Office of the Revisor of Statutes
Minnesota Session Laws - 1993, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1993
CHAPTER 357-S.F.No. 553
An act relating to retirement; Minneapolis and St.
Paul teacher retirement fund associations; providing
additional funding from various sources; assessing
active and retired members for certain teacher
retirement fund associations supplemental
administrative expenses; modifying certain post
retirement adjustments; authorizing contributions by
the city of Minneapolis; appropriating money;
authorizing certain tax levies by special school
district No. 1; amending Minnesota Statutes 1992,
sections 354A.12, subdivisions 2, 2a, and by adding
subdivisions; and Laws 1959, chapter 462, section 3,
subdivision 4; proposing coding for new law in
Minnesota Statutes, chapter 354A; repealing Laws 1987,
chapter 372, article 3, section 1.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1992, section 354A.12,
subdivision 2, is amended to read:
Subd. 2. [RETIREMENT CONTRIBUTION LEVY DISALLOWED.] Except
as provided in subdivision 3b, paragraph (d), with respect to
special school district No. 1, notwithstanding any law to the
contrary, levies for teachers retirement fund associations in
cities of the first class, including levies for any employer
social security taxes for teachers covered by the Duluth
teachers retirement fund association or the Minneapolis teachers
retirement fund association or the St. Paul teachers retirement
fund association, are disallowed.
Sec. 2. Minnesota Statutes 1992, section 354A.12,
subdivision 2a, is amended to read:
Subd. 2a. [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION
RATES.] (a) The employing units shall make the following
employer contributions to teachers retirement fund associations:
(1) for any coordinated member of a teachers retirement
fund association in a city of the first class, the employing
unit shall pay the employer social security taxes in accordance
with section 355.46, subdivision 3, clause (b);
(2) for any coordinated member of one of the following
teachers retirement fund associations in a city of the first
class, the employing unit shall make a regular employer
contribution to the respective retirement fund association in an
amount equal to the designated percentage of the salary of the
coordinated member as provided below:
Duluth teachers retirement
fund association 4.50 percent
Minneapolis teachers retirement
fund association 4.50 percent
St. Paul teachers retirement
fund association 4.50 percent;
(3) for any basic member of one of the following teachers
retirement fund associations in a city of the first class, the
employing unit shall make a regular employer contribution to the
respective retirement fund in an amount equal to the designated
percentage of the salary of the basic member as provided below:
Minneapolis teachers retirement
fund association 8.50 percent
St. Paul teachers retirement
fund association 8.00 percent
(4) for a basic member of a teachers retirement fund
association in a city of the first class, the employing unit
shall make an additional employer contribution to the respective
fund in an amount equal to the designated percentage of the
salary of the basic member, as provided below:
Minneapolis teachers retirement
fund association
July 1, 1993 - June 30, 1994 4.85 percent
July 1, 1994, and thereafter 3.64 percent
St. Paul teachers retirement
fund association
July 1, 1993 - June 30, 1995 4.63 percent
July 1, 1995, and thereafter 3.64 percent
(5) for a coordinated member of a teachers retirement fund
association in a city of the first class, the employing unit
shall make an additional employer contribution to the respective
fund in an amount equal to the applicable percentage of the
coordinated member's salary, as provided below:
Duluth teachers retirement
fund association 1.29 percent
Minneapolis teachers retirement
fund association
July 1, 1992 - June 30, 1993 0.00 percent
July 1, 1993, and thereafter 1.00
July 1, 1993 - June 30, 1994 0.50 percent
July 1, 1994, and thereafter 3.64 percent
St. Paul teachers retirement
fund association
July 1, 1992 - June 30, 1993 0.00 percent
July 1, 1993, and thereafter 1.00
July 1, 1993 - June 30, 1994 0.5 percent
July 1, 1994 - June 30, 1995 1.50 percent
July 1, 1995, and thereafter 3.64 percent
(b) For basic members of the Minneapolis teachers
retirement fund association and the St. Paul teachers retirement
fund association who retire on or after July 1, 1993, the
employing unit shall continue to make an additional employer
contribution to the retirement fund in an amount equal to the
average salary of the employing unit's basic members multiplied
by the relevant percentages in paragraph (a), clause (4).
(c) The regular and additional employer contributions must
be remitted directly to the respective teachers retirement fund
association each month.
(d) (c) Payments of regular and additional employer
contributions for school district or technical college employees
who are paid from normal operating funds must be made from the
appropriate fund of the district or technical college.
Sec. 3. Minnesota Statutes 1992, section 354A.12, is
amended by adding a subdivision to read:
Subd. 3a. [SPECIAL DIRECT STATE AID TO ST. PAUL TEACHERS
RETIREMENT FUND ASSOCIATION.] (a) The state shall pay to the St.
Paul teachers retirement fund association $500,000 in fiscal
year 1994. In each subsequent fiscal year, the payment to the
St. Paul teachers retirement fund association must be increased
at the same rate as the increase in the general education
revenue formula allowance under section 124A.22, subdivision 2,
in subsequent fiscal years.
(b) The direct state aid is payable October 1 annually.
The commissioner of finance shall pay the direct state aid. The
amount required under this subdivision is appropriated annually
to the commissioner of finance.
Sec. 4. Minnesota Statutes 1992, section 354A.12, is
amended by adding a subdivision to read:
Subd. 3b. [SPECIAL DIRECT STATE MATCHING AID TO THE
MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special
school district No. 1 may make an additional employer
contribution to the Minneapolis teachers retirement fund
association. The city of Minneapolis may make a contribution to
the Minneapolis teachers retirement fund association. This
contribution may be made by a levy of the board of estimate and
taxation of the city of Minneapolis, and the levy, if made, is
classified as that of a special taxing district for purposes of
section 275.065.
(b) For every $1,000 contributed in equal proportion by
special school district No. 1 and by the city of Minneapolis to
the Minneapolis teachers retirement fund association under
paragraph (a), the state shall pay to the Minneapolis teachers
retirement fund association $1,000, but not to exceed $2,500,000
in total in fiscal year 1994. The total amount available for
each subsequent fiscal year must be increased at the same rate
as the increase in the general education revenue formula
allowance under section 124A.22, subdivision 2, in subsequent
fiscal years. The superintendent of special school district No.
1, the mayor of the city of Minneapolis, and the executive
director of the Minneapolis teachers retirement fund association
shall jointly certify to the commissioner of finance the total
amount that has been contributed by special school district No.
1 and by the city of Minneapolis to the Minneapolis teachers
retirement fund association. Any certification to the
commissioner of education must be made quarterly. If the total
certifications for a fiscal year exceed the maximum annual
direct state matching aid amount in any quarter, the amount of
direct state matching aid payable to the Minneapolis teachers
retirement fund association must be limited to the balance of
the maximum annual direct state matching aid amount available.
The amount required under this paragraph, subject to the maximum
direct state matching aid amount, is appropriated annually to
the commissioner of finance.
(c) The commissioner of finance may prescribe the form of
the certifications required under paragraph (b).
Sec. 5. Minnesota Statutes 1992, section 354A.12, is
amended by adding a subdivision to read:
Subd. 3c. [TERMINATION OF DIRECT STATE MATCHING AID.] (a)
The direct state aid under subdivision 3a to the St. Paul
teachers retirement association and the direct state aid under
subdivision 3b to the Minneapolis teachers retirement fund
association terminates for the respective fund at the end of the
fiscal year in which the accrued liability funding ratio for
that fund, as determined in the most recent actuarial report for
that fund by the actuary retained by the legislative commission
on pensions and retirement, equals or exceeds the accrued
liability funding ratio for the teachers retirement association,
as determined in the most recent actuarial report for the
teachers retirement association by the actuary retained by the
legislative commission on pensions and retirement.
(b) If the state aid is terminated for the St. Paul
teachers retirement fund association or the Minneapolis teachers
retirement fund association under paragraph (a), it may not
again be received by that fund.
Sec. 6. Minnesota Statutes 1992, section 354A.12, is
amended by adding a subdivision to read:
Subd. 3d. [SUPPLEMENTAL ADMINISTRATIVE EXPENSE
ASSESSMENT.] (a) The active and retired membership of the
Minneapolis teachers retirement fund association and of the St.
Paul teachers retirement fund association is responsible for
defraying supplemental administrative expenses other than
investment expenses of the respective teacher retirement fund
association.
(b) Investment expenses of the teachers retirement fund
association are those expenses incurred by or on behalf of the
retirement fund in connection with the investment of the assets
of the retirement fund other than investment security
transaction costs. Other administrative expenses are all
expenses incurred by or on behalf of the retirement fund for all
other retirement fund functions other than the investment of
retirement fund assets. Investment and other administrative
expenses must be accounted for using generally accepted
accounting principles and in a manner consistent with the
comprehensive annual financial report of the teachers retirement
fund association for the immediately previous fiscal year under
section 356.20.
(c) Supplemental administrative expenses other than
investment expenses of a first class city teacher retirement
fund association are those expenses for the fiscal year that
exceed the amount computed by applying the most recent
percentage of pay administrative expense amount, other than
investment expenses, for the teachers retirement association
governed by chapter 354 to the covered payroll of the respective
teachers retirement fund association for the fiscal year.
(d) The board of trustees of each first class city teachers
retirement fund association shall allocate the total dollar
amount of supplemental administrative expenses other than
investment expenses among the various active and retired
membership groups of the teachers retirement fund association
and shall assess the various membership groups their respective
share of the supplemental administrative expenses other than
investment expenses, in amounts determined by the board of
trustees. The supplemental administrative expense assessments
must be paid by the membership group in a manner determined by
the board of trustees of the respective teachers retirement
association. Supplemental administrative expenses payable by
the active members of the pension plan must be picked up by the
employer in accordance with section 356.62.
(e) The supplemental administrative expense assessments
must be deposited in the applicable teachers retirement fund
upon receipt.
(f) Any omitted active membership group assessments that
remain undeducted and unpaid to the teachers retirement fund
association for 90 days must be paid by the respective school
district. The school district may recover any omitted active
membership group assessment amounts that it has previously
paid. The teachers retirement fund association shall deduct any
omitted retired membership group assessment amounts from the
benefits next payable after the discovery of the omitted amounts.
Sec. 7. [354A.28] [MODIFICATION IN MINNEAPOLIS TEACHERS
RETIREMENT FUND ASSOCIATION POST RETIREMENT ADJUSTMENT.]
Subdivision 1. [POST RETIREMENT ADJUSTMENT
MODIFICATION.] Any post retirement adjustment payable from the
Minneapolis teachers retirement fund association after June 1,
1993, must be modified as provided in this section.
Subd. 2. [ESTABLISHMENT.] The Minneapolis teachers
retirement fund association shall establish an annuity reserve
fund for providing an investment vehicle for the reserves for
various retirement annuities and benefits payable by the fund.
Subd. 3. [ASSETS.] The assets of the annuity reserve fund
consist of the money representing the actuarially determined
required reserves for various retirement annuities and benefits
payable by the Minneapolis teachers retirement fund association.
Subd. 4. [MANAGEMENT.] The Minneapolis teachers retirement
fund association annuity reserve fund must be managed by the
board of trustees of the Minneapolis teachers retirement fund
association.
Subd. 5. [INVESTMENT.] The assets of the annuity reserve
fund must be invested, reinvested, and retained in the
discretion of the board of trustees of the Minneapolis teachers
retirement fund association in authorized investments under
section 11A.24.
Subd. 6. [ALLOCATION OF ASSETS.] No later than the last
business day of the month in which the benefit payment begins,
the board of trustees of the Minneapolis teachers retirement
fund association shall determine the reserves to be allocated to
the respective annuity reserve fund in the following manner:
(1) the present value of the benefit payable to the
annuitant or benefit recipient must be determined using the
postretirement earnings assumptions specified for the first
class city teachers retirement funds in section 356.215, and the
mortality table applicable to the fund; and
(2) the amount determined in clause (1) must be multiplied
by the funding ratio of the teachers retirement fund association
determined for the previous fiscal year end, and the product
must be identified as the amount allocated to the annuity
reserve fund.
Subd. 7. [WITHDRAWAL OF MONEY.] If the executive director
of the Minneapolis teachers retirement fund association
concludes that money is required for the payment of retirement
annuities or benefits, the executive director shall sell
sufficient securities in the reserve fund or transfer available
cash to pay benefits.
Subd. 8. [CALCULATION OF POSTRETIREMENT ADJUSTMENTS.] (a)
Annually, after June 30, the board of trustees of the
Minneapolis teachers retirement fund association shall use the
procedures in this subdivision and subdivision 9 to determine
the amount of any postretirement adjustment. The authority to
pay the automatic two percent annual postretirement increase as
specified in the articles and bylaws continues.
Subd. 9. [ADDITIONAL INCREASE.] (a) In addition to the
postretirement increases granted under subdivision 8, an
additional percentage increase must be computed and paid under
this subdivision.
(b) The board of trustees shall determine the number of
annuities or benefit recipients who have been receiving an
annuity or benefit for at least 12 months as of the current June
30. These recipients are entitled to receive the surplus
investment earnings additional postretirement increase.
(c) Annually, on June 30, the board of trustees of the
teachers retirement fund association shall determine the amount
of reserves in the annuity reserve fund as specified in
subdivision 6.
(d) Annually, on June 30, the board of trustees of the
Minneapolis teachers retirement fund association shall determine
the five-year annualized rate of return attributable to the
assets in the annuity reserve fund under the formula or formulas
specified in section 11A.04, clause (11).
(e) The board of trustees shall determine the amount of
excess five-year annualized rate of return over the
preretirement interest assumption as specified in section
356.215.
(f) The additional increase must be determined by
multiplying the quantity one minus the rate of contribution
deficiency, as specified in the most recent actuarial report of
the actuary retained by the legislative commission on pensions
and retirement, times the rate of return excess as determined in
paragraph (e).
(g) The additional increase is payable to all eligible
annuitants or benefit recipients on January 1 following the June
30 determination date under paragraphs (c) and (d).
Sec. 8. Laws 1959, chapter 462, section 3, subdivision 4,
is amended to read:
Subd. 4. The school district shall contract with the City
of Minneapolis for such facilities and necessary services as are
furnished by the Civil Service Commission, and unless the Board
of Education and city governing body each adopts a resolution
declaring that a particular function would be most efficiently
and effectively handled separately, the board shall may contract
on a pro-rata cost basis with the city for such facilities and
services as are provided by the Purchasing Department,
comptroller, treasurer, legal department, City Planning
Commission, and other services supplied by such city, provided,
however, that the board may contract for other legal services
when the interest of the school district and the city are in
conflict in any legal matter.
Sec. 9. [STUDY OF TEACHERS RETIREMENT FUND ASSOCIATIONS
PHASE-OUT OR CONSOLIDATION OPTIONS.]
(a) The legislative commission on pensions and retirement
shall study the options available for phasing-out or
consolidating the first class city teacher retirement fund
associations. The commission shall report its conclusions by
February 1, 1994, to the chairs of the committee on governmental
operations and reform of the senate, the committee on finance of
the senate, the committee on governmental operations and
gambling of the house of representatives, and the committee on
ways and means of the house of representatives.
(b) The legislative commission on pensions and retirement
shall establish a technical advisory group for the study
composed of the commission staff, the directors of the first
class city teacher retirement funds, a representative of the
teacher bargaining unit of the respective school districts, a
representative of each school district, and a representative of
the department of finance. Each bargaining unit and school
district shall notify the chair of the legislative commission on
pensions and retirement of its designation of a representative.
(c) The executive director of the teachers retirement
association and an employee representative to be selected by the
board of the teachers retirement association must be members of
the technical advisory group in paragraph (b). The board shall
notify the chair of the legislative commission on pensions and
retirement of its designation of an employee representative.
Sec. 10. [REPEALER.]
Laws 1987, chapter 372, article 3, section 1, is repealed.
Sec. 11. [EFFECTIVE DATE.]
Sections 1 to 5, 9, and 10 are effective on July 1, 1993.
Sections 6 and 7 are effective for the Minneapolis teachers
retirement fund association the day following first receipt of
contributions from special school district No. 1, the city of
Minneapolis, and matching state contributions under section 4.
Section 6 is effective for the St. Paul teachers retirement fund
association on July 1, 1993. Section 8 is effective the day
following final enactment.
Presented to the governor May 20, 1993
Signed by the governor May 24, 1993, 5:45 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes