Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 336-S.F.No. 625 
           An act relating to retirement; providing conditions 
          for survivor and dependent benefits from various 
          systems; first class city teachers; annuities, 
          death-while-active survivor benefits, and 
          administration; St. Paul teachers postretirement 
          adjustments; administrative expenses; amending 
          Minnesota Statutes 1992, sections 352.01, by adding a 
          subdivision; 352.12, subdivision 2, and by adding 
          subdivisions; 353.01, subdivision 15, and by adding a 
          subdivision; 353.32, subdivision 1a, and by adding 
          subdivisions; 354.05, subdivision 8, and by adding a 
          subdivision; 354.46, subdivisions 2, 5, and by adding 
          subdivisions; 354A.011, subdivision 27, and by adding 
          a subdivision; 354A.021, subdivision 5; 354A.12, 
          subdivisions 1, 1a, 2a, 2b, and by adding a 
          subdivision; 354A.23, subdivision 3; 354A.31, by 
          adding subdivisions; 354A.35, subdivision 2, and by 
          adding subdivisions; and 356.215, subdivision 4j. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                               ARTICLE 1 
    Section 1.  Minnesota Statutes 1992, section 354A.011, 
subdivision 27, is amended to read: 
    Subd. 27.  [TEACHER.] "Teacher" means any person who 
renders service in a public school district located in the 
corporate limits of one of the cities of the first class which 
was so classified on January 1, 1979, as any of the following: 
    (a) a full-time employee in a position for which a valid 
license from the state board department of education is 
required; 
    (b) an employee of the teachers retirement fund association 
located in the city of the first class unless the employee has 
exercised the option pursuant to Laws 1955, chapter 10, section 
1, to retain membership in the Minneapolis employees retirement 
fund established pursuant to chapter 422A; 
    (c) a part-time employee in a position for which a valid 
license from the state board department of education is 
required; or 
    (d) a part-time employee in a position for which a valid 
license from the state board department of education is required 
who also renders other nonteaching services for the school 
district unless the board of trustees of the teachers retirement 
fund association determines that the combined employment is on 
the whole so substantially dissimilar to teaching service that 
the service shall not be covered by the association. 
     The term shall not mean any person who renders service in 
the school district as any of the following: 
     (1) an independent contractor or the employee of an 
independent contractor; 
     (2) an employee who is a full-time teacher covered by 
another teachers retirement fund association established 
pursuant to this chapter or chapter 354; 
     (3) an employee holding a part-time adult supplementary 
technical college license who renders part-time teaching service 
in a technical college if (1) the service is incidental to the 
regular nonteaching occupation of the person; and (2) the 
applicable technical college stipulates annually in advance that 
the part-time teaching service will not exceed 300 hours in a 
fiscal year; and (3) the part-time teaching service actually 
does not exceed 300 hours in a fiscal year; or 
     (4) an employee exempt from licensure pursuant to section 
125.031. 
    Sec. 2.  Minnesota Statutes 1992, section 354A.021, 
subdivision 5, is amended to read: 
    Subd. 5.  [TAX SHELTERED ANNUITY PROGRAM AND FUND.] Any 
teachers retirement fund association may establish a tax 
sheltered annuity program and fund meeting the requirements of 
section 403(b) of the Internal Revenue Code of 1954, as amended, 
which shall include all assets which were acquired for the 
specific purpose of being credited to the program and fund and 
to which shall be credited all employee contributions, and 
employer contributions if negotiated under a collective 
bargaining agreement, designated for this purpose and all 
interest income attributable to the assets of the program and 
fund.  
    Sec. 3.  Minnesota Statutes 1992, section 354A.12, 
subdivision 1, is amended to read: 
    Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] The contribution 
required to be paid by each member of a teachers retirement fund 
association shall not be less than the percentage of total 
salary specified below for the applicable association and 
program: 
     Association and Program              Percentage of
                                          Total Salary
Duluth teachers retirement
  association
          old law and new law
          coordinated programs              4.5 percent
Minneapolis teachers retirement
  association
          basic program                     8.5 percent
          coordinated program               4.5 percent
St. Paul teachers retirement
  association
          basic program                     8 percent
          coordinated program               4.5 percent
    Contributions shall be made by deduction from salary and 
must be remitted directly to the respective teachers retirement 
fund association at least once each month. 
    Sec. 4.  Minnesota Statutes 1992, section 354A.12, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [OBLIGATION FOR OMITTED SALARY DEDUCTIONS.] If 
the full required contributions are not deducted from the salary 
of a teacher, payment of the shortage in such deductions is the 
sole obligation of the employing unit during the three-year 
period following the end of the fiscal year in which the 
shortage occurred.  The shortage is payable by the employing 
unit upon notification of the shortage by the executive director 
of the applicable retirement fund association.  The employing 
unit shall also pay any employer contributions related to the 
shortage.  The amount of the shortage in employee contributions 
and associated employer contributions is payable with interest 
at the rate of six percent per annum preretirement interest 
assumption for the retirement fund as specified in section 
356.215, subdivision 4d, compounded annually, from the end of 
the fiscal year in which the shortage occurred to the end of the 
month in which payment is made and the interest shall be 
credited to the fund stated as a monthly rate from the date due 
until the date payment is received in the office of the 
association, with a minimum interest charge of $10.  If the 
shortage payment and interest is not paid by the employing unit 
within 60 days of notification, the executive director shall 
certify the amount of the shortage payment and interest to the 
commissioner of finance, who shall deduct the amount from any 
state aid or appropriation amount applicable to the employing 
unit.  
    Sec. 5.  Minnesota Statutes 1992, section 354A.12, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 
RATES.] (a) The employing units shall make the following 
employer contributions to teachers retirement fund associations: 
     (1) for any coordinated member of a teachers retirement 
fund association in a city of the first class, the employing 
unit shall pay the employer social security taxes in accordance 
with section 355.46, subdivision 3, clause (b); 
     (2) for any coordinated member of one of the following 
teachers retirement fund associations in a city of the first 
class, the employing unit shall make a regular employer 
contribution to the respective retirement fund association in an 
amount equal to the designated percentage of the salary of the 
coordinated member as provided below: 
     Duluth teachers retirement
     fund association                        4.50 percent
     Minneapolis teachers retirement
     fund association                        4.50 percent
     St. Paul teachers retirement
     fund association                        4.50 percent;
     (3) for any basic member of one of the following teachers 
retirement fund associations in a city of the first class, the 
employing unit shall make a regular employer contribution to the 
respective retirement fund in an amount equal to the designated 
percentage of the salary of the basic member as provided below: 
     Minneapolis teachers retirement
     fund association                        8.50 percent
     St. Paul teachers retirement
     fund association                        8.00 percent
     (4) for a basic member of a teachers retirement fund 
association in a city of the first class, the employing unit 
shall make an additional employer contribution to the respective 
fund in an amount equal to the designated percentage of the 
salary of the basic member, as provided below: 
     Minneapolis teachers retirement     
     fund association                    4.85 percent  
     St. Paul teachers retirement   
     fund association                    4.63 percent   
     (5) for a coordinated member of a teachers retirement fund 
association in a city of the first class, the employing unit 
shall make an additional employer contribution to the respective 
fund in an amount equal to the applicable percentage of the 
coordinated member's salary, as provided below: 
     Duluth teachers retirement 
     fund association                    1.29 percent 
     Minneapolis teachers retirement  
     fund association  
       July 1, 1992 - June 30, 1993      0.00 percent 
       July 1, 1993, and thereafter      1.00 percent 
     St. Paul teachers retirement  
     fund association       
       July 1, 1992 - June 30, 1993      0.00 percent  
       July 1, 1993, and thereafter      1.00 percent 
    (b) For basic members of the Minneapolis teachers 
retirement fund association and the St. Paul teachers retirement 
fund association who retire on or after July 1, 1993, the 
employing unit shall continue to make an additional employer 
contribution to the retirement fund in an amount equal to the 
average salary of the employing unit's basic members multiplied 
by the relevant percentages in paragraph (a), clause (4). 
    (c) The regular and additional employer contributions must 
be remitted directly to the respective teachers retirement fund 
association at least once each month.  Delinquent amounts are 
payable with interest under the procedure in subdivision 1a.  
    (d) Payments of regular and additional employer 
contributions for school district or technical college employees 
who are paid from normal operating funds must be made from the 
appropriate fund of the district or technical college. 
    Sec. 6.  Minnesota Statutes 1992, section 354A.12, 
subdivision 2b, is amended to read: 
    Subd. 2b.  [REPORT ON CONTRIBUTION INSUFFICIENCIES.] By 
January 1 of each year, the executive secretary or director of 
each first class city teachers retirement fund association shall 
report to the chair of the legislative commission on pensions 
and retirement, the chair of the committee on appropriations 
ways and means of the house of representatives, and the chair of 
the committee on finance of the senate on the amount raised by 
the additional employer contribution rates then in effect and 
the sufficiency of the total statutory support when compared to 
the total required contributions determined under section 
356.215. 
    Sec. 7.  Minnesota Statutes 1992, section 354A.12, is 
amended by adding a subdivision to read: 
    Subd. 5.  [EMPLOYEE REPORTING.] Each school district shall 
provide to the appropriate teachers retirement fund association 
information regarding all new or returning employees on a form 
provided by the executive secretary or director before the 
employee's first payroll date. 
    Sec. 8.  Minnesota Statutes 1992, section 354A.23, 
subdivision 3, is amended to read: 
    Subd. 3.  Notwithstanding anything to the contrary in the 
articles and bylaws of the basic programs enumerated in chapter 
354A, eligibility for payment and the payment of interest on 
refunds and interest on repayment of refunds shall be computed 
determined in the same manner as for the coordinated programs 
covered by this chapter.  
    Sec. 9.  Minnesota Statutes 1992, section 354A.31, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [APPLICATION FOR ANNUITY.] Application for a 
retirement annuity may be made by a member or by a person 
authorized to act on behalf of the member.  Every application 
for retirement must be made in writing on a form prescribed by 
the executive secretary or director and must be substantiated by 
written proof of the member's age and identity.  The notarized 
signature of a member's spouse on a retirement annuity 
application acknowledging the member's annuity selection meets 
the notice requirement to the spouse under section 356.371, 
subdivision 3.  An application for a retirement annuity is not 
complete until all necessary supporting documents are received 
by the executive secretary or director. 
     Sec. 10.  [EFFECTIVE DATE.] 
    Sections 1 to 9 are effective the day following final 
enactment. 

                               ARTICLE 2 
    Section 1.  Minnesota Statutes 1992, section 354A.31, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [APPLICATIONS AFTER RETIREMENT.] If an 
application for retirement is filed with the board during the 
90-day period immediately following the termination of teaching 
service, the annuity may begin to accrue as if the application 
for retirement had been filed with the board on the date 
teaching service terminated.  In no event may an annuity begin 
to accrue more than one month before the date of final salary 
receipt. 
     Sec. 2.  [BYLAW AMENDMENT.] 
    Consistent with Minnesota Statutes, section 354A.12, 
subdivision 4, the boards of the Duluth teachers retirement fund 
association, the Minneapolis teachers retirement fund 
association, and the St. Paul teachers retirement fund 
association may amend the bylaws or articles of incorporation to 
provide that, if an application for retirement is filed with the 
board during the 90-day period immediately following the 
termination of teaching service, the annuity may begin to accrue 
as if the application for retirement had been filed with the 
board on the date teaching service terminated.  An annuity may 
not begin to accrue more than one month before the date of final 
salary receipt. 
    Sec. 3.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective the day following final 
enactment. 

                               ARTICLE 3 
    Section 1.  [ST. PAUL TEACHERS BYLAW AMENDMENT.] 
    Pursuant to Minnesota Statutes, section 354A.12, 
subdivision 4, permission is granted for St. Paul teachers 
retirement fund association to amend its articles to: 
    (a) Reduce the waiting period for receipt of the additional 
lump sum postretirement payment from three years to one year. 
    (b) The assets of the fund used to determine the dollar 
amount payable be the assets as defined in Minnesota Statutes, 
section 356.215, subdivision 1, clause 6, the actuarial value of 
the fund. 
    (c) The lump sum postretirement adjustment, at the request 
of the annuitant or benefit recipient, may be converted to a 
monthly annuity of equivalent actuarial value based on: 
    (1) the age of the annuitant or benefit recipient on 
January 1 of the year following the end of the fiscal year; 
    (2) the mortality table established by the board of 
trustees of the association and approved under Minnesota 
Statutes, section 356.215, subdivision 7; and 
    (3) a postretirement interest rate assumption of 7.5 
percent. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 

                                ARTICLE 4
    Section 1.  Minnesota Statutes 1992, section 356.215, 
subdivision 4j, is amended to read: 
    Subd. 4j.  [ADMINISTRATIVE EXPENSES.] The actuarial 
valuation must indicate the administrative expenses of the fund, 
expressed both in dollars and as a percentage of covered payroll.
Administrative expenses are costs incurred by the retirement 
plans excluding investment expenses.  Investment expenses 
include all expenses incurred for the retention of professional 
external investment managers and professional investment 
consultants, custodian bank fees, investment transaction costs, 
and the costs incurred by the retirement plans to manage 
investment portfolios or assets internally.  Investment expenses 
must be deducted from investment return in the actuarial 
valuation, and not included in administrative expenses when 
calculating the allowance for expenses. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 

                               ARTICLE 5 
    Section 1.  Minnesota Statutes 1992, section 354A.35, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEATH WHILE ELIGIBLE TO RETIRE; SURVIVING SPOUSE 
OPTIONAL ANNUITY.] The surviving spouse of any coordinated 
member who has attained the age of at least 50 years and has 
credit for at least three years of service or has credit for at 
least 30 years of service regardless of age shall be is entitled 
to joint and survivor annuity coverage in the event of death of 
the member prior to retirement.  The surviving spouse may apply 
for the annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  The member's 
surviving spouse shall be paid a joint and survivor annuity as 
provided in section 354A.32 and computed pursuant to section 
354A.31.  Sections 354A.37, subdivision 2, and 354A.39 apply to 
a deferred annuity payable under this section.  The benefits 
shall be payable for life.  
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 

                                ARTICLE 6 
    Section 1.  Minnesota Statutes 1992, section 352.01, is 
amended by adding a subdivision to read: 
    Subd. 26.  [DEPENDENT CHILD.] "Dependent child" means a 
biological or adopted child of a deceased employee who has not 
reached the age of 20 and is dependent upon the employee for 
more than one-half of the child's support at the time of the 
employee's death.  It also means a child of the member conceived 
during the member's lifetime and born after the member's death. 
    Sec. 2.  Minnesota Statutes 1992, section 352.12, 
subdivision 2, is amended to read: 
    Subd. 2.  [SURVIVING SPOUSE BENEFIT.] (a) If an employee or 
former employee is at least 50 years old and has credit for at 
least three years allowable service or who has credit for at 
least 30 years of allowable service, regardless of age, and dies 
before an annuity or disability benefit has become payable, 
notwithstanding any designation of beneficiary to the contrary, 
the surviving spouse of the employee may elect to receive, in 
lieu of the refund with interest provided in under subdivision 
1, an annuity equal to the joint and 100 percent survivor 
annuity which the employee could have qualified for had the 
employee terminated service on the date of death. 
    (b) If the employee was under age 55 and has credit for at 
least 30 years of allowable service on the date of death, the 
surviving spouse may elect to receive a 100 percent joint and 
survivor annuity based on the age of the employee and surviving 
spouse on the date of death.  The annuity is payable using the 
full early retirement reduction under section 352.116, 
subdivision 1, paragraph (a), to age 55 and one-half of the 
early retirement reduction from age 55 to the age payment begins.
    (c) If the employee was under age 55 and has credit for at 
least three years of allowable service credit on the date of 
death but did not yet qualify for retirement, the surviving 
spouse may elect to receive a 100 percent joint and survivor 
annuity based on the age of the employee and surviving spouse at 
the time of death.  The annuity is payable using the full early 
retirement reduction under section 352.116, subdivision 1 or 1a, 
to age 55 and one-half of the early retirement reduction from 
age 55 to the age payment begins.  
    The surviving spouse eligible for surviving spouse benefits 
under paragraph (a) may apply for the annuity at any time after 
the date on which the deceased employee would have attained the 
required age for retirement based on the employee's allowable 
service.  The surviving spouse eligible for surviving spouse 
benefits under paragraph (b) or (c) may apply for the annuity at 
any time after the employee's death.  The annuity must be 
computed as provided in under sections 352.115, subdivisions 1, 
2, and 3, and 352.116, subdivisions 1, 1a, and 3.  Sections 
352.22, subdivision 3, and 352.72, subdivision 2, apply to a 
deferred annuity or surviving spouse benefit payable under this 
subdivision.  The annuity must cease with the last payment 
received by the surviving spouse in the lifetime of 
the surviving spouse, or upon expiration of a term certain 
benefit payment to a surviving spouse under subdivision 2a.  An 
amount equal to the excess, if any, of the accumulated 
contributions credited to the account of the deceased employee 
in excess of the total of the benefits paid and payable to the 
surviving spouse must be paid to the deceased employee's last 
designated beneficiary or, if none, to the surviving children of 
the deceased spouse in equal shares or, if none, to the 
surviving parents of the deceased spouse or, if none, to the 
representative of the estate of the deceased spouse as specified 
under subdivision 1.  
    Any employee may request in writing that this subdivision 
not apply and that payment be made only to a designated 
beneficiary as otherwise provided by this chapter. 
    Sec. 3.  Minnesota Statutes 1992, section 352.12, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 
lieu of the 100 percent optional annuity under subdivision 2, or 
refund under subdivision 1, the surviving spouse of a deceased 
employee may elect to receive survivor coverage in a term 
certain of five, ten, 15, or 20 years, but monthly payments must 
not exceed 75 percent of the average high-five monthly salary of 
the deceased employee.  The monthly term certain annuity must be 
actuarially equivalent to the 100 percent optional annuity under 
subdivision 2. 
    If a survivor elects a term certain annuity and dies before 
the expiration of the specified term certain period, the 
commuted value of the remaining annuity payments must be paid in 
a lump sum to the survivor's estate. 
    Sec. 4.  Minnesota Statutes 1992, section 352.12, is 
amended by adding a subdivision to read: 
    Subd. 2b.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
no surviving spouse eligible for benefits under subdivision 2, a 
dependent child or children as defined in section 352.01, 
subdivision 26, is eligible for monthly payments.  Payments to a 
dependent child must be paid from the date of the employee's 
death to the date the dependent child attains age 20 if the 
child is under age 15.  If the child is 15 years or older on the 
date of death, payment must be made for five years.  The payment 
to a dependent child is an amount actuarially equivalent to the 
value of a 100 percent optional annuity under subdivision 2 
using the age of the employee and age of the dependent child at 
the date of death in lieu of the age of the surviving spouse.  
If there is more than one dependent child, each dependent child 
shall receive a proportionate share of the actuarial value of 
the employee's account.  
    Sec. 5.  Minnesota Statutes 1992, section 353.01, 
subdivision 15, is amended to read: 
    Subd. 15.  [DEPENDENT CHILD.] For the purpose of survivor 
benefit eligibility under sections 353.31, subdivision 1, and 
353.657, subdivision 3, "dependent child" means a natural 
biological or adopted child of a deceased member who is 
unmarried, and under the age of 18, or age 18 to 23, so long as 
the child submits evidence of full-time enrollment in an 
accredited educational institution.  "Dependent child" also 
includes a child of the member conceived during the member's 
lifetime and born after the member's death.  It also means a 
dependent child who is the subject of adoption proceedings filed 
by a member, and who within two years after death of the member, 
by judgment and decree duly entered, is adjudged to be the 
adopted child of the deceased member; subject, however, to the 
qualifying conditions of age and dependency under this 
subdivision.  The dependency of the child dates from the decree 
of adoption.  "Dependent child" also includes a child age 18 to 
23 who had submitted evidence of full-time enrollment in an 
accredited educational institution but was determined to be 
medically unable to continue school on a full-time basis.  The 
board of trustees shall adopt written procedures to make 
determinations regarding eligibility based on a student being 
medically unable to continue school, and may not continue a 
benefit for medical reasons for a period greater than one year. 
    Sec. 6.  Minnesota Statutes 1992, section 353.01, is 
amended by adding a subdivision to read: 
    Subd. 15a.  [DEPENDENT CHILD.] For the purpose of survivor 
benefit eligibility under section 353.32, subdivision 1c, 
"dependent child" means any biological or adopted child of a 
deceased member who has not reached the age of 20 and is 
dependent for more than one-half of support upon the member.  It 
also includes any child of the member conceived during the 
member's lifetime and born after the member's death. 
    Sec. 7.  Minnesota Statutes 1992, section 353.32, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [SURVIVING SPOUSE OPTIONAL ANNUITY.] (a) If a 
member or former member who has attained at least age 50 and has 
credit for not less than three years of allowable service or who 
has credit for not less than 30 years of allowable service, 
regardless of age attained, and dies before the annuity or 
disability benefit begins to accrue under section 353.29, 
subdivision 7, or 353.33, subdivision 2, notwithstanding any 
designation of beneficiary to the contrary, the surviving spouse 
may elect to receive, instead of a refund with interest under 
subdivision 1, or surviving spouse benefits otherwise payable 
under section 353.31, an annuity equal to the 100 percent joint 
and survivor annuity that the member could have qualified for 
had the member terminated service on the date of death.  
    (b) If the member was under age 55 and has credit for at 
least 30 years of allowable service on the date of death, the 
surviving spouse may elect to receive a 100 percent joint and 
survivor annuity based on the age of the member and surviving 
spouse on the date of death.  The annuity is payable using the 
full early retirement reduction under section 353.30, 
subdivisions 1b and 1c, to age 55 and one-half of the early 
retirement reduction from age 55 to the age payment begins.  
    (c) If the member was under age 55 and has credit for at 
least three years of allowable service on the date of death but 
did not qualify for retirement, the surviving spouse may elect 
to receive the 100 percent joint and survivor annuity based on 
the age of the member and surviving spouse at the time of 
death.  The annuity is payable using the full early retirement 
reduction under section 353.30, subdivision 1, 1b, 1c, or 5, to 
age 55 and one-half of the early retirement reduction from age 
55 to the age payment begins. 
    Notwithstanding the definition of surviving spouse in 
section 353.01, subdivision 20, a former spouse of the member, 
if any, is entitled to a portion of the monthly surviving spouse 
optional annuity if stipulated under the terms of a marriage 
dissolution decree filed with the association.  If there is no 
surviving spouse or child or children, a former spouse may be 
entitled to a lump-sum refund payment under subdivision 1, if 
provided for in a marriage dissolution decree but not a monthly 
surviving spouse optional annuity despite the terms of a 
marriage dissolution decree filed with the association. 
    The surviving spouse eligible for surviving spouse benefits 
under paragraph (a) may apply for the annuity at any time after 
the date on which the deceased employee would have attained the 
required age for retirement based on the employee's allowable 
service.  The surviving spouse eligible for surviving spouse 
benefits under paragraph (b) or (c) may apply for an annuity any 
time after the member's death.  The annuity must be computed 
under sections 353.29, subdivisions 2 and 3; 353.30, 
subdivisions 1, 1a, 1b, 1c, and 5; and 353.31, subdivision 3.  
    Sections 353.34, subdivision 3, and 353.71, subdivision 2, 
apply to a deferred annuity or surviving spouse benefit payable 
under this subdivision.  No payment may accrue beyond the end of 
the month in which entitlement to the annuity has terminated or 
upon expiration of the term certain benefit payment under 
subdivision 1b.  An amount equal to any excess of the 
accumulated contributions that were credited to the account of 
the deceased employee over and above the total of the annuities 
paid and payable to the surviving spouse must be paid to the 
deceased member's last designated beneficiary or, if none, to 
the legal representative of the estate of the deceased member as 
specified under subdivision 1.  
    A member may specify in writing that this subdivision does 
not apply and that payment may be made only to the designated 
beneficiary as otherwise provided by this chapter. 
    Sec. 8.  Minnesota Statutes 1992, section 353.32, is 
amended by adding a subdivision to read: 
    Subd. 1b.  [SURVIVOR COVERAGE TERM CERTAIN.] In lieu of the 
100 percent optional annuity under subdivision 1a, or a refund 
under subdivision 1, the surviving spouse of a deceased member 
may elect to receive survivor coverage for a term certain of 
five, ten, 15, or 20 years, but monthly payments must not exceed 
75 percent of the average high-five monthly salary of the 
deceased member.  The monthly term certain annuity must be 
actuarially equivalent to the 100 percent optional annuity under 
subdivision 1a. 
    If a surviving spouse elects a term certain annuity and 
dies before the expiration of the specified term certain period, 
the commuted value of the remaining annuity payments must be 
paid in a lump sum to the survivor's estate. 
    Sec. 9.  Minnesota Statutes 1992, section 353.32, is 
amended by adding a subdivision to read: 
    Subd. 1c.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
no surviving spouse eligible for benefits under subdivision 1a, 
a dependent child or children as defined in section 353.01, 
subdivision 15a, is eligible for monthly payments.  Payments to 
a dependent child must be paid from the date of the member's 
death to the date the dependent child attains age 20 if the 
child is under age 15.  If the child is 15 years or older on the 
date of death, payment must be made for five years.  The payment 
to a dependent child is an amount actuarially equivalent to the 
value of a 100 percent optional annuity under subdivision 1a 
using the age of the member and age of the dependent child at 
the date of death in lieu of the age of the surviving spouse.  
If there is more than one dependent child, each dependent child 
shall receive a proportionate share of the actuarial value of 
the employee's account.  
    Sec. 10.  Minnesota Statutes 1992, section 354.05, 
subdivision 8, is amended to read: 
    Subd. 8.  [DEPENDENT CHILD.] For the purpose of survivor 
benefit eligibility under section 354.46, subdivision 
1, "dependent child" means any natural biological or adopted 
child of a deceased member who has not reached the age of 18, or 
who is under age 22 and is a full-time student throughout the 
normal school year, unmarried and dependent for more than 
one-half of support upon such the member and for a period of at 
least 90 days prior to the member's death.  It also includes any 
child of the member conceived while living and born after death. 
    Sec. 11.  Minnesota Statutes 1992, section 354.05, is 
amended by adding a subdivision to read: 
    Subd. 8a.  [DEPENDENT CHILD.] For the purpose of survivor 
benefit eligibility under section 354.46, subdivision 2b, 
"dependent child" means any biological or adopted child of a 
deceased member who has not reached the age of 20 and is 
dependent for more than one-half of support upon the member.  It 
also includes any child of the member conceived while living and 
born after death. 
    Sec. 12.  Minnesota Statutes 1992, section 354.46, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEATH WHILE ELIGIBLE DESIGNATED BENEFICIARY 
BENEFIT.] (a) The surviving spouse of any member or former 
member who has attained the age of at least 50 years and has 
credit for at least three years of allowable service or who has 
credit for at least 30 years of allowable service irrespective 
of age is entitled to joint and survivor annuity coverage in the 
event of death of the member prior to retirement.  If the 
surviving spouse does not elect to receive a surviving spouse 
benefit provided pursuant to under subdivision 1, if applicable, 
or does not elect to receive a refund of accumulated member 
contributions provided pursuant to under section 354.47, 
subdivision 1, the surviving spouse is entitled to receive, upon 
written application on a form prescribed by the executive 
director, a benefit equal to the second portion of a 100 percent 
joint and survivor annuity as provided pursuant to specified 
under section 354.45, based on the age of the member and 
surviving spouse at the time of death of the member, and 
computed pursuant to under section 354.44, subdivision 2, or 6, 
or 7, whichever is applicable.  
    (b) If the member was under age 55 and has credit for at 
least 30 years of allowable service on the date of death, the 
surviving spouse may elect to receive a 100 percent joint and 
survivor annuity based on the age of the member and surviving 
spouse on the date of death.  The annuity is payable using the 
full early retirement reduction under section 354.44, 
subdivision 6, paragraph (3)(ii), to age 55 and one-half of the 
early retirement reduction from age 55 to the age payment begins.
    (c) If the member was under age 55 and has credit for at 
least three years of allowable service on the date of death but 
did not yet qualify for retirement, the surviving spouse may 
elect to receive the 100 percent joint and survivor annuity 
based on the age of the member and the surviving spouse at the 
time of death.  The annuity is calculated using the full early 
retirement reduction under section 354.44, subdivision 6, to age 
55 and one-half of the early retirement reduction from age 55 to 
the age the annuity begins.  The surviving spouse eligible for a 
surviving spouse benefit under paragraph (a) may apply for the 
annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  The surviving spouse 
eligible for surviving spouse benefits under paragraph (b) or 
(c) may apply for the annuity any time after the member's death. 
This benefit accrues from the day following the date of the 
member's death but may not begin to accrue more than six months 
before the date the application is filed with the executive 
director.  Sections 354.44 354.55, subdivision 6 11, and 354.60 
apply to a deferred annuity payable under this section.  The 
benefit is payable for life. 
    Sec. 13.  Minnesota Statutes 1992, section 354.46, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [SURVIVOR COVERAGE TERM CERTAIN.] In lieu of the 
100 percent optional annuity under subdivision 2, or a refund 
under section 354.47, subdivision 1, the surviving spouse of a 
deceased member may elect to receive survivor coverage in a term 
certain of five, ten, 15, or 20 years, but monthly payments must 
not exceed 75 percent of the average high-five monthly salary of 
the deceased member.  The monthly term certain annuity must be 
actuarially equivalent to the 100 percent optional annuity under 
subdivision 2. 
    If a surviving spouse elects a term certain payment and 
dies before the expiration of the specified term certain period, 
the commuted value of the remaining annuity payments must be 
paid in a lump sum to the survivor's estate. 
    Sec. 14.  Minnesota Statutes 1992, section 354.46, is 
amended by adding a subdivision to read: 
    Subd. 2b.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
no surviving spouse eligible for benefits under subdivision 2, a 
dependent child or children as defined in section 354.05, 
subdivision 8a, is eligible for monthly payments.  Payments to a 
dependent child must be paid from the date of the member's death 
to the date the dependent child attains age 20 if the child is 
under age 15.  If the child is 15 years or older on the date of 
death, payment must be made for five years.  The payment to a 
dependent child is an amount actuarially equivalent to the value 
of a 100 percent optional annuity under subdivision 2 using the 
age of the member and age of the dependent child at the date of 
death in lieu of the age of the member and the spouse.  If there 
is more than one dependent child, each dependent child shall 
receive a proportionate share of the actuarial value of the 
member's account.  
    Sec. 15.  Minnesota Statutes 1992, section 354.46, 
subdivision 5, is amended to read: 
    Subd. 5.  [PAYMENT TO DESIGNATED BENEFICIARY.] Any member 
and the spouse of the member may make a joint specification in 
writing on a form prescribed by the executive director that the 
benefits provided in subdivision 2, or in section 354.47, 
subdivision 1, shall be paid only to a designated beneficiary.  
For purposes of this subdivision, a designated beneficiary may 
only be either a former spouse or a child, either natural 
biological or adopted, of the member, but more than one 
beneficiary may be designated for the benefit provided in 
section 354.47, subdivision 1.  
    Sec. 16.  Minnesota Statutes 1992, section 354A.011, is 
amended by adding a subdivision to read: 
    Subd. 12a.  [DEPENDENT CHILD.] "Dependent child" means any 
biological or adopted child of a deceased member who has not 
reached the age of 20 and is dependent on the member for more 
than one-half of the child's support at the time of the member's 
death.  It also means a child of the member conceived during the 
member's lifetime and born after the member's death. 
    Sec. 17.  Minnesota Statutes 1992, section 354A.35, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEATH WHILE ELIGIBLE TO RETIRE; SURVIVING SPOUSE 
OPTIONAL ANNUITY.] (a) The surviving spouse of any a coordinated 
member who has attained the age of at least 50 years and has 
credit for at least three years of service or has credit for at 
least 30 years of service regardless of age shall be entitled to 
joint and survivor annuity coverage in the event of death of the 
member and dies prior to retirement, may elect to receive, 
instead of a refund with interest under subdivision 1, an 
annuity equal to the 100 percent joint and survivor annuity the 
member could have qualified for had the member terminated 
service on the date of death.  The surviving spouse eligible for 
a surviving spouse benefit under this paragraph may apply for 
the annuity at any time after the date on which the deceased 
employee would have attained the required age for retirement 
based on the employee's allowable service.  A surviving spouse 
eligible for surviving spouse benefits under paragraph (b) and 
(c) may apply for an annuity at any time after the member's 
death.  The member's surviving spouse shall be paid a joint and 
survivor annuity as provided in under section 354A.32 and 
computed pursuant to under section 354A.31.  
    (b) If the member was under age 55 and has credit for at 
least 30 years of allowable service on the date of death, the 
surviving spouse may elect to receive a 100 percent joint and 
survivor annuity based on the age of the member and surviving 
spouse on the date of death.  The annuity is payable using the 
full early retirement reduction under section 354A.31, 
subdivision 6, paragraph (a), to age 55 and one-half of the 
early retirement reduction from age 55 to the age payment begins.
    (c) If the member was under age 55 and has credit for at 
least three years of allowable service on the date of death but 
did not yet qualify for retirement, the surviving spouse may 
elect to receive the 100 percent joint and survivor annuity 
based on the age of the member and the survivor at the time of 
death.  The annuity is payable using the full early retirement 
reduction under section 354A.31, subdivision 6 or 7, to age 55 
and one-half of the early retirement reduction from age 55 to 
the date payment begins. 
    Sections 354A.37, subdivision 2, and 354A.39 apply to a 
deferred annuity or surviving spouse benefit payable under this 
section.  The benefits shall be are payable for the life of the 
surviving spouse, or upon expiration of the term certain benefit 
payment under subdivision 2b.  
    Sec. 18.  Minnesota Statutes 1992, section 354A.35, is 
amended by adding a subdivision to read: 
    Subd. 2b.  [SURVIVOR COVERAGE TERM CERTAIN.] In lieu of the 
100 percent optional annuity under subdivision 2, or a refund 
under subdivision 1, the surviving spouse of a deceased member 
may elect to receive survivor coverage in a term certain of 
five, ten, 15, or 20 years, but monthly payments must not exceed 
75 percent of the average high-five monthly salary of the 
deceased member.  The monthly term certain annuity must be 
actuarially equivalent to the 100 percent optional annuity under 
subdivision 2. 
    If a surviving spouse elects a term certain annuity and 
dies before the expiration of the specified term certain period, 
the commuted value of the remaining annuity payments must be 
paid in a lump sum to the survivor's estate. 
    Sec. 19.  Minnesota Statutes 1992, section 354A.35, is 
amended by adding a subdivision to read: 
    Subd. 2c.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
no surviving spouse eligible for benefits under subdivision 2, a 
dependent child or children as defined in section 354A.011, 
subdivision 12a, is eligible for monthly payments.  Payments to 
a dependent child must be paid from the date of the member's 
death to the date the dependent child attains age 20 if the 
child is under age 15.  If the child is 15 years or older on the 
date of death, payment must be made for five years.  The payment 
to a dependent child is an amount actuarially equivalent to the 
value of a 100 percent optional annuity under subdivision 2 
using the age of the member and age of the dependent child at 
the date of death.  If there is more than one dependent child, 
each dependent child shall receive a proportionate share of the 
actuarial value of the employee's account.  
    Sec. 20.  [EFFECTIVE DATE.] 
    Sections 1 to 19 are effective July 1, 1993. 
    Presented to the governor May 20, 1993 
    Signed by the governor May 24, 1993, 5:46 p.m.