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1987 Minnesota Session Laws

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

  

                         Laws of Minnesota 1987 

                        CHAPTER 284-H.F.No. 1213 
           An act relating to retirement; various public pension 
          plans; implementing various administrative changes; 
          making private certain membership data; conforming 
          mandatory retirement provisions for public employees 
          to the federal Age Discrimination in Employment 
          Amendments of 1986; clarifying the obligation of the 
          state auditor to undertake periodic public pension 
          plan audits; establishing combined service disability 
          and survivor benefits; amending Minnesota Statutes 
          1986, sections 13.43, by adding a subdivision; 43A.34, 
          subdivisions 1 and 4; 136.81, subdivision 3; 136.82, 
          subdivision 1; 181.81, subdivision 1; 181.811; 352.12, 
          subdivision 6; 352.96, subdivision 1, and by adding a 
          subdivision; 352D.015, subdivision 5; 353.01, 
          subdivisions 2b and 20; 353.03, subdivision 3; 353.27, 
          subdivisions 4, 10, and 12; 353.28, subdivision 5; 
          353.29, subdivision 8; 353.33, by adding a 
          subdivision; 353.34, by adding a subdivision; 353.36, 
          subdivision 2; 353.64, subdivisions 1 and 2; 353.656, 
          subdivision 6, and by adding a subdivision; 353.657; 
          354.05, subdivision 35, and by adding a subdivision; 
          354.06, subdivision 1; 354.07, subdivision 3; 354.094, 
          subdivision 1; 354.44, subdivisions 1a and 5; 354.46, 
          subdivision 5; 354.48, subdivision 7; 354.51, 
          subdivision 5; 354.55, subdivision 11; 354.62, 
          subdivision 5, and by adding a subdivision; 354A.021, 
          by adding a subdivision; 354A.21; 422A.09, subdivision 
          3; and 423.076; proposing coding for new law in 
          Minnesota Statutes, chapters 13 and 356; repealing 
          Minnesota Statutes 1986, sections 43A.34, subdivision 
          2; 125.12, subdivision 5; 353.64, subdivision 6; 
          356.301; and 473.419. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1 

                     PUBLIC PENSION PLAN DATA PRIVACY
    Section 1.  Minnesota Statutes 1986, section 13.43, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [DATA DISCLOSURE BY STATEWIDE PENSION PLANS.] 
Notwithstanding any law to the contrary, with respect to data 
collected and maintained on members, survivors and beneficiaries 
by statewide retirement systems that is classified as public 
data in accordance with subdivision 2, those retirement systems 
may be only required to disclose name, gross pension, and type 
of benefit awarded, except as required by sections 13.03, 
subdivisions 4 and 6; and 13.05, subdivisions 4 and 9.  
    Sec. 2.  [13.641] [PUBLIC EMPLOYEES RETIREMENT ASSOCIATION 
DATA.] 
    The following data on beneficiaries and survivors of public 
employees retirement association members is considered private 
data on individuals: 
    (1) address; 
    (2) birth date; 
    (3) direct deposit account number; and 
    (4) tax withholding data. 
    Sec. 3.  [13.642] [TEACHERS RETIREMENT ASSOCIATION DATA.] 
    The following data on beneficiaries and survivors of 
teachers retirement association members is considered private 
data on individuals:  
    (1) address; 
    (2) birth date; 
    (3) direct deposit account number; and 
    (4) tax withholding data. 
    Sec. 4.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 2 

            MANDATORY RETIREMENT AGE FEDERAL LAW CONFORMANCE 
    Section 1.  Minnesota Statutes 1986, section 43A.34, 
subdivision 1, is amended to read:  
    Subdivision 1.  [MANDATORY RETIREMENT AGE.] Employees in 
the executive branch who are subject to the provisions of the 
Minnesota state retirement system or the teacher's retirement 
association and who are serving as faculty members or 
administrators under a contract of unlimited terms or similar 
arrangement providing for unlimited tenure at an institution of 
higher education, as defined by United States Code, title 20, 
section 1141(a), as amended through December 31, 1986, must 
retire from employment by the state upon reaching the age of 70, 
except as provided in other law.  Other employees in the 
executive branch who are subject to the provisions of the 
Minnesota state retirement system or the teacher's retirement 
association, except as provided in subdivision 3 or 4, or as 
provided in section 354.44, subdivision 1a, are not subject to a 
mandatory retirement age provision. 
    Sec. 2.  Minnesota Statutes 1986, section 43A.34, 
subdivision 4, is amended to read:  
    Subd. 4.  [STATE PATROL, CONSERVATION AND CRIME BUREAU 
OFFICERS EXEMPTED.] Notwithstanding any provision to the 
contrary, (a) conservation officers and crime bureau officers 
who were first employed on or after July 1, 1973 and who are 
members of the state patrol retirement fund by reason of their 
employment, and members of the Minnesota state patrol division 
of the department of public safety who are members of the state 
patrol retirement association by reason of their employment, 
shall not continue employment after attaining the age of 60 
years, except for a fractional portion of one year that will 
enable the employee to complete the employee's next full year of 
allowable service as defined pursuant to section 352B.01, 
subdivision 3; and (b) conservation officers and crime bureau 
officers who were first employed and are members of the state 
patrol retirement fund by reason of their employment before July 
1, 1973, shall not continue employment after attaining the 
age specified in subdivision 1 of 70 years.  
    Sec. 3.  Minnesota Statutes 1986, section 181.81, 
subdivision 1, is amended to read:  
    Subdivision 1.  [RESTRICTION ON MANDATORY RETIREMENT AGE.] 
(a) It is unlawful for any private sector employer, public or 
private, excluding the United States government and any of its 
instrumentalities, to refuse to hire or employ, or to discharge, 
dismiss, reduce in grade or position, or demote any individual 
on the grounds that the individual has reached an age of less 
than 70, except in cases where federal statutes or rules or 
other state statutes, not including special laws compel or 
specifically authorize such action.  Nothing in this section 
shall prohibit compulsory retirement of employees who have 
attained 70 years of age or more; provided further that nothing 
in this section shall prohibit compulsory retirement of an 
employee who has attained at least 65 years of age and who for 
the two year period immediately before retirement is employed in 
an executive or a high policy making position if that employee 
is entitled to an immediate nonforfeitable annual retirement 
benefit from a pension, profit sharing, savings or deferred 
compensation plan of an employer, or any combination of these 
benefits which totals in the aggregate at least $27,000.  If the 
retirement benefit is in a form other than a straight life 
annuity, the equivalent annualized payment value of the benefit 
shall be actuarially determined according to rules promulgated 
by the commissioner of labor and industry.  Pilots and flight 
crew members shall not be subject to the provisions of this 
section or section 363.02, subdivision 6, but shall be retired 
from this employment pursuant to standards contained in 
regulations promulgated by the federal aviation administration 
for airline pilots and flight officers and are subject to the 
bona fide occupational requirements for these employees as 
promulgated by the federal aviation administration.  
    (b) Prior to June 1, 1982 every employer shall notify an 
employee in writing at least 90 days but no more than 120 days 
prior to the employee's 65th birthday of the option to continue 
employment beyond that date.  The notice shall state in a 
conspicuous manner that the employee shall respond to the notice 
within 30 days of the employee's desire to continue employment 
beyond the employee's 65th birthday.  Every employer shall post 
in a conspicuous place a notice written or approved by the 
commissioner of labor and industry stating that the mandatory 
retirement age is age 70.  Employment shall continue for as long 
as the employee desires or until the employer demonstrates that 
the employee no longer can meet the bona fide requirements, 
consistently applied, for the job or position or until the 
employee reaches the compulsory retirement age established by 
the employer.  When an employer intends to terminate an employee 
who is 65 years of age or older earlier than age 70 on the 
ground that the employee no longer can meet the bona fide 
requirements for the job or position the employer shall give the 
employee 30 days notice of that intention.  
    (c) If there exists a date on which the accrual of pension 
benefits or credits, or the contributions therefor by the 
employee or the employer, or the employee's employment related 
health and welfare benefits or insurance coverages are 
diminished or eliminated by virtue of the employee attaining a 
certain age, the employer shall notify the employee of the 
changes at least 90 but not more than 120 days prior to the 
effective date of the change.  This section, in and of itself, 
shall not be construed to require any change in the employer 
contribution levels of any pension or retirement plan, or to 
require any employer to increase an employer's or employee's 
payments for the provision of insurance benefits contained in 
any employee benefit or insurance plan.  
    Sec. 4.  Minnesota Statutes 1986, section 181.811, is 
amended to read:  
    181.811 [MANDATORY RETIREMENT AGE.] 
    Laws 1978, chapter 649 is effective April 24, 1979, subject 
to the following exceptions: 
    (1) In the case of employees covered by a collective 
bargaining agreement which was entered into between a labor 
organization and an employer and which was in effect on 
September 1, 1977, it shall take effect upon the termination of 
the agreement or on January 1, 1980, whichever comes first. 
    (2) Nothing contained in Laws 1978, chapter 649 or Laws 
1979, chapter 40 shall be construed as requiring the rehiring, 
reinstatement or payment of additional benefits to an employee 
who terminates service prior to April 24, 1979, with an employer 
who employs 20 or more employees, or the rehiring, reinstatement 
or payment of additional benefits to an employee who terminates 
service prior to June 1, 1980, with an employer who employs less 
than 20 employees, pursuant to a mandatory retirement law or 
policy which mandates retirement prior to attaining 70 years of 
age, or any other employee who terminates service prior to the 
termination of a collectively bargained contract containing a 
mandatory retirement provision. 
    (3) Laws 1978, chapter 649, section 3, is effective January 
1, 1979.  Any person who was previously a member of and has 
received a refund of accumulated employee or member 
contributions from one or more of the covered retirement funds 
enumerated in section 356.32, subdivision 2 and who terminated 
service at age 65 or older for any reason whether or not the 
person was required to terminate service pursuant to a mandatory 
retirement statute or a uniformly applied mandatory retirement 
policy established by the employer between January 1, 1979 and 
April 24, 1979 shall be entitled to repay the refund of 
accumulated employee or member contributions to the respective 
retirement fund with compound interest at the rate of six 
percent from the date the refund was received to the date the 
refund is repaid.  Upon repayment of a refund, the person shall 
be entitled if otherwise qualified to a proportionate annuity, 
with accrual to commence upon the first day of the month 
following the filing of a valid application for the annuity. 
    (4) Employers who employ fewer than 20 employees shall not 
be subject to the provisions of Laws 1978, chapter 649, until 
June 1, 1980. 
    Sec. 5.  Minnesota Statutes 1986, section 354.44, 
subdivision 1a, is amended to read:  
    Subd. 1a.  [MANDATORY RETIREMENT.] Notwithstanding the 
provisions of sections 43A.11 or 197.455 to 197.48, a member who 
is serving as a faculty member or administrator under a contract 
of unlimited tenure or similar arrangement providing for 
unlimited tenure at an institution of higher education, as 
defined in section 1201(a) of the federal Higher Education Act 
of 1965, as amended through January 1, 1987, shall terminate 
employment at the end of the academic year in which the member 
reaches the age of 70.  For purposes of this subdivision, an 
academic year shall be deemed to end August 31.  No other member 
shall be subject to a mandatory retirement age provision.  A 
member who terminates employment at any time during the academic 
year at the end of which the person is age 65 or older shall, 
for the purpose of determining eligibility for a proportionate 
retirement annuity, be considered to have been required to 
terminate employment at age 65 or older pursuant to section 
356.32.  Nothing contained in this subdivision shall preclude an 
employing unit covered by this chapter from employing a retired 
teacher as a substitute or part time teacher.  Any person who 
has attained the age of at least 65 years, who is employed as a 
substitute or part time teacher and who earns an amount equal to 
the annual maximum earnings allowable for that 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 pursuant to 
the provisions of United States Code, title 42, section 403, in 
any academic year from employment as a substitute or part time 
teacher, shall terminate employment for the remainder of that 
academic year.  No person who is required to terminate 
employment as a teacher by virtue of this subdivision shall has 
attained the age of at least 65 years and who has retired under 
this chapter may resume membership in the retirement association 
as a result of subsequent employment as a substitute or part 
time teacher.  
    Sec. 6.  Minnesota Statutes 1986, section 354A.21, is 
amended to read:  
    354A.21 [MANDATORY RETIREMENT; PROPORTIONATE ANNUITY.] 
    Notwithstanding the provisions of sections 197.46 to 197.48 
or 354A.05, a teacher subject to the provisions of this chapter 
shall terminate employment at the end of the academic year in 
which the teacher reaches the age of 70.  A teacher who 
terminates employment at any time during the academic year at 
the end of which the teacher is required to terminate employment 
pursuant to this section shall be entitled upon application to a 
proportionate retirement annuity pursuant to section 356.32.  
Nothing contained in this section shall preclude a district from 
employing a retired teacher as a substitute teacher but upon 
having earned an amount equal to the annual maximum earnings 
allowable for that 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 pursuant to the provisions of United States 
Code, title 42, section 403, in any academic year from 
employment as a substitute teacher, any person over the age of 
70 years shall terminate employment for the remainder of that 
academic year.  No person employed as a substitute teacher after 
reaching the mandatory retirement age of at least 65 years and 
who has retired under this chapter shall resume membership in 
the teachers retirement fund association by virtue of the 
employment as a substitute teacher. 
    Sec. 7.  Minnesota Statutes 1986, section 422A.09, 
subdivision 3, is amended to read:  
    Subd. 3.  [EXCEPTIONS FROM MEMBERSHIP.] The exempt class 
shall consist of: 
    (1) Employees who are members of any other organization or 
association of the city on behalf of which a tax is levied by 
the city for the purpose of paying retirement allowances to 
disabled or superannuated employees. 
    (2) Persons filling elective position; provided that any 
elective officer holding an elective city office, except a judge 
of municipal court, shall, upon written application to the 
retirement board, be entitled to become a member of the 
contributing class of the fund, and after becoming a contributor 
to the fund be entitled to all benefits conferred upon employees 
of the contributing class except retirement on a service 
allowance, which shall be granted only upon completion of ten or 
more years of service and attaining at least age 60. 
    All retirement allowances shall be computed and determined 
as provided herein, except that in determining the number of 
years of service, credit shall be given for time served as an 
elective officer or employee, or member of an executive board or 
commission or any combination thereof.  Persons who have served 
in elective positions which qualified them for membership in the 
fund prior to July 1, 1967, and who immediately thereafter hold 
elective office, first being appointed to that elective office 
in Hennepin county, may retain or resume membership in the fund 
as an elective officer of the county.  The county shall collect 
and pay to the retirement fund the employee contribution as 
required pursuant to section 422A.10.  The employer contribution 
on behalf of the elected officer shall be paid by the county.  
Before receiving a retirement allowance, or any other benefit, 
any person who claims credit for service pursuant to this 
section shall contribute to the fund an amount equal to the 
amount of contributions to the fund which the person would have 
made had the person been a contributor to the fund since the 
date the person first became eligible for membership in the 
fund, in accordance with section 422A.10, plus six percent 
compound interest. 
    (3) Persons serving without pay. 
    (4) Persons employed on a temporary basis, as doorkeepers, 
ticket takers, and attendants at the municipal auditorium, park 
recreation facilities, or like activities, employed less than 
1000 hours, or its equivalent if employed on any other basis 
than an hourly basis, in any calendar year from January 1 to 
December 31, inclusive, provided that employees who were 
contributing members of the fund on July 1, 1959 shall not be 
affected by the exclusions contained in this section. 
    (5) A person who is exempted from the contributing class by 
Minnesota Statutes 1974, section 422A.09, subdivision 3, clauses 
(4) and (5), but who is employed by and paid, in whole or in 
part, by the city or any of its boards, departments, or 
commissions, operated as a department of the city government or 
independently, if financed in whole or in part by city funds, 
including any person employed by a public corporation, and 
including any person employed by Special School District No. 1, 
each of whom is not a member of any other retirement system, who 
later becomes a contributing member of the fund may elect to 
qualify at that time for credit by paying into the fund an 
amount equal to the amount of contributions to the fund which 
the person would have made had the person been a contributor to 
the fund since the date the person first qualified as an exempt 
member of the contributing class, in accordance with section 
422A.10, plus six percent compound interest. 
    (6) Any person who is employed by the city or any of its 
boards, departments, commissions or a public corporation and is 
excluded from participation in the fund by paragraph (4) shall 
be separated from the service upon reaching the age of 70 
regardless of the provisions of the veterans preference act. 
    (7) Any person who is employed in subsidized on-the-job 
training, work experience or public service employment as an 
enrollee under the federal comprehensive employment and training 
act from and after March 30, 1978, unless the city council of 
the city of Minneapolis specifies that the person is to be 
considered as a provisional member of the retirement fund 
pursuant to section 356.451 or unless the person has as of the 
later of March 30, 1978 or the date of employment sufficient 
service credit in the retirement fund to meet the minimum 
vesting requirements for a deferred retirement annuity, or the 
employer agrees in writing to make the required employer 
contributions, including any employer additional contributions, 
on account of that person from revenue sources other than funds 
provided under the federal comprehensive training and employment 
act, or the person agrees in writing to make the required 
employer contribution in addition to the required employee 
contribution. 
    Sec. 8.  Minnesota Statutes 1986, section 423.076, is 
amended to read:  
    423.076 [RETIREMENT; POLICE AND FIRE DEPARTMENTS.] 
    A compulsory retirement age of not less than 65 years may 
be established that was in effect on March 3, 1983, for persons 
on the payroll of a police or fire department which does not 
come within the provisions of section 423.075 without being a 
violation of section 181.81 or section 363.02, subdivision 6, 
may be retained.  
    Sec. 9.  [REPEALER.] 
    Minnesota Statutes 1986, sections 43A.34, subdivision 2; 
125.12, subdivision 5; and 473.419, are repealed. 
    Sec. 10.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                                ARTICLE 3 

                STATE UNIVERSITY AND COLLEGE SUPPLEMENTAL

                        RETIREMENT PLAN CHANGES 
    Section 1.  Minnesota Statutes 1986, section 136.81, 
subdivision 3, is amended to read:  
    Subd. 3.  Prior to July 1 of each year, Each person 
described in section 136.80, subdivision 1, may indicate in 
writing, on forms provided by the executive director of the 
teachers retirement fund, the account of the Minnesota 
supplemental retirement investment fund in which salary 
deductions and state matching funds attributable to salary 
deductions be invested for the year beginning July 1.  For that 
year and thereafter until a different written indication is 
made, the executive director of the teachers retirement fund 
shall purchase with the salary deductions and state matching 
funds attributable to the salary deductions shares in the 
account of the Minnesota supplemental retirement investment fund 
chosen by the person elect to purchase shares in one or a 
combination of the income share account, the growth share 
account, the money market account, the bond market account, or 
the common stock index account established in section 11A.17.  
The person may elect to participate in one or more of the 
investment accounts in the fund by specifying, on a form 
provided by the executive director of the teachers retirement 
fund, the percentage of salary deductions and state matching 
funds to be used to purchase shares in each of the accounts. 
    Twice in any calendar year, each person described in 
section 136.80, subdivision 1, may indicate in writing on forms 
provided by the teachers retirement association a choice of 
options for subsequent purchases of shares.  After a choice is 
made, and until a different written indication is made, the 
executive director shall purchase shares in the supplemental 
fund as selected. 
    A change in choice of investment option is effective no 
later than the first pay date that occurs 30 or more days after 
receipt of the request for a change. 
    Twice in any calendar year a person described in section 
136.80, subdivision 1, may also change the investment options 
selected for all or a portion of the person's shares previously 
purchased.  If a partial transfer is made a minimum of $1,000 
must be transferred and a minimum balance of $1,000 must remain 
in the previously selected investment option.  A change is 
restricted to a transfer from one or more accounts to a single 
account.  Changes in investment options for the person's shares 
must be effected as soon as cash flow to an account practically 
permits, but not later than six months after the requested 
change. 
    If a person fails to indicate a choice as provided herein, 
the executive director of the teachers retirement fund shall 
purchase shares in the income account of the Minnesota 
supplemental retirement investment fund for the coming year.  
The shares so purchased shall stand in the name of the board of 
trustees of the teachers retirement fund, but a record shall be 
kept indicating the number of shares in each account of the 
Minnesota supplemental retirement investment fund purchased with 
the salary deductions and state matching funds attributable to 
the salary deductions of each person.  The record shall be known 
as the "employee's share account record."  The employee's share 
account record shall show, in addition to the number of shares 
therein, any cash balance of salary deductions or state matching 
funds attributable to those deductions which stands uninvested 
in shares. 
    Sec. 2.  Minnesota Statutes 1986, section 136.82, 
subdivision 1, is amended to read:  
    Subdivision 1.  The executive director of the teachers 
retirement fund shall redeem shares in the accounts of the 
Minnesota supplemental retirement investment fund standing in an 
employee's share account record under the following 
circumstances, but always in accordance with the laws and rules 
governing the Minnesota supplemental retirement investment fund: 
    (1) When requested to do so in writing on forms provided by 
the executive director of the teachers retirement fund by a 
person having shares to the credit of the employee's share 
account record, if the person is 60 55 years of age or older and 
is no longer employed by the state university board or state 
board for community colleges.  In such case the person shall 
receive the cash realized on the redemption of the shares.  The 
person may direct the redemption of not more than 20 percent of 
the person's shares in the employee's share account record in 
any one year and may not direct more than one redemption in any 
one calendar month; provided, however, that the state university 
board in the case of a person employed by the state university 
board, and the state board for community colleges in the case of 
a person employed by the state board for community colleges, 
may, upon application, in their sole discretion, permit greater 
withdrawals in any one year. 
    (2) When requested to do so in writing on forms provided by 
the executive director of the teachers retirement fund by a 
person having shares to the credit of the employee's share 
account record, if the person has left employment by the state 
university board or state board for community colleges because 
of a total and permanent disability as defined in section 
354.05, subdivision 14, and if the executive director of the 
teachers retirement fund finds that the person is totally and 
permanently disabled and will as a result be unable to return to 
similar employment, the person shall receive the cash realized 
on the redemption of the shares.  The person may direct the 
redemption of not more than 20 percent of the shares in the 
employee's share account record in any one year and may not 
direct more than one redemption in any one calendar month; 
provided, however, that the state university board in the case 
of a person employed by the state university board, and the 
state board for community colleges in the case of a person 
employed by the state board for community colleges, may, upon 
application, in their sole discretion, permit greater 
withdrawals in any one year.  If the person returns to good 
health, the person shall owe no restitution to the state or any 
fund created by its laws for a redemption directed pursuant to 
this paragraph. 
    (3) In the event of the death of a person having shares to 
the credit of the employee's share account record and leaving a 
surviving spouse, then when requested to do so in writing on 
forms provided by the executive director of the teachers 
retirement fund by the surviving spouse.  The surviving spouse 
shall receive the cash realized on the redemption of the 
shares.  The surviving spouse may direct the redemption of not 
more than 20 percent of the shares in the deceased spouse's 
employee's share account record in any one year and may not 
direct more than one redemption in any one calendar month; 
provided, however, that the state university board in the case 
of a person employed by the state university board, and the 
state board for community colleges in the case of a person 
employed by the state board for community colleges, may, upon 
application, in their sole discretion, permit greater 
withdrawals in any one year.  In that case the surviving spouse 
shall receive the cash realized from the redemption of the 
shares.  Upon the death of the surviving spouse any shares 
remaining in the employee's share account record shall be 
redeemed by the executive director of the teachers retirement 
fund and the cash realized therefrom distributed to the estate 
of the surviving spouse. 
    (4) In the event of the death of a person having shares to 
the credit of the employee's share account record and leaving no 
surviving spouse, then the executive director of the teachers 
retirement fund shall redeem all shares to the credit of the 
employee's share account record and pay the cash realized 
therefrom to the estate of the deceased person. 
    (5) When requested to do so in writing on forms provided by 
the executive director of the teachers retirement fund by a 
person having shares to the credit of the employee's share 
account record, if the person is no longer employed by the state 
university board or state board for community colleges, but does 
not qualify under the provisions of paragraphs (1) to (4).  In 
that case one-half of the cash realized on the redemption of 
shares shall be received by the person and one-half shall become 
the property of the supplemental retirement plan account of the 
teachers retirement fund.  Annually on July 1 the cancellations 
of the previous 12 months shall be prorated among the employees 
share accounts in proportion to the value which each account 
bears to the total value of all share accounts. 
     Sec. 3.  [EFFECTIVE DATE.] 
    Section 1 is effective January 1, 1988.  Section 2 is 
effective July 1, 1987. 

                               ARTICLE 4 

        MINNESOTA STATE RETIREMENT SYSTEM ADMINISTRATIVE CHANGES
    Section 1.  Minnesota Statutes 1986, section 352.12, 
subdivision 6, is amended to read:  
    Subd. 6.  [DEATH AFTER SERVICE TERMINATION.] Except as 
provided in subdivision 1, if a former employee covered by the 
system dies and has not received an annuity, a retirement 
allowance or a disability benefit, a refundment refund shall be 
made to the last designated beneficiary or, if there be none, to 
the surviving spouse or, if none, to the employee's surviving 
children in equal shares or, if none, to the employee's 
surviving parents in equal shares or, if none, to the 
representative of the estate in an amount equal to accumulated 
employee contributions.  The refund must include interest at the 
rate of five percent per year compounded annually.  The interest 
must be computed to the first day of the month in which the 
refund is processed and be based on fiscal year balances. 
    Sec. 2.  Minnesota Statutes 1986, section 352.96, 
subdivision 1, is amended to read:  
    Subdivision 1.  [WRITTEN AGREEMENT FOR DEFERMENT 
ENTITLEMENT TO DEFER COMPENSATION.] At the request of an officer 
or employee of the state of Minnesota or, an officer or employee 
of any political subdivision thereof, or an employee covered 
by any of the a retirement funds fund enumerated in section 
356.20, subdivision 2, the appointing authority shall by payroll 
deduction defer the payment of part of the compensation of the 
officer or employee.  The amount to be deferred must be as 
provided in a written agreement between the officer or employee 
and the state of Minnesota, the political subdivision, or other 
employing unit whose employees are covered by any of the public 
retirement funds enumerated in section 356.20, subdivision 2,.  
The agreement must be in a form specified by the executive 
director of the Minnesota state retirement system in such a 
manner as will qualify the deferred amount for benefits afforded 
under federal and state tax laws, rules, and rulings. 
    Sec. 3.  Minnesota Statutes 1986, section 352.96, is 
amended by adding a subdivision to read:  
    Subd. 1a.  [FAILURE TO IMPLEMENT PLAN.] Implementation of 
the deferred compensation plan by the employing unit must be 
completed within 30 days of the request as provided in 
subdivision 1.  If the employing unit fails to implement the 
deferred compensation plan, the employing unit may not defer 
compensation under any existing or new deferred compensation 
plan from the date of the request until the date on which the 
deferred compensation plan provided for in this section is 
implemented.  The executive director of the Minnesota state 
retirement system may order any employing unit that fails to 
implement the deferred compensation plan provided for in this 
section upon a valid request to undertake that implementation 
and may enforce that order in appropriate legal proceedings.  
    Sec. 4.  Minnesota Statutes 1986, section 352D.015, 
subdivision 5, is amended to read:  
    Subd. 5.  [COVERED EMPLOYMENT.] "Covered employment" means 
employment covered by this chapter or by chapter 352.  
    Sec. 5.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 5 

                PUBLIC EMPLOYEES RETIREMENT ASSOCIATION 

                         ADMINISTRATIVE CHANGES 
    Section 1.  Minnesota Statutes 1986, section 353.01, 
subdivision 2b, is amended to read:  
    Subd. 2b.  [EXCLUDED EMPLOYEES.] The following persons are 
excluded from the meaning of "public employee": 
    (a) Persons employed for professional services where such 
service is incidental to regular professional duties.  Service 
is incidental if compensation for it amounts to no more than 25 
percent of a person's total annual gross earnings for all 
professional duties. 
    (b) Election officers. 
    (c) Independent contractors and their employees. 
    (d) Patient and inmate help in governmental subdivision 
charitable, penal and correctional institutions. 
    (e) Members of boards, commissions, bands and others who 
serve the governmental subdivision intermittently. 
    (f) Employees who hold positions of an essentially 
temporary or seasonal character, provided such employment does 
not continue for a period in excess of 120 working days in any 
calendar year or in any school year for school employees.  
Immediately following the expiration of such 120 working days if 
such employees continue in public service and earn in excess of 
$325 in any one calendar month, the department heads must then 
report all such employees for membership and must cause employee 
contributions to be made on behalf of such employees in 
accordance with section 353.27, subdivision 4, and they shall 
remain members until termination of public service. 
    (g) Part-time employees who receive monthly compensation 
not exceeding $325, and part-time employees and elected 
officials whose annual compensation is stipulated in advance, in 
writing, to be not more than $3,900 per calendar year or per 
school year for school employees for employment expected to be 
of a full year's duration or more than the prorated portion of 
$3,900 per employment period for employment expected to be of 
less than a full year's duration, except that members shall 
continue their membership until termination of public service.  
    (h) Persons who first occupy an elected office after March 
1, 1978, the compensation for which does not exceed $325 per 
month. 
    (i) Emergency employees who are employed by reason of work 
caused by fire, flood, storm or similar disaster. 
    (j) Employees who by virtue of their employment are 
required to contribute to any other pension, relief or 
retirement fund established for the benefit of officers and 
employees of a governmental subdivision, except as an act of the 
legislature has specifically enabled participation by employees 
of a designated governmental subdivision in a plan supplemental 
to the public employees retirement association; provided that 
this clause shall not prevent a person from contributing to the 
public employees retirement association and also belonging to or 
contributing to another public pension fund for other service 
occurring during the same period of time. 
    (k) Police matrons employed in a police department of any 
city who are transferred to the jurisdiction of a joint city and 
county detention and corrections authority. 
    (l) Chaplains and nuns who have taken a vow of poverty as 
members of a religious order. 
    (m) Full-time students who are enrolled and are regularly 
attending classes at an accredited school, college or 
university; provided, no person employed full time by a 
governmental subdivision shall be exempt under this paragraph. 
    (n) Resident physicians, medical interns and pharmacist 
interns who are serving in public hospitals. 
    (o) Appointed or elected officers, paid entirely on a fee 
basis, and who were not members on June 30, 1971. 
    (p) Nothing in Laws 1973, chapter 753 shall be interpreted 
to impair or revoke any option exercised under Laws 1963, 
chapter 793. 
    (q) Persons employed in subsidized on-the-job training, 
work experience or public service employment as enrollees under 
the federal Comprehensive Employment and Training Act from and 
after March 30, 1978, unless the person has as of the later of 
March 30, 1978 or the date of employment sufficient service 
credit in the retirement fund to meet the minimum vesting 
requirements for a deferred retirement annuity, or the employer 
agrees in writing on forms prescribed by the executive director 
to make the required employer contributions, including any 
employer additional contributions, on account of that person 
from revenue sources other than funds provided under the federal 
Comprehensive Training and Employment Act, or the person agrees 
in writing on forms prescribed by the executive director to make 
the required employer contributions in addition to the required 
employee contribution. 
    (r) Town, city or county assessors elected or appointed 
pursuant to chapter 273 who do not receive compensation in 
excess of $325 per month from any one employing governmental 
subdivision or who are employed pursuant to an employment 
contract which sets forth the total compensation to be paid and 
the length of service, not to exceed three months in duration, 
required for the performance of the contract and which was 
entered into in advance of the commencement of employment. 
    (s) (r) A person holding a part time adult supplementary 
vocational technical school license who renders part time 
teaching service in a vocational technical school if (1) the 
service is incidental to the person's regular nonteaching 
occupation; and (2) the applicable vocational technical school 
stipulates annually in advance that the part time teaching 
service will not exceed 300 hours in a fiscal year; and (3) the 
part time teaching service actually does not exceed 300 hours in 
a fiscal year. 
    (t) (s) A person exempt from licensure pursuant to section 
125.031. 
    Sec. 2.  Minnesota Statutes 1986, section 353.01, 
subdivision 20, is amended to read:  
    Subd. 20.  [SURVIVING SPOUSE.] "Surviving spouse" means the 
unremarried spouse of a deceased member who was living with had 
the same legal residence as the member at the time of death, or 
at the time the member became totally and permanently disabled. 
    Sec. 3.  Minnesota Statutes 1986, section 353.03, 
subdivision 3, is amended to read:  
    Subd. 3.  [DUTIES AND POWERS OF THE BOARD.] (a) The board 
shall elect a president and vice-president.  The board shall 
approve the staffing complement necessary to administer the 
fund.  The cost of administering this chapter must be paid by 
the fund.  
    (b) The board shall 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.  It shall adopt, alter, 
and enforce reasonable rules consistent with the laws of the 
state 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.  It shall pass upon and 
allow or disallow all applications for membership in the fund 
and shall allow or disallow claims for withdrawals, pensions, or 
benefits payable from the fund.  It shall adopt an appropriate 
mortality table based on experience of the fund as recommended 
by the association actuary, with interest set at the rate 
specified in section 356.215, subdivision 4, clause (4).  It 
shall provide for the payment out of the fund of all necessary 
expenses for the administration of the fund and of all claims 
for withdrawals, pensions, or benefits allowed.  The board shall 
approve or disapprove all recommendations and actions of the 
executive director made subject to its approval or disapproval 
by subdivision 3a. 
    (c) 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.  The board shall establish procedures 
to assure that a benefit applicant and recipient may have a 
review of a benefit eligibility or benefit amount determination 
affecting the applicant or recipient.  The review procedure may 
afford the benefit applicant or benefit recipient an opportunity 
to present views at any review proceeding conducted, but is not 
a contested case under chapter 14. 
    (d) 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 finance.  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. 
    (e) The board shall establish procedures governing 
reimbursement of expenses to board members.  These procedures 
shall define the types of activities and expenses that qualify 
for reimbursement, shall provide that all out-of-state travel 
must be authorized by the board, and shall provide for 
independent verification of claims for expense reimbursement. 
The procedures must comply with applicable rules and policies of 
the department of finance, the department of administration, and 
the department of employee relations. 
     (f) 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. 4.  Minnesota Statutes 1986, section 353.27, 
subdivision 4, is amended to read:  
    Subd. 4.  [EMPLOYERS REPORTING REQUIREMENTS; CONTRIBUTIONS; 
MEMBER STATUS.] The head of each department is hereby directed 
to cause employee contributions to be deducted from the salary 
of each member and to issue or approve one voucher payable to 
the state treasurer for the aggregate amount so deducted from 
such salaries, and at the same time to issue or approve one 
voucher for the aggregate amount of the employer contributions 
and the additional employer contributions for the same period of 
employment as that covered by the employee contributions, and to 
cause the same to be received not later than 20 calendar days 
thereafter in the office of the association.  The head of each 
department shall, for each pay period in which employee 
contributions are deducted, submit to the association a salary 
deduction report, in the form prescribed by the executive 
director, showing (a) the legal names and the association 
membership numbers, listed in alphabetical order, of all 
members; (b) the legal names of all new public employees and the 
effective dates of appointment; (c) the amount of each salary 
deduction; (d) the amount of salary from which each deduction 
was made; (e) effective dates of all terminations of public 
service on account of members and if such terminations were 
caused by death or retirement, there shall be inserted after 
such date the applicable word, "death" or "retirement" status 
code as set by the association; (f) effective dates of all 
temporary layoffs and leaves of absence and if such leaves are 
sick leaves, there shall be inserted after such date the words, 
"sick leave" applicable status code as set by the association; 
and (g) the beginning and ending dates of the payroll period 
covered and the date of actual payment.  Additionally, reports 
of contributions shall be accompanied by a membership enrollment 
form for each new employee in the form prescribed by the 
executive director, and it shall be the responsibility of 
department heads to obtain such enrollment forms from new 
employees to be submitted to the association within 30 days 
following the date of employment.  The employers shall furnish 
such additional reports on magnetic media or other form of 
report as may be requested by the association executive director.
    Sec. 5.  Minnesota Statutes 1986, section 353.27, 
subdivision 10, is amended to read:  
    Subd. 10.  [EMPLOYERS; FURNISH COPIES OF PAYROLL 
ABSTRACTS.] The head of each department is required to furnish 
the executive director with a carbon or duplicate copy of the 
departmental payroll abstracts for the last pay period during 
the months of January and July March and October, respectively, 
in each year.  It shall be the duty of said executive director 
to check the copies of all such payroll abstracts against the 
membership records of the association to ascertain whether or 
not any omissions have been made by any department head in the 
reporting of any new public employees for membership. 
    Sec. 6.  Minnesota Statutes 1986, section 353.27, 
subdivision 12, is amended to read:  
    Subd. 12.  [OMITTED SALARY DEDUCTIONS; OBLIGATIONS.] In the 
case of omission of required deductions from salary of an 
employee, past due for a period of 60 days or less, the head of 
the department shall deduct from the employee's next salary 
payment and forthwith remit to the executive director the amount 
of the employee contribution delinquency, with cumulative 
interest thereon at the rate of six percent per annum, 
compounded annually, from the date or dates each delinquent 
employee contribution was first payable, such interest to be 
paid by the employer.  To the extent that any such omitted 
required deductions are not paid by the employee, they shall 
constitute a liability of the governmental subdivision which 
failed to make said required deductions, with interest thereon 
as hereinbefore specified.  After July 1, 1973, any such omitted 
required deductions, past due for a period in excess of 60 days, 
shall become the sole obligation of the governmental subdivision 
from the time such deductions were first payable, together with 
interest thereon as hereinbefore specified.  Any amount so due, 
together with employer and additional employer contributions at 
the rates and in the amounts specified in subdivisions 3 and 3a, 
with interest thereon at the rate of six percent compounded 
annually from the date they were first payable, shall be paid 
from the proceeds of a tax levy made pursuant to section 353.28, 
or from other funds available to the employer.  Unless otherwise 
indicated, this subdivision shall have both retroactive and 
prospective application, and the governmental subdivision is 
liable retroactively and prospectively for all amounts due 
hereunder.  No action for the recovery of delinquent employee 
and employer contributions or interest thereon shall on 
contributions may be commenced and no payment of delinquent 
contributions may be made or accepted unless the association has 
already commenced action for recovery of delinquent 
contributions, after the expiration of three calendar years next 
following the calendar year in which the contributions were 
omitted. 
    Sec. 7.  Minnesota Statutes 1986, section 353.28, 
subdivision 5, is amended to read:  
    Subd. 5.  Any amount which becomes due and payable pursuant 
to this section or section 353.27, subdivision 4 shall bear 
compound interest at the rate of six percent per year from the 
date due for the next five calendar days, and compound interest 
at the rate of ten percent per year for amounts past due in 
excess of five calendar days until the date paid payment is 
actually received in the office of the association, with a 
minimum charge of $5 $10. 
    Sec. 8.  Minnesota Statutes 1986, section 353.29, 
subdivision 8, is amended to read:  
    Subd. 8.  [ANNUITIES; PAYMENT; EVIDENCE OF RECEIPT.] 
Payment of any annuity or benefit for a given month shall be 
mailed by the association to the annuitant, recipient of a 
disability benefit, or survivor, during the first week of that 
month.  Evidence of receipt of warrants issued by the 
association in payment of an annuity or benefit shall be 
submitted by the payee thereof to the association periodically 
at times specified by the board of trustees, together with a 
written declaration that the annuitant or recipient of a 
disability benefit has or has not returned to public service; 
that the surviving dependent spouse has or has not remarried; 
and shall be furnished on forms provided by the executive 
director thereof, before the association shall pay to 
the annuitant, disability recipient, or survivor for the next 
ensuing month, the annuity or benefit to which the person 
otherwise may be entitled.  In lieu of the evidence of receipt 
of warrants for recipients of an annuity or a benefit, the board 
may contract for professional services to identify deceased 
annuitants and benefit recipients through a review of nationally 
maintained death records. 
    Sec. 9.  Minnesota Statutes 1986, section 353.33, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [RECOVERY OF DISABILITY OVERPAYMENTS.] An 
overpayment of disability benefits must be recovered by the 
executive director by suspending or reducing the payment of 
disability benefits, survivor benefits, survivor annuities, 
refunds, or retirement annuities until all overpaid money has 
been recovered. 
    Sec. 10.  Minnesota Statutes 1986, section 353.34, is 
amended by adding a subdivision to read: 
    Subd. 7.  [SICK LEAVE.] A member who is on an authorized 
sick leave and has received a maximum of one year of allowable 
service in accordance with section 353.01, subdivision 16, 
paragraph (4), and who does not return to public service for at 
least 120 calendar days following the year of allowable service 
may elect to receive a refund of accumulated deductions as 
provided in subdivision 2.  Application for a refund may not be 
made before the expiration of 120 calendar days following the 
end of one year of allowable service for employees on authorized 
sick leave. 
    Sec. 11.  Minnesota Statutes 1986, section 353.36, 
subdivision 2, is amended to read:  
    Subd. 2.  [EMPLOYEE CONTRIBUTIONS; INTEREST; MATCHING 
PAYMENT.] A member who has at least one year of allowable 
service with the association, whose public service terminated 
before July 1, 1982, and who has prior public service on which 
salary deductions were not taken for the retirement fund and who 
does not have the required minimum number of years of allowable 
service credit to qualify for an annuity, may apply for an 
annuity if otherwise qualified, and within 90 days thereafter 
purchase whatever period of the member's prior public service 
which is necessary to bring the member's total allowable service 
credit to the minimum, provided that the most recent period of 
prior uncredited public service shall be purchased first.  The 
member may gain allowable service credit by paying the 
applicable percentage of on the salary covered under the law in 
effect at the time that the prior public service was performed.  
The applicable member contribution percentage, if the member is 
a basic member, the applicable percentage is eight percent, and 
if the member is a coordinated member, the applicable percentage 
is four percent.  An amount equal to the employer and employer 
additional contributions specified in section 353.27, 
subdivisions 3 and 3a, plus interest on the total amount 
representing employee, employer and employer additional 
contributions at the rate of six percent per annum compounded 
annually from the date first payable to the date payment is 
made, shall also be paid.  The employer, at its sole discretion, 
may agree to pay the amount representing the employer and 
employer additional contributions pursuant to subdivision 2a.  
An annuity shall accrue as provided in section 353.29, 
subdivision 7, but no annuity shall be paid until the 
applicant's payment is made in full for the prior public 
service.  If payment is not made within such 90 days, the 
application for retirement shall be void. 
    Sec. 12.  Minnesota Statutes 1986, section 353.64, 
subdivision 1, is amended to read:  
    Subdivision 1.  Any person who prior to July 1, 1961, was a 
member of the police and fire fund, by virtue of being a police 
officer or firefighter, shall as long as the person remains in 
either position, be deemed to continue membership in the fund.  
Any person who was employed by a governmental subdivision as a 
police officer and was a member of the police and fire fund on 
July 1, 1978 by virtue of being a police officer as defined by 
this section on that date shall be entitled, if employed by the 
same governmental subdivision in a position in the same 
department in which the person was employed on that date, to 
continue membership in the fund whether or not that person has 
the power of arrest by warrant after that date.  Any other 
employee serving on a full-time basis as a police officer or 
firefighter on or after July 1, 1961, shall become a member of 
the public employees police and fire fund.  Any employee serving 
on less than a full-time basis as a police officer shall become 
a member of the public employees police and fire fund only after 
a resolution stating that the employee should be covered by the 
police and fire fund is adopted by the governing body of the 
governmental subdivision employing the person declaring that the 
position which the person holds is that of a police officer.  
Any employee serving on less than a full-time basis as a 
firefighter, other than a volunteer firefighter, shall become a 
member of the public employees police and fire fund only after a 
resolution stating that the employee should be covered by the 
police and fire fund is adopted by the governing body of the 
governmental subdivision employing the person declaring that the 
position which the person holds is that of a firefighter.  Any 
police officer or firefighter who by virtue of that employment 
is required to contribute to any other pension, relief, or 
retirement fund established for the benefit of officers or 
employees of a governmental subdivision other than a volunteer 
firefighters relief association to which sections 69.771 to 
69.776 apply shall not be a member of this fund. 
    Sec. 13.  Minnesota Statutes 1986, section 353.64, 
subdivision 2, is amended to read:  
    Subd. 2.  Before a governing body may declare a position to 
be that of a police officer, the duties of the person so 
employed shall, as a minimum, include services as an officer of 
a designated police department or sheriff's office or person in 
charge of a designated police department or sheriff's 
office whose primary job it is to enforce the law, who is 
licensed by the Minnesota board of peace officer standards and 
training under sections 626.84 to 626.855, who is engaged in the 
hazards of protecting the safety and property of others and who 
has the power to arrest by warrant. 
    Sec. 14.  Minnesota Statutes 1986, section 353.656, 
subdivision 6, is amended to read:  
    Subd. 6.  [RETIREMENT STATUS AT AGE 55.] All disability 
benefits payable under this section shall terminate when the 
disabled firefighter or police officer becomes 55 years of age.  
If the person is still disabled when the person attains the age 
of 55 years, the person shall be deemed to be a retired member 
and, if the person had elected an optional annuity pursuant to 
subdivision 1a, shall receive an annuity in accordance with the 
terms of the optional annuity previously elected, or, if the 
person had not elected an optional annuity pursuant to 
subdivision 1a, may then elect to receive either a normal 
retirement annuity computed pursuant to section 353.651, or an 
optional annuity as provided in section 353.30, subdivision 3, 
or normal retirement annuity equal to the disability benefit 
paid before the person reached age 55.  Any disabled person who 
becomes age 55 shall have the annuity computed in accordance 
with the law in effect upon attainment of age 55.  Election of 
an optional annuity shall be made prior to the person attaining 
the age of 55 years.  If an optional annuity is elected, the 
election shall be effective on the date on which the person 
attains the age of 55 years and the optional annuity shall begin 
to accrue on the first day of the month next following the month 
in which the person attains the age of 55 years.  
    Sec. 15.  Minnesota Statutes 1986, section 353.656, is 
amended by adding a subdivision to read: 
    Subd. 7.  [DISABLED MEMBERS.] Notwithstanding the age-55 
requirement of section 353.651, subdivision 1, a member of the 
police and fire fund age 55 or over who has five or more years 
of allowable service but less than ten years of allowable 
service and who becomes disabled may elect to draw a retirement 
annuity in accordance with section 353.651, subdivision 3, based 
on the actual years of allowable service. 
    Sec. 16.  Minnesota Statutes 1986, section 353.657, is 
amended to read:  
    353.657 [SURVIVOR BENEFITS.] 
    Subdivision 1.  In the event any member of the police and 
fire fund shall die from any cause, the association shall grant 
survivor benefits to any surviving spouse who was residing with 
had the same legal residence as the member at the time of death 
and who was married to the member for a period of at least one 
year, except that if death occurs in the line of duty no time 
limit is required, and to a dependent child or children, 
unmarried and under the age of 18 years.  The spouse and child 
or children shall be entitled to monthly benefits as provided in 
the following subdivisions. 
    Subd. 2.  The spouse, for life or until remarriage, shall 
receive a monthly benefit equal to 30 percent of the member's 
average full-time monthly salary earned rate as a police officer 
or firefighter on which employee contributions were paid over 
the last full six months of allowable service preceding death in 
effect over the last six months of allowable service preceding 
the month in which death occurred. 
    Subd. 2a.  If a member or former member who has attained 
the age of at least 50 years and has credit for not less than 
ten years allowable service or who has credit for at least 30 
years of allowable service, regardless of age attained, dies 
before public service has terminated, or if an employee who has 
filed a valid application for an annuity or disability benefit 
prior to termination of public service dies before the annuity 
or benefit has become payable, notwithstanding any designation 
of beneficiary to the contrary, the surviving spouse may elect 
to receive, in lieu of a refund with interest provided in 
section 353.32, subdivision 1, or survivor benefits otherwise 
payable pursuant to subdivisions 1 and 2, an annuity equal to 
the 100 percent joint and survivor annuity which the member 
could have qualified for on the date of death, computed as 
provided in sections 353.651, subdivisions 2 and 3, and 353.30, 
subdivision 3.  The surviving spouse may apply for the annuity 
at any time after the date on which the deceased employee would 
have attained the required age for retirement based on the 
employee's allowable service.  Sections 353.34, subdivision 3, 
and 353.71, subdivision 2, apply to a deferred annuity payable 
under this subdivision.  No payment shall accrue beyond the end 
of the month in which entitlement to such annuity has 
terminated.  An amount equal to the excess, if any, of the 
accumulated contributions which were credited to the account of 
the deceased employee over and above the total of the annuities 
paid and payable to the surviving spouse shall be paid to the 
deceased member's last designated beneficiary or, if none, to 
the legal representative of the estate of such deceased member.  
Any member may request in writing that this subdivision not 
apply and that payment be made only to the designated 
beneficiary, as otherwise provided by this chapter. 
    Subd. 3.  Each dependent child, until the child reaches the 
age of 18 years, shall receive a monthly benefit equal to ten 
percent of the member's average full-time monthly salary earned 
rate as a police officer or firefighter on which employee 
contributions were paid over the last full six months of 
allowable service preceding death in effect over the last six 
months of allowable service preceding the month in which death 
occurred.  Payments for the benefit of any qualified dependent 
child under the age of 18 years shall be made to the surviving 
parent, or if there be none, to the legal guardian of the child 
or to any adult person with whom the child may at the time be 
living, provided only that the parent or other person to whom 
any amount is to be paid shall have advised the board in writing 
that the amount will be held or used in trust for the benefit of 
the child.  The maximum monthly benefit for any one family shall 
not exceed an amount equal to 50 percent of the member's 
specified average monthly salary, and the minimum benefit per 
family shall not be less than 30 percent of the member's 
specified average monthly salary. 
    Subd. 4.  If the member shall die under circumstances which 
entitle a surviving spouse and dependent children to receive 
benefits under the workers' compensation law, the amounts so 
received by them shall not be deducted from the benefits payable 
under this section. 
    Sec. 17.  [RETROACTIVE AUTHORIZATION OF PAYMENTS TO CERTAIN 
DISABILITANTS.] 
    Notwithstanding any law to the contrary, a disabilitant who 
became eligible for an annuity under section 15 after May 31, 
1986, but before June 1, 1987, may receive an annuity 
retroactive to the first of the month following the date of 
disability. 
    Sec. 18.  [REPEALER.] 
    Minnesota Statutes 1986, section 353.64, subdivision 6, is 
repealed. 
    Sec. 19.  [EFFECTIVE DATE.] 
    Sections 15 and 17 are effective June 1, 1986.  Sections 1 
to 14, 16, and 18 are effective the day following final 
enactment.  

                               ARTICLE 6 

         TEACHERS RETIREMENT ASSOCIATION ADMINISTRATIVE CHANGES
    Section 1.  Minnesota Statutes 1986, section 354.05, 
subdivision 35, is amended to read:  
    Subd. 35.  [SALARY.] "Salary" means the compensation paid 
to a teacher excluding lump sum annual or sick leave payments 
and all forms of severance 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.  "Salary" does not mean any form of payment 
made in lieu of any other employer paid fringe benefit or 
expense, or any form of severance payments.  Severance 
payments includes include, but is are not limited to:  
    (a) payments to an employee to terminate employment;  
    (b) payments, or that portion of payments, that are not 
clearly for performance of services to the employer; and 
    (c) payments to an administrator or former administrator 
serving as an advisor to a successor or as a consultant to the 
employer under an agreement to terminate employment within two 
years or less for compensation that is significantly different 
than the most recent contract salary. 
    Sec. 2.  Minnesota Statutes 1986, section 354.05, is 
amended by adding a subdivision to read: 
    Subd. 37.  [TERMINATION OF TEACHING SERVICE.] "Termination 
of teaching service" means the withdrawal of a member from 
active teaching service by resignation or the termination of the 
member's teaching contract by the employer. 
    Sec. 3.  Minnesota Statutes 1986, section 354.06, 
subdivision 1, is amended to read:  
    Subdivision 1.  The management of the fund shall be vested 
in a board of eight trustees which shall be known as the board 
of trustees of the teachers retirement fund.  It shall be 
composed of the following persons:  the commissioner of 
education, the commissioner of finance, the commissioner of 
commerce, four members of the fund who shall be elected by the 
members of the fund and one retiree who shall be elected by the 
retirees of the fund.  The five elected members of the board of 
trustees shall be chosen by mail ballot in a manner which shall 
be fixed by the board of trustees of the fund.  In every odd 
numbered year there shall be elected two members of the fund to 
the board of trustees for terms of four years commencing on the 
first of July next succeeding their election.  In every odd 
numbered year there shall be elected one retiree of the fund to 
the board of trustees for a term of two years commencing on the 
first of July next succeeding the election.  The filing of 
candidacy for a retiree election must include a petition of 
endorsement signed by at least ten retirees of the fund.  Each 
election shall be completed by June first of each succeeding odd 
numbered year.  In the case of elective members, any vacancy 
shall be filled by appointment by the remainder of the board, 
and the appointee shall serve until the members or retirees of 
the fund at the next regular election have elected a trustee to 
serve for the unexpired term caused by the vacancy.  No member 
or retiree shall be appointed by the board, or elected by the 
members of the fund as a trustee if the person is not a member 
or retiree of the fund in good standing at the time of the 
appointment or election.  It shall be the duty of the board of 
trustees to faithfully administer the law without prejudice and 
consistent with the expressed intent of the legislature.  They 
shall act as trustees with a fiduciary obligation to the state 
of Minnesota which created the fund, the taxpayers which aid in 
financing it and the teachers who are its beneficiaries. 
    Sec. 4.  Minnesota Statutes 1986, section 354.07, 
subdivision 3, is amended to read:  
    Subd. 3.  The attorney general shall be legal advisor to 
the board and the executive director.  The board may sue or be 
sued in the name of the board of trustees of the teachers 
retirement fund and in all actions brought by or against it the 
board shall be represented by the attorney general.  Venue of 
all actions is in the Ramsey county district court. 
    Sec. 5.  Minnesota Statutes 1986, section 354.094, 
subdivision 1, is amended to read:  
    Subdivision 1.  [SERVICE CREDIT CONTRIBUTIONS.] A member 
granted an extended leave of absence pursuant to section 125.60 
or 136.88, except as provided in subdivision 1a or 1b, may pay 
employee contributions and receive allowable service credit 
toward annuities and other benefits under this chapter, for each 
year of the leave provided the member and the employing board 
make the required employer contribution in any proportion they 
may agree upon, during the period of the leave which shall not 
exceed five years.  Except as provided in subdivision 1a or 1b, 
the state shall not pay employer contributions into the fund for 
any year for which a member is on extended leave.  The employee 
and employer contributions shall be based upon the rates of 
contribution prescribed by section 354.42 for the salary 
received during the year immediately preceding the extended 
leave.  Payments for the years for which a member is receiving 
service credit while on extended leave shall be made on or 
before the later of June 30 of each fiscal year for which 
service credit is received or within 30 days after first 
notification by the association of the amount due, whichever is 
later if requested by the member, is given by the association.  
No payment is permitted after the following September 30.  
Payments received after June 30 must include six percent 
interest from June 30 through the end of the month in which 
payment is received. 
    Sec. 6.  Minnesota Statutes 1986, section 354.44, 
subdivision 5, is amended to read:  
    Subd. 5.  [RESUMPTION OF TEACHING.] Any person who retired 
under any provision of any retirement law applicable to schools 
and institutions covered by the provisions of this chapter and 
has thereafter resumed teaching in any school or institution to 
which this chapter applies shall continue to receive payments in 
accordance with the annuity except that during any year in which 
the person's income from the teaching service is in an amount 
equal to or greater than the annual maximum earnings allowable 
for that 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 pursuant to the provisions of United States Code, title 
42, section 403.  For the purpose of this subdivision, income 
from teaching service shall include, but is not limited to:  
    (a) all income from for services performed as a consultant 
or an independent contractor for an employer unit covered by the 
provisions of this chapter; and 
    (b) the greater of either the income received or an amount 
based on the rate paid with respect to an administrative 
position, consultant, or independent contractor in an employer 
unit with approximately the same number of pupils and at the 
same level as the position occupied by the person who resumes 
teaching service.  
    In the event that the person has not yet reached the 
minimum age for the receipt of social security benefits, the 
maximum earnings for the person shall be equal to the annual 
maximum earnings allowable for the minimum age for the receipt 
of social security benefits.  The amount in excess of the 
applicable reemployment income maximum specified in this 
subdivision shall be deducted from the annuity payable for the 
year immediately following the year in which the excess amount 
was earned.  After a person has reached the age of 70, the 
person shall receive the annuity in full regardless of the 
amount of income. 
    Sec. 7.  Minnesota Statutes 1986, section 354.46, 
subdivision 5, is amended to read:  
    Subd. 5.  [PAYMENT TO DESIGNATED BENEFICIARY.] Any member 
and the spouse of the member may make a joint specification in 
writing on a form prescribed by the executive director that the 
benefits provided in subdivision 2, or in section 354.47, 
subdivision 1, shall be paid only to a designated beneficiary.  
For purposes of this subdivision, a designated beneficiary may 
only be either a former spouse or a child, either natural or 
adopted, of the member, but more than one beneficiary may be 
designated for the benefit provided in section 354.47, 
subdivision 1.  
    Sec. 8.  Minnesota Statutes 1986, section 354.48, 
subdivision 7, is amended to read:  
    Subd. 7.  [PARTIAL REEMPLOYMENT.] Should the disabled 
person resume a gainful occupation and have in which earnings 
are less than the person's salary at the date of disability or 
the salary currently paid for similar positions, the board shall 
continue the disability benefit in an amount which when added to 
of such earnings does not exceed the person's plus the 
disability benefit originally granted may not exceed the salary 
at the date of disability or the salary currently paid for 
similar positions, whichever is lower, provided the disability 
benefit in such case does not exceed the disability benefit 
originally allowed.  If the sum of such earnings plus the 
disability benefit originally granted exceeds the salary at the 
date of disability, the amount of excess earnings must be 
deducted from the disability benefit.  The provisions of this 
subdivision shall not prohibit the board from making a 
determination that a member is no longer totally and permanently 
disabled or that the member is engaged or is able to engage in a 
substantial gainful occupation based on the results of the 
regular physical examinations required by subdivision 6 or any 
other physical examinations required by the board.  Payment of 
the disability benefit provided in this subdivision during a 
period of partial reemployment shall be discontinued if the 
board finds that the member is no longer totally and permanently 
disabled.  
    Sec. 9.  Minnesota Statutes 1986, section 354.51, 
subdivision 5, is amended to read:  
    Subd. 5.  In the event that full required member 
contributions are not deducted from the salary of a teacher, 
payment shall be made as follows:  
    (a) Payment of shortages in member deductions on salary 
earned after July 1, 1961 June 30, 1957, and prior to July 1, 
1981 shall, may be made within one year from the end of the 
fiscal year in which the shortage in deductions occurred in 
order to be accepted without an interest charge.  If payment is 
not made within this period of time, it may be paid by the 
member any time prior to retirement provided that the.  Payment 
shall include six percent interest compounded annually 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 shall be 
credited to the fund.  If payment of a shortage in deductions is 
not made, the formula service credit of the member shall be 
prorated pursuant to section 354.05, subdivision 25, clause (3). 
    (b) Payment of shortages in member deductions on salary 
earned after June 30, 1981 shall be the sole obligation of the 
employing unit and shall be payable by the employing unit upon 
notification by the executive director of the shortage with 
interest at the rate of six percent per annum, compounded 
annually, 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 shall be credited to the fund.  Effective July 1, 
1986, the employing unit shall also pay the employer 
contributions as specified in section 354.42, subdivisions 3 and 
5 for such shortages.  If the shortage payment is not paid by 
the employing unit within 60 days of notification, the executive 
director shall certify the amount of the shortage payment 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, or to the commissioner of finance, 
who shall deduct the amount from any state aid or appropriation 
amount applicable to the employing unit if the employing unit is 
not supported by property taxes.  
    (c) Payment may not be made for shortages in member 
deductions on salary earned prior to July 1, 1957. 
    Sec. 10.  Minnesota Statutes 1986, section 354.55, 
subdivision 11, is amended to read:  
    Subd. 11.  Any person covered under section 354.44, 
subdivisions 6 and 7, who ceases to render teaching service may 
leave the person's accumulated deductions in the fund for the 
purpose of receiving a deferred annuity at retirement.  
Eligibility for an annuity under this subdivision shall be 
governed pursuant to section 354.44, subdivision 1, or 354.60. 
    The amount of the deferred retirement annuity shall be 
determined by section 354.44, subdivisions 6 and 7, and 
augmented as provided herein.  The required reserves related to 
that portion of the annuity which had accrued at the time the 
member ceased to render teaching service shall be augmented by 
interest compounded annually from the first day of the month 
following the month during which the member ceased to render 
teaching service to the effective date of retirement.  There 
shall be no augmentation if this period is less than three 
months or if this period commences prior to July 1, 1971.  The 
rates of interest used for this purpose shall be five percent 
commencing July 1, 1971, until January 1, 1981, and three 
percent thereafter.  If a person has more than one period of 
uninterrupted service, a separate average salary determined 
under section 354.44, subdivision 6, must be used for each 
period and the required reserves related to each period shall be 
augmented by interest pursuant to this subdivision.  The sum of 
the augmented required reserves so determined shall be the basis 
for purchasing the deferred annuity.  If a person repays a 
refund, the service restored by the repayment must be considered 
as continuous with the next period of service for which the 
person has credit with this fund.  If a person does not render 
teaching service in any one or more consecutive fiscal years and 
then resumes teaching service, the formula percentages used from 
date of resumption will be those applicable to new members.  The 
mortality table and interest assumption contained therein used 
to compute the annuity shall be determined by the law in effect 
at the time of the member's retirement.  A period of 
uninterrupted service for the purposes of this subdivision shall 
mean a period of covered teaching service during which the 
member has not been separated from active service for more than 
one fiscal year. 
    The provisions of this subdivision shall not apply to 
variable account accumulations as defined in section 354.05, 
subdivision 23. 
    In no case shall the annuity payable herein be less than 
the amount of annuity payable pursuant to section 354.44, 
subdivisions 6 and 7. 
    The requirements and provisions for retirement prior to age 
65 contained in section 354.44, subdivision 6, clause (2) shall 
also apply to an employee fulfilling the requirements with a 
combination of service as provided in section 354.60. 
    The augmentation provided by this subdivision applies to 
the benefit provided in section 354.46, subdivision 2. 
    The augmentation provided by this subdivision shall not 
apply to any period in which a person is on an approved leave of 
absence from an employer unit covered by the provisions of this 
chapter. 
    Sec. 11.  Minnesota Statutes 1986, section 354.62, 
subdivision 5, is amended to read:  
    Subd. 5.  [VARIABLE RETIREMENT ANNUITY.] (1) At retirement 
the amount of the member's variable account accumulation in the 
employee variable annuity contribution account, based on the 
valuation at the previous fiscal year end plus any contributions 
made by the person since the end of the previous fiscal year, 
and an equal amount from the employer variable annuity 
contribution account shall be transferred to the variable 
annuity reserve account, and the variable retirement annuity for 
the member shall be determined by the member's age, and sex, and 
the amount transferred for the member to the variable annuity 
reserve account at the date of retirement.  The amount of the 
annuity shall be calculated on the basis of an appropriate 
annuity table of mortality with an interest assumption of eight 
percent, except that if the member elects to have the 
accumulation transferred to the Minnesota postretirement 
investment fund as authorized by clause (8), the annuity shall 
be calculated with an interest assumption of five percent. 
    (2) Whenever the admitted value of the annuity reserve 
account of the variable annuity division, as of June 30 of any 
year, exceeds or is less than the then present value of all 
variable annuities in force, determined in accordance with the 
rate of interest and approved actuarial tables then in effect, 
by at least two percent of the present value, the amount of each 
variable annuity payment shall be proportionately increased or 
decreased for the following year. 
    (3) The death benefit payable in the event of a member's 
death prior to retirement shall be a lump sum refund of a 
member's variable account accumulation, based on the valuation 
at the previous fiscal year end plus any contributions made by 
the person since the end of the previous fiscal year, to the 
surviving spouse, or if there is no surviving spouse to the 
designated beneficiary.  Except that if a member has made an 
election in accordance with joint and survivor annuity is 
payable under section 354.46, subdivision 2, then the surviving 
spouse shall receive a joint and survivor variable annuity as 
described in section 354.44 must be paid and computed as 
provided in clause (1).  An amount equal to the lump sum refund 
made in this clause shall be transferred from the employer 
contribution account to the variable annuity turnover account. 
    (4) Except as provided in section 354.44, subdivision 7, 
any person who ceases to be a member by reason of termination of 
teaching service, shall be entitled to a lump sum refundment of 
the member's variable account accumulations, based on the 
valuation at the previous fiscal year end plus any contributions 
made by the person since the end of the previous fiscal year.  
Application for a refundment may be made no sooner than 30 days 
after termination of teaching service if the applicant has not 
again become a teacher.  Repayment of a refundment upon 
resumption of teaching is not permitted under this section.  An 
amount equal to the refundment to the member shall be 
transferred from the employer contribution account to the 
variable annuity turnover account. 
    (5) If a member is determined to be totally and permanently 
disabled as provided in sections 354.05, subdivision 14; and 
354.48, the member shall be entitled to the annuity provided in 
this subdivision. 
    (6) Those members eligible for retirement as provided in 
section 354.44, subdivision 1 shall upon application for the 
annuity provided therein be entitled to the annuity provided in 
this subdivision.  The annuity elected in accordance with 
sections 354.44, and 354.45 shall be the annuity applicable to 
this subdivision. 
    (7) Notwithstanding section 356.18, increases in annuity 
payments pursuant to this section shall be made automatically 
unless written notice is filed by the annuitant with the 
teachers retirement association board requesting that the 
increase not be made. 
    (8) At retirement, a member may elect to have the amount of 
the member's variable annuity accumulation in the employee 
variable annuity contribution account and an equal amount from 
the employer variable annuity contribution account transferred 
to the Minnesota postretirement investment fund as provided in 
section 354.63, subdivision 2, clause (2).  This election may 
also be made by a surviving spouse who receives an annuity under 
clause (3).  The election shall be made on a form provided by 
the executive secretary director. 
    Sec. 12.  Minnesota Statutes 1986, section 354.62, is 
amended by adding a subdivision to read: 
    Subd. 6.  [RECALCULATION OF CERTAIN ANNUITIES.] A variable 
annuity effective prior to May 1, 1984, must be recalculated on 
June 30, 1987, based on an appropriate annuity table of 
mortality with an interest assumption of eight percent, and the 
adjusted annuity must begin to accrue July 1, 1987. 
    Sec. 13.  [EFFECTIVE DATE.] 
    Section 1 is effective July 1, 1987.  Sections 2 to 12 are 
effective the day following final enactment. 

                                ARTICLE 7

               PUBLIC PENSION PLAN AUDIT RESPONSIBILITIES
    Section 1.  Minnesota Statutes 1986, section 354A.021, is 
amended by adding a subdivision to read:  
    Subd. 8.  [AUDIT BY LEGISLATIVE AUDITOR.] The books and 
accounts of each teachers retirement fund association must be 
examined and audited periodically as considered necessary by the 
state auditor.  A full and detailed report of the examination 
and audit must be made and a copy provided to the teachers 
retirement fund association board of trustees.  The cost of any 
examination and audit must be paid by the teachers retirement 
fund association in accordance with section 6.56.  For purposes 
of section 6.56, each teachers retirement fund association is 
considered a state agency.  
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective July 1, 1987. 

                               ARTICLE 8 

            COMBINED SERVICE DISABILITY AND SURVIVOR BENEFITS
    Section 1.  [356.302] [DISABILITY BENEFIT WITH COMBINED 
SERVICE.] 
    Subdivision 1.  [DEFINITIONS.] (a) The terms used in this 
section are defined in this subdivision. 
    (b) "Average salary" means the highest average of covered 
salary for the appropriate period of credited service that is 
required for the calculation of a disability benefit by the 
covered retirement plan and that is drawn from any period of 
credited service and covered salary in a covered retirement plan.
    (c) "Covered retirement plan" or "plan" means a retirement 
plan listed in subdivision 7. 
    (d) "Duty-related" means a disabling illness or injury that 
occurred while the person was actively engaged in employment 
duties or that arose out of the person's active employment 
duties. 
    (e) "General employee retirement plan" means a covered 
retirement plan listed in subdivision 7, clauses (1) to (8). 
    (f) "Occupationally disabled" means the condition of having 
any medically determinable physical or mental impairment that 
makes a person unable to satisfactorily perform the minimum 
requirements of the person's employment position or a 
substantially similar employment position. 
    (g) "Public safety employee retirement plan" means a 
covered retirement plan listed in subdivision 7, clauses (9) to 
(11). 
    (h) "Totally and permanently disabled" means the condition 
of having any medically determinable physical or mental 
impairment that makes a person unable to engage in any 
substantial gainful activity and that is expected to continue or 
has continued for a period of at least one year or that is 
expected to result directly in the person's death. 
    Subd. 2.  [ENTITLEMENT.] Notwithstanding any law to the 
contrary governing any covered retirement plan, a member of a 
covered retirement plan may receive a combined service 
disability benefit from each covered retirement plan in which 
the person has credit for at least six months of allowable 
service if that person meets the applicable qualifying 
conditions.  Subdivision 3 applies to a member of a general 
employee retirement plan.  Subdivision 4 applies to a member of 
a public safety employee retirement plan.  Subdivision 5 applies 
to a member of a covered retirement plan with general employee 
and public safety employee retirement plan service. 
     Subd. 3.  [GENERAL EMPLOYEE PLAN ELIGIBILITY REQUIREMENTS.] 
A disabled member of a covered retirement plan who has credit 
for allowable service in a combination of general employee 
retirement plans is entitled to a combined service disability 
benefit if the member: 
    (1) is less than 65 years of age on the date of application 
for the disability benefit; 
    (2) has become totally and permanently disabled; 
    (3) has credit for allowable service in any combination of 
general employee retirement plans totaling at least ten years if 
the person has not reached age 50 or at least five years if the 
person has reached age 50; 
     (4) has credit for at least six months of allowable service 
with the current general employee retirement plan before the 
commencement of the disability; 
     (5) has at least five continuous years of allowable service 
credit by the general employee retirement plan or has at least a 
total of five years of allowable service credit by a combination 
of general employee retirement plans in a 72-month period during 
which no interruption of allowable service credit from a 
termination of employment exceeded 29 days; and 
     (6) is not receiving a retirement annuity or disability 
benefit from any covered general employee retirement plan at the 
time of the commencement of the disability. 
     Subd. 4.  [PUBLIC SAFETY PLAN ELIGIBILITY REQUIREMENTS.] A 
disabled member of a covered retirement plan who has credit for 
allowable service in a combination of public safety employee 
retirement plans is entitled to a combined service disability 
benefit if the member: 
    (1) is less than 55 years of age on the date of application 
for the disability benefit; 
    (2) has become occupationally disabled; 
    (3) has credit for allowable service in any combination of 
public safety employee retirement plans totaling at least one 
year if the disability is duty-related or totaling at least five 
years if the disability is not duty-related; 
    (4) has credit for at least six months of allowable service 
with the current public safety employee retirement plan before 
the commencement of the disability; and 
    (5) is not receiving a retirement annuity or disability 
benefit from any covered public safety employee retirement plan 
at the time of the commencement of the disability. 
    Subd. 5.  [GENERAL AND PUBLIC SAFETY PLAN ELIGIBILITY 
REQUIREMENTS.] A disabled member of a covered retirement plan 
who has credit for allowable service in a combination of both 
public safety employee retirement plans and general employee 
retirement plans must meet the qualifying requirements in 
subdivisions 3 and 4 to receive a combined service disability 
benefit from the applicable general employee and public safety 
employee retirement plans, except that the person need only be a 
member of a covered retirement plan at the time of the 
commencement of the disability and that the minimum allowable 
service requirements of subdivision 3, clauses (3) and (5), and 
subdivision 4, clauses (3) and (4), may be met in any 
combination of covered retirement plans. 
    Subd. 6.  [COMBINED SERVICE DISABILITY BENEFIT 
COMPUTATION.] (a) The combined service disability benefit from 
each covered retirement plan must be based on the allowable 
service in each retirement plan, except as specified in 
paragraphs (b) to (f). 
    (b) The disability benefit must be governed by the law in 
effect for each covered retirement plan on the date of the 
commencement of the member's most recent qualifying disability 
as a member of a covered retirement plan. 
    (c) All plans must base the disability benefit on the same 
average salary to the extent practicable. 
     (d) If the method of the covered retirement plan used to 
compute a disability benefit varies based on the length of 
allowable service credit, the benefit accrual formula 
percentages used by the plan must recognize the allowable 
service credit in the plan as a continuation of any previous 
allowable service credit with other covered retirement plans. 
    (e) If the covered retirement plan is a defined benefit or 
formula plan and the method used to compute a disability benefit 
does not vary based on the length of allowable service credit, 
the portion of the specified benefit amount from the plan must 
bear the same proportion to the total specified benefit amount 
as the allowable service credit in that plan bears to the total 
allowable service credit in all covered retirement plans.  If 
the covered retirement plan is a defined contribution or 
nonformula plan, the disability benefit amount for allowable 
service under the plan is not affected, but the service and 
covered salary under the plan must be used in calculations by 
other covered retirement plans. 
     (f) A period for which a person has allowable service 
credit in more than one covered retirement plan must be used 
only once in determining the total allowable service credit for 
calculating the combined service disability benefit, with any 
period of duplicated service credit handled as provided in 
section 356.30, subdivision 1, clause (3), items (i) and (j). 
     Subd. 7.  [COVERED RETIREMENT PLANS.] This section applies 
to the following retirement plans: 
     (1) state employees retirement fund, established by chapter 
352; 
     (2) unclassified employees retirement plan, established by 
chapter 352D; 
     (3) public employees retirement association, established by 
chapter 353; 
     (4) teachers retirement fund, established by chapter 354; 
     (5) Duluth teachers retirement fund association, 
established by chapter 354A; 
    (6) Minneapolis teachers retirement fund association, 
established by chapter 354A; 
    (7) St. Paul teachers retirement fund association, 
established by chapter 354A; 
    (8) Minneapolis employees retirement fund, established by 
chapter 422A; 
    (9) correctional employees retirement plan, established by 
chapter 352; 
    (10) state patrol retirement fund, established by chapter 
352B; and 
    (11) public employees police and fire fund, established by 
chapter 353. 
    Sec. 2.  [356.303] [SURVIVOR BENEFIT WITH COMBINED 
SERVICE.] 
    Subdivision 1.  [DEFINITIONS.] (a) The terms used in this 
section are defined in this subdivision. 
    (b) "Average salary" means the highest average of covered 
salary for the appropriate period of credited service that is 
required for the calculation of a survivor annuity or a survivor 
benefit, whichever applies, by the covered retirement plan and 
that is drawn from any period of credited service and covered 
salary in a covered retirement plan. 
     (c) "Covered retirement plan" or "plan" means a retirement 
plan listed in subdivision 4. 
    (d) "Deceased member" means a person who on the date of 
death was an active member of a covered retirement plan and who 
has reached the minimum age, if any, required by the covered 
retirement plan as part of qualifying for a survivor annuity or 
survivor benefit. 
    (e) "Surviving child" means a child of a deceased member 
(1) who is unmarried, (2) who has not reached age 18, or, if a 
full-time student, who has not reached a higher age specified in 
the applicable covered retirement plan, and (3) if specified by 
that plan, who was actually dependent on the deceased member for 
a specified proportion of support before the deceased member's 
death.  "Surviving child" includes a natural child, an adopted 
child, or a child of a deceased member who is conceived during 
the member's lifetime and is born after the member's death. 
    (f) "Surviving spouse" means the legally married husband or 
wife of the deceased member who was residing with the deceased 
member on the date of death and who, if specified by the 
applicable covered retirement plan, had been married to the 
deceased member for a specified period of time before the death 
of the deceased member. 
    (g) "Survivor annuity" means the entitlement to a future 
amount payable to a survivor as the remainder interest of an 
optional annuity form implied by law as having been chosen by a 
deceased member before the date of death and effective on the 
date of death or provided automatically. 
    (h) "Survivor benefit" means an entitlement to a future 
amount payable to a survivor that is not included in the 
definition of a survivor annuity. 
    Subd. 2.  [ENTITLEMENT; ELIGIBILITY.] Notwithstanding any 
law to the contrary governing a covered retirement plan, a 
person who is the survivor of a deceased member of a covered 
retirement plan may receive a combined service survivor benefit 
from each covered retirement plan in which the deceased member 
had credit for at least six months of allowable service if the 
deceased member: 
     (1) had credit for sufficient allowable service in any 
combination of covered retirement plans to meet any minimum 
allowable service credit requirement of the covered retirement 
fund for qualification for a survivor benefit or annuity; 
    (2) had credit for at least six months of allowable service 
with the most recent covered retirement plan before the date of 
death and was an active member of that covered retirement plan 
on the date of death; and 
    (3) was not receiving a retirement annuity from any covered 
retirement plan on the date of death. 
    Subd. 3.  [COMBINED SERVICE SURVIVOR BENEFIT 
COMPUTATION.] (a) The combined service survivor annuity or 
survivor benefit from each covered retirement plan must be based 
on the allowable service in each covered retirement plan, except 
as provided by paragraphs (b) to (f). 
    (b) The survivor annuity or survivor benefit must be 
governed by the law in effect for each covered retirement plan 
on the date of death of the deceased member. 
    (c) All plans must base the survivor annuity or survivor 
benefit on the same average salary. 
    (d) If the method of the covered retirement plan used to 
compute a survivor benefit or annuity varies based on the length 
of allowable service credit, the benefit accrual formula 
percentages used by the plan must recognize the allowable 
service credit in the plan as a continuation of any previous 
allowable service credit with other covered retirement plans. 
    (e) If the covered retirement plan is a defined benefit or 
formula plan and the method used to compute a survivor benefit 
or annuity does not vary based on the length of allowable 
service credit, the portion of the specified benefit or annuity 
amount from the plan must bear the same proportion to the total 
specified benefit or annuity amount as the allowable service 
credit in that plan bears to the total allowable service credit 
in all covered retirement plans.  If the covered retirement plan 
is a defined contribution or nonformula plan, the survivor 
benefit amount for allowable service under the plan is not 
affected, but the service and covered salary under the plan must 
be used in calculations by other covered retirement plans. 
     (f) A period for which a person has allowable service 
credit in more than one covered retirement plan must be used 
only once in determining the total allowable service credit for 
calculating the combined service survivor annuity or survivor 
benefit.  A period of duplicated service credit must be handled 
as provided in section 356.30, subdivision 1, clause (3), items 
(i) and (j). 
    Subd. 4.  [COVERED RETIREMENT PLANS.] This section applies 
to the following retirement plans: 
    (1) legislators retirement plan, established by chapter 3A; 
    (2) state employees retirement fund, established by chapter 
352; 
    (3) correctional employees retirement plan, established by 
chapter 352; 
     (4) state patrol retirement fund, established by chapter 
352B; 
     (5) elective state officers retirement plan, established by 
chapter 352C; 
     (6) unclassified employees retirement plan, established by 
chapter 352D; 
    (7) public employees retirement association, established by 
chapter 353; 
    (8) public employees police and fire fund, established by 
chapter 353; 
    (9) teachers retirement fund, established by chapter 354; 
    (10) Duluth teachers retirement fund association, 
established by chapter 354A; 
    (11) Minneapolis teachers retirement fund association, 
established by chapter 354A; 
    (12) St. Paul teachers retirement fund association, 
established by chapter 354A; and 
    (13) Minneapolis employees retirement fund, established by 
chapter 422A. 
    Sec. 3.  [REPEALER.] 
    Minnesota Statutes 1986, section 356.301, is repealed. 
    Sec. 4.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment 
and applies to any active member of a covered retirement plan 
whose applicable disability is determined to have begun on or 
after that date.  Section 2 is effective the day following final 
enactment and applies to any person who became a survivor on or 
after June 15, 1986.  Section 3 is effective the day following 
final enactment. 
    Approved May 28, 1987

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