Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1986 

                        CHAPTER 458-H.F.No. 229 
           An act relating to retirement; public plans generally; 
          extending the time for termination of service to 
          qualify for early retirement without reduction of 
          annuities; providing health insurance benefits for 
          certain retired teachers; changing eligibility 
          requirements for surviving spouse benefits; regulating 
          coverage under the unclassified employees retirement 
          program; amending Minnesota Statutes 1984, sections 
          62E.14, subdivision 1; 352.12, subdivision 2; 352.91, 
          by adding a subdivision; 352D.01; 352D.015, 
          subdivision 5; 352D.02; 352D.06, subdivision 1; 
          352D.065, subdivision 5; 352D.085, subdivision 1; 
          353.32, subdivision 1a; 354.05, subdivisions 2 and 26; 
          354.44, subdivision 4; 354.46, subdivision 2; and 
          354A.35, subdivision 2; Minnesota Statutes 1985 
          Supplement, sections 136C.50, subdivision 7; 353.01, 
          subdivision 2a; 353.657, subdivision 2a; 354.55, 
          subdivision 11; 356.215, subdivision 4d; and 356.70, 
          subdivision 1; Laws 1985, First Special Session 
          chapter 7, section 31, subdivision 2; proposing coding 
          for new law in Minnesota Statutes, chapter 62E. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [62E.081] [HEALTH INSURANCE FOR RETIRED 
TEACHERS.] 
    Subdivision 1.  [TEACHERS ELIGIBLE FOR HEALTH INSURANCE.] A 
teacher who retired before May 1, 1974, from the basic plan of 
the Minneapolis teachers retirement fund association and who is 
not currently eligible for the health insurance benefits of the 
federal Medicare Program of the Social Security Act is entitled 
to have health insurance premiums paid and to receive the 
benefits of a number two qualified plan offered by the Minnesota 
comprehensive health association under sections 62E.01 to 
62E.17.  The premium payments must be made through contributions 
from employed teachers in special school district No. 1 and from 
special school district No. 1 in the manner described in 
subdivision 2.  To qualify for a benefit under this subdivision 
a retiree shall permit the school district to verify with the 
Social Security Administration that the retiree does not qualify 
for Medicare.  The permission must be granted on a form 
prescribed by the school district. 
    Subd. 2.  [DETERMINATION OF PREMIUM.] Before June 30 of 
each year, the writing carrier for the Minnesota comprehensive 
health association under section 62E.13 shall notify the school 
district of the total premium payment for the following school 
year required for coverage of the eligible teachers enrolled 
under subdivision 1 in the comprehensive health insurance plan.  
The school district shall remit the required premium payment on 
a monthly basis thereafter to the writing carrier.  The employer 
contribution to the required premium payment must be one-half of 
the total premium payment and must be paid from the school 
district's general fund.  The school district shall calculate 
the percentage of total annual payroll for teachers necessary to 
raise one-half of the total premium payment.  The school 
district shall withhold the appropriate amount from each 
teacher's paychecks. 
    Sec. 2.  Minnesota Statutes 1984, section 62E.14, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CERTIFICATE, CONTENTS.] The comprehensive 
health insurance plan shall be open for enrollment by eligible 
persons.  An eligible person shall enroll by submission of a 
certificate of eligibility to the writing carrier.  The 
certificate shall provide the following: 
    (a) Name, address, age, and length of time at residence of 
the applicant; 
    (b) Name, address, and age of spouse and children if any, 
if they are to be insured; 
    (c) Evidence of rejection, a requirement of restrictive 
riders, a rate up, or a pre-existing conditions limitation on a 
qualified plan, the effect of which is to substantially reduce 
coverage from that received by a person considered a standard 
risk, by at least one association members within six months of 
the date of the certificate, or other eligibility requirements 
adopted by rule by the commissioner which are not inconsistent 
with this chapter and which evidence that a person is unable to 
obtain coverage substantially similar to that which may be 
obtained by a person who is considered a standard risk; and 
    (d) Evidence that the applicant meets the eligibility 
requirements of section 1, subdivision 1, of this act; and 
    (e) A designation of the coverage desired. 
    An eligible person may not purchase more than one policy 
from the state plan.  Upon ceasing to be a resident of Minnesota 
a person is no longer eligible to purchase or renew coverage 
under the state plan. 
    Sec. 3.  Minnesota Statutes 1985 Supplement, section 
136C.50, subdivision 7, is amended to read: 
    Subd. 7.  [STAFF.] The council may employ an executive 
director and other staff needed to carry out its duties.  The 
executive director shall serve in the unclassified service and 
may be paid an allowance not to exceed $2,000 annually for 
miscellaneous expenses in connection with duties of the office.  
The council may contract with professional, technical, and 
clerical consultants and interns needed to carry out its 
functions. 
    Sec. 4.  Minnesota Statutes 1984, section 352.12, 
subdivision 2, is amended to read: 
    Subd. 2.  [SURVIVING SPOUSE BENEFIT.] If an employee or 
former employee who has attained the age of at least 55 50 years 
and has credit for not less than ten years allowable service or 
who has credit for not less than 30 years of allowable service, 
regardless of age attained, dies before an annuity or disability 
benefit has become payable, notwithstanding any designation of 
beneficiary to the contrary, his or her surviving spouse may 
elect to receive, in lieu of the refund with interest provided 
in subdivision 1, an annuity equal to the joint and 100 percent 
survivor annuity which the employee could have qualified for had 
he or she terminated service on the date of death.  The 
surviving spouse may apply for the annuity at any time after the 
date on which the deceased employee would have attained the 
required age for retirement based on the employee's allowable 
service.  The annuity shall be computed as provided in section 
352.115, subdivisions 1, 2, and 3, and section 352.116, 
subdivisions 1 and 3.  Sections 352.22, subdivision 3, and 
352.72, subdivision 2, apply to a deferred annuity payable under 
this subdivision.  The annuity shall cease with the last payment 
received by the surviving spouse in his or her lifetime.  An 
amount equal to the excess, if any, of the accumulated 
contributions which were credited to the account of the deceased 
employee over and above the total of the benefits paid and 
payable to the surviving spouse shall be paid to the deceased 
employee's last designated beneficiary or, if none, to the 
surviving children of the deceased spouse in equal shares or, if 
none, to the surviving parents of the deceased spouse or, if 
none, to the representative of the estate of such deceased 
spouse.  Any employee may request in writing that this 
subdivision not apply and that payment be made only to his 
designated beneficiary as otherwise provided by this chapter. 
    Sec. 5.  Minnesota Statutes 1984, section 352D.01, is 
amended to read: 
    352D.01 [ESTABLISHMENT.] 
    There is hereby established within the Minnesota state 
retirement system a retirement program for certain unclassified 
public employees in state service to be known as the Minnesota 
unclassified employees retirement program, which shall be 
administered by the Minnesota state retirement system.  
    Sec. 6.  Minnesota Statutes 1984, section 352D.015, 
subdivision 5, is amended to read: 
    Subd. 5.  "Covered employment" means employment covered by 
chapter 352, or this chapter.  
    Sec. 7.  Minnesota Statutes 1984, section 352D.02, as 
amended by Laws 1985, First Special Session chapter 10, section 
88, is amended to read: 
    352D.02 [COVERAGE.] 
    Subdivision 1.  [COVERAGE.] The following employees, if 
they are in the unclassified service of the state and are 
eligible for coverage under the Minnesota state employees 
retirement system fund, shall participate in the unclassified 
program unless an employee gives notice to the executive 
director of the state retirement system within one year 
following the commencement of employment in the unclassified 
service that the employee desires coverage under the regular 
employee plan.  For the purposes of this chapter, an employee 
who does not file notice with the executive director shall be 
deemed to have exercised the option to participate in the 
unclassified plan. 
    (1) any employee in the office of the governor, lieutenant 
governor, secretary of state, state auditor, state treasurer, 
attorney general or the state board of investment, 
    (2) the head of any department, division, or agency created 
by statute in the unclassified service, an acting department 
head subsequently appointed to the position, or any employee 
enumerated in section 15A.081, subdivision 1 or 15A.083, 
subdivision 4, 
    (3) any permanent, full-time unclassified employee of the 
legislature or any commission or agency of the legislature or a 
temporary legislative employee having shares in the supplemental 
retirement fund as a result of former employment covered by this 
chapter, whether or not eligible for coverage under the 
Minnesota state retirement system, 
     (4) any person employed in a position established pursuant 
to section 43A.08, subdivision 1, clause (c), or subdivision 1a 
or in a position authorized under a statute creating or 
establishing a department or agency of the state, which is at 
the deputy or assistant head of department or agency or director 
level, 
     (5) the chair, chief administrator, and not to exceed nine 
positions at the division director or administrative deputy 
level of the metropolitan waste control commission as designated 
by the commission; the chair, executive director, and not to 
exceed three positions at the division director or assistant to 
the chair level of the regional transit board; a chief 
administrator who is an employee of the metropolitan transit 
commission; and the chair, executive director, and not to exceed 
nine positions at the division director or administrative deputy 
level of the metropolitan council as designated by the council; 
provided that upon initial designation of all positions provided 
for in this clause, no further designations or redesignations 
shall be made without approval of the board of directors of the 
Minnesota state retirement system, 
     (6) the executive director, associate executive director, 
and not to exceed nine positions of the higher education 
coordinating board in the unclassified service, as designated by 
the higher education coordinating board; provided that upon 
initial designation of all positions provided for in this 
clause, no further designations or redesignations shall be made 
without approval of the board of directors of the Minnesota 
state retirement system, 
    (7) the clerk of the appellate courts appointed pursuant to 
Article VI, Section 2, of the Constitution of the state of 
Minnesota, 
    (8) the chief executive officers of correctional facilities 
operated by the department of corrections and of hospitals and 
nursing homes operated by the department of human services, 
    (9) any employee whose principal employment is at the state 
ceremonial house, 
    (10) employees of the Minnesota educational computing 
corporation, and 
    (11) any employee of the world trade center board. 
    Subd. 1a.  The following employees if they are eligible for 
coverage under the state employees retirement fund, or the 
teachers retirement association, or would have been eligible for 
coverage under those funds but for this subdivision, shall 
participate in the plan, subject to the provisions of 
subdivision 5 and section 36, and have social security coverage 
under the agreement between the state and the secretary of 
health and human services:  the chancellor, university 
presidents, and unclassified managerial employees in the state 
university system employed at the level of dean or higher. 
    Subd. 1b.  Any person who on the day before June 30, 1982 
is a participant in the state unclassified employees retirement 
program, whose position is placed in the classified service 
pursuant to Laws 1982, Chapter 560, may elect to maintain 
membership in the unclassified program as long as the person 
holds the position or a position in a higher class in the same 
agency.  When an unclassified position which entitles a person 
to participate in the unclassified retirement program is placed 
in the classified service, the commissioner of employee 
relations shall send written notice to the incumbent of the 
position, and to the director of the Minnesota state retirement 
system.  This notice shall state the incumbent's option under 
this subdivision.  A person eligible to maintain membership in 
the unclassified plan shall notify the executive director of the 
state retirement system of the person's election to maintain 
membership in the unclassified plan within 60 days of the date 
on which the commissioner sends the notice stating that the 
position has been placed in the classified service.  A person 
who does not file this notice shall be deemed to have waived the 
right to remain in the unclassified plan.  
    Subd. 1b 1c.  An employee covered by the regular plan who 
is subsequently employed as a permanent, full-time unclassified 
employee of the legislature or any commission or agency of the 
legislature may elect to transfer accumulated employee and 
matching employer contributions, as provided in section 352D.03. 
    Subd. 2.  A person becoming a participant in the 
unclassified program by virtue of employment in a position 
specified in subdivision 1, clause (2) and remaining in the 
unclassified service shall remain a participant in the program 
even though the position the person occupies is deleted from any 
of the sections referenced in subdivision 1, clause (2) by 
subsequent amendment, except that a person shall not be eligible 
to elect the unclassified program after separation from 
unclassified service if on the return of the person to service, 
that position is not specified in subdivision 1, clause (2).  
Any person employed in a position specified in subdivision 1 
shall cease to participate in the unclassified program in the 
event his position is placed in the classified service. 
    Subd. 3.  An election to not participate is irrevocable 
during any period of covered employment.  An employee with 
employee shares to his credit in the unclassified program, after 
acquiring credit for ten years of allowable service but prior to 
termination of covered employment, may, notwithstanding other 
provisions of this subdivision, elect to terminate his 
participation in the unclassified plan and be covered by the 
regular plan by filing such election with the executive 
director.  The executive director shall thereupon redeem the 
employee's total shares and shall credit to the employee's 
account in the regular plan the amount of contributions that 
would have been so credited had the employee been covered by the 
regular plan during his entire covered employment.  The balance 
of moneys so redeemed and not credited to the employee's account 
shall be transferred to the state contribution reserve of the 
state employees retirement fund, except that the employee 
contribution paid to the unclassified plan in excess of that 
required by the general employee plan shall be refunded to the 
employee as provided in section 352.22.  
    Subd. 4.  When any person elects participation in the 
unclassified program all contributions from the time first 
eligible to make such an election shall be covered by the 
program. 
    Subd. 5.  An employee in a position with retirement 
coverage under the basic program in the teachers retirement 
association is not entitled to participate in the plan unless 
the employee leaves the position and begins employment more than 
30 days later in a position with retirement coverage under the 
plan.  
    Sec. 8.  Minnesota Statutes 1984, section 352D.06, 
subdivision 1, is amended to read:  
    Subdivision 1.  When a participant attains at least age 58, 
is retired from covered service, and applies for a retirement 
annuity, the cash value of his shares shall be transferred to 
the Minnesota post-retirement investment fund and used to 
provide an annuity for the retired employee based upon his age 
when the benefit begins to accrue according to the reserve basis 
used by the regular state employees retirement fund in 
determining pensions and reserves.  
    Sec. 9.  Minnesota Statutes 1984, section 352D.065, 
subdivision 5, is amended to read: 
    Subd. 5.  An unclassified employee A participant who 
returns to covered service after receiving benefits under this 
section shall not be required or allowed to repay such benefits. 
    Sec. 10.  Minnesota Statutes 1984, section 352D.085, 
subdivision 1, is amended to read: 
    Subdivision 1.  Service under the unclassified program for 
which the employee has employee shares to his credit, may be 
used for the limited purpose of qualifying for benefits under 
sections 352.115, 352.72, subdivision 1, and 352.113, 354.44, 
354.45, 354.48, and 354.60; provided such service may not be 
used to qualify for a disability benefit under section 352.113, 
or 354.48 if a participant was under the unclassified program at 
the time of the disability, and provided further that the years 
of service and salary paid while such the participant was in the 
unclassified program shall not be used in determining the amount 
of benefits. 
    Sec. 11.  Minnesota Statutes 1985 Supplement, section 
353.01, subdivision 2a, is amended to read: 
    Subd. 2a.  [INCLUDED EMPLOYEES.] The following persons are 
included in the meaning of "public employee": 
    (a) Elected or appointed officers and employees of elected 
officers. 
    (b) District court reporters. 
    (c) Officers and employees of the public employees 
retirement association. 
    (d) Employees of the League of Minnesota Cities. 
    (e) Officers and employees of public hospitals, owned or 
operated by or an integral part of, any governmental subdivision 
or governmental subdivisions. 
    (f) Employees of a school district who receive separate 
salaries for driving their own buses. 
    (g) Employees of the Association of Minnesota Counties. 
    (h) Employees of the Metropolitan Inter-County Association. 
    (i) Employees of the Minnesota Municipal Utilities 
Association. 
    (j) Employees of the metropolitan airports commission if 
employment initially commences on or after July 1, 1979. 
    (k) Employees of the Minneapolis employees retirement fund, 
if employment initially commences on or after July 1, 1979. 
    (l) Employees of the Range Association of Municipalities 
and Schools. 
    (m) Employees of the soil and water conservation districts. 
    (n) Employees of a county historical society who are county 
employees. 
    Sec. 12.  Minnesota Statutes 1984, section 353.32, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [SURVIVING SPOUSE OPTIONAL ANNUITY.] If a member 
or former member who has attained the age of at least 55 50 
years and has credit for not less than ten years of allowable 
service, or who has credit for not less than 30 years of 
allowable service, regardless of age attained, dies before the 
annuity or disability benefit has become payable, 
notwithstanding any designation of beneficiary to the contrary, 
the surviving spouse may elect to receive, in lieu of a refund 
with interest provided in subdivision 1, or survivor benefits 
otherwise payable pursuant to section 353.31, an annuity equal 
to the 100 percent joint and survivor annuity which the member 
could have qualified for had the member terminated service on 
the date of death.  The surviving spouse may apply for the 
annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  The annuity shall be 
computed as provided in sections 353.29, subdivisions 2 and 3; 
and 353.30, subdivisions 1, 1a, 1b and 1c.  Sections 353.34, 
subdivision 3, and 353.71, subdivision 2, apply to a deferred 
annuity payable under this subdivision.  No payment shall accrue 
beyond the end of the month in which entitlement to the annuity 
has terminated.  An amount equal to the excess, if any, of the 
accumulated contributions which were credited to the account of 
the deceased employee over and above the total of the annuities 
paid and payable to the surviving spouse shall be paid to the 
deceased member's last designated beneficiary or, if none, to 
the legal representative of the estate of the deceased member.  
Any member may specify in writing that this subdivision shall 
not apply and that payment shall be made only to the designated 
beneficiary, as otherwise provided by this chapter. 
    Sec. 13.  Minnesota Statutes 1985 Supplement, section 
353.657, subdivision 2a, is amended to read: 
    Subd. 2a.  If a member who has attained the age of at least 
55 50 years and has credit for not less than ten years allowable 
service dies before public service has terminated, or if an 
employee who has filed a valid application for an annuity or 
disability benefit prior to termination of public service dies 
before the annuity or benefit has become payable, 
notwithstanding any designation of beneficiary to the contrary, 
the surviving spouse may elect to receive, in lieu of a refund 
with interest provided in section 353.32, subdivision 1, or 
survivor benefits otherwise payable pursuant to subdivisions 1 
and 2, an annuity equal to the 100 percent joint and survivor 
annuity which the member could have qualified for on the date of 
death, computed as provided in sections 353.651, subdivisions 2 
and 3, and 353.30, subdivision 3.  The surviving spouse may 
apply for the annuity at any time after the date on which the 
deceased employee would have attained the required age for 
retirement based on the employee's allowable service.  Sections 
353.34, subdivision 3, and 353.71, subdivision 2, apply to a 
deferred annuity payable under this subdivision.  No payment 
shall accrue beyond the end of the month in which entitlement to 
such annuity has terminated.  An amount equal to the excess, if 
any, of the accumulated contributions which were credited to the 
account of the deceased employee over and above the total of the 
annuities paid and payable to the surviving spouse shall be paid 
to the deceased member's last designated beneficiary or, if 
none, to the legal representative of the estate of such deceased 
member.  Any member may request in writing that this subdivision 
not apply and that payment be made only to the designated 
beneficiary, as otherwise provided by this chapter. 
    Sec. 14.  Minnesota Statutes 1984, section 354.05, 
subdivision 2, is amended to read:  
    Subd. 2.  [TEACHER.] "Teacher" includes any person who 
renders service as a teacher, supervisor, principal, 
superintendent, or librarian in the public schools of the state 
located outside of the corporate limits of the cities of the 
first class as those cities were so classified on January 1, 
1979, or in the state universities, or in any charitable or 
state institution including penal and corrective institutions 
supported, in whole or in part, by public funds, or who is 
engaged in educational administration in connection with the 
state public school system, including the state university 
system and state community college system, but excluding the 
University of Minnesota, whether the position be a public office 
or an employment, not including members of any general governing 
or managing board or body connected with the systems, or the 
officers of common, independent, special, or associated school 
districts, or unorganized territory.  The term shall also 
include an employee of the teachers retirement association 
unless the employee is covered by the Minnesota state retirement 
system by virtue of prior employment by the association, and any 
nurse, counselor, social worker, therapist or psychologist who 
renders service in the public schools as defined above or in 
state universities.  The term shall also include any person who 
renders teaching service on a part time basis and who also 
renders other services for a school district.  In such cases, 
the teachers retirement association shall have the authority to 
determine whether all or none of the combined employment shall 
be covered by the teachers retirement association.  The term 
does not include an employee described in section 352D.02, 
subdivision 1a, clause (1), who is hired after the effective 
date of this act.  The term does not mean any person who works 
for a school or institution as an independent contractor.  The 
term shall not include any person employed in subsidized 
on-the-job training, work experience or public service 
employment as an enrollee under the federal comprehensive 
employment and training act from and after March 30, 1978, 
unless the person has as of the later of March 30, 1978 or the 
date of employment sufficient service credit in the retirement 
fund to meet the minimum vesting requirements for a deferred 
retirement annuity, or the employer agrees in writing on forms 
prescribed by the executive director to make the required 
employer contributions, including any employer additional 
contributions, on account of that person from revenue sources 
other than funds provided under the federal comprehensive 
training and employment act, or the person agrees in writing on 
forms prescribed by the executive director to make the required 
employer contribution in addition to the required employee 
contribution.  The term shall not include any person holding a 
part time adult supplementary vocational-technical school 
license who renders part time teaching service in a 
vocational-technical school if (1) the service is incidental to 
the regular nonteaching occupation of the person; and (2) the 
applicable vocational-technical school stipulates annually in 
advance that the part time teaching service will not exceed 300 
hours in a fiscal year; and (3) the part time teaching service 
actually does not exceed 300 hours in a fiscal year.  The term 
also shall not include a person exempt from licensure pursuant 
to section 125.031 or any person who was excluded from 
membership prior to January 1, 1981 pursuant to Laws 1978, 
chapter 556, section 1 and Laws 1980, chapter 342, section 8, if 
the person annually certifies on a form prescribed by the 
executive director that the person has established and is 
contributing to an individual retirement account which is based 
on nonteaching employment. 
    Sec. 15.  Minnesota Statutes 1984, section 354.05, 
subdivision 26, is amended to read: 
    Subd. 26.  [POST RETIREMENT INVESTMENT FUND ANNUITY.] "Post 
retirement investment fund annuity" means the payments made by 
the fund to an annuitant after retirement in accordance with the 
provisions of section 354.63.  It also means that the payments 
made by the fund shall never be an amount less than the amount 
originally determined on the date of retirement or as adjusted 
on each succeeding January 1, 1974 whichever is later but not 
including the adjustments provided in section 11A.18. 
    Sec. 16.  Minnesota Statutes 1984, section 354.44, 
subdivision 4, is amended to read: 
    Subd. 4.  [TIME AND MANNER OF PAYMENTS.] A member may make 
application to the board for a retirement annuity any time after 
the member has satisfied the age and service requirements of 
this chapter for retirement except that no application for 
retirement may be made more than 60 days before termination of 
teaching service.  The annuity payment shall begin to accrue 
after the termination of teaching service, or after the 
application for retirement has been filed with the board, 
whichever is later, as follows: 
    (a) on the sixteenth day of the month of termination or 
filing if the termination or filing occurs on or before the 
fifteenth day of the month or 
    (b) on the first day of the month following the month of 
termination or filing if the termination or filing occurs on or 
after the sixteenth day of the month but in no event shall an 
annuity begin to accrue more than one month prior to the date of 
final salary receipt. 
    If an application for retirement is filed with the board 
during the 90-day period immediately following the termination 
of teaching service, the annuity may begin to accrue as if the 
application for retirement had been filed with the board on the 
date teaching service terminated.  In no event may an annuity 
begin to accrue more than one month before the date of final 
salary receipt. 
    Sec. 17.  Minnesota Statutes 1984, section 354.46, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY 
BENEFIT.] The surviving spouse of any member or former member 
who has attained the age of at least 55 50 years and has credit 
for at least ten years of allowable service or who has credit 
for at least 30 years of allowable service irrespective of age 
shall be entitled to joint and survivor annuity coverage in the 
event of death of the member prior to retirement.  If the 
surviving spouse does not elect to receive a surviving spouse 
benefit provided pursuant to subdivision 1, if applicable, or 
does not elect to receive a refund of accumulated member 
contributions provided pursuant to sections 354.47, subdivision 
1, or 354.62, subdivision 5, clause (3), whichever is 
applicable, the surviving spouse shall be entitled to receive, 
upon written application on a form prescribed by the executive 
director, a benefit equal to the second portion of a 100 percent 
joint and survivor annuity as provided pursuant to section 
354.45 and computed pursuant to section 354.44, subdivisions 2, 
6 or 7, whichever is applicable.  The surviving spouse may apply 
for the annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  Sections 354.44, 
subdivisions 6 and 7, and 354.60 apply to a deferred annuity 
payable under this section.  If the member was a participant in 
the variable annuity division, the applicable portion of the 
benefit shall be computed pursuant to section 354.62, 
subdivision 5, clause (1).  The benefit shall be payable for 
life. 
    Sec. 18.  Minnesota Statutes 1985 Supplement, section 
354.55, subdivision 11, is amended to read: 
    Subd. 11.  Any person covered under section 354.44, 
subdivisions 6 and 7, who ceases to render teaching service may 
leave the person's accumulated deductions in the fund for the 
purpose of receiving a deferred annuity at retirement.  
Eligibility for an annuity under this subdivision shall be 
governed pursuant to section 354.44, subdivision 1, or 354.60. 
    The amount of the deferred retirement annuity shall be 
determined by section 354.44, subdivisions 6 and 7, and 
augmented as provided herein.  The required reserves related to 
that portion of the annuity which had accrued at the time the 
member ceased to render teaching service shall be augmented by 
interest compounded annually from the first day of the month 
following the month during which the member ceased to render 
teaching service to the effective date of retirement.  There 
shall be no augmentation if this period is less than three 
months or if this period commences prior to July 1, 1971.  The 
rates of interest used for this purpose shall be five percent 
commencing July 1, 1971, until January 1, 1981, and three 
percent thereafter.  If a person has more than one period of 
uninterrupted service, a separate average salary determined 
under section 354.44, subdivision 6, must be used for each 
period and the required reserves related to each period shall be 
augmented by interest pursuant to this subdivision.  The sum of 
the augmented required reserves so determined shall be the basis 
for purchasing the deferred annuity.  If a person does not 
render teaching service in any one or more consecutive fiscal 
years and then resumes teaching service, the formula percentages 
used from date of resumption will be those applicable to new 
members.  The mortality table and interest assumption contained 
therein used to compute the annuity shall be determined by the 
law in effect at the time of the member's retirement.  A period 
of uninterrupted service for the purposes of this subdivision 
shall mean a period of covered teaching service during which the 
member has not been separated from active service for more than 
one fiscal year. 
    The provisions of this subdivision shall not apply to 
variable account accumulations as defined in section 354.05, 
subdivision 23. 
    In no case shall the annuity payable herein be less than 
the amount of annuity payable pursuant to section 354.44, 
subdivisions 6 and 7. 
    The requirements and provisions for retirement prior to age 
65 contained in section 354.44, subdivision 6, clause (2) shall 
also apply to an employee fulfilling the requirements with a 
combination of service as provided in section 354.60. 
    The augmentation provided by this subdivision shall not 
apply to any period in which a person is on an approved leave of 
absence from an employer unit covered by the provisions of this 
chapter. 
    Sec. 19.  Minnesota Statutes 1984, section 354A.35, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEATH WHILE ELIGIBLE TO RETIRE; SURVIVING SPOUSE 
OPTIONAL ANNUITY.] The surviving spouse of any coordinated 
member who has attained the age of at least 55 50 years and has 
credit for at least 20 ten years of service or has credit for at 
least 30 years of service regardless of age shall be entitled to 
joint and survivor annuity coverage in the event of death of the 
member prior to retirement.  The surviving spouse may apply for 
the annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  The member's 
surviving spouse shall be paid a joint and survivor annuity as 
provided in section 354A.32 and computed pursuant to section 
354A.31.  Sections 354A.37, subdivision 2, and 354A.39 apply to 
a deferred annuity payable under this section.  The benefits 
shall be payable for life.  
    Sec. 20.  Minnesota Statutes 1985 Supplement, section 
356.215, subdivision 4d, is amended to read: 
    Subd. 4d.  [INTEREST ASSUMPTIONS.] For funds governed by 
chapters 3A, 352, 352B, 352C, 353, 354 (except the variable 
annuity fund, which is governed by section 354.62), and 490, a 
preretirement interest assumption of eight percent, a 
postretirement interest assumption of five percent, and an 
assumption that in each future year the salary on which a 
retirement or other benefit is based is 1.065 multiplied by the 
salary for the preceding year must be used.  For funds governed 
by chapter 354A, preretirement and postretirement assumptions of 
eight percent and an assumption that in each future year the 
salary on which a retirement or other benefit is based is 1.065 
multiplied by the salary for the preceding year, but the payment 
of postretirement adjustments to retirees shall be based on the 
methods specified in the bylaws of the fund as approved by the 
legislature.  For all other funds, a preretirement interest 
assumption of five percent, a postretirement interest assumption 
of five percent, and an assumption that in each future year the 
salary on which a retirement or other benefit is based is 1.035 
multiplied by the salary for the preceding year must be used.  
    Sec. 21.  Minnesota Statutes 1985 Supplement, section 
356.70, subdivision 1, is amended to read: 
    Subdivision 1.  [COMBINED AGE AND SERVICE REQUIREMENT.] Any 
member of a retirement plan established pursuant to chapter 352, 
353, 354, or 354A who by January 1, 1987, has attained the age 
of at least 55 years and whose attained age plus credited 
allowable service totals at least 85, is entitled, upon valid 
application and termination of service prior to January July 1, 
1987, to the normal retirement annuity provided in these 
chapters without any reduction in annuity by reason of such 
early retirement.  
    Sec. 22.  Laws 1985, First Special Session chapter 7, 
section 31, subdivision 2, is amended to read: 
    Subd. 2.  [ELIGIBLE EMPLOYEES.] From the public employees 
retirement association, a member who is currently employed by 
independent school district No. 281, who was absent from 
employment due to illness between April 22 March 20, 1981, 
and September 1 April 17, 1981, and between June 13, 1981, and 
October 23, 1981, and who did not have the required deductions 
made from income received between July 1, 1981, and September 1, 
1981 during those two periods of absence, shall be entitled to 
pay the voluntary assessments. 
    Sec. 23.  [BUHL POLICE SURVIVOR BENEFITS.] 
    Notwithstanding the limitations in Minnesota Statutes, 
section 423.58, or any other law, the bylaws of the Buhl police 
relief association may be amended to provide for the payment of 
a survivor benefit to the surviving spouse of a deceased member, 
or the surviving children equally if there is no surviving 
spouse, in an amount equal to 85 percent of the pension the 
deceased member was to receive on the date of his death.  
Benefits calculated in accordance with this section must 
continue until the surviving spouse remarries or until a 
dependent child reaches the age of 18 years or, if a full-time 
student, 22 years, and may be made retroactive to June 30, 1985. 
    Sec. 24.  [EVELETH POLICE AND FIREFIGHTERS; BENEFIT 
INCREASE.] 
    Notwithstanding any general or special law to the contrary, 
in addition to other benefits payable, retirement benefits 
payable to retired police officers and firefighters and their 
surviving spouses by the Eveleth police and fire trust fund may 
be increased by $25 a month.  Increases may be made retroactive 
to January 1, 1986. 
    Sec. 25.  [ANDOVER FIREFIGHTERS BYLAW AMENDMENT.] 
    Notwithstanding any provision of Minnesota Statutes, 
sections 69.771 to 69.776 or chapter 424A, the Andover 
firefighters relief association may amend its bylaws to allow 
computation of service pensions utilizing a member's period of 
service as an active member of the municipal fire department 
during the period prior to incorporation of the relief 
association. 
    Sec. 26.  [FALLS NURSING HOME EMPLOYEES.] 
    Subdivision 1.  [REFUND OF CONTRIBUTIONS.] A member of the 
public employees retirement association who was employed by the 
Falls nursing home on the date the nursing home was taken over 
by a private corporation or organization must be paid a refund 
of accumulated employee and employer contributions made by or on 
behalf of the employee to the association, plus interest at the 
rate of six percent a year.  If an employee has previously 
received a refund of employee contributions, only the employer 
contributions plus the total interest must be refunded.  No 
employer additional contributions may be refunded. 
    Subd. 2.  [DEFERRED ANNUITY.] If an employee described in 
subdivision 1 had at least five years of allowable service 
credit, the employee may elect to receive, in lieu of the 
refund, a deferred annuity under section 353.34, subdivision 3, 
notwithstanding the length of service requirements contained in 
that subdivision.  An employee eligible for a deferred annuity 
who has previously received a refund of employee contributions 
may reinstate his or her eligibility for a deferred annuity by 
repaying the amount refunded, including any interest received, 
to the association.  
    Subd. 3.  [DEADLINE.] Refunds must be paid or options 
exercised and repayments of refunds made before July 1, 1987.  
    Sec. 27.  [PURCHASE OF PRIOR SERVICE CREDIT BY CERTAIN 
EMPLOYEES.] 
    Notwithstanding the limitations in Minnesota Statutes, 
section 353.36, subdivision 2, or any other law, a person who 
was employed by the Becker county highway department from May, 
1952, to June, 1954, and who does not have the required number 
of years of allowable service credit to qualify for early 
retirement under section 356.70, subdivision 1, solely because 
of prior public service for which salary deductions were not 
taken out for the association, and who otherwise meets the 
requirements of section 353.36, subdivision 2, may, by paying 
before December 31, 1986, an amount calculated in accordance 
with section 353.36, subdivision 2, purchase the period of prior 
public service necessary to bring the person's total allowable 
service to the minimum required for retirement under section 
356.70, subdivision 1, although the person's public service did 
not terminate before July 1, 1982. 
    Sec. 28.  [PURCHASE OF PRIOR SERVICE CREDIT.] 
    Notwithstanding any provision of law to the contrary, a 
person who was employed as a public health nurse by the suburban 
Hennepin county public health nursing service from June, 1957, 
to February, 1961, and who is currently employed by the city of 
Bloomington as a health administrator, may purchase prior 
service credit from the public employees retirement association 
for the period from June 10, 1957, to February 26, 1961. 
    Sec. 29.  [PAYMENT.] 
    The provisions of Laws 1982, chapter 578, article II, 
section 2, govern the amount and manner of payment for the 
purchase of prior service credit.  Payment may be made either by 
the city of Bloomington or by the person entitled to purchase 
prior service. 
    Sec. 30.  [PAYMENT OF VOLUNTARY ASSESSMENTS.] 
    Subdivision 1.  Notwithstanding Minnesota Statutes, section 
353.01, subdivision 16, or any other law, the person described 
in subdivision 2 may pay the public employees retirement 
association voluntary assessments.  The amount of the payment is 
governed by section 353.27, subdivision 2.  
    Subd. 2.  A member of the public employees retirement 
association who is currently employed by the Hennepin county 
medical center who was absent from employment due to injury 
between December 3, 1982, and February 7, 1983, and who did not 
have the required deductions made from income received between 
December 3, 1982, and February 7, 1983, may pay the voluntary 
assessments.  
    Subd. 3.  Payment of employee contributions must be made by 
the member, and the current employer of the person must pay the 
employer and additional employer contribution required by 
section 353.27, subdivisions 3 and 3a.  All employee, employer, 
and employer additional contributions must include interest at 
the rate of six percent a year, compounded annually, from 
December 3, 1982.  Payments must be completed by July 1, 1986. 
    Sec. 31.  Minnesota Statutes 1984, section 352.91, is 
amended by adding a subdivision to read:  
    Subd. 3b.  Covered correctional service also means service 
performed by certain state employees in positions usually 
covered by this section who were excluded by law from coverage 
between July 1973 and July 1980 if they were 45 years of age or 
over when hired, provided they are state employees on the 
effective date of this subdivision and provided they elect 
coverage.  Eligible employees who elect coverage must file 
written notice of their election with the director prior to July 
1, 1986. 
    Sec. 32.  [CONTRIBUTIONS.] 
    State employees electing coverage under section 31 must pay 
employee contributions in an amount equal to the difference 
between employee contributions previously made and employee 
contributions under the correctional employee plan for the 
appropriate period of employment between July 1973 and July 
1980.  The employer of an employee electing coverage shall pay 
the difference in employer contributions.  Employee and employer 
contributions paid pursuant to this section shall include 
interest at six percent per annum compounded annually.  No 
service credit shall be awarded in the correctional plan until 
all contributions are paid.  
    Sec. 33.  [REFUNDS FOR COUNTY HISTORICAL SOCIETY 
EMPLOYEES.] 
    Upon application prior to January 1, 1987, refunds of 
employee and equal employer contributions must be made to 
employees of a county historical society who are not county 
employees.  Refunds must include interest at a rate of six 
percent a year compounded annually.  
    Sec. 34.  [MANKATO POLICE PROBATIONARY PERIOD.] 
    Notwithstanding Minnesota Statutes, section 423.372 or any 
other law, a member of the Mankato police relief association who 
served a probationary period during which the member was not 
eligible for membership in the association, may elect to 
purchase service credit for the probationary period.  A member 
electing to purchase service credit shall pay to the association 
an amount equal to the employee contribution which would have 
been required of a member during the probationary period plus 
interest thereon at a rate equal to the annual average rate of 
return on investments of the special fund of the association.  
An election to purchase service credit and all payments of 
contributions must be completed by December 31, 1987 or the date 
the member retires, if earlier. 
    Sec. 35.  [MINNEAPOLIS PUBLIC LIBRARY EMPLOYEES.] 
    Subdivision 1.  [ELIGIBLE EMPLOYEES.] Notwithstanding any 
other provision of law, a person who was employed by the 
Minneapolis public library in a temporary or part time position 
prior to July 1, 1979, and is currently a member of the public 
employees retirement association, may purchase prior service 
credit from the public employees retirement association for a 
period of service between 1972 and 1985 that has not been 
credited in the public employees retirement association.  
Purchase may be only for months actually employed.  
    Subd. 2.  [PAYMENT.] The amount of payment will be the 
higher of the payment required by section 353.36, subdivision 2, 
or the payment required by Laws 1982, chapter 578, article II, 
section 2.  Payments must be made prior to July 1, 1987. 
    Sec. 36.  [ELECTION OF COVERAGE; TRANSITION.] 
    A current employee or official enumerated in Minnesota 
Statutes, section 352D.02, subdivision 1a, as added by section 
7, may elect prospective coverage in the unclassified plan.  The 
employee may elect to transfer prior service credit to the plan 
under the provisions of section 352D.12. 
    The executive director of the state retirement system, or 
teachers retirement association, as appropriate, shall notify 
current employees or officials of the option within six months 
following the effective date of this act.  An employee or 
official eligible to elect coverage by the plan shall notify the 
appropriate director within six months after the date of 
notice.  An election to participate in the plan is irrevocable 
during any current or subsequent period of employment.  
    Sec. 37.  [OPTION TO CHOOSE PLAN.] 
    Subdivision 1.  Each legislative employee who while being 
employed by the legislature exercised an option to retain 
coverage in the state employees retirement fund has an option to 
choose future coverage in the unclassified plan and to transfer 
to the unclassified plan prior service credit accrued in the 
state employees retirement fund.  
    For an employee who elects to transfer service credit, the 
executive director of the fund shall transfer to the 
unclassified plan accumulated employee and equal employer 
contributions with interest at six percent a year compounded 
annually, based on fiscal year balances.  The employee must 
complete the application for the transfer before July 1, 1987.  
    Subd. 2.  The legislative body for which the employee is 
employed has the option to pay to the employee's account in the 
unclassified plan an amount equal to the difference between the 
employer contribution that would have been deposited in the 
employee's account had the employee been a member of the plan 
and the employer contribution that was contributed to the state 
employees retirement fund on behalf of the employee during the 
period the employee retained coverage in the state employees 
retirement fund.  The legislative body must exercise its option 
before July 1, 1987. 
    Sec. 38.  [INCREASE IN CERTAIN ANNUITIES.] 
    A former member of the public employees retirement 
association, the state patrol retirement fund, or the state 
retirement system who terminated employment before July 1, 1973, 
or the teachers retirement association who terminated employment 
before July 1, 1972, and was at least 55 years of age with at 
least ten years of service at the time of termination, and who 
deferred receipt of an annuity until after June 30, 1973, must 
be paid the annuity increase granted to pre-1973 retirees by 
Laws 1973, chapter 653, sections 32 and 34; chapter 728, section 
25, subdivisions 13 and 14; chapter 753, sections 2 and 36; and 
chapter 755, section 5, commencing with the first annuity 
payment made after the effective date of this section.  
Retirement funds covered by this section shall transfer to the 
post retirement fund the required reserves necessary to support 
the increases granted by this section.  
    Sec. 39.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective upon approval by the 
governing board of Special School District No. 1.  Section 23 is 
effective upon approval by the Buhl city council.  Section 24 is 
effective upon approval by the Eveleth city council.  Section 25 
is effective upon approval by the Andover city council.  Section 
34 is effective upon approval by the Mankato city council.  All 
local approvals must comply with Minnesota Statutes, section 
645.021.  Sections 3 to 22, 26 to 33, and 35 to 38 are effective 
the day following final enactment.  Sections 4, 12, 13, 17, and 
19 apply to members whose deaths occur after June 30, 1985. 
    Approved March 25, 1986