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Key: (1) language to be deleted (2) new language


                         Laws of Minnesota 1985 

                         CHAPTER 11-S.F.No. 122 
           An act relating to retirement; public employees 
          retirement association; setting the salary range of 
          the executive director; changing the membership of the 
          board; providing qualifications for the executive 
          director; requiring advice and consent of the senate 
          for appointment of the executive director; defining 
          the duties of the board; ending the terms of current 
          board members; defining the duties of the executive 
          director; amending Minnesota Statutes 1984, sections 
          15A.081, subdivision 1; 43A.04, subdivision 1; 43A.10, 
          subdivision 6; and 353.03, subdivisions 1, 1a, 2, 3, 
          3a, and 5.  
    Section 1.  [FINDINGS.] 
    The legislature reaffirms that the public employees 
retirement association is a public agency, created by and 
subject to the control of the legislature.  The legislature is 
responsible for assuring that the laws establishing the 
association lead to responsible governance and efficient 
administration.  The legislature must assure that the board of 
trustees fulfills its fiduciary obligations to the state, to the 
taxpayers, and to the members of the association. 
    The legislature finds that actions of the association board 
of trustees have damaged public confidence in the association's 
ability to fulfill its fiduciary obligations and to operate in 
accordance with legislative intent.  The legislature finds that 
this act is necessary to assure that the board of trustees will 
fulfill its fiduciary obligations and will responsibly 
administer the affairs of the association in keeping with 
legislative intent. 
    Sec. 2.  Minnesota Statutes 1984, section 15A.081, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SALARY.] The governor shall set the salary 
rate within the ranges listed below for positions specified in 
this subdivision, upon approval of the legislative commission on 
employee relations and the legislature as provided by section 
43A.18, subdivisions 2 and 5: 
                                                Salary Range 
                                                July 1, 1983 
Commissioner of education;                   $57,500-$70,000 
Commissioner of finance; 
Commissioner of transportation; 
Commissioner of human services; 
Chancellor, community college system; 
Chancellor, state university system; 
Director, vocational technical
Executive director, state board of 
Commissioner of administration;              $50,000-$60,000 
Commissioner of agriculture; 
Commissioner of commerce;
Commissioner of corrections;  
Commissioner of economic security;  
Commissioner of employee relations;  
Commissioner of energy and economic 
Commissioner of health;  
Commissioner of labor and industry;  
Commissioner of natural resources;  
Commissioner of revenue;
Commissioner of public safety;  
Chairperson, waste management board 
Chief administrative law judge; office of
  administrative hearings;
Director, pollution control agency;
Director, state planning agency;
Executive director, higher education  
  coordinating board;  
Executive director, housing finance 
Executive director, public employees
  retirement association;
Executive director, teacher's 
  retirement association;  
Executive director, state retirement  
Commissioner of human rights;                $40,000-$52,500
Director, department of public service; 
Commissioner of veterans' affairs; 
Director, bureau of mediation services; 
Commissioner, public utilities commission; 
Member, transportation regulation board; 
Director, zoological gardens. 
    Sec. 3.  Minnesota Statutes 1984, section 43A.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  [STATEWIDE LEADERSHIP.] The commissioner 
shall be the chief personnel and labor relations manager of the 
civil service in the executive branch.  
    (a) Whenever any power or responsibility is given to the 
commissioner by any provision of Laws 1981, Chapter 210, unless 
otherwise expressly provided, the power or authority shall apply 
to all employees of agencies in the executive branch and to 
employees in classified positions in the office of the 
legislative auditor, the Minnesota state retirement system, the 
public employees retirement association, and the teacher's 
retirement association.  Unless otherwise provided by law, the 
power or authority shall not apply to unclassified employees in 
the legislative and judicial branches.  
    (b) The commissioner shall operate an information system 
from which personnel data, as defined in section 13.43, 
concerning employees and applicants for positions in the 
classified service can be retrieved.  
    The commissioner shall have access to all public and 
private personnel data kept by appointing authorities which will 
aid in the discharge of the commissioner's duties.  
    (c) The commissioner may consider and investigate any 
matters concerned with the administration of provisions of Laws 
1981, Chapter 210 and may order any remedial actions consistent 
with law. 
    Sec. 4.  Minnesota Statutes 1984, section 43A.10, 
subdivision 6, is amended to read: 
EXAMINATIONS.] Competitive promotional examinations shall be 
open only to employees of the civil service, the Minnesota state 
retirement system, the public employees retirement association, 
and the teacher's retirement association.  The commissioner may 
require that competition be extended to all employees as defined 
above or may limit competition to employees of one or more 
agencies or organizational units thereof or to employees meeting 
specified employment conditions.  
    Sec. 5.  Minnesota Statutes 1984, section 353.03, 
subdivision 1, is amended to read: 
management of the public employees retirement fund is hereby 
vested in a board of trustees consisting of 15 the state auditor 
and eight members, who shall be known as the board of trustees.  
This board shall consist of four trustees The governor shall 
appoint five trustees to four-year terms, one of whom shall be 
designated by each of the following associations or 
organizations, Minnesota to represent school boards association, 
League of Minnesota one to represent cities, Association of 
Minnesota one to represent counties and the executive committee 
of the statewide general labor organization which includes among 
its membership the employee organizations, as defined in section 
179A.03, subdivision 6, which represent the largest number of 
employees who are association members; nine area trustees, who 
shall be elected from the membership employed in one of the 
areas described below by the members employed in such area 
except members of the police and fire fund;, one trustee who 
shall be a retired annuitant elected at large by other retired 
annuitants and disabilitants;, and one trustee who is a public 
member of the police and fire fund elected at large by the 
membership of the police and fire fund knowledgeable in pension 
matters.  Trustees elected by The membership of the association 
or by the retired annuitants and disabilitants of the 
association shall be elected elect three trustees for a term 
terms of four years.  Trustees designated by an association or 
organization or elected or selected by the use of a procedure 
other than direct election by the membership of the 
association or by the annuitants of the association shall hold 
office for a term of two years or until the designation, 
election or selection procedure is changed, if that occurs 
earlier be public employees and members of the association.  For 
seven days beginning November 1 of each year preceding a year in 
which an election is held, the association shall accept at its 
office filings in person or by mail of candidates for the board 
of trustees.  An area A candidate shall submit at the time of 
filing a nominating petition signed by 25 or more members of the 
fund from the area of the candidate, a retired annuitant 
candidate, a nominating petition signed by any combination of 25 
or more retired annuitants or disabilitants, and a police and 
fire fund candidate, a nominating petition signed by 25 or more 
members of such fund.  No name may be withdrawn from nomination 
by the nominee after November 15.  At the request of a candidate 
for an elected position on the board of trustees, the board 
shall mail a statement of up to 300 words prepared by the 
candidate to all persons eligible to vote in the election of the 
candidate.  The board may adopt policies to govern form and 
length of these statements, timing of mailings, and deadlines 
for submitting materials to be mailed.  These policies must be 
approved by the secretary of state.  Disputes between the board 
and a candidate concerning application of these policies to a 
particular statement shall be resolved by the secretary of 
state.  A candidate who: 
    (a) receives contributions or makes expenditures in excess 
of $100; or 
    (b) has given implicit or explicit consent for any other 
person to receive contributions or make expenditures in excess 
of $100; 
for the purpose of bringing about the candidate's election, must 
file a report with the ethical practices board disclosing the 
source and amount of all contributions to his or her campaign. 
The ethical practices board shall prescribe forms governing 
these disclosures.  Expenditures and contributions have the 
meaning defined in section 10A.01.  These terms do not include 
the mailing made by the association board on behalf of the 
candidate.  A candidate must file a report within 30 days from 
the day that the results of the election are announced.  The 
ethical practices board shall maintain these reports and make 
them available for public inspection in the same manner as the 
board maintains and makes available other reports filed with 
it.  By January 10 of each year in which elections are to be 
held the board shall distribute by mail to the members, retired 
annuitants and disabilitants, ballots listing the candidates.  
No member may vote for more than one candidate for each board 
position to be filled.  A ballot indicating a vote for more than 
one person for any position shall be void.  No special marking 
may be used on the ballot to indicate incumbents.  The last day 
for mailing ballots to the fund shall be January 31.  Except as 
provided in this section, all Terms expire on January 31 of the 
fourth year, and the position shall remain positions are vacant 
until the newly elected member is members are qualified.  The 
ballot envelopes shall be so designed and the ballots shall be 
counted in such a manner as to insure that each vote is secret.  
For the purpose of electing the nine area trustees, the state 
shall be divided into three areas as follows:  Area one shall 
include Anoka, Hennepin, Ramsey and Washington counties.  Area 
two shall include Big Stone, Swift, Kandiyohi, Meeker and Wright 
counties and all counties south thereof, except counties in area 
one.  Area three shall include all the remaining counties of the 
state.  If any governmental unit is located in more than one 
area, place of employment shall be deemed to be in the area in 
which the main office of the governmental unit is located.  Each 
year for three years one area trustee shall be elected to a 
four-year term from each area by the members employed in the 
respective areas.  In the fourth year one trustee shall be 
elected at large by the police and fire fund membership and one 
trustee elected at large by the retired annuitants and 
    The elections shall be supervised by the secretary of 
state.  It shall be the duty of the board of trustees to 
faithfully administer the law without prejudice and consistent 
with the expressed intent of the legislature.  They shall act as 
trustees with a fiduciary obligation to the state of Minnesota 
which created the fund, the taxpayers of the governmental 
subdivisions which aid in financing it and the public employees 
who are its beneficiaries.  They shall act in good faith and 
shall exercise that degree of judgment and care, under 
circumstances then prevailing, which persons of prudence, 
discretion, and intelligence exercise in the management of their 
own affairs.  
    Sec. 6.  Minnesota Statutes 1984, section 353.03, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [VACANCY, HOW FILLED.] Any vacancy on the board 
caused by death, resignation, or removal of any member so 
elected shall trustee, or occurring because an elected trustee 
ceases to be a public employee and an active member of the 
association, must be filled by the board for trustees elected by 
members, and by the governor for other trustees, for the 
unexpired portion of the term in which the vacancy occurs. 
    Sec. 7.  Minnesota Statutes 1984, section 353.03, 
subdivision 2, is amended to read: 
    Subd. 2.  [NO COMPENSATION EXPENSES.] The members of the 
board of trustees and members of any authorized committee of 
said retirement association shall serve without compensation, 
but shall be reimbursed out of the retirement fund for expenses 
actually and necessarily paid or incurred in the performance of 
their duties.  Members of the board of trustees shall suffer no 
loss of compensation from their a public employer by reason of 
service on or for the board or on any authorized committee 
    Sec. 8.  Minnesota Statutes 1984, section 353.03, 
subdivision 3, is amended to read: 
THE BOARD.] (a) The board shall elect a chairman president and 
vice-chairman, and shall appoint an executive director and other 
employees and may adopt bylaws, and procure other services as it 
may reasonably deem necessary and fix their compensation subject 
to subdivision 2 hereof vice-president.  The board shall approve 
the staffing complement necessary to administer the fund.  The 
cost of administering this chapter must be paid by the fund.  
    (b) The board shall adopt bylaws for its own government and 
for the management of the fund consistent with the laws of the 
state and may modify them at pleasure.  It shall adopt, alter, 
and enforce reasonable rules consistent with the laws of the 
state for the administration and management of the fund, for the 
payment and collection of payments from members, and for the 
payment of withdrawals and benefits.  It shall pass upon and 
allow or disallow all applications for membership in the fund 
and shall allow or disallow claims for withdrawals, pensions, or 
benefits payable from the fund.  It shall adopt an appropriate 
mortality table based on experience of the fund as recommended 
by the association actuary, with interest set at the rate 
specified in section 356.215, subdivision 4, clause (4).  It 
shall provide for the payment out of the fund of all necessary 
expenses for the administration of the fund and of all claims 
for withdrawals, pensions, or benefits allowed.  The board shall 
approve or disapprove all recommendations and actions of the 
executive director made subject to its approval or disapproval 
by subdivision 3a. 
    (c) In passing upon all applications and claims, the board 
may summon, swear, hear, and examine witnesses and, in the case 
of claims for disability benefits, may require the claimant to 
submit to a medical examination by a physician of the board's 
choice, at the expense of the fund, as a condition precedent to 
the passing on the claim, and, in the case of all applications 
and claims, may conduct investigations necessary to determine 
their validity and merit. 
    (d) The board may continue to authorize the sale of life 
insurance to members under the insurance program in effect on 
January 1, 1985, but must not change that program without the 
approval of the commissioner of finance.  The association shall 
not receive any financial benefit from the life insurance 
program beyond the amount necessary to reimburse the association 
for costs incurred in administering the program.  The 
association shall not engage directly or indirectly in any other 
activity involving the sale or promotion of goods or services, 
or both, whether to members or nonmembers. 
    (e) The board shall establish procedures governing 
reimbursement of expenses to board members.  These procedures 
shall define the types of activities and expenses that qualify 
for reimbursement, shall provide that all out-of-state travel 
must be authorized by the board, and shall provide for 
independent verification of claims for expense reimbursement. 
The procedures must comply with applicable rules and policies of 
the department of finance, the department of administration, and 
the department of employee relations. 
    Sec. 9.  Minnesota Statutes 1984, section 353.03, 
subdivision 3a, is amended to read: 
(a) [QUALIFICATIONS APPOINTMENT.] The board shall appoint, with 
the advice and consent of the senate, an executive director on 
the basis of education, experience in the retirement field, and 
leadership ability.  The executive director shall have had at 
least five years' experience in an executive level management 
position, which has included responsibility for pensions, 
deferred compensation, or employee benefits.  The executive 
director serves at the pleasure of the board.  The salary of the 
executive director is as provided by section 15A.081, 
subdivision 1. 
    (b) [DUTIES.] The management of the association is vested 
in the executive director who shall be the executive and 
administrative head of the association.  He shall act as adviser 
to the board on all matters pertaining to the association.  He 
shall also act as the secretary of the board.  It is the duty of 
The executive director and he has the power to shall: 
    (1) Attend all meetings of the board; 
    (2) Prepare and recommend to the board rules and 
regulations for the purpose of carrying out the provisions of 
this chapter; 
    (3) Establish and maintain an adequate system of records 
and accounts following recognized accounting principles and 
    (4) Designate an assistant director, with the approval of 
the board, who shall serve in the unclassified service and whose 
salary is set in accordance with section 43A.18, subdivision 3, 
appoint a confidential secretary in the unclassified service, 
and appoint such employees, both permanent and temporary, as are 
necessary to carry out the provisions of said this chapter, and 
with the approval of the board fix their compensation who are 
subject to chapters 43A and 179A in the same manner as are 
executive branch employees; 
    (5) Organize the work of the association as he deems 
necessary to fulfill the functions of the association, and 
define the duties of its employees and delegate to them any of 
his powers or duties, subject to his control and under such 
conditions as he may prescribe; 
    (6) With the approval of the board, contract for actuarial 
services, professional management services, and consulting 
services as may be necessary and fix the compensation therefor 
to fulfill the purposes of this chapter.  Such All contracts 
shall not be are subject to the competitive bidding procedure 
prescribed by chapter 16 16B.  The commissioner of 
administration shall not approve, and the association shall not 
enter into, any contract to provide lobbying services or 
legislative advocacy of any kind.  Copies of all professional 
management survey reports shall be sent directly to the 
legislature and the legislative auditor at the same time reports 
are furnished the board.  Only management firms experienced in 
conducting management surveys of federal, state or local public 
retirement systems shall be qualified to contract with the 
director hereunder; 
    (7) With the approval of the board provide inservice 
training for all employees of the association; 
    (8) Make refunds of accumulated contributions to former 
members and to the designated beneficiary, surviving spouse, 
legal representative or next of kin of deceased members or 
deceased former members, all as provided in this chapter; 
    (9) Determine the amount of the annuities and disability 
benefits of members covered by the association and authorize 
payment thereof beginning as of the dates such annuities and 
benefits begin to accrue, all in accordance with the provisions 
of said this chapter; 
    (10) Pay annuities, refundments refunds, survivor benefits, 
salaries and all necessary operating expenses of the association;
    (11) Prepare and submit to the board and the legislature an 
annual report covering the operation of the association, as 
required by chapter 356; 
    (12) Prepare and submit biennial and annual budgets to the 
board for its approval and submit the approved budgets to the 
department of finance for approval by the commissioner; and 
    (13) With the approval of the board, perform such other 
duties as may be required for the administration of the 
association and the other provisions of this chapter and for the 
transaction of its business. 
    Sec. 10.  Minnesota Statutes 1984, section 353.03, 
subdivision 5, is amended to read: 
    Subd. 5.  [APPLICATION OF LAWS.] Laws applicable to state 
agencies and agencies with statewide jurisdiction shall not be 
construed to apply to the association unless such laws make 
specific reference to this subdivision; provided, however, the 
applicable provisions of chapters 355 and 356 shall apply to the 
    Sec. 11.  [TERMS ENDED.] 
    Notwithstanding any other law to the contrary, the terms of 
all people who are members of the public employees retirement 
association board prior to the effective date of this section, 
whether they were elected or designated, end on the effective 
date of this section.  Incumbent members, including those 
elected in January 1985, do not hold over and cease to have any 
authority to carry out the decisions of the board unless 
reappointed or reelected to the board.  If individuals elected 
in January 1985 have not become members of the board by the 
effective date of this section, they shall not take office.  In 
addition, all committees established by the board are abolished 
on the effective date of this section. 
    Sec. 12.  [TRANSITION.] 
    Subdivision 1.  [APPOINTMENTS.] Within 30 days after the 
effective date of this act, the governor shall appoint the five 
trustees specified in Minnesota Statutes, section 353.03, 
subdivision 1.  In addition, and notwithstanding any provision 
of section 353.03, subdivision 1, the governor shall appoint 
three trustees who are public employees and members of the 
association.  The term of one trustee who is a public employee 
and member of the association and who is appointed under this 
subdivision ends January 31, 1986.  The terms of the other two 
trustees who are public employees and members of the association 
and who are appointed under this subdivision end January 31, 
1987.  In making those appointments, the governor shall 
designate the trustee whose term ends in 1986 and the trustees 
whose terms end in 1987.  Minnesota Statutes, section 15.0597 
does not govern appointments made under this subdivision. 
    Subd. 2.  [INTERIM DIRECTOR.] The acting interim director 
of the association, actively serving in that position on the 
effective date of this section, from that date until a new board 
has taken office may exercise all powers vested in the board by 
Minnesota Statutes, section 353.03, subdivisions 1, 3, and 3a.  
Until a new executive director has been appointed by the board, 
the acting interim director has the powers and duties assigned 
to the executive director under Minnesota Statutes, section 
353.03, subdivision 3a. 
    Subd. 3.  [ELECTION PROCEDURES.] The board shall accept 
filings for one elected position on the board in November 1985 
and shall conduct an election for that position in January 
1986.  The board shall accept filings for two elected positions 
on the board in November 1986 and shall conduct an election for 
those positions in January 1987.  Thereafter, the board shall 
follow the election procedures described in Minnesota Statutes, 
section 353.03, subdivision 1, as necessary to fill the 
positions of elected trustees. 
    Subd. 4.  [EMPLOYEES.] Notwithstanding any provision of 
Minnesota Statutes, section 353.03, subdivision 3a, employees of 
the association are not subject to Minnesota Statutes, chapters 
43A and 179A until July 1, 1985. 
<$Use f1 format>
    Sec. 13.  [CURRENT EMPLOYEES.] 
    Employees who hold or are on leave from positions of the 
association on July 1, 1985, are appointed to the civil service 
of the state without competitive or qualifying examination.  The 
commissioner of employee relations shall place the employees in 
the proper classifications in the classified service, except for 
those holding or on leave from unclassified positions listed in 
Minnesota Statutes, section 353.03, subdivision 3a, who are to 
be placed in the proper classifications in the unclassified 
service.  Each employee is appointed at no loss in salary or 
accrued vacation benefits, but no increase in salary until the 
employee's salary comes within the range for the employee's 
class and no additional accrual of vacation benefits until the 
employee's total accrued vacation benefits falls below the 
maximum permitted by the state for the employee's position.  An 
employee so appointed shall begin on July 1, 1985, to serve a 
probationary period not to exceed six months, which the 
executive director may terminate earlier.  Employees who retire 
by June 30, 1985, are entitled to the cash value of their 
accrued sick leave under the formula in use by the association 
the day before the day of final enactment of this act.  The 
association shall provide health insurance for employees who are 
retired on the day of final enactment of this act and employees 
who retire or qualify for retirement by June 30, 1985.  The 
health insurance provided under this section is subject to any 
change in plan design or coverage that occurs through collective 
bargaining or implementation of a plan established under 
Minnesota Statutes, section 43A.18 for employees in positions 
equivalent to that from which the insured employee retired.  
Coverages must be coordinated with relevant health insurance 
benefits provided through the federal medicare program.  
Notwithstanding other law to the contrary, the commissioners of 
employee relations and finance may adjust reporting of hours 
worked by association employees after July 1, 1985, as needed to 
facilitate the transition to the state's biweekly payroll system.
    Sec. 14.  [SEVERABILITY.] 
    The provisions of this act are severable.  If any provision 
is found to be void, the remaining provisions shall remain valid.
    Sec. 15.  [EFFECTIVE DATE.] 
    Sections 1, 2, 5 to 12, and 14 are effective the day 
following final enactment.  Sections 3, 4, and 13 are effective 
July 1, 1985. 
    Approved April 10, 1985

Official Publication of the State of Minnesota
Revisor of Statutes