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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 709-H.F.No. 2477 
           An act relating to retirement; making technical 
          changes in the laws governing the teachers retirement 
          association and the public employees retirement 
          association; including certain county historical 
          society employees in the membership of the public 
          employees retirement association; authorizing certain 
          persons to purchase prior service; excluding certain 
          metropolitan transit commission employees from 
          additional disability and survivorship coverage; 
          regulating volunteer firefighters annuity contracts; 
          authorizing changes in certain local police and 
          firefighters relief associations; authorizing optional 
          Medicare coverage for certain public employees; 
          providing for a special referendum; amending certain 
          mandatory retirement age provisions; clarifying 
          eligibility of local elected officials for 
          participation in a deferred compensation program; 
          amending vesting provisions for judges; permitting the 
          payment of certain state aids to the city of Winona; 
          making technical changes in the laws governing the 
          judges retirement plan; establishing an individual 
          retirement account plan for state university and 
          community college faculty; amending Minnesota Statutes 
          1986, sections 353.01, subdivisions 15, 29, and by 
          adding a subdivision; 353.028, subdivision 2; 353.03, 
          subdivision 1; 353.27, subdivisions 7, 13, and by 
          adding subdivisions; 353.32, subdivision 5; 353.33, 
          subdivision 7; 353.37, subdivision 1; 353.65, 
          subdivision 2; 354.05, by adding a subdivision; 
          356.24; 424A.02, by adding subdivisions; 471.61, 
          subdivision 1; 473.418; 490.123, subdivision 1; 
          490.124, subdivision 2; and 490.129; Minnesota 
          Statutes 1987 Supplement, sections 136.82, subdivision 
          1; 352.85, subdivisions 1 and 2; 353.01, subdivisions 
          2a, 2b, 10, 16, and 20; 353.27, subdivisions 10 and 
          12; 353.29, subdivision 6; 353.32, subdivision 1a; 
          353.34, subdivision 3; 353A.10, subdivision 3; 
          353C.02; 353C.03; 353C.04; 353C.05; 353C.06, 
          subdivisions 1, 3, and 4; 353C.07; 353C.08, 
          subdivision 5 and by adding a subdivision; 353D.05, 
          subdivision 2; 353D.07, subdivisions 1, 2, and 4; 
          353D.08; 356.302, subdivisions 1 and 3; and 490.124, 
          subdivision 11; Laws 1955, chapter 151, section 9, 
          subdivision 7, as amended; Laws 1986, chapter 359, 
          section 25; Laws 1987, chapter 372, article 2, section 
          16; proposing coding for new law in Minnesota 
          Statutes, chapters 60A; 355; and 356; proposing coding 
          for new law as Minnesota Statutes, chapter 354B; 
          repealing Minnesota Statutes 1987 Supplement, section 
          353D.07, subdivision 5. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1 
TEACHERS RETIREMENT ASSOCIATION 
    Section 1.  Minnesota Statutes 1987 Supplement, section 
136.82, subdivision 1, is amended to read:  
    Subdivision 1.  [GENERALLY.] (a) The executive director of 
the teachers retirement fund shall redeem shares in the accounts 
of the Minnesota supplemental retirement investment fund 
standing in an employee's share account record under the 
following circumstances, but always in accordance with the laws 
and rules governing the Minnesota supplemental retirement 
investment fund: 
    (1) (b) The executive director shall redeem shares under 
this subdivision when requested to do so in writing on forms 
provided by the executive director of the teachers retirement 
fund by a person having shares to the credit of the employee's 
share account record, if the person is age 55 years of age or 
older and is no longer employed by the state university board or 
state board for community colleges.  In such case the 
person shall must receive the cash realized on the redemption of 
the shares.  The person may direct the redemption of not more 
than 20 percent of the person's shares in the employee's share 
account record in any one year and may not direct more than one 
redemption in any one calendar month; provided, however, that 
the state university board or its designee, in the case of a 
person employed by the state university board, and the state 
board for community colleges or its designee, in the case of a 
person employed by the state board for community colleges, may, 
upon application, in at their sole discretion, permit greater 
withdrawals in any one year. 
    (2) (c) The executive director shall redeem shares under 
this subdivision when requested to do so in writing, on forms 
provided by the executive director of the teachers retirement 
fund, by a person having shares to the credit of the employee's 
share account record, if the person has left employment by the 
state university board or state board for community colleges 
because of a total and permanent disability as defined in 
section 354.05, subdivision 14, and.  If the executive director 
of the teachers retirement fund finds that the person is totally 
and permanently disabled and will as a result be unable to 
return to similar employment, the person shall must receive the 
cash realized on the redemption of the shares.  The person may 
direct the redemption of not more than 20 percent of the shares 
in the employee's share account record in any one year and may 
not direct more than one redemption in any one calendar month; 
provided, however, that the state university board or its 
designee, in the case of a person employed by the state 
university board, and the state board for community colleges or 
its designee, in the case of a person employed by the state 
board for community colleges, may, upon application, in at their 
sole discretion, permit greater withdrawals in any one year.  If 
the person returns to good health, the person shall owe owes no 
restitution to the state or any a fund created established by 
its laws for a redemption directed pursuant to under this 
paragraph. 
    (3) (d) The executive director shall redeem shares under 
this subdivision in the event of the death of a person having 
shares to the credit of the employee's share account record and 
leaving a surviving spouse, then when requested to do so in 
writing, on forms provided by the executive director of the 
teachers retirement fund, by the surviving spouse.  The 
surviving spouse shall must receive the cash realized on the 
redemption of the shares.  The surviving spouse may direct the 
redemption of not more than 20 percent of the shares in the 
deceased spouse's employee's share account record in any one 
year and may not direct more than one redemption in any one 
calendar month; provided, however, that the state university 
board or its designee, in the case of a person employed by the 
state university board, and the state board for community 
colleges or its designee, in the case of a person employed by 
the state board for community colleges, may, upon 
application, in at their sole discretion, permit greater 
withdrawals in any one year.  In that case the surviving 
spouse shall must receive the cash realized from the redemption 
of the shares.  Upon the death of the surviving spouse any 
shares remaining in the employee's share account record shall 
must be redeemed by the executive director of the teachers 
retirement fund and the cash realized therefrom from the 
redemption must be distributed to the estate of the surviving 
spouse. 
    (4) (e) In the event of the death of a person having shares 
to the credit of the employee's share account record and leaving 
no surviving spouse, then the executive director of the teachers 
retirement fund shall redeem all shares to the credit of the 
employee's share account record and pay the cash realized 
therefrom from the redemption to the estate of the deceased 
person. 
    (5) (f) The executive director shall redeem shares under 
this subdivision when requested to do so in writing, on forms 
provided by the executive director of the teachers retirement 
fund, by a person having shares to the credit of the employee's 
share account record, if the person is no longer employed by the 
state university board or state board for community colleges, 
but does not qualify under the provisions of paragraphs (1) (b) 
to (4) (e).  In that case one-half of the cash realized on the 
redemption of shares shall must be received by the person and 
one-half shall become becomes the property of the supplemental 
retirement plan account of the teachers retirement fund.  
Annually on July 1 the cancellations of the previous 12 
months shall must be prorated among the employees share accounts 
in proportion to the value which that each account bears to the 
total value of all share accounts. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective July 1, 1988. 

                               ARTICLE 2 

                      HISTORICAL SOCIETY EMPLOYEES 
    Section 1.  Minnesota Statutes 1987 Supplement, section 
353.01, subdivision 2a, is amended to read:  
    Subd. 2a.  [INCLUDED EMPLOYEES.] The following persons are 
included in the meaning of "public employee": 
    (a) (1) elected or appointed officers and employees of 
elected officers. 
    (b) (2) district court reporters. 
    (c) (3) officers and employees of the public employees 
retirement association. 
    (d) (4) employees of the league of Minnesota cities. 
    (e) (5) officers and employees of public hospitals, owned 
or operated by, or an integral part of, any a governmental 
subdivision or governmental subdivisions. 
    (f) (6) employees of a school district who receive separate 
salaries for driving their own buses. 
    (g) (7) employees of the association of Minnesota counties. 
    (h) (8) employees of the metropolitan intercounty 
association. 
    (i) (9) employees of the minnesota Municipal utilities 
association. 
    (j) (10) employees of the metropolitan airports commission 
if employment initially commences on or commenced after July 1 
June 30, 1979. 
    (k) (11) employees of the Minneapolis employees retirement 
fund, if employment initially commences on or commenced after 
July 1 June 30, 1979. 
    (l) (12) employees of the range association of 
municipalities and schools. 
    (m) (13) employees of the soil and water conservation 
districts. 
    (n) (14) employees of a county historical society who are 
county employees.  
    (o) (15) employees of a county historical society located 
in the county whom the county, at its option, certifies to the 
executive director to be county employees for purposes of 
retirement coverage under this chapter, which status must be 
accorded to all similarly situated county historical society 
employees and, once established, must continue as long as a 
person is an employee of the county historical society and is 
not excluded under subdivision 2b. 
    (16) employees of an economic development authority created 
under sections 458C.01 to 458C.23. 
    (p) (17) employees of the department of military affairs of 
the state of Minnesota who are full-time firefighters. 
    Sec. 2.  Minnesota Statutes 1986, section 471.61, 
subdivision 1, is amended to read:  
    Subdivision 1.  [OFFICERS, EMPLOYEES.] Any A county, 
municipal corporation, town, school district, county extension 
committee, other political subdivision or other body corporate 
and politic of this state, other than the state or any 
department thereof of the state, through its governing body, and 
any two or more subdivisions acting jointly through their 
governing bodies, may insure or protect its or their officers 
and employees, and their dependents, or any class or 
classes thereof of officers, employees, or dependents, under a 
policy or policies, or contract or contracts of group insurance 
or benefits covering life, health, and accident, in the case of 
employees, and medical and surgical benefits, and 
hospitalization insurance or benefits, for both employees and 
dependents, or dependents of an employee whose death was due to 
causes arising out of and in the course of employment, or any 
one or more of such those forms of insurance or protection.  Any 
such A governmental unit, including county extension committees 
and those paying their employees, may pay all or any part of the 
premiums or charges on such the insurance or protection.  Any 
such A payment shall be is deemed to be additional compensation 
paid to such the officers or employees, but for purposes of 
determining contributions or benefits under any a public pension 
or retirement system it shall is not be deemed to be additional 
compensation.  Any One or more of such governmental units may 
determine that a person is an officer or employee if such 
officer or employee the person receives income from such the 
governmental subdivisions without regard to the manner of 
election or appointment, including but not limited to employees 
of county historical societies that receive funding from the 
county.  The appropriate officer of such the governmental unit, 
or those disbursing county extension funds, shall deduct from 
the salary or wages of each officer and employee who elects to 
become insured or so protected, on the officer's or employee's 
written order, all or part of the officer's or employee's share 
of such premiums or charges and remit the same share or portion 
to the insurer or company issuing such the policy or contract. 
    Any A governmental unit, other than a school district, 
which that pays all or any part of such the premiums or 
charges is authorized to levy and collect a tax, if necessary, 
in the next annual tax levy for the purpose of providing the 
necessary funds money for the payment of such the premiums or 
charges, and such the sums so levied and appropriated shall 
are not, in the event such the sum exceeds the maximum sum 
allowed by any law or the charter of a municipal corporation, be 
considered part of the cost of government of such the 
governmental unit as defined in any tax levy or per capita 
expenditure limitation; provided at least 50 percent of the cost 
of benefits on dependents shall must be contributed by the 
employee or be paid by levies within existing per capita tax 
limitations. 
    The word "dependents" as used herein shall mean in this 
subdivision means spouse and minor unmarried children under the 
age of 18 years actually dependent upon the employee. 

                               ARTICLE 3 
PURCHASES OF PRIOR SERVICE AND RELATED PROVISIONS 
    Section 1.  [PURCHASES OF PRIOR SERVICE.] 
    Subdivision 1.  [ELIGIBILITY.] The following persons are 
eligible to purchase credit for the specified period or periods 
of prior service from the indicated retirement fund: 
    (1) from the public employees retirement association, a 
person whose employment with the city of Hibbing began in June 
1971, but for whom no salary deductions were taken until June 
1973, for the period for which the deductions were omitted; 
    (2) from the public employees retirement association, a 
person who is currently a state employee and who has prior 
service as an employee of the Fond du Lac Indian reservation 
from July 2, 1973, to December 29, 1980, for that period of 
employment by the Fond du Lac Indian reservation for which the 
person has not previously received service credit; 
    (3) from the general state employees retirement fund of the 
Minnesota state retirement system, a permanent employee of the 
metropolitan sports facilities commission who was an employee of 
the metropolitan sports facilities commission on May 17, 1977, 
and who was born on January 10, 1930, and began employment by 
the commission in 1956 or who was born on November 14, 1937, and 
began employment by the commission in 1961, and who did not 
exercise an option to purchase the prior service under Minnesota 
Statutes, section 473.565, subdivision 3 or 4, for that period 
of direct or indirect employment by the commission for which the 
person has not previously received service credit; 
    (4) from the teachers retirement association, a member who 
rendered teaching service, as defined in Minnesota Statutes, 
section 354.05, before July 1, 1957, and who did not make 
contributions for the service because of the limited or 
permanent exempt status of the person and optional membership, 
for that period of teaching service for which the person has not 
previously received service credit;  
    (5) from the public employees retirement association, a 
person employed by a public hospital as defined in Minnesota 
Statutes, section 355.71, subdivision 3, who exercised an option 
under Laws 1963, chapter 793, section 3, subdivision 5, between 
July 1, 1963, and June 30, 1967, to terminate membership in the 
coordinated program of the public employees retirement 
association and who elects to resume public employees retirement 
association coordinated program membership under article 5, 
section 40, for all or a portion of the period between the 
person's termination of membership and the election to resume 
membership; 
    (6) from the teachers retirement association, 
notwithstanding any other law, a person who is currently a 
member of the teachers retirement association and who taught at 
the University of Minnesota - southern school of agriculture as 
a certified science teacher from October 1, 1957, through March 
31, 1959, for the period taught at that school, provided the 
purchase is initiated before January 1, 1989; and 
    (7) from the public employees retirement association, a 
person who was elected clerk of court for Fillmore county from 
1969 to 1976, who was appointed court administrator for Fillmore 
county in January 1977, who was discovered in 1985 to have not 
had appropriate member and employer contributions made on behalf 
of the person, and who retired March 1, 1988, for the period 
during calendar years 1979, 1980, and 1981 for which 
contributions were omitted, subject to approval by the board of 
commissioners of Fillmore county and compliance with section 
645.021. 
    Subd. 2.  [PURCHASE PAYMENT AMOUNT.] For a person eligible 
to purchase credit for prior service under subdivision 1, there 
must be paid to the retirement fund of which the person is a 
member 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 applicable preretirement interest rate 
specified in Minnesota Statutes, section 356.215, subdivision 
4d, and the mortality table adopted for the retirement fund and 
assuming continuous future service in the retirement fund 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, and also assuming a future 
salary history that includes annual salary increases at the 
applicable salary increase rate specified in Minnesota Statutes, 
section 356.215, subdivision 4d.  The person requesting the 
purchase of prior service shall establish in the records of the 
retirement fund 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 retirement fund. 
    Subd. 3.  [PAYMENT; CREDITING SERVICE.] Payment must be 
made in one lump sum, unless the executive director of the 
retirement fund 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 a person specified in 
subdivision 1, clause (1), (2), (4), (5), (6), or (7) may, at 
its discretion, and the metropolitan sports facilities 
commission for a person specified in subdivision 1, clause (3), 
shall 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.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment.  

                               ARTICLE 4 
TRANSIT COMMISSION EMPLOYEES 
    Section 1.  Minnesota Statutes 1986, section 473.418, is 
amended to read:  
    473.418 [DISABILITY AND SURVIVORSHIP COVERAGE.] 
    From and after the effective date of Laws 1978, chapter 
538, the metropolitan transit commission shall provide for all 
active employees of the transit operating division of the 
metropolitan transit commission disability and survivorship 
coverage which, when added to the disability benefit or the 
survivorship benefit payable from the Minnesota state retirement 
system pursuant to sections 352.113 or 352.12, subdivision 2, 
will at least equal the disability benefit or the survivorship 
benefit which that employee at the time of disability or the 
employee's surviving spouse at the time of the death of the 
employee while on active duty would have been entitled to 
receive under the disability benefit or survivor of active 
employee deceased while on active duty benefit provisions of the 
metropolitan transit commission-transit operating division 
employees retirement fund plan document in effect on December 
31, 1977.  The metropolitan transit commission shall not be 
required to provide any supplementary disability benefit 
coverage or benefit amount to replace the amount of any 
reduction in any disability payable from the Minnesota state 
retirement system due to the receipt of benefits under the 
workers' compensation law unless no offset of the amount of 
workers' compensation benefits from the amount of a disability 
benefit was required pursuant to the provisions of article 10 of 
the metropolitan transit commission-transit operating division 
employees retirement fund plan document in effect on December 
31, 1977.  The metropolitan transit commission may elect to 
provide the additional disability and survivorship coverage 
either through contract with an insurance carrier or through 
self insurance.  If the commission elects to provide the 
coverage through an insurance contract, the chair of the 
metropolitan transit commission is authorized to request bids 
from, or to negotiate with, insurance carriers and to enter into 
contracts with carriers which in the judgment of the commission 
are best qualified to underwrite and service this insurance 
benefit coverage.  The commission shall consider factors such as 
the cost of the contracts as well as the service capabilities, 
character, financial position and reputation with respect to 
carriers under consideration, as well as any other factors which 
the commission deems appropriate.  The disability and 
survivorship insurance contract with the particular insurance 
carrier shall be for a uniform term of at least one year, but 
may be made automatically renewable from term to term in absence 
of notice of termination by either party.  The disability and 
survivorship insurance contract shall contain a detailed 
statement of benefits offered, maximums, limitations and 
exclusions.  A summary description of the essential terms of the 
contract shall be provided by the commission to the labor 
organization which is the exclusive bargaining agent 
representing employees of the transit operating division of the 
metropolitan transit commission and to each active employee of 
the transit operating division.  The determination of whether 
the disability or survivorship insurance coverage meets the 
minimum requirements of this section shall be made by the 
commission upon consultation with the executive director of the 
Minnesota state retirement system.  If the disability or 
survivorship coverage provided by the metropolitan transit 
commission fails at any time after the effective date of Laws 
1978, chapter 538 to meet the requirements of this section as to 
the level of disability or survivorship coverage to be provided, 
the deficiency in the actual benefits provided shall continue to 
be an obligation of the commission.  Notwithstanding any 
provisions of chapter 179 to the contrary, the labor 
organization which is the exclusive bargaining agent 
representing employees of the transit operating division of the 
metropolitan transit commission may meet and bargain with the 
commission on an increase in the level of disability or survivor 
of active employee deceased while on active duty coverage to be 
provided by the commission at the same time that wages and other 
terms and conditions of employment are considered.  This section 
does not apply to employees hired after December 31, 1977. 
    Sec. 2.  [APPLICATION.] 
    Section 1 applies in the counties of Anoka, Carver, Dakota, 
Hennepin, Ramsey, Scott, and Washington. 

                               ARTICLE 5 
PUBLIC EMPLOYEES RETIREMENT ASSOCIATION 
    Section 1.  Minnesota Statutes 1987 Supplement, section 
353.01, subdivision 2b, is amended to read:  
    Subd. 2b.  [EXCLUDED EMPLOYEES.] (a) The following persons 
are excluded from the meaning of "public employee": 
    (a) (1) persons employed for professional services where 
such the service is incidental to regular professional duties.  
Service is incidental if, determined on the basis that 
compensation for it the service amounts to no more than 25 
percent of a the person's total annual gross earnings for all 
professional duties.; 
    (b) (2) election officers.; 
    (c) (3) independent contractors and their employees.; 
    (d) (4) patient and inmate help in governmental subdivision 
charitable, penal, and correctional institutions.; 
    (e) (5) members of boards, commissions, bands, and others 
who serve the governmental subdivision intermittently.; 
    (f) (6) employees who hold positions of an essentially 
temporary or seasonal character, provided such employment does 
not continue for a period in excess of 120 working days in any 
calendar year or in any school year for school employees. 
Immediately following the expiration of such 120 working days if 
such employees continue in public service and earn in excess of 
$325 in any one calendar month, the department heads must then 
report all such employees for membership and must cause employee 
contributions to be made on behalf of such employees in 
accordance with section 353.27, subdivision 4, and they shall 
remain members until termination of public service. whose 
employment is not expected to continue for a period longer than 
six consecutive months;  
    (g) (7) part-time employees who receive monthly 
compensation from a governmental subdivision not exceeding 
$325 $425, and part-time employees and elected officials whose 
annual compensation from a governmental subdivision is 
stipulated in advance, in writing, to be not more 
than $3,900 $5,100 per calendar year or per school year for 
school employees for employment expected to be of a full year's 
duration or more than the prorated portion of $3,900 $5,100 per 
employment period for employment expected to be of less than a 
full year's duration, except that members shall continue their 
membership until termination of public service.;  
    (h) (8) persons who first occupy an elected office after 
March 1, 1978 July 1, 1988, the compensation for which does not 
exceed $325 $425 per month.; 
    (i) (9) emergency employees who are employed by reason of 
work caused by fire, flood, storm, or similar disaster.; 
    (j) (10) employees who by virtue of their employment as an 
officer or employee of a governmental subdivision are required 
by law to be a member of and to contribute to any of the plans 
or funds administered by the state employees retirement fund 
system, the teachers retirement fund, the state patrol 
retirement fund, the Duluth teachers retirement fund 
association, the Minneapolis teachers retirement fund 
association, the St. Paul teachers retirement fund association, 
the Minneapolis employees retirement fund, the Minnesota state 
retirement system correctional officers retirement plan, or any 
police or firefighters relief association governed by section 
69.77 which that has not consolidated with the public employees 
police and fire fund and for which the employee has not elected 
coverage by the public employees police and fire fund benefit 
plan as provided in sections 353A.01 to 353A.10, other than as 
an act of the legislature has specifically enabled participation 
by employees of a designated governmental subdivision in a plan 
supplemental to the public employees retirement association.  
This clause shall not prevent a person from being a member of 
and contributing to the public employees retirement association 
and also belonging to or contributing to another public pension 
fund for other service occurring during the same period of time.;
    (k) (11) police matrons employed in a police department of 
any a city who are transferred to the jurisdiction of a joint 
city and county detention and corrections authority.;  
    (l) (12) persons who are excluded from coverage under the 
federal old age, survivors, disability, and health insurance 
program for the performance of service as specified in United 
States Code, title 42, section 410(a) (8) (A), as amended 
through January 1, 1987.; 
    (m) (13) full-time students who are enrolled and are 
regularly attending classes at an accredited school, college, or 
university; provided, no person and who are not employed full 
time by a governmental subdivision shall be exempt under this 
paragraph.; 
    (n) (14) resident physicians, medical interns, and 
pharmacist interns who are serving in public hospitals.; 
    (o) (15) appointed or elected officers, paid entirely on a 
fee basis, and who were not members on June 30, 1971.; 
    (p) Nothing in Laws 1973, chapter 753 shall be interpreted 
to impair or revoke any option exercised under Laws 1963, 
chapter 793. 
    (q) Town, city, or county assessors elected or appointed 
pursuant to chapter 273 who do not receive compensation in 
excess of $325 per month from any one employing governmental 
subdivision or who are employed pursuant to an employment 
contract which sets forth the total compensation to be paid and 
the length of service, not to exceed three months in duration, 
required for the performance of the contract and which was 
entered into in advance of the commencement of employment. 
    (r) (16) persons holding a part-time adult supplementary 
vocational technical school license who render part-time 
teaching service in a vocational technical school if (1) the 
service is incidental to the person's regular nonteaching 
occupation; and (2), the applicable vocational technical school 
stipulates annually in advance that the part-time teaching 
service will not exceed 300 hours in a fiscal year;, and (3) the 
part-time teaching service actually does not exceed 300 hours in 
a fiscal year.; and 
    (s) (17) persons exempt from licensure pursuant to under 
section 125.031. 
    (b) Immediately following the expiration of a six-month 
period of employment by an employee covered by paragraph (a), 
clause (6), if the employee continues in public service and 
earns more than $425 from a governmental subdivision in any one 
calendar month, the department head shall report the employee 
for membership and cause employee contributions to be made on 
behalf of the employee in accordance with section 353.27, 
subdivision 4, and the employee remains a member until 
termination of public service.  This paragraph may not be 
construed to exclude an employee from membership whose 
employment is expected to continue for more than six months but 
who is serving a probationary period. 
    (c) If compensation from a governmental subdivision to an 
employee covered by paragraph (a), clause (7), exceeds $5,100 
per calendar year or school year after being stipulated in 
advance, the stipulation is no longer valid and contributions 
must be made on behalf of the employee in accordance with 
section 353.27, subdivision 12, from the month in which the 
employee first exceeded $425. 
    (d) Paragraph (a), clause (10), does not prevent a person 
from being a member of and contributing to the public employees 
retirement association and also belonging to or contributing to 
another public pension fund for other service occurring during 
the same period of time.  A person who meets the definition of 
"public employee" in section 353.01, subdivision 2, by virtue of 
other service occurring during the same period of time shall 
become a member of the association unless contributions are made 
to another public retirement fund on the salary based on the 
other service or to the teachers retirement association in 
accordance with section 354.05, subdivision 2. 
    Sec. 2.  Minnesota Statutes 1986, section 353.01, is 
amended by adding a subdivision to read:  
    Subd. 2c.  [DEFINING OF TERMINATION OF PUBLIC SERVICE.] A 
person who terminates employment that was excluded from 
membership under subdivision 2b, paragraph (a), clause (6) or 
(7), who returns within 30 days to employment in the same 
governmental subdivision in another position excluded from 
membership under subdivision 2b, paragraph (a), clause (6) or 
(7), is considered a member from the beginning of the 
reemployment unless the total period covered by all periods of 
employment is less than six months or on which the amount earned 
does not exceed the dollar limitations in subdivision 2b, 
paragraph (a), clause (7). 
    Sec. 3.  Minnesota Statutes 1987 Supplement, section 
353.01, subdivision 10, is amended to read:  
    Subd. 10.  [SALARY.] "Salary" means the periodical 
compensation of any a public employee, before deductions for 
deferred compensation or, supplemental retirement plans, or 
other voluntary salary reduction programs, and also means 
"wages" and includes net income from fees.  Fees paid to 
district court reporters shall are not be considered a salary.  
Lump sum annual or lump sum sick leave payments and, severance 
payments, and all payments in lieu of any employer-paid group 
insurance coverage, including the difference between single and 
family rates that may be paid to a member with single coverage, 
shall are not be deemed to be salary.  Prior to Before the 
time that all sick leave has been used, amounts paid to an 
employee pursuant to under a disability insurance policy or 
program where the employer paid the premiums shall be are 
considered salary, and, after all sick leave has been used, the 
payment shall is not be considered salary.  Workers' 
compensation payments shall are not be considered salary.  
For any a public employee who has prior service covered by a 
local police or firefighters relief association which that has 
consolidated with the public employees police and fire fund and 
who has elected coverage by the public employees police and fire 
fund benefit plan as provided in section 353A.08 following the 
consolidation, the term "salary" means the rate of salary upon 
which member contributions to the special fund of the relief 
association were made prior to the effective date of the 
consolidation as specified in the applicable general law, 
special by law, and by bylaw provisions governing the relief 
association as of on the date of the initiation of the 
consolidation procedure and the actual periodical compensation 
of the public employee after the effective date of the 
consolidation. 
    Sec. 4.  Minnesota Statutes 1986, section 353.01, 
subdivision 15, is amended to read:  
    Subd. 15.  [DEPENDENT CHILD.] "Dependent child" means any a 
natural or adopted child of a deceased member, provided such 
child is (a) under the age of 18, (b) or age 18 through 21 and a 
full time student in an accredited school, university, or 
college, and in either case unmarried and dependent for more 
than one-half of support upon such the member at the time of 
death and for not less than 90 days prior thereto before the 
time of death; provided, that the child of a deceased member, 
who at the time of death was receiving total and permanent 
disability benefits pursuant to under section 353.33, shall be 
is deemed dependent if dependent upon the decedent for more than 
one-half of support during the 90 days prior to before the 
decedent's becoming totally and permanently disabled.  It 
"Dependent child" also includes any a child of the member 
conceived during the member's lifetime and born after the 
member's death.  It also means any a dependent child who is the 
subject of adoption proceedings filed by a member, and who 
within two years after death of the member, by judgment and 
decree duly entered, is adjudged to be the adopted child of the 
deceased member; subject, however, to the qualifying conditions 
of age and dependency aforesaid and in this subdivision.  The 
dependency of the child hereunder shall date dates from the 
decree of adoption.  "Dependent child" also includes a child age 
18 to 21 who was attending an accredited school, university, or 
college full time, but was determined to be medically unable to 
continue school on a full-time basis.  The board of trustees 
shall adopt written procedures to make determinations regarding 
eligibility based on a student being medically unable to 
continue school, and may not continue a benefit for medical 
reasons for a period greater than one year. 
    Sec. 5.  Minnesota Statutes 1987 Supplement, section 
353.01, subdivision 16, is amended to read:  
    Subd. 16.  [ALLOWABLE SERVICE.] (a) "Allowable service" 
means: (1) service during years of actual membership in the 
course of which employee contributions were currently made;, 
periods covered by payments in lieu of salary deductions made as 
provided in section 353.35, and service in years during which 
the public employee was not a member but for which the member 
later elected, while a member, to obtain credit by making 
payments to the fund as permitted by any law then in effect. 
    (2) Any (b) "Allowable service" also means a period of 
authorized leave of absence with pay from which deductions for 
employee contributions are made, deposited, and credited to the 
fund. 
    (3) Any (c) "Allowable service" also means a period of 
authorized leave of absence without pay which that does not 
exceed one year, and during or for which a member obtained 
credit by payments to the fund made in lieu in place of salary 
deductions, provided that such the payments are made in an 
amount or amounts based on the member's average salary on which 
deductions were paid (a) for the last six months of public 
service, or (b) for that portion of the last six months while 
the member was in public service, to apply to the period in 
either case immediately preceding commencement of such the leave 
of absence; provided, however, that if the employee elects to 
pay employee contributions for the period of any leave of 
absence without pay, or for any portion thereof of the leave, 
the employee shall also, as a condition to the exercise of such 
the election, pay to the fund an amount equivalent to both the 
required employer and additional employer 
contributions therefor, such for the employee.  The payment 
to must be made currently or within one year from the date the 
leave of absence terminates, unless the.  The employer by 
appropriate action of its governing body and, made a part of its 
official records, prior to before the date of the first payment 
of such the employee contribution, certifies may certify to the 
association in writing that it will cause to be paid such the 
employer and additional employer contributions from the proceeds 
of a tax levy made pursuant to under section 353.28.  Payments 
under this clause shall paragraph must include interest at the 
rate of six percent per annum a year from the date of the 
termination of the leave of absence to the date payment is made. 
    (4) Any (d) "Allowable service" also means a period during 
which a member is on an authorized sick leave of absence, 
without pay limited to one year, or an authorized temporary 
layoff. 
    (5) Any (e) "Allowable service" also means a period during 
which a member is on an authorized leave of absence to enter 
military service, provided that the member returns to public 
service upon discharge from military service pursuant to under 
section 192.262, and pays into the fund employee contributions 
based upon the employee's salary at the date of return from 
military service.  After June 30, 1983, Payment must be made 
within five years of the date of discharge from the military 
service.  The amount of these contributions shall must be in 
accord with the contribution rates and salary limitations, if 
any, in effect during such the leave, plus interest thereon at 
six percent per annum a year compounded annually from the date 
of return to public service to the date payment is made.  In 
such cases the matching employer contribution and additional 
employer contribution provided in section 353.27, subdivisions 3 
and 3a, shall must be paid by the department employing such the 
member upon return to public service, and the governmental 
subdivision involved is hereby authorized to may appropriate 
money therefor for those payments.  Such A member shall may 
not receive credit for any a voluntary extension of military 
service at the instance of the member beyond the initial period 
of enlistment, induction, or call to active duty. 
    (6) (f) For calculating benefits under sections 353.30, 
353.31, 353.32, and 353.33 for state officers and employees 
displaced by the community corrections act, Minnesota Statutes 
1984, chapter 401, and transferred into county service 
under Minnesota Statutes 1984, section 401.04, "allowable 
service" means combined years of allowable service as defined in 
Minnesota Statutes 1984, section sections 352.01, subdivision 
11, and Minnesota Statutes 1984, section 353.01, subdivision 16, 
paragraphs (1) to (5). 
    (7) (g) For any a public employee who has prior service 
covered by a local police or firefighters relief 
association which that has consolidated with the public 
employees police and fire fund, and who has elected coverage by 
the public employees police and fire fund benefit plan as 
provided in section 353A.08 following the consolidation, any 
"applicable service" is a period of service credited by the 
local police or firefighters relief association as of the 
effective date of the consolidation based on the applicable 
general law, special law, and on bylaw provisions governing the 
relief association as of on the date of the initiation of the 
consolidation procedure. 
    Sec. 6.  Minnesota Statutes 1987 Supplement, section 
353.01, subdivision 20, is amended to read:  
    Subd. 20.  [SURVIVING SPOUSE.] "Surviving spouse" means the 
unremarried spouse of a deceased member who had the same legal 
residence as was legally married to the member at the time of 
death, or at the time the member became totally and permanently 
disabled. 
    Sec. 7.  Minnesota Statutes 1986, section 353.01, 
subdivision 29, is amended to read:  
    Subd. 29.  [DESIGNATED BENEFICIARY.] "Designated 
beneficiary" means the person or organization designated by a 
member, former member, disabilitant, or retired member in 
writing, signed and filed with the association before the death 
of the member, former member, disabilitant, or retired member, 
to receive a refund of the balance of the member's accumulated 
deductions after death. 
    Sec. 8.  Minnesota Statutes 1986, section 353.028, 
subdivision 2, is amended to read: 
    Subd. 2.  [ELECTION.] A city manager may elect to be 
excluded from membership in the association.  The election of 
exclusion shall must be made within 30 days six months following 
the commencement of employment or within 30 days following May 
22, 1981, whichever occurs later, in writing on a form 
prescribed by the executive director, and shall must be approved 
by a resolution of the governing body of the city.  The election 
of exclusion shall is not be effective until it is filed with 
the executive director.  Membership of a city manager in the 
association shall cease ceases on the date the written election 
is received by the executive director or upon a later date 
specified.  The election to be excluded from membership shall 
must include a provision agreeing that the person will not at 
any time in the future seek any authorization to purchase 
service credit for any period of excluded service and shall be 
is irrevocable.  Employee and employer contributions made on 
behalf of a person exercising the option to be excluded from 
membership under this section must be refunded in accordance 
with section 353.27, subdivision 7.  
    Sec. 9.  Minnesota Statutes 1986, section 353.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MANAGEMENT; COMPOSITION; ELECTION.] The 
management of the public employees retirement fund is vested in 
a board of trustees consisting of the state auditor and eight 
members.  The governor shall appoint five trustees to four-year 
terms, one of whom shall be designated to represent school 
boards, one to represent cities, one to represent counties, one 
who shall be a retired annuitant, and one who is a public member 
knowledgeable in pension matters.  The membership of the 
association shall elect three trustees for terms of four years.  
Trustees elected by the membership of the association shall must 
be public employees and members of the association.  For seven 
days beginning November October 1 of each year preceding a year 
in which an election is held, the association shall accept at 
its office filings in person or by mail of candidates for the 
board of trustees.  A candidate shall submit at the time of 
filing a nominating petition signed by 25 or more members of the 
fund.  No name may be withdrawn from nomination by the nominee 
after November October 15.  At the request of a candidate for an 
elected position on the board of trustees, the board shall mail 
a statement of up to 300 words prepared by the candidate to all 
persons eligible to vote in the election of the candidate.  The 
board may adopt policies to govern form and length of these 
statements, timing of mailings, and deadlines for submitting 
materials to be mailed.  These policies must be approved by the 
secretary of state.  The secretary of state shall resolve 
disputes between the board and a candidate concerning 
application of these policies to a particular statement shall be 
resolved by the secretary of state.  A candidate who: 
    (a) (1) receives contributions or makes expenditures in 
excess of $100; or 
    (b) (2) has given implicit or explicit consent for any 
other person to receive contributions or make expenditures in 
excess of $100; for the purpose of bringing about the 
candidate's election, must file a report with the ethical 
practices board disclosing the source and amount of all 
contributions to the candidate's campaign.  The ethical 
practices board shall prescribe forms governing these 
disclosures.  Expenditures and contributions have the meaning 
defined in section 10A.01.  These terms do not include the 
mailing made by the association board on behalf of the 
candidate.  A candidate must file a report within 30 days from 
the day that the results of the election are announced.  The 
ethical practices board shall maintain these reports and make 
them available for public inspection in the same manner as the 
board maintains and makes available other reports filed with 
it.  By January 10 of each year in which elections are to be 
held the board shall distribute by mail to the members ballots 
listing the candidates.  No member may vote for more than one 
candidate for each board position to be filled.  A ballot 
indicating a vote for more than one person for any 
position shall be is void.  No special marking may be used on 
the ballot to indicate incumbents.  The last day for mailing 
ballots to the fund shall be is January 31.  Terms expire on 
January 31 of the fourth year, and positions are vacant until 
newly elected members are qualified.  The ballot envelopes shall 
must be so designed and the ballots shall be counted in such a 
manner as to insure that ensures that each vote is secret.  
    The secretary of state shall supervise the elections shall 
be supervised by the secretary of state.  It shall be the duty 
of The board of trustees to shall faithfully administer the law 
without prejudice and consistent with the expressed intent of 
the legislature.  They Board members shall act as trustees with 
a fiduciary obligation to the state of Minnesota, which created 
the fund, the taxpayers of the governmental subdivisions which 
that aid in financing it, and the public employees who are its 
beneficiaries.  They shall act in good faith and shall exercise 
that degree of judgment and care, under circumstances then 
prevailing, which that persons of prudence, discretion, and 
intelligence exercise in the management of their own affairs.  
    Sec. 10.  Minnesota Statutes 1986, section 353.27, 
subdivision 7, is amended to read: 
    Subd. 7.  [ADJUSTMENT FOR ERRONEOUS RECEIPTS OR 
DISBURSEMENTS.] (1) (a) [ERRONEOUS DEDUCTIONS.] Any Deductions 
taken in error by the employer from the salary of an employee 
for the retirement fund and transmitted to the association shall 
must be refunded to the employee calculated in accordance with 
section 353.34, subdivision 2; and the employer contribution and 
the additional employer contribution, if any, for the erroneous 
employee contribution shall must be refunded to the employer, 
provided, however, that the association and the state social 
security agency may make proper adjustments of moneys money 
taken as employee and employer deductions, and provided further 
that the refund of deductions taken in error has been made 
within three calendar years of the calendar year in which the 
initial erroneous deduction taken in error was received by the 
association.  If the refund of deductions taken in error has not 
been made within three calendar years of the calendar year in 
which the initial erroneous deduction taken in error was 
received by the association, the erroneous contributions are 
considered valid, and the years of allowable service 
attributable to the erroneous deductions must be credited to the 
member in accordance with section 353.01, subdivision 16, and, 
notwithstanding a law to the contrary, the employee may continue 
to be a member until termination of public service. 
    (2) (b) [ERRONEOUS DISBURSEMENT.] In the event a salary 
warrant or check from which a deduction for the retirement fund 
was taken has been canceled or the amount of the warrant or 
check returned to the funds of the department making the 
payment, a refund of the sum so deducted, or any a portion of it 
as that is required to adjust the deductions, shall must be made 
to the department or institution. 
    Sec. 11.  Minnesota Statutes 1986, section 353.27, is 
amended by adding a subdivision to read: 
    Subd. 7a.  [DEDUCTIONS OR CONTRIBUTIONS TRANSMITTED BY 
ERROR.] If employee deductions and employer contributions were 
erroneously transmitted to the association, but should have been 
transmitted to another public pension fund listed in section 
356.30, subdivision 3, the association shall transfer the 
erroneous employee deductions and employer contributions to the 
appropriate retirement fund without interest.  The time 
limitations in section 353.27, subdivisions 7 and 12, do not 
apply. 
    Sec. 12.  Minnesota Statutes 1987 Supplement, section 
353.27, subdivision 10, is amended to read: 
    Subd. 10.  [EMPLOYERS; FURNISH COPIES OF PAYROLL 
ABSTRACTS.] The head of each department is required to furnish 
the executive director with a carbon or duplicate copy of the 
departmental payroll abstracts for the last full pay period 
during the months month of March May for school districts and 
October December for all other governmental subdivisions, 
respectively, in each year.  Instead of a duplicate copy of the 
payroll abstract, the employer may submit an exception report 
listing only those employees who worked the last full pay period 
of May or December, but who are not members of the association.  
Minimum reporting requirements to be shown on either the payroll 
abstract or exception report include:  (1) name of the 
governmental subdivision and department identification; (2) the 
association's assigned unit number and unique code; (3) pay 
period coverage dates; (4) any employee deductions; (5) gross 
salary for the pay period; (6) each employee's year-to-date 
gross pay; and (7) the reason for any exclusion.  It shall be 
the duty of said The executive director to shall check the 
copies of all such payroll abstracts against the membership 
records of the association to ascertain whether or not any 
omissions have been made by any a department head in the 
reporting of any new public employees for membership.  The head 
of any department shall furnish a carbon or duplicate copy of 
the department payroll abstract at the request of the executive 
director.  The executive director may delegate an association 
employee by appointment, in accordance with section 353.03, 
subdivision 3a, paragraph (b), clause (5), to conduct a field 
audit to review the payroll records of a governmental 
subdivision. 
    Sec. 13.  Minnesota Statutes 1987 Supplement, section 
353.27, subdivision 12, is amended to read: 
    Subd. 12.  [OMITTED SALARY DEDUCTIONS; OBLIGATIONS.] In the 
case of omission of required deductions from salary of an 
employee, past due for a period of 60 days or less, the head of 
the department shall deduct from the employee's next salary 
payment and forthwith remit to the executive director the amount 
of the employee contribution delinquency, with cumulative 
interest thereon at the rate of six percent per annum a year, 
compounded annually, from the date or dates each delinquent 
employee contribution was first payable, such.  The interest to 
must be paid by the employer.  To the extent that any such 
omitted required deductions are not paid by the employee, they 
shall constitute a liability of the governmental subdivision 
which failed to make said required deductions, with interest 
thereon as hereinbefore specified.  After July 1, 1973, any such 
Omitted required deductions, past due for a period in excess of 
60 days, shall become are the sole obligation of the 
governmental subdivision from the time such the deductions were 
first payable, together with interest thereon as hereinbefore 
specified in this subdivision.  Any amount so due, together with 
employer and additional employer contributions at the rates and 
in the amounts specified in subdivisions 3 and 3a, with interest 
thereon at the rate of six percent compounded annually from the 
date they were first payable, shall must be paid from the 
proceeds of a tax levy made pursuant to under section 353.28, or 
from other funds available to the employer.  Unless otherwise 
indicated, this subdivision shall have has both retroactive and 
prospective application, and the governmental subdivision is 
liable retroactively and prospectively for all amounts due 
hereunder under it.  No action for the recovery of delinquent 
omitted employee and employer contributions or interest on 
contributions may be commenced and no payment of delinquent 
omitted contributions may be made or accepted unless the 
association has already commenced action for recovery 
of delinquent omitted contributions, after the expiration of 
three calendar years next following after the calendar year in 
which the contributions were omitted.  An action for the 
recovery of omitted contributions or interest commences five 
calendar days after the date of the written correspondence 
requesting information from the governmental unit that may lead 
to a recovery of omitted contributions. 
    Sec. 14.  Minnesota Statutes 1986, section 353.27, is 
amended by adding a subdivision to read: 
    Subd. 12a.  A member who was employed and met the 
eligibility requirements for participation in the association 
before July 1, 1973, who has a period of employment in which 
previously omitted employer contributions were made under 
subdivision 12 but for whom no, or only partial, omitted 
employee contributions have been made, or a member who had prior 
coverage in the association for which previously omitted 
employer contributions were made under subdivision 12 but who 
terminated service before required omitted employee 
contributions could be withheld from salary, may pay the omitted 
employee contributions for the period on which omitted employer 
contributions were previously paid plus interest at the rate of 
six percent compounded annually.  The statute of limitations for 
payment of omitted deductions in subdivision 12 applies.  
    Sec. 15.  Minnesota Statutes 1986, section 353.27, 
subdivision 13, is amended to read: 
    Subd. 13.  [CERTAIN WARRANTS CANCELED.] Any A warrant 
payable from the retirement fund remaining unpaid for a period 
of six five years, shall must be canceled into the retirement 
fund and not into the general fund. 
    Sec. 16.  Minnesota Statutes 1987 Supplement, section 
353.29, subdivision 6, is amended to read: 
    Subd. 6.  [RETIREMENT BEFORE ELIGIBILITY FOR SOCIAL 
SECURITY BENEFITS.] Any A member or former member who retires 
before becoming eligible for social security retirement benefits 
may elect to receive an optional retirement annuity from the 
association which that provides for different annuity amounts 
over different periods of retirement.  The election of this 
optional retirement annuity shall must be exercised by making 
application to the board of trustees.  The optional 
annuity shall must take the form of an annuity payable for the 
period before the annuitant becomes eligible for social security 
old age retirement benefits in a greater amount than the amount 
of the annuity calculated under subdivisions 2 and 3 on the 
basis of the age of the annuitant at retirement but equal 
insofar as possible to the social security old age retirement 
benefit and the adjusted retirement annuity amount payable 
immediately after the annuitant becomes eligible for social 
security old age retirement benefits in an amount less than the 
amount of the annuity calculated under subdivisions 2 and 3 on 
the basis of the age of the annuitant at retirement.  The social 
security leveling option may be calculated based on broad 
average social security old age retirement benefits.  The 
optional annuity shall must be the actuarial equivalent of the 
normal retirement annuity computed on the basis of age at 
retirement.  This greater amount shall must be paid until the 
annuitant reaches the age of 62, at which time the payment from 
the association shall must be reduced.  The board of trustees 
shall establish the method of computing the optional retirement 
annuity under this subdivision shall be established by the board 
of trustees.  In establishing the method of computing the 
optional retirement annuity, the board of trustees shall obtain 
the written recommendation approval of the commission-retained 
actuary.  The recommendations shall must be a part of the 
permanent records of the board of trustees. 
    Sec. 17.  Minnesota Statutes 1987 Supplement, 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 at least age of at least 
50 years and has credit for not less than 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 begins to 
accrue in accordance with section 353.29, subdivision 7, or 
353.33, subdivision 2, notwithstanding any designation of 
beneficiary to the contrary, the surviving spouse may elect to 
receive, in lieu instead of a refund with interest provided in 
subdivision 1, or survivor benefits otherwise payable pursuant 
to under section 353.31, an annuity equal to the 100 percent 
joint and survivor annuity which that 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 must 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 may accrue beyond the 
end of the month in which entitlement to the annuity has 
terminated.  An amount equal to the any excess, if any, of the 
accumulated contributions which 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 shall 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.  Any A member may specify in writing that this 
subdivision shall does not apply and that payment shall may be 
made only to the designated beneficiary, as otherwise provided 
by this chapter. 
    Sec. 18.  Minnesota Statutes 1986, section 353.32, 
subdivision 5, is amended to read:  
    Subd. 5.  [$1,500 OR LESS, LIMITED.] If a member or former 
member dies without having designated a beneficiary, or if the 
beneficiary should die before making application for refund of 
the sum to the credit of such decedent, and the amount of the 
refund is $1,500 or less, the board of trustees may 90 days 
after the date of death, in the absence of probate proceedings, 
make payment to the surviving spouse of the said decedent, or, 
if none, to the next of kin under the laws of descent of the 
state of Minnesota decedent's personal representative or, if 
none, to the estate.  Such A payment shall be under this 
subdivision is a bar to recovery by any other person or 
persons.  Any A retirement annuity, or disability or survivor 
benefit which shall have that has accrued at the time of death 
of an annuitant, disabilitant or survivor may be paid in like 
the same manner. 
    Sec. 19.  Minnesota Statutes 1986, section 353.33, 
subdivision 7, is amended to read:  
    Subd. 7.  [PARTIAL REEMPLOYMENT.] Should such If a disabled 
person resume resumes a gainful occupation from which earnings 
are less than the salary at the date of disability or the salary 
currently paid for similar positions, the board shall continue 
the disability benefit in an amount which that, when added to 
such the earnings, does not exceed the salary at the date of 
disability or the salary currently paid for similar positions, 
whichever is higher, provided the disability benefit in such 
case does not exceed the disability benefit originally allowed, 
plus any postretirement adjustments payable after December 31, 
1988, in accordance with section 11A.18, subdivision 10.  No 
deductions for the retirement fund shall may be taken from the 
salary of a disabled person who is receiving a disability 
benefit as provided in this subdivision. 
    Sec. 20.  Minnesota Statutes 1987 Supplement, section 
353.34, subdivision 3, is amended to read:  
    Subd. 3.  [DEFERRED ANNUITY; ELIGIBILITY; COMPUTATION.] Any 
person A member with at least five years of allowable service 
when termination of public service occurs shall have has the 
option of leaving the accumulated deductions in the fund 
and thereby be being entitled to a deferred retirement annuity 
commencing at age 65 or for to a deferred early retirement 
annuity pursuant to under section 353.30, subdivision 1, 1a, 1b 
or 1c.  The deferred annuity shall must be computed in the 
manner provided in under 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 must be augmented as provided in 
section 353.71, subdivision 2.  Any person A former member 
qualified to apply for a deferred retirement annuity may revoke 
this option at any time prior to before the commencement of 
deferred annuity payments by making application for a refund.  
The person shall be is entitled to a refund of accumulated 
member contributions within 30 days following date of receipt of 
the application by the executive director. 
    Sec. 21.  Minnesota Statutes 1986, section 353.37, 
subdivision 1, is amended to read:  
    Subdivision 1.  [EFFECT ON ANNUITY.] The annuity of a 
person otherwise eligible therefor for an annuity under this 
chapter shall must be suspended if the person reenters, and for 
as long as the person remains in, public service as a 
nonelective employee of a governmental subdivision, if earned 
compensation for the reemployment service equals or exceeds the 
annual maximum earnings allowable for that age for the continued 
receipt of full benefit amounts monthly under the federal old 
age, survivors and disability insurance program as set by the 
secretary of health and human services pursuant to the 
provisions of under United States Code, title 42, section 403, 
in any calendar year.  In the event that the person has not yet 
reached the minimum age for the receipt of social security 
benefits, the maximum earnings for the person shall be are equal 
to the annual maximum earnings allowable for the minimum age for 
the receipt of social security benefits.  The suspension of the 
annuity shall must commence as of the first of the month after 
the month in which the maximum permitted compensation is 
exceeded as herein provided, but shall it applies only apply to 
those months in which the annuitant is actually employed in 
nonelective service in a position covered by this chapter.  Any 
An annuitant of the association who is elected to public office 
after retirement shall be is entitled to hold such the office 
and receive the annuity otherwise payable from the public 
employees retirement association.  Upon proper showing by an 
annuitant that the reason for the suspension of the annuity 
payments no longer exists, the monthly annuity payments shall 
must be resumed.  Public service performed by an annuitant 
subsequent to retirement under this chapter shall does not 
increase or decrease the amount of any an annuity when payment 
of the annuity is resumed.  The annuitant shall may not be 
required to make any further contributions to the retirement 
fund by reason of this subsequent public service. 
    Sec. 22.  Minnesota Statutes 1986, section 353.65, 
subdivision 2, is amended to read:  
    Subd. 2.  The employee contribution shall be is an amount 
equal to eight percent of the total salary of every the member.  
This contribution shall must be made by deduction from salary in 
the manner provided in subdivision 4.  Where any portion of a 
member's salary is paid from other than public funds, such the 
member's employee contribution shall be is based on the total 
salary received from all sources.  If the member is a 
firefighter employed on less than a full-time basis, the 
member's total salary shall not include any reimbursement 
payments for fire calls.  
    Sec. 23.  Minnesota Statutes 1987 Supplement, section 
353A.10, subdivision 3, is amended to read:  
    Subd. 3.  [LEVY AND BONDING AUTHORITY.] A municipality in 
which was located a local police or firefighters relief 
association which that has consolidated with the fund may issue 
special general obligation bonds of the municipality to defray 
all or a portion of the principal amounts specified in section 
353A.09, subdivisions 2 to 6, or certify to the county auditor 
an additional special levy in the amount necessary to defray all 
or a portion of the principal amount specified in section 
353A.09, subdivisions 2 to 6, or the annual amount specified in 
section 353A.09, subdivisions 2 to 6.  The municipality may 
pledge the full faith, credit, and taxing power of the 
municipality for the payment of the principal of and interest on 
the general obligation bonds.  Notwithstanding any law to the 
contrary, any additional special levy shall may not be included 
in any limitation concerning rate or amount established by 
charter or law and shall must be a special levy for the purposes 
of section 275.50, subdivision 5, clause (o), and any municipal 
bond may be issued shall without an election under section 
475.58 and may not be included in the net debt of the 
municipality for purposes of any charter or statutory debt 
limitation, nor shall may any tax levy for the payment of bond 
principal or interest be subject to any limitation concerning 
rate or amount established by charter or law.  
    Sec. 24.  Minnesota Statutes 1987 Supplement, section 
353C.02, is amended to read:  
    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 who 
supervise correctional officers and who are stationed 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 353C.04 or by a joint-powers 
correctional agency in which St. Louis county or its 
municipalities participate, if the governing body of the agency 
elects to participate under section 353C.04; 
    (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 353C.04 a member of the basic program of 
the public employees retirement association or a member of the 
public employees police and fire fund. 
    Sec. 25.  Minnesota Statutes 1987 Supplement, section 
353C.03, is amended to read:  
    353C.03 [CORRECTIONAL SERVICE PLAN COVERAGE.] 
    Subdivision 1.  [INITIAL COVERAGE.] A person who is a local 
government correctional service employee on June 30, 1988, or on 
the date on which the county elects to participate in the plan 
under section 353C.04, whichever is later, is a member of the 
local government correctional service retirement plan and shall 
begin contributing to the plan on July 1, 1988, or on the first 
day of the first pay period following the date on which the 
county elects to participate in the plan under section 353C.04, 
whichever is later. 
    Subd. 2.  [SUBSEQUENT COVERAGE.] A person who becomes a 
local government correctional service employee after June 30, 
1988, or on the date on which the county elects to participate 
in the plan under section 353C.04, whichever is later, is a 
member of the local government correctional service retirement 
plan and shall contribute to the plan.  
    Sec. 26.  Minnesota Statutes 1987 Supplement, section 
353C.04, is amended to read:  
    353C.04 [LOCAL GOVERNMENT EMPLOYING UNIT PARTICIPATION 
OPTION.] 
    Dakota county, Hennepin county, Ramsey county, St. Louis 
county, or Washington county or the governing board of a 
joint-powers correctional agency in which St. Louis county or 
its municipalities participate may elect to provide its 
correctional employees with retirement coverage by the local 
government correctional service retirement plan in lieu instead 
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 employing unit.  
    Sec. 27.  Minnesota Statutes 1987 Supplement, section 
353C.05, is amended to read:  
    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 
instead 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 
7.5 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 
instead 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 
7.5 percent of salary. 
    Subd. 3.  [ADJUSTMENT IN CONTRIBUTION RATES.] Beginning 
with the first full pay period after the most recent 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. 28.  Minnesota Statutes 1987 Supplement, section 
353C.06, subdivision 1, is amended to read:  
    Subdivision 1.  [ELIGIBILITY REQUIREMENTS.] After 
separation from public employment, an employee covered under 
section 353C.02 who has attained the age of at least 55 years 
and has credit for not less than ten five years of coverage in 
the local government correctional service plan is entitled, upon 
application, to a normal retirement annuity.  In lieu Instead of 
a normal retirement annuity, a retiring employee may elect to 
receive the optional annuity provided in section 353.30, 
subdivision 3. 
    Sec. 29.  Minnesota Statutes 1987 Supplement, section 
353C.06, subdivision 3, is amended to read:  
    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, and pro rata for 
completed months less than a full year, 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. 
    Sec. 30.  Minnesota Statutes 1987 Supplement, section 
353C.06, subdivision 4, is amended to read:  
    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.  The annuity 
is payable for the life of the recipient, or in accordance with 
the terms of any optional annuity form selected, and is payable 
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.  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 public 
service the employee is eligible to receive at that time, is 
less than the benefit payable under subdivision 3, the retired 
employee must is entitled to receive an amount payable under 
subdivision 3, less any amount payable from social security 
based on public service used in the benefit calculation.  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. 
    Sec. 31.  Minnesota Statutes 1987 Supplement, section 
353C.07, is amended to read:  
    353C.07 [AUGMENTATION IN CERTAIN CASES.] 
    Subdivision 1.  [AUGMENTATION FOR PRIOR SERVICE BENEFITS.] 
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.  
    Subd. 2.  [DEFERRED ANNUITIES AUGMENTATION.] The deferred 
annuity, if any, accruing under section 353.71 or 353C.06, must 
be computed as provided in section 353C.06, subdivision 3, on 
the basis of allowable service before the termination of 
correctional service and augmented as provided in this 
subdivision.  The required reserves applicable to a deferred 
annuity or to an annuity for which a former correctional service 
employee was eligible, but had not applied, or to any deferred 
segment of an annuity must be determined as of the date on which 
the benefit begins to accrue and augmented by interest at the 
rate of three percent compounded annually from the first day of 
the month following the month in which the person ceased to be a 
correctional service employee to the first day of the month in 
which the annuity begins to accrue.  If a person has more than 
one period of uninterrupted service, the required reserves 
related to each period must be augmented by interest under this 
subdivision.  The sum of the augmented required reserves so 
determined is the present value of the annuity.  "Uninterrupted 
service" has the meaning given it in section 353.71, subdivision 
2.  If a person repays a refund, the service restored by the 
repayment must be considered to be continuous with the next 
period of service for which the person has credit by the plan.  
The formula percentages used for each period of uninterrupted 
service must be those applicable to a new employee.  The 
mortality table and interest assumption used to compute this 
annuity must be those in effect when the person files an 
application for the annuity.  This subdivision shall not reduce 
the annuity otherwise payable under this chapter. 
    Sec. 32.  Minnesota Statutes 1987 Supplement, section 
353C.08, subdivision 5, is amended to read:  
    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 on the coordinated formula in the manner 
provided in section 353C.06 353.29 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.  The savings clause 
provision of section 353C.06, subdivision 4, is applicable. 
    Sec. 33.  Minnesota Statutes 1987 Supplement, section 
353C.08, is amended by adding a subdivision to read: 
    Subd. 7.  [COMBINED SERVICE DISABILITY BENEFIT.] If the 
employee is entitled to receive a disability benefit as provided 
in subdivision 1 or 2 and has credit for less covered 
correctional service than the length of service upon which the 
correctional disability benefit is based, and also has credit 
for regular plan service, the employee is entitled to a 
disability benefit or deferred retirement annuity based on the 
regular plan service only for the service that, when combined 
with the correctional service, exceeds the number of years on 
which the correctional disability benefit is based.  The 
disabled employee who also has credit for regular plan service 
must in all respects qualify under section 353.33 to be entitled 
to receive a disability benefit based on the regular plan 
service, except that the service may be combined to satisfy 
length of service requirements.  Any deferred annuity to which 
the employee may be entitled based on regular plan service must 
be augmented as provided in section 353.71 while the employee is 
receiving a disability benefit under this section. 
    Sec. 34.  Minnesota Statutes 1987 Supplement, section 
353D.05, subdivision 2, is amended to read:  
    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 After a choice is made, 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 $200 must be transferred and a 
minimum balance of $500 $200 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. 
    Sec. 35.  Minnesota Statutes 1987 Supplement, section 
353D.07, subdivision 1, is amended to read:  
    Subdivision 1.  [TYPE OF PLAN; UNIFORMITY.] The plan is a 
defined contribution plan where when the benefits are payable 
upon termination of service, retirement, or death, or withdrawal 
when permitted, are.  The amount of benefits is 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.  
    Sec. 36.  Minnesota Statutes 1987 Supplement, section 
353D.07, subdivision 2, is amended to read:  
    Subd. 2.  [AGE; VESTING PAYMENT OF BENEFITS.] 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 and employer contributions 
plus accrued investment income vests is payable immediately upon 
the death or termination of an active member for a period that 
exceeds 30 days.  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. 
    Sec. 37.  Minnesota Statutes 1987 Supplement, section 
353D.07, subdivision 4, is amended to read:  
    Subd. 4.  [DISABILITY OR DEATH OF A MEMBER.] 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 must be paid in a lump sum to the designated 
beneficiary or, if none, the heirs at law of the decedent.  
    Sec. 38.  Minnesota Statutes 1987 Supplement, section 
353D.08, is amended to read:  
    353D.08 [PORTABILITY.] 
    Qualified ambulance service personnel who change employment 
or membership among participating ambulance services may must 
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 353D.07, subdivision 5 if 
termination from one participating ambulance service and 
commencement in another participating ambulance service occur 
within 30 days. 
    Sec. 39.  Minnesota Statutes 1987 Supplement, section 
356.302, subdivision 1, is amended to read:  
    Subdivision 1.  [DEFINITIONS.] (a) The terms used in this 
section are defined in this subdivision. 
    (b) "Average salary" means the highest average of covered 
salary for the appropriate period of credited service that is 
required for the calculation of a disability benefit by the 
covered retirement plan and that is drawn from any period of 
credited service and successive years of covered salary in a 
covered retirement plan. 
    (c) "Covered retirement plan" or "plan" means a retirement 
plan listed in subdivision 7. 
    (d) "Duty-related" means a disabling illness or injury that 
occurred while the person was actively engaged in employment 
duties or that arose out of the person's active employment 
duties. 
    (e) "General employee retirement plan" means a covered 
retirement plan listed in subdivision 7, clauses (1) to (8). 
    (f) "Occupationally disabled" means the condition of having 
any a medically determinable physical or mental impairment that 
makes a person unable to satisfactorily perform the minimum 
requirements of the person's employment position or a 
substantially similar employment position. 
    (g) "Public safety employee retirement plan" means a 
covered retirement plan listed in subdivision 7, clauses (9) to 
(11). 
    (h) "Totally and permanently disabled" means the condition 
of having any a medically determinable physical or mental 
impairment that makes a person unable to engage in any 
substantial gainful activity and that is expected to continue or 
has continued for a period of at least one year or that is 
expected to result directly in the person's death. 
    Sec. 40.  Minnesota Statutes 1987 Supplement, section 
356.302, subdivision 3, is amended to read:  
    Subd. 3.  [GENERAL EMPLOYEE PLAN ELIGIBILITY REQUIREMENTS.] 
A disabled member of a covered retirement plan who has credit 
for allowable service in a combination of general employee 
retirement plans is entitled to a combined service disability 
benefit if the member: 
    (1) is less than 65 years of age on the date of application 
for the disability benefit; 
    (2) has become totally and permanently disabled; 
    (3) has credit for allowable service in any combination of 
general employee retirement plans totaling at least ten years if 
the person has not reached age 50 or at least five years if the 
person has reached age 50; 
    (4) has credit for at least six months of allowable service 
with the current general employee retirement plan before the 
commencement of the disability; 
    (5) has at least five continuous years of allowable service 
credit by the general employee retirement plan or has at least a 
total of five years of allowable service credit by a combination 
of general employee retirement plans in a 72-month period during 
which no interruption of allowable service credit from a 
termination of employment exceeded 29 days; and 
    (6) is not receiving a retirement annuity or disability 
benefit from any covered general employee retirement plan at the 
time of the commencement of the disability.  
    Sec. 41.  [ELECTION TO RESUME RETIREMENT COVERAGE.] 
    A person employed by a public hospital as defined in 
section 355.71, subdivision 3, who exercised an option under 
Laws 1963, chapter 793, section 3, subdivision 5, between July 
1, 1963, and June 30, 1967, to terminate membership in the 
coordinated program of the public employees retirement 
association may elect to resume that membership.  The election 
to resume membership must be made before October 1, 1988, on a 
form prescribed by the executive director of the public 
employees retirement association.  Resumption of membership 
begins as of the first day of the first full pay period after 
the election is filed with the executive director. 
    Sec. 42.  [REPEALER.] 
    Minnesota Statutes 1987 Supplement, section 353D.07, 
subdivision 5, is repealed.  
    Sec. 43.  [EFFECTIVE DATE.] 
    Section 12 is effective March 1, 1988.  Section 21 is 
effective January 1, 1988.  The remaining sections are effective 
July 1, 1988. 

                               ARTICLE 6 
MEDICARE COVERAGE REFERENDUM 
    Section 1.  [355.90] [OPTIONAL MEDICARE COVERAGE FOR 
CERTAIN PRE-1986 PUBLIC EMPLOYEES.] 
    Subdivision 1.  [DEFINITIONS.] (a) Notwithstanding any 
provision of section 355.01 to the contrary, the terms used in 
this section are defined in this subdivision.  
    (b) "Employee" means an active member or participant of a 
public employee pension plan listed in section 356.30, 
subdivision 3, clauses (5), (6), (7), (9), (10), (11), and (12), 
who is not covered by a previous agreement under section 355.02 
for that employment and who meets the requirements of United 
States Code, title 42, section 418(v)(2). 
    (c) "Employment" means service performed for compensation 
by an employee in the employ of the state or of a political 
subdivision that constitutes Medicare qualified government 
employment under the provisions of United States Code, title 42, 
section 410(p).  
    (d) "Political subdivision" means a public employer under 
section 355.01, subdivision 10.  
    (e) "Social Security Act" means the act cited in section 
355.01, subdivision 8.  
    (f) "State agency" means the commissioner of employee 
relations or the commissioner's designee.  
    (g) "Wages" means compensation specified in section 355.01, 
subdivision 2.  
    Subd. 2.  [OPTIONAL MEDICARE COVERAGE AGREEMENT.] The state 
agency, with the approval of the governor, may modify its 
agreement on behalf of the state and its political subdivisions 
with the Secretary of Health and Human Services to extend the 
provisions of United States Code, title 42, sections 426, 426-1, 
and 1395c, to current employees of the state and its political 
subdivisions who do not have that coverage through coverage by 
the federal old age, survivors, and disability insurance program 
for that employment under any previous agreement or modification 
of the agreement.  
    Subd. 3.  [REFERENDUM.] A referendum on the question of 
extending the provisions of United States Code, title 42, 
sections 426, 426-1, and 1395c, must be held for each public 
employee pension plan listed in section 356.30, subdivision 3, 
except clauses (5) and (6), that has current members or 
participants who do not have coverage by the federal old age, 
survivors, and disability insurance program for the employment 
giving rise to that pension plan membership.  The state agency 
shall supervise the referendum in accordance with United States 
Code, title 42, section 418, on the date or dates set by the 
governor for each pension plan.  The notice of the referendum 
provided to each employee must contain a statement sufficient to 
inform the person of the rights available to the person as an 
employee in Medicare qualified government employment and the 
employee contribution rates applicable to the program.  The 
referendum is approved if a majority of the members or 
participants indicate their desire to have the coverage on a 
form prescribed by the state agency.  If the referendum is 
approved, the governor shall certify that fact to the Secretary 
of Health and Human Services, and the coverage is effective for 
all members or participants of the plan on the first of the 
month after the certification unless the participant or member 
elects coverage effective retroactively to April 1, 1986. 
    Subd. 4.  [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] (a) If the 
referendum is approved, beginning on the first of the month 
after the certification of approval by the governor, the 
employer of each member or participant covered by the referendum 
shall deduct from the wages of the employee an amount equal to 
the tax that would be imposed under United States Code, title 
26, section 3101(b), if the services of the employee for which 
wages were paid constituted employment as defined in United 
States Code, title 26, section 3121. 
    (b) In addition to the deduction specified in paragraph 
(a), the employer of each member or participant covered by the 
referendum shall also pay an amount equal to the tax that would 
be imposed under United States Code, title 26, section 3111(b), 
on the same wage base specified in paragraph (a). 
    (c) The amounts under paragraphs (a) and (b) shall be paid 
by the employer to the Secretary of the Treasury in the manner 
required by the secretary. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 

                                ARTICLE 7 

               VOLUNTEER FIREFIGHTERS RELIEF ASSOCIATIONS 
    Section 1.  [60A.40] [APPROVAL OF VOLUNTEER FIRE ANNUITY 
CONTRACT BUSINESS.] 
    No insurance company that issues single premium annuity 
contracts may enter into an annuity contract with a volunteer 
firefighters relief association in this state unless the 
insurance company has been authorized to conduct this type of 
business by the commissioner.  If the commissioner finds that 
the insurance company is rated according to a recognized 
national rating agency or organization among the top 25 percent 
of all insurance companies doing this type of business and is so 
situated and has sufficient capabilities to service these 
contracts throughout the state, the commissioner shall approve 
the insurance company for the conduct of this type of business. 
    Sec. 2.  Minnesota Statutes 1986, section 424A.02, is 
amended by adding a subdivision to read: 
    Subd. 8a.  [PURCHASE OF ANNUITY CONTRACTS.] A relief 
association providing a lump-sum service pension, if the 
governing articles of incorporation or bylaws so provide, may 
purchase an annuity contract on behalf of a retiring member in 
an amount equal to the service pension otherwise payable at the 
request of the person and in place of a direct payment to the 
person.  The annuity contract must be purchased from an 
insurance carrier licensed to do business in this state and 
approved for this product by the commerce commissioner under 
section 1. 
    Sec. 3.  Minnesota Statutes 1986, section 424A.02, is 
amended by adding a subdivision to read: 
    Subd. 13.  [COMBINED SERVICE PENSIONS.] If the articles of 
incorporation or bylaws of the associations so provide, a 
volunteer firefighter with total service credit of ten years or 
more as a member of two or more relief associations is entitled, 
when otherwise qualified, to a prorated service pension from 
each association in which the member has two years or more of 
service credit.  The prorated service pension must be based on 
the service pension amount in effect for the relief association 
on the date volunteer firefighting services covered by that 
relief association terminate.  To receive a service pension 
under this subdivision, the firefighter must become a member of 
the second or succeeding association and give notice of 
membership to the prior association within two years of 
termination of active service with the prior association.  The 
notice must be attested to by the association secretary. 
    Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective the day following final 
enactment. 
    Section 3 is effective July 1, 1988, and applies to service 
performed by a volunteer serving with a fire department on that 
date or thereafter. 

                               ARTICLE 8 

               LOCAL POLICE AND FIRE RELIEF ASSOCIATIONS 
    Section 1.  [VIRGINIA FIREFIGHTERS RELIEF ASSOCIATION; 
PRIOR LEGISLATION.] Laws 1987, chapter 372, article 2, section 
16, is amended to read:  
    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 retroactive to January 1, 1987, upon approval by the 
Virginia city council and compliance with Minnesota Statutes, 
section 645.021.  
    Sec. 2.  [VIRGINIA FIREFIGHTERS RELIEF ASSOCIATION; 
SURVIVOR BENEFITS.] 
    Survivor benefits accrued to a member of the Virginia 
firefighters relief association up to the date of death must be 
paid to surviving children, if any, if the spouse of the member 
predeceases the member.  If no children survive the member, 
survivor benefits accrued to the member up to the date of death 
must be paid to the beneficiary designated by the member.  
    Sec. 3.  [EVELETH POLICE AND FIREFIGHTERS; BENEFIT 
INCREASE.] 
    Notwithstanding any general or special law to the contrary, 
in addition to other benefits payable, retirement benefits 
payable to retired police officers and firefighters and their 
surviving spouses by the Eveleth police and fire trust fund may 
be increased by $50 a month.  Increases may be made retroactive 
to January 1, 1988. 
    Sec. 4.  [FRIDLEY FIREFIGHTERS; DEFINED CONTRIBUTION PLAN.] 
    Notwithstanding any law to the contrary, the Fridley 
volunteer firefighters relief association may amend its articles 
of incorporation or bylaws to convert its defined benefit 
pension plan to a defined contribution plan.  The conversion 
plan must provide for allocation of special fund assets among 
individual accounts to be established for each active 
firefighters association member.  Instead of providing further 
defined pension plan benefits, the association shall purchase 
annuity contracts with existing special fund assets for retired 
members and for active members who may not qualify as a 
"volunteer firefighter" under Minnesota Statutes, chapter 424A.  
All provisions of Minnesota Statutes not inconsistent with this 
section govern the defined contribution plan established under 
this section. 
    Sec. 5.  Laws 1955, chapter 151, section 9, subdivision 7, 
as amended by Laws 1963, chapter 271, section 6, is amended to 
read: 
    Subd. 7.  The association shall pay to any member who, 
after not less than ten five years of service in the police 
department, retires because of sickness or injury occurring 
while not on duty and not engaged in police work and the 
retirement is necessary because the member is unable to perform 
police duties, a pension of 20 ten units per month, and for each 
additional year of service over ten five years, a pension of two 
units per month, but not to exceed a total of 40 units.  If a 
member is entitled to more than 40 units through years of 
service, he shall receive those additional units over 40 when he 
becomes 50 years of age, but the total of these pension payments 
shall not exceed 50 units per month. 
    Sec. 6.  [MINNETONKA VOLUNTEER FIREFIGHTERS.] 
    Subdivision 1.  [EXCLUSION FROM COVERAGE.] Notwithstanding 
any law to the contrary, a volunteer firefighter serving with 
the Minnetonka fire department is excluded from the definition 
of "public employee" in Minnesota Statutes, section 353.01, 
subdivision 2, for activities undertaken as part of volunteer 
firefighter duties.  Compensation paid to a Minnetonka volunteer 
firefighter for volunteer firefighting duties must be excluded 
from the definition of "salary" in section 353.01, subdivision 
10.  A Minnetonka volunteer firefighter is not a member of the 
public employees police and fire fund as a result of volunteer 
firefighter duties.  
    Subd. 2.  [QUALIFICATION FOR CERTAIN PERSONS.] A person who 
is a Minnetonka volunteer firefighter may qualify as a "public 
employee" under section 353.01, subdivision 2, and may be a 
member of the public employees police and fire fund for 
compensation received from employment and activities other than 
volunteer firefighter duties.  
    Subd. 3.  [REFUND.] A volunteer firefighter who is excluded 
from membership by subdivision 1 is 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 interest at the 
rate of six percent a year, compounded annually, if the person 
or the city of Minnetonka 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. 7.  [THIEF RIVER FALLS VOLUNTEER FIRE RELIEF 
ASSOCIATION; VALIDATION OF CERTAIN SERVICE PENSIONS.] 
    The payment of a service pension before January 1, 1988, by 
the Thief River Falls volunteer firefighters relief association 
to a person who terminated active service with the Thief River 
Falls fire department with at least 20 years of active service 
before attaining age 50 and who complies with all other 
conditions of the articles of incorporation or bylaws of the 
relief association are validated. 
    Sec. 8.  [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION 
FIVE-YEAR VESTING.] 
    In accordance with Minnesota Statutes, section 354A.12, 
subdivision 4, approval is granted for the St. Paul teachers 
retirement fund association to amend the bylaws of the 
association in effect on June 1, 1978, as amended, governing the 
benefits of the basic division of the association, article IV, 
section 3, paragraph 1, clauses (b), applicable to limited 
service pensions, and (d), applicable to deferred pensions, and 
article IV, section 3, paragraph 10, applicable to survivor 
benefits, by replacing the ten years of accredited service 
vesting requirement with a five years of accredited service 
vesting requirement. 
    Sec. 9.  [MINNEAPOLIS TEACHERS PARTICIPATING ANNUITY; 
EXTENSION TO CERTAIN RETIREES.] 
    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 to permit annual participating annuity adjustments 
under article IX, subsection (19), to be applied, effective 
January 1, 1989, to minimum normal retirement annuities payable 
to eligible recipients under article IX, subsection (14), as 
amended pursuant to Laws 1987, chapter 372, article 3, section 
1, paragraph (f).  
    Sec. 10.  [LOCAL APPROVAL.] 
    Sections 1 and 2 are effective upon approval by the 
Virginia city council and compliance with Minnesota Statutes, 
section 645.021. 
    Section 3 is effective upon approval by the Eveleth city 
council and compliance with Minnesota Statutes, section 645.021. 
    Section 4 is effective upon approval by the Fridley city 
council and compliance with Minnesota Statutes, section 645.021. 
    Section 5 is effective upon approval by the St. Paul city 
council and compliance with Minnesota Statutes, section 645.021, 
subdivision 3. 
    Section 6 is effective upon approval by the Minnetonka city 
council and compliance with Minnesota Statutes, section 645.021. 
    Section 7 is effective upon approval by the Thief River 
Falls city council and compliance with Minnesota Statutes, 
section 645.021. 
    Sections 8 and 9 are effective the day following final 
enactment. 

                               ARTICLE 9

                         OTHER RETIREMENT ISSUES
    Section 1.  Minnesota Statutes 1987 Supplement, 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 system as provided in 
section 352.01, subdivision 23, who is ordered to active duty 
under section 190.08, subdivision 3, who elects this special 
retirement coverage under subdivision 4, who is required to 
retire from federal military status at the an age of 60 years 
earlier than age 65 by applicable federal laws or regulations 
and who terminates employment as a state employee upon attaining 
that mandatory retirement age is entitled, upon application, to 
a retirement annuity computed in accordance with section 
352.115, subdivisions 2 and 3, without any reduction for early 
retirement under section 352.116, subdivision 1. 
    Sec. 2.  Minnesota Statutes 1987 Supplement, section 
352.85, subdivision 2, is amended to read:  
    Subd. 2.  [DISABILITY BENEFIT.] An employee described in 
subdivision 1, who is less than 60 years of the applicable 
federal military status mandatory retirement age and who becomes 
disabled and physically or mentally unfit to perform 
occupational duties due to injury, sickness, or other 
disability, and who is found disqualified for retention on 
active duty as a result of a physical examination required by 
applicable federal laws or regulations, is entitled upon 
application to disability benefits computed in the manner 
specified in section 352.113.  Disability benefits are otherwise 
governed by section 352.113, except that the age for the 
termination of the disability benefit is 60 years the applicable 
federal military status mandatory retirement age. 
    Sec. 3.  [356.245] [LOCAL ELECTED OFFICIALS.] 
    An elected official covered by section 353.01, subdivision 
2a, is eligible to participate in the state of Minnesota 
deferred compensation plan under section 356.24.  A local 
governmental unit may make the matching employer contributions 
authorized by that section on the part of a participating 
elected official. 
     Sec. 4.  Minnesota Statutes 1986, section 490.124, 
subdivision 2, is amended to read: 
    Subd. 2.  [MINIMUM SERVICE REQUIREMENT; EXTENSION OF TERM.] 
No judge shall be eligible for an annuity at normal or early 
retirement date if the judge has less than ten five years of 
allowable service.  A judge who shall retire on or, as permitted 
under sections 490.121 to 490.132, after mandatory retirement 
date, shall be entitled to a proportionate annuity based upon 
the allowable service of the judge at date of retirement. 
    A judge who was in office on December 31, 1973 and 
thereafter and who, by the date on which the current term 
expires, would not be eligible to retire with full benefits 
under statutes in effect on December 31, 1973, may apply to the 
governor for an extension to serve up to three additional years, 
stating the intention of the judge to retire upon attaining 
eligibility to receive a retirement allowance.  Notwithstanding 
section 490.125, the governor shall forthwith make a written 
order accepting the retirement application, and extending the 
term of office of the judge for the period of time, not to 
exceed three years, as may be necessary to make the judge 
eligible for retirement, solely for purposes of computing 
benefits hereunder. 
     Sec. 5.  Laws 1986, chapter 359, section 25, is amended to 
read: 
     Sec. 25.  [STATE AIDS FOR WINONA.] 
     Upon receipt of the state auditor's report of the relief 
association for calendar year 1985 and of the valuation report 
for December 31, 1985, the commissioner of finance shall issue 
warrants to the city of Winona in the amounts equal to the 
amounts of police state aid, amortization state aid, and 
supplemental amortization state aid withheld by the department 
of finance since August 26, 1985 1984, plus interest at a rate 
of six percent per annum from the date each state aid payment 
was withheld.  This section does not apply to state aids for 
which the relief association must qualify after December 31, 
1987. 
    Sec. 6.  [EFFECTIVE DATE.] 
    Sections 1, 2, and 5 are effective on the day following 
final enactment.  Sections 3 and 4 are effective July 1, 1988. 

                               ARTICLE 10 

                    UNIFORM JUDICIAL RETIREMENT PLAN 
    Section 1.  Minnesota Statutes 1986, section 490.123, 
subdivision 1, is amended to read:  
    Subdivision 1.  [CREATION; CONTRIBUTIONS.] There is hereby 
created a special fund known as The "judges' retirement fund".  
The fund shall must be credited with all contributions, all 
interest, and all other income authorized by law.  From this 
fund there are appropriated the payments authorized by sections 
490.121 to 490.132, in the amounts and at the times provided 
herein, including the expenses of administering the fund.  Each 
A judge shall contribute to the fund from each salary payment a 
sum equal to one-half of one percent of salary, plus a sum equal 
to the salary multiplied by the rate of employee tax specified 
in the Federal Insurance Contributions Act as defined in section 
355.01, subdivision 9, but in aggregate not less than seven 
percent of salary.  In addition, a judge referred to in section 
355.392, subdivision 1, clause (b), shall contribute to the fund 
from each salary payment a sum equal to an additional 
three-quarters of one percent of salary.  The balance of all 
money necessary for administering sections 490.121 to 490.132 
and the judges' retirement fund, including payment of retirement 
compensation and other benefits under sections 490.121 to 
490.132, shall must be contributed to the fund by the state. 
    Money certified by the executive director of the Minnesota 
state retirement system to the commissioner of finance as needed 
to meet the state's obligations to the judges' retirement fund 
shall must be transferred to the fund at least once a month. 
    Sec. 2.  Minnesota Statutes 1987 Supplement, section 
490.124, subdivision 11, is amended to read:  
    Subd. 11.  [OPTIONAL ANNUITIES.] There shall be No survivor 
or death benefits may be paid in connection with the death of a 
judge who retires after December 31, 1973, except as otherwise 
provided in sections 490.121 to 490.132.  Within 30 days before 
retirement, except as provided in subdivision 10, a judge may 
elect to receive, in lieu instead of the normal retirement 
annuity, an optional retirement annuity which shall take in the 
form of either an annuity payable for a period certain and for 
life thereafter or after that period, a joint and survivor 
annuity without reinstatement in the event of the designated 
beneficiary predeceasing the retired judge, or a joint and 
survivor annuity with reinstatement in the event of the 
designated beneficiary predeceasing the retired judge.  The An 
optional retirement annuity shall must be actuarially equivalent 
to a single life annuity with no term certain and shall must be 
established by the board of directors of the Minnesota state 
retirement system.  In establishing these optional retirement 
annuity forms, the board shall obtain the written recommendation 
of the actuary retained by the legislative commission on 
pensions and retirement.  The recommendations shall must be a 
part of the permanent records of the board. 
    Sec. 3.  Minnesota Statutes 1986, section 490.129, is 
amended to read:  
    490.129 [BENEFITS OFFSET.] 
    Upon any event of maturity of benefits for any a judge 
referred to in section 355.392, subdivision 1, clause (b), the 
amount payable from the judges' retirement fund shall must be 
reduced by 75 50 percent of the amount of the judge's primary 
benefit payable upon the event of maturity of benefits under the 
Social Security Act. 
    Upon any event of maturity of benefits for the judge's 
surviving spouse or dependent children under section 490.124, 
subdivision 9, the amount payable from the judges' retirement 
fund shall must be based (a) (1) on the judge's normal 
retirement annuity or (b) (2) upon the event of maturity of 
benefits under the Social Security Act, on the judge's normal 
retirement annuity after reduction by 75 50 percent of the 
amount of the judge's primary benefit under the Social Security 
Act; provided that the surviving spouse or dependent 
children shall must receive an annuity of not less than 25 
percent of the judge's final average compensation.  
     Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective July 1, 1988.  Section 3 is 
effective retroactively to August 1, 1987, and applies to 
benefits that accrued, accrue, or would have accrued after that 
date. 

                               ARTICLE 11 
INDIVIDUAL RETIREMENT ACCOUNT PLAN 
    Section 1.  Minnesota Statutes 1986, section 354.05, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [EXCEPTIONS.] Notwithstanding subdivision 2, a 
person who is first employed as a teacher in the state 
university system or the state community college system after 
June 30, 1988, is not a member of the fund unless the person is 
covered by section 3, subdivision 2, and has exercised an option 
under that subdivision to remain a member of the fund. 
    Sec. 2.  [354B.01] [DEFINITIONS.] 
    Subdivision 1.  [PLAN.] "Plan" means the individual 
retirement account plan established by sections 2 to 5. 
    Subd. 2.  [COVERED EMPLOYMENT, STATE UNIVERSITIES.] 
"Covered employment," with respect to employment by the state 
university system, means employment in a position included in 
the definition of teacher under section 354.05, subdivision 2, 
other than that of an administrator covered by or eligible for 
coverage in the Minnesota state retirement system unclassified 
employees retirement plan. 
    Subd. 3.  [COVERED EMPLOYMENT, COMMUNITY COLLEGES.] 
"Covered employment," with respect to employment by the 
community college system, means employment in a position 
included in the definition of teacher under section 354.05, 
subdivision 2. 
    Sec. 3.  [354B.02] [COVERED PERSONS.] 
    Subdivision 1.  [PLAN PARTICIPANTS.] Except as provided in 
subdivision 2, a person who was first employed in covered 
employment after June 30, 1988, shall participate in the plan. 
    Subd. 2. [PERSONS WITH CERTAIN PRIOR SERVICE.] A person 
with prior service as a member of the teachers retirement 
association other than in covered employment under section 2, 
subdivision 2 or 3, who is entitled to a deferred annuity under 
section 354.55, subdivision 11, and who is first employed in 
covered employment after June 30, 1988, may, at the person's 
option, remain a member of the teacher's retirement association 
or participate in the plan. 
    Sec. 4.  [354B.04] [CONTRIBUTIONS.] 
    Subdivision 1.  [MEMBER CONTRIBUTIONS.] Persons in covered 
employment who participate in the plan shall make a member 
contribution in an amount equal to the amount prescribed by 
section 354.42, subdivision 2.  The contribution must be made by 
payroll deduction each pay period.  
    Subd. 2.  [EMPLOYER CONTRIBUTIONS.] The employer of persons 
in covered employment who participate in the plan shall make an 
employer contribution in an amount equal to the amount 
prescribed by section 354.42, subdivision 3, and shall continue 
to make an additional employer contribution to the teachers 
retirement association in an amount equal to the amount 
prescribed by section 354.42, subdivision 5. 
    Subd. 3.  [MANNER OF EMPLOYER CONTRIBUTIONS.] The employer 
of persons in covered employment shall make employer 
contributions from any available revenue sources.  The employer 
contribution must be made each pay period.  
    Sec. 5.  [354B.05] [ADMINISTRATION.] 
    Subdivision 1.  [GOVERNING BOARDS.] The state university 
board shall administer the plan for persons in covered 
employment under section 2, subdivision 2.  The community 
college board shall administer the plan for persons in covered 
employment under section 2, subdivision 3.  
    Subd. 2.  [PURCHASE OF CONTRACTS.] The state university 
board and the community college board shall arrange for the 
purchase of annuity contracts, fixed, variable, or a combination 
of fixed and variable, or custodial accounts to provide 
retirement and death benefits to members of the plan.  The 
contracts or accounts must be purchased with contributions under 
section 4 or money or assets otherwise provided by law or by 
authority of the state university board or community college 
board and acceptable by the financial institutions from which 
the contracts or accounts are purchased. 
    Subd. 3.  [SELECTION OF FINANCIAL INSTITUTIONS.] The state 
university board and the community college board shall select no 
more than three financial institutions to provide annuity 
contracts or custodial accounts.  Investment programs offered by 
the institutions must meet the requirements of section 401(a) or 
403(b) of the Internal Revenue Code of 1986, as amended.  In 
making their selections, the boards shall consider these 
criteria: 
    (1) the experience and ability of the financial institution 
to provide retirement and death benefits suited to the needs of 
the covered employees; 
    (2) the relationship of the benefits to their cost; and 
    (3) the financial strength and stability of the institution.
    Subd. 4.  [BENEFITS OWNED BY MEMBERS.] The retirement and 
death benefits provided by the annuity contracts or custodial 
accounts are owned by the members of the plan and must be paid 
in accordance with the provisions of the annuity contracts or 
custodial accounts. 
    Sec. 6.  Minnesota Statutes 1986, section 356.24, is 
amended to read:  
    356.24 [SUPPLEMENTAL PENSION OR DEFERRED COMPENSATION 
PLANS, RESTRICTIONS UPON GOVERNMENT UNITS.] 
    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 that is established, maintained, and operated in 
addition to a primary pension program for the benefit of the 
governmental subdivision employees other than to a supplemental 
pension plan which that was established, maintained and operated 
prior to before May 6, 1971, to any a plan which that 
provides solely for group health, hospital, disability, or death 
benefits, to the individual retirement account plan established 
by sections 2 to 5, or to any a plan which that provides 
solely for severance pay as authorized pursuant to by section 
465.72 to a retiring or terminating employee.  No change in 
benefits or employer contributions in any plan to which this 
section applies after May 6, 1971 shall be, is effective without 
prior legislative authorization.  
    Sec. 7.  [CERTAIN NEW EMPLOYEES.] 
    Notwithstanding section 3, a person who was first hired in 
covered employment after June 30, 1988, does not become a member 
of the plan established by sections 3 to 5 until the plan is in 
operation and ready to accept contributions, and the payment of 
employer and employee contributions under section 4 does not 
begin until that time. 
    Sec. 8.  [EFFECTIVE DATE.] 
    Sections 1 to 7 are effective July 1, 1988. 
    Approved May 4, 1988