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Minnesota Legislature

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1988 

                        CHAPTER 605-H.F.No. 257 
           An act relating to public employment; providing that 
          certain state employees who are eligible to retire are 
          eligible for state-paid insurance benefits; 
          authorizing employer contributions to a deferred 
          compensation plan in certain instances; modifying the 
          definition of terms and conditions of employment for 
          public employees; modifying severance pay; amending 
          Minnesota Statutes 1986, sections 123.72; 179A.03, 
          subdivision 19; 179A.07, subdivision 2; 179A.16, by 
          adding a subdivision; 179A.20, by adding a 
          subdivision; 356.24; 465.72, subdivision 1; and 
          471.616, subdivision 1; Minnesota Statutes 1987 
          Supplement, sections 43A.24, subdivision 2; 43A.316, 
          subdivision 8; and 352.96, subdivision 2; proposing 
          coding for new law in Minnesota Statutes, chapter 471; 
          repealing Minnesota Statutes 1986, section 465.72, 
          subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1987 Supplement, section 
43A.24, subdivision 2, is amended to read:  
    Subd. 2.  [OTHER ELIGIBLE PERSONS.] The following persons 
are eligible for state paid life insurance and hospital, 
medical, and dental benefits as determined in applicable 
collective bargaining agreements or by the commissioner or by 
plans pursuant to section 43A.18, subdivision 6, or by the board 
of regents for employees of the University of Minnesota not 
covered by collective bargaining agreements.  Coverages made 
available, including optional coverages, are as contained in the 
plan established pursuant to section 43A.18, subdivision 2. 
    (a) a member of the state legislature, provided that 
changes in benefits resulting in increased costs to the state 
shall not be effective until expiration of the term of the 
members of the existing house of representatives.  An eligible 
member of the state legislature may decline to be enrolled for 
state paid coverages by filing a written waiver with the 
commissioner.  The waiver shall not prohibit the member from 
enrolling the member or dependents for optional coverages, 
without cost to the state, as provided for in section 43A.26.  A 
member of the state legislature who returns from a leave of 
absence to a position previously occupied in the civil service 
shall be eligible to receive the life insurance and hospital, 
medical, and dental benefits to which the position is entitled; 
    (b) a permanent employee of the legislature or a permanent 
employee of a permanent study or interim committee or commission 
or a state employee on leave of absence to work for the 
legislature, during a regular or special legislative session; 
    (c) a judge of the appellate courts or an officer or 
employee of these courts; a judge of the district court, a judge 
of county court, a judge of county municipal court, or a judge 
of probate court; a district administrator; and an employee of 
the office of the district administrator of the fifth or the 
eighth judicial districts; 
    (d) a salaried employee of the public employees retirement 
association; 
    (e) a full-time military or civilian officer or employee in 
the unclassified service of the department of military affairs 
whose salary is paid from state funds; 
    (f) a salaried employee of the Minnesota historical 
society, whether paid from state funds or otherwise, who is not 
a member of the governing board;  
    (g) an employee of the regents of the University of 
Minnesota; and 
    (h) notwithstanding section 43A.27, subdivision 3, an 
employee of the state of Minnesota or the regents of the 
University of Minnesota who is at least 60 and not yet 65 years 
of age on July 1, 1982, who is otherwise eligible for employee 
and dependent insurance and benefits pursuant to section 43A.18 
or other law, who has at least 20 years of service and retires, 
earlier than required, within 60 days of March 23, 1982; or an 
employee who is at least 60 and not yet 65 years of age on July 
1, 1982, who has at least 20 years of state service and retires, 
earlier than required, from employment at Rochester state 
hospital after July 1, 1981; or an employee who is at least 55 
and not yet 65 years of age on July 1, 1982, and is covered by 
the Minnesota state retirement system correctional employee 
retirement plan or the state patrol retirement fund, who has at 
least 20 years of state service and retires, earlier than 
required, within 60 days of March 23, 1982.  For purposes of 
this clause, a person retires when the person terminates active 
employment in state or University of Minnesota service and 
applies for a retirement annuity.  Eligibility shall cease when 
the retired employee attains the age of 65, or when the employee 
chooses not to receive the annuity that the employee has applied 
for.  The retired employee shall be eligible for coverages to 
which the employee was entitled at the time of retirement, 
subject to any changes in coverage through collective bargaining 
or plans established pursuant to section 43A.18, for employees 
in positions equivalent to that from which retired, provided 
that the retired employee shall not be eligible for state-paid 
life insurance.  Coverages shall be coordinated with relevant 
health insurance benefits provided through the federally 
sponsored Medicare program; and 
     (i) An employee of an agency of the state of Minnesota 
identified through the process provided in this paragraph who is 
eligible to retire prior to age 65.  The commissioner and the 
exclusive representative of state employees shall enter into 
agreements under section 179A.22 to identify employees whose 
positions are in programs that are being permanently eliminated 
or reduced due to federal or state policies or practices.  
Failure to reach agreement identifying these employees is not 
subject to impasse procedures provided in chapter 179A.  The 
commissioner must prepare a plan identifying eligible employees 
not covered by a collective bargaining agreement in accordance 
with the process outlined in section 43A.18, subdivisions 2 and 
3.  For purposes of this paragraph, a person retires when the 
person terminates active employment in state service and applies 
for a retirement annuity.  Eligibility ends as provided in the 
agreement or plan, but must cease at the end of the month in 
which the retired employee chooses not to receive an annuity, or 
the employee is eligible for employer-paid health insurance from 
a new employer.  The retired employees shall be eligible for 
coverages to which they were entitled at the time of retirement, 
subject to any changes in coverage through collective bargaining 
or plans established under section 43A.18 for employees in 
positions equivalent to that from which they retired, provided 
that the retired employees shall not be eligible for state-paid 
life insurance. 
    Sec. 2.  Minnesota Statutes 1987 Supplement, section 
43A.316, subdivision 8, is amended to read:  
    Subd. 8.  [CONTINUATION OF COVERAGE.] (a) A participating 
employee who is laid off or is on unrequested leave may elect to 
continue the plan coverage.  This coverage is at the expense of 
the employee unless otherwise provided by a collective 
bargaining agreement.  Premiums for these employees shall be 
established by the commissioner.  Coverage continues until one 
of the following occurs: 
    (1) the employee is reemployed and eligible for health care 
coverage under a group policy; or 
    (2) the insurance continuation periods required by state 
and federal laws expire. 
    (b) A participating employee who retires and is receiving 
an annuity or is eligible for and has applied for an annuity 
under chapter 352, 352B, 352C, 352D, 353, 354, 354A, 356, 422A, 
423, 423A, 424, or 490 is eligible to continue participation in 
the plan.  Any employer's contribution must cease when the 
retiree reaches age 65.  These employees, and employees who have 
already retired prior to the group from which they retired 
entering the plan, are eligible to participate as long as their 
group continues to participate.  This participation is at the 
retiree's expense unless a collective bargaining agreement or 
personnel policy provides otherwise.  An employer shall notify 
an employee of this option no later than the effective date of 
retirement.  The retired employee shall notify the employer 
within 30 days of the effective date of retirement of intent to 
exercise this option. 
    The spouse of a deceased retired employee may purchase the 
benefits provided at premiums established by the commissioner if 
the deceased retired employee received an annuity under chapter 
352, 353, 354, 354A, 356, 422A, 423, 423A, or 424 and if the 
spouse was a dependent under the retired employee's coverage 
under this section at the time of the death of the retired 
employee.  Coverage under this clause shall be coordinated with 
relevant insurance benefits provided through the federally 
sponsored Medicare program.  
    (c) The plan benefits shall continue in the event of strike 
permitted by section 179A.18, if the exclusive representative 
chooses to have coverage continue and the employee pays the 
total monthly premiums when due.  
    (d) A person who desires to participate under paragraphs 
(a) to (c) shall notify the eligible employer or former employer 
of intent to participate according to rules established by the 
commissioner.  The eligible employer shall notify the 
commissioner, and coverage shall begin as soon as the 
commissioner permits. 
    Persons participating under these paragraphs shall make 
appropriate premium payments in the time and manner established 
by the commissioner. 
    Sec. 3.  Minnesota Statutes 1986, section 123.72, is 
amended to read:  
    123.72 [MEDICAL INSURANCE PREMIUMS FOR RETIRED PERSONNEL.] 
    The school board of any independent school district may 
expend funds to pay premiums on hospitalization and major 
medical insurance coverage for officers and employees who retire 
prior to age 65 and who are between the ages of 55 and 65.  Such 
premiums shall only be paid until such retired officers and 
employees reach age 65.  
    Sec. 4.  Minnesota Statutes 1986, section 179A.03, 
subdivision 19, is amended to read:  
    Subd. 19.  [TERMS AND CONDITIONS OF EMPLOYMENT.] "Terms and 
conditions of employment" means the hours of employment, the 
compensation therefor including fringe benefits except 
retirement contributions or benefits other than employer payment 
of, or contributions to, premiums for group insurance coverage 
of retired employees or severance pay, and the employer's 
personnel policies affecting the working conditions of the 
employees.  In the case of professional employees the term does 
not mean educational policies of a school district.  "Terms and 
conditions of employment" is subject to section 179A.07.  
    Sec. 5.  Minnesota Statutes 1986, section 179A.07, 
subdivision 2, is amended to read:  
    Subd. 2.  [MEET AND NEGOTIATE.] (a) A public employer has 
an obligation to meet and negotiate in good faith with the 
exclusive representative of public employees in an appropriate 
unit regarding grievance procedures and the terms and conditions 
of employment, but this obligation does not compel the public 
employer or its representative to agree to a proposal or require 
the making of a concession.  
    The public employer's duty under this subdivision exists 
notwithstanding contrary provisions in a municipal charter, 
ordinance, or resolution.  A provision of a municipal charter, 
ordinance, or resolution which limits or restricts a public 
employer from negotiating or from entering into binding 
contracts with exclusive representatives is superseded by this 
subdivision.  
    (b) In addition, a public employer may, but does not have 
an obligation to, meet and negotiate in good faith with the 
exclusive representative of public employees in an appropriate 
unit regarding an employer contribution to the state of 
Minnesota deferred compensation plan authorized by section 
356.24, paragraph (a), clause (4), within the limits set by 
section 356.24, paragraph (a), clause (4). 
    Sec. 6.  Minnesota Statutes 1986, section 179A.16, is 
amended by adding a subdivision to read: 
    Subd. 9.  [NO ARBITRATION.] Failure to reach agreement on 
employer payment of, or contributions toward, premiums for group 
insurance coverage of retired employees is not subject to 
interest arbitration procedures under this section. 
    Sec. 7.  Minnesota Statutes 1986, section 179A.20, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [FORMER EMPLOYEE BENEFITS.] A contract may not 
obligate an employer to fund all or part of the cost of health 
care benefits for a former employee beyond the duration of the 
contract, subject to section 179A.20, subdivision 6.  A 
personnel policy may not obligate an employer to fund all or 
part of health care benefits for a former employee beyond the 
duration of the policy.  A policy may not extend beyond the 
termination of the contract of longest duration covering other 
employees of the employer or, if none, the termination of the 
budgetary cycle during which the policy is adopted. 
    Sec. 8.  Minnesota Statutes 1987 Supplement, section 
352.96, subdivision 2, is amended to read:  
    Subd. 2.  [PURCHASE OF SHARES.] The amount of compensation 
so deferred may be used to purchase: 
    (1) shares in the Minnesota supplemental investment fund 
established in section 11A.17; 
    (2) saving accounts in federally insured financial 
institutions; 
    (3) life insurance contracts, fixed annuity and variable 
annuity contracts from companies that are subject to regulation 
by the commissioner of commerce; or 
    (4) a combination of (1), (2), or (3), as specified by the 
participant. 
    The shares accounts or contracts purchased shall stand in 
the name of the state or other employing unit, for the officer 
or employee whose deferred compensation purchased the shares, 
until distributed to the officer or employee in a manner agreed 
upon by the employee and the executive director of the Minnesota 
state retirement system, acting for the employer.  This 
subdivision does not authorize an employer contribution, except 
as authorized in section 356.24, paragraph (a), clause (4).  The 
state, political subdivision, or other employing unit is not 
responsible for any loss that may result from investment of the 
deferred compensation. 
    Sec. 9.  Minnesota Statutes 1986, section 356.24, is 
amended to read:  
    356.24 [SUPPLEMENTAL PENSION OR DEFERRED COMPENSATION 
PLANS, RESTRICTIONS UPON GOVERNMENT UNITS.] 
    (a) It is unlawful for a school district or other 
governmental subdivision or state agency to levy taxes for, or 
contribute public funds to a supplemental pension or deferred 
compensation plan which is established, maintained and operated 
in addition to a primary pension program for the benefit of the 
governmental subdivision employees other than: 
    (1) to a supplemental pension plan which that was 
established, maintained and operated prior to before May 6, 
1971,; 
    (2) to any a plan which that provides solely for group 
health, hospital, disability, or death benefits or; 
    (3) to any a plan which that provides solely for 
severance pay as authorized pursuant to under section 465.72 to 
a retiring or terminating employee; or 
    (4) to the state of Minnesota deferred compensation plan 
under section 352.96, if provided for in a personnel policy or 
in the collective bargaining agreement of the public employer 
with the exclusive representative of public employees in an 
appropriate unit, in an amount matching employee contributions 
on a dollar for dollar basis, but not to exceed an employer 
contribution of $2,000 a year per employee.  
    (b) No change in benefits or employer contributions in any 
a supplemental pension plan to which this section applies after 
May 6, 1971 shall, may be effective without prior legislative 
authorization.  
    Sec. 10.  Minnesota Statutes 1986, section 465.72, 
subdivision 1, is amended to read:  
    Subdivision 1.  [PAYMENT; LIMITS.] Except as may otherwise 
be provided in Laws 1959, chapter 690, as amended, any a county, 
city, township, school district or other governmental 
subdivision may pay severance pay to its employees and 
promulgate adopt rules for the payment of severance pay to an 
employee who leaves employment on or before or subsequent to the 
normal retirement date.  Severance pay shall also does not 
include the payment of accumulated vacation leave, compensation 
for accumulated sick leave or a combination thereof other 
payments in the form of periodic contributions by an employer 
toward premiums for group insurance policies for a former 
employee.  The severance pay shall must be excluded from 
retirement deductions and from any calculations in retirement 
benefits.  It shall Severance pay must be paid in a manner 
mutually agreeable to the employee and employer and, except as 
provided in subdivision 2, over a period not to exceed five 
years from retirement or termination of employment.  If a 
retired or terminated employee dies before all or a portion of 
the severance pay has been disbursed, that balance due shall 
must be paid to a named beneficiary or, lacking same one, to the 
deceased's estate.  Except as provided in subdivision 2, in no 
event shall Severance pay provided for an employee leaving 
employment may not exceed an amount equivalent to one year of 
pay. 
    Sec. 11.  [471.611] [RETIREES' HEALTH INSURANCE BENEFITS.] 
    Subdivision 1.  [ACCOUNTING.] A unit of local government 
that agrees to make payments for health insurance benefits for 
retired employees shall identify the amount required to pay the 
cost of those benefits during the period in which the contract 
or personnel policy providing for those benefits is in effect 
and shall record the amount as an expenditure, according to 
generally accepted accounting principles, in the fiscal year or 
years during which the payments are to be made.  A school 
district is in compliance with this subdivision if it complies 
with section 121.908, subdivision 6.  Provision of these 
benefits under a personnel policy must be approved, as a 
separate action, by the governing body of the employing 
governmental unit. 
    Subd. 2.  [COORDINATION.] A unit of local government that 
funds all or part of the cost of health care benefits for a 
retired employee must provide for coverage to be coordinated 
with applicable benefits provided through the federally 
sponsored medicare program. 
    Sec. 12.  Minnesota Statutes 1986, section 471.616, 
subdivision 1, is amended to read:  
    Subdivision 1.  [BIDDING REQUIRED.] No governmental 
subdivision, political subdivision, or any other body corporate 
and politic authorized by law to purchase group insurance for 
its employees and providing or intending to provide group 
insurance protections and benefits for 25 or more of its 
employees shall enter into a contract for or renew any group 
insurance policy or contract without calling for bids and 
awarding the contract to the lowest responsible bidder by way of 
competitive bidding procedures similar to those for the 
provision of services and supplies under section 16B.07, 
subdivisions 1 to 5.  A political subdivision may provide in the 
bid specifications that self-insured health benefit plans will 
not be considered.  Lowest responsible bidder means the insurer, 
service plan corporation, or self-insurance plan, if allowed by 
the bid specifications which offers the lowest cost, is 
authorized to do business in this state, and is deemed by the 
governmental unit to be capable of satisfactorily performing the 
administration of the policy or contract in accordance with the 
bid specifications.  "Cost" means in the case of an insurer, the 
net premium, including consideration of any expense and risk 
charges; in the case of service plan corporation, the charge for 
expenses and risk taking; and in the case of self-insurance 
plans, the sum of the cost of paid claims, including provision 
for estimated incurred but unpaid claims at the end of the term, 
administrative costs, and premium for excess coverage.  The cost 
of changing plans may also be considered in determining the 
lowest cost.  The aggregate value of benefits provided by a 
contract entered into after July 1, 1973 shall not be less than 
those provided by the preexisting contract (a) unless a majority 
of the employees covered under the group insurance plan and 
voting on the question agree to a reduction in the benefits, if 
the employees are not represented by an exclusive representative 
pursuant to section 179A.12, or (b) unless the public employer 
and the exclusive representative of the employees of an 
appropriate bargaining unit, certified pursuant to under section 
179.67 179A.12, agree to a reduction in the benefits.  The 
aggregate value of benefits of any former employee who has 
retired shall not, in any event, be reduced pursuant to clause 
(a) or (b), unless the employee has individually agreed to the 
reduction. 
    No contract need be submitted to bid more frequently than 
once every 48 months, unless for any reason whatsoever, a 50 
percent or greater change in the premium per covered employee 
under the policy contract is provided, required or indicated.  
If additional employees are added to an existing group pursuant 
to a joint powers agreement under section 471.59, new bids and 
award are not required.  
    When an insurer proposes an increase in rates, it shall 
accompany its proposal with an aggregate claims record for the 
appropriate period that explains the proposed increase.  When a 
contract is resubmitted for bids the aggregate claims record 
shall accompany the specifications for the contract.  Cost 
comparisons are not required between insured and self-insurance 
alternatives, but apply to comparisons between two or more 
insured proposals or comparisons between two or more 
self-insurance proposals.  
    Sec. 13.  [CONTRACTS VALIDATED.] 
    Notwithstanding any law to the contrary, the terms of a 
contract or personnel policy in effect before the effective date 
of this section providing for severance pay for the purposes 
described in section 465.72, subdivision 2, or providing for 
employer payment of some or all of the costs of health care 
benefits or insurance for retired employees, and all payments 
made under those policies or contracts, are valid, subject to 
section 7.  
    Sec. 14.  [REPEALER.] 
    Minnesota Statutes 1986, section 465.72, subdivision 2, is 
repealed. 
    Sec. 15.  [EFFECTIVE DATES.] 
    Sections 1 to 14 are effective the day following final 
enactment.  Section 13 applies retroactively to August 1, 1986. 
    Section 12 applies only to employees who retire after the 
effective date of the section. 
    Approved April 24, 1988