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CHAPTER 211--S.F.No. 2620

An act

relating to retirement; benefit and contribution changes for Minnesota statewide and major local public employee retirement plans; increasing contribution rates; reducing certain postretirement adjustment rates; modifying investment return assumptions; extending amortization target dates; reducing deferred annuities augmentation; requiring a study on postretirement adjustments; making administrative changes to the Minnesota State Retirement System, Teachers Retirement Association, Public Employees Retirement Association, and St. Paul Teachers Retirement Fund Association; clarifying refund repayment procedures; modifying executive director credentials; clarifying service requirements; revising appeal procedures; modifying service credit purchase procedures; establishing new procedures for disability applications due to private disability insurance requirements; clarifying disability benefit payment provisions; modifying annual benefit limitations for federal tax code compliance; authorizing use of IRS correction procedures; clarifying benefit offsets for certain refund payments; clarifying police and fire plan coverage for certain Hennepin Healthcare System supervisors; modifying various economic actuarial assumptions; authorizing the transfer of assets and members from the voluntary statewide volunteer firefighter retirement plan to a volunteer firefighter relief association; adopting recommendations of the Volunteer Firefighter Relief Association working group; modifying certain provisions for volunteer firefighter relief associations; increasing the lump-sum service pension maximum and lowering certain vesting requirements for the Eden Prairie Volunteer Firefighters Relief Association; modifying the Brook Park volunteer firefighters service pension level; permitting alternative allocation of fire state aid for the city of Austin; establishing a fire state aid work group; establishing a relief association working group; extending a reporting deadline for the Clearbrook Fire Department Relief Association; clarifying a 1992 session law for the Swift County-Benson Hospital; modifying various Department of Human Services and Department of Corrections employment classifications eligible for correctional retirement coverage; revising augmentation interest rates for certain terminated privatized employees; adopting definition of the Hometown Heroes Act related to public safety officer death benefits; modifying defined contribution plans to allow certain distributions; allowing service credit purchase and rule of 90 eligibility for certain Minnesota Department of Transportation employees; expanding investment authority for the Hennepin County Supplemental Retirement Plan; authorizing certain MnSCU employees to elect retroactive and prospective TRA coverage; authorizing a MnSCU employee to transfer past service from IRAP to PERA; increasing maximum employer contribution to a supplemental laborers pension fund; exempting certain laborers groups from coverage; authorizing certain additional sources of retirement plan funding; making technical and conforming changes; authorizing direct state aid to the public employees police and fire retirement plan and the St. Paul Teachers Retirement Fund Association; modifying pension adjustment revenue provisions; appropriating money;

amending Minnesota Statutes 2016, sections 3A.02, subdivision 4; 3A.03, subdivisions 2, 3; 16A.14, subdivision 2a; 126C.10, subdivision 37; 352.01, subdivisions 2a, 13a; 352.017, subdivision 2; 352.03, subdivisions 5, 6; 352.04, subdivisions 2, 3, 8, 9; 352.113, subdivisions 2, 4, 14; 352.116, subdivision 1a; 352.22, subdivisions 2, 3, by adding subdivisions; 352.23; 352.27; 352.91, subdivisions 3f, 3g, by adding a subdivision; 352.92, subdivisions 1, 2, by adding a subdivision; 352.955, subdivision 3; 352B.013, subdivision 2; 352B.02, subdivisions 1a, 1c; 352B.08, by adding a subdivision; 352B.085; 352B.086; 352B.11, subdivision 4; 352D.02, subdivisions 1, 3; 352D.04, subdivision 2; 352D.05, subdivision 4; 352D.085, subdivision 1; 352D.11, subdivision 2; 352D.12; 352F.04, subdivisions 1, 2, by adding a subdivision; 353.01, subdivisions 2b, 10, 16, 43, 47; 353.012; 353.0162; 353.03, subdivision 3; 353.27, subdivisions 7a, 12, 12a, 12b; 353.28, subdivision 5; 353.29, subdivisions 4, 7; 353.30, subdivisions 3c, 5; 353.32, subdivisions 1, 4; 353.34, subdivisions 2, 3; 353.35, subdivision 1; 353.37, subdivision 1; 353.64, subdivision 10; 353.65, subdivisions 2, 3, by adding a subdivision; 353D.07; 353F.02, subdivision 5a; 353F.025, subdivision 2; 353F.04, subdivision 2; 353F.05; 353F.057; 353F.06; 353F.07; 353G.01, subdivision 9, by adding a subdivision; 353G.02, subdivision 6; 353G.03, subdivision 3; 353G.08, subdivision 3; 353G.11, subdivision 1; 354.05, subdivision 2, by adding a subdivision; 354.06, subdivisions 2, 2a; 354.095; 354.42, subdivisions 2, 3; 354.435, subdivision 4; 354.436, subdivision 3; 354.44, subdivisions 3, 6, 9; 354.45, by adding a subdivision; 354.46, subdivision 6; 354.48, subdivision 1; 354.49, subdivision 2; 354.50, subdivision 2; 354.51, subdivision 5; 354.512; 354.52, subdivisions 4, 4d; 354.53, subdivision 5; 354.55, subdivision 11; 354.66, subdivision 2; 354.72, subdivisions 1, 2; 354A.011, subdivisions 3a, 29; 354A.093, subdivisions 4, 6; 354A.095; 354A.096; 354A.12, subdivisions 1, 1a, 2a, 3a, 3c, 7; 354A.29, subdivision 7; 354A.31, subdivisions 3, 5, 6, 7; 354A.34; 354A.35, subdivision 2; 354A.36, subdivision 4; 354A.37, subdivisions 2, 3; 354A.38; 356.195, subdivision 2; 356.215, subdivisions 9, 11; 356.24, subdivision 1; 356.30, subdivision 1; 356.32, subdivision 2; 356.415, subdivisions 1, 1a, 1b, 1c, 1d, 1e, 1f, by adding a subdivision; 356.44; 356.47, subdivisions 1, 3; 356.50, subdivision 2; 356.551, subdivision 2; 356.635, subdivision 10, by adding subdivisions; 356.645; 356.96, subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13; 356A.06, subdivision 7; 383B.47; 383B.48; 383B.49; 383B.50; 423A.02, subdivisions 3, 5; 423A.022, subdivision 5; 424A.001, subdivisions 2, 3, 10, by adding a subdivision; 424A.002, subdivision 1; 424A.01, subdivisions 1, 5, 6, by adding subdivisions; 424A.015, subdivision 1, by adding a subdivision; 424A.016, subdivision 2; 424A.02, subdivisions 1, 3a, 7; 424A.04, subdivision 1; 424A.07; 424A.091, subdivision 3; 424A.094, subdivision 3; 424A.10, subdivision 1; 424B.20, subdivision 4, by adding a subdivision; 490.121, subdivisions 4, 25, 26; 490.1211; 490.123, by adding a subdivision; 490.124, subdivision 12; Minnesota Statutes 2017 Supplement, sections 353.27, subdivision 3c; 356.215, subdivision 8; Laws 1992, chapter 534, section 10, subdivision 3; proposing coding for new law in Minnesota Statutes, chapters 353F; 353G; 356; 424A; repealing Minnesota Statutes 2016, sections 3A.12; 352.04, subdivision 11; 352.045; 352.72; 352B.30; 353.0161; 353.27, subdivision 3b; 353.34, subdivision 6; 353.71; 354.42, subdivisions 4a, 4b, 4c, 4d; 354.60; 354A.12, subdivision 2c; 354A.29, subdivisions 8, 9; 354A.39; 356.611, subdivisions 3, 3a, 4, 5; 356.96, subdivisions 14, 15; 424A.02, subdivision 13; Laws 2008, chapter 349, article 8, section 4.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

MINNESOTA STATE RETIREMENT SYSTEM
BENEFIT CHANGES

Section 1.

Minnesota Statutes 2016, section 3A.02, subdivision 4, is amended to read:

Subd. 4.

Deferred annuities augmentation.

deleted text begin (a)deleted text end The deferred retirement allowance of any former legislator must be augmented as provided hereindeleted text begin .deleted text end

deleted text begin (b) The required reserves applicable to the deferred retirement allowance, determined as of the date the benefit begins to accrue using an appropriate mortality table and an interest assumption of six percent, must be augmenteddeleted text end from the first of the month following the termination of active service, or July 1, 1973, whichever is later, to the deleted text begin first day of the month in which the allowance begins to accruedeleted text end new text begin effective date of retirementnew text end , at the following deleted text begin annually compoundeddeleted text end rate or ratesnew text begin , compounded annuallynew text end :

(1) five percent until January 1, 1981;

(2) three percent from January 1, 1981, deleted text begin or from the first day of the month following the termination of active service, whichever is later,deleted text end until January 1 of the year in which the former legislator attains age 55 or deleted text begin untildeleted text end January 1, 2012, whichever is earlier;

(3) five percent from the period end date under clause (2) until the effective date of retirement or deleted text begin untildeleted text end January 1, 2012, whichever is earlier; deleted text begin anddeleted text end

(4) two percent deleted text begin after December 31, 2011.deleted text end new text begin from January 1, 2012, until December 31, 2018; andnew text end

new text begin (5) after December 31, 2018, the deferred annuity must not be augmented. new text end

Sec. 2.

Minnesota Statutes 2016, section 352.116, subdivision 1a, is amended to read:

Subd. 1a.

Actuarial reduction for early retirement.

new text begin (a) new text end This subdivision applies to a person who has become at least 55 years old and first became a covered employee after June 30, 1989, and to any other covered employee who has become at least 55 years old and whose annuity is higher when calculated under section 352.115, subdivision 3, paragraph (b), in conjunction with this subdivision than when calculated under section 352.115, subdivision 3, paragraph (a), in conjunction with subdivision 1. A covered employee who retires before the normal retirement age shall be paid the normal retirement annuity provided in section 352.115, subdivisions 2 and 3, paragraph (b), reduced deleted text begin so thatdeleted text end new text begin as described in paragraph (b) or (c), as applicable.new text end

new text begin (b) For covered employees who retire on or after July 1, 2019, new text end the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity new text begin until normal retirement age new text end and the annuity amount were augmented at deleted text begin andeleted text end new text begin the applicable new text end annual rate deleted text begin of three percentdeleted text end new text begin ,new text end compounded annuallynew text begin ,new text end from the day the annuity begins to accrue until the normal retirement agenew text begin . The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee for the period until the employee reaches normal retirement age. The applicable annual rates are the following:new text end

new text begin (1) until June 30, 2019, three percent if the employee became an employee before July 1, 2006, and 2.5 percent if the employee became an employee after June 30, 2006; new text end

new text begin (2) beginning July 1, 2019, through June 30, 2024, a rate that changes each month, on the first day of the month, starting with the rate in clause (1), as applicable to the employee, and reducing the rate to zero in equal monthly increments over the five-year period; and new text end

new text begin (3) after June 30, 2024, zero percent. new text end

new text begin After June 30, 2024, actuarial equivalent, for the purpose of determining the reduced annuity commencing before normal retirement age under this clause, shall not take into account any augmentation. new text end

new text begin (c) For covered employees who retire before July 1, 2019, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an annual rate of three percent, compounded annually, from the day the annuity begins to accrue until normal retirement agenew text end if the employee became an employee before July 1, 2006, and at an annual rate of 2.5 percentnew text begin ,new text end compounded annuallynew text begin ,new text end from the day the annuity begins to accrue until deleted text begin thedeleted text end normal retirement age if the employee deleted text begin initially becomesdeleted text end new text begin became new text end an employee after June 30, 2006.

Sec. 3.

Minnesota Statutes 2016, section 352.22, subdivision 2, is amended to read:

Subd. 2.

Amount of refund.

Except as provided in subdivision 3, the refund payable to a person who ceased to be a state employee by reason of a termination of state service is an amount equal to employee accumulated contributions plus interest new text begin until the date on which the refund is paid, new text end at the deleted text begin rate ofdeleted text end new text begin following rates for the applicable period:new text end

new text begin (1) new text end six percent per year compounded daily from the date that the contribution was made until June 30, 2011deleted text begin , or until the date on which the refund is paid, whichever is earlier, and at the rate ofdeleted text end new text begin ;new text end

new text begin (2)new text end four percent per year compounded daily from the date that the contribution was made or deleted text begin fromdeleted text end July 1, 2011, whichever is later, deleted text begin until the date on which the refund is paid.deleted text end new text begin until June 30, 2018; andnew text end

new text begin (3) three percent per year compounded daily from the date that the contribution was made or July 1, 2018, whichever is later. new text end

Included with the refund is any interest paid as part of repayment of a past refund, plus interest thereon from the date of repayment.

Sec. 4.

Minnesota Statutes 2016, section 352.22, is amended by adding a subdivision to read:

new text begin Subd. 2b. new text end

new text begin Refund repayment. new text end

new text begin Any person who has received a refund from the state employees retirement plan, and who is a member of any of the retirement plans specified in section 356.311, paragraph (b), may repay the refund with interest to the state employees retirement plan. If a refund is repaid to the plan and more than one refund has been received from the plan, all refunds must be repaid. Repayment must be made as provided in section 352.23, and under terms and conditions consistent with that section as agreed upon with the director. new text end

Sec. 5.

Minnesota Statutes 2016, section 352.22, subdivision 3, is amended to read:

Subd. 3.

Deferred annuity.

(a) An employee who has at least three years of allowable service if employed before July 1, 2010, or who has at least five years of allowable service if employed after June 30, 2010, when termination occurs may elect to leave the accumulated contributions in the fund and thereby be entitled to a deferred retirement annuity. The annuity must be computed under the law in effect when state service terminated, on the basis of the allowable service credited to the person before the termination of service.

(b) An employee on layoff or on leave of absence without pay, except a leave of absence for health reasons, and who does not return to state service must have an annuity, deferred annuity, or other benefit to which the employee may become entitled computed under the law in effect on the employee's last working day.

(c) No application for a deferred annuity may be made more than 60 days before the time the former employee reaches the required age for entitlement to the payment of the annuity. The deferred annuity begins to accrue no earlier than 60 days before the date the application is filed in the office of the system, but not (1) before the date on which the employee reaches the required age for entitlement to the annuity nor (2) before the day following the termination of state service in a position which is not covered by the retirement system.

(d) Application for the accumulated contributions left on deposit with the fund may be made at any time following the date of the termination of service.

(e) Deferred annuities must be augmented as provided in deleted text begin section 352.72, subdivision 2deleted text end new text begin subdivision 3anew text end .

Sec. 6.

Minnesota Statutes 2016, section 352.22, is amended by adding a subdivision to read:

new text begin Subd. 3a. new text end

new text begin Computation of deferred annuity. new text end

new text begin (a) The deferred annuity of any former state employee must be augmented from the first day of the month following termination of active service or July 1, 1971, whichever is later, to the effective date of retirement. new text end

new text begin (b) For a person who became a state employee before July 1, 2006, the annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) five percent until January 1, 1981; new text end

new text begin (2) three percent thereafter until January 1 of the year following the year in which the former employee attains age 55 or January 1, 2012, whichever is earlier; new text end

new text begin (3) five percent from the January 1 next following the attainment of age 55 until December 31, 2011; new text end

new text begin (4) two percent from January 1, 2012, until December 31, 2018; and new text end

new text begin (5) after December 31, 2018, the deferred annuity must not be augmented. new text end

new text begin (c) For a person who became a state employee after June 30, 2006, the annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) 2.5 percent until December 31, 2011; new text end

new text begin (2) two percent from January 1, 2012, until December 31, 2018; and new text end

new text begin (3) after December 31, 2018, the deferred annuity must not be augmented. new text end

new text begin (d) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former state employee who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and the tables adopted by the board and approved by the actuary retained under section 356.214. new text end

Sec. 7.

Minnesota Statutes 2016, section 352B.08, is amended by adding a subdivision to read:

new text begin Subd. 2b. new text end

new text begin Computation of deferred annuity. new text end

new text begin (a) The deferred annuity of any former member must be augmented from the first day of the month following the termination of active service, or July 1, 1971, whichever is later, to the effective date of retirement. new text end

new text begin (b) For a person who became an employee before July 1, 2006, the annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) five percent until January 1, 1981; new text end

new text begin (2) three percent from January 1, 1981, until December 31, 2011; new text end

new text begin (3) two percent from January 1, 2012, until December 31, 2018; and new text end

new text begin (4) after December 31, 2018, the deferred annuity must not be augmented. new text end

new text begin (c) For a person who became an employee after June 30, 2006, the annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) 2.5 percent until December 31, 2011; new text end

new text begin (2) two percent from January 1, 2012, until December 31, 2018; and new text end

new text begin (3) after December 31, 2018, the deferred annuity must not be augmented. new text end

new text begin (d) The mortality table and interest assumption used to compute the annuity must be those in effect when the member files application for annuity. new text end

Sec. 8.

Minnesota Statutes 2016, section 352D.085, subdivision 1, is amended to read:

Subdivision 1.

Combined service.

Except as provided in section 356.30, 356.302, or 356.303, service under the unclassified program deleted text begin fordeleted text end new text begin during new text end which the employee deleted text begin has been credited with employee sharesdeleted text end new text begin contributed to the program under section 352D.04, subdivision 2, new text end may be used for the limited purpose of qualifying for benefits under sections 352.115, deleted text begin 352.72, subdivision 1,deleted text end 352.113, 354.44, 354.45, 354.48, and deleted text begin 354.60deleted text end new text begin 356.311new text end . The service deleted text begin alsodeleted text end may not be used to qualify for a disability benefit under section 352.113 or 354.48 if a participant was under the unclassified program at the time of the disability. Also, the years of service and salary paid while the participant was in the unclassified program may not be used in determining the amount of benefits.

Sec. 9.

Minnesota Statutes 2016, section 490.121, subdivision 25, is amended to read:

Subd. 25.

Tier I.

"Tier I" is the benefit program of the retirement plan with a membership specified by section 490.1221, paragraph (b), and governed by sections 356.415, deleted text begin subdivisions 1 anddeleted text end new text begin subdivision new text end 1f; and 490.121 to 490.133, except as modified in sections 490.121, subdivision 21f, paragraph (b); 490.1222; 490.123, subdivision 1a, paragraph (b); and 490.124, subdivision 1, paragraphs (c) and (d).

Sec. 10.

Minnesota Statutes 2016, section 490.121, subdivision 26, is amended to read:

Subd. 26.

Tier II.

"Tier II" is the benefit program of the retirement plan with a membership specified by section 490.1221, paragraph (c), and governed by sections 356.415, deleted text begin subdivisions 1 anddeleted text end new text begin subdivision new text end 1f; 490.121 to 490.133, as modified in section 490.121, subdivision 21f, paragraph (b); 490.1222; 490.123, subdivision 1a, paragraph (b); and 490.124, subdivision 1, paragraphs (c) and (d).

Sec. 11.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2016, sections 3A.12; 352.045; 352.72; and 352B.30, new text end new text begin are repealed. new text end

Sec. 12.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 11 are effective June 30, 2018. new text end

ARTICLE 2

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION
BENEFIT CHANGES

Section 1.

Minnesota Statutes 2016, section 353.30, subdivision 5, is amended to read:

Subd. 5.

Actuarial reduction for early retirement.

new text begin (a) new text end This subdivision applies to a member who has become at least 55 years old and first became a public employee after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under section 353.29, subdivision 3, paragraph (b), in conjunction with this subdivision than when calculated under section 353.29, subdivision 3, paragraph (a), in conjunction with subdivision 1, 1a, 1b, or 1c. An employee who retires before normal retirement age shall be paid the retirement annuity provided in section 353.29, subdivision 3, paragraph (b), reduced deleted text begin so thatdeleted text end new text begin as described in paragraph (b) or (c), as applicable.new text end

new text begin (b) For members who begin to receive an annuity on or after July 1, 2019, new text end the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity new text begin until normal retirement age new text end and the annuity amount were augmented at deleted text begin andeleted text end new text begin the applicable new text end annual rate deleted text begin of three percentdeleted text end new text begin ,new text end compounded annuallynew text begin ,new text end from the deleted text begin day thedeleted text end annuity deleted text begin begins to accruedeleted text end new text begin starting date new text end until deleted text begin thedeleted text end normal retirement agenew text begin . The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee for the period until the employee reaches normal retirement age. The applicable annual rates are the following:new text end

new text begin (1) until June 30, 2019, three percent if the employee became an employee before July 1, 2006, and 2.5 percent if the employee became an employee after June 30, 2006; new text end

new text begin (2) beginning July 1, 2019, through June 30, 2024, a rate that changes each month, on the first day of the month, starting with the rate in clause (1), as applicable to the employee, and reducing the rate to zero in equal monthly increments over the five-year period; and new text end

new text begin (3) after June 30, 2024, zero percent. new text end

new text begin After June 30, 2024, actuarial equivalent, for the purpose of determining the reduced annuity commencing before normal retirement age under this paragraph, shall not take into account any augmentation. new text end

new text begin (c) For members who begin to receive an annuity before July 1, 2019, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an annual rate of three percent, compounded annually, from the annuity starting date until normal retirement agenew text end if the employee became an employee before July 1, 2006, and at 2.5 percentnew text begin ,new text end compounded annuallynew text begin ,new text end from the deleted text begin day thedeleted text end annuity deleted text begin begins to accruedeleted text end new text begin starting date new text end until deleted text begin thedeleted text end normal retirement age if the employee deleted text begin initially becomesdeleted text end new text begin became new text end an employee after June 30, 2006.

Sec. 2.

Minnesota Statutes 2016, section 353.34, subdivision 2, is amended to read:

Subd. 2.

Refund with interest.

(a) Except as provided in subdivision 1, any person who ceases to be a deleted text begin public employeedeleted text end new text begin membernew text end is entitled to receive a refund in an amount equal to accumulated deductions with annual compound interest to the first day of the month in which the refund is processed.

(b) new text begin Annual compound interest rates on a refund under paragraph (a) shall be as follows:new text end

new text begin (1) new text end deleted text begin for a person who ceases to be a public employee before July 1, 2011, the refund interest is at the rate ofdeleted text end six percent to June 30, 2011deleted text begin ,deleted text end new text begin ;new text end

new text begin (2) four percent after June 30, 2011, to June 30, 2018; new text end and deleted text begin at the rate of fourdeleted text end

new text begin (3) three new text end percent after June 30, deleted text begin 2011.deleted text end new text begin 2018.new text end

deleted text begin for a person who ceases to be a public employee after July 1, 2011, the refund interest is at the rate of four percent. deleted text end

(c) If a person repays a refund and subsequently applies for another refund, the repayment amount, including interest, is added to the fiscal year balance in which the repayment was made.

(d) If the refund payable to a member is based on employee deductions that are determined to be invalid under section 353.27, subdivision 7, the interest payable on the invalid employee deductions is four percent.

Sec. 3.

Minnesota Statutes 2016, section 353.34, subdivision 3, is amended to read:

Subd. 3.

Deferred annuity; eligibility; computation.

(a) A member who is vested under section 353.01, subdivision 47, when termination of public service or termination of membership occurs has the option of leaving the accumulated deductions in the fund and being entitled to a deferred retirement annuity commencing at normal retirement age or to a deferred early retirement annuity under section 353.30, subdivision 1a, 1b, 1c, or 5.

(b) The deferred annuity must be computed under section 353.29, subdivision 3, on the basis of the law in effect on the date of termination of public service or termination of membership, whichever is earlier, and must be augmented as provided in deleted text begin section 353.71, subdivision 2deleted text end new text begin paragraph (c)new text end .

new text begin (c) The deferred annuity of any former member must be augmented from the first day of the month following the termination of active service, or July 1, 1971, whichever is later, to the effective date of retirement. new text end

new text begin (d) For a person who became a public employee before July 1, 2006, and who has a termination of public service before January 1, 2012, the deferred annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) five percent until January 1, 1981; new text end

new text begin (2) three percent from January 1, 1981, until January 1 of the year following the year in which the former member attains age 55 or December 31, 2011, whichever is earlier; new text end

new text begin (3) five percent from January 1 of the year following the year in which the former member attains age 55, or December 31, 2011, whichever is earlier; new text end

new text begin (4) one percent from January 1, 2012, until December 31, 2018; and new text end

new text begin (5) after December 31, 2018, the deferred annuity must not be augmented. new text end

new text begin (e) For a person who became a public employee after June 30, 2006, and who has a termination of public service before January 1, 2012, the deferred annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) 2.5 percent until December 31, 2011; new text end

new text begin (2) one percent from January 1, 2012, until December 31, 2018; and new text end

new text begin (3) after December 31, 2018, the deferred annuity must not be augmented. new text end

new text begin (f) For a person who has a termination of public service after December 31, 2011, the deferred annuity must not be augmented. new text end

new text begin (g) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former member who terminated service before July 1, 1997, or the survivor benefit payable on behalf of a basic or police and fire member who was receiving disability benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained under section 356.214. new text end

deleted text begin (c)deleted text end new text begin (h) new text end A former member qualified to apply for a deferred retirement annuity may revoke this option at any time before the commencement of deferred annuity payments by making application for a refund. The person is entitled to a refund of accumulated member contributions within 30 days following date of receipt of the application by the executive director.

Sec. 4.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2016, sections 353.27, subdivision 3b; and 353.71, new text end new text begin are repealed. new text end

Sec. 5.

new text begin EFFECTIVE DATE. new text end

new text begin (a) Section 1 is effective for annuities with an annuity starting date that is on or after July 1, 2019, notwithstanding the member's date of termination of public service. new text end

new text begin (b) Sections 2 to 4 are effective June 30, 2018. new text end

ARTICLE 3

TEACHERS RETIREMENT ASSOCIATION
BENEFIT CHANGES

Section 1.

Minnesota Statutes 2016, section 354.44, subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement annuity.

(a) The formula retirement annuity must be computed in accordance with the applicable provisions of the formulas stated in paragraph (b) or (d) on the basis of each member's average salary under section 354.05, subdivision 13a, for the period of the member's formula service credit.

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The average salary as defined in section 354.05, subdivision 13a, multiplied by the following percentages per year of formula service credit shall determine the amount of the annuity to which the member qualifying therefor is entitled for service rendered before July 1, 2006:

Period Coordinated Member Basic Member
Each year of service during first ten 1.2 percent per year 2.2 percent per year
Each year of service thereafter 1.7 percent per year 2.7 percent per year

For service rendered on or after July 1, 2006, by a member other than a member who was a member of the former Duluth Teachers Retirement Fund Association between January 1, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member who was a member of the former Duluth Teachers Retirement Fund Association between January 1, 2013, and June 30, 2015, the average salary as defined in section 354.05, subdivision 13a, multiplied by the following percentages per year of service credit, determines the amount the annuity to which the member qualifying therefor is entitled:

Period Coordinated Member Basic Member
Each year of service during first ten 1.4 percent per year 2.2 percent per year
Each year of service after ten years of service 1.9 percent per year 2.7 percent per year

(c)deleted text begin (i)deleted text end new text begin (1)new text end This paragraph applies only to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction with this paragraph than when calculated under paragraph (d), in conjunction with paragraph (e).

deleted text begin (ii)deleted text end new text begin (2)new text end Where any member retires prior to normal retirement age under a formula annuity, the member shall be paid a retirement annuity in an amount equal to the normal annuity provided in paragraph (b) reduced by one-quarter of one percent for each month that the member is under normal retirement age at the time of retirement except that for any member who has 30 or more years of allowable service credit, the reduction shall be applied only for each month that the member is under age 62.

deleted text begin (iii)deleted text end new text begin (3)new text end Any member whose attained age plus credited allowable service totals 90 years is entitled, upon application, to a retirement annuity in an amount equal to the normal annuity provided in paragraph (b), without any reduction by reason of early retirement.

(d) This paragraph applies to a member who has become at least 55 years old and first became a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity amount when calculated under this paragraph and in conjunction with paragraph (e), is higher than it is when calculated under paragraph (b), in conjunction with paragraph (c).

new text begin (1)new text end For a basic member, the average salary, as defined in section 354.05, subdivision 13a, multiplied by 2.7 percent for each year of service for a basic member determines the amount of the retirement annuity to which the basic member is entitled. The annuity of a basic member who was a member of the former Minneapolis Teachers Retirement Fund Association as of June 30, 2006, must be determined according to the annuity formula under the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association in effect as of that date.

new text begin (2)new text end For a coordinated member, the average salary, as defined in section 354.05, subdivision 13a, multiplied by 1.7 percent for each year of service rendered before July 1, 2006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a member other than a member who was a member of the former Duluth Teachers Retirement Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the amount of the retirement annuity to which the coordinated member is entitled.

(e) This paragraph applies to a deleted text begin persondeleted text end new text begin member new text end who has become at least 55 years old and first becomes a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b), in conjunction with paragraph (c). An employee who retires under the formula annuity before the normal retirement age shall be paid the normal annuity provided in paragraph (d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity and the annuity amount were augmented at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee after June 30, 2006. Except in regards to section 354.46, this paragraph remains in effect until June 30, 2015.

(f) deleted text begin Afterdeleted text end new text begin Until new text end June 30, deleted text begin 2020deleted text end new text begin 2019new text end , this paragraph applies to a deleted text begin persondeleted text end new text begin member new text end who has become at least 55 years old and first becomes a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b) in conjunction with paragraph (c). An employee who retires under the formula annuity before the normal retirement age is entitled to receive the normal annuity provided in paragraph (d)new text begin , reduced as described in clause (1) or (2), as applicablenew text end .

new text begin (1)new text end For a deleted text begin persondeleted text end new text begin member new text end who is at least age 62 deleted text begin or olderdeleted text end and has at least 30 years of service, the annuity deleted text begin mustdeleted text end new text begin shall new text end be reduced by an early reduction factor of six percent deleted text begin perdeleted text end new text begin for each new text end year deleted text begin of the annuitydeleted text end new text begin that the member's age of retirement precedes normal retirement age. The resulting reduced annuity shall be further adjusted to take into account the increase in the monthly amount new text end that would deleted text begin be payable to the employee if the employeedeleted text end new text begin have occurred had the member retired early and new text end deferred receipt of the annuity new text begin until normal retirement age new text end and the annuity deleted text begin amount weredeleted text end new text begin was new text end augmented deleted text begin at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, anddeleted text end new text begin during the deferral period new text end at 2.5 percent deleted text begin compounded annuallydeleted text end new text begin ,new text end if the deleted text begin employee became an employeedeleted text end new text begin member commenced employment new text end after June 30, 2006new text begin , or at three percent, if the member commenced employment before July 1, 2006, compounded annuallynew text end .

new text begin (2)new text end For a deleted text begin persondeleted text end new text begin member new text end who deleted text begin isdeleted text end new text begin has new text end not deleted text begin at leastdeleted text end new text begin attained new text end age 62 deleted text begin or older and does not have at leastdeleted text end new text begin or has fewer than new text end 30 years of service, the annuity deleted text begin woulddeleted text end new text begin shall new text end be reduced new text begin for each year that the member's age of retirement precedes the normal retirement age new text end by deleted text begin andeleted text end new text begin the following new text end early reduction deleted text begin factor ofdeleted text end new text begin factors:new text end

new text begin (i) for the period during which the member is age 55 through age 59, the factor is new text end four percent deleted text begin per year for ages 55 through 59deleted text end new text begin ;new text end and

new text begin (ii) for the period during which the member is age 60 but not yet normal retirement age, the factor isnew text end seven percent deleted text begin per year of the annuity that would be payable to the employee if the employeedeleted text end new text begin .new text end

new text begin The resulting reduced annuity shall be further adjusted to take into account the increase in the monthly amount that would have occurred had the member retired early andnew text end deferred receipt of the annuity new text begin until normal retirement age new text end and the annuity deleted text begin amount weredeleted text end new text begin was new text end augmented deleted text begin at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, anddeleted text end new text begin during the deferral period new text end at 2.5 percent deleted text begin compounded annuallydeleted text end new text begin ,new text end if the deleted text begin employee became an employeedeleted text end new text begin member commenced employment new text end after June 30, 2006new text begin , or at three percent, if the member commenced employment before July 1, 2006, compounded annuallynew text end .

(g) new text begin For members who retire on or after July 1, 2019, this paragraph applies to a person who has become at least 55 years old and first becomes a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b) in conjunction with paragraph (c). An employee who retires under the formula annuity before the normal retirement age is entitled to receive the normal annuity provided in paragraph (d), reduced as described in clause (1) or (2), as applicable.new text end

new text begin (1) For a member who is at least age 62 and has at least 30 years of service, the annuity shall be reduced by an early reduction factor of six percent for each year that the member's age of retirement precedes the normal retirement age. The resulting reduced annuity shall be further adjusted to take into account the increase in the monthly amount that would have occurred had the member retired early and deferred receipt of the annuity until normal retirement age and the annuity was augmented during the deferral period at 2.5 percent, if the member commenced employment after June 30, 2006, or at three percent, if the member commenced employment before July 1, 2006, compounded annually. new text end

new text begin (2) For a member who has not attained age 62 or has fewer than 30 years of service, the annuity shall be reduced for each year that the member's age of retirement precedes normal retirement age by the following early reduction factors: new text end

new text begin (i) for the period during which the member is age 55 through age 59, the factor is four percent; and new text end

new text begin (ii) for the period during which the member is age 60 but not yet normal retirement age, the factor is seven percent. new text end

new text begin The resulting annuity shall be further adjusted to take into account the increase in the monthly amount that would have occurred had the member retired early and deferred receipt of the annuity until normal retirement age and the annuity was augmented during the deferral period at the applicable annual rate, compounded annually. The applicable annual rate is the rate in effect for the month that includes the member's effective date of retirement and shall be considered as fixed for the member for the period until the member reaches normal retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member commenced employment after June 30, 2006, or three percent, if the member commenced employment before July 1, 2006, compounded annually, and decreases each month beginning July 2019 in equal monthly increments over the five-year period that begins July 1, 2019, and ends June 30, 2024, to zero percent effective for July 2024 and thereafter. new text end

new text begin After June 30, 2024, the reduced annuity commencing before normal retirement age under this clause shall not take into account any augmentation. new text end

new text begin (h) new text end After June 30, 2015, and before July 1, deleted text begin 2020deleted text end new text begin 2019new text end , for a person who would have a reduced retirement annuity under either paragraph (e) or (f) if they were applicable, the employee is entitled to receive a reduced annuity which must be calculated using a blended reduction factor augmented monthly by 1/60 of the difference between the reduction required under paragraph (e) and the reduction required under paragraph (f).

deleted text begin (h)deleted text end new text begin (i) new text end No retirement annuity is payable to a former employee with a salary that exceeds 95 percent of the governor's salary unless and until the salary figures used in computing the highest five successive years average salary under paragraph (a) have been audited by the Teachers Retirement Association and determined by the executive director to comply with the requirements and limitations of section 354.05, subdivisions 35 and 35a.

Sec. 2.

Minnesota Statutes 2016, section 354.49, subdivision 2, is amended to read:

Subd. 2.

Calculation.

(a) Except as provided in section 354.44, subdivision 1, any person who ceases to be a member by reason of termination of teaching service, is entitled to receive a refund in an amount equal to the accumulated deductions credited to the account plus interest compounded annually using the following interest rates:

(1) before July 1, 1957, no interest accrues;

(2) July 1, 1957, to June 30, 2011, six percent; deleted text begin anddeleted text end

(3) deleted text begin after June 30deleted text end new text begin July 1new text end , 2011, new text begin to June 30, 2018, new text end four percentnew text begin ; andnew text end

new text begin (4) after June 30, 2018, three percentnew text end .

For the purpose of this subdivision, interest must be computed on fiscal year end balances to the first day of the month in which the refund is issued.

(b) If the person has received permanent disability payments under section 354.48, the refund amount must be reduced by the amount of those payments.

Sec. 3.

Minnesota Statutes 2016, section 354.55, subdivision 11, is amended to read:

Subd. 11.

Deferred annuity; augmentation.

(a) Any person covered under section 354.44, subdivision 6, who ceases to render teaching service, may leave the person's accumulated deductions in the fund for the purpose of receiving a deferred annuity at retirement.

(b) The deleted text begin amount of thedeleted text end deferred retirement annuity deleted text begin is determined by section 354.44, subdivision 6, anddeleted text end new text begin of any former member must be new text end augmented deleted text begin as provided in this subdivision. The required reserves for the annuity which had accrued when the member ceased to render teaching service must be augmented, as further specified in this subdivision, by the applicable interest rate compounded annuallydeleted text end from the first day of the month following the deleted text begin month during which the member ceased to render teachingdeleted text end new text begin termination of active new text end service to the effective date of retirement.

(c) No augmentation is deleted text begin notdeleted text end creditable if the deferral period is less than three months or if deferral commenced before July 1, 1971.

(d) For persons who became covered employees before July 1, 2006, deleted text begin with a deferral period commencing after June 30, 1971,deleted text end the annuity must be augmented deleted text begin as followsdeleted text end new text begin at the following rate or rates, compounded annuallynew text end :

(1) five percent deleted text begin interest compounded annuallydeleted text end until January 1, 1981;

(2) three percent deleted text begin interest compounded annuallydeleted text end from January 1, 1981, until January 1 of the year following the year in which the deferred annuitant attains age 55new text begin or June 30, 2012, whichever is earliernew text end ;

(3) five percent deleted text begin interest compounded annuallydeleted text end from the date established in clause (2) deleted text begin to the effective date of retirement ordeleted text end until June 30, 2012deleted text begin , whichever is earlierdeleted text end ; deleted text begin anddeleted text end

(4) two percent deleted text begin interest compounded annually after June 30, 2012deleted text end new text begin from July 1, 2012, until June 30, 2019; andnew text end

new text begin (5) after June 30, 2019, the deferred annuity must not be augmentednew text end .

(e) For persons who become covered employees after June 30, 2006, the deleted text begin interest rate used to augment the deferreddeleted text end annuity deleted text begin isdeleted text end new text begin must be augmented at the following rate or rates, compounded annually:new text end

new text begin (1) new text end 2.5 percent deleted text begin interest compounded annuallydeleted text end until June 30, 2012deleted text begin , or until the effective date of retirement, whichever is earlier, anddeleted text end new text begin ;new text end

new text begin (2)new text end two percent deleted text begin interest compounded annually after June 30deleted text end new text begin from July 1new text end , 2012new text begin , until June 30, 2019new text end new text begin ; andnew text end

new text begin (3) after June 30, 2019, the deferred annuity must not be augmentednew text end .

deleted text begin (f) If a person has more than one period of uninterrupted service, a separate average salary determined under section 354.44, subdivision 6, must be used for each period and the required reserves related to each period must be augmented as specified in this subdivision. The sum of the augmented required reserves is the present value of the annuity. For the purposes of this subdivision, "period of uninterrupted service" means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year. deleted text end

deleted text begin (g) If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has allowable service credit in the Teachers Retirement Association. deleted text end

deleted text begin (h) If a person does not render teaching service in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of the resumption of teaching service must be those applicable to new members. deleted text end

deleted text begin (i) The mortality table and interest rate actuarial assumption used to compute the annuity must be the applicable mortality table established by the board under section 354.07, subdivision 1, and the interest rate actuarial assumption under section 356.215 in effect when the member retires. deleted text end

deleted text begin (j)deleted text end new text begin (f) new text end In no case may the annuity payable under this subdivision be less than the amount of annuity payable under section 354.44, subdivision 6.

deleted text begin (k)deleted text end new text begin (g) new text end The requirements and provisions for retirement before normal retirement age contained in section 354.44, subdivision 6, also apply to an employee fulfilling the requirements with a combination of service as provided in section deleted text begin 354.60deleted text end new text begin 356.311new text end .

deleted text begin (l)deleted text end new text begin (h) new text end The augmentation provided by this subdivision applies to the benefit provided in section 354.46, subdivision 2.

deleted text begin (m)deleted text end new text begin (i) new text end The augmentation provided by this subdivision does not apply to any period in which a person is on an approved leave of absence from an employer unit covered by the provisions of this chapter.

deleted text begin (n)deleted text end new text begin (j) new text end The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former teacher who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and tables adopted by the board as recommended by an approved actuary and approved by the actuary retained under section 356.214.

Sec. 4.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2016, sections 354.42, subdivisions 4a, 4b, 4c, and 4d; and 354.60, new text end new text begin are repealed. new text end

Sec. 5.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 4 are effective June 30, 2018. new text end

ARTICLE 4

ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION
BENEFIT CHANGES

Section 1.

Minnesota Statutes 2016, section 354A.011, subdivision 3a, is amended to read:

Subd. 3a.

Actuarial equivalent.

"Actuarial equivalent" means the condition of one annuity or benefit having an equal actuarial present value as another annuity or benefit, determined as of a given date with each actuarial present value based on the appropriate mortality table adopted by the appropriate board of trustees based on the experience of that retirement fund association as recommended by the actuary retained under section 356.214, and approved under section 356.215, subdivision 18, and using the applicable deleted text begin preretirement or postretirement interest ratedeleted text end new text begin investment return new text end assumption specified in section 356.215, subdivision 8.

Sec. 2.

Minnesota Statutes 2016, section 354A.29, subdivision 7, is amended to read:

Subd. 7.

deleted text begin Eligibility for payment ofdeleted text end Postretirement adjustments.

deleted text begin (a) Annually, after June 30, the board of trustees of the St. Paul Teachers Retirement Fund Association must determine the amount of any postretirement adjustment using the procedures in this subdivision and subdivision 8 or 9, whichever is applicable. deleted text end

deleted text begin (b) On January 1deleted text end new text begin (a) Except as set forth in paragraph (c)new text end , each person who has been receiving an annuity or benefit under the articles of incorporation, the bylaws, or this chapter, whose effective date of benefit commencement occurred on or before July 1 of the calendar year immediately before the adjustment, is eligible to receive deleted text begin adeleted text end new text begin an annual new text end postretirement deleted text begin increase as specified in subdivision 8 or 9.deleted text end new text begin adjustment, effective as of each January 1, as follows:new text end

new text begin (1) there shall be no postretirement adjustment on January 1, 2019, and January 1, 2020; and new text end

new text begin (2) the postretirement adjustment shall be one percent on January 1, 2021, and each January 1 thereafter. new text end

new text begin (b) A postretirement adjustment is to be applied as a permanent increase to the regular payment of each eligible member on January 1. For any eligible member whose effective date of benefit commencement occurred after January 1 of the immediately preceding calendar year, the amount of the postretirement adjustment must be reduced by 50 percent. new text end

new text begin (c) Each person who retires on or after July 1, 2024, is entitled to an annual postretirement adjustment, effective as of each January 1, beginning with the year following the year in which the member attains normal retirement age. new text end

new text begin (d) Paragraph (c) does not apply to members who retire under section 354A.31, subdivision 6, paragraph (b), or who retire when the member is at least age 62 and has at least 30 years of service under section 354A.31, subdivision 7. new text end

Sec. 3.

Minnesota Statutes 2016, section 354A.31, subdivision 7, is amended to read:

Subd. 7.

Reduction for early retirement.

(a) This subdivision applies to a person who has become at least 55 years old and first becomes a coordinated member after June 30, 1989, and to any other coordinated member who has become at least 55 years old and whose annuity is higher when calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), deleted text begin or subdivision 4a, paragraph (d), as applicable,deleted text end in conjunction with this subdivision than when calculated under subdivision 4, paragraph (c), deleted text begin or subdivision 4a, paragraph (c),deleted text end in conjunction with subdivision 6.new text begin An employee who retires under the formula annuity before the normal retirement age shall be paid the normal annuity reduced as described in paragraph (b) if the person retires on or after July 1, 2019, or in paragraph (c) if the person retires before July 1, 2019, as applicable.new text end

(b) A coordinated member who retires before the normal retirement age new text begin and on or after July 1, 2019, new text end is entitled to receive a retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), deleted text begin or subdivision 4a, paragraph (d), whichever applies,deleted text end new text begin reduced as described in clause (1) or (2), as applicable.new text end

new text begin (1) If the member retires when the member is younger than age 62 or with fewer than 30 years of service, the annuity must be reduced by an early reduction factor for each year that the member's age of retirement precedes normal retirement age. The early reduction factors are four percent per year for ages 55 through 59 and seven percent per year for ages 60 through normal retirement age. The resulting annuity must be further adjusted to take into account augmentation as if the employee had deferred receipt of the annuity until normal retirement age and the annuity were augmented at the applicable annual rate, compounded annually, from the day the annuity begins to accrue until normal retirement age. The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee. The applicable annual rates are the following: new text end

new text begin (i) until June 30, 2019, 2.5 percent; new text end

new text begin (ii) a rate that changes each month, beginning July 1, 2019, through June 30, 2024, which is determined by reducing the rate in item (i) to zero in equal monthly increments over the five-year period; and new text end

new text begin (iii) after June 30, 2024, zero percent. new text end

new text begin After June 30, 2024, the reduced annuity commencing before normal retirement age under this clause shall not take into account any augmentation. new text end

new text begin (2) If the member retires when the member is at least age 62 or older and has at least 30 years of service, the member is entitled to receive a retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), multiplied by the applicable early retirement factor specified for members "Age 62 or older with 30 years of service" in the table in paragraph (c). new text end

new text begin (c) A coordinated member who retires before the normal retirement age and before July 1, 2019, is entitled to receive a retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), new text end multiplied by the applicable early retirement factor specified below:

Under age 62 Age 62 or older
or less than 30 years of service with 30 years of service
Normal retirement age: 65 66 65 66
Age at retirement
55 0.5376 0.4592
56 0.5745 0.4992
57 0.6092 0.5370
58 0.6419 0.5726
59 0.6726 0.6062
60 0.7354 0.6726
61 0.7947 0.7354
62 0.8507 0.7947 0.8831 0.8389
63 0.9035 0.8507 0.9246 0.8831
64 0.9533 0.9035 0.9635 0.9246
65 1.0000 0.9533 1.0000 0.9635
66 1.0000 1.0000

For normal retirement ages between ages 65 and 66, the early retirement factors must be determined by linear interpolation between the early retirement factors applicable for normal retirement ages 65 and 66.

Sec. 4.

Minnesota Statutes 2016, section 354A.37, subdivision 2, is amended to read:

Subd. 2.

Eligibility for deferred retirement annuity.

(a) Any coordinated member who ceases to render teaching services for the school district in which the teachers retirement fund association is located, with sufficient allowable service credit to meet the minimum service requirements specified in section 354A.31, subdivision 1, shall be entitled to a deferred deleted text begin retirementdeleted text end annuity in lieu of a refund under subdivision 1.

new text begin (b)new text end The deferred deleted text begin retirementdeleted text end annuity must be deleted text begin computed under section 354A.31 and shall bedeleted text end augmented deleted text begin as provided in this subdivisiondeleted text end new text begin from the first day of the month following the termination of active service to the effective date of retirement. There is no augmentation if this period is less than three monthsnew text end .

new text begin (c)new text end The deferred annuity commences upon application after the person on deferred status attains at least the minimum age specified in section 354A.31, subdivision 1.

deleted text begin (b) The monthly annuity amount that had accrued when the member ceased to render teaching service must be augmented from the first day of the month following the month during which the member ceased to render teaching service to the effective date of retirement. There is no augmentation if this period is less than three months. The rate of augmentation is deleted text end

new text begin (d) For a person who became a covered employee before July 1, 2006, the annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) new text end three percent deleted text begin compounded annuallydeleted text end until January 1 of the year following the year in which the former member attains age 55deleted text begin ,deleted text end new text begin or June 30, 2012, whichever is earlier;new text end

new text begin (2) new text end five percent deleted text begin compounded annually after that date to July 1deleted text end new text begin from the January 1 next following the attainment of age 55 or until June 30new text end , 2012deleted text begin , anddeleted text end new text begin ;new text end

new text begin (3) new text end two percent deleted text begin compounded annually after that date to the effective date of retirement if the employee became an employee before July 1, 2006, and atdeleted text end new text begin from July 1, 2012, until June 30, 2019; andnew text end

new text begin (4) after June 30, 2019, the deferred annuity must not be augmented. new text end

new text begin (e) For a person who became a covered employee after June 30, 2006, the annuity must be augmented at the following rate or rates, compounded annually: new text end

new text begin (1) new text end 2.5 percent deleted text begin compounded annually to July 1, 2012, anddeleted text end new text begin until June 30, 2012;new text end

new text begin (2) new text end two percent deleted text begin compounded annually after that date to the effective date of retirement if the employee became an employee after June 30, 2006. If a person has more than one period of uninterrupted service, a separate average salary determined under section 354A.31 must be used for each period, and the monthly annuity amount related to each period must be augmented as provided in this subdivision. The sum of the augmented monthly annuity amounts determines the total deferred annuity payable. If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has credit with the fund. If a person does not render teaching services in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of resumption of teaching service are those applicable to new members. The mortality table and interest assumption used to compute the annuity are the table established by the fund to compute other annuities, and the interest assumption under section 356.215 in effect when the member retires. A period of uninterrupted service for the purpose of this subdivision means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year.deleted text end new text begin from July 1, 2012, until June 30, 2019; andnew text end

new text begin (3) after June 30, 2019, the deferred annuity must not be augmented. new text end

deleted text begin (c)deleted text end new text begin (f)new text end The augmentation provided by this subdivision applies to the benefit provided in section 354A.35, subdivision 2. The augmentation provided by this subdivision does not apply to any period in which a person is on an approved leave of absence from an employer unit.

Sec. 5.

Minnesota Statutes 2016, section 354A.37, subdivision 3, is amended to read:

Subd. 3.

Computation of refund amount.

A former coordinated member who qualifies for a refund under subdivision 1 is entitled to receive a refund equal to the amount of the former coordinated member's accumulated employee contributions with interest at the deleted text begin rate ofdeleted text end new text begin following rates for the applicable period:new text end

new text begin (1) new text end Six percent per annum compounded annually to July 1, 2011deleted text begin , if the person is a former member of the St. Paul Teachers Retirement Fund Association, anddeleted text end new text begin ;new text end

new text begin (2)new text end four percent per annum compounded annually new text begin to July 1, 2018; andnew text end

new text begin (3) three percent per annum compounded annually new text end thereafter.

Sec. 6.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2016, sections 354A.29, subdivisions 8 and 9; and 354A.39, new text end new text begin are repealed. new text end

Sec. 7.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 6 are effective June 30, 2018. new text end

ARTICLE 5

ACTUARIAL ASSUMPTIONS AND
POSTRETIREMENT ADJUSTMENTS FOR STATEWIDE PLANS

Section 1.

Minnesota Statutes 2017 Supplement, section 356.215, subdivision 8, is amended to read:

Subd. 8.

deleted text begin Interest and salarydeleted text end new text begin Actuarial new text end assumptions.

(a) The actuarial valuation must use the applicable following deleted text begin interestdeleted text end new text begin investment return new text end assumption:

deleted text begin (1) select and ultimate interest rate assumption deleted text end

deleted text begin plan deleted text end deleted text begin ultimate interest rate assumption deleted text end
deleted text begin teachers retirement plan deleted text end deleted text begin 8.5% deleted text end

deleted text begin The select preretirement interest rate assumption for the period through June 30, 2017, is eight percent. deleted text end

deleted text begin (2) single rate interest rate assumption deleted text end

plan deleted text begin interest ratedeleted text end new text begin investment return new text end assumption
general state employees retirement plan deleted text begin 8deleted text end new text begin 7.5new text end %
correctional state employees retirement plan deleted text begin 8 deleted text end new text begin 7.5 new text end
State Patrol retirement plan deleted text begin 8 deleted text end new text begin 7.5 new text end
legislators retirement plan, and for the constitutional officers calculation of total plan liabilities 0
judges retirement plan deleted text begin 8 deleted text end new text begin 7.5 new text end
general public employees retirement plan deleted text begin 8 deleted text end new text begin 7.5 new text end
public employees police and fire retirement plan deleted text begin 8 deleted text end new text begin 7.5 new text end
local government correctional service retirement plan deleted text begin 8 deleted text end new text begin 7.5 new text end
new text begin teachers retirement plan new text end new text begin 7.5 new text end
St. Paul teachers retirement plan deleted text begin 8 deleted text end new text begin 7.5 new text end
Bloomington Fire Department Relief Association 6
local monthly benefit volunteer firefighter relief associations 5
monthly benefit retirement plans in the statewide volunteer firefighter retirement plan 6

(b)deleted text begin (1) If funding stability has been attained,deleted text end The new text begin actuarial new text end valuation new text begin for each of the covered retirement plans listed in section 356.415, subdivision 2, and the St. Paul Teachers Retirement Fund Association new text end must deleted text begin use adeleted text end new text begin take into account the new text end postretirement adjustment rate deleted text begin actuarial assumption equal to the postretirement adjustment ratedeleted text end new text begin or rates applicable to the plan as new text end specified in section 354A.29, subdivision deleted text begin 9deleted text end new text begin 7new text end , or 356.415, deleted text begin subdivision 1,deleted text end whichever applies.

deleted text begin (2) If funding stability has not been attained, the valuation must use a select postretirement adjustment rate actuarial assumption equal to the postretirement adjustment rate specified in section 354A.29, subdivision 8, or 356.415, subdivision 1a, 1b, 1c, 1d, 1e, or 1f, whichever applies, for a period ending when the approved actuary estimates that the plan will attain the defined funding stability measure, and thereafter an ultimate postretirement adjustment rate actuarial assumption equal to the postretirement adjustment rate under section 354A.29, subdivision 9, or 356.415, subdivision 1, for the applicable period or periods beginning when funding stability is projected to be attained. deleted text end

(c) The actuarial valuation must use the applicable deleted text begin following single rate futuredeleted text end salary increase deleted text begin assumption, the applicable following modified single rate future salary increase assumption, or the applicable following graded rate future salary increase assumption:deleted text end new text begin and payroll growth assumptions found in the appendix to the standards for actuarial work adopted by the Legislative Commission on Pensions and Retirement pursuant to section 3.85, subdivision 10. The appendix must be updated whenever new assumptions have been approved or deemed approved under subdivision 18.new text end

deleted text begin (1) single rate future salary increase assumption deleted text end

deleted text begin plan deleted text end deleted text begin future salary increase assumption deleted text end
deleted text begin legislators retirement plan deleted text end deleted text begin 5% deleted text end
deleted text begin judges retirement plan deleted text end deleted text begin 2.75 deleted text end
deleted text begin Bloomington Fire Department Relief Association deleted text end deleted text begin 4 deleted text end

deleted text begin (2) age-related future salary increase age-related select and ultimate future salary increase assumption or graded rate future salary increasedeleted text end assumption

deleted text begin plan deleted text end deleted text begin future salary increase assumption deleted text end
deleted text begin local government correctional service retirement plan deleted text end deleted text begin assumption B deleted text end
deleted text begin St. Paul teachers retirement plan deleted text end deleted text begin assumption A deleted text end

deleted text begin For plans other than the St. Paul teachers retirement plan and the local government correctional service retirement plan, the select calculation is: during the designated select period, a designated percentage rate is multiplied by the result of the designated integer minus T, where T is the number of completed years of service, and is added to the applicable future salary increase assumption. The designated select period is ten years and the designated integer is ten for the local government correctional service retirement plan and 15 for the St. Paul Teachers Retirement Fund Association. The designated percentage rate is 0.2 percent for the St. Paul Teachers Retirement Fund Association. deleted text end

deleted text begin The ultimate future salary increase assumption is: deleted text end

deleted text begin age deleted text end deleted text begin A deleted text end deleted text begin B deleted text end
deleted text begin 16 deleted text end deleted text begin 5.9% deleted text end deleted text begin 8.75% deleted text end
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deleted text begin (3) service-related ultimate future salary increase assumption deleted text end

deleted text begin general state employees retirement plan of the Minnesota State Retirement System deleted text end deleted text begin assumption A deleted text end
deleted text begin general employees retirement plan of the Public Employees Retirement Association deleted text end deleted text begin assumption B deleted text end
deleted text begin Teachers Retirement Association deleted text end deleted text begin assumption C deleted text end
deleted text begin public employees police and fire retirement plan deleted text end deleted text begin assumption D deleted text end
deleted text begin State Patrol retirement plan deleted text end deleted text begin assumption E deleted text end
deleted text begin correctional state employees retirement plan of the Minnesota State Retirement System deleted text end deleted text begin assumption F deleted text end
deleted text begin service length deleted text end deleted text begin A deleted text end deleted text begin B deleted text end deleted text begin C deleted text end deleted text begin D deleted text end deleted text begin E deleted text end deleted text begin F deleted text end
deleted text begin 1 deleted text end deleted text begin 10.25% deleted text end deleted text begin 11.78% deleted text end deleted text begin 12% deleted text end deleted text begin 12.75% deleted text end deleted text begin 7.75% deleted text end deleted text begin 5.75% deleted text end
deleted text begin 2 deleted text end deleted text begin 7.85 deleted text end deleted text begin 8.65 deleted text end deleted text begin 9 deleted text end deleted text begin 10.75 deleted text end deleted text begin 7.25 deleted text end deleted text begin 5.6 deleted text end
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deleted text begin (d) The actuarial valuation must use the applicable following payroll growth assumption for calculating the amortization requirement for the unfunded actuarial accrued liability where the amortization retirement is calculated as a level percentage of an increasing payroll: deleted text end

deleted text begin plan deleted text end deleted text begin payroll growth assumption deleted text end
deleted text begin general state employees retirement plan of the Minnesota State Retirement System deleted text end deleted text begin 3.5% deleted text end
deleted text begin correctional state employees retirement plan deleted text end deleted text begin 3.5 deleted text end
deleted text begin State Patrol retirement plan deleted text end deleted text begin 3.5 deleted text end
deleted text begin judges retirement plan deleted text end deleted text begin 2.75 deleted text end
deleted text begin general employees retirement plan of the Public Employees Retirement Association deleted text end deleted text begin 3.5 deleted text end
deleted text begin public employees police and fire retirement plan deleted text end deleted text begin 3.5 deleted text end
deleted text begin local government correctional service retirement plan deleted text end deleted text begin 3.5 deleted text end
deleted text begin teachers retirement plan deleted text end deleted text begin 3.75 deleted text end
deleted text begin St. Paul teachers retirement plan deleted text end deleted text begin 4 deleted text end

deleted text begin (e)deleted text end new text begin (d) new text end The assumptions set forth in deleted text begin paragraphs (c) and (d)deleted text end new text begin the appendix to the standards for actuarial work new text end continue to apply, unless a different salary assumption or a different payroll increase assumption:

(1) has been proposed by the governing board of the applicable retirement plan;

(2) is accompanied by the concurring recommendation of the actuary retained under section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the most recent actuarial valuation report if section 356.214 does not apply; and

(3) has been approved or deemed approved under subdivision 18.

Sec. 2.

Minnesota Statutes 2016, section 356.215, subdivision 9, is amended to read:

Subd. 9.

Other assumptions.

deleted text begin Thedeleted text end new text begin (a) Each plan's new text end actuarial valuation must use assumptions concerning new text begin base new text end mortalitynew text begin ratesnew text end , disability, retirement, withdrawal, retirement age, and any other relevant demographic or economic factor. These assumptions must be set at levels consistent with those determined in the most recent quadrennial experience study completed under subdivision 16, if required, or deleted text begin representative of the best estimate of future experiencedeleted text end new text begin as recommended by the plan's approved actuarynew text end , if a quadrennial experience study is not required.

new text begin (b) The actuarial valuation may use an assumption concerning future mortality improvement. This assumption may be set at levels consistent with those determined in the most recent mortality improvement scale published by the Society of Actuaries or as otherwise recommended by the plan's approved actuary. new text end

new text begin (c)new text end The actuarial valuation must contain an exhibit indicating deleted text begin anydeleted text end new text begin the new text end actuarial assumptions used in preparing the valuation report.

Sec. 3.

Minnesota Statutes 2016, section 356.215, subdivision 11, is amended to read:

Subd. 11.

Amortization contributions.

(a) In addition to the exhibit indicating the level normal cost, the actuarial valuation of the retirement plan must contain an exhibit for financial reporting purposes indicating the additional annual contribution sufficient to amortize the unfunded actuarial accrued liability and must contain an exhibit for contribution determination purposes indicating the additional contribution sufficient to amortize the unfunded actuarial accrued liability. For the retirement plans listed in subdivision 8, paragraph (c), but excluding the legislators retirement plan, the additional contribution must be calculated on a level percentage of covered payroll basis by the established date for full funding in effect when the valuation is prepared, assuming annual payroll growth at the applicable percentage rate set forth in subdivision 8, paragraph (d). For all other retirement plans and for the legislators retirement plan, the additional annual contribution must be calculated on a level annual dollar amount basis.

(b) For any retirement plan other than a retirement plan governed by paragraph (d), (e), (f), (g), (h), (i), or (j), if there has not been a change in the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, which change or changes by itself or by themselves without inclusion of any other items of increase or decrease produce a net increase in the unfunded actuarial accrued liability of the fund, the established date for full funding is the first actuarial valuation date occurring after June 1, 2020.

(c) For any retirement plan, if there has been a change in any or all of the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, and the change or changes, by itself or by themselves and without inclusion of any other items of increase or decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the established date for full funding must be determined using the following procedure:

(i) the unfunded actuarial accrued liability of the fund must be determined in accordance with the plan provisions governing annuities and retirement benefits and the actuarial assumptions in effect before an applicable change;

(ii) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the unfunded actuarial accrued liability amount determined under item (i) by the established date for full funding in effect before the change must be calculated using the interest assumption specified in subdivision 8 in effect before the change;

(iii) the unfunded actuarial accrued liability of the fund must be determined in accordance with any new plan provisions governing annuities and benefits payable from the fund and any new actuarial assumptions and the remaining plan provisions governing annuities and benefits payable from the fund and actuarial assumptions in effect before the change;

(iv) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the difference between the unfunded actuarial accrued liability amount calculated under item (i) and the unfunded actuarial accrued liability amount calculated under item (iii) over a period of 30 years from the end of the plan year in which the applicable change is effective must be calculated using the applicable interest assumption specified in subdivision 8 in effect after any applicable change;

(v) the level annual dollar or level percentage amortization contribution under item (iv) must be added to the level annual dollar amortization contribution or level percentage calculated under item (ii);

(vi) the period in which the unfunded actuarial accrued liability amount determined in item (iii) is amortized by the total level annual dollar or level percentage amortization contribution computed under item (v) must be calculated using the interest assumption specified in subdivision 8 in effect after any applicable change, rounded to the nearest integral number of years, but not to exceed 30 years from the end of the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and not to be less than the period of years beginning in the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and ending by the date for full funding in effect before the change; and

(vii) the period determined under item (vi) must be added to the date as of which the actuarial valuation was prepared and the date obtained is the new established date for full funding.

(d) For the general employees retirement plan of the Public Employees Retirement Association, the established date for full funding is June 30, deleted text begin 2031deleted text end new text begin 2048new text end .

(e) For the Teachers Retirement Association, the established date for full funding is June 30, deleted text begin 2037deleted text end new text begin 2048new text end .

(f) For the correctional state employees retirement plan new text begin and the State Patrol retirement plan new text end of the Minnesota State Retirement System, the established date for full funding is June 30, deleted text begin 2038deleted text end new text begin 2048new text end .

(g) For the judges retirement plan, the established date for full funding is June 30, deleted text begin 2038deleted text end new text begin 2048new text end .

(h) For the new text begin local government correctional service retirement plan and the new text end public employees police and fire retirement plan, the established date for full funding is June 30, deleted text begin 2038deleted text end new text begin 2048new text end .

(i) For the St. Paul Teachers Retirement Fund Association, the established date for full funding is June 30, deleted text begin 2042. In addition to other requirements of this chapter, the annual actuarial valuation must contain an exhibit indicating the funded ratio and the deficiency or sufficiency in annual contributions when comparing liabilities to the market value of the assets of the fund as of the close of the most recent fiscal yeardeleted text end new text begin 2048new text end .

(j) For the general state employees retirement plan of the Minnesota State Retirement System, the established date for full funding is June 30, deleted text begin 2040deleted text end new text begin 2048new text end .

(k) For the retirement plans for which the annual actuarial valuation indicates an excess of valuation assets over the actuarial accrued liability, the valuation assets in excess of the actuarial accrued liability must be recognized as a reduction in the current contribution requirements by an amount equal to the amortization of the excess expressed as a level percentage of pay over a 30-year period beginning anew with each annual actuarial valuation of the plan.

Sec. 4.

Minnesota Statutes 2016, section 356.30, subdivision 1, is amended to read:

Subdivision 1.

Eligibility; computation of annuity.

(a) Notwithstanding any provisions of the laws governing the new text begin covered new text end retirement plans deleted text begin enumerateddeleted text end new text begin listed new text end in subdivision 3, a person deleted text begin who has met the qualifications of paragraph (b)deleted text end may elect to receivenew text begin , upon retirement,new text end a retirement annuity from each deleted text begin enumerateddeleted text end new text begin covered new text end retirement plan deleted text begin in which the person has at least one-half year of allowable service, based on the allowable service in each plandeleted text end , subject to the provisions of paragraph deleted text begin (c).deleted text end new text begin (b), if the person has:new text end

new text begin (1) allowable service in any two or more of the covered plans; new text end

new text begin (2) at least one-half year of allowable service in each covered plan, based on the allowable service in each plan; new text end

new text begin (3) total allowable service that equals or exceeds the longest service credit vesting requirement of the applicable retirement plan; and new text end

new text begin (4) not begun to receive an annuity from any covered plan or made application for benefits from each applicable plan and the retirement annuity effective dates of each plan are within a one-year period. new text end

deleted text begin (b) A person may receive, upon retirement, a retirement annuity from each enumerated retirement plan in which the person has at least one-half year of allowable service, and augmentation of a deferred annuity calculated at the appropriate rate under the laws governing each public pension plan or fund named in subdivision 3, based on the date of the person's initial entry into public employment from the date the person terminated all public service if: deleted text end

deleted text begin (1) the person has allowable service in any two or more of the enumerated plans; deleted text end

deleted text begin (2) the person has sufficient allowable service in total that equals or exceeds the applicable service credit vesting requirement of the retirement plan with the longest applicable service credit vesting requirement; and deleted text end

deleted text begin (3) the person has not begun to receive an annuity from any enumerated plan or the person has made application for benefits from each applicable plan and the effective dates of the retirement annuity with each plan under which the person chooses to receive an annuity are within a one-year period. deleted text end

deleted text begin (c)deleted text end new text begin (b) If all requirements in paragraph (a) have been satisfied, new text end the retirement annuity from each plan must be based upon the allowable service, accrual rates, and average salary in the applicable plan except as further specified or modified in the following clauses:

(1) the laws governing annuities must be the law in effect on the date of termination from the last period of public service under a covered retirement plan with which the person earned a minimum of one-half year of allowable service credit during that employment;

(2) the deleted text begin "deleted text end average salarydeleted text begin " on which the annuity from each covered plan in which the employee has credit in adeleted text end new text begin used to calculate the annuity for each new text end formula plan must be based on the employee's highest five successive years of covered salary during the entire service in covered plans;

(3) the accrual rates deleted text begin to be used bydeleted text end new text begin under new text end each plan must be deleted text begin thosedeleted text end new text begin the new text end percentages prescribed by each plan's formula deleted text begin as continueddeleted text end new text begin in effect new text end for the respective years of allowable service from one plan to the next, recognizing all previous allowable service with the other covered plans;

(4) the allowable service in all the new text begin covered new text end plans must be combined in determining eligibility for and the application of each plan's provisions deleted text begin indeleted text end new text begin with new text end respect to reduction in the annuity amount for retirement prior to normal retirement age; and

(5) the annuity amount payable for any allowable service under a nonformula plan deleted text begin ofdeleted text end new text begin that is new text end a covered plan must not be affected, but such service and covered salary must be used in the above calculation.

new text begin (c) If a person eligible for an annuity under paragraph (a) from each covered plan terminates all public service, the deferred annuity must be augmented from the date of termination until the earlier of: new text end

new text begin (1) the effective date of retirement; or new text end

new text begin (2) December 31, 2018, for the Minnesota State Retirement System and the Public Employees Retirement Association or June 30, 2019, for the Teachers Retirement Association and the St. Paul Teachers Retirement Association. new text end

new text begin A deferred annuity must not be augmented after the applicable dates under clause (2). The appropriate rate of augmentation is the rate in effect on the date on which the person entered into public employment and subsequently adjusted according to the laws governing each covered plan, as applicable. new text end

(d) This section does not apply to any person whose final termination from the last public service under a covered plan was before May 1, 1975.

(e) For the purpose of computing annuities under this sectiondeleted text begin , the accrual rates used by any covered plan, except the public employees police and fire plan, the judges retirement fund, and the State Patrol retirement plan, must not exceed 2.7 percent per year of service for any year of service or fraction thereof. The formula percentage used bydeleted text end new text begin :new text end

new text begin (1)new text end the judges retirement fund new text begin accrual rate new text end must not exceed 3.2 percent per year of service for any year of service or fraction thereofdeleted text begin . The accrual rate used bydeleted text end new text begin ;new text end

new text begin (2)new text end the public employees police and fire plan and the State Patrol retirement plan new text begin accrual rate new text end must not exceed 3.0 percent per year of service for any year of service or fraction thereofdeleted text begin . The accrual rate or rates used bydeleted text end new text begin ;new text end

new text begin (3)new text end the legislators retirement plan new text begin accrual rate new text end must not exceed 2.5 percent, but this limit does not apply to the adjustment provided under section 3A.02, subdivision 1, paragraph (c)deleted text begin .deleted text end new text begin ; andnew text end

new text begin (4) any other covered plan's accrual rate must not exceed 2.7 percent per year of service for any year of service or fraction thereof. new text end

(f) Any period of time for which a person has credit in more than one of the covered plans must be used only once for the purpose of determining total allowable service.

(g) If the period of duplicated service credit is more than one-half year, or the person has credit for more than one-half year, with each of the plans, each plan must apply its formula to a prorated service credit for the period of duplicated service based on a fraction of the salary on which deductions were paid to that fund for the period divided by the total salary on which deductions were paid to all plans for the period.

(h) If the period of duplicated service credit is less than one-half year, or when added to other service credit with that plan is less than one-half year, the service credit must be ignored and a refund of contributions made to the person in accord with that plan's refund provisions.

Sec. 5.

new text begin [356.311] COVERAGE BY MORE THAN ONE PLAN. new text end

new text begin (a) Any person who has been a member of two or more of the retirement plans listed in paragraph (b) is entitled, when qualified, to an annuity from each fund if: new text end

new text begin (1) the person's combined service in any two or more retirement plans equals or exceeds the vesting requirement of the fund with the longest vesting requirement; and new text end

new text begin (2) the person has not taken a refund from any of the retirement plans. new text end

new text begin (b) This section applies to any defined benefit plan administered by the Minnesota State Retirement System, including the State Patrol Retirement Plan; the Public Employees Retirement Association, including the public employees police and fire plan; the Teachers Retirement Association; and the St. Paul Teachers Retirement Fund Association, except as noted in paragraph (c). new text end

new text begin (c) This section does not apply to plans providing benefits for police officers or firefighters under sections 424A.091 to 424A.096 or the Bloomington Fire Department Relief Association. new text end

new text begin (d) No portion of the service upon which the retirement annuity from one retirement plan is based shall be again used in the computation of a retirement annuity from another plan. The annuity from each plan must be determined under the laws applicable to that plan except that the requirement that a person meet the vesting requirement in any particular plan shall not apply, provided the combined service in any two or more plans equals or exceeds the vesting requirement of the plan with the longest vesting requirement. new text end

new text begin (e) Any deferred annuity payable under this section shall be subject to augmentation under the laws applicable to the deferred annuity. new text end

new text begin (f) Any person to whom an annuity is not payable under this section because the person took a refund from one of the funds shall be entitled to repay the refund in accordance with the laws governing the refund. Upon repayment, the person is entitled to annuities under this section, if the person would otherwise be entitled. new text end

Sec. 6.

Minnesota Statutes 2016, section 356.415, subdivision 1, is amended to read:

Subdivision 1.

Annual postretirement adjustments; deleted text begin generallydeleted text end new text begin Minnesota State Retirement System general state employees retirement plan, legislators retirement plan, and unclassified state employees retirement programnew text end .

(a) Except as deleted text begin otherwise provided in subdivision 1a, 1b, 1c, 1d, 1e, or 1fdeleted text end new text begin set forth in paragraph (c)new text end , new text begin recipients of a new text end retirement annuity, disability benefit, or survivor benefit deleted text begin recipients of a covereddeleted text end new text begin from the general state employees new text end retirement plannew text begin , the legislators retirement plan, or the unclassified state employees retirement programnew text end are entitled to deleted text begin adeleted text end new text begin an annual new text end postretirement adjustment deleted text begin annually ondeleted text end new text begin , effective as of eachnew text end January 1, as follows:

(1) new text begin effective January 1, 2019, through December 31, 2023, new text end a postretirement increase of deleted text begin 2.5deleted text end new text begin one new text end percent must be applied each yeardeleted text begin , effective January 1,deleted text end to the new text begin amount of the new text end monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; deleted text begin anddeleted text end

(2) new text begin effective January 1, 2019, through December 31, 2023, new text end for each annuitant or benefit recipient who has been receiving an annuity or a benefit deleted text begin amountdeleted text end for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, deleted text begin an annualdeleted text end new text begin a new text end postretirement increase of 1/12 of deleted text begin 2.5deleted text end new text begin one new text end percent for each month that the person has been receiving an annuity or benefit must be applieddeleted text begin .deleted text end new text begin to the amount of the monthly annuity or benefit of the annuitant or benefit recipient;new text end

new text begin (3) effective January 1, 2024, and thereafter, a postretirement increase of 1.5 percent must be applied each year to the amount of the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and new text end

new text begin (4) effective January 1, 2024, and thereafter, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 1.5 percent for each month that the person has been receiving an annuity or benefit must be applied to the amount of the monthly annuity or benefit of the annuitant or benefit recipient. new text end

(b) An increase in annuity or benefit payments under this deleted text begin sectiondeleted text end new text begin subdivision new text end must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the covered retirement plan requesting that the increase not be made.

new text begin (c) Members who retire on or after January 1, 2024, under the general state employees retirement plan, the legislators retirement plan, or the unclassified state employees retirement program are entitled to an annual postretirement adjustment of the member's retirement annuity, effective as of each January 1, beginning with the year following the year in which the member attains normal retirement age, as follows: new text end

new text begin (1) if a member has been receiving an annuity for at least 12 full months as of the June 30 of the calendar year immediately before the date of the adjustment, a postretirement increase equal to the percentage specified in paragraph (a), clause (3), must be applied, effective on January 1, to the amount of the member's monthly annuity; new text end

new text begin (2) if a member has been receiving an annuity for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the date of adjustment, a postretirement increase of 1/12 of the percentage specified in paragraph (a), clause (4), for each month that the member has been receiving an annuity must be applied, effective on January 1, to the amount of the member's monthly annuity; or new text end

new text begin (3) if a member has been receiving an annuity for fewer than seven months before the date of adjustment, a postretirement increase shall not be applied until the next January 1 and the amount of the adjustment shall be the amount determined under clause (2). new text end

new text begin (d) Paragraph (c) does not apply to members who retire under section 352.116, subdivision 1, paragraph (c). new text end

Sec. 7.

Minnesota Statutes 2016, section 356.415, subdivision 1a, is amended to read:

Subd. 1a.

Annual postretirement adjustments; Minnesota State Retirement System deleted text begin plans other than State Patroldeleted text end new text begin correctional state employees new text end retirement plan.

(a) Retirement annuity, disability benefit, or survivor benefit recipients of the deleted text begin legislators retirement plan, including constitutional officers as specified in chapter 3A, the general state employees retirement plan, thedeleted text end correctional state employees retirement plandeleted text begin , and the unclassified state employees retirement programdeleted text end are entitled to deleted text begin adeleted text end new text begin an annual new text end postretirement adjustment deleted text begin annually ondeleted text end new text begin , effective as of eachnew text end January 1, as follows:

(1) deleted text begin for each successive January 1, if the definition of funding stability under paragraph (b) has not been met as of the prior July 1 for or with respect to the applicable retirement plan,deleted text end a postretirement increase of deleted text begin twodeleted text end new text begin 1.5 new text end percent must be applied each yeardeleted text begin , effective on January 1,deleted text end to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

(2) deleted text begin for each successive January 1, if the definition of funding stability under paragraph (b) has not been met as of the prior July 1 for or with respect to the applicable retirement plan,deleted text end for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of deleted text begin twodeleted text end new text begin 1.5 new text end percent for each month that the person has been receiving an annuity or benefit must be appliednew text begin to the amount of the monthly annuity or benefit of each annuitant or benefit recipientnew text end .

deleted text begin (b) Increases under this subdivision for the general state employees retirement plan or the correctional state employees retirement plan terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicate that the market value of assets of the retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under subdivision 1 recommence after that date. Increases under this subdivision for the legislators retirement plan established under chapter 3A, including the constitutional officers specified in that chapter, and for the unclassified state employees retirement program, terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicate that the market value of assets of the general state employees retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under subdivision 1 recommence after that date. deleted text end

deleted text begin (c) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, for the general state employees retirement plan or the correctional state employees retirement plan, is again to be applied in a subsequent year or years if the market value of assets of the applicable plan equals or is less than: deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation. deleted text end

deleted text begin (d) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, for the legislators retirement plan, including the constitutional officers, and for the unclassified state employees retirement program, is again to be applied in a subsequent year or years if the market value of assets of the general state employees retirement plan equals or is less than: deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation. deleted text end

deleted text begin (e)deleted text end new text begin (b) new text end An increase in annuity or benefit payments under this subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the applicable covered retirement plan requesting that the increase not be made.

Sec. 8.

Minnesota Statutes 2016, section 356.415, subdivision 1b, is amended to read:

Subd. 1b.

Annual postretirement adjustments; PERA; general employees retirement plan deleted text begin and local government correctional retirement plandeleted text end .

(a) deleted text begin Retirement annuity, disability benefit, or survivor benefit recipients ofdeleted text end new text begin Annuities, disability benefits, and survivor benefits being paid from new text end the general employees retirement plan of the Public Employees Retirement Association deleted text begin and the local government correctional service retirement plan are entitled to a postretirement adjustment annually ondeleted text end new text begin shall be increased effective each new text end January 1deleted text begin , as follows:deleted text end new text begin by the percentage of increase determined under this subdivision. The increase to the annuity or benefit shall be determined by multiplying the monthly amount of the annuity or benefit by the percentage of increase specified in paragraph (b), after taking into account any reduction to the percentage of increase required under paragraph (c).new text end

deleted text begin (1) for each successive January 1 until funding stability is restored for the applicable retirement plan, a postretirement increase of one percent must be applied each year, effective on January 1, to the monthly annuity or benefit amount of each annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; deleted text end

deleted text begin (2) for each successive January 1 until funding stability is restored for the applicable retirement plan, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of one percent for each month the person has been receiving an annuity or benefit must be applied; deleted text end

deleted text begin (3) for each January 1 following the restoration of funding stability for the applicable retirement plan, a postretirement increase of 2.5 percent must be applied each year, effective January 1, to the monthly annuity or benefit amount of each annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and deleted text end

deleted text begin (4) for each January 1 following restoration of funding stability for the applicable retirement plan, for each annuity or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 percent for each month the person has been receiving an annuity or benefit must be applied. deleted text end

deleted text begin (b) Funding stability is restored when the market value of assets of the applicable retirement plan equals or exceeds 90 percent of the actuarial accrued liabilities of the applicable plan in the two most recent consecutive actuarial valuations prepared under section 356.215 and the standards for actuarial work by the approved actuary retained by the Public Employees Retirement Association under section 356.214. deleted text end

deleted text begin (c) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, is again to be applied in a subsequent year or years if the market value of assets of the applicable plan equals or is less than: deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation. deleted text end

new text begin (b) The percentage of increase shall be one percent unless the federal Social Security Administration has announced a cost-of-living adjustment pursuant to United States Code, title 42, section 415(i), in the last quarter of the preceding calendar year that is greater than two percent. If the cost-of-living adjustment announced by the federal Social Security Administration is greater than two percent, the percentage of increase shall be 50 percent of the cost-of-living adjustment announced by the federal Social Security Administration, but in no event may the percentage of increase exceed 1.5 percent. new text end

new text begin (c)(1) If the recipient of an annuity, disability benefit, or survivor's benefit has been receiving the annuity or benefit for at least 12 full months as of the June 30 of the calendar year immediately before the effective date of the increase, there is no reduction in the percentage of increase. new text end

new text begin (2) If the recipient of an annuity, disability benefit, or survivor's benefit has been receiving the annuity or benefit for at least one month, but less than 12 full months, as of the June 30 of the calendar year immediately preceding the effective date of the increase, the percentage of increase is multiplied by a fraction, the numerator of which is the number of months the annuity or benefit was received as of June 30 of the preceding calendar year and the denominator of which is 12. new text end

new text begin (d) Effective for members who retire on or after January 1, 2024, annuities shall not be increased under paragraphs (a) to (c) until January 1 of the year following the year in which the member reaches normal retirement age. January 1 of the year following the year in which the member reaches normal retirement age shall be considered the effective date of the increase under paragraph (c). If a member has been receiving an annuity for fewer than seven months as of the January 1 of the year following the year in which the member reaches normal retirement age, no increase shall be paid until January 1 of the next year. new text end

deleted text begin (d)deleted text end new text begin (e) new text end An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the deleted text begin annuitant or benefitdeleted text end recipient with the executive director of the Public Employees Retirement Association requesting that the increase not be made.

new text begin (f) Paragraph (d) does not apply to members who retire under section 353.30, subdivision 1a. new text end

Sec. 9.

Minnesota Statutes 2016, section 356.415, subdivision 1c, is amended to read:

Subd. 1c.

Annual postretirement adjustments; PERA-police and fire.

(a) Retirement annuity, disability benefit, or survivor benefit recipients of the public employees police and fire retirement plan are entitled to deleted text begin adeleted text end new text begin an annual new text end postretirement adjustment deleted text begin annually ondeleted text end new text begin , effective as of eachnew text end January 1, deleted text begin if the definition of funding stability under paragraph (c) has not been met,deleted text end as follows:

deleted text begin (1) for each annuitant or benefit recipient whose annuity or benefit effective date is on or before June 1, 2014, who has been receiving the annuity or benefit for at least 12 full months as of the immediate preceding June 30, an amount equal to one percent in each year; or deleted text end

deleted text begin (2) for each annuitant or benefit recipient whose annuity or benefit effective date is on or before June 1, 2014, who has been receiving the annuity or benefit for at least one full month, but less than 12 months, as of the immediate preceding June 30, an amount equal to 1/12 of one percent for each month of annuity or benefit receipt; and deleted text end

deleted text begin (3)deleted text end new text begin (1) new text end for each annuitant or benefit recipient deleted text begin whose annuity or benefit effective date is after June 1, 2014,deleted text end who will have been receiving an annuity or benefit for at least 36 full months as of the immediate preceding June 30, deleted text begin an amount equal todeleted text end new text begin a postretirement increase of new text end one percentnew text begin must be applied each year to the amount of the monthly annuity or benefit of the annuitant or benefit recipientnew text end ; or

deleted text begin (4)deleted text end new text begin (2) new text end for each annuitant or benefit recipient deleted text begin whose annuity or benefit effective date is after June 1, 2014,deleted text end who has been receiving the annuity or benefit for at least 25 full months, but less than 36 months as of the immediate preceding June 30, deleted text begin an amount equal todeleted text end new text begin a postretirement increase of new text end 1/12 of one percent for each full month deleted text begin ofdeleted text end new text begin that the person has been receiving an new text end annuity or benefit deleted text begin receiptdeleted text end during the fiscal year in which the annuity or benefit was effectivenew text begin must be applied each year to the amount of the monthly annuity or benefit of the annuitant or benefit recipientnew text end .

deleted text begin (b) Retirement annuity, disability benefit, or survivor benefit recipients of the public employees police and fire retirement plan are entitled to a postretirement adjustment annually on each January 1 following the restoration of funding stability as defined under paragraph (c) and during the continuation of funding stability as defined under paragraph (c), as follows: deleted text end

deleted text begin (1) for each annuitant or benefit recipient who has been receiving the annuity or benefit for at least 36 full months as of the immediate preceding June 30, an amount equal to 2.5 percent; and deleted text end

deleted text begin (2) for each annuitant or benefit recipient who has been receiving the annuity or benefit for at least 25 full months, but less than 36 full months, as of the immediate preceding June 30, an amount equal to 1/12 of 2.5 percent for each full month of annuity or benefit receipt during the fiscal year in which the annuity or benefit was effective. deleted text end

deleted text begin (c) Funding stability is restored when the market value of assets of the public employees police and fire retirement plan equals or exceeds 90 percent of the actuarial accrued liabilities of the applicable plan in the two most recent consecutive actuarial valuations prepared under section 356.215 and under the standards for actuarial work of the Legislative Commission on Pensions and Retirement by the approved actuary retained by the Public Employees Retirement Association under section 356.214. deleted text end

deleted text begin (d) After having met the definition of funding stability under paragraph (c), a full or prorated increase, as provided in paragraph (a), clause (1), (2), (3), or (4), whichever applies, rather than adjustments under paragraph (b), is again applied in a subsequent year or years if the market value of assets of the public employees police and fire retirement plan equals or is less than: deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation. deleted text end

deleted text begin (e)deleted text end new text begin (b) new text end An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the Public Employees Retirement Association requesting that the increase not be made.

Sec. 10.

Minnesota Statutes 2016, section 356.415, subdivision 1d, is amended to read:

Subd. 1d.

Teachers Retirement Association annual postretirement adjustments.

(a)new text begin Except as set forth in paragraph (d), recipients of anew text end retirement annuity, disability benefit, or survivor benefit deleted text begin recipients ofdeleted text end new text begin from new text end the Teachers Retirement Association are entitled to deleted text begin adeleted text end new text begin an annualnew text end postretirement adjustment deleted text begin annually ondeleted text end new text begin , effective as of eachnew text end January 1, as follows:

(1) deleted text begin for eachdeleted text end new text begin effective new text end January 1 deleted text begin until funding stability is restoreddeleted text end new text begin , 2019, through December 31, 2023new text end , a postretirement increase of deleted text begin twodeleted text end new text begin onenew text end percent must be applied each yeardeleted text begin , effective on January 1,deleted text end to the new text begin amount of the new text end monthly annuity or benefit deleted text begin amountdeleted text end of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment;

(2) deleted text begin for eachdeleted text end new text begin effective new text end January 1 deleted text begin until funding stability is restoreddeleted text end new text begin , 2019, through December 31, 2023new text end , for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, deleted text begin an annualdeleted text end new text begin anew text end postretirement increase of 1/12 of deleted text begin twodeleted text end new text begin onenew text end percent for each month the person has been receiving an annuity or benefit must be applieddeleted text begin ;deleted text end new text begin to the amount of the monthly annuity or benefit of the annuitant or benefit recipient;new text end

deleted text begin (3) for each January 1 following the restoration of funding stability, a postretirement deleted text end deleted text begin increase of 2.5 percent must be applied each year, effective January 1, to the monthly annuity deleted text end deleted text begin or benefit amount of each annuitant or benefit recipient who has been receiving an annuity deleted text end deleted text begin or a benefit for at least 12 full months as of the June 30 of the calendar year immediately deleted text end deleted text begin before the adjustment; and deleted text end

deleted text begin (4) for each January 1 following the restoration of funding stability, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 percent for each month the person has been receiving an annuity or benefit must be applied. deleted text end

deleted text begin (b) Funding stability is restored when the market value of assets of the Teachers Retirement Association equals or exceeds 90 percent of the actuarial accrued liabilities of the Teachers Retirement Association in the two most recent prior actuarial valuations prepared under section 356.215 and the standards for actuarial work by the approved actuary retained by the Teachers Retirement Association under section 356.214. deleted text end

deleted text begin (c) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, or the increase under paragraph (a), clauses (3) and (4), is again to be applied in a subsequent year or years if the market value of assets of the plan equals or is less than: deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the plan for two consecutive actuarial valuations; or deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the plan for the most recent actuarial valuation. deleted text end

new text begin (3) effective January 1, 2024, and thereafter, a postretirement increase must be applied each year to the amount of the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment, at the following rates: new text end

new text begin from January 1, 2024, through December 31, 2024 new text end new text begin 1.1 percent new text end
new text begin from January 1, 2025, through December 31, 2025 new text end new text begin 1.2 percent new text end
new text begin from January 1, 2026, through December 31, 2026 new text end new text begin 1.3 percent new text end
new text begin from January 1, 2027, through December 31, 2027 new text end new text begin 1.4 percent new text end
new text begin from January 1, 2028, and thereafter new text end new text begin 1.5 percent new text end

new text begin (4) effective January 1, 2024, and thereafter, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months, as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of the applicable percentage for each month that the person has been receiving an annuity or benefit must be applied to the amount of the monthly annuity or benefit of the annuitant or benefit recipient. The applicable percentages are the following: new text end

new text begin from January 1, 2024, through December 31, 2024 new text end new text begin 1.1 percent new text end
new text begin from January 1, 2025, through December 31, 2025 new text end new text begin 1.2 percent new text end
new text begin from January 1, 2026, through December 31, 2026 new text end new text begin 1.3 percent new text end
new text begin from January 1, 2027, through December 31, 2027 new text end new text begin 1.4 percent new text end
new text begin from January 1, 2028, and thereafter new text end new text begin 1.5 percent new text end

deleted text begin (d)deleted text end new text begin (b)new text end An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the Teachers Retirement Association requesting that the increase not be made.

deleted text begin (e)deleted text end new text begin (c)new text end The retirement annuity payable to a person who retires before becoming eligible for Social Security benefits and who has elected the optional payment as provided in section 354.35 must be treated as the sum of a period-certain retirement annuity and a life retirement annuity for the purposes of any postretirement adjustment. The period-certain retirement annuity plus the life retirement annuity must be the annuity amount payable until age 62, 65, or normal retirement age, as selected by the member at retirement, for an annuity amount payable under section 354.35. A postretirement adjustment granted on the period-certain retirement annuity must terminate when the period-certain retirement annuity terminates.

new text begin (d) Members who retire on or after July 1, 2024, are entitled to an annual postretirement adjustment of the member's retirement annuity, effective as of each January 1, beginning with the year following the year in which the member attains normal retirement age, as follows: new text end

new text begin (1) if a member has been receiving an annuity for at least 12 full months as of the June 30 of the calendar year immediately before the date of the adjustment, a postretirement increase equal to the percentage specified in paragraph (a), clause (3), must be applied, effective on January 1, to the amount of the member's monthly annuity; new text end

new text begin (2) if a member has been receiving an annuity for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the date of adjustment, a postretirement increase of 1/12 of the applicable percentage specified in paragraph (a), clause (4), for each month that the member has been receiving an annuity must be applied, effective on January 1, to the amount of the member's monthly annuity; or new text end

new text begin (3) if a member has been receiving an annuity for fewer than seven months as of the January 1 of the year following the year in which the member attains normal retirement age, a postretirement adjustment shall be applied effective as of the next January 1. The amount of the adjustment shall be determined under clause (2). new text end

new text begin (e) Paragraph (d) does not apply to members who retire under section 354.44, subdivision 6, paragraph (c), clause (3), or who retire when the member is at least age 62 and has at least 30 years of service under section 354.44, subdivision 6, paragraph (c), (d), (e), or (f), as applicable. new text end

Sec. 11.

Minnesota Statutes 2016, section 356.415, subdivision 1e, is amended to read:

Subd. 1e.

Annual postretirement adjustments; State Patrol retirement plan.

(a) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol retirement plan are entitled to deleted text begin adeleted text end new text begin an annual new text end postretirement adjustment deleted text begin annually ondeleted text end new text begin , effective as of eachnew text end January 1 deleted text begin if the definition of funding stability under paragraph (b) has not been metdeleted text end , as follows:

(1) a postretirement increase of one percent must be applied each yeardeleted text begin , effective on January 1,deleted text end to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of one percent for each month that the person has been receiving an annuity or benefit must be appliednew text begin to the amount of the monthly annuity or benefit of each annuitant or benefit recipientnew text end .

deleted text begin (b) Increases under paragraph (a) for the State Patrol retirement plan terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations for the plan prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicates that the market value of assets of the retirement plan equals or exceeds 85 percent of the actuarial accrued liability of the retirement plan. Thereafter, increases under paragraph (a) become effective again on the December 31 of the calendar year in which the actuarial valuation, or prior consecutive actuarial valuations for the plan prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicates that the market value of the assets of the retirement plan equals or is less than 80 percent of the actuarial accrued liability of the retirement plan for two years, or equals or is less than 75 percent of the actuarial accrued liability of the retirement plan for one year and increases under paragraph (c) commence after that date. deleted text end

deleted text begin (c) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol retirement plan are entitled to a postretirement adjustment annually on January 1, as follows: deleted text end

deleted text begin (1) a postretirement increase of 1.5 percent must be applied each year, effective on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and deleted text end

deleted text begin (2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 1.5 percent for each month that the person has been receiving an annuity or benefit must be applied. deleted text end

deleted text begin (d) Increases under paragraph (c) for the State Patrol retirement plan terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work adopted by the Legislative Commission on Pensions and Retirement indicates that the market value of assets of the retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under subdivision 1 recommence after that date. deleted text end

deleted text begin (e)deleted text end new text begin (b) new text end An increase in annuity or benefit payments under this subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the applicable covered retirement plan requesting that the increase not be made.

Sec. 12.

Minnesota Statutes 2016, section 356.415, subdivision 1f, is amended to read:

Subd. 1f.

Annual postretirement adjustments; Minnesota State Retirement System judges retirement plan.

deleted text begin (a) The increases provided under this subdivision are in lieu of increases under subdivision 1 or 1a for retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan. deleted text end

deleted text begin (b)deleted text end new text begin (a) new text end Retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan are entitled to deleted text begin adeleted text end new text begin an annual new text end postretirement adjustment deleted text begin annually ondeleted text end new text begin , effective as of eachnew text end January 1deleted text begin ,deleted text end new text begin if the definition of funding stability under paragraph (b) has not been met, new text end as follows:

(1) a postretirement increase of 1.75 percent must be applied each yeardeleted text begin , effective on January 1,deleted text end to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 1.75 percent for each month that the person has been receiving an annuity or benefit must be appliednew text begin to the amount of the monthly annuity or benefit of each annuitant or benefit recipientnew text end .

deleted text begin (c)deleted text end new text begin (b) new text end Increases under deleted text begin this subdivisiondeleted text end new text begin paragraph (a) new text end terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicates that the market value of assets of the judges retirement plan equals or exceeds 70 percent of the actuarial accrued liability of the retirement plandeleted text begin .deleted text end new text begin and new text end increases under deleted text begin subdivision 1 or 1a, whichever is applicable,deleted text end new text begin paragraph (c) new text end begin deleted text begin on the January 1 next followingdeleted text end new text begin after new text end that date.

new text begin (c) Retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan are entitled to a postretirement adjustment annually, effective as of each January 1 if the definition of funding stability under paragraph (d) has not been met, as follows: new text end

new text begin (1) a postretirement increase of two percent must be applied each year to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and new text end

new text begin (2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of two percent for each month that the person has been receiving an annuity or benefit must be applied to the amount of the monthly annuity or benefit of the annuitant or benefit recipient. new text end

new text begin (d) Increases under paragraph (c) terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under section 356.214 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicate that the market value of assets of the judges retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under paragraph (e) begin after that date. new text end

new text begin (e) Retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan are entitled to a postretirement adjustment annually, effective as of each January 1, as follows: new text end

new text begin (1) a postretirement increase of 2.5 percent must be applied each year to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and new text end

new text begin (2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 percent for each month that the person has been receiving an annuity or benefit must be applied to the amount of the monthly annuity or benefit of the annuitant or benefit recipient. new text end

deleted text begin (d)deleted text end new text begin (f) new text end An increase in annuity or benefit payments under this subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the applicable covered retirement plan requesting that the increase not be made.

Sec. 13.

Minnesota Statutes 2016, section 356.415, is amended by adding a subdivision to read:

new text begin Subd. 1g. new text end

new text begin Annual postretirement adjustments; PERA local government correctional retirement plan. new text end

new text begin (a) Annuities, disability benefits, and survivor benefits being paid from the local government correctional retirement plan of the Public Employees Retirement Association shall be increased effective each January 1 by the percentage of increase determined under this subdivision. The increase to the annuity or benefit shall be determined by multiplying the monthly amount of the annuity or benefit by the percentage of increase specified in paragraph (b), after taking into account any reduction to the percentage of increase required under paragraph (c). new text end

new text begin (b) The percentage of increase shall be one percent unless the federal Social Security Administration has announced a cost-of-living adjustment pursuant to United States Code, title 42, section 415(i), in the last quarter of the preceding calendar year that is greater than one percent. If the cost-of-living adjustment announced by the federal Social Security Administration is greater than one percent, the percentage of increase shall be the same as the cost-of-living adjustment announced by the federal Social Security Administration, but in no event may the percentage of increase exceed the applicable maximum percentage. The applicable maximum percentage is 2.5 percent, until either of the following occurs, in which case the applicable maximum percentage is 1.5 percent and remains at 1.5 percent thereafter: new text end

new text begin (1) the market value of assets equals or is less than 85 percent of the actuarial accrued liabilities as reported by the plan's actuary in two consecutive annual actuarial valuations; or new text end

new text begin (2) the market value of assets equals or is less than 80 percent of the actuarial accrued liabilities as reported by the plan's actuary in the most recent annual actuarial valuation. new text end

new text begin (c)(1) If the recipient of an annuity, disability benefit, or survivor's benefit has been receiving the annuity or benefit for at least 12 full months as of the June 30 of the calendar year immediately before the effective date of the increase, there is no reduction in the percentage of increase. new text end

new text begin (2) If the recipient of an annuity, disability benefit, or survivor's benefit has been receiving the annuity or benefit for at least one month, but less than 12 full months, as of the June 30 of the calendar year immediately preceding the effective date of the increase, the percentage of increase is multiplied by a fraction, the numerator of which is the number of months the annuity or benefit was received as of June 30 of the preceding calendar year and the denominator of which is 12. new text end

new text begin (d) An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the recipient with the executive director of the Public Employees Retirement Association requesting that the increase not be made. new text end

Sec. 14.

new text begin STUDY. new text end

new text begin Before December 31, 2020, the Legislative Commission on Pensions and Retirement must conduct a study of postretirement adjustments for the covered plans as defined in Minnesota Statutes, section 356.415, subdivision 2, and the St. Paul Teachers Retirement Fund Association. The study shall take into account the purpose of postretirement adjustments and whether governing statutes are consistent with the purpose of postretirement adjustments. The study shall also consider alternative methodologies for determining postretirement adjustments and evaluate the new methodology to be used by the Public Employees Retirement Association under this act. The Legislative Commission on Pensions and Retirement shall report its conclusions based on the study during the 2021 legislative session. new text end

Sec. 15.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 14 are effective June 30, 2018. new text end

ARTICLE 6

INTEREST RATE CONFORMING CHANGES

Section 1.

Minnesota Statutes 2016, section 3A.03, subdivision 2, is amended to read:

Subd. 2.

Refund.

(a) A former member who has made contributions under subdivision 1 and who is no longer a member of the legislature is entitled to receive, upon written application to the executive director on a form prescribed by the executive director, a refund from the general fund of all contributions credited to the member's account with interest computed as provided in section 352.22, subdivision 2.

(b) The refund of contributions as provided in paragraph (a) terminates all rights of a former member of the legislature and the survivors of the former member under this chapter.

(c) If the former member of the legislature again becomes a member of the legislature after having taken a refund as provided in paragraph (a), the member is a member of the unclassified employees retirement program of the Minnesota State Retirement System.

(d) However, the member may reinstate the rights and credit for service previously forfeited under this chapter if the member repays all refunds taken, plus interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annuallynew text begin ,new text end from the date on which the refund was taken to the date on which the refund is repaid.

new text begin (e) A member of the legislature who has received a refund from any of the retirement plans specified in section 356.311, paragraph (b), may repay the refund to the respective plan under such terms and conditions consistent with the law governing the retirement plan if the law governing the plan permits the repayment of refunds. If the total amount to be repaid, including principal and interest exceeds $2,000, repayment may be made in three equal installments over a period of 18 months, with the interest accrued during the period of the repayment added to the final installment. new text end

deleted text begin (e)deleted text end new text begin (f) new text end No person may be required to apply for or to accept a refund.

Sec. 2.

Minnesota Statutes 2016, section 352.01, subdivision 13a, is amended to read:

Subd. 13a.

Reduced salary during period of workers' compensation.

An employee on leave of absence receiving temporary workers' compensation payments and a reduced salary or no salary from the employer who is entitled to allowable service credit for the period of absence, may make payment to the fund for the difference between salary received, if any, and the salary the employee would normally receive if not on leave of absence during the period. The employee shall pay an amount equal to the employee and employer contribution rate under section 352.04, subdivisions 2 and 3, on the differential salary amount for the period of the leave of absence.

The employing department, at its option, may pay the employer amount on behalf of its employees. Payment made under this subdivision must include interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafter per yeardeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2new text end , and must be completed within one year of the return from leave of absence.

Sec. 3.

Minnesota Statutes 2016, section 352.017, subdivision 2, is amended to read:

Subd. 2.

Purchase procedure.

(a) An employee covered by a plan specified in this chapter may purchase credit for allowable service in that plan for a period specified in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c), whichever applies. The employing unit, at its option, may pay the employer portion of the amount specified in paragraph (b) on behalf of its employees.

(b) If payment is received by the executive director within one year from the date the employee returned to work following the authorized leave, the payment amount is equal to the employee and employer contribution rates specified in law for the applicable plan at the end of the leave period multiplied by the employee's hourly rate of salary on the date of return from the leave of absence and by the days and months of the leave of absence for which the employee is eligible for allowable service credit. The payment must include compound interest at the deleted text begin monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafterdeleted text end new text begin applicable monthly rate or rates specified in section 356.59, subdivision 2, new text end from the last day of the leave period until the last day of the month in which payment is received. If payment is received by the executive director after one year, the payment amount is the amount determined under section 356.551. Payment under this paragraph must be made before the date of termination from public employment covered under this chapter.

(c) If the employee terminates employment covered by this chapter during the leave or following the leave rather than returning to covered employment, payment must be received by the executive director within 30 days after the termination date. The payment amount is equal to the employee and employer contribution rates specified in law for the applicable plan on the day prior to the termination date, multiplied by the employee's hourly rate of salary on that date and by the days and months of the leave of absence prior to termination.

Sec. 4.

Minnesota Statutes 2016, section 352.04, subdivision 8, is amended to read:

Subd. 8.

Department required to pay omitted salary deductions.

(a) If a department fails to take deductions past due for a period of 60 days or less from an employee's salary as provided in this section, those deductions must be taken on later payroll abstracts.

(b) If a department fails to take deductions past due for a period in excess of 60 days from an employee's salary as provided in this section, the department, and not the employee, must pay on later payroll abstracts the employee and employer contributions and deleted text begin an amount equivalent to 8.5 percent until June 30, 2015, and eight percent thereafter of the total amount due in lieu of interest, or if the delay in payment exceeds one year, 8.5 percent until June 30, 2015, and eight percent thereafter compound annualdeleted text end interestdeleted text begin .deleted text end new text begin at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the date the employee and employer contributions should have been deducted to the date payment of the total amount due is paid by the department.new text end

(c) If a department fails to take deductions past due for a period of 60 days or less and the employee is no longer in state service so that the required deductions cannot be taken from the salary of the employee, the department must nevertheless pay the required employer contributions. If any department fails to take deductions past due for a period in excess of 60 days and the employee is no longer in state service, the omitted contributions must be recovered under paragraph (b).

(d) If an employee from whose salary required deductions were past due for a period of 60 days or less leaves state service before the payment of the omitted deductions and subsequently returns to state service, the unpaid amount is considered the equivalent of a refund. The employee accrues no right by reason of the unpaid amount, except that the employee may pay the amount of omitted deductions as provided in section 352.23.

Sec. 5.

Minnesota Statutes 2016, 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 excess of required amounts 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) If erroneous employee deductions and employer contributions are caused by an error in plan coverage involving the plan and any other plans specified in section 356.99, that section applies. If the employee should have been covered by the plan governed by chapter 352D, 353D, 354B, or 354D, the employee deductions and employer contributions taken in error must be directly transferred to the applicable employee's account in the correct retirement plan, with interest at the deleted text begin rate of 0.71 percent per month until June 30, 2015, and 0.667 percent per month thereafterdeleted text end new text begin applicable monthly rate or rates specified in section 356.59, subdivision 2new text end , compounded annually, from the first day of the month following the month in which coverage should have commenced in the correct defined contribution plan until the end of the month in which the transfer occurs.

Sec. 6.

Minnesota Statutes 2016, section 352.23, is amended to read:

352.23 TERMINATION OF RIGHTS; REPAYMENT OF REFUND.

(a) When any employee accepts a refund as provided in section 352.22, all existing allowable service credits and all rights and benefits to which the employee was entitled before accepting the refund terminate.

(b) Terminated service credits and rights must not again be restored until the former employee acquires at least six months of allowable service credit after taking the last refund. In that event, the employee may repay all refunds previously taken from the retirement fund.

(c) Repayment of refunds entitles the employee only to credit for service covered by (1) salary deductions; (2) payments previously made in lieu of salary deductions as permitted under law in effect when the payment in lieu of deductions was made; (3) payments made to obtain credit for service as permitted by laws in effect when payment was made; and (4) allowable service previously credited while receiving temporary workers' compensation as provided in section 352.01, subdivision 11, paragraph (a), clause (3).

(d) Payments under this section for repayment of refunds are to be paid with interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annuallynew text begin ,new text end from the date the refund was taken until the date the refund is repaid. They may be paid in a lump sum or by payroll deduction in the manner provided in section 352.04. Payment may be made in a lump sum up to six months after termination from service.

Sec. 7.

Minnesota Statutes 2016, section 352.27, is amended to read:

352.27 CREDIT FOR BREAK IN SERVICE TO PROVIDE UNIFORMED SERVICE.

(a) An employee who is absent from employment by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), and who returns to state service upon discharge from service in the uniformed service within the time frames required in United States Code, title 38, section 4312(e), may obtain service credit for the period of the uniformed service as further specified in this section, provided that the employee did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions.

(b) The employee may obtain credit by paying into the fund an equivalent employee contribution based upon the contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the employee would have received if the employee had continued to be employed in covered employment rather than to provide uniformed service, or, if the determination of that rate is not reasonably certain, the annual salary rate is the employee's average salary rate during the 12-month period of covered employment rendered immediately preceding the period of the uniformed service.

(c) The equivalent employer contribution and, if applicable, the equivalent additional employer contribution provided in this chapter must be paid by the department employing the employee from funds available to the department at the time and in the manner provided in this chapter, using the employer and additional employer contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent employee contribution.

(d) If the employee equivalent contributions provided in this section are not paid in full, the employee's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total employee contribution received by the total employee contribution otherwise required under this section.

(e) To receive service credit under this section, the contributions specified in this section must be transmitted to the Minnesota State Retirement System during the period which begins with the date on which the individual returns to state service and which has a duration of three times the length of the uniformed service period, but not to exceed five years. If the determined payment period is less than one year, the contributions required under this section to receive service credit may be made within one year of the discharge date.

(f) The amount of service credit obtainable under this section may not exceed five years unless a longer purchase period is required under United States Code, title 38, section 4312.

(g) The employing unit shall pay interest on all equivalent employee and employer contribution amounts payable under this section. Interest must be deleted text begin computed at the rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin at the applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annuallynew text begin ,new text end from the end of each fiscal year of the leave or the break in service to the end of the month in which the payment is received.

Sec. 8.

Minnesota Statutes 2016, section 352.955, subdivision 3, is amended to read:

Subd. 3.

Payment of additional equivalent contributions.

(a) An eligible employee who is transferred to plan coverage and who elects to transfer past service credit under this section must pay an additional member contribution for that prior service period. The additional member contribution is the amount computed under paragraph (b), plus the greater of the amount computed under paragraph (c), or 40 percent of the unfunded actuarial accrued liability attributable to the past service credit transfer.

(b) The executive director shall compute, for the most recent 12 months of service credit eligible for transfer, or for the entire period eligible for transfer if less than 12 months, the difference between the employee contribution rate or rates for the general state employees retirement plan and the employee contribution rate or rates for the correctional state employees retirement plan applied to the eligible employee's salary during that transfer period, plus compound interest at the new text begin applicable new text end monthly rate deleted text begin of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafterdeleted text end new text begin or rates specified in section 356.59, subdivision 2new text end .

(c) The executive director shall compute, for any service credit being transferred on behalf of the eligible employee and not included under paragraph (b), the difference between the employee contribution rate or rates for the general state employees retirement plan and the employee contribution rate or rates for the correctional state employees retirement plan applied to the eligible employee's salary during that transfer period, plus compound interest at the deleted text begin monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafterdeleted text end new text begin applicable monthly rate or rates specified in section 356.59, subdivision 2new text end .

(d) The executive director shall compute an amount using the process specified in paragraph (b), but based on differences in employer contribution rates between the general state employees retirement plan and the correctional state employees retirement plan rather than employee contribution rates.

(e) The executive director shall compute an amount using the process specified in paragraph (c), but based on differences in employer contribution rates between the general state employees retirement plan and the correctional state employees retirement plan rather than employee contribution rates.

(f) The additional equivalent member contribution under this subdivision must be paid in a lump sum. Payment must accompany the election to transfer the prior service credit. No transfer election or additional equivalent member contribution payment may be made by a person or accepted by the executive director after the one year anniversary date of the effective date of the retirement coverage transfer, or the date on which the eligible employee terminates state employment, whichever is earlier.

(g) If an eligible employee elects to transfer past service credit under this section and pays the additional equivalent member contribution amount under paragraph (a), the applicable department shall pay an additional equivalent employer contribution amount. The additional employer contribution is the amount computed under paragraph (d), plus the greater of the amount computed under paragraph (e), or 60 percent of the unfunded actuarial accrued liability attributable to the past service credit transfer.

(h) The unfunded actuarial accrued liability attributable to the past service credit transfer is the present value of the benefit obtained by the transfer of the service credit to the correctional state employees retirement plan reduced by the amount of the asset transfer under subdivision 4, by the amount of the member contribution equivalent payment computed under paragraph (b), and by the amount of the employer contribution equivalent payment computed under paragraph (d).

(i) The additional equivalent employer contribution under this subdivision must be paid in a lump sum and must be paid within 30 days of the date on which the executive director of the Minnesota State Retirement System certifies to the applicable department that the employee paid the additional equivalent member contribution.

Sec. 9.

Minnesota Statutes 2016, section 352B.013, subdivision 2, is amended to read:

Subd. 2.

Purchase procedure.

(a) An employee covered by the plan specified in this chapter may purchase credit for allowable service in the plan for a period specified in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c), whichever applies. The employing unit, at its option, may pay the employer portion of the amount specified in paragraph (b) on behalf of its employees.

(b) If payment is received by the executive director within one year from the date the employee returned to work following the authorized leave, the payment amount is equal to the employee and employer contribution rates specified in section 352B.02 at the end of the leave period multiplied by the employee's hourly rate of salary on the date of return from the leave of absence and by the days and months of the leave of absence for which the employee is eligible for allowable service credit. The payment must include compound interest at the deleted text begin monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafterdeleted text end new text begin applicable monthly rate or rates specified in section 356.59, subdivision 2, new text end from the last day of the leave period until the last day of the month in which payment is received. If payment is received by the executive director after one year from the date the employee returned to work following the authorized leave, the payment amount is the amount determined under section 356.551. Payment under this paragraph must be made before the date of termination from public employment covered under this chapter.

(c) If the employee terminates employment covered by this chapter during the leave or following the leave rather than returning to covered employment, payment must be received by the executive director within 30 days after the termination date. The payment amount is equal to the employee and employer contribution rates specified in section 352B.02 on the day prior to the termination date, multiplied by the employee's hourly rate of salary on that date and by the days and months of the leave of absence prior to termination.

Sec. 10.

Minnesota Statutes 2016, section 352B.085, is amended to read:

352B.085 SERVICE CREDIT FOR CERTAIN DISABILITY LEAVES OF ABSENCE.

A member on leave of absence receiving temporary workers' compensation payments and a reduced salary or no salary from the employer who is entitled to allowable service credit for the period of absence under section 352B.011, subdivision 3, paragraph (b), may make payment to the fund for the difference between salary received, if any, and the salary that the member would normally receive if the member was not on leave of absence during the period. The member shall pay an amount equal to the member and employer contribution rate under section 352B.02, subdivisions 1b and 1c, on the differential salary amount for the period of the leave of absence. The employing department, at its option, may pay the employer amount on behalf of the member. Payment made under this subdivision must include interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafter per yeardeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2new text end , and must be completed within one year of the member's return from the leave of absence.

Sec. 11.

Minnesota Statutes 2016, section 352B.086, is amended to read:

352B.086 SERVICE CREDIT FOR UNIFORMED SERVICE.

(a) A member who is absent from employment by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), and who returns to state employment in a position covered by the plan upon discharge from service in the uniformed services within the time frame required in United States Code, title 38, section 4312(e), may obtain service credit for the period of the uniformed service, provided that the member did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions.

(b) The member may obtain credit by paying into the fund an equivalent member contribution based on the member contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the member would have received if the member had continued to provide employment services to the state rather than to provide uniformed service, or if the determination of that rate is not reasonably certain, the annual salary rate is the member's average salary rate during the 12-month period of covered employment rendered immediately preceding the purchase period.

(c) The equivalent employer contribution and, if applicable, the equivalent employer additional contribution, must be paid by the employing unit, using the employer and employer additional contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent member contribution.

(d) If the member equivalent contributions provided for in this section are not paid in full, the member's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total member contributions received by the total member contributions otherwise required under this section.

(e) To receive allowable service credit under this section, the contributions specified in this section must be transmitted to the fund during the period which begins with the date on which the individual returns to state employment covered by the plan and which has a duration of three times the length of the uniformed service period, but not to exceed five years. If the determined payment period is calculated to be less than one year, the contributions required under this section to receive service credit must be transmitted to the fund within one year from the discharge date.

(f) The amount of allowable service credit obtainable under this section may not exceed five years, unless a longer purchase period is required under United States Code, title 38, section 4312.

(g) The employing unit shall pay interest on all equivalent member and employer contribution amounts payable under this section. Interest must be computed at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annuallynew text begin ,new text end from the end of each fiscal year of the leave or break in service to the end of the month in which payment is received.

Sec. 12.

Minnesota Statutes 2016, section 352B.11, subdivision 4, is amended to read:

Subd. 4.

Reentry into state servicenew text begin ; refund repaymentnew text end .

new text begin (a) new text end When a former member, who has become separated from state service that entitled the member to membership and has received a refund of retirement payments, reenters the state service in a position that entitles the member to membership, that member shall receive credit for the period of prior allowable state service if the member repays into the fund the amount of the refund, plus interest deleted text begin on it at the rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin at the applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annually, at any time before subsequent retirement. Repayment may be made in installments or in a lump sum.

new text begin (b) A person who has received a refund from the State Patrol retirement fund who is a member of another public retirement system included in section 356.311 may repay the refund with interest to the State Patrol retirement fund as provided in paragraph (a). new text end

Sec. 13.

Minnesota Statutes 2016, section 352D.05, subdivision 4, is amended to read:

Subd. 4.

Repayment of refund.

(a) A participant in the unclassified program may repay regular refunds taken under section 352.22, as provided in section 352.23.

(b) A participant in the unclassified program or an employee covered by the general employees retirement plan who has withdrawn the value of the total shares may repay the refund taken and thereupon restore the service credit, rights and benefits forfeited by paying into the fund the amount refunded plus interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annuallynew text begin ,new text end from the date that the refund was taken until the date that the refund is repaid. If the participant had withdrawn only the employee shares as permitted under prior laws, repayment must be pro rata.

(c) Except as provided in section 356.441, the repayment of a refund under this section must be made in a lump sum.

Sec. 14.

Minnesota Statutes 2016, section 352D.11, subdivision 2, is amended to read:

Subd. 2.

Payments by employee.

An employee entitled to purchase service credit may make the purchase by paying to the state retirement system an amount equal to the current employee contribution rate in effect for the state retirement system applied to the current or final salary rate multiplied by the months and days of prior temporary, intermittent, or contract legislative service. Payment shall be made in one lump sum unless the executive director of the state retirement system agrees to accept payment in installments over a period of not more than three years from the date of the agreement. Installment payments shall be charged interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annually.

Sec. 15.

Minnesota Statutes 2016, section 352D.12, is amended to read:

352D.12 TRANSFER OF PRIOR SERVICE CONTRIBUTIONS.

(a) An employee who is a participant in the unclassified program and who has prior service credit in a covered plan under chapter 352, 353, 354, 354A, or 422A may, within the time limits specified in this section, elect to transfer to the unclassified program prior service contributions to one or more of those plans.

(b) For participants with prior service credit in a plan governed by chapter 352, 353, 354, 354A, or 422A, "prior service contributions" means the accumulated employee and equal employer contributions with interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annually, based on fiscal year balances.

(c) If a participant has taken a refund from a retirement plan listed in this section, the participant may repay the refund to that plan, notwithstanding any restrictions on repayment to that plan, deleted text begin plus 8.5 percent interest until June 30, 2015, and eight percent interest thereafterdeleted text end new text begin with interest at the applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annuallynew text begin ,new text end and have the accumulated employee and equal employer contributions transferred to the unclassified program with interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually based on fiscal year balances. If a person repays a refund and subsequently elects to have the money transferred to the unclassified program, the repayment amount, including interest, is added to the fiscal year balance in the year which the repayment was made.

(d) A participant electing to transfer prior service contributions credited to a retirement plan governed by chapter 352, 353, 354, 354A, or 422A as provided under this section must complete a written application for the transfer and repay any refund within one year of the commencement of the employee's participation in the unclassified program.

Sec. 16.

Minnesota Statutes 2016, section 353.01, subdivision 16, is amended to read:

Subd. 16.

Allowable service; limits and computation.

(a) "Allowable service" means:

(1) service during years of actual membership in the course of which employee deductions were withheld from salary and contributions were made at the applicable rates under section 353.27, 353.65, or 353E.03;

(2) periods of service covered by payments in lieu of salary deductions under sections 353.27, subdivisions 12 and 12a, and 353.35;

(3) 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;

(4) a period of authorized leave of absence during which the employee receives pay as specified in subdivision 10, paragraph (a), clause (4) or (5), from which deductions for employee contributions are made, deposited, and credited to the fund;

(5) a period of authorized leave of absence without pay, or with pay that is not included in the definition of salary under subdivision 10, paragraph (a), clause (4) or (5), for which salary deductions are not authorized, and for which a member obtained service credit for up to 12 months of the authorized leave period by payment under section 353.0161 or 353.0162, to the fund made in place of salary deductions;

(6) a periodic, repetitive leave that is offered to all employees of a governmental subdivision. The leave program may not exceed 208 hours per annual normal work cycle as certified to the association by the employer. A participating member obtains service credit by making employee contributions in an amount or amounts based on the member's average salary, excluding overtime pay, that would have been paid if the leave had not been taken. The employer shall pay the employer and additional employer contributions on behalf of the participating member. The employee and the employer are responsible to pay interest on their respective shares at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3new text end , compounded annually, from the end of the normal cycle until full payment is made. An employer shall also make the employer and additional employer contributions, plus deleted text begin 8.5 percentdeleted text end interest deleted text begin until June 30, 2015, and eight percent interest thereafterdeleted text end new text begin at the applicable rate or rates specified in section 356.59, subdivision 3new text end , compounded annually, on behalf of an employee who makes employee contributions but terminates public service. The employee contributions must be made within one year after the end of the annual normal working cycle or within 30 days after termination of public service, whichever is sooner. The executive director shall prescribe the manner and forms to be used by a governmental subdivision in administering a periodic, repetitive leave. Upon payment, the member must be granted allowable service credit for the purchased period;

(7) an authorized temporary or seasonal layoff under subdivision 12, limited to three months allowable service per authorized temporary or seasonal layoff in one calendar year. An employee who has received the maximum service credit allowed for an authorized temporary or seasonal layoff must return to public service and must obtain a minimum of three months of allowable service subsequent to the layoff in order to receive allowable service for a subsequent authorized temporary or seasonal layoff;

(8) a period during which a member is absent from employment by a governmental subdivision by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), if the member returns to public service with the same governmental subdivision upon discharge from service in the uniformed service within the time frames required under United States Code, title 38, section 4312(e), provided that the member did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions. The service must be credited if the member pays into the fund equivalent employee contributions based upon the contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the member would have received if the member had continued to be employed in covered employment rather than to provide uniformed service, or, if the determination of that rate is not reasonably certain, the annual salary rate is the member's average salary rate during the 12-month period of covered employment rendered immediately preceding the period of the uniformed service. Payment of the member equivalent contributions must be made during a period that begins with the date on which the individual returns to public employment and that is three times the length of the military leave period, or within five years of the date of discharge from the military service, whichever is less. If the determined payment period is less than one year, the contributions required under this clause to receive service credit may be made within one year of the discharge date. Payment may not be accepted following 30 days after termination of public service under subdivision 11a. If the member equivalent contributions provided for in this clause are not paid in full, the member's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total member contributions received by the total member contributions otherwise required under this clause. The equivalent employer contribution, and, if applicable, the equivalent additional employer contribution must be paid by the governmental subdivision employing the member if the member makes the equivalent employee contributions. The employer payments must be made from funds available to the employing unit, using the employer and additional employer contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent member contribution. The governmental subdivision involved may appropriate money for those payments. The amount of service credit obtainable under this section may not exceed five years unless a longer purchase period is required under United States Code, title 38, section 4312. The employing unit shall pay interest on all equivalent member and employer contribution amounts payable under this clause. Interest must be computed at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3new text end , compounded annually, from the end of each fiscal year of the leave or the break in service to the end of the month in which the payment is received. Upon payment, the employee must be granted allowable service credit for the purchased period; or

(9) a period specified under section 353.0162.

(b) No member may receive more than 12 months of allowable service credit in a year either for vesting purposes or for benefit calculation purposes.

(c) For an active member who was an active member of the former Minneapolis Firefighters Relief Association on December 29, 2011, "allowable service" is the period of service credited by the Minneapolis Firefighters Relief Association as reflected in the transferred records of the association up to December 30, 2011, and the period of service credited under paragraph (a), clause (1), after December 30, 2011. For an active member who was an active member of the former Minneapolis Police Relief Association on December 29, 2011, "allowable service" is the period of service credited by the Minneapolis Police Relief Association as reflected in the transferred records of the association up to December 30, 2011, and the period of service credited under paragraph (a), clause (1), after December 30, 2011.

Sec. 17.

Minnesota Statutes 2016, section 353.0162, is amended to read:

353.0162 REDUCED SALARY PERIODS SALARY CREDIT PURCHASE.

(a) A member may purchase additional salary credit for a period specified in this section.

(b) The applicable period is a period during which the member is receiving a reduced salary from the employer while the member is:

(1) receiving temporary workers' compensation payments related to the member's service to the public employer;

(2) on an authorized leave of absence; or

(3) on an authorized partial paid leave of absence as a result of a budgetary or salary savings program offered or mandated by a governmental subdivision.

(c) The differential salary amount is the difference between the average monthly salary received by the member during the period of reduced salary under this section and the average monthly salary of the member, excluding overtime, on which contributions to the applicable plan were made during the period of the last six months of covered employment occurring immediately before the period of reduced salary, applied to the member's normal employment period, measured in hours or otherwise, as applicable.

(d) To receive eligible salary credit, the member shall pay an amount equal to:

(1) the applicable employee contribution rate under section 353.27, subdivision 2; 353.65, subdivision 2; or 353E.03, subdivision 1, as applicable, multiplied by the differential salary amount;

(2) plus an employer equivalent payment equal to the applicable employer contribution rate in section 353.27, subdivision 3; 353.65, subdivision 3; or 353E.03, subdivision 2, as applicable, multiplied by the differential salary amount;

(3) plus, if applicable, an equivalent employer additional amount equal to the additional employer contribution rate in section 353.27, subdivision 3a, multiplied by the differential salary amount.

(e) The employer, by appropriate action of its governing body and documented in its official records, may pay the employer equivalent contributions and, as applicable, the equivalent employer additional contributions on behalf of the member.

(f) Payment under this section must include interest on the contribution amount or amounts, whichever applies, at deleted text begin an 8.5 percent annual rate until June 30, 2015, and at an eight percent annual rate thereafterdeleted text end new text begin the applicable rate or rates specified in section 356.59, subdivision 3, compounded annuallynew text end , prorated for deleted text begin applicabledeleted text end new text begin the number of new text end monthsnew text begin , if less than 12 months,new text end from the date on which the period of reduced salary specified under this section terminates to the date on which the payment or payments are received by the executive director. Payment under this section must be completed within the earlier of 30 days from termination of public service by the employee under section 353.01, subdivision 11a, or one year after the termination of the period specified in paragraph (b), as further restricted under this section.

(g) The period for which additional allowable salary credit may be purchased is limited to the period during which the person receives temporary workers' compensation payments or for those business years in which the governmental subdivision offers or mandates a budget or salary savings program, as certified to the executive director by a resolution of the governing body of the governmental subdivision. For an authorized leave of absence, the period for which allowable salary credit may be purchased may not exceed 12 months of authorized leave.

(h) To purchase salary credit for a subsequent period of temporary workers' compensation benefits or subsequent authorized medical leave of absence, the member must return to public service and render a minimum of three months of allowable service.

Sec. 18.

Minnesota Statutes 2017 Supplement, section 353.27, subdivision 3c, is amended to read:

Subd. 3c.

Former MERF members; member and employer contributions.

(a) For the period July 1, 2015, through December 31, 2031, the member contributions for former members of the Minneapolis Employees Retirement Fund and by the former Minneapolis Employees Retirement Fund-covered employing units are governed by this subdivision.

(b) The member contribution for a public employee who was a member of the former Minneapolis Employees Retirement Fund on June 29, 2010, is 9.75 percent of the salary of the employee.

(c) The employer regular contribution with respect to a public employee who was a member of the former Minneapolis Employees Retirement Fund on June 29, 2010, is 9.75 percent of the salary of the employee.

(d) The annual employer supplemental contribution is the employing unit's share of $31,000,000. For calendar years 2017 and 2018, the employer supplemental contribution is the employing unit's share of $21,000,000.

(e) Each employing unit's share under paragraph (d) is the amount determined from an allocation between each employing unit in the portion equal to the unit's employer supplemental contribution paid or payable under Minnesota Statutes 2012, section 353.50, during calendar year 2014.

(f) The employer supplemental contribution amount under paragraph (d) for calendar year 2015 must be invoiced by the executive director of the Public Employees Retirement Association by July 1, 2015. The calendar year 2015 payment is payable in a single amount on or before September 30, 2015. For subsequent calendar years, the employer supplemental contribution under paragraph (d) must be invoiced on January 31 of each year and is payable in two parts, with the first half payable on or before July 31 and with the second half payable on or before December 15. Late payments are payable with deleted text begin compounddeleted text end interestnew text begin , compounded annually,new text end at the deleted text begin rate of 0.71 percentdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3, new text end per month for each month or portion of a month that has elapsed after the due date.

(g) The employer supplemental contribution under paragraph (d) terminates on December 31, 2031.

Sec. 19.

Minnesota Statutes 2016, section 353.27, subdivision 7a, is amended to read:

Subd. 7a.

Deductions or contributions transmitted by error.

(a) If employee deductions and employer contributions under this section, section 353.50, 353.65, or 353E.03 were erroneously transmitted to the association, but should have been transmitted to a plan covered by chapter 352D, 353D, 354B, or 354D, the executive director shall transfer the erroneous employee deductions and employer contributions to the appropriate retirement fund or individual account, as applicable. The time limitations specified in subdivisions 7 and 12 do not apply. The transfer to the applicable defined contribution plan account must include interest at the deleted text begin rate of 0.71 percent per month until June 30, 2015, and 0.667 percentdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3, new text end per month deleted text begin thereafterdeleted text end , compounded annually, from the first day of the month following the month in which coverage should have commenced in the defined contribution plan until the end of the month in which the transfer occurs.

(b) A potential transfer under paragraph (a) that is reasonably determined to cause the plan to fail to be a qualified plan under section 401(a) of the federal Internal Revenue Code, as amended, must not be made by the executive director of the association. Within 30 days after being notified by the Public Employees Retirement Association of an unmade potential transfer under this paragraph, the employer of the affected person must transmit an amount representing the applicable salary deductions and employer contributions, without interest, to the retirement fund of the appropriate Minnesota public pension plan, or to the applicable individual account if the proper coverage is by a defined contribution plan. The association must provide the employing unit a credit for the amount of the erroneous salary deductions and employer contributions against future contributions from the employer. If the employing unit receives a credit under this paragraph, the employing unit is responsible for refunding to the applicable employee any amount that had been erroneously deducted from the person's salary.

(c) If erroneous employee deductions and employer contributions reflect a plan coverage error involving any Public Employees Retirement Association plan specified in section 356.99 and any other plan specified in that section, section 356.99 applies.

Sec. 20.

Minnesota Statutes 2016, section 353.27, subdivision 12, is amended to read:

Subd. 12.

Omitted salary deductions; obligations.

(a) In the case of omission of required deductions for the general employees retirement plan, the public employees police and fire retirement plan, or the local government correctional employees retirement plan from the salary of an employee, the department head or designee shall immediately, upon discovery, report the employee for membership and deduct the employee deductions under subdivision 4 during the current pay period or during the pay period immediately following the discovery of the omission. Payment for the omitted obligations may only be made in accordance with reporting procedures and methods established by the executive director.

(b) When the entire omission period of an employee does not exceed 60 days, the governmental subdivision may report and submit payment of the omitted employee deductions and the omitted employer contributions through the reporting processes under subdivision 4.

(c) When the omission period of an employee exceeds 60 days, the governmental subdivision shall furnish to the association sufficient data and documentation upon which the obligation for omitted employee and employer contributions can be calculated. The omitted employee deductions must be deducted from the employee's subsequent salary payment or payments and remitted to the association for deposit in the applicable retirement fund. The employee shall pay omitted employee deductions due for the 60 days prior to the end of the last pay period in the omission period during which salary was earned. The employer shall pay any remaining omitted employee deductions and any omitted employer contributions, plus cumulative interest at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually, from the date or dates each omitted employee contribution was first payable.

(d) An employer shall not hold an employee liable for omitted employee deductions beyond the pay period dates under paragraph (c), nor attempt to recover from the employee those employee deductions paid by the employer on behalf of the employee. Omitted deductions due under paragraph (c) which are 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 deleted text begin annual rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3, new text end compounded annually. Omitted employee deductions 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 deleted text begin annual rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3, new text end compounded annuallynew text begin ,new text end from the date the contributions were first payable.

(e) 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. Except as provided under paragraph (b), 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. 21.

Minnesota Statutes 2016, section 353.27, subdivision 12a, is amended to read:

Subd. 12a.

Terminated employees: omitted deductions.

A terminated employee who was a member of the general employees retirement plan of the Public Employees Retirement Association, the public employees police and fire retirement plan, or the local government correctional employees retirement plan and 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 deductions could be withheld from salary, may pay the omitted employee deductions for the period on which omitted employer contributions were previously paid plus interest at the deleted text begin annual rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3, new text end compounded annually. 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. 22.

Minnesota Statutes 2016, section 353.27, subdivision 12b, is amended to read:

Subd. 12b.

Terminated employees: immediate eligibility.

If deductions were omitted from salary adjustments or final salary of a terminated employee who was a member of the general employees retirement plan, the public employees police and fire retirement plan, or the local government correctional employees retirement plan and who is immediately eligible to draw a monthly benefit, the employer shall pay the omitted employer and employer additional contributions plus interest on both the employer and employee amounts due at deleted text begin an annual rate of 8.5 percentdeleted text end new text begin the applicable rate or rates specified in section 356.59, subdivision 3, new text end compounded annually. The employee shall pay the employee deductions within six months of an initial notification from the association of eligibility to pay omitted deductions or the employee forfeits the right to make the payment.

Sec. 23.

Minnesota Statutes 2016, section 353.28, subdivision 5, is amended to read:

Subd. 5.

Interest chargeable on amounts due.

Any amount due under this section or section 353.27, subdivision 4, is payable with interest at the deleted text begin annual compound rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3, compounded annually, new text end from the date due until the date payment is received by the association, with a minimum interest charge of $10.

Sec. 24.

Minnesota Statutes 2016, section 353.35, subdivision 1, is amended to read:

Subdivision 1.

Refund rights.

(a) Except as provided in paragraph (b), when any former member accepts a refund, all existing service credits and all rights and benefits to which the person was entitled prior to the acceptance of the refund must terminate.

(b) A refund under section 353.651, subdivision 3, paragraph (c), does not result in a forfeiture of salary credit for the allowable service credit covered by the refund.

(c) The rights and benefits of a former member must not be restored until the person returns to active service and acquires at least six months of allowable service credit after taking the last refund and repays the refund or refunds taken and interest received under section 353.34, subdivisions 1 and 2, plus interest at the deleted text begin annual rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable rate or rates specified in section 356.59, subdivision 3, new text end compounded annually. If the person elects to restore service credit in a particular fund from which the person has taken more than one refund, the person must repay all refunds to that fund. All refunds must be repaid within six months of the last date of termination of public service.

Sec. 25.

Minnesota Statutes 2016, section 354.50, subdivision 2, is amended to read:

Subd. 2.

Interest charge.

If a member desires to repay the refunds, payment shall include interest at deleted text begin an annual rate of 8.5 percentdeleted text end new text begin the applicable annual rate or rates specified in section 356.59, subdivision 4, new text end compounded annuallynew text begin ,new text end from date of withdrawal to the date payment is made and shall be credited to the fund.

Sec. 26.

Minnesota Statutes 2016, section 354.51, subdivision 5, is amended to read:

Subd. 5.

Payment of shortages.

(a) Except as provided in paragraph (b), in the event that full required member contributions are not deducted from the salary of a teacher, payment of shortages in member deductions on salary earned are the sole obligation of the employing unit and are payable by the employing unit upon notification by the executive director of the shortagenew text begin . The amount of the shortage shall be paidnew text end with interest at deleted text begin an annual rate of 8.5 percentdeleted text end new text begin the applicable annual rate or rates specified in section 356.59, subdivision 4, new text end compounded annuallynew text begin ,new text end from the end of the fiscal year in which the shortage occurred to the end of the month in which payment is made and the interest must be credited to the fund. The employing unit shall also pay the employer contributions as specified in section 354.42, subdivisions 3 and 5 for the shortages. If the shortage payment is not paid by the employing unit within 60 days of notification, and if the executive director does not use the recovery procedure in section 354.512, the executive director shall certify the amount of the shortage to the applicable county auditor, who shall spread a levy in the amount of the shortage payment over the taxable property of the taxing district of the employing unit if the employing unit is supported by property taxes. Payment may not be made for shortages in member deductions on salary paid or payable under paragraph (b) or for shortages in member deductions for persons employed by the Minnesota State Colleges and Universities system in a faculty position or in an eligible unclassified administrative position and whose employment was less than 25 percent of a full academic year, exclusive of the summer session, for the applicable institution that exceeds the most recent 36 months.

(b) For a person who is employed by the Minnesota State Colleges and Universities system in a faculty position or in an eligible unclassified administrative position and whose employment was less than 25 percent of a full academic year, exclusive of the summer session, for the applicable institution, upon the person's election under section 354B.21 of retirement coverage under this chapter, the shortage in member deductions on the salary for employment by the Minnesota State Colleges and Universities system institution of less than 25 percent of a full academic year, exclusive of the summer session, for the applicable institution for the most recent 36 months and the associated employer contributions must be paid by the Minnesota State Colleges and Universities system institution, plus deleted text begin annual compounddeleted text end interest at the deleted text begin rate of 8.5 percentdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 4, compounded annually, new text end from the end of the fiscal year in which the shortage occurred to the end of the month in which the Teachers Retirement Association coverage election is made. An individual electing coverage under this paragraph shall repay the amount of the shortage in member deductions, plus interest, through deduction from salary or compensation payments within the first year of employment after the election under section 354B.21, subject to the limitations in section 16D.16. The Minnesota State Colleges and Universities system may use any means available to recover amounts which were not recovered through deductions from salary or compensation payments. No payment of the shortage in member deductions under this paragraph may be made for a period longer than the most recent 36 months.

Sec. 27.

Minnesota Statutes 2016, section 354.52, subdivision 4, is amended to read:

Subd. 4.

Reporting and remittance requirements.

An employer shall remit all amounts due to the association and furnish a statement indicating the amount due and transmitted with any other information required by the executive director. If an amount due is not received by the association within 14 calendar days of the payroll warrant, the deleted text begin amount accrues interest at an annual rate of 8.5 percentdeleted text end new text begin employer shall pay interest on the amount due at the applicable annual rate or rates specified in section 356.59, subdivision 4, new text end compounded annuallynew text begin ,new text end from the due date until the amount is received by the association. All amounts due and other employer obligations not remitted within 60 days of notification by the association must be certified to the commissioner of management and budget who shall deduct the amount from any state aid or appropriation amount applicable to the employing unit.

Sec. 28.

Minnesota Statutes 2016, section 354.53, subdivision 5, is amended to read:

Subd. 5.

Interest requirements.

The employer shall pay interest on all equivalent employee and employer contribution amounts payable under this sectiondeleted text begin . Interest must be computed at a rate of 8.5 percentdeleted text end new text begin at the applicable annual rate or rates specified in section 356.59, subdivision 4, new text end compounded annuallynew text begin ,new text end from the end of each fiscal year of the leave or the break in service to the end of the month in which the payment is received.

Sec. 29.

Minnesota Statutes 2016, section 354.72, subdivision 2, is amended to read:

Subd. 2.

Purchase procedure.

(a) A teacher may purchase credit for allowable and formula service in the plan for a period specified in subdivision 1 if the teacher makes a payment as specified in paragraph (b), (c), or (d), whichever applies. The employing unit, at its option, may pay the employer portion of the amount on behalf of its employees.

(b) If payment is received by the executive director by June 30 of the fiscal year of the strike period or by December 31 of the fiscal year following an authorized leave included under section 354.093, 354.095, or 354.096, payment must equal the total employee and employer contribution rates, including amortization contribution rates if applicable, multiplied by the member's average monthly salary rate on the date the leave or strike period commenced, multiplied by the months and portions of a month of the leave or strike period for which the teacher seeks allowable service credit. This paragraph also applies to an extended leave under section 354.094, except that payment must be received by June 30 of the year of the leave, and the salary used in the computation is the salary received during the year immediately preceding the initial year of the leave.

(c) If payment is made after June 30 and before the following June 30 for a strike period, or after December 31 of the fiscal year following a leave of absence under section 354.093, 354.095, or 354.096, and before July 1, the payment must include the amount determined in paragraph (b) plus compound interest at deleted text begin adeleted text end new text begin the applicablenew text end monthly rate deleted text begin of 0.71 percentdeleted text end new text begin or rates specified in section 356.59, subdivision 4,new text end from June 30 for a strike period, or from December 31 for a leave under section 354.093, 354.095, or 354.096, until the last day of the month in which payment is received. If payment is made on or after July 1 and before the following July 1 for an extended leave of absence under section 354.094, the payment must include the amount determined in paragraph (b) plus compound interest at deleted text begin a monthly rate of 0.71 percentdeleted text end new text begin the applicable monthly rate or rates specified in section 356.59, subdivision 4,new text end from June 30 until the last day of the month in which payment is received.

(d) If payment is received by the executive director after the applicable last permitted date under paragraph (c), the payment amount is the amount determined under section 356.551. Notwithstanding payment deadlines specified in section 356.551, payment under this section may be made anytime before the effective date of retirement.

Sec. 30.

Minnesota Statutes 2016, section 354A.093, subdivision 6, is amended to read:

Subd. 6.

Interest requirements.

The employer shall pay interest on all equivalent employee and employer contribution amounts payable under this section. Interest must be computed at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 5, new text end compounded annuallynew text begin ,new text end from the end of each fiscal year of the leave or break in service to the end of the month in which payment is received.

Sec. 31.

Minnesota Statutes 2016, section 354A.096, is amended to read:

354A.096 MEDICAL LEAVE.

Any teacher in the coordinated program of the St. Paul Teachers Retirement Fund Association who is on an authorized medical leave of absence and subsequently returns to teaching service is entitled to receive allowable service credit, not to exceed one year, for the period of leave, upon making the prescribed payment to the fund. This payment must include the required employee and employer contributions at the rates specified in section 354A.12, subdivisions 1 and 2a, as applied to the member's average full-time monthly salary rate on the date the leave of absence commenced plus deleted text begin annualdeleted text end interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafter per yeardeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 5, compounded annually, new text end from the end of the fiscal year during which the leave terminates to the end of the month during which payment is made. The member must pay the total amount required unless the employing unit, at its option, pays the employer contributions. The total amount required must be paid by the end of the fiscal year following the fiscal year in which the leave of absence terminated or before the member retires, whichever is earlier. Payment must be accompanied by a copy of the resolution or action of the employing authority granting the leave and the employing authority, upon granting the leave, must certify the leave to the association in a manner specified by the executive director. A member may not receive more than one year of allowable service credit during any fiscal year by making payment under this section. A member may not receive disability benefits under section 354A.36 and receive allowable service credit under this section for the same period of time.

Sec. 32.

Minnesota Statutes 2016, section 354A.12, subdivision 1a, is amended to read:

Subd. 1a.

Obligation for omitted salary deductions.

If the full required contributions are not deducted from the salary of a teacher, payment of the shortage in such deductions is the sole obligation of the employing unit during the three-year period following the end of the fiscal year in which the shortage occurred. The shortage is payable by the employing unit upon notification of the shortage by the executive director of the applicable retirement fund association. The employing unit shall also pay any employer contributions related to the shortage. The amount of the shortage in employee contributions and associated employer contributions is payable with interest at the deleted text begin preretirement interest assumption for the retirement fund as specified in section 356.215, subdivision 8, stated as a monthly ratedeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 5, new text end from the date due until the date payment is received in the office of the association, new text begin compounded annually, new text end with a minimum interest charge of $10. If the shortage payment and interest is not paid by the employing unit within 60 days of notification, the executive director shall certify the amount of the shortage payment and interest to the commissioner of management and budget, who shall deduct the amount from any state aid or appropriation amount applicable to the employing unit.

Sec. 33.

Minnesota Statutes 2016, section 354A.12, subdivision 7, is amended to read:

Subd. 7.

Recovery of benefit overpayments.

(a) If the executive director discovers, within the time period specified in subdivision 8 following the payment of a refund or the accrual date of any retirement annuity, survivor benefit, or disability benefit, that benefit overpayment has occurred due to using invalid service or salary, or due to any erroneous calculation procedure, the executive director must recalculate the annuity or benefit payable and recover any overpayment. The executive director shall recover the overpayment by requiring direct repayment or by suspending or reducing the payment of a retirement annuity or other benefit payable under this chapter to the applicable person or the person's estate, whichever applies, until all outstanding amounts have been recovered. If a benefit overpayment or improper payment of benefits occurred caused by a failure of the person to satisfy length of separation requirements for retirement under section 354A.011, subdivision 21, the executive director shall recover the improper payments by requiring direct repayment. The repayment must include interest at the deleted text begin rate of 0.71 percent per monthdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 5, new text end from the first of the month in which a monthly benefit amount was paid to the first of the month in which the amount is repaid, with annual compounding.

(b) In the event the executive director determines that an overpaid annuity or benefit that is the result of invalid salary included in the average salary used to calculate the payment amount must be recovered, the executive director must determine the amount of the employee deductions taken in error on the invalid salary, with interest as determined under 354A.37, subdivision 3, and must subtract that amount from the total annuity or benefit overpayment, and the remaining balance of the overpaid annuity or benefit, if any, must be recovered.

(c) If the invalid employee deductions plus interest exceed the amount of the overpaid benefits, the balance must be refunded to the person to whom the benefit or annuity is being paid.

(d) Any invalid employer contributions reported on the invalid salary must be credited against future contributions payable by the employer.

(e) If a member or former member, who is receiving a retirement annuity or disability benefit for which an overpayment is being recovered, dies before recovery of the overpayment is completed and an optional annuity or refund is payable, the remaining balance of the overpaid annuity or benefit must continue to be recovered from the payment to the optional annuity beneficiary or refund recipient.

(f) The board of trustees shall adopt policies directing the period of time and manner for the collection of any overpaid retirement or optional annuity, and survivor or disability benefit, or a refund that the executive director determines must be recovered as provided under this section.

Sec. 34.

Minnesota Statutes 2016, section 354A.34, is amended to read:

354A.34 DISPOSITION OF UNPAID PERIOD CERTAIN FOR LIFE OR GUARANTEED REFUND OPTIONAL ANNUITIES.

If a retiree from a coordinated program who has elected a period certain and for life thereafter or a guaranteed refund optional annuity form dies without having a designated beneficiary who has survived the retiree, any remaining unpaid guaranteed annuity payments shall be computed at the rate of interest specified in section 356.215, subdivision 8, and paid in one lump sum to the estate of the retiree. If a retiree from a coordinated program who has elected a period certain and for life or a guaranteed refund optional annuity form dies with a designated beneficiary who has survived the retiree but the designated beneficiary dies without there existing another designated beneficiary, any remaining unpaid guaranteed annuity payments shall be computed deleted text begin at the rate ofdeleted text end new text begin with new text end interest new text begin at the applicable annual rate or rates new text end specified in section deleted text begin 356.215, subdivision 8deleted text end new text begin 356.59, subdivision 5new text end , and paid in one lump sum to the estate of the designated beneficiary.

Sec. 35.

Minnesota Statutes 2016, section 356.195, subdivision 2, is amended to read:

Subd. 2.

Purchase procedure for strike periods.

(a) An employee covered by a plan specified in subdivision 1 may purchase allowable service credit in the applicable plan for any period of time during which the employee was on a public employee strike without pay, not to exceed a period of one year, if the employee makes a payment in lieu of salary deductions as specified in paragraph (b) or (c), whichever applies. The employing unit, at its option, may pay the employer portion of the amount specified in paragraph (b) on behalf of its employees.

(b) If payment is received by the applicable pension plan executive director within one year from the end of the strike, the payment amount is equal to the applicable employee and employer contribution rates specified in law for the applicable plan during the strike period, applied to the employee's rate of salary in effect at the conclusion of the strike for the period of the strike without pay, plus compound interest at the deleted text begin monthly rate of 0.71 percent for any period for the Teachers Retirement Association and at the monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent thereafter for any other retirement plan listed in section 356.30, subdivision 3deleted text end new text begin applicable monthly rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever appliesnew text end , from the last day of the strike period until the date payment is received.

(c) If payment is received by the applicable pension fund director after one year and before five years from the end of the strike, the payment amount is the amount determined under section 356.551.

(d) Payments may not be made more than five years after the end of the strike.

Sec. 36.

Minnesota Statutes 2016, section 356.44, is amended to read:

356.44 PARTIAL PAYMENT OF PENSION PLAN REFUND.

(a) Notwithstanding any provision of law to the contrary, a member of a pension plan listed in section 356.30, subdivision 3, with at least two years of forfeited service taken from a single pension plan, may repay a portion of all refunds. A partial refund repayment must comply with this section.

(b) The minimum portion of a refund repayment is one-third of the total service credit period of all refunds taken from a single plan.

(c) The cost of the partial refund repayment is the product of the cost of the total repayment multiplied by the ratio of the restored service credit to the total forfeited service credit. The total repayment amount includes interest at the deleted text begin annual rate of 8.5 percent for any period for the Teachers Retirement Association and is 8.5 percent until June 30, 2015, and eight percent thereafter for any other retirement plan listed in section 356.30, subdivision 3deleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever appliesnew text end , compounded annually, from the refund date to the date repayment is received.

(d) The restored service credit must be allocated based on the relationship the restored service bears to the total service credit period for all refunds taken from a single pension plan.

(e) This section does not authorize a public pension plan member to repay a refund if the law governing the plan does not authorize the repayment of a refund of member contributions.

Sec. 37.

Minnesota Statutes 2016, section 356.50, subdivision 2, is amended to read:

Subd. 2.

Service credit procedure.

(a) To obtain the public pension plan allowable service credit, the eligible person under subdivision 1 shall pay the required member contribution amount. The required member contribution amount is the member contribution rate or rates in effect for the pension plan during the period of service covered by the back pay award, applied to the unpaid gross salary amounts of the back pay award including unemployment insurance, workers' compensation, or wages from other sources which reduced the back award. No contributions may be made under this clause for compensation covered by a public pension plan listed in section 356.30, subdivision 3, for employment during the removal period. The person shall pay the required member contribution amount within 60 days of the date of receipt of the back pay award or within 60 days of a billing from the retirement fund, whichever is later.

(b) The public employer who wrongfully discharged the public employee must pay an employer contribution on the back pay award. The employer contribution must be based on the employer contribution rate or rates in effect for the pension plan during the period of service covered by the back pay award, applied to the salary amount on which the member contribution amount was determined under paragraph (a). deleted text begin Interest on both the required member and employer contribution amount must be paid by the employer at the annual compound rate of 8.5 percent for any period for the Teachers Retirement Association and 8.5 percent until June 30, 2015, and eight percent thereafter, for any other retirement plan listed in section 356.30, subdivision 3, per year, expressed monthlydeleted text end new text begin The employer must pay compound interest on both the required member and employer contribution amounts at the applicable monthly rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever appliesnew text end , between the date the contribution amount would have been paid to the date of actual payment. The employer payment must be made within 30 days of the payment under paragraph (a).

Sec. 38.

Minnesota Statutes 2016, section 356.551, subdivision 2, is amended to read:

Subd. 2.

Determination.

(a) Unless the minimum purchase amount set forth in paragraph (c) applies, the prior service credit purchase amount is an amount equal to the actuarial present value, on the date of payment, as calculated by the chief administrative officer of the pension plan and reviewed by the actuary retained under section 356.214, of the amount of the additional retirement annuity obtained by the acquisition of the additional service credit in this section.

(b) Calculation of this amount must be made using the preretirement interest rate applicable to the public pension plan specified in section 356.215, subdivision 8, and the mortality table adopted for the public pension plan. The calculation must assume continuous future service in the public pension plan until, and retirement at, the age at which the minimum requirements of the fund for normal retirement or retirement with an annuity unreduced for retirement at an early age, including section 356.30, are met with the additional service credit purchased. The calculation must also assume a full-time equivalent salary, or actual salary, whichever is greater, and a future salary history that includes annual salary increases at the applicable salary increase rate for the plan specified in section 356.215, subdivision deleted text begin 4ddeleted text end new text begin 8new text end .

(c) The prior service credit purchase amount may not be less than the amount determined by applying, for each year or fraction of a year being purchased, the sum of the employee contribution rate, the employer contribution rate, and the additional employer contribution rate, if any, applicable during that period, to the person's annual salary during that period, or fractional portion of a year's salary, if applicable, plus interest at the deleted text begin annual rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies, new text end compounded annuallynew text begin ,new text end from the end of the year in which contributions would otherwise have been made to the date on which the payment is received.

(d) Unless otherwise provided by statutes governing a specific plan, payment must be made in one lump sum within one year of the prior service credit authorization or prior to the member's effective date of retirement, whichever is earlier. Payment of the amount calculated under this section must be made by the applicable eligible person.

(e) However, the current employer or the prior employer may, at its discretion, pay all or any portion of the payment amount that exceeds an amount equal to the employee contribution rates in effect during the period or periods of prior service applied to the actual salary rates in effect during the period or periods of prior service, plus interest at the new text begin applicable annual new text end rate deleted text begin of 8.5 percent a yeardeleted text end new text begin or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies,new text end compounded annuallynew text begin ,new text end from the date on which the contributions would otherwise have been made to the date on which the payment is made. If the employer agrees to payments under this subdivision, the purchaser must make the employee payments required under this subdivision within 90 days of the prior service credit authorization. If that employee payment is made, the employer payment under this subdivision must be remitted to the chief administrative officer of the public pension plan within 60 days of receipt by the chief administrative officer of the employee payments specified under this subdivision.

Sec. 39.

new text begin [356.59] INTEREST RATES. new text end

new text begin Subdivision 1. new text end

new text begin Applicable interest rates. new text end

new text begin Whenever the payment of interest is required with respect to any payment, including refunds, remittances, shortages, contributions, or repayments, the rate of interest is the rate or rates specified in subdivisions 2 to 5 for each public retirement plan. new text end

new text begin Subd. 2. new text end

new text begin Minnesota State Retirement System. new text end

new text begin The interest rates for all retirement plans administered by the Minnesota State Retirement System are as follows: new text end

new text begin Annual new text end new text begin Monthly new text end
new text begin before July 1, 2015 new text end new text begin 8.5 percent new text end new text begin 0.71 percent new text end
new text begin from July 1, 2015, to June 30, 2018 new text end new text begin 8.0 percent new text end new text begin 0.667 percent new text end
new text begin after June 30, 2018 new text end new text begin 7.5 percent new text end new text begin 0.625 percent new text end

new text begin Subd. 3. new text end

new text begin Public Employees Retirement Association. new text end

new text begin The interest rates for all retirement plans administered by the Public Employees Retirement Association are as follows: new text end

new text begin before July 1, 2015 new text end new text begin 8.5 percent new text end
new text begin from July 1, 2015, to June 30, 2018 new text end new text begin 8.0 percent new text end
new text begin after June 30, 2018 new text end new text begin 7.5 percent new text end

new text begin Subd. 4. new text end

new text begin Teachers Retirement Association. new text end

new text begin The interest rates for the retirement plan administered by the Teachers Retirement Association are as follows: new text end

new text begin Annual new text end new text begin Monthly new text end
new text begin before July 1, 2018 new text end new text begin 8.5 percent new text end new text begin 0.71 percent new text end
new text begin after June 30, 2018 new text end new text begin 7.5 percent new text end new text begin 0.625 percent new text end

new text begin Subd. 5. new text end

new text begin St. Paul Teachers Retirement Fund Association. new text end

new text begin The interest rates for the retirement plan administered by the St. Paul Teachers Retirement Fund Association are as follows: new text end

new text begin Annual new text end new text begin Monthly new text end
new text begin before July 1, 2015 new text end new text begin 8.5 percent new text end new text begin 0.71 percent new text end
new text begin from July 1, 2015, to June 30, 2018 new text end new text begin 8.0 percent new text end new text begin 0.667 percent new text end
new text begin after June 30, 2018 new text end new text begin 7.5 percent new text end new text begin 0.625 percent new text end

Sec. 40.

Minnesota Statutes 2016, section 490.121, subdivision 4, is amended to read:

Subd. 4.

Allowable service.

(a) "Allowable service" means any calendar month, subject to the service credit limit in subdivision 22, served as a judge at any time, during which the judge received compensation for that service from the state, municipality, or county, whichever applies, and for which the judge made any required member contribution. It also includes any month served as a referee in probate for all referees in probate who were in office before January 1, 1974.

(b) "Allowable service" also means a period of authorized leave of absence for which the judge has made a payment in lieu of contributions, not in an amount in excess of the service credit limit under subdivision 22. To obtain the service credit, the judge shall pay an amount equal to the normal cost of the judges retirement plan on the date of return from the leave of absence, as determined in the most recent actuarial report for the plan filed with the Legislative Commission on Pensions and Retirement, multiplied by the judge's average monthly salary rate during the authorized leave of absence and multiplied by the number of months of the authorized leave of absence, plus deleted text begin annual compound interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin interest at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, new text end from the date of the termination of the leave to the date on which payment is made. The payment must be made within one year of the date on which the authorized leave of absence terminated. Service credit for an authorized leave of absence is in addition to a uniformed service leave under section 490.1211.

(c) "Allowable service" does not mean service as a retired judge.

Sec. 41.

Minnesota Statutes 2016, section 490.1211, is amended to read:

490.1211 UNIFORMED SERVICE.

(a) A judge who is absent from employment by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), and who returns to state employment as a judge upon discharge from service in the uniformed service within the time frame required in United States Code, title 38, section 4312(e), may obtain service credit for the period of the uniformed service, provided that the judge did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions.

(b) The judge may obtain credit by paying into the fund equivalent member contribution based on the contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the judge would have received if the judge had continued to provide employment services to the state rather than to provide uniformed service, or if the determination of that rate is not reasonably certain, the annual salary rate is the judge's average salary rate during the 12-month period of judicial employment rendered immediately preceding the purchase period.

(c) The equivalent employer contribution and, if applicable, the equivalent employer additional contribution, must be paid by the employing unit, using the employer and employer additional contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent member contribution.

(d) If the member equivalent contributions provided for in this section are not paid in full, the judge's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total member contributions received by the total member contributions otherwise required under this section.

(e) To receive allowable service credit under this section, the contributions specified in this section and section 490.121 must be transmitted to the fund during the period which begins with the date on which the individual returns to judicial employment and which has a duration of three times the length of the uniformed service period, but not to exceed five years. If the determined payment period is calculated to be less than one year, the contributions required under this section to receive service credit may be within one year from the discharge date.

(f) The amount of allowable service credit obtainable under this section and section 490.121 may not exceed five years, unless a longer purchase period is required under United States Code, title 38, section 4312.

(g) The state court administrator shall pay interest on all equivalent member and employer contribution amounts payable under this section. Interest must be deleted text begin computed at the rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin at the applicable annual rate or rates specified in section 356.59, subdivision 2, new text end compounded annuallynew text begin ,new text end from the end of each fiscal year of the leave or break in service to the end of the month in which payment is received.

Sec. 42.

Minnesota Statutes 2016, section 490.124, subdivision 12, is amended to read:

Subd. 12.

Refund.

(a) A person who ceases to be a judge is entitled to a refund in an amount that is equal to all of the member's employee contributions to the judges' retirement fund plus interest computed under section 352.22, subdivision 2.

(b) A refund of contributions under paragraph (a) terminates all service credits and all rights and benefits of the judge and the judge's survivors under this chapter.

(c) A person who becomes a judge again after taking a refund under paragraph (a) may reinstate the previously terminated allowable service credit, rights, and benefits by repaying the total amount of the previously received refund. The refund repayment must include interest deleted text begin on the total amount previously received at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin at the applicable annual rate or rates specified in section 356.59, subdivision 2new text end , compounded annually, from the date on which the refund was received until the date on which the refund is repaid.

Sec. 43.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 42 are effective June 30, 2018. new text end

ARTICLE 7

CONTRIBUTION RATES

Section 1.

Minnesota Statutes 2016, section 352.04, subdivision 2, is amended to read:

Subd. 2.

Employee contributions.

(a) The employee contribution to the fund must be equal to the following percent of salary:

deleted text begin from July 1, 2010, to June 30, 2014 deleted text end deleted text begin 5 deleted text end
from July 1, 2014, deleted text begin and thereafterdeleted text end new text begin to June 30, 2018new text end 5.5
new text begin from July 1, 2018, to June 30, 2019 new text end new text begin 5.75 new text end
new text begin after June 30, 2019 new text end new text begin 6 new text end

(b) These contributions must be made by deduction from salary as provided in subdivision 4.

new text begin (c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase. new text end

Sec. 2.

Minnesota Statutes 2016, section 352.04, subdivision 3, is amended to read:

Subd. 3.

Employer contributions.

new text begin (a) new text end The employer contribution to the fund must be equal to the following percent of salary:

deleted text begin from July 1, 2010, to June 30, 2014 deleted text end deleted text begin 5 deleted text end
from July 1, 2014, deleted text begin and thereafterdeleted text end new text begin to June 30, 2018new text end 5.5
new text begin from July 1, 2018, to June 30, 2019 new text end new text begin 5.875 new text end
new text begin after June 30, 2019 new text end new text begin 6.25 new text end

new text begin (b) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase. new text end

Sec. 3.

Minnesota Statutes 2016, section 352.92, subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

(a) Employee contributions of covered correctional employees must be in an amount equal to the following percent of salary:

deleted text begin from July 1, 2010, to June 30, 2014 deleted text end deleted text begin 8.6 deleted text end
from July 1, 2014, deleted text begin and thereafterdeleted text end new text begin to June 30, 2018new text end 9.1
new text begin after June 30, 2018 new text end new text begin 9.6 new text end

(b) These contributions must be made by deduction from salary as provided in section 352.04, subdivision 4.

new text begin (c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase. new text end

Sec. 4.

Minnesota Statutes 2016, section 352.92, subdivision 2, is amended to read:

Subd. 2.

Employer contributions.

new text begin (a) new text end The employer shall contribute for covered correctional employees an amount equal to the following percent of salary:

deleted text begin from July 1, 2010, to June 30, 2014 deleted text end deleted text begin 12.1 deleted text end
from July 1, 2014, deleted text begin and thereafterdeleted text end new text begin to June 30, 2018new text end 12.85
new text begin after June 30, 2018 new text end new text begin 14.4 new text end

new text begin (b) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase. new text end

Sec. 5.

Minnesota Statutes 2016, section 352.92, is amended by adding a subdivision to read:

new text begin Subd. 2a. new text end

new text begin Supplemental employer contribution. new text end

new text begin (a) Effective July 1, 2019, the employer shall pay a supplemental contribution. The supplemental contribution is 1.45 percent of salary for covered correctional employees from July 1, 2019, through June 30, 2020; 2.95 percent of salary for covered correctional employees from July 1, 2020, through June 30, 2021; and 4.45 percent of salary for covered correctional employees thereafter. The supplemental contribution rate of 4.45 percent remains in effect until the market value of the assets of the correctional state employees retirement plan of the Minnesota State Retirement System equals or exceeds the actuarial accrued liability of the plan as determined by the actuary retained under section 356.214. The expiration of the supplemental employer contribution is effective the first day of the first full pay period of the fiscal year immediately following the issuance of the actuarial valuation upon which the expiration is based. new text end

new text begin (b) The supplemental contribution under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of this subdivision. new text end

Sec. 6.

Minnesota Statutes 2016, section 352B.02, subdivision 1a, is amended to read:

Subd. 1a.

Member contributions.

(a) The member contribution is the following percentage of the member's salary:

deleted text begin (1) before the first day of the first pay period beginning after July 1, 2014 deleted text end deleted text begin 12.4 percent deleted text end
deleted text begin (2) on or after the first day of the first pay period beginning afterdeleted text end new text begin from new text end July 1, 2014, to June 30, 2016 13.4 deleted text begin percentdeleted text end
deleted text begin (3) after June 30, 2016 deleted text end new text begin from July 1, 2016, to June 30, 2018 new text end 14.4 deleted text begin percentdeleted text end
new text begin from July 1, 2018, to June 30, 2020 new text end new text begin 14.9 new text end
new text begin after June 30, 2020 new text end new text begin 15.4 new text end

(b) These contributions must be made by deduction from salary as provided in section 352.04, subdivision 4.

new text begin (c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase. new text end

Sec. 7.

Minnesota Statutes 2016, section 352B.02, subdivision 1c, is amended to read:

Subd. 1c.

Employer contributionsnew text begin and supplemental employer contributionnew text end .

(a) In addition to member contributions, department heads shall pay a sum equal to the specified percentage of the salary upon which deductions were made, which constitutes the employer contribution to the fund as follows:

deleted text begin (1) before the first day of the first pay period beginning after July 1, 2014 deleted text end deleted text begin 18.6 percent deleted text end
deleted text begin (2) on or after the first day of the first pay period beginning afterdeleted text end new text begin from new text end July 1, 2014, to June 30, 2016 20.1 deleted text begin percentdeleted text end
deleted text begin (3) after June 30, 2016 deleted text end new text begin from July 1, 2016, to June 30, 2018 new text end 21.6 deleted text begin percentdeleted text end
new text begin from July 1, 2018, to June 30, 2019 new text end new text begin 22.35 new text end
new text begin after June 30, 2019 new text end new text begin 23.1 new text end

(b) Department contributions must be paid out of money appropriated to departments for this purpose.

new text begin (c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase. new text end

new text begin (d) Effective July 1, 2018, department heads shall pay a supplemental employer contribution. The supplemental contribution is 1.75 percent of the salary upon which deductions are made from July 1, 2018, through June 30, 2019; three percent of the salary upon which deductions are made from July 1, 2019, through June 30, 2020; five percent of the salary which deductions are made from July 1, 2020, through June 30, 2021; and seven percent of the salary upon which deductions are made thereafter. The supplemental contribution must be paid starting the first day of the first full pay period after the effective date of this subdivision. The supplemental contribution rate of seven percent remains in effect until the market value of the assets of the State Patrol retirement plan of the Minnesota State Retirement System equals or exceeds the actuarial accrued liability of the plan as determined by the actuary retained under section 356.214. The expiration of the supplemental employer contribution is effective the first day of the first full pay period of the fiscal year immediately following the issuance of the actuarial valuation upon which the expiration is based. new text end

Sec. 8.

Minnesota Statutes 2016, section 352D.04, subdivision 2, is amended to read:

Subd. 2.

Contribution rates.

(a) The money used to purchase shares under this section is the employee and employer contributions provided in this subdivision.

(b) The employee contribution is an amount equal to the percent of salary specified in section 352.04, subdivision 2, or 352.045, subdivision 3a.

(c) The employer contribution is an amount equal to deleted text begin six percentdeleted text end new text begin the following percentage new text end of salarydeleted text begin .deleted text end new text begin :new text end

new text begin from July 1, 2018, through June 30, 2019 new text end new text begin 6 percent new text end
new text begin after June 30, 2019 new text end new text begin 6.25 percent new text end

(d) For members of the legislature, the contributions under this subdivision also must be made on per diem payments received during a regular or special legislative session, but may not be made on per diem payments received outside of a regular or special legislative session, on the additional compensation attributable to a leadership position under section 3.099, subdivision 3, living expense payments under section 3.101, or special session living expense payments under section 3.103.

(e) For a judge who is a member of the unclassified plan under section 352D.02, subdivision 1, paragraph (c), clause (16), the employee contribution rate is eight percent of salary, and there is no employer contribution.

(f) These contributions must be made in the manner provided in section 352.04, subdivisions 4, 5, and 6.

Sec. 9.

Minnesota Statutes 2016, section 353.65, subdivision 2, is amended to read:

Subd. 2.

Employee contribution.

(a) For members other than members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, or for members other than members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employee contribution is an amount equal to the following percentage of the total salary of each member, as follows: deleted text begin 9.6 percent before calendar year 2014; 10.2 percent in calendar year 2014; and 10.8 percent in calendar year 2015 and thereafter.deleted text end

new text begin before January 1, 2019 new text end new text begin 10.8 percent new text end
new text begin from January 1, 2019, through December 31, 2019 new text end new text begin 11.3 percent new text end
new text begin from January 1, 2020, and thereafter new text end new text begin 11.8 percent new text end

(b) For members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, the employee contribution is an amount equal to eight percent of the monthly unit value under section 353.01, subdivision 10a, multiplied by 80 and expressed as a biweekly amount for each member. The employee contribution made by a member with at least 25 years of service credit as an active member of the former Minneapolis Firefighters Relief Association must be deposited in the postretirement health care savings account established under section 352.98.

(c) For members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employee contribution is an amount equal to eight percent of the monthly unit value under section 353.01, subdivision 10b, multiplied by 80 and expressed as a biweekly amount for each member. The employee contribution made by a member with at least 25 years of service credit as an active member of the former Minneapolis Police Relief Association must be deposited in the postretirement health care savings account established under section 352.98.

(d) Contributions under this section must be made by deduction from salary in the manner provided in subdivision 4. Where any portion of a member's salary is paid from other than public funds, the member's employee contribution is based on the total salary received from all sources.

Sec. 10.

Minnesota Statutes 2016, section 353.65, subdivision 3, is amended to read:

Subd. 3.

Employer contribution.

(a) With respect to members other than members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, or for members other than members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employer contribution is an amount equal to the following percentage of the total salary of each member, as follows: deleted text begin 14.4 percent before calendar year 2014; 15.3 percent in calendar year 2014; and 16.2 percent in calendar year 2015 and thereafter.deleted text end

new text begin before January 1, 2019 new text end new text begin 16.2 percent new text end
new text begin from January 1, 2019, through December 31, 2019 new text end new text begin 16.95 percent new text end
new text begin from January 1, 2020, and thereafter new text end new text begin 17.7 percent new text end

(b) With respect to members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, the employer contribution is an amount equal to the amount of the member contributions under subdivision 2, paragraph (b).

(c) With respect to members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employer contribution is an amount equal to the amount of the member contributions under subdivision 2, paragraph (c).

(d) Contributions under this subdivision must be made from funds available to the employing subdivision by the means and in the manner provided in section 353.28.

Sec. 11.

Minnesota Statutes 2016, section 354.42, subdivision 2, is amended to read:

Subd. 2.

Employee contribution.

(a) The employee contribution to the fund is the following percentage of the member's salary:

Period Basic Program Coordinated Program
deleted text begin from July 1, 2013, until June 30, 2014 deleted text end deleted text begin 10.5 percent deleted text end deleted text begin 7 percent deleted text end
deleted text begin after June 30, 2014 deleted text end new text begin from July 1, 2014, through June 30, 2023 new text end 11 percent 7.5 percent
new text begin after June 30, 2023 new text end new text begin 11.25 percent new text end new text begin 7.75 percent new text end

(b) When an employee contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid for each employer unit with the first payroll cycle reported.

(c) After June 30, 2015, if a contribution rate revision is required under subdivisions 4a, 4b, and 4c, the employee contributions under paragraphs (a) and (b) must be adjusted accordingly.

(d) This contribution must be made by deduction from salary. Where any portion of a member's salary is paid from other than public funds, the member's employee contribution must be based on the entire salary received.

Sec. 12.

Minnesota Statutes 2016, section 354.42, subdivision 3, is amended to read:

Subd. 3.

Employer.

(a) The regular employer contribution to the fund by Special School District No. 1, Minneapolis, is an amount equal to the applicable following percentage of salary of each coordinated member and the applicable percentage of salary of each basic member specified in paragraph (c).

The additional employer contribution to the fund by Special School District No. 1, Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a coordinated member or who is a basic member.

(b) The regular employer contribution to the fund by Independent School District No. 709, Duluth, is an amount equal to the applicable percentage of salary of each old law or new law coordinated member specified for the coordinated program in paragraph (c).

(c) The employer contribution to the fund for every other employer is an amount equal to the applicable following percentage of the salary of each coordinated member and the applicable following percentage of the salary of each basic member:

Period Coordinated Member Basic Member
deleted text begin from July 1, 2013, until June 30, 2014 deleted text end deleted text begin 7 percent deleted text end deleted text begin 11 percent deleted text end
deleted text begin after June 30, 2014 deleted text end new text begin from July 1, 2014, through June 30, 2018 new text end 7.5 percent 11.5 percent
new text begin from July 1, 2018, through June 30, 2019 new text end new text begin 7.71 percent new text end new text begin 11.71 percent new text end
new text begin from July 1, 2019, through June 30, 2020 new text end new text begin 7.92 percent new text end new text begin 11.92 percent new text end
new text begin from July 1, 2020, through June 30, 2021 new text end new text begin 8.13 percent new text end new text begin 12.13 percent new text end
new text begin from July 1, 2021, through June 30, 2022 new text end new text begin 8.34 percent new text end new text begin 12.34 percent new text end
new text begin from July 1, 2022, through June 30, 2023 new text end new text begin 8.55 percent new text end new text begin 12.55 percent new text end
new text begin after June 30, 2023 new text end new text begin 8.75 percent new text end new text begin 12.75 percent new text end

(d) When an employer contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid for each employer unit with the first payroll cycle reported.

(e) After June 30, 2015, if a contribution rate revision is made under subdivisions 4a, 4b, and 4c, the employer contributions under paragraphs (a), (b), and (c) must be adjusted accordingly.

Sec. 13.

Minnesota Statutes 2016, section 354A.12, subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

(a) The contribution required to be paid by each member of the St. Paul Teachers Retirement Fund Association is the percentage of total salary specified below for the applicable association and program:

Program Percentage of Total Salary
St. Paul Teachers Retirement Fund Association
deleted text begin basic program after June 30, 2014 deleted text end deleted text begin 9 percent deleted text end
deleted text begin basic program after June 30, 2015 deleted text end deleted text begin 9.5 percent deleted text end
basic program after June 30, 2016 10 percent
new text begin basic program after June 30, 2022 new text end new text begin 10.25 percent new text end
deleted text begin coordinated program after June 30, 2014 deleted text end deleted text begin 6.5 percent deleted text end
deleted text begin coordinated program after June 30, 2015 deleted text end deleted text begin 7 percent deleted text end
coordinated program after June 30, 2016 7.5 percent
new text begin coordinated program after June 30, 2022 new text end new text begin 7.75 percent new text end

(b) Contributions must be made by deduction from salary and must be remitted directly to the St. Paul Teachers Retirement Fund Association at least once each month.

(c) When an employee contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid by the employer with the first payroll cycle reported.

Sec. 14.

Minnesota Statutes 2016, section 354A.12, subdivision 2a, is amended to read:

Subd. 2a.

Employer regular and additional contributions.

(a) The employing units shall make the following employer contributions to the teachers retirement fund association:

(1) for deleted text begin anydeleted text end new text begin each new text end coordinated member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make a regular employer contribution to the retirement fund association in an amount equal to the designated percentage of the salary of the coordinated member as provided below:

deleted text begin after June 30, 2014 deleted text end deleted text begin 5.5 percent deleted text end
deleted text begin after June 30, 2015 deleted text end deleted text begin 6 percent deleted text end
after June 30, 2016 6.25 percent
after June 30, 2017 6.5 percent
new text begin after June 30, 2018 new text end new text begin 7.335 percent new text end
new text begin after June 30, 2019 new text end new text begin 8.17 percent new text end
new text begin after June 30, 2020 new text end new text begin 8.38 percent new text end
new text begin after June 30, 2021 new text end new text begin 8.59 percent new text end
new text begin after June 30, 2022 new text end new text begin 8.8 percent new text end
new text begin after June 30, 2023 new text end new text begin 9 percent new text end

(2) for deleted text begin anydeleted text end new text begin each new text end basic member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make a regular employer contribution to the respective retirement fund in an amount according to the schedule below:

deleted text begin after June 30, 2014 deleted text end deleted text begin 9 percent of salary deleted text end
deleted text begin after June 30, 2015 deleted text end deleted text begin 9.5 percent of salary deleted text end
after June 30, 2016 9.75 percent of salary
after June 30, 2017 10 percent of salary
new text begin after June 30, 2018 new text end new text begin 10.835 percent of salary new text end
new text begin after June 30, 2019 new text end new text begin 11.67 percent of salary new text end
new text begin after June 30, 2020 new text end new text begin 11.88 percent of salary new text end
new text begin after June 30, 2021 new text end new text begin 12.09 percent of salary new text end
new text begin after June 30, 2022 new text end new text begin 12.3 percent of salary new text end
new text begin after June 30, 2023 new text end new text begin 12.5 percent of salary new text end

(3) for deleted text begin adeleted text end new text begin each new text end basic member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to 3.64 percent of the salary of the basic member;

(4) for deleted text begin adeleted text end new text begin each new text end coordinated member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to 3.84 percent of the coordinated member's salary.

(b) The regular and additional employer contributions must be remitted directly to the St. Paul Teachers Retirement Fund Association at least once each month. Delinquent amounts are payable with interest under the procedure in subdivision 1a.

(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.

(d) When an employer contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid by the employer with the first payroll cycle reported.

Sec. 15.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 14 are effective June 30, 2018. new text end

ARTICLE 8

DIRECT STATE AID

Section 1.

Minnesota Statutes 2016, section 353.65, is amended by adding a subdivision to read:

new text begin Subd. 3b. new text end

new text begin Direct state aid. new text end

new text begin (a) The state shall pay $4,500,000 on October 1, 2018, and October 1, 2019, to the public employees police and fire retirement plan. By October 1 of each year after 2019, the state shall pay $9,000,000 to the public employees police and fire retirement plan. The commissioner of management and budget shall pay the aid specified in this subdivision. The amount required is annually appropriated from the general fund to the commissioner of management and budget. new text end

new text begin (b) The aid under paragraph (a) continues until the earlier of: new text end

new text begin (1) the first day of the fiscal year following the fiscal year in which the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial accrued liabilities as reported by the actuary retained under section 356.214 in the annual actuarial valuation prepared under section 356.215; or new text end

new text begin (2) July 1, 2048. new text end

Sec. 2.

Minnesota Statutes 2016, section 354.435, subdivision 4, is amended to read:

Subd. 4.

Expiration.

deleted text begin Thisdeleted text end new text begin The aid amounts specified in this new text end section deleted text begin expires effectivedeleted text end new text begin shall continue until the earlier of:new text end

new text begin (1) new text end the first day of the fiscal year deleted text begin nextdeleted text end following the fiscal year in which the deleted text begin Teachers Retirement Association has no unfundeddeleted text end new text begin actuarial value of assets of the fund equals or exceeds 100 percent of the new text end actuarial accrued deleted text begin liabilitydeleted text end new text begin liabilities new text end as deleted text begin determined by thedeleted text end new text begin reported by the actuary retained under section 356.214 in the annual new text end actuarial valuation prepared under section 356.215 deleted text begin by the approved actuary retained under section 356.214.deleted text end new text begin ; ornew text end

new text begin (2) July 1, 2048. new text end

Sec. 3.

Minnesota Statutes 2016, section 354.436, subdivision 3, is amended to read:

Subd. 3.

Aid expiration.

The aid amounts specified in this section deleted text begin terminate and this section expires on the October 1 next following the later of the following dates: (1) when the current assets of the Teachers Retirement Association fund equal or exceeddeleted text end new text begin continue until the earlier of:new text end

new text begin (1) the first day of the fiscal year following the fiscal year in which the actuarial value of assets of the fund equals or exceeds 100 percent of new text end the actuarial accrued liabilities deleted text begin of the funddeleted text end as deleted text begin determined in the most recent actuarial valuation report for the Teachers Retirement Association funddeleted text end new text begin reported new text end by the actuary retained under section 356.214new text begin in the annual actuarial valuation prepared under section 356.215new text end ; or

(2) deleted text begin when the member and employer contribution rates are first determined to be eligible for a reduction under section 354.42, subdivisions 4a, 4b, 4c, and 4ddeleted text end new text begin July 1, 2048new text end .

Sec. 4.

Minnesota Statutes 2016, section 354A.12, subdivision 3a, is amended to read:

Subd. 3a.

Direct state aid to first class city teachers retirement fund associations.

(a) The state shall pay $2,827,000 to the St. Paul Teachers Retirement Fund Association.

(b) In addition to other amounts specified in this subdivision, the state shall pay $7,000,000 as state aid to the St. Paul Teachers Retirement Fund Association.

new text begin (c) In addition to the amounts specified in paragraphs (a) and (b), the state shall pay $5,000,000 as state aid to the St. Paul Teachers Retirement Fund Association. new text end

deleted text begin (c)deleted text end new text begin (d) new text end The aid under this subdivision is payable October 1 annually. The commissioner of management and budget shall pay the aid specified in this subdivision. The amount required is appropriated annually from the general fund to the commissioner of management and budget.

Sec. 5.

Minnesota Statutes 2016, section 354A.12, subdivision 3c, is amended to read:

Subd. 3c.

Termination of supplemental contributions and direct matching and state aid.

(a) The supplemental contributions payable to the St. Paul Teachers Retirement Fund Association by Independent School District No. 625 under section 423A.02, subdivision 3, and deleted text begin all forms ofdeleted text end new text begin the new text end aid under subdivision 3a deleted text begin to the St. Paul Teachers Retirement Fund Association mustdeleted text end new text begin , paragraphs (a) and (b),new text end continue until the deleted text begin actuarialdeleted text end new text begin earlier of:new text end

new text begin (1) the first day of the fiscal year following the year in which the actuarial new text end value of assets of the fund deleted text begin equaldeleted text end new text begin equals new text end or deleted text begin exceeddeleted text end new text begin exceeds 100 percent of new text end the actuarial accrued liability deleted text begin of the funddeleted text end as deleted text begin determined in the most recent actuarial report for the funddeleted text end new text begin reported new text end by the actuary retained under section 356.214 deleted text begin or until the established date for full funding under section 356.215, subdivision 11, whichever occurs earlierdeleted text end new text begin in the most recent annual actuarial valuation prepared under section 356.215; ornew text end

new text begin (2) July 1, 2048new text end .

deleted text begin (b) The aid to the Duluth Teachers Retirement Fund Association under section 423A.02, subdivision 3, and all forms of state aid under subdivision 3a to the Duluth Teachers Retirement Fund Association must continue until the current assets of the fund equal or exceed the actuarial accrued liability of the fund as determined in the most recent actuarial report for the fund by the actuary retained under section 356.214 or until the established date for full funding under section 356.215, subdivision 11, whichever occurs earlier. deleted text end

new text begin (b) The aid under subdivision 3a, paragraph (c), continues until the earlier of: new text end

new text begin (1) the first day of the fiscal year following the fiscal year in which the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial accrued liabilities as reported by the actuary retained under section 356.214 in the annual actuarial valuation prepared under section 356.215; or new text end

new text begin (2) July 1, 2048. new text end

Sec. 6.

Minnesota Statutes 2016, section 423A.02, subdivision 3, is amended to read:

Subd. 3.

Reallocation of amortization state aid.

(a) Seventy percent of the difference between $5,720,000 and the current year amortization aid distributed under subdivision 1 that is not distributed for any reason to a municipality must be distributed by the commissioner of revenue according to this paragraph. The commissioner shall distribute 60 percent of the amounts derived under this paragraph to the Teachers Retirement Association, and 40 percent to the St. Paul Teachers Retirement Fund Association to fund the unfunded actuarial accrued liabilities of the respective funds. These payments must be made on July 15 each fiscal year. If the St. Paul Teachers Retirement Fund Association or the deleted text begin Duluthdeleted text end Teachers Retirement deleted text begin Funddeleted text end Association deleted text begin becomes fully funded, the association's deleted text end new text begin satisfies subdivision 5,new text end eligibility for its portion of this aid ceases. Amounts remaining in the undistributed balance account at the end of the biennium if aid eligibility ceases cancel to the general fund.

(b) In order to receive amortization aid under paragraph (a), before June 30 annually Independent School District No. 625, St. Paul, must make an additional contribution of $800,000 each year to the St. Paul Teachers Retirement Fund Association.

(c) Thirty percent of the difference between $5,720,000 and the current year amortization aid under subdivision 1 that is not distributed for any reason to a municipality must be distributed under section 69.021, subdivision 7, paragraph (d), as additional funding to support a minimum fire state aid amount for volunteer firefighter relief associations.

Sec. 7.

Minnesota Statutes 2016, section 423A.02, subdivision 5, is amended to read:

Subd. 5.

Termination of state aid programs.

The amortization state aid and additional amortization state aid programs deleted text begin terminatedeleted text end deleted text begin asdeleted text end new text begin continue until the earliernew text end ofnew text begin :new text end

new text begin (1) new text end the December 31deleted text begin , nextdeleted text end following the deleted text begin date of the actuarial valuation whendeleted text end new text begin end of the fiscal year in which new text end the new text begin actuarial value of new text end assets of the St. Paul Teachers Retirement Fund Association deleted text begin equaldeleted text end new text begin or the Teachers Retirement Association equals or exceeds 100 percent of new text end the actuarial accrued deleted text begin liability of that plan or when the assets of the Duluth Teachers Retirement Fund Association equal the actuarial accrued liability of that plan, whichever is later.deleted text end new text begin liabilities as reported by the actuary retained under section 356.214 in the annual actuarial valuation report prepared under section 356.215; ornew text end

new text begin (2) July 1, 2048. new text end

Sec. 8.

Minnesota Statutes 2016, section 423A.022, subdivision 5, is amended to read:

Subd. 5.

Aid termination.

(a) The aid under subdivision 2, paragraph (a), clauses (1) and (3), deleted text begin ends ondeleted text end new text begin continues until the earlier of:new text end

new text begin (1) new text end the December 1 deleted text begin nextdeleted text end following the deleted text begin actuarial valuation date ondeleted text end new text begin end of the fiscal year in new text end which the new text begin actuarial value of new text end assets of new text begin both new text end the new text begin State Patrol retirement plan and the public employees police and fire new text end retirement plan deleted text begin on a market value basisdeleted text end equals or exceeds 90 percent of the deleted text begin totaldeleted text end actuarial accrued liabilities deleted text begin of the retirement plandeleted text end as deleted text begin disclosed in andeleted text end new text begin reported by the actuary retained under section 356.214 in the annual new text end actuarial valuation prepared under section 356.215 deleted text begin and the Standards for Actuarial Work promulgated by the Legislative Commission on Pensions and Retirement, for the State Patrol retirement plan or the public employees police and fire retirement plan, whichever occurs lastdeleted text end new text begin ; ornew text end

new text begin (2) July 1, 2048new text end .

(b) The aid under subdivision 2, paragraph (a), clause (2), does not terminate.

Sec. 9.

Minnesota Statutes 2016, section 490.123, is amended by adding a subdivision to read:

new text begin Subd. 5. new text end

new text begin Direct state aid. new text end

new text begin (a) The state shall pay $6,000,000 annually to the judges' retirement fund. The aid is payable each October 1. The commissioner of management and budget shall pay the aid specified in this subdivision. The amount required is annually appropriated from the general fund to the commissioner of management and budget. new text end

new text begin (b) The aid under paragraph (a) continues until the earlier of: new text end

new text begin (1) the first day of the fiscal year following the fiscal year in which the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial accrued liabilities as reported by the actuary retained under section 356.214 in the annual actuarial valuation prepared under section 356.215; or new text end

new text begin (2) July 1, 2048. new text end

Sec. 10.

new text begin REPEALER. new text end

new text begin Laws 2008, chapter 349, article 8, section 4, new text end new text begin is repealed. new text end

Sec. 11.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 10 are effective June 30, 2018. new text end

ARTICLE 9

MINNESOTA STATE RETIREMENT SYSTEM
ADMINISTRATIVE PROVISIONS

Section 1.

Minnesota Statutes 2016, section 3A.03, subdivision 2, is amended to read:

Subd. 2.

Refund.

(a) A former member who has made contributions under subdivision 1 and who is no longer a member of the legislature is entitled to receive, upon written application to the executive director on a form prescribed by the executive director, a refund from the general fund of all contributions credited to the member's account with interest computed as provided in section 352.22, subdivision 2.

(b) The refund of contributions as provided in paragraph (a) terminates all rights of a former member of the legislature and the survivors of the former member under this chapter.

(c) If the former member of the legislature again becomes a member of the legislature after having taken a refund as provided in paragraph (a), the member is a member of the unclassified employees retirement program of the Minnesota State Retirement System.

(d) However, the member may reinstate the rights and credit for service previously forfeited under this chapter if the member repays all refunds taken, plus interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually from the date on which the refund was taken to the date on which the refund is repaid.new text begin Repayment must be made as provided in section 352.23, paragraph (d).new text end

(e) No person may be required to apply for or to accept a refund.

Sec. 2.

Minnesota Statutes 2016, section 3A.03, subdivision 3, is amended to read:

Subd. 3.

Legislators retirement fund.

(a) The legislators retirement fund, a special retirement fund, is created within the state treasury. The legislators retirement fund must be credited with any investment proceeds on the assets of the retirement fund.

(b) The payment of annuities under section 3A.115, paragraph (b), is appropriated from the legislators retirement fund.

new text begin (c) The legislators retirement fund may receive transfers of general fund proceeds. new text end

Sec. 3.

Minnesota Statutes 2016, section 16A.14, subdivision 2a, is amended to read:

Subd. 2a.

Exceptions.

The allotment and encumbrance system does not apply to:

(1) appropriations for the courts or the legislature;

(2) payment of unemployment benefitsdeleted text begin .deleted text end new text begin ; andnew text end

new text begin (3) transactions within the defined contribution funds administered by the Minnesota State Retirement System. new text end

Sec. 4.

Minnesota Statutes 2016, section 352.01, subdivision 2a, is amended to read:

Subd. 2a.

Included employees.

(a) "State employee" includes:

(1) employees of the Minnesota Historical Society;

(2) employees of the State Horticultural Society;

(3) employees of the Minnesota Crop Improvement Association;

(4) employees of the adjutant general whose salaries are paid from federal funds and who are not covered by any federal civilian employees retirement system;

(5) employees of the Minnesota State Colleges and Universities who are employed under the university or college activities program;

(6) currently contributing employees covered by the system who are temporarily employed by the legislature during a legislative session or any currently contributing employee employed for any special service as defined in subdivision 2b, clause (6);

(7) employees of the legislature who are appointed without a limit on the duration of their employment;

(8) trainees who are employed on a full-time established training program performing the duties of the classified position for which they will be eligible to receive immediate appointment at the completion of the training period;

(9) employees of the Minnesota Safety Council;

(10) any employees who are on authorized leave of absence from the Transit Operating Division of the former Metropolitan Transit Commission and who are employed by the labor organization which is the exclusive bargaining agent representing employees of the Transit Operating Division;

(11) employees of the Metropolitan Council, Metropolitan Parks and Open Space Commission, Metropolitan Sports Facilities Commission, or Metropolitan Mosquito Control Commission unless excluded under subdivision 2b or are covered by another public pension fund or plan under section 473.415, subdivision 3;

(12) judges of the Tax Court;

(13) personnel who were employed on June 30, 1992, by the University of Minnesota in the management, operation, or maintenance of its heating plant facilities, whose employment transfers to an employer assuming operation of the heating plant facilities, so long as the person is employed at the University of Minnesota heating plant by that employer or by its successor organization;

(14) personnel who are employed as seasonal employees in the classified or unclassified service;

(15) persons who are employed by the Department of Commerce as a peace officer in the Commerce Fraud Bureau under section 45.0135 who have attained the mandatory retirement age specified in section 43A.34, subdivision 4;

(16) employees of the University of Minnesota unless excluded under subdivision 2b, clause (3);

(17) employees of the Middle Management Association whose employment began after July 1, 2007, and to whom section 352.029 does not apply;

(18) employees of the Minnesota Government Engineers Council to whom section 352.029 does not apply;

(19) employees of the Minnesota Sports Facilities Authority;

(20) employees of the Minnesota Association of Professional Employees;

(21) employees of the Minnesota State Retirement System;

(22) employees of the State Agricultural Society;

(23) employees of the Gillette Children's Hospital Board who were employed in the state unclassified service at the former Gillette Children's Hospital on March 28, 1974; deleted text begin anddeleted text end

(24) if approved for coverage by the Board of Directors of Conservation Corps Minnesota, employees of Conservation Corps Minnesota so employed on June 30, 2003deleted text begin .deleted text end new text begin ; andnew text end

new text begin (25) employees of the Perpich Center for Arts Education who are covered by the general state employees retirement plan of the Minnesota State Retirement System as of July 1, 2016. new text end

(b) Employees specified in paragraph (a), clause (13), are included employees under paragraph (a) if employer and employee contributions are made in a timely manner in the amounts required by section 352.04. Employee contributions must be deducted from salary. Employer contributions are the sole obligation of the employer assuming operation of the University of Minnesota heating plant facilities or any successor organizations to that employer.

Sec. 5.

Minnesota Statutes 2016, section 352.03, subdivision 5, is amended to read:

Subd. 5.

Executive directordeleted text begin ;deleted text end new text begin , deputy director, andnew text end assistant director.

(a) The new text begin board shall appoint an new text end executive director, in this chapter called the director, deleted text begin of the system must be appointed by the boarddeleted text end on the basis of deleted text begin fitnessdeleted text end new text begin educationnew text end , experience in the retirement field, deleted text begin and leadershipdeleted text end abilitynew text begin to manage and lead system staff, and ability to assist the board in setting a vision for the systemnew text end . The director must have had at least five years' experience deleted text begin on the administrative staff of a major retirement systemdeleted text end new text begin in either an executive level management position or in a position with responsibility for the governance, management, or administration of a retirement plannew text end .

(b) The executive directornew text begin , deputy director,new text end and assistant director must be in the unclassified service but appointees may be selected from civil service lists if desired. Notwithstanding any law to the contrary, the board must set the salary of the executive director. The salary of the executive director must not exceed the limit for a position listed in section 15A.0815, subdivision 2. The salary of the new text begin deputy director and new text end assistant director must be set in accordance with section 43A.18, subdivision 3.

Sec. 6.

Minnesota Statutes 2016, section 352.03, subdivision 6, is amended to read:

Subd. 6.

Duties and powers of executive director.

The management of the system is vested in the director, who is the executive and administrative head of the system. new text begin The director may appoint a deputy director and an assistant director with the approval of the board. new text end The director shall be advisor to the board on matters pertaining to the system and shall also act as the secretary of the board. The director shall:

(1) attend meetings of the board;

(2) prepare and recommend to the board appropriate rules to carry out this chapter;

(3) establish and maintain an adequate system of records and accounts following recognized accounting principles and controls;

deleted text begin (4) designate an assistant director with the approval of the board; deleted text end

deleted text begin (5)deleted text end new text begin (4) new text end appoint any employees, both permanent and temporary, that are necessary to carry out the provisions of this chapter;

deleted text begin (6)deleted text end new text begin (5) new text end organize the work of the system as the director deems necessary to fulfill the functions of the system, and define the duties of its employees and delegate to them any powers or duties, subject to the control of the director and under conditions the director may prescribe. Appointments to exercise delegated power must be by written order and shall be filed with the secretary of state;

deleted text begin (7)deleted text end new text begin (6) new text end with the advice and consent of the board, contract for the services of an approved actuary, professional management services, and any other consulting services as necessary and fix the compensation for those services. The contracts are not subject to competitive bidding under chapter 16C. Any approved actuary retained by the executive director shall function as the actuarial advisor of the board and the executive director, and may perform actuarial valuations and experience studies to supplement those performed by the actuary retained under section 356.214. Any supplemental actuarial valuations or experience studies shall be filed with the executive director of the Legislative Commission on Pensions and Retirement. Professional management services may not be contracted for more often than once in six years. Copies of professional management survey reports must be transmitted to the secretary of the senate, the chief clerk of the house of representatives, and the Legislative Reference Library as provided by section 3.195, and to the executive director of the commission at the time as reports are furnished to the board. Only management firms experienced in conducting management surveys of federal, state, or local public retirement systems are qualified to contract with the director;

deleted text begin (8)deleted text end new text begin (7) new text end with the advice and consent of the board provide in-service training for the employees of the system;

deleted text begin (9)deleted text end new text begin (8) new text end make refunds of accumulated contributions to former state employees and to the designated beneficiary, surviving spouse, legal representative, or next of kin of deceased state employees or deceased former state employees, as provided in this chapter;

deleted text begin (10)deleted text end new text begin (9) new text end determine the amount of the annuities and disability benefits of employees covered by the system and authorize payment of the annuities and benefits beginning as of the dates on which the annuities and benefits begin to accrue, in accordance with the provisions of this chapter;

deleted text begin (11)deleted text end new text begin (10) new text end pay annuities, refunds, survivor benefits, salaries, and necessary operating expenses of the system;

deleted text begin (12)deleted text end new text begin (11) new text end certify funds available for investment to the State Board of Investment;

deleted text begin (13)deleted text end new text begin (12) new text end with the advice and approval of the board request the State Board of Investment to sell securities when the director determines that funds are needed for the system;

deleted text begin (14)deleted text end new text begin (13) new text end prepare and submit to the board and the legislature an annual financial report covering the operation of the system, as required by section 356.20;

deleted text begin (15)deleted text end new text begin (14) new text end prepare and submit biennial and annual budgets to the board and with the approval of the board submit the budgets to the Department of Management and Budget; and

deleted text begin (16)deleted text end new text begin (15) new text end with the approval of the board, perform other duties required to administer the retirement and other provisions of this chapter and to do its business.

Sec. 7.

Minnesota Statutes 2016, section 352.113, subdivision 4, is amended to read:

Subd. 4.

Medical or psychological examinations; authorization for payment of benefit.

(a) Any physician, psychologist, chiropractor, deleted text begin ordeleted text end physician assistantnew text begin , or nurse practitionernew text end providing any service specified in this section must be licensed.

(b) An applicant shall provide a detailed report signed by a physician, and at least one additional report signed by a physician, deleted text begin chiropractor,deleted text end psychologist, deleted text begin ordeleted text end new text begin chiropractor, new text end physician assistantnew text begin , or nurse practitionernew text end with evidence to support an application for total and permanent disability. The reports must include an expert opinion regarding whether the employee is permanently and totally disabled within the meaning of section 352.01, subdivision 17, and that the disability arose before the employee was placed on any paid or unpaid leave of absence or terminated public service.

(c) If there is medical evidence that supports the expectation that at some point the person applying for the disability benefit will no longer be disabled, the decision granting the disability benefit may provide for a termination date upon which the total and permanent disability can be expected to no longer exist. When a termination date is part of the decision granting benefits, prior to the benefit termination the executive director shall review any evidence provided by the disabled employee to show that the disabling condition for which benefits were initially granted continues. If the benefits cease, the disabled employee may follow the appeal procedures described in section 356.96 or may reapply for disability benefits using the process described in this subdivision.

(d) Any claim to disability must be supported by a report from the employer indicating that there is no available work that the employee can perform with the disabling condition and that all reasonable accommodations have been considered. Upon request of the executive director, an employer shall provide evidence of the steps the employer has taken to attempt to provide reasonable accommodations and continued employment to the claimant.

(e) The director shall also obtain written certification from the employer stating whether the employment has ceased or whether the employee is on sick leave of absence because of a disability that will prevent further service to the employer and that the employee is not entitled to compensation from the employer.

(f) The medical adviser shall consider the reports of the deleted text begin physicians, physician assistants, psychologists, and chiropractorsdeleted text end new text begin physician, psychologist, chiropractor, physician assistant, or nurse practitioner new text end and any other evidence supplied by the employee or other interested parties. If the medical adviser finds the employee totally and permanently disabled, the adviser shall make appropriate recommendation to the director in writing together with the date from which the employee has been totally disabled. The director shall then determine if the disability occurred deleted text begin within 18 months of filing the application,deleted text end while still in the employment of the statedeleted text begin , and the propriety of authorizing payment of a disability benefit as provided in this sectiondeleted text end new text begin and constitutes a total and permanent disability as defined in section 352.01, subdivision 17new text end .

(g) A terminated employee may apply for a disability benefit within 18 months of termination as long as the disability occurred while in the employment of the state. The fact that an employee is placed on leave of absence without compensation because of disability does not bar that employee from receiving a disability benefit.

new text begin (h) Upon appeal, the board of directors may extend the disability benefit application deadline in paragraph (g) by an additional 18 months if the terminated employee is determined by the board of directors to have a cognitive impairment that made it unlikely that the terminated employee understood that there was an application deadline or that the terminated employee was able to meet the application deadline. new text end

deleted text begin (h)deleted text end new text begin (i)new text end Unless the payment of a disability benefit has terminated because the employee is no longer totally disabled, or because the employee has reached normal retirement age as provided in this section, the disability benefit must cease with the last payment received by the disabled employee or which had accrued during the lifetime of the employee unless there is a spouse surviving. In that event, the surviving spouse is entitled to the disability benefit for the calendar month in which the disabled employee died.

Sec. 8.

Minnesota Statutes 2016, section 352.113, subdivision 14, is amended to read:

Subd. 14.

Disabilitant earnings reports.

Disability benefit recipients must report all earnings from reemployment and income from workers' compensation to the system annually by May 15 in a format prescribed by the executive director. new text begin The executive director may waive the earnings report requirement for any disabled employee who is not required to undergo regular medical or psychological examinations under subdivision 6. new text end If the form is not submitted by June 15, benefits must be suspended effective July 1. If the form deemed acceptable by the executive director is received after the June 15 deadline, benefits shall be reinstated retroactive to July 1.

Sec. 9.

Minnesota Statutes 2016, section 352.23, is amended to read:

352.23 TERMINATION OF RIGHTS; REPAYMENT OF REFUND.

(a) When any employee accepts a refund as provided in section 352.22, all existing allowable service credits and all rights and benefits to which the employee was entitled before accepting the refund terminate.

(b) Terminated service credits and rights must not again be restored until the former employee acquires at least six months of allowable service credit after taking the last refunddeleted text begin . In that event, the employee may repaydeleted text end new text begin and repays new text end all refunds previously taken from the retirement fundnew text begin with interest as provided in paragraph (d)new text end .

(c) Repayment of refunds entitles the employee only to credit for service covered by (1) salary deductions; (2) payments previously made in lieu of salary deductions as permitted under law in effect when the payment in lieu of deductions was made; (3) payments made to obtain credit for service as permitted by laws in effect when payment was made; and (4) allowable service previously credited while receiving temporary workers' compensation as provided in section 352.01, subdivision 11, paragraph (a), clause (3).

(d) Payments under this section for repayment of refunds are to be paid with interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually from the date the refund was taken until the date the refund is repaid. deleted text begin Theydeleted text end new text begin Repayment new text end may be deleted text begin paid in a lump sum or by payroll deduction in the manner provided in section 352.04. Payment may bedeleted text end made in new text begin partial payments consistent with section 356.44 during employment or in new text end a lump sum up to six months after termination from service.

Sec. 10.

Minnesota Statutes 2016, section 352B.11, subdivision 4, is amended to read:

Subd. 4.

Reentry into state service.

When a former member, who has become separated from state service that entitled the member to membership and has received a refund of retirement payments, reenters the state service in a position that entitles the member to membership, that member shall receive credit for the period of prior allowable state service if the member repays into the fund the amount of the refund, plus interest on it at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annuallydeleted text begin , at any time before subsequent retirement. Repayment may be made in installments or in a lump sumdeleted text end .new text begin Repayment must be made as provided in section 352.23, paragraph (d).new text end

Sec. 11.

Minnesota Statutes 2016, section 352D.02, subdivision 1, is amended to read:

Subdivision 1.

Coverage.

(a) Employees enumerated in paragraph (c), clauses (2), (3), (4), (6) to (14), and (16) to (18), if they are in the unclassified service of the state or Metropolitan Council and are eligible for coverage under the general state employees retirement plan under chapter 352, are participants in the unclassified program under this chapter deleted text begin unless the employee gives notice to the executive director of the Minnesota State Retirement System within one year following the commencement of employment in the unclassified service that the employee desires coverage under the general state employees retirement plan. For the purposes of this chapter, an employee who does not file notice with the executive director is deemed to have exercised the option to participate in the unclassified programdeleted text end .

(b) Persons referenced in paragraph (c), clause (5), are participants in the unclassified program under this chapter unless the person was eligible to elect different coverage under section 3A.07 and elected retirement coverage by the applicable alternative retirement plan. Persons referenced in paragraph (c), clause (15), are participants in the unclassified program under this chapter for judicial employment in excess of the service credit limit in section 490.121, subdivision 22.

(c) Enumerated employees and referenced persons are:

(1) the governor, the lieutenant governor, the secretary of state, the state auditor, and the attorney general;

(2) an employee in the Office of the Governor, Lieutenant Governor, Secretary of State, State Auditor, Attorney General;

(3) an employee of the State Board of Investment;

(4) the head of a department, division, or agency created by statute in the unclassified service, an acting department head subsequently appointed to the position, or an employee enumerated in section 15A.0815 or 15A.083, subdivision 4;

(5) a member of the legislature;

(6) an unclassified employee of the legislature or a commission or agency of the legislature who is appointed without a limit on the duration of the employment or a temporary legislative employee having shares in the supplemental retirement fund as a result of former employment covered by this chapter, whether or not eligible for coverage under the Minnesota State Retirement System;

(7) a person who is employed in a position established under section 43A.08, subdivision 1, clause (3), or in a position authorized under a statute creating or establishing a department or agency of the state, which is at the deputy or assistant head of department or agency or director level;

(8) the regional administrator, or executive director of the Metropolitan Council, general counsel, division directors, operations managers, and other positions as designated by the council, all of which may not exceed 27 positions at the council and the chair;

(9) the commissioner, deputy commissioner, and not to exceed nine positions of the Minnesota Office of Higher Education in the unclassified service, as designated by the Minnesota Office of Higher Education before January 1, 1992, or subsequently redesignated with the approval of the board of directors of the Minnesota State Retirement System, unless the person has elected coverage by the individual retirement account plan under chapter 354B;

(10) the clerk of the appellate courts appointed under article VI, section 2, of the Constitution of the state of Minnesota, the state court administrator and judicial district administrators;

(11) the chief executive officers of correctional facilities operated by the Department of Corrections and of hospitals and nursing homes operated by the Department of Human Services;

(12) an employee whose principal employment is at the state ceremonial house;

(13) an employee of the Agricultural Utilization Research Institute;

(14) an employee of the State Lottery who is covered by the managerial plan established under section 43A.18, subdivision 3;

(15) a judge who has exceeded the service credit limit in section 490.121, subdivision 22;

(16) an employee of Enterprise Minnesota, Inc.;

(17) a person employed by the Minnesota State Colleges and Universities as faculty or in an eligible unclassified administrative position as defined in section 354B.20, subdivision 6, who was employed by the former state university or the former community college system before May 1, 1995, and elected unclassified program coverage prior to May 1, 1995; and

(18) a person employed by the Minnesota State Colleges and Universities who was employed in state service before July 1, 1995, who subsequently is employed in an eligible unclassified administrative position as defined in section 354B.20, subdivision 6, and who elects coverage by the unclassified program.

Sec. 12.

Minnesota Statutes 2016, section 352D.02, subdivision 3, is amended to read:

Subd. 3.

Transfer to general employees retirement plan.

(a) deleted text begin If permitted under paragraph (b), an employeedeleted text end new text begin A person in the unclassified program and new text end referred to in subdivision 1, paragraph (c), clauses (2) to (4), (6) to (14), and (16) to (18), deleted text begin who is credited with shares in the unclassified program and has credit for allowable servicedeleted text end may elect to terminate participation in the unclassified program and be covered by the general new text begin state new text end employees retirement plandeleted text begin . (b) An employee specified in paragraph (a) is permitted to terminate participation in the unclassified program and be covered bydeleted text end new text begin if the person files an election to transfer to new text end the general new text begin state new text end employees retirement plan deleted text begin if the employeedeleted text end new text begin with the executive director of the Minnesota State Retirement System as provided in paragraph (b) and the person's current employment or appointmentnew text end :

(1) deleted text begin was employeddeleted text end new text begin began new text end before July 1, 2010, and new text begin the person new text end has at least ten years of deleted text begin allowable servicedeleted text end new text begin covered employmentnew text end ; or

(2) deleted text begin was first employeddeleted text end new text begin began new text end after June 30, 2010, and new text begin the person new text end has no more than seven years of allowable servicenew text begin in the unclassified programnew text end .

deleted text begin Thedeleted text end new text begin (b) An new text end election new text begin to transfer new text end must be in writingnew text begin ,new text end on a form provided by the executive director, and deleted text begin can be made no later than one month following the termination of covered employment.deleted text end new text begin delivered to the executive director:new text end

new text begin (1) for persons described in paragraph (a), clause (1), no later than one month following the termination of covered employment; or new text end

new text begin (2) for persons described in paragraph (a), clause (2), by the earlier of (i) the end of the month following the termination of employment in a position covered by the unclassified program, and (ii) the last day of the seventh year of allowable service in the unclassified program. new text end

new text begin For purposes of this chapter, an employee who does not file an election to transfer with the executive director is deemed to have exercised the option to participate in the unclassified program. new text end

(c) If the transfer election is made, the executive director shall redeem the employee's total shares and credit to the employee's account in the general employees retirement plan the amount of contributions that would have been credited had the employee been covered by the general employees retirement plan during the employee's entire covered employment. The balance of money redeemed and not credited to the employee's account must be transferred to the general employees retirement plan, except that the executive director must determine:

(1) the employee contributions paid to the unclassified program; and

(2) the employee contributions that would have been paid to the general employees retirement plan for the comparable period, if the individual had been covered by that plan.

If clause (1) is greater than clause (2), the difference must be refunded to the employee as provided in section 352.22. If clause (2) is greater than clause (1), the difference must be paid by the employee within six months of electing general employees retirement plan coverage or before the effective date of the annuity, whichever is sooner.

(d) An election under paragraph (b) to transfer coverage to the general employees retirement plan is irrevocable during any period of covered employment.

(e) A person referenced in subdivision 1, paragraph (c), clause (1), (5), or (15), who is credited with employee shares in the unclassified program is not permitted to terminate participation in the unclassified program and be covered by the general employees retirement plan.

Sec. 13.

Minnesota Statutes 2016, section 352D.05, subdivision 4, is amended to read:

Subd. 4.

Repayment of refund.

(a) A participant in the unclassified program may repay regular refunds taken under section 352.22, as provided in section 352.23.

(b) A participant in the unclassified program or an employee covered by the general employees retirement plan who has withdrawn the value of the total shares may repay the refund taken and thereupon restore the service credit, rights and benefits forfeited by paying into the fund the amount refunded plus interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually from the date that the refund was taken until the date that the refund is repaid. If the participant had withdrawn only the employee shares as permitted under prior laws, repayment must be pro rata.

(c) deleted text begin Except as provided in section 356.441, the repayment of a refund under this section must be made in a lump sumdeleted text end new text begin Repayment must be made as provided in section 352.23, paragraph (d)new text end .

Sec. 14.

Minnesota Statutes 2016, section 490.124, subdivision 12, is amended to read:

Subd. 12.

Refund.

(a) A person who ceases to be a judge is entitled to a refund in an amount that is equal to all of the member's employee contributions to the judges' retirement fund plus interest computed under section 352.22, subdivision 2.

(b) A refund of contributions under paragraph (a) terminates all service credits and all rights and benefits of the judge and the judge's survivors under this chapter.

(c) A person who becomes a judge again after taking a refund under paragraph (a) may reinstate the previously terminated allowable service credit, rights, and benefits by repaying the total amount of the previously received refund. The refund repayment must include interest on the total amount previously received at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter, compounded annually, from the date on which the refund was received until the date on which the refund is repaid.new text begin Repayment must be made as provided in section 352.23, paragraph (d).new text end

Sec. 15.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 14 are effective June 30, 2018. new text end

ARTICLE 10

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION
ADMINISTRATIVE PROVISIONS

Section 1.

Minnesota Statutes 2016, section 353.01, subdivision 2b, is amended to read:

Subd. 2b.

Excluded employees.

(a) The following public employees are not eligible to participate as members of the association with retirement coverage by the general employees retirement plan, the local government correctional employees retirement plan under chapter 353E, or the public employees police and fire retirement plan:

(1) persons whose annual salary from one governmental subdivision never exceeds an amount, stipulated in writing in advance, of $5,100 if the person is not a school district employee or $3,800 if the person is a school year employee. If annual compensation from one governmental subdivision to an employee exceeds the stipulated amount in a calendar year or a school year, whichever applies, after being stipulated in advance not to exceed the applicable amount, the stipulation is no longer valid and contributions must be made on behalf of the employee under section 353.27, subdivision 12, from the first month in which the employee received salary exceeding $425 in a month;

(2) public officers who are elected to a governing body, city mayors, or persons who are appointed to fill a vacancy in an deleted text begin electivedeleted text end new text begin elected new text end office of a governing body, whose term of office commences on or after July 1, 2002, for the service to be rendered in that deleted text begin electivedeleted text end new text begin elected new text end position;

(3) election judges and persons employed solely to administer elections;

(4) patient and inmate personnel who perform services for a governmental subdivision;

(5) except as otherwise specified in subdivision 12a, employees who are employed solely in a temporary position as defined under subdivision 12a, and employees who resign from a nontemporary position and accept a temporary position within 30 days of that resignation in the same governmental subdivision;

(6) employees who are employed by reason of work emergency caused by fire, flood, storm, or similar disaster, but if the person becomes a probationary or provisional employee within the same pay period, other than on a temporary basis, the person is a "public employee" retroactively to the beginning of the pay period;

(7) 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, or the St. Paul Teachers Retirement Fund Association, but this exclusion 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 plan or fund for other service occurring during the same period of time, and a person who meets the definition of "public employee" in subdivision 2 by virtue of other service occurring during the same period of time becomes a member of the association unless contributions are made to another public retirement plan 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;

(8) persons who are members of a religious order and 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, if no irrevocable election of coverage has been made under section 3121(r) of the Internal Revenue Code of 1954, as amended;

(9) persons who are:

(i) employed by a governmental subdivision who have not reached the age of 23 and who are enrolled on a full-time basis to attend or are attending classes on a full-time basis at an accredited school, college, or university in an undergraduate, graduate, or professional-technical program, or at a public or charter high school;

(ii) employed as resident physicians, medical interns, pharmacist residents, or pharmacist interns and are serving in a degree or residency program in a public hospital or in a public clinic; or

(iii) students who are serving for a period not to exceed five years in an internship or a residency program that is sponsored by a governmental subdivision, including an accredited educational institution;

(10) persons who hold a part-time adult supplementary technical college license who render part-time teaching service in a technical college;

(11) deleted text begin except for employees ofdeleted text end new text begin for the first three years of employment, foreign citizens who are employed by a governmental subdivision, other than new text end Hennepin County or deleted text begin employees ofdeleted text end Hennepin Healthcare System, Inc., deleted text begin foreign citizens who are employed by a governmental subdivisiondeleted text end under deleted text begin adeleted text end new text begin one or more new text end work deleted text begin permitdeleted text end new text begin permits new text end or deleted text begin under an H-1b visadeleted text end initially issued or extended for a combined period of less than three years of employment but upon extension of the deleted text begin employment of the visa beyond the three-year period, the foreign citizen must be reported for membership beginning on the first of the month following the extension if the monthly earnings threshold as provided under subdivision 2a, paragraph (a), is metdeleted text end new text begin work visasnew text end ;

(12) public hospital employees who elected not to participate as members of the association before 1972 and who did not elect to participate from July 1, 1988, to October 1, 1988;

(13) 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 general employees retirement plan or the public employees police and fire plan, whichever applies, on the basis of compensation received from public employment service other than service as volunteer ambulance service personnel;

(14) except as provided in section 353.87, volunteer firefighters, as defined in subdivision 36, engaging in activities undertaken as part of volunteer firefighter duties, but 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 general employees retirement plan or the public employees police and fire plan, whichever applies, on the basis of compensation received from public employment activities other than those as a volunteer firefighter;

(15) pipefitters and associated trades personnel employed by Independent School District No. 625, St. Paul, with coverage under a collective bargaining agreement by the pipefitters local 455 pension plan who were either first employed after May 1, 1997, or, if first employed before May 2, 1997, elected to be excluded under Laws 1997, chapter 241, article 2, section 12;

(16) electrical workers, plumbers, carpenters, and associated trades personnel who are employed by Independent School District No. 625, St. Paul, or the city of St. Paul, who have retirement coverage under a collective bargaining agreement by the Electrical Workers Local 110 pension plan, the United Association Plumbers Local 34 pension plan, or the pension plan applicable to Carpenters Local 322 who were either first employed after May 1, 2000, or, if first employed before May 2, 2000, elected to be excluded under Laws 2000, chapter 461, article 7, section 5;

(17) bricklayers, allied craftworkers, cement masons, glaziers, glassworkers, painters, allied tradesworkers, and plasterers who are employed by the city of St. Paul or Independent School District No. 625, St. Paul, with coverage under a collective bargaining agreement by the Bricklayers and Allied Craftworkers Local 1 pension plan, the Cement Masons Local 633 pension plan, the Glaziers and Glassworkers Local L-1324 pension plan, the Painters and Allied Trades Local 61 pension plan, or the Twin Cities Plasterers Local 265 pension plan who were either first employed after May 1, 2001, or if first employed before May 2, 2001, elected to be excluded under Laws 2001, First Special Session chapter 10, article 10, section 6;

(18) plumbers who are employed by the Metropolitan Airports Commission, with coverage under a collective bargaining agreement by the Plumbers Local 34 pension plan, who either were first employed after May 1, 2001, or if first employed before May 2, 2001, elected to be excluded under Laws 2001, First Special Session chapter 10, article 10, section 6;

(19) employees who are hired after June 30, 2002, solely to fill seasonal positions under subdivision 12b which are limited in duration by the employer to 185 consecutive calendar days or less in each year of employment with the governmental subdivision;

(20) persons who are provided supported employment or work-study positions by a governmental subdivision and who participate in an employment or industries program maintained for the benefit of these persons where the governmental subdivision limits the position's duration to up to five years, including persons participating in a federal or state subsidized on-the-job training, work experience, senior citizen, youth, or unemployment relief program where the training or work experience is not provided as a part of, or for, future permanent public employment;

(21) independent contractors and the employees of independent contractors;

(22) reemployed annuitants of the association during the course of that reemployment;

(23) persons appointed to serve on a board or commission of a governmental subdivision or an instrumentality thereof;

(24) persons employed as full-time fixed-route bus drivers by the St. Cloud Metropolitan Transit Commission who are members of the International Brotherhood of Teamsters Local 638 and who are, by virtue of that employment, members of the International Brotherhood of Teamsters Central States pension plan; and

(25) electricians or pipefitters employed by the Minneapolis Park and Recreation Board, with coverage under a collective bargaining agreement by the IBEW local 292, or pipefitters local 539 pension plan, who were first employed before May 2, 2015, and who elected to be excluded under Laws 2015, chapter 68, article 11, section 5.

(b) Any person performing the duties of a public officer in a position defined in subdivision 2a, paragraph (a), clause (3), is not an independent contractor and is not an employee of an independent contractor.

Sec. 2.

Minnesota Statutes 2016, section 353.01, subdivision 10, is amended to read:

Subd. 10.

Salary.

(a) Subject to the limitations of section 356.611, "salary" means:

(1) the wages or periodic compensation payable to a public employee by the employing governmental subdivision before:

(i) employee retirement deductions that are designated as picked-up contributions under section 356.62;

(ii) any employee-elected deductions for deferred compensation, supplemental retirement plans, or other voluntary salary reduction programs that would have otherwise been available as a cash payment to the employee; and

(iii) employee deductions for contributions to a supplemental plan or to a governmental trust established under section 356.24, subdivision 1, clause (7), to save for postretirement health care expenses, unless otherwise excluded under paragraph (b);

(2) for a public employee who is covered by a supplemental retirement plan under section 356.24, subdivision 1, clause (8), (9), (10), or (12), the employer contributions to the applicable supplemental retirement plan when an agreement between the parties establishes that the contributions will either result in a mandatory reduction of employees' wages through payroll withholdings, or be made in lieu of an amount that would otherwise be paid as wages;

(3) a payment from a public employer through a grievance proceeding, settlement, or court order that is attached to a specific earnings period in which the employee's regular salary was not earned or paid to the member due to a suspension or a period of involuntary termination that is not a wrongful discharge under section 356.50; provided the amount is not less than the equivalent of the average of the hourly base salary rate in effect during the last six months of allowable service prior to the suspension or period of involuntary termination, plus any applicable increases awarded during the period that would have been paid under a collective bargaining agreement or personnel policy but for the suspension or involuntary termination, multiplied by the average number of regular hours for which the employee was compensated during the six months of allowable service prior to the suspension or period of involuntary termination, but not to exceed the compensation that the public employee would have earned if regularly employed during the applicable period;

(4) deleted text begin for a member who is absent from employment due todeleted text end new text begin compensation paid during new text end an authorized leave of absence, other than an authorized medical leave of absence, new text begin as long as new text end the compensation paid during deleted text begin the leave if equivalent todeleted text end new text begin a pay period is not less than the lesser of:new text end

new text begin (i) the product of new text end the new text begin average new text end hourly base salary rate in effect during the six months of allowable servicedeleted text begin , or portions thereof, prior todeleted text end new text begin immediately preceding new text end the leave, multiplied by the average number of regular hours for which the employee was compensated new text begin each pay period new text end during the six months of allowable service deleted text begin prior todeleted text end new text begin immediately preceding new text end the deleted text begin applicabledeleted text end leave of absence;new text begin ornew text end

new text begin (ii) compensation equal to the value of the employee's total available accrued leave hours; new text end

(5) deleted text begin for a member who is absent from employment by reason ofdeleted text end new text begin compensation paid during new text end an authorized medical leave of absence, new text begin other than a workers' compensation leave, as long as new text end the compensation paid during deleted text begin the leave if specified in advance to be at leastdeleted text end new text begin a pay period is not less than the lesser of:new text end

new text begin (i) the product of new text end one-half ofdeleted text begin , but no more than equal to, the earnings the member received, on which contributions were reported and allowable service crediteddeleted text end new text begin and the average hourly base salary rate in effect new text end during the six months new text begin of allowable service new text end immediately preceding the deleted text begin medicaldeleted text end leave of absence; deleted text begin anddeleted text end new text begin ornew text end

new text begin (ii) compensation equal to the value of the employee's total available accrued leave hours; and new text end

(6) for a public employee who receives performance or merit bonus payment under a written compensation plan, policy, or collective bargaining agreement in addition to regular salary or in lieu of regular salary increases, the compensation paid to the employee for attaining or exceeding performance goals, duties, or measures during a specified period of employment.

(b) Salary does not mean:

(1) fees paid to district court reporters;

(2) unused annual leave, vacation, or sick leave payments, in the form of lump-sum or periodic payments;

(3) for the donor, payment to another person of the value of hours donated under a benevolent vacation, personal, or sick leave donation program;

(4) any form of severance or retirement incentive payments;

(5) an allowance payment or per diem payments for or reimbursement of expenses;

(6) lump-sum settlements not attached to a specific earnings period;

(7) workers' compensation payments or disability insurance payments, including payments from employer self-insurance arrangements;

(8) employer-paid amounts used by an employee toward the cost of insurance coverage, flexible spending accounts, cafeteria plans, health care expense accounts, day care expenses, or any 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 and certain amounts determined by the executive director to be ineligible;

(9) employer-paid fringe benefits, including, but not limited to:

(i) employer-paid premiums or supplemental contributions for employees for all types of insurance;

(ii) membership dues or fees for the use of fitness or recreational facilities;

(iii) incentive payments or cash awards relating to a wellness program;

(iv) the value of any nonmonetary benefits;

(v) any form of payment made in lieu of an employer-paid fringe benefit;

(vi) an employer-paid amount made to a deferred compensation or tax-sheltered annuity program; and

(vii) any amount paid by the employer as a supplement to salary, either as a lump-sum amount or a fixed or matching amount paid on a recurring basis, that is not available to the employee as cash;

(10) the amount equal to that which the employing governmental subdivision would otherwise pay toward single or family insurance coverage for a covered employee when, through a contract or agreement with some but not all employees, the employer:

(i) discontinues, or for new hires does not provide, payment toward the cost of the employee's selected insurance coverages under a group plan offered by the employer;

(ii) makes the employee solely responsible for all contributions toward the cost of the employee's selected insurance coverages under a group plan offered by the employer, including any amount the employer makes toward other employees' selected insurance coverages under a group plan offered by the employer; and

(iii) provides increased salary rates for employees who do not have any employer-paid group insurance coverages;

(11) except as provided in section 353.86 or 353.87, compensation of any kind paid to volunteer ambulance service personnel or volunteer firefighters, as defined in subdivision 35 or 36;

(12) the amount of compensation that exceeds the limitation provided in section 356.611;

(13) amounts paid by a federal or state grant for which the grant specifically prohibits grant proceeds from being used to make pension plan contributions, unless the contributions to the plan are made from sources other than the federal or state grant; and

(14) bonus pay that is not performance or merit pay under paragraph (a), clause (6).

(c) Amounts, other than those provided under paragraph (a), clause (3), provided to an employee by the employer through a grievance proceeding, a court order, or a legal settlement are salary only if the settlement or court order is reviewed by the executive director and the amounts are determined by the executive director to be consistent with paragraph (a) and prior determinations.

Sec. 3.

Minnesota Statutes 2016, section 353.01, subdivision 47, is amended to read:

Subd. 47.

Vesting.

(a) "Vesting" means obtaining a nonforfeitable entitlement to an annuity or benefit from a retirement plan administered by the Public Employees Retirement Association by having credit for sufficient allowable service under paragraph (b), (c), or (d), whichever applies.

(b) For purposes of qualifying for an annuity or benefit as a basic or coordinated plan member of the general employees retirement plan of the Public Employees Retirement Association:

(1) a public employee who first became a member of the association before July 1, 2010, is 100 percent vested when the person has accrued credit for not less than three years of allowable service deleted text begin as defined under subdivision 16deleted text end new text begin in the general employees retirement plannew text end ; and

(2) a public employee who first becomes a member of the association after June 30, 2010, is 100 percent vested when the person has accrued credit for not less than five years of allowable service deleted text begin as defined under subdivision 16deleted text end new text begin in the general employees retirement plannew text end .

(c) For purposes of qualifying for an annuity or benefit as a member of the local government correctional deleted text begin employeesdeleted text end new text begin service new text end retirement plan:

(1) a public employee who first became a member of the association before July 1, 2010, is 100 percent vested when the person has accrued credit for not less than three years of allowable service deleted text begin as defined under subdivision 16deleted text end new text begin in the local government correctional service retirement plannew text end ; and

(2) a public employee who first becomes a member of the association after June 30, 2010, is vested at the following percentages when the person has accrued deleted text begin crediteddeleted text end new text begin credit for new text end allowable service deleted text begin as defined under subdivision 16,deleted text end new text begin in the local government correctional service retirement plan, new text end as follows:

(i) 50 percent after five years;

(ii) 60 percent after six years;

(iii) 70 percent after seven years;

(iv) 80 percent after eight years;

(v) 90 percent after nine years; and

(vi) 100 percent after ten years.

(d) For purposes of qualifying for an annuity or benefit as a member of the public employees police and fire retirement plan:

(1) a public employee who first became a member of the association before July 1, 2010, is 100 percent vested when the person has accrued credit for not less than three years of allowable service deleted text begin as defined under subdivision 16deleted text end new text begin in the public employees police and fire retirement plannew text end ;

(2) a public employee who first becomes a member of the association after June 30, 2010, and before July 1, 2014, is vested at the following percentages when the person has accrued credited allowable service deleted text begin as defined under subdivision 16deleted text end new text begin in the public employees police and fire retirement plannew text end , as follows:

(i) 50 percent after five years;

(ii) 60 percent after six years;

(iii) 70 percent after seven years;

(iv) 80 percent after eight years;

(v) 90 percent after nine years; and

(vi) 100 percent after ten years; and

(3) a public employee who first becomes a member of the association after June 30, 2014, is vested at the following percentages when the person has accrued deleted text begin crediteddeleted text end new text begin credit for new text end allowable service deleted text begin as defined under subdivision 16deleted text end new text begin in the public employees police and fire retirement plannew text end , as follows:

(i) 50 percent after ten years;

(ii) 55 percent after 11 years;

(iii) 60 percent after 12 years;

(iv) 65 percent after 13 years;

(v) 70 percent after 14 years;

(vi) 75 percent after 15 years;

(vii) 80 percent after 16 years;

(viii) 85 percent after 17 years;

(ix) 90 percent after 18 years;

(x) 95 percent after 19 years; and

(xi) 100 percent after 20 or more years.

Sec. 4.

Minnesota Statutes 2016, section 353.0162, is amended to read:

353.0162 deleted text begin REDUCED SALARY PERIODSdeleted text end SALARY CREDIT PURCHASEnew text begin FOR PERIODS OF REDUCED SALARYnew text end .

(a) A member may purchase deleted text begin additionaldeleted text end new text begin differential new text end salary creditnew text begin as described in paragraph (c)new text end for a period specified in deleted text begin this sectiondeleted text end new text begin paragraph (b)new text end .

(b) The applicable period is a period during which the member is receiving new text begin no or new text end a reduced salary from the employer while the member is:

(1) receiving deleted text begin temporarydeleted text end workers' compensation payments related to the member's service to the public employer;

(2) on an authorized leave of absencenew text begin , except that if the authorized leave of absence exceeds 12 months, the period of leave for which differential salary credit may be purchased is limited to 12 monthsnew text end ; or

(3) on an authorized deleted text begin partial paiddeleted text end leave of absence as a result of a budgetary or salary savings program offered or mandated by a governmental subdivisionnew text begin , if certified to the executive director by the governmental subdivisionnew text end .

(c) deleted text begin Thedeleted text end Differential salary deleted text begin amountdeleted text end new text begin credit new text end is the difference between the deleted text begin average monthlydeleted text end salary received by the member during deleted text begin thedeleted text end new text begin a new text end period deleted text begin of reduced salary under this sectiondeleted text end new text begin specified in paragraph (b) new text end and the deleted text begin average monthlydeleted text end salary of the member, excluding overtime, on which contributions to the applicable plan deleted text begin weredeleted text end new text begin would have been new text end made during the period deleted text begin of the last six months of covered employment occurring immediately before the period of reduced salary, applied todeleted text end new text begin based on new text end the member's normal employment period, measured in hours or otherwise, as applicablenew text begin , and rate of paynew text end .

(d) To receive deleted text begin eligibledeleted text end new text begin differential new text end salary credit, the member shall pay new text begin the plan, by delivering payment to the executive director, new text end an amount equal to:

(1) the applicable employee contribution rate under section 353.27, subdivision 2; 353.65, subdivision 2; or 353E.03, subdivision 1, as applicable, multiplied by the differential salary amount;

(2) plus an employer equivalent payment equal to the applicable employer contribution rate in section 353.27, subdivision 3; 353.65, subdivision 3; or 353E.03, subdivision 2, as applicable, multiplied by the differential salary amount;

(3) plus, if applicable, an equivalent employer additional amount equal to the additional employer contribution rate in section 353.27, subdivision 3a, multiplied by the differential salary amount.

(e) The employer, by appropriate action of its governing body and documented in its official records, may pay the employer equivalent contributions and, as applicable, the equivalent employer additional contributions on behalf of the member.

(f) Payment under this section must include interest on the contribution amount or amounts, whichever applies, at an 8.5 percent annual rate until June 30, 2015, and at an eight percent annual rate thereafter, prorated for applicable months from the date on which the period of reduced salary specified deleted text begin under this sectiondeleted text end new text begin in paragraph (b) new text end terminates to the date on which the payment or payments are received by the executive director. Payment under this section must be completed deleted text begin withindeleted text end new text begin by new text end the deleted text begin earlierdeleted text end new text begin earliest new text end ofnew text begin :new text end

new text begin (1)new text end 30 days deleted text begin fromdeleted text end new text begin after new text end termination of public service by the employee under section 353.01, subdivision 11adeleted text begin , ordeleted text end new text begin ;new text end

new text begin (2)new text end one year after the termination of the period specified in paragraph (b)deleted text begin , as further restricted under this section.deleted text end new text begin ; ornew text end

new text begin (3) 30 days after the commencement of a disability benefit. new text end

deleted text begin (g) The period for which additional allowable salary credit may be purchased is limited to the period during which the person receives temporary workers' compensation payments or for those business years in which the governmental subdivision offers or mandates a budget or salary savings program, as certified to the executive director by a resolution of the governing body of the governmental subdivision. For an authorized leave of absence, the period for which allowable salary credit may be purchased may not exceed 12 months of authorized leave. deleted text end

deleted text begin (h) To purchasedeleted text end new text begin (g) If the member has purchased 12 months of differential new text end salary creditdeleted text begin for a subsequent period of temporary workers' compensation benefits or subsequent authorized medical leave of absencedeleted text end , the member must return to public service and render a minimum of three months of allowable servicenew text begin to purchase differential salary credit for a subsequent leave of absencenew text end .

Sec. 5.

Minnesota Statutes 2016, section 353.03, subdivision 3, is amended to read:

Subd. 3.

Duties and powers.

(a) The board shall:

(1) elect a president and vice-president;

(2) approve the staffing complement, as recommended by the executive director, necessary to administer the fund;

(3) adopt bylaws for its own government and for the management of the fund consistent with the laws of the state and may modify them at pleasure;

(4) adopt, alter, and enforce reasonable rules consistent with the laws of the state and the terms of the applicable benefit plans for the administration and management of the fund, for the payment and collection of payments from members and for the payment of withdrawals and benefits, and that are necessary in order to comply with the applicable federal Internal Revenue Service and Department of Labor requirements;

(5) pass upon and allow or disallow all applications for membership in the fund and allow or disallow claims for withdrawals, pensions, or benefits payable from the fund;

deleted text begin (6) authorize procedures for use of electronic signatures as defined in section 325L.02, paragraph (h), on applications and forms required by the association; deleted text end

deleted text begin (7)deleted text end new text begin (6) new text end adopt an appropriate mortality table based on experience of the fund as recommended by the association actuary and approved under section 356.215, subdivision 18, with interest set at the rate specified in section 356.215, subdivision 8;

deleted text begin (8)deleted text end new text begin (7) new text end provide for the payment out of the fund of the cost of administering this chapter, of all necessary expenses for the administration of the fund and of all claims for withdrawals, pensions, or benefits allowed;

deleted text begin (9)deleted text end new text begin (8) new text end approve or disapprove all recommendations and actions of the executive director made subject to its approval or disapproval by subdivision 3a; and

deleted text begin (10)deleted text end new text begin (9) new text end approve early retirement and optional annuity factors, subject to review by the actuary retained by the Legislative Commission on Pensions and Retirement; establish the schedule for implementation of the approved factors; and notify the Legislative Commission on Pensions and Retirement of the implementation schedule.

(b) In passing upon all applications and claims, the board may summon, swear, hear, and examine witnesses and, in the case of claims for disability benefits, may require the claimant to submit to a medical examination by a physician of the board's choice, at the expense of the fund, as a condition precedent to the passing on the claim, and, in the case of all applications and claims, may conduct investigations necessary to determine their validity and merit.

(c) The board may continue to authorize the sale of life insurance to members under the insurance program in effect on January 1, 1985, but must not change that program without the approval of the commissioner of management and budget. The association shall not receive any financial benefit from the life insurance program beyond the amount necessary to reimburse the association for costs incurred in administering the program. The association shall not engage directly or indirectly in any other activity involving the sale or promotion of goods or services, or both, whether to members or nonmembers.

(d) The board shall establish procedures governing reimbursement of expenses to board members. These procedures must define the types of activities and expenses that qualify for reimbursement, must provide that all out-of-state travel be authorized by the board, and must provide for the independent verification of claims for expense reimbursement. The procedures must comply with the applicable rules and policies of the Department of Management and Budget and the Department of Administration.

(e) The board may purchase fiduciary liability insurance and official bonds for the officers and members of the board of trustees and employees of the association and may purchase property insurance or may establish a self-insurance risk reserve including, but not limited to, data processing insurance and "extra-expense" coverage.

Sec. 6.

Minnesota Statutes 2016, section 353.29, subdivision 4, is amended to read:

Subd. 4.

Application for annuity.

Application for a retirement annuity new text begin or optional annuity new text end may be made by a member or by a person deleted text begin authorized to actdeleted text end new text begin acting new text end on behalf of the membernew text begin , upon proof of authority satisfactory to the executive directornew text end . Every application deleted text begin for retirementdeleted text end must be made deleted text begin in writingdeleted text end on a form new text begin or in a format new text end prescribed by the executive director and must be substantiated by deleted text begin writtendeleted text end proof of the member's age and identity. 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 356.46, subdivision 3. An application for a retirement annuity is not complete until all necessary supporting documents are received by the executive director.

Sec. 7.

Minnesota Statutes 2016, section 353.29, subdivision 7, is amended to read:

Subd. 7.

deleted text begin Annuities; accrualdeleted text end new text begin Annuity starting datenew text end .

(a) Except as deleted text begin to elected public officialsdeleted text end new text begin specified in paragraph (b)new text end , a retirement annuity granted under this chapter begins deleted text begin withdeleted text end new text begin on new text end the first day of the first calendar month after the date of termination of public servicenew text begin or up to six months before the first of the month in which a complete application is received by the executive director under subdivision 4, whichever is laternew text end . The annuity must be paid in equal monthly installments deleted text begin and does not accruedeleted text end new text begin , unless suspended or reduced under section 353.37. Annuity payments shall not be paidnew text end beyond the end of the month in which entitlement to the annuity has terminated.

(b) An annuity granted to an deleted text begin electivedeleted text end new text begin elected new text end public official deleted text begin accruesdeleted text end new text begin may begin new text end on the day following new text begin the new text end expiration of new text begin the new text end public office deleted text begin or expiration of the right to hold that officedeleted text end new text begin that qualified the elected official for membership under section 353.01, subdivision 2a or 2d, if a complete application is received by the executive director under subdivision 4 within six months of the date of termination of public servicenew text end . The annuity for the month during which the expiration occurred is prorated accordingly.

(c) An annuity, once granted, must not be increased, decreased, or revoked except under this chapter.

deleted text begin (d) An annuity payment may be made retroactive for up to one year prior to that month in which a complete application is received by the executive director under subdivision 4. deleted text end

deleted text begin (e)deleted text end new text begin (d) new text end If an annuitant dies before negotiating the check for the month in which death occurs, payment must first be made to the surviving spouse, or if none, then to the designated beneficiary, or if none, lastly to the estate.

Sec. 8.

Minnesota Statutes 2016, section 353.30, subdivision 3c, is amended to read:

Subd. 3c.

Effective date of bounce-back annuity.

In the event of the death of the designated optional annuity beneficiary before the retired employee or disabilitant, the restoration of the normal single life annuity under subdivision 3a or 3b will take effect on the first of the month following the date of death of the designated optional annuity beneficiary or on the first of the month following deleted text begin one yeardeleted text end new text begin six months new text end before deleted text begin the date on which a certified copydeleted text end new text begin satisfactory verification new text end of the death deleted text begin recorddeleted text end is deleted text begin received in the office of the public employees retirement associationdeleted text end new text begin established by the executive directornew text end , whichever date is later.

Sec. 9.

Minnesota Statutes 2016, section 353.32, subdivision 1, is amended to read:

Subdivision 1.

Before retirement.

If a member or former member deleted text begin who terminated public servicedeleted text end dies before deleted text begin retirement or beforedeleted text end receiving any retirement annuity and no other payment of any kind is or may become payable to any person, a refund is payable to the designated beneficiary or, if there be none, to the surviving spouse, or, if none, to the legal representative of the decedent's estate. The refund must be in an amount equal to accumulated deductionsnew text begin , less the sum of any disability or survivor benefits that have been paid by the fund,new text end plus annual compound interest thereon at the rate specified in section 353.34, subdivision 2, deleted text begin and less the sum of any disability or survivor benefits, if any, that may have been paid by the fund;deleted text end provided that a survivor who has a right to benefits under section 353.31 may waive such benefits in writing, except such benefits for a dependent child under the age of 18 years may only be waived under an order of the district court.

Sec. 10.

Minnesota Statutes 2016, section 353.34, subdivision 2, is amended to read:

Subd. 2.

Refund with interest.

(a) Except as provided in subdivision 1, any person who ceases to be a public employee is entitled to receive a refund in an amount equal to accumulated deductions deleted text begin withdeleted text end new text begin , less the sum of any disability benefits that have been paid by the fund, plusnew text end annual compound interest to the first day of the month in which the refund is processed.

(b) For a person who ceases to be a public employee before July 1, 2011, the refund interest is at the rate of six percent to June 30, 2011, and at the rate of four percent after June 30, 2011. For a person who ceases to be a public employee after July 1, 2011, the refund interest is at the rate of four percent.

(c) If a person repays a refund and subsequently applies for another refund, the repayment amount, including interest, is added to the fiscal year balance in which the repayment was made.

(d) If the refund payable to a member is based on employee deductions that are determined to be invalid under section 353.27, subdivision 7, the interest payable on the invalid employee deductions is four percent.

Sec. 11.

Minnesota Statutes 2016, section 353.35, subdivision 1, is amended to read:

Subdivision 1.

Refund rights.

(a) Except as provided in paragraph (b), when any former member accepts a refund, all existing service credits and all rights and benefits to which the person was entitled prior to the acceptance of the refund deleted text begin mustdeleted text end terminate.

(b) A refund under section 353.651, subdivision 3, paragraph (c), does not result in a forfeiture of salary credit for the allowable service credit covered by the refund.

(c) deleted text begin Thedeleted text end new text begin If a person forfeits service credits, rights, and benefits under paragraph (a), the person's service credits, new text end rightsnew text begin ,new text end and benefits deleted text begin of a former member must notdeleted text end new text begin shall new text end be restored deleted text begin untildeleted text end new text begin if new text end the person returns to deleted text begin active service and acquiresdeleted text end new text begin employment covered by the association for new text end at least six months of allowable service deleted text begin credit after taking the last refunddeleted text end and repays deleted text begin the refund or refunds taken and interestdeleted text end new text begin all amounts previously new text end received under section 353.34, deleted text begin subdivisions 1 anddeleted text end new text begin subdivision new text end 2, plus interest at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafternew text begin ,new text end compounded annuallynew text begin , from the date each amount was received to the date the amount is repaidnew text end . deleted text begin If the person elects to restore service credit in a particular fund from which the person has taken more than one refund, the person must repay all refunds to that fund. All refundsdeleted text end new text begin The repayment new text end must be deleted text begin repaiddeleted text end new text begin made new text end within six months of the last deleted text begin date of terminationdeleted text end new text begin day new text end of public servicenew text begin employment. A person may have service credits, rights, and benefits restored under this paragraph only one timenew text end .

Sec. 12.

Minnesota Statutes 2016, section 353.37, subdivision 1, is amended to read:

Subdivision 1.

Salary maximums.

(a)deleted text begin The annuity of a person otherwise eligible for deleted text end new text begin If a member who is receivingnew text end an annuity fromdeleted text begin the general employees retirement plan of the Public Employees Retirement Association, the public employees police and fire retirement plan, or the local government correctional employees retirement plan must be suspended under subdivision 2 or reduced under subdivision 3, whichever results in the higher annual annuity amount, if the person reenters public service as a nonelective employee ofdeleted text end new text begin a retirement plan administered by the association is employed by (1)new text end a governmental deleted text begin subdivisiondeleted text end new text begin employer in a nonelected position not required by law to be covered by a plan administered by the Minnesota State Retirement System, the Teachers Retirement Association, or the St. Paul Teachers Retirement Fund Association,new text end or deleted text begin returns to work as an employee ofdeleted text end new text begin (2) bynew text end a labor organization that represents public employees who are association members under this chapternew text begin ,new text end and new text begin the member'snew text end salary deleted text begin for the reemployment servicedeleted text end exceeds the annual maximum new text begin salary defined in paragraph (b), the annuity shall be suspended under subdivision 2 or reduced under subdivision 3, whichever results in the higher annuity amount.new text end

new text begin (b) The annual maximum salary means the annual maximumnew text end earnings allowable deleted text begin for thatdeleted text end new text begin at the member'snew text end age for the continued receipt of full benefit amounts monthly under the federal Old Age, Survivors and Disability Insurance Program as set by the secretary of health and human services under United States Code, title 42, section 403, in deleted text begin anydeleted text end new text begin effect for thenew text end calendar year. If the deleted text begin persondeleted text end new text begin membernew text end has not yet reached the minimum age for the receipt of Social Security benefits, the maximum salary deleted text begin for the person is equal todeleted text end new text begin meansnew text end the annual maximum earnings allowable for the minimum age for the receipt of Social Security benefits.

deleted text begin (b)deleted text end new text begin (c)new text end The provisions of paragraph (a) do not apply to the members of the general employees plan of the Public Employees Retirement Association who were former members of MERF.

Sec. 13.

Minnesota Statutes 2016, section 353.64, subdivision 10, is amended to read:

Subd. 10.

Pension coverage for Hennepin Healthcare System, Inc.; paramedics and emergency medical technicians.

An employee of Hennepin Healthcare System, Inc. is a member of the public employees police and fire retirement plan under sections 353.63 to 353.68 if the person is:

(1) certified as a paramedic or emergency medical technician by the state under section 144E.28, subdivision 4;

(2) employed deleted text begin fulldeleted text end new text begin at least halfnew text end time new text begin by Hennepin Healthcare System, Inc. new text end asnew text begin :new text end

new text begin (i)new text end a paramedic deleted text begin ordeleted text end new text begin ;new text end

new text begin (ii) annew text end emergency medical technician deleted text begin by Hennepin Countydeleted text end ;new text begin ornew text end

new text begin (iii) a supervisor or manager of paramedics or emergency medical technicians;new text end and

(3) not eligible for coverage under the agreement signed between the state and the secretary of the federal Department of Health and Human Services making the provisions of the federal Old Age, Survivors, and Disability Insurance Act applicable to paramedics and emergency medical technicians because the person's position is excluded after that date from application under United States Code, title 42, sections 418(d)(5)(A) and 418(d)(8)(D), and section 355.07.

Hennepin Healthcare System, Inc. shall deduct the employee contribution from the salary of each deleted text begin full-time paramedic and emergency medical technician it employsdeleted text end new text begin covered employee,new text end as required by section 353.65, subdivision 2, shall make the employer contribution for each deleted text begin full-time paramedic and emergency medical technician it employsdeleted text end new text begin covered employee,new text end as required by section 353.65, subdivision 3, and shall meet the employer recording and reporting requirements in section 353.65, subdivision 4.

Sec. 14.

Minnesota Statutes 2016, section 353F.02, subdivision 5a, is amended to read:

Subd. 5a.

Privatized former public employer.

"Privatized former public employer" means a medical facility that was deleted text begin formerlydeleted text end included in the definition of governmental subdivision under section 353.01, subdivision 6, new text begin on the day before the effective date of privatization new text end that is privatized and whose employees are certified for participation under this chapter.

Sec. 15.

Minnesota Statutes 2016, section 353F.025, subdivision 2, is amended to read:

Subd. 2.

Reporting privatizations.

(a) If the actuarial calculations under subdivision 1, paragraph (c), indicate privatization can be approved because a net gain to the general employees retirement plan of the Public Employees Retirement Association is expected, or if paragraph (b) applies, the executive director shall, following acceptance of the actuarial calculations by the board of trustees, forward notice and supporting documentation, including a copy of the actuary's report and findings, to the chair and the executive director of the Legislative Commission on Pensions and Retirement and the chairs and the ranking minority members of the committees with jurisdiction over governmental operations in the house of representatives and senate.

(b) If the calculations under subdivision 1, paragraph (c), indicate a net loss, the executive director shall recommend to the board of trustees that the privatization be approved if the chief clerical officer of the applicable governmental subdivision submits a resolution from the governing body specifying that a lump sum payment will be made to the Public Employees Retirement Association equal to the net loss, plus interest. The interest must be computed using the applicable ultimate preretirement interest rate assumption under section 356.215, subdivision 8, expressed as a monthly rate, from the date of the actuarial valuation from which the actuarial accrued liability data was used to determine the net loss in the actuarial study under subdivision 1, to the date of payment, with annual compounding. Payment must be made on or after the effective date of privatization.

(c) The Public Employees Retirement Association must maintain a list that includes the names of all privatized former public employers in the association's comprehensive annual financial report and on the association's Web site. deleted text begin Annually by March 1, the association must submit to the executive director of the Legislative Commission on Pensions and Retirement the names of any privatized former public employers approved since the publication of the previous fiscal year's comprehensive annual financial report.deleted text end

Sec. 16.

Minnesota Statutes 2016, section 353F.04, subdivision 2, is amended to read:

Subd. 2.

Exceptions.

The increased augmentation rates specified in subdivision 1 do not apply to a privatized former public employee:

(1) beginning the first of the month in which the privatized former public employee becomes covered again by a retirement plan enumerated in section 356.30, subdivision 3, if the employee accrues at least six months of credited service in any single plan enumerated in section 356.30, subdivision 3, except clause (6);

(2) beginning the first of the month in which the privatized former public employee becomes covered again by the general employees retirement plan of the Public Employees Retirement Association;

(3) beginning the first of the month after a privatized former public employee terminates service with the deleted text begin successor entitydeleted text end new text begin privatized former public employernew text end ; or

(4) if the person begins receipt of a retirement annuity while employed by the employer which assumed operations of or purchased the privatized former public employer.

Sec. 17.

Minnesota Statutes 2016, section 353F.05, is amended to read:

353F.05 AUTHORIZATION FOR ADDITIONAL ALLOWABLE SERVICE FOR EARLY RETIREMENT PURPOSES.

(a) For the purpose of determining eligibility for early retirement benefits provided under section 353.30, subdivision 1a, of the edition of Minnesota Statutes published in the year before the year in which the privatization occurred, and notwithstanding any provision of chapter 353, to the contrary, the years of allowable service for a privatized former public employee who transfers employment on the effective date of privatization and does not apply for a refund of contributions under section 353.34, subdivision 1, of the edition of Minnesota Statutes published in the year before the year in which the privatization occurred, or any similar provision, includes service with the deleted text begin successor employer to thedeleted text end privatized former public employer following the effective date. The deleted text begin successordeleted text end new text begin privatized former public new text end employer shall provide any reports that the executive director of the Public Employees Retirement Association may reasonably request to permit calculation of benefits.

(b) To be eligible for early retirement benefits under this section, the individual must separate from service with the deleted text begin successor to thedeleted text end privatized former public employer. The privatized former public employee, or an individual authorized to act on behalf of that employee, may apply for an annuity following application procedures under section 353.29, subdivision 4.

Sec. 18.

Minnesota Statutes 2016, section 353F.057, is amended to read:

353F.057 TERMINATION FROM SERVICE REQUIREMENT.

Upon termination of service from the privatized former public employer deleted text begin or any successor entitydeleted text end after the effective date of privatization, a privatized former public employee must separate from any employment relationship with the privatized former public employer deleted text begin or any successor entitydeleted text end for at least 30 days to qualify to receive a retirement annuity under this chapter.

Sec. 19.

Minnesota Statutes 2016, section 353F.06, is amended to read:

353F.06 APPLICATION OF REEMPLOYED ANNUITANT EARNINGS LIMITATIONS.

If a privatized former public employee satisfies the separation from service requirement in section 353F.057 and thereafter resumes employment with the privatized former public employer or deleted text begin any successor entity ordeleted text end a governmental subdivision under section 353.01, subdivision 6, the reemployed annuitant earnings limitations of section 353.37 apply.

Sec. 20.

Minnesota Statutes 2016, section 353F.07, is amended to read:

353F.07 EFFECT ON REFUND.

Notwithstanding any provision of chapter 353 to the contrary, privatized former public employees may receive a refund of employee accumulated contributions plus interest as provided in section 353.34, subdivision 2, at any time after the transfer of employment to the deleted text begin successor employer of thedeleted text end privatized former public employer. If a privatized former public employee has received a refund from a pension plan listed in section 356.30, subdivision 3, the person may not repay that refund unless the person again becomes a member of one of those listed plans and complies with section 356.30, subdivision 2.

Sec. 21.

new text begin [353F.09] APPLICATION TO SALES OF PRIVATIZED FORMER PUBLIC EMPLOYERS. new text end

new text begin A medical facility or other employing unit shall cease to be a privatized former public employer and its employees shall cease to be considered privatized former public employees under this chapter upon the sale of the operations of the medical facility or employing unit to another employer or the sale of the medical facility or employing unit to another employer. The privatized former public employees shall be entitled to benefits accrued under this chapter to the date of the sale, but shall not accrue additional benefits after the date of the sale. new text end

Sec. 22.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2016, section 353.0161, new text end new text begin is repealed. new text end

Sec. 23.

new text begin EFFECTIVE DATE. new text end

new text begin (a) Sections 1 to 13 and 22 are effective June 30, 2018. new text end

new text begin (b) Sections 14 to 21 are effective for privatizations with an effective date of privatization under Minnesota Statutes, section 353F.02, subdivision 3, after June 30, 2018, and for sales of privatized former public employers after June 30, 2018. new text end

ARTICLE 11

TEACHERS RETIREMENT ASSOCIATION
ADMINISTRATIVE PROVISIONS

Section 1.

Minnesota Statutes 2016, section 354.05, subdivision 2, is amended to read:

Subd. 2.

Teacher.

(a) "Teacher" means:

(1) a person who renders service as a teacher, supervisor, principal, superintendent, librarian, nurse, counselor, social worker, therapist, or psychologist innew text begin :new text end

new text begin (i)new text end a public school of the state other than in Independent School District No. 625 deleted text begin or in Independent School District No. 709, or in anydeleted text end new text begin ;new text end

new text begin (ii) anew text end charter schooldeleted text begin , irrespective of the location of the school, or in anydeleted text end new text begin ;new text end

new text begin (iii) anew text end charitable, penal, or correctional deleted text begin institutionsdeleted text end new text begin institution new text end of a governmental subdivisiondeleted text begin ,deleted text end new text begin ;new text end or

new text begin (iv) the Perpich Center for Arts Education, except that any employee of the Perpich Center for Arts Education who was covered by the Minnesota State Retirement System general state employees retirement plan as of July 1, 2018, shall continue to be covered by that plan and not by the Teachers Retirement Association; new text end

new text begin (2) a personnew text end who is engaged in educational administration in connection with the state public school system, whether the position be a public office or deleted text begin andeleted text end new text begin as new text end employment;

new text begin (3) a person who renders service as a charter school director or chief administrative officer; provided, however, that if the charter school director or chief administrative officer is covered by the Public Employees Retirement Association general employees retirement plan on July 1, 2018, the charter school director or chief administrative officer shall continue to be covered by that plan and not by the Teachers Retirement Association; new text end

deleted text begin (2)deleted text end new text begin (4) new text end an employee of the Teachers Retirement Association;

deleted text begin (3)deleted text end new text begin (5) new text end a person who renders teaching service on a part-time basis and who also renders other services for a single employing unit where the teaching service comprises at least 50 percent of the combined employment salary is a member of the association for all services with the single employing unit or, if less than 50 percent of the combined employment salary, the executive director determines all of the combined service is covered by the association; or

deleted text begin (4)deleted text end new text begin (6) new text end a person who is not covered by the plans established under chapter 352D, 354A, or 354B and who is employed by the Board of Trustees of the Minnesota State Colleges and Universities system in an unclassified position as:

(i) a president, vice-president, or dean;

(ii) a manager or a professional in an academic or an academic support program other than specified in item (i);

(iii) an administrative or a service support faculty position; or

(iv) a teacher or a research assistant.

(b) "Teacher" does not mean:

(1) a person who works for a school or institution as an independent contractor as defined by the Internal Revenue Service;

deleted text begin (2) a person who renders part-time teaching service or who is a customized trainer as defined by the Minnesota State Colleges and Universities system if (i) the service is incidental to the regular nonteaching occupation of the person; and (ii) the employer stipulates annually in advance that the part-time teaching service or customized training service will not exceed 300 hours in a fiscal year and retains the stipulation in its records; and (iii) the part-time teaching service or customized training service actually does not exceed 300 hours in a fiscal year; deleted text end

deleted text begin (3) a person exempt from licensure under section 122A.30; deleted text end

deleted text begin (4)deleted text end new text begin (2) new text end annuitants of the teachers retirement plan who are employed after retirement by an employing unit that participates in the teachers retirement plan during the course of that reemployment;

deleted text begin (5)deleted text end new text begin (3) new text end a person who is employed by the University of Minnesota;

deleted text begin (6)deleted text end new text begin (4) new text end a member or an officer of any general governing or managing board or body of an employing unit that participates in the teachers retirement plan; or

deleted text begin (7)deleted text end new text begin (5) new text end a person employed by Independent School District No. 625 deleted text begin or Independent School District No. 709deleted text end as a teacher as defined in section 354A.011, subdivision 27.

Sec. 2.

Minnesota Statutes 2016, section 354.05, is amended by adding a subdivision to read:

new text begin Subd. 17a. new text end

new text begin Former spouse. new text end

new text begin "Former spouse" means a person who is no longer a spouse of a member due to dissolution of the marriage, legal separation, or annulment. new text end

Sec. 3.

Minnesota Statutes 2016, section 354.06, subdivision 2, is amended to read:

Subd. 2.

President; executive director.

The board shall annually elect one of its members as president. It shall elect an executive director. Notwithstanding any law to the contrary, the board must set the salary of the executive director. The salary of the executive director must not exceed the limit for a position listed in section 15A.0815, subdivision 2. deleted text begin The salary of the assistant executive director who shall be in the unclassified service, shall be set in accordance with section 43A.18, subdivision 3.deleted text end The executive director shall serve during the pleasure of the board and be the executive officer of the board, with such duties as the board shall prescribe. The board shall employ all other clerks and employees necessary to properly administer the association. The cost and expense of administering the provisions of this chapter shall be paid by the association. The new text begin board shall appoint an new text end executive director deleted text begin shall be appointed by the boarddeleted text end on the basis of deleted text begin fitnessdeleted text end new text begin educationnew text end , experience in the retirement field deleted text begin and leadershipdeleted text end new text begin ,new text end abilitynew text begin to manage and lead system staff, and ability to assist the board in setting a vision for the systemnew text end . The executive director shall have had at least five years of experience on the administrative staff of a major retirement system.

Sec. 4.

Minnesota Statutes 2016, section 354.06, subdivision 2a, is amended to read:

Subd. 2a.

Duties of executive director.

The management of the association is vested in the executive director who shall be the executive and administrative head of the association. The executive director shall act as advisor to the board on all matters pertaining to the association and shall also act as the secretary of the board. The executive director shall:

(1) attend all meetings of the board;

(2) prepare and recommend to the board appropriate rules to carry out the provisions of this chapter;

(3) establish and maintain an adequate system of records and accounts following recognized accounting principles and controls;

(4) designatenew text begin , as necessary, a deputy executive director andnew text end an assistant executive director in the unclassified servicenew text begin , as defined in section 43A.08, whose salaries shall be set in accordance with section 43A.18, subdivision 3,new text end and two assistant executive directors in the classified servicenew text begin , as defined in section 43A.07,new text end with the approval of the board, and appoint such employees, both permanent and temporary, as are necessary to carry out the provisions of this chapter;

(5) organize the work of the association as the director deems necessary to fulfill the functions of the association, and define the duties of its employees and delegate to them any powers or duties, subject to the director's control and under such conditions as the director may prescribe;

(6) with the approval of the board, contract and set the compensation for the services of an approved actuary, professional management services, and any other consulting services. These contracts are not subject to the competitive bidding procedure prescribed by chapter 16C. An approved actuary retained by the executive director shall function as the actuarial advisor of the board and the executive director and may perform actuarial valuations and experience studies to supplement those performed by the actuary retained under section 356.214. Any supplemental actuarial valuations or experience studies shall be filed with the executive director of the Legislative Commission on Pensions and Retirement. Copies of professional management survey reports must be transmitted to the secretary of the senate, the chief clerk of the house of representatives, and the Legislative Reference Library as provided by section 3.195, and to the executive director of the commission at the same time as reports are furnished to the board. Only management firms experienced in conducting management surveys of federal, state, or local public retirement systems are qualified to contract with the executive director;

(7) with the approval of the board, provide in-service training for the employees of the association;

(8) make refunds of accumulated contributions to former members and to the designated beneficiary, surviving spouse, legal representative, or next of kin of deceased members or deceased former members, under this chapter;

(9) determine the amount of the annuities and disability benefits of members covered by the association and authorize payment of the annuities and benefits beginning as of the dates on which the annuities and benefits begin to accrue, under this chapter;

(10) pay annuities, refunds, survivor benefits, salaries, and necessary operating expenses of the association;

(11) prepare and submit to the board and the legislature an annual financial report covering the operation of the association, as required by section 356.20;

(12) certify funds available for investment to the State Board of Investment;

(13) with the advice and approval of the board, request the State Board of Investment to sell securities on determining that funds are needed for the purposes of the association;

(14) prepare and submit biennial and annual budgets to the board and with the approval of the board submit those budgets to the Department of Management and Budget; and

(15) with the approval of the board, perform such other duties as may be required for the administration of the association and the other provisions of this chapter and for the transaction of its business. The executive director may:

(i) reduce all or part of the accrued interest and fines payable by an employing unit for reporting requirements under deleted text begin section 354.52deleted text end new text begin this chapternew text end , based on an evaluation of any extenuating circumstances of the employing unit;

(ii) assign association employees to conduct field audits of an employing unit to ensure compliance with the provisions of this chapter; and

(iii) recover overpayments, if not repaid to the association, by suspending or reducing the payment of a retirement annuity, refund, disability benefit, survivor benefit, or optional annuity under this chapter until the overpayment, plus interest, has been recovered.

Sec. 5.

Minnesota Statutes 2016, section 354.095, is amended to read:

354.095 MEDICAL LEAVE.

new text begin (a) new text end Upon granting a medical leave, an employing unit must certify the leave to the association on a form specified by the executive director. A member of the association who is on an authorized medical leave of absence is entitled to receive allowable service credit, not to exceed deleted text begin one yeardeleted text end new text begin five yearsnew text end , for the period of leave, upon making the prescribed payment to the fund under section 354.72. A member may not receive more than one year of allowable service credit during any fiscal year by making payment under this section. A member may not receive disability benefits under section 354.48 and receive allowable service credit under this section for the same period of time.

new text begin (b) The executive director shall reject an application for disability benefits under section 354.48 if the member is applying only because an employer-sponsored provider of private disability insurance benefits requires the application and the member would not have applied for disability benefits in the absence of the requirement. The member shall submit a copy of the disability insurance policy that requires an application for disability benefits from the plan if the member wishes to assert that the application is only being submitted because of the disability insurance policy requirement. new text end

new text begin (c)new text end Notwithstanding the provisions of any agreement to the contrary, employee and employer contributions may not be made to receive allowable service credit under this section if the member does not retain the right to full reinstatement both during and at the end of the medical leave.

Sec. 6.

Minnesota Statutes 2016, section 354.44, subdivision 3, is amended to read:

Subd. 3.

Application for retirement.

A member or a person authorized to act on behalf of the member may make application for retirement provided the age and service requirements under subdivision 1 are satisfied on or before the member's retirement annuity accrual date under subdivision 4. The application may be made no earlier than deleted text begin 120deleted text end new text begin 180 new text end days before the termination of teaching service. The application must be made on a form prescribed by the executive director and is not complete until all necessary supporting documents are received by the executive director.

Sec. 7.

Minnesota Statutes 2016, section 354.44, subdivision 9, is amended to read:

Subd. 9.

Determining applicable law.

A former teacher who returns to covered service following a termination and who is not receiving a retirement annuity under this section must have earned at least deleted text begin 85 daysdeleted text end new text begin one-half year new text end of credited service following the return to covered service to be eligible for improved benefits resulting from any law change enacted subsequent to that termination.

Sec. 8.

Minnesota Statutes 2016, section 354.45, is amended by adding a subdivision to read:

new text begin Subd. 3. new text end

new text begin Payment upon death of former spouse. new text end

new text begin Upon the death of the former spouse to whom payments are to be made before the end of the specified payment period, payments shall be made according to the terms of a beneficiary form completed by the former spouse or, if no beneficiary form, to the estate of the former spouse or as otherwise ordered by a court of competent jurisdiction. new text end

Sec. 9.

Minnesota Statutes 2016, section 354.46, subdivision 6, is amended to read:

Subd. 6.

Application.

(a) A beneficiary designation and an application for benefits under this section must be in writing on a form prescribed by the executive director.

(b) Sections 354.55, subdivision 11, and 354.60 apply to a deferred annuity payable under this section.

(c) Unless otherwise specified, the annuity must be computed under section 354.44, subdivision 2 or 6, whichever is applicable.

new text begin (d) Each designated beneficiary eligible for a lifetime benefit under this subdivision may apply for an annuity any time after the member's death. The benefit may not begin to accrue more than six months before the date the application is filed with the executive director and may not accrue before the member's death. new text end

Sec. 10.

Minnesota Statutes 2016, section 354.48, subdivision 1, is amended to read:

Subdivision 1.

Age, service and salary requirements.

A member who is totally and permanently disablednew text begin , who has not reached the normal retirement age as defined in section 354.05, subdivision 38,new text end and new text begin who new text end has at least three years of credited allowable service at the time that the total and permanent disability begins is entitled to a disability benefit based on this allowable service in an amount provided in subdivision 3. If the disabled member's teaching service has terminated at any time, at least two of the required three years of allowable service must have been rendered after last becoming a member. deleted text begin Any member whose average salary is less than $75 per month is not entitled to disability benefits.deleted text end

Sec. 11.

Minnesota Statutes 2016, section 354.512, is amended to read:

354.512 RECOVERY OF DEFICIENCIES.

In addition to any other remedies permitted under law, if an employing unit or other entity required by law to make any form of payment to the Teachers Retirement Association fails to make full payment deleted text begin within 60 days of notificationdeleted text end , the executive director is authorized to certify the amount of deficiency to the commissioner of management and budget, who shall deduct the amount from any state aid or appropriation applicable to the employing unit or entity, and transmit the withheld aid or appropriation to the executive director for deposit in the fund.

Sec. 12.

Minnesota Statutes 2016, section 354.52, subdivision 4, is amended to read:

Subd. 4.

Reporting and remittance requirements.

An employer shall remit all amounts due to the association and furnish a statement indicating the amount due and transmitted with any other information required by the executive director. If an amount due is not received by the association within 14 calendar days of the payroll warrant, the amount accrues interest at an annual rate of 8.5 percent compounded annually from the due date until the amount is received by the association. All amounts due and other employer obligations not remitted deleted text begin within 60 days of notification by the association mustdeleted text end new text begin may new text end be certified to the commissioner of management and budget who shall deduct the amount from any state aid or appropriation amount applicable to the employing unit.

Sec. 13.

Minnesota Statutes 2016, section 354.52, subdivision 4d, is amended to read:

Subd. 4d.

Annual base salary reporting.

An employing unit must provide deleted text begin the followingdeleted text end new text begin annual base salary new text end datanew text begin , as defined in section 354.05, subdivision 41,new text end to the association on or before June 30 of each fiscal yeardeleted text begin : (1) annual base salary, as defined in section 354.05, subdivision 41; anddeleted text end new text begin .new text end

deleted text begin (2) beginning and ending dates for the regular school work year. deleted text end

Sec. 14.

Minnesota Statutes 2016, section 354.66, subdivision 2, is amended to read:

Subd. 2.

Qualified part-time teacher program participation requirements.

(a) A teacher in a Minnesota public elementary school, a Minnesota secondary school, or the Minnesota State Colleges and Universities system who has three years or more of allowable service in the association or three years or more of full-time teaching service in Minnesota public elementary schools, Minnesota secondary schools, or the Minnesota State Colleges and Universities system, by agreement with the board of the employing district or with the authorized representative of the board, may be assigned to teaching service in a part-time teaching position under subdivision 3. The agreement must be executed before October 1 of the school year for which the teacher deleted text begin requests to make retirement contributions under subdivision 4deleted text end new text begin has been assigned to teaching service in a part-time teaching position under this sectionnew text end . A copy of the executed agreement must be filed with the executive director of the association. If the copy of the executed agreement is filed with the association after October 1 of the school year for which the teacher deleted text begin requests to make retirement contributions under subdivision 4deleted text end new text begin has been assigned to teaching service in a part-time teaching positionnew text end , the employing unit shall pay the fine specified in section 354.52, subdivision 6, for each calendar day that elapsed since the October 1 due datenew text begin , unless the association waives the finenew text end . The association may not accept an executed agreement that is received by the association more than 15 months late. deleted text begin The association may not waive the fine required by this section.deleted text end

(b) Notwithstanding paragraph (a), if the teacher is also a legislator:

(1) the agreement in paragraph (a) must be executed before March 1 of the school year for which the teacher requests to make retirement contributions under subdivision 4; and

(2) the fines specified in paragraph (a) apply if the employing unit does not file the executed agreement with the executive director of the association by March 1.

Sec. 15.

Minnesota Statutes 2016, section 354.72, subdivision 1, is amended to read:

Subdivision 1.

Application.

This section applies to any strike period under section 354.05, subdivision 13, clause (6), and to any period of authorized leave of absence deleted text begin without paydeleted text end under sections 354.093, 354.094, 354.095, and 354.096 for which the teacher obtains credit for allowable service by making payment as specified in this section to the Teachers Retirement Association fund. Each year of an extended leave of absence under section 354.094 is considered to be a separate leave for purposes of this section.

Sec. 16.

Minnesota Statutes 2016, section 423A.02, subdivision 3, is amended to read:

Subd. 3.

Reallocation of amortization state aid.

(a) Seventy percent of the difference between $5,720,000 and the current year amortization aid distributed under subdivision 1 that is not distributed for any reason to a municipality must be distributed by the commissioner of revenue according to this paragraph. The commissioner shall distribute 60 percent of the amounts derived under this paragraph to the Teachers Retirement Association, and 40 percent to the St. Paul Teachers Retirement Fund Association to fund the unfunded actuarial accrued liabilities of the respective funds. These payments must be made on July 15 each fiscal year. If the St. Paul Teachers Retirement Fund Association deleted text begin or the Duluth Teachers Retirement Fund Associationdeleted text end becomes fully funded, the association's eligibility for its portion of this aid ceases. Amounts remaining in the undistributed balance account at the end of the biennium if aid eligibility ceases cancel to the general fund.

(b) In order to receive amortization aid under paragraph (a), before June 30 annually Independent School District No. 625, St. Paul, must make an additional contribution of $800,000 each year to the St. Paul Teachers Retirement Fund Association.

(c) Thirty percent of the difference between $5,720,000 and the current year amortization aid under subdivision 1 that is not distributed for any reason to a municipality must be distributed under section 69.021, subdivision 7, paragraph (d), as additional funding to support a minimum fire state aid amount for volunteer firefighter relief associations.

Sec. 17.

new text begin EFFECTIVE DATE. new text end

new text begin (a) Sections 1 to 4; 5, paragraphs (b) and (c); and 6 to 16 are effective June 30, 2018. new text end

new text begin (b) Section 5, paragraph (a), is effective June 30, 2019. new text end

ARTICLE 12

ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION
ADMINISTRATIVE PROVISIONS

Section 1.

Minnesota Statutes 2016, section 354A.093, subdivision 4, is amended to read:

Subd. 4.

Eligible payment period.

(a) To receive service credit under this section, the contributions specified in this section must be transmitted to the deleted text begin applicable first class citydeleted text end new text begin St. Paul new text end Teachers Retirement Fund Association during the period which begins with the date the individual returns to teaching service and which has a duration of three times the length of the uniformed service period, but not to exceed five years.

(b) Notwithstanding paragraph (a), if the payment period determined under paragraph (a) is less than one year, the contributions required under this section to receive service credit may be made within one year from the discharge date.

Sec. 2.

Minnesota Statutes 2016, section 354A.31, subdivision 5, is amended to read:

Subd. 5.

Unreduced normal retirement annuity.

Upon retirement at normal retirement age, a vested coordinated member is entitled to a normal retirement annuity calculated under subdivision 4 deleted text begin or 4a, whichever appliesdeleted text end .

Sec. 3.

Minnesota Statutes 2016, section 354A.31, subdivision 6, is amended to read:

Subd. 6.

Reduced retirement annuity.

This subdivision applies only to a person who first became a coordinated member or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and whose annuity is higher when calculated using the retirement annuity formula percentage in subdivision 4, paragraph (c), deleted text begin or subdivision 4a, paragraph (c),deleted text end in conjunction with this subdivision than when calculated under subdivision 4, paragraph (d), deleted text begin or subdivision 4a, paragraph (d),deleted text end in conjunction with subdivision 7.

(a) Upon retirement at an age before normal retirement age or prior to age 62 with at least 30 years of service credit, a vested coordinated member shall be entitled to a retirement annuity in an amount equal to the normal retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (c), deleted text begin or subdivision 4a, paragraph (c),deleted text end reduced by one-quarter of one percent for each month that the coordinated member is under normal retirement age if the coordinated member has less than 30 years of service credit or is under the age of 62 if the coordinated member has at least 30 years of service credit.

(b) Any coordinated member whose attained age plus credited allowable service totals 90 years is entitled, upon application, to a retirement annuity in an amount equal to the normal retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (c), deleted text begin or subdivision 4a, paragraph (c),deleted text end without any reduction by reason of early retirement.

Sec. 4.

Minnesota Statutes 2016, section 354A.36, subdivision 4, is amended to read:

Subd. 4.

Determination of disability.

new text begin (a) new text end The board of the teachers retirement fund association shall make the final determination of the existence of a permanent and total disability. The board shall have the coordinated member examined by at least two licensed physicians, licensed chiropractors, or licensed psychologists who are selected by the board. After making any required examinations, each physician, chiropractor, or psychologist with respect to a mental impairment, shall make a written report to the board concerning the coordinated member, which shall include a statement of the expert opinion of the physician, chiropractor, or psychologist as to whether or not the member is permanently and totally disabled within the meaning of section 354A.011, subdivision 14. The board shall also obtain a written statement from the employer as to whether or not the coordinated member was terminated or separated from active employment due to a disability which is deemed by the employer to reasonably prevent further service by the member to the employer and which caused the coordinated member not to be entitled to further compensation from the employer for services rendered by the member. If, after consideration of the reports of the physicians, chiropractors, or psychologists with respect to a mental impairment, and any evidence presented by the member or by any other interested parties, the board determines that the coordinated member is totally and permanently disabled within the meaning of section 354A.011, subdivision 14, it shall grant the coordinated member a disability benefit. A member who is placed on a leave of absence without compensation as a result of the disability is not barred from receiving a disability benefit under this section.

new text begin (b) The executive director shall reject an application for disability benefits under section 354A.36 if the member is applying only because an employer-sponsored provider of private disability insurance benefits requires the application and the member would not have applied for disability benefits in the absence of the requirement. The member shall submit a copy of the disability insurance policy that requires an application for disability benefits from the plan if the member wishes to assert that the application is only being submitted because of the disability insurance policy requirement. new text end

Sec. 5.

Minnesota Statutes 2016, section 354A.38, is amended to read:

354A.38 EFFECT OF REFUND; REPAYMENT OF REFUND.

Subdivision 1.

Effect of refund; termination of service credit.

If a coordinated member or former coordinated member applies for and deleted text begin acceptsdeleted text end new text begin is issued new text end a refund pursuant to section 354A.37, all allowable service which was credited to the member or former member shall be terminated.

Subd. 2.

Repayment of refund.

A coordinated member with at least two years of allowable service credited subsequent to the member's last application for and deleted text begin acceptancedeleted text end new text begin payment new text end of a refund pursuant to section 354A.37 shall be entitled to repay the refund. The amount of the refund repayment shall be calculated pursuant to subdivision 3. If the member has deleted text begin previously applied for and accepteddeleted text end new text begin taken new text end more than one refund, deleted text begin and the previous refund ordeleted text end new text begin all new text end refunds deleted text begin have not beendeleted text end new text begin must be new text end repaiddeleted text begin , then the member shall be entitled only to repay all outstanding refunds and shall not be entitled to repay only the most recent refunddeleted text end new text begin pro ratanew text end .

Subd. 3.

Computation of refund repayment amount.

If the coordinated member elects to repay a refund under subdivision 2, the repayment to the fund must be in an amount equal to refunds the member has deleted text begin accepteddeleted text end new text begin been issuednew text end plus interest at the deleted text begin rate of 8.5 percent until June 30, 2015, and eight percent thereafterdeleted text end new text begin applicable annual rate or rates specified in section 356.59, subdivision 5, new text end compounded annuallynew text begin ,new text end from the date that the refund was deleted text begin accepteddeleted text end new text begin issued new text end to the date that the refund is repaid.

Sec. 6.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 5 are effective June 30, 2018. new text end

ARTICLE 13

RETIREMENT SYSTEMS, GENERALLY
ADMINISTRATIVE PROVISIONS

Section 1.

Minnesota Statutes 2016, section 356.32, subdivision 2, is amended to read:

Subd. 2.

Covered retirement plans.

The provisions of this section apply to the following retirement plans:

(1) the general state employees retirement plan of the Minnesota State Retirement System, established under chapter 352;

(2) the correctional state employees retirement plan of the Minnesota State Retirement System, established under chapter 352;

(3) the State Patrol retirement plan, established under chapter 352B;

(4) the general employees retirement plan of the Public Employees Retirement Association, established under chapter 353;

(5) the public employees police and fire plan of the Public Employees Retirement Association, established under chapter 353;

(6) new text begin the local government correctional service retirement plan of the Public Employees Retirement Association, established under chapter 353E;new text end

new text begin (7) new text end the Teachers Retirement Association, established under chapter 354; and

deleted text begin (7)deleted text end new text begin (8) new text end the St. Paul Teachers Retirement Fund Association, established under chapter 354A.

Sec. 2.

Minnesota Statutes 2016, section 356.47, subdivision 3, is amended to read:

Subd. 3.

Payment.

(a) Beginning one year after the reemployment withholding period ends relating to the reemployment that gave rise to the limitation, and the filing of a written application, the retired member is entitled to the payment, in a lump sum, of the value of the person's amount under subdivision 2, plus annual compound interest. For the general state employees retirement plan, the correctional state employees retirement plan, the general employees retirement plan of the Public Employees Retirement Association, the public employees police and fire retirement plan, the local government correctional employees retirement plan, and the teachers retirement plan, the annual interest rate is six percent from the date on which the amount was deducted from the retirement annuity to the date of payment or until January 1, 2011, whichever is earlier, and no interest after January 1, 2011. For the St. Paul Teachers Retirement Fund Association, the annual interest is the rate of six percent from the date that the amount was deducted from the retirement annuity to the date of payment or June 30, 2011, whichever is earlier, and with no interest accrual after June 30, 2011.

(b) The written application must be on a form prescribed by the chief administrative officer of the applicable retirement plan.

(c) If the retired member dies before the payment provided for in paragraph (a) is made, the amount is payable, upon written application, to the deceased person's surviving spouse, or if none, to the deceased person's designated beneficiary, or if none, to the deceased person's estate.

(d) new text begin If the amount under subdivision 2 is an eligible rollover distribution as defined in section 356.635, subdivisions 4 and 5, the applicable retirement plan shall provide notice and an election:new text end

new text begin (1) to the member regarding the member's right to elect a direct rollover under section 356.635, subdivisions 3 to 7, new text end in lieu of deleted text begin thedeleted text end new text begin a new text end direct payment deleted text begin of the person's amount under subdivision 2, on or after the payment date under paragraph (a), if the federal Internal Revenue Code so permits, the retired member may elect to have all or any portion of the payment amount under this section paid in the form of a direct rollover to an eligible retirement plan as defined in section 402(c) of the federal Internal Revenue Code that is specified by the retired member. If the retired member dies with a balance remaining payable under this section, the surviving spouse of the retired member, or if none, the deceased person's designated beneficiary, or if none, the administrator of the deceased person's estate may elect a direct rollover under this paragraph.deleted text end new text begin ; or new text end

new text begin (2) if paragraph (c) applies and the amount is to be paid to a person who is a distributee as defined in section 356.635, subdivision 7, to the distributee regarding the distributee's right to elect a direct rollover under section 356.635, subdivisions 3 to 7, in lieu of a direct payment. new text end

Sec. 3.

Minnesota Statutes 2016, section 356.635, is amended by adding a subdivision to read:

new text begin Subd. 9a. new text end

new text begin Definitions. new text end

new text begin (a) The following definitions apply for purposes of this subdivision and subdivisions 10 to 12. new text end

new text begin (b) "Annual addition" means the sum for the limitation year of all pretax and after-tax contributions made by the member or the member's employer and credited to an account in the name of the member in any defined contribution plan maintained by the employer. new text end

new text begin (c) "Compensation" means the compensation actually paid or made available to a member for any limitation year, including all items of remuneration described in Code of Federal Regulations, title 26, section 1.415(c)-2(b), and excluding all items of remuneration described in Code of Federal Regulations, title 26, section 1.415(c)-2(c). Compensation for pension plan purposes for any limitation year shall not exceed the applicable federal compensation limit described in section 356.611, subdivision 2. new text end

new text begin (d) "Limitation year" means the calendar year or fiscal year, whichever is applicable to the particular pension plan. new text end

new text begin (e) "Maximum permissible benefit" means an annual benefit of $160,000, automatically adjusted under section 415(d) of the Internal Revenue Code for each limitation year ending after December 31, 2001, payable in the form of a single life annuity. The new limitation shall apply to limitation years ending with or within the calendar year of the date of the adjustment, but a member's benefits shall not reflect the adjusted limit prior to January 1 of that calendar year. The maximum permissible benefit amount shall be further adjusted as follows: new text end

new text begin (1) if the member has less than ten years of participation, the maximum permissible benefit shall be multiplied by a fraction, the numerator of which is the number of years, or part thereof, but not less than one year, of participation in the plan, and the denominator of which is ten; new text end

new text begin (2) if the annual benefit begins before the member has attained age 62, the determination as to whether the maximum permissible benefit limit has been satisfied shall be made, in accordance with regulations prescribed by the United States secretary of the treasury, by reducing the limit so that the limit, as so reduced, equals an annual benefit, beginning when the annual benefit actually begins, which is equivalent to a $160,000, as adjusted, annual benefit beginning at age 62; and new text end

new text begin (3) if the annual benefit begins after the member has attained age 65, the determination as to whether the maximum permissible benefit limit has been satisfied shall be made, in accordance with regulations prescribed by the United States secretary of the treasury, by increasing the limit so that the limit, as so increased, equals an annual benefit, beginning when the annual benefit actually begins, which is equivalent to a $160,000, as adjusted, annual benefit beginning at age 65. new text end

Sec. 4.

Minnesota Statutes 2016, section 356.635, subdivision 10, is amended to read:

Subd. 10.

new text begin Annual new text end benefit limitationsnew text begin ; defined benefit plansnew text end .

new text begin (a) The annual benefit payable to a member shall not exceed the maximum permissible benefit. If the benefit the member would otherwise receive for a limitation year would result in the payment of an annual benefit in excess of the maximum permissible benefit, the benefit shall be reduced to the extent necessary so the benefit does not exceed the maximum permissible benefit. new text end

new text begin (b) new text end For purposes of applying the deleted text begin limits of section 415(b) of the Internal Revenue Code, a retirementdeleted text end new text begin limitation in paragraph (a), an annual new text end benefit that is payable in any form other than a single life annuity deleted text begin and that is subject to section 417(e)(3) of the Internal Revenue Code mustdeleted text end new text begin shall new text end be adjusted to an actuarially equivalent single life annuity that equals, if the annuity starting date is in a plan year beginning after 2005, the annual amount of the single life annuity commencing at the same annuity starting date that has the same actuarial present value as the deleted text begin participant'sdeleted text end new text begin member's new text end form of benefit, using whichever of the following produces the greatest annual amount:

(1) the interest rate and the mortality table or other tabular factor specified in the plan for adjusting benefits in the same form;

(2) a 5.5 percent interest rate assumption and the applicable mortality table; or

(3) the applicable interest rate under section 417(e)(3) of the Internal Revenue Code and the applicable mortality table, divided by 1.05.

new text begin (c) If a member participated in more than one pension plan in which the employer participates, the benefits under each plan must be reduced proportionately to satisfy the limitation in paragraph (a). new text end

Sec. 5.

Minnesota Statutes 2016, section 356.635, is amended by adding a subdivision to read:

new text begin Subd. 11. new text end

new text begin Annual addition limitation; defined contribution plans. new text end

new text begin The annual additions by or on behalf of a member to a defined contribution plan for any limitation year shall not exceed the lesser of (1) 100 percent of the member's compensation for the limitation year or (2) the dollar limit in effect for the limitation year under section 415(c)(1)(A) of the Internal Revenue Code, as adjusted by the United States secretary of the treasury under section 415(d)(1)(C) of the Internal Revenue Code. new text end

Sec. 6.

Minnesota Statutes 2016, section 356.635, is amended by adding a subdivision to read:

new text begin Subd. 12. new text end

new text begin Incorporation by reference. new text end

new text begin Any requirements of section 415(b) and (c) of the Internal Revenue Code and related regulations and agency guidance not addressed by subdivisions 10 and 11 shall be considered incorporated by reference, including provisions applicable to qualified police and firefighters and to survivor and disability benefits. Subdivisions 10 to 12 shall be interpreted in a manner that is consistent with the requirements of section 415(b) and (c) of the Internal Revenue Code and the related regulations. new text end

Sec. 7.

Minnesota Statutes 2016, section 356.635, is amended by adding a subdivision to read:

new text begin Subd. 13. new text end

new text begin Correction of errors. new text end

new text begin The executive director of each plan may correct an operational, demographic, employer eligibility, or plan document error as the executive director deems necessary or appropriate to preserve and protect the plan's tax qualification under section 401(a) of the Internal Revenue Code, including as provided in the Internal Revenue Service's Employee Plans Compliance Resolution System (EPCRS) or any successor thereto. To the extent deemed necessary by the executive director to implement correction, the executive director may: new text end

new text begin (1) make distributions; new text end

new text begin (2) transfer assets; or new text end

new text begin (3) recover an overpayment by reducing future benefit payments or designating appropriate revenue or source of funding that will restore to the plan the amount of the overpayment. new text end

Sec. 8.

Minnesota Statutes 2016, section 356.96, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) Unless the language or context clearly indicates that a different meaning is intended, for the purpose of this section, the terms in deleted text begin paragraphs (b) to (e)deleted text end new text begin this subdivision new text end have the meanings given them.

(b) deleted text begin "Chief administrative officer"deleted text end new text begin "Executive director" new text end means the executive director of a covered pension plan or the executive director's designee or representative.

(c) "Covered pension plan" means a plan enumerated in section 356.20, subdivision 2, clauses (1) to (4), (8), and (11) to (14), but does not mean the deferred compensation plan administered under sections 352.965 and 352.97 or to the postretirement health care savings plan administered under section 352.98.

(d) "Governing board" means the Board of Trustees of the Public Employees Retirement Association, the Board of Trustees of the Teachers Retirement Association, or the Board of Directors of the Minnesota State Retirement System.

(e) "Person" deleted text begin includesdeleted text end new text begin means new text end an active, retired, deferred, or nonvested inactive participant in a covered pension plan or a beneficiary of a participant, or an individual who has applied to be a participant or who is or may be a survivor of a participant, or new text begin the representative of new text end a state agency or other governmental unit that employs active participants in a covered pension plan.

new text begin (f) "Petitioner" means a person who has filed a petition for review of an executive director's determination under this section. new text end

Sec. 9.

Minnesota Statutes 2016, section 356.96, subdivision 2, is amended to read:

Subd. 2.

Right to deleted text begin reviewdeleted text end new text begin appeal to executive director; determinationnew text end .

A deleted text begin determination made by the chief administrative officerdeleted text end new text begin person may appeal a decision by the staff new text end of a covered pension plan regarding deleted text begin adeleted text end new text begin the new text end person's eligibility, benefits, or other rights under the plan deleted text begin with which the person does not agreedeleted text end new text begin to the executive director of the plan. The appeal must be in writing and be delivered to the executive director no later than 60 days after the date of the written notice of the staff decision. The executive director may overturn, modify, or affirm the staff's decision. The executive director's determinationnew text end is subject to review under this section.

Sec. 10.

Minnesota Statutes 2016, section 356.96, subdivision 3, is amended to read:

Subd. 3.

Notice of determination.

deleted text begin If the applicable chief administrative officer denies an application or a written request, modifies a benefit, or terminates a benefit of a person claiming a right or potential rights under a covered pension plan, the chief administrative officer shall notify that person through a written notice containing: deleted text end new text begin The executive director shall issue a written notice of determination to the person who files an appeal under subdivision 2. The notice of determination must be delivered by certified mail to the address to which the most recent benefit payment was sent or, if that address is that of a financial institution, to the last known address of the person. The notice of determination shall include the following: new text end

(1) a statement of the reasons for the determination;

(2) a deleted text begin noticedeleted text end new text begin statement new text end that the person may petition the governing board of the covered pension plan for a review of the determination and that a person's petition for review must be filed in the administrative office of the covered pension plan deleted text begin withindeleted text end new text begin no later than new text end 60 days deleted text begin of the receiptdeleted text end new text begin after the date new text end of the written notice of deleted text begin thedeleted text end determination;

(3) a statement indicating that a failure to petition for review within 60 days precludes the person from deleted text begin contesting indeleted text end any deleted text begin otherdeleted text end new text begin further new text end administrative new text begin or judicial new text end review deleted text begin or court procedure the issues determined by the chief administrative officerdeleted text end new text begin of the executive director's determinationnew text end ;

(4) a statement indicating that all relevant materials, documents, affidavits, and other records that the person wishes to be reviewed in support of the petition new text begin and a list of any witnesses who will testify before the governing board, along with a summary of the witness' testimony, new text end must be filed with deleted text begin and received indeleted text end the administrative office of the covered pension plan at least 15 days before the date of the hearing under subdivision 10new text begin or as directed by the administrative law judge who conducts a fact-finding conference under subdivision 7, paragraph (b), or a contested case hearing under subdivision 12, paragraph (b)new text end ; deleted text begin anddeleted text end

(5) a summary of this section, including all filing requirements and deadlinesdeleted text begin .deleted text end new text begin ; andnew text end

new text begin (6) the statement required under subdivision 4, paragraph (a), if applicable. new text end

Sec. 11.

Minnesota Statutes 2016, section 356.96, subdivision 4, is amended to read:

Subd. 4.

Termination of benefits.

(a) If deleted text begin a covered pension plan decides todeleted text end new text begin the executive director's determination will new text end terminate a benefit that is being paid to a person, deleted text begin before terminating the benefit, the chief administrative officer must, in addition to the other procedures prescribed in this section, provide the individual with written notice of the pending benefit termination by certified mail. The notice must explain the reason for the pending benefit termination. The person must be given andeleted text end new text begin the notice of determination must also state that the person has the new text end opportunity to explain, in writing, in person, by telephone, or by e-mail, the reasons that the benefit should not be terminated.

(b) If the deleted text begin chief administrative officer is unable to contact the person anddeleted text end new text begin notice of determination is returned as undeliverable and the person cannot be reached by any other reasonable means of communication and the executive director new text end determines that a failure to terminate the benefit will result in unauthorized payment by a covered pension plan, the deleted text begin chief administrative officerdeleted text end new text begin executive director new text end may terminate the benefit immediately deleted text begin upon mailing a written notice containing the information required by subdivision 3 to the address to which the most recent benefit payment was sent and, if that address is that of a financial institution, to the last known address of the persondeleted text end .

Sec. 12.

Minnesota Statutes 2016, section 356.96, subdivision 5, is amended to read:

Subd. 5.

Petition for review.

(a) new text begin Upon receipt of the notice of determination required in subdivision 3, new text end a person deleted text begin who claims a right under subdivision 2deleted text end may petition new text begin the governing board of the covered pension plan new text end for a review of deleted text begin that decision by the governing board of the covered pension plandeleted text end new text begin the executive director's determinationnew text end .

(b) deleted text begin A petition under this section must be sent to the chief administrative officer by mail and must be postmarkeddeleted text end new text begin The petitioner must file the petition for review with the administrative office of the covered pension plan new text end no later than 60 days after the deleted text begin person receiveddeleted text end new text begin date of new text end the notice new text begin of determination new text end required by subdivision 3. new text begin Filing of the petition is effective upon mailing or personal delivery. new text end The petition must include the deleted text begin person'sdeleted text end new text begin petitioner's new text end statement of the reason or reasons that the deleted text begin person believes the decision of the chief administrative officerdeleted text end new text begin determination of the executive director new text end should be reversed or modified. deleted text begin The petition may include all documentation and written materials that the petitioner deems to be relevant. In developing a record for review by the board when a decision is appealed, the chief administrative officer may direct that the applicant participate in a fact-finding session conducted by an administrative law judge assigned by the Office of Administrative Hearings and, as applicable, participate in a vocational assessment conducted by a qualified rehabilitation counselor on contract with the applicable retirement system.deleted text end

Sec. 13.

Minnesota Statutes 2016, section 356.96, subdivision 6, is amended to read:

Subd. 6.

Failure to petition.

If a timely petition for review under subdivision 5 is not filed with the deleted text begin chiefdeleted text end administrative deleted text begin officer,deleted text end new text begin office of new text end the covered pension deleted text begin plan'sdeleted text end new text begin plan, the executive director's new text end determination is final and is not subject to further administrative or judicial review.

Sec. 14.

Minnesota Statutes 2016, section 356.96, subdivision 7, is amended to read:

Subd. 7.

Notice of hearingnew text begin ; fact-finding; filing and timing requirementsnew text end .

(a) After receiving a petition, the deleted text begin chief administrative officerdeleted text end new text begin executive director new text end must schedule a deleted text begin timelydeleted text end new text begin hearing to new text end review deleted text begin ofdeleted text end the petition before the governing board of the covered pension plannew text begin or the executive director may defer the scheduling of a hearing until after a fact-finding conference under paragraph (b)new text end . deleted text begin The review must be scheduled to take into consideration any necessary accommodations to allow the petitioner to participate in the governing board's review.deleted text end

new text begin (b) The executive director may direct the petitioner to participate in a fact-finding conference conducted by an administrative law judge assigned by the Office of Administrative Hearings. The fact-finding conference is an informal proceeding not subject to Minnesota Rules, chapter 1400, except that Minnesota Rules, part 1400.7300, shall govern the admissibility of evidence and Minnesota Rules, part 1400.8603, shall govern how the fact-finding conference is conducted. The administrative law judge must issue a report and a recommendation to the governing board. new text end

new text begin (c) If the petitioner's claim relates to disability benefits, the executive director may direct the petitioner to participate in a vocational assessment conducted by a qualified rehabilitation counselor under contract with the covered pension plan. The counselor must issue a report regarding the assessment to the governing board. new text end

deleted text begin (b)deleted text end new text begin (d) new text end Not less than 30 calendar days before the new text begin date new text end scheduled new text begin for the new text end hearing deleted text begin datedeleted text end new text begin before the governing boardnew text end , the deleted text begin chief administrative officerdeleted text end new text begin executive director new text end must deleted text begin provide by mail todeleted text end new text begin notify new text end the petitioner deleted text begin an acknowledgment of the receipt of the person's petition and a follow-up noticedeleted text end of the time and place of the meeting at which the governing board is scheduled to deleted text begin consider the petition anddeleted text end new text begin conduct the hearing. If there has been no fact-finding conference under paragraph (b), not less than 15 days before the date scheduled for the hearing, the petitioner and the executive director new text end must provide deleted text begin a copydeleted text end new text begin to the governing board and the other party copies new text end of all deleted text begin relevant documents,deleted text end new text begin documentary new text end evidencedeleted text begin , summaries, and recommendations assembled by or on behalf of the plan administration to be considered by the governing boarddeleted text end new text begin that will be presented and a list of witnesses who will testify, along with a summary of their testimonynew text end .

deleted text begin (c) All documents and materials that the petitioner wishes to be part of the record for review must be filed with the chief administrative officer and must be received in the offices of the covered pension plan at least 15 days before the date of the meeting at which the petition is scheduled to be heard. deleted text end

deleted text begin (d) Adeleted text end new text begin (e) The new text end petitioner may request a deleted text begin continuancedeleted text end new text begin postponement new text end of deleted text begin adeleted text end new text begin the date new text end scheduled new text begin for the new text end hearing deleted text begin if the request is received by the chief administrative officer withindeleted text end new text begin before the governing board within a reasonable time, but no later than new text end ten calendar days deleted text begin ofdeleted text end new text begin before new text end the scheduled new text begin hearing new text end date deleted text begin of the applicable board meeting. The chief administrative officer must reschedule the review within a reasonable time. Only one continuance may be granted to any petitionerdeleted text end new text begin . A petitioner shall be granted only one postponement unless the applicable covered pension plan agrees to additional postponementsnew text end .

Sec. 15.

Minnesota Statutes 2016, section 356.96, subdivision 8, is amended to read:

Subd. 8.

Record for review.

(a) All evidence, including all records, documents, and affidavits in the possession of the covered pension plan of which the covered pension plan desires to avail itself and be considered by the governing board, and all evidence which the petitioner wishes to present to the governing board, including any evidence which would otherwise be classified by law as "private," must be made part of the hearing record.

(b) The deleted text begin chief administrative officerdeleted text end new text begin executive director new text end must provide a copy of the record to each member of the governing board at least deleted text begin sevendeleted text end new text begin five new text end days before the scheduled hearing date.

(c) deleted text begin Any additional document, affidavit, or other relevant information that the petitioner requests be part of the record may be admitted with the consent of the governing board.deleted text end new text begin If a fact-finding conference under subdivision 7, paragraph (b), is not conducted, the record is limited to those materials provided to the petitioner in accordance with subdivision 7, paragraph (d), those filed by the petitioner with the covered pension plan in a timely manner in accordance with subdivision 7, paragraph (e), any vocational assessment report under subdivision 7, paragraph (c), and any testimony at the hearing before the governing board. Any additional evidence may be placed in the record pursuant to subdivision 10, paragraph (b).new text end

new text begin (d) If a fact-finding conference under subdivision 7, paragraph (b), or a contested case hearing under subdivision 12, paragraph (b), is conducted, the record before the governing board must be limited to the following: new text end

new text begin (1) the record from the Office of Administrative Hearings; new text end

new text begin (2) seven-page submissions by the petitioner and a representative of the covered pension plan commenting on the administrative law judge's recommendation; and new text end

new text begin (3) any vocational assessment report under subdivision 7, paragraph (c). new text end

Sec. 16.

Minnesota Statutes 2016, section 356.96, subdivision 9, is amended to read:

Subd. 9.

Amended determination.

At any time before the hearing before the governing board, for good cause shown and made part of the records of the plan, the deleted text begin chief administrative officerdeleted text end new text begin executive director new text end may reverse, alter, amend, or modify the prior decision which is subject to review under this section by issuing an amended deleted text begin decisiondeleted text end new text begin determination to the petitionernew text end . Upon doing so, the deleted text begin chief administrative officerdeleted text end new text begin executive director new text end may cancel the governing board's scheduled review of the person's petition and deleted text begin shall sodeleted text end notify the petitioner.

Sec. 17.

Minnesota Statutes 2016, section 356.96, subdivision 10, is amended to read:

Subd. 10.

new text begin Board new text end hearing.

(a) The governing board shall hold a timely hearing on a petition for review as part of a regularly scheduled board meeting, or as part of a special meeting if so scheduled. All governing board members who participate in the decision-making process must be familiar with the record. The governing board shall make its decision on a petition solely on the record as submitted and on the proceedings of the hearing.

new text begin (b)new text end At the hearing, the petitioner, the petitioner's deleted text begin attorney, and the chief administrative officerdeleted text end new text begin representative, if any, the executive director, and a representative of the covered pension plan who does not also serve as the governing board's legal advisor during the board's decision-making process new text end may state and discuss with the governing board their positions with respect to the petition. new text begin If no fact-finding conference under subdivision 7, paragraph (b), or contested case hearing under subdivision 12, paragraph (b), was conducted, additional evidence may be received in the form of testimony from previously disclosed witnesses. new text end The governing board may allow further documentation to be placed in the record at the board meeting only with the agreement of both the deleted text begin chief administrative officerdeleted text end new text begin executive director new text end and the petitioner. The deleted text begin chief administrative officerdeleted text end new text begin executive director new text end may not otherwise participate in the board's decision-making process.

deleted text begin (b) When a petition presents a contested issue of law, an assistant attorney general may participate and may argue on behalf of the legal position taken by the chief administrative officer if that assistant attorney general does not also serve as the governing board's legal advisor during the board's decision-making process. deleted text end

deleted text begin (c) A motion by a board member, supported by a summary of the relevant facts, conclusions and reasons, as properly amended and approved by a majority of the governing board, constitutes the board's final decision. A verbatim statement of the board's final decision must be served upon the petitioner. If the decision is contrary to the petitioner's desired outcome, the notice shall inform the petitioner of the appeal rights set forth in subdivision 13. deleted text end

deleted text begin (d)deleted text end new text begin (c) new text end If a petitioner who received timely notice of a scheduled hearing fails to appear, the governing board may nevertheless hear the petition and issue a decision.

new text begin (d) The governing board's decision shall be made upon a motion by a board member and approval by a majority of the governing board. The governing board must issue its decision as a written order containing findings of fact, conclusions of law, and the board's decision no later than 30 days after the hearing. If the decision is contrary to the petitioner's desired outcome, the notice must inform the petitioner of the appeal rights set forth in subdivision 13. new text end

Sec. 18.

Minnesota Statutes 2016, section 356.96, subdivision 11, is amended to read:

Subd. 11.

Disability medical issues.

deleted text begin (a)deleted text end If deleted text begin a person petitions the governing boarddeleted text end new text begin the petitioner seeks new text end to reverse or modify a determination deleted text begin which founddeleted text end new text begin by the executive director new text end that there deleted text begin exists nodeleted text end new text begin was insufficient new text end medical data deleted text begin supportingdeleted text end new text begin to support new text end an application for disability benefits, the new text begin governing new text end board may reverse that determination only if there is deleted text begin in factdeleted text end medical evidence supporting the application. The new text begin governing new text end board has the discretion to resubmit a disability benefit application at any time to a medical advisor for reconsideration, and the resubmission may include an instruction that further medical examinations be obtained.

deleted text begin (b) The governing board may make a determination contrary to the recommendation of the medical advisor only if there is expert medical evidence in the record to support its contrary decision. If there is no medical evidence contrary to the opinion of the medical advisor in the record and the medical advisor attests that the decision was made in accordance with the applicable disability standard, the board must follow the decision of the medical advisor regarding the cause of the disability. deleted text end

deleted text begin (c) The obligation of the governing board to follow the decision of the medical advisor under paragraph (b) does not apply to instances when the governing board makes a determination different from the recommendation of the medical advisor on issues that do not involve medical issues. deleted text end

Sec. 19.

Minnesota Statutes 2016, section 356.96, subdivision 12, is amended to read:

Subd. 12.

Referral for administrative hearing.

(a) deleted text begin Notwithstanding any provision of sections 14.03, 14.06, and 14.57 to 14.69 to the contrary, a challenge to a determination of the chief administrative officer of a covered pension plandeleted text end new text begin A fact-finding conference under subdivision 7, paragraph (b), new text end must be conducted exclusively under the procedures set forth in this section and deleted text begin isdeleted text end not new text begin as new text end a contested case under chapter 14.

(b) deleted text begin Notwithstanding the provisions of paragraph (a),deleted text end A governing board, in its sole discretion, may refer a petition brought under this section to the Office of Administrative Hearings for a contested case hearing under sections 14.57 to 14.69.

Sec. 20.

Minnesota Statutes 2016, section 356.96, subdivision 13, is amended to read:

Subd. 13.

Appeal of the governing board's decision; judicial review.

deleted text begin Withindeleted text end new text begin No later than new text end 60 days deleted text begin ofdeleted text end new text begin after new text end the date of the mailing of the notice of the governing board's decision, the petitioner may appeal the decision by filing a writ of certiorari with the Court of Appeals under section 606.01 and Rule 115 of the Minnesota Rules of Civil Appellate Procedure. Failure by a person to appeal to the Court of Appeals within the 60-day period precludes the person from later raising, in any subsequent administrative hearing or court proceeding, those substantive and procedural issues that reasonably should have been raised upon a timely appeal.

Sec. 21.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2016, sections 356.611, subdivisions 3, 3a, 4, and 5; and 356.96, subdivisions 14 and 15, new text end new text begin are repealed. new text end

Sec. 22.

new text begin EFFECTIVE DATE. new text end

new text begin Sections 1 to 21 are effective June 30, 2018. new text end

ARTICLE 14

VOLUNTEER FIREFIGHTER RELIEF ASSOCIATIONS MODIFICATIONS

Section 1.

Minnesota Statutes 2016, section 356A.06, subdivision 7, is amended to read:

Subd. 7.

Expanded list of authorized investment securities.

(a) Authority. A covered pension plan not described by subdivision 6, paragraph (a), is an expanded list plan and shall invest its assets as specified in this subdivision. The governing board of an expanded list plan may select and appoint investment agencies to act for or on its behalf.

(b) Securities generally; investment forms. An expanded list plan is authorized to purchase, sell, lend, and exchange the investment securities authorized under this subdivision, including puts and call options and future contracts traded on a contract market regulated by a governmental agency or by a financial institution regulated by a governmental agency. These securities may be owned directly or through shares in exchange-traded or mutual funds, or as units in commingled trusts, subject to any limitations specified in this subdivision.

(c) Government obligations. An expanded list plan is authorized to invest funds in governmental bonds, notes, bills, mortgages, and other evidences of indebtedness if the issue is backed by the full faith and credit of the issuer or the issue is rated among the top four quality rating categories by a nationally recognized rating agency. The obligations in which funds may be invested under this paragraph are guaranteed or insured issues of:

(1) the United States, one of its agencies, one of its instrumentalities, or an organization created and regulated by an act of Congress;

(2) the Dominion of Canada or one of its provinces if the principal and interest are payable in United States dollars;

(3) a state or one of its municipalities, political subdivisions, agencies, or instrumentalities; and

(4) a United States government-sponsored organization of which the United States is a member if the principal and interest are payable in United States dollars.

(d) Investment-grade corporate obligations. An expanded list plan is authorized to invest funds in bonds, notes, debentures, transportation equipment obligations, or any other longer term evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States or any of its states, or the Dominion of Canada or any of its provinces if:

(1) the principal and interest are payable in United States dollars; and

(2) the obligations are rated among the top four quality categories by a nationally recognized rating agency.

(e) Below-investment-grade corporate obligations. An expanded list plan is authorized to invest in unrated corporate obligations or in corporate obligations that are not rated among the top four quality categories by a nationally recognized rating agency if:

(1) the aggregate value of these obligations does not exceed five percent of the covered pension plan's market value;

(2) the covered pension plan's participation is limited to 50 percent of a single offering subject to this paragraph; and

(3) the covered pension plan's participation is limited to 25 percent of an issuer's obligations subject to this paragraph.

(f) Other obligations. (1) An expanded list plan is authorized to invest funds in:

(i) bankers acceptances and deposit notes if issued by a United States bank that is rated in the highest four quality categories by a nationally recognized rating agency;

(ii) certificates of deposit if issued by a United States bank or savings institution rated in the highest four quality categories by a nationally recognized rating agency or whose certificates of deposit are fully insured by federal agencies, or if issued by a credit union in an amount within the limit of the insurance coverage provided by the National Credit Union Administration;

(iii) commercial paper if issued by a United States corporation or its Canadian subsidiary and if rated in the highest two quality categories by a nationally recognized rating agency;

(iv) mortgage securities and asset-backed securities if rated in the top four quality categories by a nationally recognized rating agency;

(v) repurchase agreements and reverse repurchase agreements if collateralized with letters of credit or securities authorized in this section;

(vi) guaranteed investment contracts if issued by an insurance company or a bank that is rated in the top four quality categories by a nationally recognized rating agency or alternative guaranteed investment contracts if the underlying assets comply with the requirements of this subdivision;

(vii) savings accounts if fully insured by a federal agency; and

(viii) guaranty fund certificates, surplus notes, or debentures if issued by a domestic mutual insurance company.

(2) Sections 16A.58, 16C.03, subdivision 4, and 16C.05 do not apply to certificates of deposit and collateralization agreements executed by the covered pension plan under clause (1), item (ii).

(3) In addition to investments authorized by clause (1), item (iv), an expanded list plan is authorized to purchase from the Minnesota Housing Finance Agency all or any part of a pool of residential mortgages, not in default, that has previously been financed by the issuance of bonds or notes of the agency. The covered pension plan may also enter into a commitment with the agency, at the time of any issue of bonds or notes, to purchase at a specified future date, not exceeding 12 years from the date of the issue, the amount of mortgage loans then outstanding and not in default that have been made or purchased from the proceeds of the bonds or notes. The covered pension plan may charge reasonable fees for any such commitment and may agree to purchase the mortgage loans at a price sufficient to produce a yield to the covered pension plan comparable, in its judgment, to the yield available on similar mortgage loans at the date of the bonds or notes. The covered pension plan may also enter into agreements with the agency for the investment of any portion of the funds of the agency. The agreement must cover the period of the investment, withdrawal privileges, and any guaranteed rate of return.

(g) Corporate stocks. An expanded list plan is authorized to invest in stocks or convertible issues of any corporation organized under the laws of the United States or any of its states, any corporation organized under the laws of the Dominion of Canada or any of its provinces, or any corporation listed on an exchange that is regulated by an agency of the United States or of the Canadian national government.

An investment in any corporation must not exceed five percent of the total outstanding shares of that corporation, except that an expanded list plan may hold up to 20 percent of the shares of a real estate investment trust and up to 20 percent of the shares of a closed mutual fund.new text begin Purchase of shares of exchange-traded or mutual funds shall be consistent with paragraph (b).new text end

(h) Other investments. (1) In addition to the investments authorized in paragraphs (b) to (g), and subject to the provisions in clause (2), an expanded list plan is authorized to invest funds in:

(i) equity and debt investment businesses through participation in limited partnerships, trusts, private placements, limited liability corporations, limited liability companies, limited liability partnerships, and corporations;

(ii) real estate ownership interests or loans secured by mortgages or deeds of trust or shares of real estate investment trusts, through investment in limited partnerships, bank-sponsored collective funds, trusts, mortgage participation agreements, and insurance company commingled accounts, including separate accounts;

(iii) resource investments through limited partnerships, trusts, private placements, limited liability corporations, limited liability companies, limited liability partnerships, and corporations; and

(iv) international securities.

(2) The investments authorized in clause (1) must conform to the following provisions:

(i) the aggregate value of all investments made under clause (1), items (i), (ii), and (iii), may not exceed 35 percent of the market value of the fund for which the expanded list plan is investing;

(ii) there must be at least four unrelated owners of the investment other than the expanded list plan for investments made under clause (1), item (i), (ii), or (iii);

(iii) the expanded list plan's participation in an investment vehicle is limited to 20 percent thereof for investments made under clause (1), item (i), (ii), or (iii);

(iv) the expanded list plan's participation in a limited partnership does not include a general partnership interest or other interest involving general liability. The expanded list plan may not engage in any activity as a limited partner which creates general liability;

(v) the aggregate value of all unrated obligations and obligations that are not rated among the top four quality categories by a nationally recognized rating agency authorized by paragraph (e) and clause (1), item (iv), must not exceed five percent of the covered plan's market value; and

(vi) for volunteer firefighter relief associations, emerging market equity and international debt investments authorized under clause (1), item (iv), must not exceed 15 percent of the association's special fund market value.

(i) Supplemental plan investments. The governing body of an expanded list plan may certify assets to the State Board of Investment for investment under section 11A.17.

(j) Asset mix limitations. The aggregate value of an expanded list plan's investments under paragraphs (g) and (h) and equity investments under paragraph (i), regardless of the form in which these investments are held, must not exceed 85 percent of the covered plan's market value.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 2.

Minnesota Statutes 2016, section 424A.001, subdivision 2, is amended to read:

Subd. 2.

Fire department.

"Fire department" includes a municipal fire department deleted text begin ordeleted text end new text begin ,new text end an independent nonprofit firefighting corporationnew text begin , and a fire department established as or operated by a joint powers entity under section 471.59new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 3.

Minnesota Statutes 2016, section 424A.001, is amended by adding a subdivision to read:

new text begin Subd. 2a. new text end

new text begin Municipal. new text end

new text begin "Municipal" means of a city or township. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 4.

Minnesota Statutes 2016, section 424A.001, subdivision 3, is amended to read:

Subd. 3.

Municipality.

"Municipality" means a deleted text begin municipalitydeleted text end new text begin city or townshipnew text end which has established a fire department with which the relief association is directly associated, deleted text begin or the municipalitiesdeleted text end new text begin a city or townshipnew text end which deleted text begin havedeleted text end new text begin hasnew text end entered into a contract with the independent nonprofit firefighting corporation of which the relief association is deleted text begin a subsidiarydeleted text end new text begin directly associated, or a city or township that has entered into a contract with a joint powers entity established under section 471.59 of which the relief association is directly associatednew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 5.

Minnesota Statutes 2016, section 424A.001, subdivision 10, is amended to read:

Subd. 10.

Volunteer firefighter.

"Volunteer firefighter" means a person who is a member of the applicable fire department or the independent nonprofit firefighting corporation and is eligible for membership in the applicable relief association and:

(i) is engaged in providing emergency response services or delivering fire education or prevention services as a member of a deleted text begin municipaldeleted text end fire departmentdeleted text begin , a joint powers entity fire department, or an independent nonprofit firefighting corporationdeleted text end ;

(ii) is trained in or is qualified to provide fire suppression duties or to provide fire prevention duties under subdivision 8; and

(iii) meets any other minimum firefighter and service standards established by the fire department deleted text begin or the independent nonprofit firefighting corporationdeleted text end or specified in the articles of incorporation or bylaws of the relief association.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 6.

Minnesota Statutes 2016, section 424A.002, subdivision 1, is amended to read:

Subdivision 1.

Authorization.

A deleted text begin municipaldeleted text end fire department deleted text begin or an independent nonprofit firefighting corporationdeleted text end , with approval by the applicable municipality or municipalities, may establish a new volunteer firefighter relief association or may retain an existing volunteer firefighter relief association. A deleted text begin municipaldeleted text end fire department deleted text begin or an independent nonprofit firefighting corporationdeleted text end may be associated with only one volunteer firefighter relief association at one time.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 7.

new text begin [424A.003] CERTIFICATION OF SERVICE CREDIT. new text end

new text begin (a) When a municipal fire department, a joint powers fire department, or an independent nonprofit firefighting corporation is directly associated with the volunteer firefighters relief association, the fire chief shall certify annually by March 31 the service credit for the previous calendar year of each volunteer firefighter rendering active service with the fire department. new text end

new text begin (b) The certification shall be made to an officer of the relief association's board of trustees and to the municipal clerk or clerk-treasurer of the largest municipality in population served by the associated fire department. new text end

new text begin (c) The fire chief shall notify each volunteer firefighter rendering active service with the fire department of the amount of service credit rendered by the firefighter for the previous calendar year. The service credit notification and a description of the process and deadlines for the firefighter to challenge the fire chief's determination of service credit must be provided to the firefighter 60 days prior to its certification to the relief association and municipality. If the service credit amount is challenged, the fire chief shall accept and consider any additional pertinent information and shall make a final determination of service credit. new text end

new text begin (d) The service credit certification must be expressed as the number of completed months of the previous year during which an active volunteer firefighter rendered at least the minimum level of duties as specified and required by the fire department under the rules, regulations, and policies applicable to the fire department. No more than one year of service credit may be certified for a calendar year. new text end

new text begin (e) If a volunteer firefighter who is a member of the relief association leaves active firefighting service to render active military service that is required to be governed by the federal Uniformed Services Employment and Reemployment Rights Act, as amended, the firefighter must be certified as providing service credit for the period of the military service, up to the applicable limit of the federal Uniformed Services Employment and Reemployment Rights Act. If the volunteer firefighter does not return from the military service in compliance with the federal Uniformed Services Employment and Reemployment Rights Act, the service credits applicable to that military service credit period are forfeited and canceled at the end of the calendar year in which the time limit set by federal law occurs. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 8.

Minnesota Statutes 2016, section 424A.01, subdivision 1, is amended to read:

Subdivision 1.

Minors.

No volunteer firefighters relief association associated with a municipalitynew text begin , a joint powers entity,new text end or an independent nonprofit firefighting corporation may include as a relief association member a minor serving as a volunteer firefighter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 9.

Minnesota Statutes 2016, section 424A.01, is amended by adding a subdivision to read:

new text begin Subd. 4a. new text end

new text begin Prohibition on receipt of concurrent service credit. new text end

new text begin No firefighter may be credited with service credit in a volunteer firefighters relief association for the same hours of service for which coverage is already provided in a fund operated pursuant to chapter 353. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019, and applies to service rendered on or after that date. new text end

Sec. 10.

Minnesota Statutes 2016, section 424A.01, subdivision 5, is amended to read:

Subd. 5.

Fire prevention personnel.

(a) If the deleted text begin fire department is a municipal department and thedeleted text end applicable municipality deleted text begin approves, or if the fire department is an independent nonprofit firefighting corporation and the contracting municipalitydeleted text end or municipalities approve, the fire department may employ or otherwise utilize the services of persons as volunteer firefighters to perform fire prevention duties and to supervise fire prevention activities.

(b) Personnel serving in fire prevention positions are eligible to be members of the applicable volunteer firefighter relief association and to qualify for service pension or other benefit coverage of the relief association on the same basis as fire department personnel who perform fire suppression duties.

(c) Personnel serving in fire prevention positions also are eligible to receive any other benefits under the applicable law or practice for services on the same basis as personnel who are employed to perform fire suppression duties.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019. new text end

Sec. 11.

Minnesota Statutes 2016, section 424A.01, is amended by adding a subdivision to read:

new text begin Subd. 5a. new text end

new text begin Volunteer emergency medical personnel. new text end

new text begin Volunteer emergency medical personnel are eligible to be members of the applicable volunteer firefighters relief association and to qualify for service pension or other benefit coverage of the relief association on the same basis as fire department personnel who perform or supervise fire suppression or fire prevention duties if: new text end

new text begin (1) the fire department employs or otherwise uses the services of persons solely as volunteer emergency medical personnel to perform emergency medical response duties or supervise emergency medical response activities; new text end

new text begin (2) the bylaws of the relief association authorize the eligibility; and new text end

new text begin (3) the eligibility is approved by: new text end

new text begin (i) the municipality, if the fire department is a municipal department; new text end

new text begin (ii) the joint powers board, if the fire department is a joint powers entity; or new text end

new text begin (iii) the contracting municipality or municipalities, if the fire department is an independent nonprofit firefighting corporation. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019, and applies to service rendered on or after that date. new text end

Sec. 12.

Minnesota Statutes 2016, section 424A.01, subdivision 6, is amended to read:

Subd. 6.

Return to active firefighting after break in service.

(a) This subdivision new text begin governs the service pension calculation requirements of a firefighter who returns to active service after a break in service and new text end applies to all breaks in service, except that the resumption service requirements of this subdivision do not apply to leaves of absence made available by federal statute, such as the Family Medical Leave Act, United States Code, title 29, section 2691, and the Uniformed Services Employment and Reemployment Rights Act, United States Code, title 38, section 4301, and do not apply to leaves of absence made available by state statute, such as the Parental Leave Act, section 181.941; the Leave for Organ Donation Act, section 181.9456; the Leave for Civil Air Patrol Service Act, section 181.946; the Leave for Immediate Family Members of Military Personnel Injured or Killed in Active Service Act, section 181.947; or the Protection of Jurors' Employment Act, section 593.50.

(b)(1) If a firefighter who has ceased to perform or supervise fire suppression and fire prevention duties for at least 60 days resumes performing active firefighting with the fire department associated with the relief association, if the bylaws of the relief association so permit, the firefighter may again become an active member of the relief association. A firefighter who returns to active service and membership is subject to the service pension calculation requirements under this section.

(2) A firefighter who has been granted an approved leave of absence not exceeding one year by the fire department or by the relief association is exempt from the minimum period of resumption service requirement of this section.

(3) A person who has a break in service not exceeding one year but has not been granted an approved leave of absence and who has not received a service pension or disability benefit may be made exempt from the minimum period of resumption service requirement of this section by the relief association bylaws.

(4) If the bylaws so provide, a firefighter who returns to active relief association membership under this paragraph may continue to collect a monthly service pension, notwithstanding the service pension eligibility requirements under chapter 424A.

(c) If a former firefighter who has received a service pension or disability benefit returns to active relief association membership under paragraph (b), the firefighter may qualify for the receipt of a service pension from the relief association for the resumption service period if the firefighter meets the service requirements of section 424A.016, subdivision 3, or 424A.02, subdivision 2. No firefighter may be paid a service pension more than once for the same period of service.

(d) If a former firefighter who has not received a service pension or disability benefit returns to active relief association membership under paragraph (b), the firefighter may qualify for the receipt of a service pension from the relief association for the original and resumption service periods if the firefighter meets the service requirements of section 424A.016, subdivision 3, or 424A.02, subdivision 2, based on the original and resumption years of service c