1st Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to retirement; statewide and major local 1.3 public pension plans; making various changes of an 1.4 administrative nature; setting various limitations and 1.5 requirements for public employees police and fire 1.6 retirement plan disability benefit applications; 1.7 resolving one person and small group pension problems; 1.8 reducing the early retirement age for the judges 1.9 retirement plan; authorizing a shorter vesting 1.10 schedule for the Marine on St. Croix Volunteer 1.11 Firefighters Relief Association; revising the salary 1.12 maximum for the executive secretary of the Minneapolis 1.13 Firefighters Relief Association; permitting single 1.14 Teachers Retirement Association members to make 1.15 survivor benefit designations; authorizing retirement 1.16 coverage discontinuation by an elected county 1.17 official; revising the manner in which actuarial 1.18 services to the Legislative Commission on Pensions and 1.19 Retirement are provided; continuing retirement 1.20 coverage by the general employees retirement plan of 1.21 the Public Employees Retirement Association for Anoka 1.22 County Achieve Program and the Government Training 1.23 Services; including in privatized public employee 1.24 retirement coverage employees of the Fair Oaks Lodge, 1.25 Wadena, and RenVilla Nursing Home; extending the 1.26 expiration date on certain prior military service 1.27 credit purchases; temporarily exempting Metropolitan 1.28 Airports Commission police from reemployed annuitant 1.29 earnings limitation; ratifying certain Bellingham 1.30 volunteer firefighter relief association annuity 1.31 purchases; including the Lake Johanna fire department 1.32 employees in Public Employees Retirement Association 1.33 coverage; limiting the covered salary of school 1.34 district superintendents and administrators for 1.35 pension purposes; expanding the health care savings 1.36 plan; modifying the department of transportation 1.37 pilots retirement plan; creating a statewide volunteer 1.38 firefighter retirement plan study task force; 1.39 authorizing shorter vesting periods for defined 1.40 contribution volunteer firefighter relief 1.41 associations; modifying Minneapolis Police Relief 1.42 Association provisions; appropriating money; amending 1.43 Minnesota Statutes 2002, sections 3A.03, subdivision 1.44 2; 69.77, subdivision 4; 352.01, subdivision 13; 1.45 352.03, subdivision 6; 352.113, subdivisions 4, 6, 8, 1.46 by adding a subdivision; 352.12, subdivisions 1, 6; 2.1 352.22, subdivisions 2, 3; 352.27; 352.275, 2.2 subdivision 1; 352.86, subdivision 1; 352.95, 2.3 subdivisions 1, 2, 4; 352.98; 352B.01, subdivisions 2.4 3a, 11, by adding a subdivision; 352B.02, subdivision 2.5 1e; 352B.10, subdivisions 1, 2, 3, 4, 5; 352B.105; 2.6 352B.11, subdivisions 1, 2, by adding subdivisions; 2.7 352D.065, subdivision 2; 352D.075, subdivisions 2, 3, 2.8 by adding a subdivision; 353.01, subdivisions 2b, 10, 2.9 12a, 12b, 16, 16a; 353.03, subdivision 3a; 353.33, 2.10 subdivisions 4, 6, 6b, 7, by adding a subdivision; 2.11 353.37, subdivision 3, by adding a subdivision; 2.12 353.656, subdivision 5, by adding subdivisions; 2.13 354.05, subdivisions 2, 22, 35; 354.06, subdivision 2.14 2a; 354.07, subdivision 9; 354.091; 354.096, 2.15 subdivision 1; 354.42, subdivision 7; 354.44, 2.16 subdivisions 4, 5; 354.46, subdivisions 2, 2b, 5, by 2.17 adding a subdivision; 354.48, subdivisions 2, 4, 6, 2.18 6a, 10; 354.51, subdivision 5; 354.52, subdivisions 2.19 4a, 6, by adding a subdivision; 354.53; 354.533, 2.20 subdivision 1; 354.66, subdivision 2; 354A.011, 2.21 subdivision 24; 354A.021, subdivision 7; 354A.093; 2.22 354A.094, subdivision 3; 354A.097, subdivision 1; 2.23 354A.36, subdivisions 4, 6; 354B.20, subdivisions 4, 2.24 6; 354B.23, subdivision 1; 354B.32; 354C.11, 2.25 subdivision 2; 356.215, subdivisions 2, 18; 356.216; 2.26 356.302, subdivision 3; 356.441; 356.611, subdivision 2.27 2, by adding subdivisions; 422A.06, subdivision 2; 2.28 422A.18, subdivisions 1, 4; 423B.01,subdivision 12; 2.29 423B.09, subdivisions 1, 4, by adding a subdivision; 2.30 423B.10, subdivision 1; 423B.15, subdivision 3; 2.31 423C.05, subdivisions 4, 5, 6, by adding a 2.32 subdivision; 424A.02, subdivisions 2, 7; 490.121, 2.33 subdivision 10, by adding a subdivision; 490.124, 2.34 subdivision 12; Minnesota Statutes 2003 Supplement, 2.35 sections 353.01, subdivision 6; 353F.02, subdivision 2.36 4; 423C.03, subdivision 3; Laws 1999, chapter 222, 2.37 article 16, section 16, as amended; Laws 2000, chapter 2.38 461, article 4, section 4, as amended; proposing 2.39 coding for new law in Minnesota Statutes, chapters 2.40 352F; 353F; 356; 423B; repealing Minnesota Statutes 2.41 2002, sections 3.85, subdivisions 11, 12; 352D.02, 2.42 subdivision 5; 353.33, subdivision 5b; 354A.107; 2.43 356.217; 490.11. 2.44 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.45 ARTICLE 1 2.46 MEMBERSHIP ISSUES 2.47 Section 1. Minnesota Statutes 2002, section 353.01, 2.48 subdivision 2b, is amended to read: 2.49 Subd. 2b. [EXCLUDED EMPLOYEES.] The following public 2.50 employees are not eligible to participate as members of the 2.51 association with retirement coverage by the public employees 2.52 retirement plan, the local government correctional employees 2.53 retirement plan under chapter 353E, or the public employees 2.54 police and fire retirement plan: 2.55 (1) public officers, other than county sheriffs, who are 2.56 elected to a governing body, or persons who are appointed to 2.57 fill a vacancy in an elective office of a governing body, whose 3.1 term of officefirstcommences on or after July 1, 2002, for the 3.2 service to be rendered in that elective position. Elected 3.3 governing body officials who were active members of the 3.4 association's coordinated or basic retirement plans as of June 3.5 30, 2002, continue participation throughout incumbency in office 3.6 until termination of public service occurs as defined in 3.7 subdivision 11a; 3.8 (2) election officers or election judges; 3.9 (3) patient and inmate personnel who perform services for a 3.10 governmental subdivision; 3.11 (4) except as otherwise specified in subdivision 12a, 3.12 employees who are hired for a temporary position as defined 3.13 under subdivision 12a, and employees who resign from a 3.14 nontemporary position and accept a temporary position within 30 3.15 days in the same governmental subdivision.;An employer must not3.16apply the definition of temporary position so as to exclude3.17employees who are hired to fill positions that are permanent or3.18that are for an unspecified period but who are serving a3.19probationary period at the start of the employment. If the3.20period of employment extends beyond six consecutive months and3.21the employee earns more than $425 from one governmental3.22subdivision in any calendar month, the department head shall3.23report the employee for membership and require employee3.24deductions be made on behalf of the employee under section3.25353.27, subdivision 4.3.26The membership eligibility of an employee who resigns or is3.27dismissed from a temporary position and within 30 days accepts3.28another temporary position in the same governmental subdivision3.29is determined on the total length of employment rather than on3.30each separate position. Membership eligibility of an employee3.31who holds concurrent temporary and nontemporary positions in one3.32governmental subdivision is determined by the length of3.33employment and salary of each separate position;3.34 (5) employees who are employed by reason of work emergency 3.35 caused by fire, flood, storm, or similar disaster; 3.36 (6) employees who by virtue of their employment in one 4.1 governmental subdivision are required by law to be a member of 4.2 and to contribute to any of the plans or funds administered by 4.3 the Minnesota State Retirement System, the Teachers Retirement 4.4 Association, the Duluth Teachers Retirement Fund Association, 4.5 the Minneapolis Teachers Retirement Fund Association, the St. 4.6 Paul Teachers Retirement Fund Association, the Minneapolis 4.7 Employees Retirement Fund, or any police or firefighters relief 4.8 association governed by section 69.77 that has not consolidated 4.9 with the Public Employees Retirement Association, or any local 4.10 police or firefighters consolidation accountbutwho have not 4.11 elected the type of benefit coverage provided by the public 4.12 employees police and fire fund under sections 353A.01 to 4.13 353A.10, or any persons covered by section 353.665, subdivision 4.14 4, 5, or 6, who have not elected public employees police and 4.15 fire plan benefit coverage. This clause must not be construed 4.16 to prevent a person from being a member of and contributing to 4.17 the Public Employees Retirement Association and also belonging 4.18 to and contributing to another public pension plan or fund for 4.19 other service occurring during the same period of time. A 4.20 person who meets the definition of "public employee" in 4.21 subdivision 2 by virtue of other service occurring during the 4.22 same period of time becomes a member of the association unless 4.23 contributions are made to another public retirement fund on the 4.24 salary based on the other service or to the Teachers Retirement 4.25 Association by a teacher as defined in section 354.05, 4.26 subdivision 2; 4.27 (7) persons who are members of a religious order and are 4.28 excluded from coverage under the federal Old Age, Survivors, 4.29 Disability, and Health Insurance Program for the performance of 4.30 service as specified in United States Code, title 42, section 4.31 410(a)(8)(A), as amended through January 1, 1987, if no 4.32 irrevocable election of coverage has been made under section 4.33 3121(r) of the Internal Revenue Code of 1954, as amended; 4.34 (8) employees of a governmental subdivision who have not 4.35 reached the age of 23 and are enrolled on a full-time basis to 4.36 attend or are attending classes on a full-time basis at an 5.1 accredited school, college, or university in an undergraduate, 5.2 graduate, or professional-technical program, or a public or 5.3 charter high school; 5.4 (9) resident physicians, medical interns, and pharmacist 5.5 residents and pharmacist interns who are serving in a degree or 5.6 residency program in public hospitals; 5.7 (10) students who are serving in an internship or residency 5.8 program sponsored by an accredited educational institution; 5.9 (11) persons who hold a part-time adult supplementary 5.10 technical college license who render part-time teaching service 5.11 in a technical college; 5.12 (12) except for employees of Hennepin county, foreign 5.13 citizens working for a governmental subdivision with a work 5.14 permit of less than three years, or an H-1b visa valid for less 5.15 than three years of employment. Upon notice to the association 5.16 that the work permit or visa extends beyond the three-year 5.17 period, the foreign citizensare tomust be reported for 5.18 membership from the date of the extension; 5.19 (13) public hospital employees who elected not to 5.20 participate as members of the association before 1972 and who 5.21 did not elect to participate from July 1, 1988, to October 1, 5.22 1988; 5.23 (14) except as provided in section 353.86, volunteer 5.24 ambulance service personnel, as defined in subdivision 35, but 5.25 persons who serve as volunteer ambulance service personnel may 5.26 still qualify as public employees under subdivision 2 and may be 5.27 members of the Public Employees Retirement Association and 5.28 participants in the public employees retirement fund or the 5.29 public employees police and fire fund, whichever applies, on the 5.30 basis of compensation received from public employment service 5.31 other than service as volunteer ambulance service personnel; 5.32 (15) except as provided in section 353.87, volunteer 5.33 firefighters, as defined in subdivision 36, engaging in 5.34 activities undertaken as part of volunteer firefighter duties; 5.35 provided that a person who is a volunteer firefighter may still 5.36 qualify as a public employee under subdivision 2 and may be a 6.1 member of the Public Employees Retirement Association and a 6.2 participant in the public employees retirement fund or the 6.3 public employees police and fire fund, whichever applies, on the 6.4 basis of compensation received from public employment activities 6.5 other than those as a volunteer firefighter; 6.6 (16) pipefitters and associated trades personnel employed 6.7 by Independent School District No. 625, St. Paul, with coverage 6.8 under a collective bargaining agreement by the pipefitters local 6.9 455 pension plan who were either first employed after May 1, 6.10 1997, or, if first employed before May 2, 1997, elected to be 6.11 excluded under Laws 1997, chapter 241, article 2, section 12; 6.12 (17) electrical workers, plumbers, carpenters, and 6.13 associated trades personnel employed by Independent School 6.14 District No. 625, St. Paul, or the city of St. Paul, who have 6.15 retirement coverage under a collective bargaining agreement by 6.16 the Electrical Workers Local 110 pension plan, the United 6.17 Association Plumbers Local 34 pension plan, or the Carpenters 6.18 Local 87 pension plan who were either first employed after May 6.19 1, 2000, or, if first employed before May 2, 2000, elected to be 6.20 excluded under Laws 2000, chapter 461, article 7, section 5; 6.21 (18) bricklayers, allied craftworkers, cement masons, 6.22 glaziers, glassworkers, painters, allied tradesworkers, and 6.23 plasterers employed by the city of St. Paul or Independent 6.24 School District No. 625, St. Paul, with coverage under a 6.25 collective bargaining agreement by the Bricklayers and Allied 6.26 Craftworkers Local 1 pension plan, the Cement Masons Local 633 6.27 pension plan, the Glaziers and Glassworkers Local L-1324 pension 6.28 plan, the Painters and Allied Trades Local 61 pension plan, or 6.29 the Twin Cities Plasterers Local 265 pension plan who were 6.30 either first employed after May 1, 2001, or if first employed 6.31 before May 2, 2001, elected to be excluded under Laws 2001, 6.32 First Special Session chapter 10, article 10, section 6; 6.33 (19) plumbers employed by the metropolitan airports 6.34 commission, with coverage under a collective bargaining 6.35 agreement by the Plumbers Local 34 pension plan, who either were 6.36 first employed after May 1, 2001, or if first employed before 7.1 May 2, 2001, elected to be excluded under Laws 2001, First 7.2 Special Session chapter 10, article 10, section 6; 7.3 (20) employees who are hired after June 30, 2002, to fill 7.4 seasonal positions under subdivision 12b which are limited in 7.5 duration by the employer to 185 consecutive calendar days or 7.6 less in each year of employment with the governmental 7.7 subdivision; 7.8 (21) persons who are provided supported employment or 7.9 work-study positions by a governmental subdivision and who 7.10 participate in an employment or industries program maintained 7.11 for the benefit of these persons where the governmental 7.12 subdivision limits the position's duration to three years or 7.13 less, including persons participating in a federal or state 7.14 subsidized on-the-job training, work experience, senior citizen, 7.15 youth, or unemployment relief program where the training or work 7.16 experience is not provided as a part of, or for, future 7.17 permanent public employment; 7.18 (22) independent contractors and the employees of 7.19 independent contractors; and 7.20 (23) reemployed annuitants of the association during the 7.21 course of that reemployment. 7.22 Sec. 2. Minnesota Statutes 2002, section 353.01, 7.23 subdivision 12a, is amended to read: 7.24 Subd. 12a. [TEMPORARY POSITION.](1)(a) "Temporary 7.25 position" means an employment position predetermined by the 7.26 employer at the time of hiring to be a period of six months or 7.27 less. Temporary position also means an employment position 7.28 occupied by a person hired by the employer as a temporary 7.29 replacement who is employed for a predetermined period of six 7.30 months or less. 7.31(2)(b) "Temporary position" does not mean an employment 7.32 position for a specified or unspecified term in which a person 7.33 serves a probationary period as a requirement for subsequent 7.34 employment on a permanent or unlimited basis. 7.35 (c) If employment in a temporary position extends beyond 7.36 six consecutive months, the head of the department shall report 8.1 the employee for membership if salary in any month exceeds the 8.2 salary threshold specified in subdivision 2a. The membership 8.3 eligibility of an employee who resigns or is dismissed from a 8.4 temporary position and accepts another temporary position in the 8.5 same governmental subdivision within 30 days must be determined 8.6 on the total length of employment rather than on each separate 8.7 position. 8.8 Sec. 3. Minnesota Statutes 2002, section 353.01, 8.9 subdivision 12b, is amended to read: 8.10 Subd. 12b. [SEASONAL POSITION.] "Seasonal position" means 8.11 a position where the nature of the work or its duration are 8.12 related to a specific season or seasons of the year, regardless 8.13 of whether or not the employing agency anticipates that the same 8.14 employee will return to the position each season in which it 8.15 becomes available. The entire period of employment in a 8.16businessyear must be used to determine whether or not a 8.17 position may be excluded as seasonal when there is less than a 8.18 30-day break between one seasonal position and a subsequent 8.19 seasonal position for employment with the same governmental 8.20 employer. Seasonal positions include, but are not limited to, 8.21 coaching athletic activities or employment to plow snow or to 8.22 maintain roads or parks, or to operate skating rinks, ski 8.23 lodges, golf courses, or swimming pools. 8.24 Sec. 4. Minnesota Statutes 2002, section 354.05, 8.25 subdivision 2, is amended to read: 8.26 Subd. 2. [TEACHER.] (a) "Teacher" means: 8.27 (1) a person who renders service as a teacher, supervisor, 8.28 principal, superintendent, librarian, nurse, counselor, social 8.29 worker, therapist, or psychologist in a public school of the 8.30 state located outside of the corporate limits of a city of the 8.31 first class, or in any charter school, irrespective of the 8.32 location of the school, or in any charitable, penal, or 8.33 correctional institutions of a governmental subdivision, or who 8.34 is engaged in educational administration in connection with the 8.35 state public school system, but excluding the University of 8.36 Minnesota, whether the position be a public office or an 9.1 employment, and not including the members or officers of any 9.2 general governing or managing board or body; 9.3 (2) an employee of the Teachers Retirement Association; 9.4 (3) a person who renders teaching service on a part-time 9.5 basis and who also renders other services for a single employing 9.6 unit. A person whose teaching service comprises at least 50 9.7 percent of the combined employment salary is a member of the 9.8 association for all services with the single employing unit. If 9.9 the person's teaching service comprises less than 50 percent of 9.10 the combined employment salary, the executive director must 9.11 determine whether all or none of the combined service is covered 9.12 by the association; or 9.13 (4) a person who is not covered by the plans established 9.14 under chapter 352D, 354A, or 354B and who is employed by the 9.15 board of trustees of the Minnesota State Colleges and 9.16 Universities system in an unclassified position as: 9.17 (i) a president, vice-president, or dean; 9.18 (ii) a manager or a professional in an academic or an 9.19 academic support program other than specified in item (i); 9.20 (iii) an administrative or a service support faculty 9.21 position; or 9.22 (iv) a teacher or a research assistant. 9.23 (b) "Teacher" does not mean: 9.24 (1) a person who works for a school or institution as an 9.25 independent contractor as defined by the Internal Revenue 9.26 Service; 9.27 (2)a person employed in subsidized on-the-job training,9.28work experience or public service employment as an enrollee9.29under the federal Comprehensive Employment and Training Act from9.30and after March 30, 1978, unless the person has, as of the later9.31of March 30, 1978, or the date of employment, sufficient service9.32credit in the retirement association to meet the minimum vesting9.33requirements for a deferred retirement annuity, or the employer9.34agrees in writing on forms prescribed by the executive director9.35to make the required employer contributions, including any9.36employer additional contributions, on account of that person10.1from revenue sources other than funds provided under the federal10.2Comprehensive Training and Employment Act, or the person agrees10.3in writing on forms prescribed by the executive director to make10.4the required employer contribution in addition to the required10.5employee contribution;10.6(3)a personholding a part-time adult supplementary10.7technical college licensewho renders part-time teaching service 10.8 or who is a customized trainer as defined by the Minnesota State 10.9 Colleges and Universities systemin a technical collegeif (i) 10.10 the service is incidental to the regular nonteaching occupation 10.11 of the person; and (ii) theapplicable technical college10.12 employer stipulates annually in advance that the part-time 10.13 teaching service or customized training service will not exceed 10.14 300 hours in a fiscal year and retains the stipulation in its 10.15 records; and (iii) the part-time teaching service or customized 10.16 training service actually does not exceed 300 hours in a fiscal 10.17 year; or 10.18(4)(3) a person exempt from licensure under section 10.19 122A.30. 10.20 Sec. 5. Minnesota Statutes 2002, section 354B.20, 10.21 subdivision 4, is amended to read: 10.22 Subd. 4. [COVERED EMPLOYMENT.] (a) "Covered employment" 10.23 means employment by a person eligible for coverage by this 10.24 retirement program under section 354B.21 in a faculty position 10.25 or in an eligible unclassified administrative position. 10.26 (b) "Covered employment" does not mean employment specified 10.27 in paragraph (a) by a faculty member employed ina state10.28university or a community collegethe Minnesota State Colleges 10.29 and Universities system if the person's initial appointment is 10.30 specified as constituting less than 25 percent of a full 10.31 academic year, exclusive of summer session, for the applicable 10.32 institution. 10.33 Sec. 6. Minnesota Statutes 2002, section 354B.20, 10.34 subdivision 6, is amended to read: 10.35 Subd. 6. [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE POSITION.] 10.36 "Eligible unclassified administrative position" means the 11.1 following: 11.2 (1) the chancellor of the board; 11.3 (2) a president of a state college or university;or11.4 (3) anexcludedadministrator employed in a state 11.5 university or college, by the board, or by the Higher Education 11.6 Services Office; or 11.7 (4) other managers and professionals in academic and 11.8 academic support programs in the unclassified service employed 11.9 in a state university or college, by the board, or by the Higher 11.10 Education Services Office. 11.11 Sec. 7. Minnesota Statutes 2002, section 354C.11, 11.12 subdivision 2, is amended to read: 11.13 Subd. 2. [ELIGIBILITY.] (a) An individual must participate 11.14 in the supplemental retirement plan if the individual is 11.15 employed by the Board of Trustees in the unclassified service of 11.16 the state and has completed at least two years with a full-time 11.17 contract of applicable unclassified employment with the board or 11.18 an applicable predecessor board in any of the positions 11.19 specified in paragraph (b). 11.20 (b) Eligible positions or employment classifications are: 11.21 (1) an unclassified administrative position as defined in 11.22 section 354B.20, subdivision 6; 11.23 (2) an employment classification included in one of the 11.24 following collective bargaining units under section 179A.10, 11.25 subdivision 2: 11.26 (i) the state university instructional unit; 11.27 (ii) the state college instructional unit; and 11.28 (iii) the state university administrative unit; or 11.29 (3) an unclassified employee of the board: 11.30 (i) included in the general professional unit or the 11.31 supervisory employees unit under section 179A.10, subdivision 2; 11.32 or 11.33 (ii) an employee who is excluded from one of those units 11.34 due to the employee's confidential status under section 179A.10, 11.35 subdivision 1, clause (8). 11.36 Sec. 8. [REPEALER.] 12.1 Minnesota Statutes 2002, section 352D.02, subdivision 5, is 12.2 repealed. 12.3 Sec. 9. [EFFECTIVE DATE.] 12.4 (a) Sections 1 to 5 and 8 are effective on July 1, 2004. 12.5 (b) Section 6 is effective on July 1, 2004, and applies 12.6 retroactively to the date of hire of the applicable person in 12.7 the affected position. 12.8 (c) Section 7 is effective retroactively to July 1, 2001. 12.9 ARTICLE 2 12.10 COVERED SALARY DEFINITION 12.11 Section 1. Minnesota Statutes 2002, section 352.01, 12.12 subdivision 13, is amended to read: 12.13 Subd. 13. [SALARY.] (a) "Salary" means wages, or other 12.14 periodic compensation, paid to an employee before deductions for 12.15 deferred compensation, supplemental retirement plans, or other 12.16 voluntary salary reduction programs. 12.17 (b) "Salary" does not include: 12.18 (1) lump sum sick leave payments,; 12.19 (2) severance payments,; 12.20 (3) lump sum annual leave payments and overtime payments 12.21 made at the time of separation from state service,; 12.22 (4) payments in lieu of any employer-paid group insurance 12.23 coverage, including the difference between single and family 12.24 rates that may be paid to an employee with single coverage, and; 12.25 (5) payments made as an employer-paid fringe benefit,; 12.26 (6) workers' compensation payments,; 12.27 (7) employer contributions to a deferred compensation or 12.28 tax sheltered annuity program,; and 12.29 (8) amounts contributed under a benevolent vacation and 12.30 sick leave donation programare not salary. 12.31 (c) Amounts provided to an employee by the employer through 12.32 a grievance proceeding or a legal settlement are salary only if 12.33 the settlement is reviewed by the executive director and the 12.34 amounts are determined by the executive director to be 12.35 consistent with paragraph (a) and prior determinations. 12.36 Sec. 2. Minnesota Statutes 2002, section 352B.01, 13.1 subdivision 11, is amended to read: 13.2 Subd. 11. [AVERAGE MONTHLY SALARY.] (a) "Average monthly 13.3 salary" means the average of the highest monthly salaries for 13.4 five years of service as a member upon which contributions were 13.5 deducted from pay under section 352B.02, or upon which 13.6 appropriate contributions or payments were made to the fund to 13.7 receive allowable service and salary credit as specified under 13.8 the applicable law. Average monthly salary must be based upon 13.9 all allowable service if this service is less than five 13.10 years.It13.11 (b) "Average monthly salary" means the salary of the member 13.12 as defined in section 352.01, subdivision 13. "Average monthly 13.13 salary" does not include any lump-sum annual leave payments and 13.14 overtime payments made at the time of separation from state 13.15 service, any amounts of severance pay, or any reduced salary 13.16 paid during the period the person is entitled to workers' 13.17 compensation benefit payments for temporary disability. 13.18 (c) A member on leave of absence receiving temporary 13.19 workers' compensation payments and a reduced salary or no salary 13.20 from the employer who is entitled to allowable service credit 13.21 for the period of absence may make payment to the fund for the 13.22 difference between salary received, if any, and the salary the 13.23 member would normally receive if not on leave of absence during 13.24 the period. The member shall pay an amount equal to the member 13.25 and employer contribution rate under section 352B.02, 13.26 subdivisions 1b and 1c, on the differential salary amount for 13.27 the period of the leave of absence. The employing department, 13.28 at its option, may pay the employer amount on behalf of the 13.29 member. Payment made under this subdivision must include 13.30 interest at the rate of 8.5 percent per year, and must be 13.31 completed within one year of the return from the leave of 13.32 absence. 13.33 Sec. 3. Minnesota Statutes 2002, section 353.01, 13.34 subdivision 10, is amended to read: 13.35 Subd. 10. [SALARY.] (a) "Salary" means: 13.36 (1) the periodic compensation of a public employee, before 14.1 deductions for deferred compensation, supplemental retirement 14.2 plans, or other voluntary salary reduction programs, and also 14.3 means "wages" and includes net income from fees; and 14.4 (2) for a public employee who has prior service covered by 14.5 a local police or firefighters relief association that has 14.6 consolidated with the Public Employees Retirement Association or 14.7 to which section 353.665 applies and who has elected coverage 14.8 either under the public employees police and fire fund benefit 14.9 plan under section 353A.08 following the consolidation or under 14.10 section 353.665, subdivision 4,"salary" meansthe rate of salary 14.11 upon which member contributions to the special fund of the 14.12 relief association were made prior to the effective date of the 14.13 consolidation as specified by law and by bylaw provisions 14.14 governing the relief association on the date of the initiation 14.15 of the consolidation procedure and the actual periodic 14.16 compensation of the public employee after the effective date of 14.17 consolidation. 14.18 (b) Salary does not mean: 14.19 (1) the fees paid to district court reporters, unused 14.20 annual vacation or sick leave payments, in lump-sum or periodic 14.21 payments, severance payments, reimbursement of expenses, 14.22 lump-sum settlements not attached to a specific earnings period, 14.23 or workers' compensation payments; 14.24 (2) employer-paid amounts used by an employee toward the 14.25 cost of insurance coverage, employer-paid fringe benefits, 14.26 flexible spending accounts, cafeteria plans, health care expense 14.27 accounts, day care expenses, or any payments in lieu of any 14.28 employer-paid group insurance coverage, including the difference 14.29 between single and family rates that may be paid to a member 14.30 with single coverage and certain amounts determined by the 14.31 executive director to be ineligible; 14.32 (3) the amount equal to that which the employing 14.33 governmental subdivision would otherwise pay toward single or 14.34 family insurance coverage for a covered employee when, through a 14.35 contract or agreement with some but not all employees, the 14.36 employer: 15.1 (i) discontinues, or for new hires does not provide, 15.2 payment toward the cost of the employee's selected insurance 15.3 coverages under a group plan offered by the employer; 15.4 (ii) makes the employee solely responsible for all 15.5 contributions toward the cost of the employee's selected 15.6 insurance coverages under a group plan offered by the employer, 15.7 including any amount the employer makes toward other employees' 15.8 selected insurance coverages under a group plan offered by the 15.9 employer; and 15.10 (iii) provides increased salary rates for employees who do 15.11 not have any employer-paid group insurance coverages;and15.12 (4) except as provided in section 353.86 or 353.87, 15.13 compensation of any kind paid to volunteer ambulance service 15.14 personnel or volunteer firefighters, as defined in subdivision 15.15 35 or 36; and 15.16 (5) the amount of compensation that exceeds the limitation 15.17 provided in section 356.611. 15.18 (c) Amounts provided to an employee by the employer through 15.19 a grievance proceeding or a legal settlement are salary only if 15.20 the settlement is reviewed by the executive director and the 15.21 amounts are determined by the executive director to be 15.22 consistent with paragraph (a) and prior determinations. 15.23 Sec. 4. Minnesota Statutes 2002, section 354.05, 15.24 subdivision 35, is amended to read: 15.25 Subd. 35. [SALARY.] (a) "Salary" means the periodic 15.26 compensation, upon which member contributions are required 15.27 before deductions for deferred compensation, supplemental 15.28 retirement plans, or other voluntary salary reduction programs. 15.29 (b) "Salary" does not mean: 15.30 (1) lump sum annual leave payments; 15.31 (2) lump sum wellness and sick leave payments; 15.32 (3) employer-paid amounts used by an employee toward the 15.33 cost of insurance coverage, employer-paid fringe benefits, 15.34 flexible spending accounts, cafeteria plans, health care expense 15.35 accounts, day care expenses, or any payments in lieu of any 15.36 employer-paid group insurance coverage, including the difference 16.1 between single and family rates that may be paid to a member 16.2 with single coverage and certain amounts determined by the 16.3 executive director to be ineligible; 16.4 (4) any form of payment made in lieu of any other 16.5 employer-paid fringe benefit or expense; 16.6 (5) any form of severance payments; 16.7 (6) workers' compensation payments; 16.8 (7) disability insurance payments, including self-insured 16.9 disability payments; 16.10 (8) payments to school principals and all other 16.11 administrators for services that are in addition to the normal 16.12 work year contract if these additional services are performed on 16.13 an extended duty day, Saturday, Sunday, holiday, annual leave 16.14 day, sick leave day, or any other nonduty day; 16.15 (9) payments under section 356.24, subdivision 1, clause 16.16 (4); and 16.17 (10) payments made under section 122A.40, subdivision 12, 16.18 except for payments for sick leave that are accumulated under 16.19 the provisions of a uniform school district policy that applies 16.20 equally to all similarly situated persons in the district. 16.21 (c) Amounts provided to an employee by the employer through 16.22 a grievance proceeding or a legal settlement are salary only if 16.23 the settlement is reviewed by the executive director and the 16.24 amounts are determined by the executive director to be 16.25 consistent with paragraph (a) and prior determinations. 16.26 Sec. 5. Minnesota Statutes 2002, section 354A.011, 16.27 subdivision 24, is amended to read: 16.28 Subd. 24. [SALARY; COVERED SALARY.] (a) "Salary" or 16.29 "covered salary" means the entire compensation, upon which 16.30 member contributions are required and made, that is paid to a 16.31 teacher before deductions for deferred compensation, 16.32 supplemental retirement plans, or other voluntary salary 16.33 reduction programs. 16.34 (b) "Salary" does not mean: 16.35 (1) lump sum annual leave payments; 16.36 (2) lump sum wellness and sick leave payments; 17.1 (3) employer-paid amounts used by an employee toward the 17.2 cost of insurance coverage, employer-paid fringe benefits, 17.3 flexible spending accounts, cafeteria plans, health care expense 17.4 accounts, day care expenses, or any payments in lieu of any 17.5 employer-paid group insurance coverage, including the difference 17.6 between single and family rates that may be paid to a member 17.7 with single coverage, and certain amounts determined by the 17.8 executive secretary or director to be ineligible; 17.9 (4) any form of payment that is made in lieu of any other 17.10 employer-paid fringe benefit or expense; 17.11 (5) any form of severance payments; 17.12 (6) workers' compensation payments; 17.13 (7) disability insurance payments, including self-insured 17.14 disability payments; 17.15 (8) payments to school principals and all other 17.16 administrators for services that are in addition to the normal 17.17 work year contract if these additional services are performed on 17.18 an extended duty day, Saturday, Sunday, holiday, annual leave 17.19 day, sick leave day, or any other nonduty day; 17.20 (9) payments under section 356.24, subdivision 1, clause 17.21 (4)(ii); and 17.22 (10) payments made under section 122A.40, subdivision 12, 17.23 except for payments for sick leave that are accumulated under 17.24 the provisions of a uniform school district policy that applies 17.25 equally to all similarly situated persons in the district. 17.26 (c) Amounts provided to an employee by the employer through 17.27 a grievance proceeding or a legal settlement are salary only if 17.28 the settlement is reviewed by the executive director and the 17.29 amounts are determined by the executive director to be 17.30 consistent with paragraph (a) and prior determinations. 17.31 Sec. 6. Minnesota Statutes 2002, section 356.611, 17.32 subdivision 2, is amended to read: 17.33 Subd. 2. [FEDERAL COMPENSATION LIMITS.] (a) For members 17.34first contributing toof a covered pension plan enumerated in 17.35 section 356.30, subdivision 3,on or after July 1, 1995,17.36 compensation in excess of the limitationset forthspecified in 18.1 section 401(a)(17) of the Internal Revenue Code, as amended, for 18.2 changes in the cost of living under section 401(a)(17)(B) of the 18.3 Internal Revenue Code, may not be included for contribution and 18.4 benefit computation purposes. 18.5 (b) Notwithstanding paragraph (a), for members specified in 18.6 paragraph (a) who first contributed to a covered plan before 18.7 July 1, 1995, the annual compensation limitset forthspecified 18.8 in Internal Revenue Code 401(a)(17) on June 30, 1993, appliesto18.9members first contributing before July 1, 1995if that provides 18.10 a greater allowable annual compensation. 18.11 Sec. 7. Minnesota Statutes 2002, section 356.611, is 18.12 amended by adding a subdivision to read: 18.13 Subd. 3. [MAXIMUM BENEFIT LIMITATIONS.] A member's annual 18.14 benefit, if necessary, must be reduced to the extent required by 18.15 section 415(b) of the Internal Revenue Code, as adjusted by the 18.16 United States Secretary of the Treasury under section 415(d) of 18.17 the Internal Revenue Code. For purposes of section 415 of the 18.18 Internal Revenue Code, the limitation year of a pension plan 18.19 covered by this section must be the fiscal year or calendar year 18.20 of that plan, whichever is applicable. The accrued benefit 18.21 limitation described in section 415(e) of the Internal Revenue 18.22 Code must cease to be effective for limitation years beginning 18.23 after December 31, 1999. 18.24 Sec. 8. [EFFECTIVE DATE.] 18.25 (a) Sections 1, 2, 3, 6, and 7 are effective on July 1, 18.26 2004. 18.27 (b) Sections 4 and 5 are effective on the day following 18.28 final enactment. 18.29 ARTICLE 3 18.30 ALLOWABLE SERVICE CREDIT 18.31 Section 1. Minnesota Statutes 2002, section 352.27, is 18.32 amended to read: 18.33 352.27 [CREDIT FORMILITARYBREAK IN SERVICE TO PROVIDE 18.34 UNIFORMED SERVICE.] 18.35Any(a) An employeegiven a leave of absence to enter18.36military servicewho is absent from employment by reason of 19.1 service in the uniformed services, as defined in United States 19.2 Code, title 38, section 4303(13), and who returns to state 19.3 service upon discharge frommilitaryserviceas providedin the 19.4 uniformed service within the time frames required in United 19.5 States Code, title 38, section192.2624312(e), may obtain 19.6 service credit for the period ofmilitarythe uniformed service.19.7The employee is not entitled to credit for any voluntary19.8extension of military service at the instance of the employee19.9beyond the initial period of enlistment, induction, or call to19.10active duty, nor to credit for any period of service following a19.11voluntary return to military serviceas further specified in 19.12 this section, provided that the employee did not separate from 19.13 uniformed service with a dishonorable or bad conduct discharge 19.14 or under other than honorable conditions.An19.15 (b) The employee may obtain credit by paying into the fund 19.16 an equivalent employee contribution based upon the contribution 19.17 rate or rates in effect at the time that the uniformed service 19.18 was performed multiplied by the full and fractional years being 19.19 purchased and applied to the annual salaryreceived at the date19.20of return from military service. The amount of this contribution19.21must be the applicable amounts required in section 352.04,19.22subdivision 2, plus interest at an annual rate of 8.5 percent19.23compounded annuallyrate. The annual salary rate is the average 19.24 annual salary during the purchase period that the employee would 19.25 have received if the employee had continued to be employed in 19.26 covered employment rather than to provide uniformed service, or, 19.27 if the determination of that rate is not reasonably certain, the 19.28 annual salary rate is the employee's average salary rate during 19.29 the 12-month period of covered employment rendered immediately 19.30 preceding the period of the uniformed service. 19.31 (c) Thematchingequivalent employer contribution and, if 19.32 applicable, the equivalent additional employer contribution 19.33 provided in section 352.04 must be paid by the department 19.34 employing the employeeupon return to state servicefrom funds 19.35 available to the department at the time and in the manner 19.36 provided in section 352.04, using the employer and additional 20.1 employer contribution rate or rates in effect at the time that 20.2 the uniformed service was performed, applied to the same annual 20.3 salary rate or rates used to compute the equivalent employee 20.4 contribution. 20.5 (d) If the employee equivalent contributions provided in 20.6 this section are not paid in full, the employee's allowable 20.7 service credit must be prorated by multiplying the full and 20.8 fractional number of years of uniformed service eligible for 20.9 purchase by the ratio obtained by dividing the total employee 20.10 contribution received by the total employee contribution 20.11 otherwise required under this section. 20.12 (e) To receive service credit under this section, the 20.13 contributions specified in this section must be transmitted to 20.14 the Minnesota State Retirement System during the period which 20.15 begins with the date on which the individual returns to state 20.16 service and which has a duration of three times the length of 20.17 the uniformed service period, but not to exceed five years. If 20.18 the determined payment period is less than one year, the 20.19 contributions required under this section to receive service 20.20 credit may be made within one year of the discharge date. 20.21 (f) The amount of service credit obtainable under this 20.22 section may not exceed five years unless a longer purchase 20.23 period is required under United States Code, title 38, section 20.24 4312. 20.25 (g) The employing unit shall pay interest on all equivalent 20.26 employee and employer contribution amounts payable under this 20.27 section. Interest must be computed at a rate of 8.5 percent 20.28 compounded annually from the end of each fiscal year of the 20.29 leave or the break in service to the end of the month in which 20.30 the payment is received. 20.31 Sec. 2. Minnesota Statutes 2002, section 352B.01, is 20.32 amended by adding a subdivision to read: 20.33 Subd. 3b. [CREDIT FOR BREAK IN SERVICE TO PROVIDE 20.34 UNIFORMED SERVICE.] (a) A member who is absent from employment 20.35 by reason of service in the uniformed services, as defined in 20.36 United States Code, title 38, section 4303(13), and who returns 21.1 to state employment in a position covered by the plan upon 21.2 discharge from service in the uniformed service within the time 21.3 frame required in United States Code, title 38, section 4312(e), 21.4 may obtain service credit for the period of the uniformed 21.5 service, provided that the member did not separate from 21.6 uniformed service with a dishonorable or bad conduct discharge 21.7 or under other than honorable conditions. 21.8 (b) The member may obtain credit by paying into the fund an 21.9 equivalent member contribution based on the contribution rate or 21.10 rates in effect at the time that the uniformed service was 21.11 performed multiplied by the full and fractional years being 21.12 purchased and applied to the annual salary rate. The annual 21.13 salary rate is the average annual salary during the purchase 21.14 period that the member would have received if the member had 21.15 continued to provide employment services to the state rather 21.16 than to provide uniformed service, or if the determination of 21.17 that rate is not reasonably certain, the annual salary rate is 21.18 the member's average salary rate during the 12-month period of 21.19 covered employment rendered immediately preceding the purchase 21.20 period. 21.21 (c) The equivalent employer contribution and, if 21.22 applicable, the equivalent employer additional contribution, 21.23 must be paid by the employing unit, using the employer and 21.24 employer additional contribution rate or rates in effect at the 21.25 time that the uniformed service was performed, applied to the 21.26 same annual salary rate or rates used to compute the equivalent 21.27 member contribution. 21.28 (d) If the member equivalent contributions provided for in 21.29 this subdivision are not paid in full, the member's allowable 21.30 service credit must be prorated by multiplying the full and 21.31 fractional number of years of uniformed service eligible for 21.32 purchase by the ratio obtained by dividing the total member 21.33 contributions received by the total member contributions 21.34 otherwise required under this subdivision. 21.35 (e) To receive allowable service credit under this 21.36 subdivision, the contributions specified in this section must be 22.1 transmitted to the fund during the period which begins with the 22.2 date on which the individual returns to state employment covered 22.3 by the plan and which has a duration of three times the length 22.4 of the uniformed service period, but not to exceed five years. 22.5 If the determined payment period is calculated to be less than 22.6 one year, the contributions required under this subdivision to 22.7 receive service credit may be within one year from the discharge 22.8 date. 22.9 (f) The amount of allowable service credit obtainable under 22.10 this section may not exceed five years, unless a longer purchase 22.11 period is required under United States Code, title 38, section 22.12 4312. 22.13 (g) The employing unit shall pay interest on all equivalent 22.14 member and employer contribution amounts payable under this 22.15 subdivision. Interest must be computed at a rate of 8.5 percent 22.16 compounded annually from the end of each fiscal year of the 22.17 leave or break in service to the end of the month in which 22.18 payment is received. 22.19 Sec. 3. Minnesota Statutes 2002, section 353.01, 22.20 subdivision 16, is amended to read: 22.21 Subd. 16. [ALLOWABLE SERVICE; LIMITS AND COMPUTATION.] (a) 22.22 "Allowable service" means: 22.23 (1) service during years of actual membership in the course 22.24 of which employee contributions were made, periods covered by 22.25 payments in lieu of salary deductions under section 353.35; 22.26 (2) service in years during which the public employee was 22.27 not a member but for which the member later elected, while a 22.28 member, to obtain credit by making payments to the fund as 22.29 permitted by any law then in effect; 22.30 (3) a period of authorized leave of absence with pay from 22.31 which deductions for employee contributions are made, deposited, 22.32 and credited to the fund; 22.33 (4) a period of authorized personal, parental, or medical 22.34 leave of absence without pay, including a leave of absence 22.35 covered under the federal Family Medical Leave Act, that does 22.36 not exceed one year, and during or for which a member obtained 23.1 service credit for each month in the leave period by payments to 23.2 the fund made in place of salary deductions. The payments must 23.3 be made in an amount or amounts based on the member's average 23.4 salary on which deductions were paid for the last six months of 23.5 public service, or for that portion of the last six months while 23.6 the member was in public service, to apply to the period in 23.7 either case that immediately precedes the commencement of the 23.8 leave of absence. If the employee elects to pay the employee 23.9 contributions for the period of any authorized personal, 23.10 parental, or medical leave of absence without pay, or for any 23.11 portion of the leave, the employee shall also, as a condition to 23.12 the exercise of the election, pay to the fund an amount 23.13 equivalent to the required employer and the additional employer 23.14 contributions, if any, for the employee. The payment must be 23.15 made within one year from the expiration of the leave of absence 23.16 or within 20 days after termination of public service under 23.17 subdivision 11a, whichever is earlier. The employer, by 23.18 appropriate action of its governing body which is made a part of 23.19 its official records and which is adopted before the date of the 23.20 first payment of the employee contribution, may certify to the 23.21 association in writing its commitment to pay the employer and 23.22 additional employer contributions from the proceeds of a tax 23.23 levy made under section 353.28. Payments under this paragraph 23.24 must include interest at an annual rate of 8.5 percent 23.25 compounded annually from the date of the termination of the 23.26 leave of absence to the date payment is made. An employee shall 23.27 return to public service and render a minimum of three months of 23.28 allowable service in order to be eligible to pay employee and 23.29 employer contributions for a subsequent authorized leave of 23.30 absence without pay. Upon payment, the employee must be granted 23.31 allowable service credit for the purchased period; 23.32 (5) a periodic, repetitive leave that is offered to all 23.33 employees of a governmental subdivision. The leave program may 23.34 not exceed 208 hours per annual normal work cycle as certified 23.35 to the association by the employer. A participating member 23.36 obtains service credit by making employee contributions in an 24.1 amount or amounts based on the member's average salary that 24.2 would have been paid if the leave had not been taken. The 24.3 employer shall pay the employer and additional employer 24.4 contributions on behalf of the participating member. The 24.5 employee and the employer are responsible to pay interest on 24.6 their respective shares at the rate of 8.5 percent a year, 24.7 compounded annually, from the end of the normal cycle until full 24.8 payment is made. An employer shall also make the employer and 24.9 additional employer contributions, plus 8.5 percent interest, 24.10 compounded annually, on behalf of an employee who makes employee 24.11 contributions but terminates public service. The employee 24.12 contributions must be made within one year after the end of the 24.13 annual normal working cycle or within 20 days after termination 24.14 of public service, whichever is sooner. The association shall 24.15 prescribe the manner and forms to be used by a governmental 24.16 subdivision in administering a periodic, repetitive leave. Upon 24.17 payment, the member must be granted allowable service credit for 24.18 the purchased period; 24.19 (6) an authorized temporary layoff under subdivision 12, 24.20 limited to three months allowable service per authorized 24.21 temporary layoff in one calendar year. An employee who has 24.22 received the maximum service credit allowed for an authorized 24.23 temporary layoff must return to public service and must obtain a 24.24 minimum of three months of allowable service subsequent to the 24.25 layoff in order to receive allowable service for a subsequent 24.26 authorized temporary layoff; or 24.27 (7) a period during which a member ison an authorized24.28leave of absence to enter militaryabsent from employment by a 24.29 governmental subdivision by reason of servicein the armed24.30forces of the United Statesin the uniformed services, as 24.31 defined in United States Code, title 38, section 4303(13), if 24.32 the member returns to public service upon discharge 24.33 frommilitaryservice in the uniformed service within the time 24.34 frames required under United States Code, title 38, section 24.35192.262 and4312(e), provided that the member did not separate 24.36 from uniformed service with a dishonorable or bad conduct 25.1 discharge or under other than honorable conditions. The service 25.2 is credited if the member pays into the fund equivalent employee 25.3 contributions based upon theemployee'scontribution rate or 25.4 rates in effect at the time that the uniformed service was 25.5 performed multiplied by the full and fractional years being 25.6 purchased and applied to the annual salaryat the date of return25.7from military servicerate. The annual salary rate is the 25.8 average annual salary during the purchase period that the member 25.9 would have received if the member had continued to be employed 25.10 in covered employment rather than to provide uniformed service, 25.11 or, if the determination of that rate is not reasonably certain, 25.12 the annual salary rate is the member's average salary rate 25.13 during the 12-month period of covered employment rendered 25.14 immediately preceding the period of the uniformed service. 25.15 Payment of the member equivalent contributions must be made 25.16withinduring a period which begins with the date on which the 25.17 individual returns to public employment and that is three times 25.18 the length of the military leave period, or within five years of 25.19 the date of discharge from the military service, whichever is 25.20 less. If the determined payment period is less than one year, 25.21 the contributions required under this clause to receive service 25.22 credit may be made within one year of the discharge date. 25.23 Payment may not be accepted following 20 days after termination 25.24 of public service under subdivision 11a.The amount of these25.25contributions must be in accord with the contribution rates and25.26salary limitations, if any, in effect during the leave, plus25.27interest at an annual rate of 8.5 percent compounded annually25.28from the date of return to public service to the date payment is25.29made.If the member equivalent contributions provided for in 25.30 this clause are not paid in full, the member's allowable service 25.31 credit must be prorated by multiplying the full and fractional 25.32 number of years of uniformed service eligible for purchase by 25.33 the ratio obtained by dividing the total member contributions 25.34 received by the total member contributions otherwise required 25.35 under this clause. Thecorrespondingequivalent employer 25.36 contribution, and, if applicable, the equivalent additional 26.1 employer contribution, if applicable,must be paid by the 26.2 governmental subdivision employing the memberupon the person's26.3return to public serviceif the member makes the equivalent 26.4 employee contributions. The employer payments must be made from 26.5 funds available to the employing unit, using the employer and 26.6 additional employer contribution rate or rates in effect at the 26.7 time that the uniformed service was performed, applied to the 26.8 same annual salary rate or rates used to compute the equivalent 26.9 member contribution. The governmental subdivision involved may 26.10 appropriate money for those payments.A member may not receive26.11credit for a voluntary extension of military service at the26.12instance of the member beyond the initial period of enlistment,26.13induction, or call to active duty.The amount of service credit 26.14 obtainable under this section may not exceed five years unless a 26.15 longer purchase period is required under United States Code, 26.16 title 38, section 4312. The employing unit shall pay interest 26.17 on all equivalent member and employer contribution amounts 26.18 payable under this clause. Interest must be computed at a rate 26.19 of 8.5 percent compounded annually from the end of each fiscal 26.20 year of the leave or the break in service to the end of the 26.21 month in which the payment is received. Upon payment, the 26.22 employee must be granted allowable service credit for the 26.23 purchased period. 26.24 (b) For calculating benefits under sections 353.30, 353.31, 26.25 353.32, and 353.33 for state officers and employees displaced by 26.26 the Community Corrections Act, chapter 401, and transferred into 26.27 county service under section 401.04, "allowable service" means 26.28 the combined years of allowable service as defined in paragraph 26.29 (a), clauses (1) to (6), and section 352.01, subdivision 11. 26.30 (c) For a public employee who has prior service covered by 26.31 a local police or firefighters relief association that has 26.32 consolidated with the Public Employees Retirement Association or 26.33 to which section 353.665 applies, and who has elected the type 26.34 of benefit coverage provided by the public employees police and 26.35 fire fund either under section 353A.08 following the 26.36 consolidation or under section 353.665, subdivision 4, 27.1 "applicable service" is a period of service credited by the 27.2 local police or firefighters relief association as of the 27.3 effective date of the consolidation based on law and on bylaw 27.4 provisions governing the relief association on the date of the 27.5 initiation of the consolidation procedure. 27.6 (d) No member may receive more than 12 months of allowable 27.7 service credit in a year either for vesting purposes or for 27.8 benefit calculation purposes. 27.9 (e) "Allowable service" also means a period purchased under 27.10 section 356.555. 27.11 Sec. 4. Minnesota Statutes 2002, section 354.091, is 27.12 amended to read: 27.13 354.091 [SERVICE CREDIT.] 27.14 (a) In computing service credit, no teacher shall receive 27.15 credit for more than one year of teaching service for any fiscal 27.16 year. Commencing July 1, 1961: 27.17 (1) if a teacher teaches less than five hours in a day, 27.18 service credit must be given for the fractional part of the day 27.19 as the term of service performed bears to five hours; 27.20 (2) if a teacher teaches five or more hours in a day, 27.21 service credit must be given for only one day; 27.22 (3) if a teacher teaches at least 170 full days in any 27.23 fiscal year, service credit must be given for a full year of 27.24 teaching service; and 27.25 (4) if a teacher teaches for only a fractional part of the 27.26 year, service credit must be given for such fractional part of 27.27 the year as the period of service performed bears to 170 days. 27.28 (b) A teacher shall receive a full year of service credit 27.29 based on the number of days in the employer's full school year 27.30 if it is less than 170 days. Teaching service performed before 27.31 July 1, 1961, must be computed under the law in effect at the 27.32 time it was performed. 27.33 (c) A teacherdoesmust not lose or gain retirement service 27.34 credit as a result of the employer converting to a flexible or 27.35 alternate work schedule. If the employer converts to a flexible 27.36 or alternate work schedule, the forms for reporting and the 28.1 procedures for determining service credit must be determined by 28.2 the executive director with the approval of the board of 28.3 trustees. 28.4 (d) For all services rendered on or after July 1, 2003, 28.5 service credit for all members employed by the Minnesota State 28.6 Colleges and Universities system must be determined: 28.7 (1) for full-time employees, by the definition of full time 28.8 employment contained in the collective bargaining agreement for 28.9 those units listed in section 179A.10, subdivision 2, or 28.10 contained in the applicable personnel or salary plan for those 28.11 positions designated in section 179A.10, subdivision 1; 28.12 (2) for part-time employees, by the appropriate proration 28.13 of full-time equivalency based on the provisions contained in 28.14 the collective bargaining agreement for those units listed in 28.15 section 179A.10, subdivision 2, or contained in the applicable 28.16 personnel or salary plan for those positions designated in 28.17 section 179A.10, subdivision 1, and the applicable procedures of 28.18 the Minnesota State Colleges and Universities system; and 28.19 (3) in no case may a member receive more than one year of 28.20 service credit for any fiscal year. 28.21 Sec. 5. Minnesota Statutes 2002, section 354.096, 28.22 subdivision 1, is amended to read: 28.23 Subdivision 1. [CERTIFICATION.] Upon granting a family 28.24 leave to a member, an employing unit must certify the leave to 28.25 the association on a form specified by the executive director 28.26before the end of the fiscal year during which the leave was28.27granted. 28.28 Sec. 6. Minnesota Statutes 2002, section 354.53, is 28.29 amended to read: 28.30 354.53 [CREDIT FORMILITARYBREAK IN SERVICELEAVE OF28.31ABSENCETO PROVIDE UNIFORMED SERVICE.] 28.32 Subdivision 1. [ELIGIBILITY; EMPLOYEE AND EMPLOYER 28.33 CONTRIBUTIONS.] (a) Anyemployee given a leave of absence to28.34enter military serviceteacher who is absent from employment by 28.35 reason of service in the uniformed services, as defined in 28.36 United States Code, title 38, section 4303(13), and who returns 29.1 to the employer providing teaching service upon discharge from 29.2militaryserviceas providedin the uniformed service within the 29.3 time frames required in United States Code, title 38, section 29.4192.2624312(e), may obtain service credit for the period of 29.5militarythe uniformed servicebut shall not receive credit for29.6any voluntary extension of military service at the instance of29.7the member beyond the initial period of enlistment, induction or29.8call to active dutyas further specified in this section, 29.9 provided that the teacher did not separate from uniformed 29.10 service with a dishonorable or bad conduct discharge or under 29.11 other than honorable conditions. 29.12 (b) The membershallmay obtain credit by paying into the 29.13 fund an equivalent employee contribution based upon the 29.14 contribution rate or rates in effect at the time that 29.15 themilitaryuniformed service was performed multiplied by the 29.16 full and fractional years being purchased and applied to the 29.17 annual salary rateof the member for the year beginning with the29.18date of return from military service and the number of years of29.19military service together with interest thereon at an annual29.20rate of 8.5 percent compounded annually from the time the29.21military service was rendered to the first date of payment. The 29.22 annual salary rate is the average annual salary during the 29.23 purchase period that the teacher would have received if the 29.24 teacher had continued to provide teaching service to the 29.25 employer rather than provide uniformed service or if the 29.26 determination of that rate is not reasonably certain, the annual 29.27 salary rate is the teacher's average salary rate during the 29.28 12-month period immediately preceding the period, or, if the 29.29 preceding period is less than 12 months, the annualized rate 29.30 derived from the teacher's average salary rate during the period 29.31 of teacher employment rendered immediately preceding the period 29.32 of the uniformed service. 29.33 (c) The equivalent employer contribution and, if 29.34 applicable, the equivalent additional contribution provided in 29.35 section 354.42 must be paid by the employing unitatas provided 29.36 in section 354.52, subdivision 4, using the employer and 30.1 employer additional contribution rate or rates in effect at the 30.2 time that themilitaryuniformed service was performed, applied 30.3 to the same annual salary rateofor rates used to compute the 30.4member for the year beginning with the date of return from30.5military service, in the manner provided in section 354.52,30.6subdivision 4equivalent employee contribution. 30.7 Subd. 2. [CALCULATION OF CREDIT.] (a) For purposes of 30.8 computing a money purchase annuity under section 354.44, 30.9 subdivision 2, all payments into the fundpursuant tounder this 30.10 sectionshallmust be considered accumulations after July 1, 30.11 1957for the purpose of computing any annuity in accordance with30.12section 354.44, subdivision 2. 30.13 (b) For purposes of computing a formula annuity under 30.14 section 354.44, subdivision 6, if the employee equivalent 30.15 contributionsand interest thereonprovided in this section are 30.16 not paid in full, the member's formula service creditshallmust 30.17 becalculatedprorated by multiplying the full and fractional 30.18 number of years ofmilitaryuniformed service eligible for 30.19 purchase by the ratio obtained by dividing the totalamount paid30.20andemployee contribution received by themaximum amount payable30.21provided hereintotal employee contribution otherwise required 30.22 under this section. 30.23 Subd. 3. [PAYMENTSELIGIBLE PAYMENT PERIOD.]Payments30.24pursuant to this(a) To receive service credit under this 30.25 section, the contributions specified in this sectionshallmust 30.26 bemade withintransmitted to the Teachers Retirement 30.27 Association during the period which begins with the date on 30.28 which the individual returns to teaching service and which has a 30.29 duration of three times the length of the uniformed service 30.30 period, but not to exceed five yearsfrom the date of discharge. 30.31 (b) Notwithstanding paragraph (a), if the payment period 30.32 determined under paragraph (a) is less than one year, the 30.33 contributions required under this section to receive service 30.34 credit may be made within one year from the discharge date. 30.35 Subd. 4. [LIMITS ON SERVICE CREDIT.] The amount of service 30.36 credit obtainable under this section may not exceed five years, 31.1 unless a longer purchase period is required under United States 31.2 Code, title 38, section 4312. 31.3 Subd. 5. [INTEREST REQUIREMENTS.] The employer shall pay 31.4 interest on all equivalent employee and employer contribution 31.5 amounts payable under this section. Interest must be computed 31.6 at a rate of 8.5 percent compounded annually from the end of 31.7 each fiscal year of the leave or the break in service to the end 31.8 of the month in which the payment is received. 31.9 Sec. 7. Minnesota Statutes 2002, section 354A.093, is 31.10 amended to read: 31.11 354A.093 [MILITARYBREAK IN SERVICECREDITTO PROVIDE 31.12 UNIFORMED SERVICE.] 31.13 Subdivision 1. [ELIGIBILITY.] Any teacher in the 31.14 coordinated program of either the Minneapolis Teachers 31.15 Retirement Fund Association or the St. Paul Teachers Retirement 31.16 Fund Association or any teacher in the new law coordinated 31.17 program of the Duluth Teachers Retirement Fund Association who 31.18 isgranted a leaveabsent from employment by reason ofabsence31.19to enter militaryservice in the uniformed services as defined 31.20 in United States Code, title 38, section 4303(13) and who 31.21 returns to the employer providing active teaching service upon 31.22 discharge frommilitaryuniformed serviceas provided inwithin 31.23 the time frames required under United States Code, title 38, 31.24 section192.2624312(e),shall be entitled tomay receive 31.25 allowable service credit in the applicable association for all 31.26 or a portion of the period ofmilitaryuniformed servicebut, 31.27 provided that the teacher did notfor any voluntary extension of31.28militaryseparate from uniformed servicebeyond the initial31.29period of enlistment, inductionwith a dishonorable orcall to31.30active duty which occurred at the instance of the teacherbad 31.31 conduct discharge or under other than honorable conditions. 31.32 Subd. 2. [CONTRIBUTIONS.] If the teachergranted the31.33military service leave of absencemakes the equivalent employee 31.34 contribution for a period ofmilitary service leave of absence31.35pursuant toservice provided to the uniformed services under 31.36 this section, the employing unit shall make an equivalent 32.1 employer contribution on behalf of the teacher to the applicable 32.2 association for the periodof the military service leave of32.3absencebeing purchased in the manner described in section 32.4 354A.12, subdivision 2a. The equivalent employee and employer 32.5 contributionsshallmust be in an amount equal to the employee 32.6 and employer contribution rates in effect for other active 32.7 members of the association covered by the same program applied 32.8 to a salary figure equal to the teacher's average annual salary 32.9 rateat the date of return from military servicethat the 32.10 teacher would have received if the leave or break in service had 32.11 not occurred, or if the determination of that average salary 32.12 rate is not reasonably certain, on the basis of the teacher's 32.13 average salary rate during the 12-month period immediately 32.14 preceding the period, or, if the preceding period is less than 32.15 12 months, the annualized rate derived from the teacher's 32.16 average salary rate during the period of teacher employment 32.17 rendered immediately preceding the period of uniformed 32.18 service, with the result multiplied by the number of full and 32.19 fractional years constituting the period of service provided to 32.20 themilitaryuniformed serviceleave of absencewhich the 32.21 teacherseeksis authorized to purchase under this 32.22 section.Payment shall include interest on the amount payable32.23pursuant to this section at the rate of six percent compounded32.24annually from the year the military service was rendered to the32.25date of payment.32.26 Subd. 3. [PRORATING.] If the payments made by a 32.27 teacherpursuant tounder this section are less thananthe full 32.28 amountequal to the applicable contribution rate applied to a32.29salary figure equal to the teacher's annual salary rate at the32.30date of return from military service, multiplied by the number32.31of years constituting the period of the military service leave32.32of absencedetermined under subdivision 2, the service credit 32.33shallmust be prorated. The prorated service creditshallmust 32.34 be determined by the ratio between the amount of the 32.35 actual equivalent employee payment which was made and the full 32.36contribution amount payable pursuant toequivalent employee 33.1 payment required under this section.In order to be entitled to33.2receive service credit under this section, payment shall be made33.3within five years from the date of discharge from military33.4service.33.5 Subd. 4. [ELIGIBLE PAYMENT PERIOD.] (a) To receive service 33.6 credit under this section, the contributions specified in this 33.7 section must be transmitted to the applicable first class city 33.8 teachers retirement fund association during the period which 33.9 begins with the date the individual returns to teaching service 33.10 and which has a duration of three times the length of the 33.11 uniformed service period, but not to exceed five years. 33.12 (b) Notwithstanding paragraph (a), if the payment period 33.13 determined under paragraph (a) is less than one year, the 33.14 contributions required under this section to receive service 33.15 credit may be made within one year from the discharge date. 33.16 Subd. 5. [LIMITS ON SERVICE CREDIT.] The amount of service 33.17 credit obtainable under this section may not exceed five years, 33.18 unless a longer purchase period is required under United States 33.19 Code, title 38, section 4312. 33.20 Subd. 6. [INTEREST REQUIREMENTS.] The employer shall pay 33.21 interest on all equivalent employee and employer contribution 33.22 amounts payable under this section. Interest must be computed 33.23 at a rate of 8.5 percent compounded annually from the end of 33.24 each fiscal year of the leave or break in service to the end of 33.25 the month in which payment is received. 33.26 Sec. 8. Minnesota Statutes 2002, section 490.121, is 33.27 amended by adding a subdivision to read: 33.28 Subd. 4b. [CREDIT FOR BREAK IN SERVICE TO PROVIDE 33.29 UNIFORMED SERVICE.] (a) A judge who is absent from employment by 33.30 reason of service in the uniformed services, as defined in 33.31 United States Code, title 38, section 4303(13), and who returns 33.32 to state employment as a judge upon discharge from service in 33.33 the uniformed service within the time frame required in United 33.34 States Code, title 38, section 4312(e) may obtain service credit 33.35 for the period of the uniformed service, provided that the judge 33.36 did not separate from uniformed service with a dishonorable or 34.1 bad conduct discharge or under other than honorable conditions. 34.2 (b) The judge may obtain credit by paying into the fund 34.3 equivalent member contribution based on the contribution rate 34.4 rates in effect at the time that the uniformed service was 34.5 performed multiplied by the full and fractional years being 34.6 purchased and applied to the annual salary rate. The annual 34.7 salary rate is the average annual salary during the purchase 34.8 period that the judge would have received if the judge had 34.9 continued to provide employment services to the state rather 34.10 than to provide uniformed service, or if the determination of 34.11 that rate is not reasonably certain, the annual salary rate is 34.12 the judge's average salary rate during the 12-month period of 34.13 judicial employment rendered immediately preceding the purchase 34.14 period. 34.15 (c) The equivalent employer contribution and, if 34.16 applicable, the equivalent employer additional contribution, 34.17 must be paid by the employing unit, using the employer and 34.18 employer additional contribution rate or rates in effect at the 34.19 time that the uniformed service was performed, applied to the 34.20 same annual salary rate or rates used to compute the equivalent 34.21 member contribution. 34.22 (d) If the member equivalent contributions provided for in 34.23 this subdivision are not paid in full, the judge's allowable 34.24 service credit must be prorated by multiplying the full and 34.25 fractional number of years of uniformed service eligible for 34.26 purchase by the ratio obtained by dividing the total member 34.27 contributions received by the total member contributions 34.28 otherwise required under this subdivision. 34.29 (e) To receive allowable service credit under this 34.30 subdivision, the contributions specified in this section must be 34.31 transmitted to the fund during the period which begins with the 34.32 date on which the individual returns to judicial employment and 34.33 which has a duration of three times the length of the uniformed 34.34 service period, but not to exceed five years. If the determined 34.35 payment period is calculated to be less than one year, the 34.36 contributions required under this subdivision to receive service 35.1 credit may be within one year from the discharge date. 35.2 (f) The amount of allowable service credit obtainable under 35.3 this section may not exceed five years, unless a longer purchase 35.4 period is required under United States Code, title 38, section 35.5 4312. 35.6 (g) The state court administrator shall pay interest on all 35.7 equivalent member and employer contribution amounts payable 35.8 under this subdivision. Interest must be computed at a rate of 35.9 8.5 percent compounded annually from the end of each fiscal year 35.10 of the leave or break in service to the end of the month in 35.11 which payment is received. 35.12 Sec. 9. [EFFECTIVE DATE.] 35.13 Sections 1 to 8 are effective on July 1, 2004. 35.14 ARTICLE 4 35.15 QUALIFIED PART-TIME TEACHER PROVISIONS 35.16 Section 1. Minnesota Statutes 2002, section 354.66, 35.17 subdivision 2, is amended to read: 35.18 Subd. 2. [QUALIFIED PART-TIME TEACHER PROGRAM 35.19 PARTICIPATION REQUIREMENTS.] (a) A teacher in a Minnesota public 35.20 elementary school, a Minnesota secondary school, or the 35.21 Minnesota State Colleges and Universities system who has three 35.22 years or more of allowable service in the association or three 35.23 years or more of full-time teaching service in Minnesota public 35.24 elementary schools, Minnesota secondary schools, or the 35.25 Minnesota State Colleges and Universities system, by agreement 35.26 with the board of the employing district or with the authorized 35.27 representative of the board, may be assigned to teaching service 35.28 in a part-time teaching position under subdivision 3. The 35.29 agreement must be executed before October 1 of the school year 35.30 for which the teacher requests to make retirement contributions 35.31 under subdivision 4. A copy of the executed agreement must be 35.32 filed with the executive director of the association. If the 35.33 copy of the executed agreement is filed with the association 35.34 after October 1 of the school year for which the teacher 35.35 requests to make retirement contributions under subdivision 4, 35.36 the employing unit shall pay the fine specified in section 36.1 354.52, subdivision 6, for each calendar day that elapsed since 36.2 the October 1 due date. The association may not accept an 36.3 executed agreement that is received by the association more than 36.4 15 months late. The association may not waive the fine required 36.5 by this section. 36.6 (b) Notwithstanding paragraph (a), if the teacher is also a 36.7 legislator: 36.8 (1) the agreement in paragraph (a) must be executed before 36.9 March 1 of the school year for which the teacher requests to 36.10 make retirement contributions under subdivision 4; and 36.11 (2) the fines specified in paragraph (a) apply if the 36.12 employing unit does not file the executed agreement with the 36.13 executive director of the association by March 1. 36.14 Sec. 2. Minnesota Statutes 2002, section 354A.094, 36.15 subdivision 3, is amended to read: 36.16 Subd. 3. [QUALIFIED PART-TIME TEACHER PROGRAM 36.17 PARTICIPATION REQUIREMENTS.] (a) A teacher in the public schools 36.18 of a city of the first class who has three years or more 36.19 allowable service in the applicable retirement fund association 36.20 or three years or more of full-time teaching service in 36.21 Minnesota public elementary schools, Minnesota secondary 36.22 schools, and Minnesota State Colleges and Universities system 36.23 may, by agreement with the board of the employing district, be 36.24 assigned to teaching service within the district in a part-time 36.25 teaching position. The agreement must be executed before 36.26 October 1 of the year for which the teacher requests to make 36.27 retirement contributions under subdivision 4. A copy of the 36.28 executed agreement must be filed with the executive director of 36.29 the retirement fund association. If the copy of the executed 36.30 agreement is filed with the association after October 1 of the 36.31 year for which the teacher requests to make retirement 36.32 contributions under subdivision 4, the employing school district 36.33 shall pay a fine of $5 for each calendar day that elapsed since 36.34 the October 1 due date. The association may not accept an 36.35 executed agreement that is received by the association more than 36.36 15 months late. The association may not waive the fine required 37.1 by this section. 37.2 (b) Notwithstanding paragraph (a), if the teacher is also a 37.3 legislator: 37.4 (1) the agreement in paragraph (a) must be executed before 37.5 March 1 of the school year for which the teacher requests to 37.6 make retirement contributions under subdivision 4; and 37.7 (2) the fines specified in paragraph (a) apply if the 37.8 employing unit does not file the executed agreement with the 37.9 executive director of the applicable Teachers Retirement Fund 37.10 Association by March 1. 37.11 Sec. 3. [EFFECTIVE DATE.] 37.12 Sections 1 and 2 are effective on July 1, 2004. 37.13 ARTICLE 5 37.14 RETIREMENT PLAN CONTRIBUTIONS AND TRANSFERS 37.15 Section 1. Minnesota Statutes 2002, section 354.42, 37.16 subdivision 7, is amended to read: 37.17 Subd. 7. [ERRONEOUS SALARY DEDUCTIONS OR DIRECT PAYMENTS.] 37.18 (a)AnyDeductions taken from the salary of an employee for the 37.19 retirement fund in errorshallmust be refunded to the employee 37.20 upon the discovery of the error and after the verification of 37.21 the error by the employing unit making the deduction, and. The 37.22 corresponding employer contribution and additional employer 37.23 contribution amounts attributable to the erroneous salary 37.24 deduction must be refunded to the employing unit. 37.25 (b) If salary deductions and employer contributions were 37.26 erroneously transmitted to the retirement fund and should have 37.27 been transmitted to another Minnesota public pension plan, the 37.28retirement associationexecutive director must transfer these 37.29 salary deductions and employer contributions to the appropriate 37.30 public pension fund without interest. For purposes of this 37.31 paragraph, a Minnesota public pension plan means a plan 37.32 specified in section 356.30, subdivision 3, or the plan governed 37.33 by chapter 354B. 37.34 (c) A potential transfer under paragraph (b) that would 37.35 cause the plan to fail to be a qualified plan under section 37.36 401(a) of the Internal Revenue Code, as amended, must not be 38.1 made by the executive director. Within 30 days after being 38.2 notified by the Teachers Retirement Association of an unmade 38.3 potential transfer under this paragraph, the employer of the 38.4 affected person must transmit an amount representing the 38.5 applicable salary deductions and employer contributions, without 38.6 interest, to the retirement fund of the appropriate Minnesota 38.7 public pension plan fund. The retirement association must 38.8 provide a credit for the amount of the erroneous salary 38.9 deductions and employer contributions against future 38.10 contributions from the employer. 38.11 (d) If a salary warrant or check from which a deduction for 38.12 the retirement fund was taken has been canceled or the amount of 38.13 the warrant or if a check has been returned to the funds of the 38.14 employing unit making the payment, a refund of the amount 38.15 deducted, or any portion of it that is required to adjust the 38.16 salary deductions,shallmust be made to the employing unit. 38.17(d) Any(e) Erroneous direct payments of member-paid 38.18 contributions or erroneous salary deductions that were not 38.19 refundedinduring the regular payroll cycle processingof an38.20employing unit's annual summary report shallmust be refunded to 38.21 the memberwith, plus interest computed using the rate and 38.22 method specified in section 354.49, subdivision 2. 38.23 (f) Any refund under this subdivision that would cause the 38.24 plan to fail to be a qualified plan under section 401(a) of the 38.25 Internal Revenue Code, as amended, may not be refunded and 38.26 instead must be credited against future contributions payable by 38.27 the employer. The employer is responsible for refunding to the 38.28 applicable employee any amount that was erroneously deducted 38.29 from the salary of the employee, with interest as specified in 38.30 paragraph (e). 38.31 Sec. 2. Minnesota Statutes 2002, section 354.51, 38.32 subdivision 5, is amended to read: 38.33 Subd. 5. [PAYMENT OF SHORTAGES.] (a) Except as provided in 38.34 paragraph (b), in the event that full required member 38.35 contributions are not deducted from the salary of a teacher, 38.36 paymentshallmust be made as follows: 39.1(a)(1) Payment of shortages in member deductions on salary 39.2 earned after June 30, 1957, andprior tobefore July 1, 1981, 39.3 may be made any timeprior tobefore retirement. Paymentshall39.4 must include interest at an annual rate of 8.5 percent 39.5 compounded annually from the end of the fiscal year in which the 39.6 shortage occurred to the end of the month in which payment is 39.7 made and the interestshallmust be credited to the fund. If 39.8 payment of a shortage in deductions is not made, the formula 39.9 service credit of the membershallmust be proratedpursuant to39.10 under section 354.05, subdivision 25, clause (3). 39.11(b)(2) Payment of shortages in member deductions on salary 39.12 earned after June 30, 1981,shall beare the sole obligation of 39.13 the employing unit andshall beare payable by the employing 39.14 unit upon notification by the executive director of the shortage 39.15 with interest at an annual rate of 8.5 percent compounded 39.16 annually from the end of the fiscal year in which the shortage 39.17 occurred to the end of the month in which payment is made and 39.18 the interestshallmust be credited to the fund. Effective July 39.19 1, 1986, the employing unit shall also pay the employer 39.20 contributions as specified in section 354.42, subdivisions 3 and 39.21 5 forsuchthe shortages. If the shortage payment is not paid 39.22 by the employing unit within 60 days of notification, the 39.23 executive director shall certify the amount of the shortage 39.24 payment to the applicable county auditor, who shall spread a 39.25 levy in the amount of the shortage payment over the taxable 39.26 property of the taxing district of the employing unit if the 39.27 employing unit is supported by property taxes, or to the 39.28 commissioner of finance, who shall deduct the amount from any 39.29 state aid or appropriation amount applicable to the employing 39.30 unit if the employing unit is not supported by property taxes. 39.31(c)(3) Payment may not be made for shortages in member 39.32 deductions on salary earnedprior tobefore July 1, 1957, for 39.33 shortages in member deductions on salary paid or payable under 39.34 paragraph (b), or for shortages in member deductions for persons 39.35 employed by the Minnesota State Colleges and Universities system 39.36 in a faculty position or in an eligible unclassified 40.1 administrative position and whose employment was less than 25 40.2 percent of a full academic year, exclusive of the summer 40.3 session, for the applicable institution that exceeds the most 40.4 recent 36 months. 40.5 (b) For a person who is employed by the Minnesota State 40.6 Colleges and Universities system in a faculty position or in an 40.7 eligible unclassified administrative position and whose 40.8 employment was less than 25 percent of a full academic year, 40.9 exclusive of the summer session, for the applicable institution, 40.10 upon the person's election under section 354B.21 of retirement 40.11 coverage under this chapter, the shortage in member deductions 40.12 on the salary for employment by the Minnesota State Colleges and 40.13 Universities system institution of less than 25 percent of a 40.14 full academic year, exclusive of the summer session, for the 40.15 applicable institution for the most recent 36 months and the 40.16 associated employer contributions must be paid by the Minnesota 40.17 State Colleges and Universities system institution, plus annual 40.18 compound interest at the rate of 8.5 percent from the end of the 40.19 fiscal year in which the shortage occurred to the end of the 40.20 month in which the Teachers Retirement Association coverage 40.21 election is made. If the shortage payment is not made by the 40.22 institution within 60 days of notification, the executive 40.23 director shall certify the amount of the shortage payment to the 40.24 commissioner of finance, who shall deduct the amount from any 40.25 state appropriation to the system. An individual electing 40.26 coverage under this paragraph shall repay the amount of the 40.27 shortage in member deductions, plus interest, through deduction 40.28 from salary or compensation payments within the first year of 40.29 employment after the election under section 354B.21, subject to 40.30 the limitations in section 16D.16. The Minnesota State Colleges 40.31 and Universities system may use any means available to recover 40.32 amounts which were not recovered through deductions from salary 40.33 or compensation payments. No payment of the shortage in member 40.34 deductions under this paragraph may be made for a period longer 40.35 than the most recent 36 months. 40.36 Sec. 3. Minnesota Statutes 2002, section 354B.23, 41.1 subdivision 1, is amended to read: 41.2 Subdivision 1. [MEMBER CONTRIBUTION RATE.](a) Except as41.3provided in paragraph (b),The member contribution rate for 41.4 participants in the individual retirement account plan is 4.5 41.5 percent of salary. 41.6(b) For participants in the individual retirement account41.7plan who were otherwise eligible to elect retirement coverage in41.8the state unclassified employees retirement program, the member41.9contribution rate is the rate specified in section 352D.04,41.10subdivision 2, paragraph (a).41.11 Sec. 4. Minnesota Statutes 2002, section 354B.32, is 41.12 amended to read: 41.13 354B.32 [TRANSFER OF FUNDS TO IRAP.] 41.14 A participant in the individual retirement account plan 41.15 established in this chapter who has less than ten years of 41.16 allowable service under the Teachers Retirement Association or 41.17thea teachers retirement fund association, whichever applies, 41.18 may elect to transfer an amount equal to the participant's 41.19 accumulated member contributions to the Teachers Retirement 41.20 Association or the applicable teachers retirement fund 41.21 association, plus compound interest at the rate of six percent 41.22 per annum, to the individual retirement account plan. The 41.23 transfers are irrevocablefund to fundfund-to-fund transfers, 41.24 and, in no event, may the participant receive direct payment of 41.25 the money transferredprior to retirementbefore the termination 41.26 of employment. If a participant elects the contribution 41.27 transfer, all of the participant's allowable and formula service 41.28 credit in the Teachers Retirement Association or the teachers 41.29 retirement fund association associated with the transferred 41.30 amount is forfeited. 41.31 The executive director of the teachers retirement 41.32 association and the chief administrative officers of the 41.33 teachers retirement fund associations, in cooperation with the 41.34 chancellor of the Minnesota State Colleges and Universities 41.35 system, shall notify participants who are eligible to transfer 41.36 of their right to transfer and the amount that they are eligible 42.1 to transfer, and shall, upon request, provide forms to implement 42.2 the transfer. The chancellor of the Minnesota State Colleges 42.3 and Universities system shall assist the Teachers Retirement 42.4 Association and the teachers retirement fund associations in 42.5 developing transfer forms and in implementing the transfers. 42.6 Authority to elect a transfer under this section expires on 42.7 July 1, 2004. 42.8 Sec. 5. [EFFECTIVE DATE; RETROACTIVE APPLICATION.] 42.9 (a) Section 2 is effective on July 1, 2004. 42.10 (b) Section 2 applies to shortages in member deductions 42.11 that occurred before the effective date of the section. 42.12 (c) Sections 1, 3, and 4 are effective on July 1, 2004. 42.13 ARTICLE 6 42.14 REPORTING AND INFORMATION PROVISION 42.15 Section 1. Minnesota Statutes 2002, section 354.07, 42.16 subdivision 9, is amended to read: 42.17 Subd. 9. [INFORMATION DISTRIBUTION.] All school districts, 42.18 the Minnesota State Colleges and Universities,community42.19collegesand other employers of members of the association are 42.20 obligated to distribute to their employees ballots for the 42.21 election of members to the board of trustees, pamphlets, 42.22 brochures, documents or any other material containing 42.23 association information which are prepared by the executive 42.24 director or the board and are delivered to the employers for 42.25 distribution. 42.26 Sec. 2. Minnesota Statutes 2002, section 354.52, 42.27 subdivision 4a, is amended to read: 42.28 Subd. 4a. [MEMBER DATA REPORTING REQUIREMENTS.] (a)An42.29employing unit must initially provide the member data specified42.30in paragraph (b) or any of that data not previously provided to42.31the association for payroll warrants dated after June 30, 1995,42.32in a format prescribed by the executive director.An employing 42.33 unit must provide the member data specified in paragraph (b) in 42.34 a format prescribed by the executive director. Data changes and 42.35 the dates of those changes under this subdivision must be 42.36 reported to the association in a format prescribed by the 43.1 executive director on an ongoing basis within 14 calendar days 43.2 after the date of the end of the payroll cycle in which they 43.3 occur. These data changes must be reported with the payroll 43.4 cycle data under subdivision 4b. 43.5 (b) Data on the member includes: 43.6 (1) legal name, address, date of birth, association member 43.7 number, employer-assigned employee number, and social security 43.8 number; 43.9 (2) association status, including, but not limited to, 43.10 basic, coordinated, exempt annuitant, exempt technical college 43.11 teacher, and exempt independent contractor or consultant; 43.12 (3) employment status, including, but not limited to, full 43.13 time, part time, intermittent, substitute, or part-time 43.14 mobility; 43.15 (4) employment position, including, but not limited to, 43.16 teacher, superintendent, principal, administrator, or other; 43.17 (5) employment activity, including, but not limited to, 43.18 hire, termination, resumption of employment, disability, or 43.19 death; 43.20 (6) leaves of absence; 43.21 (7) county district number assigned by the association for 43.22 the employing unit; 43.23 (8) data center identification number, if applicable;and43.24 (9) gender; 43.25 (10) position code; and 43.26 (11) other information as may be required by the executive 43.27 director. 43.28 Sec. 3. Minnesota Statutes 2002, section 354.52, is 43.29 amended by adding a subdivision to read: 43.30 Subd. 4c. [MNSCU SERVICE CREDIT REPORTING.] For all 43.31 part-time service rendered on or after July 1, 2004, the service 43.32 credit reporting requirement in subdivision 4b for all part-time 43.33 employees of the Minnesota State Colleges and Universities 43.34 system must be met by the Minnesota State Colleges and 43.35 Universities system reporting to the association on or before 43.36 July 31 of each year the final calculation of each part-time 44.1 member's service credit for the immediately preceding fiscal 44.2 year based on the employee's assignments for the fiscal year. 44.3 Sec. 4. Minnesota Statutes 2002, section 354.52, 44.4 subdivision 6, is amended to read: 44.5 Subd. 6. [NONCOMPLIANCE CONSEQUENCES.] An employing unit 44.6 that does not comply with the reporting requirements underthis44.7section shallsubdivision 2a, 4a, or 4b must pay a fine of $5 44.8 per calendar day until the association receives the required 44.9 data. 44.10 Sec. 5. [EFFECTIVE DATE.] 44.11 Sections 1 to 4 are effective on July 1, 2004. 44.12 ARTICLE 7 44.13 RETIREMENT ANNUITY PROVISIONS 44.14 Section 1. Minnesota Statutes 2002, section 352.86, 44.15 subdivision 1, is amended to read: 44.16 Subdivision 1. [ELIGIBILITY; RETIREMENT ANNUITY.] A person 44.17 who is employed by the Department of Transportation in the civil 44.18 service employment classification of aircraft pilot or chief 44.19 pilot who is covered by the general employee retirement plan of 44.20 the system under section 352.01, subdivision 23, who elects this 44.21 special retirement coverage under subdivision 3, who is 44.22 prohibited from performing the duties of aircraft pilot or chief 44.23 pilot after reaching age6265 by arulepolicy adopted by the 44.24 commissioner of transportation, and who terminates employment as 44.25 a state employee onreaching thaton or after age 62 but prior 44.26 to normal retirement age is entitled, upon application, to a 44.27 retirement annuity computedin accordance withunder section 44.28 352.115, subdivisions 2 and 3, without any reduction for early 44.29 retirement under section 352.116, subdivision 1. 44.30 Sec. 2. Minnesota Statutes 2002, section 353.37, is 44.31 amended by adding a subdivision to read: 44.32 Subd. 1b. [RETIREMENT AGE.] For purposes of this section, 44.33 "retirement age" means retirement age as defined in United 44.34 States Code, title 42, section 416(l). 44.35 Sec. 3. Minnesota Statutes 2002, section 353.37, 44.36 subdivision 3, is amended to read: 45.1 Subd. 3. [REDUCTION OF ANNUITY.] The association shall 45.2 reduce the amount of the annuityas follows:45.3(a) forof a person who has not reachednormalthe 45.4 retirement age,by one-half of the amount in excess of the 45.5 applicable reemployment income maximum under subdivision 1;. 45.6(b) for a person who has reached normal retirement age, but45.7has not reached age 70, one-third of the amount in excess of the45.8applicable reemployment income maximum under subdivision 1;45.9(c) for a person who has reached age 70, or for salary45.10earned through service in an elected office, there is no45.11reduction upon reemployment, regardless of income.45.12 There is no reduction upon reemployment, regardless of income, 45.13 for a person who has reached the retirement age. 45.14 Sec. 4. Minnesota Statutes 2002, section 354.44, 45.15 subdivision 4, is amended to read: 45.16 Subd. 4. [RETIREMENT ANNUITY ACCRUAL DATE.] (a) An annuity 45.17 payment begins to accrue,providingprovided that the age and 45.18 service requirements under subdivision 1 are satisfied, after 45.19 the termination of teaching service, or after the application 45.20 for retirement has been filed with the board, whichever is 45.21 later, as follows: 45.22 (1) on the 16th day of the month of termination or filing 45.23 if the termination or filing occurs on or before the 15th day of 45.24 the month; 45.25 (2) on the first day of the month following the month of 45.26 termination or filing if the termination or filing occurs on or 45.27 after the 16th day of the month; 45.28 (3) on July 1 for all school principals and other 45.29 administrators who receive a full annual contract salary during 45.30 the fiscal year for performance of a full year's contract 45.31 duties; or 45.32 (4) a later date to be either the first or the 16th day of 45.33 a month occurring within the six-month period immediately 45.34 following the termination of teaching service as specified under 45.35 paragraph (b) by the member. 45.36 (b) If an application for retirement is filed with the 46.1 board during the six-month period that occurs immediately 46.2 following the termination of teaching service, the annuity may 46.3 begin to accrue as if the application for retirement had been 46.4 filed with the board on the date teaching service terminated or 46.5 a later date under paragraph (a), clause (4).An annuity must46.6not begin to accrue more than one month before the date of final46.7salary receipt.46.8 Sec. 5. Minnesota Statutes 2002, section 354.44, 46.9 subdivision 5, is amended to read: 46.10 Subd. 5. [RESUMPTION OF TEACHING SERVICE AFTER 46.11 RETIREMENT.] (a) Any person who retired under the provisions of 46.12 this chapter and has thereafter resumed teaching in any employer 46.13 unit to which this chapter applies is eligible to continue to 46.14 receive payments in accordance with the annuity except that 46.15 annuity payments must be reduced during the calendar year 46.16 immediately following any calendar year in which the person's 46.17 income from the teaching service is in an amount greater than 46.18 the annual maximum earnings allowable for that age for the 46.19 continued receipt of full benefit amounts monthly under the 46.20 federal old age, survivors and disability insurance program as 46.21 set by the secretary of health and human services under United 46.22 States Code, title 42, section 403. The amount of the reduction 46.23 must be one-half of the amount in excess of the applicable 46.24 reemployment income maximum specified in this subdivision and 46.25 must be deducted from the annuity payable for the calendar year 46.26 immediately following the calendar year in which the excess 46.27 amount was earned. If the person has not yet reached the 46.28 minimum age for the receipt of Social Security benefits, the 46.29 maximum earnings for the person must be equal to the annual 46.30 maximum earnings allowable for the minimum age for the receipt 46.31 of Social Security benefits. 46.32 (b) If the person is retired for only a fractional part of 46.33 the calendar year during the initial year of retirement, the 46.34 maximum reemployment income specified in this subdivision must 46.35 be prorated for that calendar year. 46.36 (c) After a person has reached the Social Security full 47.1 retirement ageof 70, no reemployment income maximum is 47.2 applicable regardless of the amount of income. 47.3 (d) The amount of the retirement annuity reduction must be 47.4 handled or disposed of as provided in section 356.47. 47.5 (e) For the purpose of this subdivision, income from 47.6 teaching service includes, but is not limited to: 47.7 (1) all income for services performed as a consultant or an 47.8 independent contractor for an employer unit covered by the 47.9 provisions of this chapter; and 47.10 (2) the greater of either the income received or an amount 47.11 based on the rate paid with respect to an administrative 47.12 position, consultant, or independent contractor in an employer 47.13 unit with approximately the same number of pupils and at the 47.14 same level as the position occupied by the person who resumes 47.15 teaching service. 47.16 Sec. 6. Minnesota Statutes 2002, section 490.121, 47.17 subdivision 10, is amended to read: 47.18 Subd. 10. [EARLY RETIREMENT DATE.] "Early retirement date" 47.19 means the last day of any month after a judge attains the age of 47.206260 until the normal retirement date. 47.21 Sec. 7. [PERA-POLICE AND FIRE; TEMPORARY EXEMPTION FROM 47.22 REEMPLOYED ANNUITANT EARNINGS LIMITATIONS.] 47.23 Notwithstanding any provision of Minnesota Statutes, 47.24 section 353.37, to the contrary, a person who is receiving a 47.25 retirement annuity from the public employees police and fire 47.26 plan and who is employed as a sworn peace officer by the 47.27 Metropolitan Airports Commission is exempt from the limitation 47.28 on reemployed annuitant earnings for the period January 1, 2004, 47.29 until June 30, 2007. 47.30 Sec. 8. [EFFECTIVE DATE.] 47.31 (a) Section 1 is effective on the day following final 47.32 enactment 47.33 (b) Sections 2, 3, 4, 5, and 6 are effective on July 1, 47.34 2004. 47.35 (c) Sections 7 is effective on the day following final 47.36 enactment and applies retroactively to January 1, 2004. 48.1 ARTICLE 8 48.2 DISABILITY BENEFIT PROVISIONS 48.3 Section 1. Minnesota Statutes 2002, section 352.113, 48.4 subdivision 4, is amended to read: 48.5 Subd. 4. [MEDICAL OR PSYCHOLOGICAL EXAMINATIONS; 48.6 AUTHORIZATION FOR PAYMENT OF BENEFIT.] (a) An applicant shall 48.7 provide medical, chiropractic, or psychological evidence to 48.8 support an application for total and permanent disability. 48.9 (b) The director shall have the employee examined by at 48.10 least one additional licensed chiropractor, physician, or 48.11 psychologist designated by the medical adviser. The 48.12 chiropractors, physicians, or psychologists shall make written 48.13 reports to the director concerning the employee's disability 48.14 includingmedicalexpert opinions as to whether the employee is 48.15 permanently and totally disabled within the meaning of section 48.16 352.01, subdivision 17. 48.17 (c) The director shall also obtain written certification 48.18 from the employer stating whether the employment has ceased or 48.19 whether the employee is on sick leave of absence because of a 48.20 disability that will prevent further service to the employer and 48.21 as a consequence the employee is not entitled to compensation 48.22 from the employer. 48.23 (d) The medical adviser shall consider the reports of the 48.24 physicians, psychologists, and chiropractors and any other 48.25 evidence supplied by the employee or other interested parties. 48.26 If the medical adviser finds the employee totally and 48.27 permanently disabled, the adviser shall make appropriate 48.28 recommendation to the director in writing together with the date 48.29 from which the employee has been totally disabled. The director 48.30 shall then determine if the disability occurred within 180 days 48.31 of filing the application, while still in the employment of the 48.32 state, and the propriety of authorizing payment of a disability 48.33 benefit as provided in this section. 48.34 (e) A terminated employee may apply for a disability 48.35 benefit within 180 days of termination as long as the disability 48.36 occurred while in the employment of the state. The fact that an 49.1 employee is placed on leave of absence without compensation 49.2 because of disability does not bar that employee from receiving 49.3 a disability benefit. 49.4 (f) Unless the payment of a disability benefit has 49.5 terminated because the employee is no longer totally disabled, 49.6 or because the employee has reached normal retirement age as 49.7 provided in this section, the disability benefitshallmust 49.8 cease with the last payment received by the disabled employee or 49.9 which had accrued during the lifetime of the employee unless 49.10 there is a spouse surviving;. In that event, the surviving 49.11 spouse is entitled to the disability benefit for the calendar 49.12 month in which the disabled employee died. 49.13 Sec. 2. Minnesota Statutes 2002, section 352.113, 49.14 subdivision 6, is amended to read: 49.15 Subd. 6. [REGULAR MEDICAL OR PSYCHOLOGICAL EXAMINATIONS.] 49.16 At least once each year during the first five years following 49.17 the allowance of a disability benefit to any employee, and at 49.18 least once in every three-year period thereafter, the director 49.19 may require any disabled employee to undergo a medical, 49.20 chiropractic, or psychological examination. The examination 49.21 must be made at the place of residence of the employee, or at 49.22 any place mutually agreed upon, bya physician or physiciansan 49.23 expert or experts designated by the medical adviser and engaged 49.24 by the director. If any examination indicates to the medical 49.25 adviser that the employee is no longer permanently and totally 49.26 disabled, or is engaged in or can engage in a gainful 49.27 occupation, payments of the disability benefit by the fund must 49.28 be discontinued. The paymentsshall discontinuemust be 49.29 discontinued as soon as the employee is reinstated to the 49.30 payroll following sick leave, but in no caseshallmay payment 49.31 be made for more than 60 days after the medical adviser finds 49.32 that the employee is no longer permanently and totally disabled. 49.33 Sec. 3. Minnesota Statutes 2002, section 352.113, is 49.34 amended by adding a subdivision to read: 49.35 Subd. 7a. [TEMPORARY REEMPLOYMENT BENEFIT REDUCTION 49.36 WAIVER.] A reduction in benefits under subdivision 7, or a 50.1 termination of benefits due to the disabled employee resuming a 50.2 gainful occupation from which earnings are equal to or more than 50.3 the employee's salary at the date of disability or the salary 50.4 currently paid for similar positions does not apply until six 50.5 months after the individual returns to a gainful occupation. 50.6 Sec. 4. Minnesota Statutes 2002, section 352.113, 50.7 subdivision 8, is amended to read: 50.8 Subd. 8. [REFUSAL OF EXAMINATION.] If a disabled employee 50.9 refuses to submit toa medicalan expert examination as 50.10 required, payments by the fund must be discontinued and the 50.11 director shall revoke all rights of the employee in any 50.12 disability benefit. 50.13 Sec. 5. Minnesota Statutes 2002, section 352.95, 50.14 subdivision 1, is amended to read: 50.15 Subdivision 1. [JOB-RELATED DISABILITY.] A covered 50.16 correctional employee who becomes disabled and who is expected 50.17 to be physically or mentally unfit to perform the duties of the 50.18 position for at least one year as a direct result of an injury, 50.19 sickness, or other disability that incurred in orarisingarose 50.20 out of any act of duty that makes the employee physically or 50.21 mentally unable to perform the duties,is entitled to a 50.22 disability benefit. The disability benefit may be based on 50.23 covered correctional service only. The benefit amountmust50.24equalis 50 percent of the average salary defined in section 50.25 352.93, plus an additional percent equal to that specified in 50.26 section 356.315, subdivision 5, for each year of covered 50.27 correctional service in excess of 20 years, ten months, prorated 50.28 for completed months. 50.29 Sec. 6. Minnesota Statutes 2002, section 352.95, 50.30 subdivision 2, is amended to read: 50.31 Subd. 2. [NON-JOB-RELATED DISABILITY.]AnyA covered 50.32 correctional employee who, after rendering at least one year of 50.33 covered correctional service, becomes disabled and who is 50.34 expected to be physically or mentally unfit to perform the 50.35 duties of the position for at least one year because of sickness 50.36 or injuryoccurringthat occurred while not engaged in covered 51.1 employment,is entitled to a disability benefit based on covered 51.2 correctional service only. The disability benefit must be 51.3 computed as provided in section 352.93, subdivisions 1 and 2, 51.4 and must be computed as though the employee had at least 15 51.5 years of covered correctional service. 51.6 Sec. 7. Minnesota Statutes 2002, section 352.95, 51.7 subdivision 4, is amended to read: 51.8 Subd. 4. [MEDICAL OR PSYCHOLOGICAL EVIDENCE.] (a) An 51.9 applicant shall provide medical, chiropractic, or psychological 51.10 evidence to support an application for disability benefits. The 51.11 director shall have the employee examined by at least one 51.12 additional licensed physician, chiropractor, or psychologist who 51.13 is designated by the medical adviser. The physicians, 51.14 chiropractors, or psychologists with respect to a mental 51.15 impairment, shall make written reports to the director 51.16 concerning the question of the employee's disability, 51.17 includingmedicaltheir expert opinions as to whether the 51.18 employee is disabled within the meaning of this section. The 51.19 director shall also obtain written certification from the 51.20 employer stating whether or not the employee is on sick leave of 51.21 absence because of a disability that will prevent further 51.22 service to the employer, and as a consequence, the employee is 51.23 not entitled to compensation from the employer. 51.24 (b) If, on considering thephysicians'reports by the 51.25 physicians, chiropractors, or psychologists and any other 51.26 evidence supplied by the employee or others, the medical adviser 51.27 finds the employee disabled within the meaning of this section, 51.28 the advisor shall make the appropriate recommendation to the 51.29 director, in writing, together with the date from which the 51.30 employee has been disabled. The director shall then determine 51.31 the propriety of authorizing payment of a disability benefit as 51.32 provided in this section. 51.33 (c) Unless the payment of a disability benefit has 51.34 terminated because the employee is no longer disabled, or 51.35 because the employee has reached either age 65 or the five-year 51.36 anniversary of the effective date of the disability benefit, 52.1 whichever is later, the disability benefitshallmust cease with 52.2 the last payment which was received by the disabled employee or 52.3 which had accrued during the employee's lifetime. While 52.4 disability benefits are paid, the director has the right, at 52.5 reasonable times, to require the disabled employee to submit 52.6 proof of the continuance of the disability claimed. If any 52.7 examination indicates to the medical adviser that the employee 52.8 is no longer disabled, the disability payment must be 52.9 discontinued upon the person's reinstatement to state service or 52.10 within 60 days of the finding, whichever is sooner. 52.11 Sec. 8. Minnesota Statutes 2002, section 352B.10, 52.12 subdivision 1, is amended to read: 52.13 Subdivision 1. [INJURIES,; PAYMENT AMOUNTS.]AnyA member 52.14 who becomes disabled and who is expected to be physically or 52.15 mentally unfit to perform duties for at least one year as a 52.16 direct result of an injury, sickness, or other disability that 52.17 incurred in orarisingarose out of any act of duty,shallis 52.18 entitled to receive disability benefits while disabled. The 52.19 benefits must be paid in monthly installments. The benefit is 52.20 an amount equal to the member's average monthly salary 52.21 multiplied by 60 percent, plus an additional percent equal to 52.22 that specified in section 356.315, subdivision 6, for each year 52.23 and pro rata for completed months of service in excess of 20 52.24 years, if any. 52.25 Sec. 9. Minnesota Statutes 2002, section 352B.10, 52.26 subdivision 2, is amended to read: 52.27 Subd. 2. [DISABLED WHILE NOT ON DUTY.] If a member 52.28terminates employment afterwith at least one year of service 52.29because of sickness or injury occurring while not on duty and52.30not engaged in state work entitling the member to membership,52.31and the memberbecomes disabled and is expected to be physically 52.32 or mentally unfit to perform the duties of the position for at 52.33 least one year because of sickness or injuryoccurringthat 52.34 occurred while not engaged in covered employment, themember52.35 individual is entitled to disability benefits. The benefit must 52.36 bein the same amount andcomputedin the same wayas if the 53.1memberindividual were 55 years old at the date of disability 53.2 and the annuitywere paidwas payable under section 352B.08. If 53.3 a disability under thisclausesubdivision occurs after one year 53.4 of service but before 15 years of service, the disability 53.5 benefit must be computed as though thememberindividual had 53.6 credit for 15 years of service. 53.7 Sec. 10. Minnesota Statutes 2002, section 352B.10, 53.8 subdivision 3, is amended to read: 53.9 Subd. 3. [ANNUAL AND SICK LEAVE; WORK AT LOWER PAY.] No 53.10 membershallis entitled to receiveanya disability benefit 53.11 payment when the member has unused annual leave or sick leave, 53.12 or under any other circumstances,when, during the period of 53.13 disability, there has been no impairment of salary.ShouldIf 53.14 themember or former member resumedisabilitant resumes gainful 53.15workemployment, the disability benefit must be continued in an 53.16 amount which, when added to current earnings, does not exceed 53.17 the salary rate receivedofby the person at the date of 53.18 disabilityas, which must be adjusted over time by thesame53.19 percentage increase in United States average wages used by the 53.20 Social Security Administration in calculating average indexed 53.21 monthly earnings for the old age, survivors, and disability 53.22 insurance programs for the same period. 53.23 Sec. 11. Minnesota Statutes 2002, section 352B.10, 53.24 subdivision 4, is amended to read: 53.25 Subd. 4. [PROOF OF DISABILITY.] (a) No disabilitybenefit53.26payment shallbenefits may bemade except uponpaid unless 53.27 adequate proof is furnished to the executive director of the 53.28 existence of the disability.While disability benefits are53.29being paid53.30 (b) Adequate proof of a disability must include a written 53.31 expert report by a licensed physician, by a licensed 53.32 chiropractor, or with respect to a mental impairment, by a 53.33 licensed psychologist. 53.34 (c) Following the commencement of benefit payments, 53.35 the executive director has the right, at reasonable times, to 53.36 require thedisabled former memberdisabilitant to submit proof 54.1 of the continuance of the disability claimed. 54.2 Sec. 12. Minnesota Statutes 2002, section 352B.10, 54.3 subdivision 5, is amended to read: 54.4 Subd. 5. [OPTIONAL ANNUITY.] Adisabled member54.5 disabilitant may, in lieu of survivorship coverage under section 54.6 352B.11, subdivision 2, choose the normal disability benefit or 54.7 an optional annuity as provided in section 352B.08, subdivision 54.8 3. The choice of an optional annuity must be made in writing, 54.9 on a form prescribed by the executive director, and must be made 54.10 before the commencement of the payment of the disability 54.11 benefit, or within 90 daysof attainingbefore reaching age 65 54.12 or before reaching the five-year anniversary of the effective 54.13 date of the disability benefit, whichever is later.ItThe 54.14 optional annuity is effective on the date on which the 54.15 disability benefit begins to accrue, or the month following the 54.16 attainment of age 65 or following the five-year anniversary of 54.17 the effective date of the disability benefit, whichever is later. 54.18 Sec. 13. Minnesota Statutes 2002, section 352B.105, is 54.19 amended to read: 54.20 352B.105 [TERMINATION OF DISABILITY BENEFITS.] 54.21 Disability benefits payable under section 352B.10shall54.22 must terminateaton the transfer date, which is the end of the 54.23 month in which thebeneficiarydisabilitant becomes 65 years old 54.24 or the five-year anniversary of the effective date of the 54.25 disability benefit, whichever is later. If thebeneficiary54.26 disabilitant is still disabledwhenon thebeneficiary becomes54.2765 years oldtransfer date, thebeneficiary shalldisabilitant 54.28 must be deemed to be a retired member and, if thebeneficiary54.29 disabilitant had chosen an optional annuity under section 54.30 352B.10, subdivision 5,shallmust receive an annuityin54.31accordance withunder the terms of the optional annuity 54.32 previously chosen. If thebeneficiarydisabilitant had not 54.33 chosen an optional annuity under section 352B.10, subdivision 5, 54.34 thebeneficiarydisabilitant may then choose to receive either a 54.35 normal retirement annuity computed under section 352B.08, 54.36 subdivision 2, or an optional annuity as provided in section 55.1 352B.08, subdivision 3. An optional annuity must be chosen 55.2 within 90 days of attainingage 65 or reachingthefive-year55.3anniversary of the effective date of the disability benefit,55.4whichever is latertransfer date. If an optional annuity is 55.5 chosen, the optional annuityshall begin to accrueaccrues on 55.6 the first of the month next followingattainment of age 65 or55.7the five-year anniversary oftheeffectivetransfer dateof the55.8disability benefit, whichever is later. 55.9 Sec. 14. Minnesota Statutes 2002, section 352D.065, 55.10 subdivision 2, is amended to read: 55.11 Subd. 2. [DISABILITY BENEFIT AMOUNT.] A participant who 55.12 becomes totally and permanently disabled has the option, even if 55.13 on leave of absence without pay, to receive: 55.14 (1) the value of the participant's total shares; 55.15 (2) the value ofone-halfof a portion of the total shares 55.16 and an annuity based on thevalue of one-halfremainder of the 55.17 total shares; or 55.18 (3) an annuity based on the value of the participant's 55.19 total shares. 55.20 Sec. 15. Minnesota Statutes 2002, section 353.33, 55.21 subdivision 4, is amended to read: 55.22 Subd. 4. [PROCEDURE TO DETERMINE ELIGIBILITY.] (a) The 55.23 applicant shall provide an expert report signed by a licensed 55.24 physician, psychologist, or chiropractor and the applicant must 55.25 authorize the release of medical and health care evidence, 55.26 including all medical records and relevant information from any 55.27 source, to support the application for total and permanent 55.28 disability benefits. 55.29 (b) The medical adviser shall verify the medical evidence 55.30 and, if necessary for disability determination, suggest the 55.31 referral of the applicant to specialized medical consultants. 55.32 (c) The association shall also obtain from the employer,a 55.33 certification of the member's past public service, the dates 55.34 of any paid sick leave and vacation beyond the last working day 55.35 and whether or not any sick leave or annual leave has been 55.36 allowed. 56.1 (d) If, upon consideration of the medical evidence received 56.2 and the recommendations of the medical adviser, it is determined 56.3 by the executive director that the applicant is totally and 56.4 permanently disabled within the meaning of the law, the 56.5 association shall grant the person a disability benefit.The56.6fact that56.7 (e) An employee who is placed on leave of absence without 56.8 compensation because of a disabilitydoesis notbar the person56.9 barred from receiving a disability benefit. 56.10 Sec. 16. Minnesota Statutes 2002, section 353.33, 56.11 subdivision 6, is amended to read: 56.12 Subd. 6. [CONTINUING ELIGIBILITY FOR BENEFITS.] The 56.13 association shall determine eligibility for continuation of 56.14 disability benefits and require periodic examinations and 56.15 evaluations of disabled members as frequently as deemed 56.16 necessary. The association shall require the disabled member to 56.17 provide an expert report signed by a licensed physician, 56.18 psychologist, or chiropractor and the disabled member shall 56.19 authorize the release of medical and health care evidence, 56.20 including all medical and health care records and information 56.21 from any source, relating to an application for continuation of 56.22 disability benefits. Disability benefits are contingent upon a 56.23 disabled person's participation in a vocational 56.24 rehabilitationprogramevaluation if the executive director 56.25 determines that the disabled person may be able to return to a 56.26 gainful occupation. If a member is found to be no longer 56.27 totally and permanently disabled, payments must cease the first 56.28 of the month following the expiration of a 30-day period after 56.29 the member receives a certified letter notifying the member that 56.30 payments will cease. 56.31 Sec. 17. Minnesota Statutes 2002, section 353.33, 56.32 subdivision 6b, is amended to read: 56.33 Subd. 6b. [DUTIES OF THE MEDICAL ADVISER.] At the request 56.34 of the executive director, the medical adviser shall designate 56.35 licensed physicians, psychologists, or chiropractors to examine 56.36 applicants for disability benefits and review themedicalexpert 57.1 reports based upon these examinations to determine whether an 57.2 applicant is totally and permanently disabled as defined in 57.3 section 353.01, subdivision 19, disabled as defined in section 57.4 353.656, or eligible for continuation of disability benefits 57.5 under subdivision 6. The medical examiner shall also review, at 57.6 the request of the executive director, all medical and health 57.7 care statements on behalf of an applicant for disability 57.8 benefits, and shall report in writing to the executive 57.9 director the conclusions and recommendations of the examiner on 57.10 those matters referred for advice. 57.11 Sec. 18. Minnesota Statutes 2002, section 353.33, 57.12 subdivision 7, is amended to read: 57.13 Subd. 7. [PARTIAL REEMPLOYMENT.] If, following a work or 57.14 non-work-related injury or illness, a disabled personresumes a57.15gainful occupation from whichwho remains totally and 57.16 permanently disabled as defined in section 353.01, subdivision 57.17 19, has income from employment that is not substantial gainful 57.18 activity and the rate of earnings from that employment are less 57.19 than the salary rate at the date of disability or the 57.20 salary rate currently paid forsimilarpositions similar to the 57.21 employment position held by the disabled person immediately 57.22 before becoming disabled, whichever is greater, theboard57.23 executive director shall continue the disability benefit in an 57.24 amount that, when added to the earnings and any workers' 57.25 compensation benefit, does not exceed the salary rate at the 57.26 date of disability or the salary currently paid forsimilar57.27 positions similar to the employment position held by the 57.28 disabled person immediately before becoming disabled, whichever 57.29 is higher, provided. The disability benefitdoesunder this 57.30 subdivision may not exceed the disability benefit originally 57.31 allowed, plus any postretirement adjustments payable after 57.32 December 31, 1988, in accordance with section 11A.18, 57.33 subdivision 10. No deductions for the retirement fund may be 57.34 taken from the salary of a disabled person who is receiving a 57.35 disability benefit as provided in this subdivision. 57.36 Sec. 19. Minnesota Statutes 2002, section 353.33, is 58.1 amended by adding a subdivision to read: 58.2 Subd. 7a. [TRIAL WORK PERIOD.] (a) If, following a work or 58.3 non-work related injury or illness, a disabled member attempts 58.4 to return to work for their previous public employer or attempts 58.5 to return to a similar position with another public employer, on 58.6 a full-time or less than full-time basis, the Public Employees 58.7 Retirement Association shall continue paying the disability 58.8 benefit for a period not to exceed six months. The disability 58.9 benefit must continue in an amount that, when added to the 58.10 subsequent employment earnings and workers' compensation 58.11 benefit, does not exceed the salary at the date of disability or 58.12 the salary currently paid for similar positions, whichever is 58.13 higher. 58.14 (b) No deductions for the retirement fund may be taken from 58.15 the salary of a disabled person who is attempting to return to 58.16 work under this provision unless the member waives further 58.17 disability benefits. 58.18 (c) A member only may return to employment and continue 58.19 disability benefit payments once while receiving disability 58.20 benefits from a plan administered by the Public Employees 58.21 Retirement Association. 58.22 Sec. 20. Minnesota Statutes 2002, section 353.656, 58.23 subdivision 5, is amended to read: 58.24 Subd. 5. [PROOF OF DISABILITY.] (a) A disability benefit 58.25 payment must not be made except upon adequate proof furnished to 58.26 the executive director of the association of the existence of 58.27sucha disability, and. 58.28 (b) During the time when disability benefits are being 58.29 paid, the executive director of the association has the right, 58.30 at reasonable times, to require the disabled member to submit 58.31 proof of the continuance of the disability claimed. 58.32 (c) Adequate proof of a disability must include a written 58.33 expert report by a licensed physician, by a licensed 58.34 chiropractor, or with respect to a mental impairment, by a 58.35 licensed psychologist. 58.36 (d) A person applying for or receiving a disability benefit 59.1 shall provide or authorize release of medical evidence, 59.2 including all medical records and information from any source, 59.3 relating to an application for disability benefits or the 59.4 continuation of those benefits. 59.5 Sec. 21. Minnesota Statutes 2002, section 353.656, is 59.6 amended by adding a subdivision to read: 59.7 Subd. 8. [APPLICATION PROCEDURE TO DETERMINE ELIGIBILITY 59.8 FOR POLICE AND FIRE PLAN DISABILITY BENEFITS.] (a) An 59.9 application for disability benefits must be made in writing on a 59.10 form or forms prescribed by the executive director. 59.11 (b) If an application for disability benefits is filed 59.12 within two years of the date of the injury or the onset of the 59.13 illness that gave rise to the disability application, the 59.14 application must be supported by evidence that the applicant is 59.15 unable to perform the duties of the position held by the 59.16 applicant on the date of the injury or the onset of the illness 59.17 causing the disability. The employer must provide evidence 59.18 indicating whether the applicant is able or unable to perform 59.19 the duties of the position held on the date of the injury or 59.20 onset of illness causing the disability and the specifications 59.21 of any duties that the individual can or cannot perform. 59.22 (c) If an application for disability benefits is filed more 59.23 than two years after the date of the injury or the onset of an 59.24 illness causing the disability, the application must be 59.25 supported by evidence that the applicant is unable to perform 59.26 the most recent duties that are expected to be performed by the 59.27 applicant during the 90 days before the filing of the 59.28 application. The employer must provide evidence of the duties 59.29 that are expected to be performed by the applicant during the 90 59.30 days before to the filing of the application, whether the 59.31 applicant can or cannot perform those duties overall, and the 59.32 specifications of any duties that the applicant can or cannot 59.33 perform. 59.34 (d) Unless otherwise permitted by law, no application for 59.35 disability benefits can be filed by a former member of the 59.36 police and fire plan more than three years after the former 60.1 member has terminated from Public Employees Retirement 60.2 Association police and fire plan covered employment. If an 60.3 application is filed within three years after the termination of 60.4 public employment, the former member must provide evidence that 60.5 the disability is the direct result of an injury or the 60.6 contracting of an illness that occurred while the person was 60.7 still actively employed and participating in the police and fire 60.8 plan. 60.9 (e) Any application for duty-related disability must be 60.10 supported by a first report of injury as defined in section 60.11 176.231. 60.12 (f) If a member who has applied for and been approved for 60.13 disability benefits before the termination of service does not 60.14 terminate service or is not placed on an authorized leave of 60.15 absence as certified by the governmental subdivision within 45 60.16 days following the date on which the application is approved, 60.17 the application shall be canceled. If an approved application 60.18 for disability benefits has been canceled, a subsequent 60.19 application for disability benefits may not be filed on the 60.20 basis of the same medical condition for a minimum of one year 60.21 from the date on which the previous application was canceled. 60.22 (g) An applicant may file a retirement application under 60.23 section 353.29, subdivision 4, at the same time as the 60.24 disability application is filed. If the disability application 60.25 is approved, the retirement application is canceled. If the 60.26 disability application is denied, the retirement application 60.27 must be initiated and processed upon the request of the 60.28 applicant. A police and fire fund member may not receive a 60.29 disability benefit and a retirement annuity from the police and 60.30 fire fund at the same time. 60.31 (h) A repayment of a refund must be made within six months 60.32 after the effective date of disability benefits or within six 60.33 months after the date of the filing of the disability 60.34 application, whichever is later. No purchase of prior service 60.35 or payment made in lieu of salary deductions otherwise 60.36 authorized under section 353.01 or 353.36, subdivision 2, may be 61.1 made after the occurrence of the disability for which an 61.2 application is filed under this section. 61.3 Sec. 22. Minnesota Statutes 2002, section 353.656, is 61.4 amended by adding a subdivision to read: 61.5 Subd. 9. [REFUSAL OF EXAMINATION OR MEDICAL EVIDENCE.] If 61.6 a person applying for or receiving a disability benefit refuses 61.7 to submit to a medical examination under subdivision 11, or 61.8 fails to provide or to authorize the release of medical evidence 61.9 under subdivisions 5 and 7, the association shall cease the 61.10 application process or shall discontinue the payment of a 61.11 disability benefit, whichever is applicable. Upon the receipt 61.12 of the requested medical evidence, the association shall resume 61.13 the application process or the payment of a disability benefit 61.14 upon approval for the continuation, whichever is applicable. 61.15 Sec. 23. Minnesota Statutes 2002, section 353.656, is 61.16 amended by adding a subdivision to read: 61.17 Subd. 10. [ACCRUAL OF BENEFITS.] (a) A disability benefit 61.18 begins to accrue the day following the commencement of 61.19 disability, 90 days preceding the filing of an application, or, 61.20 if annual or sick leave is paid for more than the 90-day period, 61.21 from the date on which the payment of salary ceased, whichever 61.22 is later. 61.23 (b) Payment of the disability benefit must not continue 61.24 beyond the end of the month in which entitlement has 61.25 terminated. If the disabilitant dies prior to negotiating the 61.26 check for the month in which death occurs, payment must be made 61.27 to the surviving spouse or, if none, to the designated 61.28 beneficiary or, if none, to the estate. 61.29 Sec. 24. Minnesota Statutes 2002, section 353.656, is 61.30 amended by adding a subdivision to read: 61.31 Subd. 11. [INDEPENDENT MEDICAL EXAMINATION; DUTIES OF THE 61.32 MEDICAL ADVISOR.] Any individual receiving disability benefits 61.33 or any applicant, if requested by the executive director, must 61.34 submit to an independent medical examination. The medical 61.35 examination must be paid for by the association. The medical 61.36 advisor shall review all medical reports submitted to the 62.1 association, including the findings of an independent medical 62.2 examination requested under this section, and shall advise the 62.3 executive director. 62.4 Sec. 25. Minnesota Statutes 2002, section 353.656, is 62.5 amended by adding a subdivision to read: 62.6 Subd. 12. [APPROVAL OF DISABILITY BENEFITS.] Review of 62.7 disability benefit applications and review of existing 62.8 disability cases must be made by the executive director based 62.9 upon all relevant evidence, including advice from the medical 62.10 advisor and the evidence provided by the member and employer. A 62.11 member whose application for disability benefits or whose 62.12 continuation of disability benefits is denied may appeal the 62.13 executive director's decision to the board of trustees within 45 62.14 days of the receipt of a certified letter notifying the member 62.15 of the decision to deny the application or the benefit 62.16 continuation. 62.17 Sec. 26. Minnesota Statutes 2002, section 354.48, 62.18 subdivision 2, is amended to read: 62.19 Subd. 2. [APPLICATIONS; ACCRUAL.] (a) A person described 62.20 in subdivision 1, or another person authorized to act on behalf 62.21 of the person, may make written application on a form prescribed 62.22 by the executive director for a total and permanent disability 62.23 benefit only within the 18-month period following the 62.24 termination of teaching service.This62.25 (b) The benefit accrues from the day following the 62.26 commencement of the disability or the day following the last day 62.27 for which salary is paid, whichever is later, but does not begin 62.28 to accrue more than six months before the date on which the 62.29 written application is filed with the executive director. If 62.30 salary is being received for either annual or sick leave during 62.31 the disability period,payments accruethe disability benefit 62.32 accrues from the day following the last day for which this 62.33 salary is paid. 62.34 Sec. 27. Minnesota Statutes 2002, section 354.48, 62.35 subdivision 4, is amended to read: 62.36 Subd. 4. [DETERMINATION BY THE EXECUTIVE DIRECTOR.] (a) 63.1 The executive director shall have the member examined by at 63.2 least two licensed physicians, licensed chiropractors, or 63.3 licensed psychologists selected by the medical adviser. 63.4 (b) These physicians, chiropractors, or psychologists with 63.5 respect to a mental impairment, shall make written reports to 63.6 the executive director concerning the member's disability, 63.7 includingmedicalexpert opinions as to whether or not the 63.8 member is permanently and totally disabled within the meaning of 63.9 section 354.05, subdivision 14. 63.10 (c) The executive director shall also obtain written 63.11 certification from the last employer stating whether or not the 63.12 member was separated from service because of a disability which 63.13 would reasonably prevent further service to the employer and as 63.14 a consequence the member is not entitled to compensation from 63.15 the employer. 63.16 (d) If, upon the consideration of the reports of the 63.17 physicians, chiropractors, or psychologists and any other 63.18 evidence presented by the member or by others interested 63.19 therein, the executive director finds that the member is totally 63.20 and permanently disabled, the executive director shall grant the 63.21 member a disability benefit.The fact that63.22 (e) An employee who is placed on leave of absence without 63.23 compensation because of disabilityshallis notbar the member63.24 barred from receiving a disability benefit. 63.25 Sec. 28. Minnesota Statutes 2002, section 354.48, 63.26 subdivision 6, is amended to read: 63.27 Subd. 6. [REGULAR PHYSICAL EXAMINATIONS.] At least once 63.28 each year during the first five years following the allowance of 63.29 a disability benefit to any member, and at least once in every 63.30 three-year period thereafter, the executive director shall 63.31 require the disability beneficiary to undergoa medicalan 63.32 expert examination by a physician or physicians, by a 63.33 chiropractor or chiropractors, or by one or more psychologists 63.34 with respect to a mental impairment, engaged by the executive 63.35 director. Ifanyan examination indicates that the member is no 63.36 longer permanently and totally disabled or that the member is 64.1 engaged or is able to engage in a substantial gainful 64.2 occupation, payments of the disability benefit by the 64.3 associationshallmust be discontinued. The paymentsshall64.4discontinuemust be discontinued as soon as the member is 64.5 reinstated to the payroll following sick leave, but payment may 64.6 not be made for more than 60 days after the physicians, the 64.7 chiropractors, or the psychologists engaged by the executive 64.8 director find that the person is no longer permanently and 64.9 totally disabled. 64.10 Sec. 29. Minnesota Statutes 2002, section 354.48, 64.11 subdivision 6a, is amended to read: 64.12 Subd. 6a. [MEDICAL ADVISER; DUTIES.] The state 64.13 commissioner of health or a licensed physician on the staff of 64.14 the department of health who is designated by the commissioner 64.15shall beis the medical adviser of the executive director. The 64.16 medical adviser shall designate licensed physicians, licensed 64.17 chiropractors, or licensed psychologists with respect to a 64.18 mental impairment, who shall examine applicants for disability 64.19 benefits. The medical adviser shall pass upon allmedical64.20 expert reports based on any examinations performed in order to 64.21 determine whether a teacher is totally and permanently disabled 64.22 as defined in section 354.05, subdivision 14. The medical 64.23 adviser shall also investigate all health and medical statements 64.24 and certificates by or on behalf of a teacher in connection with 64.25 a disability benefit, and shall report in writing to the 64.26 director setting forth any conclusions and recommendations on 64.27 all matters referred to the medical adviser. 64.28 Sec. 30. Minnesota Statutes 2002, section 354.48, 64.29 subdivision 10, is amended to read: 64.30 Subd. 10. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] 64.31 (a) No personshall beis entitled to receive both a disability 64.32 benefit and a retirement annuity provided by this chapter. 64.33 (b) The disability benefit paid to a person hereundershall64.34 must terminate at the end of the month in which the person 64.35 attains the normal retirement age. If the person is still 64.36 totally and permanently disabled at the beginning of the month 65.1 next following the month in which the person attains the normal 65.2 retirement age, the personshallmust be deemed to be on 65.3 retirement status and, if the person had elected an optional 65.4 annuitypursuant tounder subdivision 3a,shallmust receive an 65.5 annuity in accordance with the terms of the optional annuity 65.6 previously elected, or, if the person had not elected an 65.7 optional annuitypursuant tounder subdivision 3a, may elect to 65.8 receive a straight life retirement annuity equal to the 65.9 disability benefit paidprior tobefore the date on which the 65.10 person attains the normal retirement age65or reaches the 65.11 five-year anniversary of the effective date of the disability 65.12 benefit, whichever is later, or may elect to receive an optional 65.13 annuity as provided in section 354.45, subdivision 1. 65.14 (c) Election of an optional annuity must be made within 90 65.15 days of the normal retirement age65or the five-year 65.16 anniversary of the effective date of the disability benefit, 65.17 whichever is later. 65.18 (d) If an optional annuity is elected, the electionshall65.19beis effective on the date on which the person attains the 65.20 normal retirement age65or reaches the five-year anniversary of 65.21 the effective date of the disability benefit, whichever is 65.22 later. The optional annuityshall beginbegins to accrue on the 65.23 first day of the month next following the month in which the 65.24 person attains the normal retirement age65or reaches the 65.25 five-year anniversary of the effective date of the disability 65.26 benefit, whichever is later. 65.27 Sec. 31. Minnesota Statutes 2002, section 354A.36, 65.28 subdivision 4, is amended to read: 65.29 Subd. 4. [DETERMINATION OF DISABILITY.] The board of the 65.30 teachers retirement fund association shall make the final 65.31 determination of the existence of a permanent and total 65.32 disability. The board shall have the coordinated member 65.33 examined by at least two licensed physicians, licensed 65.34 chiropractors, or licensed psychologists whoshall beare 65.35 selected by the board. After making any required examinations, 65.36 each physician, chiropractor, or psychologist with respect to a 66.1 mental impairment, shall make a written report to the board 66.2 concerning the coordinated member, which shall include a 66.3 statement of thephysician's medicalexpert opinion of the 66.4 physician, chiropractor, or psychologist as to whether or not 66.5 the member is permanently and totally disabled within the 66.6 meaning of section 354A.011, subdivision 14. The board shall 66.7 also obtain a written statement from theschool district66.8 employer as to whether or not the coordinated member was 66.9 terminated or separated from active employment due to a 66.10 disability which is deemed by thedistrictemployer to 66.11 reasonably prevent further service by the member to thedistrict66.12 employer and which caused the coordinated member not to be 66.13 entitled to further compensation from thedistrictemployer for 66.14 services rendered by the member. If, after consideration of the 66.15 reports of the physicians, chiropractors, or psychologists with 66.16 respect to a mental impairment, and any evidence presented by 66.17 the member or by any other interested parties, the board 66.18 determines that the coordinated member is totally and 66.19 permanently disabled within the meaning of section 354A.011, 66.20 subdivision 14, it shall grant the coordinated member a 66.21 disability benefit.The fact thatA memberhas beenwho is 66.22 placed on a leave of absence without compensation as a result of 66.23 the disabilityshallis notoperate to barbarreda66.24coordinated memberfrom receiving a disability benefit under 66.25 this section. 66.26 Sec. 32. Minnesota Statutes 2002, section 354A.36, 66.27 subdivision 6, is amended to read: 66.28 Subd. 6. [REQUIREMENT FOR REGULAR PHYSICAL EXAMINATIONS.] 66.29 At least once each year during the first five years following 66.30 the granting of a disability benefit to a coordinated member by 66.31 the board and at least once in every three year period 66.32 thereafter, the board shall require the disability benefit 66.33 recipient to undergo amedicalexpert examination as a condition 66.34 for continued entitlement of the benefit recipient to receive a 66.35 disability benefit. Themedicalexpert examinationshallmust 66.36 be made at the place of residence of the disability benefit 67.1 recipient or at any other place mutually agreeable to the 67.2 disability benefit recipient and the board. Themedicalexpert 67.3 examinationshallmust be made by a physician or physicians, by 67.4 a chiropractor or chiropractors, or by one or more psychologists 67.5 engaged by the board. The physician or physicians, the 67.6 chiropractor or chiropractors, or the psychologist or 67.7 psychologists with respect to a mental impairment, conducting 67.8 themedicalexpert examination shall make a written report to 67.9 the board concerning the disability benefit recipient and the 67.10 recipient's disability, including a statement of thephysician's67.11medicalexpert opinion of the physician, chiropractor, or 67.12 psychologist as to whether or not the member remains permanently 67.13 and totally disabled within the meaning of section 354A.011, 67.14 subdivision 14. If the board determines from consideration of 67.15 thephysician'swrittenmedicalexpert examination report of the 67.16 physician, of the chiropractor, or of the psychologist, with 67.17 respect to a mental impairment, that the disability benefit 67.18 recipient is no longer permanently and totally disabled or if 67.19 the board determines that the benefit recipient is engaged or is 67.20 able to engage in a gainful occupation, unless the disability 67.21 benefit recipient is partially employedpursuant tounder 67.22 subdivision 7, then further disability benefit payments from the 67.23 fundshallmust be discontinued. The discontinuation of 67.24 disability benefitsshallmust occur immediately if the 67.25 disability recipient is reinstated to the district payroll 67.26 following sick leave and within 60 days of the determination by 67.27 the board following themedicalexpert examination and report of 67.28 the physician or physicians, chiropractor or chiropractors, or 67.29 psychologist or psychologists engaged by the board that the 67.30 disability benefit recipient is no longer permanently and 67.31 totally disabled within the meaning of section 354A.011, 67.32 subdivision 14. 67.33 Sec. 33. Minnesota Statutes 2002, section 356.302, 67.34 subdivision 3, is amended to read: 67.35 Subd. 3. [GENERAL EMPLOYEE PLAN ELIGIBILITY REQUIREMENTS.] 67.36 A disabled member of a covered retirement plan who has credit 68.1 for allowable service in a combination of general employee 68.2 retirement plans is entitled to a combined service disability 68.3 benefit if the member: 68.4 (1) is less than65 years ofthe normal retirement age on 68.5 the date of the application for the disability benefit; 68.6 (2) has become totally and permanently disabled; 68.7 (3) has credit for allowable service in any combination of 68.8 general employee retirement plans totaling at least three years; 68.9 (4) has credit for at least one-half year of allowable 68.10 service with the current general employee retirement plan before 68.11 the commencement of the disability; 68.12 (5) has at least three continuous years of allowable 68.13 service credit by the general employee retirement plan or has at 68.14 least a total of three years of allowable service credit by a 68.15 combination of general employee retirement plans in a 72-month 68.16 period during which no interruption of allowable service credit 68.17 from a termination of employment exceeded 29 days; and 68.18 (6) was not receiving a retirement annuity or disability 68.19 benefit from any covered general employee retirement plan at the 68.20 time of the commencement of the disability. 68.21 Sec. 34. Minnesota Statutes 2002, section 422A.18, 68.22 subdivision 1, is amended to read: 68.23 Subdivision 1. [MEDICALEXPERT EXAMINATION.] (a) Upon the 68.24 application of the head of the department in which a 68.25 contributing employee is employed, or upon the application of 68.26 the contributing employee or of one acting in the employee's 68.27 behalf, the retirement board shall place the contributor on 68.28 disability, providedand pay the person a disability allowance 68.29 under this section if the medical board, aftera medicalan 68.30 expert examination of the contributor made at the place of 68.31 residence of the contributor or at a place mutually agreed upon, 68.32 shall certify to the retirement board that the contributor is 68.33 physically or mentally incapacitated for the performance of 68.34 further service to the city and recommend that the contributor 68.35 be placed on disability. 68.36 (b) The medical board shall consist of the city physician, 69.1 a physician, chiropractor, or licensed psychologist to be 69.2 selected by the retirement board, and a physician, chiropractor, 69.3 or licensed psychologist to be selected by the employee. 69.4 (c) Disability of an employee resulting from injury or 69.5 illness received in the performance of the duties of the city 69.6 service shall be defined as duty disability. 69.7 (d) Disability incurred as a result of injury or illness 69.8 not connected with the performance of such service shall be 69.9 defined as nonduty disability. In order to be entitled to a 69.10 retirement allowance for a nonduty disability, an employee shall 69.11 have rendered five or more years of service to the city. 69.12 Sec. 35. Minnesota Statutes 2002, section 422A.18, 69.13 subdivision 4, is amended to read: 69.14 Subd. 4. [ADDITIONAL MEDICAL EXAMINATIONS.] (a) Once each 69.15 year, the retirement board may require any disability 69.16 beneficiary while still under the established age for retirement 69.17 to undergomedicalan expert examination bya physician orone 69.18 or more physicians, one or more chiropractors, or one or more 69.19 licensed psychologists designated by the retirement board,. The 69.20 examinationtomust be made at the place of residence of the 69.21 beneficiary or other place mutually agreed upon.Should69.22 (b) If the medical boardreport and certifycertifies to 69.23 the retirement board thatsuchthe disability beneficiary is no 69.24 longer physically or mentally incapacitated for the performance 69.25 of duty, the beneficiary's allowanceshallmust be discontinued 69.26 and the head of the department in which the beneficiary was 69.27 employed at the time of retirement shall, upon notification by 69.28 the retirement board of the report of the medical board, 69.29 reemploy the beneficiary at a rate of salary not less than the 69.30 amount of the disability allowance, but. 69.31 (c) After the expiration of five years subsequent to the 69.32 retirement ofsuchthe beneficiary, the restoration to duty, 69.33 notwithstanding the recommendation of the medical board,shall69.34beis optional with the head of the department.ShouldIf any 69.35 disability beneficiary, while under the established age for 69.36 retirementrefuse, refuses to submit to at least one 70.1medicalexpert examination in any year bya physician orone or 70.2 more physicians, one or more chiropractors, or one or more 70.3 licensed psychologists designated by the medical board, the 70.4 allowanceshallmust be discontinued until the withdrawal of 70.5 such refusal, and should such refusal continue for one year, all 70.6 the beneficiary's rights in and to any retirement or disability 70.7 allowanceshall beare forfeited. 70.8 Sec. 36. Minnesota Statutes 2002, section 423B.09, 70.9 subdivision 4, is amended to read: 70.10 Subd. 4. [CERTIFICATE OF PHYSICIANS REQUIRED.] (a) No 70.11 member is entitled to a pension under subdivision 1, paragraph 70.12 (b) or (c), except upon the certificate of two or more 70.13 physiciansor, surgeons, chiropractors, licensed psychologists, 70.14 or a combination of experts chosen by the governing board. This 70.15 certificate must set forth the cause, nature, and extent of the 70.16 disability, disease, or injury of the member. 70.17 (b) No active member may be awarded, granted, or paid a 70.18 disability pension under subdivision 1, paragraph (c), unless 70.19 the certificate states that the disability, disease, or injury 70.20 was incurred or sustained by the member while in the service of 70.21 the police department of the city. The certificate must be 70.22 filed with the secretary of the association. 70.23 Sec. 37. Minnesota Statutes 2002, section 423C.05, 70.24 subdivision 4, is amended to read: 70.25 Subd. 4. [TEMPORARY DISABILITY PENSION.] (a) An active 70.26 member who, by sickness or accident, becomes temporarily 70.27 disabled from performing firefighter duties for the fire 70.28 departmentshall beis entitled to a temporary disability 70.29 pension. 70.30 (b) No allowance for disabilityshallmay be made unless 70.31 notice of the disability and an application for benefits is made 70.32 by or on behalf of the disabled member within 90 days after the 70.33 beginning of the disability. This applicationshallmust 70.34 include a certificate from a qualifiedmedical professional70.35 expert setting forth the cause, nature, and extent of the 70.36 disability. This certificate must also conclude that the 71.1 disability was incurred or sustained while the member was in the 71.2 service of the fire department. 71.3 (c) The board shall utilize the board of examiners 71.4 establishedpursuant tounder section 423C.03, subdivision 6, to 71.5 investigate and report on an application for benefitspursuant71.6tounder this section and to make recommendations as to 71.7 eligibility and the benefit amount to be paid. 71.8 (d) A member entitled to a disability pensionshallmust 71.9 receive benefits in the amount and manner determined by the 71.10 board. 71.11 Sec. 38. Minnesota Statutes 2002, section 423C.05, 71.12 subdivision 5, is amended to read: 71.13 Subd. 5. [SERVICE-RELATED PERMANENT DISABILITY PENSION.] 71.14 An active member who becomes permanently disabled as the result 71.15 of a service-related disease or injuryshallis, upon 71.16 application and approval of the board,beentitled to a pension 71.17 of 41 units or in the amount determined under subdivision 8. 71.18 The application for service-related permanent disabilityshall71.19 must include a certificate from a qualifiedmedical professional71.20 expert setting forth the permanent nature of the disability or 71.21 disease and that it was service related. 71.22 Sec. 39. Minnesota Statutes 2002, section 423C.05, 71.23 subdivision 6, is amended to read: 71.24 Subd. 6. [NON-SERVICE-RELATED PERMANENT DISABILITY 71.25 PENSION.] An active member who, by reason of sickness or 71.26 accident, becomes permanently disabled and unable to perform 71.27 firefighter duties for the fire department due to 71.28 non-service-related disease or injuryshall beis entitled to a 71.29 permanent disability pension. No allowance for disabilityshall71.30 may be made unless notice of the disability and an application 71.31 for benefits is made by or on behalf of the disabled member 71.32 within 90 days after the beginning of the disability. This 71.33 applicationshallmust include a certificate from a qualified 71.34 medical professional setting forth the cause, nature, and extent 71.35 of the disability. A member who is entitled to a disability 71.36 pension under this subdivisionshallmust receive benefits in 72.1 the amount and manner determined by the board, not to exceed 41 72.2 units. 72.3 Sec. 40. Minnesota Statutes 2002, section 423C.05, is 72.4 amended by adding a subdivision to read: 72.5 Subd. 6a. [QUALIFIED EXPERT.] A qualified expert includes 72.6 a licensed physician or chiropractor, or in the case of mental 72.7 impairment, includes a licensed psychologist. 72.8 Sec. 41. [REPEALER.] 72.9 (a) Minnesota Statutes 2002, sections 353.33, subdivision 72.10 5b; and 490.11, are repealed on July 1, 2004. 72.11 (b) Sections 3 and 19 are repealed on July 1, 2006. 72.12 Sec. 42. [EFFECTIVE DATE.] 72.13 Sections 1 to 41 are effective on July 1, 2004. 72.14 ARTICLE 9 72.15 DEATH AND SURVIVOR BENEFITS AND REFUNDS 72.16 Section 1. Minnesota Statutes 2002, section 3A.03, 72.17 subdivision 2, is amended to read: 72.18 Subd. 2. [REFUND.] (a)AnyA former member who has made 72.19 contributions under subdivision 1 and who is no longer a member 72.20 of the legislature is entitled to receive, upon written 72.21 application to the executive director on a form prescribed by 72.22 the executive director, a refund of all contributions credited 72.23 to the member's account with interestat an annual rate of six72.24percent compounded annuallycomputed as provided in section 72.25 352.22, subdivision 2. 72.26 (b) The refund of contributions as provided in paragraph (a) 72.27 terminates all rights of a former member of the legislatureor72.28 and the survivors of the former member under this chapter. 72.29 (c) If the former member of the legislature again becomes a 72.30 member of the legislature after having taken a refund as 72.31 provided in paragraph (a), the member must be considered a new 72.32 member of this plan. However,a newthe member may reinstate 72.33 the rights and credit for service previously forfeited if the 72.34newmember repays all refunds taken plus interest at an annual 72.35 rate of 8.5 percent compounded annually from the date on which 72.36 the refund was taken to the date on which the refund is repaid. 73.1(c)(d) No person may be required to apply for or to accept 73.2 a refund. 73.3 Sec. 2. Minnesota Statutes 2002, section 352.12, 73.4 subdivision 1, is amended to read: 73.5 Subdivision 1. [DEATH BEFORE TERMINATION OF SERVICE.] If 73.6 an employee dies before state service has terminated and neither 73.7 a survivor annuity nor a reversionary annuity is payable on 73.8 behalf of the employee, or if a former employee who has 73.9 sufficient service credit to be entitled to an annuity dies 73.10 before thebenefitannuity has become payable,the director73.11shall makea refund with interest is payable upon filing a 73.12 written application on a form prescribed by the executive 73.13 director. The refund is payable to the last designated 73.14 beneficiary or, if there is none, to the surviving spouse or, if 73.15 none, to the employee's surviving children in equal shares or, 73.16 if none, to the employee's surviving parents in equal shares or, 73.17 if none, to the representative of the estatein an amount equal73.18to the accumulated employee contributions plus interest at the73.19rate of six percent per annum compounded annually. Interest 73.20 must be computed as provided in section 352.22, subdivision 2,73.21to the first day of the month in which the refund is processed. 73.22 Upon the death of an employee who has received a refund that was 73.23 later repaid in full, interest must be paid on the repaid refund 73.24 only from the date of the repayment. If the repayment was made 73.25 in installments, interest must be paid only from the date on 73.26 which the installment payments began. The designated 73.27 beneficiary, the surviving spouse, or the representative of the 73.28 estate of an employee who had received a disability benefit is 73.29 not entitled to the payment of interest upon any balance 73.30 remaining to the decedent's credit in the fund at the time of 73.31 death, unless the death occurred before any payment could be 73.32 negotiated. 73.33 Sec. 3. Minnesota Statutes 2002, section 352.12, 73.34 subdivision 6, is amended to read: 73.35 Subd. 6. [DEATH AFTER SERVICE TERMINATION.] Except as 73.36 provided in subdivision 1, if a former employee covered by the 74.1 systemdies andwho has not received an annuity, a retirement 74.2 allowance, or a disability benefit dies, a refundmust be made74.3 is payable to the last designated beneficiary or, if there is 74.4 none, to the surviving spouse or, if none, to the employee's 74.5 surviving children in equal shares or, if none, to the 74.6 employee's surviving parents in equal shares or, if none, to the 74.7 representative of the estate in an amount equal to accumulated 74.8 employee contributions plus interest.The refund must include74.9interest at the rate of six percent per year compounded74.10annually.The interest on the refund must be computed as 74.11 provided in section 352.22, subdivision 2. 74.12 Sec. 4. Minnesota Statutes 2002, section 352.22, 74.13 subdivision 2, is amended to read: 74.14 Subd. 2. [AMOUNT OF REFUND.] Except as provided in 74.15 subdivision 3, the refund payable to a person who ceased to be a 74.16 state employee by reason of a termination of state service isin74.17 an amount equal to employee accumulated contributions plus 74.18 interest at the rate of six percent per year compoundedannually74.19 daily from the date that the contribution was made until the 74.20 date on which the refund is paid. Included with the refund is 74.21 any interest paid as part of repayment of a past refund, plus 74.22 interest thereon from the date of repayment.Interest must be74.23computed to the first day of the month in which the refund is74.24processed and must be based on fiscal year or monthly balances,74.25whichever applies.74.26 Sec. 5. Minnesota Statutes 2002, section 352.22, 74.27 subdivision 3, is amended to read: 74.28 Subd. 3. [DEFERRED ANNUITY.] (a) An employee who has at 74.29 least three years of allowable service when termination occurs 74.30 may elect to leave the accumulated contributions in the fund and 74.31 thereby be entitled to a deferred retirement annuity. The 74.32 annuity must be computed under the law in effect when state 74.33 service terminated, on the basis of the allowable service 74.34 credited to the person before the termination of service. 74.35 (b) An employee on layoff or on leave of absence without 74.36 pay, except a leave of absence for health reasons, and who does 75.1 not return to state serviceshallmust have an annuity, deferred 75.2 annuity, or other benefit to which the employee may become 75.3 entitled computed under the law in effect on the employee's last 75.4 working day. 75.5 (c) No application for a deferred annuity may be made more 75.6 than 60 days before the time the former employee reaches the 75.7 required age for entitlement to the payment of the annuity. The 75.8 deferred annuity begins to accrue no earlier than 60 days before 75.9 the date the application is filed in the office of the system, 75.10 but not (1) before the date on which the employee reaches the 75.11 required age for entitlement to the annuity nor (2) before the 75.12 day following the termination of state service in a 75.13 position which is not covered by the retirement system. 75.14 (d) Application for the accumulated contributions left on 75.15 deposit with the fund may be made at any timeafter 30 days75.16 following the date of the termination of service. 75.17 Sec. 6. Minnesota Statutes 2002, section 352B.10, 75.18 subdivision 5, is amended to read: 75.19 Subd. 5. [OPTIONAL ANNUITY.] Adisabled member75.20 disabilitant may elect, in lieu of spousal survivorship coverage 75.21 under section 352B.11,subdivision 2subdivisions 2b and 75.22 2c,choosethe normal disability benefit or an optional annuity 75.23 as provided in section 352B.08, subdivision 3. The choice of an 75.24 optional annuity must be made before the commencement of the 75.25 payment of the disability benefit, or within 90 daysof75.26attainingbefore reaching age 65 or reaching the five-year 75.27 anniversary of the effective date of the disability benefit, 75.28 whichever is later.ItThe optional annuity is effective on the 75.29 date on which the disability benefit begins to accrue, or the 75.30 month following attainment of age 65 or the five-year 75.31 anniversary of the effective date of the disability benefit, 75.32 whichever is later. 75.33 Sec. 7. Minnesota Statutes 2002, section 352B.11, 75.34 subdivision 1, is amended to read: 75.35 Subdivision 1. [REFUND OF PAYMENTS.] (a) A member who has 75.36 not received other benefits under this chapter is entitled to a 76.1 refund of payments made by salary deduction, plus interest, if 76.2 the member is separated, either voluntarily or involuntarily, 76.3 from the state service that entitled the member to membership. 76.4 (b) In the event of the member's death, if there are no 76.5 survivor benefits payable under this chapter, a refund plus 76.6 interest is payable to the last designated beneficiary on a form 76.7 filed with the director before death, or if no designation is 76.8 filed,the refundis payable to the member's estate. Interest 76.9 under this subdivision must becomputed at the rate of six76.10percent a year, compounded annuallycalculated as provided in 76.11 section 352.22, subdivision 2. To receive a refund, the 76.12 application must be made on a form prescribed by the executive 76.13 director. 76.14 Sec. 8. Minnesota Statutes 2002, section 352B.11, 76.15 subdivision 2, is amended to read: 76.16 Subd. 2. [DEATH; PAYMENT TOSPOUSE ANDDEPENDENT CHILDREN; 76.17 FAMILY MAXIMUMS.]If a member serving actively as a member, or a76.18member or former member receiving the disability benefit before76.19attaining age 65 or reaching the five-year anniversary of the76.20effective date of the disability benefit, whichever is later,76.21provided by section 352B.10, subdivisions 1 and 2, dies from any76.22cause before attaining age 65 or reaching the five-year76.23anniversary of the effective date of the disability benefit,76.24whichever is later, the surviving spouse and dependent children76.25are entitled to benefit payments as follows:76.26(a) A member with at least three years of allowable service76.27is deemed to have elected a 100 percent joint and survivor76.28annuity payable to a surviving spouse only on or after the date76.29the member or former member became or would have become 55.76.30(b) The surviving spouse of a member who had credit for76.31less than three years of service shall receive, for life, a76.32monthly annuity equal to 50 percent of that part of the average76.33monthly salary of the member from which deductions were made for76.34retirement.76.35(c) The surviving spouse of a member who had credit for at76.36least three years service and who died after becoming 55 years77.1old, may elect to receive a 100 percent joint and survivor77.2annuity, for life, notwithstanding a subsequent remarriage, in77.3lieu of the annuity prescribed in paragraph (b).77.4(d) The surviving spouse of any member who had credit for77.5three years or more and who was not 55 years old at death, shall77.6receive the benefit equal to 50 percent of the average monthly77.7salary as described in clause (b) until the deceased member77.8would have become 55 years old, and beginning the first of the77.9month following that date, may elect to receive the 100 percent77.10joint and survivor annuity.77.11(e)Each dependent childshall, as defined in section 77.12 352B.01, subdivision 10, is entitled to receive a monthly 77.13 annuity equal to ten percent ofthat part ofthe average monthly 77.14 salary of theformerdeceased memberfrom which deductions were77.15made for retirement. A dependent child over 18 and under 23 77.16 years of age also may receive the monthly benefit provided in 77.17 this section,if the child is continuously attending an 77.18 accreditedschool as a full-time student during the normal77.19school year asdetermined by the director. If the child does 77.20 not continuously attend school, but separates from full-time 77.21 attendance during any part of a school year, the annuityshall77.22 must cease at the end of the month of separation. In addition, 77.23 a payment of $20 per monthshallmust be prorated equally to the 77.24 surviving dependent children when the former member is survived 77.25 by more than oneor moredependentchildrenchild. Payments for 77.26 the benefit of anyqualifieddependent child must be made to the 77.27 surviving spouse, or if there is none, to the legal guardian of 77.28 the child. Themaximummonthly benefit for any one family, 77.29 including a surviving spouse benefit, if applicable, must not be 77.30 less than 50 percent nor exceed 70 percent of the average 77.31 monthly salaryfor any number of childrenof the deceased member. 77.32(f) If the member dies under circumstances that entitle the77.33surviving spouse and dependent children to receive benefits77.34under the workers' compensation law, the workers' compensation77.35benefits received by them must not be deducted from the benefits77.36payable under this section.78.1(g) The surviving spouse of a deceased former member who78.2had credit for three or more years of allowable service, but not78.3the spouse of a former member receiving a disability benefit78.4under section 352B.10, subdivision 2, is entitled to receive the78.5100 percent joint and survivor annuity at the time the deceased78.6member would have become 55 years old. If a former member dies78.7who does not qualify for other benefits under this chapter, the78.8surviving spouse or, if none, the children or heirs are entitled78.9to a refund of the accumulated deductions left in the fund plus78.10interest at the rate of six percent per year compounded annually.78.11 Sec. 9. Minnesota Statutes 2002, section 352B.11, is 78.12 amended by adding a subdivision to read: 78.13 Subd. 2b. [SURVIVING SPOUSE BENEFIT ELIGIBILITY.] (a) If 78.14 an active member with three or more years of allowable service 78.15 dies before attaining age 55, the surviving spouse is entitled 78.16 to the benefit specified in subdivision 2c, paragraph (b). 78.17 (b) If an active member with less than three years of 78.18 allowable service dies at any age, the surviving spouse is 78.19 entitled to receive the benefit specified in subdivision 2c, 78.20 paragraph (c). 78.21 (c) If an active member with three or more years of 78.22 allowable service dies on or after attaining exact age 55, the 78.23 surviving spouse is entitled to receive the benefits specified 78.24 in subdivision 2c, paragraph (d). 78.25 (d) If a disabilitant dies while receiving a disability 78.26 benefit under section 352B.10 or before the benefit under that 78.27 section commenced, and an optional annuity was not elected under 78.28 section 352B.10, subdivision 5, the surviving spouse is entitled 78.29 to receive the benefit specified in subdivision 2c, paragraph 78.30 (b). 78.31 (e) If a former member with three or more years of 78.32 allowable service, who terminated from service and has not 78.33 received a refund or commenced receipt of any other benefit 78.34 provided by this chapter, dies, the surviving spouse is entitled 78.35 to receive the benefit specified in subdivision 2c, paragraph 78.36 (e). 79.1 (f) If a former member with less than three years of 79.2 allowable service, who terminated from service and has not 79.3 received a refund or commenced receipt of any other benefit, if 79.4 applicable, provided by this chapter, dies, the surviving spouse 79.5 is entitled to receive the refund specified in subdivision 2c, 79.6 paragraph (f). 79.7 Sec. 10. Minnesota Statutes 2002, section 352B.11, is 79.8 amended by adding a subdivision to read: 79.9 Subd. 2c. [SURVIVING SPOUSE BENEFIT ENTITLEMENTS.] (a) A 79.10 surviving spouse specified in subdivision 2b is eligible to 79.11 receive, following the filing of a valid application and 79.12 consistent with any other applicable requirements, a benefit as 79.13 specified in this subdivision. A 100 percent joint and survivor 79.14 annuity under paragraph (b) must be computed assuming the exact 79.15 age 55 for the deceased member and the age of the surviving 79.16 spouse on the date of death. A 100 percent joint and survivor 79.17 annuity under paragraph (d) or (e) must be computed using the 79.18 age of the deceased member on the date of death and the age of 79.19 the surviving spouse on that same date. 79.20 (b) For a surviving spouse specified in subdivision 2b, 79.21 paragraph (a) or (d), the surviving spouse benefit is a benefit 79.22 for life equal to 50 percent of the average monthly salary of 79.23 the deceased member. On the first of the month next following 79.24 the date on which the deceased member would have attained exact 79.25 age 55, in lieu of continued receipt of the prior benefit, the 79.26 surviving spouse is eligible to commence receipt of the second 79.27 half of a 100 percent joint and survivor annuity, if this 79.28 provides a larger benefit. 79.29 (c) For a surviving spouse specified in subdivision 2b, 79.30 paragraph (b), the surviving spouse benefit is a benefit for 79.31 life equal to 50 percent of the average monthly salary of the 79.32 deceased member. 79.33 (d) For a surviving spouse specified in subdivision 2b, 79.34 paragraph (c), the surviving spouse benefit is a benefit for 79.35 life equal to 50 percent of the average monthly salary of the 79.36 deceased member, or the second half of a 100 percent joint and 80.1 survivor annuity, whichever is larger. 80.2 (e) For a surviving spouse specified in subdivision 2b, 80.3 paragraph (e), the surviving spouse benefit is the second half 80.4 of a 100 percent joint and survivor annuity, commencing on the 80.5 first of the month next following the deceased member's date of 80.6 death, or the first of the month next following the date on 80.7 which the deceased member would have attained age 55, whichever 80.8 is later. 80.9 (f) For a surviving spouse specified in subdivision 2b, 80.10 paragraph (f), the surviving spouse or, if none, the children 80.11 or, if none, the deceased member's estate, is entitled to a 80.12 refund of the employee contributions plus interest computed as 80.13 specified in subdivision 1. 80.14 Sec. 11. Minnesota Statutes 2002, section 352B.11, is 80.15 amended by adding a subdivision to read: 80.16 Subd. 2d. [COORDINATION WITH WORKERS' COMPENSATION 80.17 BENEFITS.] If the deceased member died under circumstances that 80.18 entitle the surviving spouse and the dependent child or children 80.19 to receive benefits under workers' compensation law, the 80.20 workers' compensation benefits received by the deceased member's 80.21 survivor or survivors must not be deducted from the benefits 80.22 payable under this section. 80.23 Sec. 12. Minnesota Statutes 2002, section 352D.075, 80.24 subdivision 2, is amended to read: 80.25 Subd. 2. [SURVIVING SPOUSE BENEFIT.] (a) Notwithstanding 80.26 any designation of a beneficiary to the contrary, if a 80.27 participant or a former participant diesleaving a spouse and80.28there is no named beneficiary who survives to receive payment or80.29the spouse is named beneficiarybefore an annuity or a 80.30 disability benefit becomes payable, the surviving spousemayis 80.31 entitled to receive: 80.32 (1) a lump sum payment of the value of the participant's 80.33 total shares; 80.34 (2)Thea lump sum payment of a portion of the value of 80.35one-half ofthe total shares andbeginning at age 55 or80.36thereafter receive, at any time after the participant's death, 81.1 an annuity based on the remaining value ofone-half ofthe total 81.2 shares, provided that. If the spouse dies before receiving any 81.3 annuity payments, the remaining value ofsaidthe sharesshall81.4be paidis payable to the spouse's children in equal shares,but81.5 and if nosuchchildren survive, then to the parents of the 81.6 spouse in equal shares,butand if nosuchchildren or parents 81.7 survive, then to the estate of the spouse; or 81.8 (3)Beginning at age 55 or thereafter receiveat any time 81.9 after the participant's death, an annuity based on the value of 81.10 the total shares, provided that. If the spouse dies before 81.11 receiving any annuity payments, the value ofsaidthe shares 81.12shall be paidis payable to the spouse's children in equal 81.13 shares,butand if nosuchchildren survive, then to the parents 81.14 of the spouse in equal shares,butand if no such children or 81.15 parents survive, then to the estate of the spouse; andfurther81.16provided,ifsaidthe spouse dies after receiving annuity 81.17 payments but before receiving payments equal to the value of the 81.18 employee shares, the value of the employee shares 81.19 remainingshall be paidis payable to the spouse's children in 81.20 equal shares,butand if nosuchchildren survive, then to the 81.21 parents of the spouse in equal shares,butand if nosuch81.22 children or parents survive, then to the estate of the spouse. 81.23 (b) A participant or a former participant and the person's 81.24 spouse may make a joint specification, in writing, on a form 81.25 prescribed by the executive director, that the benefits provided 81.26 in this section must be paid only to the designated beneficiary. 81.27 Sec. 13. Minnesota Statutes 2002, section 352D.075, is 81.28 amended by adding a subdivision to read: 81.29 Subd. 2a. [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 81.30 lieu of the annuity under subdivision 2, clause (2) or (3), or 81.31 in lieu of a distribution under subdivision 2, clause (1), the 81.32 surviving spouse of a deceased participant may elect to receive 81.33 survivor coverage in the form of a term certain annuity of five, 81.34 six, 15, or 20 years, based on the value of the remaining 81.35 shares. The monthly term certain annuity must be calculated 81.36 under section 352D.06, subdivision 1. 82.1 Sec. 14. Minnesota Statutes 2002, section 352D.075, 82.2 subdivision 3, is amended to read: 82.3 Subd. 3. [REFUND TO BENEFICIARY.] If a participant dies 82.4 and hasnamed a beneficiaryno surviving spouse, the value of 82.5 the total sharesshall be paidis payable tosucha designated 82.6 beneficiary, but ifsuchthe beneficiary dies before receiving 82.7 payment, or if no beneficiary has been namedand there is no82.8spouse, the value ofsaidthe sharesshall be paidis payable 82.9 to the children of the participant in equal shares,butor if no 82.10suchchildren survive, then in equal shares to the parents of 82.11 the participant,butor if nosuch children orparents survive, 82.12 then to the estate of the participant. 82.13 Sec. 15. [352F.052] [APPLICATION OF SURVIVING SPOUSE, 82.14 DEPENDENT CHILD PROVISION.] 82.15 Notwithstanding any provisions of law to the contrary, 82.16 subdivisions within section 352.12 of the edition of Minnesota 82.17 Statutes published in the year before the year in which a 82.18 privatization occurred, applicable to the surviving spouse or 82.19 dependent children of a former member, apply to the survivors of 82.20 a terminated hospital employee of Fairview, University of 82.21 Minnesota Physicians, or University Affiliated Family Physicians. 82.22 Sec. 16. [353F.052] [APPLICATION OF SURVIVING SPOUSE, 82.23 DEPENDENT CHILD PROVISION.] 82.24 Notwithstanding any provisions of law to the contrary, 82.25 subdivisions within section 353.32 of the edition of Minnesota 82.26 Statutes published in the year before the year in which a 82.27 privatization occurred, applicable to the surviving spouse or 82.28 dependent children of a former member as defined in section 82.29 353.01, subdivision 7a, apply to the survivors of a terminated 82.30 medical facility or other public employing unit employee. 82.31 Sec. 17. Minnesota Statutes 2002, section 354.05, 82.32 subdivision 22, is amended to read: 82.33 Subd. 22. [DESIGNATED BENEFICIARY.] "Designated 82.34 beneficiary" means the person, trust, or organization designated 82.35 by a retiree or member to receive the benefits to which a 82.36 beneficiary is entitled under this chapter. A beneficiary 83.1 designation is valid only if it is made on an appropriate form 83.2 provided by the executive director that is signed by the member 83.3and two witnesses to the member's signature. The properly 83.4 completed form must be received by the association on or before 83.5 the date of death of the retiree or member. If a retiree or a 83.6 member does not designate a person, trust, or organization, or 83.7 if the person who was designated predeceases the retiree or the 83.8 member, or if the trust or organization ceases to exist before 83.9 the death of the retiree or the member, the designated 83.10 beneficiarymeansis the estate of the deceased retiree or 83.11 member. 83.12 Sec. 18. Minnesota Statutes 2002, section 354.46, 83.13 subdivision 2, is amended to read: 83.14 Subd. 2. [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY83.15BENEFITSURVIVING SPOUSE SURVIVOR COVERAGE.] (a)The surviving83.16spouse of any member or former member who hasIf the active or 83.17 deferred member was at least age 55 and had credit for at least 83.18 three years of allowable service on the date of death, the 83.19 surviving spouse is entitled to the second portion of a 100 83.20 percent joint and survivor annuitycoverage in the event of83.21death of the member prior to retirement. If the surviving83.22spouse does not elect to receive a surviving spouse benefit83.23under subdivision 1, if applicable, or does not elect to receive83.24a refund of accumulated member contributions under section83.25354.47, subdivision 1, the surviving spouse is entitled to83.26receive, upon written application on a form prescribed by the83.27executive director, a benefit equal to the second portion of a83.28100 percent joint and survivor annuityspecified under section 83.29 354.45, based on the age of the active or deferred memberand83.30surviving spouseat the time of deathof the member,and 83.31computed under section 354.44, subdivision 2 or 6, whichever is83.32applicablethe age of the surviving spouse at the time the 83.33 benefit accrues. 83.34 (b) If the active or deferred member was under age 55 and 83.35hashad credit for at least 30 years of allowable service on the 83.36 date of death, the surviving spouse may elect to receive the 84.1 second portion of a 100 percent joint and survivor annuity based 84.2 on the age of the active or deferred memberand surviving spouse84.3 on the date of death and the age of the surviving spouse at the 84.4 time the benefit accrues. If section 354.44, subdivision 6, 84.5 applies, the annuity is payable using the full early retirement 84.6 reduction under section 354.44, subdivision 6,paragraph84.7 clause (3)(ii), to age 55 and one-half of the early retirement 84.8 reduction from age 55 to the age payment begins. 84.9 (c) If the active or deferred member was under age 55 and 84.10hashad credit for at least three years of allowable service on 84.11 the date of death, but did not yet qualify for retirement, the 84.12 surviving spouse may elect to receive the second portion of a 84.13 100 percent joint and survivor annuity based on the age of 84.14 the active or deferred memberand the surviving spouseat the 84.15 time of death and the age of the surviving spouse at the time 84.16 the benefit accrues. If section 354.44, subdivision 6, applies, 84.17 the annuity is calculated using the full early retirement 84.18 reduction under section 354.44, subdivision 6, to age 55 and 84.19 one-half of the early retirement reduction from age 55 to the 84.20 age the annuity begins.The surviving spouse eligible for a84.21surviving spouse benefit under paragraph (a) may apply for the84.22annuity at any time after the date on which the deceased84.23employee would have attained the required age for retirement84.24based on the employee's allowable service.84.25 (d) The surviving spouse eligible for surviving spouse 84.26 benefits underparagraph (b) or (c)this subdivision may apply 84.27 for the annuity any time after the member's death.ThisThe 84.28 benefitaccrues from the day following the date of the member's84.29death butmay not begin to accrue more than six months before 84.30 the date the application is filed with the executive 84.31 director and may not accrue before the member's death.Sections84.32354.55, subdivision 11, and 354.60 apply to a deferred annuity84.33payable under this section.The benefit is payable for life. 84.34 Any benefit under this subdivision is in lieu of benefits under 84.35 subdivision 1, if applicable, and in lieu of a refund of 84.36 accumulated member contributions under section 354.47, 85.1 subdivision 1. 85.2 (e) For purposes of this subdivision, a designated 85.3 beneficiary must be a former spouse or a biological or adopted 85.4 child of the member. 85.5 Sec. 19. Minnesota Statutes 2002, section 354.46, 85.6 subdivision 2b, is amended to read: 85.7 Subd. 2b. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 85.8 no surviving spouse eligible for benefits under subdivision 2,a85.9 each dependent childor childrenas defined in section 354.05, 85.10 subdivision 8a, is eligible for monthlypaymentssurviving child 85.11 benefits.PaymentsSurviving child benefits to a dependent 85.12 child must be paid from the date of the member's death to the 85.13 date the dependent child attains age 20 if the child is under 85.14 age 15 on the date of the member's death. If the child is 15 85.15 years or older on the date of the member's death,payment must85.16be madethe surviving child benefit is payable for five years. 85.17 Thepayment to adependent surviving child benefit is an amount 85.18 that is actuarially equivalent to the value of a 100 percent 85.19 optional annuity under subdivision 2 calculated using the age of 85.20 the member and age of the dependent childatas of the date of 85.21 death in lieu of the age of the member and the spouse. If there 85.22 is more than one dependent child, each dependent childshallis 85.23 entitled to receive a proportionate share of the actuarial value 85.24 of the member's account. 85.25 Sec. 20. Minnesota Statutes 2002, section 354.46, 85.26 subdivision 5, is amended to read: 85.27 Subd. 5. [PAYMENT TO DESIGNATED BENEFICIARY.] A memberand85.28 who is single or, if the member is married, a member and the 85.29 spouse of the member jointly, may make ajointspecification in 85.30 writing on a form prescribed by the executive director that the 85.31 benefits provided in subdivision 2, or in section 354.47, 85.32 subdivision 1, must be paid only to a designated beneficiary or 85.33 to designated beneficiaries. For purposes of subdivision 2, a 85.34 designated beneficiary may only be either a former spouse or a 85.35 biological or an adopted child of the member. 85.36 Sec. 21. Minnesota Statutes 2002, section 354.46, is 86.1 amended by adding a subdivision to read: 86.2 Subd. 6. [APPLICATION.] (a) A beneficiary designation and 86.3 an application for benefits under this section must be in 86.4 writing on a form prescribed by the executive director. 86.5 (b) Sections 354.55, subdivision 11, and 354.60 apply to a 86.6 deferred annuity payable under this section. 86.7 (c) Unless otherwise specified, the annuity must be 86.8 computed under section 354.44, subdivision 2 or 6, whichever is 86.9 applicable. 86.10 Sec. 22. Minnesota Statutes 2002, section 356.441, is 86.11 amended to read: 86.12 356.441 [REPAYMENT OF REFUNDSPAYMENT ACCEPTANCE ALLOWED.] 86.13 Subdivision 1. [PAYMENT AUTHORIZATION.] The repayment of a 86.14 refund and interest on that refund or the payment of equivalent 86.15 contributions and interest for an eligible leave of absence, as 86.16 permitted under laws governing any public pension plan in 86.17 Minnesota, may be made: 86.18 (1) with funds distributed or transferred from a plan 86.19 qualified under the federal Internal Revenue Code of 1986, 86.20 section 401, subsection (a) or (k); 403; 408; or 457, subsection 86.21 (b), as amendedthrough December 31, 1988, or an annuity86.22qualified under the federal Internal Revenue Code of 1986,86.23section 403(a). Repayment may also be madefrom time to time; 86.24 or 86.25 (2) with funds distributed from an individual retirement 86.26 accountused solely to receive aor individual retirement 86.27 annuity, if done solely in a manner that is eligible for 86.28 treatment as a nontaxable rolloverfrom that type of a plan or86.29annuityor transfer under the applicable federal law.The86.30repaid refund86.31 Subd. 2. [SEPARATE ACCOUNTING REQUIREMENT.] Nontaxable 86.32 rollovers or transfer amounts under subdivision 1 received by a 86.33 public pension fund must be separately accounted for as member 86.34 contributions not previously taxed. Before accepting 86.35 any rollovers or transfers to which this section applies, the 86.36 executive directormustshall require the member to provide 87.1 written documentation to demonstrate that the amounts to 87.2 be rolled over or transferred are eligible for a tax-free 87.3 rollover or transfer and qualify for that treatment under the 87.4 federal Internal Revenue Code of 1986, as amended. 87.5 Sec. 23. Minnesota Statutes 2002, section 490.124, 87.6 subdivision 12, is amended to read: 87.7 Subd. 12. [REFUND.] (a)AnyA person who ceases to be a 87.8 judge but who does not qualify for a retirement annuity or other 87.9 benefit under section 490.121shall beis entitled to a refund 87.10 in an amount equal to all theperson'smember's employee 87.11 contributions to the judges' retirement fund plus interest 87.12 computedto the first day of the month in which the refund is87.13processed based on fiscal year balances at an annual rate of87.14five percent compounded annuallyunder section 352.22, 87.15 subdivision 2. 87.16 (b) A refund of contributions under paragraph (a) 87.17 terminates all service credits and all rights and benefits of 87.18 the judge and the judge's survivors. A person who becomes a 87.19 judge again after taking a refund under paragraph (a) may 87.20 reinstate the previously terminated service credits, rights, and 87.21 benefits by repayingall refundsthe total amount of the 87.22 previously received refund.AThe refund repayment must include 87.23 interest on the total amount previously received at an annual 87.24 rate of 8.5 percent compounded annually from the date on which 87.25 the refund was received until the date on which the refund is 87.26 repaid. 87.27 Sec. 24. [TEACHERS RETIREMENT ASSOCIATION; BENEFICIARY 87.28 DESIGNATION.] 87.29 (a) An eligible person described in paragraph (b) is 87.30 entitled to make a specification that the benefits provided in 87.31 Minnesota Statutes, section 354.46, subdivision 2, or in 87.32 Minnesota Statutes, section 354.47, subdivision 1, may be paid 87.33 only to a designated beneficiary or beneficiaries. 87.34 (b) An eligible person is a person who: 87.35 (1) was born on July 9, 1956; 87.36 (2) is employed as a teacher by Independent School District 88.1 No. 535, Rochester; 88.2 (3) is a member of the Teachers Retirement Association; 88.3 (4) has more than 19 years of allowable service credit in 88.4 the Teachers Retirement Association; 88.5 (5) has two minor children; 88.6 (6) has no potential surviving spouse by virtue of a prior 88.7 marriage dissolution; and 88.8 (7) has been diagnosed with a serious medical condition 88.9 that is life threatening. 88.10 (c) The designated beneficiary or beneficiaries may only be 88.11 a biological or adopted child, the biological or adopted 88.12 children of the eligible person, or a trust established for the 88.13 child or children if the trust is required to provide for the 88.14 proper health, support, maintenance, and education of the 88.15 dependent child or children. If two or more children are 88.16 designated or if a trust established for more than one child is 88.17 designated, the benefit payable to or on behalf of each child is 88.18 an equal share of the total benefit. 88.19 (d) The specification must be made in writing on a form 88.20 prescribed by the executive director of the Teachers Retirement 88.21 Association. 88.22 Sec. 25. [REPEALER.] 88.23 Minnesota Statutes 2002, section 354A.107, is repealed. 88.24 Sec. 26. [EFFECTIVE DATE.] 88.25 (a) Sections 1 to 25 are effective on July 1, 2004. 88.26 (b) Sections 8 to 11 are not intended to increase, modify, 88.27 impair, or diminish the benefit entitlements specified in 88.28 Minnesota Statutes, chapter 352B. If the Minnesota State 88.29 Retirement System executive director determines that any 88.30 provision of those sections does increase, modify, impair, or 88.31 diminish the benefit entitlements as reflected in applicable law 88.32 just prior to the effective date of this section, the executive 88.33 director shall certify that determination and a recommendation 88.34 as to the required legislative correction to the chairs of the 88.35 Legislative Commission on Pensions and Retirement, the house 88.36 Governmental Operations Committee, the senate State and Local 89.1 Government Operations Committee, and the executive director of 89.2 the Legislative Commission on Pensions and Retirement. 89.3 (c) Consistent with Minnesota Statutes, section 645.21, and 89.4 public pension policy in general, the increased interest rate 89.5 provided on a refund under section 23 applies only to judges 89.6 whose termination of service occurs on or after July 1, 2004. 89.7 ARTICLE 10 89.8 FEDERAL INTERNAL REVENUE 89.9 CODE COMPLIANCE 89.10 Section 1. Minnesota Statutes 2002, section 356.611, is 89.11 amended by adding a subdivision to read: 89.12 Subd. 4. [COMPENSATION.] (a) For purposes of this section, 89.13 compensation means a member's compensation actually paid or made 89.14 available for any limitation year determined as provided by 89.15 Treasury Regulation Section 1.415-2(d)(10). 89.16 (b) Compensation for any period includes: 89.17 (1) any elective deferral as defined in section 402(g)(3) 89.18 of the Internal Revenue Code; 89.19 (2) any elective amounts that are not includable in a 89.20 member's gross income by reason of sections 125 or 457 of the 89.21 Internal Revenue Code; and 89.22 (3) any elective amounts that are not includable in a 89.23 member's gross income by reason of section 132(f)(4) of the 89.24 Internal Revenue Code. 89.25 Sec. 2. [356.635] [INTERNAL REVENUE CODE COMPLIANCE.] 89.26 Subdivision 1. [RETIREMENT BENEFIT COMMENCEMENT.] The 89.27 retirement benefit of a member who has terminated employment 89.28 must begin no later than the later of April 1 of the calendar 89.29 year following the calendar year that the member attains the 89.30 federal minimum distribution age under section 401(a)(9) of the 89.31 Internal Revenue Code or April 1 of the calendar year following 89.32 the calendar year in which the member terminated employment. 89.33 Subd. 2. [DISTRIBUTIONS.] Distributions shall be made as 89.34 required under section 401(a)(9) of the Internal Revenue Code 89.35 and the treasury regulations adopted under that section, 89.36 including, but not limited to, the incidental death benefit 90.1 provisions of section 401(a)(9)(G) of the Internal Revenue Code. 90.2 Subd. 3. [DIRECT ROLLOVERS.] A distributee may elect, at 90.3 the time and in the manner prescribed by the plan administrator, 90.4 to have all or any portion of an eligible rollover distribution 90.5 paid directly to an eligible retirement plan as specified by the 90.6 distributee. 90.7 Subd. 4. [ELIGIBLE ROLLOVER DISTRIBUTION.] An "eligible 90.8 rollover distribution" is any distribution of all or any portion 90.9 of the balance to the credit of the distributee. 90.10 Subd. 5. [INELIGIBLE AMOUNTS.] An eligible rollover 90.11 distribution does not include: 90.12 (1) a distribution that is one of a series of substantially 90.13 equal periodic payments, receivable annually or more frequently, 90.14 that is made for the life or life expectancy of the distributee, 90.15 the joint lives or joint life expectancies of the distributee 90.16 and the distributee's designated beneficiary, or for a specified 90.17 period of ten years or more; 90.18 (2) a distribution that is required under section 401(a)(9) 90.19 of the Internal Revenue Code; or 90.20 (3) any other exception required by law or the Internal 90.21 Revenue Code. 90.22 Subd. 6. [ELIGIBLE RETIREMENT PLAN.] (a) An "eligible 90.23 retirement plan" is: 90.24 (1) an individual retirement account under section 408(a) 90.25 of the Internal Revenue Code; 90.26 (2) an individual retirement annuity plan under section 90.27 408(b) of the Internal Revenue Code; 90.28 (3) an annuity plan under section 403(a) of the Internal 90.29 Revenue Code; 90.30 (4) a qualified trust plan under section 401(a) of the 90.31 Internal Revenue Code that accepts the distributee's eligible 90.32 rollover distribution; 90.33 (5) an annuity contract under section 403(b) of the 90.34 Internal Revenue Code; or 90.35 (6) an eligible deferred compensation plan under section 90.36 457(b) of the Internal Revenue Code, which is maintained by a 91.1 state or local government and which agrees to separately account 91.2 for the amounts transferred into the plan. 91.3 (b) For distributions of after-tax contributions which are 91.4 not includable in gross income, the after-tax portion may be 91.5 transferred only to an individual retirement account or annuity 91.6 described in section 408(a) or (b) of the Internal Revenue Code, 91.7 or to a qualified defined contribution plan described in either 91.8 section 401(a), or section 403(a), of the Internal Revenue Code, 91.9 that agrees to separately account for the amounts transferred, 91.10 including separately accounting for the portion of the 91.11 distribution which is includable in gross income and the portion 91.12 of the distribution which is not includable. 91.13 Subd. 7. [DISTRIBUTEE.] A "distributee" is: 91.14 (1) an employee or a former employee; 91.15 (2) the surviving spouse of an employee or former employee; 91.16 or 91.17 (3) the former spouse of the employee or former employee 91.18 who is the alternate payee under a qualified domestic relations 91.19 order as defined in section 414(p) of the Internal Revenue Code, 91.20 or who is a recipient of a court-ordered equitable distribution 91.21 of marital property, as provided in section 518.58. 91.22 Subd. 8. [FORFEITURES.] For defined benefit plans, unless 91.23 otherwise permitted by section 401(a)(8) of the Internal Revenue 91.24 Code, forfeitures may not be applied to increase the benefits 91.25 that any employee would otherwise receive under the plan. 91.26 Subd. 9. [MILITARY SERVICE.] Contributions, benefits, and 91.27 service credit with respect to qualified military service must 91.28 be provided according to section 414(u) of the Internal Revenue 91.29 Code. 91.30 Sec. 3. [TRANSITIONAL PROVISION.] 91.31 (a) An eligible rollover distribution under Minnesota 91.32 Statutes, section 356.635, does not include the portion of a 91.33 distribution that is not included in gross income. 91.34 (b) For eligible rollover distributions to a surviving 91.35 spouse, an eligible retirement plan under Minnesota Statutes, 91.36 section 356.635, is limited to an individual retirement account 92.1 under section 408(a) of the Internal Revenue Code or an 92.2 individual retirement annuity plan under section 408(b) of the 92.3 Internal Revenue Code. 92.4 Sec. 4. [EFFECTIVE DATE.] 92.5 (a) Section 1, paragraph (a), is effective on July 1, 2004. 92.6 Section 1, paragraph (b), is effective retroactively as 92.7 follows: clauses (1) and (2) are effective for limitation years 92.8 beginning on and after January 1, 1998; and clause (3) is 92.9 effective for limitation years beginning on and after January 1, 92.10 2001. 92.11 (b) Sections 2 and 3 are effective on the day following 92.12 final enactment. 92.13 (c) Section 2 is effective retroactively as follows: 92.14 subdivision 1 is effective on and after January 1, 1989; 92.15 subdivision 2 is effective for distributions on and after 92.16 December 31, 1989; subdivision 3 is effective for distributions 92.17 on and after January 1, 1993; subdivision 6, paragraph (a), 92.18 clauses (5) and (6), are effective for distributions made after 92.19 December 31, 2001; subdivision 6, paragraph (b), is effective 92.20 for distributions after December 31, 2001; and subdivision 9 is 92.21 effective December 12, 1994. 92.22 (d) Section 3 is effective only for distributions made 92.23 before January 1, 2002. 92.24 ARTICLE 11 92.25 HEALTH CARE SAVINGS 92.26 PLAN MODIFICATIONS 92.27 Section 1. Minnesota Statutes 2002, section 352.98, is 92.28 amended to read: 92.29 352.98 [POSTRETIREMENTHEALTH CARE SAVINGS PLAN.] 92.30 Subdivision 1. [PLAN CREATED.] The Minnesota State 92.31 Retirement System shall establish a plan or plans, known as 92.32postretirementhealth care savings plans, through which public 92.33 employers and employees may save to coverpostretirementhealth 92.34 care costs. The Minnesota State Retirement System shall make 92.35 available one or more trusts, including a governmental trust or 92.36 governmental trusts, authorized under the Internal Revenue Code 93.1 to be eligible for tax-preferred or tax-free treatment through 93.2 which employers and employees can save to coverpostretirement93.3 health care costs. 93.4 Subd. 2. [CONTRACTING AUTHORIZED.] The Minnesota State 93.5 Retirement System is authorized to administer the plan and to 93.6 contract with public and private entities to provide investment 93.7 services, record keeping, benefit payments, and other functions 93.8 necessary for the administration of the plan. If allowed by the 93.9 Minnesota State Board of Investment, the Minnesota State Board 93.10 of Investment supplemental investment funds may be offered as 93.11 investment options under thepostretirementhealth care savings 93.12 plan or plans. 93.13 Subd. 3. [CONTRIBUTIONS.] (a) Contributions to the plan 93.14shallmust be determined through a personnel policy or in a 93.15 collective bargaining agreement of a public employer with the 93.16 exclusive representative of the covered employees in an 93.17 appropriate unit. The Minnesota State Retirement System may 93.18 offer different types of trusts permitted under the Internal 93.19 Revenue Code to best meet the needs of different employee units. 93.20 (b) Contributions to the plan by or on behalf of the 93.21 employeeshallmust be held in trust for reimbursement of 93.22 employee and dependent health-related expenses following 93.23 retirement from public employment or during active employment. 93.24 The Minnesota State Retirement System shall maintain a separate 93.25 account of the contributions made by or on behalf of each 93.26 participant and the earnings thereon. The Minnesota State 93.27 Retirement System shall make available a limited range of 93.28 investment options, and each employee may direct the investment 93.29 of the accumulations in the employee's account among the 93.30 investment options made available by the Minnesota State 93.31 Retirement System. At the request of a participating employer 93.32 and employee group, the Minnesota State Retirement System may 93.33 determine how the assets of the affected employer and employee 93.34 group should be invested. 93.35 (c) This section does not obligate a public employer to 93.36 meet and negotiate in good faith with the exclusive bargaining 94.1 representative of any public employee group regarding an 94.2 employer contribution to a postretirement or active employee 94.3 health care savings plan authorized by this section and section 94.4 356.24, subdivision 1, clause (7). It is not the intent of the 94.5 legislature to authorize the state to incur new funding 94.6 obligations for the costs of retiree health care or the costs of 94.7 administering retiree health care plans or accounts. 94.8 Subd. 4. [REIMBURSEMENT FOR HEALTH-RELATED EXPENSES.] 94.9Following termination of public service,The Minnesota State 94.10 Retirement System shall reimburse employees at least quarterly 94.11 for submitted health-related expenses, as required by federal 94.12 and state law, until the employee exhausts the accumulation in 94.13 the employee's account. If an employee dies prior to exhausting 94.14 the employee's account balance, the employee's spouse or 94.15 dependentsshall beare eligible to be reimbursed for health 94.16 care expenses from the account until the account balance is 94.17 exhausted. If an account balance remains after the death of a 94.18 participant and all of the participant's legal dependents, the 94.19 remainder of the accountshallmust be paid to the employee's 94.20 beneficiaries or, if none, to the employee's estate. 94.21 Subd. 5. [FEES.] The Minnesota state retirement plan is 94.22 authorized to charge uniform fees to participants to cover the 94.23 ongoing cost of operating the plan. Any fees not neededshall94.24 must revert to participant accounts or be used to reduce plan 94.25 fees the following year.The Minnesota State Retirement System94.26is authorized to charge participating employers a fee, not to94.27exceed one-sixth of the Federal Insurance Contribution Act94.28savings realized by the employer as a result of participating in94.29the plan, until the initial costs of establishing the plan or94.30plans authorized by this section are recovered, or $75,000,94.31whichever is less.94.32 Subd. 6. [ADVISORY COMMITTEE.] (a) The Minnesota State 94.33 Retirement System shall establish a participant advisory 94.34 committee for the health care savings plan, made up of one 94.35 representative appointed by each employee unit participating in 94.36 the plan. Each participating unit shall be responsible for the 95.1 expenses of its own representative. 95.2 (b) The advisory committee shall meet at least twice per 95.3 year and shall be consulted on plan offerings and vendor 95.4 selection. By October 1 of each year, the Minnesota State 95.5 Retirement System shall give the advisory committee a statement 95.6 of fees collected and the use of the fees. 95.7 Subd. 7. [CONTRACTING WITH PRIVATE ENTITIES.] Nothing in 95.8 this sectionshall prohibitprohibits employers from contracting 95.9 with private entities to provide forpostretirementhealth care 95.10 reimbursement plans. 95.11 Sec. 2. [EFFECTIVE DATE.] 95.12 Section 1 is effective on the day following final enactment. 95.13 ARTICLE 12 95.14 RETIREMENT COVERAGE FOLLOWING 95.15 A PRIVATIZATION 95.16 Section 1. Minnesota Statutes 2003 Supplement, section 95.17 353F.02, subdivision 4, is amended to read: 95.18 Subd. 4. [MEDICAL FACILITY.] "Medical facility" means: 95.19 (1) the Fair Oaks Lodge, Wadena; 95.20 (2) the Glencoe Area Health Center; 95.21(2)(3) the Kanabec Hospital; 95.22 (4) the Luverne Public Hospital; 95.23 (5) the RenVilla Nursing Home; and 95.24(3)(6) the Waconia-Ridgeview Medical Center; and95.25(4) the Kanabec Hospital. 95.26 Sec. 2. [RENVILLA NURSING HOME; COMPUTATION OF PAYMENT 95.27 RATES.] 95.28 In the first reporting year that Public Employee Retirement 95.29 Association costs are no longer incurred for the RenVilla 95.30 Nursing Home, the facility shall have its allowable employee 95.31 pension or retirement plan costs reported on its Rule 50 cost 95.32 report treated as Public Employee Retirement Association 95.33 contributions for the purpose of computing its payment rates. 95.34 Sec. 3. [PERA-GENERAL RETENTION OF PUBLIC EMPLOYEE STATUS 95.35 FOR ANOKA ACHIEVE PROGRAM EMPLOYEES.] 95.36 Subdivision 1. [APPLICATION.] This section applies to a 96.1 person who was: 96.2 (1) employed by Anoka County in connection with the Achieve 96.3 Program for adults with developmental disabilities on the day 96.4 before operation of the program is transferred to Achieve 96.5 Services, Inc; and 96.6 (2) a member of the Public Employees Retirement Association 96.7 on December 31, 2003. 96.8 Subd. 2. [CONTINUATION OF COVERAGE.] For purposes of 96.9 participation in the coordinated plan of the Public Employees 96.10 Retirement Association, a person to whom this section applies is 96.11 a "public employee" under Minnesota Statutes, chapter 353, while 96.12 employed by Achieve Services, Inc., which is a governmental 96.13 subdivision under Minnesota Statutes, section 353.01, 96.14 subdivision 6, paragraph (a), for the purposes of reporting 96.15 contributions for those persons to whom this section applies 96.16 only. 96.17 Sec. 4. [PERA-GENERAL; RETENTION OF PUBLIC EMPLOYEE 96.18 COVERAGE FOR GOVERNMENT TRAINING SERVICES EMPLOYEES.] 96.19 Subdivision 1. [APPLICATION.] Notwithstanding any 96.20 provision of Minnesota Statutes, chapter 353, this section 96.21 applies to a person who: 96.22 (1) was employed by the state and local government joint 96.23 powers organization, the Government Training Service, on the day 96.24 before the operation was transferred to a nonprofit 96.25 organization, Government Training Services; 96.26 (2) was a member of the general employees retirement plan 96.27 of the Public Employees Retirement Association; and 96.28 (3) is employed by Government Training Services. 96.29 Subd. 2. [COVERAGE CONTINUATION.] (a) A person described 96.30 in subdivision 1 is a public employee for purposes of Minnesota 96.31 Statutes, section 353.01, subdivision 2, and is eligible to 96.32 continue participation in the coordinated program of the general 96.33 employees retirement plan of the Public Employees Retirement 96.34 Association. 96.35 (b) While employing a person described in subdivision 1, 96.36 Government Training Services is a governmental subdivision for 97.1 purposes of Minnesota Statutes, section 353.01, subdivision 6, 97.2 paragraph (a). 97.3 Sec. 5. [EFFECTIVE DATE.] 97.4 (a) Section 1, relating to the Fair Oaks Lodge, Wadena, is 97.5 effective upon the latter of: 97.6 (1) the day after the governing body of Todd County and its 97.7 chief clerical officer timely complete their compliance with 97.8 Minnesota Statutes, section 645.021, subdivisions 2 and 3; and 97.9 (2) the day after the governing body of Wadena County and 97.10 its chief clerical officer timely complete their compliance with 97.11 Minnesota Statutes, section 645.021, subdivisions 2 and 3. 97.12 (b) Section 1, relating to the RenVilla Nursing Home, is 97.13 effective upon the latter of: 97.14 (1) the day after the governing body of the city of 97.15 Renville and its chief clerical officer timely complete their 97.16 compliance with Minnesota Statutes, section 645.021, 97.17 subdivisions 2 and 3; and 97.18 (2) the first day of the month next following certification 97.19 to the governing body of the city of Renville by the executive 97.20 director of the Public Employees Retirement Association that the 97.21 actuarial accrued liability of the special benefit coverage 97.22 proposed for extension to the privatized RenVilla Nursing Home 97.23 employees under section 1 does not exceed the actuarial gain 97.24 otherwise to be accrued by the Public Employees Retirement 97.25 Association, as calculated by the consulting actuary retained by 97.26 the Legislative Commission on Pensions and Retirement. 97.27 (c) The cost of the actuarial calculations must be borne by 97.28 the city of Renville or the purchaser of the RenVilla Nursing 97.29 Home. 97.30 (d) If the required actions under paragraphs (b) and (c) 97.31 occur, section 1 applies retroactively to the RenVilla Nursing 97.32 Home as of the date of privatization. 97.33 (e) If the required actions under paragraph (a) occur, 97.34 section 1 applies retroactively to Fair Oaks Lodge, Wadena, as 97.35 of January 1, 2004. 97.36 (f) Sections 3 and 4 are effective on the day following 98.1 final enactment. 98.2 ARTICLE 13 98.3 MINNEAPOLIS FIREFIGHTERS RELIEF ASSOCIATION 98.4 Section 1. Minnesota Statutes 2003 Supplement, section 98.5 423C.03, subdivision 3, is amended to read: 98.6 Subd. 3. [COMPENSATION OF OFFICERS AND BOARD MEMBERS.] (a) 98.7 Notwithstanding any other law to the contrary, the association 98.8 may provide forpayment of the followingsalaries to its 98.9 officers and board members:as specified in this subdivision. 98.10(1)(b) If the executive secretary is not an active member, 98.11 the executive secretary may receive a salary to be set by the 98.12 board, subject to the limitations stated in paragraph (d). If 98.13 the executive secretary is an active member, the executive 98.14 secretary may receive a salary not exceeding 50 percent of the 98.15 maximum salary of a first grade firefighter;. 98.16(2)(c) The president may receive a salary not exceeding 98.17 ten percent of the maximum salary of a first grade firefighter;, 98.18 and 98.19(3)all other elected members of the board, other than the 98.20 executive secretary, may receive a salary not exceeding 2.5 98.21 percent of the maximum salary of a first grade firefighter. 98.22 (d) If the executive secretary is not an active member, the 98.23 executive secretary's salary may not exceed the highest salary 98.24 currently received by the executive director of the Minnesota 98.25 State Retirement System, the Public Employees Retirement 98.26 Association, or the Teachers Retirement Association. 98.27 Sec. 2. [EFFECTIVE DATE.] 98.28 Section 1 is effective on the day on which the Minneapolis 98.29 City Council and the chief clerical officer of the city of 98.30 Minneapolis complete in a timely manner the requirements of 98.31 Minnesota Statutes, section 645.021, subdivisions 2 and 3. 98.32 ARTICLE 14 98.33 VOLUNTEER FIREFIGHTER RELIEF 98.34 ASSOCIATION CHANGES 98.35 Section 1. Minnesota Statutes 2002, section 424A.02, 98.36 subdivision 2, is amended to read: 99.1 Subd. 2. [NONFORFEITABLE PORTION OF SERVICE PENSION.] If 99.2 the articles of incorporation or bylaws of a relief association 99.3 so provide, a relief association may pay a reduced service 99.4 pension to a retiring member who has completed fewer than 20 99.5 years of service. The reduced service pension may be paid when 99.6 the retiring member meets the minimum age and service 99.7 requirements of subdivision 1. 99.8 The amount of the reduced service pension may not exceed 99.9 the amount calculated by multiplying the service pension 99.10 appropriate for the completed years of service as specified in 99.11 the bylaws times the applicable nonforfeitable percentage of 99.12 pension. 99.13 For a volunteer firefighter relief association that pays a 99.14 lump sum service pension, a monthly benefit service pension, or 99.15 a lump sum service pension or a monthly benefit service pension 99.16 as alternative benefit forms, the nonforfeitable percentage of 99.17 pension amounts are as follows: 99.18 Completed Years of Service Nonforfeitable Percentage 99.19 of Pension Amount 99.20 5 40 percent 99.21 6 44 percent 99.22 7 48 percent 99.23 8 52 percent 99.24 9 56 percent 99.25 10 60 percent 99.26 11 64 percent 99.27 12 68 percent 99.28 13 72 percent 99.29 14 76 percent 99.30 15 80 percent 99.31 16 84 percent 99.32 17 88 percent 99.33 18 92 percent 99.34 19 96 percent 99.35 20 and thereafter 100 percent 99.36 For a volunteer firefighter relief association that pays a 100.1 defined benefit service pension, the nonforfeitable percentage 100.2 of pension amounts are as follows: 100.3 Completed Years of Service Nonforfeitable Percentage 100.4 of Pension Amount 100.5 5 40 percent 100.6 6 52 percent 100.7 7 64 percent 100.8 8 76 percent 100.9 9 88 percent 100.10 10 and thereafter 100 percent 100.11 Sec. 2. Minnesota Statutes 2002, section 424A.02, 100.12 subdivision 7, is amended to read: 100.13 Subd. 7. [DEFERRED SERVICE PENSIONS.] (a) A member of a 100.14 relief association to which this section applies is entitled to 100.15 a deferred service pension if the member: 100.16 (1) has completed the lesser of the minimum period of 100.17 active service with the fire department specified in the bylaws 100.18 or 20 years of active service with the fire department; 100.19 (2) has completed at least five years of active membership 100.20 in the relief association; and 100.21 (3) separates from active service and membership before 100.22 reaching age 50 or the minimum age for retirement and 100.23 commencement of a service pension specified in the bylaws 100.24 governing the relief association if that age is greater than age 100.25 50. 100.26 (b) The deferred service pension starts when the former 100.27 member reaches age 50 or the minimum age specified in the bylaws 100.28 governing the relief association if that age is greater than age 100.29 50 and when the former member makes a valid written application. 100.30 (c) A relief association that provides a lump sum service 100.31 pension may, when its governing bylaws so provide, pay interest 100.32 on the deferred lump sum service pension during the period of 100.33 deferral. If provided for in the bylaws, interest must be paid 100.34 in one of the following manners: 100.35 (1) at the investment performance rate actually earned on 100.36 that portion of the assets if the deferred benefit amount is 101.1 invested by the relief association in a separate account 101.2 established and maintained by the relief association or if the 101.3 deferred benefit amount is invested in a separate investment 101.4 vehicle held by the relief associationor, if not,; 101.5 (2) at the interest rate of five percent, compounded 101.6 annually; or 101.7 (3) at a rate equal to the actual time weighted total rate 101.8 of return investment performance of the special fund as reported 101.9 by the office of the state auditor under section 356.219, up to 101.10 five percent, compounded annually, and applied consistently for 101.11 all deferred service pensioners. 101.12 (d) A relief association may not use the method provided 101.13 for in paragraph (c), clause (3), until it has modified its 101.14 bylaws to be consistent with that clause. 101.15 (e) For a deferred service pension that is transferred to a 101.16 separate account established and maintained by the relief 101.17 association or separate investment vehicle held by the relief 101.18 association, the deferred member bears the full investment risk 101.19 subsequent to transfer and in calculating the accrued liability 101.20 of the volunteer firefighters relief association that pays a 101.21 lump sum service pension, the accrued liability for deferred 101.22 service pensions is equal to the separate relief association 101.23 account balance or the fair market value of the separate 101.24 investment vehicle held by the relief association. 101.25(e)(f) The deferred service pension is governed by and 101.26 must be calculated under the general statute, special law, 101.27 relief association articles of incorporation, and relief 101.28 association bylaw provisions applicable on the date on which the 101.29 member separated from active service with the fire department 101.30 and active membership in the relief association. 101.31 Sec. 3. [MARINE ON ST. CROIX VOLUNTEER FIREFIGHTERS RELIEF 101.32 ASSOCIATION; EARLY VESTING.] 101.33 (a) Notwithstanding Minnesota Statutes, section 424A.02, 101.34 subdivision 2, to the contrary, the Marine on St. Croix 101.35 Volunteer Firefighters Relief Association may utilize an early 101.36 vesting schedule as provided in paragraphs (b) and (c). 102.1 (b) If the articles of incorporation or bylaws of the 102.2 Marine on St. Croix Volunteer Firefighters Relief Association so 102.3 provide, the relief association may pay a reduced service 102.4 pension to a retiring member who has completed fewer than ten 102.5 years of service. The reduced service pension may be paid when 102.6 the retiring member meets the minimum age and service 102.7 requirements of Minnesota Statutes, section 424A.02, subdivision 102.8 1. 102.9 (c) The amount of the reduced service pension may not 102.10 exceed the amount calculated by multiplying the service pension 102.11 appropriate for the completed years of service as specified in 102.12 the articles of incorporation or bylaws by the applicable 102.13 nonforfeitable percentage of the service pension amount. The 102.14 nonforfeitable percentage of service pension amounts are as 102.15 follows: 102.16 Completed years Nonforfeitable percentage 102.17 of service of service pension amount 102.18 5 40 percent 102.19 6 52 percent 102.20 7 64 percent 102.21 8 76 percent 102.22 9 88 percent 102.23 10 and 100 percent 102.24 thereafter 102.25 Sec. 4. [BELLINGHAM FIREFIGHTER RELIEF ASSOCIATION; 102.26 RATIFICATION OF PRIOR ANNUITY INVESTMENTS.] 102.27 Notwithstanding Minnesota Statutes, section 356A.06, 102.28 subdivision 7, any annuity purchases by the Bellingham 102.29 Firefighters Relief Association prior to the effective date of 102.30 this section are ratified as permissible investments. 102.31 Sec. 5. [STUDY OF STATEWIDE LUMP SUM VOLUNTEER FIREFIGHTER 102.32 RETIREMENT PLAN; CREATION OF TASK FORCE.] 102.33 Subdivision 1. [TASK FORCE MEMBERSHIP.] (a) A statewide 102.34 Volunteer Firefighter Retirement Plan Study Task Force is 102.35 created. 102.36 (b) The task force members are: 103.1 (1) four members appointed by the president of the 103.2 Minnesota Area Relief Association coalition; 103.3 (2) four members appointed by the president of the 103.4 Minnesota State Fire Department Association; 103.5 (3) four members appointed by the president of the 103.6 Minnesota State Fire Chiefs Association; 103.7 (4) four members appointed by the board of directors of the 103.8 League of Minnesota Cities; 103.9 (5) two members appointed by the board of directors of the 103.10 Insurance Federation of Minnesota; 103.11 (6) two members appointed by the board of directors of the 103.12 Minnesota Association of Farm Mutual Insurance Companies; 103.13 (7) the Minnesota state auditor or the auditor's designee; 103.14 and 103.15 (8) two members appointed by the Minnesota Association of 103.16 Townships. 103.17 (c) Appointments must be made on or before July 1, 2004. 103.18 If the appointment is not made in a timely manner, or if there 103.19 is a vacancy, the state auditor shall appoint the task force 103.20 member or the replacement member. 103.21 (d) The chair of the task force must be selected by the 103.22 task force. 103.23 (e) Administrative services for the task force must be 103.24 provided by the Department of Public Safety. 103.25 Subd. 2. [TASK FORCE DUTIES.] The task force shall conduct 103.26 fact finding regarding the creation of a statewide volunteer 103.27 firefighter retirement plan. 103.28 The task force shall recommend the investment vehicle or 103.29 vehicles to be utilized by the plan, the administration and 103.30 corporate governance structure of the plan, the incentives 103.31 needed to formulate the plan, the limitations applicable to the 103.32 plan, and the state resources needed to be dedicated to the plan. 103.33 Subd. 3. [REPORT.] The task force shall prepare a report 103.34 detailing its findings about a potential statewide volunteer 103.35 firefighter retirement plan. The report is due January 15, 103.36 2005, and must be filed with the Legislative Reference Library; 104.1 the chair of the Legislative Commission on Pensions and 104.2 Retirement; the chair of the State and Local Government 104.3 Operations Committee of the senate; the chair of the State 104.4 Government Budget Division of the Senate Finance Committee; the 104.5 chair of the Governmental Operations and Veterans Affairs Policy 104.6 Committee of the house of representatives; and the chair of the 104.7 State Government Finance Committee of the house of 104.8 representatives. 104.9 Sec. 6. [APPROPRIATION.] 104.10 $40,000 is appropriated from the general fund in fiscal 104.11 year 2005 to the commissioner of public safety to hire a 104.12 consultant to assist the statewide Volunteer Firefighter 104.13 Retirement Plan Study Task Force. 104.14 Sec. 7. [EFFECTIVE DATE.] 104.15 (a) Sections 1, 2, 5, and 6 are effective on July 1, 2004. 104.16 (b) Section 3 is effective on the day after the date on 104.17 which the city council of the city of Marine on St. Croix and 104.18 the chief clerical officer of the city of Marine on St. Croix 104.19 comply with Minnesota Statutes, section 645.02, subdivisions 2 104.20 and 3. 104.21 (c) Section 4 is effective on the day following final 104.22 enactment. 104.23 (d) The deferred service pension interest crediting 104.24 procedure of Minnesota Statutes, section 424A.02, subdivision 7, 104.25 paragraph (c), clause (3), expires on December 31, 2008. 104.26 ARTICLE 15 104.27 PERA POLICE AND FIRE PLAN 104.28 MEMBERSHIP INCLUSIONS 104.29 Section 1. Minnesota Statutes 2003 Supplement, section 104.30 353.01, subdivision 6, is amended to read: 104.31 Subd. 6. [GOVERNMENTAL SUBDIVISION.] (a) "Governmental 104.32 subdivision" means a county, city, town, school district within 104.33 this state, or a department or unit of state government, or any 104.34 public body whose revenues are derived from taxation, fees, 104.35 assessments or from other sources. 104.36 (b) Governmental subdivision also means the Public 105.1 Employees Retirement Association, the League of Minnesota 105.2 Cities, the Association of Metropolitan Municipalities, public 105.3 hospitals owned or operated by, or an integral part of, a 105.4 governmental subdivision or governmental subdivisions, the 105.5 Association of Minnesota Counties, the Metropolitan Intercounty 105.6 Association, the Minnesota Municipal Utilities Association, the 105.7 Metropolitan Airports Commission, the Minneapolis Employees 105.8 Retirement Fund for employment initially commenced after June 105.9 30, 1979, the Range Association of Municipalities and Schools, 105.10 soil and water conservation districts, economic development 105.11 authorities created or operating under sections 469.090 to 105.12 469.108, the Port Authority of the city of St. Paul, the Spring 105.13 Lake Park Fire Department, incorporated, the Lake Johanna 105.14 Volunteer Fire Department, incorporated, the Red Wing 105.15 Environmental Learning Center, and the Dakota County 105.16 Agricultural Society. 105.17 (c) Governmental subdivision does not mean any municipal 105.18 housing and redevelopment authority organized under the 105.19 provisions of sections 469.001 to 469.047; or any port authority 105.20 organized under sections 469.048 to 469.089 other than the Port 105.21 Authority of the city of St. Paul; or any hospital district 105.22 organized or reorganized prior to July 1, 1975, under sections 105.23 447.31 to 447.37 or the successor of the district, nor the 105.24 Minneapolis Community Development Agency. 105.25 Sec. 2. [EFFECTIVE DATE.] 105.26 Section 1 is effective on the day following final enactment. 105.27 ARTICLE 16 105.28 ONE PERSON AND SMALL GROUP 105.29 PENSION CHANGES 105.30 Section 1. [PERA-GENERAL; PURCHASE OF PRIOR SERVICE 105.31 CREDIT.] 105.32 (a) An eligible person described in paragraph (b) is 105.33 entitled to purchase up to 33 months of allowable service credit 105.34 from the general employees retirement plan of the Public 105.35 Employees Retirement Association. The service credit purchase 105.36 under this section must be made in accordance with Minnesota 106.1 Statutes, section 356.55 or 356.551, whichever applies. 106.2 (b) An eligible person is a person who: 106.3 (1) is currently a member of the Teachers Retirement 106.4 Association; 106.5 (2) was employed by Independent School District No. 621, 106.6 Mounds View, from May 1968 to December 1971, but was not covered 106.7 by the general employees retirement plan of the Public Employees 106.8 Retirement Association; 106.9 (3) was employed by Independent School District No. 31, 106.10 Bemidji, but was not covered by the general employees retirement 106.11 plan of the Public Employees Retirement Association; 106.12 (4) was employed as a special education teacher by 106.13 Independent School District No. 12, Centennial, for the 106.14 1974-1975 school year and for the 1977-1978, 1978-1979, and 106.15 1979-1980 school years; 106.16 (5) was employed as a special education teacher by 106.17 Independent School District No. 16, Spring Lake Park, for the 106.18 1975-1976 school year; 106.19 (6) was employed as a special education teacher by 106.20 Independent School District No. 138, North Branch, for the 106.21 1980-1981, 1981-1982, 1982-1983, 1983-1984, 1984-1985, and 106.22 1985-1986 school years; and 106.23 (7) has been employed by Independent School District No. 106.24 11, Anoka-Hennepin, since the 1986-1987 school year. 106.25 (c) An eligible person described in paragraph (b) must 106.26 apply with the executive director of the Public Employees 106.27 Retirement Association to make the service credit purchase under 106.28 this section. The application must be in writing and must 106.29 include all necessary documentation of the applicability of this 106.30 section, documentation of the eligible person's eligibility for 106.31 retirement coverage by the general employees retirement plan of 106.32 the Public Employees Retirement Association if the employment 106.33 had been properly reported to the association at the time the 106.34 employment was rendered, and any other relevant information that 106.35 the executive director may require. 106.36 Sec. 2. [PERA-GENERAL EMPLOYEES RETIREMENT PLAN COVERAGE 107.1 TERMINATION AUTHORIZATION.] 107.2 Subdivision 1. [ELIGIBILITY.] (a) An eligible person 107.3 specified in paragraph (b) is authorized to apply for a 107.4 retirement annuity from the public employees police and fire 107.5 retirement plan, provided that the necessary age and service 107.6 requirements are met, under Minnesota Statutes, section 353.651, 107.7 as further specified under subdivision 2. 107.8 (b) An eligible person is a person who: 107.9 (1) was born on October 10, 1956; 107.10 (2) was employed as a police officer by the city of Red 107.11 Wing; 107.12 (3) was elected to the Goodhue County Board of 107.13 Commissioners in November 1998; and 107.14 (4) elected under the law then applicable to have 107.15 retirement coverage by the general employees retirement plan of 107.16 the Public Employees Retirement Association for the county board 107.17 service. 107.18 Subd. 2. [RETIREMENT ANNUITY.] (a) Notwithstanding an 107.19 irrevocable election to participate in the general employees 107.20 retirement plan of the Public Employees Retirement Association 107.21 as an elected official and the person's continuation of elected 107.22 service, an eligible person under subdivision 1, paragraph (b), 107.23 is deemed to have terminated retirement plan membership under 107.24 Minnesota Statutes, section 353.01, subdivision 11b, on the 107.25 first day of the first pay period next following the date of 107.26 enactment. 107.27 (b) Upon the change in retirement coverage status under 107.28 paragraph (a), the eligible person may apply for a retirement 107.29 annuity under Minnesota Statutes, section 353.651. In computing 107.30 that annuity, the Public Employees Retirement Association must 107.31 exclude the salary that was attributable to the Goodhue County 107.32 board service. The deferred annuity augmentation under 107.33 Minnesota Statutes, section 353.71, applies to the annuity under 107.34 this subdivision. 107.35 Subd. 3. [TREATMENT OF GOODHUE COUNTY BOARD CONTRIBUTIONS 107.36 TO PERA.] (a) All member contributions by the eligible person to 108.1 the coordinated program of the general employee retirement plan 108.2 of the Public Employees Retirement Association attributable to 108.3 the Goodhue County board elected service, and all corresponding 108.4 employer contributions, must be determined. 108.5 (b) An eligible person described in subdivision 1, 108.6 paragraph (b), must elect, within 90 days of the change in 108.7 retirement coverage status under paragraph (a), between 108.8 receiving a refund under Minnesota Statutes, section 353.34, 108.9 subdivision 2, of the member contributions determined under 108.10 paragraph (a) or having coverage by the public employees defined 108.11 contribution plan under Minnesota Statutes, chapter 353D, as 108.12 further specified in paragraph (c). 108.13 (c) If coverage by the public employees defined 108.14 contribution plan is elected under paragraph (b), contributions 108.15 to that plan commence as of the first day of the first pay 108.16 period following the election, and the accumulated member and 108.17 employer contributions determined under paragraph (a) must be 108.18 transferred with annual compound interest at the rate of six 108.19 percent to an account established for the eligible person in its 108.20 public employees defined contribution plan. 108.21 (d) If no election is made by an eligible person by the 108.22 required date in paragraph (b), the individual is assumed to 108.23 have elected the refund indicated in paragraph (b). 108.24 (e) Upon an election under paragraph (b), or upon a 108.25 mandatory refund under paragraph (d), all rights in the Public 108.26 Employees Retirement Association coordinated plan due to elected 108.27 Goodhue County board service are forfeited and may not be 108.28 reestablished. 108.29 Sec. 3. [PUBLIC EMPLOYEES RETIREMENT ASSOCIATION COVERAGE 108.30 TERMINATION; MINNEAPOLIS PARK BOARD MEMBER.] 108.31 Subdivision 1. [ELIGIBILITY.] (a) An eligible individual 108.32 specified in paragraph (b) is authorized to apply for a 108.33 retirement annuity, provided necessary age and service 108.34 requirements are met, under Minnesota Statutes, section 353.29 108.35 or 353.30, as applicable, as further specified under subdivision 108.36 2. 109.1 (b) An eligible individual is an individual who: 109.2 (1) was born on April 3, 1946; 109.3 (2) was employed as a Hennepin County employee and became a 109.4 member of the Public Employees Retirement Association general 109.5 plan due to that service in July 1976; 109.6 (3) was elected to the Minneapolis park board and took 109.7 office in January 1992; and 109.8 (4) elected under law then applicable to have Public 109.9 Employees Retirement Association general plan coverage for the 109.10 Minneapolis park board elected or appointed service. 109.11 Subd. 2. [RETIREMENT ANNUITY.] (a) Notwithstanding an 109.12 irrevocable election to participate in the Public Employees 109.13 Retirement Association general plan as an elected official and 109.14 continuation of elected service, an eligible individual under 109.15 subdivision 1, paragraph (b), is deemed to have terminated 109.16 membership under Minnesota Statutes, section 353.01, subdivision 109.17 11b, following the termination of all Public Employees 109.18 Retirement Association general covered employment. 109.19 (b) If the requirements of paragraph (a) are satisfied, the 109.20 eligible individual may apply for a retirement annuity under 109.21 Minnesota Statutes, section 353.29 or 353.30, as applicable. If 109.22 there is a delay between the termination date and the 109.23 commencement of the annuity, deferred annuity augmentation under 109.24 Minnesota Statutes, section 353.71, applies. 109.25 Sec. 4. [EFFECTIVE DATE.] 109.26 Sections 1 to 3 are effective on the day following final 109.27 enactment. 109.28 ARTICLE 17 109.29 PRIOR SERVICE CREDIT PURCHASES 109.30 Section 1. Minnesota Statutes 2002, section 352.275, 109.31 subdivision 1, is amended to read: 109.32 Subdivision 1. [SERVICE CREDIT PURCHASE AUTHORIZED.] A 109.33 state employee who has at least three years of allowable service 109.34 with the Minnesota State Retirement System and who performed 109.35 service in the United States armed forces before becoming a 109.36 state employee, or who failed to obtain service credit for a 110.1 military leave of absence under section 352.27, is entitled to 110.2 purchase allowable service credit for the initial period of 110.3 enlistment, induction, or call to active duty without any 110.4 voluntary extension by making payment under section 356.55if110.5the employee is not entitled to receive a current or deferred110.6retirement annuity from a United States armed forces pension110.7plan and has not purchased service credit from any other defined110.8benefit public employee pension plan for the same period of110.9service. 110.10 Sec. 2. Minnesota Statutes 2002, section 352B.01, 110.11 subdivision 3a, is amended to read: 110.12 Subd. 3a. [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 110.13 (a) A member who has at least three years of allowable service 110.14 with the State Patrol retirement plan under subdivision 3 and 110.15 who performed service in the United States armed forces before 110.16 becoming a member is entitled to purchase allowable service 110.17 credit for the initial period of enlistment, induction, or call 110.18 to active duty without any voluntary extension by making payment 110.19 under section 356.55, if the employee is not entitled to receive110.20a current or deferred retirement annuity from a United States110.21armed forces pension plan and has not purchased service credit110.22from any other defined benefit public employee pension plan for110.23the same period of service. 110.24 (b) A member who desires to purchase service credit under 110.25 paragraph (a) must apply with the executive director to make the 110.26 purchase. The application must include all necessary 110.27 documentation of the member's qualifications to make the 110.28 purchase, signed written permission to allow the executive 110.29 director to request and receive necessary verification of 110.30 applicable facts and eligibility requirements, and any other 110.31 relevant information that the executive director may require. 110.32 (c) Allowable service credit for the purchase period must 110.33 be granted by the State Patrol retirement plan to the purchasing 110.34 employee upon receipt of the purchase payment amount. Payment 110.35 must be made before the effective date of retirement of the 110.36 member. 111.1 Sec. 3. Minnesota Statutes 2002, section 353.01, 111.2 subdivision 16a, is amended to read: 111.3 Subd. 16a. [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 111.4 (a) A public employee who has at least three years of allowable 111.5 service with the Public Employees Retirement Association or the 111.6 public employees police and fire plan and who performed service 111.7 in the United States armed forces before becoming a public 111.8 employee, or who failed to obtain service credit for a military 111.9 leave of absence under subdivision 16, paragraph (h), is 111.10 entitled to purchase allowable service credit for the initial 111.11 period of enlistment, induction, or call to active duty without 111.12 any voluntary extension by making payment under section 111.13 356.55if the public employee is not entitled to receive a111.14current or deferred retirement annuity from a United States111.15armed forces pension plan and has not purchased service credit111.16from any other defined benefit public employee pension plan for111.17the same period of service. 111.18 (b) A public employee who desires to purchase service 111.19 credit under paragraph (a) must apply with the executive 111.20 director to make the purchase. The application must include all 111.21 necessary documentation of the public employee's qualifications 111.22 to make the purchase, signed written permission to allow the 111.23 executive director to request and receive necessary verification 111.24 of applicable facts and eligibility requirements, and any other 111.25 relevant information that the executive director may require. 111.26 (c) Allowable service credit for the purchase period must 111.27 be granted by the public employees association or the public 111.28 employees police and fire plan, whichever applies, to the 111.29 purchasing public employee upon receipt of the purchase payment 111.30 amount. Payment must be made before the effective date of 111.31 retirement of the public employee. 111.32 Sec. 4. Minnesota Statutes 2002, section 354.533, 111.33 subdivision 1, is amended to read: 111.34 Subdivision 1. [SERVICE CREDIT PURCHASE AUTHORIZED.] A 111.35 teacher who has at least three years of allowable service credit 111.36 with the Teachers Retirement Association and who performed 112.1 service in the United States armed forces before becoming a 112.2 teacher as defined in section 354.05, subdivision 2, or who 112.3 failed to obtain service credit for a military leave of absence 112.4 under the provisions of section 354.53, is entitled to purchase 112.5 allowable and formula service credit for the initial period of 112.6 enlistment, induction, or call to active duty without any 112.7 voluntary extension by making payment under section 356.55 112.8provided the teacher is not entitled to receive a current or112.9deferred retirement annuity from a United States armed forces112.10pension plan and has not purchased service credit from any other112.11defined benefit public employee pension plan for the same period112.12of service. 112.13 Sec. 5. Minnesota Statutes 2002, section 354A.097, 112.14 subdivision 1, is amended to read: 112.15 Subdivision 1. [SERVICE CREDIT PURCHASE AUTHORIZED.] A 112.16 teacher who has at least three years of allowable service credit 112.17 with the teachers retirement fund association and who performed 112.18 service in the United States armed forces before becoming a 112.19 teacher as defined in section 354A.011, subdivision 27, or who 112.20 failed to obtain service credit for a military leave of absence 112.21 period under section 354A.093, is entitled to purchase allowable 112.22 service credit for the initial period of enlistment, induction, 112.23 or call to active duty without any voluntary extension by making 112.24 payment under section 356.55, provided the teacher is not112.25entitled to receive a current or deferred retirement annuity112.26from a United States armed forces pension plan and has not112.27purchased service credit from another defined benefit public112.28employee pension plan for the same period of service. 112.29 Sec. 6. Laws 1999, chapter 222, article 16, section 16, as 112.30 amended by Laws 2002, chapter 392, article 7, section 1, and 112.31 Laws 2003, First Special Session chapter 12, article 6, section 112.32 2, is amended to read: 112.33 Sec. 16. [REPEALER.] 112.34 (a) Sections12 to 6 and 8 to 13 are repealed on May 16, 112.35 2004. 112.36 (b) Sections 1 and 7 are repealed on May 16, 2006. 113.1 Sec. 7. Laws 2000, chapter 461, article 4, section 4, as 113.2 amended by Laws 2003, First Special Session chapter 12, article 113.3 6, section 4, is amended to read: 113.4 Sec. 4. [EFFECTIVE DATE; SUNSET REPEALER.] 113.5 (a) Sections 1, 2, and 3 are effective on the day following 113.6 final enactment. 113.7 (b) Sections 1, 2, and 3 are repealed on May 16,20042006. 113.8 Sec. 8. [EFFECTIVE DATE.] 113.9 Sections 1 to 7 are effective on the day following final 113.10 enactment. 113.11 ARTICLE 18 113.12 PROVISION OF ACTUARIAL SERVICES 113.13 Section 1. Minnesota Statutes 2002, section 352.03, 113.14 subdivision 6, is amended to read: 113.15 Subd. 6. [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 113.16 management of the system is vested in the director, who is the 113.17 executive and administrative head of the system. The director 113.18 shall be advisor to the board on matters pertaining to the 113.19 system and shall also act as the secretary of the board. The 113.20 director shall: 113.21 (1) attend meetings of the board; 113.22 (2) prepare and recommend to the board appropriate rules to 113.23 carry out this chapter; 113.24 (3) establish and maintain an adequate system of records 113.25 and accounts following recognized accounting principles and 113.26 controls; 113.27 (4) designate an assistant director with the approval of 113.28 the board; 113.29 (5) appoint any employees, both permanent and temporary, 113.30 that are necessary to carry out the provisions of this chapter; 113.31 (6) organize the work of the system as the director deems 113.32 necessary to fulfill the functions of the system, and define the 113.33 duties of its employees and delegate to them any powers or 113.34 duties, subject to the control of the director and under 113.35 conditions the director may prescribe. Appointments to exercise 113.36 delegated power must be by written order and shall be filed with 114.1 the secretary of state; 114.2 (7) with the advice and consent of the board, contract for 114.3 the services of an approved actuary, professional management 114.4 services, and any other consulting services as necessary and fix 114.5 the compensation for those services. The contracts are not 114.6 subject to competitive bidding under chapter 16C. Any approved 114.7 actuary retained by the executive director shall function as the 114.8 actuarial advisor of the board and the executive director, and 114.9 may perform actuarial valuations and experience studies to 114.10 supplement those performed by the actuary retainedby the114.11legislative commission on pensions and retirementunder section 114.12 6. Any supplemental actuarial valuations or experience studies 114.13 shall be filed with the executive director of the Legislative 114.14 Commission on Pensions and Retirement. Professional management 114.15 services may not be contracted for more often than once in six 114.16 years. Copies of professional management survey reports must be 114.17 transmitted to the secretary of the senate, the chief clerk of 114.18 the house of representatives, and the Legislative Reference 114.19 Library as provided by section 3.195, and to the executive 114.20 director of the commission at the time as reports are furnished 114.21 to the board. Only management firms experienced in conducting 114.22 management surveys of federal, state, or local public retirement 114.23 systems are qualified to contract with the director; 114.24 (8) with the advice and consent of the board provide 114.25 in-service training for the employees of the system; 114.26 (9) make refunds of accumulated contributions to former 114.27 state employees and to the designated beneficiary, surviving 114.28 spouse, legal representative, or next of kin of deceased state 114.29 employees or deceased former state employees, as provided in 114.30 this chapter; 114.31 (10) determine the amount of the annuities and disability 114.32 benefits of employees covered by the system and authorize 114.33 payment of the annuities and benefits beginning as of the dates 114.34 on which the annuities and benefits begin to accrue, in 114.35 accordance with the provisions of this chapter; 114.36 (11) pay annuities, refunds, survivor benefits, salaries, 115.1 and necessary operating expenses of the system; 115.2 (12) certify funds available for investment to the State 115.3 Board of Investment; 115.4 (13) with the advice and approval of the board request the 115.5 State Board of Investment to sell securities when the director 115.6 determines that funds are needed for the system; 115.7 (14) prepare and submit to the board and the legislature an 115.8 annual financial report covering the operation of the system, as 115.9 required by section 356.20; 115.10 (15) prepare and submit biennial and annual budgets to the 115.11 board and with the approval of the board submit the budgets to 115.12 the Department of Finance; and 115.13 (16) with the approval of the board, perform other duties 115.14 required to administer the retirement and other provisions of 115.15 this chapter and to do its business. 115.16 Sec. 2. Minnesota Statutes 2002, section 352B.02, 115.17 subdivision 1e, is amended to read: 115.18 Subd. 1e. [AUDIT; ACTUARIAL VALUATION.] The legislative 115.19 auditor shall audit the fund. Any actuarial valuation of the 115.20 fund required under section 356.215shallmust be prepared by 115.21 the actuary retainedby the Legislative Commission on Pensions115.22and Retirementunder section 6. Any approved actuary retained 115.23 by the executive director under section 352.03, subdivision 6, 115.24 may perform actuarial valuations and experience studies to 115.25 supplement those performed by the commission-retained actuary. 115.26 Any supplemental actuarial valuation or experience studies shall 115.27 be filed with the executive director of the Legislative 115.28 Commission on Pensions and Retirement. 115.29 Sec. 3. Minnesota Statutes 2002, section 353.03, 115.30 subdivision 3a, is amended to read: 115.31 Subd. 3a. [EXECUTIVE DIRECTOR.] (a) [APPOINTMENT.] The 115.32 board shall appoint, with the advice and consent of the senate, 115.33 an executive director on the basis of education, experience in 115.34 the retirement field, and leadership ability. The executive 115.35 director shall have had at least five years' experience in an 115.36 executive level management position, which has included 116.1 responsibility for pensions, deferred compensation, or employee 116.2 benefits. The executive director serves at the pleasure of the 116.3 board. The salary of the executive director is as provided by 116.4 section 15A.0815. 116.5 (b) [DUTIES.] The management of the association is vested 116.6 in the executive director who shall be the executive and 116.7 administrative head of the association. The executive director 116.8 shall act as adviser to the board on all matters pertaining to 116.9 the association and shall also act as the secretary of the 116.10 board. The executive director shall: 116.11 (1) attend all meetings of the board; 116.12 (2) prepare and recommend to the board appropriate rules to 116.13 carry out the provisions of this chapter; 116.14 (3) establish and maintain an adequate system of records 116.15 and accounts following recognized accounting principles and 116.16 controls; 116.17 (4) designate, with the approval of the board, up to two 116.18 persons who shall serve in the unclassified service and whose 116.19 salary is set in accordance with section 43A.18, subdivision 3, 116.20 appoint a confidential secretary in the unclassified service, 116.21 and appoint employees to carry out this chapter, who are subject 116.22 to chapters 43A and 179A in the same manner as are executive 116.23 branch employees; 116.24 (5) organize the work of the association as the director 116.25 deems necessary to fulfill the functions of the association, and 116.26 define the duties of its employees and delegate to them any 116.27 powers or duties, subject to the control of, and under such 116.28 conditions as, the executive director may prescribe; 116.29 (6) with the approval of the board, contract for the 116.30 services of an approved actuary, professional management 116.31 services, and any other consulting services as necessary to 116.32 fulfill the purposes of this chapter. All contracts are subject 116.33 to chapter 16C. The commissioner of administration shall not 116.34 approve, and the association shall not enter into, any contract 116.35 to provide lobbying services or legislative advocacy of any 116.36 kind. Any approved actuary retained by the executive director 117.1 shall function as the actuarial advisor of the board and the 117.2 executive director and may perform actuarial valuations and 117.3 experience studies to supplement those performed by the actuary 117.4 retainedby the Legislative Commission on Pensions and117.5Retirementunder section 6. Any supplemental actuarial 117.6 valuations or experience studies shall be filed with the 117.7 executive director of the Legislative Commission on Pensions and 117.8 Retirement. Copies of professional management survey reports 117.9 shall be transmitted to the secretary of the senate, the chief 117.10 clerk of the house of representatives, and the Legislative 117.11 Reference Library as provided by section 3.195, and to the 117.12 executive director of the commission at the same time as reports 117.13 are furnished to the board. Only management firms experienced 117.14 in conducting management surveys of federal, state, or local 117.15 public retirement systems shall be qualified to contract with 117.16 the director hereunder; 117.17 (7) with the approval of the board provide in-service 117.18 training for the employees of the association; 117.19 (8) make refunds of accumulated contributions to former 117.20 members and to the designated beneficiary, surviving spouse, 117.21 legal representative or next of kin of deceased members or 117.22 deceased former members, as provided in this chapter; 117.23 (9) determine the amount of the annuities and disability 117.24 benefits of members covered by the association and authorize 117.25 payment of the annuities and benefits beginning as of the dates 117.26 on which the annuities and benefits begin to accrue, in 117.27 accordance with the provisions of this chapter; 117.28 (10) pay annuities, refunds, survivor benefits, salaries, 117.29 and necessary operating expenses of the association; 117.30 (11) prepare and submit to the board and the legislature an 117.31 annual financial report covering the operation of the 117.32 association, as required by section 356.20; 117.33 (12) prepare and submit biennial and annual budgets to the 117.34 board for its approval and submit the approved budgets to the 117.35 department of finance for approval by the commissioner; 117.36 (13) reduce all or part of the accrued interest payable 118.1 under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 118.2 subdivision 5, upon receipt of proof by the association of an 118.3 unreasonable processing delay or other extenuating circumstances 118.4 of the employing unit. The executive director shall prescribe 118.5 and submit for approval by the board the conditions under which 118.6 such interest may be reduced; and 118.7 (14) with the approval of the board, perform such other 118.8 duties as may be required for the administration of the 118.9 association and the other provisions of this chapter and for the 118.10 transaction of its business. 118.11 Sec. 4. Minnesota Statutes 2002, section 354.06, 118.12 subdivision 2a, is amended to read: 118.13 Subd. 2a. [DUTIES OF EXECUTIVE DIRECTOR.] The management 118.14 of the association is vested in the executive director who shall 118.15 be the executive and administrative head of the association. 118.16 The executive director shall act as advisor to the board on all 118.17 matters pertaining to the association and shall also act as the 118.18 secretary of the board. The executive director shall: 118.19 (1) attend all meetings of the board; 118.20 (2) prepare and recommend to the board appropriate rules to 118.21 carry out the provisions of this chapter; 118.22 (3) establish and maintain an adequate system of records 118.23 and accounts following recognized accounting principles and 118.24 controls; 118.25 (4) designate an assistant executive director in the 118.26 unclassified service and two assistant executive directors in 118.27 the classified service with the approval of the board, and 118.28 appoint such employees, both permanent and temporary, as are 118.29 necessary to carry out the provisions of this chapter; 118.30 (5) organize the work of the association as the director 118.31 deems necessary to fulfill the functions of the association, and 118.32 define the duties of its employees and delegate to them any 118.33 powers or duties, subject to the director's control and under 118.34 such conditions as the director may prescribe; 118.35 (6) with the approval of the board, contract and set the 118.36 compensation for the services of an approved actuary, 119.1 professional management services, and any other consulting 119.2 services. These contracts are not subject to the competitive 119.3 bidding procedure prescribed by chapter 16C. An approved 119.4 actuary retained by the executive director shall function as the 119.5 actuarial advisor of the board and the executive director and 119.6 may perform actuarial valuations and experience studies to 119.7 supplement those performed by the actuary retainedby the119.8legislative commission on pensions and retirementunder section 119.9 6. Any supplemental actuarial valuations or experience studies 119.10 shall be filed with the executive director of the Legislative 119.11 Commission on Pensions and Retirement. Copies of professional 119.12 management survey reports must be transmitted to the secretary 119.13 of the senate, the chief clerk of the house of representatives, 119.14 and the Legislative Reference Library as provided by section 119.15 3.195, and to the executive director of the commission at the 119.16 same time as reports are furnished to the board. Only 119.17 management firms experienced in conducting management surveys of 119.18 federal, state, or local public retirement systems are qualified 119.19 to contract with the executive director; 119.20 (7) with the approval of the board, provide in-service 119.21 training for the employees of the association; 119.22 (8) make refunds of accumulated contributions to former 119.23 members and to the designated beneficiary, surviving spouse, 119.24 legal representative, or next of kin of deceased members or 119.25 deceased former members, under this chapter; 119.26 (9) determine the amount of the annuities and disability 119.27 benefits of members covered by the association and authorize 119.28 payment of the annuities and benefits beginning as of the dates 119.29 on which the annuities and benefits begin to accrue, under this 119.30 chapter; 119.31 (10) pay annuities, refunds, survivor benefits, salaries, 119.32 and necessary operating expenses of the association; 119.33 (11) prepare and submit to the board and the legislature an 119.34 annual financial report covering the operation of the 119.35 association, as required by section 356.20; 119.36 (12) certify funds available for investment to the State 120.1 Board of Investment; 120.2 (13) with the advice and approval of the board, request the 120.3 State Board of Investment to sell securities on determining that 120.4 funds are needed for the purposes of the association; 120.5 (14) prepare and submit biennial and annual budgets to the 120.6 board and with the approval of the board submit those budgets to 120.7 the department of finance; and 120.8 (15) with the approval of the board, perform such other 120.9 duties as may be required for the administration of the 120.10 association and the other provisions of this chapter and for the 120.11 transaction of its business. The executive director may: 120.12 (i) reduce all or part of the accrued interest and fines 120.13 payable by an employing unit for reporting requirements under 120.14 section 354.52, based on an evaluation of any extenuating 120.15 circumstances of the employing unit; 120.16 (ii) assign association employees to conduct field audits 120.17 of an employing unit to ensure compliance with the provisions of 120.18 this chapter; and 120.19 (iii) recover overpayments, if not repaid to the 120.20 association, by suspending or reducing the payment of a 120.21 retirement annuity, refund, disability benefit, survivor 120.22 benefit, or optional annuity under this chapter until the 120.23 overpayment, plus interest, has been recovered. 120.24 Sec. 5. Minnesota Statutes 2002, section 354A.021, 120.25 subdivision 7, is amended to read: 120.26 Subd. 7. [ACTUARIAL CONSULTANT.] The board of trustees or 120.27 directors of each teachers retirement fund association may 120.28 contract for the services of an approved actuary and fix the 120.29 reasonable compensation for those services. Any approved 120.30 actuary retained by the board shall function as the actuarial 120.31 advisor to the board and may perform actuarial valuations and 120.32 experience studies to supplement those performed by the actuary 120.33 retainedby the Legislative Commission on Pensions and120.34Retirementunder section 6. Any supplemental actuarial 120.35 valuations or experience studiesshallmust be filed with the 120.36 executive director of the Legislative Commission on Pensions and 121.1 Retirement. 121.2 Sec. 6. [356.214] [ACTUARIAL VALUATION PREPARATION; JOINT 121.3 RETENTION OF CONSULTING ACTUARY.] 121.4 Subdivision 1. [JOINT RETENTION.] (a) The chief 121.5 administrative officers of the Minnesota State Retirement 121.6 System, the Public Employees Retirement Association, the 121.7 Teachers Retirement Association, the Duluth Teachers Retirement 121.8 Fund Association, the Minneapolis Teachers Retirement Fund 121.9 Association, the Minneapolis Employees Retirement Fund, and the 121.10 St. Paul Teachers Retirement Fund Association, jointly, on 121.11 behalf of the state, its employees, its taxpayers, and its 121.12 various public pension plans, shall contract with an established 121.13 actuarial consulting firm to conduct annual actuarial valuations 121.14 and related services for the retirement plans named in paragraph 121.15 (b). The principal from the actuarial consulting firm on the 121.16 contract must be an approved actuary under section 356.215, 121.17 subdivision 1, paragraph (c). Prior to becoming effective, the 121.18 contract under this section is subject to a review and approval 121.19 by the Legislative Commission on Pensions and Retirement. 121.20 (b) The contract for actuarial services must include the 121.21 preparation of actuarial valuations and related actuarial work 121.22 for the following retirement plans: 121.23 (1) the teachers retirement plan, Teachers Retirement 121.24 Association; 121.25 (2) the general state employees retirement plan, Minnesota 121.26 State Retirement System; 121.27 (3) the correctional employees retirement plan, Minnesota 121.28 State Retirement System; 121.29 (4) the State Patrol retirement plan, Minnesota State 121.30 Retirement System; 121.31 (5) the judges retirement plan, Minnesota State Retirement 121.32 System; 121.33 (6) the Minneapolis employees retirement plan, Minneapolis 121.34 Employees Retirement Fund; 121.35 (7) the public employees retirement plan, Public Employees 121.36 Retirement Association; 122.1 (8) the public employees police and fire plan, Public 122.2 Employees Retirement Association; 122.3 (9) the Duluth teachers retirement plan, Duluth Teachers 122.4 Retirement Fund Association; 122.5 (10) the Minneapolis teachers retirement plan, Minneapolis 122.6 Teachers Retirement Fund Association; 122.7 (11) the St. Paul teachers retirement plan, St. Paul 122.8 Teachers Retirement Fund Association; 122.9 (12) the legislators retirement plan, Minnesota State 122.10 Retirement System; 122.11 (13) the elective state officers retirement plan, Minnesota 122.12 State Retirement System; and 122.13 (14) local government correctional service retirement plan, 122.14 Public Employees Retirement Association. 122.15 (c) The contract must require completion of the annual 122.16 actuarial valuation calculations on a fiscal year basis, with 122.17 the contents of the actuarial valuation calculations as 122.18 specified in section 356.215, and in conformity with the 122.19 standards for actuarial work adopted by the Legislative 122.20 Commission on Pensions and Retirement. 122.21 The contract must require completion of annual experience 122.22 data collection and processing and a quadrennial published 122.23 experience study for the plans listed in paragraph (b), clauses 122.24 (1), (2), and (7), as provided for in the standards for 122.25 actuarial work adopted by the commission. The experience data 122.26 collection, processing, and analysis must evaluate the following: 122.27 (1) individual salary progression; 122.28 (2) the rate of return on investments based on the current 122.29 asset value; 122.30 (3) payroll growth; 122.31 (4) mortality; 122.32 (5) retirement age; 122.33 (6) withdrawal; and 122.34 (7) disablement. 122.35 The contract must include provisions for the preparation of 122.36 cost analyses by the jointly retained actuary for proposed 123.1 legislation that include changes in benefit provisions or 123.2 funding policies prior to their consideration by the Legislative 123.3 Commission on Pensions and Retirement. 123.4 (d) The actuary retained by the joint retirement systems 123.5 shall annually prepare a report to the legislature, including a 123.6 commentary on the actuarial valuation calculations for the plans 123.7 named in paragraph (b) and summarizing the results of the 123.8 actuarial valuation calculations. The actuary shall include 123.9 with the report the actuary's recommendations to the legislature 123.10 concerning the appropriateness of the support rates to achieve 123.11 proper funding of the retirement plans by the required funding 123.12 dates. The actuary shall, as part of the quadrennial experience 123.13 study, include recommendations to the legislature on the 123.14 appropriateness of the actuarial valuation assumptions required 123.15 for evaluation in the study. 123.16 (e) If the actuarial gain and loss analysis in the 123.17 actuarial valuation calculations indicates a persistent pattern 123.18 of sizable gains or losses, as directed by the joint retirement 123.19 systems or as requested by the chair of the Legislative 123.20 Commission on Pensions and Retirement, the actuary shall prepare 123.21 a special experience study for a plan listed in paragraph (b), 123.22 clause (3), (4), (5), (6), (8), (9), (10), (11), (12), (13), or 123.23 (14), in the manner provided for in the standards for actuarial 123.24 work adopted by the commission. 123.25 (f) The term of the contract between the joint retirement 123.26 systems and the actuary retained may not exceed five years. The 123.27 joint retirement system administrative officers shall establish 123.28 procedures for the consideration and selection of contract 123.29 bidders and the requirements for the contents of an actuarial 123.30 services contract under this section. The procedures and 123.31 requirements must be submitted to the Legislative Commission on 123.32 Pensions and Retirement for review and comment prior to final 123.33 approval by the joint administrators. The contract is subject 123.34 to the procurement procedures under chapter 16C. The 123.35 consideration of bids and the selection of a consulting 123.36 actuarial firm by the chief administrative officers must occur 124.1 at a meeting that is open to the public and reasonable timely 124.2 public notice of the date and the time of the meeting and its 124.3 subject matter must be given. 124.4 (g) The actuarial services contract may not limit the 124.5 ability of the Minnesota legislature and its standing committees 124.6 and commissions to rely on the actuarial results of the work 124.7 prepared under the contract. 124.8 (h) The joint retirement systems shall designate one of the 124.9 retirement system executive directors as the actuarial services 124.10 contract manager. 124.11 Subd. 2. [ALLOCATION OF ACTUARIAL COSTS.] (a) The 124.12 actuarial services contract manager shall assess each retirement 124.13 plan specified in subdivision 1, paragraph (b), its appropriate 124.14 portion of the total compensation paid to the actuary retained 124.15 by the joint retirement systems for the actuarial valuation 124.16 calculations and quadrennial experience studies. The total 124.17 assessment is 100 percent of the amount of contract compensation 124.18 for the actuarial consulting firm for actuarial valuation 124.19 calculations, including any public employees police and fire 124.20 plan consolidation accounts of the Public Employees Retirement 124.21 Association established after March 1, 1999, annual experience 124.22 data collection and processing, and quadrennial experience 124.23 studies. 124.24 The portion of the total assessment payable by each 124.25 retirement system or pension plan must be determined based on 124.26 each plan's proportion of the actuarial services required, as 124.27 determined by the retained actuary, to complete the actuarial 124.28 valuation calculations, annual experience data collection and 124.29 processing, and quadrennial experience studies for all plans. 124.30 The assessment must be made within 30 days following the 124.31 end of the fiscal year and must be reported to the chief 124.32 administrative officers of the applicable retirement plans. The 124.33 amount of the assessment is appropriated from the retirement 124.34 fund applicable to the retirement plan. 124.35 (b) The actuarial services contract manager shall assess 124.36 each retirement plan or each interest group which requested the 125.1 preparation of a cost analysis for proposed legislation the cost 125.2 of the actuary retained by the joint retirement systems incurred 125.3 in the cost analysis preparation. With respect to interest 125.4 groups, the actuarial services contract manager shall obtain a 125.5 written commitment for the payment of the assessment in advance 125.6 of the cost analysis preparation and may require an advance 125.7 deposit or advance payment before authorizing the cost analysis 125.8 preparation. The retirement plan or the interest group shall 125.9 pay the assessment within 30 days of the date on which the 125.10 assessment is billed. The amount of the assessment is 125.11 appropriated from the retirement fund applicable to the 125.12 retirement plan for cost analyses requested by a retirement plan 125.13 or system. 125.14 (c) The actuarial services contract manager shall assess to 125.15 the Legislative Commission on Pensions and Retirement the cost 125.16 of the actuarial cost analysis preparation for the proposed 125.17 legislation requested by the chair of the Legislative Commission 125.18 on Pensions and Retirement or by the commission executive 125.19 director. The commission shall pay the assessment within 30 125.20 days of the date on which the assessment is billed. 125.21 Subd. 3. [REPORTING TO THE COMMISSION.] A copy of the 125.22 actuarial valuations, experience studies, and actuarial cost 125.23 analyses prepared by the actuary retained by the joint 125.24 retirement systems under the contract provided for in this 125.25 section must be filed with the executive director of the 125.26 Legislative Commission on Pensions and Retirement at the same 125.27 time that the document is transmitted to the actuarial services 125.28 contract manager or to any other document recipient. 125.29 Sec. 7. Minnesota Statutes 2002, section 356.215, 125.30 subdivision 2, is amended to read: 125.31 Subd. 2. [REQUIREMENTS.] (a) It is the policy of the 125.32 legislature that it is necessary and appropriate to determine 125.33 annually the financial status of tax supported retirement and 125.34 pension plans for public employees. To achieve this goal: 125.35 (1) theLegislative Commission on Pensions and Retirement125.36shall have prepared by theactuary retainedby the commission126.1 under section 6 shall prepare annual actuarial valuations of the 126.2 retirement plans enumerated in section3.856, subdivision111, 126.3 paragraph (b), and quadrennial experience studies of the 126.4 retirement plans enumerated in section3.856, subdivision111, 126.5 paragraph (b), clauses (1), (2), and (7); and 126.6 (2) the commissioner of finance may have prepared by the 126.7 actuary retained by the commission, two years after each set of 126.8 quadrennial experience studies, quadrennial projection 126.9 valuations of at least one of the retirement plans enumerated in 126.10 section3.856, subdivision111, paragraph (b), for which the 126.11 commissioner determines that the analysis may be beneficial. 126.12 (b) The governing or managing board or administrative 126.13 officials of each public pension and retirement fund or plan 126.14 enumerated in section 356.20, subdivision 2, clauses (9), (10), 126.15 and (12), shall have prepared by an approved actuary annual 126.16 actuarial valuations of their respective funds as provided in 126.17 this section. This requirement also applies to any fund or plan 126.18 that is the successor to any organization enumerated in section 126.19 356.20, subdivision 2, or to the governing or managing board or 126.20 administrative officials of any newly formed retirement fund, 126.21 plan, or association operating under the control or supervision 126.22 of any public employee group, governmental unit, or institution 126.23 receiving a portion of its support through legislative 126.24 appropriations, and any local police or fire fund to which 126.25 section 356.216 applies. 126.26 Sec. 8. Minnesota Statutes 2002, section 356.215, 126.27 subdivision 18, is amended to read: 126.28 Subd. 18. [ESTABLISHMENT OF ACTUARIAL ASSUMPTIONS.] (a) 126.29 The actuarial assumptions used for the preparation of actuarial 126.30 valuations under this section that are other than those set 126.31 forth in this section may be changed only with the approval of 126.32 the Legislative Commission on Pensions and Retirement. 126.33 (b) A change in the applicable actuarial assumptions may be 126.34 proposed by the governing board of the applicable pension fund 126.35 or relief association, by the actuary retained by the 126.36Legislative Commission on Pensions and Retirementjoint 127.1 retirement systems under section 6, by the actuarial advisor to 127.2 a pension fund governed by chapter 352, 353, 354, or 354A, or by 127.3 the actuary retained by a local police or firefighters relief 127.4 association governed by sections 69.77 or 69.771 to 69.776, if 127.5 one is retained. 127.6 Sec. 9. Minnesota Statutes 2002, section 422A.06, 127.7 subdivision 2, is amended to read: 127.8 Subd. 2. [ACTUARIAL VALUATION REQUIRED.] As of July 1 of 127.9 each year, an actuarial valuation of the retirement fund shall 127.10 be prepared by thecommission-retainedactuary retained by the 127.11 joint retirement systems under section 6 and filed in 127.12 conformance with the provisions and requirements of sections 127.13 356.215 to 356.23. Experience studies shall be prepared at 127.14 those times required by statute, required by the standards for 127.15 actuarial work adopted by the Legislative Commission on Pensions 127.16 and Retirement or ordered by the board. 127.17 The board may contract for the services of an approved 127.18 actuary and fix the reasonable compensation for those services. 127.19 Any approved actuary retained by the board shall function as the 127.20 actuarial advisor to the board and may perform actuarial 127.21 valuations and experience studies to supplement those performed 127.22 by the actuary retained by theLegislative Commission on127.23Pensions and Retirementjoint retirement systems under section 6. 127.24 Any supplemental actuarial valuations or experience studies 127.25shallmust be filed with the executive director of the 127.26 Legislative Commission on Pensions and Retirement. 127.27 Sec. 10. [REPEALER.] 127.28 Minnesota Statutes 2002, sections 3.85, subdivisions 11 and 127.29 12; and 356.217, are repealed. 127.30 Sec. 11. [EFFECTIVE DATE.] 127.31 Sections 1 to 10 are effective on the day following final 127.32 enactment. 127.33 ARTICLE 19 127.34 MINNEAPOLIS POLICE RELIEF ASSOCIATION 127.35 Section 1. Minnesota Statutes 2002, section 69.77, 127.36 subdivision 4, is amended to read: 128.1 Subd. 4. [RELIEF ASSOCIATION FINANCIAL REQUIREMENTS; 128.2 MINIMUM MUNICIPAL OBLIGATION.] (a) The officers of the relief 128.3 association shall determine the financial requirements of the 128.4 relief association and minimum obligation of the municipality 128.5 for the following calendar year in accordance with the 128.6 requirements of this subdivision. The financial requirements of 128.7 the relief association and the minimum obligation of the 128.8 municipality must be determined on or before the submission date 128.9 established by the municipality under subdivision 5. 128.10 (b) The financial requirements of the relief association 128.11 for the following calendar year must be based on the most recent 128.12 actuarial valuation or survey of the special fund of the 128.13 association if more than one fund is maintained by the 128.14 association, or of the association, if only one fund is 128.15 maintained, prepared in accordance with sections 356.215, 128.16 subdivisions 4 to 15, and 356.216, as required under subdivision 128.17 10. If an actuarial estimate is prepared by the actuary of the 128.18 relief association as part of obtaining a modification of the 128.19 benefit plan of the relief association and the modification is 128.20 implemented, the actuarial estimate must be used in calculating 128.21 the subsequent financial requirements of the relief association. 128.22 (c) If the relief association has an unfunded actuarial 128.23 accrued liability as reported in the most recent actuarial 128.24 valuation or survey, the total of the amounts calculated under 128.25 clauses (1), (2), and (3), constitute the financial requirements 128.26 of the relief association for the following year. If the relief 128.27 association does not have an unfunded actuarial accrued 128.28 liability as reported in the most recent actuarial valuation or 128.29 survey, the amount calculated under clauses (1) and (2) 128.30 constitute the financial requirements of the relief association 128.31 for the following year. The financial requirement elements are: 128.32 (1) the normal level cost requirement for the following 128.33 year, expressed as a dollar amount, which must be determined by 128.34 applying the normal level cost of the relief association as 128.35 reported in the actuarial valuation or survey and expressed as a 128.36 percentage of covered payroll to the estimated covered payroll 129.1 of the active membership of the relief association, including 129.2 any projected change in the active membership, for the following 129.3 year; 129.4 (2) for the Bloomington Fire Department Relief Association, 129.5 the Fairmont Police Relief Association, and the Virginia Fire 129.6 Department Relief Association, to the dollar amount of normal 129.7 cost determined under clause (1) must be added an amount equal 129.8 to the dollar amount of the administrative expenses of the 129.9 special fund of the association if more than one fund is 129.10 maintained by the association, or of the association if only one 129.11 fund is maintained, for the most recent year, multiplied by the 129.12 factor of 1.035. The administrative expenses are those 129.13 authorized under section 69.80. No amount of administrative 129.14 expenses under this clause are to be included in the financial 129.15 requirements of the Minneapolis Firefighters Relief Association 129.16 or the Minneapolis Police Relief Association; and 129.17 (3) to the dollar amount of normal cost and expenses 129.18 determined under clauses (1) and (2) must be added an amount 129.19 equal to the level annual dollar amount which is sufficient to 129.20 amortize the unfunded actuarial accrued liability by December 129.21 31, 2010, for the Bloomington Fire Department Relief 129.22 Association, the Fairmont Police Relief Association, the 129.23 Minneapolis Firefighters Relief Association, and the Virginia 129.24 Fire Department Relief Association, and by December 31, 2020, 129.25 for the Minneapolis Police Relief Association, as determined 129.26 from the actuarial valuation or survey of the fund, using an 129.27 interest assumption set at the applicable rate specified in 129.28 section 356.215, subdivision 8. The amortization date specified 129.29 in this clause applies to all local police or salaried 129.30 firefighters' relief associations and that date supersedes any 129.31 amortization date specified in any applicable special law. 129.32 (d) The minimum obligation of the municipality is an amount 129.33 equal to the financial requirements of the relief association 129.34 reduced by the estimated amount of member contributions from 129.35 covered salary anticipated for the following calendar year and 129.36 the estimated amounts anticipated for the following calendar 130.1 year from the applicable state aid program established under 130.2 sections 69.011 to 69.051 receivable by the relief association 130.3 after any allocation made under section 69.031, subdivision 5, 130.4 paragraph (b), clause (2), or 423A.01, subdivision 2, clause 130.5 (6), from the local police and salaried firefighters' relief 130.6 association amortization aid program established under section 130.7 423A.02, subdivision 1, from the supplementary amortization 130.8 state-aid program established under section 423A.02, subdivision 130.9 1a, and from the additional amortization state aid under section 130.10 423A.02, subdivision 1b. 130.11 Sec. 2. Minnesota Statutes 2002, section 356.216, is 130.12 amended to read: 130.13 356.216 [CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE 130.14 AND FIRE FUNDS.] 130.15 (a) The provisions of section 356.215 that govern the 130.16 contents of actuarial valuations must apply to any local police 130.17 or fire pension fund or relief association required to make an 130.18 actuarial report under this section, except as follows: 130.19 (1) in calculating normal cost and other requirements, if 130.20 required to be expressed as a level percentage of covered 130.21 payroll, the salaries used in computing covered payroll must be 130.22 the maximum rate of salary on which retirement and survivorship 130.23 credits and amounts of benefits are determined and from which 130.24 any member contributions are calculated and deducted; 130.25 (2) in lieu of the amortization date specified in section 130.26 356.215, subdivision 11, the appropriate amortization target 130.27 date specified in section 69.77, subdivision 4, or 69.773, 130.28 subdivision 4, clause (c), must be used in calculating any 130.29 required amortization contribution except that the amortization 130.30 date for the Minneapolis Police Relief Association is December 130.31 31, 2020; 130.32 (3) in addition to the tabulation of active members and 130.33 annuitants provided for in section 356.215, subdivision 13, the 130.34 member contributions for active members for the calendar year 130.35 and the prospective annual retirement annuities under the 130.36 benefit plan for active members must be reported; 131.1 (4) actuarial valuations required under section 69.773, 131.2 subdivision 2, must be made at least every four years and 131.3 actuarial valuations required under section 69.77 shall be made 131.4 annually; 131.5 (5) the actuarial balance sheet showing accrued assets 131.6 valued at market value if the actuarial valuation is required to 131.7 be prepared at least every four years or valued as current 131.8 assets under section 356.215, subdivision 1, clause (6), or 131.9 paragraph (b), whichever applies, if the actuarial valuation is 131.10 required to be prepared annually, actuarial accrued liabilities, 131.11 and the unfunded actuarial accrued liability must include the 131.12 following required reserves: 131.13 (i) For active members 131.14 1. Retirement benefits 131.15 2. Disability benefits 131.16 3. Refund liability due to death or withdrawal 131.17 4. Survivors' benefits 131.18 (ii) For deferred annuitants' benefits 131.19 (iii) For former members without vested rights 131.20 (iv) For annuitants 131.21 1. Retirement annuities 131.22 2. Disability annuities 131.23 3. Surviving spouses' annuities 131.24 4. Surviving children's annuities 131.25 In addition to those required reserves, separate items must 131.26 be shown for additional benefits, if any, which may not be 131.27 appropriately included in the reserves listed above; and 131.28 (6) actuarial valuations are due by the first day of the 131.29 seventh month after the end of the fiscal year which the 131.30 actuarial valuation covers. 131.31 (b) For the Minneapolis Firefighters Relief Association or 131.32 the Minneapolis Police Relief Association, the following 131.33 provisions additionally apply: 131.34 (1) in calculating the actuarial balance sheet, unfunded 131.35 actuarial accrued liability, and amortization contribution of 131.36 the relief association, "current assets" means the value of all 132.1 assets at cost, including realized capital gains and losses, 132.2 plus or minus, whichever applies, the average value of total 132.3 unrealized capital gains or losses for the most recent 132.4 three-year period ending with the end of the plan year 132.5 immediately preceding the actuarial valuation report 132.6 transmission date; and 132.7 (2) in calculating the applicable portions of the actuarial 132.8 valuation, an annual preretirement interest assumption of six 132.9 percent, an annual postretirement interest assumption of six 132.10 percent, and an annual salary increase assumption of four 132.11 percent must be used. 132.12 Sec. 3. Minnesota Statutes 2002, section 423B.01, 132.13 subdivision 12, is amended to read: 132.14 Subd. 12. [EXCESS INVESTMENT INCOME.] "Excess investment 132.15 income" means the amount, if any, by which the average time 132.16 weighted total rate of return earned by the fund in the most 132.17 recent priorfivetwo fiscal years has exceeded the actual 132.18 average percentage increase in the current monthly salary of a 132.19 first grade patrol officer in the most recent priorfivetwo 132.20 fiscal years plus two percent, and must be expressed as a dollar 132.21 amount. The amount may not exceed one percent of the total 132.22 assets of the fund, except when the actuarial value of assets of 132.23 the fund according to the most recent annual actuarial valuation 132.24 prepared in accordance with sections 356.215 and 356.216 is 132.25 greater than 102 percent of its actuarial accrued liabilities, 132.26 in which case the amount must not exceed 1-1/2 percent of the 132.27 total assets of the fund, and does not exist unless the yearly 132.28 average percentage increase of the time weighted total rate of 132.29 return of the fund for the previousfivetwo years exceeds by 132.30 two percent the yearly average percentage increase in monthly 132.31 salary of a first grade patrol officer during the previousfive132.32 two calendar years. 132.33 Sec. 4. Minnesota Statutes 2002, section 423B.09, 132.34 subdivision 1, is amended to read: 132.35 Subdivision 1. [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 132.36 RECEIVE PENSIONS.] The association shall grant pensions payable 133.1 from the police pension fund in monthly installments to persons 133.2 entitled to pensions in the manner and for the following 133.3 purposes. 133.4 (a)When the actuarial value of assets of the fund133.5according to the most recent annual actuarial valuation133.6performed in accordance with sections 356.215 and 356.216 is133.7less than 90 percent of the actuarial accrued liabilities, an133.8active member or a deferred pensioner who has performed duty as133.9a member of the police department of the city for five years or133.10more, upon written application after retiring from duty and133.11reaching at least age 50, is entitled to be paid monthly for133.12life a service pension equal to eight units. For full years of133.13service beyond five years, the service pension increases by 1.6133.14units for each full year, to a maximum of 40 units. When the133.15actuarial value of assets of the fund according to the most133.16recent annual actuarial valuation prepared in accordance with133.17sections 356.215 and 356.216 is greater than 90 percent of133.18actuarial accrued liabilities,Active members, deferred members, 133.19 and service pensioners are entitled to a service pension 133.20 according to the following schedule: 133.21 5 years 8.0 units 133.22 6 years 9.6 units 133.23 7 years 11.2 units 133.24 8 years 12.8 units 133.25 9 years 14.4 units 133.26 10 years 16.0 units 133.27 11 years 17.6 units 133.28 12 years 19.2 units 133.29 13 years 20.8 units 133.30 14 years 22.4 units 133.31 15 years 24.0 units 133.32 16 years 25.6 units 133.33 17 years 27.2 units 133.34 18 years 28.8 units 133.35 19 years 30.4 units 133.36 20 years34.035.0 units 134.1 21 years35.636.6 units 134.2 22 years37.238.2 units 134.3 23 years38.839.8 units 134.4 24 years40.441.4 units 134.5 25 years42.043.0 units 134.6 Fractional years of service may not be used in computing 134.7 pensions. 134.8 (b) An active member who after five years' service but less 134.9 than 20 years' service with the police department of the city, 134.10 becomes superannuated so as to be permanently unable to perform 134.11 the person's assigned duties, is entitled to be paid monthly for 134.12 life a superannuation pension equal to four units for five years 134.13 of service and an additional two units for each full year of 134.14 service over five years and less than 20 years. 134.15 (c) An active member who is not eligible for a service 134.16 pension and who, while a member of the police department of the 134.17 city, becomes diseased or sustains an injury while in the 134.18 service that permanently unfits the member for the performance 134.19 of police duties is entitled to be paid monthly for life a 134.20 pension equal to 34 units while so disabled. 134.21 Sec. 5. Minnesota Statutes 2002, section 423B.09, is 134.22 amended by adding a subdivision to read: 134.23 Subd. 7. [ADDITIONAL UNIT.] The additional unit provided 134.24 to members by subdivision 1 must also be provided to members who 134.25 selected a joint annuity option under subdivision 6 and must be 134.26 in an amount that is actuarially equivalent to the service 134.27 pension and the automatic survivor coverage for that additional 134.28 unit. 134.29 Sec. 6. Minnesota Statutes 2002, section 423B.10, 134.30 subdivision 1, is amended to read: 134.31 Subdivision 1. [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 134.32 surviving spouse of a deceased service pensioner, disability 134.33 pensioner, deferred pensioner, superannuation pensioner, or 134.34 active member, who was the legally married spouse of the 134.35 decedent, residing with the decedent, and who was married while 134.36 or before the time the decedent was on the payroll of the police 135.1 department, and who, if the deceased member was a service or 135.2 deferred pensioner, was legally married to the member for a 135.3 period of at least one year before retirement from the police 135.4 department, is entitled to a surviving spouse benefit. The 135.5 surviving spouse benefit is equal to2223 units per month if 135.6 the person is the surviving spouse of a deceased active member 135.7 or disabilitant. The surviving spouse benefit is equal to six 135.8 units per month, plus an additional one unit for each year of 135.9 service to the credit of the decedent in excess of five years, 135.10 to a maximum of2223 units per month, if the person is the 135.11 surviving spouse of a deceased service pensioner, deferred 135.12 pensioner, or superannuation pensioner. The surviving spouse 135.13 benefit is payable for the life of the surviving spouse. 135.14 (b) A surviving child of a deceased service pensioner, 135.15 disability pensioner, deferred pensioner, superannuation 135.16 pensioner, or active member, who was living while the decedent 135.17 was an active member of the police department or was born within 135.18 nine months after the decedent terminated active service in the 135.19 police department, is entitled to a surviving child benefit. 135.20 The surviving child benefit is equal to eight units per month if 135.21 the person is the surviving child of a deceased active member or 135.22 disabilitant. The surviving child benefit is equal to two units 135.23 per month, plus an additional four-tenths of one unit per month 135.24 for each year of service to the credit of the decedent in excess 135.25 of five years, to a maximum of eight units, if the person is the 135.26 surviving child of a deceased service pensioner, deferred 135.27 pensioner, or superannuation pensioner. The surviving child 135.28 benefit is payable until the person attains age 18, or, if in 135.29 full-time attendance during the normal school year, in a school 135.30 approved by the board of directors, until the person receives a 135.31 bachelor's degree or attains the age of 22 years, whichever 135.32 occurs first. In the event of the death of both parents leaving 135.33 a surviving child or children entitled to a surviving child 135.34 benefit as determined in this paragraph, the surviving child is, 135.35 or the surviving children are, entitled to a surviving child 135.36 benefit in such sums as determined by the board of directors to 136.1 be necessary for the care and education of such surviving child 136.2 or children, but not to exceed the family maximum benefit per 136.3 month, to the children of any one family. 136.4 (c) The surviving spouse and surviving child benefits are 136.5 subject to a family maximum benefit. The family maximum benefit 136.6 is 41 units per month. 136.7 (d) A surviving spouse who is otherwise not qualified may 136.8 receive a benefit if the surviving spouse was married to the 136.9 decedent for a period of five years and was residing with the 136.10 decedent at the time of death. The surviving spouse benefit is 136.11 the same as that provided in paragraph (a), except that if the 136.12 surviving spouse is younger than the decedent, the surviving 136.13 spouse benefit must be actuarially equivalent to a surviving 136.14 spouse benefit that would have been paid to the member's spouse 136.15 had the member been married to a person of the same age or a 136.16 greater age than the member's age before retirement. 136.17 Sec. 7. Minnesota Statutes 2002, section 423B.15, 136.18 subdivision 3, is amended to read: 136.19 Subd. 3. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 136.20 amount determined under subdivision 2 must be applied in 136.21 accordance with this subdivision. When the actuarial value of 136.22 assets of the fund according to the most recent annual actuarial 136.23 valuation prepared in accordance with sections 356.215 and 136.24 356.216 is less than 102 percent of its total actuarial 136.25 liabilities, the relief association shall apply the first 136.26 one-half of excess investment income to the payment of an annual 136.27 postretirement payment as specified in this subdivision and the 136.28 second one-half of excess investment income up to one-half of 136.29 one percent of the assets of the fund must be applied to reduce 136.30 the state amortization state aid or supplementary amortization 136.31 state aid payments otherwise due to the relief association under 136.32 section 423A.02 for the current calendar year. When the 136.33 actuarial value of assets of the fund according to the most 136.34 recent annual actuarial valuation prepared in accordance with 136.35 sections 356.215 and 356.216 is less than 102 percent funded and 136.36 other conditions are met, the relief association shall pay an 137.1 annual postretirement payment to all eligible members in an 137.2 amount not to exceed one-half of one percent of the assets of 137.3 the fund. When the actuarial value of assets of the fund 137.4 according to the most recent annual actuarial valuation prepared 137.5 in accordance with sections 356.215 and 356.216 is greater than 137.6 102 percent of its actuarial accrued liabilities, the relief 137.7 association shall pay an annual postretirement payment to all 137.8 eligible members in an amount not to exceed 1-1/2 percent of the 137.9 assets of the fund. Payment of the annual postretirement 137.10 payment must be in a lump sum amount on June 1 following the 137.11 determination date in any year. Payment of the annual 137.12 postretirement payment may be made only if the average time 137.13 weighted total rate of return for the most recent priorfivetwo 137.14 years exceeds by two percent the actual average percentage 137.15 increase in the current monthly salary of a top grade patrol 137.16 officer in the most recent priorfivetwo fiscal years. The 137.17 total amount of all payments to members may not exceed the 137.18 amount determined under this subdivision. Payment to each 137.19 eligible member must be calculated by dividing the total number 137.20 of pension units to which eligible members are entitled into the 137.21 excess investment income available for distribution to members, 137.22 and then multiplying that result by the number of units to which 137.23 each eligible member is entitled to determine each eligible 137.24 member's annual postretirement payment. When the actuarial 137.25 value of assets of the fund according to the most recent annual 137.26 actuarial valuation prepared in accordance with sections 356.215 137.27 and 356.216 is less than 102 percent of its actuarial accrued 137.28 liabilities, payment to each eligible member may not exceed an 137.29 amount equal to the total monthly benefit that the eligible 137.30 member was entitled to in the prior year under the terms of the 137.31 benefit plan of the relief association or each eligible member's 137.32 proportionate share of the excess investment income, whichever 137.33 is less. When the actuarial value of assets of the fund 137.34 according to the most recent annual actuarial valuation prepared 137.35 in accordance with sections 356.215 and 356.216 is greater than 137.36 102 percent of its actuarial accrued liabilities, payment to 138.1 each eligible member must not exceed the member's proportionate 138.2 share of 1-1/2 percent of the assets of the fund. 138.3 A person who received a pension or benefit for the entire 138.4 12 months before the determination date is eligible for a full 138.5 annual postretirement payment. A person who received a pension 138.6 or benefit for less than 12 months before the determination date 138.7 is eligible for a prorated annual postretirement payment. 138.8 Sec. 8. [423B.22] [GUARANTEED PENSION PROVISION.] 138.9 Once a pension benefit is properly paid in accordance with 138.10 this law to any member, the dollar amount of that pension 138.11 benefit shall not be reduced. 138.12 Sec. 9. [LOCAL APPROVAL; NONSEVERABILITY.] 138.13 Sections 1 to 8 are not severable and are effective on the 138.14 day after the date of the approval by the city council of the 138.15 city of Minneapolis and the timely completion by the chief 138.16 clerical officer of the city of Minneapolis of compliance with 138.17 Minnesota Statutes, section 645.021, subdivisions 2 and 3.