change or changes, by 
 62.18  themselves and without inclusion of any other items of increase 
 62.19  or decrease, produce a net increase in the unfunded actuarial 
 62.20  accrued liability in the fund, the established date for full 
 62.21  funding must be determined using the following procedure:  
 62.22     (i) the unfunded actuarial accrued liability of the fund 
 62.23  must be determined in accordance with the plan provisions 
 62.24  governing annuities and retirement benefits and the actuarial 
 62.25  assumptions in effect before an applicable change; 
 62.26     (ii) the level annual dollar contribution or level 
 62.27  percentage, whichever is applicable, needed to amortize the 
 62.28  unfunded actuarial accrued liability amount determined under 
 62.29  item (i) by the established date for full funding in effect 
 62.30  before the change must be calculated using the interest 
 62.31  assumption specified in subdivision 4d in effect before the 
 62.32  change; 
 62.33     (iii) the unfunded actuarial accrued liability of the fund 
 62.34  must be determined in accordance with any new plan provisions 
 62.35  governing annuities and benefits payable from the fund and any 
 62.36  new actuarial assumptions and the remaining plan provisions 
 63.1   governing annuities and benefits payable from the fund and 
 63.2   actuarial assumptions in effect before the change; 
 63.3      (iv) the level annual dollar contribution or level 
 63.4   percentage, whichever is applicable, needed to amortize the 
 63.5   difference between the unfunded actuarial accrued liability 
 63.6   amount calculated under item (i) and the unfunded actuarial 
 63.7   accrued liability amount calculated under item (iii) over a 
 63.8   period of 30 years from the end of the plan year in which the 
 63.9   applicable change is effective must be calculated using the 
 63.10  applicable interest assumption specified in subdivision 4d in 
 63.11  effect after any applicable change; 
 63.12     (v) the level annual dollar or level percentage 
 63.13  amortization contribution under item (iv) must be added to the 
 63.14  level annual dollar amortization contribution or level 
 63.15  percentage calculated under item (ii); 
 63.16     (vi) the period in which the unfunded actuarial accrued 
 63.17  liability amount determined in item (iii) is amortized by the 
 63.18  total level annual dollar or level percentage amortization 
 63.19  contribution computed under item (v) must be calculated using 
 63.20  the interest assumption specified in subdivision 4d in effect 
 63.21  after any applicable change, rounded to the nearest integral 
 63.22  number of years, but not to exceed 30 years from the end of the 
 63.23  plan year in which the determination of the established date for 
 63.24  full funding using the procedure set forth in this clause is 
 63.25  made and not to be less than the period of years beginning in 
 63.26  the plan year in which the determination of the established date 
 63.27  for full funding using the procedure set forth in this clause is 
 63.28  made and ending by the date for full funding in effect before 
 63.29  the change; and 
 63.30     (vii) the period determined under item (vi) must be added 
 63.31  to the date as of which the actuarial valuation was prepared and 
 63.32  the date obtained is the new established date for full funding.  
 63.33     (d) For the Minneapolis employees retirement fund, the 
 63.34  established date for full funding is June 30, 2020. 
 63.35     (e) For the public employees retirement association police 
 63.36  and fire fund plan, the correctional employees retirement plan 
 64.1   of the Minnesota state retirement system, and the state patrol 
 64.2   retirement plan, an excess of valuation assets over actuarial 
 64.3   accrued liability will must be amortized in the same manner over 
 64.4   the same period as an unfunded actuarial accrued liability 
 64.5   but will must serve to reduce the required contribution instead 
 64.6   of increasing it. 
 64.7      Sec. 60.  Minnesota Statutes 1996, section 356.217, is 
 64.8   amended to read: 
 64.9      356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.] 
 64.10     (a) The actuary retained by the legislative commission on 
 64.11  pensions and retirement is not required to prepare actuarial 
 64.12  valuations of the public employees local government correctional 
 64.13  employees retirement plan unless the plan is implemented by a 
 64.14  county under section 353C.04. 
 64.15     (b) The cost of any requested benefit projections by the 
 64.16  commission-retained actuary relating to the Minnesota 
 64.17  postretirement investment fund for the state board of investment 
 64.18  is payable by the state board of investment. 
 64.19     (c) (b) Actuarial valuations under section 356.215, for 
 64.20  July 1, 1991, and thereafter, are not required to have an 
 64.21  individual commentary section.  The commentary section, if 
 64.22  omitted from the individual plan actuarial valuation, must be 
 64.23  included in an appropriate generalized format as part of the 
 64.24  report to the legislature under section 3.85, subdivision 11. 
 64.25     (d) (c) Actuarial valuations under section 356.215, for 
 64.26  July 1, 1991, and thereafter, are not required to contain 
 64.27  separate actuarial valuation results for basic and coordinated 
 64.28  programs unless each program has a membership of at least ten 
 64.29  percent of the total membership of the fund.  Actuarial 
 64.30  valuations under section 356.215, for July 1, 1991, and 
 64.31  thereafter, are not required to contain cash flow forecasts. 
 64.32     (e) (d) Actuarial valuations of the public employees police 
 64.33  and fire fund local consolidation accounts for July 1, 1991, and 
 64.34  thereafter, are not required to contain separate tabulations or 
 64.35  summaries of active member, service retirement, disability 
 64.36  retirement, and survivor data for each local consolidation 
 65.1   account. 
 65.2      (f) (e) The commission-retained actuary is: 
 65.3      (1) required to publish experience findings for plans for 
 65.4   which experience findings are required only on a quadrennial 
 65.5   basis for the four-year period ending June 30, 1992, and every 
 65.6   four years thereafter; 
 65.7      (2) not required to prepare a separate experience analysis 
 65.8   or publish separate experience findings for basic and 
 65.9   coordinated programs if separate actuarial valuation results for 
 65.10  the programs are not required; and 
 65.11     (3) not required to calculate investment rate of return 
 65.12  experience results on any basis other than current asset value 
 65.13  as defined in section 356.215, subdivision 1, clause (6). 
 65.14     Sec. 61.  Minnesota Statutes 1996, section 356.30, 
 65.15  subdivision 1, is amended to read: 
 65.16     Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 
 65.17  Notwithstanding any provisions to the contrary of the laws 
 65.18  governing the funds enumerated in subdivision 3, a person who 
 65.19  has met the qualifications of clause (2) may elect to receive a 
 65.20  retirement annuity from each fund in which the person has at 
 65.21  least six months allowable service, based on the allowable 
 65.22  service in each fund, subject to the provisions of clause (3).  
 65.23     (2) A person may receive upon retirement a retirement 
 65.24  annuity from each fund in which the person has at least six 
 65.25  months allowable service, and augmentation of a deferred annuity 
 65.26  calculated under the laws governing each public pension plan or 
 65.27  fund named in subdivision 3, from the date the person terminated 
 65.28  all public service if: 
 65.29     (a) the person has allowable service totaling an amount 
 65.30  that allows the person to receive an annuity in any two or more 
 65.31  of the enumerated funds; and 
 65.32     (b) the person has not begun to receive an annuity from any 
 65.33  enumerated fund or the person has made application for benefits 
 65.34  from all funds and the effective dates of the retirement annuity 
 65.35  with each fund under which the person chooses to receive an 
 65.36  annuity are within a one-year period.  
 66.1      (3) The retirement annuity from each fund must be based 
 66.2   upon the allowable service in each fund, except that:  
 66.3      (a) The laws governing annuities must be the law in effect 
 66.4   on the date of termination from the last period of public 
 66.5   service under a covered fund with which the person earned a 
 66.6   minimum of one-half year of allowable service credit during that 
 66.7   employment.  
 66.8      (b) The "average salary" on which the annuity from each 
 66.9   covered fund in which the employee has credit in a formula plan 
 66.10  shall be based on the employee's highest five successive years 
 66.11  of covered salary during the entire service in covered funds.  
 66.12     (c) The formula percentages to be used by each fund must be 
 66.13  those percentages prescribed by each fund's formula as continued 
 66.14  for the respective years of allowable service from one fund to 
 66.15  the next, recognizing all previous allowable service with the 
 66.16  other covered funds.  
 66.17     (d) Allowable service in all the funds must be combined in 
 66.18  determining eligibility for and the application of each fund's 
 66.19  provisions in respect to actuarial reduction in the annuity 
 66.20  amount for retirement prior to normal retirement.  
 66.21     (e) The annuity amount payable for any allowable service 
 66.22  under a nonformula plan of a covered fund must not be affected 
 66.23  but such service and covered salary must be used in the above 
 66.24  calculation.  
 66.25     (f) This section shall not apply to any person whose final 
 66.26  termination from the last public service under a covered fund is 
 66.27  prior to May 1, 1975.  
 66.28     (g) For the purpose of computing annuities under this 
 66.29  section the formula percentages used by any covered fund, except 
 66.30  the basic program of the teachers retirement association, the 
 66.31  public employees police and fire fund, and the state patrol 
 66.32  retirement fund, must not exceed 2-1/2 the percent specified in 
 66.33  section 356.19, subdivision 4, per year of service for any year 
 66.34  of service or fraction thereof.  The formula percentage used by 
 66.35  the public employees police and fire fund and the state patrol 
 66.36  retirement fund must not exceed 2.65 the percent specified in 
 67.1   section 356.19, subdivision 6, per year of service for any year 
 67.2   of service or fraction thereof.  The formula percentage used by 
 67.3   the teachers retirement association must not exceed 2.63 percent 
 67.4   per year of basic program service for any year of basic program 
 67.5   service or fraction thereof.  The formula percentage used by the 
 67.6   legislators retirement plan and the elective state officers 
 67.7   retirement must not exceed 2.5 percent, but this limit does not 
 67.8   apply to the adjustment provided under section 3A.02, 
 67.9   subdivision 1, paragraph (c), or 352C.031, paragraph (b). 
 67.10     (h) Any period of time for which a person has credit in 
 67.11  more than one of the covered funds must be used only once for 
 67.12  the purpose of determining total allowable service.  
 67.13     (i) If the period of duplicated service credit is more than 
 67.14  six months, or the person has credit for more than six months 
 67.15  with each of the funds, each fund shall apply its formula to a 
 67.16  prorated service credit for the period of duplicated service 
 67.17  based on a fraction of the salary on which deductions were paid 
 67.18  to that fund for the period divided by the total salary on which 
 67.19  deductions were paid to all funds for the period.  
 67.20     (j) If the period of duplicated service credit is less than 
 67.21  six months, or when added to other service credit with that fund 
 67.22  is less than six months, the service credit must be ignored and 
 67.23  a refund of contributions made to the person in accord with that 
 67.24  fund's refund provisions.  
 67.25     Sec. 62.  Minnesota Statutes 1996, section 356.30, 
 67.26  subdivision 3, is amended to read: 
 67.27     Subd. 3.  [COVERED FUNDS.] This section applies to the 
 67.28  following retirement funds: 
 67.29     (1) state employees retirement fund, established pursuant 
 67.30  to chapter 352; 
 67.31     (2) correctional employees retirement program, established 
 67.32  pursuant to chapter 352; 
 67.33     (3) unclassified employees retirement plan, established 
 67.34  pursuant to chapter 352D; 
 67.35     (4) state patrol retirement fund, established pursuant to 
 67.36  chapter 352B; 
 68.1      (5) legislators' retirement plan, established pursuant to 
 68.2   chapter 3A; 
 68.3      (6) elective state officers' retirement plan, established 
 68.4   pursuant to chapter 352C; 
 68.5      (7) public employees retirement association, established 
 68.6   pursuant to chapter 353; 
 68.7      (8) public employees police and fire fund, established 
 68.8   pursuant to chapter 353; 
 68.9      (9) teachers retirement association, established pursuant 
 68.10  to chapter 354; 
 68.11     (10) Minneapolis employees retirement fund, established 
 68.12  pursuant to chapter 422A; 
 68.13     (11) Minneapolis teachers retirement fund association, 
 68.14  established pursuant to chapter 354A; 
 68.15     (12) St. Paul teachers retirement fund association, 
 68.16  established pursuant to chapter 354A; 
 68.17     (13) Duluth teachers retirement fund association, 
 68.18  established pursuant to chapter 354A; 
 68.19     (14) public employees local government correctional service 
 68.20  retirement plan established by sections 353C.01 to 353C.10; and 
 68.21     (15) (14) judges' retirement fund, established by sections 
 68.22  490.121 to 490.132. 
 68.23     Sec. 63.  Minnesota Statutes 1996, section 356.32, 
 68.24  subdivision 2, is amended to read: 
 68.25     Subd. 2.  [COVERED FUNDS.] The provisions of this section 
 68.26  shall apply to the following retirement funds: 
 68.27     (1) state employees retirement fund, established pursuant 
 68.28  to chapter 352; 
 68.29     (2) correctional employees retirement program, established 
 68.30  pursuant to chapter 352; 
 68.31     (3) state patrol retirement fund, established pursuant to 
 68.32  chapter 352B; 
 68.33     (4) public employees retirement fund, established pursuant 
 68.34  to chapter 353; 
 68.35     (5) public employees police and fire fund, established 
 68.36  pursuant to chapter 353; 
 69.1      (6) teachers retirement association, established pursuant 
 69.2   to chapter 354; 
 69.3      (7) Minneapolis employees retirement fund, established 
 69.4   pursuant to chapter 422A; 
 69.5      (8) Duluth teachers retirement fund association, 
 69.6   established pursuant to chapter 354A; 
 69.7      (9) Minneapolis teachers retirement fund association, 
 69.8   established pursuant to chapter 354A; and 
 69.9      (10) St. Paul teachers retirement fund association, 
 69.10  established pursuant to chapter 354A; 
 69.11     (11) public employees local government correctional service 
 69.12  retirement plan established by sections 353B.01 to 353B.10. 
 69.13     Sec. 64.  Minnesota Statutes 1996, section 422A.06, 
 69.14  subdivision 8, is amended to read: 
 69.15     Subd. 8.  [RETIREMENT BENEFIT FUND.] (a) The retirement 
 69.16  benefit fund shall consist of amounts held for payment of 
 69.17  retirement allowances for members retired pursuant to this 
 69.18  chapter.  
 69.19     (b) Assets equal to the required reserves for retirement 
 69.20  allowances pursuant to this chapter determined in accordance 
 69.21  with the appropriate mortality table adopted by the board of 
 69.22  trustees based on the experience of the fund as recommended by 
 69.23  the commission-retained actuary shall be transferred from the 
 69.24  deposit accumulation fund to the retirement benefit fund as of 
 69.25  the last business day of the month in which the retirement 
 69.26  allowance begins.  The income from investments of these assets 
 69.27  shall be allocated to this fund.  There shall be paid from this 
 69.28  fund the retirement annuities authorized by law.  A required 
 69.29  reserve calculation for the retirement benefit fund must be made 
 69.30  by the actuary retained by the legislative commission on 
 69.31  pensions and retirement and must be certified to the retirement 
 69.32  board by the commission-retained actuary. 
 69.33     (c) The retirement benefit fund shall be governed by the 
 69.34  applicable laws governing the accounting and audit procedures, 
 69.35  investment, actuarial requirements, calculation and payment of 
 69.36  postretirement benefit adjustments, discharge of any deficiency 
 70.1   in the assets of the fund when compared to the actuarially 
 70.2   determined required reserves, and other applicable operations 
 70.3   and procedures regarding the Minnesota postretirement investment 
 70.4   fund in effect on June 30, 1997, established pursuant to under 
 70.5   Minnesota Statutes 1996, section 11A.18, and any legal or 
 70.6   administrative interpretations of those laws of the state board 
 70.7   of investment, the legal advisor to the board of investment and 
 70.8   the executive director of the state board of investment in 
 70.9   effect on June 30, 1997.  If a deferred yield adjustment account 
 70.10  is established for the Minnesota postretirement investment 
 70.11  fund before June 30, 1997, under Minnesota Statutes 1996, 
 70.12  section 11A.18, subdivision 5, the retirement board shall also 
 70.13  establish and maintain a deferred yield adjustment account 
 70.14  within this fund.  
 70.15     (d) Annually, following the calculation of any 
 70.16  postretirement adjustment payable from the retirement benefit 
 70.17  fund, the board of trustees shall submit a report to the 
 70.18  executive director of the legislative commission on pensions and 
 70.19  retirement and to the commissioner of finance indicating the 
 70.20  amount of any postretirement adjustment and the underlying 
 70.21  calculations on which that postretirement adjustment amount is 
 70.22  based, including the amount of dividends, the amount of 
 70.23  interest, and the amount of net realized capital gains or losses 
 70.24  utilized in the calculations. 
 70.25     (e) With respect to a former contributing member who began 
 70.26  receiving a retirement annuity or disability benefit under 
 70.27  section 422A.151, paragraph (a), clause (2), after June 30, 
 70.28  1997, or with respect to a survivor of a former contributing 
 70.29  member who began receiving a survivor benefit under section 
 70.30  422A.151, paragraph (a), clause (2), after June 30, 1997, the 
 70.31  reserves attributable to the one percent lower amount of the 
 70.32  cost-of-living adjustment payable to those annuity or benefit 
 70.33  recipients annually must be transferred back to the deposit 
 70.34  accumulation fund to the credit of the metropolitan airports 
 70.35  commission.  The calculation of this annual reduced 
 70.36  cost-of-living adjustment reserve transfer must be reviewed by 
 71.1   the actuary retained by the legislative commission on pensions 
 71.2   and retirement. 
 71.3      Sec. 65.  Minnesota Statutes 1996, section 422A.151, is 
 71.4   amended to read: 
 71.5      422A.151 [ALTERNATIVE CALCULATION OF ANNUITY.] 
 71.6      (a) In the case of a contributing member of the Minneapolis 
 71.7   employees retirement fund who is employed as a licensed peace 
 71.8   officer or firefighter with the metropolitan airports commission 
 71.9   and who retires, becomes disabled within the meaning of section 
 71.10  422A.18, or dies, the retirement, disability, or survivor 
 71.11  allowance is equal to the higher of the following: 
 71.12     (1) the retirement, disability, or survivor allowance 
 71.13  calculated for the person under the applicable provisions of the 
 71.14  Minneapolis employees retirement fund; or 
 71.15     (2) the retirement, disability, or survivor benefit that 
 71.16  the person would be entitled to upon meeting the applicable age 
 71.17  and allowable service requirements of section 353.651, 353.656, 
 71.18  or 353.657 if all employment as a licensed peace officer or 
 71.19  firefighter with the metropolitan airports commission had been 
 71.20  allowable service under the public employees retirement 
 71.21  association police and fire fund, instead of being covered by 
 71.22  the Minneapolis employees retirement fund.  In computing the 
 71.23  alternative benefit under section 353.651, 353.656, or 353.657, 
 71.24  the applicable definitions and related provisions of chapter 353 
 71.25  must be used. 
 71.26     A firefighter or licensed peace officer terminating 
 71.27  employment by the metropolitan airports commission after June 
 71.28  30, 1997, or the survivor of a deceased firefighter or licensed 
 71.29  peace officer terminating employment by the metropolitan 
 71.30  airports commission after June 30, 1997, under section 353.651, 
 71.31  353.656, or 353.657, shall receive a one percent lower 
 71.32  cost-of-living adjustment than otherwise payable under section 
 71.33  422A.06, subdivision 5.  If the cost-of-living adjustment 
 71.34  payable under section 422A.06, subdivision 5, is less than one 
 71.35  percent, the firefighter or licensed peace officer who retired 
 71.36  after June 30, 1997, must not have a reduction in the previously 
 72.1   received annuity or benefit amount, but future cost-of-living 
 72.2   adjustments must be modified equal to the percentage the benefit 
 72.3   would have been reduced below the person's current annuity or 
 72.4   benefit amount to reflect the one percent lower cost-of-living 
 72.5   adjustment under section 422A.06, subdivision 5. 
 72.6      (b) If a contributing member under paragraph (a) has 
 72.7   periods of coverage by the Minneapolis employees retirement fund 
 72.8   that include service other than employment as a licensed peace 
 72.9   officer or firefighter as well as employment as a licensed peace 
 72.10  officer or firefighter, the calculation of the benefit under 
 72.11  paragraph (a), clause (2), may only utilize service as a 
 72.12  licensed peace officer or firefighter employed by the 
 72.13  metropolitan airports commission. 
 72.14     Sec. 66.  Minnesota Statutes 1996, section 490.124, 
 72.15  subdivision 1, is amended to read: 
 72.16     Subdivision 1.  [BASIC RETIREMENT ANNUITY.] Except as 
 72.17  qualified hereinafter from and after mandatory retirement date, 
 72.18  normal retirement date, early retirement date, or one year from 
 72.19  the disability retirement date, as the case may be, a retirement 
 72.20  annuity shall be payable to a retiring judge from the judges' 
 72.21  retirement fund in an amount equal to:  (1) 2-1/2 the percent of 
 72.22  specified in section 356.19, subdivision 7, multiplied by the 
 72.23  judge's final average compensation multiplied by the number of 
 72.24  years and fractions of years of allowable service rendered prior 
 72.25  to July 1, 1980; plus (2) three the percent of specified in 
 72.26  section 356.19, subdivision 8, multiplied by the judge's final 
 72.27  average compensation multiplied by the number of years and 
 72.28  fractions of years of allowable service rendered after June 30, 
 72.29  1980; provided that the annuity shall must not exceed 65 70 
 72.30  percent of the judge's annual salary for the 12 months 
 72.31  immediately preceding retirement.  
 72.32     Sec. 67.  Minnesota Statutes 1996, section 490.124, 
 72.33  subdivision 5, is amended to read: 
 72.34     Subd. 5.  [DEFERRED BENEFITS.] (a) Any benefit to which a 
 72.35  judge is entitled under this section may be deferred until early 
 72.36  or normal retirement date, notwithstanding termination of such 
 73.1   judge's service prior thereto. 
 73.2      (b) The retirement annuity of, or the survivor benefit 
 73.3   payable on behalf of, a former judge, who terminated service 
 73.4   before July 1, 1997, which is not first payable until after June 
 73.5   30, 1997, must be increased on an actuarial equivalent basis to 
 73.6   reflect the change in the postretirement interest rate actuarial 
 73.7   assumption under section 356.215, subdivision 4d, from five 
 73.8   percent to six percent under a calculation procedure and tables 
 73.9   adopted by the board of directors of the Minnesota state 
 73.10  retirement system and approved by the actuary retained by the 
 73.11  legislative commission on pensions and retirement. 
 73.12     Sec. 68.  Laws 1996, chapter 448, article 1, section 3, is 
 73.13  amended to read:  
 73.14     Sec. 3.  [EFFECTIVE DATE.] 
 73.15     (a) Sections 1 and 2 are effective on the day following 
 73.16  approval by the Itasca county board and compliance with 
 73.17  Minnesota Statutes, section 645.021. 
 73.18     (b) Notwithstanding Minnesota Statutes, section 645.021, 
 73.19  the approval and compliance required by paragraph (a) is 
 73.20  effective if accomplished before January 1, 1999.  
 73.21     Sec. 69.  [APPROPRIATIONS; DEPARTMENT OF CORRECTIONS AND 
 73.22  LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.] 
 73.23     (a) $900,000 in fiscal year 1998 and $900,000 in fiscal 
 73.24  year 1999 is appropriated from the general fund to the 
 73.25  commissioner of corrections.  The commissioner of finance shall 
 73.26  include this amount in the base budget for the agency when 
 73.27  developing the governor's budget recommendations for the 
 73.28  biennium ending June 30, 2001. 
 73.29     (b) For fiscal year 1999, $50,000 is appropriated to the 
 73.30  legislative coordinating commission for allocation to the 
 73.31  legislative commission on pensions and retirement. 
 73.32     Sec. 70.  [APPROPRIATION REDUCTION.] 
 73.33     Subdivision 1.  [REDUCTIONS BY RETIREMENT PLAN AND 
 73.34  EMPLOYER.] In fiscal years 1998 and 1999, the commissioner of 
 73.35  finance shall reduce allotments and cancel to the general fund 
 73.36  the amounts determined by multiplying the general fund supported 
 74.1   salaries of employees who are members of the teachers retirement 
 74.2   association according to clauses (1) and (2), and for employees 
 74.3   who are members of the general state employees retirement plan 
 74.4   of the Minnesota state retirement system according to clauses 
 74.5   (3), (4), and (5): 
 74.6      (1) 0.90 percent for the Minnesota state colleges and 
 74.7   universities; 
 74.8      (2) 1.50 percent for all agencies other than the Minnesota 
 74.9   state colleges and universities 
 74.10     (3) 0.20 percent for all agencies other than the Minnesota 
 74.11  state colleges and universities and the university of Minnesota; 
 74.12     (4) 0.12 percent for the Minnesota state colleges and 
 74.13  universities; 
 74.14     (5) 0.0728 percent for the university of Minnesota. 
 74.15     Subd. 2.  [APPROPRIATION REDUCTIONS APPLIED TO BASE 
 74.16  BUDGETS.] The commissioner of finance shall include the 
 74.17  reductions under subdivision 1 when developing the base budgets 
 74.18  for all affected organizations as submitted with the governor's 
 74.19  recommended budget for the biennium ending June 30, 2001. 
 74.20     Subd. 3.  [PROJECTED SAVINGS.] For the biennium ending June 
 74.21  30, 1999, the projected general fund savings attributable to the 
 74.22  reductions under subdivision 1 are as follows: 
 74.23                                            fiscal year 
 74.24                                          1998        1999 
 74.25   subdivision 1, clauses (1) and (2)  $1,937,000  $2,053,000 
 74.26   subdivision 1, clauses (3)          $1,162,000  $1,233,000 
 74.27   subdivision 1, clauses (4) and (5)  $  480,000  $  509,000 
 74.28     Sec. 71.  [APPROPRIATION] 
 74.29     For the fiscal years ending June 30, 1998, and June 30, 
 74.30  1999, the amounts transferred under section 13 to funds and 
 74.31  accounts from which the salaries of peace officers employed by 
 74.32  the department of natural resources are paid are appropriated 
 74.33  from those funds and accounts to the commissioner of natural 
 74.34  resources to assist in making the employer contributions to the 
 74.35  state patrol retirement plan under Minnesota Statutes, section 
 74.36  352B.02, subdivision 1c.  Notwithstanding section 13, for fiscal 
 75.1   years 1998 and 1999, amounts transferred to the general fund for 
 75.2   peace officers employed by the department of natural resources 
 75.3   do not cancel but are appropriated to the commissioner of 
 75.4   natural resources to assist in making employer contributions to 
 75.5   the state patrol retirement plan.  The amounts appropriated in 
 75.6   this section must be included in the department's budgetary base 
 75.7   for the next biennium. 
 75.8      Sec. 72.  [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.] 
 75.9      A monthly survivor, disability, or retirement benefit paid 
 75.10  under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 352D, 
 75.11  353, 353A, 354, and 490 on June 30, 1997, is permanently 
 75.12  increased effective July 1, 1997, to reflect the change in the 
 75.13  postretirement fund interest assumption from five percent to six 
 75.14  percent.  The benefit payable under the six percent 
 75.15  postretirement interest assumption must be actuarially 
 75.16  equivalent to the benefit payable under the five percent 
 75.17  interest assumption and must be based on tables adopted by the 
 75.18  applicable board and approved by the actuary retained by the 
 75.19  legislative commission on pensions and retirement. 
 75.20     Sec. 73.  [ALTERNATIVE BENEFIT ADJUSTMENTS.] 
 75.21     If the permanent increase under section 71, along with the 
 75.22  annual cost-of-living adjustments paid during the ten years 
 75.23  after the effective date of this section averages less than 
 75.24  inflation as measured by the Consumer Price Index or 3.5 
 75.25  percent, whichever is lower, the executive directors of the 
 75.26  teachers retirement association, public employees retirement 
 75.27  association, and the Minnesota state retirement system shall 
 75.28  suggest alternative benefit adjustments for retirees receiving 
 75.29  benefits on June 30, 1997, who exceed their life expectancy by 
 75.30  three or more years. 
 75.31     Sec. 74.  [MANDATED PENSION COMMISSION STUDY; DISPOSITION 
 75.32  OF PERA-P&F CONSOLIDATION ACCOUNTS.] 
 75.33     (a) The legislative commission on pensions and retirement, 
 75.34  in consultation with the affected constituencies, shall study 
 75.35  the advantages and disadvantages of the blending of some or all 
 75.36  local police and salaried firefighter consolidation accounts 
 76.1   into the public employees police and fire retirement plan 
 76.2   established under Minnesota Statutes, sections 353.63 to 353.68. 
 76.3      (b) The report must be transmitted on or before January 31, 
 76.4   1998, to the chair of the committee on governmental operations 
 76.5   and veterans of the senate, the chair of the governmental 
 76.6   operations budget division of the senate, the chair of the 
 76.7   committee on governmental operations of the house of 
 76.8   representatives, and the chair of the state government finance 
 76.9   division of the house of representatives. 
 76.10     Sec. 75.  [MANDATED PENSION COMMISSION STUDY; FIRST CLASS 
 76.11  CITY TEACHER RETIREMENT FUND CONSOLIDATION OPTIONS.] 
 76.12     (a) The legislative commission on pensions and retirement, 
 76.13  in consultation with the affected constituencies, shall study 
 76.14  the advantages and disadvantages of the restructuring or the 
 76.15  consolidation of the first class city teacher retirement fund 
 76.16  associations and the statewide teachers retirement association.  
 76.17  In its deliberations, the commission shall review the future 
 76.18  state funding needs of the Minneapolis employees retirement fund 
 76.19  and other applicable state pension funding resources. 
 76.20     (b) The report must be transmitted on or before January 31, 
 76.21  1998, to the chair of the committee on governmental operations 
 76.22  and veterans of the senate, the chair of the governmental 
 76.23  operations budget division of the senate, the chair of the 
 76.24  committee on governmental operations of the house of 
 76.25  representatives, and the chair of the state governmental finance 
 76.26  division of the house of representatives. 
 76.27     Sec. 76.  [TERMINATION DATE; CERTAIN TEACHERS.] 
 76.28     Notwithstanding Minnesota Statutes, section 354.44, 
 76.29  subdivision 4, for purposes of eligibility for retirement 
 76.30  benefits from the teachers retirement association, the 
 76.31  termination date of a teacher terminating active teaching 
 76.32  service at the end of the school year in a school where the 
 76.33  school year was disrupted or extended by flooding during the 
 76.34  first half of calendar year 1997 or by fire damage or fire loss 
 76.35  to school buildings or facilities during the 1996-1997 school 
 76.36  year must be determined by the closing date of the school 
 77.1   calendar in effect immediately before the flooding or in effect 
 77.2   immediately before the fire. 
 77.3      Sec. 77.  [POLICE STATE AID ADJUSTMENT.] 
 77.4      The legislature determines that the total employer 
 77.5   contributions paid to the public employees police and fire fund 
 77.6   for calendar year 1995, as certified to the commissioner of 
 77.7   revenue by the public employees retirement association in August 
 77.8   1996 for determining the amount of police state aid to be 
 77.9   distributed in September 1996, were overstated for some of the 
 77.10  counties and cities and understated for other counties and 
 77.11  cities.  The executive director of the public employees 
 77.12  retirement association shall certify to the commissioner of 
 77.13  revenue the amount of the overstated or understated 1995 
 77.14  calendar year employer contributions paid to the public 
 77.15  employees police and fire fund by each county and city; and the 
 77.16  commissioner of revenue shall adjust the October 1997 police 
 77.17  state aid distributions by the applicable amount of overpaid or 
 77.18  underpaid police state aid distributed in September 1996. 
 77.19     The estimated net adjustment for police state aid in the 
 77.20  fiscal year ending June 30, 1998, is $1,835,000.  The expected 
 77.21  net reduction to future police state aid expenditures resulting 
 77.22  from this adjustment is 6.5 percent less each year. 
 77.23     Sec. 78.  [REPEALER.] 
 77.24     (a) Minnesota Statutes 1996, sections 124.195, subdivision 
 77.25  12; 124.2139; 356.70; and 356.88, subdivision 2, are repealed. 
 77.26     (b) Minnesota Statutes 1996, sections 353C.01; 353C.02; 
 77.27  353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 
 77.28  and 353C.10, are repealed. 
 77.29     Sec. 79.  [EFFECTIVE DATES.] 
 77.30     Sections 38 and 39 are effective the first full pay period 
 77.31  after December 31, 1997.  Sections 17, 18, 21, 22, 29, and 30 
 77.32  are effective the first full pay period after June 30, 1997.  
 77.33  Sections 48, 49, and 50 are effective for all salary paid July 
 77.34  1, 1997, or later.  Sections 1 to 16, 19, 20, 23 to 28, 31 to 
 77.35  36, 37, 40 to 47, 51 to 67, 69 to 75, 77, and 78 are effective 
 77.36  July 1, 1997.  Sections 68 and 76 are effective the day 
 78.1   following final enactment.  
 78.2                              ARTICLE 2
 78.3               LEGISLATORS AND CONSTITUTIONAL OFFICERS
 78.4      Section 1.  Minnesota Statutes 1996, section 3A.07, is 
 78.5   amended to read: 
 78.6      3A.07 [APPLICATION.] 
 78.7      (a) Except as provided in paragraph (b), this chapter 
 78.8   applies to members of the legislature in service upon after July 
 78.9   1, 1965, or thereafter, who otherwise meet the requirements of 
 78.10  this chapter. 
 78.11     (b) Members of the legislature who were elected for the 
 78.12  first time after June 30, 1997, or members of the legislature 
 78.13  who were elected before July 1, 1997, and who, after July 1, 
 78.14  1998, elect not to be members of the plan established by this 
 78.15  chapter are covered by the unclassified employees retirement 
 78.16  program governed by chapter 352D. 
 78.17     (c) The post-July 1, 1998, coverage election under 
 78.18  paragraph (b) is irrevocable and must be made on a form 
 78.19  prescribed by the director. 
 78.20     Sec. 2.  [352C.011] [APPLICABILITY.] 
 78.21     (a) Except as provided in paragraph (b), this chapter 
 78.22  applies only to constitutional officers first elected before 
 78.23  July 1, 1997, to a constitutional office.  
 78.24     (b) Constitutional officers elected for the first time to a 
 78.25  constitutional office after June 30, 1997, or constitutional 
 78.26  officers who were elected before July 1, 1997, and who, after 
 78.27  July 1, 1998, elect not to be members of the plan established by 
 78.28  this chapter are covered by the unclassified employees 
 78.29  retirement program governed by chapter 352D. 
 78.30     (c) The post-July 1, 1998, coverage election under 
 78.31  paragraph (b) is irrevocable and must be made on a form 
 78.32  prescribed by the executive director of the Minnesota state 
 78.33  retirement system. 
 78.34     Sec. 3.  Minnesota Statutes 1996, section 352D.02, 
 78.35  subdivision 1, is amended to read: 
 78.36     Subdivision 1.  [COVERAGE.] (a) Employees enumerated in 
 79.1   paragraph (b) (c), clauses 2, 3, 4, and 6 to 15, if they are in 
 79.2   the unclassified service of the state or metropolitan council 
 79.3   and are eligible for coverage under the general state employees 
 79.4   retirement plan under chapter 352, are participants in the 
 79.5   unclassified program under this chapter unless the employee 
 79.6   gives notice to the executive director of the Minnesota state 
 79.7   retirement system within one year following the commencement of 
 79.8   employment in the unclassified service that the employee desires 
 79.9   coverage under the general state employees retirement plan.  For 
 79.10  the purposes of this chapter, an employee who does not file 
 79.11  notice with the executive director is deemed to have exercised 
 79.12  the option to participate in the unclassified plan. 
 79.13     (b) Persons referenced in paragraph (c), clauses (1) and 
 79.14  (5), are participants in the unclassified program under this 
 79.15  chapter unless the person is eligible to elect different 
 79.16  coverage under section 3A.07 or 352C.011 and, after July 1, 
 79.17  1998, elects retirement coverage by the applicable alternative 
 79.18  retirement plan. 
 79.19     (c) Enumerated employees and referenced persons are: 
 79.20     (1) the governor, the lieutenant governor, the secretary of 
 79.21  state, the state auditor, the state treasurer, and the attorney 
 79.22  general; 
 79.23     (2) an employee in the office of the governor, lieutenant 
 79.24  governor, secretary of state, state auditor, state treasurer, 
 79.25  attorney general, or; 
 79.26     (3) an employee of the state board of investment; 
 79.27     (2) (4) the head of a department, division, or agency 
 79.28  created by statute in the unclassified service, an acting 
 79.29  department head subsequently appointed to the position, or an 
 79.30  employee enumerated in section 15A.081, subdivision 1 or 
 79.31  15A.083, subdivision 4; 
 79.32     (3) (5) a member of the legislature; 
 79.33     (6) a permanent, full-time unclassified employee of the 
 79.34  legislature or a commission or agency of the legislature or a 
 79.35  temporary legislative employee having shares in the supplemental 
 79.36  retirement fund as a result of former employment covered by this 
 80.1   chapter, whether or not eligible for coverage under the 
 80.2   Minnesota state retirement system; 
 80.3      (4) (7) a person who is employed in a position established 
 80.4   under section 43A.08, subdivision 1, clause (3), or in a 
 80.5   position authorized under a statute creating or establishing a 
 80.6   department or agency of the state, which is at the deputy or 
 80.7   assistant head of department or agency or director level; 
 80.8      (5) (8) the regional administrator, or executive director 
 80.9   of the metropolitan council, general counsel, division 
 80.10  directors, operations managers, and other positions as 
 80.11  designated by the council, all of which may not exceed 27 
 80.12  positions at the council and the chair, provided that upon 
 80.13  initial designation of all positions provided for in this 
 80.14  clause, no further designations or redesignations may be made 
 80.15  without approval of the board of directors of the Minnesota 
 80.16  state retirement system; 
 80.17     (6) (9) the executive director, associate executive 
 80.18  director, and not to exceed nine positions of the higher 
 80.19  education services office in the unclassified service, as 
 80.20  designated by the higher education services office before 
 80.21  January 1, 1992, or subsequently redesignated with the approval 
 80.22  of the board of directors of the Minnesota state retirement 
 80.23  system, unless the person has elected coverage by the individual 
 80.24  retirement account plan under chapter 354B; 
 80.25     (7) (10) the clerk of the appellate courts appointed under 
 80.26  article VI, section 2, of the Constitution of the state of 
 80.27  Minnesota; 
 80.28     (8) (11) the chief executive officers of correctional 
 80.29  facilities operated by the department of corrections and of 
 80.30  hospitals and nursing homes operated by the department of human 
 80.31  services; 
 80.32     (9) (12) an employee whose principal employment is at the 
 80.33  state ceremonial house; 
 80.34     (10) (13) an employee of the Minnesota educational 
 80.35  computing corporation; 
 80.36     (11) (14) an employee of the world trade center board; and 
 81.1      (12) (15) an employee of the state lottery board who is 
 81.2   covered by the managerial plan established under section 43A.18, 
 81.3   subdivision 3. 
 81.4      Sec. 4.  Minnesota Statutes 1996, section 352D.02, 
 81.5   subdivision 2, is amended to read: 
 81.6      Subd. 2.  [COVERAGE UPON EMPLOYMENT CHANGE.] A person 
 81.7   becoming a participant in the unclassified program by virtue of 
 81.8   employment in a position specified in subdivision 1, 
 81.9   clause (2) (4) and remaining in the unclassified service shall 
 81.10  remain a participant in the program even though the position the 
 81.11  person occupies is deleted from any of the sections referenced 
 81.12  in subdivision 1, clause (2) (4) by subsequent amendment, except 
 81.13  that a person shall not be eligible to elect the unclassified 
 81.14  program after separation from unclassified service if on the 
 81.15  return of the person to service, that position is not specified 
 81.16  in subdivision 1, clause (2) (4).  Any person employed in a 
 81.17  position specified in subdivision 1 shall cease to participate 
 81.18  in the unclassified program in the event the position is placed 
 81.19  in the classified service. 
 81.20     Sec. 5.  Minnesota Statutes 1996, section 352D.04, 
 81.21  subdivision 1, is amended to read: 
 81.22     Subdivision 1.  [INVESTMENT OPTIONS.] (a) An employee A 
 81.23  person exercising an option to participate in the retirement 
 81.24  program provided by this chapter may elect to purchase shares in 
 81.25  one or a combination of the income share account, the growth 
 81.26  share account, the international share account, the money market 
 81.27  account, the bond market account, the fixed interest account, or 
 81.28  the common stock index account established in section 11A.17.  
 81.29  The employee person may elect to participate in one or more of 
 81.30  the investment accounts in the fund by specifying, on a form 
 81.31  provided by the executive director, the percentage of 
 81.32  the employee's person's contributions provided in subdivision 2 
 81.33  to be used to purchase shares in each of the accounts. 
 81.34     (b) A participant may indicate in writing on forms provided 
 81.35  by the Minnesota state retirement system a choice of options for 
 81.36  subsequent purchases of shares.  Until a different written 
 82.1   indication is made by the participant, the executive director 
 82.2   shall purchase shares in the supplemental fund as selected by 
 82.3   the participant.  If no initial option is chosen, 100 percent 
 82.4   income shares must be purchased for a participant.  A change in 
 82.5   choice of investment option is effective no later than the first 
 82.6   pay date first occurring after 30 days following the receipt of 
 82.7   the request for a change. 
 82.8      (c) Shares in the fixed interest account attributable to 
 82.9   any guaranteed investment contract as of July 1, 1994, may not 
 82.10  be withdrawn from the fund or transferred to another account 
 82.11  until the guaranteed investment contract has expired, unless the 
 82.12  participant qualifies for withdrawal under section 352D.05 or 
 82.13  for benefit payments under sections 352D.06 to 352D.075. 
 82.14     (d) A participant or former participant may also change the 
 82.15  investment options selected for all or a portion of the 
 82.16  participant's shares previously purchased in accounts, subject 
 82.17  to the provisions of paragraph (c) concerning the fixed interest 
 82.18  account.  Changes in investment options for the participant's 
 82.19  shares must be effected as soon as cash flow to an account 
 82.20  practically permits, but not later than six months after the 
 82.21  requested change. 
 82.22     Sec. 6.  Minnesota Statutes 1996, section 352D.04, 
 82.23  subdivision 2, is amended to read: 
 82.24     Subd. 2.  [CONTRIBUTION RATES.] (a) The moneys money used 
 82.25  to purchase shares under this section shall be is the employee 
 82.26  and employer contributions provided in this subdivision. 
 82.27     (a) (b) The employee contribution shall be is an amount 
 82.28  equal to the employee contribution specified in section 352.04, 
 82.29  subdivision 2.  
 82.30     (b) (c) The employer contribution shall be is an amount 
 82.31  equal to six percent of salary.  
 82.32     (d) These contributions shall must be made by deduction 
 82.33  from salary in the manner provided in section 352.04, 
 82.34  subdivisions 4, 5, and 6.  
 82.35     (e) For members of the legislature, the contributions under 
 82.36  this subdivision also must be made on per diem payments received 
 83.1   during a regular or special legislative session, but may not be 
 83.2   made on per diem payments received outside of a regular or 
 83.3   special legislative session, on the additional compensation 
 83.4   attributable to a leadership position under section 3.099, 
 83.5   subdivision 3, living expense payments under section 3.101, or 
 83.6   special session living expense payments under section 3.103. 
 83.7      Sec. 7.  [355.621] [LEGISLATORS AND CONSTITUTIONAL 
 83.8   OFFICERS; SOCIAL SECURITY COVERAGE REFERENDUM.] 
 83.9      Subdivision 1.  [DEFINITIONS GENERALLY.] For the purposes 
 83.10  of sections 7 to 14, each of the terms defined in this section 
 83.11  has the indicated meaning. 
 83.12     Subd. 2.  [ENABLING ACT.] "Enabling act" means sections 
 83.13  355.01 to 355.07. 
 83.14     Subd. 3.  [LEGISLATOR.] "Legislator" means a member of the 
 83.15  legislature duly elected and sworn into office. 
 83.16     Subd. 4.  [CONSTITUTIONAL OFFICER.] "Constitutional officer"
 83.17  means the governor, the lieutenant governor, the attorney 
 83.18  general, the secretary of state, the state auditor, and the 
 83.19  state treasurer duly elected and sworn into office. 
 83.20     Subd. 5.  [ADDITIONAL TERMS.] The terms "social security 
 83.21  act," "state agency," "employment," "wages," "contribution 
 83.22  fund," "federal insurance contributions act," and "political 
 83.23  subdivision" each have the meaning ascribed in the enabling act. 
 83.24     Sec. 8.  [355.622] [REFERENDUM.] 
 83.25     Under the enabling act, the governor shall designate an 
 83.26  agency or individual to supervise a referendum to be held after 
 83.27  July 1, 1998, in accordance with provisions of section 
 83.28  218(d)(6)(c) of the Social Security Act, for legislators and for 
 83.29  constitutional officers. 
 83.30     Sec. 9.  [355.623] [NOTICE OF REFERENDUM.] 
 83.31     The notice of referendum required by section 218(d) of the 
 83.32  Social Security Act that is to be provided to legislators and to 
 83.33  constitutional officers must contain a statement of the rights 
 83.34  which accrue under the Social Security Act.  The statement must 
 83.35  be in the form that the agency or individual designated to 
 83.36  supervise the referendum deems necessary and sufficient to 
 84.1   inform legislators and constitutional officers of their Social 
 84.2   Security Act rights.  The statement must also inform the 
 84.3   legislators and constitutional officers of the effect that 
 84.4   social security coverage will have on their future public 
 84.5   retirement coverage. 
 84.6      Sec. 10.  [355.624] [DIVISION OF THE LEGISLATORS RETIREMENT 
 84.7   PLAN AND THE ELECTIVE STATE OFFICERS RETIREMENT PLAN.] 
 84.8      (a) In accord with section 218(d)(6)(c) of the Social 
 84.9   Security Act, the state agency shall divide the legislators 
 84.10  retirement plan into two parts or divisions and shall divide the 
 84.11  elective state officers retirement plan into two parts or 
 84.12  divisions. 
 84.13     (b) One division or part of the legislators retirement plan 
 84.14  must be composed of legislators who desire coverage under an 
 84.15  agreement under section 218(d) of the Social Security Act, and 
 84.16  those legislators must have their future public pension plan 
 84.17  coverage under chapter 352D.  Also included in this division or 
 84.18  part are legislators who are elected after July 1, 1997.  The 
 84.19  other division or part of the legislators retirement plan must 
 84.20  be composed of legislators who do not desire coverage under an 
 84.21  agreement under section 218(d) of the Social Security Act, and 
 84.22  those legislators must have their future public pension plan 
 84.23  coverage under chapter 3A. 
 84.24     (c) One division or part of the elective state officers 
 84.25  retirement plan must be composed of constitutional officers who 
 84.26  desire coverage under an agreement under section 218(d) of the 
 84.27  Social Security Act, and those constitutional officers must have 
 84.28  their future public pension plan coverage under chapter 352D.  
 84.29  Also included in this division or part are constitutional 
 84.30  officers who are elected after July 1, 1997.  The other division 
 84.31  or part of the elective state officers retirement plan must be 
 84.32  composed of constitutional officers who do not desire coverage 
 84.33  under an agreement under section 218(d) of the Social Security 
 84.34  Act, and those constitutional officers must have their future 
 84.35  public pension plan coverage under chapter 352C. 
 84.36     Sec. 11.  [355.625] [TRANSFER OF MEMBERS.] 
 85.1      In accord with section 218(d)(6)(f) of the Social Security 
 85.2   Act and when the legislators retirement plan or the elective 
 85.3   state officers retirement plan, whichever applies, is divided 
 85.4   into two parts or divisions, a legislator or constitutional 
 85.5   officer who does not desire coverage under an agreement under 
 85.6   section 218(d) of the Social Security Act may be transferred to 
 85.7   the other part or division if the agreement with the federal 
 85.8   Department of Health and Human Services so provides and if the 
 85.9   legislator or constitutional officer files with the state agency 
 85.10  a written request for the transfer. 
 85.11     Sec. 12.  [355.626] [CERTIFICATION BY GOVERNOR.] 
 85.12     If the governor receives satisfactory evidence that the 
 85.13  conditions specified in section 218(d)(7) of the Social Security 
 85.14  Act have been met with respect to the legislators retirement 
 85.15  plan or the elective state officers retirement plan, whichever 
 85.16  applies, the governor shall so certify to the secretary of the 
 85.17  federal Department of Health and Human Services. 
 85.18     Sec. 13.  [355.627] [AGREEMENTS WITH FEDERAL AGENCY.] 
 85.19     Upon the governor's certification under section 12, the 
 85.20  state agency, with the approval of the governor, is authorized 
 85.21  after June 30, 1998, to enter into or modify an agreement with 
 85.22  the secretary of the federal Department of Health and Human 
 85.23  Services with respect to legislators or constitutional officers, 
 85.24  whichever applies. 
 85.25     Sec. 14.  [355.628] [SOCIAL SECURITY CONTRIBUTIONS.] 
 85.26     Subdivision 1.  [EMPLOYER CONTRIBUTIONS.] Employer 
 85.27  contributions required under the agreement or modification under 
 85.28  section 13 and payments required by section 355.49 must be paid 
 85.29  by the senate, the house of representatives, or the relevant 
 85.30  constitutional office, whichever applies. 
 85.31     Subd. 2.  [EMPLOYEE CONTRIBUTIONS; DEDUCTION FROM 
 85.32  WAGES.] (a) After the date on which the agreement or 
 85.33  modification under section 13 is executed, there must be paid as 
 85.34  a deduction from wages an employee contribution by legislators 
 85.35  or constitutional officers in an amount equal to the tax that 
 85.36  would be imposed by the Federal Insurance Contribution Act if 
 86.1   the service constituted employment within the meaning of the act.
 86.2      (b) Contributions made under this subdivision must be paid 
 86.3   into the contribution fund in partial discharge of the employer 
 86.4   liability for social security coverage. 
 86.5      (c) A failure to deduct employee contributions does not 
 86.6   relieve the legislator or constitutional officer or the senate, 
 86.7   the house of representatives, or the relevant constitutional 
 86.8   office of the liability to make the contribution. 
 86.9      Sec. 15.  [COVERAGE ELECTION.] 
 86.10     (a) Members of the legislature who were members of the 
 86.11  legislators retirement plan on the effective date of this 
 86.12  section and constitutional officers who were members of the 
 86.13  elective state officers retirement plan on the effective date of 
 86.14  this section may elect coverage by the unclassified employees 
 86.15  retirement program governed by Minnesota Statutes, chapter 352D, 
 86.16  instead of the prior retirement coverage, as part of the social 
 86.17  security referendum under section 10. 
 86.18     (b) The election of a retirement coverage change applies 
 86.19  only to prospective service as a member of the legislature or a 
 86.20  constitutional officer.  The election must be made in 
 86.21  conjunction with the referendum selection under section 10.  A 
 86.22  member of the legislature or a constitutional officer who elects 
 86.23  a retirement coverage change under this section is entitled to 
 86.24  an augmented deferred retirement annuity under Minnesota 
 86.25  Statutes, section 3A.02, subdivisions 1 and 4, or Minnesota 
 86.26  Statutes, sections 352C.031 and 352C.033, whichever applies, 
 86.27  notwithstanding any provision of law to the contrary. 
 86.28     (c) A member of the legislature or a constitutional officer 
 86.29  who elects a retirement coverage change under this section is 
 86.30  not entitled to a refund under Minnesota Statutes, section 
 86.31  3A.03, subdivision 2, or 352C.09, subdivision 2, whichever 
 86.32  applies, until the person terminates service as a member of the 
 86.33  legislature or a constitutional officer. 
 86.34     Sec. 16.  [STUDY OF LEGISLATORS AND CONSTITUTIONAL OFFICER 
 86.35  PENSION COVERAGE.] 
 86.36     Subdivision 1.  [STUDY MANDATE.] The legislative commission 
 87.1   on pensions and retirement shall study the issue of the 
 87.2   appropriate pension coverage for legislators and for 
 87.3   constitutional officers during the 1997-1998 interim. 
 87.4      Subd. 2.  [STUDY CONTENTS.] At a minimum, the commission 
 87.5   must study the following: 
 87.6      (1) the appropriate member contribution rates to the 
 87.7   legislators retirement plan and the elective state officers 
 87.8   retirement plan and their adequacy in funding the normal cost 
 87.9   and administrative expenses of the applicable plan in comparison 
 87.10  to other public pension plans; 
 87.11     (2) the appropriateness of including new legislators and 
 87.12  constitutional officers and of including current legislators and 
 87.13  constitutional officers in coverage by the social security 
 87.14  program and the necessary adaptations to the defined 
 87.15  contribution plan coverage established in section 3 and the 
 87.16  legislators retirement plan established in Minnesota Statutes, 
 87.17  chapter 3A, or the elective state officers retirement plan 
 87.18  established in Minnesota Statutes, chapter 352C, to supplement 
 87.19  that coverage; and 
 87.20     (3) the appropriateness of permitting current legislators 
 87.21  and current constitutional officers to elect the defined 
 87.22  contribution plan coverage established in section 3 for future 
 87.23  service and the impact of the election on past service credit 
 87.24  under Minnesota Statutes, chapter 3A, or Minnesota Statutes, 
 87.25  chapter 352C. 
 87.26     Subd. 3.  [STUDY PRINCIPLES.] The study must reflect the 
 87.27  following principles: 
 87.28     (1) to the extent practicable, the public pension plan 
 87.29  coverage to be provided to legislators and constitutional 
 87.30  officers should match or parallel the pension coverage provided 
 87.31  to legislative employees and agency heads; 
 87.32     (2) the public pension plan coverage to be provided to 
 87.33  legislators and constitutional officers may appropriately 
 87.34  reflect the part-time nature of legislative service for many 
 87.35  legislators and the unique character of elected public service 
 87.36  for other legislators and for constitutional officers; and 
 88.1      (3) the public pension coverage ultimately provided to 
 88.2   legislators and constitutional officers should conform with the 
 88.3   applicable provisions of the principles of pension policy of the 
 88.4   commission.  
 88.5      Subd. 4.  [STUDY RESULTS.] The results of the study should 
 88.6   include any applicable proposed legislation, including, but not 
 88.7   limited to, amending or repealing, in whole or in part, sections 
 88.8   1 to 15. 
 88.9      Subd. 5.  [REPORT.] The study and any recommended proposed 
 88.10  legislation must be reported to the 1998 legislative session.  
 88.11     Sec. 17.  [EFFECTIVE DATE.] 
 88.12     Sections 1 to 6 and 16 are effective July 1, 1997.  
 88.13  Sections 7 to 15 are effective July 1, 1998. 
 88.14                             ARTICLE 3
 88.15             FIRST CLASS CITY TEACHER RETIREMENT FUNDS
 88.16     Section 1.  Minnesota Statutes 1996, section 354A.011, 
 88.17  subdivision 15a, is amended to read: 
 88.18     Subd. 15a.  [NORMAL RETIREMENT AGE.] "Normal retirement 
 88.19  age" means age 65 for a person who first became a member of the 
 88.20  coordinated program of the Minneapolis or St. Paul teachers 
 88.21  retirement fund association or the new law coordinated program 
 88.22  of the Duluth teachers retirement fund association or a member 
 88.23  of a pension fund listed in section 356.30, subdivision 3, 
 88.24  before July 1, 1989.  For a person who first became a member of 
 88.25  the coordinated program of the Minneapolis or St. Paul teachers 
 88.26  retirement fund association or the new law coordinated program 
 88.27  of the Duluth teachers retirement fund association after June 
 88.28  30, 1989, normal retirement age means the higher of age 65 or 
 88.29  retirement age, as defined in United States Code, title 42, 
 88.30  section 416(l), as amended, but not to exceed age 66.  For a 
 88.31  person who is a member of the basic program of the Minneapolis 
 88.32  or St. Paul teachers retirement fund association or the old law 
 88.33  coordinated program of the Duluth teachers retirement fund 
 88.34  association, normal retirement age means the age at which a 
 88.35  teacher becomes eligible for a normal retirement annuity 
 88.36  computed upon meeting the age and service requirements specified 
 89.1   in the applicable provisions of the articles of incorporation or 
 89.2   bylaws of the respective teachers retirement fund association. 
 89.3      Sec. 2.  Minnesota Statutes 1996, section 354A.12, 
 89.4   subdivision 1, is amended to read: 
 89.5      Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] The contribution 
 89.6   required to be paid by each member of a teachers retirement fund 
 89.7   association shall not be less than the percentage of total 
 89.8   salary specified below for the applicable association and 
 89.9   program: 
 89.10       Association and Program              Percentage of
 89.11                                            Total Salary
 89.12  Duluth teachers retirement
 89.13    association
 89.14            old law and new law
 89.15            coordinated programs              5.5 percent
 89.16  Minneapolis teachers retirement
 89.17    association
 89.18            basic program                     8.5 percent
 89.19            coordinated program               4.5 5.5 percent
 89.20  St. Paul teachers retirement
 89.21    association
 89.22            basic program                     8 percent
 89.23            coordinated program               4.5 5.5 percent
 89.24     Contributions shall be made by deduction from salary and 
 89.25  must be remitted directly to the respective teachers retirement 
 89.26  fund association at least once each month. 
 89.27     Sec. 3.  Minnesota Statutes 1996, section 354A.12, 
 89.28  subdivision 2a, is amended to read: 
 89.29     Subd. 2a.  [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 
 89.30  RATES.] (a) The employing units shall make the following 
 89.31  employer contributions to teachers retirement fund associations: 
 89.32     (1) for any coordinated member of a teachers retirement 
 89.33  fund association in a city of the first class, the employing 
 89.34  unit shall pay the employer social security taxes in accordance 
 89.35  with section 355.46, subdivision 3, clause (b); 
 89.36     (2) for any coordinated member of one of the following 
 90.1   teachers retirement fund associations in a city of the first 
 90.2   class, the employing unit shall make a regular employer 
 90.3   contribution to the respective retirement fund association in an 
 90.4   amount equal to the designated percentage of the salary of the 
 90.5   coordinated member as provided below: 
 90.6        Duluth teachers retirement
 90.7        fund association                        4.50 percent
 90.8        Minneapolis teachers retirement
 90.9        fund association                        4.50 percent
 90.10       St. Paul teachers retirement
 90.11       fund association                        4.50 percent;
 90.12     (3) for any basic member of one of the following teachers 
 90.13  retirement fund associations in a city of the first class, the 
 90.14  employing unit shall make a regular employer contribution to the 
 90.15  respective retirement fund in an amount equal to the designated 
 90.16  percentage of the salary of the basic member as provided below: 
 90.17       Minneapolis teachers retirement
 90.18       fund association                        8.50 percent
 90.19       St. Paul teachers retirement
 90.20       fund association                        8.00 percent
 90.21     (4) for a basic member of a teachers retirement fund 
 90.22  association in a city of the first class, the employing unit 
 90.23  shall make an additional employer contribution to the respective 
 90.24  fund in an amount equal to the designated percentage of the 
 90.25  salary of the basic member, as provided below: 
 90.26       Minneapolis teachers retirement 
 90.27       fund association 
 90.28         July 1, 1993 - June 30, 1994          4.85 percent 
 90.29         July 1, 1994, and thereafter          3.64 percent
 90.30       St. Paul teachers retirement 
 90.31       fund association 
 90.32         July 1, 1993 - June 30, 1995          4.63 percent 
 90.33         July 1, 1995, and thereafter          3.64 percent
 90.34     (5) for a coordinated member of a teachers retirement fund 
 90.35  association in a city of the first class, the employing unit 
 90.36  shall make an additional employer contribution to the respective 
 91.1   fund in an amount equal to the applicable percentage of the 
 91.2   coordinated member's salary, as provided below: 
 91.3        Duluth teachers retirement
 91.4        fund association                        1.29 percent 
 91.5        Minneapolis teachers retirement
 91.6        fund association
 91.7          July 1, 1993 - June 30, 1994          0.50 percent 
 91.8          July 1, 1994, and thereafter          3.64 percent
 91.9        St. Paul teachers retirement 
 91.10       fund association 
 91.11         July 1, 1993 - June 30, 1994          0.50 percent 
 91.12         July 1, 1994 - June 30, 1995          1.50 percent 
 91.13         July 1, 1995 1997, and thereafter     3.64
 91.14                                               3.84 percent
 91.15     (b) The regular and additional employer contributions must 
 91.16  be remitted directly to the respective teachers retirement fund 
 91.17  association at least once each month.  Delinquent amounts are 
 91.18  payable with interest under the procedure in subdivision 1a. 
 91.19     (c) Payments of regular and additional employer 
 91.20  contributions for school district or technical college employees 
 91.21  who are paid from normal operating funds must be made from the 
 91.22  appropriate fund of the district or technical college. 
 91.23     Sec. 4.  Minnesota Statutes 1996, section 354A.12, 
 91.24  subdivision 3a, is amended to read: 
 91.25     Subd. 3a.  [SPECIAL DIRECT STATE AID TO ST. PAUL FIRST 
 91.26  CLASS CITY TEACHERS RETIREMENT FUND ASSOCIATION ASSOCIATIONS.] 
 91.27  (a) In fiscal year 1998, the state shall pay $4,827,000 to the 
 91.28  St. Paul teachers retirement fund association $500,000 in fiscal 
 91.29  year 1994, $17,954,000 to the Minneapolis teachers retirement 
 91.30  fund association, and $486,000 to the Duluth teachers retirement 
 91.31  fund association.  In each subsequent fiscal year, the payment 
 91.32  these payments to the St. Paul first class city teachers 
 91.33  retirement fund association associations must be increased at 
 91.34  the same rate as the increase in the general education revenue 
 91.35  formula allowance under section 124A.22, subdivision 2, in 
 91.36  subsequent fiscal years $2,827,000 for St. Paul, $12,954,000 for 
 92.1   Minneapolis, and $486,000 for Duluth. 
 92.2      (b) The direct state aid is aids under this subdivision are 
 92.3   payable October 1 annually.  The commissioner of finance shall 
 92.4   pay the direct state aid.  The amount required under this 
 92.5   subdivision is appropriated annually from the general fund to 
 92.6   the commissioner of finance. 
 92.7      Sec. 5.  Minnesota Statutes 1996, section 354A.12, 
 92.8   subdivision 3b, is amended to read: 
 92.9      Subd. 3b.  [SPECIAL DIRECT STATE MATCHING AID TO THE 
 92.10  MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special 
 92.11  school district No. 1 may make an additional employer 
 92.12  contribution to the Minneapolis teachers retirement fund 
 92.13  association.  The city of Minneapolis may make a contribution to 
 92.14  the Minneapolis teachers retirement fund association.  This 
 92.15  contribution may be made by a levy of the board of estimate and 
 92.16  taxation of the city of Minneapolis, and the levy, if made, is 
 92.17  classified as that of a special taxing district for purposes of 
 92.18  sections 275.065 and 276.04, and for all other property tax 
 92.19  purposes. 
 92.20     (b) For every $1,000 contributed in equal proportion by 
 92.21  special school district No. 1 and by the city of Minneapolis to 
 92.22  the Minneapolis teachers retirement fund association under 
 92.23  paragraph (a), the state shall pay to the Minneapolis teachers 
 92.24  retirement fund association $1,000, but not to exceed $2,500,000 
 92.25  in total in fiscal year 1994.  The total amount available for 
 92.26  each subsequent fiscal year must be increased at the same rate 
 92.27  as the increase in the general education revenue formula 
 92.28  allowance under section 124A.22, subdivision 2, in subsequent 
 92.29  fiscal years.  The superintendent of special school district No. 
 92.30  1, the mayor of the city of Minneapolis, and the executive 
 92.31  director of the Minneapolis teachers retirement fund association 
 92.32  shall jointly certify to the commissioner of finance the total 
 92.33  amount that has been contributed by special school district No. 
 92.34  1 and by the city of Minneapolis to the Minneapolis teachers 
 92.35  retirement fund association.  Any certification to the 
 92.36  commissioner of children, families, and learning must be made 
 93.1   quarterly.  If the total certifications for a fiscal year exceed 
 93.2   the maximum annual direct state matching aid amount in any 
 93.3   quarter, the amount of direct state matching aid payable to the 
 93.4   Minneapolis teachers retirement fund association must be limited 
 93.5   to the balance of the maximum annual direct state matching aid 
 93.6   amount available.  The amount required under this paragraph, 
 93.7   subject to the maximum direct state matching aid amount, is 
 93.8   appropriated annually to the commissioner of finance. 
 93.9      (c) The commissioner of finance may prescribe the form of 
 93.10  the certifications required under paragraph (b). 
 93.11     Sec. 6.  Minnesota Statutes 1996, section 354A.12, 
 93.12  subdivision 3c, is amended to read: 
 93.13     Subd. 3c.  [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND 
 93.14  DIRECT MATCHING AND STATE AID.] (a) The supplemental 
 93.15  contributions payable to the Minneapolis teachers retirement 
 93.16  fund association by special school district No. 1 and the city 
 93.17  of Minneapolis under section 423A.02, subdivision 3, or to the 
 93.18  St. Paul teachers retirement fund association by independent 
 93.19  school district No. 625 under section 423A.02, subdivision 3, or 
 93.20  the direct state aid aids under subdivision 3a to the St. Paul 
 93.21  first class city teachers retirement association associations, 
 93.22  and the direct matching and state aid under subdivision 3b to 
 93.23  the Minneapolis teachers retirement fund association terminates 
 93.24  terminate for the respective fund at the end of the fiscal year 
 93.25  in which the accrued liability funding ratio for that fund, as 
 93.26  determined in the most recent actuarial report for that fund by 
 93.27  the actuary retained by the legislative commission on pensions 
 93.28  and retirement, equals or exceeds the accrued liability funding 
 93.29  ratio for the teachers retirement association, as determined in 
 93.30  the most recent actuarial report for the teachers retirement 
 93.31  association by the actuary retained by the legislative 
 93.32  commission on pensions and retirement. 
 93.33     (b) If the state direct matching, state supplemental, or 
 93.34  state aid is terminated for the St. Paul a first class city 
 93.35  teachers retirement fund association or the Minneapolis teachers 
 93.36  retirement fund association under paragraph (a), it may not 
 94.1   again be received by that fund. 
 94.2      (c) If either the Minneapolis teachers retirement fund 
 94.3   association, or the St. Paul teachers retirement fund 
 94.4   association, or the Duluth teachers retirement fund association 
 94.5   remain funded at less than the funding ratio applicable to the 
 94.6   teachers retirement association when the provisions of paragraph 
 94.7   (b) become effective, then any state aid not distributed to that 
 94.8   association must be immediately transferred to the other 
 94.9   association associations in proportion to the relative sizes of 
 94.10  their unfunded actuarial accrued liabilities. 
 94.11     Sec. 7.  [354A.29] [ST. PAUL TEACHERS RETIREMENT FUND 
 94.12  ASSOCIATION POSTRETIREMENT ADJUSTMENT.] 
 94.13     Subdivision 1.  [ARTICLES OF INCORPORATION AND 
 94.14  BYLAWS.] Permission is granted for the St. Paul teachers 
 94.15  retirement fund association under Minnesota Statutes, section 
 94.16  354A.12, subdivision 4, to amend its articles of incorporation 
 94.17  and bylaws to provide postretirement adjustments under this 
 94.18  section. 
 94.19     Subd. 2.  [ELIMINATION OF PRIOR LUMP SUM POSTRETIREMENT 
 94.20  ADJUSTMENT MECHANISM.] As a condition precedent to the 
 94.21  implementation of subdivisions 3 through 6, the lump sum 
 94.22  postretirement adjustment mechanism in effect on the date of 
 94.23  enactment of this section must be eliminated and the articles of 
 94.24  incorporation and bylaws of the association must be amended 
 94.25  accordingly. 
 94.26     Subd. 3.  [POSTRETIREMENT ADJUSTMENT.] (a) The 
 94.27  postretirement adjustment described in the articles and bylaws 
 94.28  of the St. Paul teachers retirement fund association must be 
 94.29  determined by the board annually after June 30 using the 
 94.30  procedures under this section. 
 94.31     (b) Each eligible person who has been receiving an annuity 
 94.32  or benefit under the articles of incorporation, the bylaws, or 
 94.33  this chapter for at least 12 months as of the end of the fiscal 
 94.34  year is eligible to receive a postretirement adjustment of 2.0 
 94.35  percent that is payable each January 1. 
 94.36     Subd. 4.  [ADDITIONAL INVESTMENT PERCENTAGE 
 95.1   ADJUSTMENT.] (a) An excess investment earnings percentage 
 95.2   adjustment must be computed and paid under this subdivision to 
 95.3   those annuitants and eligible benefit recipients who have been 
 95.4   receiving an annuity or benefit for at least 12 months as 
 95.5   determined each June 30 by the board of trustees. 
 95.6      (b) The board shall also determine the five-year annualized 
 95.7   rate of return attributable to the assets of the St. Paul 
 95.8   teachers retirement fund association under the formula specified 
 95.9   in section 11A.04, clause (11), and the amount of the excess 
 95.10  five-year annualized rate of return over the preretirement 
 95.11  interest assumption specified in Minnesota Statutes, section 
 95.12  356.215. 
 95.13     (c) The excess investment percentage adjustment must be 
 95.14  determined by multiplying the quantity one minus the rate of 
 95.15  contribution deficiency, as specified in the most recent 
 95.16  actuarial report of the actuary retained by the legislative 
 95.17  commission on pensions and retirement under section 356.215, by 
 95.18  the rate of return excess as determined in paragraph (b). 
 95.19     (d) The excess investment percentage adjustment is payable 
 95.20  to all annuitants and benefit recipients on the following 
 95.21  January 1. 
 95.22     Subd. 5.  [EFFECT ON ANNUITY.] The adjustments calculated 
 95.23  under subdivisions 3 and 4 must be included in all annuities or 
 95.24  benefits paid to the recipient after the adjustments take effect.
 95.25     Subd. 6.  [LUMP SUM POSTRETIREMENT ADJUSTMENT 
 95.26  TRANSITION.] This subdivision applies to all annuitants and 
 95.27  beneficiaries of the association who received a lump sum 
 95.28  postretirement adjustment before the calculation of the first 
 95.29  postretirement adjustment under subdivisions 3 and 4.  Before 
 95.30  the calculation of the first postretirement adjustment under 
 95.31  subdivisions 3 and 4, the annual retirement annuity must be 
 95.32  increased by the amount of the lump sum postretirement 
 95.33  adjustment described in the association bylaws and paid to the 
 95.34  annuitant or beneficiary in 1997 before the effective date of 
 95.35  this section or if the annuitant or beneficiary was not eligible 
 95.36  for a lump sum postretirement adjustment, then the annual 
 96.1   benefit paid to that annuitant or benefit recipient must be 
 96.2   increased by the cumulative percentage increase in the Consumer 
 96.3   Price Index for urban wage earners and clerical workers All 
 96.4   Items Index published by the United States Department of Labor, 
 96.5   Bureau of Labor Statistics, from the date of the initial receipt 
 96.6   of a retirement annuity or benefit of the person whose service 
 96.7   is the basis of the benefit to June 30, 1997. 
 96.8      Sec. 8.  Minnesota Statutes 1996, section 354A.31, 
 96.9   subdivision 4, is amended to read: 
 96.10     Subd. 4.  [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 
 96.11  ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 
 96.12  applies to the coordinated programs of the Minneapolis teachers 
 96.13  retirement fund association and the St. Paul teachers retirement 
 96.14  fund association.  
 96.15     (b) The normal coordinated retirement annuity shall be an 
 96.16  amount equal to a retiring coordinated member's average salary 
 96.17  multiplied by the retirement annuity formula percentage.  
 96.18  Average salary for purposes of this section shall mean an amount 
 96.19  equal to the average salary upon which contributions were made 
 96.20  for the highest five successive years of service credit, but 
 96.21  which shall not in any event include any more than the 
 96.22  equivalent of 60 monthly salary payments.  Average salary must 
 96.23  be based upon all years of service credit if this service credit 
 96.24  is less than five years. 
 96.25     (c) This paragraph, in conjunction with subdivision 6, 
 96.26  applies to a person who first became a member or a member in a 
 96.27  pension fund listed in section 356.30, subdivision 3, before 
 96.28  July 1, 1989, unless paragraph (d), in conjunction with 
 96.29  subdivision 7, produces a higher annuity amount, in which case 
 96.30  paragraph (d) will apply.  The retirement annuity formula 
 96.31  percentage for purposes of this paragraph is one the percent 
 96.32  specified in section 356.19, subdivision 1, per year for each 
 96.33  year of coordinated service for the first ten years and 1.5 the 
 96.34  percent specified in section 356.19, subdivision 2, for each 
 96.35  year of coordinated service thereafter.  
 96.36     (d) This paragraph applies to a person who has become at 
 97.1   least 55 years old and who first becomes a member after June 30, 
 97.2   1989, and to any other member who has become at least 55 years 
 97.3   old and whose annuity amount, when calculated under this 
 97.4   paragraph and in conjunction with subdivision 7 is higher than 
 97.5   it is when calculated under paragraph (c), in conjunction with 
 97.6   the provisions of subdivision 6.  The retirement annuity formula 
 97.7   percentage for purposes of this paragraph is 1.5 the percent 
 97.8   specified in section 356.19, subdivision 2, for each year of 
 97.9   coordinated service.  
 97.10     Sec. 9.  Minnesota Statutes 1996, section 354A.31, 
 97.11  subdivision 4a, is amended to read: 
 97.12     Subd. 4a.  [COMPUTATION OF THE NORMAL COORDINATED 
 97.13  RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 
 97.14  to the new law coordinated program of the Duluth teachers 
 97.15  retirement fund association. 
 97.16     (b) The normal coordinated retirement annuity is an amount 
 97.17  equal to a retiring coordinated member's average salary 
 97.18  multiplied by the retirement annuity formula percentage.  
 97.19  Average salary for purposes of this section means an amount 
 97.20  equal to the average salary upon which contributions were made 
 97.21  for the highest five successive years of service credit, but may 
 97.22  not in any event include any more than the equivalent of 60 
 97.23  monthly salary payments.  Average salary must be based upon all 
 97.24  years of service credit if this service credit is less than five 
 97.25  years. 
 97.26     (c) This paragraph, in conjunction with subdivision 6, 
 97.27  applies to a person who first became a member or a member in a 
 97.28  pension fund listed in section 356.30, subdivision 3, before 
 97.29  July 1, 1989, unless paragraph (d), in conjunction with 
 97.30  subdivision 7, produces a higher annuity amount, in which case 
 97.31  paragraph (d) applies.  The retirement annuity formula 
 97.32  percentage for purposes of this paragraph is 1.13 the percent 
 97.33  specified in section 356.19, subdivision 1, per year for each 
 97.34  year of coordinated service for the first ten years and 1.63 the 
 97.35  percent specified in section 356.19, subdivision 2, for each 
 97.36  subsequent year of coordinated service. 
 98.1      (d) This paragraph applies to a person who is at least 55 
 98.2   years old and who first becomes a member after June 30, 1989, 
 98.3   and to any other member who is at least 55 years old and whose 
 98.4   annuity amount, when calculated under this paragraph and in 
 98.5   conjunction with subdivision 7, is higher than it is when 
 98.6   calculated under paragraph (c) in conjunction with subdivision 
 98.7   6.  The retirement annuity formula percentage for purposes of 
 98.8   this paragraph is 1.63 the percent specified in section 356.19, 
 98.9   subdivision 2, for each year of coordinated service. 
 98.10     Sec. 10.  Laws 1979, chapter 109, section 1, as amended by 
 98.11  Laws 1981, chapter 157, section 1, is amended to read: 
 98.12     Section 1.  Authorization is hereby granted in accordance 
 98.13  with Minnesota Statutes, Section 354A.12, for the St. Paul 
 98.14  teachers retirement fund association to amend its bylaws as 
 98.15  follows: 
 98.16     (1) Paragraph 9 of Section 3 of Article IV of the bylaws 
 98.17  may be amended to provide a lump sum payment to annuitants and 
 98.18  survivor benefit recipients who have been receiving annuities or 
 98.19  benefits for at least three years, payable three months 
 98.20  following the end of a fiscal year.  The payments shall only be 
 98.21  made if the investment income of the fund during the preceding 
 98.22  fiscal year was in excess of 5-1/2 percent of the asset value of 
 98.23  the fund at the end of that fiscal year.  The amount that each 
 98.24  eligible annuitant or benefit recipient shall be entitled to 
 98.25  receive shall be determined as follows: 
 98.26     (a) The years of service of each annuitant as credited by 
 98.27  the fund and the years of service of each person on behalf of 
 98.28  whom a survivor benefit is paid as credited by the fund shall be 
 98.29  totaled; 
 98.30     (b) The dollar amount equal to one-half of one percent of 
 98.31  the asset value of the fund at the end of the previous fiscal 
 98.32  year shall be determined; 
 98.33     (c) The dollar amount determined pursuant to clause (b) 
 98.34  shall be divided by the aggregate years of credited service 
 98.35  totaled pursuant to clause (a), the result to be considered the 
 98.36  bonus figure per year of service credit; 
 99.1      (d) For each eligible annuitant and benefit recipient, the 
 99.2   payment shall be equal to the bonus figure per year of service 
 99.3   credit determined pursuant to clause (c) multiplied by each year 
 99.4   of service credited for that person by the fund. 
 99.5      (2) A new paragraph may be added to Section 2 of Article IV 
 99.6   of the bylaws to provide that any active member of the fund with 
 99.7   service credit prior to July 1, 1978 who elects in the social 
 99.8   security referendum to become a coordinated member shall be 
 99.9   entitled to a retirement annuity when otherwise qualified, the 
 99.10  calculation of which shall utilize the formula specified in Laws 
 99.11  1977, Chapter 429, Section 61 for that portion of credited 
 99.12  service which was served prior to July 1, 1978 and the new 
 99.13  coordinated formula specified in the bylaws for the remainder of 
 99.14  credited service, both applied to the average salary as 
 99.15  specified in Paragraph 2 of Section 1 of Article IX.  The 
 99.16  formula percentages to be used in calculating the coordinated 
 99.17  portion of a retirement annuity on coordinated service shall 
 99.18  recognize the coordinated service as a continuation of any 
 99.19  service prior to July 1, 1978. 
 99.20     (3) (2) Paragraph 5 of Section 3 of Article IV of the 
 99.21  bylaws in effect on June 1, 1978 may be amended to provide that 
 99.22  the recomputation of a disability benefit in an amount equal to 
 99.23  a service pension shall occur when the member attains the age of 
 99.24  60 years and shall be recomputed without any reduction for early 
 99.25  retirement, and that if the disability terminates prior to age 
 99.26  60 the member shall be eligible for benefits as provided in 
 99.27  Paragraph 1 of Section 3 of Article IV and the years of service 
 99.28  and final average salary accrued to disability termination date 
 99.29  would be used as provided in Paragraph 5 of Section 3 of Article 
 99.30  IV of the bylaws in effect June 1, 1978 and that Paragraph 3 of 
 99.31  Section 4 of Article IV be amended to conform to this provision. 
 99.32     (4) (3) Article VIII of the bylaws in effect July 1, 1978 
 99.33  may be amended by adding a new section 5 providing augmentation 
 99.34  of benefits in the same manner as Minnesota Statutes 1978, 
 99.35  Section 354.55, Subdivision 11. 
 99.36     Sec. 11.  [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 
100.1   INCREASE FORMULAS.] 
100.2      In accordance with Minnesota Statutes, section 354A.12, 
100.3   subdivision 4, approval is granted for the Duluth teachers 
100.4   retirement fund association to amend its articles of 
100.5   incorporation or bylaws by increasing the formula percentage 
100.6   used in computing annuities for old law coordinated program 
100.7   members in the Duluth teachers retirement fund association to 
100.8   1.45 percent for each year of credited service. 
100.9      Sec. 12.  [REPEALER.] 
100.10     (a) Minnesota Statutes 1996, section 354A.12, subdivision 
100.11  2b, is repealed. 
100.12     (b) Laws 1985, chapter 259, section 3; and Laws 1993, 
100.13  chapter 336, article 3, section 1, are repealed. 
100.14     Sec. 13.  [EFFECTIVE DATES.] 
100.15     Sections 2 and 3 are effective for all salary paid on or 
100.16  after July 1, 1997.  Sections 1 and 4 to 12 are effective July 
100.17  1, 1997. 
100.18                             ARTICLE 4
100.19                MINNEAPOLIS POLICE AND FIREFIGHTERS
100.20     Section 1.  Minnesota Statutes 1996, section 423B.01, 
100.21  subdivision 9, is amended to read: 
100.22     Subd. 9.  [EXCESS INVESTMENT INCOME.] "Excess investment 
100.23  income" means the amount, if any, by which the average time 
100.24  weighted total rate of return earned by the fund in the most 
100.25  recent prior five fiscal years has exceeded the actual average 
100.26  percentage increase in the current monthly salary of a first 
100.27  grade patrol officer in the most recent prior five fiscal years 
100.28  plus two percent, and must be expressed as a dollar amount and.  
100.29  The amount may not exceed one percent of the total assets of the 
100.30  fund, except when the actuarial value of assets of the fund 
100.31  according to the most recent annual actuarial valuation prepared 
100.32  in accordance with sections 356.215 and 356.216 is greater than 
100.33  102 percent of its actuarial accrued liabilities, in which case 
100.34  the amount must not exceed 1-1/2 percent of the total assets of 
100.35  the fund, and does not exist unless the yearly average 
100.36  percentage increase of the time weighted total rate of return of 
101.1   the fund for the previous five years exceeds by two percent the 
101.2   yearly average percentage increase in monthly salary of a first 
101.3   grade patrol officer during the previous five calendar years. 
101.4      Sec. 2.  Minnesota Statutes 1996, section 423B.01 is 
101.5   amended by adding a new subdivision to read: 
101.6      Subd. 15.  [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 
101.7   or "actuarially equivalent" means the condition of one annuity 
101.8   or benefit having an equal actuarial present value as another 
101.9   annuity or benefit, determined as of a given date at a specified 
101.10  age with each actuarial present value based on the appropriate 
101.11  mortality table adopted by the board of directors based on the 
101.12  experience of the fund and approved by the actuary retained by 
101.13  the legislative commission on pensions and retirement and using 
101.14  the applicable preretirement or postretirement interest rate 
101.15  assumptions specified in section 356.216. 
101.16     Sec. 3.  Minnesota Statutes 1996, section 423B.06, is 
101.17  amended by adding a subdivision to read: 
101.18     Subd. 5.  [TAX LEVY.] Notwithstanding any provision of 
101.19  section 69.77 to the contrary, if in any year after the 
101.20  actuarial value of assets of the fund according to the most 
101.21  recent annual actuarial valuation prepared in accordance with 
101.22  sections 356.215 and 356.216 is greater than 102 percent of the 
101.23  actuarial accrued liabilities of the fund and subsequently the 
101.24  actuarial value of assets are less than 100 percent of the 
101.25  actuarial accrued liabilities, the city of Minneapolis is not 
101.26  required to levy a property tax to amortize any unfunded 
101.27  actuarial accrued liability unless the fund experiences two 
101.28  successive years when the actuarial value of assets are less 
101.29  than 100 percent of the actuarial accrued liabilities according 
101.30  to the most recent annual actuarial valuation prepared in 
101.31  accordance with sections 356.215 and 356.216. 
101.32     Sec. 4.  Minnesota Statutes 1996, section 423B.07, is 
101.33  amended to read: 
101.34     423B.07 [AUTHORIZED FUND DISBURSEMENTS.] 
101.35     The police pension fund may be used only for the payment of:
101.36     (1) service, disability, or dependency pensions; 
102.1      (2) notwithstanding a contrary provision of section 69.80, 
102.2   the salary of the secretary of the association in an amount not 
102.3   to exceed 30 percent of the base salary of a first grade patrol 
102.4   officer, the salary of the president of the association in an 
102.5   amount not to exceed ten percent of the base salary of a first 
102.6   grade patrol officer, and the salaries of the other elected 
102.7   members of the board of trustees in an amount not to exceed 
102.8   three units; 
102.9      (3) expenses of officers and employees of the association 
102.10  in connection with the protection of the fund; 
102.11     (4) expenses of operating and maintaining the association, 
102.12  including the administrative expenses related to the 
102.13  administration of the insurance plan authorized in section 
102.14  423B.08; 
102.15     (5) support for hospital and medical insurance for 
102.16  pensioners who have completed 20 years or more of service or 
102.17  permanent disabilitants and surviving spouses of deceased active 
102.18  members, disabilitants, or service pensioners who have completed 
102.19  20 years or more of service in an amount equal to one unit per 
102.20  month, to be added to the pension otherwise provided; 
102.21     (6) health and welfare benefits of one unit per month in 
102.22  addition to other benefits for members who retired after July 1, 
102.23  1980, and have completed 20 years or more of service or for 
102.24  members who are permanent disabilitants; and 
102.25     (7) (5) other expenses authorized by section 69.80, or 
102.26  other applicable law. 
102.27     Sec. 5.  Minnesota Statutes 1996, section 423B.09, 
102.28  subdivision 1, is amended to read: 
102.29     Subdivision 1.  [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 
102.30  RECEIVE PENSIONS.] The association shall grant pensions payable 
102.31  from the police pension fund in monthly installments to persons 
102.32  entitled to pensions in the manner and for the following 
102.33  purposes. 
102.34     (a) When the actuarial value of assets of the fund 
102.35  according to the most recent annual actuarial valuation 
102.36  performed in accordance with sections 356.215 and 356.216 is 
103.1   less than 90 percent of the actuarial accrued liabilities, an 
103.2   active member or a deferred pensioner who has performed duty as 
103.3   a member of the police department of the city for five years or 
103.4   more, upon written application after retiring from duty and 
103.5   reaching at least age 50, is entitled to be paid monthly for 
103.6   life a service pension equal to eight units.  For full years of 
103.7   service beyond five years, the service pension increases by 1.6 
103.8   units for each full year, to a maximum of 40 units.  When the 
103.9   actuarial value of assets of the fund according to the most 
103.10  recent annual actuarial valuation prepared in accordance with 
103.11  sections 356.215 and 356.216 is greater than 90 percent of 
103.12  actuarial accrued liabilities, active members, deferred members, 
103.13  and service pensioners are entitled to a service pension 
103.14  according to the following schedule: 
103.15                 5 years           8.0 units
103.16                 6 years           9.6 units
103.17                 7 years          11.2 units
103.18                 8 years          12.8 units
103.19                 9 years          14.4 units
103.20                10 years          16.0 units
103.21                11 years          17.6 units
103.22                12 years          19.2 units
103.23                13 years          20.8 units
103.24                14 years          22.4 units
103.25                15 years          24.0 units
103.26                16 years          25.6 units
103.27                17 years          27.2 units
103.28                18 years          28.8 units
103.29                19 years          30.4 units
103.30                20 years          34.0 units
103.31                21 years          35.6 units
103.32                22 years          37.2 units
103.33                23 years          38.8 units
103.34                24 years          40.4 units
103.35                25 years          42.0 units
103.36     Fractional years of service may not be used in computing 
104.1   pensions. 
104.2      (b) An active member who after five years' service but less 
104.3   than 20 years' service with the police department of the city, 
104.4   becomes superannuated so as to be permanently unable to perform 
104.5   the person's assigned duties, is entitled to be paid monthly for 
104.6   life a superannuation pension equal to two four units for five 
104.7   years of service and an additional two units for each full year 
104.8   of service over five years and less than 20 years. 
104.9      (c) An active member who is not eligible for a service 
104.10  pension and who, while a member of the police department of the 
104.11  city, becomes diseased or sustains an injury while in the 
104.12  service that permanently unfits the member for the performance 
104.13  of police duties is entitled to be paid monthly for life a 
104.14  pension equal to 32 34 units while so disabled. 
104.15     Sec. 6.  Minnesota Statutes 1996, section 423B.09, is 
104.16  amended by adding a subdivision to read: 
104.17     Subd. 6.  [OPTIONAL ANNUITIES.] A member who is retired or 
104.18  disabled on the effective date of this subdivision may elect an 
104.19  optional retirement annuity within 60 days of the effective date 
104.20  instead of the normal retirement annuity.  A member who retires 
104.21  or becomes disabled after the effective date of this subdivision 
104.22  may elect an optional retirement annuity prior to the receipt of 
104.23  any benefits.  The optional retirement annuity may be a 50 
104.24  percent, a 75 percent, or a 100 percent joint and survivor 
104.25  annuity without reinstatement in the event of the designated 
104.26  beneficiary predeceasing the member or a 50 percent, a 75 
104.27  percent, or a 100 percent joint and survivor annuity with 
104.28  reinstatement in the event of the designated beneficiary 
104.29  predeceasing the member.  Optional retirement annuity forms must 
104.30  be actuarially equivalent to the service pension and automatic 
104.31  survivor coverage otherwise payable to the retiring member and 
104.32  the member's beneficiaries.  Once selected, the optional annuity 
104.33  is irrevocable. 
104.34     Sec. 7.  Minnesota Statutes 1996, section 423B.10, 
104.35  subdivision 1, is amended to read: 
104.36     Subdivision 1.  [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 
105.1   surviving spouse of a deceased service pensioner, disability 
105.2   pensioner, deferred pensioner, superannuation pensioner, or 
105.3   active member, who was the legally married spouse of the 
105.4   decedent, residing with the decedent, and who was married while 
105.5   or before the time the decedent was on the payroll of the police 
105.6   department, and who, if the deceased member was a service or 
105.7   deferred pensioner, was legally married to the member for a 
105.8   period of at least one year before retirement from the police 
105.9   department, is entitled to a surviving spouse benefit.  The 
105.10  surviving spouse benefit is equal to 21 22 units per month if 
105.11  the person is the surviving spouse of a deceased active member 
105.12  or disabilitant.  The surviving spouse benefit is equal to six 
105.13  units per month, plus an additional one unit for each year of 
105.14  service to the credit of the decedent in excess of five years, 
105.15  to a maximum of 21 22 units per month, if the person is the 
105.16  surviving spouse of a deceased service pensioner, deferred 
105.17  pensioner, or superannuation pensioner.  The surviving spouse 
105.18  benefit is payable for the life of the surviving spouse. 
105.19     (b) A surviving child of a deceased service pensioner, 
105.20  disability pensioner, deferred pensioner, superannuation 
105.21  pensioner, or active member, who was living while the decedent 
105.22  was an active member of the police department or was born within 
105.23  nine months after the decedent terminated active service in the 
105.24  police department, is entitled to a surviving child benefit.  
105.25  The surviving child benefit is equal to eight units per month if 
105.26  the person is the surviving child of a deceased active member or 
105.27  disabilitant.  The surviving child benefit is equal to two units 
105.28  per month, plus an additional four-tenths of one unit per month 
105.29  for each year of service to the credit of the decedent in excess 
105.30  of five years, to a maximum of eight units, if the person is the 
105.31  surviving child of a deceased service pensioner, deferred 
105.32  pensioner, or superannuation pensioner.  The surviving child 
105.33  benefit is payable until the person attains age 18, or, if in 
105.34  full-time attendance during the normal school year, in a school 
105.35  approved by the board of directors, until the person receives a 
105.36  bachelor's degree or attains the age of 22 years, whichever 
106.1   occurs first.  In the event of the death of both parents leaving 
106.2   a surviving child or children entitled to a surviving child 
106.3   benefit as determined in this paragraph, the surviving child is, 
106.4   or the surviving children are, entitled to a surviving child 
106.5   benefit in such sums as determined by the board of directors to 
106.6   be necessary for the care and education of such surviving child 
106.7   or children, but not to exceed the family maximum benefit per 
106.8   month, to the children of any one family.  
106.9      (c) The surviving spouse and surviving child benefits are 
106.10  subject to a family maximum benefit.  The family maximum benefit 
106.11  is 40 41 units per month. 
106.12     (d) A surviving spouse who is otherwise not qualified may 
106.13  receive a benefit if the surviving spouse was married to the 
106.14  decedent for a period of five years and was residing with the 
106.15  decedent at the time of death.  The surviving spouse benefit is 
106.16  the same as that provided in paragraph (a), except that if the 
106.17  surviving spouse is younger than the decedent, the surviving 
106.18  spouse benefit must be actuarially equivalent to a surviving 
106.19  spouse benefit that would have been paid to the member's spouse 
106.20  had the member been married to a person of the same age or a 
106.21  greater age than the member's age before retirement. 
106.22     Sec. 8.  Minnesota Statutes 1996, section 423B.15, 
106.23  subdivision 2, is amended to read: 
106.24     Subd. 2.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
106.25  board of trustees of the relief association shall determine by 
106.26  May 1 of each year whether or not the fund has excess investment 
106.27  income.  The amount of excess investment income, if any, must be 
106.28  stated as a dollar amount and reported by the chief 
106.29  administrative officer of the relief association to the mayor 
106.30  and governing body of the city, the state auditor, the 
106.31  commissioner of finance, and the executive director of the 
106.32  legislative commission on pensions and retirement.  The dollar 
106.33  amount of excess investment income up to one percent of the 
106.34  assets of the fund, except when the actuarial value of assets of 
106.35  the fund according to the most recent annual actuarial valuation 
106.36  prepared in accordance with sections 356.215 and 356.216 is 
107.1   greater than 102 percent of its actuarial accrued liabilities in 
107.2   which case the amount may not exceed 1-1/2 percent of the assets 
107.3   of the fund, must be applied for the purpose specified in 
107.4   subdivision 3.  Excess investment income must not be considered 
107.5   as income to or assets of the fund for actuarial valuations of 
107.6   the fund for that year under sections 69.77, 356.215, and 
107.7   356.216 and the provisions of this section except to offset the 
107.8   annual postretirement payment.  Additional investment income is 
107.9   any realized or unrealized investment income other than the 
107.10  excess investment income and must be included in the actuarial 
107.11  valuations performed under sections 69.77, 356.215, and 356.216 
107.12  and the provisions of this section. 
107.13     Sec. 9.  Minnesota Statutes 1996, section 423B.15, 
107.14  subdivision 3, is amended to read: 
107.15     Subd. 3.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
107.16  amount determined under subdivision 2 must be applied in 
107.17  accordance with this subdivision.  When the actuarial value of 
107.18  assets of the fund according to the most recent annual actuarial 
107.19  valuation prepared in accordance with sections 356.215 and 
107.20  356.216 is less than 102 percent of its total actuarial 
107.21  liabilities, the relief association shall apply the first 
107.22  one-half of excess investment income to the payment of an annual 
107.23  postretirement payment as specified in this subdivision. and the 
107.24  second one-half of excess investment income up to one-half of 
107.25  one percent of the assets of the fund must be applied to reduce 
107.26  the state amortization state aid or supplementary amortization 
107.27  state aid payments otherwise due to the relief association under 
107.28  section 423A.02 for the current calendar year.  When the 
107.29  actuarial value of assets of the fund according to the most 
107.30  recent annual actuarial valuation prepared in accordance with 
107.31  sections 356.215 and 356.216 is less than 102 percent funded and 
107.32  other conditions are met, the relief association shall pay an 
107.33  annual postretirement payment to all eligible members in an 
107.34  amount not to exceed one-half of one percent of the assets of 
107.35  the fund.  When the actuarial value of assets of the fund 
107.36  according to the most recent annual actuarial valuation prepared 
108.1   in accordance with sections 356.215 and 356.216 is greater than 
108.2   102 percent of its actuarial accrued liabilities, the relief 
108.3   association shall pay an annual postretirement payment to all 
108.4   eligible members in an amount not to exceed 1-1/2 percent of the 
108.5   assets of the fund.  Payment of the annual postretirement 
108.6   payment must be in a lump sum amount on June 1 following the 
108.7   determination date in any year.  Payment of the annual 
108.8   postretirement payment may be made only if the average time 
108.9   weighted total rate of return for the most recent prior five 
108.10  years exceeds by two percent the actual average percentage 
108.11  increase in the current monthly salary of a top grade patrol 
108.12  officer in the most recent prior five fiscal years.  The total 
108.13  amount of all payments to members may not exceed the amount 
108.14  determined under this subdivision.  Payment to each eligible 
108.15  member must be calculated by dividing the total number of 
108.16  pension units to which eligible members are entitled into the 
108.17  excess investment income available for distribution to members, 
108.18  and then multiplying that result by the number of units to which 
108.19  each eligible member is entitled to determine each eligible 
108.20  member's annual postretirement payment.  When the actuarial 
108.21  value of assets of the fund according to the most recent annual 
108.22  actuarial valuation prepared in accordance with sections 356.215 
108.23  and 356.216 is less than 102 percent of its actuarial accrued 
108.24  liabilities, payment to each eligible member may not exceed an 
108.25  amount equal to the total monthly benefit that the eligible 
108.26  member was entitled to in the prior year under the terms of the 
108.27  benefit plan of the relief association or each eligible member's 
108.28  proportionate share of the excess investment income, whichever 
108.29  is less.  When the actuarial value of assets of the fund 
108.30  according to the most recent annual actuarial valuation prepared 
108.31  in accordance with sections 356.215 and 356.216 is greater than 
108.32  102 percent of its actuarial accrued liabilities, payment to 
108.33  each eligible member must not exceed the member's proportionate 
108.34  share of 1-1/2 percent of the assets of the fund. 
108.35     A person who received a pension or benefit for the entire 
108.36  12 months before the determination date is eligible for a full 
109.1   annual postretirement payment.  A person who received a pension 
109.2   or benefit for less than 12 months before the determination date 
109.3   is eligible for a prorated annual postretirement payment. 
109.4      Sec. 10.  Minnesota Statutes 1996, section 423B.15, 
109.5   subdivision 6, is amended to read: 
109.6      Subd. 6.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
109.7   No provision of or payment made under this section may be 
109.8   interpreted or relied upon by any member of the relief 
109.9   association to guarantee or entitle a member to annual 
109.10  postretirement payments for a period when no excess investment 
109.11  income is earned by the fund.  If the actuarial value of assets 
109.12  of the fund according to the most recent annual actuarial 
109.13  valuation prepared in accordance with sections 356.215 and 
109.14  356.216 is less than 102 percent of its actuarial accrued 
109.15  liabilities, the distribution of assets under this section must 
109.16  not exceed one-half of one percent. 
109.17     Sec. 11.  Minnesota Statutes 1996, section 423B.15, is 
109.18  amended by adding a subdivision to read: 
109.19     Subd. 7.  [ANNUAL ACTUARIAL VALUATION DATE.] 
109.20  Notwithstanding any provision of section 69.77, subdivision 2h, 
109.21  356.215 or 356.216 to the contrary, the annual actuarial 
109.22  valuation of the fund must be completed by May 1 of each year. 
109.23     Sec. 12.  Laws 1965, chapter 519, section 1, as amended by 
109.24  Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, 
109.25  section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 
109.26  164, section 2; Laws 1990, chapter 589, article 1, section 5; 
109.27  Laws 1992, chapter 454, section 2; and Laws 1994, chapter 591, 
109.28  article 1, section 1, is amended to read: 
109.29     Section 1.  [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF 
109.30  ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding 
109.31  the provisions of Minnesota Statutes 1965, Section 69.48, to the 
109.32  contrary, when a service pensioner, disability pensioner, or 
109.33  deferred pensioner, or an active member of a relief association 
109.34  dies, leaving: 
109.35     (1) A surviving spouse who was a legally married spouse, 
109.36  residing with the decedent, and who was married while or prior 
110.1   to the time the decedent was on the payroll of the fire 
110.2   department in the case of a deceased active member; and who, in 
110.3   case the deceased member was a service or deferred pensioner was 
110.4   legally married to the member at least five years before death; 
110.5   or 
110.6      (2) A child or children who were living while the deceased 
110.7   was on the payroll of the fire department, or born within nine 
110.8   months after the decedent was withdrawn from the payroll of the 
110.9   fire department, the surviving spouse and the child or children 
110.10  shall be entitled to a pension or pensions, as follows: 
110.11     (a) To the surviving spouse, a pension of not less than 17 
110.12  units, and not to exceed the total of 22 units per month, as the 
110.13  bylaws of the association provide, for life; provided, that if 
110.14  the spouse shall remarry then the pension shall cease and 
110.15  terminate as of the date of remarriage; provided, further, if 
110.16  the remarriage terminates for any reason, the surviving spouse 
110.17  shall again be entitled to a pension as the bylaws of the 
110.18  association provide; 
110.19     (b) To the child or children, if their other parent is 
110.20  living, a pension of not to exceed eight units per month for 
110.21  each child up to the time each child reaches the age of not less 
110.22  than 16 years and not to exceed an age of 18 years; provided, 
110.23  however, upon approval by the board of trustees, such a child 
110.24  who is a full-time student, upon proof of compliance with the 
110.25  provisions of this act, may be entitled to such pension so long 
110.26  as the child is a full-time student and has not reached 22 years 
110.27  of age, all in conformity with the bylaws of the association; 
110.28  provided, further, the total pensions hereunder for the 
110.29  surviving spouse and children of the deceased member shall not 
110.30  exceed the sum of 41 units per month; 
110.31     (c) A child or children of a deceased member after the 
110.32  death of their other parent, or in the event their other parent 
110.33  predeceases the member, be entitled to receive a pension or 
110.34  pensions in such amount as the board of trustees of the 
110.35  association shall deem necessary to properly support the child 
110.36  or children until they reach the age of not less than 16 and not 
111.1   more than 18 years; provided, however, upon approval by the 
111.2   board of trustees, such a child who is a full-time student, upon 
111.3   proof of compliance with the provisions of this act, may be 
111.4   entitled to such pension so long as the child is a full-time 
111.5   student and has not reached 22 years of age, as the bylaws of 
111.6   the association may provide; but the total amount of the pension 
111.7   or pensions hereunder for any child or children shall not exceed 
111.8   the sum of 41 units per month; 
111.9      (d) For the purposes of this act, a full-time student is 
111.10  defined as an individual who is in full-time attendance as a 
111.11  student at an educational institution.  Whether or not the 
111.12  student was in full-time attendance would be determined by the 
111.13  board of trustees of the association in the light of the 
111.14  standards and practices of the school involved.  Specifically 
111.15  excluded is a person who is paid by the person's employer while 
111.16  attending school at the request of the person's employer.  
111.17  Benefits may continue during any period of four calendar months 
111.18  or less in any 12 month period in which a person does not attend 
111.19  school if the person shows to the satisfaction of the board of 
111.20  trustees that the person intends to continue in full-time school 
111.21  attendance immediately after the end of the period.  An 
111.22  educational institution is defined so as to permit the payment 
111.23  of benefits to students taking vocational or academic courses in 
111.24  all approved, accredited or licensed schools, colleges, and 
111.25  universities.  The board of trustees shall make the final 
111.26  determination of eligibility for benefits if any question arises 
111.27  concerning the approved status of the educational institution 
111.28  which the student attends or proposes to attend; 
111.29     (e) In the event that a child who is receiving a pension as 
111.30  provided above shall marry before the age of 22 years, the 
111.31  pension shall cease as of the date of the marriage.; and 
111.32     (f) A surviving spouse of a deceased service pensioner, 
111.33  disability pensioner, deferred pensioner, or service pensioner 
111.34  who is otherwise not qualified may receive a benefit if the 
111.35  surviving spouse was legally married to the decedent for a 
111.36  period of five years and was residing with the decedent at the 
112.1   time of death.  The surviving spouse benefit is the same as that 
112.2   provided under paragraph (a), except that if the surviving 
112.3   spouse is younger than the decedent, the surviving spouse 
112.4   benefit must be actuarially equivalent to a surviving spouse 
112.5   benefit that would have been paid to the member's spouse had the 
112.6   member been married to a person of the same age or a greater age 
112.7   than the member's age prior to retirement.  A benefit paid under 
112.8   this paragraph may be less than 17 units, notwithstanding the 17 
112.9   unit minimum established under paragraph (a). 
112.10     Sec. 13.  Laws 1989, chapter 319, article 19, section 7, 
112.11  subdivision 1, as amended by Laws 1992, chapter 471, article 2, 
112.12  section 5, and Laws 1996, chapter 438, article 4, section 12, is 
112.13  amended to read: 
112.14     Subdivision 1.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF 
112.15  ASSOCIATION; DEFINITIONS.] For the purposes of this section, 
112.16  each of the terms in this subdivision have the meanings given 
112.17  them in paragraphs (a) to (h). 
112.18     (a) "Annual postretirement payment" means the payment of a 
112.19  lump sum postretirement benefit to an eligible member on June 1 
112.20  following the determination date in any year. 
112.21     (b) "City" means the city of Minneapolis. 
112.22     (c) "Determination date" means December 31 of each year. 
112.23     (d) "Eligible member" means a person, including a service 
112.24  pensioner, a disability pensioner, a survivor, or dependent of a 
112.25  deceased active member, service pensioner, or disability 
112.26  pensioner, who received a pension or benefit from the relief 
112.27  association during the 12 months before the determination date.  
112.28  A person who received a pension or benefit for the entire 12 
112.29  months before the determination date is eligible for a full 
112.30  annual postretirement payment.  A person who received a pension 
112.31  or benefit for less than 12 months before the determination date 
112.32  is eligible for a prorated annual postretirement payment. 
112.33     (e) "Excess investment income" means the amount by which 
112.34  the average time weighted total rate of return earned by the 
112.35  fund in the most recent prior five fiscal years has exceeded the 
112.36  actual average percentage increase in the current monthly salary 
113.1   of a top grade firefighter in the most recent prior five fiscal 
113.2   years plus two percent.  The excess investment income must be 
113.3   expressed as a dollar amount and may not exceed one percent of 
113.4   the total assets of the fund, except when the actuarial value of 
113.5   assets of the fund according to the most recent annual actuarial 
113.6   valuation prepared in accordance with Minnesota Statutes, 
113.7   sections 356.215 and 356.216 is greater than 102 percent of its 
113.8   actuarial accrued liabilities in which case the amount must not 
113.9   exceed 1-1/2 percent of the assets of the funds. 
113.10     (f) "Fund" means the Minneapolis fire department relief 
113.11  association. 
113.12     (g) "Relief association" means the Minneapolis fire 
113.13  department relief association.  
113.14     (h) "Time weighted total rate of return" means the 
113.15  percentage amount determined by using the formula or formulas 
113.16  established by the state board of investment under Minnesota 
113.17  Statutes, section 11A.04, clause (11), and in effect on January 
113.18  1, 1987. 
113.19     Sec. 14.  Laws 1989, chapter 319, article 19, section 7, 
113.20  subdivision 3, is amended to read: 
113.21     Subd. 3.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
113.22  board of trustees of the relief association shall determine by 
113.23  May 1 of each year whether or not the relief association has 
113.24  excess investment income.  The amount of excess investment 
113.25  income, if any, must be stated as a dollar amount and reported 
113.26  by the chief administrative officer of the relief association to 
113.27  the mayor and governing body of the city, the state auditor, the 
113.28  commissioner of finance, and the executive director of the 
113.29  legislative commission on pensions and retirement.  The dollar 
113.30  amount of excess investment income up to one percent of the 
113.31  assets of the fund, except if the actuarial value of assets of 
113.32  the fund according to the most recent annual actuarial valuation 
113.33  prepared in accordance with Minnesota Statutes, sections 356.215 
113.34  and 356.216 is greater than 102 percent of its actuarial accrued 
113.35  liabilities, must be applied for the purpose specified in 
113.36  subdivision 4.  Excess investment income must not be considered 
114.1   as income to or assets of the fund for actuarial valuations of 
114.2   the fund for that year under sections 69.77, 356.215, and 
114.3   356.216 and the provisions of this section except to offset the 
114.4   annual postretirement payment.  Additional investment income is 
114.5   any realized or unrealized investment income other than the 
114.6   excess investment income and must be included in the actuarial 
114.7   valuations performed under sections 69.77, 356.215, and 356.216 
114.8   and the provisions of this section. 
114.9      Sec. 15.  Laws 1989, chapter 319, article 19, section 7, 
114.10  subdivision 4, as amended by Laws 1990, chapter 570, article 12, 
114.11  section 63, Laws 1992, chapter 471, article 2, section 6, and 
114.12  Laws 1996, chapter 438, article 4, section 13, is amended to 
114.13  read: 
114.14     Subd. 4.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
114.15  amount determined under subdivision 3 must be applied in 
114.16  accordance with this subdivision.  When the actuarial value of 
114.17  assets of the fund according to the most recent annual actuarial 
114.18  valuation prepared in accordance with Minnesota Statutes, 
114.19  sections 356.215 and 356.216 is less than 102 percent of its 
114.20  actuarial accrued liabilities, the relief association shall 
114.21  apply the first one-half of one percent of assets which 
114.22  constitute excess investment income to the payment of an annual 
114.23  postretirement payment as specified in this subdivision. and the 
114.24  second one-half of one percent of assets which constitute excess 
114.25  investment income shall be applied to reduce the state 
114.26  amortization state aid or supplementary amortization state aid 
114.27  payments otherwise due to the relief association under section 
114.28  423A.02 for the current calendar year.  When the actuarial value 
114.29  of assets of the fund according to the most recent annual 
114.30  actuarial valuation prepared in accordance with Minnesota 
114.31  Statutes, sections 356.215 and 356.216 is less than 102 percent 
114.32  of its actuarial accrued liabilities, the relief association 
114.33  shall pay an annual postretirement payment to all eligible 
114.34  members in an amount not to exceed one-half of one percent of 
114.35  the assets of the fund.  Payment of the annual postretirement 
114.36  payment must be in a lump sum amount on June 1 following the 
115.1   determination date in any year.  When the actuarial value of 
115.2   assets of the fund according to the most recent annual actuarial 
115.3   valuation prepared in accordance with Minnesota Statutes, 
115.4   sections 356.215 and 356.216 is greater than 102 percent of its 
115.5   actuarial accrued liabilities, the relief association shall pay 
115.6   an annual postretirement payment to all eligible members in an 
115.7   amount not to exceed 1-1/2 percent of the assets of the fund.  
115.8   Payment of the annual postretirement payment may be made only if 
115.9   the average time weighted total rate of return in the most 
115.10  recent prior five fiscal years exceeds by two percent the actual 
115.11  average percentage increase in the current monthly salary of a 
115.12  top grade firefighter in the most recent prior five fiscal 
115.13  years.  The total amount of all payments to members may not 
115.14  exceed the amount determined under subdivision 3.  Payment to 
115.15  each eligible member must be calculated by dividing the total 
115.16  number of pension units to which eligible members are entitled 
115.17  into the excess investment income available for distribution to 
115.18  members, and then multiplying that result by the number of units 
115.19  to which each eligible member is entitled to determine each 
115.20  eligible member's annual postretirement payment.  When the fund 
115.21  actuarial value of assets according to the most recent annual 
115.22  actuarial valuation prepared in accordance with Minnesota 
115.23  Statutes, sections 356.215 and 356.216 is less than 102 percent 
115.24  of its actuarial accrued liabilities, payment to each eligible 
115.25  member may not exceed an amount equal to the total monthly 
115.26  benefit that the eligible member was entitled to in the prior 
115.27  year under the terms of the benefit plan of the relief 
115.28  association or each eligible member's proportionate share of the 
115.29  excess investment income, whichever is less.  When the actuarial 
115.30  value of assets of the fund according to the most recent annual 
115.31  actuarial valuation prepared in accordance with Minnesota 
115.32  Statutes, sections 356.215 and 356.216 is greater than 102 
115.33  percent of its actuarial accrued liabilities, payment to each 
115.34  eligible member may not exceed the member's proportionate share 
115.35  of 1-1/2 percent of assets of the fund. 
115.36     Sec. 16.  Laws 1989, chapter 319, article 19, section 7, 
116.1   subdivision 7, is amended to read: 
116.2      Subd. 7.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
116.3   No provision of or payment made under this section may be 
116.4   interpreted or relied upon by any member of the relief 
116.5   association to guarantee or entitle a member to annual 
116.6   postretirement payments for a period when no excess investment 
116.7   income is earned by the fund.  If the actuarial value of assets 
116.8   of the fund according to the most recent annual actuarial 
116.9   valuation prepared in accordance with Minnesota Statutes, 
116.10  sections 356.215 and 356.216 is less than 102 percent of its 
116.11  actuarial accrued liabilities, a distribution of the fund assets 
116.12  must not exceed one-half of one percent. 
116.13     Sec. 17.  Laws 1993, chapter 125, article 1, section 1, is 
116.14  amended to read: 
116.15     Section 1.  [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.] 
116.16     Notwithstanding the provisions of Minnesota Statutes, 
116.17  section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, 
116.18  chapter 607, article XV, section 9, to the contrary, when the 
116.19  actuarial value of assets of the fund according to the most 
116.20  recent annual actuarial valuation prepared in accordance with 
116.21  Minnesota Statutes, sections 356.215 and 356.216 is less than 90 
116.22  percent of its actuarial accrued liabilities, the service 
116.23  pensions payable by the Minneapolis fire department relief 
116.24  association for members terminating active service as a 
116.25  Minneapolis firefighter after June 1, 1993, must be computed as 
116.26  follows: 
116.27              length of                   service 
116.28          credited service            pension payable
116.29              10 years                  16.0 units
116.30              11 years                  17.6 units
116.31              12 years                  19.2 units
116.32              13 years                  20.8 units
116.33              14 years                  22.4 units
116.34              15 years                  24.0 units
116.35              16 years                  25.6 units
116.36              17 years                  27.2 units
117.1               18 years                  28.8 units
117.2               19 years                  30.4 units
117.3               20 years                  33.0 units
117.4               21 years                  34.6 units
117.5               22 years                  36.2 units
117.6               23 years                  37.8 units
117.7               24 years                  39.4 units
117.8               25 years                  41.0 units
117.9      When the actuarial value of assets of the fund according to 
117.10  the most recent annual actuarial valuation prepared in 
117.11  accordance with Minnesota Statutes, sections 356.215 and 356.216 
117.12  is of greater than 90 percent of actuarial accrued liabilities, 
117.13  the following schedule applies to all active members and retired 
117.14  service pensioners who otherwise met the then existing 
117.15  requirements to receive a benefit: 
117.16              length of                   service 
117.17          credited service            pension payable
117.18               5 years                   8.0 units
117.19               6 years                   9.6 units
117.20               7 years                  11.2 units
117.21               8 years                  12.8 units
117.22               9 years                  14.4 units
117.23              10 years                  16.0 units
117.24              11 years                  17.6 units
117.25              12 years                  19.2 units
117.26              13 years                  20.8 units
117.27              14 years                  22.4 units
117.28              15 years                  24.0 units
117.29              16 years                  25.6 units
117.30              17 years                  27.2 units
117.31              18 years                  28.8 units
117.32              19 years                  30.4 units
117.33              20 years                  33.0 33.5 units
117.34              21 years                  34.6 35.1 units
117.35              22 years                  36.2 37.7 units
117.36              23 years                  37.8 38.3 units
118.1               24 years                  39.4 39.9 units
118.2               25 years                  41.0 41.5 units
118.3      When the actuarial value of assets of the fund according to 
118.4   the most recent annual actuarial valuation prepared in 
118.5   accordance with Minnesota Statutes, sections 356.215 and 356.216 
118.6   is of greater than 92.5 percent of actuarial accrued 
118.7   liabilities, the following schedule applies to all active 
118.8   members and retired service pensioners who otherwise met the 
118.9   then existing requirements to receive a benefit: 
118.10              length of                   service 
118.11          credited service            pension payable
118.12               5 years                   8.0 units
118.13               6 years                   9.6 units
118.14               7 years                  11.2 units
118.15               8 years                  12.8 units
118.16               9 years                  14.4 units
118.17              10 years                  16.0 units
118.18              11 years                  17.6 units
118.19              12 years                  19.2 units
118.20              13 years                  20.8 units
118.21              14 years                  22.4 units
118.22              15 years                  24.0 units
118.23              16 years                  25.6 units
118.24              17 years                  27.2 units
118.25              18 years                  28.8 units
118.26              19 years                  30.4 units
118.27              20 years                  34.0 units
118.28              21 years                  35.6 units
118.29              22 years                  37.2 units
118.30              23 years                  38.8 units
118.31              24 years                  40.4 units
118.32              25 years                  42.0 units
118.33     Sec. 18.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; 
118.34  OPTIONAL ANNUITIES.] 
118.35     A member of the Minneapolis fire department relief 
118.36  association who is retired or disabled on the effective date of 
119.1   this section may elect an optional retirement annuity within 60 
119.2   days of the effective date instead of the normal retirement 
119.3   pension.  A member who retires or becomes disabled after the 
119.4   effective date of this section may elect an optional retirement 
119.5   annuity prior to the receipt of any benefits.  The optional 
119.6   retirement annuity may be a 50 percent, a 75 percent, or a 100 
119.7   percent joint and survivor annuity without reinstatement in the 
119.8   event of the designated beneficiary predeceasing the member or a 
119.9   joint and survivor annuity with reinstatement in the event of 
119.10  the designated beneficiary predeceasing the member.  An optional 
119.11  retirement annuity must be actuarially equivalent to the service 
119.12  pension and automatic survivor coverage otherwise payable to the 
119.13  retiring member and the member's beneficiaries.  Once selected, 
119.14  the optional annuity is irrevocable. 
119.15     Sec. 19.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION 
119.16  TAX LEVY.] 
119.17     If in any year after the Minneapolis fire department relief 
119.18  actuarial value of assets of the association according to the 
119.19  most recent annual actuarial valuation prepared in accordance 
119.20  with Minnesota Statutes, sections 356.215 and 356.216 is greater 
119.21  than 102 percent of the actuarial accrued liabilities of the 
119.22  fund and subsequently the actuarial value of assets are less 
119.23  than 100 percent of the actuarial accrued liabilities according 
119.24  to the most recent annual actuarial valuation prepared in 
119.25  accordance with Minnesota Statutes, sections 356.215 and 
119.26  356.216, the city of Minneapolis is not required to levy a 
119.27  property tax to fund any deficit unless the fund has two 
119.28  successive years when the actuarial value of assets are less 
119.29  than 100 percent of the actuarial accrued liabilities according 
119.30  to the most recent annual actuarial valuation prepared in 
119.31  accordance with Minnesota Statutes, sections 356.215 and 356.216.
119.32     Sec. 20.  [ACTUARIAL VALUATION DATE.] 
119.33     Notwithstanding Minnesota Statutes, section 69.77, 
119.34  subdivision 2h, 356.215 or 356.216, the annual actuarial 
119.35  valuation of the Minneapolis fire department relief association 
119.36  must be completed by May 1 of each year. 
120.1      Sec. 21.  [ACTUARIAL EQUIVALENT.] 
120.2      For the purposes of the Minneapolis fire department relief 
120.3   association, "actuarial equivalent" or "actuarially equivalent" 
120.4   means the condition of one annuity or benefit having an equal 
120.5   actuarial present value as another annuity or benefit, 
120.6   determined as of a given date at a specified age with each 
120.7   actuarial present value based on the appropriate mortality table 
120.8   adopted by the board of directors based on the experience of the 
120.9   fund and approved by the actuary retained by the legislative 
120.10  commission on pensions and retirement and using the applicable 
120.11  preretirement or postretirement interest rate assumptions 
120.12  specified in Minnesota Statutes, section 356.216. 
120.13     Sec. 22.  [BENEFIT EXCHANGE.] 
120.14     The one unit health and welfare benefit granted to members 
120.15  of the Minneapolis fire department relief association in Laws 
120.16  1980, chapter 667, article XV, section 9, who retired after July 
120.17  1, 1980, must be reduced by one-half unit upon the 
120.18  implementation of the benefit improvement in section 17 when the 
120.19  actuarial value of assets of the fund according to the most 
120.20  recent annual actuarial valuation report under Minnesota 
120.21  Statutes, sections 356.215 and 356.216 exceeds 90 percent of its 
120.22  actuarial accrued liabilities and the benefit must be eliminated 
120.23  when the actuarial value of assets of the fund exceeds 92.5 
120.24  percent of its actuarial accrued liabilities and the benefit in 
120.25  section 15 is fully implemented. 
120.26     Sec. 23.  [EFFECTIVE DATE.] 
120.27     The sections of this article are effective on the day after 
120.28  compliance by the governing body of the city of Minneapolis with 
120.29  Minnesota Statutes, section 645.021, subdivision 2.  Section 4 
120.30  is effective when the provisions of section 5 take effect.  The 
120.31  disability pension and superannuation pension unit amount change 
120.32  in section 5 is effective only when section 4 takes effect.  
120.33  Sections 7 and 12 are effective retroactive to July 1, 1996 and 
120.34  apply to all current spouses of members, except that the unit 
120.35  increases for surviving spouses in section 7 shall not otherwise 
120.36  increase the surviving spouse benefit beyond 22 units.