Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                        CHAPTER 341-H.F.No. 1584 
           An act relating to retirement; the public employees 
          retirement association; making various changes 
          reflecting benefits, administration, and investment 
          practices; amending Minnesota Statutes 1990, sections 
          353.01, subdivisions 2b, 6, 10, 15, 16, and 20; 
          353.03, subdivision 1; 353.27, subdivisions 4, 7, 12, 
          12a, and by adding subdivisions; 353.28, subdivision 
          6; 353.29, subdivision 4; 353.31, subdivision 1; 
          353.32, subdivision 1a; 353.33, subdivision 3a; 
          353.34, subdivision 1; 353.64, by adding a 
          subdivision; 353.656, subdivision 1a; 353.657; 
          353A.01, subdivision 1; 353A.02, subdivision 16, and 
          by adding a subdivision; 353A.03; 353A.06; 353A.08, 
          subdivision 1; 353C.06, subdivision 3; 353C.07, 
          subdivision 1; 353C.08, subdivision 2; 353C.09; 
          353D.01, subdivision 2; 353D.02; 353D.04; 353D.05, 
          subdivision 2; 353D.07, subdivisions 2 and 3; 353D.12, 
          subdivision 1; 354B.04, subdivision 2; 356.371, 
          subdivision 3; 356.86, subdivisions 2 and 4; 356.87; 
          Laws 1990, chapter 570, article 8, section 14, 
          subdivision 1; and repealing Minnesota Statutes 1990, 
          sections 353.33, subdivision 5a; and 353C.07, 
          subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, 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 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 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.  If the 
period of employment is extended beyond the six-month period and 
the employee 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 
under section 353.27, subdivision 4.  Membership eligibility of 
an employee who holds concurrent temporary employment of six 
months or less and 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) appointed and elected employees whose actual 
compensation from one governmental subdivision does not exceed 
$425 per month, 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, if no irrevocable election of coverage has been 
made under section 3121(r) of the Internal Revenue Code of 1954, 
as amended; 
    (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 college license who render part-time teaching service 
in a technical college; 
      (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 1990, section 353.01, 
subdivision 6, is amended to read: 
    Subd. 6.  [GOVERNMENTAL SUBDIVISION.] "Governmental 
subdivision" means a county, city, town, school district within 
this state, or a department or unit of state government, or any 
public body whose revenues are derived from taxation, fees, 
assessments or from other sources, but does not mean any 
municipal housing and redevelopment authority organized under 
the provisions of sections 469.001 to 469.047; or any port 
authority organized pursuant to under sections 469.048 to 
469.068; or any hospital district organized or reorganized prior 
to July 1, 1975, pursuant to under sections 447.31 to 447.37 or 
the successor of the district.  A hospital district organized or 
reorganized on or after July 1, 1975, whose employees are not 
enrolled and participating in the association, may elect to be 
excluded from the definition of governmental subdivision for 
purposes of this chapter.  To be excluded, the hospital district 
must notify the association in writing of its intent to be 
excluded. 
    Sec. 3.  Minnesota Statutes 1990, section 353.01, 
subdivision 10, is amended to read: 
    Subd. 10.  [SALARY.] (a) "Salary" means the periodical 
compensation of a public employee, before deductions for 
deferred compensation, supplemental retirement plans, or other 
voluntary salary reduction programs, and also means "wages" and 
includes net income from fees.  Fees paid to district court 
reporters are not considered a salary.  Lump sum Unused annual 
or lump sum sick leave payments, in lump-sum or periodic 
payments, are not salary.  Severance payments, workers' 
compensation payments, and all payments in lieu of any 
employer-paid group insurance coverage, including the difference 
between single and family rates that may be paid to a member 
with single coverage, are not deemed to be salary.  Before the 
time that all sick leave has been used, amounts paid to an 
employee under a disability insurance policy or program where 
the employer paid the premiums are considered salary, and, after 
all sick leave has been used, the payment is not considered 
salary.  Workers' compensation payments are not considered 
salary. 
    (b) Except as provided in sections 353.86 or 353.87, 
compensation of any kind paid to volunteer ambulance service 
personnel or volunteer firefighters, as defined in subdivisions 
35 and 36, is not considered salary.  
    (c) 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 
retirement association and who has elected coverage by under the 
public employees police and fire fund benefit plan as provided 
in under section 353A.08 following the consolidation, "salary" 
means the rate of salary upon which member contributions to the 
special fund of the relief association were made prior to the 
effective date of the consolidation as specified by law and by 
bylaw provisions governing the relief association on the date of 
the initiation of the consolidation procedure and the actual 
periodical compensation of the public employee after the 
effective date of the consolidation. 
    Sec. 4.  Minnesota Statutes 1990, section 353.01, 
subdivision 15, is amended to read: 
    Subd. 15.  [DEPENDENT CHILD.] "Dependent child" means a 
natural or adopted child of a deceased member, provided such 
child who is unmarried, and under the age of 18, or age 18 to 
21 and a full-time student in an accredited school, university, 
or college, and in either case unmarried and dependent for more 
than one-half of support upon the member at the time of death 
and for not less than 90 days before the time of death; 
provided, that the child of a deceased member who at the time of 
death was receiving total and permanent disability benefits 
under section 353.33, is deemed dependent if dependent upon the 
decedent for more than one-half of support during the 90 days 
before the decedent's becoming totally and permanently 
disabled 23, so long as the child submits evidence of full-time 
enrollment in an accredited educational institution.  "Dependent 
child" also includes a child of the member conceived during the 
member's lifetime and born after the member's death.  It also 
means a dependent child who is the subject of adoption 
proceedings filed by a member, and who within two years after 
death of the member, by judgment and decree duly entered, is 
adjudged to be the adopted child of the deceased member; 
subject, however, to the qualifying conditions of age and 
dependency in under this subdivision.  The dependency of the 
child dates from the decree of adoption.  "Dependent child" also 
includes a child age 18 to 21 23 who was attending an accredited 
school, university, or college full time, had submitted evidence 
of full-time enrollment in an accredited educational institution 
but was determined to be medically unable to continue school on 
a full-time basis.  The board of trustees shall adopt written 
procedures to make determinations regarding eligibility based on 
a student being medically unable to continue school, and may not 
continue a benefit for medical reasons for a period greater than 
one year. 
    Sec. 5.  Minnesota Statutes 1990, 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 under 
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, an authorized temporary layoff, or a 
maternity, paternity, or adoption leave.  The association will 
grant a maximum of two months service credit for a maternity, 
paternity, or adoption 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 or adoption 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 under section 353.27, subdivisions 3 and 3a, must be 
paid by the department employing the member upon return to 
public service, and if the member makes the employee 
contributions.  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. 6.  Minnesota Statutes 1990, section 353.01, 
subdivision 20, is amended to read: 
    Subd. 20.  [SURVIVING SPOUSE.] "Surviving spouse" means the 
unremarried spouse of a deceased member who was legally married 
to the member at the time of death, or at the time the member 
became totally and permanently disabled. 
    Sec. 7.  Minnesota Statutes 1990, section 353.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MANAGEMENT; COMPOSITION; ELECTION.] The 
management of the public employees retirement fund is vested in 
a board of trustees consisting of the state auditor and eight 
nine members.  The governor shall appoint five six trustees to 
four-year terms, one of whom shall be designated to represent 
school boards, one to represent cities, one to represent 
counties, one who is a member of the police and fire fund, one 
who is a retired annuitant, and one who is a public member 
knowledgeable in pension matters.  The membership of the 
association shall elect three trustees for terms of four years.  
Trustees elected by the membership of the association must be 
public employees and members of the association.  For seven days 
beginning October 1 of each year preceding a year in which an 
election is held, the association shall accept at its office 
filings in person or by mail of candidates for the board of 
trustees.  A candidate shall submit at the time of filing a 
nominating petition signed by 25 or more members of the fund.  
No name may be withdrawn from nomination by the nominee after 
October 15.  At the request of a candidate for an elected 
position on the board of trustees, the board shall mail a 
statement of up to 300 words prepared by the candidate to all 
persons eligible to vote in the election of the candidate.  The 
board may adopt policies to govern form and length of these 
statements, timing of mailings, and deadlines for submitting 
materials to be mailed.  These policies must be approved by the 
secretary of state.  The secretary of state shall resolve 
disputes between the board and a candidate concerning 
application of these policies to a particular statement.  A 
candidate who: 
     (1) receives contributions or makes expenditures in excess 
of $100; or 
     (2) has given implicit or explicit consent for any other 
person to receive contributions or make expenditures in excess 
of $100 for the purpose of bringing about the candidate's 
election, shall file a report with the ethical practices board 
disclosing the source and amount of all contributions to the 
candidate's campaign.  The ethical practices board shall 
prescribe forms governing these disclosures.  Expenditures and 
contributions have the meaning defined in section 10A.01.  These 
terms do not include the mailing made by the association board 
on behalf of the candidate.  A candidate shall file a report 
within 30 days from the day that the results of the election are 
announced.  The ethical practices board shall maintain these 
reports and make them available for public inspection in the 
same manner as the board maintains and makes available other 
reports filed with it.  By January 10 of each year in which 
elections are to be held the board shall distribute by mail to 
the members ballots listing the candidates.  No member may vote 
for more than one candidate for each board position to be 
filled.  A ballot indicating a vote for more than one person for 
any position is void.  No special marking may be used on the 
ballot to indicate incumbents.  The last day for mailing ballots 
to the fund is January 31.  Terms expire on January 31 of the 
fourth year, and positions are vacant until newly elected 
members are qualified.  The ballot envelopes must be so designed 
and the ballots counted in a manner that ensures that each vote 
is secret.  
     The secretary of state shall supervise the elections.  The 
board of trustees and the executive director shall undertake 
their activities consistent with chapter 356A.  
    Sec. 8.  Minnesota Statutes 1990, section 353.27, 
subdivision 4, is amended to read: 
    Subd. 4.  [EMPLOYERS REPORTING REQUIREMENTS; CONTRIBUTIONS; 
MEMBER STATUS.] (a) The head of each department is hereby 
directed to cause employee contributions to be deducted shall 
deduct employee contributions from the salary of each member and 
to issue or approve one voucher payable to the state treasurer 
for the aggregate amount so deducted from such salaries, and at 
the same time to issue or approve one voucher warrant for the 
aggregate amount of the employee contributions, the employer 
contributions and the additional employer contributions for the 
same period of employment as that covered by the employee 
contributions, and to cause the same to be received not later 
than within 20 calendar days thereafter in the office of the 
association.  The head of each department shall, for each pay 
period in which employee contributions are deducted, submit to 
the association a salary deduction report, in the form 
prescribed by the executive director, showing (a) the legal 
names and the association membership numbers, listed in 
alphabetical order, of all members; (b) the legal names of all 
new public employees and the effective dates of appointment; (c) 
the amount of each salary deduction; (d) the amount of salary 
from which each deduction was made; (e) effective dates of all 
member terminations of public service on account of members and 
if such terminations were caused by death or retirement, there 
shall be inserted after such date accompanied by the applicable 
status code as set by the association for those terminations 
caused by death or retirement; (f) effective dates of all 
temporary layoffs and leaves of absence and if such leaves are 
sick leaves, there shall be inserted after such date accompanied 
by the applicable status code as set by the association; and (g) 
the beginning and ending dates of the payroll period covered and 
the date of actual payment.  Additionally, Reports of 
contributions shall must be accompanied by a membership 
enrollment form for each new employee in the form prescribed by 
the executive director, and it shall be the responsibility of 
department heads to obtain such.  The enrollment forms from new 
employees to must be collected by the employer and submitted to 
the association within 30 days following the date of 
employment.  The employers employer shall furnish such 
additional reports on magnetic media or on other form of 
report forms as may be requested by the association executive 
director. 
    (b) Notwithstanding paragraph (a), the association may 
provide for less frequent reporting and payments for small 
employers. 
    Sec. 9.  Minnesota Statutes 1990, section 353.27, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [WRONGFUL DISCHARGE SETTLEMENT 
PAYMENTS.] Notwithstanding section 353.01, subdivision 10, 
employee deductions and employer contributions and additional 
employer contributions must be made on the gross salary of 
wrongful discharge settlement payments before subtracting 
unemployment compensation, workers' compensation, or wages from 
other sources. 
    Sec. 10.  Minnesota Statutes 1990, section 353.27, 
subdivision 7, is amended to read: 
    Subd. 7.  [ADJUSTMENT FOR ERRONEOUS RECEIPTS OR 
DISBURSEMENTS.] (a)  [ERRONEOUS DEDUCTIONS TAKEN IN ERROR.] 
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 under 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.  A refund 
of deductions taken in error from sick leave, vacation pay, 
workers' compensation, 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 taken in error must be 
credited to the member in accordance with under 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. 11.  Minnesota Statutes 1990, section 353.27, is 
amended by adding a subdivision to read: 
    Subd. 7b.  [OVERPAYMENTS TO MEMBERS.] In the event of an 
overpayment to a member, the executive director shall recover 
the overpayment by suspending or reducing the payment of a 
retirement annuity, refund, disability benefit, survivor 
benefit, or optional annuity under this chapter until all 
outstanding money has been recovered. 
    Sec. 12.  Minnesota Statutes 1990, section 353.27, 
subdivision 12, is amended to read: 
    Subd. 12.  [OMITTED SALARY DEDUCTIONS; OBLIGATIONS.] (a) In 
the case of omission of required deductions from salary of an 
employee, the department head shall immediately, upon discovery, 
report the employee for membership and require employee 
deductions be made in accordance with under subdivision 4.  
Omitted employee deductions due for the 60-day period preceding 
enrollment membership must be deducted upon receipt of billing 
from the association from the employee's next salary payment and 
remitted to the association.  The employer shall pay any 
remaining omitted employee deductions past due and any omitted 
employer contributions, plus cumulative interest at the rate of 
six percent a year, compounded annually, from the date or dates 
each omitted employee contribution was first payable.  Any 
amount due from the employer must be paid from the proceeds of a 
tax levy made under section 353.28 or from other funds available 
to the employer. 
    (b) An employer shall not hold an employee liable for 
omitted employee deductions due for more than the 60-day period 
preceding enrollment beyond the pay period that covers the 60th 
day preceding membership nor attempt to recover from the 
employee those employee deductions paid by the 
employer.  Neither an employer nor an employee is responsible to 
pay Omitted deductions not paid by the employee constitute a 
liability of the employer that failed to deduct the omitted 
deductions from the employee's salary.  The employer shall make 
payment with interest at the rate of six percent compounded 
annually.  Omitted employee deductions when are no longer due if 
an employee terminates public service before making payment of 
omitted employee deductions to the association, but the employer 
remains liable to pay omitted employer contributions plus 
interest at the rate of six percent compounded annually from the 
date the contributions were first payable.  This subdivision has 
both retroactive and prospective application, and the 
governmental subdivision is liable retroactively and 
prospectively for all amounts due under it. 
    (c) The association may not commence action for the 
recovery of omitted employee deductions and employer 
contributions after the expiration of three calendar years after 
the calendar year in which the contributions and deductions were 
omitted.  No payment may be made or accepted unless the 
association has already commenced action for recovery of omitted 
deductions.  An action for recovery commences on the date of the 
mailing of any written correspondence from the association 
requesting information from the governmental subdivision upon 
which to determine whether or not omitted deductions occurred. 
    Sec. 13.  Minnesota Statutes 1990, section 353.27, 
subdivision 12a, is amended to read: 
    Subd. 12a.  A member who was employed and met the 
eligibility requirements for participation in the association 
before July 1, 1973, terminated employee who has a period of 
employment in which previously omitted employer contributions 
were made under subdivision 12 but for whom no, or only partial, 
omitted employee contributions have been made, or a member who 
had prior coverage in the association for which previously 
omitted employer contributions were made under subdivision 12 
but who terminated service before required omitted employee 
contributions deductions could be withheld from salary, may pay 
the omitted employee contributions deductions for the period on 
which omitted employer contributions were previously paid plus 
interest at the rate of six percent compounded annually.  The 
statute of limitations for payment of omitted deductions in 
subdivision 12 applies.  A terminated employee may pay the 
omitted employee deductions plus interest within six months of 
an initial notification from the association of eligibility to 
pay those omitted deductions.  If a terminated employee is 
reemployed in a position covered under a public pension fund 
under section 356.30, subdivision 3, and elects to pay omitted 
employee deductions, payment must be made no later than six 
months after a subsequent termination of public service.  
    Sec. 14.  Minnesota Statutes 1990, section 353.27, is 
amended by adding a subdivision to read: 
    Subd. 12b.  If deductions were omitted from salary 
adjustments or final salary of a terminated employee, the 
employer shall pay the employer and employer additional 
contributions plus interest on both and the employee shall pay 
the employee deductions. 
    Sec. 15.  Minnesota Statutes 1990, section 353.28, 
subdivision 6, is amended to read: 
    Subd. 6.  If the governmental subdivision fails to pay 
amounts due under this chapter chapters 353, 353A, 353B, 353C, 
and 353D or fails to make payments of excess police state aid to 
the public employees police and fire fund under section 69.031, 
subdivision 5, the executive director shall certify those 
amounts to the governmental subdivision for payment.  If the 
governmental subdivision fails to remit the sum so due in a 
timely fashion, the executive director shall certify amounts to 
the county auditor for collection.  The county auditor shall 
collect such amounts out of the revenue of the governmental 
subdivision, or shall add them to the levy of the governmental 
subdivision and make payment directly to the association.  This 
tax shall be levied, collected, and apportioned in the manner 
other taxes are levied, collected, and apportioned. 
    Sec. 16.  Minnesota Statutes 1990, section 353.29, 
subdivision 4, is amended to read: 
    Subd. 4.  [APPLICATION FOR ANNUITY.] Application for a 
retirement annuity may be made by a member or by a person 
authorized to act on behalf of the member.  Every application 
for retirement shall must be made in writing on a form 
prescribed by the executive director and shall must be 
substantiated by written proof of the member's age and 
identity.  No The notarized signature of a member's spouse on a 
retirement annuity application acknowledging the member's 
annuity selection meets the notice requirement to the spouse 
under section 356.371, subdivision 3.  An application for a 
retirement annuity may be considered is not complete until all 
necessary supporting documents are received by the executive 
director. 
    Sec. 17.  Minnesota Statutes 1990, section 353.31, 
subdivision 1, is amended to read: 
    Subdivision 1.  [BENEFITS FOR SURVIVING SPOUSE AND 
DEPENDENT CHILDREN; BEFORE RETIREMENT.] Upon the death of a 
basic member before retirement or upon the death of a basic 
member who was disabled and receiving disability benefits 
pursuant to under section 353.33 at the time of death who has 
had at least 18 months of credited allowable service, the 
surviving spouse and dependent child or children of the member, 
as defined in section 353.01, subdivisions 15 and 20, shall be 
are entitled to receive the monthly benefit provided below: 
(a) Surviving spouse           50 percent of the member's
                               monthly average salary in
                               effect over the last full
                               six months of allowable
                               service preceding the month
                               in which death occurred
(b) Each dependent child       10 percent of the member's
                               monthly average salary in
                               effect over the last full
                               six months of allowable
                               service preceding the month
                               in which death occurred
    Subd. 1a.  [MAXIMUM FAMILY BENEFIT.] Payments for the 
benefit of any a dependent child or children, as defined in 
section 353.01, subdivision 15, shall must be made to the 
surviving parent, or if there be none, to the legal guardian of 
the child.  The maximum monthly benefit for a family shall must 
not exceed $1,000 an amount equal to 70 percent of the member's 
specified average monthly salary, and the minimum benefit per 
for a family shall including a 100 percent joint and survivor 
annuity under subdivision 1b, must not be less than 50 percent 
of the basic member's specified average monthly salary, subject 
to the aforementioned maximum.  The surviving spouse benefit 
shall terminate upon the remarriage of the spouse, and the 
dependent children's benefit shall be reduced pro tanto when any 
child is no longer dependent. 
    Any survivor of a basic member whose average salary was 
less than $75 per month shall not be entitled to the benefits 
provided in this subdivision. 
     Subd. 1b.  [JOINT AND SURVIVOR OPTION.] (a) Prior to 
payment of any survivor a surviving spouse benefit pursuant to 
this under subdivision 1, in lieu of that benefit, the surviving 
dependent spouse may elect to receive the 100 percent joint and 
survivor optional annuity provided pursuant to under section 
353.32, subdivision 1a, rather than a surviving spouse benefit.  
     (b) If there is a dependent child or children, and the 100 
percent joint and survivor optional annuity for the surviving 
spouse, when added to the dependent children's benefit under 
subdivisions 1 and 1a, exceeds an amount equal to 70 percent of 
the member's specified average monthly salary, the 100 percent 
joint and survivor annuity under section 353.32, subdivision 1a, 
must be reduced by the amount necessary so that the total family 
benefit does not exceed the 70 percent maximum family benefit 
amount under subdivision 1a. 
     (c) The 100 percent joint and survivor optional annuity 
must be restored to the surviving spouse, plus applicable 
postretirement fund adjustments under section 356.41, as the 
dependent child or children become no longer dependent under 
section 353.01, subdivision 15. 
    Subd. 1c.  [COORDINATED MEMBERS.] Except for any benefits 
provided pursuant to under section 353.32, subdivisions 1 and 
1a, there are no survivor benefits are payable to the surviving 
spouse or dependent children of a deceased coordinated member. 
    Sec. 18.  Minnesota Statutes 1990, section 353.32, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [SURVIVING SPOUSE OPTIONAL ANNUITY.] If a member 
or former member who has attained at least age 50 and has credit 
for not less than three years of allowable service or who has 
credit for not less than 30 years of allowable service, 
regardless of age attained, dies before the annuity or 
disability benefit begins to accrue in accordance with section 
353.29, subdivision 7, or 353.33, subdivision 2, notwithstanding 
any designation of beneficiary to the contrary, the surviving 
spouse may elect to receive, instead of a refund with interest 
provided in under subdivision 1, or survivor surviving spouse 
benefits otherwise payable under section 353.31, an annuity 
equal to the 100 percent joint and survivor annuity that the 
member could have qualified for had the member terminated 
service on the date of death.  The surviving spouse may apply 
for the annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  The annuity must be 
computed as provided in under sections 353.29, subdivisions 2 
and 3; and 353.30, subdivisions 1, 1a, 1b, 1c, and 5; and 
353.31, subdivision 3.  Sections 353.34, subdivision 3, and 
353.71, subdivision 2, apply to a deferred annuity payable under 
this subdivision.  No payment may accrue beyond the end of the 
month in which entitlement to the annuity has terminated.  An 
amount equal to any excess of the accumulated contributions that 
were credited to the account of the deceased employee over and 
above the total of the annuities paid and payable to the 
surviving spouse must be paid to the deceased member's last 
designated beneficiary or, if none, to the legal representative 
of the estate of the deceased member.  A member may specify in 
writing that this subdivision does not apply and that payment 
may be made only to the designated beneficiary as otherwise 
provided by this chapter. 
    Sec. 19.  Minnesota Statutes 1990, section 353.33, 
subdivision 3a, is amended to read: 
    Subd. 3a.  [OPTIONAL ANNUITY ELECTION.] A disabled member 
may elect to receive the normal disability benefit or an 
optional annuity as provided in under section 353.30, 
subdivision 3.  The election of an optional annuity shall must 
be made prior to the commencement of payment of the disability 
benefit.  The optional annuity shall must begin to accrue on the 
same date as provided for the disability benefit.  
     (1) If a person who is not the spouse of a member is named 
as beneficiary of the joint and survivor optional annuity, the 
person is eligible to receive the annuity only if the spouse, on 
the disability application form prescribed by the executive 
director, permanently waives the surviving spouse benefits under 
sections 353.31, subdivision 1, and 353.32, subdivision 1a.  If 
the spouse of the member refuses to permanently waive the 
surviving spouse coverage, the selection of a person other than 
the spouse of the member as a joint annuitant is invalid. 
    (2) If the spouse of the member permanently waives survivor 
coverage, the dependent children, if any, continue to be 
eligible for survivor benefits under section 353.31, subdivision 
1, including the minimum benefit in section 353.31, subdivision 
1a.  The designated optional annuity beneficiary may draw the 
monthly benefit; however, the amount payable to the dependent 
child or children and joint annuitant must not exceed the 70 
percent maximum family benefit under section 353.31, subdivision 
1a.  If the maximum is exceeded, the benefit of the joint 
annuitant must be reduced to the amount necessary so that the 
total family benefit does not exceed the 70 percent maximum 
family benefit amount. 
     (3) If the spouse is named as the beneficiary of the joint 
and survivor optional annuity, the spouse may draw the monthly 
benefits; however, the amount payable to the dependent child or 
children and the joint annuitant must not exceed the 70 percent 
maximum family benefit under section 353.31, subdivision 1a.  If 
the maximum is exceeded, each dependent child will receive ten 
percent of the member's specified average monthly salary, and 
the benefit to the joint annuitant must be reduced to the amount 
necessary so that the total family benefit does not exceed the 
70 percent maximum family benefit amount.  The joint and 
survivor optional annuity must be restored to the surviving 
spouse, plus applicable postretirement adjustments under section 
356.41, as the dependent child or children become no longer 
dependent under section 353.01, subdivision 15. 
    Sec. 20.  Minnesota Statutes 1990, section 353.34, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REFUND OR DEFERRED ANNUITY.] Any A member 
who ceases to be a public employee by reason of termination of 
public service, or who is on a continuous layoff for more than 
120 calendar days, shall be is entitled to a refund of 
accumulated employee deductions as provided in under subdivision 
2, or to a deferred annuity as provided in under subdivision 3.  
An active member of a fund enumerated in section 356.30, 
subdivision 3, clause (7), (8), or (14), who terminates public 
service in any of those funds and becomes a member of another 
fund enumerated in those clauses may receive a refund of 
employee contributions plus five six percent interest compounded 
annually from the fund in which the member terminated service.  
Application for a refund may not be made prior to the date of 
termination of public service, or the expiration of 120 days of 
layoff, and.  A refund shall must be paid within 120 days 
following receipt of the application, provided unless the 
applicant has not again become a public employee required to be 
covered by the association. 
    Sec. 21.  Minnesota Statutes 1990, 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, 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 even upon 
remarriage.  
    Sec. 22.  Minnesota Statutes 1990, section 353.64, is 
amended by adding a subdivision to read: 
    Subd. 5a.  A member of the police and fire fund continues 
to be a member of that fund if transferred to a different 
position with associated police or fire department functions in 
the same department or a related department in the same 
governmental subdivision provided the governing body sends a 
copy of a resolution to that effect to the association. 
    Sec. 23.  Minnesota Statutes 1990, section 353.656, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [OPTIONAL ANNUITY ELECTION.] A disabled member 
of the police and fire fund may elect to receive the normal 
disability benefit or an optional annuity as provided in section 
353.30, subdivision 3.  The election of an optional annuity 
shall be made prior to commencement of payment of the disability 
benefit.  The optional annuity shall begin to accrue on the same 
date as provided for the disability benefit.  
    (1) If the person who is not the spouse of the member is 
named as beneficiary of the joint and survivor optional annuity, 
the person is eligible to receive the annuity only if the 
spouse, on the disability application form prescribed by the 
executive director, permanently waives the surviving spouse 
benefits under section 353.657, subdivisions 2 and 2a.  If the 
spouse of the member refuses to permanently waive the surviving 
spouse coverage, the selection of a person other than the spouse 
of the member as a joint annuitant is invalid. 
     (2) If the spouse of the member permanently waives survivor 
coverage, the dependent child or children, if any, continue to 
be eligible for survivor benefits, including the minimum benefit 
under section 353.657, subdivision 3.  The designated optional 
annuity beneficiary may draw the monthly benefit; however, the 
amount payable to the dependent child or children and joint 
annuitant must not exceed the 70 percent maximum family benefit 
under section 353.657, subdivision 3.  If the maximum is 
exceeded, the benefit of the joint annuitant must be reduced to 
the amount necessary so that the total family benefit does not 
exceed the 70 percent maximum family benefit amount. 
     (3) If the spouse is named as the beneficiary of the joint 
and survivor optional annuity, the spouse may draw the monthly 
benefit; however, the amount payable to the dependent child or 
children and the joint annuitant must not exceed the 70 percent 
maximum family benefit under section 353.657, subdivision 3.  If 
the maximum is exceeded, each dependent child will receive ten 
percent of the member's specified average monthly salary, and 
the benefit to the joint annuitant must be reduced to the amount 
necessary so that the total family benefit does not exceed the 
70 percent maximum family benefit amount.  The joint and 
survivor optional annuity must be restored to the surviving 
spouse, plus applicable postretirement adjustments under section 
356.41, as the dependent child or children become no longer 
dependent under section 353.01, subdivision 15. 
    Sec. 24.  Minnesota Statutes 1990, section 353.657, is 
amended to read: 
    353.657 [SURVIVOR BENEFITS.] 
    Subdivision 1.  In the event any member of the police and 
fire fund 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 
a surviving spouse who had the same legal residence as the 
member at the time of death, as defined in section 353.01, 
subdivision 20, 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.  The association shall also 
grant survivor benefits to a dependent child or 
children, unmarried and under the age of 18 years as defined in 
section 353.01, subdivision 15.  The spouse and child or 
children are entitled to monthly benefits as provided in the 
following subdivisions. 
    Subd. 2.  The spouse, for life or until remarriage, shall 
receive a monthly benefit equal to 50 percent of the member's 
average full-time monthly salary rate as a police officer or 
firefighter in effect over the last six months of allowable 
service preceding the month in which death occurred. 
    Subd. 2a.  [DEATH WHILE ELIGIBLE SURVIVOR BENEFIT.] If a 
member or former member who has attained the age of at least 50 
years and has credit for not less than three years allowable 
service or who has credit for at least 30 years of allowable 
service, regardless of age attained, dies before public service 
has terminated, or if an employee who has filed a valid 
application for an annuity or disability benefit prior to 
termination of public service dies before the annuity or benefit 
has become payable, notwithstanding any designation of 
beneficiary to the contrary, the surviving spouse may elect to 
receive a death while eligible survivor benefit.  The benefit 
shall be in lieu may be elected instead of a refund with 
interest provided in under section 353.32, subdivision 1, 
or survivor surviving spouse benefits otherwise payable pursuant 
to under subdivisions 1 and 2.  The benefit must be an annuity 
equal to the 100 percent joint and survivor annuity which the 
member could have qualified for on the date of death, computed 
as provided in sections 353.651, subdivisions 2 and 3, and 
353.30, subdivision 3.  If there is a dependent child or 
children, and the 100 percent joint and survivor optional 
annuity for the surviving spouse, when added to the benefit of 
the dependent child or children under subdivision 3, exceeds an 
amount equal to 70 percent of the member's specified average 
monthly salary, the 100 percent joint and survivor annuity must 
be reduced by the amount necessary so that the total family 
benefit does not exceed the 70 percent maximum family benefit 
amount under subdivision 3.  The 100 percent joint and survivor 
optional annuity must be restored to the surviving spouse, plus 
applicable postretirement fund adjustments under section 356.41, 
as the dependent child or children become no longer dependent 
under section 353.01, subdivision 15.  The surviving spouse may 
apply for the annuity at any time after the date on which the 
deceased employee would have attained the required age for 
retirement based on the employee's allowable service.  Sections 
353.34, subdivision 3, and 353.71, subdivision 2, apply to a 
deferred annuity payable under this subdivision.  No payment 
shall accrue beyond the end of the month in which entitlement to 
such annuity has terminated.  An amount equal to the excess, if 
any, of the accumulated contributions which were credited to the 
account of the deceased employee over and above the total of the 
annuities paid and payable to the surviving spouse shall be paid 
to the deceased member's last designated beneficiary or, if 
none, to the legal representative of the estate of such deceased 
member.  Any member may request in writing that this subdivision 
not apply and that payment be made only to the designated 
beneficiary, as otherwise provided by this chapter.  For a 
member who is employed as a full-time firefighter by the 
department of military affairs of the state of Minnesota, 
allowable service as a full-time state military affairs 
department firefighter credited by the Minnesota state 
retirement system may be used in meeting the minimum allowable 
service requirement of this subdivision. 
    Subd. 3.  Each A dependent child, until the child reaches 
the age of 18 years as defined in section 353.01, subdivision 
15, shall receive a monthly benefit equal to ten percent of the 
member's average full-time monthly salary rate as a police 
officer or firefighter in effect over the last six months of 
allowable service preceding the month in which death 
occurred.  A dependent child shall receive this benefit until 
age 23, so long as the child submits evidence of full-time 
enrollment in an accredited post-secondary educational 
institution for at least five of the 12 months immediately 
preceding the month for which benefits are sought.  Payments for 
the benefit of any qualified a dependent child shall must be 
made to the surviving parent, or if there be none, to the legal 
guardian of the child or to any adult person with whom the child 
may at the time be living, provided only that the parent or 
other person to whom any amount is to be paid shall have advised 
advises the board in writing that the amount will be held or 
used in trust for the benefit of the child.  The maximum monthly 
benefit for any one family shall must not exceed an amount equal 
to 70 percent of the member's specified average monthly salary, 
and the minimum benefit per family shall, including the joint 
and survivor optional annuity under subdivision 2a, and section 
353.656, subdivision 1a, must not be less than 50 percent of the 
member's specified average monthly salary. 
    Subd. 4.  If the member shall die under circumstances which 
entitle a surviving spouse and dependent children to receive 
benefits under the workers' compensation law, the amounts so 
received by them shall not be deducted from the benefits payable 
under this section. 
    Sec. 25.  Minnesota Statutes 1990, section 353A.01, 
subdivision 1, is amended to read: 
    Subdivision 1.  [VOLUNTARY CONSOLIDATION AUTHORIZED.] It is 
the intent and policy of the legislature in sections 353A.01 to 
353A.10 to authorize, on a voluntary elective basis, any local 
police or salaried firefighters relief association and the 
respective municipality to effect the consolidation of the local 
relief association into with the public employees police and 
fire fund retirement association established by chapter 353. 
    Sec. 26.  Minnesota Statutes 1990, section 353A.02, 
subdivision 16, is amended to read: 
    Subd. 16.  [LOCAL RELIEF ASSOCIATION CONSOLIDATION 
ACCOUNTS.] "Local relief association consolidation accounts" 
means the special accounts created within consolidated with the 
fund by public employees retirement association under sections 
353.65, subdivision 1, and 353A.09, subdivision 1.  
    Sec. 27.  Minnesota Statutes 1990, section 353A.02, is 
amended by adding a subdivision to read: 
    Subd. 24a.  [PUBLIC EMPLOYEES RETIREMENT 
ASSOCIATION.] "Public employees retirement association" means 
the retirement system that administers the public employees 
police and fire fund and the local relief association 
consolidated accounts. 
    Sec. 28.  Minnesota Statutes 1990, section 353A.03, is 
amended to read: 
    353A.03 [VOLUNTARY CONSOLIDATION OPTION.] 
    Notwithstanding any provision of law to the contrary, any 
local police or firefighters relief association, as defined in 
section 353A.02, subdivision 15, may consolidate with the public 
employees police and fire fund retirement association as 
provided in sections 353A.01 to 353A.10.  
    Sec. 29.  Minnesota Statutes 1990, section 353A.06, is 
amended to read: 
    353A.06 [FINALIZATION OF CONSOLIDATION.] 
    Upon the completion of the applicable actions preliminary 
to consolidation finalization under section 353A.05, each entity 
shall report the result of those actions to the relief 
association and to the municipality.  Upon final approval by the 
municipality as provided in under section 353A.04, subdivision 
8, the consolidation of the relief association with the 
public employee police and fire fund shall be employees 
retirement association is scheduled to occur.  The consolidation 
shall be is effective as of the date established for 
consolidation by the board of the public employees retirement 
association.  The effect of the consolidation shall be as 
provided in is governed under sections 353A.07 to 353A.09.  
    Sec. 30.  Minnesota Statutes 1990, section 353A.08, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ELECTION OF COVERAGE BY CURRENT RETIREES.] 
Any A person who is receiving a service pension, disability 
benefit, or survivorship benefit shall have the option is 
eligible to elect to have benefit coverage provided under the 
relevant provisions of the public employees police and fire fund 
benefit plan or to retain benefit coverage provided under the 
relief association benefit plan in effect on the effective date 
of the consolidation.  The relevant provisions of the public 
employees police and fire fund benefit plan for the person 
electing that benefit coverage shall be limited to participation 
in the Minnesota postretirement investment fund for any future 
postretirement adjustments in the amount of the benefit or 
pension payable as of the effective date of the consolidation, 
the date as of which pension or benefit payments are to be paid 
and the termination of a survivor or disability benefit or 
suspension of a retirement annuity before the death of the 
person.  The survivorship benefit payable on behalf of any 
service pension or disability benefit recipient who elects 
benefit coverage provided under the relevant provisions of the 
public employees police and fire fund benefit plan shall must be 
calculated under the relief association benefit plan in effect 
on the effective date of the consolidation and shall be is 
subject to participation in the Minnesota postretirement 
investment fund for any future postretirement adjustments in the 
amount of the survivorship benefit payable. 
    By electing the public employees police and fire fund 
benefit plan, any a current service pension or disability 
benefit recipient who, as of the first January 1 occurring after 
the effective date of consolidation, has been receiving the 
pension or benefit for at least 18 months 7 months, or any 
survivor benefit recipient who, as of the first January 1 
occurring after the effective date of consolidation, has been 
receiving the benefit on the person's own behalf or in 
combination with a prior applicable service pension or 
disability benefit for at least 18 months shall be entitled 7 
months is eligible to receive any a partial adjustment payable 
from the Minnesota postretirement investment fund under section 
11A.18, subdivision 9 as of the first January 1 occurring after 
the effective date of consolidation. 
    The election by any pension or benefit recipient shall must 
be made on or before the deadline established by the board of 
the public employees retirement association, which shall be 
established in a manner which that recognizes the number of 
persons eligible to make the election and the anticipated time 
required to conduct any required benefit counseling.  
    Sec. 31.  Minnesota Statutes 1990, section 353C.06, 
subdivision 3, is amended to read: 
    Subd. 3.  [ANNUITY AMOUNT.] The average salary as defined 
in subdivision 2, multiplied by two percent for each year of 
allowable service for the first ten years and 2.5 percent for 
each additional year of allowable service, and pro rata for 
completed months less than a full year, determines the amount of 
the normal annuity.  If a person has earned allowable service in 
the public employees retirement association or the public 
employees police and fire fund for performing services other 
than those of a local government correctional employee prior to 
participation under this chapter, the annuity representing such 
service must be computed in accordance with the coordinated 
formula under sections 353.29 and 353.30 or 353.651, whichever 
applies. 
    Sec. 32.  Minnesota Statutes 1990, section 353C.07, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AUGMENTATION FOR PRIOR SERVICE BENEFITS.] 
Unless prior service has been transferred or unless a combined 
service annuity under section 356.30 has been elected, an 
employee who becomes a local government correctional employee 
after being a member of the public employees retirement 
association or the public employees police and fire fund is 
covered under section 353.71, subdivision 2, with respect to 
that prior service.  An employee who becomes a member of the 
public employees retirement association or the public employees 
police and fire fund after being a local government correctional 
employee is also covered under section 353.71, subdivision 2, 
with respect to that prior service, unless calculated under 
section 356.30. 
    Sec. 33.  Minnesota Statutes 1990, section 353C.08, 
subdivision 2, is amended to read: 
    Subd. 2.  [NONDUTY DISABILITY QUALIFICATION REQUIREMENTS.] 
A local government correctional employee who after not less than 
five years has at least one year of covered service, and who, 
before reaching the age of 55, becomes disabled and physically 
unfit to perform the duties of the position because of sickness 
or injury occurring while not engaged in covered employment, is 
entitled to a disability benefit based on covered service.  The 
disability benefit must be computed in the same manner as an 
annuity under section 353C.06, subdivision 3, and as though the 
employee had at least ten years of covered correctional service. 
    Sec. 34.  Minnesota Statutes 1990, section 353C.09, is 
amended to read: 
    353C.09 [SURVIVING SPOUSE OPTIONAL ANNUITY.] 
    If a member or former member of the local government 
correctional service retirement plan has attained the age of at 
least 50 years and has credit for not less than ten three years 
of allowable service, or who has credit for not less than 30 
years of allowable service, regardless of age attained, dies 
before the annuity or disability benefit has become payable, 
notwithstanding any designation of beneficiary to the contrary, 
the surviving spouse may elect to receive, in lieu of a refund 
with interest provided in section 353.32, subdivision 1, an 
annuity equal to the 100 percent joint and survivor annuity for 
which the member could have qualified had the member terminated 
service on the date of death.  The surviving spouse may apply 
for the annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  The annuity must be 
computed on the coordinated formula as provided in formulas 
under sections 353.29, subdivisions 2 and 3, and 353.30, 
subdivisions 1, 1a, 1b, and 1c.  Sections 353.34, subdivision 3, 
and 353.71, subdivision 2, apply to a deferred annuity payable 
under this subdivision.  No payment may accrue beyond the end of 
the month in which entitlement to the annuity has terminated.  
An amount equal to any excess of the accumulated contributions 
that were credited to the account of the deceased employee over 
and above the total of the annuities paid and payable to the 
surviving spouse must be paid to the deceased member's last 
designated beneficiary or, if none, to the legal representative 
of the estate of the deceased member.  A member may specify in 
writing that this subdivision does not apply and that payment 
must be made only to the designated beneficiary, as otherwise 
provided by this chapter. 
    Sec. 35.  Minnesota Statutes 1990, section 353D.01, 
subdivision 2, is amended to read: 
    Subd. 2.  [ELIGIBILITY.] (a) Except as provided in section 
353D.11, eligibility to participate in the retirement defined 
contribution plan is open to an elected local government 
official of a governmental subdivision who elects to participate 
in the plan and who is not a member of the public employees 
retirement association within the meaning of section 353.01, 
subdivision 7, and.  The service of an elected local government 
official on an additional board, commission, or committee, even 
if part of the official's elected position, is not covered 
service under this plan.  Eligibility to participate in the 
defined contribution plan terminates when the participant ceases 
to be an elected local government official.  For purposes of 
this chapter, an elected local government official does not 
include an elected county sheriff.  
    (b) Eligibility to participate is open to basic and 
advanced life support emergency medical service personnel 
employed by or providing services for any public ambulance 
service or privately operated ambulance service that receives an 
operating subsidy from a governmental entity that elects to 
participate.  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.  
    (c) 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. 36.  Minnesota Statutes 1990, section 353D.02, is 
amended to read: 
    353D.02 [ELECTION OF COVERAGE.] 
    (a) Eligible elected local government officials may elect 
to participate in the defined contribution plan after being 
elected or appointed to a public office by filing an a 
membership application to participate on a form prescribed by 
the executive director of the association authorizing 
contributions to be deducted from the elected official's salary. 
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. 
pay period for which the contributions were deducted or, if pay 
period coverage dates are not provided, the date on which the 
membership application or contributions are received in the 
office of the association, whichever is received first, provided 
further that the membership application is received by the 
association within 60 days of the receipt of the contributions.  
If the membership application is not received, the elected 
official is not a participant in the plan and may request a 
refund under section 353D.04, subdivision 2.  An election to 
participate in the plan is irrevocable during incumbency in 
office.  
    (b) 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 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. 37.  Minnesota Statutes 1990, section 353D.04, is 
amended to read: 
    353D.04 [CONTRIBUTIONS TO PLAN AND DEDUCTIONS IN ERROR.] 
    Subdivision 1.  [CONTRIBUTIONS.] (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 must be remitted on a 
regular periodic basis to the association together with any 
member contributions paid or withheld.  Those contributions must 
be credited to the individual account of each participating 
member.  
    Subd. 2.  [DEDUCTIONS IN ERROR.] Deductions taken totally 
or partially in error by the employer from the salary of an 
elected official and contributions made by the employer may be 
refunded upon request to the elected official and the employer. 
    (a) In the case of a total refund, the association shall 
refund the value of an elected official's account, including 
investment earnings, the accumulated employee deductions, 
accumulated employer contributions, less administrative expenses 
under section 353D.05, subdivision 3. 
    (b) In the case of a partial refund, the association shall 
refund the amount of the actual error, without interest, less 
the administrative expenses under section 353D.05, subdivision 
3, from the employer share.  
    Sec. 38.  Minnesota Statutes 1990, section 353D.05, 
subdivision 2, is amended to read: 
    Subd. 2.  [INVESTMENT OPTIONS.] (a) An individual A 
participant may elect to purchase shares in the income share 
account, the growth share account, the money market account, the 
bond market account, the guaranteed return account, or the 
common stock index account established by section 11A.17, or a 
combination of those accounts.  The participant may elect to 
purchase shares in a combination of those accounts by specifying 
the percentage of contributions to be used to purchase shares in 
each of the accounts. 
    (b) Twice in a calendar year, A participant may indicate in 
writing a choice of options for subsequent purchases of shares.  
After a choice is made, until the participant makes a different 
written indication, the executive director of the association 
shall purchase shares in the supplemental investment fund or 
funds specified by the participant.  If no initial option is 
indicated by a participant or the specifications made by the 
participant exceed 100 percent to be invested in more than one 
account, the executive director shall invest all contributions 
made by or on behalf of a participant in the income share 
account.  If the specifications are less than 100 percent, the 
executive director shall invest the remaining percentage in the 
income share account.  A choice of investment options is 
effective no later than the first pay date occurring more than 
30 days after receipt of the written choice of options. 
    (c) One month before the start of a new guaranteed 
investment contract, a participant may elect to transfer all or 
a portion of the participant's shares previously purchased in 
the income share, growth share, common stock index, bond market, 
or money market accounts to the new guaranteed investment 
contract in the guaranteed return account.  If a partial 
transfer is made, a minimum of $200 must be transferred and a 
minimum balance of $200 must remain in the previously selected 
investment options.  Upon expiration of a guaranteed investment 
contract, the participant's shares attributable to that contract 
must be transferred to a new guaranteed investment contract 
unless the executive director is otherwise directed by the 
participant.  Shares in the guaranteed return account may not be 
withdrawn from the fund or transferred to another account until 
the guaranteed investment contract has expired, unless the 
participant qualifies for a benefit payment under section 
353D.07. 
    (d) Twice in a calendar year, A participant or former 
participant may also change the investment options selected for 
all or a portion of the individual's previously purchased shares 
in accounts other than the guaranteed return account.  If a 
partial transfer of previously purchased shares is selected, a 
minimum of $200 must be transferred and a minimum balance of 
$200 must remain in the previously selected investment option.  
A change under this paragraph is effective as soon as cash flow 
to an account permits, but not later than six months from the 
requested change. 
    Sec. 39.  Minnesota Statutes 1990, section 353D.07, 
subdivision 2, is amended to read: 
    Subd. 2.  [PAYMENT OF BENEFITS.] Withdrawal of or a 
retirement benefit based on individual participant contributions 
and employer contributions plus accrued investment income is 
payable immediately upon the death or termination of a 
participant for a period that exceeds 30 days.  No investment 
options or transfers of all or a portion of the deceased elected 
official's shares in the income share, growth share, common 
stock index, bond market, money market, or guaranteed investment 
accounts shall be made following death or termination of the 
participant.  An application by or on behalf of the participant 
must be filed before any payment of benefits may be made. 
    Sec. 40.  Minnesota Statutes 1990, section 353D.07, 
subdivision 3, is amended to read: 
    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 participant.  As an 
alternative to a lump sum lump-sum distribution, the participant 
may choose to have the association use transfer the total 
account value to for the purchase of an annuity payable at a 
designated age from to an insurance company of the participant's 
choice that is licensed to do business in the state.  
    Sec. 41.  Minnesota Statutes 1990, section 353D.12, 
subdivision 1, is amended to read: 
    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 May 9, 1990 June 30, 1991, 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.  The association shall not accept 
contributions for prior service after the elected official 
ceases to hold elected office. 
    Sec. 42.  Minnesota Statutes 1990, section 354B.04, 
subdivision 2, is amended to read: 
    Subd. 2.  [EMPLOYER CONTRIBUTIONS.] The employer of persons 
in covered employment who participate in the plan shall make an 
employer contribution to the plan in an amount equal to the 
amount prescribed by section 354.42, subdivision 3, and shall 
continue to make an additional employer contribution to the 
teachers retirement association in an amount equal to the amount 
prescribed by section 354.42, subdivision 5. 
    Sec. 43.  Laws 1990, chapter 570, article 8, section 14, 
subdivision 1, is amended to read: 
    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.  
The purchase of prior service credit ceases when the elected 
official no longer holds an elected office.  
    Sec. 44.  Minnesota Statutes 1990, 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 executive director 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 a retirement annuity by the 
member, a copy of the completed retirement annuity application 
and retirement annuity beneficiary form, if applicable, 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 unless the spouse's signature confirming the receipt is on 
the annuity application 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, if applicable, to the spouse by certified mail 
with restricted delivery. 
    Sec. 45.  Minnesota Statutes 1990, 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 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 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 
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 to 
those persons receiving an annuity or benefit on the preceding 
November 30.  A person who is 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 or returns the amount of adjustment to the 
retirement fund.  Written notice of the waiver of the 
postretirement adjustment is irrevocable for the year during 
which it was made. 
    Sec. 46.  Minnesota Statutes 1990, section 356.86, 
subdivision 4, is amended to read: 
    Subd. 4.  [OPTIONAL 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 
adjustment paid in equal monthly amounts instead of receiving a 
lump sum payment on December 1, 1989.  Selection of this option 
optional payment schedule must be made by the recipient in 
writing on forms prepared by the retirement association.  
This option optional payment schedule may be revoked by the 
recipient in writing prior to the 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. 47.  Minnesota Statutes 1990, section 356.87, is 
amended to read: 
    356.87 [HEALTH INSURANCE WITHHOLDING.] 
    The Upon authorization of a person entitled to receive a 
retirement annuity, disability benefit or survivor benefit, the 
executive director of a public pension fund listed in section 
356.20, subdivision 2, shall, upon authorization of a person 
entitled to receive benefits, withhold health insurance premium 
amounts from the pension benefits retirement annuity, disability 
benefit or survivor benefit, and pay the premium amounts to the 
public employees insurance plan.  The public employees insurance 
plan shall reimburse a public pension fund for the 
administrative expense of withholding the premium amounts and 
shall assume liability for the failure of a public pension fund 
to properly withhold the premium amounts. 
    Sec. 48.  [TERMINATION OF MEMBERSHIP.] 
    Subdivision 1.  [ELIGIBILITY.] Notwithstanding the 
limitations in Minnesota Statutes, section 353D.02, a member of 
the public employees defined contribution plan, who was born on 
September 22, 1948, and has been employed by independent school 
district No. 701 from 1984 to the present, may revoke 
participation in the defined contribution plan that began on 
October 1, 1990. 
    Subd. 2.  [RETURN OF CONTRIBUTIONS.] The employee 
contributions shall be returned to the eligible individual in 
subdivision 1.  The remaining value in the former participant's 
account, if any, shall be remitted to the association. 
     Sec. 49.  [TEMPORARY; PUBLIC HOSPITAL STATUS.] 
    The change specified in section 2 does not impact the 
status of any hospital district as of the effective date of 
section 2 regarding inclusion or exclusion of an employing unit. 
     Sec. 50.  [TRANSFER.] 
    Notwithstanding Minnesota Statutes, section 354B.03, 
subdivision 3, or any other provision of law to the contrary, a 
person who is an employee of the state university board on the 
effective date of this section who was employed by the state 
university board before 1964, and who elected to transfer 
retirement coverage from the teachers retirement association to 
the individual retirement account plan created in Minnesota 
Statutes, chapter 354B, may revoke that transfer prospectively 
and have future service credited by the teachers retirement 
association.  A revocation must be made in a manner prescribed 
by the executive director of the teachers retirement association 
and must be made within 60 days of the effective date of this 
section.  The election is effective only for future service and 
does not permit transfer to the teachers retirement association 
of any contributions made to the individual retirement account 
plan. 
    Sec. 51.  [REPEALER.] 
    Minnesota Statutes, sections 353.33, subdivision 5a, and 
353C.07, subdivision 2, are repealed. 
    Sec. 52.  [EFFECTIVE DATE.] 
    Sections 1 to 51 are effective the day following final 
enactment.  Section 20 applies retroactively to May 16, 1989, 
and applies to all refunds paid after the day following final 
enactment.  Section 30 applies retroactively to December 31, 
1990.  Section 48 applies retroactively to October 1, 1990.  
Section 42 is effective for the first payroll period beginning 
after July 1, 1991.  Section 50 is effective the day following 
final enactment. 
    Presented to the governor May 31, 1991 
    Signed by the governor June 4, 1991, 9:00 p.m.