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

CHAPTER 286--S.F.No. 1808
An act
relating to retirement; statewide and local retirement plans; revising
certain statutory actuarial assumptions; requiring comprehensive annual
retirement plan fund reporting by Minnesota Management and Budget,
modifying various Department of Human Services employment classifications
eligible for correctional retirement coverage; modifying certain health care
savings plan provisions; clarifying transfer eligibility for the unclassified state
employees retirement program; making various modifications in retirement
plans administered by the Public Employees Retirement Association, making
various revisions in the public employees privatization law; making various
administrative changes in the Teachers Retirement Association law, including
revising state and local aid programs inherited from the former Minneapolis
Teachers Retirement Fund Association; making various modifications to conform
with the federal Internal Revenue Code retirement plan requirements; updating
the public pension fund investment laws, merging the Fairmont Police Relief
Association and the Virginia fire consolidation account with the public employees
police and fire retirement plan; making various volunteer fire retirement
law changes; and making various small group or single person retirement
authorizations;amending Minnesota Statutes 2010, sections 11A.07, subdivision
4; 11A.14, subdivision 14; 11A.24; 16A.06, subdivision 9; 69.011, subdivision
1; 69.051, subdivisions 1, 1a, 3; 69.77, subdivision 9; 69.772, subdivision 4;
69.773, subdivision 5; 69.775; 69.80; 126C.41, subdivision 3; 352.90; 352.91,
subdivisions 3c, 3d, 3e, 3f; 352.98, subdivisions 3, 4, 5, 8; 352D.02, subdivision
3; 353.01, subdivision 47; 353.50, subdivision 7; 353.656, subdivision 2;
353F.02, subdivision 4; 353F.04, subdivision 1; 353F.07; 353G.08, by adding a
subdivision; 354.51, subdivision 5; 354A.08; 354A.12, subdivision 3c; 356.215,
subdivisions 1, 11; 356.219, subdivisions 1, 8; 356.415, subdivision 1d; 356.611,
subdivisions 2, 3, 3a, 4, by adding a subdivision; 356.635, subdivisions 6, 9;
356A.01, subdivision 19; 356A.06, subdivisions 6, 7; 423A.02, subdivision 3;
424A.001, subdivision 4; 424A.01, subdivision 6; 424A.016, subdivisions 5, 6;
424A.02, subdivisions 1, 7, 9; 424A.04, subdivision 3; 424A.06, subdivision
2; Minnesota Statutes 2011 Supplement, sections 69.77, subdivisions 1a, 4;
353.01, subdivisions 2a, 6, 16; 353.668, subdivision 4; 356.215, subdivision 8;
Laws 2002, chapter 392, article 1, section 8; proposing coding for new law in
Minnesota Statutes, chapters 16A; 353; 354; repealing Minnesota Statutes 2010,
sections 128D.18; 354A.12, subdivision 3b; 356.219, subdivision 4; 423A.06;
Laws 1947, chapter 624, sections 1; 2; 3; 4; 5; 6; 8; 9; 10; 11; 12; 13; 14; 15; 16;
17; 18; 19; 21; 22; Laws 1953, chapter 399, as amended; Laws 1961, chapter 420,
sections 2, as amended; 3; 4; 5, as amended; 6; Laws 1963, chapter 407, section
1, as amended; Laws 1963, chapter 423; Laws 1965, chapter 546, sections 1; 2,
as amended; 3; Laws 1969, chapter 578, sections 1; 2; 3; Laws 1974, chapter
183, as amended; Laws 1982, chapter 574, section 1; Laws 1982, chapter 578,
article 1, section 14; Laws 1983, chapter 69, section 1; Laws 1984, chapter 547,
section 27; Laws 1987, chapter 372, article 2, section 14; Laws 1988, chapter
709, sections 1, as amended; 2; Laws 1991, chapter 62, sections 1; 2; Laws 1992,
chapter 465, section 1; Laws 1999, chapter 222, article 3, sections 3; 4; 5.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1
STATUTORY ACTUARIAL ASSUMPTION AND CONFORMING CHANGES

    Section 1. Minnesota Statutes 2010, section 356.215, subdivision 1, is amended to read:
    Subdivision 1. Definitions. (a) For the purposes of sections 3.85 and 356.20 to
356.23, each of the terms in the following paragraphs has the meaning given.
    (b) "Actuarial valuation" means a set of calculations prepared by an actuary retained
under section 356.214 if so required under section 3.85, or otherwise, by an approved
actuary, to determine the normal cost and the accrued actuarial liabilities of a benefit
plan, according to the entry age actuarial cost method and based upon stated assumptions
including, but not limited to rates of interest, mortality, salary increase, disability,
withdrawal, and retirement and to determine the payment necessary to amortize over a
stated period any unfunded accrued actuarial liability disclosed as a result of the actuarial
valuation of the benefit plan.
    (c) "Approved actuary" means a person who is regularly engaged in the business of
providing actuarial services and who is a fellow in the Society of Actuaries.
    (d) "Entry age actuarial cost method" means an actuarial cost method under which
the actuarial present value of the projected benefits of each individual currently covered
by the benefit plan and included in the actuarial valuation is allocated on a level basis over
the service of the individual, if the benefit plan is governed by section 69.773, or over the
earnings of the individual, if the benefit plan is governed by any other law, between the
entry age and the assumed exit age, with the portion of the actuarial present value which is
allocated to the valuation year to be the normal cost and the portion of the actuarial present
value not provided for at the valuation date by the actuarial present value of future normal
costs to be the actuarial accrued liability, with aggregation in the calculation process to be
the sum of the calculated result for each covered individual and with recognition given to
any different benefit formulas which may apply to various periods of service.
    (e) "Experience study" means a report providing experience data and an actuarial
analysis of the adequacy of the actuarial assumptions on which actuarial valuations are
based.
    (f) "Actuarial value of assets" means:
(1) For the July 1, 2009, actuarial valuation, the market value of all assets as of
June 30, 2009, reduced by:
    (i) 20 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2006,
and June 30, 2005, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2005;
    (ii) 40 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2007,
and June 30, 2006, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2006;
    (iii) 60 percent of the difference between the actual net change in the market value
of assets other than the Minnesota postretirement investment fund between June 30, 2008,
and June 30, 2007, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2007;
    (iv) 80 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2008; and
(v) if applicable, 80 percent of the difference between the actual net change in the
market value of the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets over that fiscal
year period if the assets had increased at 8.5 percent annually.
(2) For the July 1, 2010, actuarial valuation, the market value of all assets as of
June 30, 2010, reduced by:
(i) 20 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2007,
and June 30, 2006, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2006;
(ii) 40 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2008,
and June 30, 2007, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2007;
(iii) 60 percent of the difference between the actual net change in the market value
of assets other than the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2008;
(iv) 80 percent of the difference between the actual net change in the market value of
total assets between June 30, 2010, and June 30, 2009, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to the annual percentage preretirement interest rate assumption used
in the actuarial valuation for July 1, 2009; and
(v) if applicable, 60 percent of the difference between the actual net change in the
market value of the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets over that fiscal
year period if the assets had increased at 8.5 percent annually.
(3) For the July 1, 2011, actuarial valuation, the market value of all assets as of
June 30, 2011, reduced by:
(i) 20 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2008,
and June 30, 2007, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2007;
(ii) 40 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2008;
(iii) 60 percent of the difference between the actual net change in the market value
of the total assets between June 30, 2010, and June 30, 2009, and the computed increase in
the market value of the total assets over that fiscal year period if the assets had earned
a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2009;
(iv) 80 percent of the difference between the actual net change in the market value of
total assets between June 30, 2011, and June 30, 2010, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to the annual percentage preretirement interest rate assumption used
in the actuarial valuation for July 1, 2010; and
(v) if applicable, 40 percent of the difference between the actual net change in the
market value of the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets over that fiscal
year period if the assets had increased at 8.5 percent annually.
(4) (1) For the July 1, 2012, actuarial valuation, the market value of all assets as of
June 30, 2012, reduced by:
(i) 20 percent of the difference between the actual net change in the market value of
assets other than the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets other than the
Minnesota postretirement investment fund over that fiscal year period if the assets had
earned a rate of return on assets equal to the annual percentage preretirement interest rate
assumption used in the actuarial valuation for July 1, 2008;
(ii) 40 percent of the difference between the actual net change in the market value of
total assets between June 30, 2010, and June 30, 2009, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to the annual percentage preretirement interest rate assumption used
in the actuarial valuation for July 1, 2009;
(iii) 60 percent of the difference between the actual net change in the market value
of total assets between June 30, 2011, and June 30, 2010, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to the annual percentage preretirement interest rate assumption used
in the actuarial valuation for July 1, 2010;
(iv) 80 percent of the difference between the actual net change in the market value of
total assets between June 30, 2012, and June 30, 2011, and the computed increase in the
market value of total assets over that fiscal year period if the assets had earned a rate of
return on assets equal to the annual percentage preretirement interest rate assumption used
in the actuarial valuation for July 1, 2011; and
(v) if applicable, 20 percent of the difference between the actual net change in the
market value of the Minnesota postretirement investment fund between June 30, 2009,
and June 30, 2008, and the computed increase in the market value of assets over that fiscal
year period if the assets had increased at 8.5 percent annually.
(5) (2) For the July 1, 2013, and following actuarial valuations, the market value of
all assets as of the preceding June 30, reduced by:
(i) 20 percent of the difference between the actual net change in the market value
of total assets between the June 30 that occurred three years earlier and the June 30 that
occurred four years earlier and the computed increase in the market value of total assets
over that fiscal year period if the assets had earned a rate of return on assets equal to the
annual percentage preretirement interest rate assumption used in the actuarial valuation
for the July 1 that occurred four years earlier;
(ii) 40 percent of the difference between the actual net change in the market value
of total assets between the June 30 that occurred two years earlier and the June 30 that
occurred three years earlier and the computed increase in the market value of total assets
over that fiscal year period if the assets had earned a rate of return on assets equal to the
annual percentage preretirement interest rate assumption used in the actuarial valuation
for the July 1 that occurred three years earlier;
(iii) 60 percent of the difference between the actual net change in the market value
of total assets between the June 30 that occurred one year earlier and the June 30 that
occurred two years earlier and the computed increase in the market value of total assets
over that fiscal year period if the assets had earned a rate of return on assets equal to the
annual percentage preretirement interest rate assumption used in the actuarial valuation
for the July 1 that occurred two years earlier; and
(iv) 80 percent of the difference between the actual net change in the market value
of total assets between the most recent June 30 and the June 30 that occurred one year
earlier and the computed increase in the market value of total assets over that fiscal year
period if the assets had earned a rate of return on assets equal to the annual percentage
preretirement interest rate assumption used in the actuarial valuation for the July 1 that
occurred one year earlier.
    (g) "Unfunded actuarial accrued liability" means the total current and expected
future benefit obligations, reduced by the sum of the actuarial value of assets and the
present value of future normal costs.
    (h) "Pension benefit obligation" means the actuarial present value of credited
projected benefits, determined as the actuarial present value of benefits estimated to be
payable in the future as a result of employee service attributing an equal benefit amount,
including the effect of projected salary increases and any step rate benefit accrual rate
differences, to each year of credited and expected future employee service.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 2. Minnesota Statutes 2011 Supplement, section 356.215, subdivision 8, is
amended to read:
    Subd. 8. Interest and salary assumptions. (a) The actuarial valuation must use
the applicable following preretirement interest assumption and the applicable following
postretirement interest assumption:
(1) select and ultimate interest rate assumption




plan
ultimate
preretirement
interest rate
assumption
ultimate
postretirement
interest rate
assumption

general state employees retirement plan
8.5%
6.0%

correctional state employees retirement plan
8.5
6.0

State Patrol retirement plan
8.5
6.0



legislators retirement plan
8.5 0.0
6.0 -2.0 until June
30, 2040, and -2.5
after June 30, 2040



elective state officers retirement plan
8.5 0.0
6.0 -2.0 until June
30, 2040, and -2.5
after June 30, 2040

judges retirement plan
8.5
6.0

general public employees retirement plan
8.5
6.0

public employees police and fire retirement plan
8.5
6.0


local government correctional service
retirement plan
8.5
6.0

teachers retirement plan
8.5
6.0

Duluth teachers retirement plan
8.5
8.5

St. Paul teachers retirement plan
8.5
8.5
Except for the legislators retirement plan and the elective state officers retirement
plan, the select preretirement interest rate assumption for the period after June 30, 2012,
through June 30, 2017, is 8.0 percent. Except for the legislators retirement plan and the
elective state officers retirement plan, the select postretirement interest rate assumption for
the period after June 30, 2012, through June 30, 2017, is 5.5 percent, except for the Duluth
teachers retirement plan and the St. Paul teachers retirement plan, each with a select
postretirement interest rate assumption for the period after June 30, 2012, through June
30, 2017, of 8.0 percent.
(2) single rate preretirement and postretirement interest rate assumption


plan
interest rate
assumption

Fairmont Police Relief Association
5.0
5.0

Virginia Fire Department Relief Association
5.0
5.0

Bloomington Fire Department Relief Association
6.0
6.0


local monthly benefit volunteer firefighters relief
associations
5.0
5.0
    (b) Before July 1, 2010, The actuarial valuation must use the applicable following
single rate future salary increase assumption, the applicable following modified single
rate future salary increase assumption, or the applicable following graded rate future
salary increase assumption:
    (1) single rate future salary increase assumption

plan
future salary increase assumption

legislators retirement plan
5.0%

judges retirement plan
4.03.0

Fairmont Police Relief Association
3.5

Virginia Fire Department Relief Association
3.5


Bloomington Fire Department Relief
Association
4.0
    (2) age-related future salary increase age-related select and ultimate future salary
increase assumption or graded rate future salary increase assumption

plan
future salary increase assumption

correctional state employees retirement plan
assumption D

State Patrol retirement plan
assumption C

local government correctional service retirement plan
assumption C

Duluth teachers retirement plan
assumption A

St. Paul teachers retirement plan
assumption B
The select calculation is: during the
designated select period, a designated
percentage rate is multiplied by the result of
the designated integer minus T, where T is
the number of completed years of service,
and is added to the applicable future salary
increase assumption. The designated select
period is five years and the designated
integer is five for the general state employees
retirement plan. The designated select period
is ten years and the designated integer is ten
for all other retirement plans covered by
this clause. The designated percentage rate
is: (1) 0.2 percent for the correctional state
employees retirement plan, the State Patrol
retirement plan, and the local government
correctional service retirement plan; (2)
0.6 percent for the general state employees
retirement plan; and (3) (2) 0.3 percent for
the teachers retirement plan, the Duluth
Teachers Retirement Fund Association,
and the St. Paul Teachers Retirement
Fund Association. The select calculation
for the Duluth Teachers Retirement Fund
Association is 8.00 percent per year for
service years one through seven, 7.25 percent
per year for service years seven and eight,
and 6.50 percent per year for service years
eight and nine.
    The ultimate future salary increase assumption is:

age
A
B
C
D

16
8.00%
6.90%
7.7500%9.00%
7.2500%

17
8.00
6.90
7.75009.00
7.2500

18
8.00
6.90
7.75009.00
7.2500

19
8.00
6.90
7.75009.00
7.2500

20
6.90
6.90
7.75009.00
7.2500

21
6.90
6.90
7.14548.75
6.6454

22
6.90
6.90
7.07258.50
6.5725

23
6.85
6.85
7.05448.25
6.5544

24
6.80
6.80
7.03638.00
6.5363

25
6.75
6.75
7.00007.75
6.5000

26
6.70
6.70
7.00007.50
6.5000

27
6.65
6.65
7.00007.25
6.5000

28
6.60
6.60
7.00007.00
6.5000

29
6.55
6.55
7.00006.75
6.5000

30
6.50
6.50
7.00006.75
6.5000

31
6.45
6.45
7.00006.50
6.5000

32
6.40
6.40
7.00006.50
6.5000

33
6.35
6.35
7.00006.50
6.5000

34
6.30
6.30
7.00006.25
6.5000

35
6.25
6.25
7.00006.25
6.5000

36
6.20
6.20
6.90196.00
6.4019

37
6.15
6.15
6.80746.00
6.3074

38
6.10
6.10
6.71256.00
6.2125

39
6.05
6.05
6.60545.75
6.1054

40
6.00
6.00
6.50005.75
6.0000

41
5.90
5.95
6.35405.75
5.8540

42
5.80
5.90
6.20875.50
5.7087

43
5.70
5.85
6.06225.25
5.5622

44
5.60
5.80
5.90485.25
5.4078

45
5.50
5.75
5.75005.00
5.2500

46
5.40
5.70
5.69405.00
5.1940

47
5.30
5.65
5.63755.00
5.1375

48
5.20
5.60
5.58225.00
5.0822

49
5.10
5.55
5.54045.00
5.0404

50
5.00
5.50
5.50005.00
5.0000

51
4.90
5.45
5.43845.00
4.9384

52
4.80
5.40
5.37765.00
4.8776

53
4.70
5.35
5.31675.00
4.8167

54
4.60
5.30
5.28265.00
4.7826

55
4.50
5.25
5.25004.75
4.7500

56
4.40
5.20
5.25004.75
4.7500

57
4.30
5.15
5.25004.50
4.7500

58
4.20
5.10
5.25004.25
4.7500

59
4.10
5.05
5.25004.25
4.7500

60
4.00
5.00
5.25004.25
4.7500

61
3.90
5.00
5.25004.25
4.7500

62
3.80
5.00
5.25004.25
4.7500

63
3.70
5.00
5.25004.25
4.7500

64
3.60
5.00
5.25004.25
4.7500

65
3.50
5.00
5.25004.00
4.7500

66
3.50
5.00
5.25004.00
4.7500

67
3.50
5.00
5.25004.00
4.7500

68
3.50
5.00
5.25004.00
4.7500

69
3.50
5.00
5.25004.00
4.7500

70
3.50
5.00
5.25004.00
4.7500
(3) service-related ultimate future salary increase assumption


general state employees retirement plan of the
Minnesota State Retirement System
assumption A


general employees retirement plan of the Public
Employees Retirement Association
assumption B

Teachers Retirement Association
assumption C

public employees police and fire retirement plan
assumption D

State Patrol retirement plan
assumption E


correctional state employees retirement plan of the
Minnesota State Retirement System
assumption F


service
length
A
B
C
D
E
F

1
10.7510.50%
12.2512.03%
12.00%
13.00%
8.00%
6.00%

2
8.358.10
9.158.90
9.00
11.00
7.50
5.85

3
7.156.90
7.757.46
8.00
9.00
7.00
5.70

4
6.456.20
6.856.58
7.50
8.00
6.75
5.55

5
5.955.70
6.255.97
7.25
6.50
6.50
5.40

6
5.555.30
5.755.52
7.00
6.10
6.25
5.25

7
5.255.00
5.455.16
6.85
5.80
6.00
5.10

8
4.954.70
5.154.87
6.70
5.60
5.85
4.95

9
4.754.50
4.854.63
6.55
5.40
5.70
4.80

10
4.654.40
4.654.42
6.40
5.30
5.55
4.65

11
4.454.20
4.454.24
6.25
5.20
5.40
4.55

12
4.354.10
4.354.08
6.00
5.10
5.25
4.45

13
4.254.00
4.153.94
5.75
5.00
5.10
4.35

14
4.053.80
4.053.82
5.50
4.90
4.95
4.25

15
3.953.70
3.953.70
5.25
4.80
4.80
4.15

16
3.853.60
3.853.60
5.00
4.80
4.65
4.05

17
3.753.50
3.753.51
4.75
4.80
4.50
3.95

18
3.753.50
3.753.50
4.50
4.80
4.35
3.85

19
3.753.50
3.753.50
4.25
4.80
4.20
3.75

20
3.753.50
3.753.50
4.00
4.80
4.05
3.75

21
3.753.50
3.753.50
3.90
4.70
4.00
3.75

22
3.753.50
3.753.50
3.80
4.60
4.00
3.75

23
3.753.50
3.753.50
3.70
4.50
4.00
3.75

24
3.753.50
3.753.50
3.60
4.50
4.00
3.75

25
3.753.50
3.753.50
3.50
4.50
4.00
3.75

26
3.753.50
3.753.50
3.50
4.50
4.00
3.75

27
3.753.50
3.753.50
3.50
4.50
4.00
3.75

28
3.753.50
3.753.50
3.50
4.50
4.00
3.75

29
3.753.50
3.753.50
3.50
4.50
4.00
3.75


30 or
more
3.753.50
3.753.50
3.50
4.50
4.00
3.75
    (c) Before July 2, 2010, The actuarial valuation must use the applicable following
payroll growth assumption for calculating the amortization requirement for the unfunded
actuarial accrued liability where the amortization retirement is calculated as a level
percentage of an increasing payroll:

plan
payroll growth assumption


general state employees retirement plan of the
Minnesota State Retirement System
3.75%

correctional state employees retirement plan
4.503.75

State Patrol retirement plan
4.503.75

legislators retirement plan
4.50

judges retirement plan
4.003.00


general employees retirement plan of the Public
Employees Retirement Association
3.753.75

public employees police and fire retirement plan
3.753.75

local government correctional service retirement plan
4.503.75

teachers retirement plan
3.753.75

Duluth teachers retirement plan
4.504.50

St. Paul teachers retirement plan
5.005.00
    (d) After July 1, 2010, The assumptions set forth in paragraphs (b) and (c) continue
to apply, unless a different salary assumption or a different payroll increase assumption:
    (1) has been proposed by the governing board of the applicable retirement plan;
    (2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
most recent actuarial valuation report if section 356.214 does not apply; and
    (3) has been approved or deemed approved under subdivision 18.
EFFECTIVE DATE.This section is effective June 30, 2012.

    Sec. 3. Minnesota Statutes 2010, section 356.215, subdivision 11, is amended to read:
    Subd. 11. Amortization contributions. (a) In addition to the exhibit indicating
the level normal cost, the actuarial valuation of the retirement plan must contain an
exhibit for financial reporting purposes indicating the additional annual contribution
sufficient to amortize the unfunded actuarial accrued liability and must contain an exhibit
for contribution determination purposes indicating the additional contribution sufficient
to amortize the unfunded actuarial accrued liability. For the retirement plans listed in
subdivision 8, paragraph (c), but excluding the MERF division of the Public Employees
Retirement Association and the legislators retirement plan, the additional contribution
must be calculated on a level percentage of covered payroll basis by the established
date for full funding in effect when the valuation is prepared, assuming annual payroll
growth at the applicable percentage rate set forth in subdivision 8, paragraph (c). For all
other retirement plans and for the MERF division of the Public Employees Retirement
Association and the legislators retirement plan, the additional annual contribution must be
calculated on a level annual dollar amount basis.
    (b) For any retirement plan other than the general state employees retirement plan
of the Minnesota State Retirement System or a retirement plan governed by paragraph
(d), (e), (f), (g), (h), (i), or (j), if there has not been a change in the actuarial assumptions
used for calculating the actuarial accrued liability of the fund, a change in the benefit
plan governing annuities and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability of all or a portion of the
fund, or a combination of the three, which change or changes by itself or by themselves
without inclusion of any other items of increase or decrease produce a net increase in the
unfunded actuarial accrued liability of the fund, the established date for full funding is the
first actuarial valuation date occurring after June 1, 2020.
    (c) For any retirement plan other than the general employees retirement plan of the
Public Employees Retirement Association, if there has been a change in any or all of the
actuarial assumptions used for calculating the actuarial accrued liability of the fund, a
change in the benefit plan governing annuities and benefits payable from the fund, a
change in the actuarial cost method used in calculating the actuarial accrued liability of all
or a portion of the fund, or a combination of the three, and the change or changes, by itself
or by themselves and without inclusion of any other items of increase or decrease, produce
a net increase in the unfunded actuarial accrued liability in the fund, the established date
for full funding must be determined using the following procedure:
    (i) the unfunded actuarial accrued liability of the fund must be determined in
accordance with the plan provisions governing annuities and retirement benefits and the
actuarial assumptions in effect before an applicable change;
    (ii) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the unfunded actuarial accrued liability amount determined under item
(i) by the established date for full funding in effect before the change must be calculated
using the interest assumption specified in subdivision 8 in effect before the change;
    (iii) the unfunded actuarial accrued liability of the fund must be determined in
accordance with any new plan provisions governing annuities and benefits payable from
the fund and any new actuarial assumptions and the remaining plan provisions governing
annuities and benefits payable from the fund and actuarial assumptions in effect before
the change;
    (iv) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the difference between the unfunded actuarial accrued liability amount
calculated under item (i) and the unfunded actuarial accrued liability amount calculated
under item (iii) over a period of 30 years from the end of the plan year in which the
applicable change is effective must be calculated using the applicable interest assumption
specified in subdivision 8 in effect after any applicable change;
    (v) the level annual dollar or level percentage amortization contribution under item
(iv) must be added to the level annual dollar amortization contribution or level percentage
calculated under item (ii);
    (vi) the period in which the unfunded actuarial accrued liability amount determined
in item (iii) is amortized by the total level annual dollar or level percentage amortization
contribution computed under item (v) must be calculated using the interest assumption
specified in subdivision 8 in effect after any applicable change, rounded to the nearest
integral number of years, but not to exceed 30 years from the end of the plan year in
which the determination of the established date for full funding using the procedure set
forth in this clause is made and not to be less than the period of years beginning in the
plan year in which the determination of the established date for full funding using the
procedure set forth in this clause is made and ending by the date for full funding in effect
before the change; and
    (vii) the period determined under item (vi) must be added to the date as of which
the actuarial valuation was prepared and the date obtained is the new established date
for full funding.
    (d) For the MERF division of the Public Employees Retirement Association, the
established date for full funding is June 30, 2031.
    (e) For the general employees retirement plan of the Public Employees Retirement
Association, the established date for full funding is June 30, 2031.
    (f) For the Teachers Retirement Association, the established date for full funding is
June 30, 2037.
    (g) For the correctional state employees retirement plan of the Minnesota State
Retirement System, the established date for full funding is June 30, 2038.
    (h) For the judges retirement plan, the established date for full funding is June
30, 2038.
    (i) For the public employees police and fire retirement plan, the established date
for full funding is June 30, 2038.
    (j) For the St. Paul Teachers Retirement Fund Association, the established date for
full funding is June 30 of the 25th year from the valuation date. In addition to other
requirements of this chapter, the annual actuarial valuation must contain an exhibit
indicating the funded ratio and the deficiency or sufficiency in annual contributions when
comparing liabilities to the market value of the assets of the fund as of the close of the
most recent fiscal year.
(k) For the general state employees retirement plan of the Minnesota State
Retirement System, the established date for full funding is June 30, 2040.
    (l) For the retirement plans for which the annual actuarial valuation indicates an
excess of valuation assets over the actuarial accrued liability, the valuation assets in
excess of the actuarial accrued liability must be recognized as a reduction in the current
contribution requirements by an amount equal to the amortization of the excess expressed
as a level percentage of pay over a 30-year period beginning anew with each annual
actuarial valuation of the plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. DELAYED REPORTING DATE FOR CERTAIN QUADRENNIAL
EXPERIENCE STUDIES.
Notwithstanding any provision of Minnesota Statutes, section 356.215, subdivisions
2 and 3, paragraph (c), to the contrary, the next experience studies of the general state
employees retirement plan of the Minnesota State Retirement System, the general
employees retirement plan of the Public Employees Retirement Association, and the
Teachers Retirement Association must cover the period of July 1, 2008, through June 30,
2014, and must be filed with the applicable entities on June 30, 2015.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 2
CONTRIBUTION ADEQUACY REPORTING

    Section 1. [16A.106] ADEQUACY OF BUDGETED AND FORECASTED
DEFINED BENEFIT PLAN RETIREMENT CONTRIBUTIONS.
(a) On or before May 30 or the date occurring 30 days after the conclusion of
the regular legislative session, whichever is later, in each odd-numbered year, the
commissioner shall prepare a report to the legislature on the adequacy of the budgeted
appropriations, including retirement-related state aids, and forecasted member and
employer retirement contributions to meet the total calculated actuarial funding
requirements of the statewide and major local defined benefit retirement plans.
(b) The total calculated actuarial funding requirements are the sum of:
(1) the normal cost;
(2) the administrative expenses as defined in section 356.20, subdivision 4,
paragraph (c); and
(3) the supplemental amortization contribution requirement using the amortization
target date specified in section 356.215, subdivision 11.
The total calculated actuarial funding requirements must be as determined in the
most recent actuarial valuation of the retirement plan prepared by an approved actuary
under section 356.215 and the most recent standards for actuarial work adopted by the
Legislative Commission on Pensions and Retirement.
(c) The statewide and major local retirement plans are the defined benefit retirement
plans listed in section 356.20, subdivision 2, clauses (1) to (6), (9), (12), (13), and (14).
(d) The report must also include as an exhibit as of the start of the most recent fiscal
year, the following information for each statewide and major local retirement plan in a
single comparative table:
(1) the year the retirement plan was enacted or established;
(2) the number of active members of the retirement plan;
(3) the number of retirement annuitants and retirement benefit recipients;
(4) whether or not the retirement plan supplements the federal Old Age, Survivors
and Disability Insurance program;
(5) the complete schedule of accrued benefit obligations and projected benefit
obligations from the latest actuarial valuation reports;
(6) whether or not the retirement plan permits the purchase of service credit for
out-of-state service or time;
(7) the percentage of covered salary employer contributions;
(8) the percentage of covered salary member contributions;
(9) the amount of unfunded actuarial accrued liability calculated using the actuarial
value of assets and the market value of assets;
(10) the percentage that assets, at actuarial value and at market value, represent
of the actuarial accrued liability;
(11) the normal retirement age or ages;
(12) the salary base definition and the percentage of salary base benefit accrual rate
per year of service credit formula for a normal retirement annuity;
(13) the amount of automatic postretirement adjustment;
(14) whether or not service credit is available for military service and any limitation
on its acquisition;
(15) the vesting period for a disability benefit and the definition of a disability
qualifying for a disability benefit;
(16) investment performance and interest rate actuarial assumptions;
(17) the amortization target date;
(18) four fiscal years running statistics of active retirement plan members;
(19) four fiscal years running statistics of retirement annuitants and retirement
benefit recipients;
(20) four fiscal years running statistics of deferred annuitants;
(21) four fiscal years running statistics of unfunded actuarial accrued liability
determined on an actuarial value of assets basis and on a market value of assets basis;
(22) four fiscal years running statistics of the percentage that assets, at actuarial
value and at market value, represent of the actuarial accrued liability;
(23) four fiscal years running statistics of actuarial value of assets; and
(24) four fiscal years running statistics of market value of assets.
(e) The report under this section also must be included on the Web site of the
department.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 3
MSRS-CORRECTIONAL PLAN MEMBERSHIP CHANGES

    Section 1. Minnesota Statutes 2010, section 352.90, is amended to read:
352.90 POLICY.
It is the policy of the legislature to provide special retirement benefits for and
special contributions by certain correctional employees who may be required to retire at
an early age because they lose the mental or physical capacity required to maintain the
safety, security, discipline, and custody of inmates at state correctional facilities or of
patients at the Minnesota Security Hospital, of patients in the Minnesota sex offender
program, or of patients in the Minnesota extended treatment options program specialty
health system-Cambridge.

    Sec. 2. Minnesota Statutes 2010, section 352.91, subdivision 3c, is amended to read:
    Subd. 3c. Nursing personnel. (a) "Covered correctional service" means service by
a state employee in one of the employment positions at a correctional facility or at the
Minnesota Security Hospital, or in the Minnesota sex offender program that are specified
in paragraph (b) if at least 75 percent of the employee's working time is spent in direct
contact with inmates or patients and the fact of this direct contact is certified to the
executive director by the appropriate commissioner.
(b) The employment positions are as follows:
(1) registered nurse - senior;
(2) registered nurse;
(3) registered nurse - principal;
(4) licensed practical nurse 2; and
(5) registered nurse advance practice; and
(6) psychiatric advance practice registered nurse.
EFFECTIVE DATE.(a) This section is effective retroactively from August 22,
2011.
(b) Service credit under the correctional state employees retirement plan rather
than under the general state employees retirement plan for the period between August
22, 2011, and the day following enactment is contingent on the state employee and the
Department of Human Services paying the difference between the applicable employee
and employer contributions in the two retirement plans under Minnesota Statutes, section
352.017, subdivision 2.

    Sec. 3. Minnesota Statutes 2010, section 352.91, subdivision 3d, is amended to read:
    Subd. 3d. Other correctional personnel. (a) "Covered correctional service" means
service by a state employee in one of the employment positions at a correctional facility or
at the Minnesota Security Hospital specified in paragraph (b) if at least 75 percent of the
employee's working time is spent in direct contact with inmates or patients and the fact of
this direct contact is certified to the executive director by the appropriate commissioner.
    (b) The employment positions are:
    (1) automotive mechanic;
(2) baker;
    (3) central services administrative specialist, intermediate;
    (4) central services administrative specialist, principal;
    (5) chaplain;
    (6) chief cook;
    (7) clinical program therapist 1;
(8) clinical program therapist 2;
(9) clinical program therapist 3;
(10) clinical program therapist 4;
(11) cook;
    (8) (12) cook coordinator;
    (9) corrections program therapist 1;
    (10) corrections program therapist 2;
    (11) corrections program therapist 3;
    (12) corrections program therapist 4;
    (13) corrections inmate program coordinator;
    (14) corrections transitions program coordinator;
    (15) corrections security caseworker;
    (16) corrections security caseworker career;
    (17) corrections teaching assistant;
    (18) delivery van driver;
    (19) dentist;
    (20) electrician supervisor;
    (21) general maintenance worker lead;
    (22) general repair worker;
    (23) library/information research services specialist;
    (24) library/information research services specialist senior;
    (25) library technician;
    (26) painter lead;
    (27) plant maintenance engineer lead;
    (28) plumber supervisor;
    (29) psychologist 1;
    (30) psychologist 3;
    (31) recreation therapist;
    (32) recreation therapist coordinator;
    (33) recreation program assistant;
    (34) recreation therapist senior;
    (35) sports medicine specialist;
    (36) work therapy assistant;
    (37) work therapy program coordinator; and
    (38) work therapy technician.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2010, section 352.91, subdivision 3e, is amended to read:
    Subd. 3e. Minnesota extended treatment options program specialty health
system-Cambridge. (a) "Covered correctional service" means service by a state employee
in one of the employment positions with the Minnesota extended treatment options
program specialty health system-Cambridge specified in paragraph (b) if at least 75
percent of the employee's working time is spent in direct contact with patients who are in
the Minnesota extended treatment options program specialty health system-Cambridge
and if service in such a position is certified to the executive director by the commissioner
of human services.
    (b) The employment positions are:
    (1) behavior analyst 1;
    (2) behavior analyst 2;
    (3) behavior analyst 3;
    (4) group supervisor;
    (5) group supervisor assistant;
    (6) human services support specialist;
    (7) residential program lead;
    (8) psychologist 2;
    (9) recreation program assistant;
    (10) recreation therapist senior;
    (11) registered nurse senior;
    (12) skills development specialist;
    (13) social worker senior;
    (14) social worker specialist; and
    (15) speech pathology specialist.

    Sec. 5. Minnesota Statutes 2010, section 352.91, subdivision 3f, is amended to read:
    Subd. 3f. Additional Department of Human Services personnel. (a) "Covered
correctional service" means service by a state employee in one of the employment
positions specified in paragraph (b) at the Minnesota Security Hospital or in the Minnesota
sex offender program if at least 75 percent of the employee's working time is spent in
direct contact with patients and the determination of this direct contact is certified to the
executive director by the commissioner of human services.
    (b) The employment positions are:
    (1) behavior analyst 2;
    (2) behavior analyst 3;
    (3) certified occupational therapy assistant 1;
    (4) certified occupational therapy assistant 2;
    (5) chemical dependency counselor senior;
    (6) client advocate;
    (7) clinical program therapist 3;
(8) clinical program therapist 4;
(9) customer services specialist principal;
    (8) (10) dental assistant registered;
    (9) (11) group supervisor;
    (10) (12) group supervisor assistant;
    (11) (13) human services support specialist;
    (12) (14) licensed alcohol and drug counselor;
    (13) (15) licensed practical nurse 1;
    (14) (16) management analyst 3;
    (15) (17) occupational therapist;
    (16) (18) occupational therapist, senior;
    (17) (19) psychologist 1;
    (18) (20) psychologist 2;
    (19) (21) psychologist 3;
    (20) (22) recreation program assistant;
    (21) (23) recreation therapist lead;
    (22) (24) recreation therapist senior;
    (23) (25) rehabilitation counselor senior;
    (24) (26) security supervisor;
    (25) (27) skills development specialist;
    (26) (28) social worker senior;
    (27) (29) social worker specialist;
    (28) (30) social worker specialist, senior;
    (29) (31) special education program assistant;
    (30) (32) speech pathology clinician;
    (31) (33) work therapy assistant; and
    (32) (34) work therapy program coordinator.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 4
HEALTH CARE SAVINGS PLAN MODIFICATIONS

    Section 1. Minnesota Statutes 2010, section 352.98, subdivision 3, is amended to read:
    Subd. 3. Contributions. (a) Contributions to the plan must be defined in a
personnel policy or in a collective bargaining agreement of a public employer or political
subdivision. The executive director may offer different types of trusts permitted under the
Internal Revenue Code to best meet the needs of different employer units.
    (b) Contributions to the plan by or on behalf of the participant must be held in trust
for reimbursement of eligible health-related expenses for participants and their dependents
following termination from public employment or during active employment in other
circumstances set forth in the plan document. The executive director shall maintain
a separate account of the contributions made by or on behalf of each participant and
the earnings thereon. The executive director shall make available a limited range of
investment options, and each participant may direct the investment of the accumulations
in the participant's account among the investment options made available by the executive
director.
    (c) This section does not obligate a public employer to meet and negotiate in good
faith with the exclusive bargaining representative of any public employee group regarding
an employer contribution to a postretirement or active employee health care savings plan
authorized by this section and section 356.24, subdivision 1, clause (7). It is not the intent
of the legislature to authorize the state to incur new funding obligations for the costs of
retiree health care or the costs of administering retiree health care plans or accounts.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2010, section 352.98, subdivision 4, is amended to read:
    Subd. 4. Reimbursement for health-related expenses. The executive director
shall reimburse participants at least quarterly for eligible health-related expenses, as
allowable by federal and state law, until the participant exhausts the accumulation in the
participant's account. If a participant dies prior to exhausting the participant's account
balance, the participant's spouse or dependents are eligible to be reimbursed for health care
expenses from the account until the account balance is exhausted. If an account balance
remains after the death of a participant and all of the participant's legal dependents, the
remainder of the account must be paid to the participant's beneficiaries or, if none, to
the participant's estate a living person or persons named by the personal representative
of the estate. The person or persons named must use the account for reimbursement of
allowable health care expenses.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2010, section 352.98, subdivision 5, is amended to read:
    Subd. 5. Fees. The executive director is authorized to charge uniform fees to
participants to cover the ongoing cost of operating the plan. Any fees not needed must
revert to participant accounts or be used to reduce plan fees the following year. The fees
must be deposited in an administrative fee account. On January 1, following the end of the
prior fiscal year, the executive director shall estimate the amount needed to cover plan
expenses, record keeping costs, and custodial fees for the new fiscal year. If the balance
of the administrative fee account is in excess of this amount, the excess must revert to
participant accounts, or plan fees must be reduced to eliminate the excess, or the executive
director may use a combination of both approaches to eliminate the excess.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2010, section 352.98, subdivision 8, is amended to read:
    Subd. 8. Exemption from process. Assets in a health-care health care savings
plan account described in this section must be used for the reimbursement of healthcare
health care expenses and are not assignable or subject to execution, levy, attachment,
garnishment, or other legal process, except as provided in section 518.58, 518.581, or
518A.53.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 5
MSRS-UNCLASSIFIED RETIREMENT PROGRAM MODIFICATIONS

    Section 1. Minnesota Statutes 2010, section 352D.02, subdivision 3, is amended to
read:
    Subd. 3. Transfer to general employees retirement plan. (a) If permitted under
paragraph (b), an employee referred to in subdivision 1, paragraph (c), clauses (2) to (4),
(6) to (14), and (16) to (18), who is credited with shares in the unclassified program, and
who has credit for allowable service, not later than one month following the termination
of covered employment, may elect to terminate participation in the unclassified program
and be covered by the general employees retirement plan by filing a written election
with the executive director.
(b) An employee specified in paragraph (a) is permitted to terminate participation
in the unclassified program and be covered by the general employees retirement plan if
the employee:
(1) was employed before July 1, 2010, and has at least ten years of allowable service
as of the date of the election; or if the employee
(2) was first employed after June 30, 2010, and has no more than seven years of
allowable service as of the date of the election.
The election must be in writing on a form provided by the executive director, and
can be made no later than one month following the termination of covered employment.
(b) (c) If the transfer election is made, the executive director shall then redeem the
employee's total shares and shall credit to the employee's account in the general employees
retirement plan the amount of contributions that would have been so credited had the
employee been covered by the general employees retirement plan during the employee's
entire covered employment or elective state service. The balance of money so redeemed
and not credited to the employee's account must be transferred to the general employees
retirement plan, except that the executive director must determine:
(1) the employee contribution contributions paid to the unclassified program must
be compared to; and
(2) the employee contributions that would have been paid to the general employees
retirement plan for the comparable period, if the individual had been covered by that plan.
If clause (1) is greater than clause (2), the difference must be refunded to the
employee as provided in section 352.22. If clause (2) is greater than clause (1), the
difference must be paid by the employee within six months of electing general employees
retirement plan coverage or before the effective date of the annuity, whichever is sooner.
    (c) (d) An election under paragraph (a) (b) to transfer coverage to the general
employees retirement plan is irrevocable during any period of covered employment.
(d) (e) A person referenced in subdivision 1, paragraph (c), clause (1), (5), or
(15), who is credited with employee shares in the unclassified program is not permitted
to terminate participation in the unclassified program and be covered by the general
employees retirement plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 6
PERA-ADMINISTERED RETIREMENT PLAN MODIFICATIONS

    Section 1. Minnesota Statutes 2011 Supplement, section 353.01, subdivision 16,
is amended to read:
    Subd. 16. Allowable service; limits and computation. (a) "Allowable service"
means:
    (1) service during years of actual membership in the course of which employee
deductions were withheld from salary and contributions were made at the applicable rates
under section 353.27, 353.65, or 353E.03;
(2) periods of service covered by payments in lieu of salary deductions under
sections 353.27, subdivision 12, and 353.35;
    (3) service in years during which the public employee was not a member but for
which the member later elected, while a member, to obtain credit by making payments to
the fund as permitted by any law then in effect;
    (4) a period of authorized leave of absence with pay from which deductions for
employee contributions are made, deposited, and credited to the fund;
    (5) a period of authorized personal, parental, or medical leave of absence without
pay, including a leave of absence covered under the federal Family Medical Leave Act,
that does not exceed one year, and for which a member obtained service credit for each
month in the leave period by payment under section 353.0161 to the fund made in place of
salary deductions. An employee must return to public service and render a minimum of
three months of allowable service in order to be eligible to make payment under section
353.0161 for a subsequent authorized leave of absence without pay. Upon payment, the
employee must be granted allowable service credit for the purchased period;
    (6) a periodic, repetitive leave that is offered to all employees of a governmental
subdivision. The leave program may not exceed 208 hours per annual normal work cycle
as certified to the association by the employer. A participating member obtains service
credit by making employee contributions in an amount or amounts based on the member's
average salary, excluding overtime pay, that would have been paid if the leave had not been
taken. The employer shall pay the employer and additional employer contributions on
behalf of the participating member. The employee and the employer are responsible to pay
interest on their respective shares at the rate of 8.5 percent a year, compounded annually,
from the end of the normal cycle until full payment is made. An employer shall also make
the employer and additional employer contributions, plus 8.5 percent interest, compounded
annually, on behalf of an employee who makes employee contributions but terminates
public service. The employee contributions must be made within one year after the end of
the annual normal working cycle or within 30 days after termination of public service,
whichever is sooner. The executive director shall prescribe the manner and forms to be
used by a governmental subdivision in administering a periodic, repetitive leave. Upon
payment, the member must be granted allowable service credit for the purchased period;
    (7) an authorized temporary or seasonal layoff under subdivision 12, limited to three
months allowable service per authorized temporary or seasonal layoff in one calendar year.
An employee who has received the maximum service credit allowed for an authorized
temporary or seasonal layoff must return to public service and must obtain a minimum of
three months of allowable service subsequent to the layoff in order to receive allowable
service for a subsequent authorized temporary or seasonal layoff;
    (8) a period during which a member is absent from employment by a governmental
subdivision by reason of service in the uniformed services, as defined in United States
Code, title 38, section 4303(13), if the member returns to public service with the same
governmental subdivision upon discharge from service in the uniformed service within the
time frames required under United States Code, title 38, section 4312(e), provided that
the member did not separate from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions. The service must be credited if the
member pays into the fund equivalent employee contributions based upon the contribution
rate or rates in effect at the time that the uniformed service was performed multiplied by
the full and fractional years being purchased and applied to the annual salary rate. The
annual salary rate is the average annual salary, excluding overtime pay, during the purchase
period that the member would have received if the member had continued to be employed
in covered employment rather than to provide uniformed service, or, if the determination
of that rate is not reasonably certain, the annual salary rate is the member's average salary
rate, excluding overtime pay, during the 12-month period of covered employment rendered
immediately preceding the period of the uniformed service. Payment of the member
equivalent contributions must be made during a period that begins with the date on which
the individual returns to public employment and that is three times the length of the
military leave period, or within five years of the date of discharge from the military service,
whichever is less. If the determined payment period is less than one year, the contributions
required under this clause to receive service credit may be made within one year of the
discharge date. Payment may not be accepted following 30 days after termination of
public service under subdivision 11a. If the member equivalent contributions provided for
in this clause are not paid in full, the member's allowable service credit must be prorated
by multiplying the full and fractional number of years of uniformed service eligible for
purchase by the ratio obtained by dividing the total member contributions received by the
total member contributions otherwise required under this clause. The equivalent employer
contribution, and, if applicable, the equivalent additional employer contribution must be
paid by the governmental subdivision employing the member if the member makes the
equivalent employee contributions. The employer payments must be made from funds
available to the employing unit, using the employer and additional employer contribution
rate or rates in effect at the time that the uniformed service was performed, applied to the
same annual salary rate or rates used to compute the equivalent member contribution. The
governmental subdivision involved may appropriate money for those payments. The
amount of service credit obtainable under this section may not exceed five years unless a
longer purchase period is required under United States Code, title 38, section 4312. The
employing unit shall pay interest on all equivalent member and employer contribution
amounts payable under this clause. Interest must be computed at a rate of 8.5 percent
compounded annually from the end of each fiscal year of the leave or the break in service
to the end of the month in which the payment is received. Upon payment, the employee
must be granted allowable service credit for the purchased period; or
(9) a period specified under subdivision 40 section 353.0162.
    (b) For calculating benefits under sections 353.30, 353.31, 353.32, and 353.33 for
state officers and employees displaced by the Community Corrections Act, chapter 401,
and transferred into county service under section 401.04, "allowable service" means the
combined years of allowable service as defined in paragraph (a), clauses (1) to (6), and
section 352.01, subdivision 11.
    (c) For a public employee who has prior service covered by a local police or
firefighters relief association that has consolidated with the Public Employees Retirement
Association under chapter 353A or to which section 353.665 applies, and who has
elected the type of benefit coverage provided by the public employees police and fire
fund either under section 353A.08 following the consolidation or under section 353.665,
subdivision 4
, "allowable service" is a period of service credited by the local police or
firefighters relief association as of the effective date of the consolidation based on law
and on bylaw provisions governing the relief association on the date of the initiation
of the consolidation procedure.
    (d) No member may receive more than 12 months of allowable service credit in a
year either for vesting purposes or for benefit calculation purposes. For an active member
who was an active member of the former Minneapolis Firefighters Relief Association on
the day prior to the effective date of consolidation under Laws 2011, First Special Session
chapter 8, article 6, section 19, "allowable service" is the period of service credited by
the Minneapolis Firefighters Relief Association as reflected in the transferred records of
the association up to the effective date of consolidation under Laws 2011, First Special
Session chapter 8, article 6, section 19, and the period of service credited under paragraph
(a), clause (1), after the effective date of consolidation under Laws 2011, First Special
Session chapter 8, article 6, section 19. For an active member who was an active member
of the former Minneapolis Police Relief Association on the day prior to the effective date
of consolidation under Laws 2011, First Special Session chapter 8, article 7, section 19,
"allowable service" is the period of service credited by the Minneapolis Police Relief
Association as reflected in the transferred records of the association up to the effective date
of consolidation under Laws 2011, First Special Session chapter 8, article 7, section 19,
and the period of service credited under paragraph (a), clause (1), after the effective date
of consolidation under Laws 2011, First Special Session chapter 8, article 7, section 19.
    (e) MS 2002 [Expired]
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2010, section 353.01, subdivision 47, is amended to read:
    Subd. 47. Vesting. (a) "Vesting" means obtaining a nonforfeitable entitlement
to an annuity or benefit from a retirement plan administered by the Public Employees
Retirement Association by having credit for sufficient allowable service under paragraph
(b) or (c), whichever applies.
(b) For purposes of qualifying for an annuity or benefit as a basic or coordinated plan
member of the general employees retirement plan of the Public Employees Retirement
Association:
(1) a member public employee who first became a public employee member before
July 1, 2010, is vested when the person has accrued credit for not less than three years
of allowable service as defined under subdivision 16; and
(2) a member public employee who first becomes a public employee member after
June 30, 2010, is vested when the person has accrued credit for not less than five years of
allowable service as defined under subdivision 16.
(c) For purposes of qualifying for an annuity or benefit as a member of the police
and fire plan or a member of the local government correctional employees retirement plan:
(1) a member public employee who first became a public employee member before
July 1, 2010, is vested when the person has accrued credit for not less than three years
of allowable service as defined under subdivision 16; and
(2) a member public employee who first becomes a public employee member after
June 30, 2010, is vested at the following percentages when the person has accrued credited
allowable service as defined under subdivision 16, as follows:
(i) 50 percent after five years;
(ii) 60 percent after six years;
(iii) 70 percent after seven years;
(iv) 80 percent after eight years;
(v) 90 percent after nine years; and
(vi) 100 percent after ten years.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2010, section 353.50, subdivision 7, is amended to read:
    Subd. 7. MERF division account contributions. (a) After June 30, 2010, the
member and employer contributions to the MERF division account are governed by this
subdivision.
(b) An active member covered by the MERF division must make an employee
contribution of 9.75 percent of the total salary of the member as defined in section 353.01,
subdivision 10. The employee contribution must be made by payroll deduction by the
member's employing unit under section 353.27, subdivision 4, and is subject to the
provisions of section 353.27, subdivisions 7, 7a, 7b, 12, 12a, and 12b.
(c) The employer regular contribution to the MERF division account with respect
to an active MERF division member is 9.75 percent of the total salary of the member as
defined in section 353.01, subdivision 10.
(d) The employer additional contribution to the MERF division account with respect
to an active member of the MERF division is 2.68 percent of the total salary of the member
as defined in section 353.01, subdivision 10, plus the employing unit's share of $3,900,000
that the employing unit paid or is payable to the former Minneapolis Employees
Retirement Fund under Minnesota Statutes 2008, section 422A.101, subdivision 1a, 2,
or 2a, during calendar year 2009, as was certified by the former executive director of the
former Minneapolis Employees Retirement Fund.
(e) Annually after June 30, 2012, the employer supplemental contribution to
the MERF division account by the city of Minneapolis, Special School District No. 1,
Minneapolis, a Minneapolis-owned public utility, improvement, or municipal activity,
Hennepin county, the Metropolitan Council, the Metropolitan Airports Commission, and
the Minnesota State Colleges and Universities system is the larger of the following:
(1) the amount by which the total actuarial required contribution determined under
section 356.215 by the approved actuary retained by the Public Employees Retirement
Association in the most recent actuarial valuation of the MERF division and based on a
June 30, 2031, amortization date, after subtracting the contributions under paragraphs (b),
(c), and (d), exceeds $22,750,000 or $24,000,000, whichever applies; or
(2) the amount of $27,000,000, but the total supplemental contribution amount
plus the contributions under paragraphs (c) and (d) may not exceed $34,000,000. Each
employing unit's share of the total employer supplemental contribution amount is equal to
the applicable portion specified in paragraph (g) (h). The initial total actuarial required
contribution after June 30, 2012, must be calculated using the mortality assumption
change recommended on September 30, 2009, for the Minneapolis Employees Retirement
Fund by the approved consulting actuary retained by the Minneapolis Employees
Retirement Fund board.
(f) Before January 31, each employing unit must be invoiced for its share of the
total employer supplemental contribution amount under paragraph (e). The amount is
payable by the employing unit in two parts. The first half of the amount due is payable
on or before the July 31 following the date of the invoice, and the second half of the
amount due is payable on or before December 15. Each invoice must be based on the
actuarial valuation report prepared under section 356.215 and the standards for actuarial
work promulgated by the Legislative Commission on Pensions and Retirement as of the
valuation date occurring 18 months earlier.
(f) (g) Notwithstanding any provision of paragraph (c), (d), or (e) to the contrary, as
of August 1 annually, if the amount of the retirement annuities and benefits paid from the
MERF division account during the preceding fiscal year, multiplied by the factor of 1.035,
exceeds the market value of the assets of the MERF division account on the preceding
June 30, plus state aid of $9,000,000, $22,750,000, or $24,000,000, whichever applies,
plus the amounts payable under paragraphs (b), (c), (d), and (e) during the preceding
fiscal year, multiplied by the factor of 1.035, the balance calculated is a special additional
employer contribution. The special additional employer contribution under this paragraph
is payable in addition to any employer contribution required under paragraphs (c), (d), and
(e), and is payable on or before the following June 30. The special additional employer
contribution under this paragraph must be allocated as specified in paragraph (g) (h).
(g) (h) The employer supplemental contribution under paragraph (e) or the special
additional employer contribution under paragraph (f) (g) must be allocated between the
city of Minneapolis, Special School District No. 1, Minneapolis, any Minneapolis-owned
public utility, improvement, or municipal activity, the Minnesota State Colleges and
Universities system, Hennepin County, the Metropolitan Council, and the Metropolitan
Airports Commission in proportion to their share of the actuarial accrued liability of the
former Minneapolis Employees Retirement Fund as of July 1, 2009, as calculated by the
approved actuary retained under section 356.214 as part of the actuarial valuation prepared
as of July 1, 2009, under section 356.215 and the Standards for Actuarial Work adopted by
the Legislative Commission on Pensions and Retirement.
(h) (i) The employer contributions under paragraphs (c), (d), and (e), and (g) must be
paid as provided in section 353.28.
(i) (j) Contributions under this subdivision are subject to the provisions of section
353.27, subdivisions 4, 7, 7a, 7b, 11, 12, 12a, 12b, 13, and 14.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2010, section 353.656, subdivision 2, is amended to read:
    Subd. 2. Benefits paid under workers' compensation law. (a) If a member, as
described in subdivision 1, is injured under circumstances which entitle the member to
receive benefits under the becomes disabled and receives a disability benefit as specified
in this section and is also entitled to receive lump sum or periodic benefits under workers'
compensation law, the member shall receive the same benefits as provided in subdivision
1, with disability benefits paid reimbursed and future benefits reduced by all periodic or
lump-sum amounts, other than those amounts excluded under paragraph (b), paid to the
member under the workers' compensation law, after deduction of amount of attorney fees,
authorized under applicable workers' compensation laws, paid by a disabilitant if the total
of laws, the single life annuity actuarial equivalent disability benefit amount and the
workers' compensation benefit exceeds: amount must be added. The computation must
exclude any attorney fees paid by the disabilitant as authorized under applicable workers'
compensation laws. The computation must also exclude permanent partial disability
payments provided under section 176.101, subdivision 2a, and retraining payments under
section 176.102, subdivision 11, if the permanent partial disability or retraining payments
are reported to the executive director in a manner specified by the executive director.
(b) The equivalent salary is the amount determined under clause (1) or (2),
whichever is greater:
(1) the salary the disabled member received as of the date of the disability; or
(2) the salary currently payable for the same employment position or an employment
position substantially similar to the one the person held as of the date of the disability,
whichever is greater. The disability benefit must be reduced to that amount which, when
added to the workers' compensation benefits, does not exceed the greater of the salaries
described in clauses (1) and (2) positions in the applicable government subdivision.
    (b) Permanent partial disability payments provided for in section 176.101,
subdivision 2a, and retraining payments provided for in section 176.102, subdivision 11,
must not be offset from disability payments due under paragraph (a) if the amounts of
the permanent partial or retraining payments are reported to the executive director in a
manner specified by the executive director.
(c) If the amount determined under paragraph (a) exceeds the equivalent salary
determined under paragraph (b), the disability benefit amount must be reduced to that
amount which, when added to the workers' compensation benefits, equals the equivalent
salary.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. PERA-ADMINISTERED RETIREMENT PLANS; STUDY OF
UPDATED MEMBERSHIP WAGE THRESHOLD FIGURE.
(a) The Public Employees Retirement Association shall: (1) identify the options
for revising the membership threshold salary under Minnesota Statutes, section 353.01,
subdivisions 2a and 2b, for membership in a retirement plan administered by the
association; (2) determine the actuarial impact on the retirement plans administered by the
association, the financial impact on participating employers, and the financial impact on
prospective public employees of each option; and (3) formulate the recommendations for
structuring each identified option.
(b) The Public Employees Retirement Association shall report its findings and
recommendations of its study to the chair, the vice chair, and the executive director of the
Legislative Commission on Pensions and Retirement. The report must be filed with the
commission on or before February 15, 2013.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 7
REVISIONS IN THE PERA PRIVATIZATION LAW

    Section 1. Minnesota Statutes 2010, section 353F.02, subdivision 4, is amended to read:
    Subd. 4. Medical facility. "Medical facility" means:
    (1) Bridges Medical Services;
(2) Cedarview Care Center in Steele County;
    (2) (3) the City of Cannon Falls Hospital;
    (3) (4) the Chris Jenson Health and Rehabilitation Center in St. Louis County;
(4) (5) Clearwater County Memorial Hospital doing business as Clearwater Health
Services in Bagley;
    (5) (6) the Dassel Lakeside Community Home;
(6) (7) the Douglas County Hospital, with respect to the Mental Health Unit;
    (7) (8) the Fair Oaks Lodge, Wadena;
    (8) (9) the Glencoe Area Health Center;
    (9) (10) Hutchinson Area Health Care;
    (10) (11) the Lakefield Nursing Home;
    (11) (12) the Lakeview Nursing Home in Gaylord;
    (12) (13) the Luverne Public Hospital;
    (13) (14) the Oakland Park Nursing Home;
    (14) (15) the RenVilla Nursing Home;
    (15) (16) the Rice Memorial Hospital in Willmar, with respect to the Department
of Radiology and the Department of Radiation/Oncology;
(16) (17) the St. Peter Community Health Care Center;
(18) the Traverse Care Center in Traverse County;
    (17) (19) the Waconia-Ridgeview Medical Center;
(18) (20) the Weiner Memorial Medical Center, Inc.;
(19) (21) the Wheaton Community Hospital; and
(20) (22) the Worthington Regional Hospital.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2010, section 353F.04, subdivision 1, is amended to read:
    Subdivision 1. Enhanced augmentation rates. (a) The deferred annuity of
a terminated medical facility or other public employing unit employee is subject
to augmentation under section 353.71, subdivision 2, of the edition of Minnesota
Statutes published in the year in which the privatization occurred, except that the rate
of augmentation is as specified in paragraph (b) or (c), whichever is applicable this
subdivision.
    (b) This paragraph applies if the legislation adding the medical facility or other
employing unit to section 353F.02, subdivision 4 or 5, as applicable, was enacted before
July 26, 2005, and became effective before January 1, 2008, for the Hutchinson Area
Health Care or before January 1, 2007, for all other medical facilities and all other
employing units. For a terminated medical facility or other public employing unit
employee, the augmentation rate is 5.5 percent compounded annually until January 1
following the year in which the person attains age 55. From that date to the effective date
of retirement, the augmentation rate is 7.5 percent compounded annually.
    (c) If paragraph (b) is not applicable, and if the effective date of the privatization is
before January 1, 2011, the augmentation rate is four percent compounded annually until
January 1, following the year in which the person attains age 55. From that date to the
effective date of retirement, the augmentation rate is six percent compounded annually.
(d) If the effective date of the privatization is after December 31, 2010, the
applicable augmentation rate depends on the result of computations specified in section
353F.025, subdivision 1. If those computations indicate no loss or a net gain to the fund of
the general employees retirement plan of the Public Employees Retirement Association,
the augmentation rate is 2.0 percent compounded annually until the effective date of
retirement. If the computations under that subdivision indicate a net loss to the fund if
a 2.0 percent augmentation rate is used, but a net gain or no loss if a 1.0 percent rate is
used, then the augmentation rate is 1.0 percent compounded annually until the effective
date of retirement.
(e) The term "effective date of the privatization" as used in this subdivision means
the "effective date" as defined in section 353F.02, subdivision 3.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2010, section 353F.07, is amended to read:
353F.07 EFFECT ON REFUND.
Notwithstanding any provision of chapter 353 to the contrary, terminated medical
facility or other public employing unit employees may receive a refund of employee
accumulated contributions plus interest at the rate of six percent per year compounded
annually as provided in accordance with section 353.34, subdivision 2, of the edition
of Minnesota Statutes published in the year in which the privatization occurred, at any
time after the transfer of employment to the successor employer to of the terminated
medical facility or other public employing unit. If a terminated medical facility or other
public employing unit employee has received a refund from a pension plan enumerated
listed in section 356.30, subdivision 3, the person may not repay that refund unless the
person again becomes a member of one of those enumerated listed plans and complies
with section 356.30, subdivision 2.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 8
TRA ADMINISTRATIVE CHANGES AND RELATED MODIFICATIONS

    Section 1. Minnesota Statutes 2010, section 16A.06, subdivision 9, is amended to read:
    Subd. 9. First class city teacher retirement funds aids reporting. Each year,
on or before April 15, the commissioner of management and budget shall report to the
chairs of the senate Finance Committee and the house of representatives Ways and Means
Committee on expenditures for state aids to the Minneapolis and Saint St. Paul Teacher
Retirement Fund associations Association, and to the Teachers Retirement Association on
behalf of the merged Minneapolis Teachers Retirement Fund Association, under sections
354.435, 354A.12, and 423A.02, subdivision 3. This report shall include the amounts
expended in the most recent fiscal year and estimates of expected expenditures for the
current and next fiscal year.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2010, section 126C.41, subdivision 3, is amended to read:
    Subd. 3. Retirement levies. (a) In 1991 and each year thereafter, a district to which
this subdivision applies may levy an additional amount required for contributions to
the general employees retirement plan of the Public Employees Retirement Association
as the successor of the Minneapolis Employees Retirement Fund as a result of the
maximum dollar amount limitation on state contributions to that plan imposed under
section 353.505. The additional levy must not exceed the most recent amount certified by
the executive director of the Public Employees Retirement Association as the district's
share of the contribution requirement in excess of the maximum state contribution under
section 353.505.
(b) For taxes payable in 1994 and thereafter, Special School District No. 1,
Minneapolis, and Independent School District No. 625, St. Paul, may levy for the increase
in the employer retirement fund contributions, under Laws 1992, chapter 598, article 5,
section 1.
(c) If the employer retirement fund contributions under section 354A.12, subdivision
2a
, are increased for fiscal year 1994 or later fiscal years, Special School District No. 1,
Minneapolis, and Independent School District No. 625, St. Paul, may levy in payable
1994 or later an amount equal to the amount derived by applying the net increase in
the employer retirement fund contribution rate of the respective teacher retirement fund
association between fiscal year 1993 and the fiscal year beginning in the year after the
levy is certified to the total covered payroll of the applicable teacher retirement fund
association. If an applicable school district levies under this paragraph, they may not
levy under paragraph (b).
(d) In addition to the levy authorized under paragraph (c), Special School District
No. 1, Minneapolis, may also levy payable in 1997 or later an amount equal to the
contributions under section 423A.02 354.435, subdivision 3 2, and may also levy in
payable 1994 or later an amount equal to the state aid contribution under section 354A.12
354.435, subdivision 3b 1
. Independent School District No. 625, St. Paul, may levy
payable in 1997 or later an amount equal to the supplemental contributions under section
423A.02, subdivision 3.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. [354.435] ADDITIONAL CONTRIBUTIONS BY SPECIAL SCHOOL
DISTRICT NO. 1 AND CITY OF MINNEAPOLIS.
    Subdivision 1. Special direct state matching aid. (a) Special School District No. 1,
Minneapolis, and the city of Minneapolis must make additional employer contributions
to the Teachers Retirement Association in the amounts specified in paragraph (b). These
contributions can be made from any available source. If made in whole or in part by a
levy, the levy may be classified as that of a special taxing district for purposes of sections
275.065 and 276.04, and for all other property tax purposes.
(b) Each fiscal year $1,250,000 must be contributed by Special School District
No. 1, Minneapolis, and $1,250,000 must be contributed by the city of Minneapolis to
the Teachers Retirement Association and the state shall match this total by paying to
the Teachers Retirement Association $2,500,000. The superintendent of Special School
District No. 1, Minneapolis, the mayor of the city of Minneapolis, and the executive
director of the Teachers Retirement Association shall jointly certify to the commissioner
of management and budget the total amount that has been contributed by Special School
District No. 1, Minneapolis, and by the city of Minneapolis to the Teachers Retirement
Association. Any certification to the commissioner of management and budget must
be made quarterly. If the certifications for a fiscal year exceed the maximum annual
direct state matching aid amount in any quarter, the amount of direct state matching aid
payable to the Teachers Retirement Association must be limited to the balance of the
maximum annual direct state matching aid amount available. The amount required under
this paragraph, subject to the maximum direct state matching aid amount, is appropriated
annually to the commissioner of management and budget.
(c) The commissioner of management and budget may prescribe the form of the
certifications required under paragraph (b).
    Subd. 2. Additional contributions. In addition to any other required contributions,
on or before June 30 each fiscal year, Special School District No. 1, Minneapolis, and the
city of Minneapolis must each make an additional contribution to the Teachers Retirement
Association of $1,000,000.
    Subd. 3. Procedure for recovery of deficient or delinquent amounts. If Special
School District No. 1, Minneapolis, or the city of Minneapolis fails to pay the full amount
required under subdivision 1, paragraph (b), or 2, in a timely manner, the executive
director is authorized to use section 354.512, or any other process in law to ensure full
payment is obtained.
    Subd. 4. Expiration. This section expires effective the first day of the fiscal year
next following the fiscal year in which the Teachers Retirement Association has no
unfunded actuarial accrued liability as determined by the actuarial valuation prepared
under section 356.215 by the approved actuary retained under section 356.214.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2010, section 354.51, subdivision 5, is amended to read:
    Subd. 5. Payment of shortages. (a) Except as provided in paragraph (b), in the
event that full required member contributions are not deducted from the salary of a
teacher, payment must be made as follows:
(1) Payment of shortages in member deductions on salary earned after June 30,
1957, and before July 1, 1981, may be made any time before retirement. Payment must
include interest at an annual rate of 8.5 percent 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 must be credited to the fund. If payment of a shortage in deductions
is not made, the formula service credit of the member must be prorated under section
354.05, subdivision 25, clause (3).
(2) Payment of shortages in member deductions on salary earned after June 30,
1981, are the sole obligation of the employing unit and are payable by the employing
unit upon notification by the executive director of the shortage with interest at an annual
rate of 8.5 percent 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
must 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 the
shortages. If the shortage payment is not paid by the employing unit within 60 days of
notification, and if the executive director does not use the recovery procedure in section
354.512, the executive director shall certify the amount of the shortage 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 management and budget, 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.
(3) Payment may not be made for shortages in member deductions on salary earned
before July 1, 1957, for shortages in member deductions on salary paid or payable under
paragraph (b), or for shortages in member deductions for persons employed by the
Minnesota State Colleges and Universities system in a faculty position or in an eligible
unclassified administrative position and whose employment was less than 25 percent
of a full academic year, exclusive of the summer session, for the applicable institution
that exceeds the most recent 36 months.
(b) For a person who is employed by the Minnesota State Colleges and Universities
system in a faculty position or in an eligible unclassified administrative position and
whose employment was less than 25 percent of a full academic year, exclusive of the
summer session, for the applicable institution, upon the person's election under section
354B.21 of retirement coverage under this chapter, the shortage in member deductions
on the salary for employment by the Minnesota State Colleges and Universities system
institution of less than 25 percent of a full academic year, exclusive of the summer session,
for the applicable institution for the most recent 36 months and the associated employer
contributions must be paid by the Minnesota State Colleges and Universities system
institution, plus annual compound interest at the rate of 8.5 percent from the end of the
fiscal year in which the shortage occurred to the end of the month in which the Teachers
Retirement Association coverage election is made. If the shortage payment is not made by
the institution within 60 days of notification, the executive director shall certify the amount
of the shortage payment to the commissioner of management and budget, who shall deduct
the amount from any state appropriation to the system. An individual electing coverage
under this paragraph shall repay the amount of the shortage in member deductions, plus
interest, through deduction from salary or compensation payments within the first year of
employment after the election under section 354B.21, subject to the limitations in section
16D.16. The Minnesota State Colleges and Universities system may use any means
available to recover amounts which were not recovered through deductions from salary or
compensation payments. No payment of the shortage in member deductions under this
paragraph may be made for a period longer than the most recent 36 months.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. [354.512] RECOVERY OF DEFICIENCIES.
In addition to any other remedies permitted under law, if an employing unit or
other entity required by law to make any form of payment to the Teachers Retirement
Association fails to make full payment within 60 days of notification, the executive
director is authorized to certify the amount of deficiency to the commissioner of
management and budget, who shall deduct the amount from any state aid or appropriation
applicable to the employing unit or entity, and transmit the withheld aid or appropriation
to the executive director for deposit in the fund.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2010, section 354A.12, subdivision 3c, is amended to read:
    Subd. 3c. Termination of supplemental contributions and direct matching and
state aid. The supplemental contributions payable to the Minneapolis Teachers Retirement
Fund Association by Special School District No. 1 and the city of Minneapolis under
section 423A.02, subdivision 3, must be paid to the Teachers Retirement Association and
must continue until the current assets of the fund equal or exceed the actuarial accrued
liability of the fund as determined in the most recent actuarial report for the fund by
the actuary retained under section 356.214, or 2037, whichever occurs earlier. The
supplemental contributions payable to the St. Paul Teachers Retirement Fund Association
by Independent School District No. 625 under section 423A.02, subdivision 3, or the
direct state aid under subdivision 3a to the St. Paul Teachers Retirement Fund Association
must continue until the current assets of the fund equal or exceed the actuarial accrued
liability of the fund as determined in the most recent actuarial report for the fund by the
actuary retained under section 356.214 or until 2037, whichever occurs earlier.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2011 Supplement, section 356.215, subdivision 8, is
amended to read:
    Subd. 8. Interest and salary assumptions. (a) The actuarial valuation must use
the applicable following preretirement interest assumption and the applicable following
postretirement interest assumption:



plan
preretirement
interest
rate assumption
postretirement
interest
rate assumption

general state employees retirement plan
8.5%
6.0%

correctional state employees retirement plan
8.5
6.0

State Patrol retirement plan
8.5
6.0

legislators retirement plan
8.5
6.0

elective state officers retirement plan
8.5
6.0

judges retirement plan
8.5
6.0

general public employees retirement plan
8.5
6.0

public employees police and fire retirement plan
8.5
6.0


local government correctional service
retirement plan
8.5
6.0

teachers retirement plan
8.5
6.0

Duluth teachers retirement plan
8.5
8.5

St. Paul teachers retirement plan
8.5
8.5

Fairmont Police Relief Association
5.0
5.0

Virginia Fire Department Relief Association
5.0
5.0


Bloomington Fire Department Relief
Association
6.0
6.0


local monthly benefit volunteer firefighters
relief associations
5.0
5.0
    (b) Before July 1, 2010, the actuarial valuation must use the applicable following
single rate future salary increase assumption, the applicable following modified single
rate future salary increase assumption, or the applicable following graded rate future
salary increase assumption:
    (1) single rate future salary increase assumption

plan
future salary increase assumption

legislators retirement plan
5.0%

judges retirement plan
4.0

Fairmont Police Relief Association
3.5

Virginia Fire Department Relief Association
3.5


Bloomington Fire Department Relief
Association
4.0
    (2) age-related select and ultimate future salary increase assumption or graded rate
future salary increase assumption

plan
future salary increase assumption

correctional state employees retirement plan
assumption D

State Patrol retirement plan
assumption C

local government correctional service retirement plan
assumption C

Duluth teachers retirement plan
assumption A

St. Paul teachers retirement plan
assumption B
For plans other than the Duluth teachers
retirement plan, the select calculation
is: during the designated select period, a
designated percentage rate is multiplied by
the result of the designated integer minus T,
where T is the number of completed years of
service, and is added to the applicable future
salary increase assumption. The designated
select period is five years and the designated
integer is five for the general state employees
retirement plan. The designated select period
is ten years and the designated integer is ten
for all other retirement plans covered by
this clause. The designated percentage rate
is: (1) 0.2 percent for the correctional state
employees retirement plan, the State Patrol
retirement plan, and the local government
correctional service retirement plan; and (2)
0.6 percent for the general state employees
retirement plan; and (3) 0.3 percent for the
teachers retirement plan, the Duluth Teachers
Retirement Fund Association, and the St.
Paul Teachers Retirement Fund Association.
The select calculation for the Duluth Teachers
Retirement Fund Association is 8.00 percent
per year for service years one through seven,
7.25 percent per year for service years seven
and eight, and 6.50 percent per year for
service years eight and nine.
    The ultimate future salary increase assumption is:

age
A
B
C
D

16
8.00%
6.90%
7.7500%
7.2500%

17
8.00
6.90
7.7500
7.2500

18
8.00
6.90
7.7500
7.2500

19
8.00
6.90
7.7500
7.2500

20
6.90
6.90
7.7500
7.2500

21
6.90
6.90
7.1454
6.6454

22
6.90
6.90
7.0725
6.5725

23
6.85
6.85
7.0544
6.5544

24
6.80
6.80
7.0363
6.5363

25
6.75
6.75
7.0000
6.5000

26
6.70
6.70
7.0000
6.5000

27
6.65
6.65
7.0000
6.5000

28
6.60
6.60
7.0000
6.5000

29
6.55
6.55
7.0000
6.5000

30
6.50
6.50
7.0000
6.5000

31
6.45
6.45
7.0000
6.5000

32
6.40
6.40
7.0000
6.5000

33
6.35
6.35
7.0000
6.5000

34
6.30
6.30
7.0000
6.5000

35
6.25
6.25
7.0000
6.5000

36
6.20
6.20
6.9019
6.4019

37
6.15
6.15
6.8074
6.3074

38
6.10
6.10
6.7125
6.2125

39
6.05
6.05
6.6054
6.1054

40
6.00
6.00
6.5000
6.0000

41
5.90
5.95
6.3540
5.8540

42
5.80
5.90
6.2087
5.7087

43
5.70
5.85
6.0622
5.5622

44
5.60
5.80
5.9048
5.4078

45
5.50
5.75
5.7500
5.2500

46
5.40
5.70
5.6940
5.1940

47
5.30
5.65
5.6375
5.1375

48
5.20
5.60
5.5822
5.0822

49
5.10
5.55
5.5404
5.0404

50
5.00
5.50
5.5000
5.0000

51
4.90
5.45
5.4384
4.9384

52
4.80
5.40
5.3776
4.8776

53
4.70
5.35
5.3167
4.8167

54
4.60
5.30
5.2826
4.7826

55
4.50
5.25
5.2500
4.7500

56
4.40
5.20
5.2500
4.7500

57
4.30
5.15
5.2500
4.7500

58
4.20
5.10
5.2500
4.7500

59
4.10
5.05
5.2500
4.7500

60
4.00
5.00
5.2500
4.7500

61
3.90
5.00
5.2500
4.7500

62
3.80
5.00
5.2500
4.7500

63
3.70
5.00
5.2500
4.7500

64
3.60
5.00
5.2500
4.7500

65
3.50
5.00
5.2500
4.7500

66
3.50
5.00
5.2500
4.7500

67
3.50
5.00
5.2500
4.7500

68
3.50
5.00
5.2500
4.7500

69
3.50
5.00
5.2500
4.7500

70
3.50
5.00
5.2500
4.7500
(3) service-related ultimate future salary increase assumption


general state employees retirement plan of the
Minnesota State Retirement System
assumption A


general employees retirement plan of the Public
Employees Retirement Association
assumption B

Teachers Retirement Association
assumption C

public employees police and fire retirement plan
assumption D


service
length
A
B
C
D

1
10.75%
12.25%
12.00%
13.00%

2
8.35
9.15
9.00
11.00

3
7.15
7.75
8.00
9.00

4
6.45
6.85
7.50
8.00

5
5.95
6.25
7.25
6.50

6
5.55
5.75
7.00
6.10

7
5.25
5.45
6.85
5.80

8
4.95
5.15
6.70
5.60

9
4.75
4.85
6.55
5.40

10
4.65
4.65
6.40
5.30

11
4.45
4.45
6.25
5.20

12
4.35
4.35
6.00
5.10

13
4.25
4.15
5.75
5.00

14
4.05
4.05
5.50
4.90

15
3.95
3.95
5.25
4.80

16
3.85
3.85
5.00
4.80

17
3.75
3.75
4.75
4.80

18
3.75
3.75
4.50
4.80

19
3.75
3.75
4.25
4.80

20
3.75
3.75
4.00
4.80

21
3.75
3.75
3.90
4.70

22
3.75
3.75
3.80
4.60

23
3.75
3.75
3.70
4.50

24
3.75
3.75
3.60
4.50

25
3.75
3.75
3.50
4.50

26
3.75
3.75
3.50
4.50

27
3.75
3.75
3.50
4.50

28
3.75
3.75
3.50
4.50

29
3.75
3.75
3.50
4.50

30 or more
3.75
3.75
3.50
4.50
    (c) Before July 2, 2010, the actuarial valuation must use the applicable following
payroll growth assumption for calculating the amortization requirement for the unfunded
actuarial accrued liability where the amortization retirement is calculated as a level
percentage of an increasing payroll:

plan
payroll growth assumption


general state employees retirement plan of the
Minnesota State Retirement System
3.75%

correctional state employees retirement plan
4.50

State Patrol retirement plan
4.50

legislators retirement plan
4.50

judges retirement plan
4.00


general employees retirement plan of the Public
Employees Retirement Association
3.75

public employees police and fire retirement plan
3.75

local government correctional service retirement plan
4.50

teachers retirement plan
3.75

Duluth teachers retirement plan
4.50

St. Paul teachers retirement plan
5.00
    (d) After July 1, 2010, the assumptions set forth in paragraphs (b) and (c) continue to
apply, unless a different salary assumption or a different payroll increase assumption:
    (1) has been proposed by the governing board of the applicable retirement plan;
    (2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
most recent actuarial valuation report if section 356.214 does not apply; and
    (3) has been approved or deemed approved under subdivision 18.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 8. Minnesota Statutes 2010, section 356.415, subdivision 1d, is amended to read:
    Subd. 1d. Teachers Retirement Association annual postretirement adjustments.
(a) Retirement annuity, disability benefit, or survivor benefit recipients of the Teachers
Retirement Association are entitled to a postretirement adjustment annually on January
1, as follows:
(1) for January 1, 2011, and January 1, 2012, no postretirement increase is payable;
(2) for January 1, 2013, and each successive January 1 until funding stability is
restored, a postretirement increase of two percent must be applied each year, effective
on January 1, to the monthly annuity or benefit amount of each annuitant or benefit
recipient who has been receiving an annuity or a benefit for at least 18 full months prior
to the January 1 increase;
(3) for January 1, 2013, and each successive January 1 until funding stability is
restored, for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least six full months before the January 1 increase, an annual postretirement
increase of 1/12 of two percent for each month the person has been receiving an annuity or
benefit must be applied, effective January 1, following the year in for which the person has
been retired for at least six months but less than 12 18 months;
(4) for each January 1 following the restoration of funding stability, a postretirement
increase of 2.5 percent must be applied each year, effective January 1, to the monthly
annuity or benefit amount of each annuitant or benefit recipient who has been receiving an
annuity or a benefit for at least 18 full months prior to the January 1 increase; and
(5) for each January 1 following the restoration of funding stability, for each
annuitant or benefit recipient who has been receiving an annuity or a benefit for at least six
full months before the January 1 increase, an annual postretirement increase of 1/12 of
2.5 percent for each month the person has been receiving an annuity or benefit must be
applied, effective January 1, following the year in for which the person has been retired
for at least six months but less than 12 18 months.
(b) Funding stability is restored when the market value of assets of the Teachers
Retirement Association equals or exceeds 90 percent of the actuarial accrued liabilities of
the Teachers Retirement Association in the most recent prior actuarial valuation prepared
under section 356.215 and the standards for actuarial work by the approved actuary
retained by the Teachers Retirement Association under section 356.214.
(c) An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the Teachers Retirement Association requesting that the increase
not be made.
(d) The retirement annuity payable to a person who retires before becoming eligible
for Social Security benefits and who has elected the optional payment as provided in
section 354.35 must be treated as the sum of a period-certain retirement annuity and a life
retirement annuity for the purposes of any postretirement adjustment. The period-certain
retirement annuity plus the life retirement annuity must be the annuity amount payable
until age 62, 65, or normal retirement age, as selected by the member at retirement, for an
annuity amount payable under section 354.35. A postretirement adjustment granted on
the period-certain retirement annuity must terminate when the period-certain retirement
annuity terminates.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2010, section 423A.02, subdivision 3, is amended to read:
    Subd. 3. Reallocation of amortization or supplementary amortization state
aid. (a) Seventy percent of the difference between $5,720,000 and the current year
amortization aid and supplemental amortization aid distributed under subdivisions 1
and 1a that is not distributed for any reason to a municipality for use by a local police
or salaried fire relief association must be distributed by the commissioner of revenue
according to this paragraph. The commissioner shall distribute 50 percent of the amounts
derived under this paragraph to the Teachers Retirement Association, ten percent to the
Duluth Teachers Retirement Fund Association, and 40 percent to the St. Paul Teachers
Retirement Fund Association to fund the unfunded actuarial accrued liabilities of the
respective funds. These payments shall be made on or before June 30 each fiscal year. If
the St. Paul Teachers Retirement Fund Association becomes fully funded, its eligibility
for this aid ceases. Amounts remaining in the undistributed balance account at the end of
the biennium if aid eligibility ceases cancel to the general fund.
    (b) In order to receive amortization and supplementary amortization aid under
paragraph (a), prior to June 30 Independent School District No. 625, St. Paul, must make
contributions an additional contribution of $800,000 each year to the St. Paul Teachers
Retirement Fund Association in accordance with the following schedule:.

Fiscal Year
Amount

1996
$
0

1997
$
0

1998
$
200,000

1999
$
400,000

2000
$
600,000

2001 and thereafter
$
800,000
    (c) Special School District No. 1, Minneapolis, and the city of Minneapolis must
each make contributions to the Teachers Retirement Association in accordance with the
following schedule:


Fiscal Year
City amount
School district
amount

1996
$
0
$
0

1997
$
0
$
0

1998
$
250,000
$
250,000

1999
$
400,000
$
400,000

2000
$
550,000
$
550,000

2001
$
700,000
$
700,000

2002
$
850,000
$
850,000

2003 and thereafter
$
1,000,000
$
1,000,000
    (d) (c) Thirty percent of the difference between $5,720,000 and the current year
amortization aid and supplemental amortization aid under subdivisions 1 and 1a that is not
distributed for any reason to a municipality for use by a local police or salaried firefighter
relief association must be distributed under section 69.021, subdivision 7, paragraph (d),
as additional funding to support a minimum fire state aid amount for volunteer firefighter
relief associations.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. REPEALER.
Minnesota Statutes 2010, sections 128D.18; and 354A.12, subdivision 3b, are
repealed.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 9
FEDERAL INTERNAL REVENUE CODE CONFORMITY PROVISIONS

    Section 1. Minnesota Statutes 2010, section 356.611, subdivision 2, is amended to read:
    Subd. 2. Federal compensation limits. (a) For members of a covered pension plan
enumerated in section 356.30, subdivision 3, and of the plan established under chapter
353D, compensation in excess of the limitation specified in section 401(a)(17) of the
Internal Revenue Code, as amended, for changes in the cost of living under section
401(a)(17)(B) of the Internal Revenue Code, may not be included for contribution and
benefit computation purposes.
    (b) Notwithstanding paragraph (a), for members specified in paragraph (a) who
first contributed to a plan specified in that paragraph before July 1, 1995, the annual
compensation limit specified in Internal Revenue Code section 401(a)(17) of the Internal
Revenue Code on June 30, 1993, applies if that provides a greater allowable annual
compensation.
(c) To the extent required by sections 3401(h) and 414(u)(12) of the federal Internal
Revenue Code, an individual receiving a differential wage payment as defined in section
3401(h)(2) of the federal Internal Revenue Code from an employer shall be treated
as employed by that employer, and the differential wage payment will be treated as
compensation for purposes of applying the limits on annual additions under section 415(c)
of the federal Internal Revenue Code.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2009.

    Sec. 2. Minnesota Statutes 2010, section 356.611, subdivision 3, is amended to read:
    Subd. 3. Maximum benefit limitations. A member's An annuitant's annual benefit,
if necessary, must be reduced to the extent required by section 415(b) of the federal
Internal Revenue Code, as adjusted by the United States secretary of the treasury under
section 415(d) of the federal Internal Revenue Code for any applicable increases in the
cost of living, including applicable increases in the cost of living after the member's
termination of employment. For purposes of section 415 of the federal Internal Revenue
Code, the limitation year of a pension plan covered by this section must be the fiscal year
or calendar year of that plan, whichever is applicable. If an annuitant participated in more
than one pension plan in which the employer participates, the benefits under each plan
must be reduced proportionately, if necessary, to satisfy the applicable limitation.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2010, section 356.611, subdivision 3a, is amended to read:
    Subd. 3a. Maximum annual addition limitation, defined contribution plans. The
annual additions on behalf of a member to the a defined contribution plan established
under chapter 352D or 353D for any limitation year beginning after December 31, 2001,
shall not exceed the lesser of 100 percent of the member's compensation, as defined for
purposes of applicable limitation on annual additions under section 415(c) of the federal
Internal Revenue Code; or $40,000, as adjusted by the United States secretary of the
treasury under section 415(d) of the federal Internal Revenue Code.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2010, section 356.611, subdivision 4, is amended to read:
    Subd. 4. Compensation. (a) For purposes of this section, compensation means a
member's compensation actually paid or made available for any limitation year including
all items of remuneration described in federal treasury regulation section 1.415 (c)-2(b)
and excluding all items of remuneration described in federal treasury regulation section
1.415 (c)-2(c). Compensation for pension plan purposes for any limitation year shall not
exceed the applicable federal compensation limit described in subdivision 2.
(b) Compensation for any period includes:
(1) any elective deferral as defined in section 402(g)(3) of the federal Internal
Revenue Code;
(2) any elective amounts that are not includable in a member's gross income by
reason of sections 125 or 457 of the federal Internal Revenue Code; and
(3) any elective amounts that are not includable in a member's gross income by
reason of section 132(f)(4) of the federal Internal Revenue Code.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2010, section 356.611, is amended by adding a subdivision
to read:
    Subd. 5. Limitation year. Unless otherwise specifically provided, for purposes of
section 415 of the federal Internal Revenue Code, the limitation year of a pension plan
covered by this section is the calendar year or fiscal year, whichever is applicable.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2010, section 356.635, subdivision 6, is amended to read:
    Subd. 6. Eligible retirement plan. (a) An "eligible retirement plan" is:
(1) an individual retirement account under section 408(a) or 408A of the federal
Internal Revenue Code;
(2) an individual retirement annuity plan under section 408(b) of the federal Internal
Revenue Code;
(3) an annuity plan under section 403(a) of the federal Internal Revenue Code;
(4) a qualified trust plan under section 401(a) of the federal Internal Revenue Code
that accepts the distributee's eligible rollover distribution;
(5) an annuity contract under section 403(b) of the federal Internal Revenue Code;
(6) an eligible deferred compensation plan under section 457(b) of the federal
Internal Revenue Code, which is maintained by a state or local government and which
agrees to separately account for the amounts transferred into the plan; or
(7) in the case of an eligible rollover distribution to a nonspousal beneficiary, an
individual account or annuity treated as an inherited individual retirement account under
section 402(c)(11) of the federal Internal Revenue Code.
(b) For distributions of after-tax contributions which are not includable in gross
income, the after-tax portion may be transferred only to an individual retirement
account or annuity described in section 408(a) or (b) of the federal Internal Revenue
Code, to a Roth individual retirement account described in section 408A of the federal
Internal Revenue Code, or to a qualified defined contribution plan described in either
section 401(a) or 403(a) of the federal Internal Revenue Code, that agrees to separately
account for the amounts transferred, including separately accounting for the portion of
the distribution which is includable in gross income and the portion of the distribution
which is not includable.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2008.

    Sec. 7. Minnesota Statutes 2010, section 356.635, subdivision 9, is amended to read:
    Subd. 9. Military service. Contributions, benefits, including death and disability
benefits under section 401(a)(37) of the federal Internal Revenue Code, and service credit
with respect to qualified military service must be provided according to section 414(u) of
the federal Internal Revenue Code.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2007.

ARTICLE 10
AUTHORIZED PUBLIC PENSION FUND INVESTMENT REVISIONS

    Section 1. Minnesota Statutes 2010, section 11A.07, subdivision 4, is amended to read:
    Subd. 4. Duties and powers. The director, at the direction of the state board, shall:
(1) plan, direct, coordinate, and execute administrative and investment functions
in conformity with the policies and directives of the state board and the requirements of
this chapter and of chapter 356A;
(2) prepare and submit biennial and annual budgets to the board and with the
approval of the board submit the budgets to the Department of Management and Budget;
(3) employ professional and clerical staff as necessary. Employees whose primary
responsibility is to invest or manage money or employees who hold positions designated
as unclassified under section 43A.08, subdivision 1a, are in the unclassified service of the
state. Other employees are in the classified service. Unclassified employees who are
not covered by a collective bargaining agreement are employed under the terms and
conditions of the compensation plan approved under section 43A.18, subdivision 3b;
(4) report to the state board on all operations under the director's control and
supervision;
(5) maintain accurate and complete records of securities transactions and official
activities;
(6) establish a policy relating to the purchase and sale of securities on the basis of
competitive offerings or bids. The policy is subject to board approval;
(7) cause securities acquired to be kept in the custody of the commissioner of
management and budget or other depositories consistent with chapter 356A, as the state
board deems appropriate;
(8) prepare and file with the director of the Legislative Reference Library, by
December 31 of each year, a report summarizing the activities of the state board, the
council, and the director during the preceding fiscal year. The report must be prepared
so as to provide the legislature and the people of the state with a clear, comprehensive
summary of the portfolio composition, the transactions, the total annual rate of return,
and the yield to the state treasury and to each of the funds whose assets are invested by
the state board, and the recipients of business placed or commissions allocated among
the various commercial banks, investment bankers, money managers, and brokerage
organizations and the amount of these commissions or other fees. The report must contain
financial statements for funds managed by the board prepared in accordance with generally
accepted accounting principles. The report must include an executive summary;
(9) include on the state board's Web site its annual report and an executive summary
of its quarterly reports;
(10) require state officials from any department or agency to produce and provide
access to any financial documents the state board deems necessary in the conduct of
its investment activities;
(11) receive and expend legislative appropriations; and
(12) undertake any other activities necessary to implement the duties and powers
set forth in this subdivision consistent with chapter 356A.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2010, section 11A.14, subdivision 14, is amended to read:
    Subd. 14. Reports required. As of each valuation date, or as often as the state
board determines, each participant shall be informed of the number of units owned and the
current value of the units. Annually, the state board shall provide each participant financial
statements prepared in accordance with generally accepted accounting principles.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2010, section 11A.24, is amended to read:
11A.24 AUTHORIZED INVESTMENTS.
    Subdivision 1. Securities generally. (a) The state board shall have the authority
is authorized to purchase, sell, lend or, and exchange the following securities specified
in this section, for funds or accounts specifically made subject to this section, including
puts and call options and future contracts traded on a contract market regulated by a
governmental agency or by a financial institution regulated by a governmental agency.
These securities may be owned directly or through shares in exchange-traded or mutual
funds, or as units in commingled trusts that own the securities described in subdivisions 2
to 6, subject to any limitations as specified in this section.
(b) Any agreement to lend securities must be concurrently collateralized with cash
or securities with a market value of not less than 100 percent of the market value of the
loaned securities at the time of the agreement. Any agreement for put and call options
and futures contracts may only be entered into with a fully offsetting amount of cash or
securities. Only securities authorized by this section, excluding those under subdivision 6,
paragraph (a), clauses (1) to (4) (3), may be accepted as collateral or offsetting securities.
    Subd. 2. Government obligations. The state board may is authorized to invest
funds in governmental bonds, notes, bills, mortgages, and other evidences of indebtedness
provided if the issue is backed by the full faith and credit of the issuer or if the issue
is rated among the top four quality rating categories by a nationally recognized rating
agency. The obligations in which the board may invest under this subdivision include are
guaranteed or insured issues of (a):
(1) the United States, its agencies, its instrumentalities, or organizations created
and regulated by an act of Congress; (b)
(2) the Dominion of Canada and or any of its provinces, provided the principal and
interest is are payable in United States dollars; (c)
(3) any of the states and or any of their municipalities, political subdivisions,
agencies or instrumentalities; (d) the International Bank for Reconstruction and
Development, the Inter-American Development Bank, the Asian Development Bank, the
African Development Bank, or and
(4) any other United States government sponsored organization of which the United
States is a member, provided if the principal and interest is are payable in United States
dollars.
    Subd. 3. Corporate obligations. (a) The state board may is authorized to invest
funds in bonds, notes, debentures, transportation equipment obligations, or and any other
longer term evidences of indebtedness issued or guaranteed by a corporation organized
under the laws of the United States or any state thereof of the United States, or the
Dominion of Canada or any Canadian province thereof provided that if:
(1) the principal and interest of obligations of corporations incorporated or organized
under the laws of the Dominion of Canada or any Canadian province thereof shall be
are payable in United States dollars; and
(2) the obligations shall be are rated among the top four quality categories by a
nationally recognized rating agency.
(b) The state board may invest in unrated corporate obligations or in corporate
obligations that are not rated among the top four quality categories as provided in
paragraph (a), clause (2), provided that if:
(1) the aggregate value of these obligations may does not exceed five percent of the
market or book value, whichever is less, of the fund for which the state board is investing;
(2) the state board's participation is limited to 50 percent of a single offering subject
to this paragraph; and
(3) the state board's participation is limited to 25 percent of an issuer's obligations
subject to this paragraph.
    Subd. 4. Other obligations. (a) The state board may is authorized to invest funds
in bankers acceptances, certificates of deposit, deposit notes, commercial paper, mortgage
securities and asset backed securities, repurchase agreements and reverse repurchase
agreements, guaranteed investment contracts, savings accounts, and guaranty fund
certificates, surplus notes, or debentures of domestic mutual insurance companies if they
conform to the following provisions:
(1) bankers acceptances and deposit notes of United States banks are limited to those
if issued by banks a United States bank that is rated in the highest four quality categories
by a nationally recognized rating agency;
(2) certificates of deposit are limited to those if issued by (i) a United States banks
and savings institutions that are bank or savings institution that is rated in the top four
quality categories by a nationally recognized rating agency or whose certificates of deposit
are fully insured by federal agencies;, or (ii) certificates of deposits issued by a credit
unions union in amounts up to an amount within the limit of the insurance coverage
provided by the National Credit Union Administration;
(3) commercial paper is limited to those if issued by a United States corporations
corporation or their its Canadian subsidiaries subsidiary and if rated in the highest two
quality categories by a nationally recognized rating agency;
(4) mortgage securities shall be and asset-backed securities if rated in the top four
quality categories by a nationally recognized rating agency;
(5) collateral for repurchase agreements and reverse repurchase agreements is
limited to if collateralized with letters of credit and or securities authorized in this section;
(6) guaranteed investment contracts are limited to those if issued by an insurance
companies company or banks a bank that is rated in the top four quality categories by a
nationally recognized rating agency or to alternative guaranteed investment contracts
where if the underlying assets comply with the requirements of this section;
(7) savings accounts are limited to those if fully insured by a federal agencies
agency; and
(8) asset backed securities shall be rated in the top four quality categories by a
nationally recognized rating agency guaranty fund certificates, surplus notes, or debentures
if issued by a domestic mutual insurance company.
(b) Sections 16A.58, 16C.03, subdivision 4, and 16C.05 do not apply to certificates
of deposit and collateralization agreements executed by the state board under paragraph
(a), clause (2).
(c) In addition to investments authorized by paragraph (a), clause (4), the state board
may is authorized to purchase from the Minnesota Housing Finance Agency all or any
part of a pool of residential mortgages, not in default, that has previously been financed
by the issuance of bonds or notes of the agency. The state board may also enter into a
commitment with the agency, at the time of any issue of bonds or notes, to purchase at
a specified future date, not exceeding 12 years from the date of the issue, the amount of
mortgage loans then outstanding and not in default that have been made or purchased from
the proceeds of the bonds or notes. The state board may charge reasonable fees for any
such commitment and may agree to purchase the mortgage loans at a price sufficient to
produce a yield to the state board comparable, in its judgment, to the yield available on
similar mortgage loans at the date of the bonds or notes. The state board may also enter
into agreements with the agency for the investment of any portion of the funds of the
agency. The agreement must cover the period of the investment, withdrawal privileges,
and any guaranteed rate of return.
    Subd. 5. Corporate stocks. The state board may is authorized to invest funds in
stocks or convertible issues of any corporation organized under the laws of the United
States or the any of its states thereof, the Dominion of Canada or any of its provinces, or
any corporation listed on an exchange that is regulated by an agency of the United States
or of the Canadian national government, if they conform to the following provisions:.
(a) The aggregate value of corporate stock investments, as adjusted for realized
profits and losses, shall not exceed 85 percent of the market or book value, whichever is
less, of a fund, less the aggregate value of investments according to subdivision 6;
(b) Investments shall An investment in any corporation must not exceed five percent
of the total outstanding shares of any one that corporation, except that the state board may
hold up to 20 percent of the shares of a real estate investment trust and up to 20 percent
of the shares of a closed-end mutual fund.
    Subd. 5a. Asset mix limitations. The aggregate value of investments under
subdivision 5, plus the aggregate value of all investments under subdivision 6, must not
exceed 85 percent of the market value of a fund.
    Subd. 6. Other investments. (a) In addition to the investments authorized in
subdivisions 1 to 5, and subject to the provisions in paragraph (b), the state board may
is authorized to invest funds in:
(1) venture capital equity and debt investment businesses through participation in
limited partnerships, trusts, private placements, limited liability corporations, limited
liability companies, limited liability partnerships, and corporations;
(2) real estate ownership interests or loans secured by mortgages or deeds of trust or
shares of real estate investment trusts through investment in limited partnerships, bank
sponsored bank-sponsored collective funds, trusts, mortgage participation agreements,
and insurance company commingled accounts, including separate accounts;
(3) regional and mutual funds through bank sponsored collective funds and open-end
investment companies registered under the Federal Investment Company Act of 1940, and
closed-end mutual funds listed on an exchange regulated by a governmental agency;
(4) (3) resource investments through limited partnerships, trusts, private placements,
limited liability corporations, limited liability companies, limited liability partnerships,
and corporations; and
(5) (4) international securities.
(b) The investments authorized in paragraph (a) must conform to the following
provisions:
(1) the aggregate value of all investments made according to under paragraph (a),
clauses (1) to (4) (3), may not exceed 35 percent of the market value of the fund for
which the state board is investing;
(2) there must be at least four unrelated owners of the investment other than the state
board for investments made under paragraph (a), clause (1), (2), or (3), or (4);
(3) state board participation in an investment vehicle is limited to 20 percent thereof
for investments made under paragraph (a), clause (1), (2), or (3), or (4); and
(4) state board participation in a limited partnership does not include a general
partnership interest or other interest involving general liability. The state board may not
engage in any activity as a limited partner which creates general liability.
(c) All financial, business, or proprietary data collected, created, received, or
maintained by the state board in connection with investments authorized by paragraph (a),
clause (1), (2), or (4) (3), are nonpublic data under section 13.02, subdivision 9. As used
in this paragraph, "financial, business, or proprietary data" means data, as determined by
the responsible authority for the state board, that is of a financial, business, or proprietary
nature, the release of which could cause competitive harm to the state board, the legal
entity in which the state board has invested or has considered an investment, the managing
entity of an investment, or a portfolio company in which the legal entity holds an interest.
As used in this section, "business data" is data described in section 13.591, subdivision 1.
Regardless of whether they could be considered financial, business, or proprietary data, the
following data received, prepared, used, or retained by the state board in connection with
investments authorized by paragraph (a), clause (1), (2), or (4) (3), are public at all times:
(1) the name and industry group classification of the legal entity in which the state
board has invested or in which the state board has considered an investment;
(2) the state board commitment amount, if any;
(3) the funded amount of the state board's commitment to date, if any;
(4) the market value of the investment by the state board;
(5) the state board's internal rate of return for the investment, including expenditures
and receipts used in the calculation of the investment's internal rate of return; and
(6) the age of the investment in years.
    Subd. 7. Appropriation. There is annually appropriated to the state board, from
the assets of the funds for which the state board invests pursuant relating to authorized
investments under subdivision 6, clause paragraph (a), sums sufficient to pay the costs for
the management of these funds assets by private management firms.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2010, section 69.77, subdivision 9, is amended to read:
    Subd. 9. Local police and paid fire relief association investment authority.
(a) The funds special fund of the association must be invested in securities that are
authorized investments under section 356A.06, subdivision 6 or 7, whichever applies.
Notwithstanding any provision of section 356A.06, subdivision 6 or 7 to the contrary, the
special fund of the relief association may be additionally invested in:
(1) open-end investment companies registered under the federal Investment
Company Act of 1940, if the portfolio investments of the investment companies comply
with the type of securities authorized for investment under section 356A.06, subdivision 7,
up to 75 percent of the market value of the assets of the fund; and
(2) domestic government and corporate debt obligations that are not rated in the top
four quality categories by a nationally recognized rating agency, and comparable unrated
securities if the percentage of these assets does not exceed five percent of the total assets
of the special fund or 15 percent of the special fund's nonequity assets, whichever is less,
the special fund's participation is limited to 50 percent of a single offering of the debt
obligations, and the special fund's participation is limited to 25 percent of an issuer's debt
obligations that are not rated in the top four quality categories. Securities held by the
association before June 2, 1989, that do not meet the requirements of this subdivision may
be retained after that date if they were proper investments for the association on that date.
(b) The governing board of the association may select and appoint investment
agencies to act for and in its behalf or may certify special fund assets for investment by the
State Board of Investment under section 11A.17. The governing board of the association
may certify general fund assets of the relief association for investment by the State Board
of Investment in fixed income pools or in a separately managed account at the discretion
of the State Board of Investment as provided in section 11A.14. The governing board of
the association may select and appoint a qualified private firm to measure management
performance and return on investment, and the firm shall must use the formula or formulas
developed by the state board under section 11A.04, clause (11).
(c) The governing board of the association may certify general fund assets of the
relief association for investment by the State Board of Investment in fixed income pools
or in a separately managed account at the discretion of the State Board of Investment
as provided in section 11A.14.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2010, section 69.775, is amended to read:
69.775 INVESTMENTS.
(a) The special fund assets of a relief association governed by sections 69.771 to
69.776 must be invested in securities that are authorized investments under section
356A.06, subdivision 6 or 7, whichever applies.
(b) Notwithstanding the foregoing, up to 75 percent of the market value of the assets
of the special fund, not including any money market mutual funds, may be invested in
open-end investment companies registered under the federal Investment Company Act of
1940, if the portfolio investments of the investment companies comply with the type of
securities authorized for investment under section 356A.06, subdivision 7.
(c) Securities held by the associations before June 2, 1989, that do not meet the
requirements of this section may be retained after that date if they were proper investments
for the association on that date.
(d) The governing board of the association may select and appoint investment
agencies to act for and in its behalf or may certify special fund assets for investment by the
State Board of Investment under section 11A.17.
(e) The governing board of the association may certify general fund assets of the
relief association for investment by the State Board of Investment in fixed income pools
or in a separately managed account at the discretion of the State Board of Investment
as provided in section 11A.14.
(f) (b) The governing board of the association may select and appoint a qualified
private firm to measure management performance and return on investment, and the
firm shall must use the formula or formulas developed by the state board under section
11A.04, clause (11).
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2010, section 354A.08, is amended to read:
354A.08 AUTHORIZED INVESTMENTS.
(a) In addition to investments authorized under section 356A.06, subdivision 7, a
teachers retirement fund association may receive, hold, and dispose of:
(1) real estate or personal property acquired by it, whether the acquisition was by
purchase, or any other lawful means, as provided in this chapter or in the association's
articles of incorporation; and.
(2) domestic government and corporate debt obligations that are not rated in the top
four quality categories by a nationally recognized rating agency, and comparable unrated
securities if the percentage of these assets does not exceed five percent of the total assets
of the pension plan or 15 percent of the pension plan's nonequity assets, whichever is less,
if the pension plan's participation is limited to 50 percent of a single offering of the debt
obligations, and if the pension plan's participation is limited to 25 percent of an issuer's
debt obligations that are not rated in the top four quality categories.
(b) In addition to other authorized real estate investments, an association may also
invest funds in Minnesota situs nonfarm real estate ownership interests or loans secured
by mortgages or deeds of trust. The board may also certify assets for investment by the
State Board of Investment as provided under section 11A.17.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2010, section 356.219, subdivision 1, is amended to read:
    Subdivision 1. Report required. (a) Except as indicated in subdivision 4, The State
Board of Investment, on behalf of the public pension funds and programs for which it is
the investment authority, and any Minnesota public pension plan that is not fully invested
through the State Board of Investment, including a local police or firefighters relief
association governed by sections 69.77 or 69.771 to 69.775, shall report the information
specified in subdivision 3 to the state auditor. The state auditor may prescribe a form or
forms for the purposes of the reporting requirements contained in this section.
(b) A local police or firefighters relief association governed by section 69.77 or
sections 69.771 to 69.775 is fully invested during a given calendar year for purposes of
this section if all assets of the applicable pension plan beyond sufficient cash equivalent
investments to cover six months expected expenses are invested under section 11A.17.
The board of any fully invested public pension plan remains responsible for submitting
investment policy statements and subsequent revisions as required by subdivision 3,
paragraph (a).
(c) For purposes of this section, the State Board of Investment is considered to be
the investment authority for any Minnesota public pension fund required to be invested by
the State Board of Investment under section 11A.23, or for any Minnesota public pension
fund authorized to invest in the supplemental investment fund under section 11A.17 and
which is fully invested by the State Board of Investment.
(d) This section does not apply to the following plans:
(1) the Minnesota unclassified employees retirement program under chapter 352D;
(2) the public employees defined contribution plan under chapter 353D;
(3) the individual retirement account plans under chapters 354B and 354D;
(4) the higher education supplemental retirement plan under chapter 354C;
(5) any alternative retirement benefit plan established under section 383B.914; and
(6) the University of Minnesota faculty retirement plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 8. Minnesota Statutes 2010, section 356.219, subdivision 8, is amended to read:
    Subd. 8. Timing of reports. (a) For salaried firefighter relief associations, police
relief associations, and volunteer firefighter relief associations, the information required
under this section must be submitted by the due date for reports required under section
69.051, subdivision 1 or 1a, as applicable. If a relief association satisfies the definition of
a fully invested plan under subdivision 1, paragraph (b), for the calendar year covered
by the report required under section 69.051, subdivision 1 or 1a, as applicable, the chief
administrative officer of the covered pension plan shall certify that compliance on a form
prescribed by the state auditor. The state auditor shall transmit annually to the State Board
of Investment a list or lists of covered pension plans which submitted certifications in
order to facilitate reporting by the State Board of Investment under paragraph (c).
(b) For the Minneapolis Teachers Retirement Fund Association, the St. Paul
Teachers Retirement Fund Association, the Duluth Teachers Retirement Fund Association,
the Minneapolis Employees Retirement Fund, and the University of Minnesota faculty
supplemental retirement plan, and the applicable administrators for the University of
Minnesota faculty retirement plan and the individual retirement account plans under
chapters 354B and 354D, the information required under this section must be submitted to
the state auditor by June 1 of each year.
(c) The State Board of Investment, on behalf of pension funds specified in
subdivision 1, paragraph (c), must report information required under this section by
September 1 of each year.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2010, section 356A.01, subdivision 19, is amended to read:
    Subd. 19. Pension fund. "Pension fund" means the assets amassed and held in a
pension plan, other than the general fund, as reserves for present and future payment of
benefits and administrative expenses. For a retirement plan governed by section 69.77 or
by chapter 424A, the term means the relief association special fund.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. Minnesota Statutes 2010, section 356A.06, subdivision 6, is amended to read:
    Subd. 6. Limited list of authorized investment securities. (a) Except to the
extent otherwise authorized by law, Authority. This subdivision specifies the investment
authority for a limited list plan. A limited list plan is a covered pension plan may invest its
assets only in investment securities authorized by this subdivision if the plan that does not:
    (1) have pension fund assets with a book market value in excess of $1,000,000;
    (2) use the services of an investment advisor registered with the Securities and
Exchange Commission in accordance with the Investment Advisers Act of 1940, or
registered as an investment advisor in accordance with sections 80A.58, and 80A.60,
for the investment of at least 60 percent of its pension fund assets, calculated on book
market value;
    (3) use the services of the State Board of Investment for the investment of at least 60
percent of its pension fund assets, calculated on book market value; or
    (4) use a combination of the services of an investment advisor meeting the
requirements of clause (2) and the services of the State Board of Investment for the
investment of at least 75 percent of its pension fund assets, calculated on book market
value.
    (b) Investment agency appointment authority. securities authorized for The
governing board of a covered pension plan covered by this subdivision are: may select
and appoint investment agencies to act for or on its behalf.
(c) Savings accounts; similar vehicles. A limited list plan is authorized to invest in:
    (1) certificates of deposit issued, to the extent of available insurance or
collateralization, by a financial institution that is a member of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation, that is
insured by the National Credit Union Administration, or that is authorized to do business
in this state and has deposited with the chief administrative officer of the plan a sufficient
amount of marketable securities as collateral in accordance with section 118A.03;
    (2) guaranteed investment contracts, limited to those issued by insurance companies
or banks rated in the top four quality categories by a nationally recognized rating agency
or to alternative guaranteed investment contracts where the underlying assets comply
with the requirements of this paragraph; and
(3) savings accounts, to the extent of available insurance, with a financial institution
that is a member of the Federal Deposit Insurance Corporation or the Federal Savings and
Loan Insurance Corporation; limited to those fully insured by federal agencies.
    (3) (d) Government-backed obligations. A limited list plan is authorized to invest
in governmental obligations as further specified in this paragraph, including bonds, notes,
bills, or other fixed obligations, issued by the United States, an agency or instrumentality
of the United States, an organization established and regulated by an act of Congress or by
a state, state agency or instrumentality, municipality, or other governmental or political
subdivision that mortgages, and other evidences of indebtedness, if the issue is backed
by the full faith and credit of the issuer or if the issue is rated among the top four quality
rating categories by a nationally recognized rating agency. The obligations in which plans
are authorized to invest under this paragraph are guaranteed or insured issues of:
    (i) for the obligation in question, issues an obligation that equals or exceeds the
stated investment yield of debt securities not exempt from federal income taxation and of
comparable quality;
    (ii) for an obligation that is a revenue bond, has been completely self-supporting
for the last five years; and
    (iii) for an obligation other than a revenue bond, has issued an obligation backed by
the full faith and credit of the applicable taxing jurisdiction and has not been in default on
the payment of principal or interest on the obligation in question or any other nonrevenue
bond obligation during the preceding ten years;
(1) the United States, one of its agencies, one of its instrumentalities, or an
organization created and regulated by an act of Congress;
(2) the Dominion of Canada or one of its provinces if the principal and interest are
payable in United States dollars;
(3) a state or one of its municipalities, political subdivisions, agencies, or
instrumentalities; or
(4) any United States government-sponsored organization of which the United States
is a member if the principal and interest are payable in United States dollars.
    (4) (e) Corporate obligations. A limited list plan is authorized to invest in corporate
obligations, including bonds, notes, debentures, or other regularly issued and readily
marketable evidences of indebtedness issued by a corporation organized under the laws
of any state that during the preceding five years has had on average annual net pretax
earnings at least 50 percent greater than the annual interest charges and principal payments
on the total issued debt of the corporation during that period and that, for the obligation
in question, has issued an obligation rated in one of the top three quality categories by
Moody's Investors Service, Incorporated, or Standard and Poor's Corporation; and
    (5) shares in an open-end investment company registered under the federal
Investment Company Act of 1940, if the portfolio investments of the company are limited
to investments that meet the requirements of clauses (1) to (4). transportation equipment
obligations, or any other longer-term evidences of indebtedness issued or guaranteed by
a corporation organized under the laws of the United States or any of its states, or the
Dominion of Canada or any of its provinces if:
(1) the principal and interest are payable in United States dollars; and
(2) the obligations are rated among the top four quality categories by a nationally
recognized rating agency.
(f) Mutual fund authority, limited list authorized assets. Securities authorized
under paragraphs (c) to (e) may be owned directly or through shares in exchange-traded
funds, or through open-end mutual funds, or as units of commingled trusts.
(g) Extended mutual fund authority. Notwithstanding restrictions in other
paragraphs of this subdivision, a limited list plan is authorized to invest the assets of
the special fund in exchange-traded funds and open-end mutual funds, if their portfolio
investments comply with the type of securities authorized for investment under section
356A.06, subdivision 7, paragraphs (c) to (g). Investments under this paragraph must not
exceed 75 percent of the assets of the special fund, not including any money market
investments through mutual or exchange-traded funds.
(h) Supplemental fund authority. The governing body of a limited list plan may
certify special fund assets to the State Board of Investment for investment under section
11A.17.
(i) Assets mix restrictions. A limited list plan must conform to the asset mix
limitations specified in section 356A.06, subdivision 7.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 11. Minnesota Statutes 2010, section 356A.06, subdivision 7, is amended to read:
    Subd. 7. Expanded list of authorized investment securities. (a) Authority.
Except to the extent otherwise authorized by law, A covered pension plan not described by
subdivision 6, paragraph (a), is an expanded list plan and shall invest its assets only in
accordance with as specified in this subdivision. The governing board of an expanded list
plan may select and appoint investment agencies to act for or on its behalf.
    (b) Securities generally; investment forms. The covered pension An expanded list
plan has the authority is authorized to purchase, sell, lend, or and exchange the investment
securities specified in paragraphs (c) to (i) authorized under this subdivision, including
puts and call options and future contracts traded on a contract market regulated by a
governmental agency or by a financial institution regulated by a governmental agency.
These securities may be owned directly or through shares in exchange-traded or mutual
funds, or as units in commingled trusts that own the securities described in paragraphs (c)
to (i), including real estate investment trusts and insurance company commingled accounts,
including separate accounts, subject to any limitations specified in this subdivision.
    (c) Government obligations. The covered pension An expanded list plan may
is authorized to invest funds in governmental bonds, notes, bills, mortgages, and other
evidences of indebtedness if the issue is backed by the full faith and credit of the issuer or
the issue is rated among the top four quality rating categories by a nationally recognized
rating agency. The obligations in which funds may be invested under this paragraph
include are guaranteed or insured issues of:
(1) the United States, one of its agencies, one of its instrumentalities, or organizations
an organization created and regulated by an act of Congress;
(2) the Dominion of Canada and or one of its provinces, provided if the principal
and interest is are payable in United States dollars;
(3) the states and their a state or one of its municipalities, political subdivisions,
agencies, or instrumentalities; and
(4) the International Bank for Reconstruction and Development, the Inter-American
Development Bank, the Asian Development Bank, the African Development Bank, or
any other a United States government sponsored government-sponsored organization of
which the United States is a member, provided if the principal and interest is are payable
in United States dollars.
    (d) Investment-grade corporate obligations. The covered pension An expanded
list plan may is authorized to invest funds in bonds, notes, debentures, transportation
equipment obligations, or any other longer term evidences of indebtedness issued or
guaranteed by a corporation organized under the laws of the United States or any state
thereof of its states, or the Dominion of Canada or any province thereof of its provinces if
they conform to the following provisions:
    (1) the principal and interest of obligations of corporations incorporated or organized
under the laws of the Dominion of Canada or any province thereof must be are payable in
United States dollars; and
    (2) the obligations must be are rated among the top four quality categories by a
nationally recognized rating agency.
(e) Below-investment-grade corporate obligations. An expanded list plan is
authorized to invest in unrated corporate obligations or in corporate obligations that are
not rated among the top four quality categories by a nationally recognized rating agency if:
(1) the aggregate value of these obligations does not exceed five percent of the
covered pension plan's market value;
(2) the covered pension plan's participation is limited to 50 percent of a single
offering subject to this paragraph; and
(3) the covered pension plan's participation is limited to 25 percent of an issuer's
obligations subject to this paragraph.
    (e) (f) Other obligations. (1) The covered pension An expanded list plan may is
authorized to invest funds in bankers acceptances, certificates of deposit, deposit notes,
commercial paper, mortgage participation certificates and pools, asset backed securities,
repurchase agreements and reverse repurchase agreements, guaranteed investment
contracts, savings accounts, and guaranty fund certificates, surplus notes, or debentures of
domestic mutual insurance companies if they conform to the following provisions:
    (i) bankers acceptances and deposit notes of United States banks are limited to those
if issued by banks a United States bank that is rated in the highest four quality categories
by a nationally recognized rating agency;
    (ii) certificates of deposit are limited to those if issued by (A) a United States
banks and bank or savings institutions that are institution rated in the highest four quality
categories by a nationally recognized rating agency or whose certificates of deposit are
fully insured by federal agencies;, or (B) if issued by a credit unions union in amounts
up to an amount within the limit of the insurance coverage provided by the National
Credit Union Administration;
    (iii) commercial paper is limited to those if issued by a United States corporations
corporation or their its Canadian subsidiaries subsidiary and if rated in the highest two
quality categories by a nationally recognized rating agency;
    (iv) mortgage participation or pass through certificates evidencing interests in pools
of first mortgages or trust deeds on improved real estate located in the United States where
the loan to value ratio for each loan as calculated in accordance with section 61A.28,
subdivision 3
, does not exceed 80 percent for fully amortizable residential properties and
in all other respects meets the requirements of section 61A.28, subdivision 3 securities
and asset-backed securities if rated in the top four quality categories by a nationally
recognized rating agency;
    (v) collateral for repurchase agreements and reverse repurchase agreements is
limited to if collateralized with letters of credit and or securities authorized in this section;
    (vi) guaranteed investment contracts are limited to those if issued by an insurance
companies company or banks a bank that is rated in the top four quality categories by a
nationally recognized rating agency or to alternative guaranteed investment contracts
where if the underlying assets comply with the requirements of this subdivision;
    (vii) savings accounts are limited to those if fully insured by a federal agencies
agency; and
    (viii) asset backed securities must be rated in the top four quality categories by a
nationally recognized rating agency guaranty fund certificates, surplus notes, or debentures
if issued by a domestic mutual insurance company.
    (2) Sections 16A.58, 16C.03, subdivision 4, and 16C.05 do not apply to certificates
of deposit and collateralization agreements executed by the covered pension plan under
clause (1), item (ii).
    (3) In addition to investments authorized by clause (1), item (iv), the covered pension
an expanded list plan may is authorized to purchase from the Minnesota Housing Finance
Agency all or any part of a pool of residential mortgages, not in default, that has previously
been financed by the issuance of bonds or notes of the agency. The covered pension plan
may also enter into a commitment with the agency, at the time of any issue of bonds or
notes, to purchase at a specified future date, not exceeding 12 years from the date of the
issue, the amount of mortgage loans then outstanding and not in default that have been
made or purchased from the proceeds of the bonds or notes. The covered pension plan may
charge reasonable fees for any such commitment and may agree to purchase the mortgage
loans at a price sufficient to produce a yield to the covered pension plan comparable, in
its judgment, to the yield available on similar mortgage loans at the date of the bonds or
notes. The covered pension plan may also enter into agreements with the agency for the
investment of any portion of the funds of the agency. The agreement must cover the period
of the investment, withdrawal privileges, and any guaranteed rate of return.
    (f) (g) Corporate stocks. The covered pension An expanded list plan may is
authorized to invest funds in stocks or convertible issues of any corporation organized
under the laws of the United States or the any of its states thereof, any corporation
organized under the laws of the Dominion of Canada or any of its provinces, or any
corporation listed on an exchange that is regulated by an agency of the United States or of
the Canadian national government, if they conform to the following provisions:.
    (1) the aggregate value of investments under this paragraph, plus paragraphs (g) and
(k), plus equity investments under paragraphs (h), (i), and (j), as adjusted for realized
gains and losses, must not exceed 85 percent of the market or book value, whichever is
less, of a fund; and
    (2) investments An investment in any corporation must not exceed five percent of
the total outstanding shares of any one that corporation, except that an expanded list plan
may hold up to 20 percent of the shares of a real estate investment trust and up to 20
percent of the shares of a closed mutual fund.
    (g) Developed market foreign stocks investments. In addition to investments
authorized under paragraph (f), the covered pension fund may invest in foreign stock sold
on an exchange in any developed market country that is included in the Europe, Australia,
and Far East Index.
    (h) Commingled or mutual investments. The covered pension plan may invest
in index funds or mutual funds, including index mutual funds, through bank-sponsored
collective funds and shares of open-end investment companies registered under the
Federal Investment Company Act of 1940, to the extent that these funds comply with
paragraphs (c) to (j).
    (i) Real estate investment trust; related investments. The covered pension plan
may invest in real estate investment trusts secured by mortgages or deeds of trust and
sold on an exchange, and insurance company commingled accounts, including separate
accounts, of a debt or equity nature.
    (j) Exchange traded funds. The covered pension plan may invest funds in exchange
traded funds, subject to the maximums, the requirements, and the limitations set forth in
paragraphs (c) to (i), as applicable.
    (k) (h) Other investments. (1) In addition to the investments authorized in
paragraphs (b) to (j) (g), and subject to the provisions in clause (2), the covered pension
an expanded list plan may is authorized to invest funds in:
    (i) venture capital equity and debt investment businesses through participation in
limited partnerships, trusts, private placements, limited liability corporations, limited
liability companies, limited liability partnerships, and corporations;
    (ii) real estate ownership interests or loans secured by mortgages or deeds of trust or
shares of real estate investment trusts, through investment in limited partnerships or bank
sponsored, bank-sponsored collective funds, trusts, mortgage participation agreements,
and insurance company commingled accounts, including separate accounts;
    (iii) regional and mutual funds through bank sponsored collective funds and
open-end investment companies registered under the Federal Investment Company Act of
1940 to the extent that a fund or a portion of a fund does not qualify under paragraph (h);
    (iv) (iii) resource investments through limited partnerships, trusts, private
placements, limited liability corporations, limited liability companies, limited liability
partnerships, and corporations; and
    (v) (iv) international debt securities and emerging market equity securities.
    (2) The investments authorized in clause (1) must conform to the following
provisions:
    (i) the aggregate value of all investments made according to under clause (1),
including allocated amounts of index and mutual funds items (i), (ii), and (iii), may not
exceed 20 35 percent of the market value of the fund for which the covered pension
expanded list plan is investing;
    (ii) there must be at least four unrelated owners of the investment other than the
covered pension expanded list plan for investments made under clause (1), item (i), (ii),
or (iii), or (iv);
    (iii) covered pension plan the expanded list plan's participation in an investment
vehicle is limited to 20 percent thereof for investments made under clause (1), item (i),
(ii), or (iii), or (iv); and
    (iv) covered pension plan the expanded list plan's participation in a limited
partnership does not include a general partnership interest or other interest involving
general liability. The covered pension expanded list plan may not engage in any activity
as a limited partner which creates general liability.; and
(v) for volunteer firefighter relief associations, emerging market equity and
international debt investments authorized under clause (1), item (iv), must not exceed 15
percent of the association's special fund market value.
(i) Supplemental plan investments. The governing body of an expanded list plan
may certify assets to the State Board of Investment for investment under section 11A.17.
(j) Asset mix limitations. The aggregate value of an expanded list plan's
investments under paragraphs (g) and (h) and equity investments under paragraph (i),
regardless of the form in which these investments are held, must not exceed 85 percent of
the covered plan's market value.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 12. INVESTMENT AUTHORITY TRANSITION PROVISION.
If any investment by the State Board of Investment or any covered pension plan fund
was an authorized investment under law in effect immediately before the effective date
of applicable sections of this act, but is not authorized by this act, the applicable assets
must be liquidated before June 30, 2013.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 13. REPEALER.
Minnesota Statutes 2010, section 356.219, subdivision 4, is repealed.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 11
LOCAL RELIEF ASSOCIATION OR CONSOLIDATION ACCOUNT
MERGERS WITH PERA-P&F

    Section 1. Minnesota Statutes 2011 Supplement, section 69.77, subdivision 1a, is
amended to read:
    Subd. 1a. Covered retirement plans. The provisions of this section apply to the
following local retirement plans:
(1) the Bloomington Firefighters Relief Association;.
(2) the Fairmont Police Relief Association; and
(3) the Virginia Fire Department Relief Association.
EFFECTIVE DATE.(a) For the Fairmont Police Relief Association, this section
is effective as of the date for consolidation set by the board of the Public Employees
Retirement Association in consultation with the State Board of Investment, but not later
than June 29, 2012.
(b) For the Virginia fire consolidation account, this section is effective on June 29,
2012, which is the effective date of merger.

    Sec. 2. Minnesota Statutes 2011 Supplement, section 69.77, subdivision 4, is amended
to read:
    Subd. 4. Relief association financial requirements; minimum municipal
obligation. (a) The officers of the relief association shall determine the financial
requirements of the relief association and minimum obligation of the municipality for
the following calendar year in accordance with the requirements of this subdivision.
The financial requirements of the relief association and the minimum obligation of the
municipality must be determined on or before the submission date established by the
municipality under subdivision 5.
(b) The financial requirements of the relief association for the following calendar
year must be based on the most recent actuarial valuation or survey of the special fund of
the association if more than one fund is maintained by the association, or of the association,
if only one fund is maintained, prepared in accordance with sections 356.215, subdivisions
4 to 15
, and 356.216, as required under subdivision 10. If an actuarial estimate is prepared
by the actuary of the relief association as part of obtaining a modification of the benefit
plan of the relief association and the modification is implemented, the actuarial estimate
must be used in calculating the subsequent financial requirements of the relief association.
(c) If the relief association has an unfunded actuarial accrued liability as reported in
the most recent actuarial valuation or survey, the total of the amounts calculated under
clauses (1), (2), and (3), constitute the financial requirements of the relief association for
the following year. If the relief association does not have an unfunded actuarial accrued
liability as reported in the most recent actuarial valuation or survey, the amount calculated
under clauses (1) and (2) constitute the financial requirements of the relief association for
the following year. The financial requirement elements are:
(1) the normal level cost requirement for the following year, expressed as a dollar
amount, which must be determined by applying the normal level cost of the relief
association as reported in the actuarial valuation or survey and expressed as a percentage
of covered payroll to the estimated covered payroll of the active membership of the relief
association, including any projected change in the active membership, for the following
year;
(2) for the Bloomington Fire Department Relief Association, the Fairmont Police
Relief Association, and the Virginia Fire Department Relief Association, to the dollar
amount of normal cost determined under clause (1) must be added an amount equal to the
dollar amount of the administrative expenses of the special fund of the association if more
than one fund is maintained by the association, or of the association if only one fund is
maintained, for the most recent year, multiplied by the factor of 1.035. The administrative
expenses are those authorized under section 69.80; and
(3) to the dollar amount of normal cost and expenses determined under clauses
(1) and (2) must be added an amount equal to the level annual dollar amount which
is sufficient to amortize the unfunded actuarial accrued liability as determined from
the actuarial valuation or survey of the fund, using an interest assumption set at the
applicable rate specified in section 356.215, subdivision 8, by that fund's amortization
date as specified in paragraph (d).
(d) The Virginia Fire Department Relief Association special fund amortization date
is December 31, 2010. The Fairmont Police Relief Association special fund amortization
date is December 31, 2020. The Bloomington Fire Department Relief Association
special fund amortization date is determined under section 356.216, clause (2). The
amortization date specified in this paragraph supersedes any amortization date specified in
any applicable special law.
(e) The minimum obligation of the municipality is an amount equal to the financial
requirements of the relief association reduced by the estimated amount of member
contributions from covered salary anticipated for the following calendar year and the
estimated amounts anticipated for the following calendar year from the applicable state aid
program established under sections 69.011 to 69.051 receivable by the relief association
after any allocation made under section 69.031, subdivision 5, paragraph (b), clause (2),
or 423A.01, subdivision 2, paragraph (a), clause (6), from the local police and salaried
firefighters' relief association amortization aid program established under section 423A.02,
subdivision 1
, from the supplementary amortization state-aid program established under
section 423A.02, subdivision 1a, and from the additional amortization state aid under
section 423A.02, subdivision 1b.
EFFECTIVE DATE.(a) For the Fairmont Police Relief Association, this section
is effective as of the date for consolidation set by the board of the Public Employees
Retirement Association in consultation with the State Board of Investment, but not later
than June 29, 2012.
(b) For the Virginia fire consolidation account, this section is effective on June 29,
2012, which is the effective date of merger.

    Sec. 3. Minnesota Statutes 2011 Supplement, section 353.668, subdivision 4, is
amended to read:
    Subd. 4. Transfer of assets; transfer of title to assets. (a) On the effective date of
the consolidation under Laws 2011, First Special Session chapter 8, article 7, section 19,
the chief administrative officer of the Minneapolis Police Relief Association shall transfer
the entire assets of the special fund of the Minneapolis Police Relief Association other
than the health insurance account to the public employees police and fire retirement fund
at market value. Unless ineligible or inappropriate, the transfer must be in the form of
investment securities and must include any accounts receivable that are determined by the
State Board of Investment as being capable of being collected. An amount, in cash, must
be transferred by the city of Minneapolis equal to the market value recognized by the relief
association of investment securities that are determined by the executive director of the
State Board of Investment not to be in compliance with the requirements and limitations
set forth in sections 11A.09, 11A.14, 11A.23, and 11A.24 or not to be appropriate for
retention in light of the established investment objectives of the State Board of Investment
or of accounts receivable determined by the executive director of the State Board of
Investment as being incapable of being collected. Legal and beneficial title to assets that
are determined noncompliant or inappropriate securities or that are uncollectible accounts
receivable are transferred to the city of Minneapolis on the effective date of consolidation
under Laws 2011, First Special Session chapter 8, article 7, section 19. Any accounts
payable on the effective date of consolidation under Laws 2011, First Special Session
chapter 8, article 7, section 19, are an obligation of the public employees police and fire
retirement fund and reduce the asset value for purposes of subdivision 6. The transferred
assets must be deposited in the public employees police and fire retirement fund. The
amount of the health insurance account as of the date of the consolidation must remain
deposited in the financial institution retained by the former Minneapolis Police Relief
Association on May 1, 2011, and that financial institution must act as the custodian of the
account. The health insurance account may be transferred from the financial institution
that holds the account to a successor financial institution on June 30, 2012, under the
requirements of this subdivision and the terms of an agreement between the Minneapolis
Police Relief Association and the successor financial institution dated December 30,
2011, that provides for the transfer. The financial institution shall perform all trustee and
fiduciary duties with respect to the account as a condition to the retention of the account.
The executive director of the Minneapolis Police Relief Association, prior to the effective
date of consolidation, shall estimate three calendar years of the administrative expenses
related to the operation of the account and shall prepay those expenses from the account to
the financial institution prior to the effective date of consolidation. After the three-year
prepayment period, the beneficiaries of the account are responsible for the payment of the
administrative expenses related to the operation of the account.
(b) Upon the transfer of assets to the State Board of Investment under paragraph
(a), legal title to those transferred assets vests with the State Board of Investment on
behalf of the public employees police and fire retirement plan, and beneficial title to the
transferred assets remains with the former membership of the former Minneapolis Police
Relief Association.
(c) The public employees police and fire retirement plan and fund is the successor in
interest to all claims for or against the Minneapolis Police Relief Association. The public
employees police and fire retirement plan and fund is not liable for any claim against the
Minneapolis Police Relief Association, its governing board, or its administrative staff
acting in a fiduciary capacity, under chapter 356A or common law, which is founded upon
a claim of a breach of fiduciary duty if the act or acts constituting the claimed breach were
not undertaken in good faith. The public employees police and fire retirement plan may
assert any applicable defense to any claim in any judicial or administrative proceeding
that the Minneapolis Police Relief Association, its board, or its administrative staff would
otherwise have been entitled to assert, and the public employees police and fire retirement
plan may assert any applicable defense that it has in its capacity as a statewide agency.
(d) The Public Employees Retirement Association shall indemnify any former
fiduciary of the Minneapolis Police Relief Association consistent with the provisions of
section 356A.11. The indemnification may be effected by the purchase by the Public
Employees Retirement Association of reasonable fiduciary liability tail insurance for the
officers and directors of the former Minneapolis Police Relief Association. Consistent
with section 69.80, the relief association may purchase reasonable fiduciary liability tail
insurance for its officers and directors prior to the effective date of consolidation under
Laws 2011, First Special Session chapter 8, article 7, section 19.
(e) Office equipment and other physical assets of the special fund of the Minneapolis
Police Relief Association that are not needed by the Public Employees Retirement
Association may be sold by the special fund of the Minneapolis Police Relief Association
to the general fund of the Minneapolis Police Relief Association or to any successor
fraternal organization of the Minneapolis Police Relief Association at fair market value,
with the proceeds of that sale deposited in the public employees police and fire retirement
fund and included in the transferred asset value under subdivision 6.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. [353.669] CONSOLIDATION OF THE FAIRMONT POLICE RELIEF
ASSOCIATION.
    Subdivision 1. Membership transfer. On the effective date of consolidation, the
retired members, including surviving spouses, of the Fairmont Police Relief Association
are transferred to the public employees police and fire retirement plan, are no longer
members of the former Fairmont Police Relief Association, and are members of the public
employees police and fire retirement plan.
    Subd. 2. Benefit liability transfer. The liability for the payment of retirement
annuities, service pensions, and survivor benefits of the retired members, service
pensioners, surviving spouses, and any other retirement benefit recipients of the former
Fairmont Police Relief Association, as contained in the transferred records of the former
relief association, is transferred to the public employees police and fire retirement plan on
the effective date of consolidation.
    Subd. 3. Transfer of records. On the effective date of consolidation, the
chief administrative officer of the Fairmont Police Relief Association shall transfer all
records and documents relating to the special fund of the former Fairmont Police Relief
Association to the executive director of the Public Employees Retirement Association. To
the extent possible, original copies of all records and documents must be transferred.
    Subd. 4. Transfer of assets; transfer of title to assets. (a) On the effective date of
consolidation, the chief administrative officer of the Fairmont Police Relief Association
shall transfer the entire assets of the special fund of the Fairmont Police Relief Association
to the public employees police and fire retirement fund at market value. Unless ineligible
or inappropriate as determined by the State Board of Investment, the transfer must be
in the form of investment securities and must include any accounts receivable that are
determined by the State Board of Investment as being capable of being collected. The city
of Fairmont must transfer, in cash, an amount equal to the market value, as recognized by
the relief association of any investment securities that are determined by the executive
director of the State Board of Investment to be not in compliance with the requirements
and limitations set forth in sections 11A.09, 11A.14, 11A.23, and 11A.24, or to be
inappropriate for retention in light of the established investment objectives of the State
Board of Investment, or of any accounts receivable that are determined by the executive
director as being incapable of being collected. The legal and beneficial title to assets that
are determined to be noncompliant or inappropriate securities or that are determined to be
uncollectable accounts receivable are transferred from the relief association special fund
to the city of Fairmont as of the effective date of consolidation. Any accounts payable
of the special fund of the Fairmont Police Relief Association on the effective date of
consolidation, are an obligation of the public employees police and fire retirement fund
and reduce the value of the transferred relief association special fund assets for purposes
of subdivision 6. Assets transferred from the special fund of the Fairmont Police Relief
Association must be deposited in the public employees police and fire retirement fund
and must be managed by the State Board of Investment through the Minnesota combined
investment funds under section 11A.14.
(b) Upon the transfer of the assets to the management of the State Board of
Investment under paragraph (a), legal title to those transferred assets vests with the State
Board of Investment on behalf of the public employees police and fire retirement plan,
and beneficial title to the transferred assets remains with the former membership of the
former Fairmont Police Relief Association.
(c) The public employees police and fire retirement plan and fund is the successor in
interest to all claims for and against the Fairmont Police Relief Association. The public
employees police and fire retirement plan and fund is not liable for any claim against the
Fairmont Police Relief Association or its governing board acting in a fiduciary capacity
under chapter 356A or under common law which is founded upon a claim of a breach of
fiduciary duty if the act or acts constituting the claimed breach were not undertaken in
good faith. The public employees police and fire retirement plan may assert any applicable
defense to any claim in any judicial or administrative proceeding that the former Fairmont
Police Relief Association or its former governing board would otherwise have been
entitled to assert and the public employees police and fire retirement plan may assert any
applicable defense that it has in its capacity as a statewide agency.
(d) The Public Employees Retirement Association shall indemnify any former
fiduciary of the Fairmont Police Relief Association consistent with the provisions of
section 356A.11. The indemnification may be effected by the purchase by the Public
Employees Retirement Association of reasonable fiduciary liability tail insurance for the
officers and directors of the former Fairmont Police Relief Association.
    Subd. 5. Benefits. (a) The annuities, service pensions, and other retirement benefits
of or attributable to retired members and surviving spouses of the Fairmont Police Relief
Association who had that status as of the effective date of consolidation, continue after
consolidation in the same amount and under the same terms as provided under Minnesota
Statutes 2000, sections 423.41 to 423.46, 423.48 to 423.59, 423.61, and 423.62; Laws
1963, chapter 423; Laws 1977, chapter 100; and Laws 1999, chapter 222, article 3, section
4, except as provided in paragraph (b).
(b) The annual base salary figure for pension and benefit determinations upon
consolidation and for the balance of calendar year 2012 is $106,666.67. After December
31, 2012, annual postretirement adjustments of pensions and benefits in force must be
calculated solely under section 356.415, subdivision 1c.
    Subd. 6. Calculation of final funded status; employer contributions. (a) As of
the effective date of consolidation, the approved actuary retained by the Public Employees
Retirement Association under section 356.214 shall determine the final funded status of
the Fairmont Police Relief Association special fund. The final funded status is the present
value of future benefits payable from the Fairmont Police Relief Association as of the
effective date of consolidation after subtracting the market value of the transferred assets
of the Fairmont Police Relief Association as of the effective date of consolidation. The
present value of future benefits figure must be calculated using the applicable actuarial
assumptions for the public employees police and fire retirement plan specified in or
established under section 356.215. If there is a remainder present value of future benefits
amount, the city of Fairmont shall pay to the public employees police and fire retirement
fund an amount sufficient, on a level annual dollar basis, to amortize the calculated
remainder present value of future benefits amount by December 31, 2020. Payments shall
be made annually on or before December 31, beginning in 2012.
(b) If there are assets of the former Fairmont Police Relief Association in excess of
the present value of future benefits as of the effective date of consolidation, these assets
must be credited to an interest bearing suspense account within the public employees
police and fire retirement fund, must be used to offset any amount payable under paragraph
(c) until June 30, 2015, and, after June 30, 2015, must be paid to the city of Fairmont. The
suspense account must be credited with the same rate of investment return as the public
employees police and fire retirement fund.
(c) If, after the effective date of consolidation, the postretirement or preretirement
interest rate actuarial assumption applicable to the public employees police and fire
retirement plan under section 356.215, subdivision 8, is modified from the rates specified
in Minnesota Statutes 2010, section 356.215, subdivision 8, the remainder present value of
future benefits amount calculation under paragraph (a), updated for the passage of time,
must be revised and the amortization contribution by the city of Fairmont for the balance
of the amortization period must be redetermined and certified to the city of Fairmont.
EFFECTIVE DATE.This section is effective as of the date for consolidation set
by the board of the Public Employees Retirement Association in consultation with the
State Board of Investment, but not later than June 29, 2012.

    Sec. 5. [353.6691] MERGER OF THE VIRGINIA FIRE DEPARTMENT
RELIEF ASSOCIATION.
    Subdivision 1. Merger authorized. On the effective date of merger, the Virginia
fire department consolidation account of the Public Employees Retirement Association
under chapter 353A becomes a part of the public employees police and fire retirement plan
and fund governed by sections 353.63 to 353.659.
    Subd. 2. Benefit liability transfer. All current and future liabilities of the Virginia
fire department consolidation account under chapter 353A are liabilities of the public
employees police and fire retirement plan and fund as of the effective date of merger and
the accrued benefits of the members of the consolidation account are the obligation of the
public employees police and fire retirement plan and fund.
    Subd. 3. Transfer of assets; transfer to title assets. On the effective date of merger,
the assets of the Virginia fire department consolidation account must be transferred to the
public employees police and fire retirement fund. Upon transfer, the market value of the
assets of the consolidation account, less any amount of residual assets under subdivision 5,
are assets of the public employees police and fire fund as of the effective date of merger,
and the assets, excluding the distribution amount under subdivision 5, become an asset of
the public employees police and fire retirement fund. The public employees police and
fire retirement fund also must be credited as an asset with the amount of any receivable
assets from employer contributions under subdivision 5.
    Subd. 4. Benefits. A person who received a service pension, a disability benefit, or a
survivor benefit from the Virginia fire department consolidation account for the month
prior to the effective date of merger and who has not previously elected postretirement
adjustments under section 356.415, subdivision 1c, rather than the postretirement
adjustment mechanism of the Virginia Fire Department Relief Association under section
353A.08, subdivision 1, may elect future postretirement adjustments under section
356.415, subdivision 1c, or the retention of the former Virginia Fire Department Relief
Association postretirement adjustment mechanism. The election must be made in writing
on a form prescribed by the executive director on or before September 1, 2012. Unless
modified by an election under this subdivision, the benefit plan election by any person or
on behalf of any person under section 353A.08 remains binding.
    Subd. 5. Calculation of final funded status; employer contributions. (a) As of
the effective date of merger, the approved actuary retained by the Public Employees
Retirement Association under section 356.214 shall determine the final funded status of the
former Virginia Fire Department Relief Association special fund. The final funded status is
the present value of future benefits payable from the Virginia fire department consolidation
account as of the effective date of merger after subtracting the market value of the
transferred assets of the Virginia fire department consolidation account as of the effective
date of merger. The present value of future benefits figure must be calculated using the
applicable actuarial assumptions for the public employees police and fire retirement plan
specified in or established under section 356.215. If there is a remainder present value
of future benefits amount, the city of Virginia shall pay to the public employees police
and fire retirement fund an amount sufficient, on a level annual dollar basis, to amortize
the calculated remainder present value of future benefits amount by December 31, 2020.
Payments shall be made annually on or before December 31, beginning in 2012.
(b) If there are assets of the former Virginia fire department consolidation account in
excess of the present value of future benefits as of the effective date of merger, these assets
shall be credited to an interest bearing suspense account within the public employees police
and fire retirement fund until January 1, 2013. The suspense account must be credited with
the same rate of investment return as the public employees police and fire retirement fund.
(c) If, after the effective date of merger, the postretirement or preretirement interest
rate actuarial assumption applicable to the public employees police and fire retirement plan
under section 356.215, subdivision 8, is modified from the rates specified in Minnesota
Statutes 2010, section 356.215, subdivision 8, the remainder present value of future
benefits amount calculation under paragraph (a), updated for the passage of time, must be
revised and any amortization contribution by the city of Virginia for the balance of the
amortization period must be redetermined and certified to the city of Virginia.
(d) On January 1, 2013, one-half of any suspense account under paragraph (b)
must be paid as an additional ad hoc postretirement adjustment to the service pensioners,
disabilitants, and surviving spouses of the former Virginia fire consolidation account. The
additional ad hoc postretirement adjustment for each recipient is the total amount available
for the adjustment divided by the total number of recipients as of January 1, 2013, of the
former Virginia fire consolidation account. On January 1, 2014, if the suspense account
has earned investment income equal to or greater than the preretirement interest rate
assumption applicable to the public employees police and fire retirement plan under section
356.215, subdivision 8, the balance remaining of the suspense account under paragraph (b)
must be paid as an additional ad hoc postretirement adjustment to the service pensioners,
disabilitants, and surviving spouses of the former Virginia fire consolidation account,
divided by the total number of recipients as of January 1, 2014. Nothing in this paragraph
may be deemed to authorize the payment of a postretirement adjustment to an estate.
EFFECTIVE DATE.This section is effective on June 29, 2012, which is the
effective date of merger.

    Sec. 6. Minnesota Statutes 2011 Supplement, section 356.215, subdivision 8, is
amended to read:
    Subd. 8. Interest and salary assumptions. (a) The actuarial valuation must use
the applicable following preretirement interest assumption and the applicable following
postretirement interest assumption:



plan
preretirement
interest
rate assumption
postretirement
interest
rate assumption

general state employees retirement plan
8.5%
6.0%

correctional state employees retirement plan
8.5
6.0

State Patrol retirement plan
8.5
6.0

legislators retirement plan
8.5
6.0

elective state officers retirement plan
8.5
6.0

judges retirement plan
8.5
6.0

general public employees retirement plan
8.5
6.0

public employees police and fire retirement plan
8.5
6.0


local government correctional service
retirement plan
8.5
6.0

teachers retirement plan
8.5
6.0

Duluth teachers retirement plan
8.5
8.5

St. Paul teachers retirement plan
8.5
8.5

Fairmont Police Relief Association
5.0
5.0

Virginia Fire Department Relief Association
5.0
5.0


Bloomington Fire Department Relief
Association
6.0
6.0


local monthly benefit volunteer firefighters
relief associations
5.0
5.0
    (b) Before July 1, 2010, the actuarial valuation must use the applicable following
single rate future salary increase assumption, the applicable following modified single
rate future salary increase assumption, or the applicable following graded rate future
salary increase assumption:
    (1) single rate future salary increase assumption

plan
future salary increase assumption

legislators retirement plan
5.0%

judges retirement plan
4.0

Fairmont Police Relief Association
3.5

Virginia Fire Department Relief Association
3.5


Bloomington Fire Department Relief
Association
4.0
    (2) age-related select and ultimate future salary increase assumption or graded rate
future salary increase assumption

plan
future salary increase assumption

correctional state employees retirement plan
assumption D

State Patrol retirement plan
assumption C

local government correctional service retirement plan
assumption C

Duluth teachers retirement plan
assumption A

St. Paul teachers retirement plan
assumption B
The select calculation is: during the
designated select period, a designated
percentage rate is multiplied by the result of
the designated integer minus T, where T is
the number of completed years of service,
and is added to the applicable future salary
increase assumption. The designated select
period is five years and the designated
integer is five for the general state employees
retirement plan. The designated select period
is ten years and the designated integer is ten
for all other retirement plans covered by
this clause. The designated percentage rate
is: (1) 0.2 percent for the correctional state
employees retirement plan, the State Patrol
retirement plan, and the local government
correctional service retirement plan; (2)
0.6 percent for the general state employees
retirement plan; and (3) 0.3 percent for the
teachers retirement plan, the Duluth Teachers
Retirement Fund Association, and the St.
Paul Teachers Retirement Fund Association.
The select calculation for the Duluth Teachers
Retirement Fund Association is 8.00 percent
per year for service years one through seven,
7.25 percent per year for service years seven
and eight, and 6.50 percent per year for
service years eight and nine.
    The ultimate future salary increase assumption is:

age
A
B
C
D

16
8.00%
6.90%
7.7500%
7.2500%

17
8.00
6.90
7.7500
7.2500

18
8.00
6.90
7.7500
7.2500

19
8.00
6.90
7.7500
7.2500

20
6.90
6.90
7.7500
7.2500

21
6.90
6.90
7.1454
6.6454

22
6.90
6.90
7.0725
6.5725

23
6.85
6.85
7.0544
6.5544

24
6.80
6.80
7.0363
6.5363

25
6.75
6.75
7.0000
6.5000

26
6.70
6.70
7.0000
6.5000

27
6.65
6.65
7.0000
6.5000

28
6.60
6.60
7.0000
6.5000

29
6.55
6.55
7.0000
6.5000

30
6.50
6.50
7.0000
6.5000

31
6.45
6.45
7.0000
6.5000

32
6.40
6.40
7.0000
6.5000

33
6.35
6.35
7.0000
6.5000

34
6.30
6.30
7.0000
6.5000

35
6.25
6.25
7.0000
6.5000

36
6.20
6.20
6.9019
6.4019

37
6.15
6.15
6.8074
6.3074

38
6.10
6.10
6.7125
6.2125

39
6.05
6.05
6.6054
6.1054

40
6.00
6.00
6.5000
6.0000

41
5.90
5.95
6.3540
5.8540

42
5.80
5.90
6.2087
5.7087

43
5.70
5.85
6.0622
5.5622

44
5.60
5.80
5.9048
5.4078

45
5.50
5.75
5.7500
5.2500

46
5.40
5.70
5.6940
5.1940

47
5.30
5.65
5.6375
5.1375

48
5.20
5.60
5.5822
5.0822

49
5.10
5.55
5.5404
5.0404

50
5.00
5.50
5.5000
5.0000

51
4.90
5.45
5.4384
4.9384

52
4.80
5.40
5.3776
4.8776

53
4.70
5.35
5.3167
4.8167

54
4.60
5.30
5.2826
4.7826

55
4.50
5.25
5.2500
4.7500

56
4.40
5.20
5.2500
4.7500

57
4.30
5.15
5.2500
4.7500

58
4.20
5.10
5.2500
4.7500

59
4.10
5.05
5.2500
4.7500

60
4.00
5.00
5.2500
4.7500

61
3.90
5.00
5.2500
4.7500

62
3.80
5.00
5.2500
4.7500

63
3.70
5.00
5.2500
4.7500

64
3.60
5.00
5.2500
4.7500

65
3.50
5.00
5.2500
4.7500

66
3.50
5.00
5.2500
4.7500

67
3.50
5.00
5.2500
4.7500

68
3.50
5.00
5.2500
4.7500

69
3.50
5.00
5.2500
4.7500

70
3.50
5.00
5.2500
4.7500
(3) service-related ultimate future salary increase assumption


general state employees retirement plan of the
Minnesota State Retirement System
assumption A


general employees retirement plan of the Public
Employees Retirement Association
assumption B

Teachers Retirement Association
assumption C

public employees police and fire retirement plan
assumption D


service
length
A
B
C
D

1
10.75%
12.25%
12.00%
13.00%

2
8.35
9.15
9.00
11.00

3
7.15
7.75
8.00
9.00

4
6.45
6.85
7.50
8.00

5
5.95
6.25
7.25
6.50

6
5.55
5.75
7.00
6.10

7
5.25
5.45
6.85
5.80

8
4.95
5.15
6.70
5.60

9
4.75
4.85
6.55
5.40

10
4.65
4.65
6.40
5.30

11
4.45
4.45
6.25
5.20

12
4.35
4.35
6.00
5.10

13
4.25
4.15
5.75
5.00

14
4.05
4.05
5.50
4.90

15
3.95
3.95
5.25
4.80

16
3.85
3.85
5.00
4.80

17
3.75
3.75
4.75
4.80

18
3.75
3.75
4.50
4.80

19
3.75
3.75
4.25
4.80

20
3.75
3.75
4.00
4.80

21
3.75
3.75
3.90
4.70

22
3.75
3.75
3.80
4.60

23
3.75
3.75
3.70
4.50

24
3.75
3.75
3.60
4.50

25
3.75
3.75
3.50
4.50

26
3.75
3.75
3.50
4.50

27
3.75
3.75
3.50
4.50

28
3.75
3.75
3.50
4.50

29
3.75
3.75
3.50
4.50

30 or more
3.75
3.75
3.50
4.50
    (c) Before July 2, 2010, the actuarial valuation must use the applicable following
payroll growth assumption for calculating the amortization requirement for the unfunded
actuarial accrued liability where the amortization retirement is calculated as a level
percentage of an increasing payroll:

plan
payroll growth assumption


general state employees retirement plan of the
Minnesota State Retirement System
3.75%

correctional state employees retirement plan
4.50

State Patrol retirement plan
4.50

legislators retirement plan
4.50

judges retirement plan
4.00


general employees retirement plan of the Public
Employees Retirement Association
3.75

public employees police and fire retirement plan
3.75

local government correctional service retirement plan
4.50

teachers retirement plan
3.75

Duluth teachers retirement plan
4.50

St. Paul teachers retirement plan
5.00
    (d) After July 1, 2010, the assumptions set forth in paragraphs (b) and (c) continue to
apply, unless a different salary assumption or a different payroll increase assumption:
    (1) has been proposed by the governing board of the applicable retirement plan;
    (2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
most recent actuarial valuation report if section 356.214 does not apply; and
    (3) has been approved or deemed approved under subdivision 18.
EFFECTIVE DATE.(a) For the Fairmont Police Relief Association, this section
is effective as of the date for consolidation set by the board of the Public Employees
Retirement Association in consultation with the State Board of Investment, but not later
than June 29, 2012.
(b) For the Virginia fire consolidation account, this section is effective on June 29,
2012, which is the effective date of merger.

    Sec. 7. Laws 2002, chapter 392, article 1, section 8, is amended to read:
    Sec. 8. REVISOR INSTRUCTIONS.
    (a) In the next and subsequent editions of Minnesota Statutes, the revisor of statutes
shall not print Minnesota Statutes, sections 423.41 to 423.62, but shall denote those
sections as "[LOCAL, CITY OF FAIRMONT, POLICE PENSIONS.]."
    (b) In the next and subsequent editions of Minnesota Statutes, the revisor of statutes
shall, in each section indicated in column A, replace the cross-reference specified in
column B with the cross-reference set forth in column C:

Column A
Column B
Column C

69.021, subd. 10
69.77, subd. 2a
69.77, subd. 3

69.021, subd. 10
69.77, subd. 2b
69.77, subd. 4

69.021, subd. 10
69.77, subd. 2c
69.77, subd. 5


299A.465, subd. 5
424.03
Minnesota Statutes, 2000,
424.03

353A.07, subd. 6
69.77, subd. 2a
69.77, subd. 3

353A.09, subd. 4
69.77, subd. 2a
69.77, subd. 3

356.216
69.77, subd. 2b
69.77, subd. 4

356.219, subd. 2
69.77, subd. 2g
69.77, subd. 9

423.01, subd. 2
69.77, subd. 2b
69.77, subd. 4

423A.18
69.77, subd. 2i
69.77, subd. 11

423A.19, subd. 4
69.77, subd. 2i
69.77, subd. 11

423B.06, subd. 1
69.77, subd. 2a
69.77, subd. 3

423B.06, subd. 1
69.77, subd. 2b
69.77, subd. 4

423B.06, subd. 1
69.77, subd. 2c
69.77, subd. 5

423B.06, subd. 1
69.77, subd. 2d
69.77, subd. 6

423B.06, subd. 1
69.77, subd. 2e
69.77, subd. 7

423B.06, subd. 1
69.77, subd. 2f
69.77, subd. 8

423B.21, subd. 1
69.77, subd. 2b
69.77, subd. 4
EFFECTIVE DATE.This section is effective as of the date for consolidation set
by the board of the Public Employees Retirement Association in consultation with the
State Board of Investment, but not later than June 29, 2012.

    Sec. 8. TERMINATION OF THE FAIRMONT POLICE RELIEF
ASSOCIATION.
On the effective date of consolidation, the Fairmont Police Relief Association
ceases to exist.
EFFECTIVE DATE.This section is effective as of the date for consolidation set
by the board of the Public Employees Retirement Association in consultation with the
State Board of Investment, but not later than June 29, 2012.

    Sec. 9. TERMINATION OF THE VIRGINIA FIRE DEPARTMENT RELIEF
ASSOCIATION.
On the effective date of merger, the Virginia fire department consolidation account
ceases to exist.
EFFECTIVE DATE.This section is effective on June 29, 2012, which is the
effective date of merger.

    Sec. 10. REPEALER.
    Subdivision 1. Fairmont Police Relief Association. (a) Laws 1963, chapter 423;
and Laws 1999, chapter 222, article 3, sections 3; 4; and 5, are repealed.
(b) Minnesota Statutes 2010, section 423A.06, is repealed.
(c) The revisor shall show Minnesota Statutes 2010, sections 423.41; 423.42;
423.43; 423.44; 423.45; 423.46; 423.48; 423.49; 423.50; 423.51; 423.52; 423.53; 423.54;
423.55; 423.56; 423.57; 423.58; 423.59; 423.61; and 423.62,as repealed.
(d) Laws 1947, chapter 624, sections 1; 2; 3; 4; 5; 6; 8; 9; 10; 11; 12; 13; 14; 15;
16; 17; 18; 19; 21; and 22, are repealed.
    Subd. 2. Virginia fire department consolidation account. Laws 1953, chapter
399, as amended by Laws 1961, chapter 420, section 1, Laws 1961, chapter 420, section 2,
Laws 1961, chapter 420, section 3, Laws 1961, chapter 420, section 4, Laws 1961, chapter
420, section 5, Laws 1961, chapter 420, section 6, Laws 1963, chapter 407, section 1,
Laws 1965, chapter 546, section 1, Laws 1965, chapter 546, section 2, Laws 1965, chapter
546, section 3, Laws 1969, chapter 578, section 1, Laws 1969, chapter 578, section 2,
Laws 1969, chapter 578, section 3; Laws 1961, chapter 420, sections 2, as amended by
Laws 1965, chapter 546, section 2, Laws 1965, chapter 546, section 3, Laws 1969, chapter
578, section 1; 3; 4; 5, as amended by Laws 1963, chapter 407, section 1, Laws 1969,
chapter 578, section 2; and 6; Laws 1963, chapter 407, section 1, as amended by Laws
1969, chapter 578, section 2; Laws 1965, chapter 546, sections 1; 2, as amended by Laws
1969, chapter 578, section 1; and 3; Laws 1969, chapter 578, sections 1; 2; and 3; Laws
1974, chapter 183, as amended by Laws 1991, chapter 62, section 1; Laws 1982, chapter
574, section 1; Laws 1982, chapter 578, article 1, section 14; Laws 1983, chapter 69,
section 1; Laws 1984, chapter 547, section 27; Laws 1987, chapter 372, article 2, section
14; Laws 1988, chapter 709, sections 1, as amended by Laws 1989, chapter 319, article 4,
section 2, Laws 1989, chapter 319, article 18, section 11; and 2; Laws 1991, chapter 62,
sections 1; and 2; and Laws 1992, chapter 465, section 1, are repealed.
EFFECTIVE DATE.Subdivision 1 is effective as of the date for consolidation
of the Fairmont Police Relief Association set by the board of the Public Employees
Retirement Association in consultation with the State Board of Investment, but not later
than June 29, 2012.
Subdivision 2 is effective for the Virginia fire consolidation account on June 29,
2012, which is the effective date of merger.

ARTICLE 12
VOLUNTEER FIRE RETIREMENT CHANGES

    Section 1. Minnesota Statutes 2010, section 69.011, subdivision 1, is amended to read:
    Subdivision 1. Definitions. Unless the language or context clearly indicates that
a different meaning is intended, the following words and terms, for the purposes of this
chapter and chapters 423, 423A, 424 and 424A, have the meanings ascribed to them:
    (a) "Commissioner" means the commissioner of revenue.
    (b) "Municipality" means:
    (1) a home rule charter or statutory city;
    (2) an organized town;
    (3) a park district subject to chapter 398;
    (4) the University of Minnesota;
    (5) for purposes of the fire state aid program only, an American Indian tribal
government entity located within a federally recognized American Indian reservation;
    (6) for purposes of the police state aid program only, an American Indian tribal
government with a tribal police department which exercises state arrest powers under
section 626.90, 626.91, 626.92, or 626.93;
    (7) for purposes of the police state aid program only, the Metropolitan Airports
Commission; and
    (8) for purposes of the police state aid program only, the Department of Natural
Resources and the Department of Public Safety with respect to peace officers covered
under chapter 352B.
    (c) "Minnesota Firetown Premium Report" means a form prescribed by the
commissioner containing space for reporting by insurers of fire, lightning, sprinkler
leakage and extended coverage premiums received upon risks located or to be performed
in this state less return premiums and dividends.
    (d) "Firetown" means the area serviced by any municipality having a qualified fire
department or a qualified incorporated fire department having a subsidiary volunteer
firefighters' relief association.
    (e) "Market value" means latest available market value of all property in a taxing
jurisdiction, whether the property is subject to taxation, or exempt from ad valorem
taxation obtained from information which appears on abstracts filed with the commissioner
of revenue or equalized by the State Board of Equalization.
    (f) "Minnesota Aid to Police Premium Report" means a form prescribed by the
commissioner for reporting by each fire and casualty insurer of all premiums received
upon direct business received by it in this state, or by its agents for it, in cash or otherwise,
during the preceding calendar year, with reference to insurance written for insuring against
the perils contained in auto insurance coverages as reported in the Minnesota business
schedule of the annual financial statement which each insurer is required to file with
the commissioner in accordance with the governing laws or rules less return premiums
and dividends.
    (g) "Peace officer" means any person:
    (1) whose primary source of income derived from wages is from direct employment
by a municipality or county as a law enforcement officer on a full-time basis of not less
than 30 hours per week;
    (2) who has been employed for a minimum of six months prior to December 31
preceding the date of the current year's certification under subdivision 2, clause (b);
    (3) who is sworn to enforce the general criminal laws of the state and local
ordinances;
    (4) who is licensed by the Peace Officers Standards and Training Board and is
authorized to arrest with a warrant; and
    (5) who is a member of the Minneapolis Police Relief Association, the State Patrol
retirement plan, or the public employees police and fire fund.
    (h) "Full-time equivalent number of peace officers providing contract service" means
the integral or fractional number of peace officers which would be necessary to provide
the contract service if all peace officers providing service were employed on a full-time
basis as defined by the employing unit and the municipality receiving the contract service.
    (i) "Retirement benefits other than a service pension" means any disbursement
authorized under section 424A.05, subdivision 3, clauses (3) and (4).
    (j) "Municipal clerk, municipal clerk-treasurer, or county auditor" means:
(1) for the police state aid program and police relief association financial reports:
(i) the person who was elected or appointed to the specified position or, in the
absence of the person, another person who is designated by the applicable governing body.;
(ii) in a park district, the clerk is the secretary of the board of park district
commissioners.;
(iii) in the case of the University of Minnesota, the clerk is that official designated
by the Board of Regents.;
(iv) for the Metropolitan Airports Commission, the clerk is the person designated
by the commission.;
(v) for the Department of Natural Resources or the Department of Public Safety,
the clerk is the respective commissioner.;
(vi) for a tribal police department which exercises state arrest powers under section
626.90, 626.91, 626.92, or 626.93, the clerk is the person designated by the applicable
American Indian tribal government.; and
(2) for the fire state aid program and fire relief association financial reports, the
person who was elected or appointed to the specified position, or, for governmental
entities other than counties, if the governing body of the governmental entity designates
the position to perform the function, the chief financial official of the governmental entity
or the chief administrative official of the governmental entity.
(k) "Voluntary statewide lump-sum volunteer firefighter retirement plan" means the
retirement plan established by chapter 353G.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 2. Minnesota Statutes 2010, section 69.051, subdivision 1, is amended to read:
    Subdivision 1. Financial report and audit. (a) The board of each salaried
firefighters relief association, police relief association, and volunteer firefighters relief
association as defined in section 424A.001, subdivision 4, with assets of at least $200,000
or liabilities of at least $200,000 in the prior year or in any previous year, according to
the applicable actuarial valuation or financial report if no valuation is required, shall: (1)
prepare a financial report covering the special and general funds of the relief association
for the preceding fiscal year on a form prescribed by the state auditor, file the financial
report, and submit financial statements.
(b) The financial report must contain financial statements and disclosures which
present the true financial condition of the relief association and the results of relief
association operations in conformity with generally accepted accounting principles and in
compliance with the regulatory, financing and funding provisions of this chapter and any
other applicable laws. The financial report must be countersigned by:
(1) the municipal clerk or clerk-treasurer of the municipality in which the relief
association is located if the relief association is a firefighters relief association which is
directly associated with a municipal fire department or is a police relief association,; or
countersigned by the secretary of the independent nonprofit firefighting corporation and
(2) by the municipal clerk or clerk-treasurer of the largest municipality in population
which contracts with the independent nonprofit firefighting corporation if the volunteer
firefighter relief association is a subsidiary of an independent nonprofit firefighting
corporation and by the secretary of the independent nonprofit firefighting corporation; or
(3) by the chief financial official of the county in which the volunteer firefighter
relief association is located or primarily located if the relief association is associated with
a fire department that is not located in or associated with an organized municipality.
(2) file (c) The financial report must be retained in its office for public inspection
and present it to must be filed with the city council governing body of the government
subdivision in which the associated fire department is located after the close of the fiscal
year. One copy of the financial report must be furnished to the state auditor after the
close of the fiscal year; and.
(3) submit to the state auditor (d) Audited financial statements which have been must
be attested to by a certified public accountant, public accountant, or the state auditor and
must be filed with the state auditor within 180 days after the close of the fiscal year. The
state auditor may accept this report in lieu of the report required in clause (2) paragraph (c).
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 3. Minnesota Statutes 2010, section 69.051, subdivision 1a, is amended to read:
    Subd. 1a. Financial statement. (a) The board of each volunteer firefighters relief
association, as defined in section 424A.001, subdivision 4, that is not required to file
a financial report and audit under subdivision 1 must prepare a detailed statement of
the financial affairs for the preceding fiscal year of the relief association's special and
general funds in the style and form prescribed by the state auditor. The detailed statement
must show the sources and amounts of all money received; all disbursements, accounts
payable and accounts receivable; the amount of money remaining in the treasury; total
assets including a listing of all investments; the accrued liabilities; and all items necessary
to show accurately the revenues and expenditures and financial position of the relief
association.
(b) The detailed financial statement required under paragraph (a) must be certified
by an independent public accountant or auditor or by the auditor or accountant who
regularly examines or audits the financial transactions of the municipality. In addition to
certifying the financial condition of the special and general funds of the relief association,
the accountant or auditor conducting the examination shall give an opinion as to the
condition of the special and general funds of the relief association, and shall comment
upon any exceptions to the report. The independent accountant or auditor must have at
least five years of public accounting, auditing, or similar experience, and must not be an
active, inactive, or retired member of the relief association or the fire or police department.
(c) The detailed statement required under paragraph (a) must be countersigned by:
(1) the municipal clerk or clerk-treasurer of the municipality,; or,
(2) where applicable, by the secretary of the independent nonprofit firefighting
corporation and by the municipal clerk or clerk-treasurer of the largest municipality in
population which contracts with the independent nonprofit firefighting corporation if the
relief association is a subsidiary of an independent nonprofit firefighting corporation. and
by the secretary of the independent nonprofit firefighting corporation; or
(3) by the chief financial official of the county in which the volunteer firefighter
relief association is located or primarily located if the relief association is associated with
a fire department that is not located in or associated with an organized municipality.
(d) The volunteer firefighters' relief association board must file the detailed statement
required under paragraph (a) in the relief association office for public inspection and
present it to the city council within 45 days after the close of the fiscal year, and must
submit a copy of the detailed statement to the state auditor within 90 days of the close of
the fiscal year.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 4. Minnesota Statutes 2010, section 69.051, subdivision 3, is amended to read:
    Subd. 3. Report by certain municipalities. (a) Each municipality which has
an organized fire department but which does not have a firefighters' relief association
governed by section 69.77 or sections 69.771 to 69.775 and which is not exempted
under paragraph (b) shall annually prepare a detailed financial report of the receipts and
disbursements by the municipality for fire protection service during the preceding calendar
year, on a form prescribed by the state auditor. The financial report must contain any
information which the state auditor deems necessary to disclose the sources of receipts
and the purpose of disbursements for fire protection service. The financial report must be
signed by the municipal clerk or clerk-treasurer of the municipality. The financial report
must be filed by the municipal clerk or clerk-treasurer with the state auditor on or before
July 1 annually. The state auditor shall forward one copy to the county auditor of the
county wherein the municipality is located. The municipality shall not qualify initially to
receive, or be entitled subsequently to retain, state aid under this chapter if the financial
reporting requirement or the applicable requirements of this chapter or any other statute or
special law have not been complied with or are not fulfilled.
(b) Each municipality that has an organized fire department and provides retirement
coverage to its firefighters through the voluntary statewide lump-sum volunteer firefighter
retirement plan under chapter 353G qualifies to have fire state aid transmitted to and
retained in the statewide lump-sum volunteer firefighter retirement fund without filing
a detailed financial report if the executive director of the Public Employees Retirement
Association certifies compliance by the municipality with the requirements of sections
353G.04 and 353G.08, paragraph (e), and by the applicable fire chief with the requirements
of section 353G.07.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2010, section 69.772, subdivision 4, is amended to read:
    Subd. 4. Certification of financial requirements and minimum municipal
obligation; levy. (a) The officers of the relief association shall certify the financial
requirements of the special fund of the relief association and the minimum obligation of
the municipality with respect to the special fund of the relief association as determined
under subdivision 3 to the governing body of the municipality on or before August 1 of
each year. The certification must be made to the entity that is responsible for satisfying
the minimum obligation with respect to the special fund of the relief association. If the
responsible entity is a joint powers entity, the certification must be made in the manner
specified in the joint powers agreement, or if the joint powers agreement is silent on this
point, the certification must be made to the chair of the joint powers board.
(b) The financial requirements of the relief association and the minimum municipal
obligation must be included in the financial report or financial statement under section
69.051. The schedule forms related to the determination of the financial requirements
must be filed with the state auditor by March 31, annually, if the relief association is
required to file a financial statement under section 69.051, subdivision 1a, or by June 30,
annually, if the relief association is required to file a financial report and audit under
section 69.051, subdivision 1.
(b) (c) The municipality shall provide for at least the minimum obligation of the
municipality with respect to the special fund of the relief association by tax levy or from
any other source of public revenue.
(c) (d) The municipality may levy taxes for the payment of the minimum municipal
obligation without any limitation as to rate or amount and irrespective of any limitations
imposed by other provisions of law upon the rate or amount of taxation until the balance
of the special fund or any fund of the relief association has attained a specified level. In
addition, any taxes levied under this section must not cause the amount or rate of any other
taxes levied in that year or to be levied in a subsequent year by the municipality which are
subject to a limitation as to rate or amount to be reduced.
(d) (e) If the municipality does not include the full amount of the minimum
municipal obligations in its levy for any year, the officers of the relief association shall
certify that amount to the county auditor, who shall spread a levy in the amount of the
certified minimum municipal obligation on the taxable property of the municipality.
(e) (f) If the state auditor determines that a municipal contribution actually made
in a plan year was insufficient under section 69.771, subdivision 3, paragraph (c), clause
(5), the state auditor may request a copy of the certifications under this subdivision
from the relief association or from the city. The relief association or the city, whichever
applies, must provide the certifications within 14 days of the date of the request from
the state auditor.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 6. Minnesota Statutes 2010, section 69.773, subdivision 5, is amended to read:
    Subd. 5. Minimum municipal obligation. (a) The officers of the relief association
shall determine the minimum obligation of the municipality with respect to the special
fund of the relief association for the following calendar year on or before August 1 of each
year in accordance with the requirements of this subdivision.
(b) The minimum obligation of the municipality with respect to the special fund is
an amount equal to the financial requirements of the special fund of the relief association
determined under subdivision 4, reduced by the estimated amount of any fire state
aid payable under sections 69.011 to 69.051 reasonably anticipated to be received by
the municipality for transmittal to the special fund of the relief association during the
following year and the amount of any anticipated contributions to the special fund
required by the relief association bylaws from the active members of the relief association
reasonably anticipated to be received during the following calendar year. A reasonable
amount of anticipated fire state aid is an amount that does not exceed the fire state aid
actually received in the prior year multiplied by the factor 1.035.
(c) The officers of the relief association shall certify the financial requirements of
the special fund of the relief association and the minimum obligation of the municipality
with respect to the special fund of the relief association as determined under subdivision 4
and this subdivision to the governing body of the municipality by August 1 of each year.
The certification must be made to the entity that is responsible for satisfying the minimum
obligation with respect to the special fund of the relief association. If the responsible
entity is a joint powers entity, the certification must be made in the manner specified in
the joint powers agreement, or if the joint powers agreement is silent on this point, the
certification must be made to the chair of the joint powers board.
(d) The financial requirements of the relief association and the minimum municipal
obligation must be included in the financial report or financial statement under section
69.051.
(d) (e) The municipality shall provide for at least the minimum obligation of the
municipality with respect to the special fund of the relief association by tax levy or from
any other source of public revenue. The municipality may levy taxes for the payment of the
minimum municipal obligation without any limitation as to rate or amount and irrespective
of any limitations imposed by other provisions of law or charter upon the rate or amount
of taxation until the balance of the special fund or any fund of the relief association has
attained a specified level. In addition, any taxes levied under this section must not cause
the amount or rate of any other taxes levied in that year or to be levied in a subsequent year
by the municipality which are subject to a limitation as to rate or amount to be reduced.
(e) (f) If the municipality does not include the full amount of the minimum municipal
obligation in its levy for any year, the officers of the relief association shall certify that
amount to the county auditor, who shall spread a levy in the amount of the minimum
municipal obligation on the taxable property of the municipality.
(f) (g) If the state auditor determines that a municipal contribution actually made
in a plan year was insufficient under section 69.771, subdivision 3, paragraph (c), clause
(5), the state auditor may request from the relief association or from the city a copy of
the certifications under this subdivision. The relief association or the city, whichever
applies, must provide the certifications within 14 days of the date of the request from
the state auditor.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 7. Minnesota Statutes 2010, section 69.80, is amended to read:
69.80 AUTHORIZED ADMINISTRATIVE EXPENSES.
(a) Notwithstanding any provision of law to the contrary, the payment of the
following necessary, reasonable and direct expenses of maintaining, protecting and
administering the special fund, when provided for in the bylaws of the association and
approved by the board of trustees, constitutes authorized administrative expenses of a
police, salaried firefighters', or volunteer firefighters' relief association organized under
any law of this state:
(1) office expense, including, but not limited to, rent, utilities, equipment, supplies,
postage, periodical subscriptions, furniture, fixtures, and salaries of administrative
personnel;
(2) salaries of the president, secretary, and treasurer officers of the association, or
their designees, and any other official salaries of the members of the board of trustees of
the relief association to whom a salary is payable under bylaws or articles of incorporation
in effect on January 1, 1986 if the salary amounts are approved by the governing body of
the entity that is responsible for meeting any minimum obligation under section 69.77,
69.772, or 69.773, and their the itemized expenses of relief association officers and board
members that are incurred as a result of fulfilling their responsibilities as administrators
of the special fund;
(3) tuition, registration fees, organizational dues, and other authorized expenses
of the officers or members of the board of trustees incurred in attending educational
conferences, seminars, or classes relating to the administration of the relief association;
(4) audit, actuarial, medical, legal, and investment and performance evaluation
expenses;
(5) filing and application fees payable by the relief association to federal or other
governmental entities;
(6) reimbursement to the officers and members of the board of trustees, or their
designees, for reasonable and necessary expenses actually paid and incurred in the
performance of their duties as officers or members of the board; and
(6) (7) premiums on fiduciary liability insurance and official bonds for the officers,
members of the board of trustees, and employees of the relief association.
(b) Any other expenses of the relief association must be paid from the general fund
of the association, if one exists. If a relief association has only one fund, that fund is the
special fund for purposes of this section. If a relief association has a special fund and
a general fund, and any expense of the relief association that is directly related to the
purposes for which both funds were established, the payment of that expense must be
apportioned between the two funds on the basis of the benefits derived by each fund.
EFFECTIVE DATE.This section is effective July 1, 2012, with respect to the
amendment to paragraph (a), clause (2), and is effective retroactively from January 1,
2010, with respect to the amendment to paragraph (a), clauses (5), (6), and (7).

    Sec. 8. Minnesota Statutes 2010, section 353G.08, is amended by adding a subdivision
to read:
    Subd. 2a. Additional municipal contributions authorized. (a) At the discretion of
the municipality or the independent nonprofit firefighting corporation associated with a fire
department covered by a voluntary statewide lump-sum volunteer firefighter retirement
plan account, the municipality or the corporation may make additional contributions
to the applicable account.
(b) The executive director of the Public Employees Retirement Association
may specify requirements as to the form, timing, and accompanying information for
contributions made under this subdivision.
(c) Any contributions made under this subdivision must be included as total present
assets of the account for the calculation of any subsequent annual funding requirements
for the account under subdivision 1 or for the calculation of any cash flow funding
requirement under subdivision 2.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2010, section 424A.001, subdivision 4, is amended to read:
    Subd. 4. Relief association. (a) "Relief association" or "volunteer firefighters'
relief association" means (1) a volunteer firefighters' relief association or a volunteer
firefighters' division or account of a partially salaried and partially volunteer firefighters'
relief association that is:
(1) organized and incorporated as a nonprofit corporation to provide retirement
benefits to volunteer firefighters under chapter 317A and any laws of the state,;
(2) is governed by this chapter and chapter 69, sections 69.771 to 69.775; and
(3) is directly associated with:
(i) a fire department established by municipal ordinance; or
(2) any separately incorporated volunteer firefighters' relief association that is
subsidiary to and that provides service pension and retirement benefit coverage for
members of (ii) an independent nonprofit firefighting corporation that is organized under
the provisions of chapter 317A, is governed by this chapter, and that operates exclusively
primarily for firefighting purposes; or
(iii) a fire department operated as or by a joint powers entity that operates primarily
for firefighting purposes.
(b) "Relief association" or "volunteer firefighters' relief association" does not mean:
(1) the Bloomington Fire Department Relief Association governed by section 69.77;
Minnesota Statutes 2000, chapter 424; and Laws 1965, chapter 446, as amended; or
(2) the voluntary statewide lump-sum volunteer firefighter retirement plan governed
by Minnesota Statutes, chapter 353G.
(c) A relief association or volunteer firefighters' relief association is a governmental
entity that receives and manages public money to provide retirement benefits for
individuals providing the governmental services of firefighting and emergency first
response.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. Minnesota Statutes 2010, section 424A.01, subdivision 6, is amended to read:
    Subd. 6. Return to active firefighting after break in service. (a) The requirements
of this section apply to all breaks in service, except breaks in service mandated by federal
or state law.
(b)(1) If a firefighter who has ceased to perform or supervise fire suppression and
fire prevention duties for at least 60 days resumes performing active firefighting with the
fire department associated with the relief association, if the bylaws of the relief association
so permit, the firefighter may again become an active member of the relief association. A
firefighter who returns to active service and membership is subject to the service pension
calculation requirements under this section.
(2) A firefighter who has been granted an approved leave of absence not exceeding
one year by the fire department or by the relief association is exempt from the minimum
period of resumption service requirement of this section.
(3) A person who has a break in service not exceeding one year but has not been
granted an approved leave of absence and who has not received a service pension or
disability benefit may be made exempt from the minimum period of resumption service
requirement of this section by the relief association bylaws.
(4) If the bylaws so provide, a firefighter who returns to active relief association
membership under this paragraph may continue to collect a monthly service pension,
notwithstanding the service pension eligibility requirements under chapter 424A.
(c) If a former firefighter who has received a service pension or disability benefit
returns to active relief association membership under paragraph (b), the firefighter may
qualify for the receipt of a service pension from the relief association for the resumption
service period if the firefighter meets the service requirements of section 424A.016,
subdivision 3
, or 424A.02, subdivision 2. No firefighter may be paid a service pension
more than once for the same period of service.
(d) If a former firefighter who has not received a service pension or disability benefit
returns to active relief association membership under paragraph (b), the firefighter may
qualify for the receipt of a service pension from the relief association for the original
and resumption service period periods if the firefighter meets the minimum period of
resumption service specified in the relief association bylaws and the service requirements
of section 424A.016, subdivision 3, or 424A.02, subdivision 2, based on the original and
resumption years of service credit.
(e) A firefighter who returns to active lump-sum relief association membership
under paragraph (b) and who qualifies for a service pension under paragraph (c) or (d)
must have, upon a subsequent cessation of duties, any service pension for the resumption
service period calculated as a separate benefit. If a lump-sum service pension had
been paid to the firefighter upon the firefighter's previous cessation of duties, a second
lump-sum service pension for the resumption service period must be calculated to apply
by applying the service pension amount in effect on the date of the firefighter's termination
of the resumption service for all years of the resumption service. No firefighter may be
paid a service pension twice for the same period of service. If a lump-sum service pension
had not been paid to the firefighter upon the firefighter's previous cessation of duties and
the firefighter meets the minimum service requirement of section 424A.016, subdivision
3
, or 424A.02, subdivision 2, a service pension must be calculated to apply the service
pension amount in effect on the date of the firefighter's termination of the resumption
service for all years of service credit.
(f) A firefighter who had not been paid a lump-sum service pension returns to
active relief association membership under paragraph (b), who does did not qualify for
a service pension under paragraph (d) meet the minimum period of resumption service
requirement specified in the relief association's bylaws, but who does meet the minimum
service requirement of section 424A.016, subdivision 3, or 424A.02, subdivision 2, based
on the firefighter's previous original and resumption years of active service, must have,
upon a subsequent cessation of duties, a service pension calculated for the previous years
of original and resumption service based on periods calculated by applying the service
pension amount in effect on the date of the firefighter's termination of the resumption
service, or, if the bylaws so provide, based on the service pension amount in effect on the
date of the firefighter's previous cessation of duties. The service pension for a firefighter
who returns to active lump-sum relief association membership under this paragraph, but
who had met the minimum period of resumption service requirement specified in the relief
association's bylaws, must be calculated by applying the service pension amount in effect
on the date of the firefighter's termination of the resumption service.
(g) If a firefighter receiving a monthly benefit service pension returns to active
monthly benefit relief association membership under paragraph (b), and if the relief
association bylaws do not allow for the firefighter to continue collecting a monthly service
pension, any monthly benefit service pension payable to the firefighter is suspended as
of the first day of the month next following the date on which the firefighter returns to
active membership. If the firefighter was receiving a monthly benefit service pension, and
qualifies for a service pension under paragraph (c), the firefighter is entitled to an additional
monthly benefit service pension upon a subsequent cessation of duties calculated based
on the resumption service credit and the service pension accrual amount in effect on the
date of the termination of the resumption service. A suspended initial service pension
resumes as of the first of the month next following the termination of the resumption
service. If the firefighter was not receiving a monthly benefit service pension and meets
the minimum service requirement of section 424A.02, subdivision 2, a service pension
must be calculated to apply by applying the service pension amount in effect on the date
of the firefighter's termination of the resumption service for all years of service credit.
(h) A firefighter who was not receiving a monthly benefit service pension returns to
active relief association membership under paragraph (b), who does did not qualify for
a service pension under paragraph (d) meet the minimum period of resumption service
requirement specified in the relief association's bylaws, but who does meet the minimum
service requirement of section 424A.02, subdivision 2, based on the firefighter's previous
original and resumption years of active service, must have, upon a subsequent cessation
of duties, a service pension calculated for the previous years of original and resumption
service based on periods calculated by applying the service pension amount in effect on
the date of the firefighter's termination of the resumption service, or, if the bylaws so
provide, based on the service pension amount in effect on the date of the firefighter's
previous cessation of duties. The service pension for a firefighter who returns to active
relief association membership under this paragraph, but who had met the minimum period
of resumption service requirement specified in the relief association's bylaws, must be
calculated by applying the service pension amount in effect on the date of the firefighter's
termination of the resumption service.
(i) For defined contribution plans, a firefighter who returns to active relief
association membership under paragraph (b) and who qualifies for a service pension
under paragraph (c) or (d) must have, upon a subsequent cessation of duties, any service
pension for the resumption service period calculated as a separate benefit. If a service
pension had been paid to the firefighter upon the firefighter's previous cessation of duties,
and if the firefighter meets the minimum service requirement of section 424A.016,
subdivision 3, based on the resumption years of service, a second service pension for
the resumption service period must be calculated to include allocations credited to the
firefighter's individual account during the resumption period of service and deductions
for administrative expenses, if applicable.
(j) For defined contribution plans, if a firefighter who had not been paid a service
pension returns to active relief association membership under paragraph (b), and who
meets the minimum service requirement of section 424A.016, subdivision 3, based on
the firefighter's original and resumption years of service, must have, upon a subsequent
cessation of duties, a service pension for the original and resumption service periods
calculated to include allocations credited to the firefighter's individual account during the
resumption period of service and deductions for administrative expenses, if applicable,
less any amounts previously forfeited under section 424A.016, subdivision 4.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 11. Minnesota Statutes 2010, section 424A.016, subdivision 5, is amended to read:
    Subd. 5. Service pension installment payments. (a) A defined contribution relief
association, if the governing bylaws so provide, may pay, at the option of the retiring
member intended recipient and in lieu of a single payment of a service pension or a
survivor benefit, the service pension or survivor benefit in installments.
(b) The election of installment payments is irrevocable and must be made by the
retiring member intended recipient in writing and filed with the secretary of the relief
association no later than 30 days before the commencement of payment of the service
pension or survivor benefit.
(c) The amount of the installment payments must be the fractional portion of the
remaining account balance equal to one divided by the number of remaining annual
installment payments.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 12. Minnesota Statutes 2010, section 424A.016, subdivision 6, is amended to read:
    Subd. 6. Deferred service pensions. (a) A member of a relief association is entitled
to a deferred service pension if the member:
    (1) has completed the lesser of the minimum period of active service with the fire
department specified in the bylaws or 20 years of active service with the fire department;
    (2) has completed at least five years of active membership in the relief association;
and
    (3) separates from active service and membership before reaching age 50 or the
minimum age for retirement and commencement of a service pension specified in the
bylaws governing the relief association if that age is greater than age 50. The requirement
that a member separate from active service and membership is waived for persons who
have discontinued their volunteer firefighter duties and who are employed on a full-time
basis under section 424A.015, subdivision 1.
    (b) The deferred service pension is payable when the former member reaches
at least age 50, or at least the minimum age specified in the bylaws governing the relief
association if that age is greater than age 50, and when the former member makes a valid
written application.
    (c) A defined contribution relief association may, if its governing bylaws so provide,
credit interest or additional investment performance on the deferred lump-sum service
pension during the period of deferral. If provided for in the bylaws, the interest must be
paid:
(1) at the investment performance rate actually earned on that portion of the assets
if the deferred benefit amount is invested by the relief association in a separate account
established and maintained by the relief association or;
(2) at the investment performance rate actually earned on that portion of the assets
if the deferred benefit amount is invested in a separate investment vehicle held by the
relief association; or
(2) (3) at the investment return on the assets of the special fund of the defined
contribution volunteer firefighter relief association in proportion to the share of the assets
of the special fund to the credit of each individual deferred member account through
the accounting date on which the investment return is recognized by and credited to the
special fund.
    (d) Unless the bylaws of a relief association that has elected to pay interest or
additional investment performance on deferred lump-sum service pensions under
paragraph (c) specifies a different interest or additional investment performance method,
including the interest or additional investment performance period starting date and ending
date, the interest or additional investment performance on a deferred service pension
is creditable as follows:
(1) for a relief association that has elected to pay interest or additional investment
performance under paragraph (c), clause (1) or (3), beginning on the date that the
member separates from active service and membership and ending on the accounting
date immediately before the deferred member commences receipt of the deferred service
pension; or
(2) for a relief association that has elected to pay interest or additional investment
performance under paragraph (c), clause (2), beginning on the date that the member
separates from active service and membership and ending on the date that the separate
investment vehicle is valued immediately before the date on which the deferred member
commences receipt of the deferred service pension.
(e) The deferred service pension is governed by and must be calculated under
the general statute, special law, relief association articles of incorporation, and relief
association bylaw provisions applicable on the date on which the member separated from
active service with the fire department and active membership in the relief association.
EFFECTIVE DATE.(a) This section is effective January 1, 2013.
(b) This section applies only to persons becoming deferred service pensioners after
January 1, 2013.

    Sec. 13. Minnesota Statutes 2010, section 424A.02, subdivision 1, is amended to read:
    Subdivision 1. Authorization. (a) A defined benefit relief association, when its
articles of incorporation or bylaws so provide, may pay out of the assets of its special
fund a defined benefit service pension to each of its members who: (1) separates from
active service with the fire department; (2) reaches age 50; (3) completes at least five
years of active service as an active member of the municipal fire department to which the
relief association is associated; (4) completes at least five years of active membership
with the relief association before separation from active service; and (5) complies with
any additional conditions as to age, service, and membership that are prescribed by the
bylaws of the relief association. A service pension computed under this section may be
prorated monthly for fractional years of service as the bylaws or articles of incorporation
of the relief association so provide. The bylaws or articles of incorporation may define
a "month," but the definition must require a calendar month to have at least 16 days of
active service. If the bylaws or articles of incorporation do not define a "month," a
"month" is a completed calendar month of active service measured from the member's
date of entry to the same date in the subsequent month. The service pension earned by a
volunteer firefighter under this chapter and the articles of incorporation and bylaws of the
volunteer firefighters' relief association may be paid whether or not the municipality or
nonprofit firefighting corporation to which the relief association is associated qualifies for
the receipt of fire state aid under chapter 69.
(b) In the case of a member who has completed at least five years of active service as
an active member of the fire department to which the relief association is associated on
the date that the relief association is established and incorporated, the requirement that
the member complete at least five years of active membership with the relief association
before separation from active service may be waived by the board of trustees of the relief
association if the member completes at least five years of inactive membership with the
relief association before the date of the payment of the service pension. During the
period of inactive membership, the member is not entitled to receive disability benefit
coverage, is not entitled to receive additional service credit towards computation of a
service pension, and is considered to have the status of a person entitled to a deferred
service pension under subdivision 7.
(c) No municipality or nonprofit firefighting corporation may delegate the power to
take final action in setting a service pension or ancillary benefit amount or level to the
board of trustees of the relief association or to approve in advance a service pension or
ancillary benefit amount or level equal to the maximum amount or level that this chapter
would allow rather than a specific dollar amount or level.
(d) No relief association as defined in section 424A.001, subdivision 4, may pay a
defined benefit service pension or disability benefit to a former member of the relief
association if that person has not separated from active service with the fire department to
which the relief association is directly associated, unless:
(1) the person is employed subsequent to retirement by the municipality or the
independent nonprofit firefighting corporation, whichever applies, to perform duties within
the municipal fire department or corporation on a full-time basis;
(2) the governing body of the municipality or of the corporation has filed its
determination with the board of trustees of the relief association that the person's
experience with and service to the fire department in that person's full-time capacity
would be difficult to replace; and
(3) the bylaws of the relief association were amended to provide for the payment of
a service pension or disability benefit for such full-time employees.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 14. Minnesota Statutes 2010, section 424A.02, subdivision 7, is amended to read:
    Subd. 7. Deferred service pensions. (a) A member of a defined benefit relief
association is entitled to a deferred service pension if the member:
    (1) has completed the lesser of either the minimum period of active service with
the fire department specified in the bylaws or 20 years of active service with the fire
department;
    (2) has completed at least five years of active membership in the relief association;
and
    (3) separates from active service and membership before reaching age 50 or the
minimum age for retirement and commencement of a service pension specified in the
bylaws governing the relief association if that age is greater than age 50. The requirement
that a member separate from active service and membership is waived for persons who
have discontinued their volunteer firefighter duties and who are employed on a full-time
basis under section 424A.015, subdivision 1.
    (b) The deferred service pension is payable when the former member reaches
at least age 50, or at least the minimum age specified in the bylaws governing the relief
association if that age is greater than age 50, and when the former member makes a valid
written application.
    (c) A defined benefit relief association that provides a lump-sum service pension
governed by subdivision 3 may, when its governing bylaws so provide, pay interest on the
deferred lump-sum service pension during the period of deferral. If provided for in the
bylaws, interest must be paid in one of the following manners:
    (1) at the investment performance rate actually earned on that portion of the assets
if the deferred benefit amount is invested by the relief association in a separate account
established and maintained by the relief association or;
(2) at the investment performance rate actually earned on that portion of the assets
if the deferred benefit amount is invested in a separate investment vehicle held by the
relief association; or
    (2) (3) at an interest rate of up to five percent, compounded annually, as set by the
board of directors and approved as provided in subdivision 10.
    (d) Interest under paragraph (c), clause (2) (3), is payable following the date on
which the municipality has approved the deferred service pension interest rate established
by the board of trustees.
    (e) Unless the bylaws of a relief association that has elected to pay interest or
additional investment performance on deferred lump-sum service pensions under
paragraph (c) specifies a different interest or additional investment performance method,
including the interest or additional investment performance period starting date and ending
date, the interest or additional investment performance on a deferred service pension
is creditable as follows:
(1) for a relief association that has elected to pay interest or additional investment
performance under paragraph (c), clause (1) or (3), beginning on the date that the
member separates from active service and membership and ending on the accounting
date immediately before the deferred member commences receipt of the deferred service
pension; or
(2) for a relief association that has elected to pay interest or additional investment
performance under paragraph (c), clause (2), beginning on the date that the member
separates from active service and membership and ending on the date that the separate
investment vehicle is valued immediately before the date on which the deferred member
commences receipt of the deferred service pension.
(f) For a deferred service pension that is transferred to a separate account established
and maintained by the relief association or separate investment vehicle held by the relief
association, the deferred member bears the full investment risk subsequent to transfer and
in calculating the accrued liability of the volunteer firefighters relief association that pays
a lump-sum service pension, the accrued liability for deferred service pensions is equal
to the separate relief association account balance or the fair market value of the separate
investment vehicle held by the relief association.
    (f) (g) The deferred service pension is governed by and must be calculated under
the general statute, special law, relief association articles of incorporation, and relief
association bylaw provisions applicable on the date on which the member separated from
active service with the fire department and active membership in the relief association.
EFFECTIVE DATE.(a) This section is effective January 1, 2013.
(b) This section applies only to persons becoming deferred service pensioners after
January 1, 2013.

    Sec. 15. Minnesota Statutes 2010, section 424A.02, subdivision 9, is amended to read:
    Subd. 9. Limitation on ancillary benefits. A defined benefit relief association,
including any volunteer firefighters relief association governed by section 69.77 or any
volunteer firefighters division of a relief association governed by chapter 424, may only
pay ancillary benefits which would constitute an authorized disbursement as specified in
section 424A.05 subject to the following requirements or limitations:
    (1) with respect to a defined benefit relief association in which governing bylaws
provide solely for a lump-sum service pension to a retiring member, or provide a retiring
member the choice of either a lump-sum service pension or a monthly service pension
and the lump-sum service pension was chosen, no ancillary benefit may be paid to any
former member or paid to any person on behalf of any former member after the former
member (i) terminates active service with the fire department and active membership
in the relief association; and (ii) commences receipt of a service pension as authorized
under this section; and
    (2) with respect to any defined benefit relief association, no ancillary benefit paid or
payable to any member, to any former member, or to any person on behalf of any member
or former member, may exceed in amount the total earned service pension of the member
or former member. The total earned service pension must be calculated by multiplying
the service pension amount specified in the bylaws of the relief association at the time of
death or disability, whichever applies, by the years of service credited to the member or
former member. The years of service must be determined as of (i) the date the member or
former member became entitled to the ancillary benefit; or (ii) the date the member or
former member died entitling a survivor or the estate of the member or former member to
an ancillary benefit. The ancillary benefit must be calculated without regard to whether the
member had attained the minimum amount of service and membership credit specified in
the governing bylaws. For active members, the amount of a permanent disability benefit
or a survivor benefit must be equal to the member's total earned service pension except
that the bylaws of a defined benefit relief association may provide for the payment of a
survivor benefit in an amount not to exceed five times the yearly service pension amount
specified in the bylaws on behalf of any member who dies before having performed five
years of active service in the fire department with which the relief association is affiliated.
(3)(i) If a lump sum survivor or death benefit is payable under the articles of
incorporation or bylaws, the benefit must be paid:
(A) as a survivor benefit to the surviving spouse of the deceased firefighter;
(B) as a survivor benefit to the surviving children of the deceased firefighter if
no surviving spouse;
(C) as a survivor benefit to a designated beneficiary of the deceased firefighter if no
surviving spouse or surviving children; or
(D) as a death benefit to the estate of the deceased active or deferred firefighter if no
surviving children and no beneficiary designated.
(ii) If there are no surviving children, the surviving spouse may waive, in writing,
wholly or partially, the spouse's entitlement to a survivor benefit.
(4)(i) If a monthly benefit survivor or death benefit is payable under the articles of
incorporation or bylaws, the benefit must be paid:
(A) as a survivor benefit to the surviving spouse of the deceased firefighter;
(B) as a survivor benefit to the surviving children of the deceased firefighter if
no surviving spouse;
(C) as a survivor benefit to a designated beneficiary of the deceased firefighter if no
surviving spouse or surviving children; or
(D) as a death benefit to the estate of the deceased active or deferred firefighter if no
surviving spouse, no surviving children, and no beneficiary designated.
(ii) If there are no surviving children, the surviving spouse may waive, in writing,
wholly or partially, the spouse's entitlement to a survivor benefit.
(iii) For purposes of this clause, if the relief association bylaws authorize a monthly
survivor benefit payable to a designated beneficiary, the relief association bylaws may
limit the total survivor benefit amount payable.
(5) For purposes of this section, for a monthly benefit volunteer fire relief association
or for a combination lump-sum and monthly benefit volunteer fire relief association where
a monthly benefit service pension has been elected by or a monthly benefit is payable with
respect to a firefighter, a designated beneficiary must be a natural person. For purposes
of this section, for a lump-sum volunteer fire relief association or for a combination
lump-sum and monthly benefit volunteer fire relief association where a lump-sum service
pension has been elected by or a lump-sum benefit is payable with respect to a firefighter,
a trust created under chapter 501B may be a designated beneficiary. If a trust is payable to
the surviving children organized under chapter 501B as authorized by this section and
there is no surviving spouse, the survivor benefit may be paid to the trust, notwithstanding
a requirement of this section to the contrary.
EFFECTIVE DATE.This section is effective January 1, 2013.

    Sec. 16. Minnesota Statutes 2010, section 424A.04, subdivision 3, is amended to read:
    Subd. 3. Conditions on relief association consultants. (a) If a volunteer firefighter
relief association employs or contracts with a consultant to provide legal or financial
advice, the secretary of the relief association shall obtain and the consultant shall provide
to the secretary of the relief association a copy of the consultant's certificate of insurance.
(b) A consultant is any person who is employed under contract to provide legal or
financial advice and who is or who represents to the volunteer firefighter relief association
that the person is:
(1) an actuary;
(2) a licensed public accountant or a certified public accountant;
(3) an attorney;
(4) an investment advisor or manager, or an investment counselor;
(5) an investment advisor or manager selection consultant;
(6) a pension benefit design advisor or consultant; or
(7) any other financial consultant.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 17. Minnesota Statutes 2010, section 424A.06, subdivision 2, is amended to read:
    Subd. 2. General fund assets and revenues. To (a) The general fund, if established,
must be credited with the following:
(1) all moneys money received from dues, other than dues payable as contributions
under the bylaws of the relief association to the special fund;
(2) all money received from fines,;
(3) all money received from initiation fees,;
(4) all money received as entertainment revenues; and
(5) any moneys money or property donated, given, granted or devised by any
person, either for the support of the general fund of the relief association or for unspecified
uses purposes.
(b) The treasurer of the relief association is the custodian of the assets of the general
fund and must be the recipient on behalf of the general fund of all revenues payable to the
general fund. The treasurer shall maintain adequate records documenting any transaction
involving the assets or the revenues of the general fund. These records must be open for
inspection by any member of the relief association at reasonable times and places.
EFFECTIVE DATE.This section is effective July 1, 2012.

ARTICLE 13
SMALL GROUP OR ONE PERSON RETIREMENT PROVISIONS

    Section 1. Minnesota Statutes 2011 Supplement, section 353.01, subdivision 2a,
is amended to read:
    Subd. 2a. Included employees; mandatory membership. (a) Public employees
whose salary exceeds $425 in any month and who are not specifically excluded under
subdivision 2b or who have not been provided an option to participate under subdivision
2d, whether individually or by action of the governmental subdivision, must participate as
members of the association with retirement coverage by the general employees retirement
plan under this chapter, the public employees police and fire retirement plan under this
chapter, or the local government correctional employees retirement plan under chapter
353E, whichever applies. Membership commences as a condition of their employment on
the first day of their employment or on the first day that the eligibility criteria are met,
whichever is later. Public employees include but are not limited to:
(1) persons whose salary meets the threshold in this paragraph from employment in
one or more positions within one governmental subdivision;
(2) elected county sheriffs;
(3) persons who are appointed, employed, or contracted to perform governmental
functions that by law or local ordinance are required of a public officer, including, but
not limited to:
(i) town and city clerk or treasurer;
(ii) county auditor, treasurer, or recorder;
(iii) city manager as defined in section 353.028 who does not exercise the option
provided under subdivision 2d; or
(iv) emergency management director, as provided under section 12.25;
(4) physicians under section 353D.01, subdivision 2, who do not elect public
employees defined contribution plan coverage under section 353D.02, subdivision 2;
(5) full-time employees of the Dakota County Agricultural Society;
(6) employees of the Minneapolis Firefighters Relief Association or Minneapolis
Police Relief Association who are not excluded employees under subdivision 2b due
to coverage by the relief association pension plan and who elected general employee
retirement plan coverage before August 20, 2009; and
(7) employees of the Red Wing Port Authority who were first employed by the
Red Wing Port Authority before May 1, 2011, and who are not excluded employees
under subdivision 2b.; and
(8) employees of the Seaway Port Authority of Duluth who are not excluded
employees under subdivision 2b.
    (b) A public employee or elected official who was a member of the association on
June 30, 2002, based on employment that qualified for membership coverage by the public
employees retirement plan or the public employees police and fire plan under this chapter,
or the local government correctional employees retirement plan under chapter 353E as of
June 30, 2002, retains that membership for the duration of the person's employment in that
position or incumbency in elected office. Except as provided in subdivision 28, the person
shall participate as a member until the employee or elected official terminates public
employment under subdivision 11a or terminates membership under subdivision 11b.
(c) If the salary of an included public employee is less than $425 in any subsequent
month, the member retains membership eligibility.
(d) For the purpose of participation in the MERF division of the general employees
retirement plan, public employees include employees who were members of the former
Minneapolis Employees Retirement Fund on June 29, 2010, and who participate as
members of the MERF division of the association.
EFFECTIVE DATE.(a) This section is effective the day after the board of
commissioners of the Seaway Port Authority of Duluth and its chief clerical officer timely
complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.
(b) Authority of the Seaway Port Authority of Duluth to approve this section expires
on June 30, 2012.

    Sec. 2. Minnesota Statutes 2011 Supplement, section 353.01, subdivision 6, is
amended to read:
    Subd. 6. Governmental subdivision. (a) "Governmental subdivision" means a
county, city, town, school district within this state, or a department, unit or instrumentality
of state or local government, or any public body established under state or local
authority that has a governmental purpose, is under public control, is responsible for the
employment and payment of the salaries of employees of the entity, and receives a major
portion of its revenues from taxation, fees, assessments or from other public sources.
    (b) Governmental subdivision also means the Public Employees Retirement
Association, the League of Minnesota Cities, the Association of Metropolitan
Municipalities, charter schools formed under section 124D.10, service cooperatives
exercising retirement plan participation under section 123A.21, subdivision 5, joint powers
boards organized under section 471.59, subdivision 11, paragraph (a), family service
collaboratives and children's mental health collaboratives organized under section 471.59,
subdivision 11, paragraph (b) or (c), provided that the entities creating the collaboratives
are governmental units that otherwise qualify for retirement plan membership, public
hospitals owned or operated by, or an integral part of, a governmental subdivision or
governmental subdivisions, the Association of Minnesota Counties, the Minnesota
Inter-county Association, the Minnesota Municipal Utilities Association, the Metropolitan
Airports Commission, the University of Minnesota with respect to police officers covered
by the public employees police and fire retirement plan, the Minneapolis Employees
Retirement Fund for employment initially commenced after June 30, 1979, the Range
Association of Municipalities and Schools, soil and water conservation districts, economic
development authorities created or operating under sections 469.090 to 469.108, the Port
Authority of the city of St. Paul, the Seaway Port Authority of Duluth, the Red Wing
Port Authority, the Spring Lake Park Fire Department, incorporated, the Lake Johanna
Volunteer Fire Department, incorporated, the Red Wing Environmental Learning Center,
the Dakota County Agricultural Society, Hennepin Healthcare System, Inc., and the
Minneapolis Firefighters Relief Association and Minneapolis Police Relief Association
with respect to staff covered by the Public Employees Retirement Association general plan.
    (c) Governmental subdivision does not mean any municipal housing and
redevelopment authority organized under the provisions of sections 469.001 to 469.047;
or any port authority organized under sections 469.048 to 469.089 other than the Port
Authority of the city of St. Paul or the Seaway Port Authority of Duluth and other than
the Red Wing Port Authority; or any hospital district organized or reorganized prior to
July 1, 1975, under sections 447.31 to 447.37 or the successor of the district; or the board
of a family service collaborative or children's mental health collaborative organized
under sections 124D.23, 245.491 to 245.495, or 471.59, if that board is not controlled
by representatives of governmental units.
    (d) A nonprofit corporation governed by chapter 317A or organized under Internal
Revenue Code, section 501(c)(3), which is not covered by paragraph (a) or (b), is not a
governmental subdivision unless the entity has obtained a written advisory opinion from
the United States Department of Labor or a ruling from the Internal Revenue Service
declaring the entity to be an instrumentality of the state so as to provide that any future
contributions by the entity on behalf of its employees are contributions to a governmental
plan within the meaning of Internal Revenue Code, section 414(d).
    (e) A public body created by state or local authority may request membership on
behalf of its employees by providing sufficient evidence that it meets the requirements in
paragraph (a).
    (f) An entity determined to be a governmental subdivision is subject to the reporting
requirements of this chapter upon receipt of a written notice of eligibility from the
association.
EFFECTIVE DATE.(a) This section is effective the day after the board of
commissioners of the Seaway Port Authority of Duluth and its chief clerical officer timely
complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.
(b) Authority of the Seaway Port Authority of Duluth to approve this section expires
on June 30, 2012.

    Sec. 3. PERA-GENERAL; PRIOR SEAWAY PORT AUTHORITY OF DULUTH
SERVICE CREDIT TRANSFER.
    Subdivision 1. PERA-general coverage. Employees of the Seaway Port Authority
of Duluth on July 1, 2012, are public employees within the meaning of Minnesota
Statutes, section 353.01, subdivisions 2 and 2a, and are members of the general employees
retirement plan of the Public Employees Retirement Association as of that date.
    Subd. 2. Service and salary credit for prior Seaway Port Authority of Duluth
employment. (a) Any employee of the Seaway Port Authority of Duluth on the effective
date of this section is eligible, on or after July 1, 2012, to transfer to the general employees
retirement plan of the Public Employees Retirement Association prior service credit
rendered in the employ of the Seaway Port Authority of Duluth as allowable service
credit, but not to exceed the maximum set forth in paragraph (c), and prior salary received
from employment by the Seaway Port Authority of Duluth as salary credit as provided in
paragraph (b).
(b) The amount of allowable service and salary credit to be transferred to the general
employees retirement plan for prior Seaway Port Authority of Duluth employment is that
portion of the total prior Seaway Port Authority of Duluth employment that bears the same
relationship that the assets transferred to the general employees retirement fund with
respect to each applicable person bear to the full actuarial value of the benefit attributable
to the prior service and salary under Minnesota Statutes, chapters 353 and 356. The full
actuarial value of the benefit attributable to the prior service under Minnesota Statutes,
chapters 353 and 356, is as provided in Minnesota Statutes, section 356.551. The assets
transferred with respect to each applicable person is the person's account balance in the
Seaway Port Authority of Duluth section 401(a) federal Internal Revenue Code retirement
plan, the person's account balance in a section 457 federal Internal Revenue Code deferred
compensation plan, the person's share of any purchase payment amounts that the Seaway
Port Authority of Duluth irrevocably commits to contribute to the general employees
retirement fund, and any purchase payment amount contributed by the applicable person
to the general employees retirement fund. Any amounts from the section 401(a) federal
Internal Revenue Code retirement plan, the section 457 federal Internal Revenue Code
deferred compensation plan, or from a purchase payment amount provided by the Seaway
Port Authority of Duluth must be made on an institution-to-institution basis.
(c) If the assets transferred with respect to an applicable person under paragraph (b)
are less than the full actuarial value of the benefit attributable to the prior service under
Minnesota Statutes, section 356.551, as of the date of the asset transfer, the untransferred
balance of the prior service and salary may be purchased on June 30, 2014, by the
applicable person or a combination of the applicable person and the Seaway Port Authority
of Duluth by the payment of the balance of the full actuarial value payment amount under
Minnesota Statutes, section 356.551, plus compound interest at the rate of 0.71 percent per
month between the transfer date under paragraph (b) until June 30, 2014. No applicable
person may purchase more allowable service and salary credit from the general employees
retirement plan of the Public Employees Retirement Association than the person's period
of employment by the Seaway Port Authority of Duluth rendered before the effective date
of this section if the employment would have been eligible service and salary for general
employees retirement plan coverage if the service had been rendered or salary received
after the effective date of this section.
(d) An applicable person must provide any documentation related to eligibility
under the general employees retirement plan that is required by the executive director.
Allowable service and salary credit for any period must be transferred and recognized
by the general employees retirement plan for an applicable person upon receipt of the
associated transferred assets.
(e) Transferred service and salary credit related to the Seaway Port Authority of
Duluth before July 1, 1989, does not make a person eligible for a retirement annuity under
Minnesota Statutes, section 353.30, subdivision 1a.
(f) Authority to have service and salary credit transferred under this section expires
on July 1, 2013, or on the date that the applicable person terminates employment by the
Seaway Port Authority of Duluth, whichever is earlier.
    Subd. 3. Status of service transfer amounts. Notwithstanding any provision of
Minnesota Statutes, section 353.32, 353.34, or 353.35, to the contrary, amounts transferred
to the general employees retirement fund of the Public Employees Retirement Association
under subdivision 2 must be considered to be an accumulated member contribution
deduction.
EFFECTIVE DATE.(a) This section is effective the day after the board of
commissioners of the Seaway Port Authority of Duluth and its chief clerical officer timely
complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.
(b) Authority of the Seaway Port Authority of Duluth to approve this section expires
on June 30, 2012.

    Sec. 4. TEACHERS RETIREMENT ASSOCIATION; COVERAGE ELECTION
FOR CERTAIN MNSCU FACULTY MEMBER.
(a) Notwithstanding any provision to the contrary in Minnesota Statutes, chapter
354B, an eligible person described in paragraph (b) may elect prospective and retroactive
retirement coverage under paragraph (c).
(b) An eligible person is a person who:
(1) was born on February 2, 1978;
(2) was initially employed by the Minnesota State Colleges and Universities system
on a part-time basis at Metropolitan State University on August 27, 2005;
(3) was also additionally employed within the Minnesota State Colleges and
Universities system at Inver Hills Community College and St. Paul College; and
(4) was covered by the higher education individual retirement account plan because
of a failure of Metropolitan State University to advise the eligible person about the
optional election and default retirement coverage provisions of Minnesota Statutes, section
354B.21, subdivisions 2 and 3.
(c) An eligible person may elect retirement coverage by the Teachers Retirement
Association rather than the higher education individual retirement account plan for faculty
employment rendered after the date of the retirement coverage election under this section
and for past Minnesota State Colleges and Universities system faculty employment from
August 27, 2005, until the date of the retirement coverage election. The election must
be made in writing, must be filed with the executive director of the Teachers Retirement
Association, and must be accompanied with any relevant documentation required by the
executive director of the Teachers Retirement Association.
(d) If an eligible person makes the retirement coverage election under paragraph (c),
the eligible person's member contributions to the higher education individual retirement
account plan must be transferred to the Teachers Retirement Association, with any earned
investment returns on those contributions. If the transferred member contributions and
investment earnings are less than the calculated amount of the member contribution that
the eligible person would have made to the Teachers Retirement Association on the
eligible person's compensation from the Minnesota State Colleges and Universities system
for the period from August 27, 2005, to the date of the retirement coverage election, if
the person had been covered by the Teachers Retirement Association during the period,
plus annual compound interest at the rate of 8.5 percent, the eligible person shall pay the
balance of that calculated member contribution obligation within 30 days of the retirement
coverage election. Any payment may be made through an institution-to-institution transfer
from the eligible person's account in the Minnesota state deferred compensation program
or the eligible person's tax-sheltered savings account under section 403(b) of the federal
Internal Revenue Code.
(e) Upon the transfer of the equivalent member contribution amount and any
additional payments under paragraph (d), the balance of the eligible person's higher
education individual retirement account plan account must be transferred to the Teachers
Retirement Association. If the amounts under paragraph (d) and the higher education
individual retirement account plan account balance under this paragraph are less than
the prior service credit purchase payment amount calculated under Minnesota Statutes,
section 356.551, the Minnesota State Colleges and Universities system shall pay that
difference within 60 days of the retirement coverage election date.
(f) Upon the transfers and payments under paragraphs (d) and (e), the eligible person
must be credited by the Teachers Retirement Association with allowable and formula
service for Minnesota State Colleges and Universities system employment since August
27, 2005.
(g) The authority to make a retirement coverage election under this section expires
on January 1, 2013.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. SERVICE CREDIT PURCHASE AUTHORIZATION FOR
UNCREDITED PRIOR PUBLIC EMPLOYMENT.
(a) An eligible person described in paragraph (b) is entitled to purchase allowable
service in the general employees retirement plan of the Public Employees Retirement
Association under Minnesota Statutes, section 353.01, subdivision 16, for the period
described in paragraph (c) upon the payment of the purchase requirement specified in
paragraph (e).
(b) An eligible person is a person who:
(1) was born on September 10, 1949;
(2) was first employed by Crookston Township on July 1, 1990;
(3) was enrolled in the general employees retirement plan of the Public Employees
Retirement Association on September 15, 2010; and
(4) had omitted deductions paid for allowable service for Crookston Township
back to January 1, 2007.
(c) The period of prior service credit available for purchase is the period of
Crookston Township employment from July 1, 1990, to December 31, 2006, if the service
was not that of an independent contractor and the compensation for the service met or
exceeded the applicable minimum monthly salary threshold amount for plan coverage.
(d) The eligible person must apply with the executive director of the Public
Employees Retirement Association to make the service credit purchase under this section.
The application must be in writing and must include all necessary relevant documentation
that the executive director may require.
(e) Allowable service credit under Minnesota Statutes, section 353.01, subdivision
16, must be granted by the general employees retirement plan of the Public Employees
Retirement Association to the eligible person in proportion to the portion of the prior
service credit purchase payment amount bears to the total prior service credit purchase
payment amount required under Minnesota Statutes, section 356.551. Of the total prior
service credit purchase payment amount under Minnesota Statutes, section 356.551, the
eligible person must pay a total amount equal to the employee contribution rates in effect
during the uncredited employment period applied to the actual salary rates of the eligible
person during the period. If the eligible person begins to make the payment, Crookston
Township shall pay the remainder of the total prior service credit purchase payment
amount calculated under Minnesota Statutes, section 356.551. The executive director of
the Public Employees Retirement Association shall notify the treasurer of Crookston
Township that the member has begun paying the member contribution amount within 60
days of the receipt of that payment. If Crookston Township fails to pay its portion of the
prior service credit purchase payment amount under this section, the executive director
of the Public Employees Retirement Association shall collect the unpaid amount under
Minnesota Statutes, section 353.28, subdivision 6, paragraph (a). The eligible person
and Crookston Township may make monthly or quarterly installment payments of their
purchase payment portions, with interest on the remaining balance of the portion at an 8.5
percent annual compounded rate.
(f) Authority for an eligible person and Crookston Township to make prior service
credit purchase installment payments under this section expires on June 30, 2017, or upon
the eligible person's termination of employment by Crookston Township, whereupon any
unpaid installments are due in a lump sum.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. PERA-P&F; LATE RETROACTIVE DUTY DISABILITY BENEFIT
APPLICATION AUTHORIZED.
(a) Notwithstanding any provision of Minnesota Statutes, section 353.031 or
353.656 to the contrary, an eligible person described in paragraph (b) is authorized to file,
on behalf of the deceased eligible person's spouse, an application for a disability benefit
from the public employees police and fire retirement plan retroactive to the date of the
duty disability injury.
(b) An eligible person is the surviving spouse of a person who:
(1) was born on February 9, 1983;
(2) was initially employed as a deputy sheriff by Mahnomen County on May 9, 2005;
(3) suffered two gunshot wounds while investigating a report of gunfire in
Mahnomen on February 18, 2009, including one gunshot wound to the head; and
(4) after periods at a rehabilitation hospital and at a hospice facility, died as a result
of the wounds and accompanying complications on August 9, 2010.
(c) If the eligible person files the disability benefit application under paragraph (a)
and if the late Mahnomen County deputy sheriff described in paragraph (b) is determined
by the Public Employees Retirement Association as being disabled while in the line of
duty, the eligible person is entitled to receive payment of the duty disability benefits that
would have been paid before August 10, 2010, to the late Mahnomen County deputy
described in paragraph (b) under Minnesota Statutes, section 353.656, subdivision 1a, if
a disability benefit application had been filed in a timely manner on or after February
18, 2009.
(d) The authority to file a disability benefit application under paragraph (a) expires
on July 1, 2013.
EFFECTIVE DATE.This section is effective the day following final enactment.
Presented to the governor May 7, 2012
Signed by the governor May 10, 2012, 12:39 p.m.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569