Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1994, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 508-H.F.No. 2124
An act relating to retirement; state university and
state community college individual retirement account
plans; clarifying various plan provisions; providing
for plan coverage for technical college teachers;
providing for an optional election of plan coverage
for certain state university and community college
teachers; mandating the preparation of plan
recodification legislation; amending Minnesota
Statutes 1992, sections 353.27, subdivision 7a;
354.05, subdivision 2a; 354.42, subdivision 7;
354B.01, by adding a subdivision; 354B.015; and
354B.02, subdivision 2, and by adding a subdivision;
Minnesota Statutes 1993 Supplement, sections 352.04,
subdivision 9; 354A.011, subdivision 27; 354B.02,
subdivision 1; and 354B.05, subdivision 3; proposing
coding for new law in Minnesota Statutes, chapter
354B; proposing coding for new law as Minnesota
Statutes, chapter 354C.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
TECHNICAL COLLEGE TEACHING PERSONNEL
Section 1. Minnesota Statutes 1993 Supplement, section
352.04, subdivision 9, is amended to read:
Subd. 9. [ERRONEOUS DEDUCTIONS, CANCELED WARRANTS.] (a)
Deductions taken from the salary of an employee for the
retirement fund in error must, upon discovery and verification
by the department making the deduction, be refunded to the
employee.
(b) If a deduction for the retirement fund is taken from a
salary warrant or check, and the check is canceled or the amount
of the warrant or check returned to the funds of the department
making the payment, the sum deducted, or the part of it required
to adjust the deductions, must be refunded to the department or
institution if the department applies for the refund on a form
furnished by the director. The department's payments must
likewise be refunded to the department.
(c) Employee deductions and employer contributions taken in
error may be directly transferred, without interest, to another
Minnesota public employee retirement fund listed in section
356.30, subdivision 3, plan by which the employee is actually
covered.
For purposes of this subdivision, a Minnesota public
pension plan means a plan specified in section 356.30,
subdivision 3, or the plan governed by chapter 354B.
Sec. 2. Minnesota Statutes 1992, section 353.27,
subdivision 7a, is amended to read:
Subd. 7a. [DEDUCTIONS OR CONTRIBUTIONS TRANSMITTED BY
ERROR.] (a) If employee deductions and employer contributions
were erroneously transmitted to the association, but should have
been transmitted to another Minnesota public pension fund listed
in section 356.30, subdivision 3 plan, the association shall
transfer the erroneous employee deductions and employer
contributions to the appropriate retirement fund without
interest. The time limitations in subdivisions 7 and 12 do not
apply.
(b) For purposes of this subdivision, a Minnesota public
pension plan means a plan specified in section 356.30,
subdivision 3, or the plan governed by chapter 354B.
Sec. 3. Minnesota Statutes 1992, section 354.05,
subdivision 2a, is amended to read:
Subd. 2a. [EXCEPTIONS.] (a) Notwithstanding subdivision 2,
a person who is first employed as a teacher in the state
university system or the state community college system after
June 30, 1989, specified in paragraph (b) is not a member of the
fund except for purposes of social security coverage unless (1)
the person is covered by section 354B.02, subdivision 2, and
remains a member of the fund for all purposes or, (2) the person
is covered by section 354B.02, subdivision 1 or 5, or 354B.035,
and elects coverage by the teachers retirement association.
(b) A teacher is excluded from fund membership under
paragraph (a) if first employed as:
(1) a teacher in the state university system after June 30,
1989;
(2) a teacher in the state community college system after
June 30, 1989; or
(3) a teacher in a technical college authorized under
chapter 136C or 136D after June 30, 1995.
Sec. 4. Minnesota Statutes 1992, section 354.42,
subdivision 7, is amended to read:
Subd. 7. [ERRONEOUS SALARY DEDUCTIONS OR DIRECT PAYMENTS.]
(a) Any deductions taken from the salary of an employee for the
retirement fund in error shall be refunded to the employee upon
discovery and verification by the employing unit making the
deduction, and the corresponding employer contribution and
additional employer contribution amounts attributable to the
erroneous salary deduction must be refunded to the employing
unit.
(b) If salary deductions and employer contributions were
erroneously transmitted to the retirement fund and should have
been transmitted to another Minnesota public pension fund
enumerated in section 356.30, subdivision 3 plan, the retirement
fund must transfer these salary deductions and employer
contributions to the appropriate public pension fund without
interest. For purposes of this paragraph, a Minnesota public
pension plan means a plan specified in section 356.30,
subdivision 3, or the plan governed by chapter 354B.
(c) If 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 has been returned to the funds of the
employing unit making the payment, a refund of the amount
deducted, or any portion of it that is required to adjust the
salary deductions, shall be made to the employing unit.
(d) Any erroneous direct payments of member paid
contributions or erroneous salary deductions that were not
refunded in the regular processing of an employing unit's annual
summary report shall be refunded to the member with interest
computed using the rate and method specified in section 354.49,
subdivision 2.
Sec. 5. Minnesota Statutes 1993 Supplement, section
354A.011, subdivision 27, is amended to read:
Subd. 27. [TEACHER.] "Teacher" means any person who
renders service in a public school district located in the
corporate limits of one of the cities of the first class which
was so classified on January 1, 1979, as any of the following:
(a) a full-time employee in a position for which a valid
license from the state department of education is required;
(b) an employee of the teachers retirement fund association
located in the city of the first class unless the employee has
exercised the option pursuant to Laws 1955, chapter 10, section
1, to retain membership in the Minneapolis employees retirement
fund established pursuant to chapter 422A;
(c) a part-time employee in a position for which a valid
license from the state department of education is required; or
(d) a part-time employee in a position for which a valid
license from the state department of education is required who
also renders other nonteaching services for the school district
unless the board of trustees of the teachers retirement fund
association determines that the combined employment is on the
whole so substantially dissimilar to teaching service that the
service shall not be covered by the association.
The term shall not mean any person who renders service in
the school district as any of the following:
(1) an independent contractor or the employee of an
independent contractor;
(2) an employee who is a full-time teacher covered by
another teachers retirement fund association established
pursuant to this chapter or chapter 354;
(3) an employee holding a part-time adult supplementary
technical college license who renders part-time teaching service
in a technical college if (1) the service is incidental to the
regular nonteaching occupation of the person; and (2) the
applicable technical college stipulates annually in advance that
the part-time teaching service will not exceed 300 hours in a
fiscal year; and (3) the part-time teaching service actually
does not exceed 300 hours in a fiscal year; or
(4) an employee exempt from licensure pursuant to section
125.031; or
(4) an employee who is a teacher in a technical college
located in a city of the first class unless the person elects
coverage by the applicable first class city teacher retirement
fund association under section 354B.02, subdivision 1, or
354B.035.
Sec. 6. Minnesota Statutes 1992, section 354B.01, is
amended by adding a subdivision to read:
Subd. 4a. [COVERED EMPLOYMENT; TECHNICAL COLLEGES.]
"Covered employment," with respect to employment by a technical
college authorized under chapter 136C or 136D, means employment
in a position included in the definition of teacher under
section 354.05, subdivision 2.
Sec. 7. Minnesota Statutes 1992, section 354B.015, is
amended to read:
354B.015 [SOCIAL SECURITY COVERAGE.]
Plan participants under section 354B.02, subdivision 1, and
persons electing participation under section 354B.02,
subdivision 2 or, 3, or 5, or 354B.035, remain members of the
teachers retirement association or the state unclassified
employees retirement program, whichever applies, for purposes of
social security coverage only and remain covered by the
applicable agreement entered into under section 355.02, but are
not members of the teachers retirement association or the state
unclassified employees retirement program for any other purpose
while employed in covered employment.
Sec. 8. Minnesota Statutes 1993 Supplement, section
354B.02, subdivision 1, is amended to read:
Subdivision 1. [PLAN PARTICIPANTS.] (a) Except as provided
in subdivision 2, or unless the person has elected retirement
coverage under section 352D.02, subdivision 1a, a person who was
first employed in covered employment under section 354B.01,
subdivision 2 or 3, after June 30, 1989, shall participate in
the plan. A person who was first employed in covered employment
or first included in coverage under section 354B.01, subdivision
4a, after June 30, 1995, may participate in the plan or may
elect coverage by the teachers retirement association. Election
to participate in the plan or the association must be made
within 60 days of the start of covered employment and must be
made under section 354B.035. A technical college teacher who
does not make the election within the 60 days shall become a
member of the plan governed by chapter 354 or 354A.
(b) Except as provided in paragraph (a), or subdivision 2,
or unless the person has elected retirement coverage under
section 352D.02, subdivision 1, paragraph (b), clause (6) or
(13), a person who was first employed in covered employment
after July 1, 1992, shall participate in the plan.
(c) Participants or employees who would be participants in
this plan but for prior participation in the teachers retirement
association or the other Minnesota public employee retirement
plan governed by section 356.30, whichever applies, and who are
subsequently appointed to a position with the community college
system or the state university system designated as an acting,
temporary, or interim position, shall remain in the teachers
retirement association or the other Minnesota public employee
plan during the term of the acting, temporary, or interim
position. If the participant's status becomes permanent, the
participant has the option to make a new election appropriate to
the plan in which the position should be located.
Sec. 9. Minnesota Statutes 1992, section 354B.02,
subdivision 2, is amended to read:
Subd. 2. [PERSONS WITH CERTAIN PRIOR ALLOWABLE SERVICE.] A
person with less than three years of prior allowable service as
a member of the teachers retirement association other than in
covered employment under section 354B.01, subdivision 2 or 3,
and who is first employed in covered employment after June 30,
1989, remains a member of the teacher's retirement association
for all purposes, but a coordinated member may elect to
participate in the plan. This election to participate in the
plan must be made by January 1, 1995, or within 60 days of the
start of covered employment, whichever is later.
Sec. 10. Minnesota Statutes 1992, section 354B.02, is
amended by adding a subdivision to read:
Subd. 5. [OPTIONAL ELECTION PROVISIONS FOR STATE
UNIVERSITY AND COMMUNITY COLLEGE PARTICIPANTS.] (a)
Notwithstanding any other provision of this chapter or chapter
354 to the contrary, state university and community college
employees who have not previously exercised their option to
elect to transfer to this plan or remain with the teachers
retirement association are eligible to make that election.
Participants in either the plan or association may transfer
benefit coverage to the other. A transfer election is
irrevocable during any period of covered employment under this
section and is subject to the conditions of paragraphs (b), (c),
and (d).
(b) Members of the teachers retirement association as of
July 1, 1994, or employees newly hired after that date who have
prior allowable service credit as a member in the teachers
retirement association are eligible to transfer service credit
prospectively only. Existing contributions and service credit
must remain with the teachers retirement association and the
person is eligible for an augmented deferred retirement annuity
from the teachers retirement association under section 354.55,
subdivision 11. A transfer election made under this subdivision
is irrevocable.
(c) Members of the plan as of July 1, 1994, who were first
employed after June 30, 1989, may transfer membership
prospectively only to the teachers retirement association,
effective on the date the transfer election is made. Funds
previously invested under the plan with the financial
institution selected by the member are not eligible to be
transferred to the association. Withdrawal of funds from the
plan by a member is subject to rules of the plan. An election
to transfer membership to the teachers retirement association is
irrevocable during any period of covered employment. The
employer of a transferring member must make the additional
employer contribution provided for in section 354.42,
subdivision 5, for future service only.
(d) Transfer elections under this section must be made
within 90 days from the date on which the executive director or
plan administrator provides notification of the election and
must be elected on forms prescribed by the plan administrator or
executive director.
Sec. 11. [354B.035] [TECHNICAL COLLEGE TEACHING PERSONNEL;
TRANSITIONAL PROVISIONS.]
Subdivision 1. [APPLICATION.] Notwithstanding any
provision of this chapter to the contrary, this section applies
only to plan coverage for technical college members covered
under section 354B.01, subdivision 4a.
Subd. 2. [ELECTION TO PARTICIPATE.] Technical college
teaching personnel may either elect to participate in the plan
or elect coverage by the teachers retirement association, the
Duluth teachers retirement fund association, the Minneapolis
teachers retirement fund association, or the St. Paul teachers
retirement fund association as follows:
(a) A technical college teacher first employed in covered
employment after June 30, 1995, must make the election within 60
days of the start of covered employment, on a form provided by
the state university plan administrator under section 354B.05,
subdivision 1. The election is irrevocable during any future
period of covered service.
(b) A technical college teacher with prior allowable
service as a member of the teachers retirement association or of
a first class city teachers retirement fund association may
elect coverage by the applicable plan. If that coverage is
elected, the election is irrevocable, accumulated employer and
employee contributions and prior allowable service credit under
section 354.05, subdivision 13, or 354A.011, subdivision 4,
whichever applies, must remain with the applicable teachers
retirement fund, and the teacher is eligible for an augmented
deferred retirement annuity from the teachers retirement
association under section 354.55, subdivision 11, or the
applicable first class city teachers retirement fund association
under section 354A.37, subdivision 2.
Subd. 3. [EMPLOYER CONTRIBUTION AMOUNT FOR CERTAIN
COVERAGE ELECTIONS.] Employer contributions for technical
college teaching personnel who elect coverage by the teachers
retirement fund association are governed by section 354.42,
subdivisions 3 and 5, and employer contributions for technical
college teaching personnel who elect coverage by a first class
city teacher retirement fund association are governed by the
applicable employer contribution provisions of section 354A.12,
subdivision 2a.
Sec. 12. Minnesota Statutes 1993 Supplement, section
354B.05, subdivision 3, is amended to read:
Subd. 3. [SELECTION OF FINANCIAL INSTITUTIONS.] The
supplemental investment fund administered by the state board of
investment is one of the investment options for the plan. The
state board of investment may select two up to five other
financial institutions to provide annuity products. In making
their selections, the board shall consider at least these
criteria:
(1) the experience and ability of the financial institution
to provide retirement and death benefits suited to the needs of
the covered employees;
(2) the relationship of the benefits to their cost; and
(3) the financial strength and stability of the institution.
The state board of investment must periodically review at
least every three years each financial institution selected by
the state board of investment. The state board of investment
may retain consulting services to assist in the periodic review,
may establish a budget for its costs in the periodic review
process, and may charge a proportional share of those costs to
each financial institution selected by the state board of
investment. All contracts must be approved by the state board
of investment before execution by the state university board and
the community college board. The state board of investment
shall also establish policies and procedures under section
11A.04, clause (2), to carry out this subdivision.
The chancellor of the state university system and the
chancellor of the state community college system shall redeem
all shares in the accounts of the Minnesota supplemental
investment fund held on behalf of personnel in the supplemental
plan who elect an investment option other than the supplemental
investment fund, except that shares in the fixed interest
account must not be redeemed until the expiration dates for the
guaranteed investment contracts. The chancellors shall transfer
the cash realized to the financial institutions selected by the
state university board and the community college board under
section 354B.05.
Sec. 13. [354B.15] [TRANSFER OF CERTAIN TRA MEMBER
CONTRIBUTION REFUNDS TO IRAP.]
(a) Notwithstanding any provision of law to the contrary, a
former member of the teachers retirement fund association who
has less than three years of allowable service and who is a
member of the plan governed by this chapter may elect to
transfer to the plan an amount equal to the refund that the
member could otherwise receive under section 354.49, subdivision
2. The transfer must be made from the teachers retirement fund
association directly to the plan and credited by the plan
appropriately. No amount under this section is payable directly
to an individual.
(b) The election must be made on a form prescribed by the
executive director of the teachers retirement fund association,
after consultation with the administrators of the plan.
Sec. 14. [CHAPTER 354B RECODIFICATION.]
(a) The staff of the legislative commission on pensions and
retirement, in conjunction with representatives of the higher
education board, the state university board, the state community
college board, one representative from each employee bargaining
unit covered by chapter 354B, and other interested parties,
shall prepare proposed legislation to recodify Minnesota
Statutes, chapter 354B.
(b) The proposed legislation must be submitted to the
chairs of the senate committee on governmental operations and
reform, the senate committee on education, the house of
representatives committee on governmental operations and
gambling, and the house of representatives committee on
education by January 15, 1995.
(c) The proposed legislation must accomplish the following:
(1) eliminate obsolete and duplicate references in
Minnesota Statutes, chapter 354B;
(2) clarify obscure or ambiguous language in Minnesota
Statutes, chapter 354B, with special attention given to the
effects of the higher education systems merger provided in
Minnesota Statutes, chapter 136E;
(3) merge the separate individual retirement account plans
currently administered by the state university system and the
state community college system;
(4) wherever possible, eliminate unnecessary or duplicative
administrative provisions; and
(5) implement those appropriate retirement plan provisions
necessary to give effect to the purposes of Minnesota Statutes,
chapter 136E.
Sec. 15. [EFFECTIVE DATES.]
(a) Sections 1, 2, 4, 10, 12, and 13 are effective July 1,
1994.
(b) Sections 3, 5, 6, 7, 8, and 11 are effective July 1,
1995.
ARTICLE 2
INDIVIDUAL RETIREMENT ACCOUNT PLAN
Section 1. [354C.01] [DEFINITIONS.]
Subdivision 1. [TERMS.] Unless the language or context
clearly indicates that a different meaning is intended, the
following terms have the meanings given.
Subd. 2. [INDIVIDUAL RETIREMENT ACCOUNT PLAN OR
PLAN.] "Individual retirement account plan" or "plan" means the
individual retirement account plan established by sections
354B.01 to 354B.05.
Subd. 3. [COVERED EMPLOYMENT.] "Covered employment" means
employment as an eligible employee as defined under section
354C.02, subdivision 2.
Subd. 4. [PROFESSIONAL EMPLOYEE.] "Professional employee"
means an employee who is engaged in work that:
(1) is predominantly intellectual and varied in character
as opposed to routine mental, manual, mechanical, or physical;
(2) involves discretion and judgment in its performance;
(3) cannot be standardized in relation to a given period of
time; and
(4) requires advance knowledge in a field of science or
learning usually acquired by long study in an institution of
higher learning or hospital.
Subd. 5. [SUPERVISORY EMPLOYEE.] "Supervisory employee"
means an employee having the authority to hire, transfer,
suspend, promote, discharge, assign, reward, or discipline
employees, direct the work of employees, or adjust employees'
grievances on behalf of the employer. To be included as a
supervisory function, the exercise of the authority by the
employee may not be merely routine or clerical in nature but
must require the use of independent judgment.
Sec. 2. [354C.02] [PARTICIPANTS.]
Subdivision 1. [ELECTION.] An eligible employee as
enumerated in subdivision 2 who is eligible for membership in
the Minnesota state retirement system under chapter 352, the
public employees retirement association under chapter 353, or
the teachers retirement association under chapter 354 may elect
to participate in the individual retirement account plan rather
than in the general state retirement plan. Election to
participate in the plan must be made pursuant to section 354C.04.
Subd. 2. [ELIGIBILITY.] Eligible employees are:
(1) any supervisory or professional employee of the state
arts board; and
(2) any supervisory or professional employee of the
Minnesota humanities commission.
Sec. 3. [354C.03] [SOCIAL SECURITY COVERAGE.]
Plan participants remain members of the general state
retirement plan for purposes of social security coverage only
remain covered by the applicable agreement entered into under
section 355.02 but are not members of the general state
retirement plan for any other purpose while employed in covered
employment.
Sec. 4. [354C.04] [PLAN COVERAGE.]
Eligible employees shall elect to participate in either the
individual retirement account plan or their respective
retirement plan as follows:
(1) An eligible employee first employed after the effective
date of this act in covered employment may elect retirement
coverage under either their respective state retirement plan or
the individual retirement account plan within 60 days of the
start of covered employment. An election made under this
subdivision is irrevocable.
(2) An eligible employee with prior allowable service as a
member of the Minnesota state retirement system, the public
employees retirement association, or the teachers retirement
association may elect coverage by the plan. If plan coverage is
elected, accumulated employer and employee contributions and
allowable service credit shall remain with the applicable
retirement association or system. Notwithstanding any provision
of law to the contrary, an individual who has transferred
coverage for the same employment to the plan is entitled to an
augmented deferred retirement annuity based on the amount
representing the employer and employee contributions made on the
individual's behalf in the retirement association or system in
which the individual was formerly enrolled without regard to
whether or not the individual meets the service credit vesting
requirements of the applicable retirement association or
system. An election made under this subdivision must be made
within 120 days and is irrevocable.
Sec. 5. [354C.05] [CONTRIBUTIONS.]
Subdivision 1. [MEMBER CONTRIBUTIONS.] Eligible employees
who would otherwise be eligible to participate in the Minnesota
state retirement system, the public employees retirement
association, or the teachers retirement association, but who
participate in the individual retirement account plan, shall
make a member contribution in an amount equal to the member
contribution amount required by the plan for which the
individual was originally eligible for membership. The
contribution must be made by payroll deduction each pay period
and must be in accordance with either section 403(b) or 414(h)
of the Internal Revenue Code.
Subd. 2. [EMPLOYER CONTRIBUTIONS.] The employer of
eligible employees described in subdivision 1 who are eligible
to participate in either the Minnesota state retirement system
or the public employees retirement association shall make an
employer contribution to the plan in an amount equal to the
employer contribution amount required by the plan for which the
individual was originally eligible for membership. The employer
of eligible employees described in subdivision 1 who are
eligible to participate in the teachers retirement association
shall make an employer contribution to the plan in an amount
equal to the employer contribution required by section 354.42,
subdivision 3, and shall make an employer contribution to the
teachers retirement association in an amount equal to the
employer contribution required by section 354.42, subdivision 5.
Sec. 6. [354C.06] [ADMINISTRATION.]
The Minnesota state university system or its successor
shall administer the individual retirement account plan for
eligible employees in accordance with sections 354B.01 to
354B.05.
Sec. 7. [354C.07] [TRANSFER OF CERTAIN MSRS MEMBER
CONTRIBUTION REFUND AMOUNTS TO PLAN.]
(a) Notwithstanding any provision of law to the contrary, a
former member of the general state employees retirement plan of
the Minnesota state retirement system who is a member of the
individual retirement account plan under this chapter may elect
to transfer to the individual retirement account plan an amount
equal to the refund under section 352.22, subdivision 2, that
the member could otherwise receive. The transfer must be made
from the general state employees retirement fund directly to the
individual retirement account plan and credited by the plan
appropriately. No amount under this section is payable directly
to any individual.
(b) The election must be made on a form prescribed by the
executive director of the Minnesota state retirement system,
after consultation with the administrators of the plan.
Sec. 8. [EFFECTIVE DATE.]
This article is effective July 1, 1994.
Presented to the governor April 22, 1994
Signed by the governor April 25, 1994, 1:11 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes