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Minnesota Legislature

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1987 

                        CHAPTER 372-H.F.No. 1159 
           An act relating to retirement; modifying various 
          statewide public safety pension plan provisions; 
          modifying various nonstatewide public safety pension 
          plan provisions; authorizing modifications in 
          Minneapolis teacher retirement fund association 
          benefit plan; authorizing various purchases of prior 
          service credit; establishing an ambulance service 
          personnel retirement plan; limiting the uses of public 
          pension plan assets; authorizing various miscellaneous 
          retirement benefit modifications; making various 
          changes in the investment authority of the state board 
          of investment; lowering service requirements for 
          vesting; modifying workers' compensation benefit 
          offsets; amending Minnesota Statutes 1986, sections 
          11A.04; 11A.24, subdivisions 2, 3, 4, 5, and 6; 
          11A.25; 69.80; 352.01, subdivision 2B; 352.113, 
          subdivision 1; 352.115, subdivision 1; 352.12, 
          subdivision 2; 352.22, subdivision 3; 352.72, 
          subdivision 1; 352.85, subdivision 1; 352.91, 
          subdivision 4; 352.93, subdivision 1; 352B.08, 
          subdivision 1; 352B.11, subdivision 2; 352B.30, 
          subdivision 1; 353.01, subdivision 2a; 353.29, 
          subdivisions 1 and 2; 353.30, subdivision 1c; 353.32, 
          subdivision 1a; 353.33, subdivisions 1, 5, and by 
          adding a subdivision; 353.34, subdivision 3; 353.64, 
          by adding a subdivision; 353.651, subdivisions 1 and 
          2; 353.656, subdivisions 2, 3, and by adding a 
          subdivision; 353.657, subdivision 2a; 353.71, 
          subdivision 1; 354.44, subdivision 1; 354.46, 
          subdivision 2; 354.48, subdivision 1; 354.49, 
          subdivision 3; 354.60; 354A.31, subdivisions 1, 5, and 
          6; 354A.35, subdivision 2; 354A.36, subdivision 1; 
          354A.39; 356.20, subdivision 2; 356.30, subdivisions 1 
          and 3; 356.32, subdivision 2; 424.04; and 424A.02, 
          subdivision 9; Laws 1949, chapter 406, section 4, 
          subdivisions 2 and 3, as amended, section 5, 
          subdivisions 1 and 3, as amended, and section 6, 
          subdivision 1, as amended; Laws 1967, chapter 678, 
          section 2, as amended, chapter 751, section 2; Laws 
          1971, chapter 614, section 1, subdivision 2, as 
          amended; Laws 1977, chapter 169, section 1, 
          subdivision 1a, as amended; and Laws 1980, chapter 
          607, article 15, section 9; proposing coding for new 
          law in Minnesota Statutes, chapters 356 and 423A; 
          proposing coding for new law as Minnesota Statutes, 
          chapters 353A, 353B and 356A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                               ARTICLE 1 

              STATEWIDE PUBLIC SAFETY PENSION PLAN CHANGES 
    Section 1.  Minnesota Statutes 1986, section 69.80, is 
amended to read:  
    69.80 [AUTHORIZED ADMINISTRATIVE EXPENSES.] 
    Notwithstanding any provision of law to the contrary, the 
payment of the following necessary, reasonable and direct 
expenses of maintaining, protecting and administering the 
special fund, when provided for in the bylaws of the association 
and approved by the board of trustees, shall constitute 
authorized administrative expenses of a police, salaried 
firefighters' or volunteer firefighters' relief association 
organized under any law of this state: 
    (a) office expense including but not limited to rent, 
utilities, equipment, supplies, postage, periodical 
subscriptions, furniture, fixtures, and salaries of 
administrative personnel; 
    (b) salaries and itemized expenses of the president, 
secretary, and treasurer of the association, or their designees, 
and any other official of the relief association to whom a 
salary is payable under bylaws or articles of incorporation in 
effect on January 1, 1986, and their itemized expenses incurred 
as a result of fulfilling their responsibilities as 
administrators of the special fund; 
    (c) tuition, registration fees, organizational dues, and 
other authorized expenses of the officers or members of the 
board of trustees incurred in attending educational conferences, 
seminars, or classes relating to the administration of the 
relief association; 
    (d) audit, actuarial, medical, legal, and investment and 
performance evaluation expenses; 
    (e) reimbursement to the officers and members of the board 
of trustees, or their designees, for reasonable and necessary 
expenses actually paid and incurred in the performance of their 
duties as officers or members of the board; and 
    (f) premiums on fiduciary liability insurance and official 
bonds for the officers, members of the board of trustees, and 
employees of the relief association. 
    Any other expenses of the relief association shall be paid 
from the general fund of the association, if one exists.  If a 
relief association has only one fund, that fund shall be deemed 
to be the special fund for purposes of this section.  If a 
relief association has a special fund and a general fund, and 
any expense of the relief association is directly related to the 
purposes for which both funds were established, the payment of 
that expense shall be apportioned between the two funds on the 
basis of the benefits derived by each fund. 
    Sec. 2.  Minnesota Statutes 1986, section 352.01, 
subdivision 2B, is amended to read:  
    Subd. 2B.  [EXCLUDED EMPLOYEES.] The following persons are 
excluded from the meaning of state employee: 
    (1) elective state officers; 
    (2) students employed by the University of Minnesota, the 
state universities, and community colleges unless approved for 
coverage by the board of regents, the state university board or 
the state board for community colleges, as the case may be; 
    (3) employees who are eligible to membership in the state 
teachers retirement association except employees of the 
department of education who have elected or may elect to be 
covered by the Minnesota state retirement system instead of the 
teachers retirement association; 
    (4) employees of the University of Minnesota who are 
excluded from coverage by action of the board of regents; 
    (5) officers and enlisted personnel in the national guard 
and the naval militia and such as are assigned to permanent 
peacetime duty who pursuant to federal law are or are required 
to be members of a federal retirement system; 
    (6) election officers; 
    (7) persons engaged in public work for the state but 
employed by contractors when the performance of the contract is 
authorized by the legislature or other competent authority; 
    (8) officers and employees of the senate and house of 
representatives or a legislative committee or commission who are 
temporarily employed; 
    (9) all courts and court employees, referees, receivers, 
jurors, and notaries public, except employees of the appellate 
courts and referees and adjusters employed by the department of 
labor and industry; 
    (10) patient and inmate help in state charitable, penal and 
correctional institutions including the Minnesota veterans home; 
    (11) persons employed for professional services where the 
service is incidental to regular professional duties and whose 
compensation is paid on a per diem basis; 
    (12) employees of the Sibley House Association; 
    (13) employees of the Grand Army of the Republic and 
employees of the ladies of the G.A.R.; 
    (14) operators and drivers employed pursuant to section 
16.07, subdivision 4; 
    (15) the members of any state board or commission who serve 
the state intermittently and are paid on a per diem basis; the 
secretary, secretary-treasurer, and treasurer of those boards if 
their compensation is $500 or less per year, or, if they are 
legally prohibited from serving more than two consecutive terms 
and their total service therefor is required by law to be less 
than ten years; and the board of managers of the state 
agricultural society and its treasurer unless the treasurer is 
also its full time secretary; 
    (16) state troopers; 
    (17) temporary employees of the Minnesota state fair 
employed on or after July 1 for a period not to extend beyond 
October 15 of the same year; and persons employed at any time or 
times by the state fair administration for special events held 
on the fairgrounds; 
    (18) emergency employees in the classified service except 
emergency employees who within the same pay period become 
provisional or probationary employees on other than a temporary 
basis, shall be deemed "state employees" retroactively to the 
beginning of the pay period; 
    (19) persons described in section 352B.01, subdivision 2, 
clauses (b) and (c) formerly defined as state police officers; 
    (20) all temporary employees in the classified service, all 
temporary employees in the unclassified service appointed for a 
definite period of not more than six months and employed less 
than six months in any one-year period and all seasonal help in 
the classified service employed by the department of revenue; 
    (21) trainees paid under budget classification number 41, 
and other trainee employees, except those listed in subdivision 
2A, clause (10); 
    (22) persons whose compensation is paid on a fee basis; 
    (23) state employees who in any year have credit for 12 
months service as teachers in the public schools of the state 
and as teachers are members of the teachers retirement 
association or a retirement system in St. Paul, Minneapolis, or 
Duluth; 
    (24) employees of the adjutant general employed on an 
unlimited intermittent or temporary basis in the classified and 
unclassified service for the support of army and air national 
guard training facilities; 
    (25) chaplains and nuns who have taken a vow of poverty as 
members of a religious order; 
    (26) labor service employees employed as a laborer 1 on an 
hourly basis; 
    (27) examination monitors employed by departments, 
agencies, commissions, and boards for the purpose of conducting 
examinations required by law; 
    (28) members of appeal tribunals, exclusive of the chair, 
to which reference is made in section 268.10, subdivision 4; 
    (29) persons appointed to serve as members of fact finding 
commissions, adjustment panels, arbitrators, or labor referees 
under the provisions of chapter 179; 
    (30) temporary employees employed for limited periods of 
time under any state or federal program for the purpose of 
training or rehabilitation including persons employed for 
limited periods of time from areas of economic distress except 
skilled and supervisory personnel and persons having civil 
service status covered by the system; 
    (31) full-time students employed by the Minnesota 
historical society who are employed intermittently during part 
of the year and full time during the summer months; 
    (32) temporary employees, appointed for not more than six 
months, of the metropolitan council and of any of its statutory 
boards, the members of which board are appointed by the 
metropolitan council; 
    (33) persons employed in positions designated by the 
department of employee relations as student workers; 
    (34) any person who is 65 years of age or older when 
appointed and who does not have allowable service credit for 
previous employment, unless the employee gives notice to the 
director within 60 days following appointment that coverage is 
desired; 
    (35)  members of trades employed by the metropolitan waste 
control commission with trade union pension plan coverage 
pursuant to a collective bargaining agreement first employed 
after June 1, 1977; and 
    (36) persons employed in subsidized on-the-job training, 
work experience or public service employment as enrollees 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 system to meet the minimum vesting 
requirements for a deferred annuity, or the employer agrees in 
writing on forms prescribed by the 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 
Employment and Training Act, or the person agrees in writing on 
forms prescribed by the director to make the required employer 
contribution in addition to the required employee contribution; 
and 
    (37) persons who are employed as full-time firefighters by 
the department of military affairs and as firefighters are 
members of the public employees police and fire fund. 
    Sec. 3.  Minnesota Statutes 1986, section 352.85, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ELIGIBILITY; RETIREMENT ANNUITY.] Any 
person who is employed by the department of military 
affairs other than as a full-time firefighter, who is covered by 
the general employee retirement plan of the Minnesota state 
retirement system as provided in section 352.01, subdivision 23, 
who is ordered to active duty pursuant to section 190.08, 
subdivision 3, who elects this special retirement coverage 
pursuant to subdivision 4, who is required to retire from 
federal military status at the age of 60 years by applicable 
federal laws or regulations and who terminates employment as a 
state employee upon attaining that age shall be entitled, upon 
application, to a retirement annuity computed in accordance with 
section 352.115, subdivisions 2 and 3, without any reduction for 
early retirement pursuant to section 352.116, subdivision 1. 
     Sec. 4.  Minnesota Statutes 1986, section 352.91, 
subdivision 4, is amended to read:  
    Subd. 4.  Upon the recommendation of the commissioner of 
corrections or the commissioner of human services, whichever is 
the appropriate employing authority, with the approval of the 
legislative advisory committee and with notification to and 
receipt of comments from the legislative commission on pensions 
and retirement, the commissioner of employee relations may 
certify additional civil service classifications at state adult 
correctional or security hospital facilities to the executive 
director of the Minnesota state retirement system as positions 
rendering covered correctional service.  The commissioner of 
corrections and the commissioner of human services must 
establish, in writing, a set of criteria upon which to base a 
recommendation for certifying additional civil service 
classifications as rendering covered correctional service. 
    Sec. 5.  Minnesota Statutes 1986, 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.  
    (o) Employees of an economic development authority created 
under sections 458C.01 to 458C.23. 
    (p) Employees of the department of military affairs of the 
state of Minnesota who are full-time firefighters. 
    Sec. 6.  Minnesota Statutes 1986, section 353.64, is 
amended by adding a subdivision to read: 
    Subd. 8.  [PENSION COVERAGE FOR CERTAIN STATE MILITARY 
AFFAIRS DEPARTMENT FIREFIGHTERS.] A person who is employed as a 
full-time firefighter on or after the first day of the first 
payroll period after the effective date of this section by the 
department of military affairs of the state of Minnesota and who 
is not eligible for coverage under the agreement signed between 
the state and the secretary of the federal Department of Health 
and Human Services making the provisions of the federal Old Age, 
Survivors, and Disability Insurance Act applicable to state 
employees because the person's position is excluded from 
application under United States Code, title 42, sections 
418(d)(5)(A) and 418(d)(8)(D) and section 355.07, is a member of 
the public employees police and fire fund and is considered to 
be a firefighter within the meaning of this section.  The state 
department of military affairs shall make the employee 
contribution deduction from the salary of each full-time 
military affairs department firefighter as required by section 
353.65, subdivision 2, shall make the employer contribution with 
respect to each firefighter as required by section 353.65, 
subdivision 3, and shall meet the employer recording and 
reporting requirements in section 353.65, subdivision 4. 
    Sec. 7.  Minnesota Statutes 1986, section 353.656, 
subdivision 3, is amended to read:  
    Subd. 3.  [NONDUTY DISABILITY BENEFIT.] After June 30, 
1973, Any member who becomes disabled after not less than five 
years of allowable service, before reaching the age of 55, 
because of sickness or injury occurring while not on duty as a 
police officer or firefighter, and by reason thereof of that 
sickness or injury the member is unable to perform duties as a 
police officer or firefighter, shall be entitled to receive a 
disability benefit.  The benefit shall be in the same amount and 
paid in the same manner as if the member were 55 years of age at 
the date of disability and the benefit were paid pursuant to 
section 353.651.  Should If a disability under this clause occur 
subdivision occurs after five but in less than ten years of 
allowable service, the disability benefit shall be the same as 
though the member had at least ten years service.  For any 
member who is employed as a full-time firefighter by the 
department of military affairs of the state of Minnesota, 
allowable service as a full-time state military affairs 
department firefighter credited by the Minnesota state 
retirement system may be used in meeting the minimum allowable 
service requirement of this subdivision. 
    Sec. 8.  Minnesota Statutes 1986, section 353.657, 
subdivision 2a, is amended to read:  
    Subd. 2a.  [DEATH WHILE ELIGIBLE SURVIVOR BENEFIT.] If a 
member who has attained the age of at least 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, a death while eligible survivor benefit.  The benefit 
shall be 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,.  The benefit must be 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.  For a 
member who is employed as a full-time firefighter by the 
department of military affairs of the state of Minnesota, 
allowable service as a full-time state military affairs 
department firefighter credited by the Minnesota state 
retirement system may be used in meeting the minimum allowable 
service requirement of this subdivision. 
    Sec. 9.  [353C.01] [LOCAL GOVERNMENT CORRECTIONAL SERVICE 
RETIREMENT PLAN.] 
    Subdivision 1.  [PLAN ADMINISTRATION; FUND.] The public 
employees local government correctional service retirement plan 
is a separate plan administered by the public employees 
retirement association.  The association shall maintain a 
special fund known as the public employees local government 
correctional service retirement fund.  
    Subd. 2.  [REVENUE SOURCES.] Member contributions under 
section 13, subdivision 1 or 3, and employer contributions under 
section 13, subdivision 1 or 3, and other amounts authorized by 
law, including any investment income or invested fund assets, 
must be deposited in the fund. 
    Subd. 3.  [INVESTMENT.] The public employees local 
government correctional service retirement fund participates in 
the Minnesota postretirement investment fund.  The amounts 
provided in section 353.271 must be deposited in that fund.  The 
balance of any assets of the fund must be deposited in the 
Minnesota combined investment fund as provided in section 
11A.14, if applicable, or otherwise under section 11A.23.  
    Subd. 4.  [COLLECTION OF CONTRIBUTIONS.] The collection of 
member and employer contributions are governed by section 
353.27, subdivisions 4, 7, 8, 9, 10, 11, 12, and 13. 
    Subd. 5.  [FUND DISBURSEMENT RESTRICTED.] The public 
employees local government correctional service retirement fund 
and its share of participation in the Minnesota postretirement 
investment fund may be disbursed only for the purposes provided 
for in this chapter.  The proportional share of the expenses of 
the association and any benefits provided in this chapter, other 
than benefits payable from the Minnesota postretirement 
investment fund, must be paid from the correctional service 
retirement fund.  Retirement annuities, disability benefits, 
survivorship benefits, and any refunds of accumulated deductions 
may be paid only from the correctional service retirement fund 
after those needs have been certified by the executive director 
and the amounts withdrawn from the share of participation in the 
Minnesota postretirement fund under section 11A.18.  The amounts 
necessary to make the payments from the correctional service 
retirement fund and the participation in the Minnesota 
postretirement investment fund are annually appropriated from 
those funds for those purposes.  
    Sec. 10.  [353C.02] [CORRECTIONAL SERVICE EMPLOYEES.] 
    A local government correctional service employee is a 
person who: 
    (1) meets the definition of "essential employee" in section 
179A.03, subdivision 7, excluding state employees, University of 
Minnesota employees, firefighters, peace officers subject to 
licensure under sections 626.84 to 626.855, employees of 
hospitals other than state hospitals, confidential employees, 
supervisory employees other than supervisory employees of 
correctional officers at correctional facilities or city or 
county jails, principals, and assistant principals; 
    (2) is employed by Dakota county, Hennepin county, Ramsey 
county, St. Louis county, or Washington county, if the county 
elects to participate under section 12; 
    (3) is a public employee within the meaning of section 
353.01, subdivisions 2 and 2a; and 
    (4) is not at the time of the exercise of the participation 
option under section 12 a member of the basic program of the 
public employees retirement association or a member of the 
public employees police and fire fund. 
    Sec. 11.  [353C.03] [CORRECTIONAL SERVICE PLAN COVERAGE.] 
    Subdivision 1.  [INITIAL COVERAGE.] A person who is a local 
government correctional service employee on June 30, 1988, is a 
member of the local government correctional service retirement 
plan and shall begin contributing to the plan on July 1, 1988. 
    Subd. 2.  [SUBSEQUENT COVERAGE.] A person who becomes a 
local government correctional service employee after June 30, 
1988, is a member of the local government correctional service 
retirement plan and shall contribute to the plan.  
    Sec. 12.  [353C.04] [LOCAL GOVERNMENT EMPLOYING UNIT 
PARTICIPATION OPTION.] 
    Dakota county, Hennepin county, Ramsey county, St. Louis 
county, or Washington county may elect to provide its 
correctional employees with retirement coverage by the local 
government correctional service retirement plan in lieu of 
retirement coverage by the public employees retirement 
association or the public employees police and fire fund.  The 
election must be made on a form provided by the executive 
director of the public employees retirement association and, 
once made, is irrevocable for all local government correctional 
service employees employed by the county.  
    Sec. 13.  [353C.05] [CORRECTIONAL SERVICE PLAN 
CONTRIBUTIONS.] 
    Subdivision 1.  [MEMBER CONTRIBUTIONS.] Beginning with the 
first full pay period after July 1, 1988, after the effective 
date of the election to provide retirement coverage by the local 
governmental unit, or after becoming a local government 
correctional service employee, whichever is later, in lieu of 
employee contributions payable under section 353.27, subdivision 
2, a local government correctional service employee shall make 
an employee contribution in an amount equal to five percent of 
salary. 
    Subd. 2.  [EMPLOYER CONTRIBUTIONS.] Beginning with the 
first full pay period after July 1, 1988, after the effective 
date of the election to provide retirement coverage by the local 
governmental unit, or after becoming a local government 
correctional service employee, whichever is later, in lieu of 
employer contributions payable under section 353.27, subdivision 
3, the employer shall contribute for a local government 
correctional service employee an amount equal to five percent of 
salary. 
    Subd. 3.  [ADJUSTMENT IN CONTRIBUTION RATES.] Beginning 
with the first full pay period after the actuarial valuation of 
the local government correctional service retirement plan 
prepared by the actuary retained by the legislative commission 
on pensions and retirement is filed with the executive director 
of the public employees retirement association, the member 
contribution rate is a percentage that equals one-half of the 
calculated total actuarial requirement of the plan, and the 
employer contribution rate is the balance of the calculated 
total actuarial requirement of the plan.  
    Sec. 14.  [353C.06] [CORRECTIONAL SERVICE PLAN RETIREMENT 
ANNUITY.] 
    Subdivision 1.  [ELIGIBILITY REQUIREMENTS.] After 
separation from public employment, an employee covered under 
section 10 who has attained the age of at least 55 years and has 
credit for not less than ten years of coverage in the local 
government correctional service plan is entitled, upon 
application, to a normal retirement annuity.  In lieu of a 
normal retirement annuity, a retiring employee may elect to 
receive the optional annuity provided in section 353.30, 
subdivision 3. 
    Subd. 2.  [AVERAGE SALARY BASE.] In calculating the annuity 
under subdivision 3, "average salary" means an amount equivalent 
to the average of the highest salary earned as a local 
government correctional employee upon which employee 
contributions were paid for any five successive years of 
allowable service. 
    Subd. 3.  [ANNUITY AMOUNT.] The average salary as defined 
in subdivision 2, multiplied by two percent for each year of 
allowable service for the first ten years and 2.5 percent for 
each additional year of allowable service, determines the amount 
of the normal annuity.  If a person has earned allowable service 
in the public employees retirement association or the public 
employees police and fire fund for performing services other 
than those of a local government correctional employee, the 
annuity representing such service must be computed in accordance 
with the coordinated formula under sections 353.29 and 353.30 or 
section 353.651, whichever applies. 
    Subd. 4.  [ACCRUAL AND DURATION.] The annuity under this 
section begins to accrue as provided in section 353.29, 
subdivision 7, and must be paid for an additional 84 full 
calendar months or to the first of the month following the month 
in which the employee becomes age 65, whichever occurs first.  
After a recipient has received the annuity calculated under this 
formula for 84 full calendar months or to the first of the month 
following the month in which the employee becomes age 65, 
whichever occurs first, the benefit must be recomputed in 
accordance with the coordinated formula in sections 353.29 and 
353.30, except that if this amount, when added to the social 
security benefit based on state service the employee is eligible 
to receive at that time, is less than the benefit payable under 
subdivision 3, the retired employee must receive an amount 
payable under subdivision 3.  When an annuity is reduced under 
this subdivision, any percentage of adjustments that have been 
applied to the original annuity under section 11A.18, before the 
reduction, must be compounded and applied to the reduced annuity.
    Subd. 5.  [MULTIPLE SERVICE LIMITATION.] A former employee 
who has both regular and local government correctional service 
must, if qualified, receive an annuity based on both periods of 
service, but no period of service may be used more than once in 
calculating the annuity. 
    Sec. 15.  [353C.07] [AUGMENTATION IN CERTAIN CASES.] 
    Unless prior service has been transferred or unless a 
combined service annuity under section 356.30 has been elected, 
an employee who becomes a local government correctional employee 
after being a member of the public employees retirement 
association or the public employees police and fire fund is 
covered under section 353.71, subdivision 2, with respect to 
that prior service.  
    Sec. 16.  [353C.08] [DISABILITY BENEFITS.] 
    Subdivision 1.  [DUTY DISABILITY QUALIFICATION 
REQUIREMENTS.] A local government correctional employee who is 
less than 55 years of age and who becomes disabled and 
physically unfit to perform the duties of the position as a 
direct result of an injury, sickness, or other disability 
incurred in or arising out of any act of duty that renders the 
employee physically or mentally unable to perform the employee's 
duties, is entitled to a disability benefit based on covered 
service only in an amount equal to 45 percent of the average 
salary defined in section 14, subdivision 2, plus an additional 
2.5 percent for each year of covered service in excess of 20 
years.  
    Subd. 2.  [NONDUTY DISABILITY QUALIFICATION 
REQUIREMENTS.] A local government correctional employee who 
after not less than five years of covered service, before 
reaching the age of 55, becomes disabled and physically unfit to 
perform the duties of the position because of sickness or injury 
occurring while not engaged in covered employment, is entitled 
to a disability benefit based on covered service.  The 
disability benefit must be computed in the same manner as an 
annuity under section 14, subdivision 3, and as though the 
employee had at least ten years of covered correctional service. 
    Subd. 3.  [OPTIONAL ANNUITY.] A disabled local government 
correctional employee may elect the normal disability benefit or 
an optional annuity as provided in section 353.30, subdivision 
3.  The election of an optional annuity must be made before the 
commencement of payment of the disability benefit and is 
effective on the date on which the disability benefit begins to 
accrue as provided in section 353.33, subdivision 2.  Upon 
becoming effective, the optional annuity begins to accrue on the 
same date as provided for the disability benefit. 
    Subd. 4.  [DISABILITY BENEFIT APPLICATION.] A claim or 
demand for a disability benefit must be initiated by written 
application in the manner and form prescribed by the executive 
director, filed in the office of the association, showing 
compliance with the statutory conditions qualifying the 
applicant for a disability benefit.  A member or former member 
who became disabled during a period of membership may file an 
application for disability benefits within three years following 
termination of local government correctional service, but not 
after that time has elapsed.  This benefit begins to accrue the 
day following the commencement of disability, 90 days preceding 
the filing of the application, or, if annual or sick leave is 
paid for more than the 90-day period, from the date salary 
ceased, whichever is latest.  No payment may accrue beyond the 
end of the month in which entitlement has terminated.  If the 
disabilitant dies before negotiating the check for the month in 
which death occurs, payment must be made to the optional 
annuitant or beneficiary. 
    Subd. 5.  [DISABILITY BENEFIT TERMINATION.] The disability 
benefit paid to a disabled local government correctional 
employee terminates at the end of the month in which the 
employee reaches age 62.  If the disabled local government 
correctional employee is still disabled when the employee 
reaches age 62, the employee is deemed to be a retired employee 
and, if the employee had elected an optional annuity under 
subdivision 3, must receive an annuity in accordance with the 
terms of the optional annuity previously elected.  If the 
employee had not elected an optional annuity under subdivision 
3, the employee may elect either to receive a normal retirement 
annuity computed in the manner provided in section 14 or to 
receive an optional annuity as provided in section 353.30, 
subdivision 3, based on the same length of service as used in 
the calculation of the disability benefit.  Election of an 
optional annuity must be made before attaining the age of 62 
years.  The reduction for retirement prior to age 65 as provided 
in section 353.30, subdivisions 1 and 1c, is not applicable.  
    Subd. 6.  [RESUMPTION OF EMPLOYMENT.] Should a disabled 
employee resume a gainful occupation from which earnings are 
less than salary received at the date of disability or the 
salary currently paid for similar positions, or should the 
employee be entitled to receive workers' compensation benefits, 
the disability benefit must be continued in an amount that, when 
added to such earnings and workers' compensation benefits, does 
not exceed the salary received at the date of disability or the 
salary currently payable for the same employment position or an 
employment position substantially similar to the one the person 
held as of the date of the disability, whichever is greater. 
    Sec. 17.  [353C.09] [SURVIVING SPOUSE OPTIONAL ANNUITY.] 
    If a member or former member of the local government 
correctional service retirement plan has attained the age of at 
least 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 section 353.32, subdivision 1, an 
annuity equal to the 100 percent joint and survivor annuity for 
which the member could have qualified 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 must be 
computed on the coordinated formula 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 may accrue beyond the end of the month 
in which entitlement to the annuity has terminated.  An amount 
equal to any excess of the accumulated contributions that were 
credited to the account of the deceased employee over and above 
the total of the annuities paid and payable to the surviving 
spouse must be paid to the deceased member's last designated 
beneficiary or, if none, to the legal representative of the 
estate of the deceased member.  A member may specify in writing 
that this subdivision does not apply and that payment must be 
made only to the designated beneficiary, as otherwise provided 
by this chapter. 
    Sec. 18.  [353C.10] [SCOPE AND APPLICATION.] 
    The general provisions of chapter 353 apply to the local 
government correctional service retirement plan except where 
otherwise specifically provided in sections 9 to 18. 
    Sec. 19.  Minnesota Statutes 1986, section 356.20, 
subdivision 2, is amended to read:  
    Subd. 2.  [COVERED PUBLIC PENSION FUNDS.] (1) State 
employees retirement fund. 
    (2) Public employees retirement fund. 
    (3) Teachers retirement fund. 
    (4) State patrol retirement fund. 
    (5) Minneapolis teachers retirement fund association. 
    (6) St. Paul teachers retirement fund association. 
    (7) Duluth teachers retirement fund association. 
    (8) Minneapolis employees retirement fund. 
    (9) University of Minnesota faculty retirement plan. 
    (10) University of Minnesota faculty supplemental 
retirement plan. 
    (11) Judges retirement fund. 
    (12) Any police or firefighter's relief association 
enumerated in section 69.77, subdivision 1a or 69.771, 
subdivision 1. 
    (13) Public employees police and fire fund.  
    (14) Minnesota state retirement system correctional 
officers retirement plan.  
    (15) Public employees local government correctional service 
retirement plan. 
    Sec. 20.  Minnesota Statutes 1986, section 356.30, 
subdivision 3, is amended to read:  
    Subd. 3.  [COVERED FUNDS.] The provisions of this section 
shall apply to the following retirement funds: 
    (1) state employees retirement fund established pursuant to 
chapter 352; 
    (2) correctional employees retirement program, established 
pursuant to chapter 352; 
    (3) unclassified employees retirement plan, established 
pursuant to chapter 352D; 
    (4) state patrol retirement fund, established pursuant to 
chapter 352B; 
    (5) legislators' retirement plan, established pursuant to 
chapter 3A; 
    (6) elective state officers' retirement plan, established 
pursuant to chapter 352C; 
    (7) public employees retirement association, established 
pursuant to chapter 353; 
    (8) public employees police and fire fund, established 
pursuant to chapter 353; 
    (9) teachers retirement fund, established pursuant to 
chapter 354; 
    (10) Minneapolis employees retirement fund, established 
pursuant to chapter 422A; 
    (11) Minneapolis teachers retirement fund association, 
established pursuant to chapter 354A; 
    (12) St. Paul teachers retirement fund association, 
established pursuant to chapter 354A; 
    (13) Duluth teachers retirement fund association, 
established pursuant to chapter 354A; 
    (14) public employees local government correctional service 
retirement plan established by sections 9 to 18. 
    Sec. 21.  Minnesota Statutes 1986, section 356.32, 
subdivision 2, is amended to read:  
    Subd. 2.  [COVERED FUNDS.] The provisions of this section 
shall apply to the following retirement funds: 
    (1) state employees retirement fund, established pursuant 
to chapter 352; 
    (2) correctional employees retirement program, established 
pursuant to chapter 352; 
    (3) state patrol retirement fund, established pursuant to 
chapter 352B; 
    (4) public employees retirement fund, established pursuant 
to chapter 353; 
    (5) public employees police and fire fund, established 
pursuant to chapter 353; 
    (6) teachers retirement fund, established pursuant to 
chapter 354; 
    (7) Minneapolis employees retirement fund, established 
pursuant to chapter 422A; 
    (8) Duluth teachers retirement fund association, 
established pursuant to chapter 354A; 
    (9) Minneapolis teachers retirement fund association, 
established pursuant to chapter 354A; 
    (10) St. Paul teachers retirement fund association, 
established pursuant to chapter 354A; 
    (11) public employees local government correctional service 
retirement plan established by sections 9 to 18. 
    Sec. 22.  Minnesota Statutes 1986, section 424A.02, 
subdivision 9, is amended to read:  
    Subd. 9.  [LIMITATION ON ANCILLARY BENEFITS.] Any relief 
association, including any volunteer firefighters relief 
association governed by section 69.77 or any volunteer 
firefighters division of a relief association governed by 
chapter 424, may only pay ancillary benefits which would 
constitute an authorized disbursement as specified in section 
424A.05 subject to the following limitations: 
    (a) With respect to a relief association in which governing 
bylaws provide for a lump sum service pension to a retiring 
member, no ancillary benefit may be paid to any former member or 
paid to any person on behalf of any former member after the 
former member (1) terminates active service with the fire 
department and active membership in the relief association; and 
(2) commences receipt of a service pension as authorized 
pursuant to this section; and 
    (b) With respect to any relief association, no ancillary 
benefit paid or payable to any member, to any former member, or 
to any person on behalf of any member or former member, may 
exceed in amount the total earned service pension of the member 
or former member.  The total earned service pension shall be 
calculated using the service pension amount specified in the 
bylaws of the relief association and the years of service 
credited to the member or former member.  The years of service 
shall be determined as of (1) the date the member or former 
member became entitled to the ancillary benefit; or (2) the date 
the member or former member died entitling a survivor or the 
estate of the member or former member to an ancillary benefit.  
The ancillary benefit shall be calculated (1) without regard to 
whether the member or former member had attained the minimum 
amount of service and membership credit specified in the 
governing bylaws; and (2) without regard to the percentage 
amounts specified in subdivision 2; except that the bylaws of 
any relief association may provide for the payment of a survivor 
benefit in an amount not to exceed five times the yearly service 
pension amount specified in the bylaws on behalf of any member 
who dies before having performed five years of active service in 
the fire department with which the relief association is 
affiliated. 
    Sec. 23.  [EFFECTIVE DATE.] 
    Sections 2, 3, 5, 6, 7 and 8 are effective the first day of 
the first full pay period beginning after final enactment.  
Sections 9 to 21 are effective January 1, 1988.  The remaining 
sections are effective the day following final enactment. 

                               ARTICLE 2 

        VARIOUS NONSTATEWIDE PUBLIC SAFETY PENSION PLAN CHANGES 
    Section 1.  Minnesota Statutes 1986, section 424.04, is 
amended to read:  
    424.04 [MEMBERS.] 
    Subdivision 1.  [PAID FIREFIGHTERS.] Every paid 
firefighter, as defined in section 424.03, shall be eligible to 
apply for membership in the relief association in the city in 
which the person is employed within the time and in the manner 
hereinafter set forth.  Any firefighter desiring to become a 
member shall, not later than 90 days from the time when the 
person is regularly entered on the payrolls of the fire 
department, make written application for membership in the 
relief association on forms supplied by the association, 
accompanied by one or more physician's certificates as required 
by the bylaws of the association.  After the application has 
been filed, the board of examiners of the association shall make 
a thorough investigation thereof and file their report with the 
secretary of the association.  An application shall be acted 
upon by the association within six months from the date 
applicant was entered on the payroll of the fire department.  No 
paid firefighter who is more than 35 years of age when the 
application of the person is filed shall become a member of the 
relief association, except that this age limitation shall not 
apply on application for reinstatement in the association. 
    Subd. 2.  [VOLUNTEER FIREFIGHTERS.] Every volunteer 
firefighter shall be eligible to apply for membership in the 
relief association and shall make written application for 
membership in the relief association on forms supplied by the 
association not later than 90 days from the date on which the 
person commenced service as a volunteer firefighter.  No 
application from a person who is ineligible for membership 
pursuant to section 424A.01, subdivision 1 or 2 or who is 
excluded as constituting an unwarranted health risk pursuant to 
section 424A.01, subdivision 4 shall be approved by the 
association.  The application shall be acted upon by the 
association within six months from the date on which the person 
commenced service as a volunteer firefighter.  No volunteer 
firefighter who is more than 35 years of age when appointed to 
serve in any capacity performing any firefighting duties with a 
fire department shall become a member of the relief association, 
except that this age limitation shall not apply on any 
application for reinstatement in the association. 
    Sec. 2.  Laws 1949, chapter 406, section 5, subdivision 1, 
as amended by Laws 1953, chapter 127, section 5, subdivision 1, 
Laws 1969, chapter 560, section 1, and Laws 1983, chapter 88, 
section 8, is amended to read: 
    Subdivision 1.  [PERSONS MINNEAPOLIS POLICE; PERSONS 
ENTITLED TO RECEIVE.] The association shall grant pensions 
payable from the policemen's police pension fund in monthly 
installments, in the manner and for the following purposes: 
    (1) Any active member of the age of 50 years or more, and 
any deferred pensioner who performs has performed duty as a 
member of the police department of the city for 20 five years or 
more, upon his written application after retiring from such duty 
, shall and reaching at least age 50 is entitled to be paid 
monthly during his lifetime a for life a service pension equal 
to 32 units and an additional unit for each year of such service 
in excess of 20 years, but after completion of the 25th year of 
service the member shall receive 40 units thereafter. 
    (2) Any active member who performs duty as a member of the 
police department of the city for 20 years or more who retires 
from such duty before he attains the age of 50 years, upon his 
written application after reaching the age of 50 years shall be 
paid monthly during his lifetime a pension equal to 32 units and 
an additional unit for each year of such service in excess of 20 
years, but after completion of the 25th year of service the 
member shall receive 40 units thereafter eight units.  For full 
years of service beyond five years, the service pension 
increases to a maximum of 40 units, as follows: 
    Sixth through 20th years ............ 1.6 units per year 
    21st through 24th years ............. 1.0 units per year 
    25th year ........................... 4.0 units. 
    Fractional years of service may not be used in computing 
pensions. 
    (3) To (2) Any active member who shall, after ten five 
years' service but with less than 20 years' service with the 
police department of the city, become becomes superannuated so 
as to be permanently unable to perform his assigned duties, 
there shall be paid monthly during his lifetime for life a 
pension equal to 12 two units for ten five years of service and 
an additional two units for each completed full year of such 
service over ten five years and less than 20 years. 
    (4) To (3) Any active member not eligible for a service 
pension who, while a member of the police department of the 
city, becomes diseased or sustains an injury while in the 
service which permanently unfits him the member for the 
performance of police duties, there shall be paid monthly during 
his lifetime for life a pension equal to 32 units while so 
disabled. 
    Sec. 3.  Laws 1949, chapter 406, section 5, subdivision 3, 
as amended by Laws 1953, chapter 127, section 5, subdivision 2, 
and Laws 1983, chapter 88, section 9, is amended to read: 
    Subd. 2.  [PAYMENTS, MEMBER SEPARATED FROM THE SERVICE 
MINNEAPOLIS POLICE; REFUNDS PROHIBITED.] If an active member of 
the police department of the city is separated from the service 
after having completed not less than five years of service, 
under such circumstances that no pension benefits are payable to 
him or to his widow or to his children, the association shall 
return to him the sum of $500, with an additional $100 for each 
completed year of service in excess of five.  In the event the 
member is reinstated to police duty all moneys paid him shall be 
returned to the pension fund within six months from the date of 
the reinstatement.  Failure to do so relieves the association 
from any liability as to prior years of service credit as to 
reinstatement date.  In case of the death of the member any such 
sums shall be paid to his heirs, executors, or administrators No 
refund of contributions may be made upon separation from service;
provided, however, that if an active member dies leaving no 
surviving spouse or children the member's heirs, executors, or 
administrators are entitled to a refund of $100 for each 
completed year of service. 
    Sec. 4.  Laws 1949, chapter 406, section 6, subdivision 1, 
as amended by Laws 1953, chapter 127, section 6, and Laws 1967, 
chapter 820, section 1, is amended to read: 
    Subdivision 1.  [MINNEAPOLIS POLICE SURVIVOR BENEFITS; 
PERSONS TO WHOM GRANTED.] The association shall grant pensions 
or benefits payable from the policemen's police pension fund to 
any member or to any widow surviving spouse or to any child 
under 18 years of age or any member from the time and for the 
following purposes: 
    When a service pensioner, disability pensioner, or deferred 
pensioner, or an active member of a relief association dies, 
leaving 
    (1) a widow surviving spouse, who was his a legally married 
wife spouse, residing with him the decedent, and who was married 
while or prior to the time he the decedent was on the payroll of 
the police department; and who, in case the deceased member was 
a service or deferred pensioner, was legally married to the 
member at least one year before his retirement from the police 
department; or 
    (2) a child or children, who were living while the deceased 
was on the payroll of the police department or born within nine 
months after the decedent was withdrawn from such the payroll, 
the widow surviving spouse and child, or children, shall be 
entitled to a pension, or pensions, as follows: 
    (a) To the widow surviving spouse of a deceased active 
member or disabilitant, a pension of 18 units per month for 
life.  If the surviving spouse remarries, the pension ceases as 
of the date of the remarriage. 
    (b) To the surviving spouse of a deceased deferred or 
retired member, a pension of 18 4.5 units per month for her 
natural life; but, plus an additional nine-tenths of one unit 
per month for every year of service of the decedent beyond five 
years to a maximum of 18 units.  If she remarry the surviving 
spouse remarries the pension shall cease ceases as of the date 
of the remarriage. 
    (b) (c) To each child of a deceased active member or 
disabilitant, a pension of six units per month until the child 
reaches the age of 18 years; or in the case of a child in 
full-time attendance during the normal school year, in a school 
approved by the board of directors, until the child receives a 
bachelor's degree or attains the age of 22 years, whichever 
occurs first. 
    (d) To each child of a deceased deferred or retired member, 
a pension of 1.5 units per month plus three-tenths of one unit 
per month for every year of service of the decedent beyond five 
years to a maximum of six units until the child reaches the age 
of 18 years; or, in the case of a child in full-time attendance 
during the normal school year in a school approved by the board 
of directors, until the child receives a bachelor's degree or 
attains the age of 22 years, whichever is first. 
    The total pensions hereunder for the widow surviving spouse 
and children of a deceased member shall not exceed 32 units per 
month. 
    Sec. 5.  Laws 1980, chapter 607, article 15, section 9, is 
amended to read: 
    Sec. 9.  [MINNEAPOLIS POLICE AND FIRE; HEALTH AND WELFARE 
BENEFIT.] Notwithstanding any law to the contrary, any person 
who, after July 1, 1980, retires on a service pension with at 
least 20 years of service or a permanent disability benefit from 
the Minneapolis police relief association or the Minneapolis 
firefighters relief association shall be entitled on January 1, 
1981, or upon the date of retirement, whichever occurs later, to 
receive a monthly health and welfare benefit unless the city of 
Minneapolis elects to retain the local relief association by the 
adoption of a municipal resolution pursuant to section 4, 
subdivision 1.  The monthly health and welfare benefit shall be 
an amount equal to one unit as defined pursuant to Laws 1963, 
Chapter 315, Section 1, Subdivision 3, for the Minneapolis 
police relief association, or Minnesota Statutes, Section 69.45, 
for the Minneapolis firefighters relief association, whichever 
is applicable.  The monthly health and welfare benefit shall be 
paid to the retired member unless the retired member designates 
in writing that the amount be paid to an insurance carrier to 
defray the cost of any health or welfare related insurance 
coverage. 
    Sec. 6.  Laws 1949, chapter 406, section 4, subdivisions 2 
and 3, as amended by Laws 1953, chapter 127, section 4; Laws 
1965, chapter 534, section 1; Laws 1967, chapter 825, section 1; 
Laws 1969, chapter 258, section 1; Laws 1973, chapter 272, 
section 1; Laws 1975, chapter 428, section 1; and Laws 1983, 
chapter 88, section 7, is amended to read: 
    Sec. 7.  [MINNEAPOLIS, CITY OF; POLICEMEN'S PENSIONS.] 
    The policemen's pension fund shall be used only for the 
payment of: 
    (a) Service, disability or dependency pensions; 
    (b) Salaries of the secretary of the association in an 
amount not to exceed 30 percent of the base salary of a 
top-grade patrolman and of the president of the association in 
an amount not to exceed ten percent of the base salary of a 
top-grade patrolman; 
    (c) Expenses of officers and employees of the association 
in connection with the protection of the fund; 
    (d) All expenses of operating and maintaining the 
association; 
    (e) Hospital and medical insurance for pensioners who have 
completed 20 years or more of service or permanent disabilitants 
and widows surviving spouses of deceased active members, 
disabilitants, or service pensioners who have completed 20 years 
or more of service of one unit per month, such one unit to be 
added to the pension otherwise provided for herein; provided 
that a pensioner or widow surviving spouse may in writing 
authorize a deduction from their pension for an insurance plan 
adopted by the association; 
    (f) Health and welfare benefits of one unit per month in 
addition to other benefits for members who retire after July 1, 
1980, and have completed 20 years or more of service or members 
who are permanent disabilitants; and 
    (g) Other expenses authorized by law. 
    Sec. 7.  Laws 1967, chapter 678, section 2, as amended by 
Laws 1971, chapter 807, section 2, and Laws 1983, chapter 74, 
section 1, is amended to read:  
    Sec. 2.  [HIBBING POLICE; SURVIVING SPOUSES, CHILDREN; 
AMOUNT OF PENSION.] Notwithstanding any other provision of law 
or charter, pensions may be paid by the police relief 
association of the city of Hibbing to any surviving spouse or 
child under 16 18 years of age of any pensioned and retired 
member of the police department, and to any surviving spouse or 
child under 16 18 years of age of any member who dies while in 
the service of the police department of the city.  The surviving 
spouse or child shall receive not more than the sums herein 
provided.  
    $250 per month to the surviving spouse, and $15 per month 
to each child under 16 years of age.  Survivor benefits shall be 
the following percentages of the average salary of the deceased 
member during the last six months of employment by the police 
department:  
    (1) surviving spouse, 30 percent; 
    (2) surviving child under 18, 10 percent; 
    (3) maximum family benefit, 50 percent. 
    Where a surviving spouse and children reside together the 
money herein required to be paid to the children shall be paid 
to the surviving spouse for the support of the children, but 
that money paid to the surviving spouse for the surviving spouse 
and children shall not exceed $280 per month in all.  In the 
event of the death of both parents leaving a minor child or 
children under the age of 16 18 years of age, entitled to a 
pension, the sums as may be necessary for the care, maintenance 
and education of the child or children may be paid to the legal 
guardian thereof, but not to exceed the sum of $280 per month to 
the children of any one police officer maximum family benefit.  
In the event that surviving spouse remarries, he or she shall 
receive no further benefits under this law.  The fund shall not 
be used for any other purpose than the payment of service, 
disability or dependency pensions, as herein provided, and for 
the relief of a sick, injured and disabled police officer.  The 
word "member", as used in this act, shall include policewomen, 
police matrons and assistant police matrons.  
    Sec. 8.  Laws 1977, chapter 169, section 1, subdivision 1a, 
as amended by Laws 1982, chapter 443, section 1, is amended to 
read:  
    Subd. la.  [HIBBING, CITY OF; FIREFIGHTERS; SERVICE 
PENSIONS; INCREASE IN CERTAIN PENSIONS.] The Hibbing 
firefighters relief association shall pay to any retired fireman 
who retired prior to September 1, 1972, $200 $300 per month in 
addition to any service pension payable pursuant to subdivision 
1.  
    Sec. 9.  Laws 1971, chapter 614, section 1, subdivision 2, 
as amended by Laws 1982, chapter 443, section 2, is amended to 
read:  
    Subd. 2.  [HIBBING FIRE; DEPENDENCY PENSIONS.] When a 
pensioned and retired or active member of the association dies 
leaving 
    (1) A widow surviving spouse who was his the member's 
legally married wife spouse, residing with him the member, and 
who was married to him the member while or prior to the time he 
the member was on the payroll of the fire department; and who, 
in case the deceased member was a service pensioner, was legally 
married to the member at least three years before his retirement 
from the fire department; or 
    (2) A child or children who were living while the deceased 
was on the payroll of the fire department, or born within nine 
months after the decedent was withdrawn from the payroll of the 
fire department, the widow surviving spouse and the child or 
children shall be entitled to a pension or pensions based upon 
the following percentages of the average salary of the deceased 
member during the last six months of employment by the fire 
department, as follows:  
    (a) To the widow surviving spouse, not to exceed the sum of 
$250 30 percent of average salary per month, as the bylaws of 
the association provide, for her natural life which amount may 
be applicable to widows surviving spouses already receiving 
pension payments before the effective date of the most recent 
amendment hereto which affects the amount if the bylaws should 
so provide; provided, that.  If she the surviving spouse shall 
remarry then the pension shall cease and terminate as of the 
date of her remarriage;  
    (b) To the child or children, if their mother other parent 
be living, a pension of not to exceed $25 ten percent of average 
salary per month for each child up to the time each child 
reaches the age of 18 years; provided, the total pensions 
hereunder for the widow surviving spouse and children of the 
deceased member shall not exceed the sum of $280 50 percent of 
average salary per month; 
    (c) A child or children of a deceased member receiving a 
pension or pensions hereunder shall, after the death of 
their mother other parent, be entitled to receive a pension or 
pensions in such amount as the board of trustees of the 
association shall deem necessary to properly support the child 
or children until they reach the age of 18 years; but the total 
amount of the pension or pensions hereunder for any child or 
children shall not exceed the sum of $280 50 percent of average 
salary per month. 
    Sec. 10.  Laws 1967, chapter 751, section 2, is amended to 
read:  
    Sec. 2.  [WEST ST. PAUL POLICE; SERVICE PENSION.] 
    Subdivision 1.  [PENSION AMOUNT.] Notwithstanding Minnesota 
Statutes, Section 423.384, the service pension of a member of 
the policemen's police relief association of the city of West 
St. Paul who is qualified for a pension in accordance with 
Section 423.384 at the time of retirement shall be one-half of 
the regular salary of a top grade patrolman patrol officer at 
the time the member retires. 
    Subd. 2.  [SALARY DEFINED.] "Regular salary of a top grade 
patrol officer" includes the highest amount of longevity pay 
which is payable to a top grade patrol officer. 
    Subd. 3.  [POSTRETIREMENT ADJUSTMENTS.] Service pensions 
must be adjusted in accordance with Minnesota Statutes, section 
423A.01, subdivision 4.  
    Sec. 11.  [DISSOLUTION OF CLIFTON VOLUNTEER FIREFIGHTERS 
RELIEF ASSOCIATION; TRANSFER OF ASSETS AND SERVICE CREDIT.] 
    Notwithstanding the provisions of Minnesota Statutes, 
section 424A.02, subdivisions 11 and 12, if the Clifton 
independent nonprofit firefighting corporation disbands and the 
Clifton volunteer firefighters relief association established as 
provided in Minnesota Statutes, chapter 424A, is dissolved, the 
assets of the Clifton volunteer firefighters relief association 
must be transferred to any volunteer firefighters relief 
association governed by Minnesota Statutes, chapter 424A, 
applicable to the township of Duluth, county of St. Louis.  Upon 
the transfer of assets, the receiving volunteer firefighters 
relief association is the successor in interest for all claims 
for and against the Clifton volunteer firefighters relief 
association, except any claim against the relief association, 
the Clifton independent nonprofit firefighting corporation, or 
any person connected with either in a fiduciary capacity, based 
on any acts that were not done in good faith and that 
constituted a breach of the obligation as a fiduciary.  As a 
successor in interest, the receiving volunteer firefighters 
relief association may assert any applicable defense in any 
judicial proceeding that the Clifton volunteer firefighters 
relief association or the Clifton independent nonprofit 
firefighting corporation would have otherwise been entitled to 
assert. 
    Upon transfer of the assets of the Clifton volunteer 
firefighters relief association, a person with credit for 
service in the Clifton volunteer firefighters relief association 
must receive an equal amount of service credit in the receiving 
volunteer firefighters relief association. 
    Sec. 12.  [MANKATO POLICE; ESCALATION OF CERTAIN BENEFITS.] 
    Notwithstanding Minnesota Statutes, section 423.384, or any 
other law, the Mankato police benefit association may amend its 
articles or bylaws to provide for computation of postretirement 
increases for retired members for whom there exists no 
equivalent rank in the public safety department, by the same 
percentage increase granted retired first class patrol officers 
in any year.  The Mankato city council shall ratify the 
amendment as required by section 69.77, subdivision 2i, but the 
council may forego the actuarial valuation or estimate required 
by that subdivision.  
    Sec. 13.  [MILLERVILLE FIREFIGHTERS RELIEF ASSOCIATION; 
PRIOR SERVICE IN SERVICE PENSION COMPUTATIONS.] 
    Notwithstanding any provision of Minnesota Statutes, 
sections 69.771 to 69.776 or chapter 424A to the contrary, the 
Millerville 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. 14.  [VIRGINIA FIREFIGHTERS' RELIEF ASSOCIATION; 
SURVIVING SPOUSES' BENEFITS.] 
    Notwithstanding any law to the contrary, the survivor 
benefit payable to a surviving spouse of a deceased member of 
the Virginia firefighters' relief association is increased by 
$100 per month. 
     Sec. 15.  [SAVINGS CLAUSE.] 
    Nothing in sections 2 to 6 impairs or diminishes the 
benefits paid to members, spouses, or children of a member of 
the Minneapolis police relief association or the entitlement 
that members, spouses, or children had to benefits before the 
effective date of sections 2 to 6. 
    Sec. 16.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment.  
Sections 2 to 6 and 15 are effective upon approval by the 
Minneapolis city council and compliance with Minnesota Statutes, 
section 645.021.  Sections 7 to 9 are effective upon approval by 
the Hibbing city council and compliance with Minnesota Statutes, 
section 645.021.  Section 10 is effective as approved by the 
governing body of the city of West St. Paul and if there is 
compliance with Minnesota Statutes, section 645.021, and the 
increase in service pensions payable due to section 10 is 
initially payable on January 1, 1988, and is applicable to any 
member of the West St. Paul police relief association who 
retired on or after February 1, 1985.  Section 11 is effective 
upon approval by the Clifton independent nonprofit firefighting 
corporation and the approval of the governing body of the 
township of Duluth and compliance with Minnesota Statutes, 
section 645.021.  Section 12 is effective upon approval by the 
Mankato city council and compliance with Minnesota Statutes, 
section 645.021.  Section 13 is effective upon approval by the 
governing body of the city of Millerville and compliance with 
Minnesota Statutes, section 645.021.  Section 14 is effective 
upon approval by the Virginia city council and compliance with 
Minnesota Statutes, section 645.021.  

                               ARTICLE 3 

            MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION 

                   BENEFIT MODIFICATION AUTHORIZATION 
    Section 1.  [MINNEAPOLIS TEACHERS RESTRUCTURING OF 
RETIREMENT BENEFITS; POSTRETIREMENT ADJUSTMENT MECHANISM.] 
    (a) In accordance with Minnesota Statutes, section 354A.12, 
subdivision 4, approval is granted for the Minneapolis teachers 
retirement fund association to amend its articles of 
incorporation by repealing article IX, subsection (18), 
authorizing lump sum postretirement adjustments payable to 
retirees or beneficiaries. 
    (b) In accordance with Minnesota Statutes, section 354A.12, 
subdivision 4, if the repeal authorized by paragraph (a) occurs, 
approval is granted for the Minneapolis teachers retirement fund 
association to amend or make an addition to its articles of 
incorporation as provided in paragraphs (c) to (g). 
    (c) Article IX, subsection (11), authorizing formula 
retirement annuity benefits, may be amended to authorize all 
teachers who retired before June 1, 1985, other than persons 
receiving a money purchase annuity under article IX, subsection 
(3), receiving a C death benefit under article IX, subsection 
(4), item C, or receiving a total disability benefit under 
article IX, subsection (5), to receive as of the first day of 
the month following the effective date of the amendment a 
recomputed annuity determined according to the 1975 revised 
formula annuity without regard to the 30-year service limitation 
applicable to teachers who retired after May 1, 1974, and before 
June 1, 1985. 
    (d) Article IX, subsection (14) D, providing an annual 
automatic annuity increase of 1-1/2 percent to all annuitants 
who have been receiving an annuity for at least 24 months and 
who have attained the age of 65 may be amended to increase the 
annual automatic increase annuity to two percent per fiscal year 
on January 1, or July 1, whichever applies, and to extend 
eligibility for that increase annuity to all annuitants who have 
been receiving an annuity for at least 12 months, irrespective 
of the attained age of the annuitant. 
    (e) Article IX, subsection (14), may be amended by adding a 
provision authorizing an increase in the annuity of any 
annuitant who retired on or before July 1, 1986, in the amount 
of four percent of the annuity the member is otherwise eligible 
to receive on July 1, 1987, including any other increases 
granted as of that date under articles of incorporation 
amendments authorized by the section but excluding the annual 
automatic increase annuity payable under article IX, subsection 
(14), item D, on July 1, 1987, for each full year that the 
member has been retired and receiving an annuity, to a maximum 
of 20 percent. 
    (f) Article IX, subsection (14), may be amended by adding a 
provision authorizing payment, as of July 1, 1987, of an 
increase in a normal retirement annuity, joint and survivor 
annuity or term certain optional annuity of retired teachers of 
the positive dollar amount difference between a minimum normal 
retirement annuity equal to $25 per month for each full year of 
teaching service, to a maximum of 30 years, and the amount of 
the normal retirement annuity, joint and survivor annuity or 
term certain optional annuity payable on June 1, 1987, to 
retired teachers who were members of the basic program, who 
ceased active teaching service in the city public schools, who 
are receiving a normal retirement annuity, and who have not 
withdrawn a portion of required member deposits upon applying 
for the normal retirement annuity.  If the difference is not a 
positive dollar amount, no increase is payable and no reduction 
may be imposed.  For persons to whom a remainder portion of a 
joint and survivor annuity or a term certain optional annuity is 
payable, a proportional increase is payable. 
    (g) Article IX may be amended by adding a new subsection 
providing for an investment related postretirement adjustment 
mechanism.  An annual postretirement may be paid if there is any 
excess investment income.  The determination must be made by the 
board of trustees in consultation with the actuary retained by 
the legislative commission on pensions and retirement.  The fund 
has excess investment income if the time weighted total rate of 
return earned by the fund over the most recent three year fiscal 
year period has exceeded the rate of eight percent or the 
applicable postretirement interest rate assumption specified in 
Minnesota Statutes, section 356.215, subdivision 4d, whichever 
is greater.  In determining the total rate of return, the board 
shall use the formula or formulas established by the state board 
of investment under Minnesota Statutes, section 11A.04, clause 
(11), and in effect on January 1, 1987.  The amount by which the 
excess investment income exceeds the minimum interest rate must 
be expressed as a percentage and carried to four decimal 
places.  An annual postretirement adjustment is payable to a 
person who is receiving an annuity under article IX, subsection 
(8), (9), or (11), or article XI, subsection (5), who is 
receiving a death benefit under article IX, subsection (4), or 
who is receiving a joint and survivor annuity or term certain 
optional annuity under article IX, subsection (2), clause (b) or 
(c), and who has received the annuity or benefit in the person's 
own right or in combination with the initial recipient of the 
annuity for at least 12 months as of the determination date.  
The determination date is June 30, and determinations must be 
made as soon as practicable after that date.  The board of 
trustees shall determine the percentage amount of the 
postretirement adjustment payable, but the percentage amount may 
not exceed the amount by which the excess investment income 
exceeds the minimum interest rate.  The board of trustees shall 
include in the provision criteria to govern the exercise of its 
discretion in determining the instances under which an annual 
postretirement adjustment of less than the full determined 
percentage is payable.  The annual postretirement adjustment is 
payable on January 1 following the determination date and is 
payable for the duration of the annuity or benefit. 
    Sec. 2.  [WITHDRAWAL OF AUTHORITY.] 
    The authority for the amendment of article IX of the 
articles of incorporation of the Minneapolis teachers retirement 
fund association adding subsection (18) to provide a lump sum 
postretirement adjustment to certain annuitants and survivor 
benefit recipients under Laws 1981, chapter 159, section 1, 
clause (1), is withdrawn. 
    Sec. 3.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective the day following final 
enactment. 

                               ARTICLE 4 

              AUTHORIZATION OF PURCHASES OF PRIOR SERVICE 
    Section 1.  [PURCHASE OF PRIOR SERVICE CREDIT 
AUTHORIZATION.] 
    Subdivision 1.  [PURCHASE ELIGIBILITY.] (a) Notwithstanding 
the limitations in Minnesota Statutes, section 353.36, 
subdivision 2, a person whose employment with the Roseau county 
highway department began in September 1961, but for whom no 
salary deductions were taken out for the public employees 
retirement association until June 1965, may purchase credit for 
the prior public service for which salary deductions were 
omitted by paying to the association.  Eligibility to make the 
purchase of prior service credit expires on January 1, 1988.  
    (b) Notwithstanding any law to the contrary, a person who 
is currently a teacher in the North St. Paul school district, 
who was on unpaid medical leave during the 1975-1976 and 
1976-1977 school years and who was born on November 13, 1926 may 
purchase credit in the teachers retirement association for the 
periods of unpaid medical leave.  Eligibility to make the 
purchase of prior service credit expires on January 1, 1988.  
    Subd. 2.  [PURCHASE PAYMENT AMOUNT.] For any person 
eligible to purchase credit for prior service as provided in 
subdivision 1, there must be paid to the applicable retirement 
association an amount equal to the present value, on the date of 
payment, of the amount of the additional retirement annuity that 
would be obtained by virtue of the purchase of the additional 
service credit, using the interest rate specified in Minnesota 
Statutes, section 356.215, subdivision 4d, and the applicable 
mortality table adopted for the applicable retirement 
association and assuming continuous future service in the 
retirement system until, and retirement at, the age at which the 
minimum requirements of the retirement association for normal 
retirement or retirement with an annuity unreduced for 
retirement at an early age, including Minnesota Statutes, 
section 356.30, are met with the additional service credit 
purchased, for the retirement association, and a future salary 
history that includes annual salary increases at the rate 
specified in Minnesota Statutes, section 356.215, subdivision 
4d.  The person requesting the purchase of prior service must 
establish in the records of the retirement association proof of 
the service for which the purchase of prior service is 
requested.  The manner of the proof of service must be in 
accordance with procedures prescribed by the executive director 
of the applicable retirement association. 
    Subd. 3.  [PAYMENT; CREDITING SERVICE.] Payment must be 
made in one lump sum, unless the executive director of the 
applicable retirement association agrees to accept payment in 
installments over a period not to exceed three years from the 
date of the agreement, with interest at a rate deemed 
appropriate by the executive director.  The period of allowable 
service may be credited to the account of the person only after 
receipt of full payment by the executive director. 
    Subd. 4.  [OPTIONAL EMPLOYER PARTIAL PAYMENT.] Payment must 
be made by the person entitled to purchase prior service; 
however, the current or former employer of the person may, at 
its discretion, pay all or any portion of the payment amount 
that exceeds an amount equal to the employee contribution rates 
in effect for the retirement fund during the period or periods 
of prior service applied to the actual salary rates in effect 
during the period or periods of prior service, plus interest at 
the rate of six percent a year compounded annually from the date 
on which the contributions would otherwise have been made to the 
date on which the payment is made. 
    Sec. 2.  [PURCHASE OF PRIOR SERVICE BY CERTAIN EMPLOYEES.] 
    Notwithstanding any other law, a person who was employed by 
the University of Minnesota hospitals pharmacy department and 
was a member of the Minnesota state retirement system from 
October 2, 1967, to March 31, 1968, and who was appointed to a 
faculty position in the University of Minnesota pharmacy 
department and became a member of the retirement plan for 
university faculty members on April 1, 1968, and who on 
September 23, 1974, returned to state service and to membership 
in the Minnesota state retirement system as an employee of the 
department of human services may withdraw his account balance 
from the retirement plan for university faculty members and may 
purchase service credit in the Minnesota state retirement system 
for the time spent as a university faculty member.  A person 
covered by this section may purchase that service credit by 
paying to the Minnesota state retirement system, by January 1, 
1988, an amount equal to all employee, employer, and additional 
employer contributions at the rates in effect when the service 
as a faculty member was rendered plus interest at the rate of 
six percent a year from the year of purchase to the date payment 
is made. 
    Sec. 3.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective the day following final 
enactment.  

                               ARTICLE 5 
AMBULANCE SERVICE PERSONNEL RETIREMENT PLAN 
    Section 1.  [353D.01] [AMBULANCE SERVICE PERSONNEL 
RETIREMENT PLAN.] 
    Subdivision 1.  [ESTABLISHMENT.] The ambulance service 
personnel retirement plan is administered by the public 
employees retirement association under supervision of the 
association board of directors.  To assist it in governing the 
operations of the plan, the board may appoint an advisory 
committee of not more than seven members who are representative 
of ambulance service operators and ambulance service personnel.  
    Subd. 2.  [COVERAGE.] Coverage under the retirement plan is 
open to basic and advanced life support emergency medical 
service personnel employed by or providing services for any 
public ambulance service or privately operated ambulance service 
that receives an operating subsidy from a governmental entity 
that elects to participate.  First response personnel and 
emergency medical service personnel who are currently covered by 
a public or private pension plan because of their employment or 
provision of services are not eligible to participate in the 
plan.  
    Sec. 2.  [353D.02] [ELECTION OF COVERAGE.] 
    Each public ambulance service or privately operated 
ambulance service that receives an operating subsidy from a 
governmental entity with eligible personnel may elect to 
participate in the plan.  If a service elects to participate, 
its eligible personnel may elect to participate or to decline to 
participate.  An individual's election must be made within the 
latter of 30 days of the service's election to participate or 30 
days of the date on which the individual was employed by the 
service or began to provide service for it.  An election by a 
service or an individual is irrevocable. 
    Sec. 3.  [353D.03] [FUNDING OF PLAN.] 
    A public ambulance service or privately operated ambulance 
service that receives an operating subsidy from a governmental 
entity that elects to participate in the plan shall fund 
benefits for its qualified personnel who individually elect to 
participate, except that personnel who are paid for their 
services may elect to make member contributions in an amount not 
to exceed the service's contribution on their behalf.  Ambulance 
service contributions on behalf of salaried employees must be a 
fixed percentage of salary.  An ambulance service making 
contributions for volunteer or largely uncompensated personnel 
may assign a unit value for each call or each period of alert 
duty for the purpose of calculating ambulance service 
contributions. 
    Sec. 4.  [353D.04] [CONTRIBUTIONS TO PLAN.] 
    Ambulance service contributions to the plan may be made 
from any source of funds available to the ambulance service.  
Contributions must be remitted monthly to the association 
together with any member contributions paid or withheld during 
the preceding month.  Contributions shall be credited to the 
individual account of each participating member.  
    Sec. 5.  [353D.05] [INVESTMENT OF FUNDS.] 
    Subdivision 1.  [INVESTMENT.] Ambulance service 
contributions, after the deduction of an amount for 
administrative expenses, and member contributions must be 
remitted to the state board of investment for investment in the 
Minnesota supplemental investment fund established by section 
11A.17. 
    Subd. 2.  [INVESTMENT OPTIONS.] (a) An individual 
participant may elect to purchase shares in the income share 
account, the growth share account, the money market account, the 
bond market account, or the common stock index account 
established by section 11A.17, or a combination of those 
accounts.  The participant may elect to purchase shares in a 
combination of those accounts by specifying the percentage of 
contributions to be used to purchase shares in each of the 
accounts. 
    (b) Twice in a calendar year, a participant may indicate in 
writing a choice of options for subsequent purchases of shares.  
Thereafter, until the participant makes a different written 
indication, the executive director of the association shall 
purchase shares in the supplemental investment fund or funds 
specified by the participant.  If no initial option is indicated 
by a participant, the executive director shall invest all 
contributions made by or on behalf of a participant in the 
income share account.  A choice of investment options is 
effective no later than the first pay date first occurring more 
than 30 days after receipt of the written choice of options. 
    (c) Twice in a calendar year, a participant or former 
participant may also change the investment options selected for 
all or a portion of the individual's previously purchased 
shares.  If a partial transfer of previously purchased shares is 
selected, a minimum of $500 must be transferred and a minimum 
balance of $500 must remain in the previously selected 
investment option.  A change may be made only from one account 
or a combination of accounts to a single account.  A change 
under this paragraph is effective as soon as cash flow to an 
account permits, but not later than six months from the 
requested change. 
    Subd. 3.  [ADMINISTRATIVE EXPENSES.] The public employees 
retirement association may deduct an amount, set annually by the 
executive director of the association, but not to exceed two 
percent of ambulance service contributions to the plan, to 
defray the expenses of the association in administering the plan.
    Sec. 6.  [353D.06] [REPORTING BY AMBULANCE SERVICES.] 
    The executive director of the public employees retirement 
association shall prescribe the form of monthly and any other 
reports required from an ambulance service and the election 
forms required from ambulance service members.  Member forms 
shall contain names, identification numbers, amount of 
contribution by and on behalf of each member, and such other 
data as is required to keep an accurate account of the account 
value of each participating employee.  
    Sec. 7.  [353D.07] [BENEFITS.] 
    Subdivision 1.  [TYPE OF PLAN; UNIFORMITY.] The plan is a 
defined contribution plan where the benefits payable upon 
retirement, death, or withdrawal when permitted, are determined 
by the value of accumulated contributions plus a proportionate 
share of investment income of the fund credited to each 
individual account.  Each ambulance service shall determine 
eligibility for participation subject to terms of this act.  
Eligibility standards must be uniform among all ambulance 
service personnel of an ambulance service electing to 
participate.  
    Subd. 2.  [AGE; VESTING.] Normal retirement age is 50 years.
Early retirement is not allowed.  Sixty months of service credit 
are required for vesting of retirement benefits.  No minimum 
period of service is required for vesting of death benefits.  
Withdrawal of or a retirement benefit based on member 
contributions plus accrued investment income vests immediately.  
Upon completion of 60 months of service under the plan with one 
or more ambulance services, a participant terminating active 
service prior to age 50 is entitled to receive the value of the 
participant's individual account upon or after attaining age 
50.  An application by or on behalf of the participant must be 
filed before any payment of benefits may be made. 
    Subd. 3.  [FORM OF BENEFIT.] A retirement benefit is 
payable in a lump sum equal to the value of a participant's 
account at the date of retirement and may be rolled over into 
another qualified plan at the option of the member.  As an 
alternative to a lump sum distribution, the member may choose to 
have the association use the total account value to purchase an 
annuity payable at a designated age from an insurance company 
licensed to do business in the state.  
    Subd. 4.  [DISABILITY OR DEATH.] No disability coverage 
shall be provided by the plan.  In the event of the death of an 
active participant with any credited service or a deferred 
participant under age 50, the total value of the account shall 
be paid in a lump sum to the designated beneficiary or, if none, 
the heirs at law of the decedent.  
    Subd. 5.  [FORFEITURES.] The account value of any 
participant terminating service prior to acquiring a vested 
interest or of a participant who dies leaving no designated 
beneficiary or heirs at law must be returned to the public 
employees retirement association and credited against future 
ambulance service contributions by the applicable ambulance 
service or services after the expiration of two years from the 
date of termination or death.  
    Sec. 8.  [353D.08] [PORTABILITY.] 
    Qualified ambulance service personnel who change employment 
or membership among participating ambulance services may 
continue participation in the plan without penalty or forfeiture 
after their interest vests.  Qualified ambulance service 
personnel who change employment or membership to a 
nonparticipating ambulance service are not subject to the 
forfeiture required by section 7, subdivision 5.  
    Sec. 9.  [353D.09] [TAX QUALIFICATION.] 
    The public employees retirement association shall adopt 
rules required for administration of the plan.  The proposed 
plan shall be formulated and adopted in accordance with 
applicable restrictions and standards of the Internal Revenue 
Code and rulings and regulations of the Internal Revenue Service 
in order to assure the tax exempt status of the plan as a 
qualified pension plan.  Contributions by ambulance service 
personnel and by ambulance service operators may be accepted 
only after approval by the Internal Revenue Service. 
    Sec. 10.  [353D.10] [NOT CONSIDERED A LOCAL PLAN.] 
    The plan is not a local governmental pension plan or fund 
for purposes of section 356.25.  
    Sec. 11.  [EFFECTIVE DATE.] 
    Sections 1 to 10 are effective on July 1, 1987. 

                               ARTICLE 6 

                PUBLIC PENSION PLAN ASSET USE LIMITATION 
    Section 1.  [356.615] [LIMITATION ON USE OF PUBLIC PENSION 
PLAN ASSETS.] 
    (a) Money held by or credited to a public pension plan as 
assets, including employer and employee contributions, state 
aid, appropriations from the state or a governmental 
subdivision, and accrued earnings on investments, constitutes a 
dedicated fund.  The dedicated fund must be used exclusively to 
pay retirement annuities, service pensions, disability benefits, 
survivor benefits, refunds of contributions or other benefits 
provided under the benefit plan document or documents governing 
the public pension plan, and to pay reasonable administrative 
expenses approved by the governing board of the public pension 
plan or by another appropriate authority.  No assets of a public 
pension plan may be loaned or transferred to the state or a 
governmental subdivision or be used to amortize an unfunded 
actuarial accrued liability in another public pension plan, 
whether or not the plan providing the assets consolidates or has 
consolidated with the plan receiving the assets.  Nothing in 
this section prohibits a public pension plan or the state board 
of investment from investing the assets of a plan as authorized 
by law, including the investment of the assets of public pension 
plans by the state board of investment in a commingled 
investment fund.  
    (b) A public pension plan for purposes of this section 
means a pension plan or fund specified in section 356.20, 
subdivision 2, or 356.30, subdivision 3, or a retirement or 
pension plan or fund, including a supplemental retirement plan 
or fund, established, maintained, or supported by a governmental 
subdivision or public body whose revenues are derived from 
taxation, fees, assessments, or other public sources.  
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 

                               ARTICLE 7 

             VARIOUS MISCELLANEOUS RETIREMENT MODIFICATIONS 
    Section 1.  [PENSION SALARY AND SERVICE CREDIT FOR CERTAIN 
PERSONS.] 
    Subdivision 1.  [ENTITLEMENT.] A person who was an employee 
of Ramsey county and a member of the public employees retirement 
association, who suffered an illness or injury entitling the 
person to workers' compensation benefits during the five 
successive years before the date on which the person would have 
attained normal retirement age under Minnesota Statutes 1986, 
section 353.29, subdivision 1, or 353.30, subdivision 1a, who 
was granted an authorized leave of absence by Ramsey county, and 
who retired between June 26, 1986, and January 1, 1987, is 
entitled to additional credit from the public employees 
retirement association for additional salary under subdivision 2 
and additional service under subdivision 3 and to a 
recalculation by the public employees retirement association of 
the retirement annuity under subdivision 4. 
    Subd. 2.  [CREDIT FOR ADDITIONAL SALARY.] The additional 
salary for the period of the authorized leave of absence is the 
portion or multiple of the average salary on which deductions 
were made during the last six months of public service preceding 
the authorized leave of absence. 
    Subd. 3.  [CREDIT FOR ADDITIONAL ALLOWABLE SERVICE.] The 
additional allowable service is any period of authorized leave 
of absence resulting from the qualifying injury or illness, not 
to exceed 30 months, for which the person made payments to the 
public employees retirement association under Minnesota Statutes 
1986, section 353.01, subdivision 16, paragraph (3). 
    Subd. 4.  [RETIREMENT ANNUITY RECALCULATION.] If the person 
obtains credit for additional salary and allowable service, the 
public employees retirement association shall recalculate the 
person's retirement annuity on the basis of any greater final 
average salary and the additional service and shall pay any 
difference between the old annuity and the recalculated annuity 
retroactively to the date of the person's retirement.  Any 
retroactive amounts must be paid as soon as practicable. 
    Sec. 2.  [POSTRETIREMENT ADJUSTMENT FOR CERTAIN RETIRED 
TEACHER.] 
    Subdivision 1.  [RETIREMENT EFFECTIVE DATE.] In order to 
determine the effective date of retirement for the purposes of 
paying postretirement adjustments under Minnesota Statutes, 
section 11A.18, an annuitant from the teachers retirement 
association who terminated employment with the Roseau school 
district on June 30, 1982, and whose application for retirement 
was postmarked July 1, 1982, shall be deemed to have retired 
effective July 1, 1982. 
    Subd. 2.  [APPROPRIATION.] The appropriate amount of 
required reserves is appropriated from the teachers retirement 
fund to the Minnesota postretirement investment fund to make a 
retroactive payment on the first day of the month next following 
the date of the ruling of the administrative hearing required by 
subdivision 3 of the adjustments an annuitant described in 
subdivision 1 would have received from January 1, 1984, to the 
last day of the month next following the date of the ruling of 
the administrative hearing required by subdivision 3, and to 
fund the reserves necessary to support an adjusted benefit for 
the annuitant for the future. 
    Subd. 3.  [ADMINISTRATIVE HEARING.] The teachers retirement 
association shall hold an administrative hearing under Minnesota 
Statutes, sections 14.57 to 14.62, to determine the date on 
which the annuitant described in subdivision 1 mailed the 
application for retirement to the teachers retirement 
association.  Notice of the hearing must be provided within 30 
days of the effective date of this section and the hearing must 
be held as soon as practicable after that notice is provided.  
    Subd. 4.  [EFFECT OF HEARING.] Subdivisions 1 and 2 are 
effective if the administrative hearing required by subdivision 
3 results in a finding of fact that the annuitant described in 
subdivision 1 mailed the application for retirement to the 
teachers retirement association on or before June 30, 1982. 
    Sec. 3.  [ALBANY COMMUNITY HOSPITAL EMPLOYEES.] 
    Subdivision 1.  [REFUND OF CONTRIBUTIONS.] A member of the 
public employees retirement association who was employed by the 
Albany community hospital on the date the hospital was taken 
over by a private corporation or organization is entitled upon 
application to be paid a refund of accumulated employee and 
employer contributions made by or on behalf of the employee to 
the association, plus interest on those contributions at the 
rate of six percent a year.  If an employee has previously 
received a refund of employee contributions, only the 
accumulated employer contributions plus interest may be 
refunded.  No employer additional contributions may be 
refunded.  A refund of contributions may be made only to a 
federal income tax qualified individual retirement account 
established by or on behalf of the person. 
    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 Minnesota Statutes, 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 the employee's 
eligibility for a deferred annuity by repaying the amount 
refunded, including any interest received, to the association, 
and any deferred annuities augmentation may be computed only 
from the date of the refund repayment.  
    Subd. 3.  [DEADLINE.] Refunds must be paid or options must 
be exercised and repayments of refunds made by July 1, 1988.  
    Sec. 4.  [CANBY COMMUNITY HOSPITAL EMPLOYEES.] 
    Subdivision 1.  [REFUND OF CONTRIBUTIONS.] A member of the 
public employees retirement association who was employed by the 
Canby community hospital district No. 1 on the date the hospital 
was taken over by a private corporation or organization and 
whose public employment was thus terminated, may, by filing a 
valid application, elect to be paid a refund of accumulated 
employee and employer contributions made by or on behalf of the 
employee to the association, plus interest on those 
contributions at the rate of six percent a year.  If an employee 
has previously received a refund of employee contributions, only 
the accumulated employer contributions plus interest may be 
refunded.  No employer additional contributions may be 
refunded.  A refund of contributions may be made only to a 
federal income tax qualified individual retirement account 
established by or on behalf of the person. 
    Subd. 2.  [DEADLINE.] Refunds must be paid within 90 days 
of exercise of the option.  Options must be exercised by July 1, 
1988.  
    Sec. 5.  [STEARNS COUNTY HISTORICAL SOCIETY EMPLOYEE.] 
    Notwithstanding the amendment of section 353.01, 
subdivision 2a, by Laws 1986, chapter 458, section 11, which 
excluded county historical society employees not employed by the 
county from membership in the public employees retirement 
association, an employee of the Stearns county historical 
society who was born on April 2, 1923, and who was a society 
employee on March 26, 1986, may elect to retain membership in 
and retirement coverage by the public employees retirement 
association.  Notice of intent to retain membership must be 
given to the association within 60 days after the effective date 
of this section.  Any contributions refunded under Laws 1986, 
chapter 458, section 33, on behalf of the employee must be 
repaid with interest at the rate of 6.5 percent a year, 
compounded annually, to the association within the 60-day period.
    Sec. 6.  [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION 
BYLAW AMENDMENT.] 
    In accordance with Minnesota Statutes, section 354A.12, 
subdivision 4, approval is granted for the St. Paul teachers 
retirement fund association to amend its bylaws, with effect 
retroactive to July 1, 1986, as follows:  
    (1) article IV of the bylaws, section 4, paragraph 1, 
clause (a), governing the payment of service and deferred 
pensions, may be amended by removing any limitation on 
employment as a retired member in any capacity by the city of 
St. Paul; and 
    (2) article IV of the bylaws, section 4, paragraph 1, 
governing the payment of service and deferred pensions, may be 
amended by adding clause (c) to provide that any person who was 
on a leave of absence from independent school district No. 625 
on January 1, 1987, who was employed by the city of St. Paul 
while on that leave before January 1, 1987, and who applied for, 
but withdrew, an application for retirement with the fund 
association before January 1, 1987, is considered to have filed 
a valid application for retirement on January 1, 1987, in the 
form of the previously filed application and is eligible to be 
paid a retirement allowance retroactive to January 1, 1987.  
    Sec. 7.  [HIBBING ELECTED OFFICIAL.] 
    Notwithstanding the "incumbency" provision of Minnesota 
Statutes, section 353.01, subdivision 7, and rules to the 
contrary adopted by the board of the public employees retirement 
association, a person who served on the Hibbing city council and 
elected membership in the association from January 1, 1983, and 
who terminated service on the council on November 25, 1986, 
after being reelected to the council for a term beginning 
January 6, 1987, may not be considered a member of the 
association with respect to service rendered as an elected 
official after the termination date of November 25, 1986, but 
may elect to become a member of the association under section 
353.01, subdivision 7, for service rendered as an elected 
official on or after January 1, 1987. 
     Sec. 8.  [PLYMOUTH VOLUNTEER FIREFIGHTERS.] 
     Subdivision 1.  [EXCLUSION FROM CERTAIN RETIREMENT 
COVERAGE.] A volunteer firefighter serving with the Plymouth 
fire department is excluded from the definition of "public 
employee" in Minnesota Statutes, section 353.01, subdivision 2, 
and may not be a member of the public employees police and fire 
fund.  Compensation paid to a Plymouth volunteer firefighter is 
excluded from the definition of "salary" in section 353.01, 
subdivision 10. 
     Subd. 2.  [DEFINITION OF VOLUNTEER FIREFIGHTER.] A 
volunteer firefighter for purposes of subdivision 1 is a person 
who is not scheduled to serve on a full-time basis, who serves 
on call for emergency duty as a regular active member of the 
Plymouth municipal fire department, and who receives no 
compensation for that service or whose compensation for that 
service is not based on or is not a multiple of any rate of 
compensation being paid that person by the Plymouth municipal 
fire department for duty other than on call emergency duty, 
training duty, or equipment maintenance duty. 
     Subd. 3.  [REFUND.] A volunteer firefighter who is excluded 
from membership by subdivision 1 shall be entitled to a refund 
of member contributions to the public employees retirement 
association or the public employees police and fire fund based 
on compensation as a volunteer firefighter, plus simple interest 
at the rate of six percent a year, if the person or the city of 
Plymouth demonstrates to the satisfaction of the executive 
director of the association the amount of contributions made by 
the person on behalf of service as a volunteer firefighter. 
    Sec. 9.  [LEGISLATIVE INTENT.] 
    It is the finding of the legislature that the special 
refund provisions authorized in sections 3 and 4 are a unique 
response to two unique situations and it is the intent of the 
legislature that this response will not be considered for any 
allegedly similar situations.  
    Sec. 10.  [EFFECTIVE DATE.] 
    Sections 1 to 7 and 9 are effective the day following final 
enactment.  Section 8 is effective July 1, 1987. 

                                ARTICLE 8 

                   STATE BOARD OF INVESTMENT CHANGES 
    Section 1.  Minnesota Statutes 1986, section 11A.04, is 
amended to read:  
    11A.04 [DUTIES AND POWERS.] 
    The state board shall: 
    (1) Act as trustees for each fund for which it invests or 
manages money in accordance with the standard of care set forth 
in section 11A.09. 
    (2) Formulate policies and procedures deemed necessary and 
appropriate to carry out its functions.  Procedures adopted by 
the board shall allow fund beneficiaries and members of the 
public to become informed of proposed board actions.  Procedures 
and policies of the board shall not be subject to the 
administrative procedure act. 
    (3) Employ an executive director as provided in section 
11A.07. 
    (4) Employ investment advisors and consultants as it deems 
necessary. 
    (5) Prescribe policies concerning personal investments of 
all employees of the board to prevent conflicts of interest. 
    (6) Maintain a record of its proceedings. 
    (7) As it deems necessary, establish advisory committees 
subject to the provisions of section 15.059 to assist the board 
in carrying out its duties. 
    (8) Not permit state funds to be used for the underwriting 
or direct purchase of municipal securities from the issuer or 
the issuer's agent. 
    (9) Direct the state treasurer to sell property other than 
money which has escheated to the state when the board determines 
that sale of the property is in the best interest of the state.  
Escheated property shall be sold to the highest bidder in the 
manner and upon terms and conditions prescribed by the board. 
    (10) Undertake any other activities necessary to implement 
the duties and powers set forth in this section. 
    (11) Establish a formula or formulas to measure management 
performance and return on investment.  All public pension funds 
in the state shall utilize the formula or formulas developed by 
the state board. 
    (12) Except as otherwise provided in article XI, section 8 
of the constitution of the state of Minnesota, employ, at its 
discretion, qualified private firms to invest and manage the 
assets of funds over which the state board has investment 
management responsibility.  There is annually appropriated to 
the state board, from the assets of the funds for which the 
state board utilizes a private investment manager, sums 
sufficient to pay the costs therefor.  Each year, by January 15, 
the board shall report to the governor and legislature on the 
cost and the investment performance of each investment manager 
employed by the board.  
    (13) Adopt an investment policy statement that includes 
investment objectives, asset allocation, and the investment 
management structure for the retirement fund assets under its 
control.  The statement may be revised at the discretion of the 
state board.  The state board shall seek the advice of the 
council regarding its investment policy statement.  Adoption of 
the statement is not subject to chapter 14. 
    Sec. 2.  Minnesota Statutes 1986, section 11A.24, 
subdivision 2, is amended to read:  
    Subd. 2.  [GOVERNMENT OBLIGATIONS.] The state board may 
invest funds in governmental bonds, notes, bills, mortgages and 
other fixed obligations, including evidences of indebtedness 
provided the issue is backed by the full faith and credit of the 
issuer or the issue is rated among the top four quality rating 
categories by a nationally recognized rating agency.  The 
obligations in which the board may invest under this subdivision 
include guaranteed or insured issues of (a) the United States, 
its agencies, its instrumentalities, or organizations created 
and regulated by an act of Congress; (b) Canada and its 
provinces, provided the principal and interest is payable in 
United States dollars; (c) the states and their municipalities, 
political subdivisions, agencies or instrumentalities, where 
backed by the state's full faith and credit or if the issuer has 
not been in default in payments of principal or interest within 
the past ten years or in the case of revenue bonds the obligor 
has been completely self-supporting for the five prior years; 
(d) the International Bank for Reconstruction and Development, 
the Inter-American Development Bank, the Asian Development Bank, 
the African Development Bank, or any other United States 
Government sponsored organization of which the United States is 
a member, provided the principal and interest is payable in 
United States dollars and the issues are rated in the highest 
quality category by a nationally recognized rating agency. 
    Sec. 3.  Minnesota Statutes 1986, section 11A.24, 
subdivision 3, is amended to read:  
    Subd. 3.  [CORPORATE OBLIGATIONS.] The state board may 
invest funds in bonds, notes, debentures, transportation 
equipment obligations, or any other longer term evidences of 
indebtedness issued or guaranteed by a corporation organized 
under the laws of the United States or any state thereof, or the 
Dominion of Canada or any province thereof if they conform to 
the following provisions: 
    (a) the principal and interest of obligations of 
corporations incorporated or organized under the laws of the 
Dominion of Canada or any province thereof shall be payable in 
United States dollars; and 
    (b) obligations shall be rated among the top four quality 
categories by a nationally recognized rating agency; 
    (c) for unrated obligations, the corporation shall have 
issued other similar securities rated according to clause (b) 
or:  (i) the consolidated net pretax earnings of corporations 
other than banks and finance corporations shall have been on 
average for the preceding five years at least three times the 
annual interest charges on total funded debt applicable to that 
period; or (ii) the consolidated net pretax earnings of banks 
and finance corporations shall have been on average for the 
preceding five years at least 2.4 times the annual interest 
charges on total funded debt applicable to that period. 
    Sec. 4.  Minnesota Statutes 1986, section 11A.24, 
subdivision 4, is amended to read:  
    Subd. 4.  [OTHER OBLIGATIONS.] The state board may invest 
funds in bankers acceptances, certificates of deposit, 
commercial paper, mortgage participation certificates and pools, 
repurchase agreements and reverse repurchase agreements, 
guaranteed investment contracts, and savings accounts if they 
conform to the following provisions: 
    (a) bankers acceptances of United States banks shall be 
limited to those eligible for purchase by the Federal Reserve 
System issued by banks rated in the highest four quality 
categories by a nationally recognized rating agency; 
    (b) certificates of deposit shall be limited to those 
issued by United States banks and savings institutions that meet 
the collateral requirements established in section 9.031, unless 
sufficient volume is unavailable at competitive interest rates.  
In that event, noncollateralized certificates of deposit may be 
purchased from United States banks and savings institutions that 
are rated in the highest quality category by a nationally 
recognized rating agency are rated in the highest four quality 
categories by a nationally recognized rating agency or whose 
certificates of deposit are fully insured by the Federal Deposit 
Insurance Corporation or the Federal Savings and Loan Insurance 
Corporation.  Sections 16A.58 and 16B.06 do not apply to 
certifications of deposit and collateralization agreements 
executed by the state board; 
    (c) commercial paper shall be limited to those issued by 
United States corporations or their Canadian subsidiaries, shall 
be of the highest quality and mature in 270 days or less rated 
in the highest two quality categories by a nationally recognized 
rating agency; 
    (d) mortgage participation or pass through certificates 
evidencing interests in pools of first mortgages or trust deeds 
on improved real estate located in the United States where the 
loan to value ratio for each loan as calculated in accordance 
with section 61A.28, subdivision 3 does not exceed 80 percent 
for fully amortizable residential properties and in all other 
respects meets the requirements of section 61A.28, subdivision 
3.  In addition the state board may purchase from the Minnesota 
housing finance agency all or any part of any pool of 
residential mortgages, not in default, which has previously been 
financed by the issuance of bonds or notes of the agency.  The 
state board may also enter into a commitment with the agency, at 
the time of any issue of bonds or notes, to purchase at a 
specified future date, not exceeding 12 years from the date of 
the issue, the amount of mortgage loans then outstanding and not 
in default, which have been made or purchased from the proceeds 
of the bonds or notes.  The state board may charge reasonable 
fees for any such commitment, and may agree to purchase the 
mortgage loans at a price such that the yield thereon to the 
state board will, in its judgment, be comparable to that 
available on similar mortgage loans at the date of the bonds or 
notes.  The state board may also enter into agreements with the 
agency for the investment of any portion of the funds of the 
agency for such period, with such withdrawal privileges, and at 
such guaranteed rate of return, if any, as may be agreed between 
the state board and the agency.  
    (e) collateral for repurchase agreements and reverse 
repurchase agreements shall be limited to letters of credit and 
securities authorized in this section; 
    (f) guaranteed investment contracts shall be limited to 
those issued by insurance companies rated in the top four 
quality categories by a nationally recognized rating agency; 
    (g) savings accounts shall be limited to those fully 
insured by the Federal Deposit Insurance Corporation or the 
Federal Savings and Loan Insurance Corporation.  
    Sec. 5.  Minnesota Statutes 1986, section 11A.24, 
subdivision 5, is amended to read:  
    Subd. 5.  [CORPORATE STOCKS.] The state board may invest 
funds in stocks or convertible issues of any corporation 
organized under the laws of the United States or the states 
thereof, the Dominion of Canada or its provinces, or any 
corporation listed on the New York Stock Exchange or the 
American Stock Exchange, if they conform to the following 
provisions: 
    (a) The aggregate value of corporate stock investments, as 
adjusted for realized profits and losses, shall not exceed 75 85 
percent of the market or book value, whichever is less, of a 
fund, less the aggregate value of investments according to 
subdivision 6; 
    (b) Investments shall not exceed five percent of the total 
outstanding shares of any one corporation. 
    Sec. 6.  Minnesota Statutes 1986, section 11A.24, 
subdivision 6, is amended to read:  
    Subd. 6.  [OTHER INVESTMENTS.] (a) In addition to the 
investments authorized in subdivisions 1 to 5, and subject to 
the provisions in clause (b), the state board may invest funds 
in:  
    (1) Venture capital investment businesses through 
participation in limited partnerships and corporations;  
    (2) Real estate ownership interests or loans secured by 
mortgages or deeds of trust through investment in limited 
partnerships, bank sponsored collective funds, trusts, and 
insurance company commingled accounts, including separate 
accounts;  
    (3) Regional and mutual funds through bank sponsored 
collective funds and open-end investment companies registered 
under the Federal Investment Company Act of 1940; and 
    (4) Resource investments through limited partnerships, 
private placements and corporations; and 
    (5) Debt obligations not subject to subdivision 3.  
    (b) The investments authorized in clause (a) may only be 
made if they conform to the following provisions:  
    (1) The aggregate value of all investments made according 
to clause (a) shall not exceed 20 35 percent of the market value 
of the fund for which the state board is investing; 
    (2) There shall be at least four unrelated owners of the 
investment other than the state board for investments made under 
paragraph (a), clause (1), (2), (3), or (4);  
    (3) State board participation in an investment vehicle 
shall be limited to 20 percent thereof for investments made 
under paragraph (a), clause (1), (2), (3), or (4); and 
    (4) State board participation in a limited partnership does 
not include a general partnership interest or other interest 
involving general liability.  The state board shall not engage 
in any activity as a limited partner which creates general 
liability.  
    Sec. 7.  Minnesota Statutes 1986, section 11A.25, is 
amended to read:  
    11A.25 [ADDITIONAL INVESTMENT PROVISIONS.] 
    When investing assets of any funds or accounts specifically 
made subject to this section or not otherwise referred to in 
sections 11A.01 to 11A.25, all securities shall be debt 
obligations maturing within three years of the date of purchase 
and shall conform to the applicable provisions of section 11A.24.
    Sec. 8.  [EFFECTIVE DATE.] 
    Sections 1 to 7 are effective the day following final 
enactment. 

                               ARTICLE 9 
REDUCED VESTING REQUIREMENTS AND MODIFIED 
WORKERS' COMPENSATION OFFSETS 
    Section 1.  Minnesota Statutes 1986, section 352.113, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AGE AND SERVICE REQUIREMENTS.] Any 
employee covered by the system who is less than 65 years of age 
who becomes totally and permanently disabled after ten five or 
more years of allowable service and any employee who is at least 
50 years of age but less than 65 years of age who becomes 
totally and permanently disabled after five or more years of 
allowable service shall be entitled to a disability benefit in 
an amount provided in subdivision 3.  If such disabled 
employee's state service has terminated at any time, at 
least five three years of allowable service must have been 
rendered after last becoming a state employee covered by the 
system. 
    Sec. 2.  Minnesota Statutes 1986, section 352.115, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AGE AND SERVICE REQUIREMENTS.] After 
separation from state service any employee (a) who has attained 
the age of at least 55 years and who is entitled to credit for 
not less than ten five years allowable service or (b) who has 
received credit for not less than 30 years allowable service 
regardless of age is entitled upon application to a retirement 
annuity. 
    Sec. 3.  Minnesota Statutes 1986, 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 50 years 
and has credit for not less than ten five 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, 
the surviving spouse of the employee 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 the employee 
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 352.115, 
subdivisions 1, 2, and 3, and 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 the lifetime of the surviving spouse.  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 a 
designated beneficiary as otherwise provided by this chapter. 
    Sec. 4.  Minnesota Statutes 1986, section 352.22, 
subdivision 3, is amended to read:  
    Subd. 3.  [DEFERRED ANNUITY.] (1) Any employee with at 
least ten five years of allowable service when such termination 
occurs may elect to leave the accumulated contributions in the 
fund and thereby be entitled to a deferred retirement annuity.  
This annuity shall be computed in the manner provided by the law 
in effect at the time state service terminated, on the basis of 
allowable service prior to termination of service. 
    (2) An employee on layoff or on leave of absence without 
pay, except a leave of absence for health reasons, who does not 
return to state service shall have any annuity, deferred annuity 
or other benefit to which the employee may become entitled 
computed under the law in effect on the last working day. 
    (3) No application for a deferred annuity shall be made 
more than 60 days prior to the time the former employee reaches 
the required age for entitlement to the payment of the annuity.  
The deferred annuity shall begin to accrue no earlier than 60 
days prior to the date the application is filed in the office of 
the system, but in no event prior to the date the employee 
reaches the required age for entitlement to the annuity nor 
prior to the day following the termination of state service in a 
position not covered by the retirement system nor prior to the 
day following the termination of employment in a position which 
requires the employee to be a member of either the public 
employees retirement association or the teachers retirement 
association. 
    (4) Application for the accumulated contributions left on 
deposit with the fund may be made at any time after 30 days 
following the date of termination of service. 
    Sec. 5.  Minnesota Statutes 1986, section 352.72, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ENTITLEMENT TO ANNUITY.] Any person who 
has been an employee covered by the Minnesota state retirement 
system, or a member of the public employees retirement 
association including the public employees retirement 
association police and firefighters' fund, or the teachers 
retirement association, or the state patrol retirement 
association, or any other public employee retirement system in 
the state of Minnesota having a like provision but excluding all 
other funds providing benefits for police officers or 
firefighters shall be entitled when qualified to an annuity from 
each fund if total allowable service in all funds or in any two 
of these funds totals ten five or more years, provided no 
portion of the allowable service upon which the retirement 
annuity from one fund is based is again used in the computation 
for benefits from another fund and provided further that a 
refund has not been taken from any one of these funds since 
service entitling the employee to coverage under the system or 
the employee's membership in any of the associations last 
terminated.  The annuity from each fund shall be determined by 
the appropriate provisions of the law except that the 
requirement that a person must have at least ten five years 
allowable service in the respective system or association shall 
not apply for the purposes of this section provided the combined 
service in two or more of these funds equals ten five or more 
years. 
    Sec. 6.  Minnesota Statutes 1986, section 352.93, 
subdivision 1, is amended to read:  
    Subdivision 1.  After separation from state service an 
employee covered under section 352.91 who has attained the age 
of at least 55 years and has credit for not less than a total of 
ten five years of covered correctional service and regular 
Minnesota state retirement system service shall be entitled upon 
application to a retirement annuity under this section based 
only on covered correctional employees' service.  Application 
may be made no earlier than 60 days prior to the date the 
employee is eligible to retire by reason of both age and service 
requirements.  
    For the purpose of this section, average salary means the 
average of the monthly salary during the employees' highest five 
successive years of salary as an employee covered by the 
Minnesota state retirement system.  
    Sec. 7.  Minnesota Statutes 1986, section 352B.08, 
subdivision 1, is amended to read:  
    Subdivision 1.  Every member who is credited with ten five 
or more years of allowable service shall be entitled to separate 
from such state service and upon attaining the age of 55 years, 
shall be entitled to receive a life annuity, upon separation 
from state service.  Members shall make application for an 
annuity in a form and manner prescribed by the executive 
director.  No application may be made more than 60 days prior to 
the date the member is eligible to retire by reason of both age 
and service requirements.  An annuity shall begin to accrue no 
earlier than 90 days prior to the date the application is filed 
with the executive director.  
    Sec. 8.  Minnesota Statutes 1986, section 352B.11, 
subdivision 2, is amended to read:  
    Subd. 2.  [DEATH; PAYMENT TO SPOUSE AND CHILDREN.] In the 
event any member serving actively as a member, a member 
receiving the disability benefit provided by section 352B.10, 
clause (1), or a former member receiving a disability benefit as 
provided by section 352B.10, clause (3) dies from any cause, the 
surviving spouse and dependent child or dependent children shall 
be entitled to benefit payments as follows: 
    (a) A member with at least ten five years of allowable 
service or a former member with at least 20 years of allowable 
service is deemed to have elected a 100 percent joint and 
survivor annuity payable to a surviving spouse only on or after 
the date the member or former member attained or would have 
attained the age of 55. 
    (b) The surviving spouse of a member who had credit for 
less than ten five years of service shall receive, for life, a 
monthly annuity equal to 20 percent of that portion of the 
average monthly salary of the member from which deductions were 
made for retirement.  If the surviving spouse remarries, the 
annuity shall cease as of the date of the remarriage. 
    (c) The surviving spouse of a member who had credit for at 
least ten five years of service and who dies after attaining 55 
years of age, may elect to receive a 100 percent joint and 
survivor annuity, for life, notwithstanding a subsequent 
remarriage, in lieu of the annuity prescribed in clause (b). 
    (d) The surviving spouse of any member who had credit 
for ten five years or more and who was not 55 years of age at 
death, shall receive the benefit equal to 20 percent of the 
average monthly salary as described in clause (b) until the 
deceased member would have reached the age of 55 years, and 
beginning the first of the month following that date, may elect 
to receive the 100 percent joint and survivor annuity.  If the 
surviving spouse remarries prior to the deceased member's 55th 
birthdate, all benefits or annuities shall cease as of the date 
of remarriage.  Remarriage subsequent to the deceased member's 
55th birthday shall not affect the payment of the benefit. 
    (e) Each dependent child shall receive a monthly annuity 
equal to ten percent of that portion of the average monthly 
salary of the former member from which deductions were made for 
retirement.  A dependent child over the age of 18 years and 
under the age of 22 years also may receive the monthly benefit 
provided herein, if the child is continuously attending an 
accredited school as a full time student during the normal 
school year as determined by the director.  If the child does 
not continuously attend school but separates from full time 
attendance during any portion of a school year, the annuity 
shall cease at the end of the month of separation.  In addition, 
a payment of $20 per month shall be prorated equally to 
surviving dependent children when the former member is survived 
by one or more dependent children.  Payments for the benefit of 
any qualified dependent child shall be made to the surviving 
spouse, or if there be none, to the legal guardian of the 
child.  The maximum monthly benefit shall not exceed 40 percent 
of the average monthly salary for any number of children. 
    (f) If the member shall die under circumstances which 
entitle the surviving spouse and dependent children to receive 
benefits under the workers' compensation law, amounts equal to 
the workers' compensation benefits received by them shall not be 
deducted from the benefits payable pursuant to this section. 
    (g) The surviving spouse of a deceased former member who 
had credit for ten five or more years of allowable service, but 
excluding the spouse of a former member receiving a disability 
benefit under the provisions of section 352B.10, clause (3), 
shall be entitled to receive the 100 percent joint and survivor 
annuity at such time as the deceased member would have reached 
the age of 55 years, provided the surviving spouse has not 
remarried prior to that date.  In the event of the death of a 
former member who does not qualify for other benefits under this 
chapter, the surviving spouse or, if none, the children or heirs 
shall be entitled to receive a refund of the accumulated 
deductions left in the fund plus interest at the rate of five 
percent per annum compounded annually.  
    Sec. 9.  Minnesota Statutes 1986, section 352B.30, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ENTITLEMENT TO ANNUITY.] Any person who 
has been an employee covered by the Minnesota state retirement 
system, or a member of the public employees retirement 
association including the public employees retirement 
association police and firefighters' fund, or the teachers 
retirement association, or the state patrol retirement fund, or 
any other public employee retirement system in the state of 
Minnesota having a like provision but excluding all other funds 
providing benefits for police or firefighters shall be entitled 
when qualified to an annuity from each fund if total allowable 
service in all funds or in any two of these funds totals ten 
five or more years, provided no portion of the allowable service 
upon which the retirement annuity from one fund is based is 
again used in the computation for benefits from another fund and 
provided further that the member has not taken a refund from any 
one of these funds since service entitling the member to 
coverage under the system or membership in any of the 
associations last terminated.  The annuity from each fund shall 
be determined by the appropriate provisions of the law except 
that the requirement that a person must have at least ten five 
years allowable service in the respective system or association 
shall not apply for the purposes of this section provided the 
combined service in two or more of these funds equals ten five 
or more years.  
    Sec. 10.  Minnesota Statutes 1986, section 353.29, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AGE AND ALLOWABLE SERVICE REQUIREMENTS.] 
Upon separation from public service any person who has attained 
the age of at least 65 years and who received credit for not 
less than ten five years of allowable service is entitled upon 
application to a retirement annuity.  Such retirement annuity is 
known as the "normal" retirement annuity. 
    Sec. 11.  Minnesota Statutes 1986, section 353.29, 
subdivision 2, is amended to read:  
    Subd. 2.  [AVERAGE SALARY.] In calculating the annuity 
under subdivision 3, "average salary" means an amount equivalent 
to the average of a member's highest salary upon which employee 
contributions were paid for any five successive years of 
allowable service, based on dates of salary periods as listed on 
salary deduction reports.  The five successive years average 
salary may not include any reduced salary paid during a period 
in which the employee is entitled to benefit payments from 
workers' compensation for temporary disability, unless the 
average salary is higher, including this period.  
    Sec. 12.  Minnesota Statutes 1986, section 353.30, 
subdivision 1c, is amended to read:  
    Subd. 1c.  Any person who has received credit for at least 
30 years of allowable service or any person who has attained the 
age of at least 55 years but not more than 65 years, and who 
received credit for at least ten five years of allowable service 
is entitled upon application to a retirement annuity in an 
amount equal to the normal annuity provided in section 353.29, 
subdivisions 2 and 3, reduced by one-quarter of one percent for 
each month that the member is under age 65 at the time of 
retirement, except that for any member who has 30 or more years 
of allowable service the reduction shall be applied only for 
each month that the member is under age 62 at the time of 
retirement. 
    Sec. 13.  Minnesota Statutes 1986, 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 50 years 
and has credit for not less than ten five 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. 14.  Minnesota Statutes 1986, section 353.33, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AGE, SERVICE AND SALARY REQUIREMENTS.] Any 
member who becomes totally and permanently disabled before age 
65 and after ten five years of allowable service or after age 50 
but before age 65 with five years of allowable service, 
whichever is sooner, shall be entitled to a disability benefit 
in an amount provided in subdivision 3.  If such disabled 
person's public service has terminated at any time, at least 
five three of the required ten five years of allowable service 
must have been rendered after last becoming a member.  Any 
member whose average salary is less than $75 per month shall not 
be entitled to a disability benefit.  No repayment of a refund 
otherwise authorized pursuant to section 353.34 and no purchase 
of prior service or payment made in lieu of salary deductions 
otherwise authorized pursuant to section 353.01, subdivision 16, 
353.017, subdivision 4, or 353.36, subdivision 2 may be made 
after the occurrence of the disability for which an application 
pursuant to this section is filed.  
    Sec. 15.  Minnesota Statutes 1986, section 353.33, 
subdivision 5, is amended to read:  
    Subd. 5.  [BENEFITS PAID UNDER WORKERS' COMPENSATION LAW.] 
Disability benefits paid shall be reimbursed and future benefits 
shall be reduced by any amounts received or receivable, 
including temporary total, permanent total, temporary partial or 
permanent partial benefits, in either periodic or lump sum 
payments from the employer under applicable workers' 
compensation laws, after deduction of amount of attorney fees, 
authorized under applicable workers' compensation laws, paid by 
a disabilitant if the total of the single life annuity actuarial 
equivalent disability benefit and the workers' compensation 
benefit exceeds:  (1) the salary the disabled member received as 
of the date of the disability or (2) the salary currently 
payable for the same employment position or an employment 
position substantially similar to the one the person held as of 
the date of the disability, whichever is greater.  The 
disability benefit must be reduced to that amount which, when 
added to the workers' compensation benefits, does not exceed the 
greater of the salaries described in clauses (1) and (2). 
    Sec. 16.  Minnesota Statutes 1986, section 353.33, is 
amended by adding a subdivision to read: 
    Subd. 5b.  [BENEFITS PAID UNDER WORKERS' COMPENSATION LAW.] 
A disabled member who is eligible to receive a disability 
benefit under subdivision 5 as of June 30, 1987, and whose 
disability benefit amount had been reduced prior to July 1, 
1987, as a result of the receipt of workers' compensation 
benefits, must have the disability benefit payment amount 
restored, as of July 1, 1987, calculated in accordance with 
subdivision 5.  However, a disabled member is not entitled to 
receive retroactive repayment of any disability benefit amounts 
lost before July 1, 1987, as a result of the reduction required 
before that date because of the receipt of workers' compensation 
benefits. 
    Any disability benefit overpayments made before July 1, 
1987, and occurring because of the failure to reduce the 
disability benefit payment to the extent required because of the 
receipt of workers' compensation benefits, may be collected by 
the association through the reduction of disability benefit or 
annuity payment made on or after July 1, 1987, until the 
overpayment is fully recovered. 
    Sec. 17.  Minnesota Statutes 1986, section 353.34, 
subdivision 3, is amended to read:  
    Subd. 3.  [DEFERRED ANNUITY; ELIGIBILITY; COMPUTATION.] Any 
person with at least ten five years of allowable service when 
termination of public service occurs shall have the option of 
leaving the accumulated deductions in the fund and thereby be 
entitled to a deferred retirement annuity commencing at age 65 
or for a deferred early retirement annuity pursuant to section 
353.30, subdivisions 1, 1a, 1b or 1c.  The deferred annuity 
shall be computed in the manner provided in section 353.29, 
subdivisions 2 and 3, on the basis of the law in effect on the 
date of termination of public service and shall be augmented as 
provided in section 353.71, subdivision 2.  Any person qualified 
to apply for a deferred retirement annuity may revoke this 
option at any time prior to the commencement of deferred annuity 
payments by making application for a refund.  The person shall 
payments by making application for a refund.  The person shall 
be entitled to a refund of accumulated member contributions 
within 30 days following date of receipt of the application by 
the executive director. 
    Sec. 18.  Minnesota Statutes 1986, section 353.651, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AGE AND ALLOWABLE SERVICE REQUIREMENTS.] 
Upon separation from public service, any police officer or 
firefighter member who has attained the age of at least 55 years 
and who received credit for not less than ten five years of 
allowable service is entitled upon application to a retirement 
annuity.  Such retirement annuity is known as the "normal" 
retirement annuity. 
    Sec. 19.  Minnesota Statutes 1986, section 353.651, 
subdivision 2, is amended to read:  
    Subd. 2.  [AVERAGE SALARY.] In calculating the annuity 
under subdivision 3, "average salary" means an amount equivalent 
to the average of the highest salary earned as a police officer 
or firefighter upon which employee contributions were paid for 
any five successive years of allowable service. 
    The five successive years average salary may not include 
any reduced salary paid during a period in which the employee is 
entitled to benefit payments from workers' compensation for 
temporary disability unless the average salary is higher, 
including this period. 
    Sec. 20.  Minnesota Statutes 1986, section 353.656, 
subdivision 2, is amended to read:  
    Subd. 2.  [BENEFITS PAID UNDER WORKERS' COMPENSATION LAW.] 
If a member, as described in subdivision 1, is injured under 
circumstances which entitle the member to receive benefits under 
the workers' compensation law, the member shall receive the same 
benefits as provided in subdivision 1, with disability benefits 
paid reimbursed and future benefits reduced by all periodic or 
lump sum amounts paid to the member under the workers' 
compensation law, after deduction of amount of attorney fees, 
authorized under applicable workers' compensation laws, paid by 
a disabilitant if the total of the single life annuity actuarial 
equivalent disability benefit and the workers' compensation 
benefit exceeds:  (1) the salary the disabled member received as 
of the date of the disability or (2) the salary currently 
payable for the same employment position or an employment 
position substantially similar to the one the person held as of 
the date of the disability, whichever is greater.  The 
disability benefit must be reduced to that amount which, when 
added to the workers' compensation benefits, does not exceed the 
greater of the salaries described in clauses (1) and (2). 
    Sec. 21.  Minnesota Statutes 1986, section 353.656, is 
amended by adding a subdivision to read: 
    Subd. 2a.  A disabled member who is eligible to receive a 
disability benefit under subdivision 2 as of June 30, 1987, and 
whose disability benefit amount had been reduced prior to July 
1, 1987, as a result of the receipt of workers' compensation 
benefits, must have the disability benefit payment amount 
restored, as of July 1, 1987, calculated in accordance with 
subdivision 2.  However, a disabled member is not entitled to 
receive retroactive repayment of any disability benefit amounts 
lost before July 1, 1987, as a result of the reduction required 
before that date because of the receipt of workers' compensation 
benefits. 
    Any disability benefit overpayments made before July 1, 
1987, and occurring because of the failure to reduce the 
disability benefit payment to the extent required because of the 
receipt of workers' compensation benefits, may be collected by 
the association through the reduction of disability benefit or 
annuity payment made on or after July 1, 1987, until the 
overpayment is fully recovered. 
    Sec. 22.  Minnesota Statutes 1986, section 353.657, 
subdivision 2a, is amended to read:  
    Subd. 2a.  If a member who has attained the age of at least 
50 years and has credit for not less than ten five 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. 23.  Minnesota Statutes 1986, section 353.71, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ELIGIBILITY.] Any person who has been a 
member of the public employees retirement association, or the 
Minnesota state retirement system, or the teachers retirement 
association, or any other public retirement system in the state 
of Minnesota having a like provision, except a fund providing 
benefits for police officers or firefighters governed by 
sections 69.77 or 69.771 to 69.776, shall be entitled when 
qualified to an annuity from each fund if the total allowable 
service in all funds or in any two of these funds totals ten 
five or more years, provided no portion of the allowable service 
upon which the retirement annuity from one fund is based is 
again used in the computation for benefits from another fund and 
provided further that the person has not taken a refund from any 
one of these funds since the person's membership in that 
association or system last terminated.  The annuity from each 
fund shall be determined by the appropriate provisions of the 
law except that the requirement that a person must have at least 
ten five years of allowable service in the respective 
association or system shall not apply for the purposes of this 
section provided the combined service in two or more of these 
funds equals ten five or more years. 
    Sec. 24.  Minnesota Statutes 1986, section 354.44, 
subdivision 1, is amended to read:  
    Subdivision 1.  [REQUIREMENTS AS TO AGE AND SERVICE.] Any 
member or former member who ceases or has ceased to render 
teaching services in any school or institution covered by the 
provisions of this chapter, and who has attained the age of at 
least 55 years with not less than ten five years allowable 
service, or who has received credit for not less than 30 years 
allowable service regardless of age, is entitled upon written 
application to a retirement annuity. 
    Sec. 25.  Minnesota Statutes 1986, 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 50 years and has credit for 
at least ten five 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 section 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, subdivision 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. 26.  Minnesota Statutes 1986, section 354.48, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AGE, SERVICE AND SALARY REQUIREMENTS.] Any 
member who became totally and permanently disabled after at 
least ten five years of allowable service or after age 50 with 
five years of allowable service, whichever is sooner shall be 
entitled to a disability benefit in an amount provided in 
subdivision 3. If such disabled person's teaching service has 
terminated at any time, at least five three of the required ten 
five years of allowable service must have been rendered after 
last becoming a member.  Any member whose average salary is less 
than $75 per month shall not be entitled to disability benefits. 
    Sec. 27.  Minnesota Statutes 1986, section 354.49, 
subdivision 3, is amended to read:  
    Subd. 3.  Any person who has attained the age of at least 
65 with less than ten five years of credited allowable service 
shall be entitled to receive a refund in an amount equal to the 
person's accumulated deductions plus interest in lieu of a 
proportionate annuity pursuant to section 356.32 except those 
covered under the provisions of section 354.44, subdivisions 6 
or 7 in which case the refund shall be an amount equal to the 
accumulated deductions credited to the person's account as of 
June 30, 1957 and after July 1, 1957 the accumulated deductions 
plus interest at the rate of five percent compounded annually.  
    Sec. 28.  Minnesota Statutes 1986, section 354.60, is 
amended to read:  
    354.60 [SERVICE IN OTHER PUBLIC RETIREMENT FUNDS; ANNUITY.] 
    Any person who has been a member of the Minnesota state 
retirement system or the public employees retirement association 
including the public employees retirement association police and 
fire fund or the teachers retirement association or the 
Minnesota state patrol retirement association, or any other 
public employee retirement system in the state of Minnesota 
having a like provision but excluding all other funds providing 
benefits for police officers or firefighters shall be entitled 
when qualified to an annuity from each fund if the person's 
total allowable service in all three funds or in any two of 
these funds totals ten five or more years, provided no portion 
of the allowable service upon which the retirement annuity from 
one fund is based is again used in the computation for benefits 
from another fund and provided further that the person has not 
taken a refund from any one of these three funds since the 
person's membership in that association has terminated.  The 
annuity from each fund shall be determined by the appropriate 
provisions of the law except that the requirement that an 
annuitant have at least ten five years' membership service or 
ten five years of allowable service in the respective 
association shall not apply for the purposes of this section 
provided the combined service in two or more of these funds 
equals ten five or more years. 
    Sec. 29.  Minnesota Statutes 1986, section 354A.31, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AGE AND SERVICE REQUIREMENTS.] Any 
coordinated member or former coordinated member who has ceased 
to render teaching service for the school district in which the 
teachers retirement fund association exists and who has either 
attained the age of at least 55 years with not less than ten 
five years of allowable service credit or received credit for 
not less than 30 years of allowable service regardless of age, 
shall be entitled upon written application to a retirement 
annuity.  
    Sec. 30.  Minnesota Statutes 1986, section 354A.31, 
subdivision 5, is amended to read:  
    Subd. 5.  [UNREDUCED NORMAL RETIREMENT ANNUITY.] Upon 
retirement at age 65 with at least ten five years of service 
credit or at age 62 with at least 30 years of service credit, a 
coordinated member shall be entitled to a normal retirement 
annuity calculated pursuant to subdivision 4.  
    Sec. 31.  Minnesota Statutes 1986, section 354A.31, 
subdivision 6, is amended to read:  
    Subd. 6.  [REDUCED RETIREMENT ANNUITY.] Upon retirement at 
an age prior to age 65 with ten five years of service credit or 
prior to age 62 with at least 30 years of service credit, a 
coordinated member shall be entitled to a retirement annuity in 
an amount equal to the normal retirement annuity reduced by 
one-half of one percent for each month that the coordinated 
member is under the age of 65 if the coordinated member has less 
than 30 years of service credit or is under the age of 62 if the 
coordinated member has at least 30 years of service credit but 
is over the age of 59, and reduced by one-fourth of one percent 
for each month that the coordinated member is under the age of 
60.  
    Sec. 32.  Minnesota Statutes 1986, 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 50 years and has 
credit for at least ten five 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. 33.  Minnesota Statutes 1986, section 354A.36, 
subdivision 1, is amended to read:  
    Subdivision 1.  [MINIMUM AGE, SERVICE AND SALARY 
REQUIREMENTS.] Any coordinated member who has either at 
least ten five years of allowable service credit or attained the 
age of at least 50 years with at least five years of allowable 
service credit, has an average salary of at least $75 per month 
and has become totally and permanently disabled shall be 
entitled to a disability benefit.  If the disabled coordinated 
member's allowable service credit has not been continuous, at 
least five three years of the required allowable service shall 
be required to have been rendered subsequent to the last 
interruption in service.  
    Sec. 34.  Minnesota Statutes 1986, section 354A.39, is 
amended to read:  
    354A.39 [SERVICE IN OTHER PUBLIC RETIREMENT FUNDS; 
ANNUITY.] 
    Any person who has been a member of the Minnesota state 
retirement system, the public employees retirement association 
including the public employees retirement association police and 
fire fund, the teachers retirement association, the Minnesota 
state patrol retirement association, the legislators retirement 
plan, the constitutional officers retirement plan, the 
Minneapolis employees retirement fund, the Duluth teachers 
retirement fund association new law coordinated program, the 
Minneapolis teachers retirement fund association coordinated 
program, the St. Paul teachers retirement fund association 
coordinated program, or any other public employee retirement 
system in the state of Minnesota having a like provision but 
excluding all other funds providing retirement benefits for 
police officers or firefighters shall be entitled when qualified 
to an annuity from each fund if the person's total allowable 
service in all of the funds or in any two or more of the funds 
totals ten five or more years, provided that no portion of the 
allowable service upon which the retirement annuity from one 
fund is based is used again in the computation for a retirement 
annuity from another fund and provided further that the person 
has not taken a refund from any of funds or associations since 
the person's membership in the fund or association has 
terminated.  The annuity from each fund or association shall be 
determined by the appropriate provisions of the law governing 
each fund or association, except that the requirement that a 
person must have at least ten five years of allowable service in 
the respective fund or association shall not apply for the 
purposes of this section, provided that the aggregate service in 
two or more of these funds equals ten five or more years. 
    Sec. 35.  Minnesota Statutes 1986, section 356.30, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 
Notwithstanding any provisions to the contrary of the laws 
governing the funds enumerated in subdivision 3, a person who 
has met the qualifications of clause (2) may elect to receive a 
retirement annuity from each fund in which the person has at 
least six months allowable service, based on the allowable 
service in each fund, subject to the provisions of clause (3).  
    (2) A person may receive upon retirement, in lieu of any 
augmentation of deferred annuities provided by laws governing 
the funds enumerated in subdivision 3, a retirement annuity from 
each fund in which the person has at least six months allowable 
service if 
    (a) the person has allowable service totaling ten five or 
more years in any two or more of the enumerated funds;  
    (b) the person has at least six months of allowable service 
with the last such fund earned during the last period of 
employment; and 
    (c) the person has not begun to receive an annuity from any 
enumerated fund or the person has made application for benefits 
from all funds within a six-month period.  
    (3) The retirement annuity from each fund shall be based 
upon the allowable service in each fund, except that:  
    (a) The laws governing annuities shall be the law in effect 
on the date of final termination from the last public service 
under a covered fund.  
    (b) The "average salary" on which the annuity from each 
covered fund in which the employee has credit in a formula plan 
shall be based on the employee's highest five successive years 
of covered salary during the entire service in covered funds.  
    (c) The formula percentages to be used by each fund shall 
be those percentages prescribed by each fund's formula as 
continued for the respective years of allowable service from one 
fund to the next, recognizing all previous allowable service 
with the other covered funds.  
    (d) Allowable service in all the funds shall be combined in 
determining eligibility for and the application of each fund's 
provisions in respect to actuarial reduction in the benefit 
amount for retirement prior to normal retirement.  
    (e) The benefit amount payable for any allowable service 
under a nonformula plan of a covered fund shall not be affected 
but such service and covered salary shall be used in the above 
calculation.  
    (f) This section shall not apply to any person whose final 
termination from the last public service under a covered fund is 
prior to May 1, 1975.  
    (g) For the purpose of computing benefits under this 
section the formula percentages used by any covered fund shall 
in no event exceed 2-1/2 percent per year of service for any 
year of service or fraction thereof.  
    (h) Any period of time for which a person has credit in 
more than one of the covered funds shall be used only once for 
the purpose of determining total allowable service.  
    (i) If the period of duplicated service credit is more than 
six months, or the person has credit for more than six months 
with each of the funds, each fund shall apply its formula to a 
prorated service credit for the period of duplicated service 
based on a fraction of the salary on which deductions were paid 
to that fund for the period divided by the total salary on which 
deductions were paid to all funds for the period.  
    (j) If the period of duplicated service credit is less than 
six months, or when added to other service credit with that fund 
is less than six months, the service credit shall be ignored and 
a refund of contributions made to the person in accord with that 
fund's refund provisions.  
     Sec. 36.  [423A.19] [REDUCED VESTING REQUIREMENT.] 
    Subdivision 1.  [REDUCED VESTING.] Notwithstanding any law 
to the contrary, for a police or salaried firefighters relief 
association that implements the provision with municipal 
approval as provided in subdivision 4, a person with at least 
five years of service credited by the relief association is 
entitled, upon termination of active service and reaching at 
least the required normal retirement age, to receive a pro rata 
monthly service pension.  The pro rata monthly service pension 
must be calculated in the amount and manner specified by the 
board of trustees, but not to exceed that portion of the service 
pension payable upon meeting the minimum age and years of 
service requirements that bears the same relationship that the 
person's actual years and portions of years of service bear to 
the minimum service requirement. 
    Subd. 2.  [SURVIVOR BENEFIT COVERAGE.] A person entitled to 
or receiving a reduced vesting service pension as provided in 
subdivision 1 is entitled to surviving spouse benefit coverage, 
surviving child benefit coverage, or both, if all other 
qualification requirements are met.  The survivor benefit must 
be calculated in the amount and manner specified by the board of 
trustees, but not to exceed that portion of survivor benefit 
payable to a survivor of a deceased retired member who had met 
the minimum years of service requirement that bears the same 
relationship that the actual years and portions of years of 
service of the person bear to the minimum service requirement 
for a service pension. 
    Subd. 3.  [POSTRETIREMENT ADJUSTMENTS.] A reduced vesting 
service pension as provided in subdivision 1 or a survivor 
benefit payable on behalf of a deceased person entitled to or 
receiving a reduced vesting service pension as provided in 
subdivision 2 is entitled to postretirement adjustments if the 
comparable pension or benefit payable when the full minimum 
service requirement has been met is subject to postretirement 
adjustments.  The postretirement adjustment must be the same 
percentage increase as the postretirement adjustment for the 
comparable pension or benefit payable when the full minimum 
service requirement has been met. 
    Subd. 4.  [IMPLEMENTATION.] The reduced vesting requirement 
must be implemented by a local relief association through an 
amendment to the bylaws of the relief association with approval 
by the governing body of the municipality as required by section 
69.77, subdivision 2i.  The bylaw amendment may not be effective 
until a certified copy of it and the municipal approval has been 
filed by the municipal clerk with the executive director of the 
legislative commission on pensions and retirement, the state 
auditor, and the secretary of state.  
    Sec. 37.  [EFFECTIVE DATE.] 
    Sections 1 to 36 are effective July 1, 1987. 

                               ARTICLE 10

                   PUBLIC PENSION PLAN LEGAL OPINIONS
    Section 1.  Minnesota Statutes 1986, section 8.07, is 
amended to read:  
    8.07 [OPINIONS; COUNTY, CITY, TOWN, PUBLIC PENSION FUND, 
SCHOOL ATTORNEYS, COMMISSIONER OF EDUCATION.] 
    The attorney general on application shall give an opinion, 
in writing, to county, city, town, public pension fund 
attorneys, or the attorneys for the board of a school district 
or unorganized territory on questions of public importance; and 
on application of the commissioner of education shall give an 
opinion, in writing, upon any question arising under the laws 
relating to public schools.  On all school matters such opinion 
shall be decisive until the question involved shall be decided 
otherwise by a court of competent jurisdiction. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective on July 1, 1987. 

                               ARTICLE 11 

                       MISCELLANEOUS CORRECTIONS 
    Section 1.  [CORRECTION; FIRST CLASS CITY TEACHERS 
RETIREMENT FUND AUDIT RESPONSIBILITY.] 
    Subdivision 1.  [CORRECTION TO REFERENCE.] Minnesota 
Statutes 1986, section 354A.021, subdivision 7, added by H.F. 
No. 1213, article 7, section 1, if enacted at the 1987 regular 
session, is amended to read: 
    Subd. 7.  [AUDIT BY LEGISLATIVE AUDITOR.] The books and 
accounts of each teachers retirement fund association must be 
examined and audited periodically as considered necessary by the 
state auditor.  A full and detailed report of the examination 
and audit must be made and a copy provided to the teachers 
retirement fund association board of trustees.  The cost of any 
examination and audit must be paid by the teachers retirement 
fund association in accordance with section 6.56.  For purposes 
of section 6.56, each teachers retirement fund association is 
considered a state agency local governmental entity equivalent 
to a county, city, town, or school district.  
    Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective July 
1, 1987. 
    Sec. 2.  [CORRECTION; EFFECTIVE DATE.] 
    Subdivision 1.  [CLARIFICATION OF EFFECTIVE DATE.] A law 
styled as H.F. No. 1213, article 7, section 2, if enacted at the 
1987 regular session, is amended to read: 
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective July 1, 1987, regarding the 
responsibility to audit all financial transactions occurring 
after June 30, 1987. 
    Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective on 
the day following final enactment. 
    Sec. 3.  [CORRECTION; ERRONEOUS DATE REFERENCE.] 
    Subdivision 1.  [DATE REFERENCE CORRECTION.] A law styled 
as H.F. No. 1026, section 81, if enacted at the 1987 regular 
session, is amended to read: 
    Sec. 81.  [TRANSITIONAL PROVISION.] 
    In establishing the correctional employees retirement fund 
under section 20, the board of directors of the Minnesota state 
retirement system shall allocate the assets currently held by 
the state employees retirement fund between that fund and the 
newly created fund.  The assets shall be allocated based on the 
actuarial valuations of the state employees retirement plan and 
the correctional employees retirement plan prepared by the 
actuary retained by the legislative commission on pensions and 
retirement as of July 1, 1986 1987, and adjusted for the actual 
receipts of contributions and investment income and actual 
disbursements of benefits, refunds, and administrative expenses 
attributable to the correctional employees retirement plan 
occurring between July 1, 1987, and the date on which the 
correctional employees retirement fund is established. 
    Subd. 2.  [EFFECTIVE DATE.] Subdivision 1 is effective on 
the day following final enactment of H.F. No. 1026, at the 1987 
regular session. 
    Approved June 2, 1987