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Minnesota Legislature

Office of the Revisor of Statutes

SF 2715

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to retirement; actuarial and financial reporting, sunsetting statutory salary
increase and payroll increase actuarial assumptions; modifying postretirement
interest rate assumption for the Minnesota post retirement investment fund;
permitting annual financial reports to be made available to plan members
rather than provided to them; reducing specificity of annual financial reports;
eliminating transitional portions of actuarial value of assets definition;
modifying the select and ultimate salary increase actuarial assumptions for
various retirement plans; changing procedure for setting salary increase and
payroll increase actuarial assumptions after July 1, 2010; resetting amortization
target dates for various retirement plans; requiring an alternative amortization
contribution calculation; amending Minnesota Statutes 2006, sections 11A.18,
subdivision 9; 356.20, subdivisions 1, 2, 3, 4, 4a; 356.215, subdivisions 1, 2, 8,
11, 18; Minnesota Statutes 2007 Supplement, section 356.96, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 11A.18, subdivision 9, is amended to read:


Subd. 9.

Calculation of postretirement adjustment.

(a) Annually, following June
30, the state board shall use the procedures in paragraphs (b), (c), and (d) to determine
whether a postretirement adjustment is payable and to determine the amount of any
postretirement adjustment.

(b) If the Consumer Price Index for urban wage earners and clerical workers all
items index published by the Bureau of Labor Statistics of the United States Department
of Labor increases from June 30 of the preceding year to June 30 of the current year,
the state board shall certify the percentage increase. The amount certified must not
exceed deleted text beginthe lesser of the difference between the preretirement interest assumption and
postretirement interest assumption in section 356.215, subdivision 8, paragraph (a), or
deleted text end
2.5 percent. For the Minneapolis Employees Retirement Fund, the amount certified must
not exceed 3.5 percent.

(c) In addition to any percentage increase certified under paragraph (b), the board
shall use the following procedures to determine if a postretirement adjustment is payable
under this paragraph:

(1) the state board shall determine the market value of the fund on June 30 of that
year;

(2) the amount of reserves required as of the current June 30 for the annuity or
benefit payable to an annuitant and benefit recipient of the participating public pension
plans or funds must be determined by the actuary retained under section 356.214. An
annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12
full months as of the current June 30 is eligible to receive a full postretirement adjustment.
An annuitant or benefit recipient who has been receiving an annuity or benefit for at
least one full month, but less than 12 full months as of the current June 30, is eligible to
receive a partial postretirement adjustment. Each fund shall report separately the amount
of the reserves for those annuitants and benefit recipients who are eligible to receive
a full postretirement benefit adjustment. This amount is known as "eligible reserves."
Each fund shall also report separately the amount of the reserves for those annuitants
and benefit recipients who are not eligible to receive a postretirement adjustment. This
amount is known as "noneligible reserves." For an annuitant or benefit recipient who is
eligible to receive a partial postretirement adjustment, each fund shall report separately
as additional "eligible reserves" an amount that bears the same ratio to the total reserves
required for the annuitant or benefit recipient as the number of full months of annuity
or benefit receipt as of the current June 30 bears to 12 full months. The remainder of
the annuitant's or benefit recipient's reserves must be separately reported as additional
"noneligible reserves." The amount of "eligible" and "noneligible" required reserves
must be certified to the board by the actuary retained under section 356.214 as soon as is
practical following the current June 30;

deleted text begin (3) The state board shall determine the percentage increase certified under paragraph
(b) multiplied by the eligible required reserves, as adjusted for mortality gains and losses
under subdivision 11, determined under clause (2);
deleted text end

deleted text begin (4)deleted text end new text begin(3) new text endthe state board shall deleted text beginadddeleted text end new text beginmultiply new text endthe amount of reserves required for the
annuities or benefits payable to annuitants and benefit recipients of the participating public
pension plans or funds as of the current June 30 deleted text beginto the amount determined under clause
(3)
deleted text endnew text begin by the factor 1.085new text end;

deleted text begin (5)deleted text end new text begin(4) new text endthe state board shall subtract the amount determined under clause deleted text begin(4)deleted text end new text begin(3) new text endfrom
the market value of the fund determined under clause (1);

deleted text begin (6)deleted text end new text begin(5) new text endthe state board shall adjust the amount determined under clause deleted text begin(5)deleted text end new text begin(4) new text endby
the cumulative current balance determined under clause deleted text begin(8)deleted text end new text begin(7) new text endand any negative balance
carried forward under clause deleted text begin(9)deleted text endnew text begin (8)new text end;

deleted text begin (7)deleted text end new text begin(6) new text enda positive amount resulting from the calculations in clauses (1) to deleted text begin(6)deleted text end new text begin(5) new text endis
the excess market value. A negative amount is the negative balance;

deleted text begin (8)deleted text end new text begin(7) new text endthe state board shall allocate one-fifth of the excess market value or one-fifth
of the negative balance to each of five consecutive years, beginning with the fiscal year
ending the current June 30; and

deleted text begin (9)deleted text end new text begin(8) new text endto calculate the postretirement adjustment under this paragraph based on
investment performance for a fiscal year, the state board shall add together all excess
market value allocated to that year and subtract from the sum all negative balances
allocated to that year. If this calculation results in a negative number, the entire negative
balance must be carried forward and allocated to the next year. If the resulting amount is
positive, a postretirement adjustment is payable under this paragraph. The board shall
express a positive amount as a percentage of the total eligible required reserves certified to
the board under clause (2).

(d) The state board shall determine the amount of any postretirement adjustment
which is payable using the following procedure:

(1) the total "eligible" required reserves as of the first of January next following the
end of the fiscal year for the annuitants and benefit recipients eligible to receive a full or
partial postretirement adjustment as determined by clause (2) must be certified to the state
board by the actuary retained under section 356.214. The total "eligible" required reserves
must be determined by the actuary retained under section 356.214 on the assumption that
all annuitants and benefit recipients eligible to receive a full or partial postretirement
adjustment will be alive on the January 1 in question; and

(2) the state board shall add the percentage certified under paragraph (b) to any
positive percentage calculated under paragraph (c). The board shall not subtract from the
percentage certified under paragraph (b) any negative amount calculated under paragraph
(c). The sum of these percentages must be carried to five decimal places and must be
certified to each participating public pension fund or plan as the full postretirement
adjustment percentage. The full postretirement adjustment percentage certified to each
participating public pension plan or fund must not exceed five percent. For the Minneapolis
Employees Retirement Fund, no maximum percentage adjustment is applicable.

(e) A retirement annuity payable in the event of retirement before becoming eligible
for Social Security benefits as provided in section 352.116, subdivision 3; 353.29,
subdivision 6
; or 354.35 must be treated as the sum of a period certain retirement annuity
and a life retirement annuity for the purposes of any postretirement adjustment. The
period certain retirement annuity plus the life retirement annuity must be the annuity
amount payable until age 62 or 65, whichever applies. A postretirement adjustment
granted on the period certain retirement annuity must terminate when the period certain
retirement annuity terminates.

Sec. 2.

Minnesota Statutes 2006, section 356.20, subdivision 1, is amended to read:


Subdivision 1.

Report required.

(a) The governing or managing board or new text beginthe
chief
new text endadministrative deleted text beginofficialsdeleted text end new text beginofficer new text endof deleted text beginthedeleted text end new text begineach new text endpublic pension and retirement deleted text beginfundsdeleted text end new text beginplan
new text endenumerated in subdivision 2 shall annually prepare and file a financial report following the
close of each fiscal year.

(b) This requirement also applies to any plan or fund which may be a successor to any
organization so enumerated or to any newly formed retirement plan, fund or association
operating under the control or supervision of any public employee group, governmental
unit, or institution receiving a portion of its support through legislative appropriations.

(c) The report must be prepared under the supervision and at the direction of
the management of each deleted text beginfunddeleted text end new text beginplan new text endand must be signed by the presiding officer of the
managing board of the deleted text beginfunddeleted text end new text beginplan new text endand the chief administrative official of the deleted text beginfunddeleted text endnew text begin plannew text end.

Sec. 3.

Minnesota Statutes 2006, section 356.20, subdivision 2, is amended to read:


Subd. 2.

Covered public pension plans and funds.

This section applies to the
following public pension plans:

(1) the general state employees retirement plan of the Minnesota State Retirement
System;

(2) the general employees retirement plan of the Public Employees Retirement
Association;

(3) the Teachers Retirement Association;

(4) the State Patrol retirement plan;

(5) the St. Paul Teachers Retirement Fund Association;

(6) the Duluth Teachers Retirement Fund Association;

(7) the Minneapolis Employees Retirement Fund;

(8) the University of Minnesota faculty retirement plan;

(9) the University of Minnesota faculty supplemental retirement plan;

(10) the judges retirement fund;

(11) a police or firefighter's relief association specified or described in section 69.77,
subdivision 1a
deleted text begin, ordeleted text endnew text begin;
new text end

new text begin (12) a volunteer firefighter relief association governed by sectionnew text end 69.771, subdivision
1
;

deleted text begin (12)deleted text end new text begin(13) new text endthe public employees police and fire plan of the Public Employees
Retirement Association;

deleted text begin (13)deleted text end new text begin(14) new text endthe correctional state employees retirement plan of the Minnesota State
Retirement System; and

deleted text begin (14)deleted text end new text begin(15) new text endthe local government correctional service retirement plan of the Public
Employees Retirement Association.

Sec. 4.

Minnesota Statutes 2006, section 356.20, subdivision 3, is amended to read:


Subd. 3.

Filing requirement.

The financial report is a public record. A copy of the
report or a synopsis of the report containing the information required by this section must
be deleted text begindistributeddeleted text end new text beginmade available new text endannually to each member of the fund and to the governing
body of each governmental subdivision of the state which makes employers contributions
thereto or in whose behalf taxes are levied for the employers' contribution. A signed copy
of the report must be delivered to the executive director of the Legislative Commission
on Pensions and Retirement and to the Legislative Reference Library not later than six
months after the close of each fiscal year or one month following the completion and
delivery to the retirement fund of the actuarial valuation report of the fund by the actuary
retained under section 356.214, if applicable, whichever is later.

Sec. 5.

Minnesota Statutes 2006, section 356.20, subdivision 4, is amended to read:


Subd. 4.

Contents of financial report.

(a) The financial report required by
this section must contain financial statements and disclosures that indicate the financial
operations and position of the retirement plan and fund. The report must conform with
generally accepted governmental accounting principles, applied on a consistent basis. The
report must be audited.

new text begin (b) new text endThe report must include, as part of its exhibits or its footnotes, an actuarial
disclosure item based on the actuarial valuation calculations prepared by the actuary
retained under section 356.214 or by the actuary retained by the retirement fund or
plan, whichever applies, according to applicable actuarial requirements enumerated in
section 356.215, and specified in the most recent standards for actuarial work adopted
by the Legislative Commission on Pensions and Retirement. The deleted text beginaccrueddeleted text end new text beginactuarial value
of
new text endassets, the new text beginactuarial new text endaccrued liabilities, including accrued reserves, and the unfunded
actuarial accrued liability of the fund or plan must be disclosed. The disclosure item
must contain a declaration by the actuary retained under section 356.214 or the actuary
retained by the fund or plan, whichever applies, specifying that the required reserves
for any retirement, disability, or survivor benefits provided under a benefit formula are
computed in accordance with the entry age actuarial cost method and in accordance
with the most recent applicable standards for actuarial work adopted by the Legislative
Commission on Pensions and Retirement.

deleted text begin (b) Assets of the fund or plan contained in the disclosure item must include the
following statement of the actuarial value of current assets as defined in section 356.215,
subdivision 1
:
deleted text end

deleted text begin Value at
cost
deleted text end
deleted text begin Value at
market
deleted text end
deleted text begin Cash, cash equivalents, and
deleted text end
deleted text begin short-term securities
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Accounts receivable
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Accrued investment income
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Fixed income investments
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Equity investments other
deleted text end
deleted text begin than real estate
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Real estate investments
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Equipment
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Participation in the Minnesota
deleted text end
deleted text begin postretirement investment
deleted text end
deleted text begin fund or the retirement
deleted text end
deleted text begin benefit fund
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Other
deleted text end
deleted text begin .
deleted text end
deleted text begin .
deleted text end
deleted text begin Total assets
deleted text end
deleted text begin Value at cost
deleted text end
deleted text begin .
deleted text end
deleted text begin Value at market
deleted text end
deleted text begin .
deleted text end
deleted text begin Actuarial value of current
assets
deleted text end
deleted text begin .
deleted text end

deleted text begin (c) The unfunded actuarial accrued liability of the fund or plan contained in the
disclosure item must include the following measures of unfunded actuarial accrued
liability, using the actuarial value of current assets:
deleted text end

deleted text begin (1) the unfunded actuarial accrued liability, determined by subtracting the current
assets and the present value of future normal costs from the total current and expected
future benefit obligations; and
deleted text end

deleted text begin (2) the unfunded pension benefit obligation, determined by subtracting the current
assets from the actuarial present value of credited projected benefits.
deleted text end

deleted text begin If the current assets of the fund or plan exceed the actuarial accrued liabilities, the
excess must be disclosed and indicated as a surplus.
deleted text end

deleted text begin (d) The pension benefit obligations schedule included in the disclosure must contain
the following information on the benefit obligations:
deleted text end

deleted text begin (1) the pension benefit obligation, determined as the actuarial present value of
credited projected benefits on account of service rendered to date, separately identified
as follows:
deleted text end

deleted text begin (i)
deleted text end
deleted text begin for annuitants,
deleted text end
deleted text begin retirement annuities,
deleted text end
deleted text begin disability benefits,
deleted text end
deleted text begin surviving spouse and child benefits;
deleted text end
deleted text begin (ii)
deleted text end
deleted text begin for former members without vested
rights;
deleted text end
deleted text begin (iii)
deleted text end
deleted text begin for deferred annuitants' benefits,
including any augmentation;
deleted text end
deleted text begin (iv)
deleted text end
deleted text begin for active employees,
deleted text end
deleted text begin accumulated employee contributions,
including allocated investment income,
deleted text end
deleted text begin employer-financed benefits vested,
deleted text end
deleted text begin employer-financed benefits nonvested,
deleted text end
deleted text begin total pension benefit obligation; and
deleted text end

deleted text begin (2) if there are additional benefits not appropriately covered by the foregoing items
of benefit obligations, a separate identification of the obligation.
deleted text end

deleted text begin (e)deleted text end new text begin(c) new text endThe report must contain an itemized exhibit describing the administrative
expenses of the plan, including, but not limited to, the following items, classified on a
consistent basis from year to year, and with any further meaningful detail:

(1) personnel expenses;

(2) communication-related expenses;

(3) office building and maintenance expenses;

(4) professional services fees; and

(5) other expenses.

deleted text begin (f)deleted text end new text begin(d) new text endThe report must contain an itemized exhibit describing the investment
expenses of the plan, including, but not limited to, the following items, classified on a
consistent basis from year to year, and with any further meaningful detail:

(1) internal investment-related expenses; and

(2) external investment-related expenses.

deleted text begin (g)deleted text end new text begin(e) new text endAny additional statements or exhibits or more detailed or subdivided
itemization of a disclosure item that will enable the management of the deleted text beginfunddeleted text end new text beginplan new text endto
portray a true interpretation of the deleted text beginfund'sdeleted text end new text beginplan's new text endfinancial condition must be included in the
additional statements or exhibits.

Sec. 6.

Minnesota Statutes 2006, section 356.20, subdivision 4a, is amended to read:


Subd. 4a.

Financial report for police or firefighters relief association.

For any
police or firefighter's relief association referred to in subdivision 2, clause new text begin(11) or new text end(12), a
financial report new text beginthat is new text endduly filed and deleted text beginmeetingdeleted text end new text beginthat meets new text endthe requirements of section 69.051
deleted text begin must bedeleted text end new text beginis new text enddeemed to have met the requirements of subdivision 4.

Sec. 7.

Minnesota Statutes 2006, section 356.215, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) For the purposes of sections 3.85 and 356.20 to
356.23, each of the terms in the following paragraphs has the meaning given.

(b) "Actuarial valuation" means a set of calculations prepared by the actuary
retained under section 356.214 if so required under section 3.85, or otherwise, by an
approved actuary, to determine the normal cost and the accrued actuarial liabilities of
a benefit plan, according to the entry age actuarial cost method and based upon stated
assumptions including, but not limited to rates of interest, mortality, salary increase,
disability, withdrawal, and retirement and to determine the payment necessary to amortize
over a stated period any unfunded accrued actuarial liability disclosed as a result of the
actuarial valuation of the benefit plan.

(c) "Approved actuary" means a person who is regularly engaged in the business
of providing actuarial services and who has at least 15 years of service to major public
employee pension or retirement funds or who is a fellow in the Society of Actuaries.

(d) "Entry age actuarial cost method" means an actuarial cost method under which
the actuarial present value of the projected benefits of each individual currently covered
by the benefit plan and included in the actuarial valuation is allocated on a level basis over
the service of the individual, if the benefit plan is governed by section 69.773, or over the
earnings of the individual, if the benefit plan is governed by any other law, between the
entry age and the assumed exit age, with the portion of the actuarial present value which is
allocated to the valuation year to be the normal cost and the portion of the actuarial present
value not provided for at the valuation date by the actuarial present value of future normal
costs to be the actuarial accrued liability, with aggregation in the calculation process to be
the sum of the calculated result for each covered individual and with recognition given to
any different benefit formulas which may apply to various periods of service.

(e) "Experience study" means a report providing experience data and an actuarial
analysis of the adequacy of the actuarial assumptions on which actuarial valuations are
based.

(f) deleted text begin"Currentdeleted text end new text begin"Actuarial value of new text endassets" meansdeleted text begin:
deleted text end

deleted text begin (1) for the July 1, 2001, actuarial valuation, the market value of all assets as of
June 30, 2001, reduced by:
deleted text end

deleted text begin (i) 30 percent of the difference between the market value of all assets as of June 30,
1999, and the actuarial value of assets used in the July 1, 1999, actuarial valuation;
deleted text end

deleted text begin (ii) 60 percent of the difference between the actual net change in the market value of
assets between June 30, 1999, and June 30, 2000, and the computed increase in the market
value of assets between June 30, 1999, and June 30, 2000, if the assets had increased at
the percentage preretirement interest rate assumption used in the July 1, 1999, actuarial
valuation; and
deleted text end

deleted text begin (iii) 80 percent of the difference between the actual net change in the market value
of assets between June 30, 2000, and June 30, 2001, and the computed increase in
the market value of assets between June 30, 2000, and June 30, 2001, if the assets had
increased at the percentage preretirement interest rate assumption used in the July 1,
2000, actuarial valuation;
deleted text end

deleted text begin (2) for the July 1, 2002, actuarial valuation, the market value of all assets as of
June 30, 2002, reduced by:
deleted text end

deleted text begin (i) ten percent of the difference between the market value of all assets as of June 30,
1999, and the actuarial value of assets used in the July 1, 1999, actuarial valuation;
deleted text end

deleted text begin (ii) 40 percent of the difference between the actual net change in the market value of
assets between June 30, 1999, and June 30, 2000, and the computed increase in the market
value of assets between June 30, 1999, and June 30, 2000, if the assets had increased at
the percentage preretirement interest rate assumption used in the July 1, 1999, actuarial
valuation;
deleted text end

deleted text begin (iii) 60 percent of the difference between the actual net change in the market value
of assets between June 30, 2000, and June 30, 2001, and the computed increase in
the market value of assets between June 30, 2000, and June 30, 2001, if the assets had
increased at the percentage preretirement interest rate assumption used in the July 1, 2000,
actuarial valuation; and
deleted text end

deleted text begin (iv) 80 percent of the difference between the actual net change in the market value of
assets between June 30, 2001, and June 30, 2002, and the computed increase in the market
value of assets between June 30, 2001, and June 30, 2002, if the assets had increased at
the percentage preretirement interest rate assumption used in the July 1, 2001, actuarial
valuation; or
deleted text end

deleted text begin (3) for any actuarial valuation after July 1, 2002,deleted text end the market value of all assets
as of the preceding June 30, reduced by:

deleted text begin (i)deleted text end new text begin(1) new text end20 percent of the difference between the actual net change in the market value
of assets between the June 30 that occurred three years earlier and the June 30 that occurred
four years earlier and the computed increase in the market value of assets over that
fiscal year period if the assets had increased at the percentage preretirement interest rate
assumption used in the actuarial valuation for the July 1 that occurred four years earlier;

deleted text begin (ii)deleted text end new text begin(2) new text end40 percent of the difference between the actual net change in the market value
of assets between the June 30 that occurred two years earlier and the June 30 that occurred
three years earlier and the computed increase in the market value of assets over that
fiscal year period if the assets had increased at the percentage preretirement interest rate
assumption used in the actuarial valuation for the July 1 that occurred three years earlier;

deleted text begin (iii)deleted text end new text begin(3) new text end60 percent of the difference between the actual net change in the market
value of assets between the June 30 that occurred one year earlier and the June 30 that
occurred two years earlier and the computed increase in the market value of assets over
that fiscal year period if the assets had increased at the percentage preretirement interest
rate assumption used in the actuarial valuation for the July 1 that occurred two years
earlier; and

deleted text begin (iv)deleted text end new text begin(4) new text end80 percent of the difference between the actual net change in the market
value of assets between the immediately prior June 30 and the June 30 that occurred one
year earlier and the computed increase in the market value of assets over that fiscal year
period if the assets had increased at the percentage preretirement interest rate assumption
used in the actuarial valuation for the July 1 that occurred one year earlier.

(g) "Unfunded actuarial accrued liability" means the total current and expected
future benefit obligations, reduced by the sum of deleted text begincurrentdeleted text end new text beginthe actuarial value of new text endassets and
the present value of future normal costs.

(h) "Pension benefit obligation" means the actuarial present value of credited
projected benefits, determined as the actuarial present value of benefits estimated to be
payable in the future as a result of employee service attributing an equal benefit amount,
including the effect of projected salary increases and any step rate benefit accrual rate
differences, to each year of credited and expected future employee service.

Sec. 8.

Minnesota Statutes 2006, section 356.215, subdivision 2, is amended to read:


Subd. 2.

Requirements.

(a) It is the policy of the legislature that it is necessary
and appropriate to determine annually the financial status of tax supported retirement and
pension plans for public employees. To achieve this goal:

(1) the actuary retained under section 356.214 shall prepare annual actuarial
valuations of the retirement plans enumerated in section 356.214, subdivision 1, paragraph
(b), and quadrennial experience studies of the retirement plans enumerated in section
356.214, subdivision 1, paragraph (b), clauses (1), (2), and (7); and

(2) the commissioner of finance may have prepared by the actuary retained by the
commission, two years after each set of quadrennial experience studies, quadrennial
projection valuations of at least one of the retirement plans enumerated in section 6,
subdivision 1, paragraph (b), for which the commissioner determines that the analysis
may be beneficial.

(b) The governing or managing board or administrative officials of each public
pension and retirement deleted text beginfund ordeleted text end plan enumerated in section 356.20, subdivision 2, clauses
(9), deleted text begin(10)deleted text endnew text begin (11)new text end, and (12), shall have prepared by an approved actuary annual actuarial
valuations of their respective funds as provided in this section. This requirement also
applies to any deleted text beginfund ordeleted text end plan that is the successor to any organization enumerated in section
356.20, subdivision 2, or to the governing or managing board or administrative officials
of any newly formed retirement fund, plan, or association operating under the control or
supervision of any public employee group, governmental unit, or institution receiving a
portion of its support through legislative appropriations, and any local police or fire deleted text beginfunddeleted text end
new text begin relief association new text endto which section 356.216 applies.

Sec. 9.

Minnesota Statutes 2006, section 356.215, subdivision 8, is amended to read:


Subd. 8.

Interest and salary assumptions.

(a) The actuarial valuation must use
the applicable following preretirement interest assumption and the applicable following
postretirement interest assumption:

preretirement
postretirement
interest rate
interest rate
plan
assumption
assumption
general state employees retirement plan
8.5%
deleted text begin 6.0deleted text endnew text begin8.5new text end%
correctional state employees retirement
plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
State Patrol retirement plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
legislators retirement plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
elective state officers retirement plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
judges retirement plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
general public employees retirement
plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
public employees police and fire
retirement plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
local government correctional service
retirement plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
teachers retirement plan
8.5
deleted text begin 6.0 deleted text end new text begin 8.5
new text end
Minneapolis employees retirement plan
6.0
5.0
Duluth teachers retirement plan
8.5
8.5
St. Paul teachers retirement plan
8.5
8.5
Minneapolis Police Relief Association
6.0
6.0
Fairmont Police Relief Association
5.0
5.0
Minneapolis Fire Department Relief
Association
6.0
6.0
Virginia Fire Department Relief
Association
5.0
5.0
Bloomington Fire Department Relief
Association
6.0
6.0
local monthly benefit volunteer
firefighters relief associations
5.0
5.0

(b) new text beginBefore July 1, 2010, new text endthe actuarial valuation must use the applicable following
single rate future salary increase assumption, the applicable following modified single
rate future salary increase assumption, or the applicable following graded rate future
salary increase assumption:

(1) single rate future salary increase assumption

future salary
plan
increase assumption
legislators retirement plan
5.0%
elective state officers retirement plan
5.0
judges retirement plan
5.0
Minneapolis Police Relief Association
4.0
Fairmont Police Relief Association
3.5
Minneapolis Fire Department Relief
Association
4.0
Virginia Fire Department Relief Association
3.5
Bloomington Fire Department Relief
Association
4.0

(2) modified single rate future salary increase assumption

future salary
plan
increase assumption
Minneapolis employees
retirement plan
the prior calendar year amount
increased first by 1.0198 percent to
prior fiscal year date and then increased
by 4.0 percent annually for each future
year

(3) select and ultimate future salary increase assumption or graded rate future salary
increase assumption

future salary
plan
increase assumption
general state employees
retirement plan
select calculation and assumption A
correctional state employees
retirement plan
assumption deleted text beginGdeleted text endnew text beginH
new text end
State Patrol retirement plan
assumption G
general public employees
retirement plan
select calculation and assumption B
public employees police and fire
fund retirement plan
assumption C
local government correctional
service retirement plan
assumption G
teachers retirement plan
assumption D
Duluth teachers retirement plan
assumption E
St. Paul teachers retirement plan
assumption F

The select calculation is: during the deleted text beginten-yeardeleted text end
new text begin designated new text endselect period, a designated
deleted text begin percentdeleted text end new text beginpercentage rate new text endis multiplied by the
result of deleted text begintendeleted text end new text beginthe designated integer new text endminus T,
where T is the number of completed years
of service, and is added to the applicable
future salary increase assumption. new text beginThe
designated select period is five years and
the designated integer is five for the general
state employees retirement plan and the
general public employees retirement plan.
The designated select period is ten years and
the designated integer is ten for all other
retirement plans covered by this clause.
new text endThe
designated deleted text beginpercentdeleted text end new text beginpercentage rate new text endis 0.2
percent for the correctional state employees
retirement plan, the State Patrol retirement
plan, the public employees police and fire
plan, and the local government correctional
service plan; deleted text beginand 0.3deleted text end new text beginis 0.6 new text endpercent for
the general state employees retirement
plandeleted text begin,deleted text end new text beginand new text endthe general public employees
retirement plandeleted text begin,deleted text endnew text begin; and is 0.3 percent for new text endthe
teachers retirement plan, the Duluth Teachers
Retirement Fund Association, and the St.
Paul Teachers Retirement Fund Association.new text begin
The select calculation for the Duluth Teachers
Retirement Fund Association is 8.00 percent
per year for service years one through seven,
7.25 percent per year for service years seven
through eight, and 6.50 percent per year for
service years eight through nine.
new text end

The ultimate future salary increase assumption is:

deleted text begin age
deleted text end
deleted text begin A
deleted text end
deleted text begin B
deleted text end
deleted text begin C
deleted text end
deleted text begin D
deleted text end
deleted text begin E
deleted text end
deleted text begin F
deleted text end
deleted text begin G
deleted text end
deleted text begin 16
deleted text end
deleted text begin 6.95%
deleted text end
deleted text begin 6.95%
deleted text end
deleted text begin 11.50%
deleted text end
deleted text begin 8.20%
deleted text end
deleted text begin 8.00%
deleted text end
deleted text begin 6.90%
deleted text end
deleted text begin 7.7500%
deleted text end
deleted text begin 17
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 11.50
deleted text end
deleted text begin 8.15
deleted text end
deleted text begin 8.00
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 7.7500
deleted text end
deleted text begin 18
deleted text end
deleted text begin 6.85
deleted text end
deleted text begin 6.85
deleted text end
deleted text begin 11.50
deleted text end
deleted text begin 8.10
deleted text end
deleted text begin 8.00
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 7.7500
deleted text end
deleted text begin 19
deleted text end
deleted text begin 6.80
deleted text end
deleted text begin 6.80
deleted text end
deleted text begin 11.50
deleted text end
deleted text begin 8.05
deleted text end
deleted text begin 8.00
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 7.7500
deleted text end
deleted text begin 20
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.40
deleted text end
deleted text begin 11.50
deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 7.7500
deleted text end
deleted text begin 21
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.40
deleted text end
deleted text begin 11.50
deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 7.1454
deleted text end
deleted text begin 22
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.40
deleted text end
deleted text begin 11.00
deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 6.90
deleted text end
deleted text begin 7.0725
deleted text end
deleted text begin 23
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.40
deleted text end
deleted text begin 10.50
deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.85
deleted text end
deleted text begin 6.85
deleted text end
deleted text begin 7.0544
deleted text end
deleted text begin 24
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.40
deleted text end
deleted text begin 10.00
deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.80
deleted text end
deleted text begin 6.80
deleted text end
deleted text begin 7.0363
deleted text end
deleted text begin 25
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.40
deleted text end
deleted text begin 9.50
deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 7.0000
deleted text end
deleted text begin 26
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.36
deleted text end
deleted text begin 9.20
deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.70
deleted text end
deleted text begin 6.70
deleted text end
deleted text begin 7.0000
deleted text end
deleted text begin 27
deleted text end
deleted text begin 6.75
deleted text end
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deleted text end
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deleted text end
deleted text begin 6.00
deleted text end
deleted text begin 6.65
deleted text end
deleted text begin 6.65
deleted text end
deleted text begin 7.0000
deleted text end
deleted text begin 28
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.28
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deleted text end
deleted text begin 6.00
deleted text end
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deleted text end
deleted text begin 6.60
deleted text end
deleted text begin 7.0000
deleted text end
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deleted text end
deleted text begin 6.75
deleted text end
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deleted text begin 6.55
deleted text end
deleted text begin 6.55
deleted text end
deleted text begin 7.0000
deleted text end
deleted text begin 30
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.20
deleted text end
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deleted text begin 6.00
deleted text end
deleted text begin 6.50
deleted text end
deleted text begin 6.50
deleted text end
deleted text begin 7.0000
deleted text end
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deleted text begin 6.75
deleted text end
deleted text begin 6.16
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deleted text begin 6.45
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deleted text begin 6.45
deleted text end
deleted text begin 7.0000
deleted text end
deleted text begin 32
deleted text end
deleted text begin 6.75
deleted text end
deleted text begin 6.12
deleted text end
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deleted text end
deleted text begin 6.40
deleted text end
deleted text begin 6.40
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deleted text begin 7.0000
deleted text end
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deleted text end
deleted text begin 6.75
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deleted text begin 6.08
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deleted text begin 7.0000
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deleted text begin 6.75
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deleted text begin 6.04
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new text end
new text begin 4.25
new text end
new text begin 4.00
new text end
new text begin 4.75
new text end
new text begin 5.20
new text end
new text begin 3.50
new text end
new text begin 5.00
new text end
new text begin 5.2500
new text end
new text begin 4.7500
new text end
new text begin 71
new text end
new text begin 4.25
new text end
new text begin 4.00
new text end
new text begin 5.20
new text end

(c) new text beginBefore July 2, 2010, new text endthe actuarial valuation must use the applicable following
payroll growth assumption for calculating the amortization requirement for the unfunded
actuarial accrued liability where the amortization retirement is calculated as a level
percentage of an increasing payroll:

payroll growth
plan
assumption
general state employees retirement plan
deleted text begin 5.00deleted text endnew text begin4.50new text end%
correctional state employees retirement plan
deleted text begin 5.00 deleted text end new text begin 4.50
new text end
State Patrol retirement plan
5.00
legislators retirement plan
5.00
elective state officers retirement plan
5.00
judges retirement plan
5.00
general public employees retirement plan
deleted text begin 6.00 deleted text end new text begin 4.50
new text end
public employees police and fire retirement
plan
6.00
local government correctional service
retirement plan
6.00
teachers retirement plan
deleted text begin 5.00 deleted text end new text begin 4.50
new text end
Duluth teachers retirement plan
deleted text begin 5.00 deleted text end new text begin 4.50
new text end
St. Paul teachers retirement plan
5.00

new text begin (d) After July 1, 2010, the assumptions set forth in paragraphs (b) and (c) continue to
apply, unless a different salary assumption or a different payroll increase assumption:
new text end

new text begin (1) has been proposed by the governing board of the applicable retirement plan;
new text end

new text begin (2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, if applicable, or by the approved actuary preparing the most recent
actuarial valuation report if section 356.214 does not apply; and
new text end

new text begin (3) has been approved or deemed approved under subdivision 18.
new text end

Sec. 10.

Minnesota Statutes 2006, section 356.215, subdivision 11, is amended to read:


Subd. 11.

Amortization contributions.

(a) In addition to the exhibit indicating the
level normal cost, the actuarial valuation new text beginof the retirement plan new text endmust contain an exhibit
new text begin for financial reporting purposes new text endindicating the additional annual contribution sufficient
to amortize the unfunded actuarial accrued liabilitynew text begin and must contain an exhibit for
contribution determination purposes indicating the additional contribution sufficient to
amortize the unfunded actuarial accrued liability
new text end. For deleted text beginfunds governed by chapters 3A,
352, 352B, 352C, 353, 354, 354A, and 490
deleted text endnew text begin the retirement plans listed in subdivision 8,
paragraph (c)
new text end, the additional contribution must be calculated on a level percentage of
covered payroll basis by the established date for full funding in effect when the valuation
is prepareddeleted text begin. For funds governed by chapter 3A, sections 352.90 through 352.951, chapters
352B, 352C, sections 353.63 through 353.68, and chapters 353C, 354A, and 490, the level
percent additional contribution must be calculated
deleted text endnew text begin,new text end assuming annual payroll growth deleted text beginof 6.5
percent. For funds governed by sections 352.01 through 352.86 and chapter 354, the level
percent additional contribution must be calculated assuming an annual payroll growth of
five percent. For the fund governed by sections 353.01 through 353.46, the level percent
additional contribution must be calculated assuming an annual payroll growth of six
percent
deleted text endnew text begin at the applicable percentage rate set forth in subdivision 8, paragraph (c)new text end. For all
other deleted text beginfundsdeleted text endnew text begin retirement plansnew text end, the additional annual contribution must be calculated on a
level annual dollar amount basis.

(b) For any deleted text beginfunddeleted text end new text beginretirement plan new text endother than the Minneapolis Employees Retirement
Fund and the new text begingeneral employees retirement plan of the new text endPublic Employees Retirement
Association deleted text begingeneral plandeleted text end, if there has not been a change in the actuarial assumptions
used for calculating the actuarial accrued liability of the fund, a change in the benefit
plan governing annuities and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability of all or a portion of the
fund, or a combination of the three, which change or changes by itself or by themselves
without inclusion of any other items of increase or decrease produce a net increase in the
unfunded actuarial accrued liability of the fund, the established date for full funding is the
first actuarial valuation date occurring after June 1, 2020.

(c) For any deleted text beginfund ordeleted text end new text beginretirement new text endplan other than the Minneapolis Employees
Retirement Fund and the new text begingeneral employees retirement plan of the new text endPublic Employees
Retirement Association deleted text begingeneral plandeleted text end, if there has been a change in any or all of the
actuarial assumptions used for calculating the actuarial accrued liability of the fund, a
change in the benefit plan governing annuities and benefits payable from the fund, a
change in the actuarial cost method used in calculating the actuarial accrued liability of all
or a portion of the fund, or a combination of the three, and the change or changes, by itself
or by themselves and without inclusion of any other items of increase or decrease, produce
a net increase in the unfunded actuarial accrued liability in the fund, the established date
for full funding must be determined using the following procedure:

(i) the unfunded actuarial accrued liability of the fund must be determined in
accordance with the plan provisions governing annuities and retirement benefits and the
actuarial assumptions in effect before an applicable change;

(ii) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the unfunded actuarial accrued liability amount determined under item
(i) by the established date for full funding in effect before the change must be calculated
using the interest assumption specified in subdivision 8 in effect before the change;

(iii) the unfunded actuarial accrued liability of the fund must be determined in
accordance with any new plan provisions governing annuities and benefits payable from
the fund and any new actuarial assumptions and the remaining plan provisions governing
annuities and benefits payable from the fund and actuarial assumptions in effect before
the change;

(iv) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the difference between the unfunded actuarial accrued liability amount
calculated under item (i) and the unfunded actuarial accrued liability amount calculated
under item (iii) over a period of 30 years from the end of the plan year in which the
applicable change is effective must be calculated using the applicable interest assumption
specified in subdivision 8 in effect after any applicable change;

(v) the level annual dollar or level percentage amortization contribution under item
(iv) must be added to the level annual dollar amortization contribution or level percentage
calculated under item (ii);

(vi) the period in which the unfunded actuarial accrued liability amount determined
in item (iii) is amortized by the total level annual dollar or level percentage amortization
contribution computed under item (v) must be calculated using the interest assumption
specified in subdivision 8 in effect after any applicable change, rounded to the nearest
integral number of years, but not to exceed 30 years from the end of the plan year in
which the determination of the established date for full funding using the procedure set
forth in this clause is made and not to be less than the period of years beginning in the
plan year in which the determination of the established date for full funding using the
procedure set forth in this clause is made and ending by the date for full funding in effect
before the change; and

(vii) the period determined under item (vi) must be added to the date as of which
the actuarial valuation was prepared and the date obtained is the new established date
for full funding.

(d) For the Minneapolis Employees Retirement Fund, the established date for full
funding is June 30, 2020.

(e) For the general employees retirement plan of the Public Employees Retirement
Association, the established date for full funding is June 30, 2031.

(f) For the Teachers Retirement Association, the established date for full funding is
June 30, 2037.

new text begin (g) For the correctional state employees retirement plan of the Minnesota State
Retirement System, the established date for full funding is June 30, 2038.
new text end

new text begin (h) For the judges retirement plan, the established date for full funding is June
30, 2038.
new text end

new text begin (i) For the public employees police and fire retirement plan, the established date
for full funding is June 30, 2038.
new text end

deleted text begin (g)deleted text end new text begin(j) new text endFor the retirement plans for which the annual actuarial valuation indicates
an excess of valuation assets over the actuarial accrued liability, the valuation assets in
excess of the actuarial accrued liability must be recognized as a reduction in the current
contribution requirements by an amount equal to the amortization of the excess expressed
as a level percentage of pay over a 30-year period beginning anew with each annual
actuarial valuation of the plan.

new text begin (k) In addition to calculating the unfunded actuarial accrued liability of the
retirement plan for financial reporting purposes under paragraphs (a) to (j), the actuarial
valuation of the retirement plan must also include a calculation of the unfunded actuarial
accrued liability of the retirement plan for purposes of determining the amortization
contribution sufficient to amortize the unfunded actuarial liability of the Minnesota Post
Retirement Investment Fund. For this exhibit, the calculation must be the unfunded
actuarial accrued liability net of the postretirement adjustment liability funded from
the investment performance of the Minnesota Post Retirement Investment Fund or the
retirement benefit fund.
new text end

Sec. 11.

Minnesota Statutes 2006, section 356.215, subdivision 18, is amended to read:


Subd. 18.

Establishment of actuarial assumptions.

(a) new text beginBefore July 2, 2010, new text endthe
actuarial assumptions used for the preparation of actuarial valuations under this section
that are other than deleted text beginthose set forth in this sectiondeleted text end new text beginpreretirement interest, postretirement
interest, salary increase, and payroll increase
new text endmay be changed only with the approval of the
Legislative Commission on Pensions and Retirementnew text begin or after a period of six months have
elapsed since the date on which the proposed assumption change or changes were received
by the Legislative Commission on Pensions and Retirement without commission action
new text end.

new text begin (b) After July 1, 2010, the actuarial assumptions used for the preparation of actuarial
valuations under this section that are other than postretirement interest and preretirement
interest may be changed only with the approval of the Legislative Commission on
Pensions and Retirement or after a period of six months have elapsed since the date on
which the proposed assumption change or changes were received by the Legislative
Commission on Pensions and Retirement without commission action.
new text end

deleted text begin (b)deleted text end new text begin(c) new text endA change in the applicable actuarial assumptions may be proposed by the
governing board of the applicable pension fund or relief association, by the actuary
retained by the joint retirement systems under section 356.214, by the actuarial advisor to
a pension fund governed by chapter 352, 353, 354, or 354A, or by the actuary retained by
a local police or firefighters relief association governed by sections 69.77 or 69.771 to
69.776, if one is retained.

Sec. 12.

Minnesota Statutes 2007 Supplement, section 356.96, subdivision 1, is
amended to read:


Subdivision 1.

Definitions.

(a) Unless the language or context clearly indicates that
a different meaning is intended, for the purpose of this section, the terms in paragraphs
(b) to (e) have the meanings given them.

(b) "Chief administrative officer" means the executive director of a covered pension
plan or the executive director's designee or representative.

(c) "Covered pension plan" means a plan enumerated in section 356.20, subdivision
2, clauses (1) to (4), (10), and deleted text begin(12) to (14)deleted text endnew text begin (13) to (15)new text end, but does not mean the deferred
compensation plan administered under sections 352.96 and 352.97 or to the postretirement
health care savings plan administered under section 352.98.

(d) "Governing board" means the Board of Trustees of the Public Employees
Retirement Association, the Board of Trustees of the Teachers Retirement Association, or
the Board of Directors of the Minnesota State Retirement System.

(e) "Person" includes an active, retired, deferred, or nonvested inactive participant in
a covered pension plan or a beneficiary of a participant, or an individual who has applied
to be a participant or who is or may be a survivor of a participant, or a state agency or
other governmental unit that employs active participants in a covered pension plan.

Sec. 13. new text beginEFFECTIVE DATE.
new text end

new text begin (a) Section 1 is effective June 30, 2008.
new text end

new text begin (b) Sections 2 to 12 are effective June 30, 2008, and apply to annual financial reports
and actuarial valuations prepared after June 1, 2008.
new text end