Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                         CHAPTER 71--H.F.No. 384
           An act relating to retirement; local police and 
          salaried firefighters relief associations; requiring 
          annual valuations; deleting requirement of quadrennial 
          experience studies; removing obsolete language; 
          amending Minnesota Statutes 1982, sections 69.77, 
          subdivision 2; and 356.216. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 69.77, 
subdivision 2, is amended to read: 
    Subd. 2.  The penalty provided for in subdivision 1 shall 
not apply to a relief association enumerated in subdivision 1a 
if the following requirements are met: 
    (1) Each member of the relief association pays into the 
special fund of the association during a year of covered 
service, a contribution for retirement coverage including 
survivorship benefits of not less than eight percent of the 
maximum rate of salary upon which retirement coverage is 
credited and service pension and retirement benefit amounts are 
determined.  The member contributions shall be made by payroll 
deduction from the salary of the member by the municipality, and 
shall be transmitted by the municipality to the relief 
association as soon as practical.  The relief association shall 
deposit the member contribution to the credit of the special 
fund of the relief association, provided that to avoid undue 
increase in the amount of employee contributions in any one 
year, any increase in the amount of contributions required by 
this section may be spread over several years with the approval 
of the municipality, but the increase in rate of contribution in 
each year shall not be less than one percent until the 
appropriate levels of required employee contributions have been 
reached.  The member contribution requirement specified in this 
clause shall not apply to any members who are volunteer 
firefighters unless the governing body of the municipality did 
not approve this member contribution exemption following the 
consideration by the municipal governing body of the first 
actuarial survey filed with the municipality following January 
1, 1970. 
    (2) The officers of the relief association determine the 
financial requirements of the relief association and minimum 
obligation of the municipality for the following calendar year 
in accordance with the requirements of this clause.  The 
financial requirements of the relief association and the minimum 
obligation of the municipality shall be determined on or before 
the submission date established by the municipality pursuant to 
clause (3). 
    The financial requirements of the relief association for 
the following calendar year shall be based on the most recent 
actuarial valuation or survey prepared in accordance with 
sections 356.215, subdivision 4 and 356.216, whether or not the 
actuarial valuation or survey was prepared at a greater 
frequency than minimally as required pursuant to clause (8).  In 
the event that an updated actuarial valuation or an actuarial 
estimate is prepared by the actuary of the relief association as 
part of obtaining a modification of the benefit plan of the 
relief association and the modification is implemented, the 
updated actuarial valuation or actuarial estimate shall be used 
in calculating the financial requirements of the relief 
association. 
    If the relief association has an unfunded accrued liability 
as reported in the most recent actuarial valuation or survey, 
the total of the amounts calculated pursuant to clauses (a) and 
(b) shall constitute the financial requirements of the relief 
association for the following year.  If the relief association 
does not have an unfunded accrued liability as reported in the 
most recent actuarial valuation or survey the amount calculated 
pursuant to subclause (a) shall constitute the financial 
requirements of the relief association for the following year. 
    (a) The normal level cost requirement for the following 
year, expressed as a dollar amount, which shall be determined by 
applying the normal level cost of the relief association as 
reported in the actuarial valuation or survey and expressed as a 
percentage of covered payroll to the estimated covered payroll 
of the active membership of the relief association, including 
any projected increase in the active membership, for the 
following year. 
     (b) To the dollar amount of normal cost thus determined 
shall be added an amount equal to the level annual dollar amount 
which is sufficient to amortize the unfunded accrued liability 
by December 31, 2010, as determined from the actuarial valuation 
or survey of the fund, using an interest assumption set at the 
rate specified in section 356.215, subdivision 4, clause (4).  
The amortization date specified in this subclause shall apply to 
all local police or salaried firefighters relief associations 
and shall supersede any amortization date specified in any 
applicable special law. 
     The minimum obligation of the municipality shall be an 
amount equal to the financial requirements of the relief 
association reduced by the estimated amount of member 
contributions from covered salary anticipated for the following 
calendar year and the estimated amounts from the applicable 
state aid program established pursuant to sections 69.011 to 
69.051 anticipated as receivable by the relief association after 
any allocation pursuant to section 69.031, subdivision 5, clause 
(2), subclause (c) or 423A.01, subdivision 2, clause (6), and 
from the local police and salaried firefighters' relief 
association amortization aid program established pursuant to 
section 423A.02 anticipated for the following calendar year. 
     (3) The officers of the relief association shall submit 
determination of the financial requirements of the relief 
association and of the minimum obligation of the municipality to 
the governing body on or before the date established by the 
municipality which shall not be earlier than August 1 and shall 
not be later than September 1 of each year.  The governing body 
of the municipality shall ascertain whether or not the 
determinations were prepared in accordance with law. 
     (4) The municipality shall provide for and shall pay each 
year at least the amount of the minimum obligation of the 
municipality to the relief association.  If there is any 
deficiency in the municipal payment to meet the minimum 
obligation of the municipality as of the end of any calendar 
year, the amount of the deficiency shall be added to the minimum 
obligation of the municipality for the following year calculated 
pursuant to clause (2) and shall include interest at the rate of 
six percent per annum compounded from the date that the 
municipality was required to make payment pursuant to this 
clause until the date that the municipality actually makes the 
required payment. 
     (5) The municipality shall provide in the annual municipal 
budget for at least the minimum obligation of the municipality 
calculated pursuant to clause (2).  The municipality may levy 
taxes for the payment of the minimum obligation of the 
municipality without any limitation as to rate or amount and 
irrespective of limitations imposed by other provisions of law 
upon the rate or amount of taxation when the balance of the 
special fund or any fund of the relief association has attained 
a specified minimum asset level.  In addition, any taxes levied 
pursuant to this section shall not cause the amount or rate of 
other taxes levied in that year or to be levied in a subsequent 
year by the municipality which are subject to a limitation as to 
rate or amount to be reduced.  If the municipality does not 
include the full amount of the minimum obligation of the 
municipality in the levy that the municipality certified to the 
county auditor in any year, the officers of the relief 
association shall certify the amount of any deficiency to the 
county auditor.  Upon verifying the existence of any deficiency 
in the levy certified by the municipality, the county auditor 
shall spread a levy over the taxable property of the 
municipality in the amount of the deficiency certified to by the 
officers of the relief association. 
     (6) Any sums of money paid by the municipality to the 
relief association in excess of the minimum obligation of the 
municipality in any year shall be used to amortize any unfunded 
liabilities of the relief association. 
     (7) The funds of the association shall be invested in 
securities which are proper investments pursuant to section 
11A.24, except that up to $10,000 may be invested in the stock 
of any one corporation in any account of such small size that 
the three percent stock limitation specified in section 11A.24, 
subdivision 5 would necessitate a lesser investment.  Securities 
held by the association before July 1, 1971, which do not meet 
the requirements of this paragraph may be retained after that 
date if they were proper investments for the association on 
April 28, 1969.  The governing board of the association may 
select and appoint investment agencies to act for and in its 
behalf or may certify funds for investment by the state board 
under the provisions of section 11A.17, provided that there be 
no limit to the amount which may be invested in the income share 
account, in the bond account, or in the fixed-return account, 
and that up to 20 percent of that portion of the assets of the 
association invested in the Minnesota supplemental investment 
fund may be invested in the growth share account. 
    (8) The association shall procure an actuarial valuation 
showing the condition of the special fund of the relief 
association pursuant to sections 356.215 and 356.216 as of 
December 31 as of every even numbered year.  The association 
shall also procure a quadrennial experience study pursuant to 
sections 356.215 and 356.216, as of December 31, 1978, and shall 
procure a quadrennial experience study every four years 
thereafter.  A copy of the actuarial survey and the quadrennial 
experience study shall be filed with the director of the 
legislative reference library, the governing body of the 
municipality in which the association is organized, the 
executive secretary of the legislative commission on pensions 
and retirement, and the commissioner of insurance, not later 
than June 1 of the following year. 
     Sec. 2.  Minnesota Statutes 1982, section 356.216, is 
amended to read: 
    356.216 [CONTENTS OF ACTUARIAL VALUATIONS AND EXPERIENCE 
STUDIES FOR LOCAL POLICE AND FIRE FUNDS.] 
    The provisions of section 356.215, governing the contents 
of actuarial valuations and experience studies shall apply to 
any local police or fire pension fund or relief association 
required to make an actuarial report under this section except 
as follows: 
    (1) in calculating normal cost and other requirements 
expressed as a level percentage of covered payroll, the salaries 
used in computing covered payroll shall be the maximum rate of 
salary from which retirement and survivorship credits and 
amounts of benefits are determined and from which member 
contributions are calculated and deducted; 
    (2) in lieu of the amortization date specified in section 
356.215, subdivision 4, clause (7), the appropriate amortization 
target date specified in sections 69.77, subdivision 2, clause 
(2), or 69.773, subdivision 4, clause (b), shall be used in 
calculating the required amortization contribution; 
    (3) in addition to the tabulation of active members and 
annuitants provided for in section 356.215, subdivision 4, 
clause (10), the member contributions for active members for the 
calendar year and the prospective annual retirement annuities 
under the benefit plan for active members shall be reported; and 
    (4) actuarial valuations required pursuant to section 
69.773, subdivision 2 shall be made at least every four years 
and actuarial valuations required pursuant to section 69.77 
shall be made at least every two years; and 
    (5) experience studies required pursuant to section 69.77 
shall be made as of December 31, 1978 and as of December 31 of 
every fourth year thereafter and experience studies required 
pursuant to section 69.773, subdivision 2, shall be made as of 
December 31, 1978, and as of the date of each actuarial 
valuation made thereafter to accompany the actuarial valuation 
annually. 
     Sec. 3.  [EFFECTIVE DATE.] 
     This act is effective on the day following final enactment. 
    Approved April 29, 1983