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

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1990 

                        CHAPTER 570-H.F.No. 2103 
           An act relating to retirement; various retirement 
          plans; including gambling enforcement division 
          officers in the membership of the state patrol 
          retirement plan; requiring regular investment 
          performance reporting from public pension plans; 
          modifying various retirement provisions related to 
          state university and community college faculty 
          members; including certain state lottery employees in 
          the unclassified state employees retirement programs; 
          modifying economic interest statement requirements for 
          certain pension plan fiduciaries; changing schedule 
          for actuarial valuations for the Thief River Falls 
          police pension trust fund; excluding certain interns 
          from public employees retirement association 
          membership; extending retirement coverage to certain 
          former crime bureau employees; restoring forfeited 
          service credit for certain former St. Paul bureau of 
          health employees; authorizing the transfer of the 
          Moose Lake volunteer firefighters relief association; 
          authorizing additional college supplemental retirement 
          plan designated beneficiaries; authorizing service 
          credit for medical leave periods in teacher retirement 
          plans; authorizing annuitization of certain teacher 
          postretirement amounts; expanding coverage of a public 
          employees defined contribution plan to include elected 
          local government employees; transferring certain 
          employer contributions from the teachers retirement 
          association to the individual retirement account plan 
          for post-June 30, 1988, state university and community 
          college faculty; modifying the Minnesota 
          postretirement investment fund reserve transfer 
          procedure; making certain administrative modifications 
          in Minnesota state retirement system and in public 
          employees retirement association laws; making certain 
          technical corrections related to the 1989 benefit 
          increase legislation; authorizing various purchases of 
          credit for prior service; modifying the flexible 
          service pension maximums for volunteer firefighters 
          relief associations providing monthly service 
          pensions; repealing a redundant postretirement 
          adjustment provision; amending Minnesota Statutes 
          1988, sections 3A.03, subdivision 2; 11A.18, 
          subdivision 6; 43A.34, subdivision 4; 136.81, by 
          adding a subdivision; 352.01, subdivision 13; 352.029, 
          subdivision 3; 352.03, subdivision 1; 352.115, 
          subdivision 7; 352.73, by adding a subdivision; 
          352.96, subdivision 4; 352B.01, subdivision 2; 
          352B.11, subdivision 4; 352B.14, subdivision 4; 
          352C.09, subdivision 2; 352D.02, subdivision 1; 
          352D.05, subdivision 3; 353.01, subdivisions 7 and 16; 
          353.15, subdivision 2; 353.27, subdivisions 7 and 10; 
          353.46, subdivision 4; 353.657, subdivision 1; 353.83; 
          353D.01; 353D.02; 353D.03; 353D.04; 353D.05, 
          subdivisions 1 and 3; 353D.06; 353D.07; 353D.08; 
          353D.09; 354.07, subdivision 4; 354.146, subdivision 
          1; 354.42, subdivisions 2 and 3; 354.46, subdivision 
          1; 354.52, subdivision 2; 354.55, subdivision 19; 
          354B.01, subdivisions 2 and 3; 356.302, subdivisions 3 
          and 4; 424A.02, subdivision 3; Minnesota Statutes 1989 
          Supplement, sections 136.81, subdivision 1; 136.82, 
          subdivisions 1 and 2; 352.01, subdivisions 2b and 25; 
          352.021, subdivision 5; 352.031, subdivisions 2, 3, 
          and by adding a subdivision; 352.115, subdivision 3; 
          352.116, subdivisions 1 and 1a, and by adding a 
          subdivision; 352.93, subdivisions 2a and 3; 352B.08, 
          subdivisions 2a and 3; 352B.11, subdivision 2; 353.01, 
          subdivisions 2b, 11a, and 37; 353.29, subdivision 3; 
          353.30; 353.35; 353.651, subdivision 4; 353.656, 
          subdivisions 1 and 3; 354.05; 354.071, subdivisions 2, 
          3, and by adding a subdivision; 354.44, subdivision 6; 
          354.45, subdivision 1a; 354.46, subdivision 2; 354.47, 
          subdivision 1; 354.48, subdivision 3; 354.49, 
          subdivisions 2 and 3; 354.50, subdivision 5; 354.55, 
          subdivision 11; 354.65; 354.66, subdivision 2; 
          354A.011, subdivision 5a; 354A.095; 354A.31, 
          subdivisions 4, 6, and 7; 354A.32, subdivisions 1 and 
          1a; 354B.02, subdivisions 2, 3, and by adding a 
          subdivision; 354B.03, subdivisions 1 and 3; 354B.05, 
          subdivision 3; 356.371, subdivision 3; 356.86, 
          subdivisions 2, 4, 5, and 6; 356A.06, subdivision 4; 
          Laws 1978, chapter 689, section 4, subdivision 2, as 
          amended; Laws 1980, chapter 612, section 3, as 
          amended; Laws 1989, chapter 319, articles 17, section 
          18; and 19, section 7, subdivision 4; proposing coding 
          for new law in Minnesota Statutes, chapters 353D; 354; 
          354A; and 356; repealing Minnesota Statutes 1988, 
          sections 11A.19, subdivisions 1 to 8; 136.81, 
          subdivisions 2 and 3; 136.82, subdivisions 3 and 4; 
          136.83; 136.85; 354.05, subdivisions 23, 24, 33, and 
          34; 354.146, subdivision 2; 354.62, subdivisions 1, 3, 
          4, 5, and 6; Minnesota Statutes 1989 Supplement, 
          sections 11A.19, subdivision 9; 136.82, subdivisions 1 
          and 2; 136.84; 353.87, subdivision 5; 354.44, 
          subdivision 7; and 354.62, subdivisions 2 and 7; and 
          Laws 1989, chapter 335, article 1, section 50. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:  

                                ARTICLE 1

                 STATE PATROL RETIREMENT PLAN MEMBERSHIP
    Section 1.  Minnesota Statutes 1988, section 43A.34, 
subdivision 4, is amended to read: 
    Subd. 4.  [STATE PATROL, CONSERVATION AND CRIME BUREAU 
OFFICERS EXEMPTED.] Notwithstanding any provision to the 
contrary, (a) conservation officers and crime bureau officers 
who were first employed on or after July 1, 1973, and who are 
members of the state patrol retirement fund by reason of their 
employment, and members of the Minnesota state patrol division 
and gambling enforcement divisions of the department of public 
safety who are members of the state patrol retirement 
association by reason of their employment, shall not continue 
employment after attaining the age of 60 years, except for a 
fractional portion of one year that will enable the employee to 
complete the employee's next full year of allowable service as 
defined pursuant to section 352B.01, subdivision 3; and (b) 
conservation officers and crime bureau officers who were first 
employed and are members of the state patrol retirement fund by 
reason of their employment before July 1, 1973, shall not 
continue employment after attaining the age of 70 years.  
    Sec. 2.  Minnesota Statutes 1989 Supplement, section 
352.01, subdivision 2b, is amended to read: 
    Subd. 2b.  [EXCLUDED EMPLOYEES.] "State employee" does not 
include: 
     (1) elective state officers; 
     (2) students employed by the University of Minnesota, the 
state universities, and community colleges unless approved for 
coverage by the board of regents, the state university board, or 
the state board for community colleges, as the case may be; 
     (3) employees who are eligible for membership in the state 
teachers retirement association except employees of the 
department of education who have chosen or may choose to be 
covered by the Minnesota state retirement system instead of the 
teachers retirement association; 
     (4) employees of the University of Minnesota who are 
excluded from coverage by action of the board of regents; 
     (5) officers and enlisted personnel in the national guard 
and the naval militia who are assigned to permanent peacetime 
duty and who under federal law are or are required to be members 
of a federal retirement system; 
     (6) election officers; 
     (7) persons engaged in public work for the state but 
employed by contractors when the performance of the contract is 
authorized by the legislature or other competent authority; 
     (8) officers and employees of the senate and house of 
representatives or a legislative committee or commission who are 
temporarily employed; 
     (9) receivers, jurors, notaries public, and court employees 
who are not in the judicial branch as defined in section 43A.02, 
subdivision 25, except referees and adjusters employed by the 
department of labor and industry; 
     (10) patient and inmate help in state charitable, penal, 
and correctional institutions including the Minnesota veterans 
home; 
     (11) persons employed for professional services where the 
service is incidental to regular professional duties and whose 
compensation is paid on a per diem basis; 
     (12) employees of the Sibley House Association; 
     (13) employees of the Grand Army of the Republic and 
employees of the ladies of the G.A.R.; 
     (14) the members of any state board or commission who serve 
the state intermittently and are paid on a per diem basis; the 
secretary, secretary-treasurer, and treasurer of those boards if 
their compensation is $500 or less per year, or, if they are 
legally prohibited from serving more than two consecutive terms 
and their total service is required by law to be less than ten 
years; and the board of managers of the state agricultural 
society and its treasurer unless the treasurer is also its 
full-time secretary; 
     (15) state troopers; 
     (16) temporary employees of the Minnesota state fair 
employed on or after July 1 for a period not to extend beyond 
October 15 of that year; and persons employed at any time by the 
state fair administration for special events held on the 
fairgrounds; 
    (17) emergency employees in the classified service; except 
that if an emergency employee, within the same pay period, 
becomes a provisional or probationary employee on other than a 
temporary basis, the employee shall be considered a "state 
employee" retroactively to the beginning of the pay period; 
    (18) persons described in section 352B.01, subdivision 2, 
clauses (b) and (c), formerly defined as state police 
officers (2) to (5); 
    (19) temporary employees in the classified service, 
temporary employees in the unclassified service appointed for a 
definite period of not more than six months and employed less 
than six months in any one-year period and seasonal help in the 
classified service employed by the department of revenue; 
    (20) trainees paid under budget classification number 41, 
and other trainee employees, except those listed in subdivision 
2a, clause (10); 
    (21) persons whose compensation is paid on a fee basis; 
    (22) state employees who in any year have credit for 12 
months service as teachers in the public schools of the state 
and as teachers are members of the teachers retirement 
association or a retirement system in St. Paul, Minneapolis, or 
Duluth; 
    (23) employees of the adjutant general employed on an 
unlimited intermittent or temporary basis in the classified and 
unclassified service for the support of army and air national 
guard training facilities; 
     (24) chaplains and nuns who have taken a vow of poverty as 
members of a religious order; 
     (25) labor service employees employed as a laborer 1 on an 
hourly basis; 
     (26) examination monitors employed by departments, 
agencies, commissions, and boards to conduct examinations 
required by law; 
     (27) members of appeal tribunals, exclusive of the chair, 
to which reference is made in section 268.10, subdivision 4; 
     (28) persons appointed to serve as members of fact-finding 
commissions or adjustment panels, arbitrators, or labor referees 
under chapter 179; 
     (29) temporary employees employed for limited periods under 
any state or federal program for training or rehabilitation 
including persons employed for limited periods from areas of 
economic distress except skilled and supervisory personnel and 
persons having civil service status covered by the system; 
     (30) full-time students employed by the Minnesota 
historical society intermittently during part of the year and 
full-time during the summer months; 
     (31) temporary employees, appointed for not more than six 
months, of the metropolitan council and of any of its statutory 
boards, if the board members are appointed by the metropolitan 
council; 
     (32) persons employed in positions designated by the 
department of employee relations as student workers; 
     (33) any person who is 65 years of age or older when 
appointed and who does not have allowable service credit for 
previous employment, unless the employee gives notice to the 
director within 60 days after appointment that coverage is 
desired; 
     (34) members of trades employed by the metropolitan waste 
control commission with trade union pension plan coverage under 
a collective bargaining agreement first employed after June 1, 
1977; 
     (35) persons employed in subsidized on-the-job training, 
work experience, or public service employment as enrollees under 
the federal Comprehensive Employment and Training Act after 
March 30, 1978, unless the person has as of the later of March 
30, 1978, or the date of employment sufficient service credit in 
the retirement system to meet the minimum vesting requirements 
for a deferred annuity, or the employer agrees in writing on 
forms prescribed by the director to make the required employer 
contributions, including any employer additional contributions, 
on account of that person from revenue sources other than funds 
provided under the federal Comprehensive Employment and Training 
Act, or the person agrees in writing on forms prescribed by the 
director to make the required employer contribution in addition 
to the required employee contribution; 
    (36) off-duty peace officers while employed by the 
metropolitan transit commission under section 629.40, 
subdivision 5; and 
    (37) persons who are employed as full-time firefighters by 
the department of military affairs and as firefighters are 
members of the public employees police and fire fund. 
    Sec. 3.  Minnesota Statutes 1988, section 352B.01, 
subdivision 2, is amended to read: 
    Subd. 2.  [MEMBER.] "Member" means: 
    (a) (1) persons referred to and employed after June 30, 
1943, under Laws 1929, chapter 355, as amended or supplemented, 
currently employed by the state, whose salaries or compensation 
is paid out of state funds; 
    (b) (2) a conservation officer employed under section 
97A.201, currently employed by the state, whose salary or 
compensation is paid out of state funds; and 
    (c) (3) a crime bureau officer who was employed by the 
crime bureau and was a member of the highway patrolmen's 
retirement fund on July 1, 1978, whether or not that person has 
the power of arrest by warrant after that date, or who is 
employed as police personnel, with powers of arrest by warrant 
under section 299C.04, and who is currently employed by the 
state, and whose salary or compensation is paid out of state 
funds; 
    (4) a person who is employed by the state in the department 
of public safety in a data processing management position with 
salary or compensation paid from state funds, who was a crime 
bureau officer covered by the state patrol retirement plan on 
August 15, 1987, and who was initially hired in the data 
processing management position within the department during 
September 1987, or January 1988, with membership continuing for 
the duration of the person's employment in that position, 
whether or not the person has the power of arrest by warrant 
after August 15, 1987; and 
    (5) public safety employees defined as peace officers in 
section 626.84, subdivision 1, paragraph (c), and employed with 
the division of gambling enforcement under section 299L.01.  
    Sec. 4.  Minnesota Statutes 1988, section 352B.14, 
subdivision 4, is amended to read: 
    Subd. 4.  [RETIREES UNDER OLD LAW.] A member defined in 
section 352B.01, subdivision 2, clause (a) (1), who has retired 
and began collecting a retirement annuity before April 21, 1961, 
or any surviving spouse or child who began collecting an annuity 
or benefit before April 21, 1961, shall continue to receive an 
annuity or benefit in the amount and subject to the conditions 
specified in the law before April 21, 1961. 
     Sec. 5.  [PAYMENT OF OMITTED CONTRIBUTION AMOUNTS.] 
    (a) A person affected by section 3 who has not made the 
full member contribution to the state patrol retirement plan for 
service before the effective date of this section shall pay the 
amount of omitted member contributions, plus annual compound 
interest at the rate of 8.5 percent.  The omitted member 
contribution amount and interest must be paid by January 1, 
1991.  The person shall be paid a refund from any other 
Minnesota public pension plan for the period of the omitted 
member contributions and service credit for that period in that 
plan is forfeited upon receipt of the refund. 
    (b) Upon payment of the omitted member contribution amount 
under paragraph (a), the department of public safety shall pay 
an amount equal to the amount of the omitted member contribution 
multiplied by the factor of 2.224.  This omitted employer 
contribution must be paid within 30 days of the payment of the 
omitted member contribution amount. 
    Sec. 6.  [EFFECTIVE DATE.] 
    Sections 1 to 5 are effective on the day following final 
enactment. 

                               ARTICLE 2 

             PENSION PLAN INVESTMENT PERFORMANCE REPORTING 
    Section 1.  [356.218] [INVESTMENT PERFORMANCE REPORT.] 
    Subdivision 1.  [REPORT REQUIRED.] (a) Unless paragraph (c) 
applies, the chief administrative officer of a public pension 
plan with an associated pension fund or investment fund 
specified in subdivision 2 shall annually prepare and file an 
investment performance report meeting the contents requirements 
of subdivision 3.  The report must be filed with or distributed 
as specified in paragraph (b) by April 1 each year and must 
cover the previous calendar year.  The report must be prepared 
under the supervision or at the direction of the chief 
administrative officer and must be signed by that officer.  The 
investment performance report is a public record.  
    (b) A copy of the report or a synopsis of the report must 
be distributed to each member of the pension plan and must be 
filed with the chief administrative officer of each employing 
unit making employer contributions to the pension plan.  A copy 
of the report also must be filed with the executive director of 
the legislative commission on pensions and retirement. 
    (c) This section does not apply to the state board of 
investment.  This section also does not apply to a public 
pension plan if all assets of the pension fund or investment 
fund attributable to the public pension plan are invested by the 
state board of investment under chapters 11A and 356A and if the 
executive director of the state board of investment makes public 
in an annual report or in other documents the fiscal year 
investment performance results of the pension fund or investment 
fund attributable to the pension plan that substantially meet 
the requirements of subdivision 3 for that fiscal year period.  
    Subd. 2.  [COVERED PUBLIC PENSION PLANS.] The provisions of 
this section apply to any Minnesota public pension plan, 
including a local police or firefighters relief association 
governed by sections 69.77 or 69.771 to 69.775, that has assets 
with a book value of at least $500,000 as of the end of the 
preceding plan year.  
    Subd. 3.  [CONTENTS OF THE INVESTMENT PERFORMANCE 
REPORT.] The investment performance report required by this 
section must contain the time-weighted total rate of return 
results for each quarter and annually for each significant asset 
class or type of investment and for the portfolio as a whole.  
The time-weighted rate of return results must be computed using 
market values and the formula or formulas prescribed by the 
state board of investment under section 11A.04, clause (11).  
The person performing the calculations shall certify conformance 
to that formula or those formulas.  The investment performance 
report may also include any additional investment performance or 
investment related information that the chief administrative 
officer considers necessary to provide an adequate summary of 
the performance of the portfolio.  The additional information 
must be clearly indicated as a supplement to the information 
required by this subdivision.  The executive director of the 
legislative commission on pensions and retirement shall 
prescribe the forms on which the report must be submitted and 
may prescribe other directions for submitting the report. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective on July 1, 1990. 

                                ARTICLE 3

                 STATE UNIVERSITY AND COMMUNITY COLLEGE 

                     FACULTY RETIREMENT PROVISIONS 
    Section 1.  Minnesota Statutes 1989 Supplement, section 
136.81, subdivision 1, is amended to read: 
    Subdivision 1.  [DEDUCTIONS.] The state university board 
and the state board for community colleges shall deduct from the 
salary of each person described in section 136.80, subdivision 
1, a sum equal to five percent of the person's annual salary 
paid between $6,000 and $15,000.  The deduction must be made in 
the same manner as other retirement deductions are made from the 
salary of the person.  The employer shall make a contribution to 
the plan on behalf of every covered person in an amount equal to 
the deductions made from the salary of the person.  If an 
agreement is made under section 356.24 for additional employer 
contributions, an amount equal to the additional employer 
contribution must be deducted from the person's annual salary 
above $15,000 as specified in this subdivision.  The money 
deducted and the employer contribution must be deposited to the 
credit of the state university and community college 
supplemental retirement plan account of the teachers retirement 
fund.  The account must be separate and distinct from other 
funds, accounts, or assets of the teachers retirement fund.  Two 
percent of the amount of the salary deductions and employer 
contributions must be credited to the administrative expense 
reserve account of the supplemental retirement plan and must may 
be used by the state university board and the state board for 
community colleges for payment of necessary and reasonable 
administrative expenses of the supplemental retirement plan as 
provided in section 354.65. 
    Deductions taken from the salary of a person for the 
supplemental retirement plan in error must, upon discovery and 
verification, be refunded to the person.  Any related employer 
contributions must be refunded to the employer.  The executive 
director shall establish a reserve reflecting any gains or 
losses realized due to the purchase and redemption of shares 
representing salary deductions and employer contributions made 
in error.  The balance of the reserve remaining after the refund 
of contributions made in error must be credited annually to the 
administrative expense reserve account. 
    If salary deductions required under this section are 
omitted, the amount of the omitted salary deductions may be 
remitted by the person to the supplemental retirement plan 
investment account of the teachers retirement association within 
90 days following the association's written notification to the 
person of the omission, but not thereafter.  If the omitted 
salary deductions are received from the person, the required 
employer contribution must be paid by the employer within 30 
days after the association's written notification to the 
employer of the amount due. 
    Sec. 2.  Minnesota Statutes 1988, section 136.81, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [ADMINISTRATION.] The executive director of the 
teachers retirement association shall transfer the 
administration records of the supplemental retirement plan to 
the chancellor of the state university system and the chancellor 
of the state community college system on July 1, 1991.  The 
chancellor of the state university system and the chancellor of 
the state community college system shall administer the 
supplemental retirement plan for their employees.  The 
chancellors shall invest contributions made under this section, 
less amounts used for administrative expenses, as required by 
section 354B.05, subdivisions 2 and 3.  The retirement 
contributions and death benefits provided by annuity contracts 
or custodial accounts purchased by the chancellors are owned by 
the plan and must be paid in accordance with the provisions of 
the annuity contracts or custodial accounts. 
    Sec. 3.  Minnesota Statutes 1989 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:  
    (b) The executive director shall redeem shares under this 
subdivision when requested to do so in writing on forms provided 
by the executive director by a person having shares to the 
credit of the employee's share account record if the person is 
age 55 or older and is no longer employed by the state 
university board or state board for community colleges.  In such 
case the person 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, at their sole discretion, permit greater 
withdrawals in any one year.  
    (c) The executive director shall redeem shares under this 
subdivision when requested to do so in writing, on forms 
provided by the executive director, 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.  If the 
executive director finds that the person is totally and 
permanently disabled and will as a result be unable to return to 
similar employment, the person 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, at their 
sole discretion, permit greater withdrawals in any one year.  If 
the person returns to good health, the person owes no 
restitution to the state or a fund established by its laws for a 
redemption under this paragraph.  
    (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 designated beneficiary, when requested to do 
so in writing, on forms provided by the executive director, by 
the surviving spouse designated beneficiary.  The surviving 
spouse designated beneficiary must receive the cash realized on 
the redemption of the shares.  If the designated beneficiary is 
a surviving spouse, the surviving spouse may direct the 
redemption of not more than 20 percent of the shares in the 
deceased spouse's person'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, 
their sole discretion, permit greater withdrawals in any one 
year.  In that case the surviving spouse 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 must be redeemed by the executive director 
and the cash realized from the redemption must be distributed to 
the estate of the surviving spouse.  
    (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 
designated beneficiary, the surviving spouse must receive the 
cash realized on the redemption of the shares as provided in 
paragraph (d).  If there is no surviving spouse, the executive 
director shall redeem all shares to the credit of the employee's 
share account record and pay the cash realized from the 
redemption to the estate of the deceased person.  
    (f) The executive director shall redeem shares under this 
subdivision when requested to do so in writing, on forms 
provided by the executive director, 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 (b) to (e).  In that case, the person 
is entitled upon application to receive one-half of the cash 
realized on the redemption of shares and one-half must be 
credited to the administrative expense reserve account of the 
supplemental retirement plan for payment of necessary and 
reasonable administrative expenses of the supplemental 
retirement plan as provided in section 354.65.  
    Sec. 4.  Minnesota Statutes 1989 Supplement, section 
136.82, subdivision 2, is amended to read:  
    Subd. 2.  [REDEMPTION OF SHARES AS AN ANNUITY.] A person 
who has shares to the credit of the employee's share account 
record, who is 55 years of age or older and who is no longer 
employed by the state university board or the state board for 
community colleges or who is totally and permanently disabled 
pursuant to subdivision 1, paragraph (c), or who has the status 
of a surviving spouse of a person who has shares to the credit 
of the employee's share account pursuant to subdivision 1, 
paragraph (d) or (e), may redeem all or part of the shares to 
purchase an annuity by depositing the cash realized upon 
redemption with the executive director of the teachers 
retirement fund and receive in exchange an annuity for life or 
an optional annuity as hereinafter provided.  The election to 
purchase an annuity may be made only once by any individual.  If 
an election is made before the date on which the person is 
entitled to request redemption, the redemption shall not be made 
prior to the date upon which the person would be entitled to 
make the request.  The annuity purchase rates shall be based on 
the annuity table of mortality adopted by the board of trustees 
of the teachers retirement fund for the fund as provided in 
section 354.07, subdivision 1, using the interest assumption 
specified in section 356.215, subdivision 4d.  The amount of the 
annuity for life shall be that amount which has a present value 
equal to the cash realized on the redemption of the shares as of 
the first day of the month next following the date of the 
election to purchase an annuity.  The board of trustees of the 
teachers retirement fund shall establish an optional joint and 
survivor annuity, an optional annuity payable for a period 
certain and for life thereafter, and an optional guaranteed 
refund annuity paying the annuitant a fixed amount for life with 
the guarantee that in the event of death the balance of the cash 
realized from the redemption of shares is payable to the 
designated beneficiary.  The optional forms of annuity shall be 
actuarially equivalent to the single life annuity as defined in 
section 354.05, subdivision 7.  In establishing these optional 
forms, the board of trustees shall obtain the written 
recommendation of the actuary retained by the legislative 
commission on pensions and retirement, and these recommendations 
shall be a part of the permanent records of the board of 
trustees. 
    Sec. 5.  Minnesota Statutes 1988, section 354B.01, 
subdivision 2, is amended to read: 
    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.  "Covered employment" does not 
include employment when the initial appointment is defined as 
less than 25 percent of a full academic year, exclusive of 
summer session. 
    Sec. 6.  Minnesota Statutes 1988, section 354B.01, 
subdivision 3, is amended to read: 
    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.  "Covered employment" does not include employment 
when the initial appointment is defined as less than 25 percent 
of a full academic year, exclusive of summer session. 
    Sec. 7.  Minnesota Statutes 1989 Supplement, section 
354B.02, is amended by adding a subdivision to read: 
    Subd. 4.  [PURCHASE OF PRIOR SERVICE CREDIT.] A person who 
is initially excluded from participation, but is subsequently 
appointed to a position that qualifies for participation, may 
purchase credit for the prior uncovered employment.  This 
purchase must be made by paying to the employer the amount the 
person would have paid if the prior service had been covered 
employment.  This payment must be made within 45 days of the 
start of covered employment.  The employer must contribute an 
amount to match any contribution made by an employee under this 
subdivision.  Contributions for prior service must be invested 
under this section.  Once a person is employed in a position 
that qualifies for participation, all subsequent employment by 
the person is under the provisions of this plan. 
    Sec. 8.  Minnesota Statutes 1989 Supplement, section 
354B.03, subdivision 1, is amended to read: 
    Subdivision 1.  [PROCEDURE.] If a person with less than 
three years of allowable service elects a transfer to the plan 
under section 354B.02, subdivision 2 or 3, the executive 
director of the teachers retirement association shall transfer 
from the teachers retirement fund to the plan the person's 
member contributions plus interest compounded annually at five 
six percent a year.  The transfer must be made within 90 days 
from the date the executive director receives notification of 
the election.  The transfer may not include any amount 
representing an employer contribution nor any amount 
representing the repayment of a refund received by the 
association after the date of enactment of this act. 
    Sec. 9.  Minnesota Statutes 1989 Supplement, section 
354B.05, subdivision 3, is amended to read: 
    Subd. 3.  [SELECTION OF FINANCIAL INSTITUTIONS.] The 
supplemental investment fund administered by the state board of 
investment is one of the investment options for the plan.  The 
state university board and the community college board shall 
select no more than three two other financial institutions to 
provide annuity contracts or custodial accounts.  Each board may 
at its discretion change a selection of an institution.  
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.
    The chancellor of the state university system and the 
chancellor of the state community college system shall redeem 
all shares in the accounts of the Minnesota supplemental 
investment fund held on behalf of personnel in the supplemental 
plan who elect an investment option other than the supplemental 
investment fund, except that shares in the guaranteed return 
account must not be redeemed until the expiration dates for the 
guaranteed investment contracts.  The chancellors shall transfer 
the cash realized to the financial institutions selected by the 
state university board and the community college board under 
section 354B.05.  
    Sec. 10.  [INTEREST ON CERTAIN PRIOR TRANSFERS.] 
    The increase in interest payable on transfers specified in 
section 8 is also payable on transfers made before the effective 
date of section 8.  The executive director of the teachers 
retirement association shall calculate the transfer interest 
amounts payable on these prior transfers and transfer the 
additional interest within 60 days of the effective date of this 
section. 
    Sec. 11.  [TRANSFERS IN CERTAIN CASES.] 
    Notwithstanding any provision of Minnesota Statutes, 
section 354B.03, to the contrary, a person in covered employment 
under Minnesota Statutes, chapter 354, who was first employed by 
the state university system board or the community college board 
after June 30, 1988, and before July 1, 1989, and who has no 
prior allowable service under chapter 354, and who elected, or 
elects before January 1, 1991, to have their employee 
contributions transferred under Minnesota Statutes, chapter 
354B, shall have an amount equal to the employer contributions 
made on behalf of the person under Minnesota Statutes, section 
354.42, subdivision 3, plus annual interest compounded annually 
at a rate of six percent, transferred by the executive director 
of the teachers retirement association from the teachers 
retirement fund to the individual retirement account plan under 
Minnesota Statutes, chapter 354B.  The election must be made on 
a form prescribed by the executive director and must be made by 
January 1, 1991. 
    Sec. 12.  [REPEALER.] 
    Minnesota Statutes 1988, sections 136.81, subdivisions 2 
and 3; 136.82, subdivisions 3 and 4; 136.83; and 136.85, are 
repealed.  Minnesota Statutes 1989 Supplement, sections 136.82, 
subdivisions 1 and 2, as amended by sections 3 and 4; and 
136.84, are repealed. 
    Sec. 13.  [EFFECTIVE DATE.] 
    Sections 1, 2, 9, and 12 are effective July 1, 1991.  
Sections 3 to 8, 10, and 11 are effective the day following 
final enactment. 

                               ARTICLE 4 

               UNCLASSIFIED RETIREMENT PROGRAM MEMBERSHIP 
    Section 1.  Minnesota Statutes 1988, section 352D.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  [COVERAGE.] The following (a) Employees 
enumerated in paragraph (b), if they are in the unclassified 
service of the state and are eligible for coverage under 
the general state employees retirement fund plan under chapter 
352, shall participate are participants in the unclassified 
program under this chapter unless an the employee gives notice 
to the executive director of the Minnesota state retirement 
system within one year following the commencement of employment 
in the unclassified service that the employee desires coverage 
under the regular employee general state employees retirement 
plan.  For the purposes of this chapter, an employee who does 
not file notice with the executive director shall be is deemed 
to have exercised the option to participate in the unclassified 
plan. 
    (b) Enumerated employees are: 
    (1) any an employee in the office of the governor, 
lieutenant governor, secretary of state, state auditor, state 
treasurer, attorney general or an employee of the state board of 
investment,; 
    (2) the head of any a department, division, or agency 
created by statute in the unclassified service, an acting 
department head subsequently appointed to the position, or any 
an employee enumerated in section 15A.081, subdivision 1 or 
15A.083, subdivision 4,; 
    (3) any a permanent, full-time unclassified employee of the 
legislature or any a commission or agency of the legislature or 
a temporary legislative employee having shares in the 
supplemental retirement fund as a result of former employment 
covered by this chapter, whether or not eligible for coverage 
under the Minnesota state retirement system,; 
    (4) any a person employed in a position established 
pursuant to under section 43A.08, subdivision 1, clause (c), or 
subdivision 1a, or in a position authorized under a statute 
creating or establishing a department or agency of the state, 
which is at the deputy or assistant head of department or agency 
or director level,; 
    (5) the chair, chief administrator, and not to exceed nine 
positions at the division director or administrative deputy 
level of the metropolitan waste control commission as designated 
by the commission; the chair, executive director, and not to 
exceed three positions at the division director or assistant to 
the chair level of the regional transit board; a chief 
administrator who is an employee of the metropolitan transit 
commission; and the chair, executive director, and not to exceed 
nine positions at the division director or administrative deputy 
level of the metropolitan council as designated by the council; 
provided that upon initial designation of all positions provided 
for in this clause, no further designations or redesignations 
shall may be made without approval of the board of directors of 
the Minnesota state retirement system,; 
    (6) the executive director, associate executive director, 
and not to exceed nine positions of the higher education 
coordinating board in the unclassified service, as designated by 
the higher education coordinating board; provided that upon 
initial designation of all positions provided for in this 
clause, no further designations or redesignations shall may be 
made without approval of the board of directors of the Minnesota 
state retirement system,; 
    (7) the clerk of the appellate courts appointed pursuant to 
under article VI, section 2, of the Constitution of the state of 
Minnesota,; 
    (8) the chief executive officers of correctional facilities 
operated by the department of corrections and of hospitals and 
nursing homes operated by the department of human services,; 
    (9) any an employee whose principal employment is at the 
state ceremonial house,; 
    (10) employees an employee of the Minnesota educational 
computing corporation, and; 
    (11) any an employee of the world trade center board.; and 
    (12) an employee of the division of the state lottery in 
the department of gaming who is covered by the managerial plan 
established under section 43A.18, subdivision 3. 
    Sec. 2.  [TRANSFER OF ASSETS.] 
    An unclassified employee of the division of the state 
lottery in the department of gaming on the effective date of 
this section who is covered by the managerial plan established 
under Minnesota Statutes, section 43A.18, subdivision 3, and who 
was covered by the general state employees retirement plan under 
Minnesota Statutes, chapter 352, while employed as an 
unclassified employee of the division of the state lottery may 
transfer accumulated employee and employer contributions made 
while employed with the division of the state lottery to the 
unclassified plan, as provided in Minnesota Statutes, section 
352D.03. 
    Sec. 3.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective the day following final 
enactment and apply to any person who was employed with the 
division of the state lottery in the department of gaming and 
who is covered by the managerial plan established under 
Minnesota Statutes, section 43A.18, subdivision 3, before that 
date and after that date. 

                               ARTICLE 5 

                 FIDUCIARY RESPONSIBILITY MODIFICATIONS 
    Section 1.  Minnesota Statutes 1989 Supplement, section 
356A.06, subdivision 4, is amended to read: 
    Subd. 4.  [ECONOMIC INTEREST STATEMENT.] (a) Each member of 
the governing board of a covered pension plan and the chief 
administrative officer of the plan shall file with the plan a 
statement of economic interest.  
    (b) For a covered pension plan other than a plan specified 
in paragraph (c), the statement must contain the information 
required by section 10A.09, subdivision 5, and any other 
information that the fiduciary or the governing board of the 
plan determines is necessary to disclose a reasonably 
foreseeable potential or actual conflict of interest.  
    (c) For a covered pension plan governed by sections 69.771 
to 69.776 or a covered pension plan governed by section 69.77 
with assets under $8,000,000, the statement must contain the 
following: 
    (1) the person's principal occupation and principal place 
of business; 
    (2) whether or not the person has an ownership of or 
interest of ten percent or greater in an investment security 
brokerage business, a real estate sales business, an insurance 
agency, a bank, a savings and loan, or another financial 
institution; and 
    (3) any relationship or financial arrangement that can 
reasonably be expected to give rise to a conflict of interest. 
    (d) The statement must be filed annually with the chief 
administrative officer of the plan and be available for public 
inspection during regular office hours at the office of the 
pension plan.  
    (e) A disclosure form meeting the requirements of the 
federal Investment Advisers Act of 1940, United States Code, 
title 15, sections 80b-1 to 80b-21 as amended, and filed with 
the state board of investment or the pension plan meets the 
requirements of this subdivision. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 

                               ARTICLE 6 

               MISCELLANEOUS LOCAL PENSION MODIFICATIONS 
    Section 1.  Laws 1978, chapter 689, section 4, subdivision 
2, as amended by Laws 1981, chapter 224, section 272, is amended 
to read: 
    Subd. 2.  [THIEF RIVER FALLS POLICE RETIREMENT PENSION 
TRUST FUND; REPORTING ACTUARIAL VALUATION.] Upon the transfer of 
money and the establishment of the trust fund pursuant to 
subdivision 1 and periodically thereafter, the board of trustees 
shall have an actuarial valuation or survey and experience study 
made of the trust fund in accordance with the filing 
requirements and applicable actuarial standards set forth in the 
general statute governing actuarial reporting by police and fire 
funds, except that the actuarial valuation and experience study 
need be made at least once every five years.  The board of 
trustees shall also complete and file a financial report for the 
trust fund in accordance with Minnesota Statutes, Section 69.051.
    Sec. 2.  Laws 1980, chapter 612, section 3, as amended by 
Laws 1981, chapter 301, section 4, is amended to read: 
    Sec. 3.  [SAINT PAUL AND MINNEAPOLIS, CITIES OF; EMPLOYMENT 
OF UNIVERSITY OR COLLEGE STUDENTS.] 
    Notwithstanding any contrary provision of the Saint Paul 
city charter and the Minneapolis city charter, or, a statute, 
including the veterans preference act, or a civil service rule 
or regulation, the governing body or any board or commission of 
the city of Saint Paul and the city of Minneapolis having 
authority to hire employees may employ university, college, or 
professional school students pursuant to an intern or other 
training program when the program is sponsored or substantially 
financed by the state or the United States or by a philanthropic 
foundation or organization.  Persons hired under a program shall 
be in the unclassified service of the city and serve at the 
pleasure of the body employing them.  No full time appointment 
under this section shall exceed one year.  Persons employed 
under this section shall be excluded from the provisions of 
Minnesota Statutes, Sections 268.03 to 268.24, and Minnesota 
Statutes, Chapters 353 and 356. 
     Sec. 3.  [MOOSE LAKE FIREFIGHTERS' RELIEF ASSOCIATION 
ASSETS.] 
    Notwithstanding the requirements of Minnesota Statutes, 
section 424A.02, or any other law, for firefighters' relief 
association purposes the Moose Lake area fire protection 
district must be treated as a continuation of the fire 
department of the city of Moose Lake.  Assets of the Moose Lake 
fire department relief association must be transferred to a 
relief association now or hereafter established by the district 
and service of transferred members must be considered continuous 
for purpose of computing retirement benefits. 
    Sec. 4.  [PURCHASE OF SERVICE CREDIT FOR ST. PAUL BUREAU OF 
HEALTH SERVICE.] 
    Subdivision 1.  [ELIGIBILITY.] A person who was born on May 
28, 1941, who was initially employed by the St. Paul bureau of 
health in November 1963, who was covered by the St. Paul bureau 
of health relief association under Laws 1919, chapter 430, 
sections 1 to 9, as amended, by virtue of that employment, who 
terminated employment by the St. Paul bureau of health in August 
1966, and who became a member of the general plan of the public 
employees retirement association in May 1967, is entitled to 
purchase service credit in the general plan of the public 
employees retirement association for any months of employment by 
the St. Paul bureau of health in which member contributions to 
the St. Paul bureau of health relief association were made. 
    Subd. 2.  [PURCHASE PAYMENT AMOUNT.] (a) The person 
requesting the purchase of prior service shall establish in the 
records of the fund or association proof of the service for 
which the purchase of prior service is requested.  The manner of 
the proof of service must be in accordance with procedures 
prescribed by the executive director of the public employees 
retirement association.  For a person eligible to purchase 
credit under subdivision 1, there must be paid to the public 
employees retirement association an amount on the date of 
payment equal to the amount computed in paragraph (b) minus the 
amount computed in paragraph (c). 
    (b) The present value, on the date of payment, of the 
amount of additional retirement annuity that would be obtained 
due to the purchase of additional service credit by the 
individual specified in subdivision 1, using the preretirement 
interest rate specified in Minnesota Statutes, section 356.215, 
subdivision 4d, and the mortality table adopted for the public 
employees retirement association and assuming continuous future 
service in the public employees retirement association 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 
salary increase rate specified in Minnesota Statutes, section 
356.215, subdivision 4d. 
    (c) The present value of employee and employer 
contributions paid to the St. Paul bureau of health relief 
association by or on behalf of the individual eligible to 
purchase credit under subdivision 1.  The present value will be 
computed assuming investment earnings on these contributions 
equal to the rate actually earned by the assets of active 
employees covered by the public employees retirement 
association, beginning with the date the individual specified in 
subdivision 1 first made contributions to the St. Paul bureau of 
health relief association. 
    Subd. 3.  [PAYMENT; CREDITING SERVICE.] Payment must be 
made in one lump sum, unless the executive director of the 
public employees retirement association agrees to accept payment 
in installments over a period not to exceed three years from the 
date of the agreement, with interest at a rate deemed 
appropriate by the executive director.  The period of allowable 
service may be credited to the account of the person only after 
receipt of full payment by the executive director. 
    Subd. 4.  [OPTIONAL EMPLOYER PARTIAL PAYMENT.] Payment must 
be made by the person entitled to purchase prior service.  
However, the city of St. Paul may, at its discretion, pay all or 
any portion of the required payment amount. 
    Sec. 5.  [EFFECTIVE DATE.] 
    Section 1 is effective the day after compliance with 
Minnesota Statutes, section 645.021, subdivision 3, by the Thief 
River Falls city council and governs actuarial valuations and 
experience studies to be made under section 1 beginning with the 
next actuarial valuation and experience study required after 
1989. 
    Section 2 is effective, if approved by both the city 
councils of the city of Saint Paul and the city of Minneapolis, 
the day after compliance by them with Minnesota Statutes, 
section 645.021, subdivision 3. 
     Sections 3 and 4 are effective the day following final 
enactment.  

                                ARTICLE 7

                   TEACHER RETIREMENT FUND PROVISIONS
    Section 1.  [354.095] [MEDICAL LEAVE; PAYMENT PROCEDURES.] 
    A member of the fund who is on an authorized medical leave 
of absence and subsequently returns to teaching service, is 
entitled to receive allowable service credit, not to exceed one 
year, for the period of leave, upon making the prescribed 
payment to the fund.  This payment must include the required 
employee and employer contributions at the rates specified in 
section 354.42, subdivisions 2, 3, and 5, as applied to the 
member's average full-time monthly salary rate on the date of 
return from the leave of absence plus annual interest at the 
rate of 8.5 percent per year from the midpoint date of the leave 
until the date of payment.  The member must pay the total amount 
required unless the employing unit, at its option, pays the 
employer contributions.  The total amount required must be paid 
before the effective date of retirement or by the end of the 
fiscal year following the fiscal year in which the leave of 
absence terminated, whichever is earlier.  Payment must be 
accompanied by a copy of the resolution or action of the 
employing authority granting the leave and the employing 
authority, upon granting the leave, must certify the leave to 
the association on a form specified by the executive director.  
A member may not receive more than one year of allowable service 
credit during any fiscal year by making payment under this 
section.  A member may not receive disability benefits under 
section 354.48 and receive allowable service credit under this 
section for the same period of time. 
    Sec. 2.  [354A.096] [MEDICAL LEAVE.] 
    Any teacher in the coordinated program of either the 
Minneapolis teachers retirement fund association or the St. Paul 
teachers retirement fund association or the new law coordinated 
program of the Duluth teachers retirement fund association who 
is on an authorized medical leave of absence and subsequently 
returns to teaching service is entitled to receive allowable 
service credit, not to exceed one year, for the period of leave, 
upon making the prescribed payment to the fund.  This payment 
must include the required employee and employer contributions at 
the rates specified in section 354A.12, subdivisions 1 and 2, as 
applied to the member's average full-time monthly salary rate on 
the date of return from the leave of absence plus annual 
interest at the rate of 8.5 percent per year from the midpoint 
date of the leave until the date of payment.  The member must 
pay the total amount required unless the employing unit, at its 
option, pays the employer contributions.  The total amount 
required must be paid by the end of the fiscal year following 
the fiscal year in which the leave of absence terminated or 
before the member retires, whichever is earlier.  Payment must 
be accompanied by a copy of the resolution or action of the 
employing authority granting the leave and the employing 
authority, upon granting the leave, must certify the leave to 
the association in a manner specified by the executive 
director.  A member may not receive more than one year of 
allowable service credit during any fiscal year by making 
payment under this section.  A member may not receive disability 
benefits under section 354A.36 and receive allowable service 
credit under this section for the same period of time. 
    Sec. 3.  [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION.] 
    In accordance with Minnesota Statutes, section 354A.12, 
subdivision 4, approval is granted for the St. Paul teachers 
retirement fund association to amend its articles of 
incorporation or bylaws to allow basic plan members who are 
granted a medical leave of absence by independent school 
district No. 625, St. Paul, to receive up to one year service 
credit of that leave in accordance with the provisions of 
Minnesota Statutes, section 354A.096. 
    Sec. 4.  [DULUTH TEACHERS RETIREMENT FUND AND ST. PAUL 
TEACHERS RETIREMENT FUND:  ALTERNATE METHOD OF PAYING ADDITIONAL 
LUMP SUM AMOUNT.] 
    Notwithstanding the articles or bylaws of the Duluth 
teachers retirement fund association or St. Paul teachers 
retirement fund association, approval is granted for the Duluth 
teachers retirement fund association and St. Paul teachers 
retirement fund association to provide that a lump sum 
postretirement adjustment that is payable may, upon the request 
of the annuitant or survivor and approval of the board of 
trustees of the fund, be converted to a monthly annuity benefit 
of equivalent actuarial value.  The amount of the additional 
annuity shall be determined by: 
    (1) the age of the annuitant or survivor on the date of the 
lump sum postretirement adjustment; 
    (2) use of an annuity table of mortality established by the 
board of trustees of the association as required by Minnesota 
Statutes, section 356.215; and 
    (3) use of the postretirement interest rate assumption 
specified in Minnesota Statutes, section 11A.18. 
    Sec. 5.  [EFFECTIVE DATE.] 
    (a) Sections 1 to 4 are effective the day following final 
enactment.  
    (b) Section 1 is also effective retroactively to October 9, 
1988, for a former teacher employed by independent school 
district No. 831 who began a long-term disability medical leave 
on October 10, 1988, who terminated employment on June 16, 1989, 
and who has retired.  The contribution amounts for the leave 
must be based on the salary rate of the teacher in effect for 
the 1988-1989 school year and the contributions must be made by 
June 30, 1990, with interest as calculated under section 1.  If 
the contribution amounts are paid, the person's retirement 
annuity must be recomputed based on the resulting additional 
allowable service credit and revision in the person's highest 
five successive years average salary and the increased annuity 
amount accrues as of the first day of the first month next 
following the date of the payment.  If an optional annuity form 
has been selected, the increased annuity amount must be 
appropriately adjusted. 

                                ARTICLE 8

               PUBLIC EMPLOYEES DEFINED CONTRIBUTION PLAN
    Section 1.  Minnesota Statutes 1988, section 353.01, 
subdivision 7, is amended to read: 
    Subd. 7.  [MEMBER.] A member is "Member" means a person who 
accepts employment as a "public employee" and is not covered by 
the plan established in chapter 353D.  A person who is a member 
remains a member while performing services as a public employee 
and while on an authorized leave of absence or an authorized 
temporary layoff; provided, however, (1) that any elected public 
officer or any person appointed to fill a vacancy in an elective 
office shall have the right to exercise an option to become a 
member by filing application for membership, but the option to 
become a member, once exercised, may not be withdrawn during the 
incumbency of the person in office; and (2) that any member who 
is appointed by the governor to be a state department head and 
elects pursuant to section 352.021, subdivision 3, not to be 
covered by the Minnesota state retirement system, shall remain a 
member of the public employees retirement association.  
Membership in the retirement association of any person shall 
terminate upon the person ceasing to be a "public employee." 
    Sec. 2.  Minnesota Statutes 1988, section 353D.01, is 
amended to read: 
    353D.01 [AMBULANCE SERVICE PERSONNEL RETIREMENT PUBLIC 
EMPLOYEES DEFINED CONTRIBUTION PLAN.] 
    Subdivision 1.  [ESTABLISHMENT.] The ambulance service 
personnel retirement public employees defined contribution plan 
is administered by the public employees retirement association 
under supervision of the association board of directors 
trustees.  To assist it in governing the operations of the plan, 
the board may appoint an advisory committee of not more 
than seven nine members who are representative of ambulance 
service operators and ambulance service personnel the employers 
and employees who participate in the plan.  
    Subd. 2.  [COVERAGE ELIGIBILITY.] Coverage under Except as 
provided in section 353D.11, eligibility to participate in the 
retirement plan is open to an elected local government official 
of a governmental subdivision who elects to participate in the 
plan who is not a member of the public employees retirement 
association within the meaning of section 353.01, subdivision 7, 
and to basic and advanced life support emergency medical service 
personnel employed by or providing services for any public 
ambulance service or privately operated ambulance service that 
receives an operating subsidy from a governmental entity that 
elects to participate.  For purposes of this chapter, an elected 
local government official includes a person appointed to fill a 
vacancy in an elective office.  Elected local government 
official does not include an elected county sheriff.  Except as 
provided in section 353D.11, elected local government officials 
and first response personnel and emergency medical service 
personnel who are currently covered by a public or private 
pension plan because of their employment or provision of 
services are not eligible to participate in the plan.  
    Sec. 3.  Minnesota Statutes 1988, section 353D.02, is 
amended to read: 
    353D.02 [ELECTION OF COVERAGE.] 
    Eligible elected local government officials may elect to 
participate in the plan after being elected or appointed to a 
public office by filing an application to participate on a form 
prescribed by the executive director of the association.  
Participation begins on the first day of the month after the 
application is received in the association's office or on the 
date when the term of office commences, whichever date is 
later.  An election to participate in the plan is irrevocable 
during incumbency in office.  
    Each public ambulance service or privately operated 
ambulance service that receives an operating subsidy from a 
governmental entity with eligible personnel may elect to 
participate in the plan.  If a service elects to participate, 
its eligible personnel may elect to participate or to decline to 
participate.  An individual's election must be made within the 
latter of 30 days of the service's election to participate or 30 
days of the date on which the individual was employed by the 
service or began to provide service for it, whichever date is 
later.  An election by a service or an individual is irrevocable.
    Sec. 4.  Minnesota Statutes 1988, section 353D.03, is 
amended to read: 
    353D.03 [FUNDING OF PLAN.] 
    (a) An eligible elected local government official who 
elects to participate in the public employees defined 
contribution plan shall contribute an amount equal to five 
percent of salary as defined in section 353.01, subdivision 10.  
A participating elected local government official's governmental 
subdivision shall contribute a matching amount. 
    (b) A public ambulance service or privately operated 
ambulance service that receives an operating subsidy from a 
governmental entity that elects to participate in the plan shall 
fund benefits for its qualified personnel who individually elect 
to participate, except that personnel who are paid for their 
services may elect to make member contributions in an amount not 
to exceed the service's contribution on their behalf.  Ambulance 
service contributions on behalf of salaried employees must be a 
fixed percentage of salary.  An ambulance service making 
contributions for volunteer or largely uncompensated personnel 
may assign a unit value for each call or each period of alert 
duty for the purpose of calculating ambulance service 
contributions. 
    Sec. 5.  Minnesota Statutes 1988, section 353D.04, is 
amended to read: 
    353D.04 [CONTRIBUTIONS TO PLAN.] 
    (a) Contributions made by or on behalf of a participating 
elected local government official must be remitted to the public 
employees retirement association at least monthly and must be 
credited to the individual account established for the 
participating officer.  
    (b) Ambulance service contributions to the plan may be made 
from any source of funds available to the ambulance service.  
Contributions must be remitted monthly on a regular periodic 
basis to the association together with any member contributions 
paid or withheld during the preceding month.  Those 
contributions shall must be credited to the individual account 
of each participating member.  
    Sec. 6.  Minnesota Statutes 1988, section 353D.05, 
subdivision 1, is amended to read: 
    Subdivision 1.  [INVESTMENT.] Ambulance service Employing 
unit contributions, after the deduction of an amount for 
administrative expenses, and member individual participant 
contributions must be remitted to the state board of investment 
for investment in the Minnesota supplemental investment fund 
established by section 11A.17. 
    Sec. 7.  Minnesota Statutes 1988, section 353D.05, 
subdivision 3, is amended to read: 
    Subd. 3.  [ADMINISTRATIVE EXPENSES.] The public employees 
retirement association may deduct an amount, set annually by the 
executive director of the association, but not to exceed two 
percent of ambulance service the employing unit contributions to 
the plan, to defray the expenses of the association in 
administering the plan. 
    Sec. 8.  Minnesota Statutes 1988, section 353D.06, is 
amended to read: 
    353D.06 [REPORTING BY AMBULANCE SERVICES.] 
    The executive director of the public employees retirement 
association shall prescribe the form of monthly and any other 
reports reporting forms required from an ambulance service 
employing units and the election forms required from ambulance 
service members participants.  Member Reporting forms 
shall must contain names, identification numbers, amount of 
contribution by and on behalf of each member participant, and 
such other data as is required to keep an accurate account 
record of the account value of each participating employee 
participant.  
    Sec. 9.  Minnesota Statutes 1988, section 353D.07, is 
amended to read: 
    353D.07 [BENEFITS.] 
    Subdivision 1.  [TYPE OF PLAN; UNIFORMITY.] (a) The plan is 
a defined contribution plan when the benefits from which are 
payable upon termination of service, retirement, disability, or 
death.  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 Laws 1987, chapter 372.  
    (b) In the case of ambulance service personnel, eligibility 
standards must be uniform among all ambulance service personnel 
of an ambulance service electing to participate.  
    Subd. 2.  [PAYMENT OF BENEFITS.] Withdrawal of or a 
retirement benefit based on member individual participant 
contributions and employer contributions plus accrued investment 
income is payable immediately upon the death or termination 
of an active member a participant for a period that exceeds 30 
days.  An application by or on behalf of the participant must be 
filed before any payment of benefits may be made. 
    Subd. 3.  [FORM OF BENEFIT.] A retirement benefit is 
payable in a lump sum equal to the value of a participant's 
account at the date of retirement and may be rolled over into 
another qualified plan at the option of the member participant.  
As an alternative to a lump sum distribution, the member 
participant may choose to have the association use the total 
account value to purchase an annuity payable at a designated age 
from an insurance company licensed to do business in the state.  
    Subd. 4.  [DISABILITY OF PARTICIPANT.] If an active 
participant becomes permanently and totally disabled as defined 
in section 353.01, subdivision 19, that participant may withdraw 
from the account in equal monthly installments an amount, 
designated by the participant in increments of $100 but not to 
exceed ten times the joint employer and employee contribution 
for the month preceding disability.  The option must be 
exercised by filing an application on a form prescribed by the 
executive director.  Payments begin on the first day of the 
month following the month in which the disability occurred.  
Payments end when the participant's disabled status ends or the 
account balance is exhausted, whichever occurs first. 
    Subd. 5.  [DEATH OF A MEMBER PARTICIPANT.] In the event of 
the death of If an active participant dies, the total value of 
the account must be paid in a lump sum to the designated 
beneficiary or, if none, the heirs at law of the decedent.  
    Sec. 10.  Minnesota Statutes 1988, section 353D.08, is 
amended to read: 
    353D.08 [PORTABILITY.] 
    Qualified Participating ambulance service personnel who 
change employment or membership among participating ambulance 
services must shall continue participation in the plan if 
termination from one participating ambulance service and 
commencement in another participating ambulance service occur 
occurs within 30 days. 
    Sec. 11.  Minnesota Statutes 1988, section 353D.09, is 
amended to read: 
    353D.09 [TAX QUALIFICATION.] 
    The public employees retirement association shall adopt 
rules required necessary for administration of the plan.  The 
proposed plan shall be formulated and adopted in accordance with 
applicable restrictions and standards of the Internal Revenue 
Code and rulings and regulations of the Internal Revenue Service 
in order to assure the tax exempt status of the plan as a 
qualified pension plan.  Contributions by ambulance service 
personnel and by ambulance service operators may be accepted 
only after approval by the Internal Revenue Service. 
    Sec. 12.  [353D.11] [CURRENT ELECTED PUBLIC OFFICERS.] 
    Subdivision 1.  [EXERCISE OF OPTION.] As of July 1, 1990, 
an elected local government official, who with respect to 
elected service is participating in, and covered by, the general 
employees defined benefit plan administered by the public 
employees retirement association under chapter 353, may elect to 
participate in the public employees defined contribution plan 
and terminate further participation in, and coverage under, the 
defined benefit plan.  The necessary election must be made 
before June 30, 1991. 
    Subd. 2.  [REFUND OR DEFERRED ANNUITY.] An elected public 
officer who, with respect to elected service is participating 
in, and covered by, the general employees defined benefit plan 
administered by the public employees retirement association 
under chapter 353 and who, with respect to future elected 
service, elects to participate in the public employees defined 
contribution plan, is deemed to have terminated public service 
for purposes of the return of the accumulated employee 
deductions with interest or the deferred annuity allowed under 
section 353.34.  The termination of public service is deemed to 
occur as of the first day of the month following the month in 
which the election is made to participate in the public 
employees defined contribution plan and any refund of 
accumulated employee deductions with interest or future deferred 
annuity is governed by the law in effect on that day. 
    Sec. 13.  [353D.12] [CONTRIBUTIONS FOR PREVIOUS SERVICE.] 
    Subdivision 1.  [ELIGIBILITY; CONTRIBUTIONS.] An elected 
local government official who participates in the defined 
contribution plan under this chapter may make contributions to 
the plan for the service as an elected public officer rendered 
before the effective date of this section that was not covered 
by a public or private employer contributory pension plan, 
including a plan administered by the public employees retirement 
association under chapter 353. 
    Subd. 2.  [AMOUNT OF PRIOR SERVICE CONTRIBUTIONS.] (a) The 
employee purchase amount is that amount that the participating 
elected local government official specifies, but combined with 
subdivision 6 may not exceed in total the amount of the employee 
and employer contributions that would have been payable under 
section 353.27, subdivisions 2, 3, and 3a, based on the actual 
salary or compensation of the elected local government official 
from public sources during the prior service and based on the 
rates in effect during the prior service, plus interest at an 
annual compound rate of six percent. 
    (b) In any year, the purchase amount to be paid in is 
subject to the limitation for defined contribution plans under 
section 415(c) of the federal Internal Revenue Code, as amended, 
or comparable contribution limitation set forth in the federal 
Internal Revenue Code, and applicable regulations and revenue 
rulings, remaining after subtracting the funding amounts under 
section 353D.03, paragraph (a), for that year. 
    Subd. 3.  [INSTALLMENT PAYMENTS.] The purchase amount may 
be made in annual installments but may not exceed, combined with 
subdivision 6, in any installment the limitation set forth in 
subdivision 2, paragraph (a), or in total the limitation set 
forth in subdivision 2, paragraph (a). 
    Subd. 4.  [AUTHORIZED ROLLOVERS.] To the extent allowed by 
federal law, the employee purchase amount may be made with funds 
distributed from:  (1) a plan qualified under section 401(a) of 
the federal Internal Revenue Code, as amended; (2) an annuity 
qualified under section 403(a) of the federal Internal Revenue 
Code, as amended; (3) an individual retirement account used 
solely to receive a nontaxable rollover from that type of plan 
or annuity; (4) the state deferred compensation plan authorized 
under section 352.96 and qualified under section 457 of the 
federal Internal Revenue Code, as amended; or (5) another tax 
qualified plan or annuity that authorizes rollovers.  The 
participating elected local government official shall supply 
sufficient written documentation that the transfer amounts are 
eligible for tax-free rollover treatment.  An authorized 
tax-free rollover, plus any other purchase amount payments under 
this section, including subdivision 6, may not exceed the 
limitation in subdivision 2, paragraph (a).  Notwithstanding any 
provision of state law or rule to the contrary, to the extent 
permitted under federal law, the employee purchase amount may be 
transferred from the state deferred compensation plan before the 
employee terminates public employment. 
    Subd. 5.  [PRIOR SERVICE AND COMPENSATION 
DOCUMENTATION.] The participating elected local government 
official shall supply sufficient documentation of the person's 
prior uncredited service and compensation for which the purchase 
payment is made. 
    Subd. 6.  [EMPLOYING UNIT PAYMENT.] The employing unit of 
the participating elected local government official shall pay 
the amount of the employer contributions that could have been 
payable under section 353.27, subdivisions 3 and 3a, based on 
the actual salary or compensation of the elected local 
government official from public sources during the prior 
service, plus interest at an annual compound rate of six 
percent.  This amount combined with any employee purchase amount 
and any contributions under section 353D.03, paragraph (a), must 
in any year comply with the limitation set forth in subdivision 
2, paragraph (a). 
    Sec. 14.  [PURCHASE OF PRIOR SERVICE CREDIT.] 
    Subdivision 1.  [ENTITLEMENT.] An elected public officer 
who participates in the public employees retirement association 
defined benefit plan under Minnesota Statutes, chapter 353, may 
purchase service credit from the association for all or any 
portion of prior uncredited service as an elected public officer 
when the officer could have been, but was not, a member of the 
association on account of failure to exercise the membership 
option under Minnesota Statutes, section 353.01, subdivision 7. 
    Subd. 2.  [PURCHASE PAYMENT AMOUNT.] To purchase credit for 
prior service under subdivision 1, there must be paid to the 
public employee retirement association an amount equal to the 
present value, on the date of payment, of the amount of the 
additional retirement annuity obtained by the purchase of the 
additional service credit.  Calculation of this amount must be 
made using the applicable preretirement interest rate for the 
association specified in Minnesota Statutes, section 356.215, 
subdivision 4d, and the mortality table adopted for the 
association.  The calculation must assume continuous future 
service in the association until, and retirement at, the age at 
which the minimum requirements of the 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.  The calculation must also assume a future salary 
history that includes annual salary increases at the applicable 
salary increase rate for the association specified in section 
356.215, subdivision 4d.  The member must establish in the 
records of the association proof of the service for which the 
purchase of prior service is requested.  The manner of the proof 
of service must be in accordance with procedures prescribed by 
the executive director of the association. 
    Subd. 3.  [PAYMENT; CREDITING SERVICE.] Payment may be made 
in one lump sum, or in annual increments over a period not to 
exceed five years from the effective date of this section.  If 
payments are made in increments, the period of allowable service 
purchased by each payment is credited to the account of the 
member upon receipt of each payment by the executive director.  
If payments are made in increments, the executive director must 
calculate the present value of the amount of the additional 
retirement annuity obtained by each incremental payment. 
    Subd. 4.  [OPTIONAL EMPLOYER PARTIAL PAYMENT.] Payment of 
the amount calculated under subdivision 2 must be made by the 
member.  However, the current or former governmental subdivision 
employer of the member may, at its discretion, pay all or any 
portion of the payment amount that exceeds an amount equal to 
the employee contribution rates in effect 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. 15.  [EFFECTIVE DATE.] 
    Sections 1 to 14 are effective on the day following final 
enactment. 

                                ARTICLE 9

                  TRANSFERS TO MINNESOTA POSTRETIREMENT

                            INVESTMENT FUND
    Section 1.  Minnesota Statutes 1988, section 11A.18, 
subdivision 6, is amended to read: 
    Subd. 6.  [PARTICIPATING PUBLIC RETIREMENT FUNDS OR PLANS; 
TRANSFER OF REQUIRED RESERVES.] (a) Any public retirement fund 
or plan authorized by law to participate in the postretirement 
investment fund shall no later than the last business day of the 
month in which the benefit payment from the postretirement 
investment fund begins to accrue, certify and transfer to the 
state board money equal to the reserves required for those 
retirement annuities and benefits which are payable by the 
public retirement fund or plan and which are specified in law to 
be included in the participation in the fund as determined by or 
determined under a procedure specified by the actuary retained 
by the legislative commission on pensions and retirement.  
    (b) If the exact amount of the actuarially determined 
required reserves is not readily calculable as of the date of 
the commencement of a benefit payment on the required transfer 
date, the initial transfer must be based on the best estimate by 
the executive director of for the teachers retirement fund 
involved and shall be made on a timely basis and the public 
employees retirement fund and may be based on the best estimate 
for the other participating funds.  Any necessary adjustments 
based on specific calculations of actuarially determined 
required reserves must be made in later transfers.  If a best 
estimate initial transfer is insufficient, the later transfer 
from the retirement fund must include interest on the amount of 
the required reserve insufficiency at the greater of the 
following rates: 
    (1) the average short-term investment return rate earned by 
the state board over the 30-day period ending with the last 
business day of the month before the month in which the later 
adjustment transfer is made; or 
    (2) the preretirement interest assumption for the 
retirement fund as specified in section 356.215, subdivision 4d, 
stated as a monthly rate. 
    Interest on the amount of a required reserve insufficiency 
payable by a retirement fund shall be compounded on a monthly 
basis.  No interest shall be payable from the postretirement 
investment fund in the event of a required reserve 
oversufficiency. 
    (c) The state board shall confirm in writing each 
certification and transfer of money made by a participating 
public retirement fund or plan.  Each participating public 
retirement fund or plan shall maintain adequate records to 
account for money transferred to or from the postretirement 
investment fund.  
     Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 

                               ARTICLE 10

                    MINNESOTA STATE RETIREMENT SYSTEM

                        ADMINISTRATIVE PROVISIONS
    Section 1.  Minnesota Statutes 1988, section 352.01, 
subdivision 13, is amended to read: 
    Subd. 13.  [SALARY.] "Salary" means any the periodical 
compensation paid to any employee including wages, allowances, 
and fees, but excluding amounts of severance pay. before 
deductions for deferred compensation, supplemental retirement 
plans, or other voluntary salary reduction programs.  It also 
means wages and includes net income from fees.  Lump sum sick 
leave payments, 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 
an employee with single coverage, are not deemed to be salary.  
Workers' compensation payments are not considered salary. 
    Sec. 2.  Minnesota Statutes 1989 Supplement, section 
352.021, subdivision 5, is amended to read: 
    Subd. 5.  [CONTINUING COVERAGE.] Any state employee who has 
made contributions to the retirement fund for a period of one 
year and who, continuing in state service after that year, 
becomes eligible for membership in the state teachers retirement 
association as a full-time teacher, as defined in section 
354.05, subdivision 2, or is covered by section 354.05, 
subdivision 2a, may continue coverage under the system by filing 
in its office written notice of election to continue.  The 
election to be covered by the system under this subdivision or 
section 352.01, subdivision 2b, clause (3), must be made on a 
form approved by the director within 90 days after appointment 
to the position.  If the option is exercised, the employee is 
not thereafter entitled to membership in the teachers retirement 
association or in the individual retirement account plan for 
community college and state university faculty while employed by 
the state in a position that entitled the employee to make this 
election.  
    Sec. 3.  Minnesota Statutes 1988, section 352.029, 
subdivision 3, is amended to read: 
    Subd. 3.  [CONTRIBUTIONS.] The employee, employer, and 
additional employer contributions required by section 352.04, or 
by section 352.92 for employees covered by section 352.91, are 
the obligation of the employee who chooses coverage under this 
section.  However, the employing labor organization may pay the 
employer and employer additional contributions.  Contributions 
made by the employee must be made by salary deduction.  The 
employing labor organization shall pay all contributions to the 
system as required by section 352.04, or by section 352.92 for 
employees covered by section 352.91. 
    Sec. 4.  Minnesota Statutes 1988, section 352.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MEMBERSHIP OF BOARD; ELECTION; TERM.] The 
policy-making function of the system is vested in a board of 11 
members, who shall must be known as the board of directors.  
This board shall consist of three members appointed by the 
governor, one of whom must be a constitutional officer or 
appointed state official and two of whom must be public members 
knowledgeable in pension matters, four state employees elected 
by state employees covered by the system excluding employees in 
categories specifically authorized to designate or elect a 
member by this subdivision, one employee of the transit 
operating division of the metropolitan transit commission 
designated by the executive committee of the labor organization 
that is the exclusive bargaining agent representing employees of 
the transit division, one member of the state patrol retirement 
fund elected by members of that fund at a time and in a manner 
fixed by the board, one employee covered by the correctional 
employees plan elected by employees covered by that plan, and 
one retired employee elected by disabled and retired employees 
of all plans administered by the system at a time and in a 
manner to be fixed by the board.  Two state employee members, 
whose terms of office begin on the first Monday in March May 
after their election, must be elected biennially.  Elected 
members and the appointed transit operating division member hold 
office for a term of four years, except the retired member whose 
term is two years, and until their successors are elected or 
appointed, and have qualified.  An employee of the system is not 
eligible for membership on the board of directors.  A state 
employee on leave of absence is not eligible for election or 
reelection to membership on the board of directors.  The term of 
any board member who is on leave for more than six months 
automatically ends on expiration of this period. 
    Sec. 5.  Minnesota Statutes 1988, section 352.115, 
subdivision 7, is amended to read: 
    Subd. 7.  [APPLICATION FOR ANNUITY.] Application for 
annuity or optional annuity payment may be made by the employee 
at time of retirement, or by someone acting in behalf of the 
employee, upon proof of authority satisfactory to the director. 
    Sec. 6.  Minnesota Statutes 1988, section 352.96, 
subdivision 4, is amended to read: 
    Subd. 4.  [EXECUTIVE DIRECTOR TO ESTABLISH RULES.] The 
executive director of the system shall establish rules and 
procedures to carry out this section including allocation of 
administrative costs against the assets accumulated under this 
section.  Funds to pay these costs are appropriated from the 
fund or account in which the assets accumulated under this 
section are placed.  The rules established by the executive 
director must conform to federal and state tax laws, 
regulations, and rulings, and are not subject to the 
administrative procedure act.  Except for the marketing rules, 
rules adopted after July 1, 1977, relating to the options 
provided under subdivision 2, clauses (2) and (3), must be 
approved by the state board of investment.  A state employee 
must not make payments under a plan until the plan or applicable 
component of the plan has been approved for tax-deferred status 
by the internal revenue service. 
    Sec. 7.  [EFFECTIVE DATE.] 
    Sections 1 to 6 are effective the day following final 
enactment. 

                               ARTICLE 11

                 PUBLIC EMPLOYEES RETIREMENT ASSOCIATION

                        ADMINISTRATIVE PROVISIONS
    Section 1.  Minnesota Statutes 1989 Supplement, section 
353.01, subdivision 2b, is amended to read: 
    Subd. 2b.  [EXCLUDED EMPLOYEES.] The following persons are 
excluded from the meaning of "public employee": 
    (1) persons who are employed for professional services 
where the service is incidental to regular professional duties, 
determined on the basis that compensation for the service 
amounts to no more than 25 percent of the person's total annual 
gross earnings for all professional duties; 
    (2) election officers; 
    (3) independent contractors and their employees; 
    (4) patient and inmate personnel who perform services in 
charitable, penal, or correctional institutions of a 
governmental subdivision; 
    (5) members of boards, and commissions, bands, and others 
who serve a governmental subdivision intermittently unless their 
position on the board or commission is the result of public 
employment within the same governmental unit; 
    (6) employees whose employment is not expected to continue 
for a period longer than six consecutive months, unless it 
involves employment for a probationary period that is part of a 
permanent position who are hired for a period of less than six 
consecutive months but not those employees who are hired for an 
unlimited period but are serving a probationary 
period.  Immediately following the expiration of a six-month 
period of employment, If the period of employment is extended 
beyond the six-month period and the employee continues in public 
service and earns more than $425 from one governmental 
subdivision in any one calendar month, the department head shall 
report the employee for membership and require employee 
deductions be made on behalf of the employee in accordance with 
section 353.27, subdivision 4.  Membership eligibility of an 
employee who holds concurrent temporary employment of six months 
or less and part-time nontemporary positions in one governmental 
subdivision must be determined by the salary of each position.  
Membership eligibility of an employee who holds nontemporary 
positions in one governmental subdivision must be determined by 
the total salary of all positions; 
    (7) part-time appointed and elected employees who receive 
monthly whose actual compensation from one governmental 
subdivision does not exceeding exceed $425 per month, and 
part-time employees and elected officials or whose annual 
compensation from one governmental subdivision is stipulated in 
advance, in writing, to be not more than $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 $5,100 per employment period for employment 
expected to be of less than a full year's duration, except that 
members continue their membership until termination of public 
service as defined in subdivision 11a.  Membership eligibility 
of an employee who holds concurrent part-time positions under 
this clause must be determined by the total salary of all such 
positions in one governmental subdivision.  If compensation from 
one governmental subdivision to an employee under this paragraph 
exceeds $5,100 per calendar year or school year after being 
stipulated in advance not to exceed that amount, 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's earnings first exceeded 
$425; 
     (8) persons who first occupy an elected office after July 
1, 1988, the compensation for which does not exceed $425 per 
month; 
     (9) emergency employees who are employed by reason of work 
caused by fire, flood, storm, or similar disaster; 
     (10) employees who by virtue of their employment in one 
governmental subdivision are required by law to be a member of 
and to contribute to any of the plans or funds administered by 
the Minnesota state retirement system, the teachers retirement 
association, the Duluth teachers retirement fund association, 
the Minneapolis teachers retirement association, the St. Paul 
teachers retirement fund association, the Minneapolis employees 
retirement fund, or any police or firefighters relief 
association governed by section 69.77 that has not consolidated 
with the public employees police and fire fund, or any police or 
firefighters relief association that has consolidated with the 
public employees retirement association but whose members have 
not elected coverage by the public employees police and fire 
fund as provided in sections 353A.01 to 353A.10.  This clause 
must not be construed to prevent a person from being a member of 
and contributing to the public employees retirement association 
and also belonging to and 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 
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 by a teacher as defined in section 
354.05, subdivision 2; 
     (11) police matrons who are employed in a police department 
of a city who are transferred to the jurisdiction of a joint 
city and county detention and corrections authority; 
     (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; 
     (13) full-time students who are enrolled and are regularly 
attending classes at an accredited school, college, or 
university and who are not employed full time by a governmental 
subdivision; 
     (14) resident physicians, medical interns, and pharmacist 
residents and interns who are serving in a degree or residency 
program in public hospitals and students who are serving in an 
internship or residency program sponsored by an accredited 
educational institution; 
     (15) appointed or elected officers who are paid entirely on 
a fee basis and who were not members on June 30, 1971; 
     (16) persons who hold a part-time adult supplementary 
technical institute license who render part-time teaching 
service in a technical institute; 
     (17) persons exempt from licensure under section 125.031; 
      (18) persons employed by the Minneapolis community 
development agency; 
     (19) except as provided in section 353.86, volunteer 
ambulance service personnel, as defined in subdivision 35, but 
persons who serve as volunteer ambulance service personnel may 
still qualify as public employees under subdivision 2 and may be 
members of the public employees retirement association and 
participants in the public employees retirement fund or the 
public employees police and fire fund on the basis of 
compensation received from public employment service other than 
service as volunteer ambulance service personnel; and 
     (20) except as provided in section 353.87, volunteer 
firefighters, as defined in subdivision 36, engaging in 
activities undertaken as part of volunteer firefighter duties; 
provided that a person who is a volunteer firefighter may still 
qualify as a public employee under subdivision 2 and may be a 
member of the public employees retirement association and a 
participant in the public employees retirement fund or the 
public employees police and fire fund on the basis of 
compensation received from public employment activities other 
than those as a volunteer firefighter. 
    Sec. 2.  Minnesota Statutes 1989 Supplement, section 
353.01, subdivision 11a, is amended to read: 
    Subd. 11a.  [TERMINATION OF PUBLIC SERVICE.] "Termination 
of public service" occurs when an officer or employee who 
terminates employment but or is on temporary layoff as defined 
in subdivision 12 and does not within 30 days returns of 
termination or expiration of the temporary layoff return 
to nontemporary employment in the same governmental subdivision 
or begins employment in another position otherwise excluded from 
membership 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 the amount earned does not 
exceed the dollar limitations in subdivision 2b, clause (7). 
    Sec. 3.  Minnesota Statutes 1988, section 353.01, 
subdivision 16, is amended to read: 
    Subd. 16.  [ALLOWABLE SERVICE.] (a) "Allowable service" 
means service during years of actual membership in the course of 
which employee contributions were 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. 
     (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. 
     (c) "Allowable service" also means a period of authorized 
leave of absence without pay that does not exceed one year, and 
during or for which a member obtained credit by payments to the 
fund made in place of salary deductions, provided that the 
payments are made in an amount or amounts based on the member's 
average salary on which deductions were paid for the last six 
months of public service, or 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 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 of the leave, the 
employee shall also, as a condition to the exercise of the 
election, pay to the fund an amount equivalent to both the 
required employer and additional employer contributions for the 
employee.  The payment must be made within one year from the 
date the leave of absence terminates.  The employer by 
appropriate action of its governing body, made a part of its 
official records, before the date of the first payment of the 
employee contribution, may certify to the association in writing 
that it will cause to be paid the employer and additional 
employer contributions from the proceeds of a tax levy made 
under section 353.28.  Payments under this paragraph must 
include interest at the rate of six percent a year from the date 
of the termination of the leave of absence to the date payment 
is made. 
    (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, or a 
maternity leave.  The association will grant a maximum of two 
months service credit for a maternity leave upon documentation 
from the member's governmental subdivision.  A member on 
personal leave of absence who provides the association with a 
birth certificate or other evidence of birth during the personal 
leave time period will be granted up to two months of service 
credit. 
    (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 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.  Payment 
must be made within five years of the date of discharge from the 
military service.  The amount of these contributions must be in 
accord with the contribution rates and salary limitations, if 
any, in effect during the leave, plus interest at six percent 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, must be paid 
by the department employing the member upon return to public 
service, and the governmental subdivision involved may 
appropriate money for those payments.  A member may not receive 
credit for a voluntary extension of military service at the 
instance of the member beyond the initial period of enlistment, 
induction, or call to active duty. 
     (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, chapter 401, and transferred into 
county service under section 401.04, "allowable service" means 
combined years of allowable service as defined in paragraphs (a) 
to (e) and section 352.01, subdivision 11.  
     (g) For a public employee who has prior service covered by 
a local police or firefighters relief association 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, "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 law and 
on bylaw provisions governing the relief association on the date 
of the initiation of the consolidation procedure. 
    Sec. 4.  Minnesota Statutes 1988, section 353.15, 
subdivision 2, is amended to read: 
    Subd. 2.  [AUTOMATIC DEPOSITS.] The association may pay an 
annuity, benefit or refund to a trust company, qualified under 
chapter 48, that is trustee for a person eligible to receive 
such annuity, benefit or refund.  Upon the request of a retired, 
disabled or former member, the association may mail or send by 
electronic transfer the annuity, benefit or refund check to a 
banking institution, savings association or credit union for 
deposit to such person's account or joint account with a 
spouse.  The association may prescribe the conditions under 
which such payment will be made.  
    Sec. 5.  Minnesota Statutes 1988, section 353.27, 
subdivision 7, is amended to read: 
    Subd. 7.  [ADJUSTMENT FOR ERRONEOUS RECEIPTS OR 
DISBURSEMENTS.] (a)  [ERRONEOUS DEDUCTIONS.] Deductions taken in 
error by the employer from the salary of an employee for the 
retirement fund and transmitted to the association 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 must be refunded to the employer, 
provided, however, that the association and the state social 
security agency may make proper adjustments of 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, except for erroneous deductions of sick leave, 
vacation pay, and severance pay, which may be made at any time.  
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. 
    (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 deducted, or a portion of it that 
is required to adjust the deductions, must be made to the 
department or institution. 
    Sec. 6.  Minnesota Statutes 1988, 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 month of May for school districts and December the 
last pay period covering calendar-year earnings 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.  The executive director shall check the copies of 
all payroll abstracts against the membership records of the 
association to ascertain whether any omissions have been made by 
a department head in the reporting of 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. 7.  Minnesota Statutes 1989 Supplement, section 
353.35, is amended to read: 
    353.35 [CONSEQUENCES OF REFUND; REPAYMENT, RIGHTS 
RESTORED.] 
    When any former member accepts a refund, all existing 
service credits and all rights and benefits to which the person 
was entitled prior to the acceptance of the refund shall must 
terminate and shall must not again be restored until the person 
acquires not less than at least 18 months allowable service 
credit after taking the last refund and repays all refunds taken 
and interest received under section 353.34, subdivisions 1 and 
2, plus interest at six percent per annum compounded annually.  
If more than one refund has been taken, the person may repay all 
refunds or only the refund for the fund in which the person had 
most recently been a member, with interest at six percent per 
annum compounded annually.  All refunds must be repaid 
within three six months of the last date of termination of 
public service.  
    Sec. 8.  Minnesota Statutes 1988, section 353.46, 
subdivision 4, is amended to read: 
    Subd. 4.  Except as provided in section 353.84, the rights 
of a survivor of a former member, where such former member died 
prior to June 30, 1973, shall must be determined by the law in 
effect when such former member died even though a benefit is not 
payable until after June 30, 1973.  If the survivor is also 
eligible to receive a retirement annuity from the association, 
the survivor is eligible to receive both benefits.  
    Sec. 9.  Minnesota Statutes 1989 Supplement, section 
353.656, subdivision 1, is amended to read: 
    Subdivision 1.  [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 
Any member of the police and fire fund less than 55 years of 
age, who shall become becomes disabled and physically unfit to 
perform duties as a police officer or firefighter subsequent to 
June 30, 1973, as a direct result of an injury, sickness, or 
other disability incurred in or arising out of any act of duty, 
which shall has or is expected to render the member physically 
or mentally unable to perform duties as a police officer or 
firefighter for a period of at least one year, shall receive 
disability benefits during the period of such disability.  The 
benefits shall must be in an amount equal to 50 percent of the 
"average salary" pursuant to subdivision 3 plus an additional 
2-1/2 percent of said average salary for each year of service in 
excess of 20 years.  Should disability under this subdivision 
occur before the member has at least five years of allowable 
service credit in the police and fire fund, the disability 
benefit shall must be computed on the "average salary" from 
which deductions were made for contribution to the police and 
fire fund. 
    Sec. 10.  Minnesota Statutes 1989 Supplement, section 
353.656, subdivision 3, is amended to read: 
    Subd. 3.  [NONDUTY DISABILITY BENEFIT.] Any member who 
becomes disabled after not less than one year of allowable 
service, before reaching the age of 55, because of sickness or 
injury occurring while not on duty as a police officer or 
firefighter, and by reason of that sickness or injury the member 
has been or is expected to be unable to perform duties as a 
police officer or firefighter for a period of at least one year, 
shall be is entitled to receive a disability benefit.  The 
benefit shall must be in the same amount and paid in the same 
manner as if the member were 55 years of age at the date of 
disability and the benefit were paid pursuant to under section 
353.651.  If a disability under this subdivision occurs after 
one but in less than 15 years of allowable service, the 
disability benefit shall must be the same as though the member 
had at least 15 years service.  For any a member who is employed 
as a full-time firefighter by the department of military affairs 
of the state of Minnesota, allowable service as a full-time 
state military affairs department firefighter credited by the 
Minnesota state retirement system may be used in meeting the 
minimum allowable service requirement of this subdivision. 
    Sec. 11.  Minnesota Statutes 1988, section 353.657, 
subdivision 1, is amended to read: 
    Subdivision 1.  In the event any member of the police and 
fire fund shall die dies from any cause before retirement or 
after becoming disabled and receiving disability benefits if no 
optional annuity form was elected under section 353.656, 
subdivision 1a, the association shall grant survivor benefits to 
any a surviving spouse who had the same legal residence as the 
member at the time of death and who was married to the member 
for a period of at least one year, except that if death occurs 
in the line of duty no time limit is required, and to a 
dependent child or children, unmarried and under the age of 18 
years.  The spouse and child or children shall be are entitled 
to monthly benefits as provided in the following subdivisions. 
    Sec. 12.  Minnesota Statutes 1988, section 353.83, is 
amended to read: 
    353.83 [ADDITIONAL PAYMENTS TO CERTAIN ANNUITANTS.] 
    Payments of retirement annuities pursuant to this chapter, 
to annuitants who (a) retired prior to July 1, 1962, (b) had at 
least 20 years of allowable service credit in the public 
employees retirement association upon their termination of 
public employment, and (c) receive annuities of less than $200 
per month shall must, retroactive to July 1, 1967, be 
supplemented by additional payments by of $15 per month from the 
public employees retirement association from moneys in the 
general fund of the state of Minnesota in the amount of $15 per 
month, provided that such, if the annuitants have not previously 
qualified for the additional payments pursuant to under this 
section, and provided further that in no case shall the 
annuities plus the additional payments do not exceed $200 per 
month.  These additional payments shall must be made in the same 
manner and at the same time retirement annuities are paid 
and shall must be included in the warrants on which the 
annuities are so paid.  The supplemental payment herein provided 
shall be excluded from additional payments are to be added to 
and considered a portion of the annuity otherwise payable to the 
recipient and must be included in the computation of any monthly 
survivor benefit or optional annuity which may become due and 
payable to any person following the death of an annuitant who, 
during life, received a benefit pursuant to under this section.  
If an annuitant entitled to receive additional payment under 
this section should die dies before such retroactive payment is 
received, payment shall must be made upon demand to the 
designated beneficiary in an amount equal to the accumulated 
benefit from July 1, 1967, to the date of death, without 
interest. 
    Sec. 13.  [REPEALER.] 
    Minnesota Statutes 1989 Supplement, section 353.87, 
subdivision 5, is repealed. 
    Sec. 14.  [EFFECTIVE DATE.] 
    Sections 1 to 13 are effective the day following final 
enactment.  

                               ARTICLE 12

                         TECHNICAL CORRECTIONS
    Section 1.  Minnesota Statutes 1988, section 3A.03, 
subdivision 2, is amended to read: 
    Subd. 2.  [REFUND.] (1) Any person who has made 
contributions pursuant to subdivision 1 who is no longer a 
member of the legislature is entitled to receive upon 
application to the director a refund of all contributions 
credited to the member's account with interest at the rate of 
five six percent per annum compounded annually.  
    (2) The refund of contributions as provided in clause (1) 
above terminates all rights of a former member of the 
legislature or survivors of the former member under this 
chapter.  Should the former member of the legislature again be a 
member of the legislature after having taken a refund as 
provided above, the member shall be considered a new member.  
However, a new member may reinstate the rights and credit for 
service forfeited, provided the new member repays all refunds 
taken plus interest thereon at the rate of six percent per annum 
compounded annually.  
    (3) No person shall be required to apply for or accept a 
refund. 
    Sec. 2.  Minnesota Statutes 1989 Supplement, section 
352.01, subdivision 25, is amended to read: 
    Subd. 25.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
means age 65 for a person who first became a covered employee or 
a member of a pension fund listed in section 356.30, subdivision 
3, before July 1, 1989.  For a person who first becomes a 
covered employee after June 30, 1989, normal retirement age 
means the higher of age 65 or "retirement age," as defined in 
United States Code, title 42, section 416(l), as amended. 
    Sec. 3.  Minnesota Statutes 1989 Supplement, section 
352.031, subdivision 2, is amended to read: 
    Subd. 2.  [NOTICE OF TERMINATION OR DENIAL.] If the 
executive director terminates a benefit or denies an application 
or a written request of any person claiming a right under 
chapter 352, other than sections 352.96 and 352.97; chapters 3A, 
352B, 352C, and 352D; sections 490.121 to 490.133; or the 
applicable sections of chapters 355 and 356, the executive 
director must shall serve upon that person written notice 
containing: 
    (1) the reasons for the termination or denial; 
    (2) notice that the person may petition the board for a 
review of the termination or denial and that the petition for 
review must be filed within 60 days of the receipt of the 
written notice; 
    (3) a statement that relevant documentation submitted by 
the petitioner to the executive director must be received in the 
office of the Minnesota state retirement system at least 30 days 
before the meeting prescribed in subdivision 4; 
   (4) a statement that failure to petition the board within 
60 days will preclude the person from contesting in any other 
court procedure or administrative hearing, the issues determined 
by the executive director; and 
    (4) (5) a copy of this section. 
    Sec. 4.  Minnesota Statutes 1989 Supplement, section 
352.031, subdivision 3, is amended to read: 
    Subd. 3.  [PETITION FOR REVIEW.] A person who claims a 
right under subdivision 2 and whose benefit has been terminated 
or whose application or written request has been denied may 
petition for a review of that decision by the board.  A petition 
under this section must be served upon the executive director 
personally, or by mail postmarked no later than 60 days after 
the petitioner received the notice required by subdivision 2.  
The petition must include the sworn, notarized statement of the 
reasons the petitioner believes the decision of the executive 
director should be reversed or modified and may include relevant 
documentation.  Relevant documentation submitted by the 
petitioner to the executive director must be received in the 
office of the Minnesota state retirement system at least 30 days 
before the meeting prescribed in subdivision 4. 
    Sec. 5.  Minnesota Statutes 1989 Supplement, section 
352.031, is amended by adding a subdivision to read: 
    Subd. 5a.  [EXECUTIVE DIRECTOR'S ORDER.] Notwithstanding 
subdivisions 4 and 5, if the executive director determines with 
respect to a petition that no relevant facts are in dispute, the 
executive director shall inform the board of that determination, 
and the board may issue findings of fact, a decision, reasons 
for the decision, and a final order and serve it upon the 
petitioner as provided in subdivision 8.  If a petitioner 
receives an adverse decision, the petitioner may appeal the 
board's final order under subdivision 9. 
    Sec. 6.  Minnesota Statutes 1989 Supplement, section 
352.115, subdivision 3, is amended to read: 
    Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
in conjunction with section 352.116, subdivision 1, applies to a 
person who became a covered employee or a member of a pension 
fund listed in section 356.30, subdivision 3, before July 1, 
1989, unless paragraph (b), in conjunction with section 352.116, 
subdivision 1a, produces a higher annuity amount, in which case 
paragraph (b) will apply.  The employee's average salary, as 
defined in subdivision 2, multiplied by one percent per year of 
allowable service for the first ten years and 1.5 percent for 
each later year of allowable service and pro rata for completed 
months less than a full year shall determine the amount of the 
retirement annuity to which the employee is entitled. 
    (b) This paragraph applies to a person who has become at 
least 55 years old and first became a covered employee after 
June 30, 1989, and to any other covered employee who has become 
at least 55 years old and whose annuity amount, when calculated 
under this paragraph and in conjunction with section 352.116, 
subdivision 1a, is higher than it is when calculated under 
paragraph (a), in conjunction with section 352.116, subdivision 
1.  The employee's average salary, as defined in subdivision 2, 
multiplied by 1.5 percent for each year of allowable service and 
pro rata for months less than a full year shall determine the 
amount of the retirement annuity to which the employee is 
entitled. 
    Sec. 7.  Minnesota Statutes 1989 Supplement, section 
352.116, subdivision 1, is amended to read: 
    Subdivision 1.  [REDUCED ANNUITY BEFORE NORMAL RETIREMENT 
AGE.] This subdivision applies only to a person who first became 
a covered employee or a member of a pension fund listed in 
section 356.30, subdivision 3, before July 1, 1989, and whose 
annuity is higher when calculated under section 352.115, 
subdivision 3, paragraph (a), in conjunction with this 
subdivision than when calculated under section 352.115, 
subdivision 3, paragraph (b), in conjunction with subdivision 1a.
    (a) Any employee who is eligible for a retirement annuity 
under section 352.115, subdivision 1, and who retires before 
normal retirement age with credit for at least three but less 
than 30 years of allowable service shall be paid the normal 
retirement annuity provided in section 352.115, subdivisions 2 
and 3, paragraph (a), reduced by one-quarter of one percent for 
each month that the employee is under normal retirement age at 
the time of retirement.  An employee who is eligible for a 
retirement annuity under section 352.115, subdivision 1, and who 
retires prior to age 62 with credit for at least 30 years of 
allowable service shall be paid the normal retirement annuity 
provided in section 352.115, subdivisions 2 and 3, paragraph 
(a), reduced by one-quarter of one percent for each month that 
the employee is under age 62 at the time of retirement. 
    (b) Any person whose attained age plus credited allowable 
service totals 90 years is entitled, upon application, to a 
retirement annuity in an amount equal to the normal annuity 
provided in section 352.115, subdivisions 2 and 3, paragraph 
(a), without any reduction by reason of early retirement. 
    Sec. 8.  Minnesota Statutes 1989 Supplement, section 
352.116, subdivision 1a, is amended to read: 
    Subd. 1a.  [ACTUARIAL REDUCTION FOR EARLY RETIREMENT.] This 
subdivision applies to a person who has become at least 55 years 
old and first became a covered employee after June 30, 1989, and 
to any other covered employee who has become at least 55 years 
old and whose annuity is higher when calculated under section 
352.115, subdivision 3, paragraph (b), in conjunction with this 
subdivision than when calculated under section 352.115, 
subdivision 3, paragraph (a), in conjunction with subdivision 1. 
An A covered employee who retires before the normal retirement 
age shall be paid the normal retirement annuity provided in 
section 352.115, subdivisions 2 and 3, paragraph (b), reduced so 
that the reduced annuity is the actuarial equivalent of the 
annuity that would be payable to the employee if the employee 
deferred receipt of the annuity and the annuity amount were 
augmented at an annual rate of three percent compounded annually 
from the day the annuity begins to accrue until the normal 
retirement age. 
    Sec. 9.  Minnesota Statutes 1989 Supplement, section 
352.116, is amended by adding a subdivision to read: 
    Subd. 3c.  [EFFECTIVE DATE OF BOUNCE-BACK ANNUITY.] In the 
event of the death of the designated optional annuity 
beneficiary before the retired employee or disabilitant, the 
restoration of the normal single life annuity under subdivision 
3a or 3b will take effect as of the first of the month following 
the date of death of the designated optional annuity beneficiary 
or on the first of the month following one year before the date 
on which a certified copy of the death certificate of the 
designated optional annuity beneficiary is received in the 
office of the Minnesota state retirement system, whichever date 
is later. 
    Sec. 10.  Minnesota Statutes 1988, section 352.73, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [PAYMENT ADDED.] The supplemental benefit 
payable under subdivision 1 is to be added to and considered a 
portion of the annuity otherwise payable to the recipient. 
    Sec. 11.  Minnesota Statutes 1989 Supplement, section 
352.93, subdivision 2a, is amended to read: 
    Subd. 2a.  [EARLY RETIREMENT.] Any covered correctional 
employee who has attained the age of becomes at least 50 years 
old and who has at least five three years of allowable service 
is entitled upon application to a retirement annuity equal to 
the normal annuity calculated under subdivision 2, reduced so 
that the reduced annuity is the actuarial equivalent of the 
annuity that would be payable if the employee deferred receipt 
of the annuity from the day the annuity begins to accrue to age 
55. 
    Sec. 12.  Minnesota Statutes 1989 Supplement, section 
352.93, subdivision 3, is amended to read: 
    Subd. 3.  [PAYMENTS; DURATION AND AMOUNT.] The annuity 
under this section shall begin to accrue as provided in section 
352.115, subdivision 8, and must be paid for an additional 84 
full calendar months or to the first of the month following the 
month in which the employee attains normal retirement age, 
whichever occurs first, except that payment must not cease 
before the first of the month following the month in which the 
employee becomes 62.  It must then be reduced to the amount as 
calculated at normal retirement age under section 352.115, 
except that if this amount, when added to that portion of the 
social security benefit based on state service the employee is 
would be eligible to receive at the time, is less than the 
benefit payable under subdivision 2, the retired employee shall 
receive an amount that when added to the social security benefit 
will equal the amount payable under subdivision 2.  If the 
employee retired prior to age 55, the reduced benefit as 
calculated under section 352.115 must be actuarially reduced as 
provided in subdivision 2a.  
    When an annuity is reduced under this subdivision, the 
percentage adjustments, if any, that have been applied to the 
original annuity under section 11A.18, before the reduction, 
must be compounded and applied to the reduced annuity.  A former 
correctional employee employed by the state in a position 
covered by the regular plan or the unclassified employees 
retirement program between the age of 58 and normal retirement 
age shall receive a partial return of correctional contributions 
at retirement with six percent interest based on the following 
formula: 
 
 Employee contributions             Years and complete    
 contributed as a                   months of regular     
 correctional employee              service between     
 in excess of the                   age 58 and the    
 contributions the                  normal retirement age 
 employee would have       X        ..................... 
 contributed as a                   number of years between
 regular employee                   age 58 and normal 
                                    retirement age 
    Sec. 13.  Minnesota Statutes 1989 Supplement, section 
352B.08, subdivision 2a, is amended to read: 
    Subd. 2a.  [EARLY RETIREMENT.] Any member who has attained 
the age of become at least 50 years old and who has at 
least five three years of allowable service is entitled upon 
application to a retirement annuity equal to the normal annuity 
calculated under subdivision 2, reduced so that the reduced 
annuity is the actuarial equivalent of the annuity that would be 
payable if the member deferred receipt of the annuity from the 
day the annuity begins to accrue to age 55. 
    Sec. 14.  Minnesota Statutes 1989 Supplement, section 
352B.08, subdivision 3, is amended to read: 
    Subd. 3.  [OPTIONAL ANNUITY FORMS.] In lieu of the single 
life annuity provided in subdivision 2, the member or former 
member with five years or more of service may elect an optional 
annuity form.  The board of the Minnesota state retirement 
system shall establish a joint and survivor annuity, payable to 
a designated beneficiary for life, adjusted to the actuarial 
equivalent value of the single life annuity.  The board shall 
also establish an additional optional annuity with an actuarial 
equivalent value of the single life annuity in the form of a 
joint and survivor annuity which provides that the elected 
annuity be reinstated to the single life annuity provided in 
subdivision 2, if after commencing the elected joint and 
survivor annuity, the designated beneficiary dies before the 
member, which reinstatement is not retroactive but takes effect 
for the first full month occurring after the death of the 
designated beneficiary.  The board may also establish other 
actuarial equivalent value optional annuity forms.  In 
establishing actuarial equivalent value optional annuity forms, 
each optional annuity form shall have the same present value as 
a regular single life annuity using the mortality table adopted 
by the board and the interest assumption specified in section 
356.215, subdivision 4d, and the board shall obtain the written 
recommendation of the commission-retained actuary.  These 
recommendations shall be a part of the permanent records of the 
board.  
    Sec. 15.  Minnesota Statutes 1989 Supplement, section 
352B.11, subdivision 2, is amended to read: 
    Subd. 2.  [DEATH; PAYMENT TO SPOUSE AND CHILDREN.] If a 
member serving actively as a member, a member receiving the 
disability benefit provided by section 352B.10, subdivision 1, 
or a former member receiving a disability benefit as provided by 
section 352B.10, subdivision 2, dies from any cause, the 
surviving spouse and dependent children are entitled to benefit 
payments as follows: 
    (a) A member with at least three years of allowable service 
is deemed to have elected a 100 percent joint and survivor 
annuity payable to a surviving spouse only on or after the date 
the member or former member became or would have become 55. 
    (b) The surviving spouse of a member who had credit for 
less than three years of service shall receive, for life, a 
monthly annuity equal to 50 percent of that part of the average 
monthly salary of the member from which deductions were made for 
retirement.  If the surviving spouse remarries, the annuity 
shall cease as of the date of the remarriage. 
    (c) The surviving spouse of a member who had credit for at 
least three years service and who died after attaining becoming 
55 years of age old, may elect to receive a 100 percent joint 
and survivor annuity, for life, notwithstanding a subsequent 
remarriage, in lieu of the annuity prescribed in paragraph (b). 
    (d) The surviving spouse of any member who had credit for 
three years or more and who was not 55 years of age old at 
death, shall receive the benefit equal to 50 percent of the 
average monthly salary as described in clause (b) until the 
deceased member would have reached the age of become 55 years 
old, and beginning the first of the month following that date, 
may elect to receive the 100 percent joint and survivor 
annuity.  If the surviving spouse remarries before the deceased 
member's 55th birthdate birth date, benefits or annuities shall 
cease as of the date of remarriage.  Remarriage after the 
deceased member's 55th birthday shall not affect the payment of 
the benefit. 
    (e) Each dependent child shall receive a monthly annuity 
equal to ten percent of that part of the average monthly salary 
of the former member from which deductions were made for 
retirement.  A dependent child over 18 and under 23 years of age 
also may receive the monthly benefit provided in this section, 
if the child is continuously attending an accredited school as a 
full-time student during the normal school year as determined by 
the director.  If the child does not continuously attend school 
but separates from full-time attendance during any part of a 
school year, the annuity shall cease at the end of the month of 
separation.  In addition, a payment of $20 per month shall be 
prorated equally to surviving dependent children when the former 
member is survived by one or more dependent children.  Payments 
for the benefit of any qualified dependent child must be made to 
the surviving spouse, or if there is none, to the legal guardian 
of the child.  The maximum monthly benefit for any one family 
must not be less than 50 nor exceed 70 percent of the average 
monthly salary for any number of children. 
    (f) If the member dies under circumstances that entitle the 
surviving spouse and dependent children to receive benefits 
under the workers' compensation law, the workers' compensation 
benefits received by them must not be deducted from the benefits 
payable under this section. 
    (g) The surviving spouse of a deceased former member who 
had credit for three or more years of allowable service, but not 
the spouse of a former member receiving a disability benefit 
under section 352B.10, subdivision 2, is entitled to receive the 
100 percent joint and survivor annuity at the time the deceased 
member would have reached the age of become 55 years old, if the 
surviving spouse has not remarried before that date.  If a 
former member dies who does not qualify for other benefits under 
this chapter, the surviving spouse or, if none, the children or 
heirs are entitled to a refund of the accumulated deductions 
left in the fund plus interest at the rate of six percent per 
year compounded annually.  
    Sec. 16.  Minnesota Statutes 1988, section 352B.11, 
subdivision 4, is amended to read: 
    Subd. 4.  [REENTRY INTO STATE SERVICE.] When a former 
member, who has become separated from state service that 
entitled the member to membership and has received a refund of 
retirement payments, reenters the state service in a position 
that entitles the member to membership, that member shall 
receive credit for the period of prior allowable state service 
if the member repays into the fund the amount of the refund, 
plus interest on it at the rate of five six percent per year, at 
any time before subsequent retirement.  Repayment may be made in 
installments or in a lump sum.  
    Sec. 17.  Minnesota Statutes 1988, section 352C.09, 
subdivision 2, is amended to read: 
    Subd. 2.  (1) Any person who has made contributions 
pursuant to subdivision 1 who is no longer a constitutional 
officer or commissioner is entitled to receive upon application 
to the director a refund of all contributions credited to the 
individual's account with interest at the rate of five six 
percent per annum compounded annually.  
    (2) The refund of contributions as provided in clause (1) 
above terminates all rights of a former constitutional officer 
or commissioner or survivors thereof under the provisions of 
this chapter.  Should the former constitutional officer or 
commissioner again hold such office after having taken a refund 
as provided above, the former officer or commissioner shall be 
considered a new member and may reinstate the rights and credit 
for service forfeited provided all refunds previously taken are 
repaid with interest at six percent per annum compounded 
annually. 
    (3) No person shall be required to apply for or accept a 
refund. 
    Sec. 18.  Minnesota Statutes 1988, section 352D.05, 
subdivision 3, is amended to read: 
    Subd. 3.  Thirty days after termination of covered 
employment or at any time thereafter, a participant shall be is 
entitled, upon application, to withdraw the cash value of the 
participant's total shares or may leave such shares on deposit 
with the supplemental retirement fund.  Shares not withdrawn 
shall must remain on deposit with the supplemental retirement 
fund until the former participant attains the age of becomes at 
least 58 55 years old, and applies for an annuity as provided in 
under section 352D.06, subdivision 1.  
    Sec. 19.  Minnesota Statutes 1989 Supplement, section 
353.01, subdivision 37, is amended to read: 
    Subd. 37.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
means age 65 for a person who first became a public employee or 
a member of a pension fund listed in section 356.30, subdivision 
3, before July 1, 1989.  For a person who first becomes a public 
employee after June 30, 1989, "normal retirement age" means the 
higher of age 65 or "retirement age," as defined in United 
States Code, title 42, section 416(l), as amended. 
    Sec. 20.  Minnesota Statutes 1989 Supplement, section 
353.29, subdivision 3, is amended to read: 
    Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
1c, applies to any member who first became a public employee or 
a member of a pension fund listed in section 356.30, subdivision 
3, before July 1, 1989, unless paragraph (b), in conjunction 
with section 353.30, subdivision 5, produces a higher annuity 
amount, in which case paragraph (b) will apply.  The average 
salary as defined in subdivision 2, multiplied by two percent 
for each year of allowable service for the first ten years and 
thereafter by 2.5 percent per year of allowable service and 
completed months less than a full year for the "basic member", 
and one percent for each year of allowable service for the first 
ten years and thereafter by 1.5 percent per year of allowable 
service and completed months less than a full year for the 
"coordinated member," shall determine the amount of the "normal" 
retirement annuity. 
    (b) This paragraph applies to a member who has become at 
least 55 years old and first became a public employee after June 
30, 1989, and to any other member whose annuity amount, when 
calculated under this paragraph and in conjunction with section 
353.30, subdivision 5, is higher than it is when calculated 
under paragraph (a), in conjunction with section 353.30, 
subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined 
in subdivision 2, multiplied by 2.5 percent for each year of 
allowable service and completed months less than a full year for 
a basic member and 1.5 percent per year of allowable service and 
completed months less than a full year for a coordinated member, 
shall determine the amount of the normal retirement annuity. 
    Sec. 21.  Minnesota Statutes 1989 Supplement, section 
353.30, is amended to read: 
    353.30 [ANNUITIES UPON RETIREMENT.] 
    Subdivision 1.  Upon separation from public service, any 
person who first became a public employee or a member of a 
pension fund listed in section 356.30, subdivision 3, before 
July 1, 1989, and who has attained the age of become at least 58 
years old but not more than normal retirement age and who 
received credit for not less than 20 years of allowable service 
is entitled upon application to a retirement annuity in an 
amount equal to the normal annuity provided in section 353.29, 
subdivisions 2 and 3, paragraph (a), reduced by one-quarter of 
one percent for each month that the member is under normal 
retirement age at the time of retirement. 
    Subd. 1a.  Any person who first became a public employee or 
a member of a pension fund listed in section 356.30, subdivision 
3, before July 1, 1989, and whose attained age plus credited 
allowable service totals 90 years is entitled upon application 
to a retirement annuity in an amount equal to the normal annuity 
provided in section 353.29, subdivisions 2 and 3, paragraph (a), 
without any reduction in annuity by reason of such early 
retirement. 
    Subd. 1b.  Any person who first became a public employee or 
a member of a pension fund listed in section 356.30, subdivision 
3, before July 1, 1989, with 30 years or more of allowable 
service credit, who elects early retirement under subdivision 1, 
shall receive an annuity in an amount equal to the normal 
annuity provided under section 353.29, subdivisions 2 and 3, 
paragraph (a), reduced by one-quarter of one percent for each 
month that the member is under age 62 at the time of retirement. 
    Subd. 1c.  Any person who first became a public employee or 
a member of a pension fund listed in section 356.30, subdivision 
3, before July 1, 1989, and who has received credit for at least 
30 years of allowable service or who has attained the age 
of become at least 55 years old but not normal retirement age, 
and has received credit for at least three years of allowable 
service is entitled upon application to a retirement annuity in 
an amount equal to the normal annuity provided in section 
353.29, subdivisions 2 and 3, paragraph (a), reduced by 
one-quarter of one percent for each month that the member is 
under normal retirement age at the time of retirement, except 
that for any member who has 30 or more years of allowable 
service the reduction shall be applied only for each month that 
the member is under age 62 at the time of retirement. 
    Subd. 3.  [OPTIONAL RETIREMENT ANNUITY FORMS.] The board of 
trustees shall establish optional annuities which shall take the 
form of a joint and survivor annuity.  Except as provided in 
subdivision 3a, the optional annuity forms shall be actuarially 
equivalent to the forms provided in section 353.29 and 
subdivisions 1, 1a, 1b, 1c, and 5.  In establishing those 
optional forms, the board shall obtain the written 
recommendation of the commission-retained actuary.  The 
recommendations shall be a part of the permanent records of the 
board.  A member or former member may select an optional form of 
annuity in lieu of accepting any other form of annuity which 
might otherwise be available. 
    Subd. 3a.  [BOUNCE-BACK ANNUITY.] (a) If a former member or 
disabilitant selects a joint and survivor annuity option under 
subdivision 3, the former member or disabilitant must receive a 
normal single life annuity if the designated optional annuity 
beneficiary dies before the former member or disabilitant.  
Under this option, no reduction may be made in the person's 
annuity to provide for restoration of the normal single life 
annuity in the event of the death of the designated optional 
annuity beneficiary. 
     (b) A former member or disabilitant who selected an 
optional joint and survivor annuity before July 1, 1989, but did 
not choose an option that provides that the normal single life 
annuity is payable to the former member or the disabilitant if 
the designated optional annuity beneficiary dies first, is 
eligible for restoration of the normal single life annuity if 
the designated optional annuity beneficiary dies first, without 
further actuarial reduction of the person's annuity.  A former 
member or disabilitant who selected an optional joint and 
survivor annuity, but whose designated optional annuity 
beneficiary died before July 1, 1989, shall receive a normal 
single life annuity after that date, but shall not receive 
retroactive payments for periods before that date. 
    (c) A former member or disabilitant who took a further 
actuarial reduction to elect an optional joint and survivor 
annuity that provides that the normal annuity is payable to the 
former member or disabilitant if the designated optional 
beneficiary dies first but has not died before July 1, 1989, 
shall have their annuity increased as of July 1, 1989, to the 
amount the person would have received if, at the time of 
retirement or disability, the person had selected only optional 
survivor coverage that would not have provided for restoration 
of the normal annuity upon the death of the designated optional 
annuity beneficiary.  Any annuity or benefit increase under this 
paragraph is effective only for payments made after June 30, 
1989, and is not retroactive for payments made before July 1, 
1989. 
    Subd. 3b.  [BOUNCE-BACK ANNUITY.] (a) The board of trustees 
must provide a joint and survivor annuity option to members of 
the police and fire fund.  Under this option, a former member or 
disabilitant must receive a normal single life annuity if the 
designated optional annuity beneficiary dies before the former 
member or disabilitant.  Under this option, no reduction may be 
made in the person's annuity to provide for restoration of the 
normal single life annuity in the event of the death of the 
designated optional annuity beneficiary. 
    (b) A former member or disabilitant of the police and fire 
fund who selected an optional joint and survivor annuity before 
July 1, 1989, but did not choose an option that provides that 
the normal single life annuity is payable to the former member 
or the disabilitant if the designated optional annuity 
beneficiary dies first, is eligible for restoration of the 
normal single life annuity if the designated optional annuity 
beneficiary dies first, without further actuarial reduction of 
the person's annuity.  A former member or disabilitant who 
selected an optional joint and survivor annuity, but whose 
designated optional annuity beneficiary died before July 1, 
1989, shall receive a normal single life annuity after that 
date, but shall not receive retroactive payments for periods 
before that date. 
    (c) A former member or disabilitant who took a further 
actuarial reduction to elect an optional joint and survivor 
annuity that provides that the normal annuity is payable to the 
former member or disabilitant if the designated optional 
beneficiary dies first but has not died before July 1, 1989, 
shall have their annuity increased as of July 1, 1989, to the 
amount the person would have received if, at the time of 
retirement or disability, the person had selected only optional 
survivor coverage that would not have provided for restoration 
of the normal annuity upon the death of the designated optional 
annuity beneficiary.  Any annuity or benefit increase under this 
paragraph is effective only for payments made after June 30, 
1989, and is not retroactive for payments made before July 1, 
1989. 
     Subd. 3c.  [EFFECTIVE DATE OF BOUNCE-BACK ANNUITY.] In the 
event of the death of the designated optional annuity 
beneficiary before the retired employee or disabilitant, the 
restoration of the normal single life annuity under subdivision 
3a or 3b will take effect on the first of the month following 
the date of death of the designated optional annuity beneficiary 
or on the first of the month following one year before the date 
on which a certified copy of the death certificate is received 
in the office of the public employees retirement association, 
whichever date is later. 
    Subd. 4.  Any Monthly payments to which any person may be 
entitled under this chapter may be reduced in amount upon 
application of the person entitled thereto to the association, 
provided that the person shall first relinquish in writing all 
claim to that part of the full monthly payment which is the 
difference between the monthly payment which that person would 
be otherwise entitled to receive and the monthly payment which 
that person will receive.  The reduced monthly payment shall be 
payment in full of all amounts due under this chapter for the 
month for which the payment is made and acceptance of the 
reduced monthly payment releases the retirement association from 
all obligation to pay to the person the difference between the 
amount of the reduced monthly payment and the full amount of the 
monthly payment which the person would otherwise have received.  
Upon application of the person who is entitled to such monthly 
payment, it may be increased prospectively to not more than the 
amount to which the person would have been entitled had no 
portion thereof been waived.  
    Subd. 5.  [ACTUARIAL REDUCTION FOR EARLY RETIREMENT.] This 
subdivision applies to a member who has become at least 55 years 
old and first became a public employee after June 30, 1989, and 
to any other member who has become at least 55 years old and 
whose annuity is higher when calculated under section 353.29, 
subdivision 3, paragraph (b), in conjunction with this 
subdivision than when calculated under section 353.29, 
subdivision 3, paragraph (a), in conjunction with subdivision 1, 
1a, 1b, or 1c.  An employee who retires before normal retirement 
age shall be paid the retirement annuity provided in section 
353.29, subdivision 3, paragraph (b), reduced so that the 
reduced annuity is the actuarial equivalent of the annuity that 
would be payable to the employee if the employee deferred 
receipt of the annuity and the annuity amount were augmented at 
an annual rate of three percent compounded annually from the day 
the annuity begins to accrue until the normal retirement age. 
    Sec. 22.  Minnesota Statutes 1989 Supplement, section 
353.651, subdivision 4, is amended to read: 
    Subd. 4.  [EARLY RETIREMENT.] Any police officer or 
firefighter member who has attained the age of become at least 
50 years old and who has at least five three years of allowable 
service is entitled upon application to a retirement annuity 
equal to the normal annuity calculated under subdivision 3, 
reduced so that the reduced annuity is the actuarial equivalent 
of the annuity that would be payable to the member if the member 
deferred receipt of the annuity from the day the annuity begins 
to accrue until the member attains age 55. 
    Sec. 23.  Minnesota Statutes 1989 Supplement, section 
354.05, subdivision 38, is amended to read: 
    Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
means age 65 for a person who first became a member of the 
fund or a member of a pension fund listed in section 356.30, 
subdivision 3, before July 1, 1989.  For a person who first 
becomes a member of the fund after June 30, 1989, normal 
retirement age means the higher of age 65 or "retirement age," 
as defined in United States Code, title 42, section 416(l), as 
amended. 
    Sec. 24.  Minnesota Statutes 1988, section 354.07, 
subdivision 4, is amended to read: 
    Subd. 4.  It shall be the duty of the board from time to 
time to certify to the state board of investment for investment 
as much of the funds in its hands as shall not be needed for 
current purposes.  Such funds that are certified to the variable 
annuity division shall include employee deductions as well as an 
equal amount for state's matching.  Such funds that are 
certified as to investment in the postretirement investment fund 
shall include the amount as required for the total reserves 
needed for the purposes described in section 354.63.  The state 
board of investment shall thereupon transfer such assets to the 
appropriate fund provided herein, in accordance with the 
procedure set forth in sections 354.62 and section 354.63, or 
invest and reinvest an amount equal to the sum so certified in 
such securities as are now or may hereafter be duly authorized 
legal investments for state employees retirement fund and all 
such securities so transferred or purchased shall be deposited 
with the state treasurer.  All interest from these investments 
shall be credited to the appropriate funds and used for current 
purposes or investments, except as hereinafter provided.  The 
state board of investment shall have authority to sell, convey, 
and exchange such securities and invest and reinvest the funds 
when it deems it desirable to do so, and shall sell securities 
upon request of the officers of the association when such 
officers determine funds are needed for its purposes.  All of 
the provisions regarding accounting procedures and restrictions 
and conditions for the purchase and sale of securities for the 
state employees retirement fund shall apply to the accounting, 
purchase and sale of securities for the teachers' retirement 
fund. 
    Sec. 25.  Minnesota Statutes 1989 Supplement, section 
354.071, subdivision 2, is amended to read: 
    Subd. 2.  [NOTICE OF TERMINATION OR DENIAL.] If the 
executive director terminates a benefit or denies an application 
or a written request of any person claiming a right under this 
chapter or the applicable sections of chapters 136, 355, and 
356, the executive director must serve upon that person a 
written notice.  The notice must contain: 
    (1) the reasons for the termination or denial; 
    (2) notice that the person may petition the board for a 
review of the termination or denial and that the petition for 
review must be filed within 60 days of the receipt of the 
written notice; 
    (3) a statement that relevant documentation submitted by 
the petitioner to the executive director must be received in the 
office of the teachers retirement association at least 30 days 
before the meeting prescribed in subdivision 4; 
    (4) a statement that failure to petition the board within 
60 days will preclude the person from contesting in any other 
court procedure or administrative hearing, the issues determined 
by the executive director; and 
    (4) (5) a copy of this section. 
    Sec. 26.  Minnesota Statutes 1989 Supplement, section 
354.071, subdivision 3, is amended to read: 
    Subd. 3.  [PETITION FOR REVIEW.] A person who claims a 
right under subdivision 2 and whose benefit has been terminated 
or whose application or written request has been denied may 
petition for a review of that decision by the board.  A petition 
under this section must be served upon the executive director 
personally, or by mail postmarked no later than 60 days after 
the petitioner received the notice required by subdivision 2.  
The petition must include the sworn, notarized statement of the 
reasons the petitioner believes the decision of the executive 
director should be reversed or modified and may include relevant 
documentation.  Relevant documentation submitted by the 
petitioner to the executive director must be received in the 
office of the teachers retirement association at least 30 days 
before the meeting prescribed in subdivision 4. 
    Sec. 27.  Minnesota Statutes 1989 Supplement, section 
354.071, is amended by adding a subdivision to read: 
    Subd. 5a.  [EXECUTIVE DIRECTOR'S ORDER.] Notwithstanding 
subdivisions 4 and 5, if the executive director determines with 
respect to a petition that no relevant facts are in dispute, the 
executive director shall inform the board of that determination, 
and the board may issue findings of fact, a decision, reasons 
for the decision, and a final order and serve it upon the 
petitioner as provided in subdivision 8.  If a petitioner 
receives an adverse decision, the petitioner may appeal the 
board's final order under subdivision 9. 
    Sec. 28.  Minnesota Statutes 1988, section 354.146, 
subdivision 1, is amended to read: 
    Subdivision 1.  Every member who has rendered teaching 
service or was on an authorized leave of absence after June 30, 
1972 is covered by the full formula program except that those 
members who have contributed to the variable annuity fund are 
covered by the combined formula and variable annuity program.  
The benefit of a former member who does not return to teaching 
service prior to before retirement shall be determined under the 
program in effect at the time of termination.  
    Sec. 29.  Minnesota Statutes 1988, section 354.42, 
subdivision 2, is amended to read: 
    Subd. 2.  The employee contribution to the fund shall be an 
amount equal to 4-1/2 percent of the salary of every coordinated 
member and 8-1/2 percent of the salary of every basic member.  
This contribution shall be made by deduction from salary.  Where 
any portion of a member's salary is paid from other than public 
funds, such member's employee contribution shall be based on the 
entire salary received.  For purposes of financing the various 
options related to the variable annuity division, employee 
variable annuity contributions will be credited in accordance 
with section 354.62, subdivision 2. 
    Sec. 30.  Minnesota Statutes 1988, section 354.42, 
subdivision 3, is amended to read: 
    Subd. 3.  The employer contribution to the fund shall be an 
amount equal to 4-1/2 percent of the salary of each coordinated 
member and 8-1/2 percent of the salary of each basic member.  
This contribution shall be made in the manner provided in 
section 354.43.  For purposes of financing the various options 
related to the variable annuity division, employer contributions 
equal to the employee variable annuity contributions prescribed 
in section 354.62, subdivision 2, shall be allocated at the same 
time to the employer variable annuity contribution account in 
section 354.62, subdivision 3. 
    Sec. 31.  Minnesota Statutes 1989 Supplement, section 
354.44, subdivision 6, is amended to read: 
    Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
ANNUITY.] (1) The formula retirement annuity hereunder shall be 
computed in accordance with the applicable provisions of the 
formulas stated in clause (2) or (4) on the basis of each 
member's average salary for the period of the member's formula 
service credit.  For the purposes of computing the formula 
benefits under the formula and variable program, if a 
combination of these formulas is used, the formula percentages 
used will be those percentages in each formula as continued for 
the respective years of service from one formula to the next. 
    For all years of formula service credit, "average salary," 
for the purpose of determining the member's retirement annuity, 
means the average salary upon which contributions were made and 
upon which payments were made to increase the salary limitation 
provided in Minnesota Statutes 1971, section 354.511 for the 
highest five successive years of formula service credit 
provided, however, that such "average salary" shall not include 
any more than the equivalent of 60 monthly salary payments.  
Average salary must be based upon all years of formula service 
credit if this service credit is less than five years. 
    (2) This clause, in conjunction with clause (3), applies to 
a person who first became a member of the fund or a member of a 
pension fund listed in section 356.30, subdivision 3, before 
July 1, 1989, unless clause (4), in conjunction with clause (5), 
produces a higher annuity amount, in which case clause (4) 
applies.  The average salary as defined in clause (1), 
multiplied by the following percentages per year of formula 
service credit shall determine the amount of the annuity to 
which the member qualifying therefor is entitled: 
                         Coordinated Member   Basic Member
 Each year of service      1.0 percent        2.0 percent
  during first ten         per year           per year
 Each year of service      1.5 percent        2.5 percent
  thereafter               per year           per year
    (3)(i) This clause applies only to a person who first 
became a member of the fund or a member of a pension fund listed 
in section 356.30, subdivision 3, before July 1, 1989, and whose 
annuity is higher when calculated under clause (2), in 
conjunction with this clause than when calculated under clause 
(4), in conjunction with clause (5). 
    (ii) Where any member retires prior to normal retirement 
age under a formula annuity, the member shall be paid a 
retirement annuity in an amount equal to the normal annuity 
provided in clause (2) and subdivision 7, paragraph (a), reduced 
by one-quarter of one percent for each month that the member is 
under normal retirement age at the time of retirement except 
that for any member who has 30 or more years of allowable 
service credit, the reduction shall be applied only for each 
month that the member is under age 62. 
    (iii) Any member whose attained age plus credited allowable 
service totals 90 years is entitled, upon application, to a 
retirement annuity in an amount equal to the normal annuity 
provided in clause (2), without any reduction by reason of early 
retirement. 
    (4) This clause applies to a member who has become at least 
55 years old and first became a member of the fund after June 
30, 1989, and to any other member who has become at least 55 
years old and whose annuity amount when calculated under this 
clause and in conjunction with clause (5), is higher than it is 
when calculated under clause (2), in conjunction with clause (3).
The average salary, as defined in clause (1) multiplied by 2.5 
percent for each year of service for a basic member and by 1.5 
percent for each year of service for a coordinated member shall 
determine the amount of the retirement annuity to which the 
member is entitled. 
    (5) This clause applies to a person who has become at least 
55 years old and first becomes a member of the fund after June 
30, 1989, and to any other member who has become at least 55 
years old and whose annuity is higher when calculated under 
clause (4) in conjunction with this clause than when calculated 
under clause (2), in conjunction with clause (3).  An employee 
who retires under the formula annuity before the normal 
retirement age shall be paid the normal annuity provided in 
clause (4) and subdivision 7, paragraph (b), reduced so that the 
reduced annuity is the actuarial equivalent of the annuity that 
would be payable to the employee if the employee deferred 
receipt of the annuity and the annuity amount were augmented at 
an annual rate of three percent compounded annually from the day 
the annuity begins to accrue until the normal retirement age. 
    Sec. 32.  Minnesota Statutes 1989 Supplement, section 
354.45, subdivision 1a, is amended to read: 
    Subd. 1a.  [BOUNCE-BACK ANNUITY.] (a) If a former member or 
disabilitant selects a joint and survivor annuity option under 
subdivision 1, the former member or disabilitant must receive a 
normal single life annuity if the designated optional annuity 
beneficiary dies before the former member or disabilitant.  
Under this option, no reduction may be made in the person's 
annuity to provide for restoration of the normal single life 
annuity in the event of the death of the designated optional 
annuity beneficiary. 
     (b) A former member or disabilitant who selected an 
optional joint and survivor annuity before July 1, 1989, but did 
not choose an option that provides that the normal single life 
annuity is payable to the former member or the disabilitant if 
the designated optional annuity beneficiary dies first, is 
eligible for restoration of the normal single life annuity if 
the designated optional annuity beneficiary dies first, without 
further actuarial reduction of the person's annuity.  A former 
member or disabilitant who selected an optional joint and 
survivor annuity, but whose designated optional annuity 
beneficiary died before July 1, 1989, shall receive a normal 
single life annuity after that date, but shall not receive 
retroactive payments for periods before that date. 
    (c) The restoration of the normal single life annuity under 
this subdivision will take effect on the first of the month 
following the date of death of the designated optional annuity 
beneficiary or on the first of the month following one year 
before the date on which a certified copy of the death 
certificate of the designated optional annuity beneficiary is 
received in the office of the teachers retirement association, 
whichever date is later. 
    Sec. 33.  Minnesota Statutes 1988, section 354.46, 
subdivision 1, is amended to read: 
    Subdivision 1.  [BASIC PROGRAM; BENEFITS FOR SPOUSE AND 
CHILDREN OF TEACHER.] If a basic member who has at least 18 
months of allowable service credit and who has an average salary 
as defined in section 354.44, subdivision 6 equal to or greater 
than $75 dies prior to retirement or if a former basic member 
who, at the time of death, was totally and permanently disabled 
and receiving disability benefits pursuant to section 354.48 
dies prior to attaining the age of 65 years, the surviving 
dependent spouse and dependent children of the basic member or 
former basic member shall be entitled to receive a monthly 
benefit as follows: 
  (a) Surviving
  dependent
  spouse .....50 percent of the basic member's monthly
              average salary paid in the last full
              fiscal year preceding death
  (b) Each
  dependent
  child ......ten percent of the basic member's
              monthly average salary paid in the
              last full fiscal year preceding death
     Payments for the benefit of any dependent child under the 
age of 22 years shall be made to the surviving parent, or if 
there be none, to the legal guardian of the child.  The maximum 
monthly benefit shall not exceed $1,000 for any one family, and 
the minimum benefit per family shall not be less than 50 percent 
of the basic member's average salary, subject to the foregoing 
maximum.  The surviving dependent spouse benefit shall terminate 
upon remarriage, and the surviving dependent children's benefit 
shall be reduced pro tanto when any surviving child is no longer 
dependent. 
    If the basic member and the surviving dependent spouse are 
killed in a common disaster and if the total of all survivors 
benefits payable pursuant to this subdivision is less than the 
accumulated deductions plus interest payable, the surviving 
dependent children shall receive the difference in a lump sum 
payment. 
    If the survivor benefits provided in this subdivision 
exceed in total the monthly average salary of the deceased basic 
member, these benefits shall be reduced to an amount equal to 
the deceased basic member's monthly average salary. 
    Prior to payment of any survivor benefit pursuant to this 
subdivision, in lieu of that benefit, the surviving dependent 
spouse may elect to receive the joint and survivor annuity 
provided pursuant to subdivision 2, or may elect to receive a 
refund of accumulated deductions with interest in a lump sum as 
provided pursuant to sections section 354.47, subdivision 1 or 
354.62, subdivision 5, clause (3).  If there are any surviving 
dependent children, the surviving dependent spouse may elect to 
receive the refund of accumulated deductions only with the 
consent of the district court of the district in which the 
surviving dependent child or children reside. 
    Sec. 34.  Minnesota Statutes 1989 Supplement, section 
354.46, subdivision 2, is amended to read: 
    Subd. 2.  [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY 
BENEFIT.] The surviving spouse of any member or former member 
who has attained the age of at least 50 years and has credit for 
at least three years of allowable service or who has credit for 
at least 30 years of allowable service irrespective of age shall 
be entitled to joint and survivor annuity coverage in the event 
of death of the member prior to retirement.  If the surviving 
spouse does not elect to receive a surviving spouse benefit 
provided pursuant to subdivision 1, if applicable, or does not 
elect to receive a refund of accumulated member contributions 
provided pursuant to section 354.47, subdivision 1, or 354.62, 
subdivision 5, clause (3), whichever is applicable, the 
surviving spouse shall be entitled to receive, upon written 
application on a form prescribed by the executive director, a 
benefit equal to the second portion of a 100 percent joint and 
survivor annuity as provided pursuant to section 354.45 and 
computed pursuant to section 354.44, subdivision 2, 6, or 7, 
whichever is applicable.  The surviving spouse may apply for the 
annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  Sections 354.44, 
subdivisions 6 and 7, and 354.60 apply to a deferred annuity 
payable under this section.  If the member was a participant in 
the variable annuity division, the applicable portion of the 
benefit shall be computed pursuant to section 354.62, 
subdivision 5, clause (1).  The benefit shall be payable for 
life. 
    Sec. 35.  Minnesota Statutes 1989 Supplement, section 
354.47, subdivision 1, is amended to read: 
    Subdivision 1.  [DEATH BEFORE RETIREMENT.] (1) If a member 
dies before retirement and is covered pursuant to the provisions 
of section 354.44, subdivision 2, and neither an optional 
annuity, nor a reversionary annuity, nor a benefit pursuant to 
section 354.46, subdivision 1, is payable to the survivors if 
the member was a basic member, the surviving spouse, or if there 
is no surviving spouse, the designated beneficiary shall be 
entitled to an amount equal to the member's accumulated 
deductions with interest credited to the account of the member 
to the date of death. 
    (2) If a member dies before retirement and is covered 
pursuant to the provisions of section 354.44, 
subdivisions subdivision 6 and 7, and neither an optional 
annuity, nor reversionary annuity, nor the benefit described in 
section 354.46, subdivision 1, is payable to the survivors if 
the member was a basic member, the surviving spouse, or if there 
is no surviving spouse, the designated beneficiary shall be 
entitled to an amount equal to the member's accumulated 
deductions credited to the account of the member as of June 30, 
1957, and from July 1, 1957, to the date of death the member's 
accumulated deductions plus interest at the rate of six percent 
per annum compounded annually. 
    (3) The amounts payable in clause (1) or (2) are in 
addition to the amount payable in section 354.62, subdivision 5, 
for the member's variable annuity account.  
    Sec. 36.  Minnesota Statutes 1989 Supplement, section 
354.48, subdivision 3, is amended to read: 
    Subd. 3.  [COMPUTATION OF BENEFITS.] (1) The amount of the 
disability benefit granted to members covered under section 
354.44, subdivision 2, clauses (1) and (2), is an amount equal 
to double the annuity which could be purchased by the member's 
accumulated deductions plus interest on the amount computed as 
though the teacher were at normal retirement age at the time the 
benefit begins to accrue and in accordance with the law in 
effect when the disability application is received.  Any member 
who applies for a disability benefit after June 30, 1974, and 
who failed to make an election pursuant to Minnesota Statutes 
1971, section 354.145, shall have the disability benefit 
computed under this clause or clause (2), whichever is larger. 
     The benefit granted shall be determined by the following: 
     (a) the amount of the accumulated deductions; 
     (b) interest actually earned on these accumulated 
deductions to the date the benefit begins to accrue; 
     (c) interest for the years from the date the benefit begins 
to accrue to the date the member attains normal retirement age 
at the rate of three percent; 
     (d) annuity purchase rates based on an appropriate annuity 
table of mortality established by the board as provided in 
section 354.07, subdivision 1, and using the applicable 
postretirement interest rate assumption specified in section 
356.215, subdivision 4d. 
     In addition, a supplementary monthly benefit shall be paid 
to basic members only in accordance with the following table: 
        Age When Benefit                Supplementary     
        Begins to Accrue                  Benefit         
        Under Age 56                         $50          
                  56                          45          
                  57                          40          
                  58                          35          
                  59                          30          
                  60                          25          
                  61                          20          
                  62                          15          
                  63                          10          
                  64                           5          
    (2) The disability benefit granted to members covered under 
section 354.44, subdivision 6 or 7, shall be computed in the 
same manner as the annuity provided in section 354.44, 
subdivision 6 or 7, whichever is applicable.  The disability 
benefit shall be the formula annuity without the reduction for 
each month the member is under normal retirement age when the 
benefit begins to accrue. 
    (3) For the purposes of computing a retirement annuity when 
the member becomes eligible, the amounts paid for disability 
benefits shall not be deducted from the individual member's 
accumulated deductions.  If the disability benefits provided in 
this subdivision exceed the monthly average salary of the 
disabled member, the disability benefits shall be reduced to an 
amount equal to the disabled member's average salary. 
    Sec. 37.  Minnesota Statutes 1989 Supplement, section 
354.49, subdivision 2, is amended to read: 
    Subd. 2.  Except as provided in section 354.44, subdivision 
1, any person who ceases to be a member by reason of termination 
of teaching service, shall receive a refund in an amount equal 
to the accumulated deductions credited to the account as of June 
30, 1957, and after July 1, 1957, the accumulated deductions 
with interest at the rate of six percent per annum compounded 
annually plus any variable annuity account accumulations payable 
pursuant to section 354.62, subdivision 5, clause (4).  For the 
purpose of this subdivision, interest shall be computed on 
fiscal year end balances to the first day of the month in which 
the refund is issued. 
    Sec. 38.  Minnesota Statutes 1989 Supplement, section 
354.49, subdivision 3, is amended to read: 
    Subd. 3.  Any person who has attained normal retirement age 
with less than three years of credited allowable service shall 
be entitled to receive a refund in an amount equal to the 
person's accumulated deductions plus interest in lieu of a 
proportionate annuity pursuant to section 356.32 except those 
covered under the provisions of section 354.44, subdivision 6 or 
7, in which case the refund shall be an amount equal to the 
accumulated deductions credited to the person's account as of 
June 30, 1957, and after July 1, 1957, the accumulated 
deductions plus interest at the rate of six percent compounded 
annually.  
    Sec. 39.  Minnesota Statutes 1989 Supplement, section 
354.50, subdivision 5, is amended to read: 
    Subd. 5.  Notwithstanding section 354.62, subdivision 5, 
clause (4), A member who received a refund of variable account 
accumulations may repay this refund to the member's formula 
account under this section. 
    Sec. 40.  Minnesota Statutes 1988, section 354.52, 
subdivision 2, is amended to read: 
    Subd. 2.  Each school board or managing body shall, on or 
before August 1, each year, report to the teachers retirement 
board giving an itemized summary of the total amount withheld 
from the salaries of teachers for regular teacher's teachers 
retirement deductions and for variable annuity deductions, and 
such other information as the executive director may require.  
If the itemized summary is received after August 1 in any year, 
there shall be a penalty not to exceed $25 for each month or 
portion thereof which the summary is delinquent, as determined 
by the board of trustees.  The penalty shall be paid by the 
school board or the managing body.  
    Sec. 41.  Minnesota Statutes 1989 Supplement, section 
354.55, subdivision 11, is amended to read: 
    Subd. 11.  [DEFERRED ANNUITY; AUGMENTATION.] Any person 
covered under section 354.44, subdivisions subdivision 6 and 7, 
who ceases to render teaching service, may leave the person's 
accumulated deductions in the fund for the purpose of receiving 
a deferred annuity at retirement.  Eligibility for an annuity 
under this subdivision shall be governed pursuant to section 
354.44, subdivision 1, or 354.60. 
    The amount of the deferred retirement annuity shall be 
determined by section 354.44, subdivisions subdivision 6 and 7, 
and augmented as provided in this subdivision.  The required 
reserves related to that portion of the annuity which had 
accrued when the member ceased to render teaching service shall 
be augmented by interest compounded annually from the first day 
of the month following the month during which the member ceased 
to render teaching service to the effective date of retirement.  
There shall be no augmentation if this period is less than three 
months or if this period commences prior to July 1, 1971.  The 
rates of interest used for this purpose shall be five percent 
compounded annually commencing July 1, 1971, until January 1, 
1981, and three percent compounded annually thereafter until 
January 1 of the year following the year in which the former 
member attains age 55.  From that date to the effective date of 
retirement, the rate is five percent compounded annually.  If a 
person has more than one period of uninterrupted service, a 
separate average salary determined under section 354.44, 
subdivision 6, must be used for each period and the required 
reserves related to each period shall be augmented by interest 
pursuant to this subdivision.  The sum of the augmented required 
reserves so determined shall be the basis for purchasing the 
deferred annuity.  If a person repays a refund, the service 
restored by the repayment must be considered as continuous with 
the next period of service for which the person has credit with 
this fund.  If a person does not render teaching service in any 
one fiscal year or more consecutive fiscal years and then 
resumes teaching service, the formula percentages used from the 
date of the resumption of teaching service shall be those 
applicable to new members.  The mortality table and interest 
assumption used to compute the annuity shall be the applicable 
mortality table established by the board under section 354.07, 
subdivision 1, and the interest rate assumption under section 
356.215 in effect when the member retires.  A period of 
uninterrupted service for the purposes of this subdivision means 
a period of covered teaching service during which the member has 
not been separated from active service for more than one fiscal 
year. 
    The provisions of this subdivision shall not apply to 
variable account accumulations as defined in section 354.05, 
subdivision 23. 
    In no case shall the annuity payable under this subdivision 
be less than the amount of annuity payable pursuant to section 
354.44, subdivisions subdivision 6 and 7. 
    The requirements and provisions for retirement before 
normal retirement age contained in section 354.44, subdivision 
6, clause (3) or (5), shall also apply to an employee fulfilling 
the requirements with a combination of service as provided in 
section 354.60. 
    The augmentation provided by this subdivision applies to 
the benefit provided in section 354.46, subdivision 2. 
    The augmentation provided by this subdivision shall not 
apply to any period in which a person is on an approved leave of 
absence from an employer unit covered by the provisions of this 
chapter.  
    Sec. 42.  Minnesota Statutes 1988, section 354.55, 
subdivision 19, is amended to read: 
    Subd. 19.  Any member or retired former member who is 
covered by the formula or formula and variable programs in 
effect after June 30, 1973 and who made payments to the fund 
pursuant to Minnesota Statutes 1965, section 354.511 shall upon 
request receive a refund of such payments. 
    Sec. 43.  Minnesota Statutes 1989 Supplement, section 
354.65, is amended to read: 
    354.65 [ADMINISTRATIVE EXPENSES.] 
    Necessary and reasonable administrative expenses incurred 
by the teachers retirement association must be prorated and 
allocated to the teachers retirement fund, and the 
organization's participation in both the Minnesota variable 
annuity investment fund and the Minnesota supplemental 
investment fund in accordance with policies and procedures 
established by the board of trustees of the teachers retirement 
association.  
    Sec. 44.  Minnesota Statutes 1989 Supplement, section 
354.66, subdivision 2, is amended to read: 
    Subd. 2.  A teacher in the public elementary schools, 
secondary schools, or technical institutes or in the community 
college system or the state university system of the state who 
has 20 years or more of allowable service in the fund or 20 
years or more of full-time teaching service in Minnesota public 
elementary schools, secondary schools, or technical institutes 
or in the community college system or the state university 
system, or a teacher in the community college system or state 
university system who has attained at least age 55 and has ten 
years or more of allowable service in the fund or ten years or 
more of full-time teaching service as described in this 
subdivision, may, by agreement with the board of the employing 
district, be assigned to teaching service within the district in 
a part-time teaching position. 
    Sec. 45.  Minnesota Statutes 1989 Supplement, section 
354A.011, subdivision 15a, is amended to read: 
    Subd. 15a.  [NORMAL RETIREMENT AGE.] "Normal retirement 
age" means age 65 for a person who first became a member of the 
coordinated program of the Minneapolis or St. Paul teachers 
retirement fund association or the new law coordinated program 
of the Duluth teachers retirement fund association or a member 
of a pension fund listed in section 356.30, subdivision 3, 
before July 1, 1989.  For a person who first became a member of 
the coordinated program of the Minneapolis or St. Paul teachers 
retirement fund association or the new law coordinated program 
of the Duluth teachers retirement fund association after June 
30, 1989, normal retirement age means the higher of age 65 or 
retirement age, as defined in United States Code, title 42, 
section 416(l), as amended.  For a person who is a member of the 
basic program of the Minneapolis or St. Paul teachers retirement 
fund association or the old law coordinated program of the 
Duluth teachers retirement fund association, normal retirement 
age means the age at which a teacher becomes eligible for a 
normal retirement annuity computed upon meeting the age and 
service requirements specified in the applicable provisions of 
the articles of incorporation or bylaws of the respective 
teachers retirement fund association. 
     Sec. 46.  Minnesota Statutes 1989 Supplement, section 
354A.095, is amended to read: 
    354A.095 [MATERNITY LEAVE.] 
    A Basic or coordinated member members of the St. Paul 
teachers retirement fund association and old or new coordinated 
members of the Duluth teachers retirement fund association, who 
are granted parental or maternity leave of absence by the 
employing authority, are entitled to obtain service credit not 
to exceed one year for the period of leave upon payment to the 
applicable fund by the end of the fiscal year following the 
fiscal year in which the leave of absence terminated.  The 
amount of the payment must include the total required employee 
and employer contributions for the period of leave prescribed in 
section 354A.12.  Payment must be based on the member's average 
monthly salary upon return to teaching service, and is payable 
without interest.  Payment must be accompanied by a certified or 
otherwise adequate copy of the resolution or action of the 
employing authority granting or approving the leave. 
    Sec. 47.  Minnesota Statutes 1989 Supplement, section 
354A.31, subdivision 4, is amended to read: 
    Subd. 4.  [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 
ANNUITY.] (a) The normal coordinated retirement annuity shall be 
an amount equal to a retiring coordinated member's average 
salary multiplied by the retirement annuity formula percentage.  
Average salary for purposes of this section shall mean an amount 
equal to the average salary upon which contributions were made 
for the highest five successive years of service credit, but 
which shall not in any event include any more than the 
equivalent of 60 monthly salary payments.  Average salary must 
be based upon all years of service credit if this service credit 
is less than five years. 
    (b) This paragraph, in conjunction with subdivision 6, 
applies to a person who first became a member or a member in a 
pension fund listed in section 356.30, subdivision 3, before 
July 1, 1989, unless paragraph (c), in conjunction with 
subdivision 7, produces a higher annuity amount, in which case 
paragraph (c) will apply.  The retirement annuity formula 
percentage for purposes of this paragraph is one percent per 
year for each year of coordinated service for the first ten 
years and 1-1/2 1.5 percent for each year of coordinated service 
thereafter.  
    (c) This paragraph applies to a person who has become at 
least 55 years old and who first becomes a member after June 30, 
1989, and to any other member who has become at least 55 years 
old and whose annuity amount, when calculated under this 
paragraph and in conjunction with subdivision 7 is higher than 
it is when calculated under paragraph (b), in conjunction with 
the provisions of subdivision 6.  The retirement annuity formula 
percentage for purposes of this paragraph is 1-1/2 1.5 percent 
for each year of coordinated service.  
    Sec. 48.  Minnesota Statutes 1989 Supplement, section 
354A.31, subdivision 6, is amended to read: 
    Subd. 6.  [REDUCED RETIREMENT ANNUITY.] This subdivision 
applies only to a person who first became a coordinated 
member or a member of a pension fund listed in section 356.30, 
subdivision 3, before July 1, 1989, and whose annuity is higher 
when calculated using the retirement annuity formula percentage 
in subdivision (4) 4, paragraph (b), in conjunction with this 
subdivision than when calculated under subdivision 4, paragraph 
(c), in conjunction with subdivision 7. 
    (a) Upon retirement at an age prior to before normal 
retirement age with three years of service credit or prior to 
age 62 with at least 30 years of service credit, a coordinated 
member shall be entitled to a retirement annuity in an amount 
equal to the normal retirement annuity calculated using the 
retirement annuity formula percentage in subdivision (4), 
paragraph (b), reduced by one-quarter of one percent for each 
month that the coordinated member is under normal retirement age 
if the coordinated member has less than 30 years of service 
credit or is under the age of 62 if the coordinated member has 
at least 30 years of service credit.  
    (b) Any coordinated member whose attained age plus credited 
allowable service totals 90 years is entitled, upon application, 
to a retirement annuity in an amount equal to the normal 
retirement annuity calculated using the retirement annuity 
formula percentage in subdivision (4), paragraph (b), without 
any reduction by reason of early retirement. 
    Sec. 49.  Minnesota Statutes 1989 Supplement, section 
354A.31, subdivision 7, is amended to read: 
    Subd. 7.  [ACTUARIAL REDUCTION FOR EARLY RETIREMENT.] This 
subdivision applies to a person who has become at least 55 years 
old and first becomes a coordinated member after June 30, 1989, 
and to any other coordinated member who has become at least 55 
years old and whose annuity is higher when calculated using the 
retirement annuity formula percentage in subdivision 4, 
paragraph (c), in conjunction with this subdivision than when 
calculated under subdivision 4, paragraph (b), in conjunction 
with subdivision 6.  A coordinated member who retires before the 
full benefit age shall be paid the retirement annuity calculated 
using the retirement annuity formula percentage in subdivision 
4, paragraph (c), reduced so that the reduced annuity is the 
actuarial equivalent of the annuity that would be payable to the 
member if the member deferred receipt of the annuity and the 
annuity amount were augmented at an annual rate of three percent 
compounded annually from the day the annuity begins to accrue 
until the normal retirement age. 
    Sec. 50.  Minnesota Statutes 1989 Supplement, section 
354A.32, subdivision 1, is amended to read: 
    Subdivision 1.  [OPTIONAL FORMS GENERALLY.] The boards of 
the Minneapolis and the St. Paul teachers retirement fund 
associations shall each establish for the coordinated program 
and the board of the Duluth teachers retirement fund association 
shall establish for the new law coordinated program an optional 
retirement annuity which shall take the form of a joint and 
survivor annuity.  Each board may also in its discretion 
establish an optional annuity which shall take the form of an 
annuity payable for a period certain and for life thereafter.  
Each board shall also establish an optional retirement annuity 
that guarantees payment of the balance of the annuity 
recipient's accumulated deductions to a designated beneficiary 
upon the death of the annuity recipient.  Except as provided in 
subdivision 1a, optional annuity forms shall be the actuarial 
equivalent of the normal forms provided in section 354A.31.  In 
establishing these optional annuity forms, the board shall 
obtain the written recommendation of the commission-retained 
actuary.  The recommendation shall be a part of the permanent 
records of the board. 
    Sec. 51.  Minnesota Statutes 1989 Supplement, section 
354A.32, subdivision 1a, is amended to read: 
    Subd. 1a.  [BOUNCE-BACK ANNUITY.] (a) If a former 
coordinated member or disabilitant has selected a joint and 
survivor annuity option under subdivision 1, the former member 
or disabilitant must receive a normal single life annuity if the 
designated optional annuity beneficiary dies before the former 
member or disabilitant.  Under this option, no reduction may be 
made in the person's annuity to provide for restoration of the 
normal single life annuity in the event of the death of the 
designated optional annuity beneficiary. 
     (b) A former coordinated member or disabilitant who 
selected an optional joint and survivor annuity before July 1, 
1989, but did not choose an option that provides that the normal 
single life annuity is payable to the former member or the 
disabilitant if the designated optional annuity beneficiary dies 
first, is eligible for restoration of the normal single life 
annuity if the designated optional annuity beneficiary dies 
first, without further actuarial reduction of the person's 
annuity.  A former member or disabilitant who selected an 
optional joint and survivor annuity, but whose designated 
optional annuity beneficiary died before July 1, 1989, shall 
receive a normal single life annuity after that date, but shall 
not receive retroactive payments for periods before that date. 
     (c) A former coordinated member or disabilitant who took a 
further actuarial reduction to elect an optional joint and 
survivor annuity that provides that the normal annuity is 
payable to the former member or disabilitant if the designated 
optional beneficiary dies first but has not died before July 1, 
1989, shall have the annuity increased as of July 1, 1989, to 
the amount the person would have received if, at the time of 
retirement or disability, the person had selected only optional 
survivor coverage that would not have provided for restoration 
of the normal annuity upon the death of the designated optional 
annuity beneficiary.  Any annuity or benefit increase under this 
paragraph is effective only for payments made after June 30, 
1989, and is not retroactive for payments made before July 1, 
1989. 
    (d) The restoration of the normal single life annuity under 
this subdivision will take effect on the first of the month 
following the date of death of the designated optional annuity 
beneficiary or on the first of the month following one year 
before the date on which a certified copy of the death 
certificate of the designated optional annuity beneficiary is 
received in the office of the appropriate teachers retirement 
fund association, whichever date is later. 
    Sec. 52.  Minnesota Statutes 1989 Supplement, section 
354B.02, subdivision 2, is amended to read: 
    Subd. 2.  [PERSONS WITH CERTAIN PRIOR ALLOWABLE SERVICE.] A 
person with less than three years of prior allowable service as 
a member of the teachers retirement association other than in 
covered employment under section 354B.01, subdivision 2 or 3, 
and who is first employed in covered employment after June 30, 
1989, may remain remains a member of the teacher's retirement 
association for all purposes or, but a coordinated member may 
elect to participate in the plan.  This election to participate 
in the plan must be made within 60 days of the start of covered 
employment. 
    Sec. 53.  Minnesota Statutes 1989 Supplement, section 
354B.02, subdivision 3, is amended to read: 
    Subd. 3.  [OPTIONAL PARTICIPATION.] A person with less than 
three years of allowable service who was first employed in 
covered employment before July 1, 1989, and who is a coordinated 
member of the teachers retirement association, may elect to 
transfer retirement coverage to the plan under section 6 354B.03.
The election must be made on a form provided by the executive 
director.  An election to transfer retirement coverage to the 
plan must be made before July 1, 1992, and is irrevocable.  When 
a member transfers coverage to the plan, all existing service 
credits with the association to which the person was entitled 
before the transfer terminate and may not be restored. 
    Sec. 54.  Minnesota Statutes 1989 Supplement, section 
354B.03, subdivision 1, is amended to read: 
    Subdivision 1.  [PROCEDURE TRANSFER.] If a person with less 
than three years of allowable service elects a transfer to the 
plan under section 354B.02, subdivision 2 or 3, the executive 
director of the teachers retirement association shall transfer 
from the teachers retirement fund to the plan the person's 
member contributions plus interest compounded annually at five 
percent a year.  The transfer must be made within 90 days from 
the date the executive director receives notification of the 
election.  The transfer may not include any amount representing 
an employer contribution nor any amount representing the 
repayment of a refund received by the association after the date 
of enactment of this act. 
    Sec. 55.  Minnesota Statutes 1989 Supplement, section 
354B.03, subdivision 3, is amended to read: 
    Subd. 3.  [ELECTION.] A person with more than three or more 
years of allowable service credit who was first employed in 
covered employment before July 1, 1989, or after June 30, 1989, 
as provided in section 354B.02, subdivision 2, may elect 
coverage by the plan before July 1, 1992.  If coverage is 
elected, accumulated employer and employee contributions and 
allowable service credit shall must remain with the teachers 
retirement fund and that person shall remain is eligible for a 
deferred annuity from that fund augmented with interest at the 
rate of five percent computed as specified in section 354.55, 
subdivision 11.  Future contributions only shall be made to the 
plan.  An election made under this subdivision is irrevocable. 
    Sec. 56.  Minnesota Statutes 1988, 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 five three 
years; 
    (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 three continuous years of allowable 
service credit by the general employee retirement plan or has at 
least a total of five three 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. 57.  Minnesota Statutes 1988, section 356.302, 
subdivision 4, is amended to read: 
    Subd. 4.  [PUBLIC SAFETY PLAN ELIGIBILITY REQUIREMENTS.] A 
disabled member of a covered retirement plan who has credit for 
allowable service in a combination of public safety employee 
retirement plans is entitled to a combined service disability 
benefit if the member: 
    (1) is less than 55 years of age old on the date of 
application for the disability benefit; 
    (2) has become occupationally disabled; 
    (3) has credit for allowable service in any combination of 
public safety employee retirement plans totaling at least one 
year if the disability is duty-related or totaling at least five 
three years if the disability is not duty-related; 
    (4) has credit for at least six months of allowable service 
with the current public safety employee retirement plan before 
the commencement of the disability; and 
    (5) is not receiving a retirement annuity or disability 
benefit from any covered public safety employee retirement plan 
at the time of the commencement of the disability. 
    Sec. 58.  Minnesota Statutes 1989 Supplement, section 
356.371, subdivision 3, is amended to read: 
    Subd. 3.  [REQUIREMENT OF NOTICE TO MEMBER'S SPOUSE.] If a 
public pension fund provides optional retirement annuity forms 
which include a joint and survivor optional retirement annuity 
form potentially applicable to the surviving spouse of a member, 
the chief administrative officer of the public pension fund 
shall send a copy of the written statement required by 
subdivision 2 to the spouse of the member before the member's 
election of an optional retirement annuity.  
    Following the election of an optional a retirement annuity 
form by the member, a copy of the completed retirement annuity 
application and retirement annuity beneficiary form must be sent 
by the public pension fund to the spouse of the retiring 
member.  A signed acknowledgment must be required from the 
spouse confirming receipt of a copy of the completed retirement 
annuity application and retirement annuity beneficiary form.  If 
the required signed acknowledgment is not received from the 
spouse within 30 days, the public pension fund must send another 
copy of the completed retirement annuity application and 
retirement annuity beneficiary form to the spouse by certified 
mail. 
    Sec. 59.  Minnesota Statutes 1989 Supplement, section 
356.86, subdivision 2, is amended to read: 
    Subd. 2.  [AMOUNT OF POSTRETIREMENT ADJUSTMENT; PAYMENT.] 
(a) For any person receiving an annuity or benefit on November 
30, 1989, and entitled to receive a postretirement adjustment 
under subdivision 1, the postretirement adjustment is a lump sum 
payment calculated under paragraph (b) or (c). 
    (b) For coordinated plan members annuity or benefit 
recipients, the postretirement adjustment in 1989 is $25 for 
each full year of allowable service credited to the person by 
the respective retirement fund.  In 1990 and each following 
year, the postretirement adjustment is the amount payable in the 
preceding year increased by the same percentage applied to 
regular annuities paid from the postretirement fund or, for the 
retirement funds specified in subdivision 3, clauses (6), (7), 
and (8), by the same percentage applied under the articles of 
incorporation and bylaws of these funds. 
    (c) For basic plan members annuity or benefit recipients, 
the postretirement adjustment in 1989 is the greater of: 
    (1) $25 for each full year of allowable service credited to 
the person by the respective retirement fund; or 
    (2) the difference between: 
    (i) the product of $400 times the number of full years of 
allowable service credited to the person by the respective 
retirement fund; and 
    (ii) the sum of the benefits payable to the person from any 
Minnesota public employee pension plan, and cash benefits 
payable to the person from the social security administration. 
    In 1990 and each following year, each eligible basic 
plan member annuity or benefit recipient shall receive the 
amount received in the preceding year increased by the same 
percentage applied to regular annuities paid from the 
postretirement fund or, for the retirement funds specified in 
subdivision 3, clauses (6), (7), and (8), by the same percentage 
applied under the articles of incorporation and bylaws of these 
funds. 
    (d) The postretirement adjustment provided for in this 
section is payable for those persons receiving an annuity or 
benefit on November 30, 1989, on December 1, 1989.  In 
subsequent years, the adjustment must be paid on December 1, 
unless the beneficiary to those persons receiving an annuity or 
benefit on the preceding November 30.  A person who is entitled 
eligible may elect to participate in an optional annuity or 
benefit receipt schedule under subdivision 4.  This section does 
not authorize the payment of a postretirement adjustment to an 
estate if the annuity or benefit recipient dies before the 
November 30 eligibility date.  Notwithstanding section 356.18, 
the postretirement adjustment provided for in this section must 
be paid automatically unless the intended recipient files a 
written notice with the retirement fund requesting that the 
postretirement adjustment not be paid. 
    Sec. 60.  Minnesota Statutes 1989 Supplement, section 
356.86, subdivision 4, is amended to read: 
    Subd. 4.  [OPTIONAL BENEFIT POSTRETIREMENT ADJUSTMENT 
PAYMENT SCHEDULE.] Basic plan annuity or benefit recipients 
receiving adjustments under subdivision 2, paragraph (c), clause 
(2), and whose adjustment exceeds 20 percent of their Minnesota 
plan annuity or benefit may elect to have the amount of the 
benefit adjustment paid in equal monthly amounts instead of 
receiving a benefit adjustment lump sum payment on December 1 of 
each year, 1989.  Selection of this option must be made by the 
recipient in writing on forms prepared by the retirement 
association.  This option may be revoked by the recipient in 
writing prior to November 1 preceding the December 1 lump sum 
distribution.  Upon the death of the annuity or benefit 
recipient, any remaining unpaid monthly amounts shall be paid to 
the surviving spouse, or if no spouse survives, to the annuity 
or benefit recipient's beneficiary or estate. 
    Sec. 61.  Minnesota Statutes 1989 Supplement, section 
356.86, subdivision 5, is amended to read: 
    Subd. 5.  [SOCIAL SECURITY INFORMATION.] To be eligible for 
a benefit postretirement adjustment calculated under subdivision 
2, paragraph (c), clause (2), a person must authorize the social 
security administration to release to the retirement association 
information on the person's social security cash benefits.  This 
authorization must be received by the retirement association 
before the December 1, 1989, payment date. 
    Sec. 62.  Minnesota Statutes 1989 Supplement, section 
356.86, subdivision 6, is amended to read: 
    Subd. 6.  [REPORT.] By September 30, 1990, the retirement 
funds listed in subdivision 3 shall report to the legislature 
and the commissioner of finance on the number of annuity and 
benefit recipients eligible for each type of adjustment 
established in subdivision 2, the annual cost of each type of 
adjustment, and the estimated actuarial liability associated 
with each. 
    Sec. 63.  Laws 1989, chapter 319, article 19, section 7, 
subdivision 4, is amended to read: 
    Subd. 4.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
amount determined under subdivision 3 must be applied in 
accordance with this subdivision.  The relief association shall 
apply the first one-half of one percent of assets which 
constitute excess investment income to the payment of an annual 
postretirement payment as specified in this subdivision.  The 
second one-half of one percent of assets which constitute excess 
investment income shall be applied to reduce the state 
amortization state aid or supplementary amortization state aid 
payments otherwise due to the relief association under section 
423A.02 for the current calendar year.  The relief association 
shall pay an annual postretirement payment to all eligible 
members in an amount not to exceed one-half of one percent of 
the assets of the fund.  Payment of the annual postretirement 
payment must be in a lump sum amount on June 1 following the 
determination date in any year.  Payment of the annual 
postretirement payment may be made only if the time weighted 
total rate of return exceeds by two percent the actual 
percentage increase in the current monthly salary of a top grade 
patrol officer or a top grade firefighter, whichever applies, in 
the most recent fiscal year and the yearly average percentage 
increase of the time weighted total rate of return of the fund 
for the previous five years exceeds by two percent the yearly 
average percentage increase in monthly salary of a top grade 
patrol officer or a top grade firefighter, whichever applies, of 
the previous five years.  The total amount of all payments to 
members may not exceed the amount determined under subdivision 
3.  Payment to each eligible member must be calculated by 
dividing the total number of pension units to which eligible 
members are entitled into the excess investment income available 
for distribution to members, and then multiplying that result by 
the number of units to which each eligible member is entitled to 
determine each eligible member's annual postretirement payment.  
Payment to each eligible member may not exceed an amount equal 
to the total monthly benefit that the eligible member was 
entitled to in the prior year under the terms of the benefit 
plan of the relief association or each eligible member's 
proportionate share of the excess investment income, whichever 
is less.  
    Sec. 64.  [REPEALER.] 
    Minnesota Statutes 1988, sections 11A.19, subdivisions 1, 
2, 3, 4, 5, 6, 7, and 8; 354.05, subdivisions 23, 24, 33, and 
34; 354.146, subdivision 2; and 354.62, subdivisions 1, 3, 4, 5, 
and 6; Minnesota Statutes 1989 Supplement, sections 11A.19, 
subdivision 9; 354.44, subdivision 7; and 354.62, subdivisions 2 
and 7, are repealed. 
    Sec. 65.  [EFFECTIVE DATE.] 
    Sections 1 to 64 are effective the day following final 
enactment. 

                               ARTICLE 13

                  PURCHASES OF CREDIT FOR PRIOR SERVICE
    Section 1.  [BUY-BACK OF PRIOR SERVICE CREDIT.] 
    Subdivision 1.  [MILITARY AFFAIRS.] A person who was 
employed by the department of military affairs between April 14, 
1967, and December 31, 1974, may purchase service credit from 
the Minnesota state retirement system for periods of that 
employment for which allowable service credit has not been 
obtained. 
    Subd. 2.  [ST. CLOUD CITY COUNCIL.] A person who began 
service as an elected member of the St. Cloud city council on 
April 20, 1980, and who began participating in the public 
employees retirement association on February 19, 1989, may 
purchase credit for prior service as an elected member of the 
city council from April 20, 1980, to February 18, 1989. 
    Subd. 3.  [AITKIN COUNTY OFFICIAL.] A member of the public 
employees retirement association with prior service as an 
elected county official in Aitkin county between January 4, 
1971, and December 31, 1975, may purchase allowable service 
credit in the association for that period of service. 
    Subd. 4.  [ST. LOUIS PARK.] A person who was born on July 
31, 1927, who is the city attorney for the city of Brooklyn 
Park, and who was a member of the city council for the city of 
St. Louis Park from January 1, 1960, to January 1, 1968, is 
entitled to purchase credit from the public employees retirement 
association for that period of service if not otherwise credited 
as allowable service by the association. 
    Subd. 5.  [PURCHASE.] Notwithstanding Minnesota Statutes, 
section 352.01, subdivision 11, any member of the Minnesota 
state retirement system currently employed by the Willmar 
Regional Treatment Center who left state service to attend the 
University of Michigan, Ann Arbor, between February 1966 and 
April 1968 may obtain allowable service credit for that period. 
    Subd. 6.  [PERA.] A basic member of the public employees 
retirement association who was employed by the city of White 
Bear Lake from March 1, 1966, to February 1979, employed by the 
metropolitan transit commission on February 23, 1979, and who 
received a reduced salary based on service with the metropolitan 
transit commission between November 4, 1987, and March 1, 1988, 
may elect to exclude that service from calculation of the 
highest five successive years average salary used to determine 
the person's annuity from the public employees retirement 
association. 
    Subd. 7.  [PURCHASE PAYMENT AMOUNT.] To purchase credit for 
prior service under subdivisions 1 to 5 there must be paid to 
the applicable fund an amount equal to the present value, on the 
date of payment, of the amount of the additional retirement 
annuity obtained by the purchase of the additional service 
credit.  To make an exclusion under subdivision 6, there must be 
paid to the public employees retirement association an amount 
equal to the difference in the present value, on the date of 
payment, of the additional retirement annuity obtained by the 
exclusion of service between November 4, 1987, and March 1, 
1988, from calculation of the highest five successive years 
average salary.  Calculation of this amount must be made using 
the applicable preretirement interest rate specified in 
Minnesota Statutes, section 356.215, subdivision 4d, and the 
mortality table adopted for the fund.  The calculation must 
assume continuous future service in the association 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.  The calculation must also assume a 
future salary history that includes annual salary increases at 
the salary increase rate specified in section 356.215, 
subdivision 4d.  The person requesting the purchase of prior 
service shall establish in the records of the fund or 
association sufficient 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 association. 
    Subd. 8.  [PAYMENT; CREDITING SERVICE.] Payment must be 
made in one lump sum, unless the executive director of the fund 
or association agrees to accept payment in installments over a 
period not to exceed three years from the date of the agreement, 
with interest at a rate deemed appropriate by the executive 
director.  The period of allowable service may be credited to 
the account of the person or the period of service excluded from 
calculation of the high five only after receipt of full payment 
by the executive director. 
    Subd. 9.  [OPTIONAL EMPLOYER PARTIAL PAYMENT.] Payment is 
the obligation of the person entitled to purchase credit for the 
prior service.  However, the current or former employer of a 
person specified in subdivisions 1 to 6 may, at its discretion, 
pay all or any portion of the payment amount that exceeds an 
amount equal to the employee contribution rates in effect during 
the period of prior service applied to the actual salary rates 
in effect during the period 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 14

                   MISCELLANEOUS RETIREMENT PROVISIONS
    Section 1.  Minnesota Statutes 1988, section 424A.02, 
subdivision 3, is amended to read: 
    Subd. 3.  [FLEXIBLE SERVICE PENSION MAXIMUMS.] On or before 
August 1 of each year as part of the certification of the 
financial requirements and minimum municipal obligation made 
pursuant to section 69.772, subdivision 4, or 69.773, 
subdivision 5, the secretary or some other official of the 
relief association designated in the bylaws of each relief 
association shall calculate and certify to the governing body of 
the applicable qualified municipality the average amount of 
available financing per active covered firefighter for the most 
recent three-year period.  The amount of available financing 
shall include any amounts of fire state aid received or 
receivable by the relief association, any amounts of municipal 
contributions to the relief association raised from levies on 
real estate or from other available revenue sources exclusive of 
fire state aid, and one-tenth of the amount of assets in excess 
of the accrued liabilities of the relief association calculated 
pursuant to sections 69.772, subdivision 2; 69.773, subdivisions 
2 and 4; or 69.774, subdivision 2, if any.  The maximum service 
pension which the relief association may provide for in its 
bylaws for payment to a member retiring after the calculation 
date when the minimum age and service requirements specified in 
subdivision 1 are met shall be determined using the applicable 
following table. 
     For a relief association where the governing bylaws provide 
for a monthly service pension to a retiring member, if the 
average amount of available financing per active covered 
firefighter does not exceed the minimum average amount specified 
below, then the maximum monthly service pension amount per month 
for each year of service credited which may be provided for in 
the bylaws shall be the greater of:  (1) the service pension 
amount provided for in the bylaws on the date of calculation; or 
(2) the maximum service pension figure corresponding to the 
average amount of available financing per active covered 
firefighter: 
   Minimum Average Amount of      Maximum Service Pension
  Available Financing per        Amount Payable per Month
       Firefighter               for Each Year of Service
         $...                             $ .25
           37                               .50
           75                              1.00
          112                              1.50
          149                              2.00
          186                              2.50
          224                              3.00
          261                              3.50
          298                              4.00
          336                              4.50
          373                              5.00
          447                              6.00
          522                              7.00
          597                              8.00
          671                              9.00
          746                             10.00
          820                             11.00
          895                             12.00
          969                             13.00
         1044                             14.00
         1119                             15.00
         1193                             16.00
         1268                             17.00
         1342                             18.00
         1417                             19.00
         1491                             20.00
         1566                             21.00
         1640                             22.00
         1678 or more                     22.50
         1715                             23.00
         1790                             24.00
         1865                             25.00
         1940                             26.00
         2015                             27.00
         2090                             28.00
         2165                             29.00
         2240 or more                     30.00
    For a relief association in which the governing bylaws 
provide for a lump sum service pension to a retiring member, if 
the average amount of available financing per active covered 
firefighter does not exceed the minimum average amount specified 
below, then the maximum lump sum service pension amount for each 
year of service credited which may be provided for in the bylaws 
shall be the greater of:  (1) the service pension amount 
provided for in the bylaws on the date of the calculation; or 
(2) the maximum service pension figure corresponding to the 
average amount of available financing per active covered 
firefighter: 
  Minimum Average Amount         Maximum Lump Sum Service
 of Available Financing         Pension Amount Payable
    per Firefighter             for Each Year of Service
         $..                            $10
          10                             20
          14                             30
          20                             40
          24                             50
          28                             60
          38                             80
          48                            100
          58                            120
          68                            140
          76                            160
          86                            180
          96                            200
         116                            240
         134                            280
         154                            320
         172                            360
         192                            400
         212                            440
         230                            480
         250                            520
         268                            560
         288                            600
         308                            640
         326                            680
         346                            720
         364                            760
         384                            800
         432                            900
         480                           1000
         528                           1100
         576                           1200
         624                           1300
         672                           1400
         720                           1500
         768                           1600
         816                           1700
         864                           1800
         912                           1900
         960                           2000
        1008                           2100
        1056                           2200
        1104                           2300
        1152                           2400
        1200                           2500
        1248                           2600
        1296                           2700
        1344                           2800
        1392                           2900
        1440 or more                   3000
    For a relief association in which the governing bylaws 
provide for a monthly benefit service pension as an alternative 
form of service pension payment to a lump sum service pension at 
the option of the retiring member, the maximum service pension 
amount shall be determined using the applicable table contained 
in this subdivision. 
    Sec. 2.  [REPEAL OF REDUNDANT POSTRETIREMENT ADJUSTMENT.] 
    Subdivision 1.  Laws 1989, chapter 335, article 1, section 
50, is repealed. 
    Subd. 2.  This section is effective retroactively to July 
1, 1989. 
    Sec. 3.  Laws 1989, chapter 319, article 17, section 18, is 
amended to read: 
    Sec. 18.  [EFFECTIVE DATE.] 
    Sections 1 to 17 15 are effective July 1, 1989.  Sections 
16 and 17 are effective May 16, 1989. 
    Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1 and 3 are effective on the day following final 
enactment. 
    Presented to the governor April 26, 1990 
    Signed by the governor May 8, 1990, 8:30 p.m.