SF 676

3rd 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, and the St. Peter 
  1.26            Community Healthcare Center; extending the expiration 
  1.27            date on certain prior military service credit 
  1.28            purchases; temporarily exempting Metropolitan Airports 
  1.29            Commission police from reemployed annuitant earnings 
  1.30            limitation; ratifying certain Bellingham volunteer 
  1.31            firefighter relief association annuity purchases; 
  1.32            including the Lake Johanna fire department employees 
  1.33            in Public Employees Retirement Association coverage; 
  1.34            limiting the covered salary of school district 
  1.35            superintendents and administrators for pension 
  1.36            purposes; excluding certain employees from limits on 
  1.37            covered salary for pension purposes; requiring audits 
  1.38            and reports on preretirement salaries of certain 
  1.39            school district administrators; expanding the health 
  1.40            care savings plan; modifying the department of 
  1.41            transportation pilots retirement plan; creating a 
  1.42            statewide volunteer firefighter retirement plan study 
  1.43            task force; authorizing shorter vesting periods for 
  1.44            defined contribution volunteer firefighter relief 
  1.45            associations; modifying Minneapolis Police Relief 
  1.46            Association provisions; providing additional benefits 
  2.1             to certain teachers employed during or before the 
  2.2             1968-1969 school year; providing an increase in and 
  2.3             school district levy authority for the level benefit 
  2.4             formula for the Teachers Retirement Association; 
  2.5             consolidating the Minneapolis Teachers Retirement Fund 
  2.6             into the Teachers Retirement Association; authorizing 
  2.7             the sale of revenue bonds by Special School District 
  2.8             No. 1, Minneapolis; appropriating money; amending 
  2.9             Minnesota Statutes 2002, sections 3A.03, subdivision 
  2.10            2; 69.77, subdivision 4; 352.01, subdivision 13; 
  2.11            352.03, subdivision 6; 352.113, subdivisions 4, 6, 8, 
  2.12            by adding a subdivision; 352.12, subdivisions 1, 6; 
  2.13            352.22, subdivisions 2, 3; 352.27; 352.275, 
  2.14            subdivision 1; 352.86, subdivision 1; 352.91, 
  2.15            subdivision 3g; 352.95, subdivisions 1, 2, 4; 352.98; 
  2.16            352B.01, subdivisions 3a, 11, by adding a subdivision; 
  2.17            352B.02, subdivision 1e; 352B.10, subdivisions 1, 2, 
  2.18            3, 4, 5; 352B.105; 352B.11, subdivisions 1, 2, by 
  2.19            adding subdivisions; 352D.065, subdivision 2; 
  2.20            352D.075, subdivisions 2, 3, by adding a subdivision; 
  2.21            353.01, subdivisions 2b, 10, 12a, 12b, 16, 16a; 
  2.22            353.03, subdivision 3a; 353.33, subdivisions 4, 6, 6b, 
  2.23            7, by adding a subdivision; 353.37, subdivision 3, by 
  2.24            adding a subdivision; 353.64, by adding a subdivision; 
  2.25            353.656, subdivision 5, by adding subdivisions; 
  2.26            354.05, subdivisions 2, 13, 22, 35; 354.06, 
  2.27            subdivision 2a; 354.07, subdivision 9; 354.091; 
  2.28            354.096, subdivision 1; 354.42, subdivisions 2, 3, 7; 
  2.29            354.44, subdivisions 4, 5, 6; 354.46, subdivisions 2, 
  2.30            2b, 5, by adding a subdivision; 354.48, subdivisions 
  2.31            2, 4, 6, 6a, 10; 354.51, subdivision 5; 354.52, 
  2.32            subdivisions 4a, 6, by adding a subdivision; 354.53; 
  2.33            354.533, subdivision 1; 354.66, subdivision 2; 
  2.34            354A.011, subdivision 24; 354A.021, subdivision 7; 
  2.35            354A.093; 354A.094, subdivision 3; 354A.097, 
  2.36            subdivision 1; 354A.36, subdivisions 4, 6; 354B.20, 
  2.37            subdivisions 4, 6; 354B.23, subdivision 1; 354B.32; 
  2.38            354C.11, subdivision 2; 356.215, subdivisions 2, 18; 
  2.39            356.216; 356.302, subdivision 3; 356.441; 356.611, 
  2.40            subdivisions 1, 2, by adding subdivisions; 422A.06, 
  2.41            subdivision 2; 422A.18, subdivisions 1, 4; 
  2.42            423B.01,subdivision 12; 423B.09, subdivisions 1, 4, by 
  2.43            adding a subdivision; 423B.10, subdivision 1; 423B.15, 
  2.44            subdivision 3; 423C.05, subdivisions 4, 5, 6, by 
  2.45            adding a subdivision; 424A.02, subdivisions 2, 7; 
  2.46            490.121, subdivision 10, by adding a subdivision; 
  2.47            490.124, subdivision 12; Minnesota Statutes 2003 
  2.48            Supplement, sections 353.01, subdivision 6; 353F.02, 
  2.49            subdivision 4; 354A.12, subdivision 3b; 423C.03, 
  2.50            subdivision 3; Laws 1999, chapter 222, article 16, 
  2.51            section 16, as amended; Laws 2000, chapter 461, 
  2.52            article 4, section 4, as amended; proposing coding for 
  2.53            new law in Minnesota Statutes, chapters 126C; 128D; 
  2.54            352F; 353F; 354; 356; 423B; repealing Minnesota 
  2.55            Statutes 2002, sections 3.85, subdivisions 11, 12; 
  2.56            352D.02, subdivision 5; 353.33, subdivision 5b; 
  2.57            354A.107; 354A.28; 356.217; 490.11. 
  2.58  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.59                             ARTICLE 1
  2.60                         MEMBERSHIP ISSUES
  2.61     Section 1.  Minnesota Statutes 2002, section 352.91, 
  2.62  subdivision 3g, is amended to read: 
  2.63     Subd. 3g.  [ADDITIONAL CORRECTIONS DEPARTMENT PERSONNEL.] 
  2.64  (a) "Covered correctional service" means service by a state 
  3.1   employee in one of the employment positions at the designated 
  3.2   Minnesota correctional facility specified in paragraph (b), 
  3.3   provided that if at least 75 percent of the employee's working 
  3.4   time is spent in direct contact with inmates and the fact of 
  3.5   this direct contact is certified to the executive director by 
  3.6   the commissioner of corrections. 
  3.7      (b) The qualifying employment positions and the designated 
  3.8   correctional facilities are: 
  3.9      (1) corrections discipline unit supervisor, at the 
  3.10  Minnesota Correctional Facility-Faribault, the Minnesota 
  3.11  Correctional Facility-Lino Lakes, the Minnesota Correctional 
  3.12  Facility-Oak Park Heights, the Minnesota Correctional 
  3.13  Facility-Rush City, and the Minnesota Correctional Facility-St. 
  3.14  Cloud; 
  3.15     (2) dental assistant registered, at the Minnesota 
  3.16  Correctional Facility-Faribault, the Minnesota Correctional 
  3.17  Facility-Lino Lakes, the Minnesota Correctional Facility-Moose 
  3.18  Lake, the Minnesota Correctional Facility-Oak Park Heights, and 
  3.19  the Minnesota Correctional Facility-Red Wing; 
  3.20     (3) dental hygienist, at the Minnesota Correctional 
  3.21  Facility-Shakopee and the Minnesota Correctional Facility-Rush 
  3.22  City; 
  3.23     (4) psychologist 2, at the Minnesota Correctional 
  3.24  Facility-Faribault, the Minnesota Correctional Facility-Lino 
  3.25  Lakes, the Minnesota Correctional Facility-Moose Lake, the 
  3.26  Minnesota Correctional Facility-Oak Park Heights, the Minnesota 
  3.27  Correctional Facility-Red Wing, the Minnesota Correctional 
  3.28  Facility-Rush City, the Minnesota Correctional Facility-St. 
  3.29  Cloud, the Minnesota Correctional Facility-Shakopee, and the 
  3.30  Minnesota Correctional Facility-Stillwater; and or 
  3.31     (5) sentencing to service crew leader involved with the 
  3.32  inmate community work crew program, at the Minnesota 
  3.33  Correctional Facility-Faribault and the Minnesota Correctional 
  3.34  Facility-Lino Lakes. 
  3.35     Sec. 2.  Minnesota Statutes 2002, section 353.01, 
  3.36  subdivision 2b, is amended to read: 
  4.1      Subd. 2b.  [EXCLUDED EMPLOYEES.] The following public 
  4.2   employees are not eligible to participate as members of the 
  4.3   association with retirement coverage by the public employees 
  4.4   retirement plan, the local government correctional employees 
  4.5   retirement plan under chapter 353E, or the public employees 
  4.6   police and fire retirement plan: 
  4.7      (1) public officers, other than county sheriffs, who are 
  4.8   elected to a governing body, or persons who are appointed to 
  4.9   fill a vacancy in an elective office of a governing body, whose 
  4.10  term of office first commences on or after July 1, 2002, for the 
  4.11  service to be rendered in that elective position.  Elected 
  4.12  governing body officials who were active members of the 
  4.13  association's coordinated or basic retirement plans as of June 
  4.14  30, 2002, continue participation throughout incumbency in office 
  4.15  until termination of public service occurs as defined in 
  4.16  subdivision 11a; 
  4.17     (2) election officers or election judges; 
  4.18     (3) patient and inmate personnel who perform services for a 
  4.19  governmental subdivision; 
  4.20     (4) except as otherwise specified in subdivision 12a, 
  4.21  employees who are hired for a temporary position as defined 
  4.22  under subdivision 12a, and employees who resign from a 
  4.23  nontemporary position and accept a temporary position within 30 
  4.24  days in the same governmental subdivision.; An employer must not 
  4.25  apply the definition of temporary position so as to exclude 
  4.26  employees who are hired to fill positions that are permanent or 
  4.27  that are for an unspecified period but who are serving a 
  4.28  probationary period at the start of the employment.  If the 
  4.29  period of employment extends beyond six consecutive months and 
  4.30  the employee earns more than $425 from one governmental 
  4.31  subdivision in any calendar month, the department head shall 
  4.32  report the employee for membership and require employee 
  4.33  deductions be made on behalf of the employee under section 
  4.34  353.27, subdivision 4. 
  4.35     The membership eligibility of an employee who resigns or is 
  4.36  dismissed from a temporary position and within 30 days accepts 
  5.1   another temporary position in the same governmental subdivision 
  5.2   is determined on the total length of employment rather than on 
  5.3   each separate position.  Membership eligibility of an employee 
  5.4   who holds concurrent temporary and nontemporary positions in one 
  5.5   governmental subdivision is determined by the length of 
  5.6   employment and salary of each separate position; 
  5.7      (5) employees who are employed by reason of work emergency 
  5.8   caused by fire, flood, storm, or similar disaster; 
  5.9      (6) employees who by virtue of their employment in one 
  5.10  governmental subdivision are required by law to be a member of 
  5.11  and to contribute to any of the plans or funds administered by 
  5.12  the Minnesota State Retirement System, the Teachers Retirement 
  5.13  Association, the Duluth Teachers Retirement Fund Association, 
  5.14  the Minneapolis Teachers Retirement Fund Association, the St. 
  5.15  Paul Teachers Retirement Fund Association, the Minneapolis 
  5.16  Employees Retirement Fund, or any police or firefighters relief 
  5.17  association governed by section 69.77 that has not consolidated 
  5.18  with the Public Employees Retirement Association, or any local 
  5.19  police or firefighters consolidation account but who have not 
  5.20  elected the type of benefit coverage provided by the public 
  5.21  employees police and fire fund under sections 353A.01 to 
  5.22  353A.10, or any persons covered by section 353.665, subdivision 
  5.23  4, 5, or 6, who have not elected public employees police and 
  5.24  fire plan benefit coverage.  This clause must not be construed 
  5.25  to prevent a person from being a member of and contributing to 
  5.26  the Public Employees Retirement Association and also belonging 
  5.27  to and contributing to another public pension plan or fund for 
  5.28  other service occurring during the same period of time.  A 
  5.29  person who meets the definition of "public employee" in 
  5.30  subdivision 2 by virtue of other service occurring during the 
  5.31  same period of time becomes a member of the association unless 
  5.32  contributions are made to another public retirement fund on the 
  5.33  salary based on the other service or to the Teachers Retirement 
  5.34  Association by a teacher as defined in section 354.05, 
  5.35  subdivision 2; 
  5.36     (7) persons who are members of a religious order and are 
  6.1   excluded from coverage under the federal Old Age, Survivors, 
  6.2   Disability, and Health Insurance Program for the performance of 
  6.3   service as specified in United States Code, title 42, section 
  6.4   410(a)(8)(A), as amended through January 1, 1987, if no 
  6.5   irrevocable election of coverage has been made under section 
  6.6   3121(r) of the Internal Revenue Code of 1954, as amended; 
  6.7      (8) employees of a governmental subdivision who have not 
  6.8   reached the age of 23 and are enrolled on a full-time basis to 
  6.9   attend or are attending classes on a full-time basis at an 
  6.10  accredited school, college, or university in an undergraduate, 
  6.11  graduate, or professional-technical program, or a public or 
  6.12  charter high school; 
  6.13     (9) resident physicians, medical interns, and pharmacist 
  6.14  residents and pharmacist interns who are serving in a degree or 
  6.15  residency program in public hospitals; 
  6.16     (10) students who are serving in an internship or residency 
  6.17  program sponsored by an accredited educational institution; 
  6.18     (11) persons who hold a part-time adult supplementary 
  6.19  technical college license who render part-time teaching service 
  6.20  in a technical college; 
  6.21     (12) except for employees of Hennepin county, foreign 
  6.22  citizens working for a governmental subdivision with a work 
  6.23  permit of less than three years, or an H-1b visa valid for less 
  6.24  than three years of employment.  Upon notice to the association 
  6.25  that the work permit or visa extends beyond the three-year 
  6.26  period, the foreign citizens are to must be reported for 
  6.27  membership from the date of the extension; 
  6.28     (13) public hospital employees who elected not to 
  6.29  participate as members of the association before 1972 and who 
  6.30  did not elect to participate from July 1, 1988, to October 1, 
  6.31  1988; 
  6.32     (14) except as provided in section 353.86, volunteer 
  6.33  ambulance service personnel, as defined in subdivision 35, but 
  6.34  persons who serve as volunteer ambulance service personnel may 
  6.35  still qualify as public employees under subdivision 2 and may be 
  6.36  members of the Public Employees Retirement Association and 
  7.1   participants in the public employees retirement fund or the 
  7.2   public employees police and fire fund, whichever applies, on the 
  7.3   basis of compensation received from public employment service 
  7.4   other than service as volunteer ambulance service personnel; 
  7.5      (15) except as provided in section 353.87, volunteer 
  7.6   firefighters, as defined in subdivision 36, engaging in 
  7.7   activities undertaken as part of volunteer firefighter duties; 
  7.8   provided that a person who is a volunteer firefighter may still 
  7.9   qualify as a public employee under subdivision 2 and may be a 
  7.10  member of the Public Employees Retirement Association and a 
  7.11  participant in the public employees retirement fund or the 
  7.12  public employees police and fire fund, whichever applies, on the 
  7.13  basis of compensation received from public employment activities 
  7.14  other than those as a volunteer firefighter; 
  7.15     (16) pipefitters and associated trades personnel employed 
  7.16  by Independent School District No. 625, St. Paul, with coverage 
  7.17  under a collective bargaining agreement by the pipefitters local 
  7.18  455 pension plan who were either first employed after May 1, 
  7.19  1997, or, if first employed before May 2, 1997, elected to be 
  7.20  excluded under Laws 1997, chapter 241, article 2, section 12; 
  7.21     (17) electrical workers, plumbers, carpenters, and 
  7.22  associated trades personnel employed by Independent School 
  7.23  District No. 625, St. Paul, or the city of St. Paul, who have 
  7.24  retirement coverage under a collective bargaining agreement by 
  7.25  the Electrical Workers Local 110 pension plan, the United 
  7.26  Association Plumbers Local 34 pension plan, or the Carpenters 
  7.27  Local 87 pension plan who were either first employed after May 
  7.28  1, 2000, or, if first employed before May 2, 2000, elected to be 
  7.29  excluded under Laws 2000, chapter 461, article 7, section 5; 
  7.30     (18) bricklayers, allied craftworkers, cement masons, 
  7.31  glaziers, glassworkers, painters, allied tradesworkers, and 
  7.32  plasterers employed by the city of St. Paul or Independent 
  7.33  School District No. 625, St. Paul, with coverage under a 
  7.34  collective bargaining agreement by the Bricklayers and Allied 
  7.35  Craftworkers Local 1 pension plan, the Cement Masons Local 633 
  7.36  pension plan, the Glaziers and Glassworkers Local L-1324 pension 
  8.1   plan, the Painters and Allied Trades Local 61 pension plan, or 
  8.2   the Twin Cities Plasterers Local 265 pension plan who were 
  8.3   either first employed after May 1, 2001, or if first employed 
  8.4   before May 2, 2001, elected to be excluded under Laws 2001, 
  8.5   First Special Session chapter 10, article 10, section 6; 
  8.6      (19) plumbers employed by the metropolitan airports 
  8.7   commission, with coverage under a collective bargaining 
  8.8   agreement by the Plumbers Local 34 pension plan, who either were 
  8.9   first employed after May 1, 2001, or if first employed before 
  8.10  May 2, 2001, elected to be excluded under Laws 2001, First 
  8.11  Special Session chapter 10, article 10, section 6; 
  8.12     (20) employees who are hired after June 30, 2002, to fill 
  8.13  seasonal positions under subdivision 12b which are limited in 
  8.14  duration by the employer to 185 consecutive calendar days or 
  8.15  less in each year of employment with the governmental 
  8.16  subdivision; 
  8.17     (21) persons who are provided supported employment or 
  8.18  work-study positions by a governmental subdivision and who 
  8.19  participate in an employment or industries program maintained 
  8.20  for the benefit of these persons where the governmental 
  8.21  subdivision limits the position's duration to three years or 
  8.22  less, including persons participating in a federal or state 
  8.23  subsidized on-the-job training, work experience, senior citizen, 
  8.24  youth, or unemployment relief program where the training or work 
  8.25  experience is not provided as a part of, or for, future 
  8.26  permanent public employment; 
  8.27     (22) independent contractors and the employees of 
  8.28  independent contractors; and 
  8.29     (23) reemployed annuitants of the association during the 
  8.30  course of that reemployment. 
  8.31     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
  8.32  subdivision 12a, is amended to read: 
  8.33     Subd. 12a.  [TEMPORARY POSITION.] (1) (a) "Temporary 
  8.34  position" means an employment position predetermined by the 
  8.35  employer at the time of hiring to be a period of six months or 
  8.36  less.  Temporary position also means an employment position 
  9.1   occupied by a person hired by the employer as a temporary 
  9.2   replacement who is employed for a predetermined period of six 
  9.3   months or less. 
  9.4      (2) (b) "Temporary position" does not mean an employment 
  9.5   position for a specified or unspecified term in which a person 
  9.6   serves a probationary period as a requirement for subsequent 
  9.7   employment on a permanent or unlimited basis. 
  9.8      (c) If employment in a temporary position extends beyond 
  9.9   six consecutive months, the head of the department shall report 
  9.10  the employee for membership if salary in any month exceeds the 
  9.11  salary threshold specified in subdivision 2a.  The membership 
  9.12  eligibility of an employee who resigns or is dismissed from a 
  9.13  temporary position and accepts another temporary position in the 
  9.14  same governmental subdivision within 30 days must be determined 
  9.15  on the total length of employment rather than on each separate 
  9.16  position. 
  9.17     Sec. 4.  Minnesota Statutes 2002, section 353.01, 
  9.18  subdivision 12b, is amended to read: 
  9.19     Subd. 12b.  [SEASONAL POSITION.] "Seasonal position" means 
  9.20  a position where the nature of the work or its duration are 
  9.21  related to a specific season or seasons of the year, regardless 
  9.22  of whether or not the employing agency anticipates that the same 
  9.23  employee will return to the position each season in which it 
  9.24  becomes available.  The entire period of employment in a 
  9.25  business year must be used to determine whether or not a 
  9.26  position may be excluded as seasonal when there is less than a 
  9.27  30-day break between one seasonal position and a subsequent 
  9.28  seasonal position for employment with the same governmental 
  9.29  employer.  Seasonal positions include, but are not limited to, 
  9.30  coaching athletic activities or employment to plow snow or to 
  9.31  maintain roads or parks, or to operate skating rinks, ski 
  9.32  lodges, golf courses, or swimming pools. 
  9.33     Sec. 5.  Minnesota Statutes 2002, section 353.64, is 
  9.34  amended by adding a subdivision to read: 
  9.35     Subd. 6a.  [UNIVERSITY OF MINNESOTA POLICE OFFICERS.] A 
  9.36  police officer employed by the University of Minnesota who is 
 10.1   required by the Board Of Regents to contribute to the University 
 10.2   of Minnesota Faculty Retirement Plan shall not be a member of 
 10.3   the public employees police and fire fund. 
 10.4      [EFFECTIVE DATE.] This section is effective the day 
 10.5   following final enactment. 
 10.6      Sec. 6.  Minnesota Statutes 2002, section 354.05, 
 10.7   subdivision 2, is amended to read: 
 10.8      Subd. 2.  [TEACHER.] (a) "Teacher" means: 
 10.9      (1) a person who renders service as a teacher, supervisor, 
 10.10  principal, superintendent, librarian, nurse, counselor, social 
 10.11  worker, therapist, or psychologist in a public school of the 
 10.12  state located outside of the corporate limits of a city of the 
 10.13  first class, or in any charter school, irrespective of the 
 10.14  location of the school, or in any charitable, penal, or 
 10.15  correctional institutions of a governmental subdivision, or who 
 10.16  is engaged in educational administration in connection with the 
 10.17  state public school system, but excluding the University of 
 10.18  Minnesota, whether the position be a public office or an 
 10.19  employment, and not including the members or officers of any 
 10.20  general governing or managing board or body; 
 10.21     (2) an employee of the Teachers Retirement Association; 
 10.22     (3) a person who renders teaching service on a part-time 
 10.23  basis and who also renders other services for a single employing 
 10.24  unit.  A person whose teaching service comprises at least 50 
 10.25  percent of the combined employment salary is a member of the 
 10.26  association for all services with the single employing unit.  If 
 10.27  the person's teaching service comprises less than 50 percent of 
 10.28  the combined employment salary, the executive director must 
 10.29  determine whether all or none of the combined service is covered 
 10.30  by the association; or 
 10.31     (4) a person who is not covered by the plans established 
 10.32  under chapter 352D, 354A, or 354B and who is employed by the 
 10.33  board of trustees of the Minnesota State Colleges and 
 10.34  Universities system in an unclassified position as: 
 10.35     (i) a president, vice-president, or dean; 
 10.36     (ii) a manager or a professional in an academic or an 
 11.1   academic support program other than specified in item (i); 
 11.2      (iii) an administrative or a service support faculty 
 11.3   position; or 
 11.4      (iv) a teacher or a research assistant. 
 11.5      (b) "Teacher" does not mean: 
 11.6      (1) a person who works for a school or institution as an 
 11.7   independent contractor as defined by the Internal Revenue 
 11.8   Service; 
 11.9      (2) a person employed in subsidized on-the-job training, 
 11.10  work experience or public service employment as an enrollee 
 11.11  under the federal Comprehensive Employment and Training Act from 
 11.12  and after March 30, 1978, unless the person has, as of the later 
 11.13  of March 30, 1978, or the date of employment, sufficient service 
 11.14  credit in the retirement association to meet the minimum vesting 
 11.15  requirements for a deferred retirement annuity, or the employer 
 11.16  agrees in writing on forms prescribed by the executive director 
 11.17  to make the required employer contributions, including any 
 11.18  employer additional contributions, on account of that person 
 11.19  from revenue sources other than funds provided under the federal 
 11.20  Comprehensive Training and Employment Act, or the person agrees 
 11.21  in writing on forms prescribed by the executive director to make 
 11.22  the required employer contribution in addition to the required 
 11.23  employee contribution; 
 11.24     (3) a person holding a part-time adult supplementary 
 11.25  technical college license who renders part-time teaching service 
 11.26  or who is a customized trainer as defined by the Minnesota State 
 11.27  Colleges and Universities system in a technical college if (i) 
 11.28  the service is incidental to the regular nonteaching occupation 
 11.29  of the person; and (ii) the applicable technical college 
 11.30  employer stipulates annually in advance that the part-time 
 11.31  teaching service or customized training service will not exceed 
 11.32  300 hours in a fiscal year and retains the stipulation in its 
 11.33  records; and (iii) the part-time teaching service or customized 
 11.34  training service actually does not exceed 300 hours in a fiscal 
 11.35  year; or 
 11.36     (4) (3) a person exempt from licensure under section 
 12.1   122A.30. 
 12.2      Sec. 7.  Minnesota Statutes 2002, section 354B.20, 
 12.3   subdivision 4, is amended to read: 
 12.4      Subd. 4.  [COVERED EMPLOYMENT.] (a) "Covered employment" 
 12.5   means employment by a person eligible for coverage by this 
 12.6   retirement program under section 354B.21 in a faculty position 
 12.7   or in an eligible unclassified administrative position. 
 12.8      (b) "Covered employment" does not mean employment specified 
 12.9   in paragraph (a) by a faculty member employed in a state 
 12.10  university or a community college the Minnesota State Colleges 
 12.11  and Universities system if the person's initial appointment is 
 12.12  specified as constituting less than 25 percent of a full 
 12.13  academic year, exclusive of summer session, for the applicable 
 12.14  institution. 
 12.15     Sec. 8.  Minnesota Statutes 2002, section 354B.20, 
 12.16  subdivision 6, is amended to read: 
 12.17     Subd. 6.  [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE POSITION.] 
 12.18  "Eligible unclassified administrative position" means the 
 12.19  following: 
 12.20     (1) the chancellor of the board; 
 12.21     (2) a president of a state college or university; or 
 12.22     (3) an excluded administrator employed in a state 
 12.23  university or college, by the board, or by the Higher Education 
 12.24  Services Office; or 
 12.25     (4) other managers and professionals in academic and 
 12.26  academic support programs in the unclassified service employed 
 12.27  in a state university or college, by the board, or by the Higher 
 12.28  Education Services Office. 
 12.29     Sec. 9.  Minnesota Statutes 2002, section 354C.11, 
 12.30  subdivision 2, is amended to read: 
 12.31     Subd. 2.  [ELIGIBILITY.] (a) An individual must participate 
 12.32  in the supplemental retirement plan if the individual is 
 12.33  employed by the Board of Trustees in the unclassified service of 
 12.34  the state and has completed at least two years with a full-time 
 12.35  contract of applicable unclassified employment with the board or 
 12.36  an applicable predecessor board in any of the positions 
 13.1   specified in paragraph (b). 
 13.2      (b) Eligible positions or employment classifications are: 
 13.3      (1) an unclassified administrative position as defined in 
 13.4   section 354B.20, subdivision 6; 
 13.5      (2) an employment classification included in one of the 
 13.6   following collective bargaining units under section 179A.10, 
 13.7   subdivision 2: 
 13.8      (i) the state university instructional unit; 
 13.9      (ii) the state college instructional unit; and 
 13.10     (iii) the state university administrative unit; or 
 13.11     (3) an unclassified employee of the board: 
 13.12     (i) included in the general professional unit or the 
 13.13  supervisory employees unit under section 179A.10, subdivision 2; 
 13.14  or 
 13.15     (ii) an employee who is excluded from one of those units 
 13.16  due to the employee's confidential status under section 179A.10, 
 13.17  subdivision 1, clause (8).  
 13.18     Sec. 10.  [REPEALER.] 
 13.19     Minnesota Statutes 2002, section 352D.02, subdivision 5, is 
 13.20  repealed.  
 13.21     Sec. 11.  [EFFECTIVE DATE.] 
 13.22     (a) Sections 1 to 4, 6, 7, and 10 are effective on July 1, 
 13.23  2004. 
 13.24     (b) Section 8 is effective on July 1, 2004, and applies 
 13.25  retroactively to the date of hire of the applicable person in 
 13.26  the affected position. 
 13.27     (c) Section 9 is effective retroactively to July 1, 2001. 
 13.28                             ARTICLE 2
 13.29                     COVERED SALARY DEFINITION
 13.30     Section 1.  Minnesota Statutes 2002, section 352.01, 
 13.31  subdivision 13, is amended to read: 
 13.32     Subd. 13.  [SALARY.] (a) "Salary" means wages, or other 
 13.33  periodic compensation, paid to an employee before deductions for 
 13.34  deferred compensation, supplemental retirement plans, or other 
 13.35  voluntary salary reduction programs.  
 13.36     (b) "Salary" does not include: 
 14.1      (1) lump sum sick leave payments,; 
 14.2      (2) severance payments,; 
 14.3      (3) lump sum annual leave payments and overtime payments 
 14.4   made at the time of separation from state service,; 
 14.5      (4) payments in lieu of any employer-paid group insurance 
 14.6   coverage, including the difference between single and family 
 14.7   rates that may be paid to an employee with single coverage, and; 
 14.8      (5) payments made as an employer-paid fringe benefit,; 
 14.9      (6) workers' compensation payments,; 
 14.10     (7) employer contributions to a deferred compensation or 
 14.11  tax sheltered annuity program,; and 
 14.12     (8) amounts contributed under a benevolent vacation and 
 14.13  sick leave donation program are not salary. 
 14.14     (c) Amounts provided to an employee by the employer through 
 14.15  a grievance proceeding or a legal settlement are salary only if 
 14.16  the settlement is reviewed by the executive director and the 
 14.17  amounts are determined by the executive director to be 
 14.18  consistent with paragraph (a) and prior determinations. 
 14.19     Sec. 2.  Minnesota Statutes 2002, section 352B.01, 
 14.20  subdivision 11, is amended to read: 
 14.21     Subd. 11.  [AVERAGE MONTHLY SALARY.] (a) "Average monthly 
 14.22  salary" means the average of the highest monthly salaries for 
 14.23  five years of service as a member upon which contributions were 
 14.24  deducted from pay under section 352B.02, or upon which 
 14.25  appropriate contributions or payments were made to the fund to 
 14.26  receive allowable service and salary credit as specified under 
 14.27  the applicable law.  Average monthly salary must be based upon 
 14.28  all allowable service if this service is less than five 
 14.29  years.  It 
 14.30     (b) "Average monthly salary" means the salary of the member 
 14.31  as defined in section 352.01, subdivision 13.  "Average monthly 
 14.32  salary" does not include any lump-sum annual leave payments and 
 14.33  overtime payments made at the time of separation from state 
 14.34  service, any amounts of severance pay, or any reduced salary 
 14.35  paid during the period the person is entitled to workers' 
 14.36  compensation benefit payments for temporary disability.  
 15.1      (c) A member on leave of absence receiving temporary 
 15.2   workers' compensation payments and a reduced salary or no salary 
 15.3   from the employer who is entitled to allowable service credit 
 15.4   for the period of absence may make payment to the fund for the 
 15.5   difference between salary received, if any, and the salary the 
 15.6   member would normally receive if not on leave of absence during 
 15.7   the period.  The member shall pay an amount equal to the member 
 15.8   and employer contribution rate under section 352B.02, 
 15.9   subdivisions 1b and 1c, on the differential salary amount for 
 15.10  the period of the leave of absence.  The employing department, 
 15.11  at its option, may pay the employer amount on behalf of the 
 15.12  member.  Payment made under this subdivision must include 
 15.13  interest at the rate of 8.5 percent per year, and must be 
 15.14  completed within one year of the return from the leave of 
 15.15  absence. 
 15.16     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
 15.17  subdivision 10, is amended to read: 
 15.18     Subd. 10.  [SALARY.] (a) "Salary" means: 
 15.19     (1) the periodic compensation of a public employee, before 
 15.20  deductions for deferred compensation, supplemental retirement 
 15.21  plans, or other voluntary salary reduction programs, and also 
 15.22  means "wages" and includes net income from fees and amounts paid 
 15.23  by employers as the result of employee wage reductions, or 
 15.24  instead of wage increases, to supplemental national or 
 15.25  international pension plans permitted under section 356.24, 
 15.26  subdivision 1; and 
 15.27     (2) for a public employee who has prior service covered by 
 15.28  a local police or firefighters relief association that has 
 15.29  consolidated with the Public Employees Retirement Association or 
 15.30  to which section 353.665 applies and who has elected coverage 
 15.31  either under the public employees police and fire fund benefit 
 15.32  plan under section 353A.08 following the consolidation or under 
 15.33  section 353.665, subdivision 4,"salary" means the rate of salary 
 15.34  upon which member contributions to the special fund of the 
 15.35  relief association were made prior to the effective date of the 
 15.36  consolidation as specified by law and by bylaw provisions 
 16.1   governing the relief association on the date of the initiation 
 16.2   of the consolidation procedure and the actual periodic 
 16.3   compensation of the public employee after the effective date of 
 16.4   consolidation. 
 16.5      (b) Salary does not mean: 
 16.6      (1) the fees paid to district court reporters, unused 
 16.7   annual vacation or sick leave payments, in lump-sum or periodic 
 16.8   payments, severance payments, reimbursement of expenses, 
 16.9   lump-sum settlements not attached to a specific earnings period, 
 16.10  or workers' compensation payments; 
 16.11     (2) employer-paid amounts used by an employee toward the 
 16.12  cost of insurance coverage, employer-paid fringe 
 16.13  benefits, except for amounts paid by employers as the result of 
 16.14  employee wage reductions, or instead of wage increases, to 
 16.15  supplemental national or international pension plans permitted 
 16.16  under section 356.24, subdivision 1, flexible spending accounts, 
 16.17  cafeteria plans, health care expense accounts, day care 
 16.18  expenses, or any payments in lieu of any employer-paid group 
 16.19  insurance coverage, including the difference between single and 
 16.20  family rates that may be paid to a member with single coverage 
 16.21  and certain amounts determined by the executive director to be 
 16.22  ineligible; 
 16.23     (3) the amount equal to that which the employing 
 16.24  governmental subdivision would otherwise pay toward single or 
 16.25  family insurance coverage for a covered employee when, through a 
 16.26  contract or agreement with some but not all employees, the 
 16.27  employer: 
 16.28     (i) discontinues, or for new hires does not provide, 
 16.29  payment toward the cost of the employee's selected insurance 
 16.30  coverages under a group plan offered by the employer; 
 16.31     (ii) makes the employee solely responsible for all 
 16.32  contributions toward the cost of the employee's selected 
 16.33  insurance coverages under a group plan offered by the employer, 
 16.34  including any amount the employer makes toward other employees' 
 16.35  selected insurance coverages under a group plan offered by the 
 16.36  employer; and 
 17.1      (iii) provides increased salary rates for employees who do 
 17.2   not have any employer-paid group insurance coverages; and 
 17.3      (4) except as provided in section 353.86 or 353.87, 
 17.4   compensation of any kind paid to volunteer ambulance service 
 17.5   personnel or volunteer firefighters, as defined in subdivision 
 17.6   35 or 36; and 
 17.7      (5) the amount of compensation that exceeds the limitation 
 17.8   provided in section 356.611.  
 17.9      (c) Amounts provided to an employee by the employer through 
 17.10  a grievance proceeding or a legal settlement are salary only if 
 17.11  the settlement is reviewed by the executive director and the 
 17.12  amounts are determined by the executive director to be 
 17.13  consistent with paragraph (a) and prior determinations. 
 17.14     Sec. 4.  Minnesota Statutes 2002, section 354.05, 
 17.15  subdivision 35, is amended to read: 
 17.16     Subd. 35.  [SALARY.] (a) "Salary" means the periodic 
 17.17  compensation, upon which member contributions are required 
 17.18  before deductions for deferred compensation, supplemental 
 17.19  retirement plans, or other voluntary salary reduction programs. 
 17.20     (b) "Salary" does not mean: 
 17.21     (1) lump sum annual leave payments; 
 17.22     (2) lump sum wellness and sick leave payments; 
 17.23     (3) employer-paid amounts used by an employee toward the 
 17.24  cost of insurance coverage, employer-paid fringe benefits, 
 17.25  flexible spending accounts, cafeteria plans, health care expense 
 17.26  accounts, day care expenses, or any payments in lieu of any 
 17.27  employer-paid group insurance coverage, including the difference 
 17.28  between single and family rates that may be paid to a member 
 17.29  with single coverage and certain amounts determined by the 
 17.30  executive director to be ineligible; 
 17.31     (4) any form of payment made in lieu of any other 
 17.32  employer-paid fringe benefit or expense; 
 17.33     (5) any form of severance payments; 
 17.34     (6) workers' compensation payments; 
 17.35     (7) disability insurance payments, including self-insured 
 17.36  disability payments; 
 18.1      (8) payments to school principals and all other 
 18.2   administrators for services that are in addition to the normal 
 18.3   work year contract if these additional services are performed on 
 18.4   an extended duty day, Saturday, Sunday, holiday, annual leave 
 18.5   day, sick leave day, or any other nonduty day; 
 18.6      (9) payments under section 356.24, subdivision 1, clause 
 18.7   (4); and 
 18.8      (10) payments made under section 122A.40, subdivision 12, 
 18.9   except for payments for sick leave that are accumulated under 
 18.10  the provisions of a uniform school district policy that applies 
 18.11  equally to all similarly situated persons in the district. 
 18.12     (c) Amounts provided to an employee by the employer through 
 18.13  a grievance proceeding or a legal settlement are salary only if 
 18.14  the settlement is reviewed by the executive director and the 
 18.15  amounts are determined by the executive director to be 
 18.16  consistent with paragraph (a) and prior determinations. 
 18.17     Sec. 5.  Minnesota Statutes 2002, section 354A.011, 
 18.18  subdivision 24, is amended to read: 
 18.19     Subd. 24.  [SALARY; COVERED SALARY.] (a) "Salary" or 
 18.20  "covered salary" means the entire compensation, upon which 
 18.21  member contributions are required and made, that is paid to a 
 18.22  teacher before deductions for deferred compensation, 
 18.23  supplemental retirement plans, or other voluntary salary 
 18.24  reduction programs. 
 18.25     (b) "Salary" does not mean: 
 18.26     (1) lump sum annual leave payments; 
 18.27     (2) lump sum wellness and sick leave payments; 
 18.28     (3) employer-paid amounts used by an employee toward the 
 18.29  cost of insurance coverage, employer-paid fringe benefits, 
 18.30  flexible spending accounts, cafeteria plans, health care expense 
 18.31  accounts, day care expenses, or any payments in lieu of any 
 18.32  employer-paid group insurance coverage, including the difference 
 18.33  between single and family rates that may be paid to a member 
 18.34  with single coverage, and certain amounts determined by the 
 18.35  executive secretary or director to be ineligible; 
 18.36     (4) any form of payment that is made in lieu of any other 
 19.1   employer-paid fringe benefit or expense; 
 19.2      (5) any form of severance payments; 
 19.3      (6) workers' compensation payments; 
 19.4      (7) disability insurance payments, including self-insured 
 19.5   disability payments; 
 19.6      (8) payments to school principals and all other 
 19.7   administrators for services that are in addition to the normal 
 19.8   work year contract if these additional services are performed on 
 19.9   an extended duty day, Saturday, Sunday, holiday, annual leave 
 19.10  day, sick leave day, or any other nonduty day; 
 19.11     (9) payments under section 356.24, subdivision 1, clause 
 19.12  (4)(ii); and 
 19.13     (10) payments made under section 122A.40, subdivision 12, 
 19.14  except for payments for sick leave that are accumulated under 
 19.15  the provisions of a uniform school district policy that applies 
 19.16  equally to all similarly situated persons in the district. 
 19.17     (c) Amounts provided to an employee by the employer through 
 19.18  a grievance proceeding or a legal settlement are salary only if 
 19.19  the settlement is reviewed by the executive director and the 
 19.20  amounts are determined by the executive director to be 
 19.21  consistent with paragraph (a) and prior determinations. 
 19.22     Sec. 6.  Minnesota Statutes 2002, section 356.611, 
 19.23  subdivision 1, is amended to read: 
 19.24     Subdivision 1.  [STATE SALARY LIMITATIONS.] (a) 
 19.25  Notwithstanding any provision of law, bylaws, articles of 
 19.26  incorporation, retirement and disability allowance plan 
 19.27  agreements, or retirement plan contracts to the contrary, the 
 19.28  covered salary for pension purposes for a plan participant of a 
 19.29  covered retirement fund enumerated in section 356.30, 
 19.30  subdivision 3, may not exceed 95 percent of the salary 
 19.31  established for the governor under section 15A.082 at the time 
 19.32  the person received the salary. 
 19.33     (b) This section does not apply to a salary paid: 
 19.34     (1) to the governor; 
 19.35     (2) to another constitutional officer; 
 19.36     (3) to a judge; 
 20.1      (4) to an elected county attorney in the counties of Anoka, 
 20.2   Dakota, Ramsey, and St. Louis; 
 20.3      (5) to an employee of a political subdivision in a position 
 20.4   that is excluded from the limit as specified under section 
 20.5   43A.17, subdivision 9; or 
 20.6      (3) (6) to a state employee in a position for which the 
 20.7   commissioner of employee relations has approved a salary rate 
 20.8   that exceeds 95 percent of the governor's salary as defined 
 20.9   under section 43A.02, subdivision 21; 
 20.10     (7) to an employee of Gillette Hospital, the Minnesota Crop 
 20.11  Improvement Council, or the Minnesota Historical Society; 
 20.12     (8) to the executive director and chief executive officer, 
 20.13  the director of operations, and the director of corporate 
 20.14  development and agency relations of the Southern Minnesota 
 20.15  Municipal Power Agency; 
 20.16     (9) to the executive director and the insurance trust 
 20.17  administrator of the League of Minnesota Cities; or 
 20.18     (10) to the manager of Utilities Plus. 
 20.19     (c) The limited covered salary determined under this 
 20.20  section must be used in determining employee and employer 
 20.21  contributions and in determining retirement annuities and other 
 20.22  benefits under the respective covered retirement fund and under 
 20.23  this chapter. 
 20.24     Sec. 7.  Minnesota Statutes 2002, section 356.611, 
 20.25  subdivision 2, is amended to read: 
 20.26     Subd. 2.  [FEDERAL COMPENSATION LIMITS.] (a) For members 
 20.27  first contributing to of a covered pension plan enumerated in 
 20.28  section 356.30, subdivision 3, on or after July 1, 1995, 
 20.29  compensation in excess of the limitation set forth specified in 
 20.30  section 401(a)(17) of the Internal Revenue Code, as amended, for 
 20.31  changes in the cost of living under section 401(a)(17)(B) of the 
 20.32  Internal Revenue Code, may not be included for contribution and 
 20.33  benefit computation purposes.  
 20.34     (b) Notwithstanding paragraph (a), for members specified in 
 20.35  paragraph (a) who first contributed to a covered plan before 
 20.36  July 1, 1995, the annual compensation limit set forth specified 
 21.1   in Internal Revenue Code 401(a)(17) on June 30, 1993, applies to 
 21.2   members first contributing before July 1, 1995 if that provides 
 21.3   a greater allowable annual compensation. 
 21.4      Sec. 8.  Minnesota Statutes 2002, section 356.611, is 
 21.5   amended by adding a subdivision to read: 
 21.6      Subd. 3.  [MAXIMUM BENEFIT LIMITATIONS.] A member's annual 
 21.7   benefit, if necessary, must be reduced to the extent required by 
 21.8   section 415(b) of the Internal Revenue Code, as adjusted by the 
 21.9   United States Secretary of the Treasury under section 415(d) of 
 21.10  the Internal Revenue Code.  For purposes of section 415 of the 
 21.11  Internal Revenue Code, the limitation year of a pension plan 
 21.12  covered by this section must be the fiscal year or calendar year 
 21.13  of that plan, whichever is applicable.  The accrued benefit 
 21.14  limitation described in section 415(e) of the Internal Revenue 
 21.15  Code must cease to be effective for limitation years beginning 
 21.16  after December 31, 1999. 
 21.17     Sec. 9.  [EFFECTIVE DATE.] 
 21.18     (a) Sections 1, 2, 3, 7, and 8 are effective on July 1, 
 21.19  2004. 
 21.20     (b) Sections 4 and 5 are effective on the day following 
 21.21  final enactment.  
 21.22     (c) Section 6 applies retroactively to April 28, 1994.  
 21.23  Retirement annuities that were calculated based on covered 
 21.24  salary amounts that were in excess of the limit in effect after 
 21.25  April 28, 1994, but conform with section 6, are ratified. 
 21.26                             ARTICLE 3
 21.27                      ALLOWABLE SERVICE CREDIT
 21.28     Section 1.  Minnesota Statutes 2002, section 352.27, is 
 21.29  amended to read: 
 21.30     352.27 [CREDIT FOR MILITARY BREAK IN SERVICE TO PROVIDE 
 21.31  UNIFORMED SERVICE.] 
 21.32     Any (a) An employee given a leave of absence to enter 
 21.33  military service who is absent from employment by reason of 
 21.34  service in the uniformed services, as defined in United States 
 21.35  Code, title 38, section 4303(13), and who returns to state 
 21.36  service upon discharge from military service as provided in the 
 22.1   uniformed service within the time frames required in United 
 22.2   States Code, title 38, section 192.262 4312(e), may obtain 
 22.3   service credit for the period of military the uniformed service. 
 22.4   The employee is not entitled to credit for any voluntary 
 22.5   extension of military service at the instance of the employee 
 22.6   beyond the initial period of enlistment, induction, or call to 
 22.7   active duty, nor to credit for any period of service following a 
 22.8   voluntary return to military service as further specified in 
 22.9   this section, provided that the employee did not separate from 
 22.10  uniformed service with a dishonorable or bad conduct discharge 
 22.11  or under other than honorable conditions. An 
 22.12     (b) The employee may obtain credit by paying into the fund 
 22.13  an equivalent employee contribution based upon the contribution 
 22.14  rate or rates in effect at the time that the uniformed service 
 22.15  was performed multiplied by the full and fractional years being 
 22.16  purchased and applied to the annual salary received at the date 
 22.17  of return from military service. The amount of this contribution 
 22.18  must be the applicable amounts required in section 352.04, 
 22.19  subdivision 2, plus interest at an annual rate of 8.5 percent 
 22.20  compounded annually rate.  The annual salary rate is the average 
 22.21  annual salary during the purchase period that the employee would 
 22.22  have received if the employee had continued to be employed in 
 22.23  covered employment rather than to provide uniformed service, or, 
 22.24  if the determination of that rate is not reasonably certain, the 
 22.25  annual salary rate is the employee's average salary rate during 
 22.26  the 12-month period of covered employment rendered immediately 
 22.27  preceding the period of the uniformed service.  
 22.28     (c) The matching equivalent employer contribution and, if 
 22.29  applicable, the equivalent additional employer contribution 
 22.30  provided in section 352.04 must be paid by the department 
 22.31  employing the employee upon return to state service from funds 
 22.32  available to the department at the time and in the manner 
 22.33  provided in section 352.04, using the employer and additional 
 22.34  employer contribution rate or rates in effect at the time that 
 22.35  the uniformed service was performed, applied to the same annual 
 22.36  salary rate or rates used to compute the equivalent employee 
 23.1   contribution. 
 23.2      (d) If the employee equivalent contributions provided in 
 23.3   this section are not paid in full, the employee's allowable 
 23.4   service credit must be prorated by multiplying the full and 
 23.5   fractional number of years of uniformed service eligible for 
 23.6   purchase by the ratio obtained by dividing the total employee 
 23.7   contribution received by the total employee contribution 
 23.8   otherwise required under this section.  
 23.9      (e) To receive service credit under this section, the 
 23.10  contributions specified in this section must be transmitted to 
 23.11  the Minnesota State Retirement System during the period which 
 23.12  begins with the date on which the individual returns to state 
 23.13  service and which has a duration of three times the length of 
 23.14  the uniformed service period, but not to exceed five years.  If 
 23.15  the determined payment period is less than one year, the 
 23.16  contributions required under this section to receive service 
 23.17  credit may be made within one year of the discharge date.  
 23.18     (f) The amount of service credit obtainable under this 
 23.19  section may not exceed five years unless a longer purchase 
 23.20  period is required under United States Code, title 38, section 
 23.21  4312.  
 23.22     (g) The employing unit shall pay interest on all equivalent 
 23.23  employee and employer contribution amounts payable under this 
 23.24  section.  Interest must be computed at a rate of 8.5 percent 
 23.25  compounded annually from the end of each fiscal year of the 
 23.26  leave or the break in service to the end of the month in which 
 23.27  the payment is received.  
 23.28     Sec. 2.  Minnesota Statutes 2002, section 352B.01, is 
 23.29  amended by adding a subdivision to read: 
 23.30     Subd. 3b.  [CREDIT FOR BREAK IN SERVICE TO PROVIDE 
 23.31  UNIFORMED SERVICE.] (a) A member who is absent from employment 
 23.32  by reason of service in the uniformed services, as defined in 
 23.33  United States Code, title 38, section 4303(13), and who returns 
 23.34  to state employment in a position covered by the plan upon 
 23.35  discharge from service in the uniformed service within the time 
 23.36  frame required in United States Code, title 38, section 4312(e), 
 24.1   may obtain service credit for the period of the uniformed 
 24.2   service, provided that the member did not separate from 
 24.3   uniformed service with a dishonorable or bad conduct discharge 
 24.4   or under other than honorable conditions.  
 24.5      (b) The member may obtain credit by paying into the fund an 
 24.6   equivalent member contribution based on the contribution rate or 
 24.7   rates in effect at the time that the uniformed service was 
 24.8   performed multiplied by the full and fractional years being 
 24.9   purchased and applied to the annual salary rate.  The annual 
 24.10  salary rate is the average annual salary during the purchase 
 24.11  period that the member would have received if the member had 
 24.12  continued to provide employment services to the state rather 
 24.13  than to provide uniformed service, or if the determination of 
 24.14  that rate is not reasonably certain, the annual salary rate is 
 24.15  the member's average salary rate during the 12-month period of 
 24.16  covered employment rendered immediately preceding the purchase 
 24.17  period.  
 24.18     (c) The equivalent employer contribution and, if 
 24.19  applicable, the equivalent employer additional contribution, 
 24.20  must be paid by the employing unit, using the employer and 
 24.21  employer additional contribution rate or rates in effect at the 
 24.22  time that the uniformed service was performed, applied to the 
 24.23  same annual salary rate or rates used to compute the equivalent 
 24.24  member contribution.  
 24.25     (d) If the member equivalent contributions provided for in 
 24.26  this subdivision are not paid in full, the member's allowable 
 24.27  service credit must be prorated by multiplying the full and 
 24.28  fractional number of years of uniformed service eligible for 
 24.29  purchase by the ratio obtained by dividing the total member 
 24.30  contributions received by the total member contributions 
 24.31  otherwise required under this subdivision.  
 24.32     (e) To receive allowable service credit under this 
 24.33  subdivision, the contributions specified in this section must be 
 24.34  transmitted to the fund during the period which begins with the 
 24.35  date on which the individual returns to state employment covered 
 24.36  by the plan and which has a duration of three times the length 
 25.1   of the uniformed service period, but not to exceed five years.  
 25.2   If the determined payment period is calculated to be less than 
 25.3   one year, the contributions required under this subdivision to 
 25.4   receive service credit may be within one year from the discharge 
 25.5   date.  
 25.6      (f) The amount of allowable service credit obtainable under 
 25.7   this section may not exceed five years, unless a longer purchase 
 25.8   period is required under United States Code, title 38, section 
 25.9   4312.  
 25.10     (g) The employing unit shall pay interest on all equivalent 
 25.11  member and employer contribution amounts payable under this 
 25.12  subdivision.  Interest must be computed at a rate of 8.5 percent 
 25.13  compounded annually from the end of each fiscal year of the 
 25.14  leave or break in service to the end of the month in which 
 25.15  payment is received.  
 25.16     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
 25.17  subdivision 16, is amended to read: 
 25.18     Subd. 16.  [ALLOWABLE SERVICE; LIMITS AND COMPUTATION.] (a) 
 25.19  "Allowable service" means: 
 25.20     (1) service during years of actual membership in the course 
 25.21  of which employee contributions were made, periods covered by 
 25.22  payments in lieu of salary deductions under section 353.35; 
 25.23     (2) service in years during which the public employee was 
 25.24  not a member but for which the member later elected, while a 
 25.25  member, to obtain credit by making payments to the fund as 
 25.26  permitted by any law then in effect; 
 25.27     (3) a period of authorized leave of absence with pay from 
 25.28  which deductions for employee contributions are made, deposited, 
 25.29  and credited to the fund; 
 25.30     (4) a period of authorized personal, parental, or medical 
 25.31  leave of absence without pay, including a leave of absence 
 25.32  covered under the federal Family Medical Leave Act, that does 
 25.33  not exceed one year, and during or for which a member obtained 
 25.34  service credit for each month in the leave period by payments to 
 25.35  the fund made in place of salary deductions.  The payments must 
 25.36  be made in an amount or amounts based on the member's average 
 26.1   salary on which deductions were paid for the last six months of 
 26.2   public service, or for that portion of the last six months while 
 26.3   the member was in public service, to apply to the period in 
 26.4   either case that immediately precedes the commencement of the 
 26.5   leave of absence.  If the employee elects to pay the employee 
 26.6   contributions for the period of any authorized personal, 
 26.7   parental, or medical leave of absence without pay, or for any 
 26.8   portion of the leave, the employee shall also, as a condition to 
 26.9   the exercise of the election, pay to the fund an amount 
 26.10  equivalent to the required employer and the additional employer 
 26.11  contributions, if any, for the employee.  The payment must be 
 26.12  made within one year from the expiration of the leave of absence 
 26.13  or within 20 days after termination of public service under 
 26.14  subdivision 11a, whichever is earlier.  The employer, by 
 26.15  appropriate action of its governing body which is made a part of 
 26.16  its official records and which is adopted before the date of the 
 26.17  first payment of the employee contribution, may certify to the 
 26.18  association in writing its commitment to pay the employer and 
 26.19  additional employer contributions from the proceeds of a tax 
 26.20  levy made under section 353.28.  Payments under this paragraph 
 26.21  must include interest at an annual rate of 8.5 percent 
 26.22  compounded annually from the date of the termination of the 
 26.23  leave of absence to the date payment is made.  An employee shall 
 26.24  return to public service and render a minimum of three months of 
 26.25  allowable service in order to be eligible to pay employee and 
 26.26  employer contributions for a subsequent authorized leave of 
 26.27  absence without pay.  Upon payment, the employee must be granted 
 26.28  allowable service credit for the purchased period; 
 26.29     (5) a periodic, repetitive leave that is offered to all 
 26.30  employees of a governmental subdivision.  The leave program may 
 26.31  not exceed 208 hours per annual normal work cycle as certified 
 26.32  to the association by the employer.  A participating member 
 26.33  obtains service credit by making employee contributions in an 
 26.34  amount or amounts based on the member's average salary that 
 26.35  would have been paid if the leave had not been taken.  The 
 26.36  employer shall pay the employer and additional employer 
 27.1   contributions on behalf of the participating member.  The 
 27.2   employee and the employer are responsible to pay interest on 
 27.3   their respective shares at the rate of 8.5 percent a year, 
 27.4   compounded annually, from the end of the normal cycle until full 
 27.5   payment is made.  An employer shall also make the employer and 
 27.6   additional employer contributions, plus 8.5 percent interest, 
 27.7   compounded annually, on behalf of an employee who makes employee 
 27.8   contributions but terminates public service.  The employee 
 27.9   contributions must be made within one year after the end of the 
 27.10  annual normal working cycle or within 20 days after termination 
 27.11  of public service, whichever is sooner.  The association shall 
 27.12  prescribe the manner and forms to be used by a governmental 
 27.13  subdivision in administering a periodic, repetitive leave.  Upon 
 27.14  payment, the member must be granted allowable service credit for 
 27.15  the purchased period; 
 27.16     (6) an authorized temporary layoff under subdivision 12, 
 27.17  limited to three months allowable service per authorized 
 27.18  temporary layoff in one calendar year.  An employee who has 
 27.19  received the maximum service credit allowed for an authorized 
 27.20  temporary layoff must return to public service and must obtain a 
 27.21  minimum of three months of allowable service subsequent to the 
 27.22  layoff in order to receive allowable service for a subsequent 
 27.23  authorized temporary layoff; or 
 27.24     (7) a period during which a member is on an authorized 
 27.25  leave of absence to enter military absent from employment by a 
 27.26  governmental subdivision by reason of service in the armed 
 27.27  forces of the United States in the uniformed services, as 
 27.28  defined in United States Code, title 38, section 4303(13), if 
 27.29  the member returns to public service upon discharge 
 27.30  from military service in the uniformed service within the time 
 27.31  frames required under United States Code, title 38, section 
 27.32  192.262 and 4312(e), provided that the member did not separate 
 27.33  from uniformed service with a dishonorable or bad conduct 
 27.34  discharge or under other than honorable conditions.  The service 
 27.35  is credited if the member pays into the fund equivalent employee 
 27.36  contributions based upon the employee's contribution rate or 
 28.1   rates in effect at the time that the uniformed service was 
 28.2   performed multiplied by the full and fractional years being 
 28.3   purchased and applied to the annual salary at the date of return 
 28.4   from military service rate.  The annual salary rate is the 
 28.5   average annual salary during the purchase period that the member 
 28.6   would have received if the member had continued to be employed 
 28.7   in covered employment rather than to provide uniformed service, 
 28.8   or, if the determination of that rate is not reasonably certain, 
 28.9   the annual salary rate is the member's average salary rate 
 28.10  during the 12-month period of covered employment rendered 
 28.11  immediately preceding the period of the uniformed service.  
 28.12  Payment of the member equivalent contributions must be made 
 28.13  within during a period which begins with the date on which the 
 28.14  individual returns to public employment and that is three times 
 28.15  the length of the military leave period, or within five years of 
 28.16  the date of discharge from the military service, whichever is 
 28.17  less.  If the determined payment period is less than one year, 
 28.18  the contributions required under this clause to receive service 
 28.19  credit may be made within one year of the discharge date.  
 28.20  Payment may not be accepted following 20 days after termination 
 28.21  of public service under subdivision 11a.  The amount of these 
 28.22  contributions must be in accord with the contribution rates and 
 28.23  salary limitations, if any, in effect during the leave, plus 
 28.24  interest at an annual rate of 8.5 percent compounded annually 
 28.25  from the date of return to public service to the date payment is 
 28.26  made.  If the member equivalent contributions provided for in 
 28.27  this clause are not paid in full, the member's allowable service 
 28.28  credit must be prorated by multiplying the full and fractional 
 28.29  number of years of uniformed service eligible for purchase by 
 28.30  the ratio obtained by dividing the total member contributions 
 28.31  received by the total member contributions otherwise required 
 28.32  under this clause.  The corresponding equivalent employer 
 28.33  contribution, and, if applicable, the equivalent additional 
 28.34  employer contribution, if applicable, must be paid by the 
 28.35  governmental subdivision employing the member upon the person's 
 28.36  return to public service if the member makes the equivalent 
 29.1   employee contributions.  The employer payments must be made from 
 29.2   funds available to the employing unit, using the employer and 
 29.3   additional employer contribution rate or rates in effect at the 
 29.4   time that the uniformed service was performed, applied to the 
 29.5   same annual salary rate or rates used to compute the equivalent 
 29.6   member contribution.  The governmental subdivision involved may 
 29.7   appropriate money for those payments.  A member may not receive 
 29.8   credit for a voluntary extension of military service at the 
 29.9   instance of the member beyond the initial period of enlistment, 
 29.10  induction, or call to active duty.  The amount of service credit 
 29.11  obtainable under this section may not exceed five years unless a 
 29.12  longer purchase period is required under United States Code, 
 29.13  title 38, section 4312.  The employing unit shall pay interest 
 29.14  on all equivalent member and employer contribution amounts 
 29.15  payable under this clause.  Interest must be computed at a rate 
 29.16  of 8.5 percent compounded annually from the end of each fiscal 
 29.17  year of the leave or the break in service to the end of the 
 29.18  month in which the payment is received.  Upon payment, the 
 29.19  employee must be granted allowable service credit for the 
 29.20  purchased period.  
 29.21     (b) For calculating benefits under sections 353.30, 353.31, 
 29.22  353.32, and 353.33 for state officers and employees displaced by 
 29.23  the Community Corrections Act, chapter 401, and transferred into 
 29.24  county service under section 401.04, "allowable service"  means 
 29.25  the combined years of allowable service as defined in paragraph 
 29.26  (a), clauses (1) to (6), and section 352.01, subdivision 11.  
 29.27     (c) For a public employee who has prior service covered by 
 29.28  a local police or firefighters relief association that has 
 29.29  consolidated with the Public Employees Retirement Association or 
 29.30  to which section 353.665 applies, and who has elected the type 
 29.31  of benefit coverage provided by the public employees police and 
 29.32  fire fund either under section 353A.08 following the 
 29.33  consolidation or under section 353.665, subdivision 4, 
 29.34  "applicable service" is a period of service credited by the 
 29.35  local police or firefighters relief association as of the 
 29.36  effective date of the consolidation based on law and on bylaw 
 30.1   provisions governing the relief association on the date of the 
 30.2   initiation of the consolidation procedure. 
 30.3      (d) No member may receive more than 12 months of allowable 
 30.4   service credit in a year either for vesting purposes or for 
 30.5   benefit calculation purposes. 
 30.6      (e) "Allowable service" also means a period purchased under 
 30.7   section 356.555. 
 30.8      Sec. 4.  Minnesota Statutes 2002, section 354.091, is 
 30.9   amended to read: 
 30.10     354.091 [SERVICE CREDIT.] 
 30.11     (a) In computing service credit, no teacher shall receive 
 30.12  credit for more than one year of teaching service for any fiscal 
 30.13  year.  Commencing July 1, 1961: 
 30.14     (1) if a teacher teaches less than five hours in a day, 
 30.15  service credit must be given for the fractional part of the day 
 30.16  as the term of service performed bears to five hours; 
 30.17     (2) if a teacher teaches five or more hours in a day, 
 30.18  service credit must be given for only one day; 
 30.19     (3) if a teacher teaches at least 170 full days in any 
 30.20  fiscal year, service credit must be given for a full year of 
 30.21  teaching service; and 
 30.22     (4) if a teacher teaches for only a fractional part of the 
 30.23  year, service credit must be given for such fractional part of 
 30.24  the year as the period of service performed bears to 170 days. 
 30.25     (b) A teacher shall receive a full year of service credit 
 30.26  based on the number of days in the employer's full school year 
 30.27  if it is less than 170 days.  Teaching service performed before 
 30.28  July 1, 1961, must be computed under the law in effect at the 
 30.29  time it was performed. 
 30.30     (c) A teacher does must not lose or gain retirement service 
 30.31  credit as a result of the employer converting to a flexible or 
 30.32  alternate work schedule.  If the employer converts to a flexible 
 30.33  or alternate work schedule, the forms for reporting and the 
 30.34  procedures for determining service credit must be determined by 
 30.35  the executive director with the approval of the board of 
 30.36  trustees.  
 31.1      (d) For all services rendered on or after July 1, 2003, 
 31.2   service credit for all members employed by the Minnesota State 
 31.3   Colleges and Universities system must be determined: 
 31.4      (1) for full-time employees, by the definition of full time 
 31.5   employment contained in the collective bargaining agreement for 
 31.6   those units listed in section 179A.10, subdivision 2, or 
 31.7   contained in the applicable personnel or salary plan for those 
 31.8   positions designated in section 179A.10, subdivision 1; 
 31.9      (2) for part-time employees, by the appropriate proration 
 31.10  of full-time equivalency based on the provisions contained in 
 31.11  the collective bargaining agreement for those units listed in 
 31.12  section 179A.10, subdivision 2, or contained in the applicable 
 31.13  personnel or salary plan for those positions designated in 
 31.14  section 179A.10, subdivision 1, and the applicable procedures of 
 31.15  the Minnesota State Colleges and Universities system; and 
 31.16     (3) in no case may a member receive more than one year of 
 31.17  service credit for any fiscal year. 
 31.18     Sec. 5.  Minnesota Statutes 2002, section 354.096, 
 31.19  subdivision 1, is amended to read: 
 31.20     Subdivision 1.  [CERTIFICATION.] Upon granting a family 
 31.21  leave to a member, an employing unit must certify the leave to 
 31.22  the association on a form specified by the executive director 
 31.23  before the end of the fiscal year during which the leave was 
 31.24  granted. 
 31.25     Sec. 6.  Minnesota Statutes 2002, section 354.53, is 
 31.26  amended to read: 
 31.27     354.53 [CREDIT FOR MILITARY BREAK IN SERVICE LEAVE OF 
 31.28  ABSENCE TO PROVIDE UNIFORMED SERVICE.] 
 31.29     Subdivision 1.  [ELIGIBILITY; EMPLOYEE AND EMPLOYER 
 31.30  CONTRIBUTIONS.] (a) Any employee given a leave of absence to 
 31.31  enter military service teacher who is absent from employment by 
 31.32  reason of service in the uniformed services, as defined in 
 31.33  United States Code, title 38, section 4303(13), and who returns 
 31.34  to the employer providing teaching service upon discharge from 
 31.35  military service as provided in the uniformed service within the 
 31.36  time frames required in United States Code, title 38, section 
 32.1   192.262 4312(e), may obtain service credit for the period of 
 32.2   military the uniformed service but shall not receive credit for 
 32.3   any voluntary extension of military service at the instance of 
 32.4   the member beyond the initial period of enlistment, induction or 
 32.5   call to active duty as further specified in this section, 
 32.6   provided that the teacher did not separate from uniformed 
 32.7   service with a dishonorable or bad conduct discharge or under 
 32.8   other than honorable conditions. 
 32.9      (b) The member shall may obtain credit by paying into the 
 32.10  fund an equivalent employee contribution based upon the 
 32.11  contribution rate or rates in effect at the time that 
 32.12  the military uniformed service was performed multiplied by the 
 32.13  full and fractional years being purchased and applied to the 
 32.14  annual salary rate of the member for the year beginning with the 
 32.15  date of return from military service and the number of years of 
 32.16  military service together with interest thereon at an annual 
 32.17  rate of 8.5 percent compounded annually from the time the 
 32.18  military service was rendered to the first date of payment.  The 
 32.19  annual salary rate is the average annual salary during the 
 32.20  purchase period that the teacher would have received if the 
 32.21  teacher had continued to provide teaching service to the 
 32.22  employer rather than provide uniformed service or if the 
 32.23  determination of that rate is not reasonably certain, the annual 
 32.24  salary rate is the teacher's average salary rate during the 
 32.25  12-month period immediately preceding the period, or, if the 
 32.26  preceding period is less than 12 months, the annualized rate 
 32.27  derived from the teacher's average salary rate during the period 
 32.28  of teacher employment rendered immediately preceding the period 
 32.29  of the uniformed service.  
 32.30     (c) The equivalent employer contribution and, if 
 32.31  applicable, the equivalent additional contribution provided in 
 32.32  section 354.42 must be paid by the employing unit at as provided 
 32.33  in section 354.52, subdivision 4, using the employer and 
 32.34  employer additional contribution rate or rates in effect at the 
 32.35  time that the military uniformed service was performed, applied 
 32.36  to the same annual salary rate of or rates used to compute the 
 33.1   member for the year beginning with the date of return from 
 33.2   military service, in the manner provided in section 354.52, 
 33.3   subdivision 4 equivalent employee contribution. 
 33.4      Subd. 2.  [CALCULATION OF CREDIT.] (a) For purposes of 
 33.5   computing a money purchase annuity under section 354.44, 
 33.6   subdivision 2, all payments into the fund pursuant to under this 
 33.7   section shall must be considered accumulations after July 1, 
 33.8   1957 for the purpose of computing any annuity in accordance with 
 33.9   section 354.44, subdivision 2.  
 33.10     (b) For purposes of computing a formula annuity under 
 33.11  section 354.44, subdivision 6, if the employee equivalent 
 33.12  contributions and interest thereon provided in this section are 
 33.13  not paid in full, the member's formula service credit shall must 
 33.14  be calculated prorated by multiplying the full and fractional 
 33.15  number of years of military uniformed service eligible for 
 33.16  purchase by the ratio obtained by dividing the total amount paid 
 33.17  and employee contribution received by the maximum amount payable 
 33.18  provided herein total employee contribution otherwise required 
 33.19  under this section. 
 33.20     Subd. 3.  [PAYMENTS ELIGIBLE PAYMENT PERIOD.] Payments 
 33.21  pursuant to this (a) To receive service credit under this 
 33.22  section, the contributions specified in this section shall must 
 33.23  be made within transmitted to the Teachers Retirement 
 33.24  Association during the period which begins with the date on 
 33.25  which the individual returns to teaching service and which has a 
 33.26  duration of three times the length of the uniformed service 
 33.27  period, but not to exceed five years from the date of discharge. 
 33.28     (b) Notwithstanding paragraph (a), if the payment period 
 33.29  determined under paragraph (a) is less than one year, the 
 33.30  contributions required under this section to receive service 
 33.31  credit may be made within one year from the discharge date. 
 33.32     Subd. 4.  [LIMITS ON SERVICE CREDIT.] The amount of service 
 33.33  credit obtainable under this section may not exceed five years, 
 33.34  unless a longer purchase period is required under United States 
 33.35  Code, title 38, section 4312. 
 33.36     Subd. 5.  [INTEREST REQUIREMENTS.] The employer shall pay 
 34.1   interest on all equivalent employee and employer contribution 
 34.2   amounts payable under this section.  Interest must be computed 
 34.3   at a rate of 8.5 percent compounded annually from the end of 
 34.4   each fiscal year of the leave or the break in service to the end 
 34.5   of the month in which the payment is received. 
 34.6      Sec. 7.  Minnesota Statutes 2002, section 354A.093, is 
 34.7   amended to read: 
 34.8      354A.093 [MILITARY BREAK IN SERVICE CREDIT TO PROVIDE 
 34.9   UNIFORMED SERVICE.] 
 34.10     Subdivision 1.  [ELIGIBILITY.] Any teacher in the 
 34.11  coordinated program of either the Minneapolis Teachers 
 34.12  Retirement Fund Association or the St. Paul Teachers Retirement 
 34.13  Fund Association or any teacher in the new law coordinated 
 34.14  program of the Duluth Teachers Retirement Fund Association who 
 34.15  is granted a leave absent from employment by reason of absence 
 34.16  to enter military service in the uniformed services as defined 
 34.17  in United States Code, title 38, section 4303(13) and who 
 34.18  returns to the employer providing active teaching service upon 
 34.19  discharge from military uniformed service as provided in within 
 34.20  the time frames required under United States Code, title 38, 
 34.21  section 192.262 4312(e), shall be entitled to may receive 
 34.22  allowable service credit in the applicable association for all 
 34.23  or a portion of the period of military uniformed service but, 
 34.24  provided that the teacher did not for any voluntary extension of 
 34.25  military separate from uniformed service beyond the initial 
 34.26  period of enlistment, induction with a dishonorable or call to 
 34.27  active duty which occurred at the instance of the teacher bad 
 34.28  conduct discharge or under other than honorable conditions. 
 34.29     Subd. 2.  [CONTRIBUTIONS.] If the teacher granted the 
 34.30  military service leave of absence makes the equivalent employee 
 34.31  contribution for a period of military service leave of absence 
 34.32  pursuant to service provided to the uniformed services under 
 34.33  this section, the employing unit shall make an equivalent 
 34.34  employer contribution on behalf of the teacher to the applicable 
 34.35  association for the period of the military service leave of 
 34.36  absence being purchased in the manner described in section 
 35.1   354A.12, subdivision 2a.  The equivalent employee and employer 
 35.2   contributions shall must be in an amount equal to the employee 
 35.3   and employer contribution rates in effect for other active 
 35.4   members of the association covered by the same program applied 
 35.5   to a salary figure equal to the teacher's average annual salary 
 35.6   rate at the date of return from military service that the 
 35.7   teacher would have received if the leave or break in service had 
 35.8   not occurred, or if the determination of that average salary 
 35.9   rate is not reasonably certain, on the basis of the teacher's 
 35.10  average salary rate during the 12-month period immediately 
 35.11  preceding the period, or, if the preceding period is less than 
 35.12  12 months, the annualized rate derived from the teacher's 
 35.13  average salary rate during the period of teacher employment 
 35.14  rendered immediately preceding the period of uniformed 
 35.15  service, with the result multiplied by the number of full and 
 35.16  fractional years constituting the period of service provided to 
 35.17  the military uniformed service leave of absence which the 
 35.18  teacher seeks is authorized to purchase under this 
 35.19  section.  Payment shall include interest on the amount payable 
 35.20  pursuant to this section at the rate of six percent compounded 
 35.21  annually from the year the military service was rendered to the 
 35.22  date of payment. 
 35.23     Subd. 3.  [PRORATING.] If the payments made by a 
 35.24  teacher pursuant to under this section are less than an the full 
 35.25  amount equal to the applicable contribution rate applied to a 
 35.26  salary figure equal to the teacher's annual salary rate at the 
 35.27  date of return from military service, multiplied by the number 
 35.28  of years constituting the period of the military service leave 
 35.29  of absence determined under subdivision 2, the service credit 
 35.30  shall must be prorated.  The prorated service credit shall must 
 35.31  be determined by the ratio between the amount of the 
 35.32  actual equivalent employee payment which was made and the full 
 35.33  contribution amount payable pursuant to equivalent employee 
 35.34  payment required under this section.  In order to be entitled to 
 35.35  receive service credit under this section, payment shall be made 
 35.36  within five years from the date of discharge from military 
 36.1   service. 
 36.2      Subd. 4.  [ELIGIBLE PAYMENT PERIOD.] (a) To receive service 
 36.3   credit under this section, the contributions specified in this 
 36.4   section must be transmitted to the applicable first class city 
 36.5   teachers retirement fund association during the period which 
 36.6   begins with the date the individual returns to teaching service 
 36.7   and which has a duration of three times the length of the 
 36.8   uniformed service period, but not to exceed five years. 
 36.9      (b) Notwithstanding paragraph (a), if the payment period 
 36.10  determined under paragraph (a) is less than one year, the 
 36.11  contributions required under this section to receive service 
 36.12  credit may be made within one year from the discharge date. 
 36.13     Subd. 5.  [LIMITS ON SERVICE CREDIT.] The amount of service 
 36.14  credit obtainable under this section may not exceed five years, 
 36.15  unless a longer purchase period is required under United States 
 36.16  Code, title 38, section 4312. 
 36.17     Subd. 6.  [INTEREST REQUIREMENTS.] The employer shall pay 
 36.18  interest on all equivalent employee and employer contribution 
 36.19  amounts payable under this section.  Interest must be computed 
 36.20  at a rate of 8.5 percent compounded annually from the end of 
 36.21  each fiscal year of the leave or break in service to the end of 
 36.22  the month in which payment is received. 
 36.23     Sec. 8.  Minnesota Statutes 2002, section 490.121, is 
 36.24  amended by adding a subdivision to read: 
 36.25     Subd. 4b.  [CREDIT FOR BREAK IN SERVICE TO PROVIDE 
 36.26  UNIFORMED SERVICE.] (a) A judge who is absent from employment by 
 36.27  reason of service in the uniformed services, as defined in 
 36.28  United States Code, title 38, section 4303(13), and who returns 
 36.29  to state employment as a judge upon discharge from service in 
 36.30  the uniformed service within the time frame required in United 
 36.31  States Code, title 38, section 4312(e) may obtain service credit 
 36.32  for the period of the uniformed service, provided that the judge 
 36.33  did not separate from uniformed service with a dishonorable or 
 36.34  bad conduct discharge or under other than honorable conditions.  
 36.35     (b) The judge may obtain credit by paying into the fund 
 36.36  equivalent member contribution based on the contribution rate 
 37.1   rates in effect at the time that the uniformed service was 
 37.2   performed multiplied by the full and fractional years being 
 37.3   purchased and applied to the annual salary rate.  The annual 
 37.4   salary rate is the average annual salary during the purchase 
 37.5   period that the judge would have received if the judge had 
 37.6   continued to provide employment services to the state rather 
 37.7   than to provide uniformed service, or if the determination of 
 37.8   that rate is not reasonably certain, the annual salary rate is 
 37.9   the judge's average salary rate during the 12-month period of 
 37.10  judicial employment rendered immediately preceding the purchase 
 37.11  period.  
 37.12     (c) The equivalent employer contribution and, if 
 37.13  applicable, the equivalent employer additional contribution, 
 37.14  must be paid by the employing unit, using the employer and 
 37.15  employer additional contribution rate or rates in effect at the 
 37.16  time that the uniformed service was performed, applied to the 
 37.17  same annual salary rate or rates used to compute the equivalent 
 37.18  member contribution.  
 37.19     (d) If the member equivalent contributions provided for in 
 37.20  this subdivision are not paid in full, the judge's allowable 
 37.21  service credit must be prorated by multiplying the full and 
 37.22  fractional number of years of uniformed service eligible for 
 37.23  purchase by the ratio obtained by dividing the total member 
 37.24  contributions received by the total member contributions 
 37.25  otherwise required under this subdivision.  
 37.26     (e) To receive allowable service credit under this 
 37.27  subdivision, the contributions specified in this section must be 
 37.28  transmitted to the fund during the period which begins with the 
 37.29  date on which the individual returns to judicial employment and 
 37.30  which has a duration of three times the length of the uniformed 
 37.31  service period, but not to exceed five years.  If the determined 
 37.32  payment period is calculated to be less than one year, the 
 37.33  contributions required under this subdivision to receive service 
 37.34  credit may be within one year from the discharge date.  
 37.35     (f) The amount of allowable service credit obtainable under 
 37.36  this section may not exceed five years, unless a longer purchase 
 38.1   period is required under United States Code, title 38, section 
 38.2   4312.  
 38.3      (g) The state court administrator shall pay interest on all 
 38.4   equivalent member and employer contribution amounts payable 
 38.5   under this subdivision.  Interest must be computed at a rate of 
 38.6   8.5 percent compounded annually from the end of each fiscal year 
 38.7   of the leave or break in service to the end of the month in 
 38.8   which payment is received. 
 38.9      Sec. 9.  [EFFECTIVE DATE.] 
 38.10     Sections 1 to 8 are effective on July 1, 2004. 
 38.11                             ARTICLE 4
 38.12               QUALIFIED PART-TIME TEACHER PROVISIONS
 38.13     Section 1.  Minnesota Statutes 2002, section 354.66, 
 38.14  subdivision 2, is amended to read: 
 38.15     Subd. 2.  [QUALIFIED PART-TIME TEACHER PROGRAM 
 38.16  PARTICIPATION REQUIREMENTS.] (a) A teacher in a Minnesota public 
 38.17  elementary school, a Minnesota secondary school, or the 
 38.18  Minnesota State Colleges and Universities system who has three 
 38.19  years or more of allowable service in the association or three 
 38.20  years or more of full-time teaching service in Minnesota public 
 38.21  elementary schools, Minnesota secondary schools, or the 
 38.22  Minnesota State Colleges and Universities system, by agreement 
 38.23  with the board of the employing district or with the authorized 
 38.24  representative of the board, may be assigned to teaching service 
 38.25  in a part-time teaching position under subdivision 3.  The 
 38.26  agreement must be executed before October 1 of the school year 
 38.27  for which the teacher requests to make retirement contributions 
 38.28  under subdivision 4.  A copy of the executed agreement must be 
 38.29  filed with the executive director of the association.  If the 
 38.30  copy of the executed agreement is filed with the association 
 38.31  after October 1 of the school year for which the teacher 
 38.32  requests to make retirement contributions under subdivision 4, 
 38.33  the employing unit shall pay the fine specified in section 
 38.34  354.52, subdivision 6, for each calendar day that elapsed since 
 38.35  the October 1 due date.  The association may not accept an 
 38.36  executed agreement that is received by the association more than 
 39.1   15 months late.  The association may not waive the fine required 
 39.2   by this section. 
 39.3      (b) Notwithstanding paragraph (a), if the teacher is also a 
 39.4   legislator: 
 39.5      (1) the agreement in paragraph (a) must be executed before 
 39.6   March 1 of the school year for which the teacher requests to 
 39.7   make retirement contributions under subdivision 4; and 
 39.8      (2) the fines specified in paragraph (a) apply if the 
 39.9   employing unit does not file the executed agreement with the 
 39.10  executive director of the association by March 1. 
 39.11     Sec. 2.  Minnesota Statutes 2002, section 354A.094, 
 39.12  subdivision 3, is amended to read: 
 39.13     Subd. 3.  [QUALIFIED PART-TIME TEACHER PROGRAM 
 39.14  PARTICIPATION REQUIREMENTS.] (a) A teacher in the public schools 
 39.15  of a city of the first class who has three years or more 
 39.16  allowable service in the applicable retirement fund association 
 39.17  or three years or more of full-time teaching service in 
 39.18  Minnesota public elementary schools, Minnesota secondary 
 39.19  schools, and Minnesota State Colleges and Universities system 
 39.20  may, by agreement with the board of the employing district, be 
 39.21  assigned to teaching service within the district in a part-time 
 39.22  teaching position.  The agreement must be executed before 
 39.23  October 1 of the year for which the teacher requests to make 
 39.24  retirement contributions under subdivision 4.  A copy of the 
 39.25  executed agreement must be filed with the executive director of 
 39.26  the retirement fund association.  If the copy of the executed 
 39.27  agreement is filed with the association after October 1 of the 
 39.28  year for which the teacher requests to make retirement 
 39.29  contributions under subdivision 4, the employing school district 
 39.30  shall pay a fine of $5 for each calendar day that elapsed since 
 39.31  the October 1 due date.  The association may not accept an 
 39.32  executed agreement that is received by the association more than 
 39.33  15 months late.  The association may not waive the fine required 
 39.34  by this section. 
 39.35     (b) Notwithstanding paragraph (a), if the teacher is also a 
 39.36  legislator: 
 40.1      (1) the agreement in paragraph (a) must be executed before 
 40.2   March 1 of the school year for which the teacher requests to 
 40.3   make retirement contributions under subdivision 4; and 
 40.4      (2) the fines specified in paragraph (a) apply if the 
 40.5   employing unit does not file the executed agreement with the 
 40.6   executive director of the applicable Teachers Retirement Fund 
 40.7   Association by March 1. 
 40.8      Sec. 3.  [EFFECTIVE DATE.] 
 40.9      Sections 1 and 2 are effective on July 1, 2004. 
 40.10                             ARTICLE 5
 40.11            RETIREMENT PLAN CONTRIBUTIONS AND TRANSFERS
 40.12     Section 1.  Minnesota Statutes 2002, section 354.42, 
 40.13  subdivision 7, is amended to read: 
 40.14     Subd. 7.  [ERRONEOUS SALARY DEDUCTIONS OR DIRECT PAYMENTS.] 
 40.15  (a) Any Deductions taken from the salary of an employee for the 
 40.16  retirement fund in error shall must be refunded to the employee 
 40.17  upon the discovery of the error and after the verification of 
 40.18  the error by the employing unit making the deduction, and. The 
 40.19  corresponding employer contribution and additional employer 
 40.20  contribution amounts attributable to the erroneous salary 
 40.21  deduction must be refunded to the employing unit. 
 40.22     (b) If salary deductions and employer contributions were 
 40.23  erroneously transmitted to the retirement fund and should have 
 40.24  been transmitted to another Minnesota public pension plan, the 
 40.25  retirement association executive director must transfer these 
 40.26  salary deductions and employer contributions to the appropriate 
 40.27  public pension fund without interest.  For purposes of this 
 40.28  paragraph, a Minnesota public pension plan means a plan 
 40.29  specified in section 356.30, subdivision 3, or the plan governed 
 40.30  by chapter 354B. 
 40.31     (c) A potential transfer under paragraph (b) that would 
 40.32  cause the plan to fail to be a qualified plan under section 
 40.33  401(a) of the Internal Revenue Code, as amended, must not be 
 40.34  made by the executive director.  Within 30 days after being 
 40.35  notified by the Teachers Retirement Association of an unmade 
 40.36  potential transfer under this paragraph, the employer of the 
 41.1   affected person must transmit an amount representing the 
 41.2   applicable salary deductions and employer contributions, without 
 41.3   interest, to the retirement fund of the appropriate Minnesota 
 41.4   public pension plan fund.  The retirement association must 
 41.5   provide a credit for the amount of the erroneous salary 
 41.6   deductions and employer contributions against future 
 41.7   contributions from the employer. 
 41.8      (d) If a salary warrant or check from which a deduction for 
 41.9   the retirement fund was taken has been canceled or the amount of 
 41.10  the warrant or if a check has been returned to the funds of the 
 41.11  employing unit making the payment, a refund of the amount 
 41.12  deducted, or any portion of it that is required to adjust the 
 41.13  salary deductions, shall must be made to the employing unit. 
 41.14     (d) Any (e) Erroneous direct payments of member-paid 
 41.15  contributions or erroneous salary deductions that were not 
 41.16  refunded in during the regular payroll cycle processing of an 
 41.17  employing unit's annual summary report shall must be refunded to 
 41.18  the member with, plus interest computed using the rate and 
 41.19  method specified in section 354.49, subdivision 2. 
 41.20     (f) Any refund under this subdivision that would cause the 
 41.21  plan to fail to be a qualified plan under section 401(a) of the 
 41.22  Internal Revenue Code, as amended, may not be refunded and 
 41.23  instead must be credited against future contributions payable by 
 41.24  the employer.  The employer is responsible for refunding to the 
 41.25  applicable employee any amount that was erroneously deducted 
 41.26  from the salary of the employee, with interest as specified in 
 41.27  paragraph (e). 
 41.28     Sec. 2.  Minnesota Statutes 2002, section 354.51, 
 41.29  subdivision 5, is amended to read: 
 41.30     Subd. 5.  [PAYMENT OF SHORTAGES.] (a) Except as provided in 
 41.31  paragraph (b), in the event that full required member 
 41.32  contributions are not deducted from the salary of a teacher, 
 41.33  payment shall must be made as follows:  
 41.34     (a) (1) Payment of shortages in member deductions on salary 
 41.35  earned after June 30, 1957, and prior to before July 1, 1981, 
 41.36  may be made any time prior to before retirement.  Payment shall 
 42.1   must include interest at an annual rate of 8.5 percent 
 42.2   compounded annually from the end of the fiscal year in which the 
 42.3   shortage occurred to the end of the month in which payment is 
 42.4   made and the interest shall must be credited to the fund.  If 
 42.5   payment of a shortage in deductions is not made, the formula 
 42.6   service credit of the member shall must be prorated pursuant to 
 42.7   under section 354.05, subdivision 25, clause (3). 
 42.8      (b) (2) Payment of shortages in member deductions on salary 
 42.9   earned after June 30, 1981, shall be are the sole obligation of 
 42.10  the employing unit and shall be are payable by the employing 
 42.11  unit upon notification by the executive director of the shortage 
 42.12  with interest at an annual rate of 8.5 percent compounded 
 42.13  annually from the end of the fiscal year in which the shortage 
 42.14  occurred to the end of the month in which payment is made and 
 42.15  the interest shall must be credited to the fund.  Effective July 
 42.16  1, 1986, the employing unit shall also pay the employer 
 42.17  contributions as specified in section 354.42, subdivisions 3 and 
 42.18  5 for such the shortages.  If the shortage payment is not paid 
 42.19  by the employing unit within 60 days of notification, the 
 42.20  executive director shall certify the amount of the shortage 
 42.21  payment to the applicable county auditor, who shall spread a 
 42.22  levy in the amount of the shortage payment over the taxable 
 42.23  property of the taxing district of the employing unit if the 
 42.24  employing unit is supported by property taxes, or to the 
 42.25  commissioner of finance, who shall deduct the amount from any 
 42.26  state aid or appropriation amount applicable to the employing 
 42.27  unit if the employing unit is not supported by property taxes.  
 42.28     (c) (3) Payment may not be made for shortages in member 
 42.29  deductions on salary earned prior to before July 1, 1957, for 
 42.30  shortages in member deductions on salary paid or payable under 
 42.31  paragraph (b), or for shortages in member deductions for persons 
 42.32  employed by the Minnesota State Colleges and Universities system 
 42.33  in a faculty position or in an eligible unclassified 
 42.34  administrative position and whose employment was less than 25 
 42.35  percent of a full academic year, exclusive of the summer 
 42.36  session, for the applicable institution that exceeds the most 
 43.1   recent 36 months. 
 43.2      (b) For a person who is employed by the Minnesota State 
 43.3   Colleges and Universities system in a faculty position or in an 
 43.4   eligible unclassified administrative position and whose 
 43.5   employment was less than 25 percent of a full academic year, 
 43.6   exclusive of the summer session, for the applicable institution, 
 43.7   upon the person's election under section 354B.21 of retirement 
 43.8   coverage under this chapter, the shortage in member deductions 
 43.9   on the salary for employment by the Minnesota State Colleges and 
 43.10  Universities system institution of less than 25 percent of a 
 43.11  full academic year, exclusive of the summer session, for the 
 43.12  applicable institution for the most recent 36 months and the 
 43.13  associated employer contributions must be paid by the Minnesota 
 43.14  State Colleges and Universities system institution, plus annual 
 43.15  compound interest at the rate of 8.5 percent from the end of the 
 43.16  fiscal year in which the shortage occurred to the end of the 
 43.17  month in which the Teachers Retirement Association coverage 
 43.18  election is made.  If the shortage payment is not made by the 
 43.19  institution within 60 days of notification, the executive 
 43.20  director shall certify the amount of the shortage payment to the 
 43.21  commissioner of finance, who shall deduct the amount from any 
 43.22  state appropriation to the system.  An individual electing 
 43.23  coverage under this paragraph shall repay the amount of the 
 43.24  shortage in member deductions, plus interest, through deduction 
 43.25  from salary or compensation payments within the first year of 
 43.26  employment after the election under section 354B.21, subject to 
 43.27  the limitations in section 16D.16.  The Minnesota State Colleges 
 43.28  and Universities system may use any means available to recover 
 43.29  amounts which were not recovered through deductions from salary 
 43.30  or compensation payments.  No payment of the shortage in member 
 43.31  deductions under this paragraph may be made for a period longer 
 43.32  than the most recent 36 months. 
 43.33     Sec. 3.  Minnesota Statutes 2002, section 354B.23, 
 43.34  subdivision 1, is amended to read: 
 43.35     Subdivision 1.  [MEMBER CONTRIBUTION RATE.] (a) Except as 
 43.36  provided in paragraph (b), The member contribution rate for 
 44.1   participants in the individual retirement account plan is 4.5 
 44.2   percent of salary. 
 44.3      (b) For participants in the individual retirement account 
 44.4   plan who were otherwise eligible to elect retirement coverage in 
 44.5   the state unclassified employees retirement program, the member 
 44.6   contribution rate is the rate specified in section 352D.04, 
 44.7   subdivision 2, paragraph (a). 
 44.8      Sec. 4.  Minnesota Statutes 2002, section 354B.32, is 
 44.9   amended to read: 
 44.10     354B.32 [TRANSFER OF FUNDS TO IRAP.] 
 44.11     A participant in the individual retirement account plan 
 44.12  established in this chapter who has less than ten years of 
 44.13  allowable service under the Teachers Retirement Association or 
 44.14  the a teachers retirement fund association, whichever applies, 
 44.15  may elect to transfer an amount equal to the participant's 
 44.16  accumulated member contributions to the Teachers Retirement 
 44.17  Association or the applicable teachers retirement fund 
 44.18  association, plus compound interest at the rate of six percent 
 44.19  per annum, to the individual retirement account plan.  The 
 44.20  transfers are irrevocable fund to fund fund-to-fund transfers, 
 44.21  and, in no event, may the participant receive direct payment of 
 44.22  the money transferred prior to retirement before the termination 
 44.23  of employment.  If a participant elects the contribution 
 44.24  transfer, all of the participant's allowable and formula service 
 44.25  credit in the Teachers Retirement Association or the teachers 
 44.26  retirement fund association associated with the transferred 
 44.27  amount is forfeited. 
 44.28     The executive director of the teachers retirement 
 44.29  association and the chief administrative officers of the 
 44.30  teachers retirement fund associations, in cooperation with the 
 44.31  chancellor of the Minnesota State Colleges and Universities 
 44.32  system, shall notify participants who are eligible to transfer 
 44.33  of their right to transfer and the amount that they are eligible 
 44.34  to transfer, and shall, upon request, provide forms to implement 
 44.35  the transfer.  The chancellor of the Minnesota State Colleges 
 44.36  and Universities system shall assist the Teachers Retirement 
 45.1   Association and the teachers retirement fund associations in 
 45.2   developing transfer forms and in implementing the transfers.  
 45.3      Authority to elect a transfer under this section expires on 
 45.4   July 1, 2004. 
 45.5      Sec. 5.  [EFFECTIVE DATE; RETROACTIVE APPLICATION.] 
 45.6      (a) Section 2 is effective on July 1, 2004. 
 45.7      (b) Section 2 applies to shortages in member deductions 
 45.8   that occurred before the effective date of the section. 
 45.9      (c) Sections 1, 3, and 4 are effective on July 1, 2004. 
 45.10                             ARTICLE 6
 45.11                REPORTING AND INFORMATION PROVISION
 45.12     Section 1.  Minnesota Statutes 2002, section 354.07, 
 45.13  subdivision 9, is amended to read: 
 45.14     Subd. 9.  [INFORMATION DISTRIBUTION.] All school districts, 
 45.15  the Minnesota State Colleges and Universities, community 
 45.16  colleges and other employers of members of the association are 
 45.17  obligated to distribute to their employees ballots for the 
 45.18  election of members to the board of trustees, pamphlets, 
 45.19  brochures, documents or any other material containing 
 45.20  association information which are prepared by the executive 
 45.21  director or the board and are delivered to the employers for 
 45.22  distribution. 
 45.23     Sec. 2.  Minnesota Statutes 2002, section 354.52, 
 45.24  subdivision 4a, is amended to read: 
 45.25     Subd. 4a.  [MEMBER DATA REPORTING REQUIREMENTS.] (a) An 
 45.26  employing unit must initially provide the member data specified 
 45.27  in paragraph (b) or any of that data not previously provided to 
 45.28  the association for payroll warrants dated after June 30, 1995, 
 45.29  in a format prescribed by the executive director.  An employing 
 45.30  unit must provide the member data specified in paragraph (b) in 
 45.31  a format prescribed by the executive director.  Data changes and 
 45.32  the dates of those changes under this subdivision must be 
 45.33  reported to the association in a format prescribed by the 
 45.34  executive director on an ongoing basis within 14 calendar days 
 45.35  after the date of the end of the payroll cycle in which they 
 45.36  occur.  These data changes must be reported with the payroll 
 46.1   cycle data under subdivision 4b. 
 46.2      (b) Data on the member includes:  
 46.3      (1) legal name, address, date of birth, association member 
 46.4   number, employer-assigned employee number, and social security 
 46.5   number; 
 46.6      (2) association status, including, but not limited to, 
 46.7   basic, coordinated, exempt annuitant, exempt technical college 
 46.8   teacher, and exempt independent contractor or consultant; 
 46.9      (3) employment status, including, but not limited to, full 
 46.10  time, part time, intermittent, substitute, or part-time 
 46.11  mobility; 
 46.12     (4) employment position, including, but not limited to, 
 46.13  teacher, superintendent, principal, administrator, or other; 
 46.14     (5) employment activity, including, but not limited to, 
 46.15  hire, termination, resumption of employment, disability, or 
 46.16  death; 
 46.17     (6) leaves of absence; 
 46.18     (7) county district number assigned by the association for 
 46.19  the employing unit; 
 46.20     (8) data center identification number, if applicable; and 
 46.21     (9) gender; 
 46.22     (10) position code; and 
 46.23     (11) other information as may be required by the executive 
 46.24  director. 
 46.25     Sec. 3.  Minnesota Statutes 2002, section 354.52, is 
 46.26  amended by adding a subdivision to read: 
 46.27     Subd. 4c.  [MNSCU SERVICE CREDIT REPORTING.] For all 
 46.28  part-time service rendered on or after July 1, 2004, the service 
 46.29  credit reporting requirement in subdivision 4b for all part-time 
 46.30  employees of the Minnesota State Colleges and Universities 
 46.31  system must be met by the Minnesota State Colleges and 
 46.32  Universities system reporting to the association on or before 
 46.33  July 31 of each year the final calculation of each part-time 
 46.34  member's service credit for the immediately preceding fiscal 
 46.35  year based on the employee's assignments for the fiscal year. 
 46.36     Sec. 4.  Minnesota Statutes 2002, section 354.52, 
 47.1   subdivision 6, is amended to read: 
 47.2      Subd. 6.  [NONCOMPLIANCE CONSEQUENCES.] An employing unit 
 47.3   that does not comply with the reporting requirements under this 
 47.4   section shall subdivision 2a, 4a, or 4b must pay a fine of $5 
 47.5   per calendar day until the association receives the required 
 47.6   data. 
 47.7      Sec. 5.  [LEGISLATIVE COMMISSION ON PENSIONS AND 
 47.8   RETIREMENT; ACTUARIAL SERVICES BILLING TO THIRD PARTIES.] 
 47.9      Notwithstanding any provision of law to the contrary, the 
 47.10  Legislative Commission on Pensions and Retirement may bill third 
 47.11  parties for actuarial services performed for their benefit under 
 47.12  its contract with its consulting actuary under Minnesota 
 47.13  Statutes, section 3.85, may deposit the actuarial services 
 47.14  reimbursements from those third parties to the credit of the 
 47.15  commission, and those deposited reimbursements are 
 47.16  reappropriated to the commission. 
 47.17     Sec. 6.  [EFFECTIVE DATE.] 
 47.18     (a) Sections 1 to 4 are effective on July 1, 2004. 
 47.19     (b) Section 5 is effective retroactively to July 1, 2003, 
 47.20  and expires when the duty of the Legislative Commission on 
 47.21  Pensions and Retirement to retain a consulting actuary to 
 47.22  perform annual actuarial valuations of retirement plans 
 47.23  terminates. 
 47.24                             ARTICLE 7
 47.25                   RETIREMENT ANNUITY PROVISIONS
 47.26     Section 1.  Minnesota Statutes 2002, section 352.86, 
 47.27  subdivision 1, is amended to read: 
 47.28     Subdivision 1.  [ELIGIBILITY; RETIREMENT ANNUITY.] A person 
 47.29  who is employed by the Department of Transportation in the civil 
 47.30  service employment classification of aircraft pilot or chief 
 47.31  pilot who is covered by the general employee retirement plan of 
 47.32  the system under section 352.01, subdivision 23, who elects this 
 47.33  special retirement coverage under subdivision 3, who is 
 47.34  prohibited from performing the duties of aircraft pilot or chief 
 47.35  pilot after reaching age 62 65 by a rule policy adopted by the 
 47.36  commissioner of transportation, and who terminates employment as 
 48.1   a state employee on reaching that on or after age 62 but prior 
 48.2   to normal retirement age is entitled, upon application, to a 
 48.3   retirement annuity computed in accordance with under section 
 48.4   352.115, subdivisions 2 and 3, without any reduction for early 
 48.5   retirement under section 352.116, subdivision 1. 
 48.6      Sec. 2.  Minnesota Statutes 2002, section 353.37, is 
 48.7   amended by adding a subdivision to read: 
 48.8      Subd. 1b.  [RETIREMENT AGE.] For purposes of this section, 
 48.9   "retirement age" means retirement age as defined in United 
 48.10  States Code, title 42, section 416(l). 
 48.11     Sec. 3.  Minnesota Statutes 2002, section 353.37, 
 48.12  subdivision 3, is amended to read: 
 48.13     Subd. 3.  [REDUCTION OF ANNUITY.] The association shall 
 48.14  reduce the amount of the annuity as follows: 
 48.15     (a) for of a person who has not reached normal the 
 48.16  retirement age, by one-half of the amount in excess of the 
 48.17  applicable reemployment income maximum under subdivision 1;. 
 48.18     (b) for a person who has reached normal retirement age, but 
 48.19  has not reached age 70, one-third of the amount in excess of the 
 48.20  applicable reemployment income maximum under subdivision 1; 
 48.21     (c) for a person who has reached age 70, or for salary 
 48.22  earned through service in an elected office, there is no 
 48.23  reduction upon reemployment, regardless of income. 
 48.24  There is no reduction upon reemployment, regardless of income, 
 48.25  for a person who has reached the retirement age. 
 48.26     Sec. 4.  Minnesota Statutes 2002, section 354.44, 
 48.27  subdivision 4, is amended to read: 
 48.28     Subd. 4.  [RETIREMENT ANNUITY ACCRUAL DATE.] (a) An annuity 
 48.29  payment begins to accrue, providing provided that the age and 
 48.30  service requirements under subdivision 1 are satisfied, after 
 48.31  the termination of teaching service, or after the application 
 48.32  for retirement has been filed with the board, whichever is 
 48.33  later, as follows: 
 48.34     (1) on the 16th day of the month of termination or filing 
 48.35  if the termination or filing occurs on or before the 15th day of 
 48.36  the month; 
 49.1      (2) on the first day of the month following the month of 
 49.2   termination or filing if the termination or filing occurs on or 
 49.3   after the 16th day of the month; 
 49.4      (3) on July 1 for all school principals and other 
 49.5   administrators who receive a full annual contract salary during 
 49.6   the fiscal year for performance of a full year's contract 
 49.7   duties; or 
 49.8      (4) a later date to be either the first or the 16th day of 
 49.9   a month occurring within the six-month period immediately 
 49.10  following the termination of teaching service as specified under 
 49.11  paragraph (b) by the member. 
 49.12     (b) If an application for retirement is filed with the 
 49.13  board during the six-month period that occurs immediately 
 49.14  following the termination of teaching service, the annuity may 
 49.15  begin to accrue as if the application for retirement had been 
 49.16  filed with the board on the date teaching service terminated or 
 49.17  a later date under paragraph (a), clause (4).  An annuity must 
 49.18  not begin to accrue more than one month before the date of final 
 49.19  salary receipt. 
 49.20     Sec. 5.  Minnesota Statutes 2002, section 354.44, 
 49.21  subdivision 5, is amended to read: 
 49.22     Subd. 5.  [RESUMPTION OF TEACHING SERVICE AFTER 
 49.23  RETIREMENT.] (a) Any person who retired under the provisions of 
 49.24  this chapter and has thereafter resumed teaching in any employer 
 49.25  unit to which this chapter applies is eligible to continue to 
 49.26  receive payments in accordance with the annuity except that 
 49.27  annuity payments must be reduced during the calendar year 
 49.28  immediately following any calendar year in which the person's 
 49.29  income from the teaching service is in an amount greater than 
 49.30  the annual maximum earnings allowable for that age for the 
 49.31  continued receipt of full benefit amounts monthly under the 
 49.32  federal old age, survivors and disability insurance program as 
 49.33  set by the secretary of health and human services under United 
 49.34  States Code, title 42, section 403.  The amount of the reduction 
 49.35  must be one-half of the amount in excess of the applicable 
 49.36  reemployment income maximum specified in this subdivision and 
 50.1   must be deducted from the annuity payable for the calendar year 
 50.2   immediately following the calendar year in which the excess 
 50.3   amount was earned.  If the person has not yet reached the 
 50.4   minimum age for the receipt of Social Security benefits, the 
 50.5   maximum earnings for the person must be equal to the annual 
 50.6   maximum earnings allowable for the minimum age for the receipt 
 50.7   of Social Security benefits.  
 50.8      (b) If the person is retired for only a fractional part of 
 50.9   the calendar year during the initial year of retirement, the 
 50.10  maximum reemployment income specified in this subdivision must 
 50.11  be prorated for that calendar year.  
 50.12     (c) After a person has reached the Social Security full 
 50.13  retirement age of 70, no reemployment income maximum is 
 50.14  applicable regardless of the amount of income. 
 50.15     (d) The amount of the retirement annuity reduction must be 
 50.16  handled or disposed of as provided in section 356.47. 
 50.17     (e) For the purpose of this subdivision, income from 
 50.18  teaching service includes, but is not limited to:  
 50.19     (1) all income for services performed as a consultant or an 
 50.20  independent contractor for an employer unit covered by the 
 50.21  provisions of this chapter; and 
 50.22     (2) the greater of either the income received or an amount 
 50.23  based on the rate paid with respect to an administrative 
 50.24  position, consultant, or independent contractor in an employer 
 50.25  unit with approximately the same number of pupils and at the 
 50.26  same level as the position occupied by the person who resumes 
 50.27  teaching service.  
 50.28     Sec. 6.  Minnesota Statutes 2002, section 354.44, 
 50.29  subdivision 6, is amended to read: 
 50.30     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
 50.31  ANNUITY.] (1) (a) The formula retirement annuity must be 
 50.32  computed in accordance with the applicable provisions of the 
 50.33  formulas stated in clause (2) or (4) paragraph (b) or (d) on the 
 50.34  basis of each member's average salary for the period of the 
 50.35  member's formula service credit.  
 50.36     For all years of formula service credit, "average salary," 
 51.1   for the purpose of determining the member's retirement annuity, 
 51.2   means the average salary upon which contributions were made and 
 51.3   upon which payments were made to increase the salary limitation 
 51.4   provided in Minnesota Statutes 1971, section 354.511, for the 
 51.5   highest five successive years of formula service credit 
 51.6   provided, however, that such "average salary" shall not include 
 51.7   any more than the equivalent of 60 monthly salary payments.  
 51.8   Average salary must be based upon all years of formula service 
 51.9   credit if this service credit is less than five years. 
 51.10     (2) (b) This clause paragraph, in conjunction with clause 
 51.11  (3) paragraph (c), applies to a person who first became a member 
 51.12  of the association or a member of a pension fund listed in 
 51.13  section 356.30, subdivision 3, before July 1, 1989, 
 51.14  unless clause (4) paragraph (d), in conjunction with clause 
 51.15  (5) paragraph (e), produces a higher annuity amount, in which 
 51.16  case clause (4) paragraph (d) applies.  The average salary as 
 51.17  defined in clause (1) paragraph (a), multiplied by the following 
 51.18  percentages per year of formula service credit shall determine 
 51.19  the amount of the annuity to which the member qualifying 
 51.20  therefor is entitled: 
 51.21                         Coordinated Member   Basic Member
 51.22  Each year of service     the percent        the percent
 51.23   during first ten        specified in       specified in
 51.24                           section 356.315,   section 356.315,
 51.25                           subdivision 1,     subdivision 3,
 51.26                           per year           per year
 51.27  Each year of service     the percent        the percent
 51.28   thereafter              specified in       specified in
 51.29                           section 356.315,   section 356.315,
 51.30                           subdivision 2,     subdivision 4,
 51.31                           per year           per year
 51.32     (3) (c)(i) This clause paragraph applies only to a person 
 51.33  who first became a member of the association or a member of a 
 51.34  pension fund listed in section 356.30, subdivision 3, before 
 51.35  July 1, 1989, and whose annuity is higher when calculated 
 51.36  under clause (2) paragraph (b), in conjunction with this clause 
 52.1   paragraph than when calculated under clause (4) paragraph (d), 
 52.2   in conjunction with clause (5) paragraph (e). 
 52.3      (ii) Where any member retires prior to normal retirement 
 52.4   age under a formula annuity, the member shall be paid a 
 52.5   retirement annuity in an amount equal to the normal annuity 
 52.6   provided in clause (2) paragraph (b) reduced by one-quarter of 
 52.7   one percent for each month that the member is under normal 
 52.8   retirement age at the time of retirement except that for any 
 52.9   member who has 30 or more years of allowable service credit, the 
 52.10  reduction shall be applied only for each month that the member 
 52.11  is under age 62. 
 52.12     (iii) Any member whose attained age plus credited allowable 
 52.13  service totals 90 years is entitled, upon application, to a 
 52.14  retirement annuity in an amount equal to the normal annuity 
 52.15  provided in clause (2) paragraph (b), without any reduction by 
 52.16  reason of early retirement. 
 52.17     (4) (d) This clause paragraph applies to a member who has 
 52.18  become at least 55 years old and first became a member of the 
 52.19  association after June 30, 1989, and to any other member who has 
 52.20  become at least 55 years old and whose annuity amount when 
 52.21  calculated under this clause paragraph and in conjunction with 
 52.22  clause (5) paragraph (e), is higher than it is when calculated 
 52.23  under clause (2) paragraph (b), in conjunction with clause 
 52.24  (3) paragraph (c).  The average salary, as defined in clause (1) 
 52.25  paragraph (a) multiplied by the percent specified by section 
 52.26  356.315, subdivision 4, for each year of service for a basic 
 52.27  member and by the percent specified in section 356.315, 
 52.28  subdivision 2, for each year of service for a coordinated member 
 52.29  shall determine the amount of the retirement annuity to which 
 52.30  the member is entitled. 
 52.31     (5) (e) This clause paragraph applies to a person who has 
 52.32  become at least 55 years old and first becomes a member of the 
 52.33  association after June 30, 1989, and to any other member who has 
 52.34  become at least 55 years old and whose annuity is higher when 
 52.35  calculated under clause (4) paragraph (d) in conjunction with 
 52.36  this clause paragraph than when calculated under clause 
 53.1   (2) paragraph (b), in conjunction with clause (3) paragraph 
 53.2   (c).  An employee who retires under the formula annuity before 
 53.3   the normal retirement age shall be paid the normal annuity 
 53.4   provided in clause (4) paragraph (d) reduced so that the reduced 
 53.5   annuity is the actuarial equivalent of the annuity that would be 
 53.6   payable to the employee if the employee deferred receipt of the 
 53.7   annuity and the annuity amount were augmented at an annual rate 
 53.8   of three percent compounded annually from the day the annuity 
 53.9   begins to accrue until the normal retirement age. 
 53.10     (f) No retirement annuity is payable to a former 
 53.11  superintendent, assistant superintendent, or principal unless 
 53.12  and until the salary figures used in computing the highest five 
 53.13  successive years average salary under paragraph (a) have been 
 53.14  audited by the Teachers Retirement Association and determined by 
 53.15  the executive director to comply with the requirements and 
 53.16  limitations of section 354.05, subdivisions 35 and 35a. 
 53.17     Sec. 7.  Minnesota Statutes 2002, section 490.121, 
 53.18  subdivision 10, is amended to read: 
 53.19     Subd. 10.  [EARLY RETIREMENT DATE.] "Early retirement date" 
 53.20  means the last day of any month after a judge attains the age of 
 53.21  62 60 until the normal retirement date. 
 53.22     Sec. 8.  [PERA-POLICE AND FIRE; TEMPORARY EXEMPTION FROM 
 53.23  REEMPLOYED ANNUITANT EARNINGS LIMITATIONS.] 
 53.24     Notwithstanding any provision of Minnesota Statutes, 
 53.25  section 353.37, to the contrary, a person who is receiving a 
 53.26  retirement annuity from the public employees police and fire 
 53.27  plan and who is employed as a sworn peace officer by the 
 53.28  Metropolitan Airports Commission is exempt from the limitation 
 53.29  on reemployed annuitant earnings for the period January 1, 2004, 
 53.30  until June 30, 2007. 
 53.31     Sec. 9.  [TRA; REPORT ON CERTAIN SALARY AUDITS.] 
 53.32     (a) The executive director shall report to the chair of the 
 53.33  Legislative Commission on Pensions and Retirement, the chair of 
 53.34  the Committee on Governmental Operations and Veterans Affairs 
 53.35  Policy of the House of Representatives, and the chair of the 
 53.36  State and Local Government Operations Committee of the Senate on 
 54.1   the number of superintendents, assistant superintendents, and 
 54.2   principals who retired during the most recent calendar year, the 
 54.3   number of superintendents, assistant superintendents, and 
 54.4   principals where the preretirement salary audit under Minnesota 
 54.5   Statutes, section 354.44, subdivision 6, paragraph (f), 
 54.6   disclosed an impermissible salary inclusion amount, the school 
 54.7   district or districts in which impermissible salary inclusions 
 54.8   occurred, the average amount of the impermissible salary 
 54.9   inclusions where there were impermissible salary inclusions, and 
 54.10  the range of impermissible salary inclusions. 
 54.11     (b) When a report is due, the report must be filed on or 
 54.12  before February 15. 
 54.13     (c) Reports under this section must be made for calendar 
 54.14  years 2004 and 2005.  A report under this section also must be 
 54.15  filed for calendar years 2006 and 2007 if the report for 
 54.16  calendar year 2005 indicates that there were impermissible 
 54.17  salary inclusions that occurred during the calendar year. 
 54.18     Sec. 10.  [EFFECTIVE DATE.] 
 54.19     (a) Section 1 is effective on the day following final 
 54.20  enactment 
 54.21     (b) Sections 2, 3, 4, 5, 6, and 7 are effective on July 1, 
 54.22  2004. 
 54.23     (c) Section 8 is effective on the day following final 
 54.24  enactment and applies retroactively to January 1, 2004.  
 54.25                             ARTICLE 8
 54.26                   DISABILITY BENEFIT PROVISIONS
 54.27     Section 1.  Minnesota Statutes 2002, section 352.113, 
 54.28  subdivision 4, is amended to read: 
 54.29     Subd. 4.  [MEDICAL OR PSYCHOLOGICAL EXAMINATIONS; 
 54.30  AUTHORIZATION FOR PAYMENT OF BENEFIT.] (a) An applicant shall 
 54.31  provide medical, chiropractic, or psychological evidence to 
 54.32  support an application for total and permanent disability.  
 54.33     (b) The director shall have the employee examined by at 
 54.34  least one additional licensed chiropractor, physician, or 
 54.35  psychologist designated by the medical adviser.  The 
 54.36  chiropractors, physicians, or psychologists shall make written 
 55.1   reports to the director concerning the employee's disability 
 55.2   including medical expert opinions as to whether the employee is 
 55.3   permanently and totally disabled within the meaning of section 
 55.4   352.01, subdivision 17.  
 55.5      (c) The director shall also obtain written certification 
 55.6   from the employer stating whether the employment has ceased or 
 55.7   whether the employee is on sick leave of absence because of a 
 55.8   disability that will prevent further service to the employer and 
 55.9   as a consequence the employee is not entitled to compensation 
 55.10  from the employer.  
 55.11     (d) The medical adviser shall consider the reports of the 
 55.12  physicians, psychologists, and chiropractors and any other 
 55.13  evidence supplied by the employee or other interested parties.  
 55.14  If the medical adviser finds the employee totally and 
 55.15  permanently disabled, the adviser shall make appropriate 
 55.16  recommendation to the director in writing together with the date 
 55.17  from which the employee has been totally disabled.  The director 
 55.18  shall then determine if the disability occurred within 180 days 
 55.19  of filing the application, while still in the employment of the 
 55.20  state, and the propriety of authorizing payment of a disability 
 55.21  benefit as provided in this section.  
 55.22     (e) A terminated employee may apply for a disability 
 55.23  benefit within 180 days of termination as long as the disability 
 55.24  occurred while in the employment of the state.  The fact that an 
 55.25  employee is placed on leave of absence without compensation 
 55.26  because of disability does not bar that employee from receiving 
 55.27  a disability benefit.  
 55.28     (f) Unless the payment of a disability benefit has 
 55.29  terminated because the employee is no longer totally disabled, 
 55.30  or because the employee has reached normal retirement age as 
 55.31  provided in this section, the disability benefit shall must 
 55.32  cease with the last payment received by the disabled employee or 
 55.33  which had accrued during the lifetime of the employee unless 
 55.34  there is a spouse surviving;.  In that event, the surviving 
 55.35  spouse is entitled to the disability benefit for the calendar 
 55.36  month in which the disabled employee died. 
 56.1      Sec. 2.  Minnesota Statutes 2002, section 352.113, 
 56.2   subdivision 6, is amended to read: 
 56.3      Subd. 6.  [REGULAR MEDICAL OR PSYCHOLOGICAL EXAMINATIONS.] 
 56.4   At least once each year during the first five years following 
 56.5   the allowance of a disability benefit to any employee, and at 
 56.6   least once in every three-year period thereafter, the director 
 56.7   may require any disabled employee to undergo a medical, 
 56.8   chiropractic, or psychological examination.  The examination 
 56.9   must be made at the place of residence of the employee, or at 
 56.10  any place mutually agreed upon, by a physician or physicians an 
 56.11  expert or experts designated by the medical adviser and engaged 
 56.12  by the director.  If any examination indicates to the medical 
 56.13  adviser that the employee is no longer permanently and totally 
 56.14  disabled, or is engaged in or can engage in a gainful 
 56.15  occupation, payments of the disability benefit by the fund must 
 56.16  be discontinued.  The payments shall discontinue must be 
 56.17  discontinued as soon as the employee is reinstated to the 
 56.18  payroll following sick leave, but in no case shall may payment 
 56.19  be made for more than 60 days after the medical adviser finds 
 56.20  that the employee is no longer permanently and totally disabled. 
 56.21     Sec. 3.  Minnesota Statutes 2002, section 352.113, is 
 56.22  amended by adding a subdivision to read: 
 56.23     Subd. 7a.  [TEMPORARY REEMPLOYMENT BENEFIT REDUCTION 
 56.24  WAIVER.] A reduction in benefits under subdivision 7, or a 
 56.25  termination of benefits due to the disabled employee resuming a 
 56.26  gainful occupation from which earnings are equal to or more than 
 56.27  the employee's salary at the date of disability or the salary 
 56.28  currently paid for similar positions does not apply until six 
 56.29  months after the individual returns to a gainful occupation. 
 56.30     Sec. 4.  Minnesota Statutes 2002, section 352.113, 
 56.31  subdivision 8, is amended to read: 
 56.32     Subd. 8.  [REFUSAL OF EXAMINATION.] If a disabled employee 
 56.33  refuses to submit to a medical an expert examination as 
 56.34  required, payments by the fund must be discontinued and the 
 56.35  director shall revoke all rights of the employee in any 
 56.36  disability benefit. 
 57.1      Sec. 5.  Minnesota Statutes 2002, section 352.95, 
 57.2   subdivision 1, is amended to read: 
 57.3      Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 57.4   correctional employee who becomes disabled and who is expected 
 57.5   to be physically or mentally unfit to perform the duties of the 
 57.6   position for at least one year as a direct result of an injury, 
 57.7   sickness, or other disability that incurred in or arising arose 
 57.8   out of any act of duty that makes the employee physically or 
 57.9   mentally unable to perform the duties, is entitled to a 
 57.10  disability benefit.  The disability benefit may be based on 
 57.11  covered correctional service only.  The benefit amount must 
 57.12  equal is 50 percent of the average salary defined in section 
 57.13  352.93, plus an additional percent equal to that specified in 
 57.14  section 356.315, subdivision 5, for each year of covered 
 57.15  correctional service in excess of 20 years, ten months, prorated 
 57.16  for completed months. 
 57.17     Sec. 6.  Minnesota Statutes 2002, section 352.95, 
 57.18  subdivision 2, is amended to read: 
 57.19     Subd. 2.  [NON-JOB-RELATED DISABILITY.] Any A covered 
 57.20  correctional employee who, after rendering at least one year of 
 57.21  covered correctional service, becomes disabled and who is 
 57.22  expected to be physically or mentally unfit to perform the 
 57.23  duties of the position for at least one year because of sickness 
 57.24  or injury occurring that occurred while not engaged in covered 
 57.25  employment, is entitled to a disability benefit based on covered 
 57.26  correctional service only.  The disability benefit must be 
 57.27  computed as provided in section 352.93, subdivisions 1 and 2, 
 57.28  and must be computed as though the employee had at least 15 
 57.29  years of covered correctional service. 
 57.30     Sec. 7.  Minnesota Statutes 2002, section 352.95, 
 57.31  subdivision 4, is amended to read: 
 57.32     Subd. 4.  [MEDICAL OR PSYCHOLOGICAL EVIDENCE.] (a) An 
 57.33  applicant shall provide medical, chiropractic, or psychological 
 57.34  evidence to support an application for disability benefits.  The 
 57.35  director shall have the employee examined by at least one 
 57.36  additional licensed physician, chiropractor, or psychologist who 
 58.1   is designated by the medical adviser.  The physicians, 
 58.2   chiropractors, or psychologists with respect to a mental 
 58.3   impairment, shall make written reports to the director 
 58.4   concerning the question of the employee's disability, 
 58.5   including medical their expert opinions as to whether the 
 58.6   employee is disabled within the meaning of this section.  The 
 58.7   director shall also obtain written certification from the 
 58.8   employer stating whether or not the employee is on sick leave of 
 58.9   absence because of a disability that will prevent further 
 58.10  service to the employer, and as a consequence, the employee is 
 58.11  not entitled to compensation from the employer.  
 58.12     (b) If, on considering the physicians' reports by the 
 58.13  physicians, chiropractors, or psychologists and any other 
 58.14  evidence supplied by the employee or others, the medical adviser 
 58.15  finds the employee disabled within the meaning of this section, 
 58.16  the advisor shall make the appropriate recommendation to the 
 58.17  director, in writing, together with the date from which the 
 58.18  employee has been disabled.  The director shall then determine 
 58.19  the propriety of authorizing payment of a disability benefit as 
 58.20  provided in this section.  
 58.21     (c) Unless the payment of a disability benefit has 
 58.22  terminated because the employee is no longer disabled, or 
 58.23  because the employee has reached either age 65 or the five-year 
 58.24  anniversary of the effective date of the disability benefit, 
 58.25  whichever is later, the disability benefit shall must cease with 
 58.26  the last payment which was received by the disabled employee or 
 58.27  which had accrued during the employee's lifetime.  While 
 58.28  disability benefits are paid, the director has the right, at 
 58.29  reasonable times, to require the disabled employee to submit 
 58.30  proof of the continuance of the disability claimed.  If any 
 58.31  examination indicates to the medical adviser that the employee 
 58.32  is no longer disabled, the disability payment must be 
 58.33  discontinued upon the person's reinstatement to state service or 
 58.34  within 60 days of the finding, whichever is sooner.  
 58.35     Sec. 8.  Minnesota Statutes 2002, section 352B.10, 
 58.36  subdivision 1, is amended to read: 
 59.1      Subdivision 1.  [INJURIES,; PAYMENT AMOUNTS.] Any A member 
 59.2   who becomes disabled and who is expected to be physically or 
 59.3   mentally unfit to perform duties for at least one year as a 
 59.4   direct result of an injury, sickness, or other disability that 
 59.5   incurred in or arising arose out of any act of duty, shall is 
 59.6   entitled to receive disability benefits while disabled.  The 
 59.7   benefits must be paid in monthly installments.  The benefit is 
 59.8   an amount equal to the member's average monthly salary 
 59.9   multiplied by 60 percent, plus an additional percent equal to 
 59.10  that specified in section 356.315, subdivision 6, for each year 
 59.11  and pro rata for completed months of service in excess of 20 
 59.12  years, if any. 
 59.13     Sec. 9.  Minnesota Statutes 2002, section 352B.10, 
 59.14  subdivision 2, is amended to read: 
 59.15     Subd. 2.  [DISABLED WHILE NOT ON DUTY.] If a member 
 59.16  terminates employment after with at least one year of service 
 59.17  because of sickness or injury occurring while not on duty and 
 59.18  not engaged in state work entitling the member to membership, 
 59.19  and the member becomes disabled and is expected to be physically 
 59.20  or mentally unfit to perform the duties of the position for at 
 59.21  least one year because of sickness or injury occurring that 
 59.22  occurred while not engaged in covered employment, the member 
 59.23  individual is entitled to disability benefits.  The benefit must 
 59.24  be in the same amount and computed in the same way as if the 
 59.25  member individual were 55 years old at the date of disability 
 59.26  and the annuity were paid was payable under section 352B.08.  If 
 59.27  a disability under this clause subdivision occurs after one year 
 59.28  of service but before 15 years of service, the disability 
 59.29  benefit must be computed as though the member individual had 
 59.30  credit for 15 years of service. 
 59.31     Sec. 10.  Minnesota Statutes 2002, section 352B.10, 
 59.32  subdivision 3, is amended to read: 
 59.33     Subd. 3.  [ANNUAL AND SICK LEAVE; WORK AT LOWER PAY.] No 
 59.34  member shall is entitled to receive any a disability benefit 
 59.35  payment when the member has unused annual leave or sick leave, 
 59.36  or under any other circumstances, when, during the period of 
 60.1   disability, there has been no impairment of salary.  Should If 
 60.2   the member or former member resume disabilitant resumes gainful 
 60.3   work employment, the disability benefit must be continued in an 
 60.4   amount which, when added to current earnings, does not exceed 
 60.5   the salary rate received of by the person at the date of 
 60.6   disability as, which must be adjusted over time by the same 
 60.7   percentage increase in United States average wages used by the 
 60.8   Social Security Administration in calculating average indexed 
 60.9   monthly earnings for the old age, survivors, and disability 
 60.10  insurance programs for the same period. 
 60.11     Sec. 11.  Minnesota Statutes 2002, section 352B.10, 
 60.12  subdivision 4, is amended to read: 
 60.13     Subd. 4.  [PROOF OF DISABILITY.] (a) No disability benefit 
 60.14  payment shall benefits may be made except upon paid unless 
 60.15  adequate proof is furnished to the executive director of the 
 60.16  existence of the disability.  While disability benefits are 
 60.17  being paid 
 60.18     (b) Adequate proof of a disability must include a written 
 60.19  expert report by a licensed physician, by a licensed 
 60.20  chiropractor, or with respect to a mental impairment, by a 
 60.21  licensed psychologist. 
 60.22     (c) Following the commencement of benefit payments, 
 60.23  the executive director has the right, at reasonable times, to 
 60.24  require the disabled former member disabilitant to submit proof 
 60.25  of the continuance of the disability claimed.  
 60.26     Sec. 12.  Minnesota Statutes 2002, section 352B.10, 
 60.27  subdivision 5, is amended to read: 
 60.28     Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 60.29  disabilitant may, in lieu of survivorship coverage under section 
 60.30  352B.11, subdivision 2, choose the normal disability benefit or 
 60.31  an optional annuity as provided in section 352B.08, subdivision 
 60.32  3.  The choice of an optional annuity must be made in writing, 
 60.33  on a form prescribed by the executive director, and must be made 
 60.34  before the commencement of the payment of the disability 
 60.35  benefit, or within 90 days of attaining before reaching age 65 
 60.36  or before reaching the five-year anniversary of the effective 
 61.1   date of the disability benefit, whichever is later.  It The 
 61.2   optional annuity is effective on the date on which the 
 61.3   disability benefit begins to accrue, or the month following the 
 61.4   attainment of age 65 or following the five-year anniversary of 
 61.5   the effective date of the disability benefit, whichever is later.
 61.6      Sec. 13.  Minnesota Statutes 2002, section 352B.105, is 
 61.7   amended to read: 
 61.8      352B.105 [TERMINATION OF DISABILITY BENEFITS.] 
 61.9      Disability benefits payable under section 352B.10 shall 
 61.10  must terminate at on the transfer date, which is the end of the 
 61.11  month in which the beneficiary disabilitant becomes 65 years old 
 61.12  or the five-year anniversary of the effective date of the 
 61.13  disability benefit, whichever is later.  If the beneficiary 
 61.14  disabilitant is still disabled when on the beneficiary becomes 
 61.15  65 years old transfer date, the beneficiary shall disabilitant 
 61.16  must be deemed to be a retired member and, if the beneficiary 
 61.17  disabilitant had chosen an optional annuity under section 
 61.18  352B.10, subdivision 5, shall must receive an annuity in 
 61.19  accordance with under the terms of the optional annuity 
 61.20  previously chosen.  If the beneficiary disabilitant had not 
 61.21  chosen an optional annuity under section 352B.10, subdivision 5, 
 61.22  the beneficiary disabilitant may then choose to receive either a 
 61.23  normal retirement annuity computed under section 352B.08, 
 61.24  subdivision 2, or an optional annuity as provided in section 
 61.25  352B.08, subdivision 3.  An optional annuity must be chosen 
 61.26  within 90 days of attaining age 65 or reaching the five-year 
 61.27  anniversary of the effective date of the disability benefit, 
 61.28  whichever is later transfer date.  If an optional annuity is 
 61.29  chosen, the optional annuity shall begin to accrue accrues on 
 61.30  the first of the month next following attainment of age 65 or 
 61.31  the five-year anniversary of the effective transfer date of the 
 61.32  disability benefit, whichever is later. 
 61.33     Sec. 14.  Minnesota Statutes 2002, section 352D.065, 
 61.34  subdivision 2, is amended to read: 
 61.35     Subd. 2.  [DISABILITY BENEFIT AMOUNT.] A participant who 
 61.36  becomes totally and permanently disabled has the option, even if 
 62.1   on leave of absence without pay, to receive: 
 62.2      (1) the value of the participant's total shares; 
 62.3      (2) the value of one-half of a portion of the total shares 
 62.4   and an annuity based on the value of one-half remainder of the 
 62.5   total shares; or 
 62.6      (3) an annuity based on the value of the participant's 
 62.7   total shares. 
 62.8      Sec. 15.  Minnesota Statutes 2002, section 353.33, 
 62.9   subdivision 4, is amended to read: 
 62.10     Subd. 4.  [PROCEDURE TO DETERMINE ELIGIBILITY.] (a) The 
 62.11  applicant shall provide an expert report signed by a licensed 
 62.12  physician, psychologist, or chiropractor and the applicant must 
 62.13  authorize the release of medical and health care evidence, 
 62.14  including all medical records and relevant information from any 
 62.15  source, to support the application for total and permanent 
 62.16  disability benefits.  
 62.17     (b) The medical adviser shall verify the medical evidence 
 62.18  and, if necessary for disability determination, suggest the 
 62.19  referral of the applicant to specialized medical consultants.  
 62.20     (c) The association shall also obtain from the employer, a 
 62.21  certification of the member's past public service, the dates 
 62.22  of any paid sick leave and vacation beyond the last working day 
 62.23  and whether or not any sick leave or annual leave has been 
 62.24  allowed.  
 62.25     (d) If, upon consideration of the medical evidence received 
 62.26  and the recommendations of the medical adviser, it is determined 
 62.27  by the executive director that the applicant is totally and 
 62.28  permanently disabled within the meaning of the law, the 
 62.29  association shall grant the person a disability benefit.  The 
 62.30  fact that 
 62.31     (e) An employee who is placed on leave of absence without 
 62.32  compensation because of a disability does is not bar the person 
 62.33  barred from receiving a disability benefit. 
 62.34     Sec. 16.  Minnesota Statutes 2002, section 353.33, 
 62.35  subdivision 6, is amended to read: 
 62.36     Subd. 6.  [CONTINUING ELIGIBILITY FOR BENEFITS.] The 
 63.1   association shall determine eligibility for continuation of 
 63.2   disability benefits and require periodic examinations and 
 63.3   evaluations of disabled members as frequently as deemed 
 63.4   necessary.  The association shall require the disabled member to 
 63.5   provide an expert report signed by a licensed physician, 
 63.6   psychologist, or chiropractor and the disabled member shall 
 63.7   authorize the release of medical and health care evidence, 
 63.8   including all medical and health care records and information 
 63.9   from any source, relating to an application for continuation of 
 63.10  disability benefits.  Disability benefits are contingent upon a 
 63.11  disabled person's participation in a vocational 
 63.12  rehabilitation program evaluation if the executive director 
 63.13  determines that the disabled person may be able to return to a 
 63.14  gainful occupation.  If a member is found to be no longer 
 63.15  totally and permanently disabled, payments must cease the first 
 63.16  of the month following the expiration of a 30-day period after 
 63.17  the member receives a certified letter notifying the member that 
 63.18  payments will cease. 
 63.19     Sec. 17.  Minnesota Statutes 2002, section 353.33, 
 63.20  subdivision 6b, is amended to read: 
 63.21     Subd. 6b.  [DUTIES OF THE MEDICAL ADVISER.] At the request 
 63.22  of the executive director, the medical adviser shall designate 
 63.23  licensed physicians, psychologists, or chiropractors to examine 
 63.24  applicants for disability benefits and review the medical expert 
 63.25  reports based upon these examinations to determine whether an 
 63.26  applicant is totally and permanently disabled as defined in 
 63.27  section 353.01, subdivision 19, disabled as defined in section 
 63.28  353.656, or eligible for continuation of disability benefits 
 63.29  under subdivision 6.  The medical examiner shall also review, at 
 63.30  the request of the executive director, all medical and health 
 63.31  care statements on behalf of an applicant for disability 
 63.32  benefits, and shall report in writing to the executive 
 63.33  director the conclusions and recommendations of the examiner on 
 63.34  those matters referred for advice. 
 63.35     Sec. 18.  Minnesota Statutes 2002, section 353.33, 
 63.36  subdivision 7, is amended to read: 
 64.1      Subd. 7.  [PARTIAL REEMPLOYMENT.] If, following a work or 
 64.2   non-work-related injury or illness, a disabled person resumes a 
 64.3   gainful occupation from which who remains totally and 
 64.4   permanently disabled as defined in section 353.01, subdivision 
 64.5   19, has income from employment that is not substantial gainful 
 64.6   activity and the rate of earnings from that employment are less 
 64.7   than the salary rate at the date of disability or the 
 64.8   salary rate currently paid for similar positions similar to the 
 64.9   employment position held by the disabled person immediately 
 64.10  before becoming disabled, whichever is greater, the board 
 64.11  executive director shall continue the disability benefit in an 
 64.12  amount that, when added to the earnings and any workers' 
 64.13  compensation benefit, does not exceed the salary rate at the 
 64.14  date of disability or the salary currently paid for similar 
 64.15  positions similar to the employment position held by the 
 64.16  disabled person immediately before becoming disabled, whichever 
 64.17  is higher, provided.  The disability benefit does under this 
 64.18  subdivision may not exceed the disability benefit originally 
 64.19  allowed, plus any postretirement adjustments payable after 
 64.20  December 31, 1988, in accordance with section 11A.18, 
 64.21  subdivision 10.  No deductions for the retirement fund may be 
 64.22  taken from the salary of a disabled person who is receiving a 
 64.23  disability benefit as provided in this subdivision. 
 64.24     Sec. 19.  Minnesota Statutes 2002, section 353.33, is 
 64.25  amended by adding a subdivision to read: 
 64.26     Subd. 7a.  [TRIAL WORK PERIOD.] (a) If, following a work or 
 64.27  non-work related injury or illness, a disabled member attempts 
 64.28  to return to work for their previous public employer or attempts 
 64.29  to return to a similar position with another public employer, on 
 64.30  a full-time or less than full-time basis, the Public Employees 
 64.31  Retirement Association shall continue paying the disability 
 64.32  benefit for a period not to exceed six months.  The disability 
 64.33  benefit must continue in an amount that, when added to the 
 64.34  subsequent employment earnings and workers' compensation 
 64.35  benefit, does not exceed the salary at the date of disability or 
 64.36  the salary currently paid for similar positions, whichever is 
 65.1   higher. 
 65.2      (b) No deductions for the retirement fund may be taken from 
 65.3   the salary of a disabled person who is attempting to return to 
 65.4   work under this provision unless the member waives further 
 65.5   disability benefits. 
 65.6      (c) A member only may return to employment and continue 
 65.7   disability benefit payments once while receiving disability 
 65.8   benefits from a plan administered by the Public Employees 
 65.9   Retirement Association. 
 65.10     Sec. 20.  Minnesota Statutes 2002, section 353.656, 
 65.11  subdivision 5, is amended to read: 
 65.12     Subd. 5.  [PROOF OF DISABILITY.] (a) A disability benefit 
 65.13  payment must not be made except upon adequate proof furnished to 
 65.14  the executive director of the association of the existence of 
 65.15  such a disability, and. 
 65.16     (b) During the time when disability benefits are being 
 65.17  paid, the executive director of the association has the right, 
 65.18  at reasonable times, to require the disabled member to submit 
 65.19  proof of the continuance of the disability claimed.  
 65.20     (c) Adequate proof of a disability must include a written 
 65.21  expert report by a licensed physician, by a licensed 
 65.22  chiropractor, or with respect to a mental impairment, by a 
 65.23  licensed psychologist. 
 65.24     (d) A person applying for or receiving a disability benefit 
 65.25  shall provide or authorize release of medical evidence, 
 65.26  including all medical records and information from any source, 
 65.27  relating to an application for disability benefits or the 
 65.28  continuation of those benefits. 
 65.29     Sec. 21.  Minnesota Statutes 2002, section 353.656, is 
 65.30  amended by adding a subdivision to read: 
 65.31     Subd. 8.  [APPLICATION PROCEDURE TO DETERMINE ELIGIBILITY 
 65.32  FOR POLICE AND FIRE PLAN DISABILITY BENEFITS.] (a) An 
 65.33  application for disability benefits must be made in writing on a 
 65.34  form or forms prescribed by the executive director. 
 65.35     (b) If an application for disability benefits is filed 
 65.36  within two years of the date of the injury or the onset of the 
 66.1   illness that gave rise to the disability application, the 
 66.2   application must be supported by evidence that the applicant is 
 66.3   unable to perform the duties of the position held by the 
 66.4   applicant on the date of the injury or the onset of the illness 
 66.5   causing the disability.  The employer must provide evidence 
 66.6   indicating whether the applicant is able or unable to perform 
 66.7   the duties of the position held on the date of the injury or 
 66.8   onset of illness causing the disability and the specifications 
 66.9   of any duties that the individual can or cannot perform. 
 66.10     (c) If an application for disability benefits is filed more 
 66.11  than two years after the date of the injury or the onset of an 
 66.12  illness causing the disability, the application must be 
 66.13  supported by evidence that the applicant is unable to perform 
 66.14  the most recent duties that are expected to be performed by the 
 66.15  applicant during the 90 days before the filing of the 
 66.16  application.  The employer must provide evidence of the duties 
 66.17  that are expected to be performed by the applicant during the 90 
 66.18  days before to the filing of the application, whether the 
 66.19  applicant can or cannot perform those duties overall, and the 
 66.20  specifications of any duties that the applicant can or cannot 
 66.21  perform. 
 66.22     (d) Unless otherwise permitted by law, no application for 
 66.23  disability benefits can be filed by a former member of the 
 66.24  police and fire plan more than three years after the former 
 66.25  member has terminated from Public Employees Retirement 
 66.26  Association police and fire plan covered employment.  If an 
 66.27  application is filed within three years after the termination of 
 66.28  public employment, the former member must provide evidence that 
 66.29  the disability is the direct result of an injury or the 
 66.30  contracting of an illness that occurred while the person was 
 66.31  still actively employed and participating in the police and fire 
 66.32  plan. 
 66.33     (e) Any application for duty-related disability must be 
 66.34  supported by a first report of injury as defined in section 
 66.35  176.231. 
 66.36     (f) If a member who has applied for and been approved for 
 67.1   disability benefits before the termination of service does not 
 67.2   terminate service or is not placed on an authorized leave of 
 67.3   absence as certified by the governmental subdivision within 45 
 67.4   days following the date on which the application is approved, 
 67.5   the application shall be canceled.  If an approved application 
 67.6   for disability benefits has been canceled, a subsequent 
 67.7   application for disability benefits may not be filed on the 
 67.8   basis of the same medical condition for a minimum of one year 
 67.9   from the date on which the previous application was canceled. 
 67.10     (g) An applicant may file a retirement application under 
 67.11  section 353.29, subdivision 4, at the same time as the 
 67.12  disability application is filed.  If the disability application 
 67.13  is approved, the retirement application is canceled.  If the 
 67.14  disability application is denied, the retirement application 
 67.15  must be initiated and processed upon the request of the 
 67.16  applicant.  A police and fire fund member may not receive a 
 67.17  disability benefit and a retirement annuity from the police and 
 67.18  fire fund at the same time. 
 67.19     (h) A repayment of a refund must be made within six months 
 67.20  after the effective date of disability benefits or within six 
 67.21  months after the date of the filing of the disability 
 67.22  application, whichever is later.  No purchase of prior service 
 67.23  or payment made in lieu of salary deductions otherwise 
 67.24  authorized under section 353.01 or 353.36, subdivision 2, may be 
 67.25  made after the occurrence of the disability for which an 
 67.26  application is filed under this section. 
 67.27     Sec. 22.  Minnesota Statutes 2002, section 353.656, is 
 67.28  amended by adding a subdivision to read: 
 67.29     Subd. 9.  [REFUSAL OF EXAMINATION OR MEDICAL EVIDENCE.] If 
 67.30  a person applying for or receiving a disability benefit refuses 
 67.31  to submit to a medical examination under subdivision 11, or 
 67.32  fails to provide or to authorize the release of medical evidence 
 67.33  under subdivisions 5 and 7, the association shall cease the 
 67.34  application process or shall discontinue the payment of a 
 67.35  disability benefit, whichever is applicable.  Upon the receipt 
 67.36  of the requested medical evidence, the association shall resume 
 68.1   the application process or the payment of a disability benefit 
 68.2   upon approval for the continuation, whichever is applicable. 
 68.3      Sec. 23.  Minnesota Statutes 2002, section 353.656, is 
 68.4   amended by adding a subdivision to read: 
 68.5      Subd. 10.  [ACCRUAL OF BENEFITS.] (a) A disability benefit 
 68.6   begins to accrue the day following the commencement of 
 68.7   disability, 90 days preceding the filing of an application, or, 
 68.8   if annual or sick leave is paid for more than the 90-day period, 
 68.9   from the date on which the payment of salary ceased, whichever 
 68.10  is later. 
 68.11     (b) Payment of the disability benefit must not continue 
 68.12  beyond the end of the month in which entitlement has 
 68.13  terminated.  If the disabilitant dies prior to negotiating the 
 68.14  check for the month in which death occurs, payment must be made 
 68.15  to the surviving spouse or, if none, to the designated 
 68.16  beneficiary or, if none, to the estate. 
 68.17     Sec. 24.  Minnesota Statutes 2002, section 353.656, is 
 68.18  amended by adding a subdivision to read: 
 68.19     Subd. 11.  [INDEPENDENT MEDICAL EXAMINATION; DUTIES OF THE 
 68.20  MEDICAL ADVISOR.] Any individual receiving disability benefits 
 68.21  or any applicant, if requested by the executive director, must 
 68.22  submit to an independent medical examination.  The medical 
 68.23  examination must be paid for by the association.  The medical 
 68.24  advisor shall review all medical reports submitted to the 
 68.25  association, including the findings of an independent medical 
 68.26  examination requested under this section, and shall advise the 
 68.27  executive director. 
 68.28     Sec. 25.  Minnesota Statutes 2002, section 353.656, is 
 68.29  amended by adding a subdivision to read: 
 68.30     Subd. 12.  [APPROVAL OF DISABILITY BENEFITS.] Review of 
 68.31  disability benefit applications and review of existing 
 68.32  disability cases must be made by the executive director based 
 68.33  upon all relevant evidence, including advice from the medical 
 68.34  advisor and the evidence provided by the member and employer.  A 
 68.35  member whose application for disability benefits or whose 
 68.36  continuation of disability benefits is denied may appeal the 
 69.1   executive director's decision to the board of trustees within 45 
 69.2   days of the receipt of a certified letter notifying the member 
 69.3   of the decision to deny the application or the benefit 
 69.4   continuation. 
 69.5      Sec. 26.  Minnesota Statutes 2002, section 354.48, 
 69.6   subdivision 2, is amended to read: 
 69.7      Subd. 2.  [APPLICATIONS; ACCRUAL.] (a) A person described 
 69.8   in subdivision 1, or another person authorized to act on behalf 
 69.9   of the person, may make written application on a form prescribed 
 69.10  by the executive director for a total and permanent disability 
 69.11  benefit only within the 18-month period following the 
 69.12  termination of teaching service.  This 
 69.13     (b) The benefit accrues from the day following the 
 69.14  commencement of the disability or the day following the last day 
 69.15  for which salary is paid, whichever is later, but does not begin 
 69.16  to accrue more than six months before the date on which the 
 69.17  written application is filed with the executive director.  If 
 69.18  salary is being received for either annual or sick leave during 
 69.19  the disability period, payments accrue the disability benefit 
 69.20  accrues from the day following the last day for which this 
 69.21  salary is paid. 
 69.22     Sec. 27.  Minnesota Statutes 2002, section 354.48, 
 69.23  subdivision 4, is amended to read: 
 69.24     Subd. 4.  [DETERMINATION BY THE EXECUTIVE DIRECTOR.] (a) 
 69.25  The executive director shall have the member examined by at 
 69.26  least two licensed physicians, licensed chiropractors, or 
 69.27  licensed psychologists selected by the medical adviser.  
 69.28     (b) These physicians, chiropractors, or psychologists with 
 69.29  respect to a mental impairment, shall make written reports to 
 69.30  the executive director concerning the member's disability, 
 69.31  including medical expert opinions as to whether or not the 
 69.32  member is permanently and totally disabled within the meaning of 
 69.33  section 354.05, subdivision 14.  
 69.34     (c) The executive director shall also obtain written 
 69.35  certification from the last employer stating whether or not the 
 69.36  member was separated from service because of a disability which 
 70.1   would reasonably prevent further service to the employer and as 
 70.2   a consequence the member is not entitled to compensation from 
 70.3   the employer.  
 70.4      (d) If, upon the consideration of the reports of the 
 70.5   physicians, chiropractors, or psychologists and any other 
 70.6   evidence presented by the member or by others interested 
 70.7   therein, the executive director finds that the member is totally 
 70.8   and permanently disabled, the executive director shall grant the 
 70.9   member a disability benefit.  The fact that 
 70.10     (e) An employee who is placed on leave of absence without 
 70.11  compensation because of disability shall is not bar the member 
 70.12  barred from receiving a disability benefit. 
 70.13     Sec. 28.  Minnesota Statutes 2002, section 354.48, 
 70.14  subdivision 6, is amended to read: 
 70.15     Subd. 6.  [REGULAR PHYSICAL EXAMINATIONS.] At least once 
 70.16  each year during the first five years following the allowance of 
 70.17  a disability benefit to any member, and at least once in every 
 70.18  three-year period thereafter, the executive director shall 
 70.19  require the disability beneficiary to undergo a medical an 
 70.20  expert examination by a physician or physicians, by a 
 70.21  chiropractor or chiropractors, or by one or more psychologists 
 70.22  with respect to a mental impairment, engaged by the executive 
 70.23  director.  If any an examination indicates that the member is no 
 70.24  longer permanently and totally disabled or that the member is 
 70.25  engaged or is able to engage in a substantial gainful 
 70.26  occupation, payments of the disability benefit by the 
 70.27  association shall must be discontinued.  The payments shall 
 70.28  discontinue must be discontinued as soon as the member is 
 70.29  reinstated to the payroll following sick leave, but payment may 
 70.30  not be made for more than 60 days after the physicians, the 
 70.31  chiropractors, or the psychologists engaged by the executive 
 70.32  director find that the person is no longer permanently and 
 70.33  totally disabled. 
 70.34     Sec. 29.  Minnesota Statutes 2002, section 354.48, 
 70.35  subdivision 6a, is amended to read: 
 70.36     Subd. 6a.  [MEDICAL ADVISER; DUTIES.] The state 
 71.1   commissioner of health or a licensed physician on the staff of 
 71.2   the department of health who is designated by the commissioner 
 71.3   shall be is the medical adviser of the executive director.  The 
 71.4   medical adviser shall designate licensed physicians, licensed 
 71.5   chiropractors, or licensed psychologists with respect to a 
 71.6   mental impairment, who shall examine applicants for disability 
 71.7   benefits.  The medical adviser shall pass upon all medical 
 71.8   expert reports based on any examinations performed in order to 
 71.9   determine whether a teacher is totally and permanently disabled 
 71.10  as defined in section 354.05, subdivision 14.  The medical 
 71.11  adviser shall also investigate all health and medical statements 
 71.12  and certificates by or on behalf of a teacher in connection with 
 71.13  a disability benefit, and shall report in writing to the 
 71.14  director setting forth any conclusions and recommendations on 
 71.15  all matters referred to the medical adviser.  
 71.16     Sec. 30.  Minnesota Statutes 2002, section 354.48, 
 71.17  subdivision 10, is amended to read: 
 71.18     Subd. 10.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] 
 71.19  (a) No person shall be is entitled to receive both a disability 
 71.20  benefit and a retirement annuity provided by this chapter.  
 71.21     (b) The disability benefit paid to a person hereunder shall 
 71.22  must terminate at the end of the month in which the person 
 71.23  attains the normal retirement age.  If the person is still 
 71.24  totally and permanently disabled at the beginning of the month 
 71.25  next following the month in which the person attains the normal 
 71.26  retirement age, the person shall must be deemed to be on 
 71.27  retirement status and, if the person had elected an optional 
 71.28  annuity pursuant to under subdivision 3a, shall must receive an 
 71.29  annuity in accordance with the terms of the optional annuity 
 71.30  previously elected, or, if the person had not elected an 
 71.31  optional annuity pursuant to under subdivision 3a, may elect to 
 71.32  receive a straight life retirement annuity equal to the 
 71.33  disability benefit paid prior to before the date on which the 
 71.34  person attains the normal retirement age 65 or reaches the 
 71.35  five-year anniversary of the effective date of the disability 
 71.36  benefit, whichever is later, or may elect to receive an optional 
 72.1   annuity as provided in section 354.45, subdivision 1.  
 72.2      (c) Election of an optional annuity must be made within 90 
 72.3   days of the normal retirement age 65 or the five-year 
 72.4   anniversary of the effective date of the disability benefit, 
 72.5   whichever is later.  
 72.6      (d) If an optional annuity is elected, the election shall 
 72.7   be is effective on the date on which the person attains the 
 72.8   normal retirement age 65 or reaches the five-year anniversary of 
 72.9   the effective date of the disability benefit, whichever is 
 72.10  later.  The optional annuity shall begin begins to accrue on the 
 72.11  first day of the month next following the month in which the 
 72.12  person attains the normal retirement age 65 or reaches the 
 72.13  five-year anniversary of the effective date of the disability 
 72.14  benefit, whichever is later.  
 72.15     Sec. 31.  Minnesota Statutes 2002, section 354A.36, 
 72.16  subdivision 4, is amended to read: 
 72.17     Subd. 4.  [DETERMINATION OF DISABILITY.] The board of the 
 72.18  teachers retirement fund association shall make the final 
 72.19  determination of the existence of a permanent and total 
 72.20  disability.  The board shall have the coordinated member 
 72.21  examined by at least two licensed physicians, licensed 
 72.22  chiropractors, or licensed psychologists who shall be are 
 72.23  selected by the board.  After making any required examinations, 
 72.24  each physician, chiropractor, or psychologist with respect to a 
 72.25  mental impairment, shall make a written report to the board 
 72.26  concerning the coordinated member, which shall include a 
 72.27  statement of the physician's medical expert opinion of the 
 72.28  physician, chiropractor, or psychologist as to whether or not 
 72.29  the member is permanently and totally disabled within the 
 72.30  meaning of section 354A.011, subdivision 14.  The board shall 
 72.31  also obtain a written statement from the school district 
 72.32  employer as to whether or not the coordinated member was 
 72.33  terminated or separated from active employment due to a 
 72.34  disability which is deemed by the district employer to 
 72.35  reasonably prevent further service by the member to the district 
 72.36  employer and which caused the coordinated member not to be 
 73.1   entitled to further compensation from the district employer for 
 73.2   services rendered by the member.  If, after consideration of the 
 73.3   reports of the physicians, chiropractors, or psychologists with 
 73.4   respect to a mental impairment, and any evidence presented by 
 73.5   the member or by any other interested parties, the board 
 73.6   determines that the coordinated member is totally and 
 73.7   permanently disabled within the meaning of section 354A.011, 
 73.8   subdivision 14, it shall grant the coordinated member a 
 73.9   disability benefit.  The fact that A member has been who is 
 73.10  placed on a leave of absence without compensation as a result of 
 73.11  the disability shall is not operate to bar barred a 
 73.12  coordinated member from receiving a disability benefit under 
 73.13  this section.  
 73.14     Sec. 32.  Minnesota Statutes 2002, section 354A.36, 
 73.15  subdivision 6, is amended to read: 
 73.16     Subd. 6.  [REQUIREMENT FOR REGULAR PHYSICAL EXAMINATIONS.] 
 73.17  At least once each year during the first five years following 
 73.18  the granting of a disability benefit to a coordinated member by 
 73.19  the board and at least once in every three year period 
 73.20  thereafter, the board shall require the disability benefit 
 73.21  recipient to undergo a medical expert examination as a condition 
 73.22  for continued entitlement of the benefit recipient to receive a 
 73.23  disability benefit.  The medical expert examination shall must 
 73.24  be made at the place of residence of the disability benefit 
 73.25  recipient or at any other place mutually agreeable to the 
 73.26  disability benefit recipient and the board.  The medical expert 
 73.27  examination shall must be made by a physician or physicians, by 
 73.28  a chiropractor or chiropractors, or by one or more psychologists 
 73.29  engaged by the board.  The physician or physicians, the 
 73.30  chiropractor or chiropractors, or the psychologist or 
 73.31  psychologists with respect to a mental impairment, conducting 
 73.32  the medical expert examination shall make a written report to 
 73.33  the board concerning the disability benefit recipient and the 
 73.34  recipient's disability, including a statement of the physician's 
 73.35  medical expert opinion of the physician, chiropractor, or 
 73.36  psychologist as to whether or not the member remains permanently 
 74.1   and totally disabled within the meaning of section 354A.011, 
 74.2   subdivision 14.  If the board determines from consideration of 
 74.3   the physician's written medical expert examination report of the 
 74.4   physician, of the chiropractor, or of the psychologist, with 
 74.5   respect to a mental impairment, that the disability benefit 
 74.6   recipient is no longer permanently and totally disabled or if 
 74.7   the board determines that the benefit recipient is engaged or is 
 74.8   able to engage in a gainful occupation, unless the disability 
 74.9   benefit recipient is partially employed pursuant to under 
 74.10  subdivision 7, then further disability benefit payments from the 
 74.11  fund shall must be discontinued.  The discontinuation of 
 74.12  disability benefits shall must occur immediately if the 
 74.13  disability recipient is reinstated to the district payroll 
 74.14  following sick leave and within 60 days of the determination by 
 74.15  the board following the medical expert examination and report of 
 74.16  the physician or physicians, chiropractor or chiropractors, or 
 74.17  psychologist or psychologists engaged by the board that the 
 74.18  disability benefit recipient is no longer permanently and 
 74.19  totally disabled within the meaning of section 354A.011, 
 74.20  subdivision 14. 
 74.21     Sec. 33.  Minnesota Statutes 2002, section 356.302, 
 74.22  subdivision 3, is amended to read: 
 74.23     Subd. 3.  [GENERAL EMPLOYEE PLAN ELIGIBILITY REQUIREMENTS.] 
 74.24  A disabled member of a covered retirement plan who has credit 
 74.25  for allowable service in a combination of general employee 
 74.26  retirement plans is entitled to a combined service disability 
 74.27  benefit if the member: 
 74.28     (1) is less than 65 years of the normal retirement age on 
 74.29  the date of the application for the disability benefit; 
 74.30     (2) has become totally and permanently disabled; 
 74.31     (3) has credit for allowable service in any combination of 
 74.32  general employee retirement plans totaling at least three years; 
 74.33     (4) has credit for at least one-half year of allowable 
 74.34  service with the current general employee retirement plan before 
 74.35  the commencement of the disability; 
 74.36     (5) has at least three continuous years of allowable 
 75.1   service credit by the general employee retirement plan or has at 
 75.2   least a total of three years of allowable service credit by a 
 75.3   combination of general employee retirement plans in a 72-month 
 75.4   period during which no interruption of allowable service credit 
 75.5   from a termination of employment exceeded 29 days; and 
 75.6      (6) was not receiving a retirement annuity or disability 
 75.7   benefit from any covered general employee retirement plan at the 
 75.8   time of the commencement of the disability.  
 75.9      Sec. 34.  Minnesota Statutes 2002, section 422A.18, 
 75.10  subdivision 1, is amended to read: 
 75.11     Subdivision 1.  [MEDICAL EXPERT EXAMINATION.] (a) Upon the 
 75.12  application of the head of the department in which a 
 75.13  contributing employee is employed, or upon the application of 
 75.14  the contributing employee or of one acting in the employee's 
 75.15  behalf, the retirement board shall place the contributor on 
 75.16  disability, provided and pay the person a disability allowance 
 75.17  under this section if the medical board, after a medical an 
 75.18  expert examination of the contributor made at the place of 
 75.19  residence of the contributor or at a place mutually agreed upon, 
 75.20  shall certify to the retirement board that the contributor is 
 75.21  physically or mentally incapacitated for the performance of 
 75.22  further service to the city and recommend that the contributor 
 75.23  be placed on disability. 
 75.24     (b) The medical board shall consist of the city physician, 
 75.25  a physician, chiropractor, or licensed psychologist to be 
 75.26  selected by the retirement board, and a physician, chiropractor, 
 75.27  or licensed psychologist to be selected by the employee.  
 75.28     (c) Disability of an employee resulting from injury or 
 75.29  illness received in the performance of the duties of the city 
 75.30  service shall be defined as duty disability.  
 75.31     (d) Disability incurred as a result of injury or illness 
 75.32  not connected with the performance of such service shall be 
 75.33  defined as nonduty disability.  In order to be entitled to a 
 75.34  retirement allowance for a nonduty disability, an employee shall 
 75.35  have rendered five or more years of service to the city. 
 75.36     Sec. 35.  Minnesota Statutes 2002, section 422A.18, 
 76.1   subdivision 4, is amended to read: 
 76.2      Subd. 4.  [ADDITIONAL MEDICAL EXAMINATIONS.] (a) Once each 
 76.3   year, the retirement board may require any disability 
 76.4   beneficiary while still under the established age for retirement 
 76.5   to undergo medical an expert examination by a physician or one 
 76.6   or more physicians, one or more chiropractors, or one or more 
 76.7   licensed psychologists designated by the retirement board,.  The 
 76.8   examination to must be made at the place of residence of the 
 76.9   beneficiary or other place mutually agreed upon.  Should 
 76.10     (b) If the medical board report and certify certifies to 
 76.11  the retirement board that such the disability beneficiary is no 
 76.12  longer physically or mentally incapacitated for the performance 
 76.13  of duty, the beneficiary's allowance shall must be discontinued 
 76.14  and the head of the department in which the beneficiary was 
 76.15  employed at the time of retirement shall, upon notification by 
 76.16  the retirement board of the report of the medical board, 
 76.17  reemploy the beneficiary at a rate of salary not less than the 
 76.18  amount of the disability allowance, but. 
 76.19     (c) After the expiration of five years subsequent to the 
 76.20  retirement of such the beneficiary, the restoration to duty, 
 76.21  notwithstanding the recommendation of the medical board, shall 
 76.22  be is optional with the head of the department.  Should If any 
 76.23  disability beneficiary, while under the established age for 
 76.24  retirement refuse, refuses to submit to at least one 
 76.25  medical expert examination in any year by a physician or one or 
 76.26  more physicians, one or more chiropractors, or one or more 
 76.27  licensed psychologists designated by the medical board, the 
 76.28  allowance shall must be discontinued until the withdrawal of 
 76.29  such refusal, and should such refusal continue for one year, all 
 76.30  the beneficiary's rights in and to any retirement or disability 
 76.31  allowance shall be are forfeited. 
 76.32     Sec. 36.  Minnesota Statutes 2002, section 423B.09, 
 76.33  subdivision 4, is amended to read: 
 76.34     Subd. 4.  [CERTIFICATE OF PHYSICIANS REQUIRED.] (a) No 
 76.35  member is entitled to a pension under subdivision 1, paragraph 
 76.36  (b) or (c), except upon the certificate of two or more 
 77.1   physicians or, surgeons, chiropractors, licensed psychologists, 
 77.2   or a combination of experts chosen by the governing board.  This 
 77.3   certificate must set forth the cause, nature, and extent of the 
 77.4   disability, disease, or injury of the member.  
 77.5      (b) No active member may be awarded, granted, or paid a 
 77.6   disability pension under subdivision 1, paragraph (c), unless 
 77.7   the certificate states that the disability, disease, or injury 
 77.8   was incurred or sustained by the member while in the service of 
 77.9   the police department of the city.  The certificate must be 
 77.10  filed with the secretary of the association. 
 77.11     Sec. 37.  Minnesota Statutes 2002, section 423C.05, 
 77.12  subdivision 4, is amended to read: 
 77.13     Subd. 4.  [TEMPORARY DISABILITY PENSION.] (a) An active 
 77.14  member who, by sickness or accident, becomes temporarily 
 77.15  disabled from performing firefighter duties for the fire 
 77.16  department shall be is entitled to a temporary disability 
 77.17  pension.  
 77.18     (b) No allowance for disability shall may be made unless 
 77.19  notice of the disability and an application for benefits is made 
 77.20  by or on behalf of the disabled member within 90 days after the 
 77.21  beginning of the disability.  This application shall must 
 77.22  include a certificate from a qualified medical professional 
 77.23  expert setting forth the cause, nature, and extent of the 
 77.24  disability.  This certificate must also conclude that the 
 77.25  disability was incurred or sustained while the member was in the 
 77.26  service of the fire department.  
 77.27     (c) The board shall utilize the board of examiners 
 77.28  established pursuant to under section 423C.03, subdivision 6, to 
 77.29  investigate and report on an application for benefits pursuant 
 77.30  to under this section and to make recommendations as to 
 77.31  eligibility and the benefit amount to be paid.  
 77.32     (d) A member entitled to a disability pension shall must 
 77.33  receive benefits in the amount and manner determined by the 
 77.34  board. 
 77.35     Sec. 38.  Minnesota Statutes 2002, section 423C.05, 
 77.36  subdivision 5, is amended to read: 
 78.1      Subd. 5.  [SERVICE-RELATED PERMANENT DISABILITY PENSION.] 
 78.2   An active member who becomes permanently disabled as the result 
 78.3   of a service-related disease or injury shall is, upon 
 78.4   application and approval of the board, be entitled to a pension 
 78.5   of 41 units or in the amount determined under subdivision 8.  
 78.6   The application for service-related permanent disability shall 
 78.7   must include a certificate from a qualified medical professional 
 78.8   expert setting forth the permanent nature of the disability or 
 78.9   disease and that it was service related.  
 78.10     Sec. 39.  Minnesota Statutes 2002, section 423C.05, 
 78.11  subdivision 6, is amended to read: 
 78.12     Subd. 6.  [NON-SERVICE-RELATED PERMANENT DISABILITY 
 78.13  PENSION.] An active member who, by reason of sickness or 
 78.14  accident, becomes permanently disabled and unable to perform 
 78.15  firefighter duties for the fire department due to 
 78.16  non-service-related disease or injury shall be is entitled to a 
 78.17  permanent disability pension.  No allowance for disability shall 
 78.18  may be made unless notice of the disability and an application 
 78.19  for benefits is made by or on behalf of the disabled member 
 78.20  within 90 days after the beginning of the disability.  This 
 78.21  application shall must include a certificate from a qualified 
 78.22  medical professional setting forth the cause, nature, and extent 
 78.23  of the disability.  A member who is entitled to a disability 
 78.24  pension under this subdivision shall must receive benefits in 
 78.25  the amount and manner determined by the board, not to exceed 41 
 78.26  units. 
 78.27     Sec. 40.  Minnesota Statutes 2002, section 423C.05, is 
 78.28  amended by adding a subdivision to read: 
 78.29     Subd. 6a.  [QUALIFIED EXPERT.] A qualified expert includes 
 78.30  a licensed physician or chiropractor, or in the case of mental 
 78.31  impairment, includes a licensed psychologist. 
 78.32     Sec. 41.  [REPEALER.] 
 78.33     (a) Minnesota Statutes 2002, sections 353.33, subdivision 
 78.34  5b; and 490.11, are repealed on July 1, 2004. 
 78.35     (b) Sections 3 and 19 are repealed on July 1, 2006. 
 78.36     Sec. 42.  [EFFECTIVE DATE.] 
 79.1      Sections 1 to 41 are effective on July 1, 2004. 
 79.2                              ARTICLE 9 
 79.3               DEATH AND SURVIVOR BENEFITS AND REFUNDS 
 79.4      Section 1.  Minnesota Statutes 2002, section 3A.03, 
 79.5   subdivision 2, is amended to read: 
 79.6      Subd. 2.  [REFUND.] (a) Any A former member who has made 
 79.7   contributions under subdivision 1 and who is no longer a member 
 79.8   of the legislature is entitled to receive, upon written 
 79.9   application to the executive director on a form prescribed by 
 79.10  the executive director, a refund of all contributions credited 
 79.11  to the member's account with interest at an annual rate of six 
 79.12  percent compounded annually computed as provided in section 
 79.13  352.22, subdivision 2. 
 79.14     (b) The refund of contributions as provided in paragraph (a)
 79.15  terminates all rights of a former member of the legislature or 
 79.16  and the survivors of the former member under this chapter. 
 79.17     (c) If the former member of the legislature again becomes a 
 79.18  member of the legislature after having taken a refund as 
 79.19  provided in paragraph (a), the member must be considered a new 
 79.20  member of this plan.  However, a new the member may reinstate 
 79.21  the rights and credit for service previously forfeited if the 
 79.22  new member repays all refunds taken plus interest at an annual 
 79.23  rate of 8.5 percent compounded annually from the date on which 
 79.24  the refund was taken to the date on which the refund is repaid.  
 79.25     (c) (d) No person may be required to apply for or to accept 
 79.26  a refund. 
 79.27     Sec. 2.  Minnesota Statutes 2002, section 352.12, 
 79.28  subdivision 1, is amended to read: 
 79.29     Subdivision 1.  [DEATH BEFORE TERMINATION OF SERVICE.] If 
 79.30  an employee dies before state service has terminated and neither 
 79.31  a survivor annuity nor a reversionary annuity is payable on 
 79.32  behalf of the employee, or if a former employee who has 
 79.33  sufficient service credit to be entitled to an annuity dies 
 79.34  before the benefit annuity has become payable, the director 
 79.35  shall make a refund with interest is payable upon filing a 
 79.36  written application on a form prescribed by the executive 
 80.1   director.  The refund is payable to the last designated 
 80.2   beneficiary or, if there is none, to the surviving spouse or, if 
 80.3   none, to the employee's surviving children in equal shares or, 
 80.4   if none, to the employee's surviving parents in equal shares or, 
 80.5   if none, to the representative of the estate in an amount equal 
 80.6   to the accumulated employee contributions plus interest at the 
 80.7   rate of six percent per annum compounded annually.  Interest 
 80.8   must be computed as provided in section 352.22, subdivision 2, 
 80.9   to the first day of the month in which the refund is processed.  
 80.10  Upon the death of an employee who has received a refund that was 
 80.11  later repaid in full, interest must be paid on the repaid refund 
 80.12  only from the date of the repayment.  If the repayment was made 
 80.13  in installments, interest must be paid only from the date on 
 80.14  which the installment payments began.  The designated 
 80.15  beneficiary, the surviving spouse, or the representative of the 
 80.16  estate of an employee who had received a disability benefit is 
 80.17  not entitled to the payment of interest upon any balance 
 80.18  remaining to the decedent's credit in the fund at the time of 
 80.19  death, unless the death occurred before any payment could be 
 80.20  negotiated.  
 80.21     Sec. 3.  Minnesota Statutes 2002, section 352.12, 
 80.22  subdivision 6, is amended to read: 
 80.23     Subd. 6.  [DEATH AFTER SERVICE TERMINATION.] Except as 
 80.24  provided in subdivision 1, if a former employee covered by the 
 80.25  system dies and who has not received an annuity, a retirement 
 80.26  allowance, or a disability benefit dies, a refund must be made 
 80.27  is payable to the last designated beneficiary or, if there is 
 80.28  none, to the surviving spouse or, if none, to the employee's 
 80.29  surviving children in equal shares or, if none, to the 
 80.30  employee's surviving parents in equal shares or, if none, to the 
 80.31  representative of the estate in an amount equal to accumulated 
 80.32  employee contributions plus interest.  The refund must include 
 80.33  interest at the rate of six percent per year compounded 
 80.34  annually.  The interest on the refund must be computed as 
 80.35  provided in section 352.22, subdivision 2. 
 80.36     Sec. 4.  Minnesota Statutes 2002, section 352.22, 
 81.1   subdivision 2, is amended to read: 
 81.2      Subd. 2.  [AMOUNT OF REFUND.] Except as provided in 
 81.3   subdivision 3, the refund payable to a person who ceased to be a 
 81.4   state employee by reason of a termination of state service is in 
 81.5   an amount equal to employee accumulated contributions plus 
 81.6   interest at the rate of six percent per year compounded annually 
 81.7   daily from the date that the contribution was made until the 
 81.8   date on which the refund is paid.  Included with the refund is 
 81.9   any interest paid as part of repayment of a past refund, plus 
 81.10  interest thereon from the date of repayment.  Interest must be 
 81.11  computed to the first day of the month in which the refund is 
 81.12  processed and must be based on fiscal year or monthly balances, 
 81.13  whichever applies. 
 81.14     Sec. 5.  Minnesota Statutes 2002, section 352.22, 
 81.15  subdivision 3, is amended to read: 
 81.16     Subd. 3.  [DEFERRED ANNUITY.] (a) An employee who has at 
 81.17  least three years of allowable service when termination occurs 
 81.18  may elect to leave the accumulated contributions in the fund and 
 81.19  thereby be entitled to a deferred retirement annuity.  The 
 81.20  annuity must be computed under the law in effect when state 
 81.21  service terminated, on the basis of the allowable service 
 81.22  credited to the person before the termination of service. 
 81.23     (b) An employee on layoff or on leave of absence without 
 81.24  pay, except a leave of absence for health reasons, and who does 
 81.25  not return to state service shall must have an annuity, deferred 
 81.26  annuity, or other benefit to which the employee may become 
 81.27  entitled computed under the law in effect on the employee's last 
 81.28  working day. 
 81.29     (c) No application for a deferred annuity may be made more 
 81.30  than 60 days before the time the former employee reaches the 
 81.31  required age for entitlement to the payment of the annuity.  The 
 81.32  deferred annuity begins to accrue no earlier than 60 days before 
 81.33  the date the application is filed in the office of the system, 
 81.34  but not (1) before the date on which the employee reaches the 
 81.35  required age for entitlement to the annuity nor (2) before the 
 81.36  day following the termination of state service in a 
 82.1   position which is not covered by the retirement system. 
 82.2      (d) Application for the accumulated contributions left on 
 82.3   deposit with the fund may be made at any time after 30 days 
 82.4   following the date of the termination of service. 
 82.5      Sec. 6.  Minnesota Statutes 2002, section 352B.10, 
 82.6   subdivision 5, is amended to read: 
 82.7      Subd. 5.  [OPTIONAL ANNUITY.] A disabled member 
 82.8   disabilitant may elect, in lieu of spousal survivorship coverage 
 82.9   under section 352B.11, subdivision 2 subdivisions 2b and 
 82.10  2c, choose the normal disability benefit or an optional annuity 
 82.11  as provided in section 352B.08, subdivision 3.  The choice of an 
 82.12  optional annuity must be made before the commencement of the 
 82.13  payment of the disability benefit, or within 90 days of 
 82.14  attaining before reaching age 65 or reaching the five-year 
 82.15  anniversary of the effective date of the disability benefit, 
 82.16  whichever is later.  It The optional annuity is effective on the 
 82.17  date on which the disability benefit begins to accrue, or the 
 82.18  month following attainment of age 65 or the five-year 
 82.19  anniversary of the effective date of the disability benefit, 
 82.20  whichever is later. 
 82.21     Sec. 7.  Minnesota Statutes 2002, section 352B.11, 
 82.22  subdivision 1, is amended to read: 
 82.23     Subdivision 1.  [REFUND OF PAYMENTS.] (a) A member who has 
 82.24  not received other benefits under this chapter is entitled to a 
 82.25  refund of payments made by salary deduction, plus interest, if 
 82.26  the member is separated, either voluntarily or involuntarily, 
 82.27  from the state service that entitled the member to membership.  
 82.28     (b) In the event of the member's death, if there are no 
 82.29  survivor benefits payable under this chapter, a refund plus 
 82.30  interest is payable to the last designated beneficiary on a form 
 82.31  filed with the director before death, or if no designation is 
 82.32  filed, the refund is payable to the member's estate.  Interest 
 82.33  under this subdivision must be computed at the rate of six 
 82.34  percent a year, compounded annually calculated as provided in 
 82.35  section 352.22, subdivision 2.  To receive a refund, the 
 82.36  application must be made on a form prescribed by the executive 
 83.1   director. 
 83.2      Sec. 8.  Minnesota Statutes 2002, section 352B.11, 
 83.3   subdivision 2, is amended to read: 
 83.4      Subd. 2.  [DEATH; PAYMENT TO SPOUSE AND DEPENDENT CHILDREN; 
 83.5   FAMILY MAXIMUMS.] If a member serving actively as a member, or a 
 83.6   member or former member receiving the disability benefit before 
 83.7   attaining age 65 or reaching the five-year anniversary of the 
 83.8   effective date of the disability benefit, whichever is later, 
 83.9   provided by section 352B.10, subdivisions 1 and 2, dies from any 
 83.10  cause before attaining age 65 or reaching the five-year 
 83.11  anniversary of the effective date of the disability benefit, 
 83.12  whichever is later, the surviving spouse and dependent children 
 83.13  are entitled to benefit payments as follows: 
 83.14     (a) A member with at least three years of allowable service 
 83.15  is deemed to have elected a 100 percent joint and survivor 
 83.16  annuity payable to a surviving spouse only on or after the date 
 83.17  the member or former member became or would have become 55. 
 83.18     (b) The surviving spouse of a member who had credit for 
 83.19  less than three years of service shall receive, for life, a 
 83.20  monthly annuity equal to 50 percent of that part of the average 
 83.21  monthly salary of the member from which deductions were made for 
 83.22  retirement.  
 83.23     (c) The surviving spouse of a member who had credit for at 
 83.24  least three years service and who died after becoming 55 years 
 83.25  old, may elect to receive a 100 percent joint and survivor 
 83.26  annuity, for life, notwithstanding a subsequent remarriage, in 
 83.27  lieu of the annuity prescribed in paragraph (b). 
 83.28     (d) The surviving spouse of any member who had credit for 
 83.29  three years or more and who was not 55 years old at death, shall 
 83.30  receive the benefit equal to 50 percent of the average monthly 
 83.31  salary as described in clause (b) until the deceased member 
 83.32  would have become 55 years old, and beginning the first of the 
 83.33  month following that date, may elect to receive the 100 percent 
 83.34  joint and survivor annuity.  
 83.35     (e) Each dependent child shall, as defined in section 
 83.36  352B.01, subdivision 10, is entitled to receive a monthly 
 84.1   annuity equal to ten percent of that part of the average monthly 
 84.2   salary of the former deceased member from which deductions were 
 84.3   made for retirement.  A dependent child over 18 and under 23 
 84.4   years of age also may receive the monthly benefit provided in 
 84.5   this section, if the child is continuously attending an 
 84.6   accredited school as a full-time student during the normal 
 84.7   school year as determined by the director.  If the child does 
 84.8   not continuously attend school, but separates from full-time 
 84.9   attendance during any part of a school year, the annuity shall 
 84.10  must cease at the end of the month of separation.  In addition, 
 84.11  a payment of $20 per month shall must be prorated equally to the 
 84.12  surviving dependent children when the former member is survived 
 84.13  by more than one or more dependent children child.  Payments for 
 84.14  the benefit of any qualified dependent child must be made to the 
 84.15  surviving spouse, or if there is none, to the legal guardian of 
 84.16  the child.  The maximum monthly benefit for any one family, 
 84.17  including a surviving spouse benefit, if applicable, must not be 
 84.18  less than 50 percent nor exceed 70 percent of the average 
 84.19  monthly salary for any number of children of the deceased member.
 84.20     (f) If the member dies under circumstances that entitle the 
 84.21  surviving spouse and dependent children to receive benefits 
 84.22  under the workers' compensation law, the workers' compensation 
 84.23  benefits received by them must not be deducted from the benefits 
 84.24  payable under this section. 
 84.25     (g) The surviving spouse of a deceased former member who 
 84.26  had credit for three or more years of allowable service, but not 
 84.27  the spouse of a former member receiving a disability benefit 
 84.28  under section 352B.10, subdivision 2, is entitled to receive the 
 84.29  100 percent joint and survivor annuity at the time the deceased 
 84.30  member would have become 55 years old.  If a former member dies 
 84.31  who does not qualify for other benefits under this chapter, the 
 84.32  surviving spouse or, if none, the children or heirs are entitled 
 84.33  to a refund of the accumulated deductions left in the fund plus 
 84.34  interest at the rate of six percent per year compounded annually.
 84.35     Sec. 9.  Minnesota Statutes 2002, section 352B.11, is 
 84.36  amended by adding a subdivision to read: 
 85.1      Subd. 2b.  [SURVIVING SPOUSE BENEFIT ELIGIBILITY.] (a) If 
 85.2   an active member with three or more years of allowable service 
 85.3   dies before attaining age 55, the surviving spouse is entitled 
 85.4   to the benefit specified in subdivision 2c, paragraph (b). 
 85.5      (b) If an active member with less than three years of 
 85.6   allowable service dies at any age, the surviving spouse is 
 85.7   entitled to receive the benefit specified in subdivision 2c, 
 85.8   paragraph (c). 
 85.9      (c) If an active member with three or more years of 
 85.10  allowable service dies on or after attaining exact age 55, the 
 85.11  surviving spouse is entitled to receive the benefits specified 
 85.12  in subdivision 2c, paragraph (d). 
 85.13     (d) If a disabilitant dies while receiving a disability 
 85.14  benefit under section 352B.10 or before the benefit under that 
 85.15  section commenced, and an optional annuity was not elected under 
 85.16  section 352B.10, subdivision 5, the surviving spouse is entitled 
 85.17  to receive the benefit specified in subdivision 2c, paragraph 
 85.18  (b). 
 85.19     (e) If a former member with three or more years of 
 85.20  allowable service, who terminated from service and has not 
 85.21  received a refund or commenced receipt of any other benefit 
 85.22  provided by this chapter, dies, the surviving spouse is entitled 
 85.23  to receive the benefit specified in subdivision 2c, paragraph 
 85.24  (e).  
 85.25     (f) If a former member with less than three years of 
 85.26  allowable service, who terminated from service and has not 
 85.27  received a refund or commenced receipt of any other benefit, if 
 85.28  applicable, provided by this chapter, dies, the surviving spouse 
 85.29  is entitled to receive the refund specified in subdivision 2c, 
 85.30  paragraph (f). 
 85.31     Sec. 10.  Minnesota Statutes 2002, section 352B.11, is 
 85.32  amended by adding a subdivision to read: 
 85.33     Subd. 2c.  [SURVIVING SPOUSE BENEFIT ENTITLEMENTS.] (a) A 
 85.34  surviving spouse specified in subdivision 2b is eligible to 
 85.35  receive, following the filing of a valid application and 
 85.36  consistent with any other applicable requirements, a benefit as 
 86.1   specified in this subdivision.  A 100 percent joint and survivor 
 86.2   annuity under paragraph (b) must be computed assuming the exact 
 86.3   age 55 for the deceased member and the age of the surviving 
 86.4   spouse on the date of death.  A 100 percent joint and survivor 
 86.5   annuity under paragraph (d) or (e) must be computed using the 
 86.6   age of the deceased member on the date of death and the age of 
 86.7   the surviving spouse on that same date. 
 86.8      (b) For a surviving spouse specified in subdivision 2b, 
 86.9   paragraph (a) or (d), the surviving spouse benefit is a benefit 
 86.10  for life equal to 50 percent of the average monthly salary of 
 86.11  the deceased member.  On the first of the month next following 
 86.12  the date on which the deceased member would have attained exact 
 86.13  age 55, in lieu of continued receipt of the prior benefit, the 
 86.14  surviving spouse is eligible to commence receipt of the second 
 86.15  half of a 100 percent joint and survivor annuity, if this 
 86.16  provides a larger benefit. 
 86.17     (c) For a surviving spouse specified in subdivision 2b, 
 86.18  paragraph (b), the surviving spouse benefit is a benefit for 
 86.19  life equal to 50 percent of the average monthly salary of the 
 86.20  deceased member. 
 86.21     (d) For a surviving spouse specified in subdivision 2b, 
 86.22  paragraph (c), the surviving spouse benefit is a benefit for 
 86.23  life equal to 50 percent of the average monthly salary of the 
 86.24  deceased member, or the second half of a 100 percent joint and 
 86.25  survivor annuity, whichever is larger. 
 86.26     (e) For a surviving spouse specified in subdivision 2b, 
 86.27  paragraph (e), the surviving spouse benefit is the second half 
 86.28  of a 100 percent joint and survivor annuity, commencing on the 
 86.29  first of the month next following the deceased member's date of 
 86.30  death, or the first of the month next following the date on 
 86.31  which the deceased member would have attained age 55, whichever 
 86.32  is later. 
 86.33     (f) For a surviving spouse specified in subdivision 2b, 
 86.34  paragraph (f), the surviving spouse or, if none, the children 
 86.35  or, if none, the deceased member's estate, is entitled to a 
 86.36  refund of the employee contributions plus interest computed as 
 87.1   specified in subdivision 1. 
 87.2      Sec. 11.  Minnesota Statutes 2002, section 352B.11, is 
 87.3   amended by adding a subdivision to read: 
 87.4      Subd. 2d.  [COORDINATION WITH WORKERS' COMPENSATION 
 87.5   BENEFITS.] If the deceased member died under circumstances that 
 87.6   entitle the surviving spouse and the dependent child or children 
 87.7   to receive benefits under workers' compensation law, the 
 87.8   workers' compensation benefits received by the deceased member's 
 87.9   survivor or survivors must not be deducted from the benefits 
 87.10  payable under this section. 
 87.11     Sec. 12.  Minnesota Statutes 2002, section 352D.075, 
 87.12  subdivision 2, is amended to read: 
 87.13     Subd. 2.  [SURVIVING SPOUSE BENEFIT.] (a) Notwithstanding 
 87.14  any designation of a beneficiary to the contrary, if a 
 87.15  participant or a former participant dies leaving a spouse and 
 87.16  there is no named beneficiary who survives to receive payment or 
 87.17  the spouse is named beneficiary before an annuity or a 
 87.18  disability benefit becomes payable, the surviving spouse may is 
 87.19  entitled to receive: 
 87.20     (1) a lump sum payment of the value of the participant's 
 87.21  total shares; 
 87.22     (2) The a lump sum payment of a portion of the value of 
 87.23  one-half of the total shares and beginning at age 55 or 
 87.24  thereafter receive, at any time after the participant's death, 
 87.25  an annuity based on the remaining value of one-half of the total 
 87.26  shares, provided that.  If the spouse dies before receiving any 
 87.27  annuity payments, the remaining value of said the shares shall 
 87.28  be paid is payable to the spouse's children in equal shares, but 
 87.29  and if no such children survive, then to the parents of the 
 87.30  spouse in equal shares, but and if no such children or parents 
 87.31  survive, then to the estate of the spouse; or 
 87.32     (3) Beginning at age 55 or thereafter receive at any time 
 87.33  after the participant's death, an annuity based on the value of 
 87.34  the total shares, provided that.  If the spouse dies before 
 87.35  receiving any annuity payments, the value of said the shares 
 87.36  shall be paid is payable to the spouse's children in equal 
 88.1   shares, but and if no such children survive, then to the parents 
 88.2   of the spouse in equal shares, but and if no such children or 
 88.3   parents survive, then to the estate of the spouse; and further 
 88.4   provided, if said the spouse dies after receiving annuity 
 88.5   payments but before receiving payments equal to the value of the 
 88.6   employee shares, the value of the employee shares 
 88.7   remaining shall be paid is payable to the spouse's children in 
 88.8   equal shares, but and if no such children survive, then to the 
 88.9   parents of the spouse in equal shares, but and if no such 
 88.10  children or parents survive, then to the estate of the spouse.  
 88.11     (b) A participant or a former participant and the person's 
 88.12  spouse may make a joint specification, in writing, on a form 
 88.13  prescribed by the executive director, that the benefits provided 
 88.14  in this section must be paid only to the designated beneficiary. 
 88.15     Sec. 13.  Minnesota Statutes 2002, section 352D.075, is 
 88.16  amended by adding a subdivision to read: 
 88.17     Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 
 88.18  lieu of the annuity under subdivision 2, clause (2) or (3), or 
 88.19  in lieu of a distribution under subdivision 2, clause (1), the 
 88.20  surviving spouse of a deceased participant may elect to receive 
 88.21  survivor coverage in the form of a term certain annuity of five, 
 88.22  six, 15, or 20 years, based on the value of the remaining 
 88.23  shares.  The monthly term certain annuity must be calculated 
 88.24  under section 352D.06, subdivision 1. 
 88.25     Sec. 14.  Minnesota Statutes 2002, section 352D.075, 
 88.26  subdivision 3, is amended to read: 
 88.27     Subd. 3.  [REFUND TO BENEFICIARY.] If a participant dies 
 88.28  and has named a beneficiary no surviving spouse, the value of 
 88.29  the total shares shall be paid is payable to such a designated 
 88.30  beneficiary, but if such the beneficiary dies before receiving 
 88.31  payment, or if no beneficiary has been named and there is no 
 88.32  spouse, the value of said the shares shall be paid is payable 
 88.33  to the children of the participant in equal shares, but or if no 
 88.34  such children survive, then in equal shares to the parents of 
 88.35  the participant, but or if no such children or parents survive, 
 88.36  then to the estate of the participant.  
 89.1      Sec. 15.  [352F.052] [APPLICATION OF SURVIVING SPOUSE, 
 89.2   DEPENDENT CHILD PROVISION.] 
 89.3      Notwithstanding any provisions of law to the contrary, 
 89.4   subdivisions within section 352.12 of the edition of Minnesota 
 89.5   Statutes published in the year before the year in which a 
 89.6   privatization occurred, applicable to the surviving spouse or 
 89.7   dependent children of a former member, apply to the survivors of 
 89.8   a terminated hospital employee of Fairview, University of 
 89.9   Minnesota Physicians, or University Affiliated Family Physicians.
 89.10     Sec. 16.  [353F.052] [APPLICATION OF SURVIVING SPOUSE, 
 89.11  DEPENDENT CHILD PROVISION.] 
 89.12     Notwithstanding any provisions of law to the contrary, 
 89.13  subdivisions within section 353.32 of the edition of Minnesota 
 89.14  Statutes published in the year before the year in which a 
 89.15  privatization occurred, applicable to the surviving spouse or 
 89.16  dependent children of a former member as defined in section 
 89.17  353.01, subdivision 7a, apply to the survivors of a terminated 
 89.18  medical facility or other public employing unit employee. 
 89.19     Sec. 17.  Minnesota Statutes 2002, section 354.05, 
 89.20  subdivision 22, is amended to read: 
 89.21     Subd. 22.  [DESIGNATED BENEFICIARY.] "Designated 
 89.22  beneficiary" means the person, trust, or organization designated 
 89.23  by a retiree or member to receive the benefits to which a 
 89.24  beneficiary is entitled under this chapter.  A beneficiary 
 89.25  designation is valid only if it is made on an appropriate form 
 89.26  provided by the executive director that is signed by the member 
 89.27  and two witnesses to the member's signature.  The properly 
 89.28  completed form must be received by the association on or before 
 89.29  the date of death of the retiree or member.  If a retiree or a 
 89.30  member does not designate a person, trust, or organization, or 
 89.31  if the person who was designated predeceases the retiree or the 
 89.32  member, or if the trust or organization ceases to exist before 
 89.33  the death of the retiree or the member, the designated 
 89.34  beneficiary means is the estate of the deceased retiree or 
 89.35  member. 
 89.36     Sec. 18.  Minnesota Statutes 2002, section 354.46, 
 90.1   subdivision 2, is amended to read: 
 90.2      Subd. 2.  [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY 
 90.3   BENEFIT SURVIVING SPOUSE SURVIVOR COVERAGE.] (a) The surviving 
 90.4   spouse of any member or former member who has If the active or 
 90.5   deferred member was at least age 55 and had credit for at least 
 90.6   three years of allowable service on the date of death, the 
 90.7   surviving spouse is entitled to the second portion of a 100 
 90.8   percent joint and survivor annuity coverage in the event of 
 90.9   death of the member prior to retirement.  If the surviving 
 90.10  spouse does not elect to receive a surviving spouse benefit 
 90.11  under subdivision 1, if applicable, or does not elect to receive 
 90.12  a refund of accumulated member contributions under section 
 90.13  354.47, subdivision 1, the surviving spouse is entitled to 
 90.14  receive, upon written application on a form prescribed by the 
 90.15  executive director, a benefit equal to the second portion of a 
 90.16  100 percent joint and survivor annuity specified under section 
 90.17  354.45, based on the age of the active or deferred member and 
 90.18  surviving spouse at the time of death of the member, and 
 90.19  computed under section 354.44, subdivision 2 or 6, whichever is 
 90.20  applicable the age of the surviving spouse at the time the 
 90.21  benefit accrues. 
 90.22     (b) If the active or deferred member was under age 55 and 
 90.23  has had credit for at least 30 years of allowable service on the 
 90.24  date of death, the surviving spouse may elect to receive the 
 90.25  second portion of a 100 percent joint and survivor annuity based 
 90.26  on the age of the active or deferred member and surviving spouse 
 90.27  on the date of death and the age of the surviving spouse at the 
 90.28  time the benefit accrues.  If section 354.44, subdivision 6, 
 90.29  applies, the annuity is payable using the full early retirement 
 90.30  reduction under section 354.44, subdivision 6, paragraph 
 90.31  clause (3)(ii), to age 55 and one-half of the early retirement 
 90.32  reduction from age 55 to the age payment begins. 
 90.33     (c) If the active or deferred member was under age 55 and 
 90.34  has had credit for at least three years of allowable service on 
 90.35  the date of death, but did not yet qualify for retirement, the 
 90.36  surviving spouse may elect to receive the second portion of a 
 91.1   100 percent joint and survivor annuity based on the age of 
 91.2   the active or deferred member and the surviving spouse at the 
 91.3   time of death and the age of the surviving spouse at the time 
 91.4   the benefit accrues.  If section 354.44, subdivision 6, applies, 
 91.5   the annuity is calculated using the full early retirement 
 91.6   reduction under section 354.44, subdivision 6, to age 55 and 
 91.7   one-half of the early retirement reduction from age 55 to the 
 91.8   age the annuity begins.  The surviving spouse eligible for a 
 91.9   surviving spouse benefit under paragraph (a) may apply for the 
 91.10  annuity at any time after the date on which the deceased 
 91.11  employee would have attained the required age for retirement 
 91.12  based on the employee's allowable service. 
 91.13     (d) The surviving spouse eligible for surviving spouse 
 91.14  benefits under paragraph (b) or (c) this subdivision may apply 
 91.15  for the annuity any time after the member's death.  This The 
 91.16  benefit accrues from the day following the date of the member's 
 91.17  death but may not begin to accrue more than six months before 
 91.18  the date the application is filed with the executive 
 91.19  director and may not accrue before the member's death.  Sections 
 91.20  354.55, subdivision 11, and 354.60 apply to a deferred annuity 
 91.21  payable under this section.  The benefit is payable for life.  
 91.22  Any benefit under this subdivision is in lieu of benefits under 
 91.23  subdivision 1, if applicable, and in lieu of a refund of 
 91.24  accumulated member contributions under section 354.47, 
 91.25  subdivision 1. 
 91.26     (e) For purposes of this subdivision, a designated 
 91.27  beneficiary must be a former spouse or a biological or adopted 
 91.28  child of the member. 
 91.29     Sec. 19.  Minnesota Statutes 2002, section 354.46, 
 91.30  subdivision 2b, is amended to read: 
 91.31     Subd. 2b.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 91.32  no surviving spouse eligible for benefits under subdivision 2, a 
 91.33  each dependent child or children as defined in section 354.05, 
 91.34  subdivision 8a, is eligible for monthly payments surviving child 
 91.35  benefits.  Payments Surviving child benefits to a dependent 
 91.36  child must be paid from the date of the member's death to the 
 92.1   date the dependent child attains age 20 if the child is under 
 92.2   age 15 on the date of the member's death.  If the child is 15 
 92.3   years or older on the date of the member's death, payment must 
 92.4   be made the surviving child benefit is payable for five years.  
 92.5   The payment to a dependent surviving child benefit is an amount 
 92.6   that is actuarially equivalent to the value of a 100 percent 
 92.7   optional annuity under subdivision 2 calculated using the age of 
 92.8   the member and age of the dependent child at as of the date of 
 92.9   death in lieu of the age of the member and the spouse.  If there 
 92.10  is more than one dependent child, each dependent child shall is 
 92.11  entitled to receive a proportionate share of the actuarial value 
 92.12  of the member's account.  
 92.13     Sec. 20.  Minnesota Statutes 2002, section 354.46, 
 92.14  subdivision 5, is amended to read: 
 92.15     Subd. 5.  [PAYMENT TO DESIGNATED BENEFICIARY.] A member and 
 92.16  who is single or, if the member is married, a member and the 
 92.17  spouse of the member jointly, may make a joint specification in 
 92.18  writing on a form prescribed by the executive director that the 
 92.19  benefits provided in subdivision 2, or in section 354.47, 
 92.20  subdivision 1, must be paid only to a designated beneficiary or 
 92.21  to designated beneficiaries.  For purposes of subdivision 2, a 
 92.22  designated beneficiary may only be either a former spouse or a 
 92.23  biological or an adopted child of the member. 
 92.24     Sec. 21.  Minnesota Statutes 2002, section 354.46, is 
 92.25  amended by adding a subdivision to read: 
 92.26     Subd. 6.  [APPLICATION.] (a) A beneficiary designation and 
 92.27  an application for benefits under this section must be in 
 92.28  writing on a form prescribed by the executive director. 
 92.29     (b) Sections 354.55, subdivision 11, and 354.60 apply to a 
 92.30  deferred annuity payable under this section. 
 92.31     (c) Unless otherwise specified, the annuity must be 
 92.32  computed under section 354.44, subdivision 2 or 6, whichever is 
 92.33  applicable. 
 92.34     Sec. 22.  Minnesota Statutes 2002, section 356.441, is 
 92.35  amended to read: 
 92.36     356.441 [REPAYMENT OF REFUNDS PAYMENT ACCEPTANCE ALLOWED.] 
 93.1      Subdivision 1.  [PAYMENT AUTHORIZATION.] The repayment of a 
 93.2   refund and interest on that refund or the payment of equivalent 
 93.3   contributions and interest for an eligible leave of absence, as 
 93.4   permitted under laws governing any public pension plan in 
 93.5   Minnesota, may be made: 
 93.6      (1) with funds distributed or transferred from a plan 
 93.7   qualified under the federal Internal Revenue Code of 1986, 
 93.8   section 401, subsection (a) or (k); 403; 408; or 457, subsection 
 93.9   (b), as amended through December 31, 1988, or an annuity 
 93.10  qualified under the federal Internal Revenue Code of 1986, 
 93.11  section 403(a).  Repayment may also be made from time to time; 
 93.12  or 
 93.13     (2) with funds distributed from an individual retirement 
 93.14  account used solely to receive a or individual retirement 
 93.15  annuity, if done solely in a manner that is eligible for 
 93.16  treatment as a nontaxable rollover from that type of a plan or 
 93.17  annuity or transfer under the applicable federal law.  The 
 93.18  repaid refund 
 93.19     Subd. 2.  [SEPARATE ACCOUNTING REQUIREMENT.] Nontaxable 
 93.20  rollovers or transfer amounts under subdivision 1 received by a 
 93.21  public pension fund must be separately accounted for as member 
 93.22  contributions not previously taxed.  Before accepting 
 93.23  any rollovers or transfers to which this section applies, the 
 93.24  executive director must shall require the member to provide 
 93.25  written documentation to demonstrate that the amounts to 
 93.26  be rolled over or transferred are eligible for a tax-free 
 93.27  rollover or transfer and qualify for that treatment under the 
 93.28  federal Internal Revenue Code of 1986, as amended.  
 93.29     Sec. 23.  Minnesota Statutes 2002, section 490.124, 
 93.30  subdivision 12, is amended to read: 
 93.31     Subd. 12.  [REFUND.] (a) Any A person who ceases to be a 
 93.32  judge but who does not qualify for a retirement annuity or other 
 93.33  benefit under section 490.121 shall be is entitled to a refund 
 93.34  in an amount equal to all the person's member's employee 
 93.35  contributions to the judges' retirement fund plus interest 
 93.36  computed to the first day of the month in which the refund is 
 94.1   processed based on fiscal year balances at an annual rate of 
 94.2   five percent compounded annually under section 352.22, 
 94.3   subdivision 2. 
 94.4      (b) A refund of contributions under paragraph (a) 
 94.5   terminates all service credits and all rights and benefits of 
 94.6   the judge and the judge's survivors.  A person who becomes a 
 94.7   judge again after taking a refund under paragraph (a) may 
 94.8   reinstate the previously terminated service credits, rights, and 
 94.9   benefits by repaying all refunds the total amount of the 
 94.10  previously received refund.  A The refund repayment must include 
 94.11  interest on the total amount previously received at an annual 
 94.12  rate of 8.5 percent compounded annually from the date on which 
 94.13  the refund was received until the date on which the refund is 
 94.14  repaid. 
 94.15     Sec. 24.  [TEACHERS RETIREMENT ASSOCIATION; BENEFICIARY 
 94.16  DESIGNATION.] 
 94.17     (a) An eligible person described in paragraph (b) is 
 94.18  entitled to make a specification that the benefits provided in 
 94.19  Minnesota Statutes, section 354.46, subdivision 2, or in 
 94.20  Minnesota Statutes, section 354.47, subdivision 1, may be paid 
 94.21  only to a designated beneficiary or beneficiaries.  
 94.22     (b) An eligible person is a person who: 
 94.23     (1) was born on July 9, 1956; 
 94.24     (2) is employed as a teacher by Independent School District 
 94.25  No. 535, Rochester; 
 94.26     (3) is a member of the Teachers Retirement Association; 
 94.27     (4) has more than 19 years of allowable service credit in 
 94.28  the Teachers Retirement Association; 
 94.29     (5) has two minor children; 
 94.30     (6) has no potential surviving spouse by virtue of a prior 
 94.31  marriage dissolution; and 
 94.32     (7) has been diagnosed with a serious medical condition 
 94.33  that is life threatening. 
 94.34     (c) The designated beneficiary or beneficiaries may only be 
 94.35  a biological or adopted child, the biological or adopted 
 94.36  children of the eligible person, or a trust established for the 
 95.1   child or children if the trust is required to provide for the 
 95.2   proper health, support, maintenance, and education of the 
 95.3   dependent child or children.  If two or more children are 
 95.4   designated or if a trust established for more than one child is 
 95.5   designated, the benefit payable to or on behalf of each child is 
 95.6   an equal share of the total benefit. 
 95.7      (d) The specification must be made in writing on a form 
 95.8   prescribed by the executive director of the Teachers Retirement 
 95.9   Association.  
 95.10     Sec. 25. [REPEALER.] 
 95.11     Minnesota Statutes 2002, section 354A.107, is repealed. 
 95.12     Sec. 26.  [EFFECTIVE DATE.] 
 95.13     (a) Sections 1 to 25 are effective on July 1, 2004. 
 95.14     (b) Sections 8 to 11 are not intended to increase, modify, 
 95.15  impair, or diminish the benefit entitlements specified in 
 95.16  Minnesota Statutes, chapter 352B.  If the Minnesota State 
 95.17  Retirement System executive director determines that any 
 95.18  provision of those sections does increase, modify, impair, or 
 95.19  diminish the benefit entitlements as reflected in applicable law 
 95.20  just prior to the effective date of this section, the executive 
 95.21  director shall certify that determination and a recommendation 
 95.22  as to the required legislative correction to the chairs of the 
 95.23  Legislative Commission on Pensions and Retirement, the house 
 95.24  Governmental Operations Committee, the senate State and Local 
 95.25  Government Operations Committee, and the executive director of 
 95.26  the Legislative Commission on Pensions and Retirement. 
 95.27     (c) Consistent with Minnesota Statutes, section 645.21, and 
 95.28  public pension policy in general, the increased interest rate 
 95.29  provided on a refund under section 23 applies only to judges 
 95.30  whose termination of service occurs on or after July 1, 2004. 
 95.31                             ARTICLE 10
 95.32                      FEDERAL INTERNAL REVENUE
 95.33                          CODE COMPLIANCE
 95.34     Section 1.  Minnesota Statutes 2002, section 356.611, is 
 95.35  amended by adding a subdivision to read: 
 95.36     Subd. 4.  [COMPENSATION.] (a) For purposes of this section, 
 96.1   compensation means a member's compensation actually paid or made 
 96.2   available for any limitation year determined as provided by 
 96.3   Treasury Regulation Section 1.415-2(d)(10). 
 96.4      (b) Compensation for any period includes: 
 96.5      (1) any elective deferral as defined in section 402(g)(3) 
 96.6   of the Internal Revenue Code; 
 96.7      (2) any elective amounts that are not includable in a 
 96.8   member's gross income by reason of sections 125 or 457 of the 
 96.9   Internal Revenue Code; and 
 96.10     (3) any elective amounts that are not includable in a 
 96.11  member's gross income by reason of section 132(f)(4) of the 
 96.12  Internal Revenue Code.  
 96.13     Sec. 2.  [356.635] [INTERNAL REVENUE CODE COMPLIANCE.] 
 96.14     Subdivision 1.  [RETIREMENT BENEFIT COMMENCEMENT.] The 
 96.15  retirement benefit of a member who has terminated employment 
 96.16  must begin no later than the later of April 1 of the calendar 
 96.17  year following the calendar year that the member attains the 
 96.18  federal minimum distribution age under section 401(a)(9) of the 
 96.19  Internal Revenue Code or April 1 of the calendar year following 
 96.20  the calendar year in which the member terminated employment. 
 96.21     Subd. 2.  [DISTRIBUTIONS.] Distributions shall be made as 
 96.22  required under section 401(a)(9) of the Internal Revenue Code 
 96.23  and the treasury regulations adopted under that section, 
 96.24  including, but not limited to, the incidental death benefit 
 96.25  provisions of section 401(a)(9)(G) of the Internal Revenue Code. 
 96.26     Subd. 3.  [DIRECT ROLLOVERS.] A distributee may elect, at 
 96.27  the time and in the manner prescribed by the plan administrator, 
 96.28  to have all or any portion of an eligible rollover distribution 
 96.29  paid directly to an eligible retirement plan as specified by the 
 96.30  distributee. 
 96.31     Subd. 4.  [ELIGIBLE ROLLOVER DISTRIBUTION.] An "eligible 
 96.32  rollover distribution" is any distribution of all or any portion 
 96.33  of the balance to the credit of the distributee.  
 96.34     Subd. 5.  [INELIGIBLE AMOUNTS.] An eligible rollover 
 96.35  distribution does not include: 
 96.36     (1) a distribution that is one of a series of substantially 
 97.1   equal periodic payments, receivable annually or more frequently, 
 97.2   that is made for the life or life expectancy of the distributee, 
 97.3   the joint lives or joint life expectancies of the distributee 
 97.4   and the distributee's designated beneficiary, or for a specified 
 97.5   period of ten years or more; 
 97.6      (2) a distribution that is required under section 401(a)(9) 
 97.7   of the Internal Revenue Code; or 
 97.8      (3) any other exception required by law or the Internal 
 97.9   Revenue Code. 
 97.10     Subd. 6.  [ELIGIBLE RETIREMENT PLAN.] (a) An "eligible 
 97.11  retirement plan" is: 
 97.12     (1) an individual retirement account under section 408(a) 
 97.13  of the Internal Revenue Code; 
 97.14     (2) an individual retirement annuity plan under section 
 97.15  408(b) of the Internal Revenue Code; 
 97.16     (3) an annuity plan under section 403(a) of the Internal 
 97.17  Revenue Code; 
 97.18     (4) a qualified trust plan under section 401(a) of the 
 97.19  Internal Revenue Code that accepts the distributee's eligible 
 97.20  rollover distribution; 
 97.21     (5) an annuity contract under section 403(b) of the 
 97.22  Internal Revenue Code; or 
 97.23     (6) an eligible deferred compensation plan under section 
 97.24  457(b) of the Internal Revenue Code, which is maintained by a 
 97.25  state or local government and which agrees to separately account 
 97.26  for the amounts transferred into the plan. 
 97.27     (b) For distributions of after-tax contributions which are 
 97.28  not includable in gross income, the after-tax portion may be 
 97.29  transferred only to an individual retirement account or annuity 
 97.30  described in section 408(a) or (b) of the Internal Revenue Code, 
 97.31  or to a qualified defined contribution plan described in either 
 97.32  section 401(a), or section 403(a), of the Internal Revenue Code, 
 97.33  that agrees to separately account for the amounts transferred, 
 97.34  including separately accounting for the portion of the 
 97.35  distribution which is includable in gross income and the portion 
 97.36  of the distribution which is not includable. 
 98.1      Subd. 7.  [DISTRIBUTEE.] A "distributee" is: 
 98.2      (1) an employee or a former employee; 
 98.3      (2) the surviving spouse of an employee or former employee; 
 98.4   or 
 98.5      (3) the former spouse of the employee or former employee 
 98.6   who is the alternate payee under a qualified domestic relations 
 98.7   order as defined in section 414(p) of the Internal Revenue Code, 
 98.8   or who is a recipient of a court-ordered equitable distribution 
 98.9   of marital property, as provided in section 518.58. 
 98.10     Subd. 8.  [FORFEITURES.] For defined benefit plans, unless 
 98.11  otherwise permitted by section 401(a)(8) of the Internal Revenue 
 98.12  Code, forfeitures may not be applied to increase the benefits 
 98.13  that any employee would otherwise receive under the plan. 
 98.14     Subd. 9.  [MILITARY SERVICE.] Contributions, benefits, and 
 98.15  service credit with respect to qualified military service must 
 98.16  be provided according to section 414(u) of the Internal Revenue 
 98.17  Code. 
 98.18     Sec. 3.  [TRANSITIONAL PROVISION.] 
 98.19     (a) An eligible rollover distribution under Minnesota 
 98.20  Statutes, section 356.635, does not include the portion of a 
 98.21  distribution that is not included in gross income. 
 98.22     (b) For eligible rollover distributions to a surviving 
 98.23  spouse, an eligible retirement plan under Minnesota Statutes, 
 98.24  section 356.635, is limited to an individual retirement account 
 98.25  under section 408(a) of the Internal Revenue Code or an 
 98.26  individual retirement annuity plan under section 408(b) of the 
 98.27  Internal Revenue Code. 
 98.28     Sec. 4.  [EFFECTIVE DATE.] 
 98.29     (a) Section 1, paragraph (a), is effective on July 1, 2004. 
 98.30  Section 1, paragraph (b), is effective retroactively as 
 98.31  follows:  clauses (1) and (2) are effective for limitation years 
 98.32  beginning on and after January 1, 1998; and clause (3) is 
 98.33  effective for limitation years beginning on and after January 1, 
 98.34  2001. 
 98.35     (b) Sections 2 and 3 are effective on the day following 
 98.36  final enactment. 
 99.1      (c) Section 2 is effective retroactively as follows:  
 99.2   subdivision 1 is effective on and after January 1, 1989; 
 99.3   subdivision 2 is effective for distributions on and after 
 99.4   December 31, 1989; subdivision 3 is effective for distributions 
 99.5   on and after January 1, 1993; subdivision 6, paragraph (a), 
 99.6   clauses (5) and (6), are effective for distributions made after 
 99.7   December 31, 2001; subdivision 6, paragraph (b), is effective 
 99.8   for distributions after December 31, 2001; and subdivision 9 is 
 99.9   effective December 12, 1994. 
 99.10     (d) Section 3 is effective only for distributions made 
 99.11  before January 1, 2002. 
 99.12                             ARTICLE 11
 99.13                        HEALTH CARE SAVINGS 
 99.14                         PLAN MODIFICATIONS 
 99.15     Section 1.  Minnesota Statutes 2002, section 352.98, is 
 99.16  amended to read: 
 99.17     352.98 [POSTRETIREMENT HEALTH CARE SAVINGS PLAN.] 
 99.18     Subdivision 1.  [PLAN CREATED.] The Minnesota State 
 99.19  Retirement System shall establish a plan or plans, known as 
 99.20  postretirement health care savings plans, through which public 
 99.21  employers and employees may save to cover postretirement health 
 99.22  care costs.  The Minnesota State Retirement System shall make 
 99.23  available one or more trusts, including a governmental trust or 
 99.24  governmental trusts, authorized under the Internal Revenue Code 
 99.25  to be eligible for tax-preferred or tax-free treatment through 
 99.26  which employers and employees can save to cover postretirement 
 99.27  health care costs.  
 99.28     Subd. 2.  [CONTRACTING AUTHORIZED.] The Minnesota State 
 99.29  Retirement System is authorized to administer the plan and to 
 99.30  contract with public and private entities to provide investment 
 99.31  services, record keeping, benefit payments, and other functions 
 99.32  necessary for the administration of the plan.  If allowed by the 
 99.33  Minnesota State Board of Investment, the Minnesota State Board 
 99.34  of Investment supplemental investment funds may be offered as 
 99.35  investment options under the postretirement health care savings 
 99.36  plan or plans.  
100.1      Subd. 3.  [CONTRIBUTIONS.] (a) Contributions to the plan 
100.2   shall must be determined through a personnel policy or in a 
100.3   collective bargaining agreement of a public employer with the 
100.4   exclusive representative of the covered employees in an 
100.5   appropriate unit.  The Minnesota State Retirement System may 
100.6   offer different types of trusts permitted under the Internal 
100.7   Revenue Code to best meet the needs of different employee units. 
100.8      (b) Contributions to the plan by or on behalf of the 
100.9   employee shall must be held in trust for reimbursement of 
100.10  employee and dependent health-related expenses following 
100.11  retirement from public employment or during active employment.  
100.12  The Minnesota State Retirement System shall maintain a separate 
100.13  account of the contributions made by or on behalf of each 
100.14  participant and the earnings thereon.  The Minnesota State 
100.15  Retirement System shall make available a limited range of 
100.16  investment options, and each employee may direct the investment 
100.17  of the accumulations in the employee's account among the 
100.18  investment options made available by the Minnesota State 
100.19  Retirement System.  At the request of a participating employer 
100.20  and employee group, the Minnesota State Retirement System may 
100.21  determine how the assets of the affected employer and employee 
100.22  group should be invested.  
100.23     (c) This section does not obligate a public employer to 
100.24  meet and negotiate in good faith with the exclusive bargaining 
100.25  representative of any public employee group regarding an 
100.26  employer contribution to a postretirement or active employee 
100.27  health care savings plan authorized by this section and section 
100.28  356.24, subdivision 1, clause (7).  It is not the intent of the 
100.29  legislature to authorize the state to incur new funding 
100.30  obligations for the costs of retiree health care or the costs of 
100.31  administering retiree health care plans or accounts.  
100.32     Subd. 4.  [REIMBURSEMENT FOR HEALTH-RELATED EXPENSES.] 
100.33  Following termination of public service, The Minnesota State 
100.34  Retirement System shall reimburse employees at least quarterly 
100.35  for submitted health-related expenses, as required by federal 
100.36  and state law, until the employee exhausts the accumulation in 
101.1   the employee's account.  If an employee dies prior to exhausting 
101.2   the employee's account balance, the employee's spouse or 
101.3   dependents shall be are eligible to be reimbursed for health 
101.4   care expenses from the account until the account balance is 
101.5   exhausted.  If an account balance remains after the death of a 
101.6   participant and all of the participant's legal dependents, the 
101.7   remainder of the account shall must be paid to the employee's 
101.8   beneficiaries or, if none, to the employee's estate.  
101.9      Subd. 5.  [FEES.] The Minnesota state retirement plan is 
101.10  authorized to charge uniform fees to participants to cover the 
101.11  ongoing cost of operating the plan.  Any fees not needed shall 
101.12  must revert to participant accounts or be used to reduce plan 
101.13  fees the following year.  The Minnesota State Retirement System 
101.14  is authorized to charge participating employers a fee, not to 
101.15  exceed one-sixth of the Federal Insurance Contribution Act 
101.16  savings realized by the employer as a result of participating in 
101.17  the plan, until the initial costs of establishing the plan or 
101.18  plans authorized by this section are recovered, or $75,000, 
101.19  whichever is less.  
101.20     Subd. 6.  [ADVISORY COMMITTEE.] (a) The Minnesota State 
101.21  Retirement System shall establish a participant advisory 
101.22  committee for the health care savings plan, made up of one 
101.23  representative appointed by each employee unit participating in 
101.24  the plan.  Each participating unit shall be responsible for the 
101.25  expenses of its own representative.  
101.26     (b) The advisory committee shall meet at least twice per 
101.27  year and shall be consulted on plan offerings and vendor 
101.28  selection.  By October 1 of each year, the Minnesota State 
101.29  Retirement System shall give the advisory committee a statement 
101.30  of fees collected and the use of the fees.  
101.31     Subd. 7.  [CONTRACTING WITH PRIVATE ENTITIES.] Nothing in 
101.32  this section shall prohibit prohibits employers from contracting 
101.33  with private entities to provide for postretirement health care 
101.34  reimbursement plans. 
101.35     Sec. 2.  [EFFECTIVE DATE.] 
101.36     Section 1 is effective on the day following final enactment.
102.1                              ARTICLE 12
102.2                    RETIREMENT COVERAGE FOLLOWING
102.3                           A PRIVATIZATION
102.4      Section 1.  Minnesota Statutes 2003 Supplement, section 
102.5   353F.02, subdivision 4, is amended to read: 
102.6      Subd. 4.  [MEDICAL FACILITY.] "Medical facility" means: 
102.7      (1) the Fair Oaks Lodge, Wadena; 
102.8      (2) the Glencoe Area Health Center; 
102.9      (2) (3) the Kanabec Hospital; 
102.10     (4) the Luverne Public Hospital; 
102.11     (5) the RenVilla Nursing Home; 
102.12     (3) (6) the St. Peter Community Healthcare Center; and 
102.13     (7) the Waconia-Ridgeview Medical Center; and 
102.14     (4) the Kanabec Hospital. 
102.15     Sec. 2.  [RENVILLA NURSING HOME; COMPUTATION OF PAYMENT 
102.16  RATES.] 
102.17     In the first reporting year that Public Employee Retirement 
102.18  Association costs are no longer incurred for the RenVilla 
102.19  Nursing Home, the facility shall have its allowable employee 
102.20  pension or retirement plan costs reported on its Rule 50 cost 
102.21  report treated as Public Employee Retirement Association 
102.22  contributions for the purpose of computing its payment rates. 
102.23     Sec. 3.  [PERA-GENERAL RETENTION OF PUBLIC EMPLOYEE STATUS 
102.24  FOR ANOKA ACHIEVE PROGRAM EMPLOYEES.] 
102.25     Subdivision 1.  [APPLICATION.] This section applies to a 
102.26  person who was: 
102.27     (1) employed by Anoka County in connection with the Achieve 
102.28  Program for adults with developmental disabilities on the day 
102.29  before operation of the program is transferred to Achieve 
102.30  Services, Inc; and 
102.31     (2) a member of the Public Employees Retirement Association 
102.32  on December 31, 2003. 
102.33     Subd. 2. [CONTINUATION OF COVERAGE.] For purposes of 
102.34  participation in the coordinated plan of the Public Employees 
102.35  Retirement Association, a person to whom this section applies is 
102.36  a "public employee" under Minnesota Statutes, chapter 353, while 
103.1   employed by Achieve Services, Inc., which is a governmental 
103.2   subdivision under Minnesota Statutes, section 353.01, 
103.3   subdivision 6, paragraph (a), for the purposes of reporting 
103.4   contributions for those persons to whom this section applies 
103.5   only. 
103.6      Sec. 4.  [PERA-GENERAL; RETENTION OF PUBLIC EMPLOYEE 
103.7   COVERAGE FOR GOVERNMENT TRAINING SERVICES EMPLOYEES.] 
103.8      Subdivision 1.  [APPLICATION.] Notwithstanding any 
103.9   provision of Minnesota Statutes, chapter 353, this section 
103.10  applies to a person who: 
103.11     (1) was employed by the state and local government joint 
103.12  powers organization, the Government Training Service, on the day 
103.13  before the operation was transferred to a nonprofit 
103.14  organization, Government Training Services; 
103.15     (2) was a member of the general employees retirement plan 
103.16  of the Public Employees Retirement Association; and 
103.17     (3) is employed by Government Training Services. 
103.18     Subd. 2.  [COVERAGE CONTINUATION.] (a) A person described 
103.19  in subdivision 1 is a public employee for purposes of Minnesota 
103.20  Statutes, section 353.01, subdivision 2, and is eligible to 
103.21  continue participation in the coordinated program of the general 
103.22  employees retirement plan of the Public Employees Retirement 
103.23  Association. 
103.24     (b) While employing a person described in subdivision 1, 
103.25  Government Training Services is a governmental subdivision for 
103.26  purposes of Minnesota Statutes, section 353.01, subdivision 6, 
103.27  paragraph (a).  
103.28     Sec. 5.  [EFFECTIVE DATE.] 
103.29     (a) Section 1, relating to the Fair Oaks Lodge, Wadena, is 
103.30  effective upon the latter of: 
103.31     (1) the day after the governing body of Todd County and its 
103.32  chief clerical officer timely complete their compliance with 
103.33  Minnesota Statutes, section 645.021, subdivisions 2 and 3; and 
103.34     (2) the day after the governing body of Wadena County and 
103.35  its chief clerical officer timely complete their compliance with 
103.36  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
104.1      (b) Section 1, relating to the RenVilla Nursing Home, is 
104.2   effective upon the latter of: 
104.3      (1) the day after the governing body of the city of 
104.4   Renville and its chief clerical officer timely complete their 
104.5   compliance with Minnesota Statutes, section 645.021, 
104.6   subdivisions 2 and 3; and 
104.7      (2) the first day of the month next following certification 
104.8   to the governing body of the city of Renville by the executive 
104.9   director of the Public Employees Retirement Association that the 
104.10  actuarial accrued liability of the special benefit coverage 
104.11  proposed for extension to the privatized RenVilla Nursing Home 
104.12  employees under section 1 does not exceed the actuarial gain 
104.13  otherwise to be accrued by the Public Employees Retirement 
104.14  Association, as calculated by the consulting actuary retained by 
104.15  the Legislative Commission on Pensions and Retirement. 
104.16     (c) The cost of the actuarial calculations must be borne by 
104.17  the city of Renville or the purchaser of the RenVilla Nursing 
104.18  Home. 
104.19     (d) Section 1, relating to the St. Peter Community 
104.20  Healthcare Center, is effective upon the latter of: 
104.21     (1) the day after the governing body of the city of St. 
104.22  Peter and its chief clerical officer timely complete their 
104.23  compliance with Minnesota Statutes, section 645.021, 
104.24  subdivisions 2 and 3; and 
104.25     (2) the first day of the month next following certification 
104.26  to the governing body of the city of St. Peter by the executive 
104.27  director of the Public Employees Retirement Association that the 
104.28  actuarial accrued liability of the special benefit coverage 
104.29  proposed for extension to the privatized St. Peter Community 
104.30  Healthcare Center employees under section 1 does not exceed the 
104.31  actuarial gain otherwise to be accrued by the Public Employees 
104.32  Retirement Association, as calculated by the consulting actuary 
104.33  retained by the Legislative Commission on Pensions and 
104.34  Retirement. 
104.35     (e) The cost of the actuarial calculations must be borne by 
104.36  the city of St. Peter or the purchaser of the St. Peter 
105.1   Community Healthcare Center. 
105.2      (f) If the required actions under paragraphs (b) and (c) 
105.3   occur, section 1 applies retroactively to the RenVilla Nursing 
105.4   Home as of the date of privatization. 
105.5      (g) If the required actions under paragraph (a) occur, 
105.6   section 1 applies retroactively to Fair Oaks Lodge, Wadena, as 
105.7   of January 1, 2004. 
105.8      (h) Sections 3 and 4 are effective on the day following 
105.9   final enactment. 
105.10                             ARTICLE 13
105.11            MINNEAPOLIS FIREFIGHTERS RELIEF ASSOCIATION
105.12     Section 1.  Minnesota Statutes 2003 Supplement, section 
105.13  423C.03, subdivision 3, is amended to read: 
105.14     Subd. 3.  [COMPENSATION OF OFFICERS AND BOARD MEMBERS.] (a) 
105.15  Notwithstanding any other law to the contrary, the association 
105.16  may provide for payment of the following salaries to its 
105.17  officers and board members: as specified in this subdivision. 
105.18     (1) (b) If the executive secretary is not an active member, 
105.19  the executive secretary may receive a salary to be set by the 
105.20  board, subject to the limitations stated in paragraph (d).  If 
105.21  the executive secretary is an active member, the executive 
105.22  secretary may receive a salary not exceeding 50 percent of the 
105.23  maximum salary of a first grade firefighter;. 
105.24     (2) (c) The president may receive a salary not exceeding 
105.25  ten percent of the maximum salary of a first grade firefighter;, 
105.26  and 
105.27     (3) all other elected members of the board, other than the 
105.28  executive secretary, may receive a salary not exceeding 2.5 
105.29  percent of the maximum salary of a first grade firefighter. 
105.30     (d) If the executive secretary is not an active member, the 
105.31  executive secretary's salary may not exceed the highest salary 
105.32  currently received by the executive director of the Minnesota 
105.33  State Retirement System, the Public Employees Retirement 
105.34  Association, or the Teachers Retirement Association. 
105.35     Sec. 2.  [EFFECTIVE DATE.] 
105.36     Section 1 is effective on the day on which the Minneapolis 
106.1   City Council and the chief clerical officer of the city of 
106.2   Minneapolis complete in a timely manner the requirements of 
106.3   Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
106.4                              ARTICLE 14
106.5                     VOLUNTEER FIREFIGHTER RELIEF
106.6                         ASSOCIATION CHANGES
106.7      Section 1.  Minnesota Statutes 2002, section 424A.02, 
106.8   subdivision 2, is amended to read: 
106.9      Subd. 2.  [NONFORFEITABLE PORTION OF SERVICE PENSION.] If 
106.10  the articles of incorporation or bylaws of a relief association 
106.11  so provide, a relief association may pay a reduced service 
106.12  pension to a retiring member who has completed fewer than 20 
106.13  years of service.  The reduced service pension may be paid when 
106.14  the retiring member meets the minimum age and service 
106.15  requirements of subdivision 1.  
106.16     The amount of the reduced service pension may not exceed 
106.17  the amount calculated by multiplying the service pension 
106.18  appropriate for the completed years of service as specified in 
106.19  the bylaws times the applicable nonforfeitable percentage of 
106.20  pension.  
106.21     For a volunteer firefighter relief association that pays a 
106.22  lump sum service pension, a monthly benefit service pension, or 
106.23  a lump sum service pension or a monthly benefit service pension 
106.24  as alternative benefit forms, the nonforfeitable percentage of 
106.25  pension amounts are as follows: 
106.26    Completed Years of Service   Nonforfeitable Percentage
106.27                                     of Pension Amount
106.28               5                          40 percent 
106.29               6                          44 percent 
106.30               7                          48 percent 
106.31               8                          52 percent 
106.32               9                          56 percent 
106.33              10                          60 percent 
106.34              11                          64 percent 
106.35              12                          68 percent 
106.36              13                          72 percent 
107.1               14                          76 percent 
107.2               15                          80 percent 
107.3               16                          84 percent 
107.4               17                          88 percent 
107.5               18                          92 percent 
107.6               19                          96 percent 
107.7               20 and thereafter          100 percent 
107.8      For a volunteer firefighter relief association that pays a 
107.9   defined contribution service pension, the nonforfeitable 
107.10  percentage of pension amounts are as follows:  
107.11    Completed Years of Service   Nonforfeitable Percentage
107.12                                     of Pension Amount
107.13               5                          40 percent 
107.14               6                          52 percent 
107.15               7                          64 percent 
107.16               8                          76 percent 
107.17               9                          88 percent 
107.18              10 and thereafter          100 percent 
107.19     Sec. 2.  Minnesota Statutes 2002, section 424A.02, 
107.20  subdivision 7, is amended to read: 
107.21     Subd. 7.  [DEFERRED SERVICE PENSIONS.] (a) A member of a 
107.22  relief association to which this section applies is entitled to 
107.23  a deferred service pension if the member: 
107.24     (1) has completed the lesser of the minimum period of 
107.25  active service with the fire department specified in the bylaws 
107.26  or 20 years of active service with the fire department; 
107.27     (2) has completed at least five years of active membership 
107.28  in the relief association; and 
107.29     (3) separates from active service and membership before 
107.30  reaching age 50 or the minimum age for retirement and 
107.31  commencement of a service pension specified in the bylaws 
107.32  governing the relief association if that age is greater than age 
107.33  50.  
107.34     (b) The deferred service pension starts when the former 
107.35  member reaches age 50 or the minimum age specified in the bylaws 
107.36  governing the relief association if that age is greater than age 
108.1   50 and when the former member makes a valid written application. 
108.2      (c) A relief association that provides a lump sum service 
108.3   pension may, when its governing bylaws so provide, pay interest 
108.4   on the deferred lump sum service pension during the period of 
108.5   deferral.  If provided for in the bylaws, interest must be paid 
108.6   in one of the following manners: 
108.7      (1) at the investment performance rate actually earned on 
108.8   that portion of the assets if the deferred benefit amount is 
108.9   invested by the relief association in a separate account 
108.10  established and maintained by the relief association or if the 
108.11  deferred benefit amount is invested in a separate investment 
108.12  vehicle held by the relief association or, if not,; 
108.13     (2) at the interest rate of five percent, compounded 
108.14  annually; or 
108.15     (3) at a rate equal to the actual time weighted total rate 
108.16  of return investment performance of the special fund as reported 
108.17  by the office of the state auditor under section 356.219, up to 
108.18  five percent, compounded annually, and applied consistently for 
108.19  all deferred service pensioners. 
108.20     (d) A relief association may not use the method provided 
108.21  for in paragraph (c), clause (3), until it has modified its 
108.22  bylaws to be consistent with that clause. 
108.23     (e) For a deferred service pension that is transferred to a 
108.24  separate account established and maintained by the relief 
108.25  association or separate investment vehicle held by the relief 
108.26  association, the deferred member bears the full investment risk 
108.27  subsequent to transfer and in calculating the accrued liability 
108.28  of the volunteer firefighters relief association that pays a 
108.29  lump sum service pension, the accrued liability for deferred 
108.30  service pensions is equal to the separate relief association 
108.31  account balance or the fair market value of the separate 
108.32  investment vehicle held by the relief association. 
108.33     (e) (f) The deferred service pension is governed by and 
108.34  must be calculated under the general statute, special law, 
108.35  relief association articles of incorporation, and relief 
108.36  association bylaw provisions applicable on the date on which the 
109.1   member separated from active service with the fire department 
109.2   and active membership in the relief association. 
109.3      Sec. 3.  [MARINE ON ST. CROIX VOLUNTEER FIREFIGHTERS RELIEF 
109.4   ASSOCIATION; EARLY VESTING.] 
109.5      (a) Notwithstanding Minnesota Statutes, section 424A.02, 
109.6   subdivision 2, to the contrary, the Marine on St. Croix 
109.7   Volunteer Firefighters Relief Association may utilize an early 
109.8   vesting schedule as provided in paragraphs (b) and (c). 
109.9      (b) If the articles of incorporation or bylaws of the 
109.10  Marine on St. Croix Volunteer Firefighters Relief Association so 
109.11  provide, the relief association may pay a reduced service 
109.12  pension to a retiring member who has completed fewer than ten 
109.13  years of service.  The reduced service pension may be paid when 
109.14  the retiring member meets the minimum age and service 
109.15  requirements of Minnesota Statutes, section 424A.02, subdivision 
109.16  1.  
109.17     (c) The amount of the reduced service pension may not 
109.18  exceed the amount calculated by multiplying the service pension 
109.19  appropriate for the completed years of service as specified in 
109.20  the articles of incorporation or bylaws by the applicable 
109.21  nonforfeitable percentage of the service pension amount.  The 
109.22  nonforfeitable percentage of service pension amounts are as 
109.23  follows: 
109.24           Completed years           Nonforfeitable percentage 
109.25            of service               of service pension amount 
109.26                5                           40 percent 
109.27                6                           52 percent 
109.28                7                           64 percent 
109.29                8                           76 percent 
109.30                9                           88 percent 
109.31               10 and                      100 percent 
109.32               thereafter 
109.33     Sec. 4.  [BELLINGHAM FIREFIGHTER RELIEF ASSOCIATION; 
109.34  RATIFICATION OF PRIOR ANNUITY INVESTMENTS.] 
109.35     Notwithstanding Minnesota Statutes, section 356A.06, 
109.36  subdivision 7, any annuity purchases by the Bellingham 
110.1   Firefighters Relief Association prior to the effective date of 
110.2   this section are ratified as permissible investments. 
110.3      Sec. 5.  [STUDY OF STATEWIDE LUMP SUM VOLUNTEER FIREFIGHTER 
110.4   RETIREMENT PLAN; CREATION OF TASK FORCE.] 
110.5      Subdivision 1.  [TASK FORCE MEMBERSHIP.] (a) A statewide 
110.6   Volunteer Firefighter Retirement Plan Study Task Force is 
110.7   created. 
110.8      (b) The task force members are: 
110.9      (1) four members appointed by the president of the 
110.10  Minnesota Area Relief Association coalition; 
110.11     (2) four members appointed by the president of the 
110.12  Minnesota State Fire Department Association; 
110.13     (3) four members appointed by the president of the 
110.14  Minnesota State Fire Chiefs Association; 
110.15     (4) four members appointed by the board of directors of the 
110.16  League of Minnesota Cities; 
110.17     (5) two members appointed by the board of directors of the 
110.18  Insurance Federation of Minnesota; 
110.19     (6) two members appointed by the board of directors of the 
110.20  Minnesota Association of Farm Mutual Insurance Companies; 
110.21     (7) the Minnesota state auditor or the auditor's designee; 
110.22  and 
110.23     (8) two members appointed by the Minnesota Association of 
110.24  Townships. 
110.25     (c) Appointments must be made on or before July 1, 2004.  
110.26  If the appointment is not made in a timely manner, or if there 
110.27  is a vacancy, the state auditor shall appoint the task force 
110.28  member or the replacement member. 
110.29     (d) The chair of the task force must be selected by the 
110.30  task force.  
110.31     (e) Administrative services for the task force must be 
110.32  provided by the Department of Public Safety. 
110.33     Subd. 2.  [TASK FORCE DUTIES.] The task force shall conduct 
110.34  fact finding regarding the creation of a statewide volunteer 
110.35  firefighter retirement plan. 
110.36     The task force shall recommend the investment vehicle or 
111.1   vehicles to be utilized by the plan, the administration and 
111.2   corporate governance structure of the plan, the incentives 
111.3   needed to formulate the plan, the limitations applicable to the 
111.4   plan, and the state resources needed to be dedicated to the plan.
111.5      Subd. 3.  [REPORT.] The task force shall prepare a report 
111.6   detailing its findings about a potential statewide volunteer 
111.7   firefighter retirement plan.  The report is due January 15, 
111.8   2005, and must be filed with the Legislative Reference Library; 
111.9   the chair of the Legislative Commission on Pensions and 
111.10  Retirement; the chair of the State and Local Government 
111.11  Operations Committee of the senate; the chair of the State 
111.12  Government Budget Division of the Senate Finance Committee; the 
111.13  chair of the Governmental Operations and Veterans Affairs Policy 
111.14  Committee of the house of representatives; and the chair of the 
111.15  State Government Finance Committee of the house of 
111.16  representatives. 
111.17     Sec. 6.  [APPROPRIATION.] 
111.18     $40,000 is appropriated from the general fund in fiscal 
111.19  year 2005 to the commissioner of public safety to hire a 
111.20  consultant to assist the statewide Volunteer Firefighter 
111.21  Retirement Plan Study Task Force. 
111.22     Sec. 7.  [EFFECTIVE DATE.] 
111.23     (a) Sections 1, 2, 5, and 6 are effective on July 1, 2004. 
111.24     (b) Section 3 is effective on the day after the date on 
111.25  which the city council of the city of Marine on St. Croix and 
111.26  the chief clerical officer of the city of Marine on St. Croix 
111.27  comply with Minnesota Statutes, section 645.02, subdivisions 2 
111.28  and 3. 
111.29     (c) Section 4 is effective on the day following final 
111.30  enactment. 
111.31     (d) The deferred service pension interest crediting 
111.32  procedure of Minnesota Statutes, section 424A.02, subdivision 7, 
111.33  paragraph (c), clause (3), expires on December 31, 2008. 
111.34                             ARTICLE 15
111.35                     PERA POLICE AND FIRE PLAN
111.36                       MEMBERSHIP INCLUSIONS
112.1      Section 1.  Minnesota Statutes 2003 Supplement, section 
112.2   353.01, subdivision 6, is amended to read: 
112.3      Subd. 6.  [GOVERNMENTAL SUBDIVISION.] (a) "Governmental 
112.4   subdivision" means a county, city, town, school district within 
112.5   this state, or a department or unit of state government, or any 
112.6   public body whose revenues are derived from taxation, fees, 
112.7   assessments or from other sources. 
112.8      (b) Governmental subdivision also means the Public 
112.9   Employees Retirement Association, the League of Minnesota 
112.10  Cities, the Association of Metropolitan Municipalities, public 
112.11  hospitals owned or operated by, or an integral part of, a 
112.12  governmental subdivision or governmental subdivisions, the 
112.13  Association of Minnesota Counties, the Metropolitan Intercounty 
112.14  Association, the Minnesota Municipal Utilities Association, the 
112.15  Metropolitan Airports Commission, the Minneapolis Employees 
112.16  Retirement Fund for employment initially commenced after June 
112.17  30, 1979, the Range Association of Municipalities and Schools, 
112.18  soil and water conservation districts, economic development 
112.19  authorities created or operating under sections 469.090 to 
112.20  469.108, the Port Authority of the city of St. Paul, the Spring 
112.21  Lake Park Fire Department, incorporated, the Lake Johanna 
112.22  Volunteer Fire Department, incorporated, the Red Wing 
112.23  Environmental Learning Center, and the Dakota County 
112.24  Agricultural Society. 
112.25     (c) Governmental subdivision does not mean any municipal 
112.26  housing and redevelopment authority organized under the 
112.27  provisions of sections 469.001 to 469.047; or any port authority 
112.28  organized under sections 469.048 to 469.089 other than the Port 
112.29  Authority of the city of St. Paul; or any hospital district 
112.30  organized or reorganized prior to July 1, 1975, under sections 
112.31  447.31 to 447.37 or the successor of the district, nor the 
112.32  Minneapolis Community Development Agency.  
112.33     Sec. 2.  [EFFECTIVE DATE.] 
112.34     Section 1 is effective on the day following final enactment.
112.35                             ARTICLE 16
112.36                     ONE PERSON AND SMALL GROUP
113.1                           PENSION CHANGES
113.2      Section 1.  [PERA-GENERAL; PURCHASE OF PRIOR SERVICE 
113.3   CREDIT.] 
113.4      (a) An eligible person described in paragraph (b) is 
113.5   entitled to purchase up to 33 months of allowable service credit 
113.6   from the general employees retirement plan of the Public 
113.7   Employees Retirement Association.  The service credit purchase 
113.8   under this section must be made in accordance with Minnesota 
113.9   Statutes, section 356.55 or 356.551, whichever applies. 
113.10     (b) An eligible person is a person who: 
113.11     (1) is currently a member of the Teachers Retirement 
113.12  Association; 
113.13     (2) was employed by Independent School District No. 621, 
113.14  Mounds View, from May 1968 to December 1971, but was not covered 
113.15  by the general employees retirement plan of the Public Employees 
113.16  Retirement Association; 
113.17     (3) was employed by Independent School District No. 31, 
113.18  Bemidji, but was not covered by the general employees retirement 
113.19  plan of the Public Employees Retirement Association; 
113.20     (4) was employed as a special education teacher by 
113.21  Independent School District No. 12, Centennial, for the 
113.22  1974-1975 school year and for the 1977-1978, 1978-1979, and 
113.23  1979-1980 school years; 
113.24     (5) was employed as a special education teacher by 
113.25  Independent School District No. 16, Spring Lake Park, for the 
113.26  1975-1976 school year; 
113.27     (6) was employed as a special education teacher by 
113.28  Independent School District No. 138, North Branch, for the 
113.29  1980-1981, 1981-1982, 1982-1983, 1983-1984, 1984-1985, and 
113.30  1985-1986 school years; and 
113.31     (7) has been employed by Independent School District No. 
113.32  11, Anoka-Hennepin, since the 1986-1987 school year. 
113.33     (c) An eligible person described in paragraph (b) must 
113.34  apply with the executive director of the Public Employees 
113.35  Retirement Association to make the service credit purchase under 
113.36  this section.  The application must be in writing and must 
114.1   include all necessary documentation of the applicability of this 
114.2   section, documentation of the eligible person's eligibility for 
114.3   retirement coverage by the general employees retirement plan of 
114.4   the Public Employees Retirement Association if the employment 
114.5   had been properly reported to the association at the time the 
114.6   employment was rendered, and any other relevant information that 
114.7   the executive director may require. 
114.8      Sec. 2.  [PERA-GENERAL EMPLOYEES RETIREMENT PLAN COVERAGE 
114.9   TERMINATION AUTHORIZATION.] 
114.10     Subdivision 1.  [ELIGIBILITY.] (a) An eligible person 
114.11  specified in paragraph (b) is authorized to apply for a 
114.12  retirement annuity from the public employees police and fire 
114.13  retirement plan, provided that the necessary age and service 
114.14  requirements are met, under Minnesota Statutes, section 353.651, 
114.15  as further specified under subdivision 2. 
114.16     (b) An eligible person is a person who: 
114.17     (1) was born on October 10, 1956; 
114.18     (2) was employed as a police officer by the city of Red 
114.19  Wing; 
114.20     (3) was elected to the Goodhue County Board of 
114.21  Commissioners in November 1998; and 
114.22     (4) elected under the law then applicable to have 
114.23  retirement coverage by the general employees retirement plan of 
114.24  the Public Employees Retirement Association for the county board 
114.25  service.  
114.26     Subd. 2.  [RETIREMENT ANNUITY.] (a) Notwithstanding an 
114.27  irrevocable election to participate in the general employees 
114.28  retirement plan of the Public Employees Retirement Association 
114.29  as an elected official and the person's continuation of elected 
114.30  service, an eligible person under subdivision 1, paragraph (b), 
114.31  is deemed to have terminated retirement plan membership under 
114.32  Minnesota Statutes, section 353.01, subdivision 11b, on the 
114.33  first day of the first pay period next following the date of 
114.34  enactment. 
114.35     (b) Upon the change in retirement coverage status under 
114.36  paragraph (a), the eligible person may apply for a retirement 
115.1   annuity under Minnesota Statutes, section 353.651.  In computing 
115.2   that annuity, the Public Employees Retirement Association must 
115.3   exclude the salary that was attributable to the Goodhue County 
115.4   board service.  The deferred annuity augmentation under 
115.5   Minnesota Statutes, section 353.71, applies to the annuity under 
115.6   this subdivision.  
115.7      Subd. 3.  [TREATMENT OF GOODHUE COUNTY BOARD CONTRIBUTIONS 
115.8   TO PERA.] (a) All member contributions by the eligible person to 
115.9   the coordinated program of the general employee retirement plan 
115.10  of the Public Employees Retirement Association attributable to 
115.11  the Goodhue County board elected service, and all corresponding 
115.12  employer contributions, must be determined. 
115.13     (b) An eligible person described in subdivision 1, 
115.14  paragraph (b), must elect, within 90 days of the change in 
115.15  retirement coverage status under paragraph (a), between 
115.16  receiving a refund under Minnesota Statutes, section 353.34, 
115.17  subdivision 2, of the member contributions determined under 
115.18  paragraph (a) or having coverage by the public employees defined 
115.19  contribution plan under Minnesota Statutes, chapter 353D, as 
115.20  further specified in paragraph (c). 
115.21     (c) If coverage by the public employees defined 
115.22  contribution plan is elected under paragraph (b), contributions 
115.23  to that plan commence as of the first day of the first pay 
115.24  period following the election, and the accumulated member and 
115.25  employer contributions determined under paragraph (a) must be 
115.26  transferred with annual compound interest at the rate of six 
115.27  percent to an account established for the eligible person in its 
115.28  public employees defined contribution plan. 
115.29     (d) If no election is made by an eligible person by the 
115.30  required date in paragraph (b), the individual is assumed to 
115.31  have elected the refund indicated in paragraph (b). 
115.32     (e) Upon an election under paragraph (b), or upon a 
115.33  mandatory refund under paragraph (d), all rights in the Public 
115.34  Employees Retirement Association coordinated plan due to elected 
115.35  Goodhue County board service are forfeited and may not be 
115.36  reestablished.  
116.1      Sec. 3.  [PUBLIC EMPLOYEES RETIREMENT ASSOCIATION COVERAGE 
116.2   TERMINATION; MINNEAPOLIS PARK BOARD MEMBER.] 
116.3      Subdivision 1.  [ELIGIBILITY.] (a) An eligible individual 
116.4   specified in paragraph (b) is authorized to apply for a 
116.5   retirement annuity, provided necessary age and service 
116.6   requirements are met, under Minnesota Statutes, section 353.29 
116.7   or 353.30, as applicable, as further specified under subdivision 
116.8   2.  
116.9      (b) An eligible individual is an individual who:  
116.10     (1) was born on April 3, 1946; 
116.11     (2) was employed as a Hennepin County employee and became a 
116.12  member of the Public Employees Retirement Association general 
116.13  plan due to that service in July 1976; 
116.14     (3) was elected to the Minneapolis park board and took 
116.15  office in January 1992; and 
116.16     (4) elected under law then applicable to have Public 
116.17  Employees Retirement Association general plan coverage for the 
116.18  Minneapolis park board elected or appointed service.  
116.19     Subd. 2.  [RETIREMENT ANNUITY.] (a) Notwithstanding an 
116.20  irrevocable election to participate in the Public Employees 
116.21  Retirement Association general plan as an elected official and 
116.22  continuation of elected service, an eligible individual under 
116.23  subdivision 1, paragraph (b), is deemed to have terminated 
116.24  membership under Minnesota Statutes, section 353.01, subdivision 
116.25  11b, following the termination of all Public Employees 
116.26  Retirement Association general covered employment other than 
116.27  elected or appointed Minneapolis Park Board employment. 
116.28     (b) If the requirements of paragraph (a) are satisfied, the 
116.29  eligible individual may apply for a retirement annuity under 
116.30  Minnesota Statutes, section 353.29 or 353.30, as applicable.  In 
116.31  computing the annuity, the Public Employees Retirement 
116.32  Association must exclude salary due to the elected or appointed 
116.33  Minneapolis Park Board service.  If there is a delay between the 
116.34  termination date and the commencement of the annuity, deferred 
116.35  annuity augmentation under Minnesota Statutes, section 353.71, 
116.36  applies. 
117.1      Subd. 3.  [TREATMENT OF MINNEAPOLIS PARK BOARD SERVICE 
117.2   CONTRIBUTIONS TO THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION.] 
117.3   (a) All employee contributions to the Public Employees 
117.4   Retirement Association general plan by an eligible individual in 
117.5   subdivision 1, paragraph (b), due to the elected or appointed 
117.6   Minneapolis Park Board service, and all corresponding employer 
117.7   contributions, must be determined. 
117.8      (b) An eligible individual under subdivision 1, paragraph 
117.9   (b), must elect, within one year of the effective date of this 
117.10  section or upon termination of elective or appointed park board 
117.11  service, whichever is earlier, a refund under Minnesota 
117.12  Statutes, section 353.34, subdivision 2, of employee 
117.13  contributions determined under paragraph (a), or coverage by the 
117.14  public employees defined contribution plan under Minnesota 
117.15  Statutes, chapter 353D, as further specified in paragraph (c).  
117.16  This election shall be made in writing on a form to be provided 
117.17  by the executive director of the Public Employees Retirement 
117.18  Association.  
117.19     (c) If public employee defined contribution plan coverage 
117.20  is elected under paragraph (b), contributions to that plan 
117.21  commence as of the first day of the pay period following this 
117.22  election, and accumulated employee and employer contributions 
117.23  determined under paragraph (a) must be transferred with six 
117.24  percent annual interest to an account for the eligible 
117.25  individual in the public employees defined contribution plan.  
117.26     (d) If no election is made by an eligible individual by the 
117.27  required date in paragraph (b), the individual is assumed to 
117.28  have elected the refund indicated in paragraph (b).  
117.29     (e) Upon an election under paragraph (b), or a mandatory 
117.30  refund under paragraph (d), all rights in the Public Employees 
117.31  Retirement Association general plan due to elected or appointed 
117.32  Minneapolis Park Board service are forfeited and may not be 
117.33  reestablished. 
117.34     Sec. 4.  [MSRS-UNCLASSIFIED PROGRAM; ELECTION BY SURVIVOR.] 
117.35     (a) Notwithstanding any provision of Minnesota Statutes, 
117.36  chapter 352 or 352D, to the contrary, a person described in 
118.1   paragraph (b) may make the posthumous coverage election 
118.2   specified in paragraph (c) and be eligible for the survivor 
118.3   benefit specified in paragraph (d). 
118.4      (b) An eligible person is the personal representative of 
118.5   the estate of a person who: 
118.6      (1) was born on March 26, 1942; 
118.7      (2) was employed by the house of representatives for 
118.8   several years prior to being laid off; 
118.9      (3) was covered by the unclassified state employees 
118.10  retirement program of the Minnesota State Retirement System as a 
118.11  house employee until electing alternative coverage by the 
118.12  general employee retirement plan at or prior to the termination 
118.13  of house employment; 
118.14     (4) was employed by the senate prior to death, but did not 
118.15  make the election to transfer prior service contributions to the 
118.16  unclassified state employees retirement program under Minnesota 
118.17  Statutes, section 352D.12; and 
118.18     (5) died on February 19, 2004. 
118.19     (c) The posthumous coverage election is the transfer 
118.20  election under Minnesota Statutes, section 352D.12, and the 
118.21  personal representative of the estate of a person described in 
118.22  paragraph (b) may make the election as if the representative was 
118.23  a participant in the unclassified program. 
118.24     (d) If the posthumous coverage election is made under 
118.25  paragraph (d), the estate is entitled to a death benefit under 
118.26  Minnesota Statutes, section 352D.075. 
118.27     (e) The posthumous coverage election under this section 
118.28  expires on July 1, 2005. 
118.29     Sec. 5.  [MSRS DEFERRED ANNUITANT; ALLOWING USE OF 
118.30  NON-COVERED EMPLOYMENT FOR RULE OF 90 ELIGIBILITY.] 
118.31     Subdivision 1.  [AUTHORITY.] An eligible individual under 
118.32  subdivision 2 is authorized to have the benefit treatment 
118.33  specified in subdivision 3, providing the eligible individual 
118.34  complies with all requirements under subdivision 4.  
118.35     Subd. 2.  [ELIGIBILITY.] An eligible individual is an 
118.36  individual who: 
119.1      (1) is a Minnesota State Retirement System general plan 
119.2   deferred member; 
119.3      (2) was born on June 27, 1946; 
119.4      (3) was the director of the Minnesota Indian scholarship 
119.5   program from 1974 to 2002; 
119.6      (4) due to an office closing, was terminated from Minnesota 
119.7   State Retirement System general plan covered employment in late 
119.8   2002; and 
119.9      (5) was hired as a counselor at Bug-O-Na-Ge-Shig school in 
119.10  August 2003. 
119.11     Subd. 3.  [PROCEDURE.] An eligible individual under 
119.12  subdivision 2 is authorized to have employment at the 
119.13  Bug-O-Na-Ge-Shig school used for purposes of determining 
119.14  eligibility for early retirement benefits provided under 
119.15  Minnesota Statutes, section 352.116, subdivision 1, paragraphs 
119.16  (a) and (b), notwithstanding any provisions of Minnesota 
119.17  Statutes, chapter 352, to the contrary.  The employment under 
119.18  this subdivision must not be used as service credit for purposes 
119.19  of computing the specified benefit.  
119.20     Subd. 4.  [REQUIREMENTS.] (a) An eligible individual under 
119.21  subdivision 2 and that individual's employer shall provide the 
119.22  Minnesota State Retirement System executive director with any 
119.23  information or reports that the executive director may request 
119.24  to determine eligibility under this section and service provided 
119.25  to the employer.  
119.26     (b) An eligible individual is not entitled to a benefit 
119.27  determined under this section until the eligible individual 
119.28  terminates employment with the employer who owns, leases, or 
119.29  operates the school specified in subdivision 2.  
119.30     (c) A terminated eligible individual meeting requirements 
119.31  of this subdivision, or an individual authorized to act on 
119.32  behalf of that individual, may apply for an annuity following 
119.33  application procedures under Minnesota Statutes, section 
119.34  352.115, subdivision 7.  
119.35     (d) Authority under this section is voided if an eligible 
119.36  individual takes or has taken a refund under Minnesota Statutes, 
120.1   section 352.22.  
120.2      (e) The reemployed annuitant earnings limitations of 
120.3   Minnesota Statutes, section 352.115, subdivision 10, apply to 
120.4   any service by an eligible individual following reemployment 
120.5   with the employer who owns, leases, or operates the school 
120.6   specified in subdivision 2.  
120.7      (f) Authority under this section is voided if the eligible 
120.8   individual has defined benefit pension plan coverage for the 
120.9   school employment specified in subdivision 2, or if the eligible 
120.10  individual has received service credit, or is eligible to 
120.11  receive service credit, in a defined benefit pension plan for 
120.12  that school employment. 
120.13     Sec. 6.  [EFFECTIVE DATE.] 
120.14     Sections 1 to 5 are effective on the day following final 
120.15  enactment.  
120.16                             ARTICLE 17
120.17                   PRIOR SERVICE CREDIT PURCHASES
120.18     Section 1.  Minnesota Statutes 2002, section 352.275, 
120.19  subdivision 1, is amended to read: 
120.20     Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
120.21  state employee who has at least three years of allowable service 
120.22  with the Minnesota State Retirement System and who performed 
120.23  service in the United States armed forces before becoming a 
120.24  state employee, or who failed to obtain service credit for a 
120.25  military leave of absence under section 352.27, is entitled to 
120.26  purchase allowable service credit for the initial period of 
120.27  enlistment, induction, or call to active duty without any 
120.28  voluntary extension by making payment under section 356.55 if 
120.29  the employee is not entitled to receive a current or deferred 
120.30  retirement annuity from a United States armed forces pension 
120.31  plan and has not purchased service credit from any other defined 
120.32  benefit public employee pension plan for the same period of 
120.33  service. 
120.34     Sec. 2.  Minnesota Statutes 2002, section 352B.01, 
120.35  subdivision 3a, is amended to read: 
120.36     Subd. 3a.  [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 
121.1   (a) A member who has at least three years of allowable service 
121.2   with the State Patrol retirement plan under subdivision 3 and 
121.3   who performed service in the United States armed forces before 
121.4   becoming a member is entitled to purchase allowable service 
121.5   credit for the initial period of enlistment, induction, or call 
121.6   to active duty without any voluntary extension by making payment 
121.7   under section 356.55, if the employee is not entitled to receive 
121.8   a current or deferred retirement annuity from a United States 
121.9   armed forces pension plan and has not purchased service credit 
121.10  from any other defined benefit public employee pension plan for 
121.11  the same period of service. 
121.12     (b) A member who desires to purchase service credit under 
121.13  paragraph (a) must apply with the executive director to make the 
121.14  purchase.  The application must include all necessary 
121.15  documentation of the member's qualifications to make the 
121.16  purchase, signed written permission to allow the executive 
121.17  director to request and receive necessary verification of 
121.18  applicable facts and eligibility requirements, and any other 
121.19  relevant information that the executive director may require. 
121.20     (c) Allowable service credit for the purchase period must 
121.21  be granted by the State Patrol retirement plan to the purchasing 
121.22  employee upon receipt of the purchase payment amount.  Payment 
121.23  must be made before the effective date of retirement of the 
121.24  member. 
121.25     Sec. 3.  Minnesota Statutes 2002, section 353.01, 
121.26  subdivision 16a, is amended to read: 
121.27     Subd. 16a.  [UNCREDITED MILITARY SERVICE CREDIT PURCHASE.] 
121.28  (a) A public employee who has at least three years of allowable 
121.29  service with the Public Employees Retirement Association or the 
121.30  public employees police and fire plan and who performed service 
121.31  in the United States armed forces before becoming a public 
121.32  employee, or who failed to obtain service credit for a military 
121.33  leave of absence under subdivision 16, paragraph (h), is 
121.34  entitled to purchase allowable service credit for the initial 
121.35  period of enlistment, induction, or call to active duty without 
121.36  any voluntary extension by making payment under section 
122.1   356.55 if the public employee is not entitled to receive a 
122.2   current or deferred retirement annuity from a United States 
122.3   armed forces pension plan and has not purchased service credit 
122.4   from any other defined benefit public employee pension plan for 
122.5   the same period of service. 
122.6      (b) A public employee who desires to purchase service 
122.7   credit under paragraph (a) must apply with the executive 
122.8   director to make the purchase.  The application must include all 
122.9   necessary documentation of the public employee's qualifications 
122.10  to make the purchase, signed written permission to allow the 
122.11  executive director to request and receive necessary verification 
122.12  of applicable facts and eligibility requirements, and any other 
122.13  relevant information that the executive director may require. 
122.14     (c) Allowable service credit for the purchase period must 
122.15  be granted by the public employees association or the public 
122.16  employees police and fire plan, whichever applies, to the 
122.17  purchasing public employee upon receipt of the purchase payment 
122.18  amount.  Payment must be made before the effective date of 
122.19  retirement of the public employee. 
122.20     Sec. 4.  Minnesota Statutes 2002, section 354.533, 
122.21  subdivision 1, is amended to read: 
122.22     Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
122.23  teacher who has at least three years of allowable service credit 
122.24  with the Teachers Retirement Association and who performed 
122.25  service in the United States armed forces before becoming a 
122.26  teacher as defined in section 354.05, subdivision 2, or who 
122.27  failed to obtain service credit for a military leave of absence 
122.28  under the provisions of section 354.53, is entitled to purchase 
122.29  allowable and formula service credit for the initial period of 
122.30  enlistment, induction, or call to active duty without any 
122.31  voluntary extension by making payment under section 356.55 
122.32  provided the teacher is not entitled to receive a current or 
122.33  deferred retirement annuity from a United States armed forces 
122.34  pension plan and has not purchased service credit from any other 
122.35  defined benefit public employee pension plan for the same period 
122.36  of service. 
123.1      Sec. 5.  Minnesota Statutes 2002, section 354A.097, 
123.2   subdivision 1, is amended to read: 
123.3      Subdivision 1.  [SERVICE CREDIT PURCHASE AUTHORIZED.] A 
123.4   teacher who has at least three years of allowable service credit 
123.5   with the teachers retirement fund association and who performed 
123.6   service in the United States armed forces before becoming a 
123.7   teacher as defined in section 354A.011, subdivision 27, or who 
123.8   failed to obtain service credit for a military leave of absence 
123.9   period under section 354A.093, is entitled to purchase allowable 
123.10  service credit for the initial period of enlistment, induction, 
123.11  or call to active duty without any voluntary extension by making 
123.12  payment under section 356.55, provided the teacher is not 
123.13  entitled to receive a current or deferred retirement annuity 
123.14  from a United States armed forces pension plan and has not 
123.15  purchased service credit from another defined benefit public 
123.16  employee pension plan for the same period of service. 
123.17     Sec. 6.  Laws 1999, chapter 222, article 16, section 16, as 
123.18  amended by Laws 2002, chapter 392, article 7, section 1, and 
123.19  Laws 2003, First Special Session chapter 12, article 6, section 
123.20  2, is amended to read: 
123.21     Sec. 16.  [REPEALER.] 
123.22     (a) Sections 1 2 to 6 and 8 to 13 are repealed on May 16, 
123.23  2004. 
123.24     (b) Sections 1 and 7 are repealed on May 16, 2006. 
123.25     Sec. 7.  Laws 2000, chapter 461, article 4, section 4, as 
123.26  amended by Laws 2003, First Special Session chapter 12, article 
123.27  6, section 3, is amended to read: 
123.28     Sec. 4.  [EFFECTIVE DATE; SUNSET REPEALER.] 
123.29     (a) Sections 1, 2, and 3 are effective on the day following 
123.30  final enactment. 
123.31     (b) Sections 1, 2, and 3 are repealed on May 16, 2004 2006. 
123.32     Sec. 8.  [EFFECTIVE DATE.] 
123.33     Sections 1 to 7 are effective on the day following final 
123.34  enactment. 
123.35                             ARTICLE 18
123.36                  PROVISION OF ACTUARIAL SERVICES
124.1      Section 1.  Minnesota Statutes 2002, section 352.03, 
124.2   subdivision 6, is amended to read: 
124.3      Subd. 6.  [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 
124.4   management of the system is vested in the director, who is the 
124.5   executive and administrative head of the system.  The director 
124.6   shall be advisor to the board on matters pertaining to the 
124.7   system and shall also act as the secretary of the board.  The 
124.8   director shall: 
124.9      (1) attend meetings of the board; 
124.10     (2) prepare and recommend to the board appropriate rules to 
124.11  carry out this chapter; 
124.12     (3) establish and maintain an adequate system of records 
124.13  and accounts following recognized accounting principles and 
124.14  controls; 
124.15     (4) designate an assistant director with the approval of 
124.16  the board; 
124.17     (5) appoint any employees, both permanent and temporary, 
124.18  that are necessary to carry out the provisions of this chapter; 
124.19     (6) organize the work of the system as the director deems 
124.20  necessary to fulfill the functions of the system, and define the 
124.21  duties of its employees and delegate to them any powers or 
124.22  duties, subject to the control of the director and under 
124.23  conditions the director may prescribe.  Appointments to exercise 
124.24  delegated power must be by written order and shall be filed with 
124.25  the secretary of state; 
124.26     (7) with the advice and consent of the board, contract for 
124.27  the services of an approved actuary, professional management 
124.28  services, and any other consulting services as necessary and fix 
124.29  the compensation for those services.  The contracts are not 
124.30  subject to competitive bidding under chapter 16C.  Any approved 
124.31  actuary retained by the executive director shall function as the 
124.32  actuarial advisor of the board and the executive director, and 
124.33  may perform actuarial valuations and experience studies to 
124.34  supplement those performed by the actuary retained by the 
124.35  legislative commission on pensions and retirement under section 
124.36  6.  Any supplemental actuarial valuations or experience studies 
125.1   shall be filed with the executive director of the Legislative 
125.2   Commission on Pensions and Retirement.  Professional management 
125.3   services may not be contracted for more often than once in six 
125.4   years.  Copies of professional management survey reports must be 
125.5   transmitted to the secretary of the senate, the chief clerk of 
125.6   the house of representatives, and the Legislative Reference 
125.7   Library as provided by section 3.195, and to the executive 
125.8   director of the commission at the time as reports are furnished 
125.9   to the board.  Only management firms experienced in conducting 
125.10  management surveys of federal, state, or local public retirement 
125.11  systems are qualified to contract with the director; 
125.12     (8) with the advice and consent of the board provide 
125.13  in-service training for the employees of the system; 
125.14     (9) make refunds of accumulated contributions to former 
125.15  state employees and to the designated beneficiary, surviving 
125.16  spouse, legal representative, or next of kin of deceased state 
125.17  employees or deceased former state employees, as provided in 
125.18  this chapter; 
125.19     (10) determine the amount of the annuities and disability 
125.20  benefits of employees covered by the system and authorize 
125.21  payment of the annuities and benefits beginning as of the dates 
125.22  on which the annuities and benefits begin to accrue, in 
125.23  accordance with the provisions of this chapter; 
125.24     (11) pay annuities, refunds, survivor benefits, salaries, 
125.25  and necessary operating expenses of the system; 
125.26     (12) certify funds available for investment to the State 
125.27  Board of Investment; 
125.28     (13) with the advice and approval of the board request the 
125.29  State Board of Investment to sell securities when the director 
125.30  determines that funds are needed for the system; 
125.31     (14) prepare and submit to the board and the legislature an 
125.32  annual financial report covering the operation of the system, as 
125.33  required by section 356.20; 
125.34     (15) prepare and submit biennial and annual budgets to the 
125.35  board and with the approval of the board submit the budgets to 
125.36  the Department of Finance; and 
126.1      (16) with the approval of the board, perform other duties 
126.2   required to administer the retirement and other provisions of 
126.3   this chapter and to do its business. 
126.4      Sec. 2.  Minnesota Statutes 2002, section 352B.02, 
126.5   subdivision 1e, is amended to read: 
126.6      Subd. 1e.  [AUDIT; ACTUARIAL VALUATION.] The legislative 
126.7   auditor shall audit the fund.  Any actuarial valuation of the 
126.8   fund required under section 356.215 shall must be prepared by 
126.9   the actuary retained by the Legislative Commission on Pensions 
126.10  and Retirement under section 6.  Any approved actuary retained 
126.11  by the executive director under section 352.03, subdivision 6, 
126.12  may perform actuarial valuations and experience studies to 
126.13  supplement those performed by the commission-retained actuary.  
126.14  Any supplemental actuarial valuation or experience studies shall 
126.15  be filed with the executive director of the Legislative 
126.16  Commission on Pensions and Retirement.  
126.17     Sec. 3.  Minnesota Statutes 2002, section 353.03, 
126.18  subdivision 3a, is amended to read: 
126.19     Subd. 3a.  [EXECUTIVE DIRECTOR.] (a)  [APPOINTMENT.] The 
126.20  board shall appoint, with the advice and consent of the senate, 
126.21  an executive director on the basis of education, experience in 
126.22  the retirement field, and leadership ability.  The executive 
126.23  director shall have had at least five years' experience in an 
126.24  executive level management position, which has included 
126.25  responsibility for pensions, deferred compensation, or employee 
126.26  benefits.  The executive director serves at the pleasure of the 
126.27  board.  The salary of the executive director is as provided by 
126.28  section 15A.0815. 
126.29     (b)  [DUTIES.] The management of the association is vested 
126.30  in the executive director who shall be the executive and 
126.31  administrative head of the association.  The executive director 
126.32  shall act as adviser to the board on all matters pertaining to 
126.33  the association and shall also act as the secretary of the 
126.34  board.  The executive director shall: 
126.35     (1) attend all meetings of the board; 
126.36     (2) prepare and recommend to the board appropriate rules to 
127.1   carry out the provisions of this chapter; 
127.2      (3) establish and maintain an adequate system of records 
127.3   and accounts following recognized accounting principles and 
127.4   controls; 
127.5      (4) designate, with the approval of the board, up to two 
127.6   persons who shall serve in the unclassified service and whose 
127.7   salary is set in accordance with section 43A.18, subdivision 3, 
127.8   appoint a confidential secretary in the unclassified service, 
127.9   and appoint employees to carry out this chapter, who are subject 
127.10  to chapters 43A and 179A in the same manner as are executive 
127.11  branch employees; 
127.12     (5) organize the work of the association as the director 
127.13  deems necessary to fulfill the functions of the association, and 
127.14  define the duties of its employees and delegate to them any 
127.15  powers or duties, subject to the control of, and under such 
127.16  conditions as, the executive director may prescribe; 
127.17     (6) with the approval of the board, contract for the 
127.18  services of an approved actuary, professional management 
127.19  services, and any other consulting services as necessary to 
127.20  fulfill the purposes of this chapter.  All contracts are subject 
127.21  to chapter 16C.  The commissioner of administration shall not 
127.22  approve, and the association shall not enter into, any contract 
127.23  to provide lobbying services or legislative advocacy of any 
127.24  kind.  Any approved actuary retained by the executive director 
127.25  shall function as the actuarial advisor of the board and the 
127.26  executive director and may perform actuarial valuations and 
127.27  experience studies to supplement those performed by the actuary 
127.28  retained by the Legislative Commission on Pensions and 
127.29  Retirement under section 6.  Any supplemental actuarial 
127.30  valuations or experience studies shall be filed with the 
127.31  executive director of the Legislative Commission on Pensions and 
127.32  Retirement.  Copies of professional management survey reports 
127.33  shall be transmitted to the secretary of the senate, the chief 
127.34  clerk of the house of representatives, and the Legislative 
127.35  Reference Library as provided by section 3.195, and to the 
127.36  executive director of the commission at the same time as reports 
128.1   are furnished to the board.  Only management firms experienced 
128.2   in conducting management surveys of federal, state, or local 
128.3   public retirement systems shall be qualified to contract with 
128.4   the director hereunder; 
128.5      (7) with the approval of the board provide in-service 
128.6   training for the employees of the association; 
128.7      (8) make refunds of accumulated contributions to former 
128.8   members and to the designated beneficiary, surviving spouse, 
128.9   legal representative or next of kin of deceased members or 
128.10  deceased former members, as provided in this chapter; 
128.11     (9) determine the amount of the annuities and disability 
128.12  benefits of members covered by the association and authorize 
128.13  payment of the annuities and benefits beginning as of the dates 
128.14  on which the annuities and benefits begin to accrue, in 
128.15  accordance with the provisions of this chapter; 
128.16     (10) pay annuities, refunds, survivor benefits, salaries, 
128.17  and necessary operating expenses of the association; 
128.18     (11) prepare and submit to the board and the legislature an 
128.19  annual financial report covering the operation of the 
128.20  association, as required by section 356.20; 
128.21     (12) prepare and submit biennial and annual budgets to the 
128.22  board for its approval and submit the approved budgets to the 
128.23  department of finance for approval by the commissioner; 
128.24     (13) reduce all or part of the accrued interest payable 
128.25  under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 
128.26  subdivision 5, upon receipt of proof by the association of an 
128.27  unreasonable processing delay or other extenuating circumstances 
128.28  of the employing unit.  The executive director shall prescribe 
128.29  and submit for approval by the board the conditions under which 
128.30  such interest may be reduced; and 
128.31     (14) with the approval of the board, perform such other 
128.32  duties as may be required for the administration of the 
128.33  association and the other provisions of this chapter and for the 
128.34  transaction of its business.  
128.35     Sec. 4.  Minnesota Statutes 2002, section 354.06, 
128.36  subdivision 2a, is amended to read: 
129.1      Subd. 2a.  [DUTIES OF EXECUTIVE DIRECTOR.] The management 
129.2   of the association is vested in the executive director who shall 
129.3   be the executive and administrative head of the association.  
129.4   The executive director shall act as advisor to the board on all 
129.5   matters pertaining to the association and shall also act as the 
129.6   secretary of the board.  The executive director shall: 
129.7      (1) attend all meetings of the board; 
129.8      (2) prepare and recommend to the board appropriate rules to 
129.9   carry out the provisions of this chapter; 
129.10     (3) establish and maintain an adequate system of records 
129.11  and accounts following recognized accounting principles and 
129.12  controls; 
129.13     (4) designate an assistant executive director in the 
129.14  unclassified service and two assistant executive directors in 
129.15  the classified service with the approval of the board, and 
129.16  appoint such employees, both permanent and temporary, as are 
129.17  necessary to carry out the provisions of this chapter; 
129.18     (5) organize the work of the association as the director 
129.19  deems necessary to fulfill the functions of the association, and 
129.20  define the duties of its employees and delegate to them any 
129.21  powers or duties, subject to the director's control and under 
129.22  such conditions as the director may prescribe; 
129.23     (6) with the approval of the board, contract and set the 
129.24  compensation for the services of an approved actuary, 
129.25  professional management services, and any other consulting 
129.26  services.  These contracts are not subject to the competitive 
129.27  bidding procedure prescribed by chapter 16C.  An approved 
129.28  actuary retained by the executive director shall function as the 
129.29  actuarial advisor of the board and the executive director and 
129.30  may perform actuarial valuations and experience studies to 
129.31  supplement those performed by the actuary retained by the 
129.32  legislative commission on pensions and retirement under section 
129.33  6.  Any supplemental actuarial valuations or experience studies 
129.34  shall be filed with the executive director of the Legislative 
129.35  Commission on Pensions and Retirement.  Copies of professional 
129.36  management survey reports must be transmitted to the secretary 
130.1   of the senate, the chief clerk of the house of representatives, 
130.2   and the Legislative Reference Library as provided by section 
130.3   3.195, and to the executive director of the commission at the 
130.4   same time as reports are furnished to the board.  Only 
130.5   management firms experienced in conducting management surveys of 
130.6   federal, state, or local public retirement systems are qualified 
130.7   to contract with the executive director; 
130.8      (7) with the approval of the board, provide in-service 
130.9   training for the employees of the association; 
130.10     (8) make refunds of accumulated contributions to former 
130.11  members and to the designated beneficiary, surviving spouse, 
130.12  legal representative, or next of kin of deceased members or 
130.13  deceased former members, under this chapter; 
130.14     (9) determine the amount of the annuities and disability 
130.15  benefits of members covered by the association and authorize 
130.16  payment of the annuities and benefits beginning as of the dates 
130.17  on which the annuities and benefits begin to accrue, under this 
130.18  chapter; 
130.19     (10) pay annuities, refunds, survivor benefits, salaries, 
130.20  and necessary operating expenses of the association; 
130.21     (11) prepare and submit to the board and the legislature an 
130.22  annual financial report covering the operation of the 
130.23  association, as required by section 356.20; 
130.24     (12) certify funds available for investment to the State 
130.25  Board of Investment; 
130.26     (13) with the advice and approval of the board, request the 
130.27  State Board of Investment to sell securities on determining that 
130.28  funds are needed for the purposes of the association; 
130.29     (14) prepare and submit biennial and annual budgets to the 
130.30  board and with the approval of the board submit those budgets to 
130.31  the department of finance; and 
130.32     (15) with the approval of the board, perform such other 
130.33  duties as may be required for the administration of the 
130.34  association and the other provisions of this chapter and for the 
130.35  transaction of its business.  The executive director may: 
130.36     (i) reduce all or part of the accrued interest and fines 
131.1   payable by an employing unit for reporting requirements under 
131.2   section 354.52, based on an evaluation of any extenuating 
131.3   circumstances of the employing unit; 
131.4      (ii) assign association employees to conduct field audits 
131.5   of an employing unit to ensure compliance with the provisions of 
131.6   this chapter; and 
131.7      (iii) recover overpayments, if not repaid to the 
131.8   association, by suspending or reducing the payment of a 
131.9   retirement annuity, refund, disability benefit, survivor 
131.10  benefit, or optional annuity under this chapter until the 
131.11  overpayment, plus interest, has been recovered. 
131.12     Sec. 5.  Minnesota Statutes 2002, section 354A.021, 
131.13  subdivision 7, is amended to read: 
131.14     Subd. 7.  [ACTUARIAL CONSULTANT.] The board of trustees or 
131.15  directors of each teachers retirement fund association may 
131.16  contract for the services of an approved actuary and fix the 
131.17  reasonable compensation for those services.  Any approved 
131.18  actuary retained by the board shall function as the actuarial 
131.19  advisor to the board and may perform actuarial valuations and 
131.20  experience studies to supplement those performed by the actuary 
131.21  retained by the Legislative Commission on Pensions and 
131.22  Retirement under section 6.  Any supplemental actuarial 
131.23  valuations or experience studies shall must be filed with the 
131.24  executive director of the Legislative Commission on Pensions and 
131.25  Retirement. 
131.26     Sec. 6.  [356.214] [ACTUARIAL VALUATION PREPARATION; JOINT 
131.27  RETENTION OF CONSULTING ACTUARY.] 
131.28     Subdivision 1.  [JOINT RETENTION.] (a) The chief 
131.29  administrative officers of the Minnesota State Retirement 
131.30  System, the Public Employees Retirement Association, the 
131.31  Teachers Retirement Association, the Duluth Teachers Retirement 
131.32  Fund Association, the Minneapolis Teachers Retirement Fund 
131.33  Association, the Minneapolis Employees Retirement Fund, and the 
131.34  St. Paul Teachers Retirement Fund Association, jointly, on 
131.35  behalf of the state, its employees, its taxpayers, and its 
131.36  various public pension plans, shall contract with an established 
132.1   actuarial consulting firm to conduct annual actuarial valuations 
132.2   and related services for the retirement plans named in paragraph 
132.3   (b).  The principal from the actuarial consulting firm on the 
132.4   contract must be an approved actuary under section 356.215, 
132.5   subdivision 1, paragraph (c).  Prior to becoming effective, the 
132.6   contract under this section is subject to a review and approval 
132.7   by the Legislative Commission on Pensions and Retirement. 
132.8      (b) The contract for actuarial services must include the 
132.9   preparation of actuarial valuations and related actuarial work 
132.10  for the following retirement plans:  
132.11     (1) the teachers retirement plan, Teachers Retirement 
132.12  Association; 
132.13     (2) the general state employees retirement plan, Minnesota 
132.14  State Retirement System; 
132.15     (3) the correctional employees retirement plan, Minnesota 
132.16  State Retirement System; 
132.17     (4) the State Patrol retirement plan, Minnesota State 
132.18  Retirement System; 
132.19     (5) the judges retirement plan, Minnesota State Retirement 
132.20  System; 
132.21     (6) the Minneapolis employees retirement plan, Minneapolis 
132.22  Employees Retirement Fund; 
132.23     (7) the public employees retirement plan, Public Employees 
132.24  Retirement Association; 
132.25     (8) the public employees police and fire plan, Public 
132.26  Employees Retirement Association; 
132.27     (9) the Duluth teachers retirement plan, Duluth Teachers 
132.28  Retirement Fund Association; 
132.29     (10) the Minneapolis teachers retirement plan, Minneapolis 
132.30  Teachers Retirement Fund Association; 
132.31     (11) the St. Paul teachers retirement plan, St. Paul 
132.32  Teachers Retirement Fund Association; 
132.33     (12) the legislators retirement plan, Minnesota State 
132.34  Retirement System; 
132.35     (13) the elective state officers retirement plan, Minnesota 
132.36  State Retirement System; and 
133.1      (14) local government correctional service retirement plan, 
133.2   Public Employees Retirement Association.  
133.3      (c) The contract must require completion of the annual 
133.4   actuarial valuation calculations on a fiscal year basis, with 
133.5   the contents of the actuarial valuation calculations as 
133.6   specified in section 356.215, and in conformity with the 
133.7   standards for actuarial work adopted by the Legislative 
133.8   Commission on Pensions and Retirement.  
133.9      The contract must require completion of annual experience 
133.10  data collection and processing and a quadrennial published 
133.11  experience study for the plans listed in paragraph (b), clauses 
133.12  (1), (2), and (7), as provided for in the standards for 
133.13  actuarial work adopted by the commission.  The experience data 
133.14  collection, processing, and analysis must evaluate the following:
133.15     (1) individual salary progression; 
133.16     (2) the rate of return on investments based on the current 
133.17  asset value; 
133.18     (3) payroll growth; 
133.19     (4) mortality; 
133.20     (5) retirement age; 
133.21     (6) withdrawal; and 
133.22     (7) disablement.  
133.23     The contract must include provisions for the preparation of 
133.24  cost analyses by the jointly retained actuary for proposed 
133.25  legislation that include changes in benefit provisions or 
133.26  funding policies prior to their consideration by the Legislative 
133.27  Commission on Pensions and Retirement. 
133.28     (d) The actuary retained by the joint retirement systems 
133.29  shall annually prepare a report to the legislature, including a 
133.30  commentary on the actuarial valuation calculations for the plans 
133.31  named in paragraph (b) and summarizing the results of the 
133.32  actuarial valuation calculations.  The actuary shall include 
133.33  with the report the actuary's recommendations to the legislature 
133.34  concerning the appropriateness of the support rates to achieve 
133.35  proper funding of the retirement plans by the required funding 
133.36  dates.  The actuary shall, as part of the quadrennial experience 
134.1   study, include recommendations to the legislature on the 
134.2   appropriateness of the actuarial valuation assumptions required 
134.3   for evaluation in the study.  
134.4      (e) If the actuarial gain and loss analysis in the 
134.5   actuarial valuation calculations indicates a persistent pattern 
134.6   of sizable gains or losses, as directed by the joint retirement 
134.7   systems or as requested by the chair of the Legislative 
134.8   Commission on Pensions and Retirement, the actuary shall prepare 
134.9   a special experience study for a plan listed in paragraph (b), 
134.10  clause (3), (4), (5), (6), (8), (9), (10), (11), (12), (13), or 
134.11  (14), in the manner provided for in the standards for actuarial 
134.12  work adopted by the commission. 
134.13     (f) The term of the contract between the joint retirement 
134.14  systems and the actuary retained may not exceed five years.  The 
134.15  joint retirement system administrative officers shall establish 
134.16  procedures for the consideration and selection of contract 
134.17  bidders and the requirements for the contents of an actuarial 
134.18  services contract under this section.  The procedures and 
134.19  requirements must be submitted to the Legislative Commission on 
134.20  Pensions and Retirement for review and comment prior to final 
134.21  approval by the joint administrators.  The contract is subject 
134.22  to the procurement procedures under chapter 16C.  The 
134.23  consideration of bids and the selection of a consulting 
134.24  actuarial firm by the chief administrative officers must occur 
134.25  at a meeting that is open to the public and reasonable timely 
134.26  public notice of the date and the time of the meeting and its 
134.27  subject matter must be given. 
134.28     (g) The actuarial services contract may not limit the 
134.29  ability of the Minnesota legislature and its standing committees 
134.30  and commissions to rely on the actuarial results of the work 
134.31  prepared under the contract. 
134.32     (h) The joint retirement systems shall designate one of the 
134.33  retirement system executive directors as the actuarial services 
134.34  contract manager. 
134.35     Subd. 2.  [ALLOCATION OF ACTUARIAL COSTS.] (a) The 
134.36  actuarial services contract manager shall assess each retirement 
135.1   plan specified in subdivision 1, paragraph (b), its appropriate 
135.2   portion of the total compensation paid to the actuary retained 
135.3   by the joint retirement systems for the actuarial valuation 
135.4   calculations and quadrennial experience studies.  The total 
135.5   assessment is 100 percent of the amount of contract compensation 
135.6   for the actuarial consulting firm for actuarial valuation 
135.7   calculations, including any public employees police and fire 
135.8   plan consolidation accounts of the Public Employees Retirement 
135.9   Association established after March 1, 1999, annual experience 
135.10  data collection and processing, and quadrennial experience 
135.11  studies.  
135.12     The portion of the total assessment payable by each 
135.13  retirement system or pension plan must be determined based on 
135.14  each plan's proportion of the actuarial services required, as 
135.15  determined by the retained actuary, to complete the actuarial 
135.16  valuation calculations, annual experience data collection and 
135.17  processing, and quadrennial experience studies for all plans.  
135.18     The assessment must be made within 30 days following the 
135.19  end of the fiscal year and must be reported to the chief 
135.20  administrative officers of the applicable retirement plans.  The 
135.21  amount of the assessment is appropriated from the retirement 
135.22  fund applicable to the retirement plan. 
135.23     (b) The actuarial services contract manager shall assess 
135.24  each retirement plan or each interest group which requested the 
135.25  preparation of a cost analysis for proposed legislation the cost 
135.26  of the actuary retained by the joint retirement systems incurred 
135.27  in the cost analysis preparation.  With respect to interest 
135.28  groups, the actuarial services contract manager shall obtain a 
135.29  written commitment for the payment of the assessment in advance 
135.30  of the cost analysis preparation and may require an advance 
135.31  deposit or advance payment before authorizing the cost analysis 
135.32  preparation.  The retirement plan or the interest group shall 
135.33  pay the assessment within 30 days of the date on which the 
135.34  assessment is billed.  The amount of the assessment is 
135.35  appropriated from the retirement fund applicable to the 
135.36  retirement plan for cost analyses requested by a retirement plan 
136.1   or system. 
136.2      (c) The actuarial services contract manager shall assess to 
136.3   the Legislative Commission on Pensions and Retirement the cost 
136.4   of the actuarial cost analysis preparation for the proposed 
136.5   legislation requested by the chair of the Legislative Commission 
136.6   on Pensions and Retirement or by the commission executive 
136.7   director.  The commission shall pay the assessment within 30 
136.8   days of the date on which the assessment is billed. 
136.9      Subd. 3.  [REPORTING TO THE COMMISSION.] A copy of the 
136.10  actuarial valuations, experience studies, and actuarial cost 
136.11  analyses prepared by the actuary retained by the joint 
136.12  retirement systems under the contract provided for in this 
136.13  section must be filed with the executive director of the 
136.14  Legislative Commission on Pensions and Retirement at the same 
136.15  time that the document is transmitted to the actuarial services 
136.16  contract manager or to any other document recipient. 
136.17     Sec. 7.  Minnesota Statutes 2002, section 356.215, 
136.18  subdivision 2, is amended to read: 
136.19     Subd. 2.  [REQUIREMENTS.] (a) It is the policy of the 
136.20  legislature that it is necessary and appropriate to determine 
136.21  annually the financial status of tax supported retirement and 
136.22  pension plans for public employees.  To achieve this goal:  
136.23     (1) the Legislative Commission on Pensions and Retirement 
136.24  shall have prepared by the actuary retained by the commission 
136.25  under section 6 shall prepare annual actuarial valuations of the 
136.26  retirement plans enumerated in section 3.85 6, subdivision 11 1, 
136.27  paragraph (b), and quadrennial experience studies of the 
136.28  retirement plans enumerated in section 3.85 6, subdivision 11 1, 
136.29  paragraph (b), clauses (1), (2), and (7); and 
136.30     (2) the commissioner of finance may have prepared by the 
136.31  actuary retained by the commission, two years after each set of 
136.32  quadrennial experience studies, quadrennial projection 
136.33  valuations of at least one of the retirement plans enumerated in 
136.34  section 3.85 6, subdivision 11 1, paragraph (b), for which the 
136.35  commissioner determines that the analysis may be beneficial.  
136.36     (b) The governing or managing board or administrative 
137.1   officials of each public pension and retirement fund or plan 
137.2   enumerated in section 356.20, subdivision 2, clauses (9), (10), 
137.3   and (12), shall have prepared by an approved actuary annual 
137.4   actuarial valuations of their respective funds as provided in 
137.5   this section.  This requirement also applies to any fund or plan 
137.6   that is the successor to any organization enumerated in section 
137.7   356.20, subdivision 2, or to the governing or managing board or 
137.8   administrative officials of any newly formed retirement fund, 
137.9   plan, or association operating under the control or supervision 
137.10  of any public employee group, governmental unit, or institution 
137.11  receiving a portion of its support through legislative 
137.12  appropriations, and any local police or fire fund to which 
137.13  section 356.216 applies. 
137.14     Sec. 8.  Minnesota Statutes 2002, section 356.215, 
137.15  subdivision 18, is amended to read: 
137.16     Subd. 18.  [ESTABLISHMENT OF ACTUARIAL ASSUMPTIONS.] (a) 
137.17  The actuarial assumptions used for the preparation of actuarial 
137.18  valuations under this section that are other than those set 
137.19  forth in this section may be changed only with the approval of 
137.20  the Legislative Commission on Pensions and Retirement.  
137.21     (b) A change in the applicable actuarial assumptions may be 
137.22  proposed by the governing board of the applicable pension fund 
137.23  or relief association, by the actuary retained by the 
137.24  Legislative Commission on Pensions and Retirement joint 
137.25  retirement systems under section 6, by the actuarial advisor to 
137.26  a pension fund governed by chapter 352, 353, 354, or 354A, or by 
137.27  the actuary retained by a local police or firefighters relief 
137.28  association governed by sections 69.77 or 69.771 to 69.776, if 
137.29  one is retained. 
137.30     Sec. 9.  Minnesota Statutes 2002, section 422A.06, 
137.31  subdivision 2, is amended to read: 
137.32     Subd. 2.  [ACTUARIAL VALUATION REQUIRED.] As of July 1 of 
137.33  each year, an actuarial valuation of the retirement fund shall 
137.34  be prepared by the commission-retained actuary retained by the 
137.35  joint retirement systems under section 6 and filed in 
137.36  conformance with the provisions and requirements of sections 
138.1   356.215 to 356.23.  Experience studies shall be prepared at 
138.2   those times required by statute, required by the standards for 
138.3   actuarial work adopted by the Legislative Commission on Pensions 
138.4   and Retirement or ordered by the board. 
138.5      The board may contract for the services of an approved 
138.6   actuary and fix the reasonable compensation for those services.  
138.7   Any approved actuary retained by the board shall function as the 
138.8   actuarial advisor to the board and may perform actuarial 
138.9   valuations and experience studies to supplement those performed 
138.10  by the actuary retained by the Legislative Commission on 
138.11  Pensions and Retirement joint retirement systems under section 6.
138.12  Any supplemental actuarial valuations or experience studies 
138.13  shall must be filed with the executive director of the 
138.14  Legislative Commission on Pensions and Retirement.  
138.15     Sec. 10.  [APPROPRIATION REDUCTION.] 
138.16     The general fund appropriation in Laws 2003, First Special 
138.17  Session chapter 1, article 1, section 2, subdivision 4, for the 
138.18  fiscal year ending June 30, 2005, is reduced by $152,000. 
138.19     Sec. 11.  [REPEALER.] 
138.20     Minnesota Statutes 2002, sections 3.85, subdivisions 11 and 
138.21  12; and 356.217, are repealed. 
138.22     Sec. 12.  [EFFECTIVE DATE.] 
138.23     Sections 1 to 11 are effective on the day following final 
138.24  enactment. 
138.25                             ARTICLE 19 
138.26               MINNEAPOLIS POLICE RELIEF ASSOCIATION 
138.27     Section 1.  Minnesota Statutes 2002, section 69.77, 
138.28  subdivision 4, is amended to read: 
138.29     Subd. 4.  [RELIEF ASSOCIATION FINANCIAL REQUIREMENTS; 
138.30  MINIMUM MUNICIPAL OBLIGATION.] (a) The officers of the relief 
138.31  association shall determine the financial requirements of the 
138.32  relief association and minimum obligation of the municipality 
138.33  for the following calendar year in accordance with the 
138.34  requirements of this subdivision.  The financial requirements of 
138.35  the relief association and the minimum obligation of the 
138.36  municipality must be determined on or before the submission date 
139.1   established by the municipality under subdivision 5. 
139.2      (b) The financial requirements of the relief association 
139.3   for the following calendar year must be based on the most recent 
139.4   actuarial valuation or survey of the special fund of the 
139.5   association if more than one fund is maintained by the 
139.6   association, or of the association, if only one fund is 
139.7   maintained, prepared in accordance with sections 356.215, 
139.8   subdivisions 4 to 15, and 356.216, as required under subdivision 
139.9   10.  If an actuarial estimate is prepared by the actuary of the 
139.10  relief association as part of obtaining a modification of the 
139.11  benefit plan of the relief association and the modification is 
139.12  implemented, the actuarial estimate must be used in calculating 
139.13  the subsequent financial requirements of the relief association. 
139.14     (c) If the relief association has an unfunded actuarial 
139.15  accrued liability as reported in the most recent actuarial 
139.16  valuation or survey, the total of the amounts calculated under 
139.17  clauses (1), (2), and (3), constitute the financial requirements 
139.18  of the relief association for the following year.  If the relief 
139.19  association does not have an unfunded actuarial accrued 
139.20  liability as reported in the most recent actuarial valuation or 
139.21  survey, the amount calculated under clauses (1) and (2) 
139.22  constitute the financial requirements of the relief association 
139.23  for the following year.  The financial requirement elements are: 
139.24     (1) the normal level cost requirement for the following 
139.25  year, expressed as a dollar amount, which must be determined by 
139.26  applying the normal level cost of the relief association as 
139.27  reported in the actuarial valuation or survey and expressed as a 
139.28  percentage of covered payroll to the estimated covered payroll 
139.29  of the active membership of the relief association, including 
139.30  any projected change in the active membership, for the following 
139.31  year; 
139.32     (2) for the Bloomington Fire Department Relief Association, 
139.33  the Fairmont Police Relief Association, and the Virginia Fire 
139.34  Department Relief Association, to the dollar amount of normal 
139.35  cost determined under clause (1) must be added an amount equal 
139.36  to the dollar amount of the administrative expenses of the 
140.1   special fund of the association if more than one fund is 
140.2   maintained by the association, or of the association if only one 
140.3   fund is maintained, for the most recent year, multiplied by the 
140.4   factor of 1.035.  The administrative expenses are those 
140.5   authorized under section 69.80.  No amount of administrative 
140.6   expenses under this clause are to be included in the financial 
140.7   requirements of the Minneapolis Firefighters Relief Association 
140.8   or the Minneapolis Police Relief Association; and 
140.9      (3) to the dollar amount of normal cost and expenses 
140.10  determined under clauses (1) and (2) must be added an amount 
140.11  equal to the level annual dollar amount which is sufficient to 
140.12  amortize the unfunded actuarial accrued liability by December 
140.13  31, 2010, for the Bloomington Fire Department Relief 
140.14  Association, the Fairmont Police Relief Association, the 
140.15  Minneapolis Firefighters Relief Association, and the Virginia 
140.16  Fire Department Relief Association, and by December 31, 2020, 
140.17  for the Minneapolis Police Relief Association, as determined 
140.18  from the actuarial valuation or survey of the fund, using an 
140.19  interest assumption set at the applicable rate specified in 
140.20  section 356.215, subdivision 8.  The amortization date specified 
140.21  in this clause applies to all local police or salaried 
140.22  firefighters' relief associations and that date supersedes any 
140.23  amortization date specified in any applicable special law. 
140.24     (d) The minimum obligation of the municipality is an amount 
140.25  equal to the financial requirements of the relief association 
140.26  reduced by the estimated amount of member contributions from 
140.27  covered salary anticipated for the following calendar year and 
140.28  the estimated amounts anticipated for the following calendar 
140.29  year from the applicable state aid program established under 
140.30  sections 69.011 to 69.051 receivable by the relief association 
140.31  after any allocation made under section 69.031, subdivision 5, 
140.32  paragraph (b), clause (2), or 423A.01, subdivision 2, clause 
140.33  (6), from the local police and salaried firefighters' relief 
140.34  association amortization aid program established under section 
140.35  423A.02, subdivision 1, from the supplementary amortization 
140.36  state-aid program established under section 423A.02, subdivision 
141.1   1a, and from the additional amortization state aid under section 
141.2   423A.02, subdivision 1b. 
141.3      Sec. 2.  Minnesota Statutes 2002, section 356.216, is 
141.4   amended to read: 
141.5      356.216 [CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE 
141.6   AND FIRE FUNDS.] 
141.7      (a) The provisions of section 356.215 that govern the 
141.8   contents of actuarial valuations must apply to any local police 
141.9   or fire pension fund or relief association required to make an 
141.10  actuarial report under this section, except as follows: 
141.11     (1) in calculating normal cost and other requirements, if 
141.12  required to be expressed as a level percentage of covered 
141.13  payroll, the salaries used in computing covered payroll must be 
141.14  the maximum rate of salary on which retirement and survivorship 
141.15  credits and amounts of benefits are determined and from which 
141.16  any member contributions are calculated and deducted; 
141.17     (2) in lieu of the amortization date specified in section 
141.18  356.215, subdivision 11, the appropriate amortization target 
141.19  date specified in section 69.77, subdivision 4, or 69.773, 
141.20  subdivision 4, clause (c), must be used in calculating any 
141.21  required amortization contribution except that the amortization 
141.22  date for the Minneapolis Police Relief Association is December 
141.23  31, 2020; 
141.24     (3) in addition to the tabulation of active members and 
141.25  annuitants provided for in section 356.215, subdivision 13, the 
141.26  member contributions for active members for the calendar year 
141.27  and the prospective annual retirement annuities under the 
141.28  benefit plan for active members must be reported; 
141.29     (4) actuarial valuations required under section 69.773, 
141.30  subdivision 2, must be made at least every four years and 
141.31  actuarial valuations required under section 69.77 shall be made 
141.32  annually; 
141.33     (5) the actuarial balance sheet showing accrued assets 
141.34  valued at market value if the actuarial valuation is required to 
141.35  be prepared at least every four years or valued as current 
141.36  assets under section 356.215, subdivision 1, clause (6), or 
142.1   paragraph (b), whichever applies, if the actuarial valuation is 
142.2   required to be prepared annually, actuarial accrued liabilities, 
142.3   and the unfunded actuarial accrued liability must include the 
142.4   following required reserves: 
142.5            (i) For active members 
142.6         1.  Retirement benefits 
142.7         2.  Disability benefits 
142.8         3.  Refund liability due to death or withdrawal 
142.9         4.  Survivors' benefits 
142.10           (ii) For deferred annuitants' benefits 
142.11           (iii) For former members without vested rights 
142.12           (iv) For annuitants 
142.13        1.  Retirement annuities 
142.14        2.  Disability annuities 
142.15        3.  Surviving spouses' annuities 
142.16        4.  Surviving children's annuities 
142.17     In addition to those required reserves, separate items must 
142.18  be shown for additional benefits, if any, which may not be 
142.19  appropriately included in the reserves listed above; and 
142.20     (6) actuarial valuations are due by the first day of the 
142.21  seventh month after the end of the fiscal year which the 
142.22  actuarial valuation covers. 
142.23     (b) For the Minneapolis Firefighters Relief Association or 
142.24  the Minneapolis Police Relief Association, the following 
142.25  provisions additionally apply: 
142.26     (1) in calculating the actuarial balance sheet, unfunded 
142.27  actuarial accrued liability, and amortization contribution of 
142.28  the relief association, "current assets" means the value of all 
142.29  assets at cost, including realized capital gains and losses, 
142.30  plus or minus, whichever applies, the average value of total 
142.31  unrealized capital gains or losses for the most recent 
142.32  three-year period ending with the end of the plan year 
142.33  immediately preceding the actuarial valuation report 
142.34  transmission date; and 
142.35     (2) in calculating the applicable portions of the actuarial 
142.36  valuation, an annual preretirement interest assumption of six 
143.1   percent, an annual postretirement interest assumption of six 
143.2   percent, and an annual salary increase assumption of four 
143.3   percent must be used. 
143.4      Sec. 3.  Minnesota Statutes 2002, section 423B.01, 
143.5   subdivision 12, is amended to read: 
143.6      Subd. 12.  [EXCESS INVESTMENT INCOME.] "Excess investment 
143.7   income" means the amount, if any, by which the average time 
143.8   weighted total rate of return earned by the fund in the most 
143.9   recent prior five two fiscal years has exceeded the actual 
143.10  average percentage increase in the current monthly salary of a 
143.11  first grade patrol officer in the most recent prior five two 
143.12  fiscal years plus two percent, and must be expressed as a dollar 
143.13  amount.  The amount may not exceed one percent of the total 
143.14  assets of the fund, except when the actuarial value of assets of 
143.15  the fund according to the most recent annual actuarial valuation 
143.16  prepared in accordance with sections 356.215 and 356.216 is 
143.17  greater than 102 percent of its actuarial accrued liabilities, 
143.18  in which case the amount must not exceed 1-1/2 percent of the 
143.19  total assets of the fund, and does not exist unless the yearly 
143.20  average percentage increase of the time weighted total rate of 
143.21  return of the fund for the previous five two years exceeds by 
143.22  two percent the yearly average percentage increase in monthly 
143.23  salary of a first grade patrol officer during the previous five 
143.24  two calendar years. 
143.25     Sec. 4.  Minnesota Statutes 2002, section 423B.09, 
143.26  subdivision 1, is amended to read: 
143.27     Subdivision 1.  [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 
143.28  RECEIVE PENSIONS.] The association shall grant pensions payable 
143.29  from the police pension fund in monthly installments to persons 
143.30  entitled to pensions in the manner and for the following 
143.31  purposes. 
143.32     (a) When the actuarial value of assets of the fund 
143.33  according to the most recent annual actuarial valuation 
143.34  performed in accordance with sections 356.215 and 356.216 is 
143.35  less than 90 percent of the actuarial accrued liabilities, an 
143.36  active member or a deferred pensioner who has performed duty as 
144.1   a member of the police department of the city for five years or 
144.2   more, upon written application after retiring from duty and 
144.3   reaching at least age 50, is entitled to be paid monthly for 
144.4   life a service pension equal to eight units.  For full years of 
144.5   service beyond five years, the service pension increases by 1.6 
144.6   units for each full year, to a maximum of 40 units.  When the 
144.7   actuarial value of assets of the fund according to the most 
144.8   recent annual actuarial valuation prepared in accordance with 
144.9   sections 356.215 and 356.216 is greater than 90 percent of 
144.10  actuarial accrued liabilities, Active members, deferred members, 
144.11  and service pensioners are entitled to a service pension 
144.12  according to the following schedule: 
144.13                 5 years           8.0 units
144.14                 6 years           9.6 units
144.15                 7 years          11.2 units
144.16                 8 years          12.8 units
144.17                 9 years          14.4 units
144.18                10 years          16.0 units
144.19                11 years          17.6 units
144.20                12 years          19.2 units
144.21                13 years          20.8 units
144.22                14 years          22.4 units
144.23                15 years          24.0 units
144.24                16 years          25.6 units
144.25                17 years          27.2 units
144.26                18 years          28.8 units
144.27                19 years          30.4 units
144.28                20 years          34.0 35.0 units
144.29                21 years          35.6 36.6 units
144.30                22 years          37.2 38.2 units
144.31                23 years          38.8 39.8 units
144.32                24 years          40.4 41.4 units
144.33                25 years          42.0 43.0 units
144.34     Fractional years of service may not be used in computing 
144.35  pensions. 
144.36     (b) An active member who after five years' service but less 
145.1   than 20 years' service with the police department of the city, 
145.2   becomes superannuated so as to be permanently unable to perform 
145.3   the person's assigned duties, is entitled to be paid monthly for 
145.4   life a superannuation pension equal to four units for five years 
145.5   of service and an additional two units for each full year of 
145.6   service over five years and less than 20 years. 
145.7      (c) An active member who is not eligible for a service 
145.8   pension and who, while a member of the police department of the 
145.9   city, becomes diseased or sustains an injury while in the 
145.10  service that permanently unfits the member for the performance 
145.11  of police duties is entitled to be paid monthly for life a 
145.12  pension equal to 34 units while so disabled. 
145.13     Sec. 5.  Minnesota Statutes 2002, section 423B.09, is 
145.14  amended by adding a subdivision to read: 
145.15     Subd. 7.  [ADDITIONAL UNIT.] The additional unit provided 
145.16  to members by subdivision 1 must also be provided to members who 
145.17  selected a joint annuity option under subdivision 6 and must be 
145.18  in an amount that is actuarially equivalent to the service 
145.19  pension and the automatic survivor coverage for that additional 
145.20  unit. 
145.21     Sec. 6.  Minnesota Statutes 2002, section 423B.10, 
145.22  subdivision 1, is amended to read: 
145.23     Subdivision 1.  [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 
145.24  surviving spouse of a deceased service pensioner, disability 
145.25  pensioner, deferred pensioner, superannuation pensioner, or 
145.26  active member, who was the legally married spouse of the 
145.27  decedent, residing with the decedent, and who was married while 
145.28  or before the time the decedent was on the payroll of the police 
145.29  department, and who, if the deceased member was a service or 
145.30  deferred pensioner, was legally married to the member for a 
145.31  period of at least one year before retirement from the police 
145.32  department, is entitled to a surviving spouse benefit.  The 
145.33  surviving spouse benefit is equal to 22 23 units per month if 
145.34  the person is the surviving spouse of a deceased active member 
145.35  or disabilitant.  The surviving spouse benefit is equal to six 
145.36  units per month, plus an additional one unit for each year of 
146.1   service to the credit of the decedent in excess of five years, 
146.2   to a maximum of 22 23 units per month, if the person is the 
146.3   surviving spouse of a deceased service pensioner, deferred 
146.4   pensioner, or superannuation pensioner.  The surviving spouse 
146.5   benefit is payable for the life of the surviving spouse. 
146.6      (b) A surviving child of a deceased service pensioner, 
146.7   disability pensioner, deferred pensioner, superannuation 
146.8   pensioner, or active member, who was living while the decedent 
146.9   was an active member of the police department or was born within 
146.10  nine months after the decedent terminated active service in the 
146.11  police department, is entitled to a surviving child benefit.  
146.12  The surviving child benefit is equal to eight units per month if 
146.13  the person is the surviving child of a deceased active member or 
146.14  disabilitant.  The surviving child benefit is equal to two units 
146.15  per month, plus an additional four-tenths of one unit per month 
146.16  for each year of service to the credit of the decedent in excess 
146.17  of five years, to a maximum of eight units, if the person is the 
146.18  surviving child of a deceased service pensioner, deferred 
146.19  pensioner, or superannuation pensioner.  The surviving child 
146.20  benefit is payable until the person attains age 18, or, if in 
146.21  full-time attendance during the normal school year, in a school 
146.22  approved by the board of directors, until the person receives a 
146.23  bachelor's degree or attains the age of 22 years, whichever 
146.24  occurs first.  In the event of the death of both parents leaving 
146.25  a surviving child or children entitled to a surviving child 
146.26  benefit as determined in this paragraph, the surviving child is, 
146.27  or the surviving children are, entitled to a surviving child 
146.28  benefit in such sums as determined by the board of directors to 
146.29  be necessary for the care and education of such surviving child 
146.30  or children, but not to exceed the family maximum benefit per 
146.31  month, to the children of any one family.  
146.32     (c) The surviving spouse and surviving child benefits are 
146.33  subject to a family maximum benefit.  The family maximum benefit 
146.34  is 41 units per month. 
146.35     (d) A surviving spouse who is otherwise not qualified may 
146.36  receive a benefit if the surviving spouse was married to the 
147.1   decedent for a period of five years and was residing with the 
147.2   decedent at the time of death.  The surviving spouse benefit is 
147.3   the same as that provided in paragraph (a), except that if the 
147.4   surviving spouse is younger than the decedent, the surviving 
147.5   spouse benefit must be actuarially equivalent to a surviving 
147.6   spouse benefit that would have been paid to the member's spouse 
147.7   had the member been married to a person of the same age or a 
147.8   greater age than the member's age before retirement. 
147.9      Sec. 7.  Minnesota Statutes 2002, section 423B.15, 
147.10  subdivision 3, is amended to read: 
147.11     Subd. 3.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
147.12  amount determined under subdivision 2 must be applied in 
147.13  accordance with this subdivision.  When the actuarial value of 
147.14  assets of the fund according to the most recent annual actuarial 
147.15  valuation prepared in accordance with sections 356.215 and 
147.16  356.216 is less than 102 percent of its total actuarial 
147.17  liabilities, the relief association shall apply the first 
147.18  one-half of excess investment income to the payment of an annual 
147.19  postretirement payment as specified in this subdivision and the 
147.20  second one-half of excess investment income up to one-half of 
147.21  one percent of the assets of the fund must be applied to reduce 
147.22  the state amortization state aid or supplementary amortization 
147.23  state aid payments otherwise due to the relief association under 
147.24  section 423A.02 for the current calendar year.  When the 
147.25  actuarial value of assets of the fund according to the most 
147.26  recent annual actuarial valuation prepared in accordance with 
147.27  sections 356.215 and 356.216 is less than 102 percent funded and 
147.28  other conditions are met, the relief association shall pay an 
147.29  annual postretirement payment to all eligible members in an 
147.30  amount not to exceed one-half of one percent of the assets of 
147.31  the fund.  When the actuarial value of assets of the fund 
147.32  according to the most recent annual actuarial valuation prepared 
147.33  in accordance with sections 356.215 and 356.216 is greater than 
147.34  102 percent of its actuarial accrued liabilities, the relief 
147.35  association shall pay an annual postretirement payment to all 
147.36  eligible members in an amount not to exceed 1-1/2 percent of the 
148.1   assets of the fund.  Payment of the annual postretirement 
148.2   payment must be in a lump sum amount on June 1 following the 
148.3   determination date in any year.  Payment of the annual 
148.4   postretirement payment may be made only if the average time 
148.5   weighted total rate of return for the most recent prior five two 
148.6   years exceeds by two percent the actual average percentage 
148.7   increase in the current monthly salary of a top grade patrol 
148.8   officer in the most recent prior five two fiscal years.  The 
148.9   total amount of all payments to members may not exceed the 
148.10  amount determined under this subdivision.  Payment to each 
148.11  eligible member must be calculated by dividing the total number 
148.12  of pension units to which eligible members are entitled into the 
148.13  excess investment income available for distribution to members, 
148.14  and then multiplying that result by the number of units to which 
148.15  each eligible member is entitled to determine each eligible 
148.16  member's annual postretirement payment.  When the actuarial 
148.17  value of assets of the fund according to the most recent annual 
148.18  actuarial valuation prepared in accordance with sections 356.215 
148.19  and 356.216 is less than 102 percent of its actuarial accrued 
148.20  liabilities, payment to each eligible member may not exceed an 
148.21  amount equal to the total monthly benefit that the eligible 
148.22  member was entitled to in the prior year under the terms of the 
148.23  benefit plan of the relief association or each eligible member's 
148.24  proportionate share of the excess investment income, whichever 
148.25  is less.  When the actuarial value of assets of the fund 
148.26  according to the most recent annual actuarial valuation prepared 
148.27  in accordance with sections 356.215 and 356.216 is greater than 
148.28  102 percent of its actuarial accrued liabilities, payment to 
148.29  each eligible member must not exceed the member's proportionate 
148.30  share of 1-1/2 percent of the assets of the fund. 
148.31     A person who received a pension or benefit for the entire 
148.32  12 months before the determination date is eligible for a full 
148.33  annual postretirement payment.  A person who received a pension 
148.34  or benefit for less than 12 months before the determination date 
148.35  is eligible for a prorated annual postretirement payment. 
148.36     Sec. 8.  [423B.22] [GUARANTEED PENSION PROVISION.] 
149.1      Once a pension benefit is properly paid in accordance with 
149.2   this law to any member, the dollar amount of that pension 
149.3   benefit shall not be reduced. 
149.4      Sec. 9.  [LOCAL APPROVAL.] 
149.5      Sections 1 to 8 are effective on the day after the date of 
149.6   the approval by the city council of the city of Minneapolis and 
149.7   the timely completion by the chief clerical officer of the city 
149.8   of Minneapolis of compliance with Minnesota Statutes, section 
149.9   645.021, subdivisions 2 and 3. 
149.10                             ARTICLE 20 
149.11              ADDITIONAL OPTIONS FOR CERTAIN TEACHERS
149.12     Section 1.  [354.551] [ADDITIONAL BENEFIT FOR TEACHERS 
149.13  PREVIOUSLY COVERED BY MONEY PURCHASE PROGRAM.] 
149.14     Subdivision 1.  [ADDITIONAL BENEFIT ENTITLEMENT.] Eligible 
149.15  retired teachers as defined in subdivision 2 are entitled to 
149.16  receive the additional benefit amount determined under 
149.17  subdivision 3 unless the applicable person files a written 
149.18  notification with the executive director of the Teachers 
149.19  Retirement Association that the additional benefit not be paid. 
149.20     Subd. 2.  [ELIGIBILITY.] An eligible person for purposes of 
149.21  this section is a person who: 
149.22     (1) was a teacher as defined in section 354.05, subdivision 
149.23  2; 
149.24     (2) rendered teaching service as defined in section 354.05, 
149.25  subdivision 3, either during the 1968-1969 school year, but was 
149.26  not covered by the improved money purchase program savings 
149.27  clause in section 354.55, subdivision 17, or before the 
149.28  1968-1969 school year, did not take a refund of member 
149.29  contributions upon the termination of teacher service, and was 
149.30  eligible to make an election under Minnesota Statutes 1971, 
149.31  section 354.55, subdivision 8. 
149.32     Subd. 3.  [DETERMINATION OF ADDITIONAL BENEFIT AMOUNT.] (a) 
149.33  By July 1, 2004, the executive director of the Teachers 
149.34  Retirement Association shall determine which active or retired 
149.35  teachers are eligible to receive an additional benefit amount 
149.36  under this section and the amount of each person's additional 
150.1   benefit amount. 
150.2      The increase amount is 45 percent of the difference, if a 
150.3   positive number, obtained by subtracting the single life annuity 
150.4   amount initially payable upon retirement under section 354.44, 
150.5   subdivision 6, from a comparable single life annuity amount 
150.6   computed as of the same date under section 354.44, subdivision 2.
150.7      (b) The additional retirement annuity is payable beginning 
150.8   July 1, 2004, for persons who were receiving a retirement 
150.9   annuity on June 1, 2004, or with the initial retirement annuity 
150.10  payment for persons who were active, deferred, or inactive 
150.11  members on June 1, 2004.  The additional retirement annuity must 
150.12  be included in the base for any postretirement adjustment 
150.13  payable under section 11A.18.  The applicable required reserves 
150.14  amount must be transferred on July 1, 2004, for persons who were 
150.15  receiving a retirement annuity on June 1, 2004, or on the date 
150.16  of retirement for persons who were active, deferred, or inactive 
150.17  members on June 1, 2004. 
150.18     Subd. 4.  [DURATION OF ADDITIONAL BENEFIT.] The additional 
150.19  benefit amount is payable for life or for the duration of the 
150.20  selected optional annuity form, whichever applies. 
150.21     Subd. 5.  [NO PAYMENT TO ESTATE; NO RETROACTIVITY.] (a) 
150.22  Nothing in this section authorizes the payment of an additional 
150.23  benefit amount under this section to an estate or to a survivor 
150.24  or beneficiary other than under an optional annuity form. 
150.25     (b) Nothing in this section authorizes the payment of an 
150.26  additional benefit amount for any period before July 1, 2004. 
150.27     (c) Nothing in this section authorizes the payment of an 
150.28  additional benefit amount to a person who was or is entitled to 
150.29  have their retirement annuity calculated under section 354.44, 
150.30  subdivision 2. 
150.31     [EFFECTIVE DATE.] This section is effective the day 
150.32  following final enactment. 
150.33                             ARTICLE 21 
150.34                  TEACHERS RETIREMENT ASSOCIATION 
150.35                 INCREASE IN LEVEL BENEFIT FORMULA
150.36     Section 1.  [126C.458] [LEVY FOR EARLY RETIREMENT COSTS.] 
151.1      Each year, a school district may levy for the additional 
151.2   employer contributions required under section 3. 
151.3      [EFFECTIVE DATE.] This section is effective for taxes 
151.4   levied in 2004, payable in 2005, and thereafter. 
151.5      Sec. 2.  Minnesota Statutes 2002, section 354.42, 
151.6   subdivision 2, is amended to read: 
151.7      Subd. 2.  [EMPLOYEE CONTRIBUTION.] The employee 
151.8   contribution to the fund is an amount equal to 5.0 5.5 percent 
151.9   of the salary of every coordinated member and 9.0 percent of the 
151.10  salary of every basic member.  This contribution must be made by 
151.11  deduction from salary.  Where any portion of a member's salary 
151.12  is paid from other than public funds, the member's employee 
151.13  contribution must be based on the entire salary received.  
151.14     Sec. 3.  Minnesota Statutes 2002, section 354.42, 
151.15  subdivision 3, is amended to read: 
151.16     Subd. 3.  [EMPLOYER CONTRIBUTION.] The employer 
151.17  contribution to the fund is an amount equal to 5.0 5.5 percent 
151.18  of the salary of each coordinated member and 9.0 percent of the 
151.19  salary of each basic member.  
151.20     Sec. 4.  Minnesota Statutes 2002, section 354.44, 
151.21  subdivision 6, is amended to read: 
151.22     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
151.23  ANNUITY.] (1) The formula retirement annuity must be computed in 
151.24  accordance with the applicable provisions of the formulas stated 
151.25  in clause (2) or (4) on the basis of each member's average 
151.26  salary for the period of the member's formula service credit.  
151.27     For all years of formula service credit, "average salary," 
151.28  for the purpose of determining the member's retirement annuity, 
151.29  means the average salary upon which contributions were made and 
151.30  upon which payments were made to increase the salary limitation 
151.31  provided in Minnesota Statutes 1971, section 354.511, for the 
151.32  highest five successive years of formula service credit 
151.33  provided, however, that such "average salary" shall not include 
151.34  any more than the equivalent of 60 monthly salary payments.  
151.35  Average salary must be based upon all years of formula service 
151.36  credit if this service credit is less than five years. 
152.1      (2) This clause, in conjunction with clause (3), applies to 
152.2   a person who first became a member of the association or a 
152.3   member of a pension fund listed in section 356.30, subdivision 
152.4   3, before July 1, 1989, unless clause (4), in conjunction with 
152.5   clause (5), produces a higher annuity amount, in which case 
152.6   clause (4) applies.  The average salary as defined in clause 
152.7   (1), multiplied by the following percentages per year of formula 
152.8   service credit shall determine the amount of the annuity to 
152.9   which the member qualifying therefor is entitled: 
152.10                         Coordinated Member   Basic Member
152.11  Each year of service     the percent        the percent
152.12   during first ten        specified in       specified in
152.13                           section 356.315,   section 356.315,
152.14                           subdivision 1,     subdivision 3,
152.15                           per year           per year
152.16  Each year of service     the percent        the percent
152.17   thereafter              specified in       specified in
152.18                           section 356.315,   section 356.315,
152.19                           subdivision 2,     subdivision 4,
152.20                           per year           per year
152.21     (3)(i) This clause applies only to a person who first 
152.22  became a member of the association or a member of a pension fund 
152.23  listed in section 356.30, subdivision 3, before July 1, 1989, 
152.24  and whose annuity is higher when calculated under clause (2), in 
152.25  conjunction with this clause than when calculated under clause 
152.26  (4), in conjunction with clause (5). 
152.27     (ii) Where any member retires prior to normal retirement 
152.28  age under a formula annuity, the member shall be paid a 
152.29  retirement annuity in an amount equal to the normal annuity 
152.30  provided in clause (2) reduced by one-quarter of one percent for 
152.31  each month that the member is under normal retirement age at the 
152.32  time of retirement except that for any member who has 30 or more 
152.33  years of allowable service credit, the reduction shall be 
152.34  applied only for each month that the member is under age 62. 
152.35     (iii) Any member whose attained age plus credited allowable 
152.36  service totals 90 years is entitled, upon application, to a 
153.1   retirement annuity in an amount equal to the normal annuity 
153.2   provided in clause (2), without any reduction by reason of early 
153.3   retirement. 
153.4      (4) This clause applies to a member who has become at least 
153.5   55 years old and first became a member of the association after 
153.6   June 30, 1989, and to any other member who has become at least 
153.7   55 years old and whose annuity amount when calculated under this 
153.8   clause and in conjunction with clause (5), is higher than it is 
153.9   when calculated under clause (2), in conjunction with clause (3).
153.10  For a basic member, the average salary, as defined in clause (1) 
153.11  multiplied by the percent specified by section 356.315, 
153.12  subdivision 4, for each year of service for a basic member and 
153.13  by the percent specified in section 356.315, subdivision 2, for 
153.14  each year of service for a coordinated member shall determine 
153.15  the amount of the retirement annuity to which the basic member 
153.16  is entitled.  For a coordinated member, the average salary, as 
153.17  defined in clause (1) multiplied by the percent specified in 
153.18  section 356.315, subdivision 2, for each year of service 
153.19  rendered prior to July 1, 2004, and by the percent specified in 
153.20  section 356.315, subdivision 2a, for each year of service 
153.21  rendered on or after July 1, 2004, shall determine the amount of 
153.22  the retirement annuity to which the coordinated member is 
153.23  entitled. 
153.24     (5) This clause applies to a person who has become at least 
153.25  55 years old and first becomes a member of the association after 
153.26  June 30, 1989, and to any other member who has become at least 
153.27  55 years old and whose annuity is higher when calculated under 
153.28  clause (4) in conjunction with this clause than when calculated 
153.29  under clause (2), in conjunction with clause (3).  An employee 
153.30  who retires under the formula annuity before the normal 
153.31  retirement age shall be paid the normal annuity provided in 
153.32  clause (4) reduced so that the reduced annuity is the actuarial 
153.33  equivalent of the annuity that would be payable to the employee 
153.34  if the employee deferred receipt of the annuity and the annuity 
153.35  amount were augmented at an annual rate of three percent 
153.36  compounded annually from the day the annuity begins to accrue 
154.1   until the normal retirement age. 
154.2      Sec. 5.  [EFFECTIVE DATE.] 
154.3      Sections 2 to 4 are effective on July 1, 2004. 
154.4                              ARTICLE 22
154.5                         MINNEAPOLIS TEACHERS 
154.6                     RETIREMENT FUND ASSOCIATION 
154.7        CONSOLIDATION WITH THE TEACHERS RETIREMENT ASSOCIATION
154.8      Section 1.  [128D.18] [FUNDING OF UNFUNDED PENSION 
154.9   LIABILITIES.] 
154.10     Subdivision 1.  [FINANCING AUTHORITY.] Notwithstanding any 
154.11  other law to the contrary, Special School District No. 1, 
154.12  Minneapolis, may finance all or a portion of the current and 
154.13  future unfunded pension liability of the Minneapolis Teachers 
154.14  Retirement Fund Association through the issuance of revenue 
154.15  bonds issued pursuant to this section; provided that the 
154.16  following conditions are met: 
154.17     (a) The bonds shall be payable from state funds and other 
154.18  contributions appropriated to the Minneapolis Teachers 
154.19  Retirement Fund Association to pay unfunded pension liabilities, 
154.20  including, without limitation, special direct aid, matching aid, 
154.21  or other contributions under section 354A.12, subdivision 3a or 
154.22  3b, or any other subsequent state appropriation for such 
154.23  purpose, and the other sources of funds set forth in this 
154.24  section. 
154.25     (b) At the time of issuance of the bonds, section 354A.12, 
154.26  subdivisions 3a and 3b, have not been repealed or amended. 
154.27     (c) The principal amount of bonds issued and outstanding 
154.28  hereunder shall not exceed the unfunded actuarial accrued 
154.29  liability determined by the actuary retained by the Legislative 
154.30  Commission on Pensions and Retirement for the fiscal year ending 
154.31  June 30, 2002, pursuant to sections 356.215 and 356.216.  
154.32     Subd. 2.  [USE OF PROCEEDS.] The proceeds of the bonds 
154.33  issued, less costs of issuance and net original issue discount, 
154.34  shall be paid to the State Board of Investment to be deposited 
154.35  as an asset of the Minneapolis Teachers Retirement Fund 
154.36  Association.  The proceeds shall be held in trust by the State 
155.1   Board of Investment for the benefit of the Minneapolis Teachers 
155.2   Retirement Fund Association and invested as set forth in 
155.3   subdivision 3.  Annually, on the first banking day of the 
155.4   calendar year, the State Board of Investment shall pay to the 
155.5   Minneapolis Teachers Retirement Fund Association from the funds 
155.6   and with investment income thereof, the amount, if any, needed 
155.7   by the pension fund in any year to pay retirement annuities and 
155.8   benefits that are due and payable or the reasonable and 
155.9   necessary administrative expenses of the retirement plan that 
155.10  are due and payable after all assets held by the association, 
155.11  other than those assets held by the State Board of Investment, 
155.12  have been exhausted.  
155.13     Subd. 3.  [APPROPRIATIONS.] (a) Notwithstanding any law to 
155.14  the contrary, special direct state aid, matching aid, and other 
155.15  contributions levied for the Minneapolis Teachers Retirement 
155.16  Fund Association under section 354A.12, subdivisions 3a and 3b, 
155.17  and amortization or supplementary amortization state aid 
155.18  reallocated to the Minneapolis Teachers Retirement Fund 
155.19  Association under section 423A.02 are pledged and appropriated 
155.20  to the payment of the bonds and must be transferred to Special 
155.21  School District No. 1, Minneapolis, and additional employer 
155.22  contributions levied by Special School District No. 1, 
155.23  Minneapolis, under section 354A.12, subdivision 3b, shall be 
155.24  retained by the district to the extent required to pay debt 
155.25  service on the bonds for the succeeding 12-month period or a 
155.26  longer period established pursuant to the resolution of the 
155.27  district authorizing the bonds. 
155.28     (b) The bond proceeds based on the funding sources for the 
155.29  Minneapolis Teachers Retirement Fund Association referenced in 
155.30  paragraph (a) must be invested by the State Board of Investment 
155.31  in trust for the exclusive benefit of the Minneapolis Teachers 
155.32  Retirement Fund Association.  Notwithstanding any law to the 
155.33  contrary, section 356A.02 shall not apply to the Minneapolis 
155.34  Teachers Retirement Fund Association with respect to any bond 
155.35  proceeds held and invested by the State Board of Investment 
155.36  pursuant to this section. 
156.1      (c) For purposes of annual actuarial valuations and annual 
156.2   financial reports, the assets of the Minneapolis Teachers 
156.3   Retirement Fund Association held by the State Board of 
156.4   Investment pursuant to this section must not be considered as 
156.5   current assets of the Minneapolis Teachers Retirement Fund 
156.6   Association but may be considered as future assets in a similar 
156.7   manner as future contributions to the funds.  For purposes of 
156.8   calculating the cost-of-living adjustment based on the five-year 
156.9   annualized rate of investment return under section 354A.28, 
156.10  subdivision 9, whenever the required contributions under chapter 
156.11  356 exceed the statutory contributions under chapter 354A so 
156.12  that a contribution deficiency exists according to the most 
156.13  recent actuarial report by the actuary retained by the 
156.14  Legislative Commission on Pensions and Retirement, the 
156.15  cost-of-living adjustment shall be reduced by the ratio of the 
156.16  assets invested with the State Board of Investment and owned by 
156.17  the Minneapolis Teachers Retirement Fund Association to the 
156.18  total assets owned by the Minneapolis Teachers Retirement Fund 
156.19  Association. 
156.20     Subd. 4.  [NO ELECTION.] No election of the voters of the 
156.21  district shall be required to issue bonds authorized by this 
156.22  section. 
156.23     Subd. 5.  [TERMS AND SALE OF BONDS.] The bonds issued 
156.24  pursuant to this section shall bear interest at the rate or 
156.25  rates and mature on the date or dates not more than 30 years 
156.26  from the date of issue as the district shall determine by 
156.27  resolution.  Interest may be at a fixed or variable rate.  The 
156.28  bonds may be sold at a negotiated sale or by competitive bid. 
156.29     Subd. 6.  [THIS SECTION PREVAILS.] Notwithstanding any 
156.30  other law to the contrary, this section shall apply to the 
156.31  issuance and sale of the bonds and to the purposes for which the 
156.32  bonds may be issued. 
156.33     Subd. 7.  [TENDER OPTION.] An obligation may be issued 
156.34  giving its owner the right to tender or the authority to demand 
156.35  tender of the obligation to Special School District No. 1, 
156.36  Minneapolis, or another person designated by it, for purchase at 
157.1   a specified time or times, if the district has first entered 
157.2   into an agreement with a suitable financial institution 
157.3   obligating the financial institution to provide funds on a 
157.4   timely basis for purchase of bonds tendered.  The obligation is 
157.5   not considered to mature on any tender date and the purchase of 
157.6   a tendered obligation is not considered a payment or discharge 
157.7   of the obligation by the district.  Obligations tendered for 
157.8   purchase may be remarketed by or on behalf of the district or 
157.9   another purchaser.  The district may enter into agreements it 
157.10  considers appropriate to provide for the purchase and 
157.11  remarketing of tendered obligations, including: 
157.12     (1) provisions under which undelivered obligations may be 
157.13  considered tendered for purchase and new obligations may be 
157.14  substituted for them; 
157.15     (2) provisions for the payment of charges by tender agents, 
157.16  remarketing agents, and financial institutions extending lines 
157.17  of credit or letters of credit assuring repurchase; and 
157.18     (3) provisions for reimbursement of advances under letters 
157.19  of credit that may be paid from the proceeds of the obligations 
157.20  or from tax and other revenues appropriated for the payment and 
157.21  security of the obligations and similar or related provisions. 
157.22     Subd. 8.  [INTEREST EXCHANGES.] Special School District No. 
157.23  1, Minneapolis, may enter into an agreement with a third party 
157.24  for an exchange of interest rates under this subdivision.  With 
157.25  respect to outstanding obligations bearing interest at a 
157.26  variable rate, the district may agree to pay sums equal to 
157.27  interest at a fixed rate or at a different variable rate 
157.28  determined in accordance with a formula set out in the agreement 
157.29  on an amount not exceeding the outstanding principal amount of 
157.30  the obligations, in exchange for an agreement by the third party 
157.31  to pay sums equal to interest on a similar amount at a variable 
157.32  rate determined according to a formula set out in the 
157.33  agreement.  With respect to outstanding obligations bearing 
157.34  interest at a fixed rate or rates, the district may agree to pay 
157.35  sums equal to interest at a variable rate determined according 
157.36  to a formula set out in the agreement on an amount not exceeding 
158.1   the outstanding principal amount of the obligations in exchange 
158.2   for an agreement by the third party to pay sums equal to 
158.3   interest on a similar amount at a fixed rate or rates set out in 
158.4   the agreement.  Subject to any applicable bonds covenants, 
158.5   payments required to be made by the district under the swap 
158.6   agreement may be made from amounts secured to pay debt service 
158.7   on the obligations with respect to which the swap agreement was 
158.8   made from any other available source of the district. 
158.9      Subd. 9.  [STATE PLEDGE AGAINST IMPAIRMENT OF 
158.10  CONTRACTS.] The state pledges and agrees with the holders of 
158.11  bonds issued under this section that the state will not limit or 
158.12  alter the rights vested in Special School District No. 1, 
158.13  Minneapolis, to fulfill the terms of any agreements made with 
158.14  the bondholders or in any way impair the rights and remedies of 
158.15  the holders until the bonds, together with interest on them, 
158.16  with interest on any unpaid installments of interest, and all 
158.17  costs and expenses in connection with any action or proceeding 
158.18  by or on behalf of the bondholders, are fully met and 
158.19  discharged.  The district may include this pledge and agreement 
158.20  of the state in any agreement with the holders of bonds issued 
158.21  under this section. 
158.22     Subd. 10.  [NOT NET DEBT.] Bonds ended under this section 
158.23  not in default shall not be deemed net debt under any law 
158.24  limiting indebtedness. 
158.25     Subd. 11.  [CERTIFICATION AND BUDGET REQUEST.] To ensure 
158.26  the payment of the principal of and interest on bonds issued 
158.27  under this section, the superintendent of schools of Special 
158.28  School District No. 1, Minneapolis, shall annually determine and 
158.29  certify to the governor, on or before December 1, the following 
158.30  amounts: 
158.31     (1) the amount then needed to pay unpaid debt service on 
158.32  the bonds currently due and payable; 
158.33     (2) the amount of any state aids used to pay debt service 
158.34  on the bonds pursuant to this section; and 
158.35     (3) the amount required to pay debt service on the bonds 
158.36  during the then-current fiscal year, less amounts appropriated 
159.1   and available for debt service pursuant to section 354A.12, 
159.2   subdivisions 3a and 3b. 
159.3      The legislature shall consider including a separate line 
159.4   item in the biennial budget for the following fiscal year, or in 
159.5   a supplemental budget if the biennial budget has previously been 
159.6   approved, all amounts certified by the superintendent of schools 
159.7   of Special School District No. 1, Minneapolis, in accordance 
159.8   with this subdivision. 
159.9      Subd. 12.  [AID REDUCTION FOR REPAYMENT.] If the amount 
159.10  transferred by Special School District No. 1, Minneapolis, to 
159.11  the paying agent for the bonds is insufficient to pay required 
159.12  debt service, the paying agent shall notify the commissioner of 
159.13  finance.  The commissioner shall reduce any and all unrestricted 
159.14  state aids generally available to the school district by the 
159.15  amount of the deficiency and pay the amounts to the paying agent 
159.16  for the bonds for the payment of debt service.  If the state 
159.17  aids are reduced pursuant to this subdivision, the district may 
159.18  levy a tax in the amount of the reduction in state aid.  
159.19  Notwithstanding any other law to the contrary, no election of 
159.20  the voters of the district is required for the levy and the levy 
159.21  is not subject to other levy limitations. 
159.22     Subd. 13.  [EXEMPTION.] Interest on the bonds shall not be 
159.23  included in taxable net income of individuals, estates, and 
159.24  trusts for state income tax purposes and is not an item of tax 
159.25  reference in determining state alternative minimum tax 
159.26  applicable to individuals or corporations. 
159.27     Sec. 2.  Minnesota Statutes 2002, section 354.05, 
159.28  subdivision 2, is amended to read: 
159.29     Subd. 2.  [TEACHER.] (a) "Teacher" means: 
159.30     (1) a person who renders service as a teacher, supervisor, 
159.31  principal, superintendent, librarian, nurse, counselor, social 
159.32  worker, therapist, or psychologist in a public school of the 
159.33  state located outside of the corporate limits of a city of the 
159.34  first class the city of Duluth or of the city of St. Paul, or in 
159.35  any charter school, irrespective of the location of the school, 
159.36  or in any charitable, penal, or correctional institutions of a 
160.1   governmental subdivision, or who is engaged in educational 
160.2   administration in connection with the state public school 
160.3   system, but excluding the University of Minnesota, whether the 
160.4   position be a public office or an employment, not including 
160.5   members or officers of any general governing or managing board 
160.6   or body; 
160.7      (2) an employee of the Teachers Retirement Association; 
160.8      (3) a person who renders teaching service on a part-time 
160.9   basis and who also renders other services for a single employing 
160.10  unit.  A person whose teaching service comprises at least 50 
160.11  percent of the combined employment salary is a member of the 
160.12  association for all services with the single employing unit.  If 
160.13  the person's teaching service comprises less than 50 percent of 
160.14  the combined employment salary, the executive director must 
160.15  determine whether all or none of the combined service is covered 
160.16  by the association; or 
160.17     (4) a person who is not covered by the plans established 
160.18  under chapter 352D, 354A, or 354B and who is employed by the 
160.19  Board of Trustees of the Minnesota State Colleges and 
160.20  Universities system in an unclassified position as: 
160.21     (i) a president, vice-president, or dean; 
160.22     (ii) a manager or a professional in an academic or an 
160.23  academic support program other than specified in item (i); 
160.24     (iii) an administrative or a service support faculty 
160.25  position; or 
160.26     (iv) a teacher or a research assistant. 
160.27     (b) "Teacher" does not mean: 
160.28     (1) a person who works for a school or institution as an 
160.29  independent contractor as defined by the Internal Revenue 
160.30  Service; 
160.31     (2) a person employed in subsidized on-the-job training, 
160.32  work experience or public service employment as an enrollee 
160.33  under the federal Comprehensive Employment and Training Act from 
160.34  and after March 30, 1978, unless the person has, as of the later 
160.35  of March 30, 1978, or the date of employment, sufficient service 
160.36  credit in the retirement association to meet the minimum vesting 
161.1   requirements for a deferred retirement annuity, or the employer 
161.2   agrees in writing on forms prescribed by the executive director 
161.3   to make the required employer contributions, including any 
161.4   employer additional contributions, on account of that person 
161.5   from revenue sources other than funds provided under the federal 
161.6   Comprehensive Training and Employment Act, or the person agrees 
161.7   in writing on forms prescribed by the executive director to make 
161.8   the required employer contribution in addition to the required 
161.9   employee contribution; 
161.10     (3) a person holding a part-time adult supplementary 
161.11  technical college license who renders part-time teaching service 
161.12  or a customized trainer as defined by the Minnesota State 
161.13  Colleges and Universities system in a technical college if (i) 
161.14  the service is incidental to the regular nonteaching occupation 
161.15  of the person; and (ii) the applicable technical college 
161.16  stipulates annually in advance that the part-time teaching 
161.17  service or customized training service will not exceed 300 hours 
161.18  in a fiscal year and retains the stipulation in its records; and 
161.19  (iii) the part-time teaching service or customized training 
161.20  service actually does not exceed 300 hours in a fiscal year; or 
161.21     (4) a person exempt from licensure under section 122A.30. 
161.22     Sec. 3.  Minnesota Statutes 2002, section 354.05, 
161.23  subdivision 13, is amended to read: 
161.24     Subd. 13.  [ALLOWABLE SERVICE.] "Allowable service" means: 
161.25     (1) Any service rendered by a teacher for which on or 
161.26  before July 1, 1957, the teacher's account in the retirement 
161.27  fund was credited by reason of employee contributions in the 
161.28  form of salary deductions, payments in lieu of salary 
161.29  deductions, or in any other manner authorized by Minnesota 
161.30  Statutes 1953, sections 135.01 to 135.13, as amended by Laws 
161.31  1955, chapters 361, 549, 550, 611, or 
161.32     (2) Any service rendered by a teacher for which on or 
161.33  before July 1, 1961, the teacher elected to obtain credit for 
161.34  service by making payments to the fund pursuant to Minnesota 
161.35  Statutes 1980, section 354.09 and section 354.51, or 
161.36     (3) Any service rendered by a teacher after July 1, 1957, 
162.1   for any calendar month when the member receives salary from 
162.2   which deductions are made, deposited and credited in the fund, 
162.3   or 
162.4      (4) Any service rendered by a person after July 1, 1957, 
162.5   for any calendar month where payments in lieu of salary 
162.6   deductions are made, deposited and credited into the fund as 
162.7   provided in Minnesota Statutes 1980, section 354.09, subdivision 
162.8   4, and section 354.53, or 
162.9      (5) Any service rendered by a teacher for which the teacher 
162.10  elected to obtain credit for service by making payments to the 
162.11  fund pursuant to Minnesota Statutes 1980, section 354.09, 
162.12  subdivisions 1 and 4, sections 354.50, 354.51, Minnesota 
162.13  Statutes 1957, section 135.41, subdivision 4, Minnesota Statutes 
162.14  1971, section 354.09, subdivision 2, or Minnesota Statutes, 1973 
162.15  Supplement, section 354.09, subdivision 3, or 
162.16     (6) Both service during years of actual membership in the 
162.17  course of which contributions were currently made and service in 
162.18  years during which the teacher was not a member but for which 
162.19  the teacher later elected to obtain credit by making payments to 
162.20  the fund as permitted by any law then in effect, or 
162.21     (7) Any service rendered where contributions were made and 
162.22  no allowable service credit was established because of the 
162.23  limitations contained in Minnesota Statutes 1957, section 
162.24  135.09, subdivision 2, as determined by the ratio between the 
162.25  amounts of money credited to the teacher's account in a fiscal 
162.26  year and the maximum retirement contribution allowable for that 
162.27  year, or 
162.28     (8) A period purchased under section 356.555, or 
162.29     (9) A period of time during which a teacher who is a state 
162.30  employee was on strike without pay, not to exceed a period of 
162.31  one year, if the teacher makes a payment in lieu of salary 
162.32  deductions or makes a prior service credit purchase payment, 
162.33  whichever applies.  If the payment is made within 12 months, the 
162.34  payment by the teacher must be an amount equal to the employee 
162.35  and employer contribution rates set forth in section 354.42, 
162.36  subdivisions 2 and 3, applied to the teacher's rate of salary in 
163.1   effect on the conclusion of the strike for the period of the 
163.2   strike without pay, plus compound interest at a monthly rate of 
163.3   0.71 percent from the last day of the strike until the date of 
163.4   payment.  If the payment by the employee is not made within 12 
163.5   months, the payment must be in an amount equal to the payment 
163.6   amount determined under section 356.55 or 356.551, whichever 
163.7   applies; or 
163.8      (10) A period of service rendered by a teacher as an 
163.9   employee of Special School District No. 1, Minneapolis, on 
163.10  December 31, 2004, who was a member of the Minneapolis Teachers 
163.11  Retirement Fund Association by virtue of that employment, who 
163.12  has not begun receiving an annuity or other retirement benefit 
163.13  from the former Minneapolis Teachers Retirement Fund Association 
163.14  calculated in whole or in part on that service before July 1, 
163.15  2004, and who has not taken a refund of member contributions 
163.16  related to that service unless the refund is repaid under 
163.17  section 354.50, subdivision 4. 
163.18     Sec. 4.  Minnesota Statutes 2002, section 354.42, 
163.19  subdivision 2, is amended to read: 
163.20     Subd. 2.  [EMPLOYEE.] (a) The employee contribution to the 
163.21  fund is an amount equal to the following percentage of the 
163.22  salary of a member: 
163.23     (1) from January 1, 2005, to December 31, 2006, for a 
163.24  teacher employed by Special School District No. 1, Minneapolis, 
163.25  5.50 percent if the teacher is a coordinated member and 9.00 
163.26  percent if the teacher is a basic member; 
163.27     (2) after December 31, 2006, for a teacher employed by 
163.28  Special School District No. 1, Minneapolis, 5.00 percent if the 
163.29  teacher is a coordinated member and 9.00 percent if the teacher 
163.30  is a basic member; 
163.31     (3) for every other teacher 5.0 percent of if the salary of 
163.32  every teacher is a coordinated member and 9.0 percent of if the 
163.33  salary of every teacher is a basic member.  
163.34     (b) This contribution must be made by deduction from 
163.35  salary.  Where any portion of a member's salary is paid from 
163.36  other than public funds, the member's employee contribution must 
164.1   be based on the entire salary received.  
164.2      Sec. 5.  Minnesota Statutes 2002, section 354.42, 
164.3   subdivision 3, is amended to read: 
164.4      Subd. 3.  [EMPLOYER.] (a) The employer contribution to the 
164.5   fund by Special School District No. 1, Minneapolis, is an amount 
164.6   equal to 8.64 percent of the salary of each of its teachers who 
164.7   is a coordinated member and 12.64 percent of the salary of each 
164.8   of its teachers who is a basic member. 
164.9      (b) The employer contribution to the fund for every other 
164.10  employer is an amount equal to 5.0 percent of the salary of each 
164.11  coordinated member and 9.0 percent of the salary of each basic 
164.12  member.  
164.13     Sec. 6.  [354.70] [CONSOLIDATION OF THE MINNEAPOLIS 
164.14  TEACHERS RETIREMENT FUND ASSOCIATION.] 
164.15     Subdivision 1.  [MEMBERSHIP TRANSFER.] All active, 
164.16  inactive, and retired members of the Minneapolis Teachers 
164.17  Retirement Fund Association are transferred to the Teachers 
164.18  Retirement Association and are no longer members of the 
164.19  Minneapolis Teachers Retirement Fund Association as of the 
164.20  effective date of this section.  
164.21     Subd. 2.  [TRA MEMBERSHIP.] A person first hired as a 
164.22  teacher by Special School District No. 1, Minneapolis, after the 
164.23  effective date of this section and who is a teacher as defined 
164.24  in section 354.05, subdivision 2, is a member of the Teachers 
164.25  Retirement Association for the person's teaching service. 
164.26     Subd. 3.  [SERVICE CREDIT AND LIABILITY TRANSFER.] All 
164.27  allowable service and salary credit of the members and other 
164.28  individuals transferred under subdivision 1 as specified in the 
164.29  records of the Minneapolis Teachers Retirement Fund Association 
164.30  on the transfer date is allowable service credit under section 
164.31  354.05, subdivision 13, formula service credit under section 
164.32  354.05, subdivision 25, and salary credit under section 354.05, 
164.33  subdivision 35, for the Teachers Retirement Association. 
164.34     Subd. 4.  [TRANSFER OF RECORDS.] On the effective date of 
164.35  this section, the chief administrative officer of the 
164.36  Minneapolis Teachers Retirement Fund Association shall effect a 
165.1   transfer of all records and documents relating to the funds and 
165.2   the benefit plans of the association to the executive director 
165.3   of the Teachers Retirement Association.  To the extent possible, 
165.4   original copies of all records and documents must be transferred.
165.5      Subd. 5.  [TRANSFER OF ASSETS.] (a) On the effective date 
165.6   of this section, the chief administrative officer of the 
165.7   Minneapolis Teachers Retirement Fund Association shall transfer 
165.8   to the Teachers Retirement Association the entire assets of the 
165.9   Minneapolis Teachers Retirement Fund Association.  The transfer 
165.10  of the assets of the Minneapolis Teachers Retirement Fund 
165.11  Association must include any accounts receivable that are 
165.12  determined by the executive director of the State Board of 
165.13  Investment as reasonably capable of being collected.  Legal 
165.14  title to account receivables that are determined by the 
165.15  executive director of the State Board of Investment as not 
165.16  reasonably capable of being collected transfers to Special 
165.17  School District No. 1, Minneapolis, as of the date of the 
165.18  determination of the executive director of the State Board of 
165.19  Investment.  If the account receivables transferred to Special 
165.20  School District No. 1, Minneapolis, are subsequently recovered 
165.21  by the school district, Special School District No. 1, 
165.22  Minneapolis, shall transfer the recovered amount to the Teachers 
165.23  Retirement Association, in cash, for deposit in the teachers 
165.24  retirement fund, less the reasonable expenses of the school 
165.25  district related to the recovery. 
165.26     (b) As of the effective date of this section, subject to 
165.27  the authority of the State Board of Investment, the board of 
165.28  directors of the Teachers Retirement Association has legal title 
165.29  to and management responsibility for any transferred assets 
165.30  under this subdivision as trustees for any person having a 
165.31  beneficial interest in the Minneapolis Teachers Retirement Fund 
165.32  Association.  The Teachers Retirement Association is the 
165.33  successor in interest for all claims for and against the former 
165.34  Minneapolis Teachers Retirement Fund Association with respect to 
165.35  the retirement fund association, except a claim against the 
165.36  Minneapolis Teachers Retirement Fund Association or any person 
166.1   connected with the fund association in a fiduciary capacity, 
166.2   based on any act or acts by that person which were not done in 
166.3   good faith and which constituted a breach of the obligation of 
166.4   the person as a fiduciary.  As the successor in interest, the 
166.5   Teachers Retirement Association may assert any applicable 
166.6   defense in any judicial proceeding which the board of the 
166.7   Minneapolis Teachers Retirement Fund Association would have 
166.8   otherwise been entitled to assert. 
166.9      (c) From the assets of the former Minneapolis Teachers 
166.10  Retirement Fund Association transferred to the Teachers 
166.11  Retirement Association, an amount equal to 76.26 percent of the 
166.12  percent value of future benefits payable to annuitants as of 
166.13  June 30, 2004, must be transferred to the Minnesota 
166.14  postretirement investment fund.  The balance of the assets of 
166.15  the former Minneapolis Teachers Retirement Fund Association 
166.16  after the transfer to the Minnesota postretirement investment 
166.17  fund must be credited to the Teachers Retirement Association. 
166.18     Subd. 6.  [TERMINATION OF THE MINNEAPOLIS TEACHERS 
166.19  RETIREMENT FUND ASSOCIATION.] (a) As of the effective date of 
166.20  this section and upon the transfer of administration, records, 
166.21  assets, and liabilities from the Minneapolis Teachers Retirement 
166.22  Fund Association to the Teachers Retirement Association, the 
166.23  Minneapolis Teachers Retirement Fund Association ceases to exist 
166.24  as a Minnesota public pension plan.  
166.25     (b) On September 1, 2004, the membership of the former 
166.26  Minneapolis Teachers Retirement Fund Association shall 
166.27  determine, by referendum, whether or not to dissolve the 
166.28  nonprofit corporation.  If the membership elects not to dissolve 
166.29  the nonprofit corporation, the Minneapolis Teachers Retirement 
166.30  Fund Association continues as a fraternal organization for the 
166.31  benefit of active and retired teachers of Special School 
166.32  District No. 1, Minneapolis.  If the Minneapolis Teachers 
166.33  Retirement Fund Association continues as a fraternal 
166.34  organization, the board of trustees of the association shall set 
166.35  the amount of membership dues for the fraternal organization, 
166.36  Special School District No. 1, Minneapolis, shall deduct the 
167.1   amount of the active member dues from the salaries of active 
167.2   Minneapolis teachers, and the Teachers Retirement Association 
167.3   shall deduct the amount of the retired member dues from the 
167.4   retirement annuities of retired Minneapolis teachers.  
167.5      Subd. 7.  [BENEFIT CALCULATION.] (a) For every deferred, 
167.6   inactive, disabled, and retired member of the Minneapolis 
167.7   Teachers Retirement Fund Association transferred under 
167.8   subdivision 1, and the survivors of these members, annuities or 
167.9   benefits earned before the date of transfer, other than future 
167.10  postretirement adjustments, must be calculated and paid by the 
167.11  Teachers Retirement Association under the Minneapolis Teachers 
167.12  Retirement Fund Association laws, articles of incorporation, or 
167.13  bylaws that were in effect relative to the person on the date of 
167.14  the person's termination of active service covered by the 
167.15  Minneapolis Teachers Retirement Fund Association. 
167.16     (b) Retired former Minneapolis Teachers Retirement Fund 
167.17  Association members must receive postretirement adjustments 
167.18  after December 31, 2004, as provided in section 11A.18.  All 
167.19  other benefit recipients of the former Minneapolis Teachers 
167.20  Retirement Fund Association must receive postretirement 
167.21  adjustments after December 31, 2004, as provided in section 
167.22  356.41.  
167.23     Subd. 8.  [TRANSITIONAL RETIREMENT OFFICE.] The executive 
167.24  director of the Teachers Retirement Association shall maintain 
167.25  an office in Minneapolis until June 30, 2006, to handle the 
167.26  transfer of records, to determine the service credit of active 
167.27  members and recommend its conversion to allowable and formula 
167.28  service credit under sections 354.05, subdivisions 13 and 25, 
167.29  and 354.091, and to counsel potential retirees.  The executive 
167.30  director shall staff the Minneapolis office at the appropriate 
167.31  level for its functions and shall locate the Minneapolis office 
167.32  for the convenience of former Minneapolis Teachers Retirement 
167.33  Fund Association members.  
167.34     Subd. 9.  [RECOMMENDATIONS FOR UNFUNDED LIABILITY.] The 
167.35  commissioner of finance, in consultation with the Teachers 
167.36  Retirement Association, shall determine the extent of current 
168.1   and future unfunded pension liability transferred to the 
168.2   Teachers Retirement Association by this act.  By January 15, 
168.3   2005, the commissioner shall provide recommendations for 
168.4   legislation to address the liability to the Legislative 
168.5   Commission on Pensions and Retirement and the legislative chairs 
168.6   with jurisdiction of pension issues. 
168.7      Sec. 7.  [354.75] [MINNEAPOLIS EMPLOYEES RETIREMENT FUND 
168.8   APPROPRIATION REDEDICATED.] 
168.9      Subdivision 1.  The amount appropriated in Laws 2003, First 
168.10  Special Session chapter 1, article 1, section 27, for the 
168.11  financial requirements of the Minneapolis Employees Retirement 
168.12  Fund under section 422A.101, subdivision 3, is annually 
168.13  appropriated from the general fund to the commissioner of 
168.14  finance for deposit in the Teachers Retirement Fund to offset 
168.15  all or a portion of the current and future unfunded pension 
168.16  liability of the Minneapolis Teachers Retirement Fund 
168.17  Association transferred to the Teachers Retirement Association 
168.18  by this act. 
168.19     Subd. 2.  The appropriation in subdivision 1 is available 
168.20  to the extent that financial requirements of the Minneapolis 
168.21  Employees Retirement Fund under section 422A.101, subdivision 3, 
168.22  have been satisfied. 
168.23     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
168.24  354A.12, subdivision 3b, is amended to read: 
168.25     Subd. 3b.  [SPECIAL DIRECT STATE MATCHING AID TO THE 
168.26  MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special 
168.27  School District No. 1 may must make an additional employer 
168.28  contribution to the Minneapolis Teachers Retirement Fund 
168.29  Association.  The city of Minneapolis may must make a 
168.30  contribution to the Minneapolis Teachers Retirement Fund 
168.31  Association.  This contribution may must be made by a levy of 
168.32  the board of estimate and taxation of the city of Minneapolis 
168.33  and the levy, if made, is classified as that of a special taxing 
168.34  district for purposes of sections 275.065 and 276.04, and for 
168.35  all other property tax purposes. 
168.36     (b) For every $1,000 contributed in equal proportion by 
169.1   Special School District No. 1 and by the city of Minneapolis to 
169.2   the Minneapolis teachers retirement fund association under 
169.3   paragraph (a), the state shall pay to the Minneapolis Teachers 
169.4   Retirement Fund Association $1,000, but not to exceed $2,500,000 
169.5   in total in fiscal year 1994.  The superintendent of Special 
169.6   School District No. 1, the mayor of the city of Minneapolis, and 
169.7   the executive director of the Minneapolis Teachers Retirement 
169.8   Fund Association shall jointly certify to the commissioner of 
169.9   finance the total amount that has been contributed by Special 
169.10  School District No. 1 and by the city of Minneapolis to the 
169.11  Minneapolis Teachers Retirement Fund Association.  Any 
169.12  certification to the commissioner of education must be made 
169.13  quarterly.  If the total certifications for a fiscal year exceed 
169.14  the maximum annual direct state matching aid amount in any 
169.15  quarter, the amount of direct state matching aid payable to the 
169.16  Minneapolis Teachers Retirement Fund Association must be limited 
169.17  to the balance of the maximum annual direct state matching aid 
169.18  amount available.  The amount required under this paragraph, 
169.19  subject to the maximum direct state matching aid amount, is 
169.20  appropriated annually to the commissioner of finance. 
169.21     (c) The commissioner of finance may prescribe the form of 
169.22  the certifications required under paragraph (b). 
169.23     Sec. 9.  [SUCCESSOR FOR CERTAIN STATE AID AMOUNTS.] 
169.24     Upon the consolidation of the Minneapolis Teachers 
169.25  Retirement Fund Association, any state aid payable to the 
169.26  Minneapolis Teachers Retirement Fund Association under Minnesota 
169.27  Statutes, sections 354A.12, subdivisions 3a and 3b, and 423A.02, 
169.28  subdivision 3, becomes payable to Special School District No. 1, 
169.29  Minneapolis, and may only be expended to pay the debt service on 
169.30  bonds issued by the school district to defray a portion of the 
169.31  unfunded accrued liability of the former Minneapolis Teachers 
169.32  Retirement Fund Association, or if no bonds have been issued, 
169.33  transferred to the Teachers Retirement Association in addition 
169.34  to the employer contributions otherwise payable by the school 
169.35  district. 
169.36     Sec. 10.  [REPEALER.] 
170.1      Minnesota Statutes 2002, section 354A.28, is repealed.  
170.2      Sec. 11.  [INSTRUCTIONS TO REVISOR.] 
170.3      (a) If the Revisor of Statutes can readily determine a 
170.4   substitute reference for the "Minneapolis Teachers Retirement 
170.5   Fund Association" in Minnesota Statutes, chapters 354A, 355, 
170.6   356, 356A, and 423A, in Minnesota Statutes 2004 and subsequent 
170.7   editions, the Revisor of Statutes shall substitute the 
170.8   appropriate reference. 
170.9      (b) For references to the "Minneapolis Teachers Retirement 
170.10  Fund Association" in Minnesota Statutes, chapters 354A, 355, 
170.11  356, 356A, and 423A, for which the Revisor of Statutes is unable 
170.12  to readily determine a substitute reference, the Revisor of 
170.13  Statutes shall prepare draft proposed legislation for 
170.14  introduction during the 2005 legislative session providing 
170.15  proposed substitute references.  
170.16     Sec. 12.  [EFFECTIVE DATE.] 
170.17     (a) Sections 2, 3, 4, 5, and 6 are effective on January 1, 
170.18  2005.  
170.19     (b) Section 10 is effective on December 31, 2004.  
170.20     (c) Sections 1, 8, 9, and 11 are effective on July 1, 2004. 
170.21     (d) Section 7 is effective July 1, 2005.