Minnesota Legislature
HF 1582
as introduced - 94th Legislature (2025 - 2026) Posted on 02/26/2025 02:53pm
Bill Text Versions
| Engrossments | ||
|---|---|---|
| Introduction | Posted on 02/25/2025 |
Current Version - as introduced
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A bill for an act
relating to retirement; Teachers Retirement Association; providing for an unreduced
retirement annuity upon reaching age 60 with 30 years of service; modifying the
early retirement reduction factors for annuity commencement before normal
retirement age; increasing the postretirement adjustments; removing the
postretirement adjustment delay for members who retire before the normal
retirement age; increasing employer contributions; increasing the pension
adjustment revenue for school districts; appropriating money; amending Minnesota
Statutes 2024, sections 126C.10, subdivision 37; 354.42, subdivision 3; 354.44,
subdivision 6; 356.415, subdivision 1d.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2024, section 126C.10, subdivision 37, is amended to read:
Subd. 37.
Pension adjustment revenue.
(a) A school district's pension adjustment
revenue equals the sum of:
(1) the greater of zero or the product of:
(i) the difference between the district's adjustment under Minnesota Statutes 2012, section
127A.50, subdivision 1, for fiscal year 2014 per adjusted pupil unit and the state average
adjustment under Minnesota Statutes 2012, section 127A.50, subdivision 1, for fiscal year
2014 per adjusted pupil unit; and
(ii) the district's adjusted pupil units for the fiscal year; and
(2) the product of the salaries paid to district employees who were members of the
Teachers Retirement Association and the St. Paul Teachers' Retirement Fund Association
for the prior fiscal year and the district's pension adjustment rate for the fiscal year. The
pension adjustment rate for Independent School District No. 625, St. Paul, equals 2.3 percent
for fiscal year 2023, 2.5 percent for fiscal year 2024 and fiscal year 2025, and 3.25 percent
for fiscal year 2026 and later. The pension adjustment rate for all other districts equals deleted text begin 1.05
percent for fiscal year 2023,deleted text end 1.25 percent for deleted text begin fiscal year 2024 anddeleted text end fiscal year 2025, and deleted text begin 2.0deleted text end new text begin
5.8new text end percent for fiscal year 2026 and later.
(b) For fiscal year 2025, the state total pension adjustment revenue under paragraph (a),
clause (2), must not exceed the amount calculated under paragraph (a), clause (2), for fiscal
year 2024. The commissioner must prorate the pension adjustment revenue under paragraph
(a), clause (2), so as not to exceed the maximum.
(c) For fiscal year 2026 and fiscal year 2027, the state total pension adjustment revenue
under paragraph (a), clause (2), must not be prorated.
(d) For fiscal year 2028 and later, the state total pension adjustment revenue under
paragraph (a), clause (2), must not exceed the amount calculated under paragraph (a), clause
(2), for fiscal year 2027. The commissioner must prorate the pension adjustment revenue
under paragraph (a), clause (2), so as not to exceed the maximum.
(e) Notwithstanding section 123A.26, subdivision 1, a cooperative unit, as defined in
section 123A.24, subdivision 2, qualifies for pension adjustment revenue under paragraph
(a), clause (2), as if it was a district, and the aid generated by the cooperative unit shall be
paid to the cooperative unit.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for revenue in fiscal years 2026 and later.
new text end
Sec. 2.
Minnesota Statutes 2024, section 354.42, subdivision 3, is amended to read:
Subd. 3.
Employer.
(a) The regular employer contribution to the fund by Special School
District No. 1, Minneapolis, is an amount equal to the applicable following percentage of
salary of each coordinated member and the applicable percentage of salary of each basic
member specified in paragraph (c).
The additional employer contribution to the fund by Special School District No. 1,
Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a
coordinated member or who is a basic member.
(b) The regular employer contribution to the fund by Independent School District No.
709, Duluth, is an amount equal to the applicable percentage of salary of each old law or
new law coordinated member specified for the coordinated program in paragraph (c).
(c) The employer contribution to the fund for every other employer is an amount equal
to deleted text begin the applicable following percentagedeleted text end new text begin 13.3 percent new text end of the salary of each coordinated member
and deleted text begin the applicable following percentagedeleted text end new text begin 17.3 percent new text end of the salary of each basic memberdeleted text begin :deleted text end new text begin .
new text end
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deleted text begin
Period deleted text end |
deleted text begin
Coordinated Member deleted text end |
deleted text begin
Basic Member deleted text end |
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deleted text begin
from July 1, 2022, through June 30, 2023 deleted text end |
deleted text begin
8.55 percent deleted text end |
deleted text begin
12.55 percent deleted text end |
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deleted text begin
from July 1, 2023, through June 30, 2025 deleted text end |
deleted text begin
8.75 percent deleted text end |
deleted text begin
12.75 percent deleted text end |
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deleted text begin
after June 30, 2025 deleted text end |
deleted text begin
9.5 percent deleted text end |
deleted text begin
13.5 percent deleted text end |
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(d) When an employer contribution rate changes for a fiscal year, the new contribution
rate is effective for the entire salary paid for each employer unit with the first payroll cycle
reported.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2025.
new text end
Sec. 3.
Minnesota Statutes 2024, section 354.44, subdivision 6, is amended to read:
Subd. 6.
Computation of formula program retirement annuity.
(a) The formula
retirement annuity must be computed in accordance with the applicable provisions of the
formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
section 354.05, subdivision 13a, for the period of the member's formula service credit.
(b) This paragraph, in conjunction with paragraph (c), applies to a person who first
became a member of the association or a member of a pension fund listed in section 356.30,
subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e),
produces a higher annuity amount, in which case paragraph (d) applies. The average salary
as defined in section 354.05, subdivision 13a, multiplied by the following percentages per
year of formula service credit shall determine the amount of the annuity to which the member
qualifying therefor is entitled for service rendered before July 1, 2006:
| Period |
Coordinated Member |
Basic Member |
|||
| Each year of service during first ten |
1.2 percent per year |
2.2 percent per year |
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| Each year of service thereafter |
1.7 percent per year |
2.7 percent per year |
For service rendered on or after July 1, 2006, by a member other than a member who
was a member of the former Duluth Teachers Retirement Fund Association between January
1, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member
who was a member of the former Duluth Teachers Retirement Fund Association between
January 1, 2013, and June 30, 2015, the average salary as defined in section 354.05,
subdivision 13a, multiplied by the following percentages per year of service credit, determines
the amount the annuity to which the member qualifying therefor is entitled:
| Period |
Coordinated Member |
Basic Member |
|||
| Each year of service during first ten |
1.4 percent per year |
2.2 percent per year |
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| Each year of service after ten years of service |
1.9 percent per year |
2.7 percent per year |
(c)(1) This paragraph applies only to a person who first became a member of the
association or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction
with this paragraph than when calculated under paragraph (d), in conjunction with paragraph
(e).
(2) Where any member retires prior to normal retirement age under a formula annuity,
the member shall be paid a retirement annuity in an amount equal to the normal annuity
provided in paragraph (b) reduced by one-quarter of one percent for each month that the
member is under normal retirement age at the time of retirement except that for any member
who has 30 or more years of allowable service credit, the reduction shall be applied only
for each month that the member is under age 62.
(3) Any member whose attained age plus credited allowable service totals 90 years is
entitled, upon application, to a retirement annuity in an amount equal to the normal annuity
provided in paragraph (b), without any reduction by reason of early retirement.
(d) This paragraph applies to a member who has become at least 55 years old and first
became a member of the association after June 30, 1989deleted text begin , and to any other member who has
become at least 55 years old and whose annuity amount when calculated under this paragraph
and in conjunction with paragraph (e), is higher than it is when calculated under paragraph
(b), in conjunction with paragraph (c)deleted text end .
(1) For a basic member, the average salary, as defined in section 354.05, subdivision
13a, multiplied by 2.7 percent for each year of service for a basic member determines the
amount of the retirement annuity to which the basic member is entitled. The annuity of a
basic member who was a member of the former Minneapolis Teachers Retirement Fund
Association as of June 30, 2006, must be determined according to the annuity formula under
the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association
in effect as of that date.
(2) For a coordinated member, the average salary, as defined in section 354.05,
subdivision 13a, multiplied by 1.7 percent for each year of service rendered before July 1,
2006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a
member other than a member who was a member of the former Duluth Teachers Retirement
Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each
year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers
Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the
amount of the retirement annuity to which the coordinated member is entitled.
(e) This paragraph applies to a person who has become at least 55 years old and first
becomes a member of the association after June 30, 1989deleted text begin , and to any other member who
has become at least 55 years old and whose annuity is higher when calculated under
paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b)
in conjunction with paragraph (c)deleted text end . An employee who retires under the formula annuity
before the normal retirement age is entitled to receive deleted text begin the normaldeleted text end new text begin an new text end annuity deleted text begin provided in
paragraph (d), reduced as described indeleted text end new text begin under new text end clause (1) or (2), as applicable.
(1) For a member who is at least age deleted text begin 62deleted text end new text begin 60new text end and has at least 30 years of service, the
annuity deleted text begin shall be reduced by an early reduction factor of six percent for each year that the
member's age of retirement precedes the normal retirement age. The resulting reduced
annuity shall be further adjusted to take into account the increase in the monthly amount
that would have occurred had the member retired early and deferred receipt of the annuity
until normal retirement age and the annuity was augmented during the deferral period at
2.5 percent, if the member commenced employment after June 30, 2006, or at three percent,
if the member commenced employment before July 1, 2006, compounded annuallydeleted text end new text begin is the
normal annuity provided in paragraph (d), without any reduction by reason of early
retirementnew text end .
(2) For a member who has not attained age deleted text begin 62deleted text end new text begin 60new text end or has fewer than 30 years of service,
the annuity deleted text begin shall bedeleted text end new text begin is the normal annuity provided in paragraph (d) new text end reduced for each year
that the member's age of retirement precedes normal retirement age by the following early
reduction factors:
(i) for the period during which the member is age 55 through age 58, the factor is four
percent; and
(ii) for the period during which the member is at least age 59 but not yet normal retirement
age, the factor is deleted text begin sevendeleted text end new text begin fivenew text end percent.
The resulting annuity shall be further adjusted to take into account the increase in the
monthly amount that would have occurred had the member retired early and deferred receipt
of the annuity until normal retirement age and the annuity was augmented during the deferral
period at the applicable annual rate, compounded annually. The applicable annual rate is
the rate in effect for the month that includes the member's effective date of retirement and
shall be considered as fixed for the member for the period until the member reaches normal
retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member
commenced employment after June 30, 2006, or three percent, if the member commenced
employment before July 1, 2006, compounded annually, and decreases each month beginning
July 2019 in equal monthly increments over the five-year period that begins July 1, 2019,
and ends June 30, 2024, to zero percent effective for July 2024 and thereafter.
After June 30, 2024, the reduced annuity commencing before normal retirement age
under this clause shall not take into account any augmentation.
(f) No retirement annuity is payable to a former employee with a salary that exceeds 95
percent of the governor's salary unless and until the salary figures used in computing the
highest five successive years average salary under paragraph (a) have been audited by the
Teachers Retirement Association and determined by the executive director to comply with
the requirements and limitations of section 354.05, subdivisions 35 and 35a.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2025.
new text end
Sec. 4.
Minnesota Statutes 2024, section 356.415, subdivision 1d, is amended to read:
Subd. 1d.
new text begin Annual postretirement adjustments; new text end Teachers Retirement Associationdeleted text begin
annual postretirement adjustmentsdeleted text end .
(a) deleted text begin Except as set forth in paragraph (d),deleted text end Recipients
of a retirement annuity, disability benefit, or survivor benefit from the Teachers Retirement
Association are entitled to an annual postretirement adjustment, effective as of each January
1, as follows:
deleted text begin
(1) effective January 1, 2019, through December 31, 2023, a postretirement increase of
one percent must be applied each year to the amount of the monthly annuity or benefit of
each annuitant or benefit recipient who has been receiving an annuity or a benefit for at
least 12 full months as of the June 30 of the calendar year immediately before the adjustment;
deleted text end
deleted text begin
(2) effective January 1, 2019, through December 31, 2023, for each annuitant or benefit
recipient who has been receiving an annuity or a benefit for at least one full month, but less
than 12 full months as of the June 30 of the calendar year immediately before the adjustment,
a postretirement increase of 1/12 of one percent for each month the person has been receiving
an annuity or benefit must be applied to the amount of the monthly annuity or benefit of
the annuitant or benefit recipient;
deleted text end
deleted text begin (3) effectivedeleted text end new text begin (1) beginning new text end January 1, deleted text begin 2024, and thereafterdeleted text end new text begin 2026new text end , a postretirement increase
new text begin equal to 1.5 percent new text end must be applied each year to the amount of the monthly annuity or
benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit
for at least 12 full months as of the June 30 of the calendar year immediately before the
adjustmentdeleted text begin , at the following rates:deleted text end new text begin ;
new text end
|
deleted text begin
from January 1, 2024, through December 31, 2024 deleted text end |
deleted text begin
1.1 percent deleted text end |
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deleted text begin
from January 1, 2025, through December 31, 2025 deleted text end |
deleted text begin
1.2 percent deleted text end |
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deleted text begin
from January 1, 2026, through December 31, 2026 deleted text end |
deleted text begin 1.3deleted text end percent |
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deleted text begin
from January 1, 2027, through December 31, 2027 deleted text end |
deleted text begin
1.4 percent deleted text end |
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deleted text begin
from January 1, 2028, and thereafter deleted text end |
deleted text begin
1.5 percent deleted text end |
deleted text begin (4) effectivedeleted text end new text begin (2) beginning new text end January 1, deleted text begin 2024, and thereafterdeleted text end new text begin 2026new text end , for each annuitant or
benefit recipient who has been receiving an annuity or a benefit for at least one full month,
but less than 12 full months, as of the June 30 of the calendar year immediately before the
adjustment, an annual postretirement increase of 1/12 of deleted text begin the applicable percentagedeleted text end new text begin 1.5
percent new text end for each month that the person has been receiving an annuity or benefit must be
applied to the amount of the monthly annuity or benefit of the annuitant or benefit recipient.deleted text begin
The applicable percentages are the following:
deleted text end
|
deleted text begin
from January 1, 2024, through December 31, 2024 deleted text end |
deleted text begin
1.1 percent deleted text end |
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|
deleted text begin
from January 1, 2025, through December 31, 2025 deleted text end |
deleted text begin
1.2 percent deleted text end |
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deleted text begin
from January 1, 2026, through December 31, 2026 deleted text end |
deleted text begin 1.3deleted text end percent |
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deleted text begin
from January 1, 2027, through December 31, 2027 deleted text end |
deleted text begin
1.4 percent deleted text end |
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deleted text begin
from January 1, 2028, and thereafter deleted text end |
deleted text begin
1.5 percent deleted text end |
(b) An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the Teachers Retirement Association requesting that the increase not
be made.
(c) The retirement annuity payable to a person who retires before becoming eligible for
Social Security benefits and who has elected the optional payment as provided in section
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,
65, or normal retirement age, as selected by the member at retirement, for an annuity amount
payable under section 354.35. A postretirement adjustment granted on the period-certain
retirement annuity must terminate when the period-certain retirement annuity terminates.
deleted text begin
(d) Members who retire on or after July 1, 2024, are entitled to an annual postretirement
adjustment of the member's retirement annuity, effective as of each January 1, beginning
with the year following the year in which the member attains normal retirement age, as
follows:
deleted text end
deleted text begin
(1) if a member has been receiving an annuity for at least 12 full months as of the June
30 of the calendar year immediately before the date of the adjustment, a postretirement
increase equal to the percentage specified in paragraph (a), clause (3), must be applied,
effective on January 1, to the amount of the member's monthly annuity;
deleted text end
deleted text begin
(2) if a member has been receiving an annuity for at least one full month, but less than
12 full months as of the June 30 of the calendar year immediately before the date of
adjustment, a postretirement increase of 1/12 of the applicable percentage specified in
paragraph (a), clause (4), for each month that the member has been receiving an annuity
must be applied, effective on January 1, to the amount of the member's monthly annuity;
or
deleted text end
deleted text begin
(3) if a member has been receiving an annuity for fewer than seven months as of the
January 1 of the year following the year in which the member attains normal retirement
age, a postretirement adjustment shall be applied effective as of the next January 1. The
amount of the adjustment shall be determined under clause (2).
deleted text end
deleted text begin
(e) Paragraph (d) does not apply to members who retire under section 354.44, subdivision
6, paragraph (c), clause (3), or who retire when the member is at least age 62 and has at
least 30 years of service under section 354.44, subdivision 6, paragraph (c), (d), (e), or (f),
as applicable.
deleted text end
new text begin EFFECTIVE DATE. new text end
new text begin
The amendment to paragraph (a) is effective for postretirement
adjustments beginning January 1, 2026. The amendments to paragraphs (d) and (e) are
effective July 1, 2025.
new text end
Sec. 5. new text begin APPROPRIATIONS; TEACHERS RETIREMENT ASSOCIATION.
new text end
new text begin
(a) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
general fund to the Department of Education for increased employer pension contributions
to the Teachers Retirement Association. Beginning with fiscal year 2028 and later, the base
must increase annually by three percent of the prior fiscal year's base.
new text end
new text begin
(b) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
general fund to the Minnesota State Academies for increased employer pension contributions
to the Teachers Retirement Association. Beginning with fiscal year 2028 and later, the base
must increase annually by three percent of the prior fiscal year's base.
new text end
new text begin
(c) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
general fund to the Perpich Center for the Arts for increased employer pension contributions
to the Teachers Retirement Association. Beginning with fiscal year 2028 and later, the base
must increase annually by three percent of the prior fiscal year's base.
new text end
new text begin
(d) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
general fund to the Minnesota State Colleges and Universities for increased employer
pension contributions to the Teachers Retirement Association. Beginning with fiscal year
2028 and later, the base must increase annually by three percent of the prior fiscal year's
base.
new text end
Sec. 6. new text begin EDUCATION APPROPRIATIONS.
new text end
new text begin Subdivision 1. new text end
new text begin Department of Education. new text end
new text begin
The sums indicated are appropriated from
the general fund to the Department of Education for the fiscal years designated. These sums
are in addition to appropriations made for the same purpose in any other law.
new text end
new text begin Subd. 2. new text end
new text begin General education aid. new text end
new text begin
For general education aid under Minnesota Statutes,
section 126C.13, subdivision 4:
new text end
|
new text begin
$ new text end |
new text begin
....... new text end |
new text begin
..... new text end |
new text begin
2026 new text end |
|
|
new text begin
$ new text end |
new text begin
....... new text end |
new text begin
..... new text end |
new text begin
2027 new text end |
new text begin
The 2026 appropriation includes $0 for 2025 and $....... for 2026.
new text end
new text begin
The 2027 appropriation includes $....... for 2026 and $....... for 2027.
new text end